<PAGE>
SCHEDULE 14A INFORMATION
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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ZEBRA TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
ZEBRA TECHNOLOGIES CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999
To the Stockholders of
Zebra Technologies Corporation:
The Annual Meeting of Stockholders of Zebra Technologies Corporation (the
"Company") will be held at 10:30 a.m., Chicago time, on Tuesday, May 18,
1999, at The University of Chicago Gleacher Center, 450 N. Cityfront Plaza
Drive, Chicago, Illinois, for the following purposes:
(1) To elect six directors;
(2) To increase the number of authorized shares of Class A Common Stock
available for issuance under Zebra's 1997 Stock Option Plan from
2,000,000 shares to 4,250,000 shares;
(3) To ratify the selection by the Board of Directors of KPMG LLP as the
independent auditors of the Company's financial statements for the
year ending December 31, 1999; and
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 19, 1999, as
the record date for determining stockholders entitled to notice of, and to vote
at, the Annual Meeting.
By order of the Board of Directors,
Gerhard Cless
SECRETARY
Vernon Hills, Illinois
April 15, 1999
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY. WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE
FURNISHED FOR THAT PURPOSE.
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION
333 Corporate Woods Parkway
Vernon Hills, Illinois 60061
(847) 634-6700
______________________
PROXY STATEMENT
______________________
The accompanying Proxy is solicited by the Board of Directors of Zebra
Technologies Corporation, a Delaware corporation ("Zebra," or the "Company"),
for use at the Annual Meeting of Stockholders (the "Annual Meeting"), which
will be held at 10:30 a.m., Chicago time, on Tuesday, May 18, 1999, at The
University of Chicago Gleacher Center, 450 N. Cityfront Plaza Drive, Chicago,
Illinois, and any adjournments thereof. This Proxy Statement and the
accompanying form of proxy are intended to be released to stockholders on or
about April 15, 1999.
VOTING SECURITIES; PROXIES; REQUIRED VOTE
VOTING SECURITIES -- The Board of Directors has fixed the close of business
on March 19, 1999, as the record date (the "Record Date") for the determination
of stockholders entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof. As of the Record Date, the Company had outstanding
23,596,112 shares of Class A Common Stock, par value $.01 per share (the "Class
A Common Stock"), and 7,377,510 shares of Class B Common Stock, par value $.01
per share (the "Class B Common Stock" and, collectively with the Class A Common
Stock, the "Common Stock"). The holders of the Class A Common Stock and the
Class B Common Stock vote together as a single class on all matters to be
submitted to the vote of stockholders at the Annual Meeting. Holders of Class A
Common Stock are entitled to one vote per share. Holders of Class B Common Stock
are entitled to ten votes per share.
PROXIES -- The Board of Directors of the Company has selected Edward L.
Kaplan, Gerhard Cless, and Donald K. Skinner, the persons named as proxies on
the proxy card accompanying this Proxy Statement, to serve in such capacity.
Messrs. Kaplan, Cless, and Skinner are directors and officers of the Company.
Each executed and returned proxy will be voted in accordance with the directions
indicated thereon, or if no direction is indicated, such proxy will be voted in
accordance with the recommendations of the Board of Directors contained in this
Proxy Statement. Each stockholder giving a proxy has the power to revoke it at
any time before the shares it represents are voted. Revocation of a proxy is
effective upon receipt by the Secretary of the Company of either (i) an
instrument revoking the proxy or (ii) a duly executed proxy bearing a later
date. Additionally, a stockholder may change or revoke a previously executed
proxy by voting in person at the Annual Meeting.
-2-
<PAGE>
REQUIRED VOTE -- At the Annual Meeting, (i) a plurality of the votes cast in
person or by proxy is required to elect directors; (ii) the affirmative vote of
holders of a majority of the voting power of the Common Stock is required to
approve the increase the number of shares of Class A Common Stock available for
issuance under the 1997 Stock Option Plan; and (iii) the affirmative vote of
holders of a majority of the voting power of the Common Stock is required to
ratify the appointment of KPMG LLP as the independent auditors of the Company's
financial statements for the year ending December 31, 1999. Stockholders will
not be allowed to cumulate their votes in the election of directors.
The required quorum for the transaction of business at the Annual Meeting
will be a majority of the voting power of shares of Common Stock issued and
outstanding on the Record Date. Abstentions and broker non-votes will be
included in determining the presence of a quorum. With respect to the proposal
to ratify the appointment of KPMG LLP, abstentions and broker non-votes will
have the same effect as votes against such proposal. Neither abstentions nor
broker non-votes will have any effect on the voting on the proposal to elect
directors.
Because of their beneficial ownership of a majority of the outstanding
shares of Class B Common Stock, Messrs. Kaplan, Cless, and Skinner have
voting power sufficient to (i) elect the six nominees named to serve as
directors; (ii) approve the increase in the number of shares of Class A
Common Stock available for issuance under the 1997 Stock Option Plan; and
(iii) ratify the appointment of KPMG LLP. Messrs. Kaplan, Cless, and Skinner
have advised the Board of Directors that all shares beneficially owned by
them will be voted in favor of such proposals. See "Security Ownership of
Certain Beneficial Owners and Management."
-3-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has set the number of directors to be elected at the
Annual Meeting at six. Each nominee for election as director currently serves as
a director of the Company. All nominees, except Donald K. Skinner, were elected
to serve as directors by the stockholders of the Company at the last Annual
Meeting of stockholders, held on May 5, 1998. Mr. Skinner joined the Board of
Directors following the Company's merger with Eltron International, Inc. on
October 28, 1998. The Board of Directors recommends that the stockholders vote
in favor of the election of the six nominees named in this Proxy Statement to
serve as directors of the Company.
If at the time of the Annual Meeting any of the nominees is unable or
declines to serve, the persons named in the proxy will, at the direction of the
Board of Directors, either vote for such substitute nominee or nominees as the
Board of Directors recommends or vote to allow the vacancy created thereby to
remain open until filled by the Board. The Board of Directors has no reason to
believe that any nominee will be unable or will decline to serve as a director
if elected.
NOMINEES FOR ELECTION AS DIRECTORS -- The following persons, if elected at
the Annual Meeting, will serve as directors until the earlier of the 2000 annual
meeting of the Company's stockholders or until their successors are duly elected
and qualified.
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
NAME AGE POSITION WITH COMPANY SINCE
- --------------------------- --- ----------------------------------- ----------
<S> <C> <C> <C>
Gerhard Cless 59 Executive Vice President, Secretary
and Director 1969
Edward L. Kaplan 56 Chairman and Chief Executive Officer 1969
Christopher G. Knowles (1) 56 Director 1991
David P. Riley 52 Director 1991
Donald K. Skinner 58 Vice Chairman and 1998
President of Card Printer Division
Michael A. Smith (1) 44 Director 1991
</TABLE>
_____________________
(1) Member of Audit Committee.
GERHARD CLESS is Executive Vice President and Secretary, as well as a
co-founder of Zebra, and has served as a director since 1969. He served as
Executive Vice President for Engineering and Technology of Zebra from February
1995 to June 1998, after having served as Senior Vice President since 1969. Mr.
Cless served as Treasurer of Zebra until October 1991. Since 1969, he has been
active with Zebra where he has directed the development of numerous label
printers and maintained worldwide technology/vendor relationships. Prior to
founding Zebra, Mr. Cless was a research and development engineer at Teletype
Corporation's printer division. Mr. Cless received an MSME degree from
Esslingen, Germany, and has done graduate work at the Illinois Institute of
Technology.
EDWARD L. KAPLAN is Chief Executive Officer and Chairman, as well as a
co-founder, of Zebra, and has served as a director since 1969. He also served as
President of Zebra from its formation until February 1995, and again from April
1997 to April 1998 (on an interim basis) and Chief Financial Officer of Zebra
from its formation until October 1991. Mr. Kaplan began his career as a project
engineer for Seeburg Corporation, later joining Teletype Corporation as a
mechanical engineer performing research and development in the Printer Division.
In 1969, he and Gerhard Cless founded Zebra, then known as Data Specialties,
Inc. Mr. Kaplan received a BS in Mechanical Engineering from the Illinois
Institute of Technology (graduating Tau Beta Pi) and an MBA from the University
of Chicago and is an NDEA Fellow of Northwestern University.
-4-
<PAGE>
CHRISTOPHER G. KNOWLES has served as a director of Zebra since July 1991. He
is a member of the Board of Directors of Insurance Auto Auctions, Inc., since
June 1994. In 1966, Mr. Knowles joined North American Van Lines, which was
acquired by PepsiCo, Inc. two years later. He continued his career with PepsiCo,
Inc., working in human relations and distribution with several of its subsidiary
companies, including North American Van Lines, PepsiCo Service Industries and
Wilson Sporting Goods, as well as holding positions on the corporate staff of
PepsiCo. In 1976, he became a Vice President of Allied Van Lines and later
became Division Vice President in charge of Allied's Household Goods Division,
the largest division of that company. Mr. Knowles joined Underwriters Salvage
Company in 1980 as its Chairman of the Board and Chief Executive Officer and
subsequently acquired that company with other members of its management.
Underwriters Salvage Company was acquired by Insurance Auto Auctions, Inc. in
January 1994. Mr. Knowles became President and Chief Operating Officer of
Insurance Auto Auctions, Inc. in April 1994 and held such positions until March
1996. Since December 1998, Mr. Knowles served as Chief Executive Officer of
Insurance Auto Auctions, Inc. Mr. Knowles received his BA degree from Indiana
University in 1966.
DAVID P. RILEY has served as a director of Zebra since July 1991. Since 1984,
he has been President and Chief Executive Officer of The Middleby Corporation, a
public company which manufactures commercial food equipment and provides
complete kitchens to various institutional customers, as well as to restaurants
such as Pizza Hut and Domino's Pizza. He also serves as a director of The
Middleby Corporation. Mr. Riley was previously employed in various management
positions with a subsidiary of The Middleby Corporation and, before that, with
Hobart Corporation, a food equipment manufacturer. Mr. Riley holds a BS in
Engineering from The Ohio State University.
DONALD K. SKINNER has served as Vice Chairman of the Board since the merger
of Zebra and Eltron International on October 28, 1998. Previously, he served as
Eltron's Chief Executive Officer from December 1992 and as its Chairman of the
Board from July 1995. Mr. Skinner co-founded Eltron International in January
1991 and served as its Executive Vice President and Chief Operating Officer
until December 1992 and as its President from December 1992 to September 1995.
In September 1989, Mr. Skinner founded Eltron, Inc., a manufacturer of custom
thermal printers where he served as President until January 1991. From January
1989 to August 1989, Mr. Skinner served as General Manager of Axiom-Edwards-CPE,
Inc., a manufacturer of thermal printers. In 1985, Mr. Skinner co-founded and
served as Executive Vice President and Chief Operating Officer of Peripheral
Technology Corp., a manufacturer of computer disk drives, and was responsible
for new product development, engineering, sales and marketing, and operations.
Prior to his tenure at Peripheral Technology Corp., Mr. Skinner spent 15 years
at Dataproducts Corp., a manufacturer of computer printers, where he was
responsible for the development, manufacturing, and marketing of the company's
new product lines. Mr. Skinner is a director of Percon, Inc. (Eugene, Oregon), a
manufacturer of bar code reading products. Mr. Skinner holds a BSME from West
Coast University and an MBA from Pepperdine University.
MICHAEL A. SMITH has served as a director of Zebra since July 1991. He is
Managing Director and co-head of the Mergers and Acquisitions Department of
BancAmerica Robertson Stephens and previously was co-founder head of the
investment banking group BA Partners and its predecessor entities since 1989.
Previous positions include Managing Director, Corporate Finance Department, for
Bear, Stearns and Company, Inc. (1982 to 1989) and Vice President and Manager of
the Eastern States and Chicago Group Investment Banking Division of Continental
Bank (1977 to 1982). He was a director of Graphic Technology from 1983 to 1989.
Mr. Smith graduated Phi Beta Kappa from the University of Wisconsin and received
an MBA from the University of Chicago.
DIRECTOR COMPENSATION -- For their services as directors, the members of the
Board of Directors who are not employees of Zebra are paid $2,000 quarterly,
$2,000 for each Board meeting attended and $500 for each Board committee meeting
attended. In addition to cash compensation, each of Messrs. Knowles, Riley and
Smith has been granted, over a five-year period, options to acquire 20,000
shares of Class A Common Stock pursuant to Zebra's Stock Option Plan for Outside
Directors (the "Outside Director Plan"), which expired in 1996. Options granted
under the Outside Director Plan have an exercise price equal to the fair market
value on the date of grant and have a term ending seven years after the date of
grant or two years after the date on which the director ceases being a director
of the Company, whichever is earlier. Pursuant to Zebra's 1997 Non-Employee
Director Plan (the "1997 Director Plan"), on February 11, 1997, each of
-5-
<PAGE>
Messrs. Knowles, Riley and Smith was granted options to purchase 15,000
shares of Class A Common Stock at an exercise price of $24.50 per share (the
closing price of the Class A Common Stock on the grant date, as report by
Nasdaq). Options granted under the 1997 Director Plan vest in five equal
increments on the grant date and each of the first four anniversaries thereof
(so long as the optionee is still an active member of the Board of Directors)
and remain exercisable until the tenth anniversary of the grant date. See
"Security Ownership of Certain Beneficial Owners and Management."
MEETINGS -- The Board of Directors meets quarterly and may schedule
additional special meetings upon request of the Chairman of the Board, the
President of the Company or one-half of the whole Board of Directors. During the
year ended December 31, 1998, the Board of Directors met five times. Each
director attended all of the board meetings and meetings of board committees on
which he served that were held during 1998.
COMMITTEES OF THE BOARD OF DIRECTORS -- The Audit Committee generally has
responsibility for recommending independent auditors to the Board for selection,
reviewing the plan and scope of the audit, reviewing the Company's audit and
control functions and reporting to the full Board regarding all of the
foregoing. The Audit Committee conferred by telephone on a number of occasions
and held four formal meetings in 1998. The Board of Directors does not have a
compensation or nominating committee.
-6-
<PAGE>
EXECUTIVE OFFICERS
Set forth below is a table identifying the executive officers of the Company
other than Messrs. Cless, Kaplan, and Skinner, who are identified in the section
"Election of Directors -- Nominees for Election as Directors."
<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------- --- ------------------------------------------
<S> <C> <C>
Charles E. Turnbull 47 President
Jack A. LeVan 44 Senior Vice President, Business Development
Clive P. Hohberger 56 Vice President, Technology Development
Charles R. Whitchurch 52 Chief Financial Officer and Treasurer
</TABLE>
CHARLES E. TURNBULL joined Zebra as President on April 20, 1998. Mr.
Turnbull came to Zebra from Nashua Corporation, where he was President of the
Commercial Products Group from August 1995 to October 1997. From January 1994
until November 1994, Mr. Turnbull was President of the Polyken Technologies
Division of Kendall International. From 1978 to 1994, Mr. Turnbull held
various management positions of increasing responsibility with the Avery
Dennison Corporation, including Vice President and General Manager of the
Marking Films Division. Mr. Turnbull received a BS in industrial engineering
from the University of Oklahoma and an MBA from the Harvard Graduate School
of Business.
JACK A. LEVAN is Senior Vice President of Business Development. He joined
Zebra in January 1995 as Senior Vice President of Marketing. From 1993 until
joining Zebra, Mr. LeVan was President of the Carolina Enterprise
Association. From 1989 to 1993, he served in various senior management
positions with Groupe Legris Industries, progressing to President and CEO of
PPM Cranes, Inc., a company acquired by Groupe Legris Industries in 1992. Mr.
LeVan held various management positions with Miller Fluid Power from 1981 to
1989. In addition, Mr. LeVan spent three years in consulting with a
specialization in industrial marketing strategy. Mr. LeVan received a BA and
an MBA from the University of Chicago.
CLIVE P. HOHBERGER became Vice President of Technology Development in
1994. He joined Zebra in 1984 as a consultant and became Vice President of
Corporate Development in 1986. He served as Vice President of Marketing from
1988 to 1991 and became Vice President of Market Development in 1991. He
became Vice President of Technology Development in 1994 and is presently
responsible for the development of new market opportunities and liaisons with
key customers, vendors, government standards and regulatory agencies,
competitors and technology developers. Dr. Hohberger has held positions with
several firms including Weber Marking Systems, Abbott Laboratories, The
Brookhaven National Laboratory, the Montreal Neurological Institute and
Bunker-Ramo Corporation. Dr. Hohberger received his BS and MS from Case
Institute of Technology in Physics and Engineering, respectively, a Ph.D.
from Case Western Reserve University in Computer Engineering and an MBA from
the Lake Forest Graduate School of Management.
CHARLES R. WHITCHURCH joined Zebra as Chief Financial Officer and
Treasurer in September 1991. From 1981 until he joined Zebra, he served as
Vice President, Finance of Corcom, Inc., a technology company specializing in
the control of radio frequency interference. Mr. Whitchurch previously held
positions as Chief Financial Officer of Resinoid Engineering Corporation and
as Corporate Services Officer with the Harris Bank in Chicago. Mr. Whitchurch
earned a BA in Economics (Phi Beta Kappa) from Beloit College and an MBA from
Stanford University in 1973.
The Board of Directors elects officers to serve at the discretion of the
Board. There are no family relationships among any of the directors or
officers of the Company.
-7-
<PAGE>
SECTION 16(a) COMPLIANCE -- Section 16(a) of the Securities Exchange Act
of 1934, as amended, requires the Company's officers and directors and
persons who own greater than ten percent of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and The Nasdaq Stock
Market. Based solely on a review of the forms it has received and on written
representations from certain reporting persons that no such forms were
required for them, the Company believes that, except as set forth below,
during the year ended December 31, 1998, all Section 16(a) filing
requirements applicable to its officers, directors and 10% beneficial owners
were complied with by such persons.
Thomas L. Beusch (a former executive officer of the Company) and Gerhard
Cless each filed one Form 4 after the date prescribed in Section 16(a).
-8-
<PAGE>
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
The following table provides information concerning the annual and long-term
compensation for services in all capacities to the Company for the year ended
December 31, 1998, and the two prior years for (i) the chief executive officer
and (ii) the four other executive officers of the Company who received the
highest compensation (combined salary and bonus) in 1998 (collectively, the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION (1)
----------------
ANNUAL COMPENSATION AWARDS
-------------------------- ---------------- ALL
SECURITIES OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($)
- --------------------------------- ----- ---------- -------- --------------- -------------
<S> <C> <C> <C> <C>
Edward Kaplan 1998 $340,290 $122,502 -- $10,405(2)
Chairman and 1997 309,355 139,210 -- 10,055
Chief Executive Officer 1996 281,731 64,347 -- 17,972
Charles E. Turnbull (3) 1998 $188,462 $56,700 -- --
President 1997 -- -- -- --
1996 -- -- -- --
Jack A. LeVan 1998 $178,173 $48,430 -- $10,405(2)
Senior Vice President, 1997 168,940 45,614 -- 10,055
Business Development 1996 141,617 33,361 -- 9,875
Charles R. Whitchurch, 1998 $176,538 $38,170 -- $10,405(2)
Chief Financial Officer and 1997 169,028 45,637 -- 10,055
Treasurer 1996 144,463 23,462 -- 10,628
Thomas L. Beusch (4) 1998 $164,897 $29,065 -- $33,703(5)
Vice President, Sales 1997 156,970 43,781 -- 35,700
and International 1996 148,246 10,507 -- 30,262
</TABLE>
(1) None of the Named Officers had any restricted stock holdings as of
December 31, 1998.
(2) Consisting of 401(k) contributions of $5,000 and profit sharing plan
payments of $5,405.
(3) Charles E. Turnbull joined the Company on April 20, 1998.
(4) Thomas L. Beusch resigned from the Company effective January 4, 1999.
(5) Consisting of commissions of $23,298, 401(k) contributions of $5,000
and profit sharing plan payments of $5,405.
-9-
<PAGE>
The following table provides information on stock options granted in the year
ended December 31, 1998, to the Named Executives:
<TABLE>
<CAPTION>
OPTIONS GRANTED IN YEAR ENDED DECEMBER 31, 1998
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES PERCENT OF TOTAL STOCK PRICE
UNDERLYING OPTIONS/SARS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE -----------------
GRANTED EMPLOYEES IN PRICE EXPIRATION OPTION TERM (1)
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward L. Kaplan -- -- -- -- -- --
Charles E. Turnbull 60,000 16.3 38.75 04/21/08 116,250 232,500
Jack A. LeVan 10,000 2.7 38.75 04/21/08 19,375 38,750
Charles R. Whitchurch -- -- -- -- -- --
Thomas L. Beusch -- -- -- -- -- --
</TABLE>
(1) The dollar amounts under these columns are based on 5% and 10%
appreciation rates in accordance with the rules of the Securities and
Exchange Commission. This table is not intended to predict future
movements of the Company's stock price.
-10-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES -- The following table provides information on option exercises in 1998
by the Named Officers and on the Named Officers' unexercised options at December
31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)(1)
--------------------- -------------------
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ----------------- ------------------ ------------ -------------------- -------------------
<S> <C> <C> <C> <C>
Edward L. Kaplan -- -- --/-- --/--
Charles E. Turnbull -- -- --/60,000 --/--
Jack A. LeVan 3,250 101,469 3,500/23,250 23,750/77,391
Charles R. Whitchurch -- -- 14,250/20,250 171,500/90,313
Thomas L. Beusch (2) 9,750 312,562 --/17,750 --/112,313
</TABLE>
(1) The value per option is calculated by subtracting the exercise price
from the closing price of the Company's Common Stock on the Nasdaq
Stock Market on December 31, 1998, of $28.75.
(2) Thomas L. Beusch resigned from the Company effective January 4, 1999.
CERTAIN TRANSACTIONS -- In May 1989, the Company entered into a lease
agreement for its facility and certain machinery, equipment, furniture and
fixtures with Unique Building Corporation ("Unique"), a corporation owned by
Messrs. Kaplan and Cless and Stewart Shiman (a former executive officer of the
Company). The facility portion of the lease is treated as an operating lease and
has a term ending on March 31, 2008. Base monthly rental payments were $111,997
in 1998. Base monthly rental payments will increase to $115,355 from September
1, 1999, through March 31, 2003, and to $127,570 from April 1, 2003, through
March 31, 2008. The lease agreement includes a modification to the base monthly
rental which goes into effect if the prescribed rent payment is less than the
aggregate principal and interest payments required to be made by Unique under
certain Industrial Revenue Bonds. The Industrial Revenue bonds are supported by
a Letter of Credit issued by American National Bank. The Company guaranteed
$700,000 of Unique's obligation to such bank under the agreement relating to the
Letter of Credit. Under the portion of the lease agreement with Unique, which is
accounted for as a capital lease, the Company leases machinery, equipment,
furniture, and fixtures at a monthly rental of $5,725 over the lease term.
-11-
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
Traditionally, compensation for the Company's executive officers has been
determined by the Company's chief executive officer, Edward L. Kaplan, due to
the relatively small number of executive officers and Mr. Kaplan's personal
knowledge of the relative performance and responsibilities of each executive
officer. For the year ended December 31, 1998, compensation for the Company's
executive officers, other than Mr. Kaplan himself, was established in this
manner. Mr. Kaplan also submitted to the Board of Directors for its
consideration a proposal for his own compensation package, which was reviewed
and approved by the Board.
COMPENSATION ELEMENTS -- For 1998, the primary components of the Company's
executive officer compensation program were base salaries and cash bonuses based
on Company and departmental performance.
BASE SALARIES -- In determining the base salaries of Messrs. Turnbull, LeVan,
Whitchurch, and Beusch, Mr. Kaplan reviewed various technology industry salary
surveys, and he targeted salaries at levels competitive to those provided to
executives with similar responsibilities in businesses which he viewed as
comparable to the Company. Mr. Kaplan also attempted to maintain a salary
structure for the executive group which vis-a-vis each executive gives credit
for relative seniority and scope of assigned responsibilities. The Board's
approval of Mr. Kaplan's salary was based upon its subjective evaluation of Mr.
Kaplan's contributions to the Company and his importance to the Company's
continued growth. The Board reviewed the American Electronics Association
Executive Compensation Survey (the "Survey") to confirm Mr. Kaplan's salary
level was within the ranges represented by the Survey, but did not target Mr.
Kaplan's salary at a particular point within the Survey's compensation ranges.
BONUS -- Executive bonuses for 1998 were performance-related. Bonuses were
designed to reward management for achieving and exceeding goals for Company
performance as well as performance goals for particular departments.
Mr. Kaplan and each of the other Named Officers participated in the Company's
1998 Executive Bonus Plan (the "Bonus Plan"). The Bonus Plan was established by
Mr. Kaplan after meetings with the other executive officers to discuss the
Company's targeted performance goals, and Mr. Kaplan's participation in the
Bonus Plan was approved by the Board. Under the Bonus Plan, cash bonuses paid to
each of the Named Officers for 1998 were directly related to the Company's
overall financial performance. Bonuses were determined by multiplying the
particular officer's base salary by (1) his designated bonus percentage and (2)
a performance factor based upon the Company's achievement of targeted levels of
after-tax profit for 1998. Designated bonus percentages were based upon
seniority and relative positions within the Company's organizational structure.
Mr. Kaplan awarded bonuses in addition to those provided in the Bonus Plan to
certain of the Company's executive officers based upon the performance of the
departments over which they exercise direct supervisory authority. For these
bonuses, the performance criteria varied depending upon the department and the
particular goals set for the department for 1998. For example, an executive
responsible for sales functions of the Company received an additional bonus
based upon the Company's gross sales levels, while an executive in charge of
manufacturing functions received a bonus based upon targeted levels of
manufacturing efficiency, quality and on-time deliveries.
STOCK OPTIONS -- The Company has, on limited occasions, awarded stock options
to executive officers, to provide competitive compensation packages and because
the Company believes it is important that all of the Company's key executive
officers have a meaningful equity stake in the Company so that they have an
incentive to create shareholder value over a long-term investment horizon. In
1998, the Company granted 60,000 stock options to Charles L. Turnbull upon his
joining the Company as President and 10,000 shares to Jack A. LeVan as part of
the regular review of Mr. LeVan's performance and compensation.
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<PAGE>
COMPLIANCE WITH SECTION 162(m) -- The Board of Directors currently intends
for all compensation paid to the Named Officers to be tax deductible to the
Company pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"). Section 162(m) provides that compensation paid to
the Named Officers in excess of $1,000,000 cannot be deducted by the Company for
Federal income tax purposes unless, in general, such compensation is performance
based, is established by an independent committee of directors, is objective and
the plan or agreement providing for such performance based compensation has been
approved in advance by stockholders. In the future, however, if, in the judgment
of the Board, the benefits to the Company of a compensation program that does
not satisfy the arbitrary and inflexible conditions of Section 162(m) outweigh
the costs to the Company of the failure to satisfy these conditions, the Board
may adopt such a program.
BOARD OF DIRECTORS
Gerhard Cless David P. Riley
Edward L. Kaplan Michael A. Smith
Christopher G. Knowles Donald K Skinner
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company's Chief Executive Officer, Mr. Kaplan, determined the
compensation to be paid the Company's executive officers, other than himself,
for the year ended December 31, 1998. The Board of Directors, then consisting of
Messrs. Cless, Kaplan, Knowles, Riley, and Smith, approved the compensation to
be paid to Mr. Kaplan. Mr. Cless, the Company's Executive Vice President and
Secretary, and Mr. Kaplan participated in the deliberations of the Board
concerning Mr. Kaplan's compensation.
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<PAGE>
PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return
on the Class A Common Stock of the Company for the last five years with the
cumulative total return on the Nasdaq Market Index and the MG Industry Group
171 -- Electronic Equipment Manufacturers Index -- over the same period.
FIVE-YEAR COMPARISON OF CUMULATIVE RETURNS
[GRAPHIC]
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Zebra Technologies
Corporation $100.00 $68.98 $120.09 $82.56 $105.08 $101.55
MG Group Index 100.00 104.94 97.49 97.13 115.07 143.67
Nasdaq Market Index 100.00 104.99 136.18 169.23 207.00 291.96
</TABLE>
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<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 31, 1999, certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding shares of any class of Common Stock, (ii) each director of the
Company, (iii) each of the Named Officers and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK % OF TOTAL
----------------------------- ---------------------------- VOTING
NAME AND ADDRESS NUMBER % OF CLASS NUMBER % OF CLASS POWER(1)
- ------------------------- ------------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Edward L. Kaplan (2) 110,000 * 1,408,357(4) 19.1% 14.5%
Carol K. Kaplan (2) --(4) -- 290,448(5) 3.9% 3.0%
Gerhard Cless (2) 140,000(6) * 2,368,312(7) 32.1% 24.3%
Ruth I. Cless (2) -- (8) -- 806,304(9) 10.9% 8.3%
Donald K. Skinner 54,000(10) -- 420,163(11) 5.7% 4.3%
Christopher G. Knowles 31,000(12) * -- -- --
David P. Riley 21,000(13) * -- -- --
Michael A. Smith 29,000(14) * -- -- --
Charles E. Turnbull 30 -- -- -- --
Jack A. LeVan 9,174(15) * -- -- --
Charles R. Whitchurch 25,436(16) * -- -- --
William Blair & Co., L.L.C. 1,740,778(17) 7.4% -- -- --
T. Rowe Price Associates, Inc. 368,500 1.6% 648,450(18) 8.8% 6.7%
J. & W. Seligman & Co., Inc. 1,363,167(19) 5.8% -- -- --
Neuberger Berman, LLC 1,187,360(20) 5.0% -- -- --
Jurika & Voyles, L.P. 753,747(21) 3.2% -- -- --
FMR Corporation -- -- 688,860(22) 9.3% 7.8%
Directors as a group 425,696(23) 1.6% 5,293,584 71.8% 54.6%
(10 persons)
</TABLE>
____________________
* Less than one percent.
(1) Each share of the Class A Common Stock has one vote and
each share of the Class B Common Stock has ten votes. This
column shows the combined voting power of all Class A
Common Stock and Class B Common Stock beneficially owned
by each of the listed persons. The percentages are based
on the outstanding number of Class A Common Stock and
Class B Common Stock as of March 31, 1999.
(2) The address of this stockholder is c/o Zebra Technologies
Corporation, 333 Corporate Woods Parkway, Vernon Hills,
Illinois 60061.
(3) Excludes 290,448 shares that may be deemed held of record
or beneficially by Mr. Kaplan's wife, Carol, which may be
deemed to be beneficially owned by Mr. Kaplan.
-15-
<PAGE>
(4) Excludes 110,000 shares held of record or beneficially owned by
Mr. Kaplan, which may be deemed to be beneficially owned
by Mrs. Kaplan.
(5) Excludes 1,408,357 shares held of record or beneficially
by Mr. Kaplan, which may be deemed to be beneficially
owned by Mrs. Kaplan.
(6) Includes 140,000 shares held by a foundation of which Mr.
Cless is director.
(7) Excludes 806,304 shares held of record or beneficially by
Mr. Cless' wife, Ruth, which may be deemed to be
beneficially owned by Mr. Cless.
(8) Excludes 140,000 shares held of record or beneficially by
Mr. Cless, which may be deemed to be beneficially owned by
Mrs. Cless.
(9) Excludes 2,368,312 shares held of record or beneficially
by Mr. Cless, which may be deemed to be beneficially owned
by Mrs. Cless.
(10) Includes 54,000 shares of Class A Common Stock issuable
within 60 days upon exercise of options.
(11) Consists of 240,163 shares held by the Skinner Revocable
Trust and 180,000 shares held by the Skinner Irrevocable
Blind Trust.
(12) Includes 16,000 shares of Class A Common Stock issuable
within 60 days upon exercise of options granted pursuant
to the Outside Director Plan and 9,000 shares of Class A
Common Stock issuable within 60 days upon exercise of
options granted pursuant to the 1997 Directors Plan.
(13) Includes 12,000 shares of Class A Common Stock issuable
within 60 days upon exercise of options granted pursuant
to the Outside Director Plan and 9,000 shares of Class A
Common Stock issuable within 60 days upon exercise of
options granted pursuant to the 1997 Directors Plan.
(14) Includes 20,000 shares of Class A Common Stock issuable
within 60 days upon exercise of options granted pursuant
to the Outside Director Plan and 9,000 shares of Class A
Common Stock issuable within 60 days upon exercise of
options granted pursuant to the 1997 Directors Plan.
(15) Includes 7,500 shares of Class A Common Stock issuable
within 60 days upon exercise of options.
(16) Includes 13,125 shares of Class A Common Stock issuable
within 60 days upon exercise of options.
(17) As reported on a Schedule 13G filed by William Blair &
Co., L.L.C. on March 17, 1999. According to such 13G,
William Blair & Co., L.L.C. has sole voting power with
respect to 473,400 of these shares, and sole dispositive
power with respect to all 1,740,778 of these shares. The
address of this stockholder is 222 West Adams Street,
Chicago, IL 60606.
(18) As reported on a Schedule 13G filed by T. Rowe Price
Associates, Inc., on February 12, 1999. According to such
13G, T. Rowe Price Associates, Inc., has sole voting power
with respect to 21,330 of these shares, and sole
dispositive power with respect to all 648,450 of these
shares. These securities are owned by various individual
and individual investors, which T. Rowe Price Associates,
Inc. (Price Associates) serves as investment adviser with
power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities;
however, Price Associates expressly disclaims that it is,
in fact, the beneficial owner of such securities. The
address of this stockholder is 100 E. Pratt Street,
Baltimore, MD 21202.
(19) As reported on a Schedule 13G filed by J. & W. Seligman &
Co., Inc., on February 10, 1999. According to such 13G, J.
& W. Seligman & Co., Inc., has shared voting power with
respect to 1,028,900 of these shares, and shared
dispositive power with respect to all 1,363,167 of these
shares. The address of this stockholder is 100 Park
Avenue, New York, NY 10017.
(20) As reported on a Schedule 13G filed by Neuberger Berman,
LLC, on February 15, 1999. According to such 13G,
Neuberger Berman, LLC, has sole voting power with respect
to 480,960 of these shares, shared voting power with
respect to 706,400 of these shares, and sole dispositive
-16-
<PAGE>
power with respect to all 1,187,360 of these shares. The
address of this stockholder is 605 Third Avenue, New York,
NY 10158.
(21) As reported on a Schedule 13G filed by Jurika & Voyles,
L.P., on February 11, 1999. According to such 13G, Jurika
& Voyles, L.P., has shared voting power with respect to
724,122 of these shares and shared dispositive power with
respect to all 753,747 of these shares. The address of
this stockholder is 1999 Harrison Street, Suite 700,
Oakland, CA 94612.
(22) As reported on a Schedule 13G filed by FMR Corporation and
certain affiliates on November 10, 1998. According to such
13G, affiliates of FMR Corporation have sole dispositive
power with respect to all 688,860 of these shares. The
address of this stockholder is 82 Devonshire Street,
Boston, Massachusetts 02109.
(23) Includes 154,575 shares of Class A Common Stock issuable
within 60 days upon exercise of options.
-17-
<PAGE>
PROPOSAL 2
INCREASE THE NUMBER OF SHARES AVAILABLE FOR OPTIONS
UNDER THE ZEBRA 1997 STOCK OPTION PLAN
The Zebra 1997 Stock Option Plan (the "Plan") currently provides that 2.0
million shares of Class A Common Stock are authorized for issuance pursuant
to options granted thereunder. To date, Zebra has granted options to purchase
2,165,048 shares of Class A Common Stock under the Plan. After taking
cancellations and forfeitures into account, a deficit of 71,572 shares of
Class A Common Stock currently exists for future option grants. Accordingly,
grants of options to purchase 71,572 shares are subject to the approval of
stockholders at the Annual Meeting.
The Zebra Board of Directors adopted the Plan effective February 11, 1997.
Stockholder approval of the Plan was requested and obtained in 1997 to (i) meet
the requirements of the Nasdaq Stock Market; (ii) qualify certain compensation
under the Plan as performance-based compensation that is tax deductible under
Section 162(m) of the Code; and (iii) qualify certain stock options granted
under the Plan as incentive stock options. In October 1998, in order to
accommodate options issued in the Eltron merger, Zebra's Board of Directors and
stockholders approved an amendment to the Plan that increased the number of
shares of Class A Common Stock available for issuance thereunder from 531,500
shares to 2.0 million shares.
The Company has historically utilized stock options as a part of its overall
compensation program for key employees, officers and directors. Zebra's Board of
Directors believes that it is in the best interests of the Company to have
stock-based awards available for employees. Since the Company's merger with
California-based Eltron, it is competing within an employment base for which
stock options have historically represented a significant portion of
compensation. The Board of Directors believes that the proposed amendment, if
approved by stockholders, will assist Zebra in attracting, retaining, and
motivating highly qualified personnel.
The Board of Directors recommends that the stockholders vote in favor of the
proposal to increase the number of shares available for options under the Plan.
Messrs. Kaplan, Cless, and Skinner and certain members of their family have
executed voting agreements, whereby they have agreed to vote all shares of
Common Stock held by them in favor of the proposed amendment.
The following is a brief summary of certain provisions of the Plan.
GENERAL
The Plan is a flexible plan that provides the Zebra Option Committee broad
discretion to fashion the terms of the awards to provide eligible participants
with stock-based incentives, including: (i) non-qualified and incentive stock
options for the purchase of shares of Class A Common Stock and (ii) dividend
equivalents. The Plan is administered by the Zebra Option Committee, which is
currently comprised of Mr. Kaplan and Mr. Cless. The persons eligible to
participate in the Plan are directors, officers, and employees of Zebra or any
subsidiary of Zebra who, in the opinion of the Zebra Option Committee, are in a
position to make contributions to the growth, management, protection and success
of Zebra or its subsidiaries. To the extent required by Section 162(m) of the
Code, grants under the Plan will be approved by at least two non employee
directors of Zebra.
The purpose of the Plan is to promote the overall financial objectives of
Zebra and its stockholders by motivating eligible participants to achieve
long-term growth in stockholder equity in Zebra and by retaining the association
of these individuals.
The Plan currently provides for the grant of options and other awards of up
to 2.0 million shares of shares of Class A Common Stock. In the discretion of
the Zebra Option Committee, shares of Class A Common Stock subject to an award
under the Plan that remain unissued upon termination of such award, are
forfeited, or are received by Zebra as consideration for the exercise or payment
of an award, shall become available for additional awards under the Plan.
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<PAGE>
In the event of a stock dividend, stock split, recapitalization, sale of
substantially all of the assets of Zebra, reorganization or similar event, the
Zebra Option Committee will adjust the aggregate number of shares of Class A
Common Stock subject to the Plan, the number of shares available for awards and
subject to outstanding awards and the exercise price per share, and other terms
of outstanding awards.
The Zebra Board of Directors or Zebra Option Committee may amend, modify or
discontinue the Plan at any time, except if such amendment (i) impairs the
rights of a Participant (as defined in the Plan) without the Participant's
consent, or (ii) would disqualify the Plan from the exemption provided by Rule
16b-3 under the Exchange Act. Amendments may be subject to stockholder approval
under applicable law. Any amendment by the Zebra Option Committee is subject to
approval of the Zebra Board of Directors. The Zebra Option Committee may amend
the terms of any award granted under the Plan (other than to decrease the option
price), subject to the consent of a Participant if such amendment impairs the
rights of such Participant unless such amendment is necessary for the option or
the Plan to qualify for the exemption provided by Rule 16b-3 under the Exchange
Act.
AWARDS UNDER THE PLAN
STOCK OPTIONS. Options to purchase no more than 100,000 shares of shares of
Class A Common Stock may be granted to any one Participant in any fiscal year.
Subject to such limitation, the Zebra Option Committee shall determine the
number of shares of shares of Class A Common Stock subject to the options to be
granted to each Participant. The Zebra Option Committee may grant non-qualified
stock options, incentive stock options or a combination thereof to a
Participant. Only persons who on the date of the grant are employees of Zebra or
any parent or a subsidiary of Zebra maybe granted options which qualify as
incentive stock options. Options granted under the Plan will provide for the
purchase of shares of Class A Common Stock at prices determined by the Zebra
Option Committee, but in no event will an option intended as an incentive stock
option be granted at less than fair market value on the date of grant. When
incentive stock options are granted to an individual who owns stock possessing
more than 10% of the combined voting power of all Zebra Common Stock, the option
price shall not be less than 110% of fair market value. No non-qualified stock
option or incentive stock option shall be exercisable later than the tenth
anniversary of its date of grant. In the case of an incentive stock option
granted to a Participant who owns more than 10% of the combined voting power of
all classes of stock of Zebra or any parent or subsidiary of Zebra, such option
shall not be exercisable later than the fifth anniversary of its date of grant.
No incentive stock option shall be granted later than the tenth anniversary of
the adoption of the Plan or its approval by the stockholders of Zebra, whichever
is earlier.
Options granted under the Plan shall be exercisable at such times and
subject to such terms and conditions set forth in the Plan and as the Zebra
Option Committee shall determine or provide in an option agreement. Except as
provided in any option agreement, options may only be transferred under the
laws of descent and distribution or if such transfer is permitted by Rule
16b-3 without liability under applicable law and is consistent with the use
of the Commission's Form S-8. Otherwise, options shall be exercisable only by
the Participant during such Participant's lifetime. The option exercise price
shall be payable by the Participant (i) in cash, (ii) in shares of Class A
Common Stock held by the Participant for at least six months prior to the
exercise date and having a fair market value equal to the exercise price,
(iii) by delivery of a note or other evidence of indebtedness, (iv) by
"cashless exercise" as permitted under the Federal Reserve Board's Regulation
T, or (v) by any combination of the foregoing. Upon termination of a
Participant's employment with Zebra due to death or Disability (as defined in
the Plan), all of such Participant's unexpired and unexercised options shall
be exercisable for the shorter of (a) their remaining term or (b) 90 days
after either (i) in the case of a Participant's Disability, termination of
employment or (ii) in the case of a Participant's death, the date of the
appointment of a Representative (as defined in the Plan) or such other period
as the Zebra Option Committee may determine. If a Participant retires or if a
Participant involuntarily ceases to be an employee of Zebra (other than due
to death, Disability or as a result of termination for Cause (as defined in
thePlan)), all of such Participant's options shall terminate, except that, to
the extent such options are then exercisable, such options maybe exercised
for the shorter of their remaining terms or 90 days (or such shorter period
as the Zebra Option Committee may specify) after termination of employment.
If a Participant voluntarily ceases to be an employee of Zebra (other than
due to retirement) or is terminated as a result of Cause, all of such
Participant's outstanding options shall terminate 30 days (or such shorter
period as the Zebra Option Committee may specify) after termination of
employment.
-19-
<PAGE>
Upon receipt of a notice from a Participant to exercise an option, the Zebra
Option Committee may elect to cash out all or part of any such option by paying
the Participant, in cash or shares of Class A Common Stock, the following
amount: (i) the excess of the fair market value of the shares of Class A Common
Stock subject to the unexercised option over the option price, multiplied by
(ii) the number of shares of Class A Common Stock for which the option is to be
exercised.
DIVIDEND EQUIVALENTS. The Zebra Option Committee is authorized to grant
dividend equivalents conferring on Participants the right to receive cash,
shares of Class A Common Stock, or other property equal in value to dividends
paid on a specified number of shares of Class A Common Stock under an option.
Dividend equivalents may be paid currently or on a deferred basis and, if
deferred, may be deemed to have been reinvested in additional shares of Class A
Common Stock or other investment vehicles as specified by the Zebra Option
Committee.
CHANGES IN CONTROL
Upon the occurrence of a Change in Control (as defined below), all
unexercised stock options shall become immediately exercisable, to the extent
provided by the Zebra Option Committee in an award agreement or otherwise. In
addition, unless the Zebra Option Committee provides otherwise in an option
agreement, after the Change in Control a Participant shall have the right, by
giving notice during the 60-day period from and after a Change in Control to
Zebra, to surrender all or part of the outstanding awards and receive in cash
from Zebra the following amount for each award: (i) the excess of the Change in
Control Price (as defined below) over the exercise price of the award,
multiplied by (ii) the number of shares of Class A Common Stock subject to the
award. The "Change in Control Price" is the higher of (i) the highest reported
sales price of a share of Class A Common Stock in any transaction reported on
the principal exchange on which such shares are listed or on the Nasdaq National
Market during the 60-day period prior to the Change of Control, or (i) if the
Change in Control event is a tender offer, merger or other reorganization, the
highest price to be paid per share of Class A Common Stock in such transaction.
For purposes of the Plan, a "Change in Control" shall be deemed to have
occurred if (i) any corporation, person or other entity (other than Zebra, a
permitted transferee, a majority-owned subsidiary of Zebra or any of its
subsidiaries, or an employee benefit plan (or related trust) sponsored or
maintained by Zebra), including a "group" as defined in Section 13(d)(3) of the
Exchange Act, becomes the beneficial owner of stock representing more than the
greater of (a) 25% of the combined voting power of Zebra's then outstanding
securities or (b) the percentage of the combined voting power of Zebra's then
outstanding securities which equals (1) 10% plus (2) the percentage of the
combined voting power of Zebra's outstanding securities held by such
corporation, person or entity on the effective date of the Plan; (ii)(a) the
stockholders of Zebra approve a definitive agreement to merge or consolidate
Zebra with or into another corporation other than a majority-owned subsidiary of
Zebra, or to sell or otherwise dispose of all or substantially all of Zebra's
assets, and (b) the persons who were the members of the Zebra Board of Directors
prior to such approval do not represent a majority of the directors of the
surviving, resulting or acquiring entity or the parent thereof, (iii) the
stockholders of Zebra approve a plan of liquidation of Zebra; or (iv) within any
period of 24 consecutive months, persons who were members of the Zebra Board of
Directors immediately prior to such 24-month period, together with any persons
who were first elected as directors (other than as a result of any settlement of
a proxy or consent solicitation contest or any action taken to avoid such a
contest) during such 24-month period by or upon the recommendation of persons
who were members of the Zebra Board of Directors immediately prior to such
24-month period and who constituted a majority of the Zebra Board of Directors
at the time of such election, cease to constitute a majority of the Zebra Board
of Directors.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following summary of tax consequences with respect to the awards granted
under the Plan is not comprehensive and is based upon laws and regulations
currently in effect. Such laws and regulations are subject to change.
NON-QUALIFIED STOCK OPTIONS
PARTICIPANT. Generally, a Participant receiving a non-qualified stock option
does not realize any taxable income for federal income tax purposes at the time
of grant. Upon exercise of such Option, the excess of the fair market value of
the shares of Class A Common Stock subject to the non-qualified stock
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<PAGE>
option on the date of exercise over the exercise price will be taxable to the
Participant as ordinary income. The Participant will have a capital gain (or
loss) upon the subsequent sale of the shares of Class A Common Stock received
upon exercise of the option in an amount equal to the sale price reduced by
the fair market value of the shares of Class A Common Stock on the date the
option was exercised. The holding period for purposes of determining whether
the capital gain (or loss) is a long-term or short-term capital gain (or
loss) will commence on the date the non-qualified stock option is exercised.
TAX WITHHOLDING. The amount of income that is taxable to a Participant upon
the exercise of a non-qualified stock option will be treated as compensation
income. Accordingly, such amount will be subject to applicable withholding of
federal, state and local income taxes and social security taxes.
IF THE PARTICIPANT USES COMPANY STOCK TO PAY THE OPTION EXERCISE PRICE. If
the Participant who exercises a non-qualified stock option pays the exercise
price by tendering shares of Class A Common Stock and receives back a larger
number of shares of Class A Common Stock, the Participant will realize taxable
income in an amount equal to the fair market value of the additional shares of
Class A Common Stock received on the date of exercise, less any cash paid in
addition to the shares of Class A Common Stock tendered. Upon a subsequent sale
of the shares of Class A Common Stock received, the number of shares of Class A
Common Stock equal to the number delivered as payment of the exercise price will
have a tax basis equal to that of the shares of Class A Common Stock originally
tendered. The additional newly-acquired shares of Class A Common Stock obtained
upon exercise of the non-qualified stock option will have a tax basis equal to
the fair market value of such shares on the date of exercise.
ZEBRA. Zebra generally will be entitled to a tax deduction in the same amount
and in the same year in which the Participant recognizes ordinary income
resulting from the exercise of a non-qualified stock option.
INCENTIVE STOCK OPTIONS
PARTICIPANT. Generally, a Participant will not realize any taxable income for
federal income tax purposes at the time an incentive stock option is granted.
Upon exercise of the incentive stock option, the Participant will incur no
income tax liability (other than pursuant to the alternative minimum tax, if
applicable). If the Participant transfers shares of Class A Common Stock
received upon the exercise of an incentive stock option within a period of two
years from the date of grant of such incentive stock option or one year from the
date of receipt of the shares of Class A Common Stock (the "Holding Period"),
then, in general, the Participant will have taxable ordinary income in the year
in which the transfer occurs in an amount equal to the excess of the fair market
value on the date of exercise over the exercise price, and will have long-term
or short-term capital gain (or loss) in an amount equal to the difference
between the sale price of the shares of Class A Common Stock and the fair market
value of such shares on the date of exercise. However, if the sale price is less
than the fair market value of such shares on the date of exercise, the ordinary
income will be not more than the difference between the sale price and the
exercise price. If the Participant transfers the shares of Class A Common Stock
after the expiration of the Holding Period, the Participant will recognize
income taxable at the capital gains tax rate on the difference between the sale
price and the exercise price.
TAX WITHHOLDING. If the Participant makes any disqualifying disposition prior
to the completion of the Holding Period with respect to shares of Class A Common
Stock acquired upon the exercise of an incentive stock option granted under the
Plan, then such Participant must remit to Zebra an amount sufficient to satisfy
all federal, state, and local withholding taxes thereby incurred.
IF THE PARTICIPANT USES COMPANY STOCK TO PAY THE OPTION EXERCISE PRICE. If a
Participant who exercises an incentive stock option pays the option exercise
price by tendering shares of Class A Common Stock, such Participant will
generally incur no income tax liability (other than pursuant to the alternative
minimum tax, if applicable), provided any Holding Period requirement for the
tendered shares is met. If the tendered stock was subject to the Holding Period
requirement when tendered, payment of the exercise price with such stock
constitutes a disqualifying disposition. If the Participant pays the exercise
price by tendering shares of Class A Common Stock and the Participant receives
back a larger number of shares, under proposed Treasury Regulations, the
Participant's basis in the number of shares of newly acquired stock equal to the
number of the shares delivered as payment of the exercise price will
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have a tax basis equal to that of the shares originally tendered, increased,
if applicable, by any amount included in the Participant's gross income as
compensation. The additional newly acquired shares obtained upon exercise of
the option will have a tax basis of zero. All shares of Class A Common Stock
acquired upon exercise will be subject to the Holding Period requirement,
including the number of shares equal to the number tendered to pay the
exercise price. Any disqualifying disposition will be deemed to be a
disposition of shares of Class A Common Stock with the lowest basis.
ZEBRA. Zebra is not entitled to a tax deduction upon grant, exercise or
subsequent transfer of shares of Class A Common Stock acquired upon exercise
of an incentive stock option, provided that the Participant holds the shares
received upon the exercise of such option for the Holding Period. If the
Participant transfers the shares of Class A Common Stock acquired upon the
exercise of an incentive stock option prior to the end of the Holding Period,
Zebra generally is entitled to a deduction at the time the Participant
recognizes ordinary income in an amount equal to the amount of ordinary
income recognized by such Participant as a result of such transfer.
PARACHUTE PAYMENTS
In the event any payments or rights accruing to a Participant upon a Change
in Control, or any other payments awarded under the Plan, constitute "parachute
payments" under Section 28OG of the Code, depending upon the amount of such
payments accruing and the other income of the Participant from Zebra, the
Participant may be subject to an excise tax (in addition to ordinary income tax)
and Zebra may be disallowed a deduction for the amount of the actual payment.
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<PAGE>
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's Board of Directors has appointed KPMG LLP, independent
certified public accountants, as auditors of the Company's financial statements
for the year ending December 31, 1999. KPMG LLP has acted as auditors for the
Company since July 1991.
The Board has determined to afford stockholders the opportunity to express
their opinions on the matter of auditors for the Company, and, accordingly, is
submitting to the stockholders at the Annual Meeting a proposal to ratify the
Board's appointment of KPMG LLP. If this proposal does not receive the
affirmative vote of a majority of the votes cast affirmatively or negatively at
the Annual Meeting, in person or by proxy, the Board of Directors will interpret
this as an instruction to seek other auditors. The Board of Directors recommends
that the stockholders vote to ratify the appointment of KPMG LLP as auditors for
the year ending December 31, 1999.
It is expected that representatives of KPMG LLP will be present at the Annual
Meeting and available to respond to questions. Such representatives will be
given an opportunity to make a statement if they desire to do so.
OTHER MATTERS
SOLICITATION -- The cost of this proxy solicitation will be borne by the
Company. The Company will also request banks, brokers, fiduciaries, custodians,
nominees and certain other record holders to send proxies, proxy statements and
other materials to their principals at the Company's expense. Such banks,
brokers, fiduciaries, custodians, nominees and other record holders will be
reimbursed by the Company for their reasonable out-of-pocket expenses of
solicitation. The Company does not anticipate that costs and expenses incurred
in connection with this proxy solicitation will exceed those normally expended
for a proxy solicitation for an election of directors in the absence of a
contest.
PROPOSALS OF STOCKHOLDERS -- To be considered at the 2000 Annual Meeting,
stockholder proposals must be received by the Secretary of the Company not less
than 45 days nor more than 75 days prior to April 15, 2000.
OTHER BUSINESS -- The Board of Directors is not aware of any matters to be
presented at the Annual Meeting other than those enumerated in the Company's
Notice of Annual Meeting of Stockholders enclosed herewith. If any other matters
are properly brought before the meeting, however, it is intended that the
persons named in the proxy will vote as directed by the Board of Directors.
ANNUAL REPORT TO STOCKHOLDERS -- The Company's Annual Report to Stockholders
for the year ended December 31, 1998, containing financial and other information
pertaining to the Company, is being furnished to stockholders simultaneously
with this Proxy Statement.
ANNUAL REPORT ON FORM 10-K -- The Company will furnish without charge a copy
of the Company's Annual Report on Form 10-K for the year ended December 31,
1998, as filed with the Securities and Exchange Commission, upon the written
request of any person who is a stockholder as of the record date. Requests for
such materials should be directed to Zebra Technologies Corporation, 333
Corporate Woods Parkway, Vernon Hills, Illinois 60061, Attention: Charles R.
Whitchurch.
By Order of the Board of Directors
Gerhard Cless
SECRETARY
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<PAGE>
PROXY PROXY
ZEBRA TECHNOLOGIES CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) hereby appoints Edward L. Kaplan and
Gerhard Cless, and each of them, with power of substitution, as attorneys and
proxies for and in the name and place of the undersigned, and hereby
authorizes them to represent and to vote all of the shares of Class A Common
Stock and Class B Common Stock of Zebra Technologies Corporation held of
record as of March 19, 1999 which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Zebra Technologies Corporation to be held
on May 18, 1999 at The University of Chicago Gleacher Center, 450 N.
Cityfront Plaza Drive, Chicago, Illinois, 60611, at 10:30 a.m. local time,
and at any adjournment thereof.
(continued, and to be signed, on reverse side)
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY / /
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For ALL Withold For ALL nominees
nominees Authority except as marked
1. ELECTION OF DIRECTORS / / / / / / 2. To increase the number For Against Abstain
Gerhard Cless, Edward Kaplan, of authorized shares of / / / / / /
Christopher Knowles, David Riley, Class A Common Stock
Donald Skinner and Michael Smith available for issuance
under Zebra's 1997 Stock
(Instructions: To withhold authority Option Plan from 2,000,000
to vote for any individual nominee, shares to 4,250,000 shares
strike a line through the nominee's
name above) 3. PROPOSAL TO RATIFY THE For Against Abstain
APPOINTMENT OF KPMG LLP / / / / / /
AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY.
4. In their discretion, the For Against Abstain
Proxies are authorized to / / / / / /
vote upon such other
matters as may properly
come before the meeting.
PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature____________________DATE:_______________, 1998
Signature (if held jointly)____________________________
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER Please sign exactly as the name appears on your stock
DIRECTED HEREIN BY THE ABOVE SIGNED STOCKHOLDER. certificate. When shares are held by joint tenants, both
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR ALL NOMINEES should sign. When signing as attorney, executor, administrator,
LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 AND PROPOSAL 3. trustee or guardian, please give title as such. When signing as
a corporation, please sign in full corporate name by President
or other authorized officer. When signing as a partnership,
please sign in partnership name by an authorized person.
</TABLE>
