GlaxoSmithKline’s chief executive, Sir Andrew Witty, is to leave the drugmaker next March after collecting a £6.7m pay package last year.
GSK said it had started looking for a successor to Witty, who joined the company in 1991 and has been CEO since 2008.
The company’s annual report (PDF) showed his total pay and shares package rose to £6.66m last year, from £3.9m in 2014. Performance-based pay made up three-quarters of the 2015 remuneration, including an annual bonus of £2.2m, part of which was deferred, and £2.6m from a performance share plan. His salary stayed at just under £1.1m.
Moncef Slaoui, chairman of GSK global vaccines, an important part of the business, was the second-best-paid executive with a total package of £5.2m, up from £3m, while Simon Dingemans, the chief financial officer, saw his increase to £3.2m, from £1.9m.
Witty has come under pressure to hasten GSK’s turnaround following sliding profits in recent years. Last month, he fended off calls for a break up of the pharmaceuticals, vaccines and toothpaste multinational. He reiterated on Thursday that the company would return to core earnings growth this year, following a 15% decline last year.
Richard Parkes, an analyst at Deutsche Bank, said: “The decision will allow him to step aside at a high point following the company’s expected return to double digit earnings growth in 2016. We continue to be confident the company will meet or exceed these near-term targets driven by delivery on acquisition synergies and strong performance of its HIV business.”
He said Witty’s departure raised two main questions, regarding the dividend and a potential spinout of the consumer division.
“As a reminder GSK has committed to maintaining its dividend out to 2017 and any change to this seems highly unlikely. However, longer term we see it as possible that a new CEO prioritises M&A [mergers and acquisitions] to bolster its pharma business putting the dividend at risk longer term. While this could be funded by a sale or spin out of consumer, we view this as unlikely as it would leave any new CEO more exposed to the pharma division’s weak pipeline unless a transformational deal was tied to this.”
Witty’s reputation was damaged by a corruption scandal in China, which resulted in a £300m fine. Witty took action to clean up the company’s act. GSK became the first drugmaker to stop payments to doctors to speak on its behalf and to scrap bonus payments tied to prescriptions.
Another bribery scandal in the US, dating back to 2000, led to a record $3bn (£2.1bn) fine for GSK in 2012. Just last month it was accused of cheating the NHS and fined £37.6m over the cost of anti-depressants, but GSK disputed the ruling and said it actually saved the taxpayer money.
However, Witty will also be remembered for the three-part, $20bn deal with Swiss rival Novartis in 2014 to pool consumer healthcare assets and exchange their oncology and vaccine businesses, which was hailed as an innovative deal in the industry.
He said: “By next year, I will have been CEO for nearly 10 years and I believe this will be the right time for a new leader to take over. In making this decision it has been important to me that the board have the time to conduct a full and proper process and that we sustain the momentum of our current business performance.”
GSK’s chairman, Sir Philip Hampton, paid tribute to him, saying: “Andrew’s retirement next year will represent the culmination of 32 years of service and leadership to GSK and the industry.”
This article was written by Julia Kollewe, for theguardian.com on Thursday 17th March 2016 09.35 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010