Motorola Solutions, Inc 10-Q for FY2021 Q1
Motorola Solutions, Inc. (MSI)
10-Q
2021-05-06
For: 2021-04-03
View Original
Added on
April 03, 2026
About this 10-Q
Motorola Solutions, Inc filed this 10-Q on May 6, 2021, covering the quarter ended April 3, 2021 (FY2021 Q1).
Headline figures
Quarter ended April 3, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.77B
- up 7.1% from $1.66B a year earlier
- Net income
- $244M
- up 23.9% from net income of $197M a year earlier
- Diluted EPS
- $1.41
- up 25.9% from $1.12 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
Form 10-Q
____________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended April 3, 2021
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number: 1-7221
___________________________________________
(Exact Name of Registrant as Specified in Its Charter)
____________________________________________
| (State of Incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices, zip code)
(847 ) 576-5000
(Registrant’s telephone number, including area code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||||||||
| $0.01 | Par Value | |||||||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
| ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the registrant's Common Stock, $0.01 par value per share, outstanding as of April 15, 2021 was 169,667,685 .
| TABLE OF CONTENTS | |||||||||||
For the Quarter Ended April 3, 2021 | |||||||||||
| Page No. | |||||||||||
| Item 1. | |||||||||||
| Item 2. | |||||||||||
| Item 3. | |||||||||||
| Item 4. | |||||||||||
PART II. OTHER INFORMATION | |||||||||||
| Item 1. | |||||||||||
| Item 1A. | |||||||||||
| Item 2. | |||||||||||
| Item 3. | |||||||||||
| Item 4. | |||||||||||
| Item 5. | |||||||||||
| Item 6. | |||||||||||
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited)
| (In millions, except per share amounts) | Three Months Ended | ||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Net sales from products | $ | $ | |||||||||||||||||||||
| Net sales from services | |||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
| Costs of products sales | |||||||||||||||||||||||
| Costs of services sales | |||||||||||||||||||||||
| Costs of sales | |||||||||||||||||||||||
| Gross margin | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Research and development expenditures | |||||||||||||||||||||||
| Other charges | |||||||||||||||||||||||
| Operating earnings | |||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense, net | ( | ( | |||||||||||||||||||||
| Other, net | |||||||||||||||||||||||
| Total other expense | ( | ( | |||||||||||||||||||||
| Net earnings before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
| Less: Earnings attributable to non-controlling interests | |||||||||||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | $ | |||||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
1
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
| Three Months Ended | |||||||||||||||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | |||||||||||||||||||||
| Net earnings | $ | $ | |||||||||||||||||||||
| Other comprehensive income (loss), net of tax (Note 4): | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
| Defined benefit plans | |||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Less: Earnings attributable to non-controlling interests | |||||||||||||||||||||||
| Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ | $ | |||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
2
Condensed Consolidated Balance Sheets (Unaudited)
| (In millions, except par value) | April 3, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Contract assets | |||||||||||
| Inventories, net | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease assets | |||||||||||
| Investments | |||||||||||
| Deferred income taxes | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Contract liabilities | |||||||||||
| Accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Authorized shares: | |||||||||||
Issued shares: 4/3/21— | |||||||||||
Outstanding shares: 4/3/21— | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Motorola Solutions, Inc. stockholders’ equity (deficit) | ( | ( | |||||||||
| Non-controlling interests | |||||||||||
| Total stockholders’ equity (deficit) | ( | ( | |||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
3
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)
| (In millions, except per share data) | Shares | Common Stock and Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests | ||||||||||||||||||||||||
| Balance as of December 31, 2020 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Issuance of common stock and stock options exercised | |||||||||||||||||||||||||||||
| Share repurchase program | ( | ( | |||||||||||||||||||||||||||
| Share-based compensation expenses | |||||||||||||||||||||||||||||
Dividends declared $ | ( | ||||||||||||||||||||||||||||
| Balance as of April 3, 2021 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| (In millions, except per share data) | Shares | Common Stock and Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests | ||||||||||||||||||||||||
| Balance as of December 31, 2019 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ||||||||||||||||||||||||||||
| Issuance of common stock and stock options exercised | |||||||||||||||||||||||||||||
| Share repurchase program | ( | ( | |||||||||||||||||||||||||||
| Share-based compensation expenses | |||||||||||||||||||||||||||||
Dividends declared $ | ( | ||||||||||||||||||||||||||||
| Balance as of March 28, 2020 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
4
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Three Months Ended | |||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | |||||||||
| Operating | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile Net earnings to Net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Non-cash other income | ( | ( | |||||||||
| Share-based compensation expenses | |||||||||||
| Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | |||||||||||
| Accounts receivable | |||||||||||
| Inventories | ( | ||||||||||
| Other current assets and contract assets | |||||||||||
| Accounts payable, accrued liabilities, and contract liabilities | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Deferred income taxes | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing | |||||||||||
| Acquisitions and investments, net | ( | ( | |||||||||
| Proceeds from sales of investments and businesses, net | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from sales of property, plant and equipment | |||||||||||
| Net cash used for investing activities | ( | ( | |||||||||
| Financing | |||||||||||
| Revolving credit facility renewal fees | ( | ||||||||||
| Repayment of debt | ( | ( | |||||||||
| Proceeds from unsecured revolving credit facility draw | |||||||||||
| Issuances of common stock | |||||||||||
| Purchases of common stock | ( | ( | |||||||||
| Payments of dividends | ( | ( | |||||||||
| Net cash provided by (used for) financing activities | ( | ||||||||||
| Effect of exchange rate changes on total cash and cash equivalents | ( | ||||||||||
| Net increase in total cash and cash equivalents | |||||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
| Supplemental Cash Flow Information | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest paid | $ | $ | |||||||||
| Income and withholding taxes, net of refunds | |||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
5
| INDEX FOR NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||
| Page No. | ||||||||
| Note 1 | ||||||||
| Note 2 | ||||||||
| Note 3 | ||||||||
| Note 4 | ||||||||
| Note 5 | ||||||||
| Note 6 | ||||||||
| Note 7 | ||||||||
| Note 8 | ||||||||
| Note 9 | ||||||||
| Note 10 | ||||||||
| Note 11 | ||||||||
| Note 12 | ||||||||
| Note 13 | ||||||||
| Note 14 | ||||||||
| Note 15 | ||||||||
6
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in millions, except as noted)
1.Basis of Presentation
The condensed consolidated financial statements as of April 3, 2021 and for the three months ended April 3, 2021 and March 28, 2020 include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholders' Equity (Deficit), and Statements of Cash Flows of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) for all periods presented.
The Company operates on a 52-week fiscal year, with each fiscal year ending on December 31. With respect to each fiscal quarter, the Company operates on a 13-week fiscal quarter, with all fiscal quarters ending on a Saturday.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2020 (the "Form 10-K"). The results of operations for the three months ended April 3, 2021 are not necessarily indicative of the operating results to be expected for the full year.
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Change in Presentation
As further described in the Form 10-K, during the fourth quarter of 2020, the Company updated its revenue disaggregation presentation of major products and services to provide a more comprehensive view of technologies within the Company's reporting segments. Accordingly, the Company now reports net sales in the following three major products and services (which the Company refers to as “technologies” in this Quarterly Report on Form 10-Q (this “Form 10-Q”)): Land Mobile Radio Mission Critical Communications (“LMR” or “LMR Mission Critical Communications”), Video Security and Analytics, and Command Center Software.
•LMR Mission Critical Communications: Infrastructure, devices (two-way radio and broadband, including both for public safety and Professional Commercial Radio ("PCR")) and software that enable communications, inclusive of installation and integration, backed by services, to assure availability, security and resiliency.
•Video Security and Analytics: Cameras (fixed, body-worn, in-vehicle), access control, infrastructure, video management, software and artificial intelligence-enabled analytics that enable visibility “on scene” and bring attention to what’s important.
•Command Center Software: Software suite that enables collaboration and seamless information sharing through the public safety workflow from 911 call to case closure.
Recent Acquisitions
On August 28, 2020, the Company acquired the Callyo business ("Callyo"), a cloud-based mobile applications provider for law enforcement in North America for $63 million, inclusive of share-based compensation withheld at a fair value of $3 million that will be expensed over an average service period of two years . The acquisition was settled with $61 million in cash, net of cash acquired. This acquisition adds to the Company's existing Command Center Software suite critical mobile technological capabilities that enable information to flow seamlessly from the field to the command center. The business is a part of the Software and Services segment.
On July 31, 2020, the Company acquired Pelco, Inc. ("Pelco"), a global provider of video security solutions for a purchase price of $110 million. The acquisition was settled with $107 million of cash, net of cash acquired. The acquisition demonstrates the Company's continued investment in Video Security and Analytics, adding a broad range of products that can be used in a variety of commercial and industrial environments and use cases. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.
On June 16, 2020, the Company acquired IndigoVision Group plc ("IndigoVision") for a purchase price of $37 million. The acquisition was settled with $35 million of cash, net of cash acquired and debt assumed. The acquisition complements the Company's Video Security and Analytics technology, providing enhanced geographical reach across a wider customer base. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.
On April 30, 2020, the Company acquired a cybersecurity services business for $32 million of cash, net of cash acquired. The acquisition expands the Company's ability to assist customers with cybersecurity needs through vulnerability assessments, cybersecurity consulting, and managed services including security monitoring of network operations. The business is a part of the Software and Services segment.
On March 3, 2020, the Company acquired a cybersecurity services business for $40 million, inclusive of share-based compensation withheld at a fair value of $6 million that will be expensed over a service period of two years . The acquisition was settled with $33 million of cash, net of cash acquired. The acquisition expands the Company's ability to assist customers with
7
cybersecurity needs through vulnerability assessments, cybersecurity consulting, managed services and remediation and response capabilities. The business is a part of the Software and Services segment.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity," which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments. The new guidance removes the separation models for convertible debt with a cash conversion feature or a beneficial conversion feature. In addition, the new standard provides guidance on calculating the dilutive impact of convertible debt on earnings per share. The ASU clarifies that the average market price should be used to calculate the diluted earnings per share denominator when the exercise price or the number of shares that may be issued is variable. The ASU is effective for the Company on January 1, 2022, including interim periods, with early adoption permitted. The ASU permits the use of either a full or modified retrospective method of adoption. The Company is still evaluating the impact of the adoption of this ASU on its financial statements and disclosures.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740),” which simplifies the accounting for income taxes by removing certain exceptions and streamlining other areas of accounting for income taxes. Portions of the amendment within the ASU require retrospective, modified retrospective or prospective adoption methods. The Company adopted ASU No. 2019-12 as of January 1, 2021 on a prospective basis and the adoption of this standard did not have a material impact on its financial statement disclosures.
8
2. Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes the disaggregation of the Company's revenue by segment, geography, major product and service type and customer type for the three months ended April 3, 2021 and March 28, 2020, consistent with the information reviewed by the Company's chief operating decision maker for evaluating the financial performance of the Company's reportable segments:
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||||||||||||||
| (In millions) | Products and Systems Integration | Software and Services | Total | Products and Systems Integration | Software and Services | Total | |||||||||||||||||||||||||||||
| Regions: | |||||||||||||||||||||||||||||||||||
| North America | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| International | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Major Products and Services: | |||||||||||||||||||||||||||||||||||
| LMR | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Video Security and Analytics | |||||||||||||||||||||||||||||||||||
| Command Center Software | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Customer Type: | |||||||||||||||||||||||||||||||||||
| Direct | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Indirect | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Remaining Performance Obligations
Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of a period. The transaction values associated with remaining performance obligations which were not yet satisfied as of April 3, 2021 was $7.2 billion. A total of $3.3 billion was from Products and Systems Integration performance obligations that are not yet satisfied, of which $1.6 billion is expected to be recognized in the next twelve months . The remaining amounts will generally be satisfied over time as systems are implemented. A total of $3.9 billion was from Software and Services performance obligations that were not yet satisfied as of April 3, 2021. The determination of Software and Services performance obligations that are not satisfied takes into account a contract term that may be limited by the customer’s ability to terminate for convenience. Where termination for convenience exists in the Company's service contracts, its disclosure of the remaining performance obligations that are unsatisfied assumes the contract term is limited until renewal. The Company expects to recognize $1.5 billion from unsatisfied Software and Services performance obligations over the next twelve months , with the remaining performance obligations to be recognized over time as services are performed and software is implemented.
Contract Balances
| (In millions) | April 3, 2021 | December 31, 2020 | |||||||||||||||||||||
| Accounts receivable, net | $ | $ | |||||||||||||||||||||
| Contract assets | |||||||||||||||||||||||
| Contract liabilities | |||||||||||||||||||||||
| Non-current contract liabilities | |||||||||||||||||||||||
Revenue recognized during the three months ended April 3, 2021 which was previously included in Contract liabilities as of December 31, 2020 was $396 million, compared to $382 million of revenue recognized during the three months ended March 28, 2020 which was previously included in Contract liabilities as of December 31, 2019. Revenue of $4 million was reversed during the three months ended April 3, 2021 related to performance obligations satisfied or partially satisfied, in previous periods, primarily driven by changes in the estimates of progress on system contracts, compared to $19 million of reversals for the three months ended March 28, 2020.
9
There were no
Contract Cost Balances
| (In millions) | April 3, 2021 | December 31, 2020 | |||||||||||||||||||||
| Current contract cost assets | $ | $ | |||||||||||||||||||||
| Non-current contract cost assets | |||||||||||||||||||||||
3. Leases
Components of Lease Expense
| Three months ended | |||||||||||||||||||||||
| (in millions) | April 3, 2021 | March 28, 2020 | |||||||||||||||||||||
| Lease expense: | |||||||||||||||||||||||
| Operating lease cost | $ | $ | |||||||||||||||||||||
| Finance lease cost | |||||||||||||||||||||||
| Amortization of right-of-use assets | |||||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Variable cost | |||||||||||||||||||||||
| Sublease income | ( | ( | |||||||||||||||||||||
| Net lease expense | $ | $ | |||||||||||||||||||||
Lease Assets and Liabilities
| (in millions) | Statement Line Classification | April 3, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Operating lease assets | Operating lease assets | $ | $ | |||||||||||||||||||||||
| Finance lease assets | ||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||||
| Operating lease liabilities | $ | $ | ||||||||||||||||||||||||
| Finance lease liabilities | ||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
| Non-current liabilities: | ||||||||||||||||||||||||||
| Operating lease liabilities | Operating lease liabilities | $ | $ | |||||||||||||||||||||||
| Finance lease liabilities | ||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||
Other Information Related to Leases
| Three Months Ended | |||||||||||||||||
| (in millions) | April 3, 2021 | March 28, 2020 | |||||||||||||||
| Supplemental cash flow information: | |||||||||||||||||
| Net cash used for operating activities related to operating leases | $ | $ | |||||||||||||||
| Net cash used for financing activities related to finance leases | |||||||||||||||||
| Assets obtained in exchange for lease liabilities: | |||||||||||||||||
| Operating leases | $ | $ | |||||||||||||||
10
| (in millions) | April 3, 2021 | December 31, 2020 | |||||||||
| Weighted average remaining lease terms (years): | |||||||||||
| Operating leases | |||||||||||
| Finance leases | |||||||||||
| Weighted average discount rate: | |||||||||||
| Operating leases | % | % | |||||||||
| Finance leases | % | % | |||||||||
Future Lease Payments
| April 3, 2021 | |||||||||||||||||
| (in millions) | Operating Leases | Finance Leases | Total | ||||||||||||||
| Remainder of 2021 | $ | $ | $ | ||||||||||||||
| 2022 | |||||||||||||||||
| 2023 | |||||||||||||||||
| 2024 | |||||||||||||||||
| 2025 | |||||||||||||||||
| Thereafter | |||||||||||||||||
| Total lease payments | |||||||||||||||||
| Less: interest | |||||||||||||||||
| Present value of lease liabilities | $ | $ | $ | ||||||||||||||
4. Other Financial Data
Statements of Operations Information
Other Charges
Other charges (income) included in Operating earnings consist of the following:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Other charges (income): | |||||||||||||||||||||||
| Intangibles amortization (Note 15) | $ | $ | |||||||||||||||||||||
| Reorganization of business (Note 14) | |||||||||||||||||||||||
| Operating lease asset impairments | |||||||||||||||||||||||
| Acquisition-related transaction fees | |||||||||||||||||||||||
| Losses on legal settlements | |||||||||||||||||||||||
| Gain on sale of property, plant and equipment | ( | ||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
During the three months ended April 3, 2021, the Company recognized $7 million of operating lease asset impairments relating to the consolidation of acquired U.S. manufacturing and distribution facilities. This loss has been recognized in Other charges in the Company's Condensed Consolidated Statements of Operations.
During the three months ended March 28, 2020, the Company recorded a $50 million gain on the sale of a manufacturing facility in Europe. This gain has been recognized in Other charges in the Company's Condensed Consolidated Statements of Operations.
11
Other Income (Expense)
Interest expense, net, and Other, net, both included in Other income (expense), consist of the following:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Interest income (expense), net: | |||||||||||||||||||||||
| Interest expense | $ | ( | $ | ( | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| $ | ( | $ | ( | ||||||||||||||||||||
| Other, net: | |||||||||||||||||||||||
| Net periodic pension and postretirement benefit (Note 8) | $ | $ | |||||||||||||||||||||
| Foreign currency gain | |||||||||||||||||||||||
| Loss on derivative instruments | ( | ( | |||||||||||||||||||||
| Gains on equity method investments | |||||||||||||||||||||||
| Fair value adjustments to equity investments | |||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
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Earnings Per Common Share
The computation of basic and diluted earnings per common share is as follows:
| Amounts attributable to Motorola Solutions, Inc. common stockholders | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Basic earnings per common share: | |||||||||||||||||||||||
| Earnings | $ | $ | |||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Per share amount | $ | $ | |||||||||||||||||||||
| Diluted earnings per common share: | |||||||||||||||||||||||
| Earnings | $ | $ | |||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Add effect of dilutive securities: | |||||||||||||||||||||||
| Share-based awards | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
| Per share amount | $ | $ | |||||||||||||||||||||
In the computation of diluted earnings per common share for the three months ended April 3, 2021, the assumed exercise of 0.3 million options, including 0.1 million subject to market based contingent option agreements, were excluded because their inclusion would have been antidilutive. For the three months ended March 28, 2020, 0.2 million options were excluded because their inclusion would have been antidilutive.
As of April 3, 2021, the Company had $1.0 billion of 1.75 % Senior Convertible Notes outstanding which mature on September 15, 2024 ("Senior Convertible Notes"). The notes are convertible based on a conversion rate of 4.9140 per $1,000 principal amount (which is equal to an initial conversion price of $203.50 per share). In the event of conversion, the Company intends to settle the principal amount of the Senior Convertible Notes in cash. Because of the Company’s intention to settle the par value of the Senior Convertible Notes in cash, Motorola Solutions does not reflect any shares underlying the Senior Convertible Notes in its diluted weighted average shares outstanding until the average stock price per share for the period exceeds the conversion price. Only the number of shares that would be issuable (under the treasury stock method of accounting for share dilution) will be included, which is based upon the amount by which the average stock price exceeds the conversion price of $203.50 . The conversion price is adjusted for dividends declared through the date of settlement. For the period ended April 3, 2021, there was no dilutive effect of the Senior Convertible Notes on diluted earnings per share attributable to Motorola Solutions, Inc. as the average stock price for the period outstanding was below the conversion price.
Balance Sheet Information
Accounts Receivable, Net
Accounts receivable, net, consists of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||
| Accounts receivable | $ | $ | |||||||||
| Less allowance for credit losses | ( | ( | |||||||||
| $ | $ | ||||||||||
Inventories, Net
Inventories, net, consist of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||
| Finished goods | $ | $ | |||||||||
| Work-in-process and production materials | |||||||||||
| Less inventory reserves | ( | ( | |||||||||
| $ | $ | ||||||||||
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Other Current Assets
Other current assets consist of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||
| Current contract cost assets (Note 2) | $ | $ | |||||||||
| Tax-related deposits | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
Property, Plant and Equipment, Net
Property, plant and equipment, net, consist of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||
| Land | $ | $ | |||||||||
| Leasehold improvements | |||||||||||
| Machinery and equipment | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| $ | $ | ||||||||||
Depreciation expense for the three months ended April 3, 2021 and March 28, 2020 was $52 million and $46 million, respectively.
Investments
Investments consist of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Common stock | $ | $ | |||||||||||||||||||||
| Strategic investments, at cost | |||||||||||||||||||||||
| Company-owned life insurance policies | |||||||||||||||||||||||
| Equity method investments | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
Other Assets
Other assets consist of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||
| Defined benefit plan assets | $ | $ | |||||||||
| Non-current contract cost assets (Note 2) | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
Accrued Liabilities
Accrued liabilities consist of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||
| Compensation | $ | $ | |||||||||
| Tax liabilities | |||||||||||
| Dividend payable | |||||||||||
| Trade liabilities | |||||||||||
| Operating lease liabilities (Note 3) | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
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Other Liabilities
Other liabilities consist of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||
| Defined benefit plans | $ | $ | |||||||||
| Non-current contract liabilities (Note 2) | |||||||||||
| Deferred income taxes | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
Stockholders’ Equity (Deficit)
Share Repurchase Program: During the three months ended April 3, 2021, the Company paid an aggregate of $170 million, including transaction costs, to repurchase approximately 1.0 million shares at an average price of $175.53 per share. As of April 3, 2021, the Company had $479 million of authority available for future repurchases. Subsequent to quarter end, the Board of Directors approved a $2.0 billion increase to the share repurchase program, raising the remaining authority for future repurchases to $2.5 billion.
Payment of Dividends: During the three months ended April 3, 2021 and March 28, 2020, the Company paid $121 million and $109 million, respectively, in cash dividends to holders of its common stock. Subsequent to the quarter, the Company paid an additional $121 million in cash dividends to holders of its common stock.
Accumulated Other Comprehensive Loss
The following table displays the changes in Accumulated other comprehensive loss, including amounts reclassified into income, and the affected line items in the Condensed Consolidated Statements of Operations during the three months ended April 3, 2021 and March 28, 2020:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Foreign Currency Translation Adjustments: | |||||||||||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | |||||||||||||||||||
| Other comprehensive income (loss) before reclassification adjustment | ( | ||||||||||||||||||||||
| Tax benefit (expense) | ( | ||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | |||||||||||||||||||
| Defined Benefit Plans: | |||||||||||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | |||||||||||||||||||
| Reclassification adjustment - Actuarial net losses into Other income (Note 8) | |||||||||||||||||||||||
| Reclassification adjustment - Prior service benefits into Other expense (Note 8) | ( | ( | |||||||||||||||||||||
| Tax benefit | ( | ( | |||||||||||||||||||||
| Other comprehensive income, net of tax | |||||||||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | |||||||||||||||||||
| Total Accumulated other comprehensive loss | $ | ( | $ | ( | |||||||||||||||||||
15
5. Debt and Credit Facilities
On March 24, 2021, the Company entered into a $2.25 billion syndicated, unsecured revolving credit facility maturing in March 2026, which can be used for general corporate purposes and letters of credit (the "2021 Motorola Solutions Credit Agreement"). The 2021 Motorola Solutions Credit Agreement replaces the Company’s $2.2 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2022. The 2021 Motorola Solutions Credit Agreement includes a letter of credit sub-limit and fronting commitments of $450 million. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate ("LIBOR"), at the Company's option. The 2021 Motorola Solutions Credit Agreement includes provisions allowing the Company to replace LIBOR with a replacement benchmark rate in the future under certain conditions defined in the agreement. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if the Company's credit rating changes. The Company must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2021 Motorola Solutions Credit Agreement. The Company was in compliance with its financial covenants as of April 3, 2021.
The Company has an unsecured commercial paper program, backed by the 2021 Motorola Solutions Credit Agreement, under which the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $2.2 billion outstanding at any one time. Proceeds from the issuances of the notes are expected to be used for general corporate purposes. The notes are issued at a zero-coupon rate and are issued at a discount which reflects the interest component. At maturity, the notes are paid back in full including the interest component. The notes are not redeemable prior to maturity. As of April 3, 2021 the Company had no outstanding debt under the commercial paper program.
6. Risk Management
Foreign Currency Risk
The Company had outstanding foreign exchange contracts with notional amounts totaling $1.2
The following table shows the five
| Notional Amount | |||||||||||
| Net Buy (Sell) by Currency | April 3, 2021 | December 31, 2020 | |||||||||
| Euro | $ | $ | |||||||||
| Canadian dollar | |||||||||||
| Norwegian krone | |||||||||||
| Chinese renminbi | ( | ( | |||||||||
| Australian dollar | ( | ( | |||||||||
Counterparty Risk
The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of non-performance by counterparties. However, the Company’s risk is limited to the fair value of the instruments when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. As of April 3, 2021, all of the counterparties had investment grade credit ratings. As of April 3, 2021, the Company had $7 million of exposure to aggregate credit risk with all counterparties.
The following tables summarize the fair values and locations in the Condensed Consolidated Balance Sheets of all derivative financial instruments held by the Company as of April 3, 2021 and December 31, 2020:
| Fair Values of Derivative Instruments | |||||||||||
| April 3, 2021 | Other Current Assets | Accrued Liabilities | |||||||||
| Derivatives designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | $ | $ | |||||||||
| Derivatives not designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | |||||||||||
| Total derivatives | $ | $ | |||||||||
16
| Fair Values of Derivative Instruments | |||||||||||
| December 31, 2020 | Other Current Assets | Accrued Liabilities | |||||||||
| Derivatives designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | $ | $ | |||||||||
| Derivatives not designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | |||||||||||
| Total derivatives | $ | $ | |||||||||
The following table summarizes the effect of derivatives on the Company's condensed consolidated financial statements for the three months ended April 3, 2021 and March 28, 2020:
| Financial Statement Location | Three Months Ended | |||||||||||||||||||||||||
| Foreign Exchange Contracts | April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||||
| Effective portion | Accumulated other comprehensive income | $ | $ | |||||||||||||||||||||||
| Forward points recognized | Other income (expense) | |||||||||||||||||||||||||
| Undesignated derivatives recognized | Other income (expense) | ( | ( | |||||||||||||||||||||||
Net Investment Hedges
The Company uses foreign exchange forward contracts with contract terms of 12 to 15 months to hedge against the effect of the British pound and the Euro exchange rate fluctuations against the U.S. dollar on a portion of its net investments in certain European operations. The Company recognizes changes in the fair value of the net investment hedges as a component of foreign currency translation adjustments within other comprehensive income to offset a portion of the change in translated value of the net investments being hedged, until the investments are sold or liquidated. As of April 3, 2021, the Company had €100 million of net investment hedges in certain Euro functional subsidiaries and £125 million of net investment hedges in certain British pound functional subsidiaries.
7. Income Taxes
At the end of each interim reporting period, the Company makes an estimate of its annual effective income tax rate. Tax expense in interim periods is calculated at the estimated annual effective tax rate plus or minus the tax effects of items of income and expense that are discrete to the period. The estimate used in providing for income taxes on a year-to-date basis may change in subsequent interim periods.
The following table provides details of income taxes:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Net earnings before income taxes | $ | $ | |||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Effective tax rate | % | % | |||||||||||||||||||||
During the three months ended April 3, 2021, the Company recorded $44 million of net tax expense, resulting in an effective tax rate of 15 %. During the three months ended March 28, 2020, the Company recorded $26 million of net tax expense, resulting in an effective tax rate of 12 %. The effective tax rates for each of the three months ended April 3, 2021 and March 28, 2020 was different from the U.S. federal statutory tax rate of 21% due to state tax expense, offset primarily by tax benefits related to share-based compensation. The effective tax rate for the three months ended April 3, 2021 of 15 % is higher than the effective tax rate for the three months ended March 28, 2020 of 12 %, primarily due to lower tax benefits on share-based compensation.
17
8. Retirement and Other Employee Benefits
Pension and Postretirement Health Care Benefits Plans
The net periodic benefits for Pension and Postretirement Health Care Benefits Plans were as follows:
| U.S. Pension Benefit Plans | Non-U.S. Pension Benefit Plans | Postretirement Health Care Benefits Plan | |||||||||||||||||||||||||||||||||
| Three Months Ended | April 3, 2021 | March 28, 2020 | April 3, 2021 | March 28, 2020 | April 3, 2021 | March 28, 2020 | |||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||||||||||||||
| Unrecognized net loss | |||||||||||||||||||||||||||||||||||
| Unrecognized prior service benefit | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Net periodic pension benefits | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
9. Share-Based Compensation Plans
Compensation expense for the Company’s share-based plans was as follows:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Share-based compensation expense included in: | |||||||||||||||||||||||
| Costs of sales | $ | $ | |||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Research and development expenditures | |||||||||||||||||||||||
| Share-based compensation expense included in Operating earnings | |||||||||||||||||||||||
| Tax benefit | ( | ( | |||||||||||||||||||||
| Share-based compensation expense, net of tax | $ | $ | |||||||||||||||||||||
| Decrease in basic earnings per share | $ | ( | $ | ( | |||||||||||||||||||
| Decrease in diluted earnings per share | $ | ( | $ | ( | |||||||||||||||||||
During the three months ended April 3, 2021, the Company granted 0.3 million restricted stock units (RSUs), 0.07 million performance stock units (PSUs) and 0.05 million market stock units (MSUs) with an aggregate grant-date fair value of $50 million, $15 million, and $10 million, respectively, and 0.1 million stock options and 0.2 million performance options (POs) with an aggregate grant-date fair value of $6 million and $10 million, respectively. The share-based compensation expense will generally be recognized over the vesting period of three years .
18
10. Fair Value Measurements
The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of April 3, 2021 and December 31, 2020 were as follows:
| April 3, 2021 | Level 1 | Level 2 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
| Common stock | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
| December 31, 2020 | Level 1 | Level 2 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
| Common stock | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
The Company had no Level 3 holdings as of April 3, 2021 or December 31, 2020.
At April 3, 2021 and December 31, 2020, the Company had $463 million and $448 million, respectively, of investments in money market government and U.S. treasury funds classified (Level 1) as Cash and cash equivalents in its Condensed Consolidated Balance Sheets. The money market funds had quoted market prices that are equivalent to par.
Using quoted market prices and market interest rates, the Company determined that the fair value of long-term debt at April 3, 2021 and December 31, 2020 was $5.6 billion and $5.8 billion (Level 2), respectively.
All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values.
11. Sales of Receivables
Sales of Receivables
The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three months ended April 3, 2021 and March 28, 2020:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Contract-specific discounting facility | $ | $ | |||||||||||||||||||||
| Accounts receivable sales proceeds | |||||||||||||||||||||||
| Long-term receivables sales proceeds | |||||||||||||||||||||||
| Total proceeds from receivable sales | $ | $ | |||||||||||||||||||||
At April 3, 2021, the Company had retained servicing obligations for $927 million of long-term receivables, compared to $983 million at December 31, 2020. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables. The Company had outstanding commitments to provide long-term financing to third parties totaling $82 million at April 3, 2021, compared to $78 million at December 31, 2020.
During the three months ended April 3, 2021, the Company utilized a contract-specific receivable discounting facility which began during the three months ended March 28, 2020, resulting in accounts receivable sales of $71 million. The net benefit to the Company's operating cash flow from the utilization of the receivable discounting facility for the three months ended April 3, 2021 was $71 million, when adjusted for amounts that were collected under the commercial contract with the customer within the period in the absence of utilizing the discounting facility. The proceeds of the Company's receivable sales are included in Operating activities within the Company's Condensed Consolidated Statements of Cash Flows.
19
12. Commitments and Contingencies
Legal Matters
On March 14, 2017, the Company filed a complaint in the U.S. District Court for the Northern District of Illinois (the “Court”) against Hytera Communications Corporation Limited of Shenzhen, China; Hytera America, Inc.; and Hytera Communications America (West), Inc. (collectively, “Hytera”), alleging trade secret theft and copyright infringement and seeking, among other things, injunctive relief, compensatory damages, and punitive damages. On February 14, 2020, the Company announced that a jury decided in the Company's favor in its trade secret theft and copyright infringement case. In connection with this verdict, the jury awarded the Company $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total of $764.6 million. The Court denied Hytera’s motion for a new trial on October 20, 2020. On December 17, 2020, the Court denied the Company’s motion for a permanent injunction, finding instead that Hytera must pay the Company a forward-looking reasonable royalty on products that use the Company’s stolen trade secrets. The royalty rate is yet to be determined, and will be set by the Court absent agreement of the parties.
On January 11, 2021, the Court granted Hytera’s motion for certain equitable relief and reduced the $764.6 million judgment award to $543.7 million. That same day, the Court also granted the Company’s motion for pre-judgment interest, although the precise amount of interest owed to the Company by Hytera is still to be determined by the Court. On March 25, 2021, the Court entered rulings favorable to the Company with respect to several of the Company's post-trial motions, including the Company's motion for attorneys' fees and its motion to require Hytera to turn over certain assets in satisfaction of the Company’s judgment award.
13. Segment Information
The following table summarizes Net sales by segment:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Products and Systems Integration | $ | $ | |||||||||||||||||||||
| Software and Services | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
The following table summarizes the Operating earnings by segment:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Products and Systems Integration | $ | $ | |||||||||||||||||||||
| Software and Services | |||||||||||||||||||||||
| Operating earnings | |||||||||||||||||||||||
| Total other expense | ( | ( | |||||||||||||||||||||
| Earnings before income taxes | $ | $ | |||||||||||||||||||||
20
14. Reorganization of Business
2021 Charges
During the three months ended April 3, 2021, the Company recorded net reorganization of business charges of $16 million including $14 million of charges in Other charges and $2 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $16 million were charges of $18 million related to employee separation, partially offset by $2 million of reversals for accruals no longer needed.
The following table displays the net charges incurred by segment:
| Three Months Ended | |||||||||||
| April 3, 2021 | |||||||||||
| Products and Systems Integration | $ | ||||||||||
| Software and Services | |||||||||||
| $ | |||||||||||
Reorganization of Businesses Accruals
| January 1, 2021 | Additional Charges | Adjustments | Amount Used | April 3, 2021 | ||||||||||||||||||||||
| $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
Employee Separation Costs
At January 1, 2021, the Company had an accrual of $79 million for employee separation costs. The 2021 additional charges of $18 million represent severance costs for approximately 200 employees. The adjustment of $2 million reflects reversals for accruals no longer needed. The $37 million used reflects cash payments to severed employees. The remaining accrual of $58 million, which is included in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets at April 3, 2021, is expected to be paid, primarily within one year, to approximately 1,000 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.
2020 Charges
During the three months ended March 28, 2020, the Company recorded net reorganization of business charges of $18 million including $12 million of charges in Other charges and $6 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $18 million were charges of $22 million related to employee separation, partially offset by $4 million of reversals for accruals no longer needed.
The following table displays the net charges incurred by segment:
| Three Months Ended | |||||||||||
| March 28, 2020 | |||||||||||
| Products and Systems Integration | $ | ||||||||||
| Software and Services | |||||||||||
| $ | |||||||||||
15. Intangible Assets and Goodwill
On August 28, 2020, the Company acquired Callyo, a cloud-based mobile applications provider for law enforcement in North America for $63 million, inclusive of share-based compensation withheld at a fair value of $3 million that will be expensed over an average service period of two years . The acquisition was settled with $61 million in cash, net of cash acquired. This acquisition adds to Motorola Solutions’ existing Command Center Software suite critical mobile technology capabilities that enable information to flow seamlessly from the field to the command center. The Company recognized $38 million of goodwill, $31 million of identifiable intangible assets, and $8 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $27 million of customer relationships and $4 million of developed technology that will be amortized over a period of and seven years , respectively. The business is part of the Software and Services segment. The purchase accounting was completed as of the first quarter of 2021.
On July 31, 2020, the Company acquired Pelco, a global provider of video security solutions for a purchase price of $110 million. The acquisition was settled with $107 million of cash, net of cash acquired. The acquisition demonstrates Motorola Solutions’ continued investment in Video Security and Analytics, adding a broad range of products that can be used in a variety of commercial and industrial environments and use cases. The Company recognized $41 million of goodwill, $30 million of identifiable intangible assets, and $36 million of net assets. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $23 million of customer relationships, $4 million of developed technology, and $3 million of trade names that will be amortized over a period of , , and five years , respectively. The business is a part of both the
21
Products and Systems Integration segment and the Software and Services segment. The purchase accounting is not yet complete and as such the final allocation between income tax accounts and goodwill may be subject to change.
On June 16, 2020, the Company acquired IndigoVision for a purchase price of $37 million. The acquisition was settled with $35 million of cash, net of cash acquired and debt assumed. The acquisition complements the Company's Video Security and Analytics technology, providing enhanced geographical reach across a wider customer base. The Company recognized $14 million of goodwill, $22 million of identifiable intangible assets, and $1 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible asset was classified as $22 million of customer relationships that will be amortized over a period of eleven years . The business is a part of both the Products and Systems Integration and Software and Services segments. The purchase accounting is not yet complete and as such the final allocation between income tax accounts and goodwill may be subject to change.
On April 30, 2020, the Company acquired a cybersecurity services business for a purchase price of $32 million of cash, net of cash acquired. The Company recognized $23 million of goodwill, $10 million of identifiable intangible assets and $1 million of net liabilities. The goodwill is deductible for tax purposes. The identifiable intangible assets were classified as $8 million of customer relationships and $2 million of developed technology that will be amortized over a period of twelve years and three years , respectively. The acquisition expands the Company’s ability to assist customers with cybersecurity needs through vulnerability assessments, cybersecurity consulting, and managed services including security monitoring of network operations. The business is a part of the Software and Services segment. The purchase accounting was completed as of the first quarter of 2021.
On March 3, 2020, the Company acquired a cybersecurity services business for $40 million, inclusive of share-based compensation withheld at a fair value of $6 million that will be expensed over a service period of two years . The acquisition was settled with $33 million of cash, net of cash acquired. The Company recognized $28 million of goodwill, $7 million of intangible assets and $2 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible asset was classified as a customer relationship that will be amortized over a period of thirteen years . The acquisition expands the Company’s ability to assist customers with cybersecurity needs through vulnerability assessments, cybersecurity consulting, managed services and remediation and response capabilities. The business is a part of the Software and Services segment. The purchase accounting was completed as of the first quarter of 2021.
Intangible Assets
Amortized intangible assets were comprised of the following:
| April 3, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
| Completed technology | $ | $ | $ | $ | |||||||||||||||||||
| Patents | |||||||||||||||||||||||
| Customer-related | |||||||||||||||||||||||
| Other intangibles | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Amortization expense on intangible assets was $58 million for the three months ended April 3, 2021. Amortization expense on intangible assets was $53 million for the three months ended March 28, 2020. As of April 3, 2021, annual amortization expense is estimated to be $209 million in 2021, $206 million 2022, $108 million in 2023, $83 million in 2024, $73 million in 2025, and $69 million in 2026.
Amortized intangible assets were comprised of the following by segment:
| April 3, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
| Products and Systems Integration | $ | $ | $ | $ | |||||||||||||||||||
| Software and Services | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
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Goodwill
The following table displays a rollforward of the carrying amount of goodwill by segment from January 1, 2021 to April 3, 2021:
| Products and Systems Integration | Software and Services | Total | |||||||||||||||
| Balance as of January 1, 2021 | $ | $ | $ | ||||||||||||||
| Purchase accounting adjustments | ( | ( | ( | ||||||||||||||
| Foreign currency | |||||||||||||||||
| Balance as of April 3, 2021 | $ | $ | $ | ||||||||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This commentary should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Motorola Solutions, Inc. (“Motorola Solutions” the “Company,” “we,” “our,” or “us”) for the three months ended April 3, 2021 and March 28, 2020, as well as our consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2020 (the "Form 10-K").
Forward-Looking Statements
Statements in this Form 10-Q which are not historical in nature are forward-looking statements within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “aims,” “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this Form 10-Q. Some of these risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A “Risk Factors” of the Form 10-K and those described elsewhere in our other SEC filings. Forward-looking statements include, but are not limited to, statements included in: (1) “Management's Discussion and Analysis of Financial Condition and Results of Operations,” about: (a) the continuing and future impact of COVID-19 on our business; (b) the impact of the American Rescue Plan Act of 2021 on our business; (c) the impact of global economic and political conditions on our business; (d) the impact of acquisitions on our business; (e) market growth/contraction, demand, spending and resulting opportunities; (f) our continued ability to reduce our operating expenses; (g) the growth of sales opportunities in our Products and Systems Integration and Software and Services segments; (h) the success of our business strategy and portfolio; (i) future payments, charges, use of accruals and expected cost-saving benefits associated with our reorganization of business programs and employee separation costs; (j) our ability and cost to repatriate funds; (k) the liquidity of our investments; (l) our ability to settle the principal amount of the Senior Convertible Notes (as defined below) in cash; (m) our ability and cost to access the capital markets at our current ratings; (n) our ability to borrow and the amount available under our credit facilities; (o) the return of capital to shareholders through dividends and/or repurchasing shares; and (p) the adequacy of internal resources to fund expected working capital and capital expenditure requirements; (2) the impact of recent accounting pronouncements issued by the Financial Accounting Standards Board on our financial statements; (3) “Quantitative and Qualitative Disclosures about Market Risk,” about the impact of interest rate risks and foreign currency exchange risks; and (4) “Legal Proceedings,” about the outcome and effect of pending legal matters. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except as legally required.
Executive Overview
Business Overview
During the fourth quarter of 2020, the Company updated its revenue disaggregation presentation of major products and services to provide a more comprehensive view of technologies within our reporting segments. Accordingly, the Company now reports net sales in the following three major products and services (which we refer to as “technologies” in this Quarterly Report on Form 10-Q): Land Mobile Radio Mission Critical Communication (“LMR” or “LMR Mission Critical Communications”), Video Security and Analytics and Command Center Software.
•LMR Mission Critical Communications: Infrastructure, devices (two-way radio and broadband, including both for public safety and Professional Commercial Radio ("PCR")) and software that enable communications, inclusive of installation and integration, backed by services, to assure availability, security and resiliency.
•Video Security and Analytics: Cameras (fixed, body-worn, in-vehicle), access control, infrastructure, video management, software and artificial intelligence-enabled analytics that enable visibility “on scene” and bring attention to what’s important.
•Command Center Software: Software suite that enables collaboration and seamless information sharing through the public safety workflow from 911 call to case closure.
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First Quarter Financial Results
•Net sales were $1.8 billion in the first quarter of 2021 compared to $1.7 billion in the first quarter of 2020.
•Operating earnings were $298 million in the first quarter of 2021 compared to $259 million in the first quarter of 2020.
•Net earnings attributable to Motorola Solutions, Inc. were $244 million, or $1.41 per diluted common share, in the first quarter of 2021, compared to $197 million, or $1.12 per diluted common share, in the first quarter of 2020.
•Operating cash flow increased $62 million to $370 million in the first quarter of 2021 compared to $308 million in the first quarter of 2020.
•We repurchased $170 million of common stock and paid $121 million in dividends in the first quarter of 2021.
COVID-19
In response to the COVID-19 pandemic, there have been a broad number of governmental and commercial actions taken to limit the spread of the virus, including social distancing measures, stay-at-home orders, travel restrictions, business shutdowns and slowdowns. We continue to adhere to applicable governmental and commercial restrictions and to assess the impact on our employees, customers, communities, liquidity and financial position.
We continue to abide by a number of measures in an effort to protect the health and well-being of our employees and customers, including having office workers work remotely, reducing employee travel, withdrawing from certain industry events, increasing the frequency of cleaning services, encouraging face coverings, and using thermal scanning. We have continued to ensure customer continuity by fulfilling several emergency orders, completing remote software maintenance where possible, and continuing to service our mission-critical networks on-site as needed to ensure seamless operations. Our sales teams have also continued to improve virtual engagement with our customers. Additionally, our engineering teams have adapted our solutions offerings to equip our customers with the latest technology in an effort to protect their workplaces from the spread of COVID-19. Specifically, in Video Security and Analytics, we have adapted our software and hardware offerings to provide analytics addressing occupancy counting, face mask detection, and thermal detection capabilities.
We believe our existing balances of cash and cash equivalents, along with other short-term liquidity arrangements, will continue to be sufficient to satisfy our liquidity requirements associated with our existing operations. We were in compliance with all applicable covenants in the 2021 unsecured revolving credit facility as of April 3, 2021. Additionally, we have no bond maturities until 2023. We continue to assess our operating expenses and identify cost reducing initiatives, including lower travel costs, contractor spend and reducing our real estate footprint. In addition, our supply chain partners have been supportive and continue to work to fulfill the necessary service levels to the Company and its customers.
Although the COVID-19 pandemic continued to influence our activities in the first quarter of 2021, as described above, the negative impacts on our business from COVID-19 have begun to ease. Specifically, in our Software and Services segment, with the largely recurring nature of the business and our strong backlog position, we continue to expect that the impacts on net sales and operating margin will be limited in 2021. Within the Products and Systems Integration segment, we are encouraged by strong LMR backlog, and the resiliency of the Video Security and Analytics technology that experienced growth in the first quarter of 2021 and which we expect to continue to grow for the remainder of 2021. In addition, in March 2021, the President of the United States signed into law the American Rescue Plan Act of 2021 (the "ARPA"), which is intended to provide economic stimulus, specifically additional funding to state and local governments, education and healthcare, as well as other funding relief provisions, in order to address the impact of the COVID-19 pandemic. We continue to evaluate the potential impact of the ARPA on our business and results of operations.
Lastly, we evaluated whether there were any impairment indicators as of April 3, 2021, which included a review of our receivables and contract assets, inventory, right-of-use lease assets, long-lived assets, investments, goodwill and intangible assets. As of the end of the first quarter of 2021, we concluded our assets were fairly stated and recoverable.
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Recent Acquisitions
| Technology | Segment | Acquisition | Description | Purchase Price | Date of Acquisition | ||||||||||||
| Command Center Software | Software and Services | Callyo | Provider of cloud-based mobile applications for law enforcement in North America, including critical mobile technological capabilities that enable information to flow seamlessly from the field to the command center. | $63 million, inclusive of share-based compensation of $3 million | August 28, 2020 | ||||||||||||
| Video Security and Analytics | Products and Systems Integration Software and Services | Pelco, Inc. | Global provider of video security solutions, adding a broad range of products for a variety of commercial and industrial environments and use cases. | $110 million | July 31, 2020 | ||||||||||||
| Video Security and Analytics | Products and Systems Integration Software and Services | IndigoVision Group plc | Provider of video security solutions to enhance geographical reach across a wider customer base. | $37 million | June 16, 2020 | ||||||||||||
| LMR | Software and Services | Unnamed cybersecurity services business | Provider of vulnerability assessments, cybersecurity consulting, and managed services, including security monitoring of network operations. | $32 million | April 30, 2020 | ||||||||||||
| LMR | Software and Services | Unnamed cybersecurity services business | Provider of vulnerability assessments, cybersecurity consulting, managed services, and remediation and response capabilities. | $40 million, inclusive of share-based compensation of $6 million | March 3, 2020 | ||||||||||||
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Results of Operations
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | April 3, 2021 | % of Sales* | March 28, 2020 | % of Sales* | |||||||||||||||||||||||||||||||||||||||||||
| Net sales from products | $ | 926 | $ | 884 | |||||||||||||||||||||||||||||||||||||||||||
| Net sales from services | 847 | 771 | |||||||||||||||||||||||||||||||||||||||||||||
| Net sales | 1,773 | 1,655 | |||||||||||||||||||||||||||||||||||||||||||||
| Costs of products sales | 438 | 47.3 | % | 397 | 44.9 | % | |||||||||||||||||||||||||||||||||||||||||
| Costs of services sales | 475 | 56.1 | % | 471 | 61.1 | % | |||||||||||||||||||||||||||||||||||||||||
| Costs of sales | 913 | 868 | |||||||||||||||||||||||||||||||||||||||||||||
| Gross margin | 860 | 48.5 | % | 787 | 47.6 | % | |||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 303 | 17.1 | % | 341 | 20.6 | % | |||||||||||||||||||||||||||||||||||||||||
| Research and development expenditures | 180 | 10.2 | % | 168 | 10.2 | % | |||||||||||||||||||||||||||||||||||||||||
| Other charges | 79 | 4.5 | % | 19 | 1.1 | % | |||||||||||||||||||||||||||||||||||||||||
| Operating earnings | 298 | 16.8 | % | 259 | 15.6 | % | |||||||||||||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | (54) | (3.0) | % | (52) | (3.1) | % | |||||||||||||||||||||||||||||||||||||||||
| Other, net | 45 | 2.5 | % | 17 | 1.0 | % | |||||||||||||||||||||||||||||||||||||||||
| Total other expense | (9) | (0.5) | % | (35) | (2.1) | % | |||||||||||||||||||||||||||||||||||||||||
| Net earnings before income taxes | 289 | 16.3 | % | 224 | 13.5 | % | |||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 44 | 2.5 | % | 26 | 1.6 | % | |||||||||||||||||||||||||||||||||||||||||
| Net earnings | 245 | 13.8 | % | 198 | 12.0 | % | |||||||||||||||||||||||||||||||||||||||||
| Less: Earnings attributable to non-controlling interests | 1 | 0.1 | % | 1 | 0.1 | % | |||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | 244 | 13.8 | % | $ | 197 | 11.9 | % | |||||||||||||||||||||||||||||||||||||||
| Earnings per diluted common share | $ | 1.41 | $ | 1.12 | |||||||||||||||||||||||||||||||||||||||||||
* Percentages may not add due to rounding
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Results of Operations—Three months ended April 3, 2021 compared to three months ended March 28, 2020
The results of operations for the first quarter of 2021 are not necessarily indicative of the operating results to be expected for the full year. Historically, we have experienced higher revenues in the fourth quarter as compared to the rest of the quarters of our fiscal year as a result of the purchasing patterns of our customers.
We use the following U.S. GAAP key financial performance measures to manage our business on a consolidated basis and by reporting segment, and to monitor and assess our results of operations:
•Net sales—a measure of our revenue for the current period.
•Operating earnings—a measure of our earnings from operations, before non-operating expenses and income taxes.
•Operating margins—a measure of our operating earnings as a percentage of total net sales.
Considered together, we believe these measures are strong indicators of our overall performance and our ability to create shareholder value. A discussion of our results of operations and financial condition follows.
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||||||||||||||
| (In millions) | Products and Systems Integration | Software and Services | Total | Products and Systems Integration | Software and Services | Total | |||||||||||||||||||||||||||||
| Net sales by region | |||||||||||||||||||||||||||||||||||
| North America | $ | 742 | $ | 443 | $ | 1,185 | $ | 748 | $ | 368 | $ | 1,116 | |||||||||||||||||||||||
| International | 273 | 315 | 588 | 245 | 294 | 539 | |||||||||||||||||||||||||||||
| $ | 1,015 | $ | 758 | $ | 1,773 | $ | 993 | $ | 662 | $ | 1,655 | ||||||||||||||||||||||||
| Net sales by technology | |||||||||||||||||||||||||||||||||||
| LMR | $ | 850 | $ | 551 | $ | 1,401 | $ | 860 | $ | 490 | $ | 1,350 | |||||||||||||||||||||||
| Video Security and Analytics | 165 | 88 | 253 | 133 | 67 | 200 | |||||||||||||||||||||||||||||
| Command Center Software | — | 119 | 119 | — | 105 | 105 | |||||||||||||||||||||||||||||
| Total | $ | 1,015 | $ | 758 | $ | 1,773 | $ | 993 | $ | 662 | $ | 1,655 | |||||||||||||||||||||||
| Operating earnings | $ | 77 | $ | 221 | $ | 298 | $ | 92 | $ | 167 | $ | 259 | |||||||||||||||||||||||
| Operating margins | 7.6 | % | 29.2 | % | 16.8 | % | 9.3 | % | 25.2 | % | 15.6 | % | |||||||||||||||||||||||
Net Sales
The Products and Systems Integration segment’s net sales represented 57% of our net sales in the first quarter of 2021 and 60% in the first quarter of 2020. The Software and Services segment’s net sales represented 43% of our net sales in the first quarter of 2021 and 40% in the first quarter of 2020.
Net sales increased $118 million, or 7%, in the first quarter of 2021 compared to the first quarter of 2020. The $22 million, or 2%, increase in net sales within the Products and Systems Integration segment was driven by an 11% increase in the International region partially offset by a 1% decrease in the North America region. The $96 million, or 15%, increase in net sales within the Software and Services segment was driven by a 21% increase in the North America region and a 7% increase in the International region. Net sales includes:
•an increase in the Products and Systems Integration segment, inclusive of $35 million of revenue from acquisitions, driven by an increase in Video Security and Analytics and PCR, partially offset by a decrease in public safety LMR;
•an increase in the Software and Services segment, inclusive of $13 million of revenue from acquisitions, driven by an increase in LMR services, Video Security and Analytics, and Command Center Software; and
•$32 million from favorable currency rates.
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Regional results include:
•a 6% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in LMR services, Video Security and Analytics, PCR and Command Center Software, partially offset by a decline in public safety LMR products, which were impacted by supply constraints; and
•a 9% increase in the International region, inclusive of revenue from acquisitions, primarily driven by an increase in Video Security and Analytics and public safety LMR.
Products and Systems Integration
The 2% increase in the Products and Systems Integration segment was driven by the following:
•$32 million, or 24% growth in Video Security and Analytics, inclusive of revenue from acquisitions, driven by both the International and North America regions;
•$10 million, or 1% decrease in LMR, primarily impacted by supply constraints in North America public safety LMR, partially offset by an increase in PCR sales; and
•$15 million from favorable currency rates.
Software and Services
The 15% increase in the Software and Services segment was driven by the following:
•$61 million, or 12% growth in LMR services, inclusive of revenue from acquisitions, driven by both the North America and International regions;
•$21 million, or 31% growth in Video Security and Analytics, inclusive of revenue from acquisitions, driven by both the International and North America regions;
•$14 million, or 13% growth in Command Center Software, inclusive of revenue from acquisitions, driven by both the North America and International regions; and
•$17 million from favorable currency rates.
Gross Margin
| Three Months Ended | |||||||||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | % Change | ||||||||||||||
| Gross margin | $ | 860 | $ | 787 | 9 | % | |||||||||||
Gross margin was 48.5% of net sales in the first quarter of 2021 compared to 47.6% in the first quarter of 2020. The primary drivers of this increase were:
•higher gross margin within the Software and Services segment, inclusive of acquisitions, primarily driven by higher gross margin contribution from sales growth and improved mix of service offerings; and
•higher gross margin in the Products and Systems Integration segment, inclusive of acquisitions, as a result of LMR project mix within North America.
Selling, General and Administrative Expenses
| Three Months Ended | |||||||||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | % Change | ||||||||||||||
| Selling, general and administrative expenses | $ | 303 | $ | 341 | (11) | % | |||||||||||
SG&A expenses decreased 11% in the first quarter of 2021 compared to the first quarter of 2020. SG&A expenses were 17.1% of net sales in the first quarter of 2021 compared to 20.6% of net sales in the first quarter of 2020. The decrease in SG&A expenses was primarily due to reduced legal expenses, indirect expenses, travel expenses and share-based compensation expenses. The overall reduction in SG&A expenses was partially offset by higher expenses associated with acquired businesses and employee incentive costs.
Research and Development Expenditures
| Three Months Ended | |||||||||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | % Change | ||||||||||||||
| Research and development expenditures | $ | 180 | $ | 168 | 7 | % | |||||||||||
R&D expenditures increased 7% in the first quarter of 2021 compared to the first quarter of 2020 primarily due to higher expenses associated with acquired businesses and higher employee incentive costs. R&D expenditures remained flat at 10.2% of net sales in the first quarter of 2021 and the first quarter of 2020.
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Other Charges
| Three Months Ended | |||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | |||||||||
| Other charges | $ | 79 | $ | 19 | |||||||
Other charges increased by $60 million in the first quarter of 2021 compared to the first quarter of 2020. The change was driven primarily by the following:
•$50 million gain on the sale of property, plant and equipment in the first quarter of 2020 that did not recur in the first quarter of 2021; and
•$7 million of operating lease asset impairments in the first quarter of 2021.
Operating Earnings
| Three Months Ended | |||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | |||||||||
| Operating earnings from Products and Systems Integration | $ | 77 | $ | 92 | |||||||
| Operating earnings from Software and Services | 221 | 167 | |||||||||
| Operating earnings | $ | 298 | $ | 259 | |||||||
Operating earnings increased $39 million, or 15%, compared to the first quarter of 2020. The increase in Operating earnings was due to:
•Software and Services increased by $54 million, driven by higher sales and gross margin contribution due to improved mix of service offerings, as well as improved operating leverage; and
•partially offset by a decline of $15 million in Products and Systems Integration, primarily driven by a $50 million gain on the sale of property, plant and equipment in the first quarter of 2020 that did not recur in the first quarter of 2021, as well as higher incentive costs, partially offset by lower legal expenses, indirect spend and travel expenses.
Interest Expense, net
| Three Months Ended | |||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | |||||||||
| Interest expense, net | $ | (54) | $ | (52) | |||||||
The increase in interest expense, net in the first quarter of 2021 compared to the first quarter of 2020 was a result of lower interest income earned on cash due to lower interest rates for the period ending April 3, 2021 compared to the period ending March 28, 2020.
Other, net
| Three Months Ended | |||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | |||||||||
| Other, net | $ | 45 | $ | 17 | |||||||
The increase in Other, net in the first quarter of 2021 compared to the first quarter of 2020 was driven primarily by:
•$30 million of net periodic pension and postretirement benefit in the first quarter of 2021 compared to $20 million of net periodic pension and postretirement benefit in the first quarter of 2020;
•$8 million loss on derivatives in the first quarter of 2021 compared to a $16 million loss on derivatives in the first quarter of 2020;
•$5 million of gains related to fair value adjustments to equity investments in the first quarter of 2021 compared to $1 million of gains related to fair value adjustments to equity investments in the first quarter of 2020; and
•partially offset by $14 million of foreign currency gains in the first quarter of 2021 compared to $18 million of foreign currency gains in the first quarter of 2020;
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Effective Tax Rate
| Three Months Ended | |||||||||||
| (In millions) | April 3, 2021 | March 28, 2020 | |||||||||
| Income tax expense | $ | 44 | $ | 26 | |||||||
Income tax expense increased by $18 million in the first quarter of 2021 compared to the first quarter of 2020, resulting in an effective tax rate of 15%. Our effective tax rate for the three months ended April 3, 2021 is higher than the effective tax rate for the three months ended March 28, 2020 of 12%, primarily due to lower tax benefits on share-based compensation.
Reorganization of Business
During the first quarter of 2021, we recorded net reorganization of business charges of $16 million including $14 million of charges recorded within Other charges and $2 million in Costs of sales in our Condensed Consolidated Statements of Operations. Included in the $16 million were charges of $18 million related to employee separation costs, partially offset by $2 million of reversals for accruals no longer needed.
During the first quarter of 2020, we recorded net reorganization of business charges of $18 million including $12 million of charges in Other charges and $6 million of charges in Costs of sales in our Condensed Consolidated Statements of Operations. Included in the $18 million were charges of $22 million related to employee separation costs and $4 million reversals for accruals no longer needed.
The following table displays the net charges incurred by segment:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Products and Systems Integration | $ | 12 | $ | 14 | |||||||||||||||||||
| Software and Services | 4 | 4 | |||||||||||||||||||||
| $ | 16 | $ | 18 | ||||||||||||||||||||
Cash payments for employee severance in connection with the reorganization of business plans were $37 million in the first quarter of 2021 and $22 million in the first quarter of 2020. The reorganization of business accrual at April 3, 2021 was $58 million related to employee separation costs that are expected to be paid within one year.
Liquidity and Capital Resources
| Three Months Ended | |||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||
| Cash flows provided by (used for): | |||||||||||
| Operating activities | $ | 370 | $ | 308 | |||||||
| Investing activities | (52) | (26) | |||||||||
| Financing activities | (256) | 439 | |||||||||
| Effect of exchange rates on cash and cash equivalents | 4 | (50) | |||||||||
| Increase (decrease) in cash and cash equivalents | $ | 66 | $ | 671 | |||||||
Cash and Cash Equivalents
At April 3, 2021, $834 million of the $1.3 billion cash and cash equivalents balance was held in the U.S. and $486 million was held in other countries, with $122 million held in the United Kingdom.
Operating Activities
The increase in cash flows provided by operating activities from the first quarter of 2020 to the first quarter of 2021 was driven primarily by an increase in earnings as a result of increased sales volume and improved working capital, partially offset by higher income tax payments.
Investing Activities
The increase in cash flows used for investing activities from the first quarter of 2020 to the first quarter of 2021 was primarily due to:
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•$56 million decrease in the proceeds from the sale of property, plant and equipment driven by the sale of a European manufacturing facility in the first quarter of 2020; and
•partially offset by $34 million decrease in cash used for acquisitions and investments.
Financing Activities
The increase in cash flows used for financing activities from the first quarter of 2020 as compared to the cash provided by financing activities in the first quarter of 2021 was primarily driven by (also see further discussion in "Debt," "Share Repurchase Program" and "Dividends" below):
•$800 million of proceeds received from the draw on our syndicated, unsecured revolving credit facility during the first quarter of 2020;
•$12 million increase in the payment of dividends in the first quarter of 2021 compared to the first quarter of 2020;
•$7 million related to the payment of revolving credit facility renewal fees in the first quarter of 2021;
•partially offset by an $83 million decrease in share repurchases in the first quarter of 2021 compared to the first quarter of 2020; and
•$40 million increase of net proceeds from the issuance of common stock in the first quarter of 2021 compared to the first quarter of 2020.
Sales of Receivables
The following table summarizes the proceeds received from sales of accounts receivable and long-term customer financing receivables for the three months ended April 3, 2021 and March 28, 2020:
| Three Months Ended | |||||||||||||||||||||||
| April 3, 2021 | March 28, 2020 | ||||||||||||||||||||||
| Contract-specific discounting facility | $ | 71 | $ | 44 | |||||||||||||||||||
| Accounts receivable sales proceeds | — | 24 | |||||||||||||||||||||
| Long-term receivables sales proceeds | 54 | 41 | |||||||||||||||||||||
| Total proceeds from receivable sales | $ | 125 | $ | 109 | |||||||||||||||||||
During the three months ended April 3, 2021, we utilized a contract-specific receivable discounting facility which began during the three months ended March 28, 2020, resulting in accounts receivable sales of $71 million. The net benefit to our operating cash flow from the utilization of the receivable discounting facility for the three months ended April 3, 2021 was $71 million, when adjusted for amounts that were collected under the commercial contract with the customer within the period in the absence of utilizing the discounting facility. The proceeds of our receivable sales are included in Operating activities within our Condensed Consolidated Statements of Cash Flows.
Debt
We had outstanding debt of $5.2 billion at both April 3, 2021 and December 31, 2020, including the current portions of $11 million and $12 million at April 3, 2021 and December 31, 2020, respectively.
On March 24, 2021, we entered into a $2.25 billion syndicated, unsecured revolving credit facility maturing in March 2026, which can be used for general corporate purposes and letters of credit (the "2021 Motorola Solutions Credit Agreement"). The 2021 Motorola Solutions Credit Agreement replaces our $2.2 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2022. The 2021 Motorola Solutions Credit Agreement includes a $450 million letter of credit sublimit and fronting commitments of $450 million. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate ("LIBOR"), at our option. The 2021 Motorola Solutions Credit Agreement includes provisions allowing us to replace LIBOR with a replacement benchmark rate in the future under certain conditions defined in the agreement. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if our credit rating changes. We must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2021 Motorola Solutions Credit Agreement. We were in compliance with the financial covenants as of April 3, 2021.
On September 5, 2019, we entered into an agreement with Silver Lake Partners to issue $1.0 billion of 1.75% senior convertible notes which mature in September 2024 ("Senior Convertible Notes"). Interest on these notes is payable semiannually. The notes are convertible anytime on or after two years from their issuance date, except in certain limited circumstances. The notes are convertible based on a conversion rate of 4.9140 per $1,000 principal amount (which is equal to an initial conversion price of $203.50 per share). In the event of conversion, we intend to settle the principal amount of the Senior Convertible Notes in cash. We recorded a debt liability associated with the Senior Convertible Notes by determining the fair value of an equivalent debt instrument without a conversion option. Using a discount rate of 2.45%, which was determined based on a review of relevant market data, we calculated the debt liability to be $986 million, indicating a $14 million discount to be
32
amortized over the expected life of the debt instrument. The remaining proceeds of $14 million were allocated to the conversion option and accordingly, increased Additional paid-in capital.
We have an unsecured commercial paper program, backed by the 2021 Motorola Solutions Credit Agreement, under which we may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $2.2 billion outstanding at any one time. Proceeds from the issuances of the notes are expected to be used for general corporate purposes. As of April 3, 2021 we had no outstanding debt under the commercial paper program.
We believe that we have adequate internal resources available to fund expected working capital and capital expenditure requirements for the next twelve months as supported by the level of cash and cash equivalents in the U.S., the ability to repatriate funds from foreign jurisdictions, cash provided by operations, as well as liquidity provided by our commercial paper program backed by the 2021 Motorola Solutions Credit Agreement. Refer also to “COVID-19” in this Part I, Item 3 of this Form 10-Q for a discussion of the impact of COVID-19 on our liquidity.
Share Repurchase Program
During the three months ended April 3, 2021, we paid an aggregate of $170 million, including transaction costs, to repurchase approximately 1.0 million shares at an average price of $175.53 per share. As of April 3, 2021, the Company had used approximately $13.5 billion of the share repurchase authority to repurchase shares, leaving $479 million of authority available for future repurchases. Subsequent to quarter end, the Board of Directors approved a $2.0 billion increase to the share repurchase program, raising the remaining authority for future repurchases to $2.5 billion.
Dividends
During the first quarter of 2021 we paid $121 million in cash dividends to holders of our common stock. Subsequent to the quarter, we paid an additional $121 million in cash dividends to holders of our common stock.
Long-Term Customer Financing Commitments
We had outstanding commitments to provide long-term financing to third parties totaling $82 million at April 3, 2021, compared to $78 million at December 31, 2020.
Recent Accounting Pronouncements
See “Recent Accounting Pronouncements” and “Recently Adopted Accounting Pronouncements” in Note 1, “Basis of Presentation” to our condensed consolidated financial statements included in Part I, Item 1. of this Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our interest rate risk or foreign currency risk during the three months ended April 3, 2021. For a discussion of our exposure to interest rate risk and foreign currency risk, refer to our disclosures set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of the Form 10-K.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Form 10-Q (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to Motorola Solutions, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to Motorola Solutions’ management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended April 3, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
In addition to the matter referenced below, the Company is subject to legal proceedings and claims that have not been fully resolved and which have arisen in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's condensed consolidated financial position, liquidity, or results of operations. However, an unfavorable resolution could have a material adverse effect on the Company's condensed consolidated financial position, liquidity, or results of operations in the periods in which the matters are ultimately resolved, or in the periods in which more information is obtained that changes management's opinion of the ultimate disposition.
See Note 12, “Commitments and Contingencies,” to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for information regarding our legal proceedings.
Item 1A. Risk Factors
In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in the Form 10-K, which could materially affect our business, financial condition or future results. The risks described in “Risk Factors” in the Form 10-K remain current in all material respects.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information with respect to acquisitions by the Company of shares of its common stock during the quarter ended April 3, 2021.
Issuer Purchases of Equity Securities
| Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share (1) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (2) | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program(2) | |||||||||||||||||||
| 12/30/2020 to 01/27/2021 | 413,917 | $ | 170.91 | 413,917 | $ | 586,844,842 | |||||||||||||||||
| 01/28/2021 to 02/24/2021 | 224,133 | $ | 177.71 | 224,133 | $ | 548,013,011 | |||||||||||||||||
| 02/25/2021 to 03/30/2021 | 329,412 | $ | 179.87 | 329,412 | $ | 478,763,100 | |||||||||||||||||
| Total | 967,462 | $ | 175.53 | 967,462 | |||||||||||||||||||
(1)Average price paid per share of common stock repurchased is the execution price, including commissions paid to brokers.
(2)As originally announced on July 28, 2011, and subsequently amended, the board of directors has authorized the Company to repurchase an aggregate amount of up to $14.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date. As of April 3, 2021, the Company had used approximately $13.5 billion, including transaction costs, to repurchase shares, leaving $479 million of authority available for future repurchases. Subsequent to quarter end, the Board of Directors approved a $2.0 billion increase to the share repurchase program, raising the remaining authority for future repurchases to $2.5 billion.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
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Item 6. Exhibits
Exhibits 10.1-10.5 listed in this Part II, Item 6 of this Form 10-Q are management contracts or compensatory plans or arrangements.
| Exhibit No. | Exhibit | |||||||
| *10.1 | ||||||||
| *10.2 | ||||||||
| *10.3 | ||||||||
| *10.4 | ||||||||
| *10.5 | ||||||||
| 10.6 | ||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Scheme Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
___________________________________
| * | Filed herewith | ||||
| ** | Furnished herewith | ||||
| MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2021 Motorola Solutions, Inc. All rights reserved. | |||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MOTOROLA SOLUTIONS, INC. | |||||||||||
| By: | /S/ DAN PEKOFSKE | ||||||||||
Dan Pekofske Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer) | |||||||||||
May 6, 2021
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Exhibit 10.1
Motorola Solutions Long Range Incentive Plan (LRIP),
as Amended and Restated February 11, 2021
Overview
The Plan is being implemented pursuant to the terms and conditions of the Omnibus Plan, and as most recently amended and restated shall apply to performance cycles beginning on and after January 1, 2021.
Eligibility
Effective January 4, 2011, Officers of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) shall be eligible to participate in the Plan. The Chief Executive Officer is also eligible to participate as approved by the Compensation Committee. No employee who is not an Officer shall be eligible to participate in the Plan.
Participation
Generally, Officers who become eligible to participate during the first three months of a multi-year performance cycle will participate in the full performance cycle. Officers who become eligible to participate after the first three months of a performance cycle will participate in the performance cycle on a pro rata basis, except that Officers who first become eligible to participate during the last three months of a performance cycle will not be eligible to participate in the performance cycle. The number of shares/units for any equity-based awards granted pursuant to this paragraph will be calculated based on the same common stock value that was used on the original date of grant of awards for the applicable performance cycle, and then prorated, as applicable. In addition, in the event that such an equity-based award described above is made during the last 12 months of the applicable performance cycle such that the remaining vesting period applicable to the award is fewer than 12 months, such vesting period shall be deemed approved by the Compensation Committee for purposes of the applicable award agreement governing such award.
Participants who lose their eligibility to participate due to a lapse of status as an Officer after the first three months of a performance cycle will participate in the performance cycle on a pro rata basis if they continue to be employed with the Company through the last day of the performance cycle or if their employment terminates earlier under any of the conditions outlined in this Plan permitting pro rata payments. Participants who lose their eligibility to participate in the first three months of a performance cycle will not be eligible to participate in the performance cycle.
Pro rata awards will be determined on the basis of the number of completed months of employment as an Officer during which the participant is actively working within the performance cycle.
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Performance Cycle
The Plan is based upon multi-year performance cycles selected by the Compensation Committee.
Performance Criteria
Performance criteria for each cycle will be determined by the Compensation Committee based on one or more of the Performance Criteria set forth in Section 14 of the Omnibus Plan.
Performance criteria may apply to performance in each year in the performance cycle, to cumulative performance during multiple years in the performance cycle or the entire performance cycle, or a combination of any of the foregoing.
Participants’ Target & Maximum Award
A participant’s target award is established at the commencement of a performance cycle. Target awards for all Officers who are not Covered Employees or Covered Persons or Officers designated as members of the Executive Committee shall be determined by the LRIP Committee.
A participant’s maximum earned award will be determined by the Compensation Committee, but in no event will it exceed two and one half times his/her target award.
The Compensation Committee specifically reserves to itself the authority to set the target and maximum awards for all Covered Employees, Covered Persons and all members of the Executive Committee.
Award and Payout Process
•All awards will be made as follows:
•Any award(s) made to the Chief Executive Officer of the Company under the LRIP shall be made in the form of a stock-settled equity-based award granted under the Omnibus Plan;
•Any award(s) made to any other LRIP participant (other than the Chief Executive Officer of the Company) under the LRIP shall be in the form(s) of a stock-settled equity-based award and/or a cash-based award, with such allocation as determined by the Compensation Committee in its discretion;
•All equity-based awards granted under the LRIP shall exclusively be governed by the terms of the applicable award agreement and the Omnibus Plan and shall only be subject to the terms of the LRIP to the extent specifically referenced in such award agreement; and
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•All cash-based awards under the LRIP shall be paid in cash and/or Company stock, as determined by the Compensation Committee in its discretion. To the extent such awards are paid in Company stock, the number of shares of stock earned by a participant shall be determined by dividing the amount of the award earned during the performance cycle by the Certification Date Value. The shares will be issued under, and subject to the limitations of, the Omnibus Plan or such other shareholder-approved Company equity-based incentive plan as designated by the Compensation Committee.
•The Compensation Committee may reduce the amount of the payment to be made pursuant to this Plan to any participant who is or may be a Covered Employee at any time prior to payment as a result of the participant’s performance during the performance cycle. The Chief Executive Officer may adjust the amount of the payment to be made pursuant to this Plan to any participant at any time prior to payment as a result of the participant’s performance during the performance cycle; provided, however, that no upward adjustment may result in a payment to the participant in excess of the participant’s maximum award under the Plan. Any adjustment to a payment to a member of the Executive Committee, a Covered Employee or a Covered Person will be subject to the approval of the Compensation Committee.
•If management or the Compensation Committee determines, in their sole discretion, prior to the payment of an award, that a participant has engaged in Serious Misconduct or has violated any agreement or restrictive covenants between the participant and the Company related to protection of the Company’s trade secrets and/or confidential and proprietary information, the participant will forfeit any unpaid award, in addition to being subject to other remedies that may be available to the Company.
•The Company shall have the right to satisfy all federal, state and/or local withholding tax requirements with respect to the award earned by reducing, as applicable, either: (1) the cash paid (in the event of a cash payment) by the amount of withholding required or (2) the number of earned shares (in the event of a stock payment) by the number of shares determined by dividing the amount of withholding required by the Certification Date Value.
•Payments will be made during the calendar year immediately following the last calendar year in the performance cycle (unless a participant makes an irrevocable election under any deferred compensation arrangement subject to Section 409A of the Internal Revenue Code of 1986, as amended, to defer payment of a portion of the participant’s award, in which case such payment, if any, shall be made in accordance with such election). A participant has no right to any award until that award is paid.
Situations Affecting The Plan
Change in Employment
•Generally, a participant will be eligible for payment of an earned award only if employment continues through the last day of the performance cycle.
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•Because employee retention is an important objective of this Plan and awards do not bear a precise relationship to time worked within the calendar year or length of service with the Company, participants who separate from employment prior to the end of the performance cycle (except as expressly provided in this Plan) shall not receive any award attributable to that performance cycle.
•In the event a participant’s employment terminates due to the participant’s death or Total and Permanent Disability, the participant shall receive the target award attributable to a performance cycle, which shall be paid at the time of the termination.
•Pro rata awards may be possible, depending upon the type of employment termination or change in status. In the event a participant: (i) remains on payroll as an active employee at the end of a performance cycle, but is not actively working, whether or not on a Leave of Absence, (ii) Retires, or, (iii) in the final year of a performance cycle, a Divestiture occurs or the participant is involuntarily terminated for a reason other than Serious Misconduct prior to the end of the performance cycle while actively employed or on a Leave of Absence, the participant will be entitled to a pro rata award based on the number of completed months of employment within the performance cycle in which the participant was actively working as an Officer, provided that the participant is otherwise eligible for an award.
•The table below summarizes the treatment of awards in the event a participant separates employment before the end of a performance cycle:
| If employment terminates due to… | The earned award will be… | ||||
| Death | Accelerated | ||||
| Total and Permanent Disability | Accelerated | ||||
| Retirement (in all countries other than member states or acceding countries of the European Union) | Prorated | ||||
| Involuntary Termination of Employment for a Reason Other than Serious Misconduct in the final year of the performance cycle | Prorated | ||||
| Divestiture in the final year of the performance cycle | Prorated | ||||
| Termination of Employment For Any Other Reason than Described Above (including but not limited to voluntary resignation) | Forfeited | ||||
A prorated payout will be based on final performance results and paid in the same manner and at the same time as other awards, as described above in “Award and Payout Process,” to the extent that such payment complies with Section 409A of the Internal Revenue Code of 1986, as amended.
4
In the event a participant is reclassified from a higher Officer level to a lower Officer level or vice versa (e.g., from Executive Vice President to either Senior Vice President or Corporate Vice President or from Corporate Vice President to Senior or Executive Vice President), the following provisions shall apply:
•Cash-Based Awards. If a participant experiences a promotion or a demotion during a performance cycle, the participant’s target cash-based award will be recalculated to reflect: (a) the lower target award level for the actual number of months completed within the performance cycle while employed in the lower Officer level and (b) the higher target award for the actual number of remaining months within the performance cycle while employed in the higher Officer level.
•Equity-Based Awards. With respect to all equity-based awards granted hereunder, the following provisions shall apply:
•If the participant experiences a promotion during a performance cycle, the participant will be granted an additional award at the time of promotion with such new award having a target value equal to the amount by which the higher Officer level’s target award exceeds that of the lower Officer level, prorated to reflect the actual number of remaining months within the performance cycle that the participant is employed in the higher Officer level. The number of shares/units subject to any such additional grant made to a participant pursuant to the immediately preceding sentence shall be calculated using the same common stock value that was used on the date of grant of the participant’s original award for the applicable performance cycle to determine the number of shares/units subject to such original award. In addition, in the event that such additional grant described above is made during the last 12 months of the applicable performance cycle such that the remaining vesting period applicable to the award is fewer than 12 months, such vesting period shall be deemed approved by the Compensation Committee for purposes of the applicable award agreement governing such award.
•If the participant experiences a demotion during a performance cycle, after application of the resulting performance during the performance period, the final payout of the participant’s award will be calculated by applying an adjustment factor so that the final payout reflects the pro-ration of the applicable target award levels for the portions of the performance cycle during which the participant was employed in the higher and lower Officer levels, respectively.
Change in Control
If the Company undergoes a Change in Control as defined in the Omnibus Plan, the treatment of outstanding awards under this Plan shall be determined by the terms of the Omnibus Plan in effect at the time of the commencement of the performance cycle; provided, however, that payment will be made in the manner set forth under “Award and Payout Process” unless payment under the Omnibus Plan is due upon a Change in Control and such Change in Control would be a permissible distribution event, as defined in Section 409A(a)(2) of the Internal Revenue Code of 1986, as amended, in which case payment shall be made at the time and in the manner required by Section 409A of the Internal Revenue Code of 1986, as amended.
5
Reservation And Retention Of Company Rights
•The selection of any Officer for participation in the Plan will not give that participant any right to be retained in the employ of the Company.
•The Compensation Committee’s decision to make an award in no way implies that similar awards may be granted in the future.
•Anyone claiming a benefit under the Plan will not have any right to or interest in any awards unless and until all terms, conditions, and provisions of the Plan that affect that person have been fulfilled as specified herein.
•No Officer will at any time have a right to be selected for participation in a future performance period for any fiscal year, despite having been selected for participation in a previous performance period.
Administration
Except as otherwise provided herein, it is expressly understood that the Compensation Committee has the discretionary authority to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan, all of which will be binding upon the participant.
General Provisions
•Award opportunities may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
•To the extent permitted by law, amounts paid under the Plan will not be considered to be compensation for purposes of any other compensation or benefit plan or program maintained by the Company.
•All obligations of the Company under the Plan with respect to payout of awards, and the corresponding rights granted thereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or other acquisition of all or substantially all of the business and/or assets of the Company.
•All awards to Covered Persons are subject to the terms and conditions of the Recoupment Policy, as it may be amended from time to time, including as it may be amended to comply with Section 10D of the Exchange Act (the “Recoupment Policy”). The Recoupment Policy provides that, in the event of certain accounting restatements (a “Policy Restatement”), the Company’s independent directors may require, among other things, reimbursement of all or a portion of the gross amount of any bonus or incentive compensation paid to the Covered Person hereunder on or after January 1, 2008, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations
6
made by the independent directors of the Company in accordance with the Recoupment Policy shall be binding upon the Covered Person. The Recoupment Policy is in addition to any other remedies which may be otherwise available to the Company at law, in equity or under contract, or otherwise required by law, including under Section 10D of the Exchange Act.
•In the event that any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.
•No participant or beneficiary will have any interest whatsoever in any specific asset of the Company. To the extent that any person acquires a right to receive payments under the Plan, such right will be no greater than the right of any unsecured general creditor of the Company.
•This Plan constitutes a legal document which governs all matters involved with its interpretation and administration and supersedes any writing or representation inconsistent with its terms.
Definitions
Certification Date Value: the closing price of one share of Company common stock on the New York Stock Exchange on the date on which the Compensation Committee certifies the amount of the award earned.
Company: Motorola Solutions, Inc. and its Subsidiaries.
Compensation Committee: the Compensation and Leadership Committee of the Board of Directors.
Continuous Service Date: accumulated years and months of service with the Company, including time worked before a prior separation from employment that was less than five years in duration.
Covered Employee: a covered employee within the meaning of Section 162(m)(3) of the Internal Revenue Code of 1986, as amended.
Covered Person(s): officer(s) (as such term is defined in Rule 16a-1(f) under the Exchange Act) of the Company.
Divestiture: the sale, lease, outsourcing arrangement, spin-off, or similar transaction wherein a Subsidiary is sold or whose shares are distributed to the Motorola Solutions stockholders, or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Company or a Subsidiary.
Exchange Act: the Securities Exchange Act of 1934.
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Executive Committee: the group of Officers that report to the Chief Executive Officer, and referred to as management’s Executive Committee.
Leave of Absence: an approved leave of absence.
LRIP Committee: the committee to which the Compensation Committee may delegate certain powers and duties as described above. Unless otherwise determined, the LRIP Committee will consist of the Senior Human Resources Officer, a senior Compensation Officer and a senior Finance Officer. The LRIP Committee may establish self-governance procedures such as by-laws, and shall keep minutes regarding all actions taken by the LRIP Committee.
Omnibus Plan: the Motorola Solutions Omnibus Incentive Plan of 2015, as Amended and Restated Effective May 18, 2015, as amended, or any subsequent amendment and restatement or any successor plan.
Officers: Corporate, Senior and Executive Vice Presidents, Chief Operating Officer, and Chief Executive Officer of the Company.
Plan: the Motorola Solutions, Inc. Long Range Incentive Plan (LRIP).
Policy Restatement: a restatement of the Company’s financial results.
Recoupment Policy: the Company’s “Policy Regarding Recoupment of Incentive Payments upon Financial Restatement”, as it may be amended from time to time.
Retire or Retirement: shall only apply in countries other than member states or acceding countries of the European Union and shall mean voluntary or involuntary termination from Motorola Solutions or a Subsidiary (other than a termination because of Serious Misconduct) as follows:
(i) at or after age 55 with 10 years of service;
(ii) at or after age 60 with 5 years of service;
(iii) at or after age 65, without regard to years of service; or
(iv) with any other combination of age and service, at the discretion of the Compensation Committee.
Years of service will be based on the participant’s Continuous Service Date.
Subsidiary: an entity of which Motorola Solutions, Inc. owns directly or indirectly at least 50% and that Motorola Solutions consolidates for financial reporting purposes.
Serious Misconduct: any misconduct that is a ground for termination under the Motorola Solutions Code of Business Conduct, human resources policies, or other written policies or procedures.
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Total and Permanent Disability: for U.S. employees, entitlement to long-term disability benefits under the Motorola Solutions Disability Income Plan, as amended and any successor plan; for non-U.S. employees, as established by applicable Motorola Solutions policy or as required by local regulations.
If a term is used but not defined, it has the meaning given such term in the Omnibus Plan.
Amendment, Modification, And Termination
Except as expressly provided by law, this Plan is provided at the Company’s sole discretion and the Compensation Committee may modify or terminate it at any time, prospectively or retroactively, without notice or obligation for any reason; provided, however, that no such action may adversely affect a participant’s rights under the Plan subsequent to such time as negotiations or discussions which ultimately lead to a Change in Control have commenced. In addition, there is no obligation to extend the Plan or establish a replacement plan or performance cycle(s) in subsequent years.
Applicable Law
To the extent not preempted by federal law, or otherwise provided by local law, the Plan will be construed in accordance with, and governed by, the laws of the state of Illinois without regard to any state’s conflicts of laws principles. Any legal action related to this Plan shall be brought only in a federal or state court located in Illinois.
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Exhibit 10.2
PERFORMANCE STOCK UNIT AWARD AGREEMENT
This Performance Stock Unit Award (“Award”) is awarded on «Grant_date» (“Date of Grant”), by Motorola Solutions, Inc. (the “Company” or “Motorola Solutions”) to Gregory Q. Brown (“Grantee”).
WHEREAS, Grantee is receiving the Award (as a type of Restricted Stock Unit) under Section 8 of the Motorola Solutions Omnibus Incentive Plan of 2015, as amended (the “Omnibus Plan”);
WHEREAS, Grantee and Motorola, Inc. entered into an employment agreement (the “Employment Agreement”), dated as of the 27th day of August 2008, as amended from time to time; and
WHEREAS, the Award is being made by the Compensation and Leadership Committee (the “Compensation Committee”) of the Board of Directors as provided in the Motorola Solutions Long Range Incentive Plan, as Amended and Restated February 11, 2021 (the “LRIP”).
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the Company hereby awards Performance Stock Units to Grantee on the following terms and conditions:
1.Award of Performance Stock Units. The Company hereby grants to Grantee a target number of «Txt_Nbr_of_Shares» Motorola Solutions Performance Stock Units (the “PSUs”) subject to the terms and conditions set forth below and the applicable terms of the Employment Agreement and subject to adjustment as provided in the LRIP and the Omnibus Plan, which provides an opportunity to earn up to a maximum number of shares of Motorola Solutions Common Stock (“Common Stock”) equal to 250% of such target number. No PSU shall be paid unless earned in accordance with this agreement. All PSUs that become earned pursuant to this agreement shall be paid in whole shares of Common Stock; no fractional shares shall be credited or delivered to Grantee. The PSUs are granted pursuant to the Omnibus Plan and are subject to all of the terms and conditions of the Omnibus Plan and the Employment Agreement, and shall only be subject to the LRIP as specifically referenced in this Award.
2.Restrictions. The PSUs are being awarded to Grantee subject to the transfer and forfeiture conditions set forth below (the “Restrictions”):
a.No Assignment. The PSUs may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
b.Restricted Conduct. Sections 7(a), (b) and (c) (together, the “Restrictive Covenants”) of the Employment Agreement are hereby incorporated by reference into this Award and shall apply as if fully set forth herein mutatis mutandis, and any capitalized terms used in such Sections 7(a), (b) and (c) shall have the meanings ascribed to such terms in the Employment Agreement. If Grantee breaches the Restrictive Covenants, in addition to all remedies in law and/or equity available to the Company or any Subsidiary (as defined in the LRIP), Grantee shall forfeit all PSUs under this Award.
c.Recoupment Policy. The PSUs are subject to the terms and conditions of the Company’s Policy Regarding Recoupment of Incentive Payments upon Financial Restatement, as such policy is in effect on the Date of Grant (such policy, being the “Recoupment Policy”), as set forth in more detail in the LRIP.
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Notwithstanding the foregoing, nothing in this Section 2 is intended to or shall limit, prevent, impede or interfere with Grantee’s non-waivable right, without prior notice to the Company, to provide information to the government, participate in investigations, testify in proceedings regarding the Company or any Subsidiary’s past or future conduct, engage in any activities protected under whistleblower statutes, or to receive and fully retain a monetary award from a government-administered whistleblower award program for providing information directly to a government agency. Grantee does not need prior authorization from the Company to make any such reports or disclosures and is not required to notify the Company that Grantee has made such reports or disclosures.
3.Earning. Subject to the remaining terms and conditions of this Award, and provided the PSUs have not been forfeited as described in Section 2 above, the PSUs will be earned as follows:
a.Performance Period. The PSUs will be earned and payable, if at all, based on the Company’s performance from [____________], 20[__] until [____________], 20[__] (the “Performance Period”) to the extent provided in the following schedule, to be determined following the Compensation Committee’s certification of the achievement of the applicable performance criteria set forth in Appendix A (such date, the “Performance Certification Date”), which certification shall occur in no event later than March 15 of the year following the end of the Performance Period for which the PSUs may be earned:
| (A) PSUs Eligible to be Earned | (B) Payout Factor | (C) Number of PSUs Earned | ||||||||||||
| 100% of Target PSU Award | See Appendix A for Payout Factors | Target PSU Award (Column A) times Payout Factor (Column B) | ||||||||||||
Any PSUs that fail to be earned pursuant to Section 3(a) shall be forfeited, subject to the special provisions set forth in Sections 3(b), (c), (d), and (e). Any unearned PSUs shall be automatically forfeited upon Grantee’s termination of employment with Motorola Solutions prior to the last day of the Performance Period for any reason other than as specifically set forth in Sections 3(b), (c), (d), and (e) below. The Company will not be obligated to pay Grantee any consideration whatsoever for forfeited PSUs. For the avoidance of doubt, Grantee must remain employed on the last day of the Performance Period in order to earn any PSUs pursuant to this Award, except as explicitly set forth in this Award; provided, however, that if Grantee takes a Leave of Absence (as defined in the LRIP) from Motorola Solutions or a Subsidiary, such period shall constitute continued employment for purposes of this Award; provided, further, that, in such circumstances, the total number of PSUs that may become earned and payable to Grantee shall be pro-rated in accordance with the terms and conditions set forth in the LRIP.
b.Disability or Death. Upon the occurrence of Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to Grantee’s death or Disability (as defined in the Employment Agreement), in each case prior to the last day of the Performance Period, the treatment of PSUs shall be governed by Sections 5(d) and (e) of the Employment Agreement, respectively.
c.Qualifying Termination Outside of the Change of Control Protection Period. Upon the occurrence of Grantee’s termination of employment with Motorola Solutions and its
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Subsidiaries by the Company (other than (i) for Cause (as defined in the Employment Agreement), (ii) death, or (iii) Disability), or by Grantee for Good Reason (as defined in the Employment Agreement) (each of the foregoing events hereinafter referred to as a “Qualifying Termination”) prior to the last day of the Performance Period (other than during the Change of Control Protection Period (as defined in the Employment Agreement)), and if the PSUs have not been forfeited as described in Section 2 above, then such PSUs shall be governed by Section 5(a) of the Employment Agreement.
d.Qualifying Termination During the Change of Control Protection Period. Upon the occurrence of a Qualifying Termination that occurs prior to the last day of the Performance Period but during the Change of Control Protection Period (as defined in the Employment Agreement), and if the PSUs have not been forfeited as described in Section 2 above, then the target number of PSUs for the Performance Period during which such Qualifying Termination occurs shall become fully earned, assuming achievement of the applicable performance criteria at the target performance level.
e.Other Certain Terminations of Employment. Upon the occurrence of (i) Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to a Divestiture (which shall mean if Grantee accepts employment with another company in direct connection with the sale, lease, outsourcing arrangement or any other type of asset transfer or transfer of any portion of a facility or any portion of a discrete organizational unit of Motorola Solutions or a Subsidiary, or if Grantee remains employed by a Subsidiary that is sold) that occurs during the final calendar year of the Performance Period, or (ii) Grantee becoming eligible for Retirement (which shall mean Grantee’s voluntary termination of employment prior to the end of the Performance Period (A) at or after age 55 with at least 10 years of service, (B) at or after age 60 with at least 5 years of service, or (C) at or after age 65), in each case, prior to the last day of the Performance Period, and if the PSUs have not been forfeited as described in Section 2 above, then a number of PSUs for the Performance Period shall remain subject to performance through the end of the Performance Period and shall become earned based upon actual achievement of the applicable performance criteria set forth in Appendix A for the Performance Period on a pro rata basis in an amount equal to (x) the number of PSUs under this Award that become earned based on actual performance as described in this Section 3(e), multiplied by (y) a fraction, the numerator of which is the number of completed full months of service by Grantee from the beginning of the Performance Period to Grantee’s date of termination and the denominator of which is the number of months in the Performance Period.
4.Payment and Settlement of Earned PSUs.
a.General. Upon the earning of the PSUs described in Section 3 above, the Company shall, at its election, either: (i) establish a brokerage account for Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of PSUs that have been earned; or (ii) deliver to Grantee a certificate representing a number of shares of Common Stock equal to the number of PSUs that have been earned. Such earned PSUs shall be paid and settled as soon as practicable following the Performance Certification Date, but in no event later than March 15 of the year following the end of the Performance Period for which the PSUs were earned.
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b.Disability or Death. Upon the occurrence of Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to Disability or death prior to the last day of the Performance Period (as described in Section 3(b) above), the PSUs that become earned pursuant to the Employment Agreement shall be settled within 30 days of Grantee’s termination of employment due to Grantee’s Disability or death.
c.Qualifying Termination Outside of the Change of Control Protection Period. Upon the occurrence of Grantee’s Qualifying Termination that occurs outside of the Change of Control Protection Period as described in Section 3(c) above, the PSUs that become earned PSUs in accordance with Section 3(c) will be payable as soon as practicable following the Performance Certification Date, based on the applicable performance criteria set forth in Appendix A, but in no event later than March 15 of the year following the end of the Performance Period for which the PSUs were earned; provided, however, that in the event that such Qualifying Termination occurs prior to the end of the Performance Period and a Change of Control (as defined in the Employment Agreement) subsequently occurs after such Qualifying Termination but prior to the end of the Performance Period, the PSUs that become earned PSUs in accordance with Section 3(c) shall be paid within 30 days of the consummation of such Change of Control.
d.Qualifying Termination During the Change of Control Protection Period. Upon the occurrence of Grantee’s Qualifying Termination that occurs the Change of Control Protection Period as described in Section 3(d) above, the payment of PSUs that become earned PSUs in accordance with Section 3(d) will be paid on the sixtieth (60th) day after the Qualifying Termination, subject to the terms and conditions set forth in Section 5(b) of the Employment Agreement, including, but not limited to, the execution and non-revocation of a release, as described in more detail therein.
e.Other Certain Terminations of Employment. Upon the occurrence of (i) Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to a Divestiture that occurs during the final calendar year of the Performance Period, or (ii) Grantee becoming eligible for Retirement (each as described in Section 3(e) above), the PSUs that become earned PSUs in accordance with Section 3(e) will be payable as soon as practicable following the Performance Certification Date, based on the applicable performance criteria set forth in Appendix A, but in no event later than March 15 of the year following the end of the Performance Period for which the PSUs were earned; provided, however, that in the event that any of the events described in clauses (i) or (ii) above occurs prior to the end of the Performance Period and a Change of Control (as defined in the Employment Agreement) subsequently occurs after such event but prior to the end of the Performance Period, the PSUs that become earned PSUs in accordance with Section 3(e) shall be paid within 30 days of the consummation of such Change of Control.
5.Whole Shares. All earned PSUs shall be paid in whole shares of Common Stock; no fractional shares shall be credited or delivered to Grantee.
6.Adjustments. The PSUs shall be subject to adjustment as provided in Section 16 of the Omnibus Plan.
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7.Dividends. No dividends (or dividend equivalents) shall be paid with respect to unearned PSUs credited to Grantee’s account.
8.Withholding Taxes. The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the PSUs. Grantee may satisfy any withholding obligation, in whole or in part, by electing to have the Company withhold a sufficient number of shares of Common Stock otherwise deliverable in connection with the applicable PSUs that are earned, the Fair Market Value of which shall be determined on the Payment Date (as defined in Section 19 below) in accordance with Section 19 below, to satisfy Grantee’s tax withholding obligation.
9.Voting and Other Rights.
a.Grantee shall have no rights as a stockholder of the Company in respect of the PSUs, including the right to vote and to receive cash dividends and other distributions until delivery of certificate or equivalent representing shares of Common Stock in satisfaction of the PSUs.
b.The grant of PSUs does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary to terminate Grantee’s employment at any time.
10.Funding. No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any PSUs awarded hereunder. The grant of PSUs hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company.
11.Nature of Award. By accepting this agreement, Grantee acknowledges his understanding that the grant of PSUs under this agreement is completely at the discretion of Motorola Solutions, and that Motorola Solutions’ decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantee’s right or the Company’s right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. Grantee’s acceptance of this Award is voluntary. The Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments, notwithstanding any provision of any compensation, insurance agreement or benefit plan to the contrary.
12.Acknowledgements. With respect to the PSUs, this agreement (and any provisions of the Employment Agreement incorporated into this agreement) is the entire agreement with the Company. No waiver of any breach of any provision of this agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this agreement shall be severable and in the event that any provision of this agreement shall be found by any court as specified in Section 18 below to be unenforceable, in whole or in part, the remainder of this agreement shall nevertheless be enforceable and binding on the parties. Grantee hereby agrees that the court may modify any invalid, overbroad or unenforceable term of this agreement so that such term, as modified, is valid and enforceable under applicable law. Further, by accepting any Award under this agreement, Grantee
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affirmatively states that she or he has not, will not and cannot rely on any representations not expressly made herein.
13.Motorola Solutions Assignment Rights. Motorola Solutions shall have the right to assign this agreement, which shall not affect the validity or enforceability of this agreement. This agreement shall inure to the benefit of assigns and successors of Motorola Solutions.
14.Waiver. The failure of the Company to enforce at any time any provision of this agreement shall in no way be construed to be a waiver of such provision or any other provision hereof.
15.Actions by the Compensation Committee. The Compensation Committee may delegate its authority to administer this agreement consistent with applicable law. The actions and determinations of the Compensation Committee or its delegate shall be binding upon the parties.
16.Consent to Transfer Personal Data. By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this Section. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantee’s ability to participate in the LRIP and the Omnibus Plan. Motorola Solutions, its Subsidiaries and Grantee’s employer hold certain personal information about Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola Solutions, or details of all PSUs or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the LRIP and/or the Omnibus Plan (“Data”). Motorola Solutions and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of Grantee’s participation in the LRIP and the Omnibus Plan, and Motorola Solutions and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola Solutions in the implementation, administration and management of the LRIP and/or the Omnibus Plan. These recipients may be located throughout the world, including the United States. Grantee authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantee’s participation in the LRIP and/or the Omnibus Plan, including any requisite transfer of such Data as may be required for the administration of the LRIP and/or the Omnibus Plan and/or the subsequent holding of shares of stock on Grantee’s behalf to a broker or other third party with whom Grantee may elect to deposit any shares of stock acquired pursuant to the LRIP and/or the Omnibus Plan. Grantee may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola Solutions; however, withdrawing consent may affect Grantee’s ability to participate in the LRIP and the Omnibus Plan.
17.Remedies for Breach. Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of the Restrictive Covenants will be irreparable and further agrees the Company may obtain injunctive relief against Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this agreement, any other agreements between Grantee and the Company for the protection of the Company’s Confidential Information (as defined in the Employment Agreement) or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in Section 18 below, will, at the request of the Company, be entered on consent and enforced by any such court having
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jurisdiction over Grantee. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief.
18.Governing Law. All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any state’s conflicts of law principles. Any disputes regarding this Award or agreement shall be brought only in the state or federal courts of Illinois.
19.Definitions. Any capitalized terms used herein that are not otherwise defined below or elsewhere in this agreement shall have the same meaning provided under the LRIP and the Omnibus Plan.
a.“Fair Market Value” shall be the closing price for a share of Common Stock on the date on which any PSUs earned pursuant to this Award are paid in accordance with Section 4 above (such date, the “Payment Date”), as reported for the New York Stock Exchange-Composite Transactions in the Wall Street Journal at www.online.wsj.com. In the event the New York Stock Exchange is not open for trading on the Payment Date, or if the Common Stock does not trade on such day, Fair Market Value for this purpose shall be the closing price of the Common Stock on the last trading day prior to the Payment Date.
20.409A Compliance. Notwithstanding any provision in this Award to the contrary, if Grantee is a “specified employee” (certain officers of Motorola Solutions within the meaning of Treasury Regulation Section 1.409A-1(i) and using the identification methodology selected by Motorola Solutions from time to time) on the date of Grantee’s termination of employment, any payment which would be considered “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) that Grantee is entitled to receive upon termination of employment, and which otherwise would be paid or delivered during the six month period immediately following the date of Grantee’s termination of employment, will instead be paid or delivered on the earlier of (a) the first day of the seventh month following the date of Grantee’s termination of employment and (b) Grantee’s death. For purposes of determining the time of payment or delivery of any payment Grantee is entitled to receive upon termination of employment, the determination of whether Grantee has experienced a termination of employment will be determined by Motorola Solutions in a manner consistent with the definition of “separation from service” under the default rules of Section 409A of the Code.
21.Plan Documents. The Omnibus Plan and the Prospectus for the Omnibus Plan are available on the Motorola Solutions website at https://batchat.motorolasolutions.com/home/ls/community/stock-programs and the LRIP is available at https://batchat.motorolasolutions.com/home/ls/community/executive-rewards. If Grantee does not have access to the website, Grantee must contact Global Rewards Equity Administration, Motorola Solutions, Inc., 500 W. Monroe Street, Chicago, Illinois 60661 U.S.A. to request LRIP and/or Omnibus Plan documents.
22.Miscellaneous. The PSUs shall be subject to Section 5 of the Employment Agreement.
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APPENDIX A
| Relative TSR Payout Scale* | |||||
| MSI 3-Year TSR Percentile Rank | Payout Factor** | ||||
90th – 100th Percentile | 250% | ||||
80th – 89.99th Percentile | 200% | ||||
70th – 79.99th Percentile | 175% | ||||
60th – 69.99th Percentile | 150% | ||||
55th – 59.99th Percentile | 110% | ||||
50th – 54.99th Percentile | 90% | ||||
45th – 49.99th Percentile | 80% | ||||
35th – 44.99th Percentile | 50% | ||||
30th – 34.99th Percentile | 30% | ||||
< 30.00th Percentile | 0% | ||||
*“Relative TSR” means the Company’s total stockholder return performance (i.e., (Ending Stock Price – Beginning Stock Price) divided by Beginning Stock Price) relative to the companies listed in the S&P 500 at the beginning of the Performance Period.
“Beginning Stock Price” means the daily average stock price during the three months immediately preceding the first day of Performance Period.
“Ending Stock Price” means the daily average stock price during the three months immediately preceding the last day of the Performance Period, with all dividends deemed reinvested.
**The Compensation Committee reserves the right to reduce the payout, in its discretion, if the Company’s TSR performance during the Performance Period is negative.
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Exhibit 10.3
PERFORMANCE STOCK UNIT AWARD AGREEMENT
This Performance Stock Unit Award (“Award”) is awarded on «Grant_date» (“Date of Grant”), by Motorola Solutions, Inc. (the “Company” or “Motorola Solutions”) to «First_Name» «Last_Name» (“Grantee”).
WHEREAS, Grantee is receiving the Award (as a type of Restricted Stock Unit) under Section 8 of the Motorola Solutions Omnibus Incentive Plan of 2015, as amended (the “Omnibus Plan”); and
WHEREAS, the Award is being made by the Compensation and Leadership Committee (the “Compensation Committee”) of the Board of Directors as provided in the Motorola Solutions Long Range Incentive Plan, as Amended and Restated February 11, 2021 (the “LRIP”).
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the Company hereby awards Performance Stock Units to Grantee on the following terms and conditions:
1.Award of Performance Stock Units. The Company hereby grants to Grantee a target number of «Txt_Nbr_of_Shares» Motorola Solutions Performance Stock Units (the “PSUs”) subject to the terms and conditions set forth below and subject to adjustment as provided in the LRIP and the Omnibus Plan, which provides an opportunity to earn up to a maximum number of shares of Motorola Solutions Common Stock (“Common Stock”) equal to 250% of such target number. No PSU shall be paid unless earned in accordance with this agreement. All PSUs that become earned pursuant to this agreement shall be paid in whole shares of Common Stock; no fractional shares shall be credited or delivered to Grantee. The PSUs are granted pursuant to the Omnibus Plan and are subject to all of the terms and conditions of the Omnibus Plan, and shall only be subject to the LRIP as specifically referenced in this Award.
2.Restrictions. The PSUs are being awarded to Grantee subject to the transfer and forfeiture conditions set forth below (the “Restrictions”):
a.No Assignment. The PSUs may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
b.Restricted Conduct. If Grantee engages in any of the conduct described in subparagraphs (i) through (v) below for any reason, in addition to all remedies in law and/or equity available to the Company or any Subsidiary (as defined in the LRIP), including the recovery of liquidated damages, Grantee shall forfeit all PSUs. For purposes of subparagraphs (i) through (v) below, “Company” or “Motorola Solutions” shall mean Motorola Solutions, Inc. and/or any of its Subsidiaries.
(i)Confidential Information. During the course of Grantee’s employment with the Company or any Subsidiary and thereafter, Grantee uses or discloses, except on behalf of the Company and pursuant to the Company’s directions, any Company Confidential Information (as defined in Section 20 below); and/or
(ii)Solicitation of Employees. During Grantee’s employment and for a period of one year following the termination of Grantee’s employment for any reason, Grantee hires, recruits, solicits or induces, or causes, allows, permits or aids others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information (as defined in
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Section 20 below) of the Company to terminate his/her employment with the Company and/or to seek employment with Grantee’s new or prospective employer, or any other company; and/or
(iii)Solicitation of Customers. During Grantee’s employment and for a period of one year following the termination of Grantee’s employment for any reason, Grantee, directly or indirectly, on behalf of Grantee or any other person, company or entity, solicits or participates in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which Grantee had direct or indirect contact regarding those products or services or about which Grantee learned Confidential Information (as defined in Section 20 below) at any time during the one year prior to Grantee’s termination of employment with the Company; and/or
(iv)Non-Competition regarding Products or Services. During Grantee’s employment and for a period of one year following the termination of Grantee’s employment for any reason, Grantee, directly or indirectly, in any capacity, provides products or services competitive with or similar to products or services offered by the Company to any person, company or entity which was a customer for such products or services and with which customer Grantee had direct or indirect contact regarding those products or services or about which customer Grantee learned Confidential Information at any time during the one year prior to Grantee’s termination of employment with the Company; and/or
(v)Non-Competition regarding Activities. During Grantee’s employment and for a period of one year following the termination of Grantee’s employment for any reason, Grantee engages in activities which are entirely or in part the same as or similar to activities in which Grantee engaged at any time during the one year preceding termination of Grantee’s employment with the Company, for any person, company or entity in connection with products, services or technological developments (existing or planned) that are entirely or in part the same as, similar to, or competitive with, any products, services or technological developments (existing or planned) on which Grantee worked at any time during the one year preceding termination of Grantee’s employment. This paragraph applies in countries in which Grantee has physically been present performing work for the Company at any time during the one year preceding termination of Grantee’s employment.
c.Recoupment Policy. The PSUs are subject to the terms and conditions of the Company’s Policy Regarding Recoupment of Incentive Payments upon Financial Restatement, as such policy is in effect on the Date of Grant (such policy, being the “Recoupment Policy”), as set forth in more detail in the LRIP.
Notwithstanding the foregoing, nothing in this Section 2 is intended to or shall limit, prevent, impede or interfere with Grantee’s non-waivable right, without prior notice to the Company, to provide information to the government, participate in investigations, testify in proceedings regarding the Company or any Subsidiary’s past or future conduct, engage in any activities protected under whistleblower statutes, or to receive and fully retain a monetary award from a
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government-administered whistleblower award program for providing information directly to a government agency. Grantee does not need prior authorization from the Company to make any such reports or disclosures and is not required to notify the Company that Grantee has made such reports or disclosures.
3.Earning. Subject to the remaining terms and conditions of this Award, and provided the PSUs have not been forfeited as described in Section 2 above, the PSUs will be earned as follows:
a.Performance Period. The PSUs will be earned and payable, if at all, based on the Company’s performance from [____________], 20[__] until [____________], 20[__] (the “Performance Period”) to the extent provided in the following schedule, to be determined following the Compensation Committee’s certification of the achievement of the applicable performance criteria set forth in Appendix A (such date, the “Performance Certification Date”), which certification shall occur in no event later than March 15 of the year following the end of the Performance Period for which the PSUs may be earned:
| (A) PSUs Eligible to be Earned | (B) Payout Factor | (C) Number of PSUs Earned | ||||||||||||
| 100% of Target PSU Award | See Appendix A for Payout Factors | Target PSU Award (Column A) times Payout Factor (Column B) | ||||||||||||
Any PSUs that fail to be earned pursuant to Section 3(a) shall be forfeited, subject to the special provisions set forth in Sections 3(b) and (c). Any unearned PSUs shall be automatically forfeited upon Grantee’s termination of employment with Motorola Solutions prior to the last day of the Performance Period for any reason other than as specifically set forth in Sections 3(b) and (c) below. The Company will not be obligated to pay Grantee any consideration whatsoever for forfeited PSUs. For the avoidance of doubt, Grantee must remain employed on the last day of the Performance Period in order to earn any PSUs pursuant to this Award, except as explicitly set forth in this Award; provided, however, that if Grantee takes a Leave of Absence (as defined in the LRIP) from Motorola Solutions or a Subsidiary, such period shall constitute continued employment for purposes of this Award; provided, further, that, in such circumstances, the total number of PSUs that may become earned and payable to Grantee shall be pro-rated in accordance with the terms and conditions set forth in the LRIP.
b.Total and Permanent Disability or Death. Upon the occurrence of Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to Total and Permanent Disability (as defined in the LRIP) or death, in each case prior to the last day of the Performance Period, the target number of PSUs for the Performance Period shall become fully earned, assuming achievement of the applicable performance criteria at the target performance level, such that if the Award becomes earned pursuant to this Section 3(b), the Payout Factor shall be deemed to equal 1 (one).
c.Certain Terminations of Employment. Upon the occurrence of Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to (i) a Divestiture (as defined in the LRIP) that occurs during the final calendar year of the Performance Period, (ii) Grantee’s termination of employment by Motorola Solutions or a Subsidiary for reasons other than for Serious Misconduct (as defined in the LRIP) during the final calendar year of the Performance Period, or (iii) Retirement (as defined in the LRIP) prior
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to the last day of the Performance Period, and if the PSUs have not been forfeited as described in Section 2 above, then a number of PSUs for the Performance Period shall remain subject to performance through the end of the Performance Period and shall become earned based upon actual achievement of the applicable performance criteria set forth in Appendix A for the Performance Period on a pro rata basis in an amount equal to (A) the number of PSUs under this Award that become earned based on actual performance as described in this Section 3(c), multiplied by (B) a fraction, the numerator of which is the number of completed full months of service by Grantee from the beginning of the Performance Period to Grantee’s date of termination and the denominator of which is the number of months in the Performance Period.
4.Payment and Settlement of Earned PSUs.
a.General. Upon the earning of the PSUs described in Section 3 above, the Company shall, at its election, either: (i) establish a brokerage account for Grantee and credit to that account the number of shares of Common Stock of the Company equal to the number of PSUs that have been earned; or (ii) deliver to Grantee a certificate representing a number of shares of Common Stock equal to the number of PSUs that have been earned. Such earned PSUs shall be paid and settled as soon as practicable following the Performance Certification Date, but in no event later than March 15 of the year following the end of the Performance Period for which the PSUs were earned.
b.Total and Permanent Disability or Death. Upon the occurrence of Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to Total and Permanent Disability or death prior to the last day of the Performance Period (as described in Section 3(b) above), the PSUs that become earned pursuant to Section 3(b) shall be settled within 30 days of Grantee’s termination of employment due to Grantee’s Total and Permanent Disability or death.
c.Certain Terminations of Employment. Upon the occurrence of Grantee’s termination of employment with Motorola Solutions and its Subsidiaries due to (i) a Divestiture (as defined in the LRIP) that occurs during the final calendar year of the Performance Period, (ii) Grantee’s termination of employment by Motorola Solutions or a Subsidiary for reasons other than for Serious Misconduct (as defined in the LRIP) during the final calendar year of the Performance Period, or (iii) Retirement (as defined in the LRIP) prior to the last day of the Performance Period (each as described in Section 3(c) above), the PSUs that become earned PSUs in accordance with Section 3(c) will be payable as soon as practicable following the Performance Certification Date, based on the applicable performance criteria set forth in Appendix A, but in no event later than March 15 of the year following the end of the Performance Period for which the PSUs were earned; provided, however, that in the event that any of the events described in clauses (i), (ii), or (iii) above occurs prior to the end of the Performance Period and a Change in Control subsequently occurs after such event but prior to the end of the Performance Period, the PSUs that become earned PSUs in accordance with Section 3(c) shall be paid within 30 days of the consummation of such Change in Control.
5.Change in Control.
a.Notwithstanding anything in Sections 3 and 4 of this Award to the contrary, if a Change in Control of the Company occurs prior to the end of the Performance Period, and the
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successor corporation (or parent thereof) does not assume this Award or replace it with an economically equivalent award, then the target number of PSUs for the Performance Period during which such Change in Control occurs shall become fully earned, assuming achievement of the applicable performance criteria at the target performance level; provided, however that, with respect to any Award that is assumed or replaced, such assumed or replaced Award shall (i) no longer be subject to any performance condition, which shall be deemed satisfied at the target performance level for such assumed or replaced Award (i.e., the Payout Factor shall be deemed to equal one (1)), and (ii) be subject only to a time-based vesting period substantially equivalent to the applicable remaining Performance Period for such award; provided, further, that replacement awards shall be subject to accelerated vesting upon the occurrence of any of the following within 24 months following such Change in Control (or such lesser period as may remain in the Performance Period) (each a “Qualifying Termination”): (A) if Grantee is involuntarily terminated for a reason other than Cause, (B) if Grantee resigns for Good Reason, or (C) Grantee is eligible or becomes eligible for Retirement. For purposes of this paragraph, the terms “Change in Control,” “Cause,” and “Good Reason” are defined in the Omnibus Plan. In the event that Grantee’s employment is terminated for any reason prior to satisfying the time-based vesting condition, other than pursuant to a Qualifying Termination, the Award shall immediately and automatically be forfeited.
b.Upon the occurrence of a Change in Control prior to the end of the Performance Period, all PSUs that become earned pursuant to Section 5(a) above by reason of the failure of the successor corporation (or parent thereof) in the Change in Control to assume this Award or replace it with an economically equivalent award shall be settled within 30 days of the consummation of the Change in Control.
c.Upon the occurrence of a Change in Control prior to the end of the Performance Period and the subsequent assumption or replacement of this Award with an economically equivalent award by the successor corporation (or parent thereof) in the Change in Control, the settlement of any such assumed or replacement award that becomes payable to Grantee on account of Grantee’s Qualifying Termination shall be settled within 30 days following such Qualifying Termination; provided, however that in the event that Grantee is eligible or becomes eligible for Retirement prior to a Qualifying Termination, such award will be settled no later than March 15 of the calendar year following later of (x) the calendar year in which the Change in Control occurs, or (y) the calendar year in which Grantee is eligible or becomes eligible for Retirement.
6.Whole Shares. All earned PSUs shall be paid in whole shares of Common Stock; no fractional shares shall be credited or delivered to Grantee.
7.Adjustments. The PSUs shall be subject to adjustment as provided in Section 16 of the Omnibus Plan.
8.Dividends. No dividends (or dividend equivalents) shall be paid with respect to unearned PSUs credited to Grantee’s account.
9.Withholding Taxes. The Company is entitled to withhold applicable taxes for the respective tax jurisdiction attributable to this Award or any payment made in connection with the PSUs. If Grantee is not subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) at the time applicable taxes are assessed, the Company, in its sole discretion,
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may satisfy its tax withholding responsibilities, in whole or in part, by either (a) electing to withhold a sufficient number of shares of Common Stock otherwise deliverable in connection with the applicable PSUs that are earned, the Fair Market Value of which shall be determined on the Payment Date (as defined in Section 20 below) in accordance with Section 20 below, to satisfy Grantee’s tax withholding obligation or (b) requiring Grantee to pay, by cash or certified check, the amount necessary to satisfy Grantee’s tax withholding obligation. If Grantee is subject to Section 16 of the Exchange Act at the time applicable taxes are assessed, Grantee may satisfy any withholding obligation, in whole or in part, by either (A) electing to have the Company withhold a sufficient number of shares of Common Stock otherwise deliverable in connection with the applicable PSUs that are earned, the Fair Market Value of which shall be determined on the Payment Date (as defined in Section 20 below) in accordance with Section 20 below, to satisfy Grantee’s tax withholding obligation or (B) paying, by cash or certified check, the amount necessary to satisfy Grantee’s tax withholding obligation.
10.Voting and Other Rights.
a.Grantee shall have no rights as a stockholder of the Company in respect of the PSUs, including the right to vote and to receive cash dividends and other distributions until delivery of certificate or equivalent representing shares of Common Stock in satisfaction of the PSUs.
b.The grant of PSUs does not confer upon Grantee any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary to terminate Grantee’s employment at any time.
11.Funding. No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any PSUs awarded hereunder. The grant of PSUs hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company.
12.Nature of Award. By accepting this agreement, Grantee acknowledges his understanding that the grant of PSUs under this agreement is completely at the discretion of Motorola Solutions, and that Motorola Solutions’ decision to make this Award in no way implies that similar awards may be granted in the future or that Grantee has any guarantee of future employment. Nor shall this or any such grant interfere with Grantee’s right or the Company’s right to terminate such employment relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between Grantee and the Company. Grantee’s acceptance of this Award is voluntary. The Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments, notwithstanding any provision of any compensation, insurance agreement or benefit plan to the contrary.
13.Acknowledgements. With respect to the PSUs, this agreement is the entire agreement with the Company. No waiver of any breach of any provision of this agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this agreement shall be severable and in the event that any provision of this agreement shall be found by any court as specified in Section 19 below to be unenforceable, in whole or in part, the remainder of this agreement shall nevertheless be enforceable and binding on the parties. Grantee hereby agrees that the court may modify any invalid, overbroad or unenforceable term of this agreement so that such term, as modified, is valid and enforceable
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under applicable law. Further, by accepting any Award under this agreement, Grantee affirmatively states that she or he has not, will not and cannot, rely on any representations not expressly made herein.
14.Motorola Solutions Assignment Rights. Motorola Solutions shall have the right to assign this agreement, which shall not affect the validity or enforceability of this agreement. This agreement shall inure to the benefit of assigns and successors of Motorola Solutions.
15.Waiver. The failure of the Company to enforce at any time any provision of this agreement shall in no way be construed to be a waiver of such provision or any other provision hereof.
16.Actions by the Compensation Committee. The Compensation Committee may delegate its authority to administer this agreement consistent with applicable law. The actions and determinations of the Compensation Committee or its delegate shall be binding upon the parties.
17.Consent to Transfer Personal Data. By accepting this award, Grantee voluntarily acknowledges and consents to the collection, use, processing and transfer of personal data as described in this Section. Grantee is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide the consent may affect Grantee’s ability to participate in the LRIP and the Omnibus Plan. Motorola Solutions, its Subsidiaries and Grantee’s employer hold certain personal information about Grantee, that may include his/her name, home address and telephone number, date of birth, social security number or other employee identification number, salary grade, hire data, salary, nationality, job title, any shares of stock held in Motorola Solutions, or details of all PSUs or any other entitlement to shares of stock awarded, canceled, purchased, vested, or unvested, for the purpose of managing and administering the LRIP and/or the Omnibus Plan (“Data”). Motorola Solutions and/or its Subsidiaries will transfer Data among themselves as necessary for the purpose of implementation, administration and management of Grantee’s participation in the LRIP and the Omnibus Plan, and Motorola Solutions and/or any of its Subsidiaries may each further transfer Data to any third parties assisting Motorola Solutions in the implementation, administration and management of the LRIP and/or the Omnibus Plan. These recipients may be located throughout the world, including the United States. Grantee authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantee’s participation in the LRIP and/or the Omnibus Plan, including any requisite transfer of such Data as may be required for the administration of the LRIP and/or the Omnibus Plan and/or the subsequent holding of shares of stock on Grantee’s behalf to a broker or other third party with whom Grantee may elect to deposit any shares of stock acquired pursuant to the LRIP and/or the Omnibus Plan. Grantee may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting Motorola Solutions; however, withdrawing consent may affect Grantee’s ability to participate in the LRIP and the Omnibus Plan.
18.Remedies for Breach. Grantee hereby acknowledges that the harm caused to the Company by the breach or anticipated breach of Section 2(b) above will be irreparable and further agrees the Company may obtain injunctive relief against Grantee in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this agreement, any other agreements between Grantee and the Company for the protection of the Company’s Confidential Information (as defined in Section 20) or law, including the recovery of liquidated damages. Grantee agrees that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in Section 19 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over Grantee. This relief would occur
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without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief.
19.Governing Law. All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any state’s conflicts of law principles. Any disputes regarding this Award or agreement shall be brought only in the state or federal courts of Illinois.
20.Definitions. Any capitalized terms used herein that are not otherwise defined below or elsewhere in this agreement shall have the same meaning provided under the LRIP and the Omnibus Plan.
a.“Confidential Information” means information concerning the Company and its business that is not generally known outside the Company, and includes (i) trade secrets; (ii) intellectual property; (iii) the Company’s methods of operation and Company processes; (iv) information regarding the Company’s present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (v) information on customers or potential customers, including customers’ names, sales records, prices, and other terms of sales and Company cost information; (vi) Company personnel data; (vii) Company business plans, marketing plans, financial data and projections; and (viii) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed not generally known until such broader use is actually commercially implemented.
b.“Fair Market Value” shall be the closing price for a share of Common Stock on the date on which any PSUs earned pursuant to this Award are paid in accordance with Section 4 above (such date, the “Payment Date”), as reported for the New York Stock Exchange-Composite Transactions in the Wall Street Journal at www.online.wsj.com. In the event the New York Stock Exchange is not open for trading on the Payment Date, or if the Common Stock does not trade on such day, Fair Market Value for this purpose shall be the closing price of the Common Stock on the last trading day prior to the Payment Date.
21.409A Compliance Applicable Only to Grantees Subject to U.S. Tax. Notwithstanding any provision in this Award to the contrary, if Grantee is a “specified employee” (certain officers of Motorola Solutions within the meaning of Treasury Regulation Section 1.409A-1(i) and using the identification methodology selected by Motorola Solutions from time to time) on the date of Grantee’s termination of employment, any payment which would be considered “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) that Grantee is entitled to receive upon termination of employment, and which otherwise would be paid or delivered during the six month period immediately following the date of Grantee’s termination of employment, will instead be paid or delivered on the earlier of (a) the first day of the seventh month following the date of Grantee’s termination of employment and (b) Grantee’s death. For purposes of determining the time of payment or delivery of any payment Grantee is entitled to receive upon termination of employment, the determination of whether Grantee has experienced a termination of employment will be determined by Motorola Solutions in a manner consistent with the definition of “separation from service” under the default rules of Section 409A of the Code.
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22.Plan Documents. The Omnibus Plan and the Prospectus for the Omnibus Plan are available on the Motorola Solutions website at https://batchat.motorolasolutions.com/home/ls/community/stock-programs and the LRIP is available at https://batchat.motorolasolutions.com/home/ls/community/executive-rewards. If Grantee does not have access to the website, Grantee must contact Global Rewards Equity Administration, Motorola Solutions, Inc., 500 W. Monroe Street, Chicago, Illinois 60661 U.S.A. to request LRIP and/or Omnibus Plan documents.
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APPENDIX A
| Relative TSR Payout Scale* | |||||
| MSI 3-Year TSR Percentile Rank | Payout Factor** | ||||
90th – 100th Percentile | 250% | ||||
80th – 89.99th Percentile | 200% | ||||
70th – 79.99th Percentile | 175% | ||||
60th – 69.99th Percentile | 150% | ||||
55th – 59.99th Percentile | 110% | ||||
50th – 54.99th Percentile | 90% | ||||
45th – 49.99th Percentile | 80% | ||||
35th – 44.99th Percentile | 50% | ||||
30th – 34.99th Percentile | 30% | ||||
< 30.00th Percentile | 0% | ||||
*“Relative TSR” means the Company’s total stockholder return performance (i.e., (Ending Stock Price – Beginning Stock Price) divided by Beginning Stock Price) relative to the companies listed in the S&P 500 at the beginning of the Performance Period.
“Beginning Stock Price” means the daily average stock price during the three months immediately preceding the first day of Performance Period.
“Ending Stock Price” means the daily average stock price during the three months immediately preceding the last day of the Performance Period, with all dividends deemed reinvested.
**The Compensation Committee reserves the right to reduce the payout, in its discretion, if the Company’s TSR performance during the Performance Period is negative.
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Exhibit 10.4
PERFORMANCE STOCK UNIT AWARD AGREEMENT
This Performance Stock Unit Award (“Award”) is awarded on «Grant_date» (“Date of Grant”), by Motorola Solutions, Inc. (the “Company” or “Motorola Solutions”) to «First_Name» «Last_Name» (“Grantee”).
WHEREAS, Grantee is receiving the Award (as a type of Restricted Stock Unit) under Section 8 of the Motorola Solutions Omnibus Incentive Plan of 2015, as amended (the “Omnibus Plan”); and
WHEREAS, the Award is being made by the Compensation and Leadership Committee (the “Compensation Committee”) of the Board of Directors as provided in the Motorola Solutions Long Range Incentive Plan, as Amended and Restated February 11, 2021 (the “LRIP”).
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the Company hereby awards Performance Stock Units to you on the following terms and conditions:
1.Award of Performance Stock Units. The Company hereby grants to you a target number of «Txt_Nbr_of_Shares» Motorola Solutions Performance Stock Units (the “PSUs”) subject to the terms and conditions set forth below and subject to adjustment as provided in the LRIP and the Omnibus Plan, which provides an opportunity to earn up to a maximum number of shares of Motorola Solutions Common Stock (“Common Stock”) equal to 250% of such target number. No PSU shall be paid unless earned in accordance with this agreement. All PSUs that become earned pursuant to this agreement shall be paid in whole shares of Common Stock; no fractional shares shall be credited or delivered to you. The PSUs are granted pursuant to the Omnibus Plan and are subject to all of the terms and conditions of the Omnibus Plan, and shall only be subject to the LRIP as specifically referenced in this Award.
2.Restrictions. The PSUs are being awarded to you subject to the transfer and forfeiture conditions set forth below (the “Restrictions”). In its sole discretion, the Compensation Committee or its delegee may amend or waive the provisions of subparagraphs (b) or (c) hereof, in whole or in part, to the extent necessary or advisable to comply with applicable laws, as determined by the Compensation Committee (or its delegee):
a.No Assignment. Prior to the earning of the PSUs as described in Section 3 below, you may not directly or indirectly, in any capacity, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the PSUs still subject to Restrictions. The PSUs shall be forfeited if you violate or attempt to violate this transfer restriction.
b.Restricted Conduct. As consideration for the PSUs granted above under the terms of this Award and in acknowledgement of Motorola Solutions having provided you with confidential and proprietary information as a Motorola Solutions vice president or elected officer, you agree that you will comply with the restrictions set forth in subparagraphs (i) through (vi) below. If you violate or attempt to violate any of the restrictions described in subparagraphs (i) through (vi) below for any reason, you acknowledge and agree that the Company would suffer irreparable harm, will have no adequate remedy at law and shall be entitled to injunctive relief. You also acknowledge and agree that in addition to all remedies in law and/or equity available to the Company or any Subsidiary (as defined in the LRIP), including without limitation injunctive relief or the recovery of liquidated damages, you shall forfeit all PSUs (whether or not earned) and shall immediately pay to the Company,
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with respect to previously earned PSUs, an amount equal to (x) the per share Fair Market Value (as defined in Section 29 below) of the Common Stock on the date on which the Restrictions lapsed with respect to the applicable earned PSUs times (y) the number of shares underlying such previously-earned PSUs, without regard to any Tax-Related Items (as defined in Section 9) that may have been deducted from such amount. For purposes of subparagraphs (i) through (vi) below, “Company” or “Motorola Solutions” shall mean Motorola Solutions, Inc. and/or any of its Subsidiaries.
(i)Confidential Information. During the course of your employment with the Company or any Subsidiary and thereafter, you agree that you will not use or disclose, except on behalf of the Company and pursuant to the Company’s directions, any Confidential Information (as defined in Section 29 below);
(ii)Solicitation of Employees. During your employment and for a period of one year following the termination of your employment for any reason, you agree that you will not hire, recruit, solicit or induce, or cause, allow, permit or aid others to hire, recruit, solicit or induce, or to communicate in support of those activities, any employee of the Company who possesses Confidential Information of the Company to terminate his/her employment with the Company and/or to seek employment with your new or prospective employer, or any other company;
(iii)Solicitation of Customers. During your employment and for a period of one year following the termination of your employment for any reason, you agree that you will not, directly or indirectly, in any capacity, on behalf of yourself or any other person, company or entity, solicit or participate in soliciting, products or services competitive with or similar to products or services offered by, manufactured by, designed by or distributed by the Company to any person, company or entity which was a customer or potential customer for such products or services and with which you had direct or indirect contact regarding those products or services or about which you learned Confidential Information at any time during the one year prior to your termination of employment with the Company;
(iv)Non-Competition regarding Products or Services. During your employment and for a period of one year following the termination of your employment for any reason, you agree that you will not, directly or indirectly, in any capacity, provide products or services competitive with or similar to products or services offered by the Company to any person, company or entity which was a customer for such products or services and with which customer you had direct or indirect contact regarding those products or services or about which customer you learned Confidential Information at any time during the one year prior to your termination of employment with the Company;
(v)Non-Competition regarding Activities. During your employment and for a period of one year following the termination of your employment for any reason, you agree that you will not, directly or indirectly, in any capacity, for your new or prospective employer, or any other person, company, or entity, accept employment involving or otherwise engage in any activity or activities competitive with or similar to any activity or activities in which you engaged at any time during the one year preceding termination of your employment with the Company in connection with any products, services, projects or technological developments (existing or planned) on which you
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worked or about which you learned Confidential Information at any time during the one year preceding termination of your employment; provided that this sub-paragraph (v) applies in any countries in which you have physically been present performing work for the Company at any time during the one year preceding termination of your employment; and
(vi)Non-Competition regarding Other Companies. During your employment and for a period of one year following the termination of your employment for any reason, you agree that you will not, directly or indirectly, in any capacity, accept employment with, render services to and/or act as an agent, associate, independent contractor, consultant, manager, member or partner of any person, company, or entity that competes with the Company in connection with any products, services, projects or technological developments (existing or planned) on which you worked or about which you learned Confidential Information at any time during the one year preceding termination of your employment.
c. Recoupment Policy. If you are an officer subject to Section 16, or become subject to Section 10D, of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) the PSUs are subject to the terms and conditions of the Company’s Policy Regarding Recoupment of Incentive Payments upon Financial Restatement (such policy, as it may be amended from time to time, including as it may be amended to comply with Section 10D of the Exchange Act, the “Recoupment Policy”). The Recoupment Policy provides that, in the event of certain accounting restatements (a “Policy Restatement”), the Company’s independent directors may require, among other things (i) cancellation of any of the PSUs that remain outstanding; and/or (ii) reimbursement of any gains in respect of the PSUs, if and to the extent the conditions set forth in the Recoupment Policy apply. Any determinations made by the independent directors in accordance with the Recoupment Policy shall be binding upon you. The Recoupment Policy is in addition to any other remedies which may be otherwise available to the Company at law, in equity or under contract, or otherwise required by law, including under Section 10D of the Exchange Act.
Notwithstanding the foregoing, nothing in this Section 2 is intended to or shall limit, prevent, impede or interfere with your non-waivable right, without prior notice to the Company, to provide information to the government, participate in investigations, testify in proceedings regarding the Company or any Subsidiary’s past or future conduct, engage in any activities protected under whistleblower statutes, or to receive and fully retain a monetary award from a government-administered whistleblower award program for providing information directly to a government agency. You do not need prior authorization from the Company to make any such reports or disclosures and are not required to notify the Company that you have made such reports or disclosures.
3.Earning. Subject to the remaining terms and conditions of this Award, and provided the PSUs have not been forfeited as described in Section 2 above, the PSUs will be earned as follows:
a.Performance Period. The PSUs will be earned and payable, if at all, based on the Company’s performance from [____________], 20[__] until [____________], 20[__] (the “Performance Period”) to the extent provided in the following schedule, to be determined following the Compensation Committee’s certification of the achievement of the applicable performance criteria set forth in Appendix A (such date, the “Performance Certification Date”), which certification shall occur in no event later than March 15 of the year following the end of the Performance Period for which the PSUs may be earned:
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| (A) PSUs Eligible to be Earned | (B) Payout Factor | (C) Number of PSUs Earned | ||||||||||||
| 100% of Target PSU Award | See Appendix A for Payout Factors | Target PSU Award (Column A) times Payout Factor (Column B) | ||||||||||||
Any PSUs that fail to be earned pursuant to Section 3(a) shall be forfeited, subject to the special provisions set forth in Sections 3(b) and (c). Any unearned PSUs shall be automatically forfeited upon your termination of employment with Motorola Solutions prior to the last day of the Performance Period for any reason other than as specifically set forth in Sections 3(b) and (c) below. The Company will not be obligated to pay you any consideration whatsoever for forfeited PSUs. For the avoidance of doubt, you must remain employed on the last day of the Performance Period in order to earn any PSUs pursuant to this Award, except as explicitly set forth in this Award; provided, however, that if you take a Leave of Absence (as defined in the LRIP) from Motorola Solutions or a Subsidiary, such period shall constitute continued employment for purposes of this Award; provided, further, that, in such circumstances, the total number of PSUs that may become earned and payable to you shall be pro-rated in accordance with the terms and conditions set forth in the LRIP.
b.Total and Permanent Disability or Death. Upon the occurrence of your termination of employment with Motorola Solutions and its Subsidiaries due to Total and Permanent Disability (as defined in the LRIP) or death, in each case prior to the last day of the Performance Period, the target number of PSUs for the Performance Period shall become fully earned, assuming achievement of the applicable performance criteria at the target performance level, such that if the Award becomes earned pursuant to this Section 3(b), the Payout Factor shall be deemed to equal 1 (one).
c.Certain Terminations of Employment. Upon the occurrence of your termination of employment with Motorola Solutions and its Subsidiaries due to (i) a Divestiture (as defined in the LRIP) that occurs during the final calendar year of the Performance Period, (ii) your termination of employment by Motorola Solutions or a Subsidiary for reasons other than for Serious Misconduct (as defined in the LRIP) during the final calendar year of the Performance Period, or (iii) Retirement (as defined in the LRIP) prior to the last day of the Performance Period, and if the PSUs have not been forfeited as described in Section 2 above, then a number of PSUs for the Performance Period shall remain subject to performance through the end of the Performance Period and shall become earned based upon actual achievement of the applicable performance criteria set forth in Appendix A for the Performance Period on a pro rata basis in an amount equal to (A) the number of PSUs under this Award that become earned based on actual performance as described in this Section 3(c), multiplied by (B) a fraction, the numerator of which is the number of completed full months of service by you from the beginning of the Performance Period to your date of termination and the denominator of which is the number of months in the Performance Period.
4.Payment and Settlement of Earned PSUs.
a.General. Upon the earning of the PSUs described in Section 3 above, the Company shall, at its election, either: (i) establish a brokerage account for you and credit to that account the number of shares of Common Stock of the Company equal to the number of PSUs that have been earned; or (ii) deliver to you a certificate representing a number of shares of Common
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Stock equal to the number of PSUs that have been earned. Such earned PSUs shall be paid and settled as soon as practicable following the Performance Certification Date, but in no event later than March 15 of the year following the end of the Performance Period for which the PSUs were earned.
b.Total and Permanent Disability or Death. Upon the occurrence of your termination of employment with Motorola Solutions and its Subsidiaries due to Total and Permanent Disability or death prior to the last day of the Performance Period (as described in Section 3(b) above), the PSUs that become earned pursuant to Section 3(b) shall be settled within 30 days of your termination of employment due to your Total and Permanent Disability or death.
c.Certain Terminations of Employment. Upon the occurrence of your termination of employment with Motorola Solutions and its Subsidiaries due to (i) a Divestiture (as defined in the LRIP) that occurs during the final calendar year of the Performance Period, (ii) your termination of employment by Motorola Solutions or a Subsidiary for reasons other than for Serious Misconduct (as defined in the LRIP) during the final calendar year of the Performance Period, or (iii) Retirement (as defined in the LRIP) prior to the last day of the Performance Period (each as described in Section 3(c) above), the PSUs that become earned PSUs in accordance with Section 3(c) will be payable as soon as practicable following the Performance Certification Date, based on the applicable performance criteria set forth in Appendix A, but in no event later than March 15 of the year following the end of the Performance Period for which the PSUs were earned; provided, however, that in the event that any of the events described in clauses (i), (ii), or (iii) above occurs prior to the end of the Performance Period and a Change in Control subsequently occurs after such event but prior to the end of the Performance Period, the PSUs that become earned PSUs in accordance with Section 3(c) shall be paid within 30 days of the consummation of such Change in Control.
5.Change in Control.
a.Notwithstanding anything in Sections 3 and 4 of this Award to the contrary, if a Change in Control of the Company occurs prior to the end of the Performance Period, and the successor corporation (or parent thereof) does not assume this Award or replace it with an economically equivalent award, then the target number of PSUs for the Performance Period during which such Change in Control occurs shall become fully earned, assuming achievement of the applicable performance criteria at the target performance level; provided, however that, with respect to any Award that is assumed or replaced, such assumed or replaced Award shall (i) no longer be subject to any performance condition, which shall be deemed satisfied at the target performance level for such assumed or replaced Award (i.e., the Payout Factor shall be deemed to equal one (1)), and (ii) be subject only to a time-based vesting period substantially equivalent to the applicable remaining Performance Period for such award; provided, further, that replacement awards shall be subject to accelerated vesting upon the occurrence of any of the following within 24 months following such Change in Control (or such lesser period as may remain in the Performance Period) (each a “Qualifying Termination”): (A) if you are involuntarily terminated for a reason other than Cause, (B) if you resign for Good Reason, or (C) you are eligible or become eligible for Retirement. For purposes of this paragraph, the terms “Change in Control,” “Cause,” and “Good Reason” are defined in the Omnibus Plan. In the event that your employment is terminated for any reason prior to satisfying the time-based vesting condition, other than
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pursuant to a Qualifying Termination, the Award shall immediately and automatically be forfeited.
b.Upon the occurrence of a Change in Control prior to the end of the Performance Period, all PSUs that become earned pursuant to Section 5(a) above by reason of the failure of the successor corporation (or parent thereof) in the Change in Control to assume this Award or replace it with an economically equivalent award shall be settled within 30 days of the consummation of the Change in Control.
c.Upon the occurrence of a Change in Control prior to the end of the Performance Period and the subsequent assumption or replacement of this Award with an economically equivalent award by the successor corporation (or parent thereof) in the Change in Control, the settlement of any such assumed or replacement award that becomes payable to you on account of your Qualifying Termination shall be settled within 30 days following such Qualifying Termination; provided, however that in the event that you are eligible or become eligible for Retirement prior to a Qualifying Termination, such award will be settled no later than March 15 of the calendar year following later of (x) the calendar year in which the Change in Control occurs, or (y) the calendar year in which you are eligible or become eligible for Retirement.
6.Whole Shares. All earned PSUs shall be paid in whole shares of Common Stock; no fractional shares shall be credited or delivered to you.
7.Adjustments. The PSUs shall be subject to adjustment as provided in Section 16 of the Omnibus Plan.
8.Dividends. No dividends (or dividend equivalents) shall be paid with respect to unearned PSUs credited to your account.
9.Tax-Related Items.
a.Responsibility for Taxes. By accepting the Award, you acknowledge and agree that:
i.regardless of any action taken by the Company or, if different, your employer (the “Employer”), you shall be ultimately responsible for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the LRIP and the Omnibus Plan and legally applicable to you or legally imposed on the Company or the Employer as a result of your participation in the LRIP and the Omnibus Plan and deemed by the Company or the Employer to be an appropriate charge to you (“Tax-Related Items”);
ii.your liability for Tax-Related Items may exceed the amount, if any, actually withheld by the Company or the Employer;
iii.the Company and/or the Employer make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including, but not limited to, the grant, vesting, earning, or settlement of the PSUs, and the subsequent sale of shares of Common Stock acquired pursuant to such settlement, if any;
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iv.the Company and/or the Employer do not commit to and are under no obligation to structure the terms of the grant of the Award or any aspect of the Award to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result; and
v.if you are subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
b. Withholding Taxes. Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:
i.withholding shares of Common Stock otherwise deliverable to you in connection with settlement and payment of the PSUs; or
ii.withholding from proceeds of the sale of shares of Common Stock acquired upon settlement and payment of the PSUs, either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization).
Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable withholding amounts or other applicable withholding rates, including minimum and maximum applicable rates in the relevant jurisdiction(s), in which case you may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Common Stock. If the obligation for Tax-Related Items is satisfied by withholding in shares of Common Stock, for tax purposes, you are deemed to have been issued the full number of shares of Common Stock subject to the earned PSUs, notwithstanding that a number of the shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items. You agree to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of your participation in the Omnibus Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the shares of Common Stock, or the proceeds of the sale of such shares, if you fail to comply with your obligations in connection with the Tax-Related Items.
c. Withholding Taxes for Section 16 Officers. Notwithstanding Section 9(b) above, if you are considered an officer for purposes of Section 16 of the Exchange Act, you may elect to satisfy your obligations for Tax-Related Items by one of the withholding methods set forth in Section 9(b)(i) - (ii) above, unless otherwise set forth in any applicable International Appendix for your country. In the absence of such an election, the Company and/or the Employer will satisfy the obligations with regard to all Tax-Related Items by withholding in shares of Common Stock otherwise deliverable in connection with the applicable earned PSUs, as set forth in Section 9(b)(i), unless the use of such withholding method is problematic under applicable tax or securities laws, or has materially adverse accounting
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consequences, in which case, the obligation for Tax-Related Items will be satisfied by the methods set forth in Section 9(b)(ii) above.
10.Voting and Other Rights.
i.You shall have no rights as a stockholder of the Company in respect of the PSUs, including the right to vote and to receive cash dividends and other distributions until delivery of certificate or equivalent representing shares of Common Stock in satisfaction of the PSUs.
ii.The grant of PSUs does not confer upon you any right to continue in the employ of the Company or a Subsidiary or to interfere with the right of the Company or a Subsidiary to terminate your employment at any time.
11.Funding. No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any PSUs awarded hereunder. The grant of PSUs hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company.
12.Nature of Award. In accepting the Award, you acknowledge, understand and agree that:
a.the Omnibus Plan and LRIP are established voluntarily by the Company, they are discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the LRIP and the Omnibus Plan;
b.the grant of PSUs is exceptional, voluntary, non-recurrent and occasional and does not create any contractual or other right to receive future grants of PSUs, or benefits in lieu of PSUs, even if PSUs have been granted in the past;
c.all decisions with respect to future grants of PSUs or other awards, if any, will be at the sole discretion of the Company;
d.the Award and your participation in the LRIP and the Omnibus Plan shall not create or amend an employment or service contract with the Company, the Employer or any Subsidiary, and shall not interfere with the ability of the Company, the Employer or any Subsidiary, as applicable, to terminate your employment relationship (if any) at any time;
e.you are voluntarily participating in the LRIP and the Omnibus Plan;
f.the PSUs and the shares of Common Stock subject to the PSUs are not intended to replace any pension rights or compensation;
g.the PSUs and the shares of Common Stock subject to the PSUs and the income from and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, leave-related pay, pension or retirement benefits or payments, welfare benefits or any similar mandatory payments;
h.the future value of the shares of Common Stock underlying the PSUs is unknown, indeterminable and cannot be predicted with certainty;
i.except as otherwise provided in this agreement, in the Omnibus Plan or the LRIP, or by the Company in its discretion, the PSUs and the benefits evidenced by the Agreement do not
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create any entitlement to have the PSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Common Stock of the Company;
j.unless otherwise agreed with the company in writing, the PSUs and the shares of Common Stock subject to the PSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of any Subsidiary;
k.the PSUs and the shares of Common Stock subject to the PSUs are not part of normal or expected compensation or salary for any purpose;
l.none of the Company, the Employer or any Subsidiary shall be liable for any foreign exchange rate fluctuation between your local currency and the U.S. dollar that may affect the value of the PSUs or of any amounts due to you pursuant to the settlement of the PSUs or the subsequent sale of any shares of Common Stock acquired upon settlement of the PSUs; and
m.no claim or entitlement to compensation or damages shall arise from forfeiture of the PSUs resulting from the termination of your employment (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any).
13.Acknowledgements. With respect to the PSUs, this agreement is the entire agreement with the Company. No waiver of any breach of any provision of this agreement by the Company shall be construed to be a waiver of any succeeding breach or as a modification of such provision. The provisions of this agreement shall be severable and in the event that any provision of this agreement shall be found by any court as specified in Section 20 below to be unenforceable, in whole or in part, the remainder of this agreement shall nevertheless be enforceable and binding on the parties. You hereby agree that the court may modify any invalid, overbroad or unenforceable term of this agreement so that such term, as modified, is valid and enforceable under applicable law. Further, by accepting any Award under this agreement, you affirmatively state that you have not, will not and cannot, rely on any representations not expressly made herein.
14.Motorola Solutions Assignment Rights. Motorola Solutions shall have the right to assign this agreement, which shall not affect the validity or enforceability of this agreement. This agreement shall inure to the benefit of assigns and successors of Motorola Solutions.
15.Waiver. The failure of the Company to enforce at any time any provision of this agreement shall in no way be construed to be a waiver of such provision or any other provision hereof.
16.Actions by the Compensation Committee. The Compensation Committee may delegate its authority to administer this agreement consistent with applicable law. The actions and determinations of the Compensation Committee or its delegate shall be binding upon the parties.
17.Agreement Following Termination of Employment.
a.You agree that upon termination of employment with Motorola Solutions or a Subsidiary, you will immediately inform Motorola Solutions of (i) the identity of any new employer (or the nature of any start-up business or self-employment), (ii) your new title, and (iii) your job duties and responsibilities.
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b.You hereby authorize Motorola Solutions or a Subsidiary to provide a copy of this agreement to your new employer. You further agree to provide information to Motorola Solutions or a Subsidiary as may from time to time be requested in order to determine your compliance with the terms hereof.
18.Consent to Transfer Personal Data.
a.By accepting the Award, you hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in the Agreement and any other Award grant materials (“Data”) by and among, as applicable, the Employer, the Company and any Subsidiary for the exclusive purpose of implementing, administering and managing your participation in the LRIP and the Omnibus Plan. You understand that Data may include certain personal information about you, including, but not limited to, your name, home address, email address and telephone number, date of birth, social insurance number, passport number or other identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, details of all PSUs or any other entitlement to shares of Common Stock awarded, canceled, purchased, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, administering and managing the LRIP and the Omnibus Plan.
b.You understand that Data will be transferred to the Designated Broker (as defined in Section 29), which is assisting the Company with the implementation, administration and management of the Omnibus Plan. You understand that the recipients of Data may be located in the United States or elsewhere, and that a recipient’s country of operation (e.g., the United States) may have different data privacy laws and protections than your country. You understand that if you reside outside the United States, you may request a list with the names and addresses of any potential recipients of Data by contacting your human resources representative.
c.You authorize the Company, the Designated Broker and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the LRIP and the Omnibus Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Omnibus Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the LRIP and the Omnibus Plan. You understand if you reside outside the United States, you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your human resources representative. You understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to withdraw your consent, your employment status with the Employer will not be affected; the only consequence of refusing or withdrawing your consent is that the Company would not be able to make grants of PSUs or other awards to you, or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the LRIP and the Omnibus Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your human resources representative.
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d.If you work or reside in the European Union or European Economic Area (including the United Kingdom) and Switzerland, you acknowledge that you have read the Terms and Conditions appearing in the International Appendix to this Award Agreement (if applicable) for Countries within the European Union and European Economic Area (including the United Kingdom) and Switzerland related to the European General Data Protection Regulation.
19.Remedies for Breach. You hereby acknowledge that the harm caused to the Company by the breach or anticipated breach of Section 2(b) above will be irreparable and further agree the Company may obtain injunctive relief against you in addition to and cumulative with any other legal or equitable rights and remedies the Company may have pursuant to this agreement, any other agreements between you and the Company for the protection of the Company’s Confidential Information (as defined in Section 29) or law, including the recovery of liquidated damages. You agree that any interim or final equitable relief entered by a court of competent jurisdiction, as specified in Section 20 below, will, at the request of the Company, be entered on consent and enforced by any such court having jurisdiction over you. This relief would occur without prejudice to any rights either party may have to appeal from the proceedings that resulted in any grant of such relief.
20.Governing Law and Choice of Venue. All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the law of the State of Illinois without regard to any state’s conflicts of law principles. Any disputes regarding this Award or agreement shall be brought only in the state or federal courts of Illinois.
21.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the LRIP or the Omnibus Plan, or your acquisition or sale of the underlying shares of Common Stock. You acknowledge and agree that you should consult with your own personal tax, legal and financial advisors regarding your participation in the LRIP and the Omnibus Plan before taking any action related to the Omnibus Plan.
22.Compliance with Law. Notwithstanding any other provision of the LRIP, the Omnibus Plan, or this agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of Common Stock, the Company shall not be required to deliver any shares of Common Stock issuable upon earning or settlement of the PSUs prior to the completion of any registration or qualification of the Common Stock under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Common Stock with the SEC or any state or foreign securities commission, or to seek approval or clearance from any governmental authority for the issuance or sale of the shares of Common Stock. Further, you agree that the Company shall have unilateral authority to amend the LRIP, the Omnibus Plan, and the Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of shares of Common Stock.
23.Insider Trading Restrictions/Market Abuse Laws. You acknowledge that, depending on your country of residence or the Designated Broker’s country or country where the Common Stock is listed, you may be subject to insider trading restrictions and/or market abuse laws, which may affect
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your ability to accept, acquire, sell, attempt to sell or otherwise dispose of Common Stock, rights to Common Stock (e.g., PSUs) or rights linked to the value of Common Stock during such times as you are considered to have “inside information” regarding the Company (as defined by or determined under the laws in the applicable jurisdiction). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders you placed before possessing inside information. Furthermore, you could be prohibited from (a) disclosing the inside information to any third party, which may include your fellow employees (other than on a “need to know” basis) and (b) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You are responsible for ensuring compliance with any applicable restrictions and should consult your personal legal advisor on this matter.
24.Language. You acknowledge that you are sufficiently proficient in English or have consulted with an advisor who is sufficiently proficient in English to understand the terms and conditions of the Agreement. Furthermore, if you have received the Agreement or any other document related to the Award and/or the Omnibus Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
25.Exchange Control, Tax and/or Foreign Asset/Account Reporting. You acknowledge that there may be exchange control, tax, foreign asset and/or account reporting requirements which may affect your ability to acquire or hold shares of Common Stock acquired under the Omnibus Plan or cash received from participating in the LRIP or the Omnibus Plan (including from any dividends paid on shares of Common Stock acquired under the Omnibus Plan) in a brokerage/bank account or legal entity outside your country. You may be required to report such accounts, assets, the balances therein, the value thereof and/or the transactions related thereto to the tax or other authorities in your country. You also may be required to repatriate sale proceeds or other funds received as a result of your participation in the LRIP or the Omnibus Plan to your country through a designated bank or broker within a certain time after receipt. You acknowledge that it is your responsibility to be compliant with such regulations, and you should consult your personal legal advisor for any details.
26.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the LRIP and the Omnibus Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the LRIP and the Omnibus Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
27.International Appendix. Notwithstanding any provision of this agreement, the Award shall be subject to any terms and conditions set forth in the International Appendix to this agreement for your country, if applicable. Moreover, if you relocate to one of the countries included in such International Appendix, the terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The International Appendix, if applicable, constitutes part of this agreement.
28.Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the LRIP and the Omnibus Plan, on the PSUs and on any shares of Common Stock acquired under the Omnibus Plan (or the proceeds from the sale of such shares), to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
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29.Definitions. Any capitalized terms used herein that are not otherwise defined below or elsewhere in this agreement shall have the same meaning provided under the LRIP and the Omnibus Plan.
a.“Confidential Information” means information concerning the Company and its business that is not generally known outside the Company, and includes (i) trade secrets; (ii) intellectual property; (iii) the Company’s methods of operation and Company processes; (iv) information regarding the Company’s present and/or future products, developments, processes and systems, including invention disclosures and patent applications; (v) information on customers or potential customers, including customers’ names, sales records, prices, and other terms of sales and Company cost information; (vi) Company personnel data; (vii) Company business plans, marketing plans, financial data and projections; and (viii) information received in confidence by the Company from third parties. Information regarding products, services or technological innovations in development, in test marketing or being marketed or promoted in a discrete geographic region, which information the Company or one of its affiliates is considering for broader use, shall be deemed not generally known until such broader use is actually commercially implemented.
b.“Designated Broker” means E*TRADE Financial Services LLC or such other stock plan service provider as may be selected by the Company in the future for purposes of assisting the Company with the implementation, administration and management of the Omnibus Plan.
c.“Fair Market Value” shall be the closing price for a share of Common Stock on the date on which any PSUs earned pursuant to this Award are paid in accordance with Section 4 above (such date, the “Payment Date”), as reported for the New York Stock Exchange-Composite Transactions in the Wall Street Journal at www.online.wsj.com. In the event the New York Stock Exchange is not open for trading on the Payment Date, or if the Common Stock does not trade on such day, Fair Market Value for this purpose shall be the closing price of the Common Stock on the last trading day prior to the Payment Date.
30.409A Compliance Applicable Only to Grantees Subject to U.S. Tax. Notwithstanding any provision in this Award to the contrary, if you are a “specified employee” (certain officers of Motorola Solutions within the meaning of Treasury Regulation Section 1.409A-1(i) and using the identification methodology selected by Motorola Solutions from time to time) on the date of your termination of employment, any payment which would be considered “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) that you are entitled to receive upon termination of employment, and which otherwise would be paid or delivered during the six month period immediately following the date of your termination of employment, will instead be paid or delivered on the earlier of (a) the first day of the seventh month following the date of your termination of employment and (b) your death. For purposes of determining the time of payment or delivery of any payment you are entitled to receive upon termination of employment, the determination of whether you have experienced a termination of employment will be determined by Motorola Solutions in a manner consistent with the definition of “separation from service” under the default rules of Section 409A of the Code.
31.Acceptance of Terms and Conditions. By electronically accepting the Award within 30 days after the date of the electronic mail notification by the Company to you of the grant of the Award (“Email Notification Date”), you agree to be bound by the terms and conditions, the Omnibus Plan, the LRIP, and any and all rules and regulations established by Motorola Solutions in connection with
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awards issued under the LRIP and/or the Omnibus Plan. If you do not electronically accept the Award within 30 days of the Email Notification Date, you will not be entitled to the PSUs.
32.Plan Documents. The Omnibus Plan and the Prospectus for the Omnibus Plan are available on the Motorola Solutions website at https://batchat.motorolasolutions.com/home/ls/community/stock-programs and the LRIP is available at https://batchat.motorolasolutions.com/home/ls/community/executive-rewards. You may also contact PeopleConnect at https://drive.google.com/file/d/1xS974Zgt0UGortUQkzY9eU_AYXGg2Pbu. Alternatively, write to Global Rewards Equity Administration, Motorola Solutions, Inc., 500 W. Monroe Street, Chicago, Illinois 60661 U.S.A. to request documents.
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APPENDIX A
| Relative TSR Payout Scale* | |||||
| MSI 3-Year TSR Percentile Rank | Payout Factor** | ||||
90th – 100th Percentile | 250% | ||||
80th – 89.99th Percentile | 200% | ||||
70th – 79.99th Percentile | 175% | ||||
60th – 69.99th Percentile | 150% | ||||
55th – 59.99th Percentile | 110% | ||||
50th – 54.99th Percentile | 90% | ||||
45th – 49.99th Percentile | 80% | ||||
35th – 44.99th Percentile | 50% | ||||
30th – 34.99th Percentile | 30% | ||||
< 30.00th Percentile | 0% | ||||
*“Relative TSR” means the Company’s total stockholder return performance (i.e., (Ending Stock Price – Beginning Stock Price) divided by Beginning Stock Price) relative to the companies listed in the S&P 500 at the beginning of the Performance Period.
“Beginning Stock Price” means the daily average stock price during the three months immediately preceding the first day of Performance Period.
“Ending Stock Price” means the daily average stock price during the three months immediately preceding the last day of the Performance Period, with all dividends deemed reinvested.
**The Compensation Committee reserves the right to reduce the payout, in its discretion, if the Company’s TSR performance during the Performance Period is negative.
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Exhibit 10.5
Motorola Solutions, Inc.
2021-2023 Long Range Incentive Plan (LRIP) Terms
As Approved by the Compensation and Leadership Committee On February 11, 2021
Design Feature | 2021-2023 LRIP | |||||||||||||
Performance Cycle | Three years from January 1, 2021 through December 31, 2023 | |||||||||||||
Eligible Population | Corporate Vice Presidents and above | |||||||||||||
Performance Criteria | Relative Total Shareholder Return (TSR) TSR Defined as: Ending stock price (Daily average during the final three months of the Performance Cycle) + Value of reinvested dividends = Total ending value – Beginning stock price (Daily average during the three months preceding the Performance Cycle) = Total value created ÷ Beginning share price (Daily average during the three months preceding the Performance Cycle) = Total shareholder return | |||||||||||||
Negative TSR Component | If the resulting TSR performance for Motorola Solutions is negative, the Committee will have full discretion to reduce the final calculated payout. | |||||||||||||
Comparator Group | S&P 500 defined as companies in the S&P 500 at the beginning of the performance period; must be publically traded on or after July 1, 2022 to be included in the TSR percentile calculation at the end of the performance cycle. | |||||||||||||
| Payout Scale | ||||||||||||||
| Relative TSR Payout Scale | ||||||||||||||
| MSI 3-Year TSR Percentile Rank | Payout Factor | |||||||||||||
90th – 100th Percentile | 250% | |||||||||||||
80th – 89.99th Percentile | 200% | |||||||||||||
70th – 79.99th Percentile | 175% | |||||||||||||
60th – 69.99th Percentile | 150% | |||||||||||||
55th – 59.99th Percentile | 110% | |||||||||||||
50th – 54.99th Percentile | 90% | |||||||||||||
45th – 49.99th Percentile | 80% | |||||||||||||
35th – 44.99th Percentile | 50% | |||||||||||||
30th – 34.99th Percentile | 30% | |||||||||||||
< 30.00th Percentile | 0% | |||||||||||||
Exhibit 31.1
CERTIFICATION
I, Gregory Q. Brown, Chairman and Chief Executive Officer, Motorola Solutions, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Motorola Solutions, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 6, 2021
| /s/ GREGORY Q. BROWN | |||||
| Gregory Q. Brown | |||||
| Chairman and Chief Executive Officer | |||||
| Motorola Solutions, Inc. | |||||
Exhibit 31.2
CERTIFICATION
I, Jason J. Winkler, Executive Vice President and Chief Financial Officer, Motorola Solutions, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Motorola Solutions, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 6, 2021
| /s/ JASON J. WINKLER | |||||
| Jason J. Winkler | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Motorola Solutions, Inc. | |||||
Exhibit 32.1
CERTIFICATION
I, Gregory Q. Brown, Chairman and Chief Executive Officer, Motorola Solutions, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:
(1)the quarterly report on Form 10-Q for the period ended April 3, 2021 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2)the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc.
This certificate is being furnished solely for purposes of Section 906.
Dated: May 6, 2021
| /s/ GREGORY Q. BROWN | |||||
| Gregory Q. Brown | |||||
| Chairman and Chief Executive Officer | |||||
| Motorola Solutions, Inc. | |||||
Exhibit 32.2
CERTIFICATION
I, Jason J. Winkler, Executive Vice President and Chief Financial Officer, Motorola Solutions, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:
(1)the quarterly report on Form 10-Q for the period ended April 3, 2021 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2)the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc.
This certificate is being furnished solely for purposes of Section 906.
Dated: May 6, 2021
| /s/ JASON J. WINKLER | |||||
| Jason J. Winkler | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Motorola Solutions, Inc. | |||||