Board of Directors

Set out below is a description of the members of the Board of Directors and the tasks they carry out.

The Board of Directors consists of nine members, six external directors and three members elected by Lundbeck’s Danish employees, elected on a yearly basis at the Annual General Meeting. Together, the current members of the Board of Directors bring deep industry knowledge and solid top management experience to Lundbeck., which are essential for them to perform their tasks.

Lundbeck’s Board of Directors is responsible for approving the corporate strategy, setting goals for Executive Management, and for ensuring that members of Executive Management and other senior managers have the right qualifications. The Board of Directors also evaluates management performance and management remuneration. Furthermore, the Board of Directors has the overall responsibility for ensuring that adequate internal and external controls are in place, and for identifying and addressing any relevant risks. This responsibility is defined in the Danish Companies Act and stipulated in the rules of procedures for the Board of Directors. The Board of Directors regularly evaluates the business, our financial strategies and policies, and ensures that day-to-day management is carried out in accordance with such policies. 

Executive Management reports to the Board of Directors on an ongoing basis regarding:

  • Follow-up on approved strategic activities
  • Key risks, including risks associated with patenting, research and development (R&D), regulatory, commercial and financial issues
  • Recommendation for approval of large-scale investments and transactions which are of an unusual nature or size for Lundbeck
  • Financial reporting, including follow-up on budgets, estimates, interim financial statements and annual reports
  • Matters such as internal controls in the financial reporting procedures, special financial and accounting issues, evaluation of financial reporting and other financial information
  • Processing of final audit book comments from the independent auditors
  • Feedback from investor meetings to provide shareholders’ view on Lundbeck.

In 2019 the focus of the Board of Directors was on securing implementation of the corporate strategy that was presented in February. In particular the Board of Directors was heavily involved in assessing external opportunities that could support the strategic imperative of ‘Rebuilding the pipeline’. This work let to two acquisitions during the year; the acquisition of Abide Therapeutics, Inc. in March and the acquisition of Alder Biopharmaceuticals, Inc. in October. As a consequence, the number of Board meetings in 2019 was higher than in previous years with 11 meetings including a two-day strategy seminar with the Executive Management team.

Another key activity for the Board of Directors in 2019 was to expand the Executive Management with three new members and thereby adding competencies to support the implementation of the corporate strategy. In February, Johan Luthman took over the position as EVP Research & Development. In April and September two new Executive Management position were created with Keld Flintholm Jørgensen starting as EVP Corporate Strategy & Business Development, and Elise Hauge as EVP People & Communication.

Composition
Lundbeck’s Board of Directors consists of six external directors elected by the shareholders at the Annual General Meeting, and three members elected by our Danish employees. Members elected at the Annual General Meeting are up for re-election every year, while the members elected by our employees are up for re-election every four years. In 2019, Lars Rasmussen was re-elected as Chairman and Lene Skole re-elected as Deputy Chairman. In 2019 the Remuneration Committee was expanded to a Remuneration & Nomination Committee, and Jeffrey Berkowitz was added as member of the Committee. No changes to the members of the Board.

Lundbeck promotes and encourages equal opportunities and diversity. Our goals regarding equal opportunities and diversity at Board of Directors level were reached in 2015. According to the goal setting, at least one of the six members elected by the shareholders should be of the underrepresented gender (women). These goals were established in 2013 and should be reached within a four-year period, to allow for continuity of the board. In terms of the 2018 board composition, there is one female board member elected by the shareholders and one elected by Lundbeck’s employees.

Independence
Lundbeck has a two-tier board structure consisting of the Board of Directors and Executive Management. No board member is a member of Lundbeck’s Executive Management. Nasdaq Copenhagen recommends that at least half of a company’s board members should be independent. The issue of board member independence is particularly relevant for Lundbeck, which has a single principal shareholder, the Lundbeck Foundation, holding 70% of the shares. Based on the guidance from Nasdaq Copenhagen, four of the six board members elected at the Annual General Meeting are independent, while two members, due to their close affiliation with the Foundation, are not. The Foundation does not nominate the chairman of Lundbeck’s Board of Directors, but only recommends members for the position of deputy chairman and two ordinary board members.

Competencies
Every year, Lundbeck’s Board of Directors and Executive Management conduct a self-evaluation to assess strengths and weaknesses of the work performed by the Board and the committees. Based on the outcome, changes to the Board of Directors’ working procedures are discussed and any proposals for improvement are considered. Key conclusions from the 2019 evaluation were high satisfaction with the collaboration and interaction between the Board of Directors and Executive Management, which is described as open, transparent, constructive and involving. In the past couple of years competencies and knowledge that are highly relevant for setting the path for the future have been added not only to the Board of Directors but also to the Executive Management to the benefit of both the company and its strategy, as well as the work in the Board of Directors and its sub-committees.

The procedure for the evaluation can be found here.

Capital and share structure of Lundbeck 

The Board of Directors analyses the company’s need for capital on an ongoing basis, including an assessment of the company’s capital structure. 

There is no universal answer to the question of what the optimum capital structure is for a specific company because the relationship between equity and interest-bearing debt relies on the specific characteristics that apply within the particular industry in which the business operates and, by extension, the operating and financial risk. However, companies in the pharmaceutical industry are often particularly well-funded which may be explained by the extended development projects and risks associated with research activities.

The Board of Directors pursues the policy that equity beyond the level which, based on a conservative estimate, would be considered sufficient to support the underlying business should be distributed to the shareholders. The distribution to our shareholders takes place through annual dividends and if appropriate share buyback programs.

Chairmanship
The Chairman and Deputy Chairman ensure that the Board of Directors’ tasks and responsibilities are handled in a balanced and satisfactory manner. In addition to activities related to strategic, financial and operational supervision of Executive Management. In March 2016, the Board of Directors elected Lars Søren Rasmussen as Chairman and Lene Skole-Sørensen as Deputy Chairman, and they have annually been re-elected at the annual general meetings since then. 

Committees
The Board of Directors has set up three advisory committees: The Audit Committee, the Remuneration & Nomination Committee and the Scientific Committee. The three committees advise the Board on financial information and reporting, the company’s remuneration and nomination strategy including remuneration of Executive Management, and R&D, respectively. The Chairman of the Board of Directors is not Chairman of the Audit Committee. 

Audit Committee – financial advice

The Audit Committee provides advice to the Board of Directors on internal and external controls in financial reporting procedures, special financial and accounting issues, evaluation of financial reporting and other financial information and risk management issues. 

The Audit Committee provides advice on the basis of:

  • Meetings with the Corporate Management Group and internal and independent auditors
  • Management’s recommendation concerning accounting policies, accounting estimates, new accounting standards and significant single transactions
  • Critical guidelines and policies for internal controls and financial reporting procedures
  • Annual strategy, audit plans and review of status on audit procedures performed by Internal Audit
  • Communication from independent auditors to the Board of Directors, including monitoring and control of auditors’ independence, review of audit planning and draft audit book comments
  • Systematic review of the company’s risk exposure
  • Cases received through the whistle-blower system

In March 2019, the Board of Directors re-elected Henrik Andersen as Chairman and Lars Søren Rasmussen and Lars Erik Holmqvist as members of the Audit Committee. The Chairman of the Board does not act as Chairman of the Audit Committee and more than half of the members are independent. 

Remuneration & Nomination Committee – advice on remuneration and nomination

The Remuneration & Nomination Committee informs the Board of Directors of remuneration and nomination decisions regarding members of Executive Management. The Committee also advises on the company’s overall remuneration policy and prepares the remuneration report. Additionally, the Committee handles assignments related to recruitment and appointments to Lundbeck’s Board of Directors and to the senior management. and annually assesses the composition and results of the Board, the Executive Management and the Committees. 

In 2019, the previous Remuneration Committee was expanded to become the Remuneration & Nomination Committee and Jefferey Berkowitz was elected by the Board of Directors to join Lars Søren Rasmussen and Lene Skole in this Committee. Lars Søren Rasmussen as Chairman and Lene Skole-Sørensen were re-elected in March 2019. More than half of the members in the Remuneration & Nomination Committee are independent. 

Scientific Committee – advice on research and development

Lundbeck’s Board of Directors has a Scientific Committee, the purpose of which is to advise the Board of Directors on support for strategic research and development. 

In March 2019, the Board of Directors re-elected Jeremy Max Levin as Chairman and Lene Skole-Sørensen and Jeffrey Berkowitz as members of the Scientific Committee.

The charter for the Scientific Committee can be found here.

Meeting Attendance

Member of the Board

Board of Directors

Audit
Committee

Remuneration & Nomination Committee

Scientific Committee

Lars Søren Rasmussen

11/0

5/0

3/0

-

Lene Skole-Sørensen

11/0

-

3/0

2/0

Henrik Andersen

10/1

5/0

-

-

Jeffrey Berkowitz*

10/1

-

1/1

2/0

Lars Erik Holmqvist

11/0

5/0

-

-

Jeremy Max Levin

10/1

-

2/0

Rikke Kruse Andreasen

11/0

Henrik Sindal Jensen

10/1

-

-

Ludovic Tranholm Otterbein

10/1

-

-

-

 

 

 

 

The numbers indicate how many meetings the members have attended and not attended respectively.

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