Noted cardiologist and incoming Institute of Medicine president Dr. Victor Dzau is resigning from the board of directors for Medtronic (NYSE:MDT), effective 1 day before he starts his new job at the IOM.
Dzau has served on Medtronic’s board since 2008 and has been CEO of Duke University Health System since 2004. He’s leaving both behind to lead the IOM, an independent non-profit organization tasked with providing healthcare information and guidance to regulators. Dzau was elected to the IOM in 1998 and has "served on several leadership committees," the agency said.
Dzau serves on Medtronic’s Nominating & Corporate Governance Committee as well as the Quality & Technology Committee, for which he received $220,000 during Medtronic’s fiscal 2013, according to company documents. The compensation was split between $80,000 in cash and about $140,000 in stock awards. Dzau also held more than 15,500 shares of deferred stock units and more than 9,600 options as of July 1, 2013, Medtronic reported.
Dzau is also leaving behind other boards, including a seat at Pepsico (NYSE:PEP) that was starting to get some attention for potential conflicts of interest. The IOM has in the past endorsed soda taxes as a means of helping stem ever-increasing rates of obesity in the U.S.
Dzau had decided to leave Pepsico before he was named the incoming IOM president, a spokeswoman told Bloomberg. He had served on the company’s board since 2005, and as of December 2, 2013, owned nearly 32,600 shares of company stock.
Dzau’s IOM appointment comes amid increased scrutiny of potential conflicts of interest among industry and high-profile healthcare advisory groups in the wake of a scandal involving the influential National Quality Forum and a doctor named in a legal settlement over an alleged kickbacks scheme involving CareFusion (NYSE:CFN).
The U.S. Justice Dept. in a January press release announced that CareFusion paid $11.6 million to induce Dr. Charles Denham to "recommend, promote and arrange for the purchase" of its ChloraPrep wipes to healthcare providers during Denham’s time as co-chairman of the Safe Practices Committee at the NQF. The organization had asked Denham to step away from his role amid "discomfort" with his advocacy of the ChloraPrep antiseptic wipe, officials told MassDevice.com.
Dzau has in the past been targeted by allegations of potential conflicts of interest over his involvement with corporate boards and the compensation he’s received. In 2010 he was the subject of Duke University student protests over his $1 million salary and more than $983,600 in "bonus" pay, according to the Duke Chronicle. Protesters complained that Dzau was receiving excessive compensation, further accusing him of being evasive about his participation in industry boards. Dzau received nearly $1.1 million for his membership on 4 corporate boards in 2009, according to the Health Care Renewal blog.