MOT » Topics » Long-Range Incentive Plan

This excerpt taken from the MOT DEF 14A filed Mar 13, 2009.
Long-Range Incentive Plan
 
The LRIP is a pay-for-performance, multi-year incentive plan. A three-year cycle started on January 1, 2008 and will conclude on December 31, 2010. On April 21, 2008, the Compensation and Leadership Committee of the Board of Directors of Motorola, Inc. approved the cancellation of the January 1, 2006 to December 31, 2008 (2006-2008) performance cycle and the January 1, 2007 to December 31, 2009 (2007-2009) performance cycle under the Company’s Long-Range Incentive Plan of 2006 without the payment of awards for such performance cycles. These cycles were cancelled due to the poor performance versus the established plan goals and metrics and there were no new awards granted in their place. As a result, there will be no LRIP payouts in 2008 or 2009.
 
Participation in the LRIP is limited to our elected officers—including all Named Executive Officers and corporate, senior and executive vice presidents (approximately 90 participants in total).


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PROXY STATEMENT

 
The 2008-2010 LRIP program was redesigned to focus even more on creating shareowner value and does not retain many elements of prior plans.
 
These excerpts taken from the MOT 10-K filed Feb 28, 2008.
Long-Range Incentive Plan
 
In 2005, a Long-Range Incentive Plan (“LRIP”) was introduced to replace MRIP. LRIP rewards participating elected officers for the Company’s achievement of specified business goals during the period, based on two performance objectives measured over three-year cycles. The provision for LRIP for the years ended December 31, 2007, 2006 and 2005 was $(8) million, $16 million and $15 million, respectively.
 
9.  Financing Arrangements
 
Finance receivables consist of the following:
 
                 
December 31   2007     2006  
   
 
Gross finance receivables
  $ 123     $ 279  
Less allowance for losses
    (5 )     (10 )
                 
      118       269  
Less current portion
    (50 )     (124 )
                 
Long-term finance receivables
  $ 68     $ 145  
 
 
 
Current finance receivables are included in Accounts receivable and long-term finance receivables are included in Other assets in the Company’s consolidated balance sheets. Interest income recognized on finance receivables for the years ended December 31, 2007, 2006 and 2005 was $7 million, $9 million and $7 million, respectively.
 
From time to time, the Company sells short-term receivables, long-term loans and lease receivables under sales-type leases (collectively, “finance receivables”) to third parties in transactions that qualify as “true-sales.” Certain of these finance receivables are sold to third parties on a one-time, non-recourse basis, while others are sold to third parties under committed facilities that involve contractual commitments from these parties to purchase qualifying receivables up to an outstanding monetary limit. Committed facilities may be revolving in nature and, typically, must be renewed on an annual basis. Certain sales may be made through separate legal entities that are also consolidated by the Company. The Company may or may not retain the obligation to service the sold finance receivables.
 
In the aggregate, at December 31, 2007, these committed facilities provided for up to $1.4 billion to be outstanding with the third parties at any time, as compared to up to $1.3 billion provided at December 31, 2006 and up to $1.1 billion provided at December 31, 2005. As of December 31, 2007, $497 million of these committed facilities were utilized, compared to $817 million utilized at December 31, 2006 and $585 million utilized at December 31, 2005. Certain events could cause one of these facilities to terminate. In addition, before receivables can be sold under certain of the committed facilities, they may need to meet contractual requirements, such as credit quality or insurability.
 
Total finance receivables sold by the Company were $4.9 billion in 2007 (including $4.7 billion of short-term receivables), compared to $6.4 billion sold in 2006 (including $6.2 billion of short-term receivables) and


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$4.5 billion sold in 2005 (including $4.2 billion of short-term receivables). As of December 31, 2007, there were $978 million of receivables outstanding under these programs for which the Company retained servicing obligations (including $587 million of short-term receivables), compared to $1.1 billion outstanding at December 31, 2006 (including $789 million of short-term receivables) and $1.0 billion outstanding at December 31, 2005 (including $838 million of short-term receivables).
 
Under certain receivables programs, the value of the receivables sold is covered by credit insurance obtained from independent insurance companies, less deductibles or self-insurance requirements under the policies (with the Company retaining credit exposure for the remaining portion). The Company’s total credit exposure to outstanding short-term receivables that have been sold was $23 million at December 31, 2007 as compared to $19 million at December 31, 2006. Reserves of $1 and $4 million was recorded for potential losses on sold receivables at both December 31, 2007 and December 31, 2006, respectively.
 
Certain purchasers of the Company’s infrastructure equipment continue to request that suppliers provide financing in connection with equipment purchases. These requests may include all or a portion of the purchase price of the equipment. Periodically, the Company makes commitments to provide financing to purchasers in connection with the sale of equipment. However, the Company’s obligation to provide financing is often conditioned on the issuance of a letter of credit in favor of the Company by a reputable bank to support the purchaser’s credit or a pre-existing commitment from a reputable bank to purchase the receivable from the Company. The Company had outstanding commitments to extend long-term credit to third parties totaling $610 million at December 31, 2007, compared to $398 million at December 31, 2006. Of these amounts, $454 million was supported by letters of credit or by bank commitments to purchase receivables at December 31, 2007, compared to $262 million at December 31, 2006.
 
In addition to providing direct financing to certain equipment customers, the Company also assists customers in obtaining financing directly from banks and other sources to fund equipment purchases. The Company had committed to provide financial guarantees relating to customer financing totaling $42 million and $122 million at December 31, 2007 and December 31, 2006, respectively (including $23 million and $19 million at December 31, 2007 and 2006, respectively, relating to the sale of short-term receivables). Customer financing guarantees outstanding were $3 million and $47 million at December 31, 2007 and 2006, respectively (including $0 million and $2 million at December 31, 2007 and 2006, respectively, relating to the sale of short-term receivables).
 
10.  Commitments and Contingencies
 
Long-Range
Incentive Plan



 



In 2005, a Long-Range Incentive Plan (“LRIP”) was
introduced to replace MRIP. LRIP rewards participating elected
officers for the Company’s achievement of specified
business goals during the period, based on two performance
objectives measured over three-year cycles. The provision for
LRIP for the years ended December 31, 2007, 2006 and 2005
was $(8) million, $16 million and $15 million,
respectively.


 















9. 

Financing
Arrangements



 



Finance receivables consist of the following:


 



















































































































                 

December 31

 

2007

 

 

2006

 

 

 
 


Gross finance receivables


 

$

123

 

 

$

279

 


Less allowance for losses


 

 

(5

)

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

118

 

 

 

269

 


Less current portion


 

 

(50

)

 

 

(124

)

 

 

 

 

 

 

 

 

 


Long-term finance receivables


 

$

68

 

 

$

145

 

 

 






 



Current finance receivables are included in Accounts receivable
and long-term finance receivables are included in Other assets
in the Company’s consolidated balance sheets. Interest
income recognized on finance receivables for the years ended
December 31, 2007, 2006 and 2005 was $7 million,
$9 million and $7 million, respectively.


 



From time to time, the Company sells short-term receivables,
long-term loans and lease receivables under sales-type leases
(collectively, “finance receivables”) to third parties
in transactions that qualify as “true-sales.” Certain
of these finance receivables are sold to third parties on a
one-time, non-recourse basis, while others are sold to third
parties under committed facilities that involve contractual
commitments from these parties to purchase qualifying
receivables up to an outstanding monetary limit. Committed
facilities may be revolving in nature and, typically, must be
renewed on an annual basis. Certain sales may be made through
separate legal entities that are also consolidated by the
Company. The Company may or may not retain the obligation to
service the sold finance receivables.


 



In the aggregate, at December 31, 2007, these committed
facilities provided for up to $1.4 billion to be
outstanding with the third parties at any time, as compared to
up to $1.3 billion provided at December 31, 2006 and
up to $1.1 billion provided at December 31, 2005. As
of December 31, 2007, $497 million of these committed
facilities were utilized, compared to $817 million utilized
at December 31, 2006 and $585 million utilized at
December 31, 2005. Certain events could cause one of these
facilities to terminate. In addition, before receivables can be
sold under certain of the committed facilities, they may need to
meet contractual requirements, such as credit quality or
insurability.


 



Total finance receivables sold by the Company were
$4.9 billion in 2007 (including $4.7 billion of
short-term receivables), compared to $6.4 billion sold in
2006 (including $6.2 billion of short-term receivables) and





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109




$4.5 billion sold in 2005 (including $4.2 billion of
short-term receivables). As of December 31, 2007, there
were $978 million of receivables outstanding under these
programs for which the Company retained servicing obligations
(including $587 million of short-term receivables),
compared to $1.1 billion outstanding at December 31,
2006 (including $789 million of short-term receivables) and
$1.0 billion outstanding at December 31, 2005
(including $838 million of short-term receivables).


 



Under certain receivables programs, the value of the receivables
sold is covered by credit insurance obtained from independent
insurance companies, less deductibles or self-insurance
requirements under the policies (with the Company retaining
credit exposure for the remaining portion). The Company’s
total credit exposure to outstanding short-term receivables that
have been sold was $23 million at December 31, 2007 as
compared to $19 million at December 31, 2006. Reserves
of $1 and $4 million was recorded for potential losses on
sold receivables at both December 31, 2007 and
December 31, 2006, respectively.


 



Certain purchasers of the Company’s infrastructure
equipment continue to request that suppliers provide financing
in connection with equipment purchases. These requests may
include all or a portion of the purchase price of the equipment.
Periodically, the Company makes commitments to provide financing
to purchasers in connection with the sale of equipment. However,
the Company’s obligation to provide financing is often
conditioned on the issuance of a letter of credit in favor of
the Company by a reputable bank to support the purchaser’s
credit or a pre-existing commitment from a reputable bank to
purchase the receivable from the Company. The Company had
outstanding commitments to extend
long-term
credit to third parties totaling $610 million at
December 31, 2007, compared to $398 million at
December 31, 2006. Of these amounts, $454 million was
supported by letters of credit or by bank commitments to
purchase receivables at December 31, 2007, compared to
$262 million at December 31, 2006.


 



In addition to providing direct financing to certain equipment
customers, the Company also assists customers in obtaining
financing directly from banks and other sources to fund
equipment purchases. The Company had committed to provide
financial guarantees relating to customer financing totaling
$42 million and $122 million at December 31, 2007
and December 31, 2006, respectively (including
$23 million and $19 million at December 31, 2007
and 2006, respectively, relating to the sale of short-term
receivables). Customer financing guarantees outstanding were
$3 million and $47 million at December 31, 2007
and 2006, respectively (including $0 million and
$2 million at December 31, 2007 and 2006,
respectively, relating to the sale of short-term receivables).


 















10. 

Commitments
and Contingencies



 




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