8-KLeadership Changes

Motorola Solutions, Inc. 8-K Report, Executive Changes (Mar 10, 2021)

Filed March 10, 2021For Securities:MSI

Summary

This 8-K filing from Motorola Solutions, Inc. (MSI) on March 9, 2021, primarily details the approval of fiscal year 2020 cash bonuses for its Named Executive Officers (NEOs) and compensation adjustments for its Chief Financial Officer, Jason Winkler. Despite the company's financial performance falling short of the minimum targets set by the 2020 Short-Term Incentive Plan (STIP) due to the COVID-19 pandemic, the Compensation Committee exercised its discretion to award discretionary bonuses. This decision was influenced by management's efforts to navigate the pandemic, protect employees, support essential customers, and achieve strong performance in its Software and Services segment, alongside a record backlog and substantial operating cash flow. The filing also outlines an increase in Jason Winkler's base salary and a significant uplift in his long-term incentive award opportunity for 2021. These adjustments aim to align his compensation with market practices for his role, retain him within the company, and reflect the complexity of his CFO position. The long-term incentives will be 100% equity-based, vesting in March 2024, contingent on performance goals.

Key Highlights

  • 1Fiscal 2020 NEO bonuses were approved on a discretionary basis, despite the company missing minimum performance targets for non-GAAP operating earnings and free cash flow due to COVID-19.
  • 2The Compensation Committee cited management's efforts in mitigating pandemic impacts, protecting employees, supporting customers, and achieving strong Software & Services revenue growth as key factors for bonus approval.
  • 3Motorola Solutions achieved a record backlog of $11.4 billion and generated $1.6 billion in operating cash flow in fiscal 2020.
  • 4The Software and Services segment revenue grew by 9% in fiscal 2020.
  • 5CEO Greg Brown received the largest discretionary bonus at $1,421,875.
  • 6CFO Jason Winkler's annualized base salary was increased from $550,000 to $675,000.
  • 7Mr. Winkler's target annual long-term incentive award opportunity was significantly increased from $1.2 million to $3.2 million for 2021, with the award being 100% equity-based.

Frequently Asked Questions

The company's financial performance for fiscal 2020 fell short of the minimum thresholds for bonuses under the standard Short-Term Incentive Plan (STIP) due to the negative impact of the COVID-19 pandemic. However, the Compensation Committee exercised its discretionary authority to award bonuses. This decision was based on management's commendable efforts in navigating the pandemic, protecting employees, supporting critical customers, and achieving strong results in specific areas like Software and Services revenue growth, record backlog, and operating cash flow, which demonstrated resilience and effective leadership during a challenging period.

The original 2020 STIP had targets for non-GAAP operating earnings and free cash flow. While the company did not meet the minimum thresholds for these metrics due to pandemic-related challenges, the committee considered qualitative factors. These included management's success in protecting employee health and safety, maintaining critical operations for public safety and other essential customers, adapting offerings to address COVID-19 concerns, and exceeding the financial outlook provided for the second half of 2020.

Effective March 8, 2021, Jason Winkler's compensation was adjusted. His annualized base salary was increased from $550,000 to $675,000. Additionally, his target annual long-term incentive award opportunity for 2021 was substantially increased from $1.2 million to $3.2 million. This long-term incentive will be entirely equity-based, structured as performance stock units vesting on March 8, 2024, subject to performance goals. These changes aim to align his pay with market practices for a CFO role and aid in his retention.

Greg Brown, Chairman and Chief Executive Officer, received a fiscal 2020 discretionary bonus payment of $1,421,875.