SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
MOTOROLA, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
--
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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3) Filing Party:
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4) Date Filed:
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[LOGO]
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PRINCIPAL EXECUTIVE OFFICES: PLACE OF MEETING:
1303 East Algonquin Road 1297 East Algonquin Road
Schaumburg, Illinois 60196 Schaumburg, Illinois 60196
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
Notice is hereby given that the annual meeting of stockholders of Motorola,
Inc. (the "Company" or "Motorola"), a Delaware corporation, will be held in the
Auditorium at the Company's Galvin Center, 1297 East Algonquin Road, Schaumburg,
Illinois on Tuesday, May 3, 1994 at 5:00 P.M., local time, for the following
purposes:
1. To elect directors for the ensuing year;
2. To consider and vote upon the Long Range Incentive Plan of 1994;
3. To consider and vote upon a proposed amendment to the Company's restated
Certificate of Incorporation to increase the authorized Common Stock of
the Company from 700,000,000 to 1,400,000,000;
4. To act upon a stockholder proposal concerning the creation of an
independent nominating committee, if properly presented to the meeting,
which is described in the accompanying Proxy Statement;
5. To act upon a stockholder proposal concerning the amendment of the
Bylaws to create an independent nominating committee, if properly
presented to the meeting, which is described in the accompanying Proxy
Statement; and
6. To transact such other business as may properly come before the meeting.
Only stockholders of the Company of record at the close of business on March
15, 1994 will be entitled to vote at the meeting.
Stockholders are requested to vote, date, sign and mail their proxies in the
form enclosed even though they now plan to attend the meeting. If stockholders
are present at the meeting, their proxies may be withdrawn, and they may vote
personally on all matters brought before the meeting.
By order of the Board of Directors
Richard H. Weise
SECRETARY
March , 1994
IMPORTANT
WE HOPE YOU WILL ATTEND THE STOCKHOLDERS' MEETING. IN ORDER THAT THERE MAY
BE A PROPER REPRESENTATION AT THE MEETING, EACH STOCKHOLDER IS REQUESTED TO SEND
IN HIS OR HER PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. ATTENTION BY STOCKHOLDERS TO THIS REQUEST WILL REDUCE THE
COMPANY'S EXPENSE IN SOLICITING PROXIES.
PROXY STATEMENT
The annual meeting of stockholders of Motorola, Inc. (the "Company" or
"Motorola") will be held on May 3, 1994 for the purposes set forth in the
accompanying Notice. The only matters which the Board of Directors of the
Company intend to present or understand may be presented are the election of
directors; the adoption of the proposed Long Range Incentive Plan of 1994; the
adoption of a proposed amendment to the Company's restated Certificate of
Incorporation and action on two stockholder proposals, if properly presented at
the meeting and seconded. It is anticipated that this Proxy Statement and the
enclosed proxy will be first mailed to stockholders on or about March , 1994.
Only stockholders of record at the close of business on March 15, 1994 will
be entitled to notice of and to vote at the meeting or any adjournments thereof.
On that date, prior to giving effect to the two-for-one stock split in the form
of a 100% stock dividend being distributed to stockholders of record on March
15, 1994, there were 2 , , outstanding shares of the Company's common
stock, $3 par value per share ("Common Stock"), the only class of voting
securities of the Company. For each matter, including the election of directors,
which may come before the meeting, each share is entitled to one vote.
The enclosed proxy is solicited by the Board of Directors of the Company. If
the proxy in such form is properly executed and returned, and choices are
specified, the shares represented thereby will be voted at the meeting in
accordance with those instructions. If no choices are specified, the proxy will
be voted--
FOR - Election of directors nominated by the Board of Directors;
FOR - Adoption of the proposed Long Range Incentive Plan of 1994;
FOR - Adoption of the proposed amendment to the Company's restated
Certificate of Incorporation;
AGAINST - The stockholder proposal concerning the creation of an independent
nominating committee; and
AGAINST - The stockholder proposal concerning the amendment of the Bylaws to
create an independent nominating committee.
The proxy, if given, may be revoked by the stockholder giving it at any time
before it is voted, and such right is not limited by or subject to compliance
with any specified formal procedure. A proxy may be revoked by written notice of
revocation or by a later proxy, in either case delivered to the Secretary of the
Company. Attendance at the 1994 Annual Meeting will not automatically revoke a
proxy, but a stockholder in attendance may request a ballot and vote in person,
thereby revoking a prior granted proxy.
The Company's Annual Report for the fiscal year ended December 31, 1993 was
first mailed to stockholders on March , 1994. Stockholders are referred to
that report for financial and other information about the activities of the
Company. The Annual Report is not incorporated by reference into this Proxy
Statement and is not to be deemed a part hereof.
ELECTION OF DIRECTORS
The terms of office of all present directors of the Company will expire on
the day of the annual meeting upon the election of their successors. The number
of directors of the Company to be elected at the annual meeting is sixteen. The
directors elected at the annual meeting will serve until their respective
successors are elected and qualified or until earlier death or resignation.
NOMINEES
Each of the nominees named below is currently a director of the Company and
each was elected at the annual meeting of stockholders held on May 4, 1993.
At the time of the annual meeting, if any of the nominees named below is not
available to serve as a director (an event which the Board of Directors does not
now anticipate), the proxies will be voted for the election as directors of such
other person or persons as the Board of Directors may designate, unless the
Board of Directors, in its discretion, amends the Company's Bylaws to reduce the
number of directors.
Set forth below are the names and ages of the nominees, the principal
occupation of each, the year in which first elected a director of the Company,
the business experience of each for at least the past five years and certain
other information concerning each of the nominees.
2
[PHOTO] WILLIAM J. WEISZ
PRINCIPAL OCCUPATION: CHAIRMAN OF THE BOARD, MOTOROLA, INC.
DIRECTOR SINCE 1968
AGE AT 12/31/93--66
Mr. Weisz joined the Company in 1948; became vice
president in 1961; general manager of the communications
division in 1965; executive vice president and assistant
chief operating officer in 1969; president in 1970; chief
operating officer in 1972; vice chairman of the board in
1980; chief executive officer in 1986; and officer of the
board in 1988. Mr. Weisz retired as an officer of the Company
in 1989, but remained active with the Company as a
consultant, and a teacher at Motorola University. In October,
1993 he was elected acting chairman of the board and in
December, 1993 was elected chairman of the board. He is a member of the Board of
Directors of Harris Bankcorp, Inc. and its wholly owned subsidiary, Harris Trust
and Savings Bank. Mr. Weisz is a Fellow of the Institute of Electrical and
Electronics Engineers and the Radio Club of America and is past chairman of the
Electronic Industries Association Board of Governors. He is a member of the
Massachusetts Institute of Technology Corporation (Board of Trustees), and
presently is a member of the Visiting Committee to the Sloan School of
Management, MIT's Development Committee and its Investment Committee. He is past
Chairman of the Visiting Committee for the School of Electrical Engineering and
Computer Sciences. He served on the advisory committee on land mobile radio
service to the Federal Communications Commission. He served on the National
Academy of Sciences panel on Competition Among the Industrialized Allies. He is
a past member of the Defense Policy Advisory Committee on Trade to the Secretary
of Defense and the U.S. Trade Representative. Mr. Weisz received a B.S.E.E.
degree from the Massachusetts Institute of Technology and did graduate work at
Northwestern University and the University of Chicago. He has an honorary Doctor
of Business Administration degree from St. Ambrose College and has been given
the MIT Corporate Leadership Award and the Electronic Industries Association
Medal of Honor.
3
[PHOTO] ERICH BLOCH
PRINCIPAL OCCUPATION: DISTINGUISHED FELLOW AT THE COUNCIL ON
COMPETITIVENESS; FORMERLY DIRECTOR OF THE NATIONAL SCIENCE
FOUNDATION
DIRECTOR SINCE 1991; MEMBER OF LEGAL AND TECHNOLOGY
COMMITTEES
AGE AT 12/31/93--68
Mr. Bloch is currently the Distinguished Fellow at the
Council on Competitiveness, a not-for-profit, private
organization dedicated to improving the country's
competitiveness in the global marketplace. He previously was
the Director of the National Science Foundation (NSF). Before
joining NSF, Mr. Bloch was a corporate vice president for
Technical Personnel Development at International Business
Machines Corporation, a producer of information handling systems. Mr. Bloch
began his career at IBM in 1952 when he joined the company as an electrical
engineer and held a variety of increasingly responsible positions in both the
computer and semiconductor areas of the business. From 1981 to 1984 Mr. Bloch
served as chairman of the Semiconductor Research Cooperative, a group made up of
leading computer and electronics firms that fund advanced research in
universities and shares in the results. He was also IBM's representative on the
Board of the Semiconductor Industry Association. In 1985 Mr. Bloch was awarded
the National Medal of Technology by President Reagan. In 1989 he received the
Institute of Electrical and Electronics Engineers (IEEE) United States
Activities Board Award for Distinguished Public Service and the IEEE 1990
Founders Medal. Mr. Bloch has received numerous honorary doctoral degrees from
some of the country's most esteemed colleges and universities. He is a member of
the National Academy of Engineering, a Fellow of the American Association for
the Advancement of Science, and a Fellow of the IEEE. He received his education
in electrical engineering at the Federal Polytechnic Institute of Zurich,
Switzerland, and a Bachelor of Science degree in electrical engineering from the
University of Buffalo. He is a director of Convex Computer Corporation.
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[PHOTO] DAVID R. CLARE
PRINCIPAL OCCUPATION: RETIRED; FORMERLY PRESIDENT,
JOHNSON & JOHNSON
DIRECTOR SINCE 1986; CHAIRMAN OF THE COMPENSATION COMMITTEE
AND MEMBER OF THE EXECUTIVE COMMITTEE
AGE AT 12/31/93--68
Mr. Clare joined Johnson & Johnson, a health-care
products supplier, in 1946 as a manufacturing trainee and has
spent his entire career with that company. He served in a
variety of assignments and in 1971, was elected a Director
and member of the Executive Committee. In 1976, he became
President and Chairman of the Executive Committee. In 1989,
he retired from those positions and became Chairman of the
Finance Committee and, in 1990, he retired from Johnson & Johnson's Board of
Directors. He is a member of the Board of Trustees of the Robert Wood Johnson
Foundation. He is a graduate of the Massachusetts Institute of Technology.
4
[PHOTO] WALLACE C. DOUD
PRINCIPAL OCCUPATION: RETIRED; FORMERLY VICE PRESIDENT,
INTERNATIONAL BUSINESS MACHINES CORPORATION
DIRECTOR SINCE 1985; CHAIRMAN OF THE AUDIT COMMITTEE AND
MEMBER OF THE EXECUTIVE AND TECHNOLOGY COMMITTEES
AGE AT 12/31/93--68
Mr. Doud retired in 1985 as vice president of
International Business Machines Corporation, a producer of
information handling systems. He served IBM in a variety of
marketing and staff capacities for over 37 years, the last 15
of which were as the officer responsible for intellectual
property matters, standards, intercompany relationships and
telecommunications policy. A past chairman and director of
the Computer and Business Equipment Manufacturers Association, Mr. Doud also
served as a director of the American Arbitration Association and has been
recognized for involvement in numerous civic activities including United Way,
American Cancer Society, Urban League and Legal Aid Society. He is a director of
Clayton Homes, Inc. Mr. Doud received a B.B.A. degree from the University of
Wisconsin and has been awarded an honorary Doctor of Humane Letters from Mercy
College.
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[PHOTO] CHRISTOPHER B. GALVIN
PRINCIPAL OCCUPATION: PRESIDENT AND CHIEF OPERATING OFFICER,
MOTOROLA, INC.
DIRECTOR SINCE 1988; MEMBER OF THE EXECUTIVE AND FINANCE
COMMITTEES
AGE AT 12/31/93--43
Mr. Galvin began working for the Company part-time in
1967 and full-time in 1973. Between 1973 and 1983 he served
in the positions of salesman, zone sales manager, area sales
manager, product marketing manager and product manager in the
communications sector. He attended graduate school from 1975
to 1977. From 1983 to 1985, he served as vice president of
marketing, sales and service, and vice president and general
manager of U.S. operations for Tegal Corp., then a Motorola
new enterprise company. He returned to the communications sector's paging
division as product director and became vice president and general manager of
that division in 1986. He moved to chief corporate staff officer in 1988 and
later was elected to executive vice president. In January of 1990, he was
promoted to senior executive vice president and assistant chief operating
officer, the third member in the chief executive's office and was elected
president and chief operating officer in December of 1993. Mr. Galvin received a
bachelor's degree from Northwestern University and a master's degree with
distinction from the Kellogg Graduate School of Management at Northwestern. He
is a trustee of Northwestern University and the American Enterprise Institute
and is a member of the Investment Policy Advisory Committee of the U. S. Trade
Representatives office. Mr. Galvin is a son of Robert W. Galvin.
5
[PHOTO] ROBERT W. GALVIN
PRINCIPAL OCCUPATION: CHAIRMAN OF THE EXECUTIVE COMMITTEE,
MOTOROLA, INC.
DIRECTOR SINCE 1945
AGE AT 12/31/93--71
Mr. Galvin started his career at the Company in 1940. He
held the senior officership position in the Company from 1959
until 1990, when he became Chairman of the Executive
Committee. He continues to serve as a full time officer of
the Company. He attended the University of Notre Dame and the
University of Chicago, and is currently a member of the Board
of Trustees of Illinois Institute of Technology. Mr. Galvin
has been awarded a number of honorary degrees as well as
industrial, professional and national awards and recognition.
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[PHOTO] JOHN T. HICKEY
PRINCIPAL OCCUPATION: RETIRED; FORMERLY EXECUTIVE VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, MOTOROLA, INC.
DIRECTOR SINCE 1974; CHAIRMAN OF THE FINANCE COMMITTEE AND
MEMBER OF THE EXECUTIVE AND AUDIT COMMITTEES
AGE AT 12/31/93--68
Mr. Hickey joined the Company in 1948; became manager of
the semiconductor products division in 1956; assistant to the
president in 1958; vice president for planning in 1965; vice
president for finance and secretary in 1970; senior vice
president and chief financial officer in 1974; and executive
vice president in 1984. He retired in 1985 but continues to
serve as a member of the committees which oversee the
investments of the Company's domestic employee retirement and savings plans. He
also serves as a director of Trustmark Insurance Company of Lake Forest,
Illinois. He is a past Chairman of the Board of Trustees of Loyola Academy,
Wilmette, Illinois. Mr. Hickey graduated from Loyola University of Chicago and
holds an M.B.A. degree from the University of Chicago.
6
[PHOTO] ANNE P. JONES
PRINCIPAL OCCUPATION: PARTNER, SUTHERLAND, ASBILL & BRENNAN
DIRECTOR SINCE 1984; CHAIRMAN OF THE LEGAL COMMITTEE AND
MEMBER OF THE AUDIT COMMITTEE
AGE AT 12/31/93--58
Ms. Jones became a partner in the Washington, D.C. office
of the Sutherland, Asbill & Brennan law firm in September
1983. Prior thereto, she was a Commissioner of the Federal
Communications Commission, General Counsel of the Federal
Home Loan Bank Board, and was on the staff of the Securities
and Exchange Commission from 1968 to 1977. She was Director
of the Division of Investment Management of the Securities
and Exchange Commission in 1976 and 1977. Ms. Jones is a
director of the IDS Mutual Fund Group and C-COR Electronics, Inc. She holds B.S.
and L.L.B. degrees from Boston College and its Law School, respectively.
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[PHOTO] DONALD R. JONES
PRINCIPAL OCCUPATION: RETIRED; FORMERLY EXECUTIVE VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, MOTOROLA, INC.
DIRECTOR SINCE 1987; MEMBER OF THE FINANCE AND LEGAL
COMMITTEES
AGE AT 12/31/93--63
Mr. Jones joined the Company in 1951; became director of
finance and planning of the communications division in 1968;
treasurer of the Company in 1971; vice president and
assistant chief financial officer in 1974; senior vice
president and assistant chief financial officer in 1984; and
executive vice president and chief financial officer in 1985.
He retired in 1991 but remains active with the Company as a
consultant. He is a trustee of the Kemper Mutual Funds,
Chicago, Illinois. Mr. Jones received a B.S.E.E. degree from the University of
Illinois and did graduate work in Business Administration at Northwestern
University.
7
[PHOTO] WALTER E. MASSEY
PRINCIPAL OCCUPATION: PROVOST AND SENIOR VICE PRESIDENT,
ACADEMIC AFFAIRS, UNIVERSITY OF CALIFORNIA SYSTEM
DIRECTOR SINCE 1993; MEMBER OF THE NOMINATING AND TECHNOLOGY
COMMITTEES
AGE AT 12/31/93--55
After being staff physicist and post-doctoral fellow at
Argonne National Laboratory, assistant professor at the
University of Illinois, associate professor and professor of
physics at Brown University, Dr. Massey then joined Argonne
National Laboratory as its director and was named to the
additional position of Vice President for Research at the
University of Chicago in 1982. In 1984, he became Vice
President for Research and for Argonne National Laboratory, the University of
Chicago. In 1991, he was appointed, by President Bush, the Director of the
National Science Foundation, which office he held until April, 1993. Since
April, 1993 he has been Provost and Senior Vice President, Academic Affairs,
University of California System. Dr. Massey received a Ph.D. degree in Physics
and Master of Arts degree from Washington University. He also holds a Bachelor
of Science degree in Physics and Mathematics from Morehouse College. He also was
a past President of the American Physical Society. He is a director of Amoco
Corporation and BankAmerica Corporation and its subsidiary, Bank of America,
N.T.S.A.
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[PHOTO] JOHN F. MITCHELL
PRINCIPAL OCCUPATION: VICE CHAIRMAN AND OFFICER OF THE BOARD,
MOTOROLA, INC.
DIRECTOR SINCE 1974; MEMBER OF THE EXECUTIVE AND TECHNOLOGY
COMMITTEES
AGE AT 12/31/93--65
Mr. Mitchell joined the Company in 1953; became vice
president of the Company in 1968; general manager of the
communications division in 1972; executive vice president and
assistant chief operating officer in 1975; president in 1980;
chief operating officer in 1986; and vice chairman and
officer of the board in 1988. He is former chairman of the
Electronic Industries Association and a former member of its
Board of Governors. He is a former director of the National Association of
Manufacturers; a member of the President's National Security Telecommunications
Advisory Committee; a Fellow of the Radio Club of America; is a director of
National Material Corporation and is on the Advisory Board of Trustees of the
Foundation for Student Communications, Princeton University. Mr. Mitchell
received a B.S. degree from the Illinois Institute of Technology. He was awarded
an honorary doctorate from Iowa Wesleyan College.
8
[PHOTO] THOMAS J. MURRIN
PRINCIPAL OCCUPATION: DEAN OF DUQUESNE UNIVERSITY'S SCHOOL OF
BUSINESS ADMINISTRATION
DIRECTOR SINCE 1991; MEMBER OF THE COMPENSATION AND
NOMINATING COMMITTEES
AGE AT 12/31/93--64
Mr. Murrin is Dean of Duquesne University's School of
Business Administration. He previously was Deputy Secretary
of the U.S. Department of Commerce and served as a U.S.
delegate to the NATO Industrial Advisory Group and as a
member of the Defense Policy Advisory Committee on Trade.
From 1983 to 1987, he was President of the Energy and
Advanced Technology Group of Westinghouse Electric
Corporation, which he joined in 1951. Mr. Murrin also served as chairman of the
Commission on the Federal Appointment Process, the Federal Quality Institute,
the Board of Overseers of the Commerce Department's Malcolm Baldrige National
Quality Award and the Defense Department's Defense Manufacturing Board. He has
also served as Distinguished Service Professor in Technology and Management at
Carnegie Mellon University, as Chairman of the Board of Trustees of Duquesne
University and as a member of the Board of Trustees of Fordham University. He is
a director of Duquesne Light Company and its holding company, DQE, Inc.
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[PHOTO] SAMUEL C. SCOTT III
PRINCIPAL OCCUPATION: CORPORATE VICE PRESIDENT OF CPC
INTERNATIONAL, INC.
DIRECTOR SINCE 1993; MEMBER OF THE COMPENSATION AND FINANCE
COMMITTEES
AGE AT 12/31/93--49
Mr. Scott is currently a Corporate Vice President of CPC
International, Inc., a consumer foods company, and President
of Corn Products, its North American corn refining business.
Mr. Scott joined Corn Products in 1973 and has held a variety
of increasingly responsible positions with the company since
that time. He received a Bachelor of Science degree in
mechanical engineering and a Master of Business
Administration degree from Fairleigh Dickinson University.
9
[PHOTO] GARY L. TOOKER
PRINCIPAL OCCUPATION: VICE CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER, MOTOROLA, INC.
DIRECTOR SINCE 1986; MEMBER OF THE EXECUTIVE, FINANCE AND
LEGAL COMMITTEES
AGE AT 12/31/93--54
Mr. Tooker started with the Company in 1962, holding
ascending marketing and operations assignments within the
semiconductor division; he was appointed director of product
operations--MOS in 1974; in 1975, he was elected corporate
vice president and general manager of the discrete
semiconductor division; vice president and general manager of
the group's international semiconductor division in 1980;
vice president and general manager of the semiconductor products sector in 1981;
executive vice president and general manager of the semiconductor products
sector in 1984; senior executive vice president and chief corporate staff
officer in 1986; chief operating officer in 1988; president in 1990; acting
chief executive officer in October, 1993 and vice chairman of the board and
chief executive officer in December, 1993. Mr. Tooker has served as chairman of
the Semiconductor Industry Association Board of Directors, member of the Arizona
Association of Industries Board of Directors, the Scottsdale, Arizona Boys Club
Board of Directors and as a member of the Advisory Council on Engineering at
Arizona State University. He is the past Chairman of the Board of Directors of
the American Electronics Association. He is a member of the Board of Directors
of the National Alliance of Business, Junior Achievement of Chicago, the Arizona
State University Alumni Association, the Arizona State University Foundation and
the Pacific Basin Economic Council. He is Chairman of the U.S. Committee of the
Pacific Basin Economic Council and is active in the Chicago United Way. He is a
director of Eaton Corporation and a member of the Electrical Manufacturers Club,
the Chicago Economics Club, the American Management Association and the
Institute of Electrical and Electronics Engineers. In 1983, he received the
Distinguished Alumnus Award from Arizona State University. He is a graduate of
Arizona State University where he received a bachelor's degree in Electrical
Engineering and did post-graduate studies in Business Administration.
10
[PHOTO] GARDINER L. TUCKER
PRINCIPAL OCCUPATION: RETIRED; FORMERLY VICE PRESIDENT FOR
SCIENCE AND TECHNOLOGY, INTERNATIONAL PAPER COMPANY
DIRECTOR SINCE 1980; CHAIRMAN OF THE TECHNOLOGY COMMITTEE AND
MEMBER OF THE EXECUTIVE AND AUDIT COMMITTEES
AGE AT 12/31/93--68
Dr. Tucker joined International Business Machines
Corporation in 1952 as a research scientist. Thereafter, he
served in a variety of research positions for IBM, including
manager of semiconductor and transistor research at an IBM
laboratory. In 1961, he was appointed Director of Development
Engineering for IBM World Trade Corporation and in 1963,
Director of Research for IBM. Starting in 1967, he served in
the Department of Defense as Deputy Director of Defense Research and Engineering
for Electronics and Information Systems; as Principal Deputy Director of Defense
Research and Engineering; and in 1970, as Assistant Secretary of Defense for
Systems Analysis. From 1973 to 1976, he was Assistant Secretary General of NATO
for Defense Support. From 1976 to 1985, he was vice president for science and
technology, International Paper Company, a paper and building materials
producer. Dr. Tucker received an A.B. degree from Columbia College in New York
City and a Ph.D. in Physics from Columbia University.
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[PHOTO] B. KENNETH WEST
PRINCIPAL OCCUPATION: CHAIRMAN OF THE BOARD, HARRIS BANKCORP,
INC.
DIRECTOR SINCE 1976; CHAIRMAN OF THE NOMINATING COMMITTEE AND
MEMBER OF THE EXECUTIVE AND FINANCE COMMITTEES
AGE AT 12/31/93--60
Mr. West is Chairman of the Board of Harris Trust and
Savings Bank and its holding company, Harris Bankcorp, Inc.
He had been employed at Harris since 1957, and was elected
President of Harris in 1980 and Chairman and Chief Executive
Officer in 1984. In September 1993 he retired as chief
executive officer and as an employee, retaining his position
as Chairman of the Board. He is also a director of Bank of
Montreal. A native of Carthage, Illinois, Mr. West joined
Harris after two years of service as a U.S. Navy Officer. He is a 1955 Phi Beta
Kappa graduate of the University of Illinois and after joining the bank
completed night classes to receive the M.B.A. with honors in 1960 from the
University of Chicago. He is a member of and past chairman of the board of
trustees of the University of Chicago and in 1988 was awarded the University's
honorary Doctor of Laws degree. He is immediate past President of the University
of Illinois Foundation and is Chairman of the Civic Committee of the Commercial
Club of Chicago of which he is a past President.
11
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick served as the Company's independent public accountants for
the fiscal year ended December 31, 1993 and are serving in such capacity for the
current fiscal year. The appointment of independent public accountants is made
annually by the Board of Directors. The decision of the Board of Directors is
based on the recommendation of the audit committee, which reviews both the audit
scope and estimated audit fees. Representatives of KPMG Peat Marwick are
expected to be present at the annual meeting and will have the opportunity to
make a statement if they desire to do so and to respond to appropriate questions
of stockholders.
MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY
During 1993, the Board of Directors of the Company met in person or through
a conference call eight times. Two of the meetings were of two days' duration.
All incumbent directors attended 75% or more of the combined total of
meetings and actions of the Board of Directors and the committees on which they
served during 1993.
COMMITTEES OF THE BOARD OF DIRECTORS OF THE COMPANY
The Company has standing audit, compensation, nominating, executive,
finance, legal and technology committees of the Board of Directors.
The present members of the audit committee are Messrs. Doud, CHAIRMAN,
Hickey and Tucker and Ms. A. Jones. This committee held two meetings during
1993. The principal functions of the audit committee are as follows:
1. Recommend to the Board of Directors the selection of independent public
accountants;
2. Review and approve the scope of the examinations to be conducted by the
independent public accountants;
3. Review the reports and evaluations of the independent public accountants
and monitor progress toward correction of any important deficiencies
specified by such accountants;
4. Review the accounting standards and principles followed by the Company,
and in this connection, receive annually from the independent public
accountants a report describing any material item affecting the financial
statements which might be given alternative treatment;
5. Receive internal audit reports directly from the Company's internal
auditors and monitor progress in the correction of any important
deficiencies; and
6. Monitor adherence to established corporate practices, including such
matters as conflict of interest, political contributions, questionable
payments and standards of business conduct, and arrange for any special
investigations or audits that may be deemed necessary.
12
The present members of the compensation committee are Messrs. Clare,
CHAIRMAN, Murrin and Scott. This committee met eleven times during 1993. The
compensation of executive officers is reviewed by the committee and the
compensation of other elected officers of the Company is reviewed and fixed by
the compensation committee. In addition, the compensation committee administers
the Motorola Executive Incentive Plan, the currently-existing Long Range
Incentive Program and the Share Option Plans, will administer the proposed Long
Range Incentive Plan of 1994 described on pages 32 and 33, if approved by
stockholders, and generally exercises the authority of the Board of Directors
with respect to other benefit plans of the Company.
The present members of the nominating committee are Messrs. West, CHAIRMAN,
Massey and Murrin. This committee held one informal meeting in 1993. The
principal functions of the nominating committee are as follows:
1. Provide written criteria to be used as a guideline in selecting and
reviewing candidates for the Board;
2. Develop and maintain a list of potential candidates for the Board;
3. Provide an indoctrination and education program for new members of the
Board;
4. Review the performance and contribution of outside members of the Board;
and
5. Determine the need for, and qualification of, any corporate officer to
be a candidate for nomination.
The nominating committee will consider individuals recommended by
stockholders of the Company as potential future nominees. The names of such
individuals together with a full statement of their qualifications to serve as
directors of the Company should be submitted to the nominating committee in care
of the Secretary of the Company at 1303 East Algonquin Road, Schaumburg,
Illinois 60196.
Messrs. R. Galvin, CHAIRMAN, Clare, Doud, C. Galvin, Hickey, Mitchell,
Tooker, Tucker and West are the present members of the executive committee which
reviews the Company's strategic planning process and the allocation of resources
and exercises the authority of the Board on specific matters assigned by the
Board from time to time. This committee held two meetings in 1993.
Messrs. Hickey, CHAIRMAN, C. Galvin, D. Jones, Scott, Tooker and West are
the present members of the finance committee, which discusses and makes
recommendations with respect to the overall financial posture of the Company.
This committee held three meetings in 1993.
Messrs. Tucker, CHAIRMAN, Bloch, Doud, Massey and Mitchell are the present
members of the technology committee, which identifies and assesses significant
technological issues and needs affecting the Company. This committee held five
meetings in 1993, including one two-day meeting.
13
Ms. A. Jones, CHAIRMAN, and Messrs. Bloch, D. Jones and Tooker are the
present members of the legal committee, which is responsible for maintaining an
overview of the Company's legal affairs and its relationship with all internal
and external attorneys. This committee held two meetings in 1993.
DIRECTOR COMPENSATION
The current standard arrangement for compensating directors who are not
employees ("non-officer directors") of the Company is the payment of an annual
retainer of $35,000 to each director. Each non-officer director who is chairman
of a committee receives an additional $4,000 per annum. In addition, each
non-officer director receives $1,500 per day for directors' meetings attended,
$1,000 per day for full or partial days devoted to assigned work on behalf of
committees of the board, including attendance at committee meetings which are
not held in conjunction with, and on the same day as, directors' meetings; $500
per day for committee meetings attended which are held in conjunction with, and
on the same day as, directors' meetings and $1,000 per day for certain other
services for the benefit of the Company or any subsidiary which are requested by
the board, any committee or a member of the Chief Executive Office. Non-officer
directors may elect to defer receipt of all or any portion of their annual
retainer and their per meeting fees until the year after that in which they
cease being a director, become disabled or reach a designated age. Such deferred
amounts are credited with interest at a rate based on the discount rate for
ninety-day Treasury bills. Payments generally may be made in a lump sum or in
annual installments over a period not exceeding ten years. The entire
undistributed deferred amount (plus interest) will be distributed in a lump sum
upon a participating director's death. The Company also reimburses its directors
and spouses who accompany directors, in certain instances, for travel, lodging
and related expenses they incur in attending board and committee meetings. In
addition, non-officer directors participate in a retirement plan which will pay
the director, upon retirement on or after age 65, an annual benefit equal to 10
percent of the annual retainer in effect on the date of his or her retirement
for each year of service with a maximum benefit equal to 80 percent of such
retainer. Benefits will continue for the life of the retired director and the
director's spouse. Directors who are full time employees of the Company do not
accrue benefits under this plan unless they remain on the Board of Directors
after retiring from the Company. Non-officer directors are covered by insurance
which 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
directors and their spouses during the year ended December 31, 1993 was
approximately $3,025.
Mr. Robert W. Galvin, a director and executive officer, owns an airplane
which he used on business travel for the Company for approximately 79.8% of its
miles flown in 1993. The Company employs pilots and mechanics for airplanes
which it owns. They also devote a portion of their time to Mr. Galvin's
airplane, including those times when it is not being used on Company business.
The Company pays the salaries and the cost of fringe benefits of these
employees. Mr. Galvin pays all of the other expenses of his airplane, except
that the cost of fuel, oil and relatively minor incidental crew and flight
expenses incurred solely in connection with Company business flights, are paid
by
14
the Company. Mr. Galvin does not charge the Company when other Company personnel
accompany him on his airplane on business trips. In 1993, and historically, the
percentage of the total expenses of the airplane which has been paid by the
Company has been less than the percentage of usage of the airplane for Company
business. The Company considers the arrangement to be economically beneficial to
it.
Mr. John Hickey, a director, has a consulting agreement with the Company
under which he serves as a member of the Profit Sharing and Pension Committees
and consults with investment professionals within the Company on an as-needed
basis. He receives $8,000 a calendar quarter under this agreement and received
$32,000 under this arrangement in 1993. In addition, Mr. Donald Jones, a
director, has a consulting agreement with the Company under which he receives
$6,000 plus specified expenses each calendar quarter for performing a maximum of
four days of consulting services for the Company each quarter. If more than four
days of consulting services are required quarterly, Mr. Jones receives $1,500
for each additional day, or portion thereof. Mr. Jones received during 1993
$24,000 for his services and for reimbursement of his expenses. Mr. Erich Bloch,
a director, has a consulting agreement with the Company under which he receives
$30,000 each year plus expenses and received $30,000 under this agreement in
1993. Finally, Dr. Gardiner Tucker, a director, also has a consulting agreement
with the Company under which he was compensated $10,000 in 1993 for his services
and for reimbursement of his reasonable and ordinary expenses connected with his
services. Ms. Anne Jones is a partner in the law firm of Sutherland, Asbill &
Brennan which furnished legal services to the Company in 1993 and the Company
expects the firm to continue furnishing legal services in 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The present members of the compensation committee are Messrs. Clare, Murrin
and Scott. Mr. Clare became chairman of the committee on May 5, 1993. Mr. West
was a member of the compensation committee from May 5, 1993 to January 29, 1994.
Mr. William G. Salatich was a member of the compensation committee until May 5,
1993 and Mr. William J. Weisz was chairman of the compensation committee until
May 5, 1993 and a member of the committee until September 10, 1993. Mr. Weisz,
who served as chairman of the compensation committee for about four years, was
formerly an officer of Motorola, was recently elected Chairman of the Board of
Directors and has a consulting agreement with the Company. Under this agreement,
Mr. Weisz performs services as a consultant to the Company on various matters.
During 1993, Mr. Weisz was compensated at the rate of $2,000 per day for his
services and received $80,000 for such services during 1993. He also was and is
reimbursed for his expenses which are necessary for and incident to the
performance of such services. In addition to the consulting arrangement and the
standard arrangement for compensating non-officer directors, the Company paid
Mr. Weisz $2,500 per day for his service from October 27, 1993 through October
31, 1993, and $75,000 per month in November and December, 1993 and January, 1994
for his service as Chairman of the Board of Directors. The Company and Mr. Weisz
amended this consulting agreement in 1994 to provide that, in addition to the
other payments Mr. Weisz will continue to receive as a director, Mr. Weisz will
receive $25,000
15
monthly for his services to the Company, including service as Chairman of the
Board. No other person who was a member of the compensation committee was
formerly an officer or an employee of the Company.
APPROVAL BY SHAREHOLDERS
In order to be elected a nominee must be approved by the affirmative vote of
a plurality of the outstanding shares of Common Stock represented at the meeting
and entitled to vote. Abstentions will count as votes against this proposal but
broker non-votes will not count as being represented at the meeting and,
therefore, will not be taken into account for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTORS
OF THE NOMINEES NAMED HEREIN. UNLESS INDICATED OTHERWISE ON THE PROXY, THE
SHARES WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF SUCH NOMINEES.
16
SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY
The following table sets forth information as of January 31, 1994 regarding
the beneficial ownership of Common Stock by each director and nominee for
director of the Company, by the six highest compensated executive officers of
the Company, and by all current directors and current executive officers of the
Company as a group.
SHARES UNDER TOTAL SHARES
SHARES EXERCISABLE BENEFICIALLY
NAME OWNED(1) OPTIONS(2) OWNED(3)
- ----------------------------------------- ---------- ------------- -----------------
George M.C. Fisher(4) 59,820 -- 60,299
Gary L. Tooker 79,113 174,000 253,869(5)
Robert W. Galvin 7,277,074 -- 7,294,239(6)
Christopher B. Galvin 1,352,836 160,800 1,513,832(7)
John F. Mitchell 118,477 98,000 219,145
[Other exec. officer]
William J. Weisz 206,136 -- 206,136(8)
Erich Bloch 2,000 -- 2,000(9)
David R. Clare 20,116 -- 20,116
Wallace C. Doud 2,086 -- 2,086
John T. Hickey 30,130 -- 31,930(10)
Anne P. Jones 1,779 -- 1,779
Donald R. Jones 51,202 43,000 94,202
Walter E. Massey 323 -- 323
Thomas J. Murrin 3,000 -- 4,000(11)
Samuel C. Scott III 1,600 -- 1,600
Gardiner L. Tucker 2,042 -- 2,042
B. Kenneth West 5,000 -- 5,000
All current directors and current
executive officers as a group
(31 persons)(12) 8,675,229 1,205,740 10,151,393(13)
<FN>
- --------------------------
(1) Includes shares over which the person currently holds or shares voting
and/or investment power but excludes interests, if any, in shares held in
the Company's Profit Sharing and Employee Stock Ownership Plan Trusts and
the shares listed under "Shares Under Exercisable Options." The numbers in
this table do not reflect the 1994 two-for-one stock split in the form of a
100% stock dividend.
(2) Includes shares under options exercisable on January 31, 1994 and options
which become exercisable within 60 days thereafter.
(3) Includes interests, if any, in shares held in the Company's Profit Sharing
and Employee Stock Ownership Plan Trusts, which are subject to some
investment restrictions, and the shares listed under "Shares Under
Exercisable Options." Unless otherwise indicated, each person has sole
voting and investment power over the shares reported. Each director, other
than Mr. R. Galvin, owns less than 1% of the Common Stock. Mr. R. Galvin
beneficially owns 2.7% of the Common Stock. All directors and executive
officers as a group own 3.7%.
(4) Mr. Fisher resigned from the Company on October 27, 1993.
(5) Mr. Tooker has shared voting and investment power over 79,113 of these
shares.
h-TM-
17
(6) Mr. R. Galvin has or shares investment and voting power with respect to
these shares as follows: sole voting power, 4,835,641 shares; shared voting
power, 718,787 shares; sole dispositive power, 6,558,287 shares; and shared
dispositive power, 718,787 shares. Included in Mr. R. Galvin's shares are
718,787 shares which are shown in this table to be owned by Mr. C. Galvin.
Mr. R. Galvin disclaims beneficial ownership of all shares not directly held
by him and of 15,611 shares owned by his wife which are included for him
under "Total Shares Beneficially Owned."
(7) Mr. C. Galvin has or shares investment and voting power with respect to
these shares as follows: sole voting power, 627,843 shares; shared voting
power, 718,787 shares; sole investment power, 627,843 shares and shared
investment power, 718,787 shares. Included in Mr. C. Galvin's shares are
718,787 shares which are shown in this table to be owned by Mr. R. Galvin.
Mr. C. Galvin disclaims beneficial ownership of all shares not held directly
by him and of 6,206 shares owned by his wife which are included for him
under "Total Shares Beneficially Owned."
(8) Mr. Weisz disclaims beneficial ownership of 16,030 shares owned by his wife
which are included for him under "Total Shares Beneficially Owned."
(9) Mr. Bloch has shared voting and investment power over these shares.
(10) Mr. Hickey disclaims beneficial ownership of 1,800 shares owned by his wife
which are included for him under "Total Shares Beneficially Owned."
(11) Mr. Murrin disclaims beneficial ownership of 1,000 shares held by his wife
as trustee which are included for him under "Total Shares Beneficially
Owned."
(12) Each director and officer (as defined) of the Company is required to report
to the Securities and Exchange Commission, by a specified date, his or her
transactions related to Common Stock. During the period January 1, 1993
through December 31, 1993, Mr. Scott, a director, failed to timely report
one transaction and 12 trusts of which Mr. Robert Galvin, a director and
executive officer, could be deemed to be a trustee under SEC rules, and Mr.
Robert Galvin, failed to timely report a portion of fourteen annual
exclusion gift transactions totalling approximately 4,800 shares, as well as
two transfers related to those trusts.
(13) All directors and executive officers as a group have shared voting and
investment power over 799,940 of these shares.
18
SUMMARY COMPENSATION TABLE
Furnished below is a summary concerning the compensation awarded and/or paid
to each of the following current or past executive officers during each of the
Company's last three fiscal years:
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------- -----------------------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION UNDERLYING LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(2) ($)(3)(4) OPTIONS (#)(5) PAYOUTS ($)(6) ($)(7)(8)
- ----------------------- --------- ----------- ------------ ------------- ------------- ----------------- -------------
George M.C. Fisher 1993 $[825,000] $ [] $ 3,558 -0- -0- $ 10,019
Former Chairman of the 1992 921,250 535,000 6,048 80,000 -0- 5,540
Board and Chief 1991 871,667 246,700 8,025 70,000 -0- 1,984
Executive Officer
(1/1/93 to 10/27/93)
Gary L. Tooker 1993 770,000 [] 3,750 38,000 -0- 10,350
Vice Chairman and Chief 1992 715,000 415,000 5,331 60,000 -0- 5,106
Executive Officer 1991 676,667 191,500 6,519 54,000 -0- 2,007
(12/16/93 to present)
and acting Chief
Executive Officer
(10/27/93 to 12/15/93)
John F. Mitchell 1993 600,000 [] 5,596 15,000 -0- 13,061
Vice Chairman and 1992 600,000 294,000 8,128 20,000 -0- 6,588
Officer of the Board 1991 600,000 145,800 11,669 18,000 -0- 2,020
Robert W. Galvin 1993 700,000 -0- 7,585 -0- -0- 15,980
Chairman of the 1992 700,000 -0- 23,312 -0- -0- 7,420
Executive Committee 1991 700,000 -0- 21,964 -0- -0- 2,033
Christopher B. Galvin 1993 515,000 [ ] 1,062 27,000 -0- 6,407
President and Chief 1992 472,500 275,000 1,169 40,000 -0- 3,251
Operating Officer 1991 420,000 118,900 1,431 36,000 -0- 1,989
(12/16/93 to present)
and Senior Executive
Vice President and
Assistant Chief
Operating Officer
(1/1/93 to 12/15/93)
[Other executive
officer]
<FN>
- --------------------------
(1) Including amounts deferred pursuant to salary reduction arrangements under
the Motorola Employees' Savings and Profit Sharing Plan ("Profit Sharing
Plan").
(2) These amounts were earned in each of these years under the Motorola
Executive Incentive Plan ("MEIP") for performance during that year. Mr. R.
Galvin does not participate in this plan.
19
(3) These amounts are the Company's reimbursements for the federal income tax
liability resulting from the income imputed to that executive officer as a
result of coverage by a group life insurance policy for elected officers.
(4) The aggregate amount of perquisites and other personal benefits,
securities or property, given to each named executive officer valued on
the basis of aggregate incremental cost to the Company, was less than
either $50,000 or 10% of the total of annual salary and bonus for that
executive officer during each of these years.
(5) The amounts shown for options granted in 1992 and 1991 reflect a
two-for-one split of Common Stock in the form of a 100% stock dividend
made in January 1993. The amounts shown for options do not reflect a
two-for-one split of Common Stock in the form of a 100% stock dividend
made in 1994.
(6) No payments were made in or for these years under the Long Range Incentive
Program ("LRIPR"). Mr. R. Galvin does not participate in the LRIPR. The
Company is asking shareholders to approve a Motorola Long Range Incentive
Plan of 1994 ("LRIPL").
(7) These figures for 1993 include the following amounts for the premiums paid
under the term life portion of the split-dollar life insurance: for Mr.
Fisher, $5,165; for Mr. Tooker, $5,444; for Mr. Mitchell, $8,123; for Mr.
R. Galvin, $11,012; for Mr. C. Galvin, $1,542; and for Mr. ,
[ ].
(8) These figures include the following contributions made by the Company to
the Profit Sharing Plan for 1993: for Mr. Fisher, $4,854; for Mr. Tooker,
$4,906; for Mr. Mitchell, $4,938; for Mr. R. Galvin, $4,968; for Mr. C.
Galvin, $4,865; and for Mr. , [ ].
STOCK OPTION GRANTS IN 1993
INDIVIDUAL GRANTS
------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF (4) AT ASSUMED ANNUAL
SECURITIES RATES OF STOCK PRICE
UNDERLYING APPRECIATION FOR
OPTIONS GRANTED % OF TOTAL OPTIONS EXERCISE OR OPTION TERM
(# OF GRANTED TO BASE PRICE EXPIRATION --------------------------
NAME SHARES)(1)(2) EMPLOYEES IN 1993 ($/SH) DATE (3) 5% ($)(4) 10% ($)(4)
- ------------------------ --------------- ------------------- ----------- ---------- ------------ ------------
George M.C. Fisher (5) -0- -0- --
Gary L. Tooker 38,000 2.2% $ 88.88 12/16/03 $ 2,123,820 $ 5,382,700
John F. Mitchell 15,000 0.9% $ 88.88 12/16/03 $ 838,350 $ 2,124,750
Robert W. Galvin (6) -0- -0- --
Christopher B. Galvin 27,000 1.6% $ 88.88 12/16/03 $ 1,509,030 $ 3,824,550
[Other executive
officer]
<FN>
- --------------------------
(1) These are options granted under the Share Option Plan of 1991 to acquire
shares of Common Stock. The Plan was amended in December, 1993 to
eliminate the provisions which previously allowed the compensation
committee to permit options to be canceled and replacement options to be
reissued at the fair market value at the time of reissuance.
(2) These options were granted at fair market value at the time of the grant,
are generally not exercisable until one year after grant and carry with
them the right to elect to have shares withheld upon exercise and/or to
deliver previously owned shares of Common Stock to satisfy tax withholding
requirements. The options granted in 1993 to these five individuals
represent less than 0.1% of the shares of Common Stock outstanding
(determined before the 2-for-1 stock split) on March 15, 1994.
20
(3) These options could expire earlier in certain situations.
(4) The potential realizable value of the options, if any, granted in 1993 to
each of these executive officers was calculated by multiplying those
options by the difference of (a) the assumed market value, at December 16,
2003, of Common Stock if the market value of Common Stock were to increase
5% or 10% in each year of the option's 10-year term less (b) the base
price shown. This calculation does not take into account any taxes or
other expenses which might be owed. That assumed market value at a 5%
assumed annual appreciation rate over the 10-year term is $144.77 and such
value at a 10% assumed annual appreciation rate over that term is $230.53.
At $144.78, the total market value of the 2 , , shares of Common
Stock outstanding on March 15, 1994 (determined pre-stock split) would be
$ , which would be an increase of $ from the market value
of such shares at the close of business on December 31, 1993. At $230.53,
the total market value of the 2 , , shares of Common Stock
outstanding on March 15, 1994 (determined pre-stock split) would be
$ , which would be an increase of $ from the market value
of such shares at the close of business on December 31, 1993. The 5% and
10% appreciation rates are mandated by the Securities and Exchange
Commission and no representation is, of course, made that the Common Stock
will appreciate at these assumed rates or at all.
(5) Mr. Fisher resigned from the Company on October 27, 1993.
(6) Mr. R. Galvin does not participate in the Share Option Plan of 1991.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY (2) OPTIONS AT
SHARES ACQUIRED OPTIONS AT END OF 1993 (#) END OF 1993 ($)(3)
ON EXERCISE (# VALUE -------------------------- ---------------------------
NAME OF SHARES) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ --------------- ------------- ----------- ------------- ------------ -------------
George M.C. Fisher (4) 250,000 $ 9,319,800 -0- -0- -0- -0-
Gary L. Tooker 80,000 $ 4,767,600 174,000 38,000 $ 9,743,220 $ 128,060
John F. Mitchell 33,000 $ 2,082,570 98,000 15,000 $ 5,956,620 $ 50,550
Robert W. Galvin (5) -0- -0- -0- -0- -0- -0-
Christopher B. Galvin -0- -0- 160,800 27,000 $ 9,584,540 $ 90,990
[Other executive
officer]
<FN>
- --------------------------
(1) The "value realized" represents the difference between the base (or
exercise) price of the option shares and the market price of the option
shares on the date the option was exercised. The value realized was
determined without considering any taxes which may have been owed.
(2) "In-The-Money" options are options whose base (or exercise) price was less
than the market price of Common Stock at December 31, 1993.
(3) Assuming a stock price of $92.25 per share, which was the closing price of
a share of Common Stock reported for the New York Stock
Exchange--Composite Transactions on December 31, 1993.
(4) Mr. Fisher resigned from the Company on October 27, 1993.
(5) Mr. R. Galvin does not participate in the Share Option Plans.
21
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
PERFORMANCE OR
OTHER PERIOD ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF UNTIL NON-STOCK PRICE-BASED PLANS (1)(2)(5)
RIGHTS MATURATION OR ----------------------------------------------
NAME (#)(2) PAYOUT THRESHOLD ($)(3) TARGET ($)(4) MAXIMUM ($)
- ------------------------ ------------ -------------- ------------------- ----------- ------------
George M.C. Fisher (6) 1 4 Years -0- -0- -0-
Gary L. Tooker 1 4 Years $ 1 $ 770,000 $1,540,000
John F. Mitchell 1 4 Years $ 1 $ 600,000 $1,200,000
Robert W. Galvin (7) -0- -0- -0- -0- -0-
Christopher B. Galvin 1 4 Years $ 1 $ 515,000 $1,030,000
[Other executive
officer]
<FN>
- --------------------------
(1) All the payments shown are potential assumed amounts. There is no
assurance that Motorola will achieve results that would lead to payments
under the Company's current Long Range Incentive Program ("LRIPR") or that
any payments will be made under the LRIPR. No payments have been made
under the LRIPR since its inception.
(2) Under the LRIPR, the compensation committee and the board establishes
performance objectives, based on four-year periods, which are measured
against the performance of a group of thirteen other selected companies.
In general, the return on net assets (as defined in the LRIPR) and sales
growth (as defined in the LRIPR) as percentages of return on net assets
and sales growth targets (based on the performance of the group of other
companies) are used as the basis to compute LRIPR awards. The payments can
range from 0% to 200% of the executive officer's base earnings in the last
year of the four year period. No payments are made unless certain return
on net assets percentages are exceeded by Motorola and no payments are
made to participants in a particular business unit unless that unit
exceeds a specified percentage return.
(3) At the performance threshold--which is that point at which a payment could
be made under the LRIPR-- each listed current executive officer who
participates in the LRIPR could receive $1 under the LRIPR.
(4) At the performance target where the Company achieves 100% sales growth as
a percent of net asset growth and 100% return on net assets as a percent
of the return on net asset target, and 110% sales growth as a percent of
return on net asset target (assuming certain other percentages are met),
the indicated payments would be made under the LRIPR.
(5) These figures were calculated using the base salary in effect at the end
of 1993 for each participating executive officer.
(6) Mr. Fisher resigned from the Company on October 27, 1993 and his awards
under the LRIPR were terminated.
(7) Mr. R. Galvin does not participate in the LRIPR.
PENSION AND SUPPLEMENTARY RETIREMENT PLANS
The Company maintains a retirement income plan known as the Motorola, Inc.
Pension Plan (the "Pension Plan"). The Company's general objective is for the
after-tax payments from the
22
Pension Plan and Social Security to provide non-elected officer employees who
have 35 years of service under the present Pension Plan formula, with
approximately 80% to 100% of their final after-tax salary after their normal
retirement.
The Company also maintains a supplementary retirement plan in which elected
officers, including the named executive officers, except for Mr. Fisher,
participate. If the benefit payable annually (computed on a single life annuity
basis) to any named executive officer under the Pension Plan (which is generally
based on varying percentages of specified amounts of final average earnings,
prorated for service, as described in the Pension Plan) is less than the benefit
calculated under the supplementary plan, that officer will receive supplementary
payments upon retirement at age 60 or later. The total annual payments to such
officer from both plans will, generally, aggregate a percentage of the sum of
such officer's rate of salary at retirement plus an amount equal to the highest
average of the MEIP awards paid to such officer for any five years within the
last eight years preceding retirement. Such percentage ranges from 40% to 45%,
depending upon such officer's years of service and other factors. However, the
total annual pension payable on the basis of a single life annuity to any named
executive officer from the Pension Plan and supplementary retirement plan is
subject to a maximum of 70% of that officer's base salary prior to retirement.
If the officer is vested and retires at or after age 57 but prior to age 60, he
or she may elect to receive a deferred unreduced benefit when he or she attains
age 60, or an actuarially reduced benefit when that officer retires contingent
upon entering into an agreement not to compete with the Company. If a change in
control (as defined) of the Company occurs, the right of each non-vested elected
officer to receive supplementary payments will become vested on the date of such
change in control.
Based on salary levels at January 1, 1994, and the average of the MEIP
awards paid for the highest five years out of the last eight years, for the
named executive officers in the summary compensation table, the estimated annual
benefit payable upon retirement at normal retirement age from the Pension Plan,
as supplemented pursuant to the officers' supplementary retirement plan
described above, and a previous retirement income plan (except for Mr. Fisher's
benefit which is now generally able to be determined due to his resignation from
the Company) is: Mr. Fisher, $47,545; Mr. Tooker, $505,534; Mr. C. Galvin,
$330,012; Mr. Mitchell, $440,379; Mr. R. Galvin, $336,000; and [ ].
OTHER POLICIES AND AGREEMENTS
The Company has adopted a policy (the "salary protection policy") which
generally provides that most employees of the Company and its subsidiaries would
receive a lump sum payment, based on years of service and salary in the event
their employment is involuntarily terminated (except for specific reasons)
during a two-year period following an unsolicited change in control (as defined)
of the Company. This policy, which is subject to specified amendment and
termination, also provides for continuation of medical plan benefits. In
addition, the Company has entered into Termination Agreements with certain key
employees, including the named executive officers, except Mr. Fisher, who are
not covered by the salary protection policy because of the Termination
Agreements. Each Termination Agreement provides for the payment of benefits in
the event that
23
(i) the executive officer terminates his or her employment for any reason within
one year of a "change in control" (as defined), (ii) the executive officer
terminates his or her employment for "good reason" (as defined) within two years
of a change in control, or (iii) the executive officer's employment is
terminated for any reason other than termination for "good cause" (as defined),
disability, death or normal retirement within two years of a change in control.
In the case of (ii) and (iii) above, accumulation by a person or group of a 20
percent stock position would constitute a change in control, although, in the
case of (i) above, a 51 percent stock position would be required. No benefits
are payable under the Termination Agreements in the case of any change in
control which the Company's Chairman of the Board determines to be the result of
a transaction which was solely initiated by the Company. The amount of the
benefits payable to an executive officer entitled thereto would be equal to, in
addition to unpaid salary for accrued vacation days and accrued salary and
annual bonus through the termination date, an amount equal to three times the
greater of the executive officer's highest annual base salary in effect during
the three years immediately preceding the change in control and the annual base
salary in effect on the termination dale, plus an amount equal to three times
the highest annual bonus received during the immediately preceding five fiscal
years ending on or before the termination date. Benefits are subject to offset
to the extent that such offset would improve the executive officer's after-tax
position by eliminating any excise taxes otherwise imposed on the employee under
the "parachute payment" provisions of the Internal Revenue Code. The term of
each Termination Agreement is subject to automatic one year extensions unless
the Company gives 12 months' prior notice that it does not wish to extend. In
addition, if a change in control occurs during the term, the Termination
Agreement continues for an additional two years.
THE FOLLOWING GRAPH AND RELATED DISCLOSURE AND THE REPORT OF COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS
INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH
ACTS.
PERFORMANCE GRAPH
The following graph compares the cumulative total return of Motorola, Inc.,
the S&P 500 Index and a composite S&P Electronic Subgroups Index composed of the
following six S&P indices, weighted by market value at each measurement point:
the S&P Communications-Equipment/ Manufacturers Index, the S&P Computer Systems
Index, the S&P Electrical Equipment Index, the S&P Electronics Defense Index,
the S&P Electronics (Instrumentation) Index, and the S&P Electronics
(Semiconductors) Index. The S&P Communications-Equipment Manufacturers Index
currently consists of Andrew Corporation, DSC Communications Corp., M/A-Com
Inc., Northern Telecom Limited and Scientific-Atlanta, Inc. The S&P Computer
Systems Index currently consists of Amdahl Corporation, Apple Computer, Inc.,
Compaq Computer Corporation, Control Data Corporation, Cray Research, Inc., Data
General Corp., Digital Equipment Corp., Intergraph Corp., International Business
Machines Corporation, Tandem Computers, Inc., Unisys Corporation and Wang
Laboratories, Inc. "B". The S&P Electrical Equipment Index currently consists of
AMP Inc., Emerson Electric Co., General Electric Company, W.W. Grainger, Inc.,
Honeywell Inc., Raychem
24
Corp., Thomas & Betts Corp., and Westinghouse Electric Corporation. The S&P
Electronics Defense Index currently consists of EG&G, Inc., E-Systems, Inc. and
Loral Corporation. The S&P Electronics (Instrumentation) Index currently
consists of Hewlett-Packard Co., Perkin-Elmer Corp. and Tektronix, Inc. The S&P
Electronics (Semiconductors) Index currently consists of Advanced Micro Devices,
Inc., Intel Corporation, Motorola, Inc., National Semiconductor Corp., and Texas
Instruments Incorporated. These assume $100 was invested in the stock or the
Index on December 31, 1988 and also assume the reinvestment of dividends.
FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPHIC]
25
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM
The objective of Motorola's executive compensation program is to attract and
retain key executives critical to the long-term success of the Company. It is
designed to align compensation with business strategy and success, and with
Company values. This means having an integrated executive compensation program
that is intended to balance short-term performance with the achievement of
long-range strategic goals and that is designed to result in continuously
improving total shareholder value. The program rewards executives not only for
achieving Company goals, but also in relationship to the Company's performance
compared to peer industry company performance.
The compensation committee of the Board of Directors met eleven times in
1993. It discussed and reviewed in detail the compensation for the members of
the Chief Executive Office (the "CEO") and the 13 other most-senior executives
and recommended to the Board of Directors for its approval changes in
compensation for those 13 other most-senior executives. It reviews and approves
compensation changes for all elected officers that are proposed by the CEO.
SUMMARY OF COMPENSATION PLANS
For many years, Motorola has participated in a number of compensation
surveys for all job categories, exempt and non-exempt, which it believes can be
"benchmarked." One of these surveys is a "consolidated industries" report on the
compensation for executive job categories in what are currently 342 companies,
of which 25 are in the S&P Electronic Subgroups Index shown on pages 24 and 25.
Another survey is a report on the compensation for executive job categories in
what are currently 40 "high tech" and major industrial companies, selected for
their being in some of the same general lines of business as the Company or as
being viewed as generally important to the overall "high tech" industry. This
"high tech" survey includes 19 of the companies in the S&P Electronic Subgroups
Index shown in the graph on pages 24 and 25. Because Motorola intends to attract
and retain substantially above-average executives, the determination of base
salaries includes a factor that raises salary range midpoints approximately 10%
above the salary levels projected using the "consolidated industries" report, as
appropriately adjusted to reflect any higher compensation for positions
indicated in the "high tech" survey, on the basis of the Company's size and
organization level (determined using regression analysis) for directly
comparable and equivalent jobs. Where Company positions are broader or narrower
than other comparable positions in other companies, appropriate judgmental
adjustments are made to recognize these differences. Where Company positions are
not comparable to others studied, the Company positions are assigned salary
ranges which provide relative equity in relation to other Motorola positions.
Using this method, salary grades for each elected officer position (including
the CEO, discussed below) in the Company are developed for, and approved by, the
compensation committee.
26
It is also the Company's general intention that, where allowed by law and
local custom, all its employees should have the opportunity to increase their
base compensation by participating in one or more incentive compensation plans,
where the payments are based on company, unit, team, or individual performance.
In addition to a number of localized incentive programs, such as
salespersons' commissions, Motorola has four major incentive compensation
programs in operation. All four of these relate in one way or another to Company
performance and in most cases, to sector, group, division or team performance.
1. The first such program is the RONA (Return On Net Assets employed)
Incentive Program. This is generally available to eligible employees in the
United States who are not participating in the Motorola Executive Incentive
Plan and is an outgrowth of the Company's Participative Management Process.
Participants in 1993 numbered approximately 65,000. RONA awards are earned
and paid semi-annually to participants and depend, first, on the Company
and, in most cases, the major business unit for which the participant works,
exceeding a minimum RONA percentage (as determined by the Company) during
the six-month period and, second, the extent to which such minimum
percentage was exceeded. RONA combines profit after tax with more efficient
utilization of assets to help achieve sales growth. The RONA percentage is
calculated as:
Profit After Sales Profit After
Tax X -------------- = Tax
- -------------- --------------
Sales Net Assets Net Assets
2. The second such program is the Motorola Executive Incentive Plan
(MEIP). This is participated in by elected and appointed officers (including
the named executive officers other than Mr. Robert Galvin) and employees at
certain levels of management and by specific professionals who are deemed
individual contributors. Participants in 1993 numbered 717. MEIP awards are
generally earned and paid annually and are determined and awarded as a
percentage of the participant's base salary earnings. No amounts are added
to the reserve available for payment of MEIP awards in a year unless the
Company's consolidated net earnings (as determined under the MEIP, but
generally on a pre-tax basis after specified deductions) for that year
exceed five percent of average capital employed (as determined under the
MEIP). The MEIP award for each participant is based on the achievement of a
mixture of financial, strategic non-financial, and individual goals set for
each calendar year. Until late November, 1993, the MEIP contained "equity
award" provisions. Under these provisions, if the MEIP award to a
participant in any one year exceeded 50% of his or her base salary earnings,
as defined, then such participant must generally have used the excess over
40% of his or her base salary earnings, less taxes, to purchase shares of
Common Stock by exercising Share Options within 12 months after the date of
the award. In late November, those provisions were deleted because of an
increase in the minimum stock ownership for executive officers under
guidelines discussed below.
3. The third such program is the Motorola Long Range Incentive Program
(LRIPR), which is participated in to varying degrees by 32 of the Company's
top officers (including the
27
named executive officers other than Mr. Robert Galvin and Mr. George
Fisher). The MEIP was amended in late November, so that the LRIPR is no
longer a part of the MEIP. The Company is asking stockholders to approve a
new Motorola Long Range Incentive Plan of 1994 (LRIPL), which will replace
the currently-existing plan for awards beginning with the cycle starting on
January 1, 1994, if approved. See pages 32 and 33 for a description of the
proposed new LRIPL. The LRIPR goals are constructed to be "reach out" goals.
The Company must have what is viewed by the compensation committee and the
Board of Directors as superior financial performance during a four-year
cycle to receive payments under the LRIPR and if it does so, then these
senior management members can earn large LRIPR awards. The LRIPR award is
determined by the Company's RONA and sales growth, related to net asset
growth, for overlapping four-year periods, compared to an average of a
similar calculation for a group of selected competitive companies chosen by
the compensation committee (the "comparator group index"). The comparator
group index is a group of what is now thirteen companies, generally in one
or more of the same lines of the business as the Company, and believed by
the compensation committee to be appropriate for measuring comparative
performance on the basis of the factors in the LRIPR over a four-year
period. An award is earned only when Company performance exceeds a minimum
specified RONA floor, notwithstanding superior performance versus the
comparator group index.
The LRIPR has been in effect in twelve succeeding four-year cycles, the
first of which began in 1982. No payments have been made under the LRIPR
since its inception because the Company's RONA performance has not exceeded
the RONA floors set in the LRIPR. This was the case even though in the last
four completed four-year cycles the Company's financial performance (as
measured by the LRIPR) exceeded the comparator group index.
4. The last such program is the Share Option Plans. The Share Option
Plans are participated in by a wide range of managerial and individual
contributors. Recipients of Share Options in 1993 numbered approximately
5,100. There are approximately 6,500 total current Share Option holders.
Share Options are typically awarded annually to encourage optionees to own
Common Stock, thus aligning their own personal financial worth to the
Company's share price growth. They are granted with option prices at the
then-market price in quantities as low as 20 shares to mid-range and lower
level Company employees, and in substantially higher numbers to senior
managers. The final worth of Share Options depends wholly on the increase in
the value of the Common Stock, which, over time, reflects the Company's
performance, as viewed by the market.
Beginning with the Share Option grant in December, 1993, the Company
established higher minimum stock ownership level guidelines for executive
officers, including the CEO. Under those guidelines, If a CEO member does not
own shares of Common Stock representing four times his base salary and if other
executive officers do not own shares of Common Stock representing three times
his base salary, then he must retain fifty percent of the shares that remain
from any exercise of the December, 1993 Share Option grant and any future Share
Option grants, after deducting the number of shares of Common Stock that could
be surrendered to cover the cost of such exercise and any required tax
withholdings, even if he does not actually surrender shares, until the minimum
28
stock ownership level is reached. Additionally, these new guidelines reiterated
a minimum stock ownership level of 2,000 shares of Common Stock, on a pre-1994
stock split basis, for all other elected officers.
On one basis or another, the rewards under each of these four major plans
depend on overall Company performance, with some also taking account of sector,
group, division, small team or individual performance. There have been years
when the employees of entire sectors, groups, or divisions, as well as executive
officers (including one or more of the five most highly compensated at that
time) have received no payments under the RONA Incentive Program or under the
MEIP or LRIPR.
CHIEF EXECUTIVE OFFICE COMPENSATION
The compensation for the CEO members consists of base salary, annual MEIP
award eligibility, LRIPR (or, if approved, LRIPL) award eligibility, Share
Options, and certain other benefits. In addition to the studies mentioned
earlier, a special Chief Executive Officer and Chief Operating officer ("COO")
compensation study is conducted periodically for the compensation committee of
32 major industrial companies, 18 of which are in the S&P Electronic Subgroups
Index shown in the graph on pages 24 and 25 and all of which are included in
"high tech" industry survey discussed on page 26. This study uses regression
analysis techniques, which relate Motorola's size and financial performance to
these other companies' size and financial results to approximate the appropriate
base salary, other components of compensation and the total compensation levels
which should be paid for the CEO members. In determining the CEO members' base
salaries, the compensation committee considers the results of these studies and
the salary range midpoints that are approximately 10% above salary levels
projected on the basis of the Company's size, together with the Company's
performance on its own financial and non-financial strategic goals. No
particular weight was given to any one of these goals in setting base salaries
for the CEO members. The competitive studies give the committee a base from
which to modify salary and/or incentive compensation based upon performance.
Salaries of other executive officers are related to the CEO members'
compensation and to competitive conditions in the industry. The compensation
committee reviews, and recommends for approval to the Board of Directors, the
base salaries for the CEO members as well as for the members of the Company's
internal policy committee (generally, all the executive officers). The
compensation committee also reviews and fixes the compensation for all of the
Company's elected officers.
CEO BASE SALARY
No base salary increases were given to George M.C. Fisher, Gary L. Tooker
and Christopher B. Galvin during 1993. Increases of approximately 8% were,
however, given to them in 1992, effective December 1, 1992. Based on the
increased responsibilities resulting from their promotions in late 1993 and the
survey data discussed above, the base salaries of Gary L. Tooker and Christopher
B. Galvin were reviewed and, as of the first of the year, were increased to
$900,000 and $630,000, respectively.
29
CEO ANNUAL MEIP
For the MEIP award paid in 1994 for 1993 performance, 25% of the MEIP bonus
was based on the Return on Net Assets employed by the Company, which was better
than in 1992, and 25% was based on the successful achievement of other financial
goals. The other half was based on the evaluation of performance against various
goals associated with the Company's five key strategic initiatives: Six sigma
quality; Total cycle time reduction; Product, manufacturing and environmental
leadership; Profit improvement; and Empowerment for all in a participative,
cooperative, and creative workplace. As a result of the Company's performance in
1993, the compensation committee concluded that an increased MEIP award of
approximately % of each individual's 1993 base salary was awarded to the two
current CEO members in 1994.
For the MEIP award paid in 1993 for 1992 performance, the compensation
committee concluded that an increased MEIP award of approximately 58% of each
individual's 1992 base salary was awarded to all three CEO members in 1993.
Under the then-existing "equity award" provisions of the MEIP (see page 27), the
amount, less taxes, of the 1992 MEIP bonus which was generally required to be
used to purchase shares of Common Stock through the exercise of Share Options
was $166,500 for George M. C. Fisher, $129,000 for Gary L. Tooker and $86,000
for Christopher B. Galvin.
CEO SHARE OPTIONS
Share Options for 38,000 shares of Common Stock at the market price on the
grant date were awarded in December, 1993 to Gary L. Tooker as part of the
Company's annual option program. Share Options for 27,000 shares were similarly
awarded to Christopher B. Galvin. No Share Option grants were made during 1993
to George M.C. Fisher. This level of option awards was made using the
committee's judgment after considering the Company's stock option granting
guidelines. In making these grants, the committee referred to the options
granted and exercised by these CEO members from 1984 to December, 1993 and their
stock ownership as of October, 1993.
CEO LRIPR
No award was earned under the LRIPR for the four-year period ending with
1992 or 1993, even though the Company's RONA performance was better than the
comparator group index, because the minimum corporate four-year RONA percentage
required to be met for payment to be made under the LRIPR was not met.
GENERAL
The Omnibus Budget Reconciliation Act of 1993 contains a provision under
which a publicly held corporation is sometimes precluded from taking a federal
income tax deduction for compensation in excess of $1,000,000 that is paid to a
"covered employee" (I.E., the chief executive officer and any one of the four
other most highly paid executives) during a corporation's taxable year.
Compensation in excess of $1,000,000 continues to be deductible if that
compensation is "performance based" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
30
The committee has reviewed the federal income tax deductibility by the
Company of the various types of compensation which the Company makes available
to its "covered employees." The compensation paid to these executives--whether
in the form of base salary, bonuses from the LRIPR or the LRIPL, if adopted,
Share Options or imputed income--should generally be deductible for federal
income tax purposes. The committee has determined, however, and the Board has
concurred that amending the MEIP program to guarantee its compliance with the
"performance based" standard was not in the best interests of the stockholders.
The objective of the MEIP program is to focus on performance factors of
importance to the Company, some of which must be evaluated on an experienced
judgment basis, therefore probably excluding payments under the MEIP from
deductibility.
Overall, the compensation committee believes that the CEO members are being
appropriately compensated in a manner that relates to performance and in the
shareholders' long-term interests.
Respectfully submitted,
David R. Clare, Chairman
Thomas J. Murrin
Samuel C. Scott III
31
PROPOSAL TO ADOPT THE LONG RANGE INCENTIVE PLAN OF 1994
The Board of Directors recommends that the stockholders approve the adoption
of the Long Range Incentive Plan of 1994 ("Plan"). If approved by stockholders,
awards will be made for a four year cycle commencing January 1, 1994, as
described below, and no further awards will be made under the Company's
currently-existing Long Range Incentive Program (the "program").
As discussed in the Report of Compensation Committee on Executive
Compensation ("Report") on pages 26 to 31, the program had been a part of the
Company's Motorola Executive Incentive Plan ("MEIP") until November, 1993. It
has been in effect for twelve succeeding four-year cycles. Under the program and
the Plan, corporate performance objectives have been and will be established for
overlapping four year periods. No payments have been made under the program
since its inception because the Company's return on net assets employed (RONA)
performance did not exceed the RONA floor set in the program. See page 22 for a
description of the program and for the potential payments under the program to
the five highest-compensated current executive officers of the Company.
The objectives of the Plan are to increase the value of stockholders'
interest in Common Stock through the achievement of outstanding corporate
performance; to reward participating elected officers for the achievement by the
Company of outstanding performance, based on preestablished objective
performance standards, over extended periods; to provide long term incentives in
addition to the short term incentives of the MEIP; and to enhance the Company's
ability to retain participating officers. The principal features of the Plan are
summarized below, with the summary being qualified in its entirety by reference
to the terms of the Plan itself as set forth in Exhibit A hereto.
ADMINISTRATION
The Plan is to be administered by the compensation committee of the Board
("Committee") or a successor committee. The Plan contains procedures to be
followed by the Committee, and the Committee is given the authority to construe,
interpret and administer the Plan, as well as to determine the extent, if any,
to which performance standards are met.
ELIGIBILITY
The Committee is authorized to determine which of the Company's elected
officers, presently approximately 135 persons, are in positions likely to make
substantial long term contributions to the Company's success, to select those
officers to participate in the Plan and to assign each participant a maximum
award level category ranging from 100% to 200% of the participant's annualized
base salary generally earned in the last year of the cycle, as described below.
AWARDS
The Committee will grant a performance award to participants ("Grantees")
with the potential maximum cash amount to be paid to any participant being
determined by the Company's achievement based on four components: (1) RONA; (2)
sales growth; (3) shareholder return and (4) fundable growth, over a four year
cycle compared to an average of a similar calculation for a group of selected
competitive companies chosen by the Committee ("comparator group index"). Each
component is to be weighted 25%. The comparator group index is a group of what
is now thirteen companies for purposes of the cycle to be commenced on January
1, 1994, if approved by
32
stockholders, which are generally in one or more of the same lines of the
business as the Company and believed by the Committee to be appropriate for
judging comparative performance on the basis of the factors in the Plan over a
four-year period. An award is earned only when Company performance, as
determined by the Committee, exceeds minimum specified RONA floors,
notwithstanding superior performance versus the comparator group index. The
amount of the award is dependent on the performance of the Company and the
category the Grantee has been assigned to by the Committee.
PAYMENT OF AWARDS
After performance has been determined by the Committee, the award, if any,
will be paid in full in cash; provided that the Committee may specify that the
awards shall be paid: (a) in installments; (b) on a deferred basis, in whole or
in part, as specified by the Committee; or (c) on a deferred basis, in whole or
in part, at the request of the Grantee, as agreed to by the Committee. In the
case of awards not paid in full at the time of the award, the Committee may set
the terms and conditions of the award, including but not limited to, the payment
date or dates, if appropriate, and the accrual of interest and any forfeiture
provisions. The Plan provides that, subject to the discretion of the Committee,
awards deferred at the request of the Grantee will be forfeited If the Grantee
acts in a manner contrary to the best interests of the Company or if the
Grantee's employment is voluntarily terminated or is terminated for cause. Any
unpaid award, or the unpaid portion of any award, will be forfeited if the
Grantee engages in an activity which is in competition with any activity of the
Company. To the extent provided in the Plan, a Grantee whose employment
terminates will lose his or her right to receive any unpaid installment or
deferred payments. If while any award is outstanding a change in control of the
Company, as defined in the Plan, shall occur, then the award shall be fully
vested and nonforfeitable. In addition, a prorated award will generally be paid
to a Grantee if the Grantee's employment is terminated within a year of a change
in control.
NONTRANSFERABLITY
No award under the Plan may be transferred or assigned by a Grantee except
in the event of death to a previously designated beneficiary or legal
representative.
AMENDMENT
The Plan may be amended from time to time by the Board or the Committee and
may be terminated at any time by the Board.
APPROVAL BY SHAREHOLDERS
In order to be adopted, the Long Range Incentive Plan of 1994 must be
approved by the affirmative vote of a majority of the outstanding shares of
Common Stock represented at the meeting and entitled to vote. Abstentions will
count as votes against this proposal but broker non-votes will not count as
being represented at the meeting and, therefore, will not be taken into account
for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE LONG RANGE
INCENTIVE PLAN OF 1994. UNLESS OTHERWISE INDICATED ON THE PROXY, THE SHARES
WILL BE VOTED FOR ADOPTION OF THE LONG RANGE INCENTIVE PLAN OF 1994.
33
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
By resolution adopted on February 1, 1994, the Board of Directors of the
Company proposed the adoption by the stockholders of an amendment to the
Restated Certificate of Incorporation of the Company, as amended to date,
pursuant to which the number of authorized shares of Common Stock of the
Company, $3 par value, would be increased from 700,000,000 shares to
1,400,000,000 shares, and the Board of Directors directed that the proposed
amendment be submitted to a vote by the stockholders at the annual meeting of
stockholders.
If the stockholders approve the amendment, the Restated Certificate of
Incorporation of the Company will be amended as proposed by the Board of
Directors, and the number of authorized shares of Common Stock will be increased
to 1,400,000,000.
Of the 700,000,000 currently authorized shares of Common Stock, as of March
15, 1994, 28 , , were outstanding and an additional 28 , , were reserved
for issuance on outstanding shares in connection with the two-for-one stock
split in the form of a 100% stock dividend payable April 18, 1994 to
stockholders of record on March 15, 1994. In addition, as of December 31, 1993,
but giving effect to the two-for-one stock split, , , were reserved for
issuance under the Company's employee stock option plans and , , shares
were reserved for issuance in connection with the Company's Liquid Yield Option
Notes due 2009 and 2013. In addition, 150,000 shares of a series of the
Company's preferred stock are reserved for issuance under the Company's
shareholder rights plan. Otherwise, the Company does not now have any present
occasion or any present plan, understanding or agreement to issue additional
shares of Common Stock. Although presently authorized shares are sufficient to
meet all known present requirements, the Board of Directors believes that it is
desirable that the Company have the flexibility to issue a substantial number of
shares of Common Stock without further stockholder action. The availability of
additional shares will enhance the Company's flexibility in connection with
possible future actions, such as stock dividends, stock splits, financings,
employee benefit programs, corporate mergers, acquisitions of property, the
possible funding of new product programs or businesses or for other corporate
purposes. The Board of Directors will determine whether, when and on what terms
the issuance of shares of Common Stock may be warranted in connection with any
of the foregoing purposes.
The availability for issuance of additional shares of Common Stock could
enable the Board of Directors to render more difficult or discourage an attempt
to obtain control of the Company. For example, the issuance of shares of Common
Stock in a public or private sale, merger or similar transaction would increase
the number of outstanding shares, thereby possibly diluting the interest of a
party attempting to obtain control of the Company. The additional shares also
could be used to render more difficult a merger or similar transaction even if
it appears to be desirable to a majority of the stockholders. The Company is not
aware of any pending or threatened efforts to obtain control of the Company.
If the proposed amendment is approved, all or any of the authorized shares
of Common Stock or preferred stock may be issued without further action by the
stockholders and without first offering such shares to the stockholders for
subscription. The issuance of Common Stock
34
otherwise than on a pro-rata basis to all current stockholders would reduce the
current stockholders' proportionate interests. However, in any such event,
stockholders wishing to maintain their interests may be able to do so through
normal market purchases,
APPROVAL BY SHAREHOLDERS
The affirmative vote of a majority of the outstanding shares of Common Stock
of the Company entitled to vote at the annual meeting of stockholders is
required for approval of the proposed amendment. Abstentions and broker
non-votes will count as being entitled to vote and, therefore, will be taken
into account for this proposal as if they were voted against the proposal. If
the proposed amendment is adopted by the stockholders, it will become effective
upon filing and recording a Certificate of Amendment as required by the General
Corporation Law of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION. UNLESS INDICATED
OTHERWISE ON THE PROXY, THE SHARES WILL BE VOTED FOR THIS AMENDMENT.
STOCKHOLDER PROPOSALS
PROPOSAL CONCERNING THE CREATION OF AN INDEPENDENT NOMINATING COMMITTEE
The New York City Teachers' Retirement System, The City of New York, Office
of the Controller, 1 Centre Street, New York, New York 10007-2341, the
beneficial owner of 252,200 shares of Common Stock, has submitted the following
proposal:
WHEREAS, the board of directors is meant to be an independent body elected
by shareholders and charged by law and shareholders with the duty, authority and
responsibility to formulate and direct corporate policies, and
WHEREAS, this company has provided that the board may designate from among
its members one or more committees, each of which, to the extent allowed, shall
have certain designated authority, and
WHEREAS, we believe that directors independent of management are best
qualified to act in the interest of shareholders and can take steps necessary to
seek, nominate and present new directors to shareholders, and
WHEREAS, we believe the selection of new directors is an area in which
inside directors may have a conflict of interest with shareholders, and
WHEREAS, we believe that an increased role for the independent directors
would help our company improve its long-term financial condition, stock
performance and ability to compete, NOW THEREFORE BE IT
RESOLVED, that the shareholders request the company establish a Nominating
Committee to recommend candidates to stand for election to the board of
directors. The Committee shall be composed solely of independent directors. For
these purposes, an independent director is one
35
who: (1) has not been employed by the Company or an affiliate in an executive
capacity within the last five years; (2) is not a member of a company that is
one of this company's paid advisors or consultants, (3) is not employed by a
significant customer or supplier, (4) does not have a personal services contract
with the company; (5) is not employed by a tax-exempt organization that receives
significant contributions from the company; (6) is not a relative of the
management of the company; (7) has not had any business relationship that would
be required to be disclosed under Regulation S-K. The Committee responsibilities
shall include establishing procedures for the nominating process and developing
for board approval the criteria for nomination.
STATEMENT OF SUPPORT
As long-term shareholders we are concerned about our company's prospects for
profitable growth. This proposal is intended to strengthen the process by which
nominees are selected. We believe that this will strengthen the board of
directors in its role of advising, overseeing and evaluating management.
We urge you to vote FOR this proposal.
STATEMENT IN OPPOSITION
YOUR DIRECTORS RECOMMEND A VOTE AGAINST THIS STOCKHOLDER PROPOSAL FOR THE
FOLLOWING REASONS:
The Company believes that the Nominating Committee, like other Committees of
the Board and Board of Directors itself, has operated in the best interests of
the stockholders, whether its members have been current or former officers or
employees of the Company or not. All Board members are solicited for suggestions
by the Nominating Committee and the Nominating Committee presents to the full
Board a list of candidates, which includes candidates independently selected by
the Nominating Committee, for openings when they occur, with the full Board
deciding who shall be presented to stockholders for approval at an annual
meeting or who is to fill a vacancy arising between annual meetings. Since the
full Board, which is now composed primarily of people who have never been
employees or officers of the Company, makes the final decision, the Company did
not previously view the composition of the Nominating Committee as an issue.
The people nominated to become new directors since 1989 clearly shows that
the Nominating Committee and the full Board have not selected only people who
share senior management's outlook on fundamental Company policy. During that
time, no former or current senior executive of the Company has been nominated
for initial election to the Board and all of the people selected would have been
considered, when initially elected, independent for purposes of this proposal.
Instead, the Nominating Committee has selected people with an academic or with a
technical background in the Company's business or in another industry for new
director positions. This record, in conjunction with the change in the Committee
membership described in the following paragraph, would seem to be sufficient to
satisfy the following proponent's concern about Nominating Committee members
being "gatekeepers".
The Board, however, thoughtfully considered this proposal and the following
stockholder proposal and made a dramatic change in the Nominating Committee
membership, replacing all of
36
the members with new ones at the February 1994 Board meeting. With this change,
the Board and the Company believe that all current members of the Nominating
Committee meet the independence test described in this proposal, and that this
proposal is, for that reason, unnecessary.
However, one member of the Nominating Committee, B. Kenneth West, would not
be deemed independent under the following stockholder proposal because he
remains a director of two companies for which Motorola's Chairman of the Board
is also a director and because he has been an executive officer of those same
companies--Harris Bankcorp, Inc. and Harris Trust and and Savings Bank--even
though he is no longer an executive officer or employee of either. We believe
the following proponent's definition of "independence" is too restrictive and
unduly disqualifies capable people from being able to serve on the Nominating
Committee. B. Kenneth West would be considered an independent director under a
variety of tests, including the New York Stock Exchange's test for audit
committee membership and this proponent's current test for independent director,
as well as the New York State Common Retirement Fund's current test for
independent director. He would also be considered a "disinterested" person under
SEC Rule 16b-3 and as independent under the policy of the Council of
Institutional Investors described in the following proponent's Statement of
Support. The Board believes that it is not in the Company's or the shareholders'
best interests to require them to use mechanical determinations of committee
composition rather than prudent business judgment.
The affirmative vote of a majority of the Common Stock represented at the
meeting and entitled to vote is required for approval of the proposal.
Abstentions will count as votes against this proposal but broker non-votes will
not count as being represented at the meeting and, therefore, will not be taken
into account for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING STOCKHOLDER
PROPOSAL. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES WILL BE VOTED
AGAINST THE FOREGOING STOCKHOLDER PROPOSAL.
PROPOSAL CONCERNING AMENDING THE BY-LAWS TO ESTABLISH AN INDEPENDENT NOMINATING
COMMITTEE
The General Pension Fund of the International Union of Operating Engineers,
1125 17th Street, N.W., Washington, D.C. 20036, the beneficial owner of 7,000
shares of Common Stock, has submitted the following proposal:
BE IT RESOLVED: That the shareholders of Motorola ("Company") urge that the
Board of Directors take the necessary steps to amend the Company's By-Laws,
effective after the 1994 meeting, to insure that the Nominating Committee of the
Board of Directors be exclusively composed of Independent Directors. The
definition of Independent Director shall mean a Director who:
- has not been employed by the Company or an affiliate as an officer within
the last five years;
37
- has not been a member of a firm or corporation that is one of the
Company's paid advisors, consultants, or derives significant revenues from
the Company;
- has no personal service contracts with the Company;
- is not a Director or officer of a corporation on which Motorola's
Chairman, Chief Executive Officer or other officer is also a Board member.
STATEMENT OF SUPPORT
The purpose of this proposal is to establish for the Board of Directors a
basic standard of independence that we believe will permit clear and objective
decision making in the best long term interests of shareholders. A Board of
Directors must formulate corporate policies and monitor the activities of
management in implementing those policies. The Nominating Committee of the Board
of Directors serves the critical function of determining which individuals will
receive the Board's endorsement in serving as members of the Board of Directors.
Given this important function, we believe that it is in the best interest of all
shareholders if our representatives be independent, especially in respect to the
Nominating Committee.
One of the leading association of shareholder activists, the Council of
Institutional Investors-- a group of pension funds representing over $500
billion in assets--has adopted the following policy, in part, on Independent
Directors:
An independent director is someone whose only non-trivial connection to the
corporation is that person's directorship. . . Stated most simply, an
independent director is a person whose directorship constitutes his or her
only connection to the corporation.
Based on these standards, the present composition of the Board's Nominating
Committee falls far short of any appreciable standard of independence. According
to the Company's 1993 Proxy Statement, four of the five Nominating Committee
members either presently are, or have been, senior executive officers of the
Company. These senior management "gatekeepers" to the Board are in a position to
shape the composition of the Board of Directors in such a manner as to select
Board candidates for nomination who share senior management's outlook on
fundamental Company policy. The lesson for shareholders from the past several
annual meeting seasons, we believe, is that a significant group of independent
Directors is often necessary to reassess and reinvigorate senior management's
strategic approach to the Company's long-term viability. The recent management
shake-ups at various prominent corporations such as Kodak and IBM are, in our
judgement, an affirmation of the basic necessity for an independent Board. The
process of attaining a vigilant Board of Directors, responsive to the long-term
interests of shareholders, begins with an independent Nominating Committee.
STATEMENT IN OPPOSITION
YOUR DIRECTORS RECOMMEND A VOTE AGAINST THIS STOCKHOLDER APPROVAL FOR THE
FOLLOWING REASONS:
Please see the Statement in Opposition to the preceding stockholder
proposal.
38
The affirmative vote of a majority of the Common Stock represented at the
meeting and entitled to vote is required for approval of the proposal.
Abstentions will count as votes against this proposal but broker non-votes will
not count as being represented at the meeting and, therefore, will not be taken
into account for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING STOCKHOLDER
PROPOSAL. UNLESS INDICATED OTHERWISE ON THE PROXY, THE SHARES WILL BE VOTED
AGAINST THE FOREGOING STOCKHOLDER PROPOSAL.
MISCELLANEOUS
OTHER MATTERS
The Board of Directors of the Company knows of no other business to be
transacted at the annual meeting of stockholders, but if any other matters do
come before the meeting, it is the intention of the persons named in the
accompanying proxy to vote or act with respect to them in accordance with their
best judgment.
MANNER AND COST OF PROXY SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by use of the mails, officers, directors
and regular employees of the Company, acting on its behalf, may solicit proxies
by telephone, telegraph or personal interview. Also, the Company has retained D.
F. King & Co., Inc. to aid in the solicitation of proxies for which the Company
will pay an estimated fee of $13,500, plus expenses. The Company will, at its
expense, request brokers and other custodians, nominees and fiduciaries to
forward proxy soliciting material to the beneficial owners of shares held of
record by such persons.
PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1995
annual meeting of stockholders must be received at the Company's principal
executive offices not later than November , 1994.
The Nominating Committee will consider nominees recommended by stockholders
as candidates for election to the Board of Directors at the annual meeting of
stockholders. A stockholder wishing to nominate a candidate for election to the
Board is required to give written notice to the Secretary of the Company of his
or her intention to make such a nomination. The notice of nomination must be
received by the Company not less than 60 days nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting of stockholders;
provided, however, that in the event that the date of the annual meeting is more
than 30 days prior to or more than 60 days after such anniversary date, notice
must be received not less than 60 days or more than 90 days prior to such annual
meeting or within 10 days after the meeting date is announced. The notice of
nomination is required to contain certain information about both the nominee and
the stockholder making the nomination. A nomination which does not comply with
the above procedure will be disregarded.
39
Such proposals or nominations should be addressed to Richard H. Weise,
Secretary, Motorola, Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196.
By order of the Board of Directors
Richard H. Weise
SECRETARY
40
EXHIBIT A
MOTOROLA LONG RANGE INCENTIVE PLAN OF 1994
1. NAME OF THE PLAN AND PLAN OBJECTIVES
The name of the Plan is the Motorola Long Range Incentive Plan of 1994 (the
"Plan"). The objectives of the Plan are:
a. To increase the value of the stockholders' investment in Motorola, Inc.
common stock through the achievement of outstanding corporate
performance;
b. To reward participating executives for the Company's achieving
outstanding performance, based on preestablished objective performance
standards, over extended periods;
c. To provide long term incentives in addition to the short term incentives
of the Motorola Executive Incentive Plan, as amended; and
d. To enhance the Company's ability to retain participating executives.
2. DEFINITIONS
For the purpose of the Plan, unless the context provides otherwise:
a. The term "Committee" shall mean the Compensation Committee of the Board
of Directors of Motorola, Inc. or any successor committee.
b. The term "Company" shall mean Motorola, Inc.
c. The term "Cycle" shall mean a period equal to four consecutive fiscal
years of the Company.
d. The term "Eligible Employee" shall mean any elected officer of the
Company.
e. The term "Grantee" shall mean any elected officer of the Company who is
or has been eligible to receive an award under the Plan.
3. STOCKHOLDER APPROVAL
Awards, if any, granted under the Plan are contingent on receiving approval
of the Plan by the stockholders of the Company, by a majority of the shares
voting at a meeting of the stockholders, prior to payment of awards, if any.
4. RESERVE FOR THE PLAN
The Company may, with respect to each Cycle, commencing with the Cycle
beginning January 1, 1994, set up a reserve for the purpose of the Plan in such
amount as may be determined by the Company in its sole discretion. Nothing in
the Plan shall be construed to obligate the Company to set up a reserve for the
Plan. The failure of the Company to set up a reserve for the Plan in any given
year shall not be deemed to effect termination of the Plan.
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5. COMMITTEE
The Committee shall have full power and authority to construe, interpret and
administer the Plan, and each decision of the Committee shall be final,
conclusive and binding upon all persons.
At the beginning of each Cycle, the Committee shall determine (1) which of
the Company's Eligible Employees are in positions in which they are likely to
make substantial long term contributions to the Company's success and therefore
participate in the Plan for the Cycle, and (2) which award level category each
participant is assigned to.
After the close of each Cycle, the Committee shall determine and certify the
extent to which the performance measures/metrics and other terms and conditions,
if any, relating to the achievement of the performance measures/metrics were
satisfied.
6. COMPARATOR COMPANIES AND PERFORMANCE MEASURES/METRICS
At the beginning of each Cycle, the Committee shall determine the comparator
companies (Exhibit A [NOTE: This Exhibit, and Exhibits B and C are not
attached]) to be used in comparing performance and the objective
measures/metrics for the Cycle. The measures/metrics to be used for this purpose
shall be Return on Net Assets, Shareholder Return, Sales Growth and Fundable
Growth (Exhibits B and C), each of which shall be weighted 25%.
In the event that the financial reports of one or more of the comparator
companies is not published for one or more years of a Cycle, such company or
companies shall be excluded from the calculations of comparator company
performance for such Cycle.
7. AWARD LEVEL CATEGORIES, MAXIMUM AWARDS AND CALCULATION OF AWARDS
Each participant shall be assigned by the Committee to one of the following
categories, with the associated maximum award, at the beginning of each Cycle:
AWARD LEVEL MAXIMUM AWARD AS PERCENT
CATEGORY OF ANNUALIZED BASE SALARY
- ------------ --------------------------
A 200%
B 150
C 100
The Company's actual performance for the Cycle in relation to the objective
performance measures/metrics shall determine the percent of the maximum award to
be paid to each Grantee. This percent shall be multiplied by the maximum award
for each Grantee (i.e., 200%, 150% and 100% for award level categories A, B and
C, respectively) to calculate the award, as a percent of annualized base salary
earned, to be paid to each Grantee. For the purpose of computing the maximum
dollar amount of the award for each Grantee, the lesser of (1) 125% of
annualized base salary on January 1 of the first year of the Cycle or (2) 100%
of the annualized base salary on December 31 of the last year of the Cycle,
shall be used.
A-2
8. PAYMENT OF AWARDS
After performance has been determined by the Committee, awards, if any,
shall be paid in cash. Until the awards are paid to the Grantee as herein
provided, the unpaid awards shall be retained by the Company (without liability
for interest, unless interest is provided for by the Committee in accordance
with the provisions of this Section 8). All awards shall be payable in full at
the time the performance has been determined by the Committee, provided that the
Committee may specify that awards shall be paid (a) in installments, (b) on a
deferred basis, in whole or in part, until some future date or dates specified
by the Committee or (c) upon the written request of a Grantee, on a deferred
basis, in whole or in part, until some future date or dates specified in the
request and agreed to by the Committee; provided however, that with respect to
awards deferred at the request of a Grantee as to any Cycle, such request for
deferral shall be irrevocable as to such Cycle, and provided further, that such
irrevocable written request must be received by the Committee on or before
December 31 of the last year of the Cycle for which the award is payable. With
respect to awards not payable in full at the time of the award, the Committee
shall have full power and authority in its sole discretion to set all terms and
conditions relating thereto, including, but not limited to (i) the payment date
or dates if payment of the award is deferred by the Committee under (b) above or
if the award is payable in installments and (ii) the forfeiture provisions, if
any, which shall apply to awards deferred by the Committee under (b) above--it
being the intent that the forfeiture provisions contained in this Section 8
shall not apply to awards deferred by the Committee under (b) above unless the
Committee expressly provides for their applicability as a term or condition of
the deferral and then they shall apply only to the extent so provided. The
Committee shall also have the power and authority to provide forfeiture
provisions with respect to awards it defers under (b) above which are different
from those contained in this Section 8 and forfeiture provisions with respect to
awards payable in installments or deferred at the request of a participant which
are additional to those contained in this Section 8. As to awards not payable in
full at the time of the award, the Committee may impose such terms, conditions,
restrictions and forfeitures with respect thereto as it shall determine to be in
the best interests of the Company and to effect the purposes of the Plan. The
Committee may provide that interest shall be paid out of the reserve, if any, or
by the Company, on the amount of any award payable in installments under (a)
above, or deferred in whole or in part by the Committee under (b) above, or
deferred in whole or in part at the request of any Grantee with the agreement of
the Committee under (c) above. If the Committee provides for the payment of
interest with respect to any such award, such interest shall be accrued as of
the last day of each fiscal quarter of the Company, shall be credited to an
account which shall be established by the Company in the name of the Grantee and
shall be compounded as of the end of each such fiscal quarter. Accumulated
interest shall be distributed to the Grantee at the time or times the award is
paid out. In the case of awards payable in installments and deferred awards
which are not paid out in a single sum, the interest to be distributed shall be
proportionate to the amount of the award being paid at the time. The rate of
interest to be paid shall be set by the Committee at the time of the grant of
the award to which it relates. The Committee is authorized to change the rate of
interest at any time and to set different rates for different Grantees and for
differing circumstances.
A-3
If the Committee shall determine that the actions or conduct of a Grantee
have been in a manner adverse, or in any way contrary, to the best interests of
the Company, such Grantee shall lose any right to receive any portion of any
installment, or deferred payment, or amount that would otherwise have been paid
subsequent to the first of the month in which such act or conduct first
occurred, provided, however, that in no case shall the Grantee lose the right to
be paid the Grantee's unpaid awards or award, as the case may be, as of a date
prior to January 1 of the year in which the determination resulting in such loss
of right is made, and provided further, that no installment, deferred payment or
amount delivered or paid prior to the date of such determination shall be
required to be returned. The determination as to whether any act or conduct of a
Grantee is adverse, or in any way contrary, to the best interests of the Company
shall be made by the Committee under such procedure as may from time to time be
prescribed by the Committee and shall be made in the absolute discretion of the
Committee. Any determination so made, including any determination of the time at
which such act or conduct first occurred, shall be conclusive. The provisions
relating to forfeiture contained in this subparagraph shall not apply to awards
deferred by the Committee under clause (b) in the first subparagraph of this
Section 8 unless and to the extent specifically made applicable by the
Committee.
A Grantee whose employment terminates by dismissal for cause, as determined
by the Committee in its sole discretion, or who voluntarily terminates
employment with the Company or any of its subsidiaries shall, unless otherwise
determined by the Committee in connection with such termination of employment,
lose any right to receive any unpaid installments or deferred payments. A
Grantee whose employment terminates for any reason other than by death or as set
forth in the preceding sentence shall, unless otherwise determined in connection
with the termination of the Grantee's employment, continue to be paid any unpaid
installments or deferred payments in the same manner as though the Grantee's
employment had continued without interruption until such awards are fully paid.
The provisions relating to forfeiture contained in this subparagraph shall not
apply to awards deferred by the Committee under clause (b) in the first
subparagraph of this Section 8 unless and to the extent specifically made
applicable by the Committee.
If it shall be determined by the Committee that a Grantee who was permitted
to retain the right to receive any unpaid installments or deferred payments upon
termination of employment has, after such termination of employment, engaged,
directly or indirectly, in any activity which is in competition with any
activity of the Company or whose actions or conduct, either prior to or after
such termination of employment, has been in a manner of adverse or in any way
contrary to the best interests of the Company, such Grantee shall, unless
otherwise determined, lose any right to receive any unpaid installments or
deferred payments as of the first of the month in which such competitive
activity or such act or conduct first occurred, provided, however, that in no
case shall the Grantee lose the right to receive any unpaid installments or
deferred payments as of a date prior to January 1 of the year in which the
determination resulting in such loss of right is made, and provided further,
that no installment or amount delivered or paid prior to the date of any such
determination shall be required to be returned. Each determination provided for
in this subparagraph shall be made by the Committee under such procedure as may
from time to time be prescribed by the Committee and shall be made in the
absolute discretion of the Committee. Any
A-4
determination so made, including any determination of the time at which such
competitive activity or such act or conduct first occurred, shall be conclusive.
The provisions relating to forfeiture contained in this subparagraph shall not
apply to awards deferred by the Committee under clause (b) in the first
subparagraph of this Section 8 unless and to the extent specifically made
applicable by the Committee.
A Grantee who loses the right to be paid any unpaid installments or deferred
payments shall receive forthwith all portions of such Grantee's awards, unpaid
but earned installments or deferred payments not otherwise forfeited in
accordance with this Section 8. The unpaid portions of installments or deferred
payments which are forfeited shall be credited to the reserve, if any, for the
Plan, or if there is no reserve, shall be retained by the Company.
If a Grantee dies, the Grantee's unpaid and undelivered awards shall be paid
and delivered to the beneficiary previously designated by such Grantee in
writing, or, if such Grantee did not designate any beneficiary in writing or if
all of the Grantee's designated beneficiaries predeceased the Grantee, to the
Grantee's legal representative at such time and in such manner as if such
Grantee were living and in service with the Company unless the Committee in its
sole and absolute discretion accelerates such payment and delivery.
Notwithstanding the foregoing provisions of this Section 8 or any of the
eligibility requirements of the Plan, in the event of a Change in Control, all
Grantees on the date of the Change in Control shall have a fully vested and
nonforfeitable right to receive all amounts of awards which remain payable under
(a) above or which were previously deferred under (b) or (c) above, and no
amendment, suspension, curtailment or termination of the Plan shall adversely
affect or terminate such vested and nonforfeitable right to receive any award
granted under the Plan.
For purposes of the Plan, a "Change in Control" shall mean a Change in
Control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended ("Exchange Act") whether or not the Company is then
subject to such reporting requirement; provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (A) any "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company's then outstanding
securities (other than the Company, any employee benefit plan of the Company,
any "person" who is a natural person and was shown as the "beneficial owner",
directly or indirectly, of securities of the Company representing more than 5%
of the combined voting power of the Company's securities in the Company's Proxy
Statement dated earlier than, but closest to, the date the Plan is approved by
the Company's stockholders, and, for purposes of the Plan, no Change in Control
shall be deemed to have occurred as a result of the "beneficial ownership," or
changes therein, of the Company's securities by any of the foregoing), (B) there
shall be consummated (i) any consolidation or merger of the Company in which the
Company is not the surviving or continuing corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have (directly or
A-5
indirectly) at least an 80% ownership interest in the outstanding Common Stock
of the surviving corporation immediately after the merger, or (ii) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, (C)
the stockholders of the Company approve any plan or proposal for the liquidation
or dissolution of the Company, or (D) as a result of, or in connection with, any
cash tender offer, exchange offer, merger or other business combination, sale of
assets, proxy or consent solicitation (other than by the Board of Directors
("Board") of the Company), contested election or substantial stock accumulation
(a "Control Transaction"), the members of the Board immediately prior to the
first public announcement relating to such Control Transaction shall thereafter
cease to constitute a majority of the Board.
Furthermore, in the event a Grantee's employment with the Company terminates
within a year of a Change in Control, that Grantee shall receive an award(s) for
the Cycle(s) in which the Grantee's employment is terminated. Such award(s)
shall be prorated from the first day of the Cycle(s) in which the Grantee's
employment is terminated up to the date of termination of employment. This pro
rata share of the award(s) shall be paid within thirty days after the date on
which the Grantee's employment is terminated.
A Grantee shall be entitled to a pro rata award(s) if his or her employment
with the Company is terminated for any reason (including disability or
retirement) except: (a) when the relevant Change in Control occurs as a result
of a transaction or transactions initiated by the Company, other than a
transaction or transactions initiated by the Company in response to or otherwise
in connection with an unsolicited proposal to the Company which would result in
a Change in Control, or (b) the Company terminates the Grantee's employment with
the Company or a subsidiary of the Company for good cause. For purposes of the
Plan, "good cause" means (a) the conviction of a Grantee of any criminal
violation involving dishonesty, fraud or breach of trust, or (b) the Grantee's
willful engagement in gross misconduct in the performance of his or her duties
that materially injures the Company.
9. NATURE OF GRANTEE'S RIGHTS UNDER THE PLAN
Neither the adoption of the Plan, nor any modification thereof, nor any
payment thereunder, shall be construed as giving to the Grantee or any person
whomsoever any legal or equitable rights against the Company or its officers or
directors or as giving any Grantee the right to be retained in the service of
the Company or any of its subsidiaries. No loan shall be made to any Grantee by
the Company because one or more payments might be made to the Grantee under the
Plan. No Grantee shall have any right to assign, transfer, appropriate,
encumber, commute or anticipate any payment that might be made to the Grantee
under the Plan, and no benefits, rights or interest of a Grantee under the Plan
shall in any way be subject to any legal process to levy upon, garnishee or
attach the same for payment of any claim against the Grantee, nor shall any
Grantee have any right of any kind whatsoever under the Plan other than the
right to receive any payment as and when it is due and payable under the terms
of the Plan.
A-6
10. ADMINISTRATION OF THE PLAN
The Committee shall keep and maintain records and accounts which will
accurately disclose at all times the reserve for the Plan, if any, for each year
during which the Plan is in effect, the awards made under the Plan, the payment
or other disposition of these awards, and any other pertinent information with
respect to the activities of the Committee.
The fiscal year of the Plan shall at times be the same as the fiscal year of
the Company.
The Committee may consult with counsel, who may be of counsel to the
Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of such counsel.
The expense of administering the Plan shall be borne by the Company and
shall not be charged against the reserve for the Plan, if any.
11. INDEMNIFICATION AND EXCULPATION
Each person who is or shall have been a member of the Board or of the
Committee shall be indemnified and held harmless by the Company against and from
any and all loss, cost, liability or expense that may be imposed upon or
reasonably incurred by such person in connection with or resulting from any
claim, action, suit or proceeding to which such person may be a party or in
which such person may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid by such person
in settlement thereof (with the Company's written approval) or paid by such
person in satisfaction of a judgment in any such action, suit or proceeding,
except a judgment based upon a finding of such person's bad faith, subject,
however, to the condition that upon the institution of any claim, action, suit
or proceeding against such person shall in writing give the Company an
opportunity, at its own expense, to participate in, and to the extent it may
wish, to assume the defense thereof before such person undertakes to handle it
on such person's own behalf. The foregoing right of indemnification shall not be
exclusive of any other right to which such person may be entitled as a matter of
law or otherwise, or any power that the Company may have to indemnify such
person or hold such person harmless.
Each member of the Board or of the Committee, and each officer and employee
of the Company shall be fully justified in relying or acting upon any
information furnished on behalf of the Company by any person or persons other
than himself or herself in connection with the administration of the Plan. In no
event shall any person who is or shall have been a member of the Board or of the
Committee, or any officer or employee of the Company, be liable for any
determination made or other action taken or any omission to act in reliance upon
any such information, or for any action (including the furnishing of
information) taken or any failure to act, if in good faith.
12. AMENDMENT OF THE PLAN
The Plan may be amended from time to time by the Board or the Committee and
may be terminated at any time by the Board.
A-7
APPENDIX
GRAPHIC IMAGE NARRATIVE
DESCRIPTION
1. Picture approximately 1" by 1 1/4" 1. A picture approximately 1" by 1
in size of each director 1/4" in size of each director is
located to the left of each director's
name at the beginning of each
director's biographical description on
pages 3 to 11 of the proxy statement.
2. Signature of Richard H. Weise 2. The facsimile signature of
Richard H. Weise is set forth above
his name in the Notice to
Stockholders, Notice to
Plan Participants, and on page 40 of
the proxy statement.
3. Caption set forth in a box 3. The Company's recommendation at
the end of each proposal and for the
election of directors on pages 16, 33,
35, 37 and 39 is contained in a
rectangle.
[LOGO]
- --------------------------------------------------------------------------------
PRINCIPAL EXECUTIVE OFFICES:
1303 East Algonquin Road
Schaumburg, Illinois 60196
- --------------------------------------------------------------------------------
TO THE PARTICIPANTS OF THE MOTOROLA EMPLOYEES' SAVINGS AND PROFIT SHARING PLAN
AND THE MOTOROLA EMPLOYEE STOCK OWNERSHIP PLAN (THE "PLANS"):
This Notice of Annual Meeting and the accompanying Proxy Statement are being
sent to you because you are the beneficial owner of Motorola stock by reason of
being a participant in either or both of the Plans. The trustees of the Plans
are the record owners of such stock and are entitled to vote at the meeting.
However, you have the right to direct how the trustees of the Plans will vote
the shares allocated to your accounts in the Plans. YOU ARE REQUESTED TO VOTE,
DATE, SIGN AND MAIL THE VOTING INSTRUCTION FORM ENCLOSED HEREWITH so that it
will be received by April , 1994. Your presence at the meeting is not required
to enable you to vote your shares.
Notice is hereby given that the annual meeting of stockholders of Motorola,
Inc. (the "Company" or "Motorola"), a Delaware corporation, will be held in the
Auditorium at the Company's Galvin Center, 1297 East Algonquin Road, Schaumburg,
Illinois on Tuesday, May 3, 1994 at 5:00 P.M., local time, for the following
purposes:
1. To elect directors for the ensuing year;
2. To consider and vote upon the Long Range Incentive Plan of 1994;
3. To consider and vote upon a proposed amendment to the Company's restated
Certificate of Incorporation to increase the authorized Common Stock of
the Company from 700,000,000 to 1,400,000,000;
4. To act upon a stockholder proposal concerning the creation of an
independent nominating committee, if properly presented to the meeting,
which is described in the accompanying Proxy Statement;
5. To act upon a stockholder proposal concerning the amendment of the
Bylaws to create an independent nominating committee, if properly
presented to the meeting, which is described in the accompanying Proxy
Statement; and
6. To transact such other business as may properly come before the meeting.
A report on the meeting, which will include the Chairman's remarks, will be
mailed to you after the meeting.
By order of the Board of Directors
Richard H. Weise
SECRETARY
March , 1994
IMPORTANT
IN ORDER THAT THERE MAY BE A PROPER REPRESENTATION AT THE MEETING, YOU ARE
REQUESTED TO SEND IN YOUR VOTING INSTRUCTION FORM IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR
PROPOSALS 2 AND 3.
1. Election of Directors
/ / FOR all nominees / / WITHHOLD AUTHORITY to vote / / FOR all nominees listed below
listed below for all nominees listed below (except as marked to the contrary
below).
E. Bloch, D. Clare, W. Doud, C. Galvin, R. Galvin, J. Hickey, A. Jones, D.
Jones, W. Massey, J. Mitchell, T. Murrin, S. Scott III, G. Tooker, G. Tucker, W.
Weisz, B. West.
Instruction: to withhold authority to vote for any individual nominee, write
that nominee's name here: ______________________________________________________
2. Adoption of Long Range Incentive Plan of 1994
/ / FOR / / AGAINST / / ABSTAIN
3. Adoption of amendment to restated Certificate of Incorporation
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4 AND 5.
4. Stockholder proposal concerning creation of independent nominating committee
/ / FOR / / AGAINST / / ABSTAIN
5. Stockholder proposal concerning amendment of Bylaws to create an independent
nominating committee
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE, BUT IF NO
CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE
AND FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4 AND 5.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 3, 1994 ABCD
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary L. Tooker, Carl F. Koenemann, Garth L.
Milne and Kenneth J. Johnson, and each of them, as the undersigned's Proxies
(with power of substitution) to represent and to vote all the shares of common
stock of Motorola, Inc., which the undersigned would be entitled to vote, at the
annual meeting of stockholders of Motorola, Inc. to be held May 3, 1994 and at
any adjournments thereof, subject to the directions indicated on the reverse
side hereof.
In their discretion, the Proxies are authorized to vote upon any other
matter that may properly come before the meeting or any adjournments thereof.
P
R
O
X _______________________
/__
\ / / PLEASE
SIGN
Y
Date: _________________
Please vote, date, sign and mail promptly this proxy in the enclosed envelope.
When there is more than one owner, each should sign. When signing as any
attorney, administrator, executor, guardian or trustee, please add your title as
such. If executed by a corporation, the full corporation name should be given,
and this proxy should be signed by a duly authorized officer, showing his or her
title.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR
PROPOSALS 2 AND 3.
1. Election of Directors
/ / FOR all nominees / / WITHHOLD AUTHORITY to vote / / FOR all nominees listed below
listed below for all nominees listed below (except as marked to the contrary
below)
E. Bloch, D. Clare, W. Doud, C. Galvin, R. Galvin, J. Hickey, A. Jones, D.
Jones, W. Massey, J. Mitchell, T. Murrin, S. Scott III, G. Tooker, G. Tucker, W.
Weisz, B. West.
Instruction: to withhold authority to vote for any individual nominee, write
that nominee's name here: ______________________________________________________
2. Adoption of Long Range Incentive Plan of 1994
/ / FOR / / AGAINST / / ABSTAIN
3. Adoption of amendment to restated Certificate of Incorporation
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4 AND 5.
4. Stockholder proposal concerning creation of independent nominating committee
/ / FOR / / AGAINST / / ABSTAIN
5. Stockholder proposal concerning amendment of Bylaws to create an independent
nominating committee
/ / FOR / / AGAINST / / ABSTAIN
IMPORTANT--THIS FORM MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
VOTING INSTRUCTION FORM ABCD
ANNUAL MEETING OF STOCKHOLDERS, MAY 3, 1994
The undersigned hereby directs that, at the annual meeting of stockholders
of Motorola, Inc. to be held May 3, 1994 and at any adjournments thereof, the
shares of Motorola, Inc. common stock credited as of March 15, 1994 to the
undersigned's account(s) in either or both of the Motorola Employees' Savings
and Profit Sharing Plan (the "Profit Sharing Plan") or the Motorola Employee
Stock Ownership Plan (the "ESOP") shall be voted, pursuant to a proxy solicited
by the Board of Directors of Motorola, Inc., by The Northern Trust Company as
Trustee of the Profit Sharing Plan and by Harris Trust and Savings Bank as
Trustee of the ESOP, or their attorneys-in-fact, as specified on the reverse
side hereof.
_______________________________ /--PLEASE
Signature of Plan Participant \-- SIGN
Date: __________________________ , 1994
Please vote, date, sign and mail promptly in the enclosed envelope.