Motorola 2015 Annual Report Download - page 76

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directly from the insurance company and the Company receives the remainder of the death benefits. It is currently expected that
minimal cash payments will be required to fund these policies.
The net periodic pension cost for these split-dollar life insurance arrangements was $5 million for the years ended
December 31, 2015, 2014 and 2013. The Company has recorded a liability representing the actuarial present value of the future
death benefits as of the employees’ expected retirement date of $63 million and $66 million as of December 31, 2015 and
December 31, 2014, respectively.
Deferred Compensation Plan
The Company amended and reinstated its deferred compensation plan (“the Plan”) effective June 1, 2013 to reopen the
Plan to certain participants. Under the Plan, participants may elect to defer base salary and cash incentive compensation in
excess of 401(k) plan limitations. Participants under the Plan may choose to invest their deferred amounts in the same
investment alternatives available under the Company's 401(k) plan. The Plan also allows for Company matching contributions
for the following: (i) the first 4% of compensation deferred under the Plan, subject to a maximum of $50,000 for board officers, (ii)
lost matching amounts that would have been made under the 401(k) plan if participants had not participated in the Plan, and (iii)
discretionary amounts as approved by the Compensation and Leadership Committee of the Board of Directors.
Defined Contribution Plan
The Company and certain subsidiaries have various defined contribution plans, in which all eligible employees may
participate. In the U.S., the 401(k) plan is a contributory plan. Matching contributions are based upon the amount of the
employees’ contributions. The Company’s expenses for material defined contribution plans for the years ended December 31,
2015, 2014 and 2013 were $28 million, $31 million and $32 million, respectively.
Under the 401(k) plan, the Company may make an additional discretionary 401(k) plan matching contribution to eligible
employees. For the years ended December 31, 2015, 2014, and 2013 the Company made no discretionary matching
contributions.
8. Share-Based Compensation Plans and Other Incentive Plans
The Company grants options and stock appreciation rights to acquire shares of common stock to certain employees,
including executives, and to existing option holders of acquired companies in connection with the merging of option plans
following an acquisition. Each option granted and stock appreciation right has an exercise price of no less than 100% of the fair
market value of the common stock on the date of the grant. The awards have a contractual life of five to ten years and vest over
two to four years. Stock options and stock appreciation rights assumed or replaced with comparable stock options or stock
appreciation rights in conjunction with a change in control of the Company only become exercisable if the holder is also
involuntarily terminated (for a reason other than cause) or resigns for good reason within 24 months of a change in control.
Restricted stock (“RS”) and restricted stock unit (“RSU”) grants consist of shares or the rights to shares of the Company’s
common stock which are awarded to employees, including executives, and non-employee directors. The grants are restricted
such that they are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the employee.
Shares of RS and RSUs assumed or replaced with comparable shares of RS or RSUs in conjunction with a change in control
will only have the restrictions lapse if the holder is also involuntarily terminated (for a reason other than cause) or resigns for
good reason within 24 months of a change in control.
On March 9, 2015 the Compensation and Leadership Committee of the Board of Directors granted performance-based
stock options (“performance options”) and market stock units ("MSUs") to the Company’s executive officers. Performance
options have a three year performance period and are granted as a target number of units subject to adjustment based on
company performance. Each performance option granted has an exercise price of no less than 100% of the fair market value of
the common stock on the date of the grant. The awards have a contractual life of ten years. Shares ultimately issued for
performance option awards granted in 2015 are based on the actual total shareholder return (“TSR”) compared to the S&P 500
over the three year performance period based on a payout factor that corresponds to actual TSR results as established for 2015.
Vesting occurs on the third anniversary of the grant date. Under the terms of the MSUs, vesting is conditioned upon continuous
employment until the vesting date and the payout factor is at least 60% of the share price on the award date. The payout factor
is the share price on vesting date divided by share price on award date, with a maximum of 200%. The share price used in the
payout factor is calculated using an average of the closing prices on the grant or vesting date, and the 30 calendar days
immediately preceding the grant or vesting date. Vesting occurs ratably over three years.
On August 24, 2015, in conjunction with the issuance of the Senior Convertible Notes, the Company approved a grant of
performance-contingent stock options (“PCSOs”) to certain executive officers. The total number of PCSOs granted is designed
to represent approximately 1% of the fully-diluted equity of the Company. The PCSOs vest upon satisfaction of the following
stock price hurdles which must be maintained for 10-consecutive trading days during the three-year period following the grant
date: 20% of the total award will vest at an $85 stock price; an additional 30% of the total award will vest at a $102.50 stock
price; and the final 50% of the total award will vest at a $120 stock price. If any stock price hurdles are not met during the three-
year period, the corresponding portion of the options will not vest and will be forfeited. The awards have a seven-year term and a
per share exercise price of $68.50.
The employee stock purchase plan allows eligible participants to purchase shares of the Company’s common stock
through payroll deductions of up to 20% of eligible compensation on an after-tax basis. Plan participants cannot purchase more