| | Novartis
is fully committed to good corporate governance. The following
standards apply to us: | • | The
Directive on Information Relating to Corporate Governance issued by the SWX Swiss
Exchange, which entered into force on July 1, 2002; | | • | The
Swiss Code of Best Practices for Corporate Governance; | | • | The
securities laws of the United States of America as these apply to foreign issuers
of securities listed on major US stock exchanges; and | | • | The
Rules of the New York Stock Exchange (NYSE). |
We fully comply with each of these standards except that, as permitted under US
law and the rules of the NYSE, Novartis continues to apply Swiss (home country)
practices in these areas: | • | Swiss
law requires that the external auditors of Novartis be appointed by the shareholders
at the Annual General Meeting and not by the Audit and Compliance Committee, as
required in the US. | | • | Equity
compensation plans are not approved at the Annual General Meeting but are promulgated
by the Compensation Committee, or the management committee of the local Novartis
Group company. All such plans are established within the policies and programs
approved by the Compensation Committee of the Board of Directors of Novartis AG. | | • | In
accordance with Swiss law, Board Committees do not report to the shareholders
directly (we issue no proxy statement reports) but submit all their reports to
the Board of Directors. |
We have incorporated
the above standards – and the principles of corporate governance under the Swiss
Code of Obligations – into our Articles of Incorporation, the Regulations of the
Board and the Charters of the Board Committees. The Board’s Corporate Governance
and Nomination Committees review these standards and principles regularly in the
light of prevailing best practices and forwards suggestions for improvement to
the full Board for approval. | | Copies
of the aforementioned regulations and references to further information relating
to Corporate Governance can be ordered in print from Novartis AG, attn. Corporate
Secretary, Bruno Heynen, CH-4056 Basel, Switzerland. Further information on Corporate
Governance can be found on page 109 of this Annual Report or by visiting: www.novartis.com/investors/en/corporate_governance
GROUP STRUCTURE Novartis AG, a holding company organized
under Swiss law, owns directly or indirectly all companies worldwide belonging
to the Novartis Group. Novartis AG shares are listed
on the SWX Swiss Stock Exchange and traded on Virt-X (Valor No. 001200526, ISIN
CH0012005267, symbol: NOVN.VX) and on the New York Stock Exchange (NYSE) in the
form of American Depositary Shares (ADS) (Valor No. 567514, ISIN US66987V1098,
symbol: NVS). The Novartis Group is divided operationally
into three Divisions: Pharmaceuticals, Sandoz (generic pharmaceuticals) and Consumer
Health. The Pharmaceuticals Division is comprised
of Business Units responsible for the marketing and sales of pharmaceutical products.
These Business Units have common long-term economic perspectives, common customers,
common research and development activities, production and distribution practices,
and a common regulatory environment. As a result, their financial data is not
required to be separately disclosed. Sandoz is organized
as a Retail Generics business which also operates an Anti-Infectives business.
The five Business Units of the Consumer Health Division
are: Over-the-Counter self-medication (OTC), Animal Health, Medical Nutrition,
Gerber and CIBA Vision. The business operations are
conducted through local Novartis Group companies. The most important Novartis
subsidiaries and associated companies are listed in Note 33 to the Group’s consolidated
financial statements. There are two Novartis affiliated
companies whose shares are traded on public stock exchanges. These are: | • | Novartis
owns directly and indirectly 56.1% of Idenix Pharmaceuticals, Inc. (a US company).
The shares of Idenix Pharma- |
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