(ML-BOA) European Strategy

*The eurozone recovery lags all other regions in 2014…*
Euro area growth is finally rising but, as the ECB reaffirmed, the risk
remains to the
downside. We consider deflation the most significant risk facing Europe
in 2014;
while it's likely that HICP remains well below the 2% target in both
2014 and 2015,
our base case is that disinflationary trends of the last 2yrs start to
reverse in 1H14.
Nevertheless, Euro area growth is set to significantly lag all other
regions in 2014.

*…the biggest risk isn't low growth, but further disinflation*
For all the ECB's dovish inflation outlook, Mr Draghi remains unwilling
to deploy the
kind of tools used by other central banks. Prohibiting the use of any
future LTRO for
carry trading limits moral hazard; but equally tying any future LTRO to
financial
stability risks inviting market stress – particularly in funding
markets. Despite this
uncertainty, Eurozone economic sentiment has normalised; in our view,
any further
pick up in confidence is likely to be tempered by concerns over
disinflation.

*Even with growth weak, higher margins drive EPS up 12%…*
2014 likely rewards equity PMs more through alpha and less through beta.
Even
modest GDP growth sets a margin recovery in play. With EU EBITDA margins
1 St.
Dev. below average, and capacity utilisation rising, we see EPS up 12%
and indices
up 10-15% in 2014. But dispersion of returns between firms will be
markedly higher

*…While a faster capex rebound is the 'upside surprise' case*
In our base case we don't expect to see EU capex rise until 2015 - even
though EU
firms have €800Bn of cash. EU growth alone won't warrant a pick up capex
in 2014;
but if US growth surprises positively, rising global capex could yet
suck in EU firms

FT : Santander has led the way in spin-offs

Santander has led the way in spin-offs

For HSBC, the decision to consider a separate listing for its UK operations may mark a radical departure. Yet for Banco Santander, the Spanish retail banking group, it has become almost a way of life. Over the past four years, Santander has listed swaths of its far-flung banking empire on local stock markets, helping to bolster the group’s capital at a time of severe financial stress in its home market. In 2009, it raised $7bn by listing 14 per cent of its operations in Brazil, widely seen as the jewel in the bank’s foreign operations. That move was followed by a partial spin-off of its business in Chile. Last year, at the height of the banking crisis in Spain, Santander decided to list 24.9 per cent of its lucrative Mexican business in one of the largest IPOs of the year. The offering raised €3.2bn in fresh capital, valuing the entire branch at €12.73bn at the time of the sale. Santander is also in talks to list its car finance unit in the US, and has signalled repeatedly that it wants to list its UK operations, though it has veered away from doing so in the near future. Santander describes this set-up as the "model of subsidiaries", in which listed foreign branches are legally independent and autonomous in capital and liquidity. The bank argues that this approach reduces systemic risk by limiting contagion in a crisis, and provides a strong incentive to local management. Most analysts believe, however, that the flurry of partial spin-offs was above all else Santander’s response to the financial crisis in Spain – and the corresponding need to bolster the bank’s capital position at a time of unprecedented market scrutiny.

FT : HSBC eyes listing of £20bn UK bank

--> Stock is unchanged in HK.

HSBC eyes listing of £20bn UK bank

HSBC has sounded out investors about a flotation of its UK arm, in a move that would realise value from its high street banking business and address regulatory pressures. The bank has in recent weeks asked investors whether they would support the sale of a sizeable stake in the UK business. It has also discussed the issue informally at board level, according to three people familiar with the project. If Stuart Gulliver, HSBC’s chief executive, presses ahead with the plan, it will partially reverse the group’s landmark acquisition of the UK’s Midland Bank more than 20 years ago. That deal helped HSBC to become Britain’s the fourth biggest high-street operator after Lloyds, RBS and Barclays. Thinking is at an early stage, according to those involved, but the plan would be likely to involve the listing of a minority stake of up to 30 per in the UK retail and commercial banking operation. Investors estimate that such a business could float with a market capitalisation of about £20bn. Such a move would coincide with a slew of other bank listings in the UK. Lloyds Banking Group is preparing to float its TSB subsidiary next year, to comply with EU state aid penalties imposed after its UK government rescue. Royal Bank of Scotland’s Williams & Glyn’s unit is also set to list by 2015 under the same EU penalty regime. Virgin Money, too, has signalled a desire to list over a similar timeframe, while Spain’s Santander remains keen to part-float its UK subsidiary, though it has shelved plans for the time being. It emerged on Sunday that One Savings Bank, the lender formed from a restructuring of building society Kent Reliance by private equity firm JC Flowers, could also float next year For HSBC, a carveout of the UK business would help to deal with the requirements of the incoming Vickers rules, which demand that UK banks ringfence their domestic retail banking operations. Although formal separation is not required, some bankers believe that the strictures of the rules may motivate bigger lenders to break themselves up. Other regulatory changes, such as a tougher capital regime in the UK than elsewhere, may also make it logical to spin out a British operation. HSBC has made little secret about its irritation with the growing costs of being a UK regulated bank. The group is expected to pay about £900m, or 40 per cent, of the industry’s £2.2bn bank levy, to the Treasury this year. And it has long bemoaned the ringfencing rules and steadily rising regulatory capital requirements. HSBC has toned down its public complaints, calming fears that it might move its headquarters to Hong Kong. Although a listing of the UK business could bring a potential move of the group HQ back on to the agenda, people close to the bank said that any question of redomiciling remained "off the table". Some HSBC executives believe that floating the UK business would also make sense on valuation grounds. It would crystallise a higher rating for the whole group, especially in the light of buoyant investor sentiment towards the UK and the prospects for its banking sector. Shares in Lloyds, the only "pure-play" listed UK high-street bank, and a close proxy for the HSBC plan, have risen nearly 70 per cent over the past year compared with only 4 per cent for HSBC.

WSJ : Shale Offers Safety if Oil Prices Weaken

Shale Offers Safety if Oil Prices Weaken

With apologies to Warren Buffett, when the tide of oil washes in, investors will discover who can and can't swim.

The U.S. exploration-and-production sector faces a tricky 2014, largely due to its own success. Rising domestic and Canadian output is leading to a glut in North American oil. When some refineries shut down for maintenance this fall, reducing capacity to process oil, West Texas Intermediate crude prices slumped by 16%–and stalled out this year's rally in E&P stocks by mid-October.

The glut looks set to grow in 2014. Goldman Sachs GS +1.00% forecasts U.S. and Canadian oil supply to grow by 1.45 million barrels per day next year. That alone beats projected global demand growth of just 1.35 million barrels per day. In that scenario, the most efficient E&P firms look best placed to ride out lower oil prices.

U.S. shale resources differ widely. PFC Energy, a division of IHS, estimates breakeven prices range from $40 to beyond $100 per barrel. Clearly, some firms face the risk of profits being squeezed or having to shut in production if WTI weakens next year, which would undermine growth targets.

The best assets usually lie at the core of prolific shale areas such as the Eagle Ford and Permian Basin in Texas. James Sullivan at Alembic Global Advisors pegs the breakeven price for the Eagle Ford core at around $55 a barrel. Areas closer to the Gulf Coast also enjoy better transportation options to refineries. Investors in firms operating in the Bakken region should bear this in mind. It is prolific and low-cost, but its location in and around North Dakota translates into bigger discounts on its oil.

Mr. Sullivan points to Concho Resources. CXO -4.14% Its development efforts are focused in the Permian area, where breakeven prices range mostly between the high $60s and $80 a barrel. Concho has also hedged the majority of 2014's oil output at more than $90 a barrel.

Another stock to consider is EOG Resources, EOG -3.23% which has assets across the Eagle Ford, Permian and Bakken and a proven track record on efficiency. Pioneer Natural Resources, PXD -3.92% with its large Permian presence, is another. Swimming in oil isn't a pleasant experience, but it's better than sinking in it.

WSJ : Smith & Nephew Ready to Step Up

Smith & Nephew Ready to Step Up

Someone has got a spring in their step.

Shares in Smith & Nephew, SN.LN +0.77% the U.K. maker of hip and knee implants, are up almost 25% this year, recently hitting all-time highs. S&N—once the subject of perennial takeover rumors—has spent this year snapping up businesses to get more products into emerging markets. Meanwhile, there are signs the orthopedic market is on the up. For investors, S&N could keep its bounce.

Orthopedics is, to some extent, a bet on economic recovery. The downturn meant patients opted to wait for elective procedures like hip and knee replacements. In Europe, the economic pickup has been later to arrive, while austerity added pressure on prices. At S&N, which has greater European exposure than larger U.S. peers, orthopedic growth has trailed the broader market.

It may now be catching up. In the third quarter, S&N's implant revenue grew by 3% in hips and 2% in knees, versus 5% and 4%, respectively, for the global market. The company is launching new products. Meanwhile, sales of S&N's metal-on-metal hip have slumped after problems with a rival system from Johnson & Johnson. JNJ +1.58% But that hit seems to be abating, knocking only one percentage point off S&N's total hip growth in the third quarter.

And S&N offers more than just joints. About 30% of sales this year are forecast to come from its wound-care division. An enzyme-based treatment to remove necrotic tissues from wounds is expected to post revenue growth of more than 40%; negative pressure therapy, which speeds up healing, is another fast-growing area in which S&N is taking market share.

The company has also moved into emerging markets ahead of rivals. Sure, its strategy of developing simplified products for emerging markets remains somewhat unproven. But after deals in India, Brazil and Turkey this year, S&N makes about 13% of sales in the developing world, a figure it expects to be 25% in five years.

S&N no longer comes cheap. At about 16 times 2014 earnings, according to FactSet, the company is trading in line with U.S. rival Stryker. SYK +1.86% But S&N's growth prospects in wound care could merit a premium, argues Bernstein. And with little debt, there should be room for further share buybacks even if the company continues to make small acquisitions.

That should help keep S&N sprightly.

NYT : Ex-Goldman Trader Sentenced to 9 Months in Prison

Ex-Goldman Trader Sentenced to 9 Months in Prison

A federal judge in Manhattan on Friday sentenced Matthew Taylor, a former Goldman Sachs trader, to nine months in prison for covering up an $8.3 billion unauthorized trade at the firm.

In 2012, the Commodity Futures Trading Commission accused Mr. Taylor of hiding the trade to protect his year-end bonus of $1.5 million. Prosecutors said Mr. Taylor acted out of “greed and pride” and had sought a sentence of 33 to 41 months. Mr. Taylor’s trade cost Goldman $118 million, a figure he has been ordered to repay.

Mr. Taylor, who once earned seven figures on Wall Street, now cleans pools six days a week in Florida. Mr. Taylor, who was dressed in a dark suit and blue tie, apologized to the court, his wife, his two children and even Goldman for his conduct, adding that it was “painful beyond words” to be the source of distress to his loved ones.

Mr. Taylor, who graduated from the Massachusetts Institute of Technology, owned a home in the Hamptons by the time he was 28.

“In short, Mr. Taylor, you were, in the words of Tom Wolfe, ‘a master of the universe,’ ” the judge, William H. Pauley III, said.

The C.F.T.C. accused Mr. Taylor, who traded equity derivatives products in New York, of hiding the $8.3 billion position he had taken in electronic futures contracts tied to the Standard & Poor’s 500-stock index. Though his superiors had ordered him to reduce the risk on his trading book, he instead ratcheted up the position. To conceal the size of the position, he entered “multiple false entries” into a Goldman trading system, booking trades that he never actually made.

Goldman fired Mr. Taylor after learning about his cover-up and reported the unauthorized trades to authorities within days. The C.F.T.C. did not bring charges against Mr. Taylor until five years later, during which time he was able to get another job as a trader with Morgan Stanley.

Mr. Taylor left Morgan Stanley during the summer of 2012 and pleaded guilty to wire fraud earlier this year.

“This case presents a paradigm of everything that is wrong with Wall Street and the regulators that are charged with protecting the public,” the judge said. “So much for Goldman’s concern about the financial markets.”

Goldman said in a email statement that it notified the Financial Industry Regulatory Authority, the brokerage industry’s policing arm, about Mr. Taylor’s dismissal and made clear “that he was fired for misconduct related to ‘inappropriately large proprietary futures positions in a firm trading account.’”

In August, Mr. Taylor agreed to pay a $500,000 fine in a civil matter related to the criminal case. He had earlier been forced to to give up $3 million in deferred compensation when Goldman fired him.

Mr. Taylor is the second Wall Street trader to receive prison time in less than a month. In November, Kareem Serageldin, a former trader at Credit Suisse, was ordered to serve two and a half years for inflating the value of mortgage bonds as the housing market collapsed.

“Mr. Taylor accepts the judgment of the court,” Thomas C. Rotko, a lawyer for Mr. Taylor, told reporters outside of the courtroom. “We are pleased that the judge saw this matter as we did as an indictment in part of the regulatory system itself.”

NYT : Ex-SAC Trader Seeks to Use Cohen Testimony

Ex-SAC Trader Seeks to Use Cohen Testimony


Steven A. Cohen is not likely to testify at the insider trading trial of Mathew Martoma, a former trader at SAC Capital Advisors, but Mr. Martoma wants to use some of the testimony that the hedge fund’s owner gave in a related investigation.

Mr. Martoma is seeking to introduce deposition testimony that Mr. Cohen gave the Securities and Exchange Commission in May 2012 in an effort to show that the SAC Capital founder’s decision to make big trades in the shares of the drug companies Elan and Wyeth in 2008 was influenced more by the manager of another hedge fund than by Mr. Martoma.

The attempt by Mr. Martoma to use Mr. Cohen’s own words to prove his innocence could add an interesting wrinkle to the trial, scheduled to begin on Jan. 6 in the Federal District Court in Lower Manhattan. If the trial judge permits Mr. Martoma’s defense lawyers to introduce portions of Mr. Cohen’s deposition, it would make the billionaire investor a more critical figure in the trial, even though he is not expected to be called as a witness.

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Mr. Cohen sat for the S.E.C. deposition about six months before federal prosecutors charged Mr. Martoma with using inside information about a clinical drug trial to help SAC Capital avoid $276 million in losses in shares of the two companies. Authorities contend that Mr. Martoma, relying on nonpublic information from a doctor who was a consultant on the clinical trial for an experimental Alzheimer’s drug, recommended that SAC Capital sell a big stake it had in shares of Wyeth before the news of the drug trial became public.

But Mr. Martoma, in court papers filed late Friday, argues that Mr. Cohen’s deposition testimony rebuts the government’s allegation that his recommendation is what prompted Mr. Cohen and SAC Capital to sell its shares in Wyeth and to begin shorting, or betting against, the shares of Elan.

In the filing, Richard Strassberg, one of Mr. Martoma’s lawyers, contends that the “unrebutted sworn testimony of Mr. Cohen, SAC’s owner, makes clear that Mr. Martoma had nothing to do with that decision,” referring to the trading in shares of Wyeth. Mr. Strassberg also says that Mr. Cohen, in his deposition, largely credited Wayne Holman, a former SAC Capital trader who left to start his own hedge fund, with influencing his decision to initially put on a big trade in shares of Wyeth and then to get out of it in the summer of 2008.

“Mr. Cohen has testified that he made the decision to sell Wyeth securities in consultation with Mr. Holman (not Mr. Martoma), a former SAC health care portfolio manager,” Mr. Strassberg wrote.

The filing quotes a portion of Mr. Cohen’s deposition in which he describes Mr. Holman as “one of the great health care investors I have ever met and so I have a ton of respect for his work.”

At one point in the deposition, in response to a question from an S.E.C. lawyer, Mr. Cohen said that he had talked to Mr. Holman in July 2008 and learned that he had soured on Wyeth and was selling the stock.

Mr. Cohen also testified that he considered the trader a friend and that he and his wife socialized with Mr. Holman and his wife. SAC Capital also invested money with Mr. Holman’s fund, Ridgeback Capital Management, and Mr. Holman had a consulting agreement with SAC Capital.

A spokesman for Mr. Cohen did not immediately respond for comment. Mr. Holman, who has liquidated most of his fund’s holdings, according to the deposition, did not return a request for comment.

The move by Mr. Strassberg to introduce some of Mr. Cohen’s deposition comes as a close associate of Mr. Cohen’s, Michael Steinberg, is currently on trial on charges he used inside information while working at SAC Capital to make trades in shares of Dell and Nvidia. The Steinberg trial began just weeks after SAC Capital pleaded guilty to securities fraud charges and agreed to pay $1.2 billion to federal prosecutors and to stop managing money for outside investors.

A major witness against Mr. Steinberg, former SAC Capital analyst Jon Horvath, recently testified under cross-examination that he did not remember Mr. Steinberg ever explicitly telling him to get illegal inside information. Mr. Horvath also said that he did not recall telling Mr. Steinberg some of the information he was providing him to make trades was nonpublic corporate information.

Federal authorities have not criminally charged Mr. Cohen, but the S.E.C. has filed an administrative action against the highly successful trader, contending that he failed to properly supervise the employees at his firm.

Mr. Strassberg is asking the trial judge to either limit prosecutors from introducing evidence that Mr. Martoma played a role in SAC Capital’s decision to sell Wyeth shares, or to permit his client to counter that evidence with Mr. Cohen’s deposition.

Mr. Cohen’s lawyers have indicated that the billionaire investor will assert his constitutional right not to testify if he is called by either side, Mr. Strassberg noted in the court filing.

It’s not clear how the judge will rule on the lawyer’s request. But the filing is of interest because it provides the first extended glimpse into Mr. Cohen’s testimony before the S.E.C., which filed its own civil fraud charges against Mr. Martoma.

The portion of the deposition included in the court filing reveals that Mr. Cohen often answered questions by saying that he either couldn’t recall something or couldn’t remember. In the excerpt, Mr. Cohen credits both Mr. Martoma and Mr. Holman with convincing him of the merits of initially going into shares of Wyeth. He also testified that Mr. Martoma was initially bullish ion shares of Elan.

Mr. Cohen also said the decision to short shares of Elan was mainly to “hedge” what remained of the firm’s long position in Wyeth.

Here is how Mr. Cohen, for instance, testified before the S.E.C. on how his fund decided to invest in Wyeth:

Q: At the beginning of 2008, did SAC have an investment in Wyeth?

A: I believe so.

Q: In the beginning of 2008 were you bullish or bearish on Wyeth?

A. I was bullish based on the recommendation of Mat Martoma and Wayne Holman. And there may have been others that were bullish; I don’t remember.

FT : Unions gear up for fight over EADS’s defence arm shake-up

Unions gear up for fight over EADS’s defence arm shake-up

When Tom Enders launched EADS’s €36bn tie-up with Britain’s BAE Systems last year it was meant to unshackle the pan-European aerospace group from Franco-German political meddling and bolster its struggling defence business.
But after months of fraught discussions between Berlin, Paris, London and Toulouse, the deal collapsed and the EADS chief executive was forced to Plan B.

Having quickly persuaded Germany and France to reduce their stakes and interference in his business, Mr Enders has now reached Section 2 of Plan B: restructuring EADS’s defence and space subsidiaries.
Adjusting to Europe’s deep defence downturn without the help of the BAE tie-up will hurt, Mr Enders has warned. Unions are already gearing up for a fight, fearing he may cut as many as 9,000 of the defence unit’s 45,000 jobs.
This week he is expected to reveal just how painful the integration of Cassidium, Astrium and Airbus Military, under the renamed Airbus Military and Space organisation, will be and where the wounds will be deepest.
Union leaders are to be told details as early as Monday before the company’s top management figures gather in London on Wednesday for EADS’s annual meeting with institutional investors and analysts.
Cuts at EADS would hit hubs in Germany, France and Britain, with Spain largely spared because it had already been consolidated, one person close to the company said.
EADS is no longer going for growth in its defence business, which brings in €14bn of the company’s €56.5bn total sales. Instead, the focus is on improving profit margins, says Marwad Lahoud, its head of strategy.
The group’s profit margins severely lag behind those of its competitors. Margins at its Eurocopter helicopter division are 5 per cent, half those at AgustaWestland, its closest competitor.
At Astrium, EADS’s space business, they are 5.4 per cent, well below the comparable margins of Thales Alenia in Europe and Lockheed Martin and Boeing in the US. EADS’s lowest margins are at Cassidian, its defence business, much of which is in electronics. Last year, Cassidian’s margins were well below its peers at 2.5 per cent, suffering from writedowns and German budget cuts.
Cassidian’s margins look even thinner when its mature, high-margin joint ventures are taken out of the equation. These include MBDA, its missiles and weapons partnership with BAE of the UK and Italy’s Finmeccanica, Eurofighter, maker of the Typhoon fighter jet, and another joint business with the two MBDA partners.
“The rest of EADS’s defence business is much less profitable and may be lossmaking,” says Nick Cunningham, analyst at Agency Partners, noting that much of the group’s lowest-margin business is in Germany, a country that spends less than 1 per cent of GDP on defence. “As a defence company, you are much better off in the UK, France and even Italy in terms of government support.”
That is why Mr Enders pushed so hard for a tie-up with BAE and the restructuring plan he will lay out this week is a distant second choice strategy.
EADS has gone through years of restructuring and job cuts. Analysts and executives expect this latest round of cuts to be less drastic and smaller than the 20 per cent reductions that workers fear. However, concerns over the consolidation of EADS sites in east and west Munich and a handful of plants in Paris are likely to prove well founded, they say.
In late November, more than 20,000 EADS workers took to the streets in German cities from Manching to Hamburg and Bremen, to protest over the coming lay-offs and plant closures.
Rüdiger Lütjen, EADS’s European staff council, says the protests were a warning to EADS that its workers would not accept cuts or heavier burdens without a fight. “It is quite clear, there cannot be any mandatory redundancies . . . employment opportunities within the company must be secured for all colleagues.”
Leaders of IG Metall, the German union, are demanding there be no compulsory lay-offs and that affected workers be secured alternative jobs within the group, whose successful civil aerospace division contrasts with its troubles on the defence side.
Germany’s powerful unions represent one of the biggest potential stumbling blocks for EADS because the company needs their approval to make major changes.
Negotiations with the unions are expected to revolve around how best to achieve savings – from lay-offs to salary freezes – with executives warning that they could delay the process, but were unlikely to stop it.
The squeeze on government spending is so tight that Mr Enders and his peers expect Europe to develop no new significant pieces of defence equipment – such as a fighter jet or aircraft carrier – in the coming 10-15 years.
Nevertheless, the UK, France and Germany in particular are keen to maintain the capability to make critical weapons domestically, prompting them to keep a close watch on any lay-offs and plant closures at EADS and other defence suppliers.
EADS has discussed its plans with key politicians and does not expect it will be foiled by national interests. Nevertheless, Mr Enders has been wrongfooted by Angela Merkel, Germany’s chancellor, once before and, as with his unsuccessful BAE-tie up, politics is likely to play a crucial role in the success or otherwise of Plan B.

FT : New Novartis chairman rolls back Daniel Vasella’s practices

New Novartis chairman rolls back Daniel Vasella’s practices

The man who replaced Daniel Vasella as chairman of Novartis is rolling back many of the hands-on practices of his predecessor by curtailing his role at the Swiss pharmaceutical group and cutting the size of its board.
Jörg Reinhardt, who took over the helm of the world’s largest pharma group by sales in August, said that he had abolished two board subcommittees scrutinising deals and finance, and removed the directors’ influence over approval of the remuneration of several senior managers.

“We are giving greater responsibility to the executive management committee,” he told the Financial Times. “As chairman of the board . . . the most important is to make this step out of operational responsibilities to guidance and support,” he said.
The comments came after sharp investor criticism of the Novartis board at the start of this year in approving Mr Vasella’s proposed SFr72m six-year non-compete “golden handcuff” departure package, which was eventually scrapped.
Mr Vasella built Novartis over 17 years through bold acquisitions, and only split the roles of chairman and chief executive in 2010, when he offered the latter post to Joseph Jimenez while still retaining much operational influence.
Mr Reinhardt stressed that his own annual pay of SFr3.8m ($4.3m) – less than a third of Mr Vasella’s SFr13.1m last year – would include no stock options or performance-related element. “It helps you to be independent,” he said.
He also said the board would in future be shrunk from 14 to 12 members as existing directors retire, and Novartis was likely to seek individuals with commercial and emerging markets experience in its next round of recruitment.
The appointment of Mr Jimenez as CEO in 2010 triggered Mr Reinhardt’s departure as Novartis’s chief operating officer, and he took charge of Bayer HealthCare until Mr Vasella called to offer him the chairmanship early this year.
Mr Reinhardt avoided criticism of Mr Vasella and stressed he had “good relations” with Mr Jimenez. But since his return, he has overseen a strategic review that has already led to the sale of its diagnostics division, and could spark disposals of its consumer health and vaccines divisions. Mr Vasella recently cautioned against such divestments.
He said he was seeking to more tightly integrate its main three businesses – generic and patented drugs and eyecare – with new salary structures tied to performance of the entire group rather than individual divisions.
He said the board’s approval of remuneration contracts would in future be limited to those on the 11-strong executive management committee. “The idea is to clearly separate board from management responsibilities,” he said.
Mr Reinhardt said he had scrapped Mr Vasella’s “chairman’s committee” which approved all transactions valued at $50m-$500m, and its finance committee, “which wanted to be involved in operational aspects”.
However, in a sign of his own background in pharmacology and his commitment to innovative drugs, he has also created a new board committee for research and development.