Dive Brief:
- Eli Lilly said Tuesday that Chief Financial Officer Joshua Smiley resigned after a company investigation found “consensual though inappropriate” personal communications between him and certain employees.
- Smiley worked at Lilly for more than two decades, holding a variety of financial roles before being tapped in 2017 to replace longtime CFO Derica Rice. He will now be succeeded by Anat Ashkenazi, who joined Lilly in 2001 and most recently served as CFO of Lilly Research Laboratories.
- Lilly said it recently become aware of allegations that Smiley had an inappropriate personal relationship with an employee. Following an independent investigation, leadership concluded that Smiley’s behavior “exhibited poor judgment” and did not align with the company’s core values. Lilly noted that Smiley’s conduct “was not related to financial controls, financial statements or any other business matters or judgments.”
Dive Insight:
At large pharmaceutical companies, C-suite departures are often quiet affairs. Small press releases or earnings call accolades thank the executives for their service and wish them well as they head either for another opportunity or retirement.
Yet, one big exception arises when company codes are broken. In early 2019, for example, Vertex announced it had fired Ian Smith, its chief operating officer and interim head of finance, because of “personal behavior” that violated the biotech’s code of conduct. Analysts saw the firing as a significant shake-up for Vertex, given that Smith had been the company’s chief financial officer for 15 years and was considered integral to its burgeoning success.
Though tight-lipped on details, Vertex had said its decision followed an independent investigation and was unrelated to the company’s financial and business performance.
Similarly, Lilly said Smiley is leaving because of personal conduct that was not related to the company’s financials.
Smiley came into the CFO role at a challenging time for Lilly. The company’s portfolio of diabetes drugs were under pricing pressure, while its second-best seller, the erectile dysfunction pill Cialis, was close to losing patent protection. And against that backdrop, Lilly disclosed plans to cut about 8% of its global workforce. Lilly recorded a 6% drop in annual revenue in 2018, though the business has been on the rebound with the help of newer products like Trulicity and Taltz.
Now, Ashkenazi will take the reins from Smiley — who, under the terms of a separation agreement, will be available to help with the transition.
Ashkenazi has been at Lilly for nearly 20 years, during which she held the CFO role in several of the company’s global business areas. Since 2016, though, she’s been in charge of finances for Lilly Research Laboratories.
In that role, she supervised the CFOs of the company’s commercial businesses and other units, including research and development, manufacturing and quality, and general and administrative. Ashkenazi has also been in charge of the corporate strategic planning team and business transformation office.
In a statement, Lilly said it “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. Mr. Smiley did not meet that standard.”
Lilly shares were down about 2.2% in late morning trading Tuesday.
