Medtronic deal could result in $80M windfall for Covidien executive team

Covidien plc’s shareholders aren’t the only people who stand to make a hefty profit if the company is sold as planned for $43 billion to Medtronic: Financial filings also indicate that the local medical device maker’s senior executive team is in line for a windfall if they part from the newly merged company once the deal is done.

According to recent filings with the Securities and Exchange Commission, Covidien’s top-five executives stand to reap approximately $80 million in cash and equity payments if the they are terminated from the company after a change in control. The potential payouts would include accelerated salaries, bonuses and vested equity awards that average out to approximately $16 million per executive.

The same group of senior executives, led by CEO Jose Almeida, received total compensation of approximately $24 million in fiscal 2013 and realized another $30 million in value from vested option and restricted stock awards from prior years. That compensation as well as the team’s change-in-control payouts do not include tens-of-millions more in Mansfield-based Covidien shares already owned, which in the case of Almeida alone were worth approximately $73 million based on Monday’s stock close of around $87 a share.

The Covidien team’s potential severance packages, should each member leave the company following a change in control, are as follows:

• CEO José E. Almeida $37.3 million, including $7.4 million in cash severance; $1.6 million in accelerated bonuses; $8.5 million in accelerated vesting of option awards; $19.7 million in accelerated vesting of stock awards and $83,535 in welfare benefits and outplacement services.
• CFO Charles J. Dockendorff: $15.1 million, including $3.2 million in cash severance; $675,000 in accelerated bonuses; $4 million in accelerated vesting of option awards; $7 million in accelerated vesting of stock awards and $71,162 in welfare benefits; and outplacement services.
• Medical Device Group President Bryan C. Hanson : $10.5 million, including $2.1 million in cash severance; $585,000 in accelerated bonuses; $2.2 million in accelerated vesting of option awards; $5.5 million in accelerated vesting of stock awards and $71,162 in welfare benefits; and outplacement services.
• Developed Markets Group President Peter L. Wehrly: $9.3 million, including $2.1 million in cash severance; $426,000 in accelerated bonuses; $1.8 million in option awards; $4.9 million in stock awards and $71,162 in welfare benefits; and outplacement services.
• General Counsel John H. Masterson: $7.7 million, including $2.3 million in cash severance; $472,000 in accelerated bonuses; $1.8 million in accelerated vesting of option awards; $3.1 million in accelerated vesting of stock awards; and $71,162 in welfare benefits and outplacement services.