Recommendations on Foundation Governance

2018

2017

	Recommendations	Lundbeckfonden
1.1	It is recommended that the board of directors adopt guidelines for external communication,  including who can make public statements on behalf of the foundation and on what matters. The guidelines should address the need for transparency and stakeholders' needs and possibilities to obtain relevant up-to-date information about the circumstances of the foundation.	We comply The Board has defined an external communication policy, which sets out who can make public statements on behalf of Lundbeckfonden and on what matters. The CEO defines the general framework and goals for communication and make statements on behalf of the Foundation. This responsibility may be delegated to the Director of Communications or relevant members of the management team. All media enquiries to the Board are referred to the Chairman, who speaks on behalf of the Board.
2.1.1	It is recommended that, to secure the activities of the commercial foundation in accordance with the purposes and interests of the foundation, at least once a year the board of directors take a position on the overall strategy and distribution policy of the foundation based on the articles of association.	We comply At the annual strategy seminar, the Board takes a position on the overall strategy and grant policy of Lundbeckfonden.
2.2.1	It is recommended that the chairman of the board of directors organise, convene and chair meetings of the board of directors to ensure effective board work and to establish the best conditions for the work of the board members individually and collectively.	We comply The Chairman plans all board meetings in close collaboration with the CEO. It is the Chairman’s responsibility to convene, organise and chair board meetings.
2.2.2	It is recommended that if, in addition to the position as chairman, in exceptional circumstances, the chairman of the board of directors is requested to perform specific operating functions for the commercial foundation, a board resolution be passed which ensures that the board of directors retains its independent, overall management and control function. Appropriate allocation of responsibilities should be ensured between the chairman, the vice-chairman, the other members of the board of directors and the executive board, if any.	We comply The Chairman is responsible for organising Lundbeckfonden’s board work. If, in exceptional circumstances, the Chairman is requested to perform specific operating functions, the Board expects this to take place because of a board decision, which specifically ensures appropriate allocation of  responsibilities between the Chairman and the other members of the Board and management.
2.3.1	It is recommended that the board of directors regularly assess and stipulate the competences that the board of directors is to possess to perform the tasks incumbent upon the board of directors as well as possible.	We comply The Board regularly assesses and stipulates the skills required by the Board of Directors to perform the tasks that the Board carries out.
2.3.2	It is recommended that, with due respect of any right in the articles of association to make  appointments, the board of directors ensures a structured, thorough and transparent process for selection and nomination of candidates for the  board of directors.	We comply The Board is a self-perpetuating entity that selects and supplements members in accordance with the statutes. The Chairman and Vice Chairman typically nominate new members for the Board. In circumstances in which specific research skills are required, nomination takes place in collaboration with the Chairman of the Foundation’s Research and Prize committee. External advisors are usually called in to assist with the selection process.
2.3.3	It is recommended that members of the board of directors are appointed based on their personal qualities and competences considering the collective competences of the board and when composing and nominating new members of the board the need for introducing new talent is weighed against the need for continuity and the need for diversity is considered in relation to commercial and grants experience, age and gender.	We comply The Board is composed such that the combined knowledge and experience of its members ensures the fulfilment of Lundbeckfonden’s objectives, as specified in the statutes.
2.3.4	It is recommended that in the management review in the annual report and on the commercial foundation's website, there is an account of the composition of the board of directors, including its diversity, and that the following information is provided on each board member: the name and position of the member, the age and gender of the member, date of original appointment to the board whether the member has been re-elected, and expiry of the current election period, any special competences possessed by the member, other managerial positions held by the member, including positions on  executive boards, boards of directors and supervisory boards and board committees in Danish and foreign foundations, enterprises and institutions, as well as other demanding organisation tasks, whether the member has been appointed by authorities/providers of grants etc., and whether the member is considered independent.	We comply An overview of the composition of the Board of Directors is presented in the Management Report 2018 and on Lundbeckfonden’s website. No authority or similar body has the power to appoint members to the Board.
2.3.5	It is recommended that the majority of the members of the board of directors of the commercial foundation are not also members of the board of directors or executive board of the foundation's subsidiary(ies), unless it is a fully owned actual holding company.	We comply The majority of the members of Lundbeckfonden’s Board are not also members of the boards of our subsidiaries, just as the Board is not represented on the executive management teams of the subsidiaries. The Foundation is represented by two members on the boards of our subsidiaries. One of these members is our CEO, who serves as Vice Chairman on these boards. The other representative is a member of the Foundation’s Board. Our Chairman is not a member of the boards of our subsidiaries.
2.4.1	It is recommended that an appropriate proportion of the board of directors be independent. If the board of directors (excluding employee representatives) is composed of up to four members, at least one member should be independent. If the board of directors is composed of between five and eight members, at least two members should be independent. If the board of directors is composed of nine to eleven members, at least three members should be independent, and so on. To be considered independent, this person may not: be or within the past three years have been member of the executive board, or senior employee in the foundation, or a subsidiary or associated company to the foundation, within the past five years have received larger emoluments, including distributions or other benefits from the foundation/group or a subsidiary or associated company to the foundation in other capacity than as member of the board of directors or executive board of the foundation, within the past year have had a significant business relationship (e.g. personal or indirectly as partner or employee, shareholder, customer, supplier or member of the executive management of companies with corresponding connection) with the foundation/group or a subsidiary or associated company of the foundation, be or within the past three years have been employed or partner at the  external auditor, have been a member of the board of directors or executive board of the foundation for more than 12 years, have close relatives with persons who are not considered as independent, is the founder or a significant donor if the purpose of the foundation is to grant support to this person's family or others who are especially close to this person, or a member of the management of an organisation, another foundation or similar, which receives or repeatedly within the past five years have  received significant donations from the foundation.	We comply The Board consists of 11 members, of which seven are elected according to the statues and four are employee-elected representatives appointed by Group employees. Six of the seven statute-elected board members are considered independent – as one board member received a research grant from the Foundation in 2015 before being elected to the board. According to our Rules of Procedure, no present or former senior employees of neither the Foundation nor of its subsidiaries can become members of Lundbeckfonden’s Board.
2.5.1	It is recommended that members of the board of directors be appointed for a minimum  period of two years and a maximum period of four years.	We explain Lundbeckfonden has chosen a shorter election period. According to the statutes, a board member is elected for one year at a time – adopting best practice from listed companies. This allows for regular evaluation of a member’s performance. No member who has been a member of the Board for more than 12 years can be re-elected. The Board may deviate from this rule if the Board’s competence profile dictates it. The decision to do so is always made by the Board.
2.5.2	It is recommended that an age limit for members of the board of directors be set, which is published in the management review or on the foundation's website.	We comply Members of the Board who have turned 75 years of age may not be elected or re-elected to the Board. The Board may deviate from this rule if the Board’s competence profile dictates it. The decision to do so is always made by the Board.
2.6.1	It is recommended that the board of directors establish an evaluation procedure in which the board of directors, the chairman and the contributions and performance of individual members are evaluated annually and the result is discussed by the board of directors.	We comply The Board performs an annual self-assessment.
2.6.2	It is recommended that once a year the board of directors evaluate the work and performance of the executive board and/or the administrator (where relevant) in accordance with predefined clear criteria.	We comply The work and performance of the management team is assessed as part of the annual self-assessment of the Board.
3.1	It is recommended that the members of the board of directors of commercial foundations be  remunerated with a fixed remuneration and that members of a possible executive board be remunerated with a fixed remuneration, possibly combined with a bonus which should not be dependent upon accounting results. The remuneration should reflect the work and responsibilities consequential to the position.	We comply Members of the Board and the CEO are remunerated by a fixed fee. This fee does not depend on the financial results of the subsidiaries nor on our other investment activities. In addition, the CEO has a bonus potential which is not dependent on the accounting result of the Foundation. Members of our research and investment committees – as well as the board members of our subsidiaries – receive an additional fee in proportion to their workload.
3.2	It is recommended that the annual financial statements provide information about the full  remuneration received by each member of the board of directors and executive board (if relevant) from the commercial foundation and from other  enterprises in the group. Furthermore, there should be information on any other remuneration which members of the board of directors, except for  employee representatives, have received for performing tasks for the foundation, subsidiaries of the foundation or enterprises in the same group as the foundation.	We comply Information on the total sum paid in remuneration to members of the Board and the CEO is specified in Lundbeckfonden’s Annual Report 2018.

	Recommendations	Lundbeckfonden
1.1	It is recommended that the board of directors adopt guidelines for external communication,  including who can make public statements on behalf of the foundation and on what matters. The guidelines should address the need for transparency and stakeholders' needs and possibilities to obtain relevant up-to-date information about the circumstances of the foundation.	We comply The Board has defined an external communication policy, which sets out who can make public statements on behalf of Lundbeckfonden and on what matters. The CEO defines the general framework and goals for communication and make statements on behalf of the Foundation. This responsibility may be delegated to the Director of Communications or relevant members of the management team. All media enquiries to the Board are referred to the Chairman, who speaks on behalf of the Board.
2.1.1	It is recommended that, to secure the activities of the commercial foundation in accordance with the purposes and interests of the foundation, at least once a year the board of directors take a position on the overall strategy and distribution policy of the foundation based on the articles of association.	We comply At the annual strategy seminar, the Board takes a position on the overall strategy and grant policy of Lundbeckfonden.
2.2.1	It is recommended that the chairman of the board of directors organise, convene and chair meetings of the board of directors to ensure effective board work and to establish the best conditions for the work of the board members individually and collectively.	We comply The Chairman plans all board meetings in close collaboration with the CEO. It is the Chairman’s responsibility to convene, organise and chair board meetings.
2.2.2	It is recommended that if, in addition to the position as chairman, in exceptional circumstances, the chairman of the board of directors is requested to perform specific operating functions for the commercial foundation, a board resolution be passed which ensures that the board of directors retains its independent, overall management and control function. Appropriate allocation of responsibilities should be ensured between the chairman, the vice-chairman, the other members of the board of directors and the executive board, if any.	We comply The Chairman is responsible for organising Lundbeckfonden’s board work. If, in exceptional circumstances, the Chairman is requested to perform specific operating functions, the Board expects this to take place because of a board decision, which specifically ensures appropriate allocation of  responsibilities between the Chairman and the other members of the Board and management.
2.3.1	It is recommended that the board of directors regularly assess and stipulate the competences that the board of directors is to possess to perform the tasks incumbent upon the board of directors as well as possible.	We comply The Board regularly assesses and stipulates the skills required by the Board of Directors to perform the tasks that the Board carries out.
2.3.2	It is recommended that, with due respect of any right in the articles of association to make  appointments, the board of directors ensures a structured, thorough and transparent process for selection and nomination of candidates for the  board of directors.	We comply The Board is a self-perpetuating entity that selects and supplements members in accordance with the statutes. The Chairman and Vice Chairman typically nominate new members for the Board. In circumstances in which specific research skills are required, nomination takes place in collaboration with the Chairman of the Foundation’s Research and Prize committee. External advisors are usually called in to assist with the selection process.
2.3.3	It is recommended that members of the board of directors are appointed based on their personal qualities and competences considering the collective competences of the board and when composing and nominating new members of the board the need for introducing new talent is weighed against the need for continuity and the need for diversity is considered in relation to commercial and grants experience, age and gender.	We comply The Board is composed such that the combined knowledge and experience of its members ensures the fulfilment of Lundbeckfonden’s objectives, as specified in the statutes.
2.3.5	It is recommended that the majority of the members of the board of directors of the commercial foundation are not also members of the board of directors or executive board of the foundation's subsidiary(ies), unless it is a fully owned actual holding company.	We comply The majority of the members of Lundbeckfonden’s Board are not also members of the boards of our subsidiaries, just as the Board is not represented on the executive management teams of the subsidiaries. The Foundation is represented by two members on the boards of our subsidiaries. One of these members is our CEO, who serves as Vice Chairman on these boards. The other representative is a member of the Foundation’s Board. Our Chairman is not a member of the boards of our subsidiaries.
2.4.1	It is recommended that an appropriate proportion of the board of directors be independent. If the board of directors (excluding employee representatives) is composed of up to four members, at least one member should be independent. If the board of directors is composed of between five and eight members, at least two members should be independent. If the board of directors is composed of nine to eleven members, at least three members should be independent, and so on. To be considered independent, this person may not: be or within the past three years have been member of the executive board, or senior employee in the foundation, or a subsidiary or associated company to the foundation, within the past five years have received larger emoluments, including distributions or other benefits from the foundation/group or a subsidiary or associated company to the foundation in other capacity than as member of the board of directors or executive board of the foundation, within the past year have had a significant business relationship (e.g. personal or indirectly as partner or employee, shareholder, customer, supplier or member of the executive management of companies with corresponding connection) with the foundation/group or a subsidiary or associated company of the foundation, be or within the past three years have been employed or partner at the external auditor, have been a member of the board of directors or executive board of the foundation for more than 12 years, have close relatives with persons who are not considered as independent, is the founder or a significant donor if the purpose of the foundation is to grant support to this person's family or others who are especially close to this person, or a member of the management of an organisation, another foundation or similar, which receives or repeatedly within the past five years have received significant donations from the foundation.	We comply The Board consists of 10 members, of which seven are elected according to the statutes and three are employee-elected representatives appointed by Group employees. Six of the seven statute-elected board members are considered independent – as one board member received a research grant from the Foundation in 2015 before being elected to the board. According to our Rules of Procedure, no present or former senior employees of neither the foundation nor of its subsidiaries can become members of Lundbeckfonden’s Board.
2.5.1	It is recommended that members of the board of directors be appointed for a minimum  period of two years and a maximum period of four years.	We explain Lundbeckfonden has chosen a shorter election period. According to the statutes, a board member is elected for one year at a time – adopting best practice from listed companies. This allows for regular evaluation of a member’s performance. No member who has been a member of the Board for more than 12 years can be re-elected. The Board may deviate from this rule if the Board’s competence profile dictates it. The decision to do so is always made by the Board.
2.5.2	It is recommended that an age limit for members of the board of directors be set, which is published in the management review or on the foundation's website.	We comply Members of the Board who have turned 75 years of age may not be elected or re-elected to the Board. The Board may deviate from this rule if the Board’s competence profile dictates it. The decision to do so is always made by the Board.
2.6.1	It is recommended that the board of directors establish an evaluation procedure in which the board of directors, the chairman and the contributions and performance of individual members are evaluated annually and the result is discussed by the board of directors.	We comply The Board performs an annual self-assessment.
2.6.2	It is recommended that once a year the board of directors evaluate the work and performance of the executive board and/or the administrator (where relevant) in accordance with predefined clear criteria.	We comply The work and performance of the management team is assessed as part of the annual self-assessment of the Board.
3.1	It is recommended that the members of the board of directors of commercial foundations be  remunerated with a fixed remuneration and that members of a possible executive board be remunerated with a fixed remuneration, possibly combined with a bonus which should not be dependent upon accounting results. The remuneration should reflect the work and responsibilities consequential to the position.	We comply Members of the Board and the CEO are remunerated by a fixed fee. This fee does not depend on the financial results of the subsidiaries nor on our other investment activities. Members of our research and investment committees – as well as the board members of our subsidiaries – receive an additional fee in proportion to their workload.
3.2	It is recommended that the annual financial statements provide information about the full  remuneration received by each member of the board of directors and executive board (if relevant) from the commercial foundation and from other  enterprises in the group. Furthermore, there should be information on any other remuneration which members of the board of directors, except for  employee representatives, have received for performing tasks for the foundation, subsidiaries of the foundation or enterprises in the same group as the foundation.	We comply Information on the total sum paid in remuneration to members of the Board and the CEO is specified in Lundbeckfonden’s Annual Report 2017.