UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

ZIMMER HOLDINGS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

      Payment of Filing Fee (Check the appropriate box):

ZIMMER HOLDINGS, INC.

March 22, 2004

Dear Fellow Stockholder:

     You are cordially invited to attend the Annual Meeting of Stockholders of Zimmer Holdings, Inc. at The New York Palace Hotel, 455 Madison Avenue, New York, New York on Monday, May 10, 2004, at 9:00 a.m.

     This booklet includes the Notice of Annual Meeting and the Proxy Statement. The Proxy Statement describes the business to be transacted at the meeting and provides other information about the company that you should know when you vote your shares.

     The principal items of business of the Annual Meeting will be the election of two directors and consideration of two stockholder proposals. We will also review the status of the company’s business.

     It is important that your shares be represented whether or not you attend the meeting. Registered stockholders can vote their shares via the Internet or by using a toll-free telephone number. Instructions for using these convenient services appear on the proxy card. You can also vote your shares by marking your votes on the proxy card, signing and dating it and mailing it promptly using the envelope provided.

     We have provided space on the proxy card for comments. We urge you to use it to let us know your feelings about the company or to bring a particular matter to our attention. If you hold your shares through an intermediary, please feel free to write directly to us.

	J. Raymond Elliott
	Chairman, President and Chief Executive Officer

     Notice is hereby given that the Annual Meeting of Stockholders will be held at The New York Palace Hotel, 455 Madison Avenue, New York, New York on Monday, May 10, 2004, at 9:00 a.m. for the following purposes as set forth in the accompanying Proxy Statement:

     Holders of record of the company’s common stock at the close of business on March 15, 2004, will be entitled to vote at the meeting.

	By Order of the Board of Directors
	David C. Dvorak
	Secretary

Dated: March 22, 2004

YOUR VOTE IS IMPORTANT

REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT.

IF YOU DO NOT ATTEND THE ANNUAL MEETING TO VOTE IN PERSON, YOUR VOTE WILL NOT BE COUNTED UNLESS A PROXY REPRESENTING YOUR SHARES IS PRESENTED AT THE MEETING.

TO ENSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE VOTE IN ONE OF THESE WAYS:

OR

OR

IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE BY BALLOT.

ZIMMER HOLDINGS, INC.

     This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors for use at the Annual Meeting of Stockholders on May 10, 2004.

Stockholders Entitled to Vote

     Holders of record of the company’s $0.01 par value common stock at the close of business on March 15, 2004 will be entitled to vote at the 2004 Annual Meeting. Each share is entitled to one vote on each matter properly brought before the meeting. Proxies are solicited to give all stockholders who are entitled to vote on the matters that come before the meeting the opportunity to do so whether or not they attend the meeting in person.

Proxies and Voting

     If you are a registered stockholder, you can simplify your voting and save the company expense by voting via the Internet or calling the toll-free number listed on the proxy card. Internet and telephone voting information is provided on the proxy card. A control number, located on the lower right of the proxy card, is designated to verify a stockholder’s identity and allow the stockholder to vote the shares and confirm that the voting instructions have been recorded properly. If you vote via the Internet or by telephone, please do not return a signed proxy card.

on the proposals or providing the designated proxies with the right to vote in their judgment and discretion on the proposals are counted to determine the number of shares present and entitled to vote; broker non-votes are not counted.

Costs of Proxy Solicitation and Questions

     Employees of the company may solicit proxies on behalf of the Board of Directors through the mail, in person, and by telecommunications. The cost thereof will be borne by the company. In addition, management has retained Georgeson Shareholder Communications Inc. to assist in soliciting proxies for a fee of $7,000, plus out-of-pocket expenses. The company will, upon request, reimburse brokerage firms and others for their reasonable expenses incurred for forwarding solicitation material to beneficial owners of stock. Questions concerning proxy voting or process should be directed to Georgeson Shareholder Communications Inc. via telephone at (866) 775-2705 (this call is toll-free in the United States and internationally).

List of Stockholders

     In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be available at the meeting and for ten days prior to the meeting, between the hours of 8:00 a.m. and 5:00 p.m., at our offices at 345 East Main Street, Warsaw, Indiana by contacting the Secretary of the company.

VOTING SECURITIES

     At the close of business on March 15, 2004, there were 243,750,677 shares of $0.01 par value common stock outstanding and entitled to vote.

PRINCIPAL STOCKHOLDERS

     The following table sets forth certain information concerning each person (including any group) known to us to beneficially own more than five percent (5%) of the common stock of the company as of February 17, 2004. Unless otherwise noted, shares are owned directly or indirectly with sole voting and investment power.

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SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS

     The following table sets forth, as of January 13, 2004, beneficial ownership of shares of common stock of the company by each director, each of the executives named in the Summary Compensation Table and all directors and executive officers as a group. None of the individuals named below or together as a group beneficially own greater than 1% of the outstanding shares of common stock.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Under Section 16(a) of the Securities Exchange Act of 1934, the company’s directors, executive officers and the beneficial holders of more than 10% of the company’s common stock are required to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based on its records and other information, the company believes that during 2003 all applicable Section 16(a) filing requirements were met.

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BOARD OF DIRECTORS

     The business of the company is managed under the direction of the Board of Directors. It has responsibility for establishing broad corporate policies and for the overall performance of the company. The Board meets on a regularly scheduled basis during the year to review significant developments affecting the company and to act on matters requiring Board approval. It also holds special meetings when an important matter requires Board action between scheduled meetings. Members of senior management regularly attend Board meetings to report on and discuss their areas of responsibility. Directors are also expected to attend the Annual Meeting of Stockholders. All of our directors attended the 2003 Annual Meeting. In 2003, there were nine meetings of the Board. Each director attended more than 75% of the total meetings of the Board of Directors and each of the committees on which he or she served during 2003.

Corporate Governance

     The Board of Directors is committed to good corporate governance and believes that an attentive, performing Board is a tangible competitive advantage. With that commitment, during the past year the Board has reviewed the company’s corporate governance policies and practices and has taken steps to implement the new rules of the Securities and Exchange Commission and the revised listing standards of the New York Stock Exchange. In addition, the Board has implemented other corporate governance practices and procedures on a best practices basis.

Director Independence

     As permitted by the rules of the New York Stock Exchange, the Board has adopted categorical standards to assist it in making determinations of director independence. These standards incorporate, and are consistent with, the definition of “independent” contained in the New York Stock Exchange listing rules. These standards are set forth in the company’s corporate governance guidelines, which are or will be available on the company’s website as described above. The Board has determined that each of the non-employee directors of the company, Larry C. Glasscock, Regina E. Herzlinger, D.B.A., John L. McGoldrick and Augustus A. White, III, M.D., Ph.D., meets these standards and is independent.

Committees of the Board

     The company’s Restated By-Laws, as amended, specifically provide that the Board may delegate responsibility to committees. During 2003, the Board had four standing committees: an Audit Committee, a Compensation and Management Development Committee, a Corporate Governance Committee and a Science and Technology Committee. The membership of the Audit Committee, the Compensation and Management Development Committee and the Corporate Governance Committee is composed entirely of independent directors. In addition, the members of the Audit Committee meet the heightened standards of independence for audit committee members required by the Securities and Exchange Commission rules and New York Stock Exchange listing standards. The membership of the Science and Technology Committee is composed of one independent director, two employee representatives and one non-employee consultant.

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     The table below provides membership information for each Board committee.

Audit Committee

     The principal functions of the Audit Committee include:

Compensation and Management Development Committee

     The duties of the Compensation and Management Development Committee include:

Corporate Governance Committee

     The duties of the Corporate Governance Committee include:

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     The Board and the Corporate Governance Committee periodically review the appropriate size of the Board. In considering candidates for the Board, the Corporate Governance Committee considers the entirety of each candidate’s credentials and does not have any specific minimum qualifications that must be met by a committee-recommended nominee. The committee is guided by the following basic selection criteria for all nominees: independence; highest character and integrity; experience and understanding of strategy and policy-setting; reputation for working constructively with others; and sufficient time to devote to Board matters. The committee also gives consideration to diversity, age, international background and experience and specialized expertise in the context of the needs of the Board as a whole.

Science and Technology Committee

     The duties of the Science and Technology Committee include:

Executive Sessions of and Communication with Non-Management Directors

     Non-management directors meet in executive sessions without management present upon the adjournment of every regularly scheduled meeting of the Board and at other times they determine. The director who presides at these meetings rotates session-by-session among the non-management directors in alphabetical order of their last names.

Stockholder Communication with the Board

     The Board has implemented a process whereby stockholders of the company may send communications to the Board’s attention. Any stockholder desiring to communicate with the Board, or one or more specified members thereof, should communicate in a writing addressed to Zimmer Holdings, Inc., Board of Directors, c/o Secretary, at the address shown on the cover page of this Proxy Statement. The Secretary of the company has been instructed by the Board to promptly forward all such communications to the specified addressees thereof.

Audit Committee Report

     The Audit Committee is responsible for overseeing and monitoring the quality of the company’s accounting and auditing practices. Management is responsible for planning and conducting audits and ensuring that the company’s financial statements are prepared in accordance with generally accepted accounting principles.

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Compensation of Directors

     Non-employee directors of the company receive an annual retainer of $50,000 and an additional fee of $1,500 for attending each Board meeting and each Board committee meeting not held on the same day as a Board meeting. Each non-employee director also receives 500 deferred share units at each Annual Meeting of Stockholders and committee chairs receive an annual fee of $5,000. At the end of each calendar quarter, non-employee directors are paid one-fourth of their annual retainers and committee chair annual fees and fees for attending Board and committee meetings held during the quarter. The company also provides non-employee directors with travel accident insurance when on company business.

Directors and Nominees

     The Board of Directors is divided into three classes whose terms expire at successive Annual Meetings. Two directors will be elected at the Annual Meeting to serve terms expiring in 2007. The nominees for director named below are currently directors of the company. After the election of two directors at the meeting, the company will have five directors, including the three directors whose present terms extend beyond the meeting. In the interim between Annual Meetings, the Board has the authority to increase or decrease the size of the Board and fill vacancies. Listed first below are the nominees for election, followed by the directors whose terms expire in 2005 and 2006, with information including their principal occupation and other business affiliations, the year each was first elected as a director, the Board committee memberships of each and each director’s age.

Nominees for Director: 2004 – 2007 Term

		Larry C. Glasscock, Director Since 2001 Chairman, President and Chief Executive Officer of Anthem, Inc., the publicly-held parent of Anthem Insurance Companies, Inc. (“Anthem Insurance”), since May 2003. President and Chief Executive Officer of Anthem Insurance, the Blue Cross and Blue Shield licensee for Indiana, Kentucky, Ohio, Connecticut, New Hampshire, Maine, Colorado, Nevada and Virginia, since October 1999. Mr. Glasscock joined Anthem Insurance in April 1998 as Senior Executive Vice President and Chief Operating Officer. He was named President and Chief Operating Officer in April 1999 and President and Chief Executive officer in October 1999. Mr. Glasscock was named President and Chief Executive Officer of Anthem, Inc. in July 2001. Prior to joining Anthem Insurance, Mr. Glasscock served as Chief Operating Officer of CareFirst, Inc. from January through April 1998 and he served as President and Chief Executive Officer of Group Hospitalization & Medical Services, Inc., which did business as Blue Cross and Blue Shield of the National Capital Area, from September 1993 to January 1998. From 1991 to 1993, he served as President, Chief Operating Officer and Director of First American Bank, N.A. Mr. Glasscock is a director of Anthem, Inc. Board Committees: Audit Committee (Chair), Compensation and Management Development Committee and Corporate Governance Committee. Age 55.

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		John L. McGoldrick, Director Since 2001 Executive Vice President and General Counsel of Bristol-Myers Squibb Company (“Bristol-Myers Squibb”) since January 2000; Senior Vice President, General Counsel and President, Medical Devices Group from December 1998 to January 2000 and Senior Vice President and General Counsel from 1995 to December 1998. Senior director of the Board of the New Jersey Transit Corporation and member of the board of the Advanced Medical Technology Association (AdvaMed), the medical device industry’s trade association (1998-2002). He has served on several governmental reform commissions in New Jersey. He is an invited participant of The Aspen Institute on the World Economy and the World Economic Forum (Davos). Before joining Bristol-Myers Squibb, Mr. McGoldrick was a senior partner and executive committee member of the law firm of McCarter & English. He is a graduate of Harvard College and the Harvard Law School. Board Committees: Compensation and Management Development Committee (Chair) and Corporate Governance Committee. Age 63.
Continuing Directors Whose Present Terms Expire in 2005
		J. Raymond Elliott, Director Since 2001 Chairman, President and Chief Executive Officer of the company since August 6, 2001. President, Chief Executive Officer and Director since March 20, 2001. Mr. Elliott was appointed President of Zimmer, Inc., the company’s predecessor, in November 1997. Mr. Elliott has approximately 30 years of experience in orthopaedics, medical devices and consumer products. Prior to joining Zimmer, Inc., he served as President and Chief Executive Officer of Cybex, Inc., a publicly traded medical products company, from September 1995 to June 1997, and previously as President and Chief Executive Officer of J.R. Elliott & Associates, a privately held M&A firm. During this time, Mr. Elliott successfully completed several M&A and turnaround projects for the federal government and numerous healthcare firms, including the role of Chairman and Chief Executive Officer for Cablecom Inc. Mr. Elliott has also served as Chairman and President of various divisions of Southam, Inc., a communications group, and as Group President of food and beverage leader John Labatt, Inc. He began his career in the healthcare industry with American Hospital Supply Corporation (later Baxter International), where he gained 15 years experience in sales, marketing, operations, business development and general management, leading to his appointment as President of all Far East divisions, based in Tokyo, Japan. Mr. Elliott has served as a director on more than 20 business-related boards in the U.S., Canada, Japan and Europe and has served on five occasions as Chairman. He has served as a member of the board of directors and chair of the orthopaedic sector of AdvaMed and is currently a director of the State of Indiana Workplace Development Board, the Indiana Chamber of Commerce, the American Swiss Foundation, and represents the State of Indiana on the President’s State Scholars Program. Mr. Elliott is a trustee of the Orthopaedic Research and Education Foundation (“OREF”). He holds a bachelor’s degree from the University of Western Ontario, Canada. Age 54.
		Regina E. Herzlinger, D.B.A. Director Since 2001 The Nancy R. McPherson Professor of Business Administration Chair at the Harvard Business School. Dr. Herzlinger teaches accounting and healthcare and was the first woman to be tenured and chaired at Harvard Business School and the first to serve on a number of corporate boards. She has written many articles and books in the fields of management control and healthcare. Her research has been profiled in industry journals and business publications such as The Wall Street Journal, The Economist, and Fortune and has been recognized for excellence by the American College of Healthcare Executives three times. Managed Healthcare has named her as one of healthcare’s top ten thinkers. Dr. Herzlinger received her Bachelor’s Degree from Massachusetts Institute of Technology and her Doctorate from the Harvard Business School. Dr. Herzlinger is a director of C.R. Bard, Inc. and Noven Pharmaceuticals, Inc. Board Committees: Audit Committee, Compensation and Management Development Committee and Corporate Governance Committee (Chair). Age 60.

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Continuing Director Whose Present Term Expires in 2006
		Augustus A. White, III, M.D., Ph.D. Director Since 2001 Ellen and Melvin Gordon Professor of Medical Education, Professor of Orthopaedic Surgery, and Master of the Oliver Wendell Holmes Society at the Harvard Medical School and Professor of Orthopaedic Surgery at the Harvard-MIT Division of Health Sciences and Technology; and Orthopaedic Surgeon-in-Chief, Emeritus, at the Beth Israel Deaconess Medical Center in Boston. He previously served as the Chief of Spine Surgery at Beth Israel and is Director of the Daniel E. Hogan Spine Fellowship Program. He is a graduate of the Stanford University Medical School, holds a Ph.D. from the Karolinska Institute in Stockholm and an A.B. from Brown University, and graduated from the Advanced Management Program at the Harvard Business School. Dr. White is a recipient of the Bronze Star, which he earned while stationed as a Captain in the U.S. Army Medical Corps in Vietnam. He is an internationally known and widely published authority on biomechanics of the spine, fracture healing and surgical and non-surgical care of the spine. He is nationally recognized for his work in medical education, diversity, and issues of health care disparities. Dr. White is a director of Orthologic Corp. Board Committees: Audit Committee, Compensation and Management Development Committee, Corporate Governance Committee and Science and Technology Committee (Chair). Age 67.

EXECUTIVE COMPENSATION

Compensation and Management Development Committee Report

Compensation Philosophy

     The company’s compensation philosophy is to make a financial investment in people who will deliver the innovative solutions necessary for the company to continue as a global leader in products that enhance the quality of life for orthopaedic patients. The company’s compensation program is intended to deliver cash, annual incentive and long-term compensation at levels competitive with other companies in the medical device and biotech industry as well as other competitors for talent generally. The company encourages and recognizes superior performance. Annual incentive and long-term incentive programs provide a significant additional compensation opportunity based upon the achievement of performance objectives. To complete the total compensation package and to reward employees who demonstrate their commitment to achieving our business objectives, the company also provides a comprehensive package of health, welfare and retirement benefit programs.

Compensation Components

     The major components of compensation are the same for executives and other employees. All executives and employees receive a salary, annual incentive opportunities, stock option grants and health, welfare and retirement benefits. After the acquisition of Centerpulse AG in October 2003, the Committee reviewed executive compensation elements with the help of a major international compensation and benefits consulting firm. Based on this review, the Committee approved some changes to executive salaries and annual incentive targets to ensure that current compensation levels are competitive for a company of its increased size and complexity. The executive officers received a stock option grant in January 2004 based on the guidelines that were in place for the 2003 grant. All management employees were reviewed for a stock option grant in January 2004. A broad-based stock option grant for non-management employees is contemplated for August 2004 to commemorate the third anniversary of having become an independent company and to welcome new Zimmer employees. This broad-based grant would be intended to allow employees to continue to be rewarded based on value delivered to stockholders.

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CEO Compensation

     The compensation for Mr. Elliott was adjusted on March 31, 2003 based on the average increase granted to the salaried employees on that date. The merit increase adjustment was 3.85%. In addition, based on the Committee’s review of current data that includes information on companies the size of Zimmer following the acquisition of Centerpulse AG, Mr. Elliott’s compensation has been adjusted as of January 5, 2004, including a base salary adjustment to $700,000, to compensate him on a basis consistent with the increased size and complexity of the company, as well as to recognize his contribution to the superior performance of the company. The Committee is in the process of working with an independent consulting firm to further assess the executive compensation program.

Deductibility of Compensation Over $1 Million

     U.S. federal income tax law disallows a deduction for certain compensation paid in excess of $1 million to the five executive officers listed in the Summary Compensation Table in this Proxy Statement. However, performance-based compensation is fully deductible if the programs are approved by stockholders and meet certain other requirements. The company has taken steps to ensure the deductibility of payments under the Executive Performance Incentive Plan and the 2001 Stock Incentive Plan.

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Executive Officer Compensation Tables and Notes

     The following tables set forth information regarding compensation paid to the company’s Chief Executive Officer and each of the company’s four other most highly compensated executive officers based on salary and bonus earned during 2003.

SUMMARY COMPENSATION TABLE

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OPTION/ SAR GRANTS IN LAST FISCAL YEAR

AGGREGATED OPTIONS/ SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/ SAR VALUES⁽¹⁾

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Pension Benefits

     Most of our U.S. non-union employees, including executive officers, are participants in the Zimmer Holdings, Inc. Retirement Income Plan, a non-contributory pension plan. We have also adopted a non-contributory supplemental pension plan. Our retirement income plan and supplemental pension plan provide all Zimmer participants with credit for their service years with our former parent. Benefits payable under our plans will be offset by the value of benefits payable to participants under the former parent’s plans.

PENSION PLAN TABLES

Table I

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Table II

Retention Agreement

     Pursuant to a retention agreement entered into with Mr. Elliott in February 2001, Mr. Elliott was awarded 17,544 phantom deferred share units. At the time of Mr. Elliott’s retirement or termination of employment, his units will be distributed to him in the form of a lump sum cash payment equal to the number of units awarded multiplied by the fair market value of company common stock at the time of his retirement or termination, plus the sum of any dividends credited on shares of company common stock from the date of the award to his retirement or termination date.

Change in Control Arrangements

     The company has entered into change in control agreements with twelve executives including each of the executive officers named in the Summary Compensation Table in this proxy statement. The agreements are intended to provide for continuity of management in the event of a change in control of the company. The agreements with Messrs. Elliott, Leno, Melzi, Peterson and Dvorak have an initial term that ended December 31, 2003 and provide for automatic extensions, beginning on January 1, 2004, in one-year increments, unless either the company or the executive gives prior notice of termination or a change in control shall have occurred prior to January 1 of such year. If a change in control occurs during the term of the agreement, the agreement shall continue in effect for a period of not less than 36 (in the case of Mr. Elliott) or 24 (in the case of the other executives) months beyond the month in which such change in control occurred.

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been allocated or awarded to the executive for the completed calendar year preceding the date of termination and a pro rata portion to the date of termination of the aggregate value of all contingent incentive compensation awards to the executive for the current calendar year.

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Performance Graph

     The following graph compares the performance of the company common stock for the periods indicated with the performance of the S&P 500 Stock Index and the S&P 500 Health Care Equipment Index.

Comparison of Cumulative Total Return

     Assumes $100 was invested on August 7, 2001 (the first date the company common stock was traded on the New York Stock Exchange) in company common stock and each index. Values are as of December 31 assuming dividends are reinvested. No cash dividends have been declared or paid on company common stock. Returns over the indicated period should not be considered indicative of future returns.

Compensation Committee Interlocks and Insider Participation

     No member of the Compensation and Management Development Committee during 2003 was an officer, employee or former officer of the company or had any relationship requiring disclosure herein pursuant to SEC regulations. No executive officer of the company served as a member of a compensation committee or a director of another entity under circumstances requiring disclosure under SEC regulations.

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Equity Compensation Plan Information

     The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 31, 2003, including the 2001 Stock Incentive Plan, the TeamShare Stock Option Plan, the Stock Plan for Non-Employee Directors, the Deferred Compensation Plan for Non-Employee Directors, the Employee Stock Purchase Plan and the Independent Sales Representatives Deferred Annual Final Compensation and Equity Incentive Plan.

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Proposal 1. Election of Directors

     Two directors are to be elected at the meeting for a three-year term ending at the 2007 Annual Meeting. Larry C. Glasscock and John L. McGoldrick, who are presently directors of the company, have been nominated by the Board of Directors for election at this Annual Meeting. The accompanying proxy will be voted for the Board of Directors’ nominees, except where authority to so vote is withheld. Should the nominees be unable to serve, the proxy will be voted for such persons as shall be designated by the Board of Directors.

Proposal 2. Stockholder Proposal Relating to Poison Pills

     Mr. John Chevedden, as legal proxy for Victor Rossi, P.O. Box 249, Boonville, California 95414 who holds 400 shares of common stock, has informed the company that he intends to submit the following proposal at this year’s meeting:

Poison Pill Negative

     The key negative of poison pills is that pills can preserve management deadwood.

Pills Water Down Shareholders’ Votes

     Pills water down shareholders’ votes and deprive them of a meaningful voice in corporate affairs.

The Potential of a Tender Offer Can Motivate Our Directors

     Hectoring directors to act more independently is a poor substitute for the bracing possibility that shareholders could sell the company out from under its present management.

Diluted Stock

     An anti-democratic management scheme (the poison pill) to flood the market with diluted stock is not a reason that a tender offer for our stock should fail.

Like a Dictator

     Poison pills are like a dictator who says, “Give up more of your freedom and I’ll take care of you.”

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Council of Institutional Investors Recommendation

     The Council of Institutional Investors www.cii.org, whose members have $2 trillion invested, called for shareholder approval of poison pills.

Statement in Opposition

The Board of Directors unanimously recommends a vote “AGAINST” adoption of this proposal for the following reasons:

     In response to stockholder concern, as evidenced by the vote on this topic at the 2003 Annual Meeting, the Board reviewed the possible effects of the company’s stockholder rights plan and other anti-takeover protections that may be available to the company, including certain provisions of the company’s charter and by-laws, as well as Delaware corporate law. The Board reviewed the provisions of the company’s plan with counsel, while keeping in mind its fiduciary duty to act in the best interest of the company’s stockholders. Such duty extends to protecting the company and its owners from perceived harm, including inadequate or coercive acquisition proposals. After review and deliberation, the Board determined that the company’s stockholder rights plan continues to be in the best interest of the company and its stockholders.

Rights Plans Protect and Maximize Stockholder Value in Takeovers

     The company’s stockholder rights plan is designed to protect stockholders against abusive takeover tactics and to ensure that each stockholder is treated fairly in any transaction involving an acquisition of control of the company. Plans similar to the company’s plan have been adopted by a majority of the companies included in the S&P 500 Stock Index.

Studies Indicate Rights Plans Create Higher Takeover Premiums

     From 1997 to 2001, according to a J.P. Morgan study, U.S. companies worth more than $1 billion and which had rights plans in place received a median acquisition premium of 35.9%, versus 31.9% for such companies without rights plans. Houlihan Lokey Howard & Zukin, Stockholder Rights Plan Study (2002).

Directors Permitted to Exercise Business Judgment

     The Board believes that the adoption of a stockholder rights plan is appropriately within the scope of responsibilities of the Board of Directors, acting on behalf of all stockholders. The adoption of such a plan accords with the Board’s responsibilities for the management of the Company’s affairs and the issuance of securities and does not require stockholder approval under Delaware corporation law or the rules of the New York Stock Exchange. Redeeming the rights would remove an important tool

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that the Board should have for the protection of stockholders. The Board therefore believes that any decision to redeem the rights should be made in the context of a specific acquisition proposal.

Proposal 3. Stockholder Proposal Relating to Auditor Ratification

Statement in Opposition

The Board of Directors unanimously recommends a vote “AGAINST” adoption of this proposal for the following reasons:

     Although the company has never done so, the Board understands that some companies have customarily presented a management-sponsored proposal seeking stockholder ratification of the independent auditor. However, stockholder ratification is not required and may not be the best method of supervising the independent auditors. Section 301 of the Sarbanes-Oxley Act of 2002 expressly provides that the audit committee, in its capacity as a committee of the board of directors, shall be directly responsible for the appointment of the independent auditor. In addition, Rule 10A-3(b)(2) under the Securities Exchange Act of 1934 expressly provides that the audit committee shall be directly responsible for the appointment and retention of the

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independent auditor. Finally, New York Stock Exchange listing standards require, among other things, that a listed company’s audit committee be directly responsible for the appointment and retention of the independent auditor.

INDEPENDENT AUDITOR

     PricewaterhouseCoopers LLP (“PwC”) served as the company’s independent auditor for 2003 and 2002. At the time of mailing of the Proxy Statement, the Audit Committee has not made any determination on the selection of the company’s independent auditor for 2004. The company expects that representatives of PwC will be present at the Annual Meeting and will be available to respond to appropriate questions. They will also have an opportunity to make a statement if they desire to do so.

Audit Fees

     Aggregate fees billed by PwC for professional services rendered in auditing the company’s consolidated financial statements included in the annual report on Form 10-K, the review of interim financial statements included in quarterly reports on Form 10-Q, review of material in connection with Centerpulse AG accounting matters, and with respect to a Japanese securities report, were approximately $2,687,000 and $673,000 for 2003 and 2002, respectively. For 2003, more than $1,730,000 of the auditing fees were attributable to services performed with respect to Centerpulse AG.

Audit-Related Fees

     Aggregate fees billed by PwC for assurance and related services that are reasonably connected to the performance of the audit or review of the company’s financial statements and that are not disclosed under “Audit Fees” above were approximately $1,888,000 and $61,000 for 2003 and 2002, respectively. These audit-related services consist primarily of the audit of the September 30, 2003 balance sheet of Centerpulse AG, review of employee benefit plans matters, accounting research and consultation, due diligence for the Centerpulse AG transaction, work associated with the change in accounting policy for instruments, and services associated with the pending acquisition of Implex Corp., a privately-held orthopaedics company based in New Jersey. For 2003, more than $1,609,000 of the audit-related fees were attributable to services performed with respect to the Centerpulse AG transaction.

Tax Fees

     Aggregate fees billed by PwC for professional services rendered to the company for tax compliance, tax advice and tax planning were approximately $310,000 and $460,000 for 2003 and 2002, respectively. These services include primarily tax reporting and consultation for various countries.

All Other Fees

     Aggregate fees billed by PwC for all other products and services provided to the company were approximately $990,000 and $201,000 for 2003 and 2002, respectively. For 2003, all of these fees relate to services performed by PwC concerning the company’s acquisitions of Centerpulse AG and InCentive Capital AG.

Pre-Approval Policies and Procedures

     The Audit Committee pre-approves all audit and permissible non-audit services to be provided to the company by its independent auditor prior to commencement of services. Mr. Glasscock, Audit Committee Chairman, has the delegated authority to pre-approve such services up to a specified aggregate fee amount and these pre-approval decisions are presented to the full Audit Committee at its next scheduled meeting.

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2005 PROXY PROPOSALS

     To be considered for inclusion in next year’s proxy statement, the company must receive stockholder proposals relating to the 2005 Annual Meeting of Stockholders at its principal executive offices, 345 East Main Street, Warsaw, Indiana 46580, attention: Secretary, no later than November 22, 2004.

INCORPORATION BY REFERENCE

     The sections of this Proxy Statement entitled “Audit Committee Report,” “Compensation and Management Development Committee Report” and “Performance Graph” do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the company specifically incorporates them by reference therein.

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Purpose

     The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Zimmer Holdings, Inc. (the “Company”) is appointed by the Board to assist the Board in fulfilling its responsibility to oversee (1) the integrity of the Company’s financial statements, (2) the independent auditor’s qualifications and independence, (3) the performance of the Company’s internal audit function and independent auditors, and (4) the Company’s compliance with legal and regulatory requirements.

Committee Membership

     The Committee shall consist of at least three directors. The members of the Committee shall meet the independence and experience requirements of the New York Stock Exchange and Rule 10A-3(b)(1) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). At least one member of the Committee shall be an “audit committee financial expert” as defined by the SEC. Committee members shall not simultaneously serve on the audit committees of more than two other public companies.

Committee Authority and Responsibilities

     The Committee’s job is one of oversight, recognizing that the Company’s management is responsible for preparing the Company’s financial statements and for developing and maintaining systems of internal accounting and financial controls and that independent auditors are responsible for their audit of the financial statements and obtaining the necessary understanding of the internal controls to conduct the audit, along with reporting identified areas of improvement in internal controls identified during the course of the audit. The Committee also recognizes that the financial management and the internal and independent auditors have more knowledge and information about the Company than do Committee members. Consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or internal controls or any professional certification as to the independent auditor’s work.

Oversight of the Company’s Relationship with the Independent Auditor

     1. The Committee shall be directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting. The independent auditor shall report directly to the Committee.

     2. The Committee shall preapprove all auditing services and permissible non-audit services, including the fees and terms thereof, to be provided to the Company by the independent auditor, either before the independent auditor is engaged for the particular service or pursuant to preappoval policies and procedures established by the Committee, subject to the de minimis exception for non audit services described in Section 10A(i) of the Exchange Act.

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     3. The Committee shall, at least annually, obtain and review a report by the independent auditor describing (a) the independent auditor’s internal quality control procedures, (b) any material issues raised by the most recent internal quality control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, and (c) any steps taken to deal with any such issues.

     4. The Committee shall review and evaluate the lead partner of the independent auditor team.

     5. The Committee shall receive from the independent auditor, at least annually, a formal written report delineating all relationships between the independent auditor and the Company consistent with Independence Standards Board Standard No. 1, as amended or supplemented. The Committee shall discuss with the independent auditor the independent auditor’s independence, including any relationships or services that may impact the objectivity and independence of the independent auditor and shall recommend, if necessary, that the Board take appropriate action in response to the independent auditor’s report to satisfy itself of the auditor’s independence.

     6. The Committee shall evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of permitted non audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management and internal auditors. The Committee shall present to the Board its conclusions with respect to the independent auditor.

     7. The Committee shall be responsible for ensuring the rotation of the independent auditor’s lead or coordinating audit partner having primary responsibility for the Company’s audit, the concurring or reviewing partner and other audit engagement team partners as required by law.

     8. The Committee shall consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis.

     9. The Committee shall recommend to the Board policies for the Company’s hiring of employees and former employees of the independent auditor who participated in the audit of the Company.

Financial Statement and Disclosure Matters

     10. The Committee shall review with the independent auditor and with management the proposed scope of the annual audit, past audit experience, the Company’s program for the internal examination and verification of the Company’s accounting documents and supporting data, recently completed internal examinations of the Company’s accounting documents and supporting data and other matters bearing upon the scope of the audit.

     11. The Committee shall review and discuss with management and the independent auditor the Company’s annual audited financial statements to be included in the Company’s Annual Report on Form 10-K (or the Annual Report to Shareholders if distributed prior to the filing of Form 10-K), including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and shall discuss with the independent auditor the matters required to be discussed by Statement of Auditing Standards (“SAS”) No. 61, as amended or supplemented.

     12. Based on the reviews and discussions referred to in paragraphs 5 and 11 of this Charter, the Committee shall determine whether to recommend to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K.

     13. In connection with the review by the independent auditor of the financial information included in the Company’s Quarterly Reports on Form 10 Q, the Committee shall review the quarterly financial statements prior to their public release and discuss with the independent auditor the matters required to be discussed by SAS No. 61, as amended or supplemented.

     14. The Committee shall discuss with management the Company’s earnings press releases, and review the type and presentation of information to be included therein, including the use of “pro forma” or “adjusted” non-GAAP information, and the Committee shall from time to time discuss in general the types of financial information and earnings guidance to be disclosed and the type of presentations to be made to analysts and rating agencies, provided that the Committee is not required to discuss in advance each instance in which the Company may provide earnings guidance or other information to analysts or rating agencies.

     15. The Committee shall review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles.

     16. The Committee shall review major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies.

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     17. The Committee shall review analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.

     18. The Committee shall review the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company.

     19. The Committee shall review and discuss reports from the independent auditor on:

     20. The Committee shall review with the independent auditor any audit problems or difficulties encountered in the course of the audit work, including any restrictions on the scope of the independent auditor’s activities or on access to requested information, and management’s response.

     21. The Committee shall discuss with management the Company’s policies with respect to risk assessment and risk management, the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures.

     22. The Committee shall review disclosures made to the Committee by the Company’s CEO and CFO during their certification process for the Form 10-K and Forms 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls.

Oversight of the Company’s Internal Audit Function

     23. The Committee shall review and approve the appointment or termination of the director/vice president of internal audit.

     24. The Committee shall review the significant reports to management prepared by the internal auditing department and management’s responses.

     25. The Committee shall discuss with the independent auditor and management the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.

     26. The Committee shall review with the Board the performance of the Company’s internal audit function.

Other Responsibilities

     27. The Committee shall establish and maintain procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

     28. The Committee shall receive reports on material legal and regulatory affairs, including litigation, and monitor the Company’s annual Code of Business Conduct documentation and corrective actions.

     29. The Committee shall obtain from the independent auditor assurance that the provisions of Section 10A(b) of the Exchange Act respecting the detection and reporting of illegal acts have not been implicated.

     30. The Committee shall be responsible for ensuring that the Company has an effective information technology disaster recovery plan.

     31. The Committee shall review and make recommendations to the Board concerning the Company’s policies with regard to affiliate transactions and also with regard to review of CEO and selected officers’ expense accounts and verification of perquisites policies. Affiliates in this context are defined as employees, directors, and other parties closely related to the Company.

     32. The Committee shall review and make recommendations to the Board concerning the Company’s financing plans and policies.

     33. The Committee shall meet at least four times per year, or more frequently as circumstances dictate. Any member of the Committee may call a meeting of the Committee. A quorum for a meeting shall be a majority of Committee members. The

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Committee shall meet in separate sessions, periodically, with management, with internal auditors and with the independent auditor.

     34. The Committee shall maintain minutes or other records of its meetings and make reports on its meetings to the Board.

     35. The Committee shall review and reassess the adequacy of this Charter on an annual basis and shall make recommendations to the Board, as conditions dictate, to update this Charter.

     36. The Committee shall annually review its own performance.

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