GSK rejects Elliott demand to overhaul leadership

Pharma group backs Emma Walmsley to remain chief after consumer healthcare spin-off

Emma Walmsley, chief executive of GlaxoSmithKline. Photograph: Mandel Ngan/AFP

Emma Walmsley, chief executive of GlaxoSmithKline. Photograph: Mandel Ngan/AFP

 

GlaxoSmithKline’s board has backed current chief executive Emma Walmsley, rejecting demands from Elliott Management to appoint new directors and determine whether she should continue in the job.

In a statement on Friday, GSK said the board “strongly believes” Ms Walmsley is the “right leader” of the “New GSK”, which will be created after the pharma group’s consumer healthcare division is spun off.

It said it “fully” supported the actions taken by her and the management team, adding all were subject to rigorous assessment of performance.

“Under Emma’s leadership, the board fully expects this team to deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond,” it said, adding that “focus and stability are now critical”.

Feedback

GSK also rejected the suggestion that the consumer healthcare business should be sold rather than spun off, saying that “feedback from a significant proportion” of shareholders had shown that investors wished to own the company as a listed entity.

Elliott, which the Financial Times revealed in April had built a multibillion pound stake in the UK-based drugmaker, had on Thursday called for new directors and for a process to determine whether Walmsley should hold on to her job. Elliott criticised “years of under-management” and poor share performance.

Key GSK shareholders M&G and Royal London Asset Management have publicly backed the current management, however.

GSK confirmed last month it would go ahead with plans to spin off its consumer health division next year, creating a “New GSK” focused on innovative biopharma. Ms Walmsley has previously shrugged off concerns about her leadership and insisted she is a “change agent”.

Investor

The company also said it had conducted an “extensive search” to appoint a chief executive-designate for the consumer healthcare division. It said the process was nearing completion, with an announcement expected in “due course”.

Elliott, which manages about $42 billion (€35.3bn) in assets, has built its reputation as a formidable activist investor, with campaigns at companies including AT&T, BHP and SoftBank.

Shares in GSK were flat after the announcement. – Copyright The Financial Times Limited 2021