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Originally Published MX March/April 2004

FINANCE

Medical Device Corporate Governance Survey

A survey of changes in corporate governance procedures regarding executive compensation in the medical device industry was conducted by Top Five Data Services Inc. (Fremont, CA) in December 2003.

A group of 20 publicly traded medical device companies with headquarters in the United States were selected. The companies must have had their initial public offerings no later than December 31, 2000. The companies were categorized by revenue size, with those companies having minimum 2002 revenues of $1 billion designated as Tier One companies and those companies having 2002 revenues of less than $1 billion designated as Tier Two companies (see Table).

Tier One Tier Two
Beckman Coulter Inc. (Fullerton, CA) Arrow Internation (Reading, PA)
Biomet Inc. (Warsaw, IN) Conmed Corp. (Utica, NY)
Boston Scientific Corp. (Natick, MA) Datascope Corp. (Montvale, NJ)
C. R. Bard Inc. (Murray Hill, NJ) E-Z-EM Inc. (Westbury, NY)
Dentsply International (York, PA) Haemonetics Corp. (Braintree, MA)
Guidant Corp. (Indianapolis) Hologic Inc. (Bedford, MA)
Invacare Corp. (Elyria, OH) Inamed Corp. (Santa Barbara, CA)
Medtronic Inc. (Minneapolis) Mentor Corp. (Santa Barbara, CA)
St. Jude Medical (St. Paul, MN) Ocular Sciences Inc. (Concord, CA)
Stryker Corp. (Kalamazoo, MI) Zoll Medical Corp. (Chelmsford, MA)
Companies surveyed by Top Five Data Services. Tier One companies reported minimum 2002 revenues of $1 billion and Tier Two companies reported 2002 revenues of less than $1 billion.

The proxy statements that were reviewed were filed with the SEC during 2002 and 2003; the statements, therefore, discussed corporate governance during 2001 and 2002. The survey focused on whether certain factors existed in the survey group and whether those factors changed from 2001 to 2002. The issues examined included the following.

  • Number of members of the compensation committee.
  • Number of formal meetings of the compensation committee.
  • The existence of a formalized compensation committee charter.
  • The existence of a formalized executive compensation philosophy.
  • The source(s) of the compensation committee's information when making pay program determinations.
  • The compensation committee's use of an independent compensation consultant.

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