What to make of Medtronic (NYSE:MDT) CEO Bill Hawkins’ decision to postpone his retirement?
A spokesman for the Fridley, Minn.-based company declined to answer any questions about the search for a new chief executive.
But one thing is clear: something transpired between Feb. 22, when Hawkins told analysts it would be the last time he would lead an earnings call, and May 2 when he informed employees of his decision to stay on until a successor is named sometime in early fiscal 2012. (Medtronic’s fiscal year begins in May.)
Hawkins said in his message to Medtronic employees that the “board is making is excellent progress; however, this process takes time…”
But executive recruiters say that typically when a senior executive like Hawkins makes an announcement about retiring, a search for a replacement is already underway. In other words, the search for Medtronic’s CEO has likely extended for more than four months.
On Feb. 25, three days after Hawkins hosted the earnings call, Wells Fargo analyst Larry Biegelsen wrote a note to investors saying that Medtronic may choose current board member James Lenehan, a 28-year veteran of Johnson and Johnson who retired in 2004, as its new face. A source in the local medtech industry told MedCity News this week that the story around town involved Lenehan, but the rumor seems to be dying.
Could Lenehan — or someone else — have turned an offer down? That could be one reason for the delay in naming a new CEO, say several executive recruiters.
“It’s entirely possible that they were closing in on a deal with someone and it fell apart,” said Mike Travis, principal of Travis & Co., an executive search firm focused on medical device & diagnostic, biotechnology and instrumentation companies, in a phone interview. Travis was named to BusinessWeek’s Most Influential HeadHunters List in October 2008.
Certainly, the new CEO will need to prove himself to Wall Street given that some analysts felt that Hawkins’ departure was necessary. In a research note following Hawkins’ original December announcement to retire, David Lewis, a Morgan Stanley analyst wrote: “Today’s news from Medtronic is surprising ’ in terms of timing, but thematically in line with our expectations and an encouraging signal of the Board’s desire for accelerated value generation.’
And given such pressures, a local executive recruiter is not surprised that the search is taking longer than expected.
“They are looking for a catheter in a haystack,” said Isaac Cheifetz, founder of Open Technologies Consulting based in Minneapolis. “Consider all the complicating factors: they are seeking a star CEO to return Medtronic to its glory years as a darling of Wall Street investors.
“But medical technology companies emphasize experience in their own industry when hiring and Medtronic is the world’s largest medical [device] firm,” Cheifetz said. “The pool of candidates who have the track record of accomplishment for this role, both operationally and on Wall Street, is quite limited.”
Travis said that the fact that the search is taking longer could be an indication that the Board is proceeding with caution, especially if they are looking outside the company for a new CEO.
One former, longtime Medtronic employee told MedCity News the company has changed its focus from internal to external hiring.The company has essentially given up developing through the ranks, he said. Instead they hire someone from the outside and “groom them for a couple of years before moving them into a top position.”
He didn’t want to comment on whether Hawkins fits that description.
Hawkins joined Medtronic in 2002 before being named CEO in 2007. His predecessor Arthur Collins joined Medtronic in 1992 and became the chief executive in 2001.
While the board continues the search, Hawkins may have elevated his standing by postponing his retirement date, especially if the decision to retire was prompted by the board’s desire for change. Hawkins, after all, was only CEO for a little over three and a half years before he announced he was leaving.
“It reflects well upon him that he agreed to stay on,” Travis said.
Here’s the latest personnel changes from medical device, diagnostics and life science companies around the nation. For more recent hirings and firings, check out MassDevice’s compilation of the latest personnel moves.
- NextBio appoints former Yahoo! CTO Farzad Nazem to board
NextBio, provider of a platform that enables life science researchers to search, discover, and share knowledge locked within public and proprietary data, announced the appointment of Farzad (Zod) Nazem to the NextBio Board of Directors.
- Artimplant’s CEO resigns
Hans Rosén, Artimplant’s (STO:ARTIB) CEO for almost five years, has decided to step down in conjunction with the election of a new Board of Directors at the Artimplant Annual General Meeting, which is due to take place. Hans Rosén has a period of notice of four months. Kjell Thörnbring, Artimplant CFO, has been appointed as acting CEO from May 5th.
- N.C. hospital systems executive tapped for Medicare innovation post
The Centers for Medicare & Medicaid Services have tapped a North Carolina health system executive to take on a new senior leadership post at the agency. Valinda Rutledge, CEO of CaroMont Health in Gastonia, has been named director of the Patient Care Models Group at CMS’s new Center for Medicare and Medicaid Innovation, writes MedCity News.
- CMS agency taps new chief medical officer
The Medicare agency has hired the director of hospital medicine at Cincinnati Children’s Hospital to be its new chief medical officer. Patrick Conway will also serve as director of the agency’s Office of Clinical Standards and Quality. In his previous role, Conway was responsible for improving the measurement and quality of care in a $1.5 billion health care system, reports The Hill.
- Twelve elected to Owens & Minor board
Owens & Minor Inc. (NYSE:OMI) announced at its Annual Shareholders’ Meeting on April 29 that the company’s shareholders have elected twelve directors, including two newly elected members who will take the seats of two retiring directors, to serve a one-year term.
- Dr. Damian Dupuy appointed BSD Medical board
BSD Medical Corp. (NSDQ:BSDM) announced that its Board of Directors has appointed Damian E. Dupuy, MD, a fellow of the American College of Radiology, as a new member of the BSD Board of Directors. Dr. Dupuy is a Professor of Diagnostic Imaging at the Warren Alpert Medical School of Brown University and Director of Tumor Ablation at Rhode Island Hospital in Providence.
- GE Healthcare adds to GE Patient Safety Organization
GE Healthcare Performance Solutions announces the appointment of Dr. Peter Angood as the Medical Director of the GE Patient Safety Organization (PSO). Dr. Angood is the former Senior Advisor for Patient Safety at the National Quality Forum (NQF). The GE PSO was recently certified as part of the Agency for Healthcare Research and Quality’s (AHRQ) Patient Safety Organization program.
- Solta Medical expands board to seven
Solta Medical Inc.’s (NSDQ:SLTM) Board of Directors increased the size of the Board from six directors to seven directors and elected Linda Graebner to the Board as a Class II director. At the time of Ms. Graebner’s election, the Board had not yet assigned Ms. Graebner to any Board committee.
- Delcath names Harold Mapes as executive VP of global operations
Delcath Systems Inc. (NSDQ:DCTH) announced the appointment of Harold C. Mapes to the newly created position of Executive Vice President, Global Operations. In this role, Mr. Mapes will lead the Delcath manufacturing and operations team, and will implement logistics and supply chain management in support of the Company’s commercial launch in Europe later this year. Mr. Mapes will report directly to Eamonn P. Hobbs, CEO & President.
- Sonova executives resign after insider trading probe comes to light
Hearing aid manufacturer Sonova Holding AG revealed in March that its CEO, CFO and board chairman stepped down after an internal investigation of trading by the company’s executives and officers in advance of a profit loss. That investigation found no evidence of intentional insider trading on March 16 by directors and officers, but determined the Switzerland-based company should have imposed an internal blackout period barring executives from trading in its stock in advance of the announcement, the company said in a statement, writes Law360.
- Boston Scientific talent poaching suit goes to Golden State
Judge Saundra Brown Armstrong of the U.S. District Court for Northern California ruled in the beginning of April that a noncompete dispute between Boston Scientific Corp. (NYSE:BSX) and St. Jude Medical Inc. (NYSE:STJ) would be litigated in her court rather than in Minnesota, where a similar action is pending. The judge cited the first-to-file doctrine in denying BoSci’s motion to dismiss and simultaneously enjoining it from prosecuting the Minnesota action, writes Law360.
- Stryker accuses Zimmer stealing talent
Stryker Corp. (NYSE:SYK) hit rival Zimmer Inc. (NYSE:ZIH) in April with a trade secrets and breach of contract suit in New Jersey, alleging that Zimmer poached entire segments of Stryker’s sales force. The suit, filed in the U.S. District Court for New Jersey, alleges that Stryker and its subsidiary Howmedica Osteonics Corp. stands to lose millions of dollars in sales as a result of Zimmer’s recruitment of 14 of its employees.