Medtronic Inc., the world's largest maker of heart rhythm devices, said chief executive officer William A. Hawkins, 56, will retire in April after three years in the position.
The board has begun an external search for a replacement, and Hawkins will remain until his successor is appointed, Fridley-based Medtronic said in a statement Monday.
Hawkins was elected CEO in August 2007, when Medtronic was in the midst of recalls on its heart defibrillators that started in 2005 and shrank sales of the devices at the time. In December 2007, the company agreed to pay $114.1 million to settle lawsuits it hid defects in its Marquis line of defibrillators, devices implanted to regulate erratic heartbeats. Hawkins joined Medtronic in 2002 and became chairman in 2008.
"Hawkins was dealt a bad hand, and then he didn't play it that well," said Raj Denhoy, an analyst at Jeffries & Co. in New York, in a telephone interview Monday. "The growth in the company's divisions had slowed, and he tried to bolster it through acquisitions and that hasn't worked out."
Shares rose $0.17, or 0.43 percent, to $37.56 at 1:00 p.m. CST in New York Stock Market composite trading, after earlier gaining as much as 5.7 percent in morning trading, for the biggest increase since Nov. 2009. The stock had fallen 15 percent this year before Monday.
Medtronic received a subpoena on Dec. 8 from the U.S. Attorney in western New York on sales, marketing and reimbursement practices for its brain stimulation products. The company is also being investigated for relationships between it and a Massachusetts clinic.
Medtronic's payments to doctors have also been cited in a letter from U.S. Senator Charles Grassley in October.
This year, Medtronic received FDA approval on its Arctic Front catheter and the Melody transcatheter heart valve. Medtronic said it would acquire Ardian Inc., a closely held company that's developing a hypertension device, on Nov. 22.
"Medtronic has struggled to create shareholder value over the last 10 years, and given the challenges facing the company and industry, it's not getting any easier," said JPMorgan analyst Michael Weinstein, in a note to investors Monday. "The good news is that a new CEO can be a catalyst for change, and in the cold winter of the Twin Cities, that starts today."
Hawkins joined Medtronic from Novoste Corp, where he was CEO since 1998. He began his career with Carolina Medical Electronics in 1977, after receiving a bachelor's degree in biomedical engineering from Duke University in 1976. In 1982, Hawkins earned a master's degree in business administration from the University of Virginia's Darden School of Business.
Steve Cragle, a spokesman for Medtronic, declined to say when the search for a new CEO began.