Annual Report 2007 - Novo Nordisk

Shareholder information Corporate governance and executive remuneration
egy-setting and financial and managerial supervision of the company. It
also reviews the fixed asset investment portfolio. Other tasks include
recommending the remuneration of directors and executives and suggesting
candidates for election by the general meeting. In practice, the
Chairmanship has the role and responsibility of a nomination committee
and a remuneration committee.
Audit Committee
The Audit Committee has three members elected by the Board from
among its members. All members qualify as independent as defined
by the US Securities and Exchange Commission (SEC). One member is
designated as chairman and two members are designated as Audit
Committee financial experts. One member is not regarded as independent
under the Danish Corporate Governance Recommendations.
In 2007, the Audit Committee held four meetings and all members participated
in all meetings.
The Audit Committee assists the Board with oversight of a) the
external auditor, b) the internal auditors, c) the procedure for handling
complaints regarding accounting, internal controls, auditing or financial
reporting matters (‘whistleblower function’), d) the accounting policies
and e) internal controls systems. The Audit Committee also undertakes
a post-completion review of fixed asset investments previously approved
by the Board.
Executive Management
Executive Management is responsible for the day-to-day management
of the company. It consists of the president and chief executive officer,
and four other executives (see p 48).
Executive Management’s responsibilities include organisation of the
company as well as allocation of resources, determination and implementation
of strategies and policies, direction-setting and ensuring
timely reporting and provision of information to the Board and the
stakeholders of Novo Nordisk. Executive Management meets regularly
and at least once a month. The Board appoints Executive Management
and determines its remuneration. The Chairmanship reviews the performance
of the executives. As part of the Organisational Audit process
the Chairmanship identifies successors to executives and presents the
names of such candidates to the Board for approval.
Assurance
External audit and assurance The annual report and the internal
executive
remuneration
Novo Nordisk’s remuneration policy for its Board of Directors and
Executive Management covers both fixed and incentive-based
payment. It aims to attract, retain and motivate board members
and executives.
Remuneration levels are designed to be competitive and to align the interests
of the board members and executives with those of the shareholders.
In light of recent changes in Danish legislation, Novo Nordisk
will present its guidelines for incentive-based remuneration for approval
at the Annual General Meeting 2008.
Board members
Remuneration of the Board of Directors is aligned with other major
Danish companies, and the Board regularly reviews board fees based
on recommendations from the Chairmanship. See board members’
fees for the year 2007 on p 81.
The remuneration of the board members is approved by the annual
general meeting in connection with the approval of the annual report.
Changes in the board fees will be announced at a general meeting in
advance of being presented for approval.
Each board member receives a fixed fee per year. Ordinary board
members receive a fixed amount (the base fee) while the Chairmanship
receives a multiplier thereof: the chairman receives 2.5 times the base
fee and the vice-chairman 1.5 times.
Service on the Audit Committee entitles members to additional payment:
the Audit Committee chairman receives 1.25 times the base fee
and Audit Committee members receive 0.5 times.
Individual board members may take on specific ad hoc tasks outside
the normal duties assigned by the Board. In such cases the Board determines
a fixed fee for the work.
Expenses, such as travel and accommodation in relation to board
meetings as well as relevant training, are reimbursed. Board members
are not offered stock options, warrants or other incentive schemes.
Executives
Executive remuneration is proposed by the Chairmanship and subsequently
approved by the Board. See executive pay for 2007 on p 81.
Levels are evaluated annually against a Danish benchmark of large
companies with international activities. This information is supplemented
by information on remuneration levels for similar positions in
the international pharmaceutical industry. To ensure comparability, executive
positions are evaluated in accordance with an international position
evaluation system which, among other parameters, includes and
reflects the development of the company size measured in terms of
company revenue and number of employees.
The remuneration package consists of a fixed base salary, a shortterm
cash bonus, a long-term share-based incentive, pensions and
non-monetary benefits. For executives being expatriated at the request
of the company, the remuneration package is based on current Danish
remuneration levels, including pension entitlements, while a specific
expatriation package is added for the period of expatriation.
The short-term incentive programme may result in a maximum
payout per year equal to four months’ fixed base salary plus pension
contribution. The long-term incentive programme may result in a maximum
grant per year equal to eight months’ fixed base salary plus pension
contribution. Consequently, the aggregate maximum amount that
may be granted as incentives for a given year is equal to 12 months’
base salary plus pension contribution.
Fixed base salary
The fixed base salary for each executive accounts for between 40% and
60% of the total value of the remuneration package.
Short-term incentive programme
The short-term incentive programme consists of a cash bonus that is
linked to the achievement of a number of predefined functional and in-
44 Novo Nordisk Annual Report 2007