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Chairman, six board members to stand down next month

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Former Novo CEO Sorensen to become chair for 2-3 years

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Boardroom feud comes in midst of company turnaround drive

(Adds investor comments, context)

By Stine Jacobsen, Jacob Gronholt-Pedersen and Maggie Fick

COPENHAGEN/LONDON, Oct 21 (Reuters) - The chairman of

Novo Nordisk and six other independent board members

quit on Tuesday after a dispute with the company's controlling

shareholder, as the drugmaker looks to revive sales of its

blockbuster weight-loss drug Wegovy.

The boardroom feud brings fresh turmoil to a company that

soared to become Europe's most valuable company last year on the

huge success of Wegovy, only for its shares to plunge more than

40% this year as rival Eli Lilly ( LLY ) grabbed market share.

The non-profit Novo Nordisk Foundation, which combines

business ownership with philanthropy, criticised the outgoing

board for being too slow to recognise market changes in the key

U.S. market and to change management.

It said it would propose former Novo CEO and current head of

the foundation Lars Rebien Sorensen to return as a temporary

chairman for the next two or three years.

FOUNDATION SEEKS MORE INFLUENCE

Novo, which installed a new CEO in August to launch a

turnaround plan, said chair Helge Lund and the other independent

directors would step down at an extraordinary shareholder

meeting on November 14.

The firm said in a statement that it had been impossible to

reach a "common understanding" over the make-up of the board.

"The Board proposed a renewal focusing on addition of

select, new competencies while also maintaining continuity,

whereas the Board of the Foundation wanted a more extensive

reconfiguration," it said.

The clash is the latest move by the foundation to increase

control over Novo as it seeks to revive sales and restore

investor confidence. It pushed for the early exit of CEO Lars

Fruergaard Jorgensen in May.

Novo's shares dipped to trade down around 1.7% after the

news.

Jorgensen's replacement, CEO Mike Doustdar, has launched a

restructuring drive, including 9,000 job cuts globally that has

helped bolster the share price. The firm, however, still faces

challenges in the key U.S. market against rival Eli Lilly ( LLY ).

"My guess is that the Novo Nordisk Foundation is still

unhappy with the current setup of the company and that they want

to have more influence," Markus Manns, a portfolio manager at

mutual fund and Novo shareholder Union Investment, told Reuters.

"There was a dispute about the future composition of the

board. Probably they had also different views about the future

strategy of the company."

Manns added that the proposed new chairman would be "well

qualified" and his experience could help the firm.

NOVO FACING A 'RAPIDLY CHANGING ENVIRONMENT'

In a statement, foundation chair Sorensen said that the

challenging environment meant moving fast was important.

"Given the rapidly changing environment in which Novo

Nordisk operates, we believe it is in the best interest of the

company and its shareholders to carry out a board renewal as

soon as possible," he said.

Lukas Leu, a portfolio manager at Novo Nordisk shareholder

ATG Healthcare, was still trying to digest the board shake-up.

"I don't really get it - why does the old CEO have to be the

new Chairman? Don't like it."

Claus Henrik Johansen, CEO of Global Health Invest, a Danish

healthcare investment fund, said the move marked something of a

power play by the top shareholder.

"The Foundation now takes control for a period of time," he

said. "I will follow intensely any signs of new initiatives to

reinvigorate growth and innovation."