Document Details

# Novartis AG Shareholder/Analyst Call - Novartis AG

Tuesday, March 5, 2024 4:00 AM

# Event Participants

Executives 5 Joerg Reinhardt, Vasant Narasimhan, Charlotte Pamer-Wieser, Harry Kirsch, Simon Moroney

#### Attendees 2

Vincent Kaufmann, Unknown Attendee

#### Joerg Reinhardt Executive

Good morning, shareholders. Ladies and gentlemen, I'd like to extend a very warm welcome to our 28th Annual General Meeting of Novartis AG. It's a great pleasure for me to be welcoming such a large number of you here to the St. Jakobshalle in Basel. I'd also like to welcome the members of the Board of Directors and the members of the Executive Committee who are with us today.

We also have the representatives of our auditors here. That's KPMG AG represented by the notary, Andrea Schmatz and Mr. Peter Andreas Zahn, who's the independent proxy. I hereby appoint Ms. Charlotte Pamer, Secretary of the Board of Directors, as keeper of the minutes.

And as tellers, I appoint Mr. Thomas Aegerter from UB...

# Novartis AG Shareholder/Analyst Call - Novartis AG

Tuesday, March 5, 2024 4:00 AM

# Event Participants

Executives 5 Joerg Reinhardt, Vasant Narasimhan, Charlotte Pamer-Wieser, Harry Kirsch, Simon Moroney

#### Attendees 2

Vincent Kaufmann, Unknown Attendee

#### Joerg Reinhardt Executive

Good morning, shareholders. Ladies and gentlemen, I'd like to extend a very warm welcome to our 28th Annual General Meeting of Novartis AG. It's a great pleasure for me to be welcoming such a large number of you here to the St. Jakobshalle in Basel. I'd also like to welcome the members of the Board of Directors and the members of the Executive Committee who are with us today.

We also have the representatives of our auditors here. That's KPMG AG represented by the notary, Andrea Schmatz and Mr. Peter Andreas Zahn, who's the independent proxy. I hereby appoint Ms. Charlotte Pamer, Secretary of the Board of Directors, as keeper of the minutes.

And as tellers, I appoint Mr. Thomas Aegerter from UBS, Ms. Alexandra Scriba from the Zurcher Kantonalbank; and Ms. Olga Nieto from Citibank.

Today's Annual General Meeting was called by publication of the full agenda in the Swiss Commercial Gazette #26, dated the 7th of February 2024. Unless otherwise provided by law or the articles of incorporation, the Annual General Meeting will be passing its resolutions on the basis of the absolute majority of share votes represented here. And later on, Ms. Pamer will announce the number of shareholders attending in person today and the number of shares that they represent. Voting will be performed electronically today.

And prior to the !rst vote, Ms. Pamer will give you brief instructions on how to use the voting device.

Shareholders wishing to take the "oor are kindly requested to proceed to the speakers' registration desk taking their ballot documents with them and register there if they haven't already done so. Speaking time will be limited to 5 minutes. I would also like to inform you that the Annual General Meeting is being recorded today on video and on audio as well as being webcast.

I hereby announce that the notices to today's Annual General Meeting were published in due time and due form, and therefore, the meeting is in a position to pass resolutions on all the agenda items. Additionally, on behalf of Mr. Zahn, the independent proxy, I'd like to inform you that Mr. Zahn noti!ed the Board of Directors last Friday in aggregated form about the voting instructions that he's received.

We can now begin with agenda item 1, which concerns votes on the !nancial and non!nancial reporting for the 2023 !nancial year. This agenda item is split into 2 today. We'll be having 2 votes. Item 1.1 relates to the usual vote on our !nancial reports. And additionally, this year, for the !rst time, we'll be having an advisory vote on our non!nancial reporting under Item 1.2.

Any questions or comments will be dealt with jointly for these 2 items. So under Item 1.1, the Board of Directors proposes approval of the operating and !nancial review of Novartis AG, the !nancial statements of Novartis AG and the group consolidated !nancial statements for 2023.

The vote under Item 1.2 is taking place for the !rst time this year due to new statutory requirements. And here, the Board of Directors proposes endorsement of the non!nancial report for the 2023 !nancial year in an advisory vote. This vote concerns the section speci!ed on Page 85 of the Novartis in Society Integrated Report for 2023. Our auditors, KPMG AG has audited the group consolidated !nancial statements of the Novartis Group and the !nancial statements of Novartis AG and recommends their approval. Moreover, KPMG has conducted a limited assurance audit of the key !gures on Pages 80 to 84 on Novartis in Society Integrated Report, and they have nothing to add to their report.

The annual report, the auditor's reports as well as the Novartis in Society Integrated Report 2023, which contains the non!nancial report have been available on the Novartis website since their publication.

I and my CEO, Mr. Narasimhan, would now like to make some additional comments about the past !nancial year and about our company.

Shareholders, ladies and gentlemen, Novartis not only achieved an excellent result in 2023, but also continue to work hard on strengthening the company to make it !t for the future. We have sharpened our strategic focus and tailored our group structure from the diversi!cation and breadth of the early 2000s to more focus and greater depth. We will continue to work on consolidating and creating leading positions in our focus areas.

Overall, our focus, not least following the spin-o# of Alcon in 2019 and Sandoz last year, has helped us to generate a very good shareholder performance of nearly 200% of the -- over the past 10 very active years. Thanks to our strategic and operative measures, 2023 was a successful year despite the challenging economic and geopolitical situations which I would like to discuss in more detail a little later.

Group sales increased by 10% at constant exchange rates, to \$45.44 billion. This was mainly thanks to the strong growth of our heart disease and cancer portfolios. Net pro!t rose by 62% at constant exchange rates to \$8.57 billion. Core net pro!t improved by 19% at constant exchange rates to \$13.45 billion, thanks to further e\$ciency gains. Our strategy of

positioning Novartis as a focused medicines company centering on highly innovative therapies has contributed signi!cantly to this encouraging development.

While in 2013, we were still active in various health care markets such as ophthalmology, generics and animal health, we have streamlined our activities over the past 10 years. This has allowed us to reduce our operational structure from 6 divisions to 1, making us more agile in the market.

The decision to focus our portfolio on 4 high-growth therapeutic areas while building new highly innovative technology platforms has helped us to bundle our expertise and consolidate our leading position in areas that matter to us. This movement from breadth to depth is key in view of accelerating technological developments in medicine and digital technologies, such as arti!cial intelligence. In order to prevail and to take a leading position in new !elds, such as gene therapy, nuclear medicine and RNA, which we have continuously strengthened in recent years, we have to use our !nancial and our human resources carefully and in a targeted manner. This is the only way to shorten the long development times and achieve commercial success.

As part of these e#orts, we have narrowed down the number of our research projects from around 150 to just over 100 over the past 2 years. We've also made further progress in manufacturing. We have streamlined our global production network while making substantial investments into the development of highly innovative drug manufacturing platforms. Last year, we were able to commission a new nuclear medicine production facility in the U.S., and we are planning to set up new units for the production of these time-critical therapies, which must reach patients within a few days in both China and Japan. Our RNA production unit here in Schweizerhalle, which is one of the largest in the world for this technology is sign that we still want to keep production in Switzerland.

To achieve our ambition to be one of the world's leading pharmaceutical companies through constant focus also means having to drive digitization and arti!cial intelligence on a large scale. We are not only working on continuing to digitalize our internal processes to generate e\$ciency gains. We also strongly believe that arti!cial intelligence will enable us to make the company even more agile.

Last but not least, technology will help us to better adapt to the conditions of the postpandemic working world, which is characterized by hybrid models. New technologies can also be expected to accelerate our research and development. Arti!cial intelligence already allows us to make research processes more e\$cient and to analyze large volumes of data, this wouldn't have been possible just a few years ago.

We do not know whether it will ever be possible to develop a therapy completely in silicone, in other words, entirely with the help of new data technologies. However, we do know that the future of medicine is no longer conceivable without the use of arti!cial intelligence.

Ladies and gentlemen, Novartis is working hard to leverage new technologies and attract the best talent and partners in order to remain one of the most successful pharmaceuticals company in the world. This mindset is important because the world around us is changing at a rapid pace. What is considered stable and secure today may be outdated tomorrow. This

does not just apply to technological change but also to social, economic and geopolitical developments, all of which will impact the direction and activities of Novartis in years to come.

Driven by the climate crisis and the desire to create a more sustainable and fairer world, new social movements are gaining traction. Political and other independent communities that were barely noticeable until a few years ago have shaken the fabric of society. This development has been ampli!ed by social media, which allows debates to be more democratic in a meaningful way, but also more polarized. This development also impacts the corporate world. Against this backdrop, ESG, environment, social responsibility and ethical corporate governance is becoming increasingly important.

Our annual report contains more detailed information on these issues.

Novartis is aware of this responsibility. We began more than 2 decades ago by assigning the global contract of the United Nations to support far-reaching e#orts in our mental protection, access to medicines and the diversity of our associates. Today, we invest substantial amounts in the sustainability of our facilities and distribution and partner networks to achieve our environmental goals. We are also committed to an ethical and fair labor and wage system and are continuing to implement high ethical standards and demand them from our employees. We are also continuing to expand access to the supply of medicine.

In recent months, we have made progress in the development of new therapies for neglected infectious diseases. But what's more, we've also launched new programs that give disadvantaged groups in the population, including in industrial countries such as the U.S., better access to health care.

Social changes are accompanied by geopolitical upheavals. While the U.S. remains the world's driving economic power with a clear technological lead in many areas, China and its bricks partners are catching up fast and are about to form a counterweight to the U.S. At the same time, Europe is in danger of being sidelined. The continence in"uence is waning, former innovation leaders such as Germany, the U.K.

and France, are struggling to keep up both economically and technologically. As a global company with a strong basis and its headquarters of key research and development activities and manufacturing in Switzerland and close connections with the European Research Community, we must adapt to this new reality. Novartis has a strong position in Europe and will continue to invest here. But for continued global success, we must also focus on the U.S., Asia and especially China. These are markets of the future that we want to invest in to secure a long-term success.

These economies as well as many countries in Latin America and Africa are growing faster than those in the central western world.

Europe must do everything in its power to increase its innovative power and enable companies to drive research and produce innovation. This is also true for Switzerland, of course, the latest political initiatives to resume negotiations with the EU with the aim of a stable framework agreement are a step in the right direction. The development triggered by counselor [indiscernible] to further develop this make us optimistic that Switzerland will be

able to once again have the success of the past.

Ladies and gentlemen, in 2023, we made substantial operational progress and laid the foundations for future growth. We are also doing well !nancially. Our balance sheet is strong and thanks to our excellent credit rating and strong cash "ow, we are able to make signi!cant investments and to pay out dividends. I'm therefore pleased to be able to propose a dividend increase of 3.1% to CHF 3.30 at today's Annual General Meeting, which corresponds to a dividend yield of 3.9% as per the end of 2023. Novartis' solid results and the continued strong performance of our associates, whom I would like to thank for their excellent work, give us con!dence for the future.

We have a strong global organization, a healthy product portfolio and a promising pipeline. Both the Board of Directors and the Executive Committee are highly motivated to develop the company and to continue the good work of recent years.

I would now like to close and hand over to our CEO, Vas Narasimhan. Thank you very much for your attention.

# Vasant Narasimhan Executive

[Foreign Language] Thank you for joining us today for our Annual General Meeting. Novartis has evolved over 200 years to keep pace with science and the changing needs of the world. We began as a dye making company, became a chemicals company and then slowly evolved into a health care conglomerate when Novartis was created in 1996. Over the recent years, we have accelerated our transformation into a focused medicines company. We have completed over \$100 billion in transactions to focus our company and bring in new technologies that put us at the leading edge of science and innovation.

And last year, with the successful spin-o# of Sandoz, we fully became a pure-play innovative medicines company. Today, our focused strategy is delivering strong !nancial, operational and R&D performance, as I'll outline for you this morning.

Our 2023 performance was one of the best in the history of Novartis. In 2023, we delivered USD 45.4 billion in net sales, a 10% growth versus the prior year, and core operating income that grew at 18%. Our core margin increased to 36%, moving towards our goal of 40%. Importantly, we delivered strong free cash "ow and maintain a very healthy balance sheet. This strong growth was driven by a broad base of medicines, many of which have a lengthy runway before their loss of exclusivity.

Our breast cancer drug, Kisqali is transforming breast cancer care. Recent updates to clinical guidelines in the United States now recommend Kisqali as the only preferred CDK 4/6 inhibitor for patients diagnosed with HR+/HER2- metastatic breast cancer.

With radioligand therapies like Pluvicto, we're reimagining cancer care for advanced cancers. By guiding radioactive atoms to cancer cells, RLT delivers radiation in a targeted manner, rede!ning the standard of care in the post-taxing setting for prostate cancer and has the potential to transform the treatment of many other cancers over time. And with Fabhalta, we have an incredible opportunity to reimagine the care for patients su#ering from a range of rare diseases.

Next, I would like to turn to our pipeline. Over the last year, we delivered 10 positive Phase III readouts on medicines with signi!cant potential to improve patients' lives and drive our future growth. The strength of our pipeline is a testament to our renewed strategy and focus on technology platforms where we have depth and scale to develop and commercialize therapies. I want to highlight a recent readout for our hematology medicine, scemblix, which builds on our 20-year legacy to treat chronic myelogenous leukemia, or CML, a deadly blood cancer. In 2001, Gleevec was the !rst targeted therapy in cancer and gave CML patients an opportunity to live for many years.

A decade ago, we made another advance with Tasigna, which continued to improve the care of these patients. And now more than 20 years later, our scemblix Phase III readout demonstrated superiority to Gleevec or Tasigna, and holds the opportunity to rede!ne the standard of care in CML once again.

In 2023, we also signed more than 15 strategic deals. These deals strengthen our position in areas like radioligand therapy, gene therapy and RNA therapeutics. They also strengthened our portfolio in key therapeutic areas such as oncology with the proposed acquisition of Morphosys and renal therapy with the acquisition of Chinook. Additionally, we expanded our e#orts in AI by partnering with Isomorphic Labs, one of the leading pioneers in arti!cial intelligence for drug discovery.

In terms of our impact on society, in 2023, we reached 284 million patients with our innovative medicines. We also continue to deliver our environmental targets. Our emissions, waste and water reductions are all on track to deliver our 2025 ambitions. We achieved our EPIC pledge aspirations of equal pay for equal work and gender diversity with now 48% female representation in management. Our goal is to continue to be one of the leaders in access to medicines in the long run.

In summary, 2023 was a strong year for Novartis. This performance was also re"ected in our #3 ranking in total shareholder return among our peers. I am grateful for the hard work of our associates who delivered these excellent results.

Now looking ahead, I'll share with you how we plan to continue that momentum and stay on track to achieve our goals in 2024. Our strategy remains unchanged. We have 4 core therapeutic areas: cardiovascular, renal and metabolic, immunology, neuroscience and oncology. And we're continuing to orient ourselves around these areas in both research and development and business development. Chemistry, biotherapeutics, RNA therapeutics, radioligand therapy and cell and gene therapies remain our core technology platforms, and we will continue to deepen our expertise and strength in each of these areas.

And we continue to expect 75% of our company's growth in the coming years to come from the United States, Germany, China and Japan. And we will sustain a focus on these 4 priority markets while advancing access for patients in low and middle-income countries across the globe.

Moving to our portfolio. We have strong presence and expertise in each of the therapeutic and disease areas we focus on, supported by strong in-market bands within each TA and a robust pipeline. We also continue to focus on our productivity and our margins. We are now at a 36% core operating income margin, and our aspiration is to reach 40% of by 2027, driven by strong productivity programs as well as our continued sales growth.

Now turning to technology. And as highlighted by our Chairman, we will continue to invest in and build strong technology foundations for the company. In addition, we are committed to being an industry leader in this new age of arti!cial intelligence. Our goal is to use data science and arti!cial intelligence to both improve our productivity as well as increase our speed and e#ectiveness in research and development.

And !nally, building trust with society remains a core priority for Novartis. Over the last 5 years, we've advanced to leadership positions in many of the ESG rankings, much of which is tied to our important work in alleviating disease burdens for the most vulnerable. This year, I'm proud to share that we are celebrating 25 years of Coartem, our leading antimalarial drug. And we have delivered more than 1 billion treatments of this drug since 1999 without pro!t. We continue to develop the next wave of antimalarials in clinical trials with our goal to create a malaria-free world.

Before I close, I want to once again acknowledge our associates for their hard work and dedication. Our people and our culture are at the heart of our success. And they are the reason our performance has been so strong. And our strong culture will continue to enable our performance in the future. I look forward to working alongside our people to reimagine medicine in the years ahead.

In closing, Novartis continues our journey to become the most trusted and valued medicines company in the world. It will be a long journey, but we are con!dent in this next era will be another historic chapter for our company. Thank you very much.

### Charlotte Pamer-Wieser Executive

Thank you very much, Vas. We've now been able to establish attendance !gures. Ladies and gentlemen, allow me to share the !gures with you for attendance today at our AGM. Present today are 1,693 shareholders and their representatives as well as the independent proxy. Together, they represent 1,221,976,632 votes, equating to 53.65% of the 2,277,477,752 issued shares.

The shares are divided as -- represented as follows: 1,114,499,640 votes are represented by the independent proxy. And the shareholders here in the room and their representatives represent 80,476,992 share votes.

#### Joerg Reinhardt Executive

Thank you, Ms. Pamer. I would now like to open the "oor for discussion. And for this agenda item, we currently have 4 people wishing to take the "oor. Let's begin with Mr.

Vincent Kaufmann.

### Vincent Kaufmann Attendee

Chairman, members of the Board of Directors, Shareholders, ladies and gentlemen, I'm Vincent Kaufmann, and I'm Director of the Ethos Foundation. And I'm representing a large number of shareholders here today. I'd like to take the "oor on this agenda item #1 to raise several points relating to this AGM, particularly the Sustainability Report that comes up on the agenda item 1.2. And also the votes on the various compensation items under Items 5.1, 5.2 and 5.3.

First of all, to the vote on the sustainability report. Ethos is very surprised by the Board of Directors interpretation of the rules here in proposing a consultative or advisory vote. The spirit of Article 964 of the Swiss Code of Obligations as well as Article 17 of the Article of Incorporation of Novartis because the Articles of Incorporation, which we approved last year provide that the sustainability report must be approved by the AGM and is a nontransferable matter. However, the Board of Directors is proposing only an advisory vote and is, therefore, taking this responsibility onto its own shoulders.

I would ask you, please, to reconsider this for next year. We certainly have a di#erence of opinion here. Nevertheless, we'd like to thank the Board of Directors for the high quality of this report, which covers all the various challenges in this !eld, but there are improvements to make for the future. First of all, the plan of action for reducing greenhouse gases should be explained in greater detail in the report next year. And secondly, next year's sustainability report should go into biodiversity issues in greater detail.

Novartis' activities have a great potential e#ect on the ecosystem and Nature Action 100 coalition has called upon Novartis to measure it's -- and other companies to measure their impact on biodiversity and come up with a plan to reverse reductions in biodiversity.

Finally, let me come to the matter of compensation. Unfortunately, we are seeing compensation rising much too rapidly. Again, the level of compensation is too high. Of course, we recognize the very hard work done by the executive teams at Novartis but we're, nevertheless, of the opinion that variable compensation is rising far too quickly and is not justi!able. Mr.

Narasimhan will have netted over [ CHF 16 million ] for 2023, which is twice what he received in 2018 when he !rst took o\$ce. Now as you know, of course, the Novartis' value on the stock market has remained constant over that time at [ CHF 200 billion ]. It certainly hasn't doubled. Compensation for the CEO is going to be able to increase as well, as you'll have seen in the reports. He can actually earn up to 11x his base salary, meaning that he could be earning almost CHF 20 million a year.

So ladies and gentlemen, we have the opportunity today to send a message to the Board of Directors here to call upon them to have -- to return to a more balanced system of compensation to learn from the areas of the future. Excessive compensation can lead people to take excessive risk simply for their own bene!t. So please pay careful attention to the compensation votes under Items 5.1, 5.2 and 5.3 and vote no on those points. Thank you very much.

# Joerg Reinhardt Executive

Well, thank you, Mr. Kaufmann. First of all, thank you for the kind words you've said about our work in general. In our performance, you said that the report on non!nancial matters was a good report. Thank you for those words of praise.

You also talked about the excellent work done by our executive team, our management and of course, we agree with you. Then you talked about a di#erence of opinion with respect to the vote on the report on non!nancial matters.

Di#erence of opinion is a good way of describing the situation. There are indeed di#erences of opinion on this matter. It is not very clearly regulated by the law. So what we agree on is that there is a di#erence of opinion as to whether or not a binding vote is required. In our view, on the basis of the legal advice that we've taken, a nonbinding vote is certainly acceptable and many Swiss companies will be having such a nonbinding vote this year.

Now over and above that, of course, the important thing is what's in the report and what we do on the basis of this report.

And I can assure you that if we were to get a low level of approval in this vote, be it advisory or binding, would certainly lead us to review the various aspects that we see that you're not satis!ed with. So we will certainly see what you have to say about our report. You mentioned greenhouse gases, in particular, we will certainly work on that in our report. And then you mentioned biodiversity, which is certainly a topic that we are very much on top of, we will be detailing our impact on biodiversity more carefully in the report next year. We are already on it actually with gathering the data there.

Now you also mentioned compensation. Of course, that's not a new topic for Ethos. You've said that the level of compensation is increasing. That is not correct, actually, the level of compensation is not rising. The CEO's target pay has been unchanged for the last 4 or 5 years.

So the actual level remains unchanged. What has changed is the performance; some years performance was lower, some years it is higher and that is re"ected in the annual compensation. You may have forgotten that in 2022 our CEO earned less than his target at [ CHF 8 million ].

This year, compensation is higher because performance has been very good, not just in terms of what the company has done, but also what we've delivered in terms of total shareholder return, you will see that it's a lot better than it has been in the last couple of years. And therefore, we believe that our compensation system is indeed suitable to re"ect these levels of performance. Sometimes you earn less, sometimes you earn more and what we earn in the future will, of course, depend on the performance of the company. So we will see how compensation develops as time goes on. All right.

I hope I've addressed your various points, Mr. Kaufmann, and you made your voting recommendations. Well, let us see what happens when we get to the particular voting items. Let me come to the next speaker now, which is [ Reinhardt Naya ].

## Unknown Attendee Attendee

Thank you very much. I would also like to comment on item 1.1. The focusing or depth of the research of -- the research strategy of Novartis, there is another company in Europe that had the same starting point in a country with a very high wage level is called Novo Nordisk and to set up their own research to have a good balance between acquisition and on research

results. And the balance at Novo Nordisk is actually exemplary. I'm sure that you are observing in detail what they are doing.

And I would be grateful if you could just give us a bit of an outline of a comparison of what is being done at Novo Nordisk and what Novartis could maybe learn from them. There is a famous quote, don't ask what your research department can do for you, but what the CEO and the Chairman of the Board can do for the research department. I would be grateful if you could just give us a few ideas about what you have done for research in the past year, in addition to what was done before and what you're planning to do for this year. Thank you very much. I would like to thank you for having put some of my former associates onto the slide pictures.

## Joerg Reinhardt Executive

Thank you very much, [ Mr. Naya ]. For your observations, yes, it's correct. Novo Nordisk has, over the last few years, 2 years, has shown a dramatically good development. Their share price has risen a lot more than ours or that of Roche or anyone else, and that is mainly due to the success in 1 particular area.

Those slimming injections that you've probably heard of, that were developed by 2 companies, one of them being Novo Nordisk, and they're expected to be very successful with this. It's not quite there yet. And Lilly, who also bene!ted from these injections for slimming.

Of course, Novo Nordisk has been on our radar for 20 years. It started o# as a relatively small company, !nanced through a foundation, which was already very attractive 20 years ago, a lot of companies wanted to take them over but it was never possible because the foundation always warded o# any attempt at takeover. They are very much focused on the diabetes products. And that is one of the recipes for their success. This focus on one therapeutic area to go into that research to a great depth and obtaining good results for many years but not outrageously good results.

But now a product that was planed to be used for diabetes is now being expanded to other indications such as obesity. And that is promising an enormous market success that is boosting the share price. I don't think that's a result of a wonderful research strategy, but result of the fact that they've been focusing on one particular area for many years. And that's exactly what we want to do, too, by focusing on 4 therapeutic areas that we want to go into in more depth, much more than a few years ago, and we still had a very broad range of therapeutic areas covered.

We've now taken the decision that it's better to focus on a few areas and to really know them. And that's exactly what Novo Nordisk did with diabetes research and the resulting slipping injection. And don't forget, if you have one product that makes [ CHF 20, CHF 30 or maybe CHF 50 billion ] in sales. This will, of course, pose a risk of being one-sided. So if you just depend on one product, that can be a burden, and we'll see how they fare in the future.

So what are we doing for research and development and to do some more. Well, we're always talking about research and development and how important it is, how important is to position it properly. We introduced some changes in the last few years in terms of research management, some essential changes maybe. Vas can say a few sentences on that and how

we are going to boost research more.

### Vasant Narasimhan Executive

Yes. Thank you, Joerg, and thank you as well for the question. The changes we've made in research and development, really build o# of the focus we're taking in these 4 core therapeutic areas. I would say as well, we have maintained our investment levels at over \$9 billion a year in research and development and maintain a goal of 19% to 20% of sales invested in research and development even as many of our peers actually cut back in R&D, that shows that deep commitment that we have within research and development. As well as in the 3 new technology areas I highlighted, we make signi!cant investments in cell and gene therapy, RNA therapeutics and radioligand therapies within our research portfolio.

The last point I would highlight, also, I think, to address one of the questions you had, was, we are about 65% to 70% of our medicines in our pipeline are internally developed. So we think we have a good balance between internal and external R&D, and we plan to maintain that balance going forward. Thank you.

### Joerg Reinhardt Executive

Yes, thank you very much. And perhaps just another couple of sentences. There are statistics. If you look over the past 20 years at which companies in the global pharma industry have brought the most new products to the market. That was actually us.

They haven't all been as successful as the weight loss injection from Novo Nordisk, but nevertheless, we think we've done rather well. So there you have it, and we'll come on to the next speaker now, who should be Katherine [indiscernible].

#### Unknown Attendee Attendee

Respected Chairman and members of the Board, [Foreign Language]. Today, I speak not only for myself, but for those who weren't heard in the past, namely for 400 workers of Novartis India Limited, whose working rights were violated and whose employments were canceled in February 2022. We are deeply disturbed by the turn of events in Novartis India Limited, where Novartis AG holds majority shareholding. Since 1984, the employees are organized in a Novartis Employees Union, and there was always a respectful and constructive relationship between the management and union until recent years, an incomplete list of anti-worker acts by the management.

None observance at key meeting to negotiate new agreements between the union and the management. Unilateral attempts to change employment conditions instead of going through the established collective bargaining process. Manipulation of the appraisal system to penalize union members, informing Indian newspapers about plant dismissals before informing employees and the union. Ignoring the summons of the government labor authorities, and the list goes on.

May 2021, the CEO, Mr. Narasimhan, is informed by all of us via e-mail about these workers' rights violations. An immediate intervention is urged to remind the Indian management of the global social obligations of the Novartis Group. No reply.

June 2021, a subsequent reminder is sent, again, no reply. February 2022, with utter disregard to the established norms of a solving workers issue through negotiations, the management of Novartis terminates the services of 400 employees. 365 of these are members of the union. By terminating these contracts despite of a restrained order by the honorable Labour Court, Mumbai, Novartis disrespects not only its workers, but also the law of the land in which they're operating.

The termination of all union members clearly indicates that Novartis tramples workers' rights, contrary to their claim of being employee-friendly. With news around stake sale in Novartis India Limited, it is very clear that the act of workers' right violation was to pave the way for stake sale, thus not only impacting employees but also the minority shareholders. We call for immediate end to these violations and for resolving these types of issues through talks rather than resorting to workers' rights and we assure our support for resolving these issues.

Executive Board. As you write yourself, you intend to become the health care company that enjoys most appreciation and con!dence in the world, I'd urge you to act accordingly. Wellbeing of everybody is based on everybody who works for you. So before you are talking about an increase of the pay for the Board, please ensure the rights of all your associates and do show them the appreciation and con!dence that you wish for yourself. Mr.

Narasimhan, how will you ensure from now that workers' rights are insured at Novartis India Limited? What are the tangible steps that you intend to compensate for injustice that has been done?

## Joerg Reinhardt Executive

Thank you, [indiscernible]. Is it okay? When I respond to you in German, I'm sure it is. So !rst of all, you've spoken about a few fundamental points, which I can only endorse, of course, it must be our concern to ensure that the rights of all of our associates are properly protected and that we look after them. And I would certainly like to say that we do that to the best of our ability.

Now what you have talked about with respect to India, Novartis India Limited was very speci!c, and I must confess that I'm not in a position to take a line on that today. It's certainly something that we will look into and we will get back to you, certainly. Nevertheless, I will ask Vas if he would like to give us his view of this matter.

## Vasant Narasimhan Executive

So thank you very much for raising your [indiscernible]. First, let me say Novartis has unionized employees all around the globe, and we do our best always to respect the rights of our unionized workers. It's something we always try to take as seriously. Could we do better? I'm sure we can do better.

I'm sure we will work to do better based on your feedback. But I can assure you, Novartis respects unions and ensures that we engage them in an appropriate way.

Now speci!cally on your question regarding the India -- Novartis India Limited, we made a strategic decision to focus our India business primarily on new drug launches. The Novartis India Limited business is primarily focused on older medicines, which are no longer medicines that Novartis believes we are the right company to promote. Hence, we struck a deal with a local manufacturer to send that portfolio of medicines and the workers who were working on that portfolio to this partner company. And that led to the action that you described. We will certainly take your feedback, review how we approach the situation and try to improve in the future.

Thank you very much.

### Unknown Attendee Attendee

Thank you for your answer. But with all due respect, you may be talking about your strategy and that's !ne. But nevertheless, you have to ensure that as you follow through with your strategy, you do protect everybody's workers right. But thank you very much for listening and for saying you'll get back to me. Thank you.

#### Joerg Reinhardt Executive

Okay. That takes us to the next speaker, Mr. [indiscernible]

### Unknown Attendee Attendee

Mr. Chairman, ladies and gentlemen, my name is [indiscernible]. I represent Actares. Actares is a consultant for the ethically oriented private shareholders in Switzerland. Last year, you had a good run, excellent performance.

[ Sandoz ] was on course, we were skeptical. You focused on patented and high price therapies, which increases the pro!t margin to astronomical heights 14% plus. And now the question is the following.

The communication has been almost euphoric, should the [ primal ] of the shareholder value still prevail, we think that it shouldn't. We see that there is a need for action in 3 areas. The !rst one, your annual report. Your report document high ambitions also in the areas of the Environmental Social Governance. Your concepts and methods are shown with a great level of transparency.

And that is why we cannot understand why this report on non!nancial matters is not for binding vote.

As we said earlier, we understood that the review of the Articles of Incorporation means that the vote has to be binding. And also on the previous speaker. We have mentioned the con"ict in India in a bilateral dialogue several times, there seems to be still some need for clari!cation, and we will be happy to continue the conversation about this topic. And then another point, your remuneration. You are making it very transparent, the new package for the CEO, a stateof-the-art, but it is still not adequate.

If we look at the remuneration 2023 and because we don't know the performance of the future years, of course, this is more than CHF 16 million. That is 5.3 -- a factor of 5.3% more than Actares recommends, we recommend an upper limit of CHF 3 million. And this has widened the gap between quali!ed workers in production, for example, people working in the laboratory or a process engineer and the CEO as the gap has widened further. It's now approximately [ 1 to 160 ]. That is not fair.

And my impression is that this also puts the motivation of your teams at risk. We also wonder whether the weighing of the 3 components of the remuneration should not be shifted to the long-term incentive and to sustainability. And the third point, your commitment to society. The yields of the pharmaceutical industry follow their own laws. At the beginning, you have patent protection, market monopolies and the power to determine one's own prices in countries which are very poor, this can lead to an undersupply.

Global access to the Novartis portfolio has always been a topic of our dialogue with Novartis. Novartis is systematically addressing these challenges and support some worthwhile programs. We've seen that in the report. Nevertheless, Actares feels that Novartis needs to do more than that to make its products a#ordable for everyone who needs it, 1 example from our dialogue. We know that a malaria medication is being sold at cost price.

But that can even be too expensive for some countries. So why not provide the medication at an even lower nominal price. And the same goes for antibiotics and basic care medication which is something that we should invest in because of the inadequate amount of remuneration we are going to vote no on all of the remuneration points and agree to everything else. Thank you very much for your attention.

## Joerg Reinhardt Executive

Thank you very much, Mr. [indiscernible]. Thank you for the positive evaluation of our work in summary, I could say. I am pleased that you think that the transparency of our annual report is exemplary. That's, of course, what we're going for to make everything transparent.

That is important for the public and our shareholders to know and to help them assess our performance. So -- then the second topic was remuneration that's something you're not as happy with. You're saying CHF 3 million should be the top salary for a CEO for a company of our caliber, the average target remuneration of the 15 largest pharmaceutical companies, of which 10 are in the U.S. and 5 in Europe is CHF 16 million. And we are probably not going to be able to close the gap between the CHF 3 million and the CHF 16 million.

And you're saying higher remuneration needs to be justi!ed and it has to be proven. Well, we have tried to explain how this kind of remuneration comes about in the annual report and it varies from year-to-year, and it can go down as well as up. We'll see how this develops over the next few years.

You mentioned the long-term compensation strategy. We are one of the few companies that provides for a 3-year cycle for the long-term incentive. So there is an objective for 3 years. And after 3 years, the bonus is paid out or not or just in part, and that is the long-term part of the bonus. So we're on the right path here.

And you said you talked about access to medication. Now you said that what we're doing is good. And of course, we can always do more. And of course, we can. You mentioned that our malaria drug is being provided at cost price.

You said, why lower? Yes, it's possible. There are some generics that are far below our cost price. And they are bought -- being bought by WHO. So we're not the only supplier.

There are several Indian generics companies that can provide the drug at lower cost. But we invest in research. And particularly malaria, as Vas Narasimhan said, we have made e#orts in the area of malaria to try and tackle the resistance that's developing an old medication. We have 1 in Phase III now. So we're investing into products that are necessary, but that will probably not make a great contribution to our bottom line.

But we will continue to be committed to here. And the same goes for antibiotic research. We are part of an investment fund for antibiotics research. There are a number of pharmaceutical companies that spend several millions each year to support this fund. And we hope that this will be fruitful over the next few years.

So thank you very much, Mr. [indiscernible].

And that's now on to the next speaker, Mr. [indiscernible].

#### Unknown Attendee Attendee

Chairman, ladies and gentlemen, thank you very much. Thank you for allowing me to speak for a moment. I've got a question about a topic that's perhaps not central to today's meeting. I'm very impressed with your reporting. It's very good.

It's very transparent. So you talk about lots of societal issues as well. And I think the management has done a very good job. Great that we can ask questions. Now one of the biggest problems in the world today and in our country is migration.

There are a large number of people coming here. They have many skills that they bring with them. And yet when they arrive, they can't do anything. They just have to wait while their applications are processed.

And last year, I worked on a project with refugees where we tried to organize work and work experience for these people. And Novartis company was in the area actually where I was working with these refugees. And I contacted Novartis and asked if it would be possible for any of these people to come along and do some work. Now I know that there can be legal impediments to this. But nevertheless, I do imagine that a company like Novartis, which is so a dedicated to societal issues would be able to do something.

And so here's my question. Have you got this problem on your radar? And could you comment on it?

### Joerg Reinhardt Executive

Well, thank you, Mr. [indiscernible]. I'll have a short answer, which is yes. That's great, [indiscernible]. Yes, let me give you a couple of examples.

We have some refugees from Ukraine, who are being integrated in our traineeship programs here in Switzerland, our apprenticeships. We are partnered with a number of NGOs as well as the UN, the International Red Cross and other organizations who have such programs to integrate refugees, not just in Switzerland, of course, they have global programs. And our

objective is to make sure that we can give work to over 100 refugees around the world so that they can come to work at Novartis. And we do hope we'll be able to get this going. So certainly, yes, the answer is yes, the topic is on our radar.

Thank you very, very much. That's Mr. [indiscernible] and thank you, too.

Right. We can carry on then Mr. [indiscernible].

### Unknown Attendee Attendee

Ladies and gentlemen, the world is changing. We have entered a new age, as which you said. This new age brings with it new problems and unsolved challenges. And there is 1 problem that I would like to mention here. It's one that's not mentioned enough in discussions.

Now that's the demographic problem. I did some calculations. If we continue the current development within 4 generations, the Gaza Strip will have twice as many inhabitants as Italy. Italy has 59 million today, and a birth rate of 1.25%. And after 1 generation, Italy will only have 37 million; after 2 generations just 23 million; after 4 generation, just 9 million inhabitants.

Just if we continue the development as it is.

In Gaza, they have a birth rate of 3.5% and 2 million inhabitants. And after 1 generation, 3.5 million; after 3, 10.7 million and after 4, 18.8 million inhabitants. I can't really see a solution to this problem, even if the development doesn't go quite like I just forecast demographic forecasts are generally quite stable though. So there is no solution. Well, I'm Novartis pensioner.

I've been a pensioner for 25 years. And during that time, I have considered the problems of the future. I've written a book called technology is not enough what's necessary for humanity to survive for a long time to come, it's part of the Google library. So there is an unsolved problem, and we have to think about it. Thank you very much for your attention.

#### Joerg Reinhardt Executive

Thank you very much, Mr. [indiscernible]. I can't comment on statistics, to be honest. And of course, demographic development is an unsolved problem. I agree with you on that, not just for Italy and Gaza, but for the whole world.

China is also going to have a problem in the foreseeable future with aging population. We are doing whatever we can, that those people who are alive, survive with a lot of -- with a high quality of living for as long as possible. But yes, of course, the aging population is something that we need to look at. And the drop in birth rates too, and that's true for the entire Western world. I'm sure we'll be talking about this topic in several years to come.

#### Unknown Attendee Attendee

I would like to give my book to you. Thank you very much.

#### Joerg Reinhardt Executive

All right. That's all in terms of comments on Item 1. Are there any more questions? That does

not seem to be the case. And so Ms.

Pamer is now going to explain the voting device to you shareholders.

# Charlotte Pamer-Wieser Executive

I would now like to explain the voting device televoter. It has a touch screen. A few seconds before the start of each vote, the item will be shown on the screen. You will have 4 options. Green for Yes, Red for No, and Yellow for Abstention.

And as soon as you made your choice, the televoter will vibrate to show you that your vote has been locked. If you make a mistake in voting, you can correct your vote either by pressing the color that you wish for that again or by pressing the same button again to reset. You can only vote as long as the voting window is open. The televoter allows several votes to be taken at the same time on 1 sheet because some of them won't be shown on the same screen. So you can use the arrow on the bottom right to go to the next page or to the previous page.

If during the Annual General Meeting, you have any more questions concerning the televoter, please do address -- please talk to the help desk.

## Joerg Reinhardt Executive

Thank you very much, Ms. Pamer. And now that takes on the -- to the vote. The Board of Directors proposes the approval of the operating and !nancial report of Novartis AG, the annual account of Novartis AG and the group annual accounts for the business year 2023 and recommends that you vote yes. Please cast your votes now.

[Voting]

# Charlotte Pamer-Wieser Executive

We now have the results of the vote, [indiscernible]. Ladies and gentlemen, you have approved the proposal of the Board with 99% of votes represented. So I state that you have approved the proposal of the Board. The next vote is on Item 1.2 on the agenda. The Board proposes to approve the report on non!nancial matters for the business year 2023 and proposes that you vote yes.

Please cast your vote now.

[Voting]

## Joerg Reinhardt Executive

The result is now available. Mr. Aegerter. Ladies and gentlemen, you have approved the proposal of the Board with 98.4% of votes represented. Thank you very much.

And I state that you have approved the proposal of the Board on this consultative vote.

Now on to Item 2, the discharge from liability of the members of the Board of Directors and the Executive Committee. The Board of Directors proposes to discharge each of its members and each of the members of the Executive Committee for the 2023 !nancial year. I would now like to open the "oor for discussion on this item. So far, we have no requests. If there are no

requests to speak, we will proceed with a vote.

Current and former members of the Board of Directors and Executive Committee who were part in 2023, do not have the right to vote on this item. The Board of Directors proposes that you approve this proposal and vote yes.

[Voting]

## Joerg Reinhardt Executive

The result is now available. Mr. Aegerter. Ladies and gentlemen, the proposal was approved with 97.1% of the votes represented. Let me just declare that you have approved the proposal of the Board of Directors.

So we now move on to item 3 of the agenda, appropriation of available earnings of Novartis AG as per balance sheet and declaration of dividend for 2023. Our annual report gives a detailed view of last year's business and has already been explained under Item 1 of the agenda, the appropriation of available earnings as proposed by the Board of Directors is contained in notice for the Annual General Meeting as well as on Page 10 of the Annual Report. Board Directors proposes a dividend increase by 10 rappen to CHF 3.30 per share entitled to dividends. If this proposal is approved, the dividend will be paid as from March 11, 2024.

I now open the "oor for discussion on this agenda item. If there are any requests from the "oor. No, there are no requests from the "oor, then we proceed to the vote. The Board of Directors proposes that you approve this proposal and therefore recommends that you vote yes. Please cast your votes now.

[Voting]

# Joerg Reinhardt Executive

We now have the result of the vote Mr. Aegerter, please. Ladies and gentlemen, you approved the proposal of the Board of Directors with 99.7% of the votes represented. Thank you. I note that you've approved the proposal of the Board of Directors.

We are now -- have Item 4 of the agenda, the reduction of share capital. Item 4 provides for the cancellation of the shares repurchased in 2023 as authorized by the ordinary Annual General Meeting held on for March 2022 as well as the corresponding reduction of share capital. I state that creditors were noti!ed by publication of Swiss O\$cial Gazette of commerce of the 31st of January 2024 that they can request guarantees by lodging their claims. Furthermore, KPMG AG con!rmed in the audit certi!cate available today that claims of the creditors of the company are still fully covered also after the post reduction of share capital.

The Board of Directors proposes to resolve -- to reduce the share capital of CHF 1,115,964,098.48 by CHF 42,898,154.95 to CHF 1,073,065,943.53 by cancellation of 87,547,255 treasury shares repurchased in 2023 whereby the reduction amount is o#set with the pro!t carried forward. I -- well, is there request from the "oor? Yes. There is a request from the "oor from [indiscernible].

## Unknown Attendee Attendee

Shareholders, Executive Committee and Board of Directors. These 4 blocks symbolize the corporate value of our Novartis AG, including the repurchase shares because they're part of their balance sheet. And now these shares are canceled. So that's the new corporate value. Does anything change in terms of the size of the blocks?

No. They have the same !nancial value because this one is 4% is going to be thrown into the river. So the company is worth less in the same way when paying out a dividend and that has to be earned again. So what has changed? The weighting has changed.

You just have 3 instead of 4 parts. In all these years, we have canceled shares to the tune of approximately CHF 40 billion. And we already heard that the company value is still about CHF 200 billion, but CHF 40 billion were thrown away. So if we had paid that out as an additional special dividend, that would have been approximately CHF 7 per share, more than twice as much as we said last year.

So the question is who is going to bene!t most from these cancellations? The Executive Committee and the Board, well, your payment is partly in shares and options. The repurchasing program prevents the share price from dropping and it guarantees income for our top people without a major entrepreneurial risk. And all of those who have earnings per share as part of their objectives. We are going to throw away 4% of shares, that means next year, same pro!t with 4% fewer shares, and that is an increase of the earnings per share by 4% without having earned a single franc more but it sounds good.

And it's good for the bonus.

In my view, that's not good for us. It's like vested interest. To take this money instead of making reasonable investments. There are a lot of companies that maybe could be acquired with know-how, et cetera, that would be good for the company. I know that this opinion is a minority one, particularly due to the votes by the independent proxy.

We've already seen that 92.4% of votes are represented by the independent proxy. That means that we, the rest of us represent 6.4%. And so I was -- I wondered whether it was worth me talking here, but really is -- does vex me and that's why I wanted to say. And so I think we should really consider to not do this nonsense about throwing away money. Well, throwing away money is not the right thing, and that is why I'm going to vote no.

# Joerg Reinhardt Executive

Thank you very much, Mr. [indiscernible]. We don't throw away money. But before I will ask our CFO, to say a few things. There are 2 things that I would like to comment.

First of all, you said that we don't have stock options at Novartis. You mentioned stock options. We had those 15 years ago, we don't have them anymore. Secondly, earnings per share is not part of the bonus calculations. It is the bonus that's based on operating income and sales, but not on earnings per share.

Mr. Kirsch, would you like to add something?

# Harry Kirsch Executive

Thank you very much, Mr. Reinhardt. Thank you, Mr. [indiscernible] for this question. I think share repurchasing and capital reduction sometimes maybe it's confusing because you don't all deal with this kind of topic every day.

It is complex. I can con!rm that earnings per share is not part of the basis for compensation. That means that the executive or the Board do not bene!t from earnings per share being increased. We do not destroy capital. We don't throw it in the Rhine or anywhere else.

I understand this building block logic, but the total value, the market capitalization does not change. It is just divided by a smaller number of shares. So if nothing else happens, when you announce a share repurchasing program, the share price of the individual share increases. That means that all of us or every shareholder has a small bene!t for example, of 4%. And that increases the share price.

It doesn't always happen because there are also other factors determining the share price. But for example, when we -- as previously announced, the share price went up and so everybody bene!ts. But the overall value of the company does not change. And the market capitalization of Novartis has remained unchanged. That seems to be the case, but it's been mentioned twice, but there are 2 other factors.

We sold Alcon, we sold Sandoz. So those shareholders who still have Sandoz and Alcon shares have those shares as well. And if you look at the market capitalization in Swiss francs, you also have to consider the increase of the value of the Swiss franc compared with the dollar. And in dollars, the share price, including Sandoz and Alcon has risen. So I think that's all needs to be said on this.

# Joerg Reinhardt Executive

Thank you very much, Mr. Kirsch. So if there are no further requests for the "oor or no further comments, we'll now move on to the vote. The Board of Directors proposes that you approve the proposal and therefore recommends that you vote yes. Please cast your votes now.

### [Voting]

# Joerg Reinhardt Executive

We now have the result of the vote. Mr. Aegerter, please. Ladies and gentlemen, the proposal of the Board of Directors was approved with 99.5% of the votes cast. Thank you.

Let me state that you've approved the proposal of the Board of Directors, which takes us to item 5 of the agenda, votes on compensation for the members of the Board of Directors and the Executive Committee. The Board of Directors proposes approval of a maximum aggregate amount of compensation for the members of the Board of Directors for the period between this Annual General Meeting and the next Annual General Meeting and to approve a maximum aggregate amount of compensation for the members of the Executive Committee for the !nancial year 2025. Furthermore, there will be an advisory vote on the 2023 compensation report. KPMG AG has audited the compensation report of Novartis AG and has nothing to add to the audit report.

Explanations regarding the compensation system are contained in brochure compensation votes at the 2024 Annual General Meeting, which is available on our website. The notice of the Annual General Meeting also contained a reference to the brochure. I now open the "oor for discussion, and we have a request to speak by [indiscernible].

## Unknown Attendee Attendee

Ladies and gentlemen, my names is [indiscernible]. The compensation of the CEO can be massively increased in cases of particularly good performance. Well, I mean, I think we should always expect outstanding performance even if he's only going to be paid CHF 8 million or CHF 3 million. Does Mr. Narasimhan really need this astronomically high level of pay to maintain his lifestyle?

I would suggest that he doesn't need that much. And Mr. Narasimhan, if you don't actively want to decline to take this increased sum, then I would have a suggestion for you, you could transfer that increase in your compensation directly to the Swiss Social Security because that would help to fund the recently approved 13th payout that pensioners are going to be getting in the future. That would be a really exemplary thing to do.

#### Joerg Reinhardt Executive

Well, thank you. Thank you, Ms. [indiscernible]. I know you are serious about this. I have been hoping we wouldn't have to talk about social security.

I don't really think I should take a position on this today. I know it's a highly emotive topic. But in principle, you can always discuss executive compensation in our industry. And certainly, we do see real excesses, particularly in the U.S. We try to !nd a balance between what's considered to be acceptable and what's being paid out in the rest of the world.

We try to !nd the balance so that we can ensure that we can attract the best people to Switzerland and keep them here. And that's not always very easy. We do try to be fair. We try to evaluate the performance of all our associates every year.

We have this very complex and clever system. For doing that, you can read about that in our annual report. Sometimes compensation is higher, sometimes it's lower. But we certainly try to be fair. And of course, we have to o#er competitive packages on an international scale because we want to have the best people working for us.

And I'm sure you'd like us to be able to do that. Otherwise, we won't be able to deliver the outstanding performance that you expect from us. So we are very much aware that this is a bit of a tightrope work that there are di#erences of opinion on the topic but we do hope that you believe us when we say that every year, we try to be as fair as possible and to take account of all sides of the argument. So thank you very much for your contribution today.

We have another request for the "oor. Mr. [indiscernible].

# Unknown Attendee Attendee

I hope you can hear me. I would wanted to congratulate you on the pro!t. And I don't -- I do think you deserve it, but I would like to quote Mickey Mouse, the beautiful and rich have got everything. But I would also like to talk about Patrice Bula maybe you can look at the summary Annual General Meeting 2023. I went there last year, and the !rst topic was also being discussed.

Before I went to Swiss Steel where Mrs. Bula was not present, but I conveyed Mr. [indiscernible], best wishes of [indiscernible] and Marco Portman. And the answer that Mrs. Bula gave was, he said, Mr.

[ Richard ] I invest into the Swiss economy. I support that instead of buying another villa. And so my recommendation to the members support the Swiss economy, particularly Swiss Steel and not Nike -- well, I got the secondhand, but every minute, every second, 25 Nike trainers are being sold. So you should continue to invest into the Swiss economy to preserve our status of neutrality because we have 60,000 nuclear bunkers and everyone has their ID and tablets. And so I hope that you all enjoy your lunch.

# Joerg Reinhardt Executive

Thank you very much, Mr. [ Richard ] for your contribution. You didn't ask a question, so I don't think I have to give you an answer either. Any further requests for the "oor? No, there aren't any?

Good. Let's then start voting on the compensation of the Board of Directors !rst. The Board of Directors proposes to approve the maximum aggregate amount of compensation for the members of the Board of Directors covering the period from the 2024 Annual General Meeting to the 2025 Ordinary Annual General Meeting of CHF 8,780,000 and therefore, recommends that you vote yes. Please cast your votes now.

[Voting]

## Joerg Reinhardt Executive

The result is now available. Mr. Aegerter, please. Ladies and gentlemen, you approved the proposal of the Board of Directors with 92.2% of the votes represented. Thank you.

I note that you've approved the proposal of the Board of Directors. Let us now vote on the compensation for the members of the Executive Committee. The Board of Directors proposes that shareholders endorse the maximum aggregate amount of compensation for the members of the Executive Committee to be paid, promised or granted during or in respect of 2025 totaling recommending you to vote yes. Please cast your votes now.

[Voting]

# Joerg Reinhardt Executive

The result is available. Mr. Aegerter, please. Ladies and gentlemen, you approved the proposal of the Board of Directors with 90% of the votes represented. So I also note that you've approved the proposal of the Board of Directors.

We will now proceed to the vote on the compensation report, 2023. The Board of Directors proposes to -- with shareholders endorse in an advisory nonbinding vote on compensation report 2023, and therefore, recommends that you vote yes. Please cast your votes now.

### [Voting]

# Joerg Reinhardt Executive

We now have the result of the vote. Mr. Aegerter, please. Ladies and gentlemen, you approved the proposal of the Board of Directors with 84.4% of the votes represented. Thank you.

I note that you've approved the proposal of the Board of Directors. Let's then continue with item 6 of the agenda, reelections of the Board Chair and the members of the Board of Directors. The Board of Directors proposes the reelection of the current members of the Board of Directors each until the end of the next Annual General Meeting. The Board of Directors also proposes the reelection of myself as Chairman of the Board of Directors, both for a period of o\$ce until the end of the next ordinary Annual General Meeting. Let us start with my proposed reelection as a member of the Board and as Board Chair.

For the voting procedure, I would like to hand over to our Vice Chair, Mr. Moroney. Mr. Moroney, please.

#### Simon Moroney Executive

Thank you, Mr. Reinhardt. There are no requests for the "oor on Item 6.1. And therefore, we proceed to vote. The Board of Directors proposes the reelection of Joerg Reinhardt as member of the Board of Directors as well as Board Chair and therefore, recommends that you vote yes.

Please cast your votes now.

[Voting]

#### Simon Moroney Executive

We have the result of the vote. Mr. Aegerter, please. Ladies and gentlemen, Dr. Reinhardt has been reelected as a member of the Board of Directors as well as the Board Chair with 96.1% of the votes.

Congratulations, Mr. Reinhardt. And I state that Joerg Reinhardt has been reelected to the Board of Directors and as Board Chair. Congratulation. Thus, I will pass back to our Chairman.

#### Joerg Reinhardt Executive

Thank you, Mr. Moroney, and thank you so much for your trust and con!dence. This takes us to the remaining reelections and elections of the members of Board of Directors, 6.1 to 6.13 on these agenda items. There are no requests for the "oor. Any further comments or questions, which is not the case, which take us through the votes, and we'll do that in 1 election round, but you'll elect each member of the Board of Directors individually, the 12 members of the Board of Directors who are sent for re-election are grouped into a total of 4 election units.

The voting time will therefore be 4 to 5 seconds. The Board of Directors proposes that you reelect all 12 candidates and therefore recommends that you vote yes. The voting time starts now.

### [Voting]

## Joerg Reinhardt Executive

Time us up and we are just going to wait for the results. The results are now available. Mr. Aegerter, please. Thank you, ladies and gentlemen.

We elected to the Board of Directors are the following people: Ms. Andrews has 99.5%; Mr. Buechner with 87.5%; Mr. Bula with 87.3%; Ms. Doherty with 95.8%; Ms.

Heller 97.2%; Mr. Hochstrasser, 96.6%; Mr. van Houten, 97.3%; Mr. Moroney, 98.2%; Mr. Pro Gonzalo with 99.5%; Mr.

Sawyers, 95.5%; Mr. Winters, 96.4%; and Mr. Young, 98.6%. Congratulations to all of you on your reelection.

Thank you, Mr. [indiscernible]. So I'm pleased to note that you've approved the proposals of the Board of Directors. And I'd also like to congratulate all of the members who have been reelected. So we can move on to the next item, agenda Item 7, reelections to the Compensation Committee.

The Board of Directors propose the reelection of the current members of the Compensation Committee, each for a term of o\$ce running up to the end of the next ordinary general meeting. If Mr. Moroney is reelected to the Compensation Committee, the Board once again intends to appoint him as Chairman of the Compensation Committee.

Now I would open the "oor for discussion now, although I don't see that anyone has registered to speak and so we can proceed directly to the vote. We will once again do this in one go. The 4 members of the Compensation Committee who are to be reelected, we've shown across 2 pages on your device, and you have a total of 15 seconds to cast your votes. The Board of Directors proposes that you reelect all 4 candidates and therefore recommends to you vote yes. Voting time begins now.

[Voting]

# Joerg Reinhardt Executive

We have the results, please, Mr. Aegerter. Ladies and gentlemen, you have elected Mr. Bula with 85.9%; Ms. Heller with 94.5%; Mr.

Moroney, 95%; and Mr. Winters 93.6%. Thank you very much. So I note that you've approved the proposals of the Board of Directors here as well. And once again, I congratulate the members on their election.

And we can move on to agenda item 8, the reelection of the auditors. According to our Articles of Incorporation, the auditors have to be elected annually by the general meeting. KPMG AG is standing for reelection. I open the "oor for discussion, but I don't see that anyone has requested to take the "oor, and so we can proceed directly to the vote. The Board of Directors proposes the reelection of KPMG AG, a statutory auditor for 1 year and therefore, recommends that you vote yes.

Please cast your votes now.

[Voting]

### Joerg Reinhardt Executive

The results are available. Mr. Aegerter, please. Thank you, ladies and gentlemen. You have reelected KPMG AG with 99.4% of the votes represented here.

Thank you. Thank you very much. So I note that we have reelected the auditors, KPMG AG.

Let's move on to Item 9, the reelection of the independent proxy. The Board of Directors proposes the reelection of Peter Andreas Zahn, attorney at law here in Basel as our independent proxy until the end of the next ordinary general meeting. I see no speakers wishing to take the "oor, and that means that we can proceed directly to the vote. The Board of Directors proposes that you approve this proposal and therefore recommends that you vote yes. Please cast your votes now.

[Voting]

#### Joerg Reinhardt Executive

The result is available. Mr. Aegerter. Ladies and gentlemen, you have reelected the independent proxy, Peter Andreas Zahn with 99.4% of the votes. Congratulations to you, sir.

Thank you very much. So I note that you've reelected Peter Andreas Zahn. Thank you.

So we have already dealt with all items on the agenda, and this brings us to the end of this year's Annual General Meeting. I would like to extend my thanks to you for the trust that you've expressed in us through your votes and elections today. The next Annual General Meeting is scheduled for the 7th of March 2025. And I can hereby declare today's meeting close. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]