Medtronic ($MDT) Chairman and CEO William Hawkins will retire when the fiscal year ends April 29, 2011. The company's board of directors has initiated an external search for his replacement, and Hawkins plans to remain until his successor is appointed.
Medtronic's stock through Friday had declined about 30 percent since Hawkins was named CEO in August 2007, but it traded up 1.4 percent to $37.94 Monday after the announcement, Dow Jones notes.
Hawkins joined the company 2002 as a senior VP. However, the company has experienced slowing demand for its pacemakers and heart defibrillators and for devices used in spine surgery; it also has struggled to introduce new products to offset these losses, said Phil Nalbone, an analyst at Wedbush Securities, as quoted by the Minneapolis Star Tribune.
Jefferies & Co analyst Raj Denhoy said the CEO's departure was somewhat unexpected. "Certainly...people have been disappointed with the stock's performance now for quite some time," said Denhoy, as quoted by Reuters. "I know there are some investors that have questioned his decision-making and leadership."
The devicemaker has experienced other woes besides declining sales in key areas. It received a subpoena Dec. 8 from the U.S. Attorney in western New York on sales, marketing and reimbursement practices for its brain stimulation products. The company is also being investigated for relationships between it and a Massachusetts clinic, Bloomberg notes.
JPMorgan analyst Michael Weinstein says in an investor note quoted by Bloomberg that the move could bring needed change. "Medtronic has struggled to create shareholder value over the last 10 years, and given the challenges facing the company and industry, it's not getting any easier," he writes. "The good news is that a new CEO can be a catalyst for change, and in the cold winter of the Twin Cities, that starts today."
The news follows the departures of CEO Jeff Kindler (photo) from drugmaker Pfizer and Elmar Schnee's announcement that he is stepping down as head of Merck KGaA's drug operations for personal reasons.
- get the Medtronic release
- check out the Minneapolis Star Tribune's coverage
- read Dow Jones' story
- get more from Reuters
- see the Bloomberg report