Novo Nordisk A/S (NOVOB) Earnings Call Transcript & Summary

Good afternoon. On behalf of the Board, welcome to Novo Nordisk Annual General Meeting 2024. I am Helge Lund, and I am the Chair of the Board of Directors. It gives me great pleasure to open this year's Annual General Meeting. And looking back at 2023, it has been indeed an exceptional year of innovation, our growth and also value creation and impact for the company. We will report on the progress later in the meeting. For those of you who prefer Danish or English, simultaneous translation is available here in the Bella Center and online participants can choose to the preferred language in the broadcast system. As we reflect on the year that's passed, it has become clear that as our business continues to grow, so does our role in society. And big companies have big responsibilities. The global burden of serious chronic diseases poses a significant threat to global health, and we recognize that innovative and sustainable solutions are needed to address these challenges. Our industry-leading therapeutic innovations benefited more than 40 million people living with serious chronic diseases in 2023 and the unmet needs in type 2 diabetes and obesity are growing by the day and have created surging demand for our GLP-1-based therapies. This has enabled us to reach more patients this year than at any point in our 100-year history. And as a result, there has been increased pressure on our supply chain resulting in periodic supply constraints across our product portfolio as we strive to keep pace with demand. We have responded by investing heavily in expanding our production capacity with the aim of serving millions more patients worldwide in the future. In 2023 alone, we announced investments totaling to more than DKK 75 billion in the expansion of our production sites. And the announcement that Novo Nordisk has agreed to acquire 3 Finnish sites currently owned by Catalent is also a reflection of our effort to scale production. We're also working hard to enhance access to care worldwide. Our new production partnership with manufacturer Aspen Pharmaceuticals in South Africa will significantly increase the supply of affordable insulin to African continent. And furthermore, our long-established initiatives such as changing diabetes in children and our access to insulin commitment continue to support vulnerable patients in low and middle-income countries. The burden of chronic diseases on health care systems is only set to grow in the future. In our pursuit of innovative treatments, we are building a pipeline of considerable breadth and depth. We do this by means of in-house research and development capabilities as well as external innovation and business development. This includes acquisitions like Inversago in obesity, and also [indiscernible] in cardiovascular disease. And innovation plays an equally important role in our ambition to reach net zero emissions across our entire value chain by 2045. Having already switched our production sites to sourcing 100% renewable power, we are now supporting a similar transition among our 60,000-plus network of suppliers. In the face of the unprecedented demand, we are currently onboarding more colleagues than ever before and are committed to making Novo Nordisk a diverse and inclusive workplace. Our focus is on nurturing a culture that is founded on openness, accountability and respect. Above all, we remain a purpose-driven company that is guided by a clear ambition to drive change to defeat serious chronic diseases. On behalf of the Board of Directors, I would like to offer my sincere thank yous. Firstly, we would like to express our gratitude to all colleagues for their unwavering commitment and invaluable contributions to the progress made in 2023. Secondly, we would like to extend our appreciation to our shareholders and other stakeholders for continued support. Lastly, we would like to thank our CEO, Lars Fruergaard Jorgensen for his exceptional leadership on Novo Nordisk and his team in executive management. Most of them are here today. Their dedication and hard work have been instrumental in our progress, and we look forward to our future collaboration. Let me now turn to the introduction of my fellow Board colleagues. They are all present at this Annual General Meeting. And once again, we have had excellent collaboration in the Board, undertaking the task of challenging supporting and supervising the company and its management. Members of executive management are also present at this Annual General Meeting and the collaboration between the Board of Directors and executive management continues to be trusting and also transparent. The management team ensured good operational and strategic progress in this past year, and I will come back to this later in the meeting. Present in person is also Anders Dons from the company's auditors, Deloitte. And finally, I can inform you that the Board of Directors has appointed Attorney [indiscernible] to act as Chair of the General Meeting. And [indiscernible] is joined on stage by his colleague, [ Luis Carpula ] and Luis will be attentive to shareholders participating virtually. And I leave it to [indiscernible] to take us through the agenda. So over to [indiscernible].

Thank you for that, Helge. And the first point of order for me is to confirm that the general meeting here today has been duly convened pursuant to Novo Nordisk articles and applicable requirements. The general meeting has to be convened with 3 to 5 weeks' notice both via the company's homepage and also via Nasdaq information systems. Further, the meeting must be held in the capital region of Denmark and take place no later than end of April. And certainly, the last requirement to no surprise, is satisfied here today. The first one, the notice was sent out on the 21st of February 2024, and therefore, also the requirements as to the timing of the notice has been satisfied. The company is required to present a lot of information in connection with the general meeting. That is, first of all, the annual report, but also other documents. All of that has been uploaded in due time on the home page. And therefore, I have concluded that the meeting today has been lawfully convened. When it comes to the question of the general meetings ability to adopt the resolutions on here today, I will first refer your attention to the agenda. We have all the normal items for an agenda for an Annual General Meeting here at Novo Nordisk but there are also a few proposals from the Board, which, in fact, constitutes changes to the Articles of Association. And those -- those proposals are an adoption to the articles of a reference to the indemnification arrangement for the management team and the Board of Directors and also a reduction of the share capital and finally, an extension of the authorization to increase the share capital of the company. All of these resolutions pursuant to the articles require that we at least have 2/3 of the total number of voting rights in the company's presence here today. And I can confirm that, that requirement is certainly satisfied as we have more than 89% of all votes present and 2/3 of the share capital. So the meeting here today can adopt all the resolutions we have on the agenda. Now before going on to with the agenda, a few practical comments regarding attendance and also how the meeting will be handled practically here. First of all, we have a very nice attendance today. More than 1,000 shareholders have requested admission cards. And I believe at this point in time, more than half have arrived. We arrived, we see a few more coming in and more than 772 shareholders. There's also -- in addition to those that are here at the meeting, we also have people participating online. And we also have shareholders, of course, that have submitted votes by proxy or by postal votes. Actually, the number of postal votes and proxy votes are quite substantial, and they represent almost 99% of all the voting that is represented here today. On the basis of the proxies that we have received and the voting instructions, we can already ascertain that all the proposals on the agenda will carry sufficient support to be adopted. After the meeting, there will be a complete account of the votes made available on the home page of the company. Now a few practical details on the format of the meeting, including how to speak and submit comments for those online and how we vote if that is required. Novo Nordisk obviously has a lot number of shareholders not only here in Denmark but also abroad and to allow as many shareholders as possible to participate the physical meeting here at Bella Center is combined with the ability for shareholders to participate virtually via an online application. The third option is for shareholders and others to vote for the general meeting via webcast. This format has been used by Novo Nordisk for the past couple of years, so it will be familiar to most of you here but for good order and to introduce new shareholders to the format, I'll just give a brief introduction to how to participate in the meeting. For those present here in the room, first of all, how do you get to speak? You all allowed to speak, if you wish to, after we have presented the various agenda items. We have a very large room here. So we have we have reserved a few seats up here where you're welcome to take a seat and wait my colleague, [ Anna ] will be sitting here and take your names. She'll pass that on to me. We'll put you in a queue. And then I'll invite you to the podium as when it is time to speak. When it comes to voting, shareholders participating here at Bella Center must vote via the meeting services application. And you can see here on the screen behind me how to get access to that application. I think you all received some instructions when you go through the entrance. The procedure is that you need to scan the QR code and then you'll get access to the application. If there is a motion to vote the options that are available to you will appear on the screen and you simply select on the app and then there will be a green check mark to indicate that your voting has been received. Moving on to those participating virtually. For -- for comments, you have to use the app also. There is a particular feature for that. It's a Q&A function and you simply click that item and then type in your question and click send. There's a limit to the number of characters of 2,000. So please keep the question a common [indiscernible]. And we make sure to pass it, put it in queue. And I will again make sure that it's read out loud on here. Luis will help with that she'll read out the questions so everybody can hear it and it will then be addressed. On voting, for those participating online, the procedure is pretty much the same as I described for those participating physically. There's a particular feature in the app that allows you to submit your votes. So there will be a bar indicating when we have a voting in progress and then you simply indicate in the app, how to vote, and there will be a green checkmark indicating when the voting has been received. If you have any technical questions, there's a number there that you can call in Denmark is -- well, it's a Danish country code, +45 and then it's 45464997. So everybody is welcome to reach, call them if there are any technical issues. For those in the room, had that have any difficulties, you can contact the many Novo Nordisk representatives that are available here. For the webcast, those that are participating can only view the general meeting. It is not possible to submit questions or vote in that manner. On comments generally, I kindly ask everybody to keep the questions to the topics of the AGM and also to keep the submissions as precise as possible. I would like to note that we also have a shareholder meeting after the AGM, where it will be possible to ask questions, so there's that opportunity also. The meeting here today is conducted in English, but you are most welcome to also speaking Danish up here, and the answers will then come back depending on which you choose. It might be that Helge though might use Norwegian rather than Danish when he replies. All right. That was [indiscernible]. Thank you for your patience. We go through this and let's now turn to the agenda. As it is customary here, Novo Nordisk, the first 3 items on the agenda will be presented in conjunction, that means that the report for the company's activities and the annual report for 2023 will be presented by Lars. Afterwards, Helge as Chair of the Board, will cover the financial outlook for '24 and also present the proposed dividend distribution for the year. After we have this presentation, I'll open up for questions from the floor. And I already noted quite a few speakers. We have from HP, [indiscernible] Michael [indiscernible] and Peter [indiscernible] and then John [indiscernible] and Lars [indiscernible]. Thank you. I'll put you in that order. I think I'll speak when we get there. Others are, of course, welcome as well. And I'll pass the word on to Lars.

Thank you, Helge and [indiscernible]. The year 2023 has been truly exceptional. It has been marked by an unprecedented demand and expansion of our global workforce and outstanding results and progress. In the light of onboarding more colleagues than ever before. I'd like to extend my gratitude to all the colleagues at Novo Nordisk globally, who have been pivotal in scaling our operations to new heights. Before turning to 2024, I would like to dive into some of the highlights of 2023 performance. Our strategic aspirations for 2025 consists of 4 dimensions which provide clear midterm direction on how we plan to deliver on our purpose and drive growth. I will now take you through some of the key milestones in 2023. To begin with, purpose and sustainability entails our dedication to add value to society while ensuring longevity of our business. This objective is deeply ingrained in our business with environmental, social and financial accountability anchored in the Novo Nordisk articles of Action since 2004. In terms of our environmental footprint, it is our responsibility to reduce our carbon emissions meeting our target of reaching net zero emissions by 2045. Initiatives already in place today has meant a 34% CO2 reduction when compared to 2019. Initiatives, including switching our global production network to renewable power as well as leveraging biogas in 2 of our production sites. In 2024, we reached more than 40 million patients with our diabetes and obesity treatments. Our purpose to defeat serious chronic diseases relies not only on innovation but also on ensuring the appropriate treatments are accessible to patients in need. In 2023, we were able to reach 6.7 million patients through our affordability programs. Additionally, our Changing Diabetes in Children program has effectively reached more than 52,000 children with the aspiration that no child should die from type 1 diabetes. We're also enhancing our prevention efforts by expanding our partnership with UNICEF to help address childhood obesity. Moreover, we're establishing a transformational prevention unit, to deliver scalable preventive solutions to the obesity pandemic In terms of our aspiration of being a sustainable employer, we expanded the number of women in senior leadership positions to 41% compared to 39% in 2022. We are pleased with the progress we have made across our initiatives to -- and we remain determined to achieve these strategic aspirations. Now turning towards innovation and therapeutic focus. The year 2023 was marked by several exciting trial initiations and readouts, which progressed our pipeline across all disease areas. In Diabetes Care, we are pleased with the early and successful completion of the flow kidney outcomes trial, which demonstrated a 24% reduction in the primary composite kidney endpoint. Additionally, we're excited about the regulatory submission of once-weekly insulin icodec in the U.S., EU, Japan and China. Within Obesity care, we successfully completed the select cardiovascular outcome trial. The results from the trial establishes semaglutide 2.4 milligram as the only anti-obesity medication will proven cardiovascular benefit to date. Based on the SELECT cardiovascular outcome trial, the U.S. Food and Drug Administration has approved a label expansion for Wegovy in the U.S. It is -- it now includes the indication of reducing risks of major adverse cardiovascular events in adults with either overweight or obesity and establish cardiovascular disease. In line with our business development strategy, we have acquired Inversago as an addition to our obesity pipeline. Furthermore, we have successfully completed the Phase I trial with oral amycretin and decided to advance the development program. Within rare disease, Sequoia was approved in the U.S., EU and Japan. Progress was also made within cardiovascular and emerging therapy areas. We have initiated 3 Phase I trials within cardiovascular disease and mesh. Moreover, we have acquired Ocedurenone from KBP Biosciences to strengthen our cardiovascular pipeline. Commercially, during 2023, we grew our business and served more patients than ever before. We also achieved 2 major milestones by reaching our obesity sales aspiration of more than DKK 25 billion and our aspiration for diabetes, which was to obtain 1/3 of the global diabetes market value. Going forward, we continue to aim for treating more patients with our innovative medicines. Turning to financials. We delivered 36% sales growth at constant exchange rates. The strong sales growth was unfortunately -- has unfortunately resulted in periodic supply constraints and related drug notifications across a number of products and geographies. Operating profit growth reflected the sales growth and continued investments in the future growth drivers and grew by 44% at constant exchange rates. In 2023, free cash flow ended at DKK 68.3 billion. We remain committed to provide attractive capital allocation by returning DKK 61.7 billion to our shareholders. The 36% sales growth results from the following dynamics within our therapeutic areas. GLP-1 sales grew by 52%, with 53% sales growth in international operations and 52% growth in North America operations. The sales growth was driven by Ozempic as well as Rybelsus. Insulin sales declined by 6%, driven by declining sales in the U.S. and Region China, reflecting lower realized prices. Obesity care sales grew by 154%. In International Operations, sales grew by 47%, driven by both Saxenda and Wegovy. Sales of Saxenda increased by 14%, and sales of Wegovy reached around DKK 2 billion. Going forward, we continue to roll out Wegovy in a sustainable manner by volume cap launches to balance supply and demand. In North America Operations, Obesity care sales grew by 212%. Total rare disease sales decreased by 15%, which was driven by a 24% decrease in international operations and a 1% decrease in North America operations. Sales of rare endocrine disorder products decreased by 47%, reflecting a reduction in manufacturing output. We are working hard on establishing a solid supply of rare endocrine disorder products for the future. Obesity care sales grew by 154%, driven by both operating units. The volume growth of the global branded obesity market more than doubled with a volume growth of 116%. In International Operations, Obesity care sales are driven by strong Saxenda performance and the Wegovy launches in 7 international operations countries. In the U.S., sales of Wegovy grew by 393%, reflecting the commercial relaunch in January 2023. To safeguard continuity of care, we reduce the supply of the lower starter doses back in May of 2023, which continues throughout the remainder of the year. In January 2024, we more than doubled the supply of these starter doses of Wegovy compared to the previous months. We will gradually increasing the overall supply throughout the rest of 2024. Looking towards 2024. This looks again to be an eventful year across our 4 therapeutic areas in terms of clinical readout and trial initiations. Within diabetes, we expect a decision on approval of insulin icodec in the U.S., EU, Japan and China during 2024. Of note, we're expecting the Phase I results of the once-weekly GLP-1 GIP in the first half of 2024. And we have initiation -- initiated a Phase I trial with monthly GLP-1, GIP in January. For subcutaneous semaglutide 1.0 milligram we have just released the headline results for people with type 2 diabetes and chronic kidney disease. This will be followed by the functional outcome trial, STRIDE for people with type 2 diabetes and peripheral arterial disease in the second half of 2024. As for oral semaglutide, the cardiovascular outcome trial SOUL is expected to be completed in the second half of 2024 for diabetes -- for people with diabetes and cardiovascular disease. In the obesity area, a regulatory decision on a label extension for Wegovy in the EU based on the SELECT cardiovascular trial is expected in the second half of 2024. Furthermore, we look forward to the first Phase III readout for CagriSema towards the turn of the year. For rare diseases, we are very excited about the upcoming readout of the Mim8 Phase III trial in the first half of 2024. Lastly, turning towards cardiovascular disease and emerging therapy areas, we are expecting the readout of the first part of the ESSENCE trial investigating the effect of semaglutide 2.4 milligram on fatty liver disease. Moving on to expansions within our production capacity. In 2024, we expect to increase our capital expenditure to around DKK 45 billion. The significant step-up compares to 2023 and reflects the expansion of our supply chain. This includes the previously communicated expansions of manufacturing facilities in Kalundborg and Hillerod located in Denmark and Chartres based in France. The increase in capital expenditure in 2024 mainly relates to investments in additional capacity for active pharmaceutical ingredient production and fill/finish capacity for both current and future injectable and all products across the therapy areas. In the coming years, the capital expenditure to sales ratio is still expected to be low double digits. In February this year, we announced the agreement to acquire 3 fill/finish sites from Novo Holdings in connection with the Catalent transaction. The acquisition complements the significant investments we already are doing and the site will provide strategic flexibility to our existing supply network. In closing, I would like to reiterate that during 2023, we have grown our business, serve more patients than ever before and expanded our pipeline in depth and breadth for long-term growth. Despite periodic supply constraints, we are devoted to expanding our supply chain in a scalable and gradual manner. Largely, we remain dedicated to advancing our sustainability initiatives. I would like to again express my gratitude to all my colleagues at Novo Nordisk across the globe for the unwavering commitment during another challenging yet exceptional year. I'd also like to extend my appreciation to our shareholders, not least those here today and the Board of Directors for their continued support. As we enter 2024, we will maintain our focus on commercial execution, expanding our pipeline and investing in the expansion of our production capacity for both current and future products. We have now reached Item 2 on the agenda presentation and adoption of the statutory annual report 2023. The annual report was published on the 31st of January 2024 and included financial results and the outlook for 2024. Sales grew by 36% at constant exchange rates and 31% in Danish kroner, while operating profit grew by 44% and 37%, respectively. Looking over the functional lines. Cost of goods sold increased by 26% in Danish kroner, resulting in a gross margin of 84.6%. Sales and distribution costs increased by 26% at constant exchange rates and 23% in Danish kroner. The increase is driven by both operating units. In North America operations, cost increase is driven by the relaunch of Wegovy and promotional activities for Ozempic. In International Operations, cost increase is driven by promotional activities for Rybelsus as well as obesity care market development activities. Furthermore, the increase in sales and distribution costs are impacted by adjustments to legal provisions. Research and development costs increased by 37% at constant exchange rates and by 35% in Danish kroner. The increase reflects our strategic objective to expand the pipeline across therapy areas. Specifically, we continue to increase late-stage clinical trial and early research activities. The acquisition of Forma Therapeutics in 2022 and Inversago also increased R&D expenditure. The net financials improved by a net gain of DKK 2.1 billion compared to a net loss of around DKK 5.7 billion last year. Furthermore, net profit increased by 51%. Total assets increased by around DKK 73 billion to DKK 314 billion from the end of 2022 to the end of 2023. The increase in total assets is primarily driven by noncurrent assets due to the acquisition of Forma Therapeutics. Free cash flow increased from around DKK 57 billion in 2022 to DKK 68 billion in 2023. The cash flow -- the cash conversion in 2023 was positively impacted by timing of payment of rebates in the U.S. and provisions related to the revised 340B distribution policy in the U.S. Hereby, we conclude the presentation of the income statement and the balance sheet. Now over to you, Helge, for the proposed capital allocation to shareholders. Thank you.

Thank you so much, Lars. In the annual report, we have guided that we expect the sales growth to be between 18% and 26% at constant exchange rates in 2024. And the guidance reflects expectations for sales growth in both North America operations as well as International operations. The sales growth is expected to be mainly driven by volume growth of GLP-1-based treatment for obesity and diabetes care. And the annual report also included an operating profit outlook between 21% and 29% measured at constant exchange rates also. This primarily reflected the sales growth outlook and continued investments in future and current growth drivers within research, development and commercial. This brings me to Item 3 on the agenda, resolution to distribute the profit. And in 2023, our performance has resulted in a continued attractive capital allocation to our shareholders. And Novo Nordisk returned more than DKK 61.7 billion to shareholders through share buybacks and dividends. And in August 2023, Novo Nordisk paid an interim dividend of DKK 3 per share. The Board proposes that the final dividend for 2023 is DKK 6.40 per share, which is to be paid this month. Consequently, the total dividend will be DKK 9.40 per share. This is more than a 50% increase compared to 2022 making it the 28th consecutive year with increasing dividend per share. Again, a short comment on 2024 expectation where the Board has approved a new share repurchase program of up to DKK 20 billion to be executed over the course of the next 12 months. And with that, back to you, [indiscernible].

And those parts of recommends finalize the presentation for the first 3 agenda items. And now we will open up for questions to these first items.

First speaker here will be Claus Bernard Moller from ATP. And after that, it will be Mikkel Beck.

Thank you for the floor. My name is Claus Bernanrd Muller, and I represent ATP. I would like to begin by thanking for the report. 2023 was an amazing year for Novo Nordisk with 36% sales growth and with operating profit growth of 44%, both measured in constant exchange rate, fantastic. The biggest hurdle is not to sell the GLP-1 products but to produce enough to handle this unprecedented demand, Novo Nordisk has started an extensive investment in production, including a record DKK 42 billion expansion of the production site in Kalundborg. In connection with the Capital Markets Day, I participated in the visit at the production site in Kalundborg. The expansion was huge and in comparison to the old production facility the expansion is of a completely other dimension. Novo Nordisk has changed gears and I -- and it seems credible that the company is able to supply enough products for very high revenue growth for the coming years. Another challenge is to get a wide and mature pipeline years ahead of the big patent expiration of Ozempic and Wegovy in 2030, '31, '32. However, when I look at the pipeline, I'm impressed with the progress over the last year. When you have very high growth, several years, it increases the risk of bottlenecks and blind spots. My question is, therefore, where are the bottlenecks and blind spots in Novo Nordisk and which initiatives helps the company taking to minimize the risk? Also this year, I have a few comments to gender diversity. As of 2023, women fill 41% of senior leaderships. The proportion has increased around 2 percentage points every year since 2019. It is satisfying -- it is a satisfying development and the goal of at least 25% women in senior leadership positions by the end of 2025, looks achievable. I'm pleased that Novo Nordisk takes a leadership position in gender diversity. I would also like to take the opportunity to comment the preliminary work on implementation of [ CSR D ], which Novo Nordisk already has done. We would like to see the new regulation to lead to more valuable knowledge about the company without too much reporting. There is a balancing act in making sure the company reports on the most important and material issues without confusing the readers with too much irrelevant information. Finally, I just want to wish Novo Nordisk and the employees all the best for 2024. Thank you.

Thank you to Claus from ATP. Next speaker will be Mikkel Beck, but Helge will come to the podium here and answer Claus' questions.

Thank you, Claus, for your questions and your comments. I just want to start by saying that in the view of the Board, of course, we have a strong position now. We have a clear purpose, guiding the strategy. We have a very tight strategy built on our capabilities and the organization is operating very well. Having said that, we need to stay humble. And if you were part of a Board meeting in -- in Novo these days, there is not a declaration of victory. It's rather to try to look for where are the weak points and the issues that we have to deal with. We also have a very extensive risk management process in the company that covers not only the strategic risks for the whole company, but also operational risks across the group. So that's part of how we are running the company. So if we try to -- if I take you into the boardroom of Novo Nordisk today, they are basically maybe 4 big items that we're working on. One is to deal with the current supply/demand tension every day. And all our people are focused on that every day. Secondly is to address the longer-term challenge of building manufacturing capacity, record investment level and also moving into transactions like the Catalent transaction that Lars discussed earlier. So that's one big challenge that we're working on, a big task. The second one is to make sure that we continue develop and evolve the product pipeline to secure not only growth and prospects for the next few years, but also beyond that. And those initiatives, those decisions that the Board are making today, will perhaps be visible not in 1 or 2 years but in decades into the future. So that's really, really important. And finally, and not to be underestimated, we are running already now a much bigger and much more complex company, and it will only continue. So one big topic for Lars and the team and for the Board is, how do we build organizational and leadership capacity to actually steal and govern and develop a company of that complexity and scale. And just to give one example, Lars and the team have had 400 leaders into a development program to reflect the fact that what brought a success. Historically, we'd probably not bring success into the future as a leader. So we need to think about how do we evolve the leadership perspectives to make a better company. I also want to say in that context that it is important for us as we grow and become an even more global company to make sure that we continue to -- to work on diversity. So we have set very specific targets, and we are making progress, as Lars alluded to, but there is more to do. And finally, I just wanted to make a comment on the reporting this year's or the reporting. I can assure you, Claus, that actually yesterday, we had an educational session on the Board exactly on that topic. It's a very, very extensive reporting requirement on companies. But we will do it, but it's also important for performance management perspective that we are focusing on the right issues. So thank you for your support and for your good questions.

Thank you, Helge and now it's Mikkel Beck from Danish Shareholders Association.

[Translated] Thank you for your attention. I'll be speaking Danish. I hope you'll be okay. First of all, I'd like to thank Novo Nordisk and the Investor Relations Department for organizing this shareholders event afterwards. So this is a fully hybrid. We can speak Danish and people even applaud. So that's very good. So no complaints there. No complaints. Anyway, thanks for that. And on behalf of the Danish Shareholders Association and our 17,000 members, I'd like to thank management and employees throughout the world for an excellent piece of work in '23. We are working to promote investor culture in Denmark. And we have been helped a lot with the excellent results of Novo Nordisk that mainly private investors have benefited from. Furthermore, we are working to try and ensure what we would call a good investment, transparent, decent investment. These are factors that we want to -- to measure the company's by in which our members invest. And we can certainly tell you that in our assessment, Novo has a very high scored on all parameters, not least on skills in recent years. So we're pleased with that. Now decency, transparency, we must say that as Novo has become even bigger -- has a big role to play in the Danish economy and in society, we are now seeing more attention on what the company does than what we've seen with any other listed company in Denmark. The Danish Broadcasting Corporation, they now have their own Novo Nordisk reporter and perhaps we will have a Novo Minister at some point in the Danish government. Now joking aside. It's an obligation to be big. It's important to be significant. So my question to management is, have you discussed -- you know that the Novo Foundation of the main shareholder will play an even bigger role in society so that management can focus on operations? I'm not saying you're not doing that already. Anyway, over to the business, the mission we can read and we can see that as the good results come in, you are going to expand your mission. You want it to be broader, chronic disease, you want to help more people. We appreciate that, gives opportunities. but it can also run the risk of -- you can run the risk of being defocused when you go out broader. In '23, you had very good gross margin, very profit in the company. So my second question is can we expect when you expand your focus and expand the size, can you expect to maintain these gross margins and profit rates? Is that going to be possible in the coming years? Or should we expect an [indiscernible]? Production capacity, you talked about it. ATP also talked about it. We've seen it in recent years that it is a challenge when you grow this quickly. When you read the annual report, you could get the impression that it is the new normal to have these challenges. And I'd like to ask management whether you have sort of set some deadlines of when you do not expect to have challenges with production capacity anymore? Or is it going to be a new normal given the size that you now have? Finally, I'd like to say that management and employees, we've -- I've raised them a lot. But I could ask at least, can management give us a sort of priority on assessment of risks that we see as the most significant risk? Maybe you could rank them. There could be price pressure, increased competition, be challenges with capacity and production, political unrest, presidential election in the U.S. and other countries. Could also be management challenges. I don't know. But these different risks, I'm sure you have more, could you give us sort of more information about those? Which risks do you see as the most significant ones over the next 12 to 24 months. And I have a small extra message here because last year, up here on stage, we had Frank Aaen from Critical Shareholders. He told us, and he told you that you were the last ones that should be in this room. But Frank, you are wrong. And the investor culture is here to stay. We are happy to be part of it, and we are happy to co-owners of Novo Nordisk. Thank you for your attention.

Thank you, Mikkel, from Danish Shareholders Association. And I know both Helge and Lars will be responding to those questions. So Helge, you're the first.

[Translated] So I'm going to test you all here with my Norwegian. This is Helge Lund, seems like we'll be okay. So thank you for good questions, I must say. The first question concerning commitment and authorities and so on. I think our perspective is that the pharmaceutical industry and the health industry, we are depending on trust in society. We have a deep interaction with the stakeholders. We have that throughout the company, it could be municipalities, it could be health authorities, patients, it can be suppliers and employees. So we think that we must be open. We must build up trust. That is part of management's responsibility in the company. And Lars and his team are doing that very well, I think, both in Denmark and abroad. We see that the company is being listened to. But we are a society that demands more and more openness, more and more accessibility. So still -- we think it is important. It's in the interest of the company and management to be open. So risk. We talked about risk also when Claus asked this question. I'm not going to be specific about 1 or 2 risks. No. What's important for us on the Board is to have good processes, good discussions around risk, both strategic and operational risks. And the annual report, I think it's Page 41, 42, that have a detailed description of the process of the company for identifying risks. And we've also identified topics there that we are specifically into. So I would encourage you all to take a look at the annual report on that one. Now we can all see how demanding the situation is politically, technologically and so on and so forth. So being aware of risks is important, and that's certainly part of our perspective. So Lars, maybe you would like to give a reply to the other questions.

[Translated] Yes, I'll do that in Danish because the question was in Danish. Sometimes it can be challenging to have a Chairman who is a Norwegian, right? Because his understanding of Danish is better than my understanding of Norwegian, but we are okay. Anyway, about the development in margins, it is true that we are expanding. We are broadening our focus to cover more areas. We're doing it in a very disciplined way. We started in diabetes. We then entered obesity via some of the diabetes products, some molecules. And this also means that we entered into cardiovascular diseases and in rare diseases, we've had a strong position with hemophilia based on Novo 7. Again, we have been able to expand into other hemophilia diseases. So anyway, when we expand, we do it because we say we want to have core competencies that enable us to win as well as others, okay? If you do that, you can do it in a way in which you invest, but you can also win a return that corresponds to what we have today. So if you look at our margin in the short run, it is growing because of the dynamics we have in the top line is stronger than the cost development. It's not given that this will continue forever, but that's what we have in the short run. So we can expand. It's not going to cost us on margins. Now the thing about margins is that we are investing a lot in R&D and in production capacity. We're doing that to try and meet the demand that exists. We see a very strong demand for our GLP-1-based products. I wish we'd seen that 5, 10 years ago, so we've been able to build our capacity sooner, nobody solve that. So anyway, when we expand, we do it because we say we want to have core competencies that enable us to win as well as others, okay? If you do that, you can do it in a way in which you invest, but you can also win a return that corresponds to what we have today. So if you look at our margin in the short run, it is growing because of the dynamics we have in the top line is stronger than the cost development. It is not given that this will continue forever, but that's what we have in the short run. So we can expand. It's not going to cost us on margins. Now, thing about margins is that we are investing a lot in R&D and in production capacity. We're doing that to try and meet the demand that exists. We see a very strong demand for our GLP-1 based products. I wish we'd seen that 5, 10 years ago, so we've been able to build up capacity sooner, nobody saw that. So we are in a situation now in which we have a very favorable business situation. We have a period where we can build up capacity, serve more and more patients. In parallel, we can handle the fact that over time, prices will go down, we can then still serve more and more patients and still have good -- make good money. So our ambition is that we must help millions extra people, millions of extra patients over time with lower prices but with a much larger volume. I think that's one of the best ways we can serve our purpose, which is to overcome rare and chronic diseases. Thank you.

As mentioned in the beginning, we also have participants online, and we have actually received a question or comment from one of the participants there. And I'll pass the word on to Louise to read the question out loud.

We have received a question from shareholder, [indiscernible]. In the 2023 annual report, you report that 13.8% of your employees do feel stressed with an aim of a maximum of 10%. There will be a hidden number of employees feeling stressed on top of the 13.8%. And then there are two questions. One, is 13.8% socially sustainable? And two, what concrete action have you initiated to lower the feeling of stress while working for Novo?

So I'll follow the language of the question. So do this in English. So health and safety is a key priority in Novo Nordisk, and stress is a part of that. Specifically, on whether stress level of this 13% is socially sustainable. I don't think it is. I don't think you can run a company if more than 10% of your employees are suffering from stress. Our experience is that is often a complex situation that there are for some factors at work, but also typically some factors in the private life. It's nonetheless a priority to address. So we do -- the reason why we know the number of employees working with stress, yes, we do surveys on a regular basis. We ask all employees what is the state of the stress level. We do that in all departments. We do it on an anonymous basis, and we make sure that we educate leaders in what does it mean to mitigate stress, clarity in ambitions, priorities in the departments. But it also means that when we see specific areas where there is a higher rate of stress, local action plans are made. And that is, of course, also looking at whether we have allocated the right resources and secured clarity in priorities. And it is an expectation that has to be a leader in Novo Nordisk and stay in your [indiscernible] role, you have to run an area without, say, high stress levels. The stress level we have reported here has been constant over a couple of years, and it's actually come down from a higher level. So it's a constant focus of ours and a requirement for our leaders to be able to manage that. Thank you.

Next speaker would be Peter [indiscernible], it's in English, it's critical to shareholders.

[Interpreted] Yes, you must forgive me. I prefer to speak English. First of all, thank you to the Chairman and to the CEO for the report. It's a little bit curious that a shareholder must reply to questions from the audience, but there was a question from [indiscernible] to [indiscernible] remarks, last year, I represent that organization and what [indiscernible] to say last year, I think was that with this great profit generated in the company and the capital passed on to the normal reserves of Novo Nordisk. The company doesn't really need shareholders anymore. That was the point that made last year. And looking at the figures for 2023, that point is still valid, and that actually raises the question. What is actually the primary job of Novo Nordisk? Because if you look at Novo Nordisk as a company meant to make money for the shareholders, well, then Novo Nordisk has done. Well, they've not only done well. They have done extraordinarily well. It's a formidable job they've done. Billions of the profit and they paid out twice as much to the shareholders as they spend on research and development. But the exorbitant profit comes with a price. As the Chairman said in his report, the fact that Novo Nordisk has the size it has means that it also has a special responsibility, responsibility for sustainability. So Novo Nordisk is doing well when it comes to making money, but is it also doing the right thing? Because, for instance, the whole thing is built on the patenting of insulin, a drug, which was developed by people who wanted to make it available freely, and therefore, had not patented. But okay, that's ancient history. Another important thing is whether Novo Nordisk is up to the responsibility as being a gigantic player in the global market for pharma companies? Because the truth is that part of the basis of Novo making so much money is that they can set the price they want. Because of the patent system, prices are set based on what it would cost the public healthcare system if a certain drug did not exist and not a price based on the actual cost of research, development, sales and distribution and of course, also a reasonable profit, which covers the expenses, not only for research and development of that specific drug, but also for other experience, which have not worked out. But here, we are talking about setting a price, which allows an exorbitant profit. And that comes with a price for patients all over the world who cannot get the drug which they need and which they would have been able to get at a lower price. We see that when patients are taken hostages when the price means that there are constant demands for higher and higher. And grants from government, even though we see that money paid out by government go directly to the company and the shareholders, so it's paid for by patients, by staff by healthcare systems, which are more and more under pressure locally and at the global level. It is an unhealthy development, which can be prevented only through more transparency in the setting of prices and when it comes to production cost and higher taxation of profits. And Novo should be at the forefront in ensuring full openness and transparency when it comes to pricing. You might say that a large part of the profit go into the Novo Nordisk foundation, which invests in research and healthcare project, but here, to the surprise to be paid by society because when the Novo Foundation invest DKK 1 billion in what they have prefer to call center for healthy weight, as they did in the contract on the healthcare agreement. And the government and had to pay DKK 100 million. Then I was a politician in charge of healthcare for my part because we are playing with a sleeping partner because a lot of consideration went into who actually paid the larger part of the money, which gives, of course, Novo Nordisk a very important political representation, almost as having a member of the government. And this, of course, leads us to ask who decides where money should be allocated for healthcare. Of course, all this should be done on an independent based on the needs of society and public health. It should not be done taking into consideration the possibilities of making a profit of the mother company. Here, too, Novo should do the right thing and make sure that the Novo Foundation considers only public health and that it all be done in a democratic fashion. The same thing happens in the climate area, we can see that the emissions have increased to 53% in the entire value chain, and it's highly unsatisfactory that Novo Nordisk increases emissions in this way in a time where we understand Novo clearly that if our stabilization has to exist the [indiscernible] fashion, and if Novo Nordisk is to have a market in the future, something has to be done. And payment of a 4 million bonus to the CEO as a special climate bonus in group [indiscernible]. So I recommend that Novo shifted focus from working primarily to make money for a shareholder to take a responsibility for public health, climate and society. Of course, I recognize that this is not only the responsibility of Novo. It is very much and much more also a political responsibility. As politicians, we should set up a framework within which Novo Nordisk can work, but I can ensure shareholders that it is political responsibility, which some of us are ready to take on. Thank you very much.

It will be Lars responding to these questions. After Lars' response, we have [indiscernible] as the next speaker.

[Interpreted] Thank you to [indiscernible] and to critical shareholders. I'll try to address some of the points you made and I respect that we have a different point of view, and I enjoy these discussions. So please take it in that spirit. Considering insulin, it's true that originally, the invention was accessible. There was no thought of protecting it with the patent, but only because of the patent protection, it was possible to innovate and so patients have been receiving better and better insulin over time, which has led to a market improvement of the treatment of type 1 diabetes. Actually today, all or at least the major part of our portfolio of insulin is no longer protected by patents. And in most markets, we have comparatively low prices. And if we have not had the possibility of protecting our product with patent and setting the right price for innovative product. So I would be very worried that we would not be able to provide the proper drugs and therapies for patients. And if we look at pricing as simply cost for research and development and a certain margin, well, it's been very much discussed. And I'm very worried that it might inhibit the risk taking, which leads to innovation. As I said in my introduction today, we have 6.7 million patients at a global level, patient who receive medication from Novo Nordisk within some sort of support scheme, and we are very proud of that. And we are willing to continue along that route because we feel that people should have the widest possible access to medication when it's needed. And so I'd like to comment on the way we are rolling out our business with the therapy for patients with severe overweight and obesity. For many years, we could simply sell our drugs to people who are able to pay for it. But we have chosen to take out part of our products and set them aside for healthcare authorities in those countries because typically, these authorities take care of the interest of the weakest patients and those who are not able to simply go and buy our product and pay for the amount of their own pocket. So some of the most recent launches in Britain and in Germany, we have set aside volumes, formed contracts with the local healthcare authorities where we are very flexible when it comes to pricing in order to ensure that not only the people who are able to pay for their products will get them, but also those who are in the financial difficulties. Now concerning our environmental footprint, I recognize that in the present growth phase where we are building our production capacity at a massive scale, we have increased the Scope 3 CO2 emission that is through our suppliers. And we are pleased with the reduction, which we have achieved on our own direct CO2 emission, and we are working very, very hard to get our suppliers' emission under control, and we will work harder on Scope 3 as well so that we'll take on responsibility for the global emission of CO2. And we will also look at buying building materials, which are more expensive because they are, as far as possible, greener steel greener, concrete, just as we did when we established the windmill farm where we bought electricity from [indiscernible], as it was called at the time, at a higher price because we understand our responsibility for these matters and we are willing to take on the possibility to get the climate problem under control. And we believe at a very basic level that it's good for society, good for the environment, that people who live in chronic diseases are treated because a patient in poor health generates CO2 emissions in the healthcare system and statistics show that 4% to 5% of the world emissions come from the healthcare system. So it's also important for the environment to treat patients this way, and that is why we also invest in it.

Next speaker is [indiscernible].

[Interpreted] It's a pleasure that [indiscernible] able to speak Norwegian. Thank you for the review he gave in English in this replies in Norwegian and the same thing with Lars Jorgensen, our new Chair of the meeting. Yes, you are a good little panel out there. The [indiscernible] alliance, I think they found a hair in the soup. That is, of course, sad, but what they do about the climate in Ukraine, I don't know. [indiscernible] is fighting for the Russians now and for [indiscernible] because we are satisfied shareholders, not critical shareholders. I've asked some questions and have received reasonable answers, sort of. I'd like to know whether the factories you'll be taking over from Catalent, when did that transaction materialize? I understood that the competition authorities had to look at it first and other authorities have to look at it. So I don't know. But I also read that the 3 factories had to be acquired via the stock exchange in New York, I don't know. I think when their earnings are more than 60%, I think it's quite natural because earnings from the U.S. have been more than 50%. So it's quite natural that there are U.S. financial statements and Danish financial statements, we can use that again. So I have a small gift for you, gift for Helge Lund. He speaks Norwegian, and I'm going to give him this little overview to take a look at things. We understand him very well, so he can reply in Norwegian and Lars in Danish. But this factory, Catalent, I'd like to hear how many billions have they been paid? Have they held in escrow or security? When can production start? You have a wonderful team of researchers. You also have patents. And they are not going to expire, I think, until '32, I think maybe '34, Lars can tell us, I'm sure. These patents, they are decisive for progress and growth. And you're good at defending your patents. So there are not many flies or hairs in the soup. We're in good company here. I think you are probably the best company in Denmark. And you've been that for a number of years. I also have -- there's a bit of news that came this morning. A corporate manager from Novo Nordisk said that Novo is prepared to invest and they are going to invest a lot of money. That's very joyful. The more that you can cooperate also with all of the pharmaceutical industry in Denmark, in Europe and the U.S., the better, it's better for all of mankind, but certainly also for citizens, the citizens who are sort of getting up there. age-wise. Isn't it better to have a share than to have a bond where you don't really make any money? If you use the recipe of [indiscernible], I think you will go down the drain. But Novo Nordisk, you are going on acquisitions. You go for acquisitions and you'll be spending. I don't know if it's right, but it was said today that you'll be spending DKK 170 billion, but you're ready for more, I think you should bear that in mind. They treat their employees very well. No matter where I've been in the world, you always have good behavior. Thank you for your attention.

Thank you, [indiscernible]. And it will be Lars responding to [indiscernible] questions and comments. And after [indiscernible],after Lars's response here, it will be [indiscernible] will get to it.

[Interpreted] Concerning Catalent, the thing is that we've concluded an agreement, but it requires the approval of competition authorities, both in Europe and the U.S. It may take the rest of this year. So that's why we have paid nothing yet, no krona, no dollar. We wait until we have approval until we pay. So production, we already have a partnership with Catalent, they're already producing for us. But the reason why we have expanded our cooperation is that when we have transferred technology, we do believe that from '26, they can go even more, produce even more for us and produce some of the products that -- where the patent expires in '32 plus minus, depending on the individual market.

Next speaker, so come up here, [indiscernible]. Let's go.

[Interpreted] Yes, I'm [indiscernible]. Actually, I've been a shareholder with Novo for many years. That's all. I'd like to thank you for an excellent report and wish the board and management and employees all the best. I mean, it's a wonderful result for 2023. There's every reason to be proud. I think we can also see it many places in the annual report that Novo has driven with a view 2 strategic opportunities and challenges. And to give you just 1.1 case in point, you stressed the danger of being dependent only on the semaglutide-based products. I also like to congratulate Board and management for finding a reasonable balance between the pay to investors on the one hand, and the crucial necessity of maintaining a high level of investment in developing the business and the investments that go with the society responsibility that a company like Novo has. Three brief questions after reading the annual report and this risk description. It's more a question of the regulatory reality that Novo is in. Does Novo see a risk that the EU patent legislation can develop unfavorably for patent holders of products that are very expensive to develop? How big a commercial risk is that? And what would Novo recommend to the European legislators to have as a red thread when they revise legislation? Part 2, it would seem clear that new drugs are approved systematically slower in the EU than in the U.S. What is the commercial significance of that for Novo? And what can you do specifically to change that situation? And finally, it's been said, I think even by Novo's management that the innovation environment and the talent mass in Denmark and the EU in Life Sciences is relatively limited when you compare, for instance, with the U.S. Seeing from Novo's point of view, what can Denmark do, what can European Union do to change that situation?

I know this is Lars' favorite topic, so he will respond to these questions. I have not heard that there are any others that wish to speak here after this. So I'll conclude if there are no further questions.

[Interpreted] Thank you, [indiscernible], for these questions and thank you for the nice words concerning what we do. Now if you look at the innovation environment in Europe overall compared with the U.S., the thing of it was about 20 years ago, the total investment was EUR 2 billion bigger than in Europe. Over the last 20 years, this has become a gap of EUR 22 billion that the Americans invest more than Europeans. So that is a challenge because it means that innovation -- growth and innovation is happening elsewhere. So that really links to the question concerning approval of products because as you correctly said, the U.S. health authorities are the first typically to approve a new drug. And the U.S. market is also the first to adapt new innovation. And this means that pharmaceutical companies, biotech companies typically prioritize the U.S. market because that is where you have the quickest access to market, the quickest approval. At the same time, there is an innovation ecosystem that is stronger in the U.S. In the U.S., they are better at transferring research from the university environment into start-up companies. University environments are good at basic research but not at translating that into product development. So there is a stronger innovation culture there so that companies are started up that are more -- there's more risk-prone capital. So venture finance startups occur more quickly in the U.S. So that really, again, means that the innovation ecosystem is drawn to U.S. Another dimension of it is that when you have access and you have Europe, which, to a certain extent, is reducing patent protection. It means that some companies decide not to develop products in Europe. So the specialists that exist, say, at the big hospitals, there are also professors at local universities, they are not involved in developing these products. They do not get experience with the newest technology so students are also not exposed to the recent -- the most recent innovation. So again, that creates a weaker ecosystem. I'm sorry, this is kind of lengthy, but I'm very passionate here. So I'm trying to sort of say that innovation is extremely important. The innovation ecosystem in Europe should really be improved. What we're doing now, we are revising the pharma legislation. The commission is proposed to reduce, so the data protection rules, which I think will lead to less innovation. Fortunately, the European Parliament has a slightly different attitude. So we can perhaps avoid that this would happen. But anyway, the whole ecosystem needs to improve. What you could do is to make it more favorable to invest in start-up companies. And that would help with the translation of innovation at universities into companies that are able to take risks and hopefully, development products so that at the end of the day, it could be -- generate economic activity, financial activity and lead to better treatment of diseases.

Thank you, Lars. And we have no further questions at this time. So I think we can conclude on Items 1, 2 and 3 on the agenda. So that means that the general meeting here today has taken note of the report and also approved the annual report for 2023 and also approved the proposal to distribution of profits, including the dividend that Helge described earlier. That leads us on to Item 4 and 5 of the agenda, which all relates to remuneration. First of all, Item 4 is a presentation of the remuneration report for '23 for an advisory vote. And then under Item 5, we have basically 3 topics. One is the approval of the Board remuneration for 2024. And then there is a proposal regarding a renewal of the indemnification arrangement for the Board members and other executives. And finally, there is a proposal to approve an amended remuneration policy. The Chair, Helge Lund, will present these proposals. And after that, there will be an opportunity to ask questions, if any.

Thank you, Anders. Again, this year, we have published a report on board and executive remuneration, which is accessible. You all have [Foreign Language] CEO remuneration in 2023 was DKK 68.2 million, that's 13% up compared to 2022, primarily as a result of a higher payout or short-term incentive due to better performance. I will now turn to the agenda Item 5, that's related to the Board's proposals regarding Board and executive remuneration, starting with Item 5.1 on the agenda, approval of the Board remuneration level for 2024. And as mentioned last year, the Board has continued the general review of the Board remuneration levels in light of the general market developments for Board remuneration as well as the developments in Novo Nordisk's business. The review has included a benchmark of the level of the Board fees against the Board fees paid by Nordic general industry companies as well as European pharma companies. And based on this review, the Board proposes to increase the Board base fee with 7.1%, while at the same time, maintaining the travel allowance at the same level as last year. Moreover, the Board proposes to increase the fee level for the Research and Development Committee. And as mentioned by Lars, in his review of our activities in the last year, both internal and external innovation plays a significant strategic role for Novo Nordisk, and the Board has assessed that it would be appropriate to reflect the R&D committee's role and responsibilities by increasing the Board committee fees. The Board proposes that the general meeting adopts these remuneration levels as from 2024 and that the new multipliers for the R&D committees fee are reflected in the remuneration policy. The Board expects to continue to review the board remuneration levels during 2024 in light of the general market developments for Board remuneration as well as the development in the Novo Nordisk business. Based on the review, the Board may submit a proposal for adjusted Board remuneration to the Annual General Meeting in 2025. This brings me to the agenda Item 5.2, about indemnification of Board members and executives and the Annual General Meeting has already backed in 2021 -- back in 2021, approved an indemnification scheme for Board members and executives in Novo Nordisk. It is the Board's view that the indemnification scheme is important to help in ensuring that Novo Nordisk is able to continue attracting and retaining qualified and suitable candidates for Board and executive positions. As described in the notice for the Annual General Meeting in Danish Business Authority has in a recent letter described new guiding principles for indemnification schemes for Board members and executives in Danish companies. With a view to reflect this new guidance, the Board proposes that the existing indemnification scheme is updated and reapproved by the Annual General Meeting. Moreover, in line with the guidance by the Danish Business Authority, the Board proposes that adoption of the indemnification scheme is reflected also in the Articles of Association. This brings me to Item 5.3, approval of the remuneration policy. And the remuneration policy was significantly raised and approved by the Annual General Meeting in 2020. And subsequently, minor adjustments have been approved by the Annual General Meeting every year. And in line with the Danish Companies Act, the full remuneration policy is submitted for a vote here at the Annual General Meeting in 2024. Moreover, the Board of Directors and the Remuneration Committee have undertaken a general review of the remuneration policy and proposes the following substantive changes be adopted by the Annual General Meeting. In relation to the Board, I have already mentioned the proposed adjustment of the multipliers of the fees to the Research and Development Committee and the indemnification scheme. For the executives, we take a long-term perspective, aiming to reward executives for their careful and balanced stewardship of our company with a preference for less volatile pay outcomes. Our reward structures are designed to support our strategy and motivate and reward our executives to deliver sustainable growth and successful outcomes in relation to our strategic aspirations to create value for our stakeholders and ultimately, to drive change for our patients. To maintain our competitive position and reflect Novo Nordisk's growth in size and complexity, the Board is, among other things, proposing first, to increase maximum payout under the short-term incentive program from 9 to 12 months base salary for Executive Vice Presidents. And second, to increase maximum payout under the long-term incentive program from 26 to 30 months base salary for the CEO. And third, to increase the maximum payout under the long-term incentive program from 19.5 to 24 months base salary for the Executive Vice Presidents. And fourth, to increase the shareholding requirements with 50%. For the CEO, the increase will be from 2x to 3x the annual base salary, and for the Executive Vice President from 1x to 1.5x their respective annual base salary. In addition, the Board is proposing that an incentive clawback requirement mandated by the New York Stock Exchange is reflected in the remuneration policy. And with this, I hand back the word to you, Anders.

Thank you. With that, we have a presentation of Item 4 and 5 of the agenda. Of course, this is a summary of the very detailed terms that are all included in the notice for the general meeting and the full remuneration policies can also be found on the home page. I can hear from Louise that we have no questions through the -- from the virtual participants. So any questions here? If not, I think I will conclude that these proposals have been adopted. It seems we have no questions. So just formally, we have the remuneration report for 2023 approved by an advisory vote. And then we have an approval of the Board fees for 2024. We also have the approval of the remuneration policy -- sorry, for the indemnification arrangement. There is the renewal of the existing ones, as mentioned by Helge, which also includes this amendment of the articles referring to these arrangements, as I described before. And finally, an approval of the remuneration policy. That brings us then to Item 6 and 7 of the agenda, which concerns elections to the Board of Directors and also appointment of auditor. Under the articles of Association, all Board members are elected by the general meetings -- that are elected by the general meetings are elected for a period of one year. And this also applies to the Chair and the Vice Chair that are elected directly by the general meeting also. Before presenting the Board's proposal, I'll give the floor to Helge Lund to comment on the result of the Board's self-assessment and the Board's nomination process.

Thank you, Anders. Let me start with a few words on the collaboration among the Board members and the composition of the Board. And the collaboration in the Board and between the Board, Lars and the executive team, continues to be open, productive and also forward-looking. And our purpose and strategic aspirations is the overall guide for the Board's work and the basis for addressing topics or short as well as long-term nature. Each year, the Board conducts a Board evaluation. And in 2023, the evaluation process was led by an external consultant who observed the Board and committee meetings and conducted also individual interviews with Board members and executives. Overall, the 2023 Board evaluation revealed good performance by the Board with a constructive and supportive culture and strong collaboration between the Board and executive management. All Board committees demonstrated also good performance and diligence. Key focus areas for the Board in 2024 are continued focus on longer-term strategic opportunities and associated risks, as we discussed, bringing outside-in perspective to the board discussions and also culture and organizational development and succession planning, which we discussed earlier in the meeting. When recommending candidates to be nominated, the Board takes into consideration the balance between renewal and continuity. They decide competencies and experience, the performance of the individual board members, the ambition for diversity as well as independents. With the proposed candidates, we will continue to fulfill our diversity ambition of being at least 2 shareholder-elected members of Nordic nationality and 2 of non-Nordic nationality and supplemented by being at least 3 shareholder-elected Board members of each gender. Diversity among Board members across gender and other dimensions remains a key priority. So back to you, Anders.

Thank you, Helge. And then let me just briefly outline the proposal from the Board. First of all, Item 6.1 is a proposal to reelect Helge Lund as Chair of the Board of Directors. Item 6.2 is a proposal to reelect Henrik Poulsen as Vice Chair of the Board. And then under Item 6.3 is a proposal to reelect the current Board members: Laurence Debroux, Andreas Fibig, Sylvie Gregoire, Kasim Kutay, Christina Law and Martin MacKay. In the notice of the general meeting, you have all the details about these candidates, executive roles, board memberships, educational backgrounds and competencies and also independent relation to the Danish governance recommendations. In addition to the shareholder elected Board members, we also have 4 employee-elected representatives on the Board. And these are Elisabeth Dahl Christensen, Liselotte Hyveled, Mette Bojer Jensen and Thomas Rantzau. These each elected for a 4-year period expiring in '26. Let me then quickly present the proposal for appointment of auditor. This year, something new. The auditor needs to be appointed both in respect of the financial reporting, but also in relation to the statutory review of the sustainability reporting. And based on the recommendation from the Audit Committee of the Board, [indiscernible] Board proposes that Deloitte be elected in both roles. So I'll ask the floor here if there's -- ask if there are any questions or comments? Look at these, there are no questions from the virtual participants. If there are no further comments, I hope the meeting will join me in congratulating all these candidates for their reelection. Brings us to Item 5, where we have 3 more slightly technical proposals. I'll outline all 3 of them and then we can get back with potential questions to these. First of all, is Item 8.1, which is a proposal to the company's ongoing share repurchase programs. As in previous year, the Board is proposing to reduce the company's B share capital by canceling a portion of the shares that the company has acquired in the past year. And by now, this is a customer appointing Novo Nordisk AGM agenda. [indiscernible] currently refer to the slide behind me for all the numbers and technical details. Item 8.2 is a renewal of the authorization to the Board of Directors to allow the company to repurchase own shares. Again, a customer proposal here at Novo Nordisk General Meeting is also customary in most Danish-listed companies. The proposal is to let the authorization run an extent until the General Meeting in '25. There are the customary limitations that you find in these authorizations, 10% of the share capital after the share capital reduction I mentioned before, but also a limit that the company cannot hold more than 10% at any time and also that the price needs to not be by more than 10% from the listed share price at the time of the acquisition. Final is a -- final item is 8.3, which is an extension of the existing authorizations for the Board to increase the company's share capital both with and without preemptive subscription rights for existing shareholders. The numbers also here reflected in the slide behind me. What it essentially means is that the authorization still amounts to 10% of the existing share capital after the reduction mentioned before. And the proposal is to extend the authorizations for one year so that they expire in '25, 25 March -- '26, sorry.

Any questions or comments on these more technical proposals? If not, I'll conclude that they are all adopted. Thank you for that. That brings us through to the -- through the main items of the agenda, and then we have left the -- any other business item. Item 9, which means that you are all invited to ask a few last questions. We cannot adopt up any resolutions. I can't see anybody. There's one comment here from [indiscernible]. And Louise, anybody from the virtual, no?

[Interpreted] Yes. Any other business is kind of a forum for ideas, isn't it? And I think with the results achieved, I think there are 2 people that need sort of to be rewarded here today. One is to get EUR 100 billion, you have it here, it's going to be our CEO, Lars. The other one is not so good. It's not inflation proof. So this is something we need to look at in the coming year. And I put it here, it's for you, Lars. And there are 4 questions I'd like you to answer. To Helge Lund, back in [indiscernible]. Back in [indiscernible], do you know that? In [indiscernible] in Norway? This is a small company. It is now reaching Phase II recognition. Please take a look at that one, it's about cancer. I can tell you that all companies are doing very well there. I think one of the biggest oil foundations in Norway, they are now huge customers in Novo Nordisk, and that's a good thing. I like that. And I think they've got a EUR 35 billion dividend. I don't know if it' in Norwegian krone, but well done.

I'm not sure whether we'll need security to take care of that note. But in any event, I don't think we have any further questions, no. And I think that brings us through the agenda. And we have safety of the podium. I think I can give the word back to Helge to finalize the General Meeting.

[Interpreted] Yes, before I finish the meeting, I would say, in Norway and Denmark, we're in a union for 400 years. And that I thought for many years, the Danes were a bit sad. We're not in the union because we found the oil and gas. But now it's the other way around, right, with the success that Novo Nordisk is enjoying. So perhaps the Norwegians want to get back in the union with any Norwegian Union. Anyway, anyway. First, I'd like to [indiscernible] the Annual General Meeting. You have guided us in a very professional manner. I would like also to thank all the shareholders for attending this year's Annual General Meeting. In Novo Nordisk, we always value interactions with shareholders, either in person or virtually. We are all looking forward to meeting you all again in the spring of 2025. And until then, please stay safe. For shareholders participating in person here in Bella Center, please leave the room using the doors at the back of the hall where you entered. And we will be serving a cup of coffee on first floor, if you wish. So there will also be -- there will -- you will also be able to meet Novo Nordisk management. Also for those of you who have borrowed a headset or a voting device, please hand it back on your way out. And please also remember to take all of your belongings with you. Lastly, I will mention that for those having signed up the informal shareholders' meeting will follow this meeting beginning at 5:00 here in this room. And with that, I hereby declare the general meeting closed. Thank you to all. Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.