DEF 14A 1 d696616ddef14a.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

 

 

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  Definitive Proxy Statement
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Motorola Solutions, Inc.

(Name of Registrant as Specified In Its Charter)

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

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Table of Contents

 

LOGO

 

Notice of

 

2019 ANNUAL MEETING

 

of Shareholders and Proxy Statement

 

 

 

LOGO


Table of Contents

LOGO

Dear Fellow Motorola Solutions Shareholders:

Since the opening bell rang at the New York Stock Exchange on January 4, 2011, beginning the trading of Motorola Solutions, total shareholder return through 2018 was 261%. During 2018 alone, total shareholder return was 30%.

As fellow owners, we care a great deal about shareholder returns. But we also care that those returns are created in a sustainable way, and so I’d like to open this proxy statement with some context in that regard.

We operate in an industry with relatively few environmental and social-issue risks, but many E&S opportunities: we help public safety and private-sector customers build safer communities by providing innovative emergency response communications, intelligent security solutions, and next generation 9-1-1 software.

We have steadily reduced our already small energy, water and waste footprints by 19%, 25% and 29%, respectively since 2016. We conduct exceptionally strong social and environmental supply chain audits including over 156 supplier assessments conducted in 2018, covering 81% of our supply chain spend, based on our current reporting standards1.

We are committed to providing a great work environment and competitive benefits for our more than 16,000 employees. In addition to great benefits and training programs, we offer a subsidized stock purchase plan so that our employees can have a stake in our future. We regularly win awards for being a good place to work and get top marks from the leading environmental, social, and governance scorecards for these and other employee matters.

We have set ourselves apart when it comes to our focus on innovation. In 2018, we invested more than $630 million in R&D, we have approximately 5,300 granted patents, and we have a dedicated cybersecurity team working to protect our hardware, software and service solutions. We are committed to a sustainable future. We set tough goals and we back them up with investments in our portfolio, operations and people.

At Motorola Solutions, our customers are everyday heroes—from police officers and firefighters to utility workers and educators. We are dedicated to designing and delivering the technologies our customers refer to as their lifeline—mission-critical communications, services, software, video and analytics, which keep businesses thriving and communities safe.

We ask for your voting support to continue delivering results for you. We encourage you to communicate with us whenever you wish via the means described in this proxy statement, and we thank you for your investment in us.

Sincerely,

 

LOGO

Gregory Q. Brown

Chairman and CEO

Motorola Solutions, Inc.

 

 

1 

Our suppliers are subject to our Supplier Code of Conduct, our Anti-Human Trafficking Compliance Plan and the oversight of the Responsible Business Alliance.


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LOGO

 

PRINCIPAL EXECUTIVE OFFICES:

500 West Monroe Street

Chicago, Illinois 60661

March 28, 2019

NOTICE OF 2019 ANNUAL MEETING OF SHAREHOLDERS

Annual Meeting Date: Monday, May 13, 2019

Time: 1:30 p.m., EDT

Location: The Hay-Adams, 800 16th Street, NW, Washington, DC 20006

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

The purpose of the meeting is to:

1.

elect eight directors for a one-year term;

2.

ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2019;

3.

hold a shareholder advisory vote to approve the Company’s executive compensation;

4.

consider and vote upon the shareholder proposals 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 Annual Meeting.

By order of the Board of Directors,

 

LOGO

Kristin L. Kruska

Secretary

Only Motorola Solutions shareholders of record at the close of business on March 15, 2019 (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 2018 Annual Report, is being mailed to shareholders on or about March 28, 2019.

 

LOGO

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS: VIA THE INTERNET Visit the website shown on your Motorola Solutions Notice of Internet Availability of Proxy Materials for the 2019 Annual Meeting (your Notice ) or proxy card to vote via the internet. BY MAIL If you received a printed copy of the proxy card, mark, sign, date and return the proxy card using the postage-paid envelope provided. BY TELEPHONE Use the toll-free telephone number listed on your o proxy card IN PERSON In person at the Annual Meeting.

PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO SHAREHOLDERS 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.

 

     


Table of Contents

TABLE OF CONTENTS

 

PROXY STATEMENT

 

WHAT IS MOTOROLA SOLUTIONS?

    1  

OUR BOARD

    4  

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

    4  

WHO WE ARE — BOARD

    4  

OUR BOARD’S QUALIFICATIONS

    9  

HOW OUR BOARD IS SELECTED AND EVALUATED

    9  

HOW OUR BOARD GOVERNS THE COMPANY

    9  

OUR BOARD’S LEADERSHIP STRUCTURE

    11  

COMMITTEES OF THE BOARD

    11  

INDEPENDENCE

    12  

RELATED PERSON TRANSACTION POLICY AND PROCEDURES

    13  

HOW YOU CAN COMMUNICATE WITH OUR BOARD

    13  

HOW WE DETERMINE DIRECTOR COMPENSATION

    13  

HOW OUR DIRECTORS ARE COMPENSATED

    14  

DIRECTOR RETIREMENT PLAN AND INSURANCE COVERAGE

    15  

OUR COMPANY

    16  

WHO WE ARE

    16  

OUR LEADERSHIP TEAM

    16  

OUR INCLUSIVE GLOBAL TEAM

    19  

OUR COMMITMENT TO COMMUNITY

    19  

OUR COMMITMENT TO THE ENVIRONMENT

    19  

OUR COMPLIANCE AND CONTROL

    20  

OUR CODE OF BUSINESS CONDUCT

    20  

OUR RESPONSIBLE SUPPLY CHAIN

    20  
PROPOSAL NO. 2 — RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019     21  

OUR PAY

    22  

PROPOSAL NO.  3 — ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION

    22  

COMPENSATION DISCUSSION AND ANALYSIS

    23  

LETTER TO SHAREHOLDERS FROM COMPENSATION AND LEADERSHIP COMMITTEE CHAIR

    24  

SAY ON PAY VOTE RESULTS AND SHAREHOLDER ENGAGEMENT

    25  

EXECUTIVE SUMMARY

    26  

NAMED EXECUTIVE OFFICERS

    26  

PROCESS FOR DETERMINING EXECUTIVE COMPENSATION

    34  

COMPENSATION PHILOSOPHY

    34  

2018 ANNUAL COMPENSATION ELEMENTS

    36  

COMPARATIVE MARKET DATA

    39  

EQUITY USAGE AND GRANT PRACTICES

    39  

OTHER COMPENSATION POLICIES AND PRACTICES

    40  

COMPENSATION AND LEADERSHIP COMMITTEE REPORT

    43  

COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    43  

NAMED EXECUTIVE OFFICER COMPENSATION

    44  

2018 SUMMARY COMPENSATION TABLE

    44  

GRANTS OF PLAN-BASED AWARDS IN 2018

    46  

OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END

    47  

OPTION EXERCISES AND STOCK VESTED IN 2018

    48  

NONQUALIFIED DEFERRED COMPENSATION IN 2018

    49  

RETIREMENT PLANS

    50  

PENSION BENEFITS IN 2018

    50  

EMPLOYMENT CONTRACTS

    51  

TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

    52  

CEO PAY RATIO

    59  

EQUITY COMPENSATION PLAN INFORMATION

    60  

 


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Table of Contents

 

LOGO

 

WHAT IS MOTOROLA SOLUTIONS?

Motorola Solutions is a leading provider of mission-critical communications. Our technology platforms in communications, software, video, and services make cities safer and help communities and businesses thrive. At Motorola Solutions, we are ushering in a new era in public safety and security. We serve customers around the world who depend on our solutions to keep them connected, from extreme to everyday moments. A U.S. company headquartered in Chicago, we serve more than 100,000 customers in more than 100 countries and have a rich heritage of innovation spanning more than 90 years.

The need for mission-critical communications becomes especially clear in the wake of natural disasters such as hurricanes Florence and Michael and the California wildfires in 2018. Our systems provide first responders with reliable communications before, during, and after such catastrophes, enabling coordinated planning, response, and rescue that helps save lives.

PERFORMANCE AND ACCOMPLISHMENTS

TOTAL SHAREHOLDER RETURN (in percent)

 

 

LOGO

PERFORMANCE HIGHLIGHTS SINCE 2011

 

 

261%

  TOTAL  

  SHAREHOLDER  

RETURN*

 

   

 

  52%

REDUCTION

IN SHARE

COUNT

 

   

 

$14.6

BILLION

 IN CAPITAL RETURN 

 

 

*

Based on the split adjusted closing price of MSI common stock on December 31, 2010 and the closing price of MSI common stock on December 31, 2018, illustrating the growth of an initial investment of $100 on December 31, 2010, including the payment of dividends.

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   1


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        2018 Highlights
   

   Grew sales 15% to record $7.3 billion

 

   Grew backlog 10% to record $10.6 billion

 

   Increased quarterly dividend 10% to $0.57 per share

 

   Capital allocation of $1.2 billion in acquisitions, $337 million in dividends, and $132 million of share repurchases

  

   Added 550 patents, bringing patent portfolio to approximately 5,300

 

   Acquired Avigilon Corporation, advanced security and video solutions

 

   Acquired Plant Holdings, Next-Gen 911 software and solutions

  

   Ranked No. 3 in Fortune World’s Most Admired Companies List for Network and Other Communications Equipment

 

   Ranked No. 107 in The Wall Street Journal Management Top 250 List

 

   Ranked No. 9 in Barron’s Top 100 Sustainable U.S. Companies

 

   Named one of Forbes World’s Best Employers

 

  2019 ANNUAL MEETING OF SHAREHOLDERS

 

     

Date and Time: May 13, 2019, 1:30 p.m., EDT

 

     

Location: The Hay-Adams, 800 16th Street, NW, Washington, DC 20006

 

     

Record Date: March 15, 2019

 

     

Voting: Shareholders 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

  ITEMS TO BE VOTED ON

 

 
    

Our Board’s Recommendation        

 

 

  Election of Directors (page 4)

   FOR
 

  Ratification of Independent Registered Public Accounting Firm (page 21)

   FOR
 

  Advisory Approval of the Company’s Executive Compensation (page 22)

   FOR
 

  Shareholder Proposal on Independent Director with Human Rights Expertise (page 66) 

   AGAINST
 

  Shareholder Proposal on Lobbying Disclosure (page 68)

   AGAINST

 

2   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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DIRECTOR NOMINEES

 

                       

Board Committees

(as of March 07, 2019)*

               
 Name  

  Director  

  Since  

  Indep.    

Other

  Public Co.  
Boards

  Position   Audit   Comp.   Gov. &
Nom.
  Exec.
               

 Gregory Q. Brown

  2007             1  

Chairman and CEO,

Motorola Solutions, Inc.

 

              LOGO

 

               
               

 Kenneth D. Denman

  2017      

 

LOGO

 

 

 

  3  

Venture Partner,

Sway Ventures

 

          LOGO

 

  LOGO

 

               
               

 Egon P. Durban

  2015      

 

LOGO

 

 

 

  3  

Managing Partner and Managing Director of Silver Lake

 

      LOGO

 

       
               
               

 Clayton M. Jones

  2015      

 

LOGO

 

 

 

  1  

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

 

 

 

  1  

Managing Partner and Managing Director of Silver Lake

 

  LOGO

 

      LOGO

 

   
               
               

 Anne R. Pramaggiore

  2013      

 

LOGO

 

 

 

  1  

Senior Executive Vice President and CEO of Exelon Utilities,

Exelon Corporation

 

      LOGO

 

      LOGO

 

               
               

 Joseph M. Tucci

  2017      

 

LOGO

 

 

 

  2  

Co-Chairman and Co-CEO GTY Technology Holdings, Inc.

 

      LOGO

 

       
               

LOGO = Chair of Committee

 

*

Samuel C. Scott is currently a member of the Governance and Nominating Committee but is not a director nominee standing for reelection to the Board on May 13, 2019.

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,” “MSI” or the “Company”). Proxies are being solicited on behalf of the Board of Directors of the Company (the “Board”) to be used at the 2019 Annual Meeting of Shareholders (the “Annual Meeting”) to be held at The Hay-Adams, 800 16th Street, NW, Washington, DC 20006 on Monday, May 13, 2019 at 1:30 p.m., EDT, for the purposes set forth in the Notice of 2019 Annual Meeting of Shareholders. This Proxy Statement is dated March 28, 2019 and is being distributed to shareholders on or about March 28, 2019.

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   3


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OUR BOARD

 

 

 

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

Proposal Number 1 of this Proxy Statement enables you to vote on the members of your board of directors.* We open the proxy with this vote because we believe there is no more important vote than that of electing the fiduciaries who oversee Motorola Solutions on your behalf.

To inform that vote, we provide you information here on:

 

     

Who our Board is – including their qualifications

 

     

How our Board is selected and evaluated

 

     

How the Board governs the company

 

     

How our Board is organized

 

     

How you can communicate with the Board

 

     

How our Board is compensated

WHO WE ARE – BOARD

Each of the nominees named below is currently a director of the Company, elected at the Annual Meeting of Shareholders held on May 14, 2018. The ages shown are current as of the date of this Proxy Statement.

 

 GREGORY Q.

 BROWN

  

 

Mr. Brown joined the Company in 2003, was appointed as Chief Executive Officer of Motorola, Inc. in January 2008, and since May 2011 has been the Chairman and Chief Executive Officer of Motorola Solutions, Inc.

 

Other Public Company Boards: Xerox Corporation through May 21, 2019, after which he will no longer be a member of the board. In the last five years 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, technology, services and software business, cybersecurity, safety and security experience as Chairman and CEO of the Company, and former CEO of Micromuse, Inc.

 

  Financial and accounting expertise, global business, capital allocation, developing markets, government, public policy and regulatory experience as Chairman and CEO of the Company, former chair and board member 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

 

  Government, public policy and regulatory experience as a former member of the Executive Committee of the Business Roundtable

 

  Public company board experience

 

  LOGO

 Principal Occupation:

 Chairman and Chief
 Executive Officer,
 Motorola Solutions, Inc.    

 

 Age: 58

 Director since: 2007

 Chairman since: 2011

    
    
    
    
 

 

* 

The number of directors of the Company to be elected at the Annual Meeting is eight. The directors elected at the Annual Meeting will serve a one-year term ending at the 2020 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 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 nine directors and immediately following the Annual Meeting, the size of the Board will be decreased to eight directors and will consist of the eight elected directors, if all nominees are elected. Mr. Samuel C. Scott is not standing for re-election due to meeting the retirement age set forth in the Company’s Board Governance Guidelines. 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.

 

4   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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 KENNETH D.

 DENMAN

  

 

Mr. Denman is a Venture Partner at Sway Ventures. He was the CEO and President of Emotient, Inc. from 2012 to 2016. He also served as the Chief Executive Officer of Openwave Systems Inc. from 2008 to 2011 and as a Director from 2004 to 2011; he served as the Chief Executive Officer and President and Director of iPass, Inc. from 2001 to 2008 and as its Chairman from 2003 to 2008.

 

Other Public Company Boards: Costco Wholesale Corporation, LendingClub Corporation, Mitek Solutions, Inc. In the last five years Mr. Denman served on the board of ShoreTel, Inc. from May 2007 to September 2017 and on the board of United Online from June 2015 to July 2016.

 

Board Committees: Governance and Nominating (Chair), Executive

 

Director Qualifications:

 

  Relevant industry and technology experience, financial and accounting expertise as CEO and President of Emotient, Inc., Openwave Systems, Inc. and iPass, Inc.

 

  Services and software, cybersecurity, safety and security experience as CEO and President of Emotient, Inc., Openwave Systems, Inc. and iPass, Inc.

 

  Public company CEO, global business and developing markets experience as CEO and President of iPass, Inc. and Openwave System, Inc.

 

  Private equity, investment banking and capital allocation experience as a Venture Partner of Sway Ventures

 

  Public company board experience

 

  LOGO

 Principal Occupation:

 Venture Partner,

 Sway Ventures

 

 Age: 60

 Director since: 2017

 Lead Independent Director

 (as of May 13, 2019)

 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: Dell Technologies Inc., SecureWorks Corp, VMware, Inc. In the last five years Mr. Durban served on the board of Intelsat S.A from August 2011 to December 2016.

 

Board Committees: Compensation and Leadership

 

Director Qualifications:

 

  Relevant industry, technology, global business and services and software experience as Managing Partner and Managing Director of Silver Lake

 

  Financial and accounting expertise and private equity, investment banking and capital allocation experience as Managing Partner and Managing Director of Silver Lake and 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: 45

 Director since: 2015

 Independent

 

 

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   5


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 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. In the last five years, Mr. Jones served on the boards of Rockwell Collins from March 2001 to July 2014 and Cardinal Health, Inc. from September 2012 to November 2018.

 

Board Committees: Audit

 

Director Qualifications:

 

  Public company CEO, financial and accounting expertise, and global business experience as former CEO of Rockwell Collins, Inc.

 

  Relevant industry, technology, cybersecurity, safety and security 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: 69

 Director since: 2015

 Independent

 

 

 

 

 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, Thermo Fisher Scientific, Inc. Ms. Lewent served on the board of directors of Motorola, Inc. from May 1995 to May 2010.

 

Board Committees: Audit (Chair), Executive

 

Director Qualifications:

 

  Public company CFO, financial and accounting expertise, capital allocation experience, and global business experience as the former CFO of Merck

 

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

 

  Developing markets experience as former CFO at Merck and board member of GlaxoSmithKline

 

  Government, public policy and regulatory experience as former CFO at Merck and board member of GlaxoSmithKline and Thermo Fisher

 

  Public company board experience

 

  LOGO

 

 Principal Occupation:

 Retired; Formerly Executive

 Vice President & Chief

 Financial Officer, Merck &

 Co., Inc. (“Merck”)

 

 Age: 70

 Director since: 2011

 Independent

 

 

6   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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 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. In the last five years, Mr. Mondre served on the board of Sabre Corporation from March 2007 to December 2018.

 

Board Committees: Audit, Governance and Nominating

 

Director Qualifications:

 

  Relevant industry, technology, global business, and services and software experience as Managing Partner and Managing Director of Silver Lake

 

  Financial and accounting expertise and private equity, investment banking and capital allocation 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: 44

 Director since: 2015

 Independent

 

 

 ANNE R.

 PRAMAGGIORE

  

 

Ms. Pramaggiore has been the Senior Executive Vice President and Chief Executive Officer of Exelon Utilities, a business unit of Exelon Corporation since June 1, 2018. She has been a member of the Commonwealth Edison (“ComEd”) board of directors since February 2012. She served as ComEd’s President and Chief Executive Officer from February 2012 until June 2018 and as President and Chief Operating Officer from May 2009 until February 2012.

 

Other Public Company Boards: The Babcock & Wilcox Company

 

Board Committees: Compensation and Leadership (Chair), Executive

 

Director Qualifications:

 

  Public company division CEO, government, public policy, regulatory, technology, and services and software business experience as Senior Executive Vice President and CEO of Exelon Utilities, Exelon Corporation, CEO of ComEd, Executive Vice President, Customer Operations, Regulatory and External Affairs of ComEd, and as a licensed attorney

 

  Global business experience as 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:

 Senior Executive Vice

 President and Chief

 Executive Officer, Exelon

 Utilities, Exelon Corporation

 (“Exelon”)

 

 Age: 60

 Director since: 2013

 Independent

 

 

 

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   7


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 JOSEPH M.

 TUCCI

  

 

Mr. Tucci is the Co-Chief Executive Officer and Co-Chairman of GTY Technology Holdings, Inc. and Chairman of Bridge Growth Partners. Formerly, Mr. Tucci was the Chairman and Chief Executive Officer of EMC Corporation. He was EMC’s Chairman from January 2006 and CEO from January 2001 until September 2016, when Dell Technologies acquired the company. At that time, he became an advisor to the acquiring company’s founder, Michael Dell, and its board of directors.

 

Other Public Company Boards: GTY Technology Holdings, Inc., Paychex, Inc. In the past five years Mr. Tucci served on the boards of EMC Corporation from January 2001 to September 2016 and of VMware, Inc. from April 2007 to September 2016.

 

Board Committees: Compensation and Leadership

 

Director Qualifications:

 

  Public company CEO, technology, global business, and services and software business experience as Chairman, CEO and President of EMC Corporation

 

  Relevant industry, developing markets and private equity experience as Co-CEO and Co-Chairman of GTY Technology Holdings, Inc. and founding member and current Chairman of Bridge Growth Partners

 

  Government, public policy and regulatory experience as a member of The Business Roundtable and Chair of its Task Force on Education and the Workforce and as a member of The Technology CEO Council

 

  Public company board experience

 

  LOGO

 Principal Occupation:

 Co-Chief Executive Officer

 and Co-Chairman of GTY

 Technology Holdings, Inc.

 and Chairman of Bridge

 Growth Partners

 

 Age: 71

 Director since: 2017

 Independent

 

    

 

    

 

RECOMMENDATION OF THE BOARD

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

 

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OUR BOARD’S QUALIFICATIONS

We believe the Board 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 individuals with a mix of skills and qualifications which include:

 

     

Independence: Seven of eight director nominees

 

     

Gender and ethnic diversity: Three of eight director nominees

 

     

Relevant industry experience: Six of eight director nominees

 

     

Public company CEO, division CEO and CFO: Six of eight director nominees

 

     

Financial and accounting expertise: Six of eight director nominees

 

     

Technology and information technology experience: All director nominees

 

     

Cybersecurity, safety and security experience: Three of eight director nominees

 

     

Services and software business experience: Six of eight director nominees

 

     

Global business experience: All director nominees

 

     

Developing markets experience: Four of eight director nominees

 

     

Government, public policy and regulatory experience: Five of eight director nominees

 

     

Private equity, investment banking or capital allocation experience: Seven of eight director nominees

 

     

Public company board experience: All director nominees

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

HOW OUR BOARD IS SELECTED AND EVALUATED

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, gender and ethnic diversity is an essential factor considered by the Board and the Governance and Nominating Committee when selecting director nominees. The Board and the Governance and Nominating Committee recognize the importance of a Board representing diverse knowledge and experiences and 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 shareholders, 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. Shareholder-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. In 2018, we continued our retention of Russell Reynolds to assist with this process. Russell Reynolds compiles a list of candidates, evaluates each candidate and makes recommendations to the Governance and Nominating Committee. They screen candidates based on the Board’s criteria, perform reference checks, prepare a biography of each candidate for the Governance and Nominating Committee’s review and help arrange interviews if necessary. The Governance and Nominating Committee and the Chairman of the Board will conduct interviews with candidates who meet the Board’s criteria. The Governance and Nominating Committee has full discretion in considering potential candidates and making its nominations to the Board.

HOW OUR BOARD GOVERNS THE COMPANY

We believe that the governance tone of a company is set at the top. The Board has:

 

     

Responsibility for overseeing management and providing strategic guidance

 

     

A belief in the steady refreshment of the Board to bring new and diverse perspectives

 

     

A belief in the importance of staying well informed

 

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A willingness to manage risks, seize opportunities and embrace leadership

We adhere to a number of good board governance practices and principles:

 

     

7 of our 8 members are independent, including all committee members

 

     

A lead independent director

 

     

Regular executive session meetings of independent directors

 

     

Annual director self-assessment process

 

     

Regular risk assessment processes

 

     

Board Governance Guidelines and Principles of Conduct

 

     

Director Independence Guidelines

We maintain a strong foundation of corporate governance practices and principles:

 

     

Annual election of directors

 

     

No super majority provisions

 

     

No “poison pill”

 

     

Majority voting standard in uncontested director elections

 

     

20% threshold for special meeting vote

 

     

Shareholder right to act by written consent

 

     

Succession planning:

Succession planning is important at all levels of the Company. In 2018, the Board reviewed short and long-term succession plans for the CEO and other members of management’s executive committee. When assessing possible CEO candidates, the Board identified skills and behavioral characteristics they consider a requirement for the Company’s CEO. The Board evaluates these succession plans with the overall business strategy in mind. When possible, potential leaders are introduced to the Board through presentations or separate events.

We maintain a robust compensation governance framework:

 

     

Retention of independent compensation consultant

 

     

Annual “say on pay” votes

 

     

No excise tax gross-up provisions

 

     

A recoupment “clawback” provision

 

     

Stock ownership guidelines for directors and officers

 

     

An anti-hedging policy

We maintain comprehensive governance of risks and corporate controls:

 

     

Code of Business Conduct

 

     

Supplier Code of Conduct and regular supplier audits

 

     

Anti-Human Trafficking Compliance Plan

 

     

Robust oversight of risk:

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 shareholders 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, cybersecurity, 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 and the Audit Committee’s review of financial and cybersecurity 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 and

 

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presentations to the entire Board. 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 activities of the Company. Audit services identifies and conducts engagements utilizing an enterprise risk management model, with the engagements spanning financial, operational, strategic and compliance risks. The engagement results assist management in maintaining acceptable risk levels. The director of audit services reports directly to the Audit Committee as well as the Chief Financial Officer and meets regularly with the Audit Committee and its chairperson, including in executive session.

We encourage you to visit www.motorolasolutions.com/investors to obtain more information and view our governance documents. Amendments to the above documents, or waivers applicable to our directors, chief executive officer, chief financial officer or corporate controller from certain provisions of our ethical policies and ethical 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 2018.

OUR BOARD’S LEADERSHIP STRUCTURE

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 2018. 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. If elected at the Annual Meeting of Shareholders, Mr. Denman will serve as our Lead Independent Director, effective May 13, 2019.

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, 2018 (except as otherwise noted), the number of meetings of each committee during 2018, 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.

 

    2018 Meetings: 9

 

 

    Judy C. Lewent (Chair)

    Clayton M. Jones

    Gregory K. Mondre

   

   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.

 

 

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    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.

 

 

    2018 Meetings 5

 

    Anne R. Pramaggiore (Chair)

    Egon P. Durban

    Joseph M. Tucci

 

 

 

 

    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.

 

   Oversee the governance and compensation of the Board.

 

   Review the Company’s environmental, social and governance strategy, initiatives and policies.

 

 

 

    2018 Meetings: 4

 

 

 

    Kenneth D. Denman (Chair)

    Gregory K. Mondre

    Samuel C. Scott III

 

 

 

 

    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.

 

    2018 Meetings: 0

 

 

 

    Gregory Q. Brown (Chair)

    Kenneth D. Denman

    Judy C. Lewent

    Anne R. Pramaggiore

    Samuel C. Scott III

    (Lead Independent Director)*

 

 

 

      *   Mr. Scott is not standing for reelection, and on February 14, 2019 Mr. Denman was appointed Lead Independent Director, effective May 13, 2019.

Attendance at Board Meetings

The Board held six meetings during 2018. Overall attendance at Board and committee meetings was 97%. Each incumbent director attended 100% of the combined total meetings of the Board and the committees on which he or she served during 2018, except for one director that attended 93% and one director that attended 79% of such meetings. At the Board meetings, independent directors of the Company meet regularly in executive session without management as required by the Board Governance Guidelines and NYSE listing standards. Generally, executive sessions are held in conjunction with regularly-scheduled meetings of the Board. In 2018, the non-employee independent members of the Board met in executive session five times. In addition, Board members are expected to attend the Annual Meeting as provided in the Board Governance Guidelines. Eight of the directors who stood for election at the 2018 Annual Meeting attended that meeting.

INDEPENDENCE

On March 7, 2019, 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 current non-employee directors, Mr. Denman, Mr. Durban, Mr. Jones, Ms. Lewent, Mr. Mondre, Ms. Pramaggiore, Mr. Scott and Mr. Tucci, were independent during the periods in 2018 and 2019 that they were members of the Board. Mr. Brown does not qualify as an independent director because he is an 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 from the Company 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.

 

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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. Denman, Ms. Pramaggiore and Mr. Scott 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. Denman, Mr. Durban, Mr. Mondre, Ms. Pramaggiore, Mr. Scott, and Mr. Tucci 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, 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 families. 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 2018.

HOW YOU CAN COMMUNICATE WITH OUR 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., 500 West Monroe Street, Chicago, IL 60661 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.

HOW WE DETERMINE DIRECTOR COMPENSATION

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

 

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HOW OUR DIRECTORS ARE COMPENSATED

As of the May 16, 2017 Board meeting, non-employee director compensation was set as follows on an annual basis:

 

 

Cash Compensation

 

  

 

Annual Compensation (paid quarterly)

 

   
Annual Cash Retainer    $100,000
   
Lead Independent Director Fee      $25,000
   
Audit Committee Chairperson Fee      $25,000
   

Compensation and Leadership

Committee Chairperson Fee

     $20,000
   

Governance and Nominating

Committee Chairperson Fee

     $15,000
   
Audit Committee Member Fee      $10,000

 

Equity Compensation

 

  

 

Annual Compensation (paid annually)

 

   
Annual Equity Grant    $190,000

During 2018, 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 15, 2018, each then non-employee director received a DSU award of 1,770 shares of Common Stock. The number of DSUs awarded was determined by dividing $190,000 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 shareholders ($15,833.33 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 2018, received no additional compensation for serving on the Board.

The following table further summarizes compensation paid to the non-employee directors during 2018.

 

Name

(a)

 

 

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

 

   

Stock
Awards ($)
(2)(3)

(c)

 

   

 

All Other
Compensation ($)
(g)

 

   

Total ($)
(h)

 

 
       

Kenneth D. Denman

    111,250       190,063             301,313  

Egon P. Durban

    0       290,339             290,339  
       

Clayton M. Jones

    110,000       190,063             300,063  
       

Judy C. Lewent

    125,000       190,063             315,063  
       

Gregory K. Mondre

    0       300,430             300,430  
       

Anne R. Pramaggiore

    60,000       250,299             310,299  
       

Samuel C. Scott III(4)

    128,750       190,063             318,813  
       

Joseph M. Tucci

    100,000       190,063             290,063  

 

(1)

During 2018, 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.

 

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(2)

The non-employee directors received an annual grant of DSUs on May 15, 2018. With respect to the annual grant of equity, Messrs. Durban, Jones, Mondre, Scott, Tucci and Ms. Pramaggiore elected to receive DSUs that settle at termination of service, and Mr. Denman 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, including quarterly fees elected to be received in equity, and the fair value on each date of grant are as follows:

 

    

 

March 30

 

   

 

May 15

 

   

 

June 29

 

   

 

September 28

 

   

 

December 31

 

 

Directors

 

 

Common

Stock/

Deferred

Stock Units

 

   

Annual Grant of

Deferred Stock Units

 

   

 

Common

Stock/

Deferred

Stock Units

 

   

Common

Stock/

Deferred

Stock Units

 

   

Common

Stock/

Deferred

Stock Units

 

 

Kenneth D. Denman

          1,770                    

Fair Value

            $190,063                          

Egon P. Durban

    238       1,770       215       193       218  

Fair Value

    $25,061       $190,063       $25,020       $25,117       $25,079  

Clayton M. Jones

          1,770                    

Fair Value

            $190,063                          

Judy C. Lewent

          1,770                    

Fair Value

            $190,063                          

Gregory K. Mondre

    262       1,770       237       212       240  

Fair Value

    $27,589       $190,063       $27,580       $27,590       $27,610  

Anne R. Pramaggiore

    143       1,770       129       116       131  

Fair Value

    $15,058       $190,063       $15,012       $15,096       $15,070  

Samuel C. Scott III

          1,770                    

Fair Value

            $190,063                          

Joseph M. Tucci

          1,770                    

Fair Value

            $190,063                          

 

(3)

The aggregate number of Motorola Solutions DSUs and Restricted Stock awards outstanding at December 31, 2018 includes accrued dividend equivalents or shares, is shown below:

 

  Directors       Deferred Stock Units      

    Restricted    

    Stock    

   
  Kenneth D. Denman     1,785  
  Egon P. Durban   11,862  
  Clayton M. Jones     8,719  
  Judy C. Lewent     6,032  
  Gregory K. Mondre   12,009  
  Anne R. Pramaggiore   18,956  
  Samuel C. Scott III   39,599   2,209
  Joseph M. Tucci     4,124  

 

(4)

Mr. Scott is not standing for reelection; his last day on the Board will be May 12, 2019.

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. For the purposes of these guidelines, Common Stock includes deferred stock units. As of December 31, 2018, 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, 2018 were $1,253.

 

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OUR COMPANY

 

We are committed to sharing important information with you about:

 

     

What the Company does

 

     

How it performed over the year

 

     

How it gets the best out of all of its people—not just its executives and directors

 

     

How it extends its good corporate practices throughout its supply chain

 

     

How its maintenance of good community relationships helps protect its social license to operate

 

     

How its stewardship of the environment helps attract talent, maintain stakeholder support and demonstrate integrity

 

     

How its maintenance of extensive, integrated compliance and control functions helps it manage expected and unexpected risks and survive difficult years as well as strong ones

WHO WE ARE

Motorola Solutions is a leading global provider of mission-critical communications serving more than 100,000 customers in over 100 countries. We have a rich heritage of innovation spanning more than 90 years that continues to be driven by our more than 16,000 global employees. We are committed to running our business ethically, responsibly and as a good corporate citizen to the communities in which we live and serve. All of this together helped us deliver 30% in total shareholder return in 2018. We invest in our people and policies to ensure they are each individually dedicated to maintaining these commitments.

OUR LEADERSHIP TEAM

Our Chief Executive Officer’s team, the management Executive Committee (“EC”), is comprised of the following six individuals:

 

 

 GINO BONANOTTE

 

  

 

Mr. Bonanotte is Executive Vice President and Chief Financial Officer of Motorola Solutions. He leads the Company’s global finance organization as well as information technology, supply chain operations, procurement and business development. He joined Motorola in 1988 and has held a number of key global financial leadership positions in his 30 years with the company, including corporate financial planning, supply chain, strategy and market business development, mergers and acquisitions, and joint ventures. Mr. Bonanotte serves as president and treasurer and is on the board of directors of the Motorola Solutions Foundation. He is also a member of the President’s Council at the Museum of Science and Industry in Chicago.

 

Previous Experience

 

Corporate Vice President at Motorola Solutions, responsible for financial operations of the sales and product operations organizations

 

Education

 

Mr. Bonanotte graduated with a bachelor’s degree in business from Northern Illinois University and a master’s degree in business administration from the University of Chicago’s Booth School of Business

 

  LOGO

 

Executive Vice President and Chief Financial Officer

 

 

Joined Motorola

Solutions: 1988

 

Age: 54

 

 

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MARK HACKER

 

  

 

Mr. Hacker is Executive Vice President, General Counsel & Chief Administrative Officer of Motorola Solutions. He leads the Company’s legal, government affairs and human resources teams. Mr. Hacker is a member of both the Illinois and Pennsylvania state bars, has been a certified public accountant, and is an adjunct professor at Northwestern University School of Law. Mr. Hacker is on the board of directors of Business Executives for National Security, Skills for Chicagoland’s Future, St. Rita of Cascia High School in Chicago and the 100 Club of Chicago. He is also a member of the President’s Advisory Council of Villanova University.

 

Previous Experience

 

Senior Vice President and General Counsel, Motorola Solutions, overseeing legal, government affairs, global marketing, communications and the Motorola Solutions Foundation; Corporate Finance Associate, Buchanan Ingersoll & Rooney; Accountant, Arthur Andersen

 

Education

 

Mr. Hacker earned a bachelor’s degree in accountancy from Villanova University and a law degree from Villanova University School of Law

 

  LOGO

 

Executive Vice President, General Counsel and Chief Administrative Officer

 

Joined Motorola

Solutions: 2001

Age: 47

  

 

 

KELLY MARK

 

  

 

Mr. Mark is Executive Vice President, Services & Software, for Motorola Solutions. He is responsible for the Company’s services and software business, which includes recurring revenue solutions in managed and support services, public safety and enterprise command center software solutions and unified communications applications. Mr. Mark is also the Company’s executive sponsor for FIRST Robotics, which provides students with hands-on experiences building robots as they learn skills in science, technology, engineering and math (STEM).

 

Previous Experience

 

Senior Vice President, Managed and Support Services, Motorola Solutions, overseeing services strategy, offer design and delivery worldwide

 

Education

 

Mr. Mark earned a bachelor’s degree in business from the University of Illinois and a master’s degree in business administration from Harvard Business School

 

  LOGO

 

Executive Vice President, Services and Software

 

Joined Motorola

Solutions: 1999

Age: 47

 

 

JACK MOLLOY

 

  

 

Mr. Molloy is Executive Vice President of Products & Sales for Motorola Solutions. He leads the Company’s worldwide sales organization and the product development of land mobile radio systems, devices, and video and analytics solutions. Mr. Molloy serves on the SBI Advisory Board and the board of trustees for The Field Museum in Chicago.

 

Previous Experience

 

Executive Vice President, Worldwide Sales & Services, Motorola Solutions, overseeing global sales, systems integration and managed and support services

 

Education

Mr. Molloy earned a bachelor’s degree in marketing from Northern Illinois University and a master’s degree in business administration from Loyola University

 

  LOGO

 

Executive Vice President, Products and Sales

 

Joined Motorola

Solutions: 1994

Age: 47

 

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   17


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 RAJAN NAIK

  

 

Mr. Naik is Senior Vice President, Chief Strategy & Innovation Officer, for Motorola Solutions. He is responsible for the corporate strategy organization, chief technology office, venture capital portfolio and competitive and market intelligence. Mr. Naik serves on the board of directors for CSG International.

 

Previous Experience

 

Senior Vice President and Chief Strategy Officer, Advanced Micro Devices; Partner, Technology/Media/Telecom, McKinsey & Company

 

Education

 

Mr. Naik earned a bachelor’s degree in engineering from Cornell University and a doctorate in engineering from the Massachusetts Institute of Technology

 

  LOGO

 

Senior Vice President, Chief Strategy and Innovation Officer

 

Joined Motorola

Solutions: 2015

Age: 47

 

 

CYNTHIA YAZDI

 

  

 

Ms. Yazdi is Senior Vice President and Chief of Staff for the Chairman and CEO of Motorola Solutions. She also leads worldwide marketing and communications for the Company, as well as the Motorola Solutions Foundation. Ms. Yazdi serves on the board of trustees of the Peggy Notebaert Nature Museum in Chicago and is president of the Young Professionals Group at Motorola Solutions.

 

Previous Experience

 

Has held a variety of leadership positions in strategy and operations roles during her 18-year career with the Company; most recently, she led product and business operations for the Asia Pacific and Middle East regions

 

Education

 

Ms. Yazdi earned a bachelor’s degree in civil engineering from Concordia University

 

  LOGO

 

Senior Vice President, Chief of Staff, Marketing & Communications and Motorola Solutions Foundation

 

Joined Motorola

Solutions: 2000

Age: 54

 

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OUR INCLUSIVE GLOBAL TEAM

Our more than 16,000 employees work every day to fulfill our mission of being our customers’ lifeline. We strive to create a culture where every employee experiences engaging work, effective collaboration and is rewarded for their contributions. To build this culture, we have in place a range of programs that ensure all our employees share in the value created for our shareholders and customers. We regularly win awards for being a good place to work and get top marks from the leading Environmental, Social and Governance (“ESG”) scorecards.

 

     

We provide a bonus program for every employee that is funded by the same financial performance outcomes as those we use to reward our CEO and his leadership team. As with our executive team, our employees have an opportunity to be paid individually based on performance.

 

     

We provide a stock purchase plan that allows our employees to hold a stake in the Company.

 

     

We provide comprehensive and competitive benefits in every geography where we operate including non-financial benefits such as flexible work options and professional development.

Further information on our compensation programs and benefits is provided in Compensation Discussion and Analysis.

We have a strong commitment to inclusion and diversity that includes corporate sponsorship of several councils including:

 

     

Women’s Council, Multicultural Business Council, LGBTA Council, People with Disabilities and Allies Council, Veterans Business Council.

 

     

In 2018, over 100 human resources professionals and hiring managers received several hours of specialized training on how to remove unconscious bias from the hiring process.

OUR COMMITMENT TO COMMUNITY

Motorola Solutions is committed to the communities where we live and work. More than 4,600 employees around the world contributed 39,000 hours of volunteer time to their communities last year, serving as mentors, tutors, firefighters, science fair judges and more.

In 2018, Motorola Solutions Foundation grants in 38 countries supported 2.5 million students, teachers, first responders and community members with science, technology, engineering and math education as well as public safety programs and disaster relief.

Our commitment to positive social impact, constructive corporate governance, managing environmental and social responsibilities, and community engagement has been recognized by a number of third parties with notable sustainability credentials.

 

     

We have been included in the prestigious Dow Jones Sustainability Index (DJSI) for North America, the FTSE4Good Index, and ranked #9 on Barron’s list of Top 100 Sustainable Companies.

 

     

ISS has awarded us the highest possible score for our environmental and social programs.

 

     

Sustainalytics gives us an overall “outperform” on ESG metrics.

 

     

Points of Light has recognized us as one of the “Civic 50” – the 50 most community-minded companies in the United States.

 

     

Bloomberg lists us on its Gender Equality Index – an index for companies that are committed to transparency in reporting the gender equality in their companies.

 

     

MSCI gives us good – second quartile – ratings for human capital development, supply chain labor standards, corporate governance and sourcing of materials.

OUR COMMITMENT TO THE ENVIRONMENT

As a mission-critical communications and telecommunications equipment provider, we have a unique operating footprint within our sector, and limited exposure to environmental risks and opportunities. However, we are always looking for ways to run our operations more sustainably, and from 2016 to 2017 our comprehensive environmental policies and management systems drove the following savings:

 

     

Energy use reduced by 19%

 

     

Water use reduced by 25%

 

     

CO2 emissions reduced by 20%

 

     

Waste production reduced by 29%

 

     

Electronic waste collection for recycling increased by 22%

 

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OUR COMPLIANCE AND CONTROL

We recognize that it is important for a company to have programs in place to handle the unexpected. Since we are a company that helps create safer communities, we strongly believe in having policies that mitigate risks when something goes wrong.

We consider ourselves to be leaders in this space and we have a number of critical policies that ensure we do business the right way. Some of them include:

 

     

Our Board of Directors Code of Conduct

 

     

Our Code of Business Conduct

 

     

Our Supplier Code of Conduct

 

     

Ethics and Compliance Training

 

     

Anti-Bribery Training

 

     

Anti-Harassment Training

 

     

Whistleblower Protection Policy

 

     

Anti-Human Trafficking Compliance Plan

OUR CODE OF BUSINESS CONDUCT

Our Code of Business Conduct is a snapshot of the legal and policy requirements we follow at Motorola Solutions as part of our commitment to always act lawfully and ethically. We work each day with a purpose: to help people be their best in the moments that matter. Achieving this purpose necessitates an unwavering commitment to integrity and doing business the right way.

Some highlights of our Code of Business Conduct include the following best practices:

 

     

Our Audit Committee oversees ethics issues

 

     

Our Supplier Code of Conduct requires suppliers and partners to extend our Supplier Code of Conduct to their employees and sub-contractors

 

     

We routinely conduct internal audits on ethical standards

 

     

We have a robust Whistleblower Protection Policy with extensive protections

OUR RESPONSIBLE SUPPLY CHAIN

We are an active Responsible Business Alliance (RBA) member, supporting the well-being of workers in the global electronics supply chain. Our comprehensive Supplier Code of Conduct and Anti-Human Trafficking Compliance Plan, includes:

 

     

Regular independent social and environmental risk management audits

 

     

Separate independent audits of higher risk suppliers, with report sharing via the RBA

We conducted 156 supplier assessments in 2018, including suppliers representing 81% of supply chain spend, based on current reporting standards.

For more information on our commitment to corporate responsibility please see our most recent corporate responsibility report at https://www.motorolasolutions.com/en_us/about/company-overview/corporate-responsibility.html. Our 2018 report will be published during the summer of 2019.

 

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PROPOSAL NO. 2 — RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019

 

The Audit Committee of the Board has appointed PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019, following a competitive proposal process involving multiple firms. We are asking our shareholders to ratify the appointment of PwC as our independent registered public accounting firm. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the appointment of PwC to our shareholders for ratification as a matter of good corporate governance.

Representatives of PwC are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will have the opportunity to respond to appropriate questions from shareholders. In the event shareholders do not ratify the appointment, the appointment will be reconsidered by the Audit Committee and the Board. Even if the appointment is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.

KPMG LLP (“KPMG”) was the Company’s independent registered public accounting firm for the fiscal years ending December 31, 2018 and December 31, 2017. Representatives of KPMG are not expected to be present at the Annual Meeting. Services provided to the Company and its subsidiaries by KPMG in fiscal years 2017 and 2018 are described under Audit Committee Matters—Independent Registered Public Accounting Firm Fees.

Former Independent Registered Public Accounting Firm

The Company dismissed KPMG as its independent registered public accounting firm effective upon the issuance by KPMG of their reports on the consolidated financial statements as of and for the year ended December 31, 2018 and the effectiveness of internal control over financial reporting as of December 31, 2018 included in the filing of the 2018 Form 10-K.

The audit reports of KPMG on the Company’s consolidated financial statements for the fiscal years ended December 31, 2018 and December 31, 2017 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.

During the Company’s fiscal years ended December 31, 2018 and December 31, 2017, (i) there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K) with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference thereto in their reports on the consolidated financial statements for such years; and (ii) there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).

In accordance with Item 304(a)(3) of Regulation S-K, the Company provided KPMG with a copy of its Current Report on Form 8-K and requested that KPMG furnish it with a letter addressed to the SEC stating whether it agrees with the statements made by the Company herein and if not, stating the respects in which it does not agree. A copy of KPMG’s letter dated May 17, 2018, is filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2018.

New Independent Registered Public Accounting Firm

On May 14, 2018, the Audit Committee appointed PwC as its new independent registered public accounting firm, contingent upon completion of PwC’s acceptance procedures. PwC’s appointment will be for the Company’s fiscal year ending December 31, 2019, and related interim periods.

During the Company’s two most recent fiscal years ended December 31, 2018 and December 31, 2017, neither the Company nor anyone on its behalf consulted PwC regarding (i) the application of accounting principles to a specified transaction, either completed or proposed; or on the type of audit opinion that might be rendered on the consolidated financial statements of the Company, and neither a written report nor oral advice was provided to the Company that PwC concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.

RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP.

 

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OUR PAY

 

PROPOSAL NO. 3 — ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION

In accordance with Section 14A of the Securities Exchange Act of 1934 (“Exchange Act”), we are providing our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers (“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 shareholders 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 a “clawback” policy, anti-hedging and anti-pledging, stock ownership guidelines and no excise tax gross-ups.

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

“Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the 2018 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 ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

   

Letter to Shareholders from Compensation and Leadership Committee Chair

 

    

 

24

 

 

 

Say on Pay Vote Results and Shareholder Engagement

 

    

 

25

 

 

 

Historical Say on Pay Results

     25  

2018 Shareholder Engagement

     25  

Summary of Board Responsiveness

     25  
   

Executive Summary

 

    

 

26

 

 

 

Named Executive Officers

     26  

Our Business

     26  

Company Performance

     27  

Paying for Performance

     27  

Evolution of Our CEO’s Pay Program

     32  
   

Process for Determining Executive Compensation

 

    

 

34

 

 

 

Compensation Philosophy

     34  

Sound Governance Practices

     34  

How We Plan Compensation

     34  

Performance-Based Compensation Structure

     35  

2018 Talent Actions and Target Total Compensation Summary

     35  
   

2018 Annual Compensation Elements

 

    

 

36

 

 

 

Base Salary

     36  

Short-Term Incentives

     36  

Long-Term Incentives

     37  
   

Comparative Market Data

 

    

 

39

 

 

 

2018 Peer Group

     39  

Survey Market Data

     39  
   

Equity Usage and Grant Practices

 

    

 

39

 

 

 

Other Compensation Policies and Practices

 

    

 

40

 

 

 

Benefits and Perquisites

     40  

Stock Ownership Guidelines

     41  

Change in Control Policy

     41  

Recoupment of Incentive Compensation Awards Upon Restatement of Financial Results

     42  

Impact of Favorable Accounting and Tax Treatment of Compensation Program Design

     42  

Securities Trading Policy: Anti-Hedging and Anti-Pledging

     42  

 

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LETTER TO SHAREHOLDERS FROM COMPENSATION AND LEADERSHIP COMMITTEE CHAIR

Thank you for your interest in, and support of, Motorola Solutions. As part of our efforts to respond to shareholder requests for more context and insight regarding the Compensation and Leadership Committee’s compensation decisions, we have, for the first time, added a “Paying for Performance” section in the Executive Summary to emphasize the link between our strong performance and incentive payouts. Additionally, we highlight our responses to your feedback throughout the Compensation Discussion and Analysis.

Our engagement with shareholders during last year’s proxy season, and as a follow-on to the 2018 Say on Pay vote, resulted in changes to the Company’s compensation program. Specifically, we have added more disclosure and structure around our Committee’s ability to exercise informed discretion as it relates to assessment of performance results, eliminated cash from the CEO’s long-term incentive awards and will reduce the portion of awards settled in cash for other NEOs beginning next year. We have increased the Committee’s ability to use discretion in the event of negative share price trends and increased our CEO’s equity holding requirements. Each of these changes was a response to shareholder input.

We believe the Company’s compensation program is performing as it should to incent efforts consistent with driving increasing levels of shareholder value and enhancing retention of key talent. We believe the best proof of this is the high quality of the management team that has emerged and in the results we’ve seen over the four-year period since the program was introduced. Motorola Solutions’ total shareholder return significantly outperformed the S&P 500 in 2018, 30% compared to -4%, and over the past three years, 79% compared to 30%.

Sincerely,

 

 

LOGO

Anne Pramaggiore

Compensation and Leadership Committee Chair

 

24   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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SAY ON PAY VOTE RESULTS AND SHAREHOLDER ENGAGEMENT

HISTORICAL SAY ON PAY RESULTS

The Compensation and Leadership Committee (the “Committee”) strives to ensure our executive compensation program aligns with the interests of our shareholders and adheres to our pay-for-performance philosophy. Our executive compensation program, in place since 2015, has historically received very strong shareholder support (averaging over 96% approval from 2015 to 2017). With 2018’s unusually low level of approval—69% shareholder support for our Say on Pay (“SOP”) vote—we have taken concrete steps to understand and respond to our shareholders’ concerns.

 

       

 

PROXY

 

 

2015

 

 

2016

 

 

2017

 

 

2018

       
       

 

SOP RESULT

 

 

 

97.4%

 

 

 

96.4%

 

 

 

95.6%

 

 

 

69.1%

 

       

2018 SHAREHOLDER ENGAGEMENT

Consistent with prior years, our shareholder engagement process in 2018 was multifaceted and continuous. Our efforts include monitoring trends, seeking expert input on pay practices and corporate governance, and engaging investors and shareholder groups on pay topics. We conduct targeted outreach efforts twice a year with shareholders, institutional investors and proxy advisory firms.

Our shareholders’ perspective is a critical input considered by the Committee for determining executive compensation. Given our lower SOP result, we enhanced our outreach efforts in 2018 to include:

 

     

Spring: expanded outreach to more shareholders and included Committee Chair participation in the engagement process

 

     

Fall: focused outreach to solicit specific feedback from shareholders who voted against our SOP

 

 

SPRING Answered questions and addressed concerns prior to the 2018 Annual Meeting Contacted top 50 shareholders (~70% ownership) Spoke with shareholders representing ~41% ownership
FALL Collected feedback on the results of the 2018 Annual Meeting Contacted top 25 shareholders (~60% ownership) Spoke with shareholders representing ~14% ownership

LOGO

SUMMARY OF BOARD RESPONSIVENESS

Overall, feedback from our shareholders was positive, recognizing the strength of our management team and their continued support of our performance-based programs. However, our shareholders also provided consistent feedback on how to improve aspects of our CEO’s pay program and specific incentive program features.

 

   
   

CATEGORY

 

     

 

 
 

 

 
  

THEMES WE HEARD FROM SHAREHOLDERS

 

 

 

 
 

 

 
 

 

 
  

BOARD RESPONSE

 

 

 

 
  CEO PAY            CEO pay mix is heavy in cash           

Eliminated cash from CEO long-term incentives;

paying 2016-2018 Long Range Incentive Plan (“LRIP”), and all future cycles, in stock

to provide continued alignment with

shareholders after payment

 

To further reinforce alignment with shareholders,

increased CEO stock ownership requirement from

6x to 10x base salary

 

 
    

Individual Performance Factor (“IPF”)

determination for the Executive Officer

Short Term Incentive Plan

(“STIP”) needs additional rationale

 

          

Disclosed CEO goals and achievement level as

reviewed by the Board throughout 2018

 
 

SPECIFIC INCENTIVE

 PROGRAM FEATURES 

          

Committee has limited discretion to

reduce payouts when total shareholder

return (“TSR”) is negative

          

Removed the 25% cap on the Committee’s ability

to reduce a payout under the LRIP and performance options (“POs”) if TSR

is negative—providing the Committee full

flexibility to adjust the payout

 

 

 

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EXECUTIVE SUMMARY

NAMED EXECUTIVE OFFICERS

Our Compensation Discussion and Analysis (the “CD&A”) describes the Company’s executive compensation philosophy and programs, which are governed by the Committee. The CD&A includes 2018 total compensation for our active Named Executive Officers (“NEOs”) who are listed below, as well as Bruce Brda, former Executive Vice President.

 

LOGO     

GREGORY Q. BROWN

 

Chairman and Chief Executive Officer

  LOGO     

MARK S. HACKER

 

Executive Vice President, General Counsel and Chief Administrative Officer

     
LOGO     

GINO A. BONANOTTE

 

Executive Vice President and Chief Financial Officer

  LOGO     

KELLY S. MARK

 

Executive Vice President, Services & Software

     
LOGO     

JOHN P. MOLLOY

 

Executive Vice President, Products & Sales

   

OUR BUSINESS

We are a leading global provider of mission-critical communications. Our technology platforms in communications, software, video, and services make cities safer and help communities and businesses thrive. We are ushering in a new era in public safety and security. Public safety and commercial customers, globally, depend on our solutions to keep them connected, from everyday activity to extreme moments. We serve more than 100,000 customers in more than 100 countries and have a rich heritage of innovation spanning more than 90 years.

 

 

 

 

KEY SOLUTIONS

 

 
 

 

LOGO

 

  

 

LOGO

 

  

 

LOGO

 

  

 

LOGO

 

  

 

LOGO

 

 
 

Land Mobile

Radio (LMR)

 

  

Public Saftey

LTE

 

   Services   

Video Solutions

& Analytics

 

  

Public Safey

Command Center

 

 
             
            $7.3 BILLION   16,000+ EMPLOYEES        5,300+ PATENTS                    HEADQUARTERS  
 

             in annual sales (2018)

 

 

in 60 countries

 

 

       granted

 

     

       500 West Monroe Street

       Chicago, IL USA

 

 
            $637 MILLION   100,000+ CUSTOMERS        13,000 NETWORKS            CHAIRMAN & CEO  
               in R&D spending (2018)  

in over 100 countries

         across the globe              Greg Brown  
             

We have historically had a strong presence in the first two key solutions—LMR and public safety LTE. We are extending our leadership in mission-critical solutions by expanding our services and software businesses through strategic investments and acquisitions, positioning us for access to new addressable markets. This expansion strategy was also a key driver behind redesigning our current executive compensation program in 2015, which incorporated a renewed focus on increasing total shareholder return through our Company’s transformation.

 

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COMPANY PERFORMANCE

Our TSR significantly outperformed the S&P 500 in 2018, 30% compared to -4%, and over the past three years, 79% compared to 30%. Additionally, 2018 was another record year for other key financial metrics.

 

 

LOGO

  

LOGO

 

 

Revenu Ending backlog Non-GAAP OE Non-GAAP EPS Adjusted FCT

LOGO   

 

 

Record Results

 

2018 was a record year for:

 

   Revenue (including increased recurring revenue)

 

   Ending Backlog

 

   Non-GAAP Operating Earnings (“non-GAAP OE”)—short-term incentive plan metric

 

   Non-GAAP Earnings Per Share (“non-GAAP EPS”)

 

   Adjusted Free Cash Flow (“adjusted FCF”)—short-term incentive plan metric

 

When making compensation decisions, the Committee considers specific accomplishments in 2018, as well as how those accomplishments position us to execute against our growth and expansion strategy.

PAYING FOR PERFORMANCE

CEO Framework

Individual performance objectives for Mr. Brown are established collaboratively with the Board and progress is reviewed throughout the year. When determining Mr. Brown’s earned incentives and annual target compensation opportunities, the Board evaluates performance against four main categories.

 

     

Annual Financial Goals—revenue, earnings per share and dividends

 

     

Annual Operational/Non-Financial Goals—backlog, customer experience and key litigation

 

     

Long-Term Strategic Initiatives—expansion of product and service offerings, more integrated solutions and acquisitions

 

     

People—organizational optimization, talent development and succession planning

Specific accomplishments considered for 2018 with respect to these categories are listed in the “CEO Individual Performance” section.

In recognition of the dynamic and broad-based range of Mr. Brown’s responsibilities, we do not assign a specific weight to each category. The individual performance categories do, however, reflect the Committee’s perspective that both current year results, as well as the quality of the foundation laid for future growth, are equally worthy of consideration. Additionally, the Committee reviews the momentum of the business—multiple year trajectory of key metrics—when reviewing Mr. Brown’s performance. As a result, for example, the Committee looks at annual revenue and earnings growth as well as multi-year trends of these metrics, while also focusing on the Company’s execution of pivotal acquisitions and the attraction of critical talent to the Company’s growth areas.

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   27


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Short-Term Incentive Plan Results

The STIP provides annual cash incentives to executives based on a combination of objective Company-wide financial performance targets and unique individual executive performance goals. Given the broad range of strategic activities necessary to execute the major transformation of our business, the Company performance factor is multiplied by an IPF to reward our executives for accomplishments beyond strong financial results.

Company-Wide Financial Performance

In 2018, we exceeded our operating plan for both non-GAAP OE and adjusted FCF, resulting in a Company performance factor of 1.09. The performance targets were set to incent 10% improvement in non-GAAP OE and 19% improvement in adjusted FCF.

 

             

  COMPANY

  PERFORMANCE

  MEASURE

  MINIMUM       TARGET       MAXIMUM       2018    
RESULT    
 

COMPANY    

PERFORMANCE    

FACTOR    

 

MEASURE    

WEIGHT    

 

WEIGHTED    

RESULT    

             
             

  Non-GAAP OE1 (in millions)

  $1,449   $1,705   $1,961   $1,740   1.02   65%   0.66
             
             

  Adjusted FCF2 (in millions)

  $919   $1,225   $1,470   $1,378   1.22   35%   0.43
             
             

  TOTAL

              1.09
             

 

1 

Non-GAAP OE is our reported GAAP Operating Earnings excluding share-based compensation expense, reorganization of business charges, intangibles amortization expense, environmental reserve expense, acquisition-related transaction fees, asset impairment, Avigilon purchase accounting adjustment, and loss on legal settlements.

2 

Adjusted FCF is defined as net cash provided by operating activities less capital expenditures, but includes the $500 million voluntary debt-funded pension contribution in Q1 2018.

 

28   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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CEO Individual Performance

The Committee uses the IPF in the STIP to capture key qualitative and quantitative objectives important to the execution of annual contributions to our long-term strategies. Mr. Brown’s IPF incorporates both his individual accomplishments and his role in supporting the accomplishments of his leadership team, for which he is accountable.

Mr. Brown’s 2018 IPF of 1.40 was derived from his accomplishments under the CEO framework. Highlights from his accomplishments in each category are provided in the table below.

 

  2018 ACCOMPLISHMENT HIGHLIGHTS

ANNUAL FINANCIAL GOALS

 

 

   Financial performance exceeded plan in all key metrics

 

   Revenue increased 15% to $7.3 billion, another Company record following a record in 2017

 

   Achieved 6% organic revenue growth1 which exceeded our plan

 

   Non-GAAP OE increased 16%, resulting in another Company record following a record in 2017

 

   Non-GAAP EPS increased 31%, resulting in another Company record following a record in 2017

 

   Executed total shareholder return that significantly outperformed the S&P 500 in 2018 (30% compared to -4%)

 

1  Defined as net sales calculated under GAAP excluding net sales from acquired business owned for less than four full quarters and the effects of implementing ASC 606.

 

ANNUAL OPERATIONAL/NON-FINANCIAL GOALS

 

   Backlog increased 10% to $10.6 billion, another Company record following a record in 2017

 

   Won critical litigation against a key competitor

 

   Notable land mobile radio (LMR) wins included a services contract with Maricopa County and a significant P25 system upgrade in Northern Africa

 

   Notable win from Chesterfield County in Virginia to upgrade computer-aided dispatch and records management solution as part of our command center platform

 

LONG-TERM

STRATEGIC INITIATIVES

 

 

   Acquired Avigilon, our breakthrough acquisition into video solutions and analytics, and exceeded Avigilon first year revenue plan

 

   Acquired Plant Holdings, adding Next-Gen 911 software and solutions

 

   Signed agreement to acquire VaaS, adding key analytics to our command center platform

 

   Secured $1.1B Airwave network extension through end of 2022

 

   Notable multi-year command center wins highlighting the benefits of our software suite, included a services agreement for a command center upgrade in Asia, a contract to provide Next-Gen 911 core services in Canada and an award from the City of Las Vegas for our CommandCentral Vault digital evidence solution

 

PEOPLE

 

 

   Continued talent refresh, hiring 3,700 new employees in 2018

 

   Named a new Chief Technology Officer with market leading video analytics expertise, joining us from Avigilon

 

   Hired an experienced product leader for Next-Gen 911, a critical growth area

 

   Consolidated executive team responsibilities for stronger execution:

 

- Mr. Bonanotte added procurement

 

- Mr. Molloy added Avigilon and product development

 

- Mr. Hacker added patent operations

 

- Mr. Mark added software enterprise business

 

In sum, the Committee has determined that Mr. Brown’s performance warrants application of a 1.40 IPF. The 2018 financial performance set records for many metrics, for the second year in a row. Revenue, backlog, stock price appreciation and TSR were double digit increases. The pivotal Avigilon acquisition, set in motion in 2017 and closed in 2018, exceeded plan and expanded the Company’s reach into video solutions and analytics. The contemplated VaaS acquisition further enhanced our video analytics and capabilities of our command center software suite. These results, as well as key talent acquisitions and reconfiguration of executive team responsibilities have given the Company not only its best year on record, but in the Committee’s view, positioned the Company for future growth.

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   29


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Other NEO Individual Performance

Other NEO individual performance objectives coalesce with Mr. Brown’s objectives, as set by the Board. Mr. Brown evaluated the other NEOs’ individual performance based primarily, but not exclusively, on the same categories in the CEO framework and made the following recommendations which were approved by the Committee.

The below table includes highlights from each NEO’s many accomplishments that contributed to the Company’s success in 2018. For the purposes of this table, accomplishments have been ascribed to a specific category, though many of them impact multiple categories.

 

NEO   IPF   ANNUAL FINANCIAL AND
OPERATIONAL GOALS
  LONG-TERM STRATEGIC INITIATIVES   PEOPLE

 

  BONANOTTE

 

 

1.40

 

 

   Executed shareholder return of $638M

 

   Implemented segment reporting to provide greater visibility to core business and recurring revenue growth areas while optimizing domestic tax process for the Tax Cuts and Jobs Act and implementing ASC 606

 

   Achieved $502M in cash repatriations from overseas entities with minimal friction costs

 

   Drove inventory to record turns

 

   Led process to change audit firm

 

 

 

   Led business development efforts for $1.2B in acquisitions, including structuring financing plan for Avigilon acquisition

 

   Completed tax efficient, voluntary, debt-funded contribution to U.S. pension plan, delaying mandatory contributions for several years

 

   Launched our first unified digital customer experience, including a digital catalog enabling an e-commerce experience for U.S. customers

 

 

   Reorganized team to integrate procurement with supply chain

 

   Rotated several leadership roles as part of succession planning and talent development

 

  MOLLOY

 

 

1.40

 

 

   Grew revenue 15%

 

   Exceeded business plan for Avigilon

 

   Achieved record year for devices sales

 

   Reduced cost of goods sold in all regions, saving $37M

 

   Increased ending backlog 10%

 

 

 

   Led integration of Avigilon and implemented video analytics strategy for public safety

 

 

   Reorganized team to integrate product development organization

 

   Restructured North America and EMEA channel sales team

 

  HACKER

 

 

1.40

 

 

   Led victories and favorable settlements in long-standing litigations

 

   Supported the completion of key strategic acquisitions and venture capital investments

 

   Modified annual incentive plan to drive greater differentiation of employee rewards

 

   Implemented improved and cost-effective U.S. healthcare model

 

 

 

   Executed our global offensive litigation strategy to protect our innovation and defend our intellectual property rights, including achieving key litigation wins against Hytera in the U.S. and Germany

 

   Successfully advocated for legislative and regulatory outcomes that supported public safety and law enforcement at the federal, state and local levels

 

 

   Led executive committee talent management initiatives, resulting in executive rotations and increased investments in high-potential employees

 

   Revamped internship program, resulting in Top 100 Internship Program award

 

30   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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NEO   IPF   ANNUAL FINANCIAL AND
OPERATIONAL GOALS
  LONG-TERM STRATEGIC INITIATIVES   PEOPLE

 

  MARK

 

 

1.40

 

 

   Grew Services & Software revenue 20% with growth in all regions

 

   Improved year-over-year Services & Software gross margins and operating margins

 

 

   Led efforts to secure three-year, $1.1B Airwave network extension through the end of 2022

 

   Restructured software business to streamline development of unified and integrated command center platform

 

   Launched key initiatives to develop cloud and as-a-service offerings

 

 

   Integrated software business with services team

 

   Hired key senior software talent

 

  BRDA

 

 

1.00

 

 

   Delivered several new LMR devices, including the all-band mobile radio APX 8500

 

 

   Launched development of command center platform

 

 

   Refreshed talent, adding approximately 100 outside hires in development engineering and product management

2018 NEO Short-Term Incentive Payouts

As detailed earlier, the Committee assessed and determined Mr. Brown and the other NEOs largely exceeded their qualitative and quantitative individual performance objectives. To recognize and reward these achievements, the Committee has approved the following individual performance and total STIP payouts.

 

           
   NEO   

ELIGIBLE

EARNINGS

    

STIP

TARGET (%)  

  

COMPANY

PERFORMANCE  

FACTOR

  

INDIVIDUAL

PERFORMANCE  

FACTOR

  

STIP

AWARD (S)  

  

AWARD AS

% OF TARGET  

           

 

  BROWN

  

 

$

 

1,250,000

 

 

  

 

175%

  

 

1.09

  

 

1.40

  

 

$3,338,125

  

 

153%

           

  BONANOTTE

   $ 677,231      95%    1.09    1.40    $   981,782    153%
           

  MOLLOY

   $ 629,346      95%    1.09    1.40    $   912,363    153%
           

  HACKER

   $ 581,308      95%    1.09    1.40    $   842,722    153%
           

  MARK1

   $ 437,519      82%    1.09    1.40    $   546,836    153%
           

  BRDA2

   $ 597,231      95%    1.09    1.00    $   618,432    109%
           
1 

Mr. Mark’s target incentive is based on prorated amounts due to his promotion to Executive Vice President on August 28, 2018

2 

Mr. Brda announced his retirement on August 28, 2018

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   31


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Long-Term Incentive Plan Results

Our long-term incentive program (“LTI”) is 100 percent performance-based and provides awards that are earned based on either relative TSR or change in absolute stock price. Our plan not only rewards long-term stock price performance, but also ensures that our TSR outperforms the median of the S&P 500 in order to receive a target payout.

 

Long Range Incentive Plan and Performance Options

 

The 2016-2018 LRIP and POs granted in 2016 were earned based on TSR
relative to the S&P 500 over the three-year performance period. MSI’s
three-year cumulative TSR performance of 89.8% resulted in a 90
th
percentile rank versus S&P 500 companies, with awards earned at
250% of target.
TSR calculation is defined in the “2018 Annual
Compensation Elements” section.

     

2016-2018 LRIP

 

 

 

POs

($71.22 exercise price)  

 

     
   

 

RELATIVE TSR PAYOUT SCALE (S&P 500)

 

 
     

 

PERCENTILE RANK

 

 

 

PAYOUT

 

 

 

TSR

 

     
   

 

MSI (90th Percentile)

 

 

 

250%

 

 

 

89.8%

 

 
   

90th - 100th Percentile

 

  250%

 

  88.8%

 

 
   

80th - 89.99th Percentile

 

  200%

 

  69.4%

 

 
   

70th - 79.99th Percentile

 

  175%

 

  53.6%

 

 
   

60th - 69.99th Percentile

 

  150%

 

  42.7%

 

 
   

55th - 59.99th Percentile

 

  110%

 

  37.8%

 

 
   

50th - 54.99th Percentile

 

  90%

 

  31.3%

 

 
   

45th - 49.99th Percentile

 

  80%

 

  27.0%

 

 
   

35th - 44.99th Percentile

 

  50%

 

  13.0%

 

 
   

30th - 34.99th Percentile

 

  30%

 

  9.6%

 

 
   

<30th Percentile

 

  0%

 

   

Market Stock Units

One-third of the market stock units (“MSUs”) granted in 2015, 2016 and 2017 were earned in 2018 based on absolute stock price appreciation. These awards were earned at 154%, 154% and 133% of target, with corresponding stock price appreciation.

 

 

 

 

Grant Date: March 9, 2015
3rd of 3 Tranches Earned

 

  

 

Grant Date: March 10, 2016
2nd of 3 Tranches Earned

 

  

 

Grant Date: March 9, 2017
1st of 3 Tranches Earned

 

 

 

Beginning stock price: $68.49
Ending stock price: $105.33

 

  

 

Beginning stock price: $68.50
Ending stock price: $105.33

 

  

 

Beginning stock price: $79.35
Ending stock price: $105.33

 

 

PAYOUT = 154% OF TARGET

 

  

PAYOUT = 154% OF TARGET

 

  

PAYOUT = 133% OF TARGET

 

EVOLUTION OF OUR CEO’S PAY PROGRAM

This section outlines Mr. Brown’s compensation since Motorola Solutions became a publicly traded company in January 2011. Additional detail for each component of pay, including changes from 2017 to 2018, and the corresponding rationale, can be found in the “2018 Annual Compensation Elements” section.

2011-2018 CEO Compensation

The Committee reviews Mr. Brown’s compensation in an effort to deliver a competitive, but responsible, target compensation package. Throughout Mr. Brown’s 11 years as CEO, the Committee has exercised their discretion to both increase and decrease Mr. Brown’s target compensation, as they have deemed appropriate.

 

32   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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Since 2011, the Committee has decreased Mr. Brown’s short-term cash compensation and increased his long-term compensation and provided a net increase of 31.5% over the eight years. During this same time, Mr. Brown has guided the Company through a significant transformation and Motorola Solutions has delivered TSR of 261%.

 

       

 

   PAY COMPONENT

 

 

2011

 

 

2018

 

 

% CHANGE

 

 

COMMENTS

 

       

  BASE SALARY

  $1,200,000   $1,250,000   4.2%   In 2014, Mr. Brown received an amended employment agreement which increased his base salary $50,000 and lowered his target incentive to 150%, resulting in a 18.6% decrease to Target Total Cash. In 2018, the Committee increased Mr. Brown’s target from 150% to 175%.

 

  STIP TARGET %

 

  220%   175%   -20.5%

 

  TARGET TOTAL CASH

 

  $3,840,000   $3,437,500   -10.5%
       

  LRIP

  $3,000,000   $3,125,000   4.2%   Beginning with the cycle that ended in 2018, Mr. Brown will receive LRIP payouts in stock, thus eliminating cash from his LTI program.
       

  EQUITY

  $4,000,000   $7,687,500   92.2%   In 2015, the Committee replaced Mr. Brown’s options and RSUs (containing a stock price hurdle) with POs and MSUs, improving the long-term performance orientation of the program.

  TOTAL LTI

  $7,000,000   $10,812,500   54.5%
       

  TARGET TOTAL

  COMPENSATION

  $10,840,000   $14,250,000   31.5%   AVERAGE ANNUAL INCREASE OVER EIGHT YEARS IS ~4%.

CEO Compensation vs. TSR

Over this eight year period, Mr. Brown’s target compensation program has been managed to provide appropriate pay levels in relation to returns for our shareholders. An even stronger relationship holds true when considering Mr. Brown’s compensation as reported in the Summary Compensation Table, which is a mix of current year compensation and payouts related to prior years’ performance.

 

TARGET COMPENSATION VS. TSR               SUMMARY COMPENSATION TABLE VS. TSR  
LOGO      LOGO

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   33


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PROCESS FOR DETERMINING EXECUTIVE COMPENSATION

COMPENSATION PHILOSOPHY

Our executive compensation program design is guided by five key principles.

 

 
  PRINCIPLE   DESCRIPTION
 

  Business

 

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 shareholder interests by delivering meaningful equity awards and maintaining robust stock ownership guidelines
 

  Simplicity

 

Engagement is driven through simple, cost-efficient plan design

 

 

SOUND GOVERNANCE PRACTICES

Our executive compensation program is aligned to our business strategy and incorporates strong governance.

 

 

WHAT WE DO

 

 

 

PRACTICE

 

     

 

MSI PRACTICE

 

 
 

 

Annual Shareholder Say on Pay

 

     

 

We seek an annual non-binding advisory vote from shareholders on our executive compensation

 

 
 

 

Robust Stock Ownership Guidelines

 

     

 

Executives are required to hold stock equal to 10x salary for CEO and 3x salary for other NEOs

 

 
 

 

Transparent Disclosure

 

     

 

Robust IPF disclosure for STIP

 

 
 

 

Pay for Performance and Shareholder Alignment

 

     

 

Long-term incentive program for management team, including the NEOs, is 100% performance-based

 

 
 

 

Use Independent Advisor

 

     

 

The Committee retains Compensation Advisory Partners LLC (“CAP”) to review Company compensation programs and practices

 

 

 

WHAT WE DON’T DO

 

 

 

PRACTICE

 

     

 

MSI PRACTICE

 

 
 

 

No Cash in CEO LTI Program

 

     

 

CEO LTI is paid out 100% in equity

 

 
 

 

No Excise Tax Gross-ups

 

     

 

We do not provide tax gross-ups in connection with any perquisites or in the event of any “golden parachute payment” in connection with a change in control

 

 
 

 

No Excessive Perquisites

 

     

 

We do not provide excessive perquisites to our NEOs and believe that our limited perquisites are reasonable and competitive

 

 
 

 

No Hedging or Pledging of Company Securities

 

     

 

Our Insider Trading Policy prohibits Directors, officers and other designated employees from engaging in hedging and pledging transactions related to Company stock

 

 
 

 

No Single Trigger in a Change in Control

 

     

 

In the event of a change in control, all severance pay components have a double trigger

 

 
 

 

HOW WE PLAN COMPENSATION

Our compensation framework is based on sound program design principles, which allow for the flexibility to competitively, but responsibly, address the dynamic labor markets in which we compete. These programs have been designed to focus executives on the achievement of our long-term business plan and shareholder value creation. Our incentive plans utilize rigorous financial goals and require above median relative outperformance for target payouts, while incorporating risk-mitigating features, such as payout caps, to ensure we reward sustainable growth.

 

34   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


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Over the years, our executive compensation program has evolved with our business strategy, incorporated feedback from our shareholders, and maintained market competitiveness to properly incent and reward our management team. Additionally, we conduct regular risk assessments of our compensation programs and practices and review results with the Committee at least annually.

When setting annual compensation for our NEOs, the Committee balances the current state of the business with setting the stage for the future. The Committee, with assistance from their independent advisor, considers peer company pay practices for comparable positions; NEO experience, tenure, scope of responsibility and performance; internal pay alignment, and succession planning. The Committee uses the 50th percentile of our peer group and surveys as a guideline for establishing target total compensation opportunities for our NEOs. For 2018, each of our NEOs was between the market 50th and 75th percentile, with the exception of our highly seasoned CEO.

The Committee engages an independent consultant, CAP, to advise on the Company’s executive compensation strategy and program design and to provide regulatory and market trend updates. CAP carries out competitive reviews as directed by the Committee and provides input on specific compensation recommendations for our CEO and other members of management’s EC.

In 2018, 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 2018, 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.

PERFORMANCE-BASED COMPENSATION STRUCTURE

The performance-based structure for 2018 incorporates incentives that measure both short-term and long-term performance. In addition to base salary and an annual STIP award, this structure, shown graphically below (with incentives shown at their target amounts), includes an LTI award made up of our LRIP, POs and MSUs. The Committee believes a majority of compensation should be in the form of LTI to better drive alignment with shareholder interests and executive retention.

 

 

LOGO

2018 TALENT ACTIONS AND TARGET TOTAL COMPENSATION SUMMARY

In 2018, several talent actions supported the continued transformation of our business, including: leadership alignment to our new reporting segments, development of our NEOs, and ongoing succession planning. In March, Mr. Molloy assumed the responsibilities for the newly acquired Avigilon business. Following Mr. Brda’s retirement announcement in August 2018, Mssrs. Bonanotte, Molloy, Hacker and Mark each received additional responsibilities throughout the remainder of the year.

 

     

Mr. Bonanotte’s role expanded to include procurement

 

     

Mr. Molloy’s role expanded to include product development

 

     

Mr. Hacker’s role expanded to include patent operations

 

     

Mr. Mark was promoted to Executive Vice President (“EVP”) and his role expanded to include our software enterprise business

 

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When setting NEO compensation, the Committee manages first, to target total compensation and second, to each pay component in support of the appropriate aggregate value and mix.

 

     
  NEO     BASE SALARY    

  TARGET  

STIP%

  TARGET
  TOTAL CASH  
       LTI        TARGET TOTAL
  COMPENSATION  
  YEAR OVER
  YEAR CHANGE  
  LRIP   PO   MSU
       

  BROWN

 

$1,250,000

 

175%

 

$3,437,500

 

$3,125,000

 

$3,843,750

 

$3,843,750

 

$14,250,000

 

11.8%

       
       

  BONANOTTE

 

$680,000

 

95%

 

$1,326,000

 

$750,000

 

$750,000

 

$750,000

 

$3,576,000

 

5.3%

       
       

  MOLLOY

 

$680,000

 

95%

 

$1,326,000

 

$666,666

 

$666,667

 

$666,667

 

$3,326,000

 

10.3%

       
       

  HACKER

 

$585,000

 

95%

 

$1,140,750

 

$583,334

 

$583,333

 

$583,333

 

$2,890,750

 

9.0%

       
       

  MARK1

 

$500,000

 

82%

 

$975,000

 

$353,241

 

$185,000

 

$185,000

 

$1,698,241

 

N/A

       
       

  BRDA

 

$600,000

 

95%

 

$1,170,000

 

$600,000

 

$600,000

 

$600,000

 

$2,970,000

 

2.7%

       

 

1 

Mr. Mark’s target incentive is based on prorated amounts due to his promotion to EVP on August 28, 2018.

2018 ANNUAL COMPENSATION ELEMENTS

BASE SALARY

As the only fixed compensation element in our program, base salary is used to provide what we believe to be a baseline level of stability required to be market competitive. Salaries are reviewed and adjusted by the Committee as needed. Annual increases are not guaranteed or automatic.

In March 2018, the Committee reviewed base salaries for our NEOs and applied market adjustments, where applicable. Throughout 2018, as a result of Mr. Molloy’s new responsibilities leading Avigilon and product development, his base salary increased 16.2%. Due to Mr. Mark’s material role expansion and promotion his base salary increased to $500,000. Mr. Brown has not received a base salary increase since 2014 and did not receive a base salary increase in 2018.

 

   
  NEO   2017 BASE SALARY     2018 BASE SALARY   YEAR-OVER-
  YEAR CHANGE  
   

  BROWN

$1,250,000

$1,250,000

0.0%

   

  BONANOTTE

$665,000

$680,000

2.3%

   

  MOLLOY

$585,000

$680,000

16.2%

   

  HACKER

$565,000

$585,000

3.5%

   

  MARK1

$500,000

N/A

   

  BRDA

$585,000

$600,000

2.6%

  1 

Mr. Mark became an Executive Officer as part his promotion to EVP on August 28, 2018.

SHORT-TERM INCENTIVES

The STIP is an annual cash incentive award based on the Company’s achievement of financial performance and an executive’s individual performance. The Committee sets the target value for STIP as a percentage of an executive’s base salary.

CEO Incentive Target

For 2018, the Committee approved an increase to Mr. Brown’s individual target award percentage from 150% to 175%. This is the first increase to Mr. Brown’s target total cash since the Committee reduced his individual target award percentage from 220% to 150% in 2014. Consistent with our pay for performance philosophy, and to recognize the improving company performance trajectory, due to the well-designed company transformation strategy, the change in 2018 target keeps the value of Mr. Brown’s fixed pay constant, while increasing the performance-based pay opportunity.

 

 

    BOARD RESPONSE:

 

 

Coinciding with the 2018 increase to Mr. Brown’s incentive target, the Committee has included a more robust and transparent disclosure of the framework used by the Board to evaluate Mr. Brown’s individual performance as it relates to the IPF of his STIP award.

 

 

NEO Incentive Targets

The individual target award percentage for all other NEOs (95% of base salary) did not change in 2018.

Additionally, as a result of Mr. Mark’s promotion to EVP, Services & Software, his annual target award percentage increased to 95%, to be consistent with the annual target award percentages of the other NEOs. Mr. Mark’s 2018 individual target award percentage has been prorated to reflect the timing of his promotion.

 

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Payout Formula

Actual STIP awards are based on the executive’s target incentive opportunity, the Company’s achievement of performance results (“Business Performance Factor”) and assessment of individual performance (IPF). The payout opportunity for both the Business Performance Factor and the IPF ranges 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 a market evaluation.

 

 

LOGO

ELIGIBLE EARNINGSINDIVIDUAL TARGET AWARD %TARGET INCENTIVE OPPORTUNITYBUSINESS PERFORMANCE FACTORNON-GAAP OE (65%)ADJUSTED FCF (35%)INDIVIDUAL PERFORMANCE FACTORPayout Range 0 to 140% Payout Range 0 to 140% PERFORMANCESHORT TERM INCENTIVE PLAN AWARD

Metric Selection

For 2018, the Business Performance Factor was based on achievement of non-GAAP OE (weighted 65%) and adjusted FCF (weighted 35%) goals. Non-GAAP OE measures our profits from sales and adjusted FCF 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 non-GAAP OE and adjusted FCF appropriately measure our annual business performance and ultimately drive our long-term shareholder value over time.

LONG-TERM INCENTIVES

Our LTI program, implemented in 2015, was designed with the specific intention of aligning the largest component of NEO pay to the achievement of exceptional and sustainable value creation for our shareholders during this pivotal transformation in our business. The LTI program achieves this through:

 

     

100% performance-based vesting (i.e., no time-based vesting or guaranteed value)

 

     

The program metrics being 100% aligned to creating more value for our shareholders

 

     

The majority of the total award value requiring TSR performance above the median of S&P 500 companies in order to receive a target payout

 

 

 

    BOARD RESPONSE:

 

 

In 2018, the Board eliminated LTI cash payments for Mr. Brown by paying 2016-2018 LRIP, and future cycles, in stock. Beginning with the 2017-2019 LRIP, the other NEOs will receive payouts in 50% cash and 50% stock.

 

 

 

    BOARD RESPONSE:

 

 

The Committee now has full discretion to reduce LRIP and PO payouts if TSR is negative; removing the prior 25% cap on their negative discretion.

 

Determining Target Award Values

The Committee reviews LTI target award values annually by first determining a target total compensation value appropriate for the size and complexity of the NEO’s role and then determining the appropriate LTI value based on our philosophy of delivering the largest percentage of total compensation in LTI. The Committee also considers the 100% performance-based nature of our LTI program and how our Company’s potential future performance has been impacted by the groundwork that has been set in the past year. As we continue to execute our long-term strategy through our Company’s transformation, the Committee believes it is critical that each NEO’s target opportunity appropriately reflects their contribution.

When setting LTI target awards for 2018, the Committee considered the significant impact of Mr. Brown’s decisions and actions on our longer-term business strategy and transformation.

 

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The Committee approved total target 2018 LTI at their March 2018 meeting.

 

           
  NEO   TOTAL TARGET
2017 LTI
    2018 LRIP     2018 POs     2018 MSUs     TOTAL TARGET
2018 LTI
   

YEAR-OVER-
YEAR CHANGE

 
           

 BROWN

    $9,625,000       $3,125,000       $3,843,750       $3,843,750       $10,812,500       12.3%  
           

 BONANOTTE

    $2,100,000       $750,000       $750,000       $750,000       $2,250,000       7.1%  
           

 MOLLOY

    $1,750,000       $666,666       $666,667       $666,667       $2,000,000       14.3%  
           

 HACKER

    $1,550,000       $583,334       $583,333       $583,333       $1,750,000       12.9%  
           

 MARK1

          $353,241       $185,000       $185,000       $723,241       N/A     
           

 BRDA

    $1,750,000       $600,000       $600,000       $600,000       $1,800,000       2.9%  

 

  1

Mr Mark, who was elevated to the EC in August 2018, received  an annual equity grant in March 2018 comprised of time-vested stock options and restricted stock units (“RSUs”) and a prorated LRIP.

LTI Components

The 100% performance-based LTI program includes the LRIP, POs and MSUs, each of which comprise approximately one-third of the total LTI mix.

 

     

The LRIP and POs are based on three-year TSR relative to the S&P 500. The payout scale for the LRIP and POs requires our performance to exceed median performance of the S&P 500 companies before earning a target payout.

 

     

The LRIP and POs utilize a three-year performance period, with the earned portion of LRIP paid in equity for the CEO and in cash for the other NEOs and earned POs vesting on the third anniversary of the grant.

 

     

If our TSR over the performance period is negative, but would still result in a ranking that would provide a payout, the Committee has unlimited discretion to reduce the calculated LRIP payout (and number of POs vesting).

 

     

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 the 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.

 

     

MSUs are based on absolute stock price and provide a vehicle with further alignment to shareholders and one that supports retention of our NEOs.

 

     

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.

 

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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 concurrent performance periods.

 

 

LOGO

LTI VEHICLE MIX PAYOUT SCALE 1/3 Performance LRIP 1/3 Performance Options 1/3 Market Stock Units 2/3 Performance-Based vs. S&P 500 1/3 Performance-Based vs. Absolute Stock Price Appreciation Relative TSR Payout Scale MSI 3-Year TSR Percentile Rank Payout Factor 90th 100th Percentile 250% 80th 89.99th Percentile 200% 70th 79.99th Percentile 175% 60th 69.99th Percentile 150% 55th 59.99th Percentile 110% 50th 54.99th Percentile 90% 45th 49.99th Percentile 80% 35th 44.99th Percentile 50% 30th 34.99th Percentile 30% <30.00th Percentile 0% Year 0 Year 1 Year 2 Year 3 Grant 33% 33% 33% Amount earned is equal to the stock price appreciation/depreciation as of each vest date Threshold = 40% stock price depreciation Maximum = 100% stock price appreciation

COMPARATIVE MARKET DATA

2018 PEER GROUP

The Committee reviews the composition of the peer group annually with the assistance of CAP. Our peer group, which did not change from 2017, was used to evaluate pay levels, pay mix and alignment of pay with our performance in 2018.

 

     

AGILENT TECHNOLOGIES, INC. 

  

HARRIS CORP.

  

PARKER-HANNIFIN CORP.

  

ROCKWELL COLLINS, INC.

     

AMPHENOL CORP.

  

INGERSOLL-RAND PLC

  

RAYTHEON COMPANY

  

ROPER TECHNOLOGIES. INC. 

     

ARRIS INTERNATIONAL PLC

  

JUNIPER NETWORKS, INC. 

  

ROCKWELL AUTOMATION INC. 

  

TE CONNECTIVITY LTD.

     

DOVER CORP.

              

SURVEY MARKET DATA

To supplement our peer group data, the Committee also considers compensation surveys that include data from companies of similar size and business segments to Motorola Solutions. For 2018, the Committee considered data from the Radford Global Technology Survey, Willis Towers Watson High Tech Executive Survey and the IPAS Global High Technology Survey.

EQUITY USAGE AND GRANT PRACTICES

In 2013, we reduced our overall share usage (equity grants as a percentage of common shares outstanding) from our prior granting practices to more effectively manage our stock-based compensation expense and overall shareholder dilution. The expense from grants prior to 2012 made to a broader population was fully recognized by 2016. Our share granting practices have again evolved to meet the changing needs of our business and drive our growth. In 2018, significant acquisition activity required the issuance of equity as a key retention strategy to preserve enterprise knowledge and align our new employees’ interests with those of our shareholders.

 

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In addition, at the 2015 Annual Meeting, shareholders 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”). This reduced the total number of shares reserved and approved for issuance by approximately 7 million shares, to 12 million shares. 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

MSI SHARE USAGE AGGREGATE GRANT DATE FAIR VALUE OF OPTIONS AND RSUs GRANTED IN EACH YEAR* 0.9% 1.1% 0.7% 2016 2017 2018 $61M $69M $70M 2016 2017 2018

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 Section 16 Officers and other members of the management team are approved by the Committee, with concurrence by the Board for grants to Mr. Brown.

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.

OTHER COMPENSATION POLICIES AND PRACTICES

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   Senior and Executive VPs
     

 

  Security System Monitoring

CEO
     

 

  PersonaI Use of Corporate Aircraft Service3

CEO

1 Pension provided to U.S.-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 ln limited circumstances, and as approved by the CEO, other employees are permitted to use our corporate aircraft service for personal purposes.

 

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STOCK OWNERSHIP GUIDELINES

To ensure strong alignment of our senior management with the interests of our shareholders, the Company maintains stock ownership guidelines for our senior executives, including each of our NEOs. 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 achievement period.

 

    BOARD RESPONSE:
    In 2018, the Board increased Mr. Brown’s stock ownership requirement from 6x to 10x.

Our stock ownership requirements are expressed as a multiple of base salary as shown below:

 

  EXECUTIVE GROUP    MULTIPLE OF    
BASE SALARY    
2018
   MULTIPLE OF    
BASE SALARY    
2019

  Chairman and Chief Executive Officer

   6x    10x

  Executive Vice Presidents and Executive Committee Members

   3x    3x

  Senior Vice Presidents

   2x    2x

  Corporate Vice Presidents

   1x    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.

CHANGE IN CONTROL POLICY

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 the value of the Company for the benefit of our shareholders. 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 shareholders. 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
 

 

  Cash Severance Multiple

 

  Two times sum of base salary and 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 elimates the imposition of excise tax.
 

 

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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 or MSUs, 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 was 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, but in years prior to 2018 there was an exception to such limit for compensation that qualified as “performance-based compensation”. Effective for 2018, the Tax Cuts and Jobs Act amended Section 162(m) to, among other things, extend the deduction limitation to the Chief Financial Officer and eliminate the exception for performance-based compensation, except for certain qualifying arrangements in place as of November 2, 2017.

The Company did not make any changes to its incentive plans in 2018 in an effort to maintain any tax deductions applicable due to “grandfathered” status under our existing plans. However, the Committee reserves the right to provide for compensation to executive officers that may not be deductible pursuant to Section 162(m). In addition, because of the continued development of the application and interpretation of Section 162(m) and the regulations issued thereunder, we cannot guarantee that compensation intended to satisfy the requirements for deductibility under Section 162(m), as in effect prior to 2018, would or will in fact be deductible.

SECURITIES TRADING POLICY: ANTI-HEDGING AND ANTI-PLEDGING

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.

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.

 

42   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders 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.

On May 15, 2018, Anne R. Pramaggiore was appointed the Chair of the Compensation and Leadership Committee (the “Committee”). Egon P. Durban and Joseph M. Tucci were each a member of the Committee throughout 2018

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’ 2018 Annual Report on Form 10-K.

Respectfully submitted,

Anne R. Pramaggiore, Chair

Egon P. Durban

Joseph M. Tucci

 

 

 COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND

 INSIDER PARTICIPATION

 

Anne R. Pramaggiore, Director and Chair of the Committee, Egon P. Durban, Director and Joseph M. Tucci, Director served on the Committee throughout 2018. No member of the Committee was, during the fiscal year ended December 31, 2018, an officer, former officer, or employee of the Company or any of our subsidiaries. We did not have any compensation committee interlocks in 2018.

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   43


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NAMED EXECUTIVE OFFICER COMPENSATION

 

2018 SUMMARY COMPENSATION TABLE

 

 

Name and

Principal Position
            (a)

 

 

Year

(b)

   

 

Salary

($)(1)

(c)

   

 

Bonus

($)(2)

(d)

   

 

Stock
Awards

($)(3)

(e)

   

 

Option
Awards

($)(3)

(f)

   

 

Non-Equity
Incentive

Plan
Compensation
($)(4)

(g)

   

 

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings

($)(5)
(h)

   

 

All Other

Compensation

($)(6)

(i)

   

 

Total

($)

(j)

 

 

Gregory Q. Brown

Chairman and Chief Executive Officer

 

 

 

                                         

 

 

 

 

2018

 

 

 

 

 

 

1,250,000

 

 

 

 

 

 

0

 

 

 

 

 

 

3,843,722

 

 

 

 

 

 

3,843,720

 

 

 

 

 

 

11,150,625

 

 

 

 

 

 

0

 

 

 

 

 

 

260,491

 

 

 

 

 

 

20,348,558

 

 

   

 

 

 

2017

 

 

 

 

 

 

1,250,000

 

 

 

 

 

 

0

 

 

 

 

 

 

3,249,975

 

 

 

 

 

 

3,250,000

 

 

 

 

 

 

7,312,500

 

 

 

 

 

 

17,994

 

 

 

 

 

 

259,079

 

 

 

 

 

 

15,339,548

 

 

   

 

 

 

2016

 

 

 

 

 

 

1,250,000

 

 

 

 

 

 

0

 

 

 

 

 

 

2,437,465

 

 

 

 

 

 

2,437,499

 

 

 

 

 

 

5,715,000

 

 

 

 

 

 

25,469

 

 

 

 

 

 

359,278

 

 

 

 

 

 

12,224,711

 

 

 

Gino A. Bonanotte

Executive Vice President and Chief Financial Officer

 

 

   

 

 

 

2018

 

 

 

 

 

 

677,231

 

 

 

 

 

 

0

 

 

 

 

 

 

749,994

 

 

 

 

 

 

749,969

 

 

 

 

 

 

2,648,447

 

 

 

 

 

 

0

 

 

 

 

 

 

25,889

 

 

 

 

 

 

4,851,530

 

 

   

 

 

 

2017

 

 

 

 

 

 

662,231

 

 

 

 

 

 

0

 

 

 

 

 

 

699,981

 

 

 

 

 

 

699,986

 

 

 

 

 

 

1,880,766

 

 

 

 

 

 

227,952

 

 

 

 

 

 

20,800

 

 

 

 

 

 

4,191,716

 

 

   

 

 

 

2016

 

 

 

 

 

 

645,385

 

 

 

 

 

 

0

 

 

 

 

 

 

666,647

 

 

 

 

 

 

666,666

 

 

 

 

 

 

1,339,693

 

 

 

 

 

 

93,829

 

 

 

 

 

 

24,200

 

 

 

 

 

 

3,436,420

 

 

 

John P. Molloy

Executive Vice President, Products & Sales

 

 

   

 

 

 

2018

 

 

 

 

 

 

629,346

 

 

 

 

 

 

0

 

 

 

 

 

 

666,648

 

 

 

 

 

 

666,644

 

 

 

 

 

 

2,079,028

 

 

 

 

 

 

0

 

 

 

 

 

 

41,396

 

 

 

 

 

 

4,083,062

 

 

   

 

 

 

2017

 

 

 

 

 

 

570,231

 

 

 

 

 

 

0

 

 

 

 

 

 

583,289

 

 

 

 

 

 

3,141,151

 

 

 

 

 

 

1,198,830

 

 

 

 

 

 

55,269

 

 

 

 

 

 

17,970

 

 

 

 

 

 

5,566,740

 

 

   

 

 

 

2016

 

 

 

 

 

 

497,615

 

 

 

 

 

 

300,000

 

 

 

 

 

 

466,661

 

 

 

 

 

 

466,666

 

 

 

 

 

 

818,416

 

 

 

 

 

 

35,444

 

 

 

 

 

 

17,112

 

 

 

 

 

 

2,601,914

 

 

 

Mark S. Hacker

Executive Vice President, General Counsel and Chief Administrative Officer

 

 

   

 

 

 

2018

 

 

 

 

 

 

581,308

 

 

 

 

 

 

0

 

 

 

 

 

 

583,301

 

 

 

 

 

 

583,319

 

 

 

 

 

 

1,926,057

 

 

 

 

 

 

0

 

 

 

 

 

 

19,389

 

 

 

 

 

 

3,693,374

 

 

   

 

 

 

2017

 

 

 

 

 

 

558,539

 

 

 

 

 

 

0

 

 

 

 

 

 

516,584

 

 

 

 

 

 

516,654

 

 

 

 

 

 

1,492,856

 

 

 

 

 

 

123,053

 

 

 

 

 

 

12,870

 

 

 

 

 

 

3,220,556

 

 

   

 

 

 

2016

 

 

 

 

 

 

526,337

 

 

 

 

 

 

0

 

 

 

 

 

 

433,317

 

 

 

 

 

 

433,323

 

 

 

 

 

 

1,194,026

 

 

 

 

 

 

65,630

 

 

 

 

 

 

20,775

 

 

 

 

 

 

2,673,408

 

 

 

Kelly S. Mark

Executive Vice President, Services & Software

 

 

   

 

 

 

2018

 

 

 

 

 

 

437,519

 

 

 

 

 

 

0

 

 

 

 

 

 

293,323

 

 

 

 

 

 

309,982

 

 

 

 

 

 

1,046,832

 

 

 

 

 

 

0

 

 

 

 

 

 

29,889

 

 

 

 

 

 

2,117,545

 

 

 

Bruce W. Brda

Former Executive Vice President

 

 

   

 

 

 

2018

 

 

 

 

 

 

597,231

 

 

 

 

 

 

0

 

 

 

 

 

 

599,971

 

 

 

 

 

 

599,984

 

 

 

 

 

 

1,785,097

 

 

 

 

 

 

0

 

 

 

 

 

 

21,000

 

 

 

 

 

 

3,603,283

 

 

   

 

 

 

2017

 

 

 

 

 

 

580,385

 

 

 

 

 

 

0

 

 

 

 

 

 

583,289

 

 

 

 

 

 

583,318

 

 

 

 

 

 

1,417,081

 

 

 

 

 

 

347,265

 

 

 

 

 

 

23,970

 

 

 

 

 

 

3,535,308

 

 

   

 

 

 

2016

 

 

 

 

 

 

550,769

 

 

 

 

 

 

0

 

 

 

 

 

 

466,661

 

 

 

 

 

 

466,666

 

 

 

 

 

 

1,068,901

 

 

 

 

 

 

179,594

 

 

 

 

 

 

24,200

 

 

 

 

 

 

2,756,791

 

 

 

(1)

Salary includes amounts deferred pursuant to salary reduction arrangements under the 401(k) and Deferred Compensation Plans.

(2)

Mr. Molloy’s bonus in 2016 is to recognize his contributions since his promotion in November 2015 and to calibrate his compensation for prior incentive programs, which were prorated upon his promotion.

(3)

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, 2018. Other than Mr. Mark, who received RSUs and options prior to being elevated to the EC, if maximum performance is achieved for performance-based stock awards, the aggregate grant date fair value in column (e) is $7,687,443 for Mr. Brown, $1,499,989 for Mr. Bonanotte, $1,333,296 for Mr. Molloy, $1,166,602 for Mr. Hacker and $1,119,941 for Mr. Brda. If maximum performance is achieved for performance-based option awards, the aggregate grant date fair value in column (f) is $9,609,279 for Mr. Brown, $1,874,924 for Mr. Bonanotte, $1,666,589 Mr. Molloy, $1,458,297 for Mr. Hacker and $1,499,939 for Mr. Brda.

(4)

In 2018, the amounts in column (g) consist of awards earned by eligible NEOs at the time under the 2018 STIP and under the 2016-2018 LRIP. Earned payments in column (g) during fiscal year 2018 are as follows:

 

    Mr. Brown     Mr. Bonanotte     Mr. Molloy     Mr. Hacker     Mr. Mark     Mr. Brda  

2018 STIP

    $3,338,125       $981,782       $912,363       $842,722       $546,836       $618,432  

2016-2018 LRIP (paid in stock)

    7,812,500       0       0       0       0       0  

2016-2018 LRIP (paid in cash)

    0       1,666,665       1,166,665       1,083,335       499,996       1,166,665  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

    $11,150,625       $2,648,447       $2,079,028       $1,926,057       $1,046,832       $1,785,097  

 

44   Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement


Table of Contents

In 2017, the amounts in column (g) consist of awards earned by eligible NEOs at the time under the 2017 STIP and under the 2015-2017 LRIP. Earned payments in column (g) during fiscal year 2017 are as follows:

 

   

 

Mr. Brown

 

   

 

Mr. Bonanotte

 

   

 

Mr. Molloy

 

   

 

Mr. Hacker

 

   

 

Mr. Brda

 

 

 

2017 STIP

 

   

 

$2,625,000

 

 

 

   

 

$880,767

 

 

 

   

 

$758,407

 

 

 

   

 

$742,856

 

 

 

   

 

$771,912

 

 

 

 

2015-2017 LRIP

 

   

 

4,687,500

 

 

 

   

 

999,999

 

 

 

   

 

440,423

 

 

 

   

 

750,000

 

 

 

   

 

645,169

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

TOTAL

 

   

 

$7,312,500

 

 

 

   

 

$1,880,766

 

 

 

   

 

$1,198,830

 

 

 

   

 

$1,492,856

 

 

 

   

 

$1,417,081

 

 

 

In 2016, the amounts in column (g) consist of awards earned by eligible NEOs at the time under the 2016 STIP and under the 2014-2016 LRIP. Earned payments in column (g) during fiscal year 2016 are as follows:

 

 

    

 

 

Mr. Brown

 

   

Mr. Bonanotte

 

   

Mr. Molloy

 

   

Mr. Hacker

 

   

Mr. Brda

 

 

 

2016 STIP

 

   

 

$2,415,000

 

 

 

   

 

$789,693

 

 

 

   

 

$608,883

 

 

 

   

 

$644,026

 

 

 

   

 

$673,920

 

 

 

 

2014-2016 LRIP

 

   

 

3,300,000

 

 

 

   

 

550,000

 

 

 

   

 

209,533

 

 

 

   

 

550,000

 

 

 

   

 

394,981

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

TOTAL

 

   

 

$5,715,000

 

 

 

   

 

$1,339,693

 

 

 

   

 

$818,416

 

 

 

   

 

$1,194,026

 

 

 

   

 

$1,068,901

 

 

 

 

(5)

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, 2017 to Dec. 31, 2018 ($9,133) $0 ($9,133)
 Dec. 31, 2016 to Dec. 31, 2017 $17,994 $0 $17,994
 Dec. 31, 2015 to Dec. 31, 2016 $15,798 $9,671 $25,469
Gino A. Bonanotte  Dec. 31, 2017 to Dec. 31, 2018 ($78,455) $0 ($78,455)
 Dec. 31, 2016 to Dec. 31, 2017 $125,870 $102,082 $227,952
 Dec. 31, 2015 to Dec. 31, 2016 $66,904 $26,925 $93,829
John P. Molloy  Dec. 31, 2017 to Dec. 31, 2018 ($32,187) $0 ($32,187)
 Dec. 31, 2016 to Dec. 31, 2017 $55,269 $0 $55,269
 Dec. 31, 2015 to Dec. 31, 2016 $31,528 $3,916 $35,444
Mark S. Hacker  Dec. 31, 2017 to Dec. 31, 2018 ($19,631) $11,423 ($8,208)
 Dec. 31, 2016 to Dec. 31, 2017 $33,708 $89,345 $123,053
 Dec. 31, 2015 to Dec. 31, 2016 $19,229 $46,401 $65,630
Kelly S. Mark  Dec. 31, 2017 to Dec. 31, 2018 ($23,489) $0 ($23,489)
Bruce W. Brda  Dec. 31, 2017 to Dec. 31, 2018 ($79,477) $0 ($79,477)
 Dec. 31, 2016 to Dec. 31, 2017 $138,292 $208.973 $347,265
 Dec. 31, 2015 to Dec. 31, 2016 $76,279 $103,315 $179,594

 

(6)

The amounts in column (i) for 2018 consist of perquisite costs for personal use of Company aircraft, security system monitoring, costs for financial planning, and guest attendance at Company events and a personal benefit of Company matching contributions to the 401(k) Plan. 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, and where such perquisite exceeded the greater of $25,000 or 10% of the total amount of perquisites and where such personal benefit exceeded $10,000 for such officer, the dollar amount is given.

 

   
  Perquisites

Personal

Benefit

         
NEO

Personal

Aircraft Use

Security System

Monitoring

Financial

Planning

Guest Attendance

at Company Events

401K Plan

Match

Gregory Q. Brown

 

$230,648

 

X

 

X

 

$11,000

Gino A. Bonanotte

 

*

 

X

 

X

John P. Molloy

 

X

 

X

 

X

 

$11,000

Mark S. Hacker

 

*

 

X

 

$11,000

Kelly S. Mark

 

*

 

X

 

$11,000

Bruce W. Brda

 

X

 

X

 

$11,000

 

  *

Messrs. Bonanotte, Hacker and Mark utilized the corporate aircraft to attend the funeral of a family member of a fellow executive.

 

Motorola Solutions Notice of 2019 Annual Meeting of Shareholders and Proxy Statement   45


Table of Contents

GRANTS OF PLAN-BASED AWARDS IN 2018

 

           
      

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
 (#)
 (i)

 

    

 All Other
 Option
 Awards:
 Number of
 Securities
 Underlying
 Options
 (#)
 (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

   (#)(1)(2)
   (g)

 

   

Maximum
(#)
(h)