SEC Filings

DEFR14A
MEDTRONIC PLC filed this Form DEFR14A on 10/11/2017
Entire Document
 

PROPOSAL 4 – TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE MEDTRONIC PLC AMENDED AND RESTATED 2013 STOCK AWARD AND INCENTIVE PLAN

 

General

 

The following information relates to the recommendation of the Board of Directors (the “Board”) that the shareholders of the Company approve the amendment and restatement of the Medtronic plc 2013 Stock Award and Incentive Plan (formerly known as the Medtronic, Inc. Stock Award and Incentive Plan) (“2013 Plan”) to increase the authorized number of shares by Fifty Million (50,000,000), bringing the total number of shares available for future grants under the 2013 Plan as of April 28, 2017 to 71,033,122 and the total number of shares reserved for grant since the adoption of the 2013 Plan to 122,121,596 (the “Plan Amendment”). The Company is seeking shareholder approval so that it may continue granting awards under the 2013 Plan in order to provide additional incentives to selected employees, directors, officers and consultants, strengthen commitment, motivate the diligent performance of responsibilities and attract and retain competent and dedicated persons whose efforts should result in our long-term growth and profitability.

 

The 2013 Plan was adopted by the Board of Medtronic, Inc. and approved by the shareholders of Medtronic, Inc. on August 22, 2013. Effective as of January 26, 2015, the 2013 Plan was amended to provide for the assumption of the 2013 Plan by the Company as an Irish public limited company. Subject to shareholder approval, we plan to register the additional 50,000,000 shares reserved under the 2013 Plan on a Registration Statement on Form S-8. As of April 28, 2017, 21,033,122 shares were available for future grant under the 2013 Plan.

 

We also made the following additional updates to the Plan to reflect changes in the law, accounting rules and current practices, including the following:

 

Adding EBITDA and operating cash flow to the definition of “Performance Goals”;
   
Clarifying that, with respect to all awards, dividends or other distributions or dividend equivalents may not be paid until an award is vested;
   
Providing that withholding obligations may be settled with shares up to the maximum statutory tax rate in the applicable jurisdiction;
   
Providing that, if shares are withheld at a rate that is higher than the minimum statutory tax rate, only the number of shares withheld at the minimum statutory tax rate will again become available for issuance under the 2013 Plan; and
   
Updating the Irish statutory references in the 2013 Plan to ensure consistency with the Irish Companies Act of 2014.

 

Dilution and Historical Share Usage

 

Dilution

 

In evaluating whether to amend the 2013 Plan and determining the number of shares to request for approval, the Board evaluated the dilution and existing terms of outstanding awards under the 2013 Plan. As of April 28, 2017, 21,033,122 shares were reserved for issuance under the 2013 Plan, which represents approximately 1.50% of our issued and outstanding shares. The Board believes that this number of shares constitutes reasonable potential equity dilution. The closing trading price of each ordinary share as of April 28, 2017 was $83.09.

 

As of April 28, 2017, the following equity awards were outstanding: 45,194,083 stock options and 9,354,574 restricted stock units. The new shares available under the 2013 Plan would represent an additional potential equity dilution of approximately 3.28%. The current potential equity dilution for all existing equity plans is approximately 5.13%. Including the proposed additional shares under the Plan Amendment, the potential equity dilution from all equity incentive awards outstanding and available for grant under all of our existing equity plans would result in a maximum potential equity dilution of approximately 8.24%.

 

Share Usage

 

In evaluating whether to amend the 2013 Plan and determining the number of shares to request for approval, the Board considered the Company’s historical gross burn rate (the number of incentive awards granted during a period in proportion to the Company’s outstanding shares), issued equity overhang (outstanding incentive awards in proportion to the Company’s outstanding shares) and total equity overhang (outstanding incentive awards and shares available for future awards in proportion to the Company’s outstanding shares). The Company’s gross burn rate for the 2017 fiscal year was 0.99% and the three-year average gross burn rate for fiscal 2015 through 2017 was 2.22%. The Board determined in light of these factors among others that it was appropriate to amend the 2013 Plan.

 

MEDTRONIC PLC   2017 Proxy Statement    69

 
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