Medtronic plc
For the period ended Oct 17, 2024. Filed Aug 9, 2024.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
Oct 17, 2024 · Filed Aug 9, 2024
Contents
Process
ROLE AND RESPONSIBILITIES
Compensation Committee
The Compensation Committee establishes our compensation philosophy, program design and administration rules, and is the decision-making body on all compensation matters related to our NEOs. The Compensation Committee solicits input from an independent outside compensation consultant and relies on the consultant’s advice. For more information on the Compensation Committee, its members and its duties as identified in its charter, please refer to the section entitled “Committees of the Board and Meetings — Compensation Committee” beginning on page 22 of this proxy statement.
Independent Compensation Consultant
The Compensation Committee has engaged Semler Brossy, an independent compensation consulting firm (the “Independent Consultant”), to advise the Compensation Committee on all matters related to executive officer compensation. Specifically, the Independent Consultant conducts an annual competitive market analysis of total compensation for NEOs, provides relevant market data, updates the Compensation Committee on compensation trends and regulatory developments, and counsels the Compensation Committee on program designs and specific compensation decisions related to our CEO and other executives. The work listed above and review of Board of Director compensation is the only work completed by the Independent Consultant for Medtronic and the services of that firm are at the discretion and direction of the Compensation Committee.
Consistent with the NYSE listing standards, the Compensation Committee reviews and confirms the independence of its outside consultants on an annual basis. In connection with this process, the Compensation Committee has reviewed, among other items, a letter from Semler Brossy addressing its independence and the members of the consulting team serving the Compensation Committee, including the following factors: (i) other services provided to us by Semler Brossy, (ii) fees paid by us as a percentage of Semler Brossy’s total revenue, (iii) policies or procedures of Semler Brossy that are designed to prevent conflicts of interest, (iv) any business or personal relationships between the senior advisor of the consulting team and a member of the Compensation Committee, (v) any Company stock owned by the senior advisor or any member of that individual’s immediate family, and (vi) any business or personal relationships between our executive officers and the senior advisor. The Compensation Committee discussed these considerations and concluded that the work performed by Semler Brossy and its senior advisor involved in the engagement did not raise any conflict of interest.
Chief Executive Officer
In making compensation decisions for executive officers reporting to the CEO, the Compensation Committee solicits the views of our CEO and the Independent Consultant. The Compensation Committee conducts executive sessions without the CEO present. The CEO does not make recommendations to the Compensation Committee about his own compensation.
MEDTRONIC I 2024 Proxy Statement 34
GOVERNANCE
The Committee leverages best-in-class governance practices to design and administer Medtronic’s executive compensation programs. In particular, the table below notes the market-leading governance features that are incorporated into our programs:
| Summary of Key Compensation Practices | ||
|---|---|---|
| What We Do | ü | Pay and shareholder performance alignment |
| ü | Responsible use of shares under our long-term incentive program | |
| ü | Multiple performance metrics under our short-and long-term performance-based plans discourage short-term risk-taking at the expense of long-term results | |
| ü | Targets for performance metrics aligned to financial goals communicated to shareholders | |
| ü | Payout caps on MIP and LTIP to mitigate unnecessary risk-taking | |
| ü | Limited perquisites | |
| ü | Double-trigger change of control vesting of compensation and benefits, including equity | |
| ü | Comprehensive clawback policy that applies to annual incentive, long-term incentives and equity compensation | |
| ü | Competitive stock ownership guidelines and holding periods on portions of after-tax shares until guidelines are met | |
| ü | Engagement of an independent compensation consultant | |
| What We DoNot Do | ý | No defined benefit supplemental executive retirement plans or special healthcare coverage for NEOs |
| ý | No “single-trigger” vesting of equity awards in event of a change of control | |
| ý | No dividends or dividend equivalents on unearned equity compensation | |
| ý | No excessive severance benefits | |
| ý | No hedging and pledging of Company stock permitted for executives | |
| ý | No “golden parachute” excise tax gross ups | |
| ý | No backdating or repricing of stock option awards | |
| ý | No multi-year compensation guarantees | |
USE OF MARKET COMPETITIVE COMPENSATION DATA
The Compensation Committee considers relevant market pay practices when establishing executive compensation program and pay levels, including base salary and annual and long-term incentives. To facilitate our ability to benchmark competitive compensation levels and practices, the Compensation Committee established a Comparison Group. The Compensation Committee selected the companies that constitute the Comparison Group after discussion with its Independent Consultant. The Comparison Group is selected using Compensation Committee approved criteria designed to identify companies with whom we are most likely to compete for talent. The criteria the Committee considers include items such as:
Size (measured by revenue, market capitalization, enterprise value and other measures)
Complexity and global footprint
Companies that represent Medical Device, Life Sciences, Technology and Industrials
The Compensation Committee uses data from the Comparison Group to establish a competitive market range within which pay is positioned to reflect experience and performance. Consistent with our pay-for-performance philosophy, we establish an award range for short-term and long-term incentives that generates above-market pay for above-market performance and below-market pay for below-market performance. In addition to the competitive market information, the Compensation Committee also reviews information about performance, potential, expertise, and experience for each NEO.
MEDTRONIC I 2024 Proxy Statement 35
The following table summarizes the selection criteria used by the Compensation Committee to select the Comparison Group.
| Selection Criteria | |
|---|---|
| Start with Standard & Poor’s 100 largest U.S. companies, the S&P 500 Healthcare Equipment and Supplies, and the S&P 500 Information Technology Indices Limit to Several Relevant Global Industry Classification Standard Sectors 1. Health Care2. Consumer Staples3. Industrials4. Information Technology | Consider the following criteria for selecting companies 1. Overall company size2. Health care company3. Data science and artificial intelligence4. Global operations5. Manufacturer6. Government contractor7. Geographic competitor8. Proxy advisory peer companies |
During fiscal year 2023 the Independent Consultant recommended the following changes to the Comparison Group: (1) the removal of Boeing, Lockheed Martin, Raytheon and Pepsico and (2) the addition of GE Healthcare Technologies. None of the companies removed list Medtronic as a peer. These changes ensure the Comparison Group remains reasonable and appropriate for go-forward benchmarking of market practices.
Comparison Group Size Comparisons
| 24-Company Comparison Group | |
|---|---|
| 3M | GE Healthcare Technologies |
| Abbott Laboratories | Gilead Sciences |
| AbbVie | Honeywell |
| Amgen | IBM |
| Baxter | Intel |
| Becton, Dickinson, & Co. | Johnson & Johnson |
| Biogen | Merck & Co. |
| Boston Scientific | Pfizer |
| Bristol Myers Squibb | Qualcomm |
| Cisco Systems | Stryker |
| Danaher | Thermo Fisher |
| Eli Lilly & Co. | United Health Group |
MEDTRONIC I 2024 Proxy Statement 36
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