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Governance

Recommendations on foundation governance - March 2017

The Novo Nordisk Foundation uses the Recommendations on Foundation Governance of the Committee on Foundation Governance (www.godfondsledelse.dk) as a benchmark.

 

Recommendation

 

Compliance

1.1. It is recommended that the board of directors adopt guidelines for external communication, including who can make public statements on behalf of the foundation and on what matters. The guidelines should address the need for transparency and stakeholders’ needs and possibilities to obtain relevant up-to-date information about the circumstances of the foundation.

 

The Foundation complies with this recommendation.

The Board of Directors has decided who can make public statements on behalf of the Foundation and on what matters.

The Chair speaks on behalf of the Board of Directors about the Foundation’s corporate interests. The CEO speaks on behalf of the Foundation about the grant policies and strategies decided by the Board of Directors and about all operational matters related to the Foundation’s activities.

 

2.1.1. It is recommended that, in order to secure the activities of the commercial foundation in accordance with the purposes and interests of the foundation, at least once a year the board of directors take a position on the overall strategy and distribution policy of the foundation on the basis of the articles of association.

 

The Foundation complies with this recommendation.

The Board of Directors decides both the investment strategy and grant policy once each year. The Board of Directors also discusses how to implement the Foundation’s ongoing role as a stable basis for the operating companies.

 

2.2.1. It is recommended that the chairman of the board of directors organize, convene and chair meetings of the board of directors in order to ensure effective board work and to establish the best conditions for the work of the board members individually and collectively.

 

The Foundation complies with this recommendation.

The Chair and Vice Chair collaborate with the CEO in organizing meetings of the Board of Directors which, among other things, are based on an annual wheel and a regular chairmanship meeting before the call for each board meeting is sent out. The Chair leads these meetings.

2.2.2. It is recommended that if, in addition to the position as chairman, in exceptional circumstances, the chairman of the board of directors is requested to perform specific operating functions for the commercial foundation, a board resolution be passed which ensures that the board of directors retains its independent, overall management and control function. Appropriate allocation of responsibilities should be ensured between the chairman, the vice-chairman, the other members of the board of directors and the executive board, if any.

 

 

The Foundation complies with this recommendation.

The Chair and Vice Chair together comprise the Chairmanship and are responsible for organizing the work of the Board of Directors.

 

To the extent the Chair performs special tasks for the Foundation, the Board of Directors expects this will be authorized by a Board decision specifying the conditions to ensure that the Board retains its overall management and control function.

 

2.3.1. It is recommended that the board of directors regularly assess and stipulate the competences that the board of directors is to possess in order to perform the tasks incumbent upon the board of directors as well as possible.

 

 

The Foundation complies with this recommendation.

The competence profile prepared by the Board of Directors specifies the criteria and competence requirements the members should fulfil to optimally perform the tasks for which the Board of Directors is responsible.

 

2.3.2. It is recommended that, with due respect of any right in the articles of association to make appointments, the board of directors ensure a structured, thorough and transparent process for selection and nomination of candidates for the board of directors.

 

 

The Foundation complies with this recommendation.

The Chairmanship identifies and nominates prospective members of the Board of Directors. The Chairmanship presents a draft proposal for the process to the Board, keeps the Board informed of the status and presents the nominations for new members of the Board to the Board.

The procedure for electing members of the Board of Directors under the Articles of Association precludes any public authority, external provider of grant money and any similar organization from appointing a member.

 

2.3.3. It is recommended that members of the board of directors be appointed on the basis of their personal qualities and competences, taking into account the collective competences of the board and, when composing and nominating new members of the board, the need for introducing new talent be weighed against the need for continuity and the need for diversity be considered in relation to commercial and grant experience, age and gender.

 

The Foundation complies with this recommendation.

Members appointed under the Articles of Association are elected at the Board meeting in March based on a nomination submitted in writing by the Chairmanship. Members of the Board of Directors are elected based on their personal qualities and competences, considering the collective competences of the Board. Nominations consider the need for renewal, continuity and diversity.

 

2.3.4. It is recommended that, in the management review in the annual report and on the commercial foundation’s website, there be an account of the composition of the board of directors, including its diversity, and that the following information be provided on each board member:

  • the name and position of the member;
  • the age and gender of the member;
  • date of original appointment to the board, whether the member has been re-elected, and expiry of the current election period;
  • any special competences possessed by the member;
  • other managerial positions held by the member, including positions on executive boards, boards of directors and supervisory boards and board committees in Danish and foreign foundations, enterprises and institutions, as well as other demanding organization tasks;
  • whether the member has been appointed by authorities/providers of grants etc.; and
  • whether the member is considered independent.

 

 

The Foundation complies with this recommendation.

The Foundation’s website and 2015 annual report include information on the composition of the Board of Directors, including each member’s name, affiliation, age, date first elected to the Board, whether the member has been re-elected, date the current election period ends, other managerial positions held, special competences and whether the member is considered independent.

 

The procedure for electing members of the Board of Directors under the Articles of Association precludes any public authority, external provider of grant money and any similar organization from appointing a member.

 

 

2.3.5. It is recommended that the majority of the members of the board of directors of the commercial foundation not also be members of the board of directors or executive board of the foundation’s subsidiary or subsidiaries, unless it is a fully owned actual holding company.

 

 

The Foundation complies with this recommendation.

The majority of the members of the Board of Directors are not members of the executive boards of the Foundation’s subsidiaries: five of the nine members are not members of the board of directors of a subsidiary company.

Two members of the Foundation’s Board of Directors elected under the Articles of Association are members of the Board of Directors of Novo Holdings A/S. One of these is also a member of the Board of Directors of Xellia Pharmaceuticals A/S.

One employee-elected member of the Foundation’s Board of Directors is a member of the Board of Directors of Novo Nordisk A/S, and another employee-elected member of the Foundation’s Board of Directors is a member of the Board of Directors of Novozymes A/S.

 

2.4.1. It is recommended that an appropriate proportion of the board of directors be independent.

If the board of directors (excluding employee representatives) is composed of up to four members, at least one member should be independent. If the board of directors is composed of between five and eight members, at least two members should be independent. If the board of directors is composed of nine to eleven members, at least three members should be independent, and so on.

To be considered independent, this person may not:

 

The Foundation complies with this recommendation.

Four of the six members of the Board of Directors elected under the Articles of Association are considered independent.

 

  • be or within the past three years have been a member of the executive board or senior employee in the foundation or a subsidiary or associated company to the foundation;

 

Management: In the past 3 years, one member of the Board of Directors has been a member of the Executive Management or a senior employee of the Foundation or of one of the Foundation’s key subsidiaries or companies associated with the Foundation.

  • within the past five years have received larger emoluments, including distributions or other benefits from the foundation/group or a subsidiary or associated company to the foundation in another capacity than as a member of the board of directors or executive board of the foundation;

 

Emoluments: Two members of the board have received larger emoluments, including grants or other benefits from the Foundation or Foundation Group or from a subsidiary or a company associated with the Foundation in another capacity than as a member of the Foundation’s Board of Directors or Executive Management.

  • within the past year have had a significant business relationship (e.g. personal or indirectly as a partner or employee, shareholder, customer, supplier or member of the executive management of companies with corresponding connection) with the foundation/group or a subsidiary or associated company of the foundation;

 

Business relationships: Within the past year, no member of the Board of Directors has had a significant business relationship with the Foundation or Foundation Group or with a subsidiary or a company associated with the Foundation.

  • be or within the past three years have been employed or have been a partner of the external auditor;

 

External auditor: Within the past 3 years, no member of the Board of Directors has been employed or has been a partner of the external auditor.

  • have been a member of the board of directors or executive board of the foundation for more than 12 years;

 

Longevity: No one has been a member of the Foundation’s Board of Directors or Executive Management for more than 12 years.

  • be close relatives with persons who are not considered as independent;

 

Family: No member of the Board of Directors is a close relative or in other ways close to people who are not considered independent.

  • be the founder or a significant donor if the purpose of the foundation is to grant support to this person’s family or others who are especially close to this person; or

 

Donors: No member of the Board of Directors is a founder or a significant donor.

  • be a member of the management of an organization, another foundation or similar which receives or repeatedly within the past five years has received significant donations from the foundation.

 

Donations: No member of the Board of Directors is a member of the senior management in an organization, another foundation or similar that receives or repeatedly within the past 5 years has received significant donations from the Foundation.

2.5.1. It is recommended that members of the board of directors be appointed for a minimum period of two years and a maximum period of four years.

 

The Foundation does not comply with this recommendation.

The Foundation is governed by a Board of Directors with nine members, of which six are elected under the Articles of Association and three are employee-elected members.

The election period of the members of the Board elected in accordance with the Articles of Association is 1 year, which provides a good opportunity to coordinate the succession in the boards of the whole Novo Nordisk Foundation Group: both the operating companies and the Foundation’s committees.

The election period of the employee-elected members of the Board is 4 years.

 

2.5.2. It is recommended that an age limit for members of the board of directors be set which is published in the management review or on the foundation’s website.

 

The Foundation complies with this recommendation.

In accordance with the Articles of Association, Board members can be re-elected until they reach the age of 70 years.

 

2.6.1. It is recommended that the board of directors establish an evaluation procedure in which the board of directors, the chairman and the contributions and performance of individual members are evaluated annually and the result is discussed by the board of directors.

 

The Foundation complies with this recommendation.

Each year, the Board of Directors evaluates the Board’s work and the collaboration between the Board and the Executive Management. The Chairmanship facilitates the evaluation based on a questionnaire and discusses the results with the Board.

 

2.6.2. It is recommended that once a year the board of directors evaluate the work and performance of the executive board and/or the administrator (where relevant) in accordance with predefined clear criteria.

 

The Foundation complies with this recommendation.

The Board of Directors evaluates the Executive Management as part of the evaluation procedure.

3.1. It is recommended that the members of the board of directors of commercial foundations be remunerated with a fixed remuneration and that members of a possible executive board be remunerated with a fixed remuneration, possibly combined with a bonus which should not be dependent upon accounting results. The remuneration should reflect the work and responsibilities consequential to the position.

 

The Foundation complies with this recommendation.

Members of the Board of Directors receive a fixed remuneration and are also remunerated for additional work: for example, as committee members. The remuneration Board members receive does not vary.

 

The CEO receives fixed remuneration and a bonus for achieving previously agreed annual targets. These targets do not depend on the financial results. The remuneration reflects the work and responsibilities consequential to the position.

 

3.2. It is recommended that the annual report provide information about the full remuneration received by each member of the board of directors and executive board (if relevant) from the commercial foundation and from other enterprises in the group. Furthermore, there should be information on any other remuneration which members of the board of directors, except for employee representatives, have received for performing tasks for the foundation, subsidiaries of the foundation or enterprises in the same group as the foundation.

 

The Foundation complies with this recommendation.

The annual report provides information about the full remuneration received by the individual members of the Board of Directors and by the CEO from the Foundation, its subsidiaries and companies connected with the Foundation except for information about the remuneration received by the employee-elected members of the Board.

 

 

Last updated on May 10, 2016 by JxpL