Lilly says CFO resigns after investigation into inappropriate relationship

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 company employees.

The Indianapolis-based 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.

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

Eli Lilly shares were down about 2%. The stock had risen 40% through Monday’s close in the past 12 months.

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.

Smiley’s conduct was not related to financial controls, financial statements or any other business matters or judgments, the company said, 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.

Smiley has agreed to forgo all of his $1 million 2020 cash bonus, about $3 million he was awarded between 2018 and 2020, and all of his other current and future stock awards, totaling about $20 million based on Lilly’s share price, according to a public filing. Earlier this month, Smiley sold shares worth more than $3 million, filings show.

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 INTC.O Chief Executive Brian Krzanich resigned in June 2018, after an investigation found he had a consensual relationship with an employee that breached company policy.