DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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

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  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

Motorola Solutions, Inc.

(Name of Registrant as Specified In Its Charter)

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

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LOGO

 

NOTICE OF

 

2018 ANNUAL MEETING

 

OF STOCKHOLDERS AND PROXY STATEMENT

 

 

 

 

LOGO

 


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LOGO

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 2018

March 28, 2018

Dear Fellow Motorola Solutions Stockholders:

On behalf of the Motorola Solutions Board of Directors, it is my pleasure to invite you to attend our 2018 Annual Stockholders Meeting. This year’s meeting will be held on Monday, May 14, 2018 at 6 p.m., EDT, at the Capital Hilton, 1001 16th Street NW, Washington, DC 20036.

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

 

      Election of the nine nominated directors;

 

      Advisory approval of the Company’s executive compensation; and

 

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

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

 

LOGO

Gregory Q. Brown

Chairman and CEO

Motorola Solutions, Inc.


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LOGO

 

PRINCIPAL EXECUTIVE OFFICES:

500 West Monroe Street

Chicago, Illinois 60661

March 28, 2018

NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS

Annual Meeting Date: Monday, May 14, 2018

Time: 6:00 P.M., EDT

Location: Capital Hilton, 1001 16th Street NW, Washington, DC 20036

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

The purpose of the meeting is to:

1. elect nine directors for a one-year term;
2. hold a stockholder advisory vote to approve the Company’s executive compensation;
3. ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2018;
4. consider and vote upon the stockholder proposals described in the enclosed proxy statement, if properly presented at the meeting; and
5. act upon such other matters as may properly come before the Annual Meeting.

By order of the Board of Directors,

 

LOGO

Kristin L. Kruska

Secretary

Only Motorola Solutions stockholders of record at the close of business on March 16, 2018 (the “record date”) will be entitled to vote at the meeting. The Notice, which contains instructions on how to access this Proxy Statement, the form of proxy and the Company’s 2017 Annual Report, is being mailed to stockholders on or about March 28, 2018.

 

LOGO

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


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PROXY STATEMENT SUMMARY

 

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more complete information regarding the Company’s 2017 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

2018 ANNUAL MEETING OF STOCKHOLDERS

 

      Date and Time: May 14, 2018, 6:00 p.m. EDT

 

      Location: Capital Hilton, 1001 16th Street NW, Washington, DC 20036

 

      Record Date: March 16, 2018

 

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

 

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

 

      Common Stock Outstanding as of Record Date: 161,695,469

 

      Stock Symbol: MSI

 

      Registrar & Transfer Agent: EQ Shareowner Services

ITEMS TO BE VOTED ON

 

    Our Board’s Recommendation

Election of Directors (page 4)

  FOR

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

  FOR

Ratification of Independent Registered Public Accounting Firm (page 54)

  FOR

Stockholder Proposal on Ethical Recruitment in Global Supply Chains (page 58)

  AGAINST

Stockholder Proposal on Independent Director with Human Rights Expertise (page 60)

  AGAINST

Stockholder Proposal on Lobbying Disclosure (page 62)

  AGAINST

 

DIRECTOR NOMINEES

 

                       

Board Committees

(as of March 21, 2018)

 
Name  

  Director  

  Since  

  Indep.    

Other

  Public Co.  
Boards

  Position   Audit     Comp.     Gov. &
Nom.
    Exec.  

Gregory Q. Brown

  2007           1  

Chairman and CEO,

Motorola Solutions, Inc.

                            LOGO  

Kenneth D. Denman

 

  2017     LOGO     3  

Venture Partner,

Sway Ventures

                    LOGO       LOGO  

Egon P. Durban

  2015     LOGO     3   Managing Partner and Managing Director of Silver Lake             LOGO                  

Clayton M. Jones

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

Judy C. Lewent

  2011     LOGO     2  

Former EVP and CFO,

Merck & Co., Inc.

    LOGO                       LOGO  

Gregory K. Mondre

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

Anne R. Pramaggiore

  2013     LOGO     1  

President and CEO,

Commonwealth Edison

            LOGO               LOGO  

Samuel C. Scott

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

Joseph M. Tucci

  2017     LOGO     2   Co-Chairman and Co-CEO GTY Technology Holdings, Inc.             LOGO                  

LOGO = Chair of Committee

 

(i)


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PERFORMANCE AND ACCOMPLISHMENTS

TOTAL SHAREHOLDER RETURN

 

 

LOGO

 

      2017 HIGHLIGHTS

   Grew sales 6% to $6.4 billion

 

   Grew sales in every region

 

   Grew backlog to record level of $9.6 billion, up $1.2 billion or 15% compared to the prior year

 

   Generated $1.3 billion of operating cash flow, up $181 million

  

   Capital Allocation of $483 million in share repurchases, $307 million of dividends paid, and $298 million of managed services and software acquisitions

 

   Increased quarterly dividend by 11% to $0.52 per share

 

   Launched 85 new products

  

   Added 410 patents, bringing our patent portfolio to approximately 4,400

 

   Ranked No. 3 in our category on Fortune’s “World’s Most Admired Companies” list

 

   Named to Forbes “Just 100” list of America’s best corporate citizens

PERFORMANCE HIGHLIGHTS SINCE 2011

 

 

179%

TOTAL SHAREHOLDER  

RETURN1

 

   

 

  53%

REDUCTION

IN SHARE

COUNT

 

   

 

$14.1

BILLION

IN CAPITAL RETURN

 

 

1. Based on the split adjusted closing price of MSI common stock on December 31, 2010 and the closing price of MSI common stock on December 31, 2017, illustrating the growth over an initial investment on December 31, 2010, including the payment of dividends.

 

(ii)


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EXECUTIVE COMPENSATION

2017 CEO Total Direct Compensation

2017 performance reflected our sustained efforts over the past several years to position Motorola Solutions for long-term financial success. 2017 performance was improved from 2016 with strong business performance, revenue growth along with record backlog. We ended the year meeting our operating plan and this resulted in business performance at target funding under our Executive Officer Short Term Incentive Plan. In addition, the Board recognized Mr. Brown’s strong individual performance leading the company through another outstanding year of operational and financial performance and completing a significant number of strategic acquisitions, by providing him an above target payout.

Our three-year performance that ended December 31, 2017 continued to show increased returns to our stockholders relative to our comparator group. This three-year performance resulted in an above target payout under the 2015-2017 cycle of our Long Range Incentive Plan. Given our improved performance in 2017, Mr. Brown’s total direct compensation for 2017 was $3.2 million greater than in 2016.

 

                     

Base Salary

  $1,250,000    

Executive Officer Short Term Incentive

  $2,625,000    
   

 

   

Total Short-term Cash Compensation

  $3,875,000    

Long-term Incentive Cash Payment (2015-2017 Long Range Incentive Plan)

  $4,687,500    

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

  $6,499,975    
   

 

   

Total Compensation (excluding perquisites)

  $15,062,475    

GOVERNANCE HIGHLIGHTS

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

 

     
Independence  

      Eight out of our nine nominees are independent

      Our CEO is the only management director

      All Board committees that met during 2017 are comprised of independent directors

Independent Lead Director  

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

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

Executive Sessions    

      The independent directors regularly meet in private without management

      The Lead Independent Director presides at these executive sessions

Accountability  

      All directors stand for election annually

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

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

Board Oversight of

Risk Management

 

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

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

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

      The Governance and Nominating Committee reviews all related party transactions

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

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

Stock Ownership

Requirements

 

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

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

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

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

 

(iii)


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TABLE OF CONTENTS

 

PROXY STATEMENT

 

ABOUT THE 2018 ANNUAL MEETING

    1  

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

    4  

2018 DIRECTOR NOMINEES

    4  

CORPORATE GOVERNANCE

    9  

DIRECTORS’ QUALIFICATIONS

    10  

IDENTIFYING AND EVALUATING DIRECTOR CANDIDATES

    10  

COMMITTEES OF THE BOARD

    11  

INDEPENDENT DIRECTORS

    12  

RELATED PERSON TRANSACTION POLICY AND PROCEDURES

    13  

SUCCESSION PLANNING

    13  

SECURITY OWNERSHIP INFORMATION

    14  

DIRECTOR COMPENSATION

    16  

DETERMINING DIRECTOR COMPENSATION

    16  

HOW THE DIRECTORS ARE COMPENSATED

    16  

DIRECTOR RETIREMENT PLAN AND INSURANCE COVERAGE

    18  

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

    19  

COMPENSATION DISCUSSION AND ANALYSIS

    20  

NAMED EXECUTIVE OFFICERS

    20  

EXECUTIVE SUMMARY

    20  

2017 EXECUTIVE COMPENSATION PROGRAM

    25  

COMPENSATION DECISIONS FOR 2017

    31  

OTHER COMPENSATION POLICIES AND PRACTICES

    34  

COMPENSATION AND LEADERSHIP COMMITTEE REPORT

    36  

COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    36  

NAMED EXECUTIVE OFFICER COMPENSATION

    37  

2017 SUMMARY COMPENSATION TABLE

    37  

GRANTS OF PLAN-BASED AWARDS IN 2017

    39  

OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR-END

    40  

OPTION EXERCISES AND STOCK VESTED IN 2017

    41  

NONQUALIFIED DEFERRED COMPENSATION IN 2017

    42  

RETIREMENT PLANS

    43  

PENSION BENEFITS IN 2017

    43  

EMPLOYMENT CONTRACTS

    44  

TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

    45  

CEO PAY RATIO

    52  

EQUITY COMPENSATION PLAN INFORMATION

    53  
PROPOSAL NO. 3 — RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018     54  

AUDIT COMMITTEE MATTERS

    55  

REPORT OF AUDIT COMMITTEE

    55  

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

    56  

AUDIT COMMITTEE PRE-APPROVAL POLICIES

    57  

PROPOSAL NO.  4 — STOCKHOLDER PROPOSAL RE: “ETHICAL RECRUITMENT IN GLOBAL SUPPLY CHAINS”

    58  

PROPOSAL NO.  5 — STOCKHOLDER PROPOSAL RE: “INDEPENDENT DIRECTOR WITH HUMAN RIGHTS EXPERTISE”

    60  

PROPOSAL NO.  6 — STOCKHOLDER PROPOSAL RE: “LOBBYING DISCLOSURE”

    62  

IMPORTANT DATES FOR THE 2019 ANNUAL MEETING

    64  

OTHER MATTERS

    65  

 


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ABOUT THE 2018 ANNUAL MEETING

 

 

This proxy statement (the “Proxy Statement”) is being furnished to holders of common stock, $0.01 par value per share (the “Common Stock”), of Motorola Solutions, Inc. (“we,” “our,” “Motorola Solutions,” or the “Company”). Proxies are being solicited on behalf of the Board of Directors of the Company (the “Board”) to be used at the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the Capital Hilton, 1001 16th Street NW, Washington, D.C. 20036 on Monday, May 14, 2018 at 6:00 P.M., EDT, for the purposes set forth in the Notice of 2018 Annual Meeting of Stockholders. This Proxy Statement is dated March 28, 2018 and is being distributed to stockholders on or about March 28, 2018.

All stockholders may view and print Motorola Solutions’ Proxy Statement and the 2017 Annual Report at the Company’s website at www.motorolasolutions.com/investors. The information contained on Motorola Solutions’ website is not a part of this Proxy Statement and is not deemed incorporated by reference into this Proxy Statement or any other public filing made with the Securities and Exchange Commission (the “SEC”).

Stockholders Entitled to Vote at the Annual Meeting

Only stockholders of record at the close of business on March 16, 2018 (the “record date”) will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements thereof. On the record date, there were 161,695,469 shares outstanding of Common Stock. The Common Stock is the only class of voting securities of the Company.

A list of stockholders entitled to vote at the meeting will be available for examination at the Company’s corporate offices at 500 West Monroe Street, Chicago, Illinois 60661 for ten days before the Annual Meeting and at the Annual Meeting.

Voting Without Attending the Annual Meeting

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

 

      Vote by Internet. The website address for Internet voting is provided on your Notice or proxy card. You will need to use the control number appearing on your Notice of Internet Availability of Proxy Materials (“Notice”) or proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions until 11:59 P.M., EDT on Sunday, May 13, 2018. Internet voting is available 24 hours a day. If you vote via the Internet you do NOT need to vote by telephone or return a proxy card.

 

      Vote by Telephone. You can also vote by telephone by calling the toll-free telephone number provided on your proxy card. You will need to use the control number appearing on your proxy card to vote by telephone. You may transmit your voting instructions from any touch-tone telephone until 11:59 P.M., EDT on Sunday, May 13, 2018. Telephone voting is available 24 hours a day. If you vote by telephone you do NOT need to vote over the Internet or return a proxy card.

 

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

Your Proxy at the Annual Meeting

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

 

Proposal

     

The Board Recommended Vote

Proposal 1 –

 

Election of Nine Directors

  FOR

Proposal 2 –

 

Advisory Approval of the Company’s Executive Compensation

  FOR

Proposal 3 –

 

Ratification of Independent Registered Public Accounting Firm for Fiscal Year 2018

  FOR

Proposal 4 –

 

Stockholder Proposal on Ethical Recruitment in Global Supply Chains

  AGAINST

Proposal 5 –

 

Stockholder Proposal on Independent Director with Human Rights Expertise

  AGAINST

Proposal 6 –

 

Stockholder Proposal on Lobbying Disclosure

  AGAINST

 

Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement   1


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

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

Voting At the Annual Meeting as a Beneficial Owner

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

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

Changing Your Vote

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

 

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

 

    Delivering timely written notice of revocation to: Secretary, Motorola Solutions, Inc., 500 West Monroe Street, Chicago, IL 60661; or

 

    Attending the Annual Meeting and voting in person.

Notice of Internet Availability

The SEC has adopted rules for the electronic distribution of proxy materials. We have elected to provide our stockholders access to our proxy materials and 2017 Annual Report on the Internet instead of sending a full set of printed proxy materials to all of our stockholders. This enables us to reduce costs and lessen the environmental impact of our Annual Meeting by mailing most of our stockholders a Notice. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request them by following the instructions for requesting such materials included in the Notice. The Notice instructs you on how to access and review all of the information contained in the 2018 Proxy Statement and 2017 Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet or by telephone.

The Notice, which contains instructions on how to access this Proxy Statement, the form of proxy and the Company’s 2017 Annual Report, is being mailed to stockholders on or about March 28, 2018.

Other Matters at the Annual Meeting

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

 

2   Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement


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

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

 

Proposal   Affirmative Vote Required  

Broker  

Discretionary  

Voting Allowed  

Proposal 1 –

  Election of Nine Directors  

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

 

No

Proposal 2 –

  Advisory Approval of the Company’s Executive Compensation  

Majority of shares present and entitled to vote; abstentions will count as votes “Against”

 

No

Proposal 3 –

  Ratification of Independent Registered Public Accounting Firm for Fiscal Year 2018  

Majority of shares present and entitled to vote; abstentions will count as votes “Against”

 

Yes

Proposal 4 –

  Stockholder Proposal on Ethical Recruitment in Global Supply Chains  

Majority of shares present and entitled to vote; abstentions will count as votes “Against”

 

No

Proposal 5 –

  Stockholder Proposal on Independent Director with Human Rights Expertise  

Majority of shares present and entitled to vote; abstentions will count as votes “Against”

 

No

Proposal 6 –

  Stockholder Proposal on Lobbying Disclosure  

Majority of shares present and entitled to vote; abstentions will count as votes “Against”

 

No

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

 

Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement   3


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

 

The number of directors of the Company to be elected at the Annual Meeting is nine. The directors elected at the Annual Meeting will serve a one-year term ending at the 2019 Annual Meeting, until their respective successors are elected and qualified or until their earlier death, resignation or removal. Each of the nominees has consented to being named in this Proxy Statement and to serve as a director if elected. However, if any nominee named below is not available to serve as a director for any reason at the time of the Annual Meeting, the proxies will be voted for the election of such other person or persons as the Board may designate, unless the Board, in its discretion, reduces the number of directors. Given Mr. Samuel C. Scott III’s extensive knowledge of the Company and position as Lead Independent Director, the Board of Directors has granted a one-year waiver of the retirement age for Mr. Scott, currently age 73. The Board and Mr. Scott intend that this will be the last waiver of the retirement age, and that this will be his final year on our Board. The Board is currently comprised of nine directors. Immediately following the Annual Meeting, if all nominees are elected, the Board will consist of nine directors. The Board has the authority under the Company’s Bylaws to increase or decrease the size of the Board and to fill vacancies between Annual Meetings.

2018 DIRECTOR NOMINEES

Each of the nominees named below is currently a director of the Company, elected at the Annual Meeting of Stockholders held on May 15, 2017. The ages shown are current as of the date of this Proxy Statement.

 

GREGORY Q.

BROWN

  

 

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

 

Other Public Company Boards: Xerox Corporation. In the last five years Mr. Brown served on the board of Cisco Systems, Inc. from January 2013 to July 2014.

 

Board Committees: Executive (Chair)

 

Director Qualifications:

 

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

 

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

 

    Government, public policy and regulatory experience as a member of the Board of Directors of the Business Roundtable and Chair of its Immigration Committee

 

    Public company board experience

 

LOGO

  

Principal Occupation:

Chairman and Chief Executive Officer, Motorola Solutions, Inc.

  

Age: 57

Director since: 2007

Chairman since: 2011

  
    

 

4   Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement


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KENNETH D.

DENMAN

  

 

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

 

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

 

Board Committees: Governance and Nominating (Chair as of March 21, 2018), Executive

 

Director Qualifications:

 

    Public company CEO, financial and accounting expertise, international and global business, developing markets and managed and support services experience as CEO and President of iPass, Inc. and Openwave System, Inc

 

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

 

    Private equity and investment management experience as a Venture Partner of Sway Ventures

 

    Public company board experience

LOGO

  

Principal Occupation:

Venture Partner,

Sway Ventures

  

 

Age: 59

Director since: 2017

Independent

 

 

  

 

EGON P.

DURBAN

  

 

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

 

Other Public Company Boards: Dell Technologies Inc., SecureWorks Corp, VMware, Inc. In the last 5 years Mr. Durban served on the board of Intelsat S.A from August 2011 to December 2016 and on the board of NXP Semiconductors N.V. from September 2006 to December 2013.

 

Board Committees: Compensation and Leadership

 

Director Qualifications:

 

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

 

    Financial/accounting and private equity and investment banking experience as Managing Partner and Managing Director of Silver Lake and as a former associate with Morgan Stanley’s Investment Banking Division

 

    Public company board experience

 

LOGO

  

Principal Occupation:

Managing Partner and Managing Director, Silver Lake

  

 

Age: 44

Director since: 2015

Independent

 

  

 

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CLAYTON M.

JONES

  

 

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

 

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

 

Board Committees: Audit

 

Director Qualifications:

 

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

 

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

 

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

 

     Public company board experience

 

LOGO

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

 

Age: 68

Director since: 2015

Independent

  

 

JUDY C.

LEWENT

  

 

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

 

Other Public Company Boards: GlaxoSmithKline plc, Thermo Fisher Scientific, Inc. Ms. Lewent served on the board of directors of Motorola, Inc. from May 1995 to May 2010.

 

Board Committees: Audit (Chair), Executive

 

Director Qualifications:

 

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

 

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

 

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

 

    Government/Public Policy/Regulatory as former CFO at Merck and board member of GlaxoSmithKline and Thermo Fisher

 

    Public company board experience

LOGO

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

 

Age: 69

Director since: 2011

Independent

  

 

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GREGORY K.

MONDRE

  

 

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

 

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

 

Board Committees: Audit, Governance and Nominating

 

Director Qualifications:

 

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

 

    Financial/accounting and private equity and investment banking experience as Managing Partner and Managing Director of Silver Lake and as former principal at TPG

 

    Publiccompany board experience

 

LOGO

  
Principal Occupation: Managing Partner and Managing Director, Silver Lake   

 

Age: 43

Director since: 2015

Independent

  

 

ANNE R.

PRAMAGGIORE

  

 

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

 

Other Public Company Boards: The Babcock & Wilcox Company

 

Board Committees: Compensation and Leadership (Chair), Executive

 

Director Qualifications:

 

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

 

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

 

    Public company board experience

 

LOGO

  
Principal Occupation: President and Chief Executive Officer, Commonwealth Edison Company (“ComEd”)   

 

Age: 59

Director since: 2013

Independent

  

 

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SAMUEL C.

SCOTT III

  

 

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

 

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

 

Board Committees: Governance and Nominating (Chair through March 21, 2018), Executive

 

Director Qualifications:

 

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

 

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

 

  Public company board experience

 

LOGO

  

Principal Occupation:

Retired; Formerly

Chairman of the Board,

President and Chief

Executive Officer, Corn Products

International

  

Age: 73

Director since: 1993

Lead Independent Director

since 2015

Independent

 

  

 

JOSEPH M.

TUCCI

  

 

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

 

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

 

Board Committees: Compensation and Leadership

 

Director Qualifications:

 

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

 

  Relevant industry, managed and support services, developing markets and private equity experience as Co-CEO and Co-Chairman of GTY Technology Holdings, Inc. and founding member and current Chairman of the Strategic Advisory Board of Bridge Growth Partners

 

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

 

  Public company board experience

LOGO

 

  
Principal Occupation: Co-Chief Executive Officer and Co-Chairman of GTY Technology Holdings, Inc.   

Age: 70

Director since: 2017

Independent

  
  
  
    

 

RECOMMENDATION OF THE BOARD

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

 

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CORPORATE GOVERNANCE

 

 

The Board’s Corporate Governance Principles

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

 

GOVERNANCE HIGHLIGHTS

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

 

  LOGO Eight of nine director nominees are independent

 

  LOGO Board Committees comprised of independent directors

 

  LOGO Compensation and Leadership Committee retains independent compensation consultant

 

  LOGO Lead Independent Director

 

  LOGO Independent directors regularly meet in private without management

 

  LOGO Risk assessment process with Audit and Compensation and Leadership Committees

 

  LOGO Hold annual advisory vote on executive compensation

 

  LOGO No gross-up for excise taxes

 

  LOGO Recoupment or “clawback” policy

 

  LOGO Stock Ownership Guidelines

 

  LOGO Board and Committee self assessment process

 

  LOGO Annual election of all directors

 

  LOGO Majority vote for directors in uncontested elections

 

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

 

  LOGO Active stockholder engagement process

 

  LOGO Anti-hedging policy

 

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

      Board Governance Guidelines

      Director Independence Guidelines

      The Principles of Conduct for Members of the Board of Directors

      Code of Business Conduct

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

      Restated Certificate of Incorporation, as amended

      Amended and Restated Bylaws

Amendments to the above documents, or waivers applicable to our directors, chief executive officer, chief financial officer or corporate controller from certain provisions of its ethical policies and ethical standards for directors and employees, will be posted on the Motorola Solutions website within four business days following the date of the amendment or waiver. There were no waivers in 2017.

 

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DIRECTORS’ QUALIFICATIONS

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

 

      Independence: Eight of nine director nominees

 

      Gender and ethnic diversity: Half of all independent director nominees

 

      Relevant industry experience: Six of nine director nominees

 

      Public company CEOs and CFOs: Six of nine director nominees

 

      Financial and accounting expertise: Five of nine director nominees

 

      Technology experience, information technology and cyber security: Eight of nine director nominees

 

      Global business experience: All director nominees

 

      Developing markets experience: Five of nine director nominees

 

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

 

      Private equity and investment banking experience: Four of nine director nominees

 

      Public company board experience: All director nominees

 

      Managed and Support Services: One director nominee

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

IDENTIFYING AND EVALUATING DIRECTOR CANDIDATES

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

The Governance and Nominating Committee will consider nominees recommended by Motorola Solutions stockholders, provided that the recommendation contains sufficient information (as required by the Company’s Bylaws), including the candidate’s qualifications, to assess the suitability of the candidate, and is timely received in accordance with the Company’s Bylaws. Stockholder-recommended candidates that comply with these procedures will receive the same consideration that other candidates receive.

The Governance and Nominating Committee considers recommendations from many sources, including members of the Board, management and search firms. From time to time, Motorola Solutions hires search firms to help identify and facilitate the screening and interview process of director candidates. In 2017, we continued our retention of Russell Reynolds to assist with this process. Russell Reynolds compiles a list of candidates, evaluates each candidate and makes recommendations to the Governance and Nominating Committee. Accordingly, they screen candidates based on the Board’s criteria, perform reference checks, prepare a biography of each candidate for the Governance and Nominating Committee’s review and help arrange interviews if necessary. The Governance and Nominating Committee and the Chairman of the Board will conduct interviews with candidates who meet the Board’s criteria. The Governance and Nominating Committee has full discretion in considering potential candidates and making its nominations to the Board.

 

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COMMITTEES OF THE BOARD

To assist it in carrying out its duties, the Board has delegated certain authority to several committees. The Board currently has the following standing committees: (1) Audit, (2) Compensation and Leadership, (3) Governance and Nominating, and (4) Executive. The charters for each of the Audit Committee, Compensation and Leadership Committee and Governance and Nominating Committee are available on our website at www.motorolasolutions.com/investors. Committee membership as of December 31, 2017 (except as otherwise noted), the number of meetings of each committee during 2017, and the functions of each committee are described below:

 

 

    AUDIT COMMITTEE*               

 

   

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

 

   Engage the Independent registered public accounting firm.

    2017 Meetings: 9    

 

    Judy C. Lewent (Chair)

    Clayton M. Jones

    Gregory K. Mondre

   

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

 

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

 

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

 

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

 

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

 

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

 

   Review the Company’s dividend payment plans and practices.

 

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

 

 

 

    COMPENSATION AND

    LEADERSHIP COMMITTEE*

   

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

 

   compensation and benefits programs;

 

   CEO performance and compensation;

 

   executive development and succession;

 

   diversity efforts; and

 

   evaluation of the Company’s senior management.

 

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

 

   Prepare the report of the Compensation and Leadership Committee included in this Proxy Statement.

 

 

    2017 Meetings 6

   

 

    Anne R. Pramaggiore (Chair)

    Egon P. Durban

    Joseph M. Tucci

 

   
   

 

 

    GOVERNANCE AND              

    NOMINATING

    COMMITTEE*

 

   

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

 

   Recommend director nominees and individuals to fill vacant positions and to serve on committees.

 

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

 

   Oversee the evaluation of the Board and its committees.

 

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

 

   Generally oversee the governance and compensation of the Board.

 

    2017 Meetings: 5    

 

    Samuel C. Scott III (former Chair)

    Kenneth D. Denman (current

    Chair)

    Gregory K. Mondre

 

   

 

  EXECUTIVE COMMITTEE

 

 

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

 

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

 

    2017 Meetings: 0  

  Gregory Q. Brown (Chair)

  Kenneth D. Denman (as of

  March 21, 2018)

  Judy C. Lewent

  Anne R. Pramaggiore   Samuel C. Scott III

  (Lead Independent Director)

 

 

      *   On February 1, 2017, Mr. Denman joined the Governance and Nominating Committee and was named Chair on March 21, 2018. On May 16, 2017, Mr. Mondre joined the Audit Committee and Mr. Tucci joined the Compensation and Leadership Committee.

 

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Attendance

The Board held five meetings during 2017. Overall attendance at Board and committee meetings was 93%. Each incumbent director attended 100% of the combined total meetings of the Board and the committees on which he or she served during 2017, except for one director that attended 79% of the meetings and General Michael V. Hayden who attended 1 of 2 Board meetings and 1 of 2 committee meetings that were held prior to his term ending in May, 2017. At the Board meetings, independent directors of the Company meet regularly in executive session without management as required by the Motorola Solutions, Inc. Board Governance Guidelines and NYSE listing standards. Generally, executive sessions are held in conjunction with regularly-scheduled meetings of the Board. In 2017, the non-employee independent members of the Board met in executive session five times. In addition, Board members are expected to attend the Annual Meeting as provided in the Board Governance Guidelines. All of the directors who stood for election at the 2017 Annual Meeting attended that meeting.

Leadership Structure of the Board

At the Annual Board meeting held in May 2011, the Board combined the roles of Chairman and Chief Executive Officer and appointed Gregory Q. Brown to serve as both Chief Executive Officer and Chairman of the Board and also appointed an independent director as Lead Independent Director. The Board reappointed Mr. Brown as Chairman of the Board and an independent director as Lead Independent Director at the Annual Board meetings held in 2012 through 2017. The Board determined that Mr. Brown’s thorough knowledge of Motorola Solutions business, strategy, people, operations, competition and financial position coupled with his leadership and vision made him well positioned to chair Board meetings and bring key business and stakeholder issues to the Board’s attention. Our Lead Independent Director, currently Mr. Scott, chairs the executive sessions of the Board and acts as a liaison between our Chairman and independent directors.

Communicating with the Board

All communications to the Board of Directors, Chairman of the Board, the non-management directors or any individual director, must be in writing and addressed to them c/o Secretary, Motorola Solutions, Inc., 500 West Monroe Street, Chicago, IL 60661 or by email to boardofdirectors@MotorolaSolutions.com. Our Secretary reviews all written communications and forwards to the Board a summary and/or copies of any such correspondence that, in the opinion of the Secretary, deals with the functions of the Board or Board committees or that she otherwise determines requires the Board’s or any Board committee’s attention.

The Board’s Role in the Oversight of Risks

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

Management and our Board have a robust process embedded throughout the Company to identify, analyze, manage and report all significant risks facing the Company. Our CEO and other senior managers regularly report to the Board on significant risks facing the Company, including financial, cyber-security, operational and strategic risks. Each of the Board committees reviews with management significant risks related to the committee’s area of responsibility and reports to the Board on such risks, which includes the Compensation and Leadership Committee’s review of Company-wide compensation-related risks and the Audit Committee’s review of financial and cyber security risks. While each committee is responsible for reviewing significant risks in the committee’s area of responsibility, the entire Board is regularly informed about such risks through committee reports and presentations to the entire Board. The oversight of specific risks by board committees enables the entire Board to oversee risks facing the Company more effectively and develop strategic direction taking into account the effects and magnitude of such risks. The independent Board members also discuss the Company’s significant risks when they meet in executive session without management. Our audit services department has a very important role in the risk management program. The role of this department is to provide management and the Audit Committee with an overarching and objective view of the risk management activity of the Company. This department’s engagements span financial, operational, strategic and compliance risks and the engagement results assist management in maintaining acceptable risk levels. This department identifies and conducts engagements utilizing an enterprise risk management model. The director of the department reports directly to the Audit Committee as well as the Chief Financial Officer and meets regularly with the committee and the committee chairperson, including in executive session.

INDEPENDENT DIRECTORS

On March 8, 2018, the Board made the determination, based on the recommendation of the Governance and Nominating Committee and in accordance with our Director Independence Guidelines, that the former non-employee directors, Mr. Dahlberg and General Hayden, and the current non-employee directors, Mr. Denman, Mr. Durban, Mr. Jones, Ms. Lewent, Mr. Mondre, Ms. Pramaggiore, Mr. Scott and Mr. Tucci, were independent during the periods in 2017 and 2018 that they were members of the Board. Mr. Brown does not qualify as an independent director because he is the Chief Executive Officer of the Company. See Motorola Solutions’ Relationship with Entities Associated with Independent Directors for further details.

 

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Determining Independence

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

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

Motorola Solutions’ Relationship with Entities Associated with Independent Directors

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

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

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

RELATED PERSON TRANSACTION POLICY AND PROCEDURES

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

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

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

Motorola Solutions had no Related Person Transactions in 2017.

SUCCESSION PLANNING

Succession planning is important at all levels of the Company. In 2017, the Board reviewed short and long-term succession plans for the CEO and other members of management’s executive committee. When assessing possible CEO candidates, the Board identified skills and behavioral characteristics they consider a requirement for the Company’s CEO. The Board evaluates these succession plans with the overall business strategy in mind. When possible, potential leaders are introduced to the Board through presentations or separate events.

 

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SECURITY OWNERSHIP INFORMATION

Management and Directors

The following table sets forth information as of the close of business on March 12, 2018 regarding the beneficial ownership of shares of Common Stock by each director and nominee for director of the Company, the named executive officers (“NEOs”) in the Summary Compensation Table, and all current directors and executive officers of the Company as a group. Except for Mr. Brown, who owns 1.9% of the outstanding Common Stock, each other director and NEO owns less than 1% of the outstanding Common Stock based on 165,456,313 shares of Common Stock on a fully-diluted basis outstanding on March 12, 2018. All current directors, NEOs and executive officers as a group own 2.2% of the outstanding Common Stock.

 

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

  Gregory Q. Brown

  348,571 (6)   2,789,991   34,385   3,172,947

  Gino A. Bonanotte

  33,262   147,362   0   180,624

  John P. Molloy

  18,037   2,558   487   21,082

  Bruce W. Brda

  13,548   4,145   0   17,693

  Mark S. Hacker

  14,232   94,152   0   108,384

  Kenneth D. Denman

  447   0   2,308   2,755

  Egon P. Durban

  0   0   9,087   9,087

  Clayton M. Jones

  0   0   6,840   6,840

  Judy C. Lewent

  25,014   0   6,497   31,511

  Gregory K. Mondre

  70   0   9,145   9,215

  Anne R. Pramaggiore

  0   0   16,428   16,428

  Samuel C. Scott

  5,175 (7)   0   37,309   42,484

  Joseph M. Tucci

  1,440   0   2,307   3,747

  All current directors, NEOs and executive officers as a group (13 persons)

  459,796   3,038,208   124,793   3,622,797

 

(1) Includes shares over which the person currently holds or shares voting and/or investment power but excludes the shares listed under “Shares Under Exercisable Options and SARs” and “Stock Units.”
(2) Includes shares under options and SARs exercisable on March 12, 2018 and which may become exercisable within 60 days thereafter (assuming all performance measures are satisfied).
(3) Includes stock units which are deemed to be beneficially owned on March 12, 2018 or within 60 days thereafter (assuming all performance measures are satisfied). Stock units are not deemed beneficially owned until the restrictions on the units have lapsed. Each stock unit is intended to be the economic equivalent of one share of Common Stock.
(4) Unless otherwise indicated, each person has sole voting and investment power over the shares reported.
(5) Includes the shares listed under “Shares Under Exercisable Options” and units listed under “Stock Units.”
(6) Mr. Brown has shared voting and investment power over 83,220 shares, included under “Total Shares Beneficially Owned”. He disclaims beneficial ownership over 81,000 shares held in a trust of which his wife is trustee and 2,220 shares held by his wife, except to the extent of his pecuniary interest in these shares.
(7) Mr. Scott does not have investment power over 2,179 of these shares.

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

 

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Principal Stockholders

The following table sets forth information as of December 31, 2017 with respect to any person who is known to be the beneficial owner of more than 5% of Common Stock.

 

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

 The Vanguard Group

 100 Vanguard Blvd.

 Malvern, PA 19355

 

16,488,086

shares of

Common Stock

(2)

10.2%

 BlackRock, Inc.

 55 East 52nd Street

 New York, NY 10055

 

14,927,763

shares of

Common Stock

(3)

9.3%

 Lazard Asset Management LLC

 30 Rockefeller Plaza

 New York, NY 10112

 

9,881,906

shares of

Common Stock

(4)

6.1%

 

(1) The percentage calculations set forth above are based on 161,307,525 shares of Common Stock outstanding as of February 2, 2018 rather than the percentages set forth on various stockholders’ Schedule 13G filings.
(2) Solely based on information in a Schedule 13G/A Amendment No. 3 dated February 7, 2018 filed with the SEC by The Vanguard Group. The Schedule 13G/A indicates that as of December 31, 2017, The Vanguard Group was the beneficial owner with sole voting power as to 226,786 shares, shared voting power as to 46,234 shares, sole dispositive power as to 16,219,935 shares and shared dispositive power as to 268,151 shares.
(3) Solely based on information in a Schedule 13G/A Amendment No. 4 dated January 24, 2018 filed with the SEC by BlackRock, Inc. The Schedule 13G/A indicates that as of December 31, 2017, BlackRock, Inc., as the parent holding company, was the beneficial owner with sole voting power as to 13,356,791 shares and sole dispositive power as to 14,927,763 shares.
(4) Solely based on information in a Schedule 13G dated December 31, 2017 filed with the SEC by Lazard Asset Management LLC. The Schedule 13G indicates that as of December 31, 2017, Lazard Asset Management LLC was the beneficial owner with sole voting power as to 4,733,972 shares and sole dispositive power as to 9,881,906 shares.

Section 16(a) Beneficial Ownership Reporting Compliance

Each director and certain officers of the Company are required to report to the SEC, by a specified date, his or her transactions related to our Common Stock. Based solely on a review of the copies of reports furnished to the Company or written representations that no other reports were required, the Company believes that, during the 2017 fiscal year, all reports required by Section 16(a) were timely filed by its officers and directors except as follows: In May of 2017, Joseph M. Tucci filed a Form 3 with the SEC on a timely basis reporting, among other things, the amount of securities beneficially held. It was recently determined that certain holdings of Mr. Tucci’s are in a managed fund, not a mutual fund, and therefore should have been included on the Form 3. Mr. Tucci filed an amendment to the Form 3 on March 14, 2018 reporting the correct number of securities beneficially owned.

 

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DIRECTOR COMPENSATION

 

DETERMINING DIRECTOR COMPENSATION

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

HOW THE DIRECTORS ARE COMPENSATED

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

 

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

Compensation and Leadership

Committee Chairperson Fee

     $20,000

Governance and Nominating

Committee Chairperson Fee

     $15,000
Audit Committee Member Fee      $10,000
Equity Compensation    Annual Compensation (paid annually)
Annual Equity Grant    $190,000

During 2017, a director could elect to receive all or a portion of his or her annual cash retainer and other cash fees in the form of (i) deferred stock units (“DSUs”) that settle when the director terminates service, (ii) DSUs that settle after one year (unless service is earlier terminated), or (iii) outright shares. Directors could also elect to receive the annual equity grant in the form of (i) DSUs that settle when the director terminates service, or (ii) DSUs that settle after one year (unless service is earlier terminated). These choices allow directors to engage in tax planning appropriate for their circumstances. Notwithstanding earlier settlement or receipt of shares, directors must hold all shares awarded or paid to them until termination of service from the Board.

On May 16, 2017, each then non-employee director received a DSU award of 2,271 shares of Common Stock. The number of DSUs awarded was determined by dividing $190,000 by the fair market value of a share of Common Stock on the date of grant (rounded up to the next whole number) based on the closing price on the date of grant. For a non-employee director who becomes a member of the Board of Directors after the annual grant of deferred stock units, the award will be prorated based on the number of full months to be served until the next annual meeting of stockholders ($15,833.33 per month) divided by the closing price of the Common Stock on the day of election to the Board.

Non-employee directors are not eligible to participate in the Motorola Solutions Management Deferred Compensation Plan. Motorola Solutions does not have a non-equity incentive plan or pension plan for non-employee directors. Non-employee directors do not receive any additional fees for attendance at meetings of the Board or its committees, or for additional work done on behalf of the Board or a committee. The Company also reimburses its directors and, in certain circumstances, spouses who accompany directors, for travel, lodging and related expenses they incur in attending Board and committee meetings or other meetings as requested by Motorola Solutions. Mr. Brown, who was an employee during 2017, received no additional compensation for serving on the Board.

 

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The following table further summarizes compensation paid to the non-employee directors during 2017.

 

Name

(a)

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

Stock
Awards ($)
(2)(3)

(c)

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

Kenneth D. Denman

  91,667   190,083     281,750

Egon P. Durban

  0   290,215     290,215

Clayton M. Jones

  107,500   190,083     297,583

Judy C. Lewent

  122,500   190,083     312,583

Gregory K. Mondre

  0   295,291     295,291

Anne R. Pramaggiore

  55,000   245,271     300,271

Samuel C. Scott III

  140,000   190,083     330,083

Joseph M. Tucci

  66,667   190,083     256,750

Former Director:

Kenneth C. Dahlberg(4)

  60,000       60,000

Michael V. Hayden(4)

  35,000   15,048     50,048

 

(1) During 2017, directors could elect to receive all or a portion of their annual cash retainer or other cash fees in the form of (i) DSUs that settle when the director terminates service, (ii) DSUs that settle after one year (unless service is earlier terminated), or (iii) outright shares (in each case, rounded up to the next whole share). The amounts in column (b) are the portion of the annual cash retainer and any other fees the non-employee director has elected to receive in cash.
(2) The non-employee directors received an annual grant of DSUs on May 16, 2017. With respect to the annual grant of equity, Messrs. Durban, Jones, Mondre, Scott, Tucci and Ms. Pramaggiore elected to receive DSUs that settle at termination of service, and Mr. Denman and Ms. Lewent elected to receive DSUs that settle at termination or after one year, whichever is earlier, and these amounts are included in column (c). All amounts in column (c) are the aggregate grant date fair value of DSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation–Stock Compensation (“ASC Topic 718”), including dividend equivalents, as applicable. The number of DSUs or shares of Common Stock received and the fair value on each date of grant are as follows:

 

  March 31 May 16 June 30 September 29 December 29
Directors Common
Stock/
Deferred
Stock Units

Annual Grant of

Deferred Stock Units

Common
Stock/
Deferred
Stock Units
Common
Stock/
Deferred
Stock Units
Common
Stock/
Deferred
Stock Units

Kenneth D. Denman

    2,271      

Fair Value

  $190,083

Egon P. Durban

  290   2,271   289   295   277

Fair Value

  $25,004   $190,083   $25,068   $25,037   $25,024

Clayton M. Jones

    2,271      

Fair Value

  $190,083

Judy C. Lewent

    2,271      

Fair Value

  $190,083

Gregory K. Mondre

  290   2,271   289   325   305

Fair Value

  $25,004   $190,083   $25,068   $27,583   $27,554

Anne R. Pramaggiore

  145   2,271   145   177   167

Fair Value

  $12,502   $190,083   $12,577   $15,022   $15,087

Samuel C. Scott III

    2,271      

Fair Value

  $190,083

Joseph M. Tucci

    2,271      

Fair Value

  $190,083

 

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

 

  Directors       Deferred Stock Units      

    Restricted    

Stock

  Kenneth D. Denman     2,740  
  Egon P. Durban     9,038  
  Clayton M. Jones     6,803  
  Judy C. Lewent     6,461  
  Gregory K. Mondre     9,096  
  Anne R. Pramaggiore   16,338  
  Samuel C. Scott III   37,105   2,168
  Joseph M. Tucci     2,295  

  Former Directors:

  Kenneth C. Dahlberg*

    9,270  
  Michael V. Hayden*   18,138  

    * The total for Mr. Dahlberg is as of June 30, 2017 and for General Hayden as of his retirement from the Board on May 15, 2017.

 

(4) Mr. Dahlberg’s and General Hayden’s last day on the Board was May 15, 2017.

Director Stock Ownership Guidelines

Our Board stock ownership guidelines provide that non-employee directors are expected to own Common Stock with a value equivalent to at least five times the annual cash retainer fee for directors within five years after the date of joining the Board. In addition, directors are required to hold all shares paid or awarded by the Company until their termination of service, other than shares acquired through the exercise of options awarded to directors. For the purposes of these guidelines, Common Stock includes deferred stock units. As of December 31, 2017, all non-employee directors were in compliance with the stock ownership guidelines.

DIRECTOR RETIREMENT PLAN AND INSURANCE COVERAGE

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

Non-employee directors are covered by insurance that provides accidental death and dismemberment coverage of $500,000 per person. The spouse of each such director is also covered by such insurance when traveling with the director on business trips for the Company. The Company pays the premiums for such insurance. The total premiums for coverage of all such non-employee directors and their spouses during the year ended December 31, 2017 were $1,253.

 

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

 

In accordance with Section 14A of the Exchange Act we are providing our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our NEOs as disclosed in this Proxy Statement. The Board has adopted a policy providing for annual “say-on-pay” advisory votes. Although the vote is non-binding, the Board and Compensation and Leadership Committee will review and consider the outcome of the vote when considering future executive compensation arrangements. In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis, below, for a detailed description of our executive compensation philosophy and programs. In particular, you should consider the following factors, which are more fully discussed in the Compensation Discussion and Analysis:

 

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

 

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

 

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

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

“Resolved, that the stockholders approve, on an advisory basis, the compensation of the named executive officers, as described in the Compensation Discussion and Analysis, the 2017 Summary Compensation Table and other related tables and disclosures in this Proxy Statement.”

RECOMMENDATION OF THE BOARD

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

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

NAMED EXECUTIVE OFFICERS

Our Compensation Discussion and Analysis (the “CD&A”) describes Motorola Solutions’ executive compensation philosophy and programs, which are governed by the Compensation and Leadership Committee (the “Committee”). The CD&A includes 2017 total compensation for our named executive officers (“NEOs”) who are listed below.

 

  Named Executive Officer    Title

  Gregory Q. Brown

 

Chairman and Chief Executive Officer

  Gino A. Bonanotte

 

Executive Vice President and Chief Financial Officer

  John P. Molloy

 

Executive Vice President, Worldwide Sales and Services

  Bruce W. Brda

 

Executive Vice President, Products and Solutions

  Mark S. Hacker

 

Executive Vice President, General Counsel and Chief Administrative Officer

EXECUTIVE SUMMARY

2017 was a strong year with 6% revenue growth and record operating earnings, cash flow and backlog. This performance was broad based with revenue growth in every region, and growth in both our Products and Services segments. The improved operating earnings and cash flow were driven by higher revenue and lower operating expenses. Our record backlog position of $9.6 billion includes $1.9 billion of Products and $7.7 billion of Services backlog, with Services comprised primarily of multi-year Managed and Support Services contracts. These long-term, multi-year agreements reflect the confidence our customers have in the capability and durability of our land mobile radio (“LMR”) platform for mission-critical communications. Additionally, the Company continues to innovate and invest for additional growth in software and services while driving stockholder return. During the year, we invested $298 million in acquisitions and $227 million in capital expenditures, repurchased $483 million of stock and paid dividends of $307 million. Since the inception of our share repurchase program in July 2011, the Company has returned over $14 billion in capital and reduced our share count by 53% at an average cost of $58.59 per share. Our three-year total shareholder return (“TSR”) is 44% compared with 38% for the S&P 500.

Our 2017 Performance Met Our Operating Plan;

Our 2015-2017 Performance Delivered Strong Positive Returns To Our Stockholders

Our 2017 business performance improved over 2016 and met our operating plan. Our three-year performance ending in 2017 showed solid returns to our stockholders with performance improving annually since 2015. As a result of our performance, and consistent with our pay for performance philosophy, our incentive plans paid out as follows:

 

      Our 2017 Executive Officer Short Term Incentive Plan (“STIP”) resulted in target funding for the business performance component (100% of target), reflecting our operating earnings and free cash flow results meeting our operating plan; and

 

      Our 2015-2017 Long Range Incentive Plan (“LRIP”) and performance stock options (“POs”), which are both based on Motorola Solutions’ TSR relative to the S&P 500 for the performance cycle, achieved above target payouts (150% of target).

2017 total compensation for NEOs was greater than in 2016 due to at or above target performance for all incentive programs.

2017 Actions

Our compensation program is critical to our ability to attract, retain and motivate key talent necessary to deliver on our purpose to help people be their best in the moments that matter. As part of our continuous review of our compensation program and consideration of ongoing feedback from investors, we believe we have a balanced program that continues to support our business growth. Therefore, similar to 2016, no changes were made to our compensation program for our management executive committee, which includes all NEOs.

In 2015, when Motorola Solutions entered into an Investment Agreement (the “Investment Agreement”) with Silver Lake Partners IV, L.P. and Silver Lake Partners IV Cayman (AIVII, L.P.) (collectively “Silver Lake”), a select group of senior executives, including most of our NEOs, received a grant of performance-contingent stock options (“PCSOs”) to provide further incentive to deliver returns to our stockholders. Mr. Molloy did not receive this grant in 2015 because he was not a member of our management executive committee at the time of the grant, although he was promoted to Executive Vice President and became a member of our management executive committee later in 2015. To recognize Mr. Molloy’s contributions since his promotion and ensure comparable incentives to that received by our other NEOs, Mr. Molloy received a grant of PCSO in March 2017, designed to deliver similar economic value to the PCSOs held by the other NEOs.

 

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The PCSOs are not intended to be a component of our core, ongoing compensation program for executives, and accordingly, are excluded from discussions below regarding our ongoing compensation program. Mr. Molloy’s award has the same performance period ending on August 25, 2018 (the third anniversary of the original PCSO grant date) and the same termination date of August 25, 2022 (a seven-year term from the original PCSO grant date). As detailed in the table below, the PCSOs vest in three tranches based on the attainment of certain escalating stock price hurdles and they cannot be exercised prior to the end of the performance period. The PCSOs are designed to ensure delivery of meaningful returns to our stockholders before executives realize any value. Any PCSOs that do not vest before August 25, 2018 are forfeited. The first and second stock price hurdles, for all PCSO grants, were met on June 30, 2017 and February 28, 2018, respectively. Therefore, the first and second portions of the PCSOs vested.

 

Vesting Tranche    Stock Price Hurdle1

1

   $85.00

2

   $102.50

3

   $120.00

 

1  Stock price must be met by August 25, 2018 and maintained for ten consecutive trading days.

2017 Compensation Program Overview

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

 

LOGO

 

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Our Incentive Compensation Program Based On 2017 Performance Resulted In At Target Funding;

Our Incentive Compensation Program Based On 2015-2017 TSR Resulted In Above Target Payouts

To support our pay for performance philosophy, our 2017 executive compensation program used a mix of fixed and at-risk elements to align with short- and long-term business goals through various incentives.

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

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

In 2017, we delivered growth in both operating earnings and free cash flow and met our operating plan, which resulted in at target funding for the business performance component of our STIP. Our 2015-2017 TSR (stock price appreciation plus dividends) was 52.5% over the three-year period, which resulted in a 68th percentile rank in our S&P 500 comparator group. This performance equated to a payout of 150% of target under our 2015-2017 LRIP and POs. See “Long Range Incentive Plan” for comparator group details.

 

LOGO

 

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Response to 2017 Stockholder Vote and Stockholder Engagement Process

At the 2017 Annual Meeting, our stockholders approved the advisory vote on our executive compensation with 96% support. We believe this is in large part due to program changes over the past several years, which have resulted in a fundamentally sound program designed to drive our growth and align with overall stockholder interests.

 

 

LOGO

In late 2017 and early 2018, we contacted stockholders holding approximately 62% of our shares in the aggregate to seek feedback on our governance and compensation programs, some of whom noted that they had no issues with our programs and declined our request for engagement. With the stockholders who accepted our request for feedback, we discussed important governance topics and our unchanged incentive program design, which continued to receive positive feedback. The investors with whom we spoke expressed no major concerns about the current executive compensation program, including pay programs, approach and overall governance.

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

 

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

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

 

  LOGO A significant percentage of target total direct compensation, 90% for the CEO and 80% on average for the other NEOs, is “at risk” and linked to actual performance.

 

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

 

  LOGO The long-term incentive program for management’s Executive Committee (“EC”) established in 2015 and unchanged in 2016 and 2017 is 100% performance-based.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

  LOGO Hedging of Company securities is prohibited.

 

  LOGO Our insider trading policy prohibits pledging, and no NEOs have pledged any Company equity.

 

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

We Continue to Innovate our Talent Programs and Link Talent and Pay Decisions

As our business continues to grow and our talent needs evolve we are enhancing our talent programs to ensure that we can meet the new challenges of attracting, developing, engaging and rewarding the top talent in our global industry. Throughout 2017, we re-invested in our Talent Acquisition, undertook a significant talent refresh in growth areas (e.g., Software and Services) and implemented a global leadership program for all managers. In addition, we enhanced the process to identify, develop, invest in, and monitor progress of our key talent. Our multifaceted development approach includes: new and expanded job assignments, formal and informal learning, coaching and engagement with our executive committee, our CEO and the Board. We renewed our focus on succession management, including, but not limited to, all Vice President-level roles and other roles deemed to be critical for the future of our business. We continue to support and track initiatives aimed at increasing the diversity of our workforce, and remain committed to paying competitively and providing differentiated rewards that recognize outstanding business performance and leadership behaviors.

Independent Experts Guide Program Development

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

In 2017, the Committee continued to engage CAP as its independent compensation consultant. CAP participates in Committee meetings, including regular discussions with the Committee, without management present, to ensure impartiality on certain decisions. During 2017, the Committee also reviewed the independence of CAP using assessment criteria that aligned with the SEC and related NYSE rules adopted in 2012. The Committee concluded that CAP was independent and had no conflicts of interest.

 

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2017 EXECUTIVE COMPENSATION PROGRAM

Compensation Philosophy, Practices and Program Design Inputs

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

 

  Principle   Description

  Business

  Driven

 

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

 

  Performance

  Differentiated

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

  Market

  Competitive

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

  Ownership

  Oriented

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

  Simplicity

 

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

 

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

The Committee reviews the composition of the comparator group annually with the assistance of CAP. Our comparator group, which has remained the same since 2015 (except for the removal of Tyco International Ltd. after it was acquired by Johnson Controls in September 2016) after the sale of our Enterprise business, was used to evaluate pay levels, pay mix and alignment of pay with our performance in 2017.

2017 Comparator Group

 

 Agilent Technologies, Inc.    Harris Corp.    Parker-Hannifin Corp.    Rockwell Collins, Inc.
 Amphenol Corp.    Ingersoll-Rand plc    Raytheon Company    Roper Technologies, Inc.
 ARRIS International plc    Juniper Networks, Inc.    Rockwell Automation Inc.    TE Connectivity Ltd.
 Dover Corp.               

To supplement our comparator group data, the Committee also considers compensation surveys that include data from companies of similar size and business segments to Motorola Solutions. For 2017, the Committee considered data from the Radford Global Technology Survey and the IPAS Global High Technology Survey.

The Committee uses the 50th percentile of our comparator group and surveys as a guideline for establishing target total compensation for our NEOs. However, each NEO’s target total compensation position relative to market varies due to the Committee’s consideration of additional factors such as role, scope of accountabilities, experience, individual performance and market practices when setting total target compensation. In the first quarter of the year, the Committee evaluated each NEO’s target compensation relative to market compensation to set 2017 compensation and found total compensation between the 50th and 75th percentile market for all NEOs.

 

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

 

 

LOGO

Base Salary

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

Short-Term Incentives

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

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

 

 

LOGO

For 2017, the Business Performance Factor was based on achievement of operating earnings (weighted 65%) and free cash flow (weighted 35%) goals. Operating earnings measures our profits from sales and free cash flow measures the cash available after capital expenditures. These are common performance measures both inside and outside of our industry and are fundamental inputs we use to measure profitability, business liquidity and rates of return for the business. We believe operating earnings and free cash flow appropriately measure our annual business performance and ultimately drive our long-term stockholder value over time.

 

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A rigorous process is used at the start of each year to determine the range of performance for each measure and includes an analysis of factors such as: prior year financial results, market share, projected revenue growth, margins and operating expenditures and other macroeconomic and industry considerations. The operating earnings and free cash flow targets and performance ranges for the 2017 STIP were aligned with the 2017 operating plan that was approved by the Board in the first quarter of 2017. The range of performance and 2017 results are shown in the following table:

 

  Business

  Performance

  Measure

  Minimum   Target   Maximum   2017
Result
  Business
Performance
Factor
 

Measure

Weight

 

Weighted

Result

  Operating Earnings1 (in millions)

  $1,326   $1,560   $1,794   $1,552   0.995   65%   0.65

  Free Cash Flow2 (in millions)

  $769   $1,025   $1,230   $1,029   1.004   35%   0.35

  TOTAL

                          1.00
1  Operating Earnings is our reported Non-GAAP operating earnings, which excludes highlighted items, stock-based compensation and intangible amortization.
2  Cash Flow is defined as net cash provided by operating activities less capital expenditures. The 2017 result includes two adjustments as a result of the U.S. tax reform, approved by the Committee, for: (i) a tax benefit from an anticipated US Pension contribution for the 2017 tax year, and (ii) the monetization of a long-term receivable accelerated into 2017.

The Individual Performance Factor for each NEO is the Committee’s assessment if the NEO’s individual performance and accomplishments and is discussed in more detail in Compensation Decisions for 2017.

Long-Term Incentives

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

 

    Focus on financial and operational metrics that drive our growth in ways that result in long-term value creation for stockholders.

 

    Outperform the S&P 500 comparator companies.

 

    Achieve the highest, sustainable stock price over time.

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

 

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

 

LOGO

 

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Long Range Incentive Plan

The LRIP is a performance-based, multi-year incentive plan for our senior executives, including the NEOs. We maintain overlapping three-year cycles with grants made annually, and we currently have three active cycles (2016-2018, 2017-2019 and 2018-2020). The Committee determines the total LTI value with reference to market levels through benchmarking completed by CAP. The LRIP was designed to deliver one-third of that LTI value. The comparator group used for relative TSR measurement is the S&P 500. A TSR payout factor is determined by calculating the Company’s TSR percentile rank within the S&P 500 based on the approved payout scale detailed below. The TSR calculation uses a three-month average stock price at the beginning (three months preceding performance cycle start) and end (final three months in performance cycle, plus value of reinvested dividends) of the period for measurement purposes. This approach minimizes the impact of a single beginning and ending point stock price for each performance cycle.

 

LOGO

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

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

 

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Performance Stock Options and Market Stock Units

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

 

LOGO

Timing and Grant Practices of Global Equity Awards

Since 2012, our share usage (equity grants as a percentage of common shares outstanding) has been significantly reduced from our prior granting practices, resulting in a decrease in our stock-based compensation expense. The expense from previous grants made to a broader population had been fully recognized by 2016, resulting in a level of expense we anticipate will continue for future years, unless and until we further modify our equity granting practices. In 2017, we issued equity to employees of our acquired companies as a key strategy to retain employees, and their enterprise knowledge, and align their interests with those of our stockholders. In addition, at the 2015 Annual Meeting, stockholders approved the Motorola Solutions 2015 Omnibus Incentive Plan, which was an amendment and restatement of the Motorola Solutions Omnibus Incentive Plan of 2006 (the “Omnibus Plan”). This reduced the total number of shares reserved and approved for issuance by approximately 7 million shares, to 12 million shares. We plan to continue to closely manage our equity granting practices to ensure our share usage and stock-based compensation expense remain in line with competitive levels.

 

LOGO

In 2017, our annual equity awards were made in the first quarter of the year to allow the Company to better align the receipt of equity awards with the assessment of prior year performance, achievement of prior year business goals and the prospective incentive objectives for our NEOs. We do not structure the timing of equity awards to precede or coincide with the disclosure of material non-public information. All equity grants made to Section 16 Officers and other members of the EC are approved by the Committee, with concurrence by the Board for grants to the CEO.

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

 

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Executive Benefits and Perquisites

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

 

Benefit or Perquisite  

Named

        Executives        

  

Other Executives

and Managers

        All Eligible    
    Full-Time    
    Employees     

  Retirement1, Saving and Stock Purchase Plans

  LOGO      LOGO     LOGO

  Health and Welfare Benefits2

  LOGO      LOGO     LOGO

  Deferred Compensation

  LOGO      LOGO      

  Financial Planning

  LOGO      Vice Presidents      

  Executive Physicals

  LOGO      Senior and Executive VPs      

  Security System Monitoring

  CEO             

  Personal Use of Corporate Aircraft Service3

  CEO             

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

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

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

COMPENSATION DECISIONS FOR 2017

 

Gregory Q. Brown, Chairman and Chief Executive Officer

Mr. Brown’s 2017 compensation reflects a strong year of operational and financial performance. One- and three-year performance were both improved from 2016 resulting in a higher 1) STIP award based on improved company performance and an IPF of 1.4 reflecting Mr. Brown’s outstanding individual performance for the year, and 2) LRIP payout due to improved three-year TSR for the 2015-2017 LRIP cycle.

 

   
ELEMENT  

TARGET

COMPENSATION*

 

ACTUAL

COMPENSATION

  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $1,250,000   $1,250,000   In March 2017, the Committee approved no change to base salary.

STIP AWARD

  $1,875,000   $2,625,000   Annual Salary   x     Target     x   BPF   x   IPF   =   STIP Award
      $1,250,000     150%     1.00     1.40     $2,625,000

TOTAL CASH

COMPENSATION

 

  $3,125,000   $3,875,000   Mr. Brown led the Company through an outstanding year of strong financial results, completed strategic acquisitions and refreshed talent across the Company. The Company ended the year with record revenue, earnings, cash flow and backlog. The Company completed key acquisitions to accelerate software and services growth and hired 2,200 employees, resulting in the Company’s largest ever talent refresh.

 

LTI CASH PAYMENT

(2015-2017 LRIP)

  $3,125,000   $4,687,500   2015 Cycle Start

Base Salary

$1,250,000

  x     Target  

250%

  x   TSR Payout Factor

150%

  =   LRIP Award

$4,687,500

                 
      Relative TSR rank of 68th percentile resulted in 150% of target payout

LTI 

  2017-2019
LRIP
  $3,125,000     Base Salary   x     Target     =   LRIP Target
        $1,250,000     250%     $3,125,000
        Payout based on relative TSR performance through 2019.
  PERFORMANCE
OPTIONS
  $3,250,000   $3,250,000   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  MSUs   $3,250,000   $3,249,975  

2017 TOTAL

COMPENSATION

  $12,750,000   $15,062,475   Actual Total Compensation is listed in Summary Compensation Table
* Target Compensation = Total Cash Compensation + LTI (excluding LTI Cash Payment)

 

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

Mr. Bonanotte received a 2.3% base salary increase and above target payouts under both the STIP and 2015-2017 LRIP cycle. Due to strong company and individual performance, 2017 total actual compensation was greater than in 2016.

 

   
ELEMENT  

TARGET

COMPENSATION*

 

ACTUAL

COMPENSATION

  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $665,000   $662,231   In March 2017, the Committee approved a base salary increase from $650,000 to $665,000.

STIP AWARD

  $631,750   $880,767   Eligible Earnings   x     Target     x   BPF   x   IPF   =   STIP Award
      $662,231     95%     1.00     1.40     $880,767

 

TOTAL CASH

COMPENSATION

 

  $1,296,750   $1,542,998   Mr. Bonanotte successfully executed our 2017 capital allocation strategy, driving significant shareholder return in the form of approximately $800 million in dividends and share repurchases while completing approximately $300 million in acquisitions. He repatriated over $600 million of international cash, and he implemented key improvements in forecasting both sales and cash flow.

 

LTI CASH PAYMENT

(2015-2017 LRIP)

  $666,666   $999,999   Target Value   x   TSR Payout Factor   =   LRIP Award
      $666,666     150%     $999,999
      Relative TSR rank of 68th percentile resulted in 150% of target payout.

LTI 

 

2017-2019

LRIP

  $700,000     Payout based on relative TSR performance through 2019.
  PERFORMANCE
OPTIONS
  $700,000   $699,986   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  MSUs   $700,000   $699,981  

2017 TOTAL

COMPENSATION

  $3,396,750   $3,942,964   Actual Total Compensation is listed in Summary Compensation Table

 

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

 

John P. Molloy, Executive Vice President, Worldwide Sales and Services

As a newer member of management’s executive committee, Mr. Molloy received a 15.8% base salary increase in 2017 to move him within a competitive range for his role. He received above target payouts under both the STIP and 2015-2017 LRIP cycle. In addition, Mr. Molloy received a grant of PCSOs to recognize his contributions since his promotion and ensure comparable incentives to what our other NEOs received in 2015, before Mr. Molloy was a member of our management executive committee.

 

   
ELEMENT  

TARGET

COMPENSATION*

 

ACTUAL

COMPENSATION

  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $585,000   $570,231   In March 2017, the Committee approved a base salary increase from $505,000 to $585,000.

STIP AWARD

  $555,750   $758,407   Eligible Earnings   x     Target     x   BPF   x   IPF   =   STIP Award
      $570,231     95%     1.00     1.40     $758,407

 

TOTAL CASH

COMPENSATION

 

  $1,140,750   $1,328,638   Mr. Molloy delivered outstanding operational results. He grew revenue 6%, including growth in every region and across our products and services portfolio. He ended the year with record backlog of $9.6B. He made impactful leadership changes and implemented significant improvements in sales coverage.

 

LTI CASH PAYMENT

(2015-2017 LRIP)

  $293,615   $440,423   Target Value   x   TSR Payout Factor   =   LRIP Award
      $293,615     150%     $440,423
      Relative TSR rank of 68th percentile resulted in 150% of target payout.

LTI 

 

2017-2019

LRIP

  $583,334     Payout based on relative TSR performance through 2019.
  PERFORMANCE
OPTIONS
  $583,333   $583,318   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  PCSOs     $2,557,833  
  MSUs   $583,333   $583,289    

2017 TOTAL

COMPENSATION

  $2,890,750   $5,493,501   Actual Total Compensation is listed in Summary Compensation Table

 

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

 

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Bruce W. Brda, Executive Vice President, Products and Solutions

Mr. Brda received a 4.5% base salary increase in 2017 and above target payouts under both the STIP and 2015-2017 LRIP cycle. 2017 total actual compensation was greater than in 2016 due to strong company and individual performance.

 

   
ELEMENT  

TARGET

COMPENSATION*

 

ACTUAL

COMPENSATION

  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $585,000   $580,385   In March 2017, the Committee approved a base salary increase from $560,000 to $585,000.

STIP AWARD

  $555,750   $771,912   Eligible Earnings   x     Target     x   BPF   x   IPF   =   STIP Award
      $580,385     95%     1.00     1.40     $771,912

 

TOTAL CASH

COMPENSATION

 

  $1,140,750   $1,352,297   Mr. Brda established the Software Enterprise as a strategic business unit and added experienced software leaders from outside the company. He launched innovative LMR products in all regions while making significant progress on next generation products. He refreshed approximately 25% of his team, resulting in key additions to software engineering.

 

LTI CASH PAYMENT

(2015-2017 LRIP)

  $430,113   $645,169   Target Value   x   TSR Payout Factor   =   LRIP Award
      $430,113     150%     $645,169
      Relative TSR rank of 68th percentile resulted in 150% of target payout.

LTI 

 

2017-2019

LRIP

  $583,334     Payout based on relative TSR performance through 2019.
  PERFORMANCE
OPTIONS
  $583,333   $583,318   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  MSUs   $583,333   $583,289  

2017 TOTAL

COMPENSATION

  $2,890,750   $3,164,073   Actual Total Compensation is listed in Summary Compensation Table

 

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

 

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

Mr. Hacker received a 6.6% base salary increase and above target payouts under both the STIP and 2015-2017 LRIP cycle. Due to strong company and individual performance, Mr. Hacker’s 2017 total actual compensation was greater than in 2016.

 

   
ELEMENT  

TARGET

COMPENSATION*

 

ACTUAL

COMPENSATION

  FACTORS INFLUENCING AMOUNT

BASE SALARY

  $565,000   $558,539   In March 2017, the Committee approved a base salary increase from $530,000 to $565,000.

STIP AWARD

  $536,750   $742,856   Eligible Earnings   x     Target     x   BPF   x   IPF   =   STIP Award
      $558,539     95%     1.00     1.40     $742,857

 

TOTAL CASH

COMPENSATION

 

  $1,101,750   $1,301,395   Mr. Hacker launched a global offensive litigation strategy to protect our innovation and defend our intellectual property rights, and he achieved key victories in long-standing litigations. He revamped our talent acquisition operations, and he led comprehensive Executive Committee and Vice President succession planning.

 

LTI CASH PAYMENT

(2015-2017 LRIP)

  $500,000   $750,000   Target Value   x   TSR Payout Factor   =   LRIP Award
      $500,000     150%     $750,000
      Relative TSR rank of 68th percentile resulted in 150% of target payout.

LTI 

 

2017-2019

LRIP

  $516,666     Payout based on relative TSR performance through 2019.
  PERFORMANCE
OPTIONS
  $516,667   $516,654   Represents grant date fair value pursuant to ASC Topic 718; actual value realized will be based on options and MSUs earned and stock price when/if the vested options are exercised and when the vested MSUs are sold.
  MSUs   $516,667   $516,584  

2017 TOTAL

COMPENSATION

  $2,651,750   $3,084,633   Actual Total Compensation is listed in Summary Compensation Table

 

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

 

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OTHER COMPENSATION POLICIES AND PRACTICES

Stock Ownership Guidelines

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

 

Executive Group   

Multiple of

Base Salary

Chairman and Chief Executive Officer

   6x

Executive Vice Presidents and Executive Committee Members

   3x

Senior Vice Presidents

   2x

Corporate Vice Presidents

   1x

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

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

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

Change in Control Plan

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

The CIC Severance Plan covers our NEOs (except for Mr. Brown, whose employment agreement contains change in control provisions) and our other senior executives. The Board considers the maintenance of an effective and stable management team essential to protecting and enhancing the value of the Company for the benefit of our stockholders. To that end, we recognize that the possibility of a change in control may exist and that this possibility, and the uncertainty and questions it may raise for certain senior executives, may result in the distraction, and potential departure, of senior management employees to the detriment of the Company and our stockholders. The CIC Severance Plan helps to encourage the continued attention and dedication of our senior management to their assigned duties without the distraction that may arise from the possibility of a change in control event.

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

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

 

CIC Provision   CIC Severance Plan

Eligibility

  Executive and Senior Vice Presidents

CIC Cash Severance Multiple

  Two times base salary plus target bonus

Medical Benefit Continuation

  Two years

LRIP and Equity Treatment

(Provision in Omnibus Plan)

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

Excise Tax Gross-Up

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

Recoupment of Incentive Compensation Awards Upon Restatement of Financial Results

If, in the opinion of the independent directors of the Board, the Company’s financial results require restatement due to the misconduct by one or more of the Company’s executive officers (including the NEOs), the independent directors may seek a number of remedies, all of which are

 

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

Impact of Favorable Accounting and Tax Treatment on Compensation Program Design

Favorable accounting and tax treatment of the various elements of our total compensation program is an important, but not the sole, consideration in its design. In 2017, Section 162(m) of the Internal Revenue Code limited the deductibility of certain items of compensation paid to the CEO and certain other highly compensated executive officers (together, the “covered officers”) to $1,000,000 annually, unless such compensation qualifies as performance-based compensation. Our short-term and long-term incentive programs generally have been designed so that they may qualify as performance-based compensation. In particular, in order to design our STIP so that it may meet certain Section 162(m) qualification requirements, under our Omnibus Plan, each year the Committee allocates an incentive pool equal to 5% of our consolidated operating earnings to the covered officers under our STIP. Once the amount of the pool and the specific allocations are determined at the end of the year, the Committee can apply “negative discretion” to reduce (but not increase) the amount of any award payable from the incentive pool to the covered officers, as determined by the amount payable to each covered officer based on the STIP performance criteria and actual results. The Committee reserves the right to provide for compensation to executive officers that may not be deductible pursuant to Section 162(m) in 2017.

Effective for 2018, the Tax Cuts and Jobs Act amended Section 162(m) to, among other things, extend the deduction limitation to the Chief Financial Officer and eliminate the exception for performance-based compensation. The Company is considering how to address the effects of the changes on its executive compensation programs while continuing to provide appropriate performance incentives.

Securities Trading Policy

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

Anti-Hedging Policy

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

 

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COMPENSATION AND LEADERSHIP COMMITTEE REPORT     

 

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

On May 16, 2017 Anne R. Pramaggiore was appointed the Chair of the Compensation and Leadership Committee (the “Committee”). Kenneth C. Dahlberg served as the Chair of the Committee from January 1, 2017 until May 15, 2017 when he resigned as a member of the Board of Directors. Egon P. Durban was a member of the Committee throughout 2017 and Joseph M. Tucci was appointed as a member of the Committee on May 16, 2017.

The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Company management. Based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A and incorporated by reference into Motorola Solutions’ 2017 Annual Report on Form 10-K.

Respectfully submitted,

Anne R. Pramaggiore, Chair

Egon P. Durban

Joseph M. Tucci

 

COMPENSATION AND LEADERSHIP COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

Anne R. Pramaggiore, Director and Chair of the Committee and Egon P. Durban, Director served on the Committee throughout 2017. Joseph M. Tucci, Director was appointed to the Committee on May 16, 2017 and Kenneth C. Dahlberg served as a member of the committee from January 1, 2017 until May 15, 2017. No member of the Committee was, during the fiscal year ended December 31, 2017, an officer, former officer, or employee of the Company or any of our subsidiaries. We did not have any compensation committee interlocks in 2017.

 

36   Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement


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NAMED EXECUTIVE OFFICER COMPENSATION

 

2017 SUMMARY COMPENSATION TABLE

 

Name and

Principal Position
            (a)

 

Year

(b)

   

Salary

($)(1)

(c)

   

Bonus

($)(2)

(d)

   

Stock
Awards

($)(3)

(e)

   

Option
Awards

($)(3)

(f)

   

Non-Equity
Incentive

Plan
Compensation
($)(4)

(g)

   

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings

($)(5)
(h)

   

All Other

Compensation

($)(6)

(i)

   

Total

($)

(j)

 

Gregory Q. Brown

Chairman and Chief Executive Officer

 

 

      2017       1,250,000       0       3,249,975       3,250,000       7,312,500       17,994       259,079       15,339,548  
      2016       1,250,000       0       2,437,465       2,437,499       5,715,000       25,469       359,278       12,224,711  
      2015       1,250,000       0       2,312,480       5,440,430       3,900,000       0       372,415       13,275,325  

Gino A. Bonanotte

Executive Vice President and Chief Financial Officer

 

 

      2017       662,231       0       699,981       699,986       1,880,766       227,952       20,800       4,191,716  
      2016       645,385       0       666,647       666,666       1,339,693       93,829       24,200       3,436,420  
      2015       622,404       0       666,642       1,303,842       732,212       0       20,600       3,345,700  

John P. Molloy

Executive Vice President, Worldwide Sales and Services

 

 

      2017       570,231       0       583,289       3,141,151       1,198,830       55,269       17,970       5,566,740  
      2016       497,615       300,000       466,661       466,666       818,416       35,444       17,112       2,601,914  

Bruce W. Brda

Executive Vice President, Products and Solutions

 

 

      2017       580,385       0       583,289       583,318       1,417,081       347,265       23,970       3,535,308  
      2016       550,769       0       466,661       466,666       1,068,901       179,594       24,200       2,756,791  

Mark S. Hacker

Executive Vice President, General Counsel and Chief Administrative Officer

 

 

      2017       558,539       0       516,584       516,654       1,492,856       123,053       12,870       3,220,556  
      2016       526,337       0       433,317       433,323       1,194,026       65,630       20,775       2,673,408  
      2015       507,488       0       593,740       1,237,164       641,876       0       14,450       2,994,718  

 

(1) Salary includes amounts deferred pursuant to salary reduction arrangements under the 401(k) and Deferred Compensation Plans.
(2) Mr. Molloy’s bonus in 2016 is to recognize his contributions since his promotion in November 2015 and to calibrate his compensation for prior incentive programs, which were prorated upon his promotion.
(3) The amounts in columns (e) and (f) reflect the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 8, “Share-Based Compensation Plans and Other Incentive Plans” in the Company’s Form 10-K for the fiscal year ended December 31, 2017. If maximum performance is achieved for performance-based stock awards, the aggregate grant date fair value in column (e) is $6,499,949 for Mr. Brown, $1,399,963 for Mr. Bonanotte, $1,166,578 for Mr. Molloy, $1,166,578 for Mr. Brda and $1,033,167 for Mr. Hacker. If maximum performance is achieved for performance-based option awards, the aggregate grant date fair value in column (f) is $8,124,999 for Mr. Brown, $1,749,955 for Mr. Bonanotte, $1,458,285 Mr. Molloy, $1,458,285 for Mr. Brda and $1,291,635 for Mr. Hacker.
(4) In 2017, the amounts in column (g) consist of awards earned by eligible NEOs at the time under the 2017 STIP and under the 2015-2017 LRIP. Earned payments in column (g) during fiscal year 2017 are as follows:

 

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

2017 STIP

    $2,625,000       $880,767       $758,407       $771,912       $742,856  

2015-2017 LRIP

    4,687,500       999,999       440,423       645,169       750,000  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

    $7,312,500       $1,880,766       $1,198,830       $1,417,081       $1,492,856  

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

 

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

2016 STIP

    $2,415,000       $789,693       $608,883       $673,920       $644,026  

2014-2016 LRIP

    3,300,000       550,000       209,533       394,981       550,000  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

    $5,715,000       $1,339,693       $818,416       $1,068,901       $1,194,026  

 

Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement   37


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In 2015, the amounts in column (g) consist of awards earned by eligible NEOs at the time under the 2015 STIP and under the 2013-2015 LRIP. Earned payments in column (g) during fiscal year 2015 are as follows:

 

    Mr. Brown     Mr. Bonanotte     Mr. Hacker  

2015 STIP

    $1,650,000       $520,330       $424,260  

2013-2015 LRIP

    2,250,000       211,882       217,616  
 

 

 

   

 

 

   

 

 

 

TOTAL

            $3,900,000               $732,212               $641,876  

 

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

 

NEO    Period  

 Change in Present Value 

of Pension Plan

  Above Market Deferred
 Compensation Earnings 
  Total

Gregory Q. Brown

   Dec. 31, 2016 to Dec. 31, 2017   $17,994   $0   $17,994
   Dec. 31, 2015 to Dec. 31, 2016   $15,798   $9,671   $25,469
     Dec. 31, 2014 to Dec. 31, 2015   ($1,384)   $0   ($1,384)

Gino A. Bonanotte

   Dec. 31, 2016 to Dec. 31, 2017   $125,870   $102,082   $227,952
   Dec. 31, 2015 to Dec. 31, 2016   $66,904   $26,925   $93,829
     Dec. 31, 2014 to Dec. 31, 2015   ($39,765)   $0   ($39,765)

John P. Molloy

   Dec. 31, 2016 to Dec. 31, 2017   $55,269   $0   $55,269
     Dec. 31, 2015 to Dec. 31, 2016   $31,528   $3,916   $35,444

Bruce W. Brda

   Dec. 31, 2016 to Dec. 31, 2017   $138,292   $208.973   $347,265
     Dec. 31, 2015 to Dec. 31, 2016   $76,279   $103,315   $179,594

Mark S. Hacker

   Dec. 31, 2016 to Dec. 31, 2017   $33,708   $89,345   $123,053
   Dec. 31, 2015 to Dec. 31, 2016   $19,229   $46,401   $65,630
     Dec. 31, 2014 to Dec. 31, 2015   ($7,067)   $0   ($7,067)

 

(6) The amounts in column (i) for 2017 consist of perquisite costs for personal use of Company aircraft, security system monitoring, costs for financial planning, guest attendance at Company events and Company matching contributions to the 401(k) Plan. The incremental cost to the Company for any personal use of Company aircraft is calculated by multiplying the number of hours an NEO travels in a particular plane by the direct cost per flight hour per plane. Direct costs include fuel, maintenance, labor, parts, loading and parking fees, catering and crew. Specific perquisites applicable to each NEO are identified below by an “X”. Where such perquisite exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for such officer, the dollar amount is given.

 

NEO  

Personal

Aircraft Use

   

Security System

Monitoring

   

Financial

Planning

   

Guest Attendance

at Company Events

   

401K Plan

Match

 

Gregory Q. Brown

    $229,318       X       X               X  

Gino A. Bonanotte

                    X               X  

John P. Molloy

                    X       X       X  

Bruce W. Brda

                    X       X       X  

Mark S. Hacker

                    X               X  

 

38   Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement


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GRANTS OF PLAN-BASED AWARDS IN 2017

 

      

Estimated Future Payouts

Under Non-Equity Incentive

Plan Awards

   

Estimated Future Payouts

Under Equity Incentive

Plan Awards

    All Other
Stock
Awards:
Number of
Shares of
Stock Units
(#)
(i)
    All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(j)
    Exercise
or Base
Price of
Option
Awards
($/Sh)(3)
(k)
   

Grant Date

Fair Value
of Stock

and

Option
Awards

(l)

 
Name (a)   Grant
Type
   

Grant

Date

(b)

    Threshold
($)
(c)
   

Target

($)
(d)

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

Target

(#)(1)(2)
(g)

    Maximum
(#)
(h)
         

Gregory Q. Brown 

    STIP       1/1/2017 (4)      0       1,875,000       3,675,000                                            
      LRIP       1/1/2017 (5)      937,500       3,125,000       7,812,500                                            
      MSUs       3/9/2017                         22,743       37,905 (6)      75,810                         3,249,975  
      POs       3/9/2017                         45,412       151,374 (7)      378,435                   81.37       3,250,000  

Gino A. Bonanotte 

    STIP       1/1/2017 (4)      0       629,119       1,233,073                                            
      LRIP       1/1/2017 (5)      210,000       700,000       1,750,000                                            
      MSUs       3/9/2017                         4,898       8,164 (6)      16,328                         699,981  
      POs       3/9/2017                         9,781       32,603 (7)      81,507                   81.37       699,986  

John P. Molloy 

    STIP       1/1/2017 (4)      0       541,719       1,061,769                                            
      LRIP       1/1/2017 (5)      175,000       583,334       1,458,335                                            
      MSUs       3/9/2017                         4,082       6,803 (6)      13,606                         583,289  
      POs       3/9/2017                         8,151       27,169 (7)      67,922                   81.37       583,318  
      PCSOs       3/9/2017                         145,836       223,273 (8)      330,203                   81.37       2,557,833  

Bruce W. Brda 

    STIP       1/1/2017 (4)      0       551,365       1,080,675                                            
      LRIP       1/1/2017 (5)      175,000       583,334       1,458,335                                            
      MSUs       3/9/2017                         4,082       6,803 (6)      13,606                         583,289  
      POs       3/9/2017                         8,151       27,169 (7)      67,922                   81.37       583,318  

Mark S. Hacker 

    STIP       1/1/2017 (4)      0       530,612       1,040,000                                            
      LRIP       1/1/2017 (5)      155,000       516,666       1,291,665                                            
      MSUs       3/9/2017                         3,615       6,025 (6)      12,050                         516,584  
      POs       3/9/2017                         7,219       24,064 (7)      60,160                   81.37       516,654  

 

(1) In the aggregate, the MSUs (at target) described in this table represent approximately 0.041% of the total shares of Common Stock outstanding on February 2, 2018. MSUs are not eligible for dividend equivalent rights. Each of these MSU target awards were granted under the Omnibus Plan. The fair value for MSUs is determined using a Monte Carlo simulation model.
(2) In the aggregate, the options (at target) described in this table are exercisable for approximately 0.163% of the total shares of Common Stock outstanding on February 2, 2018. All option awards were granted under our Omnibus Plan. All options entitle the holder to acquire shares of Common Stock at the exercise price determined on the grant date. The options carry the right to elect to have shares withheld upon exercise and/or to deliver previously-acquired shares of Common Stock to satisfy tax-withholding requirements. Options may be transferred to family members or certain entities in which family members have an interest. The performance-contingent stock options (“PCSOs”) granted to Mr. Molloy on March 9, 2017 expire on August 25, 2022; all other options expire at the end of ten years. However, options could expire or be cancelled earlier in certain situations.
(3) The exercise price of option awards is based on the fair market value of our Common Stock at the time of grant, which is the closing price for a share of our Common Stock on the date of grant.
(4) These grants were made pursuant to the STIP for the 2017 plan year and are payable in cash. The STIP is the Company’s annual pay-for-performance bonus plan that is based on a formula that combines Company and individual performance. For a detailed discussion of the STIP, including the targets and plan mechanics, see Compensation Discussion and Analysis. Threshold payouts assume the minimum individual performance factor of 0.0. Target payouts assume individual and business performance factors of 1.0. Maximum payouts assume the maximum individual and business performance factors of 1.4. Awards under the STIP for NEOs are determined using their eligible earnings and individual incentive target percentages for the plan year.
(5) These grants are for the 2017-2019 LRIP. Awards under the 2017-2019 LRIP cycle are determined in dollars but, at the discretion of the Compensation and Leadership Committee, may be paid in cash or Common Stock. For a discussion of the LRIP, including the targets and plan mechanics, see Compensation Discussion and Analysis. The amounts under Threshold assume the minimum performance level necessary to generate an award was achieved. If final cycle performance is below the minimum performance level at the end of the three-year cycle, awards will be $0. The amounts under Target assume the target level of performance is achieved. The amounts under Maximum will be payable if Motorola Solutions’ three-year total shareholder return ranks in the top 10th percentile among the S&P 500.
(6) MSUs are granted at target on the grant date. Actual shares are earned and vest on the first, second and third anniversary of the grant date based on stock price appreciation or depreciation. For every 1% increase or decrease in stock price, MSUs earned on the performance measurement date will increase or decrease by 1%. Maximum opportunity is 200% of the target award for 100% stock price appreciation. Minimum opportunity is 60% of the target award at 40% stock price depreciation. On March 9, 2018, the first anniversary of the grant date, the Company’s stock had appreciated by 33%; therefore, one-third of the target award was earned at 133%.

 

Motorola Solutions Notice of 2018 Annual Meeting of Stockholder and Proxy Statement   39


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(7) POs are granted at target on the grant date. Actual options are earned and vest on the third anniversary of the grant date based on the payout factor that corresponds with the Company’s relative total shareholder return percentile rank amongst the S&P 500. Maximum opportunity is 250% of the target award if percentile rank is at least the 90th percentile. Minimum opportunity is 30% of the target award if percentile rank is at least the 30th percentile.
(8) PCSOs vest upon the attainment of each stock price hurdle as follows: 44% vests when the Company closing stock price is $85.00 for ten consecutive trading days (which was met on June 30, 2017); 24% vests when the Company closing stock price is $102.50 for ten consecutive trading days (which was met on February 28, 2018); and 32% vests when the Company closing stock price is $120.00 for ten consecutive trading days. No PCSOs are exercisable prior to August 25, 2018. If any stock price hurdles are not met prior to August 25, 2018, the corresponding unvested PCSOs will expire.

OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR-END

 

    Option Awards   Stock Awards

 Name

 (a)

   Grant 
Date
 

Number of
Securities
Underlying
Unexercised
Options  (#)
Exercisable
(Vested)

(b)

 

Number of
Securities
Underlying
Unexercised

Options (#)
Unexercisable
(Unvested)

(c)

 

Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)

(d)

 

Option
Exercise
Price

($)

(e)

 

Option
Expiration
Date

(f)

   Grant 
Date
 

Number

of Shares
or Units of
Stock

That Have
Not Vested
(#)

(g)

 

Market
Value of
Shares or
Units of
Stock

That Have

Not Vested
($)
(1)

(h)

 

Equity
Incentive

Plan Awards:
Number of
Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

(#)

(i)

 

Equity
Incentive

Plan Awards
Market or
Payout Value

of Unearned
Shares,

Units or

Other Rights
That Have

Not Vested

($)(1)

(j)

 Gregory Q. Brown 

    8/27/2008       350,000 (2)      0               40.33       8/27/2018       3/9/2015                       12,767 (3)      1,153,370  
      5/7/2009       270,826 (4)      0               26.13       5/7/2019       3/10/2016                       21,248 (5)      1,919,544  
      5/5/2010       264,635 (6)      0               28.86       5/5/2020       3/9/2017                       37,905 (7)      3,424,337  
      2/1/2011       665,778 (8)      0               39.02       2/1/2021                                          
      2/22/2011       48,489 (9)      0               38.04       2/22/2021                                          
      2/22/2011       471,398 (9)      0               38.04       2/22/2021                                          
      5/2/2012       281,731 (10)      0               51.33       5/2/2022                                          
      5/13/2013       362,894 (11)      0               56.17       5/13/2023                                          
      3/10/2014       326,933 (12)      0               66.43       3/10/2024                                          
      3/9/2015                       132,749 (13)      66.57       3/9/2025                                          
      8/25/2015                       787,498 (14)      68.50       8/25/2022                                          
      3/10/2016                       123,106 (15)      71.22       3/10/2026                                          
      3/9/2017                       151,374 (16)      81.37       3/9/2027                                          

 TOTAL

            3,042,684       0       1,194,727                               0       0       71,920       6,497,252  

 Gino A. Bonanotte 

    5/13/2013       7,161 (6)      0         56.17       5/13/2023       3/9/2015           3,680 (3)      332,451  
    8/14/2013       16,040 (6)      0         57.71       8/14/2023       3/10/2016           5,811 (5)      524,965  
    3/10/2014       25,020 (6)      0         66.43       3/10/2024       3/9/2017           8,164 (7)      737,535  
    3/10/2014       41,736 (12)      0         66.43       3/10/2024            
    3/9/2015           38,270 (13)      66.57       3/9/2025            
    8/25/2015           160,417 (14)      68.50       8/25/2022            
    3/10/2016           33,670 (15)      71.22       3/10/2026            
    3/9/2017           32,603 (16)      81.37       3/9/3027            

 TOTAL

            89,957       0       264,960                               0       0       17,655       1,594,952  

 John P. Molloy

    3/9/2015       0       4,145 (6)              66.57       3/9/2025       3/9/2015       1,877 (6)      169,568                  
      11/10/2015       2,558 (6)      2,558 (6)              68.34       11/10/2025       11/10/2015       487 (6)      43,995                  
      3/10/2016                       23,569 (15)      71.22       3/10/2026       3/10/2016                       4,068 (5)      367,503  
      3/9/2017                       27,169 (16)      81.37       3/9/3027       3/9/2017                       6,803 (7)      614,583  
      3/9/2017                       330,203 (17)      81.37       3/9/3027                                          

 TOTAL

            2,558       6,703       380,941