Medtronic shareholders are down 12% in five years. They vote Thursday.

Boardroom Alpha · Executive Brief

Medtronic (MDT) shareholders vote Thursday in Galway. Since Geoff Martha became chief executive in April 2020, the stock has returned 10.5% in all, about 1.6% a year; the S&P 500 compounded at 18% a year.

In August 2025, after what it called “constructive dialogue” with the activist Elliott, the board added two directors and set up growth and operations committees, both chaired by Martha. Elliott called them “the right steps.” Organic growth reached 5.8% in the fiscal year to April, and the diabetes business, MiniMed, is being split off.

The pressure point is the board, not pay. Last year say on pay drew 93.5%, and the auditor and the three Irish-law items 90.8% or more. Craig Arnold, the lead independent director, drew 86.9% and has since taken a third outside board seat; Kendall Powell, a director since 2007, has drawn about 90% four years running.

The record: better lately, still behind

Over five years Medtronic trails the market and its peers. Its total return to Oct. 12 was −12.3%, against 91.9% for the S&P 500 and 48.8% for health care stocks, and the five device makers in Medtronic’s pay peer group with five years of trading had a median return of 4%. Device stocks as a group fell 12.6%, about as much as Medtronic.

The last three years are better. Medtronic returned 42.2%, ahead of device stocks’ 19.4% and health care’s 39.7% but behind the S&P 500’s 86.1%.

Sales have turned up. Organic revenue, which excludes currency and deals, grew 5.8% in the fiscal year to April, the company’s best in 10 years, and revenue has risen to $36.4 billion from $30.1 billion in fiscal 2021, Martha’s first full year.

Earnings have not kept pace. Adjusted earnings per share rose 0.7% last year, with tariffs among the costs. Profit has not grown since the post-pandemic rebound: earnings per share under standard accounting rules were $3.73 in both fiscal 2022 and fiscal 2026, and free cash flow fell to $5.4 billion last year from $6 billion in fiscal 2022.

After a first quarter helped by an extra week, Medtronic raised this year’s guidance to organic growth of 7.25% to 7.75% and adjusted earnings of $5.94 to $6.00 a share, up 7.4% to 8.5%.

Our read: Martha has had six and a half years, and over that stretch Medtronic’s 1.6% a year trailed even device stocks’ 3.4%. The pickup in growth is real, but the MiniMed split-off removes a business that grew faster than the rest of Medtronic last year: 7.9% organic, against 5.6%. What remains leans on cardiovascular, up 9.3%, and on margins.

Results this far behind put the burden on the board, and this ballot is shareholders’ annual check on it.

Who decides

The largest fund families have backed the board. Index funds hold about 35% of Medtronic’s shares, and at last year’s meeting Vanguard, BlackRock and State Street cast 31% of the votes.

Every fund family with more than 2.5% of the votes supported the pay plan and every director it reported a vote on. The 13% against Arnold came almost entirely from outside the largest families.

The board: Martha chairs it, and both new committees (Item 1)

Martha has also been chairman since December 2020, and he chairs both committees the board set up after the Elliott talks, according to an 8-K: Growth, on deals and capital allocation, and Operations, on margins and the supply chain. The independent directors meet without management at every regular board and committee meeting except those two, the proxy statement says.

The 8-K’s press release promised an investor day in mid-2026 on the committees’ work. It was pushed back, and no filing gives the new date: the chief financial officer told an investor conference on Sept. 15 that it is now due Dec. 10 and 11.

Arnold, 66, retired as Eaton’s chief executive in May 2025 and has since joined three public boards: Procter & Gamble and KKR in 2025 and Honeywell in November 2025. When Honeywell spun off its aerospace business in June, he left the parent’s board to become independent chair of Honeywell Aerospace, according to P&G’s August proxy statement.

With Medtronic, where he is lead director and chairs the nominating committee, that makes four boards, two of them in leadership roles. None is an easy assignment.

Over the year to Oct. 12, when the S&P 500 returned 20.4%, P&G returned 5.3% as its sales growth slowed and its chief executive changed, KKR lost 21.8% and Medtronic was flat. Honeywell Aerospace has fallen 29% since it began trading on June 29, while the S&P 500 rose 5.3%.

Given the challenges across all four boards, shareholders will be asking about his capacity and focus.

Some investors that publish their votes early oppose individual directors. CalSTRS, the California teachers’ pension fund, opposes four nominees, including Arnold, Powell and Groetelaars, and publishes no rationale; Vision Super, an Australian pension fund, cites for Powell “Tenure too long for non-executive director,” among other concerns.

Since 2016, only one current director has bought Medtronic stock on the open market: Bill Jellison, who bought 5,000 shares for about $463,000 days after joining in August 2025. Martha has bought no shares since 2016 and sold 118,471, mostly after exercising options and none since June 2024. He owns about 206,000 shares outright, worth about 14 times his salary.

Five of the 11 outside directors, including the three who joined in 2025, have yet to reach the ownership guideline of five times the $175,000 cash retainer; all five comply with the rule to keep 75% of the after-tax shares they receive until they do.

Our read: The slate as a whole leans toward re-election. John Groetelaars and Jellison, added after the Elliott talks, brought medical-device experience, and Jellison put his own money in, as we like to see.

The board says the new committees let it “move with speed and decisiveness in delivering results.” We would rather see an independent director chair the Growth Committee, which reviews the chief executive’s own deal and spending plans, and a full account of the committees’ work at the December investor day.

Arnold and Powell are harder calls. With Martha chairing the board and both new committees, the lead director is the main independent check. Since retiring from Eaton, Arnold has taken on three more boards and chairs one of them. His record is not the question; his time is, and the board could say how it weighed that.

Powell, 72, has served 19 years and draws the steadiest dissent on the board; a succession plan for his seat would address it.

Say on pay: at or above target while the stock trailed the S&P 500 (Item 3)

Martha’s reported pay rose 8% to $22.9 million in the fiscal year to April, after the pay committee raised his targets to keep him at the median of its 22-company peer group. The annual bonus paid 103% of target: sales growth and free cash flow beat their goals, while adjusted earnings per share of $5.49 missed the $5.74 goal.

The three-year performance shares, for fiscal 2024 to 2026, paid 101.5%. Their relative-return part paid 88% under the plan’s schedule: the stock’s return beat 44% of the companies in the S&P 500 Health Care Equipment index, short of the halfway target.

The company says Martha’s pay is modest for the results: valued at the year-end share price, his three-year pay ranked in the bottom quarter of the peer group, below Medtronic’s rank for total return, and the stock trades just below last year’s option exercise price. Vision Super opposes the plan, citing “Excessive CEO compensation.”

For fiscal 2027, gross margin replaces relative return as half of the performance-share test, and the stock’s return against its index will only adjust the payout, by an amount the proxy does not disclose.

Our read: The bonus paid 103% of target in a fiscal year when the stock returned 2.1%, against 29.7% for the S&P 500, though it beat the health care equipment index’s −13.9%. The three-year performance shares paid 101.5% with the stock’s return below the index median.

Still, the evidence leans toward the board: the payouts followed the formulas, the committee kept its earnings goal through the tariff hit, and target pay sits at the peer median.

The concern is next year’s design, which moves further from returns just as the turnaround is supposed to show up in them. What would change our read: disclosure that the return adjustment can cut payouts materially when Medtronic trails its index.

The Irish-law items (Items 4–6)

Medtronic is incorporated in Ireland, and Irish law requires three routine share votes each year:

• Approval to issue shares (Item 4, up to 20% of its capital for 18 months)
• Approval to sell them for cash without first offering them to existing holders (Item 5, up to 20%; it needs 75% of the votes)
• Approval to let the company and its subsidiaries buy back stock (Item 6, up to 10%)

Vision Super opposes Item 5, noting that the “potential capital increase is 20.00%.”

The company calls the authority “consistent with Irish market practice” and says it helps it fund acquisitions and raise capital; it has paid for its recent deals in cash. Medtronic has been retiring shares, not issuing them: its share count is down about 4% since fiscal 2022, and the oversubscribed MiniMed exchange offer will retire about 4.3% more.

Also on the ballot: the auditor (Item 2)

Shareholders also vote to ratify PwC as auditor; it drew 90.8% support last year. We see no reason for shareholders to object.

What to watch

• Oct. 15
  The annual meeting in Galway. Medtronic must report the results in an 8-K within four business days.
• MiniMed exchange
  Oversubscribed: on Oct. 12 Medtronic said it would accept 55 million of the 298 million shares tendered, about 4.3% of its stock. The final proration is due Oct. 14.
• Investor day
  Dec. 10 and 11, per the chief financial officer, after a mid-2026 promise. The company has said it will discuss the Growth and Operations committees’ work there.
• 2027 proxy
  How much the stock’s return against its index can move the new performance-share payout.

Sources: Medtronic’s 2026 proxy statement, its 10-K, 8-K and exchange-offer filings, and Form 4 filings; Procter & Gamble’s 2026 proxy statement; Boardroom Alpha data on vote results, fund vote reports, 13F holdings and prices; and votes investors published before the meeting. Medical devices: iShares U.S. Medical Devices ETF; health care: Health Care Select Sector SPDR; device pay peers: Abbott, Baxter, Becton Dickinson, Boston Scientific and Stryker. Returns run to the Oct. 12, 2026 close. Boardroom Alpha is an independent research and analytics company and does not invest. This brief is for information only and is not investment advice or a proxy solicitation.