Edgar Filing: MEDTRONIC INC

<![CDATA[Preliminary Notice & Statement]]>

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant þ Filed by a Party other than the Registrant ¨

Check the appropriate box:

x	Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨	Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

Medtronic, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

þ	No fee required.

Fee computed on table below per Exchange Act Rules 14a-60(i)(l) and 0-11.

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

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(4)

Date Filed:

PRELIMINARY PROXY MATERIAL — SUBJECT TO COMPLETION

LOGO

710 Medtronic Parkway

Minneapolis, Minnesota 55432

Telephone: 763-514-4000

July 12, 2013

Dear Shareholder:

Please join us for our Annual Meeting of Shareholders on Thursday, August 22, 2013, at 10:30 a.m. (Central Daylight Time) at Medtronic’s Mounds View campus, located at 8200 Coral Sea Street N.E., Mounds View, Minnesota 55112.

The accompanying Notice of Annual Meeting of Shareholders and Proxy Statement describe the business to be conducted at the Annual Meeting and details regarding admission to the Annual Meeting. We also will report on matters of current interest to our shareholders.

Your vote is important. Whether you own a few shares or many, it is important that your shares are represented. If you cannot attend the Annual Meeting in person, you may vote your shares by internet or by telephone, or, if this proxy statement was mailed to you, by completing and signing the accompanying proxy card and promptly returning it in the envelope provided.

If you wish to attend the meeting in person, you will need to request an admission ticket in advance. You can request a ticket by following the instructions set forth on page 5 of the proxy statement. If you cannot attend the meeting, you can still listen to the meeting, which will be webcast and available on our Investor Relations website.

Thank you for your continued support of Medtronic, Inc.

Sincerely,

LOGO

Omar Ishrak

Chairman and Chief Executive Officer

Alleviating Pain, Restoring Health, Extending Life

MEDTRONIC, INC.

NOTICE OF ANNUAL MEETING

OF SHAREHOLDERS

TIME

10:30 a.m. (Central Daylight Time) on Thursday, August 22, 2013.

PLACE

Medtronic’s Mounds View Campus

8200 Coral Sea Street N.E.

Mounds View, Minnesota 55112

ITEMS OF BUSINESS

To elect eleven directors for a one year term.

To ratify the appointment of PricewaterhouseCoopers LLP as Medtronic’s independent registered public accounting firm for fiscal year 2014.

To approve, in a non-binding advisory vote, named executive officer compensation (a “Say-on-Pay” vote).

To approve the Medtronic, Inc. 2013 Stock Award and Incentive Plan.

To amend and restate the Company’s Articles of Incorporation to provide that directors will be elected by a majority vote in uncontested elections.

To amend and restate the Company’s Articles of Incorporation to allow changes to the size of the Board of Directors upon the affirmative vote of a simple majority of shares.

To amend and restate the Company’s Articles of Incorporation to allow removal of a director upon the affirmative vote of a simple majority of shares.

To amend and restate the Company’s Articles of Incorporation to allow amendments to Section 5.3 of Article 5 upon the affirmative vote of a simple majority of shares.

To amend and restate the Company’s Articles of Incorporation to eliminate the “fair price provision.”

10.

To consider such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

RECORD DATE

You may vote at the Annual Meeting if you were a shareholder of record at the close of business on July 1, 2013.

VOTING BY PROXY

It is important that your shares be represented and voted at the Annual Meeting. Please vote in one of these three ways:

VOTE BY INTERNET, by going to the web address http://www.proxyvote.com and following the instructions (have your proxy card or internet notice in hand when you access the website);

VOTE BY TELEPHONE, by dialing 1-800-690-6903 and following the instructions (have your proxy card or internet notice in hand when you call); or

VOTE BY PROXY CARD, if you received a paper copy of the proxy statement, by completing, signing, dating and mailing the accompanying proxy card in the envelope provided. If you vote by internet or telephone, please do not mail your proxy card.

ANNUAL REPORT

Medtronic’s 2013 Annual Report is available at http://www.proxyvote.com and at http://www.medtronic.com/annualmeeting.

ADMISSION POLICY

If you wish to attend the Annual Meeting and you are a record holder, you must request an admission ticket in advance by following the instructions set forth on page 5 of the proxy statement. Shareholders may obtain directions to the Annual Meeting at http://www.medtronic.com/annualmeeting.

By Order of the Board of Directors,

LOGO

D. Cameron Findlay

Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to

Be Held on August 22, 2013. The Proxy Statement, Notice of Annual Meeting and 2013 Annual

Report to Shareholders are available at http://www.medtronic.com/annualmeeting.

TABLE OF CONTENTS


	Page
General Information About the Meeting and Voting		1
Proposal 1 — Election of Directors		7
Directors and Nominees		7
Director Independence		12
Related Transactions and Other Matters		14
Governance of Medtronic		15
Our Corporate Governance Principles		15
Lead Director and Chairman; Executive Sessions		15
Board Role in Risk Oversight		16
Committees of the Board and Meetings		17
Audit Committee		17
Compensation Committee		19
Finance Committee		20
Nominating and Corporate Governance Committee		21
Quality and Technology Committee		22
Annual Meeting of the Shareholders		23
Director Compensation		23
Complaint Procedure; Communications with Directors		24
Our Codes of Conduct		25
Share Ownership Information		26
Significant Shareholders		26
Beneficial Ownership of Management		26
Section 16(a) Beneficial Ownership Reporting Compliance		27
Compensation Discussion and Analysis (CD&A)		28
Overview		28
CD&A Executive Summary		28
Executive Compensation Program Design Details		34
Component Mix of Target Total Direct Compensation		35
Annual Base Salary		35
Annual Incentive Plan		36
Long-Term Incentive Plan		38
Adjustment of EPS Results Applicable to Short and Long-Term Incentives		41
Other Benefits and Perquisites		42
Compensation Decision-Making Process		43
Role of Compensation Committee		43
Independent Compensation Consultant		43
Role of Chief Executive Officer in Compensation Decisions		44
Executive Compensation Peer Companies and Competitive Market		44
Risk Assessment		45
Share Ownership, Share Retention, and Clawback Policies		45
Tax and Accounting Implications		46
Compensation Committee Report		47
Executive Compensation		48
Summary Compensation Table		48
2013 Grants of Plan-Based Awards		51
2013 Outstanding Equity Awards at Fiscal Year End		53
2013 Option Exercises and Stock Vested		55
2013 Pension Benefits		56
2013 Nonqualified Deferred Compensation		58
Potential Payments Upon Termination or Change of Control		61
Equity Compensation Plan Information		63


	Page
Report of the Audit Committee		65
Audit and Non-Audit Fees		66
Proposal 2 — Ratification of Selection of Independent Registered Public Accounting Firm		66
Proposal 3 — Advisory Resolution to Approve Named Executive Officer Compensation (“Say-on-Pay”)		67
Proposal 4 — To approve the Medtronic, Inc. 2013 Stock Award and Incentive Plan		68
Proposal 5 — To amend and restate the Company’s Articles of Incorporation to provide that directors will be elected by a majority vote in uncontested elections		78
Proposal 6 — To amend and restate the Company’s Articles of Incorporation to allow changes to the size of the Board of Directors upon the affirmative vote of a simple majority of shares		81
Proposal 7 — To amend and restate the Company’s Articles of Incorporation to allow removal of a director upon the affirmative vote of a simple majority of shares		82
Proposal 8 — To amend and restate the Company’s Articles of Incorporation to allow amendments to Section 5.3 of Article 5 upon the affirmative vote of a simple majority of shares		82
Proposal 9 — To amend and restate the Company’s Articles of Incorporation to eliminate the “fair price provision”		83
Other Information		85
Expenses of Solicitation		85
Shareholder Proposals and Director Nominations		85
Delivery of Documents to Shareholders Sharing an Address		85
Other		86
Appendix A — Medtronic, Inc. 2013 Stock Award and Incentive Plan		A-1
Appendix B — Amended and Restated Articles of Incorporation of Medtronic, Inc.		B-1

PRELIMINARY PROXY MATERIAL — SUBJECT TO COMPLETION

LOGO

710 Medtronic Parkway

Minneapolis, Minnesota 55432

Telephone: 763-514-4000

PROXY STATEMENT

Annual Meeting of Shareholders

August 22, 2013

We are providing these proxy materials in connection with the solicitation by the Board of Directors of Medtronic, Inc. (“Medtronic”) of proxies to be voted at Medtronic’s Annual Meeting of Shareholders to be held on August 22, 2013, and at any adjournment or postponement of the meeting. The proxy materials were either made available to you over the internet or mailed to you beginning on or about July 12, 2013.

GENERAL INFORMATION ABOUT THE MEETING AND VOTING

What am I voting on?

There are nine proposals scheduled to be voted on at the meeting:

•

Election of eleven directors, each for a one year term;

•

Ratification of the appointment of PricewaterhouseCoopers LLP as Medtronic’s independent registered public accounting firm for fiscal year 2014;

•

A non-binding advisory resolution to approve named executive officer compensation (a “Say-on-Pay” vote);

•

To approve the Medtronic, Inc. 2013 Stock Award and Incentive Plan;

•

To amend and restate the Company’s Articles of Incorporation to provide that directors will be elected by a majority vote in uncontested elections;

•

To amend and restate the Company’s Articles of Incorporation to allow changes to the size of the Board of Directors upon the affirmative vote of a simple majority of shares;

•

To amend and restate the Company’s Articles of Incorporation to allow removal of a director upon the affirmative vote of a simple majority of shares;

•

To amend and restate the Company’s Articles of Incorporation to allow amendments to Section 5.3 of Article 5 upon the affirmative vote of a simple majority of shares; and

•

To amend and restate the Company’s Articles of Incorporation to eliminate the “fair price provision.”

How can I receive proxy materials?

Under rules adopted by the U.S. Securities and Exchange Commission (“SEC”), we are furnishing proxy materials to our shareholders primarily via the internet, instead of mailing printed copies of proxy materials to each shareholder. On or about July 12, 2013, we began mailing to our shareholders (other than those who previously requested electronic or paper delivery) a “Notice of Internet Availability of Proxy Materials” (the “Notice”) containing instructions on how to access this proxy statement, the accompanying notice of annual meeting and our annual report for the fiscal year ended April 26, 2013 online. If you received the Notice by mail, you will not automatically receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy materials. The Notice also instructs you on how you may submit your proxy via the internet. If you previously requested electronic delivery, you will still receive an e-mail providing you the Notice, and if you previously requested paper delivery, you will still receive a paper copy of the proxy materials by mail.

Finally, you can receive a copy of our proxy materials by following the instructions (contained in the Notice) regarding how you may request to receive your materials electronically or in printed form on a one-time or ongoing basis. Requests for printed copies of the proxy materials can be made by internet at http://www.proxyvote.com, by telephone at 1-800-579-1639 or by email at sendmaterial@proxyvote.com by sending a blank email with your control number in the subject line. Please also see “Can I receive future proxy materials electronically?” below.

Who is entitled to vote?

Shareholders as of the close of business on July 1, 2013 (the “Record Date”), may vote at the Annual Meeting. You have one vote for each share of common stock you held on the Record Date, including shares:

•

Held directly in your name as “shareholder of record” (also referred to as registered shareholder);

•

Held for you in an account with a broker, bank or other nominee (shares held in “street name”). Street name holders generally cannot vote their shares directly and must instead instruct the brokerage firm, bank or nominee how to vote their shares; and

•

Credited to your account in the Medtronic, Inc. Savings and Investment Plan.

What constitutes a quorum?

A majority of the outstanding shares entitled to vote, present or represented by proxy, constitutes a quorum for the Annual Meeting. Proxies received but marked as abstentions and “broker non-votes” (described below) are counted as present and entitled to vote for purposes of determining a quorum. On the Record Date, *[ ] shares of Medtronic common stock were outstanding and entitled to vote.

How many votes are required to approve each proposal?

Election of Directors. The eleven candidates for election who receive a plurality vote of the shares present and entitled to vote in the affirmative will be elected. There is no cumulative voting.

Ratification of the Appointment of the Auditors. The ratification of the appointment of PricewaterhouseCoopers LLP as Medtronic’s independent registered public accounting firm for fiscal year 2014 requires the affirmative vote of a majority of the shares present and entitled to vote.

Say-on-Pay. The Say-on-Pay vote is a non-binding advisory vote. The Board of Directors will consider our executive compensation to have been approved by shareholders if the Say-on-Pay proposal receives the affirmative vote of a majority of the shares present and entitled to vote. The effect of the vote on this non-binding advisory vote is discussed on page 68.

Approval of the Medtronic, Inc. 2013 Stock Award and Incentive Plan. Approval of the Medtronic, Inc. 2013 Stock Award and Incentive Plan requires the affirmative vote of a majority of the shares present and entitled to vote.

Amendment and Restatement of Medtronic’s Articles of Incorporation to Provide that Directors will be Elected by a Majority Vote in Uncontested Elections. Amending and restating our Articles of Incorporation to provide that directors will be elected by a majority vote in uncontested elections requires the affirmative vote of not less than 75 percent of the votes entitled to be cast by all holders of shares of our common stock.

Amendment and Restatement of Medtronic’s Articles of Incorporation to Allow Changes to the Size of the Board of Directors upon the Affirmative Vote of a Simple Majority of Shares. Amending and restating our Articles of Incorporation to allow changes to the size of the Board of Directors upon the affirmative vote of a simple majority of shares requires the affirmative vote of not less than 75 percent of the votes entitled to be cast by all holders of shares of our common stock.

Amendment and Restatement of Medtronic’s Articles of Incorporation to Allow Removal of a Director upon the Affirmative Vote of a Simple Majority of Shares. Amending and restating our Articles of Incorporation to allow removal of a director upon the affirmative vote of a simple majority of shares requires the affirmative vote of not less than 75 percent of the votes entitled to be cast by all holders of shares of our common stock.

Amendment and Restatement of Medtronic’s Articles of Incorporation to Allow Amendments to Section 5.3 of Article 5 upon the Affirmative Vote of a Simple Majority of Shares. Amending and restating our Articles of Incorporation to allow amendments to Section 5.3 of Article 5 upon the affirmative vote of a simple majority of shares requires the affirmative vote of not less than 75 percent of the votes entitled to be cast by all holders of shares of our common stock.

Amendment and Restatement of Medtronic’s Articles of Incorporation to Eliminate the “Fair Price Provision.” Amending and restating our Articles of Incorporation to eliminate the “fair price provision” requires the affirmative vote of not less than two-thirds of the voting power of the outstanding shares of voting stock.

How are votes counted?

In the election of directors, your vote may be cast “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees.

In the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, your vote may be cast “FOR” or “AGAINST” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

In the advisory Say-on-Pay vote, your vote may be cast “FOR” or “AGAINST” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

In the vote on the Medtronic, Inc. 2013 Stock Award and Incentive Plan, your vote may be cast “FOR” or “AGAINST” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

In the vote on the amendment and restatement of Medtronic’s Articles of Incorporation to provide that directors will be elected by a majority vote in uncontested elections, your vote may be cast “FOR,” “AGAINST,” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

In the vote on the amendment and restatement of Medtronic’s Articles of Incorporation to allow changes to the size of the Board of Directors upon the affirmative vote of a simple majority of shares, your vote may be cast “FOR,” “AGAINST,” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

In the vote on the amendment and restatement of Medtronic’s Articles of Incorporation to allow removal of a director upon the affirmative vote of a simple majority of shares, your vote may be cast “FOR,” “AGAINST,” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

In the vote on the amendment and restatement of Medtronic’s Articles of Incorporation to allow amendments to Section 5.3 of Article 5 upon the affirmative vote of a simple majority of shares, your vote may be cast “FOR,” “AGAINST,” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

In the vote on the amendment and restatement of Medtronic’s Articles of Incorporation to eliminate the “fair price provision,” your vote may be cast “FOR,” “AGAINST,” or you may “ABSTAIN.” If you “ABSTAIN,” it has the same effect as a vote against the proposal.

For all of the votes, if you grant a proxy by telephone or internet without voting instructions, or sign and submit your proxy card without voting instructions, your shares will be voted in accordance with the recommendation of the Board.

What is a broker non-vote?

If you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any proposal for which your broker does not have or does not exercise discretionary authority to vote (a “broker non-vote”). Shares constituting broker non-votes are not counted or deemed to be present in person or by proxy for the purpose of voting on a non-routine matter at the Annual Meeting and, therefore, are not counted for the purpose of determining whether shareholders have approved the election of directors in proposal 1, the Say-on-Pay in proposal 3, the Medtronic, Inc. 2013 Stock Award and Incentive Plan Proposal in proposal 4, or the amendment and restatement of our Articles of Incorporation in proposals 5, 6, 7, 8 and 9 because such proposals are considered non-routine matters. If you do not provide voting instructions to your broker, your broker will have discretion to vote your shares on proposal 2, because the ratification of auditor appointment is considered a routine matter. Broker non-votes are counted as present for the purpose of determining a quorum at the Annual Meeting.

How does the Board recommend that I vote?

Medtronic’s Board recommends that you vote your shares:

•

“FOR” each of the eleven nominees to the Board for a one year term;

•

“FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as Medtronic’s independent registered public accounting firm for fiscal year 2014;

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“FOR” approval of the resolution in the non-binding Say-on-Pay advisory vote;

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“FOR” approval of the Medtronic, Inc. 2013 Stock Award and Incentive Plan;

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“FOR” amending and restating our Articles of Incorporation to provide that directors will be elected by a majority vote in uncontested elections;

•

“FOR” amending and restating our Articles of Incorporation to allow changes to the size of the Board of Directors upon the affirmative vote of a simple majority of shares;

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“FOR” amending and restating our Articles of Incorporation to allow removal of a director upon the affirmative vote of a simple majority of shares;

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“FOR” amending and restating our Articles of Incorporation to allow amendments to Section 5.3 of Article 5 upon the affirmative vote of a simple majority of shares; and

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“FOR” amending and restating our Articles of Incorporation to eliminate the “fair price provision.”

How do I vote my shares without attending the meeting?

If you are a shareholder of record or hold shares through a Medtronic stock plan, you may vote by granting a proxy. For shares held in street name, you may vote by submitting voting instructions to your broker or nominee. In most circumstances, you may vote:

•

By Internet or Telephone — If you have internet or telephone access, you may submit your proxy by following the voting instructions in the Notice of Annual Meeting no later than 11:59 p.m., Eastern Daylight Time, on August 21, 2013 (or, for shares held through the Medtronic, Inc. Savings and Investment Plan and the Medtronic Puerto Rico Employees’ Savings and Investment Plan, no later than 11:59 p.m., Eastern Daylight Time, on August 19, 2013). If you vote by internet or telephone, you need not return your proxy card.

•

By Mail — If you received a paper copy of the proxy statement, you may vote by mail by signing, dating and mailing your proxy card in the envelope provided. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity.

How do I vote my shares in person at the meeting?

If you are a shareholder of record and prefer to vote your shares at the meeting, bring the accompanying proxy card (if you received a paper copy of the proxy statement) and proof of identification. You may vote shares held in street name only if you obtain a “legal” proxy from the record holder (broker or other nominee) giving you the right to vote the shares.

Even if you plan to attend the meeting, we encourage you to vote in advance by internet, telephone or mail so that your vote will be counted in the event you are unable to attend.

How do I gain admission to the meeting?

If you wish to attend the Annual Meeting, you must be a shareholder on the record date and request an admission ticket in advance by visiting www.proxyvote.com and following the instructions provided (you will need the 12 digit number included on your proxy card, voter instruction form or notice). Tickets will be issued to registered and beneficial owners and to one guest accompanying each registered or beneficial owner.

Requests for admission tickets will be processed in the order in which they are received and must be requested no later than August 16, 2013. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a driver’s license or passport with their admission ticket. Seating will begin at 9:30 a.m. and the meeting will begin at 10:30 a.m. Cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be required to enter through a security check point before being granted access to the meeting.

What does it mean if I receive more than one proxy card or Notice?

It generally means you hold shares registered in more than one account. If you received a paper copy of the proxy statement and you vote by mail, sign and return each proxy card. Or, if you vote by internet or telephone, vote once for each proxy card and/or Notice you receive. If you have received more than one Notice, vote once for each Notice that you receive.

May I change my vote?

Yes. Whether you have voted by mail, internet or telephone, you may change your vote and revoke your proxy, prior to the Annual Meeting, by:

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Sending a written statement to that effect to the Corporate Secretary of Medtronic;

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Voting by internet or telephone at a later time;

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Submitting a properly signed proxy card with a later date; or

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Voting in person at the Annual Meeting and by filing a written notice of termination of the prior appointment of a proxy with Medtronic, or by filing a new written appointment of a proxy with Medtronic.

Can I receive future proxy materials electronically?

Yes. If you are a shareholder of record or hold shares through a Medtronic stock plan and you have received a paper copy of the proxy materials, you may elect to receive future proxy statements and annual reports online as described in the next paragraph. If you elect this feature, you will receive an email message notifying you when the materials are available, along with a web address for viewing the materials. If you received this proxy statement electronically, you do not need to do anything to continue receiving proxy materials electronically in the future.

Whether you hold shares registered directly in your name, through a Medtronic stock plan, or through a broker or bank, you can enroll for future delivery of proxy statements and annual reports by following these easy steps:

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Go to our website at www.medtronic.com;

•

Click on Investors;

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In the Shareholder Services section, click on Electronic Delivery of Proxy Materials; and

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Follow the prompts to submit your electronic consent.

Generally, brokers and banks offering this choice require that shareholders vote through the internet in order to enroll. Street name shareholders whose broker or bank is not included on this website are encouraged to contact their broker or bank and ask about the availability of electronic delivery. As is customary with internet usage, the user must pay all access fees and telephone charges. You may view this year’s proxy materials at www.medtronic.com/annualmeeting.

What are the costs and benefits of electronic delivery of Annual Meeting materials?

There is no cost to you for electronic delivery. You may incur the usual expenses associated with internet access as charged by your internet service provider. Electronic delivery ensures quicker delivery, allows you to print the materials at your computer and makes it convenient to vote your shares online. Electronic delivery also conserves natural resources and saves Medtronic significant printing, postage and processing costs.

PROPOSAL 1 — ELECTION OF DIRECTORS

Directors and Nominees

Under Medtronic’s amended Articles of Incorporation, directors whose term of office is expiring are elected annually for terms of one year or until their respective successors are elected and qualified, subject to prior death, resignation, retirement, disqualification or removal from office. Each of Richard H. Anderson, Scott C. Donnelly, Victor J. Dzau, M.D., Omar Ishrak, Shirley Ann Jackson, Ph.D., Michael O. Leavitt, James T. Lenehan, Denise M. O’Leary, Kendall J. Powell, Robert C. Pozen and Preetha Reddy has been nominated for re-election to the Board to serve until the 2014 Annual Meeting and until their successors are elected and qualified, subject to prior death, resignation, retirement, disqualification or removal from office. All of the nominees are currently directors, and, other than Mr. Donnelly and Ms. Reddy, all were previously elected to the Board of Directors by shareholders. Ms. Reddy was elected to the Board by the Board of Directors effective in September 2012 and Mr. Donnelly was elected to the Board by the Board of Directors effective in July 2013, both following recommendation by the Nominating and Corporate Governance Committee. Jack Schuler was not re-nominated because he has reached the mandatory retirement age for directors.

All of the nominees have consented to being named as a nominee in this proxy statement and have indicated a willingness to serve if elected. However, if any nominee becomes unable to serve before the election, the shares represented by proxies may be voted for a substitute designated by the Board, unless a contrary instruction is indicated on the proxy.

A plurality of votes cast is required for the election of directors. However, under the Medtronic Principles of Corporate Governance, any nominee for director in an uncontested election (i.e., an election where the only nominees are those recommended by the Board of Directors) who receives a greater number of votes “withheld” from his or her election than votes “for” such election (a “Majority Withheld Vote”) will, within five business days of the certification of the shareholder vote by the inspector of elections, tender a written offer to resign from the Board of Directors. The Nominating and Corporate Governance Committee will promptly consider the resignation offer and recommend to the Board of Directors whether or not to accept it. The Nominating and Corporate Governance Committee will consider all factors its members deem relevant in considering whether to recommend acceptance or rejection of the resignation offer, including, without limitation:

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the perceived reasons why shareholders withheld votes;

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the length of service and qualifications of the director;

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the director’s contributions to Medtronic;

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Medtronic’s compliance with securities exchange listing standards;

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possible contractual ramifications in the event the director in question is a management director;

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the purpose and provisions of the Medtronic Principles of Corporate Governance; and

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the best interests of Medtronic and its shareholders.

If a director’s resignation is accepted, the Nominating and Corporate Governance Committee will recommend to the Board of Directors whether to fill the vacancy on the Board created by the resignation or reduce the size of the Board. Any director who tenders his or her offer to resign pursuant to this policy cannot participate in the Nominating and Corporate Governance Committee or Board deliberations regarding whether to accept the resignation offer. The Board will act on the Nominating and Corporate Governance Committee’s recommendation within 90 days following the certification of the shareholder vote, which may include, without limitation:

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acceptance of the resignation offer;

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adoption of measures intended to address the perceived issues underlying the Majority Withheld Vote; or

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rejection of the resignation offer.

Thereafter, the Board of Directors will disclose its decision to accept the resignation offer or the reasons for rejecting the offer, if applicable, on a Current Report on Form 8-K to be filed with the SEC within four business days of the date of the Board’s final determination.

NOMINEES FOR DIRECTORS FOR ONE-YEAR TERMS ENDING IN 2014:


		RICHARD H. ANDERSON Chief Executive Officer Delta Air Lines, Inc.		Director since 2002 age 58
		Mr. Anderson has been Chief Executive Officer of Delta Air Lines, Inc., a commercial airline, since 2007. He was Executive Vice President of UnitedHealth Group Incorporated, a diversified health care company, and President, Commercial Services Group, of UnitedHealth Group Incorporated from 2006 to 2007, Executive Vice President of UnitedHealth Group and Chief Executive Officer of its Ingenix subsidiary from 2004 until 2006. Mr. Anderson was Chief Executive Officer of Northwest Airlines Corporation from 2001 to 2004. Northwest Airlines Corporation and Delta Air Lines, Inc. filed for bankruptcy in 2005, which is within two years of Mr. Anderson serving as an executive officer of each company. Mr. Anderson serves on the board of directors of Delta Air Lines, Inc. Qualifications: Mr. Anderson’s qualifications to serve on our Board include his more than 23 years of business, operational, financial and executive management experience. He also serves on the board of directors of another public company. Mr. Anderson’s extensive experience, including within the health care industry and for Fortune 500 companies, allows him to contribute valuable strategic management and risk assessment insight to Medtronic.

		SCOTT C. DONNELLY Chairman, President and Chief Executive Officer Textron, Inc.		Director since 2013 age 52
		Mr. Donnelly is Chairman, President and Chief Executive Officer of Textron, Inc., a producer of aircraft, defense and industrial products. Mr. Donnelly joined Textron in June 2008 as Executive Vice President and Chief Operating Officer and was promoted to President and Chief Operating Officer in January 2009. He was appointed to the Board of Directors in October 2009, became Chief Executive Officer of Textron in December 2009 and Chairman of the Board in September 2010. Previously, Mr. Donnelly was the President and CEO of General Electric Company’s aviation business unit, GE Aviation, a leading maker of commercial and military jet engines and components as well as integrated digital, electric power and mechanical systems for aircraft. Prior to July 2005, Mr. Donnelly held various other management positions since joining General Electric in 1989. Qualifications: Mr. Donnelly’s qualifications to serve on our Board include more than two decades of business experience in innovation, manufacturing, sales and marketing, and business processes. Mr. Donnelly also serves on the board of directors of another public company. His extensive executive decision-making experience and corporate governance work make Mr. Donnelly a valuable director.


		VICTOR J. DZAU, M.D. Chancellor of Health Affairs Duke University		Director since 2008 age 67
		Dr. Dzau has served as Chancellor for Health Affairs at Duke University, a leading research institution and university, and President and Chief Executive Officer of the Duke University Health System since 2004. From 1996 until 2004, he was the Hersey Professor of Theory and Practice of Medicine at the Harvard Medical School and Chair of the Department of Medicine, Physician in Chief and Director of Research at Brigham and Women’s Hospital. He is the previous Chairman of the National Institutes of Health (NIH) Cardiovascular Disease Advisory Committee and served on the Advisory Committee to the Director of the NIH. Dr. Dzau is a member of the Institute of Medicine. He currently serves as a director of Alnylam Pharmaceuticals, Inc., a specialized pharmaceutical company, and PepsiCo, Inc., an international manufacturer of snacks, foods and beverages. Within the past five years, Dr. Dzau also served as a director of Genzyme Corporation, a leading biotechnology company. Qualifications: Dr. Dzau’s qualifications to serve on our Board include extensive experience in the health care field, including senior positions with a number of research universities and organizations. He also serves on the boards of directors of a number of public companies. Dr. Dzau has a deep understanding of medical sciences and innovation, as well as physicians and other health care providers who are central to the use and development of our products.

		OMAR ISHRAK Chairman and Chief Executive Officer Medtronic, Inc.		Director since 2011 age 57
		Mr. Ishrak has been Chairman and Chief Executive Officer of Medtronic since 2011. Prior to joining Medtronic, Mr. Ishrak served as President and Chief Executive Officer of GE Healthcare Systems, a comprehensive provider of medical imaging and diagnostic technology and a division of GE Healthcare, from 2009 to 2011. Before that, Mr. Ishrak was President and Chief Executive Officer of GE Healthcare Clinical Systems from 2005 to 2008 and President and Chief Executive Officer of GE Healthcare Ultrasound and BMD from 1995 to 2004. Qualifications: Mr. Ishrak’s qualifications to serve on our Board include his more than 18 years in the health care industry and more than 30 years of technology development and business management experience. Mr. Ishrak’s strong technical expertise and deep understanding of our customers, as well as his long history of success as a global executive in the medical technology industry, make him a valuable and qualified director with critical technical, leadership and strategic skilljs.


		SHIRLEY ANN JACKSON, Ph.D. President Rensselaer Polytechnic Institute		Director since 2002 age 66
		Dr. Jackson has been President of Rensselaer Polytechnic Institute, a technological research university, since 1999. She was Chair of the U.S. Nuclear Regulatory Commission under President Clinton from 1995 to 1999, and Professor of Physics at Rutgers University and consultant to AT&T Bell Laboratories from 1991 to 1995. Dr. Jackson currently serves as a member of the President’s Council of Advisors on Science and Technology, appointed by President Obama in 2009. She is a member of the National Academy of Engineering and the American Philosophical Society and a Fellow of the American Academy of Arts and Sciences, the American Association for the Advancement of Science, and the American Physical Society. She is a trustee of the Brookings Institution, a Life Trustee of M.I.T. and a member of the Council on Foreign Relations. She is also a director of FedEx Corporation, a global courier delivery company, Marathon Oil Corporation, a company with international operations in exploration and production, oil sands mining and integrated gas, Public Service Enterprise Group, a publicly owned gas and electric utility company in the state of New Jersey, and International Business Machines Corporation, a multinational technology and consulting corporation. Within the past five years, Dr. Jackson also served as a director of NYSE Euronext, a multinational financial services corporation. Qualifications: Dr. Jackson’s qualifications to serve on our Board include her leadership experience in government, industry and within a number of educational organizations (President, Rensselaer Polytechnic Institute; Trustee, M.I.T.), including those that bring technological innovation to the marketplace. In addition, Dr. Jackson serves on the boards of directors of a number of public companies and has accumulated over 32 years of audit, compensation, and governance and nominating committee experience, including as chair. Her leadership and strategic and innovative insight make her a valuable contributor to our Board. Additionally, Dr. Jackson qualifies as an “audit committee financial expert” as defined by SEC rules.

		MICHAEL O. LEAVITT Founder and Chairman Leavitt Partners		Director since 2011 age 62
		Governor Leavitt has been founder and Chairman of Leavitt Partners, a healthcare and food safety consulting firm, since 2009. Prior to that he was the United States Secretary of Health and Human Services from 2005 to 2009; Administrator of the Environmental Protection Agency from 2003 to 2005; and Governor of Utah from 1993 to 2003. Qualifications: Governor Leavitt’s qualifications to serve on our Board include his extensive management and leadership experience, including serving as the Governor of Utah, a large state with a diverse body of constituents, appointments to positions with the U.S. government, where he oversaw and advised on issues of national concern, and overseeing Leavitt Partners, LLC’s work advising clients in the health care and food safety sectors. Mr. Leavitt’s decades of leadership experience with valuable knowledge of the governmental regulatory environment and corporate governance makes him a valuable member of our Board.


		JAMES T. LENEHAN Financial Consultant and Retired Vice Chairman and President of Johnson & Johnson		Director since 2007 age 64
		Mr. Lenehan served as President of Johnson & Johnson, an international pharmaceutical company, from 2002 until 2004 when he retired after 28 years of service to Johnson & Johnson. During those 28 years, Mr. Lenehan also served as Vice Chairman of Johnson & Johnson from 2000 until 2004; Worldwide Chairman of Johnson & Johnson’s Medical Devices and Diagnostics Group from 1999 until he became Vice Chairman of the Board; and Worldwide Chairman, Consumer Pharmaceuticals & Professional Group. Mr. Lenehan has been a financial consultant since 2004. Within the past five years, Mr. Lenehan served as a director of Talecris Biotherapeutics Holding Corp, a global biopharmaceutical company. Qualifications: Mr. Lenehan’s qualifications to serve on our Board include 30 years of business, operational and management experience in medical device, pharmaceutical, biotherapeutics and related industries. He also serves on the board of directors of private companies. His leadership and financial experience makes his input valuable to Medtronic.

		DENISE M. O’LEARY Private Venture Capital Investor		Director since 2000 age 56
		Ms. O’Leary has been a private venture capital investor in a variety of early stage companies since 1996. Ms. O’Leary is also a director of US Airways Group, Inc., a commercial airline, and Calpine Corporation, a national power generation company based in the United States. She was a member of the Stanford University Board of Trustees from 1996 through 2006, where she chaired the Committee of the Medical Center. Qualifications: Ms. O’Leary’s qualifications to serve on our Board include her extensive experience with companies at a variety of stages and her success as an investor. She also serves on the boards of directors of other public companies. Her financial expertise, experience in the oversight of risk management, and thorough knowledge and understanding of capital markets provide valuable insight with regard to corporate governance and financial matters.

		KENDALL J. POWELL Chairman and Chief Executive Officer General Mills, Inc.		Director since 2007 age 59
		Mr. Powell has been Chairman of General Mills, Inc., an international producer, marketer and distributor of cereals, snacks and processed foods, since 2008 and Chief Executive Officer of General Mills, Inc. since 2007. He was President and Chief Operating Officer of General Mills, Inc. from 2006 to 2007, and became a director of General Mills, Inc. in 2006; Executive Vice President and Chief Operating Officer, U.S. Retail from 2005 to 2006; and Executive Vice President of General Mills, Inc. from 2004 to 2005. From 1999 to 2004, Mr. Powell was Chief Executive Officer of Cereal Partners Worldwide, a joint venture of General Mills, Inc. and the Nestle Corporation. Mr. Powell joined General Mills, Inc. in 1979. Qualifications: Mr. Powell’s qualifications to serve on our Board include more than three decades of business, operational and management experience. Mr. Powell also serves on the board of directors of another public company. His extensive marketing and executive decision-making experience and corporate governance work make Mr. Powell a valuable director. Additionally, Mr. Powell qualifies as an “audit committee financial expert’ as defined by SEC rules.


		ROBERT C. POZEN Former Chairman MFS Investment Management		Director since 2004 age 66
		Mr. Pozen was Chairman of MFS Investment Management and a director of MFS Mutual Funds from 2004 until 2011. He previously was Secretary of Economic Affairs for the Commonwealth of Massachusetts in 2003, and John Olin Visiting Professor, Harvard Law School, from 2002 to 2003. He also was Vice Chairman of Fidelity Investments from 2000 to 2001 and President of Fidelity Management & Research from 1997 to 2001. From 2007 to 2008, he was the chairman of the SEC Advisory Committee on Improvements to Financial Reporting and since 2008 he has been a senior lecturer at Harvard Business School. Mr. Pozen currently serves on the board of Nielsen Holdings N.V., a global information and measurement company. Within the past five years, Mr. Pozen also served as a director of MFS Investment Management, a global asset manager, MFS Mutual Funds, a global provider of mutual fund services, and BCE Inc., a telecommunications conglomerate and the parent company of Bell Canada. Qualifications: Mr. Pozen’s qualifications to serve on our Board include his many successful investing experiences. He also served on President George W. Bush’s Commission to Strengthen Social Security and as Secretary of Economic Affairs for Massachusetts Governor Mitt Romney. His extensive financial knowledge, previous performance as a board member, and years of work in corporate governance make Mr. Pozen a qualified and valuable director. Additionally, Mr. Pozen qualifies as an “audit committee financial expert” as defined by SEC rules.

		PREETHA REDDY Managing Director Apollo Hospitals Enterprise Limited		Director since 2012 Age 55
		Ms. Reddy has been Managing Director of Apollo Hospitals Enterprise Limited, a specialized hospital system in India and a division of The Apollo Group, since 1993. Prior to that she was Joint Managing Director from 1991-1993 and Director of Apollo Hospitals since February 1989. Ms. Reddy serves on several boards under the Apollo Group, an owner of for-profit educational institutions. She is a member of the Wipro Business Leadership Council, and Senior Vice President of the All India Management Association (AIMA). Qualifications: Ms. Reddy’s qualifications to serve on our Board include her extensive experience in the field of health and managing the operations of one of the largest hospital chains in India and its network of highly skilled professionals. She also serves on the Boards of Directors of a number of organizations. Ms. Reddy has worked with industry bodies and government in India to advance health care in India. Her extensive experience in health care in developing countries, and in managing complex organizations, make her a valuable director.

THE BOARD RECOMMENDS A VOTE FOR THE DIRECTOR NOMINEES.

Director Independence

Under the New York Stock Exchange Corporate Governance Standards, to be considered independent, a director must be determined to have no material relationship with Medtronic, other than as a director. The Board of Directors has determined that the following directors, comprising all of our non-management directors, are independent under the New York Stock Exchange Corporate Governance Standards: Messrs. Anderson, Donnelly, Lenehan, Powell, Pozen, and Schuler, Drs. Dzau and Jackson, Governor Leavitt and Ms. O’Leary and Ms. Reddy. In making this determination, the Board considered its Director Independence Standards, which correspond to the New York Stock

Exchange standards on independence. These standards identify certain types of relationships that are categorically immaterial and do not, by themselves, preclude the directors from being independent. The types of relationships and the directors who have had such relationships include:

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being a current employee of an entity that has made payments to, or received payments from, Medtronic for property or services (Messrs. Anderson, Powell and Pozen, and Drs. Dzau and Jackson);

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Mr. Anderson’s relationship with Medtronic, through the relevant entity, is transactional in nature and is not a material transactional relationship.

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Mr. Powell’s relationship with Medtronic, through the relevant entity, is transactional in nature and is not a material transactional relationship.

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Mr. Pozen’s relationship with Medtronic, through the relevant entity, is transactional in nature and is not a material transactional relationship.

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Dr. Dzau’s relationships with Medtronic, through the relevant entities, are transactional in nature and are not material transactional relationships.

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Dr. Jackson’s relationship with Medtronic, through the relevant entity, is transactional in nature and is not a material transactional relationship.

and

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being an employee of a non-profit organization to which Medtronic or The Medtronic Foundation has made contributions (Mr. Pozen and Drs. Dzau and Jackson).

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The Medtronic Foundation’s contributions to the relevant non-profit entities are not material grants.

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The directors are not executive officers of the relevant non-profit organizations.

All of the relationships of the types listed above were entered into, and payments were made or received, by Medtronic in the ordinary course of business and on competitive terms, and no director participated in negotiations regarding, nor approved, any such purchases or sales. Aggregate payments to, transactions with or discretionary charitable contributions to each of the relevant organizations did not exceed the greater of $1,000,000 or 2% of that organization’s consolidated gross revenues for that organization’s last three fiscal years. The Board reviewed the transactions with each of these organizations and determined that they were made in the ordinary course of business, the directors had no role with respect to the Company’s decision to make any of the purchases or sales and the aggregate amounts in each case were less than 1% of the consolidated gross revenues of the other organization and the Company, except as discussed below.

The Board of Directors also considered relationships consistent with its Director Independence Standards in which the director had a further removed relationship with the relevant third party. This included the director being a director (rather than an employee or executive officer) of a Medtronic vendor or purchaser of Medtronic’s products in which payments were made or received by Medtronic in the ordinary course of business on competitive terms, and aggregate payments to, transactions with or discretionary charitable contributions to the relevant third party did not exceed the greater of $1,000,000 or 1% of that organization’s consolidated gross revenues for that organization’s last three fiscal years. The Board of Directors considered two such relationships: (i) Mr.Powell is a director of the Greater Twin Cities United Way, to which Medtronic contributed in excess of $1,000,000 or 1% of such organization’s consolidated gross revenues in 2013, and (ii) Dr. Dzau is a director of Alnylam Pharmaceuticals, and Medtronic made payments for products to Alnylam or its subsidiaries in excess of $1,000,000 or 1% of such organization’s consolidated gross revenues in 2013. The Board of Directors also considered a director’s spouse who was a consultant to, but not an employee of, The Medtronic Foundation where payments to the spouse did not exceed $120,000. The Board of Directors further determined that none of the relationships were material.

In addition, the Board of Directors has evaluated relationships which are consistent with its Director Independence Standards but which are not categorically pre-approved thereunder. Dr. Dzau is Chancellor of Health Affairs at Duke University. Medtronic is party to an agreement with Duke University to collaboratively research, develop and commercialize therapies to treat Hepatitis C, which was entered into before Dr. Dzau became a director of Medtronic. In November 2011, a Medtronic subsidiary entered into a sponsorship agreement with International Partnership for Innovative Healthcare Delivery, Inc. (IPIHD), a non-profit organization founded in part by Duke University, managed by Duke University, and for which Dr. Dzau serves as Chairman of the Board. In order to further IPIHD’s mission to increase global access to cost-effective and high-quality health care delivery solutions, Medtronic International, Ltd. expects to make contributions over a three-year period which will fall below $1,000,000 in the aggregate, but which will, on an aggregate basis, exceed 2% of IPIHD’s annual gross revenues. Medtronic’s business relationships with Duke University and IPIHD are maintained on an arm’s-length basis. Neither Dr. Dzau nor Duke University are given special treatment in these relationships, Dr. Dzau does not participate in negotiations or approvals regarding these relationships, and Medtronic makes no payments to Dr. Dzau other than in connection with his service as a director. In addition, pursuant to the New York Stock Exchange Corporate Governance Standards for evaluating director independence, the Board determined that none of the amounts paid in connection with these relationships are at a level that would compromise Dr. Dzau’s independence.

Mr. Pozen is the former Chairman of MFS Investment Management (“MFS”), which manages money for MFS mutual funds and other accounts, any of which may from time to time buy or sell Medtronic stock. The Board determined that this relationship is not material. Mr. Pozen has no involvement with these transactions, and there is an informational barrier between him and the rest of MFS with regard to Medtronic stock.

Related Transactions and Other Matters

In January 2007, the Board of Directors of Medtronic adopted written related party transaction policies and procedures and amended such policies and procedures in March 2011. The policies require that all “interested transactions” (as defined below) between Medtronic and a “related party” (as defined below) are subject to approval or ratification by the Nominating and Corporate Governance Committee. In determining whether to approve or ratify such transactions, the Nominating and Corporate Governance Committee will take into account, among other factors it deems appropriate, whether the interested transaction is on the same terms as are generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction. In addition, the Nominating and Corporate Governance Committee has reviewed a list of interested transactions and deemed them to be pre-approved or ratified. Also, the Board of Directors has delegated to the chair of the Nominating and Corporate Governance Committee the authority to pre-approve or ratify any interested transaction in which the aggregate amount is expected to be less than $1 million. Finally, the policies provide that no director shall participate in any discussion or approval of an interested transaction for which he or she is a related party, except that the director shall provide all material information concerning the interested transaction to the Nominating and Corporate Governance Committee.

Under the policies, an “interested transaction” is defined as any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or any guarantee of indebtedness) in which:

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the aggregate amount involved will or may be expected to exceed $120,000 in any twelve-month period;

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Medtronic is a participant; and

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any related party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than ten percent beneficial owner of another entity).

A “related party” is defined as any:

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person who is or was (since the beginning of the last fiscal year for which Medtronic has filed a Form 10-K and proxy statement, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director;

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greater than five percent beneficial owner of Medtronic’s common stock; or

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immediate family member of any of the foregoing.

During fiscal year 2013, Tino Schuler, a son of director Jack W. Schuler, was employed by Medtronic as one of a number of marketing directors focused on Medtronic’s core ear, nose, and throat product lines reporting to a Vice President, Marketing of Medtronic’s core ear, nose, and throat product lines. Mr. Tino Schuler worked for Xomed Surgical Products, Inc. (“Xomed”) beginning in August 1993, and Xomed, the predecessor to our core ear, nose, and throat business, was acquired by Medtronic in 1999. In fiscal year 2013, Medtronic’s Surgical Technologies business, which includes the core ear, nose, and throat product lines, represented approximately 8.6% of Medtronic world-wide revenue. Mr. Tino Schuler was paid an aggregate salary and bonus of $244,141 and the standard benefits provided to other non-executive Medtronic employees for his services during fiscal year 2013. Mr. Tino Schuler is not an executive officer of, and does not have a key strategic role within, Medtronic.

GOVERNANCE OF MEDTRONIC

Our Corporate Governance Principles

The Board of Directors first adopted Principles of Corporate Governance (the “Governance Principles”) in fiscal 1996 and revises these Governance Principles from time to time, most recently in June 2012. The Governance Principles describe Medtronic’s corporate governance practices and policies, and provide a framework for the governance of Medtronic. Among other things, the Governance Principles include the provisions below.

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A majority of the members of the Board must be independent directors and no more than two directors may be Medtronic employees. Currently one director, Medtronic’s Chairman and Chief Executive Officer, is not independent.

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Medtronic maintains Audit, Compensation, Finance, Nominating and Corporate Governance and Quality and Technology Committees, which consist entirely of independent directors.

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The Nominating and Corporate Governance Committee consists of all independent directors and oversees an annual evaluation of the Board.

Our Governance Principles, the charters of our Audit, Compensation, Finance, Nominating and Corporate Governance and Quality and Technology Committees and our codes of conduct are published on our website at www.medtronic.com/corporate-governance/index.htm. These materials are available in print to any shareholder upon request. From time to time the Board reviews and updates these documents as it deems necessary and appropriate.

Lead Director and Chairman; Executive Sessions

Mr. Ishrak, our Chief Executive Officer, also serves as Chairman of the Board. The Board believes that it is appropriate for Mr. Ishrak to serve as Chairman of the Board due to his extensive knowledge of and experience in the global health care industry generally and in the medical device industry specifically. This knowledge and experience will be critical in identifying strategic priorities and providing unified leadership in the execution of strategy.

Our designated “Lead Director” is Kendall J. Powell, and he presides as chair at regularly scheduled meetings of the independent directors. Mr. Powell suggests agenda items for Board

meetings and reviews and approves the agendas for each meeting of the Board of Directors and its Committees. He presides over the directors’ annual evaluation of the Board and advises Mr. Ishrak on the conduct of Board meetings, facilitating teamwork and communications between the non-management directors and management, serving as a liaison between the two. As Lead Director, Mr. Powell also receives all committee materials in addition to those committees upon which he serves. In addition, Mr. Powell acts as the focal point on the Board issues such as corporate governance and suggestions from non-management directors, especially on sensitive issues.

Six regular meetings of our Board are held each year, and at each Board meeting our independent directors may meet in executive session with no Company management present.

Board Role in Risk Oversight

Our Board of Directors, in exercising its overall responsibility to oversee the management of our business, considers risks when reviewing the Company’s strategic plan, financial results, merger and acquisition related activities, legal and regulatory matters and its public filings with the Securities and Exchange Commission. The Board is also deeply engaged in the Company’s Enterprise Risk Management (“ERM”) program and has received briefings on the outcomes of the ERM program and the steps the Company is taking to mitigate risks identified through the ERM program. The Board’s oversight of risk management includes full and open communications with management to review the adequacy and functionality of the risk management processes used by management. In addition, the Board of Directors uses its committees to assist in its risk oversight responsibility as follows:

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The Audit Committee assists the Board of Directors in its oversight of the integrity of the financial reporting of the Company and its compliance with applicable legal and regulatory requirements. It also oversees our internal controls and compliance activities. The Audit Committee periodically discusses policies with respect to risk assessment and risk management, including appropriate guidelines and policies to govern the process, as well as the Company’s major financial and business risk exposures and certain contingent liabilities and the steps management has undertaken to monitor and control such exposures. It also meets privately with representatives from the Company’s independent registered public accounting firm.

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The Finance Committee assists the Board of Directors in its oversight of risk relating to the Company’s assessment of its significant financial risks and certain contingent liabilities.

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The Compensation Committee assists the Board of Directors in its oversight of risk relating to the Company’s assessment of its compensation policies and practices.

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The Quality and Technology Committee assists the Board of Directors in its oversight of risk relating to product quality and safety and the areas of human and animal studies.

Committees of the Board and Meetings

Our five standing Board committees — Audit, Compensation, Finance, Nominating and Corporate Governance and Quality and Technology — consist solely of independent directors, as defined in the New York Stock Exchange Corporate Governance Standards. Each director attended 75% or more of the total Board and Board committee meetings on which the director served in fiscal year 2013. The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The following table summarizes the current membership of the Board and each of its standing committees and the number of times each standing committee met during fiscal year 2013.

Board

Audit

Compensation

Finance

Nominating and
Corporate
Governance

Quality and
Technology

Mr. Anderson

Chair

Mr. Donnelly

Dr. Dzau

Mr. Ishrak

Chair

Dr. Jackson

Chair

Gov. Leavitt

Mr. Lenehan

Chair

Ms. O’Leary

Mr. Powell

Chair

Mr. Pozen

Chair

Ms. Reddy

Mr. Schuler

Number of fiscal year
2013 meetings

The principal functions of our five standing committees — the Audit Committee, the Compensation Committee, the Finance Committee, the Nominating and Corporate Governance Committee, and the Quality and Technology Committee — are described below.

Audit Committee

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Oversees the integrity of Medtronic’s financial reporting

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Oversees the independence, qualifications and performance of Medtronic’s external independent registered public accounting firm and the performance of Medtronic’s internal auditors

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Oversees Medtronic’s compliance with applicable legal and regulatory requirements, including overseeing Medtronic’s engagements with, and payments to physicians and other health care providers

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Reviews with the General Counsel and independent registered public accounting firm: legal matters that may have a material impact on the financial statement; any fraud involving management or other employees who have a significant role in Medtronic’s internal controls; compliance policies; and any material reports or inquiries received that raise material issues regarding Medtronic’s financial statements and accounting or compliance policies

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Reviews annual audited financial statements with management and Medtronic’s independent registered public accounting firm and recommends to the Board whether the financial statements should be included in Medtronic’s Annual Report on Form 10-K

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Reviews the results of independent third party reviews of payments made to health care providers and oversees payments made to health care providers

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Reviews and discusses with management and Medtronic’s independent registered public accounting firm quarterly financial statements and earnings releases

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Reviews major issues and changes to Medtronic’s accounting and auditing principles and practices, including analyses of the effects of alternative GAAP methods on the financial statements, and the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of Medtronic

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Discusses policies with respect to risk assessment and risk management as well as the major financial and business risk exposures and the steps management has undertaken to monitor and control such exposures

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Undertakes the appointment, compensation, retention and oversight of the independent registered public accounting firm, which reports directly to the Audit Committee

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Pre-approves all audit and permitted non-audit services to be provided by the independent registered public accounting firm

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Reviews, at least annually, a report by the independent registered public accounting firm describing its internal quality-control procedures and any material issues raised by the most recent internal quality-control review, and any steps taken to deal with any such issues, and all relationships between the independent registered public accounting firm and Medtronic

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Reviews the experience and qualifications of the lead partner of the independent registered public accounting firm each year and considers whether there should be rotation of the lead partner or the independent auditor itself

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Establishes clear policies for hiring employees and former employees of the independent registered public accounting firm

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Prepares the Report of the Audit Committee

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Meets with the independent registered public accounting firm prior to the audit to review the scope and planning of the audit

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Reviews the results of the annual audit examination

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Considers, at least annually, the independence of the independent registered public accounting firm

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Reviews the adequacy and effectiveness of Medtronic’s internal controls over financial reporting and disclosure controls and procedures

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Reviews candidates for the positions of chief financial officer and controller of Medtronic

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Establishes procedures concerning the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters

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Meets privately in separate executive sessions periodically with management, internal auditors and the independent registered public accounting firm

Audit Committee Independence and Financial Experts

In accordance with New York Stock Exchange Corporate Governance Standards and SEC Rule 10A-3, all members of the Audit Committee meet the additional independence standards applicable to Audit Committee members. In addition, the Board has determined that all of our current Audit Committee members are audit committee financial experts, as that term is defined in SEC rules.

Audit Committee Pre-Approval Policies

Rules adopted by the SEC require public company audit committees to pre-approve audit and non-audit services provided by a company’s independent registered public accounting firm. Our Audit Committee has adopted detailed pre-approval policies and procedures pursuant to which audit, audit-related, tax and other permissible non-audit services are pre-approved by category of service. The fees are budgeted, and actual fees versus the budget are monitored throughout the year. During the year, circumstances may arise when it becomes necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, we obtain the approval of the Audit Committee before engaging the independent registered public accounting firm. The policies require the Audit Committee to be informed of each service, and the policies do not include any delegation of the Audit Committee’s responsibilities to management. The Audit Committee may also delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated will report any pre-approval decisions to the Audit Committee at its next scheduled meeting.

Compensation Committee

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Reviews compensation philosophy and major compensation programs

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Annually reviews executive compensation programs; annually reviews and approves corporate goals and objectives relevant to the compensation of the Chief Executive Officer and, based on its own evaluation of performance in light of those goals and objectives as well as input from the entire Board, determines and approves the total compensation of the Chief Executive Officer and annually approves the total compensation of all other executive officers, including base salaries

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Administers and determines incentive compensation plans and equity-based compensation plans and approves stock and other long-term incentive awards

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Monitors compliance by the Chief Executive Officer and senior management with the Company’s stock ownership guidelines

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Reviews new compensation arrangements and reviews and recommends to the Board employment agreements and severance arrangements for senior executive officers

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Reviews and discusses with management the Compensation Discussion and Analysis required by the rules of the SEC and recommends to the Board the inclusion of the Compensation Discussion and Analysis in the Company’s annual proxy statement

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Assists the Board in reviewing results of any shareholder advisory votes, responding to other shareholder communications as such relate to the compensation of senior executive officers, and reviews and recommends to the Board for approval the frequency with which Medtronic will conduct shareholder advisory votes

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Prepares the Committee’s report to be included in Medtronic’s annual proxy statement

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Assesses the Company’s risk relating to its compensation policies and practices

The Compensation Committee may form and delegate authority to subcommittees as it deems appropriate. The Compensation Committee may also delegate certain of its responsibilities to one or more Compensation Committee members or to designated senior executives or committees in accordance with applicable laws, regulations, and plan requirements. Please refer to the Compensation Discussion and Analysis beginning on page 28 for additional discussion of the Compensation Committee’s processes and procedures relating to compensation.

Compensation Committee Independence

In accordance with New York Stock Exchange Corporate Governance Standards and SEC Rule 10C-1, all members of the Compensation Committee meet the additional standards applicable to Compensation Committee members.

Compensation Committee Interlocks and Insider Participation

The members of our Compensation Committee are Richard H. Anderson (Chair), Denise M. O’Leary, Kendall J. Powell and Jack W. Schuler. No member of the Compensation Committee during fiscal year 2013 was ever an officer or employee of Medtronic, and no executive officer of Medtronic during fiscal year 2013 served on the Compensation Committee or board of any company that employed any member of Medtronic’s Compensation Committee or Board.

Compensation Risk Assessment

We conducted a risk assessment of our compensation policies and practices and concluded that such policies and practices do not create risks that are reasonably likely to have a material adverse effect on our Company. The framework for the assessment was developed using materials from the Compensation Committee’s independent consultant, Frederic W. Cook & Co., Inc., and included an update to a comprehensive internal survey used in fiscal year 2010 that was designed to identify material policies and practices to be assessed, a review of the identified compensation plans and practices against the evaluation framework and an identification of mitigating factors with respect to any such risks.

In particular, as a result of the assessment we noted that:

•

Base salaries at Medtronic are generally competitive in the median range of the executive compensation peer companies, not subject to any performance risk and act as a material component of total compensation for most Medtronic employees

•

Incentive plans for senior management and executive officers are appropriately weighted between short-term and long-term performance; between cash and equity compensation; and with long-term incentive performance targets being established at the beginning of each of our overlapping three year performance periods to reduce the incentive to maximize performance during any one year

•

Short-term incentive performance goals are recalibrated annually, based upon Medtronic’s annual operating plan approved by the Board, and are different than the long-term performance measures

•

Executives and directors are subject to stock ownership and retention guidelines which require directors to maintain ownership of Medtronic stock equal to five (5) times their annual retainer, Medtronic’s CEO to maintain ownership of Medtronic stock equal to six (6) times his annual salary, and the other NEOs to maintain Medtronic stock equal to three (3) times their annual salary. As of July 12, 2013, all directors and NEOs are in compliance with the stock ownership and retention guidelines; however, due to their recent appointments, Mr. Donnelly, Governor Leavitt and Ms. Reddy are continuing to make progress towards the ownership guidelines.

•

Medtronic has in place policies designed to recoup improper payments or gains from incentive and equity compensation paid or granted to executives

Finance Committee

•

Reviews and approves management’s recommendations to the Board for significant capital expenditures

•

Reviews, approves and monitors significant strategic transactions

•

Reviews and oversees management’s plans and objectives for the capitalization of the Company

•

Reviews and approves management’s recommendations to the Board with respect to new offerings of debt and equity securities, stock splits, credit agreements, and Medtronic’s investment policies

•

Reviews and approves management’s recommendations to the Board regarding dividends

•

Reviews and approves management’s recommendations to the Board regarding authorization for repurchases of Medtronic’s stock

•

Reviews and approves management’s recommendations for the Corporate Cash Investment Policy

•

Reviews management’s decisions regarding certain financial aspects of the Company’s employee benefit plans

•

Reviews and oversees the Company’s tax strategies

•

Reviews with management the Company’s strategies for management of significant financial risks and contingent liabilities

•

Reviews and recommends to the Board for approval authorization limits for the Committee and the Chief Executive Officer to approve expenditures

Nominating and Corporate Governance Committee

•

Identifies, evaluates and recommends to the Board individuals for the Board to nominate for election as directors

•

Formulates and administers policies and procedures for identifying, evaluating and recommending director candidates, including nominees recommended by shareholders

•

Reviews and makes recommendations to the Board whether members of the Board should stand for re-election

•

Considers any resignation offered by a director

•

Develops an annual evaluation process for the Board and its committees

•

Recommends to the Board directors to serve as members of each committee and recommends any changes to the Board or standing committees that the Committee believes desirable

•

Monitors emerging corporate governance trends and oversees and evaluates the Company’s corporate governance policies and programs

•

Recommends to the Board corporate governance guidelines

•

Reviews shareholder proposals and recommends to the Board proposed Company responses to such proposals

•

Reviews at least annually the Company’s Standards for Director Independence, recommends any desirable modifications to the standards, and provides to the Board the Committee’s assessment of which directors should be deemed independent directors

•

Reviews at least annually the requirements of a “financial expert” under the applicable rules of the SEC and NYSE and determines which directors are “financial experts”

•

Oversees and reviews on a periodic basis the continuing education program for directors and the orientation program for new directors

•

Determines director compensation and benefits

•

Reviews at least annually the leadership succession plan

The Nominating and Corporate Governance Committee considers candidates for Board membership, including those suggested by shareholders, applying the same criteria to all candidates. Any shareholder who wishes to recommend a prospective nominee for the Board for consideration by the Nominating and Corporate Governance Committee must notify the Corporate Secretary in writing at Medtronic’s offices at 710 Medtronic Parkway, Minneapolis, MN 55432. Any such recommendations should provide whatever supporting material the shareholder considers appropriate, but should at a minimum include such background and biographical material as will enable the Nominating and Corporate Governance Committee to make an initial determination as to whether the nominee satisfies the criteria for directors set out in the Governance Principles.

If the Nominating and Corporate Governance Committee identifies a need to replace a current member of the Board, to fill a vacancy in the Board or to expand the size of the Board, it considers candidates from a variety of sources, including using third-party search firms, to assist it to identify, evaluate and conduct due diligence on potential director candidates. The process followed to identify and evaluate candidates includes meetings to evaluate biographical information and background material relating to candidates, and interviews of selected candidates by members of the Board. Recommendations of candidates for inclusion in the Board slate of director nominees are based upon the criteria set forth in the Principles of Corporate Governance. These criteria include business experience and skills, judgment, honesty and integrity, the ability to commit sufficient time and attention to Board activities and the absence of potential conflicts with Medtronic’s interests. While the Nominating and Corporate Governance Committee does not have a formal diversity policy for Board membership, the Nominating and Corporate Governance Committee seeks directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions. The Nominating and Corporate Governance Committee considers, among other factors, diversity with respect to viewpoint, skills, experience and community involvement in its evaluation of candidates for Board membership.

After completing the evaluation process, the Nominating and Corporate Governance Committee makes a recommendation to the full Board as to persons who should be nominated by the Board. The Board determines the nominees after considering the recommendations and report of the Nominating and Corporate Governance Committee and such other evaluations as it deems appropriate.

Alternatively, shareholders intending to appear at the Annual Meeting to nominate a candidate for election by the shareholders at the meeting (in cases where the Board does not intend to nominate the candidate or where the Nominating and Corporate Governance Committee was not requested to consider his or her candidacy) must comply with the procedures in Medtronic’s amended articles of incorporation, which are described under “Other Information — Shareholder Proposals and Director Nominations” on page 85 of this proxy statement.

Quality and Technology Committee

•

Provides assistance to the Board in its oversight of product quality and safety, scientific and technical direction, and human and animal studies

•

Oversees risk management in the area of product quality and safety, including review of Medtronic’s overall quality strategy and processes in place to monitor and control product quality and safety; periodic review of results of product quality and quality system assessments by Medtronic and external regulators (including the U. S. Food and Drug Administration (“FDA”) and various notified bodies); and review of important product quality issues and field actions

•

Oversees the innovation strategy of the Company, including an assessment of portfolio competitive superiority and disruptive technology impacts; approach to new mark creation; monitoring overall effectiveness of research and development; a periodic targeted review of the IP strategy and portfolio; a technology evaluation of potential acquisitions for alignment with corporate strategy; and an assessment and evaluation of the economic value proposition of new and existing products

•

Oversees risk management in the area of human and animal studies, including the periodic review of policies and procedures related to the conduct of human and animal studies

Annual Meeting of the Shareholders

It has been the longstanding practice of Medtronic for all directors to attend the Annual Meeting of Shareholders. All directors attended the last Annual Meeting.

Director Compensation

The Director Compensation table reflects all compensation awarded to, earned by or paid to the Company’s non-employee directors during fiscal year 2013. No additional compensation was provided to Mr. Ishrak for his service as a director on the Board.


Non-Employee Director	Fees Earned or Paid in Cash⁽¹⁾		Stock Awards		Total
Richard H. Anderson	$	90,000	$	140,005	$	230,005
Scott C. Donnelly⁽³⁾	$	0	$	0	$	0
Victor J. Dzau	$	80,000	$	140,005	$	220,005
Shirley Ann Jackson	$	96,082	$	140,005	$	236,087
Michael O. Leavitt	$	80,000	$	140,005	$	220,005
James T. Lenehan	$	86,758	$	140,005	$	226,763
Denise M. O’Leary	$	86,159	$	140,005	$	226,164
Kendall J. Powell	$	113,379	$	140,005	$	253,384
Robert C. Pozen	$	95,000	$	140,005	$	235,005
Preetha Reddy⁽²⁾	$	47,912	$	83,890	$	131,802
Jack Schuler	$	85,000	$	140,005	$	225,005

⁽¹⁾	These numbers reflect pro-rata payments as a result of changes in committee assignments during the fiscal year.

⁽²⁾	Ms. Reddy’s compensation was pro-rated as a result of her appointment to the Board effective September 2012.

⁽³⁾	Mr. Donnelly’s term did not commence until fiscal year 2014.

Fees Earned or Paid in Cash. The fees earned or paid in cash column represents the amount of annual retainer and annual cash stipend for Board and committee service (prorated for partial year’s service). For fiscal year 2013, the Board’s annual cash retainer was $80,000.

In addition, the Chairs of each of the Nominating and Corporate Governance, Compensation, Finance and Quality and Technology Committees received an annual cash stipend of $10,000. The Chair of the Audit Committee received a cash stipend of $19,000, while all non-chair members of the Audit Committee received an annual cash stipend of $5,000. Finally, the Lead Director received an annual cash stipend of $20,000.

The annual cash retainer, annual cash stipend and special committee fees are paid in two installments — in the middle and at the end of a fiscal year. The annual cash retainer and annual cash stipend are reduced by 25% if a non-employee director does not attend at least 75% of the total meetings of the Board and Board committees on which such director served during the relevant plan year. The table on page 17 of this proxy statement under the section entitled “Committees of the Board and Meetings” shows on which committees the individual directors serve.

Stock Awards. Directors are granted deferred stock units on the first business day of the fiscal year in an amount equal to $140,000 (on a pro-rata basis for participants who are directors for less than the entire preceding plan year and reduced by 25% for those directors who failed to attend at least 75% of the applicable meetings during such fiscal year) divided by the fair market value of a

share of Medtronic common stock on the date of grant. Dividends paid on Medtronic common stock are credited to a director’s stock unit account in the form of additional stock units. The balance in a director’s stock unit account will be distributed to the director in the form of shares of Medtronic common stock upon resignation or retirement from the Board in a single distribution or, at the director’s option, in five equal annual distributions. The stock awards column represents aggregate grant date fair value of the deferred stock units granted in the respective fiscal year as computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718, Compensation — Stock Compensation.

Stock Holdings. Non-employee directors held the following shares of restricted stock, stock options, and deferred stock units as of April 26, 2013:


Non-Employee Director	Restricted Stock		Stock Options		Deferred Stock Units
Richard H. Anderson		—		24,885		23,281
Scott C. Donnelly		—		0		0
Victor J. Dzau		—		9,636		15,520
Shirley Ann Jackson		—		17,059		24,053
Michael O. Leavitt		—		0		4,465
James T. Lenehan		—		10,471		17,446
Denise M. O’Leary		—		26,095		25,262
Kendall J. Powell		—		10,061		16,625
Robert C. Pozen⁽¹⁾		—		4,484		20,858
Preetha Reddy		—		0		1,791
Jack Schuler		14,702		28,408		28,067

⁽¹⁾	Does not include 13,080 stock options transferred to adult children.

To align directors’ interests more closely with those of shareholders, the Nominating and Corporate Governance Committee approved the Medtronic, Inc. Stock Ownership and Retention Guidelines pursuant to which non-employee directors are expected to own stock of Medtronic in an amount equal to five times the annual Board retainer fees. In addition, each director must retain, for a period of one year, 75% of the net after-tax profit shares realized from option exercises or share issuances resulting from grants made after such director has achieved an investment position in the Company’s common stock in excess of the ownership guideline. For stock options, net after-tax profit shares are those shares remaining after payment of the option’s exercise price and income taxes. For share issuances, net gain shares are those remaining after payment of income taxes. Shares retained may be sold on the later of one year after receipt of the shares or until the ownership guidelines are met. In the case of retirement or termination, the shares may be sold after the shorter of the remaining retention period or one year following retirement or termination, as applicable. As of April 26, 2013, all directors were in compliance with the stock ownership and retention policy; however, due to their more recent appointments, Mr. Donnelly, Governor Leavitt and Ms. Reddy are continuing to make progress towards the required ownership guidelines.

Deferrals. Directors may defer all or a portion of their cash compensation through participation in the Medtronic Capital Accumulation Plan Deferral Program, a nonqualified deferred compensation plan designed to allow participants to make contributions of their compensation before taxes are withheld, and to earn returns or incur losses on those contributions based upon allocations of their balances to one or more investment alternatives, which are also investment alternatives that Medtronic offers its employees through its 401(k) Plan.

Complaint Procedure; Communications with Directors

The Sarbanes-Oxley Act of 2002 requires companies to maintain procedures to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding

questionable accounting or auditing matters. We currently have such procedures in place. Our 24-hour, toll-free confidential compliance line is available for the submission of concerns regarding accounting, internal controls or auditing matters. Our independent directors may also be contacted via e-mail at independentdirectors@medtronic.com. Our Lead Director may be contacted via e-mail at leaddirector@medtronic.com. Communications received from shareholders may be forwarded directly to Board members as part of the materials sent before the next regularly scheduled Board meeting, although the Board has authorized management, in its discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening or otherwise inappropriate. Advertisements, solicitations for periodical or other subscriptions and other similar communications generally will not be forwarded to the directors.

Our Codes of Conduct

All Medtronic employees, including our Chief Executive Officer and other senior executives, are required to comply with our long-standing Code of Conduct to help ensure that our business is conducted in accordance with the highest standards of ethical behavior. Our Code of Conduct covers all areas of professional conduct, including customer relationships, conflicts of interest, insider trading, intellectual property and confidential information, as well as requiring strict adherence to all laws and regulations applicable to our business. Employees are required to bring any violations and suspected violations of the Code of Conduct to the attention of Medtronic, through management or our legal counsel or by using Medtronic’s confidential compliance line. Our Code of Ethics for Senior Financial Officers, which is a part of the Code of Conduct, includes certain specific policies applicable to our Chief Executive Officer, Chief Financial Officer, Treasurer and Controller and to other senior financial officers designated from time to time by our Chief Executive Officer. These policies relate to internal controls, the public disclosures of Medtronic, violations of the securities or other laws, rules or regulations and conflicts of interest. The members of the Board of Directors are subject to a Code of Business Conduct and Ethics relating to director responsibilities, conflicts of interest, strict adherence to applicable laws and regulations and promotion of ethical behavior.

Our codes of conduct are published on our website, at www.medtronic.com under the Corporate Governance caption in the Investors section, and are available in print to any shareholder who requests them. We intend to disclose future amendments to, or waivers for directors and executive officers of, our codes of conduct on our website promptly following the date of such amendment or waiver.

SHARE OWNERSHIP INFORMATION

Significant Shareholders. The following table shows information as of July 1, 2013, concerning each person who is known by us to beneficially own more than 5% of our common stock.


Name of Beneficial Owner	Amount and Nature of Beneficial Ownership of Common Stock		Of Shares Beneficially Owned, Amount that May Be Acquired Within 60 Days		Percent of Class
BlackRock, Inc., 40 East 52nd Street, New York, NY 10022⁽¹⁾		57,163,644		N/A		5.65	%
The Vanguard Group, 100 Vanguard Blvd, Malvern, PA 19355⁽² ⁾		52,776,871		N/A		5.21	%
Wellington Management Company, LLP, 280 Congress Street, Boston, MA 02210⁽³⁾		51,680,037		N/A		5.11	%

⁽¹⁾	The information for security ownership of this beneficial owner is based on a Schedule 13G/A filed by BlackRock, Inc. on February 11, 2013. Based upon [ ] shares outstanding as of July 1, 2013, the shareholder beneficially owns approximately [ ]% of our shares outstanding.

⁽²⁾	The information for security ownership of this beneficial owner is based on a Schedule 13G file by The Vanguard Group on February 13, 2013. Based upon [ ] shares outstanding as of July 1, 2013, the shareholder beneficially owns approximately [ ]% of our shares outstanding.

⁽³⁾	The information for security ownership of this beneficial owner is based on a Schedule 13G filed by Wellington Management Company, LLP on February 14, 2013. Based upon [ ] shares outstanding as of July 1, 2013, the shareholder beneficially owns approximately [ ]% of our shares outstanding.

Beneficial Ownership of Management. The following table shows information as of July 1, 2013 concerning beneficial ownership of Medtronic’s common stock by Medtronic’s directors, named executive officers identified in the Summary Compensation Table under “Executive Compensation,” and all directors and executive officers as a group. [TO BE UPDATED]


Name of Beneficial Owner	Amount and Nature of Beneficial Ownership of Common Stock⁽⁷⁾		Of Shares Beneficially Owned, Amount that May Be Acquired Within 60 Days
Richard H. Anderson⁽¹⁾		63,646		48,166
Michael J. Coyle⁽²⁾		154,558		150,570
Scott C. Donnelly		0		0
Victor J. Dzau, M.D.		24,156		25,156
Gary L. Ellis		642,241		558,714
D. Cameron Findlay		148,359		148,169
Omar Ishrak		296,996		234,090
Shirley Ann Jackson, Ph.D.		41,312		41,112
Michael O. Leavitt		4,465		4,465
James T. Lenehan		40,917		27,917
Christopher J. O’Connell		394,708		343,128
Denise M. O’Leary		51,357		51,357
Kendall J. Powell⁽³⁾		29,686		29,686
Robert C. Pozen⁽⁴⁾		50,042		25,342
Preetha Reddy		1,791		1,791
Jack Schuler⁽⁵⁾		577,396		56,475
Directors and executive officers as a group (20 persons)⁽⁶⁾		3,118,650		2,210,813

⁽¹⁾	Mr. Anderson disclaims beneficial ownership of 25 shares that are owned by his adult son.

⁽²⁾	Includes 250 shares held by family trust and 3,739 shares held by Mr. Coyle’s spouse.

⁽³⁾	Includes 3,000 shares held by Mr. Powell’s spouse’s trust.

⁽⁴⁾	Includes 24,700 shares owned jointly with Mr. Pozen’s spouse.

⁽⁵⁾	Includes 12,900 shares held by spouse and excludes 65,670 share held by trusts for the benefit of Mr. Schuler’s adult children and 30,000 shares held by the Schuler family foundation.

⁽⁶⁾	As of July 1, 2013, no director or executive officer beneficially owns more than 1% of the shares outstanding. Medtronic’s directors and executive officers as a group beneficially own approximately *[ ]% of the shares outstanding.

⁽⁷⁾

Amounts include the shares shown in the last column, which are not currently outstanding but are deemed beneficially owned because of the right to acquire shares pursuant to options exercisable or RSUs vesting within 60 days (on or before August 30, 2013) and the right to receive shares for deferred stock units within 60 days (on or before August 30, 2013) upon a director’s resignation.

Section 16(a) Beneficial Ownership Reporting Compliance. Based upon a review of reports and written representations furnished to it, Medtronic believes that during fiscal year 2013 all filings with the SEC by its executive officers and directors complied with requirements for reporting ownership and changes in ownership of Medtronic’s common stock pursuant to Section 16(a) of the Exchange Act.

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

Overview

Medtronic’s Compensation Discussion and Analysis (“CD&A”) provides information about the Company’s executive compensation philosophy and the components of its compensation programs, including information about how Fiscal Year 2013 compensation for Medtronic’s Named Executive Officers (“NEOs”) meets the philosophy’s goals and is aligned with Fiscal Year 2013 financial goals and performance. The CD&A helps readers better understand the information found in the Summary Compensation Table and other accompanying tables located in the Executive Compensation section of this proxy statement.

This CD&A focuses on our executive pay program as it relates to the following executive officers:


Omar Ishrak		Chairman and Chief Executive Officer

Gary Ellis		Senior Vice President and Chief Financial Officer

Christopher J. O’Connell		Executive Vice President and Group President, Restorative Therapies Group

Michael J. Coyle		Executive Vice President and Group President, Cardiac and Vascular Group

D. Cameron Findlay		Senior Vice President, General Counsel and Corporate Secretary

CD&A Executive Summary

Executive Compensation Philosophy

Medtronic’s compensation programs aim to attract and retain talented executives by providing competitive pay and benefits and by aligning pay with Company performance.

•

Medtronic attracts and retains talented executives by providing a market competitive compensation program consisting of base salary, annual bonus, and long-term incentives; coupled with comprehensive benefits to support health needs, wellness, and other life events. Medtronic’s Compensation Committee benchmarks compensation with special focus on a select group of companies that are the most representative of Medtronic’s competitive talent market. Medtronic uses this benchmarking to help shape Medtronic’s competitive compensation program.

•

Medtronic emphasizes pay for performance by basing at least 75% of target total direct compensation on short-term and long-term financial incentives. A minimum of 60% of target total direct compensation is based on long-term financial incentives. The goals used for both short-term and long-term incentives align executives with shareholder goals by using annual and three-year performance measures that drive shareholder value. Short and long-term performance goals are not duplicative. Short-term incentive goals arise directly from Medtronic’s Board-approved annual operating plan and long-term incentive goals arise directly from Medtronic’s Board-approved long-term strategic plans.

The members of the Compensation Committee are all independent directors, and they work closely with an independent outside compensation consulting firm, Frederic W. Cook & Co., Inc. (“Independent Consultant”), to ensure that they approach executive compensation planning with rigor and independence. The Independent Consultant confirms that Medtronic has a competitive, pay for performance compensation program with no problematic pay practices.

Overview of Executive Compensation Components

The Compensation Committee reviews analyses completed by the Independent Consultant to examine alignment with Medtronic’s executive compensation philosophy as well as examining competitive market practice. The selected components and component mix are designed to provide multiple, non-overlapping measures of short-term operational and long-term strategic performance, with heavier weight on long-term performance.

The following summarizes the NEO compensation components. The CD&A provides detailed information about each component in the discussions of the components. Component weighting is a percentage of target total direct compensation, which includes base salary, annual incentive, restricted stock, stock options, and the long-term performance plan.


Component	Purpose	Basic Design
Base Salary Weight: Up to 20%	• Basic level of competitive cash compensation to attract and retain talent	• Targeted at the median of executive compensation comparison group

Annual Incentive Plan (Cash) Weight: Up to 17%	• Pay for performance against annual operating plan goals	• Targeted at the median of comparison group with actual pay between 0% – 200% of target • No minimum guaranteed payout • Actual payout based on performance against three equally weighted annual performance goals approved by the Board of Directors: - Revenue Growth - Earnings per Share (EPS) Growth - Cash Flow

Restricted Stock Units Weight: Not less than 21%	• Basic level of stock compensation to attract and retain talent with a Company performance qualifier	• Granted annually, vest 100% on 3^rdanniversary of grant date • Award does not vest if 3-year EPS cumulative compound annual growth threshold is not achieved • Subject to clawback and forfeiture policy • Subject to stock ownership policy

Stock Options Weight: Not less than 21%	• Value aligned with long-term total shareholder value growth	• Granted annually, vest 25% per year starting on 1^st anniversary of grant date • Subject to clawback and forfeiture policy • Subject to stock ownership policy


Component	Purpose	Basic Design

Long-Term Performance Plan (Cash) Weight: Not less than 21%	• Pay for performance against long-term goals • Tie a portion of cash compensation opportunity to longer-term Company goals	• Granted annually • Overlapping three fiscal year performance periods • Goals set at the start of each performance period • Targeted at the median of comparison group with actual paid between 0% – 200% of target • No minimum guaranteed payout • Actual payout based on performance against two equally weighted, Board- approved long-term goals - Cumulative Revenue Growth - Return on Invested Capital

Benefits	• Retirement Plan • Supplemental Retirement and Deferred Compensation Plans • Health/Wellness Plan • Life and Disability Plan	• Same programs offered to broad based employee population with the exception of an Executive Physical Exam

Perquisites (Cash)	• $40,000 for CEO • $24,000 for other NEOs	• Paid annually • Modest perquisite to cover expenses such as financial and tax planning, memberships, etc. • No tax gross-up

Important Notes about Executive Compensation Components

We maintain the following compensation practices, which demonstrate our commitment to strong corporate governance:

•

Change-in-Control Policy: Compensation and benefits under Medtronic’s Change-in-Control (CIC) policy, which also includes equity awards that are replaced in connection with a change in control, are not triggered solely by a CIC event (“single trigger”). The compensation and benefits only apply in the event of a CIC when a participant is involuntarily terminated, without cause, or where a participant terminates employment for good reason, within a limited time period following the CIC (“double trigger”). Medtronic’s CIC policy also does not provide for any “golden parachute” excise tax gross-up;

•

Stock Ownership Policy: Our policy requires the CEO to maintain ownership of Medtronic stock equal to six (6) times annual salary and other NEOs to maintain Medtronic stock equal to three (3) times annual salary. Until the ownership guideline is met, the CEO must retain 75% of after-tax Medtronic shares received through settlement of equity compensation awards and other NEOs must retain 50% of such shares. Once the guideline is met, executives must retain after-tax shares for one year following settlement of equity compensation awards. As of July 12, 2013, all NEOs are in compliance with the stock ownership and retention guidelines.

•

Forfeiture Policy: Medtronic’s Stock Award and Incentive Plan provides that stock awards are forfeited when an NEO terminates employment with Medtronic for any reason other than retirement, disability, death, or termination under specific circumstances related to a Change in Control;

•

Clawback Policy: Compensation policies include significant penalties for misconduct including a broad clawback policy that allows the Company to recapture equity compensation and other incentive awards paid to an executive who engages in misconduct. Misconduct includes, among other things, a violation of the Medtronic Code of Conduct, other fraudulent or illegal activity, violation of post-termination non-competition covenants, unauthorized disclosure of confidential information, and violation of business ethics or other business policies of Medtronic; and

•

Securities Trading Policy: NEOs (along with others) are prohibited from engaging in short sales of Medtronic securities (including share sales against the box) or engaging in purchases or sales of puts, calls or other derivative securities based on Medtronic securities. The policy also prohibits our NEOs from purchasing Medtronic securities on margin, borrowing against Medtronic securities held in a margin account or pledging Medtronic securities as collateral for a loan (unless the officers can clearly demonstrate the financial capacity to repay the loan without resorting to the pledged securities).

Consideration of “Say-on-Pay” and “Say-on-Frequency” Voting Results

The Compensation Committee reviewed shareholder and other stakeholder feedback along with the results of the 2012 shareholder “say-on-pay vote” in making compensation decisions during Fiscal Year 2013. Efforts to gather stakeholder feedback included outreach to our largest shareholders following the 2012 Proxy filing. Through these discussions, we heard positive feedback about the Proxy disclosure and no shareholder identified any pay practice of material concern. We did receive questions about the use of Performance Based Restricted Stock Units, which some incorrectly interpreted to be a Performance Share Plan. Once it was understood that Medtronic’s Performance Based Restricted Stock Units serve the same purpose as time-based RSUs (albeit with a minimum financial performance threshold), most shareholders expressed support for this element of compensation. Based on this feedback and the say-on-pay approval by shareholders, the Compensation Committee believes that shareholders generally support our compensation policies and practices. Therefore, the Compensation Committee continued to apply the same principles in determining Fiscal Year 2013 compensation actions.

The Compensation Committee and the Board also considered the results of the shareholder “say-on-frequency” vote at our 2011 annual meeting of shareholders in adopting a frequency policy for future say-on-pay votes. Because voters holding a substantial majority of shares expressed a preference for having a say-on-pay vote every year, the Board decided to hold annual say-on-pay votes. Therefore, our next say-on-pay vote will be held at our 2013 annual meeting of shareholders. We welcome the input of our shareholders on our compensation policies and compensation program at any time.

Business Environment

The Company improved its top-line performance for the second consecutive year during fiscal year 2013, with revenue growth of 5% (constant currency) and delivered diluted earnings per share growth of 8% (non-GAAP). Performance was broad-based, with many businesses and geographies making significant contributions to the fiscal year 2013 results. In addition, the Company generated $4.4 billion in free cash flow and remains committed to returning 50 percent of free cash flow to shareholders. In fiscal year 2013, we paid nearly $1.1 billion in dividends and repurchased over $1.2 billion of common stock.

In light of these business results, the Company’s annual incentive plan paid NEO’s at 122.97% of target and the long-term performance plan paid at 76.32% of target, as summarized below:

LOGO

In addition to ensuring that the annual and long-term cash incentive plan payouts align with performance, the Compensation Committee evaluates how the amount of annual cash compensation aligns with Medtronic’s performance when ranked against the executive compensation comparator companies. As shown in the table below for Fiscal Year 2013, Medtronic’s composite ranking of size, profitability, revenue growth, and shareholder return (each component equally weighted) is at the 61^st percentile. Medtronic’s ranking of total annual compensation for the CEO, CFO, and the average for other NEOs aligns with its performance ranking. The following table shows the alignment for Fiscal Year 2013:


One-Year Average Size and Performance Composite Rank				Total Annual Compensation (TAC) Rank ($000)
Size	Profitability	Growth	Shareholder Return	Chief Executive Officer					Chief Financial Officer					Average Other Named Executive Officers
Pfizer (PFE)	LLY	AMGN	GILD	ABT	$	6,600	124	%	ABT	$	3,417	237	%	ABT	$	2,719	231	%
Johnson & Johnson (JNJ)	GILD	AGN	AMGN	BAX	$	5,732	195	%	PFE	$	2,937	150	%	AMGN	$	2,457	201	%
Merck (MRK)	BDX	CFN	LLY	BMY	$	5,468	158	%	AMGN	$	2,494	203	%	BAX	$	2,323	236	%
Abbott Laboratories (ABT)	BAX	ABT	JNJ	PFE	$	5,138	129	%	LLYs	$	2,255	142	%	PFE	$	2,314	134	%
3M (MMM)	MMM	BCR	PFE	GILD	$	4,869	150	%	BMY	$	2,191	152	%	BMY	$	2,201	141	%
Amgen (AMGN)	AMGN	JNJ	BAX	AMGN	$	4,578	182	%	MRK	$	2,030	114	%	MRK	$	2,066	115	%
Eli Lilly (LLY)	AGN	BDX	CFN	LLY	$	4,482	142	%	JNJ	$	1,696	90	%	GILD	$	1,941	149	%
Medtronic (MDT)	MDT	MDT	MDT	MRK	$	4,000	111	%	MDT	$	1,510	123	%	LLY	$	1,803	142	%
Bristol-Myers Squibb (BMY)	BCR	BAX	MRK	MDT	$	3,820	123	%	COV	$	1,487	110	%	JNJ	$	1,356	110	%
Baxter International (BAX)	PFE	PFE	BMY	MMM	$	3,223	100	%	BAX	$	1,483	157	%	STJ	$	1,339	97	%
Covidien (COV)	JNJ	COV	ABT	AGN	$	2,945	97	%	MMM	$	1,443	114	%	MDT	$	1,309	123	%
Gilead Sciences (GILD)	ABT	SYK	BDX	COV	$	2,837	110	%	GILD	$	1,422	149	%	BCR	$	1,207	94	%
Stryker (SYK)	SYK	MMM	ZMH	BSX	$	2,676	164	%	BDX	$	1,219	97	%	MMM	$	1,173	106	%
Becton Dickinson (BDX)	COV	GILD	SYK	JNJ	$	2,582	90	%	AGN	$	1,076	100	%	COV	$	1,152	124	%
Boston Scientific (BSX)	ZMH	ZMH	MMM	BCR	$	2,503	96	%	BSX	$	1,046	95	%	BDX	$	1,050	85	%
Allergan (AGN)	MRK	STJ	BSX	CFN	$	2,433	89	%	CFN	$	889	85	%	AGN	$	975	95	%
St. Jude Medical (STJ)	STJ	LLY	AGN	STJ	$	2,347	104	%	ZMH	$	847	81	%	BSX	$	951	105	%
Zimmer Holdings (ZMH)	BMY	BSX	COV	BDX	$	1,980	100	%	BCR	$	823	81	%	ZMH	$	783	59	%
CareFusion (CFN)	CFN	BMY	STJ	ZMH	$	1,752	79	%	SYK	$	682	198	%	CFN	$	763	85	%
C.R. Bard (BCR)	BSX	MRK	BCR	SYK	$	1,131	41	%	STJ	$	605	104	%	SYK	$	747	73	%
MDT Rank = 65%	MDT Rank = 60%	MDT Rank = 56%	MDT Rank = 62%	MDT Rank = 60%					MDT Rank = 62%					MDT Rank = 49%
Medtronic Composite Rank = 61%				Medtronic Composite Rank = 57%

Summary of Fiscal Year 2013 Compensation Actions

The following summarizes the NEO compensation actions taken by the Compensation Committee in Fiscal Year 2013:

•

Effective for Fiscal Year 2013, the Compensation Committee approved base salary increases of 7% for Messrs. Coyle and O’Connell. Mr. Findlay received a base salary increase of 5%. Mr. Ishrak and Mr. Ellis each received a base salary increase of 4%. Base salary, which represents 20% or less of the target total direct compensation, is positioned within the median salary range of Medtronic’s peer group of companies, taking into consideration performance factors for each NEO;

•

No other compensation increases were provided to NEOs for Fiscal Year 2013;

•

In Fiscal Year 2012, the CEO, Compensation Committee, and the Independent Consultant, completed an extensive review of Medtronic’s Annual (MIP) and Long-Term Incentive Plans (LTIP). As part of the review, effective for Fiscal Year 2013, the following changes were applied to Medtronic’s Incentive Plans:

•

The guaranteed plan payout floor of 50% of target was eliminated.

•

The MIP measures were re-weighted to provide for equal weighting of revenue growth, diluted earnings per share growth, and cash flow;

•

The Long-Term Performance Plan (LTPP) measures were re-defined to measure Medtronic’s results from on-going operations compared to Board approved-targets;

•

The Long-Term Performance Plan (LTPP) measures (the cash portion of the LTIP) were re-weighted to provide for equal weighting of revenue growth and return on invested capital;

•

A change to the payout range was implemented for both the MIP and LTPP, using a range from 50% to 200% of the target payout for each component, which aligns with competitive market practice, with performance below minimum paying 0% of target for that component; and

•

In Fiscal Year 2012, Medtronic implemented executive stock ownership and retention guidelines that require the CEO to maintain ownership of Medtronic stock equal to six (6) times annual salary and other NEOs to maintain Medtronic stock equal to three (3) times annual salary. Until the ownership guideline is met, the CEO must retain 75% of after-tax Medtronic shares received through settlement of equity compensation awards and other NEOs must retain 50% of such shares. Once the guideline is met, executives must retain after-tax shares for one year following settlement of equity compensation awards. As of July 12, 2013, all NEOs are in compliance with the stock ownership and retention guidelines.

CEO Compensation Pay for Performance Analysis

The chart below shows that the Company’s past and present CEO ongoing total compensation opportunities for the last completed five fiscal years were reasonable relative to the Company’s total shareholder return (TSR) over that same time period and the total compensation opportunities at the peer companies. Excluding the effect of one-time, sign-on cash and equity awards for Mr. Ishrak in FY2012, the chart shows that CEO total compensation remained relatively flat from FY2010 through FY2011, in line with a flat TSR over the same time period, decreased in FY2012 in line with a decrease in TSR, and increased in FY2013 in line with the increase in TSR. In all five fiscal years, CEO total compensation was conservatively positioned relative to the median total compensation for Medtronic’s executive compensation comparator group. The one-time, sign-on cash and equity awards for Mr. Ishrak in FY2012 represent a common approach to offset the value of forfeited compensation and benefit value at Mr. Ishrak’s former employer and do not represent components of ongoing total compensation.

LOGO

--	“Total Compensation” for Medtronic and peers represents totals as reported in each company’s Summary Compensation Table for each respective fiscal year

--	“Peers” represent Medtronic’s 19-company Fiscal Year 2013 executive compensation peer group

Executive Compensation Program Design Details

This section of the CD&A provides details about Medtronic’s executive compensation program design, which was summarized in the preceding Executive Summary section. The section begins with two charts showing the mix of target total direct compensation components, one for the CEO and one for the average of the other NEOs, followed by detailed descriptions of each component with relevant Fiscal Year 2013 information. Total direct compensation is defined as the sum of annual base salary, target annual cash incentives, target long-term cash incentives, and the grant date estimated fair market value of long-term equity incentives.

Component Mix of Target Total Direct Compensation

LOGO

Annual Base Salary

Base salary represents 20% or less of CEO and NEO target pay opportunity. Medtronic’s philosophy is to maintain base salary within a competitive median range. The range allows for pay decisions to take into account factors such as experience and performance. To establish the median range, the Independent Consultant reporting to the Compensation Committee analyzes proxy information from the executive compensation comparator companies approved by the Committee as the best companies to benchmark competitive pay for Medtronic executives. The analysis uses regression to identify compensation differences attributed to company size. The Consultant presents to the Committee the analysis that identifies the median base salary range for the CEO and each NEO. The Committee approves base pay increases to maintain base salary within the median range, again, taking into account factors such as experience and performance.

The table below shows the Fiscal Year 2013 base salary increase for the CEO and each NEO. The increases reflected larger market movement in the median range.


Name	FY2012 Salary (000’s)		FY2013 Salary (000’s)		% Increase
Omar Ishrak	$	1,350	$	1,404		4	%
Gary Ellis	$	689	$	717		4	%
Christopher J. O’Connell	$	590	$	631		7	%
Michael J. Coyle	$	627	$	671		7	%
D. Cameron Findlay	$	608	$	638		5	%

Annual Incentive Plan

Annual Incentive Target Pay. Using the same analytical approach described for the annual base salary, the Independent Consultant to the Compensation Committee identifies the median range for annual incentive target pay for the CEO and each NEO, which is set as a percentage of annual base salary. For Fiscal Year 2013, Medtronic did not make changes to the target annual incentive pay established in Fiscal Year 2012. The table at the end of the Annual Incentive Plan section shows the target annual incentive pay along with the actual incentive pay based on Fiscal Year 2013 performance.

Fiscal Year 2013 Annual Incentive Plan Design. During Fiscal year 2012, the Compensation Committee, Independent Consultant, and Medtronic management completed an extensive review of incentive plan design and performance measures. The review considered shareholder feedback, competitive benchmarking, and Medtronic’s short-term and long-term strategic imperatives. As a result of this review, Medtronic implemented the following incentive plan design for Fiscal Year 2013:

•

Payout range aligned with market practice. Payout for each component starts at 50% of target incentive and is paid up to a maximum of 200% of target incentive.

•

Eliminated the previous minimum payout guarantee at 50%. Results below the minimum performance level for a component pays 0% of target incentive for that component.

•

Diluted Earnings Per Share performance continues to be a plan payout qualifier. Results below the minimum for the diluted EPS component result is no plan payout regardless of results for the other components.

•

Target incentive is paid at 100% achievement of three Annual Operating Plan financial targets. As detailed in the next section, these three targets come directly from the Board-approved Annual Operating Plan and represent the best financial measures of executive performance expectations.

Fiscal Year 2013 Annual Incentive Plan Performance Measures and Targets: The annual incentive plan requires the attainment of a minimum level of diluted earnings per share (“EPS”) before any plan payouts occur. Provided the minimum level is attained, the annual incentive plan uses three equally weighted measures of performance to determine the plan payout. At the Compensation Committee’s June 2012 meeting, the Committee approved the targets for each measure, which come directly from Medtronic’s Board-approved Annual Operating Plan. The following provides details about the performance measures, including a comparison to Medtronic’s executive compensation comparator company median (if available):


Measure	Rationale	Targets
Revenue Growth over Prior Year (Constant Currency)	Top line growth continues to be a key Company strategy, reflecting market development, market penetration, and market share performance	3.7% growth over Prior Year Comparator Median = 2.44% over Prior Year

Diluted Earnings Per Share Growth over Prior Year (Non-GAAP)	Earnings both from operating efficiency and financial management is a key driver of returns to shareholders	$3.66 Per Share; 7.3% over Prior Year Comparator Median = 5.1% over Prior Year

Cash-Flow Indicator	Cash flow generated from operations plus management of short-term receivables, inventory, and payables is a key driver of Medtronic’s ability to re-invest and provide returns to shareholders	$3.798 Billion

For purposes of the annual incentive calculation, “diluted earnings per share” refers to non-GAAP diluted earnings per share, a measure which includes adjustments for certain charges. A reconciliation of non-GAAP diluted earnings per share is included in the “Adjustment of EPS Results applicable to Short and Long-Term Incentives” section on page 41 of the CD&A.

Revenue Growth is defined as annual growth rate percent for revenue excluding the effects of foreign exchange rates.

Cash Flow Indicator is defined as profit after tax exclusive of special charges, plus or minus changes in accounts receivable, inventories, and accounts payable. The cash flow indicator only includes changes in assets and liabilities that best reflect annual operations. This calculation excludes the effects of foreign exchange rates.

Fiscal Year 2013 Annual Incentive Plan Results and Payouts. At the Compensation Committee’s May 2013 meeting, the Committee reviewed performance against the incentive plan targets and approved the resulting CEO and NEO annual incentive plan payouts as follows:

Incentive Plan Results:


Measure	Target			Result			Weight			% Payout
Revenue Growth		3.7	%		4.6	%		33.3	%		36.08	%
Earnings Per Share	$	3.66		$	3.70			33.3	%		36.07	%
Cash Flow Indicator	$	3.798B		$	3.998B			33.3	%		50.82	%
Total								100.0	%		122.97	%

Incentive Plan Payments:


Name	FY13 Payout Percent			FY13 Target Incentive⁽¹⁾			FY13 Actual Award⁽²⁾
Omar Ishrak		122.97	%		140	%	$	2,417,098
Gary Ellis		122.97	%		90	%	$	793,525
Christopher J. O’Connell		122.97	%		85	%	$	659,550
Michael J. Coyle		122.97	%		85	%	$	701,359
D. Cameron Findlay		122.97	%		80	%	$	627,639

⁽¹⁾	Percent of annual base salary

⁽²⁾	Annual base salary multiplied by target incentive multiplied by payout percent

Long-Term Incentive Plan (LTIP)

Fiscal Year 2013 Long-Term Incentive Target Pay. Using the same analytical approach described for annual base salary and short-term incentives, the Independent Consultant identifies the median range for long-term incentive target pay for the CEO and each NEO. Target pay is expressed as a dollar value, for example $2,400,000. The target is split equally between three LTIP components; stock options, restricted stock units, and a three-year cash incentive planned called the Long-Term Performance Plan (LTPP). Stock options are stated in a full-value equivalent, using a four-to-one conversion ratio. Note that this value conversion ratio will differ from Medtronic’s Black-Scholes grant date valuation used for accounting expense purposes under FASB ASC Topic 718. For example, the hypothetical target LTIP of $2,400,000 would be granted as $800,000 stock options (full-value equivalent), $800,000 restricted stock units, and $800,000 under the LTPP. Each of these LTIP components is described in detail following the target LTIP chart below.

At the June 2012 Compensation Committee meeting, LTIP targets were approved for Fiscal Year 2013. The following table shows the target pay for LTIP awards granted in Fiscal Year 2013 compared to Fiscal Year 2012.


Name	FY2012 LTIP Target (000’s)		FY2013 LTIP Target (000’s)		% Increase
Omar Ishrak	$	8,450	$	8,450		0	%
Gary Ellis	$	2,400	$	2,400		0	%
Christopher J. O’Connell	$	2,200	$	2,200		0	%
Michael J. Coyle	$	2,200	$	2,200		0	%
D. Cameron Findlay	$	1,800	$	1,800		0	%

Fiscal Year 2013 Long-Term Incentive Plan Components.

Stock Options: Stock options are a performance-based compensation component that ties one-third of the target LTIP value to stock price appreciation and shareholder value. Stock options only have value when the market price exceeds the exercise price. Stock option grant date value is estimated using the Black-Scholes method of stock option valuation. Information about Medtronic’s Black-Scholes valuation is presented as part of the notes to the Summary Compensation Table on page 49 of this proxy statement.

All stock option grants have an exercise price that is equal to the Medtronic market close stock price on the date of grant. Stock options have a ten year term and vest in equal increments of 25% each year beginning one year after the date of grant.

Restricted Stock Units (RSU): Restricted stock units represent the second one-third of the target LTIP value, with time-based restricted stock units being a widely used compensation component primarily intended to deliver a market competitive level of Medtronic stock ownership. Similar to time-

based RSUs, Medtronic’s grants cliff vest (100%) on the third anniversary of the grant date; however, unlike the more commonly used time-based RSUs, Medtronic’s RSUs include a three-year minimum performance threshold. If the threshold is not met, then the RSU grants will not vest.

Fiscal Year 2013 — 2015 RSU Grants. For Fiscal Year 2013 RSU grants, the threshold was set at an Earnings Per Share cumulative compound annual growth rate (cumulative CAGR) of 3%. The threshold is intentionally less than Medtronic’s target performance, consistent with the stock ownership and retention purpose of RSU grants, yet the cumulative CAGR is still a challenging performance threshold.

Fiscal Year 2011 — 2013 RSU Vesting Threshold Achievement. At its May 2013 meeting, the Compensation Committee certified that the three-year cumulative compound annual growth rate of 5% for diluted EPS growth threshold was achieved for the performance period of Fiscal Year 2011 — Fiscal Year 2013. The actual cumulative CAGR was 5.21% for the three-fiscal-year measurement period. As a result, the RSU grants made in Fiscal Year 2011 will vest on the third anniversary of the date of grant. These awards are reflected in the “Equity Incentive Plan Awards: Unearned Shares, Units, or Other Rights That have not Vested” column of the “2013 Outstanding Equity Awards at Fiscal Year End” table on page 53 of this proxy statement.

Long-Term Performance Plan (LTPP): LTPP is a three-year cash incentive plan that is based on long-term measures of Company performance. The primary intent is to tie the final one-third of target long-term incentive pay to longer term measures of performance that are not influenced by variability in the stock market. LTPP pays a cash award after the end of the three-year performance period, provided a minimum level of diluted EPS is attained. The target is equal to one-third of the LTIP target value. The minimum-to-maximum payout scale for each component ranges from 50% to 200% of target with results below minimum paid at 0% of target. A new LTPP award grant and performance period is established at the beginning of each Fiscal Year, as part of the LTIP award grant. Because three-year performance periods overlap, performance goals are established at the start of each performance period and, once established, do not change.

Just as the Compensation Committee reviewed the annual incentive plan during Fiscal Year 2012, it also completed an extensive review of Medtronic’s LTIP during that year. As a result, the Compensation Committee made several changes to the LTPP starting with the Fiscal Year 2013 — 2015 plan. The following summarizes the results of the review:

•

Continue to use two measures: three-year revenue growth and three-year return on invested capital (“ROIC”);

•

Align payout range with market practice. Payout for each component starts at 50% of target incentive and is paid up to a maximum of 200% of target incentive;

•

Re-define revenue growth so that it is based on a set cumulative target growth rate rather than relative to peers, and still uses GAAP reported results but excludes the effects of foreign currency exchange rates;

•

Re-define ROIC to use non-GAAP reported results, typically excluding one-time charges but including operating results from acquisitions and divestitures; and

•

Increase the weighting for ROIC to 50% and reduced the weighting for revenue growth to 50%.

Fiscal Year 2013 – 2015 LTPP Performance Measures and Targets: The Compensation Committee approved the LTPP performance measures and targets for Fiscal Year 2013 – 2015 at the June 2012 meeting. The LTPP uses two equally weighted measures selected as part of an extensive incentive plan review undertaken by the Compensation Committee and Independent Consultant during Fiscal Year 2012. The performance measure targets were taken directly from the Board-approved strategic goals for Medtronic. The following table provides detailed information about each performance measure:


Measure	Rationale	Targets
Three-year Revenue Growth (GAAP at Constant Currency)	This revenue growth measure differs from the annual incentive plan because it uses Medtronic’s cumulative compound annual growth rate (CCAGR) over three fiscal years. The CCAGR measure includes growth in all three fiscal years rather than only comparing the ending year to the base year. Growth through acquisitions is balanced by the equal weighting on ROIC.	5% Cumulative CAGR for FY13 — FY15

ROIC (GAAP excluding one-time items)	ROIC measures all components of management’s responsibility to generate sustained, long-term returns on invested capital.	14% average ROIC for FY13 — FY15

Revenue growth is measured as a three-year cumulative compound annual growth (cumulative CAGR) at constant currency but otherwise including all other GAAP components. ROIC is measured as the GAAP, rolling 12 month profit after tax, excluding one-time items plus interest expense net of tax, divided by the difference of the three-year average asset base less average non-interest bearing liabilities.

Fiscal Year 2011 — 2013 Long-Term Performance Plan (LTPP) Results. At its May 2013 meeting, the Compensation Committee certified the results for the LTPP performance period that began in Fiscal Year 2011 and was completed at the end of Fiscal Year 2013. Payments of awards for this LTPP performance period were made during the first fiscal quarter of 2014 and can be found in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 48 of this proxy statement.

The table below shows the Fiscal Year 2011 — Fiscal Year 2013 performance goals, results, and calculated payout.


Year	Relative Revenue Growth⁽¹⁾			ROIC⁽²⁾
FY2011		0.8	%		13.3	%
FY2012		4.4	%		14.2	%
FY2013		2.5	%		12.9	%
Total/Average		2.2	%⁽²⁾		13.5	%⁽³⁾

FY2011 — FY2013 Target		50^th Percentile			13.0	%
Payout Level		60.0	%		109.5	%
Objective Weight		67	%		33	%
Weighted Payout Percent		40.2	%		36.1	%

⁽¹⁾	Results are reported at GAAP and exclude Physio-Control divestiture.

⁽²⁾	Calculated as a cumulative compound annual growth rate.

⁽³⁾	Calculated as a 3-year average.

Adjustment of EPS Results applicable to Short and Long-Term Incentives

Fiscal Year 2013

Adjustments of EPS Results applicable to Short and Long-Term Incentive


	Fiscal Year Ended April 26, 2013			Explanation of Non-Recurring Adjustments
Diluted EPS, as reported	$	3.37		Includes additional interest expense from Convertible Debt
Significant Non-Recurring Adjustments
Restructuring charges		0.14		After-tax charges related to the restructuring initiative that began in the fourth quarter of fiscal year 2013, partially offset by the reversal of previous restructuring charges related to the fiscal year 2012 restructuring initiative.
Certain litigation charges, net		0.23		After-tax certain litigation charges related to an accounting charge for probable and reasonably estimable patent litigation with Edwards Lifesciences, Inc.
Certain acquisition-related items		(0.05	)	After-tax net income related to the change in fair value of contingent milestone payments, certain acquisition-related costs from the China Kanghui Holdings acquisition, a net charge for an adjustment of transaction costs related to the Physio-Control divestiture, an IPR&D impairment charge related to a technology recently acquired by the Structural Heart business, and income related to the reversal of an acquired contingent liability from ATS Medical.
Diluted EPS, adjusted	$	3.70

The data in this schedule has been intentionally rounded to the nearest $0.01, and therefore may not sum.

Other Benefits and Perquisites

Medtronic provides broad-based benefit plans to all of its employees, including the NEOs. All employees participate in the same health care plans, and Medtronic does not provide NEOs with any different or additional benefit plans, with the exception of a required executive physical exam and a business allowance. Medtronic executives are required to complete a physical exam as recommended in American Medical Association guidelines and, in the event that requirement exceeds regular plan coverage, the executives can receive reimbursement for up to $2,000 of the cost that exceeds the regular plan coverage. Medtronic’s business allowance policy is described in detail below. The broad-based benefit plans include:

Qualified Retirement Plans. Medtronic sponsors a number of tax-qualified retirement plans for its employees. In the United States, Medtronic changed its retirement plans effective May 1, 2005 in order to provide then-current employees and employees hired after that date a choice of retirement plans. Employees hired prior to May 1, 2005 had the option of continuing in the final average pay pension plan referred to as the Medtronic Retirement Plan (MRP) or electing to participate in one of the new plans. The Medtronic Retirement Plan is a final average pay component of the Medtronic, Inc. Retirement Plan. Employees hired after that date choose to participate in one of the new retirement plans: the Personal Pension Account or the Personal Investment Account. The Personal Pension Account is a cash balance component of the Medtronic, Inc. Retirement Plan, and the Personal Investment Account is a component of the Company’s tax-qualified 401(k) Plan. Additional details regarding these plans are provided on page 56 of this proxy statement.

Supplemental Retirement Plans. The Company offers a Nonqualified Retirement Plan Supplement (“NRPS”) designed to provide all eligible employees, including but not limited to the NEOs, with benefits which supplement those provided under certain of the tax-qualified plans maintained by Medtronic. The NRPS is designed to restore benefits lost under the Personal Pension Account, Personal Investment Account or the Medtronic Retirement Plan due to covered compensation limits established by the Internal Revenue Code. The NRPS also restores benefits for otherwise eligible compensation deferred into the Medtronic, Inc. Capital Accumulation Plan Deferral Program (the “Capital Accumulation Plan”). The NRPS provides employees with no greater benefit than they would have received under the qualified plan in which they participate were it not for the covered compensation limits and deferrals into the Capital Accumulation Plan.

Nonqualified Deferred Compensation Plan. The Company provides all vice presidents, including our NEOs, and highly-compensated sales employees, with a market competitive nonqualified deferred compensation plan through the Capital Accumulation Plan. Our plan allows these employees to make voluntary deferrals from their base pay and incentive payments, which are then credited with gains or losses based on the performance of selected investment alternatives. These alternatives are the same as those offered in our tax qualified 401(k) Plan for all employees. There are no Company contributions to the plan or Company subsidized returns.

Business Allowance. Medtronic does not provide any perquisites such as Company-provided automobiles, aircraft, club memberships, financial and tax advisors, etc. Medtronic provides NEOs with a market competitive business allowance, unless they are on an expatriate assignment, as discussed below. The NEOs may spend their business allowance at their discretion for expenses such as financial and tax planning, automobiles or club memberships. The business allowance is paid as taxable income, and Medtronic does not track an executive’s use of his or her business allowance. The annual business allowances provided to our NEOs in Fiscal Year 2013 ranged from $24,000 to $40,000. For NEOs on expatriate assignments, rather than providing a business allowance, the Company pays for certain housing and related living costs. These amounts are sometimes a significant part of an expatriate’s total compensation. Additionally, it is occasionally appropriate for NEOs to be accompanied during business travel by their spouses. The expenses associated with such travel, while rare, are considered taxable income. The referenced amounts are included in the “All Other Compensation” column of the Summary Compensation Table.

Change of Control. Compensation in a change-of-control situation is designed: (1) to protect the compensation already earned by executives and to ensure that they will be treated fairly in the event of a change of control; and (2) to help ensure the retention and dedicated attention of key executives critical to the ongoing operation of the Company. Our change-of-control policy supports these principles. We believe shareholders will be best served if the interests of our executive officers are aligned with shareholders’ interests, and we believe providing change-of-control benefits should incent senior management to objectively evaluate potential mergers or transactions that may be in the best interests of shareholders. Our change-of-control agreements are discussed in more detail in the “Potential Payments Upon Termination or Change of Control” section of “Executive Compensation.” Other than Messrs. Coyle, Findlay and Ishrak’s agreements, we do not have individual employment contracts with our NEOs relating to compensation other than those associated with a change of control.

Compensation Decision-Making Process

Role of Compensation Committee

The Compensation Committee establishes Medtronic’s compensation philosophy, program design and administration rules, and is the decision-making body on all compensation matters related to our NEOs. The Committee solicits input from an independent outside compensation consultant and relies on the consultant’s advice. For more information on the Compensation Committee, its members and its duties as identified in its charter, please refer to the section entitled “Governance of Medtronic — Compensation Committee” beginning on page 19 of this proxy statement.

Independent Compensation Consultant

The Compensation Committee has engaged Frederic W. Cook & Co., Inc., an independent outside compensation consulting firm (the “Independent Consultant”), to advise the Compensation Committee on all matters related to executive officer compensation. Specifically, the Independent Consultant conducts an annual competitive market analysis of total compensation for NEOs, provides relevant market data, updates on compensation trends and regulatory developments, and counsels on program designs and specific compensation decisions related to our CEO and other executives.

In June 2013, the Compensation Committee adopted enhanced independence standards for outside consultants that mirror the New York Stock Exchange (“NYSE”) listing standards. This policy established an assessment framework to confirm and report on a consultant’s independence. It also requires a consultant to confirm its independent status according to the Compensation Committee’s standards. The Compensation Committee reviews and confirms the independence of its outside consultants on an annual basis.

In light of the new NYSE listing standards, the Compensation Committee has considered the independence of the Independent Consultant. In connection with this process, the Compensation Committee has reviewed, among other items, a letter from the Independent Consultant addressing its independence and the members of the consulting team serving the Committee, including the following factors: (i) other services provided to us by the Independent Consultant, (ii) fees paid by us as a percentage of the Independent Consultant’s total revenue, (iii) policies or procedures of the Independent Consultant that are designed to prevent conflicts of interest, (iv) any business or personal relationships between the senior advisor of the consulting team with a member of the Compensation Committee, (v) any Company stock owned by the senior advisor or any member of his immediate family, and (vi) any business or personal relationships between our executive officers and the senior advisor. The Compensation Committee discussed these considerations and concluded that the work performed by the Independent Consultant and its senior advisor involved in the engagement did not raise any conflict of interest.

Role of Chief Executive Officer in Compensation Decisions

In making compensation decisions for executive officers reporting to the CEO, the Compensation Committee solicits the views of our CEO and the Independent Consultant. The CEO is not present during Compensation Committee executive sessions, and does not make recommendations to the Compensation Committee, about his own compensation.

Executive Compensation Peer Companies and Competitive Market

The Compensation Committee considers relevant market pay practices when establishing executive compensation levels and evaluating compensation programs including base salary, short-term and long-term incentives. In order to ensure the competitiveness of compensation programs, the Committee has established a peer group of companies for benchmarking purposes. The identification of these companies is based on discussions with, and recommendations from, Frederic W. Cook & Co., Inc. The selection criteria were based on companies in the health care equipment, pharmaceutical, and biotechnology industries that position Medtronic in the median range of the group, on average, in various measures of Company size. The following table lists Medtronic’s executive compensation peer group for Fiscal Year 2013, including Medtronic’s ranking relative to these companies based on financial data available at the time of consideration:


Company Name	Latest 4 Quarters ($Mil.)						Latest Quarter ($Mil.)						FYE Total Employees			2/28/2013 Market Capital.			Composite Percentile Rank
Company Name	Net Revenue			Operating Inc. (EBIT)			Total Assets			Total Equity			FYE Total Employees			2/28/2013 Market Capital.			Composite Percentile Rank
Pfizer	$	58,986		$	19,166		$	182,603		$	81,703			103,700		$	201,514			97	%
Johnson & Johnson	$	67,224		$	17,142		$	118,951		$	63,761			127,600		$	212,752			97	%
Merck	$	47,267		$	10,684		$	106,301		$	55,747			86,000		$	130,087			87	%
Abbott Laboratories	$	39,874		$	9,784		$	67,235		$	26,721			91,000		$	53,276			80	%
3M	$	29,904		$	6,483		$	33,876		$	17,575			87,677		$	71,759			76	%
Amgen	$	17,265		$	6,164		$	54,298		$	19,060			17,800		$	69,212			67	%
Eli Lilly	$	22,603		$	5,015		$	34,321		$	16,065			38,350		$	62,007			67	%
Medtronic	$	16,427		$	4,835		$	34,949		$	17,836			44,944		$	45,471			64	%
Bristol-Myers Squibb	$	17,621		$	4,491		$	35,897		$	13,623			28,000		$	60,557			62	%
Baxter International	$	14,190		$	3,246		$	19,825		$	7,129			51,000		$	36,924			52	%
Covidien	$	12,010		$	2,637		$	22,049		$	10,832			43,400		$	30,008			52	%
Gilead Sciences	$	9,703		$	4,307		$	21,240		$	8,604			4,500		$	65,037			45	%
Stryker	$	8,657		$	1,893		$	13,467		$	8,597			21,241		$	24,307			38	%
Becton Dickinson	$	7,777		$	1,628		$	11,629		$	4,469			29,555		$	17,080			31	%
Boston Scientific	$	7,249		$	965		$	17,154		$	6,870			24,000		$	10,031			28	%
Allergan	$	5,806		$	1,724		$	9,179		$	5,837			10,000		$	32,561			25	%
St. Jude Medical	$	5,503		$	1,491		$	9,271		$	4,094			15,000		$	12,122			18	%
Zimmer Holdings	$	4,472		$	1,319		$	9,012		$	5,866			8,700		$	13,006			16	%
CareFusion	$	3,626		$	654		$	8,412		$	5,473			15,000		$	7,288			8	%
C.R. Bard	$	2,958		$	820		$	4,151		$	1,926			12,200		$	8,085			5	%
75th Percentile	$	26,254		$	6,324		$	45,098		$	18,318			68,500		$	67,124
Mean	$	20,142		$	5,243		$	40,993		$	19,155			42,880		$	58,822
Median	$	12,010		$	3,246		$	21,240		$	8,604			28,000		$	36,924
25th Percentile	$	6,528		$	1,560		$	10,450		$	5,852			15,000		$	15,043
Medtronic Rank		60	%		65	%		69	%		73	%		68	%		53	%

Our objective is to establish market competitive compensation, including base salary, short-term, and long-term incentives, within a range of 15% (20% for LTI) on either side of the market median benchmark established for each position compared to our executive compensation peer group. Consistent with our pay-for-performance philosophy, we establish an award range for short-term and long-term incentives that generates above-market pay for above-market performance and below-market pay for below-market performance.

In addition to the competitive market information, the Compensation Committee also reviews information about career and job experience, job tenure, and job performance for each NEO. Base salary decisions are based on these factors to ensure that salaries are market competitive as specified in Medtronic’s compensation philosophy.

Risk Assessment

Compensation policies and practices are also designed to discourage inappropriate risk taking. While you should refer to the section entitled “Governance of Medtronic — Board Role in Risk Oversight” beginning on page 16 of this proxy statement for a discussion of the Company’s general risk assessment of compensation policies and practices, mitigating factors with respect to our NEOs include the following:

•

The NEOs are subject to stock ownership guidelines which require Medtronic’s CEO to maintain ownership of Medtronic stock equal to six (6) times annual salary and the other NEOs to maintain Medtronic stock equal to three (3) times annual salary. As of July 12, 2013, all directors and NEOs are in compliance with the stock ownership and retention guidelines; however, due to their more recent appointments, Mr. Donnelly, Governor Leavitt and Ms. Reddy are continuing to make progress towards the required ownership guidelines;

•

Incentive plans are more heavily weighted towards long-term performance to reduce the incentive to impact adversely long-term performance in favor of maximizing performance in one year;

•

Improper payments or gains from incentives and equity compensation are subject to clawback;

•

Short-term and long-term cash incentive payments are capped at 200% of target payout;

•

Short-term and long-term cash incentive performance targets are established at the beginning of each performance period and are not subject to change. Short and long-term incentive programs use different measures of performance. Short-term cash incentives focus on annual operating plan financial measures such as revenue growth, earnings per share, and cash flow. Long-term cash incentives measure shareholder three-year ROIC and three-year revenue growth relative to a selected peer group of Medtronic’s competitors; and

•

The Compensation Committee retains discretionary authority to override any incentive plan’s formulaic outcome in the event of unforeseen circumstances.

Share Ownership, Share Retention, and Clawback Policies

Equity Holding. In Fiscal Year 2012, Medtronic implemented executive stock ownership and retention guidelines that require the CEO to maintain ownership of Medtronic stock equal to six (6) times annual salary and other NEOs to maintain Medtronic stock equal to three (3) times annual salary. Until the ownership guideline is met, the CEO must retain 75% of after-tax Medtronic shares received through settlement of equity compensation awards and other NEOs must retain 50% of such shares. Once the guideline is met, the CEO must retain 75% of after tax shares for one year following settlement of equity compensation awards and other NEO’s must retain 50% of such shares for one year following settlement of equity compensation awards. For purposes of complying with the guidelines, stock is not considered owned if pledged as collateral for a loan. Shares owned outright, legally or beneficially, by an officer or his or her immediate family members residing in the same household, after-tax “in the money” vested but unexercised stock options, after-tax unvested restricted stock units, and shares held in the tax-qualified and nonqualified retirement and deferred compensation plans count towards the guideline. Compliance with these guidelines is measured at the beginning of the first fiscal month of a new fiscal year by the internal team at the Company responsible for handling executive compensation matters and the results of such measurement are reported to the Nominating and Corporate Governance Committee or Compensation Committee, as applicable, after

the measurement. On each measurement date, compliance is measured using each executive officer’s base salary then in effect and the average closing price per share of the Company’s common stock on the New York Stock Exchange for the six calendar months preceding the measurement date. As of July 12, 2013, all NEOs are in compliance with the stock ownership and retention policy. For share issuances (restricted stock unit vesting), net gain shares are those shares remaining after payment of income taxes.

Hedging and Pledging Policy. Our insider trading policy prohibits our NEOs and directors (along with others) from engaging in shorts sales of Medtronic securities (including share sales against the box) or engaging in purchases or sales of puts, calls or other derivative securities based on Medtronic securities. The policy also prohibits our NEOs from purchasing Medtronic securities on margin, borrowing against Medtronic securities held in a margin account or pledging Medtronic securities as collateral for a loan (unless the officers can clearly demonstrate the financial capacity to repay the loan without resorting to the pledged securities).

Sale and Transfer of Awards. All stock option, restricted stock, restricted stock unit and performance-based restricted stock/restricted stock unit awards are granted under plans which specifically prohibit the sale, assignment and transfer of awards granted under the plan with limited exceptions such as the death of the award recipient. In addition, the Compensation Committee may allow an award holder to assign or transfer an award.

Incentive Compensation Forfeiture. Medtronic has a comprehensive Incentive Compensation Forfeiture Policy, which is designed to recoup improper payments or gains paid to executive officers. If the Board determines that any executive officer has received an improper payment or gain, which is an incentive payment or grant paid or awarded to the executive officer due to misconduct, the executive officer must return the improper payment or gain to the extent it would not have been paid or awarded had the misconduct not occurred, including interest on any cash payments. “Misconduct” means any material violation of the Medtronic, Inc. Code of Conduct or other fraudulent or illegal activity for which an executive officer is personally responsible as determined by the Board. All executive officers are required to agree to this policy in writing.

Equity Compensation Forfeiture. The Company may require the return or forfeiture of cash and/or shares received or receivable in certain circumstances in which an employee has a termination of employment from the Company or any affiliate. The Company may exercise its ability to require forfeiture of awards if the employee receives or is entitled to receive delivery of shares or proceeds under an equity award program within six months prior to or twelve months following the date of termination of employment if the current or former employee engages in any of the following activities: (a) performing services for or on behalf of any competitor of, or competing with, the Company or any affiliate; (b) unauthorized disclosure of material proprietary information of the Company or any affiliate; (c) a violation of applicable business ethics policies or business policies of the Company or any affiliate; or (d) any other occurrence determined by the Compensation Committee of the Board of Directors.

Tax and Accounting Implications

The Compensation Committee structures the annual and long-term incentive plans in a manner that is intended to preserve the Company’s tax deductions under Section 162(m) of the Internal Revenue Code. However, the Compensation Committee may authorize compensation arrangements that are not fully tax-deductible but which promote other important objectives that are in the long-term interests of Medtronic and its shareholders. For example, in certain circumstances, the payment of base salary or business allowance or the vesting of restricted stock units may not be fully deductible.

In addition, the Compensation Committee structures all deferred compensation within the meaning of Section 409A of the Internal Revenue Code in a manner that is intended to prevent NEOs from being subject to the excise tax under Section 409A. The Compensation Committee also considers accounting treatment in the design of the long-term incentive plan.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company has reviewed and discussed with management the section of this proxy statement entitled “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this proxy statement.

COMPENSATION COMMITTEE:

Richard H. Anderson, Chair

Denise M. O’Leary

Kendall J. Powell

Jack W. Schuler

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes all compensation for each of the last three fiscal years awarded to, earned by or paid to the Company’s Chief Executive Officer, Chief Financial Officer, and three other most highly compensated executive officers during fiscal year 2013 (collectively, the named executive officers or “NEOs”). Please refer to the section entitled “Compensation Discussion and Analysis” beginning on page 28 of this proxy statement for a description of the compensation components for Medtronic’s NEOs. A narrative description of the material factors necessary to understand the information in the table is provided below, following the table.


Name and Principal Position	Fiscal Year		Salary		Bonus		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		Change in Pension Value and Nonqualified Deferred Compensation Earnings		All Other Compensation		Total
Omar Ishrak		2013	$	1,402,962	$	0	$	2,817,024	$	2,099,144	$	2,417,098	$	165,917	$	73,741	$	8,975,886
Chairman and Chief Executive Officer		2012	$	1,168,269	$	1,553,042	$	19,069,565	$	2,150,585	$	986,958	$	0	$	97,221	$	25,025,639

Gary L. Ellis		2013	$	716,461	$	0	$	800,029	$	615,487	$	1,302,580	$	401,356	$	37,186	$	3,873,099
Senior Vice President and Chief Financial Officer		2012	$	688,731	$	0	$	800,008	$	632,116	$	654,806	$	424,302	$	150,449	$	3,350,412
		2011	$	675,000	$	0	$	667,021	$	579,939	$	616,985	$	461,287	$	32,566	$	3,032,798


Christopher J. O’Connell		2013	$	630,212	$	0	$	734,014	$	565,564	$	1,168,604	$	252,198	$	37,776	$	3,388,368
Executive Vice President & President, Restorative Therapies Group		2012	$	589,769	$	0	$	734,015	$	579,173	$	382,243	$	239,509	$	124,710	$	2,649,420
		2011	$	576,981	$	0	$	667,021	$	579,939	$	351,240	$	160,467	$	112,296	$	2,447,943



Michael J. Coyle		2013	$	670,154	$	0	$	734,014	$	565,564	$	1,210,414	$	—	$	84,549	$	3,264,695
Executive Vice President & Group President, Cardiac and Vascular Group		2012	$	626,769	$	0	$	734,015	$	579,173	$	544,938	$	—	$	115,317	$	2,600,212
		2011	$	615,000	$	0	$	667,021	$	579,939	$	246,000	$	—	$	385,245	$	2,493,205



D. Cameron Findlay		2013	$	637,423	$	0	$	600,003	$	466,455	$	1,085,559	$	—	$	82,928	$	2,872,368
Senior Vice President, General Counsel and Secretary		2012	$	607,654	$	400,000	$	600,006	$	474,087	$	474,658	$	—	$	94,634	$	2,651,040

Salary. The salary column represents the base salary earned by the NEO during the applicable fiscal year. This column includes any amounts that the officer may have deferred under the Capital Accumulation Plan, which deferred amounts also are included in the 2013 Nonqualified Deferred Compensation Table on page 58 of this proxy statement. Each of the NEOs also contributed a portion of his salary to the Medtronic, Inc. Savings and Investment Plan, also referred to as the 401(k) Plan.

Stock Awards. The stock awards column represents aggregate grant date fair value of restricted stock unit awards and performance-based restricted stock units assuming full (maximum) achievement of applicable performance criteria over the performance period (collectively, the “restricted stock awards”) granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. Accordingly, the grant date fair value was determined by multiplying the numbers of restricted stock awards by the closing stock price on the date of grant. For a description of the vesting terms of the stock awards, see the narrative disclosure following the 2013 Grants of Plan-Based Awards table on page 51 and the footnotes to the 2013 Outstanding Equity Awards at Fiscal Year End table on page 53 of this proxy statement. Additional information regarding the assumptions used to calculate these amounts are incorporated by reference to Note 12 to the Company’s Form 10-K.

Option Awards. The option awards column represents the aggregate grant date fair value of stock option awards granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. The following table provides the assumptions underlying this estimation:


	Stock Option Grant Date
	August 2, 2010			August 1, 2011			August 24, 2011			July 30, 2012			October 29, 2012
Fair value of options granted	$	8.17		$	6.89		$	6.53		$	7.23		$	8.05
Assumption used:
Risk-free rate⁽¹⁾		2.25	%		1.83	%		1.83	%		0.91	%		1.06	%
Expected volatility⁽²⁾		26.03	%		25.95	%		25.95	%		26.31	%		26.18	%
Expected life⁽³⁾		6.3 yrs			6.4 yrs			6.4 yrs			6.5 yrs			6.5 yrs
Dividend yield⁽⁴⁾		2.40	%		2.78	%		2.78	%		2.68	%		2.50	%

⁽¹⁾	The risk-free rate is based on the grant date yield of a zero-coupon U.S. Treasury bond whose maturity period equals or approximates the expected term of the option.

⁽²⁾	The expected volatility is based on a blend of historical volatility and an implied volatility of the Company’s common stock. Implied volatility is based on market traded options of the Company’s common stock.

⁽³⁾

The Company analyzes historical employee stock option exercise and termination data to estimate the expected life assumption. The Company calculates the expected life assumption using the midpoint scenario, which combines historical exercise data with hypothetical exercise data, as the Company believes this data currently represents the best estimate of the expected life of a new employee option.

⁽⁴⁾	The dividend yield rate is calculated by dividing the Company’s annual dividend, based on the most recent quarterly dividend rate, by the closing stock price on the grant date.

For a description of the vesting terms of the option awards, see the narrative disclosure following the 2013 Grants of Plan-Based Awards table on page 51 and the footnotes to the 2013 Outstanding Equity Awards at Fiscal Year End table on page 53 of this proxy statement. Additional information regarding the assumptions used to calculate these amounts are incorporated by reference to Note 12 to the Company’s Form 10-K.

Non-Equity Incentive Plan Compensation. This column reflects the MIP and LTPP payments earned by the NEOs during the applicable fiscal year(s) and payable subsequent to fiscal year end, including any amounts deferred under the Capital Accumulation Plan (which are included in the 2013 Nonqualified Deferred Compensation table on page 58 of this proxy statement). The table below reflects the compensation received by the NEO under each plan for the performance period ending through fiscal year 2013.


Name	MIP		2011-2013 LTPP		Total Non-Equity Incentive Plan Compensation
Omar Ishrak	$	2,417,098	$	—	$	2,417,098
Gary L. Ellis	$	793,525	$	509,054	$	1,302,580
Christopher J. O’Connell	$	659,550	$	509,054	$	1,168,604
Michael J. Coyle	$	701,359	$	509,054	$	1,210,414
D. Cameron Findlay	$	627,639	$	457,920	$	1,085,559

For a more detailed description of the terms of the non-equity incentive plan awards, see page 36 of the Compensation Discussion and Analysis and the narrative disclosure following the 2013 Grants of Plan-Based Awards on page 51 of this proxy statement.

Change in Pension Value and Nonqualified Deferred Compensation Earnings. This column includes the estimated aggregate increase in the accrued pension benefit under Medtronic’s defined benefit pension plan. The change in the present value of the accrued pension benefit is impacted by variables such as additional years of service, age and the discount rate used to calculate the present value of the change. Mr. Ishrak’s value is currently an unvested benefit and subject to additional service requirements, please see the Pension Benefits table for more information. The pension values are calculated based on the accrued pension benefits (qualified plan and NRPS) as of April 26, 2013, and the fiscal year-end 2013 ASC 715 disclosure assumptions. For fiscal year 2013, the change in pension value reflects not only the increase due to additional service and pay for the year, but also a slight increase in present value due to the lower discount rate (4.55% for fiscal 2013 year-end; down from 5.05% in fiscal year 2012). Assumptions are described in Note 14 to our consolidated financial statements in our annual report for fiscal year 2013 accompanying this proxy statement.

All Other Compensation. The all other compensation column includes the following:


Name	Fiscal Year		Perquisites and Other Personal Benefits⁽¹⁾		Tax Gross-ups⁽²⁾		Registrant Contributions to Defined Contribution Plans⁽³⁾		Total
Omar Ishrak		2013	$	52,150	$	8,466	$	13,125	$	73,741
Gary L. Ellis		2013	$	24,060	$	1	$	13,125	$	37,186
Christopher J. O’Connell		2013	$	24,650	$	1	$	13,125	$	37,776
Michael J. Coyle		2013	$	24,000	$	1	$	60,548	$	84,549
D. Cameron Findlay		2013	$	24,000	$	1,232	$	57,696	$	82,928

⁽¹⁾

This column represents the aggregate incremental cost of the executives’ business allowances, physical exams, and relocation expenses. The value of perquisites and other personal benefits for Mr. Ishrak includes a $40,000 business allowance, relocation expenses and a reimbursement for expenses related to a physical exam. The value of perquisites and other personal benefits for Messrs. Ellis, Coyle, O’Connell, and Findlay includes a business allowance of $24,000 and for Messrs. Ellis and O’Connell the value also includes a reimbursement for expenses related to a physical exam. All relocation expenses are subject to a clawback requirement if the employee leaves the Company before the second anniversary of the employee’s start of employment, the employee would have to repay all relocation expenses to Medtronic. The Company occasionally allows its executives to use tickets for sporting and special events previously acquired by the Company when no other business use has been arranged. There is no incremental cost to the Company for the use.

⁽²⁾

Tax gross-ups for Mr. Ishrak are related to elements of his relocation expenses and are in accordance with Medtronic’s relocation policy. Tax gross-ups for Messrs. Ellis, Coyle, O’Connell, and Findlay are related to Medtronic’s company-wide Healthy Incentive Rewards Program available to all employees. Additionally, Mr. Findlay received a tax gross-up in connection with the administrative correction of imputed income related to life insurance. Tax gross-ups received by Messrs. Ishrak and Findlay are provided to all employees for payments related to relocation and corrective administration actions that are taxed as income.

⁽³⁾

This amount reflects the contribution by Medtronic to match contributions to the Medtronic, Inc. Savings and Investment Plan or 401(k) Plan. Medtronic matches employee contributions of up to 6% of eligible compensation. The plan makes a minimum contribution of $0.50 and a maximum contribution of $1.50, with any contribution over the minimum determined based on diluted EPS performance target levels. The fiscal year 2013 match of $0.875 was based on achievement of an adjusted diluted EPS of $3.69. Amounts for Mr. Findlay and Mr. Coyle also include $44,571 and $47,423, respectively, in Company contributions to the qualified defined contribution ($12,500 for each of Messrs. Findlay and Coyle) and nonqualified defined contribution plans ($32,071 for Mr. Findlay, $34,923 for Mr. Coyle). For additional information, see the 2013 Nonqualified Deferred Compensation table on page 58.

2013 GRANTS OF PLAN-BASED AWARDS

The following table summarizes all plan-based award grants to each of the NEOs during fiscal year 2013. Threshold amounts assume attainment of plan performance thresholds. You should refer to the Compensation Discussion and Analysis sections entitled “Annual Incentive Plan” on page 36 and “Long-Term Incentive Plan” beginning on page 38 to understand how plan-based awards are determined. A narrative description of the material factors necessary to understand the information in the table is provided below.


Name	Award Type	Grant Date		Approval Date		Estimated Future Payouts under Non-Equity Incentive Plan Awards ($)						Estimated Future Payouts Under Equity Incentive Plan Awards Target (# of shares)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Options Awards ($/Sh)		Grant Date Fair Value of Stock and Options Awards
Name	Award Type	Grant Date		Approval Date		Threshold		Target		Maximum						Exercise or Base Price of Options Awards ($/Sh)		Grant Date Fair Value of Stock and Options Awards
Omar Ishrak	MIP					$	327,666	$	1,965,600	$	3,931,200
	LTPP					$	704,250	$	2,817,000	$	5,634,000
	OPT		07/30/2012		06/21/2012										290,338		38.81	$	2,099,144
	PBRSU		07/30/2012		06/21/2012								72,585					$	2,817,024
Gary L. Ellis	MIP					$	107,572	$	645,300	$	1,290,600
	LTPP					$	200,000	$	800,000	$	1,600,000
	OPT		07/30/2012		06/21/2012										82,453		38.81	$	596,135
	OPT		10/29/2012		08/23/2012										2,404		41.60	$	19,352
	PBRSU		07/30/2012		06/21/2012								20,614					$	800,029
Christopher J. O’Connell	MIP					$	89,410	$	536,350	$	1,072,700
	LTPP					$	183,250	$	733,000	$	1,466,000
	OPT		07/30/2012		06/21/2012										75,548		38.81	$	546,212
	OPT		10/29/2012		08/23/2012										2,404		41.60	$	19,352
	PBRSU		07/30/2012		06/21/2012								18,913					$	734,014
Michael J. Coyle	MIP					$	95,077	$	570,350	$	1,140,700
	LTPP					$	183,250	$	733,000	$	1,466,000
	OPT		07/30/2012		06/21/2012										75,548		38.81	$	546,212
	OPT		10/29/2012		08/23/2012										2,404		41.60	$	19,352
	PBRSU		07/30/2012		06/21/2012								18,913					$	734,014
D. Cameron Findlay	MIP					$	85,084	$	510,400	$	1,020,800
	LTPP					$	150,000	$	600,000	$	1,200,000
	OPT		07/30/2012		06/21/2012										61,840		38.81	$	447,103
	OPT		10/29/2012		08/23/2012										2,404		41.60	$	19,352
	PBRSU		07/30/2012		06/21/2012								15,460					$	600,003

MIP = Annual performance-based plan award granted under the Medtronic, Inc. Executive Incentive Plan

LTPP = Long-term performance plan award granted under Medtronic, Inc. 2008 Stock Award and Incentive Plan

OPT = Nonqualified stock options granted under the Medtronic, Inc. 2008 Stock Award and Incentive Plan

PBRSU = Performance-based restricted stock units granted under the Medtronic, Inc. 2008 Stock Award and Incentive Plan

Estimated Future Payouts Under Non-Equity Incentive Plan Awards. Amounts in these columns represent future potential cash payments under the 2013-2015 LTPP and 2013 MIP at threshold, target and maximum performance. The LTPP provides for annual grants that are earned over a three-year period. Awards under the LTPP can range from 50% to 200% of the target grant based on the Company’s 3-year performance relative to the following metrics: three-year cumulative compounded annual revenue growth rate and ROIC (rolling 12-month profit after tax excluding one-time items plus interest expense net of tax all divided by the difference of Average Asset Base and Average Non-Interest Bearing Liabilities) for each year averaged over the three-year period. Earned payouts under the MIP can range from 50% to 200% of the target grant based on Company performance relative to annual revenue growth, diluted EPS and a cash flow measure as described on page 37 of this proxy statement in fiscal year 2013. The maximum dollar value that may be paid to any participant in qualified performance-based awards denominated in cash in any fiscal year is $10 million. Both the MIP and LTPP have separate diluted EPS goals to support the Company’s compliance with Section 162(m).

Estimated Future Payouts Under Equity Incentive Plan Awards. Amounts in this column represent grants of performance-based restricted stock units (PBRSUs). PBRSUs vest 100% on the third anniversary of the date of grant provided Medtronic achieves a minimum three-year cumulative diluted EPS threshold growth rate. Unvested PBRSUs receive dividend equivalent units (“DEUs”) which are credited and added to the share balance. DEUs are only paid to the extent the underlying PBRSUs are earned.

All Other Option Awards/Exercise or Base Price of Option Awards. The exercise or base price of the July 30, 2012 stock option grant represents the closing market price of Medtronic common stock on the date of grant. The exercise or base price of the October 29, 2012 stock option grant represents the closing stock price of Medtronic common stock on October 26, 2012. The NYSE was closed on October 29, 2012 due to the impact of Hurricane Sandy. As provided in the shareholder approved Medtronic, Inc. 2008 Stock Award and Incentive Plan, if Medtronic shares were not traded on the grant date, the exercise or base price will be the closing stock price of Medtronic common stock on the next preceding date on which shares were traded. Option awards vest 25% on each anniversary of the date of grant over a four year period.

Grant Date Fair Value of Stock and Option Awards. This column represents the grant date fair value of each equity award granted in fiscal year 2013 computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. For a discussion of the assumptions used in calculating the amount recognized for stock options granted on July 30, 2012 and October 29, 2012, see page 49 of this proxy statement. Additional information regarding the assumptions used to calculate these amounts are incorporated by reference to Note 12 to the Company’s Form 10-K.

2013 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The table below reflects all outstanding equity awards made to each of the NEOs that were outstanding at the end of fiscal year 2013. The market or payout value of unearned shares, units or other rights that have not vested equals $46.36, which was the closing price of Medtronic’s common stock on the New York Stock Exchange on April 26, 2013, and for performance-based restricted stock units and for performance share plan awards presumes that the target performance goals are met.


	OPTION AWARDS										STOCK AWARDS
Name	Option Grant Date		Number of Securities Underlying Unexercised Options (#)				Option Exercise Price ($)		Option Expiration Date		Grant Date		Shares or Units of Stock That Have Not Vested				Equity Incentive Plan Awards: Unearned Shares, Units or Other Rights That Have Not Vested
Name	Option Grant Date		Exer- cisable		Unexer- cisable		Option Exercise Price ($)		Option Expiration Date		Grant Date		Number (#) ⁽¹⁾		Market Value ($)		Number (#) ⁽¹⁾		Market or Payout Value ($)
Omar Ishrak		08/24/2011		80,753		242,260		34.88		08/24/2021		06/13/2011		261,562		12,126,015
		07/30/2012		0		290,338		38.81		07/30/2022		06/13/2011						121,440		5,629,976
												08/24/2011						84,404		3,912,950
												07/30/2012						73,917		3,426,788
Gary L. Ellis		10/23/2003		32,602		0		46.01		10/23/2013		08/02/2010						19,034		882,414
		04/30/2004		4,246		0		50.46		04/30/2014		08/01/2011						23,973		1,111,368
		10/21/2004		30,000		0		50.00		10/21/2014		07/30/2012						20,992		973,201
		10/19/2005		37,011		0		56.74		10/19/2015
		10/30/2006		41,068		0		48.70		10/30/2016
		10/29/2007		41,868		0		47.77		10/29/2017
		10/27/2008		55,188		0		36.24		10/27/2018
		08/03/2009		37,584		12,528		35.92		08/03/2019
		08/02/2010		35,492		35,492		37.53		08/02/2020
		08/01/2011		22,936		68,808		34.88		08/01/2021
		07/30/2012		0		82,453		38.81		07/30/2022
		10/29/2012		0		2,404		41.60		10/29/2022
Christopher J. O’Connell		10/23/2003		30,429		0		46.01		10/23/2013		11/02/2009		7,529		349,046
		04/30/2004		1,982		0		50.46		04/30/2014		08/02/2010						19,034		882,414
		10/21/2004		28,000		0		50.00		10/21/2014		08/01/2011						21,995		1,019,691
		04/29/2005		11,423		0		52.70		04/29/2015		07/30/2012						19,260		892,896
		10/19/2005		17,625		0		56.74		10/19/2015
		10/30/2006		15,401		0		48.70		10/30/2016
		10/29/2007		17,794		0		47.77		10/29/2017
		10/27/2008		33,113		0		36.24		10/27/2018
		08/03/2009		25,056		8,352		35.92		08/03/2019
		11/02/2009		20,764		6,922		36.12		11/02/2019
		08/02/2010		35,492		35,492		37.53		08/02/2020
		08/01/2011		21,015		63,045		34.88		08/01/2021
		07/30/2012		0		75,548		38.81		07/30/2022
		10/29/2012		0		2,404		41.60		10/29/2022
Michael J. Coyle		02/01/2010		17,381		5,794		43.15		02/01/2020		02/01/2010		18,816		872,327
		08/02/2010		35,492		35,492		37.53		08/02/2020		08/02/2010						19,034		882,414
		08/01/2011		21,015		63,045		34.88		08/01/2021		08/01/2011						21,995		1,019,691
		07/30/2012		0		75,548		38.81		07/30/2022		07/30/2012						19,260		892,896
		10/29/2012		0		2,404		41.60		10/29/2022
D. Cameron Findlay		11/02/2009		33,222		11,075		36.12		11/02/2019		11/02/2009		22,586		1,047,086
		08/02/2010		31,974		31,975		37.53		08/02/2020		08/02/2010						17,122		793,790
		08/01/2011		17,202		51,606		34.88		08/01/2021		08/01/2011						17,979		833,526
		07/30/2012		0		61,840		38.81		07/30/2022		07/30/2012						15,744		729,877
		10/29/2012		0		2,404		41.60		10/29/2022

¹⁾	Amounts in these columns may include dividend equivalents that will be distributed upon distribution of the underlying awards.

The amounts shown in the column entitled “Shares or Units of Stock That Have Not Vested” of the 2013 Outstanding Equity Awards at Fiscal Year End table that correspond to a November 2, 2009, February 1, 2010 and June 13, 2011 grant date reflect time-based restricted stock unit awards that vest 100% on the fourth anniversary of the date of grant. The June 13, 2011 grant to Mr. Ishrak reflects a performance based

restricted stock unit award that vests 35% on the first anniversary and 21 2/3% on the second, third, and fourth anniversary of the date of the grant provided that the established minimum diluted EPS threshold is achieved. The amounts shown in the column entitled “Equity Incentive Plan Awards: Unearned Shares, Units or Other Rights That Have Not Vested” of the 2013 Outstanding Equity Awards at Fiscal Year End table that correspond to an August 2, 2010, August 1, 2011, August 24, 2011 and July 30, 2012 grant date reflect performance-based restricted stock or restricted stock unit awards that vest on the third anniversary of the date of grant provided that the established performance threshold for each award is achieved, except that the August 24, 2011 grant vests on August 1, 2014.

The table below shows the vesting schedule for all unexercisable options. All options vest on the anniversary of the grant date in the year indicated except Mr. Ishrak’s August 24, 2011 option grant which vests on the anniversary of August 1, 2011.


			VESTING SCHEDULE FOR UNEXERCISABLE OPTIONS
Name	Grant Date		2013		2014		2015		2016
Omar Ishrak		08/24/2011		80,753		80,753		80,754
		07/30/2012		72,584		72,585		72,584		72,585
Gary L. Ellis		08/03/2009		12,528
		08/02/2010		17,746		17,746
		08/01/2011		22,936		22,936		22,936
		07/30/2012		20,613		20,613		20,613		20,614
		10/29/2012		601		601		601		601
Christopher J. O’Connell		08/03/2009		8,352
		11/02/2009		6,922
		08/02/2010		17,746		17,746
		08/01/2011		21,015		21,015		21,015
		07/30/2012		18,887		18,887		18,887		18,887
		10/29/2012		601		601		601		601
Michael J. Coyle		02/01/2010				5,794
		08/02/2010		17,746		17,746
		08/01/2011		21,015		21,015		21,015
		07/30/2012		18,887		18,887		18,887		18,887
		10/29/2012		601		601		601		601
D. Cameron Findlay		11/02/2009		11,075
		08/02/2010		15,987		15,988
		08/01/2011		17,202		17,202		17,202
		07/30/2012		15,460		15,460		15,460		15,460
		10/29/2012		601		601		601		601


			VESTING SCHEDULE FOR UNVESTED RESTRICTED STOCK AND RSUS
Name	Grant Date		2013		2014		2015		2016
Omar Ishrak		06/13/2011		40,480		40,480		40,480
		06/13/2011						261,562
		08/24/2011				84,404
		07/30/2012						73,917
Gary L. Ellis		08/02/2010		19,034
		08/01/2011				23,973
		07/30/2012						20,992
Christopher J. O’Connell		11/02/2009		7,529
		08/02/2010		19,034
		08/01/2011				21,995
		07/30/2012						19,260
Michael J. Coyle		02/01/2010				18,816
		08/02/2010		19,034
		08/01/2011				21,995
		07/30/2012						19,260
D. Cameron Findlay		11/02/2009		22,586
		08/02/2010		17,122
		08/01/2011				17,979
		07/30/2012						15,744

Mr. Ellis also owns 32,830 vested and deferred stock units including associated dividend equivalents, respectively, which will be distributed following his retirement.

2013 OPTION EXERCISES AND STOCK VESTED

The table below includes information related to options exercised by each of the NEOs and restricted stock awards that have vested during fiscal year 2013. The table also includes the value realized for such options and restricted stock awards. For options, the value realized on exercise is equal to the difference between the market price of the underlying shares at exercise and the exercise price of the options. For stock awards, the value realized on vesting is equal to the market price of the underlying shares at vesting.


	OPTION AWARDS				STOCK AWARDS
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting⁽¹⁾ (#)		Value Realized on Vesting⁽¹⁾ ($)
Omar Ishrak						63,787	$	2,369,687
Gary L. Ellis						14,954	$	595,319
Christopher J. O’Connell						7,477	$	297,659
Michael J. Coyle		—		—		—		0
D. Cameron Findlay		—		—		—		0

2013 PENSION BENEFITS

The table below includes information with respect to Medtronic’s pension plan for each of the NEOs as of April 26, 2013, which is the measurement date used for financial statement reporting purposes. A narrative description of the material factors necessary to understand the information in the table is provided below.


Name	Plan Name	Number of Years of Credited Service		Present Value of Accumulated Benefit ($)⁽¹⁾			Payments During Last Fiscal Year ($)
Omar Ishrak	Medtronic, Inc. Personal (Personal Pension Account)		1.83	$	25,016	⁽²⁾	$	0
	Medtronic, Inc. NRPS		1.83	$	199,364	⁽²⁾	$	0
Gary L. Ellis	Medtronic, Inc. Retirement Plan
	(Medtronic Retirement Plan)		23.42	$	558,648		$	0
	Medtronic, Inc. NRPS		23.42	$	1,978,887		$	0
Christopher J. O’Connell	Medtronic, Inc. Retirement Plan
	(Medtronic Retirement Plan)		18.75	$	272,549		$	0
	Medtronic, Inc. NRPS		18.75	$	734,621		$	0
Michael J. Coyle⁽³⁾
D. Cameron Findlay⁽³ ⁾

⁽¹⁾

The present value of the accumulated benefits are calculated using the assumptions described in Note 14 to our consolidation financial statements in our annual report for fiscal year 2013 accompanying this proxy statement. Further, in accordance with the disclosure requirements the accumulated benefit is calculated using the retirement age at which the benefit is unreduced under the plan (i.e., age 65). Only the Medtronic Retirement Plan component of the Medtronic, Inc. Retirement Plan is reduced for early commencement if the benefit is commenced before the normal retirement age of 65. The Personal Pension Account Plan is an account based plan and therefore is not reduced for early commencement. Please see below for additional detail.

⁽²⁾	Mr. Ishrak’s benefit under the Medtronic, Inc. Retirement Plan (Personal Pension Account) and the Medtronic, Inc. NRPS is not vested until the 3-year service requirement has been met.

⁽³⁾	Messrs. Findlay and Coyle do not participate in the Company’s defined benefit pension plans.

The Medtronic, Inc. Retirement Plan consists of two types of benefits, the Medtronic Retirement Plan (MRP) and the Personal Pension Account (PPA). Employees hired prior to May 1, 2005 had the option of continuing in the MRP or electing to participate in one of the new plans. The MRP is the final average pay component of the Medtronic, Inc. Retirement Plan. Employees hired on or after May 1, 2005 choose within 60 days of their hire date to participate in one of the new retirement plans: the Personal Pension Account or the Personal Investment Account (PIA). The PPA is a cash balance component of the Medtronic, Inc. Retirement Plan, and the PIA is a component of the Medtronic, Inc. 401(k) Plan.

Messrs. Ellis and O’Connell participate in the MRP component of the Medtronic, Inc. Retirement Plan. The Medtronic, Inc. Retirement Plan is a funded, tax-qualified, noncontributory defined-benefit pension plan that covers all eligible employees employed with the Company prior to April 30, 2005 who elected to remain in the MRP, including the Messrs. Ellis and O’Connell. Effective May 1, 2005, the Company froze the MRP to new entrants and provided all eligible employees the option of continuing to accrue retirement benefits under the MRP or participate in one of two new options being offered. All eligible NEOs hired prior to May 1, 2005, elected to continue participation in the MRP. Benefits under the MRP are based upon the employee’s years of credited service and the average of the employee’s highest five consecutive years of covered compensation during the employee’s career while covered under the MRP. Employees have the option of providing for a survivorship benefit upon the employee’s death by making the appropriate election at the time of retirement. Covered compensation includes

base salary, formula bonus and incentive plan payments, sales commissions, salary reduction contributions (such as to a cafeteria plan or medical plan) or salary continuation payments for short-term disability, but excludes compensation paid under the LTPP or the performance share plan (the predecessor to the LTPP). In addition, the IRS limits the amount of covered compensation that can be used in the benefit calculation. For the most recent plan year, that limit is $250,000. Normal retirement age under the plan is age 65. Eligible employees may retire upon reaching age 55 with at least ten years of service or upon reaching age 62 without regard to years of service. Any retirement prior to normal retirement age is considered “early retirement” and the benefit includes a reduction for early commencement of benefits.

Benefits under the MRP are calculated as a monthly annuity by taking 40% of the final average covered compensation less a social security allowance (which varies by individual based upon year of birth) and multiplying this result by years of credited service under the MRP. That result is then divided by 30 to yield the benefit at normal retirement age, with an early retirement factor applied to calculate the early retirement benefit. The age at the time that benefits are commenced is used to determine the early retirement reduction amount. The maximum reduction amount is 50% and applies if benefits are commenced at age 55. Employees with over 30 years of service receive 0.5% for every year of credited service in excess of 30 years.

Mr. Ishrak is a participant in the Personal Pension Account (PPA) component of the Medtronic Inc. Retirement Plan. The PPA is a tax-qualified cash balance defined benefit pension plan available to employees hired after April 30, 2005. The Company contributes 5% of eligible compensation for each year of participation into the participant’s account. Eligible compensation under the PPA matches the MRP discussed above. Additionally, each year a participant’s account will earn interest at a rate equal to the 10-year U.S. Treasury bond rate. For the fiscal year ended April 26, 2013 the interest rate was equal to 2.17%. Each participant’s account has a 3-year vesting requirement. The PPA value will be forfeited if the participant leaves the Company before the 3-year service requirement. Vested benefits in the PPA are portable and participants may receive distributions for any purpose, but may then be subject to taxation. A PPA participant leaving the Company may receive distributions in the following ways: 1) roll over benefit into another tax-qualified plan or certain IRAs; 2) lump-sum cash payment; 3) leave the PPA balance in the plan (which will continue to earn returns equal to the 10-year U.S. Treasury bond rate); and 4) various monthly annuity options, including single life, ten-year certain and joint and survivor options.

The benefits currently paid under the Medtronic, Inc. Retirement Plan are limited to an annual maximum of $200,000, in accordance with IRS requirements. The Company also has an unfunded Nonqualified Retirement Plan Supplement (the “NRPS”) that provides an amount substantially equal to the difference between the amount that would have been payable to the executive under the Medtronic, Inc. Retirement Plan in the absence of legislation limiting pension benefits and earnings that may be considered in calculating pension benefits and the amount actually payable under the plan. This is available to all participating employees whose income or benefits exceed the IRS maximum, not just the executive officers. Compensation used in the calculation of the NRPS benefit includes eligible compensation in excess of the IRS limitation and amounts deferred (excluding amounts paid and deferred under the LTPP or the performance share plan) pursuant to the Capital Accumulation Plan. NRPS benefits are determined based on the qualified plan formula that the executive elected to participate in. The NRPS benefit is calculated based on the MRP or PPA respective formula. The NRPS benefit calculated on the MRP formula is reduced based on the participant’s age at the end of the month following separation from service (within the meaning of Section 409A of the Internal Revenue Code, generally, retirement, termination of employment, or significant reduction in work schedule). Upon separation from service, the amount of retirement benefits earned under the NRPS is calculated. The monthly benefit is the sum of the monthly principal amount and the monthly interest. The monthly interest is determined based on a declining balance schedule using an interest rate of 6%. Upon separation from service, the amount of retirement benefits earned under the NRPS are calculated. If the lump sum value is less than $100,000, it is paid out as a lump sum six months after separation from service. If the lump

sum value exceeds $100,000, the value is paid out over a 15 year period in the form of a monthly annuity commencing six months after the separation from service. In the event of the employee’s death prior to the completion of the 15 year payment cycle, any remaining benefits from the NRPS are payable per the beneficiary designation on record. If a beneficiary is not named the benefit is payable to the employee’s surviving spouse, if there is no surviving spouse, to the children or if no survivors, the estate.

2013 NONQUALIFIED DEFERRED COMPENSATION


Name		Executive Contributions in Last FY⁽²⁾		Registrants Contributions in Last FY⁽³⁾		Aggregate Earnings in Last FY⁽⁴⁾		Aggregate Withdrawals/ Distributions		Aggregate Balance at Last FYE⁽⁵⁾
Omar Ishrak⁽¹⁾	CAP	$	0	$	0	$	0	$	0	$	0
	NRPS	$	0	$	0	$	0	$	0	$	0
	RSUs	$	0	$	0	$	0	$	0	$	0
	ESOP	$	0	$	0	$	0	$	0	$	0
Gary L. Ellis	CAP	$	491,654	$	0	$	116,486	$	0	$	1,324,355
	NRPS	$	0	$	0	$	0	$	0	$	0
	RSUs	$	0	$	0	$	314,974	$	0	$	1,522,003
	ESOP	$	0	$	0	$	12,620	$	0	$	60,982
Christopher J. O’Connell	CAP	$	0	$	0	$	192,222	$	0	$	1,927,437
	NRPS	$	0	$	0	$	0	$	0	$	0
	RSUs	$	0	$	0	$	0	$	0	$	0
	ESOP	$	0	$	0	$	3,748	$	0	$	18,120
Michael J. Coyle	CAP	$	693,558	$	0	$	42,921	$	0	$	1,000,580
	NRPS	$	0	$	34,923	$	6,713	$	0	$	105,899
	RSUs	$	0	$	0	$	0	$	0	$	0
	ESOP	$	0	$	0	$	0	$	0	$	0
D. Cameron Findlay⁽¹⁾	CAP	$	0	$	0	$	0	$	0	$	0
	NRPS	$	0	$	32,071	$	10,991	$	0