BASEL Actelion ATLN.VX shareholders rejected a $5.6 million pay award for the biotechnology company's chief executive Jean-Paul Clozel on Thursday, making it the second Swiss company in as many weeks to have its pay plans voted down by investors.
Public anger over executive salaries has run high in Switzerland since the country had to rescue UBS UBSN.VX from risky investments blamed on a lavish bonus culture. Swiss citizens voted in a referendum in March to introduce some of the world's strictest controls on executive pay.
Influential shareholder groups Ethos, Actares and ISS had urged shareholders to reject Actelion's compensation package, which the company reworked after shareholders owning 55 percent of the company's stock backed it last year, a proportion the company wanted to improve.
Clozel's pay award for 2012 is 15 percent higher than the previous year's, owing to a deferred profit-sharing award that was twice as high as in 2011.
In Thursday's vote owners of 60 percent of the stock rejected the package. Their vote is still only advisory, as the Swiss government has not yet decided when the new legislation comes into force, so Clozel will receive the proposed pay despite protests.
Actelion also said it would replace its profit sharing plan in 2013 with one putting more emphasis on achieving yearly goals and linked to share price performance.
Actelion chairman Jean-Pierre Garnier said the company believed it had addressed most issues raised by shareholders to better align the needs of the company and its owners, but added that it would do more work on the plans.
"We did have some elements which were not based on future performance, but we have changed all this," Garnier told Reuters following the meeting in Basel. "We are going to fine tune it even further and get this behind us."
Garnier is no stranger to acrimonious debates over executive pay awards: in 2002, when he was chief executive of British drug company GlaxoSmithkline (GSK.L), the company shelved plans to double his pay following a shareholder outcry.
Actelion's biggest shareholders beside its managers, who hold a 10.5 percent stake in the firm, are Orbis Investment Management Limited and investor Rudolf Maag.
Last week, Julius Baer BAER.VX shareholders also rejected the pay plans of the Swiss private bank.
At Novartis NOVN.VX, a $78 million pay-off for outgoing chairman Daniel Vasella stirred widespread outrage, which forced the drugmaker to scrap the payment.
(This story corrects paragraph 3 to say holders of 55 percent of shares backed pay plan last year)
(Reporting by Paul Arnold; Writing by Caroline Copley and Martin de Sa'Pinto; Editing by Sophie Walker)