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Updated Jan 24 2012

Corporate Governance

The Novo Nordisk Foundation

The Novo Nordisk Foundation dates back to the 1920s when August
Krogh and H.C. Hagedorn established Nordisk Insulinlaboratorium and later
Nordisk Insulinfond, and the brothers Thorvald and Harald Pedersen established
Novo Terapeutisk Laboratorium (later Novo’s Fond).

The Novo Nordisk Foundation was founded in 1989 following a merger
of Novo’s Fond, Nordisk Insulinlaboratorium and Nordisk Insulinfond.

 

Legal framework

The Novo Nordisk Foundation is a Danish commercial foundation
which operates independently of any other interests than those described in the
Foundation’s objects.

The Foundation is governed by the Danish Foundation Act, for which
reason the Danish Ministry of Justice represented by the Danish Civil Affairs
Agency and the Danish Commerce and Companies Agency have oversight of the
Foundation.

 

Objective

The object of the Novo Nordisk Foundation is:

  1. to provide a stable basis for the commercial and research activities of Novo Nordisk A/S, which is engaged in research, development and production within and sale of pharmaceuticals and related products and services; of Novozymes A/S, which is engaged in carrying out research, development, production and trade within biological solutions; and of any future public or private limited companies in which the Foundation’s subsidiary, Novo A/S, may hold a material equity interest or over which Novo A/S may have material influence, whether through proxy or otherwise,
  2. to support physiological, endocrinological, metabolic and other medical research,
  3. to contribute to the preservation and operation of Novo Nordisk A/S’ research hospital activities, and furthermore  
  4. to support other scientific, humanitarian and social purposes.

Board of Directors

The Foundation is governed by a Board of Directors consisting of a total of nine members, of which six members are elected under the Articles of Association and three are employee-elected board members. The board members elected under the Articles of Association (of which two must have a medical or scientific background) are elected by the six members elected under the Articles of Association for one year at a time and
may be re-elected. The Board of Directors has prepared a competence profile describing the preferred competences for members of the Board. On the basis of the profile, the chairmanship presents a proposal for nomination of current and new board members to the Board of Directors. Ordinary election of board members takes place at an ordinary board meeting in April/May each year. The Articles of Association stipulate that board members resign at the end of the calendar year in which they reach the age of 70.

In addition, the Board of Directors consists of three employee representatives
elected by and among the employees of the subsidiaries of the Foundation, Novo Nordisk A/S and Novozymes A/S, in accordance with Danish law. Employee-elected board members serve for a four-year term and have the same rights, duties and responsibilities as board members elected under the Articles of Association.

 

The Board of Directors elects among its members a chairman and a deputy chairman at
the ordinary board meeting in April/May who constitute the chairmanship and who plan the board meetings.

The Board of Directors specifies the grant areas, grant types and financial terms for awarding grants. Within this framework, the Foundation involves the necessary expertise to ensure that each project is assessed on the basis of its quality, potential and feasibility as well as the applicant’s qualifications before a grant decision is made. To this end, the Foundation has established a number of committees consisting of experts of a high international standard, and the Foundation also uses external international experts.

 

The committees are elected for a period of three to five years. The members can be re-elected once.The two members with a medical or scientific background also function as chairmen of the Foundation’s permanent committees, i.e. the Committee on Medical and Natural Sciences Research and the Nordic Research Committee.

 

The Board of Directors holds at least four ordinary board meetings and a number of additional meetings where more strategic issues are discussed.

 

The Board of Directors determines and approves the board members’ remuneration for the preceding financial year at an ordinary board meeting in April/May where the group accounts are also considered. The Foundation’s remuneration policy is that the board members should receive a reasonable basic remuneration for their work on the Board of Directors. In 2010, the basic remuneration was DKK 166,666. The chairman of the Board receives twice the basic remuneration, while the deputy chairman receives 1.5 times the basic remuneration. The two scientific members receive a fee for their other duties, including as chairmen of the two committees, in addition to the basic directors’ remuneration.

 

In 2011, the Board of Directors of the Foundation decided in principle that the directors’ remuneration should be increase as from  2011. The basic remuneration for 2011 is thus DKK 208,333. The chairman is to receive three times the basic remuneration  corresponding to DKK 625,000, while the deputy chairman is to receive twice the basic remuneration corresponding to DKK 416,666.

 

Each year, the Board of Directors evaluates the work of the Board of Directors and the cooperation between the Board and the Executive Management in order to identify areas for improvement. The evaluation is facilitated by the chairmanship.

 

The framework for the work of the Board of Directors is laid down in the Board of Directors’ rules of procedure which are evaluated on a regular basis to ensure that they reflect the activities of the Foundation at all times.

 

The Novo Nordisk Foundation has established a CSR policy which covers the Foundation’s funding activities.

 

Executive Management

The day-to-day management of the Foundation is the responsibility of a managing director who is responsible for all operational matters of the Foundation and for implementing the policies and strategies adopted by the Board of Directors.

 

The Board of Directors of the Foundation approves the director’s employment based ona recommendation bythe chairmanship. The chairmanship is responsible for evaluating the managing director’s performance.

 

Audit

The accounts of the Foundation are audited by a state-authorised public accountant appointed by the Board of Directors of the Foundation based on recommendation by the chairmanship. The appointment of an auditor takes place each year at the ordinary board meeting in April/May where the group accounts are also approved.

 

Group structure

In 1999, the Novo Nordisk Foundation established a wholly-owned subsidiary, Novo A/S, through a contribution-in-kind in the subsidiary of a share of the Foundation’s bond portfolio. All A and B shares in Novo Nordisk A/S previously held by the Novo Nordisk Foundation were transferred to Novo A/S on 31 December 1999. Novo Nordisk A/S was in November 2000 demerged into two continuing companies, Novo Nordisk A/S and Novozymes A/S.

 

At the end of 2010, Novo A/S held 25.5% of the share capital in Novo Nordisk A/S and 71.5% of the votes in Novo Nordisk A/S. Similarly, Novo A/S held 25.5% of the share capital in Novozymes A/S and 70.1% of the votes in Novozymes A/S. The figures are exclusive of Novo Nordisk A/S’ and Novozymes A/S’ portfolios of own shares.

The Foundation’s shares in Novo A/S are non-negotiable instruments and may not be sold as long as the Foundation exists. By exercising the Foundation’s voting right in Novo A/S, the Board of Directors of the Foundation shall at all times:

  • hinder any capital increase in Novo A/S, by which the Foundation would 
    lose its majority of vote in Novo A/S
  • hinder any sale by Novo A/S of A shares in Novo Nordisk A/S and/or Novozymes A/S
  • ensure that all decisions made in Novo A/S are made in compliance with and respect of the provisions in the Foundation’s Articles of Association.

  

The Board of Directors shall ensure reasonable consolidation of the Foundation through suitable appropriation of funds, possibly in Novo A/S, inter alia to enable the Foundation to participate at the discretion of the Board of Directors, possibly through Novo A/S, in future capital increases of Novo Nordisk A/S and Novozymes A/S and thus maintain the controlling interest in these companies.

 

 

To the extent deemed necessary by the Board of Directors to uphold and develop the
commercial and research activities of the Novo Nordisk and Novozymes as internationally competitive businesses, the Foundation shall in connection with a capital increase in Novo Nordisk A/S and/or Novozymes A/S or in connection with, eg, a merger of said companies with other companies be entitled to waive its controlling interest in Novo Nordisk A/S
and/or Novozymes A/S. Notwithstanding the aforesaid, the Foundation shall strive to maintain material influence in Novo Nordisk A/S and/or Novozymes A/S through Novo A/S.

A/S.

 

Objects of Novo A/S

The objects of Novo A/S are to administrate the bonds contributed in Novo A/S by the Novo Nordisk Foundation, to administrate and exercise its voting rights on the A and B shares contributed in Novo A/S by the Novo Nordisk Foundation and issued by Novo Nordisk A/S and, furthermore, to administrate and exercise its voting rights on Novo A/S' A and B shares in Novozymes A/S and through this to ensure that the Novo Nordisk  Foundation receives a satisfactory financial return.

 

This object is to be reached through Novo A/S':

  • ensurance that all companies in which the company has a material influence actively contribute to the development of the Novo Group and operate their business in accordance with the visions and values of the Novo Group,
  • maintenance of a material influence in Novo Nordisk A/S and Novozymes A/S,
  • compliance with the rules and principles which are laid down in Articles 3 and 4 in the Articles of Association of the Novo Nordisk Foundation regarding exercise of the voting rights of A and B shares in Novo Nordisk A/S and Novozymes A/S, respectively, and
  • investment and financing business including placing of capital in companies and in real property domestically and abroad.

All operational and strategic matters in relation to such investment activities are the responsibility of and are handled by the Board of Directors of Novo A/S.

 

Exercise of ownership and voting policies

As Novo A/S is a wholly-owned subsidiary of the Novo Nordisk Foundation, the Board of Directors of the Novo Nordisk Foundation actually constitutes the annual general meeting of Novo A/S.

 

According to the Foundation’s Articles of Association, the Board of Directors of the Foundation shall strive to have members of the Board of Directors of the Novo Nordisk Foundation elected as members  of the Board of Directors of Novo A/S.

As part of the competence profile established for the Board, the Foundation strives to always have its chairman and deputy chairman elected as board members in Novo A/S.  

 

The exercise of ownership in Novo Nordisk A/S and Novozymes A/S is handled by Novo
A/S; however the Foundation will always be involved if decisions require the approval of the Foundation.

 

All operational and strategic matters in relation to Novo A/S, Novo Nordisk A/S and
Novozymes A/S, respectively, are the responsibility of and are handled by the
Board of Directors of Novo A/S, Novo Nordisk A/S and Novozymes A/S,
respectively.

 

May 2011