Eli Lilly CFO steps down—and gives up $24M-plus in cash and equity—after investigation finds 'inappropriate' behavior

Eli Lilly
Eli Lilly tapped a new CFO after finding its former top finance exec engaged in "consensual though inappropriate personal communications" with employees.

After Eli Lilly heard allegations of an inappropriate relationship between its chief financial officer, Josh Smiley, and an employee, the drugmaker hired an external firm to investigate. Now, Smiley is not only out of the job, but also forfeiting $24 million in cash and equity awards.

Smiley, who's served as CFO since the start of 2018, is leaving the company, Lilly said Tuesday. Anat Ashkenazi, previously senior vice president, controller and chief financial officer of Lilly Research Laboratories, will take the post

Under a separation agreement, Smiley will forfeit his $1 million 2020 bonus and about $3 million of his 2018-2020 shareholder value award, Lilly said in an SEC filing. He's additionally set to forfeit "all other current and future equity incentive awards" that are potentially worth more than $20 million, the company said.

The company “holds all employees accountable to its core values and strongly believes its executive officers carry an even higher burden in ensuring those values are upheld,” Lilly said in a statement. 

After hearing of an alleged relationship, the company brought in an external firm to investigate; the probe revealed “consensual though inappropriate personal communications between Mr. Smiley and certain Lilly employees.” The company believes Smiley “exhibited poor judgment,” but it notes the conduct wasn’t related to any financial controls or financial reporting. Under the terms of his exit, he’ll be able to assist with the transition through July at the pay rate of $9,000 every two weeks.

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Ashkenazi has been with Lilly for nearly 20 years, and in her last role, she oversaw CFOs for the drugmaker’s commercial units and other outfits. She also led the company’s strategic planning team and business transformation office. She previously held the CFO title at several of Lilly’s global business groups. As senior vice president and CFO, Ashkenazi will earn a $900,000 salary and will be eligible for an annual bonus of the same amount, Lilly said in the SEC filing.

"We are confident in Anat's ability to serve as our next CFO given her impeccable track record of leadership and business success across nearly all major parts of the company, most recently as corporate controller and head of strategy,” Lilly CEO David Ricks said in a statement. He said the company appreciates Smiley’s contributions and wishes him well. 

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The news comes right after Lilly reported fourth-quarter 2020 results. Last year, the company generated $23.54 billion in revenues, a 10% increase versus 2019 despite the pandemic. Lilly's COVID-19 antibody chipped in $871 million.

Looking forward, the company has a “high degree of confidence in both our short- and long-term outlook at Lilly given our strong revenue growth, pipeline potential, and margin expansion opportunities,” Ashkenazi said in a statement. "I look forward to building on this excellent foundation, working closely with Dave and the rest of our talented Lilly team to drive our strategy forward and helping create shareholder value in the years ahead." 

Smiley had been with Lilly since 1995.