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Slide 1
Dr Göran AndoChairman of Novo Nordisk A/S
Mexico City – part of Cities Changing Diabetes
Public Boards Perspective
Slide 2
What does a board do?
Public Board Perspective October 2015
Slide 3
We hire and fire the CEO
Public Board Perspective October 2015
Slide 4
Management
The board appoints management, supervises on performance and provides direction for the strategy
StrategyPerformance
Public Board Perspective October 2015
• Supervise the financial performance of the company
• Supervise the performance and integrity of Executive Management
• Participate in managing the company by providing direction to Executive Management
• Participate in determining the strategy for the company, and approve major business plans and decisions
• Ensure the right Executive Management of the company
• Ensure the right organisation of the company
Slide 5
• Being more international
• Having more sector competence
• Having more diverse and balanced competencies
• Having more balanced tenures
The diversity of boards is increasing and board members are moving toward …
Novo Nordisk also has a clear approach and guiding principles in order to increase
diversity
Diversity is an overarching trend in board work leading to more careful recruitment of new candidates
Public Board Perspective October 2015
Slide 6
• Six nationalities are represented on the board
• Five female and seven male board members
• Five of eight shareholder elected board members have a strong pharma background
• Three of eight shareholder elected board members have a strong US background
• Two of eight shareholder elected board members have profound financial expertise
… and the board has seen radical change over the past five years as just four members have been on the board for more than five years.
Novo Nordisk Board of DirectorsThe Novo Nordisk board
is diverse in multiple ways
The board of Novo Nordisk is diverse and has profound expertise in a number of key areas
Public Board Perspective October 2015
Slide 7Public Board Perspective October 2015
Boards are different throughout the world
United States United Kingdom Sweden Denmark
Chairman and CEO role often the same person
One tier board systemCEO frequently also
a board member
Nomination committee of major shareholders
Two tier board system
Slide 8
Characteristics of Danish ownership structureNovo Nordisk’s two tiered board structure
is common in Denmark
Danish companies are frequently foundation owned and governed through a two tier board structure
*The Chairmanship is directly elected by the annual general meeting
Public Board Perspective October 2015
• Foundation majority ownership is common
• Foundations can ensure sufficient “free float” to encourage other strong shareholders (if company is public)
• Foundations have controlling vote
• Pharmaceutical companies Novo Nordisk, Lundbeck and Leo Pharma are all foundation owned
• Foundation ownership represents an ideal ownership structure ensuring a long term focus and stability
Shareholders
Board of Directors
Executive Management
Organisation
Audit Committee
Chairmanship* NominationCommittee
Remuneration Committee
Slide 9
Note: Treasury shares are included in the capital but have no voting rights
Share structure The Novo Nordisk Foundation
Stable ownership structure - secured through A and B-share structure
Public Board Perspective October 2015
• The Novo Nordisk Foundation is a self-governing institution that:• provides a stable basis for Novo Nordisk• supports scientific, humanitarian and social purposes
• All strategic and operational matters are governed by the board and management of Novo Nordisk
• Overlapping board memberships ensure that the Novo Nordisk Foundation and Novo Nordisk share vision and strategy
• The Novo Nordisk Foundation has no right to divest
Novo Nordisk A/S
Novo Nordisk FoundationInstitutional and private
investorsNovo A/S
A shares537m shares
B shares2,063m shares
74.7% of votes27.0% of capital
25.3% of votes73.0% of capital
Slide 10
Global leader in diabetes care Global insulin market leadership
Novo Nordisk at a glance
Source: IMS MAT May 2015 volume figures
Public Board Perspective October 2015
R&D facilityManufacturingGlobal/regional headquarter
North America: Market share 37%
International Operations: Market share 55%
Japan & Korea: Market share 49%
Europe: Market share 47%
China: Market share 57%
Global insulin market share: 47%• A focused pharmaceutical company with leading positions
in diabetes, haemophilia and growth hormone
• Exclusively focused on proteins and peptides
• Double digit top line growth driven by diabetes pandemic
• Significant growth opportunities fuelled by global
presence and strong R&D pipeline
Slide 11
Share price development Annual cash return to shareholders
Novo Nordisk has offered an attractive shareholder return through share price increase and annual cash return
1 Based on improved outlook for free cash flow generation primarily related to partial divestment of NNITNote: Dividends are allocated to the year of dividend pay. For 2015 expected free cash flow is DKK 33-35 billion. Share repurchase programmes run for 12 months starting February until end January of the following year
Public Board Perspective October 2015
0
50
100
150
200
250
300
350
400
450
2000Market cap ~90bDKK
2014Market cap ~700bDKK
2015Market cap peak >1000bDKK
Share price in DKK
2000 2015 2011 2012 2013 2014 2015E0
5
10
15
20
25
30
35
6 8 10 12 13
1212
1415 15
2.5
DKK billion
Share repurchase DividendFree cash flow
Expanded share repurchase1
Slide 12
• 39,000 employees globally
• 15,000 employees in Denmark spread across Headquarters Research & Development Manufacturing
• 1,000-2,000 new employees added net per year
Source: Danske Bank, 8 September 2015
Nordic companies listed by market cap Novo Nordisk employee numbers
Company name Market cap (mDKK)
Novo Nordisk A/S 967,979
Hennes & Mauritz AB 422,303
Nordea Bank AB 319,380
Statoil ASA 316,496
ABB LTD-REG 293,753
AP Moeller-Maersk A/S 232,762
Ericsson LM 215,233
Danske Bank A/S 213,928
Telenor ASA 201,865
Atlas Copco AB 197,341
Novo Nordisk is the most valuable company in the Nordic region and among the largest employers
Public Board Perspective October 2015
Slide 13
• Likely not to exist as independent company
• Devastating effect on Danish life science
Source: www.novonordiskfonden.dk
Grants paid out by the Novo Nordisk Foundation
Large pharma M&A since 2000 – Novo Nordisk could have been a target if not for foundation
Foundation ownership has contributed to Danish life sciences and helped Novo Nordisk to remain independent
Source: Bloomberg
Public Board Perspective October 2015
2010 2014
mDKK
201320122011
Thematic grants
Humanitarian and social causes
Open competition grants YearAcquirer/
resultant companyTarget/Merging
companiesDeal type
Total value (bUSD)
2004 Sanofi Aventis Acquisition 73.5
2000 GlaxoSmithKlineSmithkline Beecham + Glaxo Wellcome
Merger 72.4
2002 Pfizer Pharmacia Acquisition 64.3
2009 Pfizer Wyeth Acquisition 64.2
2009 Merck & Co. Schering-Plough Acquisition 47.1
2008 Roche Genentech Acquisition 44.0
2014 Actavis Forest Laboratories Acquisition 20.7
2010 Sanofi Genzyme Acquisition 19.6
2006 Bayer Schering AG Acquisition 18.4
2001 Amgen Immunex Acquisition 16.8
Slide 14
Ways in which boards add value Pitfalls related to board work
Boards add value in many ways but should also beware of a number of pitfalls
>> • The board and executive management have different roles which should not be confused with one another
• The board may get a sanitized view of what is truly going on
• The board must be careful not to get too focused on the company alone rather than seeing it in the context of the external world
• The board should beware of not shifting its focus beyond strategy and not focus too much on execution
• Developing strategy and balancing the short and long-term
• Providing oversight and good governance
• Encouraging and challenging management
• Utilising broad experience among board members
• Ensuring timely succession planning and talent development
Public Board Perspective October 2015
Slide 15
• Skills needed at board changes
• Topics change
Board succession is a never ending topic
World is changing
Public Board Perspective October 2015
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