By Stine Jacobsen and Soren Jeppesen
COPENHAGEN (Reuters) -Norway’s sovereign wealth fund, the world’s largest, said on Monday it will abstain from voting on new board members at drugmaker Novo Nordisk’s extraordinary shareholders’ meeting this week, including the proposed new chairman.
Novo’s controlling shareholder, the Novo Nordisk Foundation, said last month it would install its own chair, Lars Rebien Sorensen, to lead the drugmaker’s board.
Current Novo Chair Helge Lund and six other independent board members are set to step down at the November 14 meeting after a dispute with the foundation over the pace of change at the company.
GOVERNANCE CONCERNS OVER DUAL ROLE
The Novo Nordisk Foundation holds a majority of voting rights through its investment arm Novo Holdings.
Norges Bank Investment Management held a 1.79% stake in Novo Nordisk on June 30 valued at $5.54 billion, according to the Norwegian fund’s latest portfolio update. It did not provide a reason for its abstention and was not immediately available for comment.
The boardroom clash has added to the turmoil at Novo, whose shares have plunged more than 50% this year as rival Eli Lilly grabbed market share in the lucrative weight-loss drug market.
Sorensen’s dual role as both foundation chair and incoming company board chairman is unprecedented in Novo’s history and has raised governance concerns among some investors. The former Novo CEO, who led the company from 2000 to 2016, has said he plans to serve as chairman for two to three years.
Analysts have described the foundation’s move as giving it “carte blanche” control over the drugmaker, with its 77% voting share representing an unprecedented concentration of power.
The foundation has been criticised for departing from its stated “arm’s length” approach to the company, acting more like an activist investor as it seeks to restore sales and investor confidence.
Shares in Novo Nordisk rose 3% in early trade on Monday, after the Wegovy-maker on Saturday dropped its bid for U.S. weight loss drug company Metsera, ending a bidding war with rival Pfizer.
(Reporting by Stine Jacobsen and Soren Jeppesen in Copenhagen, additional reporting by Gwladys Fouche in Oslo, editing by Terje Solsvik and Louise Heavens)
