defc14a
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
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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ý Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Motorola, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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x No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
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Proxy Statement |
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PRINCIPAL EXECUTIVE OFFICES:
1303 East Algonquin Road
Schaumburg, Illinois 60196
March 14, 2007 |
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PLACE OF MEETING: The Art Institute of Chicago Rubloff Auditorium 230 South Columbus Drive Chicago, Illinois 60603 |
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NOTICE OF 2007 ANNUAL MEETING OF STOCKHOLDERS
To our Stockholders:
Our Annual Meeting will be held at The Art Institute of
Chicago - Rubloff Auditorium, 230 South Columbus
Drive, Chicago, Illinois 60603 on Monday, May 7, 2007 at
4:30 P.M., local time.
The purpose of the meeting is to:
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elect eleven directors for a one-year term; |
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consider and vote upon a proposed amendment to the Motorola
Employee Stock Purchase Plan of 1999 in order to authorize an
additional 50 million shares for issuance and sale to
employees; |
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consider and vote upon two shareholder proposals, if properly
presented at the meeting; and |
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act upon such other matters as may properly come before the
meeting. |
Only Motorola stockholders of record at the close of business on
March 8, 2007 (the record date) will be
entitled to vote at the meeting. Please vote in one of the
following ways:
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use the toll-free telephone number shown on your WHITE
proxy card; |
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visit the website shown on your WHITE proxy card to vote
via the Internet; or |
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mark, sign, date and return the enclosed WHITE proxy card
in the enclosed postage-paid envelope. |
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Annual Meeting, please
complete, sign, date and promptly mail your enclosed WHITE proxy
card or voting instruction form in the postage-paid envelope
provided. Should you prefer, you may vote in person or by
delivering your proxy via telephone or via the Internet by
following the instructions on your WHITE proxy card or voting
instruction form. If you have any questions or need assistance
in voting your shares of Motorola common stock, please call
D.F. King & Co., Inc., which is assisting
Motorola, toll-free at
1-800-488-8095.
PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE
LIMITED TO STOCKHOLDERS OF MOTOROLA AS OF THE RECORD DATE (OR
THEIR AUTHORIZED REPRESENTATIVES) HOLDING ADMISSION TICKETS OR
OTHER EVIDENCE OF OWNERSHIP. THE ADMISSION TICKET IS DETACHABLE
FROM YOUR WHITE PROXY CARD. IF YOUR SHARES ARE HELD BY A BANK OR
BROKER, PLEASE BRING TO THE MEETING YOUR BANK OR BROKER
STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF MOTOROLA STOCK
TO GAIN ADMISSION TO THE MEETING.
* * * CAUTION * * *
MOTOROLA HAS RECEIVED A NOTICE FROM CERTAIN AFFILIATES OF
CARL C. ICAHN FOR THE NOMINATION OF MR. ICAHN TO
MOTOROLAS BOARD OF DIRECTORS AT THE ANNUAL MEETING. THE
BOARD URGES YOU TO NOT SIGN ANY PROXY CARDS SENT TO YOU BY THE
ICAHN AFFILIATES. IF YOU HAVE PREVIOUSLY SIGNED A PROXY CARD
SENT TO YOU BY THE ICAHN AFFILIATES, YOU CAN REVOKE IT BY
SIGNING, DATING AND MAILING THE ENCLOSED WHITE PROXY CARD IN THE
ENVELOPE PROVIDED.
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By order of the Board of Directors, |
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A. Peter Lawson |
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Secretary |
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 2007
March 14, 2007
Dear fellow stockholder:
You are cordially invited to attend Motorolas 2007 Annual
Stockholders Meeting. The meeting will be held on Monday,
May 7, 2007 at 4:30 p.m., local time, in the Rubloff
Auditorium at The Art Institute of Chicago, 230 South
Columbus Drive, Chicago, Illinois 60603.
At this years Annual Meeting, in addition to electing your
entire 11 member board, we are asking stockholders to
approve an amendment to the Motorola Employee Stock Purchase
Plan of 1999 (the MOTshare Plan) to make
50 million additional shares available for purchase by
employees. The MOTshare Plan encourages employees to own more
shares of Motorola and thereby further aligns their interests
with those of all Motorola stockholders.
I encourage each of you to vote your shares through one of the
three convenient methods described in the enclosed Proxy
Statement, and if your schedule permits, to attend the meeting.
I would appreciate your support of the nominated directors and
the proposed amendment to the MOTshare Plan. Your vote is
important, so please act at your first opportunity.
On behalf of your Board of Directors, thank you for your
continued support of Motorola.
Edward J. Zander
Chairman and CEO,
Motorola, Inc.
TABLE OF CONTENTS
PROXY STATEMENT
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1
PROXY STATEMENT
PROXY STATEMENT
ABOUT THE 2007 ANNUAL MEETING
This proxy statement is being furnished to holders of common
stock, $3 par value per share (the Common Stock), of
Motorola, Inc. (the Company). Proxies are being
solicited on behalf of the Board of Directors of the Company to
be used at the 2007 Annual Meeting of Stockholders (the
Annual Meeting) to be held in the Rubloff Auditorium
at The Art Institute of Chicago, 230 South Columbus Drive,
Chicago, Illinois 60603 on Monday, May 7, 2007 at
4:30 P.M., local time, for the purposes set forth in the
Notice of 2007 Annual Meeting of Stockholders. This proxy
statement, the form of proxy and the Companys 2006 Annual
Report are being mailed to stockholders on or about
March 19, 2007. The proxy statement and the 2006 Annual
Report are also available on the Companys website at
www.motorola.com/investor.
The Company has received a notice from Icahn Partners LP, Icahn
Partners Master Fund LP and High River Limited Partnership
(collectively, the Icahn Entities) for the
nomination of Carl C. Icahn to the Companys Board of
Directors at the Annual Meeting. On March 12, 2007, the
Icahn Entities and certain other entities controlled by
Mr. Icahn filed a proxy statement on Schedule 14A with
the Securities and Exchange Commission soliciting proxies for
Mr. Icahn and the nominees named in Motorolas proxy
statement, other than Dr. John A. White.
Mr. Icahns nomination has NOT been endorsed by your
Board of Directors. We urge stockholders NOT to sign any proxy
card that you may receive from the Icahn Entities. Your Board of
Directors urges you to vote for FOR our nominees for
director, Edward J. Zander, David W. Dorman, Judy C. Lewent,
Thomas J. Meredith, Nicolas Negroponte, Samuel C.
Scott III, Ron Sommer, James R. Stengel, Douglas A.
Warner III, John A. White and Miles D. White. We are not
responsible for the accuracy of any information provided by or
relating to the Icahn Entities contained in any proxy
solicitation materials filed or disseminated by the Icahn
Entities or any other statements that they may otherwise make.
VOTING PROCEDURES
Who Is Entitled to Vote?
Only stockholders of record at the close of business on
March 8, 2007 (the record date) will be
entitled to notice of, and to vote at, the Annual Meeting or any
adjournments or postponements thereof. On that date, there were
issued and outstanding 2,385,724,367 shares of Common Stock
entitled to vote at the Annual Meeting. 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 Motorola Innovation Center,
1295 East Algonquin Road, Door 60, Schaumburg, Illinois
60196 for ten days before the Annual Meeting and at the
Annual Meeting.
How Can I Vote?
There are three convenient voting methods:
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Voting by Telephone. You can vote your shares by
telephone by calling the toll-free telephone number on your
WHITE proxy card. You may transmit your voting instructions from
any touch-tone telephone up until the closing of the polls at
the Annual Meeting. Telephone voting is available 24 hours
a day. If you vote by telephone you should NOT return a proxy
card. If you are a beneficial owner, or you hold your shares in
street name, please check your voting instruction
card or contact your bank, broker or nominee to determine
whether you will be able to vote by telephone. |
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Voting by Internet. You can also vote via the
Internet. The website address for Internet voting is also on
your WHITE proxy card. You can use the Internet to transmit your
voting instructions up until the closing of the polls at the
Annual Meeting. Internet voting also is available 24 hours
a day. If you vote via the Internet you should NOT return a
proxy card. If you are a beneficial owner, or you hold your
shares in street name, please check your voting
instruction card or contact your bank, broker or nominee to
determine whether you will be able to vote by Internet. |
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Voting by Mail. If you choose to vote by mail, mark
your WHITE proxy card, date and sign it, and return it in the
postage-paid envelope provided. Please promptly mail your WHITE
proxy card to ensure that it is received prior to the closing of
the polls at the Annual Meeting. |
2
PROXY STATEMENT
How Can I Change My Vote?
You can revoke your proxy at any time before it is voted at the
Annual Meeting by either:
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Sending written notice of revocation to the Secretary, Motorola,
Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196; |
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Submitting another timely, later-dated proxy by telephone,
Internet or paper ballot; or |
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Attending the Annual Meeting and voting in person. If your
shares are held in the name of a bank, broker or other nominee,
you must obtain a proxy, executed in your favor, from the holder
of record (that is, your bank, broker or nominee) to be able to
vote at the Annual Meeting. |
How Many Votes Must be Present to Conduct Business at
the Annual Meeting?
In order for business to be conducted, a quorum must be
represented at the Annual Meeting. A quorum is a majority of the
shares entitled to vote at the Annual Meeting. Shares
represented by a proxy marked withhold or
abstain will be considered present at the Annual
Meeting for purposes of determining a quorum. If the election of
directors is a discretionary item (as discussed
below), a proxy as to which there is a broker
non-vote will be considered present at the Annual Meeting
for purposes of determining a quorum.
How Many Votes Am I Entitled to Cast?
You are entitled to cast one vote for each share of Common Stock
you own on the record date. Stockholders do not have the right
to vote cumulatively in electing directors.
How Many Votes Are Required to Elect Directors?
In February 2006, Motorolas Board of Directors amended the
Companys bylaws and Board Governance Guidelines to adopt a
majority vote standard for non-contested director elections.
Under the amended bylaws, a plurality vote standard applies to
contested director elections.
Because the number of nominees timely nominated for the
Annual Meeting exceeds the number of directors to be elected at
the 2007 Annual Meeting, the 2007 election of directors is a
contested election under the bylaws. As a result, directors
will be elected by a plurality of the votes cast at the Annual
Meeting, meaning the 11 nominees receiving the most votes
will be elected. Only votes cast For a nominee will
be counted. Unless indicated otherwise by your WHITE proxy card,
your shares will be voted For the 11 nominees
named in this proxy statement. Instructions on the accompanying
WHITE proxy card to withhold authority to vote for one or more
of the nominees will result in those nominees receiving fewer
votes but will not count as a vote against the nominees.
Abstentions and broker non-votes will have no effect on the
director election since only votes For a nominee
will be counted.
The determination that the Icahn Entities notice of
nomination was timely received for purposes of determining the
applicability of the majority voting bylaw is neither an
admission that the Icahn Entities were eligible to deliver such
notice of nomination nor an admission that such notice otherwise
complied with the bylaws or that Mr. Icahn is eligible for
nomination to the Companys board of directors.
How Many Votes Are Required to Authorize the Amendment
to the Motorola Employee Stock Purchase Plan of 1999 (the
MOTshare Plan)?
In order to authorize the amendment to the MOTshare Plan, an
affirmative vote of a majority of the shares present in person
or by proxy and entitled to vote at the Annual Meeting is
required. For this proposal, an abstention will have the same
effect as a vote Against the proposal. Broker
non-votes will not be voted For or
Against this proposal and will have no effect on
this proposal.
How Many Votes Are Required to Pass Any Shareholder
Resolution?
In order to recommend that the Board consider adoption of any
shareholder proposal, an affirmative vote of a majority of the
shares present in person or by proxy and entitled to vote at the
Annual Meeting is required. For any shareholder proposal, an
abstention will have the same effect as a vote
Against the proposal. Broker non-votes will not be
voted For or Against the proposal and
will have no effect on the proposal.
Will My Shares be Voted if I Do Not Provide Instructions to
My Broker?
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. If you do not give instructions to the broker, the
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 (those shares are treated as broker
non-votes). The authorization of the amendment to the
MOTshare Plan and both of the shareholder proposals are
non-discretionary items.
3
PROXY STATEMENT
If the Icahn Entities solicit proxies to elect Mr. Icahn to
Motorolas Board of Directors at the Annual Meeting, then
the election of directors will also be a
non-discretionary item. As result, if your shares
are held in street name and you do not provide
instructions as to how your shares are to be voted in the
election of directors, your broker or other nominee will not be
able to vote your shares in the election of directors, and your
shares will not be voted for any of Motorolas nominees. We
urge you to provide instructions to your broker or nominee so
that your votes may be counted on this important matter. You
should vote your shares by following the instructions provided
on the enclosed WHITE proxy card and returning the WHITE proxy
card to your bank, broker or other nominee to ensure that your
shares are voted on your behalf.
If Mr. Icahn is not nominated to the Board of Directors at
the Annual Meeting, the election of directors will be a
discretionary item.
What if I Return My WHITE Proxy Card But Do Not Give Voting
Instructions?
All shares that have been properly voted whether by
telephone, Internet or mail and not revoked will be voted
at the Annual Meeting in accordance with your instructions. If
you sign your WHITE proxy card but do not give voting
instructions, the shares represented by that proxy will be voted
as recommended by the Board of Directors. The Board of Directors
recommends a vote For the election of the 11
director nominees named in this proxy statement, For
the authorization of the amendment to the MOTshare Plan and
Against both of the shareholder proposals.
What if Other Matters Are Voted on at the Annual Meeting?
If any other matters are properly presented at the Annual
Meeting for consideration, the persons named as proxies in the
enclosed WHITE proxy card will have the discretion to vote on
those matters for you. At the date we filed this proxy statement
with the Securities and Exchange Commission, the Board of
Directors did not know of any other matter to be raised at the
Annual Meeting.
How Do I Vote if I Participate in the Companys 401(k)
Plan?
If you own shares of Common Stock through the Motorola 401(k)
Plan (the 401(k) Plan), you will receive a separate
voting instruction form for the shares you hold in the 401(k)
Plan. In that case, you must return voting instructions to the
trustees for the 401(k) Plan by following the instructions
provided on the voting instruction form sent to you by the
trustees for the 401(k) Plan. If shares of Common Stock in the
401(k) Plan are not voted either by telephone, via the Internet
or by returning a voting instruction form sent to you by the
trustees for the 401(k) Plan, those shares will be voted by the
trustees in the same proportion as the shares properly voted by
other participants owning shares of Common Stock in the 401(k)
Plan. If you also own shares of Common Stock outside of the
401(k) Plan, to vote those shares you must vote either by
telephone, via the Internet, by returning the WHITE proxy card
(or voting instruction form for shares held by a broker or bank)
as directed on the WHITE proxy card (or voting instruction form)
or by attending and voting in person at the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS FOR A ONE-YEAR TERM
How Many Directors Are Standing For Election and For What
Term?
The number of directors of the Company to be elected at the 2007
Annual Meeting is 11. The directors elected at the 2007 Annual
Meeting will serve until their respective successors are elected
and qualified or until their earlier death or resignation.
4
PROXY STATEMENT
NOMINEES
Who Are the Nominees?
Each of the nominees named below is currently a director of the
Company and each was elected at the Annual Meeting of
Stockholders held on May 1, 2006, except for Mr. David
Dorman who is standing for election for the first time.
Mr. Fuller and Ms. Nooyi are not standing for
re-election. Mr. Fuller, 69, is retiring one year in
advance of the mandatory retirement age of 70 set forth in
the Companys Board Governance Guidelines.
Ms. Nooyis decision not to stand for
re-election is due to
her becoming Chief Executive Officer of PepsiCo, Inc. on
October 1, 2006 and, as recently announced, Chairman on
May 2, 2007, and the resulting additional responsibilities
of these positions. The ages shown are as of January 1,
2007.
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EDWARD J. ZANDER, Principal Occupation: Chairman of the Board
and Chief Executive Officer, Motorola, Inc.
Director since 2004 Age 59
Mr. Zander joined Motorola in January 2004 as Chairman and
Chief Executive Officer. Prior to joining Motorola,
Mr. Zander was a managing director of Silver Lake Partners,
a leading private equity fund focused on investments in
technology industries. Prior to holding that position,
Mr. Zander was President and COO of Sun Microsystems, Inc.,
a leading provider of hardware, software and services for
networks, from January 1998 until June 2002. Mr. Zander
serves as Chairman of the Technology CEO Council and on the
board of directors of several educational and non-profit
organizations. He serves as a member of the Deans Advisory
Council of the School of Management at Boston University and as
a Director of Time Warner, Inc., Netezza Corporation, The Art
Institute of Chicago, and After School Matters, Chicago.
Mr. Zander received a B.S. degree in electrical
engineering from Rensselaer Polytechnic Institute and an M.B.A.
degree and an honorary Ph.D. of Humane Letters from Boston
University.
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DAVID W. DORMAN, Principal Occupation: Senior Advisor and
Partner, Warburg Pincus; Retired Chairman and Chief Executive
Officer, AT&T
Director since 2006 Age 52
Mr. Dorman is Senior Advisor and Partner of Warburg Pincus,
a global leader in private equity. Prior to holding that
position, he was Chairman and Chief Executive Officer of
AT&T, a provider of internet and transaction-based voice and
data services, from November 2002 until his retirement in
January 2006. Previously, Mr. Dorman was President of
AT&T from 2000 to November 2002, when he became Chairman and
Chief Executive Officer. He began his career in the
telecommunications industry at Sprint Corp. in 1981, and
ultimately served as President of Sprint Business Services.
Mr. Dorman serves on the boards of CVS Corporation,
YUM! Brands, Inc., Firethorn Mobile, LLC, the Georgia Tech
Foundation, and the Woodruff Arts Center in Atlanta. He was also
a director of Scientific Atlanta, Inc. until its acquisition by
Cisco Systems, Inc. was completed in February 2006.
Mr. Dorman received a B.S. degree in Industrial Management
from the Georgia Institute of Technology.
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JUDY C. LEWENT, Principal Occupation: Executive Vice
President & Chief Financial Officer, Merck &
Co., Inc.
Director since 1995 Age 57
Ms. Lewent has been Chief Financial Officer of
Merck & Co., Inc., a pharmaceutical company, since
1990, and in addition, Executive Vice President of Merck since
February 2001. She had additional responsibilities as President,
Human Health Asia from January 2003 until July 2005, when she
assumed strategic planning responsibilities for Merck.
Ms. Lewent is also a director of Dell Inc. She serves as a
trustee of the Rockefeller Family Trust and is a life member of
the Massachusetts Institute of Technology Corporation.
Ms. Lewent is a member of the American Academy of
Arts & Sciences. She received a B.S. degree from
Goucher College and an M.S. degree from the MIT Sloan School of
Management.
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PROXY STATEMENT
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THOMAS J. MEREDITH, Principal Occupation: General Partner and
Co-Founder, Meritage Capital, L.P. and Chief Executive Officer,
MFI Capital
Director since 2005 Age 56
Mr. Meredith is currently a general partner of Meritage
Capital, L.P., an investment management firm specializing in
multi-manager hedge funds that he co-founded. He is also chief
executive officer of MFI Capital. Previously, he was the
Managing Director of Dell Ventures and Senior Vice President,
Business Development and Strategy of Dell Inc., a computer
manufacturer, from 2000 until 2001, and was Chief Financial
Officer of Dell Inc. from 1992 until 2000. Mr. Meredith is
a director of Motive, Surgient, Inc. and VoxPath Networks. He is
also an adjunct professor at the McCombs School of Business at
the University of Texas, and serves on the advisory boards of
both the Wharton School at the University of Pennsylvania and
the LBJ School at the University of Texas. Mr. Meredith
received a B.S. degree in Political Science from St.
Francis University, a J.D. degree from Duquesne University and
an LL.M. degree in Taxation from Georgetown University.
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NICHOLAS NEGROPONTE, Principal Occupation: Founder and
Chairman of the One Laptop Per Child Non-Profit Association
Director since 1996 Age 63
Mr. Negroponte is the founder and chairman of the One Laptop
Per Child non-profit organization created to design, manufacture
and distribute laptops that are sufficiently inexpensive to
provide every child in the world access to knowledge and modern
forms of education. Mr. Negroponte is currently on leave
from the Massachusetts Institute of Technology where he was
co-founder and chairman emeritus of the MIT Media Laboratory, an
interdisciplinary, multi-million dollar research center focusing
on the study and experimentation of future forms of human and
machine communication. He founded MITs pioneering
Architecture Machine Group, a combination lab and think tank
responsible for many radically new approaches to the
human-computer interface. He joined the MIT faculty in 1966 and
became a full professor in 1980. Mr. Negroponte received a
B.A. and an M.A. in Architecture from Massachusetts Institute of
Technology.
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SAMUEL C. SCOTT III, Principal Occupation: Chairman,
President and Chief Executive Officer, Corn Products
International
Director since 1993 Age 62
Mr. Scott is Chairman, President and Chief Executive Officer
of Corn Products International, a corn refining business. He was
President of the Corn Refining Division of CPC International
from 1995 through 1997, when CPC International spun off Corn
Products International as a separate corporation. Mr. Scott
serves on the Board of Directors of Bank of New York,
Inroads/Chicago, Accion International and the Chicago Council on
Global Affairs. He also serves as a Trustee of The Conference
Board. Mr. Scott received a bachelors degree in
engineering and an M.B.A. from Fairleigh Dickinson University.
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RON SOMMER, Principal Occupation: Retired; Formerly Chairman
of the Board of Management, Deutsche Telekom AG
Director since 2004 Age 57
Mr. Sommer was Chairman of the Board of Management of
Deutsche Telekom AG, a telecommunication company, from May 1995
until he retired in July 2002. He is a director of Muenchener
Rueckversicherung, Celanese, AFK Sistema, Tata Consultancy
Services and Weather Industries. Mr. Sommer is also a
Member of the International Advisory Board of The Blackstone
Group. Mr. Sommer received a Ph.D. degree in Mathematics
from the University of Vienna, Austria.
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PROXY STATEMENT
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JAMES R. STENGEL, Principal Occupation: Global Marketing
Officer, Procter & Gamble Company
Director since 2005 Age 51
Mr. Stengel is currently the Global Marketing Officer of
Procter & Gamble Company, a consumer products company.
He joined Procter & Gamble in 1983, where he recently
served as Vice President-Global Baby Care Strategic Planning,
Marketing and New Business Development from May 2000 until
August 2001, when he became Global Marketing Officer.
Mr. Stengel served as chairman of the Association of
National Advertisers from 2004 through 2006. He is also on the
Seven Hills School Board of Trustees, the National Underground
Freedom Center Board of Trustees and the United Way Tocqueville
Society. Mr. Stengel received a B.A. degree from
Franklin & Marshall College and an M.B.A. from
Pennsylvania State University.
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DOUGLAS A. WARNER III, Principal Occupation: Retired;
Formerly Chairman of the Board, J.P. Morgan
Chase & Co.
Director since 2002 Age 60
Mr. Warner was Chairman of the Board and Co-Chairman of the
Executive Committee of J.P. Morgan Chase & Co., an
international commercial and investment banking firm, from
December 2000 until he retired in November 2001. From 1995 to
2000, he was Chairman of the Board, President and Chief
Executive Officer of J.P. Morgan & Co. He is also
a director of Anheuser-Busch Companies, Inc. and General
Electric Company. He is on the Board of Counselors of the
Bechtel Group Inc. and is a member of The Business Council. He
is chairman of the Board of Managers and the Board of Overseers
of Memorial Sloan-Kettering Cancer Center. Mr. Warner is a
trustee of the Pierpont Morgan Library and a member of the Yale
Investment Committee. Mr. Warner received a B.A. degree
from Yale University.
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DR. JOHN A. WHITE, Principal Occupation: Chancellor,
University of Arkansas
Director since 1995 Age 67
Dr. White is currently Chancellor of the University of
Arkansas. Dr. White served as Dean of Engineering at
Georgia Institute of Technology from 1991 to early 1997, having
been a member of the faculty since 1975. He is also a director
of J.B. Hunt Transport Services, Inc. and Logility, Inc.
Dr. White received a B.S.I.E. from the University of
Arkansas, an M.S.I.E. from Virginia Polytechnic Institute and
State University and a Ph.D. from The Ohio State University.
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MILES D. WHITE, Principal Occupation: Chairman of the Board
and Chief Executive Officer, Abbott Laboratories
Director since 2005 Age 51
Mr. White has been Chairman of the Board and Chief Executive
Officer of Abbott Laboratories, a pharmaceuticals and
biotechnology company, since 1999. Mr. White joined Abbott
in 1984. He received a bachelors degree in mechanical
engineering and an M.B.A. degree from Stanford University. He is
a director of Tribune Company and is chairman of the board of
the Federal Reserve Bank of Chicago. He also serves on the board
of trustees of The Culver Educational Foundation, The Field
Museum in Chicago and Northwestern University.
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RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF THE ELEVEN
NOMINEES NAMED HEREIN AS DIRECTORS. UNLESS OTHERWISE INDICATED
ON YOUR PROXY, THE SHARES WILL BE VOTED FOR THE
ELECTION OF SUCH ELEVEN NOMINEES AS DIRECTORS.
7
PROXY STATEMENT
What if a Nominee is Unable to Serve as Director?
If any of the nominees named above is not available to serve as
a director at the time of the 2007 Annual Meeting (an event
which the Board does not now anticipate), the proxies will be
voted for the election as director of such other person or
persons as the Board may designate, unless the Board, in its
discretion, reduces the number of directors.
CORPORATE GOVERNANCE MATTERS
What Are the Boards Corporate Governance
Principles?
The Board has long adhered 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. In order to do that effectively, the Board believes it
should be comprised of individuals with appropriate skills and
experiences to contribute effectively to this dynamic process.
The Board is currently highly diversified; it is comprised of
active and former CEOs and CFOs of major corporations and
individuals with experience in high-tech fields, government and
academia. The Board believes that it must continue to renew
itself to ensure that its members understand the industries and
the markets in which the Company operates. The Board also
believes that it must remain well-informed about the positive
and negative issues, problems and challenges facing Motorola and
its industries and markets so that the members can exercise
their fiduciary responsibilities to stockholders.
Which Directors Are Independent?
On February 22, 2007, the Board made the determination,
based on the recommendation of the Governance and Nominating
Committee and in accordance with the Motorola, Inc. Director
Independence Guidelines, that Mr. Dorman, Mr. Fuller,
Ms. Lewent, Mr. Walter Massey, Mr. Meredith,
Mr. Negroponte, Ms. Nooyi, Mr. Scott,
Mr. Sommer, Mr. Stengel, Mr. Warner,
Mr. J. White and Mr. M. White were independent
during the periods in 2006 and 2007 that they were members of
the Board. Mr. Zander does not qualify as an independent
director since he is an employee of the Company.
How Was Independence Determined?
The Motorola, Inc. Director Independence Guidelines include the
NYSE independence standards and categorical standards the Board
uses in determining if a relationship that a Board member has
with the Company is material. The categorical standards adopted
by the Board are as follows:
Contributions or payments (including the provision
of goods or services) from Motorola to a charitable organization
(including a foundation), a university, or other not-for-profit
organization, of which a director or an immediate family member
of a director (defined to include a directors spouse,
parents, children, siblings, mothers and
fathers-in-law, sons
and daughters-in-law,
brothers and
sisters-in-law and
anyone (other than domestic employees) who shares the
directors home) is an officer, director, trustee or
employee, will not impair independence unless the contribution
or payment (excluding Motorola matches of charitable
contributions made by employees or directors under
Motorolas or the Motorola Foundations matching gift
programs):
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(i) is to an entity of which the director or the
directors spouse currently is an officer, director or
trustee, and such person held such position at the time of the
contribution, |
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(ii) was made within the previous three years, and |
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(iii) was in an amount which, in the entitys last
fiscal year prior to the year of the contribution or payment,
exceeded the greater of $300,000 or 5% of such entitys
consolidated gross revenues (or equivalent measure). |
Indebtedness of Motorola to a bank or similar entity
of which a director or a directors immediate family member
is a director, officer, employee or 10% Owner will not impair
independence unless the following are applicable:
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(i) the director or the directors spouse is an
executive officer or an owner who directly or indirectly has a
10% or greater equity or voting interest in an entity (a
10% Owner) of such entity and he or she held that
position at any time during the previous twelve months, and |
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(ii) the total amount of Motorolas indebtedness
during the previous twelve months is more than 5% of the total
consolidated assets of such entity in its last fiscal year. |
Other business relationships between a director or a
directors immediate family member,
8
PROXY STATEMENT
such as consulting, legal or financial advisory services
provided to Motorola, will not impair independence unless the
following are applicable:
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(i) the director or the directors spouse is a
partner, officer or 10% Owner of the company or firm providing
such services, and he or she held such position at any time
during the previous twelve months, and |
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(ii) the services that were provided during the previous
twelve months were in an amount which, in the companys or
firms last fiscal year, exceeded the greater of
$1 million or 2% of such companys or firms
consolidated gross revenues. |
This categorical standard does not include business
relationships with Motorolas independent registered public
accounting firm because those relationships are covered by the
NYSE independence standards.
Motorolas ownership of voting stock of a
company of which the director or the directors immediate
family member is a director, officer, employee or 10% Owner will
not impair independence unless the following are applicable:
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(i) the director or the directors spouse is an
executive officer of that company, and |
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(ii) Motorola is currently a 10% Owner of that company. |
The ownership of Motorola Common Stock by a director or a
directors immediate family member will not be considered
to be a material relationship which would impair a
directors independence.
When applying the NYSE independence standards and the
categorical standards set forth above, Motorola
includes Motorola, Inc. and any of its subsidiaries, and the
Motorola Foundation. A complete copy of the Motorola, Inc.
Director Independence Guidelines is available on the
Companys website at www.motorola.com/investor.
What is Motorolas Relationship with Entities Associated
with Its Independent Directors?
As previously disclosed, Motorola and the Motorola Foundation
have had various commercial and charitable relationships with
the Massachusetts Institute of Technology
(MIT) and the MIT Media Laboratory. Motorola
and the Motorola Foundation made payments to MIT of
approximately $4.4 million in 2006, $4.7 million in
2005, and $5.5 million in 2004. Nicholas Negroponte is a
tenured professor of MIT on leave, and formerly the Chairman of
the MIT Media Laboratory, an academic and research laboratory at
MIT. Judy Lewent is a life member of the MIT Corporation and
serves until June 30, 2007 on its Executive Committee,
which is responsible for general administration and
superintendence of the MIT Corporation.
The Motorola, Inc. Director Independence Guidelines state that a
directors independence could be impaired if a payment to a
non-profit organization, including universities, was in an
amount which, in the recipient organizations last fiscal
year, exceeded the greater of $300,000 or 5% of the recipient
organizations consolidated gross revenues (or equivalent
measure). For the fiscal year ended June 30, 2006, MIT had
total operating revenue (the closest equivalent to consolidated
gross revenue) of $2.14 billion, and 5% of that amount is
$107 million. Accordingly, Motorolas and the Motorola
Foundations combined payments and contributions to MIT are
significantly less than the $107 million impairment
threshold. Our payments in 2005 and 2004 were also significantly
less than the 5% threshold. MIT, one of the worlds leading
research universities in science and technology, has
associations with many of the top corporations around the world
which, like Motorola, seek the expertise of MIT on a wide
variety of matters. Motorolas relationship with MIT
advances the Companys business goals. Neither
Mr. Negroponte nor Ms. Lewent direct the relationship
nor do they vote as a member of the Motorola Board of Directors
to approve MIT relationships.
All independent directors, other than H. Laurance Fuller
and Ron Sommer, had relationships with entities that were
reviewed by the Board under the NYSEs independence
standard covering payments for properties or services exceeding
the greater of $1 million or 2% of consolidated gross
revenues and/or the Boards categorical standard described
above covering contributions or payments to charitable or
similar not-for-profit
organizations. In each case, the payments or contributions were
significantly less than the NYSE independence standard or the
categorical standard and were determined to be immaterial by the
Board.
Are the Members of the Audit and Legal, Compensation and
Leadership and Governance and Nominating Committees
Independent?
Yes. The Board has determined that all of the members of the
Audit and Legal Committee, the Compensation and Leadership
Committee and the Governance and Nominating Committee are
independent within the meaning of the Motorola, Inc. Director
Independence Guidelines and the NYSE listing standards for
independence.
9
PROXY STATEMENT
Where Can I Receive More Information About Motorolas
Corporate Governance Practices?
Motorola maintains a corporate governance page on its website at
www.motorola.com/investor that includes information about
its corporate governance practices. The following documents are
currently included on the website:
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The Motorola, Inc. Board Governance Guidelines, the current
version of which the Board adopted on August 2, 2006 |
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The Motorola, Inc. Director Independence Guidelines, the current
version of which the Board adopted on November 15, 2005 |
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The Principles of Conduct for Members of the Motorola, Inc.
Board of Directors, the current version of which the Board
adopted on February 12, 2007 |
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The Motorola, Inc. Code of Business Conduct, which applies to
all employees |
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The charters of the Audit and Legal Committee, Compensation and
Leadership Committee and Governance and Nominating Committee,
the current versions of which the Board adopted on
February 12, 2007 |
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The Motorola, Inc. Restated Certificate of Incorporation, as
amended through May 3, 2000 |
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The Motorola, Inc. Amended and Restated Bylaws, the current
version of which the Board adopted on February 23, 2006 |
The Company intends to disclose amendments to the above
documents or waivers applicable to its directors, chief
executive officer, chief financial officer and corporate
controller from certain provisions of its ethical policies and
standards for directors and its employees, on the Motorola
website. The Company will also provide you a printed copy of
these documents if you contact Investor Relations, in writing at
Motorola, Inc., 1303 E. Algonquin Road, Schaumburg, IL
60196; or by phone at
1-800-262-8509; or by
email at investors@motorola.com.
BOARD OF DIRECTORS MATTERS
How Often Did the Board Meet in 2006?
The Board of Directors held nine meetings during 2006. Overall
attendance at Board and committee meetings was 91%. All
incumbent directors attended 75% or more of the combined total
meetings of the Board and the committees on which they served
during 2006, except Ms. Nooyi, who is not standing for
re-election and who attended 65% of the meetings.
How Many Directors will Comprise the Board?
The Board of Directors currently is comprised of
13 directors. Following the Annual Meeting, the Board will
consist of 11 directors. Mr. Fuller and Ms. Nooyi
are not standing for re-election. In the interim between Annual
Meetings, the Board has the authority under the Companys
bylaws to increase or decrease the size of the Board and to fill
vacancies.
How Many Executive Sessions of the Board Were Held in
2006?
Independent directors of the Company meet regularly in executive
session without management as required by the Motorola, Inc.
Board Governance Guidelines. Generally, executive sessions are
held in conjunction with regularly-scheduled meetings of the
Board of Directors. In 2006, the non-employee members of the
Board met in executive session four times.
Who Serves as the Presiding Director?
The Board re-appointed Mr. Scott its lead director on
May 2, 2006. As the lead director, Mr. Scott chairs
meetings of the independent directors and serves as liaison with
the chairman with respect to matters considered by the
independent directors. Mr. Scott has served as lead
director since May 2005.
Will the Directors Attend the Annual Meeting?
Board members are expected to attend the Annual Meeting of
stockholders as provided in the Motorola, Inc. Board Governance
Guidelines. All of our directors that stood for election at the
2006 Annual Meeting attended that meeting, except
Ms. Nooyi, who is not standing for re-election in 2007.
10
PROXY STATEMENT
What Are the Committees of the Board?
To assist it in carrying out its duties, the Board has delegated
certain authority to several committees. The Board currently has
the following committees: (1) Audit and Legal,
(2) Compensation and Leadership, (3) Governance and
Nominating, (4) Executive, and (5) Finance. Committee
membership as of December 31, 2006 and the number of
meetings of each committee during 2006 are described below:
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Audit & |
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Compensation & |
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Governance & |
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Legal |
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Leadership |
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Nominating |
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Executive |
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Finance |
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Non-Employee Directors
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David W. Dorman
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X |
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H. Laurance
Fuller(1)
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Chair |
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X |
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Judy C. Lewent
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X |
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X |
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Chair |
Thomas J. Meredith
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X |
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X |
Nicholas Negroponte
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X |
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Indra K.
Nooyi(1)
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X |
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Samuel C. Scott III
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Chair |
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X |
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Ron Sommer
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X |
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James R. Stengel
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X |
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Douglas A. Warner III
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Chair |
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X |
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X |
John A. White
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X |
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Miles D. White
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X |
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Employee Director
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Edward J. Zander
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Chair |
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Number of Meetings in 2006
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11 |
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5 |
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5 |
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None |
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3 |
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(1) |
Mr. Fuller and Ms. Nooyi are not standing for
re-election to the Board at the May 7, 2007 Annual Meeting. |
In early 2006, the Board terminated the existence of the
Technology & Design Committee which held one meeting in
2006. Mr. Negroponte, Mr. Sommer, Mr. Stengel and
Mr. J. White were members of the Committee prior to its
termination.
Where Can I Locate the Current Committee Charters?
Current versions of the Audit and Legal Committee charter,
Compensation and Leadership Committee charter, and the
Governance and Nominating Committee charter, each as amended on
February 12, 2007, are available on our website at
www.motorola.com/investor.
What Are the Functions of the Audit and Legal Committee?
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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 |
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Hire the independent registered public accounting firm |
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Monitor the qualifications, independence and performance of the
Companys independent registered public accounting firm and
the performance of the internal auditors |
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Maintain, through regularly scheduled meetings, a line of
communication between the Board and the Companys financial
management, internal auditors and independent registered public
accounting firm |
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Oversee compliance with the Companys policies for
conducting business, including ethical business standards |
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Prepare the report of the Committee included in this proxy
statement |
What Are the Functions of the Compensation and Leadership
Committee?
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Assist the Board in overseeing the management of the
Companys human resources including: |
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compensation and benefits programs |
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CEO performance and compensation |
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executive development and succession and diversity efforts |
11
PROXY STATEMENT
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Oversee the evaluation of the Companys senior management |
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Review and discuss the Compensation Discussion and Analysis
(CD&A) with management and make a recommendation
to the Board on the inclusion of the CD&A in this proxy
statement |
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Prepare the report of the Committee included in this proxy
statement |
What Are the Functions of the Governance and Nominating
Committee?
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Identify individuals qualified to become board members,
consistent with the criteria approved by the Board |
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Recommend director nominees and individuals to fill vacant
positions |
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Assist the Board in interpreting the Companys Board
Governance Guidelines, the Boards Principles of Conduct
and any other similar governance documents adopted by the Board |
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Oversee the evaluation of the Board and its committees |
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Generally oversee the governance and compensation of the Board |
What is the Decision-Making Process to Determine Executive
Compensation?
The Compensation and Leadership Committee has been delegated the
responsibility by the Board of Directors (the Board)
to oversee the programs under which compensation is paid or
awarded to Motorolas executives and evaluate the
performance of Motorolas senior management. The specific
functions of the Compensation and Leadership Committee are
described in this proxy statement under What Are the
Functions of the Compensation and Leadership Committee?
and in the Compensation and Leadership Committees charter,
which the Compensation and Leadership Committee and the Board
periodically review and revise as necessary.
The Global Rewards department in Motorolas Human Resources
organization supports the Compensation and Leadership Committee
in its work and, in some cases, acts pursuant to delegated
authority from the Compensation and Leadership Committee to
fulfill various functions in administering Motorolas
compensation programs.
In carrying out its duties, the Compensation and Leadership
Committee has direct access to outside advisors, independent
compensation consultants and others to assist them. During 2005
and 2007, the Compensation and Leadership Committee directly
engaged an outside compensation consulting firm to assist them
in their review of the compensation for Motorolas
executive officers.
For more information on the decisions made by the Compensation
and Leadership Committee, see the Compensation Discussion
and Analysis.
What is the Decision-Making Process to Determine Director
Compensation?
The Governance and Nominating Committee has been delegated the
responsibility by the Board to recommend to the Board the
compensation for non-employee directors, which is to be
consistent with market practices of other similarly situated
companies and to take 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
recommendation. Although, the charter of the Governance and
Nominating Committee authorizes the Committee to delegate
director compensation matters to management based on its
reasonable judgment, the Committee has chosen not to delegate
matters related to director compensation. Management has no role
in recommending the amount or form of director compensation.
What is the Role of Independent Compensation Consultants in
Executive and Director Compensation Determinations?
In accordance with the Compensation and Leadership
Committees charter, the committee has the sole authority,
to the extent deemed necessary and appropriate, to retain and
terminate any compensation consultants, outside counsel or other
advisors, including having the sole authority to approve the
firms or advisors fees and other retention terms.
In accordance with this authority, in 2005 and 2007 the
Compensation and Leadership Committee retained Mercer Human
Resources Consulting (Mercer) as an external
consultant to provide insight and advice on matters regarding
trends in executive compensation, relative executive pay and
benefits practices, relative assessment of pay of Motorola
executives to performance, and other topics as the Compensation
and Leadership Committee deemed appropriate. See
Independent Consultant Review of Executive
Compensation in the Compensation Discussion and
Analysis for further details on the compensation-related
elements the
12
PROXY STATEMENT
Compensation and Leadership Committee requested be reviewed.
Mercers independent review of Motorolas senior
leadership team compensation found that Motorolas current
executive compensation programs are fundamentally competitive
and sound. The Compensation and Leadership Committee intends to
engage an external independent consultant to complete an
exhaustive evaluation of the Companys executive rewards
program on a periodic basis, generally every two or three years.
The Compensation and Leadership Committee intends to engage an
external independent consultant to review the specific
compensation of the CEO and all direct reports to the CEO
annually. The Compensation and Leadership Committee agreed with
the Mercer studys conclusions that no substantive
revisions to the compensation programs are required.
During 2005, the Compensation and Leadership Committee also
engaged Mercer to assist the Committee in its review of the
compensation for Motorolas non-employee directors, because
of Mercers recognized expertise in this area. Mercer was
asked to prepare a study of current trends in non-employee
director compensation, including benchmarking peer practices and
general industry best practices, and to review the design of
Motorolas director compensation program in view of such
information. Mercer reviewed its findings with the Compensation
and Leadership Committee. Based on the Mercer study and other
factors, such as a recognition of the increased time demands
placed on the Companys outside directors and a desire to
align the interests of the non-employee directors with
stockholders, the Compensation and Leadership Committee
recommended to the Governance and Nominating Committee that the
non-employee directors compensation be changed, including
an increase in Board and Committee fees. The Governance and
Nominating Committee, after reviewing and discussing these
changes, recommended the changes to the Board, which adopted the
compensation program currently in place for non-employee
directors as described under How Are the Directors
Compensated?
What Role, if any, do Executive Officers Play in Determining
or Recommending Executive and Director Compensation?
Motorolas senior leadership team, comprised of the CEO and
certain of the executives who directly report to the CEO,
provide recommendations regarding the design of the
Companys compensation program, which are provided to the
Compensation and Leadership Committee. Upon Compensation and
Leadership Committee approval, the senior leadership team is
ultimately accountable for executing against the objectives of
the approved compensation program.
Each member of Motorolas senior leadership team is
ultimately responsible for approving all compensation actions
for their respective organizations. When these compensation
actions involve other Motorola executives, the involved senior
leadership team member is accountable for ensuring the adherence
to all established governance procedures.
As CEO, Mr. Zander is responsible for bringing recommended
compensation actions involving his direct reports to the
Compensation and Leadership Committee for approval.
Mr. Zander cannot unilaterally implement compensation
changes for any of his direct reports. The Compensation and
Leadership Committee must also approve any and all compensation
for the direct reports to the CEO. During Compensation and
Leadership Committee meetings at which compensation actions
involving Mr. Zanders direct reports are discussed,
Mr. Zander takes an active part in the discussions.
Together with the Executive Vice President, Human Resources, the
Global Rewards department in Motorolas Human Resources
organization prepares recommendations regarding CEO compensation
and brings those recommendations to the Compensation and
Leadership Committee. During Compensation and Leadership
Committee meetings at which compensation actions involving
Mr. Zander are discussed, Mr. Zander does not
participate in the discussions. The independent external
compensation consultant, Mercer, is available at such meetings.
The Compensation and Leadership Committee directly engages an
outside consulting firm to assist them in its review of the
compensation for Motorolas senior leadership team.
The Compensation and Leadership Committee is responsible for
bringing recommended compensation actions involving the CEO to
the Board for its concurrence. The Compensation and Leadership
Committee cannot unilaterally approve compensation changes for
the CEO.
As stated above, management does not recommend or determine
director compensation.
What Are the Functions of the Executive Committee?
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Act for the Board between meetings on matters already approved
in principle by the Board |
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Exercise the authority of the Board on specific matters assigned
by the Board from time to time |
13
PROXY STATEMENT
What Are the Functions of the Finance Committee?
Beginning in mid-2006, the Finance Committee meets on an as
needed and ad hoc basis. The Committees functions
include:
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Review the Companys overall financial posture, asset
utilization and capital structure |
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Review the need for equity and/or debt financing and specific
outside financing proposals |
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Monitor the performance and investments of employee retirement
and related funds |
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Review the Companys dividend payment plans and practices |
How Are the Directors Compensated?
During 2006, the annual retainer fee paid to each non-employee
director was $100,000. In addition, (1) the chairs of the
Audit and Legal and Compensation and Leadership Committees each
received an additional annual fee of $15,000, (2) the
chairs of the other committees each received an additional
annual fee of $10,000, and (3) the members of the Audit and
Legal Committee, other than the chair, each received an
additional annual fee of $5,000. 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.
A director may elect to receive a portion of the above retainer
and other fees in the form of deferred stock units. The election
to receive deferred stock units must be made in 5% increments
(e.g., 65% cash/35% deferred stock units). The deferred stock
units will be paid to the director in the form of shares of
Common Stock upon termination of service from the Motorola Board
of Directors. Dividend equivalents will be reinvested in
additional deferred stock units subject to the same terms.
Beginning in 2006, an annual grant of deferred stock units in
the second quarter of the fiscal year replaced the annual stock
option grant; therefore, directors are no longer granted stock
options. The deferred stock units are paid to the director in
shares of Common Stock upon termination of service from the
Motorola Board of Directors. Dividend equivalents will be
reinvested in additional deferred stock units subject to the
same terms. On May 2, 2006, each non-employee director
received a deferred stock unit award of 5,648 shares of
Common Stock. The number of deferred stock units was determined
by dividing $120,000 by the fair market value of a share of
Common Stock on the date of grant (rounded up to the next whole
number) based on the closing price of the last trading day
before grant.
As of January 1,
2006, non-employee directors are no longer eligible to
participate in the Motorola Management Deferred Compensation
Plan. Motorola does not currently have a non-equity incentive
plan or pension plan for directors.
Non-employee directors do not receive any additional fees for
attendance at meetings of the Board or its committees or for
additional work done on behalf of the Board or a committee.
Mr. Zander, who is also an employee of Motorola, receives
no additional compensation for serving on the Board or its
committees.
The following table further summarizes compensation paid to the
non-employee directors during 2006.
Director Compensation for 2006
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Change in | |
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Pension | |
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Value and | |
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Fees | |
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Nonqualified | |
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Earned or | |
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Deferred | |
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Paid in | |
|
Stock Awards($) | |
|
Option | |
|
Compensation | |
|
All Other | |
|
|
Name |
|
Cash($)(1) | |
|
(2)(3)(4) | |
|
Awards($)(5) | |
|
Earnings($)(6) | |
|
Compensation($)(7) | |
|
Total($) | |
(a) |
|
(b) | |
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(c) | |
|
(d) | |
|
(f) | |
|
(g) | |
|
(h) | |
| |
David W.
Dorman(8)
|
|
|
$0 |
|
|
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$52,500 |
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
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$52,500 |
|
H. Laurance Fuller
|
|
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0 |
|
|
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235,000 |
|
|
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28,300 |
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|
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0 |
|
|
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0 |
|
|
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263,300 |
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Judy C. Lewent
|
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112,500 |
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|
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120,000 |
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|
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28,300 |
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|
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0 |
|
|
|
0 |
|
|
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260,800 |
|
Walter E.
Massey(9)
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|
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55,000 |
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|
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0 |
|
|
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28,300 |
|
|
|
406 |
|
|
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6,578 |
|
|
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90,284 |
|
Thomas J. Meredith
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105,000 |
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|
|
120,000 |
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|
|
28,300 |
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|
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0 |
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|
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2,844 |
|
|
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256,144 |
|
Nicholas Negroponte
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|
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100,000 |
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|
|
120,000 |
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|
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28,300 |
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|
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0 |
|
|
|
0 |
|
|
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248,300 |
|
Indra K. Nooyi
|
|
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0 |
|
|
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220,000 |
|
|
|
28,300 |
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|
|
0 |
|
|
|
0 |
|
|
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248,300 |
|
Samuel C. Scott III
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|
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115,000 |
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|
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120,000 |
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|
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28,300 |
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|
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0 |
|
|
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5,153 |
|
|
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268,453 |
|
Ron Sommer
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|
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100,000 |
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|
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120,000 |
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|
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28,300 |
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|
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0 |
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0 |
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|
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248,300 |
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James R. Stengel
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100,000 |
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|
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120,000 |
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|
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28,300 |
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0 |
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0 |
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|
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248,300 |
|
Douglas A. Warner III
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110,000 |
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|
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120,000 |
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|
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28,300 |
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|
|
0 |
|
|
|
0 |
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|
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258,300 |
|
John A. White
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|
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0 |
|
|
|
225,000 |
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|
|
28,300 |
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|
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3,942 |
|
|
|
780 |
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|
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258,022 |
|
Miles D. White
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|
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0 |
|
|
|
225,000 |
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|
|
0 |
|
|
|
0 |
|
|
|
0 |
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|
|
225,000 |
|
|
14
PROXY STATEMENT
|
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(1) |
As described above, directors may elect to receive a portion of
their retainer or other fees in the form of deferred stock
units. The amounts in column (b) are the portion of the annual
retainer and any other fees the non-employee director has
elected to receive in cash. |
|
(2) |
As described above, certain directors have elected to receive
deferred stock units for a portion of their retainer or other
fees. In addition, all directors received an annual grant of
deferred stock units with a grant date value of $120,000 on
May 2, 2006, (except for Mr. Dorman who was elected
effective July 10, 2006). All amounts in column (c)
are the amounts recognized for financial reporting purposes
calculated in accordance with FAS 123R, accounting for
dividend equivalents. These amounts are the same as the
aggregate grant date fair value of deferred stock units received
by each director in 2006. The number of deferred stock units
received and the value of Motorola Common Stock on each date of
grant are as follows: |
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May 2 - $21.25 |
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March 31 - $22.96 |
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June 30 - $19.99 |
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September 29 - $24.89 |
|
December 28 - $20.55 |
|
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Annual Grant |
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Deferred |
|
of Deferred |
|
Deferred |
|
Deferred |
|
Deferred |
Director |
|
Stock Units |
|
Stock Units |
|
Stock Units |
|
Stock Units |
|
Stock Units |
|
Mr. Dorman
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1,055 |
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1,277 |
|
Mr. Fuller
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1,252 |
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5,648 |
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1,438 |
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1,155 |
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1,399 |
|
Ms. Lewent
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5,648 |
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Mr. Massey
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Mr. Meredith
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5,648 |
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Mr. Negroponte
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5,648 |
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Ms. Nooyi
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1,089 |
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5,648 |
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|
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1,251 |
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|
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1,004 |
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|
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1,217 |
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Mr. Scott
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5,648 |
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Mr. Sommer
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5,648 |
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Mr. Stengel
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5,648 |
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Mr. Warner
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5,648 |
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|
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Mr. J. White
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|
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1,143 |
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|
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5,648 |
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|
|
1,313 |
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|
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1,055 |
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|
|
1,277 |
|
Mr. M. White
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|
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1,143 |
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|
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5,648 |
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|
|
1,313 |
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|
|
1,055 |
|
|
|
1,277 |
|
|
|
|
(3) |
As of December 31, 2006, the aggregate number of stock and
option awards outstanding for the non-employee directors were as
follows: |
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|
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|
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|
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|
|
|
|
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|
|
Deferred |
|
Restricted |
|
Common |
Director |
|
Options |
|
Stock Units |
|
Stock |
|
Stock |
|
Mr. Dorman
|
|
|
0 |
|
|
|
2,332 |
|
|
|
0 |
|
|
|
0 |
|
Mr. Fuller
|
|
|
123,966 |
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|
|
24,010 |
|
|
|
936 |
|
|
|
2,215 |
|
Ms. Lewent
|
|
|
123,966 |
|
|
|
5,674 |
|
|
|
264 |
|
|
|
47,340 |
|
Mr. Massey*
|
|
|
65,292 |
|
|
|
5,989 |
|
|
|
10,294 |
|
|
|
10,407 |
|
Mr. Meredith
|
|
|
15,000 |
|
|
|
5,674 |
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|
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0 |
|
|
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4,223 |
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Mr. Negroponte
|
|
|
123,966 |
|
|
|
5,674 |
|
|
|
0 |
|
|
|
47,863 |
|
Ms. Nooyi
|
|
|
48,528 |
|
|
|
15,790 |
|
|
|
2,995 |
|
|
|
1,584 |
|
Mr. Scott
|
|
|
115,584 |
|
|
|
12,216 |
|
|
|
12,177 |
|
|
|
21,530 |
|
Mr. Sommer
|
|
|
15,000 |
|
|
|
5,674 |
|
|
|
0 |
|
|
|
3,043 |
|
Mr. Stengel
|
|
|
15,000 |
|
|
|
5,674 |
|
|
|
0 |
|
|
|
7,305 |
|
Mr. Warner
|
|
|
65,292 |
|
|
|
11,405 |
|
|
|
4,245 |
|
|
|
20,153 |
|
Mr. J. White
|
|
|
56,910 |
|
|
|
10,470 |
|
|
|
540 |
|
|
|
43,727 |
|
Mr. M. White
|
|
|
0 |
|
|
|
11,305 |
|
|
|
0 |
|
|
|
2,000 |
|
|
|
|
* |
Mr. Massey did not stand for re-election at the May 1,
2006 annual meeting. His holdings above are as of May 1,
2006, his last day on the Board. |
|
(4) |
Certain de minimis amounts (less than $50) were paid in cash in
lieu of fractional shares. |
|
(5) |
The amounts in column (d) reflect the dollar amount recognized
for financial statement reporting purposes for the fiscal year
ended December 31, 2006 in accordance with FAS 123R
for a May 3, 2005 award made pursuant to the Motorola
Omnibus Incentive Plan of 2002 with an aggregate grant date fair
value of $84,900. Assumptions used in the calculation of these
amounts are included in Note 8, Share-Based
Compensation and Other Incentive Plans in the
Companys
Form 10-K for the
fiscal year ended December 31, 2006. However, as required,
the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. |
|
(6) |
The amounts shown in this column are earnings under the Motorola
Management Deferred Compensation Plan that were in excess of the
threshold for above-market earnings. Pursuant to SEC
rules, all earnings in 2006 in excess of 5.74% have been deemed
above market earnings. As of January 1, 2006,
non-employee directors are no longer eligible to participate in
the plan. |
15
PROXY STATEMENT
|
|
(7) |
The aggregate amount of perquisite and personal benefits,
securities, or property given to each named director valued on
the basis of aggregate incremented cost to the Company
(Company perquisite costs) was less than $10,000.
The amounts shown are tax gross-ups for income imputed to the
director for travel expenses for spouses traveling to Board
meetings and the annual meeting. |
|
(8) |
Mr. Dorman was elected to the Board effective July 10,
2006. As such, he did not receive a DSU award in May 2006 nor
did he receive a retainer fee for the first and second quarters
of 2006. |
|
(9) |
Mr. Massey did not stand for re-election at the May 1,
2006 annual meeting. As such he did not receive a DSU award in
May 2006 and he only received a retainer fee for the first and
second quarters of 2006. |
Director Retirement Plan and Insurance Coverage
In 1996, the Board terminated its retirement plan. Non-employee
directors elected to the Board after the termination date are
not entitled to benefits under this plan, and non-employee
directors already participating in the plan accrued no
additional benefits for services after May 31, 1996. In
1998, some directors 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 until they are no longer members of
the Board because either: (i) they did not stand for re-
election or were not re-elected, or (ii) their disability
or death. Mr. Fuller, Ms. Lewent, Mr. Negroponte,
Mr. Scott and Mr. J. White converted their accrued
benefits in the retirement plan in 1998 and, therefore, there
are no current directors entitled to receive payment of such
benefits in accordance with the applicable payment terms of the
retirement plan.
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, 2006 was $2,995.
Related Person Transaction Policy and Procedures
The Company has established written policies and procedures
(Related Person Transaction Policy or the
Policy) to assist it in reviewing transactions in
excess of $120,000 (Transactions) involving Motorola
and its subsidiaries (Company) and Related Persons
(as defined below). This Policy supplements the Companys
other conflict of interest policies set forth in the Principles
of Conduct for Members of the Motorola, Inc. Board of Directors
and the Motorola Code of Business Conduct for employees and its
other internal procedures. A summary description of the Related
Person Transaction Policy is set forth below.
For purposes of the Related Person Transaction Policy, a Related
Person includes the Companys directors, director nominees
and executive officers since the beginning of the Companys
last fiscal year, beneficial owners of 5% or more of any class
of the Companys voting securities (5% Holder)
and members of their respective Immediate Family (as defined in
the Policy).
The Policy provides that any Transaction since the beginning of
the last fiscal year is to be promptly reported to the
Companys General Counsel. The General Counsel will assist
with gathering important information about the Transaction and
present the information to the applicable Board committee
responsible for reviewing the Transaction. The appropriate Board
committee will determine if the Transaction is a Related Person
Transaction and approve, ratify or reject the Related Person
Transaction. In approving, ratifying or rejecting a Related
Person Transaction, the applicable committee will consider such
information as it deems important to conclude if the transaction
is fair to the Company. The Governance and Nominating Committee
will make all determinations regarding transactions involving a
director or director nominee. The Audit and Legal Committee will
make all determinations involving an executive officer or 5%
Holder.
The Company had no Related Person Transactions in 2006.
What is the Process for Identifying and Evaluating Director
Candidates?
As stated in the Motorola, Inc. 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; diversity;
age; skills, and independence. It also considers ethical
standards and integrity.
The Governance and Nominating Committee will consider nominees
recommended by Motorola stockholders provided that the
recommendation contains sufficient information for the
Governance and Nominating Committee to assess the suitability
16
PROXY STATEMENT
of the candidate, including the candidates qualifications.
Candidates recommended by stockholders that comply with these
procedures will receive the same consideration that candidates
recommended by the Committee and management receive.
The Committee considers recommendations from many sources,
including members of the Board, management and search firms.
From time-to-time,
Motorola hires global search firms to help identify and
facilitate the screening and interview process of director
nominees. The search firm screens candidates based on the
Boards criteria, performs reference checks, prepares a
biography for each candidate for the Committees review and
helps set up interviews. The Committee and the Chairman of the
Board conduct interviews with candidates who meet the
Boards criteria. During 2006, the Governance and
Nominating Committee conducted a search and identified
Mr. David W. Dorman as a director candidate. The Committee
has full discretion in considering its nominations to the Board.
PROPOSAL 2
AMENDMENT TO THE MOTOROLA EMPLOYEE STOCK PURCHASE PLAN OF
1999
The Board of Directors believes it is in the best interests of
the Company to encourage stock ownership by employees of the
Company. Accordingly, the Motorola Employee Stock Purchase Plan
of 1999 (the MOTshare Plan or the Plan)
was initially adopted in 1999 and authorized the sale to
employees of up to an aggregate of 54.3 million shares of
Common Stock issued under the Plan. In 2002, both the Board of
Directors and the stockholders approved amending the Plan to
increase the aggregate number of shares of Common Stock
available for sale to employees by 50 million shares.
The Board of Directors has approved, subject to stockholder
approval, amending the Plan to further increase the aggregate
number of shares of Common Stock available for sale to employees
by an additional 50 million shares.
As of March 1, 2007, the Company had issued and employees
had purchased approximately 94.7 million shares of the
104.3 million total shares authorized to date under the
Plan. The Company estimates that an additional 4.5 million
shares will be issued and purchased for the six-month purchase
period ending March 30, 2007. Accordingly, there is the
possibility that, without this amendment, there would be
insufficient authorized shares for all issuances before the 2008
Annual Meeting. The Company believes that the additional
authorized shares will be sufficient for purchases under the
Plan for approximately 6.5 more years.
A summary of the principal features of the Plan as
administered in the U.S. is provided below, but is
qualified in its entirety by reference to the full text of the
Plan that was filed electronically with this proxy statement
with the Securities and Exchange Commission. Such text is not
included in the printed version of this proxy statement. A copy
of the Plan is available from the Companys Secretary at
the address on the cover of this document.
Administration and Eligibility
The Plan is administered by the Compensation and Leadership
Committee of the Board of Directors (the Committee).
The Committee has the authority to make rules and regulations
governing the administration of the Plan. The Committee may
delegate the administration of the Plan in accordance with the
terms of the Plan.
Substantially all regular employees of the Company and
designated subsidiaries are eligible to participate in the
MOTshare Plan, except that the following may be excluded at the
discretion of the Committee: (i) employees whose customary
employment is 20 hours or less per week; and
(ii) employees whose customary employment is for not more
than 5 months per year. As of December 31, 2006,
approximately 54,000 employees were eligible to participate in
the Plan and approximately 23,000 employees actually
participated in the MOTshare Plan.
Participation and Terms
An eligible employee may elect to participate in the Plan as of
any Enrollment Date. Enrollment Dates occur on the
first day of the offering period which is currently set at
six-month intervals beginning on approximately April 1 and
October 1. To participate in the Plan, an employee must complete
an enrollment and payroll deduction authorization form provided
by the Committee which indicates the amounts to be deducted from
his or her salary and applied to the purchase of the shares on
the Share Purchase Date (as hereinafter defined). The payroll
deduction must be within limits set by the Committee.
A payroll deduction account is established for each
participating employee by the Company and all payroll deductions
made on behalf of each employee (on an after-tax basis) are
credited to each such employees respective payroll
deduction account. On the last trading day of each offering
17
PROXY STATEMENT
period (the Share Purchase Date), the amount
credited to each participating employees payroll deduction
account is applied to purchase as many shares as may be
purchased with such amount at the applicable purchase price.
The purchase price for the Shares will not be less than the
lesser of 85% of the closing price of shares of Common Stock as
reported on the New York Stock Exchange (i) on the first
trading day of the applicable offering period or (ii) on
the Share Purchase Date. Employees may purchase shares through
the MOTshare Plan only by payroll deductions.
Amendment and Termination
The Board of Directors of the Company may amend the Plan at any
time, provided that if stockholder approval is required for the
Plan to continue to comply with the requirements of Securities
and Exchange Commission Regulation
Section 240.16b-3
or Section 423 of the Internal Revenue Code (the
Code), such amendment shall not be effective unless
approved by the Companys stockholders within twelve months
after the date of the adoption by the Board of Directors.
The MOTshare Plan may be terminated by the Board of Directors at
any time.
Federal Income Tax Consequences
The MOTshare Plan is intended to be an employee stock
purchase plan as defined in Section 423 of the Code.
As a result, an employee participant will pay no federal income
tax upon enrolling in the Plan or upon purchase of the shares. A
participant may recognize gain or loss upon the sale or other
disposition of shares purchased under the Plan, the amount and
character of which will depend on whether the shares are held
for two years from the first day of the offering period.
|
|
|
|
|
If the participant sells or otherwise disposes of the shares
within that two-year period, the participant will
recognize ordinary income at the time of disposition in an
amount equal to the excess of the market price of the shares on
the date of purchase over the purchase price. The Company will
be entitled to a tax deduction for the same amount. |
|
|
|
If the participant sells or otherwise disposes of the shares
after holding the shares for the two-year period, the
participant will recognize ordinary income at the time in an
amount equal to the lesser of (i) the excess of the market
price of the shares on the first day of the offering period over
the purchase price, or (ii) the excess of the market price
of the shares at the time of disposition over the purchase
price. The Company will not be entitled to any tax deduction
with respect to shares purchased under the Plan if the shares
are held for the requisite two-year period. |
|
|
|
In addition, at the time of disposition of the shares, the
employee may also recognize capital gain or loss, either
short-term or long-term, depending on how long the employee held
the shares. |
Other Information
On March 8, 2007, the closing price of the Common Stock was
$18.63.
The design of the MOTshare Plan does result in a financial
statement expense under applicable accounting guidance
(FAS 123R). However, because the Company is reducing both
participation rates and stock option grant guidelines in the
Motorola Omnibus Incentive Plan of 2006 (the Omnibus
Plan) to ensure our equity granting practice under that
plan remains both competitive and cost effective, the MOTshare
Plan allows the Company to provide an efficient vehicle for all
eligible employees to acquire Motorola shares on a regular basis.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
AMENDING THE MOTOROLA EMPLOYEE STOCK PURCHASE PLAN OF 1999
(THE MOTSHARE PLAN). UNLESS OTHERWISE INDICATED ON
YOUR PROXY, THE SHARES WILL BE VOTED FOR AMENDING
THE MOTSHARE PLAN.
PROPOSAL NO. 3
SHAREHOLDER PROPOSAL RE: SHAREHOLDER VOTE ON EXECUTIVE
PAY
The Company has been advised that William Steiner, the
beneficial owner of 900 shares, intends to submit the
following proposal for consideration at the 2007 Annual
Meeting.
3Shareholder Vote on Executive Pay
RESOLVED, shareholders ask our board of directors to
adopt a policy that shareholders be given the opportunity to
vote on an advisory management resolution at each annual meeting
to approve the Compensation Committee report in the proxy
statement.
18
PROXY STATEMENT
The policy should provide that appropriate disclosures will be
made to ensure that stockholders fully understand that the vote
is advisory, will not affect any persons compensation and
will not affect the approval of any compensation-related
proposal submitted for a vote of stockholders at the same or any
other meeting of stockholders.
It is essential that the disclosure for this annual vote include
disclosure of the percentage of total executive pay and benefits
that are performance-based meaning linked to demonstrable
performance criteria measured by our companys performance
compared to its peer companies.
Mr. William Steiner, 112 Abbottsford Gate, Piermont, NY
10968 sponsors this proposal.
The current rules governing senior executive compensation do not
give stockholders enough influence over pay practices. In the
United Kingdom, public companies allow stockholders to cast an
advisory vote on the directors remuneration report.
Such a vote is not binding, but allows stockholders a clear
voice which could help reduce excessive pay. Stockholders do not
have any mechanism for providing ongoing input. See Pay
Without Performance by Lucian Bebchuk and Jesse Fried.
I believe that adoption of this proposal will be one step
further in the improvement of our corporate governance. On
July 27, 2006, our board amended our companys poison
pill by accelerating its termination from November 2008 to
August 2006. This was in response to our 77% support for a
shareholder proposal by William Steiner, Piermont, NY.
Our Board deserves to be commended for taking this step. On the
other hand that does not mean that there is no further need for
improvement. For instance, The Corporate Library
(TCL) http://www.thecorporatelibrary.com/ an
independent investment research firm rated our company
High Concern in Executive Compensation. CEO pay was
$14 million in one year. Our Board should be encouraged to
continue with improvement in our corporate governance and
support this proposal.
Shareholder Vote on Executive Pay
Yes on 3
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
ADOPTION OF THIS SHAREHOLDER PROPOSAL FOR THE REASONS SET
FORTH BELOW. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR
SHARES WILL BE VOTED AGAINST THE ADOPTION OF THIS
PROPOSAL.
The Board of Directors urges shareholders to vote against this
shareholder-submitted proposal because: (1) Motorolas
shareholders already have precise and efficient methods to
communicate their specific concerns about executive compensation
(and other matters) directly to the Board, and these methods are
far superior to the non-specific advisory vote recommended by
the Proponent; (2) the advisory vote advocated by the
Proponent would not provide the Board with any meaningful
insight into specific shareholder concerns regarding executive
compensation; and (3) Motorolas independent
Compensation and Leadership Committee already oversees an
executive compensation program that is thoughtful,
performance-based, objective and transparent.
|
|
|
Motorolas Shareholders Already Have Precise and
Efficient Methods to Communicate Their Specific Concerns
Directly to the Board |
Motorolas shareholders currently have a number of
appropriate tools to communicate specific concerns regarding
executive compensation directly to the Board. These tools enable
precise communication, rather than the ambiguous results of a
general advisory vote. The most direct tool available to
shareholders to communicate concerns about executive
compensation is the ability to send a message directly to the
independent Compensation and Leadership Committee of the Board
of Directors. Such a message can be sent one of two ways, either:
|
|
|
Via email to: |
|
Through the mail to: |
|
|
|
boardofdirectors@motorola.com
|
|
Compensation & Leadership Committee |
|
|
c/o Corporate Secretary, Motorola, Inc., |
|
|
1303 East Algonquin Road, |
|
|
Schaumburg, IL 60196. |
|
|
|
An Advisory Vote Provides No Meaningful Insight Into Specific
Shareholder Concerns Regarding Executive Compensation |
The vote recommended in the proposal would not provide any
useful information to Motorola or the members of the independent
Compensation and Leadership Committee. For example, if
shareholders voted against an advisory resolution,
Motorola would not be able to determine if the negative vote
indicates that shareholders dont like the format,
presentation or style of the report, or if shareholders
disapprove of some element of Motorolas underlying
compensation practices. This lack of
19
PROXY STATEMENT
clarity as to the meaning of the outcome of the advisory vote
requested by the proposal eliminates any benefits it might offer.
|
|
|
Motorolas Independent Compensation and Leadership
Committee Already Oversees an Executive Compensation Program
That Is Thoughtful, Performance-Based, Objective and
Transparent |
The Compensation and Leadership Committee (the
Committee) oversees Motorolas executive
compensation program and evaluates the performance of
Motorolas senior executives. The Committee is comprised
solely of independent directors and has established a
compensation philosophy of providing compensation programs that
attract, retain and motivate the best people, producing
outstanding business performance and shareholder value. The
Committee exercises great care and discipline in determining
executive compensation. Establishing executive compensation
arrangements involves balancing numerous business considerations
against competitive pressures and is a complex undertaking for
which the Committee is uniquely suited. Motorola and the
Committee continually monitor the executive compensation
programs and adopt changes to reflect the dynamic, global
marketplace in which Motorola competes for talent. Furthermore,
the Committee believes the information set forth in this proxy
statement fully and fairly describes Motorolas executive
compensation programs and provides stockholders with information
on which to evaluate such compensation programs.
The Board does not believe the advisory vote requested by the
Proponent will enhance the Companys compensation programs
or improve communication between shareholders and the Board. For
these reasons and the others stated above, the Board of
Directors recommends that you vote AGAINST the adoption of
this shareholder-submitted proposal.
PROPOSAL NO. 4
SHAREHOLDER PROPOSAL RE: RECOUP UNEARNED MANAGEMENT
BONUSES
The Company has been advised that Kenneth Steiner, the
beneficial owner of 1,400 shares, intends to submit the
following proposal for consideration at the 2007 Annual
Meeting.
4Recoup Unearned Management Bonuses
RESOLVED: Shareholders request our board to adopt a policy
(preferably in our bylaws), for our board to recoup for the
benefit of our company all unearned incentive bonuses or other
incentive payments to senior executives to the extent that their
corresponding performance targets were later reasonably
determined to have not been achieved. Restatements are one means
to determine unearned bonuses.
This would include that all applicable employment agreements and
incentive plans adopt enabling or consistent text as soon as
feasibly possible. This proposal is not intended to
unnecessarily limit our Boards judgment in crafting the
requested change in accordance with applicable laws and existing
contracts and pay plans.
Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021
sponsors this proposal.
This proposal is similar to the proposal voted at the Computer
Associates (CA) August 2004 annual meeting. In October 2003
Computer Associates announced that it had inflated income in the
fiscal year ending March 31, 2000 by reporting income from
contracts before they were signed.
Bonuses for senior executives that year were based on income
exceeding goals. Sanjay Kumar, then CEO, received a
$3 million bonus based on Computer Associates
supposedly superior performance. Mr. Kumar did not offer to
return his bonus based on discredited earnings. Mr. Kumar
was later sentenced to
12-years in jail.
There is no excuse for over-compensation based on discredited
earnings at any company. This proposal will give us as
shareholders more options if we find ourselves in a situation
similar to the Computer Associates scenario. If it appears that
our Company reported erroneous results that must be negatively
restated, then our board should have the power, by adoption of
this proposal, to seek to recoup all incentive pay that was not
earned or deserved.
Recoup Unearned Management Bonuses
Yes on 4
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
ADOPTION OF THIS SHAREHOLDER PROPOSAL FOR THE REASONS SET
FORTH BELOW. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR
SHARES WILL BE VOTED AGAINST THE ADOPTION OF THIS
PROPOSAL.
The Board of Directors urges shareholders to vote against this
shareholder-submitted proposal because: (1) the proposal
suggests an overly rigid approach to the issue raised by the
Proponent, one that would require the Board to mechanically
recoup bonuses even in inequitable circumstances; (2) a
flexible policy that enables the Board to review the facts and
circumstances involved in a financial restatement is more
appropriate than a blanket policy, (3) pursuant to the
Sarbanes-Oxley
20
PROXY STATEMENT
Act, in the event of a material restatement of the
Companys financial results as a result of misconduct, the
chief executive officer and the chief financial officer are
already required to reimburse the Company for any bonus or other
incentive-based or equity-based compensation during the year
following initial publication of the financial statements that
were required to be restated, and (4) the proposal could
limit the Companys ability to attract and retain qualified
executives and other managers.
The Proposal is Overly Mechanical and Overly Broad
The Board of Directors generally agrees with the Proponent and
supports the review of incentive-based compensation following a
restatement that impacts the achievement of financial targets
relating to that compensation. However, notwithstanding the
Boards general agreement with the fundamental concern
raised by the Proponent, the Board cannot support the specific
proposal because it presents an overly broad and rigid policy
that would require a mechanical recoupment of compensation
without a review of the attendant facts and circumstances
related to a financial restatement. The Proponents rigid
proposal would presumably apply to all restatement situations,
even those that were not caused by misconduct (for example, a
restatement triggered by a retroactive change in financial
accounting rules) and could apply to all senior executives,
including those not involved in any misconduct related to a
restatement.
In the Event of a Restatement, the Board Would Take
Appropriate Actions
In the event of a material restatement of the Companys
financial results, the Board believes it would be prudent to
carefully review the facts and circumstances that caused the
restatement before determining the appropriate course of action.
Upon completion of an investigation of the facts and
circumstances surrounding a material restatement, the Board
could consider: (1) whether any compensation was paid or
awarded on the basis of having achieved performance targets,
(2) whether a particular employee or officer was engaged in
misconduct that contributed to the restatement, and
(3) whether the compensation paid to the employee or
officer would have been reduced had the financial results been
properly reported. If it is determined that an employee or
officer did engage in misconduct, the Board would take
appropriate action, which could include, among other things,
termination of employment, seeking repayment of any bonus
received for the period restated, seeking repayment of gains
realized as a result of exercising options awarded for the
period restated, or canceling options or other equity
compensation.
The Sarbanes-Oxley Act Already Mandates Recoupment from the
CEO and CFO in the Event of a Material Restatement Caused by
Misconduct
In addition to the actions described above, if misconduct has
occurred that results in material non-compliance with any
financial reporting requirement under the securities laws,
Section 304 of the Sarbanes-Oxley Act of 2002 requires the
chief executive officer and chief financial officer to reimburse
the Company for any bonus or other incentive-based or
equity-based compensation, as well as any profits from the sale
of Motorola stock, received during the twelve-month period
following the initial publication of the financial statements
that had to be restated. Accordingly, as a matter of law, the
CEO and CFO are already subject to a policy of the type
suggested by the Proponent.
The Proposal Could Limit the Companys Ability to
Attract and Retain Qualified Executives and Other Managers
While the Board believes it appropriate to review
incentive-based compensation following a material restatement
that impacts the achievement of financial targets, the Board
believes it is vital that it be allowed to consider all the
related facts and circumstances before determining what course
of action to take. The Board disagrees with the Proponents
sweeping proposal that would presumably apply to all restatement
situations, even if they are immaterial or not resulting from
misconduct. Recoupment in the event of misstatements that are
not caused by misconduct or from executives not involved in any
misconduct related to a restatement is inequitable. Under the
Proponents policy, a substantial portion of the
compensation of each of the Companys senior officers would
be subject to a risk of forfeiture, including for reasons that
may be entirely outside of the executives control. Such a
risk of forfeiture, particularly when the policies of the
Companys competitors do not impose such a risk, may
significantly impact the Companys ability to attract and
retain qualified executives and other managers that are critical
to Motorolas competitiveness and success.
A mandatory recovery policy such as the one suggested by the
Proponent strips the Board of its discretion and limits the
Boards flexibility to act. To carry out its fiduciary
duties to stockholders, and as a matter of fairness to its
officers, the Board believes it must retain the discretion to
exercise its judgment in a manner that takes into account all
relevant findings and conclusions. Therefore, the Board of
Directors recommends that you vote AGAINST the adoption of
this overly rigid shareholder-submitted proposal.
21
PROXY STATEMENT
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the Companys equity
compensation plan information as of December 31, 2006. The
table does not include information with respect to shares
subject to outstanding options granted under equity compensation
plans assumed by the Company in connection with mergers or
acquisitions where the plans governing the options will not be
used for future awards, as described below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
remaining available for |
|
|
Number of |
|
|
|
future issuance under |
|
|
securities to be |
|
Weighted-average |
|
equity compensation |
|
|
issued upon exercise |
|
exercise price |
|
plans (excluding |
|
|
of outstanding |
|
of outstanding |
|
securities reflected in |
|
|
options and rights |
|
options and rights |
|
column (a)) |
Plan Category |
|
(a) |
|
(b) |
|
(c) |
|
Equity compensation plans approved by Motorola stockholders |
|
|
230,800,300 |
(1)(2)(3) |
|
|
$18.21 |
(4) |
|
|
120,571,906 |
(5) |
Equity compensation plans not approved by Motorola
stockholders(6)(7)
|
|
|
6,730,705 |
|
|
|
$15.90 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
237,531,005 |
|
|
|
$18.14 |
|
|
|
120,571,906 |
|
|
|
|
(1) |
This includes shares subject to outstanding options granted
under the Motorola Omnibus Incentive Plan of 2006 (2006
Plan) and prior stock incentive plans no longer in effect. |
|
(2) |
This also includes an aggregate of 5,941,726 restricted or
deferred stock units that have been granted or accrued pursuant
to dividend equivalent rights under the 2006 Plan and prior
stock incentive plans which are no longer in effect. Each
restricted or deferred stock unit is intended to be the economic
equivalent of a share of Common Stock. |
|
(3) |
This does not include 481,777 stock appreciation rights
(SARs) which are outstanding and exercisable under
prior stock incentive plans that are no longer in effect. These
SARs enable the recipient to receive, for each SAR granted, cash
in an amount equal to the excess of the fair market value of one
share of Common Stock on the date the SAR is exercised over the
fair market value of one share of Common Stock on the date the
SAR was granted. No security is issued upon the exercise of
these SARs. |
|
(4) |
This weighted exercise price does not include outstanding
restricted or deferred stock units. |
|
(5) |
Of these shares: (i) 9,630,845 shares remain available
for future issuance under the Companys employee stock
purchase plan, the Motorola Employee Stock Purchase Plan of
1999, as amended; and (ii) an aggregate of
110,941,061 shares remain available for future issuance
under the 2006 Plan. In addition to stock options, other equity
benefits which may be granted under the 2006 Plan are SARs,
restricted stock, restricted stock units, deferred stock units,
performance shares and other stock awards. In addition, at the
discretion of the Compensation and Leadership Committee, shares
of Motorola Common Stock may be issued under the 2006 Plan in
payment of awards under the Long Range Incentive Plans. |
|
(6) |
The Companys only non-stockholder approved plan is the
Motorola Compensation/ Acquisition Plan of 2000 (the C/A
Plan). No further grants may be made under the C/A Plan
effective May 1, 2006 upon adoption of the 2006 Plan. Since
its inception, the major purposes of the C/ A Plan were to grant
awards: (i) to persons newly hired by the Company, and
(ii) in connection with the acquisition of businesses.
Otherwise, grants were generally made by the Company under the
Companys stockholder approved incentive plans. Awards
could not be made under the C/ A Plan to directors or executive
officers of the Company. The C/ A Plan is more fully described
below. |
|
(7) |
As of December 31, 2006, there were 1,378,901 shares
subject to outstanding stock options which had been assumed by
the Company in connection with acquisition transactions, at a
weighted average exercise price of $11.30. These options were
issued under equity compensation plans of companies acquired by
the Company. No additional options may be granted under these
equity compensation plans. The table does not include
information with respect to these assumed options. |
Compensation/ Acquisition Plan of 2000
The Motorola Compensation/ Acquisition Plan of 2000 (the
C/ A Plan) was initially adopted on November 7,
2000 by the Board of Directors. Upon the adoption of the 2006
Plan, no further grants may be made under the C/A Plan. The C/ A
Plan provided that awards could be granted to employees of the
Company and its subsidiaries who were not executive officers or
directors of the Company, in connection with its recruiting and
retention efforts. Since its inception, the major purposes of
the C/ A Plan have been to grant awards: (i) to persons
newly hired by the Company, and (ii) in connection with the
acquisition of businesses. The C/ A Plan permitted the granting
of stock options, stock appreciation rights, restricted stock
and restricted stock units, performance stock, performance units
and other stock awards.
22
PROXY STATEMENT
Awards included options to acquire shares of Common Stock,
shares of restricted Common Stock and restricted stock units.
Each option granted has an exercise price of 100% of the market
value of the Common Stock on the date of grant. Generally,
options expire 10 years from the date of grant and vest and
become exercisable at 25% increments over four years. Awards of
restricted stock or restricted stock units consist of shares or
rights to shares of Common Stock. The restrictions on individual
grants vary, but are designed so that the awards are subject to
substantial risk of forfeiture by the employee.
Upon the occurrence of a change in control, each stock option
outstanding on the date on which the change in control occurs,
will immediately become exercisable in full. In addition, the
restrictions on all shares of restricted stock or restricted
stock units outstanding on the date on which the change in
control occurs will be automatically terminated.
OWNERSHIP OF SECURITIES
Security Ownership of Management and Directors
The following table sets forth information as of
February 28, 2007, regarding the beneficial ownership of
shares of Common Stock by each director and nominee for director
of the Company, by the persons named in the Summary Compensation
Table*, and by all current directors, nominees and executive
officers of the Company as a group. Each director, nominee and
Named Executive Officer owns less than 1% of the Common Stock.
All current directors, nominees and current executive officers
as a group own less than 1%.
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Under | |
|
|
|
Total Shares | |
|
|
|
|
Exercisable | |
|
|
|
Beneficially | |
Name |
|
Shares Owned(1) | |
|
Options(2) | |
|
Stock Units(3) | |
|
Owned(4)(5) | |
| |
Edward J. Zander
|
|
|
135,599 |
|
|
|
1,999,930 |
|
|
|
238,726 |
|
|
|
2,910,975 |
(6) |
David W. Devonshire
|
|
|
50,999 |
|
|
|
0 |
|
|
|
5,291 |
|
|
|
56,290 |
(7) |
Ronald G.
Garriques(8)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Gregory Q. Brown
|
|
|
18,063 |
|
|
|
442,265 |
|
|
|
0 |
|
|
|
941,139 |
(9) |
A. Peter Lawson
|
|
|
36,765 |
|
|
|
782,963 |
|
|
|
0 |
|
|
|
834,091 |
(10) |
David W. Dorman
|
|
|
0 |
|
|
|
0 |
|
|
|
2,335 |
|
|
|
2,335 |
|
H. Laurance Fuller
|
|
|
3,151 |
|
|
|
123,966 |
|
|
|
24,073 |
|
|
|
151,190 |
(11) |
Judy C. Lewent
|
|
|
47,604 |
|
|
|
123,966 |
|
|
|
5,690 |
|
|
|
177,260 |
(12) |
Thomas J. Meredith
|
|
|
4,223 |
|
|
|
15,000 |
|
|
|
5,690 |
|
|
|
24,913 |
|
Nicholas Negroponte
|
|
|
47,863 |
|
|
|
123,966 |
|
|
|
5,690 |
|
|
|
177,519 |
|
Indra K. Nooyi
|
|
|
4,579 |
|
|
|
48,528 |
|
|
|
15,813 |
|
|
|
68,920 |
(13) |
Samuel C. Scott III
|
|
|
33,741 |
|
|
|
115,584 |
|
|
|
12,250 |
|
|
|
161,575 |
(14) |
Ron Sommer
|
|
|
3,043 |
|
|
|
15,000 |
|
|
|
5,690 |
|
|
|
23,733 |
|
James R. Stengel
|
|
|
7,305 |
|
|
|
15,000 |
|
|
|
5,690 |
|
|
|
27,995 |
|
Douglas A. Warner III
|
|
|
24,410 |
|
|
|
65,292 |
|
|
|
11,437 |
|
|
|
101,139 |
(15) |
John A. White
|
|
|
44,267 |
|
|
|
56,910 |
|
|
|
10,495 |
|
|
|
111,672 |
(16) |
Miles D. White
|
|
|
2,000 |
|
|
|
0 |
|
|
|
11,333 |
|
|
|
13,333 |
(17) |
All current directors, nominees and current executive officers
as a group (24 persons)
|
|
|
520,217 |
|
|
|
5,073,021 |
|
|
|
367,977 |
|
|
|
7,666,136 |
(18) |
|
|
|
|
|
* |
Since Mr. Nemcek ceased to be an executive officer on
June 30, 2006, his holdings are not included in this table. |
|
|
(1) |
Includes shares over which the person currently holds or shares
voting and/or investment power but excludes interests, if any,
in shares held in the Motorola Stock Fund of the Companys
401(k) Plan and the shares listed under Shares Under
Exercisable Options and Stock Units. |
|
(2) |
Includes shares under options exercisable on February 28,
2007 and options which become exercisable within 60 days
thereafter. |
|
(3) |
Includes stock units which are deemed to be beneficially owned
on February 28, 2007 or 60 days thereafter. 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 a share of Common Stock. |
23
PROXY STATEMENT
|
|
(4) |
Unless otherwise indicated, each person has sole voting and
investment power over the shares reported. |
|
(5) |
Includes interests, if any, in shares held in the Motorola Stock
Fund of the Companys 401(k) Plan, which is subject to some
investment restrictions, the shares listed under Shares
Under Exercisable Options and units listed under
Stock Units. |
|
(6) |
Mr. Zander has shared voting and investment power over
75,000 of these shares. His holdings under Total Shares
Beneficially Owned include 238,726 restricted stock units
that have vested but are subject to a deferred distribution upon
the occurrence of certain events, as provided in his employment
agreement. His holdings under Total Shares Beneficially
Owned also include 536,720 stock units that are subject to
restrictions. The 536,720 units are excluded from the
computations of percentages of shares owned because the
restrictions lapse more than 60 days after
February 28, 2007. |
|
(7) |
Mr. Devonshires holdings under Total Shares
Beneficially Owned include 5,291 stock units that are
subject to restrictions. The restrictions on all of these units
lapse on March 18, 2007 and are reflected under Stock
Units. |
|
(8) |
Mr. Garriques terminated his employment with the Company on
February 16, 2007 and forfeited his options and restricted stock
units. |
|
(9) |
Mr. Browns holdings under Total Shares
Beneficially Owned include 480,811 stock units that are
subject to restrictions. These units are excluded from the
computations of percentages of shares owned because the
restrictions lapse more than 60 days after
February 28, 2007. |
|
|
(10) |
Mr. Lawson has shared voting and investment power over
16,242 of these shares. |
|
(11) |
Mr. Fuller does not have investment power over 936 of these
shares. |
|
(12) |
Ms. Lewent does not have investment power over 264 of these
shares. |
|
(13) |
Ms. Nooyi does not have investment power over 2,995 of
these shares. |
|
(14) |
Mr. Scott does not have investment power over 12,177 of
these shares. |
|
(15) |
Mr. Warner does not have investment power over 4,245 of
these shares. |
|
(16) |
Mr. John White has shared voting and investment power over
30,551 of these shares and shared voting and no investment power
over 540 of these shares. |
|
(17) |
Mr. Miles White has shared voting and investment power over
2,000 of these shares. |
|
(18) |
All directors, nominees and current executive officers as a
group have: sole voting and investment power over 375,267 of
these shares, shared voting and investment power over 123,793 of
these shares, and have sole voting and no investment power over
none of these shares. Included under Total Shares
Beneficially Owned are 2,070,110 stock units that are
subject to restrictions. Each stock unit is intended to be the
economic equivalent of a share of Common Stock. These units are
excluded from the computations of percentages of shares owned
because the restrictions lapse more than 60 days after
February 28, 2007. |
No directors, nominees or current executive officers have
pledged shares of Motorola Common Stock pursuant to any loan or
arrangement where there is an expectation that the loan or
arrangement may be repaid by foreclosure or other recourse to
the shares of Motorola Common Stock.
Security Ownership of Principal Shareholders
The following table sets forth information with respect to any
person who is known to be the beneficial owner of more than 5%
of the Companys Common Stock on December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
and Nature of |
|
Percent of |
Name and Address |
|
Beneficial Ownership |
|
Outstanding Shares |
|
Barclays Global Investors, NA.
and related
companies(1)
45 Fremont Street
San Francisco, CA 94105
|
|
|
168,280,301 shares of Common Stock |
(1) |
|
|
6.97 |
% |
|
|
|
(1) |
Information based solely on Schedule 13G dated
January 31, 2007 filed with the Securities and Exchange
Commission jointly by Barclays Global Investors, NA.; Barclays
Global Fund Advisors; Barclays Global Investors, Ltd;
Barclays Global Investors Japan Trust and Banking Company
Limited; and Barclays Global Investors Japan Limited. The
Schedule 13G indicates that at December 31, 2006:
(a) Barclays Global Investors, NA. was the beneficial owner
with sole dispositive power of 128,608,213 shares and
reported sole voting as to 108,880,450 shares;
(b) Barclays Global Fund Advisors was the beneficial owner
with sole dispositive power of 14,543,894 shares and
reported sole voting power as to 14,509,823 shares;
(c) Barclays Global Investors, Ltd. was the beneficial
owner with sole voting and dispositive power as to
18,292,211 shares; (d) Barclays Global Investors Japan
Trust and Banking Company Limited reported sole voting and
dispositive power as to 2,597,569 shares; and
(e) Barclays Global Investors Japan Limited reported sole
voting and dispositive power as to 4,238,414 shares. |
24
PROXY STATEMENT
Compensation Discussion and Analysis
|
|
|
General Compensation Philosophy |
Motorola is known around the world for innovation and leadership
in wireless and broadband communications. Inspired by our vision
of seamless mobility, Motorolas general compensation
philosophy is to provide world-class reward strategies and
programs that attract, retain and motivate the right people, in
the right places at the right time to help our customers get and
stay connected simply and seamlessly. Our compensation
philosophy is integral to producing outstanding business
performance and shareholder value.
As a result, we strive to provide a total compensation package
that is competitive with the prevailing practices for the
industry and countries in which we operate, allowing for above
average total compensation when justified by business results
and individual performance.
|
|
|
Executive Compensation Guiding Principles |
Our general compensation philosophy is further guided by the
following principles specific to our executives:
|
|
|
|
|
A strong link between pay and performanceboth at the
Company and the individual level. |
|
|
When Motorola has outstanding performance, total compensation
can be above the prevailing market mediancorrelating with
the level of success achieved. |
|
|
Strongly differentiated pay for high performers proportional to
their contributions to Motorolas success. |
|
|
Executives aligning with stockholders and managing from the
perspective of owners with a meaningful equity stake in Motorola. |
|
|
A competitive total rewards package that will enable the Company
to attract and motivate high-performing talent and that is
strongly competitive with other large-cap, high-tech companies. |
|
|
Retain high performers through meaningful wealth creation
opportunities. |
|
|
A simple and cost-efficient program design. |
|
|
|
Components of Motorolas Compensation Program |
The compensation program for our Named Executive Officers
consists of:
|
|
|
(1) Base salary; |
|
|
(2) Short-term incentivesnamely the annual
Motorola Incentive Plan; |
|
|
(3) Long-term incentivesnamely, the Long-Range
Incentive Plans, and equity grants; |
|
|
(4) Executive benefits and perquisites; and |
|
|
(5) Broad-based employee benefits. |
Each component aligns the interests of our executives with the
interests of our shareholders in different ways by
focusing on short-term and long-term performance goals, by
promoting an ownership mentality toward ones job, by
linking individual performance to the Companys
performance, and by ensuring healthy employees.
We measure the competitiveness of our total direct compensation
(base salaries + target short-term incentive opportunity +
long-term incentives) against high-technology market practices.
Overall, and for the last several years, total direct
compensation levels for each position are targeted, on average,
at the
65th percentile
of similar positions in our comparator company group. Some
variation above and below the
65th percentile
is allowed when, in the judgment of management and/or the
Compensation and Leadership Committee, as appropriate, the value
of the individuals experience, performance and specific
skill set justifies variation. In this way, competitively
superior pay goes to those who earn it. As a result, the
greatest retention value has been invested in the strongest
performers.
The costs of our compensation program impact Motorolas
financial performance. As a result, we continue to remain
focused on ensuring that our compensation program is optimized
to motivate employees to improve Motorolas results on a
cost-effective basis.
We also recognize the need to balance the components of our
compensation program appropriately depending on employee
position and ability to impact Motorolas results.
Accordingly, our executive compensation program is structured so
that more than two-thirds of our senior executives
targeted total compensation is at risk (in the form
of equity grants, the Long-Range Incentive Plans and the
Motorola Incentive Plans) and is dependent upon Motorolas
results.
|
|
|
Compensation Benchmarking |
The elements, as well as the total direct compensation, of our
rewards program for executives are benchmarked against a
comparator company group. In the United States, our comparator
company group consists of 17 large-cap, high-tech companies
that, in the aggregate, both we and the
25
PROXY STATEMENT
Compensation and Leadership Committee believe best represent the
Motorola portfolio of businesses and with which we compete for
executive talent. We believe using a comparator company group is
an appropriate method to understand the executive talent market
in which we must compete to obtain and retain top-quality
talent. The Compensation and Leadership Committee reviews the
comparator companies annually to determine if any changes in the
composition of the comparator group are necessary.
In 2006, our comparator company group consisted of the following
companies: Apple, Inc., Cisco Systems, Inc., Dell Inc.,
Electronic Data Systems Corp., EMC Corp., LM Ericsson Telephone
Co., Hewlett-Packard Co., International Business Machines Corp.,
Intel Corp., Alcatel-Lucent, Microsoft Corp., Nokia Corp.,
Nortel Networks Corp., Oracle Corp., QUALCOMM Inc., Sun
Microsystems, Inc. and Texas Instruments Inc. Based upon the
market in which Motorola competes for executive talent within
our industry, the Committee approved our comparator company
group and had it confirmed for reasonableness by the
Committees independent consultant, Mercer Human Resources
Consulting. In 2007, these same companies will comprise our
comparator company group.
Outside of the United States, where possible, the same
comparator company group companies are compared. In addition,
other multinational and local competitors for executive talent
are included in our comparisons when it is appropriate to do so.
In addition to the comparator company data, we also analyze and
incorporate compensation market data from the following survey
sources:
|
|
|
Cash Compensation Survey Sources |
|
|
|
|
|
CHiPS Executive Senior Management Total Compensation
Survey published by Pearl Meyer & Partners, a Clark
Consulting Practice; |
|
|
Towers Perrin Compensation Data
Bank®
(CDB) Executive Compensation Database; and |
|
|
The Benchmark and Executive Surveys Overall Practices
Report published by Radford, an AON company. |
|
|
|
Long-Term Incentive Compensation Survey Sources |
|
|
|
|
|
The three survey sources listed under Cash Compensation
Survey Sources above; and |
|
|
The Global Long Term Incentive Practices Survey published
by Buck Consultants, an ACS company. |
Because these surveys contain competitive compensation market
data on a number of companies spanning a number of different
industries, our market analysis involves narrowing the available
data to cuts that most accurately reflect our
competitive labor market. We complete regression analyses using
the appropriate data cuts to capture the most
accurate market data possible.
In order of priority, the data cuts we employ
include:
|
|
|
1) The 17 large-cap, high-tech companies that comprise our
comparator company group; |
|
|
2) An expanded comparator company group that includes other
high-tech companies (e.g., Google Inc., Palm, Inc., Advanced
Micro Devices Inc., etc.); |
|
|
3) High-tech companies with annual revenue greater than
$500 million; and, if necessary, |
|
|
4) Large-cap companies with annual revenue greater than
$3 billion. |
Since 2000, along with the Compensation and Leadership
Committee, we have sought to more closely align our executive
compensation program with that of our large-cap, high-tech
peers. Overall, our philosophy is to structure the elements of
our compensation program to be competitive between the
50th and
the
65th percentile
of our comparator company group.
However, we strongly believe in engaging the best talent in
critical functions, and this may entail negotiations with
individual executives who have significant retention packages in
place with other employers. In order to make such individuals
whole for the compensation that they would forfeit
by terminating their previous employment, we, along with the
Compensation and Leadership Committee, as appropriate, may
determine that it is in the best interest of Motorola to
negotiate compensation packages that deviate from the general
principle of targeting the
50th to
65th percentile.
Similarly, we, along with the Compensation and Leadership
Committee, as appropriate, may determine it is necessary to
provide compensation outside of the normal cycles to individuals
to address (a) job changes related to shifts in the
Companys strategic priorities, (b) strategic
investment in individuals deemed critical to our leadership
succession plans, and (c) retention of critical talent.
Therefore, for some executives, the individual compensation
elements are above the target range of the
50th to
the
65th percentile.
26
PROXY STATEMENT
|
|
|
Independent Consultant Review of Executive
Compensation |
In accordance with the Compensation and Leadership
Committees charter, the Committee has the sole authority,
to the extent deemed necessary and appropriate, to retain and
terminate any compensation consultants, outside counsel or other
advisors, including having the sole authority to approve the
firms or advisors fees and other retention terms.
The Committees current consultant, Mercer Human Resources
Consulting (Mercer), is independent of Motorola and
reports directly to the Chair of the Compensation and Leadership
Committee. Mercer does not have any other significant business
relationships with Motorola. When appropriate, the Committee
will have discussions with Mercer without management present to
ensure impartiality.
The Compensation and Leadership Committees policy is to
ensure the use of independent compensation consultants. Motorola
management reports to the Committee annually any unrelated fees
for services and products the Company may purchase from Mercer
as a percent of Mercers total revenue. The Committee
reviews and must approve in advance any unrelated engagements on
which the Company wishes to embark with Mercer. The Committee
believes that Mercer is presently the appropriate consultant to
help with Motorolas executive compensation. There are
times that it is in the best interest of the Company to use
Mercer for limited, unrelated services in light of
Motorolas global reach, because it is otherwise difficult
to find a reputable consultant other than Mercer in some
countries and regions in which the Company does business. In
these instances, Motorola management will review the use of
Mercer with the Committee. The Committee uses this information
and other matters of good judgment to ensure Mercers
independence in advising the Committee.
The Committee intends to engage an external independent
consultant to complete an exhaustive evaluation of the
Companys executive rewards program on a periodic basis,
typically every two or three years. The Committee also intends
to engage an external independent consultant to review the
specific compensation of the CEO and all direct reports to the
CEO annually.
In November 2005, the Committee engaged Mercer to independently
complete an exhaustive evaluation of Motorolas executive
rewards programs and the senior leadership teams
compensation. This study found that Motorolas current
executive compensation programs are fundamentally competitive
and sound. The Committee agreed with the Mercer studys
conclusions that no substantive revisions to the compensation
programs were required.
In January 2007, the Compensation and Leadership Committee once
again engaged Mercer to independently review Motorolas
senior leadership teams compensation. The Committee agreed
with the Mercer studys conclusions (see 2007
Executive Compensation Review) and relied on the
studys findings in setting the 2007 compensation levels
for Motorolas senior leadership team.
|
|
|
2007 Executive Compensation Review |
Mercers 2007 executive compensation review studied
(a) the competitiveness of Motorolas senior
leadership team compensation, (b) the pay mix
and structure compared to the market, and (c) the
relationship between Motorolas senior leadership team
compensation levels and Motorolas actual performance.
Mercers study found that Motorolas current
compensation targets are consistent with its targeted pay
positioning by compensation component and reasonable relative to
the market overall.
The following specific compensation components were included in
the competitive assessment:
|
|
|
|
|
Base salary; |
|
|
Annual bonus (target annual bonus opportunity); |
|
|
Total cash compensation (base salary + target annual bonus
opportunity); |
|
|
Long-term incentive compensation (long-range incentive
compensation target opportunity + equity compensation); and |
|
|
Total direct compensation (total cash compensation + long-term
incentive compensation). |
Mercer relied on both published survey sources and actual peer
company proxy data to determine Motorolas competitive
positioning relative to the market. Each position reviewed was
matched to the market based on position responsibility and the
scope of the business. Overall, Mercer found that
Motorolas current executive compensation levels are
appropriately competitive.
|
|
|
Executive Pay Levels Relative to the Market |
Mercers study found that Motorolas target total
direct compensation (base salary + target annual bonus incentive
opportunity + long-term incentives) is near the
75th percentile
and is above Motorolas target pay positioning
(65th percentile),
primarily driven by strong financial performance in 2005 and the
resulting short-term incentive awards
27
PROXY STATEMENT
and strong long-term incentive awards paid in 2006. Mercer found
that:
|
|
|
|
|
Motorola utilizes equity grants to recognize performance and to
provide a strong retention incentive; |
|
|
Select executives received RSU grants to provide meaningful
retention incentive; and |
|
|
|
|
|
These special RSU incentive grants are the primary reason total
2006 compensation for these executives was higher than the
65th percentile pay target. |
|
|
|
|
|
Motorola utilizes equity, as opposed to executive retirement
programs, to provide wealth creation opportunities (one-half of
the peer group provides a supplemental executive retirement
program benefit, while Motorola has closed its program effective
January 1, 2000). |
|
|
|
Pay Mix and Structure Compared to the Market |
Mercers study found that Motorolas compensation
structure is highly leveraged so that strong company performance
leads to above-market pay and weak company performance results
in below-market pay (characterized as a desirable
linkage by Mercer). The study also found that
Motorolas current executive compensation program is more
equity/long-term incentive oriented compared to peer companies
and general market practice. Mercers study also noted that
Motorolas overall use of equity appears reasonable and
that recent annual run rates have declined and are
at the
25th percentile
of the peer group.
|
|
|
Pay and Performance Relationship |
Mercers study found that Motorolas near-term results
have been very positive for shareholders, but noted that
improvement opportunities exist such as those listed below. The
Compensation and Leadership Committee agreed with the Mercer
studys conclusions and relied on the studys findings
in setting the 2007 compensation levels for Motorolas
senior leadership team.
|
|
|
|
|
Overall, recent relative pay appears to be well aligned with
relative performance, especially on the dimensions of growth and
shareholder returns. |
|
|
Motorolas financial performance relative to the peer group
has improved in the most recent year compared to a
3-year average
performance measure. |
|
|
Compensation for the Named Executive Officers is consistent with
top- and bottom-line growth measures, as well as with return on
equity, return on capital and total shareholder return
performance. |
|
|
Motorola continues to have room to improve on operating
performance. |
|
|
Relatively low valuation ratios suggest continued opportunity
for further improvement in shareholder results and continued
equity appreciation for management. |
Overall, and for the last several years, base salary levels for
each position are targeted, on average, at the
50th percentile
of similar positions in our comparator company group. Some
variation above and below the competitive median is allowed
when, in the judgment of management and/or the Compensation and
Leadership Committee, as appropriate, the value of the
individuals experience, performance and specific skill set
justifies variation. In this way, competitively superior pay
goes to those who earn it. As a result, the greatest retention
value has been invested in the strongest performers. Base salary
recognizes an employees role, responsibilities, skills,
experience and sustained performance.
The base salaries for the Motorola senior leadership team,
including the Named Executive Officers, were established upon
completion of an external market competitiveness analysis by
Mercer.
|
|
|
(2) Short-Term Incentives |
The Motorola Incentive Plan (MIP) is a cash-based,
pay-for-performance annual incentive plan that was initiated in
January 2002 and applies to every regular employee in the
Company (excluding those employees participating in a sales
incentive plan). The 2006 MIP discussion relates to the 2006
Motorola Incentive Plan. Motorola, like many companies, uses an
incentive plan to reward employees for their contributions to
strong annual business performance.
MIP is an annual plan that supports Motorolas goals for
promoting teamwork, strengthening our financial performance,
going after market share and improving customer satisfaction and
quality. It also helps us:
|
|
|
|
|
Attract and retain the talent we need to succeed |
|
|
Focus employees attention on critical business goals |
|
|
Share the financial benefits of superior performance, and |
|
|
Provide pay that is competitive with our comparator companies. |
28
PROXY STATEMENT
The MIP incentive formula has the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Factors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eligible Earnings |
|
× |
|
Individual Incentive Target
|
|
× |
|
Business Performance Factor
|
|
× |
|
Individual Performance
|
|
= |
|
MIP Award
|
|
|
|
MIP Individual Incentive Target |
The MIP Individual Incentive Targets are based on
market-competitive data and are established as a percentage of
eligible earnings (generally base salary). Each year, the
Compensation and Leadership Committee designates target levels
for Motorola executives. Overall, and for the last several
years, MIP Incentive Targets for each position are targeted, on
average, between the
50th and
65th percentile
of similar positions in our comparator company group.
For 2006, the Individual Incentive Targets for Motorola
executives generally ranged from 45% (for appointed vice
presidents) to 135% (for the CEO) of base salary. For 2006, the
specific Individual Incentive Targets for our Named Executive
Officers were:
|
|
|
|
Mr. Zander |
135% |
|
|
Mr. Devonshire |
95% |
|
|
Mr. Brown |
110% |
|
|
Mr. Garriques |
110% |
|
|
Mr. Lawson |
95% |
|
|
Mr. Nemcek |
95% |
|
|
The Individual Incentive Targets for the Motorola senior
leadership team, including our Named Executive Officers, were
established by the Compensation and Leadership Committee upon
completion of an external market competitiveness analysis by
Mercer.
|
|
|
MIP Business Performance Factor |
Each year, Business Performance Factor targets are
established for the Company and for each of its major
businesses. While most employees receive rewards based on
business performance of their particular business (and its
corresponding Business Performance Factor), the award for all
Motorola executives (including the Named Executive Officers)
have a significant portion of their award (100% for
Motorolas senior business leaders, including the Named
Executive Officers, and 50% for all other Motorola executives
and senior managers) based on the overall Motorola Business
Performance Factor.
In the 2006 MIP Plan the MIP Business Performance Factor
measures are:
|
|
|
|
|
Operating Earningscalculated according to GAAP, excluding
one-time events called out in earnings releases, such as
restructuring activities, sales of marketable securities and
stock compensation expense. (60% weight) |
|
|
Operating Cash Flowcalculated according to GAAP, which
excludes gains on sales of investments and securities. (10%
weight) |
|
|
Revenue Growthcalculated as the year-over-year percentage
increase in net sales after discounts according to GAAP,
adjusted for the impact of mergers, acquisitions and
divestitures in excess of $50 million. (10% weight) |
|
|
Three (3) quality-specific measures: Customer Satisfaction,
Reliability and Cost of Poor Quality. (combined 20% weight) |
The established financial and quality-specific performance
objectives represent a substantial stretch beyond the actual
results achieved in 2005. In setting these stretch
performance objectives, we realized that the achievement of the
planned performance would be very difficult. We believe that the
establishment of stretch performance objectives is appropriate
in light of our 65th percentile pay targets. However,
Motorolas performance management process is built on our
core value of performance. Year after year, we raise the
performance bar in the pursuit of continuous improvement.
The Business Performance Factor has a multiplier range between
0% (for below threshold performance) and 200% (for performance
at maximum). Achieving targeted business performance objectives
results in a 100% Business Performance Factor multiplier.
For 2006, Motorola exceeded the target for revenue growth (10%
weight). Our 2006 revenues reached a record $42.9 billion,
up 22% over 2005. On the indicated quality-specific measures
(20% weight), performance was sufficient to contribute to an
incentive payout, but was less than the maximum. Performance
fell below minimums for both operating earnings and operating
cash flow (combined weight of 70%). As a result, the
formula-driven 2006 MIP awards (based on 2006 business results)
were appropriately below the established target award level.
|
|
|
MIP Individual Performance |
The MIP Individual Performance modifies the
formula-driven award (business results) according to an
individuals contribution to Motorolas
29
PROXY STATEMENT
success. At Motorola, we believe that the most effective
performance management process establishes a tight and clear
link between individual and organizational goals and
performance. Ultimately, we strive to establish a clear line of
sight between our performance management process and our
business strategy. Individual performance is measured by both
what an individual accomplishes (goal achievement) and
how the individual achieves those accomplishments
(behaviors). Individual Performance multipliers range from 0%
(no award paid) to 130% (130% of the formula-driven award),
demonstrating our commitment to differentiating rewards based on
business and individual performance.
Motorolas long-term incentive programs are designed to
encourage creation of long-term value for our stockholders,
employee retention and stock ownership. These programs include:
|
|
|
|
|
Long-Range Incentive Plans (LRIP) and |
|
|
Equity grants (stock options and limited and selective use of
restricted stock or restricted stock units). |
A large number of our employees participate in one or more of
our long-term incentive programs, which we believe promote a
long-term focus on results and align employee and stockholder
interests. At the same time, we have carefully considered the
impact of equity expensing, actions taken by our comparator
group companies to reduce the use of stock options, and
Motorolas dilution and overhang levels. As a result, we
have made certain changes to our equity programs in the interest
of achieving the appropriate balance between promoting
Motorolas cost competitiveness and maintaining employee
incentives.
Overall, and for the last several years, long-term incentive
levels for our senior executives are targeted, on average, at
the
65th percentile
of similar positions in our comparator company group. Our senior
executives receive a large proportion of their overall targeted
compensation (roughly two-thirds) in the form of long-term
incentives in order to align interests of management and
stockholders and to promote a focus on long-term results. LRIP
accounts for roughly one-third of the total targeted long-term
incentive compensation value; the balance comes in the form of
equity grants, primarily stock options.
Targeted long-term incentive positions for Motorolas
senior leadership team, including our Named Executive Officers,
were established upon completion of an external market
competitiveness analysis by Mercer.
|
|
|
Long-Range Incentive Plan |
The Motorola Long-Range Incentive Plan (LRIP) is a
pay-for-performance, multi-year incentive plan. LRIP was
implemented in January 2005. The initial three-year cycle
started on January 1, 2005 and will conclude on
December 31, 2007 under the Motorola Long-Range Incentive
Plan of 2005. A second three-year cycle started on
January 1, 2006 and will conclude on December 31, 2008
under the Motorola Long-Range Incentive Plan of 2006 (2006
LRIP Plan). A third three-year cycle approved by the Board
in February 2007 started on January 1, 2007 and will
conclude on December 31, 2009 also under the 2006 LRIP Plan.
Participation in LRIP is limited to Motorolas elected
officers including all corporate, senior and executive
vice presidents (approximately 135 participants, including the
Named Executive Officers).
LRIP is a three-year plan that has financial targets set
annually. Annual performance against the established financial
targets is averaged to determine the overall cycles award.
Motorolas total shareholder return is then measured, both
as a stand-alone value and among its peer comparator group, to
determine if the full LRIP cycle award will be paid.
Additionally, each participants individual performance
will be taken into account in determining the final LRIP award
on a negative discretion basis only no participants
individual award can be greater than their formula driven award.
Threshold levels of performance against the established targets
(both the financial targets and total shareholder return
targets) must be satisfied in order for a LRIP award to be paid.
If these threshold levels of performance are not met, no LRIP
award is earned. The final LRIP award, if any, is measured in
cash and paid either in the form of cash or in the form of
Motorola Common Stock. The form of payment will be determined by
the Compensation and Leadership Committee, in its sole
discretion, upon the conclusion of a LRIP cycle.
The LRIP incentive formula has the following variables:
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary at Cycle Start |
|
× |
|
Individual Incentive Target |
|
× |
|
LRIP Business Performance Factor |
|
= |
|
LRIP Award |
30
PROXY STATEMENT
|
|
|
LRIP Individual Incentive Targets |
The LRIP Individual Incentive Targets are based on
market-competitive data and are established as a percentage of
base salary at the start of the performance cycle. The
Compensation and Leadership Committee designates target levels
for all LRIP participants. The Individual Incentive Targets
ranged from 50% to 250% of cycle-start base salary. The LRIP
Individual Incentive Targets are different than the individual
incentive targets set under MIP.
For the 2005-2007 LRIP cycle, the specific Individual Incentive
Targets for our Named Executive Officers are:
|
|
|
|
Mr. Zander |
250% |
|
Mr. Devonshire |
150% |
|
Mr. Brown |
183% |
|
Mr. Garriques |
n/a* |
|
Mr. Lawson |
150% |
|
Mr. Nemcek |
150% |
|
For the 2006-2008 LRIP cycle and the 2007-2009 LRIP cycle, the
specific Individual Incentive Targets for our Named Executive
Officers are:
|
|
|
|
Mr. Zander |
250% |
|
Mr. Devonshire |
150% |
|
Mr. Brown |
200% |
|
Mr. Garriques |
n/a* |
|
Mr. Lawson |
150% |
|
Mr. Nemcek |
150% |
|
* Mr. Garriques terminated employment on February 16,
2007.
|
|
|
LRIP Business Performance Factor |
The LRIP Business Performance Factor is calculated as a result
of the following three-step process:
Step 1: Establish performance targets and record
performance results annually.
LRIP awards are based on: (1) Annual Improvement in
Economic Profit, and (2) Annual Growth in Sales. By
combining these measures, LRIP emphasizes the importance of
balancing growth and profitability. While LRIP is not directly
tied to stock price, the progress made against these two
measures should equate to value created for stockholders.
Economic Profit is defined as: Net Operating Profit (after
taxes) minus Capital Charge (which is equal to the average of
invested capital at the beginning and the end of each year,
multiplied by the cost of capital).
Annual Growth in Sales is equal to the percentage change in
sales from the beginning of each individual year within the LRIP
cycle to the end of that individual year.
Specific Economic Profit and Annual Growth in Sales targets are
established at the beginning of each year within a performance
cycle and a Business Performance Matrix is
developed. The LRIP Business Performance Matrix is a
table that outlines specific Business Performance Factors to be
used for specific achievements against the established Economic
Profit improvement and sales growth targets. The LRIP Business
Performance Factors can range from 0% (for performance below
threshold) to 200% (for maximum performance).
At the conclusion of each year, the performance against the LRIP
business performance targets is measured and recorded.
Each years established LRIP performance objectives
represent a substantial stretch beyond the actual results
achieved in the previous year. In setting these
stretch performance objectives, we realized that the
achievement of the planned performance is very difficult.
However, Motorolas performance management process is built
on our core value of performance. Year after year, we raise the
performance bar in the pursuit of continuous improvement. We
believe that the establishment of stretch performance objectives
is appropriate in light of our 65th percentile pay targets.
The performance against the LRIP measures for the 2005
performance year well-surpassed the targeted performance
objectives achieving the maximum level of performance. As
a result, the Business Performance Matrix score for the 2005
performance year was 200%.
The performance against the LRIP measures for the 2006
performance year was below the threshold level of performance
set for 2006. As a result, the Business Performance Matrix score
for the 2006 performance year is 0%.
Since LRIP is a three-year incentive plan, no LRIP award is
payable at the conclusion of any one performance year. Step 2
and Step 3 below detail the additional components
involved in the determining a LRIP award.
Step 2: Average the recorded annual performance
results to determine the foundation of the LRIP award.
The three recorded annual performance results are averaged
together to determine the LRIP cycles baseline award.
31
PROXY STATEMENT
Step 3: Measure Motorolas three-year total
shareholder return compared with the established comparator
company group to determine the final Business Performance Factor
to be used for the LRIP cycle.
For the 2005-2007 LRIP cycle, in order for a full LRIP award to
be paid, Motorolas three-year total shareholder return
must exceed the average total shareholder return of the
established peer-group competitors (see Compensation
Benchmarking above). For LRIP purposes, total shareholder
return is calculated as follows:
|
|
|
|
|
Ending share price |
|
|
(200-day average through last day of
cycle (December 31, 2007)) |
+
|
|
Value of reinvested dividends |
|
|
|
=
|
|
Total ending value |
|
|
|
-
|
|
Beginning share price |
|
|
(200-day average through first day of
cycle (December 31, 2004)) |
|
|
|
=
|
|
Total value created |
|
|
|
÷
|
|
Beginning share price |
|
|
(200-day average through first day of
cycle (December 31, 2004)) |
|
|
|
=
|
|
Total shareholder return |
|
|
|
If Motorolas three-year total shareholder return is equal
to or above the 50th percentile of the comparator group,
then the full LRIP business performance factor is applied. If
Motorolas three-year total shareholder return is below the
50th percentile but above the 35th percentile of the
comparator group, then a 25% reduction in the LRIP business
performance factor is applied. If Motorolas three-year
total shareholder return is below the 35th percentile of
the comparator group, then a 50% reduction in the LRIP business
performance factor is applied.
The 2005-2007 LRIP cycle began on January 1, 2005 and will
conclude on December 31, 2007.
For the 2006-2008 LRIP cycle, in order for a full LRIP award to
be paid: (a) Motorolas three-year total shareholder
return must exceed the 55th percentile total shareholder
return of the established peer-group competitors (see
Compensation Benchmarking above) and
(b) Motorolas absolute three-year total
shareholder return must be positive (e.g., greater than 0%). For
LRIP purposes, total shareholder return is calculated as follows:
|
|
|
|
|
Ending share price |
|
|
(200-day average through last day of
cycle (December 31, 2008)) |
+
|
|
Value of reinvested dividends |
|
|
|
=
|
|
Total ending value |
|
|
|
-
|
|
Beginning share price |
|
|
(200-day average through first day of
cycle (December 31, 2005)) |
|
|
|
=
|
|
Total value created |
|
|
|
÷
|
|
Beginning share price |
|
|
(200-day average through first day of
cycle (December 31, 2005)) |
|
|
|
=
|
|
Total shareholder return |
|
|
|
If Motorolas three-year total shareholder return is equal
to or above the 55th percentile of the comparator group,
then the full LRIP business performance factor is applied. If
Motorolas three-year total shareholder return is below the
55th percentile but above the 25th percentile of the
comparator group, then a haircut reduction in the
LRIP business performance factor is applied. The
haircut is linear between the 55th percentile
(no reduction) and the 25th percentile (50% reduction). If
Motorolas three-year total shareholder return is below the
25th percentile of the comparator group, then the
Compensation and Leadership Committee will use its discretion to
determine if any 2006-2008 LRIP award will be paid.
Additionally, Motorolas absolute three-year
total shareholder return must be positive (e.g., greater than
0%) to ensure that any 2006-2008 LRIP award will be paid.
The 2006-2008 LRIP cycle began on January 1, 2006 and will
conclude on December 31, 2008.
|
|
|
Impact of Individual Performance on LRIP Awards |
The CEO may adjust the amount of the LRIP award to any
participant at any time prior to payment as a result of the
participants performance during the performance cycle;
provided, however, that any such adjustment may not result in a
payment to the participant in excess of the participants
maximum award under the Plan and any such adjustment to a
payment to a member of the senior leadership team will be
subject to the approval of the Compensation and Leadership
Committee.
Likewise, the Compensation and Leadership Committee (with or
without counsel from the CEO) may reduce the amount of the LRIP
award to any member of the senior leadership team at any time
prior to payment as a result of the participants
performance during the performance cycle.
32
PROXY STATEMENT
To reward and retain employees in a manner that best aligns
employees interests with stockholders interests,
Motorola uses stock options as its primary long-term incentive
vehicle. Together with the Compensation and Leadership
Committee, we believe that stock options align employees
interests precisely with those of other stockholders, because
when the price of the stock declines from the price at the grant
date, the employee obtains no value.
A wide range of managerial and individual contributors
participate in the Companys stock option plans. On
May 3, 2006, the Committee granted stock options to
approximately 28,900 employees as part of the
Companys annual award of stock options. These options vest
and become exercisable in four equal annual installments, with
the first installment vesting May 3, 2007. The per share
exercise price for the stock options is $21.25, the fair market
value of Motorola Common Stock on the date of the grant (see
Fair Market Value Definition below). The stock options expire on
May 3, 2016. Approximately 94% of the stock options covered
by the May 3, 2006 grant went to employees other than the
Named Executive Officers.
On a limited and selective basis, Motorola also grants
restricted stock units: (a) to help make new employees
whole for the compensation that they would forfeit
by terminating their previous employment, (b) to encourage
retention of critical talent, (c) as a strategic investment
in individuals deemed critical to our leadership succession
plans, and (d) to reward performance. In 2006,
approximately 225 of our 68,000 employees received a restricted
stock unit grant.
|
|
|
Fair Market Value Definition |
Throughout 2006 and until March 1, 2007, Grant Date
Fair Market Value was defined as the closing price for a
share of Motorola Common Stock on the last trading day before
the date of grant for equity awards.
For equity award grants on or after March 1, 2007, our
definition of Grant Date Fair Market Value has
changed to the closing price for a share of Motorola common
stock on the date of grant.
The official source for the closing price is, as has been the
case, the New York Stock Exchange Composite Transaction as
reported in the Wall Street Journal, Midwest edition.
Only the Committee may grant equity to any executive who reports
directly to the CEO. We do not time the granting of stock
options around the disclosure of material non-public information.
Since 2002, the grant date for the annual award of stock options
has always been within a day or two of the annual Motorola
stockholder meeting. This is expected to continue in 2007.
|
|
|
Recoupment of MIP, LRIP and Equity Awards |
In the event of a material restatement of Motorolas
financial results, the Board of Directors believes it would be
prudent to carefully review the facts and circumstances that
caused the restatement before determining the appropriate course
of action. Upon completion of an investigation of the facts and
circumstances surrounding a material restatement, the Board of
Directors would consider: (1) whether any compensation was
paid or awarded on the basis of having achieved performance
targets, (2) whether a particular employee or officer was
engaged in misconduct that contributed to the restatement, and
(3) whether the compensation paid to the employee or
officer would have been reduced had the financial results been
properly reported. If it is determined that an employee or
officer did engage in misconduct, the Board of Directors would
take appropriate action, which could include, among other
things, termination of employment, seeking repayment of any
bonus received for the period restated, seeking repayment of
gains realized as a result of exercising stock options awarded
for the period restated, or canceling stock options or other
equity compensation.
Motorola makes certain restrictive covenants a condition of
receipt of equity awards to our executives. The covenants last
for a period following separation from employment and prohibit
(a) disclosure of confidential proprietary information,
(b) solicitation of Motorola employees or customers on
behalf of another employer, and (c) certain work for
competitors. Under these restrictive covenants, executives that
violate them not only may be enjoined from pursuing such conduct
and be subject to other court imposed remedies, but they also
are required to forfeit any outstanding awards as of the date
such violation is discovered and to return any option gains
realized in the two years prior to and any time following the
separation from employment, as well as the value of any
restricted stock units on the date the restrictions lapsed.
These provisions serve to protect the Companys
intellectual property and human capital, and help ensure that
our executives act in the best interests of our Company and our
stockholders.
33
PROXY STATEMENT
|
|
|
(4) Executive Benefits and Perquisites |
Since 2000, the Committee and management have sought to more
closely align the Companys total executive rewards
programs with that of its large-cap, high-tech peers. Overall,
Motorolas philosophy is to pay between the 50th and
65th percentile for total rewards for executive positions
in this peer group given average business performance, but with
substantially leveraged compensation which is performance based.
As a result, several significant changes in the Motorola
executive benefits and perquisites programs have taken place.
|
|
|
Discontinued Executive Benefit and Perquisite Programs |
|
|
|
Executive Welfare Benefits |
|
|
|
|
|
Supplemental Executive AD&D/ Travel Accident Insurance
coverage terminated on December 31, 2004. |
|
|
|
Supplemental Executive Life Insurance coverage terminated on
December 31, 2004 (with the exception of retired
participants and active participants who were age 55 or
older on January 1, 2005; these retired and active
participants will continue to receive post- retirement life
insurance coverage equal to one times their salary at
retirement). |
|
|
|
Executive Retirement Benefits |
|
|
|
|
|
The Elected Officer Supplemental Retirement Plan was closed to
new participants as of January 1, 2000. This supplemental
retirement plan provides an annual income of up to 70% of the
participants base salary in place on June 30, 2005 at
retirement or disability based on certain eligibility and
vesting requirements. As of January 1, 2007, there are 5
unvested participants remaining in the plan. We do not have an
executive-only retirement plan. See Retirement Plans
for a description of retirement plans generally available to all
regular U.S. employees who started before January 1,
2005. After January 1, 2005, we do not have any pension
retirement plan for new employees. |
|
|
|
|
|
In 2004, we terminated the U.S. Executive Vehicle Program,
the U.S. Executive Home Security Program, and first-class
air travel for executives on flights less than 6 hours in
duration. |
|
|
|
New Executive Benefit and Perquisite Programs |
|
|
|
|
|
Because the health of our executives is critical to driving
Motorolas success, we introduced a health coaching program
in 2005. This program provides Motorola executives with personal
health coaching recommendations and encouragement to reach
exercise, weight management, nutrition, smoking cessation and
stress management goals. For tax purposes, the value of
executive health coaching services provided is treated as
imputed income. |
|
|
|
Executive Benefits and Perquisites That Have Not Changed |
|
|
|
|
|
The Motorola Management Deferred Compensation Plan is a
non-qualified deferred compensation plan that is unfunded and
unsecured and allows Motorolas eligible elected officers
the opportunity to defer taxes on their base salary and cash
incentive compensation. Motorola does not contribute to this
plan. This program takes up where our 401(k) plan leaves off.
While the 401(k) plan limits pre-tax contributions, the Motorola
Management Deferred Compensation Plan has no statutory limits.
It is designed to allow eligible participants with an
opportunity to supplement their savings for retirement and other
long-term savings goals in a tax-effective manner. The Motorola
Management Deferred Compensation Plan is not intended to provide
for the payment of above-market or preferential earnings (as
these terms are defined under SEC regulations) on compensation
deferred under the plan. |
|
|
|
The Motorola Executive Financial Planning Program provides
Motorolas elected officers with comprehensive financial
planning assistance, which helps them achieve the highest value
from their compensation package. Our benchmarking shows
financial planning assistance is one of the most common
executive perquisite among our comparator companies. The annual
allowance is $7,000 for our Corporate Vice Presidents and
$10,000 for our senior executives, including the Named Executive
Officers. For tax purposes, the value of financial planning
services provided is treated as imputed income. |
|
|
|
Change-in-Control
Protection |
|
|
|
|
|
The Board considers the maintenance of a sound management team
to be essential to |
34
PROXY STATEMENT
|
|
|
|
|
protecting and enhancing the best interests of Motorola and its
stockholders. To that end, Motorola recognizes that the
possibility of a
change-in-control may
exist from time to time, and that this possibility, and the
uncertainty and questions it may raise among management, may
result in the departure or distraction of management personnel
to the detriment of Motorola and its stockholders. Accordingly,
the Board has determined that appropriate steps should be taken
to encourage the continued attention and dedication of members
of the Companys management to their assigned duties
without the distraction that may arise from the possibility of a
change-in-control. As a
result, Motorola has established the Senior Officer Change in
Control Severance Plan. Motorolas Senior Officer
Change-in-Control
Severance Plan uses a double trigger. In order for
severance benefits to be triggered, a
change-in-control must
take place and an executive must be involuntarily terminated
(for a reason other than cause) or must leave for
good reason within 24 months of the
change-in-control. For
a description of benefits provided in a
change-in-control, see
Change in Control Arrangements. |
|
|
|
(5) Broad-based Employee Benefits |
As U.S. employees, our Named Executive Officers have the
opportunity to participate in a number of benefits programs that
are generally available to all regular U.S. employees.
These benefits include:
|
|
|
|
|
Healthcare Plans includes medical benefits,
dental benefits, behavioral health program, vision and hearing
care program, onsite wellness programs and wellness
centers/fitness centers. |
|
|
|
Life and Disability Plans includes group
life insurance, business travel accident insurance and
short-term and long-term disability income plans. |
|
|
|
Investing Plans includes the 401(k) plan,
the MOTshare Plan (Employee Stock Purchase Plan) and previously
existing pension plans available to employees who began their
employment prior to January 1, 2005. |
|
|
|
Work/ Life Plans includes programs that
assist with daily needs such as childcare, adoption assistance,
dependent care account and long-term care insurance. |
|
|
|
The Impact of Compensation Amounts Realizable on the Other
Elements of Compensation |
In making compensation decisions, the Compensation and
Leadership Committee reviews total compensation and benchmarks
those elements. We have deliberately designed our compensation
program to attract, retain and motivate high quality talent.
Our incentive plan award formulas take base salary into
consideration (as part of Eligible Earnings under
MIP and as Base Salary at the Start of the Cycle
under LRIP) in determining the target dollar incentive
opportunity. As a result, as a participants base salary
increases, that participants target incentive opportunity
increases as well. We follow a policy of ensuring that total
compensation, as well as each element comprising total
compensation, is competitive within the labor market (as
discussed in Compensation Benchmarking). We do not
specifically limit one element of compensation in response to
the amounts potentially realizable under other compensation
elements.
However, we have placed limits on benefits available
under our Life and Disability Plans and our Investing
Plans (including our pension plans).
For regular U.S. employees, our Life and Disability
Plans use base salary and lump-sum merit pay as components
of eligible compensation under the applicable plans
(incentive plan awards are not part of eligible
compensation). Eligible compensation is used
as the basis for the size for the applicable benefit.
Specifically,
|
|
|
|
|
Base Life Insuranceset at 2x eligible
compensation, rounded to the next higher $100 (maximum benefit
is $3 million); |
|
|
|
Supplemental Life Insuranceopportunity to
purchase an additional 1x, 2x, or 3x eligible compensation,
rounded to the next higher $100 (maximum Base Life Insurance +
Supplemental Life Insurance is $3 million); |
|
|
|
Accidental Death and Dismemberment
Insuranceset at 2x eligible compensation, rounded
to the next higher $100 (maximum benefit is $3 million); and |
|
|
|
Business Travel Accident Insuranceset at 3x
eligible compensation, rounded to the next higher $100 (maximum
benefit is $3 million). |
For regular U.S. employees, our Investing Plans
likewise use base and lump-sum merit pay as components of
eligible compensation under the applicable plans
(incentive plan awards are not part of eligible
compensation). In addition, our qualified
plans are subject to IRS limits. Specifically,
35
PROXY STATEMENT
|
|
|
|
|
401(k) Plan regular pre-tax annual
contributions in 2006 of up to $15,000 limit,
catch-up annual contributions (applies to
participants age 50 or older) up to an additional $5,000
limit; |
|
|
|
MOTshare (Employee Stock Purchase Plan)
contributions are limited to $21,250 or 10% of total eligible
compensation per calendar year; |
|
|
|
Pension Plans Motorolas Pension Plans
are offered to pension-eligible employees hired before
January 1, 2005. Motorola offers two different qualified
pension plans the Portable Pension Plan and
the Traditional Pension Plan. Motorola also offers
the Motorola Supplemental Pension Plan (a
non-qualified plan) to highly-compensated employees whose
qualified pension plan benefits are reduced by IRS annual salary
limits. A third pension plan, the Elected Officer
Supplemental Retirement Plan (a non-qualified plan) was
offered to Motorola executives who became elected officers prior
to January 1, 2000. This plan was closed to new
participants as of January 1, 2000. |
|
|
|
|
|
Both the Portable Pension Plan and the
Traditional Pension Plan use the average
compensation for the five years of highest pay during the last
10 calendar years of employment (Final Average
Earnings) to calculate the pension benefit. For purposes
of determining the pension benefit, annual compensation taken
into account may not exceed the 401(a)(17) limit imposed by the
Internal Revenue Code in any year ($220,000 in 2006). |
|
|
|
The Motorola Supplemental Pension Plan also uses the
average compensation for the five years of highest pay during
the last 10 calendar years of employment (Final Average
Earnings) to calculate the pension benefit. The maximum
Final Average Earnings is capped at a value equal to
the sum of: (a) the compensation limit under Internal
Revenue Code Section 401(a)(17), plus (b) $175,000. |
|
|
|
The Elected Officer Supplemental Retirement Plan,
which was closed to new participants as of January 1, 2000,
uses the sum of (a) the participants base salary at
retirement (or the base salary in place on June 30, 2005,
whichever is earlier) and (b) the average of the five
highest Motorola Incentive Plan awards received within the last
eight years preceding retirement. This supplemental retirement
plan caps the benefit at an annual income of up to 70% of the
participants base salary at retirement or on June 30,
2005, whichever is earlier. |
|
|
|
The Role of Executive Officers in Determining Executive
Compensation |
Motorolas senior leadership team, comprised of the Chief
Executive Officer (CEO) and certain of the
executives who directly report to the CEO, provide
recommendations regarding the design of the Companys
compensation program to the Compensation and Leadership
Committee. Upon Compensation and Leadership Committee approval,
the senior leadership team is ultimately accountable for
executing against the objectives of the approved compensation
program.
Each member of Motorolas senior leadership team is
ultimately responsible for approving all compensation actions
for their respective organizations. When these compensation
actions involve other Motorola executives, the involved senior
leadership team member is accountable for ensuring the adherence
to all established governance procedures.
As CEO, Mr. Zander is responsible for bringing recommended
compensation actions involving his direct reports to the
Compensation and Leadership Committee for approval.
Mr. Zander cannot unilaterally implement compensation
changes for any of his direct reports. The Compensation and
Leadership Committee must also approve any and all compensation
for the direct reports to the CEO. During Compensation and
Leadership Committee meetings at which compensation actions
involving Mr. Zanders direct reports are discussed,
Mr. Zander takes an active part in the discussions. The
Committees independent compensation consultant is
available at such meetings.
Together with the Executive Vice President, Human Resources, the
Global Rewards department in Motorolas Human Resources
organization prepares recommendations regarding CEO compensation
and brings those recommendations to the Compensation and
Leadership Committee. During Compensation and Leadership
Committee meetings at which compensation actions involving
Mr. Zander are discussed, Mr. Zander does not
participate in the discussions.
The Compensation and Leadership Committee directly engages an
independent outside consulting firm, Mercer Human Resources
Consulting, to assist them in its review of the compensation for
Motorolas senior leadership team.
36
PROXY STATEMENT
The Compensation and Leadership Committee is responsible for
bringing recommended compensation actions involving the CEO to
the Board for its concurrence. The Compensation and Leadership
Committee cannot unilaterally approve compensation changes for
the CEO.
|
|
|
The Impact of Favorable Accounting and Tax Treatment on
Compensation Program Design |
Favorable accounting and tax treatment of the various elements
of our compensation program is an important consideration in
their design. But, it is not the sole consideration.
Section 162(m) of the Internal Revenue Code limits the
deductibility of certain items of compensation paid to the Chief
Executive Officer, Chief Financial Officer and to each of the
named executive officers (the Covered Employees) to
$1,000,000 annually. The Companys short-term and long-term
incentive programs have been designed to provide for the
deductibility of compensation paid to the Covered Employees
under the plans. However, the Compensation and Leadership
Committee reserves the right to provide for compensation to
Covered Employees that may not be deductible.
Overall, the Compensation and Leadership Committee believes that
Motorolas pay-for-performance based executive compensation
is in the long-term interests of the stockholders.
In the first quarter of 2006, we began expensing equity awards
in accordance with FAS 123R. This results in significantly
higher accounting expenses for our stock option awards. Like
many of the companies within our comparator company group, we
have taken measures to ensure our equity granting practice
remains competitive but also cost effective (e.g., by generally
lowering both grant guidelines and participation rates).
|
|
|
Stock Ownership Requirements |
In order to link the interests of management and stockholders,
the Board requires Motorolas senior leadership team and
all other senior and executive vice presidents (approximately 45
executives) to maintain prescribed levels of Motorola stock
ownership.
The stock ownership guidelines set a minimum level of ownership
of: Common Stock with a value equal to 4 times base salary for
the CEO; Common Stock with a value equal to the lesser of 3
times base salary or 50,000 shares or units for executive
vice presidents; and Common Stock with a value equal to the
lesser of 2 times base salary or 25,000 shares or units for
senior vice presidents.
Shares owned outright, restricted stock, restricted stock units
and stock owned in benefit plans such as 401(k) and the MOTshare
Plan count toward fulfilling the ownership guidelines.
|
|
|
Securities Trading Policy |
Executives and other employees may not engage in any transaction
in which they may profit from short-term speculative swings in
the value of Motorolas securities. This includes
short sales (selling borrowed securities which the
seller hopes can be purchased at a lower price in the future) or
short sales against the box (selling owned, but not
delivered securities), put and call
options (publicly available rights to sell or buy securities
within a certain period of time at a specified price) and
hedging transactions, such as zero-cost collars and forward sale
contracts. In addition, this policy is designed to ensure
compliance with all insider trading rules.
Motorolas compensation program is designed to motivate
outstanding corporate and business performance. This
pay-for-performance program extends to all Motorola employees,
including our Chairman and Chief Executive Officer,
Mr. Edward J. Zander.
The Committee studied the data gathered from the
17-company peer group
mentioned in Compensation Benchmarking to assess the
appropriate competitive compensation levels for Mr. Zander.
Mr. Zanders compensation levels are also governed by
his employment agreement dated December 15, 2003, effective
January 5, 2004. The employment agreement was approved by
the Board, based in part on the recommendation of the
Compensation and Leadership Committee and the Search Committee
(a committee formed in 2003 to facilitate the search for a
Company Chairman and CEO). The Search Committee hired its own
external CEO compensation advisors who worked with the external
compensation advisors regularly used by the Compensation and
Leadership Committee and the Company to develop the compensation
package. Comparator data from similarly-sized companies and
companies in our industries was gathered and analyzed in
determining the compensation package.
The Committee most recently evaluated Mr. Zanders
compensation in February 2007, when it determined MIP awards for
2006 and set compensation amounts for 2007. In determining
Mr. Zanders 2007 compensation, the Committee reviewed
Mr. Zanders total remuneration, including:
(1) all aspects of Mr. Zanders total cash
compensation
37
PROXY STATEMENT
(base salary plus short-term incentives) and long-term
incentives from continuing employment;
(2) Mr. Zanders outstanding equity grants (both
stock options and restricted stock/restricted stock units);
(3) the value of Mr. Zanders deferred
compensation and retirement benefits, and (4) the value of
Mr. Zanders health and wellness employee benefits and
executive perquisites.
Pursuant to the terms of his employment agreement,
Mr. Zanders annual salary for 2006 was $1,500,000. In
February 2007, the Committee decided, and the independent board
members concurred, that Mr. Zanders base salary will
not be increased in 2007. Mr. Zanders base salary has
not changed since he joined the Company in 2004.
|
|
|
Mr. Zanders 2006 MIP Award |
Mr. Zanders target award under MIP for 2006 was
$2,025,000 and his target award is unchanged for 2007. For
Mr. Zanders 2006 MIP award, the Committee assessed
performance based on the MIP Business Performance
Factors applicable to all regular U.S. employees
(operating earnings, operating cash flow, revenue growth and
three quality-specific measures: customer satisfaction,
reliability and cost of poor quality) that comprise the formula
for awards under the plan. The Committee and the Board
considered these results, in addition to strategic and
leadership accomplishments, to decide on Mr. Zanders
2006 MIP award.
Based on the assessment of performance against 2006 MIP Business
Performance Factor targets and on the assessment of
Mr. Zanders individual performance in 2006, the
Committee recommended, and the independent board members
approved, a 2006 MIP award of $1,265,000 (125% of the
formula-driven award).
The combination of Mr. Zanders 2006 base salary and
2006 MIP award totals 23% of his total compensation in 2006.
|
|
|
Mr. Zanders 2006 Long-Term Incentive Awards |
The Board of Directors determined that the combination of
Mr. Zanders May 3, 2006 stock option grant and
Mr. Zanders 2005-2007 LRIP and 2006-2008 LRIP
Individual Incentive Targets (described above) delivered
competitive long-term incentive compensation value to
Mr. Zander in 2006.
Mr. Zander is participating in the 2005-2007 LRIP cycle,
the 2006-2008 LRIP cycle and the 2007-2009 LRIP cycle.
|
|
|
Mr. Zanders Benefits and Perquisites |
During the term of Mr. Zanders employment agreement,
Mr. Zander is eligible to participate in all long-term
incentive plans, the Motorola Portable Pension Plan, the
Motorola Supplemental Pension Plan and health and welfare,
perquisite and other arrangements generally available to other
senior executives. Because Mr. Zander is active in
professional and civic communities, has significant amounts of
private and personal information readily available on the
Internet, has strong visibility and travels extensively, he is
also entitled to reasonable use of Company aircraft for personal
and business purposes in connection with Motorolas overall
security program.
|
|
|
Mr. Zanders Severance Benefits Associated with a
Change in Control |
Mr. Zander will receive change in control benefits under
our Senior Officer Change in Control Severance Plan, or any
successor change in control plan or program. If we no longer
maintain the Senior Officer Change in Control Severance Plan, we
will provide Mr. Zander with no less favorable benefits and
protection under an alternative program or arrangement. In
addition, upon a change in control of the Company, all
equity-based awards granted to Mr. Zander will become fully
vested and exercisable, all performance goals will be deemed
achieved at target levels, all performance stock will be
delivered as promptly as practicable and all performance units,
restricted stock units and other incentive awards will be paid
out as promptly as practicable, provided however, as more fully
described herein under Employment Agreement with
Edward J. Zander, this treatment may not apply if
such awards are assumed by the successor corporation. If we
adopt an equity incentive plan or a severance plan for senior
executives with
change-in-control
benefits more generous than the benefits provided to
Mr. Zander under the agreement, Mr. Zander will be
entitled to those benefits. Motorolas change in control
program uses a double trigger. In order for
severance benefits to be triggered, a
change-in-control must
take place and an executive must be involuntarily terminated
(for a reason other than cause) or must quit for
good reason within 24 months of the
change-in-control.
Mr. Zander is entitled to reimbursement for all reasonable
legal fees and expenses reasonably incurred by him in connection
with any dispute under the agreement so long as he prevails in
such dispute on at least one material claim.
38
PROXY STATEMENT
|
|
|
Mr. Zanders Stock Ownership Requirements |
Mr. Zander has successfully met the guideline for Motorola stock
ownership.
|
|
|
Other Named Executive Officer Compensation |
The Compensation and Leadership Committee most recently
determined the Named Executive Officers compensation in
February 2007, when it determined MIP awards for 2006 and set
compensation amounts for 2007. In determining the Named
Executive Officers 2007 compensation, the Compensation and
Leadership Committee reviewed each Named Executive
Officers total remuneration, including all aspects of
total cash compensation (base salary plus short-term incentives)
and long-term incentives from continuing employment, outstanding
equity grants (both stock options and restricted
stock/restricted stock units), the value of deferred
compensation and retirement benefits and the value of health and
wellness employee benefits and executive perquisites.
|
|
|
Mr. Devonshires 2007 Compensation |
In February 2007, the Compensation and Leadership Committee
decided not to increase Mr. Devonshires base salary.
|
|
|
Mr. Browns 2007 Compensation |
In February 2006, the Compensation and Leadership Committee
decided to increase Mr. Browns base salary to
$765,000 in 2006. The Compensation and Leadership Committee
determined that the base salary adjustment appropriately rewards
Mr. Brown for his performance and was necessary to ensure
delivery of a competitive base salary to Mr. Brown.
In February 2007, the Compensation and Leadership Committee
decided not to increase Mr. Browns base salary.
|
|
|
Mr. Garriques 2006 Compensation |
In February 2006, the Compensation and Leadership Committee
decided to increase Mr. Garriques base salary to
$765,000 in 2006. The Compensation and Leadership Committee
determined that the base salary adjustment appropriately rewards
Mr. Garriques for his performance and was necessary to
ensure delivery of a competitive base salary to
Mr. Garriques.
Mr. Garriques terminated his employment with the Company on
February 16, 2007.
|
|
|
Mr. Lawsons 2007 Compensation |
In February 2007, the Compensation and Leadership Committee
decided not to increase Mr. Lawsons base salary.
The following Report of 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 Securities Exchange Act of 1934 (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.
REPORT OF COMPENSATION AND LEADERSHIP COMMITTEE ON EXECUTIVE
COMPENSATION
Throughout 2006, Director Samuel C. Scott III was the
Committees Chair and Directors Indra K. Nooyi, Ron Sommer
and James R. Stengel served on the Compensation and Leadership
Committee (the Committee) of Motorola, Inc.
During 2006, the Committee was comprised solely of non-employee
directors who were each: (i) independent as defined under
the NYSE listing standards for independence and the Motorola,
Inc. Director Independence Guidelines, (ii) a non-employee
director for purposes of
Rule 16b-3 of the
Exchange Act, and (iii) an outside director for purposes of
Section 162(m) of the Code. During 2007, the Committee will
be comprised of directors who meet these same standards.
The Committee has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of
Regulation S-K
with Motorola 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 Motorolas 2006 Annual Report on
Form 10-K.
|
|
|
|
|
|
|
Samuel C. Scott III, Chairman
Indra K. Nooyi |
|
Ron Sommer
James R. Stengel |
39
PROXY STATEMENT
NAMED EXECUTIVE OFFICER COMPENSATION
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
|
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Name and Principal Position |
|
Year |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
($)(3) |
|
($)(4) |
|
($) |
|
($)(5) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
Edward J. Zander
Chairman of the Board and
Chief Executive Officer
|
|
|
2006 |
|
|
$ |
1,500,000 |
|
|
|
$0 |
|
|
$ |
2,528,100 |
|
|
$ |
7,751,046 |
|
|
$ |
1,265,000 |
|
|
$ |
552,595 |
(6) |
|
$ |
426,662 |
(7) |
|
$ |
14,023,403 |
|
David W. Devonshire
Chief Financial Officer
|
|
|
2006 |
|
|
|
625,000 |
|
|
|
0 |
|
|
|
50,120 |
|
|
|
2,647,231 |
|
|
|
300,000 |
|
|
|
94,864 |
(8) |
|
|
45,398 |
(9) |
|
|
3,762,613 |
|
Gregory Q. Brown
Executive Vice President, President, Networks and Enterprise
|
|
|
2006 |
|
|
|
726,923 |
|
|
|
0 |
|
|
|
2,002,835 |
|
|
|
2,847,391 |
|
|
|
500,000 |
|
|
|
24,820 |
(10) |
|
|
6,600 |
|
|
|
6,108,569 |
|
Ronald G. Garriques
Executive Vice President, President, Mobile Devices
|
|
|
2006 |
|
|
|
726,923 |
|
|
|
0 |
|
|
|
1,886,504 |
(11) |
|
|
2,191,681 |
(11) |
|
|
0 |
|
|
|
69,834 |
(12) |
|
|
554,003 |
(13) |
|
|
5,428,945 |
|
A. Peter Lawson
Executive Vice President,
General Counsel and Secretary
|
|
|
2006 |
|
|
|
540,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,005,086 |
|
|
|
280,000 |
|
|
|
0 |
(14) |
|
|
17,950 |
(15) |
|
|
2,843,036 |
|
Adrian R. Nemcek
Executive Vice President (Retired)
|
|
|
2006 |
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,954,137 |
|
|
|
100,000 |
|
|
|
78,410 |
(16) |
|
|
798,229 |
(17) |
|
|
3,230,776 |
|
|
|
|
(1) |
Includes amounts deferred pursuant to salary reduction
arrangements under the 401(k) Plan and the Motorola Management
Deferred Compensation Plan. |
|
(2) |
No bonus was paid to any executive officer in this table (each,
a Named Executive Officer) other than as part of a
non-equity incentive plan. |
|
(3) |
The amounts in columns (e) and (f) reflect the dollar
amount recognized for financial statement reporting purposes for
the fiscal year ended December 31, 2006, in accordance with
FAS 123R, of awards pursuant to the Motorola Omnibus
Incentive Plan of 2006 and prior stock incentive plans no longer
in effect and thus may include amounts from awards granted both
in and prior to 2006. 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, 2006 and Note 1, Summary of
Significant Accounting Policies in the Companys Form
10-K for the fiscal year ended December 31, 2004. However,
as required, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. |
|
(4) |
The amounts in column (g) reflect cash awards earned under
the 2006 Motorola Incentive Plan (MIP). There were
no payments under any Motorola Long Range Incentive Plan
(LRIP) in 2006. |
|
(5) |
Unless otherwise indicated, the aggregate amount of perquisites
and other personal benefits, securities or property given to
each Named Executive Officer valued on the basis of aggregate
incremental cost to the Company (Company perquisite
costs), was less than $10,000. Each of these amounts
includes contributions made by the Company to the 401(k) Plan
for each of the officers in the amount of $6,600. |
|
(6) |
This amount consists of: (i) the aggregate change in
present value from December 31, 2005 to December 31,
2006 of Mr. Zanders benefits under the Motorola Inc.
Pension Plan (the Motorola Pension Plan) of $8,618
and under the Motorola Supplemental Pension Plan
(MSPP) of $48,683, and (ii) $495,294 in
earnings on nonqualified deferred compensation in excess of the
threshold for 2006 above-market earnings established
pursuant to SEC rules. As further described in the
Nonqualified Deferred Compensation in 2006 table,
all earnings in 2006 above 5.74% have been deemed above
market earnings. |
|
(7) |
This amount consists of: (i) Company perquisite costs for
Mr. Zander of $419,321, including $350,999 for personal use
of Company aircraft, $55,810 for personal use of car and driver
and costs for financial planning, security system and monitoring
service and spousal business travel, and (ii) tax gross-ups
of $741 for income imputed to Mr. Zander. The incremental
cost to the Company for Mr. Zanders personal use of
Company aircraft is calculated by multiplying the number of
hours Mr. Zander 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. The incremental cost to the Company for
Mr. Zanders personal use of a car and driver is
calculated by adding the costs for the driver, including salary
and benefits, on a pro-rata basis to the cost of fuel for
driving to and from work and Company events. |
40
PROXY STATEMENT
|
|
(8) |
This amount consists of: (i) the aggregate change in
present value from December 31, 2005 to December 31,
2006 of Mr. Devonshires benefits under the Motorola
Pension Plan of $8,405 and under the MSPP of $15,056, and
(ii) $71,403 in earnings on nonqualified deferred
compensation in excess of the threshold for 2006
above-market earnings established pursuant to SEC
rules. |
|
(9) |
This amount consists of: (i) Company perquisite costs for
Mr. Devonshire of $28,338, including income imputed for
personal use of aircraft and costs for financial planning,
spousal business travel and health coaching, and (ii) tax
gross-ups of $9,719 for income imputed to Mr. Devonshire. |
|
(10) |
This amount is the aggregate change in present value from
December 31, 2005 to December 31, 2006 of Mr.
Browns benefits under the Motorola Pension Plan of $6,956
and under the MSPP of $17,864. |
|
(11) |
Mr. Garriques forfeited all his restricted stock units and
options pursuant to their terms in connection with his
termination of employment with the Company on February 16,
2007. |
|
(12) |
This amount is the aggregate change in present value from
December 31, 2005 to December 31, 2006 of
Mr. Garriques benefits under the Motorola Pension
Plan of $20,374 and under the MSPP of $49,460. |
|
(13) |
This amount consists of: (i) Company perquisite costs for
Mr. Garriques of $357,462, including $322,528 for tax
equalization relating to his completed overseas assignment, and
costs for financial planning, health coaching, and income
imputed for personal use of aircraft, (ii) tax gross-ups of
$188,553 for income imputed to Mr. Garriques, and
(iii) an award of $1,388 pursuant to the Companys
patent award program. |
|
(14) |
The aggregate change in present value from December 31,
2005 to December 31, 2006 of Mr. Lawsons
benefits under all pension plans was negative and therefore is
reflected as $0. During that period, the change in present value
of his benefit under the Motorola Pension Plan was $46,894 and
there was a negative change in the present value of his benefit
under the Motorola Elected Officers Supplementary Plan of
($135,976). |
|
(15) |
This amount consists of Company perquisite costs for
Mr. Lawson of $17,950, including costs for financial
planning and health coaching. |
|
(16) |
This amount consists of: (i) the aggregate change in
present value from December 31, 2005 to December 31,
2006 of Mr. Nemceks benefits under the Motorola
Pension Plan of $39,393 and under the Motorola Elected Officers
Supplementary Plan of $5,912, and (ii) $33,105 in earnings
on nonqualified deferred compensation in excess of the threshold
for 2006
above-market
earnings established pursuant to SEC rules. |
|
(17) |
This amount consists of: (i) a one-time retirement
allowance of $775,752 in connection with Mr. Nemceks
retirement in July 2006, (ii) Company perquisite costs for
Mr. Nemcek of $14,458, including costs for financial
planning, health coaching and income imputed for personal use of
aircraft, and (iii) income imputed for premiums associated
with elected officer retiree life insurance. |
Compensation Proportion
Our executive compensation program is structured so that more
than two-thirds of our senior executives targeted total
compensation is at risk (in the form of equity
grants, the Long-Range Incentive Plan and the Motorola Incentive
Plan) and therefore dependent upon Motorolas results. In
determining the at risk proportion between cash and
equity among our total mix of compensation, we consider the
employee position and responsibilities, the employees
ability to impact Motorolas results, and the competitive
market for executive talent in our industry. We strive to
balance the components of our compensation program appropriately
in light of these factors. For a discussion of the material
terms of each Named Executive Officers employment
agreement, see Employment Contracts, Termination of
Employment and Change in Control Arrangements. For a
discussion of the material terms of the 2006 grants of plan
based awards, see the footnotes to the Grants of
Plan-Based Awards in 2006 table.
41
PROXY STATEMENT
Grants of Plan-Based Awards in
2006(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other | |
|
All Other | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock | |
|
Option | |
|
|
|
|
|
|
|
|
|
|
Awards: | |
|
Awards: | |
|
Exercise | |
|
Grant Date | |
|
|
|
|
Estimated Future Payouts Under | |
|
Number of | |
|
Number of | |
|
or Base | |
|
Fair Value | |
|
|
|
|
Non-Equity Incentive Plan Awards | |
|
Shares of | |
|
Securities | |
|
Price of | |
|
of Stock | |
|
|
|
|
| |
|
Stock or | |
|
Underlying | |
|
Option | |
|
and | |
|
|
|
|
Threshold | |
|
Target | |
|
Maximum | |
|
Units | |
|
Options | |
|
Awards | |
|
Option | |
Name |
|
Grant Date | |
|
($) | |
|
($) | |
|
($) | |
|
(#)(2) | |
|
(#) | |
|
($/Sh)(3) | |
|
Awards | |
(a) |
|
(b) | |
|
(c) | |
|
(d) | |
|
(e) | |
|
(i) | |
|
(j) | |
|
(k) | |
|
(l) | |
| |
Edward J. Zander
|
|
|
01/01/2006 |
(4) |
|
|
$0 |
|
|
$ |
2,025,000 |
|
|
$ |
5,265,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/01/2006 |
(5) |
|
|
1,875,000 |
|
|
|
3,750,000 |
|
|
|
7,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/03/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
(6) |
|
|
|
|
|
|
|
|
|
$ |
2,125,000 |
|
|
|
|
05/03/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800,000 |
(7) |
|
$ |
21.25 |
|
|
|
7,416,000 |
|
David W. Devonshire
|
|
|
01/01/2006 |
(4) |
|
|
0 |
|
|
|
593,750 |
|
|
|
1,543,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/01/2006 |
(5) |
|
|
468,750 |
|
|
|
937,500 |
|
|
|
1,875,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/03/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000 |
(7) |
|
|
21.25 |
|
|
|
2,781,000 |
|
Gregory Q. Brown
|
|
|
01/01/2006 |
(4) |
|
|
0 |
|
|
|
841,500 |
|
|
|
2,187,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/01/2006 |
(5) |
|
|
600,000 |
|
|
|
1,200,000 |
|
|
|
2,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/06/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000 |
(8) |
|
|
|
|
|
|
|
|
|
|
7,693,000 |
|
|
|
|
05/03/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000 |
(7) |
|
|
21.25 |
|
|
|
3,244,500 |
|
Ronald G. Garriques
|
|
|
01/01/2006 |
(4) |
|
|
0 |
|
|
|
841,500 |
|
|
|
2,187,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/01/2006 |
(5) |
|
|
600,000 |
|
|
|
1,200,000 |
|
|
|
2,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03/06/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000 |
(8) |
|
|
|
|
|
|
|
|
|
|
7,693,000 |
(9) |
|
|
|
05/03/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000 |
(7) |
|
|
21.25 |
|
|
|
3,244,500 |
(9) |
A. Peter Lawson
|
|
|
01/01/2006 |
(4) |
|
|
0 |
|
|
|
513,000 |
|
|
|
1,333,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/01/2006 |
(5) |
|
|
405,000 |
|
|
|
810,000 |
|
|
|
1,620,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05/03/2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
(7) |
|
|
21.25 |
|
|
|
1,854,000 |
|
Adrian R. Nemcek
|
|
|
01/01/2006 |
(4) |
|
|
0 |
|
|
|
570,000 |
|
|
|
1,482,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01/01/2006 |
(5) |
|
|
300,000 |
|
|
|
900,000 |
|
|
|
1,800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Motorola does not grant awards to any Named Executive Officer
under an equity incentive plan as such term is
defined by SEC rules. |
|
(2) |
In the aggregate, the restricted stock units (RSUs)
described in this table, for all grant dates, represent
approximately 0.0003% of the total shares of Common Stock
outstanding on December 31, 2006. RSUs granted on or after
May 1, 2006 are not eligible for dividend equivalent rights. |
|
(3) |
The exercise price of option awards is based on the fair market
value of Motorola Common Stock at the time of grant, calculated
as the closing price for a share of Motorola Common Stock on the
last trading day before the date of grant. See the Fair
Market Value Definition section of the Compensation
Discussion and Analysis for further details. |
|
(4) |
These grants are pursuant to the 2006 Motorola Incentive Plan
(MIP) and paid in cash. MIP is Motorolas
annual pay-for-performance bonus plan that is based upon a
formula that combines company performance and personal
performance. Awards may be $0 under the formula. Targets are
based upon even multiples of 1.0. The maximum would be an
extraordinary event both for the Company and the individual,
whose probability is remote. Awards under 2006 MIP are
determined using a participants eligible
earnings (generally, base salary) for the plan year. |
|
(5) |
These grants are for the 2006-2008 LRIP cycle (2006-2008
LRIP cycle) under the Motorola Long-Range Incentive Plan
of 2006. Awards under the 2006-2008 LRIP cycle are determined in
dollars but, at the discretion of the Compensation and
Leadership Committee, may be paid in cash or Common Stock and
are not within the scope of FAS 123R. The values accrue on
a dollar basis throughout the three-year cycle. LRIP is a
three-year cycle that has financial targets set annually. The
measures/metrics used are: (a) annual improvement in
economic profit, and (b) annual growth in sales. Specific
economic profit and sales growth targets are established at the
beginning of each year within a performance cycle and a
Business Performance Matrix is developed. The LRIP
Business Performance Matrix is a table that outlines
specific award payout factors to be used for specific
achievements against the established performance goals. The LRIP
Business Performance Factors can range from 0% (for performance
below threshold) to 200% (for maximum performance). At the
conclusion of each year, the performance against the LRIP
business performance targets is measured and recorded. At the
conclusion of the cycle, the three recorded annual performance
results are averaged together to determine the LRIP cycles
baseline award. Motorolas total shareholder return is then
measured among its peer comparator group to determine if the
full LRIP cycle award will be paid. Additionally, each
participants individual performance will be taken into
account in determining the final LRIP award on a negative
discretion basis onlyno participants individual
award can be greater than their formula-driven award. The table
represents 2006 performance which may be reduced to $0 at the
end of the three-year cycle based upon |
42
PROXY STATEMENT
|
|
|
total cycle performance. Targets
are based upon even multiples of 1.0. The maximum would be an
extraordinary event for both the Company and the individual,
whose probability is remote.
|
|
|
(6) |
These stock awards were granted on May 3, 2006 as part of
the Companys annual stock award grant. The restrictions on
these RSUs lapse equally on November 3, 2008 and
May 3, 2011. These RSUs were granted under the Motorola
Omnibus Incentive Plan of 2006 to acquire shares of Common Stock
and were valued at the fair market value at the time of the
grant, as defined in the Fair Market Value
Definition section of the Compensation Discussion
and Analysis. |
|
(7) |
These options were granted on May 3, 2006 as part of the
Companys broad-based annual stock option grant. The
options vest and become exercisable in four equal annual
installments with the first installment vesting on May 3,
2007. The options expire 10 years from the date of grant on
May 3, 2016. The option term is the same for substantially
all of the options granted to employees on May 3, 2006.
These options could expire earlier in certain situations. These
options were granted under the Motorola Omnibus Incentive Plan
of 2006 to acquire shares of Common Stock and were granted at
the fair market value at the time of the grant, as defined in
the Fair Market Value Definition section of the
Compensation Discussion and Analysis. The options
carry with them 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. In the aggregate, the options
described in this table are exercisable for approximately
0.0008% of the total shares of Common Stock outstanding on
December 31, 2006. Unvested options are generally forfeited
upon retirement. |
|
(8) |
These stock awards were granted on March 6, 2006 in
furtherance of retention and as a future incentive to the
presidents of the Companys business segments. The
restrictions on these RSUs lapse equally on September 6,
2008 and on March 6, 2011. These RSUs were granted under
the Motorola Omnibus Incentive Plan of 2006 to acquire shares of
Common Stock and were valued at the fair market value at the
time of the grant, as defined in the Fair Market Value
Definition section of the Compensation Discussion
and Analysis. |
|
(9) |
Mr. Garriques forfeited his stock and option awards
pursuant to their terms in connection with his termination of
employment with the Company on February 16, 2007. |
43
PROXY STATEMENT
Outstanding Equity Awards at 2006 Fiscal
Year-End(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
Number of |
|
Number of |
|
|
|
Number of |
|
|
|
|
Securities |
|
Securities |
|
|
|
Shares or |
|
|
|
|
Underlying |
|
Underlying |
|
|
|
Units of |
|
Market Value |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
Stock That |
|
of Shares or |
|
|
Options (#) |
|
Options (#) |
|
Exercise |
|
Option |
|
Have Not |
|
Units of Stock |
|
|
Exercisable |
|
Unexercisable |
|
Price |
|
Expiration |
|
Vested |
|
That Have Not |
Name |
|
(Vested) |
|
(Unvested) |
|
($) |
|
Date |
|
(#)(2) |
|
Vested ($) |
(a) |
|
(b) |
|
(c) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
Edward J. Zander
|
|
|
754,380 |
|
|
|
754,380 |
(3) |
|
|
$12.9742 |
|
|
|
01/05/2014 |
|
|
|
535,511 |
(4) |
|
|
$11,010,106 |
|
|
|
|
530,860 |
|
|
|
530,860 |
(5) |
|
|
16.3028 |
|
|
|
05/04/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
225,000 |
(6) |
|
|
15.91 |
|
|
|
02/14/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
187,500 |
|
|
|
562,500 |
(7) |
|
|
15.47 |
|
|
|
05/03/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
800,000 |
(8) |
|
|
21.25 |
|
|
|
05/03/2016 |
|
|
|
|
|
|
|
|
|
David W. Devonshire
|
|
|
0 |
|
|
|
137,467 |
(9) |
|
|
7.2745 |
|
|
|
05/06/2013 |
|
|
|
5,276 |
(10) |
|
|
108,475 |
|
|
|
|
0 |
|
|
|
251,460 |
(5) |
|
|
16.3028 |
|
|
|
05/04/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
300,000 |
(7) |
|
|
15.47 |
|
|
|
05/03/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
300,000 |
(8) |
|
|
21.25 |
|
|
|
05/03/2016 |
|
|
|
|
|
|
|
|
|
Gregory Q. Brown
|
|
|
0 |
|
|
|
223,520 |
(11) |
|
|
7.7398 |
|
|
|
01/01/2013 |
|
|
|
505,427 |
(12) |
|
|
10,391,579 |
|
|
|
|
0 |
|
|
|
97,790 |
(13) |
|
|
7.2745 |
|
|
|
05/06/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
118,745 |
|
|
|
237,490 |
(5) |
|
|
16.3028 |
|
|
|
05/04/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
300,000 |
(7) |
|
|
15.47 |
|
|
|
05/03/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
350,000 |
(8) |
|
|
21.25 |
|
|
|
05/03/2016 |
|
|
|
|
|
|
|
|
|
Ronald G.
Garriques(14)
|
|
|
43,586 |
(15) |
|
|
0 |
|
|
|
39.2299 |
|
|
|
01/31/2015 |
|
|
|
453,389 |
(16) |
|
|
9,321,678 |
|
|
|
|
0 |
|
|
|
40,513 |
(13) |
|
|
7.2745 |
|
|
|
05/06/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
55,880 |
(5) |
|
|
16.3028 |
|
|
|
05/04/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
195,580 |
(17) |
|
|
15.5422 |
|
|
|
09/21/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
300,000 |
(7) |
|
|
15.47 |
|
|
|
05/03/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
350,000 |
(8) |
|
|
21.25 |
|
|
|
05/03/2016 |
|
|
|
|
|
|
|
|
|
A. Peter Lawson
|
|
|
83,819 |
(18) |
|
|
0 |
|
|
|
19.2853 |
|
|
|
11/26/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
68,224 |
(19) |
|
|
0 |
|
|
|
16.0582 |
|
|
|
11/05/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
251,460 |
(15) |
|
|
0 |
|
|
|
39.2299 |
|
|
|
01/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
62,340 |
(20) |
|
|
0 |
|
|
|
12.9205 |
|
|
|
05/07/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
52,790 |
|
|
|
97,790 |
(9) |
|
|
7.2745 |
|
|
|
05/06/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
195,580 |
|
|
|
195,580 |
(5) |
|
|
16.3028 |
|
|
|
05/04/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
68,750 |
|
|
|
206,250 |
(7) |
|
|
15.47 |
|
|
|
05/03/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
200,000 |
(8) |
|
|
21.25 |
|
|
|
05/03/2016 |
|
|
|
|
|
|
|
|
|
Adrian R. Nemcek
|
|
|
28,498 |
(18) |
|
|
0 |
|
|
|
19.2853 |
|
|
|
11/26/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
83,820 |
(15) |
|
|
0 |
|
|
|
39.2299 |
|
|
|
01/31/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
69,850 |
(20) |
|
|
0 |
|
|
|
12.9205 |
|
|
|
05/07/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
374,980 |
(5) |
|
|
0 |
|
|
|
16.3028 |
|
|
|
05/04/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Motorola does not grant awards to any Named Executive Officer
under an equity incentive plan as such term is
defined by SEC rules. |
|
(2) |
Awards of RSUs prior to May 1, 2006 are entitled to
dividend equivalent rights. RSU grants on or after May 1,
2006 are not entitled to dividend equivalent rights. As
announced on May 1, 2006, the Companys quarterly
dividend rate increased beginning with the July 15, 2006
dividend from $0.04 per share to its current dividend rate
of $0.05 per share. Dividend equivalent rights are included
in the outstanding awards for the purposes of this table. |
|
(3) |
These stock options were granted on January 5, 2004. The
original grant of options vests and become exercisable in four
equal annual installments with the first installment having
vested on January 5, 2005. |
|
(4) |
200,000 of these restricted stock units (RSUs) were
granted on January 5, 2004 and vest on January 5,
2008. 76,839 of these RSUs were granted on May 4,
2004 32,931 of which vest on May 4, 2007 and
43,908 of which vest on May 4, 2008. 150,000 of these RSUs
were granted on May 3, 2005 and vest equally on
November 3, 2007 and May 3, 2010. 100,000 of these
RSUs were granted on May 3, 2006 and vest equally on
November 3, 2008 and May 3, 2011. The other 8,672 RSUs
represent accrued dividend equivalent rights. |
44
PROXY STATEMENT
|
|
(5) |
These stock options were granted on May 4, 2004. The
original grant of options vests and becomes exercisable in four
equal annual installments with the first installment having
vested on May 4, 2005. The vesting of the options granted
to Mr. Nemcek was accelerated upon his retirement as of
July 2006 pursuant to the terms of the grant. |
|
(6) |
These stock options were granted on February 14, 2005. The
original grant of options vests and becomes exercisable in four
equal annual installments with the first installment having
vested on February 14, 2006. |
|
(7) |
These stock options were granted on May 3, 2005. The
original grant of options vests and becomes exercisable in four
equal annual installments with the first installment having
vested on May 3, 2006. |
|
(8) |
These stock options were granted on May 3, 2006. The
original grant of options vests and becomes exercisable in four
equal annual installments with the first installment vesting on
May 3, 2007. |
|
(9) |
These stock options were granted on May 6, 2003. The
remaining unvested options vest and become exercisable on
May 6, 2007. |
|
(10) |
5,000 of these RSUs were granted on March 18, 2002 and vest
in three equal annual installments with the first installment
having vested on March 18, 2005. The other 276 RSUs
represent accrued dividend equivalent rights. |
|
(11) |
These stock options were granted on January 1, 2003. These
options vested and became exercisable on January 1, 2007. |
|
(12) |
50,000 of these RSUs were granted on January 1, 2003 and
the original grant vested and became exercisable in four equal
annual installments with the first installment having vested on
January 1, 2005. 100,000 of these RSUs were granted on
May 3, 2005 and vest equally on November 3, 2007 and
May 3, 2010. 350,000 of these RSUs were granted on
March 6, 2006 and vest equally on September 6, 2008
and March 6, 2011. The other 5,427 RSUs represent accrued
dividend equivalent rights. |
|
(13) |
These stock options were granted on May 6, 2003. The
original grant of options vests and becomes exercisable in four
equal annual installments with the first installment having
vested on May 6, 2004. |
|
(14) |
Mr. Garriques forfeited his stock and option awards listed
in this table pursuant to their terms in connection with his
termination of employment with the Company on February 16,
2007. |
|
(15) |
These stock options were granted on January 31, 2000. These
options vested in four equal annual installments with the first
installment vesting on January 31, 2001. |
|
(16) |
100,000 of these RSUs were granted on May 3, 2005 and vest
equally on November 3, 2007 and May 3, 2010. 350,000
of these RSUs were granted on March 6, 2006 and vest
equally on September 6, 2008 and March 6, 2011. The
other 3,389 RSUs represent accrued dividend equivalent rights. |
|
(17) |
These stock options were granted on September 21, 2001. The
remaining unvested options vest 83,820 on September 21,
2007 and 111,760 on September 21, 2008. |
|
(18) |
These stock options were granted on November 26, 1997.
These options vested on November 26, 1998. |
|
(19) |
These stock options were granted on November 5, 1998. The
original grant of options vested and became exercisable in three
equal annual installments with the first installment having
vested on November 5, 1999. |
|
(20) |
These stock options were granted on May 7, 2002. These
options vested and became exercisable in four equal annual
installments with the first installment having vested on
May 7, 2003. |
45
PROXY STATEMENT
Option Exercises and Stock Vested in 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards(1) |
|
|
|
|
|
|
|
Number of |
|
|
|
Number |
|
|
|
|
Shares |
|
|
|
of Shares |
|
|
|
|
Acquired |
|
Value Realized |
|
Acquired |
|
Value Realized |
|
|
on Exercise |
|
on Exercise |
|
on Vesting |
|
on Vesting |
Name |
|
(#) |
|
$ |
|
(#) |
|
($) |
(a) |
|
(b) |
|
(c)(2) |
|
(d) |
|
(e) |
|
Edward J. Zander
|
|
|
0 |
|
|
|
$0 |
|
|
|
318,521 |
(3) |
|
|
$7,419,954 |
(3) |
David W. Devonshire
|
|
|
474,956 |
|
|
|
4,585,722 |
|
|
|
5,235 |
|
|
|
116,479 |
|
Gregory Q. Brown
|
|
|
265,430 |
|
|
|
3,988,352 |
|
|
|
25,792 |
|
|
|
582,641 |
|
Ronald G. Garriques
|
|
|
339,992 |
|
|
|
3,085,950 |
|
|
|
25,000 |
|
|
|
570,250 |
|
A. Peter Lawson
|
|
|
100,000 |
|
|
|
1,209,400 |
|
|
|
0 |
|
|
|
0 |
|
Adrian R. Nemcek
|
|
|
730,652 |
|
|
|
7,721,004 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
(1) |
Restricted stock units accrued pursuant to dividend equivalent
rights are included for the purpose of this table. |
|
(2) |
The Value Realized on Exercise represents the
difference between the base (or exercise) price of the option
shares and the market price of the option shares on the date the
option was exercised. The value realized was determined without
considering any taxes that may have been owed. |
|
(3) |
225,497 of these shares are from vested RSUs whose distribution
has been deferred pursuant to the terms of
Mr. Zanders employment agreement until 6 months
after his termination of employment or, if earlier, the first
day on which deductibility of this compensation by Motorola is
no longer precluded by Section 162(m) of the Internal Revenue
Code. Of these 225,497 deferred RSUs, restrictions (i) on
203,206 RSUs lapsed on January 5, 2006 and, (ii) on 22,291
RSUs lapsed on May 4, 2006. The aggregate value of the
deferred RSUs reported above is $5,243,193. For a discussion of
the terms of such deferral, see Employment Agreement with
Edward J. Zander. |
Nonqualified Deferred Compensation in 2006
The Motorola Management Deferred Compensation Plan allows
eligible executive participants, including the Named Executive
Officers the opportunity to defer portions of their base salary
and annual cash incentive compensation and thereby defer taxes.
Motorola does not contribute to this plan. The Motorola
Management Deferred Compensation Plan is not intended to provide
for the payment of above-market or preferential earnings on
compensation deferred under the plan, however, as described
below, pursuant to SEC rules, all earnings on nonqualified
deferred compensation in 2006 in excess of 5.74% have been
deemed above-market earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
Registrant |
|
|
|
Aggregate |
|
|
|
|
Contributions in |
|
Contributions in |
|
Aggregate Earnings |
|
Withdrawals/ |
|
Aggregate Balance |
|
|
Last FY |
|
Last FY |
|
in Last FY |
|
Distributions |
|
at Last FYE |
Name |
|
($) |
|
($) |
|
($)(1) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
Edward J. Zander
|
|
|
|
|
|
|
|
|
|
|
$746,617 |
|
|
|
|
|
|
|
$5,118,976 |
(2) |
David W. Devonshire
|
|
|
|
|
|
|
|
|
|
|
117,143 |
|
|
|
|
|
|
|
912,896 |
(3) |
Gregory Q. Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald G. Garriques
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Peter Lawson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian R. Nemcek
|
|
|
|
|
|
|
|
|
|
|
58,390 |
|
|
|
|
|
|
|
498,276 |
(4) |
|
|
|
(1) |
Pursuant to SEC rules, all earnings on nonqualified deferred
compensation in 2006 in excess of 5.74% have been deemed
above-market earnings. Based on the performance of
the funds elected in advance by the participant (as described
below), Mr. Zander, Mr. Devonshire and Mr. Nemcek
all had earnings on nonqualified deferred compensation in excess
of 5.74% in 2006. All above-market earnings on
nonqualified deferred compensation were reported in this
years Summary Compensation Table. See the
Change in Pension Value and Nonqualified Deferred
Compensation Earnings column of the Summary
Compensation Table. |
|
|
(2) |
In the 2005 Summary Compensation Table under
Bonus compensation earned under 2004 MIP, $4,000,000
of the aggregate balance above was reported. |
|
|
(3) |
In the 2003 Summary Compensation Table under
Bonus compensation, $287,500 of the aggregate
balance above was reported in connection with
Mr. Devonshires employment offer and another $287,500
of the aggregate balance above was reported in connection with
his completion one year of service. |
|
(4) |
In the 2004 Summary Compensation Table under
Salary, the aggregate balance above was reported
(i) $129,567 as received in 2001 and (ii) $43,029 as
received in 2002. In the 2004 Summary Compensation
Table as Bonus |
46
PROXY STATEMENT
|
|
|
compensation, $50,000 of the
aggregate balance above was reported as received in 2001 under
the 2001 Performance Excellence Equals Rewards Plan and $106,237
of the aggregate balance above was reported as received in 2002
under the 2002 Performance Excellence Equals Rewards Plan.
|
The Motorola Management Deferred Compensation Plan uses the
following funds as the index for calculating investment returns
on a participants deferrals. The participants
deferrals are deemed to be invested in these funds as per the
participants election. The participant does not actually
own any share of the investment options he/she selects. The
investment fund choices mirror the fund choices available in the
Motorola 401(k) plan (with the exception of the Motorola stock
fund). The funds are available only through variable universal
life insurance products, and are not publicly traded mutual
funds.
|
|
|
|
|
|
|
|
|
Fund Offering |
|
Investment Classification | |
|
1-Year Annualized Average | |
| |
* Short-Term Investment Fund
|
|
|
Money Market |
|
|
|
4.92 |
% |
* Short-Term Bond Fund
|
|
|
Short-Term Bond |
|
|
|
4.50 |
% |
* Long-Term Bond Fund
|
|
|
Long-Term Bond |
|
|
|
4.29 |
% |
* Balanced Fund I
|
|
|
Moderate Allocation |
|
|
|
11.89 |
% |
* Balanced Fund II
|
|
|
Moderate Allocation |
|
|
|
13.74 |
% |
* Large Company Equity Fund
|
|
|
Large Blend |
|
|
|
15.77 |
% |
* Mid-Sized Company Equity Fund
|
|
|
Mid-Cap Blend |
|
|
|
10.40 |
% |
* Small Company Equity Fund
|
|
|
Small Blend |
|
|
|
18.28 |
% |
* International Equity Fund
|
|
|
Foreign Large Blend |
|
|
|
26.47 |
% |
|
Deferral elections can only be changed during the open
enrollment period prior to each plan (calendar) year.
Changes to distribution elections must be filed at least
12 months in advance. Any change will require that the
payment start date be at least five years later than the
previous payment start date. A participant may postpone or
change his/her termination payment distribution election once
per plan (calendar) year. Hardship withdrawals are
available, but all other nonscheduled withdrawals are not
available. Termination payments cannot be earlier than six
months after separation from service, except in the event of
disability, death or, possibly, a change in control of the
Company. The amounts reported in the Aggregate Earnings in
Last FY column represent all earnings on nonqualified
deferred compensation in 2006. The portion of earnings reported
as above-market earnings in the Summary Compensation
Table in the Change in Pension Value and Non-Qualified
Deferred Compensation Earnings column represents the
amount in excess of the 5.74% threshold established for 2006
pursuant to SEC rules.
RETIREMENT PLANS
The Motorola, Inc. Pension Plan (the Pension Plan)
and either the Motorola Supplemental Pension Plan (the
MSPP) or the Motorola Elected Officers Supplementary
Retirement Plan (the SRP Plan) are intended to
provide pension benefits to the Named Executive Officers in the
future. Prior to January 1, 2005, most regular U.S.
employees who had completed one year of employment with the
Company or certain of its subsidiaries were eligible to
participate in one or more of the Companys pension plans.
Those employees become vested after five years of service.
Normal retirement is at age 65. Effective January 1, 2000,
no additional officers were eligible for participation in the
SRP Plan. Effective January 1, 2005, newly-hired employees
were no longer eligible to participate in the Pension Plan or
the MSPP.
Traditional and Portable Plan
The Pension Plan contains two benefit formulas, referred to as
the Traditional Plan and the Portable Plan. The Traditional Plan
provides an annual pension annuity benefit based on the
participants final average earnings and the
participants benefit service, offset by the
participants estimated Social Security benefit. The
Traditional Plan formula consists of (i) for service from
1978 through 1987, the sum of 40% of the first $20,000 of final
average earnings, plus 35% of final average earnings in excess
of $20,000 multiplied by a fraction whose numerator is the
number of months of service during that period and whose
denominator is 420, plus (ii) for service after 1987, 75%
of final average earnings, multiplied by a fraction whose
numerator is the number of months of service after 1987 (not
exceeding 420) and whose denominator is 420, minus
(iii) 50% of the participants primary annual Social
Security benefit at age 65, or the participants later
retirement age (including any delayed retirement credits or
similar adjustments earned after February 1, 2006),
multiplied by a fraction whose numerator is the number of months
of benefit service after 1977 (not exceeding 420) and whose
denominator is 420.
47
PROXY STATEMENT
The Portable Plan provides a lump-sum pension benefit based on
the participants final average earnings, and a
benefit percentage determined by the
participants vesting service and the participants
benefit service. The Portable Plan formula consists of
(i) final average earnings multiplied by the
participants benefit percentage which cumulative benefit
percentage is based on benefit service earned on or after
July 1, 2000 and vesting service. A participants
benefit percentage is determined as follows: 4% for each year of
benefit service earned while the participant has five or fewer
years of vesting service, plus 5% for each year of benefit
service earned while the participant has more than five but less
than 10 years of vesting service, plus 6% for each year of
benefit service earned while the participant has more than 10
but less than 15 years of vesting service, plus 7% for each
year of benefit service earned while the participant has more
than 15 years of vesting service, plus (ii) the
participants Traditional Plan benefit as of June 30,
2000 (if applicable) converted to a lump-sum based on the
participants age and the interest rate in effect for the
year of payment.
Both Plans use final average earnings to calculate the
participants pension benefit. Final average earnings is
the average compensation for the five years of highest pay
during the last 10 calendar year of Motorola employment.
Eligible earnings includes regular earnings, commissions,
overtime, lump-sum merit pay, participant contributions to the
Motorola 401(k) Plan and other pre-tax plans and incentive pay
with respect to the period January 1, 2000 to
February 3, 2002. After February 3, 2002, incentive
pay was excluded from the definition of eligible compensation.
Motorola Supplemental Pension Plan
The MSPP provides benefits for highly compensated individuals
whose tax qualified Pension Plan benefits are reduced by certain
IRS limits or by participation in the Motorola Management
Deferred Compensation Plan. The IRS annual salary limitation
(Section 401(a)(17) of the Internal Revenue Code) and
certain other IRS requirements reduce pension benefits from
tax-qualified Pension Plans for certain highly compensated
individuals. The MSPP is designed to offset these limitations.
The MSPP is a non-qualified plan, which means benefits are not
subject to certain nondiscrimination testing and reporting
requirements of the Employment Retirement Income Security Act of
1974 (ERISA); however, these amounts are unsecured,
leaving the participants in the status of a general creditor of
the Company.
Effective January 1, 2007, the MSPP began imposing a
limitation on the amount of eligible compensation which will be
considered when calculating any MSPP benefit. For purposes of
determining whether an employee is eligible for an MSPP benefit,
the amount of eligible compensation used for the benefit formula
under the MSPP will be equal to the Section 401(a)(17)
limit plus $175,000 (i.e., $400,000 in 2007) (the Earnings
Cap). Consequently, the Earnings Cap will only increase if
the IRS statutorily increases the Section 401(a)(17) limit
from year to year. Regardless of the above Earnings Cap, a
special transition rule is provided for those employees whose
eligible compensation already exceeded the newly imposed
Earnings Cap. If, as of January 1, 2007, an employees
eligible compensation exceeds the Earnings Cap effective
January 1, 2007, for MSPP purposes, that employees
MSPP benefit will, from January 1, 2007 and forward, be
computed assuming the employees eligible compensation,
used to compute the employees MSPP benefit, is the greater
of (i) the employees frozen January 1, 2007
eligible compensation amount, or (ii) the Earnings Cap for
the given year.
An individual is eligible to participate in MSPP if he or she is
age 55 or older with at least five years of service, is eligible
to receive a pension plan benefit, was currently eligible to
accrue additional benefits under the pension plan at the time of
termination of employment, and the individuals pension
benefit is reduced by Internal Revenue Code limitations. A
participants pension benefit and MSPP benefit together
cannot exceed 70% of his or her final average earnings at
retirement.
Elected Officers Supplementary Retirement Plan
The Company also maintains the SRP Plan for certain elected
officers. Since January 1, 2000, no additional officers are
eligible for participation in the SRP Plan. Messrs. Lawson
and Nemcek participate in the SRP Plan. Messrs. Zander,
Devonshire, Brown and Garriques do not participate in the SRP
Plan. The SRP Plan provides that if the benefit payable annually
(computed on a single life annuity basis) to any participating
officer under one of the Companys pension plans (which is
based on a percentage of final average earnings for each year of
service) is less than the benefit calculated under the SRP Plan,
that officer will receive supplementary payments upon retirement.
Generally, the total annual payments to an officer participating
in the SRP Plan will equal a percentage of the sum of such
officers rate of salary at retirement (or the base salary
in place on June 30, 2005, whichever is earlier) plus an
amount equal to the highest average of the annual bonus awards
paid to such officer for any five years within
48
PROXY STATEMENT
the last eight years preceding retirement. Such percentage
ranges from 40% to 45%, depending upon the officers years
of service and other factors. Under an alternate formula, the
total annual payments to such officer from both plans will equal
the amount of the officers retirement benefit calculated
under the terms of the pension plan in which he participates,
without regard to the limitation on considered compensation
under qualified retirement plans in Section 401(a)(17) of
the Internal Revenue Code, as amended (the Code), or
the technical benefits limitation in Section 415 of the
Code. However, the total annual pension payable on the basis of
a single life annuity to any Named Executive Officer from the
applicable pension plan and SRP Plan is subject to a maximum of
70% of that officers base salary prior to retirement (or
the base salary in place on June 30, 2005, whichever is
earlier). If the officer is vested and retires at or after age
55 but prior to age 60, he or she may elect to receive a
deferred unreduced benefit when he or she attains age 60, or an
actuarially reduced benefit at or after age 57, contingent upon
entering into an agreement not to compete with the Company.
Officers may elect a lump sum payment in lieu of annuity
payments. The amount of the lump sum is based on annuity quotes
from annuity providers at the time of commencement. If a change
in control (as defined in the SRP Plan) of the Company occurs,
the right of each non-vested elected officer to receive
supplementary payments will become vested on the date of such
change in control and unreduced payments may begin or be made
upon retirement at or after age 55.
Messrs. Lawson and Nemcek are vested in their respective
SRP Plan benefit. At the time of vesting, the Company makes a
contribution to the trust for that plan. The purpose of that
contribution is to enable the trust to make payments of the
benefits under the SRP Plan due to the participant after
retirement. Federal and state tax laws require that the
participant include in income the amount of any contribution in
the year it was made even though the participant receives no
cash in connection with such contribution or any payments from
the retirement plan. Because the participant receives no cash
yet incurs a significant income tax liability, the Company
believes that it is appropriate to reimburse the participant so
that he or she is not paying additional taxes as a result of a
contribution. Mr. Lawson was reimbursed for such a tax
liability in 2001 and Mr. Nemcek was reimbursed for such a
tax liability in 2002. This is the Companys policy with
respect to all participants in the SRP Plan.
Participants in the SRP Plan generally become vested in the plan
at age 55 with 5 years of service, or at age 60 with two
years of service, or at age 65 or upon becoming disabled
(without regard to years of service).
A participants benefits derived solely under the Portable
Plan and the MSPP are calculated based on an employees
length of service and the average plan compensation (generally,
base pay) for the five years of highest pay during the last ten
years of employment with the Company. The estimated annual
pension benefits payable at age 65 are computed as a single life
annuity and are not offset by Social Security benefits.
49
PROXY STATEMENT
Pension Benefits in 2006
Assumptions described in Note 7, Retirement
Benefits in the Companys
Form 10-K for the
fiscal year ended December 31, 2006 are also used below and
incorporated by reference.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Present Value |
|
Payments |
|
|
|
|
Years Credited |
|
of Accumulated |
|
During Last |
Name |
|
Plan Name |
|
Service(#)(1) |
|
Benefit($) |
|
Fiscal Year($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
Edward J. Zander
|
|
Pension Plan |
|
3 yrs |
|
|
25,604 |
|
|
|
0 |
|
|
|
Supplemental Pension Plan |
|
3 yrs |
|
|
153,026 |
|
|
|
0 |
|
David W. Devonshire
|
|
Pension Plan |
|
4 yrs 10 mths |
|
|
40,456 |
|
|
|
0 |
|
|
|
Supplemental Pension Plan |
|
4 yrs 10 mths |
|
|
79,970 |
|
|
|
0 |
|
Gregory Q. Brown
|
|
Pension Plan |
|
4 yrs |
|
|
29,436 |
|
|
|
0 |
|
|
|
Supplemental Pension Plan |
|
4 yrs |
|
|
56,948 |
|
|
|
0 |
|
Ronald G. Garriques
|
|
Pension Plan |
|
8 yrs 1
mth(2) |
|
|
95,854 |
|
|
|
0 |
|
|
|
Supplemental Pension Plan |
|
8 yrs 1
mth(2) |
|
|
170,580 |
|
|
|
0 |
|
A. Peter Lawson
|
|
Pension Plan |
|
26 yrs 3 mths |
|
|
622,715 |
|
|
|
0 |
|
|
|
Elected Officer Supplementary Retirement
Plan(3) |
|
26 yrs 3 mths |
|
|
4,310,574 |
|
|
|
0 |
|
Adrian R. Nemcek
|
|
Pension Plan |
|
28 yrs 6 mths |
|
|
0 |
|
|
|
576,664 |
(4) |
|
|
Elected Officer Supplementary Retirement
Plan(3) |
|
36 yrs |
|
|
4,706,045 |
|
|
|
0 |
|
|
|
|
(1) |
When Motorola acquires a company, it does not credit or
negotiate crediting years of service for the purpose of benefit
accruals or augmentation. In certain circumstances, prior
service may count toward eligibility and vesting service. |
|
(2) |
Mr. Garriques is credited with 8 years 1 month of
benefit service and 20 years 7 months of vesting
service. Therefore, the difference does not provide any benefit
or dollar value augmentation. Rather, pursuant to a negotiated
agreement in connection with his hiring, he fully satisfied the
vesting period upon hire. Mr. Garriques terminated
employment on February 16, 2007 and no longer accrues
pension benefits as of such date. |
|
(3) |
Present value of accumulated benefit under the SRP Plan
calculations are based on the age 60 unreduced retirement
age (or current age if over 60) under the SRP Plan. |
|
(4) |
In connection with his retirement, Mr. Nemcek received this
lump-sum amount in November 2006 as full settlement of
obligations under the Pension Plan. |
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS
Employment Agreement with Edward J. Zander
On December 15, 2003, the Company entered into an
employment agreement with Mr. Zander, effective as of
January 5, 2004. The following summarizes the terms of the
agreement as amended through May 2, 2006. The agreement has
an initial term of five years but, commencing on January 5,
2008, the term will be extended for one year on each anniversary
of the effective date of the agreement unless either party
delivers notice to the other party of its intention not to
extend the term. During the term, Mr. Zander will serve as
Chief Executive Officer of the Company, with such duties and
responsibilities as are commensurate with the position, and
reports directly to our Board of Directors. Mr. Zander will
also serve as Chairman of our Board of Directors.
During the term, Mr. Zander will be paid an annual base
salary of not less than $1.5 million. The base salary will
be reviewed for increase commencing at such times as the
Compensation and Leadership Committee reviews the salaries of
senior executives generally. For each fiscal year completed
during the term, Mr. Zander will also be eligible to
receive annual cash bonuses based upon performance targets
established by the Compensation and Leadership Committee, but in
no event will his annual target bonus be less than 135% of his
annual base salary.
As provided in his employment agreement, Mr. Zander
deferred receipt of his 2004 annual bonus of $4 million
until after his date of termination of employment (but no later
than January 1 of the year following termination) or, if
earlier, the first day on which the deductibility of this
compensation by us is no longer precluded by the provisions of
Section 162(m) of the Code.
During the term, he is also eligible to participate in all
long-term incentive plans, qualified
50
PROXY STATEMENT
pension plans and health and welfare, perquisite, fringe benefit
and other arrangements generally available to other senior
executives, including reasonable use of Company aircraft for
personal (not less than 100 hours annually for personal use) and
business purposes, transition housing and a home security system.
Mr. Zander receives change in control benefits under our
Senior Officer Change in Control Severance Plan or any successor
change in control plan or program. If we no longer maintain the
Senior Officer Change in Control Severance Plan, we will provide
Mr. Zander with no less favorable benefits and protection
under an alternative program or arrangement. In addition, upon a
change in control of the Company, all equity-based awards
granted to Mr. Zander will become fully vested and
exercisable, all performance goals will be deemed achieved at
target levels, all performance stock will be delivered as
promptly as practicable and all performance units, restricted
stock units and other incentive awards will be paid out as
promptly as practicable; provided, however, that the treatment
of outstanding awards set forth above (referred to herein as
Accelerated Treatment) shall not apply if and to the
extent that such awards are assumed by the successor corporation
(or parent thereof) or are replaced with awards that preserve
the existing value of such awards at the time of the change in
control and provide for subsequent payout in accordance with the
same vesting schedule applicable to the original awards;
provided, further, that with respect to any awards that are
assumed or replaced, such assumed or replaced awards shall
provide for the Accelerated Treatment if Mr. Zander is
involuntarily terminated (for a reason other than Cause) or if
Mr. Zander quits for Good Reason within 24 months of the
Change in Control. If we adopt an equity incentive plan or a
severance plan for senior executives with change in control
benefits more generous than the benefits provided to
Mr. Zander under his employment agreement, Mr. Zander
will be entitled to those benefits.
On January 5, 2004, pursuant to his employment agreement,
we granted Mr. Zander an option to purchase
1,508,760 shares of Common Stock with a per share exercise
price of $12.97. The stock option has a term of 10 years
and vests in four equal annual installments commencing on
January 5, 2005, subject to Mr. Zanders
continued employment with us through each such date. In
addition, on January 5, 2004, we granted Mr. Zander
400,000 restricted stock units based on shares of our Common
Stock, 50% of which vested on January 5, 2006 and the
remainder of which will vest on January 5, 2008, subject to
Mr. Zanders continued employment with us through such
date. Mr. Zander has agreed to defer settlement of the
restricted stock units until six months after his date of
termination of employment or, if earlier, the first day on which
the deductibility of this compensation by us is no longer
precluded by the provisions of Section 162(m) of the Code.
Pursuant to his employment agreement and in connection with the
Companys broad-based annual stock option grant, on
May 4, 2004, we granted Mr. Zander an option to
purchase 1,061,720 shares of Common Stock with a per share
exercise price of $16.30. The stock option has a term of
10 years and vests in four equal annual installments
commencing on May 4, 2005, subject to
Mr. Zanders continued employment with us through each
such date. In addition, on May 4, 2004, we granted
Mr. Zander 109,770 restricted stock units based on shares
of our Common Stock, of which 10% vested on May 4, 2005,
20% will vest on May 4, 2006, 30% will vest on May 4,
2007 and the remaining 40% will vest on May 4, 2008,
subject to Mr. Zanders continued employment with us
through each such date. Mr. Zander has agreed to defer
settlement of the restricted stock units until six months after
his date of termination of employment (but no later than the
January 1 of the year following termination) or, if earlier, the
first day on which the deductibility of this compensation by us
is no longer precluded by the provisions of Section 162(m)
of the Code.
In connection with the replacement of outstanding amounts at his
former employer that were forfeited by Mr. Zander, on
January 5, 2004, we paid Mr. Zander a lump sum cash
payment of $600,000 and granted Mr. Zander 93,024
restricted shares of our Common Stock. The restrictions with
respect to these share of restricted stock lapsed on
January 5, 2006.
|
|
|
Severance Agreement with David W. Devonshire |
In March 2002, the Company entered into compensation
arrangements with David Devonshire as an incentive for him to
join the Company as Chief Financial Officer. Pursuant to the
compensation arrangements, if Mr. Devonshire is terminated
without cause, Motorola has agreed to pay him severance equal to
one years base salary plus his targeted incentive payout.
|
|
|
Change in Control Arrangements |
The Company has Change in Control Severance Plans (the
Plans) for its elected officers. The Plan applicable
to the Named Executive Officers is the
51
PROXY STATEMENT
Motorola, Inc. Senior Officer Change in Control Severance Plan
(the Senior Officer Plan). The Senior Officer Plan
provides for the payment of benefits in the event that:
(i) an executive officer terminates his or her employment
for good reason (as defined) within two years of a
change in control, or (ii) the executive officers
employment is terminated for any reason other than termination
for good cause (as defined), disability, death or
normal retirement within two years of a change in control of the
Company. In addition to unpaid salary for accrued vacation days
and accrued salary and annual bonus through the termination
date, the amount of the benefits payable to an executive officer
entitled thereto would be equal to the sum of:
|
|
|
(i) three times the greater of the executive officers
highest annual base salary in effect during the three years
immediately preceding the change in control and the annual base
salary in effect on the termination date; |
|
|
(ii) three times the highest annual bonus received by the
executive officer during the immediately preceding five fiscal
years ending on or before the termination date; and |
|
|
(iii) a pro rata target bonus for the year of termination. |
The executive officer would also receive continued medical and
insurance benefits for 3 years, and 3 years of age and
service credit for retiree medical eligibility. In the event the
executive officer is subject to the excise of tax under
Section 4999 of the Code, the Company will make a tax
reimbursement payment to the executive officer to offset the
impact of such excise tax. The Senior Officer Plans term
is for 3 years, subject to automatic one-year extensions
unless the Company gives 90 days prior notice that it does
not wish to extend. In addition, if a change in control occurs
during the term, the Plans continue for an additional two years.
These Plans replaced individual agreements that the Company
began providing in 1988. In addition to plans covering all of
the Companys officers, the general employee population is
covered by a change in control severance plan.
|
|
|
Termination and Change in Control Table for 2006 |
The tables below outline the potential payments to our Chief
Executive Officer and other Named Executive Officers upon the
occurrence of certain termination triggering events. For the
purposes of the table, below are the standard definitions for
the various types of termination, although exact definitions may
vary by agreement and by person.
Voluntary termination means a termination initiated
by the officer.
Voluntary termination for Good Reason generally
means termination initiated by the officer following a change in
control when: (i) an officer is assigned duties materially
inconsistent with his position, or are materially diminished,
(ii) his annual base salary or target incentive opportunity
are reduced, (iii) the Company requires regular performance
duties beyond a fifty (50) mile radius from the current
location, or (iv) the Company purports to terminate the
officers employment other than pursuant to a notice of
termination which indicates the officers employment has
been terminated for Cause. However,
Mr. Zanders employment agreement does not limit
Good Reason to a change in control and includes:
(1) a reduction by the Company in the his annual base
salary or target bonus as a percentage of the base salary;
(2) a material reduction in the aggregate level of employee
benefits made available, unless such reduction is applicable to
senior executives of the Company generally; (3) the failure
of the Company to reelect Mr. Zander to the Board,
Mr. Zander not being appointed as Chief Executive Officer
or Chairman of the Board or, except as required by applicable
law or regulation, his removal from either of such positions or
a material change in his reporting relationship so that
Mr. Zander no longer reports solely to the Board in his
position as Chief Executive Officer; (4) a material
diminution in Mr. Zanders duties or responsibilities,
or (5) relocating Mr. Zanders principal location
of employment more than 35 miles from the principal headquarters
of the Company (other than to the extent agreed to by Mr.
Zander).
Voluntary termination Retirement means, apart
from any pension plan, for purposes of the 2006 Omnibus
Incentive Plan, the 2005 Long Range Incentive Plan and the 2006
Long Range Incentive Plan age 55 with at least 20 years of
service, or age 60 with at least 10 years of service, or
age 65 and for purposes of the Motorola Incentive Plan age 55
with 5 years of service.
Involuntary Termination Total and Permanent
Disability means entitlement to long-term disability
benefits under the Motorola Disability Income Plan, as amended
and any successor plan, or a determination of a permanent and
total disability under a state workers compensation statute.
52
PROXY STATEMENT
Involuntary Termination For Cause means any
misconduct identified as a ground for termination in the
Motorola Code of Business Conduct, or the human resources
policies, or other written policies or procedures, including
among other things, conviction for any criminal violation
involving dishonesty, fraud or breach of trust or willful
engagement in gross misconduct in the performance of the duties
that materially injures the Company.
Involuntary Termination Not for Cause means an
involuntary termination for reasons other than For
Cause as defined above.
Involuntary Termination for Change-in-Control occurs
when, at any time (i) following a change-in-control and
prior to the second anniversary or (ii) prior to a
change-in-control but following such negotiations of the
change-in-control, employment is terminated
(a) involuntarily for any reason other than Cause, death,
Disability or retirement under a mandatory retirement policy of
the Company or any of its Subsidiaries or (b) by the
officer after the occurrence of an event giving rise to Good
Reason.
No Named Executive Officer is entitled to a payment in
connection with Involuntary TerminationFor Cause. Only
Mr. Zander, Mr. Nemcek and Mr. Lawson are
entitled to a payment in connection with a Voluntary Termination
for Good Reason or Retirement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward J. Zander |
|
|
|
|
|
|
|
|
|
|
|
|
Chairman of the Board and Chief |
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total and |
|
|
|
|
Voluntary Termination |
|
Permanent |
|
Involuntary Termination |
Executive Benefits and Payments |
|
|
|
Disability or |
|
|
Upon Termination(1) |
|
Good Reason |
|
Retirement |
|
Death |
|
For Cause |
|
Not For Cause |
|
Change in Control |
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(2)
|
|
|
$7,050,000 |
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$7,050,000 |
|
|
$ |
16,500,000 |
|
|
Short-term
Incentive(3)
|
|
|
0 |
|
|
|
0 |
|
|
|
2,025,000 |
|
|
|
0 |
|
|
|
2,025,000 |
|
|
|
2,025,000 |
|
|
Long-term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005-2007
LRIP(3)
|
|
|
0 |
|
|
|
0 |
|
|
|
2,500,000 |
|
|
|
0 |
|
|
|
2,500,000 |
|
|
|
2,500,000 |
|
|
|
2006-2008
LRIP(3)
|
|
|
0 |
|
|
|
0 |
|
|
|
1,250,000 |
|
|
|
0 |
|
|
|
1,250,000 |
|
|
|
1,250,000 |
|
|
|
Stock Options
(Unvested
and Accelerated or Continued
Vesting)(4)
|
|
|
11,891,928 |
|
|
|
0 |
|
|
|
11,891,928 |
|
|
|
0 |
|
|
|
11,891,928 |
|
|
|
11,891,928 |
|
|
|
Restricted Stock Units (Unvested and Accelerated or
Continued
Vesting)(4)
|
|
|
10,831,810 |
|
|
|
0 |
|
|
|
10,831,810 |
|
|
|
0 |
|
|
|
10,831,810 |
|
|
|
10,831,810 |
|
Benefits and Perquisites
(5)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
Continuation(6)
|
|
|
40,652 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
40,652 |
|
|
|
60,978 |
|
|
280G Tax
Gross-up(7)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,750,010 |
|
|
TOTAL
|
|
|
29,814,390 |
|
|
|
0 |
|
|
|
28,498,738 |
|
|
|
0 |
|
|
|
35,589,390 |
|
|
|
56,809,726 |
|
|
|
|
(1) |
For purposes of this analysis, we assumed Mr. Zanders
compensation is as follows: current base salary is equal to
$1,500,000, short-term incentive target opportunity is equal to
135% of base salary, long-term incentive compensation target
opportunity under the 2005-2007 LRIP cycle is equal to 250% of
cycle salary and under the 2006-2008 LRIP cycle is equal to 250%
of cycle salary. |
|
(2) |
Severance is calculated as 2x base salary + MIP target under
Voluntary Resignation Good Reason and under
Involuntary Termination Not for Cause and as 3x
base salary + 3x highest bonus under Involuntary
Termination Change in Control. |
|
(3) |
Assumes the effective date of termination is December 31,
2006 and that the pro-rata payment under the 2006 Motorola
Incentive Plan is equal to 12/12ths of the target award; the
pro-rata payment under the 2005-2007 LRIP cycle is equal to
24/36ths of the target award; and the pro-rata payment under the
2006-2008 LRIP cycle is equal to 12/36ths of the target award.
If the Executive does not meet the rule of retirement under the
2006 Motorola Incentive Plan (age 55 + 5 years
service) or under the Long-Range Incentive Plans (either
age 55 + 20 years service, age 60
+ 10 years service or age 65) on the effective
date of termination, zeroes are entered under Voluntary
Termination Retirement. |
|
(4) |
Assumes the effective date of termination is December 31,
2006 and the price per share of the Companys stock on the
date of termination is $20.56 per share. Under Voluntary
Termination Good Reason and under Involuntary
Termination Not for Cause, all outstanding unvested
equity continues to vest per the original term and remains
exercisable generally for 18 months following the |
53
PROXY STATEMENT
|
|
|
vesting date. If the Executive
does not meet the rule of retirement under the equity plans
(either age 55 + 20 years service, age 60
+ 10 years service or age 65) on the effective
date of termination, zeroes are entered under Voluntary
Termination Retirement. Under Total and Permanent
Disability or Death and Involuntary Termination
Change in Control, all outstanding unvested equity generally
accelerates.
|
|
|
(5) |
Payments associated with Benefits and Perquisites is
limited to the items listed. No other benefits or perquisite
continuation occurs under the termination scenarios listed. |
|
(6) |
Health and Welfare Benefits Continuation is calculated as
24 months under Voluntary Termination Good Reason
and under Involuntary Termination Not for Cause
and as 36 months under Involuntary Termination
Change in Control. |
|
(7) |
If the parachute payment (severance + value of
accelerated equity) is greater than three times the average W-2
reported compensation for the preceding five years, then an
excise tax is imposed on the portion of the
parachute payment that exceeds the average W-2 reported
compensation for the preceding years. Per Motorolas
Change-In-Control Severance Plan, an additional gross up
payment equal to the value of the excise tax imposed will
be paid. The determination to whether and when a gross up
payment is required, the amount of the gross up
payment and the assumptions to be utilized in arriving at
such determination, shall be made by the Companys
independent registered public accounting firm, currently KPMG
LLP. |
|
(8) |
Mr. Zanders deferred compensation is discussed in
Nonqualified Deferred Compensation in 2006 and there
would be no further enhancement or acceleration upon a
termination or change in control. |
The footnotes to the following Named Executive Officers
tables are found at the conclusion of Mr. Nemceks
table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David W. Devonshire |
|
Voluntary |
|
|
|
|
Chief Financial Officer |
|
Termination |
|
Total and |
|
Involuntary Termination |
|
|
Good |
|
Permanent |
|
|
Executive Benefits and Payments |
|
Reason or |
|
Disability |
|
For |
|
Not For |
|
Change in |
Upon Termination(1) |
|
Retirement |
|
or Death |
|
Cause |
|
Cause |
|
Control |
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(2)
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$937,500 |
|
|
|
$5,369,571 |
|
|
Short-term
Incentive(3)
|
|
|
0 |
|
|
|
593,750 |
|
|
|
0 |
|
|
|
593,750 |
|
|
|
593,750 |
|
|
Long-term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005-2007
LRIP(3)
|
|
|
0 |
|
|
|
625,000 |
|
|
|
0 |
|
|
|
625,000 |
|
|
|
625,000 |
|
|
|
2006-2008
LRIP(3)
|
|
|
0 |
|
|
|
312,500 |
|
|
|
0 |
|
|
|
312,500 |
|
|
|
312,500 |
|
|
|
Stock Options
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
4,423,833 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,423,833 |
|
|
|
Restricted Stock Units
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
102,800 |
|
|
|
0 |
|
|
|
0 |
|
|
|
102,800 |
|
Benefits and
Perquisites(5)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
Continuation(6)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
20,774 |
|
|
|
41,547 |
|
|
280G Tax
Gross-up(7)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
TOTAL
|
|
|
0 |
|
|
|
6,057,883 |
|
|
|
0 |
|
|
|
2,489,524 |
|
|
|
11,469,001 |
|
|
54
PROXY STATEMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory Q. Brown |
|
|
|
|
|
|
|
|
|
|
Executive Vice President, |
|
|
|
|
|
|
|
|
|
|
President, Networks and |
|
|
|
|
|
|
|
|
|
|
and Enterprise |
|
Voluntary |
|
|
|
|
|
|
|
|
|
|
Termination |
|
Total and |
|
|
|
|
Good |
|
Permanent |
|
Involuntary Termination |
Executive Benefits and Payments |
|
Reason or |
|
Disability |
|
|
Upon Termination(1) |
|
Retirement |
|
or Death |
|
For Cause |
|
Not For Cause |
|
Change in Control |
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(2)
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
$ |
1,147,500 |
|
|
|
$5,294,205 |
|
|
Short-term
Incentive(3)
|
|
|
0 |
|
|
|
841,500 |
|
|
|
0 |
|
|
|
841,500 |
|
|
|
841,500 |
|
|
Long-term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005-2007
LRIP(3)
|
|
|
0 |
|
|
|
702,978 |
|
|
|
0 |
|
|
|
702,978 |
|
|
|
702,978 |
|
|
|
2006-2008
LRIP(3)
|
|
|
0 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
400,000 |
|
|
|
400,000 |
|
|
|
Stock Options
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
6,702,803 |
|
|
|
0 |
|
|
|
0 |
|
|
|
6,702,803 |
|
|
|
Restricted Stock Units
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
10,280,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
10,280,000 |
|
Benefits and
Perquisites(5)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
Continuation(6)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
22,331 |
|
|
|
44,661 |
|
|
280G Tax
Gross-up(7)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,341,875 |
|
|
TOTAL
|
|
|
0 |
|
|
|
18,927,281 |
|
|
|
0 |
|
|
|
3,114,309 |
|
|
|
28,608,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald G. Garriques* |
|
|
|
|
|
|
|
|
|
|
Executive Vice President, President |
|
|
|
|
|
|
|
|
|
|
Mobile Devices |
|
Voluntary |
|
|
|
|
|
|
|
|
|
|
Termination |
|
Total and |
|
|
|
|
Good |
|
Permanent |
|
Involuntary Termination |
Executive Benefits and Payments |
|
Reason or |
|
Disability |
|
|
Upon Termination(1) |
|
Retirement |
|
or Death |
|
For Cause |
|
Not For Cause |
|
Change in Control |
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(2)
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
$ |
1,147,500 |
|
|
|
$5,233,287 |
|
|
Short-term
Incentive(3)
|
|
|
0 |
|
|
|
841,500 |
|
|
|
0 |
|
|
|
841,500 |
|
|
|
841,500 |
|
|
Long-term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005-2007
LRIP(3)
|
|
|
0 |
|
|
|
733,333 |
|
|
|
0 |
|
|
|
733,333 |
|
|
|
733,333 |
|
|
|
2006-2008
LRIP(3)
|
|
|
0 |
|
|
|
400,000 |
|
|
|
0 |
|
|
|
400,000 |
|
|
|
400,000 |
|
|
|
Stock Options
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
3,284,509 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,284,509 |
|
|
|
Restricted Stock Units
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
9,252,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
9,252,000 |
|
Benefits and
Perquisites(5)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
Continuation(6)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
22,331 |
|
|
|
44,661 |
|
|
280G Tax
Gross-up(7)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,859,760 |
|
|
TOTAL
|
|
|
0 |
|
|
|
14,511,342 |
|
|
|
0 |
|
|
|
3,144,664 |
|
|
|
24,649,051 |
|
|
|
|
* |
Mr. Garriques voluntarily terminated employment on
February 16, 2007 and therefore is not entitled to a
termination payment. |
55
PROXY STATEMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Peter Lawson |
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President, General |
|
|
|
|
|
Total and |
|
|
|
|
|
|
Counsel and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary Termination |
|
Permanent |
|
Involuntary Termination |
Executive Benefits and Payments |
|
|
|
Disability |
|
|
Upon Termination(1) |
|
Good Reason |
|
Retirement |
|
or Death |
|
For Cause |
|
Not For Cause |
|
Change in Control |
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(2)
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
|
$810,000 |
|
|
|
$4,234,788 |
|
|
Short-term
Incentive(3)
|
|
|
0 |
|
|
|
513,000 |
|
|
|
513,000 |
|
|
|
0 |
|
|
|
513,000 |
|
|
|
513,000 |
|
|
Long-term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005-2007
LRIP(3)
|
|
|
0 |
|
|
|
540,000 |
|
|
|
540,000 |
|
|
|
0 |
|
|
|
540,000 |
|
|
|
540,000 |
|
|
|
2006-2008
LRIP(3)
|
|
|
0 |
|
|
|
270,000 |
|
|
|
270,000 |
|
|
|
0 |
|
|
|
270,000 |
|
|
|
270,000 |
|
|
|
Stock Options
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
3,181,625 |
|
|
|
3,181,625 |
|
|
|
0 |
|
|
|
3,181,625 |
|
|
|
3,181,625 |
|
|
|
Restricted Stock Units
(Unvested and
Accelerated)(4)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Benefits and
Perquisites(5)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Motorola Pension Plan EOSRP
only(9)
|
|
|
4,337,235 |
|
|
|
4,337,235 |
|
|
|
4,337,235 |
|
|
|
0 |
|
|
|
4,337,235 |
|
|
|
4,337,235 |
|
|
Health and Welfare Benefits
Continuation(6)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
19,830 |
|
|
|
39,660 |
|
|
280G Tax
Gross-up(7)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
TOTAL
|
|
|
4,337,235 |
|
|
|
8,841,860 |
|
|
|
8,841,860 |
|
|
|
0 |
|
|
|
9,671,690 |
|
|
|
13,116,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian R. Nemcek* |
|
|
|
|
|
|
|
|
|
|
Retired |
|
Voluntary |
|
|
|
|
|
|
|
|
|
|
Termination(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Good |
|
|
|
|
|
|
|
|
Executive Benefits and Payments |
|
Reason or |
|
|
|
|
|
|
|
|
Upon Termination(1) |
|
Retirement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(2)
|
|
|
$0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Incentive(3)
|
|
|
570,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005-2007
LRIP(3)
|
|
|
575,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006-2008
LRIP(3)
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
(Unvested
and
Accelerated)(4)
|
|
|
3,831,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
(Unvested
and
Accelerated)(4)
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and
Perquisites(5)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Motorola Pension Plan
EOSRP
only(9)
|
|
|
4,706,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
Continuation(6)
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
Gross-up(7)
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
9,983,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Mr. Nemcek retired from the Company as of July 2006 and
therefore these amounts are based on his plan-based entitlements
for such triggering event. |
56
PROXY STATEMENT
|
|
(1) |
For purposes of this analysis, we assumed the Named Executive
Officers compensation is as follows: Greg Browns
current base salary is equal to $765,000, short-term incentive
target opportunity is equal to 110% of base salary, long-term
incentive compensation target opportunity under the 2005-2007
LRIP cycle is equal to 183% of cycle salary and under the
2006-2008 LRIP cycle is equal to 200% of cycle salary; Ronald
Garriques current base salary is equal to $765,000,
short-term incentive target opportunity is equal to 110% of base
salary, long-term incentive compensation target opportunity
under the 2005-2007 LRIP cycle is equal to 183% of cycle salary
and under the 2006-2008 LRIP cycle is equal to 200% of cycle
salary; A. Peter Lawsons current base salary is equal to
540,000, short-term incentive target opportunity is equal to 95%
of salary, long-term incentive compensation target opportunity
under the 2005-2007 LRIP cycle is equal to 150% of cycle salary
and under the 2006-2008 LRIP cycle is equal to 150% of cycle
salary; and Adrian Nemceks current base salary is equal to
600,000, short-term incentive target opportunity is equal to 95%
of salary, long-term incentive compensation target opportunity
under the 2005-2007 LRIP is equal to 150% of cycle salary and
under the 2006-2008 LRIP is equal to 150% of cycle salary. |
|
(2) |
Severance is calculated as 18 months of base salary under
Involuntary Termination Not for Cause and as 3x
base salary + 3x highest bonus under Involuntary
Termination Change in Control. |
|
(3) |
Assumes the effective date of termination is December 31,
2006 and that the pro-rata payment under the 2006 Motorola
Incentive Plan is equal to 12/12ths of the target award; the
pro-rata payment under 2005-2007 LRIP cycle is equal to 24/36ths
of the target award; and the pro-rata payment under 2006-2008
LRIP cycle is equal to 12/36ths of the target award. If the
Named Executive Officer does not meet the rule of retirement
under the 2006 Motorola Incentive Plan (age
55 + 5 years service) or under the Long-Range
Incentive Plans (either age 55 + 20 years
service, age 60 + 10 years service or
age 65) on the effective date of termination, zeroes are
entered under Voluntary TerminationRetirement. If a
Named Executive Officer has not met the applicable rule of
retirement, they are not automatically entitled to a pro-rata
payment under the Companys short-term or long-term
incentive plans in the event an Involuntary
Termination Not for Cause. However, such
pro-rata payments have been included in the tables. |
|
(4) |
Assumes the effective date of termination is December 31,
2006 and the price per share of the Companys stock on the
date of termination is $20.56 per share, the closing price on
December 29, 2006. If the Named Executive Officer does not
meet the rule of retirement under the equity plans (either age
55 + 20 years service, age 60 + 10 years service or
age 65) on the effective date of termination, zeroes are entered
under Voluntary Termination Retirement. |
|
(5) |
Payments associated with Benefits and Perquisites is
limited to the items listed. No other benefits or perquisite
continuation occurs under the termination scenarios listed. |
|
(6) |
Health and Welfare Benefits Continuation is calculated as
18 months under Involuntary Termination Not for
Cause and as 36 months under Involuntary
Termination Change in Control. |
|
(7) |
If the parachute payment (severance + value of
accelerated equity) is greater than three times the average W-2
reported compensation for the preceding five years, then an
excise tax is imposed on the portion of the
parachute payment that exceeds the average W-2 reported
compensation for the preceding years. Per Motorolas
Change In Control Severance Plan, an additional gross
up payment equal to the value of the excise tax imposed
will be paid. The determination to whether and when a
gross up payment is required, the amount of the
gross up payment and the assumptions to be utilized
in arriving at such determination, shall be made by the
Companys independent registered public accounting firm,
currently KPMG LLP. |
|
(8) |
See Nonqualified Deferred Compensation in 2006 for a
discussion of nonqualified deferred compensation. There is no
further enhancement or acceleration upon a termination or change
in control. |
|
(9) |
The Portable Plan was available as an option to all salaried
employees on July 1, 1999 and was the primary plan
available to all salaried employees commencing their employment
between July 1, 1999 and January 1, 2005 and is
therefore not included. The Motorola Elected Officers
Supplementary Retirement Plan (the EOSRP) is only
available to elected officers and was discontinued on
January 1, 2000. The EOSRP was closed to new participants
as of January 1, 2000. Mr. Lawson and Mr. Nemcek
are the only Named Executive Officers participating in the
EOSRP. This supplemental retirement plan provides an annual
income of up to 70% of salary at retirement or disability based
on certain eligibility and vesting requirements. As of
January 1, 2007, there are 5 unvested participants
remaining in the plan. We do not have an executive-only
retirement plan. For employees hired after January 1, 2005,
we do not have any pension retirement plan. For a further
explanation of retirement benefits, please see Retirement
Plans. |
57
PROXY STATEMENT
The following Report of Audit and Legal Committee
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 Securities Exchange Act
of 1934 (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.
AUDIT AND LEGAL COMMITTEE MATTERS
Report of Audit and Legal Committee
The Audit and Legal Committee is comprised of four non-employee
directors. Mr. Fuller, the Chair, Mr. Dorman,
Mr. Meredith and Mr. J. White were the members of the
Committee at the end of 2006. The Committee operates pursuant to
a written charter that was amended and restated by the Board as
of February 12, 2007. A copy of the Committees
current charter is available at www.motorola.com/investor.
On February 22, 2007, the Board determined that each member
of the Committee was independent within the meaning of the NYSE
listing standards for independence, SEC rules and the Motorola,
Inc. Director Independence Guidelines. The Board also determined
that each member of the Committee is (i) an audit
committee financial expert as defined by SEC rules, whose
expertise has been attained through relevant experience as
discussed in Who Are the Nominees and (ii) is
financially literate. During all of 2006, the
Committee was comprised of non-employee directors who were each
independent as defined by the NYSE listing standards applicable
during 2006 and SEC rules.
The responsibilities of the Committee include assisting the
Board of Directors in fulfilling its oversight responsibilities
as they relate to the Companys accounting policies,
internal controls, financial reporting practices and legal and
regulatory compliance. The Committee also appoints and retains
the independent registered public accounting firm.
The Committee fulfills its responsibilities through periodic
meetings with the Companys independent registered public
accounting firm, internal auditors and management. During 2006,
the Committee met eleven times. The Committee schedules its
meetings with a view toward ensuring that it devotes appropriate
attention to all of its tasks. During certain of these meetings,
the Committee meets privately with the independent registered
public accounting firm, the chief financial officer, the
director of internal audit, the chief legal counsel and from
time-to-time other members of management. Outside of formal
meetings Committee members had telephone calls to discuss
important matters with management and the independent registered
public accounting firm. The Committee also obtains a review, of
the nature described in Statement on Auditing Standards
(SAS) No. 100, from the independent registered public
accounting firm containing the results of their review of the
interim financial statements.
Throughout the year, the Committee monitors matters related to
the independence of KPMG LLP (KPMG), the
Companys independent registered public accounting firm. As
part of its monitoring activities, the Committee reviews the
relationships between the independent registered public
accounting firm and the Company. After reviewing the
relationships and discussing them with management, the Committee
discussed KPMGs overall relationship, objectivity and
independence with the Company. Based on its review, the
Committee is satisfied with the auditors independence.
KPMG also has confirmed to the Committee in writing, as required
by Independence Standards Board Standard No. 1, that, in
its professional judgment, it is independent of the Company
under all relevant professional and regulatory standards.
The Committee also discussed with management, the internal
auditors and the independent registered public accounting firm,
the quality and adequacy of the Companys internal controls
and the internal audit functions management, organization,
responsibilities, budget and staffing. The Committee reviewed
with both the independent registered public accounting firm and
the internal auditors their audit plans, audit scope, and
identification of audit risks.
The Committee discussed and reviewed with the independent
registered public accounting firm all matters required by the
standards of the Public Company Accounting Oversight Board
(United States), including those described in SAS No. 61,
Communication with Audit Committees. With and
without management present, the Committee discussed and reviewed
the results of the independent registered public accounting
firms examination of the consolidated financial
statements. The Committee also discussed the results of the
internal audit examinations.
The Committee reviewed the audited consolidated financial
statements of the Company as of and for the year ended
December 31, 2006, with management and the independent
registered public accounting firm. Management has the
responsibility for the preparation and integrity of the
Companys
58
PROXY STATEMENT
consolidated financial statements and the independent registered
public accounting firm has the responsibility for the
examination of those statements. Based on the above-mentioned
review and discussions with management and the independent
registered public accounting firm, the Committee recommended to
the Board that the Companys audited consolidated financial
statements be included in its Annual Report on
Form 10-K for the
year ended December 31, 2006, for filing with the
Securities and Exchange Commission.
The Committee also reviewed managements report on its
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2006 and the report
of the Companys independent registered public accounting
firm on managements assessment and on the effectiveness of
internal control over financial reporting as of
December 31, 2006. Management is responsible for
maintaining adequate internal control over financial reporting
and for its assessment of the effectiveness of internal control
over financial reporting. The Companys independent
registered public accounting firm has the responsibility for
auditing managements assessment and the effectiveness of
internal control over financial reporting and expressing an
opinion thereon based on their audit. Based on the
above-mentioned review and discussions with management and the
Companys independent registered public accounting firm,
the Committee recommended to the Board that managements
report on its assessment of the effectiveness of internal
control over financial reporting as of December 31, 2006
and the report of our independent registered public accounting
firm be included in the Companys Annual Report on
Form 10-K for the
year ended December 31, 2006 for filing with the Securities
and Exchange Commission.
As specified in the Audit and Legal Committee Charter, it is not
the duty of the Committee to plan or conduct audits or to
determine that the Companys consolidated financial
statements are complete and accurate and in accordance with U.S.
generally accepted accounting principles. That is the
responsibility of management and the Companys independent
registered public accounting firm. In giving its recommendation
to the Board of Directors, the Committee has relied on:
(i) managements representation that such consolidated
financial statements have been prepared with integrity and
objectivity and in conformity with U.S. generally accepted
accounting principles, and (ii) the reports of the
Companys independent registered public accounting firm
with respect to such consolidated financial statements.
|
|
|
Respectfully submitted, |
|
|
H. Laurance Fuller, Chair |
|
David W. Dorman |
|
Thomas J. Meredith |
|
John A. White |
59
PROXY STATEMENT
Independent Registered Public Accounting Firm
KPMG LLP (KPMG) served as the Companys
independent registered public accounting firm for the fiscal
years ended December 31, 2006 and December 31, 2005
and is serving in such capacity for the current fiscal year. The
Audit and Legal Committee appoints and engages the independent
registered public accounting firm annually. The decision of the
Committee is based on auditor qualifications and performance on
audit engagements.
Representatives of KPMG are expected to be present at the Annual
Meeting and will have the opportunity to make a statement if
they desire to do so and to respond to appropriate questions of
stockholders.
|
|
|
Total Fees Billed by KPMG |
The aggregate fees billed by KPMG for professional services to
the Company were $15.8 million in 2006 and
$14.4 million in 2005.
The aggregate fees billed by KPMG for professional services
rendered in connection with the audit of the Companys
annual financial statements, the audit of internal control over
financial reporting, the review of the Companys quarterly
financial statements, and services that are normally provided in
connection with statutory and regulatory filings or engagements
were $12.5 million in 2006 and $12.0 million in 2005.
The aggregate fees billed by KPMG for assurance and related
services reasonably related to the performance of the audit of
the Companys financial statements, but not included under
Audit Fees, were $2.3 million in 2006 and $1.4 million
in 2005. These fees primarily related to audits and due
diligence in connection with acquisitions and dispositions by
the Company, miscellaneous assurance services, and benefit plan
audits.
The aggregate fees billed by KPMG for tax services were
$1.0 million in 2006 and $1.0 million in 2005. These
fees primarily related to assistance with U.S. tax returns,
U.S. tax appeals and international subsidiary tax audit
services.
The aggregate fees for all other services rendered by KPMG were
$0 in 2006 and $0 in 2005.
The following table further summarizes fees billed to the
Company by KPMG during 2006 and 2005.
|
|
|
|
|
|
|
|
|
|
Service |
|
2006 |
|
2005 |
|
Audit Fees
|
|
|
$12.5 |
|
|
|
$12.0 |
|
|
Audit-Related Fees
|
|
|
|
|
|
|
|
|
Acquisition & Disposition Audits, Due Diligence, and
Assurance Services
|
|
|
$2.1 |
|
|
|
$1.2 |
|
Benefit Plan Audits
|
|
|
$0.2 |
|
|
|
$0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$2.3 |
|
|
|
$1.4 |
|
|
Tax Fees
|
|
|
|
|
|
|
|
|
International Tax Services
|
|
|
$0.4 |
|
|
|
$0.3 |
|
U.S. Tax Services
|
|
|
$0.6 |
|
|
|
$0.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$1.0 |
|
|
|
$1.0 |
|
|
All Other Fees
|
|
|
$0.0 |
|
|
|
$0.0 |
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$15.8 |
|
|
|
$14.4 |
|
|
Audit and Legal Committee Pre-Approval Policies
In addition to retaining KPMG to audit the Companys
consolidated financial statements and internal controls over
financial reporting for 2006, KPMG and other accounting firms
were retained to provide auditing and advisory services in 2006.
The Audit and Legal Committee (the Committee) has
restricted the non-audit services that KPMG may provide to the
Company primarily to divestiture and acquisition related due
diligence and audit services, financial statement audits of
employee benefit plans, audit related assurance services, and
certain tax services. The Committee has further determined that
the Company will obtain non-audit services from KPMG only when
the services offered by KPMG are more effective than other
service providers and do not impair the independence of KPMG.
The Audit and Legal Committee Auditor Fee Policy requires the
pre-approval of all professional services provided to the
Company by KPMG. Below is a summary of the policy and procedures.
The Committee pre-approves the annual audit plan and the annual
audit fee. The Committee policy includes an approved list of
non-audit services that KPMG can provide including audit related
services, tax services, and other services. The Committee
pre-approves the annual non-audit related services and budget.
The Committee allows the
60
PROXY STATEMENT
Companys Controller to authorize payment for any audit and
non-audit service in the approved budget. The Committee also
provides the Companys Controller with the authority to
pre-approve fees less than $25,000 that were not in the annual
budget but that are in the list of services approved by the
Committee. The Controller is responsible to report any approval
decisions to the Committee at its next scheduled meeting. The
Committee reviews, and if necessary, approves updated audit and
non-audit services and fees in comparison to the previous
approved budget at each regular Committee meeting.
In 2006, management did not approve any services that were not
on the list of services pre-approved by the Committee.
COMMUNICATIONS
How Can I Recommend a Director Candidate to the Governance
and Nominating Committee?
The Governance and Nominating Committee will consider a
candidate for director proposed by a stockholder. A candidate
must be highly qualified and be both willing and expressly
interested in serving on the Board. A stockholder wishing to
propose a candidate for the Committees consideration
should forward the candidates name and information about
the candidates qualifications in writing to the Governance
and Nominating Committee, c/o Secretary, Motorola, Inc.,
1303 E. Algonquin Road, Schaumburg, Illinois 60196.
The Governance and Nominating Committee will consider nominees
recommended by Motorola stockholders provided that the
recommendation contains sufficient information for the
Governance and Nominating Committee to assess the suitability of
the candidate, including the candidates qualifications.
Candidates recommended by stockholders that comply with these
procedures will receive the same consideration that candidates
recommended by the Committee and management receive.
What is the Deadline and How Do I Submit Nominations to the
Board?
A stockholder wishing to nominate a candidate for election to
the Board at the 2008 Annual Meeting of Stockholders is required
to give written notice addressed to the Secretary, Motorola,
Inc., 1303 E. Algonquin Road, Schaumburg, Illinois 60196 of his
or her intention to make such a nomination. The notice of
nomination must be received by the Companys Secretary at
the address above no later than February 2, 2008.
The notice of nomination is required to contain certain
information about both the nominee and the stockholder making
the nomination as set forth in the Companys bylaws. In
addition, it must include information regarding the recommended
candidate relevant to a determination of whether the recommended
candidate would be barred from being considered independent
under New York Stock Exchange Rule 303A.02(b), or,
alternatively, a statement that the recommended candidate would
not be so barred. A nomination which does not comply with the
above requirements will not be considered.
What is the Deadline and How Do I Submit Proposals?
Any stockholder who intends to present a proposal at the
Companys 2008 Annual Meeting of Stockholders must send the
proposal to: Secretary, Motorola, Inc., 1303 East Algonquin
Road, Schaumburg, Illinois 60196.
If the stockholder intends to present the proposal at the
Companys 2008 Annual Meeting of Stockholders and have it
included in the Companys proxy materials for that meeting,
the proposal must be received by the Company no later than
November 19, 2007, and must comply with the requirements of
Rule 14a-8 under
the Securities Exchange Act of 1934, as amended. The Company is
not obligated to include any shareholder proposal in its proxy
materials for the 2008 Annual Meeting of Stockholders if the
proposal is received after the November 19, 2007 deadline.
If a stockholder wishes to present a proposal at the 2008 Annual
Meeting of Stockholders but not have it included in the
Companys proxy materials for that meeting, the proposal:
(1) must be received by the Company no later than February
2, 2008, (2) must present a proper matter for shareholder
action under Delaware General Corporation Law, (3) must
present a proper matter for consideration at such meeting under
the Companys amended and restated certificate of
incorporation and bylaws, (4) must be submitted in a manner
that is consistent with the submission requirements provided in
the Companys bylaws, and (5) must relate to subject
matter which could not be excluded from a proxy statement under
any rule promulgated by the Securities and Exchange Commission.
How Can I Communicate with the Board?
All communications to the Board of Directors, presiding
director, the non-management directors or any individual
director, must be in writing and addressed to them c/o
Secretary, Motorola, Inc.,
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PROXY STATEMENT
1303 East Algonquin Road, Schaumburg, IL 60196 or by email to
boardofdirectors@motorola.com.
OTHER MATTERS
The Board knows of no other business to be transacted at the
2007 Annual Meeting of Stockholders, but if any other matters do
come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote or act with respect to
them in accordance with their best judgment.
Section 16(a) Beneficial Ownership Reporting
Compliance
Each director and certain officers of the Company are required
to report to the Securities and Exchange Commission, by a
specified date, his or her transactions related to Motorola
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 2006 fiscal year, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were
complied with, except that: (1) a report on Form 4 was
filed late by Mr. Fuller, a director, for one transaction,
and (2) an amended Form 3/A and Form 4/A were
filed late by Mr. Keller, an executive officer, for his
initial holdings.
Manner and Cost of Proxy Solicitation
The Company pays the cost of soliciting proxies. In addition to
mailing proxies, officers, directors and regular employees of
the Company, acting on its behalf, may solicit proxies by
telephone, personal interview or other electronic means. You may
also be solicited by means of press releases issued by the
Company and advertisements in periodicals. Also, the Company has
retained D.F. King & Co., Inc. (D.F. King)
to aid in soliciting proxies for a fee estimated not to exceed
$750,000 plus expenses. The Company also has agreed to indemnify
D.F. King against certain liabilities including liabilities
arising under the federal securities laws. D.F. King has
informed the Company that it intends to employ approximately
130 persons to solicit proxies. The Company will, at its
expense, request banks, brokers and other custodians, nominees
and fiduciaries to forward proxy soliciting material to the
beneficial owners of shares held of record by such persons. Our
expenses related to the solicitation (in excess of those
normally spent for an annual meeting with an uncontested
director election and excluding salaries and wages of our
regular employees and officers) are currently expected to be
approximately $14 million, of which approximately
$2 million has been spent to date.
Householding of Proxy Materials
In December of 2000, the Securities and Exchange Commission
adopted new rules that permit companies and intermediaries
(e.g., brokers) to satisfy the delivery requirements for proxy
statements with respect to two or more security holders sharing
the same address by delivering a single proxy statement
addressed to those security holders. This process, which is
commonly referred to as householding, potentially
means extra convenience for security holders and cost savings
for companies.
As in the past few years, a number of brokers with
accountholders who are Motorola stockholders will be
householding our proxy materials. As indicated in
the notice previously provided by these brokers to Motorola
stockholders, a single proxy statement will be delivered to
multiple stockholders sharing an address unless contrary
instructions have been received from an affected stockholder.
Once you have received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and
would prefer to receive a separate proxy statement, please
notify your broker or call us at
1-800-262-8509 or write
us at Secretary, Motorola, Inc., 1303 E. Algonquin Road,
Schaumburg, IL 60196.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
householding of their communications should contact
their broker.
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By order of the Board of Directors, |
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A. Peter Lawson |
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IMPORTANT
Your vote is important. Regardless of the number of
shares of Motorola common stock that you own, please sign, date
and promptly mail the enclosed WHITE proxy card in the
accompanying postage-paid envelope. Should you prefer, you may
exercise a proxy by telephone or via the Internet. Please refer
to the instructions on your WHITE proxy card which accompanied
this proxy statement.
Instructions for Street Name Stockholders
If you own shares of Motorola Common Stock in the name of a
broker, bank or other nominee, only it can vote your shares of
Motorola Common Stock on your behalf and only upon receipt of
your instructions. You should sign, date and promptly mail your
WHITE proxy card, or voting instruction form, when you receive
it from your broker, bank or nominee. Please do so for each
separate account you maintain. Your broker, bank or nominee also
may provide for telephone and Internet voting. Please refer to
the instructions which you received with this proxy statement.
Please vote by mail, telephone or via Internet at your earliest
convenience.
If you have any questions or need assistance in voting your
shares of Motorola common stock, please call:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Toll-Free:
1-800-488-8095
Location for the Annual Meeting of Stockholders:
The Art Institute of Chicago - Rubloff Auditorium
230 South Columbus Drive, Chicago, Illinois 60603 Tel: (312)
443-3600
May 7, 2007 at 4:30 P.M., local time
PARKING NEAR THE ART INSTITUTE
Accessible parking for a fee is located in the following garages
near the Art Institute:
Millennium Park garage (enter at Columbus Drive and Monroe
Street),
East Monroe Street garage (enter at Columbus Drive and Monroe
Street),
Grant Park North garage (enter at Michigan Avenue between
Madison and Randolph).
ENTERING AND DEPARTING THE ART INSTITUTE
You are invited to enter and depart the Art Institute through
the Columbus Drive Lobby. Access to this entrance has changed
due to the New North Wing expansion and is off of Columbus
Drive, just south of the future building.
REGISTRATION BEFORE THE MEETING 3:30 - 4:30 p.m.
Please present your Admission Ticket to the 2007 Annual Meeting
of Stockholders at registration in the Chicago Stock Exchange
Trading Room located across the hall from the Rubloff Auditorium.
APPENDIX A
Explanatory Note: The Motorola Employee Stock Purchase Plan of 1999, as amended by the Motorola
Board of Directors on February 22, 2007, subject to shareholder approval, is filed herewith
pursuant to Instruction 3 to Item 10 of Schedule 14A and is not part of the proxy statement.
MOTOROLA
EMPLOYEE STOCK PURCHASE PLAN OF 1999
(as amended by the Motorola Board of Directors on
February 22, 2007, subject to shareholder approval)
1. Purpose. Motorola, Inc., a Delaware corporation (the Company), hereby adopts
the Motorola Employee Stock Purchase Plan of 1999 (the Plan). The purpose of the Plan is to
provide an opportunity for the employees of the Company and any designated subsidiaries to purchase
shares of the Common Stock, $3 par value per share, of the Company at a discount through voluntary
automatic payroll deductions, thereby attracting, retaining and rewarding such persons and
strengthening the mutuality of interest between such persons and the Companys stockholders.
2. Shares Subject to Plan. An aggregate of 154,300,000 shares of Common Stock (the
Shares) may be sold pursuant to the Plan (comprised of 54,300,000 Shares authorized in 1999,
50,000,000 Shares authorized in 2002 and 50,000,000 Shares authorized in 2007). Such Shares may be
authorized but unissued Common Stock, treasury shares or Common Stock purchased in the open market.
If there is any change in the outstanding shares of Common Stock by reason of a stock dividend or
distribution, stock split-up, recapitalization, combination or exchange of shares, or by reason of
any merger, consolidation or other corporate reorganization in which the Company is the surviving
corporation, the number of Shares available for sale shall be equitably adjusted by the Committee
appointed to administer the Plan to give proper effect to such change.
3. Administration. The Plan shall be administered by a committee (the Committee)
which shall be the Compensation Committee of the Board of Directors or another committee consisting
of not less than two directors of the Company appointed by the Board of Directors, all of whom
shall qualify as non-employee directors within the meaning of Securities and Exchange Commission
Regulation § 240.16b-3 or any successor regulation. The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and regulations as it deems necessary for the
proper administration of the Plan and to make such determinations and interpretations and to take
such action in connection with the Plan and any Benefits granted hereunder as it deems necessary or
advisable. Notwithstanding the above, the Committee may, in its discretion, deviate from the
provisions of the Plan in administering the Plan in jurisdictions other than the United States. All
determinations and interpretations made by the Committee shall be binding and conclusive on all
participants and their legal representatives. No member of the Board, no member of the Committee
and no employee of the Company shall be liable for any act or failure to act hereunder, by any
other member or employee or by any agent to whom duties in connection with the administration of
this Plan have been delegated or, except in circumstances
involving his or her bad faith, gross negligence or fraud, for any act or failure to act by the member or
employee.
4. Eligibility. All regular employees of the Company, and of each qualified
subsidiary of the Company which may be so designated by the Committee, other than, in the
discretion of the Committee:
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shall be eligible to participate in the Plan. For the purposes of this Plan, the term employee
means any individual in an employee-employer relationship with the Company or a qualified
subsidiary of the Company, but excluding (a) any independent contractor; (b) any consultant, (c)
any individual performing services for the Company or a qualified subsidiary who has entered into
an independent contractor or consultant agreement with the Company or a qualified subsidiary; (d)
any individual performing services for the Company or a qualified subsidiary under an independent
contractor or consultant agreement, a purchase order, a supplier agreement or any other agreement
that the Company or a qualified subsidiary enters into for services; (e) any individual classified
by the Company as contract labor (such as black badgers, brown badgers, contractors, contract
employees, job shoppers), regardless of length of service; (f) any individual whose base wage or
salary is not processed for payment by the Payroll Department(s) of the Company; (g) any leased
employee as defined in Section 414(n) of the Internal Revenue Code; and (h) any individual whose
terms and conditions of employment are governed by a collective bargaining agreement resulting from
good faith collective bargaining where benefits of the type being offered under the Plan were the
subject of such bargaining, unless such agreement specifies that such individuals are eligible for
the Plan. The term qualified subsidiary means any corporation or other entity in which a fifty
percent (50%) or greater interest is, at the time, directly or indirectly owned by the Company or
by one or more subsidiaries or by the Company and one or more subsidiary. For all purposes of the
Plan, an individual shall be an employee of or be employed by the Company or a qualified
subsidiary for any Offering Period only if such individual is treated by the Company or such
qualified subsidiary for such Offering Period as its employee for purposes of employment taxes and
wage withholding for federal income taxes, regardless of any subsequent reclassification by the
Company or qualified subsidiary, any governmental agency, or any court.
5. Participation. An eligible employee may elect to participate in the Plan as of
any Enrollment Date. Enrollment Dates shall occur on the first day of an Offering Period (as
defined in paragraph 8). Any such election shall be made by completing and forwarding an
enrollment and payroll deduction authorization form to the Plan Administrator prior to such
Enrollment Date, authorizing payroll deductions in an amount not exceeding 10% of the employees
gross pay for the payroll period to which the deduction applies. A participating employee may
increase or decrease payroll deductions as of any subsequent Enrollment Date by completing and
forwarding a revised payroll deduction authorization form to the Plan Administrator; provided, that
changes in payroll deductions shall not be permitted to the extent that they would result in total
payroll deductions exceeding 10% of the employees gross pay or such other amount as may be
determined by the Committee. An eligible employee may not
initiate, increase or decrease payroll deductions as of any date other than an Enrollment Date.
For purposes of this Plan, the term gross pay means the gross amount of pay an employee would
receive at each regular pay period date before any deduction for required federal or state
withholding and any other amounts which may be withheld.
6. Payroll Deduction Accounts. The Company shall establish a Payroll Deduction
Account for each participating employee, and shall credit all payroll deductions made on behalf of
each employee pursuant to paragraph 5 to his or her Payroll Deduction Account. No interest shall
be credited to any Payroll Deduction Account.
7. Withdrawals. An employee may withdraw from an Offering Period by completing and
forwarding a written notice to the Plan Administrator. A notice of withdrawal must be received by
the first business day of the last month of an Offering Period in order for such withdrawal to be
effective during the current Offering Period. Upon receipt of such notice, payroll deductions on
behalf of the employee shall be discontinued commencing with the immediately following payroll
period, and such employee may not again be eligible to participate in the Plan until the next
Enrollment Date. Amounts credited to the Payroll Deduction Account of any employee who withdraws
shall be refunded, without interest, as soon as practicable.
8. Offering Periods. The Plan shall be implemented by consecutive Offering Periods
with a new Offering Period commencing on the first trading day on or after April 1 and October 1 of
each year, or on such other date as the Committee shall determine, and continuing thereafter to the
last trading day of the respective six-month period or until terminated in accordance with
paragraph 17 hereof. The first Offering Period hereunder shall commence on October 1, 1999.
Trading day shall mean a day on which the New York Stock Exchange is open for trading. The
Committee shall have the power to change the duration of Offering Periods (including the
commencement dates thereof) with respect to future offerings. The last trading day of each Offering
Period prior to the termination of the Plan (or such other trading date as the Committee shall
determine) shall constitute the purchase dates (the Share Purchase Dates) on which each employee
for whom a Payroll Deduction Account has been maintained shall purchase the number of Shares
determined under paragraph 9(a). Notwithstanding the foregoing, the Company shall not permit the
exercise of any right to purchase Shares
(a) to an employee who, immediately after the right is granted, would own shares
possessing 5% or more of the total combined voting power or value of all classes of
stock of the Company or any subsidiary; or
(b) which would permit an employees rights to purchase shares under this Plan, or
under any other qualified employee stock purchase plan maintained by the Company or
any subsidiary, to accrue at a rate in excess of $25,000 of the fair market value of
such shares (determined at the time such rights are granted) for each calendar year
in which the right is outstanding at any time.
For the purposes of subparagraph (a), the provisions of Section 425(d) of the Internal Revenue Code
shall apply in determining the stock ownership of an employee, and the shares which an employee may
purchase under outstanding rights or options shall be treated as shares owned by the employee.
9. Purchase of Shares.
(a) Subject to the limitations set forth in paragraphs 7 and 8, each employee participating
in an offering shall have the right to purchase as many Shares, including fractional shares, as may
be purchased with the amounts credited to his or her Payroll Deduction Account as of the payroll
date coinciding with or immediately preceding the last Wednesday of the month (or such other date
as the Committee shall determine) in which occurs the applicable Share Purchase Date (the Cutoff
Date). Employees may purchase Shares only through payroll deductions, and cash contributions shall
not be permitted.
(b) The Purchase Price for Shares purchased under the Plan shall be not less than the
lesser of an amount equal to 85% of the closing price of shares of Common Stock (i) at the
beginning of the Offering Period or (ii) on the Share Purchase Date. For these purposes, the
closing price shall be the closing price of a share of Common Stock as reported in the New York
Stock Exchange Composite Transactions as reported in the Wall Street Journal, Midwest Edition. The
Committee shall have the authority to establish a different Purchase Price as long as any such
Purchase Price complies with the provisions of Section 423 of the Internal Revenue Code.
(c) On each Share Purchase Date, the amount credited to each participating employees Payroll
Deduction Account as of the immediately preceding Cutoff Date shall be applied to purchase as many
Shares, including fractional shares, as may be purchased with such amount at the applicable
Purchase Price. Any amount remaining in an employees Payroll Deduction Account as of the relevant
Share Purchase Date in excess of the amount that may properly be applied to the purchase of Shares
as a result of the application of the limitations set forth in paragraphs 5 and 8 hereof or as
designated by the Committee shall be refunded without interest to the employee as soon as
practicable.
10. Brokerage Accounts or Plan Share Accounts. By enrolling in the Plan, each
participating employee shall be deemed to have authorized the establishment of a brokerage account
on his or her behalf at a securities brokerage firm selected by the Committee. Alternatively, the
Committee may provide for Plan share accounts for each participating employee to be established by
the Company or by an outside entity selected by the Committee which is not a brokerage firm.
Shares purchased by an employee pursuant to the Plan shall be held in the employees brokerage or
Plan share account (Plan Share Account) in his or her name, or if the employee so indicates on
his or her payroll deduction authorization form, in the employees name jointly with any other
person of legal age, with right of survivorship. An employee who is a resident of a jurisdiction
which does not recognize such a joint tenancy may request that such Shares be held in his or her
name as tenant in common with any other person of legal age, without right of survivorship.
11. Rights as Stockholder. An employee shall have no rights as a stockholder with
respect to Shares subject to any rights granted under this Plan until payment for such Shares has
been completed at the close of business on the relevant Share Purchase Date.
12. Certificates. Certificates for Shares purchased under the Plan will not be
issued automatically. However, certificates for whole Shares purchased shall be issued as soon as
practicable following an employees written request. The Company may make a reasonable charge for
the issuance of such certificates.
13. Termination of Employment. If a participating employees employment is
terminated for any reason, including death, or if an employee otherwise ceases to be eligible to
participate in the Plan, payroll deductions on behalf of the employee shall be discontinued and any
amounts then credited to the employees Payroll Deduction Account shall be refunded, without
interest, as soon as practicable, except as otherwise provided by the Committee. Notwithstanding
the above, but subject to the discretion of the Committee, if an employee is granted a paid leave
of absence (within the meaning of Treasury Regulation §1.421-7(h)(2)), payroll deductions on behalf
of the employee shall continue and any amounts credited to the employees Payroll Deduction Account
may be used to purchase Shares as provided under the Plan. If an employee is granted an unpaid
leave of absence, payroll deductions on behalf of the employee shall be discontinued, but any
amounts then credited to the employees Payroll Deduction Account may be used to purchase Shares on
the next applicable Share Purchase Date.
14. Rights Not Transferable. Rights granted under this Plan are not transferable by
a participating employee other than by will or the laws of descent and distribution, and are
exercisable during an employees lifetime only by the employee.
15. Employment Rights. Neither participation in the Plan, nor the exercise of any
right granted under the Plan, shall be made a condition of employment, or of continued employment
with the Company or any subsidiary.
16. Application of Funds. All funds received by the Company for Shares sold by the
Company on any Share Purchase Date pursuant to this Plan may be used for any corporate purpose.
17. Amendments and Termination. The Board of Directors or the Committee may amend
the Plan at any time, provided that no such amendment shall be effective unless approved within 12
months after the date of the adoption of such amendment by the affirmative vote of stockholders
holding shares of Common Stock entitled to a majority of the votes represented by all outstanding
shares of Common Stock entitled to vote if such stockholder approval is required for the Plan to
continue to comply with the requirements of Securities and Exchange Commission Regulation §
240.16b-3 and Section 423 of the Internal Revenue Code. The Board of Directors may suspend the
Plan or discontinue the Plan at any time. Upon termination of the Plan, all payroll deductions
shall cease and all amounts then credited to the participating employees Payroll Deduction
Accounts shall be equitably applied to the purchase of whole Shares then available for sale, and
any remaining amounts shall be promptly refunded to the participating employees.
18. Applicable Laws. This Plan, and all rights granted hereunder, are intended to
meet the requirements of an employee stock purchase plan under Section 423 of the Internal
Revenue Code, as from time to time amended, and the Plan shall be construed and interpreted to
accomplish this intent. Sales of Shares under the Plan are subject to, and shall be accomplished
only in accordance with, the requirements of all applicable securities and other laws.
19. Expenses. Except to the extent provided in paragraph 12, all expenses of
administering the Plan, including expenses incurred in connection with the purchase of Shares for
sale to participating employees, shall be borne by the Company and its subsidiaries.
20. Stockholder Approval. The Plan was adopted by the Board of Directors on March 9,
1999, subject to stockholder approval. The Plan and any action taken hereunder shall be null and
void if stockholder approval is not obtained at the next annual meeting of stockholders.
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Vote by Internet |
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www.cesvote.com |
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Use the Internet to transmit your voting
instructions up until the closing of the polls at the Annual Meeting, which closing is expected to occur
on Monday, May 7, 2007. Have
your proxy card in hand when
you access the website listed above and follow the
instructions to create an electronic voting
instruction form. |
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Vote By Telephone |
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1-888-693-8683 |
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REGISTRATION LINE 1
REGISTRATION LINE 2
REGISTRATION LINE 3
REGISTRATION LINE 4
REGISTRATION LINE 5
REGISTRATION LINE 6
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Use any touch-tone telephone to
transmit your voting instructions up until
the closing of the polls at the Annual Meeting, which closing is expected to occur on Monday,
May 7, 2007. Have your proxy card in
hand when you call and then follow
the instructions. |
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Vote by Mail |
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Please mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to: Motorola, Inc., c/o Corporate
Election Services, P.O. Box 3230, Pittsburgh PA 15230-3230. To ensure that
your vote is received prior to the Annual Meeting on May 7, 2007, please act
promptly. Receipt of your mailed proxy is needed prior to the closing of the polls at the Annual Meeting, which closing is expected to occur on Monday, May 7, 2007. |
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Vote by Telephone
Call Toll-Free using a
touch-tone telephone:
1-888-693-8683
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Vote by Internet
Access the Website and
cast your vote:
www.cesvote.com
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Vote by Mail
Sign and return your proxy
in the postage-paid
envelope provided.
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If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
You can view the Annual Report and Proxy Statement on the Internet at www.motorola.com/investor.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED
ê Please fold and detach card at perforation before mailing. ê
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW. |
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Proposal 1: Election of Directors for a One-Year Term |
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Nominees:
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E. Zander
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N. Negroponte
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D. Warner III
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For All
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Withhold All
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For All Except |
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D. Dorman
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S. Scott III
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J. White
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J. Lewent
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R. Sommer
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M. White |
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T. Meredith
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J. Stengel |
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the
number(s) of the nominee(s) on the line below. |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2. |
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Abstain |
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Proposal 2: Approval of Amendment to The Motorola Employee Stock Purchase Plan of 1999 |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4. |
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Abstain |
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Proposal 3: Shareholder Proposal re: Shareholder Vote on Executive Pay
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Proposal 4: Shareholder Proposal re: Recoup Unearned Management Bonuses
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REGISTRATION LINE 1 |
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REGISTRATION LINE 2
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Signature
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REGISTRATION LINE 3 |
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REGISTRATION LINE 4 |
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REGISTRATION LINE 5
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Signature (Joint Owners)
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REGISTRATION LINE 6 |
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Please vote, date and sign and mail this proxy promptly in the enclosed envelope. When there is
more than one owner, each should sign. When signing as an attorney, administrator, executor,
guardian or trustee, please add your title as such. If executed by a corporation, the full
corporation name should be given, and this proxy should be signed by a duly authorized officer,
showing his or her title. |
ADMISSION TICKET TO MOTOROLAS
2007 ANNUAL MEETING OF STOCKHOLDERS
This is your admission ticket to gain access to Motorolas 2007 Annual Meeting of Stockholders
to be held at The Art Institute of Chicago Rubloff Auditorium, 230 South Columbus Drive, Chicago,
Illinois on Monday, May 7, 2007 at 4:30 p.m. local time. A map showing directions to the meeting
site is shown below. Please present this ticket at registration in The Chicago Stock Exchange
Trading Room across the hall from the Rubloff Auditorium from 3:30 4:30 p.m. Please note that a
large number of stockholders may attend the meeting, and seating is on a first-come, first-served
basis.
THIS TICKET IS NOT TRANSFERABLE
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Map to The Art Institute of Chicago
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Map to The Art Institute of Chicago Rubloff Auditorium |
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PARKING NEAR THE ART INSTITUTE
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ENTERING THE ART INSTITUTE |
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Accessible parking for a fee is located in the following garages near the Art Institute:
Millennium Park garage (enter at Columbus Drive and Monroe Street),
East Monroe Street garage (enter at Columbus Drive and Monroe Street),
Grant Park North garage (enter at Michigan Avenue between Madison and Randolph).
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You are invited to enter the Art Institute through the Columbus
Drive Lobby. Access to this entrance has changed due to
the New North Wing Expansion and is off of Columbus Drive,
just south of the future building. |
ê Please fold and detach card at perforation before mailing ê
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
for the Annual Meeting of Stockholders, May 7, 2007
The stockholder(s) whose signature(s) appear(s) on the reverse side of this Proxy Card hereby
appoint(s) Edward J. Zander, David W. Devonshire, A. Peter Lawson and Steven J. Strobel, or any one
of them, as proxies (with power of substitution) to represent and to vote all the shares of common
stock of Motorola, Inc. which the stockholder(s) would be entitled to vote, at the Annual Meeting
of Stockholders of Motorola, Inc. to be held on May 7, 2007, and at any adjournments or
postponements thereof.
In their discretion, the proxies are authorized to vote upon any other matter that may properly
come before the meeting or any adjournments or postponements thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE,
BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED, FOR PROPOSAL 2, AGAINST PROPOSAL 3 AND AGAINST PROPOSAL 4.
IMPORTANT This Proxy must be signed and dated on the reverse side.