Medtronic executives will receive $63 million in payments when the company completes its Covidien acquisition to cover the tax inversion strategy, according to a Star Tribune report.
Shareholders filed a lawsuit to block the payment, but a federal judge announced earlier this week that she will not block the payment. The payment is scheduled to “offset the special federal excise taxes imposed on executives and directors that relocate their companies overseas,” according to the report.
The payments include $24.8 million to Medtronic CEO Omar Ishrak. The judge denied a preliminary injunction ahead of the shareholders’ vote on approving the deal, scheduled for Jan. 6, 2015. There will also be a second vote on approving the excise-tax payments. Here are five things to know about the payments:
1. Medtronic representatives did not state whether the advisory vote is legally binding.
2. Medtronic is “pleased” with the ruling.
3. Long-time shareholders will face large capital gains taxes after the acquisition, and are upset.
4. The judge decided not to block the payment because she didn’t think the lawsuit would succeed.
5. The ruling doesn’t directly deal with allegations that Medtronic’s board “breached their fiduciary duty” to act in the best interest of the shareholders when approving the excise payments and moving forward with the merger.
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