Novo Nordisk to Replace More Than Half of Its Board After Governance Dispute

Denmark's Novo Nordisk said Tuesday it would replace more than half of its board, including the chair, as the Ozempic and Wegovy maker restructures in the face of rising competition for its anti-obesity treatments.

The company, which recently changed its CEO and announced it will lay off 9,000 employees, set an extraordinary shareholders meeting for November 14 following a disagreement between the board and majority shareholder over its future governance.

After failing to reach an understanding "the board concluded that it is in the best interest of the company and its shareholders to convene an extraordinary general meeting to elect new board members to provide clarity on the future governance of Novo Nordisk," current board chair Helge Lund said in a statement.

Of the current 12 board members, seven are giving up their seats.

The maker of Ozempic anti-diabetes treatment and Wegovy weight-loss drug faces rising competition and announced the layoffs and cost-savings programme last month as it cut its profit growth forecast for the third time this year.

The popularity of Novo Nordisk's weight-loss injections had once made it a darling of investors, boosting its share price and at one point making it Europe's most valuable company.

But its share price has been tanking since last year as competition grows from rival treatments in its key market, the United States, and it switched chief executives in August as it seeks to adjust to the changing market environment.

Novo Nordisk shares were down 1.3 percent in late afternoon trading.

Lund said that the board had proposed bringing in several new board members to add new competencies, while the majority shareholder, the Novo Nordisk Foundation, "wanted a more extensive reconfiguration".

Lund is set to be replaced by the current chairman of the Novo Nordisk Foundation, Lars Rebien Sorensen, who served as the group's CEO from 2000 to 2016, the foundation said in a separate statement.

Rebien said the foundation fully supports new chief executive Mike Doustdar and his transformation plan.

"We believe it is time to bring in new competencies and perspectives to the Board to support Mike Doustdar and his leadership team in executing on the company's strategy," he said in a statement.

Set up to provide a stable basis for the commercial and research activities conducted by the company, the non-profit Novo Nordisk Foundation owns 28.1 percent of the company's equity but 77.1 percent of voting rights.

In May, the foundation pushed out Novo Nordisk's former CEO, Lars Fruergaard Jorgensen, and at that time, Rebien joined the board as an observer.

The foundation said they now intend for him to head the Novo Nordisk board "for a limited period" of two to three years, with "two key objectives".

The first is to support the new management "in implementing its transformation plans and regaining the company's growth momentum."

His "second objective is to identify and appoint a new chair who can successfully lead the company into the 2030s."

In early August, Doustdar took over as CEO and initially froze hiring before cutting 9,000 jobs worldwide, representing more than 11 percent of the workforce.

The foundation is also putting forward Cees de Jong to replace Henrik Poulsen as vice chair.

Board members Laurence Debroux, Andreas Fibig, Sylvie Gregoire, Christina Law and Martin Mackay are also giving up their seats.

Sydbank analyst Soren Lontoft Hansen, told news agency Ritzau that the board shake-up was not surprising.

"The reality for Novo has changed radically over the past year, and this requires a response," the analyst said.