DEF 14A 1 d869259ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

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  Preliminary Proxy Statement
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  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

Motorola Solutions, Inc.

(Name of Registrant as Specified In Its Charter)

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

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Table of Contents

 

LOGO

 

Notice of

 

2020 ANNUAL MEETING

 

of Shareholders and Proxy Statement

 

 

 

LOGO


Table of Contents

LOGO

Dear Fellow Motorola Solutions Shareholder:

As I write this letter, it is an unprecedented moment in time. The world is rapidly adjusting to the coronavirus (COVID-19), which has transformed our daily lives in a few short weeks. It’s at moments like these that our work takes on even more meaning. Governments and businesses around the world rely on mission critical, always-on communications. Our customers call it their lifeline.

As I reflect on 2019, I’m proud of our technological advancements enabling that lifeline through significant investments in research and development, as well as strategic acquisitions. We invested $687 million in R&D and introduced our new next-generation public safety radio, APX NEXT. We expanded our patent portfolio by 8% to 5,700 patents and vigorously defended our intellectual property, including winning trade secret theft and copyright infringement lawsuits against Hytera. We also extended our portfolio by investing $945M for acquisitions in growth areas, including video security and analytics. As a result, we have created a unique multi-platform mission critical public safety ecosystem that provides the data that allows our customers to predict, respond and prevent incidents.

The driving force behind our work is our 17,000 employees, who are our most important assets. Motorola Solutions is committed to providing a dynamic work environment, an inclusive culture and competitive benefits, including a subsidized stock purchase plan so employees can have a stake in our future. We take pride in the awards we consistently win for our leadership in employee experience, business strength and innovation.

Additionally, our commitment to a sustainable future has not wavered. One highlight from our environmental activities is our custom greenhouse gas emission-tracking tool that has enabled us to set a target to reduce our Scope 1 and Scope 2 emissions by 38% by 2027. This commitment also extends to our supply chain. In 2019, we conducted over 218 supplier assessments, covering over 90% of our direct material supply spend, to ensure suppliers adhere to our values and priorities.1

Together, these efforts helped us deliver another year of record results, including total shareholder return of 42% in 2019. Since becoming Motorola Solutions in 2011, our company has delivered total shareholder return of 413%.

Looking to our Annual Shareholders Meeting, the event will be held as a virtual meeting on May 11, 2020, following guidance from global and U.S. health authorities to help limit the spread of COVID-19. Shareholders can join via www.virtualshareholdermeeting.com/MSI2020.

At Motorola Solutions, we help people be their best in the moments that matter. That is our purpose, and it resonates with me today more than ever, as we stand by our customers who are on the front lines of this global public health emergency. On behalf of Motorola Solutions, the board of directors and our employees, thank you for your continued support.

Sincerely,

 

LOGO

Gregory Q. Brown

Chairman and CEO

 

 

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 27, 2020

NOTICE OF 2020 VIRTUAL ANNUAL MEETING OF SHAREHOLDERS

Annual Meeting Date: Monday, May 11, 2020

Time: 9:30 a.m., CDT

Virtual Meeting Site: www.virtualshareholdermeeting.com/MSI2020

This year’s virtual annual meeting will begin promptly at 9:30 a.m., Central Daylight Time. If you plan to participate in the virtual meeting, please see the instructions on page 69 of the Proxy Statement. Shareholders will be able to listen, vote, and submit questions from their home or from any remote location that has Internet connectivity. There will be no physical location for shareholders to attend. Shareholders may only participate online by logging in at www.virtualshareholdermeeting.com/MSI2020.

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 2020;

3.

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

4.

consider and vote upon the shareholder proposal described in the enclosed proxy statement, if properly presented at the meeting; and

5.

act upon such other matters as may properly come before the 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 13, 2020 (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 2019 Annual Report, is being mailed to shareholders on or about March 27, 2020.

 

 

 

  REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:

 

   

   LOGO

 

 

VIA THE INTERNET

 

 

 

LOGO

 

 

BY MAIL

 

 
 

Visit the website shown on your Motorola Solutions Notice of Internet Availability of Proxy Materials for the 2020 Annual Meeting (your “Notice”) or proxy card to vote via the internet.

 

 

If you received a printed copy of the proxy card, mark, sign, date and return the proxy card using the postage-paid envelope provided.

 

 

     LOGO

 

 

 

BY TELEPHONE

 

 

    LOGO

 

 

 

AT THE VIRTUAL ANNUAL MEETING

 

   
 

Use the toll-free telephone number listed

on your proxy card.

 

 

Via the internet at the virtual Annual Meeting.

www.virtualshareholdermeeting.com/MSI2020

 

 

PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO SHAREHOLDERS OF MOTOROLA SOLUTIONS AS OF THE RECORD DATE (OR THEIR AUTHORIZED REPRESENTATIVES). THIS MEETING WILL TAKE PLACE ONLINE ONLY. THERE IS NO PHYSICAL LOCATION. In order to attend the meeting, you will need the 16 digit control number included on your notice.

 

     


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TABLE OF CONTENTS

 

    

PROXY STATEMENT

 

WHAT IS MOTOROLA SOLUTIONS?

    1  

OUR BOARD

    7  

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

    7  

WHO WE ARE — BOARD

    7  

OUR BOARD’S QUALIFICATIONS

    12  

HOW OUR BOARD IS SELECTED AND EVALUATED

    12  

HOW OUR BOARD GOVERNS THE COMPANY

    13  

OUR BOARD’S LEADERSHIP STRUCTURE

    14  

AMENDMENT TO RETIREMENT AGE

    14  

COMMITTEES OF THE BOARD

    14  

INDEPENDENCE

    15  

RELATED PERSON TRANSACTION POLICY AND PROCEDURES

    16  

HOW YOU CAN COMMUNICATE WITH OUR BOARD

    17  

HOW WE DETERMINE DIRECTOR COMPENSATION

    17  

HOW OUR DIRECTORS ARE COMPENSATED

    17  

DIRECTOR RETIREMENT PLAN AND INSURANCE COVERAGE

    19  

OUR COMPANY

    20  

WHO WE ARE

    20  

OUR LEADERSHIP TEAM

    20  
PROPOSAL NO. 2 — RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020     23  

OUR PAY

    24  

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

    24  

COMPENSATION DISCUSSION AND ANALYSIS

    25  

SAY ON PAY VOTE RESULTS AND SHAREHOLDER ENGAGEMENT

    26  

EXECUTIVE SUMMARY

    26  

NAMED EXECUTIVE OFFICERS

    26  

PROCESS FOR DETERMINING EXECUTIVE COMPENSATION

    34  

COMPENSATION PHILOSOPHY

    34  

2019 ANNUAL COMPENSATION ELEMENTS

    36  

COMPARATIVE MARKET DATA

    38  

EQUITY USAGE UNDER OUR COMPENSATION PROGRAMS

    39  

OTHER COMPENSATION POLICIES AND PRACTICES

    40  

COMPENSATION AND LEADERSHIP COMMITTEE REPORT

    42  

COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    42  

NAMED EXECUTIVE OFFICER COMPENSATION

    43  

2019 SUMMARY COMPENSATION TABLE

    43  

GRANTS OF PLAN-BASED AWARDS IN 2019

    46  

OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR-END

    47  

OPTION EXERCISES AND STOCK VESTED IN 2019

    48  

NONQUALIFIED DEFERRED COMPENSATION IN 2019

    49  

RETIREMENT PLANS

    50  

PENSION BENEFITS IN 2019

    50  

EMPLOYMENT CONTRACTS

    51  

TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

    52  

CEO PAY RATIO

    59  

EQUITY COMPENSATION PLAN INFORMATION

    60  

AUDIT COMMITTEE MATTERS

    61  

REPORT OF AUDIT COMMITTEE

    61  

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

    62  

AUDIT COMMITTEE PRE-APPROVAL POLICIES

    63  

 

     


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LOGO

 

 

WHAT IS MOTOROLA SOLUTIONS?

Motorola Solutions is a global leader in mission critical communications and analytics. Our technology platforms in mission critical communications, command center software, video security and analytics, bolstered by managed and support 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 more than 100,000 public safety and enterprise customers in 100 countries who depend on our solutions to help them get the job done safely and efficiently. A U.S. company headquartered in Chicago, we have a rich heritage of innovation dating back to 1928 that our 17,000 employees continue today.

PERFORMANCE AND ACCOMPLISHMENTS

TOTAL SHAREHOLDER RETURN (in percent)

 

 

LOGO

PERFORMANCE HIGHLIGHTS SINCE 2011

 

 

413%

  TOTAL  

  SHAREHOLDER  

RETURN*

 

   

 

  50%

REDUCTION

IN SHARE

COUNT

 

   

 

$15.3

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, 2019, illustrating the growth of an initial investment of $100 on December 31, 2010, including payment of dividends.

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   1


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     2019 HIGHLIGHTS

 

   

 

  Grew sales 7% to record $7.9 billion

 

  Grew backlog 6% to record $11.3 billion

 

  Increased quarterly dividend 12% to $0.64 per share

 

  Capital allocation of $709 million in acquisitions, $379 million in dividends, and $315 million of share repurchases

 

  Generated $1.8 billion of operating cash flow

 

  

 

  Added 575 patents, bringing patent portfolio to approximately 5,700

 

  APX Next radio named one of Fast Company’s 10 most important product innovations of 2019

 

  Acquired VaaS International Holdings, a video analysis as a service company

 

  Acquired WatchGuard, a provider of in-car and body worn video solutions

  

 

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

 

  Ranked No. 92 in The Wall Street Journal Management Top 250 List

 

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

 

  Named to Newsweek’s list of America’s Most Responsible Companies

 

 

 

  2020 ANNUAL MEETING OF SHAREHOLDERS

 

     

Date and Time: May 11, 2020, 9:30 a.m., CDT

 

     

Virtual Meeting Site : www.virtualshareholdermeeting.com/MSI2020

 

     

Record Date: March 13, 2020

 

     

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.

 

     

Online meeting only — No physical location

  ITEMS TO BE VOTED ON

 

 
    

Our Board’s Recommendation        

 

 

  Election of Directors (page 7)

  

FOR

 

  Ratification of Independent Registered Public Accounting Firm (page 23)

  

FOR

 

  Advisory Approval of the Company’s Executive Compensation (page 24)

  

FOR

 

  Shareholder Proposal on Political Spending Disclosure (page 66)

  

AGAINST

 

 

 

2   Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement


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DIRECTOR NOMINEES

 

                       

Board Committees

(as of March 13, 2020)*

               
 Name  

  Director    

  Since    

  Indep.    

Other    

Public Co.    

Boards    

  Position     Audit       Comp.    

  Gov. &  

Nom.

    Exec.  
               

 Gregory Q. Brown

  2007             0    

Chairman and CEO,

Motorola Solutions, Inc.

 

              LOGO

 

               

 Kenneth D. Denman

  2017      

 

LOGO

 

 

 

  2    

Venture Partner,

Sway Ventures

 

          LOGO

 

  LOGO

 

               

 Egon P. Durban

  2015      

 

LOGO

 

 

 

  4    

Co-CEO 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

 

 

 

  0    

Co-CEO of Silver Lake

 

  LOGO

 

      LOGO

 

   
               

 Anne R. Pramaggiore

  2013    

 

 

 

LOGO

 

 

  0    

Former Senior Executive Vice President and CEO of Exelon Utilities, Exelon Corporation

 

     

 

LOGO

     

 

LOGO

               

 Joseph M. Tucci*

  2017    

 

 

 

LOGO

 

 

  2    

Chairman of Growth Bridge Partners and Lead Director GTY Technology Holdings, Inc.

 

     

 

LOGO

 

 

 

LOGO

 

   

LOGO  = Chair of Committee

 

*

If elected at the Annual Meeting, Mr. Tucci will become the Chair of the Compensation and Leadership Committee on May 11, 2020

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 2020 Virtual Annual Meeting of Shareholders (the “Annual Meeting”) to be held virtually at www.virtualshareholdermeeting.com/MSI2020 on Monday, May 11, 2020 at 9:30 a.m., CDT, for the purposes set forth in the Notice of 2020 Annual Meeting of Shareholders. This Proxy Statement is dated March 27, 2020 and is being distributed to shareholders on or about March 27, 2020.

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   3


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MOTOROLA SOLUTIONS’ ENVIRONMENTAL, SOCIAL AND GOVERNANCE FRAMEWORK

Our ESG Framework is fueled by our commitment to operate ethically and our dedication to our employees, customers, community and the environment.

 

 

LOGO

Community Engagement Motorola Solutions is committed to the communities where we live and work. More than 6,600 employees around the world contributed 65,000 hours of volunteer time to their communities last year, serving as mentors, tutors, firefighters, science fair judges and more. Our Employees Our more than 17,000 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. We are committed to ensuring that all of our employees share in the value created for our shareholders and customers. Our Business We are committed to creating products and services that save lives and keep communities safer. Our drive for continuous innovation and partnership with our customers enables them to be ready in the day-to-day moments, and in the moments that matter most. Governance & Compliance 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. 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 continue to strive to operate more sustainably. Supply Chain Motorola Solutions holds high labor and environmental standards at every stage in the supply chain. We are committed to ensuring our company and our suppliers do not use indebted labor or engage in human trafficking. We engage directly with our tier-one suppliers to assess their performance and encourage compliance with our Supplier Code of Conduct.

 

 

LOGO

1 Environmental, Social and Governance ISS OualityScore OUTPERFORMERSustainalytics Overall ESG Score A MSCIESG Rating

 

4   Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement


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LOGO                         

 

   LOGO                   LOGO                         

Community Engagement

 

   At Motorola Solutions, we champion volunteerism. In 2019, we doubled the number of employees that participated in volunteer programs over 2018. This year we have challenged all employees to commit at least 20 hours in 2020 to giving back to the community.

 

   The Motorola Solutions Foundation contributes $100 for every 10 hours an employee volunteers with a charitable organization up to 100 hours/$1,000 per employee per fiscal year.

 

   In 2019, Motorola Solutions Foundation made grants in 32 countries supporting 2 million students, teachers, first responders and community members with science, technology, engineering and math education as well as public safety programs and disaster relief.

 

   The Motorola Matches program matches US employee’s charitable contributions up to $7,500 and up to $1,000 for volunteer hours.

  

Our Employees

 

   We provide a bonus program for global employees that is funded by the same financial performance outcomes as those we use to reward our CEO and the 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 at every level.

 

   We have a strong commitment to inclusion and diversity that includes corporate sponsorship of several councils including: Women’s Business Council, Multicultural Business Council, LGBTA Business Council, People with Disabilities and Allies Council and 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 Business

 

   We are dedicated to designing and delivering the mission critical ecosystem that our customers refer to as their lifeline: mission critical communications, software, video, and services that keep people connected in the most important moments.

 

   We serve more than 100,000 public safety and commercial customers across more than 100 countries and we have installed over 13,000 networks worldwide. Our customers trust us to keep them connected and safe.

 

   Motorola Solutions operates in direct compliance with our Code of Business Conduct with an unwavering commitment to integrity and doing business the right way.

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   5


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LOGO           

 

   LOGO               LOGO           

Governance & Compliance

 

  In 2019, we began reporting ESG matters to the Governance and Nominating Committee of the Board.

 

  This year we introduced the Trust Center to give our customers more information about how we protect their data. For more details visit: https://www.motorolasolutions.com
/en_us/about/trust-center.html

 

  We have a number of critical policies that ensure we do business the right way:

 

  Our Board of Directors Principles 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

 

  We developed an Anti-Human Trafficking Statement and Compliance Plan

 

  Our Audit Committee oversees ethics issues.

 

  We routinely conduct internal audits on ethical standards.

 

  For more information on our robust corporate governance structure, see pages 7-15.

  

Environment

 

  We reduced water use by 8% since 2016.

 

  We reduced waste production by 29% since 2016.

 

  We introduced a new greenhouse gas emissions tracking tool in 2018 to report a more accurate profile of our emissions.

 

  We set a target to reduce our Scope 1 and Scope 2 Greenhouse Gas Emissions by 38% by 2027.

  

Supply Chain

 

  We are an active Responsible  Business Alliance (RBA) member, supporting the well-being of workers in the global electronics supply chain.

 

  We conduct regular independent social and environmental risk management audits.

 

  We conduct separate independent audits of higher risk suppliers, with report sharing via the RBA.

 

  We completed 218 supplier assessments in 2019, including suppliers representing 96% of direct material supply chain spend, based on current reporting standards.

 

  We promote supplier diversity by ensuring that businesses owned by women and other underrepresented groups are included in our supplier selection process.

 

For more information on our commitment to corporate responsibility, please see the 2018 corporate responsibility report at https://www.motorolasolutions.com/content/dam/msi/docs/about-us/cr/2018_corporate_responsibility_report_v9.pdf, the 2019 corporate responsibility report is expected to be issued in 2020

 

6   Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement


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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 13, 2019. 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: In the last five years Mr. Brown served on the board of Xerox Corporation from January 2017 to May 2019.

 

Board Committees: Executive (Chair)

 

Director Qualifications:

 

  Public company CEO, relevant industry, technology, software and services business, cybersecurity, safety and security experience as Chairman and CEO of the Company and former Chairman and 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 Board of Directors of the Business Roundtable and former member of the President’s National Security Telecommunications Advisory Committee (NSTAC)

 

  Public company board experience

 

 

  LOGO

 

 Principal Occupation:

 Chairman and Chief
 Executive Officer,
 Motorola Solutions, Inc.    

 

 Age: 59

 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 2021 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 has the authority under the Company’s Bylaws to increase or decrease the size of the Board and to fill vacancies between Annual Meetings.

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   7


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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 and LendingClub Corporation. In the last five years Mr. Denman served on the boards of Mitek Solutions, Inc. from December 2016 to December 2019, ShoreTel, Inc. from May 2007 to September 2017, and 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.

 

  Software and services business, 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: 61

 Director since: 2017

 Lead Independent Director  

 since 2019

 Independent

    

    

    

    

 

 EGON P.

 DURBAN

 

  

 

Mr. Durban is Co-CEO of Silver Lake, a global private equity firm and is based in the firm’s Menlo Park office. Mr. Durban joined Silver Lake in 1999 as a founding principal and was previously Managing Partner and Managing Director from January 2013 to December 2019. 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: Twitter, Inc., Dell Technologies Inc., and its majority owned subsidiaries SecureWorks Corp and VMware, Inc. In the last five years Mr. Durban served on the boards of Intelsat S.A from August 2011 to December 2016 and Pivotal Software, Inc. from April 2018 to January 2020.

 

Board Committees: Compensation and Leadership

 

Director Qualifications:

 

  Relevant industry, technology, global business and software and services business experience as Co-CEO of Silver Lake

 

  Financial and accounting expertise and private equity, investment banking and capital allocation experience as Co-CEO of Silver Lake and as a former associate with Morgan Stanley’s Investment Banking Division

 

  Public company board experience

 

 

  LOGO  

 

 Principal Occupation:

 Co-CEO,

 Silver Lake

 

 Age: 46

 Director since: 2015

 Independent

 

 

 

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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 board of 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: 70

 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, and 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: 71

 Director since: 2011

 Independent

 

 

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 GREGORY K.

 MONDRE

  

 

Mr. Mondre is Co-CEO of Silver Lake based in New York. Mr. Mondre joined Silver Lake in 1999 and was previously Managing Partner and Managing Director from January 2013 to December 2019. 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: In the last five years, Mr. Mondre served on the boards of GoDaddy, Inc. from May 2014 to February 2020, and Sabre Corporation from March 2007 to December 2018.

 

Board Committees: Audit, Governance and Nominating

 

Director Qualifications:

 

  Relevant industry, technology, global business, and software and services business experience as Co-CEO of Silver Lake

 

  Financial and accounting expertise and private equity, investment banking and capital allocation experience as Co-CEO of Silver Lake and as former principal at TPG

 

  Public company board experience

 

  LOGO  

 

 Principal Occupation:

 Co-CEO,

 Silver Lake

 

 Age: 45

 Director since: 2015

 Independent

 

 

 

 ANNE R.

 PRAMAGGIORE

  

 

Ms. Pramaggiore served as Senior Executive Vice President and Chief Executive Officer of Exelon Utilities, a business unit of Exelon Corporation from June 2018 to October 2019. She was a member of the Commonwealth Edison (“ComEd”) board of directors from February 2012 to October 2019. She was vice-chair of the ComEd, PECO, BGE and PHI advisory boards from June 2018 to October 2019. She served as ComEd’s President and Chief Executive Officer from February 2012 to June 2018 and as President and Chief Operating Officer from May 2009 to February 2012.

 

Other Public Company Boards: In the last five years, Ms. Pramaggiore served on the board of The Babcock & Wilcox Company from June 2015 to April 2019

 

Board Committees: Compensation and Leadership (Chair), Executive

 

Director Qualifications:

 

  Public company division CEO, government, public policy, regulatory, technology, and cyber security business experience as former 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 former Chair of the Federal Reserve Bank of Chicago and board member of the Chicago Council on Global Affairs and former board member of The Chicago Urban League

 

  Public company board experience

 

  LOGO  

 

 Principal Occupation:

 Former Senior Executive
 Vice President and Chief

 Executive Officer, Exelon

 Utilities, Exelon Corporation  

 (“Exelon”)

 

 Age: 61

 Director since: 2013

 Independent

 

 

 

 

 

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 JOSEPH M.

 TUCCI

  

 

Mr. Tucci is the Chairman of Bridge Growth Partners and Lead Director of GTY Technology Holdings, Inc. Formerly, Mr. Tucci served as the Co-Chairman and Co-Chief Executive Officer of GTY Technology Holdings, and 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. and 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 and Governance and Nominating

 

Director Qualifications:

 

  Public company CEO, technology, global business, and software and services business experience and financial and accounting expertise 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:

 Chairman of Bridge Growth  

 Partners and Lead Director

 of GTY Technology

 Holdings, Inc.

 

 Age: 72

 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 or CFO: Six of eight director nominees

 

     

Financial and accounting expertise: All director nominees

 

     

Technology and information technology experience: All director nominees

 

     

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

 

     

Software and services business experience: Five 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 2019, 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.

 

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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

 

     

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 2019, 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” vote

 

     

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

 

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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 presentations. 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, providing 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 https://investors.motorolasolutions.com/GovDocs to obtain more information and view our governance documents. Amendments to the these governance 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 2019.

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 2019. 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. Denman, 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 continue to serve as our Lead Independent Director.

AMENDMENT TO RETIREMENT AGE

In February of 2020, the Board amended the Board Governance Guidelines to change the director retirement age from 72 to 75.

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 https://investors.motorolasolutions.com/GovDocs. Committee membership as of December 31, 2019 (except as otherwise noted), the number of meetings of each committee during 2019, 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.

 

    2019 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.

 

 

 

    2019 Meetings 9

 

    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.

 

 

 

 

    2019 Meetings: 5

 

 

 

    Kenneth D. Denman (Chair)

    Gregory K. Mondre

    Joseph M. Tucci

 

 

 

 

    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.

 

 

    2019 Meetings: 0

 

 

 

    Gregory Q. Brown (Chair)

    Kenneth D. Denman

    (Lead Independent Director)

    Judy C. Lewent

    Anne R. Pramaggiore

 

 

 

      *   If elected at the Annual Meeting, Mr. Tucci will become the Chair of the Compensation and Leadership Committee on May 11, 2020

Attendance at Board Meetings

The Board held five meetings during 2019. Overall attendance at Board and committee meetings was 96%. Each incumbent director attended 100% of the combined total meetings of the Board and the committees on which he or she served during 2019, except for one director that attended 86% and one director that attended 80% 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 2019, the non-employee independent members of the Board met in executive session five times. In addition, Board members are expected to virtually attend the Annual Meeting as provided in the Board Governance Guidelines. All of the directors who stood for election at the 2019 Annual Meeting attended that meeting.

INDEPENDENCE

On March 12, 2020, 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. Tucci, and former non-employee director Mr. Scott, were independent during the periods in 2019 and 2020 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 https://investors.motorolasolutions.com/GovDocs.

Motorola Solutions’ Relationship with Entities Associated with Independent Directors

When assessing independence, each of 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. Jones, Ms. Lewent, 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.

During 2019, Paul Czerwinski, our CEO’s son-in-law, was employed by the Company. Mr. Czerwinski was the Director of Sales—Strategic Project Team and his total compensation in 2019 was approximately $209,758, which includes salary and bonus. Mr. Czerwinski also participated in the Company’s general welfare plans and received benefits comparable to those received by persons in similar positions within the Company. The Governance and Nominating Committee reviewed and pre-approved this relationship in 2019.

On September 5, 2019, the Company entered into an investment agreement with affiliates of Silver Lake (the “New Investment Agreement”), pursuant to which the Company issued to Silver Lake $1 billion aggregate principal amount of 1.75% senior convertible notes due 2024 (the “2024 Notes”). The New Investment Agreement provides that Silver Lake will, subject to certain conditions, continue to have rights to representation on the Board and requires that, for so long as Silver Lake has rights to nominate a director to the Board, the Company will include a Silver Lake designee on its slate of nominees for election to the Board at each of the Company’s meetings of stockholders in which directors are to be elected and to use its reasonable efforts to cause the election of such person. The New Investment Agreement also imposes certain standstill obligations and transfer restrictions on Silver Lake, and requires that during a specified period and subject to certain exceptions, Silver Lake will vote shares of the Company’s common stock beneficially owned by it in support of Company-nominated directors and otherwise in accordance with the recommendation of the Board. As of the date of this proxy statement, the outstanding aggregate principal amount of the 2024 Notes is $1 billion. On March 15, 2020, the Company paid its first interest payment on the 2024 Notes, of $9.24 million. The Company did not pay any interest on the 2024 Notes in 2019.

In connection with the New Investment Agreement, on September 5, 2019, the Company amended the existing investment agreement, dated as of August 4, 2015, by and among the Company and affiliates of Silver Lake (the “Existing Investment Agreement”) to, among other things, terminate the board nomination rights of the applicable Silver Lake funds under the Existing Investment Agreement.

On September 5, 2019, affiliates of Silver Lake who were holders of the Company’s 2.0% senior convertible notes due 2020 (the “2020 Notes”) exercised their conversion rights in respect of $600 million aggregate principal amount of the 2020 Notes. The Company settled its conversion obligation to the applicable Silver Lake affiliates by paying cash in the aggregate amount of $600 million and delivering approximately 5.5 million shares of the Company’s common stock (the “Conversion Transaction”), substantially all of which were sold by such Silver Lake affiliates in an underwritten offering that closed on September 9, 2019.

 

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On September 5, 2019, the Company also agreed to repurchase from an affiliate of Silver Lake the remaining $200 million principal amount of the 2020 Notes for aggregate consideration of approximately $525 million in cash (the “Repurchase Transaction”).

Egon Durban and Greg Mondre are members of our Board and are Co-CEOs of Silver Lake. At the time of the New Investment Agreement, the amendment to the Existing Investment Agreement, the Conversion Transaction and the Repurchase Transaction (the “Silver Lake Transactions”), both Mr. Durban and Mr. Mondre were Managing Partners and Managing Directors of Silver Lake. Mr. Durban and Mr. Mondre recused themselves from the Board vote to approve the Silver Lake Transactions. The Governance and Nominating Committee reviewed and approved the Silver Lake Transactions in 2019.

As of February 28, 2020, Silver Lake and its affiliates beneficially owned 70 shares of the Company’s common stock which shares, if held as of the record date, would be entitled to be voted at the Annual Meeting and would be subject to the voting obligations set forth in the New Investment Agreement.

Motorola Solutions had no other Related Person Transactions in 2019.

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.

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

 

      *   At the February 13, 2020 Board meeting, the Lead Independent Director Fee was increased to $40,000 effective as of May 11, 2020.

During 2019, 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.

 

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On May 13, 2019, each then non-employee director received a DSU award of 1,327 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 2019, received no additional compensation for serving on the Board.

The following table further summarizes compensation paid to the non-employee directors during 2019.

 

Name

(a)

 

 

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

 

   

Stock
Awards ($)
(2)(3)

(c)

 

   

 

All Other    

Compensation ($)    
(g)    

 

 

Total ($)
(h)

 

 
       

 Kenneth D. Denman

 

 

131,667    

 

 

 

190,066    

 

 

 

 

321,733

 

 Egon P. Durban

 

 

0    

 

 

 

290,399    

 

 

 

 

290,399

 

 Clayton M. Jones

 

 

110,000    

 

 

 

190,066    

 

 

 

 

300,066

 

       

 Judy C. Lewent

 

 

125,000    

 

 

 

190,066    

 

 

 

 

315,066

 

       

 Gregory K. Mondre

 

 

0    

 

 

 

300,260    

 

 

 

 

300,260

 

       

 Anne R. Pramaggiore

 

 

60,000    

 

 

 

250,411    

 

 

 

 

310,411

 

       

 Joseph M. Tucci

 

 

100,000    

 

 

 

190,066    

 

 

 

 

290,066

 

       

 Former Director:

       
       

 Samuel C. Scott III(4)

 

 

62,500    

 

 

 

–    

 

 

 

 

62,500

 

 

(1)

During 2019, 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 13, 2019. With respect to the annual grant of equity, Messrs. Denman, Durban, Jones, Mondre, Tucci and Ms. Pramaggiore elected to receive DSUs that settle at termination of service, 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 29

 

 

May 13

 

 

June 28

 

 

September 30

 

 

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

    1,327                

 Fair Value

  $190,066          

 Egon P. Durban

  179   1,327             150   147   156

 Fair Value

  $25,135   $190,066             $25,010   $25,050   $25,138

 Clayton M. Jones

    1,327                

 Fair Value

  $190,066          

 Judy C. Lewent

    1,327                

 Fair Value

  $190,066          

 Gregory K. Mondre

  196   1,327             165   162   171

 Fair Value

  $27,522   $190,066             $27,510   $27,606   $27,555

 Anne R. Pramaggiore

  107   1,327             90   89   94

 Fair Value

  $15,025   $190,066             $15,006   $15,166   $15,147

 Samuel C. Scott III

    –                

 Fair Value

 Joseph M. Tucci

    1,327                

 Fair Value

  $190,066          

 

(3)

The aggregate number of Motorola Solutions DSUs awards outstanding at December 31, 2019 includes accrued dividend equivalents or shares, is shown below:

 

  Directors     Deferred Stock Units    

 

    Restricted    

    Stock    

  Kenneth D. Denman

  1,336

  Egon P. Durban

14,018

  Clayton M. Jones

10,192

  Judy C. Lewent

  5,649

  Gregory K. Mondre

14,228

  Anne R. Pramaggiore

20,971

  Joseph M. Tucci

  5,525

  Former Director:

  Samuel C. Scott III *

39,953

2,228

 

  *

The total for Mr. Scott is as of his retirement from the Board on May 12, 2019.

(4)

Mr. Scott’s last day on the board was 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, 2019, 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.

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, 2019 were $1,162.

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   19


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OUR COMPANY

 

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 17,000 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 42% in total shareholder return in 2019. 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: 55

 

 

 

MARK HACKER

 

  

 

Mr. Hacker is Executive Vice President, General Counsel and 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: 48

    

  

 

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KELLY MARK

 

  

 

Mr. Mark is Executive Vice President, Software and Services, for Motorola Solutions. He is responsible for the Company’s software and services 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, Software and Services

 

 

Joined Motorola

Solutions: 1999

Age: 48

 

 

 

JACK MOLLOY

 

  

 

Mr. Molloy is Executive Vice President, Products and Sales for Motorola Solutions. He leads the Company’s worldwide sales organization and the product development of land mobile radio portfolio, as well as, video security and analytics. Mr. Molloy serves on the Sales Benchmark Index Advisory Board.

 

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: 48

 

 

 

 RAJAN NAIK

  

 

Dr. Naik is Senior Vice President, Strategy and Ventures, for Motorola Solutions. He is responsible for the corporate strategy organization, chief technology office, venture capital portfolio and competitive and market intelligence. Dr. 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

 

Dr. 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, Strategy and Ventures

 

 

Joined Motorola

Solutions: 2015

Age: 48

 

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CYNTHIA YAZDI

 

  

 

Ms. Yazdi is Senior Vice President, Chief of Staff, Marketing and Communications and Motorola Solutions Foundation. She is responsible for supporting the Chairman and CEO of Motorola Solutions and for worldwide marketing and communications for the Company, as well as the Motorola Solutions Foundation. Ms. Yazdi serves on the board of the American Red Cross of Chicago.

 

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 and Communications and Motorola Solutions Foundation

 

 

Joined Motorola

Solutions: 2000

Age: 55

 

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PROPOSAL NO. 2 — RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020

 

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, 2020. PwC has acted in this capacity since 2019, following a competitive proposal process. 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 year ending December 31, 2018. Services provided to the Company and its subsidiaries by PwC and KPMG in fiscal years 2019 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 year ended December 31, 2018 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 year ended December 31, 2018, (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.

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 2020. 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 2019 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

 

   

Say on Pay Vote Results and Shareholder Engagement

 

    

 

26

 

 

 

Historical Say on Pay Results

     26  

2019 Shareholder Engagement

     26  

Board Responsiveness

 

    

 

26

 

 

 

   

Executive Summary

 

    

 

26

 

 

 

Named Executive Officers

     26  

Our Business

     27  

Company Performance

     27  

Paying for Performance

     28  

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  

2019 Target Total Compensation Summary

 

    

 

35

 

 

 

   

2019 Annual Compensation Elements

 

    

 

36

 

 

 

Base Salary

     36  

Short-Term Incentives

     36  

Long-Term Incentives

 

    

 

37

 

 

 

   

Comparative Market Data

 

    

 

38

 

 

 

2019 Peer Group

     38  

Survey Market Data

 

    

 

39

 

 

 

   

Equity Usage Under Our Compensation Programs

 

    

 

39

 

 

 

Other Compensation Policies and Practices

 

    

 

40

 

 

 

Benefits and Perquisites

     40  

Stock Ownership Guidelines

     40  

Change in Control Policy

     40  

Recoupment of Incentive Compensation Awards Upon Restatement of Financial Results

     41  

Impact of Favorable Accounting and Tax Treatment of Compensation Program Design

     41  

Securities Trading Policy: Anti-Hedging and Anti-Pledging

 

    

 

41

 

 

 

 

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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). After a low level of support in 2018, we took concrete steps to understand and respond to our shareholders’ concerns. Our shareholders appreciated the level of direct responsiveness, which resulted in 92% shareholder support for our 2019 Say on Pay (“SOP”) vote.

 

         

 

PROXY  

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

         

SOP RESULT  

 

97.4%

 

96.4%

 

95.6%

 

69.1%

 

92.3%

2019 SHAREHOLDER ENGAGEMENT

Consistent with prior years, our shareholder engagement process in 2019 was multifaceted and continuous. Our efforts included monitoring trends, seeking 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.

Every year, our shareholders’ perspective is a critical input considered by the Committee for determining executive compensation. Even with a strong SOP result, we continued our outreach efforts in 2019, which included:

 

     

Spring: followed up with our top 25 shareholders from early 2019 (approximately 58% ownership) to collect feedback

 

     

Fall/Winter: offered to engage with our top 25 shareholders (approximately 62% ownership) to hear their perspectives and understand any concerns

BOARD RESPONSIVENESS

After our SOP vote in 2018, our shareholders provided consistent feedback on how to improve aspects of our CEO’s pay and specific incentive program features. Based on this feedback, we made several changes in 2018, which continued in 2019:

 

     

Eliminated cash from CEO long-term incentives by paying any active Long Range Incentive Plan (“LRIP”) cycles in stock

 

     

Increased CEO stock ownership requirement from 6x to 10x base salary

 

     

Disclosed CEO goals and achievement level, as reviewed by the Board, starting in 2018

 

     

Removed the 25% cap on the Committee’s ability to reduce a payout under the LRIP and performance options (“POs”) when total shareholder return (“TSR”) is negative, thus providing the Committee with full discretion to decrease the payout

Overall, feedback from our shareholders was positive in 2019, recognizing the significant level of Board responsiveness in 2018, the strength of our management team and their continued support of our performance-based programs.

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 2019 total compensation for our active Named Executive Officers (“NEOs”) who are listed below.

 

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, Software and Services

     
LOGO     

JOHN P. MOLLOY

 

Executive Vice President, Products and Sales

   

 

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OUR BUSINESS

Motorola Solutions is a global leader in mission-critical communications and analytics. Our technology platforms in mission critical communications, command center software, and video security and analytics, bolstered by our managed and support services, make cities safer and help communities and businesses thrive. We serve more than 100,000 public safety and commercial customers in over 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 Safety

LTE

 

   Services   

Video Solutions

& Analytics

 

  

Public Safety

Command Center

 

   
             
            $7.9 BILLION   17,000+ EMPLOYEES        5,700+ PATENTS                    HEADQUARTERS  
 

             in annual sales (2019)

 

 

in 60 countries

 

 

       granted

 

     

       500 West Monroe Street

       Chicago, IL USA

 

 
            $687 MILLION   100,000+ CUSTOMERS        13,000 NETWORKS            CHAIRMAN & CEO  
               in R&D spending (2019)  

in over 100 countries

         installed across the globe              Greg Brown  
             

We offer comprehensive solutions that help our customers work safely and efficiently. These solutions are designed to be “purpose-built” for the unique needs of our customers, which include customers in the government, public safety and commercial verticals.

COMPANY PERFORMANCE

Our TSR significantly outperformed the S&P 500 again in 2019, 42% compared to 31%, and over the past three years, 105% compared to 53%. Additionally, 2019 was another record year for other key financial metrics such as revenue and ending backlog.

 

LOGO   LOGO

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   27


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LOGO   

 

 

Record Results

 

2019 was another record year for:

 

   Revenue (including increased recurring revenue)

 

   Ending Backlog

 

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

 

   Free Cash Flow—short-term incentive plan metric

When making compensation decisions, the Committee considers specific accomplishments in 2019, as well as how those accomplishments position us to execute against our growth and expansion strategy.

PAYING FOR PERFORMANCE

CEO Framework

Annually, 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 2019 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.

Short-Term Incentive Plan Results

The Executive Officer Short Term Incentive Plan (“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 Individual Performance Factor (“IPF”) to reward our executives for accomplishments beyond strong financial results. The IPF is based on the Compensation and Leadership Committee’s subjective and thorough review of each NEO’s individual performance throughout the year. Specific accomplishment highlights considered with making IPF decisions for 2019 are listed in the “CEO Individual Performance” and “Other NEO Individual Performance” sections below.

Company-Wide Financial Performance

In 2019, we were just below our operating plan for non-GAAP OE and exceeded our operating plan for Free Cash Flow, resulting in a Company performance factor of 1.03. The performance targets were set to incent 14% improvement in non-GAAP OE and 7% improvement in Free Cash Flow.

 

             

  COMPANY

  PERFORMANCE

  MEASURE

    MINIMUM       TARGET       MAXIMUM      

2019    

RESULT    

 

COMPANY    

PERFORMANCE    

FACTOR    

 

MEASURE    

WEIGHT    

 

WEIGHTED    

RESULT    

             

  Non-GAAP OE1 (in millions)

  $1,692     $1,990       $2,289       $1,975       0.99      65%       0.65   
             

  Free Cash Flow2 (in millions)

  $1,106     $1,475       $1,770       $1,575       1.09      35%       0.38   
             

  TOTAL

              1.03   

 

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1 

Non-GAAP OE is our reported GAAP Operating Earnings excluding share-based compensation expense, reorganization of business charges, intangibles amortization expenses, operating lease asset impairments, losses on legal settlements, and acquisition related transaction fees.

2 

Free Cash Flow is defined as net cash provided by operating activities less capital expenditures, the comparative 2018 amount included a $500 million voluntary debt-funded pension contribution.

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 2019 IPF of 1.4 was derived from his accomplishments under the CEO framework. Highlights from his accomplishments in each category are provided in the table below.

 

  2019 ACCOMPLISHMENT HIGHLIGHTS

ANNUAL FINANCIAL GOALS

 

 

   Financial performance met or exceeded financial plan in all key metrics

 

   Achieved revenue growth of 7% to $7.9 billion, another Company record following a record in 2018

 

   Achieved 5% organic revenue growth1 which exceeded our plan

 

   Non-GAAP operating earnings increased 14%, resulting in another Company record following a record in 2018

 

   Non-GAAP earnings per share increased 11%, which exceeded our plan

 

   Executed total shareholder return that significantly outperformed the S&P 500 in 2019 (42% compared to 31%)

 

ANNUAL OPERATIONAL/NON-

FINANCIAL GOALS

 

 

   Backlog increased 6% to $11.3 billion, another Company record following a record in 2018

 

   Won critical litigation against China-based Hytera for trade secret misappropriation and copyright infringement

 

   Increased patent portfolio by 575 to 5,700 issued patents and significantly expanded software copyright filings

 

   De-risked U.S. pension by $1 billion

 

   Won largest Canadian contract in our history

 

LONG-TERM

STRATEGIC INITIATIVES

 

 

   Acquired WatchGuard, expanding our mobile video security solutions for public safety

 

   Acquired Avtec, expanding our dispatch communications solutions for public safety and commercial customers

 

   Launched APX Next, our next generation P25 device with embedded LTE capability and recognized as one of the 10 most important product innovations in 2019 by Fast Company

 

   Extended U.K. Emergency Services Network contract through 2024

 

   Established the Motorola Technology Advisory Council to advise and assess on societal impact of complex emerging technologies

 

PEOPLE

 

 

   Hired 2,500 new employees and acquired 900 new employees

   Appointed 13 new vice presidents, 54% of whom are diverse

   Invested in leadership development programs for our high-potential women, including Leading Women Executives and Bonfire Women

   Earned several recognitions including Fortune’s World’s Most Admired Companies, Bloomberg’s 50 Companies to Watch in 2020, WayUp’s Top 100 Internship Program, Wall Street Journal’s Management Top 100 and Barron’s 100 Most Sustainable Companies

 

In sum, the Committee has determined that Mr. Brown’s performance warrants application of a 1.4 IPF. The 2019 financial performance set records for many metrics, for the third year in a row. Revenue, backlog, stock price appreciation and TSR were double digit increases. Strategic acquisitions in 2019, such as Avtec and WatchGuard, continued to enhance our video analytics capabilities. These results, as well as continued key talent refreshment, have given the Company not only its best year on record based on the results described above, but in the Committee’s view, positioned the Company for future growth.

 

1 

Defined as net sales calculated under GAAP excluding net sales from acquired business owned for less than four full quarters.

 

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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 2019. For the purposes of this table, accomplishments have been ascribed to a specific category, though many of them impact multiple categories.

 

 

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

 

  BONANOTTE

 

 

1.4

 

 

  Extended Silver Lake relationship for five years by replacing prior convertible note with new $1 billion convertible note

 

  Refinanced $850 million of debt, lowering interest expense and extending weighted average maturity of debt by six years

 

  Completed $2.2 billion commercial paper program and early pay-off of $400 million Avigilon term loan

 

  De-risked U.S. pension plan by offering lump sum buyout resulting in reduction of projected benefit obligation by $1B and net pension liability by $200 million

 

  Amended U.K. pension program, reducing pension liability by $80 million

 

  Completed sale of Berlin, Germany facility ahead of schedule and under budget

 

 

  Led business development efforts for $945 million in acquisitions

 

  Drove significant e-commerce launches, including new subscription modes and B2B direct

 

  Completed integration of new auditing firm following a 60-year relationship with prior firm

 

  Implemented robotic process automation for over 100 financial workflows

 

 

  Led significant talent refresh in supply chain and procurement teams, resulting in comprehensive leadership changes and material reductions at the director level

 

  Addressed talent gaps and drove culture change through hiring of 160 new employees

 

  MOLLOY

 

 

1.4

 

 

  Grew total revenue 7%

 

  Exceed business plan for Avigilon and significantly expanded Avigilon sales coverage

 

  Achieved record year for device sales

 

  Achieved fifth consecutive year of revenue growth in North America

 

  Reduced operating expenses $25 million

 

  Increased ending backlog $659 million

 

 

  Created Video Security Solutions business unit to lead integrated video portfolio

 

  Launched APX Next device, our next generation P25 radio with embedded LTE capability

 

  Launched MotoTRBO Nitro, our first CBRS device that combines private broadband data with mission-critical voice

 

 

  Reorganized EMEA and Asia Pacific sales into a consolidated international team for greater focus on direct and channel sales

 

  Reorganized infrastructure and devices teams into a consolidated team to drive platform development approach

 

  Hired new leader for the Latin America region

 

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  IPF   ANNUAL FINANCIAL AND
OPERATIONAL GOALS
  LONG-TERM STRATEGIC INITIATIVES   PEOPLE
  HACKER   1.4  

  Significantly increased software copyright filings, expanded software patent families and filed a record number of patent applications covering APX Next

 

  Supported completion of several strategic acquisitions, venture capital investments, Silver Lake extension, U.S. pension de-risking and debt refinancing

 

  Drove enhanced shareholder engagement and disclosures regarding ESG and executive compensation

 

  Executed our global offensive litigation strategy to protect our innovation and defend our intellectual property rights, including winning a $765 million jury verdict against Hytera in U.S. Federal court for trade secret misappropriation and copyright infringement

 

  Established Motorola Technology Advisory Council to assess and advise on the societal impact of artificial intelligence and other complex emerging technologies

 

  Successfully advocated for legislative and regulatory outcomes that supported public safety and law enforcement

 

  Led executive committee talent management initiatives including significant vice president talent refresh and improved succession planning

 

  Reorganized human resources team to drive increased data-analytics approach to people decisions

 

  Achieved Top 100 Internship Program award for second consecutive year

 

  MARK

 

 

1.4

 

 

  Grew Software and Services revenue 14%

 

  Grew Software and Services gross margins

 

  Grew Software and Services operating margins by 330 basis points

 

 

  Launched several new command center software improvements

 

  Drove the enablement of our command center software in the cloud

 

  Integrated the acquisition of VaaS into our command center software suite

 

  Expanded our service offerings with WAVE, cyber security, APX Next, Nitro and TRBO product lines

 

  Led extension of U.K. Emergency Services Network contract through 2024

 

 

  Restructured software team to focus on cloud services, next generation call services and software suite sales

 

  Reorganized international services teams into a consolidated team to drive operational improvements and growth of our international services business

2019 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 ($)

   

AWARD AS

    % OF TARGET    

           

  BROWN

   $ 1,250,000      175%   1.03   1.40   $ 3,154,375     144%
           

  BONANOTTE

   $ 695,846      95%   1.03   1.40   $ 953,240     144%
           

  MOLLOY

   $ 703,769      95%   1.03   1.40   $ 964,094     144%
           

  HACKER

   $ 600,846      95%   1.03   1.40   $ 823,099     144%
           

  MARK

   $ 535,654      95%   1.03   1.40   $ 733,792     144%

 

Motorola Solutions Notice of 2020 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 2017-2019 LRIP cycle and POs granted in 2017 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 122.1% resulted
in a 93rd percentile rank versus S&P 500 companies, with awards
earned at 250% of target.
TSR calculation is defined in the “2019
Annual Compensation Elements” section below.

     

2017-2019 LRIP

 

 

 

POs

($81.37 exercise price)  

 

     
   

 

RELATIVE TSR PAYOUT SCALE (S&P 500)

 

 
     

 

PERCENTILE RANK

 

 

 

PAYOUT

 

 

 

TSR

 

     
   

 

MSI (93rd Percentile)

 

 

 

250%

 

 

 

122.1%

 

 
   

90th - 100th Percentile

 

  250%

 

  103.9%

 

 
   

80th - 89.99th Percentile

 

  200%

 

  79.0%

 

 
   

70th - 79.99th Percentile

 

  175%

 

  64.7%

 

 
   

60th - 69.99th Percentile

 

  150%

 

  52.0%

 

 
   

55th - 59.99th Percentile

 

  110%

 

  45.8%

 

 
   

50th - 54.99th Percentile

 

  90%

 

  39.1%

 

 
   

45th - 49.99th Percentile

 

  80%

 

  33.0%

 

 
   

35th - 44.99th Percentile

 

  50%

 

  17.9%

 

 
   

30th - 34.99th Percentile

 

  30%

 

  12.0%

 

 
   

<30th Percentile

 

  0%

 

   

Market Stock Units

One-third of the market stock units (“MSUs”) granted in 2016, 2017 and 2018 were earned in 2019 based on absolute stock price appreciation. These awards were earned at 200% (maximum), 174% and 131% of target, respectively, with corresponding stock price appreciation.

 

 

 

 

Grant Date: March 10, 2016
3rd of 3 Tranches Earned

 

  

 

Grant Date: March 9, 2017
2nd of 3 Tranches Earned

 

  

 

Grant Date: March 8, 2018
1st of 3 Tranches Earned

 

 

 

Beginning stock price: $68.50
Ending stock price: $137.75

 

  

 

Beginning stock price: $79.35
Ending stock price: $137.75

 

  

 

Beginning stock price: $105.04
Ending stock price: $137.75

 

 

PAYOUT = 200% OF TARGET

 

  

PAYOUT = 174% OF TARGET

 

  

PAYOUT = 131% 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 2018 to 2019, and the corresponding rationale, can be found in the “2019 Annual Compensation Elements” section below.

2011-2019 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 12 years as CEO, the Committee has exercised their discretion to both increase and decrease Mr. Brown’s target compensation, as they have deemed appropriate.

 

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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 34.2% over the nine years. During this same time, Mr. Brown has guided the Company through a significant transformation and Motorola Solutions has delivered TSR of 413%.

 

       

 

   PAY COMPONENT

 

2011

 

2019

 

% 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 $3,704,166   23.5%  

 

Beginning with the cycle that ended in 2018, Mr. Brown will receive LRIP payouts in stock, thus eliminating cash from his LTI program. Starting in 2019, Mr. Brown’s LRIP was denominated 100% in performance stock units (“PSUs”).

 

       

  EQUITY

$4,000,000 $7,408,334   85.2%  

 

In 2015, the Committee replaced Mr. Brown’s stock 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 $11,112,500   58.8%  
       

  TARGET TOTAL

  COMPENSATION

$10,840,000 $14,550,000   34.2%  

 

AVERAGE ANNUAL INCREASE OVER NINE YEARS IS 3.8%.

 

CEO Compensation vs. TSR

Over this nine 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 2020 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.

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.

 

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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 an initial guideline for establishing target total compensation opportunities for our NEOs. For 2019, on average, our NEOs were between the market 50th and 75th percentiles, 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 2019, 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 2019, 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 2019 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

2019 TARGET TOTAL COMPENSATION SUMMARY

When setting NEO compensation, the Committee first determines target total compensation and second, determines 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

  $3,704,166  

  $3,704,167  

  $3,704,167  

$14,550,000

2.1%

       

  BONANOTTE

$700,000

95%

$1,365,000

$800,000

$800,000

$800,000

$3,765,000

5.3%

       

  MOLLOY

$710,000

95%

$1,384,500

$833,334

$833,333

$833,333

$3,884,500

16.8%

       

  HACKER

$605,000

95%

$1,179,750

$600,000

$600,000

$600,000

$2,979,750

3.1%

       

  MARK1

$545,000

95%

$1,062,750

$533,334

$533,333

$533,333

$2,662,750

56.8%

 

  1 

Mr. Mark’s year-over-year change is due to his 2019 LTI, which is significantly greater than his 2018 LTI prior to his promotion.

 

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2019 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 2019, the Committee reviewed base salaries for our NEOs and applied market adjustments, where applicable. Mr. Brown has not received a base salary increase since 2014 and did not receive a base salary increase in 2019.

 

   
   NEO   2018 BASE SALARY     2019 BASE SALARY   YEAR-OVER-
  YEAR CHANGE  
   

  BROWN

$1,250,000

$1,250,000

0.0%

   

  BONANOTTE

$680,000

$700,000

2.9%

   

  MOLLOY

$680,000

$710,000

4.4%

   

  HACKER

$585,000

$605,000

3.4%

   

  MARK

$500,000

$545,000

9.0%

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.

Incentive Targets

There were no changes to individual target award percentages in 2019. Our CEO, Mr. Brown, continued to have an individual target award percentage of 175%, and all other NEOs’ target percentages continue to be 95%.

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 IPF assessment. 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

Metric Selection

For 2019, the Business Performance Factor was based on achievement of non-GAAP OE (weighted 65%) and Free Cash Flow (weighted 35%) goals. Non-GAAP OE measures our profits from sales and Free Cash Flow measures the cash available after capital expenditures. These are common performance measures both inside and outside of our industry and are fundamental inputs we use to measure profitability, business liquidity and rates of return for the business. We believe non-GAAP OE and Free Cash Flow appropriately measure our annual business performance and ultimately drive our long-term shareholder value over time.

 

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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

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 2019, the Committee considered the significant impact of Mr. Brown’s decisions and actions on our longer-term business strategy and transformation.

The Committee approved total target 2019 LTI at their March 2019 meeting.

 

           
  NEO TOTAL TARGET
2018 LTI
2019 LRIP 2019 POs 2019 MSUs TOTAL TARGET
2019 LTI
YEAR-OVER-
  YEAR CHANGE  
           

 BROWN

 

$10,812,500

 

$3,704,166

 

$3,704,167

 

$3,704,167

 

$11,112,500

 

2.8%

 

           

 BONANOTTE

 

$2,250,000

 

$800,000

 

$800,000

 

$800,000

 

$2,400,000

 

6.7%

 

           

 MOLLOY1

 

$2,000,000

 

$833,334

 

$833,333

 

$833,333

 

$2,500,000

 

25.0%

 

           

 HACKER

 

$1,750,000

 

$600,000

 

$600,000

 

$600,000

 

$1,800,000

 

2.9%

 

           

 MARK2

 

$723,241

 

$533,334

 

$533,333

 

$533,333

 

$1,600,000

 

121.2%

 

 

  1 

Mr. Molloy’s year-over-year LTI increase was to recognize his continued leadership over products and sales, while successfully integrating Avigilon.

  2 

Mr. Mark’s 2018 LTI was granted prior to his promotion to EVP; his 2019 LTI grant reflects his new role as EVP.

LTI Components

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

 

     

The LRIP, which now includes performance stock unit (“PSU”) grants for the CEO and his direct reports, 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 over a three-year period to exceed median performance of the S&P 500 companies before earning a target payout.

 

     

The 2019-2021 LRIP cycle is denominated in 100% PSUs for the CEO and a mix of 50% PSUs / 50% cash for the other NEOs. The LRIP and POs utilize a three-year performance period and, consistent with earned POs, earned PSUs will vest on the third anniversary of the grant.

 

     

With new LRIP cycles denominated in equity, the Summary Compensation Table will show LRIP awards in two places; LRIP earned from the prior cycle (with amounts paid in cash and stock) will be reflected in the Non-Equity Incentive Plan column, and target PSU grants for the new LRIP cycle will be reflected in the Stock Awards column (with grant date fair value of the new LRIP PSUs at target).

 

     

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.

 

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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.

 

     

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

When setting compensation for our NEOs, the Committee reviews comparative market data from our peer group companies, as well as survey market data.

2019 PEER GROUP

Our peer group is used by the Committee to compare pay levels, pay mix and alignment of pay with our performance, as discussed in the “How We Plan Compensation” section above.

Peer Selection Criteria

To ensure meaningful comparisons, the Committee, with the assistance of CAP, the Committee’s independent consultant, reviews the peer group annually and makes updates as necessary. Specifically, as we continue to extend our leadership in mission-critical solutions by expanding our software and services businesses through strategic investments and acquisitions, the Committee expanded their review to include software and services companies.

To create a sufficiently large peer group with whom we compete for executive talent, the Committee considers a combination of primary criteria and secondary criteria, including those listed below:

 

     

Primary Criteria: Publicly traded securities listed on a U.S. stock exchange, revenues and/or market capitalization within 1/3x to 3.0x of MSI’s, relevant GICS sub-industry segments across the communications, information technology and industrials sectors

 

     

Secondary Criteria: Companies that list MSI as a peer, shareholder advisory firm names company as a peer, companies listed as peers by current peers, revenue growth, TSR, business mix

Changes to the 2019 Peer Group

In early 2019, the Committee approved the following changes:

 

     

Removal: Rockwell Collins (acquired by United Technologies)

 

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Additions: Citrix Systems, Inc. (size-appropriate; peer of peers; software industry competitor), Illinois Tools Works Inc. (size-appropriate; peer of peers; local talent competitor; global presence) and Trimble Inc. (size-appropriate; industry competitor; revenue growth; global presence)

At the time of approval, MSI was positioned at the 59th percentile for revenue and the 46th percentile for market capitalization among the resulting 15 company peer group.

2019 Peer Group Companies

 

     

AGILENT TECHNOLOGIES, INC. 

  

DOVER CORP.

  

JUNIPER NETWORKS, INC.

  

ROPER TECHNOLOGIES. INC.

     

AMPHENOL CORP.

  

ILLINOIS TOOL WORKS INC.

  

PARKER-HANNIFIN CORP.

  

TRIMBLE INC.

     

ARRIS INTERNATIONAL PLC1

  

HARRIS CORP.2

  

RAYTHEON COMPANY

  

TE CONNECTIVITY LTD.

     

CITRIX SYSTEMS, INC.

  

INGERSOLL-RAND PLC

  

ROCKWELL AUTOMATION INC.

    

 

1 

Arris International was acquired by CommScope in April 2019.

2 

Harris Corporation merged with L3 Technologies in July 2019 to form L3Harris Technologies.

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 2019, 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 UNDER OUR COMPENSATION PROGRAMS

In 2012, 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. 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.

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 remains in line with competitive levels.

In 2019, we continued to have significant acquisition activity and, in an effort to preserve enterprise knowledge and align our new employees’ interests with those of our shareholders, we issued equity either as part of an acquisition or made retention grants under the Omnibus Plan. The shares issued as part of an acquisition were granted outside of our standard compensation programs and do not count against our shares available for future issuance. The information below only includes share usage and aggregate value of equity granted under our compensation programs and excludes 0.27% share usage and $56 million value of equity granted as part of acquisitions.

 

 

LOGO

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.

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   39


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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 Counseling

LOGO

 

 

Vice Presidents

     

 

  Executive Physicals

LOGO

 

 

Senior and Executive VPs

     

 

  Security System Monitoring

CEO

 

     

 

  Personal Use of Corporate Aircraft Service3

CEO

 

1 Pension provided to U.S.-based eligible employees hired prior to January 1, 2005.

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

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

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.

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

 

EXECUTIVE GROUP     MULTIPLE OF    
    BASE SALARY     
    2019    

  Chairman and Chief Executive Officer

10x

  Executive Vice Presidents and Executive Committee Members

3x

  Senior Vice Presidents

2x

  Corporate Vice Presidents

1x

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

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, along with 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.

 

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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 eliminates the imposition of excise tax.

RECOUPMENT OF INCENTIVE COMPENSATION AWARDS UPON RESTATEMENT OF FINANCIAL RESULTS

If, in the opinion of the independent directors of the Board, the Company’s financial results require restatement due to the misconduct by one or more of the Company’s executive officers (including the NEOs), the independent directors may seek a number of remedies, all of which are subject to a number of conditions including (i) whether the executive officer engaged in 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 significant changes to its outstanding incentive awards in 2019 in an effort to maintain any tax deductions that may be 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

Directors, 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.

Our anti-hedging policy prohibits directors, executives and certain other employees, including our NEOs, from holding any security tied to the performance of our Common Stock other than equity delivered directly to employees under our equity incentive plans.

 

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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 13, 2019, 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 2019.

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’ 2019 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 2019. No member of the Committee was, during the fiscal year ended December 31, 2019, an officer, former officer, or employee of the Company or any of our subsidiaries. We did not have any compensation committee interlocks in 2019.

 

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NAMED EXECUTIVE OFFICER COMPENSATION

 

 

2019 SUMMARY COMPENSATION TABLE

 

 Name and

 Principal Position

             (a)

 

Year

(b)

   

Salary

($)(1)

(c)

   

Bonus  

($)  

(d)  

 

Stock

Awards

($)(2,3)

(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

($)(7)

(j)

 

 

 Gregory Q. Brown

 Chairman and Chief Executive Officer

 

 

                 

                                         

    2019       1,250,000     0     7,408,181       3,704,137       10,966,875           35,151           255,646           23,619,990  
                 
      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  

 

 Gino A. Bonanotte

 Executive Vice President and Chief Financial Officer

 

 

                 
      2019       695,846     0     1,199,857       799,964       2,703,240           195,990           23,449           5,618,346  
                 
      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  

 

 John P. Molloy

 Executive Vice President, Products and Sales

 

 

                 
      2019       703,769     0     1,249,810       833,331       2,422,429           96,172           32,567           5,338,078  
                 
      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  

 

 Mark S. Hacker

 Executive Vice President, General Counsel and Chief Administrative Officer

 

 

                 
      2019       600,846     0     899,790       599,996       2,114,764           67,873           18,149           4,301,418  
                 
      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  

 

 Kelly S. Mark

 Executive Vice President, Software and Services

 

 

                 
      2019       535,654     0     799,745       533,309       1,420,100           8,268           30,149           3,327,225  
                 
      2018       437,519     0     293,323       309,982       1,046,832           0           29,889           2,117,545  
(1)

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

(2)

In 2019, the amounts in column (e) reflect the aggregate grant date fair value of the long-term equity incentive awards under the 2019-2021 LRIP, awarded in the form of PSUs, and MSUs. Stock awards in column (e) during fiscal year 2019 are as follows:

 

       
 

 

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

   2019 MSUs

 

 

$3,704,108

 

 

 

$799,967

 

 

 

$833,224

 

 

 

$599,872

 

 

 

$533,219

 

   2019-2021 LRIP PSUs

 

 

3,704,073

 

 

 

399,890

 

 

 

416,586

 

 

 

299,918

 

 

 

266,526

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

   TOTAL

 

 

$7,408,181

 

 

 

$1,199,857

 

 

 

$1,249,810

 

 

 

$899,790

 

 

 

$799,745

 

In 2018, the amounts in column (e) reflect the grant date fair value of MSUs. Stock awards in column (e) during fiscal year 2018 are as follows:

 

       
 

 

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

   2018 MSUs

 

 

$3,843,722

 

 

 

$749,994

 

 

 

$666,648

 

 

 

$583,301

 

 

 

$293,323

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

   TOTAL

 

 

$3,843,722

 

 

 

$749,994

 

 

 

$666,648

 

 

 

$583,301

 

 

 

$293,323

 

In 2017, the amounts in column (e) reflect the grant date fair value of MSUs. Stock awards in column (e) during fiscal year 2017 are as follows:

 

     
 

 

  Mr. Brown     Mr. Bonanotte     Mr. Molloy     Mr. Hacker  

   2017 MSUs

 

 

$3,249,975

 

 

 

$699,981

 

 

 

$583,289

 

 

 

$516,584

 

 

 

 

   

 

 

   

 

 

   

 

 

 

   TOTAL

 

 

$3,249,975

 

 

 

$699,981

 

 

 

$583,289

 

 

 

$516,584

 

 

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(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 9, “Share-Based Compensation Plans and Other Incentive Plans” in the Company’s Form 10-K for the fiscal year ended December 31, 2019. If maximum performance is achieved for performance-based stock awards, the aggregate grant date fair value in column (e) is $16,668,398 for Mr. Brown, $2,599,659 for Mr. Bonanotte, $2,707,913 for Mr. Molloy, $1,949,435 for Mr. Hacker and $1,732,650 for Mr. Mark. If maximum performance is achieved for performance-based option awards, the aggregate grant date fair value in column (f) is $9,260,321 for Mr. Brown, $1,999,910 for Mr. Bonanotte, $2,083,303 for Mr. Molloy, $1,499,967 for Mr. Hacker and $1,333,274 for Mr. Mark.

(4)

In 2019, the amounts in column (g) consist of awards earned by eligible NEOs at the time under the 2019 STIP and under the 2017-2019 LRIP. Earned payments in column (g) during fiscal year 2019 are as follows:

 

       
 

 

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

   2019 STIP

 

 

$3,154,375

 

 

 

$953,240

 

 

 

$964,094

 

 

 

$823,099

 

 

 

$733,792

 

   2017-2019 LRIP (paid in stock)

 

 

7,812,500

 

 

 

875,000

 

 

 

729,168

 

 

 

645,833

 

 

 

343,154

 

   2017-2019 LRIP (paid in cash)

 

 

0

 

 

 

875,000

 

 

 

729,167

 

 

 

645,832

 

 

 

343,154

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

   TOTAL

 

 

$10,966,875

 

 

 

$2,703,240

 

 

 

$2,422,429

 

 

 

$2,114,764

 

 

 

$1,420,100

 

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  

   2018 STIP

 

 

$3,338,125

 

 

 

$981,782

 

 

 

$912,363

 

 

 

$842,722

 

 

 

$546,836

 

   2016-2018 LRIP (paid in stock)

 

 

7,812,500

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

   2016-2018 LRIP (paid in cash)

 

 

0

 

 

 

1,666,665

 

 

 

1,166,665

 

 

 

1,083,335

 

 

 

499,996

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

   TOTAL

 

 

$11,150,625

 

 

 

$2,648,447

 

 

 

$2,079,028

 

 

 

$1,926,057

 

 

 

$1,046,832

 

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  

   2017 STIP

 

 

$2,625,000

 

 

 

$880,767

 

 

 

$758,407

 

 

 

$742,856

 

   2015-2017 LRIP

 

 

4,687,500

 

 

 

999,999

 

 

 

440,423

 

 

 

750,000

 

 

 

 

   

 

 

   

 

 

   

 

 

 

   TOTAL

 

 

$7,312,500

 

 

 

$1,880,766

 

 

 

$1,198,830

 

 

 

$1,492,856

 

 

(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, 2018 to Dec. 31, 2019 $35,151 $0 $35,151
 Dec. 31, 2017 to Dec. 31, 2018 ($9,133) $0 ($9,133)
 Dec. 31, 2016 to Dec. 31, 2017 $17,994 $0 $17,994

 

 Gino A. Bonanotte

 Dec. 31, 2018 to Dec. 31, 2019 $195,990 $0 $195,990
 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

 

 John P. Molloy

 Dec. 31, 2018 to Dec. 31, 2019 $96,172 $0 $96,172
 Dec. 31, 2017 to Dec. 31, 2018 ($32,187) $0 ($32,187)
 Dec. 31, 2016 to Dec. 31, 2017 $55,269 $0 $55,269

 

 Mark S. Hacker

 Dec. 31, 2018 to Dec. 31, 2019 $58,656 $9,217 $67,873
 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

 

 Kelly S. Mark

 Dec. 31, 2018 to Dec. 31, 2019 $8,268 $0 $8,268
 Dec. 31, 2017 to Dec. 31, 2018 ($2,763) $0 ($2,763)

 

(6)

The amounts in column (i) for 2019 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 by an “X” 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.

 

44   Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement


Table of Contents
   
 

Perquisites

 

Personal

Benefit

 

         
 NEO

Personal

  Aircraft Use  

Security System

Monitoring

Financial

Planning

Guest Attendance

at Company Events

401K Plan

Match

 Gregory Q. Brown

$227,752

X

X

X

 Gino A. Bonanotte

X*

X

X

 John P. Molloy

X

X

X

 Mark S. Hacker

X*

X

 Kelly S. Mark

X*

X

X

 

  *

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

 

(7)

The total compensation in 2019 for the NEOs is artificially inflated because, even though only one LRIP award is made each year (including in 2019), there are two LRIP awards reflected in 2019, instead of one LRIP award, due to the transition from a cash-based LRIP (which is reported in the “Non-Equity Incentive Plan Compensation” column in the year of payout) to a stock-based LRIP (which is reported in the “Stock Awards” column in the year of grant). More specifically, in 2019 the values of both (i) the payout of the 2017-2019 LRIP and (ii) the grant of the 2019-2021 LRIP PSUs are included in the Summary Compensation Table. After the last remaining cash-based LRIP award has either been paid or forfeited, for Mr. Brown, only the value of granted LRIP PSUs will be reported. For the other NEOs, eventually, only the value of granted LRIP PSUs and the LRIP portion settled in cash, if any, will be reported. The two LRIP awards reflected in 2019 are as follows:

 

       
 

 

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

   2017-2019 LRIP (paid in stock)

 

 

7,812,500

 

 

 

875,000

 

 

 

729,168

 

 

 

645,833

 

 

 

343,154

 

   2017-2019 LRIP (paid in cash)

 

 

0

 

 

 

875,000

 

 

 

729,167

 

 

 

645,832

 

 

 

343,154

 

   2019-2021 LRIP PSUs

 

 

3,704,073

 

 

 

399,890

 

 

 

416,586

 

 

 

299,918

 

 

 

266,526

 

 

Motorola Solutions Notice of 2020 Annual Meeting of Shareholders and Proxy Statement   45


Table of Contents

GRANTS OF PLAN-BASED AWARDS IN 2019

 

           
  

 

   

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)(4)
(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)(3)
  (g)

    Maximum
(#)
(h)
 

 

Gregory Q. Brown

 

 

STIP

 

 

 

1/1/2019

(5) 

 

 

0

 

 

 

2,187,500

 

 

 

4,287,500

 

 

 

 

 

 

 

 

 

 

  

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

LRIP

 

 

 

1/1/2019

(6)