VOL. 124 | NO. 140 | Monday, July 20, 2009
Medtronic Raises CEO Pay 26 Percent to $8.9M
BY MATTHEW PERRONE | AP Business Writer
WASHINGTON (AP) - Medtronic Inc., the world's largest medical device maker, paid Chief Executive Bill Hawkins $8.9 million in total compensation for fiscal 2009, a 26 percent increase, according to an analysis by the Associated Press.
The pay hike comes as Medtronic sheds jobs in an effort to streamline operations and shrink underperforming business units.
Hawkins, 55, took the reins of Medtronic last August, replacing Art Collins, who had led the company since 2002.
According a filing with the Securities and Exchange Commission, for the year ended April 24 Hawkins received a $1.2 million salary, a $2.2 million performance-based bonus and $74,700 in other compensation, including a business allowance, contributions to his retirement plans and tax gross-ups, which help pay for taxes on perks.
Hawkins also received stock options and restricted stock worth a total of $5.5 million. The stock options are slightly "underwater," or worth less than on the day they were granted, because the Minneapolis-based company's stock has declined. The shares were granted in October 2008 with a strike price of $36.24. Company shares are currently trading around $34.70.
Medtronic makes devices such as implantable heart defibrillators, spinal implants, and insulin pumps. After a strong run-up through the 1990s, Medtronic shares touched $62 on Dec. 26, 2000, but they have been treading water in recent years and shares are down 36 percent in the past 52 weeks.
The company is seen by some analysts as a safe bet during economic downturns because it sells a broad range of devices that are medical necessities. But Medtronic has stumbled in recent quarters following safety-related concerns with its implantable devices. The company has lost share of its top-selling implantable defibrillators to rivals like Boston Scientific Corp., after a 2007 recall linked to cracked heart wires.
The company announced in May it would cut up to 1,800 employees after its fiscal fourth-quarter plunged 69 percent on slipping sales and restructuring and other charges.
The Associated Press compensation calculation is designed to isolate the value the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the U.S. Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive's compensation in the previous fiscal year.
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