Medical device manufacturer Smith & Nephew’s chief executive has announced his departure “by mutual agreement” with the board amid reports he was unhappy with his pay.
Namal Nawana will be replaced by former Roche Diagnostics chief Roland Diggelman after just 18 months in the role, sending shares tumbling eight per cent to 1,683p.
Smith & Nephew, which makes artificial hip and knee replacements, said Nawana will “pursue other opportunities outside of the UK” but will be on hand to offer advice until the end of the year.
“Namal has substantially transformed the business with a new strategy, purpose and culture, and renewed commitment to innovation, returning it to an improved growth trajectory,” chairman Roberto Quarta said.
However, Nawana was reportedly dissatisfied that the company could not meet his pay demands.
Nawana took a substantial salary cut to join the firm from the US, the Times said.
That saw his pay reduced from the $8.6m (£6.6m) he earned in 2016 at Alere, the diagnostics company he founded and sold to Abbott Laboratories, to $2.8m in the first seven months of 2018 at Smith & Nephew.
But 12.4 per cent of shareholders votes against executive pay at Smith & Nephew at its last annual meeting, with the firm working on a new remuneration package to introduce next year.
In June it was reported that Smith & Nephew was examining ways to switch its stock market listing to the US, where fewer restrictions exist on executive pay.
AJ Bell investment director Russ Mould credited said Australian Nawana with reviving the firm’s share price with a strategy to improve accountability and reduce duplication of effort.
“There appears to be a pretty simple reason Nawana is leaving – pay,” Mould added.
“It became apparent over the summer that the company was looking for ways to increase its head honcho’s remuneration with apparent discussions about a move to a US listing to escape an increasing backlash in the UK towards excessive executive pay.”
“The fear will be that this revamp of the business will be derailed by Nawana’s departure despite efforts to allay these concerns,” Mould said.
“Diggelmann faces a tricky task of balancing the need for continuity with a likely ambition to bring his own ideas to the role.”
“I am certain that Roland’s leadership qualities, combined with his excellent track record of delivering results in an innovation-led business, his deep expertise in the medical devices industry, and his knowledge of Smith & Nephew, make him the right person to build on the company’s success into the future,” Quarta said.
Diggelman joined Smith & Nephew as a non-executive director in March 2018, after serving as chief executive of Roche Diagnostics, which when he left counted $11.5bn (£8.9bn) in global turnover.
Main image credit: Smith & Nephew