Pay drops for Medtronic CEO and the median employee; bonus plan changes
14 Aug 2023
Financial StatementExecutive ChangeAcquisition
Medtronic disclosed total compensation for its top executives as well as its median worker while revealing changes to the way Medtronic Incentive Plan bonuses will be calculated.
Medtronic (NYSE: MDT) paid Chair and CEO Geoff Martha $15.4 million in fiscal 2023, the world’s largest medical device company said in its annual disclosure of pay for top executives.
That’s a 14% decrease from the year before, primarily due to Martha receiving nothing this year under the Medtronic Incentive Plan (MIP).
Pay also dropped 14% to $67,073 for Medtronic’s median worker, which the company is required to identify for comparison to CEO pay. That CEO pay ratio increased from 215:1 to 230:1 in fiscal 2023 (ended April 28, 2023).
Dublin, Ireland-based Medtronic used the same individual employee as its median worker as it did last year, saying there was “no change in our employee population or employee compensation arrangements since that median was identified that would affect the disclosure.”
Medtronic’s disclosure did not include a precise count of its employees following this year’s voluntary early retirement program (VERP) and layoffs. Medtronic’s 2023 annual report said it had more than 95,000 global employees, the same figure it provided a year earlier. Medtronic did say, however, that it had 101,867 employees back in February 2022.
Medtronic’s top-paid executives
Martha was Medtronic’s top-paid executive, with a $1.35 million salary, $13.6 million in stock and option awards and $443,588 in other compensation. That other compensation included $296,569 worth of executive perks, such as a $40,000 business allowance and $256,569 for personal use of Medtronic aircraft.
Medtronic EVP and CFO Karen Parkhill was Medtronic’s second-highest-paid executive at $6.1 million, down nearly 19% from the year before. Her fiscal 2023 compensation included a $911,059 salary and $5.1 million in stock and option awards.
Medtronic EVP and Cardiovascular President Sean Salmon came next with nearly $5.4 million, including an $867,000 salary and $4.1 million in stock and option awards. Medtronic did not disclose his prior-year pay.
Medtronic EVP and Global Regions President Rob ten Hoedt followed at $5 million, including a $907,368 salary, nearly $3.5 million in stock and option awards, and a $269,630 cash bonus for his 2021 promotion.
Medtronic EVP and Medical Surgical Portfolio President Rob White also made around $5 million, including a $794,539 salary and $4.1 million in stock and option awards.
Related: 5 growth areas where Medtronic’s CEO wants to invest more
Changes to the Medtronic Incentive Plan (MIP)
MIP pays a cash bonus based on certain “tough but fair financial performance expectations” such as revenue, profits, free cash flow, market share.
The MIP could have paid Martha around $2 million this year, but he and his four top-paid executives received nothing because “financial performance was below our target expectations,” the company said in its filing.
Medtronic’s fiscal 2023 revenue decreased 1% year-over-year to $31.2 billion, while annual profits (net income) decreased 25% to approximately $3.8 billion.
Medtronic said it has changed the MIP for the current year so that missing the earnings per share target won’t disqualify senior executives from payouts.
“Each element of the Medtronic Scorecard will be assessed independently,” the company said. “Further, the MIP will remove market share at the Medtronic Scorecard level. Therefore, the Medtronic Scorecard will be an equally weighted measurement of revenue growth, diluted EPS and free cash flow.”
Related: Ahead of Medtronic RDN’s FDA review panel, analysts place their bets
Medtronic’s annual meeting
Medtronic has moved its annual meeting of shareholders — traditionally held in Dublin in December — to October.
Investors will vote on Medtronic’s board of directors, executive compensation practices and proposals from shareholders.
Shareholders who want to nominate directors or submit other proposals have until Aug. 30.
More on executive pay:
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ZimVie discloses executive pay and severance for first C-suite exit
Baxter CEO pay dropped amid Hillrom challenges
Boston Scientific discloses executive pay, reports employment and diversity gains
Ashley McEvoy joins J&J’s top-paid executives
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GE HealthCare’s CEO earned more than GE’s CEO before spinoff
Baxter caps cash severance payouts for executives
Masimo shareholders vote ‘no’ on executive pay
Henry Schein investors push back on executive pay
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