The Changing Role of the CFO and Finance Organization

1. The Changing Role of the CFO and Finance Organization Gary Ellis Senior Vice President and Chief Financial Officer Medtronic, Inc.

2. Agenda • Challenges Facing the Finance Organization • Changing Expectations of Finance • Medtronic Finance Vision • Developing Future Finance Talent

3. CFO and Finance Organization Challenges External • SOX • Regulatory and Legal Liability • Global Competition • Shareholder Demands and Activism • Increasing Capital and Return Expectations Internal • Too Much Detail and Complexity • Reduced Finance Resources • Increasing Business Expectations • Strategy Leader • Risk Management Expectations • Improving Productivity Requirements

4. The Four Faces of the CFO The key to understanding finance’s challenges and opportunities for finance transformation. Leading Edge Stimulate behaviors across the organization to achieve strategic and financial objectives Provide financial leadership in determining strategic business direction and align financial strategies Catalyst Strategist Threshold Performance Performance Execution FinanceFunction Balance capabilities, costs and service levels to fulfill the finance organization’s responsibilities Efficiency Control Protect and preserve the assets of the organization Steward Operator 2007 Deloitte Development LLC

5. Little or no impact Substantial impact Moderate impact Impacting Factors on Finance Executive Roles In your opinion, which of the following elements have had the greatest (or least) impact on the role and responsibilities of the corporate finance function at your company over the last five years? Change in government regulations of financial reporting and governance Business managers’ need for finance’s assistance and support Board of directors and/or audit committee demands Investor analyst or lender scrutiny Financial market conditions 0 20 40 60 80 100% (Percentage of respondents) 2007 CFO Publishing Corp.

6. Impacting Factors on Finance Executive Roles In your opinion, have the following dimensions changed in the past five years at your company? Decrease Increase No change Breadth of financefunction’s responsibility Accountability for yourpersonal performance Your authority to make decisionsand allocate resources Respect for the finance functionwithin your company Resources (funding, staff)for the finance function Conflict between finance and other groups within your company 0 20 40 60 80 100% (Percentage of respondents) 2007 CFO Publishing Corp.

7. Less time More time Same amount of time Impacting Factors on Finance Executive Roles Compared with five years ago, how much time do you spend on the following activities? Contributing to company-wide strategy Regulatory compliance Financial planning and analysis Overseeing business operations Supporting Board of Directors’ information requests Managing auditors Human capital activities (hiring, training, developing finance staff) Communicating with analysts and investors 0 20 40 60 80 100% (Percentage of respondents) 2007 CFO Publishing Corp.

8. Less difficult More difficult No change Impacting Factors on Finance Executive Roles Compared with five years ago is attracting and retaining finance staff more or less difficult for your company? Mid-level staff and managers(associates and managers) Senior staff and managers(directors) Senior finance executives(CFO, VPs) Junior finance staff(clerks and specialists) 0 20 40 60 80 100% (Percentage of respondents) 2007 CFO Publishing Corp.

9. Perceptions of Finance

10. Finance Success Means Strong Management Skills Open Minded Independent Risk Minimizing Approachable Collaborative Caring Sympathetic Skeptical Compliant Risk Averse Communication Challenged Low in Trust Unemotional Low on Empathy … while remaining task-oriented, detailed and analytical

11. Levels of Finance Leadership Leadership = Initiative, Judgment, Perspective, Courage Financial Partner Business Partner Proactive Advisor Analysis Accounting Internal Control Cost Control Process Coordination Financial Reporting Use financial analysis to identify issues and opportunities Establish action plans to address issues and opportunities Implement action plans Knowledge of therapies, technologies, markets, customers Proactive business partner Develop and implement business strategies Help operations leaders “run the business” Lead cross-functional teams on “business” vs finance processes Counsel to operations management and challenging when/where appropriate

12. Medtronic Finance Vision Vision Statement Medtronic finance is a diverse, world-class team that operates with the highest ethical and business integrity, leadership and financial technical competence to provide innovative and value added contributions in its role as a full business partner in Medtronic’s mission.

13. Medtronic Finance Charter Medtronic Finance will at all times: • Ensure that Medtronic is operating in accordance with all legal and social requirements worldwide while maintaining high standards of professionalism, honesty and integrity. Maintain independence in thought and actions to do what is “right”. • Maintain strong technical competencies at all levels of the organization to ensure discipline and accuracy in all financial information while encouraging innovation to improve processes. • Maximize profits and growth potential by providing effective analysis, influence, leadership and control as business partners. • Protect shareholders’ interest by safeguarding the assets of the Company. • Deliver world-class service and productivity. • Develop effective leaders and partners through career opportunities that foster improved performance and professional growth.

14. Medtronic Finance Vision Business Partnering Leadership Business Judgment Innovation Control/ Discipline Talent Management Mobility Accountability Integrity Honesty Technical Competence

15. Finance OrganizationTalent Management Imperative Overall Goal Implement and drive a consistent and comprehensive talent assessment and development process across the global finance organization so that we have the right people, in the right jobs, at the right time to realize the finance vision of being world class.

16. Finance OrganizationTalent Management Imperative PURPOSE Drive sustained business excellence by intentionally and systematically identifying and developing talent capable of leading the organization consistent with the Medtronic Mission and business strategy. Why Talent? Talent management is the most critical organizational challenge that Medtronic will face in the next decade. Talent management ensures we have the right people, in the right jobs, at the right time. Talent management requires a fundamental change in the way we think about attracting, deploying and developing people at Medtronic. Critical Success Factors in Achieving Our Purpose • Fostering a culture that encourages candor and risk taking • Employment of formal leadership development processes • Adoption of a new talent mindset • The Talent Review Process Supports Our Purpose through 5 Key Steps • Alignment of talentwith strategic business goals • Formal assessment of organizational talent • Identification of high potentials • Define and drive actions to intentionally develop • talents into leaders for the company • Management of developmental assignments

17. Thinking Competencies - Judgment - Strategic Thinking - Innovation - Global Perspective - Customer Focus - Business Acumen People Competencies - Engagement - Change - Talent Development - Diversity - Relationship Building - Effective Communication Finance OrganizationMedtronic Competencies Personal Competencies - Integrity - Courage - Adaptability - Self Development Results Competencies - Planning - Results Orientation - Quality Orientation - Performance Management

18. Finance OrganizationFinance Functional Competencies • Business Partner • Finance and Accounting Knowledge • Financial Analysis • Internal Controls • Planning and Reporting • Technology, Knowledge and Application

19. Defining Talent Management • Strategic attention to talent decisionsthat enhance the competitive advantage of the business • Robust developmentof all employees to ensure competencies aligned with business objectives • Commitment to ensuring the identification, development and placement of top talent in key roles • Unyielding attention to leadership and critical talent pools

20. Do you know what is expected of you at work? Do you have the materials and equipment you need to do your work right? At work, do you have the opportunity to do what you do best every day? In the last seven days, have you received recognition or praise for doing good work? Does your supervisor, or someone at work, seem to care about you as a person? Is there someone at work who encourages your development? At work, do my opinions seem to count? Does the mission or purpose of my company make me feel that my job is important? Are my coworkers committed to doing quality work? Do I have a best friend at work? In the past six months, has someone at work talked to me about my progress? This past year, have I had opportunities at work to learn and grow? Retaining Talent: Twelve Questions that Matter

21. Best Practices forRetaining Talent • Management • Talk to your employees one-on-one • What’s important to each person? • Train managers to be strong people managers and leaders • Culture & Environment • Employees have a voice • Work / life atmosphere • Work environment has meaning • Talent is everyone’s job • Corporation • Strong employment brand • Exit interviews • Re-recruit former strong employees

22. Recruiting Talent Ability to demonstrate to recruits we “walk the talk” Examples: • MBA rotation program • Demonstrated track record of finance personnel evolving from “staff function organization” to “strategic business partners”

23. Leadership Development Overview Define Leadership Needs Assess Leadership Bench Strength Acquire, Deploy & Manage Talent Develop Leaders Maintain Internal Talent Profiles Create Leadership Development Plans Establish Leadership Competencies Assess Leaders’ Performance Maintain External Talent Profiles Conduct Talent Reviews Design & Manage Job Assignments Forecast Future Leadership Needs Manage Succession Develop Annual Organization Plan Assign & Manage Developmental Relationships Match Leaders to Open Positions Develop & Deliver Leadership Programs Search Internal Talent Pool

24. Leadership Development Process Performance Evals & Talent Profiles IDPs Talent Review Discussions Organization Planning Leadership Development Strategy

25. Talent Review Discussions Finance Leadership Council • Chairs: CFO and Corporate Controller • Meets two hours/month – policy, strategic issues and process leadership • One full day per quarter – active talent management • Special meetings as required

26. Organization Planning Succession planning for each leadership position… …and key jobs throughout the organization Pivotal jobs: The positions that differentiate us from our competitors and give us competitive advantage Talent Implications Quantity: What are the consequences if we don’t have enough people in these pivotal jobs? Quality: What are the consequences if we don’t excel at doing these jobs?

27. The Changing Role of the CFO and Finance Organization Gary Ellis Senior Vice President and Chief Financial Officer Medtronic, Inc.