Smith & Nephew's boss has been warned that he is in the 'last chance saloon' and must turn the company around. Activist investors have given Deepak Nath, the US-based chief executive of the medical equipment giant, two months to demonstrate improvements.
Shareholders have run out of patience with the pace of his strategy, The Mail on Sunday understands. They will pressure Nath to resign in the New Year unless he proves that the FTSE 100 firm has made operational improvements by the time that the company's full-year results are announced in February.
Smith & Nephew, founded in Hull in 1856, develops technology for surgeries such as repairing soft tissue injuries and degenerative joint conditions. It is chaired by Rupert Soames, 65, who is the former boss of outsourcer Serco and is Sir Winston Churchill's grandson.
Borrowed time: Deepak Nath. Smith & Nephew is made up of three divisions: sports medicine, wound management, and orthopaedics. Its sports medicine and wound management arms are both considered to be the second best in the world for those specialisms.However, investors have lobbied for a shake-up in the orthopaedics division. Shareholders also want the company to slash central costs and overhaul its troubled Chinese business.
Shares in the company are down nearly 7 per cent this year and have tumbled 42 per cent in the past five years. Overall profit margins are around 17 per cent – much lower than at its competitors, which include Johnson & Johnson and Stryker. The company's largest shareholder is asset manager BlackRock with 5 per cent, while activist hedge funds Cevian Capital and Harris Associates are also top-ten holders.
