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April 16, 2012
Dear Stockholder:
Please join us for the Zebra Technologies Corporation 2012 Annual Meeting of Stockholders. We will hold the meeting at 10:30 a.m., Central Time, on Friday, May 18, 2012, at our principal executive offices at 475 Half Day Road, Lincolnshire, Illinois 60069.
At the annual meeting, stockholders will be asked to vote on each of the three proposals set forth in the Notice of Annual Meeting of Stockholders and the Proxy Statement, which describe the formal business to be conducted at the annual meeting and follow this letter.
Your vote on the matters to be considered at the annual meeting is important, regardless of the size of your holdings. You may vote by marking, dating, signing and returning the enclosed proxy card in the envelope provided. Also, most registered and most beneficial stockholders may vote by toll-free telephone in the U.S. or Canada, or over the Internet by following the instructions on the enclosed proxy card. We urge you to vote your shares as soon as possible. In this way, you can ensure your shares will be represented and voted at the meeting, and you will spare Zebra the expense of a follow-up mailing. Even if you vote before the meeting you may still attend the meeting and vote in person.
Sincerely,
Michael A. Smith | Anders Gustafsson |
Chairman | Chief Executive Officer |
475 Half Day Road, Suite 500
Lincolnshire, Illinois
60069
(847) 634-6700
Notice of Annual Meeting of
Stockholders
To be Held on May 18, 2012
To the Stockholders of Zebra Technologies Corporation:
The Annual Meeting of Stockholders of Zebra Technologies Corporation will be held at 10:30 a.m., Central Time, on Friday, May 18, 2012, at our principal executive offices at 475 Half Day Road, Lincolnshire, Illinois 60069, for the following purposes:
(1) | To elect three Class I Directors with terms to expire in 2015; | ||
(2) | To hold an advisory vote to approve the compensation of our named officers; | ||
(3) | To ratify the appointment by our Audit Committee of Ernst & Young LLP as our independent auditors for 2012; and | ||
(4) | To conduct other business if properly presented. |
The proxy statement more fully describes the proposals. Only holders of record of common stock at the close of business on March 22, 2012, are entitled to vote at the meeting.
Jim Kaput | |
Corporate Secretary | |
Lincolnshire, Illinois | |
April 16, 2012 |
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May 18, 2012
Our proxy statement and 2011 Annual Report to Stockholders are available at: https://materials.proxyvote.com/989207
Table of Contents | ||
Questions and Answers about the Annual Meeting and These Proxy Materials | 1 | |
Corporate Governance | 5 | |
Proposal 1 - Election of Directors | 9 | |
Board and Committees of the Board | 11 | |
Director Compensation | 12 | |
Compensation Committee Report | 14 | |
Compensation Discussion and Analysis Executive Summary | 15 | |
Executive Compensation | 28 | |
Equity Compensation Plan Information | 40 | |
Compensation Committee Interlocks and Insider Participation | 41 | |
Proposal 2 - Advisory Vote to Approve Compensation of Named Officers | 41 | |
Report of the Audit Committee | 42 | |
Fees of Independent Auditors | 43 | |
Proposal 3 - Ratification of Appointment of Independent Auditors | 43 | |
Executive Officers | 44 | |
Ownership of Our Common Stock | 45 | |
Section 16(a) Beneficial Ownership Reporting Compliance | 46 | |
Stockholder Proposals and Other Business | 46 |
475 Half Day Road, Suite
500
Lincolnshire, Illinois 60069
Proxy Statement
for the Annual Meeting of
Stockholders
May 18, 2012
We are providing you with these proxy materials in connection with the solicitation by Zebras Board of Directors of proxies for our 2012 Annual Meeting of Stockholders. We will hold the annual meeting at 10:30 a.m., Central Time, on Friday, May 18, 2012, at our principal executive offices at 475 Half Day Road, Lincolnshire, Illinois 60069.
We mailed this proxy statement and proxy card to stockholders on or about April 16, 2012.
This proxy statement contains important information regarding our annual meeting, the proposals on which you are being asked to vote, information you may find useful in determining how to vote, and information about voting procedures. As used herein, we, us, our, Zebra or the Company refers to Zebra Technologies Corporation.
Questions and Answers about the Annual Meeting and These Proxy Materials
What matters will be voted on at the
annual meeting?
The following matters
will be voted on at the meeting:
How does the Board of Directors
recommend that I vote?
Zebras Board
recommends that you vote:
Will there be any other items of
business on the agenda?
If any other
items of business or other matters are properly brought before the annual
meeting, your proxy gives discretionary authority to the persons named on the
proxy card with respect to those items of business or other matters. The persons
named on the proxy card intend to vote the proxy in accordance with their best
judgment. Because the deadlines for stockholder proposals and nominations have
passed, we do not expect any items of business to be brought before the annual
meeting other than the items described in this proxy statement.
Who is entitled to vote at the
annual meeting?
Holders of our Class A
common stock at the close of business on March 22, 2012, the record date, may
vote at the meeting. We refer to the holders of our Class A common stock as
stockholders throughout this proxy statement. Each stockholder is entitled to
one vote for each share of Class A common stock held as of the record
date.
1
What is the difference between
holding shares as a stockholder of record and as a beneficial
owner?
You may own shares directly in
your name as a stockholder of record, which includes shares for which you have
certificates. If your shares are registered directly in your name, you are the
holder of record of those shares, and we are sending these proxy materials directly to
you. As the holder of record, you have the right to give your voting proxy
directly to us or to vote in person at the meeting.
You may also own shares indirectly through a broker, bank or other holder of record. If you hold your shares indirectly, you hold the shares in street name and are a beneficial holder, and your broker, bank or other holder of record sent these proxy materials to you. As a beneficial holder, you have the right to direct your broker, bank or other holder of record how to vote by completing a voting instruction form.
Do I have to do anything in advance
if I plan to attend the annual meeting in person?
An individual who is a beneficial owner of Class A common
stock must bring to the meeting a legal proxy from the organization that holds
the shares or a brokerage statement showing ownership of shares as of the close
of business on the record date. Representatives of institutional stockholders
must bring a legal proxy or other proof that they are representatives of a firm
that held shares as of the close of business on the record date and are
authorized to vote on behalf of the institution.
Do I have electronic access to the
proxy materials and annual report?
For
holders of record, we are pleased to offer the opportunity to receive stockholder
communications electronically. By signing up for electronic delivery of
documents such as our annual report and the proxy statement, you can access
stockholder communications as soon as they are available without waiting for
them to arrive in the mail, and submit your stockholder votes online. Holders of
record can also reduce the number of documents in their personal files,
eliminate duplicate mailings, conserve natural resources, and help reduce our
printing and mailing costs. If you are a holder of record and would like to
receive stockholder communications electronically in the future, please contact
Computershare at 877-870-2368 or 201-680-6578. Enrollment will be effective
until canceled.
Beneficial holders should refer to the information provided by the broker, bank or other institution that is the holder of record for instructions on how to elect to receive proxy statements and annual reports over the Internet. Most stockholders who hold their stock through a broker, bank or other holder of record and who have electronic access will receive an e-mail message containing the Internet address to use to access our proxy statement and annual report.
How do I vote my
shares?
Your vote is important. We
encourage you to vote promptly, which may save us the expense of a second
mailing.
If you are a holder of record, you may vote your shares in any of the following ways:
If you are a beneficial holder, the instructions that accompany your proxy materials will indicate whether you may vote by telephone, over the Internet or by mail. If you wish to attend the meeting and vote in person, you must bring a legal proxy from the organization that holds the shares or a brokerage statement showing ownership of shares as of the close of business on the record date.
2
Can I revoke or change my vote after
I submit my proxy?
If you are the
holder of record, you may revoke your proxy at any time before your shares are voted if
you (1) submit a written revocation to our Secretary, (2) submit a later-dated
proxy to our Secretary, (3) provide subsequent telephone or Internet voting
instructions, or (4) vote in person at the meeting. If you are a beneficial owner of shares,
you must contact the broker or other nominee holding your shares and follow
their instructions for changing your vote.
What will happen if I do not vote my
shares?
If you are the holder of record and you do
not vote by proxy card, by telephone, via the Internet or in person at the
annual meeting, your shares will not be voted at the annual meeting.
If you are a beneficial owner of shares and you do not provide the broker or other nominee that holds your shares with voting instructions, the broker or nominee may vote your shares only on those proposals on which it has discretion to vote. Under the rules of the New York Stock Exchange (NYSE), your broker or nominee does not have discretion to vote your shares on non-routine matters such as Proposals 1 and 2. However, your broker or nominee does have discretion to vote your shares on routine matters such as Proposal 3. In the absence of instructions, shares subject to broker non-votes will not be counted as voted or as present or represented on the proposal.
What if I do not specify how my
shares are to be voted?
Our Board has
appointed Douglas A. Fox and Jim Kaput to serve as the proxy committee for the
meeting. Mr. Fox is a Vice President, Investor Relations and Treasurer of Zebra.
Mr. Kaput is Senior Vice President, General Counsel and Corporate Secretary of
Zebra. By giving us your proxy, you are authorizing the proxy committee to vote
your shares in the manner you indicate.
If you are a holder of record and you submit a proxy, but you do not provide voting instructions, your shares will be voted:
If you are a beneficial owner and you do not provide the broker or other nominee that holds your shares with voting instructions, the broker or other nominee will determine if it has the discretionary authority to vote on the particular matter. Under the NYSEs rules, brokers and other nominees have the discretion to vote on routine matters such as Proposal 3, but do not have discretion to vote on non-routine matters such as Proposals 1 and 2. Therefore, if you do not provide voting instructions to your broker or other nominee, your broker or other nominee may only vote your shares on Proposal 3 and any other routine matters properly presented for a vote at the meeting.
What constitutes a quorum, and why
is a quorum required?
A quorum is
necessary to hold a valid meeting of stockholders. If stockholders of a majority
of the voting power of the stock issued and outstanding and entitled to vote at
the meeting are present in person or by proxy, a quorum will exist. Shares owned
by Zebra are not voted and do not count for quorum purposes. On March 22, 2012,
we had 51,882,869 shares of Class A common stock outstanding, meaning that
25,941,435 shares of Class A common stock must be represented in person or by
proxy to have a quorum. Your shares will be counted towards the quorum if you
submit a proxy or vote at the meeting. Abstentions and broker non-votes will
also count towards the quorum requirement. If there is not a quorum, a majority
of the shares present at the meeting may adjourn the meeting to a later
date.
To assure the presence of a quorum at the meeting, please vote your shares by toll-free telephone or over the Internet or complete, sign and date our proxy card and return it promptly in the enclosed postage-paid envelope, even if you plan to attend the meeting.
3
What is the effect of a broker
non-vote?
Brokers or other nominees
who hold shares of our Class A common stock for a beneficial owner have the
discretion to vote on routine proposals when they have not received voting
instructions from the beneficial owner at least ten days prior to the meeting. A
broker non-vote occurs when a broker or other nominee does not receive voting
instructions from the beneficial owner and does not have the discretion to
direct the voting of the shares. Broker non-votes will be counted for purposes
of calculating whether a quorum is present at the meeting. Thus, a broker
non-vote will not impact our ability to obtain a quorum. Broker non-votes will
not have any effect on the outcome of any proposal to be voted on at the
meeting.
What is the vote required for each proposal?
Broker | ||
Discretionary | ||
Proposal | Vote Required | Voting Allowed |
Proposal 1 Election of three Class I | Plurality of votes cast | No |
Directors with terms to expire in 2015 | ||
Proposal 2 Advisory vote to approve | Majority of the votes cast affirmatively
or negatively |
No |
executive compensation | ||
Proposal 3 Ratify the appointment of | Majority of the votes cast affirmatively
or negatively |
Yes |
Ernst & Young LLP as our independent | ||
auditors for 2012 |
With respect to Proposal 1, you may vote FOR all nominees, WITHHOLD your vote as to all nominees, or vote FOR all nominees except those specific nominees from whom you WITHHOLD your vote. The three nominees receiving the most FOR votes will be elected. A properly executed proxy that is marked WITHHOLD with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. Proxies may not be voted for more than three nominees for director and stockholders may not cumulate votes in the election of directors.
With respect to Proposals 2 and 3, you may vote FOR, AGAINST or ABSTAIN. If you ABSTAIN from voting on any of these proposals, your abstention will not affect the vote on the proposal since the proposal requires approval of a majority of the votes cast affirmatively or negatively.
What happens if the annual meeting
is adjourned or postponed?
Your proxy will still be effective and
will be voted at the rescheduled annual meeting. You will still be able to
change or revoke your proxy until it is voted.
Who is paying for the costs of this
proxy solicitation?
We will bear the expense of soliciting
proxies. We have retained Alliance Advisors LLC to solicit proxies for a fee of
$10,500 plus a reasonable amount to cover expenses. Proxies may also be
solicited in person, by telephone or electronically by Zebra personnel who will
not receive additional compensation for such solicitation. Copies of proxy
materials and the Annual Report will be supplied to brokers and other nominees
for the purpose of soliciting proxies from beneficial owners, and we will
reimburse such brokers or other nominees for their reasonable
expenses.
How can I find the results of the
annual meeting?
Preliminary results will be announced at
the meeting. Results also will be published in a current report on Form 8-K to
be filed with the Securities and Exchange Commission within four business days
after the meeting. If the official results are not available at that time, we
will provide preliminary voting results in the Form 8-K and will provide the
final results in an amendment to the Form 8-K as soon as they become
available.
4
Corporate Governance
Corporate Governance
Guidelines
Zebras primary objective
is to maximize stockholder value over the long term. Our Board of Directors
believes that sound governance practices and policies provide an important
framework to assist the Board in fulfilling its duty to stockholders. The Board
reviews Zebras Corporate Governance Guidelines from time to time and modifies
the Guidelines to reflect sound corporate governance policies and practices. Our
Corporate Governance Guidelines are available on Zebras website at
http://www.zebra.com under About Zebra-Corporate Governance.
Director Candidates and
Diversity
The Nominating Committee of
our Board of Directors is responsible for identifying individuals qualified to
serve as directors, recommending candidates, and assisting the Board in
discharging its responsibilities relating to the governance of Zebra.
Consideration of Board candidates typically involves a series of internal discussions, review of the qualifications of candidates, and interviews with selected candidates. In general, candidates for nomination to the Board are suggested by Board members or by management. The Committee has also utilized the services of a search firm to identify director candidates. The Committee will consider candidates suggested by stockholders. The Committee does not evaluate proposed candidates differently based on the source of the proposal. A stockholder seeking to recommend a prospective nominee for the Committees consideration should submit the candidates name and qualifications to Zebras Corporate Secretary at the following address: 475 Half Day Road, Suite 500, Lincolnshire, Illinois 60069. The Committee did not receive any stockholder suggestions for director candidates to be considered for election to the Board at the 2012 annual meeting. Stockholders who wish to nominate a director for election at an annual meeting of stockholders of Zebra must comply with our By-Laws regarding stockholder proposals and nominations.
The Nominating Committee considers a diverse set of criteria when evaluating Board candidates. The Committee believes that Board candidates must exhibit certain minimum characteristics: sound judgment and an even temperament, high ethical standards, and a healthy view of the relative responsibilities of a board member and management. Board members should be independent thinkers, articulate and intelligent, and have a commitment of time and attention to Zebras business. The Committees Charter also sets forth other criteria that the Committee considers important, including experience as a board member of another publicly traded company, experience in industries, global businesses or with technologies relevant to Zebra, accounting or financial reporting experience, meeting the independence standards for directors established by NASDAQ and the Securities and Exchange Commission, and race, gender, nationality and ethnicity of a candidate to support diversity. Finally, with respect to directors who may be nominated for re-election, the Committee may consider criteria such as whether the director represents stockholder interests in deliberations before the Board, demonstrates loyalty to Zebra, attends meetings regularly, keeps abreast of corporate and industry changes, prepares effectively for meetings with Board members and senior management, communicates effectively at Board and Committee meetings and with senior management, supports the deliberative process as a team member (e.g., courteous, respectful, constructive), challenges the Board and management to set and achieve goals, and/or possesses special characteristics that contribute to effectiveness as a Board member. Each year the Committee reviews the performance of current directors whose terms will expire at the upcoming annual meeting of stockholders, as well as the qualifications of any candidates for election to the Board.
Independence of
Directors
Under our Corporate
Governance Guidelines and NASDAQ listing standards, a majority of our directors
must be independent. Under NASDAQ listing standards, a director does not qualify
as independent unless the board affirmatively determines that the director has
no relationship which, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. NASDAQ listing standards also provide that a director is not
independent if (1) the director has been employed by Zebra in the last three
years; (2) the director or an immediate family member has received, during any
12-month period in the last three years, more than $120,000 in compensation from
Zebra (other than director and committee fees and pensions or other forms of
deferred compensation for prior service); (3) an immediate family member has
been employed as an executive officer of Zebra in the last three years; (4) the
director or an immediate family member is a partner, controlling stockholder, or
an executive officer of an organization to which Zebra made, or from which Zebra
received, payments for property or services in any of the years 2009, 2010, 2011
and 2012 that exceed the greater of 5% of the recipient's consolidated gross
revenues for that year, or $200,000; (5) the director or an immediate
family
5
member is employed as an executive officer of another entity where at any time during the past three years any Zebra executive officer served (or serves) on the compensation committee of the other entity; or (6) the director or an immediate family member is a partner of a Zebras independent auditor or the director or an immediate family member was a partner or employee of Zebras independent auditor who worked on Zebras audit in 2009, 2010 or 2011.
In February 2012, the Nominating Committee reviewed the independence of all directors and reported to the Board. The Board determined that each of Richard Keyser, Andrew Ludwick, Ross Manire, Robert Potter, and Michael Smith has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each director, except Anders Gustafsson, our Chief Executive Officer, and Gerhard Cless, our Executive Vice President, is independent under NASDAQ listing standards. The Board also determined that each member of the Audit Committee meets the independence requirements under NASDAQ listing standards and the rules of the Securities and Exchange Commission; each member of the Compensation Committee meets the independence requirements under NASDAQ listing standards, the non-employee director requirements of the rules of the Securities and Exchange Commission and the outside director requirements under the Internal Revenue Code; and each member of the Nominating Committee meets the independence requirements under NASDAQ listing standards.
Communications with the
Board
A stockholder who would like to
contact our Board may do so by writing to our Secretary at 475 Half Day Road,
Suite 500, Lincolnshire, Illinois 60069. Communications received in writing will
be distributed to the appropriate members of the Board, depending on the content
of the communication received.
Board
Functions
One of the primary functions
of a board of directors is to oversee senior management and the conduct of the
business of the corporation, including holding the chief executive officer and
senior management accountable for performance. Consequently, Zebras Board of
Directors believes that at least a majority of the Board should be independent
from management to provide an objective view and evaluation of management and
business performance. A primary responsibility of Zebras Board is to select the
Chief Executive Officer and, upon the recommendation of the CEO, to appoint
other executive officers who report to the CEO. The Board also plans for
succession to the position of CEO as well as certain other senior management
positions. Other responsibilities of the Board include determining the
compensation and benefits of the CEO, oversight of strategy and risk, approving
material corporate policies and budgets, approving material investments,
expenditures and transactions not in the ordinary course of business, ensuring
the transparency of disclosures and financial controls, planning for and
handling corporate crises, oversight of government and community relations, and
setting an appropriate tone of integrity and compliance.
Board Leadership
Structure
The independent members of a
board may be led by an independent chairman of the board or, when the roles of
the chairman and chief executive officer are combined, by an independent lead
director. Zebras independent directors are led by Michael Smith, who serves as
Chairman. Mr. Smith has served as a director since 1991 and as our Chairman
since 2007 when our CEO, Anders Gustafsson, joined Zebra as successor to Edward
Kaplan, Zebras co-founder and former Chairman and CEO. This structure allows
Mr. Gustafsson to focus on strategic, operational, and financial matters
necessary to operate Zebras business while Mr. Smiths knowledge of, and
experience with, Zebra and the operation and history of the Board allow Mr.
Smith to provide an independent leadership that reflects his knowledge and
experience. As Chairman, Mr. Smith presides at all meetings of stockholders and
of the Board, including executive sessions of the whole Board and of the
independent directors.
Committee
Charters
Each of the three standing
Committees of the Board periodically reviews the adequacy of its Charter, which
sets forth the authority of the Committee and its duties and responsibilities.
The Board reviewed and approved changes to the Committee Charters in 2011. A
copy of each Committee Charter is available on Zebras website at
http://www.zebra.com under About Zebra-Corporate Governance.
Access to Management and
Advisers
Each director has access to
the management of and advisers to Zebra. The Board and its Committees have the
right to consult and retain independent legal, financial, accounting and other
advisers, as they determine necessary or appropriate to carry out their duties,
at the expense of Zebra.
6
Executive Sessions and
Chairman
The Board and its Committees
regularly meet in executive session with and without management. Chairman
Michael Smith chairs executive sessions of the Board. Mr. Smith is a
non-executive independent director whose duties include advising the CEO of
matters discussed in executive sessions, where appropriate, as well as approving
Board agenda items.
Limitation of Service on other
Boards; Director Education; Retirement and Term Limits
Zebras Corporate Governance Guidelines limit to four the
number of other for-profit boards on which a non-employee director may serve.
Employee directors and executive officers are limited to service on the board of
one for-profit entity other than Zebra, unless otherwise approved by the
Chairman,. Zebra assists the Board by providing orientation for new directors
and reimbursing the costs of continuing education programs. The Board does not
endorse a mandatory retirement age, term limits, or automatic re-nomination to
serve as a director. The Board believes that Board and Committee self-evaluation
processes are the most effective means of determining whether a director should
continue to serve as a director.
Director
Compensation
The Compensation
Committee periodically reviews the compensation of our directors. In 2010 the
Committee conducted a peer group comparison of director compensation. At that
time, the Committee approved and recommended to the Board for its approval,
which the Board approved, a change in the compensation of non-employee
directors. In 2011 the Committee again conducted a peer group comparison of
director compensation. The Committee recommended to the Board, and the Board
agreed, not to make any changes at that time to director compensation. For more
information on director compensation, see Director Compensation.
Stock Ownership
Guidelines
In 2010, the Compensation
Committee approved Stock Ownership Guidelines for executive officers other than
the CEO and the Board approved Stock Ownership Guidelines for the CEO and
increased Guidelines for non-employee directors. The Guidelines began on January
1, 2011, and participants have a five-year period to satisfy the applicable
minimum stock ownership level. The minimum stock ownership levels for
participants are listed below:
Number of | ||||
Covered Participant | Multiple of Pay | Shares | ||
Chief Executive Officer | Lower of | 4x annual base salary | or | 100,000 |
Executive Vice President | Lower of | 3x annual base salary | or | 30,000 |
Senior Vice President | Lower of | 2x annual base salary | or | 20,000 |
Vice President | Lower of | 1x annual base salary | or | 10,000 |
Non-Employee Directors | Lower of | 5x annual board cash retainer | or | 10,000 |
A cap does not exist on the maximum value or number of shares that can be held by a covered participant. |
Participants are required to retain a portion of the after-tax shares acquired upon exercise or vesting of an equity award until the minimum stock ownership level is satisfied. In February 2012, the Compensation Committee reviewed compliance with the Guidelines as of December 31, 2011. Each of our non-employee directors and executive officers either has already satisfied or is on track to satisfy within the five-year period the applicable stock ownership level. A copy of the Stock Ownership Guidelines is available on Zebras website at http://www.zebra.com under About Zebra-Corporate Governance.
Oversight of Risk
Management
The goal of risk management
is to provide reasonable assurance to our senior management and Board that a
controllable risk will not have a material or significant adverse effect on
Zebra. As set forth in our Corporate Governance Guidelines, the Board is
responsible for the oversight of risk management. This responsibility is
discharged primarily through the Audit Committee. The Audit Committee receives
regular reports from a risk committee comprised of management employees
regarding the identification and management of risk in our businesses. In
addition, the Compensation Committee is responsible for the oversight of risk
related to our compensation policies and practices. Both the Audit Committee and
Compensation Committee give regular reports to the Board regarding their
oversight roles and the directors regularly discuss significant risks facing
Zebra. Management categorizes identified risks as strategic (such as product
research and development, brand positioning, marketing and pricing), operational
(such as distribution and logistics, and sales), financial (such as tax,
accounting, information technology, and liquidity) or legal and compliance (such
as governance, international trade, anti-bribery
7
product compliance, international laws and regulations, and litigation) risk. Risks arising out of Zebras compensation policies and practices may, depending on the actions or behavior encouraged by a performance or similar goal, be categorized as a strategic, operational, financial or legal and compliance risk. Identified risks that may be controlled are then assessed by management in terms of impact on Zebra and likelihood of occurrence. Some risks, such as general economic conditions, are not controllable by management. Management conducts an annual assessment of the risks arising out of Zebras compensation policies and practices. Management reviewed each significant element of compensation for the purpose of determining whether that element of compensation, including any related performance goals and targets, encourages identifiable risk-taking behavior and whether any identified risks could have a material adverse effect on Zebra. As part of this review management considers whether a compensation plan is designed to mitigate or cap risk, including features such as compensation caps under our Zebra Incentive Plan and the use of return on invested capital performance targets to reduce incentive plan compensation if invested capital is not realizing minimum rates of return approved by the Compensation Committee. Management reviewed base salary, the 2011 Zebra Incentive Plan, equity awards granted under the 2006 Zebra Incentive Compensation Plan, prepared a report, and discussed its review and conclusions with the Compensation Committee. Based on this assessment, management has determined that our policies and practices are not reasonably likely to have a material adverse effect on Zebra.
Code of Business Conduct; Code of
Ethics for Senior Financial Officers
Zebra has a Code of Business Conduct that applies to directors, officers
and employees. We also have a Code of Ethics for Senior Financial Officers that
applies to our CEO, Chief Financial Officer and Chief Accounting Officer. The
Code of Business Conduct and Code of Ethics for Senior Financial Officers each
address matters such as conflicts of interest, confidentiality, fair dealing and
compliance with laws and regulations. Copies of the Code of Business Conduct and
Code of Ethics for Senior Financial Officers are available on Zebras website at
http://www.zebra.com under About Zebra-Corporate Governance.
Related-Party
Transactions
Zebra has a written
related-party transaction policy that may apply to any transaction, arrangement
or relationship in which Zebra and any related person are parties. A related
person includes our directors and executive officers, their immediate family
members, entities in which a director, executive officer or immediate family
member is a partner or has a 10% beneficial interest, and a beneficial owner of
more than 5% of our common stock. Our General Counsel and Audit Committee
administer Zebras policy, with the General Counsel first assessing whether a
proposed transaction is subject to the policy. If the General Counsel determines
that a proposed transaction is a related-party transaction, then the Chairman of the
Audit Committee or the full Audit Committee will review the proposed transaction
to determine if it should be approved. Under Zebras policy, all relevant
available facts and circumstances are to be considered, including: (i) the
benefits to Zebra; (ii) the impact on a directors independence in the event
that the related person is a director, an immediate family member of a director
or an entity in which a director is a partner, stockholder or executive officer;
(iii) the availability of other sources for comparable products or services;
(iv) the related persons interest in the transaction; (v) the terms of the
transaction; and (vi) the terms available to unrelated third parties or to
employees generally.
Compliance
Reporting
Zebra maintains a compliance
hotline and website for compliance reporting. The compliance hotline and website
establish a confidential means for employees or other persons to communicate to
management or the Board any concerns that they may have, including concerns
regarding accounting, internal controls or audit matters or compliance with
laws, regulations, policies or the Code of Business Conduct.
Stockholder Rights
Plan
In 2002 Zebra entered into a
Rights Agreement providing for a final expiration date of the rights on March
14, 2012. In February 2012 the Board determined that it would not take any
action to extend Zebras Rights Agreement beyond the March 14, 2012 expiration
date. Consequently, the rights have expired and no longer trade with the
associated shares of common stock of Zebra.
8
Proposal 1
Election of Directors
The Board of Directors currently consists of seven directors, five of whom are independent under NASDAQ listing requirements, and two of whom are currently executive officers of Zebra. Each of the nominees for election as director currently serves as a director of Zebra.
Our Board of Directors is divided into three separate classes, with one class being elected each year to serve a staggered three-year term. The terms of the Class I Directors expire at the annual meeting, and three directors will be elected to serve for a three-year term expiring at the 2015 meeting and until their successors are elected and qualified. Our Nominating Committee has recommended, and our Board has approved, the nomination for election of Richard L. Keyser, Ross W. Manire and Dr. Robert J. Potter.
If at the time of the annual meeting any of the nominees is unable or declines to serve, the persons named in the proxy will, at the direction of the Board of Directors, either vote for the substitute nominee or nominees that the Board of Directors recommends or vote to allow the vacancy to remain open until filled by the Board. The Board has no reason to believe that any nominee will be unable or will decline to serve as a director if elected.
The Board of Directors recommends a Vote FOR the election of Richard L. Keyser, Ross W. Manire and Dr. Robert J. Potter to serve as Class I Directors of Zebra.
The following table sets forth information regarding the nominees for Class I Director and remaining directors. Included in this biographical information is information regarding certain of the experiences, qualifications, attributes, and skills that are relevant to each individuals service as a director:
Name | Age | Position with Zebra | Director Since | Term Expires | ||||
Nominees | ||||||||
Class I Directors | ||||||||
Richard L. Keyser | 69 | Director | 2008 | 2012 | ||||
Ross W. Manire | 60 | Director | 2003 | 2012 | ||||
Dr. Robert J. Potter | 79 | Director | 2003 | 2012 | ||||
Continuing Directors | ||||||||
Class II Directors | ||||||||
Gerhard Cless | 72 | Director and Executive Vice President | 1969 | 2013 | ||||
Michael A. Smith | 57 | Director and Chairman | 1991 | 2013 | ||||
Class III Directors | ||||||||
Anders Gustafsson | 51 | Director and Chief Executive Officer | 2007 | 2014 | ||||
Andrew K. Ludwick | 66 | Director | 2008 | 2014 |
Nominees for Class I
Director
Richard L. Keyser
has been a director since June 2008. Mr.
Keyser spent much of his career at W.W. Grainger, Inc., an international
distributor of maintenance, repair and operating supplies. In 2010, Mr. Keyser
was honored as the National Association of Corporate Directors (NACD) 2010
Public Company Director of the Year. The NACDs award criteria include an
unwavering commitment to integrity, confidence, informed judgment, and
performance. Mr. Keyser served as Chairman Emeritus of Grainger from 2009 to
2010. Previously, he served as Graingers Chairman from 2008 to 2009, as
Chairman and Chief Executive Officer from 1995 until 2008, and President and
Chief Operating Officer from 1994 to 1995. Prior to joining Grainger in 1986, he
held positions at NL Industries and Cummins Engine Company. Mr. Keyser received
a BS degree from the United States Naval Academy and an MBA degree from Harvard
Business School. Mr. Keyser is a member of the Board of Directors and Human
Resources Committee of the Principal Financial Group, Inc., a financial services
firm. Mr. Keyser served as a director of the Rohm & Haas Company, a
manufacturer of specialty chemicals, until 2009. Mr. Keyser serves as a trustee
of the Shedd Aquarium, a director of the North Shore University Health System, a
trustee of the Field Museum, and Chairman of the National Merit Scholarship
Corporation. Mr. Keyser is a member of our Compensation Committee. Zebras
primary means of selling its products is through distributors and resellers.
Consequently, Mr. Keysers experience in and knowledge of these channels
provides significant strategic and operational benefits to Zebra.
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Ross W. Manire has been a director since 2003. He has served since 2002 as Chairman and Chief Executive Officer of ExteNet Systems, Inc., a wireless networking company Mr. Manire founded. Mr. Manires professional career includes serving as a partner in the Entrepreneurial Services Group at Ernst & Young, LLP, a leading accounting firm, from 1983 to 1989. Prior to joining ExteNet, Mr. Manire was President of the Enclosure Systems Division of Flextronics International, Ltd., an electronics contract manufacturer, from 2000 to 2002. He was President and Chief Executive Officer of Chatham Technologies, Inc., an electronic packaging systems manufacturer that merged with Flextronics, in 2000. Prior to joining Chatham, he was Senior Vice President of the Carrier Systems Business Unit of 3Com Corporation, a provider of networking equipment and solutions. He served in various executive positions with U.S. Robotics from 1991 to 1995, including Chief Financial Officer, Senior Vice President of Operations, and Senior Vice President of the Network Systems Division prior to its merger with 3Com. From 1989 to 1991, Mr. Manire was a partner in Ridge Capital, a private investment company. Mr. Manire holds a BA degree from Davidson College and an MBA degree from the University of Chicago. He is a member of the Board of Directors and Finance and Compensation Committees of The Andersons, Inc., a diversified business with interests in agribusiness, railcars and retailing. Mr. Manire is a member of our Audit and Nominating Committees. The Board and the Audit Committee benefit from his business, operational, accounting and financial knowledge and experience. For example, Mr. Manires experience with electronics contract manufacturing has proven important as Zebra initiated and completed its project to outsource printer manufacturing. Mr. Manires financial and accounting experience also facilitates the Boards oversight of Zebras accounting, internal control and auditing functions and activities.
Dr. Robert J. Potter has been a director since 2003. Dr. Potters extensive business experience includes serving as an officer in, and consultant to, both industrial and service businesses. Since 1990, he has been President and Chief Executive Officer of R. J. Potter Company, a Dallas-area firm providing business and technical consulting. From 1987 to 1990, Dr. Potter was President and CEO of Datapoint Corporation, a leader in network-based data processing. Prior to Datapoint, Dr. Potter was Group Vice President of Nortel Networks, Senior Vice President of International Harvester, President of the Office Systems Division of Xerox and Research Manager of International Business Machines Corporation. He graduated Phi Beta Kappa from Lafayette College with a BS degree in Physics and holds a Ph.D. in optics from the University of Rochester, specializing in fiber optics. He is a fellow of the Optical Society of America and has written more than 50 articles for various scientific, technical and business publications, including the first description of optical character recognition in an encyclopedia. He is a member of the Board of Directors, Technology Committee, and Audit Committee of Molex, Incorporated, a designer, manufacturer and distributor of electronic, electrical and fiber optic interconnects, as well as switches and application tooling. Dr. Potter is on the Board of Trustees of the Illinois Institute of Technology. He is Chair of our Compensation Committee.
Continuing
Directors
Gerhard Cless
has devoted substantially his entire career
to Zebra, a company which he co-founded in 1969. Mr. Cless is an engineer by
training and has served as Executive Vice President of Zebra since 1998 and as a
director since 1969. He served as Secretary of Zebra from its formation until
2005, and as Executive Vice President for Engineering and Technology of Zebra
from 1995 to 1998, after having served as Senior Vice President of Engineering
since 1969. Mr. Cless also served as Treasurer of Zebra from its formation until
1991. He has directed the development of numerous label printers based on various
printing technologies and maintained worldwide technology/vendor relationships.
Prior to founding Zebra, Mr. Cless was a research and development engineer with
Teletype Corporations printer division. Mr. Cless received an MSME degree from
Maschinenbauschule Esslingen in Germany, and did graduate work at the Illinois
Institute of Technology. The Cless Technology Center, Zebras product
development and research facility, is named in honor of Mr. Cless.
Anders Gustafsson became Chief Executive Officer and a director in 2007. Prior to joining Zebra, Mr. Gustafsson served as Chief Executive Officer of Spirent Communications plc, a publicly-traded telecommunications company, from 2004 until 2007. From 2000 until 2004, he was Senior Executive Vice President, Global Business Operations, of Tellabs, Inc., a communications networking company. Mr. Gustafsson also served as President, Tellabs International, as well as President, Global Sales, and Vice President and General Manager, Europe, Middle East and Africa. Earlier in his career, he held executive positions with Motorola, Inc. and Network Equipment Technologies, Inc. Mr. Gustafsson has an MS degree in Electrical Engineering from Chalmers University of Technology in Gothenburg, Sweden, and an MBA degree from Harvard Business School.
Andrew K. Ludwick has been a director since 2008. Mr. Ludwick has extensive experience in technology and start-up businesses, including serving as Chief Executive Officer of Bay Networks, Inc., a multi-billion dollar
10
communications networking company, from 1994 to 1996, and Founder, President and Chief Executive Officer of SynOptics Communications, Inc., a communications networking company, from 1985 to 1994. He has been a private investor since 1997. Mr. Ludwick holds a BA from Harvard College and an MBA from Harvard Business School. He has served since 2008 as a member and chairman of the Board of Directors of Rovi Corporation (f/k/a Macrovision Corporation), a provider of technologies for the protection, enhancement and distribution of businesses digital goods. He is a member of our Audit Committee. The Board and the Audit Committee benefit from Mr. Ludwicks extensive experience as an entrepreneur, manager and investor in technology businesses. Mr. Ludwicks operational background provides the experience necessary to help the Board fulfill its oversight duties with regard to Audit Committee responsibilities and also to advise the Board and management on technology matters.
Michael A. Smith has substantial knowledge of Zebra and its industry, including prior service as a director of a public company in the automatic identification sector. He has served as a director of Zebra since 1991 and as Chairman since 2007. The Board and the Committees on which Mr. Smith serves also benefit from Mr. Smiths experience and skills in financial services as well as from his 25 years of industry experience. Since 2000, he has served as Chairman and Chief Executive Officer of FireVision LLC, a private investment company that he founded. From 1998 to 1999, Mr. Smith was Senior Managing Director and head of the Chicago and Los Angeles offices of the Mergers & Acquisitions Department of NationsBanc Montgomery Securities and its successor entity, Banc of America Securities, LLC. Previously, he was Senior Managing Director and co-head of the Mergers and Acquisitions Department of BancAmerica Robertson Stephens; co-founder and head of the investment banking group, BA Partners, and its predecessor entity, Continental Partners Group; Managing Director, Corporate Finance Department, Bear, Stearns & Co.; and Vice President and Manager of the Eastern States and Chicago Group Investment Banking Division of Continental Bank. Mr. Smith graduated Phi Beta Kappa from the University of Wisconsin with a BA degree and received an MBA degree from the University of Chicago. Mr. Smith is a member of the Board of Directors of SRAM International Corporation, a global designer, manufacturer and marketer of premium bicycle components. Mr. Smith is a managing member of Blue Star Lubrication Technology LLC and Blue Star Lubrication Technology Investors LLC, a provider of industrial lubricants and greases. Mr. Smith is the Chair of our Audit and Nominating Committees and a member of our Compensation Committee. Mr. Smith is also a Board Leadership Fellow of the National Association of Corporate Directors, having completed NACDs comprehensive program of study for experienced corporate directors.
Board and Committees of the Board
Our business is managed under the direction of our Board, which is kept advised of Zebras business through regular and special meetings of the Board and its Committees, written reports and analyses and discussions with the CEO and other officers.
During 2011, our Board met six times. All directors attended 75 percent or more of the meetings of our Board and standing committees on which they served in 2011. All directors are expected to attend our annual meeting. All directors attended the 2011 annual meeting of stockholders. Our Board has three standing committees, each of which is composed entirely of independent directors: the Audit Committee, the Compensation Committee, and the Nominating Committee.
The following table shows each Committee on which each director served, the Chairman of each Committee and the number of meetings held by each Committee.
Independent Director | Nominating | Compensation | Audit |
Richard L. Keyser | Member | ||
Andrew K. Ludwick | Member | ||
Ross W. Manire | Member | Member | |
Dr. Robert J. Potter | Chair | ||
Michael A. Smith | Chair | Member | Chair |
Meetings in 2011 | 2 | 6 | 5 |
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Audit Committee. The Audit Committee functions as the standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. Our Board has determined that Mr. Manire is an audit committee financial expert as defined under Securities and Exchange Commission regulations. In addition to the Boards determination that each member of the Committee meets the independence requirements under NASDAQ and rules of the Securities and Exchange Commission, each member of this Committee satisfies the NASDAQ requirements that no member have participated in the preparation of financial statements of Zebra or any current subsidiary of Zebra within the past three years and Mr. Manire meets the financial sophistication requirement established by NASDAQ. This Committee assists the Board in fulfilling its oversight functions with respect to matters involving the financial reporting, independent and internal audit processes, disclosure controls and procedures and internal control over financial reporting, and matters such as related-party transactions and risk management. The Committee is responsible for appointing, retaining, compensating, evaluating, and terminating, when appropriate, our independent auditor; reviewing and discussing with management and the independent auditor, Zebras annual and quarterly financial statements; and discussing policies with respect to risk assessment and risk management. The Committee has the authority to engage and determine funding for outside legal, accounting or other advisors.
Compensation Committee. The Compensation Committee determines the total compensation philosophy relating to our CEO and other executive officers and determines Zebras peer group for compensation purposes. The Committee oversees overall compensation corporate governance, the administration of Zebras short-term and long-term compensation plans and determines (or with respect to the CEO recommends to the Board) the total compensation and terms of employment for executive officers, including salary, short-term incentive targets, long-term incentive targets, performance goals and performance targets for both cash and equity awards, and the timing, terms and number of equity awards. The Committee also oversees Zebras Stock Ownership Guidelines for the non-employee directors and executive officers. The Committee has delegated to the CEO the right to grant a limited number of equity awards to non-executive officers between regular meetings of the Committee. The Committee also oversees the performance management and talent management processes used by Zebra and recommends to the Board the compensation of non-employee directors.
The Committee uses The Delves Group as its independent executive compensation consultant to provide competitive compensation data, analysis and guidance throughout the process of determining compensation for Zebras executive officers. The role of The Delves Group in determining executive compensation is further described below under Compensation Discussion and Analysis Executive Summary. The Committee has the authority to engage outside legal counsel, tax and accounting, or other advisors.
Nominating Committee. The Nominating Committee identifies individuals qualified to be Board members, recommends director nominees, and assists our Board in discharging its responsibilities relating to corporate governance. For more information regarding the Nominating Committee, see Corporate Governance. The Committee has the authority to retain a search firm to identify director candidates and to engage outside legal counsel or other advisors.
Director Compensation
The Compensation Committee recommends to the Board the compensation of non-employee directors. When reviewing compensation, the Committee considers market data and historical practices. In 2010, the Committee engaged The Delves Group as its independent compensation consultant to conduct a thorough competitive analysis. The Committee reviews market data of publicly-traded companies viewed as comparable to Zebra. The peer companies used for non-employee director compensation were the same companies used when assessing executive officer compensation. In addition, the compensation information also consisted of data from surveys of general industry practices for similar sized companies from Culpepper and Associates, Inc., Radford (an Aon Hewitt Company) and the National Association of Corporate Directors. The compensation data indicated that the structure of our non-employee directors compensation required considerable change, with the market trending toward a retainer-driven package as opposed to a fee-driven package.
12
As a result of this review, the Committee recommended and the Board approved the following compensation for non-employee directors:
Annual Cash Retainer | $50,000 with the exception of Chairman Smith, whose annual cash retainer is $100,000 |
Annual Equity Retainer | Targeted $100,000 grant value with 50% of the grant value in the form of a stock grant and 50% in the form of stock appreciation rights |
Additional Cash Fees | $2,000 for each in-person Board meeting in excess of five in-person Board meetings per year and $1,000 for each telephonic Board meeting in excess of two telephonic Board meetings per year. |
The Committee also recommended and the Board approved the following compensation for service on committees of the Board:
Annual Cash Retainer for Committee Chair |
|
Annual Cash Retainer for Committee Members |
|
Cash Fees for Additional Committee Meetings |
|
In November 2011, the Committee re-engaged The Delves Group to update the competitive analysis for non-employee director compensation. The peer companies used for reviewing non-employee director compensation were the same companies used when assessing executive officer compensation. In addition, the competitive compensation information also consisted of data for similar size firms for general industry from the National Association of Corporate Directors. The Committee reviewed the analysis, which reflected data points at the 25th, 50th and 75th percentiles for retainers and meeting fees, and concluded the compensation for non-employee directors was appropriately aligned with the market data median.
Non-employee directors may participate in our non-qualified deferred compensation plan and our group medical and dental plans, and they are reimbursed for expenses incurred in attending Board and committee meetings. Neither Mr. Gustafsson nor Mr. Cless receives additional compensation for service as a director.
13
2011 Director
Compensation
In May 2011, the
Committee reviewed proposed 2011 annual grants with a targeted grant value of
$50,000 in time-vested restricted stock and $50,000 in time-vested stock
appreciation rights, each with a one-year cliff vesting schedule. The Committee
discussed with The Delves Group current market practices regarding equity grants
and vesting schedules for non-employee directors. The Committee recommended that
the Board approve, in lieu of time-vested stock and stock appreciation rights
grants, fully vested equity awards. The Board agreed with the Committees
recommendation, and each non-employee director was granted 1,181 fully vested
shares and 3,209 fully vested stock appreciation rights. The following table
provides information regarding the compensation of our non-employee directors
for 2011.
Fees Earned | Stock | ||||
or Paid | Awards ($) | Option/SAR | All other | ||
Name | in Cash ($) | (1) | Awards ($) (1) (2) | Compensation ($) | Total ($) |
Richard L. Keyser | 61,000 | 50,027 | 40,658 | 0 | 151,685 |
Andrew K. Ludwick | 60,000 | 50,027 | 40,658 | 0 | 150,685 |
Ross W. Manire | 62,000 | 50,027 | 40,658 | 0 | 152,685 |
Robert J. Potter | 66,500 | 50,027 | 40,658 | 0 | 157,185 |
Michael A. Smith | 134,000 | 50,027 | 40,658 | 0 | 224,685 |
(1) On May 19, 2011, Messrs. Keyser, Ludwick, Manire, Potter and Smith were each granted an award of 1,181 shares of common stock and an award of stock appreciation rights for 3,209 shares of common stock. Each stock appreciation rights award has a ten-year term, and a base price of $42.36 (the closing price of our common stock on the grant date). All of the 2011 equity awards to directors were fully vested upon grant. The amounts in the table represent the aggregate grant date fair value for these awards computed in accordance with Financial Accounting Standards Codification 718, Compensation Stock Compensation. Please see Note 16, Equity-Based Compensation, of Zebras consolidated financial statements included in Zebras Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of assumptions made in calculating grant date fair value.
(2) As a result of the Board approving fully vested stock appreciation rights awards, the grant date fair value of these awards was approximately $10,000 less than the initially targeted $50,000 grant value. As of December 31, 2011, each non-employee director held unexercised stock options and stock appreciation rights representing the right to acquire the following number of shares of Zebra common stock: Mr. Keyser: 33,209; Mr. Ludwick: 39,209; Mr. Manire: 29,209; Dr. Potter: 29,209; and Mr. Smith: 29,209.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth below. Based on its review and discussion with management, the Compensation Committee has recommended to Zebras Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in Zebras Annual Report on Form 10-K for the year ended December 31, 2011.
Compensation
Committee Robert J. Potter,
Chair
Richard L. Keyser
Michael A.
Smith
14
Compensation Discussion and Analysis Executive Summary
Our Compensation Discussion and Analysis focuses upon Zebras total rewards philosophy, the role of the Compensation Committee (for purposes of the Compensation Discussion and Analysis section, the Committee), total compensation components, market and peer group data, and the approach used by the Committee when determining each element of the total compensation package inclusive of base pay, short-term and long-term incentive pay, benefits and employment agreements for our executive officers.
For 2011, the following executive officers compensation is disclosed and discussed in this proxy statement (the named officers):
Pay for
Performance
Zebras total rewards
program is designed to align our business strategy with increasing stockholder
value. An important aspect of the compensation philosophy and programs is to pay
competitively as well as reward for performance of the company. Base pay, annual
incentive and long-term equity components are determined through a pay for
performance approach, targeted at market median when target performance goals
are achieved. Superior performance can result in above median pay when the
attainment of financial and individual goals is exceeded.
In addition to utilizing a peer group to help determine compensation levels for executives, the Committee annually evaluates the financial performance of Zebra against the companies in that peer group (identified in the Compensation Discussion and Analysis below) in the financial dimensions of one and three year revenue growth, one and three year net income change, annual net profit margin, one and three year earnings per share change, return on equity, return on assets, return on invested capital, price/earnings ratio, and one, three and five year total stockholder return (TSR). This analysis was provided by The Delves Group, and is used in determining appropriate levels of pay for executive officers, including the CEO.
Based on the results of this analysis, the Committee felt there is a good correlation between executive pay and company performance as compared to the peer group. The 2011 CEO actual pay was used for the Zebra positioning, while many of the peer groups had not yet disclosed 2011 pay. We believe that once updated information is utilized, the correlation will continue to remain strong.
Stockholders Approve Compensation of
Zebras Named Officers (Say-on-Pay)
At
Zebras 2011 annual meeting, we conducted a stockholder advisory vote regarding
the compensation of executive officers as disclosed in the 2011 proxy statement.
Zebras Board of Directors recommended that stockholders approve the
compensation of the executive officers identified in the 2011 proxy statement.
The proposal was approved by 89.4% of the votes cast for or against the
proposal.
In November 2011, the Committee discussed the results of the 2011 stockholder advisory vote. The Committee did not believe any changes to compensation were required or should be considered as a result of the favorable stockholder vote. Although the results of the advisory vote were positive, we continue to focus our attention on alterations to our total rewards programs to balance our total rewards strategy with Zebras business strategy and stockholder expectations. A few key changes are highlighted as follows:
15
Stockholders Approve Annual Advisory
Vote on Compensation of Named Officers
(Say-on-Frequency)
At Zebras 2011
annual meeting, we conducted a stockholder advisory vote regarding whether to
conduct a stockholder advisory vote on the compensation of named officers every
one, two or three years. Zebras Board of Directors recommended an annual
advisory vote, and 86.5% of the votes cast for an annual, biennial or triennial
advisory vote were cast for an annual advisory vote.
After considering the results of the stockholder vote, the Board approved that Zebra hold an annual stockholder advisory vote on the compensation of our named officers. The next stockholder advisory vote on the frequency of stockholder advisory votes on named officer compensation is anticipated to be held in 2017.
Stockholders Approve Three
Compensation Plans
At Zebras 2011
annual meeting, our Board of Directors recommended and our stockholders approved
the 2011 Zebra Technologies Corporation Short-Term Incentive Plan (94.4% of the
votes cast for or against the plan), 2011 Zebra Technologies Corporation
Long-Term Incentive Plan (85.7% of the votes cast for or against the plan), and
2011 Zebra Technologies Corporation Employee Stock Purchase Plan (98.0% of the
votes cast for or against the plan).
Zebra Financial Performance In 2011, Zebra delivered record financial results, with key financial results highlighted below and as described in further detail within our annual report:
Independent Compensation
Committee
Only independent directors
served on the Compensation Committee during 2011. Dr. Potter is the Chair of the
Compensation Committee, and Messrs. Keyser and Smith are members. None of them
has ever been an officer or other employee of Zebra.
Independent Compensation
Consultant
The Committee engaged The
Delves Group as its independent executive compensation consultant to provide
competitive compensation data, analysis and guidance when reviewing and setting
our non-employee director compensation and in designing our overall executive
officer compensation program. The Delves Group exclusively provides executive
and director compensation consulting services to the Committee and did not
provide any other services to Zebra in 2011.
Named Officer Compensation, Guiding Principles and Other Committee Actions In addition to the programs described above and after conducting a review of market data and considering our total rewards philosophy and additional corporate governance matters, the Committee took the following actions in 2011:
16
Compensation Discussion and Analysis
Our Total Rewards
Philosophy
Zebras total rewards program is designed
to align our business strategy with increasing stockholder value. Created with
all employees in mind, our philosophy was significantly enhanced in 2011 to
provide a holistic approach containing five inter-related dimensions that focus
on the overall employment value proposition. Our total rewards approach contains
features to attract the best employees, keep them engaged and motivated, provide
a learning foundation to develop them, provide a variety of programs that
support and facilitate success at work and in their personal life, and reward
them for achieving or exceeding desired results.
Total Rewards Component |
Purpose of Component |
Benefits |
To attract and retain employees by providing competitive health, welfare and retirement benefits packages in order to maintain their overall health. |
Compensation |
Described below under Our Total Compensation Components. |
Development and Career |
To attract, retain, develop and motivate employees by providing a learning foundation that allows employees to take charge of their career in support of business requirements. |
Performance and Recognition |
To attract, retain, motivate and reward employees for achievements that meet and surpass expectations. |
Work-Life and Well-Being |
To attract and retain employees by providing programs that actively support and facilitate employees to achieve success at work and home through good health and wellness. |
Although the Compensation Discussion and Analysis focuses on total compensation, we believe Zebras total rewards approach supports our objectives in order to further:
17
Role of Our Compensation
Committee
The Committee assists the
Board with its responsibilities regarding the total compensation of our
executive officers and non-employee directors by overseeing our compensation and
benefit programs. The Committee fulfills its responsibility by:
Our Total Compensation
Approach
In designing and implementing
our total compensation program, we are guided by market data of a peer group of
publicly-traded companies which our Committee views are comparable to Zebra,
being of a similar size and complexity in the technology industry. This peer
group information is supplemented by data from surveys of general industry
practices for similar size firms. These surveys include a proprietary survey
from The Delves Group, the Radford Executive Survey and the Watson Wyatt
CompQuest Database. Specific to the compensation of our executive officers, the
Committee engaged The Delves Group to provide competitive compensation data,
analysis and guidance in setting 2011 compensation component levels for our
executive officers and in developing the design of our executive officer
compensation program.
Our Total Compensation
Components
Our total compensation
program includes four components: base salary, annual incentive, long-term
equity and employee benefits. Each component serves a particular purpose and,
therefore, each is considered independent of the other components, although all
four components combined provide a holistic total compensation approach within
our overall total rewards philosophy in order to attract, retain, motivate,
develop and reward our employees. For 2011, the Committee determined each
executive officers compensation component levels by comparing each total
compensation component to market data reflective of that compensation component,
but did not use a targeted pay mix to allocate total compensation among these
components.
The base salary, annual incentive and long-term equity components are determined through a pay-for-performance approach, targeted at market median when target performance goals are achieved, and can result in superior pay when superior performance goals are achieved. Actual compensation varies based upon the attainment of financial and individual performance goals, as well as each executive officers position, responsibilities and overall experience. Employee benefits are designed with features that align with market median program offerings. The following table describes the purpose of each component and how that component is related to our pay-for-performance approach and budget:
Compensation Component |
Purpose of Compensation Component | Compensation Component in Relation to Performance and Budget |
Base salary |
To attract and retain employees by compensating them for the primary functions and responsibilities of the position. |
The base salary increase an employee receives depends upon the employees individual performance, and the employees displayed skills and competencies, all established within the overall salary budget. |
Annual cash incentive awards |
To attract, retain, motivate and reward employees for achieving or surpassing key target performance goals at Zebra, business unit and individual levels. |
Financial and individual performance determines the actual amount of the employees target annual cash incentive award. Award amounts are self-funded because they are included in the financial performance results when determining actual financial performance. |
18
Long-term equity awards |
To attract, retain, motivate and reward top talent for the successful creation of stockholder value. | The employees past performance and future potential determines the amount of equity granted to them, established within an equity grant budget. Additionally, the collective performance of our employees to attain our financial goals is one of many factors influencing stock price growth resulting in wealth creation. |
Employee benefits | To attract and retain employees by providing them with a competitive health, welfare and retirement benefits package in order to maintain their overall health and well-being. | Established within the overall employee benefit budget. |
Role of Performance Management
Process and Talent Management Review on Total
Compensation
Our annual performance
management process and the results of our annual talent management review are
important aspects of the Committees determination of compensation component
levels for our executive officers. Individual performance criteria and an
executive officers talent assessment consist of a combination of objective and
subjective criteria. Individual performance goals were established for all
executive officers in 2011 and final evaluations were conducted in early 2012
under our annual performance review process.
Performance Management Process: At the beginning of the calendar year, Mr. Gustafsson meets with each executive officer and discusses the executive officers individual performance goals for the year. Mr. Gustafsson presents each executive officers individual performance goals to the Committee for approval. The Board of Directors and Mr. Smith, its Chairman, work with Mr. Gustafsson to establish Mr. Gustafssons individual performance goals for the year, though Mr. Gustafssons performance goals for the year are not given any incentive weight within our short-term or long-term compensation programs. After the year ends, Mr. Gustafsson evaluates each executive officers performance, including determining the extent to which the executive officers individual performance goals are met, and presents his assessment to the Committee for their concurrence regarding goal attainment. The Board has an annual formal evaluation process through which it assesses the performance of Mr. Gustafsson, including determining the extent to which Mr. Gustafssons individual performance objectives are met. Chairman Smith and Messrs. Ludwick and Manire communicated the results of the Boards evaluation to Mr. Gustafsson; Mr. Gustafsson communicated the results of the Committees discussion to each executive officer. The performance evaluations are conducted on a subjective basis without any pre-assigned weighting on any particular factor, taking into account other factors such as:
Talent Management Review: After completing the annual performance evaluations, Mr. Gustafsson presents an overall talent management review to the Board, discussing the past performance and future potential of each executive officer and each of their direct reports, including a discussion of key skills, competencies, developmental opportunities and succession plans.
The talent management review discussion and the performance evaluation of each executive officer were considered in conjunction with other factors discussed below in determining 2011 total compensation.
Establishing Our Total
Compensation Component Levels
In
determining the target compensation of our executive officers, the Committee
considers several factors, including market compensation benchmarking. In the
fourth quarter of 2010, the Committee engaged The Delves Group to collect and
analyze compensation data for our executive officers and assess their
compensation relative to individuals holding similar positions in technology and
other industries in preparation for 2011 total compensation planning. The
compensation data sources used by The Delves Group consisted of a proprietary
survey from The Delves Group (reflecting data taken from national companies with
revenues less than $3 billion), the Radford
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Executive Survey (reflecting data taken from high-technology companies with revenue between $500 million and $2 billion) and the Watson Wyatt CompQuest Database (reflecting data taken from U.S. manufacturing companies with revenues between $500 million and $2 billion), as well as compensation data from our peer group, and represented market-based compensation data for base salaries, annual cash incentive awards and long-term equity awards for executive officers.
The Delves Group also guided Zebra management through a comparative assessment of Zebras peer group, including revenue, net income, net profit margin, market value, and one- and three-year total stockholder return. Zebra management presented to the Committee and the Committee, Zebra management and The Delves Group discussed key findings regarding the current peer group as well as key findings of other companies that the Committee may consider in the future as peers for total compensation assessment. The Committee determined the peer group, consisting of 22 peer companies based on companies of similar size and complexity, as guided by one or more of the following criteria, and made no additions or subtractions in 2011 from the peer group assessed in 2010, as reflected in the table below:
Zebras Peer Group | ||
Ariba, Inc. | Intermec, Inc. | PowerWave Technologies, Inc. |
Arris Group, Inc. | Itron, Inc. | ScanSource, Inc. |
Brady Corp. | KLA-Tencor Corp. | Teradata Corp. |
Checkpoint Systems, Inc. | LAM Research Corp. | Teradyne, Inc. |
Ciena Corp. | Lexmark International, Inc. | Trimble Navigation, Ltd. |
Coherent, Inc. | Logitech International | Waters Corp. |
Electronics for Imaging, Inc. | NCR Corp. | |
FLIR Systems, Inc. | Polycom, Inc. |
Base Salary: Joanne Townsend, our Vice President, Human Resources, and Mr. Gustafsson review and discuss each executive officers base salary (other than that of the CEO), taking into consideration objective and subjective criteria, including individual performance, the relative position of the base salary in relation to the median-market data, executive experience levels, general labor market conditions, and our overall salary budget. After receiving the recommendations of Ms. Townsend and Mr. Gustafsson, the Committee reviews and establishes the base salaries of the non-CEO executive officers annually, relying upon the same objective and subjective information assessed by Ms. Townsend and Mr. Gustafsson.
The Committee also reviews similar objective and subjective criteria annually to recommend to the Board the base salary for Mr. Gustafsson. The Committee believes it is customary and appropriate that our CEOs base salary, cash incentive award and equity compensation are greater than that of the other Zebra executive officers. Our CEO is the only executive with broad authority over Zebras full range of operations and with responsibilities encompassing all aspects of Zebras management and operations. These responsibilities are greater in scope and collectively more significant in nature than those of any other Zebra executive officer.
For 2011, The Delves Group presented market compensation data at the median and 75th percentile levels. This market compensation data were presented as a market consensus (straight average of all sourced market data) for each executive officer, including Mr. Gustafsson. The market compensation data indicated our executive officers
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base salary compensation, not including Mr. Gustafsson, ranged from 11% below to 58% above market median, and as a collective group averaged 11% above market median. The market data indicated that Mr. Gustafssons base salary compensation was 8% above market median.
The Committee reviewed the market data, discussing each executive officers performance while assessing each executive officers base salary in comparison to the market data. The Committee noted that all employees, inclusive of executive officers, did not receive a salary increase in 2009 and received a salary increase in 2010 reflective of a one-year increase instead of a two-year make-up equivalency increase, and that Mr. Gustafssons base salary had been adjusted only once since he was hired in September 2007. In addition, the Committee noted that the base salary of our Chief Financial Officer, Mr. Smiley, was significantly below market given Mr. Smileys responsibility for financial operations and reporting obligations of Zebra, as well as Zebras global information technology function. All other named officers base salary adjustments aligned within Zebras standard merit increase percentage guidelines used for all employees.
Named
Executive Officer |
2010 Salary | 2011 Salary | Percentage Increase | Effective Date |
Anders Gustafsson | $750,000 | $775,000 | 3.3% | 3/28/2011 |
Michael C. Smiley | $320,000 | $339,000 $360,000 |
6.0% 6.1% |
3/28/2011 8/1/2011 |
Phillip Gerskovich | $386,000 | $394,000 | 2.1% | 3/28/2011 |
Hugh K. Gagnier | $350,000 | $362,600 | 3.6% | 3/28/2011 |
Michael H. Terzich | $317,000 | $328,000 | 3.5% | 3/28/2011 |
Annual Cash Incentive Awards: Each executive officer has a target annual cash incentive award, which is established by the Committee and set as a percentage of base salary. For 2011, The Delves Group presented market compensation data at the median and 75th percentile levels. This market compensation data were presented as a market consensus (straight average of all sourced market data) for each executive officer, including Mr. Gustafsson. The market data indicated our executive officers incentive target compensation as a percentage of base salary, not including Mr. Gustafsson, ranged from 13 percentage points below to 4 percentage points above market median, and as a collective group averaged 6 percentage points below market median. The market data indicated that Mr. Gustafssons annual target incentive was 5 percentage points above market median.
The Committee reviewed the market data, noting that the target annual cash incentive award percentages for each of the executive officers were generally appropriate for each of their positions. As a result, the 2011 target annual cash incentive percentages for named officers remained the same as in 2010 and were established as follows: Mr. Gustafsson - 100%; Mr. Smiley - 55%; Mr. Gerskovich - 50%; Mr. Gagnier - 50%; and Mr. Terzich - 50%.
The target annual cash incentive awards that would be payable to each executive officer is calculated as a percentage of the officers eligible compensation defined as base salary in effect during the calendar year, pro-rated to reflect base salary adjustments throughout the calendar year.
2011 Annual Cash Incentive Plan: Each of our executive officers participated in the 2011 Zebra Incentive Plan (ZIP), which provided for an annual cash incentive award based on the achievement of financial and individual performance goals during 2011.
Initial Financial Performance Goal for Section 162(m) Purposes: To satisfy the performance-based compensation conditions of Section 162(m) of the Internal Revenue Code, the ZIP contained an initial financial performance goal for executive officers. This goal was positive Zebra income from operations and which was applied before any additional financial or individual performance goals were applied. The ZIP award amount for the Chief Executive Officer could not exceed 1.5% of Zebra income from operations or exceed 0.5% of Zebra income from operations for each of the other executive officers.
Financial Performance Goals: Additional financial performance goals were established for the purpose of exercising negative discretion under IRS Section 162(m). 2011 Zebra income from operations was established as a
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financial goal with specific performance targets to be met for threshold, target and maximum payouts. The threshold and maximum performance payout percentages were 50% and 200%, respectively. Achievement below the threshold would result in a 0% payout percentage. Income from operations represented 100% of Mr. Gustafssons and 80% of each of the other executive officers 2011 target annual cash incentive award.
In addition, the financial performance component of each executive officers 2011 annual cash incentive was subject to a return on invested capital (ROIC) modifier. If the ROIC target were achieved, the financial performance component would not be modified. If the ROIC target were exceeded, the financial performance component would be increased by 20%. If the ROIC target were not achieved, the financial performance component would be reduced by 20%, 40% or 100% depending upon the level of achievement in relation to the target. The ROIC modifier does not increase the financial performance component of the incentive award beyond a maximum 200% award payment for the financial performance component.
Individual Performance Goals: With the exception of Mr. Gustafsson whose 2011 ZIP annual cash incentive award is subject solely to the financial performance goals described above, each executive officers 2011 annual cash incentive award also included the achievement of individual performance goals. These goals varied by executive officer as approved by the Committee. Mr. Gustafsson presents his performance assessment and proposed incentive award recommendations to the Committee for their concurrence regarding goal attainment and approval of ZIP award amounts. The individual performance goals represented 20% of each executive officers 2011 target cash incentive award (other than Mr. Gustafsson).
The 2011 financial performance goals and performance targets, as well as the threshold, target, maximum and actual results are reflected in the following three tables:
Definitions and Targets of Financial Goals
Performance Measure |
Definition | 2011 Target | 2011 Actual Payout Percentage |
Income from Operations |
Income from operations for the applicable period, adjusted to remove non-recurring charges and acquisitions of the Company, as applicable. 1 | $174,800,000 | 136.5% |
Return on Invested Capital |
Net Operating Profit After Tax (NOPAT) for 2011 divided by Invested Capital where (a) NOPAT = Income from Operations x (1-budgeted tax rate) and (b) Invested Capital = total assets, less cash and cash equivalents, current and long-term investments and marketable securities, and non- interest-bearing current liabilities, and which is calculated as the average Invested Capital reflected on five balance sheets (end of Q4 2010 and each of Q1-Q4 2011). | 13.50% to 16.50% | 1.2 modifier |
1 |
Non-recurring charges specifically include such expense items as (i) one-time charges, non-operating charges or expenses incurred that are not under the control of operations management, as determined by the Committee; (ii) restructuring expenses; (iii) exit expenses; (iv) integration expenses; (v) Board of Directors project activities (e.g., director searches); (vi) gains or losses on the sale of assets; (vii) acquired in-process technology; (viii) impairment charges; or (ix) changes in GAAP. The above list is not exhaustive and is meant to represent examples of the kind of expenses typically excluded from the calculations of Income from Operations. Acquisitions: generally, for the first quarter beginning at least six months after an acquisition closes, the financial targets will be adjusted to incorporate the acquired companys budget or financial plan. The reported financial performance will also be adjusted to include the acquired companys actual performance for the first quarter beginning at least six months after an acquisition closes. |
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Financial Performance Levels Required
to Receive a Cash Incentive Award
as a Percent of Target
Performance
Performance Measure |
Performance Threshold | Performance Target | Performance Maximum |
Income
from |
Performance: 75% of performance target Award 50% of target incentive |
Performance: 100% of performance target Award 100% of target incentive |
Performance: 115% of performance target Award: 200% of target incentive |
Return on |
Performance at 9.00-10.99% or 11.00-13.49% reduces financial component of award by 40% and 20%, respectively |
Performance 13.50-16.50% Financial component of award unchanged |
Performance: Above 16.50% Award: Financial component of award increased by 20% |
Performance below 75% of operating income target (i.e., threshold performance) results in a 0% payout and performance below the 9.00% ROIC performance target results in a 100% reduction to the financial component portion of the 2011 target cash incentive. Performance between the stated performance levels is interpolated on a straight line basis.
2011 Cash Incentive Award
Named Officers | Minimum | Target | Maximum | Actual
Award As a Percent of Eligible Compensation |
Actual Award |
Anders Gustafsson | 0% | 100% | 200% | 163.8% | $1,259,802 |
Michael C. Smiley | 0% | 55% | 110% | 85.82% | $294,754 |
Philip Gerskovich | 0% | 50% | 100% | 75.52% | $296,142 |
Hugh K. Gagnier | 0% | 50% | 100% | 78.52% | $282,410 |
Michael H. Terzich | 0% | 50% | 100% | 78.02% | $253,907 |
The amount of each of the named officers actual incentive award under the 2011 ZIP depended upon the level of attainment of his financial and, if applicable, individual performance goals for the year. For Mr. Gustafsson, Mr. Smiley, Mr. Gerskovich, Mr. Gagnier and Mr. Terzich, the incentive award amounts are above target incentive amounts because our 2011 operating income was 105.5% of the target, which resulted in a payout percentage of 136.5% of the financial component of each named officers target incentive. In addition, our ROIC for 2011 exceeded the 16.5% target, which resulted in the financial component portion of each target incentive being increased by 20%.
Long-Term Equity Awards Component: The Committee believes it is important that all of our executive officers are incented to create stockholder value over a long-term investment horizon. With the assistance of The Delves Group, which provided market compensation data from our peer group and the general industry regarding the level and mix of equity awards, we shifted our focus a few years ago from providing only stock options to using a variety of equity vehicles. Over the past few years we have adjusted the equity vehicle and corresponding weights to improve alignment with Zebras business strategy to allow us to develop compensation packages based upon changing business conditions and accounting practices in order to attract, retain, motivate, develop and reward our employees.
2011 Long-Term Incentive Equity Grant: For 2011, The Delves Group presented compensation market data for the median and 75th percentile levels, and included equity pay mix and prevalence data, and current and 3-year burn rates and overhang analyses. This market compensation data was presented as a market consensus (straight average of all sourced market data) for each executive officer, including Mr. Gustafsson. The market data reflected that our executive officers equity compensation from the 2010 annual grant, not including Mr. Gustafsson, ranged from 19% below to 30% above market median, and as a collective group averaged 4% above market median. Utilizing The Delves Group information for the executive officers as a guide, and with a desire to establish long-term
23
incentive target percentages for the executive officers in order to establish internal alignment for long-term incentive opportunity for the attainment of the long-term strategic goals, Mr. Gustafsson recommended to the Committee, and the Committee approved, long-term incentive target percentages for the executive officer levels. Positions at the senior vice president level (e.g., Messrs. Smiley, Gagnier, Gerskovich and Terzich) have a target long-term incentive opportunity of 150% of base salary. The target opportunity is based upon each executive officers base salary in effect immediately prior to their 2011 merit salary adjustment. A long-term incentive opportunity pay range was then established around the target percent, with the minimum equating to 50% of the target and the maximum equating to 150% of the target to be used as a guideline for each executive officer level. Mr. Gustafsson could also recommend no equity grant to an officer based upon market conditions and/or an executive officers individual performance. This new approach simplified the grant process, balanced external market data with internal alignment opportunity, and allowed for the executive officers to be eligible to receive a grant using the approach already in existence for all other eligible employee participants within Zebra. For Mr. Gustafsson, The Delves Group recommended a similar approach, with a target long-term incentive opportunity at 300% of base salary with a long-term incentive opportunity range of 50% of target as a minimum and 150% of target as maximum guideline. The Board could also provide for no equity grant to Mr. Gustafsson based upon market conditions and/or Mr. Gustafssons performance.
Using these long-term incentive target percentages and corresponding equity pay ranges, Mr. Gustafsson reviewed each executive officers long-term incentive opportunity converted to a dollar value, then recommended a total equity award dollar value for each executive officer in 2011, except for himself. The Committee considered the same factors, including Mr. Gustafssons recommendations, before making its final equity grant determination. For all executive officers other than Mr. Gustafsson, the equity grant dollar value approved by the Committee fell within the long-term incentive opportunity range guidelines for each executive officer. The 2011 actual grant date fair value awards ranged between 60% of target to 117% of target for that executive officers position, with all executive officers combined, excluding Mr. Gustafsson, averaging 98% of target long-term incentive award opportunity.
With respect to Mr. Gustafssons total equity award dollar value in 2011, the Committee consulted with The Delves Group and considered factors similar to those considered when determining the total equity award dollar values for the other executive officers. The Committee recommended to the Board, and the Board approved a 2011 equity grant to Mr. Gustafsson equal to 109% of his target long-term incentive award opportunity. Mr. Gustafssons 2011 equity grant was significantly lower in grant value than his 2010 equity grant because the 2010 grant was a special award intended to (1) provide a significant long-term incentive tied directly to achievement of Zebras strategic plan approved by the Board in 2010; (2) provide a significant potential upside rewards for achieving the strategic plan and significantly increasing Zebras stock price; and (3) serve as a retention vehicle.
For 2011, the Committee determined an equity grant dollar value for each executive officer, including Mr. Gustafsson, and converted that value to a number of shares as reflected below. This award was granted in the form of performance-vested restricted stock, time-vested stock appreciation rights and time-vested restricted stock, allocated at approximately one-third of the overall grant value to each of these equity grant vehicles.
24
All 2011 performance-vested restricted stock grants have a performance goal which is compounded annual growth rate of total net sales (CAGR) over the three-year performance period ending December 31, 2013. Achievement of an implied CAGR at the three-year target rate in any of 2011, 2012 or 2013 would result in the banking of one-third of the target number of shares for that year. At the end of the three-year performance period, the number of shares of restricted stock that would vest is based upon the greater of either the sum of the banked shares or the attainment of the target CAGR as set forth in the table below:
Below Threshold |
Performance Threshold |
Performance Target |
Performance Maximum | |
Restricted Stock Vested Percentage | 0% | 50.00% | 100.00% | 150.00% |
In addition, if the number of the vested shares exceeds zero, then the number of shares will be subject to a ROIC modifier established in a series of ranges. If the ROIC target range is achieved, the number of shares will not be modified. If the ROIC target range is exceeded, the number of shares will be increased by 20%. If the ROIC target range is not achieved, the number of shares will be reduced by 20% or 40% depending upon the level of achievement in relation to the target range. ROIC equals the average of the Annual Fiscal ROIC for 2011, 2012 and 2013. Annual Fiscal ROIC is defined as net operating profit after tax (NOPAT) for the fiscal period divided by Invested Capital as set forth under the table above entitled Definitions and Targets of Financial Component Goals.
The number of shares of restricted stock granted to the named officers in 2011 is summarized in the table below.
Stock Appreciation Rights Share (SARs) Calculation and Terms: For executive officers other than Mr. Gustafsson, in calculating the number of time-vested stock appreciation rights, we divided the approved grant dollar value of the equity award by a fair value determined by using the binomial method multiplied by an estimated per share price of our common stock on the grant date. The Committee then approved the number of shares. The actual grant price was then set using the closing price of our common stock on the grant date, establishing the actual grant date fair value. For Mr. Gustafsson, the Committee recommends, and the Board approves, a targeted grant value which was then converted by dividing the grant dollar value of the equity award by a value determined by using the binomial method multiplied by the actual per share price of our common stock on the grant date, establishing the actual grant date fair value. Consistent with recent annual equity grant award terms, the Committee determined that the stock appreciation rights awards for executive officers, including Mr. Gustafsson, would vest 25% on the first four anniversaries of the grant date, or each May 5 beginning 2012, and would expire on May 5, 2021.
The number of SARs granted to the named officers in 2011 is summarized in the table below and is based on the closing price of our common stock on the grant date.
Time-Vested and Performance-Vested Restricted Stock Share Calculation and Terms: For executive officers other than Mr. Gustafsson, in calculating the number of time-vested and performance-vested restricted shares, we divided the approved grant dollar value of the equity award by an estimated per share price of our common stock on the grant date without any discount for the restricted nature of the award. The Committee then approved the number of shares. The actual value was then set using the closing price of our common stock on the grant date, establishing the actual grant date fair value. For Mr. Gustafsson, the Committee recommends, and the Board approves, a targeted grant value which was then converted by dividing the grant dollar value of the equity award by the actual per share closing price of our common stock on the grant date without any discount for the restricted nature of the award, establishing the actual grant date fair value. In order to provide a significant long-term perspective and retention incentive, the Committee determined that the time-vested restricted stock awards for executive officers, including Mr. Gustafsson, would vest 100% on May 5, 2014, the third anniversary of the grant date. The vesting terms of the performance-vested restricted stock are described above.
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2011 Annual Equity Grants
Named Officers | Grant
Date Fair Value |
Number of Time-Vested SARs |
Target Number of Performance- Vested Restricted Shares |
Number of
Time Vested-Restricted Shares |
Anders Gustafsson | $2,454,925 | 54,484 | 20,045 | 20,045 |
Michael C. Smiley | $563,967 | 12,516 | 4,605 | 4,605 |
Philip Gerskovich | $349,146 | 7,748 | 2,851 | 2,851 |
Hugh K. Gagnier | $563,967 | 12,516 | 4,605 | 4,605 |
Michael H. Terzich | $520,995 | 11,563 | 4,254 | 4,254 |
The number of shares of performance-vested restricted shares that may vest for each of the named officers is as follows.
2011 Performance-Vested Restricted Shares
Named Officers | Fail to Meet Threshold CAGR and ROIC |
Attain Threshold CAGR and ROIC |
Attain
Target CAGR and ROIC |
Attain
Maximum CAGR and ROIC |
Anders Gustafsson | 0 | 6,013 | 20,045 | 36,081 |
Michael C. Smiley | 0 | 1,381 | 4,605 | 8,289 |
Philip Gerskovich | 0 | 855 | 2,851 | 5,131 |
Hugh K. Gagnier | 0 | 1,381 | 4,605 | 8,289 |
Michael H. Terzich | 0 | 1,276 | 4,254 | 7,657 |
Employee Benefits Component: Our executive officers are also eligible to participate in various benefit programs offered generally to Zebras U.S. salaried employees, such as our health plans and group disability and life insurance plans. We provide a 401(k) plan to eligible employees with a match of 4% of eligible compensation, and also provide a non-qualified deferred compensation plan for highly compensated employees in which Zebra does not provide for company contributions. We generally do not provide other long-term compensation plans, supplemental executive retirement plans or a defined benefit pension plan. We have not historically provided any perquisites.
Effective July 1, 2010, the Committee approved a supplemental executive disability policy for executives to replace the difference between what the group disability policy provides and the 60% earnings replacement cap under the group policy. Zebra pays for the supplemental executive disability coverage and the covered executive is taxed on this benefit, which amount is then reimbursed to the executive.
Our Executive Officer Employment
Agreements
Each executive officer has
an employment agreement addressing matters such as compensation (including base
salary, annual cash incentive awards, long-term equity awards and employee
benefit), termination of employment, non-competition and/or non-solicitation
provisions. We believe that providing an employment agreement facilitates the
attraction of high performing and high potential executive officers by providing
them a minimum level of total compensation. We also believe the employment
agreements provide a minimum level of assurance in the event of a termination of
employment in connection with a change in control, for good reason by the
executive officer, or by Zebra without cause, as defined in each executive
officers employment agreement and summarized under Executive Compensation
Employment Agreements.
The various components of total compensation as reflected within the employment agreements are reviewed on an annual basis by the Committee as described within this Compensation Discussion and Analysis. All other provisions of the employment agreements are established at the onset of the employee being appointed as an executive officer and are reviewed and updated on an as needed basis.
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Specific to the non-compete and/or non-solicitation provisions, we believe these provisions align with our desire to protect the company and the stockholders from negative actions that could be caused by an executive officer who joins a competitor and engages in activities that could result in competitive harm to Zebra or our customers.
We believe that the severance amounts as reflected under Potential Payments upon Termination of Employment are fair and reasonable in order to allow the executive officer to transition from Zebra with minimal disruption to our overall business and, in the event of a change in control, to help secure the continued employment and dedication of our executive officers, notwithstanding any concern they may have regarding their own employment.
Tax
Effects
Compliance with
Section 162(m). The Committee
generally intends for all compensation paid to our named officers to be tax
deductible to Zebra. Section 162(m) of the Internal Revenue Code, however,
provides that compensation paid to named officers (other than our chief
financial officer) in excess of $1,000,000 cannot be deducted for federal income
tax purposes unless such compensation is performance-based, is established by an
independent committee of directors, is objective and the plan or agreement
providing for such performance-based compensation has been approved in advance
by our stockholders. If in the judgment of our Committee the benefits to Zebra
of a compensation program that does not satisfy the conditions of Section 162(m)
outweigh the costs to Zebra of the failure to satisfy these conditions, the
Committee may adopt such a program. For example, the 2009, 2010 and 2011 grants
of time-vested restricted stock awards are not considered performance-based
under Section 162(m). To the extent that the ordinary income realized by a
covered employee under Section 162(m) upon vesting of these awards plus other
non-performance-based income in a year, such as salary, exceed the $1,000,000
deductibility cap, then Zebra would forego a tax deduction.
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Executive Compensation
The following table summarizes the compensation earned during 2011, 2010 and 2009 by our Chief Executive Officer and our four other most highly compensated executive officers as of December 31, 2011. We refer to these five executive officers as the named officers.
SUMMARY COMPENSATION TABLE
Non-Equity | ||||||||
Incentive Plan | All Other | |||||||
Name and | Salary | Stock | Option/SAR | Compensation | Compensation | |||
Principal Position | Year | ($) | Bonus ($) | Awards ($)(1) | Awards ($)(1) | ($)(2) | ($)(3) | Total ($) |
Anders Gustafsson | 2011 | 768,269 | 0 | 1,666,542 | 788,383 | 1,259,802 | 28,857 | 4,511,853 |
Chief Executive Officer | ||||||||
2010 | 735,961 | 0 | 4,250,006 | 1,279,981 | 1,475,342 | 29,290 | 7,770,580 | |
2009 | 700,000 | 0 | 880,200 | 908,500 | 146,468 | 14,748 | 2,649,916 | |
Michael C. Smiley | 2011 | 342,031 | 382,860 | 181,107 | 294,754 | 12,477 | 1,213,229 | |
Chief Financial Officer | 2010 | 309,769 | 0 | 358,878 | 160,664 | 316,384 | 11,376 | 1,157,071 |
2009 | 282,000 | 0 | 212,774 | 230,064 | 29,503 | 4,542 | 758,883 | |
Philip Gerskovich | 2011 | 391,846 | 0 | 237,032 | 112,114 | 296,142 | 13,614 | 1,050,748 |
Senior Vice President, | 2010 | 383,846 | 0 | 228,124 | 103,208 | 345,684 | 12,018 | 1,072,880 |
Corporate Development | 2009 | 378,000 | 0 | 159,570 | 172,552 | 39,546 | 4,542 | 754,210 |
Hugh K. Gagnier | 2011 | 359,208 | 0 | 382,860 | 181,107 | 282,410 | 13,188 | 1,218,773 |
Senior Vice President, | 2010 | 346,769 | 0 | 358,878 | 160,664 | 329,783 | 11,805 | 1,207,899 |
Global Operations | 2009 | 344,500 | 0 | 212,774 | 230,064 | 34,828 | 4,840 | 827,006 |
Michael H. Terzich | 2011 | 325,038 | 0 | 353,678 | 167,317 | 253,907 | 12,292 | 1,112,232 |
Senior Vice President, | ||||||||
Global Sales and | ||||||||
Marketing |
(1) | The amounts reflect the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Codification Topic 718, Compensation Stock Compensation, of restricted stock and stock appreciation rights (SAR) granted in 2011, 2010 and 2009. The amounts included in this column for 2011 and 2010 include the grant date fair value of time-vested restricted stock and SARs, as well as performance-vested restricted stock, which is calculated based on the probable satisfaction of the performance conditions for such awards. If the highest level of performance is achieved for the performance-vested restricted stock granted in 2011, the grant date fair value of all stock awards would be as follows: Mr. Gustafsson $2,333,159; Mr. Smiley $536,004; Mr. Gerskovich $331,845; Mr. Gagnier $536,004; and Mr. Terzich - $495,149. Please see Note 16, Equity-Based Compensation, of Zebras consolidated financial statements included in Zebras Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of assumptions made in calculating the aggregate grant date fair value of these awards. | ||
(2) | The amounts in this column reflect the annual incentive compensation earned under Zebras annual incentive plans. | ||
(3) | All other compensation for 2011 consists of 401(k) matching contributions (Mr. Gustafsson $9,800; Mr. Smiley $9,800; Mr. Gerskovich $9,800; Mr. Gagnier $9,800; and Mr. Terzich - $9,800), life insurance premiums (Mr. Gustafsson - $600; Mr. Smiley - $600; Mr. Gerskovich - $600; Mr. Gagnier - $600; and Mr. Terzich - $600), a tax gross up in connection with income recognized for long-term disability premiums paid by Zebra (Mr. Gustafsson - $6,460; Mr. Smiley - $2,077; Mr. Gerskovich - $3,214; Mr. Gagnier - $2,788; and Mr. Terzich - $1,892), and for Mr. Gustafsson, perquisites of $11,997, consisting of Zebra paid executive long-term disability insurance premiums. |
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GRANTS OF PLAN-BASED AWARDS IN 2011(1)
All Other | |||||||||||
All Other | Options | Exercise | |||||||||
Stock | Awards, | or Base | Grant Date | ||||||||
Estimated Future Payouts Under | Estimated Future Payouts Under | Awards: | Number of | Price of | Fair Value of | ||||||
Non-Equity Incentive Plan Awards(2) | Equity Incentive Plan Awards(3) | Number of | Securities | Option | Stock | ||||||
Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Shares of | Underlying | Awards | and Option | |
Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | Stock(#)(4) | Options(#)(5) | ($/Sh)(6) | Awards ($)(7) |
Anders Gustafsson | 3/7/11 | 384,555 | 769,110 | 1,538,220 | |||||||
5/5/11 | 54,484 | 41.57 | 788,383 | ||||||||
5/5/11 | 20,045 | 833,271 | |||||||||
5/5/11 | 6,013 | 20,045 | 36,081 | 833,271 | |||||||
Michael C. Smiley | 3/7/11 | 94,448 | 188,896 | 377,792 | |||||||
5/5/11 | 12,516 | 41.57 | 181,107 | ||||||||
5/5/11 | 4,605 | 191,430 | |||||||||
5/5/11 | 1,381 | 4,605 | 8,289 | 191,430 | |||||||
Philip Gerskovich | 3/7/11 | 98,034 | 196,068 | 392,136 | |||||||
5/5/11 | 7,748 | 41.57 | 112,114 | ||||||||
5/5/11 | 2,851 | 118,516 | |||||||||
5/5/11 | 855 | 2,851 | 5,131 | 118,516 | |||||||
Hugh K. Gagnier | 3/7/11 | 89,917 | 179,833 | 359,666 | |||||||
5/5/11 | 12,516 | 41.57 | 181,107 | ||||||||
5/5/11 | 4,605 | 191,430 | |||||||||
5/5/11 | 1,381 | 4,605 | 8,289 | 191,430 | |||||||
Michael H. Terzich | 3/7/11 | 81,360 | 162,719 | 325,438 | |||||||
5/5/11 | 11,563 | 41.57 | 167,317 | ||||||||
5/5/11 | 4,254 | 176,839 | |||||||||
5/5/11 | 1,276 | 4,254 | 7,657 | 176,839 |
(1) | See Compensation Discussion and Analysis for additional discussion of Zebras 2011 annual incentive plan and equity awards. | ||
(2) | The amounts in this column represent potential earnings under the 2011 annual incentive plan. The threshold, target and maximum amounts are based on a percentage of incentive eligible compensation. The amount earned was subject to attaining levels of achievement of financial performance goals and, other than for the chief executive officer, individual performance goals as described in the Compensation Discussion and Analysis. If the threshold performance target is not met, the annual incentive award is $0. At threshold performance, 50% of the target incentive will be earned. At target performance, 100% of the target incentive will be earned. At maximum performance, 200% of the target incentive will be earned. As described in Compensation Discussion and Analysis, return on invested capital (ROIC) acted as a modifier of the amount earned under the performance goals; however, pursuant to the terms of the plan, the ROIC modifier cannot increase the financial performance component of the incentive award beyond a maximum 200% award payment for the financial performance component. The actual amounts earned in respect of 2011 are reported in the summary compensation table. | ||
(3) | The target column represents the number of shares of performance-based restricted stock granted on May 5, 2011. These awards vest 100% on May 5, 2014, subject to attaining levels of achievement of performance goals relating to (1) compounded annual growth rate (CAGR) of 2013 total net sales over 2010 total net sales and (2) ROIC over the three-year performance period ending December 31, 2013, with ROIC acting as a modifier of the number of shares vested under the total net sales goal. At the threshold CAGR, 50% of the target number of shares would vest. At the target CAGR, 100% of the target number of shares would vest. At the maximum CAGR, 150% of the target number of shares would vest. If the threshold CAGR is not achieved, 0% of the |
29
shares vest. In each case, the number of vested shares will be modified based on average ROIC during the three-year performance period. If the threshold ROIC is not attained, the number of vested shares, if any, will be reduced by 40%. If the threshold ROIC is attained but target ROIC is not attained, the number of vested shares, if any, will be reduced by 20%. If the maximum ROIC is attained, the number of vested shares, if any, will be increased by 20%. The threshold column represents the number of shares that would vest if the threshold CAGR is attained, reduced by 40% if the threshold ROIC is not attained. The maximum column represents the number of shares that would vest if the maximum CAGR is attained, increased by 20% if the maximum ROIC is attained. Notwithstanding the foregoing description, up to one-third of the target number of shares may be earned (but not vested) as of December 31, 2011, 2012 and 2013 based upon the annual growth rate of total net sales for that year over the prior year total net sales (without regard to the ROIC for that year). To determine the number of restricted shares that will vest on May 5, 2014, the ROIC modifier for the three-year performance period will then be applied to the greater of (a) the sum of the three annual number of earned shares and (b) the number of shares that would vest based upon the CAGR achieved over the three-year performance period. Dividends are not paid on our common stock. Except for Mr. Gustafsson, if an executive officers employment is terminated by reason of death, disability, by the officer for good reason or by Zebra other than for cause (1) prior to December 31, 2013, the vesting of these awards will accelerate at the target number of shares or (2) on or after December 31, 2013, the vesting of these award will be determined in accordance with the performance-based vesting goals and any shares would vest on May 5, 2014. If Mr. Gustafssons employment is terminated by reason of death, disability, by Mr. Gustafsson for good reason or by Zebra other than for cause, the number of vested shares will be prorated based on days elapsed from May 5, 2011 to the date of termination of employment (unless otherwise determined by the Board or the Compensation Committee). For all awards held by executive officers, if a change in control involves stockholders receiving consideration consisting of publicly traded common stock, and if the restricted stock agreement is assumed or a provision is made for the continuation of the restricted stock agreement, then there will be a substitution of the common stock into which Zebra common stock is converted in the change in control and the target number of shares of restricted stock will vest. If a change in control does not involve stockholders receiving publicly traded common stock, then there will be a cash payment to the holder representing the value of the target number of shares of restricted stock. The definitions of change in control, good reason and cause are summarized under Employment Agreements below. | |||
(4) | Represents shares of time-vested restricted stock granted on May 5, 2011. These awards vest 100% on May 5, 2014. Dividends are not paid on our common stock. The vesting of these awards will be accelerated upon a termination of employment by reason of death, disability, resignation for good reason, or termination by Zebra without cause, except that for Mr. Gustafsson the number of vested shares would be prorated based on days elapsed from the grant date to the date of termination of employment (unless otherwise determined by the Board or the Compensation Committee). For awards held by executive officers other than Mr. Gustafsson, (1) if a change in control involves stockholders receiving consideration consisting of publicly traded common stock, and if the restricted stock award agreement is assumed or a provision is made for the continuation of the agreement, then there will be a substitution of the common stock into which Zebra common stock is converted in the change in control and the restricted stock award agreement will continue in accordance with its terms and (2) if a change in control does not involve stockholders receiving publicly traded common stock, then there will be a cash payment to the holder representing the value of the shares of restricted stock. For Mr. Gustafsson, in the event of a change in control, the shares of restricted stock will vest in full and (1) if the change in control involves stockholders receiving consideration consisting of publicly traded common stock, there will be a substitution of the common stock into which Zebra common stock is converted in the change in control or (2) if the change in control does not involve stockholders receiving publicly traded common stock, there will be a cash payment to Mr. Gustafsson representing the value of the shares of restricted stock. | ||
(5) | Represents the number of shares underlying SAR awards. SARs become exercisable in 25% increments on each of the first four anniversaries of the grant date and expire on the tenth anniversary of the grant date. For all awards held by executive officers other than Mr. Gustafsson, (i) upon termination of employment by reason of death or disability, the unvested portion will vest in full and the SAR will remain exercisable until the earlier of the expiration date or one year after the termination of employment; (ii) upon retirement, any unexercised vested portion will remain exercisable until the earlier of the expiration date or one year after retirement; (iii) upon termination for cause, the SAR will be forfeited; and (iv) upon termination for any other reason, any unexercised vested portion will remain exercisable until the earlier of the expiration date or (a) 90 days after termination if terminated by Zebra and (b) 30 days if termination is voluntary. For Mr. Gustafsson, upon |
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termination of employment (i) by reason of his death, disability, resignation for good reason, or termination by Zebra without cause, the unvested portion will vest in full and the SAR will remain exercisable until the earlier of the expiration date or one year after his termination of employment due to death or disability or 90 days after his termination of employment by reason of resignation for good reason or termination by Zebra without cause; provided, that Mr. Gustafssons 2011 and 2010 SAR awards will vest pro rata based on the number of days from the grant date through and including the date of termination of employment; (ii) upon retirement, any unexercised vested portion will remain exercisable until the earlier of the expiration date or one year after retirement; (iii) upon termination for cause, the SAR will be forfeited; and (iv) upon termination for any other reason, any unexercised vested portion will remain exercisable until the earlier of the expiration date or 30 days after his termination of employment. For awards held by executive officers other than Mr. Gustafsson, (1) if a change in control involves stockholders receiving consideration consisting of publicly traded common stock, and if the SAR agreement is assumed or a provision is made for the continuation of the SAR agreement, then there will be a substitution of the common stock into which Zebra common stock is converted in the change in control and the SAR will continue in accordance with its terms and (2) if a change in control does not involve stockholders receiving publicly traded common stock, then there will be a cash payment to the holder representing the difference between the value of a share on the date of the transaction over the base price of the SAR. For Mr. Gustafsson, in the event of a change in control, the SAR will vest in full and (1) if the change in control involves stockholders receiving consideration consisting of publicly traded common stock, there will be a substitution of the common stock into which Zebra common stock is converted in the change in control and the SAR will remain exercisable through the expiration date or (2) if the change in control does not involve stockholders receiving publicly traded common stock, there will be a cash payment to Mr. Gustafsson representing the difference between the value of a share on the date of the transaction over the base price of the SAR. | |||
(6) | The base price equals the closing market price of our common stock on the date of grant. | ||
(7) | The amounts included in this column were determined in accordance with Financial Accounting Standards Codification Topic 718, Compensation Stock Compensation and, in the case of performance-vested restricted stock awards, are calculated based on the probable satisfaction of the performance conditions. Please see Note 16, Equity-Based Compensation, of Zebras consolidated financial statements included in Zebras Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of assumptions made in calculating the aggregate grant date fair value of these awards. |
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OUTSTANDING EQUITY AWARDS AT 2011 FISCAL YEAR-END | |||||||||
Option/SAR Awards | Stock Awards | ||||||||
Equity | |||||||||
Incentive | |||||||||
Plan | |||||||||
Awards: | |||||||||
Equity | Equity | Market or | |||||||
Incentive | Incentive Plan | Payout | |||||||
Plan | Awards: | Value of | |||||||
Awards: | Number of | Unearned | |||||||
Number of | Number of | Number of | Unearned | Shares, | |||||
Securities | Securities | Securities | Number of | Shares, Units | Units or | ||||
Underlying | Underlying | Underlying | Shares or | Market Value of | or Other | Other | |||
Unexercised | Unexercised | Unexercised | Option | Units of Stock | Shares or Units | Rights That | Rights That | ||
Options/SARs | Options/SARs | Unearned | Exercise | Option | That Have | of Stock That | Have Not | Have Not | |
(#) | (#) | Options | Price | Expiration | Not Vested | Have Not Vested | Vested | Vested | |
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#)(1) | ($)(2) | (#) | ($)(2) |
Anders Gustafsson (3) | |||||||||
9/4/2007 | 75,000 | 0 | $36.80 | 9/4/2017 | |||||
9/4/2007 (4) | 42,188 | $36.80 | 9/4/2017 | ||||||
9/4/2007 (5) | 14,062 | $503,138 | |||||||
4/24/2008 | 67,500 | 22,500 | $36.49 | 4/24/2018 | |||||
5/7/2009 | 57,500 | 57,500 | $19.56 | 5/7/2019 | |||||
5/7/2009 | 45,000 | $1,610,100 | |||||||
5/6/2010 | 0 | 120,299 | $27.82 | 5/6/2020 | |||||
5/6/2010 | 44,932 | $1,607,667 | |||||||
5/6/2010 (6) | 194,105 | $6,945,077 | |||||||
5/5/2011 | 0 | 54,484 | $41.57 | 5/5/2021 | |||||
5/5/2011 | 20,045 | $717,210 | |||||||
5/5/2011 (7) | 6,013 | $215,145 | |||||||
Michael C. Smiley (8) | |||||||||
5/1/2008 | 8,775 | 2,925 | $37.67 | 5/1/2018 | |||||
5/1/2008 (5) | 1,875 | $67,088 | |||||||
5/7/2009 | 14,560 | 14,562 | $19.56 | 5/7/2019 | |||||
5/7/2009 | 10,878 | $389,215 | |||||||
5/6/2010 | 3,775 | 11,325 | $27.82 | 5/6/2020 | |||||
5/6/2010 | 5,500 | $196,790 | |||||||
5/6/2010 (6) | 13,320 | $476,590 | |||||||
5/5/2011 | 0 | 12,516 | $41.57 | 5/5/2021 | |||||
5/5/2011 | 4,605 | $164,767 | |||||||
5/5/2011 (7) | 1,381 | $49,412 | |||||||
Philip Gerskovich (9) | |||||||||
3/10/2005 | 29,786 | 0 | $50.36 | 3/10/2015 | |||||
2/6/2006 | 23,068 | 0 | $43.35 | 2/6/2016 | |||||
4/25/2007 | 9,697 | 0 | $41.25 | 4/25/2017 | |||||
4/24/2008 | 10,860 | 3,620 | $36.49 | 4/24/2018 | |||||
4/24/2008 (5) | 2,272 | $81,292 | |||||||
5/7/2009 | 10,920 | 10,922 | $19.56 | 5/7/2019 | |||||
5/7/2009 | 8,158 | $291,893 | |||||||
5/6/2010 | 2,425 | 7,275 | $27.82 | 5/6/2020 | |||||
5/6/2010 | 3,500 | $125,230 | |||||||
5/6/2010 (6) | 8,460 | $302,699 | |||||||
5/5/2011 | 0 | 7,748 | $41.57 | 5/5/2021 | |||||
5/5/2011 | 2,851 | $102,009 | |||||||
5/5/2011 (7) | 855 | $30,592 |
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Hugh K. Gagnier (10) | |||||||||
2/11/2003 | 29,250 | 0 | $25.23 | 2/11/2013 | |||||
2/11/2004 | 10,500 | 0 | $47.12 | 2/11/2014 | |||||
2/7/2005 | 9,686 | 0 | $51.62 | 2/7/2015 | |||||
2/6/2006 | 4,960 | 0 | $43.35 | 2/6/2016 | |||||
4/25/2007 | 9,334 | 0 | $41.25 | 4/25/2017 | |||||
4/24/2008 | 10,860 | 3,620 | $36.49 | 4/24/2018 | |||||
4/24/2008 (5) | 2,272 | $81,292 | |||||||
5/7/2009 | 14,560 | 14,562 | $19.56 | 5/7/2019 | |||||
5/7/2009 | 10,878 | $389,215 | |||||||
5/6/2010 | 3,775 | 11,325 | $27.82 | 5/6/2020 | |||||
5/6/2010 | 5,500 | $196,790 | |||||||
5/6/2010 (6) | 13,320 | $476,590 | |||||||
5/5/2011 | 0 | 12,516 | $41.57 | 5/5/2021 | |||||
5/5/2011 | 4,605 | $164,767 | |||||||
5/5/2011 (7) | 1,381 | $49,412 | |||||||
Michael H. Terzich (11) | |||||||||
2/11/2004 | 10,500 | 0 | $47.12 | 2/11/2014 | |||||
2/7/2005 | 9,686 | 0 | $51.62 | 2/7/2015 | |||||
2/6/2006 | 5,767 | 0 | $43.35 | 2/6/2016 | |||||
4/25/2007 | 10,667 | 0 | $41.25 | 4/25/2017 | |||||
4/24/2008 | 10,860 | 3,620 | $36.49 | 4/24/2018 | |||||
4/24/2008 (5) | 2,272 | $81,292 | |||||||
5/7/2009 | 0 | 12,742 | $19.56 | 5/7/2019 | |||||
5/7/2009 | 9,518 | $340,554 | |||||||
5/6/2010 | 3,450 | 10,350 | $27.82 | 5/6/2020 | |||||
5/6/2010 | 5,000 | $178,900 | |||||||
5/6/2010 (6) | 12,060 | $431,507 | |||||||
5/5/2011 | 0 | 11,563 | $41.57 | 5/5/2021 | |||||
5/5/2011 | 4,254 | $152,208 | |||||||
5/5/2011 (7) | 1,276 | $45,655 |
(1) | These restricted stock awards vest three years after the grant date, except that the May 6, 2010, grant to Mr. Gustafsson vests 25% on each of May 6, 2013 and 2014 and 50% on May 6, 2015. | ||
(2) | The market value is based on the $35.78 closing price of our common stock on The NASDAQ Stock Market on December 30, 2011. | ||
(3) | The option granted on April 24, 2008, will vest with respect to 22,500 shares on April 24, 2012; the stock appreciation right (SAR) granted on May 7, 2009, will vest with respect to 28,750 rights on each of May 7, 2012 and 2013; the SAR granted on May 6, 2010, will vest with respect to 30,074 rights on May 6, 2013, 30,075 rights on May 6, 2014, and 60,150 rights on May 6, 2015; and the SAR granted on May 5, 2011, will vest with respect to 13,521 rights on each of May 5, 2012, 2013, 2014 and 2015. | ||
(4) | Represents the number of shares with respect to which the option would vest upon achievement of a minimum total stockholder return level during the five-year period ending September 4, 2012. | ||
(5) | Represents the number of restricted shares that would vest upon achievement of a minimum total stockholder return level during the five-year period ending September 4, 2012. The maximum number of restricted shares that may vest is as follows: Mr. Gustafsson 56,250 shares; Mr. Smiley 7,500 shares; Mr. Gerskovich 9,090 shares; Mr. Gagnier 9,090 shares; and Mr. Terzich 9,090 shares. | ||
(6) | Represents the number of restricted shares that are expected to vest on May 6, 2013, based upon achievement of a maximum compounded annual growth rate (CAGR) of 2012 total net sales over 2009 total net sales and a maximum return on invested capital (ROIC) over the three-year performance period ending December 31, 2012. | ||
(7) | Represents the number of restricted shares that will vest on May 5, 2014, based upon achievement of a threshold CAGR of 2013 total net sales over 2010 total net sales and an ROIC over the three-year performance period ending December 31, 2013, that does not meet a threshold ROIC. The maximum number of restricted shares that may vest based upon the achievement of a maximum CAGR of 2013 total net sales over 2010 total net sales and a maximum ROIC over the three-year performance period is as follows: Mr. Gustafsson 36,081 shares; Mr. Smiley 8,289 shares; Mr. Gerskovich 5,131 shares; Mr. Gagnier 8,289 shares; and Mr. Terzich |
33
7,657 shares. See Grants of Plan-Based Awards in 2011 table and footnote 3 to that table for a more detailed description of these awards. | |||
(8) | The option granted on May 1, 2008, will vest with respect to 2,925 shares on May 1, 2012; the SAR granted on May 7, 2009, will vest with respect to 7,281 rights on each of May 7, 2012 and 2013; the SAR granted on May 6, 2010, will vest with respect to 3,775 rights on each of May 6, 2012, 2013 and 2014; and the SAR granted on May 5, 2011, will vest with respect to 3,129 rights on each of May 5, 2012, 2013, 2014 and 2015. | ||
(9) | The option granted on April 24, 2008, will vest with respect to 3,620 shares on April 24, 2012; the SAR granted on May 7, 2009, will vest with respect to 5,461 rights on each of May 7, 2012 and 2013; the SAR granted on May 6, 2010, will vest with respect to 2,425 rights on each of May 6, 2012, 2013 and 2014; and the SAR granted on May 5, 2011, will vest with respect to 1,937 rights on each of May 5, 2012, 2013, 2014 and 2015. | ||
(10) | The option granted on April 24, 2008, will vest with respect to 3,620 shares on April 24, 2012; the SAR granted on May 7, 2009, will vest with respect to 7,281 rights on each of May 7, 2012 and 2013; the SAR granted on May 6, 2010, will vest with respect to 3,775 rights on each of May 6, 2012, 2013 and 2014; and the SAR granted on May 5, 2011, will vest with respect to 3,129 rights on each of May 5, 2012, 2013, 2014 and 2015. | ||
(11) | The option granted on April 24, 2008, will vest with respect to 3,620 shares on April 24, 2012; the SAR granted on May 7, 2009, will vest with respect to 6,371 rights on each of May 7, 2012 and 2013; and the SAR granted on May 6, 2010, will vest with respect to 3,450 rights on each of May 6, 2012, 2013 and 2014; and the SAR granted on May 5, 2011, will vest with respect to 2,890 rights on May 5, 2012, and 2,891 rights on each of May 5, 2013, 2014 and 2015. |
Option/Stock Appreciation Right Exercises and Stock Vested
The table below sets forth information with respect to stock options and stock appreciation rights exercised by the named officers during 2011. No awards of restricted stock vested in 2011.
Options and Stock Appreciation Rights Exercised and Stock Vested in 2011
Number of | ||||
Number of | Shares | |||
Shares | Value Realized | Acquired on | Value Realized on | |
Acquired on | on Exercise | Vesting | Vesting | |
Name | Exercise (#) | ($)(1) | (#) | ($) |
Anders Gustafsson | 0 | 0 | 0 | 0 |
Michael C. Smiley | 0 | 0 | 0 | 0 |
Philip Gerskovich | 0 | 0 | 0 | 0 |
Hugh K. Gagnier | 56,250 | 1,158,917 | 0 | 0 |
Michael H. Terzich | 11,996 | 235,707 | 0 | 0 |
(1) | Value calculated as the difference between the market price of the underlying securities on the date of exercise and the exercise or base price of the exercised stock options or stock appreciation rights. |
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Non-Qualified Deferred Compensation
Pursuant to Zebras non-qualified deferred compensation plan, a named officer may defer, on a pre-tax basis, up to 80% of his base salary and annual incentive award. Deferred compensation balances are credited with gains or losses which mirror the performance of benchmark investment funds selected by the participant under the plan. All credited amounts are unfunded general obligations of Zebra, and participants have no greater rights to payment than any unsecured general creditor of Zebra.
The value of a participants account changes based upon the performance of a participants selected benchmark investment funds. Account balances are paid either in a lump sum or in annual installments. The plan permits payment upon, among other things, a termination of employment or a change in control of Zebra. Zebra does not make contributions to the plan, but pays the costs of administration.
The table below shows the funds available under the plan and the 2011 rates of return.
Fund Name | 2011 Rate of Return |
American Funds Europac Grw R6 (RERGX) | (13.31)% |
International Discovery Fund (PRIDX) | (14.08)% |
Dividend Growth Fund (PRDGX) | 3.53% |
Small-Cap Stock Fund (OTCFX) | (0.09)% |
T. Rowe Price Inst Large Cap Growth (TRLGX) | (1.40)% |
The table below sets forth information regarding the named officers participation in the plan in 2011.
Nonqualified Deferred Compensation for 2011
Executive | Registrant | Aggregate | Aggregate | ||
Contributions | Contributions | Earnings in | Aggregate | Balance at | |
in Last Fiscal | in Last Fiscal | Last Fiscal | Withdrawals/ | Last Fiscal | |
Year | Year | Year | Distributions | Year-End | |
Name | ($)(1) | ($) | ($)(2) | ($) | ($)(3) |
Anders Gustafsson | 0 | 0 | 0 | 0 | 0 |
Michael C. Smiley | 94,915 | 0 | (13,243) | 0 | 235,401 |
Philip Gerskovich | 0 | 0 | 0 | 0 | 0 |
Hugh K. Gagnier | 0 | 0 | (377) | 0 | 31,455 |
Michael H. Terzich | 0 | 0 | 0 | 0 | 0 |
(1) | The amount(s) reported in this column are included in the summary compensation table under the Salary and Non-Equity Incentive Plan Compensation columns. | ||
(2) | The amount(s) reported in this column are not included in the summary compensation table. | ||
(3) | For Mr. Smiley, $218,969 of this amount has been previously reported in a summary compensation table for 2011 and prior years. For Mr. Gagnier, neither he nor Zebra has made any contributions to the plan since at least 2006, the first year for which this table was required to be included in a proxy statement. |
35
Employment Agreements
Zebra has employment agreements with each of the named officers. Mr. Gustafssons employment agreement is substantially the same as the agreements of Messrs. Smiley, Gerskovich, Gagnier and Terzich, except as described below.
Messrs. Smiley, Gerskovich, Gagnier and Terzich. Messrs. Smiley, Gerskovich, Gagnier and Terzich are entitled to annual base salaries and are eligible to earn targeted annual incentive awards under Zebras annual incentive plan. Eligibility to receive equity-based compensation is determined in the sole discretion of the Compensation Committee.
If the officer terminates his employment for good reason or Zebra terminates his employment without cause and under circumstances other than death or disability, the officer will be entitled to (i) one-year continuation of base salary; (ii) a pro rata portion of his annual incentive for the year in which his employment terminates, if the incentive otherwise would have been earned; (iii) any unpaid previously earned annual incentive; (iv) a payment equal to 100% of the officers target annual incentive for the year in which employment terminates; (v) outplacement services not to exceed $32,000; and (vi) the continuation of coverage under Zebras medical and dental insurance plans, with Zebra contributing to the cost of such coverage at the same rate Zebra pays for health insurance coverage for its active employees under its group health plan, until the earlier of (a) one year after the date of termination, or (b) the officer becoming eligible for coverage under another group health plan that does not impose preexisting condition limitations. Cause includes the commission, indictment or conviction of a felony or misdemeanor involving fraud or dishonesty; a material breach of the employment agreement; willful or intentional misconduct, gross negligence, or dishonest, fraudulent or unethical behavior; failure to materially comply with a direction of the Board; or breach of fiduciary duty to Zebra.
If the officer terminates employment for good reason or Zebra terminates the officers employment without cause, and the termination occurs within 120 days immediately preceding or one year following a change in control, then the officer will be entitled to all compensation and benefits set forth in the immediately preceding paragraph, except that the officer will receive a payment equal to two times base salary in lieu of one-year salary continuation, plus two times target annual incentive in lieu of one times, which payment would be payable within 60 days following the later of the change in control or termination of employment. A change in control includes (1) an acquisition by a person or group of 35% or more of Zebras common stock; (2) a change in a majority of the Board within a 24-month period; (3) the approval by our stockholders of a complete liquidation or dissolution of Zebra; or (4) the consummation of a reorganization, merger or consolidation of Zebra or sale or other disposition of all or substantially all of the assets of Zebra. Good reason includes a demotion to a lesser position or assignment of duties materially inconsistent with the officers position, status or responsibilities; a material breach by Zebra of the employment agreement; or a decrease in base salary (unless applied proportionally).
If payments or benefits exceed the threshold under Section 4999 of the Internal Revenue Code and an excise tax becomes due, the officer would be entitled to a gross-up payment such that, after payment by him of all applicable taxes and excise taxes, he retains an amount equal to the amount he would have retained had no excise tax been imposed; provided, that if the threshold under Section 4999 is exceeded by 10% or less, the total payments he would be entitled to would be reduced so that no excise tax would be due.
Each officer is bound by non-competition and non-solicitation provisions until two years following termination, except Mr. Gagnier is bound for one year following termination. Each officer has agreed to confidentiality covenants during and after employment.
Mr. Gustafsson. Mr. Gustafssons employment agreement provides for a minimum base salary of $700,000, a target annual incentive equal to 100% of salary and a maximum annual incentive equal to 200% of salary. Mr. Gustafssons agreement also provides (i) that any decrease in Mr. Gustafssons salary permits him to terminate his employment for good reason; and (ii) if Mr. Gustafsson terminates employment for good reason or Zebra terminates his employment without cause and under circumstances other than death or disability, he will not receive outplacement services, the unvested portion of non-performance-based equity awards will vest immediately (unless otherwise expressly set forth in an award agreement, such as Mr. Gustafssons time-vested SAR and restricted stock award agreements granted in 2010 and 2011), the continuation of his salary will be for a period of two years, and, unless it is otherwise terminated, the continuation of healthcare coverage will be for a period of two years.
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Potential Payments upon Termination of Employment or Change in Control
Described below are the potential payments and benefits to which the named officers would be entitled from Zebra under their employment agreements, their equity award agreements, and Zebras compensation and benefit plans upon termination of employment, if such termination had occurred as of December 30, 2011. Amounts actually received would vary based on factors such as the date on which a named officers employment terminates and the price of our common stock on such date. The tables exclude payments and benefits that are provided on a non-discriminatory basis to full-time salaried employees, such as accrued salary and vacation pay.
The named officers are not entitled to any payments or benefits as a result of a termination of employment for cause.
Retirement or Voluntary Resignation
Accelerated | Accelerated | |||||
Salary | Incentive | Earned | Options and | Restricted | ||
Name | Severance ($) | Severance ($) | Incentive ($)(1) | SARs ($) | Stock ($) | Total ($)(2) |
Anders Gustafsson | 0 | 0 | 0 | 0 | 0 | 0 |
Michael C. Smiley | 0 | 0 | 0 | 0 | 0 | 0 |
Philip Gerskovich | 0 | 0 | 0 | 0 | 0 | 0 |
Hugh K. Gagnier | 0 | 0 | 0 | 0 | 0 | 0 |
Michael H. Terzich | 0 | 0 | 0 | 0 | 0 | 0 |
(1) | Under the 2011 annual incentive plan, all participants are entitled to a pro rata portion of any earned annual incentive award amount through the date of termination in the event of termination by reason of retirement, but not voluntary resignation. None of the named officers was eligible for retirement under the 2011 annual incentive plan. | ||
(2) | Excludes the amount of previously earned and fully vested deferred compensation under the 2002 Deferral Plan that would become immediately payable. See Non-Qualified Deferred Compensation above for additional information. |
Death or Disability
Accelerated | Accelerated | |||||
Salary | Incentive | Earned | Options and | Restricted | ||
Name | Severance ($) | Severance ($) | Incentive ($)(1) | SARs ($)(2) | Stock ($)(3) | Total ($)(4) |
Anders Gustafsson | 0 | 0 | 1,259,802 | 1,249,394 | 4,582,237 | 7,091,433 |
Michael C. Smiley | 0 | 0 | 294,754 | 326,343 | 1,180,311 | 1,801,408 |
Philip Gerskovich | 0 | 0 | 296,142 | 235,064 | 789,307 | 1,320,513 |
Hugh K. Gagnier | 0 | 0 | 282,048 | 326,343 | 1,180,311 | 1,788,702 |
Michael H. Terzich | 0 | 0 | 253,907 | 289,061 | 1,063,596 | 1,606,564 |
(1) | Under the 2011 annual incentive plan, all participants are entitled to a pro rata portion of any earned annual incentive award amount through the date of termination in the event of termination of employment by reason of death or disability. The amount assumes termination of employment as of December 30, 2011 and reflects actual performance applied against the named officers target incentive. | ||
(2) | Time-vested options and SARs accelerate vesting in full, except that Mr. Gustafssons 2011 and 2010 time-vested SAR awards vest pro rata based on the number of days from the grant date through and including the date of termination of employment. The amounts reflect the difference between the exercise price of each option or SAR and the $35.78 closing price of our common stock on The NASDAQ Stock Market on December 30, 2011 for the following number of in-the-money options and SARs: Mr. Gustafsson 97,292; Mr. Smiley 25,887; Mr. Gerskovich 18,197; Mr. Gagnier 25,887; and Mr. Terzich 23,092. | ||
(3) | Time-vested restricted stock awards accelerate vesting in full, except that Mr. Gustafssons 2011 and 2010 time-vested restricted stock awards vest pro rata based on the number of days from the grant date through and including the date of termination of employment. For performance-vested restricted stock awards granted in 2011 and 2010, the target number of shares accelerates, except that Mr. Gustafssons 2011 and 2010 performance-vested restricted stock awards vest pro rata based on the number of days from the grant date through and including the date of termination of employment. The amounts reflect the $35.78 closing |
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price of our common stock on The NASDAQ Stock Market on December 30, 2011, for the following number of shares of restricted stock: Mr. Gustafsson 128,067 shares; Mr. Smiley 32,988 shares; Mr. Gerskovich 22,060 shares; Mr. Gagnier 32,988 shares; and Mr. Terzich 29,726 shares. | |||
(4) | Excludes the amount of previously earned and fully vested deferred compensation under the 2002 Deferral Plan that would become immediately payable. See Non-Qualified Deferred Compensation above for additional information. |
Medical, | |||||||||||||||||
Salary | Incentive | Earned | Accelerated | Accelerated | Dental, | ||||||||||||
Severance | Severance | Incentive | Options and | Restricted | Outplacement | ||||||||||||
Name | ($)(1) | ($)(1) | ($)(2) | SARs ($)(3) | Stock ($)(4) | ($)(5) | Total ($)(6) | ||||||||||
Anders Gustafsson | 1,550,000 | 775,000 | 1,259,802 | 1,249,394 | 4,582,237 | 20,764 | 9,437,197 | ||||||||||
Michael C. Smiley | 360,000 | 198,000 | 294,754 | 0 | 1,180,311 | 48,218 | 2,081,283 | ||||||||||
Philip Gerskovich | 394,000 | 197,000 | 296,142 | 0 | 789,307 | 42,382 | 1,718,831 | ||||||||||
Hugh K. Gagnier | 362,600 | 181,300 | 282,048 | 0 | 1,180,311 | 48,218 | 2,054,477 | ||||||||||
Michael H. Terzich | 328,000 | 164,000 | 253,907 | 0 | 1,063,596 | 47,148 | 1,903,799 |
(1) | The named officers are entitled to severance equal to salary for one year and one times target incentive, except Mr. Gustafsson, who is entitled to salary for two years and one times target incentive. | ||
(2) | Under the 2011 annual incentive plan, all participants are entitled to a pro rata portion of any earned annual incentive award amount through the date of termination in the event of termination by Zebra without cause or termination by the named officer for good reason. The amount assumes termination of employment at year end and reflects actual performance applied against the named officers target incentive. | ||
(3) | Mr. Gustafssons time-vested options and SARs accelerate vesting in full, except that Mr. Gustafssons 2011 and 2010 time-vested SAR awards vest pro rata based on the number of days from the grant date through and including the date of termination of employment. At December 31, 2011, 97,292 in-the-money options and SARs held by Mr. Gustafsson would have accelerated vesting. | ||
(4) | Time-vested restricted stock awards accelerate vesting in full, except that Mr. Gustafssons 2011 and 2010 time-vested restricted stock awards vest pro rata based on the number of days from the grant date through and including the date of termination of employment. For performance-vested restricted stock awards granted in 2011, the vested number of shares of restricted stock will be determined in accordance with the performance-based vesting goals with vesting to occur on May 5, 2014. Since two years of the three-year performance period ending December 31, 2013 have not been completed as of December 31, 2011, the 2011 performance-vested restricted stock awards are reflected in the table at target. For performance-vested restricted stock awards granted in 2010, the target number of shares accelerates, except that Mr. Gustafssons 2011 and 2010 performance-vested restricted stock awards vest pro rata based on the number of days from the grant date through and including the date of termination of employment. The amounts reflect the $35.78 closing price of our common stock on The NASDAQ Stock Market on December 30, 2011 for the following number of shares of restricted stock: Mr. Gustafsson 128,067 shares; Mr. Smiley 32,988 shares; Mr. Gerskovich 22,060 shares; Mr. Gagnier 32,988 shares; and Mr. Terzich 29,726 shares. | ||
(5) | The named officers are entitled to healthcare and dental coverage for up to one year and outplacement services with a value up to $32,000, except Mr. Gustafsson, who is entitled to healthcare and dental coverage for up to two years, but no outplacement services. | ||
(6) | Excludes the amount of previously earned and fully vested deferred compensation under the 2002 Deferral Plan that would become immediately payable. See Non-Qualified Deferred Compensation above for additional information. |
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Termination by Zebra without Cause or
by Officer for
Good Reason Concurrently with a Change in Control
(1)
Medical, | ||||||||
Salary | Incentive | Earned | Accelerated | Dental, | ||||
Severance | Severance | Incentive | Options and | Restricted | Outplacement | Excise Tax | ||
Name | ($)(2) | ($)(2) | ($)(3) | SARs ($)(4) | Stock ($)(5) | ($)(6) | Gross Up ($)(7) | Total ($)(8) |
Anders | ||||||||
Gustafsson | 1,550,000 | 1,550,000 | 1,259,802 | 1,890,230 | 8,913,084 | 20,764 | 5,082,455 | 20,266,335 |
Michael C. | ||||||||
Smiley | 720,000 | 396,000 | 294,754 | 326,343 | 1,445,798 | 48,218 | 1,760,519 | 4,991,632 |
Philip | ||||||||
Gerskovich | 788,000 | 394,000 | 296,142 | 235,064 | 988,888 | 42,382 | 1,408,303 | 4,152,779 |
Hugh K. | ||||||||
Gagnier | 725,200 | 362,600 | 282,048 | 326,343 | 1,457,176 | 48,218 | 1,607,650 | 4,809,235 |
Michael H. | ||||||||
Terzich | 656,000 | 328,000 | 253,907 | 289,061 | 1,320,425 | 47,148 | 1,359,839 | 4,254,380 |
(1) | The named officers are entitled to the severance amounts and earned incentive award, if any, if Zebra terminates the named officers employment without cause or the named officers terminate employment for good reason within 120 days before or one year after a change in control, commonly referred to as a double trigger. The meanings of change in control, good reason and cause are set forth under Employment Agreements above. | ||
(2) | The named officers are entitled to severance equal to two times salary and target incentive. | ||
(3) | Under the 2011 annual incentive plan, all participants are entitled to a pro rata portion of any earned annual incentive award amount through the date of termination in the event of termination by Zebra without cause or termination by the named officer for good reason in the event of a change in control. The amount assumes termination of employment at year end and reflects actual performance applied against the named officers target incentive. | ||
(4) | In the event of a change in control of Zebra, all unvested in-the-money options and SARs held by the named officers would be accelerated as follows: Mr. Gustafsson 177,799; Mr. Smiley 25,887; Mr. Gerskovich 18,197; Mr. Gagnier 25,887; and Mr. Terzich 23,092. The amounts reflect the difference between the $35.78 closing of our common stock on The NASDAQ Stock Market on December 30, 2011 and the exercise price of each option or SAR. Any option or SAR awards to the named officers in 2012 will be made under Zebras 2011 Long-Term Incentive Plan (2011 LTIP), which was approved by stockholders at the 2011 annual meeting. Under the 2011 LTIP, if stockholders receive consideration consisting solely of publicly traded common stock pursuant to a change in control and outstanding equity awards are assumed or provision is made for the continuation of these awards after the change in control, then all outstanding time-vested options and SARs granted under the 2011 LTIP will continue in accordance with their terms; provided, that if a holders employment with Zebra is terminated by the holder for good reason or by Zebra without cause after the change in control and prior to the one-year anniversary of the change in control, then all outstanding time-vested options and SARs held by the holder will become exercisable in full and, along with any then unexercised portions of such options and SARs, will remain exercisable through the remaining term of such options and SARs. Performance-vested options and SARs would become exercisable in full at the target level in the event of any change in control. If a change in control does not involve stockholders receiving publicly traded common stock, then such change in control would result in a cash-out of options and SARs granted under the 2011 LTIP. | ||
(5) | Time-vested restricted stock awards accelerate vesting in full upon a change in control. Performance-vested restricted stock awards granted in 2007 and 2008 vest at 20% of the grant amount in the event of a change in control as of December 30, 2011. Performance-vested restricted stock awards granted in 2011 vest at the target number of shares. Performance-vested restricted stock awards granted in 2010 vest at the target number of shares or, if greater in the case of executive officers other than Mr. Gustafsson, in accordance with the level of performance target achieved. For purposes of this table, we have assumed that the target number of shares accelerate as of December 30, 2011. The amounts reflect the $35.78 closing price of our common stock on The NASDAQ Stock Market on December 30, 2011 for the following number of shares of restricted stock: Mr. Gustafsson 249,108; Mr. Smiley 34,488; Mr. Gerskovich 23,878; Mr. Gagnier |
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34,806; and Mr. Terzich 31,544. Any restricted stock awards to the named officers in 2012 will be made under the 2011 LTIP. Under the 2011 LTIP, if stockholders receive consideration consisting solely of publicly traded common stock pursuant to a change in control and outstanding equity awards are assumed or provision is made for the continuation of these awards after the change in control, then all outstanding time-vested restricted stock awards granted under the 2011 LTIP will continue in accordance with their terms; provided, that if a holders employment with Zebra is terminated by the holder for good reason or by Zebra without cause after the change in control and prior to the one-year anniversary of the change in control, then all outstanding time-vested restricted stock awards held by the holder will become fully vested. Performance-vested restricted stock awards would fully vest at the target level in the event of any change in control. If a change in control does not involve stockholders receiving publicly traded common stock, then such change in control would result in a cash-out of awards granted under the 2011 LTIP. | |||
(6) | The named officers are entitled to healthcare and dental coverage for up to one year and outplacement services with a value up to $32,000, except Mr. Gustafsson, who is entitled to healthcare and dental coverage for up to two years, but no outplacement services. | ||
(7) | Represents estimated tax gross ups on severance, accelerated options, SARs and restricted stock, and healthcare and dental benefits. | ||
(8) | Excludes the amount of previously earned and fully vested deferred compensation under the 2002 Deferral Plan that would become immediately payable. See Non-Qualified Deferred Compensation above for additional information. |
Equity Compensation Plan Information
The following table provides information related to Zebras equity compensation plans as of December 31, 2011.
Number of | |||||||||||
Securities to be | Weighted- | Number of Securities | |||||||||
Issued Upon | Average Exercise | Remaining Available for | |||||||||
Exercise of | Price of | Future Issuance Under | |||||||||
Outstanding | Outstanding | Equity Compensation | |||||||||
Options, | Options, | Plans (Excluding | |||||||||
Warrants and | Warrants | Securities | |||||||||
Plan Category | Rights | and Rights | Reflected in Column (a)) | ||||||||
(a) | (b) | (c) | |||||||||
Equity Compensation Plans Approved by | |||||||||||
Security Holders | 2,974,790 | (1) | $35.64 | 6,919,373 | (2) | ||||||
Equity Compensation Plans Not Approved by | |||||||||||
Security Holders | 15,584 | (3) | $2.52 | (3) | 0 | ||||||
Total | 2,990,374 | $35.47 | 6,919,373 | ||||||||
(1) | Reflects shares of Zebra common stock issuable pursuant to outstanding options and stock appreciation rights under the 1997 Stock Option Plan, 2006 Incentive Compensation Plan, 2002 Non-Employee Director Stock Option Plan and 2011 Long-Term Incentive Plan. | ||
(2) | Reflects the number of shares available under the 2011 Long-Term Incentive Plan (LTIP) (5,455,022 shares) and 2011 Employee Stock Purchase Plan (1,464,351 shares). All of the shares under the LTIP are available for any award made under the LTIP, including options, stock appreciation rights, restricted stock, restricted stock units, performance shares or performance units. | ||
(3) | Reflects shares issuable pursuant to outstanding options under the WhereNet Corp. 1997 Stock Option Plan. Zebra granted these options upon conversion of WhereNet options when Zebra acquired WhereNet Corp. |
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Compensation Committee Interlocks and Insider Participation
Only independent directors served on the Compensation Committee during 2011. Dr. Potter is the Chair of the Compensation Committee, and Messrs. Keyser and Smith are members. None of them (i) has ever been an officer or other employee of Zebra Or (ii) has any relationship requiring disclosure under Item 404 of the SECs Regulation S-K. No executive officer of Zebra served in 2011 on the compensation committee or similar body of any organization that determined compensation payable to any member of the Compensation Committee.
Proposal 2
Advisory Vote to Approve Compensation of Named Officers
Zebra is seeking your advisory vote to approve the compensation of our named officers as disclosed in this proxy statement in accordance with Section 14A of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission. This is the second year that we are asking stockholders to vote on this type of proposal, known as a say-on-pay proposal. At Zebras 2011 annual meeting of stockholders, the proposal was approved by 89.4% of the votes cast for or against the proposal. At the 2011 annual meeting, stockholders were also asked to vote on a proposal seeking their views as to whether the say-on-pay vote should be held every year, every two years, or every three years. An overwhelming majority of stockholders voting on the matter indicated a preference of holding such vote annually. Accordingly, the advisory vote on named officer compensation will be held on an annual basis at least until the next non-binding stockholder vote on the frequency with which the advisory vote on named officer compensation should be held.
Accordingly, we ask our stockholders to approve the following resolution:
Resolved, that the compensation of the named officers of Zebra Technologies Corporation, as disclosed pursuant to Item 402 of Regulation S-K, as described in and including the Compensation Discussion and Analysis Executive Summary, Compensation Discussion and Analysis, compensation tables and narrative discussion contained in this proxy statement, is approved by the stockholders of Zebra.
As described in detail under Compensation Discussion and Analysis Executive Summary and Compensation Discussion and Analysis, our total rewards and executive compensation programs are designed to attract, retain, motivate, develop and reward our named officers, who are critical to our success. Please carefully review these sections of this proxy statement. Under these programs, our named officers are rewarded for the achievement of specific annual, long-term and strategic goals, corporate and individual goals, and the realization of increased stockholder value.
Our Compensation Committee regularly reviews the compensation programs for our named officers to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders interests and current market practices. Our Compensation Committee also regularly reviews its own processes to ensure alignment with its charter and recent regulatory requirements. This review includes such topics as peer review analysis, total rewards philosophy, Compensation Committee charter review and a compensation risk assessment.
We are asking our stockholders to approve our named officer compensation as described in this proxy statement. This proposal, commonly known as a say-on-pay proposal, gives you the opportunity to express your view on the compensation of our named officers. This stockholder vote is not intended to address any specific element of compensation, but rather the overall compensation of our named officers and the philosophy, policies and practices described in this proxy statement. At our 2011 Annual Meeting of Stockholders, our stockholders approved the compensation of our named officers. We ask you to vote FOR the approval of the resolution included above.
This vote is advisory, and therefore not binding on Zebra, our Compensation Committee, or our Board of Directors. Our Board of Directors and Compensation Committee value the opinions of our stockholders and will consider the results of the vote, as appropriate, in making future decisions regarding the compensation of our named officers.
The Board of Directors recommends a vote FOR approval of the compensation of our Named Officers.
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Report of the Audit Committee
The Audit Committee of Zebras Board of Directors is comprised of three directors, all of whom are independent under applicable listing requirements of The NASDAQ Stock Market. The Audit Committee operates under a written charter adopted by the Board of Directors. The members of the Audit Committee are: Mr. Smith, Chair, and Messrs. Ludwick and Manire.
The Audit Committee received reports from and met and held discussions with management, the internal auditors and the independent accountants. It reviewed and discussed Zebras audited financial statements with management, and management has represented to the Audit Committee that Zebras financial statements were prepared in accordance with accounting principles generally accepted in the United States and that such financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. The Committee also discussed with the independent accountants the matters required to be discussed by Statement on Auditing Standards No. 114. The Audit Committee received the written disclosures and letter from the independent accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants communications with the Audit Committee concerning independence, and discussed with the independent accountants the independent accountants independence.
The Audit Committee recommended that the Board of Directors include the audited financial statements of Zebra in Zebras Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the SEC. This recommendation was based on the Audit Committees review and discussions with management, internal auditors and Zebras independent accountants, as well as the Committees reliance on managements representation described above.
Audit Committee |
|
Michael A. Smith, Chair |
|
Andrew K. Ludwick |
|
Ross W. Manire |
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Fees of Independent Auditors
Ernst & Young LLP acted as the principal independent auditor for Zebra during 2011 and 2010. The firm also provided certain audit-related, tax and permitted non-audit services. The Audit Committee pre-approves all audit, audit-related, tax and permitted non-audit services performed for Zebra by its independent auditors. In 2011 and 2010, the Audit Committee approved in advance all engagements by Ernst & Young LLP on a specific project-by-project basis, including audit, audit-related, tax and permitted non-audit services. No impermissible non-audit services were rendered by Ernst & Young LLP to Zebra in 2011 or 2010.
Zebra paid Ernst & Young LLP the following fees and expenses for services provided for the years ended December 31, 2011 and 2010:
Fees | 2011 | 2010 | ||||||
Audit Fees (1) | $ | 1,143,308 | $ | 1,318,200 | ||||
Audit-Related Fees | 23,600 | 134,340 | ||||||
Tax Fees (2) | 627,631 | 471,430 | ||||||
All Other Fees | | | ||||||
Total | $ | 1,794,539 | $ | 1,923,970 | ||||
(1) | Consists of fees for the audit of Zebras annual financial statements and reviews of the financial statements included in the quarterly reports on Form 10-Q. Also includes fees for the 2011 and 2010 audits of internal control over financial reporting. | ||
(2) | For 2011, tax compliance and tax preparation fees ($355,248) and tax advice, planning and consulting fees ($272,383). For 2010, tax compliance and tax preparation fees ($260,000) and tax advice, planning and consulting fees ($211,430). |
Proposal 3
Ratification of Appointment of Independent Auditors
The Audit Committee appointed Ernst & Young LLP, independent certified public accountants, as auditors of Zebras financial statements for the year ending December 31, 2012.
The Board wants to give stockholders the opportunity to express their opinions on the matter of auditors for Zebra, and, accordingly, is submitting a proposal to ratify the Audit Committees appointment of Ernst & Young. If this proposal does not receive the affirmative vote of a majority of the votes cast affirmatively or negatively at the Meeting, the Audit Committee may appoint another independent registered public accounting firm or may decide to maintain the appointment of Ernst & Young.
Zebra expects that representatives of Ernst & Young will be present at the meeting and available to respond to questions. These representatives will be given an opportunity to make a statement if they would like to do so.
The Board of Directors and the Audit Committee recommend a vote FOR the ratification of the appointment of Ernst & Young LLP as auditors for the year ending December 31, 2012.
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Executive Officers
The following information identifies and gives other information about our executive officers, other than Anders Gustafsson, our CEO, and Gerhard Cless, our Executive Vice President, about whom information is given above under Proposal 1- Election of Directors.
Michael Cho, age 43, Vice President, Corporate Development. Mr. Cho joined Zebra in 2010 as Vice President, Strategy. From 2008 to 2010 he served as Vice President, Business Development, of the Healthcare division of Amcor Limited, a global packaging company. Prior to that, Mr. Cho served from 2007 to 2008 as Vice President, Business Development of CommScope Inc., a global communications solutions company. From 2005 to 2007, Mr. Cho served as Vice President, Business Development of the Antenna & Cable Products Group at Andrew Corporation, which he joined in 2004 as Director, Corporate Development & Strategy. From 1999 to 2004 Mr. Cho was a consultant with McKinsey & Company. Mr. Cho received an MBA from Harvard Business School and a BS in Finance from the University of Illinois at Urbana-Champaign.
Hugh K. Gagnier, age 56, Senior Vice President, Operations. Mr. Gagnier served as Senior Vice President, Operations of our Specialty Printer Group from 2006 to 2011. Mr. Gagnier joined Zebra as the Vice President and General Manager for its Camarillo operations upon Zebras merger with Eltron International, Inc. in 1998. At Eltron, he was President and Chief Operating Officer. Mr. Gagnier received a BS degree in Mechanical Engineering from the University of Southern California.
Philip Gerskovich, age 55, Senior Vice President, New Growth Platforms. Mr. Gerskovich joined Zebra as Senior Vice President, Corporate Development, in 2005. Previously, Mr. Gerskovich was Corporate Vice President and General Manager of New Business, Commercial Printing Division for Eastman Kodak Company, a provider of photographic and imaging products and services, from 2004 until he joined Zebra. From 1999 to 2003, he was Corporate Vice President and Chief Operating Officer, Digital and Applied Imaging, at Kodak. Mr. Gerskovich received a BS degree in Computer Engineering from the University of Illinois.
Jim Kaput, age 51, became Senior Vice President, General Counsel and Secretary in 2009. From 2008-2009, he served as Counsel to the Chairman of the Securities and Exchange Commission. Mr. Kaput was Senior Vice President and General Counsel of The ServiceMaster Company, a consumer services company, from 2000 to 2007. Mr. Kaput received his JD from Cornell University School of Law and his BS from The University of Pennsylvania.
Todd R. Naughton, age 49, became Vice President, Finance in 2007 and serves as our Chief Accounting Officer. Mr. Naughton was Corporate Controller for Zebra from 1999, when he joined Zebra, until he became Vice President and Controller of Zebra in 2000, a position he held until 2007. Mr. Naughton received a BS degree in Accounting from the University of Illinois at Urbana-Champaign, and an MBA from the University of Chicago. He is a certified public accountant.
Michael C. Smiley, age 52, became Chief Financial Officer in 2008. From 2004 until joining Zebra, he served Tellabs, Inc., a provider of telecommunications networking products, as general manager of the Tellabs Denmark A/S unit. From 2002 to 2004, he held various finance and operations executive positions at Tellabs including interim chief financial officer, vice president, international finance, and treasurer. Prior to 2002, Mr. Smiley held a number of finance positions including Vice President, Asia Pacific Finance located in Taipei, Taiwan, for General Semiconductor and Assistant Treasurer for General Instrument. Mr. Smiley also serves as a member of the Board of Directors of Twin Disc, Incorporated, a publicly traded international manufacturer and worldwide distributor of heavy-duty off-highway and marine power transmission equipment and related products. Mr. Smiley holds a BS in accounting from Brigham Young University and an MBA degree from the University of Chicago.
Michael H. Terzich, age 50, Senior Vice President, Global Sales and Marketing. Mr. Terzich served as Senior Vice President, Global Sales and Marketing of our Specialty Printer Group from 2006 to 2011. From 2003 until 2006 he served as Zebras Senior Vice President, Office of the CEO, and from 2001 until 2003, as Vice President and General Manager, Tabletop and Specialty Printers. Since joining Zebra in 1992, Mr. Terzich has held a variety of positions of increasing responsibility including Vice President and General Manager, Vice President of Sales for North America, Latin America, and Asia Pacific, Vice President of Strategic Project Management, Director, Integration Project Management, Director of Printer Products, and Director of Customer and Technical Services. Mr. Terzich earned his BS degree in Marketing from the University of Illinois - Chicago and an MBA from Loyola University of Chicago.
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Joanne Townsend, age 58, joined Zebra as Vice President, Human Resources, in 2008. From 2007 to 2008, she was Vice President, Human Resources, Wireless Network Solutions Segment, for Andrew Corporation, a global designer, manufacturer, and supplier of communications equipment, services, and systems. From 1979 to 2007, Ms. Townsend held various positions at Motorola, Inc., a wireless and broadband communications company, including Director, Human Resources of various Motorola organizations from 1994 to 2007. Ms. Townsend received a BA degree in Human Resources Management from DePaul University.
The Board of Directors approves the appointment of Zebras executive officers. There are no family relationships among any of our directors or executive officers.
Ownership of Our Common Stock
This table shows how many shares of our common stock certain individuals and entities beneficially owned on March 22, 2012, unless otherwise noted. These individuals and entities include: (1) owners of more than 5% of our outstanding common stock, (2) our directors, (3) the five executive officers named in the summary compensation table (the named officers) and (4) all directors and executive officers as a group. A person has beneficial ownership over shares if the person has sole or shared voting or investment power over the shares or the right to acquire that power within 60 days. Investment power means the power to direct the sale or other disposition of the shares. Each individual or entity included in the table below has sole voting and investment power over the shares, except as described below.
Name and Address | Number | % of Shares (1) | |||||||
More than 5% Stockholders | |||||||||
Blackrock, Inc. | 2,711,752 | (2) | 5.23 | % | |||||
Neuberger Berman Group LLC | 3,542,603 | (3) | 6.83 | % | |||||
Royce & Associates, LLC | 2,694,855 | (4) | 5.19 | % | |||||
The Vanguard Group, Inc. | 2,736,850 | (5) | 5.28 | % | |||||
Directors and Executive Officers | |||||||||
Gerhard Cless | 2,043,653 | (6) | 3.94 | % | |||||
Anders Gustafsson | 561,979 | (7) | * | ||||||
Richard L. Keyser | 37,890 | (7) | * | ||||||
Andrew K. Ludwick | 50,390 | (7) | * | ||||||
Ross W. Manire | 36,390 | (7) | * | ||||||
Robert J. Potter | 36,215 | (7) | * | ||||||
Michael A. Smith | 57,240 | (7) | * | ||||||
Hugh K. Gagnier | 152,808 | (7) | * | ||||||
Philip Gerskovich | 131,439 | (7) | * | ||||||
Michael C. Smiley | 84,708 | (7) | * | ||||||
Michael H. Terzich | 110,988 | (7) | * | ||||||
All Executive Officers and Directors as a group (15 persons) | 3,435,967 | (7) | 6.62 | % |
* Less than one percent.
(1) | Based on 51,882,869 shares of common stock outstanding on March 22, 2012. | ||
(2) | Blackrock, Inc. is a holding company located at 40 East 52nd Street, New York, New York 10022. According to its Schedule 13G filed on February 9, 2012, as of December 30, 2011, Blackrock had sole voting and investment power as to all shares listed in the table. |
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(3) | Neuberger Berman Group LLC is a holding company located at 605 Third Avenue, New York, New York 10158. According to Amendment 3 to its Schedule 13G filed on February 14, 2012, the shares are beneficially owned by Neuberger Berman Group LLC., Neuberger Berman LLC, Neuberger Berman Management LLC, and Neuberger Berman Equity Funds LLC. Neuberger Berman LLC and Neuberger Berman Management LLC serve as sub-advisor and investment manager, respectively, of Neuberger Berman Group LLCs various mutual funds. Neuberger Berman Group LLC and Neuberger Berman LLC have shared voting power with respect to 3,120,527 shares, and shared dispositive power with respect to 3,542,603 shares; Neuberger Berman Management LLC has shared voting and dispositive power with respect to 3,051,259 shares; and Neuberger Berman Equity Funds has shared voting and dispositive power with respect to 2,760,970 shares. | ||
(4) | Royce & Associates, LLC is an investment advisor located at 745 Fifth Avenue, New York, NY 10151. According to its Schedule 13G filed on January 24, 2012, as of December 31, 2011, Royce had sole voting and investment power as to all 2,694,855 shares. | ||
(5) | The Vanguard Group, Inc. is an investment advisor located at 100 Vanguard Blvd., Malvern, Pennsylvania, 19355. According to its Schedule 13G filed on February 10, 2012, as of December 31, 2011, Vanguard had sole voting power and shared dispositive power with respect to 38,802 shares and sole dispositive power with respect to 2,736,850 shares. | ||
(6) | Includes 134,631 shares held directly by Mr. Cless; 997,292 shares held by Grantor Retained Annuity Trusts of which Mr. Cless is the beneficiary; 57,000 shares held by a foundation of which each of Mr. and Mrs. Cless are directors; 792,017 shares held by irrevocable trusts of which Mr. Cless is the beneficiary and Mr. Cless or Mrs. Cless is the trustee; and 62,713 shares held directly by Mrs. Cless. | ||
(7) | Includes shares of common stock that may be acquired by May 21, 2012 upon exercise of stock options and stock appreciation rights as follows: Mr. Gustafsson 264,871 shares; Mr. Keyser 28,709 shares; Mr. Ludwick 39,209 shares; Mr. Manire 29,209 shares; Dr. Potter 29,209 shares; Mr. Smith 29,209 shares; Mr. Gagnier 110,730 shares; Mr. Gerskovich 100,289 shares; Mr. Smiley 44,220 shares; Mr. Terzich 64,371 shares; and directors and executive officers as a group 797,160. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and greater than ten percent stockholders to file reports of holdings and transactions in our common stock with the Securities and Exchange Commission. To our knowledge, all required reports were filed in a timely manner.
Stockholder Proposals and Other Business
We expect the 2013 Annual Meeting of Stockholders to be held on or about May 16, 2013. To be considered for inclusion in our proxy materials for the 2013 annual meeting, a stockholder proposal must be received at our principal executive offices at 475 Half Day Road, Suite 500, Lincolnshire, Illinois 60069 by December 17, 2012. In addition, our Bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of persons for election to the Board. A stockholder proposal or nomination intended to be brought before the 2013 annual meeting must be delivered to the Corporate Secretary no earlier than January 16, 2013, and no later than February 15, 2013. All proposals and nominations should be directed to our Corporate Secretary, Zebra Technologies Corporation, 475 Half Day Road, Suite 500, Lincolnshire, Illinois 60069.
The Board and our management have not received notice of and are not aware of any business to come before the 2012 annual meeting other than the proposals we refer to in this proxy statement. If any other matter comes before the annual meeting, the persons on our proxy committee will use their best judgment in voting the proxies.
We have mailed our 2011 Annual Report to Stockholders in connection with this proxy solicitation, which includes our Annual Report on Form 10-K. If you would like another copy of our 10-K, excluding certain exhibits, please contact the Chief Financial Officer at the following address: Zebra Technologies Corporation, 475 Half Day Road, Suite 500, Lincolnshire, Illinois 60069.
46
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 p.m. Eastern Time on May 17, 2012. Have your proxy card in hand when
you access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the
costs incurred by Zebra in mailing proxy materials, you can consent to receiving
all future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future
years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time
on May 17, 2012. Have your proxy card in hand when you call and then follow the
instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |
M41946-P20331 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
ZEBRA TECHNOLOGIES CORPORATION | For All |
Withhold All |
For
All Except | |||
The Board of
Directors recommends you vote FOR the following: |
||||||
1. | Election of Directors | ¨ | ¨ | ¨ | ||
Nominees: | ||||||
01) | Richard L. Keyser | |||||
02) | Ross W. Manire | |||||
03) | Dr. Robert J. Potter |
To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. | |||
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | ||
2. | Proposal to approve, by non-binding vote, compensation of named executive officers. | ¨ | ¨ | ¨ | |
3. | Proposal to ratify Ernst & Young LLP as Independent Auditors. | ¨ | ¨ | ¨ |
For address changes and/or comments, please check this box and write them on the back where indicated. | ¨ |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
|||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
Zebra's Proxy Statement for the 2012 Annual Meeting of
Stockholders and the Annual Report for the year
ended December 31, 2011, are
available at https://materials.proxyvote.com/989207
M41947-P20331 |
ZEBRA TECHNOLOGIES
CORPORATION
This proxy is solicited by
the Board of Directors
Annual Meeting of Stockholders to be held on
May
18, 2012, and at any adjournment thereof.
Revocable Proxy
The undersigned stockholder of Zebra Technologies Corporation, a Delaware corporation, hereby appoints Douglas Fox and Jim Kaput as proxies for the undersigned, and each of them, with full power of substitution in each of them, to attend the Annual Meeting of Stockholders to be held at the Zebra headquarters building at 475 Half Day Road, Lincolnshire, Illinois on Friday, May 18, 2012, at 10:30 a.m., Central Time, or any adjournment thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting with all powers possessed by the undersigned.
Note: The shares represented by this Proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If this Proxy is executed but no direction is given, the votes entitled to be cast by the undersigned will be cast "FOR" the nominees for director, "FOR" proposals 2 and 3, and in the discretion of the Proxy holder on any other matter that may properly come before the meeting or any adjournment thereof. This Proxy is revocable and the undersigned may revoke it at any time prior to the Annual Meeting by giving written notice of such revocation to the Secretary of Zebra prior to the meeting or by filing with the Secretary of Zebra prior to the meeting a later-dated Proxy. If the undersigned is present and wants to vote in person at the Annual Meeting, or at any adjournment thereof, the undersigned may revoke this Proxy by giving written notice of such revocation to the Secretary of Zebra on a form provided at the meeting. The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of Stockholders of Zebra called for May 18, 2012, and of the Proxy Statement for the Annual Meeting prior to the signing of this Proxy.
Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholder Meeting to be Held on May 18, 2012.
Zebra's Proxy Statement for the 2012
Annual Meeting of Stockholders and the Annual Report to
Stockholders for the
year ended December 31, 2011, are available at:
https://materials.proxyvote.com/989207.
Address Changes/Comments: | |||
Continued and to be signed on reverse side