The framework for the Lundbeck Foundation’s activities.

At the Lundbeck Foundation, we have a range of policies which, collectively, provide the framework for the Foundation’s activities. The board of directors discusses these policies annually to ensure that they are always in keeping with the times

Data Ethics Policy

Data Ethics Policy

This Data Ethics Policy describes the overall ethical principles for how the Lundbeck Foundation (including Lundbeckfond Invest A/S) uses data and serves as a supplement to the Foundation’s existing privacy notices on data protection.

We strive to adhere to the principles set out herein, and expect grant recipients, reviewers, and employees to comply with it, and with due regard for, local conditions and norms.

The term ‘data’ covers data of all types and from all sources, including publicly available data, such as that collected from grant-applicants, their research, reviewers, commercial partners or employees, as well as statistical, financial, and corporate data, and data derived data.

Data is used in our operations and to allow applications and their reviews.   We strive to offer clarity on the type and source of data used, and to communicate its purpose to all involved via relevant privacy notices and guidance.

Data is gathered with the sole purpose of providing knowledge and information relevant to the Foundation’s activities, and its use should always be guided by the following principles:
 

Human interests before commercial interests

Data utilised should ultimately have a human benefit. If there is a conflict between human and commercial interests, human interests should always prevail.

Transparency

Data uses should be clear or easily explained. When personal data is utilised, the legitimate reason for doing so should be made clear, or properly informed consent should be obtained from all involved.

Anonymisation

Data should be anonymised or pseudonymised unless personalisation is a requirement for achieving the targeted results.

Autonomy

We believe that individuals should have control over the use we make of their data. Further, we do not use automated decision-making or artificial intelligence on data either provided or collected.

Accountability and governance

Accountability is an integral part of responsible data use, and we go to great lengths to reduce the risks for the individual, and to mitigate undesirable social and ethical implications.


We endeavour to integrate data ethics into all our daily management and business decisions, including when acting as stakeholder in other concerns.

Even with effective standards, policies and processes in place, data usage has the potential to lead to challenges, problems, and errors. We seek to prevent this by developing a positive culture among employees that promotes openness and encourages the continuous improvement of processes and systems.

The Data Ethics Policy is overseen by the Data Protection Officer, who reports on data ethics and escalates any issues to the executive management, as required.

Best Research Practice

Best research practice

The Lundbeck Foundation’s general criterion for allocating research funds is that the scientific content of the application, the applicant’s qualifications and the scientific environment at the host institution are of a high international standard and that the research makes a difference to people’s health and lives. We aim to ensure that all applications are evaluated on an equal basis.

Basically, the Foundation endeavours to ensure that all applications are subjected to peer review by a majority of impartial experts. The Foundation has established two permanent evaluation panels with a majority of external and foreign experts to evaluate project applications on a regular basis. Evaluation panels of international experts are convened on an ad hoc basis to evaluate major personal and strategic applications. All members of the review panels must comply with the Foundation’s rules on impartiality.

All evaluations result in a recommendation to the Lundbeck Foundation’s board of directors, which then decides on allocation of funds in accordance with legislation. Evaluation procedures for applications and recommendations are regularly adjusted to keep pace with developments and implementation of new measures.

In 2014, our board of directors adopted “The Lundbeck Foundation’s Code of Good Research Practice”, which is now incorporated into the Foundation’s General Terms and Conditions for Research Grants. Our codes support basic principles for best research practice, such as research integrity, transparency and accountability. All grant recipients must sign this document before they can receive the grant.

The Lundbeck Foundation’s General Terms and Conditions for Research Grants refer, for example, to the Danish Ministry of Higher Education and Science’s Code of Conduct for Research Integrity from 2014.

We also expect grant holders to conduct their research in accordance with Responsible Research and Innovation, cf. the EU’s HORIZON 2020 programme.

Investment Policy

Investment policy

The objective of the Lundbeck Foundation’s investing activities is threefold: 

  • to ensure cash reserves to fund the Lundbeck Foundation’s long-term ownerships
  • to keep the Lundbeck Foundation’s grant allocation activities at a stable level each year
  • to add value for research, patients, and society in general

The Lundbeck Foundation’s investing activities are spread across four general areas of investment:

  • Strategic investments are related to the Lundbeck Foundation’s role as a long-term owner of healthcare enterprises with the potential to become global leaders. Today, these comprise H. Lundbeck, ALK and Falck.
  • Lundbeckfonden BioCapital deals with the Lundbeck Foundation’s direct investments in biotech within Denmark.
  • Lundbeckfonden Invest handles the Lundbeck Foundation’s financial and alternative investing activities (e.g. in forests, property, etc.). 

The Lundbeck Foundation’s investing activities are diversified. This primarily entails diversification within asset classes, i.e. cash and cash equivalents, government bonds, corporate bonds, shares and real assets. The investing activities are subject to limitations on concentration per geographical area and within certain industries, such as pharmaceuticals. The objective of this diversification is to deliver stable positive returns with moderate risk.

Learn more about our four general investment areas here.

All investments must adhere to the Lundbeck Foundation’s values, objectives and CSR, as set out in the annual report. Furthermore, both investment processes and investments themselves must be sustainable. Companies in which the Lundbeck Foundation is represented on the board must strive to comply with corporate governance rules.

The Lundbeck Foundation does not invest in the tobacco and arms industries, that violate international agreements. Investments are assessed twice annually against the ESG (Environmental, Social and Corporate Governance) profile.

 

Communication Policy

Lundbeck Foundation communication policy

The Lundbeck Foundation’s communication, both within the organisation and to the outside world, must be efficient, coherent and targeted in order for the Foundation to put its strategy into practice and for it to be regarded as an attractive partner and workplace as well as a competent grant-giver, owner and investor. In addition, communication is a vital element of the Lundbeck Foundation’s strategy and value creation, with “an active voice in public debate” being one of its five value pillars.

Principles

The following principles set out the general guidelines for the Lundbeck Foundation’s communication activities.

Transparency
Transparency is one of the Lundbeck Foundation’s key values, and the Foundation has, for many years, been recognised as one of Denmark’s most transparent. This applies to all of the Foundation’s fields of activity where transparency is possible and does not conflict with other considerations, e.g. the Foundation’s ownership of publicly listed companies. Regard for transparency will therefore always be key but will be balanced against other considerations. Stock exchange obligations will always take precedence.   

Communication and knowledge sharing
The Foundation’s new strategy, “Bringing Discoveries to Lives”, expresses a clear focus on the brain. This includes communication of both new research results and new knowledge related to the brain to the broader public. The Lundbeck Foundation also regularly publishes new knowledge about the projects that receive the Foundation’s funding.

Collaboration
Good, constructive collaboration with the Foundation’s stakeholders and partners is vital to the Foundation’s work and helps deliver its strategy. This requires openness, and the Foundation therefore makes it a priority to be open about its business, the long-term value the Foundation wishes to create, which types of project are eligible for grants, and the Foundation’s committed approach as an owner and investor.

Strategic focus
The Foundation’s new strategy includes being an “active voice in public debate” and expresses a wish to help set the agenda in Denmark. In this regard, the Foundation has three main agendas: brain health; conditions for research; and the Foundation as an ownership model. The active voice in public debate is based on these three main agendas as well as sub-topics to which the Foundation can contribute constructively with specialist knowledge and insight. 

Target groups

The Foundation communicates to a broad range of target groups. These are mainly based in Denmark. However, there will also be activities which are important to communicate internationally, e.g. in relation to The Brain Prize and the Foundation’s BioCapital portfolios.

The following target groups are particularly important:   

  • Potential applicants for the Foundation’s grants
  • The Foundation’s ownerships and investments
  • The healthcare industry and biotech investment environment
  • Stakeholders and partners in research and neuroscience
  • Political decision-makers
     

Roles and tasks

The Foundation’s CEO defines the overall framework and goals for communication activities, in collaboration with the Senior Vice President, Corporate Affairs. 

The CEO and the management team are the public face of the Foundation in media interviews and the like (for instance, when speaking at relevant conferences). The CEO is the main spokesperson. However, in each case, we select the person with the best prerequisites for representing the Foundation in the given situation.

The Senior Vice President, Corporate Affairs, is responsible for communication activities, draws up the Foundation’s communication strategy and prioritises the daily activities in the department, based on the communication plan. This includes ensuring the following:

  • That the Foundation’s strategy and value pillars are communicated, both in-house and externally
  • That continual efforts are made to ensure the best possible media coverage of the Foundation, in consultation with the Head of Media Relations
  • That a network is established to ensure communication across the Foundation’s fields of activity, including the Foundation’s ownerships
  • That new media, both social and digital, and communication partners are incorporated into communication activities – strategically and structurally, on equal footing and in line with other activities.

As a general rule, the board of directors of the Lundbeck Foundation is not involved in daily communication activities. All press enquiries to the board of directors should be referred to the chair of the board. Board members will therefore not talk about, or on behalf of, the Foundation. The chair of the board usually only speaks at special events, following discussion with the Foundation’s CEO and/or the Senior Vice President, Corporate Affairs.

The Lundbeck Foundation’s employees and management participate in communication activities to the extent relevant and ensure that the staff in Corporate Affairs are kept up to date and abreast of important events and relevant knowledge and facts.

All employees of the Foundation have a duty to ensure that the Foundation’s communication complies with its communication policy.

The Foundation’s staff must always notify the Head of Media Relations if they have been contacted by the media, since the Head of Media Relations is responsible for identifying the right spokesperson and, if necessary or relevant, notifying the Foundation’s CEO, and thereby the board of directors.

Furthermore, when speaking to the media in general, in interviews or, for instance, when sharing content and articles by posting on social media, as representatives of the Foundation, its employees and management must show consideration and respect for the Foundation’s values and principles.
 

General guidelines for external communication
 

In light of the Lundbeck Foundation’s role in Danish society, the Foundation naturally attracts and seeks media attention. The media must always be treated with openness and efficiency. Therefore, all enquiries must be answered quickly and correctly. Similarly, efforts must be made to ensure that messages communicated by the Foundation are correct.

All contact with the media must be coordinated by the Head of Media Relations, in cooperation with the Senior Vice President, Corporate Affairs, who will ensure that enquiries are dealt with by people with the required expertise in the relevant field.  

To the extent possible, the Foundation’s employees should be given any significant information about the Lundbeck Foundation no later than the general public.

Details relating to the Foundation and one or more of its long-term ownerships must be handled together with the communication departments of the respective ownerships. Matters of a confidential or sensitive nature must not be shared or communicated in the public domain, neither externally nor within the organisation, without the prior consent of the people involved, and only on the consent of the CEO. Furthermore, current rules and the General Data Protection Regulation (GDPR) must be observed.

This communication policy was adopted by the board of directors of the Lundbeck Foundation on 25 March 2021.  

 

Sustainability policy

Lundbeckfonden’s Sustainability Policy

1.    Introduction

Lundbeckfonden is an enterprise foundation with multiple roles as owner, investor and philanthropist. Our aspiration is to fulfil these roles in a way that is environmentally, socially and financially sustainable and we believe in the value of good corporate governance. We have signed the UN Global Compact and use the ten principles on human rights, labour rights, environment, and anti-corruption to guide our work across all activities.

Our activities are centred around bioscience, human health and Denmark’s healthcare sector and delivered through a wide range of external commitments and partnerships. This policy defines the guiding principles for our work on sustainability covering all areas. 

2.    Our sustainability focus areas

Based on our purpose, strategy and core activities we have chosen four SDG focus areas to guide our value creation. These are; 

Sustainable Development Goal 3 - Wikipedia

Improving health and quality of life starting with the brain

Bringing new biomedical discoveries to the lives of patients and their relatives is a core part of the Foundation’s purpose. Our scientific grants focus on neuroscience with the potential to generate discoveries related to brain diseases, our ownerships are focused on the healthcare industry and our biotech investments focus on companies who address unmet medical needs.

Supporting responsible economic growth and job creation

Our roles as long-term business owners and direct investors gives us a co-responsibility for the economic and societal footprint of Denmark’s healthcare sector. We seek to carry out our ownership roles in ways where financial value creation is well balanced with the need for long-term societal value and well-being of employees.
Sustainable Development Goal 9 - Wikipedia

Pioneering innovation within healthcare

We invest in research, people and companies at the frontier of their fields in order to drive innovation. We support our companies and university partners in their quest for innovation and we have grants and investments which are dedicated to early-stage innovation in lifescience.  

SDG 16

Promoting sustainable practices and good governance

Our multiple roles as owner, investor and philanthropist require extensive collaboration with external partners and stakeholders. We want to be a responsible and constructive partner, who is transparent, reliable and guided by clear principles, which also reflect our internal practices.

3.    Sustainability in practices

3.1.    Our internal practices

Environmental issues
Although our climate footprint is primarily by our ownerships and investments, we seek to reduce our internal CO2e-emissions. Being an enterprise Foundation with no production activities and facilities, we have no scope 1 emissions to report. We track and report our scope 2 emissions and have taken measures to be able to track scope 3 emissions in the future.  

As air travel is a significant part of our CO2 footprint, we seek to limit unnecessary travel and use high-quality carbon offsetting to compensate for air travel that we deem necessary in our activities. We have also taken actions to encourage our employees to transition to electrical vehicles for work-related transportation.  

Social issues
The employees of the Foundation represent different genders, educational backgrounds, experiences, ages, and nationalities. We see our differences as a source of innovation and quality assurance and we want to foster an environment where our employees thrive. 

We regularly conduct employee engagement surveys to track wellbeing and progress. Employee remuneration is based on market benchmarking based on external data to ensure fairness in our structures. We also disclose diversity data in our annual reporting. 

Governance 
Our governance structure is based on four core principles: Compliance, independence, transparency, and checks & balances. 

We annually review our governance vis-à-vis Denmark’s two sets of official ‘Recommendations; The Recommendations on Foundation Governance, which applies to enterprise foundations and the Recommendations on Corporate Governance, which applies to listed companies. We disclose and explain all potential cases of divergence and strongly oppose all kinds of corruption and violations of human rights and avoid partners and vendors etc. that do not adhere to these values. 

3.2.    Good R&D practise 

We consider animal experiments and clinical trials instrumental in the advancement of scientific discoveries and the development of new medicines. The Foundation is not directly engaged in scientific experiments but expects all grant recipients, direct investments and ownerships to comply with the principles of ‘Good Research Practise’ set forth by the Medical Research Councils. 

With regard to the use of animals in research, the Foundation expects its partners and recipients to actively support the 3Rs (replacement, reduction & refinement) in their approach to animal-based research and assume responsibility for ensuring that all animal experiments conducted at Danish or foreign institutions comply with the national rules and legislation. 

With regard to clinical trials, we expect our partners and grant recipients to conduct all trials and clinical research activities in accordance with national laws, international conventions, as well as international ethical and human rights principles. These principles respect the rights, integrity, and dignity of all participants - to ensure their safety and well-being.

With regard to our philanthropic grants and activities, our aim is to support projects of high scientific standard and we believe that scientific research data should be reproducible. We also believe that scientific leaders should engage themselves in building the next generation of scientific talents and invest time in talent development and diversity and inclusion. We also take active measures to ensure an inclusive and non-biased application, screening and selection process 

3.3.    Responsible investment and ownership

The Foundation considers ESG-performance when evaluating the attractiveness of new financial investment cases and excludes investments in companies which produce controversial weapons or tobacco. 

Financial investments are screened biannually through an independent third-party ESG rating and analytics firm to assess compliance with ESG-standards or breaches of exclusion criteria. We expect our external financial managers to have high ESG-standards.

We encourage our strategic ownerships and direct investments to pursue an ambitious sustainability agenda and use our Board representation to push the agenda further. 

Overall, we expect our strategic ownerships to show; 
•    A commitment to UN Global Compact
•    A sustainability and ESG strategy which is tracked and reported regularly 
•    A commitment to innovation and the people and talent agenda  
•    Active measures to track impact and performance across relevant environmental, social and governance (ESG) factors.

We acknowledge that sustainability efforts must be proportional to company size, resources and maturity level and therefore seek to balance our push for sustainability considerations with company maturity through a proactive approach combining guidance, policies, advisory and resource allocation. 

4.    Reporting

We track and report our progress on sustainability through our annual sustainability report and our biannual ‘Communication of Progress’ report to UN Global Compact. We also conduct a specific ‘Sustainability Review’ once per year with our Board of Directors

Tax Policy

Tax policy

With its substantial grants for biomedical sciences research and controlling interests in three of Denmark's largest companies, the Lundbeck Foundation is one of the country’s largest commercial foundations. Consequently, the Foundation is of huge significance to Denmark’s social and economic development and has an immense social responsibility.

For these reasons, we aim to be open, transparent and responsible in all aspects of our organisation. In 2015, we were the first commercial foundation in Denmark to take steps to draw up and publish a tax policy. Our tax policy does not only apply to the Foundation itself. It creates a framework for our three subsidiaries — H. Lundbeck, ALK and Falck — all of which have also published their tax policies on their websites. The tax policy is based on four principles, and you can read about it here:

Download Tax Policy

Lundbeck Foundation’s Tax Policy

Introduction

With substantial contributions to Danish research and ownership of significant Danish corporations, Lundbeck Foundation has considerable influence on social and economic development in Denmark. For us, such influence comes with a high level of responsibility. Also, when it comes to tax.

The tax paid by corporations and foundations has come under increased focus in recent years. The distinction between legal tax optimisation and illegal tax evasion has developed into a debate on the ethics of corporate tax deductions and the lack of transparency when it comes to corporate tax affairs.

This document intends to make our position and policy on tax clear.

Furthermore, the Lundbeck Foundation has adopted the pension sector’s Tax Code of Conduct which contains a common set of principles and recommendations for responsible tax behaviour regarding unlisted investments made via external asset managers.

The Tax Policy is reviewed annually.

The Board of Directors has approved this Tax Policy on 12 March 2024.

Taxation of Foundations

The Lundbeck Foundation is liable to tax on profits, as is the case for Danish limited companies. The Foundation is also subject to the Danish Foundation Tax Act, which allows deductions for grants and donations.

...


Scope of the Tax Policy

This Policy applies to The Lundbeck Foundation and its subsidiaries.

For the purposes of this Policy, tax means all types of direct and indirect taxes as well as other fiscal allowances resembling a tax levied on the Foundation and its subsidiaries. Taxes collected on behalf of tax authorities throughout the world are also included.
 

Purpose of the Tax Policy

The Lundbeck Foundation is guided by a clear commitment to making a positive impact on society and showing a high level of responsibility.

To us, this means that the Foundation is a responsible taxpayer. We fulfil all tax obligations that apply to our activities and work to minimise tax risks. Engaging in any form of tax evasion is not permitted.

The Foundation must at all times comply with current legislation in the jurisdictions where our activities are carried out. Any assessment of compliance will always be based on the intention of the law in question.

Our investments are many and various. To ensure that we can account for all our decisions and transactions, all key issues – including tax – must be carefully considered before we enter into transactions and investments.
 

Governance

The overall responsibility for the tax matters of The Lundbeck Foundation lies with the Board of Directors. The Board of Directors defines the Foundation's policy on tax. The responsibility for ensuring compliance with the policy in all our activities is placed with the CEO. The CEO may delegate tasks but will always hold full responsibility for compliance.

The responsibility for implementing the policy in the subsidiaries of the Foundation lies with the respective subsidiaries.

We call in external advisors to assist in cases where our own teams do not have the relevant expertise. External advisors are also drawn upon for significant transactions and decisions in which tax considerations play a key role or where material uncertainty exist regarding the interpretation of existing laws and regulations.

We report to the Board of Directors about the tax matters of the Foundation, the tax risks and adherence to this Policy.
 

Transparency

In all governance matters, we run a transparent operation. This applies to tax matters as well. We communicate openly about tax management, the Foundation’s corporate tax payments as well as the effective tax rate.

We invite anyone to address questions on tax directly to us. We provide employees, the employees in our subsidiaries, and people related to the Foundation with the opportunity to raise or report any issues of concern confidentially through our whistle-blower system.
 

Our attitude to tax planning

When making investments and placing our activities, our primary focus is always commercial, and all tax planning takes place in that context. This means that we place our activities and investments where they make good business sense and allow us to compete on equal terms in the industry.

Furthermore, we apply the arm’s length principle to all intercompany transactions, in line with applicable best practice guidelines, unless legally required to apply other pricing mechanisms.

We have defined four principles that apply to all our activities and help guide our decision making in all matters relating to tax planning:

We will only engage in structures which have commercial substance and will not engage in artificial or opaque structures that are intended for tax avoidance or for making beneficial owners unidentifiable. We will not utilise aggressive tax planning and jurisdictions in order to avoid taxes on activities which take place elsewhere. Entities which are based in low or zero rate jurisdictions exist for substantive and commercial reasons or to avoid double taxation. When assessing the value of new or acquired activities, we always consider their effect on the reputation of the Foundation and its subsidiaries. Particularly in cases where existing activities are placed outside Denmark. Governments often implement tax incentives encouraging companies to increase investments in order to stimulate growth or to create jobs. We will use available incentives and tax reliefs where they apply in areas where we have business substance and where this is the legislators’ intention with the rules.

 

Tax risk management

Tax risks may take on several forms including compliance, financial, reputational, operational and political risks. We work to minimise tax risks.

The Foundation operates a risk management framework to create stable growth. In determining the appropriate risk response, we maintain a low level of acceptable risk to comply with our obligations to report and pay taxes on a timely basis.

The risk assessment and management of tax risks are carried out both at Foundation, sub group and entity level. The Foundation mitigates significant risks to what it considers to be an acceptable level.


Working with tax authorities

We engage in dialogue with national tax authorities, both in Denmark and abroad. Should interpretations as to the law’s intentions materially differ, we will seek to clarify the issue for significant matters by contacting the relevant tax authorities and request them to provide a binding ruling, or similar.

In situations where we cannot resolve disagreements with tax authorities through dialogue, we resolve our disagreements in the tax tribunals or courts to ensure that the appropriate practices are determined and implemented. We will always provide all relevant information that can reasonably be required to assess the positions of the Foundation and its subsidiaries.

We also make ourselves available if the authorities ask for our assessment of the consequences of a tax measure.

This Policy has the purpose of complying with section 19(2) of schedule 19 Finance Act 2016 for these UK sub groups of The Lundbeck Foundation:

 

ALK-Abelló Ltd.

DySIS Medical Ltd.

Falck Fire Services UK Limited

LFI Silva Investments Ltd.

Lundbeck Group Ltd. (Holding), including

Abide Therapeutics (UK) Limited Lundbeck Limited Lundbeck Pharmaceuticals Ltd. Lifehealth Limited Lundbeck UK LLP (owned by Lundbeck Group Ltd. (Holding), Lundbeck Limited and Lifehealth Limited)

Remuneration Policy

Remuneration Policy for Lundbeckfonden and Lundbeckfond Invest A/S (together ‘the Foundation’)

1  Introduction & Purpose

This remuneration policy (the “Policy”) describes the framework and practice for the remuneration of Board of Directors and employees in two legal entities; Lundbeckfonden (LF) and Lundbeckfond Invest A/S (LFI). The policy creates the framework for both entities which together are referred to as the Foundation and comprise a very broad range of activities; Business ownership, financial asset management, direct biotech investments, grants activities for scientific research etc. The different activities are grouped in one organisation, and the two legal entities have identical Board of Directors (the “Board”), CEO and Leadership Team (LT).

The remuneration policy applies to all employees in the Foundation and the purpose is to define the framework for remuneration ensuring that:

1) The Foundation can attract, develop, motivate and retain qualified employees, including members of the Board, CEO and the LT.

2) Remuneration components support the Foundation’s short-term and long-term objectives. 

3) Interests of the CEO and Leadership Team converge with the interests of the Foundation. 

4) Remuneration practice in the Foundation takes into consideration market practice as well as recommendations for good corporate governance and foundation governance.

5) Transparency is provided to the Foundation’s stakeholders.
 

2  General Remuneration in The Foundation

Remuneration in the Foundation consists of four components, i.e.

  • fixed base salary (applies to all)
  • performance based incentives (applies to selected employees)
  • company pension contribution (applies to all)
  • other benefits in kind

The term Total Compensation is used as the aggregate value of the four remuneration components.
 

2.1 Remuneration components

Fixed base salary is the dominant component in the remuneration in the Foundation. The level is defined by the role and position of the individual employee, who will fulfil objectives and responsibilities as agreed with his/her superior, and thereby contribute to realising the Foundation’s strategy while adhering to the Foundation’s cultural values and leadership principles. Benchmarks from the talent pool and peers in Denmark are used for guidance regarding the level of fixed base salary, but other factors such as education, professional experience and competencies etc. are also considered. Further, attention is given to the principle of equal pay for equal jobs when deciding on salary levels.

The fixed base salary will be competitive, taking total compensation into consideration, but not excessive. No maximum salary levels apply. Fixed base salary is reviewed once a year and may be adjusted accordingly. Fixed base salary is paid in cash only.

Performance based incentives is used in accordance with market practice for further motivating, rewarding and driving the right behaviour and performance. The incentive structure in the Foundation includes four different programmes:

a)   An annual bonus programme for the CEO (‘CEO bonus’). In line with the recommendations for Foundation governance, the CEO is primarily paid a fixed base salary but in addition also offered a short-term incentive programme to ensure alignment between the CEO’s remuneration and the long-term development of the Foundation Group, which comprise a broad range of commercial and philanthropic activities. The bonus is based on several elements, including the financial results of the subsidiaries and the financial investment activities. The incentive is capped as a percentage of the annual fixed base salary. Settled bonus is paid in cash.

 

b)  An annual/short term incentive programme (‘STIP’) applicable to selected managers/employees across the organisation. The purpose of the incentive is to create an incentive for participants to go the extra mile in the strategy execution and to ensure market conformity for the remuneration of employees in key positions. The pay-out is settled once a year, based on pre-defined performance criteria (KPIs) and business behaviour. In case of misconduct the CEO can decide to reduce or cancel bonus settlement regardless of performance.

c)   Invest Incentive Programme for investment professionals working with financial investments. The purpose of this incentive is to ensure participants’ attention on creating a high and stable revenue from the investment activities and to align with market practice for asset Management professionals to attract and retain qualified resources. A shared bonus pool is defined once a year based on rolling last four years’ results. The incentive is capped as a monetary value, based on the role and position of the participants. Settled bonus is paid in cash.

d)    BioCapital Incentive Programme for investment professionals working with the direct biotech investments. The purpose of this incentive is to ensure participants’ focus on financial value creation from equity investments and to align with market practise for investment professionals in this sector. A shared bonus pool is defined based on the financial return of the portfolio for a rolling period of six years. The incentive is capped as a monetary value based on the role and position of the participants. Settled bonus is paid in cash.

Performance based incentives are subject to claw back. Claw back comes into effect if bonus has been paid out based on information which has subsequently proven misstated or inaccurate and if the beneficiary has actively or passively acted in bad faith.

Company pension contribution provides employees with pension payments for retirement and a basic financial cover in case of critical illness, loss of employability or death. In general, employees are covered by mandatory defined contribution plans with a pension insurance company to which the Foundation and the employee jointly contributes. An amount of 14% of fixed base salary is paid by the Foundation and 5% of fixed base salary is paid by the employee. Historical arrangements do exist where employees are paid pension contribution as a cash allowance.

Other benefits in kind includes health insurances, health checks and customary employment benefits such as mobile phone, broadband connection at home etc. Further, members of LT and selected employees are offered a cash transport allowance. Only the CEO has a company paid car.

Situational benefits, such as maternity/paternity leave are also offered to employees. In extraordinary cases, relocation allowance may also be relevant, e.g. when recruiting a non-resident candidate.

If the CEO or an LT member serves as Board member in his/her capacity as employee of the Foundation, the board fees, value of warrants or other compensation elements will be deducted in such member’s base pay.

 

2.2 Process

Once a year following the annual performance and appraisal dialogues, the individual’s total compensation may be adjusted. Target performance is used for such considerations if any incentive scheme applies.

With regard to STIP, the bonus settlement is dependent on the individual’s conduct i.e. business behaviour, compliance with the Foundation’s business processes and values, which is reviewed in the annual development discussions.

3  Remuneration of the CEO and the Leadership Team (LT)

The remuneration to the CEO and members of the Leadership Team is intended to ensure the Foundation’s continued ability to attract and retain qualified members with the desired competencies within specific key areas, and to ensure the fulfilment of the Foundation’s strategic journey.

3.1  Remuneration components for CEO and LT

 

Remuneration Component

Applies to

Fixed base salary

All

Performance based incentives

  • CEO bonus
  • STIP
  • Invest Incentive Programme
  • BioCapital Incentive Programme

 

CEO

All members of LT excluding the CEO

Only SVP Invest

Only SVP BioCapital

Company pension contribution

All

Customary employment benefits

All

Other benefits

  • Company car
  • Transport cash allowance

 

CEO

All members of LT excluding the CEO

Termination and severance payments

The Foundation can terminate members of LT with 9 months’ notice[1]. The Foundation can terminate the CEO with a 24 months’ notice. The Foundation has no contractual obligations regarding the use of severance payments for CEO and LT.


[1] For historical reasons one member of the LT has a 12-months’ notice period.
 

3.2  Process

The remuneration to the LT is reviewed on an annual basis. The Board’s Chairmanship decides any adjustment to the Total Compensation level, based on input from the CEO and benchmarks when applicable. With regards to the CEO’s compensation the Board decides based on input from the Chairmanship. The fixed base salary is then adjusted accordingly to change the total compensation level.

4  Remuneration of the Boards

The remuneration to members of the Boards is based on fixed remuneration only in line with the recommendations of foundation governance. No performance based incentive or other variable remuneration is offered to members of the Boards.

4.1  Remuneration Components

All ordinary Board members receive a fixed annual base fee.

The Chair receives 3 x annual base fee, while the Deputy Chair receives 2 x annual base fee.

Further, the members of the Investment Committee and the Grants and Prizes Committee receives an additional committee member fee of 1.2 x the annual base fee of LF. The chair of a committee receives 1.5 x the committee fee. Furthermore, members of the Grants and Prizes Panel receive an annual fee.

No additional fee is paid to Board members to cover travelling, accommodation, etc. Instead, Board members are reimbursed for direct costs associated with the Board work.

No pension schemes are included in the remuneration to the Boards and no special termination terms apply to the Board members in the event of resignation from the Board. There are no special retention or redundancy schemes for the Board Members.

In addition to the Board fee received from LF and LFI, a Board member may also serve as a Board member of a strategic ownership. Such board fees are additional to the fee paid by LF and LFI.

Board members of LF and LFI who are employee elected representatives of strategic ownerships (subsidiaries), are not restrained from receiving variable remuneration from that specific position.

4.2  Process

Board fees are reviewed by the Board itself on annual basis and any change is based on appropriate benchmarks.

5  Governance and practice

Remuneration decisions in the Foundation, such as salary adjustments, bonus settlements, etc. is always grandparent approved. Due to the organisational size of the Foundation, the CEO usually acts as grandparent.

In case of remuneration decisions regarding members of the LT, the Chairmanship acts as grandparent and in case of the CEO the Board acts as grandparent. In general, the CEO is accountable for the Foundation to comply with the remuneration policy and to bring any deviances forward to the Board.

The Board can decide to deviate from the policy to the extent the deviation is legally acceptable under applicable law.

5.1  Reporting and review of remuneration

The CEO will provide the Chairmanship with an overview of paid remuneration to the LT as a minimum once a year. The overview will include members of the LT as well as senior employees in the investment teams, dependant on the nature and value of incentive schemes. Further, considerations on gender diversity in the Foundation are included.

At least every third year, the CEO prepares a discussion with the Chairmanship on current incentives, including historical pay-outs and considerations of the fit-for-purpose, regarding future short-term and long-term objectives for the Foundation.

The remuneration policy is updated on an annual basis.


6  Effective date and publication

The policy is effective from the date of the Board approval and is made available on the Foundation’s website.

Approved by the Board, 12 March 2024.