Smith & Nephew’s CEO, Namal Nawana, will step down at the end of the month after about a year and a half in the position over salary demands.
Starting Nov. 1, Nawana will be replaced by the former CEO of Roche Diagnostics, Roland Diggelmann, who has served on the London-based devicemaker’s board as a nonexecutive director since March 2018. Nawana is set to stay on through Dec. 31 to assist with the transition.
More stringent regulations over executive pay in the U.K.—including new requirements for 2019 that larger companies disclose the ratio of the CEO’s pay to other employees—have provided obstacles in recruiting U.S.-based executives. Nawana, formerly head of Alere Diagnostics before its $5.8 billion acquisition by Abbott, currently maintains a home outside of Boston, and Smith & Nephew said he will be pursuing opportunities outside the U.K.
“In the process of preparing our remuneration policy it became clear that we couldn’t meet Namal’s expectations on pay and reward, relative to what U.S. devices companies pay, within corporate boundaries,” a company spokesman told the Financial Times, which reported that the issue had only developed over the past few weeks.
After joining the company in May 2018, Nawana received a total pay package of $2.88 million including salary, pension payments and incentives. In its 2018 governance report (PDF), Smith & Nephew said that the pay ratio of its previous CEO, Olivier Bohuon, and Nawana was 95-to-1 when compared to the median pay in the U.K.
Smith & Nephew’s stock, traded on the London and New York stock exchanges, both fell by 8% to 9% on the news. Still, the company’s share prices have risen by 30% to 40% since Nawana became CEO last year.
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Diggelmann, who will be based in Switzerland, will receive a base pay of 1.38 million Swiss francs (about $1.4 million). Starting Jan. 1, he will be eligible for cash incentives up to 150% of his salary, equity opportunities up to 65% and performance share awards up to 190%.
Before his 11 years at Roche Diagnostics ending in August 2018, Diggelmann spent 12 in leadership roles at Sulzer Orthopedics and Zimmer, now Zimmer Biomet.