• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Advertise
  • Subscribe

MassDevice

The Medical Device Business Journal — Medical Device News & Articles | MassDevice

  • Latest News
  • Technologies
    • Artificial Intelligence (AI)
    • Cardiovascular
    • Orthopedics
    • Neurological
    • Diabetes
    • Surgical Robotics
  • Business & Finance
    • Wall Street Beat
    • Earnings Reports
    • Funding Roundup
    • Mergers & Acquisitions
    • Initial Public Offering (IPO)
    • Legal News
    • Personnel Moves
    • Medtech 100 Stock Index
  • Regulatory & Compliance
    • Food & Drug Administration (FDA)
    • Recalls
    • 510(k)
    • Pre-Market Approval (PMA)
    • MDSAP
    • Clinical Trials
  • Special Content
    • Special Reports
    • In-Depth Coverage
    • DeviceTalks
  • Podcasts
    • MassDevice Fast Five
    • DeviceTalks Weekly
    • OEM Talks
      • AbbottTalks
      • Boston ScientificTalks
      • DeviceTalks AI
      • IntuitiveTalks
      • MedtechWOMEN Talks
      • MedtronicTalks
      • Neuro Innovation Talks
      • Ortho Innovation Talks
      • Structural Heart Talks
      • StrykerTalks
  • Resources
    • About MassDevice
    • DeviceTalks
    • Newsletter Signup
    • Leadership in Medtech
    • Manufacturers & Suppliers Search
    • MedTech100 Index
    • Videos
    • Webinars
    • Whitepapers
    • Voices
Home » Shareholder sues Medtronic over plan to cover execs’ $58m tax tab

Shareholder sues Medtronic over plan to cover execs’ $58m tax tab

October 7, 2014 By Brad Perriello

Shareholder sues Medtronic over plan to cover execs' $58m tax tab

A Medtronic (NYSE:MDT) shareholder sued the company last week over its plan to cover nearly $58 million in taxes its pending, $43 billion buyout of Covidien (NYSE:COV) would incur for its top executives.

U.S. tax laws impose a 15% excise tax on stock owned by executives and directors for the 6 months before and after a merger transaction. Although it’s said all along that it will offer an excise tax "gross-up" to cover executives from the tax, Medtronic revealed in an August 26 regulatory filing the details of the coverage.

Marilyn Clark filed a shareholders derivatives lawsuit Oct. 3 in the U.S. District Court for Minnesota over the "wrongful decision to force the company to indemnify and reimburse Medtronic’s officers and directors for millions of dollars of their personal tax liability in connection with an ‘inversion’ merger that Medtronic entered into with an overseas entity, Covidien plc," according to court documents.

"The multi-million dollar windfall tax reimbursement is wholly self-serving, counter to public policy, and harmful to Medtronic its shareholders," Clark alleged.

Medtronic has said that the reimbursement plan is necessary to maintain the company’s ability "not be discouraged from taking action that they believe is in the best interest of Medtronic and its shareholders." But that, in effect, means that Medtronic "has admitted that the board is incapable of acting in Medtronic’s best interests when their personal interests are at stake," according to the lawsuit.

"By law, however, the board is duty bound to always take actions that are in the best interests of the company and its shareholders, whether or not those interests affect the officers and directors’ personal tax liabilities. Therefore, the board’s reasoning is specious and serves as no cover for the individual defendants’ self-dealing," according to the documents.

The reimbursement plan

CEO Omar Ishrak would owe some $24.8 million in excise taxes; Medtronic’s 4 other named executives would owe a collective $22.3 million. Five other executives not named in the filing would share $10.5 million to cover their excise tax liabilities, while Medtronic’s 10 non-executive directors would share $5.5 million.

The gross-ups for executives aroused the ire of shareholders who will be exposed to capital gains taxes once the deal closes, which is expected to happen later this year or early in 2015. Another tax aspect of the deal, the so-called"inversion" that would see Medtronic reincorporate in Ireland, has the U.S. Congress and even President Barack Obama up in arms. But Medtronic argues that the deal will be a net gain for the U.S. economy, because the inversion frees up billions in cash that it plans to spend here on R&D and acquisitions.

Omar Ishrak, chairman & CEO $24,750,381
Gary Ellis, CFO $7,623,633
Christopher O’Connell, restorative therapies group president $6,685,665
Michael Coyle, cardiac & vascular group president $5,348,569
Carol Surface, chief human resources officer $2,617,141
Total for named executives: $47,025,389
5 unnamed executives: $10,500,000
Total for 10 key executives: $57,525,389
Non-executive directors: $5,500,000
TOTAL

$63,025,389

Filed Under: Legal News, Mergers & Acquisitions, News Well Tagged With: Covidien, Medtronic buys Covidien

More recent news

  • Imperative Care has positive stroke treatment study results
  • Medtronic enrolls first patient in study for Onyx liquid embolic system
  • Intuitive demonstrates remote telesurgery capabilities with da Vinci 5
  • BD issues voluntary recall on certain Alaris infusion pump modules
  • CVRx announces Medicare win for Barostim therapy

Primary Sidebar

“md
EXPAND YOUR KNOWLEDGE AND STAY CONNECTED
Get the latest med device regulatory, business and technology news.

DeviceTalks Weekly

See More >

MEDTECH 100 Stock INDEX

Medtech 100 logo
Market Summary > Current Price
The MedTech 100 is a financial index calculated using the BIG100 companies covered in Medical Design and Outsourcing.
MDO ad

Footer

MASSDEVICE MEDICAL NETWORK

DeviceTalks
Drug Delivery Business News
Medical Design & Outsourcing
Medical Tubing + Extrusion
Drug Discovery & Development
Pharmaceutical Processing World
MedTech 100 Index
R&D World
Medical Design Sourcing

DeviceTalks Webinars, Podcasts, & Discussions

Attend our Monthly Webinars
Listen to our Weekly Podcasts
Join our DeviceTalks Tuesdays Discussion

MASSDEVICE

Subscribe to MassDevice E-Newsletter
Advertise with us
About
Contact us

Copyright © 2025 · WTWH Media LLC and its licensors. All rights reserved.
The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of WTWH Media.

Privacy Policy