ZBRA » Topics » 2008 Awards.

This excerpt taken from the ZBRA DEF 14A filed Apr 21, 2009.
2008 Awards. For 2008, the Committee decided a total equity award dollar value for each Named Officer (other than Mr. Smiley) based on a number of factors. The Delves Group determined the median equity grant dollar value provided to other executives in positions at other companies comparable to the Named Officers’ positions, as reflected in the Study and Peer Group data, and presented that information to Mr. Gustafsson. Mr. Gustafsson then recommended to the Committee a total equity award dollar value range for each Named Officer based on factors including the Named Officer’s performance evaluation, his overall compensation package and his perceived potential and contributions to the Company. After reviewing the Study and Peer Group data provided by The Delves Group and considering Mr. Gustafsson’s recommendations, the Committee, with Mr. Gustafsson’s participation, determined the total equity award dollar value for each Named Officer other than Mr. Gustafsson. The Committee considered several factors in making its determinations, including the competitive marketplace data provided by The Delves Group, Mr. Gustafsson’s recommendations, the Company’s performance, a Named Officer’s position within the Company, his individual performance evaluation, his perceived potential and contributions to the Company, and the Committee’s subjective understanding of competitive practices in the marketplace with respect to equity awards. The factors used by Mr. Gustafsson to determine recommendations regarding total equity award dollar value ranges for each Named Officer and by the Committee to establish each Named Officer’s total equity award dollar value were assessed by Mr. Gustafsson and the Committee, respectively, on a subjective basis.

     With respect to Mr. Gustafsson’s total equity award dollar value, the Committee consulted directly with The Delves Group and considered the same factors it considered in determining the total equity award dollar values for the other Named Officers. Mr. Gustafsson did not participate in, or consult with the Committee regarding, the determination of his total equity award dollar value.

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     The Committee determined to provide half of the dollar value of each Named Officer’s (other than Messrs. Gustafsson and Smiley) equity award in the form of time-vesting stock options and half in the form of performance-based restricted shares of the Company’s Common Stock. It determined this mix of stock options and performance-based restricted stock based on the equity grant practices of other comparable companies as reported in the Study and the Peer Group data and on its general understanding of competitive market practices.

     In calculating the number of time-vesting stock options, the Company used the following formula:

  targeted dollar value of the stock option award  
(a specific binomial value) x (the estimated per share price of the Company’s Common Stock on the grant date)

The binomial value for each stock option grant was calculated based upon a variety of assumptions as of the grant date including the exercise price, expected life of the grant, expected volatility, risk-free interest rate and dividend yield. The exercise price of the stock options was set at the closing stock price of the Company’s Common Stock on the date of the equity grant.

     In calculating the number of performance-based restricted shares, the Company used the following formula:

 

targeted dollar value of the performance-based restricted stock award

 

(a specific discount value) x (the estimated per share price of the Company’s Common Stock on the grant date)

The discount value for each performance-based restricted stock award was calculated based upon a variety of assumptions as of the grant date including the per-share stock price on the grant date, expected volatility, risk-free interest rate, and dividend yield.

     In 2008, the total equity award dollar value of Mr. Gustafsson’s annual equity award was determined in the same manner as the other Named Officers. When Mr. Gustafsson was hired in September 2007, he received grants of time-vesting stock options, performance-based stock options and performance-based restricted stock. Since, unlike the other Named Officers, Mr. Gustafsson had recently received a grant of performance-based restricted stock, the Committee determined that it was appropriate that his annual equity award consist entirely of time-vesting stock options rather than a combination of performance-based restricted stock and time-vesting stock options.

     Pursuant to the Smiley Employment Agreement, Mr. Smiley was granted a stock option to purchase 11,700 shares of the Company’s Common Stock that vests in equal installments on the first four anniversaries of the grant date, as well as 7,500 shares of performance-based restricted stock. These stock options and shares of performance-based restricted stock awarded to Mr. Smiley were negotiated in connection with his hiring and reflected in the Smiley Employment Agreement.

     

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