DEF 14A 1 d123157ddef14a.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

 

 

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.
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Title of each class of securities to which transaction applies:

 

             

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¨   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)  

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Table of Contents

 

 
NOTICE OF
2016 ANNUAL MEETING
OF STOCKHOLDERS AND PROXY STATEMENT

 

 

LOGO

 

 


Table of Contents

LOGO

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 16, 2016

March 28, 2016

Dear Fellow Motorola Solutions Stockholders:

On behalf of the Motorola Solutions Board of Directors, it is my pleasure to invite you to attend our 2016 Annual Stockholders Meeting. This year’s meeting will be held on Monday, May 16, 2016 at 5 p.m., EDT, at the Four Seasons Hotel Washington, DC, 2800 Pennsylvania Avenue NW, Washington, D.C. 20007.

As a Motorola Solutions stockholder, your vote is important. Even if you are planning to attend the annual meeting in person, you are strongly encouraged to vote your shares through one of the methods described in the enclosed proxy statement. The Board and I would appreciate your support on our recommendations for the following proposals:

 

     

Election of the nine nominated directors;

 

     

Advisory approval of the Company’s executive compensation; and

 

     

Ratification of KPMG LLP as our appointed, independent, registered public accounting firm.

On behalf of your Board of Directors, thank you for your confidence in Motorola Solutions. I look forward to your continued support.

 

LOGO

Gregory Q. Brown

Chairman and CEO

Motorola Solutions, Inc.


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LOGO

 

PRINCIPAL EXECUTIVE OFFICES:

1303 East Algonquin Road

Schaumburg, Illinois 60196

March 28, 2016

NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS

Annual Meeting Date: Monday, May 16, 2016

Time: 5:00 P.M., EDT

Location: Four Seasons Hotel Washington, DC, 2800 Pennsylvania Avenue NW, Washington, D.C. 20007

A live webcast (audio only) of the meeting will be available at www.motorolasolutions.com/investors.

The purpose of the meeting is to:

1. elect nine directors for a one-year term;
2. hold a stockholder advisory vote to approve the Company’s executive compensation;
3. ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2016;
4. consider and vote upon the stockholder proposal described in the enclosed proxy statement, if properly presented at the meeting; and
5. act upon such other matters as may properly come before the meeting.

By order of the Board of Directors,

 

LOGO

Kristin L. Kruska

Secretary

Only Motorola Solutions stockholders of record at the close of business on March 18, 2016 (the “record date”) will be entitled to vote at the meeting. The Notice, which contains instructions on how to access this Proxy Statement, the form of proxy and the Company’s 2015 Annual Report, is being mailed to stockholders on or about March 28, 2016.

 

LOGO

PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO STOCKHOLDERS OF MOTOROLA SOLUTIONS AS OF THE RECORD DATE (OR THEIR AUTHORIZED REPRESENTATIVES). You will be required to provide the admission ticket that is detachable from your proxy card or provide other evidence of ownership. If your shares are held by a bank or broker, please bring your bank or broker statement evidencing your beneficial ownership of Motorola Solutions stock on the record date to gain admission to the meeting.


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PROXY STATEMENT SUMMARY

 

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more complete information regarding the Company’s 2015 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

2016 ANNUAL MEETING OF STOCKHOLDERS

 

     

Date and Time: May 16, 2016, 5:00 p.m., EDT

 

     

Location: Four Seasons Hotel Washington, DC, 2800 Pennsylvania Avenue NW, Washington, D.C. 20007

 

     

Record Date: March 18, 2016

 

     

Voting: Stockholders as of the close of business on the record date are entitled to vote. Each share of common stock is entitled to one              vote for each director nominee and one vote for each of the other proposals to be voted on.

 

     

Meeting Webcast (audio only): www.motorolasolutions.com/investors

 

     

Common Stock Outstanding as of Record Date: 174,685,442

 

     

Stock Symbol: MSI

 

     

Registrar & Transfer Agent: Wells Fargo Shareowner Services

ITEMS TO BE VOTED ON

 

    Our Board’s Recommendation

Election of Directors (page 4)

  FOR

Advisory Approval of the Company’s Executive Compensation (page 19)

  FOR

Ratification of Independent Registered Public Accounting Firm (page 55)

  FOR

Stockholder Proposal on Lobbying Disclosure (page 59)

  AGAINST

DIRECTOR NOMINEES

 

                              

Board Committees

(as of February 3, 2016)

 
Name   Director
Since
    Indep.    

Other

Public Co.

Boards

    Position   Audit     Comp.     Gov. &
Nom.
    Exec.  

Gregory Q. Brown

    2007                0     

Chairman and CEO,

Motorola Solutions, Inc.

                            LOGO     

Kenneth C. Dahlberg

    2011        LOGO          1      Former Chairman and CEO, Science Applications International Corporation     LOGO          LOGO                  LOGO     

Egon P. Durban

    2015        LOGO          1      Managing Partner and Managing Director of Silver Lake             LOGO                     

Gen. Michael V. Hayden

 

    2011        LOGO          0      Principal, Chertoff Group                     LOGO             

Clayton M. Jones

    2015        LOGO          2      Former Chairman, CEO and President, Rockwell Collins, Inc.     LOGO                             

Judy C. Lewent

    2011        LOGO          2     

Former EVP and CFO,

Merck & Co., Inc.

    LOGO                          LOGO     

Gregory K. Mondre

    2015        LOGO          2      Managing Partner and Managing Director of Silver Lake                     LOGO             

Anne R. Pramaggiore

    2013        LOGO          1     

President and CEO,

Commonwealth Edison

            LOGO          LOGO             

Samuel C. Scott

    1993        LOGO          2      Former Chairman, President and CEO, Corn Products International                     LOGO          LOGO     

 

(i)


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BUSINESS HIGHLIGHTS

 

 

LOGO

PERFORMANCE AND ACCOMPLISHMENTS 2011 – 2015

 

 

LOGO

 

(ii)


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EXECUTIVE COMPENSATION

2015 CEO Total Direct Compensation

In 2015 we continued efforts to position Motorola Solutions for long-term financial success with a focus on driving improved profitability and free cash flow growth. 2015 business performance was improved, but slightly below our operating plan. This performance resulted in a below target payout under our Executive Officer Short-Term Incentive Plan. Our three-year performance ended December 31, 2015 showed increased returns to our stockholders relative to our comparator group driven primarily by a strong 2015. However, even with stronger performance in 2015, our three year performance resulted in a below target payout under the 2013-2015 cycle of our Long Range Incentive Plan. In addition to Mr. Brown’s regular, annual compensation, at the time of the Silver Lake Investment and as further incentive to deliver returns to our stockholders, Mr. Brown received a grant of performance-contingent stock options (“PCSOs”) that vest only upon the attainment of significant stretch stock price hurdles. (See the Compensation Discussion and Analysis for details). As a result of our improved performance and the PCSO grant, Mr. Brown’s total direct compensation for 2015 was higher than in 2014 by $5.3 million.

 

                 

Base Salary

  $1,250,000    

Executive Officer Short Term Incentive

  $1,650,000    
   

 

   

Total Short-term Cash Compensation

  $2,900,000    

Long-term Incentive Cash Payment (2013-2015 Long Range Incentive Plan)

  $2,250,000    

Long-term Incentives (POs and MSUs grant date fair value)

  $4,624,967    

Long-term Incentives (PCSOs grant date fair value)

  $3,127,943    
   

 

   

Total Compensation (excluding perquisites)

  $12,902,910    

GOVERNANCE HIGHLIGHTS

As part of our commitment to high ethical standards, our Board follows sound governance practices. These practices are described in more detail in the Corporate Governance section of our web site.

 

     
Independence  

        Eight out of our nine nominees are independent

        Our CEO is the only management director

         All Board committees that met during 2015 are comprised of independent directors

Independent Lead Director  

        We have a Lead Independent Director, selected by the independent directors

        The Lead Independent Director serves as liaison between management and the other non-management directors

Executive Sessions  

        The independent directors regularly meet in private without management

        The Lead Independent Director presides at these executive sessions

Accountability  

        All directors stand for election annually

        In uncontested elections, directors must be elected by a majority of votes cast

         Holders of 20% or more of our common stock have the ability to request a special meeting of stockholders

Board Oversight of

Risk Management

 

        Our Board reviews the Company’s approach to identifying and assessing risks

        The Audit Committee reviews the risk exposure of the Company, including our internal audit assessment of risk and our material risk disclosures, and meets periodically with senior management to discuss our risk assessment and risk management policies

        The Compensation and Leadership Committee reviews the annual compensation risk assessment and retains an independent compensation consultant

        The Governance and Nominating Committee reviews all related party transactions

        We have a recoupment or “clawback” policy to recover certain executive pay

         We have a policy prohibiting trading in derivative securities of the Company, and no NEOs or Directors have pledged any Company stock

Stock Ownership

Requirements

 

        Our independent directors must hold our common stock with a value equal to at least five times the annual retainer, or $500,000, within five years of joining the Board

        Directors are required to hold all shares paid or awarded by the Company until their termination of service

         Our CEO must hold our common stock with a value equal to six times his annual salary within five years of attaining the position

         Members of the management executive committee must hold our common stock with a value equal to three times their annual salary within five years of joining the group

 

(iii)


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TABLE OF CONTENTS

 

PROXY STATEMENT

 

ABOUT THE 2016 ANNUAL MEETING

    1   

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

    4   

2016 DIRECTOR NOMINEES

    4   

CORPORATE GOVERNANCE

    9   

DIRECTORS’ QUALIFICATIONS

    10   

IDENTIFYING AND EVALUATING DIRECTOR CANDIDATES

    10   

COMMITTEES OF THE BOARD

    11   

INDEPENDENT DIRECTORS

    13   

RELATED PERSON TRANSACTION POLICY AND PROCEDURES

    13   

SECURITY OWNERSHIP INFORMATION

    14   

DIRECTOR COMPENSATION

    16   

DETERMINING DIRECTOR COMPENSATION

    16   

HOW THE DIRECTORS ARE COMPENSATED

    16   

DIRECTOR RETIREMENT PLAN AND INSURANCE COVERAGE

    18   

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

    19   

COMPENSATION DISCUSSION AND ANALYSIS

    20   

NAMED EXECUTIVE OFFICERS

    20   

EXECUTIVE SUMMARY

    20   

2015 EXECUTIVE COMPENSATION PROGRAM

    26   

COMPENSATION DECISIONS FOR 2015

    32   

OTHER COMPENSATION POLICIES AND PRACTICES

    35   

COMPENSATION AND LEADERSHIP COMMITTEE REPORT

    37   

COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    37   

NAMED EXECUTIVE OFFICER COMPENSATION

    38   

2015 SUMMARY COMPENSATION TABLE

    38   

GRANTS OF PLAN-BASED AWARDS IN 2015

    40   

OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END

    42   

OPTION EXERCISES AND STOCK VESTED IN 2015

    43   

NONQUALIFIED DEFERRED COMPENSATION IN 2015

    44   

RETIREMENT PLANS

    45   

PENSION BENEFITS IN 2015

    45   

EMPLOYMENT CONTRACTS

    46   

TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

    47   

EQUITY COMPENSATION PLAN INFORMATION

    54   
PROPOSAL NO. 3 — RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016     55   

AUDIT COMMITTEE MATTERS

    56   

REPORT OF AUDIT COMMITTEE

    56   

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

    57   

AUDIT COMMITTEE PRE-APPROVAL POLICIES

    58   

PROPOSAL NO. 4 — STOCKHOLDER PROPOSAL RE: “LOBBYING DISCLOSURE”

    59   

IMPORTANT DATES FOR THE 2017 ANNUAL MEETING

    61   

OTHER MATTERS

    62   

 


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ABOUT THE 2016 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 2016 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the Four Seasons Hotel Washington, DC, 2800 Pennsylvania Avenue NW, Washington, D.C. 20007 on Monday, May 16, 2016 at 5:00 P.M., EDT, for the purposes set forth in the Notice of 2016 Annual Meeting of Stockholders. This Proxy Statement is dated March 28, 2016 and is being distributed to stockholders on or about March 28, 2016.

All stockholders may view and print Motorola Solutions’ Proxy Statement and the 2015 Annual Report at the Company’s website at www.motorolasolutions.com/investors. The information contained on Motorola Solutions’ website is not a part of this Proxy Statement and is not deemed incorporated by reference into this Proxy Statement or any other public filing made with the Securities and Exchange Commission (the “SEC”).

Stockholders Entitled to Vote at the Annual Meeting

Only stockholders of record at the close of business on March 18, 2016 (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 174,685,442 shares outstanding of Common Stock. The Common Stock is the only class of voting securities of the Company.

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

Voting Without Attending the Annual Meeting

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

 

   

Vote by Internet. The website address for Internet voting is provided on your Notice or proxy card. You will need to use the control number appearing on your Notice of Internet Availability of Proxy Materials (“Notice”) or proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions until 11:59 P.M., EDT on Sunday, May 15, 2016. 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 until 11:59 P.M., EDT on Sunday, May 15, 2016. Telephone voting is available 24 hours a day. If you vote by telephone you do NOT need to vote over the Internet or return a proxy card.

 

   

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

Your Proxy at the Annual Meeting

If you do not vote in person at the Annual Meeting, but have voted your shares by Internet, telephone, or mail, you have authorized certain members of Motorola Solutions’ senior management designated by the Board and named in your proxy to represent you and to vote your shares as instructed. All shares that have been properly 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 with respect to one or more items, the shares represented by that proxy will be voted as recommended by the Board with respect to those items:

 

Proposal

  The Board Recommended Vote

Proposal 1 –

 

Election of nine Directors

  FOR

Proposal 2 –

 

Advisory Approval of the Company’s Executive Compensation

  FOR

Proposal 3 –

 

Ratification of Independent Registered Public Accounting Firm for Fiscal Year 2016

  FOR

Proposal 4 –

 

Stockholder Proposal on Lobbying Disclosure

  AGAINST

 

Motorola Solutions Notice of 2016 Annual Meeting of Stockholder and Proxy Statement   1


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Holding Shares in the Name of a Bank, Broker or Other Nominee

If you are the beneficial owner of shares held in “street name” by a broker, the broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. Please check your voting instruction card or contact your bank, broker or nominee to determine whether you will be able to vote by Internet or telephone. If you do not give instructions to your broker, your broker will be entitled to vote the shares with respect to “discretionary” items, but will not be permitted to vote the shares with respect to “non-discretionary” items (resulting in a “broker non-vote”). The ratification of the appointment of KPMG LLP is the only “discretionary” item. The election of directors, the advisory approval of the Company’s executive compensation, and the stockholder proposal are “non-discretionary” items.

Voting At the Annual Meeting as a Beneficial Owner

If you are a beneficial owner of shares held in “street name” by a bank, broker or other nominee and want to vote your shares in person at the Annual Meeting, you will need to ask your bank, broker or other nominee to furnish you with a legal proxy. You will need to bring the legal proxy with you to the Annual Meeting and hand it in with a signed ballot that will be provided to you. You will not be able to vote your shares at the Annual Meeting without a legal proxy. If you are provided a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the Annual Meeting and vote in person or legally appoint another proxy to vote on your behalf.

If you do not have a legal proxy, you can still attend the Annual Meeting with evidence of your stock ownership as of the record date; however, you will not be able to vote your shares at the meeting. Accordingly, we encourage you to vote or instruct your broker to vote your shares in advance, even if you plan to attend.

Changing Your Vote

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

 

   

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

 

   

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

 

   

Attending the Annual Meeting and voting in person.

Notice of Internet Availability

The SEC has adopted rules for the electronic distribution of proxy materials. We have elected to provide our stockholders access to our proxy materials and 2015 Annual Report on the Internet instead of sending a full set of printed proxy materials to all of our stockholders. This enables us to reduce costs and lessen the environmental impact of our Annual Meeting by mailing most of our stockholders a Notice. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request them by following the instructions for requesting such materials included in the Notice. The Notice instructs you on how to access and review all of the information contained in the 2016 Proxy Statement and 2015 Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet or by telephone.

The Notice, which contains instructions on how to access this Proxy Statement, the form of proxy and the Company’s 2015 Annual Report, is being mailed to stockholders on or about March 28, 2016.

Other Matters at the Annual Meeting

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

 

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Votes Required to Conduct Business at the Annual Meeting or Approve Proposals

In order for business to be conducted, a quorum of a majority of the shares entitled to vote must be represented in person or by proxy at the Annual Meeting. Abstentions and broker non-votes are included in determining whether a quorum is present, but will not be included in vote totals and will not affect the outcome of the vote for the election of directors. Abstentions will have the same effect as a vote “Against” the other proposals.

 

Proposal   Affirmative Vote  Required  

Broker

Discretionary

Voting Allowed

Proposal 1 –

  Election of Nine Directors   More “For” votes than “Against” votes cast at the Annual Meeting in person or by proxy (for non-contested election)  

No

Proposal 2 –

  Advisory Approval of the Company’s Executive Compensation   Majority of shares present and entitled to vote; abstentions will count as votes “Against”  

No

Proposal 3 –

  Ratification of Independent Registered Public Accounting Firm for Fiscal Year 2016   Majority of shares present and entitled to vote; abstentions will count as votes “Against”  

Yes

Proposal 4 –

  Stockholder Proposal on Lobbying Disclosure   Majority of shares present and entitled to vote; abstentions will count as votes “Against”  

No

With respect to each proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN”. Broker non-votes will have no effect on the outcome of any of the proposals.

 

Motorola Solutions Notice of 2016 Annual Meeting of Stockholder and Proxy Statement   3


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

 

The number of directors of the Company to be elected at the Annual Meeting is nine. The directors elected at the Annual Meeting will serve a one-year term ending at the 2017 Annual Meeting, until their respective successors are elected and qualified or until their earlier death, resignation or removal. Each of the nominees has consented to being named in this Proxy Statement and to serve as a director if elected. However, if any nominee named below is not available to serve as a director for any reason at the time of the Annual Meeting, the proxies will be voted for the election of such other person or persons as the Board may designate, unless the Board, in its discretion, reduces the number of directors. The Board is currently comprised of ten directors. Bradley E. Singer has notified the Board that he is not standing for re-election at the 2016 Annual Meeting. Immediately following the Annual Meeting, if all nominees are elected, the Board will consist of nine 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.

2016 DIRECTOR NOMINEES

Each of the nominees named below is currently a director of the Company, and, other than Egon P. Durban and Gregory K. Mondre, each was elected at the Annual Meeting of Stockholders held on May 18, 2015. Nominees Durban and Mondre were appointed by the Board of Directors at its meeting on August 18, 2015, effective as of August 25, 2015, in connection with the closing of the investment by Silver Lake in the Company. The ages shown are current as of the date of this Proxy Statement.

 

GREGORY Q.

BROWN

  

 

Mr. Brown joined the Company in 2003 and since May 2011 has been the Chairman and Chief Executive Officer of Motorola Solutions, Inc. He served as President and Chief Executive Officer from January 2011 until May 2011, Co-Chief Executive Officer of Motorola, Inc. and Chief Executive Officer of Broadband Mobility Solutions from August 2008 until January 2011.

 

Other Public Company Boards: Mr. Brown served on the board of Cisco Systems, Inc. from January 2013 to July 2014

 

Board Committees: Executive (Chair)

 

Director Qualifications:

 

       Public company CEO, relevant industry and technology experience as Chairman and CEO of the Company, and former CEO of Micromuse, Inc.

 

        International and global business, developing markets, government, public policy and regulatory experience as Chairman and CEO of the Company, Chair of the Federal Reserve Bank of Chicago, former Vice Chair of the U.S. – China Business Council, former member of the President of the United States’ Management Advisory Board

 

        Public company board experience

 

LOGO

  

Principal Occupation:

Chairman and Chief Executive Officer, Motorola Solutions, Inc. 

  

Age: 55

Director since: 2007

Chairman since: 2011

  

 

4   Motorola Solutions Notice of 2016 Annual Meeting of Stockholder and Proxy Statement


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KENNETH C.

DAHLBERG

  

 

Mr. Dahlberg served as Chief Executive Officer of SAIC, a research and engineering firm specializing in information systems and technology, from November 2003 through September 2009. Mr. Dahlberg also served as Chairman of the Board of Directors of SAIC from July 2004 until his retirement in June 2010.

 

Other Public Company Boards: Teledyne Technologies Incorporated

 

Board Committees: Compensation and Leadership (Chair), Audit, Executive

 

Director Qualifications:

 

       Public company CEO, international and global business experience as former CEO of SAIC

 

       Relevant industry and technology experience and managed and support services experience as former CEO of SAIC, and as a former executive officer of General Dynamics Corp and Raytheon Systems

 

       Government, public policy and regulatory experience as a former member of the Board of Governors at Aerospace Industries Association, the National Defense Industrial Association and the President of the United States’ National Telecommunications Security Advisory Council

 

      Public company board experience

LOGO

  

Principal Occupation:

Retired; Formerly

Chairman of the Board

and Chief Executive

Officer of Science

Applications

International

Corporation (“SAIC”)

  

Age: 71

Director since: 2011

Independent

  

 

EGON P.

DURBAN

  

 

Mr. Durban is a Managing Partner and Managing Director of Silver Lake, a global private equity firm. Mr. Durban joined Silver Lake in 1999 as a founding principal and is based in the firm’s Menlo Park office. He has previously worked in the firm’s New York office, as well as the London office, which he launched and managed from 2005 to 2010.

 

Other Public Company Boards: Intelsat S.A. In the last 5 years Mr. Durban served on the board of NXP Semiconductors N.V. from September 2006 to December 2013.

 

Board Committees: Compensation and Leadership

 

Director Qualifications:

 

       Technology and international and global business experience as Managing Partner and Managing Director of Silver Lake

 

       Financial/accounting and private equity and investment banking experience as a former associate with Morgan Stanley’s Investment Banking Division

 

       Public company board experience

 

LOGO

  

Principal Occupation:

Managing Partner and Managing Director, Silver Lake

  

Age: 42

Director since: 2015

Independent

  

 

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GEN. MICHAEL V.

HAYDEN

  

 

General Hayden has been a principal at the Chertoff Group, a security consultancy company since April 2009. General Hayden served as the director of the Central Intelligence Agency from May 2006 until his retirement in February 2009.

 

Other Public Company Boards: None

 

Board Committees: Governance and Nominating

 

Director Qualifications:

 

        Relevant industry, technology, government, public policy, and regulatory experience as a retired United States Air Force four-star general, former director of the Central Intelligence Agency, former Principal Deputy Director of National Intelligence and former director of the National Security Agency

 

        International and global business and developing markets experience as a principal at Chertoff Group

 

LOGO

  

Principal Occupation:

Principal, Chertoff

Group

  

Age: 71

Director since: 2011

Independent

  

 

CLAYTON M.

JONES

  

 

Mr. Jones served as Chairman of the Board of Rockwell Collins, Inc. from 2002 through July 2014, and Chief Executive Officer from June 2001 until his retirement in July 2013. Mr. Jones also served as President of Rockwell Collins and Corporate Officer and Senior Vice President of Rockwell International which he joined in 1979.

 

Other Public Company Boards: Deere & Company, Cardinal Health, Inc. In the last five years, Mr. Jones served on the board of Rockwell Collins from March 2001 to July 2014.

 

Board Committees: Audit

 

Director Qualifications:

 

        Public company CEO, international and global business experience as former CEO of Rockwell Collins, Inc.

 

        Relevant industry and technology experience as former CEO of Rockwell Collins, Inc., and Corporate Officer and Senior Vice President of Rockwell International

 

        Government, public policy and regulatory experience as a member of The Business Council, and former member of the President’s National Security Telecommunications Advisory Committee

 

        Public company board experience

 

LOGO

  
Principal Occupation: Retired; Formerly Chairman, Chief Executive Officer and President, Rockwell Collins, Inc. (“Rockwell Collins”)   

Age: 66

Director since: 2015

Independent

  

 

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JUDY C.

LEWENT

  

 

Ms. Lewent served as Chief Financial Officer of Merck, a pharmaceutical company, from 1990 until her retirement in 2007.

 

Other Public Company Boards: GlaxoSmithKline plc and Thermo Fisher Scientific, Inc. Ms. Lewent served on the board of directors of Motorola, Inc. from May 1995 to May 2010, and in the last five years on the board of Dell, Inc. from May 2001 to July 2011.

 

Board Committees: Audit (Chair), Executive

 

Director Qualifications:

 

        Public company CFO, financial and accounting expertise, and international business experience as the former CFO of Merck

 

        Technology experience as a life member of the Massachusetts Institute of Technology

 

        Public company board experience

LOGO

  

Principal Occupation:

Retired; Formerly Executive Vice President & Chief Financial Officer, Merck & Co., Inc. (“Merck”) 

  

Age: 67

Director since: 2011

Independent

  

 

GREGORY K.

MONDRE

  

 

Mr. Mondre joined Silver Lake in 1999 and is a Managing Partner and Managing Director of Silver Lake based in New York. Mr. Mondre was a principal at TPG, where he focused on private equity investments across a wide range of industries, with a particular focus on technology.

 

Other Public Company Boards: GoDaddy, Inc., Sabre Corporation

 

Board Committees: Governance and Nominating

 

Director Qualifications:

 

        Technology, international and global business, financial/accounting and private equity and investment banking experience as Managing Partner and Managing Director of Silver Lake and as former principal at TPG

 

       Public company board experience

 

LOGO

  

Principal Occupation:

Managing Partner and Managing Director, Silver Lake

  

Age: 41

Director since: 2015

Independent

  

 

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ANNE R.

PRAMAGGIORE

  

 

Ms. Pramaggiore has been the President and Chief Executive Officer of ComEd, an electric utility company and a business unit of Exelon Corporation, and a member of the ComEd board of directors since February 2012. She served as ComEd’s President and Chief Operating Officer from May 2009 until February 2012.

 

Other Public Company Boards: The Babcock & Wilcox Company

 

Board Committees: Compensation and Leadership, Governance and Nominating

 

Director Qualifications:

 

       Government, public policy and regulatory and technology experience as CEO of ComEd, Executive Vice President, Customer Operations, Regulatory and External Affairs of ComEd, and as a licensed attorney

 

       International and global business experience as Deputy Chair of the Federal Reserve Bank of Chicago and board member of the Chicago Council on Global Affairs and The Chicago Urban League

 

       Public company board experience

 

LOGO

  

Principal Occupation:

President and Chief

Executive Officer,

Commonwealth Edison

Company (“ComEd”) 

  

Age: 57

Director since: 2013

Independent

  

 

SAMUEL C.

SCOTT III

  

 

Mr. Scott served as Chairman, President and Chief Executive Officer of Corn Products International, a corn refining business, from February 2001 until his retirement in May 2009.

 

Other Public Company Boards: Abbott Laboratories, Bank of New York Mellon

 

Board Committees: Governance and Nominating (Chair), Executive

 

Director Qualifications:

 

      Public company CEO experience as former chairman and CEO of Corn Products International, Inc.

 

      International and global business and developing markets experience as former chairman and CEO of Corn Products International, Inc., a board member of the Chicago Council on Global Affairs, World Business Chicago, The Chicago Urban League, and Northwestern Medical Group, and as Chairman of Chicago Sister Cities International

 

       Public company board experience

 

LOGO

  

Principal Occupation:

Retired; Formerly

Chairman of the Board,

President and Chief

Executive Officer,

Corn Products

International 

  

Age: 71

Director since: 1993

Lead Independent Director since 2015

Independent

 

  

RECOMMENDATION OF THE BOARD

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

 

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CORPORATE GOVERNANCE

 

The Board’s Corporate Governance Principles

The Board adheres to governance principles designed to assure the continued vitality of the Board and excellence in the execution of its duties. The Board has responsibility for management oversight and providing strategic guidance to the Company. The Board believes that it must continue to renew itself to ensure that its members bring a fresh perspective to understanding the industries and the markets in which the Company operates. The Board also believes that it must remain well-informed about the opportunities and challenges facing Motorola Solutions and its industries and markets so that the Board members can exercise their fiduciary responsibilities to Motorola Solutions stockholders.

 

GOVERNANCE HIGHLIGHTS

The Board recognizes the importance of evolving corporate governance practices and is committed to regularly reviewing specific elements of the Company’s corporate governance. Key governance practices of the Company are:

 

  LOGO Eight of nine director nominees are independent

 

  LOGO Board Committees comprised of independent directors

 

  LOGO Compensation and Leadership Committee retains independent compensation consultant

 

  LOGO Lead Independent Director

 

  LOGO Independent directors regularly meet in private without management

 

  LOGO Risk assessment process with Audit and Compensation and Leadership Committees

 

  LOGO Hold annual advisory vote on executive compensation

 

  LOGO No gross-up for excise taxes

 

  LOGO Recoupment or “clawback” policy

 

  LOGO Stock Ownership Guidelines

 

  LOGO Board and Committee self assessment process

 

  LOGO Annual election of all directors

 

  LOGO Majority vote for directors in uncontested elections

 

  LOGO Holders of 20% or more of our Common Stock have the ability to request a special meeting of stockholders

 

  LOGO Active stockholder engagement process

 

  LOGO Anti-hedging policy

 

Motorola Solutions encourages you to visit our corporate governance page on our website at
www.motorolasolutions.com/investors which provides information about our corporate
governance practices and includes the following documents:

         Board Governance Guidelines

         Director Independence Guidelines

         The Principles of Conduct for Members of the Board of Directors

         Code of Business Conduct

         Audit Committee, Compensation and Leadership Committee and Governance and Nominating Committee charters

         Restated Certificate of Incorporation, as amended

         Amended and Restated Bylaws

Amendments to the above documents, or waivers applicable to our directors, chief executive officer, chief financial officer or corporate controller from certain provisions of its ethical policies and standards for directors and employees, will be posted on the Motorola Solutions website within four business days following the date of the amendment or waiver. There were no waivers in 2015.

 

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DIRECTORS’ QUALIFICATIONS

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

 

     

Public company CEOs and CFOs

 

     

Financial and accounting expertise

 

     

Relevant industry experience

 

     

Technology experience, including in information technology and cyber security

 

     

Global business experience

 

     

Developing markets experience

 

     

Government, public policy and regulatory experience

 

     

Managed and Support Services

 

     

Private equity and investment banking experience

 

     

Public company board experience

 

     

Gender and ethnic diversity

 

     

Independence

Specific experience, qualifications, attributes or skills of our nominees are listed in the biographies above.

IDENTIFYING AND EVALUATING DIRECTOR CANDIDATES

As stated in our Board Governance Guidelines, when selecting directors, the Board and the Governance and Nominating Committee review and consider many factors, including: experience in the context of the Board’s needs; leadership qualities; ability to exercise sound judgment; existing time commitments; years to retirement age; and independence from management. They also consider ethical standards and integrity. While the Company does not have a formal policy regarding diversity, diversity is one of several factors considered by the Board and the Governance and Nominating Committee when selecting director nominees. The Board and the Governance and Nominating Committee strive to nominate directors with a variety of complementary skills, backgrounds and perspectives so that, as a group, the Board will possess the appropriate talent, skills, experience and expertise to oversee the 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 (as required by the Company’s Bylaws), including the candidate’s qualifications, to assess the suitability of the candidate, and is timely received in accordance with the Company’s Bylaws. Stockholder-recommended candidates that comply with these procedures will receive the same consideration that other candidates receive.

The Governance and Nominating Committee considers recommendations from many sources, including members of the Board, management and search firms. From time to time, Motorola Solutions hires search firms to help identify and facilitate the screening and interview process of director candidates. The search firm screens candidates based on the Board’s criteria, performs reference checks, prepares a biography of each candidate 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 August 2015, Motorola Solutions entered into an Investment Agreement (the “Investment Agreement”) with Silver Lake Partners IV, L.P. and Silver Lake Partners IV Cayman (AIVII, L.P.) (collectively “Silver Lake”) relating to the issuance to Silver Lake of $1 billion of convertible 2% unsecured notes, due in 2020 (the “Notes”). In connection with the issuance of the Notes, Motorola Solutions agreed to expand the size of the Board and appoint two Silver Lake nominees, Egon P. Durban and Gregory K. Mondre, to the Board of Directors. The Governance and Nominating Committee interviewed both Mr. Durban and Mr. Mondre and as a result, each were nominated by the Governance and Nominating Committee for appointment by the Board of Directors. The Governance and Nominating Committee has full discretion in considering potential candidates and making its nominations to the Board.

 

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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 standing committees: (1) Audit, (2) Compensation and Leadership, (3) Governance and Nominating, and (4) Executive. The charters for each of the Audit Committee, Compensation and Leadership Committee and Governance and Nominating Committee are available on our website at www.motorolasolutions.com/investors. Committee membership as of December 31, 2015, the number of meetings of each committee during 2015, and the functions of each committee are described below:

 

 

AUDIT 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.

 

      Engage the independent registered public accounting firm.

2015 Meetings: 9  

 

Judy C. Lewent (Chair)

Kenneth C. Dahlberg

Clayton M. Jones

Bradley E. Singer

 

 

      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 position, asset utilization and capital structure.

 

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

 

      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 Committee included in this Proxy Statement.

 

 

 

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;

 

      diversity efforts; and

 

      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.

 

2015 Meetings: 6  

 

Kenneth C. Dahlberg (Chair)

Bradley E. Singer

Anne R. Pramaggiore

 

 

 

 

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 and to serve on committees.

 

      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.

 

      Review the independence of directors and evaluate and/or approve related party transactions.

 

      Generally oversee the governance and compensation of the Board.

 

2015 Meetings: 5  

 

Samuel C. Scott III (Chair)

Gen. Michael V. Hayden

Anne R. Pramaggiore

 

 

 

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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.

 

2015 Meetings: 0  

 

Gregory Q. Brown (Chair)

Kenneth C. Dahlberg

Judy C. Lewent

Samuel C. Scott III
(Lead Independent Director)

 

 

    * On February 3, 2016, Mr. Mondre joined the Governance and Nominating Committee and Mr. Durban joined the Compensation and Leadership Committee.

Attendance

The Board held eight meetings during 2015. Overall attendance at Board and committee meetings was 98%. Each incumbent director attended 95% or more of the combined total meetings of the Board and the committees on which he or she served during 2015, except for one director that attended 85% of the meetings. At the Board meetings, independent directors of the Company meet regularly in executive session without management as required by the Motorola Solutions, Inc. Board Governance Guidelines and NYSE listing standards. Generally, executive sessions are held in conjunction with regularly-scheduled meetings of the Board. In 2015, the non-employee independent members of the Board met in executive session six times. In addition, Board members are expected to attend the Annual Meeting as provided in the Board Governance Guidelines. All of the directors who stood for election at the 2015 Annual Meeting attended that meeting.

Leadership Structure of the Board

At the Annual Board meeting held in May 2011, the Board combined the roles of Chairman and Chief Executive Officer and appointed Gregory Q. Brown to serve as both Chief Executive Officer and Chairman of the Board and also appointed an independent director as Lead Independent Director. The Board reappointed Mr. Brown as Chairman of the Board and an independent director as Lead Independent Director at the Annual Board meetings held in 2012 through 2015. 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. Our Lead Independent Director, currently Mr. Scott, chairs the executive sessions of the Board and acts as a liaison between our Chairman and independent directors.

Communicating with the Board

All communications to the Board of Directors, Chairman of the Board, the non-management directors or any individual director, must be in writing and addressed to them c/o Secretary, Motorola Solutions, Inc., 1303 East Algonquin Road, Schaumburg, IL 60196 or by email to boardofdirectors@MotorolaSolutions.com. Our Secretary reviews all written communications and forwards to the Board a summary and/or copies of any such correspondence that, in the opinion of the Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board committee’s attention.

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. Our CEO and other senior managers regularly report to the Board on significant risks facing the Company, including financial, operational and strategic risks. Each of the Board committees reviews with management significant risks related to the 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 this department is to provide management and the Audit Committee with an overarching and objective view of the risk management activity of the Company. This department’s engagements span financial, operational, strategic and compliance risks and the engagement results assist management in maintaining acceptable risk levels. This department identifies and conducts engagements utilizing an enterprise risk management model. The director of the department reports directly to the Audit Committee as well as the Chief Financial Officer and meets regularly with the committee and the committee chairperson, including in executive session.

 

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INDEPENDENT DIRECTORS

On March 10, 2016, the Board made the determination, based on the recommendation of the Governance and Nominating Committee and in accordance with our Director Independence Guidelines, that the former non-employee director, Mr. Dorman, and the current non-employee directors, Mr. Dahlberg, Mr. Durban, General Hayden, Mr. Jones, Ms. Lewent, Mr. Mondre, Ms. Pramaggiore, Mr. Scott, and Mr. Singer, were independent during the periods in 2015 and 2016 that they were members of the Board. Mr. Brown does not qualify as an independent director because he is the Chief Executive Officer of the Company. See Motorola Solutions’ Relationship with Entities Associated with Independent Directors for further details.

Determining Independence

The Director Independence Guidelines include both the NYSE independence standards and additional independence standards the Board has adopted to determine if a relationship that a Board member has with the Company is material. We have adopted a stricter application of the NYSE independence standards requiring a look-back of four years when assessing independence in connection with a director’s (i) status as an employee of the Company, (ii) direct compensation in excess of $120,000, (iii) relationship with our internal or external auditor, and (iv) employment with a company that has made payments to, or received payments from, the Company for property or services.

A complete copy of the Director Independence Guidelines is available on the Company’s website at www.motorolasolutions.com/investors.

Motorola Solutions’ Relationship with Entities Associated with Independent Directors

When assessing independence, each of Mr. Dahlberg, Mr. Dorman, Mr. Jones, Ms. Pramaggiore, Mr. Scott, and Mr. Singer had relationships with entities that were reviewed by the Board under independence standards covering contributions or payments to charitable or similar not-for-profit organizations. In addition, each of Mr. Dorman, Mr. Durban, General Hayden, Mr. Jones, Mr. Mondre, Ms. Pramaggiore, Mr. Scott and Mr. Singer had relationships with entities that were reviewed by the Board under independence standards covering payments to, or received from, other entities. In each case, the payments or contributions were significantly less than the NYSE independence standards or the Director Independence Guidelines adopted by the Board, or did not constitute a disqualifying event under such standards and were determined by the Board to be immaterial.

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

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

RELATED PERSON TRANSACTION POLICY AND PROCEDURES

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

For purposes of the RPT Policy, a Related Person includes directors, director nominees and executive officers of the Company since the beginning of the Company’s last fiscal year, beneficial owners of 5% or more of any class of voting securities of the Company and members of their respective immediate family. The Governance and Nominating Committee reviews all RPT Policy matters.

The RPT Policy provides that any Transaction since the beginning of the last fiscal year is to be promptly reported to the Company’s Secretary. The Secretary will assist with gathering important information about the Transaction and present the information to the Governance and Nominating Committee. The Governance and Nominating Committee will determine whether the Transaction is a Related Person Transaction and, if so, approve, ratify or reject the Related Person Transaction. In approving, ratifying or rejecting a Related Person Transaction, the Governance and Nominating Committee will consider such information as it deems important to conclude if the transaction is fair to the Company and its subsidiaries.

Motorola Solutions had no Related Person Transactions in 2015.

 

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SECURITY OWNERSHIP INFORMATION

Management and Directors

The following table sets forth information as of the close of business on March 10, 2016 (except where otherwise noted), regarding the beneficial ownership of shares of Common Stock by each director and nominee for director of the Company, the named executive officers (“NEOs”) in the Summary Compensation Table, and all current directors and executive officers of the Company as a group. Except for Mr. Brown, who owns 2% of the outstanding Common Stock, each other director and NEO owns less than 1% of the outstanding Common Stock based on 174,286,274 shares of Common Stock outstanding on March 10, 2016. All current directors, NEOs and executive officers as a group own 2.6% of the outstanding Common Stock.

 

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

Gregory Q. Brown

        479,494        2,891,317        52,549        3,423,360 (6)  

Gino A. Bonanotte

    12,809        73,875        5,018        91,702   

Eduardo F. Conrado

    19,101        135,847        3,345        158,293   

Mark S. Hacker

    8,134        74,750        6,195        88,779   

Mark F. Moon (7)

    32,866        422,379        7,025        462,270   

Robert C. Schassler (8)

    2,025        31,327        0        33,352   

Kenneth C. Dahlberg

    9,984        0        7,043        17,027   

Egon P. Durban

    0        0        2,086        2,086   

Michael V. Hayden

    0        0        15,095        15,095   

Clayton M. Jones

    0        0        2,369        2,369   

Judy C. Lewent

    20,609        0        6,376        26,985   

Gregory K. Mondre

    0        0        2,086        2,086   

Anne R. Pramaggiore

    0        0        10,266        10,266   

Samuel C. Scott

    5,081        0        31,513        36,594 (9)  

Bradley E. Singer

            0        8,650        8,650   

All current directors, NEOs and executive officers as a group (17 persons)

    599,782        3,690,968        159,616        4,450,366   

 

(1) Includes shares over which the person currently holds or shares voting and/or investment power but excludes the shares listed under “Shares Under Exercisable Options and SARs” and “Stock Units.”
(2) Includes shares under options and SARs exercisable on March 10, 2016 and which may become exercisable within 60 days thereafter (assuming all performance measures are satisfied).
(3) Includes stock units which are deemed to be beneficially owned on March 10, 2016 or within 60 days thereafter (assuming all performance measures are satisfied). Stock units are not deemed beneficially owned until the restrictions on the units have lapsed. Each stock unit is intended to be the economic equivalent of one share of Common Stock.
(4) Unless otherwise indicated, each person has sole voting and investment power over the shares reported.
(5) Includes the shares listed under “Shares Under Exercisable Options” and units listed under “Stock Units.”
(6) Mr. Brown’s holdings under “Total Shares Beneficially Owned” include: 277,863 shares subject to exercisable stock settled stock appreciation rights (“SARs”). The number of shares subject to the stock settled SARs, assumes the exercise of 134,297 shares of stock settled SARs at an exercise price of $40.33 and the exercise of 471,398 stock settled SARs at an exercise price of $38.04, on March 10, 2016. The closing price of the Company stock on March 10, 2016 was $71.22. Mr. Brown has shared voting and investment power over 83,220 shares, included under “Total Shares Beneficially Owned”. He disclaims beneficial ownership over 81,000 shares held in a trust of which his wife is trustee and 2,220 shares held by his wife, except to the extent of his pecuniary interest in these shares.
(7) Mr. Moon’s reported ownership is as of November 16, 2015, the date on which he ceased to be subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934 (“Exchange Act”).
(8) Mr. Schassler resigned from the Company effective as of January 15, 2016. Mr. Schassler’s reported ownership is as of January 15, 2016, the date on which he ceased to be subject to the reporting requirements of Section 16 of the Exchange Act.
(9) Mr. Scott does not have investment power over 2,085 of these shares.

No directors, nominees or current executive officers have pledged shares of Common Stock pursuant to any loan or arrangement.

 

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Principal Stockholders

The following table sets forth information as of March 18, 2016 with respect to any person who is known to be the beneficial owner of more than 5% of Common Stock.

 

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

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

   

 

 

15,081,983

shares of

Common Stock

(2)  

  

  

    8.6

Capital Research Global Investors

333 South Hope Street, 55th Floor

Los Angeles, CA 90071

   

 

 

13,796,688

shares of

Common Stock

(3)  

  

  

    7.9

Orbis Investment Management Limited

Orbis House, 25 Front Street

Hamilton, Bermuda HM11

   

 

 

13,240,426

shares of

Common Stock

(4)  

  

  

    7.6

The Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

   

 

 

9,246,438

shares of

Common Stock

(5)  

  

  

    5.3

 

(1) The percentage calculations set forth above are based on 174,685,442 shares of Common Stock outstanding as of March 18, 2016 rather than the percentages set forth on various stockholders’ Schedule 13D and 13G filings.
(2) Solely based on information in a Schedule 13G/A Amendment No. 2 dated January 22, 2016 filed with the SEC by BlackRock, Inc. The Schedule 13G/A indicates that as of December 31, 2015, BlackRock, Inc., as the parent holding company, was the beneficial owner with sole voting power as to 13,561,926 shares and sole dispositive power as to 15,081,983 shares.
(3) Solely based on information in a Schedule 13G dated February 10, 2016 filed with the SEC by Capital Research Global Investors, a division of Capital Research and Management Company. The Schedule 13G indicates that as of December 31, 2015, Capital Research Global Investors was the beneficial owner with sole voting power and sole dispositive power as to 13,796,688 shares.
(4) Solely based on information in a Schedule 13G/A Amendment No.1 dated February 16, 2016 filed with the SEC jointly by Orbis Investment Management Limited, Orbis Asset Management Limited, and Orbis Investment Management (U.S.) LLC whose address is 600 Montgomery Street, Suite 3800, San Francisco, CA 94111 (collectively “Orbis”). The Schedule 13G/A indicates that as of December 31, 2015, Orbis was the beneficial owner with sole voting power and sole dispositive power as to 13,240,426 shares.
(5) Solely based on information in a Schedule 13G dated February 10, 2016 filed with the SEC by The Vanguard Group. The Schedule 13G indicates that as of December 31, 2015, The Vanguard Group was the beneficial owner with sole voting power and sole dispositive power as to 9,246,438 shares.

Section 16(a) Beneficial Ownership Reporting Compliance

Each director and certain officers of the Company are required to report to the SEC, by a specified date, his or her transactions related to our Common Stock. Based solely on a review of the copies of reports furnished to the Company or written representations that no other reports were required, the Company believes that, during the 2015 fiscal year, all filing requirements applicable to its officers and directors were complied with on a timely basis.

 

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DIRECTOR COMPENSATION

 

DETERMINING DIRECTOR COMPENSATION

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

HOW THE DIRECTORS ARE COMPENSATED

The non-employee directors are compensated on an annual basis as follows:

 

Cash Compensation    Annual Compensation (paid quarterly)
Annual Cash Retainer    $100,000
Lead Independent Director Fee      $25,000
Audit Committee Chairperson Fee      $20,000

Compensation and Leadership

Committee Chairperson Fee

     $15,000

Governance and Nominating

Committee Chairperson Fee

     $15,000
Audit Committee Member Fee        $5,000
Equity Compensation    Annual Compensation (paid annually)
Annual Equity Grant    $140,000

During 2015, a director could elect to receive all or a portion of his or her annual cash retainer and other cash fees in the form of (i) deferred stock units (“DSUs”) that settle when the director terminates service, (ii) DSUs that settle after one year (unless service is earlier terminated), or (iii) outright shares. Directors could also elect to receive the annual equity grant in the form of (i) DSUs that settle when the director terminates service, or (ii) DSUs that settle after one year (unless service is earlier terminated). These choices allow directors to engage in tax planning appropriate for their circumstances. Notwithstanding earlier settlement or receipt of shares, directors must hold all shares awarded or paid to them until termination of service from the Board.

On May 18, 2015, each then non-employee director received a DSU award of 2,329 shares of Common Stock. The number of DSUs awarded was determined by dividing $140,000 by the fair market value of a share of Common Stock on the date of grant (rounded up to the next whole number) based on the closing price on the date of grant. For a non-employee director who becomes a member of the Board of Directors after the annual grant of deferred stock units, the award will be prorated based on the number of full months to be served until the next annual meeting of stockholders ($11,666.67 per month) divided by the closing price of the Common Stock on the day of election to the Board.

Non-employee directors are not eligible to participate in the Motorola Solutions Management Deferred Compensation Plan. Motorola Solutions does not have a non-equity incentive plan or pension plan for non-employee directors. Non-employee directors do not receive any additional fees for attendance at meetings of the Board or its committees, or for additional work done on behalf of the Board or a committee. The Company also reimburses its directors and, in certain circumstances, spouses who accompany directors, for travel, lodging and related expenses they incur in attending Board and committee meetings or other meetings as requested by Motorola Solutions. Mr. Brown, who was an employee during 2015, received no additional compensation for serving on the Board or its committees.

 

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The following table further summarizes compensation paid to the non-employee directors during 2015.

 

Name

(a)

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

Stock
Awards ($)
(2)(3)

(c)

    All Other
Compensation ($)
(g)
    Total ($)
(h)
 

Kenneth C. Dahlberg

    30,000        230,174               260,174   

Egon P. Durban

    0        129,168               129,268   

Michael V. Hayden

    70,000        170,116               240,116   

Clayton M. Jones

    70,000        140,019               210,019   

Judy C. Lewent

    120,000        140,019               260,019   

Gregory K. Mondre

    0        129,168               129,268   

Anne R. Pramaggiore

    50,000        190,093               240,093   

Samuel C. Scott III

    125,417        140,019               265,436   

Bradley E. Singer

    105,000        140,019               245,019   

Former Director:

                               

David W. Dorman(4)

    0        62,518        10,000 (5)       72,518   

 

(1) During 2015, directors could elect to receive all or a portion of their annual cash retainer or other cash fees in the form of (i) DSUs that settle when the director terminates service, (ii) DSUs that settle after one year (unless service is earlier terminated), or (iii) outright shares (in each case, rounded up to the next whole share). The amounts in column (b) are the portion of the annual cash retainer and any other fees the non-employee director has elected to receive in cash. With respect to annual cash compensation, Mr. Dahlberg elected to receive outright shares of stock with respect to $90,155 and DSUs that settle at termination with respect to $140,019; Ms. Lewent elected to receive DSUs that settle at termination or after one year, whichever is earlier, with respect to $140,019; and Mr. Dorman elected to receive DSUs that settle after one year with respect to $62,518. Messrs. Durban, Hayden, Jones, Mondre, Scott, Singer and Ms. Pramaggiore elected to receive DSUs that settle at termination of service with respect to the amounts set forth in column (c) above.
(2) The non-employee directors received an annual grant of DSUs on May 18, 2015, or, in the case of Messrs. Durban and Mondre, a pro-rated portion on August 25, 2015 when they were appointed to the Board. With respect to the annual grant of equity, Messrs. Dahlberg, Durban, Hayden, Jones, Mondre, Scott and Singer and Ms. Pramaggiore elected to receive DSUs that settle at termination of service, and Mr. Dorman and Ms. Lewent elected to receive DSUs that settle at termination or after one year, whichever is earlier, and these amounts are included in column (c). All amounts in column (c) are the aggregate grant date fair value of DSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC Topic 718”), including dividend equivalents, as applicable. The number of DSUs or shares of Common Stock received and the fair value on each date of grant are as follows:

 

     March 31     May 18     June 30     August 25     September 30     December 31  
Directors   Common
Stock*/
Deferred
Stock Units
   

Annual Grant of

Deferred Stock Units

    Common
Stock*/
Deferred
Stock Units
    Pro-Rata
Annual Grant
of Deferred
Stock Units
    Common
Stock*/
Deferred
Stock Units
    Common
Stock*/
Deferred
Stock Units
 

Kenneth C. Dahlberg

    338        2,329        393               330        329   

Fair Value

    $22,534        $140,019        $22,535                $22,565        $22,520   

Egon P. Durban

                         1,545        157        366   

Fair Value

                            $93,380        $10,736        $25,053   

Michael V. Hayden

    113        2,329        131               110        110   

Fair Value

    $7,534        $140,019        $7,512                $7,522        $7,529   

Clayton M. Jones

           2,329                               

Fair Value

            $140,019                                   

Judy C. Lewent

           2,329                               

Fair Value

            $140,019                                   

Gregory K. Mondre

                         1,545        157        366   

Fair Value

                            $93,380        $10,736        $25,053   

Anne R. Pramaggiore

    188        2,329        218               183        183   

Fair Value

    $12,534        $140,019        $12,500                $12,514        $12,526   

Samuel C. Scott III

           2,329                               

Fair Value

            $140,019                                   

Bradley E. Singer

           2,329                               

Fair Value

            $140,019                                   

Former Director:

           

David W. Dorman

    469               545                        

Fair Value

    $31,268                $31,250                           

    * Common stock was issued to Mr. Dahlberg only. All other directors received DSUs.

 

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(3) The aggregate number of Motorola Solutions DSUs and Restricted Stock includes accrued dividend equivalents or shares, as applicable.

 

Directors   Deferred Stock Units    

Restricted

Stock

 
Kenneth C. Dahlberg     7,043          
Egon P. Durban     2,086          
Michael V. Hayden     15,095          
Clayton M. Jones     2,369          
Judy C. Lewent     6,376          
Gregory K. Mondre     2,086          
Anne R. Pramaggiore     10,266          
Samuel C. Scott III     31,513        2,085   
Bradley E. Singer     8,650          
Former Director:    
David W. Dorman*     52,424          

    * The total for Mr. Dorman is as of his retirement from the Board on May 18, 2015.

 

(4) Mr. Dorman’s last day on the Board was May 18, 2015.
(5) This amount represents a matching gift contribution made by the Motorola Solutions Foundation at the request of the director to a charitable institution in the director’s name pursuant to the Company’s charitable matching gift program that is available to all U.S. employees and directors.

Director Stock Ownership Guidelines

Our Board stock ownership guidelines provide that non-employee directors are expected to own Common Stock with a value equivalent to at least five times the annual cash retainer fee for directors within five years after the date of joining the Board. In addition, directors are required to hold all shares paid or awarded by the Company until their termination of service, other than shares acquired through the exercise of options awarded to directors. For the purposes of these guidelines, Common Stock includes deferred stock units. As of December 31, 2015, all non-employee directors were in compliance with the stock ownership guidelines.

DIRECTOR RETIREMENT PLAN AND INSURANCE COVERAGE

In 1996, the Board terminated its director retirement plan and no current non-employee directors are entitled to receive retirement benefits. In 1998, Mr. Scott, the only current director with an interest in the plan, converted his accrued benefits in the retirement plan into shares of restricted Common Stock. He may not sell or transfer these shares and these shares are subject to repurchase by Motorola Solutions until he is no longer a member of the Board because: (1) he does not stand for re-election or is not re-elected, or (2) of his disability or death.

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, 2015 were $1,900.

 

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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 NEOs as disclosed in this Proxy Statement. The Board has adopted a policy providing for annual “say-on-pay” advisory votes. Although the vote is non-binding, the Board and Compensation and Leadership Committee will review and consider the outcome of the vote when considering future executive compensation arrangements. In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis, below, for a detailed description of our executive compensation philosophy and programs. In particular, you should consider the following factors, which are more fully discussed in the Compensation Discussion and Analysis:

 

     

We actively engage our stockholders on their views and consider this input when designing our executive compensation programs.

 

     

Our programs are designed to pay for performance, so a majority of the NEOs’ total compensation is based on the performance of the Company and 100% of their long-term incentives are performance-based.

 

     

Our executive compensation program incorporates many leading practices to ensure ongoing good governance, including eliminating the excise tax gross-up for our CEO in 2014.

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

“Resolved, that the stockholders approve, on an advisory basis, the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the 2015 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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COMPENSATION DISCUSSION AND ANALYSIS

 

 

NAMED EXECUTIVE OFFICERS

Our Compensation Discussion and Analysis (the “CD&A”) describes Motorola Solutions’ executive compensation philosophy and programs which are governed by the Compensation and Leadership Committee (the “Committee”). The CD&A includes 2015 total compensation for our named executive officers (“NEOs”) who are listed below.

 

Named Executive Officer    Title

Gregory Q. Brown

 

Chairman and Chief Executive Officer

Gino A. Bonanotte

 

Executive Vice President and Chief Financial Officer

Mark S. Hacker

 

Executive Vice President, General Counsel and Chief Administrative Officer

Robert C. Schassler

 

Executive Vice President, Int’l Sales & Services and Global Managed & Support Services

Eduardo F. Conrado

 

Executive Vice President and Chief Strategy & Innovation Officer

Mark F. Moon

 

Former Executive Vice President and President, Sales & Marketing

EXECUTIVE SUMMARY

In 2015, we continued efforts to position Motorola Solutions for long-term success with a focus on driving improved profitability and free cash flow growth. Overall, sales were down 3% over the prior year, driven in part by significant currency headwinds, while operating earnings and operating cash flow were up significantly. This improved profitability and cash generation was due in large part to more than $200 million in operating expense reductions and a focus on working capital efficiency. Despite the structural cost reductions, the Company has continued making targeted investments and R&D expenditures in key growth areas including Managed & Support Services and Smart Public Safety Solutions. We expect these new investments will help accelerate growth in our Managed & Support Services business, which is evident in our ending backlog, which grew by approximately $700 million in 2015. We have demonstrated success in the growth area of public safety LTE, as the Company has deployed or been awarded the four largest public safety LTE projects in the world with aggregate multi-year values exceeding $800 million. Our new strategic partnership with Silver Lake also demonstrates their strong vote of confidence in our strategy and opportunities. 2015 capped off another strong year of capital return to stockholders. We returned $3.5 billion in capital to stockholders through $3.2 billion in share repurchases and $277 million in dividends. The Company has returned over $12 billion in capital since 2011. A stronger 2015 improved our longer-term total shareholder return, which was 40% over the 2013-2015 three-year period.

The Silver Lake Investment

When we entered into the Investment Agreement with Silver Lake and issued the Notes, Motorola Solutions agreed to expand the size of the Board and appoint two Silver Lake nominees, Egon Durban and Greg Mondre, to the Board of Directors. Further, at the time of the issuance of the Notes to Silver Lake, a select group of senior executives, including most of our NEOs, received a grant of performance-contingent stock options (“PCSOs”) to provide further incentive to deliver returns to our stockholders. The PCSOs are not intended to be a component of our core, ongoing compensation program for executives, and we have no plans to make another similar award in 2016.

 

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The PCSOs are premium-priced, performance-based options with an exercise price of $68.50 per share (our stock price was $60.44 on the date of grant) and a seven-year term. As detailed in the table below, the PCSOs vest based on the attainment of certain escalating stock price hurdles within the three-year period from the date of grant and they cannot be exercised prior to the third anniversary of the date of grant. The PCSOs are designed to ensure delivery of meaningful returns to our stockholders before executives realize any value. Any PCSOs that do not vest within the three-year period are forfeited. As of March 18, 2016, none of the stock price hurdles had been met, and thus, no portion of the PCSOs had vested.

 

% of Award Vesting  

        Stock        
Price

Hurdle1

   

    Appreciation    
from

Exercise

Price

        CAGR2       

20%

    $85.00        24     7

30%

    $102.50        50     14

50%

    $120.00        75     21
  1 

Stock price must be met within three years of the grant date and maintained for ten consecutive trading days.

  2 

Compound annual growth rate

Our 2015 Performance Did Not Meet Our Operating Plan;

Our 2013-2015 Performance Delivered Improved Returns To Our Stockholders

Our 2015 business performance was improved over 2014, but was slightly below our operating plan. Our three-year performance ending in 2015 showed increased returns to our stockholders driven primarily by a strong 2015. As a result of our performance, and consistent with our pay for performance philosophy, our incentive plans paid out as follows:

 

     

Our 2015 Executive Officer Short Term Incentive Plan (“STIP”) resulted in a slightly below target payout, reflecting our operating earnings result below our operating plan and free cash flow result above our operating plan; and

 

     

Our 2013-2015 Long Range Incentive Plan (“LRIP”), which is based on Motorola Solutions’ total shareholder return (“TSR”) relative to our comparator group, resulted in a below target payout.

Our NEOs’ 2015 total compensation was higher than their 2014 total compensation, which was a result of two factors:

 

  1.   Payouts under our STIP (88% of target) and LRIP (75% of target) were below target, but were higher than those achieved under both plans in 2014 (STIP at 30% and LRIP at 0%); and

 

  2.   Target long-term incentive awards designed to deliver competitive total direct compensation were followed by a subsequent award of PCSOs granted in conjunction with Silver Lake’s investment in the Company

2015 Actions

Our compensation program is critical to our ability to attract, retain and motivate key talent necessary to deliver on our purpose to help people be their best in the moments that matter. As part of our continuous review of our compensation program and consideration of ongoing feedback from investors, two changes were made to our compensation program for our management executive committee, which includes all NEOs, in 2015.

 

     

Following the sale of our Enterprise business in late 2014, the comparator group used to assess the market competitiveness of pay and performance for our NEOs was reviewed and modified to reflect the new composition and size of our Company. We removed Danaher, Eaton and NCR and added ARRIS International, Amphenol, Juniper Networks and Roper Technologies in an effort to use a comparator group that more closely aligns with our business mix and size. Median revenue and market capitalization of this new comparator group is consistent with our current business. The Committee utilized this new comparator group when making pay decisions for 2015.

 

     

We introduced a new long-term incentive design for our management executive committee, which is 100% performance-based with a focus on sustained long-term performance. This new design links one-third of the total long-term incentives to absolute stock price performance and two-thirds to relative TSR, and only provides a target payout once performance exceeds the median of the S&P 500 companies’ comparator group.

 

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2015 Compensation Program Overview

Our regular, annual compensation program included a mix of the following fixed and variable elements:

 

 

LOGO

 

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Our Incentive Compensation Program Based On 2015 Performance Resulted In Below Target Payouts;

Our Incentive Compensation Program Based On 2013-2015 Total Shareholder Return Resulted In Below Target Payouts

To support our pay for performance philosophy, our 2015 executive compensation program used a mix of fixed and at-risk elements to align with short- and long-term business goals through short- and long-term incentives.

Our STIP is tied to achieving operating earnings and free cash flow targets to measure what enables the Company to invest in future growth and appropriately return capital to stockholders. These two measures are commonly tracked by investors and we believe that they provide useful information to investors as a measure of the strength and sustainability of our business model, while also driving long-term, sustainable stockholder value.

Our long-term incentive program provides awards that are earned and vest based on stock price appreciation or relative TSR, not only to reward long-term stock price appreciation, but also to ensure that value delivered to our stockholders through TSR exceeds that of our comparator companies.

In 2015, we began to see growth in operating earnings and operating cash flow, but performance had not yet returned to desired levels, which resulted in a below target payout under our STIP. Our 2013 to 2015 TSR (stock price appreciation plus dividends) was 40% over the three-year period, which resulted in a #8 out of 14 rank in our comparator group. This performance equated to a payout of 75% of target under our 2013-2015 LRIP. See “Long Range Incentive Plan” for comparator group details.

 

LOGO

 

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Response to 2015 Stockholder Vote and Stockholder Engagement Process

At the 2015 Annual Meeting, our stockholders approved the advisory vote on our executive compensation with 97% support. We believe this is in large part due to program changes over the past several years that have been maintained and created a fundamentally sound program aligned with stockholder interests.

 

 

LOGO

In November and December 2015, we reached out to stockholders holding approximately 45% of our shares in the aggregate to seek feedback on our governance and compensation programs, some of whom noted that they had no issues with our programs and declined our request for engagement. With the stockholders who accepted our request for feedback, we discussed the investment by Silver Lake, the PCSOs we granted at the time of the investment and our incentive program design, all of which received generally positive feedback. The investors with whom we spoke expressed no major concerns about the current executive compensation program, including pay programs, approach and overall governance.

Our stockholder engagement process is not just a one-time event; we have ongoing investor relations efforts in place including monitoring best practices, engaging investors and stockholder groups on pay topics and seeking ongoing feedback on pay practices and corporate governance. We actively and periodically engage with our stockholders to request their views of our compensation programs and individual pay actions and take that information into consideration when assessing and evaluating potential changes to our executive compensation programs. In addition, we conduct outreach efforts two times a year that are focused on institutional investors with larger stockholdings, stockholder advocates and proxy advisory firms. Our November/December outreach is designed to gain feedback on the results of the previous Annual Meeting and input on our pay programs and disclosures. Our March/April outreach is designed to answer questions and provide clarifications, if necessary, leading up to the Annual Meeting and ensure stockholders are effectively informed about our programs in advance of the advisory vote on executive compensation.

 

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We continue to focus on sustained engagement efforts each year and remain committed to taking into account the results of future stockholder votes and ongoing dialogues with our stockholders when reviewing our compensation program and practices.

Our Executive Compensation Program is Aligned to our Business Strategy and Features Many Leading Practices

 

  LOGO A significant percentage of target total direct compensation, 90% for the CEO, is “at risk” and linked to actual performance.

 

  LOGO Performance measures are linked to near-term operating objectives and delivery of long-term value to stockholders through both relative and absolute stock price performance.

 

  LOGO The long-term incentive program established in 2015 is 100% performance-based.

 

  LOGO The Committee retains an independent compensation consultant to review the Company’s compensation program and practices.

 

  LOGO The independent compensation consultant reviews our pay and performance relationship annually with the Committee.

 

  LOGO Our performance-based plans (STIP, LRIP, performance options and market stock units) are subject to maximum payout caps.

 

  LOGO In the event of a change-in-control, long-term equity incentives have a double trigger; that is, outstanding equity awards will not vest in the event of a change-in-control unless also accompanied by a qualifying termination of employment. Accelerated vesting at a change-in-control is only provided if the acquirer does not assume or replace the outstanding equity awards.

 

  LOGO The Company provides limited executive perquisites and no excise tax gross-ups.

 

  LOGO Executives are required to hold stock equal to 6x salary for the CEO and 3x salary for each of the NEOs.

 

  LOGO Compensation is subject to claw-back in the event of certain financial restatements.

 

  LOGO Hedging of Company securities is prohibited.

 

  LOGO No NEOs have pledged any Company equity.

 

  LOGO We conduct regular risk assessments of our compensation programs and practices.

We Focus on Talent Management and Link Talent and Pay Decisions

Our talent programs foster the development of globally diverse executives from within our own organization. This philosophy encourages our key talent to adopt a long-term focus on our business and avoids lengthy and disruptive transitions associated with extensive external hiring. Our pay decisions support our talent objectives by not only considering individual and Company performance, but also considering long-term potential, inclusion and diversity efforts, key retention needs and organizational succession plans. We use a multi-faceted process to develop our executives, including new and expanded job assignments, formal learning, and coaching and engagement with our management executive committee, our CEO and the Board. This approach drives increased engagement and retention by demonstrating investment in our executives that builds their long-term value to the organization.

Independent Experts Guide Program Development

The Committee engages an independent consultant, Compensation Advisory Partners LLC (“CAP”), to advise on the Company’s executive compensation strategy and program design and to provide regulatory and market trend updates. CAP carries out compensation reviews as directed by the Committee and provides recommendations on specific compensation for our CEO and input on specific compensation recommendations for our other executive officers.

In 2015, the Committee continued to engage CAP as its independent compensation consultant. CAP participates in Committee meetings, including regular discussions with the Committee, without management present, to ensure impartiality on certain decisions. During 2015, the Committee also reviewed the independence of CAP using assessment criteria that aligned with the SEC and related NYSE rules adopted in 2012. The Committee concluded that CAP was independent and had no conflicts of interest.

 

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2015 EXECUTIVE COMPENSATION PROGRAM

Compensation Philosophy, Practices and Program Design Inputs

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

 

Principle   Description

Business

Driven

  Incentives are aligned with the Company’s business goals and avoid excessive risk taking

Performance

Differentiated

  Programs create an effective link between pay and performance at both the Company and individual level

Market

Competitive

  Total compensation package is competitive to attract, retain and motivate top talent needed to successfully execute our business strategy

Ownership

Oriented

  Compensation is aligned with stockholder interests by delivering meaningful equity awards and maintaining robust stock ownership guidelines

Simplicity

  Employee engagement is driven through simple, cost-efficient plan design

The Committee reviews the executive compensation program design and executive pay levels annually. As part of this annual review, CAP provided executive compensation market data, information on current market practices and trends, and alternatives to consider for determining compensation for our Section 16 Officers, including the NEOs. The Committee benchmarked our compensation program design, executive pay and performance against a group of comparator companies that are publicly traded and comparable to Motorola Solutions in market segment, product offerings, revenue and market value. The Committee believes Motorola Solutions competes against these companies, including for executive talent and stockholder investment.

The Committee reviews the composition of the comparator group annually with the assistance of CAP. Following the sale of our Enterprise business in late 2014, our comparator group was modified in 2015 to reflect the new size and composition of our Company by removing Danaher, Eaton and NCR and adding ARRIS International, Amphenol, Juniper Networks and Roper Technologies. This comparator group is used exclusively for pay and performance benchmarking and is no longer used for relative TSR measurement comparisons in the LRIP for the 2015-2017 cycle.

2015 Comparator Group

 

Agilent Technologies, Inc.

  

Harris Corp.

  

Raytheon Company

  

Roper Technologies, Inc.

Amphenol Corp.

  

Ingersoll-Rand plc

  

Rockwell Automation Inc.

  

TE Connectivity Ltd.

ARRIS International plc

  

Juniper Networks, Inc.

  

Rockwell Collins, Inc.

  

Tyco International Ltd.

Dover Corp.

  

Parker-Hannifin Corp

         

To supplement our comparator group data, the Committee also considers compensation surveys that include data from companies of similar size and business segments to Motorola Solutions. Surveys considered in the 2015 review included:

 

Survey      Publisher

Radford Global Technology Survey

     Radford, an Aon Hewitt consulting company

IPAS Global High Technology Survey

     Salary.com

 

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While the Committee uses the 50th percentile of our comparator group as a guideline for establishing target total compensation for our NEOs, each NEO’s target total compensation position relative to market varies due to the Committee’s consideration of additional factors such as role, scope of accountabilities, experience, individual performance and market practices when setting total target compensation. When setting 2015 compensation in the first quarter of the year, the Committee evaluated each NEO’s target compensation relative to market compensation and found as follows:

 

Position    NEO
Total compensation between the 50th percentile and 75th percentile market    Brown, Moon and Schassler

Total compensation at the 50th percentile market

   Conrado and Hacker

Total compensation between the 25th percentile and the 50th percentile market

   Bonanotte

A significant portion of our NEOs’ compensation is delivered through both short- and long-term incentives linked to financial and stock price performance, with a large percentage based on relative performance.

 

 

LOGO

Base Salary

Base salaries are set by the Committee with the Board’s concurrence for the CEO. When setting the base salary level for each NEO, the Committee considers many factors, including: the 50th percentile of the market data, external market conditions, individual performance, experience, internal comparisons, and succession plans.

Short-term Incentives

The STIP is an annual cash incentive award based on Motorola Solutions’ achievement of financial performance measures and an executive’s individual performance.

Actual awards are based on the executive’s target incentive award opportunity, Motorola Solutions’ achievement of performance results (“Business Performance Factor”) and assessment of individual performance (“Individual Performance Factor”). The payout range for both the Business Performance Factor and the Individual Performance Factor is from 0% to 140%, resulting in a total plan maximum payout opportunity of 196% of target. The incentive target opportunity for each NEO was determined based on market data.

 

 

LOGO

 

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For 2015, the Business Performance Factor was based on achievement of operating earnings (weighted 65%) and free cash flow (weighted 35%) goals. Operating earnings measures our profits from sales and free cash flow measures the cash available after capital expenditures. These are common performance measures both inside and outside of our industry, and are fundamental inputs we use to measure profitability, business liquidity and rates of return for the business. We believe operating earnings and free cash flow appropriately measure our annual business performance, and ultimately our long-term stockholder value.

A rigorous process is used at the start of each year to determine the range of performance for each measure and includes an analysis of factors such as: prior year financial results, market share, projected revenue growth, margins and operating expenditures and other macroeconomic and industry considerations. The operating earnings and free cash flow targets and performance ranges for the 2015 STIP were aligned with the 2015 operating plan that was approved by the Board in the first quarter of 2015. The range of performance and 2015 results are shown in the following table:

 

Business

Performance

Measure

  Minimum     Target     Maximum     2015
Result
    Business
Performance
Factor
   

Measure

Weight

   

Weighted

Result

 

Operating Earnings1 (in millions)

    $1,050        $1,235        $1,420        $1,166        0.81        65     0.53   

Free Cash Flow2 (in millions)

    $619        $825        $990        $835        1.01        35     0.35   

TOTAL

                                                    0.88   
1 

Operating Earnings is our reported Non-GAAP operating earnings, which does not include reorganization of business, stock based compensation, and intangible amortization.

2 

Free Cash Flow is defined as net cash provided by operating activities less capital expenditures.

The Individual Performance Factor for each NEO is discussed in more detail below in Compensation Decisions for 2015.

Long-term Incentives

Our regular, annual Long-term Incentives (“LTI”) are delivered through a portfolio of three vehicles, all of which are performance-based and designed to achieve a balancing of objectives within the overall program. The objective of our LTI program is to incentivize our NEOs to:

 

¡  

Focus on performance metrics that drive long-term value creation for stockholders.

 

¡  

Outperform the S&P 500 comparator companies.

 

¡  

Achieve the highest, sustainable stock price over time.

The LTI program includes a long range incentive plan (“LRIP”), performance stock options (“POs”) and market stock units (“MSUs”). The LRIP and POs (two-thirds of the total LTI opportunity) are based on relative TSR and the MSUs (one-third of the total LTI opportunity) are based on absolute stock price, making the program 100% performance-based. Inclusion of the MSUs in the portfolio is also critical to provide a vehicle to assist in retaining our executives once performance is achieved. The LTI pays out one-third in cash (the LRIP) and two-thirds in equity (the POs and MSUs).

 

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For both POs and MSUs, the number earned increases/decreases in relation to performance and unearned POs and MSUs are forfeited at the end of the performance period. The payout scale for the POs is detailed below. For MSUs, each 1% increase/decrease in stock price results in a 1% increase/decrease in the number of MSUs earned at the end of the performance period with a maximum payout at 100% stock price appreciation and a threshold of 40% stock price depreciation, below which no MSUs are earned. To further reinforce the performance nature of the program, the payout scale for the LRIP and POs requires performance to exceed median performance of the group before a target payout is earned. The comparator group used to measure relative performance is the S&P 500, which we believe is the broader industry group with which we compete for stockholder investment.

 

 

 

LOGO

 

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Long Range Incentive Plan

The LRIP is a performance-based, multi-year incentive plan for our senior executives, including the NEOs. We maintain overlapping three-year cycles with grants made annually, and we currently have three active cycles (2014-2016, 2015-2017 and 2016-2018). The Committee determines the total LTI value with reference to market levels through benchmarking completed by CAP. The LRIP was designed to deliver one-third of that LTI value. Each cycle prior to the 2015-2017 performance cycle uses a comparator group made up of peer companies for relative TSR measurement that is the same as the group used in our pay and performance analysis at that time. A TSR payout factor is determined by calculating the Company’s TSR rank within the comparator group based on the approved payout scale detailed below. Beginning with the 2015-2017 performance cycle, the S&P 500 is the comparator group used for relative TSR measurement. A TSR payout factor is determined by calculating the Company’s TSR percentile rank within the S&P 500 based on the approved payout scale detailed below. For both methodologies, the TSR calculation uses a three-month average stock price at the beginning (three months preceding performance cycle start) and end (final three months in performance cycle, plus value of reinvested dividends) of the period for measurement purposes. This approach minimizes the impact of a single beginning and ending point stock price for each performance cycle.

 

LOGO

If the resulting TSR performance for Motorola Solutions is negative, but would still result in a ranking that would provide a payout, the Committee will have discretion to reduce the calculated payout by up to 25%.

Comparator companies are reviewed annually and are not changed for any established performance cycle once they are approved by the Committee.

 

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Performance Options and Market Stock Units

In 2015, the Committee granted POs and MSUs under our Omnibus Plan (defined below) to the NEOs. The POs are earned and vest based on relative TSR performance at the end of the three year performance period based on the payout scale described above for the 2015-2017 LRIP. The MSUs are earned and vest based on stock price appreciation/depreciation at the first, second and third anniversaries of the date of grant with respect to one-third of the grant for each of the three time periods.

Timing and Grant Practices of Global Equity Awards 

In 2012, we implemented significantly reduced eligibility for our Company-wide annual equity grant and maintained eligibility for special grants on a highly selective basis to align our stock-based compensation programs to market and reduce our annual share usage rate and stock-based compensation expense.

As a result of these changes, our share usage (equity grants as a percentage of common shares outstanding) since 2012 was significantly reduced. This reduced share usage has also caused a decrease in our stock-based compensation expense since 2012, as the expense from previous grants made to a broader population becomes fully recognized. In addition, at the 2015 Annual Meeting, stockholders approved the Motorola Solutions 2015 Omnibus Incentive Plan, which was an amendment and restatement of the Motorola Solutions Omnibus Incentive Plan of 2006 (the “Omnibus Plan”), which reduced by approximately 7 million shares, to 12 million shares, the total number of shares reserved and approved for issuance. We plan to continue to closely manage our equity granting practices to ensure our share usage and stock-based compensation expense remain in line with competitive levels.

 

LOGO

In 2015, our annual equity awards were made in the first quarter of the year to allow the Company to better align the receipt of equity awards with the assessment of prior year performance and achievement of business goals. We do not structure the timing of equity awards to precede or coincide with the disclosure of material non-public information. All equity grants made to Section16 officers are approved by the Committee, with concurrence by the Board for grants to the CEO.

The Committee has also delegated authority to the most senior human resources executive to make off-cycle equity grants to newly hired or promoted employees, in recognition of outstanding achievement or for retention. These types of grants are made on the first trading day of each month.

 

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Executive Benefits and Perquisites

To enhance our ability to attract and retain talented executives in a highly competitive talent market, we provide the benefits and perquisites detailed in the following table:

 

Benefit or Perquisite    Named
Executives
   Other Executives
and Managers
   All Eligible
Full-Time
Employees

  Retirement1, Saving and Stock Purchase Plans

   LOGO      LOGO      LOGO  

  Health and Welfare Benefits2

   LOGO      LOGO      LOGO  

  Deferred Compensation

   LOGO      LOGO       

  Financial Planning

   LOGO      Vice Presidents     

  Executive Physicals

   LOGO      Executive & Senior VPs     

  Security System Monitoring

   CEO          

  Personal Use of Corporate Provided Aircraft3

   CEO          

1 Pension provided to US-based eligible employees hired prior to Jan 1, 2005.

2 Includes medical, dental, vision, group life insurance, business travel accident insurance, short- and long-term disability and work life programs.

3 In limited circumstances, and as approved by the CEO, other employees are permitted to use our corporate provided aircraft for personal purposes.

COMPENSATION DECISIONS FOR 2015

 

Gregory Q. Brown, Chairman and Chief Executive Officer

Mr. Brown’s total target compensation was lower than 2014 target compensation due to lower total LTI. However, reflecting an improved performance year in 2015, Mr. Brown’s actual compensation increased from 2014 due to a higher STIP award than the prior year, a payout under our LRIP that exceeded the zero payout for the 2012-2014 cycle that ended in December 2014 and the grant of PCSOs in connection with the Silver Lake Investment.

 

   
ELEMENT   TARGET
COMPENSATION*
  ACTUAL
COMPENSATION
  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $1,250,000   $1,250,000    

STIP AWARD

  $1,875,000   $1,650,000   Annual Salary   x     Target     x   BPF   x   IPF   =   STIP Award
      $1,250,000      150%     0.88     1.0     $1,650,000
TOTAL CASH COMPENSATION   $3,125,000   $2,900,000   Mr. Brown continued to transform the Company into a singularly focused leader in mission-critical communications and took important actions to better position the Company for operating leverage and free cash flow generation in future years. The Company acquired Airwave for $1B, secured a $1B investment from Silver Lake to help accelerate software and services growth initiatives, outsourced Penang manufacturing, and secured two additional Public Safety LTE contracts which now positions the Company with the four largest Public Safety LTE contracts in the world. We ended the year with record backlog of $6.5B and returned $3.5B in capital to stockholders.

LTI CASH PAYMENT

(2013-2015 LRIP)

  $3,000,000   $2,250,000   2013 Cycle

Base Salary

$1,200,000

 

x

    Target  

  250%

  x   TSR Payout Factor

75%

  =   LRIP Award

$2,250,000

                 
      Relative TSR rank of #8 resulted in 75% of target payout

LTI

  2015-2017
LRIP
  $3,125,000     Base Salary   x     Target     =   LRIP Target
        $1,250,000     250%     $3,125,000
        Payout based on relative TSR performance through 2017
  PERFORMANCE
OPTIONS
  $2,312,500   $2,312,487   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  PCSOs     $3,127,943  
  MSUs   $2,312,500   $2,312,480  

2015 TOTAL

COMPENSATION

  $10,875,000   $12,902,910   Actual Total Compensation is listed in Summary Compensation Table
* “Target Compensation” = Total Cash Compensation + LTI (excluding LTI Cash Payment)

 

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Gino A. Bonanotte, Executive Vice President and Chief Financial Officer

Following more substantial pay adjustments for Mr. Bonanotte in 2014 to move him to a more competitive market position, total target compensation was only modestly higher in 2015 primarily due to a 2.4% increase in base salary and the grant of the PCSOs.

 

   
ELEMENT   TARGET
COMPENSATION*
  ACTUAL
COMPENSATION
  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $625,000   $622,404   In March 2015, the Committee approved a base salary increase from $610,000 to $625,000.

STIP AWARD

  $593,750   $520,330   Eligible Earnings   x     Target     x   BPF   x   IPF   =   STIP Award
      $622,404     95%     0.88     1.0     $520,330
TOTAL CASH COMPENSATION   $1,218,750   $1,142,734   Mr. Bonanotte successfully executed our 2015 capital allocation strategy, resulting in the return of $3.5B in capital to stockholders. He also managed the acquisition of Airwave, structured the $1B Silver Lake investment, led the outsourcing of Penang manufacturing and drove more than $200M of Company-wide cost reductions.

LTI CASH PAYMENT

(2013-2015 LRIP)

  $282,510   $211,883   2013 Cycle

Base Salary

 

x

    Target    

x

  TSR Payout Factor  

=

  LRIP Award
      $300,000      94.17%     75%     $211,883
      Relative TSR rank of #8 resulted in 75% of target payout

LTI

  2015-2017
LRIP
  $666,666     Payout based on relative TSR performance through 2017
  PERFORMANCE
OPTIONS
  $666,667   $666,664   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  PCSOs     $637,178  
  MSUs   $666,667   $666,642  

2015 TOTAL

COMPENSATION

  $3,218,750   $3,325,101   Actual Total Compensation is listed in Summary Compensation Table

 

* “Target Compensation” = Total Cash Compensation + LTI (excluding LTI Cash Payment)

 

Mark S. Hacker, Executive Vice President, General Counsel and Chief Administrative Officer

Key Talent Management Actions LOGO Promoted in 2015 to include Chief Administrative Officer

Mr. Hacker’s role continued to expand in 2015 by adding accountability for human resources and global marketing to his previous role and promotion to Chief Administrative Officer. At the time of his promotion, Mr. Hacker received a 4.1% base salary increase and a $200,000 equity award delivered $100,000 in stock options and $100,000 in RSUs.

 

   
ELEMENT   TARGET
COMPENSATION*
  ACTUAL
COMPENSATION
  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $510,000   $507,488   In January 2015, the Committee approved a base salary increase from $480,000 to $500,000 in recognition of Mr. Hacker’s promotion to CAO. In March 2015, the Committee approved an additional base salary increase to $510,000.

STIP AWARD

  $484,500   $424,260   Eligible Earnings   x     Target     x   BPF   x   IPF   =   STIP Award
      $507,488      95%     0.88     1.0     $424,260
TOTAL CASH COMPENSATION   $994,500   $931,748   In early 2015, Mr. Hacker was promoted to Chief Administrative Officer and his role was expanded to include oversight for global marketing and human resources. Mr. Hacker made leadership and organizational changes that resulted in increasing his team’s impact while achieving cost reductions of 17% compared to last year. He successfully supported the Airwave and Silver Lake transactions, managed litigation to favorable resolutions, enhanced the Company’s brand narrative to emphasize its software and services growth initiatives, and transitioned U.S. healthcare to a private exchange. He also brought renewed focus to diversity and inclusion and formalized the Company’s leadership succession planning process.

LTI CASH PAYMENT

(2013-2015 LRIP)

  $290,155   $217,616   2013 Cycle

Base Salary

 

x

    Target    

x

  TSR Payout Factor  

=

  LRIP Award
      $300,150      96.67%     75%     $217,616
      Relative TSR rank of #8 resulted in 75% of target payout

LTI

  2015-2017
LRIP
  $500,000     Payout based on relative TSR performance through 2017
  PERFORMANCE
OPTIONS
  $500,000   $599,986   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  PCSOs     $637,178  
  MSUs   $500,000   $593,740  

2015 TOTAL

COMPENSATION

  $2,494,500   $2,980,268   Actual Total Compensation is listed in Summary Compensation Table

 

* “Target Compensation” = Total Cash Compensation + LTI (excluding LTI Cash Payment)

 

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Robert C. Schassler, Executive Vice President, Int’l Sales and Services and Global Managed & Support Services

On December 31, 2015, Mr. Schassler resigned from the Company, effective as of January 15, 2016, to take a position with another company. The pay actions described below reflect those made while Mr. Schassler remained in his previous role.

 

   
ELEMENT   TARGET
COMPENSATION*
  ACTUAL
COMPENSATION
  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $513,000   $510,750   In March 2015, the Committee approved a base salary increase from $500,000 to $513,000.

STIP AWARD

  $487,350   $426,987   Eligible Earnings   x   Target   x   BPF   x   IPF   =   STIP Award
      $510,750     95%     0.88     1.0     $426,987

 

TOTAL CASH COMPENSATION

 

  $1,000,350   $937,737   Mr. Schassler grew our Managed and Support Services and Smart Public Safety businesses and increased backlog by $658M.

LTI CASH PAYMENT

(2013-2015 LRIP)

  $332,046   $249,035   2013 Cycle

Base Salary

 

x

  Target  

x

  TSR Payout Factor  

=

  LRIP Award
      $430,000     77.22%     75%     $249,035
      Relative TSR rank of #8 resulted in 75% of target payout

LTI

  2015-2017
LRIP
  $433,334     Payout based on relative TSR performance through 2017; participation in this LRIP cycle was forfeited upon resignation from the Company.
  PERFORMANCE
OPTIONS
  $433,333   $433,323   Represents grant date fair value pursuant to ASC Topic 718; all POs, PCSOs and MSUs forfeited upon resignation from the Company.
  PCSOs     $637,178  
  MSUs   $433,333   $433,299  

2015 TOTAL

COMPENSATION

  $2,300,350   $2,690,572   Actual Total Compensation is listed in Summary Compensation Table

 

* “Target Compensation” = Total Cash Compensation + LTI (excluding LTI Cash Payment)

 

Eduardo F. Conrado, Executive Vice President and Chief Strategy & Innovation Officer

Key Talent Management Actions LOGO Role expanded in 2015 to include Chief Strategy Officer

Mr. Conrado was promoted to Executive Vice President in August when his role expanded to include accountability for strategy. At the time of his promotion, Mr. Conrado received a 5.6% base salary increase to recognize his expanded responsibilities.

 

   
ELEMENT   TARGET
COMPENSATION*
  ACTUAL
COMPENSATION
  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $465,000   $448,750   In March 2015, the Committee approved a base salary increase from $435,000 to $440,000 and in August 2015 approved an additional 5.6% increase at the time of his promotion.

STIP AWARD

  $441,750   $325,820   Eligible Earnings   x   Target   x   BPF   X   IPF   =   STIP Award
      $448,750     82.5%     0.88     1.0     325,820
TOTAL CASH COMPENSATION   $906,750   $774,570   Mr. Conrado was promoted in August 2015 when his role was expanded to include Strategy. Mr. Conrado enhanced our technology and solutions portfolio through a combination of organic investments and acquisitions. Mr. Conrado made organizational changes in strategy, chief technology office, and information technology to refresh leadership talent. He also made significant improvements in the employee communication and collaboration tools by transitioning the Company from Microsoft to Google.

LTI CASH PAYMENT

(2013-2015 LRIP)

  $287,014   $215,261   2013 Cycle

Base Salary

 

x

  Target    

x

  TSR Payout Factor  

=

  LRIP Award
      $415,000     69.16%       75%     $215,261
      Relative TSR rank of #8 resulted in 75% of target payout

LTI

  2015-2017
LRIP
  $413,250     Payout based on relative TSR performance through 2017
  PERFORMANCE
OPTIONS
  $333,333   $333,332   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  PCSOs     $637,178  
  MSUs   $333,333   $333,321  

2015 TOTAL

COMPENSATION

  $1,986,666   $2,293,662   Actual Total Compensation is listed in Summary Compensation Table

 

* “Target Compensation” = Total Cash Compensation + LTI (excluding LTI Cash Payment)

 

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Mark F. Moon, Former Executive Vice President and President, Sales & Marketing

Mr. Moon no longer served as Executive Vice President and President, Sales & Marketing as of November 2015 although he remains an Executive Vice President and will leave the Company at the end of 2016. When Mr. Moon separates from the Company in 2016, he will be entitled to receive severance benefits under the terms of the Company’s plans and arrangements available to senior executive officers. The pay actions described below reflect those made while Mr. Moon remained in the Executive Vice President and President, Sales & Marketing role.

 

   
ELEMENT   TARGET
COMPENSATION*
  ACTUAL
COMPENSATION
  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $660,000   $658,269   In March 2015, the Committee approved a base salary increase from $650,000 to $660,000.

STIP AWARD

  $627,000   $550,313   Eligible Earnings   x   Target   x   BPF   X   IPF   =   STIP Award
      $658,269     95%     0.88     1.0     $550,313
TOTAL CASH COMPENSATION   $1,287,000   $1,208,582   Mr. Moon executed on key aspects of the Company’s strategy to strengthen our core business and expand into adjacent markets, ending the year with record backlog. He also re-organized the North America and Latin America organizations into a streamlined Americas organization.

LTI CASH PAYMENT

(2013-2015 LRIP)

  $791,000   $593,250   2013 Cycle

Base Salary

 

x

  Target  

x

  TSR Payout Factor  

=

  LRIP Award
      $565,000     140%     75%     $593,250
      Relative TSR rank of #8 resulted in 75% of target payout

LTI

  2015-2017
LRIP
  $666,666     Payout based on relative TSR performance through 2017
  PERFORMANCE
OPTIONS
  $666,667   $633,322   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  MSUs   $666,667   $633,316    

2015 TOTAL

COMPENSATION

  $3,287,000   $3,068,470   Actual Total Compensation is listed in Summary Compensation Table

 

* “Target Compensation” = Total Cash Compensation + LTI (excluding LTI Cash Payment)

OTHER COMPENSATION POLICIES AND PRACTICES

Stock Ownership Guidelines

To ensure strong alignment of our senior management with the interests of our stockholders, the Company maintains stock ownership guidelines for our senior executives, including each of our NEOs. Our stock ownership requirements are expressed as a multiple of base salary as shown below:

 

Executive Group   

Multiple of

Base Salary

Chairman and Chief Executive Officer

   6x

Executive Vice Presidents and Executive Committee Members

   3x

Senior Vice Presidents

   2x

Corporate Vice Presidents

   1x

Executives subject to the guidelines must meet their ownership requirement within five years from the date they first become subject to their applicable ownership requirement. Executives who do not meet their stock ownership requirement within five years must hold 100% of net shares acquired (net of tax withholding) on the exercise of stock options and the vesting of RSUs or MSUs until compliance with the stock ownership requirement is achieved.

Shares counted toward guideline achievement include directly owned shares, unvested RSUs and target MSUs.

The Committee reviews compliance with the ownership guidelines annually. In the Committee’s last review, it was determined that all NEOs had met their stock ownership requirement or are within the five year grace period.

Change In Control Plan

The Company maintains the Senior Officer Change In Control Severance Plan (the “CIC Severance Plan”), which the Board has the ability to amend or terminate with at least one year’s notice to participants.

The CIC Severance Plan covers our NEOs (except for Mr. Brown, whose employment agreement contains change in control provisions) and our other senior executives. The Board considers the maintenance of an effective and stable management team essential to protecting and enhancing

 

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

The CIC Severance Plan employs a “double trigger” in order for severance benefits to be paid, meaning that both a change in control event must occur and an executive must be involuntarily terminated without “cause” or must leave for “good reason” within 24 months following the change in control.

The table below highlights key provisions of the CIC Severance Plan. For a detailed description of the CIC Severance Plan, please refer to the section “Change in Control Arrangements.”

 

CIC Provision   CIC Severance Plan

Eligibility

  Executive and Senior Vice Presidents

CIC Cash Severance Multiple

  Two times base salary plus target bonus

Medical Benefit Continuation

  Two years

LRIP and Equity Treatment

(Provision in Omnibus Plan)

  Equity and LRIP subject to “double trigger” unless awards are not assumed or replaced by acquirer. If not assumed or replaced, equity and LRIP provide for accelerated treatment with performance at target

Excise Tax Gross-Up

  None. Participants receive “best net” after-tax position of either participant’s paying the excise tax or a reduction in severance benefits to a level that eliminates the imposition of excise tax

Recoupment of Incentive Compensation Awards Upon Restatement of Financial Results

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 may seek a number of remedies, all of which are subject to a number of conditions including (i) whether the executive officer engaged in the intentional misconduct, (ii) whether the bonus or incentive compensation to be recouped was calculated based upon the financial results that were restated, and (iii) whether the incentive compensation calculated under the restated financial results is less than the amount actually paid or awarded. The independent directors review whether to require one or more remedies by directing the Company to recover all or a portion of any incentive compensation received by the executive as a result of the misconduct, as well as cancel all or a portion of the outstanding equity-based awards held by the executive (commonly referred to as a claw-back policy). In addition, the independent directors may also seek to recoup any gains realized by the executive with respect to their equity-based awards, including exercised stock options and vested RSUs, regardless of when they were issued.

Impact of Favorable Accounting and Tax Treatment on Compensation Program Design

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

Securities Trading Policy

Executives and certain other employees, including our NEOs, may not engage in any transaction in which they may profit from short-term speculative swings in the value of our securities. Our securities trading policy is applicable to all employees and is designed to ensure compliance with all applicable insider trading rules.

Anti-Hedging Policy

Directors, executives and certain other employees, including our NEOs, are not permitted to hold any security tied to the performance of our Common Stock other than equity delivered directly to employees under our equity incentive plans.

 

36   Motorola Solutions Notice of 2016 Annual Meeting of Stockholder and Proxy Statement


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COMPENSATION AND LEADERSHIP COMMITTEE REPORT     

 

THE FOLLOWING REPORT OF THE COMPENSATION AND LEADERSHIP COMMITTEE ON EXECUTIVE COMPENSATION AND RELATED DISCLOSURE SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.

Throughout 2015, Kenneth C. Dahlberg was the Chair of the Compensation and Leadership Committee (the “Committee”) and Anne R. Pramaggiore and Bradley E. Singer 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’ 2015 Annual Report on Form 10-K.

Respectfully submitted,

Kenneth C. Dahlberg, Chairman

Anne R. Pramaggiore

Bradley E. Singer

 

COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                                

 

Kenneth C. Dahlberg, Director and Chair of the Committee, Anne E. Pramaggiore, Director, and Bradley E. Singer, Director, served on the Committee throughout 2015. No member of the Committee was, during the fiscal year ended December 31, 2015, an officer, former officer, or employee of the Company or any of our subsidiaries. We did not have any compensation committee interlocks in 2015.

 

Motorola Solutions Notice of 2016 Annual Meeting of Stockholder and Proxy Statement   37


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NAMED EXECUTIVE OFFICER COMPENSATION

 

2015 SUMMARY COMPENSATION TABLE

 

Name and

Principal Position
            (a)

 

Year

(b)

   

Salary

($)(1)

(c)

   

Stock
Awards

($)(2)

(e)

   

Option
Awards

($)(2)

(f)

   

Non-Equity
Incentive

Plan
Compensation
($)(3)

(g)

   

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings

($)(4)
(h)

   

All Other

Compensation

($)(5)

(i)

   

Total

($)

(j)

 

Gregory Q. Brown

Chairman and Chief Executive Officer

  

  

      2015        1,250,000        2,312,480        5,440,430        3,900,000        0        372,415        13,275,325   
      2014        1,287,500        1,848,923        3,916,657        558,370        26,013        331,669        7,969,131   
      2013        1,200,000        1,572,805        3,334,996        6,207,600        0        306,530        12,621,931   

Gino A. Bonanotte

Executive Vice President and Chief Financial Officer

  

  

      2015        622,404        666,642        1,303,842        732,212        0        20,600        3,345,700   
      2014        615,481        660,818        799,987        175,412        173,977        20,400        2,446,075   
      2013        342,607        360,330        243,742        325,023        0        17,200        1,288,902   

Mark S. Hacker

Executive Vice President, General Counsel and Chief Administrative Officer

  

  

      2015        507,488        593,740        1,237,164        641,876        0        14,450        2,994,718   
      2014        488,942        472,031        499,997        110,012        36,052        27,432        1,634,466   

Robert C. Schassler(6)

Executive Vice President, International Sales & Services and Global Managed & Support Services

  

  

      2015        510,750        433,299        1,070,501        676,022        0        23,025        2,713,597   
      2014        499,712        542,891        324,989        131,000        93,806        22,502        1,614,900   

Eduardo F. Conrado

Executive Vice President and Chief Strategy & Innovation Officer

  

  

      2015        448,750        333,321        970,510        541,081        0        20,300        2,313,962   
      2014        449,615        314,666        333,332        101,163        143,257        27,302        1,369,335   
      2013        424,346        229,697        487,070        486,175        0        25,813        1,653,101   

Mark F. Moon

Former Executive Vice President and President, Sales & Marketing(7)

  

  

      2015        658,269        633,316        633,322        1,143,563        0        37,234        3,105,704   
      2014        669,712        660,881        699,991        210,959        145,767        54,039        2,441,348   
      2013        621,096        506,086        1,073,199        989,725        0        25,506        3,215,612   

 

(1) Salary includes amounts deferred pursuant to salary reduction arrangements under the 401(k) and Deferred Compensation Plans; 2014 reflects two additional weeks of pay due to the timing of the 2014 payroll calendar.
(2) The amounts in columns (e) and (f) reflect the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 8, “Share-Based Compensation Plans and Other Incentive Plans” in the Company’s Form 10-K for the fiscal year ended December 31, 2015. If maximum performance is achieved for performance-based stock awards, the aggregate grant date fair value in column (e) is $4,624,960 for Mr. Brown, $1,333,285 for Mr. Bonanotte, $1,093,691 for Mr. Hacker, $866,599 for Mr. Schassler, $666,642 for Mr. Conrado and $1,266,633 for Mr. Moon. If maximum performance is achieved for performance-based option awards, the aggregate grant date fair value in column (f) is $8,909,153 for Mr. Brown, $2,303,837 for Mr. Bonanotte, $1,987,147 for Mr. Hacker, $1,720,476 for Mr. Schassler, $1,470,499 for Mr. Conrado and $1,583,304 for Mr. Moon. Mr. Schassler’s unvested stock and option awards were subsequently forfeited on January 15, 2016 when he voluntarily left the Company.
(3) In 2015, the amounts in column (g) consist of awards earned by eligible NEOs at the time under the 2015 STIP and under the 2013-2015 LRIP. Earned payments in column (g) during fiscal year 2015 are as follows:

 

    Mr. Brown     Mr. Bonanotte     Mr. Hacker     Mr. Schassler     Mr. Conrado     Mr. Moon  

2015 STIP

    $1,650,000        $520,330        $424,260        $426,987        $325,820        $550,313   

2013-2015 LRIP

    2,250,000        211,883        217,616        249,035        215,261        593,250   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

    $3,900,000        $732,213        $641,876        $676,022        $541,081        $1,143,563   

 

38   Motorola Solutions Notice of 2016 Annual Meeting of Stockholder and Proxy Statement


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In 2014, the amounts in column (g) consist of awards earned by eligible NEOs at that time under the 2014 STIP. There were no payouts under the 2012-2014 LRIP. In 2013, the amounts in column (g) consist of awards earned by eligible NEOs at that time under the 2013 STIP and under the 2011-2013 LRIP. Earned payments in column (g) during fiscal year 2013 are as follows:

 

    Mr. Brown     Mr. Bonanotte     Mr. Conrado     Mr. Moon  

2013 STIP

    $1,557,600        $139,200        $187,800        $327,100   

2011-2013 LRIP

    4,650,000        185,823        298,375        662,625   
 

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

            $6,207,600                $325,023                $486,175                $989,725   

 

(4) The amounts in column (h) represent the aggregate change in present value of the respective officer’s benefits under all pension plans. If the aggregate change in value of benefits under all pension plans was negative, the value is reflected as $0. A summary of the specific values for each period are set forth below:

 

NEO    Period  

Change in Present Value

of Pension Plan

  Above Market Deferred
Compensation Earnings
  Total

Gregory Q. Brown

   Dec. 31, 2014 to Dec. 31, 2015   ($1,384)   $0   ($1,384)
   Dec. 31, 2013 to Dec. 31, 2014   $23,912   $2,101   $26,013
     Dec. 31, 2012 to Dec. 31, 2013   ($12,282)   $0   ($12,282)

Gino A. Bonanotte

   Dec. 31, 2014 to Dec. 31, 2015   ($39,765)   $0   ($39,765)
   Dec. 31, 2013 to Dec. 31, 2014   $162,929   $11,048   $173,977
     Dec. 31, 2012 to Dec. 31, 2013   ($76,221)   $0   ($76,221)

Mark S. Hacker

   Dec. 31, 2014 to Dec. 31, 2015   ($7,067)   $0   ($7,067)
     Dec. 31, 2013 to Dec. 31, 2014   $30,561   $5,491   $36,052

Robert C. Schassler

   Dec. 31, 2014 to Dec. 31, 2015   ($8,402)   $0   ($8,402)
     Dec. 31, 2013 to Dec. 31, 2014   $73,700   $20,106   $93,806

Eduardo F. Conrado

   Dec. 31, 2014 to Dec. 31, 2015   ($35,808)   $0   ($35,808)
   Dec. 31, 2013 to Dec. 31, 2014   $137,696   $5,561   $143,257
     Dec. 31, 2012 to Dec. 31, 2013   ($67,132)   $0   ($67,132)

Mark F. Moon

   Dec. 31, 2014 to Dec. 31, 2015   ($11,488)   $0   ($11,488)
   Dec. 31, 2013 to Dec. 31, 2014   $110,635   $35,132   $145,767
     Dec. 31, 2012 to Dec. 31, 2013   ($62,906)   $0   ($62,906)

 

(5) The amounts in column (i) for 2015 consist of perquisite costs for personal use of Company aircraft, security system monitoring, costs for financial planning, guest attendance at Company events, Company matching contributions to the 401(k) Plan and executive physicals. The incremental cost to the Company for any personal use of Company aircraft is calculated by multiplying the number of hours an NEO travels in a particular plane by the direct cost per flight hour per plane. Direct costs include fuel, maintenance, labor, parts, loading and parking fees, catering and crew. Specific perquisites applicable to each NEO are identified below by an “X”. Where such perquisite exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for such officer, the dollar amount is given.

 

NEO  

Personal

Aircraft Use

   

Security System

Monitoring

   

Financial

Planning

   

Guest Attendance

at Company Events

   

401K Plan

Match

   

Executive

Physical

 

Gregory Q. Brown

    $329,813        X        X                X           

Gino A. Bonanotte

                    X                X           

Mark S. Hacker

                    X                X        X   

Robert C. Schassler

                    X                X        X   

Eduardo F. Conrado

                    X                X        X   

Mark F. Moon

    $11,376                X        X        X           

 

(6) On December 31, 2015, Mr. Schassler resigned from his position as an officer of the Company, effective as of January 15, 2016.
(7) Mr. Moon no longer served as Executive Vice President and President, Sales & Marketing as of November 2015, although he remains an Executive Vice President and will leave the Company at the end of 2016.

 

Motorola Solutions Notice of 2016 Annual Meeting of Stockholder and Proxy Statement   39


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GRANTS OF PLAN-BASED AWARDS IN 2015

 

      

Estimated Future Payouts

Under Non-Equity Incentive

Plan Awards

   

Estimated Future Payouts

Under Equity Incentive

Plan Awards

    All Other
Stock
Awards:
Number of
Shares of
Stock 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)

 
Name (a)   Grant
Type
   

Grant

Date

(b)

    Threshold
($)
(c)
   

Target

($)
(d)

    Maximum
($)
(e)
    Threshold
(#)
(f)
   

Target

(#)(2)
(g)

    Maximum
(#)
(h)
         

Gregory Q. Brown

    STIP        1/1/2015 (4)      0        1,875,000        3,675,000                                                    
      LRIP        1/1/2015 (5)      937,500        3,125,000        7,812,500                                                    
      MSUs        3/9/2015                             22,982        38,303 (6)      76,606                             2,312,480   
      POs        3/9/2015                             39,925        132,749 (7)      331,873                      66.57        2,312,488   
      PCSOs        8/25/2015                             157,560        393,479 (9)      787,498                      68.50        3,127,943   

Gino A. Bonanotte

    STIP        1/1/2015 (4)      0        591,284        1,158,916                                                    
      LRIP        1/1/2015 (5)      200,000        666,666        1,666,665                                                    
      MSUs        3/9/2015                             6,625        11,042 (6)      22,084                             666,642   
      POs        3/9/2015                             11,481        38,270 (7)      95,675                      66.57        666,663   
      PCSOs        8/25/2015                             32,083        80,209 (9)      160,417                      68.50        637,178   

Mark S. Hacker

    STIP        1/1/2015 (4)      0        482,114        944,943                                                    
      LRIP        1/1/2015 (5)      150,000        500,000        1,250,000                                                    
      RSUs        1/23/2015                                                  1,527 (8)                    93,778   
      Options        1/23/2015                                                         9,363 (8)      65.48        99,997   
      MSUs        3/9/2015                             4,969        8,281 (6)      16,562                               
      POs        3/9/2015                             8,611        28,702 (7)      71,755                      66.57        499,989   
      PCSOs        8/25/2015                             32,083        80,209 (9)      160,417                      68.50        637,178   

Robert C. Schassler

    STIP        1/1/2015 (4)      0        485,213        951,017                                                    
      LRIP        1/1/2015 (5)      130,000        433,334        1,083,335