SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MEDTRONIC, INC.
(Name of Registrant as Specified in Its Charter)
CAROL E. MALKINSON
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] 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) Filing party:
(4) Date filed:
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
PRELIMINARY COPY
NOTICE OF 1995
ANNUAL MEETING AND
PROXY STATEMENT
MEDTRONIC, INC.
7000 CENTRAL AVENUE N.E.
MINNEAPOLIS, MINNESOTA 55432
[LOGO]
[LOGO]
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
Telephone: 612/574-4000
July 26, 1995
Dear Shareholder:
You are cordially invited to join us for our Annual Meeting of Shareholders
to be held this year on Wednesday, August 30, 1995, at 10:30 a.m. (CDT) at
Medtronic's Corporate Center at its Rice Creek facility, 7000 Central Avenue
N.E., Minneapolis (Fridley), Minnesota.
The Notice of Annual Meeting of Shareholders and the Proxy Statement that
follow describe the business to be conducted at the meeting. We will also
report on matters of current interest to our shareholders.
Whether you own a few or many shares of stock, it is important that your
shares be represented. If you cannot personally attend, we encourage you to
make certain that you are represented at the Meeting by signing the
accompanying Proxy card and promptly returning it in the enclosed envelope.
Sincerely,
/s/ Winston R. Wallin /s/ William W. George
Winston R. Wallin William W. George
Chairman of the Board President and Chief Executive Officer
PRELIMINARY COPY
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
WEDNESDAY, AUGUST 30, 1995
To Our Shareholders:
The 1995 Annual Meeting of Shareholders of Medtronic, Inc. will be held
Wednesday, August 30, 1995, at the Medtronic, Inc. Corporate Center at its
Rice Creek facility, 7000 Central Avenue N.E., Minneapolis (Fridley),
Minnesota, at 10:30 a.m. (CDT) for the following purposes:
1. To elect five Class III directors for three-year terms.
2. To approve an amendment to Medtronic's Restated Articles of
Incorporation to increase the number of authorized shares of Common
Stock from 200,000,000 to 800,000,000.
3. To approve adoption of the 1995 Employees Stock Purchase Plan.
4. To approve appointment of Price Waterhouse LLP as the Company's
independent auditors.
5. To take action on any other business that may properly be considered
at the Meeting or any adjournment thereof.
These items are more fully described in the following pages of the Proxy
Statement.
Shareholders of record at the close of business on July 7, 1995 will be
entitled to vote at the Meeting and any adjournments of the Meeting.
By Order of the Board of Directors,
/s/ Ronald E. Lund
Ronald E. Lund
Secretary
Approximate Date of Mailing
Proxy Material: July 26, 1995
YOUR VOTE IS IMPORTANT.
PLEASE DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
PRELIMINARY COPY
[LOGO] MEDTRONIC, INC.
7000 CENTRAL AVENUE N.E.
MINNEAPOLIS, MINNESOTA 55432
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 30, 1995
The Board of Directors of Medtronic, Inc. ("Medtronic" or the "Company") is
soliciting the accompanying proxy for the Annual Meeting of Shareholders of
Medtronic to be held on August 30, 1995.
A proxy card is enclosed. In order to register your vote, complete, date and
sign the proxy card and return it in the envelope supplied.
When stock is registered in the name of more than one person, each such
person should sign the proxy. If the shareholder is a corporation, the proxy
should be signed in its corporate name by an executive or other authorized
officer. If signed as attorney, executor, administrator, trustee, guardian,
custodian or in any other representative capacity, the signer's full title
should be given.
Shareholders are entitled to one vote for each share of Medtronic Common
Stock, $.10 par value, they hold of record as of the close of business on
July 7, 1995. On that date, shares of Medtronic Common Stock were
outstanding. A quorum (a majority of the outstanding shares) must be
represented at the Meeting in person or by proxy to transact business.
Shares represented by a properly executed proxy received by Medtronic prior
to the Meeting and not revoked will be voted in accordance with the
instructions of the shareholder or, if no instructions are indicated, in
accordance with the recommendations of the Board of Directors. A proxy may be
revoked at any time before it is exercised by written revocation to the
Corporate Secretary of Medtronic or by filing a new written proxy with the
Corporate Secretary.
ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES
The Board of Directors is divided into three classes. The members of each
class are elected to serve three-year terms with the terms of office of each
class ending in successive years. F. Caleb Blodgett, Arthur D. Collins, Jr.,
Antonio M. Gotto, Jr., M.D., Thomas E. Holloran, and Winston R. Wallin are
the nominees for election to the Board as Class III directors to serve until
the 1998 annual meeting or until their successors are elected and qualified.
All of the nominees are currently directors and were elected to the Board of
Directors by the shareholders except for Arthur D. Collins, Jr. who was
elected by the Board on August 31, 1994.
All of the nominees have indicated a willingness to serve if elected.
However, if any nominee becomes unable to serve before the election, the
shares represented by the proxy cards may be voted for a substitute
designated by the Board, unless an instruction to the contrary is indicated
on the proxy card.
THE BOARD RECOMMENDS A VOTE FOR ELECTING THE NOMINEES.
DIRECTOR NOMINEES -- CLASS III
(TERM ENDING 1998)
[PHOTO] Consultant since May 1992. Vice Chairman
F. CALEB BLODGETT, age 68 of General Mills, Inc. (consumer foods and
Director since 1976 restaurants) from January 1981 to May 1992
Class III Director and Chief Financial and Administrative
Term expires 1995 Officer of such company from November 1985
to May 1992, when he retired. Also a
director of Northwestern National Life
Insurance Company, ReliaStar Financial
Corp., Allina Health System, and Waldorf
Corporation; a trustee of Beloit College.
[PHOTO] Medtronic's Chief Operating Officer since
ARTHUR D. COLLINS, JR., age 47 January 1994; Executive Vice President of
Director since 1994 the Company and President of Medtronic
Class III Director International from June 1992 to January
Term expires 1995 1994. Corporate Vice President of Abbott
Laboratories (health care products) from
October 1989 to May 1992 and Divisional
Vice President of that company from May
1984 to October 1989. Held various
management positions both in the U.S. and
Europe during his 14 years with Abbott.
Also a director of Tennant Company and
GalaGen Inc.
[PHOTO] Chairman and Professor of the Department
ANTONIO M. GOTTO, JR., M.D., age 59 of Medicine since 1977 and J. S.
Director since 1992 Abercrombie Chair, Atherosclerosis and
Class III Director Lipoprotein Research, since 1976 at Baylor
Term expires 1995 College of Medicine and Methodist
Hospital. Director and principal
investigator, Specialized Center of
Research in Arteriosclerosis, National
Heart, Lung and Blood Institute; and
president, International Atherosclerosis
Society. Also a director of The Upjohn
Company.
[PHOTO] Professor, Graduate School of Business,
THOMAS E. HOLLORAN, age 65 University of St. Thomas, St. Paul,
Director since 1960 Minnesota since June 1985; Chairman,
Class III Director Minneapolis-St. Paul Metropolitan Airports
Term expires 1995 Commission, from February 1989 to January
1991; Chairman of the Board of Directors
and Chief Executive Officer of
Inter-Regional Financial Group, Inc.
(holding company for various financial
enterprises) from 1976 to June 1985. Also
a director of Flexsteel Industries, Inc.,
MTS Systems Corp., ADC Telecommunications
Inc., National City Bank of Minneapolis,
National City Bancorporation and Space
Center Company; chairman and a director of
Malt-O-Meal Company and the Bush
Foundation; and a director of the
Minnesota Center for Corporate
Responsibility.
[PHOTO] Medtronic's Chairman of the Board since
WINSTON R. WALLIN, age 69 January 1986 and Chief Executive Officer
Director since 1978 from June 1985 to April 1991; President of
Class III Director the Company from June 1985 to March 1989;
Term expires 1995 Vice Chairman of The Pillsbury Company
(international food company) from March
1984 to June 1985; President and Chief
Operating Officer of that company from
1977 to 1984. Also a director of Bemis
Company, Inc., Supervalu, Inc., and
Cargill, Inc., and Chairman of the Board
of Trustees of Carleton College.
BOARD MEMBERS CONTINUING IN OFFICE -- CLASS I
(TERM ENDING 1996)
[PHOTO] Chairman and owner of Rosemount Office
VERNON H. HEATH, age 66 Systems, Inc. (manufacturer of open office
Director since 1983 furniture systems) since October 1994 and
Class I Director a consultant since February 1994. Chairman
Term expires 1996 of Rosemount Inc. (measurement and control
instruments) from 1986 until retirement in
February 1994, and President and Chief
Executive Officer from July 1968 until
retirement in October 1991. Also a
director of Supervalu Inc., a Life
Director of Sister Kenny Institute, a
trustee of the University of Minnesota
Foundation and a director of the Courage
Center.
[PHOTO] Executive Vice President and Chief
EDITH W. MARTIN, PH.D., age 50 Technology Officer of Student Loan
Director since 1993 Marketing Association (Sallie Mae) from
Class I Director September 1994 to present; Vice President
Term expires 1996 and Chief Information Officer of
International Telecommunications Satellite
Organization (INTELSAT) (operates global
satellite system for domestic and
international information services) from
July 1992 to September 1994; Vice
President, High Technology Center, The
Boeing Company, October 1984 to June 1992;
Deputy Undersecretary of Defense for
Research and Advanced Technology, 1982 to
1984; Executive Director, Government
Systems Division, Control Data
Corporation, 1980 to 1982; and Director,
Computer Science and Technology
Laboratory, Georgia Institute of
Technology, 1976 to 1980. Also a director
of Immunex Corporation and Information
Resources, Inc., a member of the Steering
Committee of the Scottish Collaborative
Initiative on Optoelectronic Sciences and
the External Advisory Committee of
Mechanical and Electronic Engineering
Division of Los Alamos National
Laboratory, a fellow of the Institute of
Electrical and Electronic Engineers and a
director of The Challenger Center.
[PHOTO] Vice Chairman of Medtronic since July 1988
GLEN D. NELSON, M.D., age 58 and Executive Vice President from
Director since 1980 September 1986 to July 1988; Chairman and
Class I Director Chief Executive Officer of American
Term expires 1996 MedCenters, Inc. (HMO management) from
July 1984 to August 1986; President and
Chairman of the Board of Trustees of Park
Nicollet Medical Center (medical services)
from 1975 to 1986; Surgeon at Park
Nicollet Medical Center from 1969 to 1986.
Also a director of Northwestern National
Life Insurance Company, ReliaStar
Financial Corp., The St. Paul Companies,
Inc., Carlson Holdings, Inc., and Telcom
Systems Services, Inc.
[PHOTO] Chairman of the Board of Stericycle, Inc.
JACK W. SCHULER, age 54 (medical waste treatment and recycling
Director since 1990 business) since 1990; President and Chief
Class I Director Operating Officer of Abbott Laboratories
Term expires 1996 (health care products) from January 1987
to August 1989; a director of that company
from April 1985 to August 1989 and
Executive Vice President from January 1985
to January 1987. Also a director of
Somatogen, Inc. and Chiron Corporation.
[PHOTO] Private venture capital investor since
GERALD W. SIMONSON, age 65 June 1978; President and Chief Executive
Director since 1962 Officer of Omnetics Connector Corporation
Class I Director (microminiature connectors) since March
Term expires 1996 1991; President and Chief Executive
Officer of Unisource Corporation (general
partner of real estate limited
partnerships and equity investments) since
January 1980. Also a director of Unisource
Corporation, Northwest Teleproductions,
Inc., The Chromaline Corporation and
Winthrop Resources Corporation, and
Chairman of the Board of Fairview Hospital
and Healthcare Services.
BOARD MEMBERS CONTINUING IN OFFICE -- CLASS II
(TERM ENDING 1997)
[PHOTO] Medtronic's President and Chief Executive
WILLIAM W. GEORGE, age 52 Officer since May 1991; President and
Director since 1989 Chief Operating Officer from March 1989 to
Class II Director April 1991. President, Honeywell Space and
Term expires 1997 Aviation Systems (products for commercial
and military aviation markets and space
and satellite applications), from December
1987 to March 1989; President, Honeywell
Industrial Automation and Control, from
May 1987 to December 1987 and Executive
Vice President of that business from
January 1983 to May 1987. Also a director
of Dayton Hudson Corporation, Valspar
Corporation, The Toro Company and Allina
Health System; and a director of the
Health Industry Manufacturers Association.
[PHOTO] Director, Section of Health and Science
BERNADINE P. HEALY, M.D., age 50 Policy, The Page Center, The Cleveland
Director since 1993 Clinic Foundation, since July 1995.
(and 1987-1991) Physician affiliated with The Cleveland
Class II Director Clinic Foundation (nonprofit medical
Term expires 1997 research organization) from July 1993 to
June 1994; Director of the National
Institutes of Health from April 1991 to
June 1993; Chairman of the Research
Institute of The Cleveland Clinic
Foundation from November 1985 to April
1991; President, the American Heart
Association, National Center, from 1988 to
1989; Deputy Director of Office of Science
and Technology Policy, Executive Office of
the United States President, from 1984 to
1985; Professor of Medicine, The Johns
Hopkins University School of Medicine,
from 1977 to 1984; a trustee of Battelle
Memorial Institute, the Hudson Institute
and the Brookings Institution.
[PHOTO] Consultant since February 1985; Vice
RICHARD L. SCHALL, age 65 Chairman of Dayton Hudson Corporation
Director since 1971 (retailing) from December 1977 to
Class II Director retirement in February 1985. Also a
Term expires 1997 director of EcoLab Inc., First Bank
System, Inc., CTL Credit, Inc. and Space
Center Company; a trustee of Santa Barbara
City College Foundation and a director of
the Santa Barbara Foundation Finance
Committee.
[PHOTO] Executive Officer of Allina Health System
GORDON M. SPRENGER, age 58 (health care delivery) since July 1994;
Director since 1991 Chief Executive Officer and director of
Class II Director HealthSpan Health Systems Corporation
Term expires 1997 (health care delivery) from September 1992
to July 1994; President and Chief
Executive Officer of LifeSpan, Inc.
(health care delivery) from 1982 to
September 1992; Chief Executive Officer of
Abbott-Northwestern Hospital from 1982 to
September 1992; President of
Abbott-Northwestern Hospital from 1982 to
1988. Member of Board of Regents, St. Olaf
College. Also a director of The St. Paul
Companies, Inc. and Chair Elect of the
Board of the American Hospital
Association.
[PHOTO] Professor Emeritus since March 1995, and
RICHARD A. SWALIN, PH.D., age 66 Professor from August 1984 to February 1995,
Director since 1980 Materials Science and Technology
(and 1973-1977) Management, The University of Arizona;
Class II Director consultant in technology management since
Term expires 1997 November 1987; President and Chief Executive
Officer of Arizona Technology Development
Corp. from February 1987 to November 1987;
Dean of the College of Engineering and Mines
at The University of Arizona from September
1984 to July 1987; Vice President of
Research and Development at Allied-Signal
Corp. from 1977 to 1984. Also a director
of BMC Corp.
The affirmative vote of a majority of the shares of Common Stock present in
person or by proxy and entitled to vote at the Meeting is necessary to elect
each director nominee. For this purpose, a shareholder voting through a proxy
who abstains with respect to the election of directors is considered to be
present and entitled to vote on the election of directors at the Meeting, and
is in effect a negative vote; but a shareholder (including a broker) who does
not give authority to a proxy to vote, or withholds authority to vote, on the
election of directors shall not be considered present and entitled to vote on
the election of directors.
BOARD AND BOARD COMMITTEE MEETINGS
During fiscal 1995, Medtronic's Board of Directors held a total of seven
Board meetings. Each director attended 75% or more of the total meetings of
the Board of Directors and Board committees on which the director served
(held during the period he or she served as a director). The standing
committees of the Board of Directors include the Audit Committee, the
Compensation Committee, the Finance Committee, the Corporate Governance
Committee and the Technology and Quality Committee.
AUDIT COMMITTEE. The Audit Committee held four meetings in fiscal 1995.
Committee members are Gotto, Schall, Schuler, Sprenger, Swalin (Chair) and
Wallin. The committee reviews Medtronic's annual financial statements; makes
recommendations regarding Medtronic's independent auditors and scope of
auditor services; reviews the adequacy of accounting and audit policies,
compliance assurance procedures and internal controls; reviews nonaudit
services performed by auditors to maintain auditors' independence; and
reports to the Board of Directors on disclosure adequacy and adherence to
accounting principles.
COMPENSATION COMMITTEE. The Compensation Committee held two meetings in
fiscal 1995. Committee members are Blodgett, Healy, Heath, Holloran (Chair),
Martin and Simonson. The committee reviews compensation philosophy and major
compensation and benefits programs for employees; administers certain stock
and benefit plans; and reviews executive officers' compensation.
FINANCE COMMITTEE. The Finance Committee held four meetings in fiscal 1995.
Committee members are Blodgett (Chair), Heath, Holloran, Schall, Simonson and
Sprenger. The committee reviews and makes recommendations regarding financial
policies and performance objectives as developed by management, including
review of Medtronic's annual and long-range operating plans; assists
management in evaluation of major acquisitions and divestitures from a
financial perspective; reviews changes in capital structure; and reviews
banking relationships, insurance coverage on assets, tax strategies and
financial performance and related matters pertaining to Medtronic's employee
pension and profit sharing plans.
CORPORATE GOVERNANCE COMMITTEE. The Corporate Governance Committee (which
replaces the Nominating and Organization Committee) held four meetings in
fiscal 1995. Committee members are Blodgett, Gotto, Healy, Heath, Holloran,
Martin, Schall, Schuler, Simonson, Sprenger, Swalin and Wallin (Chair). The
committee addresses all matters of corporate governance; evaluates
qualifications and candidates for positions on the Board; evaluates the
performance of the chief executive officer; reviews major organization
changes and senior management performance; and reviews directors' cash
compensation.
The Corporate Governance Committee will consider nominees for Board membership
submitted by shareholders. Nominations by shareholders must be made pursuant to
timely notice in writing to the Corporate Secretary at 7000 Central Avenue N.E.,
Minneapolis, Minnesota 55432. Candidates for director should be persons with
broad training and experience in their chosen fields and who have earned
distinction in their activities. Notice by the shareholder to be timely must be
received not less than 50 nor more than 90 days prior to the meeting or, if less
than 60 days' disclosure of the meeting date is given, not later than the close
of business on the 10th day following the day on which notice of the meeting
date is mailed or public disclosure of such date is made. The notice shall set
forth certain information concerning such shareholder and the nominees,
including their names and addresses, their principal occupation or employment,
the capital stock of the Company which they beneficially own, such other
information as would be required in a proxy statement soliciting proxies for the
election of the nominees and the consent of each nominee to serve as a director
if so elected. The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
TECHNOLOGY AND QUALITY COMMITTEE. The Technology and Quality Committee held
three meetings in fiscal 1995. Committee members are Gotto (Chair), Healy,
Martin, Schuler, Swalin and Wallin. The committee reviews policies,
practices, processes and quality programs concerning technological and
product research; reviews efforts and investments in developing new products
and businesses; evaluates Medtronic's technological education and recognition
programs; and reviews quality process matters with Medtronic's chief quality
officer.
DIRECTOR COMPENSATION
Directors who are not employees of Medtronic receive an annual retainer of
$20,000, $1,000 per Board meeting, $750 per Board committee meeting, and
reimbursement for reasonable expenses of attending meetings. Each committee
chair receives an annual retainer of $3,000 in addition to the committee
meeting fee, and the Chairman of the Board receives an annual retainer of
$36,000.
The 1994 Stock Award Plan contains provisions permitting directors to elect
to receive all or part of their annual retainer and chairmanship fees in
restricted stock. Restrictions on the stock lapse upon termination as a
director due to death, disability, retirement, or a material change in
full-time position or responsibilities, or upon termination of service as a
director with the consent of the other directors or upon the occurrence of a
"change in control" of the Company as described under "Executive Compensation
- -- Employment and Change in Control Arrangements" below.
Under the Company's 1994 Stock Award Plan, each non-employee director
automatically receives an initial stock option grant for Common Stock on the
date he or she becomes a director and an additional automatic annual stock
option grant on the date of the Annual Meeting of Shareholders. The number of
shares subject to the initial stock option is determined by dividing an
amount, currently equal to $160,056 and increased each year proportionately
with any increase in annual retainer, by the per share closing price of the
Company's Common Stock on the New York Stock Exchange on the date of grant.
The number of shares subject to the annual stock option grant is determined
by a formula based on directors' fees. Each grant includes a related grant of
limited stock appreciation rights ("Limited Rights") which are exercisable
upon a "change in control" of the Company, as described under "Executive
Compensation -- Employment and Change in Control Arrangements" below. The
stock options become fully exercisable one year after the date of grant,
except that the option granted to a director upon being elected or appointed
by the Board will not become exercisable until the director has also been
elected to the Board by the shareholders. In addition, the plan provides that
non-employee directors who were formerly employees of the Company will
receive annual, but not initial, option grants.
In fiscal 1995, each non-employee director received an annual grant for 750
shares with an exercise price of $48.50; therefore, non-employee directors as
a group received options for a total of 9,000 shares of the Company's Common
Stock, and related limited rights.
Under the Company's retirement plan for directors, each director will receive
an annual benefit, equal to the director's annual retainer in effect when
leaving the Board, following retirement or other cessation of service as a
director of the Company. The annual benefit is payable for a period equal to
the years of service as a director up to a maximum of twenty years. No credit
is given for years of service as a director while an employee of the Company.
Each non-employee director also has group term life insurance in the amount
of $100,000 while a member of the Board.
As part of its overall program to promote charitable giving, the Company's
Foundation matches gifts by directors to qualified educational institutions
up to $4,000 per fiscal year. The Company also has a charitable contribution
plan for all directors of the Company. Upon the death of a director with five
or more years of service, the Company will contribute a total of $1,000,000
to one or more qualifying charitable institutions recommended by the director
and approved by the Compensation Committee. Directors derive no direct
financial benefit from this program since all charitable deductions accrue to
the Company.
Winston R. Wallin, Chairman of the Board of Directors of the Company and its
former chief executive officer, was paid an annual retainer of $36,000 as
Chairman of the Board in fiscal 1995. Mr. Wallin's duties include overseeing
Board governance activities, strengthening relationships between the Board
and management, and consulting with management on business and policy
matters. In addition to the services indicated, certain other non-cash
compensation and benefits were made available to Mr. Wallin. Earl E. Bakken,
Founder and Director Emeritus of the Company, retired from the Board in
August 1994 but continues to act as a consultant to the Company. He was paid
$100,000 for consulting services rendered to the Company during fiscal 1995.
Mr. Bakken's duties include representing the Company at major medical
conferences, maintaining relationships with key opinion leaders in the
cardiovascular field, and conducting speaking engagements including employee
meetings and new employee orientation. As Director Emeritus, Mr. Bakken may
attend Board meetings but has no right to vote. He also receives support
services, reimbursement for expenses and certain non-cash benefits. This
arrangement is renewable annually by the Company.
SHAREHOLDINGS OF CERTAIN OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS. To the best of Medtronic's knowledge, no
shareholder beneficially owned more than 5% of Medtronic's Common Stock as of
June 12, 1995.
MANAGEMENT SHAREHOLDINGS. The following table shows the number of shares of
Medtronic Common Stock beneficially owned by Medtronic's directors, executive
officers identified in the Summary Compensation Table below and all directors
and executive officers as a group as of June 12, 1995.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2)
F. Caleb Blodgett 44,040
Arthur D. Collins, Jr. 104,646
William W. George 384,934(3)
Antonio M. Gotto, Jr., M.D. 6,964
Bobby I. Griffin 96,676
Bernadine P. Healy, M.D. 3,944
Vernon H. Heath 23,340(4)
Thomas E. Holloran 44,040
Edith W. Martin, Ph.D. 5,847
Glen D. Nelson, M.D. 271,484
Robert L. Ryan 24,967
Richard L. Schall 56,161
Jack W. Schuler 13,389
Gerald W. Simonson 16,040
Gordon M. Sprenger 8,042
Richard A. Swalin, Ph.D. 16,050
Winston R. Wallin 362,720(5)
Directors and executive officers as
a group (21 persons) (2) 1,759,186
(1) 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 0.072% of the shares outstanding.
(2) Includes the following shares not currently outstanding but deemed
beneficially owned because of the right to acquire them pursuant to options
exercisable within 60 days (on or before August 11, 1995) as follows:
R.A. Swalin, 11,940 shares; 14,040 shares by each of V.H. Heath, T.E.
Holloran, and R.L. Schall; 3,800 shares by each of F.C. Blodgett, J.W.
Schuler and G.W. Simonson; A.M. Gotto, 6,028 shares; B.P. Healy, 1,944
shares; E.W. Martin, 5,170 shares; G.M. Sprenger, 6,560 shares; W.R.
Wallin, 88,758 shares; W.W. George, 271,000 shares; G.D. Nelson, 61,338
shares; A.D. Collins, 63,507 shares; R.L. Ryan, 13,044 shares; B.I.
Griffin, 16,178 shares; and all directors and executive officers as a
group, 686,311 shares.
(3) W.W. George disclaims beneficial ownership of 12,086 shares included in the
above table, which are held by the George Family Foundation, a charitable
trust of which he is one of the trustees.
(4) V.H. Heath disclaims beneficial ownership of 1,000 shares included in the
above table, which are held by the Heath Foundation, a charitable trust of
which he is the trustee.
(5) W.R. Wallin disclaims beneficial ownership of 4,000 shares included in the
above table, which are held by The Wallin Foundation, a charitable trust of
which he is one of the trustees.
SECTION 16 REPORTING. Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers to file reports of
ownership and changes in ownership of the Company's Common Stock with the
Securities and Exchange Commission and the New York Stock Exchange, and the
Company is required to identify any of those individuals who failed to file
such reports on a timely basis. To the best of the Company's knowledge, based
upon a review of such reports furnished to the Company and written
representations that no other reports were required, there were no late
filings required to be made by the Company's directors or executive officers
in fiscal 1995 that were not made, except for two late filings by Willard H.
Lewis. Mr. Lewis retired from the Company on October 31, 1994 and
inadvertently did not timely file reports of two post-retirement sales which
occurred in January and February 1995. Mr. Lewis subsequently reported the
sales in March 1995.
REPORT OF THE COMPENSATION COMMITTEE ON
FISCAL 1995 EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for establishing compensation policy and administering the
compensation programs of the Company's executive officers. The Committee is
comprised of six independent outside directors. The Committee generally meets
three times a year to review executive compensation policies, design of
compensation programs and individual salaries and awards for the executive
officers. The purpose of this report is to inform shareholders of the
Company's compensation policies for executive officers and the rationale for
the compensation paid to executive officers in fiscal 1995.
COMPENSATION PHILOSOPHY
The Company's compensation program is designed to motivate and reward
executives responsible for attaining the financial and strategic goals
essential for the Company's long-term success and continued growth in
shareholder value. The compensation program has been designed to provide a
competitive level of total compensation and offers incentive and equity
ownership opportunities directly linked to the Company's performance and
shareholder return. The Committee believes it is in the best interests of the
shareholders to reward executives when the Company's performance goals are
achieved and to provide significantly less compensation when these goals are
not met. Therefore, a significant portion of executive compensation is
comprised of "at risk" performance- and stock-based incentives.
Key objectives of the compensation program are to:
* Provide a strong, direct link between the Company's short- and long-term
financial and strategic goals and executive compensation.
* Motivate executives to achieve corporate, business unit and geographic
operating goals through an emphasis on performance-based compensation.
* Align the interests of executives with those of the Company's shareholders
by providing a significant portion of compensation in Company Common Stock.
* Provide competitive total compensation in order to attract and retain high
caliber key executives critical to the long-term success of the Company.
To maintain a competitive level of total executive compensation, the
Committee annually evaluates the compensation packages of certain competitor
companies. This group consists of competitors of the Company that derive at
least 25% of their revenues from medical devices or equipment. This analysis
provides the Committee with competitive data on the mix of compensation
elements, the balance of short- and long-term incentives, and overall
compensation levels. Differences in company size are adjusted through
statistical analysis. Most of the surveyed companies are included in the
industry group presented in the performance graph on page 14 of this Proxy
Statement. The Committee also uses annual cross-industry compensation data
from a survey of more than 300 U.S. manufacturing companies, including many
Fortune 500 companies and industry competitors. The Committee's goal is to
position the target total compensation for executive officers at the median
of the marketplace and the actual total compensation in excess of the median
when the Company outperforms the target performance goals. In fiscal 1995,
due to strong corporate operating performance and stock appreciation, the
actual total compensation of executive officers and of the chief executive
officer was generally above the median of the above-described peer and
cross-industry groups.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The key components of the Company's executive officer compensation program
are base salary, annual incentives and long-term incentives. These elements
are described below. In determining compensation, the Committee considers all
elements of an executive's compensation package.
BASE SALARY. The Committee annually reviews the base salaries of executive
officers. In determining appropriate salary levels, the Committee considers
individual performance, level of responsibility, scope and complexity of the
position, and salary levels for comparable positions at the peer and
cross-industry companies referenced above. In addition, in determining the
base salary for the chief executive officer, the Committee also considers
annual operating performance, strategic planning and succession planning for
senior management. Factors considered in determining base salary are not
assigned pre-determined relative weights.
Effective fiscal 1995, the Compensation Committee approved a merit increase of
10.4% for Mr. George. In determining the size of the merit increase, the
Committee took into consideration the strong operating performance of the
Company, which exceeded annual financial targets, Mr. George's leadership role
in the continuing development and implementation of the Company's strategic
goals, the compensation levels of the CEO positions in the surveyed companies
referenced above, and the fact that Mr. George, along with the other executive
officers named in the Summary Compensation Table below, elected not to receive a
merit increase for the previous fiscal year as a demonstration of the Company's
commitment to aggressively manage costs.
ANNUAL INCENTIVE AWARDS. The purpose of the Company's annual incentive plan
is to provide a direct annual financial incentive to executive officers and
key managers who achieve corporate operating, business unit and geographic
performance goals established under the Company's annual operating plan.
Executive officers are eligible for target awards under the annual incentive
plan ranging from 50% to 65% of base salary, with 65% in the case of the
chief executive officer. The size of the target award is determined by the
executive officer's position and competitive data for similar positions at
the peer and cross-industry companies referenced above. The Company sets
aggressive performance goals and, in keeping with the strong
performance-based philosophy, the resulting awards decrease or increase
substantially if actual Company performance fails to meet or exceeds targeted
levels. The awards can range from 0% to 150% of the target amounts, and a
threshhold level of performance is required before any payout occurs. For
fiscal 1995, corporate operating performance was assessed against a target
measure of corporate profit before taxes and after-tax return on net assets,
with these measures given respective weights of 60% and 40%. Business unit
and geographic financial performance were assessed against target measures of
earnings before interest and taxes, return on net assets, revenue, operating
expense, distribution expense and/or inventory turnover, with these measures
assigned respective weights that vary for each participant. In fiscal 1995,
all executive officers earned annual incentive compensation because their
respective performance levels were met or exceeded.
Mr. George's annual incentive compensation is based solely on the corporate
operating performance of the Company. For fiscal 1995, Mr. George earned an
award of 131.6% of the target level because actual corporate profit before taxes
and after-tax return on net assets (weighted at 60% and 40%, respectively)
substantially exceeded the performance targets.
In keeping with the Company's philosophy of encouraging stock ownership by
executives, in fiscal 1995 the Company introduced a program which allows
executives to elect to receive stock options in lieu of some or all of the cash
compensation earned under the annual incentive plan. By foregoing cash
compensation for stock options, the variable "at risk" component of the
executive's compensation package is extended and executives are further
motivated to perform to increase shareholder value over the long term. Under the
program, the amount of the stock option grant is determined by the Committee
based on consideration of a number of factors, including a present value
estimate of stock option value, the degree of risk incurred by the executive and
the positive economic impact to the Company.
For fiscal 1995, all of the executives named in the Summary Compensation Table
below elected to participate in the program. Mr. George elected to forego
$150,000 of annual incentive compensation and was granted an option to purchase
up to 8,067 shares at an exercise price of $74.375, which was the fair market
value of the Company's stock on April 28, 1995.
LONG-TERM INCENTIVE PLANS. Long-term incentives are provided to executive
officers primarily through the Company's performance share and stock option
programs.
The primary purpose of the performance share program is to motivate executive
officers to achieve the long-term performance goals of the Company. These
targets are based on the Company's long-term financial goals, with consideration
given to an historic analysis of the Company and peer group companies'
performance. The target award for each executive officer is also approved by the
Committee based on the scope and complexity of the position and competitive
compensation data.
The program provides the possibility of earning a payout in Company Common Stock
and cash at the end of a three-year performance cycle. As with short-term
incentive compensation, a threshold level of performance is required before
payout occurs. At the end of each three-year cycle, the award earned can range
from 0% to 180% of the initial performance share units awarded. Performance
targets are consistent with the Company's long-term financial goals and were
measured in fiscal 1995 based on three-year cumulative earnings per share and
three-year average after-tax return on net assets, with these two measures given
equal weight in determining performance level. The value of the award is
determined by the average price of the Company's Common Stock for the last 20
trading days of the performance cycle. At least half of the award must be paid
in the Company's stock, with the other half paid in cash or Company Common Stock
at the discretion of the Committee. The plan is thus aligned with both financial
results and shareholder value, as the percentage payout varies with financial
performance, and the value of the performance share units varies with the stock
price.
For the three-year cycle ended in fiscal 1995, the Company achieved cumulative
earnings per share and average return on net assets significantly in excess of
performance targets. Consequently, the payout for this cycle for all executive
officers, including Mr. George, was 180% of the target award.
The Company's stock option program provides compensation opportunities that
directly link the interests of management and shareholders, and aid in retaining
key executive officers. Executive officers are eligible for annual grants of
stock options. Guideline levels of options are prepared based on competitive
data from the peer and cross-industry companies referenced above. Individual
awards are based on the individual's responsibilities and performance, ability
to impact financial performance and future potential. These factors are not
assigned pre-determined relative weights. All individual stock option grants for
executive officers are reviewed and approved by the Committee. Executive
officers receive gains from exercised stock options only to the extent that the
fair market value of the stock has increased since the date of option grant.
In fiscal 1995, Mr. George was granted an annual stock option to purchase up to
14,151 shares of the Company's Common Stock at an average exercise price of
$53.00 per share. In addition, during fiscal 1995 the Company determined that it
would discontinue the restoration of certain non-qualified supplemental
retirement benefits as described under "Executive Compensation -- Pension Plan,"
below. Therefore, the Compensation Committee approved a one-time stock option
grant for executives affected by the change, including all of the executive
officers named in the Summary Compensation Table below. For each executive, the
amount of the stock option grant was determined based on the present value
amount of the non-qualified benefits forfeited for the years remaining until
retirement. Mr. George was granted an option to purchase 11,396 shares at an
exercise price of $53.00. This exchange of a guaranteed benefit for stock
options is consistent with the Company's emphasis on linking pay with
performance and stock-based compensation, and was economically advantageous to
the Company by eliminating an accrued non-qualified expense.
TOTAL COMPENSATION OF CHIEF EXECUTIVE OFFICER. Mr. George's total
compensation for fiscal 1995 was designed so that a significant portion of
pay was linked to Company performance. Of his total compensation, 76% was
derived from variable annual and long-term incentive elements. This "at risk"
portion of compensation was heavily weighted with long-term incentives
(approximately 56% of Mr. George's total compensation was derived from stock
option and performance share programs). The emphasis on "at risk" and
long-term incentives is intended to align Mr. George's compensation with the
achievement of long-term growth and performance by the Company.
DEDUCTIBILITY CAP ON EXECUTIVE COMPENSATION
Effective January 1, 1994, the Internal Revenue Code generally denies the
deduction for compensation in excess of $1,000,000 paid to executive officers
named in the Proxy Statement, subject to an exception for "performance-based"
compensation. Performance-based compensation, as defined in the tax law, is
not subject to this limitation on deductibility provided that certain
shareholder approval and other requirements are met. The Committee has
determined that it will make every effort, consistent with sound executive
compensation principles, to ensure that all amounts paid to the executive
officers named in the Proxy Statement are deductible by the Company. The
Committee expects that all performance-based compensation paid under its 1994
Stock Award Plan and Management Incentive Plan will qualify for deductibility
under the new tax law.
CONCLUSION
The executive officer compensation program administered by the Committee
provides incentive to attain strong financial performance and an alignment
with shareholder interests. The Committee believes that the Company's
compensation program focuses the efforts of the Company's executive officers
on the continued achievement of growth and profitability for the benefit of
the Company's shareholders.
COMPENSATION COMMITTEE:
Thomas E. Holloran, Chair Vernon H. Heath
F. Caleb Blodgett Edith W. Martin, Ph.D.
Bernadine P. Healy, M.D. Gerald W. Simonson
SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph and table below compare the cumulative total shareholder return on
the Company's Common Stock for the last five fiscal years with the cumulative
total return on the S&P 500 Index and the S&P Medical Products and Supplies
Index over the same period. The graph and table assume the investment of $100
in each of the Company's Common Stock, the S&P 500 Index and the S&P Medical
Products and Supplies Index on May 1, 1990 and that all dividends were
reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG MEDTRONIC,
S&P 500, AND S&P MEDICAL PRODUCTS & SUPPLIES INDUSTRY INDEX
[GRAPH]
<TABLE>
<CAPTION>
April 30 April 30 April 30 April 30 April 30 April 30
1995 1995 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C> <C>
MEDTRONIC $100.00 $176.10 $208.78 $209.83 $243.78 $485.50
S&P 500 100.00 117.57 134.09 146.44 154.24 181.11
S&P MP&S 100.00 161.55 178.53 142.41 133.55 208.14
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation for each of
the last three fiscal years ended April 30, 1995 awarded to or earned by the
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
OTHER ANNUAL
FISCAL SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1)
<S> <C> <C> <C> <C>
William W. George 1995 $530,007 $303,368(3) --
President and Chief 1994 479,991 324,282 --
Executive Officer 1993 479,991 338,394 --
Glen D. Nelson, M.D. 1995 $409,956 0(3) $24,708
Vice Chairman 1994 369,996 208,308 21,111
1993 369,996 217,373 21,746
Arthur D. Collins, Jr. 1995 $384,313 228,454(3) 2,212
Chief Operating Officer 1994 335,833 164,699 1,461
1993 316,458 185,919 --
Robert L. Ryan 1995 $316,499 0(3) 891
Senior Vice President and 1994 300,000 135,120 --
Chief Financial Officer 1993 62,884(10) -- --
Bobby I. Griffin 1995 $298,732 40,307(3) 3,974
Executive Vice President 1994 271,575 110,585 2,973
and President, Pacing 1993 271,575 131,225 2,949
</TABLE>
SUMMARY COMPENSATION TABLE CONTINUED
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS PAYOUTS
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION ($)(2) (#)(3) ($)(6) ($)(7)
<S> <C> <C> <C> <C>
William W. George -- 33,614 $894,870 $47,277
President and Chief -- 64,298(4) 490,677 55,085
Executive Officer -- 14,796 504,587 57,263
Glen D. Nelson, M.D. -- 32,843 620,867 37,288
Vice Chairman -- 13,976 334,990 32,754
-- 10,612 432,557 24,139
Arthur D. Collins, Jr. -- 23,808 484,776 35,453
Chief Operating Officer -- 7,986 -- 129,734(8)
$866,200 63,150(5) -- 161,887(8)
Robert L. Ryan -- 22,520 -- 28,932
Senior Vice President and -- 13,278 -- 94,599(9)
Chief Financial Officer -- 15,014 -- 50,000(11)
Bobby I. Griffin -- 18,162 405,151 28,304
Executive Vice President 12,480 7,986 230,014 26,372
and President, Pacing -- 5,612 301,234 28,495
</TABLE>
(1) Amounts payable by the Company in above-market interest under deferred
compensation plan.
(2) Mr. Collins received 24,400 shares of restricted stock when he joined the
Company to replace restricted stock he forfeited upon termination from his
previous employer. Half of these shares vested one year after the date of
grant and the balance subsequently vested on May 12, 1994. On June 23,
1993, Mr. Griffin received a restricted stock award for 390 shares in
connection with his induction into the Company's honorary technology
society. The shares vested 100% on June 22, 1994. Dividend equivalents were
paid on the restricted stock held by Messrs. Collins and Griffin. As of
April 30, 1995, Messrs. George, Nelson, Collins, Ryan and Griffin held no
restricted stock.
(3) "Bonus" column does not include fiscal 1995 cash bonus payments of
$150,000, $323,701, $75,000, $208,256 and $170,000 which Messrs. George,
Nelson, Collins, Ryan and Griffin, respectively, elected to forgo in order
to receive stock options granted in lieu of part or all of their cash bonus
compensation under the annual incentive plan. These stock options are
included in the "Securities Underlying Option/SARs" column. See "Report of
the Compensation Committee on Fiscal 1995 Executive Compensation -- Annual
Incentive Awards" and "Option/SAR Grants in Last Fiscal Year," below. That
column also includes stock options granted in fiscal 1995 to replace
certain discontinued non-qualified supplementary retirement benefits. See
"Report of the Compensation Committee on Fiscal 1995 Executive Compensation
-- Long-Term Incentive Plans" and "Option/SAR Grants in Last Fiscal Year,"
below.
(4) Includes stock option to purchase up to 44,864 shares of Common Stock in
exchange for terminating existing non-qualified retirement benefit of
$100,000 per year for life.
(5) Includes stock option to purchase up to 57,844 shares of Common Stock
granted as part of Mr. Collins' employment arrangement, a significant
amount of which was a replacement for stock options forfeited upon
termination from his previous employer.
(6) Includes the value of both cash and stock earned in fiscal 1995 under the
Company's long-term incentive plan described in "Other Long-Term Incentive
Awards" below. The stock for the fiscal 1995 payment was valued at $72.2812
per share, the average fair market value for the last 20 trading days in
April 1995.
(7) Amounts in this column for fiscal 1995 include the following: the Company
contributed $6,000 under the employee stock ownership plan for each of the
named executive officers for fiscal 1995; the Company contributed $7,942
for each of the named executive officers to match employee contributions
under the 401(k) supplemental retirement plan; and the Company contributed
$33,335, $23,346, $21,511, $14,990 and $14,362 to Messrs. George, Nelson,
Collins, Ryan and Griffin, respectively, under the non-qualified
supplemental benefit plan.
(8) Includes $100,000 employment award for each of fiscal 1993 and 1994 in
connection with his initial hiring. In addition, fiscal 1993 includes
$61,887 in relocation expenses.
(9) Includes $89,550 in relocation expenses.
(10) Mr. Ryan joined the Company in April 1993.
(11) Includes an employment award of $50,000 in connection with his initial
hiring.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth for each of the named executives the stock
options granted by the Company in fiscal 1995 and the potential value of
these stock options determined pursuant to Securities and Exchange Commission
requirements. No stock appreciation rights were granted to the named
executives in fiscal 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION 0% 5% 10%
NAME (#) FISCAL YEAR ($/SH) DATE ($) ($)(4) ($)(4)
<S> <C> <C> <C> <C> <C> <C> <C>
W.W. George 14,151(1) 2.9% $53.00 11/30/04 $0 $471,673 $1,195,312
11,396(2) 2.3 53.00 11/30/04 0 379,845 962,601
8,067(3) 1.7 74.375 04/28/05 0 377,326 956,219
G. D. Nelson, MD 10,189(1) 2.1 53.00 11/30/04 0 339,614 860,648
5,245(2) 1.1 53.00 11/30/04 0 174,823 443,036
17,409(3) 3.6 74.375 04/28/05 0 814,289 2,063,569
A.D. Collins, Jr. 9,623(1) 2.0 53.00 11/30/04 0 320,748 812,839
10,151(2) 2.1 53.00 11/30/04 0 338,347 857,438
4,034(3) .8 74.375 04/28/05 0 188,686 478,169
R. L. Ryan 5,660(1) 1.2 53.00 11/30/04 0 188,656 478,091
5,660(2) 1.2 53.00 11/30/04 0 188,656 478,091
11,200(3) 2.3 74.375 04/28/05 0 523,869 1,327,587
B. I. Griffin 5,849(1) 1.2 53.00 11/30/04 0 194,955 494,055
3,170(2) .6 53.00 11/30/04 0 105,661 267,765
9,143(3) 1.9 74.375 04/28/05 0 427,655 1,083,762
</TABLE>
(1) These stock options granted to the named executive officers have an
exercise price equal to the fair market value on the date of grant and vest
annually in 25% increments.
(2) These stock options were granted in lieu of certain supplemental retirement
benefits and vest equally on an annual basis over a 10-year period, except
for the options for Messrs. Griffin and Nelson which vest equally on an
annual basis over eight years. See "Report of the Compensation Committee on
Fiscal 1995 Executive Compensation -- Long-Term Incentive Plans."
(3) These stock options were granted in lieu of all or part of the cash
compensation earned under the Management Incentive Plan. Because the
executives elected to forego cash compensation to receive the options, the
options are 100% vested at grant. See "Report of the Compensation Committee
on Fiscal 1995 Executive Compensation -- Annual Incentive Awards."
(4) The hypothetical potential appreciation shown in these columns reflects the
required calculations at annual rates of 5% and 10% set by the Securities
and Exchange Commission, and therefore is not intended to represent either
historical appreciation or anticipated future appreciation of the Company's
Common Stock price.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth for each of the named executive officers the
value realized from stock options exercised during fiscal 1995 and the number
and value of exercisable and unexercisable stock options and stock
appreciation rights held at April 30, 1995.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FISCAL OPTIONS/SARS AT
YEAR-END (#) FISCAL YEAR-END ($)(1)
SHARES VALUE
ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
W.W. George 0 $0 277,928/96,758 $16,184,876/3,224,723
G.D. Nelson, M.D. 0 0 78,092/34,417 3,003,834/969,224
A.D. Collins, Jr. 0 0 66,526/28,418 2,389,457/710,521
R.L. Ryan 0 0 22,023/28,789 350,596/847,525
B.I. Griffin 0 0 24,925/19,395 694,957/543,246
</TABLE>
(1) Value of unexercised in-the-money options is determined by multiplying the
difference between the exercise price per share and $74.375, the closing
price per share on April 28, 1995, by the number of shares subject to such
options.
OTHER LONG-TERM INCENTIVE AWARDS
The following table sets forth the number of performance share units granted
to each of the named executives in fiscal 1995 under the Company's 1994 Stock
Award Plan and the performance-based award formula under such plan.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE
BASED-PLANS
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD
OR OTHER UNTIL
RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT ($) ($) ($)
<S> <C> <C> <C> <C> <C>
W. W. George 7,160 5/1/94-4/30/97 107,579 537,895 968,211
G.D. Nelson, M.D. 4,984 5/1/94-4/30/97 74,885 374,423 673,961
A.D. Collins, Jr. 4,672 5/1/94-4/30/97 70,197 350,984 631,771
R.L. Ryan 3,420 5/1/94-4/30/97 51,386 256,928 462,470
B.I. Griffin 3,228 5/1/94-4/30/97 48,501 242,504 436,506
</TABLE>
(1) Payout of awards is based on achieving specified levels of designated
performance objectives during a three-year performance cycle. Payout can
range from 0% to 180% of units granted, with 20% and 180% as the threshold
and maximum payouts, respectively. Payout of 100% of the units granted
represents the target payout. Awards are payable at least 50% in Common
Stock, with the remainder paid in cash or Common Stock at the discretion of
the Compensation Committee. The value in dollars is determined when the
award is earned based on the average fair market value per share for the
last 20 trading days of the performance cycle. For illustrative purposes,
the value of estimated future payouts was determined using the closing
price of the Common Stock on May 19, 1995 ($75.125 per share). See "Report
of the Compensation Committee on Fiscal 1995 Executive Compensation --
Long-Term Incentive Plans" above.
PENSION PLAN
The Company's pension plan is a defined benefit, tax qualified retirement
plan covering most U. S. employees and generally provides 40% of the average
of the highest five consecutive years of compensation (including certain
incentive compensation) in the final ten years of service, offset by a Social
Security allowance as published each year by the Internal Revenue Service.
The table below illustrates the annual benefits payable to participants who
retire at age 65 with the indicated years of service with Medtronic and with
the indicated five-year highest average annual compensation. The benefits
have been calculated on a 50% joint and survivor annuity basis, before
reduction for any amounts that may be available from Medtronic's former
Retirement Account Plan, and include amounts that are provided under the
non-qualified supplemental benefit plan. The compensation considered in
determining the pensions payable to the below-named executive officers is the
compensation shown in the "Salary" and "Bonus" columns of the Summary
Compensation Table on page 15.
FIVE-YEAR
AVERAGE YEARS OF SERVICE WITH THE COMPANY
ANNUAL
COMPENSATION(1) 15 20 25 30 35
$ 200,000 $ 33,976 $ 45,323 $ 56,603 $ 67,951 $ 72,461
400,000 70,056 93,454 116,713 140,111 149,131
600,000 106,136 141,585 176,822 212,271 225,801
800,000 142,216 189,716 236,931 284,431 302,471
1,000,000 178,296 237,846 297,041 356,591 379,141
1,200,000 214,376 285,977 357,150 428,751 455,811
(1) Calculated by considering a participant's compensation levels during the
ten-year period immediately preceding retirement. The credited years of
service (rounded to the nearest whole year) for the executive officers
named in the Summary Compensation Table were as follows at April 30, 1995;
W.W. George, 6 years; G.D. Nelson, 9 years; A.D. Collins, Jr., 3 years;
R.L. Ryan, 2 years; and B.I. Griffin, 22 years.
Certain limitations on the amount of benefits under the Company's tax
qualified retirement plan were imposed by the Employee Retirement Income
Security Act of 1974 ("ERISA") and Tax Reform Act of 1986 ("TRA"). The
Company's non-qualified supplemental benefit plan provides for the
restoration of benefits to officers who may be affected by those limitations
so that, in general, total benefits will be equal to the level of benefits
which would have been payable under the Company's retirement plan and
employee stock ownership plan but for the ERISA and TRA limitations. The
amounts shown in the pension plan table above include the additional
retirement benefits provided under the non-qualified supplemental benefit
plan. In fiscal 1995, the Company elected to discontinue the restoration of
401(k) supplemental retirement plan benefits under the non-qualified
supplemental benefit plan beginning retroactively with fiscal 1994. In
exchange for the forfeited benefit, executives were provided a one-time stock
option grant. See "Report of Compensation Committee on Fiscal 1995 Executive
Compensation -- Long-Term Incentive Plans."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 1995, the members of the Compensation Committee were Holloran
(Chair), Blodgett, Healy, Heath, Martin, and Simonson. Mr. Holloran served in
various capacities as an officer of the Company from 1961 to 1975, including
serving as president of the Company from January 1974 to December 1975. Under
Section 162(m) of the Code, Mr. Holloran is considered an outside director
until the date of the 1996 Annual Meeting of Shareholders. In fiscal 1995,
Mr. George, who is President, Chief Executive Officer and a director of the
Company, was a director of Allina Health System and served on the committee
that determines the compensation for Mr. Sprenger, who is the Executive
Officer of Allina and a director of Medtronic.
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
CHANGE IN CONTROL ARRANGEMENTS. The executive officers of the Company,
including those named in the Summary Compensation Table, have change in
control agreements (the "Agreements") with the Company. The Agreements
operate only upon the occurrence of a "change in control" as described below.
Absent a "change in control" the Agreements do not require the Company to
retain the executives or to pay them any specified level of compensation or
benefits.
Each Agreement provides that for three years after a "change in control" there
will be no adverse change in the executive's salary, bonus, opportunity,
benefits or location of employment. If during this three-year period the
executive's employment is terminated by the Company other than for cause, or if
the executive terminates his employment for good reason (as defined in the
Agreements, and including compensation reductions, demotions, relocation and
excess travel), or voluntarily during the 30-day period following the first
anniversary of the "change in control," the executive is entitled to receive an
accrued salary and annual incentive payment through the date of termination and,
except in the event of death or disability, a lump sum severance payment ("Lump
Sum Payment") equal to three times (two times in the event of termination by the
executive in the aforementioned 30-day period) the sum of his base salary and
annual bonus (and certain insurance and other welfare plan benefits). Further,
an additional payment ("gross-up") is required in an amount such that after the
payment of all taxes, income and excise, the executive will be in the same
after-tax position as if no excise tax under the Internal Revenue Code had been
imposed.
Generally, and subject to certain exceptions, a "change in control" is deemed to
have occurred if: (a) a majority of Medtronic's Board of Directors becomes
comprised of persons other than persons for whose election proxies have been
solicited by the Board, or who are then serving as directors appointed by the
Board to fill vacancies caused by death or resignation (but not removal) of a
director or to fill newly created directorships; (b) another party becomes the
beneficial owner of at least 30% of Medtronic's outstanding voting stock; or (c)
Medtronic's shareholders approve a definitive agreement or plan to merge or
consolidate Medtronic with another party (other than certain limited types of
mergers), exchange shares of voting stock of Medtronic for shares of another
corporation pursuant to a statutory exchange, sell or otherwise dispose of all
or substantially all of Medtronic's assets, or liquidate or dissolve Medtronic.
If a "change in control" of the Company occurred mid-fiscal 1996 (November 1,
1995) and resulted in the involuntary termination of the named executives at
such time or the termination by such executives for good reason, the Lump Sum
Payment to be made under such Agreements to those executive officers named in
the Summary Compensation Table above would be approximately as follows: W.W.
George, $2,970,000; G.D. Nelson, $2,112,000; A.D. Collins, Jr., $2,112,000; R.L.
Ryan, $1,509,750; and B.I. Griffin, $1,438,425. Such amounts are exclusive of
the additional gross-up payment required under each of the Agreements as a
result of excise taxes on a portion of those amounts.
In addition, events substantially identical to those described above also
constitute a "change in control" under certain of the Company's compensation
plans. The effects of a change in control under these plans with respect to the
compensation of each of the executive officers named in the Summary Compensation
Table are described below.
If a "change in control" of the Company occurs, awards under the Company's
Management Incentive Plan will accelerate and, subject to certain limitations
set forth in the plan, each participant will be entitled to a final award based
on certain assumptions as to target performance and salary. If a "change in
control" of the Company occurred mid-fiscal 1996 (November 1, 1995), the awards
under this plan to be paid to those executive officers named in the Summary
Compensation Table above would be approximately as follows: W.W. George,
$390,000; G.D. Nelson, $264,000; A.D. Collins, Jr., $264,000; R.L. Ryan,
$167,750; and B.I. Griffin, $159,825.
The Company's stock award plans and agreements thereunder provide that in the
event of a "change in control" of the Company, all restrictions under
outstanding restricted stock awards shall immediately lapse and the restricted
stock period with respect to all such shares shall be deemed to have expired,
and performance share awards shall vest immediately in a pro rata amount based
on the portion of the performance period elapsed prior to the "change in
control" and certain assumptions as to the anticipated performance which would
have been achieved during the applicable performance period. If a "change in
control" of the Company occurred mid-fiscal 1996 (November 1, 1995) and further
assuming for this purpose a market price for the Company's Common Stock at such
time of $73.25 (the June 12, 1995 New York Stock Exchange closing price), the
awards to be paid to those executive officers named in the Summary Compensation
Table above would be approximately as follows for the performance share awards:
W.W. George, $1,413,715; G.D. Nelson, $979,709; A.D. Collins, Jr., $827,446;
R.L. Ryan, $692,604 and B.I. Griffin, $637,660. None of the named executive
officers has outstanding restricted stock awards.
The Company's stock award plans and agreements thereunder also provide for or
permit acceleration of the exercisability of outstanding stock options upon the
occurrence of certain events (such as certain tender offers or exchange offers
for the Company's stock, certain changes in control of the Company, a merger or
consolidation of the Company with another entity, or a sale of substantially all
of the Company's assets or certain plans therefor) or at the discretion of the
Board of Directors.
Limited stock appreciation rights ("Limited Rights") granted under the stock
option plans are exercisable, with certain limitations, at any time within the
thirty-day period following a "change in control" of Medtronic. Upon exercise of
Limited Rights, the holder is entitled to receive an amount in cash for each
share with respect to which the Limited Rights are exercised equal to the
difference between the option exercise price per share of stock covered by the
underlying option and the fair market value per share as of the date of
exercise. If Limited Rights are exercised, the underlying option will no longer
be exercisable to the extent of the number of shares with respect to which the
Limited Rights were exercised.
If a "change in control" occurs, subject to certain limitations, Medtronic's
contributions to the employee stock ownership plan for that year will equal the
greater of Medtronic's target percentage contribution (currently 2.5% of
aggregate covered employee compensation in fiscal 1995) or, if a "change in
control" occurs after the first quarter of a plan year, the percentage
contribution Medtronic would have made upon completion of the plan year based on
performance as most recently projected by Medtronic prior to the "change in
control" and disregarding the effects of the "change in control."
If a "change in control" occurs during a plan year, subject to certain
limitations, Medtronic's matching contribution to the 401(k) supplemental
retirement plan shall equal the greater of Medtronic's target percentage
matching contribution (currently 62.5% of the first 6% of a participant's
contribution in fiscal 1995), or if the "change in control" occurs after the
first quarter of a plan year, the percentage contribution Medtronic would have
made upon completion of the plan year based on performance as most recently
projected by Medtronic prior to the "change in control" and disregarding the
effects of the "change in control."
OTHER EMPLOYMENT ARRANGEMENTS. Under the Company's postretirement survivor
benefit plan, designated beneficiaries or the estate of each executive
officer who retires with the Company (as defined in the Company's
tax-qualified employee retirement plans) shall be entitled to receive
following the officer's death a lump sum payment equal to the annual salary
of such officer in effect at the date of retirement.
APPROVAL TO AMEND RESTATED ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED SHARES OF COMMON STOCK
GENERAL. At present, Medtronic's Restated Articles of Incorporation authorize
the issuance of 200,000,000 shares of Common Stock, $.10 par value per share,
and 2,500,000 shares of Preferred Stock, $1.00 par value per share. At June
12, 1995, 115,537,914 shares of Common Stock were outstanding and 84,462,086
shares of Common Stock were authorized but unissued. Of these unissued
shares, approximately 7,910,916 were reserved for issuance pursuant to the
Company's stock award and other employee benefit plans (assuming the
shareholders approve the 1995 Employees Stock Purchase Plan under which
3,000,000 shares are reserved as described herein). Accordingly, at June 12,
1995, there were approximately 76,545,820 shares of Common Stock available
for general corporate purposes. No shares of Preferred Stock were outstanding
at June 12, 1995.
The Board of Directors recommends that the authorized number of shares of
Common Stock be increased from 200,000,000 to 800,000,000. Such increase, if
approved, will be effected by amending Section 3.1 of Article 3 of
Medtronic's Restated Articles of Incorporation to increase the authorized
shares of the Company to 802,500,000, consisting of 800,000,000 shares of
Common Stock and 2,500,000 shares of Preferred Stock. The full text of the
proposed amended Section 3.1 is set forth in Appendix A hereto.
The Board desires to increase the number of authorized shares of Common Stock
to give the Board flexibility to declare stock dividends or stock splits at
such times as the Board may deem appropriate (based upon the number of shares
of Common Stock outstanding and the number reserved for issuance at this
time, the Company does not have sufficient authorized shares of Common Stock
to effect a two-for-one stock dividend or stock split); to give the Board
flexibility to make acquisitions using stock; to adopt additional employee
benefit plans or increase the shares available under existing plans; to raise
equity capital or to use the additional shares for other general corporate
purposes. Aside from shares currently reserved for issuance under employee
benefit plans, the Board has not authorized the issuance of any additional
shares, and there are no current agreements or commitments for the issuance
of any additional shares.
Shareholders of the Company have no preemptive rights with respect to the
Common Stock and Preferred Stock of the Company. If this proposed amendment
is adopted, the additional authorized shares of Common Stock will be
available for issuance from time to time at the discretion of the Board
without further action by the shareholders, although use of such shares for
certain employee benefit plans may require shareholder approval to obtain
favorable tax treatment and certain protections under the short-term trading
provisions of the federal securities laws.
VOTING REQUIREMENTS AND RECOMMENDATION. The affirmative vote of the holders
of a majority of the outstanding shares of Common Stock of the Company
entitled to vote on this item and present in person or by proxy at the
Meeting is required for approval of this amendment to the Company's Restated
Articles. Proxies solicited by the Board of Directors will be voted for
approval of the amendment unless shareholders specify otherwise in their
proxies. For this purpose, a shareholder voting through a proxy who abstains
with respect to approval of the amendment is considered to be present and
entitled to vote on the approval of the amendment at the Meeting, and is in
effect a negative vote; but a shareholder (including a broker) who does not
give authority to a proxy to vote, or withholds authority to vote, on the
approval of the amendment shall not be considered present and entitled to
vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THIS AMENDMENT TO
THE COMPANY'S RESTATED ARTICLES OF INCORPORATION.
APPROVAL OF 1995 EMPLOYEES STOCK PURCHASE PLAN
Medtronic has provided some form of stock purchase plan for employees since
1970. The last phase of the current stock purchase plan expires at the end of
October 1995. The Board of Directors believes that Medtronic's stock purchase
plans have played an important role in retaining employees and giving
employees a sense that they have an important stake in the Company's affairs.
As a result, the Board of Directors has adopted the Medtronic, Inc. 1995
Employees Stock Purchase Plan (the "1995 Plan") and reserved 3,000,000 shares
of Common Stock for issuance pursuant to the 1995 Plan. The 1995 Plan is
similar to the Medtronic, Inc. 1990 Employees Stock Purchase Plan (the "1990
Plan"), which expires this year, and is designed to comply with the employee
stock purchase plan requirements under Section 423 of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"). A copy of the 1995
Plan is attached as Appendix B and will be furnished to shareholders upon
receipt of written request addressed to the Corporate Secretary.
ADMINISTRATION. The administration of the 1995 Plan is vested in a Committee
(the "Committee") appointed by the Board of Directors and consisting of three or
more members of the Board who are considered disinterested directors under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Act"). The
Committee may delegate all or any part of its authority under the 1995 Plan to
persons it designates who may not be disinterested directors, provided that such
delegation is consistent with any applicable requirements under Section 16 of
the Act and Section 423 of the Internal Revenue Code of 1986, as amended.
ELIGIBILITY. All employees of Medtronic and of those subsidiaries selected by
the Board of Directors are eligible to participate in any annual phase of the
1995 Plan. A person is considered employed for purposes of the 1995 Plan if the
person is customarily employed for more than 1,000 hours in a 12-month period.
Any employee who, immediately after the grant of an option, would own 5% or more
of the total combined voting power or value of Common Stock will not be granted
an option under the 1995 Plan. In addition, no employee will be permitted to
purchase more than $25,000 of Medtronic Common Stock in any calendar year (based
upon the fair market value of the stock at the time the option is granted).
Approximately 8,800 employees are currently eligible to participate in the Plan.
DURATION AND PARTICIPATION. The 1995 Plan will be operated in consecutive annual
phases beginning November 1, 1995. The 1995 Plan has a ten-year term beginning
on the commencement date of the first phase, unless the term is extended by the
Board of Directors. Each phase will commence on November 1 and will terminate on
October 31 of the following year. Before the commencement of each phase,
employees may elect to have from 2% to 10% of their salary withheld each pay
period, or such other amounts as the Committee from time to time establishes, up
to a maximum of 15%. The elected percentage cannot be increased by the employee
during the phase, but can be reduced or eliminated entirely. At the end of the
phase each employee has an option to purchase shares of Common Stock using some
or all of the funds the employee has had withheld during the phase. The purchase
price will be 85% of the fair market value of the stock on the first or last day
of the phase, whichever is lower. Except in the event of death and except for
shares purchased upon retirement or disability (see "Termination of Employment"
below), employees are not permitted to sell or otherwise transfer ownership of
the shares until one year after the end of the phase in which the stock was
purchased. The fair market value of the Company's common stock on June 12, 1995
was $73.25 per share.
TERMINATION OF EMPLOYMENT. If a participant's employment is terminated during
a phase of the 1995 Plan for any reason other than retirement or disability,
the option granted to such participant shall lapse immediately and payroll
deductions will be returned to the participant. If the termination is because
of retirement or disability, a participant may exercise his or her option
during the month in which the participant retires or disability benefits
begin. If termination is due to the participant's death, the option grant
will lapse immediately and payroll deductions will be given to the
participant's beneficiary. If death occurs after exercise of the option but
prior to delivery of the stock, it will be delivered to the executor or an
administrator of the participant's estate.
ADJUSTMENTS AND AMENDMENTS UNDER THE PLAN. Under the terms of the 1995 Plan, (i)
if the number of outstanding shares of Medtronic's Common Stock increases or
decreases as a result of stock splits or consolidations, stock dividends or
other transactions in which the Company receives no consideration, the number of
shares subject to outstanding options, the number of shares remaining reserved
for grant and the price per share will be automatically equitably adjusted to
reflect such change, and (ii) in the event of a sale, merger, consolidation or
liquidation of the Company or other event that would constitute a "change in
control" or a "fundamental change" as defined in the Company's 1994 Stock Award
Plan, the Board of Directors may either provide for the acceleration of the
current phase and the exercise of options thereunder or provide for the
continuation of the 1995 Plan only with respect to completion of the then
current phase and the exercise of the outstanding options.
The 1995 Plan may be terminated at any time by the Board of Directors provided
that no termination will affect outstanding options without the consent of the
participating employees, except as permitted in the event of a sale, merger,
consolidation or liquidation of the Company or other event that would constitute
a "change in control" or "fundamental change." Also, the Board may amend the
1995 Plan in the best interests of the Company or as may be necessary to comply
with Section 423 of the Code or other applicable laws or regulations, provided
that no such amendment shall, without prior approval of the shareholders of the
Company: (i) increase the total number of shares for which options may be
granted under the 1995 Plan (except in the case of a stock split, stock dividend
or similar event as described above); (ii) permit payroll deductions at a rate
in excess of 10% of a participant's compensation, or such other permissible
maximum contribution established by the Committee; (iii) impair any outstanding
option without the participant's consent (except as described above in the event
of a sale, merger, consolidation, liquidation or other event that would
constitute a "change in control" or "fundamental change"); (iv) materially
increase the benefits accruing to participants under the 1995 Plan; or (v)
change the requirements as to eligibility for participation in the 1995 Plan.
NEW PLAN BENEFITS. The table below sets forth certain information regarding
potential benefits in fiscal 1996 under the 1995 Plan. For purposes of this
table, it is assumed that participation in the 1995 Plan will be identical to
that in the 1990 Plan during fiscal 1995.
ESTIMATED BENEFITS AS OF OCTOBER
31, 1996
NUMBER OF
SHARES PURCHASE PRICE
NAME PURCHASED (#) PER SHARE ($)
W.W. George, President and Chief Executive
Officer 669 $31.72
G. D. Nelson, M.D., Vice Chairman 597 31.72
A. D. Collins, Jr., Chief Operating Officer 669 31.72
R. L. Ryan, Senior Vice President and
Chief Financial Officer 669 31.72
B. I. Griffin, Executive Vice President and
President, Pacing 669 31.72
All executive officers as a group 5,204 31.72
All directors who are not executive officers
as a group 0 0
All non-executive officer employees as a group 382,876 31.72
FEDERAL INCOME TAX CONSEQUENCES. Under existing U.S. federal income tax
provisions, an employee will not recognize any income either when an option is
granted or when it is exercised under the 1995 Plan. For tax purposes, the date
of grant of the option will be the date of commencement of the applicable phase
of the 1995 Plan. Employees who hold their shares for at least two years from
the date of grant of the option and for at least one year from the date of
exercise of the option or who die while holding their shares will have ordinary
income in the year of disposition or death equal to the lesser of (a) the excess
of the fair market value of the shares at the time of disposition or death over
the price paid or (b) the excess of the fair market value of the shares at the
time the option was granted over the price paid. If the holding periods have
been satisfied when the employee sells the shares or if the employee dies while
holding the shares, the Company will not be entitled to any deduction in
connection with the shares.
Employees who dispose of their shares before the holding periods described above
have been satisfied will recognize ordinary income in the year of disposition in
an amount equal to the excess of the fair market value of the shares on the date
of exercise over the price paid. The Company generally will be entitled to a
deduction at the same time as the employee is deemed to have realized ordinary
income.
Employees will have a tax basis in their shares equal to the price paid plus the
amount treated as ordinary income at the time of disposition of the shares. Any
difference between the tax basis and the amount realized will be recognized as a
capital gain or loss.
VOTING REQUIREMENTS AND RECOMMENDATION. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock of the Company entitled to
vote on this item and present in person or by proxy at the Meeting is required
for approval of the 1995 Plan. Proxies solicited by the Board of Directors will
be voted for approval of the 1995 Plan unless shareholders specify otherwise in
their proxies.
For this purpose, a shareholder voting through a proxy who abstains with respect
to approval of the 1995 Plan is considered to be present and entitled to vote on
the approval of the 1995 Plan at the Meeting, and is in effect a negative vote;
but a shareholder (including a broker) who does not give authority to a proxy to
vote, or withholds authority to vote, on the approval of the 1995 Plan shall not
be considered present and entitled to vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE 1995 EMPLOYEES
STOCK PURCHASE PLAN.
APPROVAL OF SELECTION OF AUDITORS
Upon recommendation of its Audit Committee, Medtronic's Board has selected
Price Waterhouse LLP, certified public accountants, as independent auditors
for Medtronic for the fiscal year ending April 30, 1996. That firm has acted
as independent auditors for Medtronic for more than 20 years, and the Board
considers it highly qualified. Although it is not required to do so, the
Board of Directors wishes to submit the selection of Price Waterhouse LLP for
shareholders' approval at the Meeting. If the shareholders do not give
approval, the Board will reconsider its selection.
Representatives of Price Waterhouse LLP will be present at the Meeting, will
have the opportunity to make a statement if they desire and will be available
to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS
APPOINTMENT.
GENERAL
The costs of soliciting proxies will be borne by Medtronic, including the
reimbursement to record holders of their expenses in forwarding proxy
materials to beneficial owners. Directors, officers and regular employees of
Medtronic, without extra compensation, may solicit proxies personally or by
mail, telephone, fax, telex, telegraph or special letter.
Medtronic has retained Chemical Bank, a firm that provides professional proxy
soliciting services, to aid in the solicitation of proxies for a fee of up to
$9,500 and reimbursement for certain out-of-pocket expenses.
Any shareholder proposals for the Company's 1996 Annual Meeting of
Shareholders (anticipated date August 29, 1996) must be received by the
Company by March 28, 1996 in order to be included in the Company's Proxy
Statement. The proposals also must comply with all applicable statutes and
regulations.
Medtronic's 1995 Annual Shareholder Report, including financial statements,
is being sent to shareholders of record as of July 7, 1995, together with
this Proxy Statement.
MEDTRONIC WILL FURNISH TO SHAREHOLDERS WITHOUT CHARGE A COPY OF ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 30, 1995, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, UPON RECEIPT OF WRITTEN REQUEST
ADDRESSED TO: INVESTOR RELATIONS DEPARTMENT, MEDTRONIC, INC., 7000 CENTRAL
AVENUE N.E., MINNEAPOLIS, MINNESOTA 55432.
The Board of Directors knows of no other matters to be presented at the
Annual Meeting. If any other business properly comes before the Annual
Meeting or any adjournment thereof, the proxies will vote on that business in
accordance with their best judgment.
By Order of the Board of Directors,
/s/ Ronald E. Lund
Ronald E. Lund, Secretary
MEDTRONIC, INC.
APPENDIX A
PROPOSED AMENDMENT TO ARTICLE 3, SECTION 3.1
OF MEDTRONIC, INC.'S RESTATED ARTICLES OF INCORPORATION
(LANGUAGE TO BE ADDED to the text has been underlined and LANGUAGE TO BE
DELETED has been enclosed in brackets "[ ]").
3.1 AUTHORIZED SHARES; ESTABLISHMENT OF CLASSES AND SERIES. The aggregate
number of shares the corporation has authority to issue shall be 802,500,000
[202,500,000] shares, which shall consist of 800,000,000 [200,000,000] shares
of Common Stock with a par value of $.10 per share, and 2,500,000 shares of
Preferred Stock with a par value of $1.00 per share. The Board of Directors
is authorized to establish from the shares of Preferred Stock, by resolution
adopted and filed in the manner provided by law, one or more classes or
series of Preferred Stock, and to set forth the designation of each such
class or series and fix the relative rights and preferences of each such
class or series of Preferred Stock, including, but not limited to, fixing the
relative voting rights, if any, of each class or series of Preferred Stock to
the full extent permitted by law. Holders of Common Stock shall be entitled
to one vote for each share of Common Stock held of record.
APPENDIX B
MEDTRONIC, INC.
1995 EMPLOYEES STOCK PURCHASE PLAN
1. PURPOSE OF PLAN. Medtronic, Inc. (hereinafter referred to as the
"Company") proposes to grant to Employees of the Company and of such
subsidiaries as the Company's Board of Directors (the "Board of Directors")
may designate from time to time the opportunity to purchase common stock of
the Company. Such common stock shall be purchased pursuant to this Plan,
which is the MEDTRONIC, INC. 1995 EMPLOYEES STOCK PURCHASE PLAN (hereinafter
referred to as the "Plan"). The Company intends that the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code
of 1986, as amended, and shall be construed in a manner consistent with the
requirements of Section 423, or any successor provision, and the regulations
thereunder. The Plan is intended to encourage stock ownership by all
Employees of the Company, and to be incentive to them to remain in its
employ, improve operations, increase profits and contribute more
significantly to the Company's success.
2. DEFINITIONS.
(a) "Committee" shall mean three or more directors designated by the
Board of Directors to administer the Plan under Paragraph 3 hereof, who
are considered to be disinterested persons within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934, as amended.
(b) "Disability" shall mean Disability such that the Participant would
be considered disabled under any Retirement plan of the Company which is
qualified under Section 401 of the Internal Revenue Code (which currently
provides that a Participant shall be considered to have a "Disability" as
of the date benefit payments commence under the long term disability plan
maintained by the Company or a Subsidiary).
(c) "Employee" shall mean any Employee, including an officer, who as
of the September 30 immediately preceding the commencement date of a
phase, is customarily employed for more than 1000 hours in a twelve (12)
month period.
(d) "Internal Revenue Code" shall mean the U.S. Internal Revenue Code
of 1986, as amended.
(e) "Participant" shall mean an Employee who has elected to
participate in the Plan.
(f) "Participating Employer" shall mean Medtronic, Inc. and any of its
subsidiaries which Medtronic, Inc. elects from time to time, by resolution
duly adopted by its Board of Directors, to have participate in this Plan,
or their successors and assigns, by merger, purchase or otherwise, that
thereby become subsidiaries.
(g) "Rate of Exchange" shall mean the Rate of Exchange used by the
Company to record transactions on its financial records each month in
which the payroll deductions or refunds are processed.
(h) "Retirement" shall mean Retirement of an Employee as defined under
any retirement plan of the Company which is qualified under Section 401 of
the Internal Revenue Code (which currently provides for retirement on or
after age 55, provided the Employee has been employed by the Company and/or
one or more Subsidiaries for at least ten years, or retirement on or after
age 62).
(i) "Salary" shall mean the amount paid during the applicable phase by
the Participating Employer to or for the Participant as cash compensation,
including, without limitation, sales commissions, formula bonus and
short-term incentive plan payments, overtime, Salary continuation payments
and sick pay, calculated for the twelve (12) consecutive month period ending
on the termination date of the applicable phase.
(j) "Subsidiary" shall mean any corporation defined as a subsidiary of
the Company in Section 424(f) of the Internal Revenue Code or any
successor provision.
(k) "Termination of Employment" shall mean an Employee's complete
termination of employment with Medtronic, Inc. and all of its
subsidiaries. In the event that any Subsidiary of Medtronic, Inc. ceases
to be a Subsidiary of Medtronic, Inc., the Employees of such Subsidiary
shall be considered to have terminated their employment as of the date
such Subsidiary ceases to be a Subsidiary, whether or not they continue in
employment with such former Subsidiary.
3. ADMINISTRATION. The Committee shall administer the Plan. Subject to the
express provisions of the Plan, the Committee shall have full authority, in
its discretion, to interpret and construe any and all provisions of the Plan,
to adopt rules and regulations for administering the Plan, and to make all
other determinations deemed necessary or advisable for administering the
Plan. The Committee's determination on the foregoing matters shall be
conclusive. No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted or stock issued under the Plan.
The Board of Directors shall fill all vacancies on the Committee and may
remove any member of the Committee at any time, with or without cause. All
determinations of the Committee shall be made by a majority vote of its
members. Any decision which is made in writing and signed by a majority of
the members of the Committee shall be effective as fully as though made by a
majority vote at a meeting duly called and held.
The Committee may delegate all or any part of its authority under the Plan to
persons who are not considered disinterested persons under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, for purposes of administering
the Plan and any options hereunder, provided that such delegation is
consistent with any applicable requirements under Rule 16b-3 of such Act that
do not permit persons other than disinterested directors to exercise
discretion with respect to options granted to Employees subject to the
reporting requirements of such Act, and Section 423(b) (5) of the Internal
Revenue Code, which provides that all Employees granted options under the
Plan shall have the same rights and privileges.
4. DURATION AND PHASES OF THE PLAN. The Plan will commence as of the
commencement date of the first phase hereunder and will terminate ten (10)
years thereafter, unless extended by the Board of Directors. Notwithstanding
the foregoing, this Plan shall be considered of no force or effect and any
options granted hereunder shall be considered null and void unless the
holders of a majority of all of the issued and outstanding shares of the
common stock of the Company approve the Plan within the twelve (12)
consecutive month period immediately preceding or following the date of
adoption of the Plan by the Board of Directors.
The Plan shall be carried out in a series of consecutive annual phases. Each
phase shall commence on November 1 and terminate the following October 31,
with the next succeeding phase to commence immediately after termination of
the previous phase. In the event that all of the stock reserved for grant of
options hereunder is issued pursuant to the terms hereof prior to the
commencement of one or more of the scheduled phases, or the number of shares
remaining for optioning is so small, in the opinion of the Committee, as to
render administration of any succeeding phase impracticable, such phase or
phases may be canceled. Phases shall be numbered beginning with Phase 26
commencing November 1, 1995.
5. ELIGIBILITY. All Employees who are employed by a Participating Employer on
the September 30 immediately preceding the commencement date of a phase shall
be eligible to participate in such phase.
6. PARTICIPATION. Participation in the Plan is voluntary. An eligible
Employee may elect to participate in any phase of the Plan by completing the
Plan payroll deduction form provided by his Participating Employer and
delivering it to his Participating Employer or its designated representative
not later than the October 20 next preceding the commencement date of that
phase, or such other date as is established in writing for all Participants
by the Senior Vice President, Human Resources, of the Company.
An Employee who elects to participate in any phase of the Plan shall be
deemed to have elected to participate in each subsequent consecutive phase
unless such Participant elects to discontinue payroll deductions during a
phase or exercises his right to withdraw all amounts previously withheld as
provided in Paragraph 9(a). In this event, the Participant must submit a
change of election form or a new payroll deduction form, as the case may be,
to participate in any subsequent phase. The Participant may also increase his
participation for any subsequent phase by submitting a new payroll deduction
form during the enrollment period prior to that phase.
7. PAYROLL DEDUCTIONS.
(a) Each Employee electing to participate shall indicate such election
on the Plan payroll deduction form by designating that percentage of his
Salary which he wishes to have deducted. Such percentage shall be stated
in whole percentage points and shall be not less than two percent (2%) nor
more than ten percent (10%) of the Participant's Salary, or such other
minimum and maximum percentages as the Committee may establish from time
to time, but not to exceed fifteen percent (15%).
Payroll deductions for a Participant shall commence on the first
payday coinciding with or immediately following the commencement date of
the phase and shall terminate on the last payday immediately prior to or
coinciding with the termination date of that phase, unless sooner
terminated by the Participant as provided in Paragraph 7(b) or 9(a)
hereof. The authorized deductions shall be made over the pay periods of
such phase by deducting from the Participant's Salary for each such pay
period that percentage as specified by the Participant as of the
commencement date of the phase. Except for a Participant's rights to
reduce or discontinue deductions pursuant to Paragraphs 7(b) and 9(a)
hereof, the same percentage deduction shall be applied against the
Participant's Salary for each pay period during such phase, whether or not
the Participant's Salary level increases or decreases after the
commencement date of such phase.
The extent to which a Participant may actually exercise his option
shall be based upon the amount actually withheld for such Participant as
of the termination date of the phase.
(b) A Participant shall not be entitled to increase the percentage
amount to be deducted in a given phase after the delivery deadline
specified in Paragraph 6 for filing his payroll deduction form. The
Participant may elect at any time prior to or during a phase to decrease
the percentage amount to be so deducted or discontinue any further
deductions in a given phase by filing an amended election form at least
ten (10) days prior to the first payroll date as of which such decrease or
discontinued deduction is to become effective. In the event of such a
decrease or discontinuance of deductions, the extent to which such
Participant may exercise his option as of the termination date of the
phase shall depend upon the amount actually withheld through payroll
deductions for such Participant. A Participant may also completely
discontinue participation in the Plan as provided in Paragraph 9(a)
hereof.
(c) Payroll deductions which are authorized by Participants who are
paid compensation in foreign currency shall be maintained in payroll
deduction accounts (as provided in Paragraph 11) in the country in which
such Participant is employed until exercise of the option. Upon exercise
of the option granted to such Participant, the amount so withheld shall be
used to purchase up to the maximum number of shares of stock which is
subject to that Participant's option pursuant to Paragraph 8(a)(i) below,
determined on the basis of the Rate of Exchange for currency as of the
exercise date. Upon exercise of the option, the option price shall be paid
to the Company in dollars after having been converted at the Rate of
Exchange as of the exercise date, and the extent to which the Participant
may exercise his option is dependent, in part, upon the Rate of Exchange
as of such date.
8. OPTIONS.
(a) GRANT OF OPTION.
(i) NUMBER OF SHARES. A Participant who is employed by the
Participating Employer as of the commencement date of a phase shall be
granted an option as of such date to purchase that number of whole
shares of common stock of the Company determined as of the termination
date of that same phase by dividing the total amount actually credited
to that Participant's account under Paragraph 7 hereof by the option
price set forth in Paragraph 8(a)(ii), provided that in no event shall
an option be granted for shares in excess of the maximum number
permitted in Paragraph 8(a)(iv)(A), and subject to such further
limitations set forth in Paragraph 8(a)(iv).
(ii) OPTION PRICE. The option price per share for such common stock
shall be the lesser of:
A. Eighty-five percent (85%) of the fair market value per
share of such common stock on the commencement date of the phase;
or
B. Eighty-five percent (85%) of the fair market value per
share of such common stock on the termination date of the phase.
(iii) FAIR MARKET VALUE. The fair market value of the Company's
common stock on such dates (or the last preceding business day if such
date is a Saturday, Sunday or holiday) shall be computed as follows:
A. If the Company's common stock shall be listed on any
national securities exchange, then such price shall be computed on
the basis of the closing sale price of the common stock on such
exchange on each such date, or, if no sale of the common stock has
occurred on such exchange on that date, on the next preceding date
on which there was a sale of the common stock;
B. If the common stock shall not be so listed, then such price
shall be the mean between the highest bid and asked prices quoted
by a recognized market maker in the common stock on each such
date; or
C. If the common stock shall not be so listed and such bid and
asked prices shall not be so quoted, then such price shall be
determined by an investment banking firm acceptable to the
Company.
(iv) LIMITATIONS ON PURCHASE. Anything herein to the contrary
notwithstanding:
A. The maximum number of shares subject to a Participant's
option in any phase is $25,000 of fair market value of the
Company's common stock as of the commencement date of the phase,
or such lesser amount as is required pursuant to this Paragraph
8(a)(iv).
B. A Participant shall not have the right to purchase common
stock under all employee stock purchase plans of the Company, its
subsidiaries or its parent, if any, at a rate which exceeds
Twenty-Five Thousand Dollars ($25,000) of fair market value of
such stock as determined at the time such option is granted (which
is equal to $21,250 of stock at 85% of fair market value on the
commencement date of the phase) for each calendar year in which
such option is outstanding at any time.
C. No Employee shall be granted an option if, immediately
after the grant, such Employee would own and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock
of the Company, its parent, if any, or of any Subsidiary of the
Company. For purposes of determining stock ownership under this
subparagraph (C), the rules of Section 424(d) of the Internal
Revenue Code, or any successor provision, shall apply.
D. The Committee may, in its discretion, limit the number of
shares available for option grants during any phase, as it deems
appropriate.
(b) EXERCISE OF OPTION.
(i) A Participant may, by written notice to his Participating
Employer at any time during the period of October 1 through October 20
(or such other date as provided in Paragraph 6) immediately preceding
the termination date of the phase, elect, effective as of the
termination date of that phase, not to exercise his option to purchase
any common stock or to exercise his option to purchase a specified
number of shares of common stock less than the maximum number of
shares he is authorized to purchase pursuant to Paragraph 8(a)(i). In
such event, his option shall be permitted to lapse, in whole or in
part, in accordance with such election, and the cash amounts credited
to his account shall be distributed to him as soon as practicable
after the termination date of the phase.
If a Participant fails to give such written notice to the
Participating Employer as provided herein, his option for the purchase
of such number of shares of common stock as determined pursuant to
Paragraph 8(a) will be exercised automatically for him as of the
termination date of that phase. In no event shall a Participant be
allowed to exercise his option for more shares than can be purchased
with the payroll deductions actually credited to his account during
such phase, whether or not the deductions actually credited are less
than the full amount to be credited as determined on the commencement
date of the phase pursuant to Paragraph 7(a) hereof, it being intended
that the sufficiency of amounts actually credited to a Participant's
account be a condition to the exercise of the option by such
Participant.
(ii) Fractional shares of common stock will not be issued under the Plan.
For Participants who use their funds to purchase the maximum amount
of stock permissible at the end of a phase, any cash amount that
remains in the Participant's account because it is insufficient to
purchase a whole share of common stock shall be held in the account
until the exercise date of the next subsequent phase, at which time
it will be included in the funds used to purchase common stock for
that phase, unless such amount is withdrawn pursuant to Paragraph
9(a) or the Committee, in its discretion, elects to pay out such
cash amount to Participants.
(iii) Upon issuance of the common stock to the Participant at the end of
a phase, the dividends payable on such stock will be automatically
reinvested in the Company's common stock under the Medtronic, Inc.
Dividend Reinvestment Plan (the "DRP") unless the Committee, in its
discretion, determines otherwise. The Participant has the right,
upon written notice to the Company's transfer agent (Norwest Bank
Minnesota, N.A.) as provided in the DRP, to elect instead to receive
the dividends directly by check.
(c) ISSUANCE AND DELIVERY OF STOCK. As promptly as practicable after
the termination date of any phase, the Company will issue the stock
purchased under the Plan. The Company may determine, in its discretion,
the manner of delivery of common stock purchased under the Plan, which may
be by electronic account entry into new or existing accounts, delivery of
stock certificates or such other means as the Company, in its discretion,
deems appropriate. The Company may, in its discretion, hold such stock on
behalf of the Participants during the restricted period set forth in
Paragraph 8(d) below.
(d) RESTRICTIONS ON RESALE OR TRANSFER OF STOCK. Except in the case of
a Participant who exercises his option pursuant to Paragraph 9(c) hereof,
shares of common stock acquired by a Participant hereunder may not be sold
or transferred until after the earlier of (1) October 31 immediately
following the date on which such shares are issued or (2) the death of
such Participant.
Any attempt by the Participant to sell or transfer such shares in
violation of this Paragraph 8(d) shall be considered null and void and of
no force or effect. During such restricted transfer period, each
certificate and account evidencing such shares of common stock shall bear
an appropriate legend or stop transfer order, respectively, referring to
the terms, restrictions and conditions applicable to the transfer of such
shares.
9. WITHDRAWAL OR TERMINATION OF PARTICIPATION.
(a) WITHDRAWAL. A Participant may, at any time on or before the
October 20 immediately preceding the termination date of a phase (or such
other date as provided in Paragraph 6 as the deadline to elect to
participate in the next phase), withdraw all payroll deductions then
credited to his account by giving written notice to his Participating
Employer. Promptly upon receipt of such notice of withdrawal, all payroll
deductions credited to the Participant's account will be paid to him and
no further payroll deductions will be made for such Participant during
that phase. In such case, the option granted the Participant under that
phase of the Plan shall lapse immediately. Partial withdrawals of payroll
deductions may not be made.
(b) TERMINATION OF EMPLOYMENT. If a Participant's employment shall be
terminated for reasons other than Retirement or Disability prior to the
termination date of any phase of the Plan in which he is participating,
the option granted to such Participant under the Plan shall lapse
immediately and the payroll deductions credited to his account shall be
returned to him.
(c) RETIREMENT OR DISABILITY. If the Participant terminates employment
prior to the last day of a phase in which he is participating as a result
of Retirement or Disability, the date for exercising his option as well as
the termination date of such phase solely with respect to such Participant
shall be considered for all purposes of this Plan as being the last day of
the month in which such Participant's employment is terminated. In such
event, he shall remain a Participant hereunder until the termination date
of the phase as applicable to him, he shall be entitled to exercise his
option as of such date in accordance with the provisions of this Plan, and
any shares of stock acquired by him pursuant to exercise of his option
shall not be subject to the restrictions on transfer as otherwise provided
for under Paragraph 8(d) hereof. If such Participant dies prior to the
termination date of the phase as applicable to him, his option shall lapse
immediately and the provisions of Paragraph 9(d)(i) hereof shall apply.
(d) DEATH.
(i) If the Participant dies before the termination date of any
phase of the Plan in which he is participating, the option granted
shall lapse immediately and the payroll deductions credited to his
account shall be paid to his beneficiary pursuant to Paragraph 14
below. If the Participant elects not to exercise his option pursuant
to Paragraph 8(b)(i) and the Participant dies before the amounts
credited to his account have been distributed to him, such amounts
shall be paid to his beneficiary pursuant to Paragraph 14 below.
(ii) In the event a Participant dies after exercise of his option,
but prior to the delivery to him of the common stock and cash, if any,
to be transferred pursuant to the exercise, any such stock and cash
shall be delivered by the Company to the joint tenant named pursuant
to Paragraph 10(d) hereof or, if none, the executor or administrator
of the estate of the Participant. In the event no such executor or
administrator has been appointed as of the date for delivery, the
stock shall be held by the Company until it receives written
notification from the estate of such appointment and shall then be
payable to the representative of the estate. The Company may, in its
discretion, deliver the cash, if any, in accordance with Paragraphs
9(d)(i) and 14 as if the participant died prior to exercising his
option.
10. STOCK RESERVED FOR OPTIONS.
(a) Three million (3,000,000) shares of common stock of the Company,
ten cents ($.10) par value per share (or the number and kind of securities
to which such shares may be adjusted in accordance with Paragraph 12), are
reserved for issuance upon the exercise of options granted under the Plan.
Shares subject to the unexercised portion of any lapsed or expired option
may again be subject to option under the Plan.
(b) If the total number of shares of common stock for which options
are to be granted on the commencement date of a given phase exceeds the
number of shares then remaining available under the Plan (after deduction
of all shares for which options have been exercised or are then
outstanding) and if the Committee does not elect to cancel such phase
pursuant to Paragraph 4, the Committee shall make a pro rata allocation of
the shares remaining available in as nearly a uniform and equitable manner
as practicable. In such event, the payroll deductions to be made pursuant
to the Plan which would otherwise become effective on such commencement
date shall be reduced accordingly. The Committee shall give written notice
of such reduction to each Participant affected.
(c) The Participant (or a joint tenant named pursuant to Paragraph
10(d) hereof) shall have no rights as a shareholder with respect to any
shares subject to the Participant's option until the date of issuance of
such shares to such Participant. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is
prior to the issuance date of such stock, except as otherwise provided
pursuant to Paragraph 12.
(d) The shares of common stock to be delivered to a Participant
pursuant to the exercise of an option under the Plan will be registered in
the name of the Participant or, if the Participant so directs by written
notice to the Committee prior to the termination date of that phase of the
Plan, in the names of the Participant and one other person as joint
tenants with rights of survivorship, to the extent permitted by law. Any
shares of stock so registered in the names of the Participant and his
joint tenant shall be subject to any applicable restrictions on the right
to transfer such shares during such Participant's lifetime as otherwise
provided in Paragraph 8 hereof.
11. ACCOUNTING AND USE OF FUNDS. Payroll deductions for each Participant
shall be credited to an account established for him under the Plan. A
Participant may not make any separate cash payments into such account. Such
account shall be solely for bookkeeping purposes and no separate fund or
trust shall be established hereunder. All funds from payroll deductions
received or held by the Participating Employers under the Plan may be used,
without limitation, for any corporate purpose by the Participating Employers
who shall not be obligated to segregate such funds. Such accounts shall not
bear interest.
12. ADJUSTMENT PROVISION. Subject to any required action by the shareholders
of the Company, in the event of an increase or decrease in the number of
issued and outstanding shares of common stock of the Company resulting from a
subdivision or consolidation of shares or other capital adjustment or the
payment of a stock dividend or any other increase or decrease in the number
of such shares, effected without receipt of consideration by the Company, the
number of shares of stock subject to each outstanding option and the number
of shares remaining reserved for grant and not yet subject to option and the
price per share thereof shall be automatically equitably adjusted to reflect
such change. In the event of sale by the Company of all of its assets and the
consequent discontinuance of its business, or in the event of a merger,
consolidation or liquidation of the Company, or upon occurrence of any of the
particular events described in Section 2(f) or 14(g) of the Medtronic, Inc.
1994 Stock Award Plan, as amended from time to time, the Board of Directors
may either (i) amend or adjust the provisions of this Plan to provide for the
acceleration of the current phase and the exercise of options thereunder or
(ii) continue the Plan with respect to completion of the then current phase
and the exercise of options thereunder. In the event of such continuance,
Participants shall have the right to exercise their options as to an
equivalent number of shares of stock of the corporation succeeding the
Company by reason of such sale, merger, consolidation, liquidation or other
event, as provided pursuant to Section 424(a) of the Internal Revenue Code,
or any successor provision. The grant of an option pursuant to the Plan shall
not limit in any way the right or power of the Company or Board of Directors
to make adjustments, reclassifications, reorganizations or changes in the
Company's capital or business structure or to merge, consolidate, dissolve,
liquidate, sell or transfer all or any part of its business or assets.
13. NON-TRANSFERABILITY OF OPTIONS. Options granted under any phase of the
Plan shall not be transferable and shall be exercisable only by the optionee.
Neither payroll deductions credited to a Participant's account, nor any
rights with regard to the exercise of an option or the receipt of common
stock under any phase of the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way by the Participant. Any such attempted
assignment, transfer, pledge or other disposition shall be null and void and
without effect, except that a Participating Employer may, at its option,
treat such act as an election to withdraw funds in accordance with Paragraph
9.
14. DESIGNATION OF BENEFICIARY. A Participant may file a written designation
of a beneficiary who is to receive any cash credited to the Participant under
any phase of the Plan in the event of such Participant's death prior to
exercise of his option pursuant to Paragraphs 9(c) or 9(d) hereof. The
beneficiary designation may be changed by the Participant at any time by
written notice to the Participating Employer.
Upon the death of a Participant and receipt by the Participating Employer of
proof deemed adequate by it of the identity and existence at the
Participant's death of a beneficiary validly designated under the Plan, the
Participating Employer shall deliver such cash to such beneficiary. In the
event there is no validly designated beneficiary under the Plan who is living
at the time of the Participant's death, the Participating Employer shall
deliver the cash credited to the account of the Participant to the executor
or administrator of the estate of the Participant, or if no such executor or
administrator has been appointed to the knowledge of the Participating
Employer, it may, in its discretion, deliver such cash to the spouse or to
any one or more dependents or relatives of the Participant, or if no spouse,
dependent or relative is known to the Participating Employer, then to such
other person as the Participating Employer may designate. The Participating
Employer will not be responsible for or be required to give effect to the
disposition of any cash in accordance with any will or other testamentary
disposition made by such Participant or in accordance with the provisions of
any law concerning intestacy, or otherwise. No designated beneficiary shall,
prior to the death of a Participant by whom he has been designated, acquire
any interest in any stock or in any option or in the cash credited to the
Participant under any phase of the Plan.
15. AMENDMENT AND TERMINATION. The Plan may be terminated at any time by the
Board of Directors provided that, except as permitted pursuant to Paragraph
12, no such termination will take effect with respect to any options then
outstanding without the consent of the optionees. Also, the Board may, from
time to time, amend the Plan as it may deem proper and in the best interests
of the Company or as may be necessary to comply with Section 423 of the
Internal Revenue Code or other applicable laws or regulations, provided that
no such amendment shall, without prior approval of the stockholders of the
Company (a) increase the total number of shares for which options may be
granted under the Plan (except as provided in Paragraph 12), (b) permit
payroll deductions at a rate in excess of ten percent (10%) of a
Participant's compensation or such other permissible maximum contribution
established by the Committee, (c) impair any outstanding option without the
consent of the optionee (except as provided in Paragraph 12), (d) change the
Employees or class of Employees eligible to participate under the Plan or (e)
materially increase the benefits accruing to Participants under the Plan.
16. NOTICES. All notices or other communications in connection with the Plan
or any phase thereof shall be in the form specified by the Committee and
shall be deemed to have been duly given when sent to the Participant at his
last known address, or his designated personal representative or beneficiary,
or to the Participating Employer or its designated representative, as the
case may be.
PRELIMINARY COPY
MEDTRONIC, INC.
ANNUAL MEETING -- AUGUST 30, 1995 PROXY
The undersigned appoints WINSTON R. WALLIN and RONALD E. LUND, and each of
them, as Proxies, each with the power to appoint his substitute, to represent
and vote, as designated below, all shares of the undersigned at the 1995
Annual Meeting of Shareholders of Medtronic, Inc. at the Medtronic, Inc.
Corporate Center at its Rice Creek facility, 7000 Central Avenue N.E.,
Minneapolis (Fridley), Minnesota, at 10:30 a.m., Central Daylight Time, on
Wednesday, August 30, 1995, and at any adjournment thereof.
The Board of Directors recommends votes FOR:
1. ELECT CLASS III DIRECTORS FOR THREE-YEAR TERMS:
Nominees: F. CALEB BLODGETT, ARTHUR D. COLLINS, JR., ANTONIO M. GOTTO, JR.,
M.D., THOMAS E. HOLLORAN and WINSTON R. WALLIN.
[ ] FOR all nominees listed above (except those whose names have been written
on the line below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
(To withhold authority to vote for any nominee, write that nominee's name on
the line below.)
________________________________________________________________________________
(Continued and to be signed and dated on the other side)
2. Approve amendment to Articles to increase authorized Common Stock from
200,000,000 shares to 800,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approve adoption of the 1995 Employees Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approve appointment of Price Waterhouse LLP as independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournment thereof.
Date: _________________________________ , 1995
______________________________________________
______________________________________________
______________________________________________
PLEASE DATE AND SIGN ABOVE exactly as name
appears, indicating, if appropriate, official
position or representative capacity. If stock
is held in joint tenancy, each joint owner
should sign.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL. THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS. MEDTRONIC, INC.
PRELIMINARY COPY
MEDTRONIC, INC.
ANNUAL MEETING -- AUGUST 30, 1995 PROXY
The undersigned appoints WINSTON R. WALLIN and RONALD E. LUND, and each of
them, as Proxies, each with the power to appoint his substitute, to represent
and vote, as designated below, all shares of the undersigned at the 1995
Annual Meeting of Shareholders of Medtronic, Inc. at the Medtronic, Inc.
Corporate Center at its Rice Creek facility, 7000 Central Avenue N.E.,
Minneapolis (Fridley), Minnesota, at 10:30 a.m., Central Daylight Time, on
Wednesday, August 30, 1995, and at any adjournment thereof.
The Board of Directors recommends votes FOR:
1. ELECT CLASS III DIRECTORS FOR THREE-YEAR TERMS:
Nominees: F. CALEB BLODGETT, ARTHUR D. COLLINS, JR., ANTONIO M. GOTTO, JR.,
M.D., THOMAS E. HOLLORAN and WINSTON R. WALLIN.
[ ] FOR all nominees listed above (except those whose names have been written
on the line below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
(To withhold authority to vote for any nominee, write that nominee's name on
the line below.)
________________________________________________________________________________
(Continued and to be signed and dated on the other side)
2. Approve amendment to Articles to increase authorized Common Stock
from 200,000,000 to 800,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approve adoption of the 1995 Employees Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approve appointment of Price Waterhouse as independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL. THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS.
Benefit Plan Shares
ESOP Shares
Restricted Shares
Registered Shares
Date: _________________________________ , 1995
______________________________________________
______________________________________________
______________________________________________
PLEASE DATE AND SIGN ABOVE exactly as name appears, indicating, if appropriate,
official position or representative capacity. If stock is held in joint tenancy,
each joint owner should sign.
