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0001206774-09-000823.txt : 20090421
0001206774-09-000823.hdr.sgml : 20090421
20090421060048
ACCESSION NUMBER: 0001206774-09-000823
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20090521
FILED AS OF DATE: 20090421
DATE AS OF CHANGE: 20090421
EFFECTIVENESS DATE: 20090421
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ZEBRA TECHNOLOGIES CORP/DE
CENTRAL INDEX KEY: 0000877212
STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560]
IRS NUMBER: 366966580
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-19406
FILM NUMBER: 09760445
BUSINESS ADDRESS:
STREET 1: 333 CORPORATE WOODS PKWY
CITY: VERNON HILLS
STATE: IL
ZIP: 60061
BUSINESS PHONE: 7086346700
DEF 14A
1
zebra_def14a.htm
DEFINITIVE PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the
Registrant x
Filed by a Party other than the
Registrant o
o |
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Preliminary Proxy Statement |
o |
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) |
x |
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Definitive Proxy Statement |
o |
|
Definitive Additional Materials |
o |
|
Soliciting Material Pursuant to §240.14a-11(c) or
§240.14a-12 |
ZEBRA TECHNOLOGIES
CORPORATION
(Name of Registrant as
Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of filing fee (Check the
appropriate box): |
x |
|
No fee required |
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o |
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11. |
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1) |
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Title of each class
of securities to which transaction applies: |
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2) |
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Aggregate number of
securities to which transaction applies: |
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3) |
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it
was determined): |
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4) |
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Proposed maximum
aggregate value of transaction: |
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5) |
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Total fee
paid: |
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o |
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Fee paid previously
with preliminary materials. |
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o |
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Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing. |
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1) |
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Amount Previously
Paid: |
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2) |
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Form, Schedule or
Registration Statement No.: |
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3) |
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Filing
Party: |
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4) |
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Date
Filed: |
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON MAY 21, 2009
To the Stockholders of Zebra Technologies
Corporation:
The Annual
Meeting of Stockholders of Zebra Technologies Corporation (the Company) will
be held at 10:30 a.m., Central Time, on Thursday, May 21, 2009, at the Hilton
Northbrook, 2855 North Milwaukee Avenue, Northbrook, Illinois 60062, for the
following purposes:
|
(1) |
|
To elect three
directors; |
|
|
|
(2) |
|
To ratify the
appointment by the Audit Committee of Ernst & Young LLP as the
independent auditors of the Companys financial statements for the year
ending December 31, 2009; and |
|
|
|
(3) |
|
To transact such other
business as may properly come before the Annual Meeting or any
adjournments thereof. |
The Board of
Directors has fixed the close of business on March 26, 2009, as the record date
for determining stockholders entitled to notice of, and to vote at, the Annual
Meeting.
By Order of the
Board of Directors, |
|
Noel
Elfant |
Secretary |
Lincolnshire, Illinois
April 21, 2009
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY
PROXY. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE
MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE FURNISHED FOR THAT PURPOSE OR VOTE OVER THE
INTERNET OR BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE PROXY
CARD. |
Zebra Technologies
Corporation
475 Half Day Road, Suite
500
Lincolnshire, Illinois 60069
(847) 634-6700
______________________
PROXY
STATEMENT
______________________
The
accompanying Proxy is solicited by the Board of Directors of Zebra Technologies
Corporation, a Delaware corporation (Zebra or the Company), for use at the
Annual Meeting of Stockholders, and any adjournments thereof. The Annual Meeting
will be held at 10:30 a.m., Central Time, on May 21, 2009, at the Hilton
Northbrook, 2855 North Milwaukee Avenue, Northbrook, Illinois. Directions to
attend the Annual Meeting in person are available at
http://www1.hilton.com/enUS/hi/hotel/CHINBHF-Hilton-Northbrook-Illinois/index.do
or by calling the Hilton Northbrook (847-480-7500). The Company is releasing
this Proxy Statement and the accompanying form of proxy to stockholders on or
about April 21, 2009.
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL STOCKHOLDER MEETING TO BE HELD
ON MAY 21, 2009
The
Companys Proxy Statement for the 2009 Annual Meeting of Stockholders and the
Annual Report to Stockholders for the year ended December 31, 2008, are
available at: https://materials.proxyvote.com/989207
VOTING SECURITIES; PROXIES;
REQUIRED VOTE
Voting
Securities The Board of Directors fixed the
close of business on March 26, 2009, as the Record Date for the determination of
stockholders entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof. As of the March 26, 2009 Record Date, the Company had
outstanding 59,348,525 shares of Class A Common Stock, par value $.01 per share
(Common Stock). Holders of Common Stock are entitled to one vote per
share.
Proxies The Board of Directors of
the Company selected Anders Gustafsson and Noel Elfant to serve as proxies for
the Annual Meeting. Mr. Gustafsson is a director and the Chief Executive Officer
of the Company. Mr. Elfant is Vice President, General Counsel and Secretary of
the Company. Most stockholders have a choice of voting over the Internet, by
using a toll-free telephone number or by completing a proxy card and mailing it
in the postage-paid envelope provided. Please check your proxy card or the
information forwarded by your bank, broker or other holder of record to see
which options are available to you. Please be aware that if you vote over the
Internet, you may incur costs such as telecommunication and Internet access
charges for which you will be responsible. The Internet and telephone voting
facilities for stockholders of record will close at 11:59 p.m., Eastern Time, on
May 20, 2009. The Internet and telephone voting procedures have been designed to
authenticate stockholders by use of a control number and to allow you to vote
your shares and to confirm that your instructions have been properly recorded.
Each executed and returned proxy card will be voted in accordance with the
directions indicated thereon, or if no direction is indicated, such proxy will
be voted in accordance with the recommendations of the Board of Directors
contained in this Proxy Statement. Each stockholder giving a proxy (by executing
the proxy card, over the Internet or by telephone) has the power to revoke it at
any time before the shares it represents are voted. Revocation of a proxy is
effective upon receipt by the Secretary of the Company of either (1) an
instrument revoking the proxy or (2) a proxy bearing a later date or time (which
can be done by mail, over the Internet or by telephone until those facilities
have closed). Additionally, a stockholder may change or revoke a previous proxy
by voting in person at the Annual Meeting.
-1-
Required
Vote At the Annual Meeting, (1) a plurality
of the votes cast in person or by proxy is required to elect directors; and (2)
the affirmative vote of holders of a majority of the votes cast affirmatively or
negatively, in person or by proxy, is required to approve Proposal 2,
ratification of the appointment of independent auditors. Stockholders are not
allowed to cumulate their votes in the election of directors.
The required
quorum for the transaction of business at the Annual Meeting will be a majority
of the shares of Common Stock issued and outstanding on the Record Date.
Abstentions
and broker non-votes will be included in determining the presence of a quorum.
In counting votes on the election of directors for which a plurality of votes
cast is required, only votes for or withheld will be considered. Broker
non-votes and other shares not voted will be treated as not voted in the
election of directors. In counting votes on the ratification of the appointment
of Ernst & Young LLP and on any other matter voted upon, a majority of votes
is required, and broker non-votes and other shares not voted will not be counted
as voted.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of
Directors presently consists of seven directors, five of whom are independent
under The NASDAQ Stock Market listing requirements, and two of whom are
currently executive officers of the Company. Each of the nominees for election
as director currently serves as a director of the Company.
If at the
time of the Annual Meeting any of the nominees is unable or declines to serve,
the persons named in the proxy will, at the direction of the Board of Directors,
either vote for the substitute nominee or nominees that the Board of Directors
recommends or vote to allow the vacancy created thereby to remain open until
filled by the Board of Directors. The Board of Directors has no reason to
believe that any nominee will be unable or will decline to serve as a director
if elected.
Nominees
for Election as Directors The Company has a
Board of Directors that is divided into three separate classes, with one class
being elected each year to serve a staggered three-year term. The terms of the
Class I Directors expire at this Annual Meeting, and three directors will be
elected at the Annual Meeting to serve as Class I Directors for a three-year
term expiring at the Annual Meeting in 2012 or until their successors are duly
elected and qualified. For the Annual Meeting, the Board of Directors has
proposed the following nominees for election based on a recommendation by the
Nominating Committee: Richard L. Keyser, Ross W. Manire and Dr. Robert J.
Potter.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF RICHARD L. KEYSER, ROSS W. MANIRE AND DR. ROBERT J.
POTTER TO SERVE AS DIRECTORS OF THE COMPANY.
-2-
The
following table sets forth information regarding the nominees for directors and
other directors who will serve as directors in the classes and for the terms
specified below:
Name |
|
Age |
|
Position with Company |
|
Director Since |
|
Term to Expire |
Nominees for
Director |
Class I Directors |
|
|
|
|
|
|
|
|
|
|
|
Richard L. Keyser |
|
66 |
|
Director |
|
2008 |
|
|
2012 |
(1) |
|
Ross W. Manire |
|
57 |
|
Director |
|
2003 |
|
|
2012 |
(1) |
|
Dr. Robert J. Potter |
|
76 |
|
Director |
|
2003 |
|
|
2012 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Directors |
|
|
|
|
|
|
|
|
|
|
|
Class III Directors |
|
|
|
|
|
|
|
|
|
|
|
Anders Gustafsson |
|
48 |
|
Director and Chief Executive Officer |
|
2007 |
|
|
2011 |
|
|
Andrew K.
Ludwick |
|
63 |
|
Director |
|
2008 |
|
|
2011 |
|
|
Class II Directors |
|
|
|
|
|
|
|
|
|
|
|
Gerhard
Cless |
|
69 |
|
Director and
Executive Vice President |
|
1969 |
|
|
2010 |
|
|
Michael A. Smith |
|
54 |
|
Director and Chairman |
|
1991 |
|
|
2010 |
|
|
____________________
(1) |
|
Current term expires at this Annual
Meeting. |
Nominees for Director
Richard L.
Keyser has been a director of Zebra since
June 2008. He is Chairman of the Board of W.W. Grainger, Inc., an international distributor of maintenance, repair and
operating supplies, a position he has held since 1997. Previously, he served as
Graingers Chief Executive Officer from 1995 until 2008, and President and Chief
Operating Officer from 1994 to 1995. Prior to joining Grainger in 1986, he held
positions at NL Industries and Cummins Engine Company. Mr. Keyser received a BS
degree from the United States Naval Academy and an MBA degree from Harvard
Business School. Mr. Keyser is a member of the Board of Directors of the
Principal Financial Group, a financial services firm, and the Rohm & Haas
Company, a
manufacturer of specialty chemicals. Mr. Keyser is a member of the Companys
Compensation Committee.
Ross W.
Manire has been a director of Zebra since
2003. He is Chairman and Chief Executive Officer of ExteNet Systems, Inc.
(formerly known as Clearlinx Network Corporation), a wireless networking
company, a position held since 2002. Previously, Mr. Manire was President of the
Enclosure Systems Division of Flextronics International, Ltd., an electronics
contract manufacturer, from 2000 to 2002. He was President and Chief Executive
Officer of Chatham Technologies, Inc., an electronic packaging systems
manufacturer that merged with Flextronics, in 2000. Prior to joining Chatham, he
was Senior Vice President of the Carrier Systems Business Unit of 3Com
Corporation, a provider of networking equipment and solutions. He served in
various executive positions with U.S. Robotics, including Chief Financial
Officer, Senior Vice President of Operations, and Senior Vice President of the
Network Systems Division prior to its merger with 3Com. Mr. Manire was also a
partner at Ernst & Young LLP. He holds a BA degree from Davidson College and
an MBA degree from the University of Chicago. He is a member of the Board of
Directors of The Andersons, Inc., a diversified business with interests in
agribusiness, railcars and retailing. Mr. Manire is a member of the Companys
Audit and Nominating Committees.
Dr.
Robert J. Potter has been a director of Zebra
since 2003. Since 1990, he has been President and Chief Executive Officer of R.
J. Potter Company, a Dallas-area firm providing business and technical
consulting. From 1987 to 1990, Dr. Potter was President and CEO of Datapoint
Corporation, a leader in network-based data processing. Prior to Datapoint, Dr.
Potter was Group Vice President of Nortel Networks, Senior Vice President of
International Harvester, President of the Office Systems Division of Xerox and
Research Manager of International Business Machines Corporation. He graduated
Phi Beta Kappa from Lafayette College with a BS degree in Physics and holds a
Ph.D. in optics from the University of Rochester, specializing in fiber optics.
He is a fellow of the Optical Society of America and has written more than 50
articles for various scientific, technical and business publications, including
the first description of optical character recognition in an encyclopedia. He is
a member of the Board of Directors of Molex, Incorporated, a designer,
manufacturer and distributor of electronic, electrical and fiber optic
interconnects, as well as switches and application tooling. Dr. Potter is on the
Board of Trustees of the Illinois Institute of Technology. He is Chair of the
Companys Compensation Committee.
-3-
Continuing Directors
Gerhard
Cless is Executive Vice President of Zebra,
and has been in this position since 1998. Mr. Cless is a co-founder of Zebra and
has served as a director since 1969. He served as Secretary of Zebra from its
formation until 2005, and as Executive Vice President for Engineering and
Technology of Zebra from 1995 to 1998, after having served as Senior Vice
President of Engineering since 1969. Mr. Cless served as Treasurer of Zebra from
its formation until 1991. Since 1969, he has been active with Zebra, where he
has directed the development of numerous label printers based on various
printing technologies and maintained worldwide technology/vendor relationships.
Prior to founding Zebra, Mr. Cless was a research and development engineer with
Teletype Corporations printer division. Mr.
Cless received an MSME degree from Maschinenbauschule Esslingen in Germany, and
did graduate work at the Illinois Institute of Technology. The Cless Technology
Center, Zebras product development and research facility, is named in honor of
Mr. Cless.
Anders
Gustafsson became Chief Executive Officer and
a director of Zebra in 2007. Prior to joining Zebra Technologies, Mr. Gustafsson
served as Chief Executive Officer of Spirent Communications plc, a
publicly-traded telecommunications company, from 2004 until 2007. From 2000
until 2004, he was Senior Executive Vice President, Global Business Operations,
of Tellabs, Inc. While at Tellabs, Mr. Gustafsson also served as President,
Tellabs International, as well as President, Global Sales, and Vice President
and General Manager, Europe, Middle East and Africa. Earlier in his career, he
held executive positions with Motorola, Inc. and Network Equipment Technologies,
Inc. Mr. Gustafsson has an MS degree in Electrical Engineering from Chalmers
University of Technology in Gothenburg, Sweden, and an MBA degree from Harvard
Business School.
Andrew K.
Ludwick has been a director of Zebra since
2008. He has been a private investor since 1997. Mr. Ludwick served as Chief
Executive Officer of Bay Networks, Inc., a communications networking company,
from 1994 to 1996. From 1985 to 1994, Mr. Ludwick was founder, President and
Chief Executive Officer of SynOptics Communications, Inc., a communications
networking company. Mr. Ludwick holds a BA from Harvard College and an MBA from
Harvard Business School. He is a member of the Board of Directors of Macrovision
Corporation, a provider of technologies for the protection, enhancement and
distribution of businesses digital goods. He is a member of the Companys Audit
Committee.
Michael
A. Smith has served as a director of Zebra
since 1991 and as Chairman since 2007. Since 2000, he has served as Chairman and
Chief Executive Officer of FireVision LLC, a private investment company that he
founded. From 1998 to 1999, Mr. Smith was Senior Managing Director and head of
the Chicago and Los Angeles offices of the Mergers & Acquisitions Department
of NationsBanc Montgomery Securities and its successor entity, Banc of America
Securities, LLC. Previously, he was Senior Managing Director and co-head of the
Mergers and Acquisitions Department of
BancAmerica Robertson Stephens; co-founder and head of the investment banking
group, BA Partners, and its predecessor entity, Continental Partners Group;
Managing Director, Corporate Finance Department, Bear, Stearns & Co.; and
Vice President and Manager of the Eastern States and Chicago Group Investment
Banking Division of Continental Bank. Mr. Smith graduated Phi Beta Kappa from
the University of Wisconsin with a BA degree
and received an MBA degree from the
University of Chicago. Mr. Smith is the Chair of the Audit and Nominating
Committees and a member of the Companys Compensation Committee.
-4-
CORPORATE GOVERNANCE
Board and
Committee Meetings in 2008 The Board of
Directors (the Board) met six times during 2008. Each director attended at
least 96% of the aggregate total number of meetings of the Board of Directors
and the total number of meetings of the Board committees on which he served during
2008. As a general matter, Board members are expected to attend the Companys
annual meetings. Three directors attended last years annual
meeting.
Board of
Directors Committees The Board of Directors
has three standing committees composed entirely of independent directors,
namely, the Nominating, Compensation and Audit Committees, as described below.
Charters for these Committees and the Boards Corporate Governance Guidelines
are available on the investor page of Zebras website at www.zebra.com. The Corporate Governance
Guidelines address the Boards composition, qualifications and functions,
director education, minimum required stock ownership by directors, and
management succession. Please note that the information on the Zebra website is
not incorporated by reference in this Proxy Statement.
The Board of
Directors has determined that each of Messrs. Keyser, Ludwick, Manire, Potter
and Smith is a non-employee director who meets the applicable independence
requirements of the NASDAQ Marketplace Rules (NASDAQ independence
requirements). The table below shows the current membership of each of the
Boards standing committees:
Independent
Director |
|
Nominating |
|
Compensation |
|
Audit |
Keyser |
|
|
|
Member |
|
|
Ludwick |
|
|
|
|
|
Member |
Manire |
|
Member |
|
|
|
Member |
Potter |
|
|
|
Chair |
|
|
Smith |
|
Chair |
|
Member |
|
Chair |
After each
Board meeting, the Companys independent directors have a regularly scheduled
meeting at which only independent directors are present. The Chairman of the
Board, Mr. Smith, serves as the lead director in these executive sessions.
Nominating Committee. The Nominating Committee is comprised of Messrs. Smith, Chair, and
Manire. In accordance with the listing requirements of The NASDAQ Stock Market,
the Nominating Committee determines
nominees for election to the Board of
Directors. This Committee met seven times in 2008.
The
Nominating Committee believes that candidates for Board membership must exhibit
certain minimum characteristics: good business judgment and an even temperament,
high ethical standards, and a healthy view of the relative responsibilities of a
board member and management. Board members shall be independent thinkers,
articulate and intelligent. The Nominating Committees Charter sets forth
additional criteria that the Committee considers important, including experience
as a board member of another publicly traded company, experience in industries
or with technologies relevant to the Company, accounting or financial reporting
experience, or such other professional experience as the Committee shall
determine shall qualify an individual for Board service.
In selecting
candidates and approving nominees for open Board positions, the Nominating
Committee will make every effort to ensure that the Board and its committees
include at least the minimum number of independent directors, as that term is
defined and as may be required by the Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley) and applicable standards promulgated by The NASDAQ Stock
Market or the Securities and Exchange Commission (SEC), and any other
applicable requirements.
In addition,
the Nominating Committee shall make every reasonable effort to ensure that at
least one director is a financial expert, as that term is defined by
Sarbanes-Oxley and applicable standards promulgated by The NASDAQ Stock Market
and the SEC.
The
Companys policy is not to discriminate on the basis of race, gender or
ethnicity. The Nominating Committee is supportive of any qualified candidate who
would also provide the Board with more diversity.
-5-
The
Nominating Committee will consider candidates for the Board from any reasonable
source, including stockholder recommendations. The Nominating Committee does not
evaluate proposed candidates differently based on the source of the proposal.
Stockholders who wish to suggest qualified candidates should provide notice of
such recommended candidate to the Secretary of Zebra, at Zebras headquarters
address. These recommendations should include detailed biographical information
concerning the nominee, the nominees qualifications to become a member of the
Board, and a description of any relationship the nominee has to the stockholder
making the recommendation or to other stockholders of the Company. A written
statement from the candidate consenting to be named as a candidate and, if
nominated and elected, to serve as a director, subject to the candidates due
diligence of Zebra, should accompany any such recommendation. In addition, the
notice of recommendation should disclose specific information about the
stockholder making the recommendation, including Company securities owned by the
stockholder (including options, warrants and other derivative securities) and
the stockholders voting rights with respect to Company securities, short
positions with respect to Company securities, rights to dividends on Company
shares that are separated or separable from the underlying shares and other
interests in or based on Company securities. Stockholders who wish to nominate a
director for election at an annual meeting of stockholders of the Company must
comply with the Companys By-Laws regarding stockholder proposals and
nominations.
The
Nominating Committee has the authority under its charter to hire and pay a fee
to consultants or search firms to assist in the process of identifying and
evaluating candidates. The Board appointed Mr. Keyser as a director in June
2008. In connection with its appointment of Mr. Keyser to the Board of
Directors, the Nominating Committee followed the above-described process and
engaged a recognized third-party search firm to identify for consideration
potential candidates based on the minimum characteristics and criteria set forth
above. Mr. Keyser was first identified to the Nominating Committee by this
search firm.
Compensation Committee. The Compensation Committee
is comprised of Dr. Potter, Chair, and Messrs. Keyser and Smith. The
Compensation Committee determines the compensation of the Chief Executive
Officer and all other executive officers of the Company. The Compensation
Committee also administers the 2006 Zebra Technologies Corporation Incentive
Compensation Plan and its predecessor, the 1997 Stock Option Plan, and
determines the timing, terms and number of awards granted pursuant to the 2006
Zebra Technologies Corporation Incentive Compensation Plan and its predecessor.
The Committee may retain independent consultants or other third parties and may
seek the input of members of the Companys management. This Committee met twelve
times in 2008. Although it may delegate its authority to any subcommittee and
management to the extent permitted under applicable laws and rules, when the
Committee deems appropriate, it has not done so except to grant to the CEO the
right to award stock options to Company non-executive officer employees in
limited circumstances.
In 2008, the
Compensation Committee retained The Delves Group as its independent executive
compensation consultant to provide competitive compensation data, analysis and
guidance throughout the process of determining compensation for the Companys
Named Officers (as defined below). The role of The Delves Group in determining
executive compensation is further described below under Compensation Discussion
and Analysis.
Audit Committee. The Audit
Committee is established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934 and is comprised of Messrs. Smith, Chair,
Ludwick and Manire. These three directors are independent in accordance with
NASDAQ independence requirements, including the additional independence
requirements applicable to Audit Committee members. This Committee met five
times during 2008. The Board determined that Mr. Manire is an audit committee
financial expert.
Contacting the Board of Directors
Any stockholder who would like to contact members of the Board of Directors may
do so by writing to the Office of the Secretary, Zebra Technologies Corporation,
475 Half Day Road, Suite 500, Lincolnshire, Illinois 60069. Communications
received in writing will be distributed to the Chairman or the other members of
the Board, as appropriate, depending on the facts and circumstances outlined in
the communication received.
-6-
DIRECTOR COMPENSATION
Cash
Fees. For 2008, the Company paid each of its
independent directors an annual retainer, which was paid on a quarterly basis.
Other than for the independent director that served as Chairman of the Board,
the retainer for each independent director was $6,250 per quarter. The Company
also pays its non-Chairman independent directors the following fees: $1,500 for
each Board meeting; $1,000 for each Committee meeting that occurred on the day
of a Board meeting; and $1,500 for each Committee meeting that did not occur on
the day of a Board meeting. The Chair of the Compensation Committee received an
additional $500 per Committee meeting. Mr. Smith, Chairman of the Board, is paid
$30,000 per quarter and he receives $1,500 for attending, and $500 for chairing,
each Audit Committee meeting. The meeting fees described above were paid for
meetings attended in person or by telephone.
Equity
Awards. On May 22, 2008, the Compensation
Committee approved the grant of a non-qualified stock option to each of the
Companys non-employee directors that were directors of the Company prior to the
2008 Annual Meeting and continued to serve as directors after the Annual Meeting
(i.e., Messrs. Manire, Potter and Smith). Each such stock option has a ten-year
term, has an exercise price equal to the closing price of the Common Stock on
the date of grant, May 22, 2008, is exercisable for 2,000 shares of Common Stock
and vests in full on the first anniversary of the grant date, subject to the
directors continued service as a director on such vesting date.
Mr. Ludwick
was elected as a new director by the Companys stockholders at the 2008 Annual
Meeting. In connection with his election, the Compensation Committee approved
grants of two non-qualified stock options (the Ludwick Options) to Mr.
Ludwick. Each of the Ludwick Options has a ten-year term and has an exercise
price equal to the closing price of the Common Stock on the date of grant, May
22, 2008. The first Ludwick Option is exercisable for 18,000 shares of Common
Stock and vests in four equal installments on each of the first four
anniversaries of the grant date, subject to Mr. Ludwicks continued service as a
director on each such vesting date. The second Ludwick Option is exercisable for
6,000 shares of Common Stock and vests in full on the first anniversary of the
grant date, subject to Mr. Ludwicks continued service as a director on such
vesting date.
Effective
June 16, 2008, the Board appointed Mr. Keyser as a new director of the Company.
The Compensation Committee of the Board approved the grant of a non-qualified
stock option (the Keyser Option) to Mr. Keyser in connection with his
appointment. The Keyser Option has a ten-year term and has an exercise price
equal to the closing price of Companys Common Stock on the date of grant, June
16, 2008. The Keyser Option is exercisable for 18,000 shares of the Common Stock
and vests in four equal installments on each of the first four anniversaries of
the grant date, subject to Mr. Keysers continued service as a director on each
such vesting date.
Retiring
Directors. Messrs. Kaplan and Knowles retired
as directors effective at the 2008 Annual Meeting.
In recognition of Mr. Knowles many
years of service as a director of the Company, on May 22, 2008, the Compensation
Committee amended the terms of Mr. Knowles outstanding unexercised stock
options. As of that date, Mr. Knowles held an unexercised stock option granted
to him on February 8, 2002 (the 2002 Option) to purchase 27,000 shares of the
Companys Class A Common Stock (the Common Stock) and another unexercised
stock option granted to him on February 8, 2006 (the 2006 Option) to purchase
20,000 shares of Common Stock (the 2002 Option and the 2006 Option are
collectively referred to herein as the Knowles Options). The amendment
accelerated the vesting of the unvested portion of the 2006 Option, so that the
2006 Option became fully exercisable as of May 22, 2008. Prior to the amendment,
the 2002 Option was already fully exercisable and the 2006 Option was
exercisable with respect to 8,000 shares of Common Stock. The 2006 Option would
have become exercisable with respect to an additional 4,000 shares of Common
Stock on each of February 8, 2009, February 8, 2010 and February 8, 2011. In
addition, the amendment extended the exercise period of the 2002 Option until
February 8, 2012, and the exercise period of the 2006 Option until February 8,
2016, the latest respective dates on which the Knowles Options would have
expired under their respective original terms if Mr. Knowles had continued as a
director of the Company until such dates. Prior to the amendment, the Knowles
Options exercise periods would have been shortened if Mr. Knowles did not
continue as a director of the Company.
Mr. Kaplan,
the Companys co-founder, served the Company as Chairman and Chief Executive
Officer until his retirement from those positions on September 4, 2007. Mr.
Kaplan and the Company entered into a letter agreement (the Kaplan Consulting
Agreement) regarding his engagement as a consultant effective upon his
retirement. Under the Kaplan Consulting Agreement, Mr. Kaplan provides
consulting services to the Company until the earliest of (i) May 31, 2009, (ii)
a change in control, or (iii) the hiring of a chief executive officer
subsequent to Mr. Gustafsson. The Board believes it is important to retain Mr.
Kaplan as a consultant to assist the Company in providing an effective
transition of the CEO responsibilities and to serve as a resource to the
Companys management. As the co-founder of the Company and an active member of
management for more than 38 years, the Board considers his continued involvement
and availability to be valuable to the Company.
-7-
Under the
Kaplan Consulting Agreement, Mr. Kaplan did not receive any fees for his
continued service as a director, but the Company agreed to pay Mr. Kaplan for
his consulting services as follows: $150,000 on each of September 4, 2007,
December 1, 2007 and March 1, 2008; $112,500 on each of June 1, 2008, September
1, 2008, December 1, 2008 and March 1, 2009; $87,500 on each of June 1, 2009,
September 1, 2009, December 1, 2009 and March 1, 2010; and $62,500 on each of
June 1, 2010, September 1, 2010, December 1, 2010 and March 1, 2011. Any such
payments that have not yet been paid upon the occurrence of a change in
control will be accelerated and paid at that time. In addition, the Kaplan
Consulting Agreement provided that while Mr. Kaplan was a director, he and his
spouse would continue to be eligible to participate in the Companys group
health insurance plan and the Company will pay the premium costs of such
participation. The Company will also provide Mr. Kaplan with office space and
administrative support while he performs services for the Company at the
Companys location, as well as limited computer support.
The Kaplan
Consulting Agreement amended the terms of the outstanding option granted to Mr.
Kaplan on March 23, 2005, to purchase 219,203 shares of the Companys Common
Stock (the 2005 Option). The amendment accelerated, as of September 4, 2007,
the vesting of the unvested portion of the 2005 Option, so that the 2005 Option
became fully exercisable on that date and extended the exercise period of the
2005 Option until March 22, 2015, which is the latest date on which the 2005
Option would have expired under its original terms if Mr. Kaplan continued as an
employee, director or consultant of the Company until that date. Prior to the
amendment, the 2005 Options exercise period would have been shortened relative
to any time Mr. Kaplan did not continue as an employee, director or consultant
of the Company. The Kaplan Consulting Agreement also provides that Mr. Kaplan
will continue to be restricted by the non-competition, non-solicitation and
confidentiality provisions in the award agreement with respect to the 2005
Option.
The term
change in control with respect to the vesting of the Kaplan Consulting
Agreement is defined in the Glossary.
Deferred
Compensation. Pursuant to a 2007 amendment to
the Companys 2005 Executive Deferred Compensation Plan, independent directors
may now participate in such plan and elect to defer a portion of their
compensation. Such plan is described below in Non-Qualified Deferred
Compensation. Of the independent directors, only Mr. Smith deferred any
compensation for 2008.
Summary
information regarding compensation paid to Mr. Kaplan and the independent
directors for 2008 is set forth in the table below. The directors were also
reimbursed for out-of-pocket expenses for attending Board and Committee
meetings.
2008 Director
Compensation
|
|
Fees Earned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid |
|
Option |
|
All other |
|
|
|
Name(1) |
|
in Cash
($) |
|
Awards
($)(2)(3) |
|
Compensation
($) |
|
Total
($) |
Edward L. Kaplan |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
491,430 |
(4) |
|
$ |
491,430 |
Richard
Keyser |
|
|
$ |
25,530 |
|
|
|
$ |
32,566 |
|
|
|
$ |
0 |
|
|
$ |
58,096 |
Christopher Knowles |
|
|
$ |
39,500 |
|
|
|
$ |
(11,874 |
) |
|
|
$ |
0 |
|
|
$ |
27,626 |
Andrew
Ludwick |
|
|
$ |
23,974 |
|
|
|
$ |
89,143 |
|
|
|
$ |
0 |
|
|
$ |
113,117 |
Ross Manire |
|
|
$ |
49,000 |
|
|
|
$ |
74,991 |
|
|
|
$ |
0 |
|
|
$ |
123,991 |
Robert
Potter |
|
|
$ |
59,500 |
|
|
|
$ |
74,991 |
|
|
|
$ |
0 |
|
|
$ |
134,491 |
Michael Smith |
|
|
$ |
130,000 |
|
|
|
$ |
74,991 |
|
|
|
$ |
0 |
|
|
$ |
204,991 |
____________________
(1) |
|
Aggregate number of shares underlying unexercised stock option
awards outstanding on December 31, 2008, for each of the Companys
independent directors: Mr. Kaplan: 219,203; Mr. Keyser: 18,000; Mr.
Knowles: 47,000; Mr. Ludwick: 24,000; Mr. Manire: 48,034; Dr. Potter:
49,534; and Mr. Smith: 47,500. Mr. Cless, who is an executive officer, is
also a director but does not receive any additional compensation for
services provided as a director. |
-8-
(2) |
|
The amounts reflected represent the dollar amounts recognized for
awards of stock options for financial statement reporting purposes for the
year ended December 31, 2008, in accordance with SFAS 123(R). Please refer
to Note 4, Stock Based Compensation, of the Companys consolidated
financial statements for 2008 included in the Companys Form 10-K for
2008, as filed with the Securities and Exchange Commission on February 27,
2009, for a discussion of assumptions relevant to the calculation of such
amounts. |
|
(3) |
|
The Companys non-employee directors received stock option awards
in 2008 as described above under Director Compensation. All such awards
were granted under the 2006 Zebra Technologies Corporation Incentive
Compensation Plan. The grant date values of such awards calculated in
accordance with SFAS 123(R) were as follows: |
|
Richard Keyser |
|
$ |
240,300 |
Andrew
Ludwick |
|
|
|
stock option for 18,000
shares |
|
$ |
250,200 |
stock option for 6,000
shares |
|
$ |
83,400 |
Ross Manire |
|
$ |
27,800 |
Robert
Potter |
|
$ |
27,800 |
Michael Smith |
|
$ |
27,800 |
(4) |
|
Consists of the following payments to Mr. Kaplan: quarterly
consulting payments pursuant to the Kaplan Consulting Agreement of
$487,500; health and dental insurance premiums of
$3,930. |
EXECUTIVE OFFICERS
Set forth
below is a table identifying the executive officers of the Company other than
Messrs. Cless and Gustafsson. Information for Messrs. Cless and Gustafsson is
included in the section Continuing Directors.
Name |
|
Age |
|
Position |
Noel Elfant |
|
49 |
|
Vice President, General Counsel and
Secretary |
Hugh K. Gagnier |
|
53 |
|
Senior Vice President, Business
Development and Operations, Specialty Printer Group |
Philip Gerskovich |
|
52 |
|
Senior Vice President, Corporate
Development |
Todd R. Naughton |
|
46 |
|
Vice President, Finance |
Michael C. Smiley |
|
49 |
|
Chief Financial Officer |
Michael H. Terzich |
|
47 |
|
Senior Vice President, Global Sales and
Marketing, Specialty Printer Group |
Joanne Townsend |
|
55 |
|
Vice President, Human
Resources |
William J. Walsh |
|
45 |
|
Senior Vice President and General Manager,
Zebra Enterprise Solutions |
____________________ |
|
|
|
|
Noel
Elfant is Vice President, General Counsel and
Secretary of Zebra and has been with the Company since 2003. He is also Zebras
Chief Compliance Officer. From 2001 to 2003, he served as Associate General
Counsel and Secretary of Philip Services Corporation, a company specializing in
industrial engineering, environmental services and scrap metals. Prior to that,
from 1990 to 2001, Mr. Elfant served in the Legal Department of Fortune Brands,
Inc., a diversified consumer products company, most recently as Assistant
General Counsel. Mr. Elfant began his career in the real estate and corporate
and securities departments of the Chicago-based national law firm of McDermott,
Will & Emery. Mr. Elfant earned his JD degree from Northwestern University
School of Law and his BA degree from the University of California, Los Angeles.
-9-
Hugh K.
Gagnier became Senior Vice President,
Business Development and Operations, of Zebras Specialty Printer Group business
unit in 2006, where he had previously served as its Senior Vice President,
Operations, since 2003. Mr. Gagnier joined Zebra as the Vice President and
General Manager for its Camarillo operations upon the Companys merger with
Eltron International, Inc. in 1998. At Eltron, he was President from 1995 until
its merger with Zebra, and Executive Vice President and Chief Operating Officer
from 1994 until he became President. From 1991 to 1993, Mr. Gagnier was Group
President of Wangtek and WangDAT, Inc., manufacturers of tape drives for
automated data backup. Prior to his position as Group President, Mr. Gagnier
served as President of Wangtek in 1991 and as Vice President of Engineering from
1988 to 1991. Prior to his tenure at Wangtek, Mr. Gagnier spent three and
one-half years at Peripheral Technology Corporation, a disk drive manufacturer,
in various engineering management positions. Mr. Gagnier received a BS degree in
Mechanical Engineering from the University of Southern
California.
Philip
Gerskovich joined Zebra as Senior Vice
President, Corporate Development, in 2005. Previously, Mr. Gerskovich was
Corporate Vice President and General Manager of New Business, Commercial
Printing Division for Eastman Kodak Company, a provider of photographic and
imaging products and services, from 2004 until he joined Zebra. From 1999 to
2003, he was Corporate Vice President and Chief Operating Officer, Digital and
Applied Imaging, at Kodak. His previous positions included Vice President of
Internet Appliance Business Unit, Data General Corp. from 1995 to 1998,
Director, Server Product Marketing, Dell Inc., from 1994 to 1995, and Program
Director OEM and Technology Marketing, RS/6000 Division, International Business
Machines Corporation, from 1992 to 1994. Mr. Gerskovich received a BS degree in
Computer Engineering from the University of
Illinois.
Todd R.
Naughton became Vice President, Finance in
2007. Mr. Naughton was Corporate Controller for Zebra from 1999, when he joined
the Company, until he became Vice President and Controller of Zebra in 2000, a
position he held until 2007. From 1998 to 1999, he was Vice PresidentFinancial
Shared Services for Moore North America. Previously, Mr. Naughton was Vice
President and Controller for UARCO Incorporated from 1996 to 1998. His previous
positions included Director of Treasury, Manager of Financial Planning and
Assistant Controller for Handy Andy Home Improvement Centers, Inc. (1988 to
1996), Assistant Controller and Manager of Financial Reporting of Uptown Federal
Savings, FSB (1986 to 1988) and Staff Auditor, Ernst & Whinney (1984 to
1986). Mr. Naughton received a BS degree in Accounting from the University of
Illinois at Urbana-Champaign, and an MBA from the University of Chicago. He is a
certified public accountant.
Michael
C. Smiley became Chief Financial Officer in
May 2008. From 2004 until joining the Company, he served Tellabs, Inc., a
provider of telecommunications networking products, as general manager of the
Tellabs Denmark A/S unit. Previously, from 2002 to 2004, he held various finance
and operations executive positions at Tellabs including interim chief financial
officer, vice president, international finance, and treasurer. Prior to his
positions at Tellabs, Mr. Smiley was vice president, finance-Asia/Pacific (2000
to 2002) and vice president and treasurer (1997 to 2000) for General
Semiconductor, Inc. Earlier in his career, he held positions of increasing
responsibility at General Instrument Corporation, GATX Corporation, and Itel
Corporation/Anixter Brothers, Inc. He began his professional career as an
auditor with Coopers & Lybrand L.L.P. Mr. Smiley holds a BS in accounting
from Brigham Young University and an MBA degree from the University of Chicago.
Michael
H. Terzich became Senior Vice President,
Global Sales and Marketing, Specialty Printer Group in 2006. From 2003 until
2006 he served as Zebras Senior Vice President, Office of the CEO, and from
2001 until 2003, as Vice President and General Manager, Tabletop and Specialty
Printers. Since joining Zebra in 1992, Mr. Terzich has held a variety of
progressive roles including Vice President and General Manager, Vice President
of Sales for North America, Latin America, and Asia Pacific, Vice President of
Strategic Project Management, Director, Integration Project Management, Director
of Printer Products, and Director of Customer and Technical Services. Prior to
Zebra, he was the Director of Operations for a five-plant industrial video
production and duplication company. Mr. Terzich earned his BS degree in
Marketing from the University of Illinois and an MBA from Loyola University of
Chicago.
-10-
Joanne
Townsend joined Zebra as Vice President,
Human Resources, in March 2008. From 2007 to March 2008, she was Vice President,
Human Resources, Wireless Network Solutions Segment, for Andrew Corporation, a
global designer, manufacturer, and supplier of communications equipment,
services, and systems. From 1979 to 2007, Ms. Townsend held various positions at
Motorola, Inc., a wireless and broadband communications company, including
Director, Human Resources of various Motorola organizations from 1994 to 2007.
Ms. Townsend received a BA degree in Human Resources Management from DePaul
University.
William
J. Walsh became Vice President and General
Manager, Zebra Enterprise Solutions, in January 2009. From 2005 until joining
the Company, he was President and Chief Executive Officer of Skylake Development
Company, a real estate investment firm. In 2004, he was Chief Executive Officer
and Director of Open Harbor, Inc., a global customs clearance software company.
From 2004 to 2005, he was Chief Executive Officer of Velosant, Inc., a financial
supply chain company. From 2000 to 2002, he was Chief Operating Officer of
E.piphany, Inc., a customer relationship management company. In 2000, he was
President and Chief Operating Officer of Octane, Inc., a customer relationship
management company. From 1992 to 2000, Mr. Walsh held various positions at
PeopleSoft, Inc. including President, Vice President and General Manager, Latin
America, Vice President and General Manager, Central Europe and Vice President,
Customer Services. Mr. Walsh received a BA degree in Industrial and Organization
Psychology from DePaul University and an MBA from Loyola University of Chicago.
The Board of
Directors elects officers to serve at the discretion of the Board. There are no
family relationships among any of the directors or officers of the Company.
Section
16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Companys officers and directors and persons who own more than ten
percent of a registered class of the Companys equity securities to file forms
regarding their ownership and changes in ownership with the Securities and
Exchange Commission (the SEC) and The NASDAQ Stock Market. Such persons are
also required to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the forms it has received, the Company
believes that except as follows, during the year ended December 31, 2008, all of
its officers, directors and 10% beneficial owners made required Section 16(a)
filings on a timely basis. Veraje Anjargolian, an executive officer of the
Company until the termination of his employment on July 1, 2008, failed to
timely file a Form 4 with respect to five purchases of shares of the Companys
Common Stock after his employment termination. He subsequently filed a Form 4
reporting those purchase transactions.
-11-
SECURITY OWNERSHIP OF MANAGEMENT
AND
CERTAIN BENEFICIAL OWNERS
The following table presents, as of
April 3, 2009, certain information with respect to the beneficial ownership of
the Companys Common Stock by (1) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (2) each
director of the Company, (3) each of the Named Officers (as defined below), and
(4) all directors and executive officers of the Company as a group.
|
|
Class A Common Stock |
Name and Address |
|
Number |
|
% of
Shares(1) |
More
than 5% Stockholders |
|
|
|
|
|
|
Neuberger Berman
Inc.(2) |
|
4,809,101 |
(2) |
|
8.1 |
% |
Shapiro Capital Management
LLC(3) |
|
3,948,646 |
(3) |
|
6.7 |
% |
Eminence Capital,
LLC(4) |
|
3,731,527 |
(4) |
|
6.3 |
% |
Directors and Executive Officers |
|
|
|
|
|
|
Gerhard Cless |
|
2,144,521 |
(5) |
|
3.6 |
% |
Anders Gustafsson |
|
100,500 |
(6) |
|
* |
|
Richard L. Keyser |
|
3,000 |
|
|
* |
|
Andrew K. Ludwick |
|
10,500 |
(7) |
|
* |
|
Ross W. Manire |
|
46,034 |
(8) |
|
* |
|
Robert J. Potter |
|
47,159 |
(9) |
|
* |
|
Michael A. Smith |
|
52,850 |
(10) |
|
* |
|
Hugh K. Gagnier |
|
180,751 |
(11) |
|
* |
|
Philip Gerskovich |
|
52,006 |
(12) |
|
* |
|
Michael C. Smiley |
|
10,425 |
(13) |
|
* |
|
Michael H. Terzich |
|
50,549 |
(14) |
|
* |
|
John M.
Dillon |
|
14,621 |
(15) |
|
* |
|
Charles R.
Whitchurch |
|
17,880 |
(16) |
|
* |
|
All Executive Officers and Directors as a group (15 persons) |
|
2,797,213 |
(17) |
|
4.7 |
% |
____________________
* |
|
Less than one percent.
|
|
|
|
(1) |
|
The percentages in the table are based on the 59,348,525 shares of
Common Stock outstanding as of March 26, 2009, adjusted to account for
potential exercises of each persons or groups respective stock options,
if applicable. |
|
(2) |
|
Consists of shares beneficially owned by Neuberger Berman Inc.,
Neuberger Berman, LLC, Neuberger Berman Management LLC, and Neuberger
Berman Equity Funds, as reported on Schedule 13G filed on February 12,
2009 by such persons. Neuberger Berman Inc. owns 100% of each of Neuberger
Berman, LLC and Neuberger Berman Management LLC. Neuberger Berman, LLC and
Neuberger Berman Management Inc. serve as sub-advisor and investment
manager, respectively, of Neuberger Bermans various mutual funds.
According to such Schedule 13G, each of Neuberger Berman Inc. and
Neuberger Berman LLC had sole voting power with respect to 65,221 of these
shares, shared voting power with respect to 3,955,394 shares, and shared
dispositive power with respect to 4,809,101 shares; Neuberger Berman
Management Inc. had shared voting power and shared dispositive power with
respect to 3,955,394 shares; and Neuberger Berman Equity Funds had shared
voting power and shared dispositive power with respect to 3,936,547
shares. The holdings of Lehman Brothers Asset Management LLC and Lehman
Brothers Asset Management Inc, affiliates of Neuberger Berman, LLC, are
also aggregated to comprise the holdings reported in such Schedule 13G,
and the balance of shares reported, if any, are for the individual client
accounts over which Neuberger Berman, LLC has shared power to dispose but
not vote shares. The address of these stockholders is 605 Third Avenue,
New York, New York 10158. |
-12-
(3) |
|
Consists of shares beneficially owned by Shapiro Capital Management
LLC and Samuel R. Shapiro, as reported on a Schedule 13G filed on February
3, 2009 by such persons. According to such Schedule 13G, Shapiro Capital
Management LLC is an investment adviser and one or more of its advisory
clients is the legal owner of the shares of Common Stock. Shapiro Capital
Management LLC has the authority to direct the investments of its advisory
clients, and consequently to authorize the disposition of the shares. Mr.
Shapiro is the chairman, a director and majority shareholder of Shapiro
Capital Management LLC, in which capacity he exercises dispositive power
over the shares and, therefore, may be deemed to have indirect beneficial
ownership over such shares. According to such Schedule 13G, Mr. Shapiro
has no interest in dividends or proceeds from the sale of such shares,
owns no such shares for his own account and disclaims beneficial ownership
of all of the shares. The Schedule 13G reports that Shapiro Capital
Management LLC had sole voting power with respect to 3,154,727 shares,
shared voting power with respect to 793,919 shares, and sole dispositive
power with respect to 3,948,646 shares, and that the beneficial ownership
reported by Mr. Shapiro and Shapiro Capital Management LLC related to the
same shares. The address of these stockholders is 3060 Peachtree Road
N.W., Suite 1555, Atlanta, Georgia 30305. |
|
(4) |
|
Consists of shares beneficially owned by Eminence Capital, LLC,
Eminence GP, LLC and Ricky C. Sandler, as reported on a Schedule 13G filed
on February 17, 2009 by such persons. Eminence Capital, LLC serves as the
investment manager to several Eminence funds and partnerships and may be
deemed to have voting and dispositive power over shares held for the
accounts of the Eminence funds and partnerships. Eminence GP, LLC serves
as general partner or manager with respect to the shares of Common Stock
directly owned by the partnerships and certain of the funds and may be
deemed to have voting and dispositive power over the shares held for the
accounts of the partnerships and such funds. Ricky C. Sandler is the
managing member of Eminence Capital, LLC and of Eminence GP, LLC and may
be deemed to have voting and dispositive power with respect to the shares
owned by the Eminence funds and partnerships, and individually with
respect to certain family accounts and other related accounts over which
Mr. Sandler has investment discretion. According to such Schedule 13G,
Eminence Capital, LLC had shared voting power and shared disposition power
with respect to 3,731,527 shares; Eminence GP, LLC had shared voting power
and shared dispositive power with respect to 1,758,665 shares; and Mr.
Sandler had shared voting power and shared dispositive power with respect
to 3,731,527 shares and sole voting power and sole dispositive power with
respect to 2,050 shares. The address of these stockholders is 65 East 55th
Street, 25th Floor, New York, NY 10022. |
|
(5) |
|
Includes 441,927 shares held directly by Mr. Cless; 1,355,682
shares held by Grantor Retained Annuity Trusts of which Mr. Cless is the
beneficiary; 10,000 shares held by a foundation of which each of Mr. Cless
and his wife, Ruth, are each one of six directors; 180,331 shares held by
an irrevocable trust of which Mr. Cless is the beneficiary and Mrs. Cless
is the trustee; and 156,581 shares held directly by Mrs. Cless which may
be deemed to be beneficially owned by Mr. Cless. |
|
(6) |
|
Includes 41,250 shares of Common Stock issuable to Mr. Gustafsson
within 60 days upon exercise of stock options. |
|
(7) |
|
Includes 10,500 shares of Common Stock issuable to Mr. Ludwick
within 60 days upon exercise of stock options. |
|
(8) |
|
Includes 40,034 shares of Common Stock issuable to Mr. Manire
within 60 days upon exercise of stock options. |
|
(9) |
|
Includes 41,534 shares of Common Stock issuable to Dr. Potter
within 60 days upon exercise of stock options. |
|
(10) |
|
Includes 39,500 shares of Common Stock issuable to Mr. Smith within
60 days upon exercise of stock options. |
-13-
(11) |
|
Includes 170,404 shares of Common Stock issuable to Mr. Gagnier
within 60 days upon exercise of stock options. |
|
(12) |
|
Includes 42,916 shares of Common Stock issuable to Mr. Gerskovich
within 60 days upon exercise of stock options. |
|
(13) |
|
Includes 2,925 shares of Common Stock issuable to Mr. Smiley within
60 days upon exercise of stock options. |
|
(14) |
|
Includes 35,370 shares of Common Stock issuable to Mr. Terzich
within 60 days upon exercise of stock options and 5,479 shares of Common
Stock held jointly with his wife. |
|
(15) |
|
Based on the Companys records as of Mr. Dillons termination of
employment. |
|
(16) |
|
Based on the Companys records as of Mr. Whitchurchs termination
of employment. Includes 9,333 shares of Common Stock issuable within 60
days upon exercise of stock options. |
|
(17) |
|
Mr. Whitchurchs and Mr. Dillons beneficial ownership of the
Companys Common Stock is not included in this amount because they are no
longer executive officers of the Company. Includes 489,969 shares of
Common Stock issuable to the directors and executive officers within 60
days upon exercise of stock options |
COMPENSATION COMMITTEE REPORT
The
Compensation Committee is comprised of three directors: Dr. Potter, Chair, and
Messrs. Keyser and Smith, each of whom is independent under current listing
requirements of The NASDAQ Stock Market. The Compensation Committee establishes compensation policies and programs for
the Companys executive officers. It operates under a written charter adopted by
the Board. The Compensation Committee has reviewed and discussed with management
the Compensation Discussion and Analysis (CD&A) set forth below and
based on its review and discussion with management has recommended to the
Companys Board of Directors that the CD&A be included in this Proxy
Statement and in the Companys annual report on Form 10-K for the year ended
December 31, 2008.
Compensation
Committee |
Robert J. Potter,
Chair |
Richard L.
Keyser |
Michael A.
Smith |
COMPENSATION DISCUSSION AND ANALYSIS
The
Company's compensation program for all employees is designed to attract the best
people, keep them engaged and motivated, and provide incentives to encourage
them to achieve results that create stockholder value. In light of the current
uncertain economic conditions, the Companys management has taken a number of
cost-savings actions to reduce payroll expenses in 2009. It has implemented a
salary freeze for all salaried employees, including the Companys executive
officers, and reduced certain employee benefits, including reducing Company
matching of 401(k) contributions and eliminating 2009 profit-sharing
contributions.
-14-
Committee Role
The Compensation Committee
establishes the compensation of the Named Officers.
The
Compensation Committee (the Committee) described above in the Compensation
Committee Report establishes the Companys compensation philosophy for all
compensation (including equity compensation), the Companys compensation
programs and the compensation for each executive officer, including the Chief
Executive Officer (the CEO) and the other Named Officers. The Named Officers
for this Proxy Statement are the Companys:
|
(1) |
|
Principal executive officer
during 2008: Anders Gustafsson; |
|
|
|
(2) |
|
Principal financial officers
during 2008: Michael C. Smiley, who serves as the Chief Financial Officer
(CFO) and has done so since May 1, 2008, and Charles R. Whitchurch, who
served as CFO until May 1, 2008; |
|
|
|
(3) |
|
Three other most highly
compensated executive officers (calculated in accordance with applicable
SEC rules) serving at the end of 2008: Philip Gerskovich, Hugh K. Gagnier
and Michael H. Terzich; and |
|
|
|
(4) |
|
One other most highly compensated
former executive officer who would have been a Named Officer if he was
serving as an executive officer at the end of 2008: John M.
Dillon. |
Compensation Philosophy
The Companys compensation programs are designed to reward executive
officers for achieving individual, business unit and/or corporate performance
goals. In February 2008, the Committee formalized its compensation philosophy by
adopting a Compensation, Benefits and Performance Management Philosophy (the
Compensation Philosophy). The Committee annually reviews and, if it determines
appropriate, modifies the Compensation
Philosophy.
The
Compensation Philosophy, which applies to all employees of the Company,
including the Named Officers, is summarized as follows:
Importance of
Compensation. The Companys compensation of
its employees supports the alignment of the Companys business strategy with enhanced stockholder value. The
objectives of the Companys compensation, benefits, and performance management
programs are to:
- Increase stockholder value through stock price
growth and other financial measures,
- Encourage employee actions that balance short-term
achievements with long-term success,
- Motivate behavior to attain the Companys
objectives, and
- Attract, retain, and reward high performing
employees who contribute to the Companys success.
Competitive Compensation and Benefits. The Company aligns its compensation and benefits programs
with those of publicly-traded companies of similar size in the technology
industry. Competitive information may be supplemented by data from surveys of
general industry practices for similar size firms.
Compensation Mix. Certain
compensation objectives are achieved through a pay-for-performance approach,
including base salary, annual incentives, and long-term equity-based
compensation targeted at the median of the market when target performance
objectives are achieved, and targeted at superior pay when superior performance
objectives are achieved. Actual pay will vary based upon the attainment of
financial and individual performance objectives and experience
levels.
-15-
Compensation Components
Consistent with prior years and the Compensation Philosophy, the three
principal components of the Companys compensation program for executive
officers for 2008 consisted of base salaries, annual cash incentive awards based
on the achievement of financial performance measures, and long-term equity-based
incentive awards.
Each component of compensation
serves a particular purpose, as described in the Compensation
Philosophy:
Compensation Component |
Purpose of
Component |
Base
salary |
To compensate an
individuals performance of basic functions and responsibilities of the
position and to recognize key skills and competencies of the
individual. |
Annual
cash incentive awards |
To motivate and
reward employees for achieving or surpassing targeted results in key
performance measures at the Company, business unit and individual level.
In general, the Company establishes such performance targets at levels it
considers challenging but achievable. |
Long-term
equity awards |
To reward
successful creation of stockholder value and to motivate and retain
top executive talent. The Companys equity
compensation plan allows flexibility in balancing time vested and
performance vested grants. Equity awards are approved by the Committee
based upon pre-approved equity grant guidelines, with grant levels
balancing market median award amounts with actual individual
performance. |
The
Committee considered the historical aggregate compensation of each Named Officer
and reviewed his compensation for 2008 on an aggregate basis. It determined that
each compensation component serves particular objectives and, therefore, is
considered independent of the other components. For 2008, the Committee
determined each Named Officers compensation component levels, but it did not
allocate total compensation among such components or among any other forms of
compensation based on a larger compensation policy.
The
Committee believes it is customary and appropriate that the CEOs base salary,
cash incentive award and equity compensation are greater than that of the other
Named Officers. The CEO is the only executive with broad authority over the
Companys full range of operations and with duties and responsibilities
encompassing all aspects of the Companys management and operations. These
duties and responsibilities are greater in scope and collectively more
significant in nature than those of any other Named Officer. The Committee
believes that it is appropriate that the CEOs compensation level reflects this.
Mr. Smileys
compensation for 2008 was not determined using the same processes that were used
for the other non-CEO Named Officers. His compensation component levels were
negotiated and agreed to by Mr. Smiley and the Committee as part of Mr. Smileys
employment agreement (the Smiley Employment Agreement) executed in connection
with his being hired as the CFO of the Company effective May 1, 2008. In
connection with the approval of the Smiley Employment Agreement, the Committee
considered market data that had been provided by The Delves Group (an
independent executive compensation consulting firm) and the historical
compensation package of the Companys former CFO.
In addition
to the three principal compensation components referenced above, all Named
Officers are eligible to participate in various employee benefit plans generally
available to the Companys U.S. salaried
employees. See Participation in Employee
Benefits below.
Performance Evaluations
The
Companys annual performance evaluations are an important part of the
Committees determination of compensation component levels for each Named
Officer.
In
determining the Named Officers compensation with respect to their base salaries
and equity awards, one factor considered by the Committee is the Named Officers
respective individual performance evaluations. Individual performance criteria
consist of a combination of objective and subjective criteria.
Individual
performance evaluations for Named Officers, other than the CEO, were conducted
in 2008 in accordance with the Companys annual performance review process
applicable to all salaried employees.
At the
beginning of 2008 (and with Mr. Smiley when he joined the Company), Mr.
Gustafsson, as the CEO and the supervisor of the other Named Officers, consulted
with each Named Officer and established the Named Officers individual
performance goals for the year. Shortly after the year end, Mr. Gustafsson
evaluated each Named Officers actual performance
as measured against individual performance goals. He also considered various
other factors such as:
-
the
Named Officers performance of daily responsibilities;
-
advancement and support of strategic
initiatives for the Company or a business unit; and
-
particular or general contributions to the overall management of the
Company.
-16-
These
evaluations were conducted on a subjective basis without weighting of any
particular factors. The evaluations of such Named Officers actual individual
performances relative to their pre-established performance goals were considered
in conjunction with the many other factors discussed below, particularly under
2008 Base Salaries and Equity Awards.
The CEOs performance is evaluated
by the Companys Board of Directors (Board). At the time Mr. Gustafsson became
CEO in September 2007, the Board informed him that his first performance
evaluation would be in early 2009.
Establishing Compensation Component
Levels
In
determining Named Officers compensation, the Committee considers numerous
factors, including market compensation benchmarking.
The
Committee engaged The Delves Group as its independent executive compensation
consultant to provide competitive compensation data, analysis and guidance
throughout the process of determining 2008 compensation component levels for the
Named Officers. The Delves Group also provides executive compensation consulting
services to the Company for specific projects, as approved by the Committee
Chairman.
The
Committee reviews Company executive officer compensation and performance data to
determine whether the Companys executive compensation program is competitive
and reasonable. The Committee directed The Delves Group to collect and analyze
compensation data for the Companys executive officers and assess their
compensation relative to individuals holding similar positions in technology and
other industries. In 2008, The Delves Group provided market-based compensation
data for base salaries, annual cash incentive awards and long-term equity awards
for the executive officers. The Delves Group also provided comparative
performance data for the companies comprising the Peer Group (as defined below),
including revenue, net income, market
capitalization, net margin, 1-year total
shareholder return and 3-year total shareholder return and price-earnings
ratio.
The Delves
Group presented compensation data and analysis to the Committee from several
compensation data sources for comparison with the Companys executive pay
practices. The compensation data sources consist of third-party proprietary
market databases (collectively, the Study). Another key data source was a peer
group developed by the Committee and The Delves Group in 2007 which consisted of
U.S.-based technology companies with net revenue, total assets, total equity and
market capitalization generally comparable to the Companys (the Peer Group).
The Peer Group consisted of Lexmark International Inc.; Symbol Technologies,
Inc.; Scansource, Inc.; Waters Corp.; Brady Corp.; Paxar Corp.; Intermec Inc.;
Checkpoint Systems Inc.; Polycom Inc.; Itron Inc.; Flir Systems Inc.;
Electronics for Imaging, Inc.; Avocent Corp; Coherent Inc.; Emulex Corp.;
RadiSys Corp.; Printronix Inc.; and Astro-Med Inc. The Study and the Peer Group
data were based on compensation paid predominantly in 2006 and adjusted to
reflect annual market increases of 4% in each of 2007 and 2008.
In 2008, the
Committee reviewed base salary, annual cash incentive award and equity award
data from the Study and the Peer Group. The data was presented at the median and
75th percentile levels, for executives in positions comparable to those of the
Companys executive officers. The Committee used the Study and Peer Group
information as a reference in making its compensation determinations, as further
described below.
2008 Base
Salaries.
Non-CEO
Named Officers. The Committee typically
reviews and establishes the base salaries of the Named Officers (other than the
CEO) annually. The Committee may adjust the base salaries based on objective and
subjective criteria including individual performance, the position of the base
salary within the established salary range, executive experience levels,
competitive compensation levels, general labor market conditions, and the
Companys overall salary budget. In addition, the Committee may adjust a Named
Officers base salary prospectively, or in some cases retrospectively, during
the year if he or she changes position within the Company or assumes new
responsibilities.
-17-
In
connection with establishing the Named Officers (other than the CEO) base
salary adjustments, the Companys human resources department provides merit
increase percentage guidelines based on market-based compensation data, its
knowledge of competitive market practices and the Companys salary budget. The
merit increase percentage guidelines for the 2008 base salary increases for all
Named Officers serving at the time (other than Mr. Gustafsson) were from 0% to
9%.
The human
resources department also determines a suggested salary range (the HR Salary
Range) for each Named Officer (other than the CEO) based on the Named Officers
position within the Companys internal salary grade system. Each officers
position within the internal salary grade system is assigned by the human
resources department based on generally available salary data obtained by the
Companys human resources department from several third-party proprietary
executive compensation databases. The data consists of salary information for
executives of U.S.-based general industry and technology companies with employee
counts and/or revenue similar to the Companys. In general, the midpoint of a
Named Officers HR Salary Range approximates the median of base salaries
provided to other executives in similar positions within the Company and in
comparable positions at other companies as reflected in such compensation
databases. In addition, the relative importance of each position to the Company
was also considered in determining the HR Salary Range for each position. For
2008, the HR Salary Ranges for all Named Officers (other than Messrs. Gustafsson
and Smiley) measured from 77% to 123% of their respective midpoints for 2008.
In addition,
the Committee received salary range information from the Study and the Peer
Group data (the Study and Peer Group Salary Range). The Study and Peer Group
Salary Range for each Named Officer reflects high and low parameters for each
Named Officer without identifying a median.
Typically,
the Companys Vice President, Human Resources and the CEO review and discuss the
Named Officers (other than the CEO) base salaries. The Company did not have a
Vice President, Human Resources during most of the 2008 salary review period, so
the Companys Vice President and General Counsel managed this responsibility
until a Vice President, Human Resources was hired in March 2008. After
considering the merit increase percentage guidelines and evaluating a Named
Officers performance and the position of his or her current base salary within
his or her HR Salary Range, the CEO, as direct supervisor, makes a specific base
salary adjustment recommendation to the Committee. Each Named Officers (other
than the CEO) actual base salary adjustment, if any, is determined by the
Committee. In determining each such Named Officers base salary adjustment, the
Committee reviews each Named Officers individual performance evaluation, base
salary recommended by the CEO, merit increase percentage guidelines recommended
by the human resources department, HR Salary Range, Study and Peer Group Salary
Range, current base salarys position within the HR Salary Range and Study and
Peer Group Salary Range, and the Study and Peer Group data.
Based on
individual considerations with respect to each Named Officer (other than the
CEO) such as his or her experience and contributions to the Company, and
recognizing that the Company must also react to a competitive marketplace on a
case-by-case basis when seeking to recruit and retain executives, the Committee
strives to set each Named Officers base salary within the HR Salary Range and
the Study and Peer Group Salary Range.
For the
one-year period beginning March 31, 2008, the Committee set the base salaries
for the Named Officers (other than Messrs. Gustafsson and Smiley) between 90%
and 114% of
the midpoints within their respective HR Salary Range and within their
respective Study and Peer Group Salary Range. Such Named Officers base salaries
increased between 3.34% and 7.23% over their respective base salaries for the
prior one-year period. The base salaries of Messrs. Gustafsson and Smiley are
discussed below.
Chief
Executive Officer. Mr. Gustafssons base
salary for 2007 and 2008 was determined by negotiation between Mr. Gustafsson
and the Board in connection with his hiring in September 2007. Accordingly, the
Committee did not conduct a review of Mr. Gustafssons salary in 2008. Mr.
Gustafssons employment agreement (the Gustafsson Employment Agreement)
provides that the Board retains discretion to increase Mr. Gustafssons
salary.
New Chief
Financial Officer. Mr. Smileys base salary
was determined by negotiation between Mr. Smiley and the Committee in connection
with his hiring as the CFO of the Company effective May 1, 2008.
2008 Annual Cash Incentive
Awards.
Each of the
Companys Named Officers participated in the Companys 2008 Management Bonus
Plan (the 2008 Incentive Plan). Annual cash incentive awards under the 2008
Incentive Plan were based on the achievement of financial performance goals
established for each Named Officer. Also, the Committee has authority to award
discretionary bonuses based on subjective criteria, although it did not do so
for Named Officers performance in 2008.
-18-
The target
annual cash incentive awards that would be payable to each Named Officer under
the Companys annual cash incentive award plans are calculated as a percentage
(the Target Percentage) of the Named Officers base salary. Except with
respect to Mr. Dillon, each Named Officers Target Percentage is set forth in
the Named Officers employment agreement. The Committee set Mr. Dillons Target
Percentage for 2008 at the time he became an employee of the Company in December
2007 to be consistent with other similarly-situated executive officers of the
Company. Generally, the Target Percentage is higher for executive officers in
more senior positions and who have more responsibility. The Committee has
discretion to increase the Target Percentages from the percentages set forth in
the Named Officers employment agreements (for example, based on competitive
market practices), although it did not do so for 2008.
The CEO
recommends the cash incentive award ranges for the annual cash incentive award
for each Named Officer (other than for himself) to the Committee. The Committee
then reviews and approves cash incentive award ranges. In 2008, the cash
incentive award range under the 2008 Incentive Plan for each Named Officer was
consistent with the Compensation Philosophy and ranged between 0% and 200% of
his target cash incentive award level. The Gustafsson Employment Agreement
provides that Mr. Gustafssons maximum cash incentive award will be 200% of his
base salary.
The Named
Officers minimum, target and maximum cash incentive awards under the 2008
Incentive Plan, and their actual cash incentive awards received under the 2008
Incentive Plan, each as percentages of their respective base salaries, were as
follows:
Cash Incentive Award as a
Percentage
of Base Salary Earned in 2008
Named
Officer |
Minimum |
Target |
Maximum |
Actual |
Anders
Gustafsson |
0% |
100% |
200% |
21.71% |
Michael C.
Smiley |
0% |
50% |
100% |
20.00% |
Charles R.
Whitchurch |
0% |
50% |
100% |
10.86% |
Philip
Gerskovich |
0% |
50% |
100% |
10.86% |
Hugh K.
Gagnier |
0% |
45% |
90% |
10.51% |
Michael H.
Terzich |
0% |
45% |
90% |
10.51% |
John M.
Dillon |
0% |
45% |
90% |
0% |
The amount
of each Named Officers cash incentive award under the 2008 Incentive Plan
depended upon the level of attainment of his financial performance goals for the
year.
-
Messrs. Gustafsson, Smiley, Whitchurch
and Gerskovich were eligible for annual cash incentive awards under the 2008
Incentive Plan based on the Companys achievement of specific Company
Consolidated Income from Operations levels for 2008.
-
Pursuant to the Smiley Employment Agreement, Mr. Smileys annual cash
incentive award was guaranteed to be no less than 20% of his base salary
actually earned for 2008. His cash incentive award would have equaled 10.86%
of his base salary actually earned without the 20% guarantee.
-
Pursuant to his employment agreement, as a result of his employment
termination, Mr. Whitchurch was entitled to a pro rata portion of the annual
cash incentive award for 2008 (10.86% of his base salary actually earned for
2008), and an additional annual cash incentive award equal to his target
annual cash incentive award for 2008 (50% of his annual base salary rate).
Only the former is included in the table above.
-
Messrs. Gagnier and Terzich were
eligible for annual cash incentive awards under the 2008 Incentive Plan
with 25%
of their award based on the achievement by the Specialty Printer Group (SPG)
of specific SPG Consolidated Direct Operating Profit levels for 2008 and 75%
of their awards based on Company Consolidated Income from Operations levels
for 2008.
-19-
-
Mr.
Dillon was eligible for an annual cash incentive award under the 2008
Incentive Plan with 25% of his award based on Company Consolidated Income from
Operations and 75% of his award based on the achievement of certain financial
performance measures by the Zebra Enterprise Solutions (ZES). The ZES
financial performance measures were weighted 25% on ZES Revenue, 50% on ZES
EBITDA, and 25% on ZES Total Bookings. As a result of his employment
termination, Mr. Dillon did not receive an annual cash incentive award under
the 2008 Incentive Plan.
Company Consolidated Income from
Operations, SPG Consolidated Direct Operating Profit, ZES Revenue, ZES EBITDA
and ZES Total Bookings are defined in the Glossary of Terms attached to this
Proxy Statement.
The Named
Officers financial performance targets at which they receive 100% of their
target cash incentive awards under the annual incentive award plans, which
correspond to internal financial goals, have historically (including in 2008)
been set at aggressive levels. For 2008, the financial performance targets at
which cash incentive awards (or portions of such awards) would be calculated at
the 100% level were: Company Consolidated Income from Operations target,
$213,119,000; SPG Consolidated Direct Operating Profit, $283,432,000; ZES
Revenue, $115,359,000; ZES EBITDA, $3,402,000; and ZES Total Bookings, the
budgeted amount for 2008. The Committee has the discretion to exclude the effect
of unusual events from the calculation of the achievement of financial
performance measures under the 2008 Incentive Plan.
For the
financial performance measures under the 2008 Incentive Plan, (i) the minimum
performance level required to receive a cash incentive award, and (ii) the
performance level required to receive the maximum cash incentive award payment
(i.e., 200% of target cash incentive award), reflected as a percentage of
achievement of the applicable target, were as follows:
Performance Levels Required To
Receive a Cash Incentive Award,
as a Percentage of Target Performance
Level
Financial
Performance Measure |
Minimum Performance Level |
Maximum Performance Level |
Company
Consolidated Income from Operations |
>
85.0% |
107.5% |
SPG Consolidated Direct
Operating Profit |
>
85.0% |
107.5% |
ZES Revenue
|
>
80.0% |
120% |
ZES EBITDA |
>
80.0% |
170% |
ZES Total
Bookings |
>
80.0% |
120% |
As the
former president of Navis Holdings, LLC (Navis), which was acquired by the
Company in December 2007, Mr. Dillon also participated in the Navis Holdings,
LLC Transition Bonus Plan (the Navis Plan). The Navis Plan was funded by the
sellers of Navis as an incentive for senior Navis executives to continue their
employment after a change of control of Navis. As a result of his employment
termination with the Company, Mr. Dillon received a $300,000 payment from the
Company pursuant to the Navis Plan.
2009 Annual Cash Incentive
Awards
In
February 2009, the Committee adopted an annual incentive award program for 2009,
the 2009 Zebra Incentive Plan (the 2009 Incentive Plan), in which the Named
Officers are eligible to participate. Due to the challenging economic
environment of 2009 and the potential difficulty forecasting the appropriate
financial targets for the balance of 2009, the Committee modified the 2009
Incentive Plan from the 2008 Incentive Plan in certain notable ways. These
changes include providing flexibility to establish financial performance goals
for the second half of 2009 as late as August 14, 2009.
-20-
Cash
incentive awards for participants under the 2009 Incentive Plan are based on two
incentive performance components. One is a financial performance component (the
Financial Component), which is given an 80% weighting and consists of the
achievement of one or more financial performance goals of the Company and/or, if
applicable, of the participants assigned business unit. Achievement of the
Financial Component is measured both for the whole 2009 fiscal year (the Annual
Performance Period) and for each of two separate two-quarter performance
periods (each, a Semi-Annual Performance Period). The first Semi-Annual
Performance Period consists of the Companys first two fiscal quarters of 2009,
and the second Semi-Annual Performance Period consists of the last two fiscal
quarters of 2009.
The second
component (the Personal Component), which is given a 20% weighting, consists
of the achievement of one or more other performance goals (the Personal
Performance Goals). Performance achievement with respect to the Personal
Component is measured for the Annual Performance Period.
Financial
Component. The Financial Components
performance goals, which the Committee establishes for the Named Officers, are
expressed in terms of financial performance measures which are described in the
2009 Incentive Plan (the Financial Performance Goals). The Financial
Performance Goal measures are similar to the measures applicable under the 2008
Incentive Plan. Messrs. Gustafssons, Smileys and Gerskovichs Financial
Performance Goals for both Semi-Annual Performance Periods (Semi-Annual
Performance Goals) are based on Consolidated Income from Operations of the
Company, and Messrs. Gagniers and Terzichs Financial Performance Goals for
both Semi-Annual Performance Periods are based 75% on Consolidated Income from
Operations of the Company and 25% on 2009 Income from Operations of their
assigned business unit, the Specialty Printer Group (SPG). The Named Officers
Semi-Annual Performance Goals for the first Semi-Annual Performance Period were
established at budgeted levels of Income from Operations (for both the Company
and SPG). Their Semi-Annual Performance Goals for the second Semi-Annual
Performance Period will be established by the Committee within 45 days after the
beginning of the second Semi-Annual Performance Period.
Under the
2009 Incentive Plan, the Financial Performance Goals for each participant for
the Annual Performance Period (Annual Performance Goals) will be the sum of
the participants Semi-Annual Performance Goals for the two Semi-Annual
Performance Periods.
Personal
Component. The Committee determined that the
Personal Performance Goals for the Companys Named Officers will consist of
specific levels of Return on Invested Capital for the 2009 fiscal year. Return
on Invested Capital and Income from Operations under the 2009 Incentive Plan are
defined in the Glossary of Terms attached to this Proxy Statement.
Cash
Incentive Award Levels.
The cash incentive award of each
participant under the 2009 Incentive Plan will be calculated separately with
respect to its Financial Component and Personal Component.
Under the
2009 Incentive Plan, the level of achievement of each Financial Performance Goal
corresponds to a Performance Payout Percentage for the Annual Performance
Period and each Semi-Annual Performance Period. Similarly, under the 2009
Incentive Plan, the level of achievement of each Personal Performance Goal
corresponds to a Personal Payout Percentage. The minimum performance level
required to receive a cash incentive award under the 2009 Incentive Plan for a
performance period is achievement greater than 75.0% of the applicable Financial
Performance Goal or Personal Performance Goal. The maximum cash incentive award
payment (200% of target cash incentive award) under the 2009 Incentive Plan
requires the achievement of 120% of the applicable Financial Performance Goal or
Personal Performance Goal, except that the maximum Performance Payout
Percentages for achievement of a Semi-Annual Performance Goal for either
Semi-Annual Performance Period is 100%.
Each
participant is assigned a Target Percentage (as defined above under 2008 Annual
Incentive Awards) for 2009 and is eligible to earn a cash incentive award based
on achievement of the participants Semi-Annual Performance Goals, Annual
Performance Goals and Personal Performance Goals. The calculation of a participants
total cash incentive award under the 2009 Incentive Plan is as
follows:
Incentive Award =
Combined Semi-Annual Award + Annual
Award + Personal Award
Financial Performance
Component:
|
1. |
|
Combined Semi-Annual
Award, which shall equal H times the
sum of (A x B x E) plus (A x C x F) |
|
|
|
|
|
2. |
|
Annual Award, which shall equal the amount by which (H x A x D x G)
exceeds the Combined Semi-Annual Award |
-21-
Individual Performance
Component: |
|
|
|
|
|
|
|
3. |
|
Personal Award, which shall equal (A x D x I x
J) |
Where:
|
|
|
|
A = Target Percentage
B = Base Earnings during the first
Semi-Annual Performance Period
C = Base Earnings during the second
Semi-Annual Performance Period
D = Base Earnings during 2009
E = Performance Payout Percentage
for the first Semi-Annual Performance Period
F = Performance Payout Percentage
for the second Semi-Annual Performance Period
G = Performance Payout Percentage
for Annual Financial Performance Goal
H = Financial Component weighting
percentage (i.e., 80% for Named Officers)
I = Personal Payout Percentage for
Personal Performance Goal
J = Personal Component weighting
percentage (i.e., 20% for Named Officers) |
Equity
Awards
The
Committee believes it is important that all of its Named Officers have a direct
incentive to create stockholder value over a long-term investment horizon. The
Company makes equity awards to its executive officers to provide long-term
incentives related to stock appreciation and competitive compensation
packages.
Historically, the Companys general practice was to make annual equity
awards to its Named Officers in the form of stock options. In 2008, The Delves
Group provided market compensation data from the Peer Group and the Study
regarding the level and mix of equity awards awarded to executives at other
companies comparable to the Company. Based on this data, The Delves Group and
Mr. Gustafsson recommended to the Committee that the Companys annual equity
awards consist of both stock options and performance-based restricted stock. The
Committee considered the recommendation and the equity mix data and decided to grant
annual awards in 2008 of both performance-based restricted stock and
time-vesting non-qualified stock options to its executive officers under its
stockholder-approved 2006 Zebra Technologies Corporation Incentive Compensation
Plan.
2008
Awards. For 2008, the Committee decided a
total equity award dollar value for each Named Officer (other than Mr. Smiley)
based on a number of factors. The Delves Group determined the median equity
grant dollar value provided to other executives in positions at other companies
comparable to the Named Officers positions, as reflected in the Study and Peer
Group data, and presented that information to Mr. Gustafsson. Mr. Gustafsson
then recommended to the Committee a total equity award dollar value range for
each Named Officer based on factors including the Named Officers performance
evaluation, his overall compensation package and his perceived potential and
contributions to the Company. After reviewing the Study and Peer Group data
provided by The Delves Group and considering Mr. Gustafssons recommendations,
the Committee, with Mr. Gustafssons participation, determined the total equity
award dollar value for each Named Officer other than Mr. Gustafsson. The
Committee considered several factors in making its determinations, including the
competitive marketplace data provided by The Delves Group, Mr. Gustafssons
recommendations, the Companys performance, a Named Officers position within
the Company, his individual performance evaluation, his perceived potential and
contributions to the Company, and the Committees subjective understanding of
competitive practices in the marketplace with respect to equity awards. The
factors used by Mr. Gustafsson to determine recommendations regarding total
equity award dollar value ranges for each Named Officer and by the Committee to
establish each Named Officers total equity award dollar value were assessed by
Mr. Gustafsson and the Committee, respectively, on a subjective
basis.
With respect
to Mr. Gustafssons total equity award dollar value, the Committee consulted
directly with The Delves Group and considered the same factors it considered in
determining the total equity award dollar values for the other Named Officers.
Mr. Gustafsson did not participate in, or consult with the Committee regarding,
the determination of his total equity award dollar value.
-22-
The
Committee determined to provide half of the dollar value of each Named Officers
(other than Messrs. Gustafsson and Smiley) equity award in the form of
time-vesting stock options and half in the form of performance-based restricted
shares of the Companys Common Stock. It determined this mix of stock options
and performance-based restricted stock based on the equity grant practices of
other comparable companies as reported in the Study and the Peer Group data and on its
general understanding of competitive market practices.
In
calculating the number of time-vesting stock options, the Company used the
following formula:
|
targeted dollar value of the stock
option award |
|
(a
specific binomial value) x
(the estimated per share price of the
Companys Common Stock on the grant
date) |
The binomial value for each stock option
grant was calculated based upon a variety of assumptions as of the grant date
including the exercise price, expected life of the grant, expected volatility,
risk-free interest rate and dividend yield. The exercise price of the stock
options was set at the closing stock price of the Companys Common Stock on the
date of the equity grant.
In calculating the number of
performance-based restricted shares, the Company used the following
formula:
|
targeted dollar value of the
performance-based restricted stock award |
|
(a specific discount value)
x
(the estimated per share price of the Companys Common Stock on the grant
date) |
The discount value for each
performance-based restricted stock award was calculated based upon a variety of
assumptions as of the grant date including the per-share stock price on the
grant date, expected volatility, risk-free interest rate, and dividend yield.
In 2008, the
total equity award dollar value of Mr. Gustafssons annual equity award was
determined in the same manner as the other Named Officers. When Mr. Gustafsson
was hired in September 2007, he received grants of time-vesting stock options,
performance-based stock options and performance-based restricted stock. Since,
unlike the other Named Officers, Mr. Gustafsson had recently received a grant of
performance-based restricted stock, the Committee determined that it was
appropriate that his annual equity award consist entirely of time-vesting stock
options rather than a combination of performance-based restricted stock and
time-vesting stock options.
Pursuant to
the Smiley Employment Agreement, Mr. Smiley was granted a stock option to
purchase 11,700 shares of the Companys Common Stock that vests in equal
installments on the first four anniversaries of the grant date, as well as 7,500
shares of performance-based restricted stock. These stock options and shares of
performance-based restricted stock awarded to Mr. Smiley were negotiated in
connection with his hiring and reflected in the Smiley Employment
Agreement.
Stock
Option Terms. The annual stock option awards
made to the Named Officers in 2008 are non-qualified stock options. Consistent
with the 2007 annual stock option award terms, the Committee determined that the
annual stock option awards in 2008 would vest over a four-year period, with
equal portions vesting on the first four anniversaries of the grant date. The
stock options expire no later than ten years after the grant
date.
Performance-Based Restricted Stock Terms. To align the goals of the Companys management team, the Committee
decided to tie the other Named Officers 2008 performance-based restricted stock
awards to the same vesting conditions as those applicable to Mr. Gustafssons
performance-based restricted stock grant awarded to him in September 2007.
Accordingly, the 2008 annual performance-based restricted stock awards to the
Named Officers will vest incrementally based on the Company achieving the same
levels of Total Shareholder Return prior to the fifth anniversary of the
Gustafsson Employment Agreement as apply to Mr. Gustafssons performance-based
restricted stock award. Similarly, upon his hiring, Mr. Smiley was granted a
performance-based restricted stock award pursuant to the Smiley Employment
Agreement and his performance-based restricted stock will vest according to the
same terms.
Total Shareholder Return is
calculated as:
|
Relevant Share Price Share Price on
September 4, 2007 + Dividends |
|
Share
Price on September 4, 2007 |
where (i) Relevant Share Price = the
closing per-share price of the Companys Common Stock as reported on The NASDAQ
Stock Market on any particular date, (ii) Share Price on September 4, 2007 = the
closing per-share price of the Companys Common Stock as reported on The NASDAQ
Stock Market on September 4, 2007, the date of grant of Mr. Gustafssons
performance-based restricted stock upon his hiring, and (iii) Dividends = the
aggregate dividends paid on a share of the Companys Common Stock since the date
of grant.
-23-
Participation in Employee
Benefits
Named
Officers are also eligible to participate in various benefit programs offered
generally to the Companys U.S. salaried employees.
Named
Officers may participate in the Companys health plans and group disability and
life insurance plans. The Company also provides a 401(k) plan to eligible
employees, including its Named Officers. It also provides a non-qualified
deferred compensation plan in which the Named Officers may participate. In
accordance with applicable tax laws, eligible participants have an opportunity
to defer, on a pre-tax basis, all or a portion of the participants base salary,
commissions and cash incentive awards earned each year. Deferred amounts are
credited to the participants account, which is also credited with earnings on
those amounts based on hypothetical investments selected by the participant. In
addition to such earnings, the Company may, but is not required to, specify
additional discretionary amounts which the Company may credit to a participants
account (to date, no such discretionary amounts have been credited to any
account). Until the deferred amounts are actually paid, the participant pays no
taxes on them other than FICA and Medicare taxes. The Company receives no tax
deduction for payment of the deferred amounts until they are actually paid,
although it does pay and deduct the employers portion of FICA and Medicare
taxes.
The Company
generally does not provide perquisites. Additionally, except for the Companys
401(k) plan, the deferred compensation plan and the Companys equity-based
incentive compensation plans described above, the Company does not provide other
long-term compensation plans such as supplemental executive retirement plans or
defined benefit pension plans.
Tax Effects
Compliance with Section 162(m). The
Committee generally intends for all compensation paid to the Named Officers to
be tax deductible to the Company pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended (Section 162(m)). Section 162(m) provides
that compensation paid to the Named Officers in excess of $1,000,000 cannot be
deducted by the Company for federal income tax purposes unless, in general, such
compensation is performance-based, is established by an independent committee of
directors, is objective and the plan or agreement providing for such
performance-based compensation has been approved in advance by the Companys
stockholders. However, if in the judgment of the Committee, the benefits to the
Company of a compensation program that does not satisfy the arbitrary and
inflexible conditions of Section 162(m) outweigh the costs to the Company of the
failure to satisfy these conditions, the Committee may adopt such a
program.
Stock
Options. There generally are no federal
income tax consequences to a participant or the Company upon the grant of a
non-qualified stock option (an NSO). Upon the exercise of an NSO, the
executive officer generally will recognize ordinary income in an amount equal
to: (i) the fair market value, on the date of exercise, of the acquired shares,
less (ii) the exercise price of the NSO. Subject to Section 162(m), in most
cases the Company will be entitled to a tax deduction in the same
amount.
Restricted Stock. Except as otherwise
provided above (see Compliance With Section 162(m) above) and subject to
Section 16 of the Exchange Act, there are generally no federal income tax
consequences to either the executive officer or the Company upon the grant of
restricted stock (including performance-based restricted stock), provided that
the stock is subject to a substantial risk of forfeiture. Upon the expiration of
the restricted period or the lapsing of the substantial risk of forfeiture, the
executive officer will recognize taxable income equal to the then fair market
value of the restricted stock. Subject to Section 162(m), in most cases the
Company will be entitled to a corresponding deduction. However, the participant
may make an election under Section 83(b) of the Internal Revenue Code of 1986,
as amended, within thirty days after the date of the grant, to recognize
ordinary income on the value of the restricted stock as of the date of grant, in
which case the Company will be entitled to a corresponding deduction at that
time. If such an election is made, then there is no federal income tax to either
the executive officer or the Company upon the expiration of the restricted
period or the lapsing of the substantial risk of forfeiture.
-24-
EXECUTIVE COMPENSATION AND CERTAIN
TRANSACTIONS
The
following table provides selected information concerning the compensation earned
during the year ended December 31, 2008, for services in all capacities to the
Company, by (1) the principal executive officer during 2008: Anders Gustafsson,
(2) the principal financial officers during 2008: Michael C. Smiley, who serves
as the Chief Financial Officer (CFO) and has done so since May 1, 2008, and
Charles R. Whitchurch, who served as CFO until May 1, 2008, (3) the three other
most highly compensated executive officers (calculated in accordance with
applicable SEC rules) who served in positions other than principal executive
officer or principal financial officer at the end of 2008: Philip Gerskovich,
Hugh K. Gagnier and Michael H. Terzich, and (4) one other most highly
compensated former executive officer who would have been a Named Officer if he
was serving as an executive officer at the end of 2008: John M. Dillon
(collectively, the Named Officers).
2008 SUMMARY COMPENSATION
TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity |
|
|
|
|
|
|
|
|
|
Name
and |
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
All Other |
|
|
|
Principal
Position |
|
Year |
|
Salary ($) |
|
Bonus ($) |
|
Awards
($)(1) |
|
Awards
($)(1) |
|
Compensation ($) |
|
Compensation ($) |
|
Total ($) |
Anders Gustafsson |
|
2008 |
|
$ |
700,000 |
|
$ |
0 |
|
|
$ |
1,110,005 |
|
|
|
$ |
456,689 |
|
|
|
$ |
151,970 |
|
|
|
$ |
33,297 |
(2) |
|
|
$ |
2,451,961 |
Chief Executive |
|
2007 |
|
$ |
212,692 |
|
$ |
212,692 |
|
|
$ |
160,499 |
|
|
|
$ |
295,267 |
|
|
|
$ |
0 |
|
|
|
$ |
31,862 |
|
|
|
$ |
913,012 |
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael C. Smiley(3) |
|
2008 |
|
$ |
181,131 |
|
$ |
16,564 |
|
|
$ |
59,629 |
|
|
|
$ |
27,493 |
|
|
|
$ |
19,662 |
|
|
|
$ |
44,940 |
(4) |
|
|
$ |
349,419 |
Chief Financial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles R. |
|
2008 |
|
$ |
196,191 |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
$ |
67,971 |
|
|
|
$ |
16,442 |
|
|
|
$ |
324,099 |
(6) |
|
|
$ |
604,703 |
Whitchurch (5) |
|
2007 |
|
$ |
283,839 |
|
$ |
23,247 |
|
|
$ |
132,862 |
|
|
|
$ |
131,346 |
|
|
|
$ |
5,137 |
|
|
|
$ |
9,689 |
|
|
|
$ |
586,120 |
Former Chief |
|
2006 |
|
$ |
275,363 |
|
$ |
0 |
|
|
$ |
32,649 |
|
|
|
$ |
233,873 |
|
|
|
$ |
38,689 |
|
|
|
$ |
12,476 |
|
|
|
$ |
593,050 |
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip Gerskovich |
|
2008 |
|
$ |
374,715 |
|
$ |
0 |
|
|
$ |
65,464 |
|
|
|
$ |
242,298 |
|
|
|
$ |
40,233 |
|
|
|
$ |
10,676 |
(7) |
|
|
$ |
733,386 |
Senior Vice |
|
2007 |
|
$ |
361,115 |
|
$ |
29,576 |
|
|
$ |
195,791 |
|
|
|
$ |
196,953 |
|
|
|
$ |
6,536 |
|
|
|
$ |
10,650 |
|
|
|
$ |
800,621 |
President, |
|
2006 |
|
$ |
344,792 |
|
$ |
0 |
|
|
$ |
48,112 |
|
|
|
$ |
166,561 |
|
|
|
$ |
96,887 |
|
|
|
$ |
11,964 |
|
|
|
$ |
668,316 |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hugh K. Gagnier |
|
2008 |
|
$ |
334,244 |
|
$ |
0 |
|
|
$ |
65,464 |
|
|
|
$ |
177,176 |
|
|
|
$ |
35,111 |
|
|
|
$ |
9,214 |
(8) |
|
|
$ |
621,209 |
Senior Vice |
|
2007 |
|
$ |
321,294 |
|
$ |
5,921 |
|
|
$ |
200,636 |
|
|
|
$ |
216,397 |
|
|
|
$ |
81,898 |
|
|
|
$ |
9,199 |
|
|
|
$ |
835,345 |
President, Business |
|
2006 |
|
$ |
309,762 |
|
$ |
0 |
|
|
$ |
49,303 |
|
|
|
$ |
316,249 |
|
|
|
$ |
50,612 |
|
|
|
$ |
15,387 |
|
|
|
$ |
741,313 |
Development and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Printer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael H. Terzich |
|
2008 |
|
$ |
304,373 |
|
$ |
0 |
|
|
$ |
65,464 |
|
|
|
$ |
182,187 |
|
|
|
$ |
31,975 |
|
|
|
$ |
10,572 |
(9) |
|
|
$ |
594,571 |
Senior Vice |
|
2007 |
|
$ |
284,548 |
|
$ |
5,243 |
|
|
$ |
159,715 |
|
|
|
$ |
200,967 |
|
|
|
$ |
72,532 |
|
|
|
$ |
11,082 |
|
|
|
$ |
734,087 |
President, Global |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Printer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Dillon(10) |
|
2008 |
|
$ |
339,537 |
|
$ |
300,000 |
|
|
$ |
488,386 |
|
|
|
$ |
269,496 |
|
|
|
$ |
0 |
|
|
|
$ |
160,746 |
(11) |
|
|
$ |
1,558,165 |
Former Senior Vice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Manager, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
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|
|
Zebra Enterprise |
|
|
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|
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|
|
|
|
|
|
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|
|
|
|
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|
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|
Solutions |
|
|
|
|
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|
|
|
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|
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|
-25-
____________________
(1) |
|
The amounts reflected represent the dollar amounts recognized for
awards of restricted stock and stock options for financial statement
reporting purposes for the year ended December 31, 2008, in accordance
with SFAS 123(R). Such amounts may include amounts recognized for awards
granted during 2008 and prior years. Please refer to Note 4, Stock Based
Compensation, of the Companys consolidated financial statements for 2008
included in the Companys Form 10-K for 2008, as filed with the Securities
and Exchange Commission on February 27, 2009, for a discussion of
assumptions relevant to the calculation of such amounts. |
|
|
|
(2) |
|
Consists of the following payments to Mr. Gustafsson: matching
401(k) contributions of $6,900, profit sharing plan payment of $3,486,
life insurance premiums of $189 and relocation assistance of
$22,722. |
|
(3) |
|
Mr. Smiley became Chief Financial Officer of the Company effective
May 1, 2008. |
|
(4) |
|
Consists of the following payments to Mr. Smiley: matching 401(k)
contributions of $2,115, profit sharing payment of $1,602, life insurance
premiums of $119, and relocation assistance of $41,104. |
|
(5) |
|
Mr. Whitchurch served as Chief Financial Officer and Treasurer of
the Company until May 1, 2008 and continued thereafter as a non-officer
employee until June 30, 2008. |
|
(6) |
|
Consists of the following payments to Mr. Whitchurch: matching
401(k) contributions of $4,274, life insurance premiums of $416, health
and dental insurance premiums of $3,120, unused vacation of $44,726,
severance payments pursuant to his employment agreement of $246,563, and
outplacement services of $25,000. |
|
(7) |
|
Consists of the following payments to Mr. Gerskovich: matching
401(k) contributions of $6,900, profit sharing plan payment of $3,486, and
life insurance premiums of $290. |
|
(8) |
|
Consists of the following payments to Mr. Gagnier: matching 401(k)
contributions of $5,438, profit sharing plan payments of $3,486, and life
insurance premiums of $290. |
|
(9) |
|
Consists of the following payments to Mr. Terzich: matching 401(k)
contributions of $6,900, profit sharing plan payment of $3,486, and life
insurance premiums of $186. |
|
(10) |
|
Mr. Dillon served as Senior Vice President and General Manager,
Zebra Enterprise Solutions until August 22, 2008. |
|
(11) |
|
Consists of the following payments to Mr. Dillon: life insurance
premiums of $2,129, health and dental insurance premiums of $8,479, unused
vacation of $30,379, $11,426 for a sales incentive trip, and severance
payments of $108,333. |
Employment Agreements
The Company
has employment agreements with each of its Named Officers. The form of
employment agreements of Messrs. Gerskovich, Gagnier and Terzich are the same
(the Form Employment Agreement), as was Mr. Whitchurchs employment agreement
while he was an employee of the Company. Mr. Gustafssons employment agreement
(as amended, the Gustafsson Employment Agreement) is substantially the same as
the Form Employment Agreement other than as described below under Mr.
Gustafsson and Mr. Smileys employment agreement (the Smiley Employment
Agreement) is substantially the same as the Form Employment Agreement other
than as described below under Mr. Smiley. Mr. Dillons employment agreement is
described below under Mr. Dillon.
Messrs. Gerskovich, Gagnier,
Terzich and Whitchurch. The Form Employment
Agreements for Messrs. Gerskovich, Gagnier, Terzich and Whitchurch (the Other
Named Officers) superseded all previous employment agreements, severance
agreements, separation agreements and other arrangements between the Company and
them with respect to the subject matter of the Form Employment Agreement. Under
the Form Employment Agreements, the Other Named Officers are entitled to annual
base salaries and are eligible to earn targeted annual cash incentive awards as
further described above under Compensation Discussion and Analysis. The Other
Named Officers annual base salaries will be reviewed at least annually, and may
be increased or decreased from time to time by the Company. However, if an Other
Named Officers annual base salary in effect on the date of his Form Employment
Agreement is decreased in an amount equal to or greater than ten percent (10%)
(unless such decrease is applied on a proportionally equal basis to all
executive officers of the Company), then the Other Named Officer will have
fifteen days to terminate his employment, in which case such termination will be
for good reason under his Employment Agreement. Each Other Named Officers
target annual cash incentive award is payable upon the attainment of certain
performance measures and in accordance with the Companys annual incentive award
plan for the relevant fiscal year. The Form Employment Agreements also provide
that the Other Named Officers will be eligible to receive equity compensation,
as determined in the sole discretion of the Compensation Committee.
-26-
The
employment of each Other Named Officer under his Form Employment Agreement is
terminable at any time, subject to certain severance obligations as described
below. Each Form Employment Agreement provides that if the Other Named Officer
terminates his employment with good reason or the Company terminates his
employment without cause and under circumstances other than death or
disability as provided in his Employment Agreement, he will be entitled to (i)
the continuation of his base salary at the rate then in effect for a period of
one year; (ii) a pro rata portion of his annual cash incentive award (the
Annual Award) for the year in which his employment terminates, if it otherwise
would have been earned if he was employed as of the date the annual cash
incentive awards for such year are paid to senior level executives of the
Company, and any such pro rata portion will be payable at the time annual cash
incentive awards for such year are paid to senior level executives of the
Company; (iii) if not yet paid, any Annual Award attributable to the year
immediately preceding the year of the employment termination, if it otherwise
would have been earned if he was employed as of the date the annual cash
incentive awards for such year are paid to senior level executives of the
Company, and any such Annual Award will be payable at the time annual cash
incentive awards for such year are paid to senior level executives of the
Company; (iv) a payment equal to 100% of his targeted annual cash incentive
award based upon his base salary for the year in which his employment terminates
and payable at the time annual cash incentive awards for such year are paid to
senior level executives of the Company for such year; (v) outplacement services
not to exceed $32,000, and (vi) the continuation of coverage under the Companys
medical and dental insurance plans, as mandated by COBRA, with the Company
paying for such coverage at the same rate the Company pays for health insurance
coverage for its active employees under its group health plan and the Other
Named Officer paying for any employee-paid portion of such coverage, until the
earlier of (a) one year after the date of termination, or (b) the Other Named
Officer becoming eligible for coverage under another group health plan that does
not impose preexisting condition limitations on the Other Named Officers
coverage.
The Form
Employment Agreements provide that if the Other Named Officer terminates his
employment with good reason or the Company terminates his employment without
cause, and such termination of employment occurs within 120 days immediately
preceding or one year immediately following a change in control, then the
Other Named Officer will be entitled to all compensation and benefits set forth
in the immediately preceding paragraph, except that instead of receiving salary
continuation as set forth in subpart (i) and the payment equal to 100% of his
targeted annual cash incentive award as set forth in subpart (iv), he will
receive a payment equal to two times his base salary at the rate then in effect
plus two times his targeted annual cash incentive award based upon his base
salary, which payment shall be payable within sixty days following the later of
the change in control or the termination.
Under the
Form Employment Agreements, if payments or benefits from the Company to the
Other Named Officer exceed the applicable threshold under Section 4999 of the
Internal Revenue Code of 1986, as amended (the Code), and an excise tax
becomes due thereunder, the Other Named Officer would be entitled to receive an
additional payment so that, after payment by him of all applicable taxes and
excise taxes, he retains an amount equal to the amount he would have retained
had no excise tax been imposed; provided, however, that if the applicable
threshold under Section 4999 of the Code is exceeded by ten percent (10%) or
less, the total payments he would be entitled to receive will be reduced so that
they are $1.00 less than such applicable threshold.
Each Form
Employment Agreement, other than Mr. Gagniers, further provides that the Other
Named Officer is bound by non-competition and non-solicitation provisions until
two years following his termination. Mr. Gagniers Form Employment Agreement
instead binds him by non-competition and non-solicitation provisions for one
year following his termination. Each Form Employment Agreement also subjects the
Other Named Officer to confidentiality covenants at all times during and after
the term of the Form Employment Agreement. It also obligates the Company to
maintain directors and officers liability insurance coverage for the Other
Named Officer and to indemnify him to the extent permitted under the Companys
By-Laws and/or Certificate of Incorporation.
The terms
cause, change in control, disability and good reason as used in the Form
Employment Agreements are defined in the Glossary of Terms attached to this
Proxy Statement as Appendix A (the Glossary).
Mr.
Gustafsson. Mr. Gustafsson and the Company
entered into the Gustafsson Employment Agreement effective September 4, 2007, in
connection with his hiring as the Companys CEO. The Gustafsson Employment
Agreement provided for an initial annual base salary of $700,000, a targeted
annual cash incentive award equal to 100% of Mr. Gustafssons annual base salary
and a maximum annual cash incentive award equal to 200% of Mr. Gustafssons
annual base salary.
-27-
The
Gustafsson Employment Agreement also provided for the specific award to Mr.
Gustafsson of stock options and restricted stock. Pursuant to the Gustafsson
Employment Agreement, Mr. Gustafsson was granted a stock option to purchase
75,000 shares of the Companys Common Stock that vests in equal installments on
the first four anniversaries of the grant date as long as he remains employed by
the Company (the Initial Option). He was also granted an additional stock
option to purchase 168,750 shares of the Companys Common Stock (the TSR
Option) and 56,250 restricted shares of the Companys Common Stock (the TSR
Stock). The TSR Option and TSR Stock will each vest incrementally as long as
Mr. Gustafsson is employed by the Company and is contingent upon the Company
achieving various levels of Total Shareholder Return (as defined above under
Compensation Discussion and Analysis) prior to the fifth anniversary of the
Gustafsson Employment Agreement. The vesting terms of the TSR Stock and TSR
Options are the same as those of the Restricted Stock described below under
Award Agreements. Under the Gustafsson Employment Agreement, the Compensation
Committee may adjust the formula for calculating Total Shareholder Return to
prevent dilution or enlargement of the Total Shareholder Return as a result of
certain corporate transactions.
The
Gustafsson Employment Agreement is substantially similar to the Form Employment
Agreement in most other respects, with the following exceptions: (i) the
Gustafsson Employment Agreement provided for payment of relocation costs; (ii)
any decrease in Mr. Gustafssons base salary, rather than a decrease of at least
10%, permits Mr. Gustafsson to terminate his employment for good reason; (iii)
if Mr. Gustafsson terminates his employment with good reason or the Company
terminates his employment without cause and under circumstances other than
death or disability, he will not receive outplacement services, the unvested
portion of the Initial Option and any annual equity awards will vest
immediately, the continuation of his base salary will be for a period of two
years rather than one year, and, unless it is otherwise terminated, the
continuation of healthcare coverage will be for a period of two years rather
than one year; and (iv) the Company paid up to $15,000 of Mr. Gustafssons legal
fees related to the negotiation and drafting of the Gustafsson Employment
Agreement.
The terms
cause, change in control, disability and good reason as used in the
Gustafsson Employment Agreements are defined in the Glossary.
Mr.
Smiley. Mr. Smiley and the Company entered
into the Smiley Employment Agreement effective May 1, 2008 in connection with
his hiring as the Companys CFO. The Smiley Employment Agreement provided for an
initial annual base salary of $282,000 and a targeted annual cash incentive
award equal to 50% of Mr. Smileys annual base salary. The Smiley Employment
Agreement also provided that Mr. Smileys annual cash incentive award for 2008
would not be less than 20% of his base salary actually earned in 2008.
The Smiley
Employment Agreement also provided for the specific award to Mr. Smiley of stock
options and restricted stock. Pursuant to the Smiley Employment Agreement, Mr.
Smiley was granted a stock option to purchase 11,700 shares of the Companys
Common Stock that vests in equal installments on the first four anniversaries of
the grant date as long as he remains employed by the Company (the Smiley
Option). He was also granted restricted shares of the Companys Common Stock
(the Smiley Stock). The Smiley Stock will vest incrementally as long as Mr.
Smiley is employed by the Company and is contingent upon the Company achieving
various levels of Total Shareholder Return prior to the fifth anniversary of the
Smiley Employment Agreement. The Smiley Stocks vesting terms are described
below under Award Agreements. Under the Smiley Employment Agreement, the
Compensation Committee may adjust the formula for calculating Total Shareholder
Return to prevent dilution or enlargement of the Total Shareholder Return as a
result of certain corporate transactions. The Smiley Employment Agreement is
otherwise substantially similar to the Form Employment Agreement.
-28-
Mr.
Dillon. Mr. Dillon and Navis LLC, a
subsidiary of Navis Holdings, LLC,
had entered into an employment agreement in
connection with the Companys acquisition of Navis Holdings, LLC in December
2007. Mr. Dillons employment agreement provided for an annual base salary,
annual cash incentive awards and equity grants and contains non-solicitation and
confidentiality provisions similar to those in the Form Employment Agreements.
In connection with the acquisition, Mr. Dillon was granted (i) a stock option to
purchase shares of the Companys Common Stock that vests in equal installments
on the first four anniversaries of the grant date as long as he remained
employed by the Company (the Dillon Option); (ii) an additional stock option
to purchase shares of the Companys Common Stock, to replace his existing stock
option to purchase securities of Navis Holdings, LLC, that vested, as long as he
was employed by the Company, in 17 equal monthly installments beginning January
2008 through and including May 2009 (the Replacement Option); and (iii)
restricted shares of the Companys Common Stock that vest in equal installments
on the first two anniversaries of the grant date as long as he remained employed
by the Company (the Dillon Restricted Stock). As further described above under
Compensation Discussion and Analysis, Mr. Dillon also participated in the
Navis Holdings, LLC Transition Bonus Plan (the Navis Plan).
In
connection with the termination of his employment, Mr. Dillon and the Company
entered into a Confidential Waiver Agreement and General Release (the Dillon
Release Agreement). The Dillon Release Agreement provides that, in
consideration of certain waivers and releases by Mr. Dillon and in lieu of any
other severance payments or other benefits, Mr. Dillon will receive: (i)
continuation of his base salary at the rate then in effect for a period of one
year; (ii) a lump-sum payment of $300,000 pursuant to the Navis Plan; and (iii)
the continuation of coverage under the Companys medical, dental and vision
plans, in accordance with COBRA, until the earlier of (a) one year after Mr.
Dillons termination, or (b) Mr. Dillon becoming eligible for coverage under
another group health plan that does not impose preexisting condition limitations
on Mr. Dillons coverage. Upon Mr. Dillons employment termination, pursuant to
their respective award agreements, the Dillon Option was terminated, one-half of
the previously unvested portion of the Replacement Option vested, and the Dillon
Restricted Stock vested in full.
-29-
GRANTS OF PLAN-BASED AWARDS IN 2008
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All
Other |
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Options |
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Estimated Possible |
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Estimated Possible |
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Awards, |
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Exercise
or |
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Payouts Under Non-Equity |
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Payouts Under Equity |
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Number
of |
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Base
Price |
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Grant Date |
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Incentive Plan
Awards(1) |
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Incentive Plan
Awards(2) |
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Securities |
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of |
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Fair Value |
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Underlying |
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Option |
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of
Stock |
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Options |
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Awards |
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and Option |
Name |
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Grant Date |
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Target ($) |
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Maximum ($) |
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Threshold (#) |
|
Target (#) |
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(#)(3) |
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($/SH) |
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Awards ($) |
Anders Gustafsson |
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3/25/08 |
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$ |
700,000 |
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$ |
1,400,000 |
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4/24/08 |
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90,000 |
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$36.49 |
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$ |
1,226,700 |
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Michael C. Smiley |
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5/1/08 |
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$ |
90,566 |
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$ |
181,131 |
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5/1/08 |
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|
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|
1,875 |
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7,500 |
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$ |
162,041 |
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5/1/08 |
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11,700 |
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$37.67 |
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$ |
164,619 |
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Charles R. Whitchurch |
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3/25/08 |
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|
$ |
98,096 |
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$ |
196,191 |
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Philip Gerskovich |
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3/25/08 |
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$ |
374,715 |
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4/24/08 |
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2,273 |
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9,090 |
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$ |
181,830 |
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4/24/08 |
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14,480 |
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$36.49 |
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$ |
197,362 |
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Hugh K. Gagnier |
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3/25/08 |
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$ |
150,410 |
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$ |
300,820 |
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4/24/08 |
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2,273 |
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9,090 |
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$ |
181,830 |
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4/24/08 |
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14,480 |
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$36.49 |
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$ |
197,362 |
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Michael H. Terzich |
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3/25/08 |
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$ |
136,968 |
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$ |
273,936 |
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4/24/08 |
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2,273 |
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9,090 |
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$ |
181,830 |
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4/24/08 |
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14,480 |
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$36.49 |
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$ |
197,362 |
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John M. Dillon |
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3/25/08 |
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$ |
152,792 |
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$ |
305,583 |
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____________________
(1) |
|
Represents target and maximum award amounts that could
have been paid out as cash annual incentive awards for 2008 under the
Companys 2008 Management Bonus Plan if various financial performance
goals were achieved. The target and maximum award amounts are based on
percentages of each Named Officers actual base salary earnings for 2008.
The actual award amounts for the 2008 performance period were paid to the
Named Officers in March 2009, and are reported in the Non-equity
Incentive Plan Compensation column of the 2008 Summary Compensation Table
above. The 2008 Management Bonus Plan and the determination of award
amounts under it are further described above under Compensation
Discussion and Analysis. The Company has omitted a threshold column
because there is no minimum award amount. |
|
(2) |
|
Shares of restricted stock granted under the 2006 Zebra
Technologies Corporation Incentive Compensation Plan that will vest
incrementally contingent upon the Company achieving various levels of
Total Shareholder Return prior to September 4, 2012, as further
described below under Award Agreements. The amounts represent the number
of shares that will vest upon achievement of the minimum total shareholder
return level for which such shares will vest and upon achievement of the
targeted total shareholder return level. The Company has omitted a
maximum column because the target award amount is the maximum award
amount. |
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(3) |
|
Non-qualified stock options for shares of the Companys
Common Stock granted under the 2006 Zebra Technologies Corporation
Incentive Compensation Plan at an exercise price equal to the closing
market price on the date of grant. Such options become exercisable with
respect to 25% of the underlying shares on each of the first four
anniversaries of the date of grant, and vesting accelerates upon a change
in control in accordance with the terms of the 2006 Zebra Technologies
Corporation Incentive Compensation Plan. |
-30-
Award Agreements
Each award
of stock options and restricted stock awarded to the Named Officers during 2008
was granted pursuant to an award agreement. In general, the Named Officer must
remain employed by the Company or one of its subsidiaries through the applicable
vesting date in order for the award to vest. Additional information regarding
the vesting schedules, and with respect to the Restricted Stock (as defined
below) the performance targets and calculations, is described below in the
footnotes to the Outstanding Equity Awards at 2008 Fiscal Year-End table and
above under Compensation Discussion and Analysis.
Stock Option
Awards. The 2008 stock option award
agreements provide for a term of ten years to exercise the stock options. The
stock option award agreements for the stock options granted to Named Officers
provide that: (i) upon the termination of the Named Officer by reason of death
or disability, the unvested portion of the stock option will immediately
become fully vested and exercisable, and along with the unexercised vested
portion of the stock option, will remain exercisable for one year; (ii) if the
Named Officer retires, the unexercised vested portion of the stock option will
remain exercisable for one year; (iii) if the Named Officer is terminated for
cause, the unexercised vested portion of the stock option and the unvested
portion of the stock options immediately will be forfeited; (iv) if the Named
Officer is terminated for any other reason, then the unexercised vested portion
of the stock option will remain exercisable for ninety days in the event of a
termination by the Company and thirty days in the event of termination by the
Named Officer; (v) in the event of a change in control, the unvested portion
of the stock option will immediately become fully vested and exercisable, and
along with the unexercised vested portion of the stock option, will remain
exercisable for the entire term of the stock option; and (vi) the Named Officer
is bound by a non-competition and non-solicitation provision until twelve months
following termination of his employment and by confidentiality provisions at all
times during and after his employment.
The terms
cause, change in control, disability and retire as used in such 2008
stock option award agreements are defined in the Glossary.
Restricted Stock Agreements. Under the
award agreements for the Smiley Stock and the restricted stock awarded to
Messrs. Gerskovich, Gagnier, and Terzich in 2008 (collectively, the Restricted
Stock), if the Named Officer is terminated for any reason, any unvested portion
of the stock will be forfeited immediately, except that some or all of the
unvested portion of the Restricted Stock will vest if the Named Officer
terminates his employment with good reason or the Company terminates his
employment without cause, and such termination of employment occurs within 120
days immediately preceding or one year immediately following a change in
control, as described above under Employment Agreements. Messrs. Smiley,
Gerskovich, Gagnier and Terzich have the right to receive dividends paid on the
Restricted Stock and the full right to vote the Restricted Stock. Pursuant to
the restricted stock award agreements for the Restricted Stock, Messrs. Smiley,
Gerskovich, Gagnier and Terzich are each bound by a non-competition and
non-solicitation provision for twenty-four months following termination of his
employment and by confidentiality provisions at all times during and after his
employment.
The
Restricted Stock of each of Messrs. Smiley, Gerskovich, Gagnier and Terzich will
vest incrementally as long as he is employed by the Company and is contingent
upon the Company achieving various levels of Total Shareholder Return prior to
September 4, 2012. The Restricted Stock will vest as follows:
|
(i) |
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25% of the award will
vest if, at any time during the period from September 4, 2007 until
September 4, 2012 (the Vesting Period), the average of the Total
Shareholder Return measured over any 45 consecutive trading days is at
least 60%. |
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(ii) |
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The final 75% of the
award will vest if, at any time during the Vesting Period, the average of
the Total Shareholder Return measured over any 45 consecutive trading days
is at least 100%. |
-31-
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(iii) |
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If the average of the
Total Shareholder Return measured over any 45 consecutive trading day
period is between 60% and 100%, then the award will vest in the aggregate
(which Vested Percentage shall include the 25% reflected in subparagraph
(i), above) as follows: |
Total Shareholder Return
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Vested Percentage |
65% but less than 70% |
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28.8% |
70% but less
than 75% |
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33.4%
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75% but less than 80% |
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39.3% |
80% but less
than 85% |
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46.8%
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85% but less than 90% |
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56.2% |
90% but less
than 95% |
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68.4%
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95% but less than 100% |
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83.8% |
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(iv) |
|
Any portion of the
award which is unvested at the expiration of the Vesting Period will be
forfeited. |
In addition,
if Messrs. Smiley, Gerskovich, Gagnier or Terzich terminates his employment with
good reason or the Company terminates his employment without cause, and such
termination of employment occurs within 120 days immediately preceding or one
year immediately following a change in control, then pursuant to the
Restricted Stock award agreement, the unvested portion of the Restricted Stock
will immediately vest as follows:
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|
Percentage of
Unvested Restricted |
Date of Change in Control
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|
Stock That Will
Vest |
Prior to September 4, 2008 |
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100% |
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On or after September 4, 2008, but prior to September 4, 2009 |
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80% |
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On or after September 4, 2009, but prior to September 4, 2010 |
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60% |
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On or after September 4, 2010, but prior to September 4, 2011 |
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40% |
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On or after September 4, 2011, but prior to September 4, 2012 |
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20% |
The terms
cause, change in control and good reason as used in the Restricted Stock
award agreements are defined in the Glossary.
-32-
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OUTSTANDING EQUITY AWARDS AT 2008 FISCAL YEAR-END |
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Option Awards |
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Stock Awards |
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Incentive |
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Equity |
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Incentive |
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Awards: |
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Equity |
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Plan |
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Market or |
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Incentive |
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Awards: |
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Payout |
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|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
Number of |
|
Value of |
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
Unearned |
|
Unearned |
|
|
|
Number of |
|
Number of |
|
Number
of |
|
|
|
|
|
|
|
|
|
Shares, |
|
Shares, |
|
|
|
Securities |
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
Units or |
|
Units or |
|
|
|
Underlying |
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
Other |
|
Other |
|
|
|
Unexercised |
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
|
|
Rights |
|
Rights That |
|
|
|
Options |
|
Options |
|
Unearned |
|
Exercise |
|
Option |
|
That Have |
|
Have Not |
|
|
|
(#) |
|
(#) |
|
Options |
|
Price |
|
Expiration |
|
Not Vested |
|
Vested |
Name(1) |
|
Exercisable |
|
Unexercisable |
|
(#) |
|
($) |
|
Date |
|
(#) |
|
($) |
|
|
Anders Gustafsson |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/4/2007 |
|
18,750 |
|
|
56,250 |
(2) |
|
|
|
$ |
36.80 |
|
|
|
9/4/2017 |
|
|
|
|
|
|
|
|
|
|
9/4/2007 |
|
|
|
|
|
|
|
42,188(3) |
|
$ |
36.80 |
|
|
|
9/4/2017 |
|
|
|
|
|
|
|
|
|
|
9/4/2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,063 |
(4) |
|
$ |
284,916 |
(5) |
|
4/24/2008 |
|
0 |
|
|
90,000 |
|
|
|
|
$ |
36.49 |
|
|
|
4/24/2018 |
|
|
|
|
|
|
|
|
|
|
|
Michael C. Smiley |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/1/08 |
|
0 |
|
|
11,700 |
(6) |
|
|
|
$ |
37.67 |
|
|
|
5/1/2018 |
|
|
|
|
|
|
|
|
|
|
5/1/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,875 |
(7) |
|
$ |
37,988 |
(5) |
|
|
Charles R. Whitchurch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/7/2005 |
|
5,084 |
|
|
0 |
|
|
|
|
$ |
51.62 |
|
|
|
2/7/2015 |
|
|
|
|
|
|
|
|
|
|
2/6/2006 |
|
2,249 |
|
|
0 |
|
|
|
|
$ |
43.35 |
|
|
|
2/6/2016 |
|
|
|
|
|
|
|
|
|
|
4/25/2007 |
|
2,000 |
|
|
0 |
|
|
|
|
$ |
41.25 |
|
|
|
4/25/2017 |
|
|
|
|
|
|
|
|
|
|
|
Philip Gerskovich |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/10/2005 |
|
15,637 |
|
|
14,149 |
(8) |
|
|
|
$ |
50.36 |
|
|
|
3/10/2015 |
|
|
|
|
|
|
|
|
|
|
2/6/2006 |
|
7,496 |
|
|
15,572 |
(8) |
|
|
|
$ |
43.35 |
|
|
|
2/6/2016 |
|
|
|
|
|
|
|
|
|
|
4/25/2007 |
|
2,424 |
|
|
7,273 |
(8) |
|
|
|
$ |
41.25 |
|
|
|
4/25/2017 |
|
|
|
|
|
|
|
|
|
|
4/24/2008 |
|
0 |
|
|
14,480 |
(8) |
|
|
|
$ |
36.49 |
|
|
|
4/24/2018 |
|
|
|
|
|
|
|
|
|
|
4/24/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,273 |
(7) |
|
$ |
46,041 |
(5) |
|
|
Hugh K. Gagnier |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/17/2000 |
|
45,000 |
|
|
0 |
|
|
|
|
$ |
26.94 |
|
|
|
2/17/2010 |
|
|
|
|
|
|
|
|
|
|
2/14/2001 |
|
11,250 |
|
|
0 |
|
|
|
|
$ |
18.17 |
|
|
|
2/14/2011 |
|
|
|
|
|
|
|
|
|
|
2/8/2002 |
|
56,250 |
|
|
0 |
|
|
|
|
$ |
21.62 |
|
|
|
2/8/2012 |
|
|
|
|
|
|
|
|
|
|
2/11/2003 |
|
29,250 |
|
|
0 |
|
|
|
|
$ |
25.23 |
|
|
|
2/11/2013 |
|
|
|
|
|
|
|
|
|
|
2/11/2004 |
|
7,874 |
|
|
2,626 |
(9) |
|
|
|
$ |
47.12 |
|
|
|
2/11/2014 |
|
|
|
|
|
|
|
|
|
|
2/7/2005 |
|
5,084 |
|
|
4,602 |
(9) |
|
|
|
$ |
51.62 |
|
|
|
2/7/2015 |
|
|
|
|
|
|
|
|
|
|
2/6/2006 |
|
1,612 |
|
|
3,348 |
(9) |
|
|
|
$ |
43.35 |
|
|
|
2/6/2016 |
|
|
|
|
|
|
|
|
|
|
4/25/2007 |
|
2,333 |
|
|
7,001 |
(9) |
|
|
|
$ |
41.25 |
|
|
|
4/25/2017 |
|
|
|
|
|
|
|
|
|
|
4/24/2008 |
|
0 |
|
|
14,480 |
(9) |
|
|
|
$ |
36.49 |
|
|
|
4/24/2018 |
|
|
|
|
|
|
|
|
|
|
4/24/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,273 |
(7) |
|
$ |
46,041 |
(5) |
|
|
Michael H. Terzich |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2003 |
|
5,626 |
|
|
0 |
|
|
|
|
$ |
25.23 |
|
|
|
2/11/2013 |
|
|
|
|
|
|
|
|
|
|
2/11/2004 |
|
7,874 |
|
|
2,626 |
(10) |
|
|
|
$ |
47.12 |
|
|
|
2/11/2014 |
|
|
|
|
|
|
|
|
|
|
2/7/2005 |
|
5,084 |
|
|
4,602 |
(10) |
|
|
|
$ |
51.62 |
|
|
|
2/7/2015 |
|
|
|
|
|
|
|
|
|
|
2/6/2006 |
|
1,874 |
|
|
3,893 |
(10) |
|
|
|
$ |
43.35 |
|
|
|
2/6/2016 |
|
|
|
|
|
|
|
|
|
|
4/25/2007 |
|
2,666 |
|
|
8,001 |
(10) |
|
|
|
$ |
41.25 |
|
|
|
4/25/2017 |
|
|
|
|
|
|
|
|
|
|
4/24/2008 |
|
0 |
|
|
14,480 |
(10) |
|
|
|
$ |
36.49 |
|
|
|
4/24/2018 |
|
|
|
|
|
|
|
|
|
|
4/24/2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,273 |
(7) |
|
$ |
46,041 |
(5) |
-33-
____________________
(1) |
|
Mr. Dillon did not hold any outstanding stock options to
purchase shares of the Companys Common Stock or restricted stock shares
of the Companys Common Stock on December 31, 2008. |
|
|
|
(2) |
|
With respect to Mr. Gustafssons stock option granted on
September 4, 2007, the unexercisable portion will vest with respect to
18,750 shares on each of September 4, 2009, September 4, 2010 and
September 4, 2011. |
|
(3) |
|
With respect to Mr. Gustafssons stock option for
168,750 shares granted on September 4, 2007, which will vest incrementally
upon the Companys attainment of specified average total shareholder
return targets on the same terms as the Restricted Stock described above
under Award Agreements, represents the number shares with respect to
which the stock option will vest upon achievement of the minimum total
shareholder return level for which such stock option will
vest. |
|
(4) |
|
Mr. Gustafssons 56,250 shares of restricted stock
granted on September 4, 2007 will vest incrementally upon the Companys
attainment of specified average total shareholder return targets on the
same terms as the Restricted Stock described above under Award
Agreements. Such shares represents the number of shares that will vest
upon achievement of the minimum total shareholder return level for which
such shares will vest. |
|
(5) |
|
The market value of such awards is based on the closing
price of the Companys Common Stock listed on The NASDAQ Stock Market on
December 31, 2008 ($20.26 per share). |
|
(6) |
|
Mr. Smileys stock option granted on May 1, 2008 will
vest with respect to 2,925 shares on each of May 1, 2009, May 1, 2010, May
1, 2011 and May 1, 2012. |
|
(7) |
|
Such shares of Restricted Stock will vest incrementally
upon the Companys attainment of specified average total shareholder
return targets on the terms described above under Award Agreements with
respect to Restricted Stock. Such shares represent the number of shares of
Restricted Stock that will vest upon achievement of the minimum total
shareholder return level for which such shares of Restricted Stock will
vest. |
|
(8) |
|
With respect to the unexercisable portions of Mr.
Gerskovichs stock options, (a) the stock option granted on March 10, 2005
vested with respect to 6,702 shares on March 10, 2009 and will vest with
respect to 7,447 shares on March 10, 2010; (b) the stock option granted on
February 6, 2006 vested with respect to 4,613 shares on February 6, 2009
and will vest with respect to 5,191 shares on February 6, 2010 and 5,768
shares on February 6, 2011; and (c) the stock option granted on April 25,
2007 will vest with respect to 2,424 shares on April 25, 2009, 2,424
shares on April 25, 2010 and 2,425 shares on April 25, 2011; and (d) the
stock option granted on April 24, 2008 will vest with respect to 3,620
shares on each of April 24, 2009, April 24, 2010, April 24, 2011 and April
24, 2012. |
|
(9) |
|
With respect to the unexercisable portions of Mr.
Gagniers stock options: (a) the stock option granted on February 11, 2004
vested with respect to 2,626 shares on February 11, 2009; (b) the stock
option granted on February 7, 2005 vested with respect to 2,180 shares on
February 7, 2009 and will vest with respect to 2,422 shares on February 7,
2010; (c) the stock option granted on February 6, 2006 vested with respect
to 992 shares on February 6, 2009 and will vest with respect to 1,116
shares on February 6, 2010 and 1,240 shares on February 6, 2011; (d) the
stock option granted on April 25, 2007 will vest with respect to 2,333
shares on April 25, 2009 and 2,334 shares on each of April 25, 2010 and
April 25, 2011; and (e) the stock option granted on April 24, 2008 will
vest with respect to 3,620 shares on each of April 24, 2009, April 24,
2010, April 24, 2011 and April 24, 2012. |
|
(10) |
|
With respect to the unexercisable portions of Mr.
Terzichs stock options: (a) the stock option granted on February 11, 2004
vested with respect to 2,626 shares on February 11, 2009; (b) the stock
option granted on February 7, 2005 vested with respect to 2,180 shares on
February 7, 2009 and will vest with respect to 2,422 shares on February 7,
2010; (c) the stock option granted on February 6, 2006 vested with respect
to 1,153 shares on February 6, 2009 and will vest with respect to 1,298
shares on February 6, 2010 and 1,442 shares on February 6, 2011; (d) the
stock option granted on April 25, 2007 vested with respect to 2,667 shares
on April 25, 2009 and will vest with respect to 2,667 shares on each of
April 25, 2010 and April 25, 2011; and (e) the stock option granted on
April 24, 2008 will vest with respect to 3,620 shares on each of April 24,
2009, April 24, 2010, April 24, 2011 and April 24,
2012. |
-34-
OPTION EXERCISES AND STOCK VESTED
The table
below sets forth information with respect to stock options exercised by the
Named Officers during 2008 and restricted stock of Named Officers that vested
during 2008.
Options Exercised and Stock Vested in
2008
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
|
|
Shares |
|
Value |
|
Shares |
|
|
|
|
|
|
Acquired |
|
Realized on |
|
Acquired |
|
Value Realized |
|
|
on
Exercise |
|
Exercise |
|
on
Vesting |
|
on
Vesting |
Name |
|
(#) |
|
($) (1)
|
|
(#) |
|
($) |
Anders Gustafsson |
|
0 |
|
|
$ |
0 |
|
|
0 |
|
|
$ |
0 |
|
Michael C.
Smiley |
|
0 |
|
|
$ |
0 |
|
|
0 |
|
|
$ |
0 |
|
Charles R. Whitchurch |
|
3,940 |
|
|
$ |
44,054 |
|
|
0 |
|
|
$ |
0 |
|
Philip
Gerskovich |
|
0 |
|
|
$ |
0 |
|
|
0 |
|
|
$ |
0 |
|
Hugh K. Gagnier |
|
0 |
|
|
$ |
0 |
|
|
0 |
|
|
$ |
0 |
|
Michael H.
Terzich |
|
0 |
|
|
$ |
0 |
|
|
0 |
|
|
$ |
0 |
|
John M. Dillon |
|
12,006 |
|
|
$ |
15,259 |
|
|
14,006 |
|
|
$ |
449,312 |
(2)
|
____________________
(1) |
|
Value calculated as the difference between the market
price of the underlying securities on the date of exercise and the
exercise price of the exercised stock options. |
|
(2) |
|
Value calculated as the market price of the shares on
the vesting date ($32.08 per share, on August 22,
2008). |
NON-QUALIFIED DEFERRED
COMPENSATION
Pursuant to
the Companys Executive Non-Qualified Deferred Compensation Plan effective
January 1, 2002, (the 2002 Deferral Plan) and its 2005 Executive Deferred
Compensation Plan effective January 1, 2005, (the 2005 Deferral Plan) (the
2002 Deferral Plan and the 2005 Deferral Plan are collectively referred to
herein as the Deferral Plans), a Named Officer could defer, on a pre-tax
basis, up to 80% of each of his base salary, commissions and cash incentive
award earned for 2008. Deferred compensation balances are credited with gains or
losses which mirror the performance of benchmark investment funds selected by
the participant from among the Deferral Plans available funds offerings. All
credited amounts under the Deferral Plans are unfunded general obligations of
the Company, and the participants have no greater rights to their respective
payments than the rights of any unsecured general creditor of the
Company.
The values
of each participants account under the Deferral Plans change based upon the
performance of the funds designated by the participant from various money market
and investment funds offerings. Amounts deferred under the Deferral Plans are
paid either in a lump sum or in annual installments pursuant to the terms of the
Deferral Plans. The Deferral Plans permit payment of the deferred amount upon,
among other things, a termination of employment and a change of control of the
Company. To date, the Company has not made contributions to the Deferral Plans, but pays
all of the Deferral Plans administrative costs and expenses.
The table
below reflects the funds available under the Deferral Plans in which the Named
Officers accounts had investment balances as of December 31, 2008, and the
funds annual rates of return for 2008, as reported by the administrator of the
Deferral Plans. The Deferral Plans are further described above under
Compensation Discussion and Analysis.
Fund Name |
|
2008 Rate of Return
|
T. Rowe Price Prime Reserve |
|
2.55% |
T. Rowe Price
Retirement 2020 |
|
(33.48%) |
T. Rowe Price Growth Stock |
|
(42.26%) |
-35-
The table below
sets forth information regarding the Named Officers participation in the
Deferral Plans in 2008.
Nonqualified Deferred Compensation
for 2008
|
|
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
Aggregate |
|
|
Contributions |
|
Contributions |
|
Earnings in |
|
Withdrawals/ |
|
Balance at |
|
|
in
Last FY |
|
in Last
FY |
|
Last FY |
|
Distributions |
|
Last FYE |
Name |
|
($)(1) |
|
($) |
|
($)(2) |
|
($)(3) |
|
($)(3) |
Anders Gustafsson |
|
$ |
0 |
|
|
$0 |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Michael C.
Smiley |
|
$
|
0 |
|
|
$0 |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Charles R. Whitchurch |
|
$
|
13,000 |
|
|
$0 |
|
$ |
(37,187) |
|
|
$ |
146,721 |
(4) |
|
$ |
84,675 |
(5) |
Philip
Gerskovich |
|
$
|
0 |
|
|
$0 |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Hugh K. Gagnier |
|
$
|
0 |
|
|
$0 |
|
$ |
(11,655) |
|
|
$ |
0 |
|
|
$ |
19,483 |
(6) |
Michael H.
Terzich |
|
$
|
0 |
|
|
$0 |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
John M. Dillon |
|
$ |
0 |
|
|
$0 |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
____________________
(1) |
|
All of Mr. Whitchurchs 2008 executive contributions
consisted of compensation earned in 2008 and reported in the 2008 Summary
Compensation Table above as Salary. All of Mr. Whitchurchs contributions
were deferred pursuant to the 2005 Deferral Plan. |
|
(2) |
|
Of Mr. Whitchurchs earnings, $(8,953) was earned on
amounts deferred pursuant to the 2002 Deferral Plan and $(28,234) was
earned on amounts deferred pursuant to the 2005 Deferral Plan. All of Mr.
Gagniers earnings were earned on amounts deferred pursuant to the 2002
Deferral Plan. The participants earnings on their deferred amounts were
not reported in the Companys 2008 Summary Compensation
Table. |
|
(3) |
|
Amounts reflected in these two columns together include
the following amounts that have been reported as compensation to the Named
Officer in the Companys Summary Compensation Tables in its annual Proxy
Statements for previous years: Mr. Whitchurch, $204,360; and Mr. Gagnier,
$16,250. |
|
(4) |
|
This amount was distributed from Mr. Whitchurchs
account under the 2002 Plan. |
|
(5) |
|
This amount is the balance in Mr. Whitchurchs account
under the 2005 Plan. |
|
(6) |
|
This amount is the balance in Mr. Gagniers account
under the 2002 Plan. |
POTENTIAL PAYMENTS UPON TERMINATION
OR CHANGE IN CONTROL
The
following paragraphs and tables describe the potential payments and benefits to
which the Named Officers would be entitled from the Company pursuant to their
individual employment agreements described above in Employment Agreements,
their equity award agreements and the Companys compensation and benefit plans
upon termination of employment, if such termination had occurred as of December
31, 2008, or upon a change in control of the Company, if such change in control
had occurred as of December 31, 2008.
The amounts
in the tables and descriptions below do not include payments and benefits to the
extent they are provided on a non-discriminatory basis to full-time salaried
employees generally upon termination of employment. Such payments and benefits
include accrued salary and vacation pay and distributions of plan balances under
the Companys 401(k) plan.
For purposes
of the following tables, and their footnotes, certain terms used with respect to
events of termination or changes in control, as discussed above under
Compensation Discussion and Analysis, Employment Agreements and Award
Agreements, have the meanings given to them in the Glossary.
-36-
Mr. Gustafsson - Potential Payments
upon Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
Termination by the Company |
|
|
|
|
|
|
Termination by the |
|
other than for Cause, or by |
|
|
Death, |
|
Company other than |
|
Employee for Good Reason, |
|
|
Disability |
|
for Cause, or by |
|
within 120 days before or one |
|
|
or |
|
Employee for Good |
|
year after a Change in |
Component |
|
Retirement |
|
Reason(1) |
|
Control(2) |
Cash severance(3) |
|
|
$ |
0 |
|
|
|
$ |
2,100,000 |
|
|
|
$ |
2,800,000 |
|
|
|
Cash award under 2008 Management Bonus
Plan(4) |
|
|
$ |
151,970 |
|
|
|
$ |
151,970 |
|
|
|
$ |
151,970 |
|
|
|
Accelerated Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
(TSR Stock) Granted 9/4/2007(5) |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
911,700 |
|
|
|
Other benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare
benefits(6) |
|
|
$ |
0 |
|
|
|
$ |
12,625 |
|
|
|
$ |
12,625 |
|
|
|
Excise tax gross-up(7) |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
1,597,892 |
|
|
|
TOTAL |
|
|
$ |
151,970 |
|
|
|
$ |
2,264,595 |
|
|
|
$ |
5,474,187 |
|
____________________
(1) |
|
Pursuant to the Gustafsson Employment Agreement further
described above in Employment Agreements, if Mr. Gustafsson is
terminated by the Company other than for cause (not including death or
disability) or if he terminates his employment for good reason, he will
receive (a) the continuation of his base salary for a period of two years
($1,400,000), (b) a pro rata portion of his annual cash incentive award
for the year in which his employment terminates ($151,970), payable at the
time the annual cash incentive awards are normally paid for the year in
which termination occurs, (c) a payment equal to one hundred percent of
his target annual cash incentive award ($700,000), payable at the time the
annual cash incentive awards are normally paid for the year in which
termination occurs, (d) accelerated vesting of the Initial Option and his
outstanding unvested annual equity awards ($0), (e) continued healthcare
coverage for two years, and (f) if applicable, an excise tax
gross-up. |
|
(2) |
|
Pursuant to the Gustafsson Employment Agreement further
described above in Employment Agreements, if Mr. Gustafsson is
terminated by the Company other than for cause (not including death or
disability) or if he terminates his employment for good reason, and such
termination of employment occurs within 120 days immediately preceding or
one year immediately following a change in control, then he will receive,
(a) within 60 days after the event, two times his base salary
($1,400,000), (b) within 60 days after the event, two times his target
annual cash incentive award ($1,400,000), (c) a pro rata portion of his
annual cash incentive award for the year in which his employment
terminates ($151,970), payable at the time the annual cash incentive
awards are normally paid for the year in which termination occurs, (d)
accelerated vesting of the Initial Option and his outstanding unvested
annual equity awards ($0), (e) accelerated vesting of 80% of the unvested
portion of the TSR Option ($0) and TSR Stock (see footnote 5 below), (f)
continued healthcare coverage for two years, and (g) if applicable, an
excise tax gross-up. |
|
(3) |
|
The amounts reflected in this row do not include amounts
reflected in the rows for Cash award under 2008 Management Bonus
Plan. |
|
(4) |
|
Represents the amount the Company is obligated to pay
Mr. Gustafsson under the 2008 Management Bonus Plan based on performance
goals attained during 2008, as further described above under Compensation
Discussion and Analysis. If his employment was terminated by reason of
his death, disability or retirement during 2008, the Company would have
paid a pro-rated portion of the amount otherwise due to him for 2008
(i.e., for purposes of this Table, 100% of the annual cash incentive
award, based on his employment for all of 2008), payable at the time the
annual cash incentive award for 2008 are normally paid. In the event his
employment was terminated prior to the end of the plan year for reasons
other than voluntary resignation, for cause, death, disability or
retirement, a pro-rated annual cash incentive award could have been paid
in the sole discretion of the Company. For purposes of this Table, it is
assumed no such discretionary amount would have been paid, except as
provided in his Employment Agreement. |
-37-
(5) |
|
Represents the value of 45,000 shares of the Companys
Common Stock based on the closing price of the Companys Common Stock
listed on The NASDAQ Stock Market on December 31, 2008 ($20.26 per share).
Pursuant to the award agreement for the April 24, 2008 grant of 56,250
shares of performance-based restricted stock, 80% of such shares will
vest. |
|
(6) |
|
Represents the cost of healthcare coverage for two years
for Mr. Gustafsson and his eligible dependants (medical: $11,429; dental:
$1,196). |
|
(7) |
|
Represents an amount to cover the gross up for excise
taxes imposed under the Internal Revenue Code on payments and benefits
received by Mr. Gustafsson, in order to preserve the after-tax value of
such payments and benefits to him. |
Mr. Smiley - Potential Payments upon
Termination or Change in Control
|
|
|
|
|
|
Termination by the Company |
|
|
|
|
Termination by the |
|
other than for Cause, or by |
|
|
Death, |
|
Company other than |
|
Employee for Good Reason, |
|
|
Disability |
|
for Cause, or by |
|
within 120 days before or one |
|
|
or |
|
Employee for Good |
|
year after a Change in |
Component |
|
Retirement |
|
Reason(1) |
|
Control(2) |
Cash severance(3) |
|
|
$ |
0 |
|
|
|
$ |
423,000 |
|
|
|
$ |
846,000 |
|
|
|
Cash award under 2008 Management Bonus
Plan(4) |
|
|
$ |
36,226 |
|
|
|
$ |
36,226 |
|
|
|
$ |
36,227 |
|
|
|
Accelerated Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Granted 5/1/2008(5) |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
121,560 |
|
|
|
Other benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare
benefits(6) |
|
|
$ |
0 |
|
|
|
$ |
11,018 |
|
|
|
$ |
11,018 |
|
Outplacement Services(7) |
|
|
$ |
0 |
|
|
|
$ |
32,000 |
|
|
|
$ |
32,000 |
|
|
|
Excise tax gross-up(8) |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
536,037 |
|
|
|
TOTAL |
|
|
$ |
36,226 |
|
|
|
$ |
502,244 |
|
|
|
$ |
1,582,842 |
|
____________________
(1) |
|
Pursuant to the Smiley Employment Agreement further
described above in Employment Agreements, if Mr. Smiley is terminated by
the Company other than for cause (not including death or disability) or if
he terminates his employment for good reason, he will receive (a) the
continuation of his base salary for a period of one year ($282,000), (b) a
pro rata portion of his annual cash incentive award for the year in which
his employment terminates ($36,227), payable at the time the annual cash
incentive awards are normally paid for the year in which termination
occurs, (c) a payment equal to one hundred percent of his target annual
cash incentive award ($141,000), payable at the time the annual cash
incentive awards are normally paid for the year in which termination
occurs, (d) professional outplacement services (up to $32,000), (e)
continued healthcare coverage for one year, and (f) if applicable, an
excise tax gross-up. |
|
(2) |
|
Pursuant to Mr. Smileys employment agreement further
described above in Employment Agreements, if Mr. Smiley is terminated by
the Company other than for cause (not including death or disability) or if
he terminates his employment for good reason, and such termination of
employment occurs within 120 days immediately preceding or one year
immediately following a change in control, then he will receive (a) within
60 days after the event, two times his base salary ($564,000), (b) within
60 days after the event, two times his target annual cash incentive award
($282,000), (c) a pro rata portion of his annual cash incentive award for
the year in which his employment terminates ($36,227), payable at the time
the annual cash incentive awards are normally paid for the year in which
termination occurs, (d) professional outplacement services (up to
$32,000), (e) continued healthcare coverage for one year, and (f) if
applicable, an excise tax gross-up. |
|
-38-
(3) |
|
The amounts reflected in this row do not include amounts
reflected in the rows for Cash award under 2008 Management Bonus Plan.
|
|
(4) |
|
Represents the amount the Company is obligated to pay
Mr. Smiley under the 2008 Management Bonus Plan based on performance goals
attained during 2008, as further described above under Compensation
Discussion and Analysis. If his employment was terminated by reason of
his death, disability or retirement during 2008, the Company would have
paid a pro-rated portion of the amount otherwise due to him for 2008
(i.e., for purposes of this Table, 100% of the annual cash incentive
award, based on his employment in 2008), payable at the time the annual
cash incentive awards for 2008 are normally paid. In the event his
employment was terminated prior to the end of the plan year for reasons
other than voluntary resignation, for cause, death, disability or
retirement, a pro-rated annual cash incentive award could have been paid
in the sole discretion of the Company. For purposes of this Table, it is
assumed no such discretionary amount would have been paid, except as
provided in his Employment Agreement. |
|
(5) |
|
Represents the value of 6,000 shares of the Companys
Common Stock based on the closing price of the Companys Common Stock
listed on The NASDAQ Stock Market on December 31, 2008 ($20.26 per share).
Pursuant to the award agreement for the April 24, 2008 grant of 7,500
shares of performance-based restricted stock, 80% of such shares will
vest. |
|
(6) |
|
Represents the cost of healthcare coverage for one year
for the Named Executive and his eligible dependants (medical: $10,001;
dental: $1,017). |
|
(7) |
|
Represents the maximum amount the Company is obligated
to pay for professional outplacement services under Mr. Smileys
employment agreement. |
|
(8) |
|
Represents an amount to cover the gross up for excise
taxes imposed under the Internal Revenue Code on payments and benefits
received by Mr. Smiley, in order to preserve the after-tax value of such
payments and benefits to him. |
Mr. Whitchurch - Potential Payments
upon Termination or Change in Control
Mr.
Whitchurch resigned as CFO effective May 1, 2008, and he continued as a
non-executive employee of the Company from that date until June 30, 2008.
Pursuant to his employment agreement further described above in Employment
Agreements, in connection with his termination, which was classified as a
termination by the Company other than for cause, Mr. Whitchurch received or will
receive (a) the continuation of his base salary for a period of one year from
June 30, 2008 ($297,000), (b) a pro rata portion of his annual cash incentive award for
2008 ($16,442), which was paid at the time the annual cash incentive awards were
paid for 2008, (c) a payment equal to one hundred percent of his target annual
cash incentive award ($148,500) for 2008, which was paid at the time the annual
cash incentive awards were paid for 2008, (d) continued healthcare coverage for
one year (medical: $5,664; dental: $613), and (e) professional outplacement
services ($25,000).
In addition,
Mr. Whitchurch had previously deferred payment of some compensation amounts plus
the credited gains and losses on such amounts based on the performance of his
investment elections under the 2002 Deferral Plan and the 2005 Deferral Plan.
Upon his termination, the Company paid Mr. Whitchurch the amounts deferred under
the 2002 Deferral Plan ($146,721) in a lump sum, and will pay Mr. Whitchurch the
amounts deferred under the 2005
Deferral Plan ($84,675) in three annual
installments.
-39-
Mr. Gerskovich - Potential
Payments upon Termination or Change in Control
|
|
|
|
|
|
Termination by the Company |
|
|
|
|
Termination by the |
|
other than for Cause, or by |
|
|
Death, |
|
Company other than |
|
Employee for Good Reason, |
|
|
Disability |
|
for Cause, or by |
|
within 120 days before or one |
|
|
or |
|
Employee
for Good |
|
year
after a Change in |
Component |
|
Retirement |
|
Reason(1) |
|
Control(2) |
Cash severance(3) |
|
|
$ |
0 |
|
|
|
$ |
567,000 |
|
|
|
$ |
1,134,000 |
|
|
|
Cash award under 2008 Management Bonus
Plan(4) |
|
|
$ |
40,233 |
|
|
|
$ |
40,233 |
|
|
|
$ |
40,233 |
|
|
|
Accelerated Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
Granted 4/24/2008(5) |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
147,331 |
|
|
|
Other benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare
benefits(6) |
|
|
$ |
0 |
|
|
|
$ |
7,028 |
|
|
|
$ |
7,028 |
|
Outplacement Services(7) |
|
|
$ |
0 |
|
|
|
$ |
32,000 |
|
|
|
$ |
32,000 |
|
|
|
TOTAL |
|
|
$ |
40,233 |
|
|
|
$ |
646,261 |
|
|
|
$ |
1,360,592 |
|
____________________
(1) |
|
Pursuant to Mr. Gerskovichs employment agreement
further described above in Employment Agreements, if Mr. Gerskovich is
terminated by the Company other than for cause (not including death or
disability) or if he terminates his employment for good reason, he will
receive (a) the continuation of his base salary for a period of one year
($378,000), (b) a pro rata portion of his annual cash incentive award for
the year in which his employment terminates ($40,233), payable at the time
the annual cash incentive awards are normally paid for the year in which
termination occurs, (c) a payment equal to one hundred percent of his
target annual cash incentive award ($189,000), payable at the time the
annual cash incentive awards are normally paid for the year in which
termination occurs, (d) professional outplacement services (up to
$32,000), (e) continued healthcare coverage for one year, and (f) if
applicable, an excise tax gross-up. |
|
(2) |
|
Pursuant to Mr. Gerskovichs employment agreement
further described above in Employment Agreements, if Mr. Gerskovich is
terminated by the Company other than for cause (not including death or
disability) or if he terminates his employment for good reason, and such
termination of employment occurs within 120 days immediately preceding or
one year immediately following a change in control, then he will receive
(a) within 60 days after the event, two times his base salary ($756,000),
(b) within 60 days after the event, two times his target annual cash
incentive award ($378,000), (c) a pro rata portion of his annual cash
incentive award for the year in which his employment terminates ($40,233),
payable at the time the annual cash incentive awards normally paid for the
year in which termination occurs, (d) professional outplacement services
(up to $32,000), (e) continued healthcare coverage for one year, and (f)
if applicable, an excise tax gross-up. |
|
(3) |
|
The amounts reflected in this row do not include amounts
reflected in the rows for Cash award under 2008 Management Bonus
Plan. |
|
(4) |
|
Represents the amount the Company is obligated to pay
Mr. Gerskovich under the 2008 Management Bonus Plan based on performance
goals attained during 2008, as further described above under Compensation
Discussion and Analysis. If his employment was terminated by reason of
his death, disability or retirement during 2008, the Company would have
paid a pro-rated portion of the amount otherwise due to him for 2008
(i.e., for purposes of this Table, 100% of the annual cash incentive
award, based on his employment for all of 2008), payable at the time the
annual cash incentive awards for 2008 are normally paid. In the event his
employment was terminated prior to the end of the plan year for reasons
other than voluntary resignation, for cause, death, disability or
retirement, a pro-rated annual cash incentive award could have been paid
in the sole discretion of the Company. For purposes of this Table, it is
assumed no such discretionary amount would have been paid, except as
provided in his Employment Agreement. |
|
(5) |
|
Represents the value of 7,272 shares of the Companys
Common Stock based on the closing price of the Companys Common Stock
listed on The NASDAQ Stock Market on December 31, 2008 ($20.26 per share).
Pursuant to the award agreement for the April 24, 2008 grant of 9,090
shares of performance-based restricted stock, 80% of such shares will
vest. |
-40-
(6) |
|
Represents the cost of healthcare coverage for one year
for the Named Executive and his eligible dependants (medical: $6,430;
dental: $598). |
|
(7) |
|
Represents the maximum amount the Company is obligated
to pay for professional outplacement services under Mr. Gerskovichs
employment agreement. |
Mr. Gagnier - Potential Payments
upon Termination or Change in Control
|
|
|
|
|
|
Termination by the Company |
|
|
|
|
Termination by the |
|
other than for Cause, or by |
|
|
Death, |
|
Company other than |
|
Employee for Good Reason, |
|
|
Disability |
|
for Cause, or by |
|
within 120 days before or one |
|
|
or |
|
Employee for Good |
|
year after a Change in |
Component |
|
Retirement |
|
Reason(1) |
|
Control(2) |
Cash severance(3) |
|
|
$ |
0 |
|
|
|
$ |
490,100 |
|
|
|
$ |
980,200 |
|
|
|
Cash award under 2008 Management Bonus
Plan(4) |
|
|
$ |
35,111 |
|
|
|
$ |
35,111 |
|
|
|
$ |
35,111 |
|
|
|
Accelerated deferred compensation(5) |
|
|
$ |
19,484 |
|
|
|
$ |
19,484 |
|
|
|
$ |
19,484 |
|
|
|
Accelerated Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
Granted 4/24/2008(6) |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
147,331 |
|
|
|
Other benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare
benefits(7) |
|
|
$ |
0 |
|
|
|
$ |
11,018 |
|
|
|
$ |
11,018 |
|
Outplacement Services(8) |
|
|
$ |
0 |
|
|
|
$ |
32,000 |
|
|
|
$ |
32,000 |
|
|
|
TOTAL |
|
|
$ |
54,595 |
|
|
|
$ |
587,713 |
|
|
|
$ |
1,225,144 |
|
____________________
(1) |
|
Pursuant to Mr. Gagniers employment agreement further
described above in Employment Agreements, if Mr. Gagnier is terminated
by the Company other than for cause (not including death or disability) or
if he terminates his employment for good reason, he will receive (a) the
continuation of his base salary for a period of one year ($338,000), (b) a
pro rata portion of his annual cash incentive award for the year in which
his employment terminates ($35,111), payable at the time the annual cash
incentive awards are normally paid for the year in which termination
occurs, (c) a payment equal to one hundred percent of his target annual
cash incentive award ($152,100), payable at the time the annual cash
incentive awards are normally paid for the year in which termination
occurs, (d) professional outplacement services (up to $32,000), (e)
continued healthcare coverage for one year, and (f) if applicable, an
excise tax gross-up. |
|
(2) |
|
Pursuant to Mr. Gagniers employment agreement further
described above in Employment Agreements, if Mr. Gagnier is terminated
by the Company other than for cause (not including death or disability) or
if he terminates his employment for good reason, and such termination of
employment occurs within 120 days immediately preceding or one year
immediately following a change in control, then he will receive (a) within
60 days after the event, two times his base salary ($676,000), (b) within
60 days after the event, two times his target annual cash incentive award
($304,200), (c) a pro rata portion of his annual cash incentive award for
the year in which his employment terminates ($35,111), payable at the time
the annual cash incentive awards are normally paid for the year in which
termination occurs, (d) professional outplacement services (up to
$32,000), (e) continued healthcare coverage for one year, and (f) if
applicable, an excise tax gross-up. |
|
(3) |
|
The amounts reflected in this row do not include amounts
reflected in the rows for Cash award under 2008 Management Bonus Plan or
Accelerated deferred compensation. |
-41-
(4) |
|
Represents the amount the Company is obligated to pay Mr. Gagnier
under the 2008 Management Bonus Plan based on performance goals attained
during 2008, as further described above under Compensation Discussion and
Analysis. If his employment was terminated by reason of his death,
disability or retirement during 2008, the Company would have paid a
pro-rated portion of the amount otherwise due to him for 2008 (i.e., for
purposes of this Table, 100% of the annual cash incentive award, based on
his employment for all of 2008), payable at the time the annual cash
incentive awards for 2008 are normally paid. In the event his employment
was terminated prior to the end of the plan year for reasons other than
voluntary resignation, for cause, death, disability or retirement, a
pro-rated annual cash incentive award could have been paid in the sole
discretion of the Company. For purposes of this Table, it is assumed no
such discretionary amount would have been paid, except as provided in his
Employment Agreement. |
|
|
|
(5) |
|
Represents the amount of deferred compensation under the
2002 Deferral Plan that would become immediately payable. As described
above in Non-Qualified Deferred Compensation, such amounts are
compensation previously earned by Mr. Gagnier of which he chose to defer
payment plus the credited gains and losses on such amounts based on the
performance of his investment elections under the 2002 Deferral Plan.
Under the 2002 Deferral Plan, (a) if Mr. Gagnier dies, his deferred
compensation under the 2002 Deferral Plan (i.e., contributions and
earnings of $19,484) is immediately payable in a lump sum, and (b) if Mr.
Gagnier becomes totally and permanently disabled or if his employment
terminates for any reason other than death or such disability, his
deferred compensation under the 2002 Deferral Plan (i.e., contributions
and earnings of $19,484) is immediately payable in a lump sum, or if it
was requested at the time of deferral, in annual
installments. |
|
(6) |
|
Represents the value of 7,272 shares of the Companys
Common Stock based on the closing price of the Companys Common Stock
listed on The NASDAQ Stock Market on December 31, 2008 ($20.26 per share).
Pursuant to the award agreement for the April 24, 2008 grant of 9,090
shares of performance-based restricted stock, 80% of such shares will
vest. |
|
(7) |
|
Represents the cost of healthcare coverage for one year
for the Named Executive and his eligible dependants (medical: $10,001;
dental: $1,017). |
|
(8) |
|
Represents the maximum amount the Company is obligated
to pay for professional outplacement services under Mr. Gagniers
employment agreement. |
Mr. Terzich - Potential Payments
upon Termination or Change in Control
|
|
|
|
|
|
Termination by the Company |
|
|
|
|
Termination by the |
|
other than for Cause, or by |
|
|
Death, |
|
Company other than |
|
Employee for Good Reason, |
|
|
Disability |
|
for
Cause, or by |
|
within
120 days before or one |
|
|
or |
|
Employee
for Good |
|
year after a Change in |
Component |
|
Retirement |
|
Reason(1) |
|
Control(2) |
Cash severance(3) |
|
|
$ |
0 |
|
|
|
$ |
449,500 |
|
|
|
$ |
899,000 |
|
|
|
Cash award under 2008 Management Bonus
Plan(4) |
|
|
$ |
31,975 |
|
|
|
$ |
31,975 |
|
|
|
$ |
31,975 |
|
|
|
Accelerated Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
Granted 4/24/2008(5) |
|
|
$ |
0 |
|
|
|
$ |
0 |
|
|
|
$ |
147,331 |
|
|
|
Other benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare
benefits(6) |
|
|
$ |
0 |
|
|
|
$ |
12,144 |
|
|
|
$ |
12,144 |
|
Outplacement Services(7) |
|
|
$ |
0 |
|
|
|
$ |
32,000 |
|
|
|
$ |
32,000 |
|
|
|
TOTAL |
|
|
$ |
31,975 |
|
|
|
$ |
525,619 |
|
|
|
$ |
1,122,450 |
|
____________________
(1) |
|
Pursuant to Mr. Terzichs employment agreement further
described above in Employment Agreements, if Mr. Terzich is terminated
by the Company other than for cause (not including death or disability) or
if he terminates his employment for good reason, he will receive (a) the
continuation of his base salary for a period of one year ($310,000), (b) a
pro rata portion of his annual cash incentive award for the year in which
his employment terminates ($31,975), payable at the time the annual cash
incentive awards are normally paid for the year in which termination
occurs, (c) a payment equal to one hundred percent of his target annual
cash incentive award ($139,500), payable at the time the annual cash
incentive awards are normally paid for the year in which termination
occurs, (d) professional outplacement services (up to $32,000), (e)
continued healthcare coverage for one year, and (f) if applicable, an
excise tax gross-up. |
-42-
(2) |
|
Pursuant to Mr. Terzichs employment agreement further
described above in Employment Agreements, if Mr. Terzich is terminated
by the Company other than for cause (not including death or disability) or
if he terminates his employment for good reason, and such termination of
employment occurs within 120 days immediately preceding or one year
immediately following a change in control, then he will receive (a) within
60 days after the event, two times his base salary ($620,000), (b) within
60 days after the event, two times his target annual cash incentive award
($279,000), (c) a pro rata portion of his annual cash incentive award for
the year in which his employment terminates ($31,975), payable at the time
the annual cash incentive awards are normally paid for the year in which
termination occurs, (d) professional outplacement services (up to
$32,000), (e) continued healthcare coverage for one year, and (f) if
applicable, an excise tax gross-up. |
|
(3) |
|
The amounts reflected in this row do not include amounts
reflected in the row for Cash award under 2008 Management Bonus Plan.
|
|
(4) |
|
Represents the amount the Company is obligated to pay
Mr. Terzich under the 2008 Management Bonus Plan based on performance
goals attained during 2008, as further described above under Compensation
Discussion and Analysis. If his employment was terminated by reason of
his death, disability or retirement during 2008, the Company would have
paid a pro-rated portion of the amount otherwise due to him for 2008
(i.e., for purposes of this Table, 100% of the annual cash incentive
award, based on his employment for all of 2008), payable at the time the
annual cash incentive awards for 2008 are normally paid. In the event his
employment was terminated prior to the end of the plan year for reasons
other than voluntary resignation, for cause, death, disability or
retirement, a pro-rated annual cash incentive award could have been paid
in the sole discretion of the Company. For purposes of this Table, it is
assumed no such discretionary amount would have been paid, except as
provided in his Employment Agreement. |
|
(5) |
|
Represents the value of 7,272 shares of the Companys
Common Stock based on the closing price of the Companys Common Stock
listed on The NASDAQ Stock Market on December 31, 2008 ($20.26 per share).
Pursuant to the award agreement for the April 24, 2008 grant of 9,090
shares of performance-based restricted stock, 80% of such shares will
vest. |
|
(6) |
|
Represents the cost of healthcare coverage for one year
for the Named Executive and his eligible dependants (medical: $11,127;
dental: $1,017). |
|
(7) |
|
Represents the maximum amount the Company is obligated
to pay for professional outplacement services under Mr. Terzichs
employment agreement. |
Mr. Dillon - Potential Payments upon
Termination or Change in Control
Mr. Dillons
employment by the Company terminated effective August 22, 2008. In connection
with his termination, he and the Company entered into the Dillon Release
Agreement further described above under Employment Agreements. Pursuant to the
Dillon Release Agreement, Mr. Dillon received or will receive (a) the
continuation of his base salary for a period of one year from the date of his
termination ($325,000), (b) a lump sump payment under the Navis Holdings, LLC
Transition Bonus Plan, as further described above under Compensation Discussion
and Analysis ($300,000), paid on August 22, 2008, and (c) continued healthcare
coverage through December 31, 2008 ($8,479). In addition, upon Mr. Dillons
termination (x) 14,006 shares of restricted stock granted to him on December 14,
2007, vested ($449,312, based on the $32.08 per share closing price of the
Companys Common Stock listed on The NASDAQ Stock Market on August 22, 2008),
and (y) his stock option granted December 14, 2007, to purchase shares of the
Companys Common Stock at an exercise price of $16.49 per share vested with
respect to 4,323 of the underlying unvested 8,645 shares ($67,396, based on the $32.08
per share closing price of the Companys Common Stock listed on The NASDAQ Stock
Market on August 22, 2008).
-43-
EQUITY COMPENSATION PLAN
INFORMATION
The
following table provides information related to the Companys equity
compensation plans as of December 31, 2008.
Equity Compensation Plan
Information
|
|
|
|
Number of |
|
|
|
|
|
|
Securities to |
|
|
|
|
|
|
be
Issued |
|
|
|
Number of Securities |
|
|
Upon Exercise |
|
Weighted-Average |
|
Remaining Available for |
|
|
of
Outstanding |
|
Exercise Price of |
|
Future Issuance Under |
|
|
Options, |
|
Outstanding Options, |
|
Equity Compensation Plans |
|
|
Warrants and |
|
Warrants |
|
(Excluding Securities |
Plan Category |
|
Rights |
|
and Rights |
|
Reflected in Column
(a)) |
|
|
(a) |
|
(b) |
|
(c) |
Equity Compensation Plans Approved by |
|
|
|
|
|
|
|
|
|
|
|
|
|
Security Holders |
|
3,004,110 |
(1) |
|
|
$ |
36.87 |
|
|
|
4,395,720 |
(2) |
|
Equity Compensation Plans Not Approved
by |
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
Holders |
|
134,274 |
(3) |
|
|
$ |
12.88 |
|
|
|
0 |
|
|
|
|
Total |
|
3,138,384 |
|
|
|
$ |
35.84 |
|
|
|
4,395,720 |
|
|
____________________
(1) |
|
Consists of shares of the Companys Common Stock
issuable pursuant to outstanding options under the Companys 1997 Stock
Option Plan, 2006 Zebra Technologies Corporation Incentive Compensation
Plan and 2002 Non-Employee Director Stock Option Plan. |
|
(2) |
|
Consists of the total number of authorized, but
unissued, shares of the Companys Common Stock that are available for
issuance under the Companys 2006 Zebra Technologies Corporation Incentive
Compensation Plan (4,002,771 shares) and 2001 Stock Purchase Plan (392,949
shares). |
|
(3) |
|
Consists of shares of the Companys Common Stock
issuable pursuant to outstanding options under The WhereNet Corp. 1997
Stock Option Plan (as amended, the WhereNet Plan) and Amended and
Restated Navis Holdings, LLC 2000 Option Plan (the Navis Plan). Shares
available under the WhereNet Plan consist of 46,997 shares, with an
average weighted exercise price of $2.74, that may be issued upon the
exercise of stock options that were granted upon the conversion of awards
previously granted under the WhereNet Plan with respect to securities of
WhereNet Corp.; the awards were converted in connection with the Companys
acquisition by merger of WhereNet Corp. Shares available under the Navis
Plan consist of 87,277 shares, with an average weighted exercise price of
$18.34, that may be issued upon the exercise of stock options that were
granted upon the conversion of awards previously granted under the Navis
Plan with respect to securities of Navis Holdings, LLC; the awards were
converted in connection with the Companys acquisition by merger of Navis
Holdings, LLC. |
-44-
COMPENSATION COMMITTEE
INTERLOCKS
AND INSIDER PARTICIPATION
Only
independent directors served on the Compensation Committee during 2008. Dr.
Potter is the Chair of the Compensation Committee, and Messrs. Keyser and Smith
are members. Mr. Knowles was a member of the Compensation Committee until his
retirement at the 2008 Annual Meeting. None of them has ever been an officer or
other employee of the Company.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The Company
had historically invested in partnerships managed by Mesirow Advanced
Strategies, Inc. (MAS), the hedge fund of funds division of Mesirow Financial
Holdings, Inc. Martin B. Kaplan, the chief executive officer of MAS, is the son
of Edward L. Kaplan, the Companys co-founder and retired director, Chairman and
Chief Executive Officer. Martin B. Kaplan receives no direct compensation based
on the Companys investment through MAS. The investment arrangement was ratified
by the Companys Board of Directors in February 2007 pursuant to the Companys
policies and procedures regarding Related Party Transactions described below
under Related Party Transactions Policies and Procedures.
As of
January 1, 2008, the balance of the MAS-managed investments was approximately
$10.9 million. The Company divested all MAS-managed investments by May
2008.
Related Party Transactions Policies and
Procedures
The Company
has adopted written policies and procedures to identify, review and approve (or
deny approval of) Related Party Transactions. A Related Party Transaction is
a transaction, arrangement or relationship or any series of similar
transactions, arrangements or relationships (including any indebtedness or
guarantee of indebtedness) (i) in which the Company (including any of its
subsidiaries) was, is or will be a participant, (ii) in which any Related
Person had, has or will have a direct or indirect interest, and (iii) that
meets applicable de minimis thresholds. Related Party Transactions do not
include the following:
|
1. |
|
most transactions
involving approved compensation of executive officers of the Company;
|
|
|
|
2. |
|
transactions involving
compensation of directors for service on the Board of Directors or
committees thereof; |
|
|
|
3. |
|
transactions available
to all employees of the Company generally or to all salaried employees of
the Company generally; or |
|
|
|
4. |
|
transactions in which
the interest of the Related Person arises solely from the ownership of a
class of the Companys equity securities and all holders of that class
receive the same benefit on a pro rata basis. |
For purposes of Related Party
Transactions, a Related Person includes:
|
1. |
|
any director or
executive officer of the Company or nominee to become a director of the
Company; |
|
|
|
2. |
|
any person known to be
the beneficial owner of more than 5% of any class of the Companys voting
securities; |
|
|
|
3. |
|
any immediate family
member of any of the foregoing persons, which means any child, stepchild,
parent, stepparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the
director, executive officer, nominee or more than 5% beneficial owner, and
any person (other than a tenant or employee) sharing the household of such
foregoing person; and |
|
|
|
4. |
|
any firm, corporation
or entity in which any of the foregoing persons is a general partner or
principal or in a similar position, or in which such person, together with
all other Related Persons, have in the aggregate a 10% or greater
beneficial ownership interest. |
-45-
Related Party Transactions in the
following categories are treated as pre-approved:
|
1. |
|
any transaction with
another company in which a Related Persons only relationship is as an
employee (other than as an executive officer), director or beneficial
owner of less than 5% of that companys shares (i) if the aggregate amount
involved does not exceed the greater of $1,000,000, or 2 percent of that
companys total annual revenues; (ii) the Related Person has no direct or
indirect involvement in the Related Party Transaction; and (iii) the
Related Person is not compensated for the transaction with the Company or
its subsidiary; and |
|
|
|
2. |
|
Any charitable
contribution, grant or endowment by the Company to a charitable
organization, foundation or university at which a Related Persons only
relationship is as an employee (other than as an executive officer) or a
director, if the aggregate amount involved does not exceed the lesser of
$100,000, or 2 percent of the charitable organizations total annual
receipts. |
The
Companys General Counsel and the Audit Committee (the Committee) administer
the Companys policies and procedures regarding Related Party Transactions. The
Companys General Counsel assesses whether proposed transactions are Related
Party Transactions. If the General Counsel determines that a proposed
transaction is a Related Party Transaction, then the appropriate party or
parties further described below review the proposed transaction and either
approve it or deny approval of it. In reviewing the proposed Related Party
Transaction and making such determination, all of the relevant facts and
circumstances available shall be considered, including (if applicable) but not
limited to: the benefits to the Company; the impact on a directors independence
(if the Related Person is a director, an immediate family member of a director
or an entity in which a director is a partner, shareholder or executive
officer); the availability of other sources for comparable products or services;
the Related Persons interest in the transaction; the terms of the transaction;
and the terms available to unrelated third parties or to employees
generally.
Depending on
the dollar amount involved in a proposed Related Party Transaction, the review
and determination of whether to approve or deny approval of the proposed Related
Party Transaction is made by different parties.
If a
proposed Related Party Transaction involves less than $100,000, the General
Counsel and the Chairman of the Committee (the Chair) and such other executive
officers that either of them may deem appropriate, or the full Committee at the
option of the Chair, shall determine whether to approve or deny approval of the
proposed Related Party Transaction.
If a
proposed Related Party Transaction involves $100,000 or more, the proposed
Related Party Transaction is submitted to the Committee for consideration at the
next Committee meeting or, to the Chair in those instances in which the General
Counsel, in consultation with the Chief Executive Officer or the Chief Financial
Officer, determines that it is not practicable or desirable for the Company to
wait until the next Committee meeting.
If the
General Counsel becomes aware of a Related Party Transaction that was not
previously approved or previously ratified under the Companys policies and
procedures, the Related Party Transaction shall be submitted to the Committee or
the Chair. If the Related Party Transaction is still ongoing, the Committee or
Chair must evaluate all options, including ratification, amendment or
termination of the Related Party Transaction. If the Related Party transaction
is completed, the Committee or Chair shall evaluate the Related Party
Transaction to determine if rescission of the Related Party Transaction and/or
any disciplinary action is appropriate, and shall request the Chief Compliance
Officer to evaluate the Companys controls and procedures to ascertain the
reason that the Related Party Transaction was not submitted for prior approval.
-46-
REPORT OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
The Audit
Committee of Zebras Board of Directors is comprised of three directors, all of
whom are independent under applicable listing requirements of The NASDAQ Stock
Market. The Audit Committee operates under a written charter adopted by the
Board of Directors. The members of the Audit Committee are: Mr. Smith, Chair,
and Messrs. Ludwick and Manire.
The Audit
Committee received reports from and met and held discussions with management,
the internal auditors and the independent accountants. It reviewed and discussed
Zebras audited financial statements with management, and management has
represented to the Audit Committee that the Companys financial statements were
prepared in accordance with accounting principles generally accepted in the
United States and that such financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein. The
Committee also discussed with the independent accountants the matters required
to be discussed by Statement on Auditing Standards No. 114. The Audit Committee
received the written disclosures and letter from the independent accountants
required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountants communications with the Audit
Committee concerning independence, and discussed with the independent
accountants the independent accountants independence.
The Audit
Committee recommended that the Board of Directors include the audited financial
statements of the Company in Zebras Annual Report on Form 10-K for the year
ended December 31, 2008, as filed with the SEC. This recommendation was based on
the Audit Committees discussion with management, internal auditors and Zebras
independent accountants, as well as the Committees reliance on managements
representation described above.
|
Audit
Committee |
|
Michael Smith,
Chair |
|
Andrew
Ludwick |
|
Ross
Manire |
Fees of Independent
Auditors
Ernst &
Young LLP acted as the principal auditor for the Company during 2007 and 2008.
The firm also provided certain audit-related, tax and permitted non-audit
services. The Audit Committees policy is to approve or pre-approve all audit,
audit-related, tax and permitted non-audit services performed for the Company by
its independent auditors in accordance with Section 10A(i) of the Securities
Exchange Act of 1934, as amended, and the Securities and Exchange Commissions
rules adopted thereunder. In 2007 and 2008, the Audit Committee approved in
advance all engagements by Ernst & Young LLP on a specific
project-by-project basis, including audit, audit-related, tax and permitted
non-audit services. No services were rendered by Ernst & Young LLP to the
Company in 2007 or 2008 pursuant to Rule 2-01(c)(7)(i)(C) of Regulation
S-X.
The Company
paid Ernst & Young LLP the following fees for services provided for the
years ended December 31, 2008 and 2007:
Fees |
|
2008(4)
|
|
2007(4)
|
Audit Fees (1) |
|
$ |
1,149,500 |
|
$ |
940,000 |
Audit-Related
Fees (2) |
|
|
237,820
|
|
|
64,500
|
Tax Fees (3)
|
|
|
1,328,030 |
|
|
445,900 |
All Other
Fees |
|
|
|
|
|
|
|
|
$ |
2,715,350 |
|
$ |
1,450,400
|
-47-
____________________
(1) |
|
Consists
of fees for the audit of the Companys annual financial statements and
reviews of the financial statements included in the quarterly reports on
Form 10-Q. Also includes fees for the 2007 and 2008 audits of internal
controls over financial reporting as required by Section 404 of
Sarbanes-Oxley. |
|
(2) |
|
For 2007
and 2008, fees for the audit of the Companys employee benefit plan, for
due diligence in connection with acquisition activities, and for fees
associated with the balance sheet audit of Multispectral Solutions, Inc.,
which the Company acquired in 2008. |
|
(3) |
|
For tax
advice and tax planning, including internal corporate structure advice,
transfer pricing studies and miscellaneous consulting
charges. |
|
(4) |
|
Fees and
out-of-pocket expense reimbursement paid to Ernst & Young LLP for
services provided for the years ended December 31, 2008, and December 31,
2007, respectively. |
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit
Committee appointed Ernst & Young LLP, independent certified public
accountants, as auditors of the Companys financial statements for the year
ending December 31, 2009.
The Board
desires to give stockholders the opportunity to express their opinions on the
matter of auditors for the Company, and, accordingly, is submitting to the
stockholders at the Annual Meeting a proposal to ratify the Audit Committees
appointment of Ernst & Young LLP. If this proposal does not receive the
affirmative vote of a majority of the votes cast affirmatively or negatively at
the Annual Meeting, in person or by proxy, the Board of Directors will interpret
this as an instruction to seek other auditors.
The Company
expects that representatives of Ernst & Young LLP will be present at the
Annual Meeting and available to respond to questions. These representatives will
be given an opportunity to make a statement if they would like to do
so.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2009.
-48-
OTHER MATTERS
Solicitation The cost of this proxy solicitation will be borne by the Company. In
addition to the solicitation of proxies by mail, the directors, officers and
employees of the Company may also solicit proxies by telephone, facsimile,
e-mail or other forms of communication, without special compensation for such
activities. The Company will also request banks, brokers, fiduciaries,
custodians, nominees and certain other record holders to send proxies, Proxy
Statements and other materials to their principals at the Companys expense. The
Company will reimburse such banks, brokers, fiduciaries, custodians, nominees
and other record holders for their reasonable out-of-pocket expenses of
solicitation. The Company does not anticipate that costs and expenses incurred
in connection with this proxy solicitation will exceed those normally expended
for a proxy solicitation for an election of directors in the absence of a
contest.
Proposals of
Stockholders Under SEC Rule 14a-8,
stockholder proposals for the annual meeting of stockholders to be held in 2010
will not be included in the Proxy Statement for that meeting unless the proposal
is proper for inclusion in the Proxy Statement and for consideration at the next
annual meeting of stockholders, and is received by the Secretary of the Company
at the Companys principal executive offices, which are located at 475 Half Day
Road, Suite 500, Lincolnshire, Illinois 60069, no later than December 22, 2009,
which is 120 days before the anniversary date of the release of this Proxy
Statement to stockholders. Stockholders must also follow the other procedures
prescribed in SEC Rule 14a-8 under the Exchange Act, as well as the Companys
By-Laws, which contain requirements that are separate and apart from the SEC
requirements of Rule 14a-8. The Companys By-Laws provide that stockholders
desiring to bring business before the 2010 Annual Meeting, including nomination
of a person for election to the Companys Board of Directors, must provide
written notice to the Companys Secretary at the Companys executive offices and
such notice must be received not less than sixty nor more than ninety days prior
to the one-year anniversary of the date on which the Company first mailed its
proxy materials for the 2009 Annual Meeting. The written notice must include the
information required by Section 2.4 of the By-Laws.
Other Business The Board of Directors is not aware of any matters to be
presented at the Annual Meeting other than those enumerated in the Companys
Notice of Annual Meeting of Stockholders enclosed herewith. If any other matters
are properly brought before the meeting, however, it is intended that the
persons named in the proxy will vote as directed by the Board of Directors.
Annual Report to
Stockholders The Companys Annual Report to
Stockholders for the year ended December 31, 2008, containing financial and
other information pertaining to the Company, is being furnished to stockholders
simultaneously with this Proxy Statement.
Annual Report on Form
10-K The Company will furnish without
charge to any stockholder as of the record date a copy of the Companys Annual
Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC.
Requests for such materials should be made in writing and directed to Zebra
Technologies Corporation, 475 Half Day Road, Suite 500, Lincolnshire, Illinois
60069, Attention: Michael C. Smiley.
|
By Order of the
Board of Directors |
|
|
|
Noel
Elfant |
|
Secretary |
-49-
APPENDIX A
GLOSSARY OF TERMS
Under the 2008 Management Bonus
Plan.
Company Consolidated Income From
Operations1 means Income from Operations as
reported in the Companys management reports, adjusted to remove the impact of
changes in foreign exchange rates. In the event of acquisitions, generally the
acquired company budget and actual financial performance is applied to the 2008
Management Bonus Plan financial objectives as of the first of the quarter
following 6 months after the acquisition closing.
SPG Consolidated Direct Operating
Profit1 means Direct Operating Profit as
reported in the Companys management reports for the Consolidated Specialty
Printer Group (SPG), adjusted to remove the impact of changes in foreign
exchange rates.
ZES Revenue means Zebra Enterprise Solutions (ZES) total GAAP revenue for
2008.
ZES EBITDA means ZES Operating Profit (GAAP) as reported in the Companys
management reports, adjusted to remove the impact of euromax bonus payments and
labor expenses charged to the marine terminal systems reserve, plus interest,
taxes, depreciation, amortization, and 123(R) compensation expense.
ZES Total Bookings means total ZES bookings during 2008 after any allocations
for GAAP vendor specific objective evidence calculations.
1 |
|
Specifically excludes such expense items as (i) amortization of
intangibles; (ii) FAS123(R) compensation expense; (iii) one-time charges,
non-operating charges or expenses incurred that are not under the control
of operations management, as ratified by the Compensation Committee; (iv)
Board of Directors project activities (e.g., CEO search, director
searches); or (v) gains or losses on the sale of assets. The foregoing
list is not exhaustive and is meant to represent examples of the kind of
expenses typically excluded from the calculations of Consolidated Income
from Operations and Direct Operating
Profit. |
Under the 2009 Zebra Incentive
Plan.
Income from Operations1 means income from operations for the applicable period,
adjusted to remove non-recurring charges, of the Company (on a consolidated
basis) or SPG, as applicable. In the event of acquisitions, generally for the
first quarter beginning at least six months after an acquisition closes, the
financial targets will be adjusted to incorporate the acquired companys budget
or financial plan, and the reported financial performance will also be adjusted
to include the acquired companys actual performance the first quarter beginning
at least six months after an acquisition closes.
Return on Invested Capital means Net
Operating Profit After Tax for 2009, divided by Invested Capital, where:
|
|
Net Operating Profit
After Tax means Income From Operations x
(1-budget tax rate); and |
|
|
|
|
|
Invested
Capital means total assets less cash and cash
equivalents, current and long-term investments and marketable securities,
and non-interest-bearing current liabilities, and which is calculated as
the average Invested Capital reflected on the five balance sheets for the
end of the following quarters: Q4 2008, Q1 2009, Q2 2009, Q3 2009 and Q4
2009. |
|
|
|
1 |
|
Non-recurring charges specifically include such expense items as
(i) one-time charges, non-operating charges or expenses incurred that are
not under the control of operations management, as ratified by the
Compensation Committee; (ii) restructuring expenses; (iii) exit expenses;
(iv) integration expenses; (v) Board of Directors project activities
(e.g., CEO search, director searches); or (vi) gains or losses on the sale
of assets; (vii) acquired in-process technology; or (viii) impairment
charges. The foregoing list is not exhaustive and is meant to represent
examples of the kind of expenses typically excluded from the calculations
of Income from Operations. |
A-1
Under the Form Employment
Agreement.
As determined
by the Board in its sole discretion, the Named Officer shall be deemed
terminated for Cause if the Board terminates the Named Officer after the Named
Officer:
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shall have committed, been
indicted of, or been convicted of, or admitted, plea bargained, entered a
plea of no contest or nolo contendere to, any felony of any kind or a
misdemeanor, or violated any laws, involving fraud, dishonesty or an act
of moral turpitude; |
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shall have materially breached
the Form Employment Agreement or any other agreement to which the Named
Officer and the Company are parties; |
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shall have materially violated
any written Company policy, regardless of whether within or outside the
scope of his authority; |
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shall have committed willful or
intentional misconduct, gross negligence, or dishonest, fraudulent or
unethical behavior, or other conduct involving serious moral turpitude in
the performance of his duties hereunder; |
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shall have failed or refused to
materially comply (to the best of his ability) with a specific direction
of the Company, unless the Named Officer reasonably and in good faith
believes such specific direction to be unlawful (in which case the
Companys termination of the Named Officers employment shall not be for
Cause under this provision); or |
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engages in any conduct which
breaches his fiduciary duty to the Company, which materially injures the
integrity, character or reputation of the Company or which impugns Named
Officer's own integrity, character or reputation so as to cause Named
Officer to be unfit to act in the capacity of an executive officer of the
Company. |
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A termination of
employment by the Company for Cause under subparagraphs (2), (3), (4), (5)
or (6) shall be effectuated by the Board giving the Named Officer written
notice of the termination within 30 days of the event constituting Cause,
or such longer period as the parties may agree, setting forth in
reasonable detail the specific conduct of the Named Officer that
constitutes Cause, the specific provisions of the Form Employment
Agreement on which the Company relies and, to the extent such Cause is
susceptible to cure, providing the Named Officer with a 30 day cure
period. If such Cause is susceptible to cure and the Named Officer fails
to remedy the condition within such 30 day cure period, the Company may
terminate the Named Officers employment within 30 days after the
expiration of the cure period, and if the Company fails to so terminate
the Named Officers employment, any subsequent termination based upon the
same underlying facts shall not constitute a termination for
Cause. |
Change in Control has the meaning given to it under the 2006 Zebra
Technologies Corporation Incentive Compensation Plan; provided, however, a Change in
Control under the Form Employment Agreement is not intended to be broader than
the definition of a Change in Control event as defined by reference to the
regulations under Section 409A of the Internal Revenue Code, and the severance
payments payable under the Form Employment Agreement in the event of a Change in
Control shall not be payable unless the applicable Change in Control constitutes
a Change in Control event in accordance with Section 409A of the Internal
Revenue Code and the regulations and guidance promulgated thereunder.
Disability means the Named Officer, as a result of illness or incapacity, shall be
unable to perform substantially his required duties for a period of 180
consecutive days; provided,
however, that if the Named Officer, after
being unable to perform substantially his required duties for a period of less
than 180 consecutive days as a result of illness or incapacity returns to active
duty for less than 30 days, the period of such active duty will be disregarded
in determining whether the 180 consecutive day threshold has been accumulated
(although it will not be accumulated as part of the 180 day period).
Good Reason means the occurrence of any one of the following:
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demotion of the Named Officer by
the Company to a non-executive officer position (including a material
diminution in the status of the Named Officers responsibilities,
authorities, powers or duties taken as a whole) or assignment to the Named
Officer of any duties materially inconsistent with his position, status or
responsibilities under this Agreement; |
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material breach of any provision
of the Form Employment Agreement by the Company; or |
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decrease in the Named Officers
base salary as in effect on the date of the Named Officers Form
Employment Agreement in an amount equal to or greater than 10% (unless
such decrease is applied on a proportionally equal basis to all executive
officers of the Company) (an Applicable Decrease), but only if the Named
Officer terminates his employment with the Company as a result of an
Applicable Decrease within 15 business days of the later of (i) the
effective date of the Applicable Decrease, or (ii) the Named Officers
actual knowledge of Applicable Decrease (Applicable Decrease Date). For
clarification purposes, should the Named Officer fail to terminate his
employment with the Company within 15 business days of the Applicable
Decrease Date, such termination shall not constitute termination of
employment by the Named Officer for Good Reason under this
provision. |
A-2
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A
termination of employment by the Named Officer for Good Reason under
subparagraph (1) or (2) shall be effectuated by giving the Company written
notice of the termination within 30 days of the event constituting Good
Reason, setting forth in reasonable detail the specific conduct of the
Company that constitutes Good Reason and the specific provisions of the
Form Employment Agreement on which Named Officer relies and providing the
Company with a 30 day period during which it may remedy the condition
constituting Good Reason. If the Company fails to remedy the condition
within such 30 day period, the Named Officer must terminate his employment
within 30 days after the expiration of the cure period, and if the Named
Officer fails to so terminate his employment, any subsequent termination
based upon the same underlying facts shall not constitute a termination
for Good Reason. |
Under the Gustafsson Employment
Agreement.
As determined
by the Board in its sole discretion, Mr. Gustafsson shall be deemed terminated
for Cause
if the Board terminates him after he:
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shall have committed, been
indicted of, or been convicted of, or admitted, plea bargained, entered a
plea of no contest or nolo contendere to, any felony of any kind or a
misdemeanor, or violated any laws, involving fraud, dishonesty or an act
of moral turpitude; |
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(2) |
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shall have materially breached
the Gustafsson Employment Agreement or certain other agreements between
Mr. Gustafsson and the Company; |
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(3) |
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shall have materially violated
any written Company policy, regardless of whether within or outside the
scope of his authority; |
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(4) |
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shall have committed willful or
intentional misconduct, gross negligence, or dishonest, fraudulent or
unethical behavior, or other conduct involving serious moral turpitude in
the performance of his duties hereunder; |
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shall have failed or refused to
materially comply (to the best of his ability) with a specific direction
of the Board, unless Mr. Gustafsson reasonably and in good faith believes
such specific direction to be unlawful (in which case the Companys
termination of Mr. Gustafssons employment shall not be for Cause under
this provision); or |
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engages in any conduct which
breaches his fiduciary duty to the Company, which materially injures the
integrity, character or reputation of the Company or which impugns Mr.
Gustafsson's own integrity, character or reputation so as to cause Mr.
Gustafsson to be unfit to act in the capacity of CEO of the
Company. |
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A termination of
employment by the Company for Cause under subparagraphs (2), (3), (4), (5)
or (6) shall be effectuated by the Board giving Mr. Gustafsson written
notice of the termination within 30 days of the event constituting Cause,
or such longer period as the parties may agree, setting forth in
reasonable detail the specific conduct of Mr. Gustafsson that constitutes
Cause, the specific provisions of the Gustafsson Employment Agreement on
which the Company relies and, to the extent such Cause is susceptible to
cure, providing Mr. Gustafsson with a 30 day cure period. If such Cause is
susceptible to cure and Mr. Gustafsson fails to remedy the condition
within such 30 day cure period, the Company may terminate Mr. Gustafssons
employment within 30 days after the expiration of the cure period, and if
the Company fails to so terminate Mr. Gustafssons employment, any
subsequent termination based upon the identical underlying facts and
circumstances shall not constitute a termination for
Cause. |
A-3
Disability means Mr. Gustafsson, as a result of illness or incapacity, shall be
unable to perform substantially his required duties for a period of one hundred
eighty (180) consecutive days; provided,
however, that if Mr. Gustafsson, after being
unable to perform substantially his required duties for a period of less than
180 consecutive days as a result of illness or incapacity returns to active duty
for less than 30 days, the period of such active duty will be disregarded in
determining whether the 180 consecutive day threshold has been accumulated
(although it will not be accumulated as part of the 180 day period).
Good Reason means the occurrence of any one of the following:
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demotion of Mr. Gustafsson by the
Company to a lesser position (including a material diminution in the
status of Mr. Gustafssons responsibilities, authorities, powers or duties
taken as a whole) or assignment to Mr. Gustafsson of any duties materially
inconsistent with his position, status or responsibilities under the
Gustafsson Employment Agreement; |
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material breach of any provision
of the Gustafsson Employment Agreement by the Company; or |
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decrease
in Mr. Gustafssons base salary as in effect on the date of Mr.
Gustafssons Employment Agreement (unless such decrease is applied on a
proportionally equal basis to all executive officers of the Company) (an
Applicable Decrease), but only if Mr. Gustafsson terminates his
employment with the Company as a result of an Applicable Decrease within
fifteen (15) business days of the later of (i) the effective date of the
Applicable Decrease, or (ii) Mr. Gustafssons actual knowledge of
Applicable Decrease (Applicable Decrease Date). For clarification
purposes, should Mr. Gustafsson fail to terminate his employment with the
Company within fifteen (15) business days of the Applicable Decrease Date,
such termination shall not constitute termination of employment by Mr.
Gustafsson for Good Reason under this provision. |
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A termination of
employment by Mr. Gustafsson for Good Reason under subparagraph (1) or (2)
shall be effectuated by giving the Company written notice of the
termination within 30 days of the event constituting Good Reason, setting
forth in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provisions of the Gustafsson
Employment Agreement on which Mr. Gustafsson relies and providing the
Company with a 30 day period during which it may remedy the condition
constituting Good Reason. If the Company fails to remedy the condition
within such 30 day period, Mr. Gustafsson must terminate his employment
within 30 days after the expiration of the cure period, and if Mr.
Gustafsson fails to so terminate his employment, any subsequent
termination based upon the same underlying facts shall not constitute a
termination for Good Reason. |
Under the Kaplan Consulting
Agreement.
Change in Control means:
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A Change in the Ownership of
the Company. A change in ownership of
the Company shall occur on the date that any one person, or more than one
person acting as a Group (as defined below), acquires ownership of stock
of the Company that, together with stock held by such person or Group,
constitutes more than 50% of the total fair market value or total voting
power of the stock of the Company; provided, however, that, if any one
person, or more than one person acting as a Group, is considered to own
more than 50% of the total fair market value or total voting power of the
stock of the Company, the acquisition of additional stock by the same
person or persons is not considered to cause a change in the ownership of
the Company; |
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A Change in the Effective
Control of the Company. A change in the
effective control of the Company occurs on the date that any one person,
or more than one person acting as a Group (as defined below), acquires (or
has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the
Company possessing 30% or more of the total voting power of the stock of
the Company; or |
A-4
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A Change in the Ownership of a
Substantial Portion of the Companys Assets. A change in the ownership of a substantial portion of the
Companys assets occurs on the date that any one person, or more than one
person acting as a Group (as defined below), acquires (or has acquired
during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a
total Gross Fair Market Value (as defined below) equal to or more than 40%
of the total Gross Fair Market Value of all of the assets of the Company
immediately prior to such acquisition or acquisitions; provided, however, that, a
transfer of assets by the Company is not treated as a change in the
ownership of such assets if the assets are transferred
to: |
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a stockholder of the Company
(immediately before the asset transfer) in exchange for or with respect to
its stock; |
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an entity, 50% or more of the
total value or voting power of which is owned, directly or indirectly, by
the Company; |
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a person, or more than one person
acting as a Group, that owns, directly or indirectly, 50% or more of the
total value or voting power of all the outstanding stock of the Company;
or |
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an entity, at least 50% of the
total value or voting power of which is owned, directly or indirectly, by
a person described in clause (c) of this paragraph
(3). |
Gross Fair Market
Value means the value of the assets of the
Company, or the value of the assets being disposed of, determined without regard
to any liabilities associated with such assets.
Group shall have the meaning ascribed to such term in Treas. Reg. Sections
1.409A-3(i)(5)(v)(B), (vi)(D) or (vii)(C), as applicable.
Ownership, for purposes of stock ownership under the definition of Change of
Control, means stock ownership as determined under Section 409A of the Internal
Revenue Code.
Under the 2008 Stock Option Award
Agreements.
Cause means, as determined by the Company, in its sole discretion,
termination of the Named Officers employment with the Company or any subsidiary
of the Company because of:
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(1) |
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the Named Officers material
breach of the stock option agreement or of any other agreement to which
the Named Officer and the Company are parties, as determined by the
Compensation Committee in good faith; or |
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(2) |
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material violation of Company
policy, regardless of whether within or outside of his or her authority;
or |
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(3) |
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willful or intentional
misconduct; gross negligence; or dishonest, fraudulent, or unethical
behavior; or other conduct involving serious moral turpitude, by the Named
Officer in the performance of his or her duties; or |
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(4) |
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dishonesty, theft or conviction
of any crime or offense involving money or property of the Company or any
of its subsidiaries; or |
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(5) |
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breach of any fiduciary duty
owing to the Company or any subsidiary of the Company; or |
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(6) |
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unauthorized disclosure of
confidential Information or unauthorized dissemination of Company
materials; or |
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(7) |
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conduct that is, or could
reasonably be expected to be, materially harmful to the Company or any of
its subsidiaries or affiliates, as determined by the Compensation
Committee in good faith. |
Change in Control has the meaning given to it under the 2006 Zebra
Technologies Corporation Incentive Compensation Plan.
Disability has the meaning given to it under the 2006 Zebra Technologies
Corporation Incentive Compensation Plan.
Retire means the Named Officers voluntary termination of employment with the
Company and/or any of its subsidiaries after attaining either (1) age 55 with 10
complete years of service or more with the Company and/or any of its
subsidiaries; or (2) age 65.
A-5
Under the 2008 Restricted Stock Award
Agreements.
Cause has the meaning given to it in the Form Employment Agreement.
Change in Control has the meaning given to it under the 2006 Zebra
Technologies Corporation Incentive Compensation Plan.
Good Reason has the meaning given to it in the Form Employment Agreement.
Under the 2006 Zebra Technologies
Corporation Incentive Compensation Plan.
Change in Control means, unless the Compensation Committee provides otherwise
in the award agreement, the occurrence of any of the following events:
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(1) |
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Any Person (as such term is
used in Sections 13(d) and 14(d) of Securities Exchange Act of 1934, as
amended (the Exchange Act)), including a group as defined in Section
13(d)(3) of the Exchange Act, is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act, except that a Person shall
be deemed to have beneficial ownership of all shares that any such
Person shall be deemed to have the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than thirty five percent (35%) of the total voting
power of the then outstanding voting equity securities of the Company
entitled to vote generally in the election of directors (Outstanding
Company Voting Securities); provided,
however, that a Person shall not be
deemed the beneficial owner of shares tendered pursuant to a tender or
exchange offer made by that Person or any Affiliate of that Person until
the tendered shares are accepted for purchase or exchange; provided, further,
that a Change in Control shall not be deemed to occur as a result of (i)
any acquisition of equity securities by the Company, (ii) any acquisition
of equity securities directly from the Company (including through an
underwriter or other financial intermediary), other than (x) an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself directly acquired from the Company,
or (y) in connection with the acquisition by the Company or its affiliates
of a business, or (iii) any acquisition by an employee benefit plan (or
related trust) sponsored or maintained by the Company or any entity
controlled by the Company; |
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(2) |
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Within any period of 24
consecutive months, persons who were members of the Board of Directors of
the Company immediately prior to such 24-month period, together with any
persons who were first elected as directors (other than as a result of any
settlement of a proxy or consent solicitation contest or any action taken
to avoid such a contest) during such 24-month period by or upon the
recommendation of persons who were members of the Board of Directors of
the Company immediately prior to such 24-month period and who constituted
a majority of the Board of Directors of the Company at the time of such
election (Incumbent Directors), cease to constitute a majority of the
Board; |
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The approval by the shareholders
of the Company of a complete liquidation or dissolution of the Company
other than to a corporation which would satisfy the requirements of
sub-clauses (a), (b) and (c) of clause (4) of this definition of Change
in Control, assuming for this purpose that such liquidation or
dissolution was a Business Combination; or |
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(4) |
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Consummation of a reorganization,
merger or consolidation of the Company or any direct or indirect
subsidiary of the Company or sale or other disposition of all or
substantially all of the assets of the Company (a Business Combination),
in each case, unless, following such Business Combination, (a) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50% of the then-outstanding voting securities
entitled to vote generally in the election of directors of the corporation
resulting from such Business Combination (which shall include for these
purposes, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Companys
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination, of Outstanding Company Voting Securities,
(b) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination and any
Person beneficially owning, immediately prior to such Business
Combination, directly or indirectly, 35% or more of the Outstanding
Company Voting Securities) beneficially owns, directly or indirectly, 35%
or more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination, or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (c) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were Incumbent Directors at the
time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination.
|
A-6
Disability means, unless otherwise provided for in the award agreement or an
employment, Change in Control or similar agreement in effect between the Named
Officer and the Company or a subsidiary of the Company, (i) in the case of an
employee, the employee qualifying for long-term disability benefits under any
long-term disability program by the Company or subsidiary in which the employee
participates, and (ii) in the case of a director or consultant, the inability of
the director or consultant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death, or which has lasted or can be expected to last for
a continuous period of not less than 12 months, as determined by the
Compensation Committee, based upon medical evidence.
A-7
|
ZEBRA TECHNOLOGIES CORPORATION 475 HALF DAY
ROAD, SUITE 500 LINCOLNSHIRE, IL 60069 |
VOTE BY INTERNET - www.proxyvote.com |
Use the Internet to transmit your voting instructions and
for electronic delivery of information prior to 11:59 PM Eastern Time on
May 20, 2009. Please have your proxy card available when you access the
web site and follow the instructions to obtain your records and to create
an electronic voting instruction form. |
|
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS |
If you would like to reduce the costs incurred by Zebra
in mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate
that you agree to receive or access proxy materials electronically in
future years. |
|
VOTE BY PHONE - 1-800-690-6903 |
Use any touch-tone telephone to transmit your voting
instructions prior to 11:59 PM Eastern Time on May 20, 2009. Please have
your proxy card available when you call and then follow the
instructions. |
|
VOTE BY MAIL |
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
M12959-P69198 |
|
KEEP THIS PORTION FOR YOUR RECORDS |
|
DETACH AND RETURN THIS PORTION
ONLY |
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. |
ZEBRA TECHNOLOGIES
CORPORATION |
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The Board of Directors recommends
a vote "FOR" Proposals 1 and 2. |
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1. |
Election of Directors |
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Nominees: |
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01) |
Richard L. Keyser |
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02) |
Ross W. Manire |
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03) |
Dr. Robert J. Potter |
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For All |
Withhold All |
For
All Except |
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To withhold authority to vote for any
individual nominee(s), mark For All Except and write the name(s) of the
nominee(s) on the line below. |
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For |
Against |
Abstain |
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2. |
Proposal to ratify Ernst & Young LLP as
Independent Auditors |
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The shares represented by this Proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned stockholder. If this Proxy is executed but no direction is
given, the votes entitled to be cast by the undersigned will be cast "FOR"
the nominees for director, "FOR" the proposal to ratify Ernst & Young
LLP as independent auditors, and in the discretion of the Proxy holder on
any other matter that may properly come before the meeting or any
adjournment or postponement thereof. |
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This Proxy is revocable and the undersigned may
revoke it at any time prior to the Annual Meeting by giving written notice
of such revocation to the Secretary of the Company prior to the meeting or
by filing with the Secretary of the Company prior to the meeting a
later-dated Proxy. If the undersigned is present and wants to vote in
person at the Annual Meeting, or at any adjournment thereof, the
undersigned may revoke this Proxy by giving written notice of such
revocation to the Secretary of the Company on a form provided at the
meeting. The undersigned hereby acknowledges receipt of a Notice of Annual
Meeting of Stockholders of the Company called for May 21, 2009, and of the
Proxy Statement for the Annual Meeting prior to the signing of this
Proxy. |
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For
address changes and/or comments, please check this box and write them on
the back where indicated. |
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NOTE: Please sign exactly as the
name(s) appear above. For joint accounts, each owner should sign. When
signing as executor, administrator, attorney, trustee, guardian or in
another representative capacity, please give your full title. If a
corporation or partnership, please sign in the name of the corporation or
partnership by an authorized officer or person. |
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
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Please do not vote by more than one method. Your vote last
received will be your official vote. If you
vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting to be Held on May 21, 2009: The Company's
Proxy Statement for the 2009 Annual Meeting of Stockholders and the Annual
Report to Stockholders for the year ended December 31, 2008, are available at:
https://materials.proxyvote.com/989207.
ZEBRA TECHNOLOGIES
CORPORATION
Revocable Proxy
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ZEBRA TECHNOLOGIES
CORPORATION FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21,
2009, AND AT ANY ADJOURNMENT THEREOF.
The
undersigned stockholder of Zebra Technologies Corporation, a Delaware
corporation (the "Company"), hereby appoints Anders Gustafsson and Noel Elfant
as proxies for the undersigned, and each of them, with full power of
substitution in each of them, to attend the Annual Meeting of Stockholders to be
held at the Hilton Northbrook, 2855 N. Milwaukee Avenue, Northbrook, Illinois,
on Thursday, May 21, 2009, at 10:30 a.m., Central Time, or any adjournment or
postponement thereof, to cast on behalf of the undersigned all votes that the
undersigned is entitled to cast at such meeting and otherwise to represent the
undersigned at the meeting with all powers possessed by the undersigned.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Stockholder Meeting to be Held
on May 21,
2009.
The Company's Proxy Statement for the 2009 Annual Meeting
of Stockholders and the Annual Report to Stockholders for the year ended
December 31, 2008, are available at:
https://materials.proxyvote.com/989207.
Address
Changes/Comments: |
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(If you noted any Address
Changes/Comments above, please mark the corresponding box on the reverse
side.) |
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(Continued on reverse
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-----END PRIVACY-ENHANCED MESSAGE-----