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Novartis shareholders follow Board of Directors’ recommendations

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Novartis shareholders today followed the Board of Directors’ recommendations for all proposed resolutions at the Group’s Annual General Meeting.

These included a 25% increase in the dividend payment for 2008, the rejection of the introduction of a consultative vote on the remuneration report and the election of William Brody, MD, PhD as a new Board member.

A total of 2,428 shareholders were present at the meeting held in Basel, representing 1.32 billion shares and 49.9% of the 2.64 billion issued shares of Novartis.

“Our strategically diversified healthcare portfolio enables us to mitigate risks and sustain performance in a time of recession. Thanks to our strong results in 2008, I am pleased that we could for the 12th consecutive year increase our dividend, delivering total shareholder return at a compounded annual growth rate of 8.3% over the past 6 years, outpacing the world market and world pharma indices,” said Dr Daniel Vasella, Chairman and CEO of Novartis.

“Our business success allowed us to contribute programs valued at over $1.2 billion, respectively 3% of our revenue to help patients in need, reaching 74 million patients in 2008.”

Despite uncertainties given the impact of the financial crisis, underlying business growth to date in 2009 has been in line with the Group’s previous full-year expectations for net sales growth at a mid-single-digit rate in local currencies (barring unforeseen events).

At the same time, operating and net income growth for the 2009 first quarter are – based on current market conditions – expected to be 8% to 10% points negatively impacted by adverse currency movements and the stronger US dollar (the Group’s reporting currency) compared to the 2008 first quarter.

Other factors set to weigh on first-quarter 2009 profit growth include the lack of exceptional gains, which supported results in the first quarter 2008, and higher Development, Marketing & Sales investments in the Pharmaceuticals Division mostly due to a different timing of these expenses over 2009 as compared to 2008.

Shareholders approved a dividend payment of CHF2.00 per share for 2008 compared to CHF1.60 in 2007. This marks the twelfth consecutive higher payout per share since the creation of Novartis in December 1996 and represents a payout ratio of 53% of net income from continuing operations. The payment date for the 2008 dividend has been set for February 27, 2009.

Shareholders rejected the proposal from Ethos and eight other shareholders to amend the article of incorporation requesting that the General Meeting hold an annual consultative vote on the remuneration report. Novartis already publishes a yearly remuneration report as part of its annual report which complies with all Swiss requirements.

Professor William Brody, MD, PhD was elected to the Board of Directors for a three year term beginning immediately after his election. Professor Brody was President of the Johns Hopkins University in Baltimore, USA until the end of 2008 and is President-designate of the Salk Institute in La Jolla, USA. He meets the independence criteria for members of the Novartis Board of Directors. Professor Brody is a member of the Board of Directors of IBM, AEGON USA and Mercantile Bankshares Corporation. In addition, he is a member of numerous professional associations and serves on the advisory boards of various government and non-profit organisations.

Novartis



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