Medtronic Will Pay Executives’ Tax Bill For Inversion

Medtronic Inc. told shareholders last week that it intends to reimburse top executives for the personal tax bill they will face as the result of the company’s announced tax inversion: Medtronic will acquire surgical supplier Covidien, an Irish company, and move its headquarters to Ireland, where it will pay substantially less corporate tax. Executives, however, will be hit with a 15 percent federal excise tax on future stock options, a special tax that kicks in after inversions. The fact the company intended to pay much of the executive’s tax bill was revealed at a “tense” annual shareholders meeting, according to an article in the StarTribune, but the amounts – a total of about $63 million, including more than $5 million each to four top executives – did not come out until an SEC filing a few days later. Some shareholders are not happy, particularly since for many of them the deal will trigger significant capital gains tax, which they will pay out of their own pocket.