SurModics Inc (SRDX)

[Democritus_of_Abdera]

Re: the 12/20/2007 DEF 14A Proxy Statement

My notes highlight the following:

1. Two directors are retiring, but there is only one nominee (Robert Buhrmaster). The proxy proposes adding one more director to the board. Consequently, it looks like we will enter the new fiscal year with two board vacancies.

Robert Buhrmaster has been a member of the Toro Co. BOD since 1996 (where he is a member of the Audit Committee, Nominating and Governance Committee and the Executive Committee and serves as Toro's presiding non-management director). SRDX’s current Chairman of the Board, Kendrick Melrose, was Chairman and CEO of the Toro Co. from 1987 until his retirement in 2005. I suspect that Mr. Melrose was the non-employee independent director that recommended Mr. Buhrmaster. I have been pleased with the board’s actions up until now (which presumably reflect Mr. Melrose’s leadership philosophy). Consequently, I look upon Mr. Buhrmaster‘s nomination favorably.

2. Minimal equity ownership guidelines for executive officers and non-employee directors have been explicitly stated. In my opinion, these guidelines are good and are not asking too much. For example, a Director getting $21,000 in annual fees would be asked to hold 2,000 shares at $50/share; Barclay will be asked to hold at least 32,000 shares (i.e. $1.6 million worth of stock), well below his current holdings of 172,585 shares. (Note that I am assuming that the guidelines include both current holdings and those that can be acquired in the next 60 days; for Barclay, these are 87,585 shares currently held and 85,000 available from past stock compensation grants, as listed in the proxy statement ownership table).

3. The retirement guideline for directors that apparently led to Dale Olseth’s and David Koch’s vacating their seats was explicitly stated (i.e. directors should retire at the age 72).

4. Explicit and detailed guidelines and philosophies underlying compensation packages determined by the Board of Directors was provided. In general, the guidelines are centered upon compensation packages that end up near the 50th percentile of base salary levels for executives at comparable companies. Comparison companies are generally those with less than $500 million reported revenues derived from a large list compiled from 1) Radford Biotechnology Compensation Survey, 2) Top Fie Data Services MEDIC Executive Compensation Survey, and 3) Watson Wyatt, ECS Industry Report on Top Management.... This year, the Merck agreement was considered an exceptional achievement and resulted in total compensations to executive officers that were 22-40% above the 50th percentile of compensation at comparison companies... I consider these compensation guidelines fair. I am also comforted by the fact that the guidelines give the board some discretion, but not a blank check.