Covidien shareholders might be popping bubbly in light of the company's $42.9 billion sale to Medtronic ($MDT), but top-level management also has a reason to celebrate. Financial filings show that the deal could result in a hefty payout for Covidien's senior executive team if they leave the company once the merger is complete.
The Irish company's top-five executives will collect approximately $80 million in cash and equity payments if they are terminated from the company after the deal goes through, according to recent filings with the Securities and Exchange Commission. The payout packages include accelerated salaries, bonuses and vested equity awards that average out to approximately $16 million per executive, the Boston Business Journal reports.
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| Covidien CEO José E. Almeida |
CEO José E. Almeida stands to gain the most from the windfall, with a $37.3 million potential severance package that includes $7.4 million in cash severance; $1.6 million in accelerated bonuses; $8.5 million in accelerated vesting of option awards; and $19.7 million in accelerating vesting of stock awards. Covidien CFO Charles J. Dockendorff would collect $15.1 million as part of Medtronic's fond farewell, with $3.2 million in cash severance; $675,000 in accelerated bonuses; $4 million in accelerated vesting of option awards; and $7 million in accelerated vesting of stock awards.
Both Medtronic and Covidien's board of directors have signed off on the recent deal, but shareholders have yet to approve the merger. The transaction also will have to clear regulatory hurdles in the U.S., EU, China and other countries before it becomes finalized.
Meanwhile, Covidien ($COV) is still flying high from positive Q2 numbers. The company posted 3% sales growth in the second quarter of its fiscal 2014, exceeding the $2.53 billion it brought in during the same period last year. Surgical solutions had sales of $1.2 billion, a 4% jump from the year before. Respiratory and patient care sales also shot up 2% to $976 million during the second quarter.
- read the Boston Business Journal story
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