Boston, MA 09/02/2014 (wallstreetpr) – Medtronic, Inc. (NYSE:MDT) will compensate its top executives and directors for the tax imposed on their stock and option awards in relation to the inversion efforts that the company is undertaking, Wall Street Journal stated in an article. The company seeks to shift its corporate office from the U.S. through the acquisition of Cividien PLC (NYSE:COV), which is based in Ireland. The move to reimburse the affected executives and board members is expected to divert the attention of the leaders from worrying about their personal finances, but to focus on the company’s best interest.
According to the regulatory filings, Medtronic, Inc. (NYSE:MDT) will cover about $24.8 million in tax bill in favor of its Chief Executive Officer, Omar Ishrak. The filings also revealed that the company’s Chief Financial Officer, Gary Ellis and some other executives will share $32.7 million to cover the tax bill linked to the inversion plans. The company has offered about $5.5 million to cover the tax bill of 10 of its nonemployee directors.
The top executives and the directors were slapped with 15% tax on stock and option, being one of the legal hurdles intended at discouraging inversion among the U.S. companies. A number of U.S. companies have sought or are in the process of seeking tax refuge. The U.S. companies are especially moving to Europe where corporate taxes are lower than in the U.S. Medtronic, Inc. (NYSE:MDT) offered to buy Covidien for $43 billion in a move that would help it to renounce its U.S. corporate citizenship and re-domicile in Covidien’s corporate address in Ireland.
The other healthcare company that is making tax reimbursement for its executives and directors is AbbVie Inc (NYSE:ABBV), which offered $54 billion to acquire Shire PLC (ADR) (NASDAQ:SHPG), which also has its base in Ireland just as like Covidien. The amount that AbbVie has earmarked to cover the tax bills for its executives and directors is still unknown.
According to experts, tax reimbursements like the ones declared by Medtronic, Inc. (NYSE:MDT) and AbbVie can be controversial in the senses that they are seen as excessive executive pay.
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