GSK investors call for chairman's head after sorry Q2, bribery probes

GSK Chairman Christopher Gent

GlaxoSmithKline Chairman Christopher Gent says he'll step down at the end of 2015. But thanks to sweeping corruption allegations and a languishing stock price, shareholders want change at the top now, the Sunday Times reports.

"They want the chairman or chief executive gone in 2014," a well-placed source told the Times. "The most obvious choice is Gent, as he will be going, eventually, anyway."

According to the Times, top Glaxo ($GSK) investors are plotting a campaign to shake up the company's board. The institutional shareholders may approach the company's senior independent director, Deryck Maughan, to get the ball rolling.

Their motivation? Glaxo's ethics problem. Already embroiled in a huge bribery investigation in China, the country recently has announced a series of corruption probes in other countries. At last count, Glaxo faced allegations in at least 10 countries, including Poland, Syria and Lebanon. Officials in the U.K. and U.S. are pursuing their own investigations of the foreign corruption allegations. And that's on top of multibillion-dollar payments to the U.S. government for marketing violations and shoddy manufacturing.

The company's recent financial performance hasn't helped, either. Glaxo reported disappointing results for the second quarter, as competition for its top-selling respiratory drug, Advair, dragged down sales. Early results from its follow-ups to Advair, Anoro and Breo, were less than spectacular. The upshot: Glaxo warned that its profits forecast might be too ambitious.

GSK senior independent director Deryck Maughan

GSK's stock price plummeted after its Q2 announcement, to the point where Denmark's Novo Nordisk ($NVO), a much smaller company sales-wise, topped the British drugmaker's market cap.

GSK is already scouting for Gent's replacement, with the chairman himself leading the search. Among the top candidates is Philip Hampton, chairman of Royal Bank of Scotland. Maughan has been working with Gent on his replacement as well. Sky News reports that Hampton's appointment could be announced next month.

- read the Times story (sub. req.)
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