Glaxo’s CEO Search Will Be ‘Relatively Expensive,’ Chairman Saysby
Board focused on candidates in health-care sector: Hampton
Company in advanced stages of recruiting one more director
Finding a replacement for Chief Executive Officer Andrew Witty, who will retire in March after nearly a decade in the job, will be “relatively expensive,” GlaxoSmithKline Plc’s chairman said.
The U.K.’s biggest drugmaker has gotten “good value” from its executives, whose pay is at the low end of pharmaceutical industry peers, Chairman Philip Hampton said Thursday at the company’s annual general meeting in London, where Glaxo is based.
“The only candidates we would consider are people who are very seriously in the health-care sector,” Hampton told reporters in London.
Witty will step down in March, after almost a decade in the top job, following a tumultuous couple of years in which he has faced criticism over the company’s performance. The board is looking both interally and externally for a replacement, Hampton said.
“Nobody starts with a closed mind about internal versus external,” he said. “Normally when you pick an external person, it’s to introduce at least the potential for more change. But with more change is more risk.”
Glaxo investors including Neil Woodford have been calling for change, saying the company should look outward for potential successors who can bring fresh perspective and reevaluate the structure of the sprawling consumer products-to-pharmaceuticals conglomerate. A breakup of the company would unlock the value of its units, Woodford and others have said.
Glaxo is focused on integrating its businesses following the closing of its trio of transactions with Novartis AG, in which the drugmakers swapped assets, giving Glaxo control of a joint venture in consumer-health products. Hampton wouldn’t rule out spinning off the consumer-health division at a later date.
“I don’t think that we are particularly diversified,” Hampton said. “We have different sorts of businesses with the consumer health care, but they’re not utterly different businesses. They are related businesses.”
The drugmaker is in the advanced stages of recruiting one more director, Hampton said. Glaxo’s board is in transition as directors Deryck Maughan, Stephanie Burns, Daniel Podolsky and Hans Wijers didn’t stand for re-election at the meeting today.
The non-executive members of Glaxo’s board don’t come from scientific backgrounds, Joe Walters, a fund manager at Royal London Asset Management, has pointed out.
“That does sort of stand out for a pharmaceuticals company -- to not have any scientists on the board,” said Ashley Hamilton Claxton, corporate governance manager at Royal London. Her firm holds almost 1 percent of Glaxo.
Hampton said the board includes two members with science backgrounds, as well as people with expertise in manufacturing and finance.
“We want a balance of skills on the board,” said Hampton, who previously led the boards of Royal Bank of Scotland Group Plc and retailer J Sainsbury Plc. “We have a good blend at the moment but we are one director short of the compliment that we normally seek.”