Summary of Compensation Arrangements for Medtronic, Inc. Executive Officers and Directors (2009-2010)

Steve Mahle Retirement

          On April 30, 2009, Mr. Mahle announced his intent to retire from Medtronic. Mr. Mahle was eligible for an early retirement program that was offered to all eligible employees but was requested by the Company to delay his retirement until September 2009, rather than retire on the date specified in the early retirement program. The Company recommended, and the Compensation Committee approved on June 18, 2009, an enhancement to Mr. Mahle’s retirement benefit that provided the same benefit under the Medtronic, Inc. Supplemental Executive Retirement Plan as if he had retired under the early retirement program. The lump sum value of this enhancement is approximately $571,000 which will be paid out to Mr. Mahle over a 15-year period.

Compensation Arrangements for Non-Employee Directors

          Non-employee director compensation consists of an annual retainer, annual cash stipends for committee chairs and special committee members, an annual stock option grant and an annual grant of deferred stock units. In addition, all new non-employee directors receive an initial stock option grant and a pro-rated annual stock option grant based on the number of days remaining in the plan year.

          For fiscal year 2010, the non-employee directors reduced the value of their annual retainer by 5% from $80,000 to $76,000. The chairs of the Corporate Governance, Compensation and Technology and Quality Committees receive an annual cash stipend of $10,000 and the chair of the Audit Committee receives an annual cash stipend of $15,000. In addition, non-chair members of the Audit Committee receive an annual cash stipend of $5,000. Members of a Special Committee receive an additional annual fee of $10,000 for each Special Committee upon which they serve, so long as the committee is convened. The annual retainer and annual cash stipend are reduced by 25% if a non-employee director does not attend at least 75% of the total meetings of the Board and Board committees on which such director served during the relevant plan year.

          Non-employee directors are granted stock options on the first business day of the fiscal year in an amount equal to $80,000 divided by the fair market value of a share of Medtronic common stock on the date of grant (which will also be the exercise price of the option). Directors granted deferred stock units on the first business day of the fiscal year in an amount equal to $80,000 (on a pro-rata basis for participants who are directors for less than the entire preceding plan year and reduced by 25% for those directors who failed to attend at least 75% of the applicable meetings during the prior fiscal year) divided by the fair market value of a share of Medtronic common stock on the date of grant. On the first business day of the fiscal quarter immediately following the fiscal quarter during which a non-employee director first becomes a director, each new non-employee director receives (1) a one-time initial stock option grant for a number of shares of Medtronic common stock equal to $160,000 divided by the fair market value of a share of Medtronic common stock on the date of grant (which will also be the exercise price of such option); and (2) a pro-rated annual stock option grant for a number of shares of Medtronic common stock equal to $80,000 (pro-rated based on the number of days remaining in the fiscal year) divided by the fair market value of a share of Medtronic common stock on the date of grant (which will also be the exercise price of such option).