Lilly says CFO resigns after investigation into inappropriate relationship

(Reuters) – Eli Lilly and Co said on Tuesday Chief Financial Officer Josh Smiley had resigned after allegations about a personal relationship sparked an investigation that found “inappropriate personal communication” with some Lilly employees.

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The drugmaker said it immediately hired external counsel to conduct an independent probe after it was made aware of the allegations. The investigation revealed consensual though inappropriate personal communications between Smiley and certain Lilly employees.

Lilly said the behavior exhibited poor judgment by Smiley. The company would not give further details on the communications or the number of employees involved.

Reuters could not immediately reach Smiley for comment. A LinkedIn search showed Smiley’s account, which he managed himself, was no longer available.

Eli Lilly had taken “swift and significant action” as soon as it learned about the allegations, a company spokeswoman told Reuters.

Smiley has been with the company since 1995 and became CFO in 2018. He will be replaced by Anat Ashkenazi, who joined the company in 2001 and was most recently senior vice president, controller and chief financial officer of Lilly Research Laboratories, Lilly said.

The company said Smiley’s conduct was not related to financial controls, financial statements or any other business matters or judgments, and he will be available to assist in the transition of his role through July at reduced cash compensation of $9,000 every two weeks.

Executive behavior and the treatment of employees has been under scrutiny over the past few years following the #MeToo social media movement.

In 2019, McDonald’s Corp dismissed chief executive Steve Easterbrook over a consensual relationship with an employee, which the board determined violated company policy.

Intel Corp chief executive Brian Krzanich resigned in June 2018, after an investigation found he had a consensual relationship with an employee that breached company policy.

Under the separation agreement, Smiley will forego all of his $1 million cash bonus, as well as other current and future equity incentive awards, with the target value totaling over $20 million.

In the past few years, Lilly has bought several smaller drug developers to bolster its line of promising drugs, including for cancer, in the hopes of reducing the drugmaker’s reliance on its blockbuster diabetes drug, Trulicity.

Lilly shares were unchanged before the opening bell on Tuesday. The stock had risen 40% through Monday’s close in the past 12 months.

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