Sustainability Report 2012 Lek d.d.

Company Profile Sustainability Report 2012 – Lek d.d. 18 The primary function of the Supervisory Board is to oversee the po- licy pursued by management. The Board can perform reviews and verification of the company's books and documentation, its treasury, securities and goods in stock, and other matters. The Supervisory Board can request the Board of Management to provide any infor- mation needed for the Board to perform its supervisory role. The main responsibilities of the Supervisory Board include the following: • Supervision of company management, • Verification and approval of annual reports, • Checking and proposing to the General Assembly the use of distributable net profit, jointly with the Board of Manage- ment, • Providing the General Assembly with a written re- port on the verification of the annual report and of the management of the company during the business year, • Reviewing reports by the Board of Management, • Reviewing and verifying the company’s books and documentation, • Appointment and recall of Board of Management members, • Granting the right to and setting criteria for buying stock options, • Signing contracts with Board of Management members, • Other competencies in accordance with the law. In accordance with its competencies and responsibilites, the Supervisory Board performs due supervision of the company’s management, monitoring it through the reports provided by the Board of Management on a regular basis at Supervisory Board meetings, and on the basis of other notifications the Board of Management assesses as significant in accordance with sta- tutory and internal regulations. In this way, the Board performs comprehensive control of the company’s economic, environ- mental and social impacts. Information on these impacts is also provided to the Supervisory Board as part of its competency of approving the company's annual report which also encompas- ses the business report which contains, inter alia, all the major environmental protection information. For their work, the members of the Supervisory Board of Lek d.d. receive no compensation or other rewards. Being also Lek/Novartis employees, their duties as Supervisory Board members form part of their job-related obligations. Appointment of the members of the Supervisory Board of Lek d.d. is confirmed by the Executive Committee of Novartis, the highest governance body, with the aim of providing the best people, based on their skills and competencies, to cover all the company’s functions, and to ensure their operational autonomy. Similarly to other levels of the company’s functioning, super- visory bodies operate in accordance also with the Diversity & Inclusion initiative. In their function, Supervisory Board members act to the benefit of the company and with due diligence, bound by an obligation of confidentiality. All members of the Supervisory Board avoid any conflict of interest. On their appointment, they have to sign a statement pursuant to Article 255 of ZGD-1, an obligation set for all the Novartis Group employees in the Novartis internal Conflict of Interest Policy. 1.5.2 Employee participation in company management 19 The company Lek d.d. adheres to the methods and condi- tions for worker participation in management as provided by the Slovenian Worker Participation in Management Act. The employees exercise their rights to participation in ma- nagement individually and collectively through the Workers' Council, Workers' Assembly and their representatives in the company's management bodies. The workers' representatives also act as Supervisory Board members, while the Workers' Director also performs the functi- on of Board of Management member. It consists of several committees (for general issues, for econo- mical, status-related, human resources and social issues), while its members serve on various boards of the company (innova tion, occupational safety, diversity and inclusion, supervisory committee of Lek Trade Union). In 2012, the employees proposed no initiatives to the Supervi- sory Board. However, they maintained direct contacts with the Workers’ Director who provided them with answers and assi- stance in finding suitable solutions with regard to job changes and working conditions, and gave them additional information. At Workers’ Council meeting, questions and initiatives provi- ded by employees are answered and responded to immedi- ately by the President of the Board of Management, Workers’ Director and HSE Director. Answers and/or any additional information is also provided after the meetings. The issues raised most frequently included working hours, working con- ditions, business results and plans, holiday facilities, organi- zational changes, and additional pension insurance. At all the sites, the Workers’ Council members, jointly with the HSE function, participated in the review of risk assessment. At employee meetings held at each of the sites, emplo- yees actively participated and put forward their questions which were answered on the spot by the President of the Board of Management, Board of Management members and respective services’ representatives. A member of the Di- versity and Inclusion committee (D&I) took active part in the Committee’s work, presenting the “Project 50+” initiative dealing with opportunities for better utilization of the skills and knowledge of employees older than 50 years who would share their knowledge and expertise with younger co-workers through mentorship. Furthermore, the Committee member participated in the "aging workforce" initiative, seeking soluti- ons for the elderly employee population. A member of the Innovation Committee participated in the pro- cess of improving the model of quality and transparent identi- fication of the most successful innovators at Lek. Criteria for assessing the impacts of proposed solutions in the Leading Solution and Leading Breakthrough categories were redefi- ned and improved. The selected innovators were honored with awards within the Lek Stars campaign. After the implementation of the Th!nk Sandoz initiative for online idea management, the Committee member took part in the process of assessing ideas filed in the web-based application. 1.5.3 Shareholder overview and inclusion 20 Lek, a Sandoz company, focused its activities on five key groups of stakeholders: patients, employees, shareholders, healthca- re partners (healthcare professionals, regulators, professional associations, buyers, suppliers) and the society (local commu nities, non-governmental institutions, members of the Academy 19 Disclosures GRI 4.4 and 4.17 20 Disclosures GRI 4.14, 4.15, 4.16 and 4.17