Motorola 2015 Annual Report Download - page 79

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78
Motorola Solutions Incentive Plans
The Company's incentive plans provide eligible employees with an annual payment, calculated as a percentage of an
employee’s eligible earnings, in the year after the close of the current calendar year if specified business goals and individual
performance targets are met. The expense for awards under these incentive plans for the years ended December 31, 2015,
2014 and 2013 was $119 million, $53 million and $87 million, respectively.
Long-Range Incentive Plan
The Long-Range Incentive Plan (“LRIP”) rewards participating elected officers for the Company’s achievement of specified
business goals during the period, based on a single performance objective measured over a three year period. The expense for
LRIP for the years ended December 31, 2015, 2014 and 2013 was $12 million, $3 million and $4 million, respectively.
9. Fair Value Measurements
The Company holds certain fixed income securities, equity securities and derivatives, which are recognized and disclosed
at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Fair value
is measured using the fair value hierarchy and related valuation methodologies as defined in the authoritative literature. This
guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or
unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the
Company's assumptions about current market conditions. The prescribed fair value hierarchy and related valuation
methodologies as they pertain to the Company are as follows:
Level 1—Quoted prices for identical instruments in active markets.
Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in
markets that are not active, and model-derived valuations, in which all significant inputs are observable, in active markets.
Level 3—Valuations derived from valuation techniques, in which one or more significant inputs are unobservable.
Investments and Derivatives
The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of December 31, 2015
and 2014 were as follows:
December 31, 2015 Level 1 Level 2 Total
Assets:
Foreign exchange derivative contracts $—$6$6
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations — 444 444
Corporate bonds —77
Common stock and equivalents 6— 6
Liabilities:
Foreign exchange derivative contracts $—$2$2
Interest agreement derivative contracts —11
December 31, 2014 Level 1 Level 2 Total
Assets:
Foreign exchange derivative contracts $—$1$1
Available-for-sale securities:
Government, agency, and government-sponsored enterprise obligations —1414
Corporate bonds —1616
Mutual funds —22
Common stock and equivalents 71 — 71
Liabilities:
Foreign exchange derivative contracts $—$5$5
Interest agreement derivative contracts —22
There were no significant transfers between Level 1 and Level 2 during 2015 or 2014.