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Equity
 12 Months Ended
Dec. 31, 2020
Disclosure of equity [abstract]  
Equity
18. Equity
The following table shows the movement in the share capital:


(USD millions)


Jan 1, 2018
Movement

in year


Dec 31, 2018
Movement

in year


Dec 31, 2019
Movement

in year


Dec 31, 2020
Share capital
969
– 25
944
– 8
936
– 23
913
Treasury shares
– 100
31
– 69
– 11
– 80
27
– 53
Outstanding share capital
869
6
875
– 19
856
4
860
The following table shows the movement in the shares:
2020
2019
2018


Number of outstanding shares

(in millions)




Note
Total

Novartis

shares
Total

treasury

shares 1
Total

outstanding

shares
Total

Novartis

shares
Total

treasury

shares 1
Total

outstanding

shares
Total

Novartis

shares
Total

treasury

shares 1
Total

outstanding

shares
Balance at beginning of year
2 527.3
– 262.3
2 265.0
2 550.6
– 239.4
2 311.2
2 616.8
– 299.3
2 317.5
Shares canceled for capital

reduction  2




– 60.3


60.3




– 23.3


23.3




– 66.2


66.2


Shares acquired to be

canceled  3






– 32.6


– 32.6




– 60.3


– 60.3




– 23.3


– 23.3
Other share purchases  4
– 1.7
– 1.7
– 1.7
– 1.7
– 1.2
– 1.2
Exercise of options

and employee transactions  5


18.9




14.7


14.7




5.5


5.5




7.8


7.8
Equity-based compensation  5
11.0
11.0
9.4
9.4
7.4
7.4
Shares delivered to Alcon

employees






0.4


0.4




0.9


0.9






Other share sales
3.0
3.0
Total movements
– 60.3
52.1
– 8.2
– 23.3
– 22.9
– 46.2
– 66.2
59.9
– 6.3
Balance at end of year
2 467.0
– 210.2
2 256.8
2 527.3
– 262.3
2 265.0
2 550.6
– 239.4
2 311.2
 1  Approximately 103.0 million treasury shares (2019: 117.6 million; 2018: 121.6 million) are held in Novartis entities that restrict their availability for use.
 2  Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years.
 3  Shares repurchased on the SIX Swiss Exchange second trading line under a CHF 10 billion share buyback authority approved at the 2016 Annual General Meeting (AGM) for transactions before February 28, 2019, and under a new CHF 10 billion share buyback authority approved at the 2019 AGM for transactions after such date
 4  Shares acquired from employees, which were previously granted to them under the respective equity-based participation plans
 5  Shares delivered as a result of options being exercised and physical share deliveries related to equity-based participation plans.
 
18.1) The amount available for distribution as a dividend to shareholders is based on the available distributable retained earnings of Novartis AG determined in accordance with the legal provisions of the Swiss Code of Obligations.
2020
2019
2018
Dividend per share (in CHF)
2.95
2.85
2.80
Total dividend payment

(in USD billion)


7.0


6.6


7.0
18.2) The following table summarizes the treasury shares movements:
2020
2019
2018






Note
Number of

outstanding

shares

(in millions)




Equity impact

USD m
Number of

outstanding

shares

(in millions)




Equity impact

USD m
Number of

outstanding

shares

(in millions)




Equity impact

USD m
Shares acquired to be canceled  1
– 32.6
– 2 897
– 60.3
– 5 351
– 23.3
– 1 859
Other share purchases  2
– 1.7
– 159
– 1.7
– 160
– 1.2
– 114
Purchase of treasury shares
– 34.3
– 3 056
– 62.0
– 5 511
– 24.5
– 1 973
Exercise of options and employee transactions  3
18.9
14.7
806
5.5
210
7.8
434
Equity-based compensation  4
11.0
730
9.4
833
7.4
756
Shares delivered to Alcon employees
0.4
30
0.9
18
Other share sales
3.0
263
Total
– 8.2
– 1 490
– 46.2
– 4 450
– 6.3
– 520
 1  Shares repurchased on the SIX Swiss Exchange second trading line under a CHF 10 billion share buyback authority approved at the 2016 AGM for transactions before February 28, 2019, and under a new CHF 10 billion share buyback authority approved at the 2019 AGM for transactions after such date
 2  Shares acquired from employees, which were previously granted to them under the respective equity-based participation plans
 3  Shares delivered as a result of options being exercised related to equity-based participation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised.
 4  Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the share-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity.
 
18.3) In November 2020, Novartis entered into an irrevocable, non-discretionary arrangement with a bank to repurchase Novartis shares on the second trading line under its up-to USD 2.5 billion share buyback. Novartis is able to cancel this arrangement at any time but could be subject to a 90-day waiting period. The commitment under this arrangement therefore reflects the obligated purchases by the bank under such trading plan over a rolling 90-day period, or if shorter, until the maturity date of such trading plan.
The commitment under this arrangement amounted to USD 1.8 billion as of December 31, 2020.
In August 2020, Novartis entered into an irrevocable, non-discretionary arrangement with a bank to repurchase Novartis shares to mitigate dilution related to participation plans of associates. Novartis was able to cancel this arrangement at any time but would have been subjected to a 90-day waiting period.
This trading plan commitment was fully executed and expired, and as a consequence, there is no contingent liability related to this plan recognized as of December 31, 2020.
In 2019, Novartis entered into a similar irrevocable, non-discretionary arrangement with a bank to repurchase Novartis shares on the second trading line under its up-to USD 5 billion share buyback and to repurchase Novartis shares to mitigate dilution related to participation plans of associates. The commitment under this arrangement therefore reflects the obligated purchases by the bank under such trading plan over a rolling 90-day period, or if shorter, until the maturity date of such trading plan.
The trading plan commitment was fully executed and expired, and as a consequence, there is no contingent liability related to this plan recognized as of December 31, 2019.
In 2018, Novartis entered into a similar irrevocable, non-discretionary arrangements with a bank to repurchase Novartis shares. The commitments under this arrangement reflected the expected purchases by the bank under such trading plan over a rolling 90-day period.
The commitment under this arrangement amounted to USD 284 million as of December 31, 2018.
18.4) In October 2020, Novartis entered into an agreement with the market maker for its employee options to repurchase a portion of the outstanding written call options. A total of 3.7 million options were repurchased under this agreement. This agreement was terminated in November 2020.
18.5) The impact of change in ownership of consolidated entities represents the excess of the amount paid to non-controlling interest over their carrying value and equity allocation to non-controlling interest due to change in ownership percentage.
18.6) Changes in non-controlling interests represent the impact on the non-controlling interest of transactions with minority shareholders, such as change in ownership percentage, dividend payments and other equity transactions.
18.7) Other movements includes, for subsidiaries in hyperinflationary economies, the impact of the restatement of the non-monetary assets and liabilities with the general price index at the beginning of the period as well as the restatement of the equity balances of the current year. In 2020, the amount recorded in equity related to hyperinflation accounting was USD 18 million (2019: USD 22 million; 2018: USD 38 million). See Note 29 for additional disclosures.
18.8) In 2019, transaction costs of USD 253 million (2018: USD 79 million) net of tax of USD 36 million (2018: USD 20 million), that are directly attributable to the distribution (spin-off) of Alcon Inc. to Novartis shareholders and that would otherwise have been avoided, were recorded as a deduction from equity. See Note 1 for further details. No transaction costs were recorded as a deduction from equity in 2020.
18.9) At December 31, 2020, the market maker held 1 million (2019: 13 million; 2018: 11 million) written call options, originally issued as part of the share-based compensation for associates, that have not yet been exercised. The weighted average exercise price of these options is USD 60.09 (2019: USD 63.90; 2018: USD 62.70), and they have contractual lives of 10 years, with remaining lives up to three years (2019: four years; 2018: five years).
In December 2018, Novartis entered into an agreement with the market maker for its employee options to repurchase a portion of the outstanding written call options that are not exercised in exchange for treasury shares. During 2019, this agreement was fully executed.