Director's Compensation Project: Motorola Mobility Holdings Inc.

This post is part of an ongoing series that examines the compensation paid to independent directors of public companies. We are using information found in the 2011 proxy statements of the selected companies.

In addition to state standards and Sarbanes-Oxley (“SOX”) requirements, the major U.S. stock exchanges each have their own standards for independence. While the NYSE and NASDAQ rules are substantially the same, there are some minor differences between the two that are worth noting.

NYSE Rule 303A.01, requires that each listed company’s board of directors be comprised of a majority of independent directors. A director is considered independent under NYSE Rule 303A.02(b)(ii) if the director received less than $120,000 in direct compensation, other than director’s fees, in any one year period over the last three years. The NYSE “direct compensation” standard is less restrictive than the corresponding NASDAQ Rule, 5605(a)(2)(B), which includes "any compensation."

NYSE Rule 303A.06 requires a listed company’s audit committee members to comport with the requirements of Rule 10A-3 (C.F.R. §240.10A-3).  SOX Section 301 imposes similar requirements.

Independent directors are compensated for their service on the board.  The amount of compensation can be seen from examining the non-management director compensation table from Motorola Mobility Holdings (NYSE:MMI) 2011 proxy statement.  According to the proxy statement, the company paid the directors the following amounts:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Jon E. Barfield*	—	—	—	—	—
William R. Hambrecht	6,250	—	—	—	6,250
Jeanne P. Jackson**	—	—	—	—	—
Keith A. Meister	6,875	—	—	—	6,875
Thomas J. Meredith	6,875	—	—	—	6,875
Daniel A. Ninivaggi	6,250	—	—	—	6,250
James R. Stengel	7,500	—	—	—	7,500
Anthony J. Vinciquerra	8,333	—	—	—	8,333
Andrew J. Viterbi	6,250	—	—	—	6,250

*Mr. Barfield joined Motorola’s Board January 4, 2011

** Ms. Jackson joined Motorola’s Board January 8, 2011

Director Compensation  In preparation for the separation of Motorola Mobility from Motorola Solutions on January 4, 2011, the Board of Directors held one meeting during 2010, and director attendance was 100%.  The table above shows how much Motorola compensated each director for that meeting.  MMI has not released the compensation for 2011 as of November 15^th, 2011, however, the Board of Directors approved an annual retainer of $75,000 with an annual equity award of $150,000. Furthermore the different chairpersons and committee members will each receive additional compensation.  The lead director receives an additional $25,000, the Audit Committee Chair receives $25,000, the Compensation and Leadership Chair receives $15,000, and the Governance and Nominating Chair receives $10,000.  Members of the Audit committee receive an additional $12,500, members of the Compensation and Leadership committee will receive $7,500, and members of the Governance and Nominating committee will receive $5,000.

Director Tenure  Chairman and CEO, Dr. Jha and CFO, Mr. Rothman served as interim management members of the board of directors during 2010 until November 30, 2010, when seven non-employee directors were elected by MMI’s former parent, Motorola Solutions, replacing Mr. Rothman in preparation for the separation on January 4, 2011. Dr. Jha was previously Co-CEO at Motorola Inc.  Mr. Daniel A Ninivaggi, serves as Interim President and Interim Chief Executive Officer and as a director of Tropicana Entertainment Inc., since January 2011.  He also serves as a director of CIT Group Inc., XO Holdings, Inc., and Federal Mogul Corporation.  Of the nine directors of MMI, six served on the board of MMI’s parent company, Motorola Inc., within the last five years.

CEO Compensation CEO Dr. Sanjay Jha received $13,016,126 in total compensation in 2010.  Dr. Jha voluntarily elected to take a decrease of 63% in his base salary for 2010, bringing that amount to $900,000.  Dr. Jha also chose to forego all bonuses due to him under the Motorola Incentive Plan, including a contractually guaranteed cash bonus of $2,400,000.  Dr. Jha received $388,623 in other compensation, of which $186,189 was for personal use of company aircraft, $61,243 was for temporary housing benefits, $50,633 was for personal use of car and driver, and $25,348 was for legal fees.  

CFO Mr. Mark E. Rothman received $1,733,070 in total compensation in 2010.  Mr. Rothman’s base salary remained at its 2009 level of $430,000 in 2010.  Mr. Rothman received $186,868 in other compensation, including relocation benefits, costs for personal use of Company aircraft, financial planning and income imputed for guest attendance at Company events, totaling $149,913.