This excerpt taken from the MOT DEF 14A filed Mar 13, 2009.
TO APPROVE AN AMENDMENT TO THE COMPANYS RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE PAR VALUE OF THE COMPANYS COMMON STOCK FROM $3.00 PER SHARE TO $0.01 PER SHARE
The Board of Directors has approved, and recommends that the stockholders approve, an amendment to Article 4 of the Companys Restated Certificate of Incorporation to change the par value of the Companys Common Stock from $3.00 per share to $0.01 per share.
The change to $0.01 par value Common Stock will have no impact on the value of the Companys stock or the rights of its stockholders. It will, however, provide the Company with additional flexibility in utilizing its shares of Common Stock for various corporate purposes.
Par value is used to designate the lowest value for which a company can sell its shares and to value the shares on a companys balance sheet. Historically, the concept of par value was to protect creditors and senior security holders by ensuring that when issuing its own shares a company received at least par value as consideration for the shares. As markets have become more liquid, with stock prices responding more rapidly to market developments, par value has become a generally outdated concept. Instead, for public companies like Motorola, the market sets the price at which stock may be issued or otherwise sold. For these reasons, the vast majority of companies today set their par value at $0.01 per share or even less.
Because of the Companys current $3.00 par value and, in particular, the proximity of this par value to recent market trading prices for the Companys Common Stock, the Companys ability to issue stock, declare cash or stock dividends, or repurchase stock, could be hampered. The change in par value to $0.01 per share will give the Company greater flexibility for structuring future transactions and making future financial decisions.
The change in the par value of the Companys stock from $3.00 per share to $0.01 per share will have no effect on the dollar amount of the Companys total shareholders equity. If the change is approved, the Common Stock account on the Companys balance sheet at $3 per share will be reduced to reflect the product of the number of shares outstanding and the new par value of $0.01 per share. The difference will be transferred to the capital surplus account.
The change in par value also will not change the number of authorized common shares. There will remain 4.2 billion authorized common shares, of which approximately 2,276,939,837 were outstanding on March 9, 2009. The change in par value will also have no impact on outstanding Company-issued stock options or restricted stock units.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT TO THE COMPANYS RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE PAR VALUE OF THE COMPANYS COMMON STOCK FROM $3 PER SHARE TO $0.01 PER SHARE. UNLESS OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR THE APPROVAL OF THE AMENDMENT TO THE COMPANYS RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE PAR VALUE OF THE COMPANYS COMMON STOCK FROM $3 PER SHARE TO $0.01 PER SHARE.
PROPOSAL NO. 3