British MedTech Firm Smith & Nephew Seeks To Adopt US-Inspired Pay Policy to Navigate Shareholder Skepticism

Zinger Key Points
  • Shift in pay policy is crucial for Smith & Nephew, which has witnessed four CEOs in the past five years due to compensation clashes.
  • The move reflects a broader trend among UK-listed companies with substantial overseas revenues, to overcome shareholder reluctance.

British multinational medical equipment manufacturing company Smith & Nephew Plc SNN is set to revamp its executive pay structure, signaling a departure from the U.K. market norms, as the company aims to align compensation with its U.S. counterparts. 

In a move aimed at addressing high executive turnover, the FTSE 100 medical devices firm intends to bring its pay for U.S. executives closer to American levels, challenging the sustainability of U.K. pay packages, according to Chairman Rupert Soames

Citing Soames, the Financial Times highlighted a group of companies, “Brilos,” which are British in listing only, emphasizing the disparity in revenue sources and the need for a global talent recruitment strategy.

This shift in pay policy is crucial for Smith & Nephew, a company that has witnessed four CEOs in the past five years, with a history of executive clashes related to compensation. 

The move also reflects a broader trend among U.K. listed companies with substantial overseas revenues, aiming to overcome shareholder reluctance in the upcoming AGM season.

Chairman Soames asserted that the current stance on pay is untenable, leading to the proposal of a pragmatic reform that diverges from the U.K. market. 

The policy aims to put U.S.-based executives, like CEO Deepak Nath, on a trajectory towards higher pay in line with local competitors, recognizing the global variations in remuneration practices.

The reform comes amidst a broader debate on the competitiveness of the London stock market, as several companies with significant North American operations opt for a primary listing in the U.S. 

Smith & Nephew, however, affirms its commitment to maintaining its primary listing in London, emphasizing the need for a compelling reason to consider a shift.

Soames is optimistic about investor reception, noting a more open mindset than two years ago. The move by Smith & Nephew reflects a strategic response to the dynamics of the med-tech market, where the majority of revenues and operational leadership reside in the U.S.

Price Action: SNN shares are up 0.37% at $28.04 on the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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