Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk
Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
76
16
Section 5
Other disclosures
5.1 Share-based payment schemes
304
250
234
Share-based payment expensed in the income statement
DKK million
2023
2022
2021
Restricted stock units to employees
365
265
189
Long-term share-based incentive programme
(Management Board)'
Long-term share-based incentive programme
(Management group below Management Board)
Restricted stock units to individual employees
Share-based payment expensed in the income
statement
1,271
819
598
209
205
19
2,149
1,539
1,040
1. In 2021, Novo Nordisk introduced a new share-based compensation programme with terms, which amortises
the grant date valuation over three years (the 2020 programme was amortised over four years). The 2023
expense includes amortisation of the 2020, 2021, 2022 and 2023 programmes.
Restricted stock units to employees
In connection with Novo Nordisk's 100 year anniversary and in appreciation of the
efforts of employees during recent years, as of 1 February 2023, all eligible employees
in the company were offered 74 restricted stock units. Each restricted stock unit gives
the holder the right to receive one Novo Nordisk B share free of charge in August
2026, subject to continued employment. The cost of the DKK 1,331 million programme
is amortised over the vesting period.
Long-term share-based incentive programme
Management Board
During 2023, Management Board participated in four long-term incentive
programmes (LTIP) which commenced in 2020, 2021, 2022 and 2023 respectively.
The LTIPS commenced in 2021, 2022 and 2023 have a three-year performance period,
subject to continued employment, and a subsequent two-year holding period. Targets are
set at the beginning of the performance period and include determination of threshold,
on-target level of performance and level of performance to achieve maximum allocation
of shares. The maximum share allocation at grant cannot exceed 26 months' base salary
for the CEO, 19.5 months' base salary for executive vice presidents and up to 15.6 months'
base salary for senior vice presidents. Hence the LTIP is capped at a number of shares at
the time of grant. Financial targets are set by the Board for a three-year period, and are
linked to three-year average growth in sales and operating profit, while every year the
Board has set the non-financial targets for a one-year period. All targets are aligned
to Novo Nordisk's Strategic Aspirations 2025: Purpose and sustainability, Innovation and
therapeutic focus, Commercial execution and Financials. Target achievement is assessed
by the Board.
The grant date of the 2023-programme was February 2023, and the share price used
for the determining the grant date fair value of the award (DKK 456) was the average
share price for Novo Nordisk B shares on Nasdaq Copenhagen in the period 2-16
February 2023, adjusted for the expected dividend. Based on the split of participants
at the grant date, 46% of the allocated shares is be allocated to members of Executive
Management and 54% to other members of the Management Board.
The LTIP which commenced in 2020 is likewise subject to a three-year performance
period in which the number of allocated shares may increase or decrease in line with
performance, which is linked to financial targets, including sales growth and economic
value creation, and non-financial targets, including achievement of clinical trial
milestones and market authorisation for specific products. The maximum share
allocation is capped in a similar way as the LTIPS described above.
All restricted stock units and shares allocated to Management are settled by transfers
of treasury shares at the time of vesting.
Management group below the Management Board
The Management group below the Management Board has a share-based incentive
programme with similar performance criteria as Management Board. Financial targets
are set by the Board for a three-year period, while the non-financial targets have been
set by the Board each year.
On 31 December 2023, a total of 18.9 million shares (21.4 million in 2022 and
19.8 million in 2021) were outstanding including all ongoing programmes.
ACCOUNTING POLICIES
Novo Nordisk operates equity-settled, share-based compensation plans.
The fair value of the employee services received in exchange for the grant
of shares is recognised as an expense and allocated over the vesting period.
The total amount to be expensed over the performance and vesting period is
determined by reference to the fair value of the shares granted, excluding the
impact of any non-market vesting conditions. The fair value is fixed at the grant
date, and adjusted for expected dividends during the vesting period. Non-market
vesting conditions are included in assumptions about the number of shares that
are expected to vest. At the end of each reporting period, Novo Nordisk revises its
estimates of the number of shares expected to vest. Novo Nordisk recognises the
impact of the revision of the original estimates, if any, in the income statement and
in a corresponding adjustment to equity (change in proceeds) over the remaining
vesting period. Adjustments relating to previous years are included in the income
statement in the year of adjustment.View entire presentation