Voting Recommendations – Novartis Annual Meeting / 28 February 2019

Voting Recommendations – Novartis Annual Meeting / 28 February 2019

18. February 2019

Voting Recommendations

 

The Swiss Shareholders Association believes that changes are needed at the top level of Novartis to guarantee a positive future. Because of the nature of the Pharma industry, where we are dealing with the essence of human life, nothing less than the highest ethical standards should be tolerated. Anything less, and a groundswell of animosity will metastasize. Particularly heading to the 2020 USA elections, healthcare will be high on all the political party's agendas, and the last thing one needs is for Novartis to be singled out as the poster child of an industry that is facing increasing external pressures and scrutiny.

 

https://www.novartis.com/sites/www.novartis.com/files/2019-novartis-agm-notice.pdf

Agenda
Item
 Description Discussion
Vote
1
 Approval of the Operating and Financial Review of Novartis AG, the Financial Statements of Novartis AG and the Group Consolidated Financial Statements for the 2018 Financial Year Two issues: 1.) Payments to Michael Cohen / Donald Trump were, it appears, were premeditatedly intended to fly under the radar at $99'980 per month. These would not have been discovered but for the Stormy Daniels investigation.
As a result, Shareholders are insecure as to what other incorrect financial transactions are hidden in the Novartis books? Shareholders would still
like an explanation from Vasant Narasimhan for the $99'980 figure.
2.) PricewaterhouseCoopers either missed the Cohen / Trump in the previous years bookkeeping, or did not raise the issue. This creates a problem of trust in PricewaterhouseCoopers' audit of the Financials.
NO
2
 Discharge from Liability of the Members of the Board of Directors and the Executive Committee. One of the main purposes of the Board is to provide oversight. The track record over the past years has disappointed.
NO
3
 Appropriation of Available Earnings of Novartis AG as per Balance Sheet and Declaration of Dividend

YES
4
 Reduction of Share Capital Novartis Shares, despite the huge value of the repurchase remains fairly flat. Thus this vehicle seems not to function.
NO
5
 Further Share Repurchase Program of CHF 10 Billion There has been no noticible boost in the share price due to the Billions already used in previous Repurchase plans. CHF 10 Billion could be put to far better use invested in innovation, or even placing it into a trust to fight infectious diseases that affect the poorest people in the world.
NO
6
 Special Distribution by Way of a Dividend in Kind to Effect the Spin-off of Alcon Inc. Wording here is not optimal. It may have been cleaner to have an initial vote to preceed this to approve a spin off, before asking for a decision on the 5:1 distribution?
YES
7
 Votes on Compensation for the Members of the Board of Directors and the Executive Committee
7.1
 Binding Vote on the Maximum Aggregate Amount of Compensation for Members of the Board of Directors from the 2019 Annual General Meeting to the 2020 Annual General Meeting With the spin-off of Alcon, the Benchmark size of Novartis is reduced, and thus the compensation of the Members of the Board should decrease in proportion.
NO
7.2
 Binding Vote on the Maximum Aggregate Amount of Compensation for Members of the Executive Committee for the next Financial Year, i.e. 2020 With the spin-off of Alcon, the Benchmark size of Novartis is reduced, and thus the compensation of the Members of the Executive Committee should decrease in proportion. Any "performance" benefits obtained due to Share buy backs need to be decoupled and discounted from the Bonus system.
This agenda item looks like a copy/paste from the previous year.
NO
7.3
 Advisory Vote on the 2018 Compensation Report Only positive aspects introduced into the performance assessments. Failures of leadership in 2018 absent?
NO
8.1
 Re-election of Joerg Reinhardt, Ph.D., and re-election as Chairman of the Board of Directors (in a single vote) During Joerg Reinhardt's tenure there have been too many allegations of misbehavior against Novartis. Mr. Reinhardt and the board are tasked to provide Leadership and Oversight. The track record seems not positive in these primary objectives.
NO
8.2 Re-election of Nancy C. Andrews, M.D., Ph.D. Since 2015
YES
8.3 Re-election of Ton Buechner Since 2016
YES
8.4 Re-election of Srikant Datar, Ph.D. Since 2003: He should have been voted off already after being present at the time when the Board wanted to secretly give Daniel Vasella $72 million. Many other alleged scandals on his watch.
NO
8.5 Re-election of Elizabeth Doherty Since 2016
YES
8.6 Re-election of Ann Fudge Since 2008: She should have been voted off already after being present at the time when the Board wanted to secretly give Daniel Vasella $72 million.
Many other alleged scandals on her watch.
NO
8.7 Re-election of Frans van Houten Since 2017
YES
8.8 Re-election of Andreas von Planta, Ph.D. Since 2006: He should have been voted off already after being present at the time when the Board wanted to secretly give Daniel Vasella $72 million. Many other alleged scandals on his watch.
NO
8.9 Re-election of Charles L. Sawyers, M.D. Since 2013:
NO
8.10 Re-election of Enrico Vanni, Ph.D. Since 2011: He should have been voted off already after being present at the time when the Board wanted to secretly give Daniel Vasella $72 million. Many other alleged scandals on his watch.
NO
8.11 Re-election of William T. Winters Since 2013
NO
8.12
 Election of Patrice Bula We would like to understand his network & by who's invitation he is standing for election.
Abstain
9.1
 Re-election of Srikant Datar, Ph.D., as member of the Compensation Committee
NO
9.2
 Re-election of Ann Fudge as member of the Compensation Committee
NO
9.3
 Re-election of Enrico Vanni, Ph.D., as member of the Compensation Committee
NO
9.4
 Re-election of William T. Winters as member of the Compensation Committee
NO
9.5
 Election of Patrice Bula as member of the Compensation Committee
Abstain
10
 Re-election of the Statutory Auditor PricewaterhouseCoopers have been Auditors for Novartis for well on 2 decades. PWC as a consultancy
preaches good Corporate Governance. A cornerstone of modern Corporate Governance is Auditor company tenure. We look forward to PWC recusing themselves as auditor of Novartis so as not to appear hypocritical with respect to their own values. They are obviously cogniscant of the dangers and moral hazards
when there is no rotation of the Auditor.
NO
11
 Re-election of the Independent Proxy
YES

Board Re-Elections
Mr Vasella was vilified globally over CHF 72 million secret golden handshake in 2013. Interestingly members of the Novartis Board who allegedly must have
been the enablers behind the attempted payment, seem to have been exempt from accountability. Taking all the other issues into account, we cannot celebrate
this track record of the Board and believe a large restructuring and diversification of the board (including Employee and shareholder representatives) can only be
of benefit to the future of Novartis.

 

2019: 7.2) Binding Vote on the Maximum Aggregate Amount of Compensation for Members of the Executive Committee for the next Financial Year, i.e. 2020
The Board of Directors proposes that shareholders approve the maximum aggregate amount of compensation to be paid, promised or granted during, or in respect
of, 2020 to the members of the Executive Committee, i.e. CHF 92,000,000 (as further described in the enclosed brochure "Compensation Votes at the 2019
Annual General Meeting").

2018: 5.2) Binding Vote on the maximum aggregate amount of Compensation for Members of the Executive Committee for the next Financial Year, i.e. 2019
The Board of Directors proposes that shareholders approve the maximum aggregate amount of compensation to be paid, promised or granted during, or in respect
of, 2019 to the members of the Executive Committee, i.e. CHF 92,000,000 (as further described in the enclosed brochure “Compensation Votes at the 2018
Annual General Meeting”).