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| Corporate Governance |
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A. The following sections of the Directive on Information Relating to Corporate Governance are included by reference, respectively not applicable or could be answered with “none.” The sections that are dealt with in detail are stated in point B below. The numbering follows that of the Directive. The articles of incorporation and the details of the Board of Directors and of the management can be found on www.actelion.com, under “Investor Relations,” “Corporate Governance”.
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| Point | | Item | | Reference | | N/A | |
1. | |
Group Structure and Shareholders | | | | | |
| 1.1.3 | | The non-listed companies belonging to the issuer’s consolidated entities | | Financial Section, note 2 | | | |
| 1.2 | | Significant shareholders | | Financial Section, note 8 | | | |
| 1.3 | | Cross-shareholdings | | | | none | |
2. | |
Capital Structure | | | | | |
| 2.1 | | Capital | | Financial Section, note 3, 4 + 5 | | | |
| 2.2 | | Authorized and conditional capital in particular | | | | | |
| | | Conditional share capital | | Financial Section, note 4 and article 3a of the articles of incorporation | | | |
| | | Authorized share capital | | Financial Section, note 5 and Article 3b of the articles of incorporation | | | |
| 2.3 | | Changes of capital | | Financial section and financial statements 2002 | | | |
| 2.4 | | Shares and participation certificates | | | | | |
| | | Shares | | Financial Section, note 3 | | | |
| | | Participation certificates | | | | none | |
| 2.5 | | Bonus certificates | | | | none | |
| 2.6 | | Limitation on transferability and nominee registrations | | | | | |
| 2.6.1 | | Limitations on transferability for each share category, along with an indication of statutory group clauses, if any, and | | Article 5 of the articles of incorporation | | | |
| | | – rules on making exceptions. | | | | none | |
| 2.6.2 | | Reasons for making exceptions in the year under review. | | | | N/A | |
| 2.6.3 | | Admissibility of nominee registrations, along with an indication of percent clauses, if any, and registration conditions. | | Article 5 of the articles of incorporation | | | |
| 2.6.4 | | Procedure and conditions for cancelling statutory privileges and limitations on transferability. | | Article 5 of the articles of incorporation | | | |
| 2.7 | | Convertible bonds and options | | | | | |
| | | Convertible bonds | | Financial Section, note 16 | | | |
| | | Options | | Financial Section, note 20 | | | |
3. | |
Board of Directors | | | | | |
| 3.3. | | Cross-involvement | | | | none | |
| 3.4.1 | | Election procedure | | Article 16 of the articles of incorporation | | | |
| 4. | | Management Board | | | | | |
| 4.2. | | Other activities and functions | | | | none | |
| 4.3. | | Management contracts | | | | none | |
| 5. | | Compensation | | | | | |
| 5.3 | | Compensations for former members of governing bodies | | | | none | |
| 5.8 | | Loans granted by governing bodies | | | | none | |
| 6. | | Shareholder’s Participation Right | | | | | |
| 6.1. | | Voting rights restrictions and representation | | Article 5 + 11 of the articles of incorporation | | | |
| 6.2. | | Statutory quorums | | Article 15 of the articles of incorporation | | law | |
| 6.3 | | Convening of general meetings of shareholders | | Article 9 + 13 of the articles of incorporation | | law | |
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B. The following items are handled directly in this section:
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1. Group Structure and Shareholders
1.1 Group Structure
1.1.1 Description of Actelion’s operation group structure |
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Actelion Ltd is the holding and finance company of the Group.
Actelion Pharmaceuticals Ltd, based in Allschwil, a 100% subsidiary of Actelion Ltd, is in charge of discovery, development, registration, production, quality assurance, safety, marketing coordination, group management and coordination. Actelion Pharmaceuticals Ltd further holds the intellectual property rights of the Group.
Actelion Registration Ltd, based in London, a 100% subsidiary of Actelion Ltd, holds the marketing authorizations for products marketed by Actelion in the EU.
Hesperion AG, based in Allschwil, a 69.1% subsidiary of Actelion Ltd, performs clinical research for the Group and third parties.
Actelion Clinical Operations, Inc. based in New Jersey, a 100% subsidiary of Actelion Ltd, performs clinical operations on behalf of the Group.
Actelion Paris Organisation SAS, based in Paris, a 100% subsidiary of Actelion Ltd, performs administrative and marketing services in Europe for the Group.
Actelion Finance SCA, based in Luxembourg, a 100% subsidiary of Actelion Ltd, performs financing for the Group.
The remaining group companies serve as import, marketing and sales companies for the Group.
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| 1.1.2 All listed companies belonging to the Issuer’s Group |
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Actelion Ltd
Gewerbestrasse 16
CH-4123 Allschwil
Switzerland
Listed on the SWX Swiss Exchange under the code ATLN
ISIN CH0010532478
Market capitalisation as of
Dec 31, 2003: CHF 2,903,778,258
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3. The Board of Directors
3.1. Board members / 3.2. Other activities and functions of the members of the Board of Directors
Robert E. Cawthorn |
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Education and professional background:
B.A. Cambridge University, England; Managing Director of Global Health Care Partners, DLJ Merchant Banking; Chairman and CEO of Rhone-Poulenc-Rorer, Inc.; Chairman and CEO of Rorer Group, Inc.; President of Biogen S.A.
Other activities and functions:
Robert E. Cawthorn is a board member of the following listed companies: Charles River Laboratories and Rx Bazaar and the following unlisted companies: Coley Pharmaceutical Group, Leerink Swann & Company, PharmaNet, Next Pharma Technologies, H2O Technologies and The Bermuda Biological Station for Research
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| Joël Besse |
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Education and professional background:
Master in sciences from the University of Toulouse, France; Aerospace engineering degree from ENSAE (Ecole Nationale Supérieure de l’Aeronautique et de l’Espace), Toulouse, France; SED Ventures, Crédit Lyonnais and Arthur Andersen, Paris, France
Other activities and functions:
Joël Besse is a board member of the following listed company: Novuspharma S.p.A. and of the following unlisted companies:
Micromet AG, Newron Pharmaceuticals S.p.a, Prestwick Pharmaceuticals Inc., U3 Pharma AG, Renovo Ltd., Arrow Pharmaceuticals Ltd;
Senior Partner of Atlas Venture, London, UK, a venture capital firm
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| Jean-Paul Clozel |
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Education and professional background:
Cardiologist educated in France, with further training in pharmacology and physiology at the University of Montreal, Canada, and the University of California, San Francisco; Eleven years as a clinician, twelve years at F. Hoffmann-La Roche, responsible for the selection and pre-clinical development of drugs; Founder of Actelion
Other activities and functions:
None
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| Werner Henrich |
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Education and professional background:
Chemist and European patent attorney; Head of Global Intellectual Property and Pharmaceutical Licensing, F. Hoffmann-La Roche Ltd., Basel; Member of the Roche Pharmaceutical Division Executive Board.; Senior Vice President of Roche
Other activities and functions:
Werner Henrich is a board member of the following unlisted companies: Basilea Pharmaceutica and Addex Pharmaceuticals
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| Rudolf Maag |
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Education and professional background:
MBA from INSEAD; Vice-Chairman and CEO of Synthes-Stratec, Inc.; Various international management positions in SANDOZ.
Other activities and functions:
Rudolph Maag is board member of the following listed companies: Straumann Holding AG (chairman) and Geberit AG. He is also a member of the board of the Basel Chamber of Commerce
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| Fred Meyer |
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Education and professional background:
M.B.A. with distinction from the Harvard Business School and an M.S., cum laude, from the Swiss Federal Institute of Technology.; President of Cove Capital Corp.; Key executive of Omnicom Group Inc. (Chief Financial Officer, Vice Chairman, Special Advisor/Executive Office); Senior Vice President, Finance and Chief Financial Officer of CBS Inc.; Various positions with Sandoz Ltd, including President and Chief Executive Officer, Sandoz United States
Other activities and functions:
Fred J. Meyer is a board member of the following unlisted entities: Novartis Corp., Partners Group (USA) Inc., Zürich Life Insurance Company of New York and Earthjustice Legal Defense Fund
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| André J. Mueller |
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Education and professional background:
Degrees in Chemical Engineering from Geneva University and Business Administration from INSEAD; Founding Partner and Director of Investments for Genevest; VP of Finance and Administration and then CFO of Biogen; CIBA Ltd and Sandoz (managerial positions in the strategic planning and finance divisions both at headquarters and in the US)
Other activities and functions:
André J. Mueller is board member of the following listed company: Synthes-Stratec Inc. and of the following unlisted companies: Addex Pharmaceuticals (chairman) and Arpida Ltd.
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| 3.4 Elections and terms of office |
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| Name of Board member | | Executive member | | Nationality | | 3.4.2 Time of first election and the remaining term of office for each member of the Board of Directors | |
| | | | | | | Date of annual general meeting of first election | | Date of annual general meeting of renewal | | Annual general meeting of end of term of office | |
| Robert E. Cawthorn | | No | | British | | 2000 | | 2002 | | 2005 | |
| Joël Besse | | No | | French | | 2000 | | 2001 | | 2004 | |
| Jean-Paul Clozel | | Yes | | French | | 2000 | | 2002 | | 2005 | |
| Werner Henrich | | No | | French | | 2000 | | 2001 | | 2004 | |
| Rudolf Maag | | No | | Swiss | | 2000 | | 2002 | | 2005 | |
| Fred J. Meyer | | No | | Swiss | | 2000 | | 2003 | | 2006 | |
| André J. Mueller | | Yes | | Swiss | | 2001 | | 2003 | | 2006 | |
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| 3.5 Internal organizational structure |
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| Name of Board member | | 3.5.1 Allocation of tasks
within the Board of Directors | | 3.5.2 Members list, tasks and area of responsibility of each committee of the Board of Directors | |
| | | Chairman | | Vice- Chairman | | Delegate | | Compensation Committee | | Finance and Audit Committee | |
| Robert E. Cawthorn | | x | | | | | | x | | | |
| Joël Besse | | | | | | | | x | | | |
| Jean-Paul Clozel | | | | | | x | | x | | | |
| Werner Henrich | | | | | | | | x | | | |
| Rudolf Maag | | | | | | | | | | x | |
| Fred J. Meyer | | | | | | | | | | x | |
| André J. Mueller | | | | x | | | | | | x | |
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| 3.5.2 Members list, tasks and area of responsibility of each committee of the Board of Directors (continued) |
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The Compensation Committee reviews matters related to the compensation of the CEO and other top managers, as well as the general employee compensation, benefit policies and HR practices of the Company. This Committee also proposes to the Board of Directors goals for global incentive plans and annual objectives and evaluates performance against these, and issues the Compensation Committee Report to the Board of Directors. The management keeps the Compensation Committee informed of other global HR projects and policies, which are being implemented or considered. In 2003, the Compensation Committee met 5 times.
The Finance and Audit Committee reviews the internal controls and finances of the Group as part of its mandate to examine risks confronted by the Group. The Chief Financial Officer (CFO) of the Company is responsible for the minutes and attends the meeting of the Finance and Audit Committee. The Finance and Audit Committee has the following responsibilities: (i) monitoring the efficiency of the Management Information Systems (MIS) and other relevant control systems and processes; (ii) the appointment of internal and external Auditors and definition of their tasks; (iii) the evaluation of the Audit Program and the Audit Results; (iv) the monitoring, evaluation and control of the period’s accounts prior to their submission to the full Board of Directors; (v) the preparation of proposals for cash and other asset management; (vi) review of the budget and explaining action for decision to the full Board of Directors and performing risk assessment functions. The Finance and Audit Committee reports to the full Board of Directors at regular intervals and submits proposals for board resolutions, if necessary. In 2003, the Finance and Audit Committee met 7 times.
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| 3.5.3 Work methods of the Board of Directors and its committees |
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In 2003, the Board of Directors met 5 times and a majority (if not all) members were present at each board meeting. When the situation so warrants, the Board of Directors holds additional ad hoc meetings or telephone conferences to discuss specific issues. Any member can request a meeting.
The management presents a status report and the Board of Directors makes the decisions on the relevant issues requiring board approval.
In the case of committees, after presentation of the issue by the management, the committee takes a preliminary decision for approval to the full Board of Directors, which will be reported along with the details of the issue, to the entire Board of Directors, who will take the final decision.
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| 3.6 Definition of area of responsibility |
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The Board of Directors has delegated the management of the Company’s business to the CEO of the Company and to the Business Executive Board and has granted the CEO the power to appoint the members of the Business Executive Board.
The Board of Directors carries out the tasks reserved to it by law. The Business Executive Board takes all other management decisions.
The Board of Directors has set up a Scientific Advisory Board, with the task of reviewing the Company’s progress in research and clinical development and evaluating new scientific perspectives alongside the Company’s management. On December 31, 2003, the Scientific Advisory Board was composed of the following four external experts of worldwide reputation: Prof. Donald Hilvert, Prof. Joël Ménard, Prof. Craig Pratt and Prof. Richard Tsien.
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| 3.7 Information and control instruments vis-à-vis the management board |
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Currently, the Board of Directors receives monthly reports about the financial situation of the Company and quarterly reports made by the CEO. On a quarterly basis, the Board of Directors receives in addition the reports that are subsequently released to the public.
The management produces a monthly financial report, which is sent to the Board of Directors.
The risk management systems consist of quality control, which ensures that the products have the required quality to be marketed, internal review of clinical development, to ensure the safe development of the product and an extensive postmarketing surveillance ensuring the continuing safety of the marketed product. In the financial area, the Board of Directors is informed regularly about financial risk and the proposed actions to be taken to mitigate this risk.
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4 Management Board
4.1. Members of the management board |
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On December 31, 2003, the Business Executive Board (“BEB”) was composed of:
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| Simon Buckingham |
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Of Australian nationality, President
Head of US, Canada and Asia Pacific
Education and professional background:
Veterinarian by training; Bachelor of Veterinary Science (Honours), University of Sidney, Australia; Doctor of Philosophy, University of Melbourne, Australia, Graduate management Qualification Australian Graduate School of Management, University of New South Wales, Australia; Sales and Marketing Director, Parke-Davis US; Global Project Director, F. Hoffmann-La Roche, Switzerland; Product Marketing Manager and Territory Manager, F. Hoffmann-La Roche, Australia
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| Christian Chavy |
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Of French nationality, President
Head of Europe, Israel and Latin America
Education and professional background:
Business School: ESSEC (Ecole Supérieure des
Sciences Economiques et Commerciales); Master Degree of Business Management from ICG (Institut de Contrôle de Gestion in Paris); Vice-President and Head of Global Therapeutic Area Reproductive Health at Serono International in Geneva; Managing Director of Serono France; Managing Director of Rorer France, Rhône-Poulenc Rorer, President of RPR Canada Inc.; Marketing Manager at Bristol-Myers France, Smith-Kline and Merck Sharp & Dohme.
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| Louis de Lassence |
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Of French nationality, Vice-President, Head of Corporate Services
Education and professional background:
Business school in Paris in 1976 and degrees in accounting; External auditor. From 1982 to 2000, worked for the Roche Group, mainly in Finance and Administration: Internal auditor; Finance Manager of Roche, Brussels; Assistant of the vice-chairman of the Roche Group; Finance Manager of Pharma International
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| Isaac Kobrin |
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Of Israeli nationality, Senior Vice-President, Head of Clinical Development
Education and professional background:
Internist educated in Israel with further training (Fullbright Fellowship) at the Ochsner Medical Foundation in New Orleans, LA, mainly in the cardiovascular and nephrology fields; Group Leader of the cardiovascular development group, F. Hoffmann-La Roche
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| Andrew J. Oakley |
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Of Australian nationality, Vice President, Chief Financial Officer
Education and professional background:
MBA from London Business School; Member of the Australian Institute of Chartered Accountants since 1987; Senior finance capacity for the global holding companies of Accenture; Executive positions in the finance departments of two multinational building material companies; Several years as equity analyst with banks in Australia, the United Kingdom and the United States
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| Satoshi Tanaka |
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Of Japanese nationality, President and Representative Director, Japan
Education and professional background:
Hematologist, qualified as a Medical Doctor of Medical Science, educated at the Doctor Course of Kyoto Prefectural University of Medicine; Master Course of Kyoto Pharmaceutical University with qualification as Pharmacist; Behring Institute and University of Mainz in Germany (hemastaseology and immunology); Business management at Cranfield University in the UK.; Knoll AG in Germany (member of the Global R&D management as President of Knoll Japan); Senior Managing Director of Hokuriku Seiyaku.
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In addition to the above-named persons, the Senior Management comprises the following individuals on December 31, 2003:
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| Frédéric Bodin |
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Of French nationality, Senior Vice-President, Head of International Medical Marketing
Education and professional background:
Cardiologist educated in France; clinical leader for the development of benazepril and valsartan, Ciba-Geigy; Medical marketing leader, F. Hoffmann-La Roche; Medical marketing leader, Novartis.
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| Martine Clozel |
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Of French nationality, Senior Vice-President, Head of Drug Discovery Pharmacology & Preclinical Development
Education and professional background:
Pediatrician specialized in neonatal intensive care, educated at the University of Nancy, France; Training in physiology and pharmacology at McGill University, Montreal, and at the University of California, San Francisco; F. Hoffmann-La Roche
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| Walter Fischli |
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Of Swiss nationality, Senior Vice-President, Head of Drug Discovery Molecular Biology & Biochemistry
Education and professional background:
Biochemist educated at the Swiss Institute of Technology (ETH) Zurich with further training in molecular biology and organic chemistry; Research fellowship at the Addiction Research Foundation - Stanford University; Leader drug discovery projects, F. Hoffmann-La Roche
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5 Compensation, Shareholdings and Loans
5.1 Content and method of determining the compensations and of the shareholding programs |
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Non-executive members of the Board of Directors receive a yearly fixed compensation as well as an allotment of share and stock options.
Generally, the executive directors receive an allotment of shares and/or options from their directorship, and a cash compensation under their employment agreement.
Management members receive (i) fixed pay, determined according to the labor market following a survey, (ii) a yearly bonus, which is determined by the Board of Directors, upon recommendation of the Compensation Committee according to certain criteria that include the Company’s, unit’s and the individual’s personal performance, as determined by the Board of Directors from time to time, and (iii) under the Esop, stock options, the number of which is determined according to a grid agreed by the Board of Directors and which takes into account the functions of the management member in question.
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| 5.2 Compensations for acting members of governing bodies / 5.4 Share allotment |
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In 2003, in aggregate, the executive members of
the Board of Directors and the members of the
management received a cash compensation of
CHF 4,694,445 and CHF 745,777 of bonus for 2002, paid out only in 2003 and a total of 51,600 (ESOP) and 2,000 (DSOP) options (see 5.6 for details) and a total of 600 shares.
In aggregate, the 5 non-executive members of the Board of Directors received in 2003 a cash compensation of CHF 110,000 and a total of 5,000 (DSOP) options (see 5.6 for details) and a total of 1,650 shares.
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| 5.5 Share ownership |
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The executive members of the Board of Directors and the members of the management hold an aggregate of 2,472,321 shares.
The non-executive members of the Board of Directors hold a total of 1,534,814 shares.
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| 5.6 Options |
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The executive members of the Board of Directors and the members of the management hold a total of 417,168 (ESOP) and 2,000 (DSOP) options. The allotment year and exercise price were as follows:
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| Number of options | | Allotment year | | Exercise price | |
| 2,880 | | 1998 | | 0.15 | |
| 11,760 | | 1999 | | 1.88 | |
| 73,760 | | 1999 | | 7.50 | |
| 99,360 | | 2000 | | 7.50 | |
| 40,000 | | 2000 | | 137.50 | |
| 24,376 | | 2001 | | 42 | |
| 13,768 | | 2001 | | 58.75 | |
| 3,375 | | 2001 | | 60 | |
| 25,325 | | 2002 | | 50 | |
| 66,125 | | 2002 | | | |
