Legal, Politics

Sensitized by a series of scandals around the world, Novartis spotlights its ethics policies

It turns out that anyone who doesn’t maintain the ethics standards at a newly sensitized Novartis has run the risk of losing a bonus.

Tainted by a political scandal in Washington DC triggered by a contract signed by ex-CEO Joe Jimenez, the company decided to talk up a scoring system it adopted in 2016 where each staffer earns a 1, 2 or 3 number ranking on ethics. Two qualifies as meeting company ethics standards and 3 qualifies for role model behavior — all of which could signal the kind of performance warranting up to 35% of their total compensation, according to a report from Reuters, which got briefed with analysts and reporters on the program.

(I’m still waiting for my invitation to that club.)

Shannon Klinger

The Cohen scandal, involving Novartis’ payment of $1.2 million to Trump’s personal attorney Michael Cohen, took place after other scandals in China, South Korea and Greece. In China, company execs reportedly started a pilot project where expense reports are scrutinized in a move to get ahead of any other reputation damaging behavior.

“This allows us to look at the behavior metric before any money leaves Novartis, and catch potential misconduct before there is any risk to our reputation,” said Novartis general counsel Shannon Klinger, according to the Reuters report.

Ironically, Klinger had been the ethics czar at Novartis before the scandal hit. She replaced chief attorney Felix Ehrat, who left abruptly after the lurid headlines hit about Michael Cohen, saying their contract was legal but a mistake.

Vas Narasimhan

That’s the same approach taken by new CEO Vas Narasimhan, who’s been trying to distance himself as much as possible from anything having to do with this scorching event. The company insists that the connection with Cohen was brief and unproductive, a position ridiculed by Democratic senators who say there was a long trail of communications between Cohen and ex-CEO Jimenez. 

As for Jimenez, who was assigned the bulk of the blame for deciding to enter into a contract with Cohen and pay the whole thing off? Company filings show that he earned more than $11.3 million in compensation for 2017.


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