DEF 14A 1 d306982ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

 

¨ Preliminary Proxy Statement

 

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x Definitive Proxy Statement

 

¨ Definitive Additional Materials

 

¨ Soliciting Material Pursuant to §240.14a-12

Motorola Solutions, Inc.

 

(Name of Registrant as Specified In Its Charter)

 

 

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

Payment of Filing Fee (Check the appropriate box):

 

x No fee required.

 

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (set forth the amount on which the filing fee is calculated and state how it was determined):

                                                                                                                                                                                                                                  

  (4) Proposed maximum aggregate value of transaction:

                                                                                                                                                                                                                                  

  (5) Total fee paid:

                                                                                                                                                                                                                                  

 

¨ Fee paid previously with preliminary materials.

 

¨ 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:

                                                                                                                                                                                                                                  


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LOGO

 

PRINCIPAL EXECUTIVE OFFICES:    PLACE OF MEETING:

1303 East Algonquin Road

Schaumburg, Illinois 60196

   Willard InterContinental

1401 Pennsylvania Avenue NW
Washington, DC 20004

March 12, 2012     

NOTICE OF 2012 ANNUAL MEETING OF STOCKHOLDERS

To our Stockholders:

Our Annual Meeting will be held at the Willard InterContinental, 1401 Pennsylvania Avenue NW, Washington, DC 20004 on Monday, April 30, 2012 at 5:00 P.M., EDT. For your convenience, we are pleased to offer a live webcast (audio only) of the meeting at www.motorolasolutions.com/investors.

The purpose of the meeting is to:

 

  1. elect eight directors for a one-year term;

 

  2. hold a stockholder advisory vote on the approval of the Company’s executive compensation;

 

  3. ratify the appointment of KPMG LLP as Motorola Solutions’ independent registered public accounting firm for 2012;

 

  4. consider and vote upon stockholder proposals, if properly presented at the meeting; and

 

  5. act upon such other matters as may properly come before the meeting.

Only Motorola Solutions stockholders of record at the close of business on March 2, 2012 (the “record date”) will be entitled to vote at the meeting. Please vote in one of the following ways:

 

   

visit the website shown on your Motorola Solutions Notice of Internet Availability of Proxy Materials for the 2012 Annual Meeting (your “Notice”) or proxy card to vote via the Internet;

 

   

use the toll-free telephone number shown at the website address listed on your Notice or on your proxy card;

 

   

if you received a printed copy of the proxy card, mark, sign, date and return the enclosed proxy card using the postage-paid envelope provided; or

 

   

in person at the Annual Meeting.

 

PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO STOCKHOLDERS OF MOTOROLA SOLUTIONS AS OF THE RECORD DATE (OR THEIR AUTHORIZED REPRESENTATIVES). YOU WILL BE REQUIRED TO PROVIDE THE ADMISSION TICKET THAT IS DETACHABLE FROM YOUR NOTICE OR PROXY CARD OR PROVIDE OTHER EVIDENCE OF OWNERSHIP. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, PLEASE BRING TO THE MEETING YOUR BANK OR BROKER STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF MOTOROLA SOLUTIONS STOCK ON THE RECORD DATE TO GAIN ADMISSION TO THE MEETING.

By order of the Board of Directors,

 

LOGO

Lewis A. Steverson

Secretary


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LOGO

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 30, 2012

March 12, 2012

Dear Fellow Motorola Solutions Stockholders:

You are cordially invited to attend Motorola Solutions’ 2012 Annual Stockholders Meeting. The meeting will be held on Monday, April 30, 2012 at 5:00 P.M., EDT, at the Willard InterContinental, 1401 Pennsylvania Avenue NW, Washington, DC 20004. Given the importance of government and public safety markets to the Motorola Solutions business, in particular our federal government customers, we have decided to again hold this year’s Annual Meeting of Stockholders in Washington, DC.

We encourage you to vote your shares through one of the three convenient methods described in the enclosed Proxy Statement and, if your schedule permits, to attend the meeting. We would appreciate your support on the following management proposals:

 

   

the election of the eight nominated directors;

 

   

the advisory approval of the Company’s executive compensation; and

 

   

the ratification of the appointment of KPMG LLP as our independent registered public accounting firm.

Your vote is important, so please act at your first opportunity.

On behalf of your Board of Directors, thank you for your continued support of Motorola Solutions.

 

LOGO

Gregory Q. Brown

Chairman and CEO

Motorola Solutions, Inc.


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PROXY STATEMENT

  
        ABOUT THE 2012 ANNUAL MEETING      1   
        VOTING PROCEDURES      1   
        PROPOSAL NO. 1 — ELECTION OF DIRECTORS FOR A ONE-YEAR TERM      4   
           NOMINEES      4   
        CORPORATE GOVERNANCE MATTERS      8   
        BOARD OF DIRECTORS MATTERS      13   
           What Are the Committees of the Board?      14   
           How Are the Directors Compensated?      17   
           Director Compensation for 2011      18   
           Director Retirement Plan and Insurance Coverage      20   
           Related Person Transaction Policy and Procedures      21   
        PROPOSAL NO. 2 — ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION      22   
        PROPOSAL NO. 3 — RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2012      25   
        PROPOSAL NO. 4 — STOCKHOLDER PROPOSAL RE: “ENCOURAGE SUPPLIER(S) TO PUBLISH AN ANNUAL SUSTAINABILITY REPORT”      26   
        PROPOSAL NO. 5 — STOCKHOLDER PROPOSAL RE: “EXECUTIVES TO RETAIN SIGNIFICANT STOCK”      28   
        EQUITY COMPENSATION PLAN INFORMATION      30   
        OWNERSHIP OF SECURITIES      31   
           Security Ownership of Management and Directors      31   
           Security Ownership of Principal Stockholders      32   
        COMPENSATION DISCUSSION AND ANALYSIS      34   
        REPORT OF THE COMPENSATION AND LEADERSHIP COMMITTEE ON EXECUTIVE COMPENSATION      61   
        COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION      61   
        NAMED EXECUTIVE OFFICER COMPENSATION      62   
           2011 Summary Compensation Table      62   
           Grants of Plan-Based Awards in 2011      64   
           Outstanding Equity Awards at 2011 Fiscal Year-End      67   
           Option Exercises and Stock Vested in 2011      69   
           Nonqualified Deferred Compensation in 2011      70   
           Retirement Plans      71   
           Pension Benefits in 2011      74   
           Employment Contracts      75   
            Termination of Employment and Change in Control Arrangements      76   
        AUDIT AND LEGAL COMMITTEE MATTERS      85   
           Report of Audit and Legal Committee      85   
           Independent Registered Public Accounting Firm Fees      87   
           Audit and Legal Committee Pre-Approval Policies      87   
        COMMUNICATIONS      88   
        OTHER MATTERS      89   


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PROXY STATEMENT    

 

1

 

 

PROXY STATEMENT

 

ABOUT THE 2012 ANNUAL MEETING

This proxy statement (the “Proxy Statement”) is being furnished to holders of common stock, $0.01 par value per share (the “Common Stock”), of Motorola Solutions, Inc. (“we,” “our,” “Motorola Solutions,” or the “Company”). Proxies are being solicited on behalf of the Board of Directors of the Company (the “Board”) to be used at the 2012 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the Willard InterContinental, 1401 Pennsylvania Avenue NW, Washington, DC 20004 on Monday, April 30, 2012 at 5:00 P.M., EDT, for the purposes set forth in the Notice of 2012 Annual Meeting of Stockholders.

All stockholders may view and print Motorola Solutions’ Proxy Statement and the 2011 Annual Report at the Company’s website at www.MotorolaSolutions.com/investor. The information contained on Motorola Solutions’ website is not a part of this Proxy Statement and is not deemed incorporated by reference into this Proxy Statement or any other public filing made with the Securities and Exchange Commission (the “SEC”).

VOTING PROCEDURES

Who Is Entitled to Vote?

Only stockholders of record at the close of business on March 2, 2012 (the “record date”) will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements thereof. On the record date, there were issued and outstanding 291,717,295 shares of Common Stock entitled to vote at the Annual Meeting. The Common Stock is the only class of voting securities of the Company.

A list of stockholders entitled to vote at the meeting will be available for examination at the corporate offices of Motorola Solutions, Inc., 1303 E. Algonquin Road, Door 51, Schaumburg, Illinois 60196 for ten days before the Annual Meeting and at the Annual Meeting.

Why Did I Receive a Notice of Internet Availability?

The SEC has adopted rules for the electronic distribution of proxy materials. We have elected to provide our stockholders access to our proxy materials and 2011 Annual Report on the Internet instead of sending a full set of printed proxy materials to all of our stockholders. This enables us to reduce costs, provide ease and flexibility for our stockholders and

lessen the environmental impact of our Annual Meeting by mailing most of our stockholders a Notice of Internet Availability of Proxy Materials (“Notice”). If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request it. Instead, the Notice instructs you on how to access and review all of the important information contained in the 2012 Proxy Statement and 2011 Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet or by telephone. If you receive a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.

The Notice, which contains instructions on how to access this Proxy Statement, the form of proxy and the Company’s 2011 Annual Report, is being mailed to stockholders on or about March 12, 2012.

How Can I Vote Without Attending the Annual Meeting?

There are three convenient methods for registered stockholders to direct their vote by proxy without attending the Annual Meeting. Stockholders can:

 

   

Vote by Internet. You can vote via the Internet. The website address for Internet voting is provided on your Notice or proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 P.M. EDT on Sunday, April 29, 2012. Internet voting is available 24 hours a day. If you vote via the Internet you do NOT need to vote by telephone or return a proxy card.

 

   

Vote by Telephone. You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone up until 11:59 P.M. EDT on Sunday, April 29, 2012. Telephone voting is available 24 hours a day. If you vote by telephone you do NOT need to vote over the Internet or return a proxy card.

 

   

Vote by Mail. If you received a printed copy of the proxy card, you can vote by marking it, dating it and signing it, and returning it in the postage-paid envelope provided. Please promptly mail your proxy card to ensure that it is received prior to the closing of the polls at the Annual Meeting.

 


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    PROXY STATEMENT
 

If you are a beneficial owner, or you hold your shares in “street name,” please check your voting instruction card or contact your bank, broker or nominee to determine whether you will be able to vote by Internet or telephone.

How Can I Change My Vote?

Registered stockholders can revoke their proxy at any time before it is voted at the Annual Meeting by either:

 

   

Submitting another timely, later-dated proxy by Internet, telephone or mail;

 

   

Delivering timely written notice of revocation to the Secretary, Motorola Solutions, Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196; or

 

   

Attending the Annual Meeting and voting in person.

If your shares are held in the name of a bank, broker or other nominee, you must obtain a proxy, executed in your favor, from the holder of record (that is, your bank, broker or nominee) to be able to vote at the Annual Meeting.

How Many Votes Must be Present to Conduct Business at the Annual Meeting?

In order for business to be conducted, a quorum must be represented in person or by proxy at the Annual Meeting. A quorum is a majority of the shares entitled to vote at the Annual Meeting. Shares represented by a proxy marked “abstain” will be considered present at the Annual Meeting for purposes of determining a quorum.

How Many Votes Am I Entitled to Cast?

You are entitled to cast one vote for each share of Common Stock you own on the record date. Stockholders do not have the right to vote cumulatively in electing directors.

Will My Shares be Voted if I Do Not Provide Instructions to My Broker?

If you are the beneficial owner of shares held in “street name” by a broker, the broker, as the record holder of the shares, is required to vote those shares in

accordance with your instructions. If you do not give instructions to your broker, your broker will be entitled to vote the shares with respect to “discretionary” items, but will not be permitted to vote the shares with respect to “non-discretionary” items (resulting in a “broker non-vote”). The ratification of the appointment of KPMG LLP is a “discretionary” item. The election of directors, the advisory approval of the Company’s executive compensation and the stockholder proposals are “non-discretionary” items.

Who Represents My Proxy at the Annual Meeting?

If you do not vote in person at the Annual Meeting, but have voted your shares by Internet, telephone, or mail, you have authorized certain members of Motorola Solutions’ senior management designated by the Board and named in your proxy to represent you and to vote your shares as instructed.

What if I Return a Proxy But Do Not Provide Specific Voting Instructions For Some or All of the Items?

All shares that have been properly voted—whether by Internet, telephone, or mail—and not revoked will be voted at the Annual Meeting in accordance with your instructions. If you sign your proxy but do not give voting instructions, the shares represented by that proxy will be voted as recommended by the Board. The Board recommends a vote: (1) “For” the election of the eight director nominees named in this Proxy Statement, (2) “For” the advisory approval of the Company’s executive compensation, (3) “For” the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2012, (4) “Against” the stockholder proposal regarding encouraging supplier(s) to publish an annual sustainability report, and (5) “Against” the stockholder proposal regarding requiring executives to retain significant stock.

What if Other Matters Are Voted on at the Annual Meeting?

If any other matters are properly presented at the Annual Meeting for consideration and if you have voted your shares by Internet, telephone or mail, the persons named as proxies in your proxy will have the discretion to vote on those matters for you. As of the date we filed this Proxy Statement with the SEC, the Board did not know of any other matter to be raised at the Annual Meeting.

 


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PROXY STATEMENT    

 

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How Do I Vote if I Participate in the Company’s 401(k) Plan?

If you own shares of Common Stock through the Motorola Solutions 401(k) Plan (the “401(k) Plan”), the Notice or proxy card includes the shares you hold in the 401(k) Plan as well as the shares you hold outside of the 401(k) Plan. Under the 401(k) Plan, participants are “named fiduciaries” to the extent of their authority to direct the voting of shares of Common Stock credited to their 401(k) Plan accounts and their proportionate share of allocated shares for which no direction is received and unallocated shares, if any (together, “Undirected Shares”). The trustee of the 401(k) Plan will vote Undirected Shares in the same proportion as the shares for which directions are received, except as otherwise provided in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). By submitting voting instructions by Internet, telephone, or, if hardcopies are requested, by mail, you direct the trustee of the 401(k) Plan to vote these shares, in person or by proxy, as designated therein, at the Annual Meeting.

How Many Votes Are Required to Elect Directors?

The Company has adopted a majority vote standard for non-contested director elections. Because the number of nominees properly nominated for the Annual Meeting is the same as the number of directors to be nominated for election at the Annual Meeting, the election of directors is a non-contested election. As set forth in the Company’s Bylaws, to be elected in a non-contested election, a director nominee must receive more “For” votes than “Against” votes. Abstentions and broker non-votes will have no effect on the director election because only votes “For” and “Against” a nominee will be counted.

How Many Votes Are Required for Advisory Approval of Executive Compensation?

With regard to the stockholder advisory approval of the Company’s executive compensation, the affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting will be required to approve our executive compensation. Abstentions will have the same effect as a vote “Against” the advisory approval resolution. Broker non-votes will have no effect on the outcome of the advisory vote. The results of this vote are not binding on the Board.

How Many Votes Are Required to Ratify the Appointment of KPMG LLP as Motorola Solutions’ Independent Registered Public Accounting Firm?

The affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of KPMG LLP. Abstentions will have the same effect as a vote “Against” the proposal.

How Many Votes Are Required to Pass the Stockholder Proposals?

In order to recommend that the Board consider adoption of any stockholder proposal, the affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting is required. Abstentions will have the same effect as a vote “Against” any proposal. Broker non-votes will have no effect on the outcome of the stockholder proposals.


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    PROXY STATEMENT
 

PROPOSAL NO. 1 — ELECTION OF DIRECTORS FOR A ONE-YEAR TERM

How Many Directors Are Standing For Election and For What Term?

The number of directors of the Company to be elected at the Annual Meeting is eight. The directors elected at the Annual Meeting will serve until their respective successors are elected and qualified or until their earlier death, resignation or removal.

NOMINEES

Who Are the Nominees?

Each of the nominees named below is currently a director of the Company. Nominees Gregory Q. Brown, William J. Bratton, David W. Dorman, Michael V. Hayden, Judy C. Lewent, Samuel C. Scott, and Dr. John A. White were elected at the Annual Meeting of Stockholders held on May 2, 2011. Nominee Kenneth C. Dahlberg was elected at a Special Meeting of the Board of Directors held on July 26, 2011. The ages shown are as of January 1, 2012.

 

 

LOGO

  

 

GREGORY Q. BROWN, Principal Occupation: Chairman and Chief Executive Officer, Motorola Solutions, Inc.

Director since 2007; Age—51

Mr. Brown joined the Company in 2003 and since May 2011 has served as Chairman and Chief Executive Officer of Motorola Solutions, Inc. He was President and Chief Executive Officer from January 2011 until May 2011, Co-Chief Executive Officer of Motorola, Inc. and Chief Executive Officer of Broadband Mobility Solutions from August 2008 until January 2011, and President and Chief Executive Officer of Motorola, Inc. from January 2008 until August 2008. From March 2007 through December 2007, Mr. Brown served as President and Chief Operating Officer of Motorola, Inc. From January 2003 through March 2007, Mr. Brown served as Executive Vice President of Motorola, Inc. and President of various businesses within Broadband Mobility Solutions. Prior to joining the Company, Mr. Brown was Chairman and Chief Executive Officer of Micromuse, Inc., a network management software company. Before that, he was President of Ameritech Custom Business Services and Ameritech New Media, Inc. Mr. Brown serves on the President of the United States’ Management Advisory Board and the Skills for America’s Future Board. He is a member of the Business Council, the Business Roundtable, the Technology CEO Council, the Commercial Club of Chicago, the World Business Chicago board, the Northwestern Memorial Hospital board, and a member of the American Cancer Society Discovery Ball Board of Ambassadors. He is also on the executive committee of the U.S. – China Business Council (USCBC) and a member of the Executives’ Club of Chicago’s Board of Directors. Mr. Brown received a B.A. degree in Economics from Rutgers University. He is a member of both Rutgers University’s executive committee of the Board of Trustees and Rutgers’ Board of Overseers.


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PROXY STATEMENT    

 

5

 

 

 

LOGO

  

 

WILLIAM J. BRATTON, Principal Occupation: Chairman of Kroll Inc. a business of Altegrity, Inc.

Director since 2011; Age—64

Mr. Bratton was appointed as the Chairman of Kroll Inc., a global risk company and business of Altegrity, Inc., in September 2010 following Altegrity’s acquisition of Kroll. Mr. Bratton joined Altegrity, a global security solutions and specialized law enforcement training company, in November 2009 as Chairman of Altegrity Risk International where he consulted on security for criminal justice agencies worldwide. Prior to joining Altegrity, Mr. Bratton served as Chief of the Los Angeles Police Department (LAPD) from October 2002 until October 2009. From 1994 to 1996, Mr. Bratton served as the Commissioner of the New York City Police Department (NYPD). Prior to his NYPD appointment, Mr. Bratton served as head of a number of other agencies, including Commissioner of the Boston Police Department, Chief of Police of the New York City Transit Police Department, Superintendent of the Massachusetts Metropolitan District Commission of Police and Chief of Police for the Massachusetts Bay Transportation Authority. From 1996 until his appointment as LAPD Chief, Mr. Bratton worked in the private sector and in 2000 formed the Bratton Group, LLC, which consulted extensively in the United States and Latin America on policing, public safety, and rule of law initiatives. During this period, Mr. Bratton also served as a Senior Consultant to Kroll’s Public Services Safety Group and Crisis and Consulting Management Group. Mr. Bratton is currently the Vice Chairman of the Homeland Security Advisory Council. Mr. Bratton holds a Bachelor of Science degree from Boston State College and is a graduate of the FBI National Executive Institute and the Senior Executive Fellows Program at Harvard’s John F. Kennedy School of Government.

 

 

LOGO

 

  

 

KENNETH C. DAHLBERG, Principal Occupation: Retired; Formerly Chairman of the Board and Chief Executive Officer of Science Applications International Corporation

Director since 2011 Age – 67

Kenneth C. Dahlberg served as Chief Executive Officer of Science Applications International Corporation (SAIC), a research and engineering firm specializing in information systems and technology, from November 2003 through September 2009. Mr. Dahlberg also served as Chairman of the Board of Directors of SAIC from July 2004 until his retirement in June 2010. Prior to joining SAIC, Mr. Dahlberg served as Executive Vice President of General Dynamics Corp., where he was responsible for its Information Systems and Technology Group, and prior to that served as President and Chief Operating Officer of Raytheon Systems. Mr. Dahlberg is currently a director of Teledyne Technologies Incorporated and Parsons Corporation. He is a member of the Institute of Electrical and Electronic Engineers, the Surface Navy Association, the Association of the United States Army, and a Lifetime Member of the United States Navy League. He served as a member of the Board of Governors at Aerospace Industries Association and National Defense Industrial Association. He also served as a member of the President of the United States’ National Telecommunications Security Advisory Committee from October 2004 to January 2010. Mr. Dahlberg received a bachelor’s degree in electrical engineering from Drexel University in 1967, a master’s degree in Electrical Engineering from the University of Southern California in 1969 and attended the University of California business school for advanced education for executives.

 


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    PROXY STATEMENT
 

 

LOGO

  

 

DAVID W. DORMAN, Principal Occupation: Non-Executive Chairman of the Board, CVS Caremark Corporation

Director since 2006; Age—57

Mr. Dorman is the Lead Independent Director of the Board of Motorola Solutions, Inc. and the Non-Executive Chairman of the Board of CVS Caremark Corporation. Previously he was the Non-Executive Chairman of the Board of Motorola Solutions, Inc. and Motorola, Inc. and was also a Managing Director and Senior Advisor with Warburg Pincus, a global leader in private equity. He was Chairman and Chief Executive Officer of AT&T, a provider of internet and transaction-based voice and data services, from November 2002 until the completion of the AT&T Corp. and SBC Communications merger in November 2005. Mr. Dorman joined AT&T as President in December 2000. He began his career in the telecommunications industry at Sprint Corp. in 1981. Mr. Dorman also serves on the boards of YUM! Brands, Inc. and the Georgia Tech Foundation. In the last five years, Mr. Dorman previously served on the board of Phorm, Inc. Mr. Dorman received a B.S. degree in Industrial Management with high honors from the Georgia Institute of Technology.

 

 

LOGO

  

 

MICHAEL V. HAYDEN, Principal Occupation: Principal, Chertoff Group

Director since 2011; Age—66

General Hayden is currently a principal at the Chertoff Group, a security consultancy company. General Hayden’s distinguished career includes several leadership positions with the U.S. Federal Government. General Hayden served as the director of the Central Intelligence Agency from May 2006 until his retirement from federal service in February 2009. From May 2005 to May 2006, General Hayden served as Principal Deputy Director of National Intelligence. He was also the director of National Security Agency from 1999 until 2005. General Hayden is a retired United States Air Force four-star general who entered active duty in the U.S. Air Force in 1969 and retired in July 2008. General Hayden also serves on the board of Alion Science and Technology and serves as a distinguished Visiting Professor at George Mason University School of Public Policy. General Hayden received a B.A. degree in History and an M.A. degree in modern American History, both from Duquesne University. He is a graduate of the Air Force ROTC program.

 

 

LOGO

  

 

JUDY C. LEWENT, Principal Occupation: Retired; Formerly Executive Vice President & Chief Financial Officer, Merck & Co., Inc.

Director since 2011; Age—62

Ms. Lewent joined Merck & Co., a pharmaceutical company, in 1980 and served as chief financial officer from 1990 until her retirement in 2007, where she was responsible for worldwide financial, corporate development and licensing matters as well as for strategic planning. Ms. Lewent also served as president, Human Health Asia from January 2003 until July 2005. Ms. Lewent currently is a director of GlaxoSmithKline plc and Thermo Fisher Scientific, Inc. She served on Motorola, Inc.’s board of directors from May 1995 to May 2010, and on the Board of Dell, Inc. from May 2001 to July 2011. She is a trustee of the Rockefeller Family Trust, a life member of the Massachusetts Institute of Technology Corporation, and a member of the American Academy of Arts and Sciences. Ms. Lewent received a bachelor’s degree from Goucher College and a master’s degree from the MIT Sloan School of Management.

 


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PROXY STATEMENT    

 

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LOGO

  

 

SAMUEL C. SCOTT III, Principal Occupation: Retired; Formerly Chairman of the Board, President and Chief Executive Officer, Corn Products International

Director since 1993; Age—67

Mr. Scott served as Chairman, President and Chief Executive Officer of Corn Products International, a corn refining business, from February 2001 until his retirement in May 2009. Prior to that Mr. Scott was President and Chief Operating Officer of Corn Products International from January 1998 to February 2001. Mr. Scott serves on the Board of Directors of Bank of New York Mellon, Abbott Laboratories, the Chicago Council on Global Affairs, World Business Chicago, and The Chicago Urban League. He also serves on the Board of Northwestern Memorial HealthCare and as Chairman of Chicago Sister Cities. Mr. Scott received a B.S. degree in Engineering and an M.B.A. from Fairleigh Dickinson University.

 

 

LOGO

  

 

DR. JOHN A. WHITE, Principal Occupation: Distinguished Professor of Industrial Engineering, University of Arkansas

Director since 1995; Age—72

Dr. White is a Distinguished Professor of Industrial Engineering at the University of Arkansas. Previously, he was Chancellor of the University of Arkansas from 1997 until he retired in June 2008. Dr. White served as Dean of Engineering at Georgia Institute of Technology from 1991 to early 1997, having been a member of the faculty since 1975. He is also a director of J.B. Hunt Transport Services, Inc. In the last five years, Dr. White previously served on the board of Logility, Inc. A member of the National Academy of Engineering, Dr. White received a B.S.I.E. from the University of Arkansas, an M.S.I.E. from Virginia Polytechnic Institute and State University and a Ph.D. from The Ohio State University.

 

RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE EIGHT NOMINEES NAMED HEREIN AS DIRECTORS. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE ELECTION OF SUCH EIGHT NOMINEES AS DIRECTORS.

What if a Nominee is Unable to Serve as Director?

If any of the nominees named above is not available to serve as a director for any reason at the time of the Annual Meeting, the proxies will be voted for the election of such other person or persons as the Board may designate, unless the Board, in its discretion, reduces the number of directors.


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CORPORATE GOVERNANCE MATTERS

What Are the Board’s Corporate Governance Principles?

The Board has long adhered to governance principles designed to assure the continued vitality of the Board and excellence in the execution of its duties. The Board has responsibility for management oversight and providing strategic guidance to the Company. The Board believes that it must continue to renew itself to ensure that its members understand the industries and the markets in which the Company operates. The Board also believes that it must remain well-informed about the positive and negative issues, problems and challenges facing Motorola Solutions and its industries and markets so that the Board members can exercise their fiduciary responsibilities to Motorola Solutions stockholders.

What Are Some of the Major Corporate Governance Initiatives the Board Has Adopted in Recent Years?

The Board recognizes the importance of evolving the Company’s corporate governance practices and is committed to regularly reviewing specific elements of the Company’s corporate governance and making changes when the Board deems them in the best interests of the Company and stockholders. As a result, Motorola Solutions is a leader in adopting many corporate governance best-practices. Motorola Solutions was an early adopter of the “say-on-pay” vote, having held a stockholder advisory vote to approve the Company’s compensation of our named executive officers for the two years before such a vote was required. We will hold an advisory vote to seek stockholder approval of our named executive officers’ compensation on an annual basis, as we recommended and as advised by our stockholders. We elect all of our directors annually and have a majority voting standard for non-contested director elections. We also eliminated our stockholder rights plan (commonly known as a “poison pill”). Holders of 20% or more of Motorola Solutions’ Common Stock have the ability to request a special meeting of stockholders. We also have a recoupment policy to recover certain executive pay in the event of misconduct leading to a financial restatement (commonly known as a “clawback policy”). In January 2011, the Board adopted a new change in control plan which covers our named executive officers, other than Mr. Brown, and our other senior executives. This new plan replaces the change in control plan for existing senior executives after the notice period expires and is currently in effect for any new senior executives. The new plan limits the participants in the plan, eliminates excise tax gross up provisions, reduces the cash severance multiple and makes certain other changes, all as more fully described in the Compensation Discussion and Analysis and in Change in Control Agreements. Further, in November 2011, the Board amended our Motorola Solutions Omnibus Incentive Plan of 2006 (the “2006 Plan”) to remove a share recycling provision, which allowed shares withheld for tax purposes to be reissued for future grants. Additionally, we clarified our plan to affirmatively state that dividend equivalents cannot be accrued on options or stock appreciation rights, and to specifically define fair market value in our stock plan, which is the closing price on the date of the transaction. We also amended our Board Governance Guidelines to increase non-employee director stock ownership guidelines from four times to five times the annual retainer within a five year time period and implemented a requirement for non-employee directors to hold all shares paid or awarded by the Company until termination of Board service. Finally, the Board eliminated tax gross-ups for imputed income related to guests traveling with any officer subject to Section 16 (a “Section 16 Officer”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) to Company sponsored events. Section 16 Officers are now responsible for taxes due on imputed income resulting from their guests attending special events.

What Are Our Directors’ Qualifications to Serve on the Motorola Solutions Board?

The Board believes it should be comprised of individuals with appropriate skills and experiences to meet its board governance responsibilities and contribute effectively to the Company. Our Governance and Nominating Committee carefully considers the skills and experiences of current directors and new nominee candidates to ensure that they meet the needs of the Company before nominating directors for election to the Board. All of our non-employee directors serve on Board committees, further supporting the Board by providing expertise to those committees. The needs of the committees also are reviewed when considering nominees to the Board.

The Board is comprised of active and former CEOs and CFOs of major corporations and individuals with experience in high-tech fields, government, law enforcement, private equity and academia. As such, they have a deep working knowledge of matters common to large companies, generally including experience with financial statement preparation, compensation determinations, regulatory compliance, corporate governance, public affairs and legal


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matters. The following is a brief discussion of the specific experience, qualifications, attributes or skills that led to the conclusion that each director should serve on the Board:

 

   

Mr. Bratton’s significant experience in law enforcement both in the U.S. and abroad and his insight in criminal justice system operations;

 

   

Mr. Brown’s leadership experience as Chairman and CEO of Motorola Solutions and his significant global business experience within the telecommunications industry;

 

   

Mr. Dahlberg’s significant business experience, previously held senior-executive level positions and his service on other public company boards;

 

   

Mr. Dorman’s experience in private equity and as the chief executive officer of a global public company in the telecommunications industry;

 

   

General Hayden’s experience as a career soldier, as the nation’s top military intelligence officer and his background in national security;

 

   

Ms. Lewent’s experience as the chief financial officer of a global public company in the pharmaceutical industry;

 

   

Mr. Scott’s experience as the chairman and chief executive officer of a global public company in the corn refining industry; and

 

   

Dr. White’s experience as the chancellor of a university, as the dean of an engineering college and as an author of financial textbooks.

Many of our directors also serve on the boards of one or more other publicly traded companies. Our Board Governance Guidelines limit the number of public company boards our directors can serve on to three or less (not including our Board) without approval of the Board. We believe Motorola Solutions benefits from the experience and expertise our directors gain from serving on those boards.

Which Directors Are Independent?

On February 14, 2012, the Board made the determination, based on the recommendation of the Governance and Nominating Committee and in accordance with the Motorola Solutions, Inc. Director Independence Guidelines, that each of the former non-employee directors, Messrs. Hambrecht, Intrieri, Meister, Meredith, Stengel, Vinciquerra, and Warner, and the current non-employee directors, Mr. Bratton, Mr. Dahlberg, Mr. Dorman, Mr. Hayden, Ms. Lewent, Mr. Scott, and Dr. White, were independent during the periods in 2011 and 2012 that they were members of the Board. Mr. Brown and Dr. Jha do not qualify as independent directors since they are, or were, employees of the Company. Messrs. Hambrecht, Meister, Meredith, Stengel, Vinciquerra and Dr. Jha all served as directors of the Company through January 3, 2011 and resigned effective January 4, 2011 in connection with the distribution of the shares of common stock of Motorola Mobility Holdings, Inc. Each such day they served as a director in 2011 was a weekend or Company holiday and no business was conducted on those days. Mr. Intrieri resigned from the Board on March 1, 2012. See “What is Motorola Solutions’ Relationship with Entities Associated with Independent Directors?” for further details.

How Was Independence Determined?

The Motorola Solutions, Inc. Director Independence Guidelines include both the NYSE independence standards and categorical standards the Board has adopted to determine if a relationship that a Board member has with the Company is material. The categorical standards adopted by the Board are as follows:

 

   

Contributions or payments (including the provision of goods or services) from Motorola Solutions to a charitable organization (including a foundation), a university, or other not-for-profit organization, of which a director or an immediate family member of a director (defined to include a director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than domestic employees) who shares the director’s home) is an officer, director, trustee or employee, will not impair independence unless the contribution or payment (excluding Motorola Solutions


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matches of charitable contributions made by employees or directors under Motorola Solutions’ or the Motorola Solutions Foundation’s matching gift programs):

(i) is to an entity of which the director or the director’s spouse currently is an officer, director or trustee, and such person held such position at the time of the contribution,

(ii) was made within the previous three years, and

(iii) was in an amount which, in the entity’s last fiscal year prior to the year of the contribution or payment, exceeded the greater of $300,000 or 5% of such entity’s consolidated gross revenues (or equivalent measure).

 

   

Indebtedness of Motorola Solutions to a bank or similar entity of which a director or a director’s immediate family member is a director, officer, employee or 10% Owner (as defined below) will not impair independence unless the following are applicable:

(i) the director or the director’s spouse is an executive officer of such entity or an owner who directly or indirectly has a 10% or greater equity or voting interest in such entity (a “10% Owner”) and he or she held that position at any time during the previous twelve months, and

(ii) the total amount of Motorola Solutions’ indebtedness during the previous twelve months is more than 5% of the total consolidated assets of such entity in its last fiscal year.

 

   

Other business relationships between a director or a director’s immediate family member, such as consulting, legal or financial advisory services provided to Motorola Solutions, will not impair independence unless the following are applicable:

(i) the director or the director’s spouse is a partner, officer or 10% Owner of the company or firm providing such services, and he or she held such position at any time during the previous twelve months, and

(ii) the services that were provided during the previous twelve months were in an amount which, in the company’s or firm’s last fiscal year, exceeded the greater of $1 million or 2% of such company’s or firm’s consolidated gross revenues.

This categorical standard does not include business relationships with Motorola Solutions’ independent registered public accounting firm because those relationships are covered by the NYSE independence standards.

 

   

Motorola Solutions’ ownership of voting stock of a company of which the director or the director’s immediate family member is a director, officer, employee or 10% Owner will not impair independence unless the following are applicable:

(i) the director or the director’s spouse is an executive officer of that company, and

(ii) Motorola Solutions is currently a 10% Owner of that company.

The ownership of Motorola Solutions Common Stock by a director or a director’s immediate family member will not be considered to be a material relationship that would impair a director’s independence.

When applying the NYSE independence standards and the categorical standards set forth above, “Motorola Solutions” includes Motorola Solutions, Inc. and any of its subsidiaries and the Motorola Solutions Foundation.

A complete copy of the Motorola Solutions, Inc. Director Independence Guidelines is available on the Company’s website at www.MotorolaSolutions.com/investor. The information contained on Motorola Solutions’ website is not a part of this Proxy Statement and is not deemed incorporated by reference into this Proxy Statement or any other public filing made with the SEC.

What is Motorola Solutions’ Relationship with Entities Associated with Independent Directors?

As previously disclosed, Mr. Meredith’s term as Acting Chief Financial Officer and Executive Vice President of Motorola, Inc. ended on March 1, 2008 and, under the terms of his agreement, his employment ended on March 31, 2008. In February 2008, the Board determined that Mr. Meredith’s independence under then Motorola, Inc.’s Independence Guidelines and the NYSE independence requirements was not impaired by his status as an employee of the Company from April 1, 2007 through March 31, 2008 because he was serving as an interim


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employee of the Company at the request of the Board while the Company conducted a search for a permanent chief financial officer. Mr. Meredith ceased being a director effective January 4, 2011.

All independent directors, other than Messrs. Dahlberg, Intrieri, Hambrecht, Meister and Vinciquerra, had relationships with entities that were reviewed by the Board under the NYSE’s independence standards and/or the Board’s categorical standards described above covering contributions or payments to charitable or similar not-for-profit organizations. In each case, the payments or contributions were significantly less than the NYSE independence standards or the categorical standards and were determined by the Board to be immaterial. Relationships with entities related to Messrs. Bratton, Dorman, Hayden, Scott, White, Meredith, Stengel and Warner and Ms. Lewent, were also reviewed under “Other Relationships” of the categorical standards and each were determined by the Board to be immaterial.

Are the Members of the Audit and Legal, Compensation and Leadership and Governance and Nominating Committees Independent?

Yes. The Board has determined that all of the current members of the Audit and Legal Committee, the Compensation and Leadership Committee and the Governance and Nominating Committee are independent within the meaning of the Motorola Solutions, Inc. Director Independence Guidelines, applicable rules of the SEC and the NYSE listing standards for independence.

Where Can I Receive More Information About Motorola Solutions’ Corporate Governance Practices?

Motorola Solutions maintains a corporate governance page on its website at www.MotorolaSolutions.com/investor that includes information about its corporate governance practices. The following documents are currently included on the website:

 

   

The Motorola Solutions, Inc. Board Governance Guidelines, the current version of which the Board adopted on November 9, 2011;

 

   

The Motorola Solutions, Inc. Director Independence Guidelines, the current version of which the Board adopted on September 11, 2008;

 

   

The Principles of Conduct for Members of the Motorola Solutions, Inc. Board of Directors, the current version of which the Board adopted on November 10, 2009;

 

   

The Motorola Solutions, Inc. Code of Business Conduct, which applies to all employees;

 

   

The charters of the Audit and Legal Committee, Compensation and Leadership Committee and Governance and Nominating Committee, the current versions of each of which the Board adopted on January 26, 2010;

 

   

The Motorola Solutions, Inc. Restated Certificate of Incorporation, as amended through January 4, 2011; and

 

   

The Motorola Solutions, Inc. Amended and Restated Bylaws, the current version of which the Board adopted on November 11, 2009.

The Company intends to disclose amendments to the above documents, or waivers applicable to its directors, chief executive officers, chief financial officer or corporate controller from certain provisions of its ethical policies and standards for directors and its employees, on the Motorola Solutions website within four business days following the date of the amendment or waiver.

What Important Recent Events have occurred at Motorola Solutions?

On January 4, 2011, the separation of Motorola Mobility Holdings, Inc. (“Motorola Mobility”) from Motorola, Inc. (the “Separation”) was completed. Motorola Mobility is an independent public company, trading under the symbol “MMI” on the New York Stock Exchange. Pursuant to the Separation, on January 4, 2011, the stockholders of record as of the close of business on December 21, 2010 received one (1) share of Motorola Mobility common stock for each eight (8) shares of Motorola, Inc. common stock held as of December 21, 2010. Immediately following the distribution of Motorola Mobility common stock, Motorola, Inc. completed a 1-for-7 reverse stock split (the “Reverse Stock Split”) and changed its name to Motorola Solutions, Inc. Stockholders received cash in lieu of fractional shares produced by the Separation and the Reverse Stock Split.


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Motorola Mobility Employees and Directors:

All outstanding stock options or unvested restricted stock units held by individuals becoming employees or directors of Motorola Mobility were substituted with options or restricted stock units, as applicable, of Motorola Mobility. The substitute award of Motorola Mobility stock options was calculated by:

 

   

multiplying the number of shares subject to each such stock option grant by 0.277682 (the “Motorola Mobility Adjustment Factor”) and rounding down; and

 

   

dividing the exercise price per share for each such stock option grant by the Mobility Adjustment Factor and rounding up.

The substitute award of restricted stock units was calculated by multiplying the number of shares subject to each such grant by the Motorola Mobility Adjustment Factor and rounding down.

The “Motorola Mobility Adjustment Factor” of 0.277682 was calculated by dividing (1) the “regular way” closing price per share of Motorola, Inc. common stock on January 3, 2011 ($9.11), by (2) the volume-weighted average price per share of Motorola Mobility common stock trades as published by Bloomberg on January 4, 2011 ($32.8072).

Motorola Solutions Employees and Directors:

With respect to all individuals remaining as employees or directors of Motorola Solutions, all outstanding stock options and unvested restricted stock units were adjusted to reflect the Separation and the Reverse Stock Split. The number of shares covered by, and the exercise price of, all vested and unvested stock options was adjusted to reflect the change in the Motorola, Inc. stock price immediately following the Separation and Reverse Stock Split by:

 

   

multiplying the number of shares subject to each such stock option grant by 0.238089 (the “Motorola Adjustment Factor”) and rounding down; and

 

   

dividing the exercise price per share for each such stock option grant by the Motorola Adjustment Factor and rounding up.

The number of restricted stock units immediately following the Separation and Reverse Stock Split was calculated by multiplying the number of shares subject to each such grant by the Motorola Adjustment Factor and rounding down.

The “Motorola Adjustment Factor” of 0.238089 was calculated by dividing (1) the “regular way” closing price per share of Motorola, Inc. common stock on January 3, 2011 ($9.11) by (2) the volume-weighted average price per share of Motorola Solutions Common Stock trades as published by Bloomberg on January 4, 2011 ($38.2629).

Board of Directors:

Directors who owned deferred stock units are entitled to dividend equivalents and therefore the deferred stock units were treated in the same manner as shares of Motorola, Inc. common stock, as described above. However, cash in lieu of fractional shares was not paid. The distribution ratio (1-for-8) and reverse stock split ratio (1-for-7) were applied and then rounded down to the nearest whole share.

In addition, instead of receiving a distribution of shares of Motorola Mobility common stock, each director received a distribution of Motorola Mobility deferred stock units and we agreed to be responsible for settling the Motorola Mobility deferred stock units for our directors following their termination of service from our Board. We will do this by purchasing shares of Motorola Mobility’s common stock on the open market, if available. Upon completion of the recently announced merger of Motorola Mobility with Google, Inc., each director will automatically be entitled to receive the cash proceeds of such merger with respect to each Motorola Mobility deferred stock unit, without interest, upon termination of Board service. However, each of the directors who received Motorola Mobility deferred stock units has elected to convert such cash proceeds into deferred stock units of Motorola Solutions, Inc. at the time of the merger of Motorola Mobility with Google, Inc. rather than receiving a right to receive cash. At the time of the merger, we will replace such cash proceeds with Motorola Solutions deferred


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stock units with terms that mirror the original Motorola Solutions deferred stock unit award by dividing the total cash proceeds such director would be eligible to receive by the closing price of our Common Stock on the date such merger is consummated.

BOARD OF DIRECTORS MATTERS

How Often Did the Board Meet in 2011?

The Board held seven meetings during 2011. Overall attendance at Board and committee meetings was 96%. Each incumbent director attended 83% or more of the combined total meetings of the Board and the committees on which he or she served during 2011.

How Many Directors will Comprise the Board?

The Board is currently comprised of, and immediately following the Annual Meeting will consist of, eight directors. The Board has the authority under the Company’s Bylaws to increase or decrease the size of the Board and to fill vacancies between Annual Meetings.

How Many Executive Sessions of the Board Were Held in 2011?

Independent directors of the Company meet regularly in executive session without management as required by the Motorola Solutions, Inc. Board Governance Guidelines and NYSE listing standards. Generally, executive sessions are held in conjunction with regularly-scheduled meetings of the Board. In 2011, the non-employee independent members of the Board met in executive session seven times.

What is the Leadership Structure of the Board? Why was that Structure Chosen? Who Serves as Chairman of the Board?

At the Annual Board meeting held in May 2011, the Board combined the roles of Chairman and Chief Executive Officer and appointed Gregory Q. Brown to serve as both Chief Executive Officer and Chairman of the Board and Mr. Dorman to serve as Lead Independent Director. The Board determined that Mr. Brown’s thorough knowledge of Motorola Solutions business, strategy, people, operations, competition and financial position coupled with his leadership and vision made him well positioned to chair Board meetings and bring key business and stakeholder issues to the Board’s attention. A joint role for Motorola Solutions provides a vital link between management and the Board, allowing the Board to perform its oversight role with the benefit of management’s perspective on our business strategy and all other aspects of the business. As Lead Independent Director, Mr. Dorman chairs the executive sessions of the Board and acts as a liaison between our Chairman and independent directors.

From May 2008 through the date of the 2011 Annual Meeting, Mr. Dorman was the non-executive, independent Chairman. Mr. Dorman became the Company’s first non-executive chairman when the Board decided to elect a non-executive chairman because it believed that structure supported our plan to separate the Company into two independent, publicly-traded companies. As Chairman, Mr. Dorman had a significant role in hiring Dr. Jha as Co-CEO of the Company and CEO of the Mobile Devices business.

Prior to 2008, the Company combined the functions of Chairman with those of Chief Executive Officer. Throughout, the Board has been and remains committed to maintaining strong corporate governance and appropriate independent oversight of management. Given that each of the members of the Board, other than Mr. Brown, are independent we believe that the leadership structure ultimately chosen by the Board will provide effective independent board leadership and oversight.

Will the Directors Attend the Annual Meeting?

Board members are expected to attend the Annual Meeting as provided in the Motorola Solutions, Inc. Board Governance Guidelines. All of our directors who stood for election at the 2011 Annual Meeting attended that meeting.


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What is the Board’s Role in the Oversight of Risks?

The Board oversees the business of the Company, including CEO and senior management performance and risk management, to assure that the long-term interests of the stockholders are being served. Each committee of the Board is also responsible for reviewing the risk exposure of the Company related to the committee’s areas of responsibility and providing input to management on such risks.

Management and our Board have a robust process embedded throughout the Company to identify, analyze, manage and report all significant risks facing the Company. The Company’s Chairman and CEO and other senior managers regularly report to the Board on significant risks facing the Company, including financial, operational and strategic risks. Each of the Board committees reviews with management significant risks related to the committee’s area of responsibility and reports to the Board on such risks, which includes the Compensation and Leadership Committee’s review of Company-wide compensation-related risks. While each committee is responsible for reviewing significant risks in the committee’s area of responsibility, the entire Board is regularly informed about such risks through committee reports. The oversight of specific risks by Board committees enables the entire Board to oversee risks facing the Company more effectively and develop strategic direction taking into account the effects and magnitude of such risks. The independent Board members also discuss the Company’s significant risks when they meet in executive session without management.

Our Audit Services department has a very important role in the risk management program. The role of the department is to provide management and the Audit and Legal Committee with an overarching and objective view of the risk management activity of the enterprise. The department’s engagements span financial, operational, strategic and compliance risks and the engagement results assist management in maintaining tolerable risk levels. The department conducts engagements utilizing an enterprise risk management model. The director of the department reports directly to the Audit and Legal Committee and meets regularly with the committee, including in executive session.

What Are the Committees of the Board?

To assist it in carrying out its duties, the Board has delegated certain authority to several committees. The Board currently has the following committees: (1) Audit and Legal, (2) Compensation and Leadership, (3) Governance and Nominating, and (4) Executive. Committee membership as of December 31, 2011 and the number of meetings of each committee during 2011 are described below:

 

Non-Employee Directors

   Audit &
Legal
     Compensation &
Leadership
     Governance &
Nominating
     Executive  

William J. Bratton

        X         

Kenneth C. Dahlberg

     X         X         

David W. Dorman*

        X         Chair         X   

Gen. Michael V. Hayden

           X      

Vincent J. Intrieri**

     X            

Judy C. Lewent

     X            X      

Samuel C. Scott III

        Chair            X   

John A. White

     Chair               X   

Employee Directors

           

Gregory Q. Brown

              Chair   

Number of Meetings in 2011

     7         9         4         0   

  * Lead Independent Director

** Resigned March 1, 2012


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Where Can I Locate the Current Committee Charters?

Current versions of the Audit and Legal Committee charter, Compensation and Leadership Committee charter and Governance and Nominating Committee charter are available on our website at www.MotorolaSolutions.com/investor. The information contained on Motorola Solutions’ website is not a part of this Proxy Statement and is not deemed incorporated by reference into this Proxy Statement or any other public filing made with the SEC.

What Are the Functions of the Audit and Legal Committee?

 

   

Assist the Board in fulfilling its oversight responsibilities as they relate to the Company’s accounting policies, internal controls, disclosure controls and procedures, financial reporting practices and legal and regulatory compliance.

 

   

Hire the independent registered public accounting firm.

 

   

Monitor the qualifications, independence and performance of the Company’s independent registered public accounting firm and the performance of the Company’s internal auditors.

 

   

Maintain, through regularly scheduled meetings, a line of communication between the Board and the Company’s financial management, internal auditors and independent registered public accounting firm.

 

   

Oversee compliance with the Company’s policies for conducting business, including ethical business standards.

 

   

Review the Company’s overall financial posture, asset utilization and capital structure.

 

   

Review the need for equity and/or debt financing and specific outside financing proposals.

 

   

Review and approve major transactions, such as restructurings, acquisitions, divestitures, joint ventures and equity investments.

 

   

Monitor the performance and investments of employee retirement and related funds.

 

   

Review the Company’s dividend payment plans and practices.

 

   

Prepare the report of the Audit and Legal Committee included in this Proxy Statement.

What Are the Functions of the Compensation and Leadership Committee?

 

   

Assist the Board in overseeing the management of the Company’s human resources, including:

 

   

compensation and benefits programs;

 

   

CEO performance and compensation;

 

   

executive development and succession; and

 

   

diversity efforts.

 

   

Oversee the evaluation of the Company’s senior management.

 

   

Review and discuss the Compensation Discussion and Analysis (“CD&A”) with management and make a recommendation to the Board on the inclusion of the CD&A in this proxy statement.

 

   

Prepare the report of the Compensation and Leadership Committee included in this proxy statement.

What Are the Functions of the Governance and Nominating Committee?

 

   

Identify individuals qualified to become Board members, consistent with the criteria approved by the Board.

 

   

Recommend director nominees and individuals to fill vacant positions.

 

   

Assist the Board in interpreting the Company’s Board Governance Guidelines, the Board’s Principles of Conduct and any other similar governance documents adopted by the Board.

 

   

Oversee the evaluation of the Board and its committees.

 

   

Generally oversee the governance and compensation of the Board.


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What Are the Functions of the Executive Committee?

 

   

Act for the Board between meetings on matters already approved in principle by the Board.

 

   

Exercise the authority of the Board on specific matters assigned by the Board from time to time.

What is the Decision-Making Process to Determine Executive Compensation?

The Board has delegated to the Compensation and Leadership Committee the responsibility to oversee the programs under which compensation is paid or awarded to Motorola Solutions’ senior executives and to evaluate their performance. The Compensation and Leadership Committee is responsible for bringing recommended compensation actions involving the CEO to the Board for its concurrence. The specific functions of the Compensation and Leadership Committee are described in this Proxy Statement under What Are the Functions of the Compensation and Leadership Committee? and in the Compensation and Leadership Committee’s charter, which the Compensation and Leadership Committee and the Board annually review and revise as necessary.

Motorola Solutions’ Human Resources organization supports the Compensation and Leadership Committee in its work and, in some cases, acts pursuant to delegated authority from the Compensation and Leadership Committee to fulfill various functions in administering Motorola Solutions’ compensation programs.

In carrying out its duties, the Compensation and Leadership Committee has direct access to outside advisors, independent compensation consultants and others to assist them in their review of the compensation for Motorola Solutions’ senior executives. Since 2009, the Committee has retained Compensation Advisory Partners, LLC (“Compensation Advisory Partners”) as its independent compensation consultant.

For more information on the decisions made by the Compensation and Leadership Committee, see the Compensation Discussion and Analysis.

What is the Decision-Making Process to Determine Director Compensation?

The Governance and Nominating Committee recommends to the Board the compensation for non-employee directors, which is to be consistent with market practices of other similarly situated companies and takes into consideration the impact on non-employee directors’ independence and objectivity. The Board has asked the Compensation and Leadership Committee to assist the Governance and Nominating Committee in making such recommendations. The charter of the Governance and Nominating Committee does not permit it to delegate director compensation matters to management, and management has no role in recommending the amount or form of director compensation.

What is the Role of Independent Compensation Consultants in Executive and Director Compensation Determinations?

In accordance with the Compensation and Leadership Committee’s charter, this committee has the sole authority, to the extent deemed necessary and appropriate, to retain and terminate any compensation consultants, outside counsel or other advisors, including the sole authority to approve the firm’s fees and retention terms.

In accordance with this authority, since 2009, the Compensation and Leadership Committee has retained Compensation Advisory Partners as its independent consultant firm. Compensation Advisory Partners provides insight and advice on matters regarding trends in executive compensation, relative executive pay and benefits practices, assessment of pay of our senior executives relative to performance and other measures as the Compensation and Leadership Committee deems appropriate. See Independent Consultant Engagement in the Compensation Discussion and Analysis for further details on the compensation-related elements the Compensation and Leadership Committee requested to be reviewed by Compensation Advisory Partners.

The Compensation and Leadership Committee intends to engage its external independent consultant to perform a comprehensive evaluation of the Company’s executive rewards program on a periodic basis. The Compensation and Leadership Committee also intends to engage its external independent consultant to review the specific compensation of the CEO and all members of the management executive committee annually.


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What Role, if any, do Executive Officers Play in Determining or Recommending Executive and Director Compensation?

Motorola Solutions’ management executive committee, comprised of the CEO and certain executives designated by the CEO, provides recommendations regarding the design of the Company’s compensation program to the Compensation and Leadership Committee. Additionally, the Compensation and Leadership Committee’s independent compensation consultant provides input on these recommendations from time to time, assists in reviewing the compensation for the management executive committee and participates in Committee meetings. Upon Compensation and Leadership Committee approval, the management executive committee is responsible for executing the objectives of approved compensation programs.

Each member of Motorola Solutions’ management executive committee is ultimately responsible for approving all compensation actions for their respective organizations. When these compensation actions involve other Motorola Solutions executives, the involved management executive committee member is accountable for ensuring adherence to all established governance procedures.

The CEO is responsible for recommending all compensation actions involving any member of the management executive committee or Section 16 Officer to the Compensation and Leadership Committee for its approval. The CEO takes an active role in Compensation and Leadership Committee meetings at which compensation actions involving the above officers are discussed.

Motorola Solutions’ Human Resources organization, together with the Compensation and Leadership Committee’s independent compensation consultant, prepares recommendations regarding CEO compensation and brings those recommendations to the Compensation and Leadership Committee. The Compensation and Leadership Committee is responsible for bringing recommended compensation actions involving the CEO to the independent members of the Board for their concurrence. The Compensation and Leadership Committee cannot unilaterally approve compensation changes for the CEO. The CEO is not involved in the preparation of recommendations related to his compensation and does not participate in the discussions regarding his compensation at Committee or Board meetings. The independent consultant is also available at such Committee meetings where the CEO’s compensation is being discussed.

As stated above, management does not recommend or determine director compensation.

What Are the Director Stock Ownership Guidelines?

On November 9, 2011, our Board stock ownership guidelines were increased to provide that, by the later of five years after that date or joining the Board, non-employee directors are expected to own Common Stock with a value equivalent to at least five times the annual retainer fee for directors. In addition, directors are required to hold all shares paid or awarded by the Company until their termination of service. For the purposes of these guidelines, Common Stock includes deferred stock units. Until such time as the obligation to own five times the annual retainer has passed, the previous requirement of four times the annual retainer within five years of joining the Board will remain in effect for all members of the Board as of November 9, 2011.

How Are the Directors Compensated?

During 2011, the annual retainer fee paid to each non-employee director was $100,000. In addition: (1) the Lead Independent Director received an additional fee of $25,000; (2) the chair of the Audit and Legal Committee received an additional annual fee of $20,000; (3) the chair of the Compensation and Leadership Committee received an additional annual fee of $15,000; (4) the non-employee chairs of the other committees each received an additional annual fee of $10,000; and (5) the members of the Audit and Legal Committee, other than the chair, each received an additional annual fee of $5,000. The non-employee Chairman of the Board received an additional annual fee of $280,000, pro-rated for the portion of the year he served in such position; in addition, the Lead Independent Director fee was pro-rated for the portion of the year he served in such position. All fees are paid quarterly. The Company also reimburses its directors and, in certain circumstances, spouses who accompany directors, for travel, lodging and related expenses they incur in attending Board and committee meetings or other meetings as requested by Motorola Solutions.


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During 2011, a director could elect to receive all or a portion of his or her annual retainer and other cash fees in the form of deferred stock units. Commencing in 2012, directors may elect to receive all or a portion of his or her annual retainer and other cash fees in the form of (i) deferred stock units that settle when the director terminates service, (ii) deferred stock units that settle after one year (unless service is earlier terminated), or (iii) outright shares.

In 2011, non-employee directors received an annual grant of $120,000 of deferred stock units in the second quarter of the fiscal year that settle when the director terminates service. Beginning in January 2012, non-employee directors will receive an annual grant of $140,000 of deferred stock units in the second quarter of the fiscal year. Further, directors may elect deferred stock units that settle when the director terminates service, or that settle after one year (unless service is earlier terminated). On May 3, 2011, each non-employee director received a deferred stock unit award of 2,656 shares of Common Stock. The number of deferred stock units awarded was determined by dividing $120,000 by the fair market value of a share of Common Stock on the date of grant (rounded up to the next whole number) based on the closing price on the date of grant.

For a non-employee director who becomes a member of the Board of Directors after the annual grant of deferred stock units, the award will be prorated based on the number of full months to be served ($10,000 per month prior to May 2012; $11,666.67 per month commencing in May 2012) divided by the closing price of the Common Stock on the day of election to the Board. On January 4, 2011, Messrs. Bratton, Hayden and Intrieri and Ms. Lewent were elected to the Board and each received a grant of deferred stock units equal to $40,000. On July 26, 2011, the date Mr. Dahlberg was elected to the Board, he received a grant of deferred stock units equal to $90,000.

Except for Dr. White, non-employee directors are not eligible to participate in the Motorola Solutions Management Deferred Compensation Plan. Motorola Solutions does not have a non-equity incentive plan or pension plan for non-employee directors. Non-employee directors do not receive any additional fees for attendance at meetings of the Board or its committees, or for additional work done on behalf of the Board or a committee. Mr. Brown and Dr. Jha, who were employees during 2011, received no additional compensation for serving on the Board or its committees.

The following table further summarizes compensation paid to the non-employee directors during 2011.

Director Compensation for 2011

 

Name

(a)

   Fees
Earned or
Paid in
Cash($)(1)
(b)
    

Stock
Awards($)
(2)(3)

(c)

     Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings($)
(f)
    All Other
Compensation($)(4)
(g)
    Total($)
(h)
 

William J. Bratton

     100,000         160,033                       260,033   

Kenneth C. Dahlberg

     39,375         103,154                       142,529   

David W. Dorman

     0         382,644                5,500 (5)      388,144   

Michael V. Hayden

     100,000         160,033                       260,033   

Judy C. Lewent

     105,000         160,033                       265,033   

Samuel C. Scott III

     115,000         120,025                       235,025   

John A. White

     72,000         168,123         0 (6)       10,000 (5)       250,123   

Former Directors(7)

            

Vincent J. Intrieri

     0         265,119                       265,119   

Douglas A. Warner III

     52,500                               52,500   

William R. Hambrecht

                                     

Keith A. Meister

                                     

Thomas J. Meredith

                                     

James R. Stengel

                                     

Anthony J. Vinciquerra

                                     


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(1) During 2011, directors could elect to receive a portion of their annual retainer or other fees in the form of deferred stock units (“DSUs”) that settle upon the termination of service with the Company. The amounts in column (b) are the portion of the annual retainer and any other fees the non-employee director has elected to receive in cash. Messrs. Dahlberg, Dorman, White and Intrieri elected to receive DSUs with respect to $13,152, $262,619, $48,098 and $105,086, respectively, in lieu of their cash fees. These deferred amounts are included in column (c).

 

(2) Certain directors have elected to receive DSUs for all or a portion of their annual retainer or other fees. In addition, all non-employee directors received an annual grant of DSUs on May 3, 2011. All amounts in column (c) are the aggregate grant date fair value of DSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC Topic 718”), including dividend equivalents, as applicable. The number of DSUs received and the fair value on each date of grant are as follows:

 

     January 4     March 31     May 3     June 30     September 30     December 31  
Directors   Deferred
Stock Units
   

Deferred

Stock Units

    Annual Grant of
Deferred Stock Units
    Deferred
Stock Units
    Deferred
Stock Units
    Deferred
Stock Units
 

William J. Bratton

    1,006               2,656                        

Fair Value

  $ 40,008        $ 120,025         

Kenneth C. Dahlberg

                         1,972 (a)      157        142   

Fair Value

        $ 90,002      $ 6,579      $ 6,573   

David W. Dorman

           2,126        2,656        2,173        806        730   

Fair value

    $ 95,011      $ 120,025      $ 100,045      $ 33,772      $ 33,791   

Michael V. Hayden

    1,006               2,656                        

Fair Value

  $ 40,008        $ 120,025         

Judy C. Lewent

    1,006               2,656                        

Fair Value

  $ 40,008        $ 120,025         

Samuel C. Scott III

                  2,656                        

Fair value

      $ 120,025         

John A. White

           269        2,656        261        287        260   

Fair Value

          $ 12,022      $ 120,025      $ 12,016      $ 12,025      $ 12,035   

Former Director

           

Vincent J. Intrieri

    1,006        587        2,656        571        627        568   

Fair Value

  $ 40,008      $ 26,233      $ 120,025      $ 26,289      $ 26,271      $ 26,293   
  (a) Mr. Dahlberg’s DSUs were granted on July 26, 2011, the date he was elected to the Board.


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(3) As of December 31, 2011, the aggregate stock and option awards outstanding for the directors were as set forth below. For each director, the options to purchase Common Stock listed below were exercisable at year end. The aggregate number of Motorola Solutions DSUs includes accrued dividend equivalents. The Motorola Mobility DSUs are set forth below for the directors who received such units in connection with the Separation.

 

Directors    Options     

Deferred Stock

Units – Motorola
Solutions

     Deferred Stock
Units – Motorola
Mobility
    

Restricted

Stock

 

William J. Bratton

             3,680                   

Kenneth C. Dahlberg

             2,280                   

David W. Dorman

             30,703         19,308           

Michael V. Hayden

             3,680                   

Judy C. Lewent

     15,544         3,680                   

Samuel C. Scott III

     15,544         12,524         8,580         1,739   

John A. White

     7,562         19,357         13,587         77   

Former Directors

           

Vincent J. Intrieri

             6,038                   

Douglas A. Warner III

     15,544                           

William R. Hambrecht

                               

Keith A. Meister

                               

Thomas J. Meredith

                               

James R. Stengel

                               

Anthony J. Vinciquerra

                               

 

(4) The aggregate amount of perquisites and personal benefits, securities or property given to each named director valued on the basis of aggregate incremental cost to the Company was less than $10,000. Accordingly, no such amounts are reported in this column.

 

(5) The amounts in this column represent matching gift contributions made by the Motorola Solutions Foundation at the request of the director to charitable institutions in the director’s name pursuant to the Company’s charitable matching gift program that is available to all U.S. employees and directors.

 

(6) The amount in this column consists of a loss of $44 in earnings under the Motorola Solutions Management Deferred Compensation Plan; therefore this amount is recorded as $0. As of January 1, 2006, new non-employee directors were not eligible to participate in the plan. Dr. White is the only non-employee director who participates in the plan.

 

(7) Mr. Intrieri resigned from the Board on March 1, 2012. Mr. Warner did not stand for re-election at the 2011 Annual Meeting and the other listed former directors all ceased to be directors on January 4, 2011 in connection with the Separation. Although Messrs. Hambrecht, Meister, Meredith, Stengel and Vinciquerra were directors on January 1-3, 2011, they did not receive any cash or equity compensation in 2011.

Director Retirement Plan and Insurance Coverage

In 1996, the Board terminated its retirement plan and no current non-employee directors are entitled to receive retirement benefits. In 1998, Mr. Scott and Dr. White, the only current directors with interests in the plan, converted their accrued benefits in the retirement plan into shares of restricted Common Stock. They may not sell or transfer these shares and these shares are subject to repurchase by Motorola Solutions until such directors are no longer members of the Board because: (1) they do not stand for re-election or are not re-elected, or (2) of their disability or death.


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Non-employee directors are covered by insurance that provides accidental death and dismemberment coverage of $500,000 per person. The spouse of each such director is also covered by such insurance when traveling with the director on business trips for the Company. The Company pays the premiums for such insurance. The total premiums for coverage of all such non-employee directors and their spouses during the year ended December  31, 2011 was $1,900.

Related Person Transaction Policy and Procedures

The Company has established written policies and procedures (the “Related Person Transaction Policy” or the “Policy”) to assist it in reviewing transactions in excess of $120,000 (“Transactions”) involving the Company and its subsidiaries and Related Persons (as defined below). This Policy supplements our other conflict of interest policies set forth in the Principles of Conduct for Members of the Motorola Solutions, Inc. Board of Directors and the Motorola Solutions Code of Business Conduct for employees and our other internal procedures. A summary description of the Related Person Transaction Policy is set forth below.

For purposes of the Related Person Transaction Policy, a Related Person includes directors, director nominees and executive officers of the Company and its subsidiaries since the beginning of the Company’s last fiscal year, beneficial owners of 5% or more of any class of voting securities of the Company and its subsidiaries (“5% Holder”) and members of their respective Immediate Family (as defined in the Policy).

The Policy provides that any Transaction since the beginning of the last fiscal year is to be promptly reported to the Company’s General Counsel. The General Counsel will assist with gathering important information about the Transaction and present the information to the Board committee responsible for reviewing the Transaction. The appropriate Board committee will determine if the Transaction is a Related Person Transaction and approve, ratify or reject the Related Person Transaction. In approving, ratifying or rejecting a Related Person Transaction, the applicable committee will consider such information as it deems important to conclude if the transaction is fair to the Company and its subsidiaries. The Governance and Nominating Committee will make all determinations regarding transactions involving a director or director nominee. The Audit and Legal Committee will make all determinations involving an executive officer or 5% Holder.

Motorola Solutions had no Related Person Transactions in 2011.

What is the Process for Identifying and Evaluating Director Candidates?

As stated in the Motorola Solutions, Inc. Board Governance Guidelines, when selecting directors, the Board and the Governance and Nominating Committee review and consider many factors, including: experience in the context of the Board’s needs; leadership qualities; ability to exercise sound judgment; existing time commitments; years to retirement age; and independence. They also consider ethical standards and integrity. While the Company does not have a formal policy regarding diversity, diversity is one of several factors considered by the Board and the Governance and Nominating Committee when selecting director nominees. The Board and the Governance and Nominating Committee strive to nominate directors with a variety of complementary skills, backgrounds and perspectives so that, as a group, the Board will possess the appropriate talent, skills, experience and expertise to oversee the Company’s businesses. The Governance and Nominating Committee annually assesses the effectiveness of its director nomination process and the Board Governance Guidelines.

The Governance and Nominating Committee will consider nominees recommended by Motorola Solutions stockholders, provided that the recommendation contains sufficient information for the Governance and Nominating Committee to assess the suitability of the candidate, including the candidate’s qualifications. Stockholder-recommended candidates that comply with these procedures will receive the same consideration that candidates recommended by the Governance and Nominating Committee and management receive, as discussed above.

The Governance and Nominating Committee considers recommendations from many sources, including members of the Board, management and search firms. From time to time, Motorola Solutions hires global search firms to help identify and facilitate the screening and interview process of director candidates. The search firm screens candidates based on the Board’s criteria, performs reference checks, prepares a biography for each candidate


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for the Governance and Nominating Committee’s review and helps arrange interviews. The Governance and Nominating Committee and the Chairman of the Board conduct interviews with candidates who meet the Board’s criteria. In connection with the Separation, we retained two third-party search firms to conduct a search for new members of the Board. The third-party search firms reviewed the qualifications of several candidates, including candidates referred to the search firms by members of the Governance and Nominating Committee and the CEO. The third-party search firms recommended a number of candidates to the Governance and Nominating Committee. In addition, Carl C. Icahn, our largest stockholder in 2011, recommended Vincent J. Intrieri as a director candidate. The Governance and Nominating Committee interviewed candidates and as a result, each of William J. Bratton, Michael V. Hayden, Vincent J. Intrieri and Judy C. Lewent were nominated by the Governance and Nominating Committee for election on January 4, 2011. Mr. Intrieri subsequently resigned on March 1, 2012, in connection with an agreement between the Company and Mr. Icahn. Also during 2011, the Governance and Nominating Committee identified Kenneth C. Dahlberg as a potential candidate. After being interviewed by the Governance and Nominating Committee and members of management, the Governance and Nominating Committee nominated Mr. Dahlberg as a director in July 2011. In connection with the resignation of Mr. Intrieri, the Board, pursuant to its authority under the Bylaws, reduced its size to eight members. If the Board chooses to subsequently increase its size, the Governance and Nominating Committee will follow its process with respect to evaluation of candidates. The Governance and Nominating Committee has full discretion in considering potential candidates and making its nominations to the Board.

 

 

PROPOSAL NO. 2 — ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION

In accordance with Section 14A of the Exchange Act we are providing our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers (or NEOs) as disclosed in this proxy statement. We have provided our stockholders with the opportunity to annually approve the Company’s executive compensation policies and procedures since 2009, when the Board of Directors adopted a Board Governance Guideline to annually provide such an opportunity. At the 2011 Annual Meeting of stockholders, our stockholders approved our executive compensation with nearly 89% support, and 90% approved an annual frequency of stockholder advisory voting to approve our executive compensation. Based upon these results, the Board determined to continue to hold an annual advisory vote on executive compensation. Because the stockholder vote to approve our executive compensation is advisory, it will not be binding upon the Board. However, the Compensation and Leadership Committee does take into account the outcome of the vote when considering future executive compensation arrangements.

The following is a summary of some key elements of our 2011 executive compensation actions, policies and programs. The Compensation Discussion and Analysis and Named Executive Officer Compensation sections of this proxy statement can be referenced for additional details.

The year 2011 marked the beginning of a new era for Motorola Solutions. In 2011, we achieved strong financial and operational performance. Net sales increased 8% compared to 2010, GAAP operating earnings increased 14%, GAAP earnings per share were up 206%, and we generated operating cash flow of $848 million, up from $803 million in 2010. In addition, we returned capital to stockholders by initiating a regular quarterly dividend of 22 cents per share and authorized a $2 billion share repurchase program (which was subsequently increased to $3 billion by the Board in January 2012). Our stockholders also benefited from this strong performance, as demonstrated by the 24% increase in our stock price between the opening price on January 4, 2011 and the closing price on December 31, 2011.

The successful completion of the spin-off of Motorola Mobility Holdings, Inc. on January 4, 2011, our strong 2011 performance and the importance of succeeding as Motorola Solutions had an influence on pay decisions for Mr. Brown and our other NEOs. Base salaries for some of our NEOs were increased during 2011 in connection with market adjustments and promotions. Mr. Brown’s salary reverted to $1,200,000 as provided in his employment agreement following his voluntary reduction to $900,000 for 2009 and 2010. Our strong operating earnings and free cash flow performance in 2011 correlated to payouts under our Annual Incentive Plan (“AIP”) that were 14% above target, excluding individual performance adjustments. A new 2011-2013 Long Range Incentive Plan (“LRIP”) cycle was implemented for our senior executives, including our NEOs. A special equity


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grant of stock options and restricted stock units, called the Leadership Grant, was made in 2011 to select senior executives, including our NEOs. Finally, Separation Event Equity Grants were made to Mr. Brown under the terms of his employment agreement. The Compensation Discussion and Analysis and Named Executive Officer Compensation sections of this proxy statement can be referenced for additional details.

During 2011, the Compensation and Leadership Committee reviewed our pay programs and practices, taking into account the favorable outcome of the stockholder vote to approve our executive compensation at the 2011 Annual Meeting of stockholders, consultations with the Compensation and Leadership Committee’s independent compensation consultant and discussions with major stockholders. Given the strong stockholder support of our pay programs, we made no specific changes to executive compensation in 2011, but we did make general corporate governance improvements, as discussed below.

In conjunction with Separation, we addressed, and continue to address, several legacy compensation-related practices. In addition, throughout 2011, we continued our dialogue with our largest stockholders to better understand their perspectives of the Company, including their views on our compensation practices. We believe the actions we have already taken, and the actions we plan to take in 2012, will lead to continued stockholder satisfaction with our executive compensation programs.

During 2011, we made several changes to enhance the corporate governance provisions of our compensation programs and to better align them to competitive market practices. These changes include:

 

Program   Program Change and Corporate Governance Improvement
New Change In Control Plan   Instituted a new Senior Executive Change in Control Plan that phases in for existing participants in 2014, which limits plan eligibility, eliminates excise tax gross-ups and reduces severance multiples, amongst other changes. Refer to the section Termination of Employment and Change In Control Arrangements of this proxy for additional details.
Executive Stock Ownership Guidelines   Expanded our stock ownership requirements to include Corporate Vice Presidents, in addition to Senior Vice Presidents, Executive Vice Presidents and our Chairman and CEO, and also implemented consequences for failure to meet the applicable stock ownership requirement within a five-year time period. Refer to the section Stock Ownership Requirements in the CD&A for additional details.
Board Stock Ownership Guidelines   Amended our Board Governance Guidelines to increase non-employee director stock ownership guidelines from four times to five times the annual retainer within a five-year time period and implemented a requirement for non-employee directors to hold all shares paid or awarded by the Company until termination of Board service. Refer to the section Board of Director Matters: What Are The Director Stock Ownership Guidelines of this proxy for additional details.
Stock Plan Amendments   Amended our Motorola Solutions Omnibus Incentive Plan of 2006 to remove a share recycling provision which allowed shares withheld for tax purposes to be reissued for future grants. Additionally, we clarified our plan to affirmatively state that dividend equivalents cannot be accrued on options or stock appreciation rights and to specifically define fair market value in our stock plan as the closing price on the date of the transaction.
Elimination of Gross-Ups   Eliminated tax gross-ups for guests traveling with Section 16 Officers to Company sponsored events. Section 16 Officers are responsible for taxes due on imputed income resulting from their guests attending special events.

In response to feedback received from many of our largest stockholders, effective in 2012, we will significantly reduce the amount of stock we grant under our long-term incentive plan. We will limit annual equity grant eligibility to a narrower management population of approximately 2,000 employees; this change will reduce eligibility for annual equity grants by approximately 12,000 employees. We will maintain eligibility for special equity grants as part of recruitment, retention and recognition; however, these grants will be given on a highly selective basis. This change in our equity grant practice will reduce our annual share usage rate and stock-based compensation expense to more competitive levels with our comparator group, while retaining our ability to attract, retain and motivate top talent in the organization.


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In addition to the general corporate governance improvements made in 2011, we continue to maintain several practices that represent strong corporate governance, including:

 

Practice   Description
Heavily weighted “at risk” pay for our senior executives   Weighted to include more short-term and long-term incentives (variable pay) than base salary (fixed pay) to create a strong link to driving stock price performance in a responsible manner without creating undue risk for the Company.
“Double trigger” feature in our Senior Executive Change in Control Plan   Requires that an executive be separated from service in conjunction with a change in control event before receiving any payouts made in connection with a change in control.
“Modified double trigger” in our  Motorola Solutions Omnibus Incentive Plan of 2006 for a change in control   Provides that there is no acceleration of equity or performance awards if such awards are assumed or replaced by the successor company, unless otherwise provided by the Compensation and Leadership Committee. For awards that are assumed or replaced during a change in control, accelerated treatment is only provided if the executive is terminated “without cause” or voluntarily resigns for Good Reason within 24 months of the change in control event.
“Clawback” policy   Provides for recoupment of incentive payments that are overstated as a result of the restatement of our financial earnings.
“Anti-hedging” policy   Precludes employees and directors from engaging in any transaction in which they may profit from short-term speculative swings in the value of our securities.
Compensation and Leadership Committee consisting entirely of independent directors   Complies with independent status as a non-employee director under SEC Rule 16b-3 and as an outside director under Section 162(m) of the Internal Revenue Code for purposes of membership on a compensation committee.
Independent compensation consultant engaged by the Compensation and Leadership Committee   Compensation and Leadership Committee reviews and approves all plans under its purview and also seeks input from its independent compensation consultant, which provides third-party input and an unbiased perspective on external market practices.
An annual risk assessment on pay that is reviewed by the Compensation and Leadership Committee   Reviews global employee compensation programs to determine if there is inappropriate or excessive risk exposure that could have a material adverse effect on the Company.

We believe these practices, coupled with our recent compensation actions, demonstrate a reasonable and responsible approach to designing and managing the Company’s compensation programs. We continuously monitor our compensation practices to ensure we maintain consistency with our compensation philosophy, guiding principles and business strategy, and are responsive to current market conditions and new developments in corporate governance. In addition, we will continue to take into account the results of future stockholder votes and ongoing dialogues with our largest stockholders when reviewing our compensation programs and practices.

For the reasons discussed above, the Board unanimously recommends that stockholders vote in favor of the following resolution:

“Resolved, that the stockholders approve, on an advisory basis, the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the 2011 Summary Compensation Table and other related tables and disclosures in this proxy statement.”

RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION.

 

 


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PROPOSAL NO. 3 — RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2012

The Audit and Legal Committee of the Board has appointed KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012. Services provided to the Company and its subsidiaries by KPMG LLP (“KPMG”) in fiscal years 2010 and 2011 are described under Audit and Legal Committee Matters—Independent Registered Public Accounting Firm Fees.

We are asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of KPMG to our stockholders for ratification as a matter of good corporate practice.

Representatives of KPMG are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will have the opportunity to respond to appropriate questions from stockholders.

The affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of KPMG. Abstentions will have the same effect as a vote “Against” the proposal.

In the event stockholders do not ratify the appointment, the appointment will be reconsidered by the Audit and Legal Committee and the Board. Even if the selection is ratified, the Audit and Legal Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.

RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTING FIRM FOR 2012. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE RATIFICATION OF KPMG LLP.

 

 


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PROPOSAL NO. 4 — STOCKHOLDER PROPOSAL RE: “ENCOURAGE SUPPLIER(S) TO PUBLISH AN ANNUAL SUSTAINABILITY REPORT”

The Company has been advised that the Comptroller of the City of New York, as custodian and a trustee for (i) the New York City Employees’ Retirement System, beneficial owner of 259,458 shares, (ii) the New York City Teachers’ Retirement System, beneficial owner of 266,452 shares, (iii) the New York City Fire Department Pension Fund, beneficial owner of 45,521 shares, (iv)the New York City Police Pension Fund, beneficial owner of 141,496 shares, and as custodian for the New York City Board of Education Retirement System, beneficial owner of 14,323 shares, intends to submit the following proposal for consideration at the Annual Meeting. We have not modified the language of the stockholder’s proposal.

WHEREAS, increasingly, multinational companies are realizing that their suppliers’ impacts and sustainability are inextricably intertwined with their own; and

WHEREAS, the UN Global Compact-Accenture CEO Study 2010, “A New Era of Sustainability”, found that 93% of surveyed CEOs believe that sustainability issues will be critical to the future success of their business, and 88% believe that they should be integrating sustainability through their supply chain, where the most significant performance gap is seen; and

WHEREAS, a study by Aaron Bernstein and Christopher Greenwald, “Benchmarking Corporate Policies on Labor and Human Rights in Global Supply Chains,” (Pension and Capital Stewardship Project Labor and Work-Life Program Harvard Law School, Nov. 2009), found a significant gap between general policies against labor and human rights abuse and more detailed standards and enforcement mechanism required to carry them out; and

WHEREAS, in 2010, PUMA, the Sport lifestyle company, in cooperation with the Global Reporting Initiative’s (GRI’s) Global Action Network for Transparency in the Supply Chain, which provides GRI certified training on transparent measurement and reporting to supplier factories, expanded its strategic suppliers sustainability reporting project with commitments from 20 suppliers in South East Asia and other major sourcing regions that they will issue their own sustainability reports from 2011 on; and

WHEREAS, given the merit of the old adage, “What Gets Measured Gets Done”, the long-term interests of multinational companies and their shareholders would be enhanced if companies were to urge their suppliers to establish performance goals on human and worker rights, and to measure and publicly report on performance using internationally recognized standards and measurement protocols;

THEREFORE, BE IT RESOLVED: the shareholders request that the Board of Directors, using a phased, tiered approach that the Company deems reasonable and practical, take the necessary steps to help move the Company’s supplier(s) to begin publishing annual, independently verifiable, sustainability reports. Among other important disclosures, reports should include the suppliers’ objective assessments and measurements of performance on workplace safety, and human and worker rights, using internationally recognized standards, indicators and measurement protocols. In addition, reports should include incidents of non-compliance, actions taken to remedy those incidents, and measures taken to contribute to long-term prevention and mitigation.

Statement in Support

A company’s best opportunity for early identification and mitigation of the risks posed by the human and labor rights violations of its suppliers is the development and rigorous implementation of a risk-management framework to enable its monitoring and verification of its suppliers’ performance against internationally recognized standards of human and labor rights, using measurable and verifiable indicators of performance. Annual sustainability reporting by its supplier(s) would strengthen the company’s ability to assess its suppliers’ performance, to hold its suppliers accountable, help to drive performance improvements, and enable investors to better understand and assess potential reputational and/or operational risks.


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RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ADOPTION OF THIS STOCKHOLDER PROPOSAL FOR THE REASONS SET FORTH BELOW. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED AGAINST THE ADOPTION OF THIS PROPOSAL.

BOARD OF DIRECTORS STATEMENT IN OPPOSITION

The Company agrees with the principles on which this proposal is based and already addresses the concerns it raises in other ways, making adoption of this proposal unnecessary and potentially detrimental to the Company as noted below. The Company is committed to being a leader in corporate responsibility, and we publish our performance annually on our website on our “corporate responsibility” page.

Since 2003, our supplier code of conduct has set forth the corporate responsibility requirements for our suppliers, and our vendor contracts state that compliance with our corporate responsibility requirements is a condition of doing business with the Company. We expect compliance by our suppliers, as well as their sources in the supply chain. We have a three-pronged approach to supplier responsibility – comprehensive self-assessments, audits and training.

Our suppliers are required to provide informative, comprehensive self-assessments on their environmental and labor policies and management systems through our electronic assessment system. This allows us to analyze the information and associated risks presented by suppliers, to identify areas for improvement and to target our on-site audits.

We commission detailed on-site audits of certain suppliers, which are conducted by either internal audit or a third-party firm. We decide which suppliers and facilities to audit based on information collected through the self-assessment described above, from specific reports made to our EthicsLine and other reporting channels, as well as from risk factors such as activity, location and reputation. Following the self-assessments and/or audits, we provide feedback to suppliers and work with them to correct any issues identified. In situations where we identify serious violations, we will place the supplier on “new-business hold,” meaning no new business will be placed with the supplier until the issue is resolved. If a supplier refuses or is unable to cooperate, we will terminate the relationship. We annually publish a report of our assessments and audit process, including a breakdown of the issues identified and status of corrective actions, on the “suppliers” page of our corporate responsibility website.

We realize that lasting improvements will be achieved only if suppliers have the capability to manage labor, health, safety and environmental impacts themselves. We hold training sessions that help suppliers understand our expectations and standards. In addition, we provide guidance on how suppliers can establish internal corporate responsibility and monitoring programs for their own supply chains. To reach a greater number of suppliers, we have developed an online training program that replicates the classroom sessions.

While we believe it is important to purchase products from suppliers that comply with high standards of legal and ethical treatment of workers and workplace safety, we do not believe that asking our suppliers to publish a corporate responsibility report is the best method to drive such performance in our supply chain. Forcing our suppliers to incur the significant expense in publishing an annual sustainability report of the type required by the proposal could lead to higher prices for the Company and for our customers without any guaranty of additional benefits. This would place the Company at a competitive disadvantage if such costs were passed along to the Company, which is not beneficial to our stockholders. Ultimately we believe the Company has and can continue to make the most impact by continuing to work directly with suppliers to identify and correct specific issues as well as to help them meet our high corporate responsibility standards through our existing approach of comprehensive self-assessments, audits and training. For these reasons and the others stated above, the Board of Directors recommends that you vote AGAINST the adoption of this stockholder-submitted proposal.

 

 


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PROPOSAL NO. 5 — STOCKHOLDER PROPOSAL RE: “EXECUTIVES TO RETAIN SIGNIFICANT STOCK”

The Company has been advised that Kenneth Steiner, beneficial owner of 714 shares, intends to submit the following proposal for consideration at the Annual Meeting. We have not modified the language of the stockholder’s proposal.

5 – Executives To Retain Significant Stock

RESOLVED, Shareholders urge that our executive pay committee adopt a policy requiring that senior executives retain a significant percentage of stock acquired through equity pay programs until one-year following the termination of their employment and to report to shareholders regarding the policy before our next annual shareholder meeting.

Shareholders recommend that our executive pay committee adopt a percentage of at least 25% of net after-tax stock. The policy shall apply to future grants and awards of equity pay and should address the permissibility of transactions such as hedging transactions which are not sales but reduce the risk of loss to executives.

As a minimum this proposals asks for a retention policy going forward, although the preference is for immediate implementation of the fullest extent possible.

Requiring senior executives to hold a significant portion of stock obtained through executive pay plans after employment termination would focus our executives on our company’s long-term success. A Conference Board Task Force report on executive pay stated that at least hold-to-retirement requirements give executives “an ever-growing incentive to focus on long-term stock price performance.”

The merit of this proposal should also be considered in the context of the opportunity for additional improvement in our company’s 2011 reported corporate governance in order to more fully realize our company’s potential:

The Corporate Law Library an independent investment research firm downgraded our company to “D” with “High Governance Risk” and “High Concern” in executive pay—$13 million for our CEO Gregory Brown.

Our executive pay committee can increase annual incentive pay for our Named Executive Officers (NEOs) by 30% for its subjective view of individual performance, which undermines the credibility and effectiveness of a structured incentive plan. NEOs continued to receive equity grants of time-vesting stock options and restricted shares without performance-contingent criteria. Our CEO was potentially entitled to nearly $50 million in the event of a change in control.

Two of our board’s key committees were chaired by directors who had more than 16 years tenure – independence concern.

Please encourage our board to respond positively to this proposal: Executives To Retain Significant Stock – Yes on 5.

RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ADOPTION OF THIS STOCKHOLDER PROPOSAL FOR THE REASONS SET FORTH BELOW. UNLESS OTHERWISE INDICATED IN YOUR PROXY, YOUR SHARES WILL BE VOTED AGAINST THE ADOPTION OF THIS PROPOSAL.

BOARD OF DIRECTORS STATEMENT IN OPPOSITION

The Board agrees that senior executives’ compensation should include a focus on long-term stockholder value. The Board believes that the Company’s current compensation programs and practices for senior executives—which include equity-based incentive compensation with vesting periods over multiple years; meaningful stock ownership requirements that extend down to our corporate vice president level; a “clawback” policy that provides for recoupment of incentive payments that are overstated as a result of the restatement of our financial earnings; and an “anti-hedging” policy that precludes executives from engaging in any transaction in which they may profit from short-term speculative swings in the value of our securities—provide an appropriate balance of encouraging a focus on the long-term performance of the Company and strong alignment with our stockholders, while enabling the Company to attract, retain and motivate the right people. The Board believes that the adoption of this proposal, which would apply to all future equity awards to our senior executives, is unnecessary to achieve the stated goals of aligning executive compensation with long-term stockholder value and could impact the Company’s ability to attract, retain and motivate senior management, and therefore is inadvisable and not in the best interests of the Company and its stockholders.


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As described in the Compensation Discussion and Analysis section of this proxy statement, the Company’s long term incentive programs are designed to promote a focus on long-term results, drive retention and align senior executives with the interests of our stockholders. These programs include equity awards, consisting of stock options and restricted stock units, and a long range incentive plan, with separate three-year performance cycles. Stock options and restricted stock units generally vest in three equal annual installments. The long range incentive plan is a cash-based, multi-year incentive plan designed to reward executives for the Company’s three-year total shareholder return relative to our comparator companies.

The Company has maintained stock ownership requirements since 2000 to ensure strong alignment of our senior management with the interests of our stockholders. Officers are required to own shares with a market value as a multiple of their annual base salary as follows, the Company’s Chief Executive Officer (“CEO”)—six times; Executive Vice Presidents or members of the management executive committee—three times; Senior Vice Presidents—two times; and Corporate Vice Presidents—one times, each within five years of their election to the applicable officer level. Additionally, in 2011 the Company strengthened these ownership requirements by implementing a formal policy that addresses executives who do not meet their applicable stock ownership requirement within five years. As of December 31, 2011, each of the Company’s named executive officers had exceeded his or her stock ownership requirements.

The Company’s clawback policy and its policy regarding hedging transactions complement the objective of aligning compensation with our stockholders’ interests. The Company’s claw back policy permits the recovery of incentive compensation received by an executive as a result of misconduct which requires restatement of the Company’s financial results and any gains realized by the executive with respect to equity based awards, including exercised stock options and vested restricted stock units, no matter when they were issued, as well as the cancellation of outstanding equity-based awards held by the executive. In addition, executives, in accordance with the Company’s anti-hedging policy, may not engage in any transaction in which they may profit from short-term speculative swings in the value of our securities, including selling short, entering into derivative contracts on, or engaging in hedging or monetization transactions that hedge the economic risk of their ownership of the Company’s shares.

This stockholder proposal fails to strike a reasonable balance between incentivizing desired senior executive behaviors by requiring meaningful levels of stock ownership and permitting executives to manage their own financial affairs. Because equity compensation is a meaningful element of compensation for our executive officers, the Company’s stock makes up a substantial proportion of their net worth. A share retention requirement that continues for a year after an executive is no longer employed by the Company, such as the one proposed, could lessen the incentive value of equity awards or result in the value of an executive’s equity holdings being dramatically affected by matters unrelated to the Company’s performance or by actions taken by others after the period of the executive’s employment ends.

The Board also believes that the Compensation and Leadership Committee, which consists entirely of independent directors, is the governing body best suited to formulate executive compensation principles and practices that balance the long-term interest of stockholders with compensation programs that attract, retain and motivate our senior executives. Adopting a rigid policy that forces equity to be held beyond the end of employment limits the Committee’s ability to design effective and competitive compensation programs and could place the Company at a competitive disadvantage in recruiting, retaining and motivating senior executives.

The Board believes that the current executive compensation programs and practices effectively balance the goals to provide executive officers with a focus on long-term stockholder value, create meaningful retention incentives, allow for recruitment of executive talent and allow for the prudent management of personal financial affairs. The Board believes that the proposal does not strike a reasonable balance and is not in the best interests of stockholders. For this and the above reasons, the Board recommends that you vote AGAINST the adoption of this stockholder submitted proposal.

 

 


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EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes the Company’s equity compensation plan information as of December 31, 2011. The number of shares and the weighted-average exercise prices in the table and footnotes reflect Separation and the Company’s Reverse Stock Split effected on January 4, 2011.

 

Plan Category    Number of
securities to be
issued upon exercise
of outstanding
options and rights
(a)
    Weighted-average
exercise price of
outstanding
options and
rights
(b)(1)
     Number of securities
remaining available
for future issuance  under
equity compensation
plans (excluding
securities reflected
in column (a))
(c)
 

Equity compensation plans approved by Motorola Solutions stockholders

     24,014,820 (2)(3)(4)    $ 62.89         29,646,078 (5) 

Equity compensation plans not approved by Motorola Solutions stockholders(6)

     27,751      $ 56.59         0   
  

 

 

      

 

 

 

Total

     24,042,571      $ 62.87         29,646,078   

 

(1) The weighted-average exercise price does not include outstanding restricted or deferred stock units.

 

(2) This includes shares subject to outstanding options granted under the 2006 Plan and prior stock incentive plans no longer in effect for new grants.

 

(3) This also includes an aggregate of 8,841,539 restricted or deferred stock units that have been granted or accrued pursuant to dividend equivalent rights under the 2006 Plan and prior stock incentive plans which are no longer in effect for new grants. Each restricted or deferred stock unit is intended to be the economic equivalent of one share of Common Stock.

 

(4) This includes 101,305 shares subject to outstanding stock appreciation rights (“SARs”) granted under the 2006 Plan (“2006 Plan SARs”) but does not include 24,080 SARs granted under prior stock incentive plans that are no longer in effect for new grants (“Prior SARs”). These SARs enable the recipient to receive, for each SAR granted, a settlement amount equal to the excess of the fair market value of one share of Common Stock on the date the SAR is exercised over the fair market value of one share of Common Stock on the date the SAR was granted. The settlement amount for the Prior SARs may only be paid in cash. No security is issued upon the exercise of these Prior SARs. The settlement amount of the 2006 Plan SARs is payable in shares of Common Stock. The 101,305 shares subject to the 2006 Plan SARs assumes the exercise of 605,695 2006 Plan SARs on December 30, 2011 at $46.29, the closing price of the Common Stock on December 30, 2011.

 

(5) Of these shares: (i) 5,977,828 shares remain available for future issuance under the Company’s employee stock purchase plan, the Motorola Solutions Employee Stock Purchase Plan of 1999, as amended; and (ii) an aggregate of 23,668,250 shares remain available for future issuance under the 2006 Plan. In addition to stock options, other equity benefits which may be granted under the 2006 Plan are SARs, restricted stock, restricted stock units, deferred stock units, performance shares and other stock awards. In addition, at the discretion of the Compensation and Leadership Committee, shares of Common Stock may be issued under the 2006 Plan in payment of awards under the Company’s long-range incentive plans.

 

(6) The Company’s non-stockholder approved plan is the Motorola Compensation/Acquisition Plan of 2000 (the “C/A Plan”), under which no further grants may be made. Since its inception, the major purposes of the C/A Plan were to grant awards: (i) to persons newly hired by the Company, and (ii) in connection with the acquisition of businesses. Otherwise, grants were generally made by the Company under the Company’s stockholder approved incentive plans. Awards could not be made under the C/A Plan to directors or executive officers of the Company. The C/A Plan is more fully described below.


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Compensation/Acquisition Plan of 2000

The Motorola Compensation/Acquisition Plan of 2000 (the “C/A Plan”) was initially adopted on November 7, 2000 by the Board. Upon the adoption of the 2006 Plan, no further grants may be made under the C/A Plan. The C/A Plan provided that awards could be granted to employees of the Company and its subsidiaries who were not executive officers or directors of the Company, in connection with its recruiting and retention efforts. From its inception, the major purposes of the C/A Plan were to grant awards: (i) to persons newly hired by the Company, and (ii) in connection with the acquisition of businesses. The C/A Plan permitted the granting of stock options, stock appreciation rights, restricted stock and restricted stock units, performance stock, performance units and other stock awards.

Awards included options to acquire shares of Common Stock, shares of restricted Common Stock and restricted stock units. Options to acquire shares are the only awards outstanding under the C/A Plan, and all such awards are fully vested and exercisable.

Each option granted has an exercise price of 100% of the market value of the Common Stock on the date of grant. Generally, options under the C/A Plan expire ten years from the date of grant and vest and become exercisable in 25% increments over four years.

OWNERSHIP OF SECURITIES

Security Ownership of Management and Directors

The following table sets forth information as of the close of business on March 1, 2012 (except where otherwise noted), regarding the beneficial ownership of shares of Common Stock by each director and nominee for director of the Company, by the persons named in the Summary Compensation Table, and by all current directors, nominees and Section 16 Officers of the Company as a group. Each director, nominee and named executive officer owns less than 1% of the outstanding Common Stock based on 291,709,758 shares of Common Stock outstanding on March 1, 2012. All current directors, nominees and current executive officers as a group own 1.2% of the outstanding Common Stock.

 

Name    Shares Owned(1)      Shares Under
Exercisable
Options(2)
     Stock Units(3)      Total Shares
Beneficially
Owned(4)(5)
 

Gregory Q. Brown

     383,503         1,893,745         41,665         2,349,266 (6) 

Sanjay K. Jha

     303,730         0         0         303,730 (7) 

Edward J. Fitzpatrick

     33,100         160,508         0         193,608   

Eugene A. Delaney

     57,891         453,358         0         512,056   

Mark F. Moon

     43,249         120,902         0         164,151   

Michele A. Carlin

     16,963         79,724         0         96,687  

William J. Bratton

     0         0         3,697         3,697  

Kenneth C. Dahlberg

     0         0         2,290         2,290   

David W. Dorman

     0         0         30,845         30,845  

Michael V. Hayden

     0         0         3,697         3,697  

Judy C. Lewent

     13,137         15,544         3,697         32,378  

Samuel C. Scott

     4,920         15,544         12,583         33,047 (8) 

John A. White

     6,324         7,562         19,447         33,333 (9) 

All current directors, nominees and current executive officers as a group (15 persons)

     578,439         2,826,163         117,921         3,554,469 (10)  

 

(1) Includes shares over which the person currently holds or shares voting and/or investment power but excludes interests, if any, in shares held in the Motorola Solutions Stock Fund of the Company’s 401(k) Plan and the shares listed under “Shares Under Exercisable Options” and “Stock Units.”

 

(2) Includes shares under options exercisable on March 1, 2012 and options which become exercisable within 60 days thereafter. Also includes unvested shares under market-based options that only vest if the market price of the Common Stock reaches defined levels.


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(3) Includes stock units which are deemed to be beneficially owned on March 1, 2012 or within 60 days thereafter. Stock units are not deemed beneficially owned until the restrictions on the units have lapsed. Each stock unit is intended to be the economic equivalent of one share of Common Stock.

 

(4) Unless otherwise indicated, each person has sole voting and investment power over the shares reported.

 

(5) Includes interests, if any, in shares held in the Motorola Solutions Stock Fund of the Company’s 401(k) Plan, which is subject to certain investment restrictions, the shares listed under “Shares Under Exercisable Options” and units listed under “Stock Units.” Does not include restricted stock units with restrictions that lapse more than 60 days after March 1, 2012; for more information on such units, see the Outstanding Equity Awards at 2011 Fiscal Year End table.

 

(6) Mr. Brown’s holdings under “Total Shares Beneficially Owned” include: 71,880 shares of restricted stock, 30,353 units subject to delayed delivery, and 107,830 unvested market-based options granted on January 31, 2008 that only vest if the market price of the Common Stock reaches defined levels as discussed in the footnotes to the Outstanding Equity Awards at 2011 Fiscal Year End table.

 

(7) Dr. Jha’s “Shares Owned” are as of January 4, 2011, the date on which he ceased to be an executive officer. As of the Separation, all options and restricted stock units previously granted to Dr. Jha were substituted with options and restricted stock units of Motorola Mobility.

 

(8) Mr. Scott does not have investment power over 1,739 of these shares.

 

(9) Dr. White has shared voting and investment power over 4,364 of these shares and shared voting and no investment power over 77 of these shares.

 

(10) All directors, nominees and current executive officers as a group have sole voting and investment power over 572,259 of these shares and shared voting and investment power over 6,180 of these shares.

No directors, nominees or current executive officers have pledged shares of Common Stock pursuant to any loan or arrangement where there is an expectation that the loan or arrangement may be repaid by foreclosure or other recourse to the shares of Common Stock.

Security Ownership of Principal Stockholders

The following table sets forth information with respect to any person who is known to be the beneficial owner of more than 5% of Common Stock as of December 31, 2011, except as noted below.

 

Name and Address    Number of Shares
of Motorola Solutions, Inc.
and Nature of
Beneficial
Ownership
  Percent of
Outstanding Shares(1)

ValueAct Capital Master Fund, L.P. and related entities
435 Pacific Ave.,
San Francisco, California 94133
(2)

   24,001,000(3)

shares of

Common
Stock

  8.2%

Morgan Stanley
1585 Broadway
New York, NY 10036

   19,448,052(4)

shares of

Common
Stock

  6.7%

BlackRock, Inc.
40 East 52
nd
Street New York, NY 10022

   19,068,267(5)

shares of

Common
Stock

  6.5%

FMR LLC
82 Devonshire Street
Boston, MA 02109

   17,872,960(6)

shares of

Common
Stock

  6.1%

 

(1) The percentage calculations set forth above are based on 291,709,758 shares of Common Stock outstanding as of March 1, 2012 rather than the percentages set forth on various stockholders’ Schedule 13D and 13G filings.


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(2) Solely based on information in a Schedule 13D/A filed with the SEC on July 20, 2011, amending a Schedule 13D previously filed on June 16, 2011, filed jointly by ValueAct Capital Master Fund, L.P., VA Partners I, LLC, ValueAct Capital Management, L.P., ValueAct Capital Management, LLC, ValueAct Holdings, L.P. and ValueAct Holdings GP, LLC.

 

(3) Solely based on information in the ValueAct 13D dated as of the date of the ValueAct 13D, and information in Form 13F-HR filed by ValueAct Holdings L.P., on February 14, 2012, filed with the SEC for the period ending December 31, 2011.

 

(4) Solely based on information in a Schedule 13G dated February 8, 2012 filed with the SEC jointly by Morgan Stanley, and Morgan Stanley Investment Management, Inc., whose address is 522 Fifth Avenue, New York, NY 10036. The Schedule 13G indicates that as of December 31, 2011, Morgan Stanley was the beneficial owner with sole dispositive power as to 19,488,052 shares and with sole voting power as to 19,097,576 shares. Additionally, according to such filing, Morgan Stanley Investment Management, Inc. was the beneficial owner with sole dispositive power as to 19,340,381 shares and with sole voting power as to 18,989,905 shares.

 

(5) Solely based on information in a Schedule 13G/A dated February 13, 2012 filed with the SEC by BlackRock, Inc. The Schedule 13G/A indicates that as of December 31, 2011, BlackRock, Inc. was the beneficial owner with sole dispositive and voting power as to 19,068,267 shares.

 

(6) Solely based on information in a Schedule 13G dated February 14, 2012 filed with the SEC by FMR LLC. The Schedule 13G indicates that as of December 31, 2011, FMR LLC was the beneficial owner with sole dispositive power as to 17,872,960 shares and with sole voting power as to 113,918 shares.

On February 26, 2012, the Company entered into a stock purchase agreement with Carl C. Icahn and certain of his affiliates pursuant to which the Company purchased 23,739,362 shares of Common Stock from Mr. Icahn and his affiliates. On February 27, 2012, a Schedule 13D/A was filed with the SEC by Mr. Icahn and his affiliates reporting ownership of 14,552,873 shares of Common Stock, or 4.95% of our Common Stock after giving effect to the purchase of Common Stock.


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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This Compensation Discussion and Analysis (the “CD&A”) describes our executive compensation philosophy and programs during 2011. Executive compensation arrangements with our named executive officers (each an “NEO,” and together, the “NEOs”) are governed by the Compensation and Leadership Committee (the “Committee”) of the Board of Directors (the “Board”). In this CD&A, you will find detailed compensation information for our Chairman and Chief Executive Officer (“CEO”), our former Co-Chief Executive Officer (“Co-CEO”) to the extent applicable, our Chief Financial Officer (“CFO”), and our three other most highly compensated officers during 2011, as listed below:

 

   

Gregory Q. Brown, Chairman and Chief Executive Officer.

 

   

Sanjay K. Jha, Former Co-Chief Executive Officer; Chief Executive Officer Motorola Mobility.

 

   

Edward J. Fitzpatrick, Executive Vice President and Chief Financial Officer.

 

   

Eugene A. Delaney, Executive Vice President, Product and Business Operations.

 

   

Mark F. Moon, Executive Vice President, Sales and Field Operations.

 

   

Michele A. Carlin, Senior Vice President, Human Resources.

Following the Separation on January 4, 2011, Dr. Jha was employed by Motorola Mobility and is not an employee of the Company.

Executive Summary

2011 Business Highlights

On January 4, 2011 we completed the spin-off of Motorola Mobility Holdings, Inc., beginning a new era for Motorola Solutions. As Motorola Solutions, we have a sharpened strategic focus on our government and enterprise customers and a purpose to help people be their best in the moments that matter. On April 29, 2011, we sold certain of the assets and liabilities of our Networks business to Nokia Siemens Networks B.V., which allowed us to provide enhanced strategic clarity to our business.

In 2011, as Motorola Solutions, we achieved strong financial and operating performance. Net sales increased 8% compared to 2010, reflecting a (i) 6% increase in the Government segment, and (ii) 11% increase in the Enterprise segment. Operating earnings increased 14% compared to 2010, reflecting a (i) 16% increase in the Government segment, and (ii) 12% increase in the Enterprise segment. We generated cash from operating activities of $848 million in 2011, compared to $803 million in 2010. As a result of our strong financial performance, on December 31, 2011, our stock price had increased 24% from our opening price on January 4, 2011 and we returned capital to stockholders by initiating a regular quarterly dividend of 22 cents per share and enacted a $2 billion share repurchase program (which was increased to $3 billion in January 2012 by the Board).

In conjunction with Separation, we addressed, and continue to address, several legacy compensation-related practices, as shown below. In addition, throughout 2011, we continued our dialogue with our largest stockholders to better understand their perspectives of the Company, including their views on our compensation practices. We believe the actions we have already taken, and the actions we plan to take in 2012 and beyond, will lead to continued stockholder satisfaction with our executive compensation programs, as evidenced by the favorable outcome (nearly 89% in favor) of the stockholder vote to approve executive compensation at the 2011 Annual Meeting of stockholders.


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During 2011, we made several changes to enhance the corporate governance provisions of our compensation programs and to better align them to competitive market practices. The table below describes the actions taken in 2011:

 

Program

  Program Change and Corporate Governance Improvement
New Change In Control Plan   Instituted a new Senior Executive Change in Control Plan that phases in for existing participants in 2014, which limits plan eligibility, eliminates excise tax gross-ups and reduces severance multiples, amongst other changes. Refer to the section Termination of Employment and Change In Control Arrangements of this proxy for additional details.
Executive Stock Ownership Guidelines   Expanded our stock ownership requirements to include Corporate Vice Presidents, in addition to Senior Vice Presidents, Executive Vice Presidents and our Chairman and CEO, and also implemented consequences for failure to meet the applicable stock ownership requirement within a five-year time period. Refer to the section Stock Ownership Requirements in the CD&A for additional details.
Board Stock Ownership Guidelines   Amended our Board Governance Guidelines to increase non-employee director stock ownership guidelines from four times to five times the annual retainer within a five-year time period and implemented a requirement for non-employee directors to hold all shares paid or awarded by the Company until termination of Board service. Refer to the section Board of Director Matters: What Are The Director Stock Ownership Guidelines of this proxy for additional details.
Stock Plan Amendments   Amended our Motorola Solutions Omnibus Incentive Plan of 2006 to remove a share recycling provision which allowed shares withheld for tax purposes to be reissued for future grants. Additionally, we clarified our plan to affirmatively state that dividend equivalents cannot be accrued on options or stock appreciation rights and to specifically define fair market value in our stock plan as the closing price on the date of the transaction.
Elimination of Gross-Ups   Eliminated tax gross-ups for guests traveling with Section 16 Officers to special events. Section 16 Officers are responsible for taxes due on imputed income resulting from their guests attending special events.

In response to feedback received from many of our largest stockholders, in 2011 we undertook a comprehensive benchmarking review of our equity granting practices (including a review of eligibility), our annual share usage (burn rate) and our annual stock-based compensation expense. Our comprehensive benchmarking concluded that on all three measures, our practices were not consistent with our comparator group. In particular, our population of employees eligible to receive equity awards was significantly broader than our comparator group.

Effective in 2012, we are implementing the following significant changes to ensure our stock-based compensation programs are market-competitive, to reduce our share usage rate and reduce our annual stock-based compensation expense:

 

   

We will limit annual equity grant eligibility to a narrower management population of approximately 2,000 employees. This change will reduce the population eligible for annual equity grants by approximately 12,000 employees.

 

   

We will maintain eligibility for special equity grants on a highly selective basis as part of recruitment, retention and recognition. We believe that special equity grants are an effective vehicle in maintaining an engaged and motivated workforce. However, we will closely manage the use of special equity grants to ensure our share usage and stock-based compensation expense remains in line with competitive levels.

We continue to evaluate and gain a better understanding of the comparator companies we and our largest stockholders use for assessing our business performance and competitiveness of our compensation programs. During 2011, we made additional refinements to the comparator group we use for both pay and performance comparison purposes to reflect input from our largest stockholders, who compare our financial performance more to multi-line industrials than stand-alone government or enterprise companies. The section Comparator Group of this CD&A can be referenced for additional details.

Our Compensation Programs Are Heavily Performance Based

Our 2011 incentive compensation programs were designed based on our compensation philosophy and guiding principles that focus on competitive pay that is strongly aligned to performance, and our 2011 results and incentive payouts demonstrate this alignment. In 2011, our executive compensation programs were structured so that more than 85% of a NEO’s targeted total direct compensation was delivered in the form of short-term and long-term incentives. We summarize below how our short-term and long-term incentive programs are linked to financial and


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stock price performance and how these programs were impacted by our strong 2011 financial and operating performance. The sections Compensation Philosophy and Executive Compensation Principles and Our 2011 Compensation Mix can be referenced for additional details.

Our Annual Incentive Plan (“AIP”) is aligned to the operating earnings and free cash flow business goals in our annual operating plan that is approved by the Board. Operating earnings is important to the Company since it measures our profits from sales, and free cash flow is important since it provides a clear view of our ability to generate cash to both invest in future growth and appropriately return to stockholders. Operating earnings and free cash flow are common performance measures inside and outside of our industry, and we believe they are critical performance measures that drive our annual business performance and long-term sustainable stockholder value. Additionally, operating earnings and free cash flow are fundamental measurements that are used in many other financial indicators we measure that show levels of profitability, business liquidity, rates of return and more.

Our strong financial performance in 2011 included operating earnings that were 106% of our target, which correlated to a payout of 113% of target on that measure, and free cash flow that was 110% of our target, which correlated to a payout of 118% of target on that measure. After applying the 65% weighting to operating earnings and 35% weighting to free cash flow, the total payout under our AIP was 114% of target, excluding individual performance adjustments. 2011 AIP payouts to individuals were further differentiated based on individual performance. On average, our NEOs received 2011 AIP payouts based on business and individual performance that were 143% of target. The section Short-Term Incentives can be referenced for additional details.

LOGO

Our long-term incentives (“LTI”) for senior executives are delivered in the form of stock options, restricted stock units (“RSUs”) and the Long-Range Incentive Plan (“LRIP”). Stock options and RSUs incent absolute stock price growth and our LRIP is designed to incent superior total shareholder return relative to our comparator group. We believe the LTI we grant to our senior executives is critical to aligning their interests to our stockholders’ interests and driving long-term stockholder value. In 2011, we had strong stock price appreciation (24%) and total return to stockholders (stock price appreciation plus our 22 cents per share quarterly dividend), benefiting both our stockholders and employees who have received LTI awards. The section Long-Term Incentives can be referenced for additional details.


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The graph below displays our 2011 stock price appreciation discussed in this section.

 

LOGO

2011 CEO and NEO Compensation and Leadership Actions

The successful completion of the Separation, our strong 2011 financial and operating performance, and the importance of succeeding as Motorola Solutions had an influence on pay decisions for Mr. Brown and our other NEOs. The table below summarizes the CEO and other NEO compensation and leadership actions that were taken in 2011.

 

Component

  Summary of NEO Actions
Base Salary   The base salaries for some of our NEOs were increased during 2011 in connection with market adjustments and promotions. Mr. Brown’s salary reverted to $1,200,000 as provided in his employment agreement following his voluntary reduction to $900,000 for 2009 and 2010.
2011 AIP   2011 AIP payouts were earned by our eligible employees, including our NEOs, and reflected the strong business performance and each individual’s performance.
2011-2013 LRIP   A new 2011-2013 LRIP cycle was implemented for our senior executives, including our NEOs.
Equity Grants   A special equity grant of stock options and RSUs, called the Leadership Grant, was made in 2011 to select senior executives, including our NEOs. This grant was made to recognize the successful completion of the Separation, reinforce the importance of succeeding as Motorola Solutions, provide enhanced focus on driving stockholder wealth and strengthen the retention and engagement of our senior executives. This grant included the 2011 and 2012 target annual stock option and RSU values for each participant and the value of portions of previous LRIP cycles that were forfeited at the time of Separation. Mr. Moon received a special award in connection with his promotion and Ms. Carlin received a special award in connection with Separation.
Separation Event Equity Grant   Separation Event Equity Grants were made to Mr. Brown under the terms of his employment agreement.
Executive Talent Development and Succession Planning   In 2011, executive talent development and succession planning were regularly discussed by the Committee. The Committee has created a framework to assess and develop our senior executive talent, and has engaged internal and external advisors to evaluate our top executives. The Chairman and CEO, Committee and Board will continue taking an active role in monitoring the development of our key executive talent in 2012 and beyond.

Summary of Greg Brown’s 2011 Total Compensation

Mr. Brown’s 2011 total compensation reported in the 2011 Summary Compensation Table significantly increased from 2010, primarily due to the one-time awards made to Mr. Brown during 2011, which were disclosed in last year’s CD&A. Mr. Brown’s 2011 total compensation in the 2011 Summary Compensation Table was determined in two parts – his 2011 core compensation and his 2011 one-time awards. $9.6 million of Mr. Brown’s


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total 2011 Summary Compensation Table disclosure was attributable to his 2011 core compensation, or the compensation we grant to him on a normal, ongoing basis. $19.8 million of Mr. Brown’s total 2011 Summary Compensation Table disclosure was attributable to the one-time Separation Event Equity Grant ($12.5 million), which was granted under his employment agreement due to our successful Separation, and the one-time award portion of the Leadership Grant ($7.3 million), which was determined and granted on the same terms as Leadership Grants made to other select executives, with the exception that Mr. Brown’s Separation Event Equity Grant and Leadership Grant both included stock price appreciation vesting hurdles in addition to service-based vesting conditions.

In addition to Mr. Brown’s 2011 total compensation reported in the 2011 Summary Compensation Table, Mr. Brown also received a 2011-2013 LRIP target award. As part of Mr. Brown’s total 2011 core compensation, the Committee approved Mr. Brown’s 2011-2013 LRIP target at 250% of his January 1, 2011 base salary of $1,200,000, or $3,000,000, as disclosed in the Grants of Plan-Based Awards in 2011 table of this proxy statement. Mr. Brown’s 2011-2013 LRIP target is not required to be disclosed in the 2011 Summary Compensation Table; rather, any amounts that Mr. Brown realizes under the 2011-2013 LRIP will be reported in 2014 as Non-Equity Incentive Plan Compensation in the Summary Compensation Table. With the inclusion of Mr. Brown’s 2011-2013 LRIP target, Mr. Brown’s total 2011 core compensation was approximately $12.6 million.

The section Greg Brown’s 2011 Total Compensation can be referenced for additional details on Mr. Brown’s 2011 total compensation.


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Stockholder “Say On Pay”

At the 2011 Annual Meeting of stockholders, our stockholders approved the stockholder advisory vote to approve our executive compensation with nearly 89% support, and 90% approved an annual frequency of stockholder advisory voting to approve our executive compensation, which corresponded with the Board’s recommendation. Based upon these results, the Board determined to hold an annual advisory vote to approve executive compensation and such vote is included as a voting matter for the Annual Meeting.

During 2011, the Committee reviewed our pay programs and practices, taking into account the favorable outcome of the stockholder vote to approve our executive compensation at the 2011 Annual Meeting of stockholders, consultations with the Committee’s independent compensation consultant and discussions with major stockholders. Given the strong stockholder support of our pay programs, we made no specific changes to executive compensation in 2011, but we did make general corporate governance improvements, as discussed above. In addition to the general corporate governance improvements made in 2011, we continue to maintain several practices that represent strong corporate governance, including:

 

Practice

  Description
Heavily weighted “at risk” pay for our senior executives   Weighted to include more short-term and long-term incentives (variable pay) than base salary (fixed pay) to create a strong link to driving stock price performance in a responsible manner without creating undue risk for the Company.
“Double trigger” feature in our Senior Executive Change in Control Plan   Requires that an executive be separated from service in conjunction with a change in control event before receiving any payouts made in connection with a change in control.
“Modified double trigger” in our  Motorola Solutions Omnibus Incentive Plan of 2006 for a change in control   Provides that there is no acceleration of equity or performance awards if such awards are assumed or replaced by the successor company, unless otherwise provided by the Compensation and Leadership Committee. For awards that are assumed or replaced during a change in control, accelerated treatment is only provided if the executive is terminated without cause or voluntarily resigns for Good Reason within 24 months of the change in control event.

“Clawback” policy

  Provides for recoupment of incentive payments that are overstated as a result of the restatement of our financial earnings.

“Anti-hedging” policy

  Precludes employees and directors from engaging in any transaction in which they may profit from short-term speculative swings in the value of our securities.
Compensation and Leadership Committee consisting entirely of independent directors   Complies with independent status as a Non-Employee Director under SEC Rule 16b-3 and as an Outside Director under Section 162(m) of the Internal Revenue Code for purposes of membership on a compensation committee.
   
Independent compensation consultant engaged by the Committee   Compensation and Leadership Committee reviews and approves all plans under its purview and also seeks input from independent compensation consultant, which provides third party input and an unbiased perspective on market practices.
   
An annual risk assessment on pay that is reviewed by the Compensation and Leadership Committee   Reviews global employee compensation programs to determine if there is inappropriate or excessive risk exposure that could have a material adverse effect on the Company.

We continuously monitor our compensation practices to ensure we are responsive to current market conditions and new developments in corporate governance. In addition, we will continue to take into account the results of future stockholder votes and ongoing dialogues with our largest stockholders when reviewing our compensation program and practices.


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Compensation Philosophy and Executive Compensation Guiding Principles

Our philosophy is to provide reward programs that attract, retain and motivate the right people, in the right place, at the right time. We strive to provide a total compensation package that is competitive with the prevailing practices in the industries and countries in which we operate, allowing for above average total compensation when justified by business results and individual performance.

Our compensation philosophy is further guided by the following principles that are specific to our executives:

 

Guiding Principle

  Rationale

Business Driven

  We offer appropriate incentives which are aligned with the Company’s business goals and avoid excessive risk taking.

Performance Differentiated

  We design our compensation programs to foster an effective link between pay and performance—both at the Company and the individual level.

Market Competitive

  We provide a competitive total compensation package that enables us to attract, retain and motivate the top talent needed to successfully execute our business strategy.

Ownership Oriented

  We align compensation with our stockholders’ interests by providing meaningful equity awards and maintaining robust guidelines that require significant stock ownership by our senior executives.

Simplicity

  Our programs are intended to drive employee engagement through their simple and cost-efficient plan design.

In establishing the pay of our executive officers (including our NEOs), the Committee references the market median for total direct compensation (in other words, total cash compensation plus long-term incentive awards) of our comparator group, in addition to considering individual performance, internal equity and succession plans, and external market conditions.


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Roles in Determining Our Compensation

The following chart provides an overview of the roles and responsibilities for the various parties involved in determining our compensation:

 

Party

  Role
Compensation and Leadership Committee  

•   Oversees certain employee compensation and benefit programs, including approval of annual and long-term incentive plan performance goals.

 

•    Evaluates the performance and development of senior management and approves compensation actions involving Section 16 Officers.

 

•   Reviews CEO performance and recommends CEO compensation actions to the independent members of the Board for their concurrence.

 

•    Recommends the compensation program for non-employee directors to the Governance and Nominating Committee.

 

•   Regularly assesses the risk exposure of all programs under the Committee’s purview.

Board of Directors

 

•   Concurs with CEO compensation actions, as approved by the Committee.

 

•   Approves non-employee director compensation, as recommended by the Committee and the Governance and Nominating Committee.

 

•    Takes action regarding certain compensation and benefit plan matters, as required by the Committee’s charter.

Chairman and CEO

 

•   Recommends all compensation actions involving members of the management executive committee or any Section 16 Officer to the Committee for its approval.

 

•   Takes an active role in Committee meetings at which the performance and compensation actions for the above executives are discussed.

 

•   Recommends annual and long-term incentive plan performance goals to the Committee for its approval.

Management Executive Committee  

•    Executes the objectives of the Company’s total compensation program.

 

•   Each member approves all compensation actions for his or her respective function and is accountable for compliance with established governance procedures.

Human Resources

 

•   Supports the Committee in its work.

 

•   Per delegated authority, fulfills various functions in administering the Company’s total compensation programs.

 

•   Prepares recommendations regarding Section 16 Officer compensation.

 

•    Along with the Committee’s independent consultant, prepares recommendations regarding CEO compensation.

Independent Consultant to the Committee  

•    Carries out compensation reviews as directed by the Committee.

 

•   Participates in Committee meetings, provides input on compensation recommendations and programs, and provides regulatory updates and trends from time to time.

The Chairman and CEO is not involved in the preparation of recommendations related to his compensation and does not participate in the discussions regarding his compensation at Committee or Board meetings. The Committee cannot unilaterally approve compensation or compensation changes for the Chairman and CEO without the Board’s concurrence.


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Components of Our 2011 Executive Compensation Program

The 2011 total compensation program for our NEOs consisted of the following components:

 

Compensation Component

  Rationale

Base salary

 

•   Provides market competitive fixed compensation to attract and retain qualified talent.

Short-term incentives through AIP  

•   Rewards executives based on achievement against the established annual business goals of the Company and their own individual performance in the achievement of these business results.

Long-term incentives through equity grants and participation in the LRIP  

•   Equity awards encourage ownership in the Company, align our management’s interests with those of our stockholders, reward increases in the absolute value of our stock and enhance long-term retention of our top talent.

 

•   The LRIP rewards relative stock performance by measuring total shareholder return against our comparator group.

Benefits and perquisites

 

•   Selected benefits and perquisites, in addition to broad-based employee benefits, provide our senior executives with a market-competitive total compensation package.

Our 2011 Compensation Mix

When making 2011 compensation decisions, the Committee considered the total direct compensation levels for each executive position against the median of similar positions in the 2010 Motorola Solutions Transitional Comparator Group. We intend to provide competitive total compensation, as well as competitive compensation for each element comprising our total compensation. As a result, we do not specifically limit one element of compensation in response to the amounts potentially realizable under other compensation elements. However, we place certain limits on benefits available under our life and disability plans and our investment plans, including our pension plans, while ensuring competitiveness in the marketplace. Our qualified retirement plans are also subject to IRS limits. Although we reference the median of our comparator group in structuring our executive compensation program, the exact percentile may differ by individual and is based on their specific performance, experience, skill set, position and ability to impact business results.

In keeping with our guiding principles of being “business driven” and “performance differentiated,” more than 85% of our NEO’s targeted total direct compensation was delivered in the form of short-term and long-term incentives. Our target short-term and long-term incentives in 2011 are a higher percentage of targeted total direct compensation than what we typically target, due to the 2011 Leadership Grant and Mr. Brown’s Separation Event Equity Grants. The below table highlights the specific 2011 target pay mix of each NEO, excluding Dr. Jha since the Committee did not determine his target pay mix in 2011 due to the Separation.

 

LOGO


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We believe our target pay program is appropriately designed and positioned versus the market. The actual pay of our NEOs is a direct result of performance results at both a business and individual level. In determining actual compensation for a NEO, in addition to referencing the market median compensation data, the Committee uses the NEO’s role, responsibilities, experience, performance and skill set as general reference points in making a judgment of his or her value to the Company and in the marketplace. These are generally subjective judgments and there is no formulaic weighting of these reference points in making specific compensation element decisions.

Comparator Group

The Committee reviews the composition of the comparator group at least annually to determine the appropriateness and applicability of the group for establishing the Company’s compensation programs and making individual pay decisions for our NEOs. As a result of the Company’s transformation leading up to the Separation, there were changes to our comparator group during 2010 and throughout 2011, as described below.

2010 Motorola Solutions Transitional Comparator Group

In the latter part of 2010, in anticipation of Separation, the Committee established a separate comparator group for Motorola Solutions in order to benchmark companies of similar size and industry focus in planning for post-Separation compensation actions. We had market data available from this comparator group in late 2010 and early 2011, and 2011 NEO pay decisions were based in part on the 2010 Motorola Solutions Transitional Comparator Group. The 2010 Motorola Solutions Transitional Comparator Group, which is listed below, is also discussed in the Independent Consultant Engagement section.

2011 Motorola Solutions Comparator Group

As we completed the Separation in early 2011, we reevaluated the 2010 Motorola Solutions Transitional Comparator Group to consider including other companies with similar financial and business performance. In February 2011, the Committee endorsed a 2011 Motorola Solutions Comparator Group that included companies that are in one of three industries (multi-industrial electronics, government industry and enterprise industry) with generally similar size and financial performance to Motorola Solutions. When compared to the 2010 Motorola Solutions Transitional Comparator Group, eight companies remained, eight new companies were added and ten companies were removed. We had market data available from this comparator group during 2011, but no 2011 NEO pay decisions were based on the 2011 Motorola Solutions Comparator Group. The 2011 Motorola Solutions Comparator Group is used as the comparator group in the 2011-2013 LRIP for relative total shareholder return measurement purposes. The 2011 Motorola Solutions Comparator Group is listed below.

 

2010 Motorola Solutions

Transitional Comparator Group

 

Anixter International, Inc.

  Juniper Networks, Inc.

Cisco Systems, Inc.

  L-3 Communications Holdings, Inc.

Commscope, Inc.

  NCR Corporation

Dell Inc.

  Northrop Grumman Corporation

EMC Corporation

  QUALCOMM, Inc.

General Dynamics Corporation

  Raytheon Company

Harris Corporation

  Rockwell Collins, Inc.

Honeywell International, Inc.

  SAIC, Inc.

ITT Corporation

  Unisys Corporation

2011 Motorola Solutions

Comparator Group

 

Danaher Corp.

  L-3 Communications Holdings Inc.

Emerson Electric Co.

  NCR Corp.

FLIR Systems, Inc.

  Raytheon Company

Harris Corp.

  Rockwell Collins Inc.

Honeywell International Inc.

  TE Connectivity Ltd.

Intermec, Inc.

  Trimble Navigation Ltd.

ITT Corporation

  Tyco International Ltd

Juniper Networks, Inc.

  Zebra Technologies Corp.
 


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2012 Motorola Solutions Comparator Group

Following the Separation, the Company continued to evaluate and gain a better understanding of our comparator companies, based in part on input received from our largest stockholders. We continue to use a single comparator group for both pay and performance comparison purposes in our executive compensation program. In November 2011, the Committee engaged Compensation Advisory Partners to independently review our 2012 Motorola Solutions Comparator Group. After evaluating the results of this review, the Committee endorsed a new 2012 Motorola Solutions Comparator Group that includes companies from the government and enterprise industries, as well as more multi-industrial companies, which was approved in early 2012. When compared to the 2011 Motorola Solutions Comparator Group, ten companies remained, six new companies were added and six companies were removed. The Committee will reference the competitive pay levels of the 2012 Motorola Solutions Comparator Group when making 2012 NEO pay decisions. Additionally, the 2012 Motorola Solutions Comparator Group will be used as the comparator group in the 2012-2014 LRIP for relative total shareholder return purposes.

The 2012 Motorola Solutions Comparator Group is listed below:

2012 Motorola Solutions

Comparator Group

 

Aruba Networks, Inc.

   Johnson Controls, Inc.

Danaher Corp.

   JVC Kenwood Corp.

Eaton Corp.

   NCR Corp.

Emerson Electric Co.

   Parker-Hannifin Corp.

Harris Corp.

   Raytheon Company

Honeywell International, Inc.

   Rockwell Collins, Inc.

Ingersoll-Rand PLC

   TE Connectivity Ltd.

Intermec, Inc.

   Tyco International Ltd.

The Committee will continue to review the composition of the comparator group at least annually, but understands the comparator group has changed multiple times in the last year, and intends to use the 2012 Motorola Solutions Comparator Group beyond 2012, only revising when appropriate (for example, when corporate transactions within the comparator group occur).

To supplement our comparator group data and obtain a more complete picture of the overall compensation environment for the broader executive group (and, from time to time, our NEOs), we look to multiple survey sources. During 2011, we utilized supplemental data for some of the NEOs from the following survey sources:

 

Survey   Publisher
CHiPS Executive & Senior Management Total Compensation Survey   Pearl Meyer & Partners, LLC
U.S. Compensation Data Bank (CDB) TriComp Executive Database   Towers Watson & Co.
Radford Global Technology Survey   Radford, an Aon Hewitt consulting company             
US Global Premium Executive Remuneration Suite—Fortune 500® Organizations   Mercer LLC

Because these surveys contain competitive compensation market data on a number of companies spanning different industries, our market analysis involves narrowing the available information to “data cuts” that more accurately reflect our size, industry and competitive labor market.

The “data cuts” for the supplemental data used for some of the NEOs during the 2010 Motorola Solutions executive compensation review from November 2010 (which is discussed below), were:

 

   

The 18 companies that comprised our 2010 Motorola Solutions Transitional Comparator Group and participated in the above surveys;

 

   

An expanded comparator company group that included other high-tech companies that participated in the above surveys;


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Technology companies generally with annual revenue greater than $3 billion; and

 

   

All companies that participated in the CHiPS survey.

Independent Consultant Engagement

The Committee engages an independent consultant to advise them on the Company’s executive compensation strategy and program design, and to provide regulatory updates and market trends. The consultant conducts a comprehensive evaluation of our compensation program on a periodic basis (typically every one or two years), and annually reviews the specific compensation of our Chairman and CEO and other Section 16 Officers.

During 2011, the Committee chose to continue the engagement of Compensation Advisory Partners as its independent compensation consultant. Compensation Advisory Partners does not have any other business or consulting relationships with the Company, and no additional business relationships are anticipated in the future. The Committee has occasional discussions with Compensation Advisory Partners without management present to ensure impartiality on certain decisions.

Based on its independent review, Compensation Advisory Partners determined that Motorola Solutions’ current executive compensation programs are fundamentally competitive and sound. The Committee agreed with this conclusion and determined that no substantive revisions to the compensation programs are required at this time.

2010 Motorola Solutions Executive Compensation Review (As applied to 2011 Pay Decisions)

In November 2010, the Committee engaged Compensation Advisory Partners to independently review our executive rewards program and the compensation of our management executive committee, including an analysis of the compensation for the Company post-Separation. Historically, this analysis would have been performed in January 2011. However, in anticipation of the Separation, the Committee elected to work with Compensation Advisory Partners in November 2010 to identify the 2010 Motorola Solutions Transitional Comparator Group and begin to assess competitive pay levels for the Company after Separation relative to our transitional comparator companies. The Committee also referenced this analysis to determine 2011 pay decisions for the Company’s post-Separation executive officers, including the NEOs.

For the November 2010 review, Compensation Advisory Partners analyzed compensation levels and practices using the 2010 Motorola Solutions Transitional Comparator Group proxy data for comparison to Motorola Solutions’ NEOs. Broader industry survey data was used to compare compensation levels and pay practices for other Motorola Solutions’ executive benchmark positions based on functional responsibilities and scope.

Competitive Review Findings

With respect to the competitiveness of our NEOs’ 2010 target compensation levels, Compensation Advisory Partners noted the following:

 

   

Mr. Brown’s 2010 base salary at his voluntarily reduced level of $900,000 was positioned below the 25th percentile and his target total annual cash compensation (base salary plus target annual incentive) and target total direct compensation (target total annual cash compensation plus long-term incentive compensation) was positioned between the median and 75th percentile.

 

   

Mr. Fitzpatrick’s base salary and target total annual cash compensation were positioned well below the 25th percentile, and his target total direct compensation approximated the median.

 

   

Mr. Delaney’s base salary was positioned slightly above the median, his target total annual cash compensation approximated the median and his target total direct compensation was above the 75th percentile.

 

   

Mr. Moon’s base salary and target total annual cash compensation were positioned at the 75th percentile, and his target total direct compensation was between the median and 75th percentile (Mr. Moon was promoted to Executive Vice President in May 2011; his benchmark review did not reflect the additional duties he assumed at Separation).


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Ms. Carlin’s base salary was positioned between the median and the 75th percentile, her target total annual cash compensation approximated the median and her target total direct compensation was positioned between the median and the 75th percentile.

Since we have historically analyzed and set compensation levels compared to comparator groups that were appropriate for the larger Motorola, Inc., the fact that our NEO target total direct compensation was, on average, above median when compared to the 2010 Motorola Solutions Transitional Comparator Group, was not surprising given the size of the comparison companies.

Compensation Advisory Partners found that our current target compensation program places a slightly greater emphasis on the LTI component as compared to the 2010 Motorola Solutions Transitional Comparator Group. In addition, our current LTI mix of stock options, RSUs and a three-year LRIP is somewhat more diversified than among the 2010 Motorola Solutions Transitional Comparator Group, in which options are most often combined with one other LTI component.

2011 Named Executive Officer Compensation

Base Salary

When setting the base salary level for each NEO, the Committee references the median of the comparator group, as well as each NEO’s individual performance, experience, internal comparisons and succession plans, and external market conditions. The table below displays the 2011 year-end base salary for each NEO (other than Dr. Jha who was not an employee after January 4, 2011 and for whom the Committee did not set compensation in 2011) along with the rationale for how it was established.

 

Named

Executive Officer

 

Current

Base Salary

  Effective Date   Rationale

Mr. Brown

  $1,200,000   January 1, 2011   In January 2011, Mr. Brown’s base salary reverted to $1,200,000 as provided in his employment agreement following his voluntary reduction to $900,000 for 2009 and 2010.

Mr. Fitzpatrick

  $525,000   May 2, 2011  

In January 2011, Mr. Fitzpatrick’s base salary increased from $450,000 to $500,000 as a market adjustment.

 

In May 2011, Mr. Fitzpatrick’s base salary increased from $500,000 to $525,000 in connection with his promotion to Executive Vice President.

Mr. Delaney

  $575,000   January 28, 2009   In January 2009, Mr. Delaney’s base salary increased from $510,000 to $575,000 in connection with his promotion to Executive Vice President. In January 2011, the Committee reaffirmed Mr. Delaney’s base salary of $575,000 for 2011.

Mr. Moon

  $525,000   May 2, 2011  

In January 2011, Mr. Moon’s base salary increased from $450,000 to $500,000 as a market adjustment.

 

In May 2011, Mr. Moon’s base salary increased from $500,000 to $525,000 in connection with his promotion to Executive Vice President.

Ms. Carlin

  $415,000   October 12, 2009   In October 2009, Ms. Carlin’s base salary increased from $370,000 to $415,000 in connection with her promotion to Senior Vice President. In January 2011, the Committee reaffirmed Ms. Carlin’s base salary of $415,000 for 2011.


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Short-Term Incentives

The AIP is the 2011 annual cash incentive plan that applied to all of our employees (excluding those employees participating in a sales incentive plan), including our NEOs.

The objectives of our AIP are to:

 

   

Focus our employees’ attention on achievement of the critical operating goals of the Company.

 

   

Link employee rewards to their individual contributions in achieving our business results.

 

   

Provide pay opportunities that are competitive with our comparator group in order to attract and retain a high-performing workforce.

AIP Incentive Formula

AIP awards are a function of an individual’s target incentive opportunity, the Company’s annual business performance and each participant’s individual performance. The payout value of an AIP award to each individual is based on the following formula:

 

                Performance Factors        
Individual

Base Pay

    x     Individual
Incentive

Target %

    x     Business
Performance
Factor
    x     Individual
Performance

Factor

  =   AIP
Award

Individual Base Pay

Base pay equals the NEO’s base salary earnings during the incentive plan year.

AIP Individual Incentive Target Percentage

Individual incentive target percentages are based on market-competitive data and are established as a percentage of base pay. At the beginning of each plan year, the Committee designates individual incentive target percentages for each of our NEOs. For 2011, individual incentive target percentages for our NEOs were generally targeted at the median of the 2010 Motorola Solutions Transitional Comparator Group.

The 2011 AIP individual incentive targets for our NEOs were as follows:

 

Named

Executive Officer (1)

  

Individual AIP Target

as % of Base Pay

 

Individual

AIP $ Target

Mr. Brown

      220%   $2,640,000

Mr. Fitzpatrick

        95%      $486,875

Mr. Delaney

        95%      $546,250

Mr. Moon

   88.37%(2)      $452,896

Ms. Carlin

        75%      $311,250

 

(1)     The table excludes Dr. Jha since the Committee did not determine his 2011 AIP target due to the Separation.

(2)      Mr. Moon’s AIP target was prorated to reflect his target of 75% of base salary from January 1, 2011 through May 1, 2011 and 95% of base salary as of May 2, 2011, the effective date of his promotion to Executive Vice President.

AIP Business Performance Factor

At the beginning of each AIP plan year, the Committee establishes performance targets for the measures determining the Company’s Business Performance Factor (“BPF”). The final BPF can range from 0% (no award paid) for below minimum financial performance to 140% for exceptional performance. The 2011 BPF for our NEOs and all employees, except the employees of the Networks business, was based on Company-wide business


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goals to reinforce the Motorola Solutions’ “partnership” value and to align to the “simplicity” guiding principle of our compensation philosophy. Beginning in 2011, the Committee approved an increase to the BPF maximum to 140% (from 130% in 2010) to provide additional incentive opportunity for corresponding superior performance and to bring the maximum individual AIP award opportunity closer to 200% (140% maximum BPF x 140% maximum individual performance factor equates to a maximum individual award opportunity of 196%).

In 2011, the Company-wide business goals were based on operating earnings (“OE”) and free cash flow (“FCF”) and aligned to the OE and FCF targets in our annual operating plan. OE is important to the Company since it measures our profits from sales and FCF is important since it measures the cash available after capital expenditures. OE and FCF are common performance measures inside and outside of our industry, and we believe they are critical performance measures that drive our annual business performance, and ultimately long-term stockholder value. Additionally, OE and FCF are fundamental measurements that are used in many other financial calculations we measure that show levels of profitability, business liquidity and rates of return.

When we set our annual operating plan, and ultimately our OE and FCF targets, we analyze several factors, including projected revenue growth, margins, operating expenditures, macro industry considerations and market share. We analyze these factors against the overall global economic environment, relative to our comparator group and compared to our previous year’s performance. Once these factors are analyzed, the annual operating plan for the upcoming year is presented to the Board for approval. Our OE and FCF performance goal targets for the AIP are directly linked to the annual operating plan that is approved by the Board.

Due to its importance in the Company’s financial success, OE carried 65% weight in determining our BPF. OE for incentive plan purposes is defined according to GAAP, excluding the effect of the following items: (i) earnings from discontinued operations as reported externally; (ii) highlighted items as reported externally, such as reorganization of business charges, asset impairments, and extraordinary, unusual and/or non-recurring items of gain or loss; (iii) stock-based compensation expense; and (iv) intangible assets amortization expense.

FCF carried 35% weight in determining our BPF. FCF for incentive plan purposes is defined as operating cash flow according to GAAP less capital expenditures. A capital expenditure is defined as the original cost of acquiring property, plant and equipment, as reported in the investing section of the cash flow statement per GAAP.

At the end of each plan year, the Committee reviews full year performance and the corresponding management recommendations regarding each component of the BPF. The Committee exercised its discretion and approved certain adjustments to the final BPF for the 2011 AIP. The adjustments and their associated rationale are described below.

 

   

In general, we exclude discontinued operations from our AIP results. However, the results from the discontinued operations of our WiBB business (which was divested in 2011), certain cash payments from the Separation and the 2010 AIP payments to Networks employees were considered in the determination of our 2011 BPF. These results were originally forecasted as continuing operations and included in our 2011 OE and FCF AIP targets, but during 2011 it was determined these results would be classified as discontinued operations. In total, these adjustments decreased our 2011 BPF. The Committee believed these were appropriate adjustments since these results were originally forecasted as continuing operations and the adjustments align to how the 2011 performance targets were originally determined.

 

   

A voluntary payment to the pension plan (incremental to our required minimum plan contribution) and specific cash repatriation efforts were excluded for determination of our 2011 BPF. These actions were made in the best interest of the Company and were not factored into the FCF AIP targets. These adjustments increased our 2011 BPF. The Committee believed these were appropriate adjustments since the actions were in the best interest of the Company and better aligned to what was factored into the 2011 performance targets.

2011 AIP Business Performance Targets and Results

The following table reflects the minimum, target and maximum levels for each of the 2011 BPF measures that pertain to all eligible employees, including our NEOs, as well as the actual and adjusted (for the impact of the above-noted exceptions) 2011 performance levels. Assuming OE and FCF business performance meets the minimum


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threshold for a payout, the BPF formula allows for a range of 30.25% of the established target award level (at the minimum level of performance) to 140% of the established target award level (at the maximum level of performance).

 

AIP Business

Performance

Measure

 

Performance

Level for

Minimum

Payout

   

Performance

Level for

Target

Payout

   

Performance

Level for

Maximum

Payout

   

Actual

Fiscal Year

2011

Performance

   

Adjusted

Fiscal Year

2011

Performance

   

Resulting

Business

Performance

Factor

   

Performance

Measure

Weight

   

Weighted

Contributing

Result

 

OE

  $ 1.135 billion      $ 1.335 billion      $ 1.535 billion      $ 1.373 billion      $ 1.417 billion        113     65     73

FCF

  $ 562 million      $ 750 million      $ 900 million      $ 660 million      $ 828 million        118     35     41

2011 AIP Business Performance Factor

  

    114

2011 AIP Individual Performance Factors

We strive to establish a clear line of sight by linking our performance management process with the rewards our employees receive. Individual performance is measured by both what an individual accomplishes (in other words, goal achievement) and how the individual accomplishes those goals (in other words, demonstration of our leadership behaviors). The Committee has the discretion to adjust AIP awards by establishing an Individual Performance Factor (“IPF”) for each NEO to account for differences in individual contribution and performance.

IPFs can range from 0 (in other words, no award paid) for poor performance to 1.4 (in other words, 140% of the formula-driven award) for exceptional performance. Beginning in 2011, the Committee approved an increase to the IPF maximum to 140% (from 130% in 2010) to provide additional incentive opportunity for corresponding superior performance and to align the maximum individual AIP award opportunity closer to 200% (140% maximum BPF x 140% maximum IPF equates to a maximum individual award opportunity of 196%).


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To recognize the performance and leadership delivered by our NEOs in our first year of operating as Motorola Solutions, the Committee established IPFs for each of our NEOs as follows:

 

Named

Executive Officer (1)

 

Individual

Performance

Factor

  Rationale

Mr. Brown

  136%   To recognize Mr. Brown’s strong leadership in streamlining and strengthening our portfolio (including the successful divestiture of our Networks business), growing operating earnings more than three times our revenue growth, generating strong cash flow and returning capital to our stockholders.

Mr. Fitzpatrick

  100%   To recognize Mr. Fitzpatrick’s performance in successfully initiating our capital allocation strategy, including the return of $1.2 billion in cash to our stockholders through share repurchase and cash dividends. Mr. Fitzpatrick was instrumental in continuing to maintain our strong balance sheet – a total cash position of $5.1 billion after making significant debt repayments and an incremental contribution to our pension plan, and repatriating $1.5 billion in cash from non-US locations. We also received solid investment grade ratings from all three ratings agencies.

Mr. Delaney

  136%   To recognize Mr. Delaney’s performance in delivering extraordinary operations and product performance throughout the year (including a GAAP operating earnings growth of 14%), introducing new product innovation and solutions in both the Government and Enterprise segments, and successfully managing our response to supply chain challenges resulting from natural disasters that hit in several areas around the world.

Mr. Moon

  136%   To recognize Mr. Moon’s performance in generating overall revenue growth of 8%, including sales growth in every region of the world and across all vertical markets, securing several critical wins that enhance the Company’s market leadership in LTE public safety and meeting our customers’ rapidly changing needs by providing creative product and service solutions which resulted in generating several long-term, multi-million dollar contracts.

Ms. Carlin

  121%   To recognize the significant role Ms. Carlin played in leading the launch of Motorola Solutions as a new company, including the development of our Purpose and Values and their linkage to our human resources programs, driving a renewed focus on executive talent development and succession planning, and continuing to drive changes to our legacy compensation programs to align them to our new comparator group.

 

(1) 

Dr. Jha did not participate in the 2011 AIP due to the Separation.

2011 AIP Payouts

Based on the approved 2011 BPFs and IPFs, the actual 2011 AIP award for each NEO is set forth in the following table:

 

Named

Executive Officer (1)

 

Eligible

Earnings

 

AIP

Target

 

Business

Performance

Factor

 

Individual

Performance

Factor

 

Actual 2011

AIP Award

Mr. Brown

  $1,200,000   220%   114%   136%   $4,100,000

Mr. Fitzpatrick

  $512,500   95%   114%   100%   $555,000

Mr. Delaney

  $575,000   95%   114%   136%   $845,000

Mr. Moon

  $512,500   88.37%   114%   136%   $700,000

Ms. Carlin

  $415,000   75%   114%   121%   $430,000

 

  (1) 

Dr. Jha did not participate in the 2011 AIP due to the Separation.


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Long-Term Incentives (“LTI”)

During 2011, of the 14,000 employees eligible for LTI, approximately 12,500 of our employees participated in one or more of our LTI programs (12,350 of those employees were part of our annual equity award process). We consider several factors in the design of our LTI programs, including the need to attract and retain top talent, the market competitiveness of those we grant equity to, the cost impact of equity expensing, the impact on stockholder dilution, the evolving regulatory landscape and the Company’s long-term business strategy. During 2011, we undertook a comprehensive benchmarking review of these factors and will be implementing significant changes to our annual equity grant eligibility, effective in 2012, as discussed further in the Equity Awards section below.

In 2011, our LTI programs were comprised of the LRIP and equity awards, consisting of stock options and RSUs. In setting the 2011 LTI levels for our NEOs, the Committee referenced the median of the 2010 Motorola Solutions Transitional Comparator Group, as well as each NEO’s individual performance, expected contribution to the long-term success of the Company, internal equity and succession plans, and external market conditions. All of our NEOs participated in the 2011-2013 LRIP cycle and received equity awards through the Leadership Grant in 2011.

Long Range Incentive Plan (“LRIP”)

The LRIP is a performance-based, multi-year incentive plan that we provide to our senior executives, including the NEOs. During 2011, we implemented an LRIP cycle for the 2011-2013 performance period. There are currently no other LRIP cycles in effect, but we do anticipate implementing overlapping LRIP cycles annually.

2011-2013 LRIP Formula

The 2011-2013 LRIP is solely focused on our three-year total shareholder return (“TSR”) relative to the three-year TSR of the 2011 Motorola Solutions Comparator Group. The design parameters for the 2011-2013 LRIP are described below.

LRIP Incentive Formula

LRIP awards are a function of an individual’s base salary at the start of the LRIP cycle, individual incentive target percentage and our TSR payout factor.

 

Base Salary

At Cycle

Start

  x   Individual
Incentive
Target %
  x   TSR
Payout
Factor
  =   LRIP
Award

LRIP Individual Incentive Targets

The table below contains the individual incentive targets for our NEOs for the 2011-2013 LRIP:

 

Named

Executive Officer (1)

 

January 1, 2011

Base Salary

 

2011-2013 LRIP

Target %

 

2011-2013 LRIP

Target $

Mr. Brown

  $1,200,000   250%   $3,000,000

Mr. Fitzpatrick

  $450,000   150%   $675,000

Mr. Delaney

  $575,000   85%   $488,750

Mr. Moon

  $450,000   95%   $427,500

Ms. Carlin

  $415,000   80%   $332,000

 

  (1)

Dr. Jha did not participate in the 2011-2013 LRIP due to the Separation.


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TSR Payout Factor

The TSR Payout Factor is calculated in a two-step process:

Step 1: Measure the three-year TSR for the Company and each of the companies in the applicable comparator group.

 

   

Ending stock price

(daily average stock price during the final three months of the Performance Cycle)

+

  Value of reinvested dividends over the Performance Cycle

=

  Total ending value

-

 

Beginning stock price

(daily average stock price during the first three months of the Performance Cycle)

=

  Total value created

÷

  Beginning stock price
=  

TOTAL SHAREHOLDER RETURN

Step 2: Rank Motorola Solutions’ TSR against the TSR of each of the companies in the applicable comparator group to determine Relative TSR Payout Factor.

 

     TSR Rank   Relative TSR
Payout Factor
       TSR Rank   Relative TSR
Payout Factor
       TSR Rank  

Relative TSR

Payout Factor

Performance

above median

pays out above

target:

  1   200%  

Performance at

median pays at

target payout:

  9   100%  

Performance

below median

pays out below

target:

  10   75%
  2   185%           11   50%
  3   170%           12   25%
  4   155%           13   0%
  5   140%           14   0%
  6   130%           15   0%
  7   120%           16   0%
  8   110%           17   0%

Equity Awards

In May 2011, the Committee granted equity to 12,350 of approximately 14,000 equity eligible employees (55% of all employees) as part of our annual equity award process. None of our NEOs participated in the annual equity grant in May 2011 since they received the 2011 Leadership Grant (described below). Both components of the annual equity grant, stock options and RSUs, will vest and become exercisable in three equal annual installments commencing on the one year anniversary of the date of grant. The stock options expire ten years from the date of grant.

The exercise price of options is set at the closing price of our stock on the date of grant. We do not structure the timing of equity award grants to precede or coincide with the disclosure of material non-public information. Grants made outside the annual equity grant cycle (e.g., new hire, promotion and special recognition grants) are made on the first trading day of the month following the date of hire/promotion/recognition. Since 2002, the grant date for our annual equity awards has been within a few days of the annual stockholders meeting. This practice is expected to continue in 2012.

In response to feedback received from many of our largest stockholders, in 2011 we undertook a comprehensive benchmarking review of our equity granting practices (including a review of eligibility), our annual share usage (burn rate) and our annual stock-based compensation expense. Our comprehensive benchmarking concluded that on all three measures, our practices were not consistent with our benchmarking findings. In particular, our population of employees eligible to receive equity awards was significantly broader than those within our comparator group.


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Effective in 2012, we are implementing the following significant changes to ensure our stock-based compensation programs are market competitive, reduce our share usage rate and reduce our annual stock-based compensation expense:

 

   

We will limit annual equity grant eligibility to a narrower management population of approximately 2,000 employees. This change will reduce the population eligible for annual equity grants by approximately 12,000 employees.

 

   

We will maintain eligibility for special equity grants on a highly selective basis as part of recruiting, retention and recognition. We believe that special equity grants are an effective vehicle in maintaining an engaged and motivated workforce. However, we will closely manage the use of special equity grants to ensure our share usage and stock-based compensation expense remains in line with competitive levels.

2011 Leadership Grant

Upon the successful execution of the Separation in early 2011, the Committee decided to make a special equity grant to selected executives of Motorola Solutions, including our NEOs.

The key objectives of the Leadership Grant were to:

 

   

Recognize and reward the performance and extraordinary effort of the Company’s senior executives over the past three years in completing the Separation;

 

   

Reinforce the importance of achieving our strategic business objectives by providing awards with a strong link to future Company performance;

 

   

Provide an enhanced focus on driving stockholder wealth;

 

   

Strengthen the retention and engagement of our senior executives; and

 

   

Replace the forfeited portions of the 2009-2011 and 2010-2012 LRIP cycles. The 2009-2011 LRIP and 2010-2012 LRIP were originally targeted to conclude on December 31, 2011, and December 31, 2012, respectively, but were terminated due to the Separation, with performance ending on January 3, 2011 (the day before Separation). Earned payouts for each of these LRIP cycles were prorated to reflect the amount of time each LRIP cycle was in existence prior to cancellation, and the remaining portion of the LRIP target was forfeited.

In determining each participant’s Leadership Grant value, the Committee included (i) the 2011 and 2012 target annual stock option and RSU values for each participant, (ii) the portion of the 2009-2011 LRIP target that was forfeited as a result of Separation, and (iii) the portion of the 2010-2012 LRIP target that was forfeited as a result of Separation.

The Leadership Grant, made on February 22, 2011, was structured to provide 60% of the total value in stock options, or, in the case of Mr. Brown, stock options and stock appreciation rights, and 40% of the total value in RSUs. On March 14, 2011, pursuant to the authority granted to the Compensation and Leadership Committee under the 2006 Plan and to comply with award limits under the 2006 Plan, 471,398 of the options awarded to Mr. Brown on February 22, 2011 under the Leadership Grant were substituted with stock-settled stock appreciation rights (“SARs”). The substitute SARs have the same grant date, expiration date and exercise price as the original option award.

For Messrs. Fitzpatrick, Delaney and Moon and Ms. Carlin, one-third of the stock options and RSUs granted through the Leadership Grant will vest on each of the first three anniversaries of the grant.

For Mr. Brown, his stock options, SARs and RSUs granted through the Leadership Grant will vest on the later of (i) one-third per year from the date of grant, or (ii) when the average closing price of our Common Stock for any fifteen consecutive trading days is greater than $43.09, which is 110% of the average closing price of our Common Stock for the fifteen trading days immediately preceding the grant date. The stock price hurdle was achieved on April 5, 2011 when the fifteen-day closing average stock price of $43.33 exceeded the stock price hurdle of $43.09.


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The recipients of the Leadership Grant did not receive an annual equity grant in May 2011 and will not automatically receive an annual equity grant in 2012, although they will be eligible for an annual equity grant in 2012 at the discretion of the CEO, and, in the case of our NEOs, subject to the approval of the Committee.

Our NEOs each received a Leadership Grant in 2011 as follows:

 

     Mr. Brown     Mr. Fitzpatrick     Mr. Delaney     Mr. Moon     Ms. Carlin  

2011 and 2012 Target Annual Equity Value

  $ 8,000,000      $ 2,666,667      $ 1,666,666      $ 2,000,000      $ 1,266,667   

Forfeited portion of 2009 – 2011 LRIP Target Amount

  $ 1,050,000      $ 80,125      $ 314,500      $ 126,667      $ 117,179   

Forfeited portion of 2010 –2012 LRIP Target Amount

  $ 2,220,000      $ 480,000      $ 536,667      $ 283,333      $ 276,667   

Total Leadership Grant Value

  $ 11,270,000      $ 3,226,792      $ 2,517,833      $ 2,410,000      $ 1,660,512   

RSU Value(1)

(40% of Total Leadership Grant Value)

  $ 4,508,000      $ 1,290,717      $ 1,007,133      $ 964,000      $ 664,205   

RSUs Granted

    118,506        33,930        26,475        25,341        17,460   

Stock Option and SAR Value(1)

(60% of Total Leadership Grant Value)

  $ 6,762,000      $ 1,936,075      $ 1,510,700      $ 1,446,000      $ 996,307   

Stock Option and SARs Granted

    519,887        154,638        120,662        115,495        79,577   

Stock Option and SAR Exercise Price

  $ 38.04      $ 38.04      $ 38.04      $ 38.04      $ 38.04   

 

(1) The RSU, stock option and SAR values were targeted values, and the actual value delivered to each participant varied slightly from the targeted value due to rounding to the nearest RSU, stock option and SAR. The actual aggregate grant date fair value of each grant, as computed in accordance with ASC Topic 718, is disclosed in the 2011 Summary Compensation Table.

Greg Brown 2011 Separation Event Equity Grant

Under his employment agreement, Mr. Brown was eligible for a Separation Event Equity award consisting of stock options worth $8,333,333 and restricted stock worth $4,166,667 upon the occurrence of the Separation and only if Motorola Mobility had a minimum market capitalization of at least $2 billion. Both conditions were met and the Committee approved, with concurrence from the independent members of the Board, the Separation Event Equity Grants to Mr. Brown.

Subject to continued employment, the Separation Event stock options and restricted stock will vest in three equal installments, each vesting date to be the later of (i) the date on which the average closing price of our Common Stock over a fifteen-day trading period is greater than $42.22, which is 110% of the average closing price of our Common Stock over the fifteen-day trading period immediately following Separation, and (ii) the first, second and third anniversary of the grant. The stock price hurdle was achieved on March 30, 2011 when the fifteen-day closing average stock price of $42.36 exceeded the stock price hurdle of $42.22.

Mr. Brown’s Separation Event Equity Grants were made on February 1, 2011 and were determined as follows:

 

     

Mr. Brown’s

Separation Event

Equity Grant

 

Restricted Stock Value(1)

(33% of Total Separation Event Equity Grant Value)

   $ 4,166,667   

Restricted Shares Granted

     106,782   

Stock Option Value(1)

(67% of Total Separation Event Equity Grant Value)

   $ 8,333,333   

Stock Options Granted

     665,778   

Stock Option Exercise Price

   $ 39.02   

Total Separation Event Equity Value

   $ 12,500,000   

 

  (1) 

The restricted stock and stock option values were targeted values and the actual value delivered to Mr. Brown varied slightly from the targeted value due to rounding to the nearest restricted share and stock option. The actual aggregate grant date fair value of each grant, as computed in accordance with ASC Topic 718, is disclosed in the 2011 Summary Compensation Table.

 


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Other NEO Equity Grants

Some of our NEOs received other equity grants, as described below:

 

   

Mr. Moon received 6,638 RSUs and 31,271 stock options in connection with his promotion to Executive Vice President.

 

   

Ms. Carlin received an award, structured 50% in cash ($112,500) and 50% in equity (2,883 RSUs), to recognize and reward her outstanding contributions in connection with Separation.

Greg Brown’s 2011 Total Compensation

Mr. Brown’s 2011 total compensation reported in the 2011 Summary Compensation Table significantly increased from 2010, primarily due to the one-time equity awards made to Mr. Brown during 2011, which were disclosed in last year’s CD&A. The table below provides additional detail on Mr. Brown’s 2011 total compensation, as reported in the 2011 Summary Compensation Table, between his 2011 core compensation and his 2011 one-time awards. $9.6 million of Mr. Brown’s total 2011 Summary Compensation Table disclosure was attributable to his 2011 core compensation, or the compensation we grant to him on a normal, ongoing basis. $19.8 million of Mr. Brown’s total 2011 Summary Compensation Table disclosure was attributable to one-time awards, including the Separation Event Equity Grant ($12.5 million) and the one-time award portion of the Leadership Grant ($7.3 million), both as discussed above.


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In addition to Mr. Brown’s 2011 total compensation reported in the 2011 Summary Compensation Table, the table below also includes Mr. Brown’s 2011-2013 LRIP target, which is not disclosed in the 2011 Summary Compensation Table. As part of Mr. Brown’s total 2011 core compensation, the Committee approved Mr. Brown’s 2011-2013 LRIP target at 250% of his January 1, 2011 base salary of $1,200,000, or $3,000,000, as disclosed in the Grants of Plan-Based Awards in 2011 table of this proxy statement. Mr. Brown’s 2011-2013 LRIP target is not required to be disclosed in the 2011 Summary Compensation Table; rather, any amounts that Mr. Brown realizes under the 2011-2013 LRIP will be reported in 2014 as Non-Equity Incentive Plan Compensation in the Summary Compensation Table. With the inclusion of Mr. Brown’s 2011-2013 LRIP target, Mr. Brown’s total 2011 core compensation was approximately $12.6 million.

 

Greg Brown Summary Compensation
Table (SCT) Compensation Component
 

2011

Core Total
Compensation(1)

   

2011

One-Time
Awards

   

2011 Total
Compensation

(as disclosed
in the
Summary
Compensation
Table or SCT)

    Rationale
Base Salary   $ 1,200,000             $ 1,200,000      2011 base salary reverted to contractual minimum following 2009 and 2010 voluntary reduction to $900,000
Stock Awards          
Separation Event Stock Award          $ 4,166,634      $ 4,166,634      Contractual grant for successful Separation
Leadership Grant Stock Award   $ 1,599,984      $ 2,907,984      $ 4,507,968      2011 and 2012 target annual equity value and forfeited LRIP opportunity
   

 

 

   

 

 

   

 

 

   
Total Stock Awards   $ 1,599,984      $ 7,074,618      $ 8,674,602     
Option Awards          
Separation Event Option Award          $ 8,333,321      $ 8,333,321      Contractual grant for successful Separation
Leadership Grant Option & SAR Awards   $ 2,399,999      $ 4,361,998      $ 6,761,997      2011 and 2012 target annual equity value and forfeited LRIP opportunity
   

 

 

   

 

 

   

 

 

   
Total Option and SAR Awards   $ 2,399,999      $ 12,695,319      $ 15,095,318     
Non-Equity Incentive Plan Compensation   $ 4,100,000             $ 4,100,000      2011 AIP payout based on business and individual performance
Change in Pension Value and Nonqualified Deferred Compensation Earnings   $ 15,188             $ 15,188      See footnote 5 to Summary Compensation Table
All Other Compensation   $ 243,944             $ 243, 944      See footnote 6 to Summary Compensation Table

2011 Total Compensation

(as disclosed in SCT)

  $ 9,559,115      $ 19,769,937      $ 29,329,052       

2011-2013 LRIP Target

(NOT disclosed in SCT)(1)

  $ 3,000,000 (1)       

2011 Total Compensation

(NOT disclosed in SCT)(1)

  $ 12,559,115 (1)       

 

  (1) 

As part of Mr. Brown’s total 2011 core compensation, the Committee also approved Mr. Brown’s 2011-2013 LRIP target at 250% of his January 1, 2011 base salary of $1,200,000, or $3,000,000, as disclosed in the Grants of Plan-Based Awards in 2011 table. Mr. Brown’s 2011-2013 LRIP target is not disclosed in the 2011 Summary Compensation Table; any amounts that Mr. Brown realizes under the 2011-2013 LRIP will be reported in 2014 as Non-Equity Incentive Plan Compensation in the Summary Compensation Table.

Executive Benefits and Perquisites

To enhance our ability to attract and retain senior executives in a highly competitive market for top talent, we seek to align our executive total compensation program offerings with those commonly provided by companies in our comparator group. To ensure we remain competitive, the core elements of our total compensation program—including our cash and equity based compensation plans—are supplemented by a few executive-only benefits and perquisites. Our executive benefits and perquisites are described below.

Change in Control (CIC) Plan. The Company maintains a Board-approved CIC Plan which covers our NEOs (except for Mr. Brown, whose employment agreement contains CIC provisions) and our other senior


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executives. The Board considers the maintenance of an effective and stable management team as essential to

protecting and enhancing the value of the Company for the benefit of our stockholders. To that end, we recognize that the possibility of a change in control may exist and that this possibility, and the uncertainty and questions it may raise amongst our senior executives, may result in the distraction, and potential departure, of management personnel to the detriment of the Company and our stockholders. The change in control provisions help to encourage the continued attention and dedication of our senior management to their assigned duties without the distraction that may arise from the possibility of a change in control event.

Our CIC Plan employs a “double trigger” before benefits are paid to a plan participant. In other words, in order for severance benefits to be paid, both a change in control event must occur and an executive must be involuntarily terminated without “cause” or the executive must leave for “good reason” within 24 months of the change in control. For definitions and a description of benefits provided under our CIC Plan, please refer to the section Change in Control Arrangements in this proxy statement.

In January 2011, the Board approved a new Senior Officer CIC Plan (“New Senior Officer Plan”), reflecting the following changes effective immediately for future participants and in 2014 for current participants:

 

   

Limited participation to only Executive Vice Presidents and Senior Vice Presidents; change in control coverage was eliminated for all Corporate Vice Presidents. The Board determined this change was appropriate to better align change in control protection to the executives whose distraction and potential departure during a possible change in control would be most detrimental to the Company and our stockholders, and to better align with market competitive practices.

 

   

Eliminated excise tax gross up provision. In the event change in control benefits are subject to the excise tax under Section 4999 of the Code, either the participant will pay the excise taxes or the benefits will be cut back to an amount that eliminates imposition of the excise taxes, whichever option is more favorable to the participant on an after-tax basis. The Board determined this change was appropriate so that the Company would not be obligated to pay and gross up potentially significant excise taxes on behalf of participants, and to better align with market competitive practices.

 

   

Reduced the cash severance multiple from three times to two times of base salary and bonus. The Board determined this change was appropriate to better align with market competitive practices.

 

   

Reduced the period of medical benefit continuation from three years to two years. The Board determined this change was appropriate to align this benefit to the reduced severance multiple of base salary and bonus, thus providing severance benefits to the participant for two years.

 

   

Revised the definition of severance base salary from the highest annual salary during the last three years to current base salary. The Board determined this change was appropriate so that the severance would provide a base salary component that is representative of the actual, current base salary of the participant.

 

   

Revised the definition of severance bonus from the highest annual bonus received in the prior five full fiscal years to the current target annual bonus. This same definition applies to any prorated bonus received for the current year’s annual incentive plan. The Board determined this change was appropriate so that the severance would provide an annual incentive component that is representative of the actual, current target incentive of the participant.

 

   

Reduced the notification period for making future changes to the New Senior Officer Plan from three years to one year. The Board determined this change was appropriate to provide a more reasonable notification period for any future changes to participants.

Because the legacy CIC Plan requires three years’ advance notification to amend the Plan, the legacy Plan will remain in effect until January 31, 2014 for all eligible participants as of January 31, 2011. The New Senior Officer Plan will go into effect for these employees on February 1, 2014 (including Messrs. Fitzpatrick, Delaney and Moon and Ms. Carlin). The New Senior Officer Plan took effect February 1, 2011 for all participants who became eligible on or after that date. The New Senior Officer Plan will expire on February 1, 2015, at which time the Committee will consider whether or not to recommend to the Board to adopt a new Plan.


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Executive Financial Planning Program. The Executive Financial Planning Program provides our senior management, including our NEOs, with comprehensive financial planning assistance designed to help them achieve the highest value from their compensation package. The annual allowance for our NEOs is up to $16,500 in the first and last year of receiving this benefit, and up to $12,000 for the years in between the first and last year’s participation. The Company imputes the cost of this benefit as income and does not provide a tax gross up to the executive.

Deferred Compensation Plan. Due to low participation, we closed the Motorola Solutions Management Deferred Compensation Plan (the “Deferred Compensation Plan”) to new deferrals on January 1, 2008. The Plan has remained closed since taking this action. When active, the Deferred Compensation Plan is a non-qualified deferred compensation plan that is unfunded and unsecured, and allows our eligible executives, including our NEOs, the opportunity to defer taxes on their base salary and cash incentive compensation. The Company does not contribute to this plan. The plan is not intended to provide above-market or preferential earnings (as these terms are defined under SEC regulations) on compensation deferred under the plan, and the actual earnings on Mr. Delaney’s (the only NEO participant in the Deferred Compensation Plan) account in 2011 were not above-market under SEC regulations, but the actual earnings on his account in 2009 and 2010 were above-market under SEC regulations.

Personal Use of Corporate Aircraft. Mr. Brown is active in professional and civic organizations and travels extensively. In addition, he has strong visibility in the media and other public forums, as well as significant amounts of private and personal information readily available about him on the internet. As a result, he is required to use our corporate aircraft for all travel as part of our corporate security program. From time to time and on a limited basis, we permit other executives to use our aircraft for personal travel. The Company does not provide tax gross ups on any imputed income resulting from this benefit. Refer to the 2011 Summary Compensation Table footnotes for information about how the personal aircraft expenses are calculated.

CEO Security. As part of the corporate security program, Mr. Brown receives the use of a car and driver for all business-related functions as well as personal use, if needed. The Company does not provide tax gross ups for any imputed income as a result of this benefit. Additionally, Mr. Brown is provided a security system at his personal residences with security alarm monitoring paid by the Company.

Broad-based Employee Benefits. As U.S. employees, our NEOs have the opportunity to participate in a number of benefit programs that are generally available to all regular U.S. employees. These benefits include: (1) health care plans (medical, vision, dental and wellness programs); (2) life and disability plans (group life insurance, business travel accident insurance, and short-term and long-term disability income plans); (3) investment plans (the 401(k) Plan) and employee stock purchase plan, as well as previously existing pension plans that were available to employees who began employment prior to January 1, 2005; and (4) work/life plans (programs that assist with daily needs such as child care, adoption assistance, dependent care accounts and long-term care insurance).

Pension Plans. Our pension plans were offered to pension-eligible employees hired before January 1, 2005. We offered a qualified pension plan, with two different benefit formulas, commonly referred to as the Portable Pension Plan and the Traditional Pension Plan (the “Pension Plans”). We also offered two non-qualified plans, the Motorola Solutions Supplemental Pension Plan (the “MSPP”) and the legacy Elected Officer Supplementary Retirement Plan (the “SRP”), to highly-compensated employees whose qualified pension plan benefits are reduced by annual salary limits imposed by the IRS. On December 15, 2008, the Board determined that, effective March 1, 2009, all future benefit accruals and compensation increases used to compute retirement benefit accruals would automatically cease for all individuals who were participants under the Pension Plans, MSPP and SRP as of February 28, 2009. However, participants continue to earn vesting credit towards their pension plan benefit on and after March 1, 2009. Mr. Delaney is the sole participant in the SRP and no other employee is eligible to participate in the SRP. Mr. Delaney vested in his benefit in 2011 and the required tax gross-up for this legacy plan is included in his total compensation in the 2011 Summary Compensation Table. The MSPP was further amended to close the plan to new participants, effective January 1, 2009, unless such participation was due to a prior contractual entitlement. Additional information regarding these plans is included in the Retirement Plans section.


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Other Compensation Policies and Practices

Stock Ownership Requirements

To ensure strong alignment of our senior management with the interests of our stockholders, the Company maintains stock ownership requirements for our senior executives, including each of our NEOs, as well as our senior management team. In January 2011, the Committee approved extending our stock ownership requirements down to the Corporate Vice President (“CVP”) level, and reaffirmed the stock ownership requirements for those positions above the CVP level. Our stock ownership requirements are shown below:

 

     Minimum Stock
Ownership Required

Chairman and Chief Executive Officer

  6 times base salary

Executive Vice Presidents and members of the management executive committee

  3 times base salary

Senior Vice Presidents (other than members of the management executive committee)

  2 times base salary

Corporate Vice Presidents (other than members of the management executive committee)

  1 times base salary

Each executive subject to the guidelines must meet their ownership requirement within five years from the date they first become subject to their applicable ownership requirement.

Additionally, effective in January 2011, the Committee strengthened the plan’s provisions by implementing a formal policy that addresses executives who do not meet their applicable stock ownership requirement within five years. The new policy requires that an executive hold any shares acquired (net of tax withholding) on the exercise of stock options and the vesting of RSUs until compliance with their stock ownership requirement is achieved.

For purposes of meeting the stock ownership requirement, “stock” means shares of Common Stock owned outright, restricted stock, RSUs and stock owned in benefit plans such as the 401(k) Plan and the employee stock purchase plan. The Committee reviews adherence to the ownership guidelines annually. In the Committee’s last review on adherence to the ownership guidelines, it was determined that all NEOs had met their stock ownership requirement.

Recoupment of Incentive Compensation Awards Upon Restatement of Financial Results

The Company maintains strict audit policies and practices in order to identify, and ideally prevent, misconduct on the part of our employees as it relates to managing our business performance and reporting our financial results. In addition, we regularly conduct a risk assessment of our compensation programs and practices, and report on the results of this assessment to the Committee as a means to ensure our programs do not create undue risk or exposure to the Company and its stockholders.

If, in the opinion of the independent directors of the Board, the Company’s financial results require restatement due to the misconduct by one or more of the Company’s executive officers (including the NEOs), the independent directors have the discretion to remedy the misconduct by directing the Company to recover all or a portion of any incentive compensation received by the executive as a result of the misconduct, as well as cancel all or a portion of the outstanding equity-based awards held by the executive (commonly referred to as a “clawback” policy). In addition, the independent directors may also seek to recoup any gains realized by the executive with respect to their equity-based awards, including exercised stock options and vested RSUs, regardless of when they were issued.

The independent directors may seek a number of remedies, all of which are subject to a number of conditions including (i) whether the executive officer engaged in the intentional misconduct, (ii) whether the bonus or incentive compensation to be recouped was calculated based upon the financial results that were restated, and (iii) whether the incentive compensation calculated under the restated financial results is less than the amount actually paid or awarded.

In addition, the independent directors may take other disciplinary action, including, without limitation (i) adjustment of future compensation of the executive officer, (ii) termination of the executive officer’s employment, (iii) pursuit of any and all remedies available in law and/or equity in any country, and (iv) such other action as may


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fit the circumstances of the particular case. The independent directors may take into account penalties or punishments imposed by third parties, such as law enforcement agencies, regulators or other authorities. The independent directors’ power to determine the appropriate punishment for the wrongdoers is in addition to, and not in replacement of, remedies imposed by such entities and is in addition to any right of recoupment against the CEO or CFO under Section 304 of the Sarbanes-Oxley Act of 2002.

Impact of Favorable Accounting and Tax Treatment on Compensation Program Design

Favorable accounting and tax treatment of the various elements of our total compensation program is an important, but not the sole, consideration in its design. Section 162(m) of the Internal Revenue Code limits the deductibility of certain items of compensation paid to the CEO and certain other highly compensated executive officers (together, the “covered officers”) to $1,000,000 annually, unless such compensation qualifies as performance-based compensation. Our short-term and long-term incentive programs have been designed to allow for performance-based compensation. In particular, in order to satisfy the Section 162(m) qualification requirements, under our 2006 Plan, each year the Committee allocates an incentive pool equal to 5% of our consolidated operating earnings to the covered officers under our AIP. Once the amount of the pool and the specific allocations are determined at the end of the year, the Committee can apply “negative discretion” to reduce (but not increase) the amount of any award payable from the incentive pool to the covered officers, as determined by the amount payable to each covered officer based on the AIP performance criteria and actual results.

For 2011, the Committee exercised this discretion to reduce the value of the awards payable under the incentive pool to the value of each such covered officer’s 2011 AIP award. For a discussion of the covered officers’ 2011 AIP awards, see Short-Term Incentives. The Committee reserves the right to provide for compensation to executive officers that may not be deductible pursuant to Section 162(m).

Securities Trading Policy

Executives and certain other employees, including our NEOs, may not engage in any transaction in which they may profit from short-term speculative swings in the value of our securities. This “anti-hedging” policy includes “short sales” (in other words, selling borrowed securities that the seller hopes can be purchased at a lower price in the future) or “short sales against the box” (in other words, selling owned, but not yet delivered, securities), “put” and “call” options (in other words, publicly available rights to sell or buy securities within a certain period of time at a specified price), “zero-cost collars” (in other words, a type of strategy that secures a range of return with a floor and a cap), “forward sale contracts” (in other words, a privately negotiated agreement to deliver shares at a set price at some point in the future) and other hedging-related transactions. Our securities trading policy is applicable to all employees and is designed to ensure compliance with all applicable insider trading rules.


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The following Report of the Compensation and Leadership Committee on Executive Compensation and related disclosure shall not be deemed incorporated by reference by any general statement incorporating this Proxy Statement into any filing under the Securities Act of 1933 (the “Securities Act”) or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

REPORT OF THE COMPENSATION AND LEADERSHIP COMMITTEE ON EXECUTIVE COMPENSATION

Throughout 2011, Director Samuel C. Scott III was the Chair of the Compensation and Leadership Committee (the “Committee”), and Directors William J. Bratton, Kenneth C. Dahlberg and David W. Dorman served as members of the Committee.

The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Company management. Based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A and incorporated by reference into Motorola Solutions’ 2011 Annual Report on Form 10-K.

Respectfully submitted,

Samuel C. Scott III, Chairman

William J. Bratton

Kenneth C. Dahlberg

David W. Dorman

COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Throughout 2011, Director Samuel C. Scott III was the Chair of the Committee, and Directors William J. Bratton, Kenneth C. Dahlberg and David W. Dorman served on the Committee. William R. Hambrecht and James R. Stengel served on the Committee on January 1, 2 and 3, 2011, during which time no Committee actions were taken. No member of the Committee was, during the fiscal year ended December 31, 2011, an officer, former officer, or employee of the Company or any of our subsidiaries. We did not have any compensation committee interlocks in 2011.


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NAMED EXECUTIVE OFFICER COMPENSATION

2011 Summary Compensation Table

 

Name and Principal

Position

(a)

 

Year

 

(b)

   

Salary

($)(1)

(c)

   

Bonus

($)

(d)

   

Stock
Awards

($)(2)

(e)

   

Option
Awards

($)(2)

(f)

   

Non-Equity
Incentive

Plan
Compensation
($) (3)

(g)

   

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings

($)

(h)

   

All Other

Compensation

($)

(i)

   

Total

($)

(j)

 

Gregory Q. Brown

    2011        1,200,000(4)        0        8,674,602        15,095,318        4,100,000        15,188(5)        243,944(6)        29,329,052   

Chairman and Chief Executive Officer

   

 

2010

2009

  

  

   

 

900,000(4)

905,769(4)

  

  

   

 

0

0

  

  

   

 

3,310,653

2,356,136

  

  

   

 

3,356,730

4,004,000

  

  

   

 

5,927,500

836,931

  

  

   

 

6,108(5)

0(5)

  

  

   

 

237,919

369,430

  

  

   

 

13,738,910

8,472,266

  

  

Dr. Sanjay K. Jha

    2011        3,462(4)        0        0        0        0        0        0        3,462   

Former Co-Chief Executive Officer

    2010        900,000(4)        426,000(7)        2,978,145        7,045,358        1,278,000(7)        0        388,622        13,016,125   
    2009        905,769(4)        1,750        1,344,000        0        1,200,000        0        337,937        3,789,456   

Edward J. Fitzpatrick

    2011        512,500        0        1,290,697        1,936,068        555,000        26,603(8)        21,138(9)        4,342,006   

Executive Vice President and Chief Financial Officer

    2010        450,000        0        721,350        731,444        759,225        9,322(8)        509,267        3,180,608   
    2009        398,647        0        1,358,630        1,545,092        189,357        29,365(8)        156,300        3,677,391   

Eugene A. Delaney

    2011        575,000        0        1,007,109        1,510,688        845,000        677,995(10)        3,232,377(11)        7,848,169   

Executive Vice President, Product and Business Operations

    2010        575,000        0        1,316,292        1,334,538        1,638,770        473,230(10)        21,260        5,359,090   
    2009        569,500        0        1,965,274        3,018,368        270,512        764,552(10)        13,800        6,602,006   

Mark F. Moon

    2011        512,500        0        1,263,943        1,895,987        700,000        71,483(12)        53,745(13)        4,497,658   

Executive Vice President, Sales and Field Operations

                 
                 

Michele A. Carlin

    2011        415,000        112,500(14)        776,673        996,304        430,000        0        16,050(15)        2,746,527   

Senior Vice President, Human Resources

                 
                 

 

(1) Salary includes amounts deferred pursuant to salary reduction arrangements under the 401(k) Plan.

 

(2) The amounts in columns (e) and (f) reflect the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. For 2011, these amounts include the grant date values of our regular annual (or “core”) grants and of special one-time grants. Assumptions used in the calculation of these amounts are included in Note 8, “Share-Based Compensation Plans and Other Incentive Plans” in the Company’s Form 10-K for the fiscal year ended December 31, 2011.

 

(3) In 2011, the amounts in column (g) consist of awards earned by eligible NEOs at that time under the AIP; there were no payments under any LRIP in 2011. In 2010, the amounts in column (g) consist of awards earned by eligible NEOs at that time under the 2009 Motorola Incentive Plan (“MIP”) and, for Messrs. Brown, Fitzpatrick and Delaney, the LRIP. There were no payments under the 2008-2010 LRIP cycle since threshold performance was not met. However, pro rata payouts were earned with respect to the 2009-2011 and 2010-2012 LRIP cycles when the remaining portions of the cycles were cancelled due to the Separation. The performance was measured under the 2009-2011 LRIP and 2010-2012 LRIP cycles as of January 3, 2011 and pro rata payments will be made to eligible participants in 2012 and 2013, respectively. For 2010, the amount in column (g) for Dr. Jha is the award earned under the MIP; for all other NEOs, earned payments during fiscal year 2010 are as follows:

 

     Mr. Brown      Mr. Fitzpatrick      Mr. Delaney  

2010 MIP

   $ 2,500,000       $ 487,350       $ 628,187   

2009-2011 Prorated LRIP

   $ 3,150,000       $ 211,875       $ 943,500   

2010-2012 Prorated LRIP

   $ 277,500       $ 60,000       $ 67,083   
  

 

 

    

 

 

    

 

 

 

TOTAL

   $ 5,927,500       $ 759,225       $ 1,638,770   


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For 2009, the amounts in column (g) are the awards earned under the MIP. There were no payments under any LRIP in 2009.

 

(4) Mr. Brown and Dr. Jha voluntarily decided to take a 25% decrease in base salary for 2009. Mr. Brown and Dr. Jha’s 2010 base salaries remained at the 2009 reduced level. In 2011, Mr. Brown’s salary reverted to the amount agreed in his employment agreement. As of the Separation, Dr. Jha was no longer an employee of the Company; this amount represents Dr. Jha’s base salary through January 3, 2011.

 

(5) For 2011, this amount is the aggregate change in present value from December 31, 2010 to December 31, 2011 of Mr. Brown’s benefits under all pension plans. During that period, the change in present value of his benefit under the Pension Plan was $15,188 and under the MSPP was $0. For 2010, this amount is the aggregate change in present value from December 31, 2009 to December 31, 2010 of Mr. Brown’s benefits under all pension plans. During that period, the change in present value of his benefit under the Pension Plan was $6,108 and under the MSPP was $0. For 2009, the aggregate change in present value from December 31, 2008 to December 31, 2009 of Mr. Brown’s benefits under all pension plans was negative and is therefore reflected as $0. During that period, the change in present value of his benefits under the Pension Plan was $24,829 and under the MSPP was ($82,475). The negative MSPP present value is a result of the Company freezing all future benefit accruals and compensation increases under the MSPP, effective March 1, 2009, when calculated with the assumptions under SEC rules.

 

(6) This amount consists of Company perquisite costs for Mr. Brown, including: $190,347 for personal use of Company aircraft, $24,596 for security system installation and monitoring, $12,000 for financial planning, and amounts for limited personal use of car and driver, guest attendance at Company events, and Company matching contributions to the 401(k) Plan. The incremental cost to the Company for Mr. Brown’s personal use of Company aircraft is calculated by multiplying the number of hours Mr. Brown travels in a particular plane by the direct cost per flight hour per plane. Direct costs include fuel, maintenance, labor, parts, loading and parking fees, catering and crew. The incremental cost to the Company for Mr. Brown’s personal use of a car and driver is calculated by adding the costs for the driver, including salary and benefits, on a pro rata basis to the cost of fuel for driving to and from work and Company events.

 

(7) In 2010, Dr. Jha chose to forego the $426,000 discretionary bonus awarded by Motorola Mobility Holdings, Inc., as well as $278,000 of his $1,278,000 MIP award, resulting in a net payment of $1,000,000.

 

(8) This amount is the aggregate change in present value from December 31, 2010 to December 31, 2011 of Mr. Fitzpatrick’s benefits under all pension plans, including benefits under the General Instrument Pension Plan. For 2011, the change in the present value of his benefit under the Motorola Solutions Pension Plan was $24,094, under the General Instrument Pension Plan was $2,509 and under the MSPP was $0. For 2010, the change in the present value of his benefit under the Motorola Solutions Pension Plan was $7,913, under the General Instrument Pension Plan was $1,409 and under the MSPP was $0. For 2009, the change in the present value of his benefit under the Motorola Solutions Pension Plan was $28,808, under the General Instrument Pension Plan was $2,473 and there was a negative change in present value of his benefit under the MSPP of ($1,916). The negative MSPP present value is a result of the Company freezing all future benefit accruals and compensation increases under the plan effective March 1, 2009, when calculated with the assumptions under SEC rules.

 

(9) This amount consists of Company perquisite costs for Mr. Fitzpatrick, including guest attendance at a Company event, costs for financial planning and Company matching contributions to the 401(k) Plan.

 

(10) This amount is the aggregate change in present value from December 31, 2010 to December 31, 2011 of Mr. Delaney’s benefits under all pension plans. During that period, the change in present value of his benefit under the Motorola Solutions Pension Plan was $89,381 and under the Motorola Elected Officers Supplementary Retirement Plan was $588,614. For 2010, the change in present value of his benefits under the Motorola Solutions Pension Plan was $47,044 and under the Motorola Elected Officers Supplementary Retirement Plan was $294,917. In 2010, Mr. Delaney also had $131,269 in earnings on nonqualified deferred compensation in excess of the threshold for 2010 above-market earnings established pursuant to SEC rules. For 2009, the change in present value of benefits under the Motorola Solutions Pension Plan was $124,268 and under the Motorola Elected Officers Supplementary Retirement Plan was $471,267. In 2009, Mr. Delaney also had $169,017 in earnings on nonqualified deferred compensation in excess of the threshold for 2009 above-market earnings established pursuant to SEC rules.


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(11) This amount consists of Company perquisite costs for Mr. Delaney for financial planning and Company matching contributions to the 401(k) Plan and a $3,212,577 tax gross-up under the Company’s Elected Officers Supplementary Retirement Plan in connection with the vesting and corresponding contribution to the trust of Mr. Delaney’s benefit; no benefit was paid to Mr. Delaney in 2011. Mr. Delaney is the last remaining individual at the Company covered by this plan.

 

(12) This amount is the aggregate change in present value from December 31, 2010 to December 31, 2011 of Mr. Moon’s benefits under the Motorola Solutions Pension Plan of $71,483.

 

(13) This amount consists of Company perquisite costs for Mr. Moon, including $25,293 for personal use of Company aircraft, guest attendance at Company events, costs for financial planning and Company matching contributions to the 401(k) Plan. The incremental cost to the Company for Mr. Moon’s personal use of Company aircraft is calculated in the same manner as set forth for Mr. Brown.

 

(14) This amount represents a discretionary bonus paid to Ms. Carlin to recognize her contributions in connection with Separation.

 

(15) This amount consists of Company perquisite costs for Ms. Carlin for financial planning and Company matching contributions to the 401(k) Plan.

The following table presents information with respect to each award of plan-based compensation to each NEO in 2011.

Grants of Plan-Based Awards in 2011

 

                         All Other
Stock
Awards:
Number of
Shares of
Stock  or
Units
(#)(1)
(i)
    All Other
Option
Awards:
Number  of
Securities
Underlying
Options
(#)(2)
(j)
    Exercise
or Base
Price of
Option
Awards
($/Sh)(3)
(k)
     Grant Date
Fair Value
of  Stock
and
Option
Awards($)
(l)
 
        Estimated Future Payouts Under
Non-Equity Incentive Plan Award
           
Name
(a)
   Grant
Type
     Grant Date
(b)
    Threshold
($)
(c)
     Target
($)
(d)
     Maximum
($)
(e)
           

Gregory Q. Brown

     AIP         01/01/2011 (4)      0         2,640,000         5,174,399                                 
     LRIP         01/01/2011 (5)      750,000         3,000,000         6,000,000                                 
     Equity         02/01/2011                                106,782 (6)                     4,166,634   
     Equity         02/01/2011                                       665,778 (7)      39.02         8,333,321   
     Equity         02/22/2011                                118,506 (8)                     4,507,968   
     Equity         02/22/2011                                       519,887 (9)      38.04         6,761,997   

Sanjay K. Jha

     AIP                                                                
     LRIP                                                                
     Equity                                                                

Edward J. Fitzpatrick

     AIP         01/01/2011 (4)      0         486,875         954,275                                 
     LRIP         01/01/2011 (5)      168,750         675,000         1,350,000                                 
     Equity         02/22/2011                                33,930 (10)                     1,290,697   
     Equity         02/22/2011                                       154,638 (11)      38.04         1,936,068   

Eugene A. Delaney

     AIP         01/01/2011 (4)      0         546,250         1,070,650                                 
     LRIP         01/01/2011 (5)      122,188         488,750         977,500                                 
     Equity         02/22/2011                                26,475 (10)                     1,007,109   
     Equity         02/22/2011                                       120,662 (11)      38.04         1,510,688   

Mark F. Moon

     AIP         01/01/2011 (4)      0         452,896         887,677                                 
     LRIP         01/01/2011 (5)      106,875         427,500         855,000                                 
     Equity         02/22/2011                                25,341 (10)                     963,972   
     Equity         02/22/2011                                       115,495 (11)      38.04         1,445,997   
     Equity         05/03/2011                                6,638 (12)                     299,971   
     Equity         05/03/2011                                       31,271 (13)      45.19         449,990   

Michele A. Carlin

     AIP         01/01/2011 (4)      0         311,250         610,050                                 
     LRIP         01/01/2011 (5)      83,000         332,000         664,000