As GlaxoSmithKline CEO Emma Walmsley faces a high-profile challenge from activist investor Elliott Management, she has won backing from an unexpected source: AstraZeneca chief Pascal Soriot.
In a showing of support from one U.K. pharma CEO to a rival, Soriot, who’s been AZ’s chief executive for nearly nine years, rejected the idea that Walmsley is unfit for leading the pharma- and vaccines-focused GSK after its consumer health split.
“It’s important that the pharmaceutical companies understand every aspect of the firm,” Soriot said, as reported by the Daily Mail. “You don’t necessarily need to be a scientist. Over the years, very smart people will gain the knowledge and be able to be fluent in discussions with scientists.”
Soriot’s comments come after Elliott questioned Walmsley’s qualification to serve as a pharma boss because of her previous consumer health background. By calling for a new board of directors to choose “the best possible leadership” for GSK and the consumer health spinoff, the activist investor is basically asking Walmsley to reapply for her job. Walmsley has served as GSK’s CEO since 2017.
Only a few days ago, GSK picked Brian McNamara, currently head of its consumer healthcare division, to head up the franchise once it breaks away from the drugmaker in mid-2022. The appointment was the result of an “extensive search and selection process” with evaluations of external and internal candidates, GSK said.
But McNamara’s appointment doesn’t answer another key part of Elliott’s request, namely that a re-evaluation of management—read: Walmsley—is also due at the new GSK.
In his interview with the Daily Mail, Soriot also offered his GSK counterpart some advice on how to handle investor activism.
“If you are challenged by another company, the key is to have a good plan and stick to it and implement,” he said, according to the Mail.
Soriot is no stranger to pressure. In 2014, he fended off a hostile takeover bid from Pfizer even as AZ was reeling from the losses of exclusivity of several key products. Over the past few years, Soriot’s compensation plans have repeatedly come under fire from investors, but that hasn’t stopped the AZ board from handing him bigger paychecks.
Most recently, two powerful proxy advisers Glass Lewis and Institutional Shareholder Services asked investors to reject AZ’s proposal to raise Soriot’s maximum long-term equity incentive awards.
RELATED: GlaxoSmithKline touts 'widespread' investor support, backs CEO Walmsley in heated fight with Elliott
As Elliott heaps pressure on Walmsley, GSK’s board, led by Chairman Jonanthan Symonds, has openly supported its chief executive. In an open letter after Elliott went public with its demands, GSK’s board said it “strongly believes” Walmsley is the “right leader” for GSK. The board supports her plan for improving performance at the British drugmaker, the letter said.
The GSK board also touted “widespread and strong support” from GSK’s “largest shareholders.” BlackRock, GSK’s largest investor, was reportedly among those key Walmsley backers. It’s worth noting that BlackRock is also AZ’s largest shareholder as of January, according to AZ’s annual report.