The Remuneration Committee

The Remuneration Committee consists of up to five members elected by the Board from among its members. One member is designated as chair and one member is an employee representative.

The Board of Directors has in March 2020 elected the following members to the Remuneration Committee:


Roles and responsibilities

The Remuneration Committee assists the Board with oversight of a) the remuneration policy for the members of the Board of Directors and Executive Management, including guidelines on incentive pay to Executive Management in the company referred to as "The policy for remuneration of Board members and executives in Novo Nordisk A/S ("Remuneration Policy")”, b) the remuneration of the members of the Board of Directors and its committees, c) the remuneration of the members of Executive Management, and d) other tasks on an ad hoc basis as specifically decided by the Board.


Independence

The Remuneration Committee consists of two non-independent members, including the chair, and two independent members pursuant to the Danish Corporate Governance Recommendations. One member is an employee representative. According to the Danish Corporate Governance Recommendations a majority of the members of a board committee should qualify as independent. Hence, the composition of the Remuneration Committee does not conform to the Danish Corporate Governance Recommendations. This is due to the fact that the Board of Directors finds that the composition of the Remuneration Committee allows for a member from the Chairmanship who is a representative of the main shareholder and an employee representative, who both qualify as non-independent Board members, being on the Remuneration Committee while maintaining an operational structure of the Remuneration Committee with relative few members.


Attendance

The Remuneration Committee conducted five meetings in 2019. All Remuneration Committee members attended all committee meetings within the member’s term in 2019. Please refer to the Annual Report 2019 on p. 39 for a detailed attendance overview.


Remuneration Committee Report for 2019

The Remuneration Committee works according to an Annual Work Plan with fixed agenda items. In addition, the Remuneration Committee meets when developments require additional meetings.

In 2019 the Remuneration Committee met five times and dealt with the following matters:

 

Remuneration of the members of the Board of Directors and its committees

  • Reviewed Danish, Nordic and European Benchmark Data on Board and Board Committee remuneration and recommended to the Board the remuneration levels, multiples and allowances for 2020 to be approved by the Annual General Meeting.
  • Reviewed Group Internal Audit’s report on Board remuneration.

 

Remuneration of the members of Executive Management

  • Reviewed the inclusion criteria for the peer group in the Nordic and European benchmark and endorsed changes therein.
  • Reviewed Nordic and European Benchmark Data on executive remuneration
  • Undertook a general review of executive remuneration, reviewed feedback from investors on executive remuneration and recommended to the Board changes to the executive remuneration such as base salary, pension, short-term cash-based incentive program, long-term share-based incentive program, shareholdings requirements etc.
  • Recommended to the Board changes in remuneration in 2019 and as well as the general remuneration level for 2020.
  • Reviewed the short-term cash-based incentive programme for the Executive Management and recommended to the Board the structure for 2020.
  • Reviewed the long-term share-based incentive programme for the Executive Management and recommended to the Board the structure for 2020.
  • Reviewed the shareholding requirements for executives as well as the executives’ adherence to the shareholding requirements.
  • Reviewed Group Internal Audit’s report on executive remuneration.

 

Remuneration Policy for the members of the Board of Directors and Executive Management

  • Reviewed and recommended to the Board changes to a new Remuneration Policy in light of the general review of the executive remuneration and the requirements in the Shareholders Rights Directive to be approved by the Annual General Meeting.

 

Reporting on Remuneration

  • Undertook the development of a new separate Remuneration Report to further enhance transparency in remuneration reporting and to align with future requirements in the Shareholder Rights Directive for comparison purposes.

 

Remuneration Committee matters and governance

  • Endorsed the Annual Work Plan for 2020.
  • Conducted a self-assessment including a review of the Remuneration Committee Charter.
  • Conducted private meetings without the assigned executive being present.
  • Endorsed the report on the Remuneration Committee’s activities.

 

Special focus areas

  • Remuneration of executives – general review of executive remuneration, incl. base salary, pension, short-term cash-based incentive program, long-term share-based incentive program, shareholding requirement etc.
  • Remuneration Policy – development of new Remuneration Policy to be approved by the Annual General Meeting.
  • Remuneration Report – development of new separate Remuneration Report to be presented to the Annual General Meeting.