* Nawana to step down on Oct. 31
* Diggelmann has been member board member since March 2018
* Shares down over 8%
(Adds details on Nawana, Diggelmann, analyst comment, share
movement, background)
By Uday Sampath Kumar
Oct 21 (Reuters) - Smith+Nephew Plc Chief Executive
Namal Nawana is stepping down after just 17 months in the role
after becoming dissatisfied with his salary at the medical
device maker.
The company said Nawana, who will be replaced by former
Roche Diagnostics head Roland Diggelmann, was leaving to pursue
opportunities outside the United Kingdom and his departure was a
mutual decision. A spokeswoman gave no additional details.
"There appears to be a pretty simple reason Nawana is
leaving – pay," AJ Bell investment director Russ Mould said.
"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 U.S. listing to escape an
increasing backlash in the UK towards excessive executive pay."
An earlier FT report had said Smith+Nephew directors
discussed moving the company's main listing from London to New
York, where higher executive payouts are more common and less
controversial, to boost its top salaries.
Analysts at Berenberg also said Nawana's pay "aspirations"
made his departure inevitable. Nawana, who steps down at the end
of the month, did not respond to request for comment on
LinkedIn.
Faced with stricter rules in the United Kingdom designed to
tackle soaring executive pay, the company is in talks with
shareholders over its 2020 remuneration policy.
Nawana, who joined the British maker of artificial knees and
hips in May 2018, received total pay of $2.88 million that year,
according to the company's last annual report. His predecessor
Olivier Bohuon received $5.12 million in 2017.
Smith+Nephew shares, which have risen 40% since Nawana's
appointment last year, fell 8.2% on Monday.
PRODUCT DIVISIONS
Nawana had focused on boosting revenue and profitability by
realigning the 160-year-old company's operations, concentrating
on product divisions rather than geographies.
He was former head of U.S. diagnostics company Alere - where
he earned $8.6 mln in 2016 - and overhauled more than half of
Smith+Nephew's leadership team. He hired heads for the company's
main divisions of sports medicine, orthopaedics and wound
management to speed up product development.
Results came quickly as the company reported higher than
expected half-year profit and boosted its 2019 revenue forecast
in July.
Analysts expect Smith+Nephew's revenue to rise more than 4%
this fiscal year, compared with the 0.8% to 3% growth the
company has had over the last three years.
Smith+Nephew is looking to Diggelmann, with more than 20
years in the orthopedics and diagnostics sectors, to continue
revenue growth by building on Nawana's strategy. He has already
had a hand in many decisions having been a board member since
March last year.
"We expect (Diggelmann) to pursue a strategy of improving
operational execution, something any competitor of Roche
Diagnostics would say he did extremely well," Berenberg analyst
Tom Jones said.
High executive pay has become a controversial issue in
Britain, highlighted by outsized awards such as a $100 million
pounds bonus to Jeff Fairburn, chief executive of housebuilder
Persimmon. The company said in November he would leave
after deciding criticism of the award had become a distraction.
Regulations introduced in January mean listed companies with
over 250 employees will have to disclose the ratio of CEO pay to
the rest of the company's workforce, in a move the government
said would make companies justify the pay of top bosses.
(Reporting by Uday Sampath and Pushkala Aripaka in Bengaluru
Editing by Rashmi Aich and David Holmes)
Smith & Nephew (SN.)
Persimmon (PSN)
