-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pOQJmq15khsE0M6k6UKmM4DbtW+fvbnHSBjABfR0xC8x4b2NCI2XA+xRQLU+whLr kzAtH7EiWkVQsfomiUxL1A== 0000912057-94-001017.txt : 19940324 0000912057-94-001017.hdr.sgml : 19940324 ACCESSION NUMBER: 0000912057-94-001017 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940503 FILED AS OF DATE: 19940323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTOROLA INC CENTRAL INDEX KEY: 0000068505 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 361115800 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 34 SEC FILE NUMBER: 001-07221 FILM NUMBER: 94517341 BUSINESS ADDRESS: STREET 1: 1303 E ALGONQUIN RD CITY: SCHAUMBURG STATE: IL ZIP: 60196 BUSINESS PHONE: 7085765000 FORMER COMPANY: FORMER CONFORMED NAME: MOTOROLA DELAWARE INC DATE OF NAME CHANGE: 19760414 DEF 14A 1 DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.142-12 MOTOROLA, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): / / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) /X/ Fee paid with Preliminary filing / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3) / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11 1) Title of each class of securities to which transaction applies: -- - ------------------------------------------------------------------------ 2) Aggregate number of securities to which transaction applies: -- - ------------------------------------------------------------------------ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:* -- ------------------------------------------------------------------------ 4) Proposed maximum aggregate value of transaction: -- - ------------------------------------------------------------------------ * Set forth the amount on which the filing fee is calculated and state how it was determined. / / 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. 1) Amount Previously Paid: ------------------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ 3) Filing Party: ------------------------------------------------------------------------ 4) Date Filed: ------------------------------------------------------------------------ [LOGO] - -------------------------------------------------------------------------------- PRINCIPAL EXECUTIVE OFFICES: PLACE OF MEETING: 1303 East Algonquin Road 1297 East Algonquin Road Schaumburg, Illinois 60196 Schaumburg, Illinois 60196 - -------------------------------------------------------------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To the Stockholders: Notice is hereby given that the annual meeting of stockholders of Motorola, Inc. (the "Company" or "Motorola"), a Delaware corporation, will be held in the Auditorium at the Company's Galvin Center, 1297 East Algonquin Road, Schaumburg, Illinois on Tuesday, May 3, 1994 at 5:00 P.M., local time, for the following purposes: 1. To elect directors for the ensuing year; 2. To consider and vote upon the Long Range Incentive Plan of 1994; 3. To consider and vote upon a proposed amendment to the Company's restated Certificate of Incorporation to increase the number of authorized shares of Common Stock of the Company from 700,000,000 to 1,400,000,000; 4. To act upon a stockholder proposal, if properly presented to the meeting, concerning the creation of an independent nominating committee, which is described in the accompanying Proxy Statement; and 5. To transact such other business as may properly come before the meeting. Only stockholders of the Company of record at the close of business on March 15, 1994 will be entitled to vote at the meeting. Stockholders are requested to vote, date, sign and mail their proxies in the form enclosed even though they now plan to attend the meeting. If stockholders are present at the meeting, their proxies may be withdrawn, and they may vote personally on all matters brought before the meeting. By order of the Board of Directors Richard H. Weise SECRETARY March 23, 1994 IMPORTANT WE HOPE YOU WILL ATTEND THE STOCKHOLDERS' MEETING. IN ORDER THAT THERE MAY BE A PROPER REPRESENTATION AT THE MEETING, EACH STOCKHOLDER IS REQUESTED TO SEND IN HIS OR HER PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. ATTENTION BY STOCKHOLDERS TO THIS REQUEST WILL REDUCE THE COMPANY'S EXPENSE IN SOLICITING PROXIES. PROXY STATEMENT The annual meeting of stockholders of Motorola, Inc. (the "Company" or "Motorola") will be held on May 3, 1994 for the purposes set forth in the accompanying Notice. The only matters which the Board of Directors of the Company intend to present or understand may be presented are the election of directors; the adoption of the proposed Long Range Incentive Plan of 1994; the adoption of a proposed amendment to the Company's restated Certificate of Incorporation and action on one stockholder proposal, if properly presented at the meeting and seconded. It is anticipated that this Proxy Statement and the enclosed proxy will be first mailed to stockholders on or about March 23, 1994. Only stockholders of record at the close of business on March 15, 1994 will be entitled to notice of and to vote at the meeting or any adjournments thereof. On that date, prior to giving effect to the two-for-one stock split in the form of a 100% stock dividend being distributed to stockholders of record on March 15, 1994, there were 279,185,023 outstanding shares of the Company's common stock, $3 par value per share ("Common Stock"), the only class of voting securities of the Company. For each matter, including the election of directors, which may come before the meeting, each share is entitled to one vote. The enclosed proxy is solicited by the Board of Directors of the Company. If the proxy in such form is properly executed and returned, and choices are specified, the shares represented thereby will be voted at the meeting in accordance with those instructions. If no choices are specified, the proxy will be voted-- FOR - Election of directors nominated by the Board of Directors; FOR - Adoption of the proposed Long Range Incentive Plan of 1994; FOR - Adoption of the proposed amendment to the Company's restated Certificate of Incorporation; and AGAINST - The stockholder proposal concerning the creation of an independent nominating committee. The proxy, if given, may be revoked by the stockholder giving it at any time before it is voted, and such right is not limited by or subject to compliance with any specified formal procedure. A proxy may be revoked by written notice of revocation or by a later proxy, in either case delivered to the Secretary of the Company. Attendance at the 1994 Annual Meeting will not automatically revoke a proxy, but a stockholder in attendance may request a ballot and vote in person, thereby revoking a prior granted proxy. The Company's Annual Report for the fiscal year ended December 31, 1993 was first mailed to stockholders on March 23, 1994. Stockholders are referred to that report for financial and other information about the activities of the Company. The Annual Report is not incorporated by reference into this Proxy Statement and is not to be deemed a part hereof. ELECTION OF DIRECTORS The terms of office of all present directors of the Company will expire on the day of the annual meeting upon the election of their successors. The number of directors of the Company to be elected at the annual meeting is sixteen. The directors elected at the annual meeting will serve until their respective successors are elected and qualified or until earlier death or resignation. 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 4, 1993. At the time of the annual meeting, if any of the nominees named below is not available to serve as a director (an event which the Board of Directors does not now anticipate), the proxies will be voted for the election as directors of such other person or persons as the Board of Directors may designate, unless the Board of Directors, in its discretion, amends the Company's Bylaws to reduce the number of directors. Set forth below are the names and ages of the nominees, the principal occupation of each, the year in which first elected a director of the Company, the business experience of each for at least the past five years and certain other information concerning each of the nominees. 2 [PHOTO] WILLIAM J. WEISZ PRINCIPAL OCCUPATION: CHAIRMAN OF THE BOARD, MOTOROLA, INC. DIRECTOR SINCE 1968 AGE AT 12/31/93--66 Mr. Weisz joined the Company in 1948; became vice president in 1961; general manager of the communications division in 1965; executive vice president and assistant chief operating officer in 1969; president in 1970; chief operating officer in 1972; vice chairman of the board in 1980; chief executive officer in 1986; and officer of the board in 1988. Mr. Weisz retired as an officer of the Company in 1989, but remained active with the Company as a consultant, and a teacher at Motorola University. In October, 1993 he was elected acting chairman of the board and in December, 1993 was elected chairman of the board. He is a member of the Board of Directors of Harris Bankcorp, Inc. and its wholly owned subsidiary, Harris Trust and Savings Bank. Mr. Weisz is a Fellow of the Institute of Electrical and Electronics Engineers and the Radio Club of America and is past chairman of the Electronic Industries Association Board of Governors. He is a member of the Massachusetts Institute of Technology Corporation (Board of Trustees), and presently is a member of the Visiting Committee to the Sloan School of Management, MIT's Development Committee and its Investment Committee. He is past Chairman of the Visiting Committee for the School of Electrical Engineering and Computer Sciences. He served on the advisory committee on land mobile radio service to the Federal Communications Commission. He served on the National Academy of Sciences panel on Competition Among the Industrialized Allies. He is a past member of the Defense Policy Advisory Committee on Trade to the Secretary of Defense and the U.S. Trade Representative. Mr. Weisz received a B.S.E.E. degree from the Massachusetts Institute of Technology and did graduate work at Northwestern University and the University of Chicago. He has an honorary Doctor of Business Administration degree from St. Ambrose College and has been given the MIT Corporate Leadership Award and the Electronic Industries Association Medal of Honor. 3 [PHOTO] ERICH BLOCH PRINCIPAL OCCUPATION: DISTINGUISHED FELLOW AT THE COUNCIL ON COMPETITIVENESS; FORMERLY DIRECTOR OF THE NATIONAL SCIENCE FOUNDATION DIRECTOR SINCE 1991; MEMBER OF LEGAL AND TECHNOLOGY COMMITTEES AGE AT 12/31/93--68 Mr. Bloch is currently the Distinguished Fellow at the Council on Competitiveness, a not-for-profit, private organization dedicated to improving the country's competitiveness in the global marketplace. He previously was the Director of the National Science Foundation (NSF). Before joining NSF, Mr. Bloch was a corporate vice president for Technical Personnel Development at International Business Machines Corporation, a producer of information handling systems. Mr. Bloch began his career at IBM in 1952 when he joined the company as an electrical engineer and held a variety of increasingly responsible positions in both the computer and semiconductor areas of the business. From 1981 to 1984 Mr. Bloch served as chairman of the Semiconductor Research Cooperative, a group made up of leading computer and electronics firms that fund advanced research in universities and shares in the results. He was also IBM's representative on the Board of the Semiconductor Industry Association. In 1985 Mr. Bloch was awarded the National Medal of Technology by President Reagan. In 1989 he received the Institute of Electrical and Electronics Engineers (IEEE) United States Activities Board Award for Distinguished Public Service and the IEEE 1990 Founders Medal. Mr. Bloch has received numerous honorary doctoral degrees from some of the country's most esteemed colleges and universities. He is a member of the National Academy of Engineering, a Fellow of the American Association for the Advancement of Science, and a Fellow of the IEEE. He received his education in electrical engineering at the Federal Polytechnic Institute of Zurich, Switzerland, and a Bachelor of Science degree in electrical engineering from the University of Buffalo. He is a director of Convex Computer Corporation. - -------------------------------------------------------------------------------- [PHOTO] DAVID R. CLARE PRINCIPAL OCCUPATION: RETIRED; FORMERLY PRESIDENT, JOHNSON & JOHNSON DIRECTOR SINCE 1986; CHAIRMAN OF THE COMPENSATION COMMITTEE AND MEMBER OF THE EXECUTIVE COMMITTEE AGE AT 12/31/93--68 Mr. Clare joined Johnson & Johnson, a health-care products supplier, in 1946 as a manufacturing trainee and has spent his entire career with that company. He served in a variety of assignments and, in 1971, was elected a Director and member of the Executive Committee. In 1976, he became President and Chairman of the Executive Committee. In 1989, he retired from those positions and became Chairman of the Finance Committee and, in 1990, he retired from Johnson & Johnson's Board of Directors. He is a member of the Board of Trustees of the Robert Wood Johnson Foundation. He is a graduate of the Massachusetts Institute of Technology. 4 [PHOTO] WALLACE C. DOUD PRINCIPAL OCCUPATION: RETIRED; FORMERLY VICE PRESIDENT, INTERNATIONAL BUSINESS MACHINES CORPORATION DIRECTOR SINCE 1985; CHAIRMAN OF THE AUDIT COMMITTEE AND MEMBER OF THE EXECUTIVE AND TECHNOLOGY COMMITTEES AGE AT 12/31/93--68 Mr. Doud retired in 1985 as vice president of International Business Machines Corporation, a producer of information handling systems. He served IBM in a variety of marketing and staff capacities for over 37 years, the last 15 of which were as the officer responsible for intellectual property matters, standards, intercompany relationships and telecommunications policy. A past chairman and director of the Computer and Business Equipment Manufacturers Association, Mr. Doud also served as a director of the American Arbitration Association and has been recognized for involvement in numerous civic activities including United Way, American Cancer Society, Urban League and Legal Aid Society. He is a director of Clayton Homes, Inc. Mr. Doud received a B.B.A. degree from the University of Wisconsin and has been awarded an honorary Doctor of Humane Letters from Mercy College. - -------------------------------------------------------------------------------- [PHOTO] CHRISTOPHER B. GALVIN PRINCIPAL OCCUPATION: PRESIDENT AND CHIEF OPERATING OFFICER, MOTOROLA, INC. DIRECTOR SINCE 1988; MEMBER OF THE EXECUTIVE AND FINANCE COMMITTEES AGE AT 12/31/93--43 Mr. Galvin began working for the Company part-time in 1967 and full-time in 1973. Between 1973 and 1983 he served in the positions of salesman, zone sales manager, area sales manager, product marketing manager and product manager in the communications sector. He attended graduate school from 1975 to 1977. From 1983 to 1985, he served as vice president of marketing, sales and service, and vice president and general manager of U.S. operations for Tegal Corp., then a Motorola new enterprise company. He returned to the communications sector's paging division as product director and became vice president and general manager of that division in 1986. He moved to chief corporate staff officer in 1988 and later was elected to executive vice president. In January of 1990, he was promoted to senior executive vice president and assistant chief operating officer, and was elected president and chief operating officer in December of 1993. Mr. Galvin received a bachelor's degree from Northwestern University and a master's degree with distinction from the Kellogg Graduate School of Management at Northwestern. He is a trustee of Northwestern University and the American Enterprise Institute and is a member of the Investment Policy Advisory Committee of the U. S. Trade Representatives office. Mr. Galvin is a son of Robert W. Galvin. 5 [PHOTO] ROBERT W. GALVIN PRINCIPAL OCCUPATION: CHAIRMAN OF THE EXECUTIVE COMMITTEE, MOTOROLA, INC. DIRECTOR SINCE 1945 AGE AT 12/31/93--71 Mr. Galvin started his career at the Company in 1940. He held the senior officership position in the Company from 1959 until 1990, when he became Chairman of the Executive Committee. He continues to serve as a full time officer of the Company. He attended the University of Notre Dame and the University of Chicago, and is currently a member of the Board of Trustees of Illinois Institute of Technology. Mr. Galvin has been awarded a number of honorary degrees as well as industrial, professional and national awards and recognition. - -------------------------------------------------------------------------------- [PHOTO] JOHN T. HICKEY PRINCIPAL OCCUPATION: RETIRED; FORMERLY EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, MOTOROLA, INC. DIRECTOR SINCE 1974; CHAIRMAN OF THE FINANCE COMMITTEE AND MEMBER OF THE EXECUTIVE AND AUDIT COMMITTEES AGE AT 12/31/93--68 Mr. Hickey joined the Company in 1948; became manager of the semiconductor products division in 1956; assistant to the president in 1958; vice president for planning in 1965; vice president for finance and secretary in 1970; senior vice president and chief financial officer in 1974; and executive vice president in 1984. He retired in 1985, but continues to serve as a member of the committees which oversee the investments of the Company's domestic employee retirement and savings plans. He also serves as a director of Trustmark Insurance Company. He is a past Chairman of the Board of Trustees of Loyola Academy, Wilmette, Illinois. Mr. Hickey graduated from Loyola University of Chicago and holds an M.B.A. degree from the University of Chicago. 6 [PHOTO] ANNE P. JONES PRINCIPAL OCCUPATION: PARTNER, SUTHERLAND, ASBILL & BRENNAN DIRECTOR SINCE 1984; CHAIRMAN OF THE LEGAL COMMITTEE AND MEMBER OF THE AUDIT COMMITTEE AGE AT 12/31/93--58 Ms. Jones became a partner in the Washington, D.C. office of the Sutherland, Asbill & Brennan law firm in September 1983. Prior thereto, she was a Commissioner of the Federal Communications Commission, General Counsel of the Federal Home Loan Bank Board, and was on the staff of the Securities and Exchange Commission from 1968 to 1977. She was Director of the Division of Investment Management of the Securities and Exchange Commission in 1976 and 1977. Ms. Jones is a director of the IDS Mutual Fund Group and C-COR Electronics, Inc. She holds B.S. and L.L.B. degrees from Boston College and its Law School, respectively. - -------------------------------------------------------------------------------- [PHOTO] DONALD R. JONES PRINCIPAL OCCUPATION: RETIRED; FORMERLY EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, MOTOROLA, INC. DIRECTOR SINCE 1987; MEMBER OF THE FINANCE AND LEGAL COMMITTEES AGE AT 12/31/93--63 Mr. Jones joined the Company in 1951; became director of finance and planning of the communications division in 1968; treasurer of the Company in 1971; vice president and assistant chief financial officer in 1974; senior vice president and assistant chief financial officer in 1984; and executive vice president and chief financial officer in 1985. He retired in 1991 but remains active with the Company as a consultant. He is a trustee of the Kemper Mutual Funds, Chicago, Illinois. Mr. Jones received a B.S.E.E. degree from the University of Illinois and did graduate work in Business Administration at Northwestern University. 7 [PHOTO] WALTER E. MASSEY PRINCIPAL OCCUPATION: PROVOST AND SENIOR VICE PRESIDENT, ACADEMIC AFFAIRS, UNIVERSITY OF CALIFORNIA SYSTEM DIRECTOR SINCE 1993; MEMBER OF THE NOMINATING AND TECHNOLOGY COMMITTEES AGE AT 12/31/93--55 After being staff physicist and post-doctoral fellow at Argonne National Laboratory, assistant professor at the University of Illinois, associate professor and professor of physics at Brown University, Dr. Massey then joined Argonne National Laboratory as its director and was named to the additional position of Vice President for Research at the University of Chicago in 1982. In 1984, he became Vice President for Research and for Argonne National Laboratory, the University of Chicago. In 1991, he was appointed, by President Bush, the Director of the National Science Foundation, which office he held until April, 1993. Since April, 1993 he has been Provost and Senior Vice President, Academic Affairs, University of California System. Dr. Massey received a Ph.D. degree in Physics and Master of Arts degree from Washington University. He also holds a Bachelor of Science degree in Physics and Mathematics from Morehouse College. He also was a past President of the American Physical Society. He is a director of Amoco Corporation and BankAmerica Corporation and its subsidiary, Bank of America, N.T.S.A. - -------------------------------------------------------------------------------- [PHOTO] JOHN F. MITCHELL PRINCIPAL OCCUPATION: VICE CHAIRMAN AND OFFICER OF THE BOARD, MOTOROLA, INC. DIRECTOR SINCE 1974; MEMBER OF THE EXECUTIVE AND TECHNOLOGY COMMITTEES AGE AT 12/31/93--65 Mr. Mitchell joined the Company in 1953; became vice president of the Company in 1968; general manager of the communications division in 1972; executive vice president and assistant chief operating officer in 1975; president in 1980; chief operating officer in 1986; and vice chairman and officer of the board in 1988. He is former chairman of the Electronic Industries Association and a former member of its Board of Governors. He is a former director of the National Association of Manufacturers; a member of the President's National Security Telecommunications Advisory Committee; a Fellow of the Radio Club of America; is a director of National Material Corporation and is on the Advisory Board of Trustees of the Foundation for Student Communications, Princeton University. Mr. Mitchell received a B.S. degree from the Illinois Institute of Technology. He was awarded an honorary doctorate from Iowa Wesleyan College. 8 [PHOTO] THOMAS J. MURRIN PRINCIPAL OCCUPATION: DEAN OF DUQUESNE UNIVERSITY'S SCHOOL OF BUSINESS ADMINISTRATION DIRECTOR SINCE 1991; MEMBER OF THE COMPENSATION AND NOMINATING COMMITTEES AGE AT 12/31/93--64 Mr. Murrin is Dean of Duquesne University's School of Business Administration. He previously was Deputy Secretary of the U.S. Department of Commerce and served as a U.S. delegate to the NATO Industrial Advisory Group and as a member of the Defense Policy Advisory Committee on Trade. From 1983 to 1987, he was President of the Energy and Advanced Technology Group of Westinghouse Electric Corporation, which he joined in 1951. Mr. Murrin also served as chairman of the Commission on the Federal Appointment Process, the Federal Quality Institute, the Board of Overseers of the Commerce Department's Malcolm Baldrige National Quality Award and the Defense Department's Defense Manufacturing Board. He has also served as Distinguished Service Professor in Technology and Management at Carnegie Mellon University, as Chairman of the Board of Trustees of Duquesne University and as a member of the Board of Trustees of Fordham University. He is a director of Duquesne Light Company and its holding company, DQE, Inc. - -------------------------------------------------------------------------------- [PHOTO] SAMUEL C. SCOTT III PRINCIPAL OCCUPATION: CORPORATE VICE PRESIDENT OF CPC INTERNATIONAL, INC. DIRECTOR SINCE 1993; MEMBER OF THE COMPENSATION AND FINANCE COMMITTEES AGE AT 12/31/93--49 Mr. Scott is currently a Corporate Vice President of CPC International, Inc., a consumer foods company, and President of Corn Products, its North American corn refining business. Mr. Scott joined Corn Products in 1973 and has held a variety of increasingly responsible positions with the company since that time. He received a Bachelor of Science degree in mechanical engineering and a Master of Business Administration degree from Fairleigh Dickinson University. 9 [PHOTO] GARY L. TOOKER PRINCIPAL OCCUPATION: VICE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, MOTOROLA, INC. DIRECTOR SINCE 1986; MEMBER OF THE EXECUTIVE, FINANCE AND LEGAL COMMITTEES AGE AT 12/31/93--54 Mr. Tooker started with the Company in 1962, holding ascending marketing and operations assignments within the semiconductor division; he was appointed director of product operations--MOS in 1974; in 1975, he was elected corporate vice president and general manager of the discrete semiconductor division; vice president and general manager of the group's international semiconductor division in 1980; vice president and general manager of the semiconductor products sector in 1981; executive vice president and general manager of the semiconductor products sector in 1984; senior executive vice president and chief corporate staff officer in 1986; chief operating officer in 1988; president in 1990; acting chief executive officer in October, 1993 and vice chairman of the board and chief executive officer in December, 1993. Mr. Tooker has served as chairman of the Semiconductor Industry Association Board of Directors, member of the Arizona Association of Industries Board of Directors, the Scottsdale, Arizona Boys Club Board of Directors and as a member of the Advisory Council on Engineering at Arizona State University. He is the past Chairman of the Board of Directors of the American Electronics Association. He is a member of the Board of Directors of the National Alliance of Business, Junior Achievement of Chicago, the Arizona State University Alumni Association, the Arizona State University Foundation and the Pacific Basin Economic Council. He is Chairman of the U.S. Committee of the Pacific Basin Economic Council and is active in the Chicago United Way. He is a director of Eaton Corporation and a member of the Electrical Manufacturers Club, the Chicago Economics Club, the American Management Association and the Institute of Electrical and Electronics Engineers. In 1983, he received the Distinguished Alumnus Award from Arizona State University. He is a graduate of Arizona State University where he received a bachelor's degree in Electrical Engineering and did post-graduate studies in Business Administration. 10 [PHOTO] GARDINER L. TUCKER PRINCIPAL OCCUPATION: RETIRED; FORMERLY VICE PRESIDENT FOR SCIENCE AND TECHNOLOGY, INTERNATIONAL PAPER COMPANY DIRECTOR SINCE 1980; CHAIRMAN OF THE TECHNOLOGY COMMITTEE AND MEMBER OF THE EXECUTIVE AND AUDIT COMMITTEES AGE AT 12/31/93--68 Dr. Tucker joined International Business Machines Corporation in 1952 as a research scientist. Thereafter, he served in a variety of research positions for IBM, including manager of semiconductor and transistor research at an IBM laboratory. In 1961, he was appointed Director of Development Engineering for IBM World Trade Corporation and in 1963, Director of Research for IBM. Starting in 1967, he served in the Department of Defense as Deputy Director of Defense Research and Engineering for Electronics and Information Systems; as Principal Deputy Director of Defense Research and Engineering; and in 1970, as Assistant Secretary of Defense for Systems Analysis. From 1973 to 1976, he was Assistant Secretary General of NATO for Defense Support. From 1976 to 1985, he was vice president for science and technology, International Paper Company, a paper and building materials producer. Dr. Tucker received an A.B. degree from Columbia College in New York City and a Ph.D. in Physics from Columbia University. - -------------------------------------------------------------------------------- [PHOTO] B. KENNETH WEST PRINCIPAL OCCUPATION: CHAIRMAN OF THE BOARD, HARRIS BANKCORP, INC. DIRECTOR SINCE 1976; CHAIRMAN OF THE NOMINATING COMMITTEE AND MEMBER OF THE EXECUTIVE AND FINANCE COMMITTEES AGE AT 12/31/93--60 Mr. West is Chairman of the Board of Harris Trust and Savings Bank and its holding company, Harris Bankcorp, Inc. He had been employed at Harris since 1957, and was elected President of Harris in 1980 and Chairman and Chief Executive Officer in 1984. In September 1993 he retired as chief executive officer and as an employee, retaining his position as Chairman of the Board. He is also a director of Bank of Montreal. A native of Carthage, Illinois, Mr. West joined Harris after two years of service as a U.S. Navy Officer. He is a 1955 Phi Beta Kappa graduate of the University of Illinois and after joining the bank completed night classes to receive the M.B.A. with honors in 1960 from the University of Chicago. He is a member of and past chairman of the board of trustees of the University of Chicago and in 1988 was awarded the University's honorary Doctor of Laws degree. He is immediate past President of the University of Illinois Foundation and is Chairman of the Civic Committee of the Commercial Club of Chicago of which he is a past President. 11 INDEPENDENT PUBLIC ACCOUNTANTS KPMG Peat Marwick served as the Company's independent public accountants for the fiscal year ended December 31, 1993 and are serving in such capacity for the current fiscal year. The appointment of independent public accountants is made annually by the Board of Directors. The decision of the Board of Directors is based on the recommendation of the audit committee, which reviews both the audit scope and estimated audit fees. Representatives of KPMG Peat Marwick 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. MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY During 1993, the Board of Directors of the Company met in person or through a conference call eight times. Two of the meetings were of two days' duration. All incumbent directors attended 75% or more of the combined total of meetings and actions of the Board of Directors and the committees on which they served during 1993. COMMITTEES OF THE BOARD OF DIRECTORS OF THE COMPANY The Company has standing audit, compensation, nominating, executive, finance, legal and technology committees of the Board of Directors. The present members of the audit committee are Messrs. Doud, CHAIRMAN, Hickey and Tucker and Ms. A. Jones. This committee held two meetings during 1993. The principal functions of the audit committee are as follows: 1. Recommend to the Board of Directors the selection of independent public accountants; 2. Review and approve the scope of the examinations to be conducted by the independent public accountants; 3. Review the reports and evaluations of the independent public accountants and monitor progress toward correction of any important deficiencies specified by such accountants; 4. Review the accounting standards and principles followed by the Company, and in this connection, receive annually from the independent public accountants a report describing any material item affecting the financial statements which might be given alternative treatment; 5. Receive internal audit reports directly from the Company's internal auditors and monitor progress in the correction of any important deficiencies; and 6. Monitor adherence to established corporate practices, including such matters as conflict of interest, political contributions, questionable payments and standards of business conduct, and arrange for any special investigations or audits that may be deemed necessary. 12 The present members of the compensation committee are Messrs. Clare, CHAIRMAN, Murrin and Scott. This committee met eleven times during 1993. The compensation of executive officers is reviewed by the committee and the compensation of other elected officers of the Company is reviewed and fixed by the compensation committee. In addition, the compensation committee administers the Motorola Executive Incentive Plan, the currently-existing Long Range Incentive Program and the Share Option Plans, will administer the proposed Long Range Incentive Plan of 1994 described on pages 32 and 33, if approved by stockholders, and generally exercises the authority of the Board of Directors with respect to other benefit plans of the Company. The present members of the nominating committee are Messrs. West, CHAIRMAN, Massey and Murrin. This committee held one informal meeting in 1993. The principal functions of the nominating committee are as follows: 1. Provide written criteria to be used as a guideline in selecting and reviewing candidates for the Board; 2. Develop and maintain a list of potential candidates for the Board; 3. Provide an indoctrination and education program for new members of the Board; 4. Review the performance and contribution of outside members of the Board; and 5. Determine the need for, and qualification of, any corporate officer to be a candidate for nomination. The nominating committee will consider individuals recommended by stockholders of the Company as potential future nominees. The names of such individuals together with a full statement of their qualifications to serve as directors of the Company should be submitted to the nominating committee in care of the Secretary of the Company at 1303 East Algonquin Road, Schaumburg, Illinois 60196. Messrs. R. Galvin, CHAIRMAN, Clare, Doud, C. Galvin, Hickey, Mitchell, Tooker, Tucker and West are the present members of the executive committee which reviews the Company's strategic planning process and the allocation of resources and exercises the authority of the Board on specific matters assigned by the Board from time to time. This committee held two meetings in 1993. Messrs. Hickey, CHAIRMAN, C. Galvin, D. Jones, Scott, Tooker and West are the present members of the finance committee, which discusses and makes recommendations with respect to the overall financial posture of the Company. This committee held three meetings in 1993. Messrs. Tucker, CHAIRMAN, Bloch, Doud, Massey and Mitchell are the present members of the technology committee, which identifies and assesses significant technological issues and needs affecting the Company. This committee held five meetings in 1993, including one two-day meeting. 13 Ms. A. Jones, CHAIRMAN, and Messrs. Bloch, D. Jones and Tooker are the present members of the legal committee, which is responsible for maintaining an overview of the Company's legal affairs and its relationship with all internal and external attorneys. This committee held two meetings in 1993. DIRECTOR COMPENSATION The current standard arrangement for compensating directors who are not employees ("non-officer directors") of the Company is the payment of an annual retainer of $35,000 to each director. Each non-officer director who is chairman of a committee receives an additional $4,000 per annum. In addition, each non-officer director receives $1,500 per day for directors' meetings attended, $1,000 per day for full or partial days devoted to assigned work on behalf of committees of the board, including attendance at committee meetings which are not held in conjunction with, and on the same day as, directors' meetings; $500 per day for committee meetings attended which are held in conjunction with, and on the same day as, directors' meetings and $1,000 per day for certain other services for the benefit of the Company or any subsidiary which are requested by the board, any committee of the board or a member of the Chief Executive Office (currently, Gary L. Tooker and Christopher B. Galvin). Non-officer directors may elect to defer receipt of all or any portion of their annual retainer and their per meeting fees until the year after that in which they cease being a director, become disabled or reach a designated age. Such deferred amounts are credited with interest at a rate based on the discount rate for ninety-day Treasury bills. Payments generally may be made in a lump sum or in annual installments over a period not exceeding ten years. The entire undistributed deferred amount (plus interest) will be distributed in a lump sum upon a participating director's death. The Company also reimburses its directors and spouses who accompany directors, in certain instances, for travel, lodging and related expenses they incur in attending board and committee meetings. In addition, non-officer directors participate in a retirement plan which will pay the director, upon retirement on or after age 65, an annual benefit equal to 10 percent of the annual retainer in effect on the date of his or her retirement for each year of service with a maximum benefit equal to 80 percent of such retainer. Benefits will continue for the life of the retired director and the director's spouse. Directors who are full time employees of the Company do not accrue benefits under this plan unless they remain on the Board of Directors after retiring from the Company. Non-officer directors are covered by insurance which 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 directors and their spouses during the year ended December 31, 1993 was approximately $3,025. Mr. Robert W. Galvin, a director and executive officer, owns an airplane which he used on business travel for the Company for approximately 79.8% of its miles flown in 1993. The Company employs pilots and mechanics for airplanes which it owns. They also devote a portion of their time to Mr. Galvin's airplane, including those times when it is not being used on Company business. The Company pays the salaries and the cost of fringe benefits of these employees. Mr. Galvin pays all of the other expenses of his airplane, except that the cost of fuel, oil and relatively minor incidental crew and flight expenses incurred solely in connection with Company business flights, are paid by 14 the Company. Mr. Galvin does not charge the Company when other Company personnel accompany him on his airplane on business trips. In 1993, and historically, the percentage of the total expenses of the airplane which has been paid by the Company has been less than the percentage of usage of the airplane for Company business. The Company considers the arrangement to be economically beneficial to it. Mr. John Hickey, a director, has a consulting agreement with the Company under which he serves as a member of the Advisory Committee (which administers the Motorola Employees' Savings and Profit Sharing Plan) and the Retirement Committee (which administers the Motorola, Inc. Employee Stock Ownership Plan and the Motorola, Inc. Pension Plan) and consults with investment professionals within the Company on an as-needed basis. He receives $8,000 a calendar quarter under this agreement and received $32,000 plus expenses under this arrangement in 1993. In addition, Mr. Donald Jones, a director, has a consulting agreement with the Company under which he serves as Chairman of the Advisory and Retirement Committees and currently receives $8,000 per calendar quarter. Mr. Jones received during 1993 $24,000 for his services and was reimbursed for his expenses. Mr. Erich Bloch, a director, has a consulting agreement with the Company under which he receives $30,000 each year plus expenses and received $30,000 under this agreement in 1993. Finally, Dr. Gardiner Tucker, a director, also has a consulting agreement with the Company under which he was compensated $10,000 in 1993 for his services and was also reimbursed for his expenses connected with his services. Ms. Anne Jones is a partner in the law firm of Sutherland, Asbill & Brennan which furnished legal services to the Company in 1993 and the Company expects the firm to continue furnishing legal services in 1994. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The present members of the compensation committee are Messrs. Clare, Murrin and Scott. Mr. Clare became chairman of the committee on May 5, 1993. Mr. West was a member of the compensation committee from May 5, 1993 to January 29, 1994. Mr. William G. Salatich was a member of the compensation committee until May 5, 1993 and Mr. William J. Weisz was chairman of the compensation committee until May 5, 1993 and a member of the committee until September 10, 1993. Mr. Weisz, who served as chairman of the compensation committee for about four years, was formerly an officer of Motorola, was recently elected Chairman of the Board of Directors and has a consulting agreement with the Company. Under this agreement, Mr. Weisz performs services as a consultant to the Company on various matters. During 1993, Mr. Weisz was compensated at the rate of $2,000 per day for his services and received $80,000 for such services during 1993. He also was and is reimbursed for his expenses which are necessary for and incident to the performance of such services. In addition to the consulting arrangement and the standard arrangement for compensating non-officer directors, the Company paid Mr. Weisz $2,500 per day for his service from October 27, 1993 through October 31, 1993, and $75,000 per month in November and December, 1993 and January, 1994 for his service as Chairman of the Board of Directors. The Company and Mr. Weisz amended this consulting agreement in 1994 to provide that, in addition to the other payments Mr. Weisz will continue to receive as a director, Mr. Weisz will receive $25,000 15 monthly, in lieu of $2,500 per day, for his services to the Company, including service as Chairman of the Board. No other person who was a member of the compensation committee was formerly an officer or an employee of the Company. APPROVAL BY STOCKHOLDERS In order to be elected, a nominee must receive the vote of a plurality of the outstanding shares of Common Stock represented at the meeting and entitled to vote. Shares may be voted for or withheld from each nominee. Shares that are withheld and broker non-votes will have no effect on the outcome of the election because directors will be elected by a plurality of the shares voted for directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED HEREIN. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF SUCH NOMINEES. 16 SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY The following table sets forth information as of January 31, 1994 (except as indicated below) regarding the beneficial ownership 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 and current executive officers of the Company as a group.
SHARES UNDER TOTAL SHARES SHARES EXERCISABLE BENEFICIALLY NAME OWNED(1) OPTIONS(2) OWNED(3) - ----------------------------------------- ---------- ------------- ----------------- George M.C. Fisher(4) 59,820 -- 60,299 Gary L. Tooker 79,113 174,000 253,869(5) Christopher B. Galvin(6) 1,340,629 123,000 1,470,236(7) John F. Mitchell 118,477 98,000 219,145 Edward F. Staiano 10,000 112,000 122,132 James A. Norling 20,316 132,000 152,864 William J. Weisz 190,106 -- 206,136(8) Erich Bloch 2,000 -- 2,000(9) David R. Clare 20,116 -- 20,116 Wallace C. Doud 2,086 -- 2,086 Robert W. Galvin(10) 7,491,647 -- 7,508,812(11) John T. Hickey 30,130 -- 31,930(12) Anne P. Jones 1,779 -- 1,779 Donald R. Jones 51,202 43,000 94,202 Walter E. Massey 323 -- 323 Thomas J. Murrin(13) 3,500 -- 4,500(14) Samuel C. Scott III(15) 2,000 -- 2,000 Gardiner L. Tucker 2,042 -- 2,042 B. Kenneth West 5,000 -- 5,000 All current directors and current executive officers as a group (30 persons)(16) 8,907,190 1,152,140 10,128,096(17) - -------------------------- (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 Company's Profit Sharing and Employee Stock Ownership Plan Trusts and the shares listed under "Shares Under Exercisable Options." The numbers in this table do not reflect the March 15, 1994 two-for-one stock split in the form of a 100% stock dividend. (2) Includes shares under options exercisable on January 31, 1994 and options which become exercisable within 60 days thereafter. (3) Includes interests, if any, in shares held in the Company's Profit Sharing and Employee Stock Ownership Plan Trusts, which are subject to some investment restrictions, and the shares listed under "Shares Under Exercisable Options." Unless otherwise indicated, each person has sole voting and investment power over the shares reported. Each director, other than Mr. R. Galvin, owns less than 1% of the Common Stock. Mr. R. Galvin beneficially owns 2.7% of the Common Stock. All directors and executive officers as a group own 3.6%. (4) Mr. Fisher resigned from the Company on October 27, 1993.
17 (5) Mr. Tooker has shared voting and investment power over 79,113 of these shares. (6) As of February 15, 1994. (7) Mr. C. Galvin has or shares investment and voting power with respect to these shares as follows: sole voting power, 622,038 shares; shared voting power, 718,787 shares; sole investment power, 621,939 shares and shared investment power, 718,787 shares. Included in Mr. C. Galvin's shares are 718,787 shares which are shown in this table to be owned by Mr. R. Galvin. Mr. C. Galvin disclaims beneficial ownership of all shares not held directly by him and of 6,411 shares owned by his wife which are included for him under "Total Shares Beneficially Owned." (8) Mr. Weisz disclaims beneficial ownership of 16,030 shares owned by his wife which are included for him under "Total Shares Beneficially Owned." (9) Mr. Bloch has shared voting and investment power over these shares. (10) As of February 16, 1994. (11) Mr. R. Galvin has or shares investment and voting power with respect to these shares as follows: sole voting power, 4,830,430 shares; shared voting power, 718,787 shares; sole dispositive power, 6,774,282 shares; and shared dispositive power, 718,787 shares. Included in Mr. R. Galvin's shares are 718,787 shares which are shown in this table to be owned by Mr. C. Galvin. Mr. R. Galvin disclaims beneficial ownership of all shares not directly held by him and of 15,611 shares owned by his wife which are included for him under "Total Shares Beneficially Owned." (12) Mr. Hickey disclaims beneficial ownership of 1,800 shares owned by his wife which are included for him under "Total Shares Beneficially Owned." (13) As of February 18, 1994. (14) Mr. Murrin disclaims beneficial ownership of 1,000 shares held by his wife as trustee which are included for him under "Total Shares Beneficially Owned." (15) As of February 9, 1994. (16) Each director and officer (as defined) of the Company is required to report to the Securities and Exchange Commission, by a specified date, his or her transactions related to Common Stock. During the period January 1, 1993 through December 31, 1993, Mr. Scott, a director, failed to timely report one transaction and 12 trusts of which Mr. Robert Galvin, a director and executive officer, could be deemed to be a trustee under SEC rules, and Mr. Robert Galvin, failed to timely report a portion of fourteen annual exclusion gift transactions totalling approximately 4,800 shares, as well as two transfers related to those trusts. (17) All directors and executive officers as a group have shared voting and investment power over 799,940 of these shares.
18 SUMMARY COMPENSATION TABLE Furnished below is a summary concerning the compensation awarded and/or paid to each of the following current or past executive officers during each of the Company's last three fiscal years:
ANNUAL COMPENSATION LONG TERM COMPENSATION ---------------------------------------- --------------------------------------------------- OTHER ANNUAL SECURITIES ALL OTHER NAME AND COMPENSATION UNDERLYING COMPENSATION PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(2) ($)(3)(4) OPTIONS (#)(5) LTIP PAYOUTS ($)(6) ($)(7)(8) - -------------------- --------- ----------- ------------ ------------- --------------- ------------------- ------------- George M.C. Fisher 1993 $ 825,000 $ 907,500 $ 3,558 -0- -0- $ 10,019 Former Chairman of 1992 921,250 535,000 6,048 80,000 -0- 5,540 the Board and Chief 1991 871,667 246,700 8,025 70,000 -0- 1,984 Executive Officer (1/1/93 to 10/27/93) Gary L. Tooker 1993 770,000 847,000 3,750 38,000 -0- 10,350 Vice Chairman and 1992 715,000 415,000 5,331 60,000 -0- 5,106 Chief Executive 1991 676,667 191,500 6,519 54,000 -0- 2,007 Officer (12/16/93 to present) and acting Chief Executive Officer (10/27/93 to 12/15/93) John F. Mitchell 1993 600,000 660,000 5,596 15,000 -0- 13,061 Vice Chairman and 1992 600,000 294,000 8,128 20,000 -0- 6,588 Officer of the Board 1991 600,000 145,800 11,669 18,000 -0- 2,020 Christopher B. 1993 515,000 566,500 1,062 27,000 -0- 6,407 Galvin 1992 472,500 275,000 1,169 40,000 -0- 3,251 President and Chief 1991 420,000 118,900 1,431 36,000 -0- 1,989 Operating Officer (12/16/93 to present) and Senior Executive Vice President and Assistant Chief Operating Officer (1/1/93 to 12/15/93) Edward F. Staiano 1993 479,000 503,800 2,869 18,000 -0- 9,031 Executive Vice 1992 446,333 218,700 4,380 34,000 -0- 4,470 President 1991 420,833 127,000 6,158 30,000 -0- 1,989 James A. Norling 1993 478,333 499,900 1,898 20,000 -0- 7,649 Executive Vice 1992 441,667 242,900 2,679 40,000 -0- 3,815 President 1991 411,250 164,500 2,810 34,000 -0- 2,000 - ------------------------------ (1) Including amounts deferred pursuant to salary reduction arrangements under the Motorola Employees' Savings and Profit Sharing Plan ("Profit Sharing Plan"). (2) These amounts were earned in each of these years under the Motorola Executive Incentive Plan ("MEIP") for performance during that year. (3) These amounts are the Company's reimbursements for the federal income tax liability resulting from the income imputed to that executive officer as a result of coverage by a group life insurance policy for elected officers. (4) 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, was less than either $50,000 or 10% of the total of annual salary and bonus for that executive officer during each of these years. (5) The amounts shown for options granted in 1992 and 1991 reflect a two-for-one split of Common Stock in the form of a 100% stock dividend paid in January 1993. The amounts shown for options do not reflect a two-for-one split of Common Stock in the form of a 100% stock dividend payable in April, 1994. (6) No payments were made in or for these years under the Long Range Incentive Program ("LRIPR"). The Company is asking stockholders to approve a Long Range Incentive Plan of 1994 ("LRIPL").
19 (7) These figures for 1993 include the following amounts for the premiums paid under the term life portion of the split-dollar life insurance: for Mr. Fisher, $5,165; for Mr. Tooker, $5,444; for Mr. Mitchell, $8,123; for Mr. C. Galvin, $1,542; for Mr. Staiano, $4,166; and for Mr. Norling, $2,755. (8) These figures include the following contributions made by the Company to the Profit Sharing Plan for 1993: for Mr. Fisher, $4,854; for Mr. Tooker, $4,905; for Mr. Mitchell, $4,938; for Mr. C. Galvin, $4,865; for Mr. Staiano, $4,865 and for Mr. Norling, $4,894.
STOCK OPTION GRANTS IN 1993
INDIVIDUAL GRANTS ------------------------------------------------------------- POTENTIAL REALIZABLE VALUE NUMBER OF (4) AT ASSUMED ANNUAL SECURITIES RATES OF STOCK PRICE UNDERLYING APPRECIATION FOR OPTIONS GRANTED % OF TOTAL OPTIONS EXERCISE OR OPTION TERM (# OF GRANTED TO BASE PRICE EXPIRATION -------------------------- NAME SHARES)(1)(2) EMPLOYEES IN 1993 ($/SH) DATE (3) 5% ($)(4) 10% ($)(4) - ------------------------ --------------- ------------------- ----------- ---------- ------------ ------------ George M.C. Fisher (5) -0- -0- -- Gary L. Tooker 38,000 2.2% $ 88.88 12/16/03 $ 2,123,820 $ 5,382,700 John F. Mitchell 15,000 0.9% $ 88.88 12/16/03 $ 838,350 $ 2,124,750 Christopher B. Galvin 27,000 1.6% $ 88.88 12/16/03 $ 1,509,030 $ 3,824,550 Edward F. Staiano 18,000 1.1% $ 88.88 12/16/03 $ 1,006,020 $ 2,549,700 James A. Norling 20,000 1.2% $ 88.88 12/16/03 $ 1,117,800 $ 2,833,000 - -------------------------- (1) These are options granted under the Share Option Plan of 1991 to acquire shares of Common Stock. The Plan was amended in December, 1993 to eliminate the provisions which previously allowed the compensation committee to permit options to be canceled and replacement options to be reissued at the fair market value at the time of reissuance. (2) These options were granted at fair market value at the time of the grant, are generally not exercisable until one year after grant and carry with them the right to elect to have shares withheld upon exercise and/or to deliver previously owned shares of Common Stock to satisfy tax withholding requirements. The options granted in 1993 to these five individuals represent less than 0.1% of the shares of Common Stock outstanding. (3) These options could expire earlier in certain situations. (4) The potential realizable value of the options, if any, granted in 1993 to each of these executive officers was calculated by multiplying those options by the excess of (a) the assumed market value, at December 16, 2003, of Common Stock if the market value of Common Stock were to increase 5% or 10% in each year of the option's 10-year term over (b) the base price shown. This calculation does not take into account any taxes or other expenses which might be owed. The assumed market value at a 5% assumed annual appreciation rate over the 10-year term is $144.77 and such value at a 10% assumed annual appreciation rate over that term is $230.53. At $144.77, the total market value of the 279,185,023 shares of Common Stock outstanding on March 15, 1994 (determined pre-stock split) would be $40,417,615,780 which would be an increase of $14,662,797,408 from the market value of such shares at the close of business on December 31, 1993. At $230.53, the total market value of the 279,185,023 shares of Common Stock outstanding on March 15, 1994 (determined pre-stock split) would be $64,360,523,352 which would be an increase of $38,605,704,980 from the market value of such shares at the close of business on December 31, 1993. The 5% and 10% appreciation rates are set forth in the Securities and Exchange Commission rules and no representation is, of course, made that the Common Stock will appreciate at these assumed rates or at all. (5) Mr. Fisher resigned from the Company on October 27, 1993.
20 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN- UNDERLYING UNEXERCISED THE-MONEY (2) OPTIONS AT SHARES ACQUIRED OPTIONS AT END OF 1993 (#) END OF 1993 ($)(3) ON EXERCISE (# VALUE -------------------------- --------------------------- NAME OF SHARES) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ------------------------ --------------- ------------- ----------- ------------- ------------ ------------- George M.C. Fisher (4) 250,000 $ 9,319,800 -0- -0- -0- -0- Gary L. Tooker 80,000 $ 4,767,600 174,000 38,000 $ 9,743,220 $ 128,060 John F. Mitchell 33,000 $ 2,082,570 98,000 15,000 $ 5,956,620 $ 50,550 Christopher B. Galvin -0- -0- 160,800 27,000 $ 9,584,540 $ 90,990 Edward F. Staiano 22,000 $ 991,120 112,000 18,000 $ 5,483,640 $ 60,660 James A. Norling -0- -0- 132,000 20,000 $ 7,499,560 $ 67,400 - -------------------------- (1) The "value realized" 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 which may have been owed. (2) "In-The-Money" options are options whose base (or exercise) price was less than the market price of Common Stock at December 31, 1993. (3) Assuming a stock price of $92.25 per share, which was the closing price of a share of Common Stock reported for the New York Stock Exchange--Composite Transactions on December 31, 1993. (4) Mr. Fisher resigned from the Company on October 27, 1993.
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
PERFORMANCE OR OTHER PERIOD ESTIMATED FUTURE PAYOUTS UNDER NUMBER OF UNTIL NON-STOCK PRICE-BASED PLANS (1)(2)(5) RIGHTS MATURATION OR ---------------------------------------------- NAME (#)(2) PAYOUT THRESHOLD ($)(3) TARGET ($)(4) MAXIMUM ($) - ------------------------ ------------ -------------- ------------------- ----------- ------------ George M.C. Fisher (6) 1 4 Years -0- -0- -0- Gary L. Tooker 1 4 Years $ 1 $ 770,000 $1,540,000 John F. Mitchell 1 4 Years $ 1 $ 600,000 $1,200,000 Christopher B. Galvin 1 4 Years $ 1 $ 515,000 $1,030,000 Edward F. Staiano 1 4 Years $ 1 $ 490,000 $ 980,000 James A. Norling 1 4 Years $ 1 $ 490,000 $ 980,000 - -------------------------- (1) All the payments shown are potential assumed amounts. There is no assurance that Motorola will achieve results that would lead to payments under the Company's current Long Range Incentive Program ("LRIPR") or that any payments will be made under the LRIPR. No payments have been made under the LRIPR since its inception. (2) Under the LRIPR, the compensation committee and the Board establish performance objectives, based on four-year periods, which are measured against the performance of a group of thirteen other selected companies. In general, the return on net assets (as defined in the LRIPR) and sales growth (as defined in the LRIPR) as percentages of return on net assets and sales growth targets (based on the performance of the group of other companies) are used as the basis to compute LRIPR awards. The payments can range from 0% to 200% of the executive officer's base earnings in the last year of the four year period. No
21 payments are made unless certain return on net assets percentages are exceeded by Motorola and no payments are made to participants in a particular business unit unless that unit exceeds a specified percentage return. (3) At the performance threshold--which is that point at which a payment could be made under the LRIPR-- each listed current executive officer who participates in the LRIPR could receive $1 under the LRIPR. (4) At the performance target where the Company achieves 100% sales growth as a percent of net asset growth and 100% return on net assets as a percent of the return on net asset target, and 110% sales growth as a percent of return on net asset target (assuming certain other percentages are met), the indicated payments would be made under the LRIPR. (5) These figures were calculated using the base salary in effect at the end of 1993 for each participating executive officer. (6) Mr. Fisher resigned from the Company on October 27, 1993 and his awards under the LRIPR were terminated.
PENSION AND SUPPLEMENTARY RETIREMENT PLANS The Company maintains a retirement income plan known as the Motorola, Inc. Pension Plan (the "Pension Plan"). The Company's general objective is for the after-tax payments from the Pension Plan and Social Security to provide non-elected officer employees who have 35 years of service under the present Pension Plan formula, with approximately 80% to 100% of their final after-tax salary after their normal retirement. The Company also maintains a supplementary retirement plan in which elected officers, including the named executive officers, except for Mr. Fisher, participate. If the benefit payable annually (computed on a single life annuity basis) to any named executive officer under the Pension Plan (which is generally based on varying percentages of specified amounts of final average earnings, prorated for service, as described in the Pension Plan) is less than the benefit calculated under the supplementary plan, that officer will receive supplementary payments upon retirement at age 60 or later. The total annual payments to such officer from both plans will, generally, aggregate a percentage of the sum of such officer's rate of salary at retirement plus an amount equal to the highest average of the Motorola Executive Incentive Plan ("MEIP") awards paid to such officer for any five years within the last eight years preceding retirement, as disclosed in the Summary Compensation Table. Such percentage ranges from 40% to 45%, depending upon such officer's years of service and other factors. However, the total annual pension payable on the basis of a single life annuity to any named executive officer from the Pension Plan and supplementary retirement plan is subject to a maximum of 70% of that officer's base salary prior to retirement. If the officer is vested and retires at or after age 57 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 when that officer retires contingent upon entering into an agreement not to compete with the Company. If a change in control (as defined) 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. 22 Based on salary levels at January 1, 1994, and the average of the MEIP awards paid for the highest five years out of the last eight years, for the named executive officers in the Summary Compensation Table, the estimated annual benefit payable upon retirement at normal retirement age from the Pension Plan, as supplemented pursuant to the officers' supplementary retirement plan described above, and a previous retirement income plan (except for Mr. Fisher's benefit which is now generally able to be determined due to his resignation from the Company) is: Mr. Fisher, $47,545; Mr. Tooker, $505,534; Mr. C. Galvin, $330,012; Mr. Mitchell, $440,379; Mr. Staiano, $319,376; and Mr. Norling, $306,876. OTHER POLICIES AND AGREEMENTS The Company has adopted a policy (the "salary protection policy") which generally provides that most employees of the Company and its subsidiaries would receive a lump sum payment, based on years of service and salary in the event their employment is involuntarily terminated (except for specific reasons) during a two-year period following an unsolicited change in control (as defined) of the Company. This policy, which is subject to specified amendment and termination, also provides for continuation of medical plan benefits. In addition, the Company has entered into Termination Agreements with certain key employees, including the named executive officers, except Mr. Fisher, who are not covered by the salary protection policy because of the Termination Agreements. Each Termination Agreement provides for the payment of benefits in the event that (i) the executive officer terminates his or her employment for any reason within one year of a "change in control" (as defined), (ii) the executive officer terminates his or her employment for "good reason" (as defined) within two years of a change in control, or (iii) the executive officer's 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. In the case of (ii) and (iii) above, accumulation by a person or group of a 20 percent stock position would constitute a change in control, although, in the case of (i) above, a 51 percent stock position would be required. No benefits are payable under the Termination Agreements in the case of any change in control which the Company's Chairman of the Board determines to be the result of a transaction which was solely initiated by the Company. The amount of the benefits payable to an executive officer entitled thereto would be equal to, in addition to unpaid salary for accrued vacation days and accrued salary and annual bonus through the termination date, an amount equal to three times the greater of the executive officer's 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 dale, plus an amount equal to three times the highest annual bonus received during the immediately preceding five fiscal years ending on or before the termination date. Benefits are subject to offset to the extent that such offset would improve the executive officer's after-tax position by eliminating any excise taxes otherwise imposed on the employee under the "parachute payment" provisions of the Internal Revenue Code. The term of each Termination Agreement is subject to automatic one year extensions unless the Company gives 12 months' prior notice that it does not wish to extend. In addition, if a change in control occurs during the term, the Termination Agreement continues for an additional two years. 23 THE FOLLOWING GRAPH AND RELATED DISCLOSURE AND THE REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS. PERFORMANCE GRAPH The following graph compares the cumulative total return of Motorola, Inc., the S&P 500 Index and a composite S&P Electronic Subgroups Index composed of the following six S&P indices, weighted by market value at each measurement point: the S&P Communications-Equipment/ Manufacturers Index, the S&P Computer Systems Index, the S&P Electrical Equipment Index, the S&P Electronics Defense Index, the S&P Electronics (Instrumentation) Index, and the S&P Electronics (Semiconductors) Index. The S&P Communications-Equipment Manufacturers Index currently consists of Andrew Corporation, DSC Communications Corp., M/A-Com Inc., Northern Telecom Limited and Scientific-Atlanta, Inc. The S&P Computer Systems Index currently consists of Amdahl Corporation, Apple Computer, Inc., Compaq Computer Corporation, Control Data Corporation, Cray Research, Inc., Data General Corp., Digital Equipment Corp., Intergraph Corp., International Business Machines Corporation, Tandem Computers, Inc., Unisys Corporation and Wang Laboratories, Inc. "B". The S&P Electrical Equipment Index currently consists of AMP Inc., Emerson Electric Co., General Electric Company, W.W. Grainger, Inc., Honeywell Inc., Raychem Corp., Thomas & Betts Corp., and Westinghouse Electric Corporation. The S&P Electronics Defense Index currently consists of EG&G, Inc., E-Systems, Inc. and Loral Corporation. The S&P Electronics (Instrumentation) Index currently consists of Hewlett-Packard Co., Perkin-Elmer Corp. and Tektronix, Inc. The S&P Electronics (Semiconductors) Index currently consists of Advanced Micro Devices, Inc., Intel Corporation, Motorola, Inc., National Semiconductor Corp., and Texas Instruments Incorporated. These assume $100 was invested in the stock or the Index on December 31, 1988 and also assume the reinvestment of dividends. 24 FIVE YEAR CUMULATIVE TOTAL RETURN [GRAPHIC] 25 REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM The objective of Motorola's executive compensation program is to attract and retain key executives critical to the long-term success of the Company. It is designed to align compensation with business strategy and success, and with Company values. This means having an integrated executive compensation program that is intended to balance short-term performance with the achievement of long-range strategic goals and that is designed to result in continuously improving total shareholder value. The program rewards executives not only for achieving Company goals, but also in relationship to the Company's performance compared to peer industry company performance. The compensation committee of the Board of Directors met eleven times in 1993. It discussed and reviewed in detail the compensation for the members of the Chief Executive Office (the "CEO"), currently Gary L. Tooker and Christopher B. Galvin, and the 13 other most-senior executives and recommended to the Board of Directors for its approval changes in compensation for those 13 other most-senior executives. It reviews and approves compensation changes for all elected officers that are proposed by the CEO. SUMMARY OF COMPENSATION PLANS For many years, Motorola has participated in a number of compensation surveys for all job categories, exempt and non-exempt, which it believes can be "benchmarked." One of these surveys is a "consolidated industries" report on the compensation for executive job categories in what are currently 342 companies, of which 25 are in the S&P Electronic Subgroups Index shown on pages 24 and 25. Another survey is a report on the compensation for executive job categories in what are currently 40 "high tech" and major industrial companies, selected for their being in some of the same general lines of business as the Company or as being viewed as generally important to the overall "high tech" industry. This "high tech" survey includes 19 of the companies in the S&P Electronic Subgroups Index shown in the graph on pages 24 and 25. Because Motorola intends to attract and retain substantially above-average executives, the determination of base salaries includes a factor that raises salary range midpoints approximately 10% above the salary levels projected using the "consolidated industries" report, as appropriately adjusted to reflect any higher compensation for positions indicated in the "high tech" survey, on the basis of the Company's size and organization level (determined using regression analysis) for directly comparable and equivalent jobs. Where Company positions are broader or narrower than other comparable positions in other companies, appropriate judgmental adjustments are made to recognize these differences. Where Company positions are not comparable to others studied, the Company positions are assigned salary ranges which provide relative equity in relation to other Motorola positions. Using this method, salary grades for each elected officer position (including the CEO, discussed below) in the Company are developed for, and approved by, the compensation committee. 26 It is also the Company's general intention that, where allowed by law and local custom, all its employees should have the opportunity to increase their base compensation by participating in one or more incentive compensation plans, where the payments are based on Company, unit, team, or individual performance. In addition to a number of localized incentive programs, such as salespersons' commissions, Motorola has four major incentive compensation programs in operation. All four of these relate in one way or another to Company performance and in most cases, to sector, group, division or team performance. 1. The first such program is the RONA (Return On Net Assets employed) Incentive Program. This is generally available to eligible employees in the United States who are not participating in the Motorola Executive Incentive Plan and is an outgrowth of the Company's Participative Management Process. Participants in 1993 numbered approximately 65,000. RONA awards are earned and paid semi-annually to participants and depend, first, on the Company and, in most cases, the major business unit for which the participant works, exceeding a minimum RONA percentage (as determined by the Company) during the six-month period and, second, the extent to which such minimum percentage was exceeded. RONA combines profit after tax with more efficient utilization of assets to help achieve sales growth. The RONA percentage is calculated as: Profit After Sales Profit After Tax X -------------- = Tax - -------------- -------------- Sales Net Assets Net Assets
2. The second such program is the Motorola Executive Incentive Plan (MEIP). This is participated in by elected and appointed officers (including the named executive officers) and employees at certain levels of management and by specific professionals who are deemed individual contributors. Participants in 1993 numbered 717. MEIP awards are generally earned and paid annually and are determined and awarded as a percentage of the participant's base salary earnings. No amounts are added to the reserve available for payment of MEIP awards in a year unless the Company's consolidated net earnings (as determined under the MEIP, but generally on a pre-tax basis after specified deductions) for that year exceed five percent of average capital employed (as determined under the MEIP). The MEIP award for each participant is based on the achievement of a mixture of financial, strategic non-financial, and individual goals set for each calendar year. Until late November, 1993, the MEIP contained "equity award" provisions. Under these provisions, if the MEIP award to a participant in any one year exceeded 50% of his or her base salary earnings, as defined, then such participant must generally have used the excess over 40% of his or her base salary earnings, less taxes, to purchase shares of Common Stock by exercising Share Options within 12 months after the date of the award. In late November, those provisions were deleted because of an increase in the minimum stock ownership for executive officers under guidelines discussed below. 3. The third such program is the Motorola Long Range Incentive Program (LRIPR), which is participated in to varying degrees by 32 of the Company's top officers (including the named executive officers other than Mr. George Fisher). The MEIP was amended in late 27 November, so that the LRIPR is no longer a part of the MEIP. The Company is asking stockholders to approve a new Long Range Incentive Plan of 1994 (LRIPL), which will replace the currently-existing plan (LRIPR) for awards beginning with the cycle starting on January 1, 1994, if approved. See pages 32 and 33 for a description of the proposed new LRIPL. The LRIPR goals are constructed to be "reach out" goals. The Company must have what is viewed by the compensation committee and the Board of Directors as superior financial performance during a four-year cycle to receive payments under the LRIPR and if it does so, then these senior management members can earn large LRIPR awards. The LRIPR award is determined by the Company's RONA and sales growth, related to net asset growth, for overlapping four-year periods, compared to an average of a similar calculation for a group of selected competitive companies chosen by the compensation committee (the "comparator group index"). The comparator group index is a group of what is now thirteen companies, generally in one or more of the same lines of the business as the Company, and believed by the compensation committee to be appropriate for measuring comparative performance on the basis of the factors in the LRIPR over a four-year period. An award is earned only when Company performance exceeds a minimum specified RONA floor, notwithstanding superior performance versus the comparator group index. The LRIPR has been in effect in twelve succeeding four-year cycles, the first of which began in 1982. No payments have been made under the LRIPR since its inception because the Company's RONA performance has not exceeded the RONA floors set in the LRIPR. This was the case even though in the last four completed four-year cycles the Company's financial performance (as measured by the LRIPR) exceeded the comparator group index. 4. The last such program is the Share Option Plans. The Share Option Plans are participated in by a wide range of managerial and individual contributors. Recipients of Share Options in 1993 numbered approximately 5,100. There are approximately 6,500 total current Share Option holders. Share Options are typically awarded annually to encourage optionees to own Common Stock, thus aligning their own personal financial worth to the Company's share price growth. They are granted with option prices at the then-market price in quantities as low as 20 shares to mid-range and lower level Company employees, and in substantially higher numbers to senior managers. The final worth of Share Options depends wholly on the increase in the value of the Common Stock, which, over time, reflects the Company's performance, as viewed by the market. Beginning with the Share Option grant in December, 1993, the Company established higher minimum stock ownership level guidelines for executive officers, including the CEO. Under those guidelines, If a CEO member does not own shares of Common Stock representing four times his base salary and if other executive officers do not own shares of Common Stock representing three times his base salary, then he must retain fifty percent of the shares that remain from any exercise of the December, 1993 Share Option grant and any future Share Option grants, after deducting the number of shares of Common Stock that could be surrendered to cover the cost of such exercise and any required tax withholdings, even if he does not actually surrender shares, until the minimum 28 stock ownership level is reached. Additionally, these new guidelines reiterated a minimum stock ownership level of 2,000 shares of Common Stock, on a pre-1994 stock split basis, for all other elected officers. On one basis or another, the rewards under each of these four major plans depend on overall Company performance, with some also taking account of sector, group, division, small team or individual performance. There have been years when the employees of entire sectors, groups, or divisions, as well as executive officers (including one or more of the five most highly compensated at that time) have received no payments under the RONA Incentive Program or under the MEIP or LRIPR. CHIEF EXECUTIVE OFFICE COMPENSATION The compensation for the CEO members consists of base salary, annual MEIP award eligibility, LRIPR (or, if approved, LRIPL) award eligibility, Share Options, and certain other benefits. In addition to the studies mentioned earlier, a special Chief Executive Officer and Chief Operating officer ("COO") compensation study is conducted periodically for the compensation committee of 32 major industrial companies, 18 of which are in the S&P Electronic Subgroups Index shown in the graph on pages 24 and 25 and all of which are included in "high tech" industry survey discussed on page 26. This study uses regression analysis techniques, which relate Motorola's size and financial performance to these other companies' size and financial results to approximate the appropriate base salary, other components of compensation and the total compensation levels which should be paid for the CEO members. In determining the CEO members' base salaries, the compensation committee considers the results of these studies and the salary range midpoints that are approximately 10% above salary levels projected on the basis of the Company's size, together with the Company's performance on its own financial and non-financial strategic goals. No particular weight was given to any one of these goals in setting base salaries for the CEO members. The competitive studies give the committee a base from which to modify salary and/or incentive compensation based upon performance. Salaries of other executive officers are related to the CEO members' compensation and to competitive conditions in the industry. The compensation committee reviews, and recommends for approval to the Board of Directors, the base salaries for the CEO members as well as for the members of the Company's internal policy committee (generally, all the executive officers). The compensation committee also reviews and fixes the compensation for all of the Company's elected officers. CEO BASE SALARY No base salary increases were given to George M.C. Fisher, Gary L. Tooker and Christopher B. Galvin during 1993. Increases of approximately 8% were, however, given to them in 1992, effective December 1, 1992. Based on the increased responsibilities resulting from their promotions in late 1993 and the survey data discussed above, the base salaries of Gary L. Tooker and Christopher B. Galvin were reviewed and, as of January 1, 1994, were increased to $900,000 and $630,000, respectively. 29 CEO ANNUAL MEIP For the MEIP award paid in 1994 for 1993 performance, 25% of the MEIP bonus was based on the Return on Net Assets (RONA) employed by the Company, which was better than in 1992, and 25% was based on the successful achievement of other financial goals. The other half was based on the evaluation of performance against various goals associated with the Company's five key strategic initiatives: Six sigma quality; Total cycle time reduction; Product, manufacturing and environmental leadership; Profit improvement; and Empowerment for all in a participative, cooperative, and creative workplace. As a result of the Company's performance in 1993, the compensation committee determined that an increased MEIP award was warranted and granted an MEIP award of 110% of each individual's 1993 base salary to the two current CEO members, and to George M.C. Fisher, in 1994. For the MEIP award paid in 1993 for 1992 performance, the compensation committee concluded that an MEIP award of approximately 58% of each individual's 1992 base salary was warranted, which was awarded to all three CEO members in 1993. Under the then-existing "equity award" provisions of the MEIP (see page 27), the amount, less taxes, of the 1992 MEIP award, which was generally required to be used to purchase shares of Common Stock through the exercise of Share Options, was $166,500 for George M. C. Fisher, $129,000 for Gary L. Tooker and $86,000 for Christopher B. Galvin. CEO SHARE OPTIONS Share Options for 38,000 shares of Common Stock at the market price on the grant date were awarded in December, 1993 to Gary L. Tooker as part of the Company's annual option program. Share Options for 27,000 shares were similarly awarded to Christopher B. Galvin. No Share Option grants were made during 1993 to George M.C. Fisher. This level of option awards was made using the committee's judgment after considering the Company's stock option granting guidelines. In making these grants, the committee referred to the options granted and exercised by these CEO members from 1984 to December, 1993 and their stock ownership as of October, 1993. CEO LRIPR No award was earned under the LRIPR for the four-year period ending with 1992 or 1993, even though the Company's RONA performance was better than the comparator group index, because the minimum corporate four-year RONA percentage required to be met for payment to be made under the LRIPR was not met. GENERAL The Omnibus Budget Reconciliation Act of 1993 contains a provision under which a publicly held corporation is sometimes precluded from taking a federal income tax deduction for compensation in excess of $1,000,000 that is paid to a "covered employee" (I.E., the chief executive officer and any one of the four other most highly paid executives) during a corporation's taxable year. Compensation in excess of $1,000,000 continues to be deductible if that compensation is "performance based" within the meaning of Section 162(m) of the Internal Revenue Code. 30 The committee has reviewed the federal income tax deductibility by the Company of the various types of compensation which the Company makes available to its "covered employees." The compensation paid to these executives--whether in the form of base salary, bonuses from the LRIPR or the LRIPL, if adopted, Share Options or imputed income--should generally be deductible for federal income tax purposes. The committee has determined, however, and the Board has concurred, that amending the MEIP program to guarantee its compliance with the "performance based" standard was not in the best interests of the stockholders. The objective of the MEIP program is to focus on performance factors of importance to the Company, some of which must be evaluated on an experienced judgment basis, therefore probably excluding payments under the MEIP from deductibility. Overall, the compensation committee believes that the CEO members are being appropriately compensated in a manner that relates to performance and in the stockholders' long-term interests. Respectfully submitted, David R. Clare, Chairman Thomas J. Murrin Samuel C. Scott III 31 PROPOSAL TO ADOPT THE LONG RANGE INCENTIVE PLAN OF 1994 The Board of Directors recommends that the stockholders approve the adoption of the Long Range Incentive Plan of 1994 ("Plan"). If approved by stockholders, awards will be made for a four-year cycle commencing January 1, 1994, as described below, and no further awards will be made under the Company's currently-existing Long Range Incentive Program (the "program"). As discussed in the Report of Compensation Committee on Executive Compensation ("Report") on pages 26 to 31, the program had been a part of the Motorola Executive Incentive Plan ("MEIP") until November, 1993. It has been in effect for twelve succeeding four-year cycles. Under the program and the Plan, corporate performance objectives have been and will be established for overlapping four-year periods. No payments have been made under the program since its inception because the Company's return on net assets employed (RONA) performance did not exceed the RONA floor set in the program. See pages 21 and 22 for a description of the program and for the potential payments under the program to the five highest-compensated current executive officers of the Company. The objectives of the Plan are to increase the value of stockholders' interest in Common Stock through the achievement of outstanding corporate performance; to reward participating elected officers for the achievement by the Company of outstanding performance, based on preestablished objective performance standards, over extended periods; to provide long term incentives in addition to the short term incentives of the MEIP; and to enhance the Company's ability to retain participating officers. The principal features of the Plan are summarized below, with the summary being qualified in its entirety by reference to the terms of the Plan itself as set forth in Exhibit A hereto. ADMINISTRATION The Plan is to be administered by the compensation committee of the Board ("Committee") or a successor committee. The Plan contains procedures to be followed by the Committee, and the Committee is given the authority to construe, interpret and administer the Plan, as well as to determine the extent, if any, to which performance standards are met. ELIGIBILITY The Committee is authorized to determine which of the Company's elected officers, presently approximately 135 persons, are in positions likely to make substantial long term contributions to the Company's success, to select those officers to participate in the Plan and to assign each participant a maximum award level category ranging from 100% to 200% of the participant's annualized base salary. For purposes of computing the award for a participant, the annualized base salary represents the lesser of 125% of annualized base salary on January 1 of the first year of the cycle or 100% of annualized base salary on December 31 of the last year of the cycle. 32 AWARDS The Committee will grant a performance award to participants ("Grantees") with the potential maximum cash amount to be paid to any participant being determined by the Company's achievement based on four components: (1) RONA; (2) sales growth; (3) stockholder return and (4) fundable growth, over a four-year cycle compared to an average of a similar calculation for a group of selected competitive companies chosen by the Committee ("comparator group index"). Each component is to be weighted 25%. The comparator group index is a group of what is now thirteen companies for purposes of the cycle to be commenced on January 1, 1994, if approved by stockholders, which are generally in one or more of the same lines of the business as the Company and believed by the Committee to be appropriate for judging comparative performance on the basis of the factors in the Plan over a four-year period. An award is earned only when Company performance, as determined by the Committee, exceeds minimum specified RONA floors, notwithstanding superior performance versus the comparator group index. The amount of the award is dependent on the performance of the Company and the category the Grantee has been assigned to by the Committee. However, the maximum dollar amount of the award for any Grantee for any cycle cannot exceed $5,000,000. PAYMENT OF AWARDS After performance has been determined by the Committee, the award, if any, will be paid in full in cash; provided that the Committee may specify that the awards shall be paid: (a) in installments; (b) on a deferred basis, in whole or in part, as specified by the Committee; or (c) on a deferred basis, in whole or in part, at the request of the Grantee, as agreed to by the Committee. In the case of awards not paid in full at the time of the award, the Committee may set the terms and conditions of the award, including but not limited to, the payment date or dates, if appropriate, and the accrual of interest and any forfeiture provisions. The Plan provides that, subject to the discretion of the Committee, awards deferred at the request of the Grantee will be forfeited If the Grantee acts in a manner contrary to the best interests of the Company or if the Grantee's employment is voluntarily terminated or is terminated for cause. Any unpaid award, or the unpaid portion of any award, will be forfeited if the Grantee engages in an activity which is in competition with any activity of the Company. To the extent provided in the Plan, a Grantee whose employment terminates will lose his or her right to receive any unpaid installment or deferred payments. If while any award is outstanding a change in control of the Company, as defined in the Plan, shall occur, then the award shall be fully vested and nonforfeitable. In addition, a prorated award will generally be paid to a Grantee if the Grantee's employment is terminated within a year of a change in control. NONTRANSFERABILITY No award under the Plan may be transferred or assigned by a Grantee except in the event of death to a previously designated beneficiary or legal representative. AMENDMENT The Plan may be amended from time to time by the Board or the Committee and may be terminated at any time by the Board. 33 APPROVAL BY STOCKHOLDERS In order to be adopted, the Long Range Incentive Plan of 1994 must be approved by the affirmative vote of a majority of the outstanding shares of Common Stock represented at the meeting and entitled to vote. Abstentions will count as votes against this proposal, but broker non-votes will not count as being entitled to vote on this proposal at the meeting and, therefore, will not be taken into account for this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE LONG RANGE INCENTIVE PLAN OF 1994. UNLESS OTHERWISE INDICATED ON THE PROXY, THE SHARES WILL BE VOTED FOR ADOPTION OF THE LONG RANGE INCENTIVE PLAN OF 1994. AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION By resolution adopted on February 1, 1994, the Board of Directors of the Company proposed the adoption by the stockholders of an amendment to the Restated Certificate of Incorporation of the Company, as amended to date, pursuant to which the number of authorized shares of Common Stock of the Company, $3 par value, would be increased from 700,000,000 shares to 1,400,000,000 shares, and the Board of Directors directed that the proposed amendment be submitted to a vote by the stockholders at the annual meeting of stockholders. If the stockholders approve the amendment, the Restated Certificate of Incorporation of the Company will be amended as proposed by the Board of Directors, and the number of authorized shares of Common Stock will be increased to 1,400,000,000. Of the 700,000,000 currently authorized shares of Common Stock, as of March 15, 1994, 279,213,886 were issued and an additional 279,213,886 were reserved for issuance on these shares in connection with the two-for-one stock split in the form of a 100% stock dividend payable April 18, 1994 to stockholders of record on March 15, 1994. In addition, as of December 31, 1993, but giving effect to the two-for-one stock split, 40,360,000 shares were reserved for issuance under the Company's employee stock option plans and 19,091,000 shares were reserved for issuance in connection with the Company's Liquid Yield Option Notes due 2009 and 2013. In addition, 150,000 shares of a series of the Company's preferred stock are reserved for issuance under the Company's shareholder rights plan. Otherwise, the Company does not now have any present plan, understanding or agreement to issue additional shares of Common Stock. Although presently authorized shares are sufficient to meet all known present requirements, the Board of Directors believes that it is desirable that the Company have the flexibility to issue a substantial number of shares of Common Stock without further stockholder action. The availability of additional shares will enhance the Company's flexibility in connection with possible future actions, such as stock dividends, stock splits, financings, employee benefit programs, corporate mergers, acquisitions of property, the possible funding of new product programs or businesses or for other corporate purposes. The Board of Directors will determine whether, when and on what terms the issuance of shares of Common Stock may be warranted in connection with any of the foregoing purposes. 34 The availability for issuance of additional shares of Common Stock could enable the Board of Directors to render more difficult or discourage an attempt to obtain control of the Company. For example, the issuance of shares of Common Stock in a public or private sale, merger or similar transaction would increase the number of outstanding shares, thereby possibly diluting the interest of a party attempting to obtain control of the Company. The additional shares also could be used to render more difficult a merger or similar transaction even if it appears to be desirable to a majority of the stockholders. The Company is not aware of any pending or threatened efforts to obtain control of the Company. If the proposed amendment is approved, all or any of the authorized shares of Common Stock or preferred stock may be issued without further action by the stockholders and without first offering such shares to the stockholders for subscription. The issuance of Common Stock otherwise than on a pro-rata basis to all current stockholders would reduce the current stockholders' proportionate interests. However, in any such event, stockholders wishing to maintain their interests may be able to do so through normal market purchases. APPROVAL BY STOCKHOLDERS The affirmative vote of a majority of the outstanding shares of Common Stock of the Company entitled to vote at the annual meeting of stockholders is required for approval of the proposed amendment. Abstentions and broker non-votes will both be taken into account for this proposal as if they were voted against the proposal. If the proposed amendment is adopted by the stockholders, it will become effective upon filing and recording a Certificate of Amendment as required by the General Corporation Law of Delaware. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES WILL BE VOTED FOR THIS AMENDMENT. STOCKHOLDER PROPOSAL PROPOSAL CONCERNING THE CREATION OF AN INDEPENDENT NOMINATING COMMITTEE The New York City Teachers' Retirement System, The City of New York, Office of the Controller, 1 Centre Street, New York, New York 10007-2341, the beneficial owner of 252,200 shares of Common Stock, has submitted the following proposal: WHEREAS, the board of directors is meant to be an independent body elected by shareholders and charged by law and shareholders with the duty, authority and responsibility to formulate and direct corporate policies, and WHEREAS, this company has provided that the board may designate from among its members one or more committees, each of which, to the extent allowed, shall have certain designated authority, and 35 WHEREAS, we believe that directors independent of management are best qualified to act in the interest of shareholders and can take steps necessary to seek, nominate and present new directors to shareholders, and WHEREAS, we believe the selection of new directors is an area in which inside directors may have a conflict of interest with shareholders, and WHEREAS, we believe that an increased role for the independent directors would help our company improve its long-term financial condition, stock performance and ability to compete, NOW THEREFORE BE IT RESOLVED, that the shareholders request the company establish a Nominating Committee to recommend candidates to stand for election to the board of directors. The Committee shall be composed solely of independent directors. For these purposes, an independent director is one who: (1) has not been employed by the Company or an affiliate in an executive capacity within the last five years; (2) is not a member of a company that is one of this company's paid advisors or consultants, (3) is not employed by a significant customer or supplier, (4) does not have a personal services contract with the company; (5) is not employed by a tax-exempt organization that receives significant contributions from the company; (6) is not a relative of the management of the company; (7) has not had any business relationship that would be required to be disclosed under Regulation S-K. The Committee responsibilities shall include establishing procedures for the nominating process and developing for board approval the criteria for nomination. STATEMENT OF SUPPORT As long-term shareholders we are concerned about our company's prospects for profitable growth. This proposal is intended to strengthen the process by which nominees are selected. We believe that this will strengthen the board of directors in its role of advising, overseeing and evaluating management. We urge you to vote FOR this proposal. STATEMENT IN OPPOSITION YOUR DIRECTORS RECOMMEND A VOTE AGAINST THIS STOCKHOLDER PROPOSAL FOR THE FOLLOWING REASONS: The Company believes that the nominating committee, like other committees of the Board and Board of Directors itself, has operated in the best interests of the stockholders, whether its members have been current or former officers or employees of the Company or not. All Board members are solicited for suggestions by the nominating committee and the nominating committee presents to the full Board a list of candidates, which includes candidates independently selected by the nominating committee, for openings when they occur, with the full Board deciding who shall be presented to stockholders for approval at an annual meeting or who is to fill a vacancy arising between annual meetings. Since the full Board, which is now composed primarily of people who have never been employees or officers of the Company, makes the final decision, the Company did not previously view the composition of the nominating committee as an issue. 36 The people nominated to become new directors since 1989 clearly shows that the nominating committee and the full Board have not selected only people who share senior management's outlook on fundamental Company policy. During that time, no former or current senior executive of the Company has been nominated for initial election to the Board and all of the people selected would have been considered, when initially elected, independent for purposes of this proposal. Instead, the nominating committee has selected people with an academic or with a technical background in the Company's business or in another industry for new director positions. This record, in conjunction with the change in the committee membership described in the following paragraph, would seem to be sufficient to satisfy the proponent's concern about the process by which nominees are selected. The Board, however, thoughtfully considered this proposal and made a dramatic change in the nominating committee membership, replacing all of the members with new ones at the February 1994 Board meeting. With this change, the Board and the Company believe that all current members of the nominating committee meet the independence test described in this proposal, and that this proposal is, for that reason, unnecessary. The affirmative vote of a majority of the Common Stock represented at the meeting and entitled to vote is required for approval of the proposal. Abstentions will count as votes against this proposal but broker non-votes will not count as being entitled to vote on this proposal at the meeting and, therefore, will not be taken into account for this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING STOCKHOLDER PROPOSAL. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES WILL BE VOTED AGAINST THE FOREGOING STOCKHOLDER PROPOSAL. MISCELLANEOUS OTHER MATTERS The Board of Directors of the Company knows of no other business to be transacted at the 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. MANNER AND COST OF PROXY SOLICITATION The cost of solicitation of proxies will be borne by the Company. In addition to the solicitation of proxies by use of the mails, officers, directors and regular employees of the Company, acting on its behalf, may solicit proxies by telephone, telegraph or personal interview. Also, the Company has retained D. F. King & Co., Inc. to aid in the solicitation of proxies for which the Company will pay an estimated fee of $13,500, plus expenses. The Company will, at its expense, request brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the beneficial owners of shares held of record by such persons. 37 PROPOSALS Proposals of stockholders intended to be presented at the Company's 1995 annual meeting of stockholders must be received at the Company's principal executive offices not later than November 23, 1994. The nominating committee will consider nominees recommended by stockholders as candidates for election to the Board of Directors at the annual meeting of stockholders. A stockholder wishing to nominate a candidate for election to the Board is required to give written notice to the Secretary of the Company of his or her intention to make such a nomination. The notice of nomination must be received by the Company not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is more than 30 days prior to or more than 60 days after such anniversary date, notice must be received not less than 60 days or more than 90 days prior to such annual meeting or within 10 days after the meeting date is announced. The notice of nomination is required to contain certain information about both the nominee and the stockholder making the nomination. A nomination which does not comply with the above procedure will be disregarded. Such proposals or nominations should be addressed to Richard H. Weise, Secretary, Motorola, Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196. By order of the Board of Directors Richard H. Weise SECRETARY 38 EXHIBIT A MOTOROLA LONG RANGE INCENTIVE PLAN OF 1994 1. NAME OF THE PLAN AND PLAN OBJECTIVES The name of the Plan is the Motorola Long Range Incentive Plan of 1994 (the "Plan"). The objectives of the Plan are: a. To increase the value of the stockholders' investment in Motorola, Inc. common stock through the achievement of outstanding corporate performance; b. To reward participating executives for the Company's achieving outstanding performance, based on preestablished objective performance standards, over extended periods; c. To provide long term incentives in addition to the short term incentives of the Motorola Executive Incentive Plan, as amended; and d. To enhance the Company's ability to retain participating executives. 2. DEFINITIONS For the purpose of the Plan, unless the context provides otherwise: a. The term "Committee" shall mean the Compensation Committee of the Board of Directors of Motorola, Inc. or any successor committee. b. The term "Company" shall mean Motorola, Inc. c. The term "Cycle" shall mean a period equal to four consecutive fiscal years of the Company. d. The term "Eligible Employee" shall mean any elected officer of the Company. e. The term "Grantee" shall mean any elected officer of the Company who is or has been eligible to receive an award under the Plan. 3. STOCKHOLDER APPROVAL Awards, if any, granted under the Plan are contingent on receiving approval of the Plan by the stockholders of the Company, by a majority of the shares voting at a meeting of the stockholders, prior to payment of awards, if any. 4. RESERVE FOR THE PLAN The Company may, with respect to each Cycle, commencing with the Cycle beginning January 1, 1994, set up a reserve for the purpose of the Plan in such amount as may be determined by the Company in its sole discretion. Nothing in the Plan shall be construed to obligate the Company to set up a reserve for the Plan. The failure of the Company to set up a reserve for the Plan in any given year shall not be deemed to effect termination of the Plan. A-1 5. COMMITTEE The Committee shall have full power and authority to construe, interpret and administer the Plan, and each decision of the Committee shall be final, conclusive and binding upon all persons. At the beginning of each Cycle, the Committee shall determine (1) which of the Company's Eligible Employees are in positions in which they are likely to make substantial long term contributions to the Company's success and therefore participate in the Plan for the Cycle, and (2) which award level category each participant is assigned to. After the close of each Cycle, the Committee shall determine and certify the extent to which the performance measures/metrics and other terms and conditions, if any, relating to the achievement of the performance measures/metrics were satisfied. 6. COMPARATOR COMPANIES AND PERFORMANCE MEASURES/METRICS At the beginning of each Cycle, the Committee shall determine the comparator companies (Exhibit A [NOTE: This Exhibit, and Exhibits B and C are not attached]) to be used in comparing performance and the objective measures/metrics for the Cycle. The measures/metrics to be used for this purpose shall be Return on Net Assets, Shareholder Return, Sales Growth and Fundable Growth (Exhibits B and C), each of which shall be weighted 25%. In the event that the financial reports of one or more of the comparator companies is not published for one or more years of a Cycle, such company or companies shall be excluded from the calculations of comparator company performance for such Cycle. 7. AWARD LEVEL CATEGORIES, MAXIMUM AWARDS AND CALCULATION OF AWARDS Each participant shall be assigned by the Committee to one of the following categories, with the associated maximum award, at the beginning of each Cycle:
AWARD LEVEL MAXIMUM AWARD AS PERCENT CATEGORY OF ANNUALIZED BASE SALARY - ------------ -------------------------- A 200% B 150 C 100
The Company's actual performance for the Cycle in relation to the objective performance measures/metrics shall determine the percent of the maximum award to be paid to each Grantee. This percent shall be multiplied by the maximum award for each Grantee (i.e., 200%, 150% and 100% for award level categories A, B and C, respectively) to calculate the award, as a percent of annualized base salary earned, to be paid to each Grantee. For the purpose of computing the maximum dollar amount of the award for each Grantee, the lesser of (1) 125% of annualized base salary on January 1 of the first year of the Cycle or (2) 100% of the annualized base salary on December 31 of the last year of the Cycle, shall be used. The maximum dollar amount of the award for any Grantee for any Cycle shall not exceed $5 million. A-2 8. PAYMENT OF AWARDS After performance has been determined by the Committee, awards, if any, shall be paid in cash. Until the awards are paid to the Grantee as herein provided, the unpaid awards shall be retained by the Company (without liability for interest, unless interest is provided for by the Committee in accordance with the provisions of this Section 8). All awards shall be payable in full at the time the performance has been determined by the Committee, provided that the Committee may specify that awards shall be paid (a) in installments, (b) on a deferred basis, in whole or in part, until some future date or dates specified by the Committee or (c) upon the written request of a Grantee, on a deferred basis, in whole or in part, until some future date or dates specified in the request and agreed to by the Committee; provided however, that with respect to awards deferred at the request of a Grantee as to any Cycle, such request for deferral shall be irrevocable as to such Cycle, and provided further, that such irrevocable written request must be received by the Committee on or before December 31 of the last year of the Cycle for which the award is payable. With respect to awards not payable in full at the time of the award, the Committee shall have full power and authority in its sole discretion to set all terms and conditions relating thereto, including, but not limited to (i) the payment date or dates if payment of the award is deferred by the Committee under (b) above or if the award is payable in installments and (ii) the forfeiture provisions, if any, which shall apply to awards deferred by the Committee under (b) above--it being the intent that the forfeiture provisions contained in this Section 8 shall not apply to awards deferred by the Committee under (b) above unless the Committee expressly provides for their applicability as a term or condition of the deferral and then they shall apply only to the extent so provided. The Committee shall also have the power and authority to provide forfeiture provisions with respect to awards it defers under (b) above which are different from those contained in this Section 8 and forfeiture provisions with respect to awards payable in installments or deferred at the request of a participant which are additional to those contained in this Section 8. As to awards not payable in full at the time of the award, the Committee may impose such terms, conditions, restrictions and forfeitures with respect thereto as it shall determine to be in the best interests of the Company and to effect the purposes of the Plan. The Committee may provide that interest shall be paid out of the reserve, if any, or by the Company, on the amount of any award payable in installments under (a) above, or deferred in whole or in part by the Committee under (b) above, or deferred in whole or in part at the request of any Grantee with the agreement of the Committee under (c) above. If the Committee provides for the payment of interest with respect to any such award, such interest shall be accrued as of the last day of each fiscal quarter of the Company, shall be credited to an account which shall be established by the Company in the name of the Grantee and shall be compounded as of the end of each such fiscal quarter. Accumulated interest shall be distributed to the Grantee at the time or times the award is paid out. In the case of awards payable in installments and deferred awards which are not paid out in a single sum, the interest to be distributed shall be proportionate to the amount of the award being paid at the time. The rate of interest to be paid shall be set by the Committee at the time of the grant of the award to which it relates. The Committee is authorized to change the rate of interest at any time and to set different rates for different Grantees and for differing circumstances. A-3 If the Committee shall determine that the actions or conduct of a Grantee have been in a manner adverse, or in any way contrary, to the best interests of the Company, such Grantee shall lose any right to receive any portion of any installment, or deferred payment, or amount that would otherwise have been paid subsequent to the first of the month in which such act or conduct first occurred, provided, however, that in no case shall the Grantee lose the right to be paid the Grantee's unpaid awards or award, as the case may be, as of a date prior to January 1 of the year in which the determination resulting in such loss of right is made, and provided further, that no installment, deferred payment or amount delivered or paid prior to the date of such determination shall be required to be returned. The determination as to whether any act or conduct of a Grantee is adverse, or in any way contrary, to the best interests of the Company shall be made by the Committee under such procedure as may from time to time be prescribed by the Committee and shall be made in the absolute discretion of the Committee. Any determination so made, including any determination of the time at which such act or conduct first occurred, shall be conclusive. The provisions relating to forfeiture contained in this subparagraph shall not apply to awards deferred by the Committee under clause (b) in the first subparagraph of this Section 8 unless and to the extent specifically made applicable by the Committee. A Grantee whose employment terminates by dismissal for cause, as determined by the Committee in its sole discretion, or who voluntarily terminates employment with the Company or any of its subsidiaries shall, unless otherwise determined by the Committee in connection with such termination of employment, lose any right to receive any unpaid installments or deferred payments. A Grantee whose employment terminates for any reason other than by death or as set forth in the preceding sentence shall, unless otherwise determined in connection with the termination of the Grantee's employment, continue to be paid any unpaid installments or deferred payments in the same manner as though the Grantee's employment had continued without interruption until such awards are fully paid. The provisions relating to forfeiture contained in this subparagraph shall not apply to awards deferred by the Committee under clause (b) in the first subparagraph of this Section 8 unless and to the extent specifically made applicable by the Committee. If it shall be determined by the Committee that a Grantee who was permitted to retain the right to receive any unpaid installments or deferred payments upon termination of employment has, after such termination of employment, engaged, directly or indirectly, in any activity which is in competition with any activity of the Company or whose actions or conduct, either prior to or after such termination of employment, has been in a manner of adverse or in any way contrary to the best interests of the Company, such Grantee shall, unless otherwise determined, lose any right to receive any unpaid installments or deferred payments as of the first of the month in which such competitive activity or such act or conduct first occurred, provided, however, that in no case shall the Grantee lose the right to receive any unpaid installments or deferred payments as of a date prior to January 1 of the year in which the determination resulting in such loss of right is made, and provided further, that no installment or amount delivered or paid prior to the date of any such determination shall be required to be returned. Each determination provided for in this subparagraph shall be made by the Committee under such procedure as may from time to time be prescribed by the Committee and shall be made in the absolute discretion of the Committee. Any A-4 determination so made, including any determination of the time at which such competitive activity or such act or conduct first occurred, shall be conclusive. The provisions relating to forfeiture contained in this subparagraph shall not apply to awards deferred by the Committee under clause (b) in the first subparagraph of this Section 8 unless and to the extent specifically made applicable by the Committee. A Grantee who loses the right to be paid any unpaid installments or deferred payments shall receive forthwith all portions of such Grantee's awards, unpaid but earned installments or deferred payments not otherwise forfeited in accordance with this Section 8. The unpaid portions of installments or deferred payments which are forfeited shall be credited to the reserve, if any, for the Plan, or if there is no reserve, shall be retained by the Company. If a Grantee dies, the Grantee's unpaid and undelivered awards shall be paid and delivered to the beneficiary previously designated by such Grantee in writing, or, if such Grantee did not designate any beneficiary in writing or if all of the Grantee's designated beneficiaries predeceased the Grantee, to the Grantee's legal representative at such time and in such manner as if such Grantee were living and in service with the Company unless the Committee in its sole and absolute discretion accelerates such payment and delivery. Notwithstanding the foregoing provisions of this Section 8 or any of the eligibility requirements of the Plan, in the event of a Change in Control, all Grantees on the date of the Change in Control shall have a fully vested and nonforfeitable right to receive all amounts of awards which remain payable under (a) above or which were previously deferred under (b) or (c) above, and no amendment, suspension, curtailment or termination of the Plan shall adversely affect or terminate such vested and nonforfeitable right to receive any award granted under the Plan. For purposes of the Plan, a "Change in Control" shall mean a Change in Control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act") whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if (A) any "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (other than the Company, any employee benefit plan of the Company, any "person" who is a natural person and was shown as the "beneficial owner", directly or indirectly, of securities of the Company representing more than 5% of the combined voting power of the Company's securities in the Company's Proxy Statement dated earlier than, but closest to, the date the Plan is approved by the Company's stockholders, and, for purposes of the Plan, no Change in Control shall be deemed to have occurred as a result of the "beneficial ownership," or changes therein, of the Company's securities by any of the foregoing), (B) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the surviving or continuing corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have (directly or A-5 indirectly) at least an 80% ownership interest in the outstanding Common Stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, (C) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company, or (D) as a result of, or in connection with, any cash tender offer, exchange offer, merger or other business combination, sale of assets, proxy or consent solicitation (other than by the Board of Directors ("Board") of the Company), contested election or substantial stock accumulation (a "Control Transaction"), the members of the Board immediately prior to the first public announcement relating to such Control Transaction shall thereafter cease to constitute a majority of the Board. Furthermore, in the event a Grantee's employment with the Company terminates within a year of a Change in Control, that Grantee shall receive an award(s) for the Cycle(s) in which the Grantee's employment is terminated. Such award(s) shall be prorated from the first day of the Cycle(s) in which the Grantee's employment is terminated up to the date of termination of employment. This pro rata share of the award(s) shall be paid within thirty days after the date on which the Grantee's employment is terminated. A Grantee shall be entitled to a pro rata award(s) if his or her employment with the Company is terminated for any reason (including disability or retirement) except: (a) when the relevant Change in Control occurs as a result of a transaction or transactions initiated by the Company, other than a transaction or transactions initiated by the Company in response to or otherwise in connection with an unsolicited proposal to the Company which would result in a Change in Control, or (b) the Company terminates the Grantee's employment with the Company or a subsidiary of the Company for good cause. For purposes of the Plan, "good cause" means (a) the conviction of a Grantee of any criminal violation involving dishonesty, fraud or breach of trust, or (b) the Grantee's willful engagement in gross misconduct in the performance of his or her duties that materially injures the Company. 9. NATURE OF GRANTEE'S RIGHTS UNDER THE PLAN Neither the adoption of the Plan, nor any modification thereof, nor any payment thereunder, shall be construed as giving to the Grantee or any person whomsoever any legal or equitable rights against the Company or its officers or directors or as giving any Grantee the right to be retained in the service of the Company or any of its subsidiaries. No loan shall be made to any Grantee by the Company because one or more payments might be made to the Grantee under the Plan. No Grantee shall have any right to assign, transfer, appropriate, encumber, commute or anticipate any payment that might be made to the Grantee under the Plan, and no benefits, rights or interest of a Grantee under the Plan shall in any way be subject to any legal process to levy upon, garnishee or attach the same for payment of any claim against the Grantee, nor shall any Grantee have any right of any kind whatsoever under the Plan other than the right to receive any payment as and when it is due and payable under the terms of the Plan. A-6 10. ADMINISTRATION OF THE PLAN The Committee shall keep and maintain records and accounts which will accurately disclose at all times the reserve for the Plan, if any, for each year during which the Plan is in effect, the awards made under the Plan, the payment or other disposition of these awards, and any other pertinent information with respect to the activities of the Committee. The fiscal year of the Plan shall at times be the same as the fiscal year of the Company. The Committee may consult with counsel, who may be of counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of such counsel. The expense of administering the Plan shall be borne by the Company and shall not be charged against the reserve for the Plan, if any. 11. INDEMNIFICATION AND EXCULPATION Each person who is or shall have been a member of the Board or of the Committee shall be indemnified and held harmless by the Company against and from any and all loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be a party or in which such person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof (with the Company's written approval) or paid by such person in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of such person's bad faith, subject, however, to the condition that upon the institution of any claim, action, suit or proceeding against such person shall in writing give the Company an opportunity, at its own expense, to participate in, and to the extent it may wish, to assume the defense thereof before such person undertakes to handle it on such person's own behalf. The foregoing right of indemnification shall not be exclusive of any other right to which such person may be entitled as a matter of law or otherwise, or any power that the Company may have to indemnify such person or hold such person harmless. Each member of the Board or of the Committee, and each officer and employee of the Company shall be fully justified in relying or acting upon any information furnished on behalf of the Company by any person or persons other than himself or herself in connection with the administration of the Plan. In no event shall any person who is or shall have been a member of the Board or of the Committee, or any officer or employee of the Company, be liable for any determination made or other action taken or any omission to act in reliance upon any such information, or for any action (including the furnishing of information) taken or any failure to act, if in good faith. 12. AMENDMENT OF THE PLAN The Plan may be amended from time to time by the Board or the Committee and may be terminated at any time by the Board. A-7 APPENDIX
GRAPHIC IMAGE NARRATIVE DESCRIPTION 1. Picture approximately 1" by 1 1/4" 1. A picture approximately 1" by 1 in size of each director 1/4" in size of each director is located to the left of each director's name at the beginning of each director's biographical description on pages 3 to 11 of the proxy statement. 2. Signature of Richard H. Weise 2. The facsimile signature of Richard H. Weise is set forth above his name in the Notice to Stockholders, Notice to Plan Participants, and on page 38 of the proxy statement. 3. Caption set forth in a box 3. The Company's recommendation at the end of each proposal and for the election of directors on pages 16, 34, 35 and 37 is contained in a rectangle.
[LOGO] - -------------------------------------------------------------------------------- PRINCIPAL EXECUTIVE OFFICES: 1303 East Algonquin Road Schaumburg, Illinois 60196 - -------------------------------------------------------------------------------- TO THE PARTICIPANTS OF THE MOTOROLA EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN AND THE MOTOROLA EMPLOYEE STOCK OWNERSHIP PLAN (THE "PLANS"): This Notice of Annual Meeting and the accompanying Proxy Statement are being sent to you because you are the beneficial owner of Motorola stock by reason of being a participant in either or both of the Plans. The trustees of the Plans are the record owners of such stock and are entitled to vote at the meeting. However, you have the right to direct how the trustees of the Plans will vote the shares allocated to your accounts in the Plans. YOU ARE REQUESTED TO VOTE, DATE, SIGN AND MAIL THE VOTING INSTRUCTION FORM ENCLOSED HEREWITH so that it will be received by April 20, 1994. Your presence at the meeting is not required to enable you to vote your shares. Notice is hereby given that the annual meeting of stockholders of Motorola, Inc. (the "Company" or "Motorola"), a Delaware corporation, will be held in the Auditorium at the Company's Galvin Center, 1297 East Algonquin Road, Schaumburg, Illinois on Tuesday, May 3, 1994 at 5:00 P.M., local time, for the following purposes: 1. To elect directors for the ensuing year; 2. To consider and vote upon the Long Range Incentive Plan of 1994; 3. To consider and vote upon a proposed amendment to the Company's restated Certificate of Incorporation to increase the number of authorized shares of Common Stock of the Company from 700,000,000 to 1,400,000,000; 4. To act upon a stockholder proposal, if properly presented to the meeting, concerning the creation of an independent nominating committee, which is described in the accompanying Proxy Statement; and 5. To transact such other business as may properly come before the meeting. A report on the meeting, which will include the Chairman's remarks, will be mailed to you after the meeting. By order of the Board of Directors Richard H. Weise SECRETARY March 23, 1994 IMPORTANT IN ORDER THAT THERE MAY BE A PROPER REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO SEND IN YOUR VOTING INSTRUCTION FORM IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 3, 1994 [LOGO] THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS The undersigned hereby appoints Gary L. Tooker, Carl F. Koenemann, Garth L. Milne and Kenneth J. Johnson, and each of them, as the undersigned's Proxies (with power of substitution) to represent and to vote all the shares of common stock of Motorola, Inc., which the undersigned would be entitled to vote, at the annual meeting of stockholders of Motorola, Inc. to be held May 3, 1994 and at any adjournments thereof, subject to the directions indicated on the reverse side hereof. In their discretion, the Proxies are authorized to vote upon any other matter that may properly come before the meeting or any adjournments thereof. P R Date: _____________, 1994 O X __________________________ SIGNATURE Y __________________________ SIGNATURE Please vote, date, sign and mail promptly this proxy in the enclosed envelope. When there is more than one owner, each should sign. When signing as any 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. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR PROPOSALS 2 AND 3. 1. Election of Directors / / FOR / / WITHHELD / / FOR all except nominee(s) written below _________________________________
E. Bloch, D. Clare, W. Doud, C. Galvin, R. Galvin, J. Hickey, A. Jones, D. Jones, W. Massey, J. Mitchell, T. Murrin, S. Scott III, G. Tooker, G. Tucker, W. Weisz, B. West. 2. Adoption of Long Range Incentive Plan of 1994 / / FOR / / AGAINST / / ABSTAIN 3. Adoption of amendment to restated Certificate of Incorporation / / FOR / / AGAINST / / ABSTAIN THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4. 4. Stockholder proposal concerning creation of independent nominating committee / / FOR / / AGAINST / / ABSTAIN 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 ABOVE AND FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSAL 4. IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE. VOTING INSTRUCTION FORM [LOGO] ANNUAL MEETING OF STOCKHOLDERS, MAY 3, 1994 The undersigned hereby directs that, at the annual meeting of stockholders of Motorola, Inc. to be held May 3, 1994 and at any adjournments thereof, the shares of Motorola, Inc. common stock credited as of March 15, 1994 to the undersigned's account(s) in either or both of the Motorola Employees' Savings and Profit Sharing Plan (the "Profit Sharing Plan") or the Motorola Employee Stock Ownership Plan (the "ESOP") shall be voted, pursuant to a proxy solicited by the Board of Directors of Motorola, Inc., by The Northern Trust Company as Trustee of the Profit Sharing Plan and by Harris Trust and Savings Bank as Trustee of the ESOP, or their attorneys-in-fact, as specified on the reverse side hereof. PLEASE SIGN ____________________________________ Signature of Plan Participant Date: _______________________ , 1994 Please vote, date, sign and mail promptly in the enclosed envelope. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR PROPOSALS 2 AND 3. 1. Election of Directors / / FOR / / WITHHELD / / FOR all except nominee(s) written below _________________________
E. Bloch, D. Clare, W. Doud, C. Galvin, R. Galvin, J. Hickey, A. Jones, D. Jones, W. Massey, J. Mitchell, T. Murrin, S. Scott III, G. Tooker, G. Tucker, W. Weisz, B. West. 2. Adoption of Long Range Incentive Plan of 1994 / / FOR / / AGAINST / / ABSTAIN 3. Adoption of amendment to restated Certificate of Incorporation / / FOR / / AGAINST / / ABSTAIN THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4. 4. Stockholder proposal concerning creation of independent nominating committee / / FOR / / AGAINST / / ABSTAIN IMPORTANT--THIS FORM MUST BE SIGNED AND DATED ON THE REVERSE SIDE. -----END PRIVACY-ENHANCED MESSAGE-----