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rules of the New York Stock Exchange must be reported, does not have any influence
on the independence of either Professor Datar or Mr. William W. George, who became
a member of the faculty of Harvard Business School in 2004. Professor Zinkernagel
has been delegated to the Scientific Advisory Board of the Novartis Institute
for Tropical Diseases (NITD). He is also a delegate to the Board of Directors
of the Genomics Institute of the Novartis Research Foundation (GNF).
Novartis on a regular basis and in the ordinary course conducts business with
Barclays Capital, of which Hans-Joerg Rudloff is presently Chairman of the Executive
Committee. The Board of Directors concluded that pursuant to its independence
criteria this does not have any influence on the independence of Hans-Joerg Rudloff.
No Director is a member of a board of directors of a listed company with which
any Novartis Group company conducts a material amount of business.
TERM OF OFFICE The specific term of office for a Director
is determined by the shareholders at an Annual General Meeting on the occasion
of his or her election. The term of office shall not exceed three years. In order
to provide for continuity on the Board the terms of office have been coordinated
such that in each year approximately one third of all members of the Board shall
be subject to individual reelection or election. This is subject to the right
of the Annual General Meeting to remove Directors at any time. The average tenure
of our Directors is eight years and their average age is 62 years. In principle,
a Director is to retire after 12 years of service or the reaching of 70 years
of age. The shareholders may grant an exemption from this rule and reelect a member
of the Board of Directors for further terms of office of no more than three years
at a time.
CHAIRMAN AND CEO, VICE CHAIRMEN, LEAD
DIRECTOR Dr. Vasella has been elected by the Board
as its Chairman and also to serve as Chief Executive Officer of the Group. It
is the view of the Board that this dual role ensures effective leadership and
excellent communication between the shareholders, the Board and Management.
To ensure that the interests of the shareholders are well represented at the highest
possible level, the Board has appointed an | | independent
Lead Director, whose responsibilities include the supervision of an orderly process
in evaluating the performance of the Chairman and CEO, and to chair the Board’s
private sessions (i.e., the meetings of the Non-Executive Directors). The Lead
Director, as any other Board member, may request from the persons entrusted with
the management information about all matters concerning Novartis AG. In case of
a crisis, the Lead Director would assume leadership of the Independent Directors.
The Lead Director also is a member of all of the Committees of the Board.
ROLE AND FUNCTIONING OF THE BOARD The Board holds the
ultimate decision-making authority of Novartis AG for all matters except those
reserved by law to the shareholders. The agenda for
Board meetings is set by the Chairman. Any Board Member may request a Board meeting
or that an item be included on the agenda. Board Members are provided, in advance
of Board meetings, with adequate materials to prepare for the items on the agenda.
Decisions are taken by the Board as a whole, with the support of its four Committees
described below (Chairman’s Committee, Compensation Committee, Audit and Compliance
Committee, and Corporate Governance and Nomination Committee).
The primary functions of the Board are: | •
| Provide the strategic direction
of Novartis; | | • | Determination
of the organizational structure and the manner of governance of the company; | | •
| Overall supervision of the business
operations; | | • | Approval
of major acquisitions or divestments; | | •
| Structuring the accounting system,
setting financial targets and financial planning; | | •
| Appointing and dismissing members
of the Executive Committee and other key executives; | | •
| Promulgation of fundamental
corporate policies, in particular on financial matters, corporate governance and
citizenship, personnel or environmental matters; and overseeing compliance therewith;
| | • | Preparation
of the matters to be presented at the General Meeting, including the Novartis
AG financial statements and the Group’s consolidated financial statements. |
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