Exhibit 10.42


Terms of Non-Employee Director
Compensation

Under the Medtronic, Inc. 2008 Stock Award and Incentive Plan

(as adopted August 24, 2011)


          Each
director serving on the Board who is not an employee of the Company or an
Affiliate (each, a “Non-Employee Director”) shall be compensated as provided
below and as determined by the Board from time to time (the terms set forth
below shall remain in effect until modified by the Board or the Nominating and
Corporate Governance Committee of the Board). Equity compensation awards
granted pursuant to this Exhibit A shall be granted under the Medtronic, Inc.
2008 Stock Award and Incentive Plan (the “Incentive Plan”). Unless otherwise
defined below, capitalized terms set forth in this Exhibit A shall have the
meaning given to them in the Incentive Plan.


Annual Retainers and Annual
Stipends


          Each
Non-Employee Director shall be paid an annual retainer equal to $80,000 (the
“Annual Retainer”). Any Non-Employee Director serving as Chair of any of the
Nominating and Corporate Governance, Compensation, or Finance and Technology
and Quality Committees of the Board shall receive, in addition to the Annual
Retainer, an annual stipend of $10,000 (the “Annual Stipends”). 


          Any
Non-Employee Director serving as Lead Director of the Board shall receive, in
addition to the Annual Retainer, an annual stipend of $20,000 (the “Lead
Director Stipend”).


          Any
Non-Employee Director serving as Chair of the Audit Committee of the Board
shall receive, in addition to the Annual Retainer, an annual stipend of
$19,000, and any other Non-Employee Director serving as a member of the Audit
Committee shall receive an Annual Stipend of $5,000 (the “Audit Committee
Annual Stipends”).


                    Unless
deferred by a director pursuant to the terms of the Company’s Capital
Appreciation Plan, the Annual Retainer, Annual Stipends, Lead Director Stipend
and Audit Committee Annual Stipends shall be paid in cash in two equal
installments payable, respectively, within 10 days following the end of the
Company’s second fiscal quarter and within 10 days following the end of the
Company’s fiscal year. Notwithstanding the foregoing, the amount payable in
respect of the Annual Retainer, Annual Stipends, Lead Director Stipend and
Audit Committee Annual Stipends shall be reduced by 25% for each Non-Employee
Director who fails to attend at least 75% of the total meetings of the Board
and Committees of the Board on which such director served during the fiscal
year, such reduction to be applied to payments to be made within 10 days
following the end of the Company’s fiscal year.





Special
Committee Fees


          In
addition to the foregoing amounts, each Non-Employee Director serving on a
Special Committee of the Board shall be paid an annual fee of $10,000 (the
“Special Committee Fees”); provided that the Special Committee meets during the
year. The Special Committee Fees shall be paid in cash in two equal
installments payable, respectively, within 10 days following the end of the
Company’s second fiscal quarter and within 10 days following the end of the
Company’s fiscal year.


Restricted Stock Unit Awards


          On
the first business day of each fiscal year of the Company, each Non-Employee
Director who is then a member of the Board shall be granted that number of
Restricted Stock Units (the “Deferred Units”) equal to (1) $140,000 divided by
the Fair Market Value of a Share on such date, multiplied by (2) the Pro-Ration
Factor. For each Non-Employee Director, the Pro-Ration Factor means (1) in the
case of a Non-Employee Director who was a Non-Employee Director for the entire
preceding fiscal year and (x) attended at least 75 percent of the regular and
special meetings of the Board and the committees of the Board, during such fiscal
year, on which the Non-Employee Director serves (the “Meetings”), 100% or (y)
did not attend at least 75% of the Meetings, 75%; and (2) in the case of a
Non-Employee Director who was a Non-Employee Director for a portion of such
fiscal year and (x) attended 75% of the Meetings occurring during such portion
of the fiscal year (the “Applicable Meetings”), a percentage determined by
dividing the number of days during such fiscal year that such Non-Employee
Director served as a Non-Employee Director by the total number of days in such
fiscal year or (y) did not attend 75% of the Applicable Meetings, the product
of (A) the fraction determined pursuant to provision (2)(x) of this sentence
and (B) 75%. Each Non-Employee Director who retires prior to the last day of
each fiscal year shall be granted a number of Deferred Units equal to (1) the
Annual Retainer paid during such year divided by the Fair Market Value of a
Share on such Non-Employee Director’s retirement date, multiplied by (2) the
Pro-Ration Factor. In addition, each Non-Employee Director shall subsequently
be granted additional Restricted Stock Units reflecting deemed reinvestment of
any amounts that would have been paid in cash dividends with respect to the
Deferred Units.


          The
Award Agreement in respect of the Deferred Units shall provide that the
Deferred Units shall be immediately vested; provided, however, that Deferred Units
awarded to a Non-Employee Director initially appointed by the Board shall not
vest unless, and until such time as, such director shall have been elected to
the Board by the shareholders of the Company. The Award Agreement shall further
provide that the Deferred Units shall be settled in Shares, and that such
settlement shall be governed by any election previously made by the grantee
Non-Employee Director in respect of the deferred stock unit account established
pursuant to the Medtronic, Inc. 1998 Outside Director Stock Compensation Plan
(the “Deferred Account”), unless and until such election is changed in accordance
with procedures established by the Committee.





          If
no such election in respect of the Deferred Account has been made, or no such
Deferred Account for the grantee Non-Employee Director exists, the Non-Employee
Director shall be provided the opportunity to elect whether the Deferred Units
will be settled in a single lump sum or in five annual installments; provided,
however, that any such election shall not be effective unless made
on or before December 31 of the calendar year before the calendar year in
respect of which such Deferred Units are granted. In the event that no election
has been or may be made in respect of the Deferred Units for any Non-Employee
Director, the Award Agreement shall provide that the Deferred Units shall be
settled in a lump sum of Shares on the date on which the Non-Employee Director
ceases for any reason to be a member of the Board. In all other respects, the
grant, settlement, and vesting of the Restricted Stock Units shall be governed
by the terms of the applicable Award Agreement and the Incentive Plan.


Removal for
Cause


          In
the event that a Non-Employee Director is removed from the Board for Cause
before a Change of Control(a
“Removed Director”): (1) all Options granted to the Removed Director pursuant
to an Annual Option Award or Initial Option Award shall immediately expire and
be forfeited and (2) unless the Board or Committee determines in connection
with or after such removal to forfeit Deferred Units granted to the Removed
Director, such Deferred Units shall be settled pursuant to the Removed
Director’s valid elections with respect thereto or, if no such election exists,
in a lump sum of Shares on the date on which the Removed Director ceases to be
a member of the Board. In addition, if the Removed Director has received or
been entitled to delivery of Shares within six months before the date of
removal, the Board or the Committee, in its sole discretion, may require the
Removed Director to return or forfeit all or a portion of such Shares and
receive back any exercise price paid therefor, or may require the Removed
Director to pay the Company the value of such Shares less any exercise price
paid therefor, determined as of the date of the exercise or delivery of the
Award, as the case may be, in the event that the Board or the Committee, in its
sole discretion, determines that, whether before or after removal the Removed
Director (1) engaged in competition with the Company or any Affiliate, (2)
disclosed, without authorization, material proprietary information of the
Company or any Affiliate, (3) violated applicable business ethics policies or
business policies of the Company or any Affiliate or (4) engaged in any conduct
that the Board, in its sole discretion, determines to warrant such return or
forfeiture. The Board’s or the Committee’s right to require such return or
forfeiture must be exercised within 90 days after the later of (1) the date of
removal or (2) the discovery of an occurrence described in provisions (1)
through (4) of the previous sentence, but in no event later than 15 months
after the date of removal.


Share Retention


          Shares
received pursuant to Annual Option Awards, Initial Option Awards and Deferred
Units shall be subject to the Company’s Officer and Director Stock Retention
Guidelines.