Elliott calls for leadership review at GSK

Elliott Advisors has renewed pressure on the board of GlaxoSmithKline by calling for new directors and a review of whether chief executive Emma Walmsley should lead the company after it spins off its consumer arm.

In a letter to GSK's chairman Jonathan Symonds, the activist investor said the company could increase its share price by at least 45% before the spinoff but that it had failed to realise its potential for many years because of "under-management". It confirmed that it had a significant stake in GSK.

Elliott said GSK should bring in new directors with deep biopharmaceutical and consumer healthcare experience before the split. The new board should then make sure the right leaders are in place at the top of both businesses, it said.

"Elliott is not advocating a specific outcome but is arguing for a robust process," Elliott said. "Elliott strongly believes that the future CEOs of new GSK and CH must have the skillsets and expertise to match their respective tasks at hand."

Walmsley, who took over as CEO in 2017, has faced questions about whether she is the right person to lead a pharmaceuticals company because her background is in consumer products. She set out a growth plan on 23 June but Elliott said though it was an important step in the right direction it did not solve GSK's credibility problems.

Elliott also called for stronger incentives so that no bonus is paid for achieving the bottom end of financial guidance but with a full bonus for more ambitious targets. GSK should invest in research but make deeper cost cuts to improve profitability, Elliott said.

The board should also consider selling the consumer business instead of spinning it off if the opportunity arises, Elliott said. The vaccines and pharmaceuticals divisions should remain separate so investors can assess their performance and to give the "crown jewel" vaccines business more flexibility, it added.

"After years of disappointing performance, which led to frustrated shareholders, demotivated employees and an erosion of the company’s public perception and credibility, GSK is facing a significant inflection point," Elliott said. "We expect GSK to follow the steps above in order to realise its true potential, and we stand ready to help GSK along the way."

GSK shares rose 0.5% to £14.27 at 10:28 BST.