Sustainability Report 2014 Lek d.d.

21 Company Profile Lek d.d. is a company with a two-tier board system. The ma- nagement function is performed by the company’s Board of Management which is controlled by the company’s Super- visory Board. The Board of Management runs the company to the benefit of the company, independently and on its own responsibility. The members of the Board of Management are obligated to provide to the President of the Board of Management complete, com- prehensive, accurate and ongoing information about any major event and development of individual transactions in the areas of their responsibility. Provision of information to the Supervisory Board and the General Assembly is the responsibility of the President of the Board of Management who reports to the Supervisory Board Chairman on an ongoing basis in all the cases important to the company's operations, as follows: • Profitability of the company, particularly its return on equity. • Draft business policy and other basic business issues, • Transactions that can significantly impact the com- pany’s profitability and financial solvency. • Development of transactions under way, in particular the company’s turnover and financial standing. • Issues regarding the business operations of the parent company and its associated companies. • Other matters in compliance with the law and accord- ing to the requirements of the Supervisory Board. Management of the company business is overseen by the Supervisory Board, in accordance with its mandates and re- sponsibilities. The Board can perform reviews and verification of the company's books and documentation, its treasury, secu- rities and goods in stock, and other matters. The Supervisory Board can request the Board of Management to provide any information 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 Management. • Providing the General Assembly with a written report on the verification of the annual report and of the ma- nagement of the company during the business year. • Reviewing reports by the Board of Management. • Reviewing and verifying the company’s books and do- cumentation. • 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. The Supervisory Board performs due supervision of the com- pany’s management, monitoring it through the reports provided by the Board of Management on a regular basis at Super- visory Board meetings, and on the basis of other notifications the Board of Management assesses as significant in accor- dance with statutory and internal regulations. In this way, the Board performs comprehensive control of the company’s eco- nomic, environmental 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 encompasses all relevant information related to environmental protection. 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, based on the skills and competen- cies of its members, with the aim of providing the best people, to cover all the company’s functions, and to ensure their ope- rational autonomy. Similarly to other levels of the company’s functioning, supervisory bodies also operate in accordance 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. Upon their appointment, they have to sign a statement pursuant to Article 255 of ZGD-1, an obligation set for all Novartis Group employees in the Novartis internal Conflict of Interest Policy. "To improve the safety culture and reduce the number of accidents at work, we designed a comprehensive plan in 2014, aimed at raising common awareness of the impor- tance of safety. Lek’s management supported increased investments in so- lutions that will make our workplaces even safer. We have undertaken many projects. The beginning of 2015 was very encouraging as no accident resulting in sickness absence was recorded in the first two months, though in the first two months of 2014 there were two accidents resulting in sick- ness absence. In addition, two activities with a sustained contribution to safety were also of key importance in the previous year: the roll-out of the Safety Promoters initiative within which 80 associates are currently promoting safety among employees, and the implementation of the DuPont STOP program. The latter is based on enhancing observa- tion and communication skills thereby reducing injuries and increasing the awareness about safety. It is generally felt that the awareness about the impor- tance of safety is growing in all areas and that we all want to contribute our share. This aspiration connects us all: the top management, trade union, worker’s council, leaders and employees. We increasingly talk about safety and notice that the employees do not only take care for their own safety but often for the safety of their colleagues by encouraging awareness. Despite the progress, there is still room for improvement in each and every one of us." Robert Hribar, Head HSE For a better safety culture