Basel, January 28, 2013
To the shareholders of Novartis AG
Notice of Annual General Meeting
Date: Friday, February 22, 2013, 10.00 a.m. (doors open at 8.30 a.m.) Place: St. Jakobshalle, Basel (entrance Brüglingerstrasse/St. Jakobs-Strasse)
1 Approval of the Annual Report, the Financial Statements of Novartis AG and the Group Consolidated Financial Statements for the Business Year 2012
The Board of Directors proposes approval.
2 Discharge from Liability of the Members of the Board of Directors and the Executive Committee The Board of Directors proposes discharge from liability of its members and those of the Executive Committee for the business year 2012.
3 Appropriation of Available Earnings of Novartis AG and Declaration of Dividend The Board of Directors proposes to use the available earnings of Novartis AG of 2012 for the purpose of distributing a gross dividend of CHF 2.30 per share as follows. This will result in a payout ratio of 65% of the Group’s consolidated net income expressed in USD*. Balance brought forward
Net income of 2012
Partial use of free reserves
Available earnings at the disposal of the AGM
Gross (before taxes and duties) dividend of CHF 2.30 per
dividend bearing share** of CHF 0.50 nominal value
Balance to be carried forward
Payout ratio is calculated by converting into USD the proposed total gross dividend amount in CHF at the CHF-USD exchange rate of December 31, 2012 based on an estimated number of shares outstanding on dividend payment date and dividing it by the USD consolidated net income attributable to shareholders of Novartis AG based on the 2012 Novartis Group consolidated financial statements.
** No dividend will be declared on treasury shares held by Novartis AG and certain other treasury shares held by other Group companies.
Assuming that this proposal by the Board of Directors is approved, payment of the dividend will be made as from March 1, 2013. The last trading day with entitlement to receive the dividend is February 25, 2013. As from February 26, 2013 the shares will be traded ex-dividend.
4 Consultative Vote on the Compensation System
According to article 18 paragraph 2 of the Articles of Incorporation of Novartis AG, the General Meeting holds a consultative vote on the compensation system of Novartis before every significant change to the compensation system, but at least every third Annual General Meeting. Since changes are proposed, shareholders are asked to hold a consultative vote on the compensation system of Novartis at the Annual General Meeting 2013.
To enhance alignment with the interests of the shareholders and to foster long-term value creation, the Board of Directors proposes to introduce changes to the compensation system for the CEO and the members of the Executive Committee. The proposed changes are scheduled to enter into effect on January 1, 2014. The current compensation system will continue to be applicable until the end of the current performance cycles.
The enclosed summary sets out further details regarding the proposed compensation system for the CEO and the members of the Executive Committee. In addition, the current compensation system of Novartis is described in the Annual Report – Compensation Report (http://www.novartis.com/annualreport2012).
The Board of Directors proposes that the shareholders endorse the newly proposed compensation system of Novartis (non-binding consultative vote).
5 Elections to the Board of Directors
At this Annual General Meeting, the terms of office of Daniel Vasella, M.D. and Marjorie M.T. Yang expire. At their own wish, Daniel Vasella and Marjorie M.T. Yang are not standing for re-election to the Board of Directors.
The Board of Directors proposes the election of Verena A. Briner, M.D., Joerg Reinhardt, Ph.D., Charles L. Sawyers, M.D. and William T....
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