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. )
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Motorola Solutions, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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NOTICE OF |
2015 ANNUAL MEETING |
OF STOCKHOLDERS AND PROXY STATEMENT |
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2015
March 31, 2015
Dear Fellow Motorola Solutions Stockholders:
On behalf of the Motorola Solutions Board of Directors, it is my pleasure to invite you to attend our 2015 Annual Stockholders Meeting. This years meeting will be held on Monday, May 18, 2015 at 5 p.m., EDT, at the Fairmont Washington, D.C., Georgetown, 2401 M Street NW, Washington, D.C. 20037.
As a Motorola Solutions stockholder, your vote is important. Even if you are planning to attend the annual meeting in person, you are strongly encouraged to vote your shares through one of the methods described in the enclosed proxy statement. The Board and I would appreciate your support on our recommendations for the following proposals:
| Election of the eight nominated directors; |
| Advisory approval of the Companys executive compensation; |
| Approval of the Amendment and Restatement of our Omnibus Incentive Plan; |
| Approval of the Amendment and Restatement of our Employee Stock Purchase Plan; and |
| Ratification of KPMG LLP as our appointed, independent, registered public accounting firm. |
2014 was a transformational year for our Company as we set a solid foundation for growth and profitability. We divested our Enterprise business, significantly improved our risk profile through pension de-risking actions and achieved substantial operating expense savings. We prioritized our services business, simplified key Company processes and focused more on our research and development spending on growth areas. We also returned $2.9 billion to stockholders through share repurchase and dividends while reaffirming our commitment to a more efficient capital structure. As a result, we believe were in a better position to grow, deliver strong cash flow and drive stockholder value for years to come.
Motorola Solutions now is singularly focused on serving the mission-critical communications needs of our public safety and commercial customers. I take great personal pride in knowing that our solutions and services make a difference in the world. Through the power of technology, cities can become safer, citizens more engaged and public safety agencies more empowered. Safer cities are the engines for success, driving economies to flourish and communities to thrive.
On behalf of your Board of Directors, thank you for your confidence in Motorola Solutions. I look forward to your continued support.
Gregory Q. Brown
Chairman and CEO
Motorola Solutions, Inc.
|
PRINCIPAL EXECUTIVE OFFICES: 1303 East Algonquin Road Schaumburg, Illinois 60196 |
March 31, 2015
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS
Annual Meeting Date: Monday, May 18, 2015
Time: 5:00 P.M., EDT
Location: Fairmont Washington, D.C., Georgetown, 2401 M Street NW, Washington, DC 20037
A live webcast (audio only) of the meeting will be available at www.motorolasolutions.com/investors.
The purpose of the meeting is to:
1. | elect eight directors for a one-year term; |
2. | hold a stockholder advisory vote to approve the Companys executive compensation; |
3. | approve the Amendment and Restatement of our Omnibus Incentive Plan; |
4. | approve the Amendment and Restatement of our Employee Stock Purchase Plan; |
5. | ratify the appointment of KPMG LLP as the Companys independent registered public accounting firm for 2015; |
6. | consider and vote upon the stockholder proposal described in the enclosed proxy statement, if properly presented at the meeting; and |
7. | act upon such other matters as may properly come before the meeting. |
By order of the Board of Directors,
Michelle M. Warner
Secretary
Only Motorola Solutions stockholders of record at the close of business on March 20, 2015 (the record date) will be entitled to vote at the meeting. The Notice, which contains instructions on how to access this Proxy Statement, the form of proxy and the Companys 2014 Annual Report, is being mailed to stockholders on or about March 31, 2015.
PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO STOCKHOLDERS OF MOTOROLA SOLUTIONS AS OF THE RECORD DATE (OR THEIR AUTHORIZED REPRESENTATIVES). You will be required to provide the admission ticket that is detachable from your proxy card or provide other evidence of ownership. If your shares are held by a bank or broker, please bring your bank or broker statement evidencing your beneficial ownership of Motorola Solutions stock on the record date to gain admission to the meeting.
PROXY STATEMENT SUMMARY |
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more complete information regarding the Companys 2014 performance, please review the Companys Annual Report on Form 10-K for the year ended December 31, 2014.
2015 ANNUAL MEETING OF STOCKHOLDERS
| Date and Time: May 18, 2015, 5:00 p.m., EDT |
| Location: Fairmont Washington, D.C., Georgetown, 2401 M Street, Washington, DC 20037 |
| Record Date: March 20, 2015 |
| Voting: Stockholders as of the close of business on the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on. |
| Meeting Webcast (audio only): www.motorolasolutions.com/investors |
| Common Stock Outstanding as of Record Date: 211,273,136 |
| Stock Symbol: MSI |
| Registrar & Transfer Agent: Wells Fargo Shareowner Services |
ITEMS TO BE VOTED ON
Our Boards Recommendation | ||
Election of Directors (page 4) |
FOR | |
Advisory Vote to Approve Executive Compensation (page 19) |
FOR | |
Approval of the Amendment and Restatement of our Omnibus Incentive Plan (page 55) |
FOR | |
Approval of the Amendment and Restatement of our Employee Stock Purchase Plan (page 62) |
FOR | |
Ratification of Independent Registered Public Accounting Firm (page 65) |
FOR | |
Stockholder Proposal on Lobbying Disclosure (page 69) |
AGAINST |
DIRECTOR NOMINEES
Board Committees (as of December 31, 2014) |
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Name | Director Since |
Indep. | Other Public Co. Boards |
Position | Audit | Comp. | Gov. & Nom. |
Exec. | ||||||||||||||||||||||
Gregory Q. Brown |
2007 | 0 | Chairman and CEO, Motorola Solutions, Inc. |
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Kenneth C. Dahlberg |
2011 | 1 | Former Chairman and CEO, Science Applications International Corporation | |||||||||||||||||||||||||||
Gen. Michael V. Hayden |
2011 | 0 | Principal, Chertoff Group | |||||||||||||||||||||||||||
Clayton M. Jones |
Nom. | 2 | Former Chairman, CEO and President, Rockwell Collins, Inc. | |||||||||||||||||||||||||||
Judy C. Lewent |
2011 | 2 | Former EVP and CFO, Merck & Co., Inc. |
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Anne R. Pramaggiore |
2013 | 0 | President and CEO, Commonwealth Edison |
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Samuel C. Scott |
1993 | 2 | Former Chairman, President and CEO, Corn Products International | |||||||||||||||||||||||||||
Bradley E. Singer |
2012 | 0 | Partner, ValueAct Capital |
(i)
BUSINESS HIGHLIGHTS
PERFORMANCE AND ACCOMPLISHMENTS 2011 2014
(ii)
EXECUTIVE COMPENSATION
2014 CEO Total Direct Compensation
2014 was a transformational year with the completion of the sale of our Enterprise business to Zebra Technologies Corporation (Zebra) in October. However, 2014 was a challenging year overall and our 2014 business performance was below our operating plan. This performance resulted in a below target payout under our Executive Officer Short-Term Incentive Plan. Our three-year performance ended December 31, 2014 also resulted in lower returns to our stockholders relative to our comparator group, resulting in a zero payout under the 2012-2014 cycle of our Long Range Incentive Plan. As a result, total direct compensation for 2014 was lower than in 2013 by $4.7 million.
Base Salary* |
$1,287,500 | |||||||
Executive Officer Short Term Incentive |
$558,370 | |||||||
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Total Short-term Cash Compensation |
$1,845,870 | |||||||
Long-term Incentive Cash Payment (2012- 2014 Long Range Incentive Plan) |
$0 | |||||||
Long-term Incentives (grant date fair value) |
$5,765,580 | |||||||
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Total Compensation (excluding perquisites) |
$7,611,450 |
* Actual wages reflects two additional weeks of pay due to the timing of the 2014 payroll calendar.
GOVERNANCE HIGHLIGHTS
As part of our commitment to high ethical standards, our Board follows sound governance practices. These practices are described in more detail in the Corporate Governance section of our web site.
Independence | Seven out of our eight nominees are independent Our CEO is the only management director All Board committees that met during 2014 are comprised of independent directors | |
Independent Lead Director | We have a Lead Independent Director, selected by the independent directors The Lead Independent Director serves as liaison between management and the other non-management directors | |
Executive Sessions | The independent directors regularly meet in private without management The Lead Independent Director presides at these executive sessions | |
Accountability | All directors stand for election annually In uncontested elections, directors must be elected by a majority of votes cast Holders of 20% or more of our common stock have the ability to request a special meeting of stockholders | |
Board Oversight of Risk Management |
Our Board reviews the Companys approach to identifying and assessing risks The Audit Committee reviews the risk exposure of the Company, including our internal audit assessment of risk and our material risk disclosures, and meets periodically with senior management to discuss our risk assessment and risk management policies The Compensation and Leadership Committee reviews the annual compensation risk assessment and retains an independent compensation consultant The Governance and Nominating Committee reviews all related party transactions We have a recoupment or clawback policy to recover certain executive pay We have a policy prohibiting trading in derivative securities of the Company, and no NEOs or Directors have pledged any Company stock | |
Stock Ownership Requirements |
Our independent directors must hold at least five times the annual retainer, or $500,000, of our common stock within five years of joining the Board Directors are required to hold all shares paid or awarded by the Company until their termination of service Our CEO must hold our common stock equal to six times his annual salary within five years of attaining the position Members of the management executive committee must hold our common stock valued at three times their annual salary within five years of joining the group |
(iii)
TABLE OF CONTENTS |
This proxy statement (the Proxy Statement) is being furnished to holders of common stock, $0.01 par value per share (the Common Stock), of Motorola Solutions, Inc. (we, our, Motorola Solutions, or the Company). Proxies are being solicited on behalf of the Board of Directors of the Company (the Board) to be used at the 2015 Annual Meeting of Stockholders (the Annual Meeting) to be held at the Fairmont Washington, D.C., Georgetown, 2401 M Street NW, Washington, DC 20037 on Monday, May 18, 2015 at 5:00 P.M., EDT, for the purposes set forth in the Notice of 2015 Annual Meeting of Stockholders. This Proxy Statement is dated March 31, 2015 and is being distributed to stockholders on or about March 31, 2015.
All stockholders may view and print Motorola Solutions Proxy Statement and the 2014 Annual Report at the Companys website at www.motorolasolutions.com/investors. The information contained on Motorola Solutions website is not a part of this Proxy Statement and is not deemed incorporated by reference into this Proxy Statement or any other public filing made with the Securities and Exchange Commission (the SEC).
Stockholders Entitled to Vote at the Annual Meeting
Only stockholders of record at the close of business on March 20, 2015 (the record date) will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements thereof. On the record date, there were 211,273,136 shares outstanding of Common Stock. The Common Stock is the only class of voting securities of the Company.
A list of stockholders entitled to vote at the meeting will be available for examination at the corporate offices of Motorola Solutions, Inc., 1303 E. Algonquin Road, Door 51, Schaumburg, Illinois 60196 for ten days before the Annual Meeting and at the Annual Meeting.
Voting Without Attending the Annual Meeting
There are three convenient methods for registered stockholders to direct their vote by proxy without attending the Annual Meeting. Stockholders can:
| Vote by Internet. The website address for Internet voting is provided on your Notice or proxy card. You will need to use the control number appearing on your Notice of Internet Availability of Proxy Materials (Notice) or proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 P.M., EDT on Sunday, May 17, 2015. Internet voting is available 24 hours a day. If you vote via the Internet you do NOT need to vote by telephone or return a proxy card. |
| Vote by Telephone. You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 P.M., EDT on Sunday, May 17, 2015. Telephone voting is available 24 hours a day. If you vote by telephone you do NOT need to vote over the Internet or return a proxy card. |
| Vote by Mail. If you received a printed copy of the proxy card, you can vote by marking, dating, signing, and returning it in the postage-paid envelope provided. Please promptly mail your proxy card to ensure that it is received prior to the closing of the polls at the Annual Meeting. |
Your Proxy at the Annual Meeting
If you do not vote in person at the Annual Meeting, but have voted your shares by Internet, telephone, or mail, you have authorized certain members of Motorola Solutions senior management designated by the Board and named in your proxy to represent you and to vote your shares as instructed. All shares that have been properly votedwhether by Internet, telephone or mailand not revoked will be voted at the Annual Meeting in accordance with your instructions. If you sign your proxy but do not give voting instructions with respect to one or more items, the shares represented by that proxy will be voted as recommended by the Board with respect to those items:
Proposal |
The Board Recommended Vote | |||
Proposal 1 |
Election of eight Directors |
FOR | ||
Proposal 2 |
Advisory Approval of the Companys Executive Compensation |
FOR | ||
Proposal 3 |
Approval of the Amendment and Restatement of our Omnibus Incentive Plan |
FOR | ||
Proposal 4 |
Approval of the Amendment and Restatement of our Employee Stock Purchase Plan |
FOR | ||
Proposal 5 |
Ratification of Independent Registered Public Accounting Firm for Fiscal Year 2015 |
FOR | ||
Proposal 6 |
Stockholder Proposal on Lobbying Disclosure |
AGAINST | ||
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 1 |
Holding Shares in the Name of a Bank, Broker or Other Nominee
If you are the beneficial owner of shares held in street name by a broker, the broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. Please check your voting instruction card or contact your bank, broker or nominee to determine whether you will be able to vote by Internet or telephone. If you do not give instructions to your broker, your broker will be entitled to vote the shares with respect to discretionary items, but will not be permitted to vote the shares with respect to non-discretionary items (resulting in a broker non-vote). The ratification of the appointment of KPMG LLP is the only discretionary item. The election of directors, the advisory approval of the Companys executive compensation, the approval of the amendment and restatement of our omnibus incentive plan, the approval of the amendment and restatement of our employee stock purchase plan and the stockholder proposal are non-discretionary items.
Voting At the Annual Meeting as a Beneficial Owner
If you are a beneficial owner of shares held in street name by a bank, broker or other nominee and want to vote your shares in person at the Annual Meeting, you will need to ask your bank, broker or other nominee to furnish you with a legal proxy. You will need to bring the legal proxy with you to the Annual Meeting and hand it in with a signed ballot that will be provided to you. You will not be able to vote your shares at the Annual Meeting without a legal proxy. If you are provided a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the Annual Meeting and vote in person or legally appoint another proxy to vote on your behalf.
If you do not have a legal proxy, you can still attend the Annual Meeting with evidence of your stock ownership as of the record date; however, you will not be able to vote your shares at the meeting. Accordingly, we encourage you to vote or instruct your broker to vote your shares in advance, even if you plan to attend.
Changing Your Vote
Registered stockholders can revoke their proxy at any time before it is voted at the Annual Meeting by either:
| Submitting another timely, later-dated proxy by Internet, telephone or mail; |
| Delivering timely written notice of revocation to the Secretary, Motorola Solutions, Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196; or |
| Attending the Annual Meeting and voting in person. |
Notice of Internet Availability
The SEC has adopted rules for the electronic distribution of proxy materials. We have elected to provide our stockholders access to our proxy materials and 2014 Annual Report on the Internet instead of sending a full set of printed proxy materials to all of our stockholders. This enables us to reduce costs and lessen the environmental impact of our Annual Meeting by mailing most of our stockholders a Notice. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request them by following the instructions for requesting such materials included in the Notice. The Notice instructs you on how to access and review all of the information contained in the 2015 Proxy Statement and 2014 Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet or by telephone.
The Notice, which contains instructions on how to access this Proxy Statement, the form of proxy and the Companys 2014 Annual Report, is being mailed to stockholders on or about March 31, 2015.
Other Matters at the Annual Meeting
If any other matters are properly presented at the Annual Meeting for consideration and if you have voted your shares by Internet, telephone or mail, the persons named as proxies in your proxy will have the discretion to vote on those other matters for you. As of the date we filed this Proxy Statement, the Board did not know of any other matter to be raised at the Annual Meeting.
2 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
Votes Required to Conduct Business at the Annual Meeting or Approve Proposals
In order for business to be conducted, a quorum of a majority of the shares entitled to vote must be represented in person or by proxy at the Annual Meeting. Abstentions and broker non-votes are included in determining whether a quorum is present, but will not be included in vote totals and will not affect the outcome of the vote for the election of directors. Abstentions will have the same effect as a vote Against the other proposals.
Proposal | Affirmative Vote Required | Broker Discretionary Voting Allowed | ||||
Proposal 1 |
Election of eight Directors | More For votes than Against votes cast at the Annual Meeting in person or by proxy (for non-contested election) | No | |||
Proposal 2 |
Advisory Approval of the Companys Executive Compensation | Majority of shares present and entitled to vote; abstentions will count as votes Against | No | |||
Proposal 3 |
Approval of the Amendment and Restatement of our Omnibus Incentive Plan | Majority of shares present and entitled to vote; abstentions will count as votes Against | No | |||
Proposal 4 |
Approval of the Amendment and Restatement of our Employee Stock Purchase Plan | Majority of shares present and entitled to vote; abstentions will count as votes Against | No | |||
Proposal 5 |
Ratification of Independent Registered Public Accounting Firm for Fiscal Year 2015 | Majority of shares present and entitled to vote; abstentions will count as votes Against | Yes | |||
Proposal 6 |
Stockholder Proposal on Lobbying Disclosure | Majority of shares present and entitled to vote; abstentions will count as votes Against | No | |||
With respect to each proposal, you may vote FOR, AGAINST or ABSTAIN. Broker non-votes will have no effect on the outcome of any of the proposals. |
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 3 |
The number of directors of the Company to be elected at the Annual Meeting is eight. The directors elected at the Annual Meeting will serve a one-year term ending at the 2016 Annual Meeting until their respective successors are elected and qualified or until their earlier death, resignation or removal. Each of the nominees has consented to being named in this Proxy Statement and to serve as a director if elected. However, if any nominee named below is not available to serve as a director for any reason at the time of the Annual Meeting, the proxies will be voted for the election of such other person or persons as the Board may designate, unless the Board, in its discretion, reduces the number of directors. The Board is currently comprised of eight directors. Immediately following the Annual Meeting, if all nominees are elected, the Board will consist of eight directors. The Board has the authority under the Companys Bylaws to increase or decrease the size of the Board and to fill vacancies between Annual Meetings.
Each of the nominees named below, other than Mr. Jones, is currently a director of the Company, elected at the Annual Meeting of Stockholders held on May 5, 2014. The ages shown are current as of the date of this Proxy Statement.
GREGORY Q. BROWN |
Mr. Brown joined the Company in 2003 and since May 2011 has been the Chairman and Chief Executive Officer of Motorola Solutions, Inc. He served as President and Chief Executive Officer from January 2011 until May 2011, Co-Chief Executive Officer of Motorola, Inc. and Chief Executive Officer of Broadband Mobility Solutions from August 2008 until January 2011.
Other Public Company Boards: Mr. Brown served on the board of Cisco Systems, Inc. from January 2013 to July 2014
Board Committees: Executive (Chair)
Director Qualifications:
Public company CEO, relevant industry and technology experience as Chairman and CEO of the Company, former CEO of Micromuse, Inc.
International and global business, developing markets, government, public policy and regulatory experience as Chairman and CEO of the Company, Chair of the Federal Reserve Bank of Chicago, former Vice Chair of the U.S. China Business Council, former member of the President of the United States Management Advisory Board
Public company board experience | |
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Principal Occupation: Chairman and Chief Executive Officer, Motorola Solutions, Inc. |
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Age: 54 Director since: 2007 Chairman since: 2011 |
4 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
KENNETH C. DAHLBERG |
Mr. Dahlberg served as Chief Executive Officer of SAIC, a research and engineering firm specializing in information systems and technology, from November 2003 through September 2009. Mr. Dahlberg also served as Chairman of the Board of Directors of SAIC from July 2004 until his retirement in June 2010.
Other Public Company Boards: Teledyne Technologies Incorporated
Board Committees: Compensation and Leadership (Chair), Audit, Executive
Director Qualifications:
Public company CEO, international and global business experience as former CEO of SAIC
Relevant industry and technology experience as former CEO of SAIC, and as a former executive officer of General Dynamics Corp and Raytheon Systems
Government, public policy and regulatory experience as a former member of the Board of Governors at Aerospace Industries Association, the National Defense Industrial Association and a former member of the President of the United States National Telecommunications Security Advisory Council
Public company board experience | |
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Principal Occupation: Retired; Formerly Chairman of the Board and Chief Executive Officer of Science Applications International Corporation (SAIC) |
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Age: 70 Director since: 2011 Independent |
GEN. MICHAEL V. HAYDEN |
General Hayden has been a principal at the Chertoff Group, a security consultancy company since April 2009. General Hayden served as the director of the Central Intelligence Agency from May 2006 until his retirement in February 2009.
Other Public Company Boards: None
Board Committees: Governance and Nominating
Director Qualifications:
Relevant industry, government, public policy and regulatory experience as a retired United States Air Force four-star general, former director of the Central Intelligence Agency, former Principal Deputy Director of National Intelligence and former director of the National Security Agency
International and global business and developing markets experience as a principal at Chertoff Group | |
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Principal Occupation: Principal, Chertoff Group |
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Age: 70 Director since: 2011 Independent |
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 5 |
CLAYTON M. JONES |
Mr. Jones served as Chairman of the Board of Rockwell Collins, Inc. from 2002 through July 2014, and Chief Executive Officer from June 2001 until his retirement in July 2013. Mr. Jones also served as President of Rockwell Collins and Corporate Officer and Senior Vice President of Rockwell International which he joined in 1979.
Other Public Company Boards: Deere & Company, Cardinal Health, Inc. In the last five years, Mr. Jones served on the board of Rockwell Collins from March 2001 to July 2014.
Board Committees: None
Director Qualifications:
Public company CEO, international and global business experience as former CEO of Rockwell Collins, Inc.
Relevant industry and technology experience as former CEO of Rockwell Collins, Inc., and Corporate Officer and Senior Vice President of Rockwell International.
Government, public policy and regulatory experience as a member of The Business Council, Presidents National Security Telecommunications Advisory Committee.
Public company board experience | |
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Principal Occupation: Retired; Formerly Chairman, Chief Executive Officer and President, Rockwell Collins, Inc. (Rockwell Collins) | ||
Age: 65 Director since: Nominee Independent |
JUDY C. LEWENT |
Ms. Lewent served as Executive Vice President and Chief Financial Officer of Merck, a pharmaceutical company, from 1990 until her retirement in 2007.
Other Public Company Boards: GlaxoSmithKline plc and Thermo Fisher Scientific, Inc. In the last five years, Ms. Lewent served on the board of directors of Motorola, Inc. from May 1995 to May 2010, and on the board of Dell, Inc. from May 2001 to July 2011.
Board Committees: Audit (Chair), Executive
Director Qualifications:
Public company CFO, financial and accounting expertise, and international business experience as the former CFO of Merck
Technology experience as a life member of the Massachusetts Institute of Technology
Public company board experience | |
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Principal Occupation: Retired; Formerly Executive Vice President & Chief Financial Officer, Merck & Co., Inc. (Merck) |
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Age: 66 Director since: 2011 Independent |
6 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
ANNE R. PRAMAGGIORE |
Ms. Pramaggiore has been the President and Chief Executive Officer of ComEd, an electric utility company and a business unit of Exelon Corporation, and a member of the ComEd board of directors since February 2012. She served as ComEds President and Chief Operating Officer from May 2009 until February 2012.
Other Public Company Boards: Ms. Pramaggiore served on the board of The Babcock & Wilcox Company from January 2011 to May 2014
Board Committees: Compensation and Leadership, Governance and Nominating
Director Qualifications:
Government, public policy and regulatory and technology experience as CEO of ComEd, Executive Vice President, Customer Operations, Regulatory and External Affairs of ComEd, and as a licensed attorney
International and global business experience as Deputy Chair of the Federal Reserve Bank of Chicago and board member of the Chicago Council on Global Affairs and The Chicago Urban League
Public company board experience | |
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Principal Occupation: President and Chief Executive Officer, Commonwealth Edison Company (ComEd) |
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Age: 56 Director since: 2013 Independent |
SAMUEL C. SCOTT III |
Mr. Scott served as Chairman, President and Chief Executive Officer of Corn Products International, a corn refining business, from February 2001 until his retirement in May 2009.
Other Public Company Boards: Abbott Laboratories, Bank of New York Mellon
Board Committees: Governance and Nominating (Chair), Executive
Director Qualifications:
Public company CEO experience as former chairman and CEO of Corn Products International, Inc.
International and global business and developing markets experience as former chairman and CEO of Corn Products International, Inc., a board member of the Chicago Council on Global Affairs, World Business Chicago, The Chicago Urban League, and Northwestern Memorial HealthCare, and as Chairman of Chicago Sister Cities International
Public company board experience | |
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Principal Occupation: Retired; Formerly Chairman of the Board, President and Chief Executive Officer, Corn Products International |
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Age: 70 Director since: 1993 Independent |
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 7 |
BRADLEY E. SINGER |
Mr. Singer has been a partner at ValueAct Capital an investment management company since May 2012. Mr. Singer was the Senior Executive Vice President and Chief Financial Officer of Discovery Communications, Inc., a media company, from July 2008 to March 2012 and also served as its Treasurer from February 2009 to September 2011. He served as Chief Financial Officer and Senior Executive Vice President of Discovery Communications Holding, LLC from July 2008 to March 2012 and as its Treasurer from February 2009 to September 2011.
Other Public Company Boards: None
Board Committees: Audit, Compensation and Leadership
Director Qualifications:
Public company CFO, financial and accounting expertise, and technology and international and global business experience as former CFO and Treasurer of Discovery Communications, Inc., Discovery Communications Holdings LLC and American Tower Corporation, a wireless and broadcast communications infrastructure company
Private equity and investment banking experience as a partner with ValueAct Capital and as a former investment banker with Goldman, Sachs & Co
Public company board experience | |
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Principal Occupation: Partner, ValueAct Capital |
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Age: 48 Director since: 2012 Independent
|
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE EIGHT NOMINEES NAMED HEREIN AS DIRECTORS. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE ELECTION OF SUCH EIGHT NOMINEES AS DIRECTORS.
8 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
The Boards Corporate Governance Principles
The Board adheres to governance principles designed to assure the continued vitality of the Board and excellence in the execution of its duties. The Board has responsibility for management oversight and providing strategic guidance to the Company. The Board believes that it must continue to renew itself to ensure that its members bring a fresh perspective to understanding the industries and the markets in which the Company operates. The Board also believes that it must remain well-informed about the opportunities and challenges facing Motorola Solutions and its industries and markets so that the Board members can exercise their fiduciary responsibilities to Motorola Solutions stockholders.
GOVERNANCE HIGHLIGHTS |
The Board recognizes the importance of evolving corporate governance practices and is committed to regularly reviewing specific elements of the Companys corporate governance. Key governance practices of the Company are:
Seven of eight director nominees are independent |
Board Committees comprised of independent directors |
Compensation and Leadership Committee retains independent compensation consultant |
Lead Independent Director |
Independent directors regularly meet in private without management |
Risk assessment process with Audit and Compensation and Leadership Committees |
Hold annual advisory vote on executive compensation |
No gross-up for excise taxes |
Recoupment or clawback policy |
Stock Ownership Guidelines |
Board and Committee self assessment process |
Annual election of all directors |
Majority vote for directors in uncontested elections |
Holders of 20% or more of our Common Stock have the ability to request a special meeting of stockholders |
Active stockholder engagement process |
Anti-hedging policy |
Motorola Solutions encourages you to visit our corporate governance page on our website at www.motorolasolutions.com/investors which provides information about our corporate governance practices and includes the following documents: |
Board Governance Guidelines |
Director Independence Guidelines |
The Principles of Conduct for Members of the Board of Directors |
Code of Business Conduct |
Audit Committee, Compensation and Leadership Committee and Governance and Nominating Committee charters |
Restated Certificate of Incorporation, as amended |
Amended and Restated Bylaws |
Amendments to the above documents, or waivers applicable to its directors, chief executive officer, chief financial officer or corporate controller from certain provisions of its ethical policies and standards for directors and its employees, will be posted on the Motorola Solutions website within four business days following the date of the amendment or waiver. The Amended and Restated Bylaws were amended on November 13, 2014. There were no waivers in 2014.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 9 |
The Board believes it should be comprised of individuals with appropriate skills and experiences to meet its board governance responsibilities and contribute effectively to the Company. Our Governance and Nominating Committee carefully considers the skills and experiences of current directors and new candidates to ensure that they meet the needs of the Company before nominating directors for election to the Board. All of our non-employee directors serve on Board committees, further supporting the Board by providing expertise to those committees. The needs of the committees also are reviewed when considering nominees to the Board. The Board has a deep working knowledge of matters common to large companies and is comprised of a mix of skills and qualifications which includes:
| Public company CEOs and CFOs |
| Financial and accounting expertise |
| Relevant industry experience |
| Technology experience, including in information technology and cyber security |
| Global business experience |
| Developing markets experience |
| Government, public policy and regulatory experience |
| Academia |
| Private equity and investment banking experience |
| Public company board experience |
| Gender and ethnic diversity |
| Independence |
Specific experience, qualifications, attributes or skills of our nominees are listed in the biographies above.
IDENTIFYING AND EVALUATING DIRECTOR CANDIDATES
As stated in our Board Governance Guidelines, when selecting directors, the Board and the Governance and Nominating Committee review and consider many factors, including: experience in the context of the Boards needs; leadership qualities; ability to exercise sound judgment; existing time commitments; years to retirement age; and independence from management. They also consider ethical standards and integrity. While the Company does not have a formal policy regarding diversity, diversity is one of several factors considered by the Board and the Governance and Nominating Committee when selecting director nominees. The Board and the Governance and Nominating Committee strive to nominate directors with a variety of complementary skills, backgrounds and perspectives so that, as a group, the Board will possess the appropriate talent, skills, experience and expertise to oversee the Companys businesses. The Governance and Nominating Committee annually assesses the effectiveness of its director nomination process and the Board Governance Guidelines.
The Governance and Nominating Committee will consider nominees recommended by Motorola Solutions stockholders, provided that the recommendation contains sufficient information (as required by the Companys Bylaws), including the candidates qualifications, to assess the suitability of the candidate, and is timely received in accordance with the Companys Bylaws. Stockholder-recommended candidates that comply with these procedures will receive the same consideration that other candidates receive.
The Governance and Nominating Committee considers recommendations from many sources, including members of the Board, management and search firms. From time to time, Motorola Solutions hires search firms to help identify and facilitate the screening and interview process of director candidates. The search firm screens candidates based on the Boards criteria, performs reference checks, prepares a biography for each candidate for the Governance and Nominating Committees review and helps arrange interviews. The Governance and Nominating Committee and the Chairman of the Board conduct interviews with candidates who meet the Boards criteria. In connection with identifying Mr. Jones, we retained a third-party search firm to review his qualifications. The Chairman of the Board and members of the Governance and Nominating Committee interviewed Mr. Jones and as a result, Mr. Jones was included in this proxy statement as a nominee for election by the stockholders. The Governance and Nominating Committee has full discretion in considering potential candidates and making its nominations to the Board.
10 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
To assist it in carrying out its duties, the Board has delegated certain authority to several committees. The Board currently has the following standing committees: (1) Audit, (2) Compensation and Leadership, (3) Governance and Nominating, and (4) Executive. The charters for each of the Audit Committee, Compensation and Leadership Committee and Governance and Nominating Committee are available on our website at www.motorolasolutions.com/investors. Committee membership as of December 31, 2014, the number of meetings of each committee during 2014, and the functions of each committee are described below:
AUDIT COMMITTEE
|
Assist the Board in fulfilling its oversight responsibilities as they relate to the Companys
accounting policies, internal controls, disclosure controls and procedures, financial reporting practices and legal and regulatory compliance.
Engage the independent registered public accounting firm. | |
2014 Meetings: 9 | ||
Judy C. Lewent (Chair) Kenneth C. Dahlberg Bradley E. Singer |
Monitor the qualifications,
independence and performance of the Companys independent registered public
Maintain, through regularly scheduled meetings, a line of communication between the Board and the
Oversee compliance with the Companys policies for conducting business, including ethical business standards.
Review the Companys overall financial position, asset utilization and capital structure.
Review the need for equity and/or debt financing and specific outside financing proposals.
Review and approve certain major transactions, such as restructurings, acquisitions, divestitures, joint ventures
Monitor the performance and investments of employee retirement and related funds.
Review the Companys dividend payment plans and practices.
Prepare the report of the Audit Committee included in this Proxy Statement.
|
COMPENSATION AND
|
Assist the Board in overseeing the management of the Companys human resources,
including:
compensation and benefits programs;
CEO performance and compensation;
executive development and succession; and
diversity efforts.
Oversee the evaluation of the Companys senior management.
Review and discuss the Compensation Discussion and Analysis (CD&A) with management and make a
Prepare the report of the Compensation and Leadership Committee included in this Proxy Statement.
| |
2014 Meetings: 6 | ||
Kenneth C. Dahlberg (Chair) Bradley E. Singer Anne R. Pramaggiore
|
GOVERNANCE AND
|
Identify individuals qualified to become Board members, consistent with the criteria approved by the
Board.
Recommend director nominees and individuals to fill vacant positions and to serve on committees.
Assist the Board in interpreting the Companys Board Governance Guidelines, the Boards
Principles of Conduct
Oversee the evaluation of the Board and its committees.
Review the independence of directors and evaluate and/or approve related party transactions.
Generally oversee the governance and compensation of the Board.
| |
2014 Meetings: 4 | ||
Samuel C. Scott III (Chair) Gen. Michael V. Hayden Anne R. Pramaggiore
|
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 11 |
EXECUTIVE COMMITTEE
|
Act for the Board between meetings on matters already approved in principle by the Board.
Exercise the authority of the Board on specific matters assigned by the Board from time to time. | |
2014 Meetings: 0 | ||
Gregory Q. Brown (Chair) Kenneth C. Dahlberg David W. Dorman
(Lead Samuel C. Scott III
|
* Mr. Dorman is not standing for reelection; his term will expire on May 18, 2015.
Attendance
The Board held fifteen meetings during 2014. Overall attendance at Board and committee meetings was 92%. Each incumbent director attended over 89% of the combined total meetings of the Board and the committees on which he or she served during 2014, except for one director that attended 86% of the meetings and one director that attended 75% of the meetings. At the Board meetings, independent directors of the Company meet regularly in executive session without management as required by the Motorola Solutions, Inc. Board Governance Guidelines and NYSE listing standards. Generally, executive sessions are held in conjunction with regularly-scheduled meetings of the Board. In 2014, the non-employee independent members of the Board met in executive session eight times. In addition, Board members are expected to attend the Annual Meeting as provided in the Motorola Solutions, Inc. Board Governance Guidelines. Six of the eight directors who stood for election at the 2014 Annual Meeting attended that meeting.
Leadership Structure of the Board
At the Annual Board meeting held in May 2011, the Board combined the roles of Chairman and Chief Executive Officer and appointed Gregory Q. Brown to serve as both Chief Executive Officer and Chairman of the Board and Mr. Dorman to serve as Lead Independent Director. The Board reappointed Mr. Brown as Chairman of the Board and Mr. Dorman as Lead Independent Director at the Annual Board meetings held in May 2012, 2013 and 2014. The Board determined that Mr. Browns thorough knowledge of Motorola Solutions business, strategy, people, operations, competition and financial position coupled with his leadership and vision made him well positioned to chair Board meetings and bring key business and stakeholder issues to the Boards attention. As Lead Independent Director, Mr. Dorman chairs the executive sessions of the Board and acts as a liaison between our Chairman and independent directors. Mr. Dormans term on the Board will end at the 2015 Annual Meeting. The Board will appoint a new Lead Independent Director at its next regularly scheduled Board meeting.
Communicating with the Board
All communications to the Board of Directors, Chairman of the Board, the non-management directors or any individual director, must be in writing and addressed to them c/o Secretary, Motorola Solutions, Inc., 1303 East Algonquin Road, Schaumburg, IL 60196 or by email to boardofdirectors@MotorolaSolutions.com. Our Secretary reviews all written communications and forwards to the Board a summary and/or copies of any such correspondence that, in the opinion of the Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Boards or any Board committees attention.
The Boards Role in the Oversight of Risks
The Board oversees the business of the Company, including CEO and senior management performance and risk management, to assure that the long-term interests of the stockholders are being served. Each committee of the Board is also responsible for reviewing the risk exposure of the Company related to the committees areas of responsibility and providing input to management on such risks.
Management and our Board have a robust process embedded throughout the Company to identify, analyze, manage and report all significant risks facing the Company. Our CEO and other senior managers regularly report to the Board on significant risks facing the Company, including financial, operational and strategic risks. Each of the Board committees reviews with management significant risks related to the committees area of responsibility and reports to the Board on such risks, which includes the Compensation and Leadership Committees review of Company-wide compensation-related risks. While each committee is responsible for reviewing significant risks in the committees area of responsibility, the entire Board is regularly informed about such risks through committee reports. The oversight of specific risks by board committees enables the entire Board to oversee risks facing the Company more effectively and develop strategic direction taking into account the effects and magnitude of such risks. The independent Board members also discuss the Companys significant risks when they meet in executive session without management. Our audit services department has a very important role in the risk management program. The role of this department is to provide management and the Audit Committee with an overarching and objective view of the risk management activity of the Company. This departments engagements span financial, operational, strategic and compliance risks and the engagement results assist management in maintaining tolerable risk levels. This department identifies and conducts engagements utilizing an enterprise risk management model. The director of the department reports directly to the Audit Committee as well as the Chief Financial Officer and meets regularly with the committee and the committee chairperson, including in executive session.
12 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
On March 9, 2015, the Board made the determination, based on the recommendation of the Governance and Nominating Committee and in accordance with our Director Independence Guidelines, that the former non-employee director, Dr. White, and the current non-employee directors, Mr. Dahlberg, Mr. Dorman, General Hayden, Ms. Lewent, Ms. Pramaggiore, Mr. Scott, and Mr. Singer, were independent during the periods in 2014 and 2015 that they were members of the Board. Mr. Brown does not qualify as an independent director because he is the Chief Executive Officer of the Company. On March 24, 2015, the Board, on the recommendation of the Governance and Nominating Committee, determined that Mr. Jones would qualify as an independent director. See Motorola Solutions Relationship with Entities Associated with Independent Directors for further details.
Determining Independence
The Director Independence Guidelines include both the NYSE independence standards and additional independence standards the Board has adopted to determine if a relationship that a Board member has with the Company is material. We have adopted a stricter application of the NYSE independence standards requiring a look-back of four years when assessing independence in connection with a directors (i) status as an employee of the Company, (ii) direct compensation in excess of $120,000, (iii) relationship with our internal or external auditor, and (iv) employment with a company that has made payments to, or received payments from, the Company for property or services.
A complete copy of the Director Independence Guidelines is available on the Companys website at www.motorolasolutions.com/investors.
Motorola Solutions Relationship with Entities Associated with Independent Directors
When assessing independence, each of Mr. Dorman, Mr. Jones, Ms. Pramaggiore, Mr. Scott, Mr. Singer and Dr. White had relationships with entities that were reviewed by the Board under independence standards covering contributions or payments to charitable or similar not-for-profit organizations. In addition, each of Mr. Dahlberg, General Hayden, Mr. Jones, Ms. Pramaggiore, Mr. Scott and Mr. Singer had relationships with entities that were reviewed by the Board under independence standards covering payments to, or received from, other entities. In each case, the payments or contributions were significantly less than the NYSE independence standards or the Director Independence Guidelines adopted by the Board or did not constitute a disqualifying event under such standards and were determined by the Board to be immaterial.
Independent Members of the Audit, Compensation and Leadership and Governance and Nominating Committees
The Board has determined that all of the current members of the Audit Committee, the Compensation and Leadership Committee and the Governance and Nominating Committee are independent within the meaning of the Director Independence Guidelines, applicable rules of the SEC and the NYSE listing standards for independence.
RELATED PERSON TRANSACTION POLICY AND PROCEDURES
The Company has established a written related person transaction policy and procedures (the RPT Policy) to assist it in reviewing transactions in excess of $120,000 (Transactions) involving the Company and its subsidiaries and Related Persons (as defined below). The RPT Policy supplements our other conflict of interest policies set forth in the Principles of Conduct for Members of the Motorola Solutions, Inc. Board of Directors and the Code of Business Conduct for employees and our other internal procedures.
For purposes of the RPT Policy, a Related Person includes directors, director nominees and executive officers of the Company since the beginning of the Companys last fiscal year, beneficial owners of 5% or more of any class of voting securities of the Company and members of their respective immediate family. The Governance and Nominating Committee reviews all RPT Policy matters.
The RPT Policy provides that any Transaction since the beginning of the last fiscal year is to be promptly reported to the Companys Secretary. The Secretary will assist with gathering important information about the Transaction and present the information to the Governance and Nominating Committee. The Governance and Nominating Committee will determine if the Transaction is a Related Person Transaction and, if so, approve, ratify or reject the Related Person Transaction. In approving, ratifying or rejecting a Related Person Transaction, the Governance and Nominating Committee will consider such information as it deems important to conclude if the transaction is fair to the Company and its subsidiaries.
Through October 2014, when his role was transitioned to Zebra, Paul Czerwinski, our CEOs son-in-law, was employed by the Company. Mr. Czerwinski was an executive account manager and his total compensation in 2014 was approximately $282,000, which includes salary and bonus. Mr. Czerwinski also participated in the Companys general welfare plans and received benefits comparable to those received by persons in similar positions within the Company. The Governance and Nominating Committee reviewed and pre-approved this relationship in 2014.
On November 4, 2014 the Company entered into a stock purchase agreement with ValueAct Capital Master Fund L.P. (ValueAct), a greater than 5% stockholder, to buy from ValueAct 11,319,047 shares of the Companys common stock with a value totaling approximately $750,000,000. This purchase was made as part of the Companys existing stock repurchase program and was approved by the Board.
Motorola Solutions had no other Related Person Transactions in 2014.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 13 |
SECURITY OWNERSHIP INFORMATION
Management and Directors
The following table sets forth information as of the close of business on March 2, 2015 (except where otherwise noted), regarding the beneficial ownership of shares of Common Stock by each director and nominee for director of the Company, the persons named in the Summary Compensation Table, and all current directors, nominees and Section 16 Officers of the Company as a group. Except for Mr. Brown, who owns 1.4% of the outstanding Common Stock, each other director, nominee and named executive officer (NEO) owns less than 1% of the outstanding Common Stock based on 213,288,177 shares of Common Stock outstanding on March 2, 2015. All current directors, nominees, NEOs and current executive officers as a group own 1.8% of the outstanding Common Stock.
Name | Shares Owned(1) | Shares Under Exercisable Options and SARs(2) |
Stock Units(3) | Total
Shares Beneficially Owned(4)(5) |
||||||||||||
Gregory Q. Brown |
451,474 | 2,477,533 | 41,985 | 2,970,993 | (6) | |||||||||||
Gino A. Bonanotte |
6,012 | 41,754 | 3,513 | 51,279 | ||||||||||||
Mark S. Hacker |
9,886 | 33,211 | 2,509 | 45,606 | ||||||||||||
Mark F. Moon |
28,332 | 335,553 | 3,513 | 367,398 | ||||||||||||
Robert C. Schassler |
0 | 37,659 | 1,882 | 39,541 | ||||||||||||
Kenneth C. Dahlberg |
8,388 | 0 | 4,569 | 12,957 | ||||||||||||
David W. Dorman |
10,300 | 0 | 53,766 | 64,066 | ||||||||||||
Michael V. Hayden |
0 | 0 | 11,892 | 11,892 | ||||||||||||
Clayton M. Jones |
0 | 0 | 0 | 0 | ||||||||||||
Judy C. Lewent |
18,455 | 3,571 | 6,059 | 28,085 | ||||||||||||
Anne R. Pramaggiore |
0 | 0 | 6,958 | 6,958 | ||||||||||||
Samuel C. Scott |
5,034 | 3,571 | 28,490 | 37,095 | (7) | |||||||||||
Bradley E. Singer |
0 | 0 | 6,140 | 6,140 | ||||||||||||
All current directors, nominees, NEOs and current executive officers as a group (14 persons) |
562,108 | 3,114,575 | 223,272 | 3,899,956 | (8) |
(1) | Includes shares over which the person currently holds or shares voting and/or investment power but excludes the shares listed under Shares Under Exercisable Options and SARs and Stock Units. |
(2) | Includes shares under options and SARs exercisable on March 2, 2015 and which may become exercisable within 60 days thereafter (assuming all performance measures are satisfied). |
(3) | Includes stock units which are deemed to be beneficially owned on March 2, 2015 or within 60 days thereafter (assuming all performance measures are satisfied). Stock units are not deemed beneficially owned until the restrictions on the units have lapsed. Each stock unit is intended to be the economic equivalent of one share of Common Stock. |
(4) | Unless otherwise indicated, each person has sole voting and investment power over the shares reported. |
(5) | Includes the shares listed under Shares Under Exercisable Options and units listed under Stock Units. |
(6) | Mr. Browns holdings under Total Shares Beneficially Owned include: 266,775 shares subject to exercisable stock settled stock appreciation rights (SARs). The number of shares subject to the stock settled SARs, assumes the exercise of 134,297 shares of stock settled SARs at an exercise price of $40.33 and the exercise of 471,398 stock settled SARs at an exercise price of $38.04, on March 2, 2015. The closing price of the Company stock on March 2, 2015 was $68.89. Mr. Brown has shared voting and investment power over 83,220 shares, included under Total Shares Beneficially Owned. He disclaims beneficial ownership over 81,000 shares held in a trust of which his wife is trustee and 2,220 shares held by his wife, except to the extent of his pecuniary interest in these shares. |
(7) | Mr. Scott does not have investment power over 2,038 of these shares. |
(8) | All directors, nominees and current executive officers as a group have sole voting and investment power over 3,772,713 of these shares and shared voting and/or investment power over 127,243 of these shares. |
No directors, nominees or current executive officers have pledged shares of Common Stock pursuant to any loan or arrangement.
14 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
Principal Stockholders
The following table sets forth information with respect to any person who is known to be the beneficial owner of more than 5% of Common Stock as of December 31, 2014.
Name and Address | Number of
Shares of Motorola Solutions, Inc. and Nature of Beneficial Ownership |
Percent
of Outstanding Shares(1) |
||||||
Orbis Investment Management Limited Orbis House, 25 Front Street Hamilton, Bermuda HM11 |
|
18,161,243 shares of Common Stock |
(2)
|
8.5 | % | |||
BlackRock, Inc. 40 East 52nd Street New York, NY 10022 |
|
18,051,444 shares of Common Stock |
(3)
|
8.5 | % | |||
ValueAct Capital Master Fund, L.P. and related entities One Letterman Dr., Building D, Fourth Floor San Francisco, California 94129 |
|
17,588,576 shares of Common Stock |
(4)
|
8.2 | % | |||
Capital Research Global Investors 333 South Hope Street, 55th Floor Los Angeles, CA 90071 |
|
11,597,115 shares of Common Stock |
(5)
|
5.4 | % |
(1) | The percentage calculations set forth above are based on 213,288,177 shares of Common Stock outstanding as of March 2, 2015 rather than the percentages set forth on various stockholders Schedule 13D and 13G filings. |
(2) | Solely based on information in a Schedule 13G dated February 17, 2015 filed with the SEC jointly by Orbis Investment Management Limited, Orbis Asset Management Limited, and Orbis Investment Management (U.S.) LLC whose address is 600 Montgomery Street, Suite 3800, San Francisco, CA 94111 (collectively Orbis). The Schedule 13G indicates that as of December 31, 2014, Orbis was the beneficial owner with shared voting power as to 18,161,243 shares and shared dispositive power as to 18,161,243 shares. |
(3) | Solely based on information in a Schedule 13G/A Amendment No. 1 dated January 12, 2015 filed with the SEC by BlackRock, Inc. The Schedule 13G/A indicates that as of December 31, 2014, BlackRock, Inc., as the parent holding company, was the beneficial owner with sole voting power as to 15,332,013 shares and sole dispositive power as to 18,051,444 shares. |
(4) | Solely based on information in a Schedule 13D/A Amendment No. 6 dated November 6, 2014 filed with the SEC jointly by ValueAct Capital Master Fund, L.P., VA Partners I, LLC, ValueAct Capital Management, L.P., ValueAct Capital Management, LLC, ValueAct Holdings, L.P. and ValueAct Holdings GP, LLC (collectively ValueAct). The Schedule 13D/A indicates that as of November 4, 2014, ValueAct was the beneficial owner with shared voting power as to 17,588,576 shares and shared dispositive power as to 17,588,576 shares. |
(5) | Solely based on information in a Schedule 13G/A Amendment No. 1 dated February 11, 2015 filed with the SEC by Capital Research Global Investors, a division of Capital Research and Management Company. The Schedule 13G/A indicates that as of December 31, 2014, Capital Research Global Investors was the beneficial owner with sole voting power and sole dispositive power as to 11,597,115 shares. |
Section 16(a) Beneficial Ownership Reporting Compliance
Each director and certain officers of the Company are required to report to the SEC, by a specified date, his or her transactions related to our Common Stock. Based solely on a review of the copies of reports furnished to the Company or written representations that no other reports were required, the Company believes that, during the 2014 fiscal year, all filing requirements applicable to its officers and directors were complied with on a timely basis.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 15 |
DETERMINING DIRECTOR COMPENSATION
The Governance and Nominating Committee recommends to the Board the compensation for non-employee directors, which is to be consistent with market practices of other similarly situated companies and takes into consideration the impact on non-employee directors independence and objectivity. The Board has asked the Compensation and Leadership Committee to assist the Governance and Nominating Committee in making such recommendations. The charter of the Governance and Nominating Committee does not permit it to delegate director compensation matters to management, and management has no role in recommending the amount or form of director compensation.
HOW THE DIRECTORS ARE COMPENSATED
The non-employee directors are compensated on an annual basis as follows:
Cash Compensation | Annual Compensation (paid quarterly) | |
Annual Cash Retainer | $100,000 | |
Lead Independent Director Fee | $25,000 | |
Audit Committee Chairperson Fee | $20,000 | |
Compensation and Leadership Committee Chairperson Fee |
$15,000 | |
Governance and Nominating Committee Chairperson Fee |
$15,000 | |
Audit Committee Member Fee | $5,000 | |
Equity Compensation | Annual Compensation (paid annually) | |
Annual Equity Grant | $140,000 |
During 2014, a director could elect to receive all or a portion of his or her annual cash retainer and other cash fees in the form of (i) deferred stock units (DSUs) that settle when the director terminates service, (ii) DSUs that settle after one year (unless service is earlier terminated), or (iii) outright shares. Directors could also elect to receive the annual equity grant in the form of (i) DSUs that settle when the director terminates service, or (ii) DSUs that settle after one year (unless service is earlier terminated). These choices allow directors to engage in tax planning appropriate for their circumstances. Notwithstanding earlier settlement or receipt of shares, directors must hold all shares awarded or paid to them until termination of service from the Board.
On May 6, 2014, each then non-employee director received a DSU award of 2,109 shares of Common Stock. The number of DSUs awarded was determined by dividing $140,000 by the fair market value of a share of Common Stock on the date of grant (rounded up to the next whole number) based on the closing price on the date of grant. For a non-employee director who becomes a member of the Board of Directors after the annual grant of deferred stock units, the award will be prorated based on the number of full months to be served until the next annual meeting of stockholders ($11,666.67 per month) divided by the closing price of the Common Stock on the day of election to the Board.
Non-employee directors are not eligible to participate in the Motorola Solutions Management Deferred Compensation Plan. Motorola Solutions does not have a non-equity incentive plan or pension plan for non-employee directors. Non-employee directors do not receive any additional fees for attendance at meetings of the Board or its committees, or for additional work done on behalf of the Board or a committee. The Company also reimburses its directors and, in certain circumstances, spouses who accompany directors, for travel, lodging and related expenses they incur in attending Board and committee meetings or other meetings as requested by Motorola Solutions. Mr. Brown, who was an employee during 2014, received no additional compensation for serving on the Board or its committees.
16 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
The following table further summarizes compensation paid to the non-employee directors during 2014.
Director Compensation for 2014 | ||||||||||||||||||||
Name (a) |
Fees
Earned or Paid in Cash ($)(1) (b) |
Stock (c) |
Change
in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f) |
All
Other Compensation ($)(4) (g) |
Total
($) (h) |
|||||||||||||||
Kenneth C. Dahlberg |
60,000 | 200,213 | | | 260,213 | |||||||||||||||
David W. Dorman(5) |
0 | 265,154 | | | 265,154 | |||||||||||||||
Michael V. Hayden |
70,000 | 170,125 | | | 240,125 | |||||||||||||||
Judy C. Lewent |
120,000 | 140,038 | | | 260,038 | |||||||||||||||
Anne R. Pramaggiore |
50,000 | 190,163 | | | 240,163 | |||||||||||||||
Samuel C. Scott III |
115,000 | 140,038 | | 5,000 | (6) | 260,038 | ||||||||||||||
Bradley E. Singer |
105,000 | 140,038 | | 10,000 | (6) | 255,038 | ||||||||||||||
Former Director: |
||||||||||||||||||||
John A. White(7) |
15,750 | 36,827 | 1,332 | (8) | 10,000 | (6) | 63,909 |
(1) | During 2014, directors could elect to receive all or a portion of their annual cash retainer or other cash fees in the form of (i) DSUs that settle when the director terminates service, (ii) DSUs that settle after one year (unless service is earlier terminated), or (iii) outright shares (in each case, rounded up to the next whole share). The amounts in column (b) are the portion of the annual cash retainer and any other fees the non-employee director has elected to receive in cash. With respect to annual cash compensation, Mr. Dorman elected to receive DSUs that settle after one year with respect to $125,000; Mr. Dahlberg elected to receive outright shares of stock with respect to $60,000; Mr. Hayden, Ms. Pramaggiore and Dr. White elected to receive DSUs that settle at termination of service with respect to $30,000, $50,000 and $36,750, respectively. |
(2) | Certain directors have elected to receive DSUs or common stock for all or a portion of their annual cash retainer or other cash fees as described in footnote 1 above. In addition, all non-employee directors received an annual grant of DSUs on May 6, 2014. With respect to the annual grant of equity, Messrs. Dahlberg, Hayden, Scott, Singer and White and Ms. Pramaggiore elected to receive DSUs that settle at termination of service, and Mr. Dorman and Ms. Lewent elected to receive DSUs that settle on the first anniversary of the date of grant, and these amounts are included in column (c). All amounts in column (c) are the aggregate grant date fair value of DSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation (ASC Topic 718), including dividend equivalents, as applicable. The number of DSUs or shares of common stock received and the fair value on each date of grant are as follows: |
March 31 | May 6 | June 30 | September 30 | December 31 | ||||||||||||||||
Directors | Common Stock*/ Deferred Stock Units |
Annual Grant of Deferred Stock Units (Award Date May 6) |
Common Stock*/ Deferred Stock Units |
Common Stock*/ Deferred Stock Units |
Common Stock*/ Deferred Stock Units |
|||||||||||||||
Kenneth C. Dahlberg |
234 | 2,109 | 226 | 238 | 224 | |||||||||||||||
Fair Value |
$15,044 | $140,038 | $15,045 | $15,061 | $15,026 | |||||||||||||||
David W. Dorman |
487 | 2,109 | 470 | 494 | 466 | |||||||||||||||
Fair Value |
$31,309 | $140,038 | $31,288 | $31,260 | $31,259 | |||||||||||||||
Michael V. Hayden |
117 | 2,109 | 113 | 119 | 112 | |||||||||||||||
Fair Value |
$7,522 | $140,038 | $7,522 | $7,530 | $7,513 | |||||||||||||||
Judy C. Lewent |
| 2,109 | | | | |||||||||||||||
Fair Value |
$140,038 | |||||||||||||||||||
Anne R. Pramaggiore |
195 | 2,109 | 188 | 198 | 187 | |||||||||||||||
Fair Value |
$12,537 | $140,038 | $12,515 | $12,529 | $12,544 | |||||||||||||||
Samuel C. Scott III |
| 2,109 | | | | |||||||||||||||
Fair Value |
$140,038 | |||||||||||||||||||
Bradley E. Singer |
| 2,109 | | | | |||||||||||||||
Fair Value |
$140,038 | |||||||||||||||||||
Former Director: |
||||||||||||||||||||
John A. White |
286 | | 277 | | | |||||||||||||||
Fair Value |
$18,387 | | $18,440 | | |
* Common Stock was issued to Mr. Dahlberg only. All other directors received DSUs.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 17 |
(3) | As of December 31, 2014, the aggregate stock and option awards outstanding for the directors were as set forth below. For each director, the options to purchase Common Stock listed below were exercisable at year end. The aggregate number of Motorola Solutions DSUs and Restricted Stock includes accrued dividend equivalents or shares, as applicable. |
Directors | Options | Deferred Stock Units | Restricted Stock |
|||||||||
Kenneth C. Dahlberg | | 4,569 | | |||||||||
David W. Dorman | | 53,766 | | |||||||||
Michael V. Hayden | | 11,982 | | |||||||||
Judy C. Lewent | 3,571 | 6,059 | | |||||||||
Anne R. Pramaggiore | | 6,958 | | |||||||||
Samuel C. Scott III | 3,571 | 28,490 | 2,038 | |||||||||
Bradley E. Singer | | 6,140 | | |||||||||
Former Director: | ||||||||||||
John A. White* | 3,571 | 38,000 | 77 |
* The total for Dr. White is as of his retirement from the Board on May 5, 2014, inclusive of the shares paid in lieu of compensation on June 30, 2014.
(4) | The aggregate amount of perquisites and personal benefits given to each named director valued on the basis of aggregate incremental cost to the Company was less than $10,000 for each director. Accordingly, no such amounts are reported in this column. |
(5) | Mr. Dorman is not standing for reelection; his last day on the Board will be May 18, 2015. |
(6) | These amounts represent matching gift contributions made by the Motorola Solutions Foundation at the request of the director to charitable institutions in the directors name pursuant to the Companys charitable matching gift program that is available to all U.S. employees and directors. |
(7) | Dr. White did not stand for reelection; his last day on the Board was May 5, 2014. |
(8) | This amount consists of earnings under the Motorola Solutions Management Deferred Compensation Plan in excess of the threshold for 2014 above-market earnings established pursuant to SEC rules. As of January 1, 2006, new non-employee directors were not eligible to participate in the plan. Dr. White was the only non-employee director participating in this plan. |
Director Stock Ownership Guidelines
Our Board stock ownership guidelines provide that non-employee directors are expected to own Common Stock with a value equivalent to at least five times the annual cash retainer fee for directors within five years after the date of joining the Board. In addition, directors are required to hold all shares paid or awarded by the Company until their termination of service, other than shares acquired through the exercise of options awarded to directors. For the purposes of these guidelines, Common Stock includes deferred stock units. Until such time as the obligation to own five times the annual cash retainer has passed, the previous requirement of four times the annual cash retainer within five years of joining the Board will remain in effect for all members of the Board as of November 9, 2011. As of December 31, 2014, all non-employee directors were in compliance with the stock ownership guidelines.
DIRECTOR RETIREMENT PLAN AND INSURANCE COVERAGE
In 1996, the Board terminated its director retirement plan and no current non-employee directors are entitled to receive retirement benefits. In 1998, Mr. Scott and Dr. White, the only directors with interests in the plan, converted their accrued benefits in the retirement plan into shares of restricted Common Stock. They may not sell or transfer these shares and these shares are subject to repurchase by Motorola Solutions until such directors are no longer members of the Board because: (1) they do not stand for re-election or are not re-elected, or (2) of their disability or death. Dr. Whites 77 shares ceased to be restricted upon his departure from the Board on May 5, 2014.
Non-employee directors are covered by insurance that provides accidental death and dismemberment coverage of $500,000 per person. The spouse of each such director is also covered by such insurance when traveling with the director on business trips for the Company. The Company pays the premiums for such insurance. The total premiums for coverage of all such non-employee directors and their spouses during the year ended December 31, 2014 were $1,780.
18 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
PROPOSAL NO. 2 ADVISORY APPROVAL OF THE COMPANYS EXECUTIVE COMPENSATION |
In accordance with Section 14A of the Exchange Act we are providing our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed in this Proxy Statement. The Board has adopted a policy providing for annual say-on-pay advisory votes. Although the vote is non-binding, the Board and Compensation and Leadership Committee will review and consider the outcome of the vote when considering future executive compensation arrangements. In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis, below, for a detailed description of our executive compensation philosophy and programs. In particular, you should consider the following factors, which are more fully discussed in the Compensation Discussion and Analysis:
| We actively engage our stockholders on their views and consider this input when designing our executive compensation programs. |
| Our programs are designed to pay for performance, so a majority of the NEOs total compensation is based on the performance of the Company. |
| Our executive compensation program incorporates many leading practices to ensure ongoing good governance, including eliminating the excise tax gross-up for our CEO on March 10, 2014. |
For the reasons discussed above, the Board unanimously recommends that stockholders vote in favor of the following resolution:
Resolved, that the stockholders approve, on an advisory basis, the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the 2014 Summary Compensation Table and other related tables and disclosures in this Proxy Statement.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPANYS EXECUTIVE COMPENSATION. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE APPROVAL OF THE COMPANYS EXECUTIVE COMPENSATION.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 19 |
Our Compensation Discussion and Analysis (the CD&A) describes Motorola Solutions executive compensation philosophy and programs which are governed by the Compensation and Leadership Committee (the Committee). The CD&A includes 2014 total compensation for our NEOs who are listed below.
Named Executive Officer | Title | |
Gregory Q. Brown |
Chairman and Chief Executive Officer | |
Gino A. Bonanotte |
Executive Vice President and Chief Financial Officer | |
Mark F. Moon |
Executive Vice President and President, Sales & Product Operations | |
Mark S. Hacker |
Executive Vice President, General Counsel and Chief Administrative Officer | |
Robert C. Schassler |
Executive Vice President, Solutions and Services |
In 2014, we transformed Motorola Solutions into a singularly focused business to deliver innovative mission-critical communications solutions by completing the sale of our Enterprise business in October. In spite of the success of this significant divestiture, 2014 was a challenging year overall and our 2014 business performance was below our operating plan. Our three-year performance ending in 2014 also resulted in lower returns to our stockholders due to challenging years in both 2013 and 2014 following a strong 2012. As a result of our performance, and consistent with our pay for performance philosophy, our incentive plans paid out as follows:
| Our 2014 Executive Officer Short Term Incentive Plan (STIP) resulted in a significantly below target payout reflecting our operating earnings and free cash flow results below our operating plan; and |
| Our 2012-2014 Long Range Incentive Plan (LRIP), which is based on Motorola Solutions total shareholder return (TSR) relative to our comparator group, resulted in no payout due to below threshold performance. |
The combination of these two incentive plan payouts resulted in 2014 total compensation for our NEOs that is lower than their 2013 total compensation.
Our compensation program is a critical component to support our ability to attract, retain and motivate key talent necessary to deliver on our purpose to help people be their best in the moments that matter. As part of our continuous review of our compensation program and consideration of ongoing feedback from investors, changes were made to the CEOs compensation and employment agreement in 2014. In addition, a reassessment of our executive pay programs resulted in a decision to introduce a new long-term incentive program for our management executive committee, which includes all NEOs, in 2015.
2014 Actions
| On March 10, 2014, the CEOs employment agreement was amended to remove the gross-up for excise taxes. |
| The CEOs pay mix was adjusted to better align with market while maintaining a similar level of target total direct compensation. This was achieved by increasing the CEOs base salary from $1,200,000 to $1,250,000, decreasing the STIP target from 220% to 150% of base salary, and increasing the target long-term incentive (LTI) grant from $8,000,000 to $9,000,000 effectively putting more at risk compensation into the LTI component of pay to more effectively align payouts with long-term returns to stockholders. |
2015 Actions
| Following the sale of our Enterprise business, the comparator group used to assess the market competitiveness of pay and performance for our NEOs was reviewed and modified to reflect the new composition and size of our Company. Removal of Danaher, Eaton and NCR and the addition of ARRIS Group, Amphenol, Juniper Networks and Roper Industries will provide a comparator group that is more appropriate for our business mix and size with median revenue and market capitalization consistent with our current business. The Committee considered this new comparator group when making pay decisions for 2015. |
| A new long-term incentive plan (New LTI) for our management executive committee was introduced in 2015. The New LTI is 100% performance-based with a focus on sustained long-term performance. The New LTI links one-third of the total LTI to absolute stock price performance and two-thirds to relative TSR and only provides a target payout once performance exceeds the median of the S&P 500 companies comparator group. |
20 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
2015 New LTI Program
The New LTI program modifies our long-term incentive portfolio by aligning a larger percentage of the program value to the achievement of relative performance. Under the new program two-thirds of the total LTI opportunity is based on relative TSR and one-third is based on absolute stock price, making the program 100% performance-based. The program maintains a similar pay mix of one-third cash and two-thirds equity but delivers the equity component through two new vehicles; performance stock options (POs) and Market Stock Units (MSUs). For both POs and MSUs, the number earned increases/decreases in relation to performance and unearned POs and MSUs are forfeited. The payout scale for the POs is detailed below. For MSUs, each 1% increase/decrease in stock price results in a 1% increase/decrease in the number of MSUs earned at the end of the performance period with a maximum payout at 200% stock price appreciation and a threshold of 40% stock price depreciation, below which no MSUs are earned. To further reinforce the performance-nature of the program, the payout scale for the LRIP and POs requires performance to exceed median performance of the group before a target payout is earned. The comparator group used to measure relative performance is the S&P 500 which we believe is the broader industry group that we compete with for investment. The LRIP component of the program will apply to all eligible participants to ensure alignment to the same long-term performance across the organization.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 21 |
Our 2014 Performance Did Not Meet Our Operating Plan;
Our 2012-2014 Performance Delivered Lower Returns To Our Stockholders
2014 was a challenging year for our end markets, but a transformational year for our Company. Overall, 2014 sales and operating earnings were both down for the year at $5.9 billion and $1.1 billion, respectively. The decline in sales was primarily a result of first-half weakness in our North America business due to the impact of narrowbanding. Although demand was challenged, the Company took a number of important actions to better position itself for operating leverage and free cash flow generation in future years. The Company divested its Enterprise business during the year for $3.45 billion, which transformed our Company into a singularly focused pure play leader in mission critical communications. In addition, the Company achieved over $200 million of cost reductions for the year, while making critical investments in growth areas such as Public Safety LTE and our Services businesses. The Company also significantly improved its risk profile and cash flow in future periods through pension de-risking actions, while reaffirming our commitment to capital return and more efficient capital structure with $2.9 billion of stock buybacks and dividends and a new $5 billion repurchase authorization. Total stockholder return lagged our comparator companies in 2014 and over the three-year period ending 2014, but the actions taken in 2014 build a foundation for growth, significant operating leverage and strong cash flow generation for years to come.
2014 Compensation Program Overview
Our compensation program included a mix of the following fixed and variable elements:
Our Incentives Compensation Program Based On 2014 Performance Resulted In Below Target Payouts;
Our Incentives Compensation Program Based On 2012-2014 Total Shareholder Return Resulted In No Payouts
To support our pay for performance philosophy, the 2014 executive compensation program used a mix of fixed and at-risk elements and provided alignment to short- and long-term business goals through short- and long-term incentives.
Our STIP is tied to achieving operating earnings and free cash flow targets that measure profits from sales and provide a clear view of our ability to generate cash to both invest in future growth and in the current year appropriately return capital to stockholders. These two measures are commonly tracked by investors and we believe also drive long-term, sustainable stockholder value.
22 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
Our 2014 operating earnings and free cash flow were below our expectations and the Committee approved a Business Performance Factor of 0.30 (30% of target) under the 2014 STIP. See Short-term Incentives for additional details on the Business Performance Factor under the 2014 STIP.
Our long-term incentive program incorporated stock price appreciation hurdles for vesting of both stock options and RSUs and a relative TSR measure in our LRIP to reward both long-term stock price appreciation and value delivered to our stockholders that exceeds that of our comparator companies. The stock price hurdle for our 2014 grants has not yet been achieved, so none of the grants will time-vest until after the15% stock price appreciation requirement is met. See Stock Options and Restricted Stock Units for additional details.
In connection with our LRIP, our 2012 to 2014 total return to stockholders (stock price appreciation plus dividends) was 48% over the three-year period, which resulted in a #13 rank in the comparator group. This rank was below threshold performance resulting in a 0% of target payout. See Long Range Incentive Plan for comparator group details.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 23 |
Response to 2014 Stockholder Vote and Stockholder Engagement Process
At the 2014 Annual Meeting, our stockholders approved the advisory vote on our executive compensation with 98% support. This result was a significant improvement from the 68% favorable vote received in 2013. We believe this is due in large part to significant compensation program changes implemented since 2011 which introduced more leading practices in an effort to align with changes in market and governance practices. These program changes have been maintained over time creating a fundamentally sound program aligned with stockholder interests.
During our November/December 2014 stockholder engagement we contacted stockholders holding approximately 51% of our shares, some of whom noted they had no issues and declined our request for engagement. Those investors we spoke with expressed no major concerns about the current executive compensation program, including pay programs, approach and overall governance. Through this engagement, investors raised two key themes: (1) a desire to ensure we continue to assess the alignment between pay and performance and adapt our programs appropriately and (2) a continued focus on management of stock expense, burn rate and total dilution. These key themes were considered when developing the 2015 LTI program and management proposals for approval of our 2015 Omnibus Incentive Plan and Employee Stock Purchase Plan presented in this proxy for stockholder approval. In addition, through our stockholder engagement process last year, we had received feedback that our elimination of excise tax gross-ups for the broader population was well received, and that elimination of excise tax gross-ups for the CEO would be similarly well received. Therefore, we evaluated our position on excise tax gross-ups and on March 10, 2014 the employment agreement with Mr. Brown was amended to remove the excise tax gross-up provision. See Employment Contracts for more information.
Our stockholder engagement is not just a one-time event, but supplements our ongoing investor relations efforts including monitoring best practices, engaging investors and stockholder groups on pay topics and seeking ongoing feedback on pay practices and corporate governance. We actively engage our stockholders on their views of our program design and individual pay actions and take that information into consideration when assessing program design. Stockholder views are solicited on an ongoing basis, with specific outreach efforts conducted two times a year that are focused on institutional investors with larger stockholdings and stockholder advocates and proxy advisory firms. Our November/December outreach is designed to gain feedback on the results of the previous Annual Meeting and input on our pay programs and disclosures.
24 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
Our March/April outreach is designed to answer questions and provide clarifications, if necessary, leading up to the Annual Meeting and ensure stockholders are effectively informed about our programs in advance of the advisory vote on executive compensation.
We continue to focus on sustained engagement efforts each year and remain committed to taking into account the results of future stockholder votes and ongoing dialogues with our stockholders when reviewing our compensation program and practices.
Our Executive Compensation Program is Aligned to our Business Strategy and Features Many Leading Practices
A significant percentage of target total direct compensation, 90% for the CEO, is at risk and linked to actual performance. |
Performance measures are linked to near-term operating objectives and delivery of long-term value to stockholders through both relative and absolute stock price performance. |
Our 2015 New LTI program is 100% performance-based. |
The Committee retains an independent compensation consultant to review the Companys compensation program and practices. |
The independent compensation consultant reviews our pay and performance relationship annually and the Committee validates the alignment. |
There are maximum payout caps in the STIP and LRIP. |
In the event of a change-in-control, long-term equity incentives have a double trigger; that is, outstanding equity awards will not vest in the event of a change-in-control unless also accompanied by a qualifying termination of employment. Accelerated vesting at a change-in-control is only provided if the acquirer does not assume or replace the outstanding equity awards. |
The Company provides limited executive perquisites and no excise tax gross-ups (including for the CEO, whose contract was amended to eliminate the excise tax gross-up on March 10, 2014). |
Executives are required to hold stock equal to 6x salary for the CEO and 3x salary for each of the NEOs. |
Compensation is subject to claw-back in the event of certain financial restatements. |
Hedging of Company securities is prohibited. |
No NEOs have pledged any Company equity. |
We conduct regular risk assessments of our compensation programs and practices. |
We Focus on Talent Management and Link Talent and Pay Decisions
Our talent programs foster the development of globally diverse executives from within our own organization. This philosophy encourages our key talent to adopt a long-term focus on our business and avoids lengthy and disruptive transitions associated with extensive external hiring. Our pay decisions support our talent objectives by not only considering individual and Company performance, but also long-term potential, key retention needs and organizational succession plans. We use a multi-faceted process to develop our executives which includes new and expanded job assignments, formal learning, and coaching and engagement with our management executive committee, our CEO and the Board. This approach drives increased engagement and retention by demonstrating investment in our executives that builds their long-term value to the organization.
Program Development is Guided by Independent Experts
The Committee engages an independent consultant, Compensation Advisory Partners LLC (CAP), to advise on the Companys executive compensation strategy and program design and to provide regulatory and market trend updates. CAP carries out compensation reviews as directed by the Committee and provides recommendations on specific compensation for our CEO and input on specific compensation recommendations for our other executive officers.
In 2014, the Committee continued to engage CAP as its independent compensation consultant. CAP participates in Committee meetings, including regular discussions with the Committee without management present to ensure impartiality on certain decisions. During 2014, the Committee also reviewed the independence of CAP using assessment criteria that aligned with the SEC and related New York Stock Exchange rules adopted in 2012. The Committee concluded that CAP was independent and had no conflicts of interest.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 25 |
2014 EXECUTIVE COMPENSATION PROGRAM
Compensation Philosophy, Practices and Program Design Inputs
Our philosophy is to provide reward programs that attract, retain and motivate the right people, in the right place, at the right time. We strive to provide a total compensation package that is competitive with the prevailing practices in the industries and countries in which we operate, allowing for above average total compensation when justified by business results and individual performance. Program design is guided by these principles:
Principle | Description | |
Business Driven |
Incentives are aligned with the Companys business goals and avoid excessive risk taking | |
Performance Differentiated |
Programs create an effective link between pay and performance at both the Company and individual level | |
Market Competitive |
Total compensation package is competitive to attract, retain and motivate top talent needed to successfully execute our business strategy | |
Ownership Oriented |
Compensation is aligned with stockholder interests by delivering meaningful equity awards and maintaining robust stock ownership guidelines | |
Simplicity |
Employee engagement is driven through simple, cost-efficient plan design |
The Committee reviews the executive compensation program design and executive pay levels annually. As part of this annual review, CAP provided executive compensation market data, information on current market practices and trends, and alternatives to consider for determining compensation for our Section 16 Officers including the NEOs. The Committee benchmarked our compensation program design, executive pay and performance against a group of comparator companies that are publicly traded and comparable to Motorola Solutions in market segment, product offerings, revenue and market value. The Committee believes Motorola Solutions competes against these companies for executive talent and stockholder investment. The Committee reviews the composition of the comparator group annually with the assistance of CAP. For 2014, Emerson Electric Co., Honeywell Intl Inc. and JVC Kenwood were removed from the comparator group and Agilent Technologies, Inc., Dover Corp. and Rockwell Automation Inc. were added to the comparator group to position Motorola Solutions closer to the median revenue of the group. The same comparator group used for pay and performance benchmarking is also used for relative TSR measurement comparisons in the LRIP for the 2014-2016 cycle.
2014 Comparator Group
Agilent Technologies, Inc. |
Harris Corp. |
Parker-Hannifin Corp. |
Rockwell Collins, Inc. | |||
Danaher Corp. |
Ingersoll-Rand PLC |
Raytheon Company |
TE Connectivity Ltd. | |||
Dover Corp. |
NCR Corp. |
Rockwell Automation Inc. |
Tyco International Ltd. | |||
Eaton Corp. |
To supplement our comparator group data, the Committee also considers data from compensation surveys that include data from companies of similar size and business segments to Motorola Solutions. Surveys considered in the 2014 review included:
Survey | Publisher | |
Radford Global Technology Survey |
Radford, an Aon Hewitt consulting company | |
IPAS Global High Technology Survey |
Salary.com |
26 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
While the Committee uses the 50th percentile of our comparator group as a guideline for establishing target total compensation for our NEOs, each NEOs target total compensation position relative to market varies due to the Committees consideration of additional factors such as role scope and accountabilities, experience, individual performance and market practices when setting total target compensation. The Committee evaluated each NEOs pay relative to market compensation when setting 2014 compensation in the first quarter of the year and confirmed the following market positioning at that time:
NEO | Competitive Market Position | |
Brown and Moon | Target total compensation between the 50th percentile and 75th percentile of market | |
Hacker | Target total compensation at the 50th percentile of market | |
Schassler | Target total compensation between the 25th percentile and the 50th percentile of market (reflects 2014 review after promotion) | |
Bonanotte | Target total compensation at the 25th percentile of market |
A significant portion of our NEOs compensation is delivered through both short- and long-term incentives linked to financial and stock price performance, some of which is based on relative and not just absolute performance.
Base Salary
Base salaries are set by the Committee with the Boards concurrence for the CEO. When setting the base salary level for each NEO, the Committee references the 50th percentile of the comparator group, as well as considering external market conditions, and each NEOs individual performance, experience, internal comparisons, and succession plans.
Short-term Incentives
The STIP is an annual cash incentive award based on Motorola Solutions achievement of performance measures and assessment of individual performance.
Actual awards are based on the executives target incentive award opportunity, achievement of performance results (Business Performance Factor) and assessment of individual performance (Individual Performance Factor). The payout range for both the Business Performance Factor and the Individual Performance Factor is from 0% to 140% resulting in a total plan maximum payout opportunity of 196% of target. The incentive target opportunity for each NEO was determined based on market data.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 27 |
For 2014, the Business Performance Factor was designed to be determined based on achievement of operating earnings (weighted 65%) and free cash flow (weighted 35%) goals. Operating earnings measures our profits from sales and free cash flow measures the cash available after capital expenditures. The two measures are common performance measures inside and outside of our industry, are fundamental inputs we use to measure profitability, business liquidity and rates of return for the business, and we believe appropriately measure our annual business performance, and ultimately long-term stockholder value.
A rigorous process is used at the start of each year to determine the range of performance for each measure and includes analysis of factors such as: prior year financial results, market share, projected revenue growth, margins and operating expenditures and other macroeconomic and industry considerations. The operating earnings and free cash flow targets and performance ranges for the 2014 STIP were linked to the 2014 operating plan that was approved by the Board in the first quarter of 2014 and contemplated a full year of our Government and Enterprise business segments. Once the sale of our Enterprise business was announced, the results from our Enterprise business were classified as discontinued operations for 2014. Under the plan definitions and terms of the 2014 STIP, the actual results from the discontinued operations of the Enterprise business were to be excluded for purposes of the 2014 STIP, which caused the calculated Business Performance Factor to be zero. Since our operating earnings and free cash flow targets included the full year results for the Enterprise business segment, but the results excluded those for the Enterprise business, the Committee determined this was an inequitable comparison. In light of the inequitable comparison, the Committee considered the results of the Government business for the full year and ten months of Enterprise business results to derive and approve the Business Performance Factor of 0.30 (30% of target). The range of performance that was approved by the Board in the first quarter of 2014 is shown in the following table:
Business Performance Measure |
Minimum | Target | Maximum | |||||||||
Operating Earnings1 (in millions) |
$1,411 | $1,660 | $1,909 | |||||||||
Free Cash Flow2 (in millions) |
$724 | $965 | $1,158 |
1 | Operating Earnings is our reported Non-GAAP operating earnings which does not include reorganization of business, stock based compensation, and intangible amortization. |
2 | Free Cash Flow is defined as net cash provided by operating activities less capital expenditures. |
The Individual Performance Factor for each NEO is discussed in more detail below in Compensation Decisions for 2014.
Long-term Incentives
The Long-term Incentives (LTI) are delivered through a portfolio of three different vehicles all of which are performance-based and designed to achieve a balancing of objectives within the overall program. The objective of our LTI design is to create a program that incents our NEOs to:
¡ | Focus on long-term performance that drives value for stockholders. |
¡ | Outperform comparator companies in the market. |
¡ | Achieve absolute stock price appreciation over a set period of time. |
28 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
Maximum value is only realized through these programs when the Company achieves stock price appreciation and relative performance that exceeds that of our comparators.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 29 |
Long Range Incentive Plan
The LRIP is a performance-based, multi-year incentive plan for our senior executives, including the NEOs. We maintain overlapping three-year cycles with a grant made annually and currently have three active cycles (2013-2015 and 2014-2016 under the current plan and 2015-2017 under the new LTI program). The 2015-2017 cycle has a different comparator group and payout scale as described previously. Our NEOs LRIP targets were designed to deliver one-third of the total LTI value. The Committee determines the total LTI value with reference to market levels determined through the benchmarking completed by CAP. Each performance cycle uses a comparator group for that cycles pay and performance analysis and for relative TSR measurement. The TSR calculation uses a three-month average stock price at the beginning (three months preceding performance cycle start) and ending (final three months in performance cycle plus value of reinvested dividends) of the period for measurement purposes. This approach minimizes the impact of a single beginning and ending point stock price for each performance cycle. A TSR factor is then determined with reference to the Companys ranking within the comparator group of companies based on the approved payout scale for the respective cycle.
If the resulting TSR performance for Motorola Solutions is negative, the Committee will have discretion to reduce the calculated payout by up to 25%.
Comparator companies are reviewed annually and are not changed for any established performance cycle once they are approved by the Committee.
30 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
Stock Options and Restricted Stock Units
In 2014, the Committee granted stock options and RSUs under the Motorola Solutions Omnibus Incentive Plan of 2006 (the 2006 Plan) to the NEOs that had performance-contingent vesting based on the achievement of a 15% stock price appreciation hurdle over a set period of time (as described below). These equity awards delivered two-thirds of the total LTI value and were a combination of stock options (50% of equity value) and RSUs (50% of equity value).
The performance-contingent stock options and RSUs granted to all the NEOs in 2014 will vest on the later of:
| One-third on each of the first, second and third anniversaries of the date of grant; and |
| When the average closing price of our Common Stock for any fifteen consecutive trading days is greater than $75.63 (the 15% stock price appreciation hurdle). |
The stock price hurdle has not yet been achieved, so none of the grants will time-vest until after the15% stock price appreciation requirement is met.
Timing and Grant Practices of Global Equity Awards
In 2012, we implemented significantly reduced eligibility for our Company-wide annual equity grant and maintained eligibility for special grants on a highly selective basis to align our stock-based compensation programs to market and reduce our annual share usage rate and stock-based compensation expense.
As a result of these changes, our share usage (equity grants as a percentage of common shares outstanding) since 2012 was significantly reduced. This reduced share usage has also caused a decrease in our stock-based compensation expense since 2012 as the expense from previous grants made to a broader population become fully recognized. We plan to continue to closely manage our equity granting practices to ensure our share usage and stock-based compensation expense remain in line with competitive levels.
In 2014, our annual equity awards were made in the first quarter of the year to allow the Company to better align the receipt of equity awards with the assessment of prior year performance and achievement of business goals. We do not structure the timing of equity awards to precede or coincide with the disclosure of material non-public information. All equity grants made to Section16 officers are approved by the Committee, with concurrence by the Board for grants to the CEO.
The Committee has also delegated authority to the most senior human resources executive to make off-cycle equity grants to newly hired or promoted employees, in recognition of outstanding achievement or for retention. Grants are made on the first trading day of the month following the date of hire, promotion, recognition or retention.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 31 |
Executive Benefits and Perquisites
To enhance our ability to attract and retain talented executives in a highly competitive talent market, we provide the benefits and perquisites detailed in the following table:
Benefit or Perquisite | Named Executives |
Other Executives and Managers |
All Eligible Full-Time Employees | |||
Retirement1, Saving and Stock Purchase Plans |
||||||
Health and Welfare Benefits2 |
||||||
Deferred Compensation |
||||||
Financial Planning |
AVPs & Above | |||||
Executive Physicals |
SVPs & Above | |||||
Security Services |
CEO | |||||
Personal Use of Corporate Aircraft3 |
CEO direct reports |
1 Pension provided to US-based eligible employees hired prior to Jan 1, 2005.
2 Includes medical, dental, vision, group life insurance, business travel accident insurance, short- and long-term disability and work life programs.
3 In limited circumstance, and approved by the CEO, other employees are permitted to use our corporate aircraft for personal purposes.
COMPENSATION DECISIONS FOR 2014
Gregory Q. Brown, Chairman and Chief Executive Officer
Mr. Browns total target compensation was adjusted in 2014 to better align his pay mix to market. This was achieved through a modest increase in base salary from $1,200,000 to $1,250,000, decreasing his short-term incentive target from 220% to 150% and increasing his target LTI grant from $8,000,000 to $9,000,000. Mr. Browns actual compensation reflects a challenging performance year in 2014. Mr. Browns total compensation decreased in 2014 due to a $0 payout under the 2012-2014 LRIP and a below target payout under the STIP based on Company performance.
ELEMENT | TARGET COMPENSATION |
ACTUAL COMPENSATION1 |
FACTORS INFLUENCING AMOUNT | |||||||||||||||||||||||
BASE SALARY |
$1,250,000 | $1,287,500 | In March 2014, the Committee and Board approved a base salary increase of $50,000 for Mr. Brown. | |||||||||||||||||||||||
STIP AWARD |
$1,875,000 | $558,370 | Annual Salary | x | Target | x | BPF | x | IPF | = | STIP Award | |||||||||||||||
$1,240,822 | 150% | 0.30 | 1.0 | $558,370 | ||||||||||||||||||||||
Mr. Brown continued to transform the company into a singularly focused leader in mission-critical communications and took important actions to better position the company for operating leverage and free cash flow generation in future years. The company divested its Enterprise business for $3.45B, returned $2.9B in capital to shareholders, decreased U.S. pension liabilities by $4.2B, made critical investments in key growth areas including Public Safety LTE and our Services business, and ended the year with a record $5.8B in backlog. | ||||||||||||||||||||||||||
TOTAL CASH COMPENSATION | $3,125,000 | $1,845,870 | ||||||||||||||||||||||||
LTI CASH PAYMENT (2012-2014 LRIP) |
$3,000,000 | $0 | 2012 Cycle Base Salary |
x | Target | x | TSR Payout Factor | = | LRIP Award | |||||||||||||||||
$1,200,000 | 250% | 0% | $0 | |||||||||||||||||||||||
Relative TSR rank of #13 resulted in 0% of target payout | ||||||||||||||||||||||||||
LTI |
2014- 2016 LRIP |
$3,000,000 | | Base Salary | x | Target | = | LRIP Target | ||||||||||||||||||
$1,200,000 | 250% | $3,000,000 | ||||||||||||||||||||||||
Payout based on relative TSR performance through 2016 | ||||||||||||||||||||||||||
STOCK OPTIONS |
$3,916,667 | $3,916,657 | Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on stock price when/if the vested options are exercised and when the vested RSUs are sold. As of the record date, the performance hurdle has not been met. | |||||||||||||||||||||||
RSUs | $1,958,333 | $1,848,923 | ||||||||||||||||||||||||
2014 TOTAL COMPENSATION |
$12,000,000 | $7,611,450 | Actual Total Compensation is listed in Summary Compensation Table |
1 Actual base salary reflects two additional weeks of pay due to the timing of the 2014 payroll calendar.
32 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
Gino A. Bonanotte, Executive Vice President and Chief Financial Officer
Mr. Bonanottes positioning at the 25th percentile of market was taken into account for pay action decisions in 2014 designed to move Mr. Bonanotte toward a more competitive market position. These pay actions included a 16.2% base salary increase and an additional $500,000 equity award delivered $300,000 in stock options and $200,000 in RSUs to recognize Mr. Bonanottes promotion to the Chief Financial Officer role late in 2013.
ELEMENT | TARGET COMPENSATION |
ACTUAL COMPENSATION1 |
FACTORS INFLUENCING AMOUNT | |||||||||||||||||||||||
BASE SALARY |
$610,000 | $615,481 | In March 2014, the Committee approved a base salary increase from $525,000 to $610,000. | |||||||||||||||||||||||
STIP AWARD |
$579,500 | $175,412 | Eligible Earnings | x | Target | x | BPF | x | IPF | = | STIP Award | |||||||||||||||
$615,481 | 95% | 0.30 | 1.0 | $175,412 | ||||||||||||||||||||||
Mr. Bonanotte successfully executed our 2014 capital allocation strategy, resulting in the return of $2.9B in capital to shareholders. He also managed the sale of our Enterprise business, led the initiative to de-risk our pension liability by $4.2B, drove $200M of company-wide cost reductions and re-designed our forecasting process. | ||||||||||||||||||||||||||
TOTAL CASH COMPENSATION | $1,189,500 | $790,893 | ||||||||||||||||||||||||
LTI CASH PAYMENT (2012-2014 LRIP) |
$193,648 | $0 | 2012 Cycle Base Salary |
x | Target | x | TSR Payout Factor | = | LRIP Award | |||||||||||||||||
$280,000 | 69.16% | 0% | $0 | |||||||||||||||||||||||
Relative TSR rank of #13 resulted in 0% of target payout | ||||||||||||||||||||||||||
LTI |
2014-2016
LRIP |
$500,000 | | Base Salary | x | Target | = | LRIP Target | ||||||||||||||||||
$525,000 | 95.24% | $500,000 | ||||||||||||||||||||||||
Payout based on relative TSR performance through 2016 | ||||||||||||||||||||||||||
STOCK OPTIONS2 |
$800,000 | $799,987 | Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on stock price when/if the vested options are exercised and when the vested RSUs are sold. As of the record date, the performance hurdle has not been met. | |||||||||||||||||||||||
RSUs2 | $700,000 | $660,818 | ||||||||||||||||||||||||
2014 TOTAL COMPENSATION |
$3,189,500 | $2,251,698 | Actual Total Compensation is listed in Summary Compensation Table |
1 Actual base salary reflects two additional weeks of pay due to the timing of the 2014 payroll calendar.
2 Target and actual stock option and RSU amounts reflect value of annual and promotional equity.
Mark F. Moon, Executive Vice President and President, Sales & Product Operations
In March 2014, Mr. Moon received a 4.0% base salary increase.
ELEMENT | TARGET COMPENSATION |
ACTUAL COMPENSATION1 |
FACTORS INFLUENCING AMOUNT | |||||||||||||||||||||||
BASE SALARY |
$650,000 | $669,712 | In March 2014, the Committee approved a base salary increase from $625,000 to $650,000. | |||||||||||||||||||||||
STIP AWARD |
$682,500 | $210,959 | Eligible Earnings | x | Target | x | BPF | X | IPF | = | STIP Award | |||||||||||||||
$669,712 | 105% | 0.30 | 1.0 | $210,959 | ||||||||||||||||||||||
Mr. Moon made leadership and organizational changes which enhanced our focus and operational efficiency. He achieved product share gains and ended the year with record backlog. He also executed on key aspects of the companys strategy to strengthen our core business and expand into adjacent markets, including the development of our industry-leading Public Safety LTE position. | ||||||||||||||||||||||||||
TOTAL CASH COMPENSATION | $1,332,500 | $880,671 | ||||||||||||||||||||||||
LTI CASH PAYMENT (2012-2014 LRIP) |
$603,750 | $0 | 2012 Cycle Base Salary |
x | Target | x | TSR Payout Factor | = | LRIP Award | |||||||||||||||||
$525,000 | 115% | 0% | $0 | |||||||||||||||||||||||
Relative TSR rank of #13 resulted in 0% of target payout | ||||||||||||||||||||||||||
LTI |
2014-2016
LRIP |
$700,000 | | Base Salary | x | Target | = | LRIP Target | ||||||||||||||||||
$625,000 | 112% | $700,000 | ||||||||||||||||||||||||
Payout based on relative TSR performance through 2016 | ||||||||||||||||||||||||||
STOCK OPTIONS |
$700,000 | $699,991 | Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on stock price when/if the vested options are exercised and when the vested RSUs are sold. As of the record date, the performance hurdle has not been met. | |||||||||||||||||||||||
RSUs | $700,000 | $660,881 | ||||||||||||||||||||||||
2014 TOTAL COMPENSATION |
$3,432,500 | $2,241,543 | Actual Total Compensation is listed in Summary Compensation Table |
1 Actual base salary reflects two additional weeks of pay due to the timing of the 2014 payroll calendar.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 33 |
Mark S. Hacker, Executive Vice President, General Counsel and Chief Administrative Officer
Key Talent Management Actions Promoted in 2015 to include Chief Administrative Officer
In March 2014, Mr. Hacker received a 10.3% base salary increase.
ELEMENT | TARGET COMPENSATION |
ACTUAL COMPENSATION1 |
FACTORS INFLUENCING AMOUNT | |||||||||||||||||||||||
BASE SALARY |
$480,000 | $488,942 | In March 2014, the Committee approved a base salary increase from $435,000 to $480,000. | |||||||||||||||||||||||
STIP AWARD |
$360,000 | $110,012 | Eligible Earnings | x | Target | x | BPF | x | IPF | = | STIP Award | |||||||||||||||
$488,942 | 75% | 0.30 | 1.0 | $110,012 | ||||||||||||||||||||||
Mr. Hacker made leadership and organizational changes that resulted in increasing his teams impact while achieving cost reductions of 15% compared to last year. He managed significant litigation to favorable resolutions and successfully supported corporate transactions including the sale of the Enterprise business. He also launched talent management initiatives that strengthened the legal, government affairs and communications functions, and drove simplification and increased velocity by implementing changes to legacy processes and policies. | ||||||||||||||||||||||||||
TOTAL CASH COMPENSATION | $840,000 | $598,954 | ||||||||||||||||||||||||
LTI CASH PAYMENT (2012-2014 LRIP) |
$200,187 | $0 | 2012 Cycle Base Salary |
x | Target | x | TSR Payout Factor | = | LRIP Award | |||||||||||||||||
$290,000 | 69.03% | 0% | $0 | |||||||||||||||||||||||
Relative TSR rank of #13 resulted in 0% of target payout | ||||||||||||||||||||||||||
LTI |
2014-2016
LRIP |
$500,000 | | Base Salary | x | Target | = | LRIP Target | ||||||||||||||||||
$435,000 | 115% | $500,000 | ||||||||||||||||||||||||
Payout based on relative TSR performance through 2016 | ||||||||||||||||||||||||||
STOCK OPTIONS |
$500,000 | $499,997 | Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on stock price when/if the vested options are exercised and when the vested RSUs are sold. As of the record date, the performance hurdle has not been met. | |||||||||||||||||||||||
RSUs | $500,000 | $472,031 | ||||||||||||||||||||||||
2014 TOTAL COMPENSATION |
$2,340,000 | $1,570,982 | Actual Total Compensation is listed in Summary Compensation Table |
1 Actual base salary reflects two additional weeks of pay due to the timing of the 2014 payroll calendar.
Robert C. Schassler, Executive Vice President, Solutions and Services
Key Talent Management Actions Promoted from within to lead the Solutions and Services business
Mr. Schassler was promoted from within to lead the Solutions and Services business in May 2014. At the time of his promotion, Mr. Schassler received a base salary increase to $500,000, a STIP target increase from 75% to 95% of base salary and a prorated LRIP target increase to 95% for all open performance cycles (2012-2014, 2013-2015 and 2014-2016). In addition, Mr. Schassler was awarded a promotional equity grant of $400,000 delivered $200,000 in stock options and $200,000 in RSUs.
ELEMENT | TARGET COMPENSATION |
ACTUAL COMPENSATION |
FACTORS INFLUENCING AMOUNT | |||||||||||||||||||||||
BASE SALARY1 |
$500,000 | $499,712 | In May 2014, the Committee approved a base salary increase from $465,000 to $500,000 at the time of Mr. Schasslers promotion. | |||||||||||||||||||||||
STIP AWARD |
$419,567 | $131,000 | Eligible Earnings | x | Target | x | BPF | x | IPF | = | STIP Award | |||||||||||||||
$499,712 | 87.38% | 0.30 | 1.0 | $131,000 | ||||||||||||||||||||||
In early 2014, Mr. Schassler was promoted and elevated to the Executive Committee to prioritize our Services business and to emphasize its importance on the growth of the company. Mr. Schassler successfully restructured the Solutions and Services organization and launched our new Managed Services and Smart Public Safety Solutions businesses. | ||||||||||||||||||||||||||
TOTAL CASH COMPENSATION | $919,567 | $630,712 | ||||||||||||||||||||||||
LTI CASH PAYMENT (2012-2014 LRIP) |
$265,144 | $0 | 2012 Cycle Base Salary |
x | Target | x | TSR Payout Factor | = | LRIP Award | |||||||||||||||||
$415,000 | 63.89% | 0% | $0 | |||||||||||||||||||||||
Relative TSR rank of #13 resulted in 0% of target payout | ||||||||||||||||||||||||||
LTI |
2014- 2016 LRIP |
$402,948 | | Base Salary | x | Target | = | LRIP Target | ||||||||||||||||||
$445,000 | 90.55% | $402,948 | ||||||||||||||||||||||||
Payout based on relative TSR performance through 2016 | ||||||||||||||||||||||||||
STOCK OPTIONS2 |
$325,000 | $324,989 | Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on stock price when/if the vested options are exercised and when the vested RSUs are sold | |||||||||||||||||||||||
RSUs2 | $575,000 | $542,891 | ||||||||||||||||||||||||
2014 TOTAL COMPENSATION |
$2,222,515 | $1,498,592 | Actual Total Compensation is listed in Summary Compensation Table |
1 Target base salary reflects new salary as of promotion in May 2014. Actual base salary reflects two additional weeks of pay due to the timing of the 2014 payroll calendar.
2 Target and actual stock option and RSU amounts reflect value of annual and promotional equity.
34 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
OTHER COMPENSATION POLICIES AND PRACTICES
Stock Ownership Guidelines
To ensure strong alignment of our senior management with the interests of our stockholders, the Company maintains stock ownership guidelines for our senior executives, including each of our NEOs. Our stock ownership requirements are expressed as a multiple of base salary as shown below:
Executive Group | Multiple of Base Salary | |
Chairman and Chief Executive Officer |
6x | |
Executive Vice Presidents and Executive Committee Members |
3x | |
Senior Vice Presidents |
2x | |
Corporate Vice Presidents |
1x |
Executives subject to the guidelines must meet their ownership requirement within five years from the date they first become subject to their applicable ownership requirement. Executives who do not meet their stock ownership requirement within five years must hold 100% of net shares acquired (net of tax withholding) on the exercise of stock options and the vesting of RSUs until compliance with the stock ownership requirement is achieved.
Shares counted toward guideline achievement include directly owned shares and unvested RSUs.
The Committee reviews compliance with the ownership guidelines annually. In the Committees last review, it was determined that all NEOs had met their stock ownership requirement or are within the five year grace period.
Change In Control Plan
The Company maintains the Senior Officer Change In Control Severance Plan (the CIC Severance Plan). In November 2014, the Committee amended and restated the plan with no material changes except the elimination of the expiration date for the plan, allowing for indefinite plan duration. The plan continues to provide the Board the ability to amend or terminate the plan with at least one year notice to participants.
The CIC Severance Plan covers our NEOs (except for Mr. Brown, whose employment agreement contains change in control provisions) and our other senior executives. The Board considers the maintenance of an effective and stable management team essential to protecting and enhancing the value of the Company for the benefit of our stockholders. To that end, we recognize that the possibility of a change in control may exist and that this possibility, and the uncertainty and questions it may raise for certain senior executives, may result in the distraction, and potential departure, of senior management employees to the detriment of the Company and our stockholders. The change in control provision helps to encourage the continued attention and dedication of our senior management to their assigned duties without the distraction that may arise from the possibility of a change in control event.
The CIC Severance Plan employs a double trigger in order for severance benefits to be paid, meaning both a change in control event must occur and an executive must be involuntarily terminated without cause or the executive must leave for good reason within 24 months following the change in control.
The table below highlights key provisions of the CIC Severance Plan. For a detailed description of the CIC Severance Plan, please refer to the section Change in Control Arrangements for more information.
CIC Provision | CIC Severance Plan | |
Eligibility |
Executive and Senior Vice Presidents | |
CIC Cash Severance Multiple |
Two times base salary plus target bonus | |
Medical Benefit Continuation |
Two years | |
LRIP and Equity Treatment (Provision in 2006 Plan) |
Equity and LRIP subject to double trigger unless awards are not assumed or replaced by acquirer. If not assumed or replaced, equity and LRIP provide for accelerated treatment with LRIP performance at target | |
Excise Tax Gross-Up |
None. Participants receive best net after-tax position of either participants paying the excise tax or a reduction in severance benefits to a level that eliminates the imposition of excise tax |
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 35 |
Recoupment of Incentive Compensation Awards Upon Restatement of Financial Results
If, in the opinion of the independent directors of the Board, the Companys financial results require restatement due to the misconduct by one or more of the Companys executive officers (including the NEOs), the independent directors may seek a number of remedies, all of which are subject to a number of conditions including (i) whether the executive officer engaged in the intentional misconduct, (ii) whether the bonus or incentive compensation to be recouped was calculated based upon the financial results that were restated, and (iii) whether the incentive compensation calculated under the restated financial results is less than the amount actually paid or awarded. The independent directors shall review whether to require one or more remedies by directing the Company to recover all or a portion of any incentive compensation received by the executive as a result of the misconduct, as well as cancel all or a portion of the outstanding equity-based awards held by the executive (commonly referred to as a claw-back policy). In addition, the independent directors may also seek to recoup any gains realized by the executive with respect to their equity-based awards, including exercised stock options and vested RSUs, regardless of when they were issued.
Impact of Favorable Accounting and Tax Treatment on Compensation Program Design
Favorable accounting and tax treatment of the various elements of our total compensation program is an important, but not the sole, consideration in its design. Section 162(m) of the Internal Revenue Code limits the deductibility of certain items of compensation paid to the CEO and certain other highly compensated executive officers (together, the covered officers) to $1,000,000 annually, unless such compensation qualifies as performance-based compensation. Our short-term and long-term incentive programs generally have been designed so that they may qualify as performance-based compensation. In particular, in order to satisfy the Section 162(m) qualification requirements, under our 2006 Plan, each year the Committee allocates an incentive pool equal to 5% of our consolidated operating earnings to the covered officers under our STIP. Once the amount of the pool and the specific allocations are determined at the end of the year, the Committee can apply negative discretion to reduce (but not increase) the amount of any award payable from the incentive pool to the covered officers, as determined by the amount payable to each covered officer based on the STIP performance criteria and actual results. The Committee reserves the right to provide for compensation to executive officers that may not be deductible pursuant to Section 162(m).
Securities Trading Policy
Executives and certain other employees, including our NEOs, may not engage in any transaction in which they may profit from short-term speculative swings in the value of our securities. Our securities trading policy is applicable to all employees and is designed to ensure compliance with all applicable insider trading rules.
Anti-Hedging Policy
Directors, executives and certain other employees, including our NEOs, are not permitted to hold any security tied to the performance of our common stock other than equity delivered directly to employees under our equity incentive plans.
36 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
COMPENSATION AND LEADERSHIP COMMITTEE REPORT |
THE FOLLOWING REPORT OF THE COMPENSATION AND LEADERSHIP COMMITTEE ON EXECUTIVE COMPENSATION AND RELATED DISCLOSURE SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 (THE SECURITIES ACT) OR UNDER THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
Throughout 2014, Kenneth C. Dahlberg was the Chair of the Compensation and Leadership Committee (the Committee) and Bradley E. Singer served as a member of the Committee. Anne R. Pramaggiore joined the Committee on March 10, 2014.
The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Company management. Based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A and incorporated by reference into Motorola Solutions 2014 Annual Report on Form 10-K.
Respectfully submitted,
Kenneth C. Dahlberg, Chairman
Anne R. Pramaggiore
Bradley E. Singer
COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
Kenneth C. Dahlberg, Director and Chair of the Committee and Bradley E. Singer, Director, served on the Committee throughout 2014. Anne E. Pramaggiore, Director, served on the Committee from March 10, 2014 through the end of 2014. No member of the Committee was, during the fiscal year ended December 31, 2014, an officer, former officer, or employee of the Company or any of our subsidiaries. We did not have any compensation committee interlocks in 2014.
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 37 |
NAMED EXECUTIVE OFFICER COMPENSATION |
2014 SUMMARY COMPENSATION TABLE
Name and Principal Position (a) |
Year (b) |
Salary ($)(1) (c) |
Bonus ($) (d) |
Stock ($)(2) (e) |
Option ($)(2) (f) |
Non-Equity Plan (g) |
Change
in ($)(4) |
All Other Compensation ($)(5) (i) |
Total ($) (j) |
|||||||||||||||||||||||||||
Gregory Q. Brown Chairman and Chief Executive Officer |
| |||||||||||||||||||||||||||||||||||
2014 | 1,287,500 | 0 | 1,848,923 | 3,916,657 | 558,370 | 26,013 | 331,669 | 7,969,131 | ||||||||||||||||||||||||||||
2013 | 1,200,000 | 0 | 1,572,805 | 3,334,996 | 6,207,600 | 0 | 306,530 | 12,621,931 | ||||||||||||||||||||||||||||
2012 | 1,200,000 | 0 | 1,263,716 | 2,667,993 | 3,370,000 | 21,352 | 1,802,112 | 10,325,173 | ||||||||||||||||||||||||||||
Gino A. Bonanotte Executive Vice President and Chief Financial Officer |
| |||||||||||||||||||||||||||||||||||
2014 | 615,481 | 0 | 660,818 | 799,987 | 175,412 | 173,977 | 20,400 | 2,446,075 | ||||||||||||||||||||||||||||
2013 | 342,607 | 0 | 360,330 | 243,742 | 325,023 | 0 | 17,200 | 1,288,902 | ||||||||||||||||||||||||||||
Mark F. Moon Executive Vice President and President, Sales & Product Operations |
| |||||||||||||||||||||||||||||||||||
2014 | 669,712 | 0 | 660,881 | 699,991 | 210,959 | 145,767 | 54,039 | 2,441,348 | ||||||||||||||||||||||||||||
2013 | 621,096 | 0 | 506,086 | 1,073,199 | 989,725 | 0 | 25,506 | 3,215,612 | ||||||||||||||||||||||||||||
2012 | 561,462 | 0 | 379,081 | 800,392 | 680,000 | 100,264 | 27,270 | 2,548,469 | ||||||||||||||||||||||||||||
Mark S. Hacker Executive Vice President, General Counsel and Chief Administrative Officer |
| |||||||||||||||||||||||||||||||||||
2014 | 488,942 | 0 | 472,031 | 499,997 | 110,012 | 36,052 | 27,432 | 1,634,466 | ||||||||||||||||||||||||||||
Robert C. Schassler Executive Vice President, Solutions and Services |
| |||||||||||||||||||||||||||||||||||
2014 | 499,712 | 0 | 542,891 | 324,989 | 131,000 | 93,806 | 22,502 | 1,614,900 |
(1) | Salary includes amounts deferred pursuant to salary reduction arrangements under the 401(k) and Deferred Compensation Plans; reflects two additional weeks of pay due to the timing of the 2014 payroll calendar. |
(2) | The amounts in columns (e) and (f) reflect the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 8, Share-Based Compensation Plans and Other Incentive Plans in the Companys Form 10-K for the fiscal year ended December 31, 2014. |
(3) | In 2014, the amounts in column (g) consist of awards earned by eligible NEOs at that time under the 2014 STIP. There were no payouts under the 2012-2014 LRIP. In 2013, the amounts in column (g) consist of awards earned by eligible NEOs at that time under the 2013 STIP and under the 2011-2013 LRIP. Earned payments in column (g) during fiscal year 2013 are as follows: |
Mr. Brown | Mr. Bonanotte | Mr. Moon | ||||||||||
2013 STIP |
$1,557,600 | $139,200 | $327,100 | |||||||||
2011-2013 LRIP |
4,650,000 | 185,823 | 662,625 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
$6,207,600 | $325,023 | $989,725 |
In 2012, the amounts in column (g) consist of awards earned by eligible NEOs at that time under the Annual Incentive Plan (the AIP), under which our annual cash incentives for NEOs were paid prior to 2013; there were no payments under any LRIP in 2012.
38 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
(4) | The amounts in column (h) represent the aggregate change in present value of the respective officers benefits under all pension plans. If the aggregate change in value of benefits under all pension plans was negative, the value is reflected as $0. A summary of the specific values for each period are set forth below: |
NEO | Period | Change in Present Value of Pension Plan |
Above Market Deferred Compensation Earnings |
Total | ||||
Gregory Q. Brown |
Dec. 31, 2013 to Dec. 31, 2014 | $23,912 | $2,101 | $26,013 | ||||
Dec. 31, 2012 to Dec. 31, 2013 | ($12,282) | $0 | ($12,282) | |||||
Dec. 31, 2011 to Dec. 31, 2012 | $21,352 | $0 | $21,352 | |||||
Gino A. Bonanotte |
Dec. 31, 2013 to Dec. 31, 2014 | $162,929 | $11,048 | $173,977 | ||||
Dec. 31, 2012 to Dec. 31, 2013 | ($76,221) | $0 | ($76,221) | |||||
Mark F. Moon |
Dec. 31, 2013 to Dec. 31, 2014 | $110,635 | $35,132 | $145,767 | ||||
Dec. 31, 2012 to Dec. 31, 2013 | ($62,906) | $0 | ($62,906) | |||||
Dec. 31, 2011 to Dec. 31, 2012 | $100,264 | $0 | $100,264 | |||||
Mark S. Hacker |
Dec. 31, 2013 to Dec. 31, 2014 | $30,561 | $5,491 | $36,052 | ||||
Robert C. Schassler |
Dec. 31, 2013 to Dec. 31, 2014 | $73,700 | $20,106 | $93,806 |
(5) | The amounts in column (i) for 2014 consist of perquisite costs for personal use of Company aircraft, security system monitoring, costs for financial planning, guest attendance at Company events, Company matching contributions to the 401(k) Plan, executive physicals and payment of legal fees. The incremental cost to the Company for any personal use of Company aircraft is calculated by multiplying the number of hours an NEO travels in a particular plane by the direct cost per flight hour per plane. Direct costs include fuel, maintenance, labor, parts, loading and parking fees, catering and crew. Specific perquisites applicable to each NEO are identified below by an X. Where such perquisite exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for such officer, the dollar amount is given. |
NEO | Personal Aircraft Use |
Security System Monitoring |
Financial Planning |
Guest Attendance at Company Events |
401K Plan Match |
Executive Physical |
Legal Fees |
|||||||||||||||||||||
Gregory Q. Brown |
$284,490 | X | X | X | X | X | X | |||||||||||||||||||||
Gino A. Bonanotte |
X | X | ||||||||||||||||||||||||||
Mark F. Moon |
$28,805 | X | X | X | ||||||||||||||||||||||||
Mark S. Hacker |
X | X | X | X | ||||||||||||||||||||||||
Robert C. Schassler |
X | X | X |
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 39 |
GRANTS OF PLAN-BASED AWARDS IN 2014
Estimated Future Payouts Under Non-Equity Incentive Plan Award |
All Other Number of |
All Other Option Awards: Number of Securities Underlying Options (#)(2) (j) |
Exercise or Base Price of Option Awards ($/Sh)(3) (k) |
Grant Date Fair Value of Stock and Option Awards ($) (l) |
||||||||||||||||||||||||||||||||||
Name (a) | Grant Type |
Award Date |
Grant Date (b) |
Threshold ($) (c) |
Target ($) |
Maximum ($) (e) |
||||||||||||||||||||||||||||||||
Gregory Q. Brown |
STIP | 1/1/2014 | (4) | 0 | 1,875,000 | 2,625,000 | | | | | ||||||||||||||||||||||||||||
LRIP | 1/1/2014 | (5) | 781,250 | 3,125,000 | 6,250,000 | | | | | |||||||||||||||||||||||||||||
RSUs | 3/10/2014 | | | | 29,479 | (6) | | | 1,848,923 | |||||||||||||||||||||||||||||
Options | 3/10/2014 | | | | | 326,933 | (7) | 66.43 | 3,916,657 | |||||||||||||||||||||||||||||
Gino A. Bonanotte |
STIP | 1/1/2014 | (4) | 0 | 579,500 | 811,300 | | | | | ||||||||||||||||||||||||||||
LRIP | 1/1/2014 | (5) | 125,000 | 500,000 | 1,000,000 | | | | | |||||||||||||||||||||||||||||
RSUs | 3/10/2014 | | | | 7,526 | (6) | | | 472,031 | |||||||||||||||||||||||||||||
RSUs | 3/10/2014 | | | | 3,010 | (8) | | | 188,787 | |||||||||||||||||||||||||||||
Options | 3/10/2014 | | | | | 41,736 | (7) | 66.43 | 499,997 | |||||||||||||||||||||||||||||
Options | 3/10/2014 | | | | | 25,020 | (8) | 66.43 | 299,990 | |||||||||||||||||||||||||||||
Mark F. Moon |
STIP | 1/1/2014 | (4) | 0 | 682,500 | 955,500 | | | | | ||||||||||||||||||||||||||||
LRIP | 1/1/2014 | (5) | 175,000 | 700,000 | 1,400,000 | | | | | |||||||||||||||||||||||||||||
RSUs | 3/10/2014 | | | | 10,537 | (6) | | | 660,881 | |||||||||||||||||||||||||||||
Options | 3/10/2014 | | | | | 58,430 | (7) | 66.43 | 699,991 | |||||||||||||||||||||||||||||
Mark S. Hacker |
STIP | 1/1/2014 | (4) | 0 | 360,000 | 504,000 | | | | | ||||||||||||||||||||||||||||
LRIP | 1/1/2014 | (5) | 125,000 | 500,000 | 1,000,000 | | | | | |||||||||||||||||||||||||||||
RSUs | 3/10/2014 | | | | 7,526 | (6) | | | 472,031 | |||||||||||||||||||||||||||||
Options | 3/10/2014 | | | | | 41,736 | (7) | 66.43 | 499,997 | |||||||||||||||||||||||||||||
Robert C. Schassler |
STIP | 1/1/2014 | (4) | 0 | 436,900 | 611,660 | | | | | ||||||||||||||||||||||||||||
LRIP | 1/1/2014 | (5) | 100,737 | 402,948 | 805,895 | | | | | |||||||||||||||||||||||||||||
RSUs | 3/10/2014 | | | | 5,645 | (8) | | | 354,054 | |||||||||||||||||||||||||||||
RSUs | 5/20/2014 | | | | 3,006 | (8) | | | 188,837 | |||||||||||||||||||||||||||||
Options | 3/10/2014 | | | | | 10,425 | (8) | 66.43 | 124,996 | |||||||||||||||||||||||||||||
Options | 5/20/2014 | | | | | 19,047 | (8) | 66.52 | 199,994 |
(1) | In the aggregate, the RSUs described in this table represent approximately 0.031% of the total shares of Common Stock outstanding on January 31, 2015. RSUs granted on or after May 1, 2006 are not eligible for dividend equivalent rights. Each of these RSU awards were granted under the 2006 Plan. All RSUs entitle the holder to acquire shares of Common Stock and were valued at the fair market value at the time of the grant. The fair market value for all equity award grants on or after July 28, 2011 is defined as the closing price for a share of our Common Stock on the date of grant less a discount for the dividends not paid on the RSUs. |
(2) | In the aggregate, the options described in this table are exercisable for approximately 0.242% of the total shares of Common Stock outstanding on January 31, 2015. Each of these option awards were granted under the 2006 Plan. All options entitle the holder to acquire shares of Common Stock at the exercise price determined on the grant date. The options carry the right to elect to have shares withheld upon exercise and/or to deliver previously-acquired shares of Common Stock to satisfy tax-withholding requirements. Options may be transferred to family members or certain entities in which family members have an interest. These options expire at the end of ten years; however, they could expire or be cancelled earlier in certain situations. |
(3) | The exercise price of option awards is based on the fair market value of our Common Stock at the time of grant, which is the closing price for a share of our Common Stock on the date of grant. |
(4) | These grants are made pursuant to the STIP for the 2014 plan year and are payable in cash. The STIP is the Companys annual pay-for-performance bonus plan that is based upon a formula that combines Company performance and individual performance. For a detailed discussion of the STIP, including the targets and plan mechanics, see Compensation Discussion and Analysis. Threshold payouts assume the minimum individual performance factor of 0.0. Target payouts assume individual and business performance factors of 1.0. Maximum payouts assume the maximum individual and business performance factors of 1.4. Awards under the STIP for NEOs are determined using their base pay and individual incentive target percentages for the plan year. |
40 | Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement |
(5) | These grants are for the 2014-2016 LRIP. Awards under the 2014-2016 LRIP cycle are determined in dollars but, at the discretion of the Compensation and Leadership Committee, may be paid in cash or Common Stock. For a discussion of the LRIP, including the targets and plan mechanics, see Compensation Discussion and Analysis. The amounts under Threshold assume the minimum performance level necessary to generate an award was achieved. If final cycle performance is below the minimum performance level at the end of the three-year cycle, awards will be $0. The amounts under Target assume the target level of performance is achieved. The amounts under Maximum will be payable if Motorola Solutions three-year total shareholder return ranks first amongst the peer companies. |
(6) | The restrictions on the RSUs lapse in three equal installments, each lapse date to be the later of (a) the date on which the average closing price of our Common Stock over a fifteen-day trading period is 15% greater than the average closing price of our Common Stock over the fifteen-day trading period immediately preceding the date of the grant on March 10, 2014, and (b) the first, second and third anniversary of the grant date. The average closing price of our Common Stock over the fifteen-day trading period immediately preceding the date of the grant on March 10, 2014 has not yet been exceeded; therefore as of March 20, 2015 the restrictions have not lapsed. |
(7) | These options vest in three equal installments, each vesting date to be the later of (a) the date on which the average closing price of our Common Stock over a fifteen-day trading period is 15% greater than the average closing price of our Common Stock over the fifteen-day trading period immediately preceding the date of the grant on March 10, 2014, and (b) the first, second and third anniversary of the grant date. The average closing price of our Common Stock over the fifteen-day trading period immediately preceding the date of the grant on March 10, 2014 has not yet been exceeded; therefore as of March 20, 2015 the restrictions have not lapsed. |
(8) | The restrictions on the RSUs lapse and the options vest in three equal installments on the first, second and third anniversary of the grant date. |
Motorola Solutions Notice of 2015 Annual Meeting of Stockholder and Proxy Statement | 41 |
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END
Option Awards | Stock Awards | |||||||||||||||||
Name (a) |
Grant Date |
Number of (b) |
Number of Options (#) (c) |
Equity (d) |
Option ($) (e) |
Option (f) |
Grant Date |
Number of Shares That Have (g) |
Market That Have Not Vested (h) |
Gregory Q. Brown |
5/3/2005 | 95,235 | (2) | 0 | | 64.98 | 5/3/2015 | 5/2/2012 | 25,949 | (3) | 1,740,659 | |||||||||||||||||||||||||
5/3/2006 | 83,331 | (2) | 0 | | 89.26 | 5/3/2016 | 5/13/2013 | 19,761 | (4) | 1,325,568 | ||||||||||||||||||||||||||
4/5/2007 | 95,235 | (2) | 0 | | 73.88 | 4/5/2017 | 3/10/2014 | 29,479 | (5) | 1,977,451 | ||||||||||||||||||||||||||
1/31/2008 | | | 53,915 | (6) | 55.91 | 1/31/2018 | ||||||||||||||||||||||||||||||
8/27/2008 | 552,521 | (7) | 0 | | 40.33 | 8/27/2018 | ||||||||||||||||||||||||||||||
8/27/2008 | 134,297 | (8) | 0 | | 40.33 | 8/27/2018 | ||||||||||||||||||||||||||||||
5/7/2009 | 270,826 | (9) | 0 | | 26.13 | 5/7/2019 | ||||||||||||||||||||||||||||||
5/5/2010 | 264,635 | (10) | 0 | | 28.86 | 5/5/2020 | ||||||||||||||||||||||||||||||
2/1/2011 | 665,778 | (11) | 0 | | 39.02 | 2/1/2021 | ||||||||||||||||||||||||||||||
2/22/2011 | 48,489 | (12) | 0 | | 38.04 | 2/22/2021 |