Medtronics __£Home Sweet (Relocation Bonus) Home__ã__»

Medtronic, Inc. filed its proxy late last week, and we found the high-dollar salaries one might expect at such a high-profile company: Chairman/CEO William Hawkins got a total compensation package of more than $9.6 million, for example. But was another interesting section as well.

It seems that the company required Christopher O—Connell to move from California to Minnesota after it promoted him to the position of Executive Vice President and Group President, Restorative Therapies Group. The promotion came with a nice 28 percent raise bringing his base salary to $525,000 per year.

There was a problem with relocating O’Connell, though, and that was the timing of the move. Medtronic acknowledged that the economic crisis hit California’s housing market quite harshly. The proxy disclosed that O—Connell —would have incurred a loss in the value of his house of approximately $900,000, plus the value of improvements made to the home—

Normally, the company said, it would have reimbursed O—Connell for only $475,000 of his equity loss. But it continued:

—Because Mr. O—Connell was required to sell his house in market conditions under which he otherwise would not have sold, management believed this was an unacceptably large loss to be borne by Mr. O—Connell.

Accordingly, Medtronic gave O—Connell a bonus of $1.4 million, explaining that it —was intended to cover approximately $800,000 of the equity loss plus applicable taxes, with Mr. O—Connell being responsible for the remaining portion of the loss, which exceeded $100,000 (plus the value of improvements).

For O—Connell’s part, he has to stay with Medtronic for five years (unless he dies or becomes disabled), or he risks having to repay the bonus to the company on a pro-rated basis.

Lower-level executives and their attorneys shouldn’t get their hopes up if they have a relocation on the horizon. Besides noting that the California real estate market was severely depressed, the company called O—Connell’s relocation —unusually important to the Company.

Image source: Minnemom via Flickr


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