Medtronic gets major reshuffle at the top

In a move that bears the signature of Bill Hawkins, its first-year chief executive, Medtronic Inc. announced a shake-up of its top management team Tuesday.

The biggest change: Chief Operating Officer Michael DeMane, a 10-year Medtronic veteran, "has decided to leave to pursue other opportunities."

In a news release, Hawkins said he thanked DeMane for his "significant contributions to the company during his tenure and wish him all the best in his future endeavors." DeMane, 51, could not be reached for comment Tuesday, and it was unclear what his next career step may be.

"I'm surprised he stayed around this long; he's more of an entrepreneurial type,'' said Jan Wald, an analyst with Stanford Group. (DeMane was named COO at Medtronic's annual meeting last August.)

This is the first major reshuffling of management since Hawkins became CEO last August at the Fridley-based medical technology giant.

In a statement, he said the changes will "focus on growth, globalization, operating leverage and innovation."

All involved promoting or moving existing Medtronic employees.

"Bill's putting his own stamp on the company,'' said Timothy Nelson, an analyst with FAF Advisors Inc. "He didn't have complete say in how this team was constructed before he was CEO. Obviously it wasn't a good match between Bill and Mike.''

Glenn Reicin, an analyst with Morgan Stanley, said in a note to investors that DeMane's departure is a "blow to the company's senior management structure." DeMane, who was responsible for the recent success of the company's operations abroad, including the launch of its drug-coated heart stent, "is a big loss of talent," Reicin said.

As chief operating officer for the past year, Nelson said, "[DeMane] has been sort of invisible, and frankly the performance of the company hasn't been great on an operational basis.''

According to a Securities and Exchange Commission filing, DeMane will remain an employee of Medtronic until May 31, 2009, continuing to receive his salary and benefits. If he stays, Medtronic will pay him lump-sum separation amounts of $362,500 and $688,750, representing six months' salary and his bonus for fiscal year 2009, respectively. The agreement contains confidentiality, noncompete and nonsolicitation provisions, the filing says.

Other changes

Medtronic also replaced the head of its spine business since 2005, Pete Wehrly, with Steve LaNeve, who had been president of Medtronic Japan. Medtronic said in a statement that Wehrly is "leaving the company," but offered no further detail.

Nelson, of FAF Advisors, said there "are some definite challenges in spine that need new leadership.'' The division, which makes devices used in spine surgery, reported $2.5 billion in annual revenue last year, about 20 percent of the $12.3 billion in overall revenue reported by the company.

The Memphis-based spine business reported $808 million in revenue for the fiscal third quarter, an increase of 35 percent, driven by $147 million in sales from the $4.2 billion purchase of Kyphon Inc., which also makes devices for back surgery. Excluding Kyphon results, the division's quarterly revenue grew 11 percent.

Among other executive changes:

•Jean-Luc Butel was named senior vice president and president of Medtronic International, responsible for all of Medtronic's operations outside the United States.

•James Dallas was named senior vice president of Quality and Operations, responsible for cross-business initiatives such as integrating acquisitions.

•Katie Szyman, formerly vice president of Medtronic Endovascular, was named senior vice president of a new group called Strategy and Development, which combines several functions including corporate strategy, business development, corporate ventures and science and technology.

•Bob Blankemeyer, vice president and general manager of Medtronic's Ear, Nose and Throat/ Neurologic Technologies business, will take additional responsibilities for Medtronic Navigation.

•Steve Mahle, a 36-year company veteran who headed Medtronic's cardiac rhythm business for many years, was named executive vice president of Healthcare Policy and Regulatory, responsible for government affairs, reimbursement, regulatory and clinical functions. Medtronic said the position recognizes the "increasingly rigorous and challenging health care environment around the world.''

Janet Moore • 612-673-7752