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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement**
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MOTOROLA, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes: ** The Registrant expects to release definitive proxy materials to
stockholders on or about March 23, 2000.
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
PRELIMINARY PROXY MATERIALS
Proxy Statement
Management's Dis-
cussion
and Analysis
1999 Consolidated
Financial State-
ments
and Notes
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PRINCIPAL EXECUTIVE OFFICES: PLACE OF MEETING:
1303 East Algonquin Road Hyatt Regency Woodfield
Schaumburg, Illinois 60196 1800 E. Golf Road
Schaumburg, Illinois 60173
March 23, 2000
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
Our Annual Meeting will be held at the Hyatt Regency Woodfield, 1800 E. Golf
Road, Schaumburg, Illinois 60173 on Monday, May 1, 2000 at 5:00 P.M., local
time.
The purpose of the meeting is to:
1. elect directors for the next year;
2. approve a proposal to amend Motorola's Restated Certificate of Incorpora-
tion, as amended, to increase the number of authorized shares of
Motorola's common stock from 1.4 billion shares to 4.2 billion shares;
3. consider and vote upon the Motorola Omnibus Incentive Plan of 2000; and
4. act upon such other matters as may properly come before the meeting.
Only Motorola stockholders of record at the close of business on March 15, 2000
will be entitled to vote at the meeting. Please vote in one of these ways:
. use the toll-free telephone number shown on your proxy card;
. visit the website shown on your proxy card to vote via the Internet; or
. mark, sign, date and return the enclosed proxy card in the enclosed post-
age-paid envelope.
PLEASE NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO STOCKHOLDERS OF
MOTOROLA AS OF THE RECORD DATE (OR THEIR AUTHORIZED REPRESENTATIVES) HOLDING
ADMISSION TICKETS OR OTHER EVIDENCE OF OWNERSHIP. THE ADMISSION TICKET IS DE-
TACHABLE FROM YOUR PROXY CARD. IF YOUR SHARES ARE HELD BY A BANK OR BROKER,
PLEASE BRING TO THE MEETING YOUR BANK OR BROKER STATEMENT EVIDENCING YOUR
BENEFICIAL OWNERSHIP OF MOTOROLA STOCK TO GAIN ADMISSION TO THE MEETING.
By order of the Board of Directors,
/s/A. Peter Lawson
A. Peter Lawson
Secretary
<PAGE>
PRELIMINARY PROXY MATERIALS
1303 E. Algonquin Road
Schaumburg, IL 60196
Christopher B. Galvin//Chairman of the Board and Chief Executive Officer
March 23, 2000
Dear Fellow Stockholders:
It has been an exciting year at Motorola. We have worked very hard on meeting
the goals we outlined to stockholders last year. We have made a lot of progress
in 1999. We know much remains to be done.
We are asking our stockholders to consider two important proposals for our 2000
Annual Meeting. First, we are asking you to approve an increase in the number
of authorized shares of Motorola common stock. In February 2000, the Motorola
Board of Directors approved a 3-for-1 stock split, subject to the stockholders
approving an increase in the number of the Company's authorized shares. Addi-
tional shares may also be used by the Company to purchase other companies, such
as in the recently completed merger with General Instrument, and in connection
with our employee benefit plans.
We are also asking for your approval of the Motorola Omnibus Incentive Plan of
2000. The Board adopted the 2000 Plan in response to what can only be called a
"war for talent" that is being waged in the information technology industry.
The Company has spent the last year reviewing its compensation programs.
Motorola's programs related to equity-based awards have fallen behind most of
our key competition. The Board and senior management believe that competitive
compensation programs are crucial for Motorola's success. The 2000 Plan is in-
tegral to our compensation strategies in 2000 and going forward.
Each of these proposals is discussed in greater detail in the Proxy Statement.
I appreciate your support of these proposals and your continued support of Mo-
torola.
Very truly yours,
/s/Christopher B. Galvin
<PAGE>
PRELIMINARY PROXY MATERIALS
PROXY STATEMENT
--------------------
PROXY STATEMENT--VOTING PROCEDURES
Your vote is very important. The Board of Directors is soliciting proxies to
be used at the May 1, 2000 Annual Meeting. This proxy statement, the form of
proxy and the 1999 Summary Annual Report will be mailed to stockholders on or
about March 23, 2000. The Summary Annual Report is not a part of this proxy
statement. The proxy statement and Summary Annual Report also are available on
the Company's website at www.motorola.com/investor.
Who Can Vote
Only stockholders of record at the close of business on March 15, 2000 will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. On that date, there were [716,294,440] issued and outstanding shares
of the Company's common stock, $3 par value per share ("Common Stock"), the
only class of voting securities of the Company.
How You Can Vote
This year there are three convenient voting methods:
. Voting by Telephone. You can vote your shares by telephone by calling the
toll-free telephone number on your proxy card. Telephone voting is avail-
able 24 hours a day. If you vote by telephone you should not return your
proxy card.
. Voting by Internet. You can also vote via the Internet. The website for
Internet voting is on your proxy card, and voting also is available 24
hours a day. If you vote via the Internet you should not return your proxy
card.
. Voting by Mail. If you choose to vote by mail, mark your proxy, date and
sign it, and return it in the postage-paid envelope provided.
How You May Revoke or Change Your Vote
You can revoke your proxy at any time before it is voted at the meeting by:
. Sending written notice of revocation to the Secretary.
. Submitting another timely proxy by telephone, Internet or paper ballot.
. Attending the Annual Meeting and voting in person. If your shares are held
in the name of a bank, broker or other holder of record, you must obtain a
proxy, executed in your favor, from the holder of record to be able to
vote at the meeting.
General Information on Voting
You are entitled to cast one vote for each share of Common Stock you own on
the record date. Stockholders do not have the right to vote cumulatively in
electing directors.
In order for business to be conducted, a quorum must be represented at the
Annual Meeting. A quorum is a majority of the shares entitled to vote at the
Annual Meeting. Shares represented by a proxy in which authority to vote for
any matter considered is "withheld", a proxy marked "abstain" or a proxy as to
which there is a "broker non-vote" will be considered present at the meeting
for purposes of determining a quorum.
There are differing vote requirements for the various proposals. Directors will
be elected by a plurality of the votes cast at the Annual Meeting, meaning the
14 nominees receiving the most votes will be elected. Only votes cast for a
nominee will be counted. Unless indicated otherwise by your proxy, the shares
will be voted for the 14 management nominees. Instructions on the accompanying
proxy to withhold authority to vote for one or more of the nominees will result
in those nominees receiving fewer votes but will not count as a vote against
the nominees.
The amendment to the Company's Restated Certificate of Incorporation, as amend-
ed, to increase the number of shares of authorized Common Stock to 4.2 billion
shares requires an affirmative vote of a majority of the shares outstanding and
entitled to vote as of the record date. Abstentions and broker non-votes on
this matter will have the same impact as votes against the proposal.
The adoption of the Motorola Omnibus Incentive Plan of 2000 requires an affir-
mative vote of a majority of the shares present in person or by proxy and enti-
tled to vote at the Annual Meeting. For this proposal, an abstention will have
the same effect as a vote against the proposal. Broker non-votes will not be
voted for or against the proposal and will have no effect on the proposal.
If you are the beneficial owner of shares held in "street name" by a broker,
the broker as the record holder of the shares is required to vote those shares
in accordance with your instructions. If you do not give instructions to the
broker, the broker will be entitled to vote the shares with respect to "discre-
tionary" items but will not be permitted to vote the shares with respect to
"non-discretionary" items (those shares are treated as "broker non-votes").
All shares that have been properly voted--whether by telephone, Internet or
mail--and not revoked will be voted at the Annual Meeting in accordance with
your instructions. If you sign your proxy card but do not give voting instruc-
tions, the shares represented by that proxy will be voted as recommended by the
Board of Directors.
If any other matters are properly presented at the Annual Meeting for consid-
eration, the persons named in the enclosed proxy card will have the discretion
to vote on those matters for you. At the date we began printing this proxy
statement, the Board of Directors did not know of any other matter to be raised
at the annual meeting.
Voting by Participants in the Company's Profit Sharing and Investment Plan
If a stockholder is a participant in the Motorola Profit Sharing and Invest-
ment Plan (the "Profit Sharing Plan") the proxy card also will serve as a vot-
ing instruction for the trustees of that plan where all accounts are registered
in the same name. If shares of Common Stock in the Profit Sharing Plan are not
voted either by telephone, via the Internet, or by returning the proxy card
representing such shares, those shares will be voted by the trustees in the
same proportion as the shares properly voted.
1
<PAGE>
PROXY STATEMENT
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Voting by Participants in the General Instrument Corporation Savings Plan
If a stockholder is a participant in the General Instrument Corporation Sav-
ings Plan (the "GI Savings Plan") the proxy card also will serve as voting in-
structions for the special fiduciary under that plan for all shares of Common
Stock that have been allocated to the participant's account under the GI Sav-
ings Plan. The special fiduciary will instruct the trustee to vote all shares
for which the special fiduciary receives timely voting instructions from par-
ticipants in accordance with such participants' instructions. The special fi-
duciary shall direct the trustee to vote all shares for which the special
fiduciary has not received timely voting instructions in the special
fiduciary's sole discretion. The trustee will vote the shares in accordance
with directions received from the special fiduciary. Please note that partici-
pants in the GI Savings Plan are considered named fiduciaries with respect to
the shares of Common Stock for which they are entitled to direct the special
fiduciary to vote. In directing the special fiduciary how to vote, they should
consider the long-term best interests of themselves and the other participants
in the GI Savings Plan.
1. ELECTION OF DIRECTORS FOR A ONE-YEAR TERM
The term of office of all present directors of the Company will expire on
the day of the 2000 Annual Meeting upon the election of their successors. The
number of directors of the Company to be elected at the Annual Meeting is 14.
The directors elected at the Annual Meeting will serve until their respective
successors are elected and qualified or until their earlier death or resigna-
tion.
NOMINEES
Each of the nominees named below is currently a director of the Company and
was elected at the Annual Meeting of stockholders held on May 3, 1999. The
ages shown are as of December 31, 1999. Donald R. Jones is not standing for
re-election to the Board because of the Company's policy on age and tenure of
directors.
If any of the nominees named below is not available to serve as a director
at the time of the Annual Meeting (an event which the Board does not now an-
ticipate), the proxies will be voted for the election as director of such
other person or persons as the Board may designate, unless the Board, in its
discretion, reduces the number of directors.
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CHRISTOPHER B. GALVIN, Principal Occupation: Chairman of the Board
and Chief Executive Officer, Motorola, Inc.
Director since 1988 Age--49
Mr. Galvin began working for the Company in 1967 and he served in
sales, sales management, marketing, product management, service
management and general management positions in the Company's vari-
ous businesses. He served as president and chief operating officer
from 1993 until he became Chief Executive Officer on January 1,
1997. In February 1999, Mr. Galvin was elected Chairman of the
Board. Mr. Galvin received a bachelor's degree from Northwestern
University and a master's degree from the Kellogg Graduate School
of Management at Northwestern University. Mr. Galvin is the son of
Robert W. Galvin.
photo of CHRISTOPHER B. GALVIN
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RONNIE C. CHAN, Principal Occupation: Chairman, Hang Lung
Development Group
Director since 1997 Age--50
Mr. Chan has been the Chairman of Hong Kong-based Hang Lung Devel-
opment Group since 1991. Hang Lung Development Group is involved
in property development, property investment and hotels. In 1986,
Mr. Chan co-founded the private Morningside/Springfield Groups.
The Morningside Group directs investments in private companies.
The Springfield Group engages in financial trading, fund manage-
ment and investment consulting. He is a member of the Board of Di-
rectors of Enron Corporation and Standard Chartered PLC. Mr. Chan
obtained his first two degrees in biology from California State
University and an MBA from the University of Southern California.
Mr. Chan is a U.S. citizen residing in Hong Kong.
photo of RONNIE C. CHAN
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H. LAURANCE FULLER, Principal Occupation: Co-Chairman of the
Board, BP Amoco, p.l.c.
Director since 1994 Age--61
Mr. Fuller will be retiring as Co-Chairman and a director of BP
Amoco, p.l.c., an energy company, on March 31, 2000. He is a di-
rector of The Chase Manhattan Corporation, The Chase Manhattan
Bank, N.A., Abbott Laboratories, Security Capital Group and Cata-
lyst. Mr. Fuller graduated from Cornell University with a B.S. de-
gree in chemical engineering and earned a J.D. degree from DePaul
University Law School.
photo of H. LAURANCE FULLER
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2
<PAGE>
PROXY STATEMENT
--------------------
ROBERT W. GALVIN, Principal Occupation: Chairman of the Executive
Committee, Motorola, Inc.
Director since 1945 Age--77
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.
photo of ROBERT W. GALVIN
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ROBERT L. GROWNEY, Principal Occupation: President and Chief
Operating Officer, Motorola, Inc.
Director since 1997 Age--57
Mr. Growney began his career with Motorola in 1966, holding vari-
ous positions in the Company's wireless communications businesses
including president and general manager of the Messaging, Informa-
tion and Media Sector from 1994 until he was elected President and
Chief Operating Officer on January 1, 1997. Mr. Growney received
both his bachelor's degree in mechanical engineering and his mas-
ter's degree in business administration from Illinois Institute of
Technology and is currently a member of the Board of Trustees of
Illinois Institute of Technology.
photo of ROBERT L. GROWNEY
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ANNE P. JONES, Principal Occupation: Consultant
Director since 1984 Age--64
Ms. Jones is currently working as a consultant. She was a partner
in the Washington, D.C. office of the Sutherland, Asbill & Brennan
law firm from 1983 until 1994. Before that, she was a Commissioner
of the Federal Communications Commission. Ms. Jones is a director
of the American Express Mutual Fund Group. She holds B.S. and
L.L.B. degrees from Boston College and its Law School, respective-
ly.
photo of ANNE P. JONES
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JUDY C. LEWENT, Principal Occupation: Senior Vice President and
Chief Financial Officer, Merck & Co., Inc.
Director since 1995 Age--50
Ms. Lewent has been Senior Vice President and Chief Financial Of-
ficer, Merck & Co., Inc., a pharmaceuticals company, since 1992.
She is also a director of Johnson & Johnson Merck Consumer Pharma-
ceuticals Company, The Quaker Oats Company, Merial Limited, and
the National Bureau of Economic Research. Ms. Lewent is also a
trustee of the Rockefeller Family Trust, a trustee board member of
the University of Pennsylvania Health System, and a Massachusetts
Institute of Technology Corporation member. Ms. Lewent received a
B.S. degree from Goucher College and a M.S. degree from the MIT
Sloan School of Management.
photo of JUDY C. LEWENT
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DR. WALTER E. MASSEY, Principal Occupation: President of Morehouse
College
Director since 1993 Age--61
Dr. Massey is President of Morehouse College. He has been director
of the Argonne National Laboratory and vice president for research
at the University of Chicago. In 1991 he was appointed by Presi-
dent Bush as the Director of the National Science Foundation after
which he was Provost and Senior Vice President for the University
of California System. Dr. Massey received a Ph.D. degree in Phys-
ics and a Master of Arts degree from Washington University. He
also holds a Bachelor of Science degree in Physics and Mathematics
from Morehouse College. He is a director of BP Amoco p.l.c.,
BankAmerica Corporation and McDonalds, Inc. Dr. Massey previously
served as a director of the Company from May 1984 until May 1991
when he accepted his appointment to the National Science Founda-
tion.
photo of DR. WALTER E. MASSEY
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3
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PROXY STATEMENT
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NICHOLAS NEGROPONTE, Principal Occupation: Director of the
Massachusetts Institute of Technology Media Laboratory
Director since 1996 Age--56
Mr. Negroponte is a co-founder and director of the Massachusetts
Institute of Technology Media Laboratory, an interdisciplinary,
multi-million dollar research center focusing on the study and ex-
perimentation of future forms of human and machine communication.
He founded MIT's pioneering Architecture Machine Group, a combina-
tion lab and think tank responsible for many radically new ap-
proaches to the human-computer interface. He joined the MIT
faculty in 1966 and became a full professor in 1980. Mr. Negro-
ponte received a B.A. and M.A. in Architecture from Massachusetts
Institute of Technology.
photo of NICHOLAS NEGROPONTE
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JOHN E. PEPPER, JR., Principal Occupation: Chairman of the
Executive Committee of the Board of Directors, Procter & Gamble
Co.
Director since 1994 Age--61
Mr. Pepper is Chairman of the Executive Committee of the Board of
Directors of Procter & Gamble Co., a consumer products company,
and its former chairman of the board and chief executive officer.
Mr. Pepper is also a director of the Xerox Corporation and Boston
Scientific Corporation. Mr. Pepper graduated from Yale University
in 1960.
photo of JOHN E. PEPPER, JR.
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SAMUEL C. SCOTT III, Principal Occupation: President and Chief
Operating Officer, Corn Products International
Director since 1993 Age--55
Mr. Scott is President and Chief Operating Officer of Corn Prod-
ucts International, a corn refining business. Mr. Scott serves on
the Board of Directors of Corn Products International, Reynolds
Metals Company, the Corn Refiners Association Inroads Chicago and
Russell Reynolds Associates. Mr. Scott graduated from Fairleigh
Dickinson University, with a bachelor's degree in engineering in
1966 and an MBA in 1973.
photo of SAMUEL C. SCOTT III
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GARY L. TOOKER, Principal Occupation: Retired; formerly Chairman
of the Board, Motorola, Inc.
Director since 1986 Age--60
Mr. Tooker started with the Company in 1962, holding ascending
marketing and operations assignments within the semiconductor
business and the Company, including chief executive officer from
1993 through 1996 and chairman of the board from January 1997
through May 1999. He retired as an officer of the Company on De-
cember 31, 1999. He is a member of the Board of Directors of Eaton
Corporation, Atlantic Richfield Company (ARCO) and Catalyst and
the Morehouse College Board of Trustees. He is a graduate of Ari-
zona State University where he received a bachelor's degree in
Electrical Engineering and did post-graduate studies in Business
Administration.
photo of GARY L. TOOKER
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B. KENNETH WEST, Principal Occupation: Senior Consultant for
Corporate Governance to Teachers Insurance and Annuity
Association-College Retirement Equities Fund
Director since 1976 Age--66
Mr. West is serving as Senior Consultant for Corporate Governance
to TIAA-CREF, a major pension fund company. He retired as chairman
of Harris Bankcorp, Inc. in 1995 where he had been employed since
1957. He is also a director of The Pepper Companies, Inc. Mr. West
graduated from the University of Illinois and received an MBA de-
gree from the University of Chicago.
photo of B. KENNETH WEST
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PROXY STATEMENT
--------------------
DR. JOHN A. WHITE, Principal Occupation: Chancellor, University of
Arkansas
Director since 1995 Age--60
Dr. White is currently Chancellor of the University of Arkansas.
Dr. White served as Dean of Engineering at Georgia Institute of
Technology from 1991 to early 1997, having been a member of the
faculty since 1975. He is a director of Eastman Chemical Company,
J.B. Hunt Transport Services, Inc., Logility, Inc., and Russell
Corporation. Dr. White received a B.S.I.E. from the University of
Arkansas, a M.S.I.E. from Virginia Polytechnic Institute and State
University and a Ph.D. from The Ohio State University.
photo of DR. JOHN A. WHITE
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5
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PROXY STATEMENT
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MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY
During 1999 the Board had nine meetings. All incumbent directors attended
75% or more of the combined total meetings of the Board and the committees on
which they served during 1999 except Mr. Chan.
COMMITTEES OF THE BOARD OF DIRECTORS
Audit and Legal Committee
Members: Directors A. Jones (Chair), Chan, Fuller, D. Jones and White
Number of Meetings in 1999: Four
Functions:
. Oversees internal controls, audits and compliance programs
. Recommends independent auditors and oversees the scope of their activi-
ties
. Oversees health, safety and environmental audit functions and business
ethics
. Oversees internal legal practice and policy
Compensation Committee
Members: Directors Scott (Chair), Fuller and Pepper
Number of Meetings in 1999: Seven
Functions:
. Establishes elected officers compensation
. Administers or monitors compensation and benefit plans
Executive Committee
Members: Directors R. Galvin (Chair), C. Galvin, Growney, Scott, Tooker and
West
Number of Meetings in 1999: None
Functions:
. Reviews strategic planning process, allocation of resources and other
specific matters assigned by the Board
Finance Committee
Members: Directors D. Jones (Chair), Chan, Growney, Lewent and West
Number of Meetings in 1999: Seven
Functions:
. Reviews current and long-range financial strategy and planning, includ-
ing dividends and borrowings
Management Development Committee
Members: Directors West (Chair), C. Galvin, Scott and Tooker
Number of Meetings in 1999: Three
Functions:
. Reviews the process and results of the Company's organization and man-
agement development program
Nominating Committee
Members: Directors Pepper (Chair), A. Jones, Massey and Negroponte
Number of Meetings in 1999: Four
Functions:
. Recommends candidates for membership on the Board based on committee-
established guidelines
. Consults with the Chairman of the Board on committee assignments
. Considers candidates for the Board recommended by stockholders
. Considers matters of corporate governance
This Committee will consider a candidate for director proposed by a stock-
holder. A candidate must be highly qualified and be both willing and ex-
pressly interested in serving on the Board. A stockholder wishing to propose
a candidate for the Committee's consideration should forward the candidate's
name and information about the candidate's qualifications to the Company's
Secretary as described on page .
Technology Committee
Members: Directors Massey (Chair), Growney, Lewent, Negroponte and White
Number of Meetings in 1999: Three
Functions:
. Identifies and assesses significant technological issues and needs af-
fecting the Company
DIRECTOR COMPENSATION
In 1999, non-employee directors were paid an annual retainer of $40,000.
This fee has not increased over the last four years. Employee directors re-
ceive no additional compensation for serving on the Board or its Committees.
In addition to the annual retainer, non-employee directors are paid for each
meeting attended as follows: (i) $1,500 per day for directors' meetings; (ii)
$1,000 per day for committee meetings (unless on the same day as another meet-
ing, then $500); and (iii) $1,500 per day and a pro-rata portion thereof for
partial days, for assigned work for the benefit of the Company or any subsidi-
ary. Each non-employee director who is a chair of a committee receives an ad-
ditional $4,000 per annum. The Company also reimburses its directors, and in
certain instances spouses who accompany directors, for travel, lodging and re-
lated expenses they incur in attending Board and committee meetings.
Directors are required to accept half of all their board compensation in
Common Stock or restricted Common Stock, and may elect to accept up to 100% of
their compensation in Common Stock or restricted Common Stock. Restricted Com-
mon Stock is Common Stock that may not be transferred until (i) the holder
does not stand for re-election or is not re-elected or (ii) the holder's dis-
ability or death.
In 1999, each non-employee director received an option to acquire 2,500
shares of Common Stock at the fair market value of the shares on the date of
grant.
Non-employee directors may elect to defer receipt of all or any portion of
their compensation until the year after 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.
6
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PROXY STATEMENT
--------------------
In 1996, the Board terminated its retirement plan. Non-employee directors
elected after the termination are not entitled to benefits under this plan, and
non-employee directors already participating in the plan accrued no additional
benefits for services after May 31, 1996. In 1998, some directors converted
their accrued benefits in the retirement plan into shares of restricted Motor-
ola Common Stock. They may not sell or transfer these shares until they are no
longer members of the Board because (i) they did not stand for re-election or
were not re-elected or (ii) their disability or death. Directors who did not
convert their accrued benefits in the retirement plan are entitled to receive
payment of such benefits in accordance with the applicable payment terms of the
plan, including payments to spouses in the event of death.
Non-employee directors are covered by insurance that provides accidental
death and dismemberment coverage of $500,000 per person. The spouse of each
such director is also covered by such insurance when traveling with the direc-
tor 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, 1999 was $3,500.
Robert W. Galvin, a director and executive officer, owns an airplane, which
he used on business travel for the Company for approximately 77% of its miles
flown in 1999. The Company employs pilots and mechanics for Company-owned air-
planes. They also devote a portion of their time to Mr. Galvin's airplane, in-
cluding 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. Gal-
vin pays all of the other expenses of his airplane, except that the cost of fu-
el, oil and relatively minor incidental crew and flight expenses incurred
solely in connection with Company business flights are paid by the Company. Mr.
Galvin does not charge the Company when other Company personnel accompany him
on his airplane on business trips. In 1999, and historically, the percentage of
Company-paid expenses of the airplane has been less than the percentage of us-
age of the airplane for Company business.
Gary Tooker retired as an officer of the Company on December 31, 1999. In
connection with his retirement, the Company entered into a consultant agreement
with Mr. Tooker, which began on January 1, 2000. Under this consultant agree-
ment, Mr. Tooker has agreed to make available to Motorola consulting services
that are specifically requested by Motorola's CEO. Those services are expected
to include:
. Representing Motorola at meetings with U. S. and foreign governments and
with councils and committees associated with U.S. and foreign governments
. Representing Motorola at various international meetings and trade shows
. Representing Motorola at meetings of charitable and educational organiza-
tions and institutions
. Continued involvement with Motorola University activities, both in teach-
ing and in fostering external relationships
. Other topics as may from time-to-time be decided upon by consultant and
the CEO.
Mr. Tooker did not receive any payments in 1999 under this consultant agree-
ment. The Company expects to pay Mr. Tooker approximately $2,727,000 in 2000
and approximately $270,000 in 2001 under the agreement. In addition, during the
term of the consultant agreement, Mr. Tooker will receive secretarial and com-
puter support and be entitled to use the Company-owned aircraft in connection
with his consulting services. He will also be entitled to home security serv-
ices and tax preparation services comparable to those offered to elected offi-
cers of the Company. The Company also will pay for annual physical examinations
and medical insurance premiums. Mr. Tooker will also receive regular director
compensation paid to non-employee directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED HEREIN AS
DIRECTORS. UNLESS INDICATED OTHERWISE BY YOUR PROXY VOTE, THE SHARES WILL BE
VOTED FOR THE ELECTION AS DIRECTORS OF SUCH NOMINEES.
2. APPROVAL OF INCREASE IN AUTHORIZED COMMON STOCK
The Board of Directors of the Company has proposed the adoption by the stock-
holders of an amendment to the Company's Restated Certificate of Incorporation,
as amended, to increase the number of shares of authorized Common Stock of the
Company to 4.2 billion shares from the presently authorized number of 1.4 bil-
lion shares. The Board of Directors has declared that the proposed amendment be
submitted to a vote by the stockholders at the Annual Meeting.
On February 29, 2000, the Board of Directors declared a contingent 3-for-1
stock split in the form of a stock dividend. If, and only if, the proposed
amendment to the Company's Restated Certificate of Incorporation, as amended,
is adopted by the stockholders at the Annual Meeting and the number of shares
of authorized Common Stock is increased to 4.2 billion, the stock dividend will
be distributed on June 1, 2000 to holders of Common Stock of record on May 15,
2000. The Company reserves the right to rescind the stock dividend.
If the proposed amendment is adopted by the stockholders, the Company plans
to file a Certificate of Amendment to the Restated Certificate of Incorpora-
tion, as amended, as soon as practicable following the Annual Meeting and the
number of shares of authorized Common Stock will thereby be increased to 4.2
billion.
On March 15, 2000, of the 1.4 billion authorized shares of Common Stock, a
total of [716.3 million] shares were outstanding and approximately [72.0 mil-
lion] shares were reserved for issuance in connection with the Company's obli-
gations to issue stock in connection with outstanding options, warrants,
convertible debt securities and other exchangeable securities. The remainder of
the shares of authorized common stock were not issued or subject to reserva-
tion.
7
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PROXY STATEMENT
- ------------------
In addition to enabling the contingent 3-for-1 stock split in the form of a
stock dividend that is described above, the additional shares will enhance the
Company's flexibility in connection with possible future actions, such as
stock splits, stock dividends, future acquisitions of property and securities
of other companies, financings and other corporate purposes. The Board of Di-
rectors 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 pur-
poses. The Board of Directors believes that it is beneficial to the Company to
have the additional shares available for such purposes without delay or the
necessity of a special shareholders' meeting. Other than the contingent 3-for-
1 stock split in the form of a stock dividend that is described above, the
Company has no immediate plans, arrangements, commitments or understandings
with respect to the issuance of any of the additional shares of common stock
which would be authorized by the proposed amendment.
If the proposed amendment is adopted by the stockholders, the additional
shares will be available for issuance from time to time without further action
by the stockholders (unless required by applicable law, regulatory agencies or
by the rules of any stock exchange on which the Company's securities may then
be listed) and without first offering such shares to the stockholders. Stock-
holders do not have preemptive rights with respect to the common stock. The
issuance of Common Stock, or securities convertible into Common Stock, on
other than a pro-rata basis would result in the dilution of a present stock-
holder's interest in the Company.
The Company has not proposed the increase in the authorized number of shares
with the intention of using the additional shares for anti-takeover purposes,
although the Company could theoretically use the additional shares to make it
more difficult or to discourage an attempt to acquire control of the Company.
As of this date, the Company is unaware of any pending or threatened efforts
to acquire control of the Company.
The affirmative vote of a majority of the shares outstanding and entitled to
vote as of the record date is required for the adoption of the proposed amend-
ment to the Company's Restated Certificate of Incorporation, as amended.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO INCREASE THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK. UNLESS OTHERWISE INDICATED BY YOUR PROXY,
THE SHARES WILL BE VOTED FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE RE-
STATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO INCREASE THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK.
3. ADOPTION OF THE MOTOROLA OMNIBUS INCENTIVE PLAN OF 2000
The Board has adopted the Motorola Omnibus Incentive Plan of 2000 (the "2000
Plan") and is recommending that stockholders approve the 2000 Plan at the An-
nual Meeting. The 2000 Plan is integral to the Company's compensation strate-
gies and programs. There is an ongoing "war for talent" within the information
technology industry where the Company competes. In order to retain and secure
employees in this intensely competitive employment environment, the Company
must have competitive compensation programs, particularly with respect to eq-
uity-based awards. The use of stock options and other stock awards among in-
formation technology companies is widely prevalent and continues to increase.
The Company has found that its use of stock options falls behind the usage by
others in the industry. The 2000 Plan will give Motorola more flexibility to
keep pace with competitors.
With stockholder approval of the 2000 Plan, the Company expects to continue
its efforts to expand the use of stock options as the Company's most widely-
used form of long-term incentive. The 2000 Plan will also permit annual man-
agement incentive awards, stock grants, restricted stock grants, performance
stock grants, performance unit grants, stock appreciation rights grants
("SARs"), and cash awards. Stockholder approval of the 2000 Plan also will
permit the performance-based awards discussed below to qualify for deductibil-
ity under Section 162(m) of the Internal Revenue Code.
Awards and grants under the 2000 Plan are referred to as "Benefits." Those
eligible for Benefits under the 2000 Plan are referred to as "Participants."
Participants include all employees of the Company and its subsidiaries and all
non-employee directors.
The Company's existing incentive plan, the Motorola Incentive Plan of 1998
(the "1998 Plan"), by its terms, expires on May 4, 2002, and no benefits will
be granted under the 1998 Plan after that date. As of December 31, 1999, ap-
proximately 25.8 million shares were available for new grants under the 1998
Plan and there were approximately 31.3 million shares subject to outstanding
options under the 1998 Plan and it predecessors. As a result of grants made
under the 1998 Plan after December 31, 1999, including grants of stock options
to approximately 30,000 employees based on 1999 performance, on March 15,
2000, approximately [6.8] million shares were available for new grants under
the 1998 Plan. While the 1998 Plan will remain in place, it does not provide
sufficient shares for the grant which will occur prior to the 2001 stockholder
meeting. Rather than request that stockholders approve additional shares for
the 1998 Plan, the Board of Directors approved for submission to the stock-
holders the new 2000 Plan. The Board recommends a vote for adoption of the
2000 Plan, so the Company can effectively recruit, motivate, and retain the
caliber of employees essential for achievement of the Company's success.
8
<PAGE>
PROXY STATEMENT
--------------------
A summary of the principal features of the 2000 Plan is provided below, but
is qualified in its entirety by reference to the full text of the 2000 Plan
which was filed electronically with this proxy statement with the Securities
and Exchange Commission. Such text is not included in the printed version of
this proxy statement.
Shares Available for Issuance
The aggregate number of shares of Common Stock that may be issued under the
2000 Plan will not exceed [35.7 million] (subject to the adjustment provisions
discussed below). The [35.7 million] new shares represent slightly less than 5
percent of the currently outstanding shares.
The number of shares which may be issued under the 2000 Plan for Benefits
other than stock options will not exceed a total of 3 million shares (subject
to the adjustment provisions discussed below).
Administration and Eligibility
The 2000 Plan will be administered by a Committee of the Board (the "Commit-
tee") consisting of two or more directors, each of whom will qualify as a "non-
employee director" within the meaning set forth in Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Com-
mittee will approve the aggregate Benefits and the individual Benefits for the
most senior elected officers and non-employee directors.
No Participant may receive in any Plan Year: (i) stock options relating to
more than 1,000,000 shares; (ii) restricted stock that is subject to the at-
tainment of Performance Criteria as discussed below relating to more than
100,000 shares; (iii) SARs relating to more than 1,000,000 shares; or (iv) per-
formance shares relating to more than 100,000 shares (all of these limits sub-
ject to the adjustment provisions discussed below). The maximum amount that may
be earned under Performance Unit awards by any Participant who is a "covered
employee" in any calendar year may not exceed $5,000,000.
Stock Options
Grants of Options
The Committee is authorized to grant stock options to Participants
("Optionees"), which may be either incentive stock options ("ISOs") or nonqual-
ified stock options ("NSOs"). NSOs and ISOs are collectively referred to as
"Stock Options." The exercise price of any Stock Option must be equal to or
greater than the fair market value of the shares on the date of the grant. The
term of an ISO cannot exceed 10 years, and it is anticipated that NSOs will
have a term of 10 years, although the Committee retains the discretion to es-
tablish different terms for NSOs, as long as the term does not exceed 10 years.
ISOs may not be granted more than ten years after the date of adoption of the
2000 Plan by the Board.
For purposes of the 2000 Plan, fair market value shall be determined in such
manner as the Committee may deem equitable, or as required by applicable law or
regulation. Generally, however, fair market value means the average of the high
and low sale price as reported on the New York Stock Exchange--Composite Trans-
actions.
Exercisability and Termination
At the time of grant, the Committee in its sole discretion will determine
when Options are exercisable and when they expire.
Payment of Option Price
Payment for shares purchased upon exercise of a Stock Option must be made in
full at the time of purchase. Payment may be made in cash, by the transfer to
the Company of shares owned by the Participant for at least six months valued
at fair market value on the date of transfer (including a certification of own-
ership of shares owned by the Participant, delivery of a properly executed ex-
ercise notice to a broker to deliver to the Company proceeds to pay the Option
Exercise Price and any withholding taxes due to the Company) or in such other
manner as may be authorized by the Committee.
Restricted Stock Grants
Restricted Stock consists of shares which are transferred or sold by the Com-
pany to a Participant, but are subject to substantial risk of forfeiture and to
restrictions on their sale or other transfer by the Participant ("Restricted
Stock"). The Committee determines the eligible Participants to whom, and the
time or times at which, grants of Restricted Stock will be made, the number of
shares to be granted, the price to be paid, if any, the time or times within
which the shares covered by such grants will be subject to forfeiture, the time
or times at which the restrictions will terminate, and all other terms and con-
ditions of the grants. Restrictions could include, but are not limited to, Per-
formance Criteria, continuous service with the Company, the passage of time or
other restrictions.
Performance Stock
Performance Stock is the right of a Participant to whom a grant of such stock
is made to receive shares or cash or a combination of shares and cash equal to
the fair market value of such shares at a future date in accordance with the
terms of such grant and upon the attainment of Performance Criteria specified
by the Committee.
The award of Performance Stock to a Participant will not create any rights in
such Participant as a stockholder of the Company until the issuance of Common
Stock with respect to an award.
Performance Units
Performance Units are the right of a Participant to whom a grant of such Per-
formance Units is made to receive a payment in cash upon the attainment of Per-
formance Criteria. The Committee may substitute actual shares of Common Stock
for the cash payment otherwise required to be made pursuant to a Performance
Unit award.
Performance Criteria
Awards of Restricted Stock, Performance Stock, Performance Units and other
incentives under the 2000 Plan may
9
<PAGE>
PROXY STATEMENT
- ------------------
be made subject to the attainment of performance goals relating to one or more
business criteria within the meaning of Section 162(m) of the Code, including,
but not limited to, cash flow; cost; ratio of debt to debt plus equity; profit
before tax; earnings before interest and taxes; earnings before interest, tax-
es, depreciation and amortization; earnings per share; operating earnings;
economic value added; ratio of operating earnings to capital spending; free
cash flow; net profit; net sales; price of the Company's Common Stock; return
on net assets, equity, or stockholders' equity; market share; or total return
to stockholders ("Performance Criteria").
Any Performance Criteria may be used to measure the performance of the Com-
pany as a whole or any business unit of the Company, and any performance cri-
teria may be adjusted to include or exclude extraordinary items.
SARs
The Committee has the authority to grant SARs to Participants and to deter-
mine the number of shares subject to each SAR, the term of the SAR, the time
or times at which the SAR may be exercised, and all other terms and conditions
of the SAR. An SAR is a right, denominated in shares, to receive, upon exer-
cise of the right, in whole or in part, without payment to the Company an
amount, payable in shares, in cash or a combination thereof, that is equal to
the excess of: (i) the fair market value of Common Stock on the date of exer-
cise of the right over; (ii) the fair market value of Common Stock on the date
of grant of the right multiplied by the number of shares for which the right
is exercised. It is anticipated that SARs primarily will be used in place of
stock options, and any appreciation in value will be paid in cash, in order to
comply with the laws and regulations of foreign jurisdictions or to make the
grant a more effective form of compensation in a foreign jurisdiction.
Annual Management Incentive Awards
The Committee has the authority to grant Management Incentive Awards to des-
ignated executive officers of the Company or any subsidiary.
Management Incentive Awards will be paid out of an incentive pool equal to 5
percent of the Company's consolidated operating earnings for each calendar
year. The Committee will allocate an incentive pool percentage to each desig-
nated Participant for each calendar year. In no event, may the incentive pool
percentage for any one Participant exceed 30 percent of the total pool. For
purposes of the 2000 Plan, "consolidated operating earnings" will mean the
consolidated earnings before income taxes of the Company, computed in accor-
dance with generally accepted accounting principles, but shall exclude the ef-
fects of extraordinary items. Extraordinary items mean: (i) extraordinary,
unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on
the disposition of a business; (iii) changes in tax or accounting regulations
or laws; or (iv) the effect of a merger or acquisition. The Participant's in-
centive award then will be determined by the Committee based on the Partici-
pant's allocated portion of the incentive pool subject to adjustment in the
sole discretion of the Committee.
Stock Awards
The Committee may award shares of Common Stock to Participants without pay-
ment therefor, as additional compensation for service to the Company or a sub-
sidiary.
Cash Awards
A cash award consists of a monetary payment made by the Company to an em-
ployee as additional compensation for his or her services to the Company or a
subsidiary. A cash award may be made in tandem with another Benefit or may be
made independently of any other Benefit. Cash awards may be subject to other
terms and conditions, which may vary from time to time and among employees, as
the Committee determines to be appropriate.
Amendment of the 2000 Plan
Except as may be required for compliance with Rule 16b-3 under the Exchange
Act and Section 162(m) of the Code, the Board or the Committee has the right
and power to amend the 2000 Plan provided, however, that neither the Board nor
the Committee may amend the 2000 Plan in a manner which would impair or ad-
versely affect the rights of the holder of a Benefit without the holder's con-
sent. If the Code or any other applicable statute, rule or regulation,
including, but not limited to, those of any securities exchange, requires
stockholder approval with respect to the 2000 Plan or any type of amendment
thereto, then to the extent so required, stockholder approval will be ob-
tained.
Termination of the 2000 Plan
The 2000 Plan may be terminated at any time by the Board. Termination will
not in any manner impair or adversely affect any Benefit outstanding at the
time of termination.
Committee's Right to Modify Benefits
Any Benefit granted may be converted, modified, forfeited, or canceled, in
whole or in part, by the Committee if and to the extent permitted in the 2000
Plan, or applicable agreement entered into in connection with a Benefit grant
or with the consent of the Participant to whom such Benefit was granted. The
Committee may grant Benefits on terms and conditions different than those
specified in the 2000 Plan to comply with the laws and regulations of any for-
eign jurisdiction, or to make the Benefits more effective under such laws and
regulations.
Neither the Board nor the Committee may cancel any outstanding Stock Option
for the purpose of reissuing the option to the Participant at a lower exercise
price, or reduce the option price of an outstanding option.
Change in Control
Stock Options
Upon the occurrence of a Change in Control, each Stock Option outstanding on
the date on which the Change in Control occurs will immediately become exer-
cisable in full for the remainder of its term.
10
<PAGE>
PROXY STATEMENT
--------------------
Restricted Stock
Upon the occurrence of a Change in Control, the restrictions on all shares of
Restricted Stock outstanding on the date on which the Change in Control occurs
will be automatically terminated.
Performance Stock
Upon the occurrence of a Change in Control, any Performance Criteria with re-
spect to any Performance Stock previously granted, but still considered out-
standing (as a right to receive shares or cash at a future date) will be deemed
to have been attained at target levels, and shares of Common Stock or cash will
be paid to the Participant in an amount or amounts determined in accordance
with the terms and conditions set forth in the applicable agreement relating to
the Performance Stock.
Performance Units
Upon the occurrence of a Change in Control, any Performance Criteria with re-
spect to any Performance Units previously granted, but still considered out-
standing (as a right to receive shares or cash at a future date) will be deemed
to have been attained at target levels, and the cash (or shares of Common
Stock) will be paid to the Participant in an amount or amounts determined in
accordance with the terms and conditions set forth in the applicable agreement
relating to the Performance Units.
SARs
Upon the occurrence of a Change in Control, each SAR outstanding on the date
on which the Change in Control occurs will immediately become exercisable in
full for the remainder of its term.
Management Incentive Awards
Upon the occurrence of a Change in Control, all Management Incentive Awards
will be paid out based on the consolidated operating earnings of the immedi-
ately preceding year, or such other method of payment as may be determined by
the Committee (prior to the Change in Control).
Other Stock or Cash Awards
Upon the occurrence of a Change in Control, any terms and conditions with re-
spect to other stock or cash awards previously granted under the 2000 Plan will
be deemed to be fully satisfied and the other stock or cash awards will be paid
out immediately to the Participants, in amounts determined in accordance with
the terms and conditions set forth in the applicable grant, award, or agreement
relating to such Benefits.
For purposes of the 2000 Plan, the term "Change in Control" is defined as:
(i) any change in the person or group that possesses, directly or indirectly,
the power to direct or cause the direction of the management and the policies
of the Company, whether through the ownership of voting securities, by contract
or otherwise; (ii) the acquisition, directly or indirectly, of securities of
the Company representing at least 20 percent of the combined voting power of
the outstanding securities of the Company (other than by the Company, or any
employee benefit plan of the Company); (iii) the consummation of certain merg-
ers and consolidations involving the Company; (iv) the consummation of the sale
or other disposition of all or substantially all of the Company's assets; (v) a
liquidation or dissolution of the Company approved by its stockholders; and
(vi) a change in the majority of the board in existence prior to the first pub-
lic announcement relating to any cash tender offer, exchange offer, merger or
other business combination, sale of assets, proxy or consent solicitation
(other than by the Board of the Company), contested election or substantial
stock accumulation.
Adjustments
If there is any change in the Common Stock by reason of any stock split,
stock dividend, spin-off, split-up, spin-out, recapitalization, merger, consol-
idation, reorganization, combination, or exchange of shares, the number and
class of shares available for Benefits, and the number of shares subject to
outstanding Benefits, and the price of each of the foregoing, as applicable,
will be equitably adjusted by the Committee in its discretion. The Board has
approved a 3-for-1 stock split in the form of a stock dividend contingent upon
stockholder approval of the increase of authorized shares described in Proposal
2 in this proxy statement. If the contingent 3-for-1 stock split in the form of
a stock dividend occurs, then the number of shares of Common Stock reserved for
issuance under the 2000 Plan will be adjusted to reflect the stock split and
will increase to [107.1] million shares.
Subject to the Change-in-Control provisions, without affecting the number of
shares reserved or available hereunder, either the Board or the Committee may
authorize the issuance or assumption of Benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it deems appropriate.
In the event of any merger, consolidation, or reorganization in which the
Company is not the continuing corporation, there shall be substituted on an eq-
uitable basis as determined by the Committee, for each share of common stock
subject to a Benefit, the number and kind of shares of stock, other securities,
cash, or other property to which holders of Common Stock of the Company are en-
titled pursuant to the transaction.
Reusage
If a Stock Option expires or is terminated, surrendered or canceled without
having been fully exercised or if Restricted Stock, Performance Shares or SARs
are forfeited or terminated without the issuance of all of the shares subject
thereto, the shares covered by such Benefits (as long as such Benefits were is-
sued under the 2000 Plan) will again be available for use under the 2000 Plan.
Shares covered by a Benefit granted under the 2000 Plan will not be counted as
used unless and until they are actually and unconditionally issued and deliv-
ered to a Participant. The number of shares which are transferred to the Com-
pany by a Participant to pay the exercise or purchase price of a Benefit will
be subtracted
11
<PAGE>
PROXY STATEMENT
- ------------------
from the number of shares issued with respect to such Benefit for the purpose
of counting shares used. Shares withheld to pay withholding taxes in connection
with the exercise or payment of a Benefit will not be counted as used. Shares
covered by a Benefit granted under the 2000 Plan which is settled in cash will
not be counted as used.
Federal Income Tax Consequences
The Company has been advised by counsel that the federal income tax conse-
quences as they relate to Benefits are as follows:
ISOs
An Optionee does not generally recognize taxable income upon the grant or
upon the exercise of an ISO. Upon the sale of ISO shares, the Optionee recog-
nizes income in an amount equal to the difference, if any, between the exercise
price of the ISO shares and the fair market value of those shares on the date
of sale. The income is taxed at long-term capital gains rates if the Optionee
has not disposed of the stock within two years after the date of the grant of
the ISO and has held the shares for at least one year after the date of exer-
cise and the Company is not entitled to a federal income tax deduction. The
holding period requirements are waived when an Optionee dies.
The exercise of an ISO may in some cases trigger liability for the alterna-
tive minimum tax.
If an Optionee sells ISO shares before having held them for at least one year
after the date of exercise and two years after the date of grant, the Optionee
recognizes ordinary income to the extent of the lesser of: (i) the gain real-
ized upon the sale; or (ii) the difference between the exercise price and the
fair market value of the shares on the date of exercise. Any additional gain is
treated as long-term or short-term capital gain depending upon how long the
Optionee has held the ISO shares prior to disposing of them in a disqualifying
disposition. In the year of disposition, the Company receives a federal income
tax deduction in an amount equal to the ordinary income which the Optionee rec-
ognizes as a result of the disposition.
NSOs
An Optionee does not recognize taxable income upon the grant of an NSO. Upon
the exercise of such a Stock Option, the Optionee recognizes ordinary income to
the extent the fair market value of the shares received upon exercise of the
NSO on the date of exercise exceeds the exercise price. The Company receives an
income tax deduction in an amount equal to the ordinary income which the
Optionee recognizes upon the exercise of the Stock Option. If an Optionee sells
shares received upon the exercise of an NSO, the Optionee recognizes capital
gain income to the extent the sales proceeds exceed the fair market value of
such shares on the date of exercise.
Restricted Stock
A Participant who receives an award of Restricted Stock does not generally
recognize taxable income at the time of the award or payment. Instead, the Par-
ticipant recognizes ordinary income in the first taxable year in which his or
her interest in the shares becomes either: (i) freely transferable; or (ii) no
longer subject to substantial risk of forfeiture. On the date restrictions
lapse, the Participant includes in taxable income the fair market value of the
shares less the cash, if any, paid for the shares.
A Participant may elect to recognize income at the time he or she receives
Restricted Stock in an amount equal to the fair market value of the Restricted
Stock (less any cash paid for the shares) on the date of the award.
The Company receives a compensation expense deduction in the taxable year in
which restrictions lapse (or in the taxable year of the award if, at that time,
the Participant had filed a timely election to accelerate recognition of in-
come).
Other Benefits
In the case of an exercise of an SAR or an award of Performance Stock, Per-
formance Units, or Common Stock or cash, the Participant will generally recog-
nize ordinary income in an amount equal to any cash received and the fair
market value of any shares received on the date of payment or delivery. In that
taxable year, the Company will receive a federal income tax deduction in an
amount equal to the ordinary income which the Participant has recognized.
Million Dollar Deduction Limit
The Company may not deduct compensation of more than $1,000,000 that is paid
to an individual who, on the last day of the taxable year, is either the
Company's chief executive officer or is among one of the four other most high-
ly-compensated officers for that taxable year. The limitation on deductions
does not apply to certain types of compensation, including qualified perfor-
mance-based compensation. The Company believes that Benefits in the form of
Stock Options, Performance Stock, Performance Units, SARs, performance-based
Restricted Stock and cash payments under Management Incentive Awards constitute
qualified performance-based compensation and, as such, will be exempt from the
$1,000,000 limitation on deductible compensation.
Miscellaneous
A new benefits table is not provided because no grants have been made under the
2000 Plan and all Benefits are discretionary. As of March 15, 2000, the closing
price of Motorola's Common Stock was $ .
Approval by Stockholders
In order to be adopted, the 2000 Plan must be approved by the affirmative
vote of a majority of the outstanding shares represented at the meeting and en-
titled to vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD RECOMMENDS A VOTE FOR ADOPTION OF THE MOTOROLA OMNIBUS INCENTIVE
PLAN OF 2000. UNLESS OTHERWISE INDICATED ON THE PROXY, THE SHARES WILL BE VOTED
FOR ADOPTION OF THE MOTOROLA OMNIBUS INCENTIVE PLAN OF 2000.
12
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PROXY STATEMENT
--------------------
OWNERSHIP OF SECURITIES
The following table sets forth information as of February 29, 2000 regarding
the beneficial ownership of shares of Common Stock by each director and nominee
for director of the Company, by the persons named in the Summary Compensation
Table on page 15, and by all current directors, nominees and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
Shares Under Total Shares
Shares Exercisable Beneficially
Name Owned(1) Options(2) Owned(3)(4)
---------------------------------------------------------------------------
<S> <C> <C> <C>
Christopher B. Galvin 3,287,573 553,334 3,841,314(5)
Gary L. Tooker 167,799 606,920(6) 776,281(6)
Robert L. Growney 129,972 295,667 426,272(7)
Merle L. Gilmore 106,533 274,667 381,920(8)
Carl F. Koenemann 31,308 163,644 198,218(9)
Ronnie C. Chan 5,476 -- 5,476(10)
H. Laurance Fuller 9,878 6,000 15,878(11)
Robert W. Galvin 15,129,932 -- 15,164,177(12)
Anne P. Jones 3,085 6,000 9,843(13)
Donald R. Jones 51,906 6,000 109,108(14)
Judy C. Lewent 4,641 6,000 10,641(15)
Walter E. Massey 3,957 3,500 7,457(16)
Nicholas Negroponte 7,628 6,000 13,628
John E. Pepper, Jr. 8,200 6,000 18,550(17)
Samuel C. Scott III 8,196 6,000 14,196(18)
B. Kenneth West 9,132 6,000 15,132(19)
John A. White 6,707 -- 6,707(20)
All current directors, nominees
and current executive officers
as a group (30 persons) 17,362,380 4,086,448 21,599,450(21)
- -------------------------------------------------------------------------------
</TABLE>
(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 Trust and the shares listed under "Shares Un-
der Exercisable Options."
(2) Includes shares under options exercisable on February 29, 2000 and options
which become exercisable within 60 days thereafter.
(3) Unless otherwise indicated, each person has sole voting and investment
power over the shares reported.
(4) Includes interests, if any, in shares held in the Company's Profit Sharing
Trust, which is subject to some investment restrictions, and the shares
listed under "Shares Under Exercisable Options. Each director, other than
Mr. R. Galvin, owns less than 1% of the Common Stock. Mr. R. Galvin bene-
ficially owns [2.1]% of the Common Stock. All current directors, nominees
and current executive officers as a group own [3]%.
(5) Mr. C. Galvin has or shares investment and voting power with respect to
these shares as follows: sole voting and investment power, 889,151 shares;
shared voting and investment power, 1,611,860 shares; sole voting power
only, 403,669 shares; and shared voting power only, 382,893 shares. In-
cluded in Mr. C. Galvin's shares are 1,986,593 shares, which are shown in
this table to be owned by Mr. R. Galvin. Mr. C. Galvin disclaims benefi-
cial ownership of all shares not held directly by him.
(6) Mr. Tooker has shared voting and investment power over 167,799 of these
shares. Mr. Tooker disclaims beneficial ownership of 51,285 shares held in
certain trusts and of 9,108 shares under exercisable options which are in-
directly held by he and family members.
(7) Mr. Growney does not have investment power over 90,000 of these shares.
(8) Mr. Gilmore has shared voting and investment power over 23,778 of these
shares, and does not have investment power over 80,000 of these shares.
(9) Mr. Koenemann has shared voting and investment power over 30,864 of these
shares.
(10) Mr. Chan does not have investment power over 1,225 of these shares.
(11) Mr. Fuller does not have investment power over 312 of these shares.
(12) Mr. R. Galvin has or shares investment and voting power with respect to
these shares as follows: sole voting and investment power, 9,762,446
shares; sole investment power only, 4,067,455 shares; and shared voting
and investment
13
<PAGE>
PROXY STATEMENT
- ------------------
power, 1,300,031 shares. Included in Mr. R. Galvin's shares are 1,986,593
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 31,222 shares owned by his wife, which are included for him un-
der "Total Shares Beneficially Owned." Christopher B. Galvin presently
serves as co-trustee with his father, Robert W. Galvin, and his mother,
Mary B. Galvin, under certain trusts established for their benefit, estate
planning and charity and holds an executed general power of attorney from
them to manage their assets, including the voting or selling of Motorola
shares, if that becomes necessary.
(13) Ms. Jones does not have investment power over 696 of these shares, and
disclaims beneficial ownership of 758 shares held by her husband, which
are included for her under "Total Shares Beneficially Owned."
(14) Mr. Jones disclaims beneficial ownership of 51,202 shares held by his
wife, which are included for him under "Total Shares Beneficially Owned."
(15) Ms. Lewent does not have investment power over 88 of these shares.
(16) Mr. Massey has shared voting and investment power over 768 of these
shares, and does not have investment power over 654 of these shares.
(17) Mr. Pepper does not have investment power over 1,571 of these shares, and
disclaims beneficial ownership of 4,350 shares held by his family mem-
bers, which are included for him under "Total Shares Beneficially Owned."
(18) Mr. Scott does not have investment power over 1,202 of these shares.
(19) Mr. West does not have investment power only over 4,632 of these shares.
(20) Mr. White does not have investment power over 180 of these shares.
(21) All directors, nominees and current executive officers as a group have
shared voting and investment power over 1,873,964 of these shares, and do
not have investment power over 385,560 of these shares.
Principal Shareholders
As of December 31, 1999, no person was known by the Company to be the bene-
ficial owner of more than 5% of the Company's Common Stock, except that FMR
Corp. filed a Schedule 13G with the Securities and Exchange Commission con-
taining the following information:
<TABLE>
<CAPTION>
Number of shares and Nature of
Name and Address Beneficial Ownership Percent of Class
- -------------------------------------------------------------------------------
<S> <C> <C>
FMR Corp. 49,983,620 shares of Common Stock (1) 8.206%
82 Devonshire Street
Boston, MA 02109
- -------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1999, FMR Corp. had sole voting power over 3,912,440
shares of Common Stock and sole dispositive power over 49,983,620 shares
of Common Stock.
14
<PAGE>
PROXY STATEMENT
--------------------
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------- -----------------------------
Other Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Salary Bonus sation Awards Options Payouts Sation
Name and Principal Position Year ($) (1) ($)(2) ($)(3)(4) ($)(6) (#)(7)(8) ($)(9) ($)(10)(11)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Christopher B. Galvin 1999 1,275,000 1,900,000 7,973 13,153,000 300,000 0 6,419
Chairman of the Board and 1998 1,200,000 600,000 13,476 0 250,000 0 8,179
Chief Executive Officer 1997 990,000 955,000 5,615 0 80,000 505,260 7,661
Gary L. Tooker 1999 1,080,000 500,000 13,048 0 0 0 10,062
Vice Chairman of the Board 1998 1,080,000 250,000 25,884 0 100,000 0 15,999
1997 1,080,000 760,000 14,901 0 80,000 692,928 15,732
Robert L. Growney 1999 975,000 1,200,000 7,066 11,837,700 275,000 0 8,971
President and Chief 1998 920,000 450,000 5,289 0 215,000 0 6,056
Operating Officer 1997 720,000 695,000 4,428,617(5) 0 60,000 256,640 7,225
Merle L. Gilmore 1999 750,000 900,000 2,288 10,522,400 250,000 0 5,422
Executive Vice President 1998 646,558 400,000 4,074 0 200,000 0 5,058
1997 565,000 495,000 2,064 0 40,000 232,580 6,252
Carl F. Koenemann 1999 570,000 500,000 2,555 0 110,000 0 6,918
Executive Vice President 1998 550,000 180,000 4,531 0 100,000 0 7,500
and Chief Financial Officer 1997 485,000 325,000 3,916 0 40,000 195,488 7,500
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Including amounts deferred pursuant to salary reduction arrangements under
the Profit Sharing Plan.
(2) These amounts were earned in each of these years under the Motorola Execu-
tive Incentive Plan ("MEIP") for performance during that year.
(3) These amounts are the Company's reimbursements for the income tax liabil-
ity resulting from the income imputed to that executive officer as a re-
sult of coverage by a group life insurance policy for elected officers and
the use of Company aircraft.
(4) The aggregate amount of perquisites and other personal benefits, securi-
ties or property, given to each named executive officer valued on the ba-
sis 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) Elected officers participate in a supplementary retirement plan and gener-
ally become vested in the plan at age 55. A discussion of the Company's
pension and retirement plans is on page 18. At the time of vesting the
Company makes a contribution to the trust for that plan. The purpose of
that contribution is to enable the trust to make payments of the benefits
under the plan due to the participant after retirement. Federal and state
tax laws require that the participant include in income the amount of any
contribution in the year it was made even though the participant receives
no cash in connection with such contribution or any payments from the re-
tirement plan. Because the participant receives no cash yet incurs a sig-
nificant income tax liability, the Company believes that it is appropriate
to reimburse the participant so that he or she is not paying additional
taxes as a result of a contribution. This is the Company's policy with re-
spect to elected officers all of whom participate in the plan, including
those named in the Compensation Table. In 1997, Mr. Growney was reimbursed
for such a tax liability of $4,423,360.
(6) This column shows the market value of restricted stock awards on the date
of grant. The closing price of the Common Stock on January 31, 2000, the
date on which the shares of restricted stock were granted, was $131.53.
The shares of restricted stock were granted to these executives in recog-
nition of their successful efforts to significantly improve the Company's
performance during 1999 and to provide them with strong incentive to con-
tinue to increase the value of the Company during their employment as fol-
lows: 100,000 shares to Mr. Galvin; 90,000 shares to Mr. Growney; and
80,000 shares to Mr. Gilmore. The restrictions on 50% of the restricted
stock lapse upon the executive officer's retirement. The restrictions on
the remaining 50% of the shares lapse on a scheduled basis over the execu-
tive officer's career as long as he is employed by the Company or a sub-
sidiary. These restrictions lapse on 25% of the shares in 4 years and on
25% of the shares in 6 years after the date of grant. In certain circum-
stances, those restrictions could all lapse at retirement. In addition,
for the shares held by these three executives, if total shareholder return
from the date of grant is 125% or greater before the restrictions on the
time-vesting 50% of their shares lapse, the restrictions on these shares
would automatically lapse. Upon death or total and permanent disability,
all restrictions lapse. Regular quarterly dividends or dividend equiva-
lents are paid on restricted stock held by these individuals.
15
<PAGE>
PROXY STATEMENT
- ------------------
(7) Stock options granted in 1997 vested and became exercisable after one
year. In 1998, the Committee granted stock options to key employees at the
Company that vest and become exercisable over a three year period. Other
than Mr. Tooker's options, the options in the 1998 grant to the named ex-
ecutives vest and become exercisable as follows: 33.3% on 11/05/99; 33.3%
on 11/05/00; and 33.4% on 11/05/01.
(8) The Committee granted stock options to these executives in recognition of
their successful efforts to significantly improve the Company's perfor-
mance during 1999 and to provide them with strong incentive to continue to
increase the value of the Company during their employment. Traditionally,
grants of stock options are made in November or December of each year. The
Committee delayed the 1999 grant to January 31, 2000 so that it could
fully assess the full year 1999 performance of the Company. These options
were granted at fair market value at the time of grant. Other than Mr.
Koenemann's options, the options vest and become exercisable over 4 years
as follows: 25% on 1/31/01; 25% on 1/31/02; 25% on 1/31/03; and 25% on
1/31/04. Mr. Koenemann's options vest and become exercisable as follows:
60% on 1/31/01 and 40% on 1/31/02.
(9) No payments under this plan will be made for the cycle ending with 1999.
(10) These figures for 1999 include the following amounts for the premiums paid
under the term life portion of the split-dollar life insurance for: Mr. C.
Galvin, $2,995; Mr. Tooker, $6,638; Mr. Growney, $5,547; Mr. Gilmore,
$1,998; and Mr. Koenemann, $3,494.
(11) These figures include the following contributions made by the Company to
the Profit Sharing Plan for 1999 for: Mr. C. Galvin, $3,424; Mr. Tooker,
$3,424; Mr. Growney, $3,424; Mr. Gilmore, $3,424; and Mr. Koenemann,
$3,424.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN 1999
Individual Grants
- -------------------------------------------------------------------------- Potential Realizable
Number of Value (4) at Assumed
Securities Annual Rates of Stock
Underlying % of Total Exercise Price Appreciation for
Options Granted Options Granted or Base Option Term
(# of shares) to Employees in Price Expiration ----------------------
Name (1) (2) 1999 ($/Sh) Date (3) 5% ($) (4) 10% ($) (4)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Christopher B. Galvin 300,000 1.6% $131.53 1/31/15 42,573,427 125,371,036
Gary L. Tooker 0 0% $131.53 1/31/15 0 0
Robert L. Growney 275,000 1.5% $131.53 1/31/15 39,025,641 114,923,449
Merle L. Gilmore 250,000 1.4% $131.53 1/31/15 35,477,856 104,475,863
Carl F. Koenemann 110,000 0.6% $131.53 1/31/15 15,610,257 45,969,380
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) These are options granted under the Motorola Incentive Plan of 1998 to ac-
quire shares of Common Stock. Options were granted on January 31, 2000 re-
lating to performance during 1999. Traditionally, grants of stock options
are made in November or December of each year. The Committee delayed the
1999 grant to January 31, 2000 so that it could fully assess the full year
1999 performance of the Company.
(2) These options were granted at fair market value at the time of the grant,
and carry with them the right to elect to have shares withheld upon exer-
cise and/or to deliver previously acquired shares of Common Stock to sat-
isfy tax withholding requirements. Other than Mr. Koenemann's options, the
options vest and become exercisable over 4 years as follows: 25% on
1/31/01; 25% on 1/31/02; 25% on 1/31/03; and 25% on 1/31/04. Mr.
Koenemann's options vest and become exercisable as follows: 60% on 1/31/01
and 40% on 1/31/02. Options may be transferred to family members or certain
entities in which family members have an interest. In the aggregate, the
options described in this table are exercisable for approximately 0.13% of
the shares of Common Stock outstanding on March 15, 2000.
(3) The option term is 15 years from the date of grant. The option term is the
same for substantially all of the options granted to employees on January
31, 2000. These options could expire earlier in certain situations.
(4) These hypothetical gains are based entirely on assumed annual growth rates
of 5% and 10% in the value of the Company's stock price over the entire 15-
year life of these options. This equates to an increase in stock price of
108% and 318%, respectively. These assumed rates of growth are selected by
the Securities and Exchange Commission for illustration purposes only and
are not intended to predict future stock prices, which will depend upon
market conditions and the Company's future performance. This calculation
does not take into account any taxes or other expenses which might be owed.
For example, the options granted to Mr. Galvin would produce a pre-tax gain
of $125,371,036 only if the Company's stock price appreciates by 10% per
year for 15 years and rises to more than $549 per share before Mr. Galvin
exercises the stock options. Based on the number of shares of Motorola Com-
mon Stock outstanding as of January 31, 2000, such an increase would pro-
duce a corresponding aggregate pre-tax gain of more than $298 billion for
the Company's stockholders. In other words, Mr. Galvin's gain from the op-
tions would equal .042% of the potential gain to all stockholders.
16
<PAGE>
PROXY STATEMENT
---------------
AGGREGATED OPTION EXERCISES IN 1999
AND 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-The-
Shares Underlying Unexercised Money (2) Options at end of
Acquired on Value Options at end of 1999 (#) 1999 ($) (3)
Exercise Realized ------------------------------ --------------------------------
Name (# of shares) ($) (1) Exercisable Unexercisable (4) Exercisable Unexercisable (4)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Christopher B. Galvin 0 0 553,334 466,666 55,239,009 20,284,271
Gary L. Tooker 63,080(5) 4,549,363(5) 660,920(6) 0 66,372,819(6) 0
Robert L. Growney 30,373 1,647,233 295,667 418,333 26,614,554 17,711,736
Merle L. Gilmore 0 0 274,667 383,333 25,976,044 16,384,636
Carl F. Koenemann 69,690 5,286,278 163,644 176,666 14,872,980 7,956,471
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The "value realized" represents the difference between the base (or exer-
cise) 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, 1999.
(3) Assuming a stock price of $147.25 per share, which was the closing price of
a share of Common Stock reported for the New York Stock Exchange-Composite
Transactions on December 31, 1999.
(4) Includes options granted on January 31, 2000 relating to performance during
1999. Traditionally, grants of stock options are made in November or Decem-
ber of each year. The Committee delayed the grant to January 31, 2000 so
that it could fully assess the full year 1999 performance of the Company.
(5) Includes 18,000 shares acquired upon exercise of options that were previ-
ously transferred by Mr. Tooker to a limited partnership indirectly held by
Mr. Tooker and his family members.
(6) Includes 27,108 shares under exercisable options that were transferred by
Mr. Tooker to a limited partnership indirectly held by Mr. Tooker and his
family members.
LONG-TERM INCENTIVE PLANS-AWARDS IN 1999
<TABLE>
<CAPTION>
Performance Estimated Future
or Other Payouts
Period Under Non-Stock
Until Based Plans
Maturation -------------------
or Payout (1)(2)(4)
Maximum Target Maximum
Name ($) $(3) ($)
- ------------------------------------------------------
<S> <C> <C> <C>
Christopher B. Galvin 4 Years 1,593,750 3,187,500
Gary L. Tooker 4 Years 1,350,000 2,700,000
Robert L. Growney 4 Years 1,218,750 2,437,500
Merle L. Gilmore 4 Years 937,500 1,875,000
Carl F. Koenemann 4 Years 712,500 1,425,000
- ------------------------------------------------------
</TABLE>
(1) Under the Company's Long Range Incentive Plan of 1994 ("LRIP"), at the be-
ginning of each four-year cycle, the Compensation Committee determines the
objective measures/metrics for that cycle. The measures/metrics used for
this purpose are return on net assets ("RONA"), stockholder return and
sales growth over a four-year period, each weighted at 25%, compared to a
selected comparator group of companies. The fourth measurement is fundable
growth weighted at 25%. An award is earned only when Company performance
exceeds the minimum specified RONA floor, notwithstanding superior perfor-
mance versus the comparator group of companies, and can range from 0% to
200% of the lesser of (i) 125% of the executive officer's annualized base
salary on January 1 of the first year of the four year cycle, or (ii) 100%
of the executive officer's annualized base salary on December 31 of the
last year of the four year cycle.
(2) All the payments shown are potential assumed amounts. There is no assurance
that Motorola will achieve results that would lead to payments under LRIP
or that any payments will be made under this plan.
(3) At the performance target, which is that point at which 50% of the maximum
award under the LRIP would be payable, the indicated payments would be made
under the LRIP.
(4) These figures were calculated using the January 1, 1999 annualized base
salary for each participating executive officer.
17
<PAGE>
PROXY STATEMENT
- ------------------
RETIREMENT PLANS
The Motorola, Inc. Pension Plan (the "Pension Plan") may provide pension
benefits to the named executive officers in the future. Most regular U.S. em-
ployees who have completed one year of employment with the Company or certain
of its subsidiaries are eligible to participate in the Pension Plan. They be-
come vested after five years of service. Normal retirement is at age 65.
The Company also maintains supplementary retirement plans for employees, in-
cluding the executive officers named in the Compensation Table, who receive
compensation in excess of the reduced compensation limit imposed under the In-
ternal Revenue Code. The plan applicable to the named executives provides that
if the benefit payable annually (computed on a single life annuity basis) to
any officer under the Pension Plan (which is generally based on varying per-
centages 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. Generally, the total annual payments to such officer from both
plans will 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 Motorola Ex-
ecutive Incentive Plan ("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 annu-
ity to any named executive officer from the Pension Plan and supplementary re-
tirement 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 bene-
fit 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.
Participants in the supplementary retirement plan generally become vested in
the plan at age 55. At the time of vesting the Company makes a contribution to
the trust for that plan. The purpose of that contribution is to enable the
trust to make payments of the benefits under the supplementary retirement plan
due to the participant after retirement. Federal and state tax laws require
that the participant include in income the amount of any contribution in the
year it was made even though the participant receives no cash in connection
with such contribution or any payments from the retirement plan. Because the
participant receives no cash yet incurs a significant income tax liability,
the Company believes that it is appropriate to reimburse the participant so
that he or she is not paying additional taxes as a result of a contribution.
This is the Company's policy with respect to elected officers, all of whom
participate in the plan, including those named in the Compensation Table.
Based on salary levels at December 31, 1999, 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 an-
nual 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, is as follows: Mr. C.
Galvin, $1,608,367; Mr. Tooker, $762,636; Mr. Growney, $778,846; Mr. Gilmore,
$780,200, and Mr. Koenemann, $419,401.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Company has adopted a policy (the "salary protection policy") which gen-
erally 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 de-
fined) 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, who are not covered by the
salary protection policy because of the Termination Agreements. Each Termina-
tion Agreement provides for the payment of benefits in the event that (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 termi-
nates 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), disabili-
ty, 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 per-
cent 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 con-
trol which the Company's Chairman of the Board determines to be the result of
a transaction which was initiated by the Company. The amount of the benefits
payable to an executive officer entitled thereto would be equal to, in addi-
tion 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 date, 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 un-
der the "parachute payment" provisions of the Internal Revenue Code. The term
of each Termination
18
<PAGE>
PROXY STATEMENT
--------------------
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 "Report of Compensation Committee on Executive Compensation"
and "Performance Graphs" and related disclosure shall not be deemed incorpo-
rated by reference by any general statement incorporating this proxy statement
into any filing under the Securities Act of 1933 or under the Securities Ex-
change Act of 1934, except to the extent that the Company specifically incorpo-
rates this information by reference, and shall not otherwise be deemed filed
under such Acts.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM
Motorola's executive compensation program is designed to attract and retain
key executives critical to the long-term success of the Company. The design is
centered around three focal points--a) providing competitive base pay, b) de-
livering excellent, pay when results warrant, and c) generating outstanding re-
turns to shareholders over the long term. The programs were redesigned during
1999 for implementation during 2000 to create stronger links to performance and
shareholder value.
SUMMARY OF COMPENSATION PLANS
Base pay levels are compared to a competitive peer group within each country
and region. In the U.S., the peer group consists of 23 companies which, in the
aggregate, the Committee believes fairly represent the Motorola portfolio of
businesses. Outside the U.S., the same companies are compared unless other,
more compelling competitors for executive talent are present.
Overall, base salary levels for each executive position are set at the 50th
percentile of similar positions in the competitive peer group. When a position
does not readily match those found in the data, judgment is applied to deter-
mine a fair competitive salary. Some variation above and below the competitive
median is allowed when, in the judgment of management and the Committee, the
value of the individual's experience and specific skill set justifies. Varia-
tions are permitted in order to place more emphasis on performance-related re-
wards that generate significant income to those individuals and businesses that
demonstrate their ability to produce strong results. In this way, competitively
superior pay goes to those that earn it. As a result, the greatest retention
value has been invested in the strongest performers.
The major executive compensation programs are as follows:
1. Participants in the Motorola Executive Incentive Plan (the "MEIP") include
elected and appointed vice presidents (including the executives named in the
Compensation Table) and employees at certain levels of management and specific
professionals who are deemed individual contributors. In 1999, approximately
1,050 people participated in MEIP.
The MEIP awards are generally earned and paid annually. Awards are determined
as a percentage of the participant's base salary earnings. The Company may pro-
vide up to 7% of its annual consolidated pretax earnings after deducting 5% of
capital employed, each as defined in the MEIP, for awards under this Plan. The
MEIP award for each participant is based on the achievement of a mixture of fi-
nancial, strategic non-financial and individual goals set for each calendar
year. The MEIP sets no limits on the amount of awards to individual partici-
pants, except that the aggregate amounts awarded under the MEIP cannot exceed
the amount reserved. In addition, the Committee has established target and up-
per limit MEIP award levels which vary by salary range and which are upgraded
periodically based on competitive survey information. For exceptional perfor-
mance, the upper limit guidelines can be exceeded.
2. The second program is the Long Range Incentive Plan of 1994 (the "LRIP").
In 1999, 37 of the Company's most senior elected officers (including the execu-
tives named in the Compensation Table) were eligible for awards, but no awards
will be paid.
The LRIP award is determined, in part, by the Company's RONA (Return On Net
Assets), sales growth and stockholder return over a four-year period, compared
to an average of a similar calculation for a group of selected competitive com-
panies chosen by the Committee (the "comparator group index") and to Company
targets. The comparator group index is a group of approximately 20 companies,
generally in one or more of the same lines of business as the Company, and be-
lieved by the Committee to be appropriate for measuring comparative performance
on the basis of the factors in the LRIP 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 and Com-
pany targets. Additionally, the award is determined, in part, by the Company's
fundable growth.
The LRIP or a predecessor plan has been in effect in 18 succeeding four-year
cycles, the first of which began in 1982. Since inception of the LRIP and its
predecessor plan, payments have only been made four times, for the cycles end-
ing with 1994, 1995, 1996 and 1997, because the Company's overall RONA perfor-
mance had not previously exceeded the required RONA floor. For the four-year
cycle ending with 1997, the Company exceeded the Company-wide RONA floor set in
the LRIP but payments were less than the maximum award. For the four-year cy-
cles ending with 1998 and 1999, the Company did not meet the Company-wide RONA
floor set in the LRIP and no payments were or will be made.
19
<PAGE>
PROXY STATEMENT
- ------------------
3. A wide range of managerial and individual contributors participate in the
Company's stock option plans. Recipients of stock options for 1999 performance
numbered approximately 30,000. There are approximately [36,000] current option
holders. Stock options are typically awarded annually to encourage optionees
to own Common Stock to align their own personal financial worth to the
Company's share price growth. The option exercise price is the market price at
the time of grant. Options are granted in quantities as low as 50 shares to
mid-range and lower-level Company employees, and in substantially higher num-
bers to senior managers. Traditionally, grants of stock options are made in
November or December of each year. The Committee delayed the 1999 grant until
January 31, 2000 so that it could fully assess the full year 1999 performance
of the Company.
Beginning with the stock option grant in December 1993, the Company estab-
lished higher stock ownership guidelines for executive officers, including the
Chief Executive Office. Under those guidelines, if a Chief Executive Office
member does not own shares of Common Stock representing four times his base
salary or if other executive officers do not own shares of Common Stock repre-
senting three times their base salaries, then such officers must retain fifty
percent of the shares that remain from any exercise of the stock option grant
received after December 1993 (after deducting the number of shares of Common
Stock that could be surrendered to cover the cost of such exercise and any re-
quired tax withholdings, even if he or she does not actually surrender
shares), until the minimum stock ownership level is reached. Additionally,
these guidelines set a minimum stock ownership level of 5,000 shares of Common
Stock for all other elected officers, 1,000 shares of Common Stock for all ap-
pointed vice-presidents and 300 shares for all other MEIP participants. Under
these additional guidelines, if an elected officer or appointed vice-president
does not own shares of Common Stock representing the minimum stock ownership
level, then he or she must retain fifty percent of the shares that remain from
any exercise of any stock option granted after June 30, 1994, or after the
date he or she becomes an elected officer or appointed vice-president if later
(after deducting the number of shares of Common Stock that could be surren-
dered to cover the cost of such exercise and any required tax withholdings,
even if he or she does not actually surrender shares), until the minimum Com-
mon Stock ownership level is reached.
On one basis or another, the rewards under each of these 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 execu-
tive officers (including one or more of the five most highly compensated at
that time) have received no payments under these plans.
The description of the Motorola Omninbus Incentive Plan of 2000, which the
Board is recommending that stockholders approve at the Annual Meeting, begins
on page . As noted there, the 2000 Plan will give Motorola the flexibility
to keep pace with other "high tech" and industrial companies in a very compet-
itive employment environment.
CHIEF EXECUTIVE OFFICE
The compensation for the Chief Executive Office members consists of base
salary, annual MEIP award eligibility, LRIP award eligibility, stock options,
restricted stock and certain other benefits. Christopher B. Galvin, Chairman
of the Board and Chief Executive Officer, and Robert L. Growney, President and
Chief Operating Officer, are the current members of the Chief Executive Of-
fice.
The Committee studied the data gathered from the 23-company peer group men-
tioned earlier to assess the appropriate competitive compensation levels for
members of the Chief Executive Office.
Chief Executive Office Base Salary
In determining the Chief Executive Office members' base salaries, the Com-
mittee considered the results of the study together with the Company's perfor-
mance on its own financial and non-financial strategic goals and the
individual performance of the Chief Executive Office members. No particular
weight was given to any one of these goals in setting base salaries for the
Chief Executive Office members. The competitive study gave the Committee a
base from which to modify salary and/or incentive compensation based upon per-
formance. In 1999, the Committee reviewed, and recommended for approval to the
Board, the base salaries of the Chief Executive Office members and the full
Board approved them.
Chief Executive Office Annual MEIP
For the 1999 MEIP awards, the Committee assessed performance to the business
plan, results from the Company's Performance Excellence Scorecard and the out-
standing results achieved from the restructuring implemented beginning in the
second half of 1998. On this basis, the Committee granted awards at the
planned levels determined under the competitive study.
Chief Executive Office Stock Options and Restricted Stock Grants
Options to purchase 300,000 shares of Common Stock at $131.53 per share, the
market price on January 31, 2000, the date of grant, were awarded to Christo-
pher B. Galvin as part of the Company's annual option program. Options to pur-
chase 275,000 shares were similarly awarded to Robert L. Growney. These stock
options vest and become exercisable over four years as follows: 25% on
1/31/01; 25% on 1/31/02; 25% on 1/31/03; and 25% on 1/31/04. 100,000 shares of
restricted stock were awarded to Mr. Galvin and 90,000 shares of restricted
stock were awarded to Mr. Growney on January 31, 2000. The restrictions on 50%
of the shares of restricted stock lapse upon the executive officer's retire-
ment. The restrictions on the remaining 50% of the shares lapse on a scheduled
basis over the executive officer's career as long as he is employed by the
Company or a subsidiary. These restrictions lapse on 25% of the shares in
20
<PAGE>
PROXY STATEMENT
--------------------
4 years and on 25% of the shares in 6 years after the date of grant. In certain
circumstances, those restrictions could all lapse at retirement. In addition,
for the shares held by these executives, if total shareholder return from the
date of grant is 125% or greater before the restrictions on the time-vesting
50% of their shares lapse, the restrictions on these shares would automatically
lapse. Upon death or total and permanent disability all restrictions lapse.
Options and restricted stock were granted to these executives in recognition
of their successful efforts to significantly improve the Company's performance
during 1999 and to provide them with strong incentive to continue to increase
the value of the company during their employment. The level of option awards
and restricted stock were made using the Committee's judgment considering the
vesting schedule and restrictions and the Company's performance in 1999. The
Committee also considered the options granted and exercised by these Chief Ex-
ecutive Office members from 1989 to 1999 and their stock ownership as of Janu-
ary 1, 2000.
Chief Executive Office LRIP
For the four-year period ending 1997, performance met plan criteria and the
CEO and COO were awarded $505,260 and $256,640, respectively, under the LRIP.
This represented 25.5% and 17.85% of the maximum awards. The minimum corporate
four-year RONA percentage required to be met for payment under the LRIP was not
met for the four-year periods ending with 1998 and 1999 and no payments were or
will be made.
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code generally limits the corporate
tax deduction to one million dollars for compensation paid to named executive
officers unless certain requirements are met. The Company has not been entitled
to deduct some amount of payments under the Motorola Executive Incentive Plan
in the past. The 1999 MEIP awards will not be deductible to the extent they
cause the applicable employee remuneration to exceed one million dollars during
1999. MEIP awards fail to qualify as "performance based compensation" exempt
from the limitation on deductions that is imposed by Section 162(m) because the
Committee exercises discretion in making these awards. The Committee believes
that the discretionary component of this plan permits the Committee to make de-
cisions in the best interests of the Company and its stockholders and it in-
tends, therefore, to continue the process by which it determines MEIP awards.
The Stock Option Plan of 1996 and the Long Range Incentive Plan of 1994 meet
the requirements for exemption under Section 162(m) and compensation paid under
these plans in 1999, if any, also will be deductible. The Motorola Incentive
Plan of 1998 permits various types of awards, some of which qualify for exemp-
tion under Section 162(m) and some of which do not. Stock options, performance
shares and stock appreciation rights that are granted under the plan qualify as
"performance based compensation" and, as such, are exempt from the limitation
on deductions. Outright grants of common stock, restricted stock and/or cash do
not qualify for exemption and are subject to the Section 162(m) limitation on
deductions.
Overall, the Committee believes that the Chief Executive Office members are
being appropriately compensated in a manner that relates to performance and is
in the long-term interests of the stockholders.
Respectfully submitted,
Samuel C. Scott III, Chairman
H. Laurance Fuller
John E. Pepper, Jr.
21
<PAGE>
PROXY STATEMENT
- ------------------
PERFORMANCE GRAPHS
The following graphs compare the five-year and one-year cumulative total re-
turns of Motorola, Inc., the S&P 500 Index and a composite S&P Electronic Sub-
groups Index composed of the following nine S&P indices, weighted by market
value at each measurement point: the S&P Communications Equipment/Manufacturers
Index, the S&P Computers (Peripherals) Index, the S&P Electrical Equipment In-
dex, the S&P Electronics (Component Distributors) Index, the S&P Electronics
Index, the S&P Computers (Hardware) Index, the S&P Computers (Networking) In-
dex, the S&P Electronics (Semiconductors) Index and the S&P Equipment (Semicon-
ductors) Index. This composite index contains a total of 48 electronics
companies. The graphs assume $100 was invested in the stock or the Index on De-
cember 31, 1994 or December 31, 1998, respectively, and also assume the rein-
vestment of dividends.
Comparison of Five-Year Cumulative Total Return
[LINE CHART]
Measurement Period S&P
(Fiscal Year Covered) MOTOROLA 500 INDEX SUB-GROUPS
- ------------------- ---------- --------- ----------
1994 $100 $100 $100
1995 $ 99.0 $136.5 $137.5
1996 $107.1 $169.5 $192.4
1997 $100.9 $226.0 $251.6
1998 $108.6 $291.0 $418.0
1999 $262.7 $352.3 $733.9
Comparison of One-Year Total Return
[LINE CHART]
Measurement Period S&P
(Fiscal Year Covered) MOTOROLA 500 INDEX SUB-GROUPS
- --------------------- ---------- --------- ----------
1998 $100 $100 $100
1999 $241.9 $121 $175.6
22
<PAGE>
PROXY STATEMENT
--------------------
OTHER MATTERS
The Board knows of no other business to be transacted at the 2000 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.
Independent Public Accountants
KPMG LLP served as the Company's independent public accountants for the fis-
cal year ended December 31, 1999 and are serving in such capacity for the cur-
rent fiscal year. The appointment of independent public accountants is made
annually by the Board. The decision of the Board is based on the recommendation
of the Audit and Legal Committee, which reviews both the audit scope and esti-
mated audit fees. Representatives of KPMG LLP 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.
Manner and Cost of Proxy Solicitation
The Company pays the cost of soliciting proxies. In addition to mailing prox-
ies, officers, directors and regular employees of the Company, acting on its
behalf, may solicit proxies by telephone or personal interview. Also, the Com-
pany has retained D. F. King & Co., Inc. to aid in soliciting proxies. The Com-
pany will pay an estimated fee of [$14,000], plus expenses, to D. F. King. 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Each director and certain officers of the Company are required to report to
the Securities and Exchange Commission, by a specified date, his or her trans-
actions related to Motorola Common Stock. Based solely on review of the copies
of reports furnished to the Company or written representations that no other
reports were required, the Company believes that, during the 1999 fiscal year,
all filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with, except that 1 report covering 1
transaction was filed late by Mr. Negroponte, a director, and 1 report covering
1 transaction was filed late by Mr. Younts, an executive officer.
List of Stockholders
A list of stockholders entitled to vote at the meeting will be available for
examination at Motorola's Galvin Center, 1297 East Algonquin Road, Schaumburg,
Illinois 60196 for ten days before the 2000 Annual Meeting and at the Annual
Meeting.
Proposals
Proposals of stockholders intended to be presented at the Company's 2001 an-
nual meeting of stockholders and included in the Company's proxy statement and
form of proxy for that meeting must be received at the Company's principal ex-
ecutive offices not later than November 23, 2000.
After the November 23, 2000 deadline, a stockholder may present a proposal at
the Company's 2001 annual meeting if it is submitted to the Company's Secretary
at the address below no later than February 6, 2001. If timely submitted, the
stockholder may present the proposal at the 2001 annual meeting, but the Com-
pany is not obligated to present the matter in its proxy materials.
A stockholder wishing to recommend a candidate for election to the Board
should send the recommendation and a description of the person's qualifications
to the Nominating Committee in care of the Secretary of Motorola at the address
below. The Nominating Committee has full discretion in considering its nomina-
tions to the Board. 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's Secretary at the address below no later than
February 6, 2001. The notice of nomination is required to contain certain in-
formation about both the nominee and the stockholder making the nomination as
set forth in the Company's bylaws. A nomination which does not comply with the
above requirements will not be considered.
Send all proposals or nominations to A. Peter Lawson, Secretary, Motorola,
Inc., 1303 East Algonquin Road, Schaumburg, Illinois 60196.
Form 10-K
The Company will mail without charge, a copy of the Annual Report on Form 10-
K. Direct requests to Investor Relations, 1303 E. Algonquin Road, Schaumburg,
IL 60196. The report also is available on the Company's website
www.motorola.com/investor.
By order of the
Board of Directors,
/s/ A. Peter Lawson
A. Peter Lawson
Secretary
23
<PAGE>
Location for the Annual Meeting of Stockholders:
Hyatt Regency Woodfield
1800 E. Golf Road, Schaumburg, Illinois 60173, (847) 605-1234
Time and Date of Meeting: 5:00 P.M., local time, May 1, 2000
Map to the Hyatt Regency Woodfield
[MAP]
<PAGE>
APPENDIX 1
----------
FORM OF PROXY
[MOTOROLA LOGO]
2000
P
R
O
X
Y
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
for the Annual Meeting of Stockholders, May 1, 2000
The undersigned hereby appoints Christopher B. Galvin, Robert L. Growney,
Carl F. Koenemann, Garth L. Milne and Anthony M. Knapp, 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 1, 2000 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.
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, FOR
PROPOSAL 2 AND FOR PROPOSAL 3.
IMPORTANT--This Proxy must be signed and dated on the reverse side.
- -------------------------------------------------------------------------------
VOTE YOUR SHARES BY PHONE OR OVER THE INTERNET
We encourage you to vote by telephone or over the Internet. These are two
quick and easy methods to vote your shares that are available 24 hours a day,
seven days a week, and your vote is recorded as if you mailed in your proxy
card. On the reverse side of this card are instructions on how to vote by
telephone and over the Internet. Voting by one of these convenient methods
will also save the Company money.
We also ask you to notify the Company if you are receiving multiple copies
of the Summary Annual Report at your household. You can do so by checking the
box under the signature block of the proxy card if you are mailing in your
proxy card, by following the prompt if you are voting by telephone, or by
checking the appropriate box on the electronic Internet proxy card. If you do
so, the Company can save money by reducing the number of Summary Annual
Reports it must print and mail.
- -------------------------------------------------------------------------------
ADMISSION TICKET TO MOTOROLA'S 2000 ANNUAL MEETING OF STOCKHOLDERS
[MOTOROLA LOGO]
This is your Admission ticket to gain access to Motorola's 2000 Annual Meeting
of Stockholders to be held at the Hyatt Regency Woodfield, 1800 E. Golf Road,
Schaumburg, Illinois on Monday, May 1, 2000, at 5:00 P.M. A map showing
directions to the meeting site is shown on the reverse side of this admission
ticket. Please present this ticket at one of the registration stations. Please
note that a large number of stockholders may attend the meeting, and seating
is on a first come, first served basis.
THIS TICKET IS NOT TRANSFERABLE
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW, FOR
PROPOSAL 2 AND FOR PROPOSAL 3. [X]
1.Election of Directors--
Nominees: R. Chan, H. Fuller, C. Galvin, For All
R. Galvin, R. Growney, A. Jones, For Withheld Except
J. Lewent, W. Massey, N. Negroponte, [_] [_] [_]
J. Pepper, Jr., S. Scott III, G. Tooker,
B. West, J. White
- -------------------------------------------------------------------------------
(Except nominee(s) written above)
2. Approval of Increase in Authorized Common Stock For Against Abstain
[_] [_] [_]
3. Adoption of the Motorola Omnibus Incentive For Against Abstain
Plan of 2000 [_] [_] [_]
----------------------------------
Signature Date
----------------------------------
Signature if jointly held 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 an 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.
[_] Do not mail future Summary Annual
Reports for this account. Another
is received at this household.
IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET PLEASE SEE INSTRUCTION CARD BELOW
- -------------------------------------------------------------------------------
- --------------
- -------------- [MOTOROLA LOGO]
Control Number
TELEPHONE VOTING INSTRUCTIONS
On a touch-tone telephone call the toll-free number 1-888-457-2960, 24 hours
per day, seven days a week.
Enter your 6-digit Control Number found in the box above.
Press 1 to vote FOR the recommendations of the Board of Directors, or press
9 if you do not wish to vote for the recommendations of the Board of
Directors.
Press 1 if you receive more than one Summary Annual Report in your household
and do not wish to receive a Summary Annual Report on this account.
If you wish to withhold authority to vote or vote against some but not all
of the recommendations of the Board of Directors, you must do so by signing,
dating and returning the proxy card in the envelope provided or by voting via
the Internet.
INTERNET VOTING INSTRUCTIONS
Go to the following website: www.harrisbank.com/wproxy. Enter the
information requested on your proxy screen, including your 6-digit Control
Number found in the box above.
If you vote by telephone or the Internet, do not mail back your proxy card.
- -------------------------------------------------------------------------------
[MAP APPEARS HERE]
Location for the Annual Meeting of Stockholders
Map to the Hyatt Regency Woodfield
1800 E. Golf Road, Schaumburg, Illinois 60173, (847) 605-1234
<PAGE>
APPENDIX 2
----------
Explanatory Note: The Motorola Omnibus Incentive Plan of 2000 is filed herewith
pursuant to Instruction 3 to Item 10 of Schedule 14A and is not part of the
proxy statement.
- --------------------------------------------------------------------------------
THE MOTOROLA OMNIBUS
INCENTIVE PLAN OF 2000
<PAGE>
TABLE OF CONTENTS
Page
1. Purpose............................... 1
2. Administration........................ 1
3. Participants.......................... 1
4. Shares Available under the Plan....... 1
5. Types of Benefits..................... 2
6. Stock Options......................... 2
7. Stock Appreciation Rights............. 2
8. Restricted Stock...................... 3
9. Performance Stock..................... 3
10. Performance Units..................... 3
11. Annual Management Incentive Awards.... 4
12. Other Stock or Cash Awards............ 4
13. Performance Goals..................... 4
14. Change in Control..................... 4
15. Adjustment Provisions................. 5
16. Nontransferability.................... 6
17. Taxes................................. 6
18. Duration, Amendment and Termination... 6
19. Fair Market Value..................... 7
20. Other Provisions...................... 7
21. Governing Law......................... 7
22. Stockholder Approval.................. 7
<PAGE>
THE MOTOROLA OMNIBUS
INCENTIVE PLAN OF 2000
1. Purpose. The purposes of the Motorola Omnibus Incentive Plan of 2000
(the "Plan") are (i) to encourage outstanding individuals to accept or continue
employment with Motorola, Inc. ("Motorola") and its subsidiaries or to serve as
directors of Motorola, and (ii) to furnish maximum incentive to those persons to
improve operations and increase profits and to strengthen the mutuality of
interest between those persons and Motorola's stockholders by providing them
stock options and other stock and cash incentives.
2. Administration. The Plan will be administered by a Committee (the
"Committee") of the Motorola Board of Directors consisting of two or more
directors as the Board may designate from time to time, each of whom shall
qualify as a "Non-Employee Director" within the meaning set forth in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or any successor legislation. The Committee shall have the authority to
construe and interpret the Plan and any benefits granted thereunder, to
establish and amend rules for Plan administration, to change the terms and
conditions of options and other benefits at or after grant, and to make all
other determinations which it deems necessary or advisable for the
administration of the Plan. The determinations of the Committee shall be made in
accordance with their judgment as to the best interests of Motorola and its
stockholders and in accordance with the purposes of the Plan. A majority of the
members of the Committee shall constitute a quorum, and all determinations of
the Committee shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or meeting of the
Committee, in writing signed by all the Committee members. The Committee may
delegate the administration of the Plan, in whole or in part, on such terms and
conditions as it may impose, to such other person or persons as it may determine
in its discretion, except with respect to benefits to officers subject to
Section 16 of the Exchange Act or officers who are or may be "covered employees"
within the meaning of Section 162(m) of the Internal Revenue Code ("Covered
Employees").
3. Participants. Participants may consist of all employees of Motorola
and its subsidiaries and all Non-Employee Directors of Motorola. Any corporation
or other entity in which a 50% or greater interest is at the time directly or
indirectly owned by Motorola shall be a subsidiary for purposes of the Plan.
Designation of a participant in any year shall not require the Committee to
designate that person to receive a benefit in any other year or to receive the
same type or amount of benefit as granted to the participant in any other year
or as granted to any other participant in any year. The Committee shall consider
all factors which it deems relevant in selecting participants and in determining
the type and amount of their respective benefits.
4. Shares Available under the Plan. There is hereby reserved for
issuance under the Plan an aggregate of 35,700,000 shares of Motorola common
stock. If there is a lapse, expiration, termination or cancellation of any stock
option issued under the Plan prior to the issuance of shares thereunder or if
shares of common stock are issued under the Plan and thereafter are reacquired
by Motorola, the shares subject to those options and the reacquired
<PAGE>
shares shall be added to the shares available for benefits under the Plan. In
addition, any shares of common stock exchanged by an optionee as full or partial
payment to Motorola of the exercise price under any stock option exercised under
the Plan, any shares retained by Motorola pursuant to a participant's tax
withholding election, and any shares covered by a benefit which is settled in
cash shall be added to the shares available for benefits under the Plan. All
shares issued under the Plan may be either authorized and unissued shares or
issued shares reacquired by Motorola. Under the Plan, no participant may receive
in any calendar year (i) Stock Options relating to more than 1,000,000 shares,
(ii) Restricted Stock that is subject to the attainment of Performance Goals of
Section 13 hereof relating to more than 100,000 shares, (iii) Stock Appreciation
Rights relating to more than 1,000,000 shares, or (iv) Performance Shares
relating to more than 100,000 shares. The shares reserved for issuance and the
limitations set forth above shall be subject to adjustment in accordance with
Section 15 hereof. All of the available shares may, but need not, be issued
pursuant to the exercise of incentive stock options. Notwithstanding anything
else contained in this Section 4 the number of shares which may be issued under
the Plan for benefits other than stock options shall not exceed a total of
3,000,000 shares (subject to adjustment in accordance with Section 15 hereof).
5. Types of Benefits. Benefits under the Plan shall consist of Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Stock,
Performance Units, Annual Management Incentive Awards and Other Stock or Cash
Awards, all as described below.
6. Stock Options. Subject to the terms of the Plan, Stock Options may be
granted to participants, at any time as determined by the Committee. The
Committee shall determine the number of shares subject to each option and
whether the option is an Incentive Stock Option. The option price for each
option shall be determined by the Committee but shall not be less than 100% of
the fair market value of Motorola's common stock on the date the option is
granted. Each option shall expire at such time as the Committee shall determine
at the time of grant. Options shall be exercisable at such time and subject to
such terms and conditions as the Committee shall determine; provided, however,
that no option shall be exercisable later than the tenth anniversary of its
grant. The option price, upon exercise of any option, shall be payable to
Motorola in full by (a) cash payment or its equivalent, (b) tendering previously
acquired shares (held for at least six months) having a fair market value at the
time of exercise equal to the option price, (c) certification of ownership of
such previously-acquired shares, (d) delivery of a properly executed exercise
notice, together with irrevocable instructions to a broker to promptly deliver
to Motorola the amount of sale proceeds from the option shares or loan proceeds
to pay the exercise price and any withholding taxes due to Motorola, and (e)
such other methods of payment as the Committee, at its discretion, deems
appropriate. In no event shall the Committee cancel any outstanding Stock Option
for the purpose of reissuing the option to the participant at a lower exercise
price or reduce the option price of an outstanding option.
7. Stock Appreciation Rights. Subject to the terms of the Plan, Stock
Appreciation Rights ("SARs") may be granted to participants at any time as
determined by the Committee. An SAR may be granted in tandem with a Stock Option
granted under this Plan or on a free-standing basis. The grant price of a tandem
SAR shall be equal to the option price of the related option. The grant price of
a free-standing SAR shall be equal to the fair market value of Motorola's common
stock on the date of its grant. An SAR may be exercised upon such terms and
conditions and for the term as the Committee in its sole discretion determines;
provided, however, that the term shall not exceed the option term in the case of
a tandem SAR or ten years
<PAGE>
in the case of a free standing SAR. Upon exercise of an SAR, the participant
shall be entitled to receive payment from Motorola in cash or stock, at the
discretion of the Committee, in an amount determined by multiplying the excess
of the fair market value of a share of common stock on the date of exercise over
the grant price of the SAR by the number of shares with respect to which the SAR
is exercised.
8. Restricted Stock. Subject to the terms of the Plan, Restricted Stock
may be awarded or sold to participants under such terms and conditions as shall
be established by the Committee. Restricted Stock shall be subject to such
restrictions as the Committee determines, including, without limitation, any of
the following:
(a) a prohibition against sale, assignment, transfer, pledge,
hypothecation or other encumbrance of the shares of Restricted Stock
for a specified period; or
(b) a requirement that the holder of Restricted Stock forfeit (or in
the case of shares sold to the participant resell to Motorola at cost)
such shares in the event of termination of employment during the
period of restriction.
All restrictions shall expire at such times as the Committee shall specify.
9. Performance Stock. Subject to the terms of the Plan, the Committee
shall designate the participants to whom long-term performance stock
("Performance Stock") is to be awarded and determine the number of shares, the
length of the performance period and the other terms and conditions of each such
award. Each award of Performance Stock shall entitle the participant to a
payment in the form of shares of common stock upon the attainment of performance
goals and other terms and conditions specified by the Committee.
Notwithstanding satisfaction of any performance goals, the number of
shares issued under a Performance Stock award may be adjusted by the Committee
on the basis of such further consideration as the Committee in its sole
discretion shall determine. However, the Committee may not, in any event,
increase the number of shares earned upon satisfaction of any performance goal
by any participant who is a Covered Employee. The Committee may, in its
discretion, make a cash payment equal to the fair market value of shares of
common stock otherwise required to be issued to a participant pursuant to a
Performance Stock award.
10. Performance Units. Subject to the terms of the Plan, the Committee
shall designate the participants to whom long-term performance units
("Performance Units") are to be awarded and determine the number of units and
the terms and conditions of each such award. Each Performance Unit award shall
entitle the participant to a payment in cash upon the attainment of performance
goals and other terms and conditions specified by the Committee.
Notwithstanding the satisfaction of any performance goals, the amount
to be paid under a Performance Unit award may be adjusted by the Committee on
the basis of such further consideration as the Committee in its sole discretion
shall determine. However, the Committee may not, in any event, increase the
amount earned under Performance Unit awards upon satisfaction of any performance
goal by any participant who is a Covered Employee and the maximum amount earned
by a Covered Employee in any calendar year may not exceed $5,000,000. The
Committee may, in its discretion, substitute actual shares of common stock for
the cash payment otherwise required to be made to a participant pursuant to a
Performance Unit award.
<PAGE>
11. Annual Management Incentive Awards. The Committee may designate
Motorola executive officers who are eligible to receive a monetary payment in
any calendar year based on a percentage of an incentive pool equal to 5% of
Motorola's consolidated operating earnings for the calendar year. The Committee
shall allocate an incentive pool percentage to each designated participant for
each calendar year. In no event may the incentive pool percentage for any one
participant exceed 30% of the total pool. Consolidated operating earnings shall
mean the consolidated earnings before income taxes of the Company, computed in
accordance with generally accepted accounting principles, but shall exclude the
effects of Extraordinary Items. Extraordinary Items shall mean (i)
extraordinary, unusual and/or non-recurring items of gain or loss (ii) gains or
losses on the disposition of a business, (iii) changes in tax or accounting
regulations or laws, or (iv) the effect of a merger or acquisition, all of which
must be identified in the audited financial statements, including footnotes, or
the Management Discussion and Analysis section of the Company's annual report.
As soon as possible after the determination of the incentive pool for
a Plan year, the Committee shall calculate the participant's allocated portion
of the incentive pool based upon the percentage established at the beginning of
the calendar year. The participant's incentive award then shall be determined by
the Committee based on the participant's allocated portion of the incentive pool
subject to adjustment in the sole discretion of the Committee. In no event may
the portion of the incentive pool allocated to a participant who is a Covered
Employee be increased in any way, including as a result of the reduction of any
other participant's allocated portion.
12. Other Stock or Cash Awards. In addition to the incentives described in
sections 6 through 11 above, and subject to the terms of the Plan, the Committee
may grant other incentives payable in cash or in common stock under the Plan as
it determines to be in the best interests of Motorola and subject to such other
terms and conditions as it deems appropriate.
13. Performance Goals. Awards of Restricted Stock, Performance Stock,
Performance Units and other incentives under the Plan may be made subject to the
attainment of performance goals relating to one or more business criteria within
the meaning of Section 162(m) of the Internal Revenue Code, including, but not
limited to, cash flow; cost; ratio of debt to debt plus equity; profit before
tax; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; earnings per share; operating earnings; economic
value added; ratio of operating earnings to capital spending; free cash flow;
net profit; net sales; price of Company Stock; return on net assets, equity or
stockholders' equity; market share; or total return to shareholders
("Performance Criteria"). Any Performance Criteria may be used to measure the
performance of the Company as a whole or any business unit of the Company. Any
Performance Criteria may include or exclude Extraordinary Items. Performance
Criteria shall be calculated in accordance with the Company's financial
statements, generally accepted accounting principles, or under a methodology
established by the Committee prior to the issuance of an award which is
consistently applied and identified in the audited financial statements,
including footnotes, or the Management Discussion and Analysis section of the
Company's annual report. However, the Committee may not in any event increase
the amount of compensation payable to a Covered Employee upon the attainment of
a performance goal.
14. Change in Control. Except as otherwise determined by the Committee at
the time of grant of an award, upon a Change in Control of Motorola, all
outstanding Stock Options and SARs shall become vested and exercisable; all
restrictions on Restricted Stock shall lapse; all
<PAGE>
performance goals shall be deemed achieved at target levels and all other terms
and conditions met; all Performance Stock shall be delivered; all Performance
Units shall be paid out as promptly as practicable; all Annual Management
Incentive Awards shall be paid out based on the consolidated operating earnings
of the immediately preceding year or such other method of payment as may be
determined by the Committee at the time of award or thereafter but prior to the
Change in Control; and all Other Stock or Cash Awards shall be delivered or
paid. 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 Exchange Act whether or not Motorola 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 Motorola representing 20% or more of the
combined voting power of Motorola's then outstanding securities (other
than Motorola or any employee benefit plan of Motorola; 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 Motorola's securities by either of the foregoing), (b)
there shall be consummated (i) any consolidation or merger of Motorola
in which Motorola is not the surviving or continuing corporation or
pursuant to which shares of common stock would be converted into or
exchanged for cash, securities or other property, other than a merger
of Motorola in which the holders of common stock immediately prior to
the merger have, directly or indirectly, at least a 65% 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 Motorola
other than any such transaction with entities in which the holders of
Motorola Common Stock, directly or indirectly, have at least a 65%
ownership interest, (c) the stockholders of Motorola approve any plan
or proposal for the liquidation or dissolution of Motorola, or (d) as
the 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), 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
15. Adjustment Provisions.
(a) If Motorola shall at any time change the number of issued
shares of common stock by stock dividend or stock split, the total
number of shares reserved for issuance under the Plan, the maximum
number of shares which may be made subject to an award in any calendar
year, and the number of shares covered by each outstanding award and
the price therefor, if any, shall be equitably adjusted by the
Committee, in its sole discretion.
<PAGE>
(b) Subject to the provisions of Section 14, without affecting the
number of shares reserved or available hereunder the Board of
Directors or the Committee may authorize the issuance or assumption of
benefits under this Plan in connection with any merger, consolidation,
acquisition of property or stock, or reorganization upon such terms
and conditions as it may deem appropriate.
(c) In the event of any merger, consolidation or reorganization of
Motorola with or into another corporation, other than a merger,
consolidation or reorganization in which Motorola is the continuing
corporation and which does not result in the outstanding common stock
being converted into or exchanged for different securities, cash or
other property, or any combination thereof, there shall be
substituted, on an equitable basis as determined by the Committee in
its discretion, for each share of common stock then subject to a
benefit granted under the Plan, the number and kind of shares of
stock, other securities, cash or other property to which holders of
common stock of Motorola will be entitled pursuant to the transaction.
16. Nontransferability. Each benefit granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and distribution and
each Stock Option and SAR shall be exercisable during the participant's lifetime
only by the participant or, in the event of disability, by the participant's
personal representative. In the event of the death of a participant, exercise of
any benefit or payment with respect to any benefit shall be made only by or to
the executor or administrator of the estate of the deceased participant or the
person or persons to whom the deceased participant's rights under the benefit
shall pass by will or the laws of descent and distribution. Notwithstanding the
foregoing, at its discretion, the Committee may permit the transfer of a Stock
Option by the participant, subject to such terms and conditions as may be
established by the Committee.
17. Taxes. Motorola shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares deliverable under the Plan, after
giving the person entitled to receive such payment or delivery notice and
Motorola may defer making payment or delivery as to any award, if any such tax
is payable until indemnified to its satisfaction. The Committee may, in its
discretion, subject to such rules as it may adopt, permit a participant to pay
all or a portion of any required withholding taxes arising in connection with
the exercise of a Stock Option or SAR or the receipt or vesting of shares
hereunder by electing to have Motorola withhold shares of common stock, having a
fair market value equal to the amount to be withheld.
18. Duration, Amendment and Termination. No Incentive Stock Option shall
be granted more than ten years after the date of adoption of this Plan by the
Board of Directors; provided, however, that the terms and conditions applicable
to any benefit granted on or before such date may thereafter be amended or
modified by mutual agreement between Motorola and the participant, or such other
person as may then have an interest therein. The Board of Directors or the
Committee may amend the Plan from time to time or terminate the Plan at any
time. However, no such action shall reduce the amount of any existing award or
change the terms and conditions thereof without the participant's consent. No
amendment of the Plan shall be made without stockholder approval if stockholder
approval is required by law, regulation, or stock exchange rule.
<PAGE>
19. Fair Market Value. The fair market value of Motorola's common stock at
any time shall be determined in such manner as the Committee may deem equitable,
or as required by applicable law or regulation.
20. Other Provisions.
(a) The award of any benefit under the Plan may also be subject to
other provisions (whether or not applicable to the benefit awarded to any other
participant) as the Committee determines appropriate, including provisions
intended to comply with federal or state securities laws and stock exchange
requirements, understandings or conditions as to the participant's employment,
requirements or inducements for continued ownership of common stock after
exercise or vesting of benefits, forfeiture of awards in the event of
termination of employment shortly after exercise or vesting, or breach of
noncompetition or confidentiality agreements following termination of
employment, or provisions permitting the deferral of the receipt of a benefit
for such period and upon such terms as the Committee shall determine.
(b) In the event any benefit under this Plan is granted to an
employee who is employed or providing services outside the United States and who
is not compensated from a payroll maintained in the United States, the Committee
may, in its sole discretion, modify the provisions of the Plan as they pertain
to such individuals to comply with applicable law, regulation or accounting
rules.
21. Governing Law. The Plan and any actions taken in connection herewith
shall be governed by and construed in accordance with the laws of the state of
Delaware (without regard to applicable Delaware principles of conflict of laws).
22. Stockholder Approval. The Plan was adopted by the Board of Directors
on February 29, 2000, subject to stockholder approval. The Plan and any benefits
granted thereunder shall be null and void if stockholder approval is not
obtained at the next annual meeting of stockholders.
