ANNUAL REPORT 2021

LUNDBECK ANNUAL REPORT 2021 = CONTENTS 36/111 CORPORATE GOVERNANCE Corporate governance concerns the way Lundbeck is managed and controlled, while creating value for both the company and its stakeholders. More information on the mandatory annual Corporate Governance report is disclosed on www.lundbeck.com* in accordance with section 107(b) in the Danish Financial Statements Act. https://www.lundbeck.com/content/dam/lundbeck-com/masters/global- site/pdf/corporate-governance/2021/corporate_governance_report.pdf Detailed description of the Board members and their competencies and qualifications can be found on https://www.lundbeck.com/global/about-us/our- leadership/board-of-directors Detailed description of the Board of Directors' work, evaluation procedure and results can be found on https://www.lundbeck.com/global/about-us/corporate- governance/board-tasks **** Lundbeck has a two-tier board structure consisting of the Board of Directors and the Executive Management. The two bodies are separated, and no person serves as a member of both. The Board of Directors has ten members, of which seven are elected at the Annual General Meeting for a one-year term and three are elected by Lundbeck's employees for a four-year term. The current members of the Board of Directors** bring deep industry knowledge and solid top management experience to Lundbeck, which are essential for the Board to perform its tasks. Lundbeck's Board of Directors is responsible for approving the corporate strategy and its implementation, setting goals for Executive Management, and for ensuring that members of Executive Management and other senior managers have the right qualifications. The Board of Directors also evaluates management performance and remuneration. Furthermore, the Board of Directors has the overall responsibility for ensuring that adequate internal and external controls are in place, and for identifying and addressing any relevant risks. These responsibilities are defined in the Danish Companies Act and stipulated in the rules of procedures for the Board of Directors. The Board of Directors regularly evaluates the Lundbeck's strategy, business, performance, financial strategies and policies, and ensures that day-to-day management is carried out in accordance with such policies. The Board of Directors analyzes Lundbeck's need for capital on an ongoing basis, including an assessment of Lundbeck's capital structure. There is no universal answer to the question of what the optimum capital structure is for a specific company because the relationship between equity and interest-bearing debt relies on the specific characteristics that apply within the particular industry in which the business operates and, by extension, the operating and financial risk. However, companies in the pharmaceutical industry are often particularly well-funded which may be explained by the extended development projects and risks associated with research activities. The Board of Directors pursues the policy that equity beyond the level which, based on a conservative estimate, would be considered sufficient to support the underlying business should be distributed to the shareholders. The distribution to our shareholders takes place through annual dividends and if appropriate share buyback programs. Our dividend policy is currently to pay out 30-60 % of the net profits as dividend to the shareholders. The Board of Directors has established a self-evaluation procedure covering, among other things, board composition, contribution and results, Board agenda and discussions, cooperation between the Board of Directors and Executive Management, committee work and structure. The 2021 Board evaluation was built on the previous evaluations performed in 2019 and 2020 where all members of the Board of Directors and Executive Management participated. It was conducted as an in-house online survey and the result showed an increase to an already high level of satisfaction with the collaboration and interaction between the Board of Directors and Executive Management. The collaboration was described as transparent, constructive, effective, and involving. The survey also included an update of the competencies on the Board. We saw an increase of competencies and knowledge relevant for the future strategic path of the company, e.g. scientific knowledge and experience, which is now at a satisfactory level. More details regarding the work performed by the Board of Directors, the evaluation procedure and results hereof can be found at www.lundbeck.com***. Also, the remuneration of Lundbeck's Executive Management and Board of Directors can be found at www.lundbeck.com****. Detailed description of the remuneration can be found on https://www.lundbeck.com/global/about-us/corporate-governance/remuneration

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