Approach

Medtronic’s commitment to ethics and compliance begins at the highest levels of the company. Our Chief Ethics and Compliance Officer is a member of Medtronic senior management, chairs the Executive Compliance Committee, and reports directly to the Chief Executive Officer. He has direct and independent access to the Board of Directors, and reports regularly to the Audit Committee and at least annually to the full Board.

Under the leadership of the Chief Ethics and Compliance Officer, the Office of Ethics and Compliance:

• coordinates and tracks Code of Conduct certification activities,
• facilitates a full curriculum of online ethics and compliance training,
• maintains the Voice Your Concern Policy,
• coordinates investigations of allegations of suspected misconduct, and
• supports our compliance partners within each business and geography to ensure employees are aware of and comply with our Code of Conduct, Business Conduct Standards and other Medtronic policies.

Medtronic’s Voice Your Concern Policy encourages all employees to exercise Medtronic core behaviors – customer focus, candor, trust, respect, courage and accountability – by reporting any potential wrongdoing or misconduct. The policy outlines several avenues for reporting, including a Voice Your Concern web site and call center hosted by an independent third party.

Ethics and Compliance Training

In June 2009, we initiated mandatory Medtronic Corporate Integrity Agreement training. The training covers our Code of Conduct, information on our ethics and compliance program, and our corporate integrity agreements. All U.S. employees, and others who sell or market our products in the United States, must complete the mandatory training within 30 days of their hire date.

The Office of Ethics and Compliance uses a third-party vendor to facilitate ethics and compliance training across the company. A curriculum of courses is offered, and employees are automatically enrolled in certain courses based on their positions within Medtronic.

Commitment to Principled Collaboration with Healthcare Professionals and Healthcare Organizations

In February 2009, Medtronic announced a commitment to voluntarily disclose certain payments made to U.S. healthcare professionals and healthcare organizations. On June 1, 2010, we began posting annual payments made to physicians in excess of $5,000 for royalties and consulting services at www.medtronic.com/collaboration. Consulting agreements include services in areas such as education and training, clinical trial design and administration, and product design and safety. Each interaction must be conducted with integrity and reflect our fundamental goal of benefitting patients.

We believe this transparency will help people understand the critical role that collaboration between industry and physicians plays in our ability to fulfill our Mission. Medtronic will commission an annual third-party audit of the report and publish a summary of the audit results.

In addition, Medtronic adopted a new enterprise-wide process to plan for healthcare provider and healthcare organization service agreements. This process provides enhanced documentation and analysis regarding the business need for services and the selection of a particular individual or entity to perform those needed services. We also standardized our consulting-services agreements to ensure consistency across the corporation. Medtronic will continue to use our documented fair market value methodology for all compensation to healthcare providers and healthcare organizations. We are placing annual limits on healthcare provider services relationships and are implementing a fixed fee compensation model for training and education events. We are placing restrictions on royalty earners and their participation in clinical research for products on which their royalties are earned.

Medtronic will conduct regular holistic reviews of each physician relationship. We are taking a One Medtronic enterprise-wide approach to the compliance standards. In addition, Medtronic will engage interested stakeholders industry-wide to facilitate dialogue on best practices and critical issues in physician-industry collaboration.