Smith & Nephew's culture clash over cash

published 24 October 2019

The board of the British medical devices company Smith & Nephew (S&N) has parted ways with CEO Namal Nawana (pictured) after only 18 months, say Sarah Neville and Sarah Provan in the Financial Times. The problem was pay.

Despite receiving a $1.5m base salary and a total package of up to $6m, Nawana had complained a few months ago that in a previous job he had been paid "multiples more than what I'm paid here in the UK". The firm has said it was unable to match his "expectations on pay and reward" while staying "within corporate boundaries".

There's "no doubt" about who instigated the quarrel that led to Nawana's departure, says Nils Pratley in The Guardian. Having talked about his job as a "great honour" when he was first appointed, it now turns out that Nawana's "warm feelings" were "dependent on the willingness of his new employer to whack up his pay at the first opportunity". So when Smith & Nephew refused, making it clear to him that it is a UK company that pays according to UK notions of "acceptable avarice", it was inevitable that he would leave.

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Nawana is not being completely unreasonable, says Ed Cropley on Breakingviews. "While generous," his pay package "lagged peers in the US." He has also added value, with shareholders £3.3bn better off since his appointment. Still, he knew what he was signing up for, so "he should have bargained harder before accepting the job". By refusing to cough up, S&N has shown that "principles and employment contracts matter".

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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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