Smith & Nephew (LON:SN, NYSE:SNN) announced that Namal Nawana will step down from the Board and his position as Chief Executive Officer (CEO) by mutual agreement on 31 October 2019 to pursue other opportunities outside of the UK. The Board is pleased to announce that Roland Diggelmann has been appointed as the Company’s new CEO and will take on his new responsibilities on 1 November 2019. Namal will be employed and provide advice and assistance to Roland in his new role until 31 December 2019 to help ensure a smooth transition.
Namal has been instrumental in delivering on a critical phase of Smith+Nephew’s development, accelerating revenue growth across franchises and geographies as well as improving profitability. The new CEO and senior leadership team will now build on these strong foundations to further drive commercial execution and deliver on the Company’s strategic ambitions.
Roland joined Smith+Nephew’s Board as a Non-Executive Director in March 2018, since when he has gained deep insight into the Company and its management team. His career has been spent in medical technology, most recently as CEO of Roche Diagnostics, a global business which at the time of his departure in 2018 had turnover of CHF11.5bn ($11.5bn) in over 100 markets and 34,000 employees. Prior to his 11-year career at Roche Diagnostics, Roland spent 12 years in the orthopaedics sector, serving in strategy and leadership roles at Sulzer Orthopedics and Zimmer, now Zimmer Biomet.
As stated at the time of our first half results, we continue to see positive momentum across the business and the Company will announce its Q3 Trading Report, as scheduled, on 31 October 2019.
Roberto Quarta, Chairman of Smith+Nephew, said:
“On behalf of the Board, I am delighted to welcome Roland Diggelmann as Smith+Nephew’s incoming CEO. I am certain that Roland’s leadership qualities, combined with his excellent track record of delivering results in an innovation-led business, his deep expertise in the medical devices industry, and his knowledge of Smith+Nephew, make him the right person to build on the Company’s success into the future.
“During his time with Smith+Nephew, Namal has substantially transformed the business with a new strategy, purpose and culture, and renewed commitment to innovation, returning it to an improved growth trajectory. I would like to thank Namal for his leadership and many contributions to the Company, our employees, customers and stakeholders.”
Roland Diggelmann said:
“I am honoured to have been asked to lead Smith+Nephew at an exciting time for the business. As Non-Executive Director I have seen first-hand the strength of the Group’s people and its portfolio of leading technologies. I look forward to playing my part in shaping the future of the company and driving the next stage of growth.”
With immediate effect, Roland will cease to be a Non-Executive Director and steps down from the Audit Committee and Culture and Compliance Committee of the Board.
No further disclosure obligations arise under paragraphs (1) to (6) of LR 9.6.13 R of the UK Listing Authority’s Listing Rules in respect of this appointment.
This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014.
The person responsible for arranging the release of this announcement on behalf of Smith+Nephew is Susan Swabey, Company Secretary.
Roland will be paid in accordance with the Remuneration Policy approved by shareholders on 6 April 2017 and as set out in the 2018 Annual Report:
· He will receive a base salary of CHF1,380,000 per annum.
· From 1 January 2020, he will have an annual Cash Incentive Plan opportunity of 150% of base salary, annual Equity Incentive Plan opportunity of up to 65% of base salary and Performance Share Plan awards of up to 190% of base salary. He will not be eligible to participate in any Plans in respect of 2019 and will not receive any buy-out award.
· The Company will pay a pension contribution (or cash in lieu) of 12% of salary per annum.
· He will receive standard benefits, which are not materially different in nature or value relative to the incumbent CEO.
· His notice period will be not less than six months from him and not less than 12 months from the Company.
The Board is currently consulting with shareholders on the Remuneration Policy to be submitted to shareholders for approval at the Annual General Meeting in April 2020. Roland’s remuneration arrangements will be amended in line with the new Policy, as and when it is approved.
In connection with his departure from the Company on 31 December 2019, Namal will be paid in accordance with the Company’s Remuneration Policy and the terms of his service agreement:
· He will continue to receive his salary, benefits and pension contributions in the normal way up to 31 December 2019.
· He will receive payments in lieu of his salary, health and dental benefits, car allowance and pension contributions in respect of the balance of his notice period.
· He will participate in the Cash Incentive Plan and Equity Incentive Plan in respect of the 2019 financial year. Any awards under those plans, which are dependent on performance, will be determined by the Remuneration Committee in February 2020. The Equity Incentive Plan award will vest in equal tranches on the normal vesting dates in 2021, 2022 and 2023.
· Pursuant to the Plan Rules, his outstanding Equity Incentive Plan award will be preserved and vest on the original vesting dates and his outstanding Performance Share Plan awards will be pro-rated for service and will, subject to the performance conditions being satisfactorily met at the end of the three-year performance period, vest on the original vesting dates. He will be required to retain any vested shares, net of tax, for a further two-year period after the vesting date.
Namal Nawana said:
“There is clear momentum behind our strategy laid out last year, underlined by S performance generated by our team during 2019. I am proud to be leaving Smith & Nephew in a strong position for the next phase of its development.”