Ladies and gentlemen, may I please have your attention? We'd like to get this year's annual meeting started. Here's our Chairman and Chief Executive Officer, Greg Brown.
Good afternoon, and welcome everyone. For those in the room, we appreciate your personal attendance. For those on the phone, we thank you for listening in. I'm delighted to welcome you to this annual meeting of Motorola Solutions Stockholders. I'm gonna begin by introducing my fellow director nominees, and then Kristin Kruska will preside over the formal business of the meeting. Then finally, I will rejoin you to walk through our results and take questions. As I introduce the other director nominees, I ask that they stand up as I call their name. Ken Denman is a venture partner with Sway Ventures and former CEO and president of Emotient. Ken currently serves on the board of Costco Wholesale Corporation, LendingClub Corporation, and Mitek Systems, and chairs our board's Governance and Nominating Committee.
Egon Durban is the managing partner and managing director of Silver Lake, and currently serves on the board of Dell Technologies, Secureworks, and VMware. Clay Jones is the former chairman of the board and CEO of Rockwell Collins, and currently serves on the boards of Deere & Company and Cardinal Health. Judy Lewent is the former Executive Vice President and CFO of Merck, and currently serves on the boards of GlaxoSmithKline and Thermo Fisher Scientific. Judy chairs our board's Audit Committee. Greg Mondre is the managing partner and managing director of Silver Lake, and currently serves on the boards of GoDaddy and Sabre Corporation.
Anne Pramaggiore is the President and CEO of Commonwealth Edison, and we are excited for her as she moves to her new role as Senior Executive Vice President and CEO of Exelon Utilities, and currently serves on the board of the Babcock & Wilcox Company, and she chairs our board's Compensation and Leadership Committee. Sam Scott is the former chairman, president, and CEO of Corn Products International, and currently serves on the boards of Abbott Labs and Bank of New York Mellon. Sam is our Lead Independent Director. Joe Tucci. Joe is the co-CEO and co-chairman of GTY Technology Holdings and former chairman and CEO of EMC Corporation. Joe currently serves on the boards of GTY Technology and Paychex, Inc.
Now for the formal business of the meeting, I'd like to introduce Motorola Solutions' Secretary to the Board, Kristin Kruska, who will serve as today's presiding stockholder meeting chair. Kristin?
Thank you, Greg. We will now attend to the formal business of the meeting, after which Greg will give a short presentation, and the floor will be open for our general question and answer period. Representatives of KPMG, the company's external auditors, are also present and available to answer questions. When you came in, you were handed a printed program, which sets forth today's agenda and includes the procedures we will follow on the back. If you do not have the program, raise your hand so we can provide you one. I will now call the 2018 Annual Stockholders Meeting to order. As a reminder, the proposals in the proxy statement are the only items of business that can be transacted at this meeting.
As we go through the agenda, any stockholder who wishes to comment on a specific proposal may do so only during the time provided for comments. If you wish to comment on a proposal, please approach the microphone, and please limit your comments to two minutes. There's a total time limit of 10 minutes for each proposal under consideration. This meeting is being held pursuant to a notice mailed on or about March 28th, 2018, to each stockholder of record at the close of business on March 16th, 2018. A list of the stockholders entitled to vote at this meeting has been available for the past 10 days at our corporate offices and is available at this meeting for inspection.
I am pleased to report that 145,282,966 shares of the 161,695,469 shares outstanding and entitled to vote are represented in person or by proxy at this meeting. This is approximately 90% of the outstanding shares and represents a quorum for the purposes of this meeting. It is 6:03 P.M. on May 14th, 2018, and I now declare the polls open for all matters of business. The polls will remain open until all items of business have been presented and discussed. If there are any stockholders present who have already voted and wish to revoke or change their vote, or have not yet voted and wish to vote, you may do so at this time. If you need a ballot, please raise your hand.
You may vote until all items of business as set forth on the agenda have been introduced and discussed. At that time, I will announce that the polls are closed, and we will collect your ballots. Proposal one: The first matter is the election of directors. I hereby nominate as directors for the ensuing year, or until their successors are duly elected and qualified, the board's nine nominees that were listed in the proxy statement. Gregory Q. Brown, Kenneth D. Denman, Egon P. Durban, Clayton M. Jones, Judy C. Lewent, Gregory K. Mondre, Anne R. Pramaggiore, Samuel Scott III, Joseph M. Tucci. Is there a second?
I second the motion.
Does any stockholder wish to make a comment directly related to the election of directors? There being no comments, we'll move on to the next matter. Next is the binding, non-binding advisory vote to approve the company's executive compensation. The resolution provided in the proxy statement to be acted upon states resolved that the stockholders approve on an advisory basis the compensation of the named executive officers as described in the compensation discussion and analysis, the 2017 summary compensation table, and other related tables and disclosures in this proxy statement. Is there a second?
I second the motion.
Does any stockholder wish to make a comment directly related to this matter? I'll move on to the next item, which is the ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for 2018. The Audit Committee of the board has appointed KPMG as the company's independent registered public accounting firm for 2018. This appointment is now formally submitted for stockholder ratification. Is there a second?
I second the motion.
Does anyone wish to make a comment?
I think I asked this question. Sister Valerie Heinonen and Mercy Investment Services. I think I asked this question last year, but there's much more attention. What does the audit, do the auditors review, for example, the sustainability reports and policies and so on? And I'll stop with that.
So, no, our auditors do not review the sustainability policies of the company.
They audit the financial results of the company.
Amen.
and our reported financials that we prepare for the market.
Amen. Are you considering third party to review your sustainability report?
We do have third-party oversight and usage of third parties in connection with our environmental policies and procedures and our sustainability report. We utilize those vendors to help us assess our individual vendors and help us assess our programs and help us conduct some of the reviews.
Good. Thank you.
Thank you, Sister. I will move on to our next item, unless there are any other comments. Next is the proposal, stockholder proposal regarding ethical recruitment and supply chain. The sponsor of this resolution may make a proposal and provide a brief supporting statement and make a motion for adoption of this proposal. Please limit your remarks to five minutes.
Thank you. I'm Robert McGarrah, and I am here on behalf of Domini Impact Equity Fund to move proposal number four. This proposal asks for a report disclosing specific remedial efforts that Motorola Solutions has taken to ensure that its global supply chain is free of forced or bonded labor, including any efforts to reimburse workers for recruitment fees that were paid by workers in violation of the company's policy. Around the world, roughly 150 million people leave their countries in search of economic opportunities elsewhere. They often pass through the hands of unscrupulous recruiters who exploit these vulnerable people by charging fees, withholding passports, failing to provide written contracts, and spelling out the terms or spelling out the terms of their employment.
Many workers find themselves in conditions of bonded labor, working months on the job simply to pay off the exorbitant recruitment fees that they're required to pay. A growing number of leading companies have responded to these abuses by adopting no fees commitments, seeking to ensure that recruiters are paid by employers and not workers. As a multinational company dependent upon extended supply chains in many countries, Motorola Solutions must assess if workers are being recruited into debt bondage, forced labor, and ultimately slavery. Motorola has the right policies in place and should be commended for that, and we do. The board's statement in opposition to this proposal, however, goes into some detail about our company's policies, but it pays virtually no attention to the focus of the proposal. How are these policies implemented?
Policies on paper mean very little without going on into implementation on the ground, and that's the focus of this proposal, and that's where Motorola's disclosures continue to come up short. Investors do not have sufficient information to understand whether Motorola's efforts are adequate, and this proposal seeks to address that gap in reporting. Domini has, for 20 years, had plenty of experience working with companies on implementation of supply chain human rights policies. It wasn't hard to find a prominent red flag in Motorola Solutions disclosures prompting this engagement. Last year, for example, Adam Kanzer, Domini's Managing Director, was here to tell you that the number 14 was emblazoned on that red flag. This year, the number is 15. Motorola Solutions reports that out of its entire global supply chain, which includes several hundred suppliers, it only audited 15 sites in 2016.
Even at that small number of sites, Motorola found 13, quote, "freely chosen employment," unquote, issues, but no further information is provided. What's that mean? Thirteen people were found to be in conditions of bonded or forced labor? Was this at 13 facilities? Was it 13 violations at one facility? How serious were these violations, and most importantly, what has the company done about them? Does this number refer to 13 slaves? If you look at these problems, you'll find them. But in 2017, Motorola did less, setting a goal to audit only 12 high-risk facilities... not all high-risk facilities, but only 12 high-risk facilities. So this places Motorola Solutions far behind its peers that conduct hundreds of audits annually, and they find problems and report on what they did to address them.
Inadequate attention to these very serious issues presents risks to the brand, risk to shareholder value, and risk to the men and women who make our company's products. Bonded labor, as a result of unethical recruitment practices, is rampant globally. Migrant workers are among the most vulnerable in the world. The New York Times has reported on this, many other papers. These workers are far from home. They may not speak the local language. They often find themselves trapped by employers who will not return them and return their passports even, or by a mountain of debt that never seems to go down. Nobody should have to pay for their job, and we commend Motorola Solutions for recognizing this. But what has the company done about it?
Apple reports that as a result of their efforts over the last 10 years, approximately 35,000 individuals were repaid for recruitment fees that should not have been charged. In total, these reimbursements came to more than $30 million. Again, if you look for these problems, you'll find them. For 2 years in a row, we have been asking the company to show us that it means what it says. Domini looks forward to continued dialogue with Motorola Solutions and its management team, and thanks you, thank you for the attention to these concerns, and we move adoption of this proposal.
Thank you.
Thank you.
For the reasons stated in the company's proxy statement, including the fact that we have addressed concerns raised by this proposal through our comprehensive policies and procedures on human rights, including our Code of Business Conduct, Human Rights Policy, Supplier Code of Conduct, Anti-Human Trafficking Statement and Compliance Plan, and our Environment, Health and Safety Policy, all of which are based on internationally recognized human rights standards. The board of directors recommends that you vote against the adoption of this stockholder-submitted proposal. Is there a stockholder who wishes to second this proposal to put it to a vote? Thank you. Do any stockholders wish to make any further comments related to this proposal? Thank you. We'll move on to the next. This year's proxy statement also contains a stockholder proposal, which is entitled Independent Director with Human Rights Expertise.
I will now recognize the sponsor of this resolution, who may introduce the proposal, and please keep your remarks to five minutes.
I am Sister Valerie Heinonen, an Ursuline Sister. On behalf of Mercy Investment... Oh, I'm sorry.
It's okay.
I'm in the wrong order.
We can flip-flop. No, it's fine. Go right ahead.
My name is Rebecca Blachly, and on behalf of the Episcopal Church, whose corporate name is the Domestic and Foreign Missionary Society, I move the proposed resolution number five, calling for an independent director with expertise in human rights on page sixty. Motorola Solutions provides goods and services around the world, including in areas with high levels of conflict and the potential for human rights abuses. Therefore, we need to be sure that our company has appropriate levels of expertise at the management and at the board level to advise the company on any human rights issues that may arise. It is imperative we not be complicit in or ignorant of human rights abuses where we do business.
Motorola Solutions will benefit from having an individual with recognized human rights expertise on the board, who will be accountable to ensure that the company fully implements the Motorola Solutions human rights policy and the other policies and procedures designed to ensure that the company complies with internationally recognized human rights standards. As you're aware, the company faces international criticism for ignoring and even contributing to human rights abuses in places like China and the Middle East, including in the occupied West Bank, East Jerusalem, and the Gaza Strip. Our company should want the highest levels of attention to be paid to human rights concerns that affect the business performance of the company. That is best accomplished by ensuring adequate expertise on the board. We move the adoption of this proposal. Thank you.
Thank you. For the reasons stated in the company's proxy statement, including the fact that our governance and nominating committee considers a wide variety of skills, backgrounds, and perspectives that, when taken together, provide the appropriate expertise to oversee the company's business. Setting aside a specific seat for a director with human rights experience would, in our view, impede the ability of our governance and nominating committee to nominate candidates that most benefit the company as a whole. The board of directors recommends that you vote against this adoption of the stockholder-submitted proposal. Is there any stockholder who wishes to second this proposal to put it to a vote? Does anyone wish to make any further comments related to this? Our final proposal, Sister Heinonen, is on lobbying disclosures. I think you know the rules, so
I just can't count. I'm Sister Valerie Heinonen, Ursuline Sister. On behalf of Mercy Investment Services and the Dominican Sisters of Hope, I move proposal six, page 62, which asks for a report on state and federal lobbying expenditures, including indirect funding of lobbying through trade associations and support for the American Legislative Exchange Council. Transparency and accountability in corporate spending to influence public policy are in the best interest of Motorola Solutions stockholders and our company, as those of you who are following the AT&T $600,000 expenditure to a White House lawyer, and to a lesser extent, the Swiss drug company, Novartis, spending might suggest. Motorola Solutions spent more than $17.3 million since 2010 on federal lobbying activities. Plus, there is incomplete disclosure for state lobbying.
For example, Motorola Solutions hired 121 lobbyists in 20 states, for 2017. Our company continues to claim the proposal disregards its existing disclosure policies. We disagree. We regard the existing lobbying disclosure insufficient. Motorola Solutions is required to report its lobbying and already has this information, so you can easily disclose it at minimal cost. Corporations contribute millions to trade associations that lobby indirectly on your behalf without specific disclosure or accountability. Our company discloses only a partial listing of its trade association memberships and fails to disclose trade association payments or amounts, or percentage of which is used for lobbying. This proposal also asks for disclosure of payments to tax-exempt organizations that write and endorse model legislation, which includes the American Legislative Exchange Council, or ALEC, where our company has been identified as a member.
Corporate reputation is tied to shareholder value, as studies show companies with a high reputational ranking perform better financially than lower-ranked companies. Without a clear system ensuring accountability, corporate assets can be used to promote public policy objectives, which may pose reputational risks to Motorola Solutions and its shareholders. Lobbying transparency is a safety mechanism for our company and its shareholders. What is disclosed gets managed. Knowing Motorola Solutions' lobbying spending will be disclosed will ensure that both our board and management oversee company lobbying, that it is done ethically and in the best interest of our company and its shareholders. We urge support for this proposal.
Thank you. For the reasons stated in the company's proxy statement, including the fact that the company complies with all lobbying disclosure laws, that our trade association memberships over $50,000 are published on our website, and that we believe that lobbying disclosures should apply equally to all participants in the legislative process, the board of directors recommends that you vote against the adoption of this stockholder-submitted proposal. Is there a stockholder who wishes to second this proposal to put it to a vote? Thank you. Does any other stockholder wish to make a comment related to this matter? All right. There are no other matters that may properly be voted on before this meeting, and I ask that you now complete your ballots if you have them.
If your broker or the re-registered holder of your shares provided you with a legal proxy, please be sure to turn that in with your ballot. I now declare the polls closed at 6:21 P.M. on May 14, 2018. I will now read the preliminary results of the items acted upon at today's meeting, each as reported by the Inspector of Elections. More than a majority of the shares voted in person or by proxy at this meeting were voted for the election of each director. As a result, the nine persons who have been nominated for election have been duly elected as the directors of the company, each to hold office for a one-year term. Approximately 69% of the votes cast were voted for the approval of the company's executive compensation.
Approximately 98% of the votes cast were voted for the ratification of the appointment of KPMG as the company's independent registered public accounting firm for 2018. Approximately 13% of the votes cast were voted for the resolution on ethical recruitment and global supply chains. As a result, this stockholder proposal has not been approved by the stockholders. Approximately 10% of the votes cast were voted for the resolution on independent directors with human rights experience. As a result, this stockholder proposal has not been approved by the stockholders. Approximately 35% of the votes cast were voted for the resolution on lobbying disclosure. As a result, this stockholder proposal has not been approved by the stockholders. We will report the official results of the stockholder vote with respect to each proposal on a Form 8-K within four days of this meeting.
I now declare the formal portion of the meeting adjourned. It is my pleasure to turn the meeting over to Greg Brown, who will report to you on the company's business and have then a Q&A period.
Thanks again for coming, and thank you for your engagement and your active input. I just want to close with a few thoughts. First, recapping 2017, it was a very strong year on revenue growth and operating earnings expansion, and double-digit growth in terms of non-GAAP earnings per share. But we're also pretty excited about the acquisitions that we made around Kodiak Networks, Avigilon in video surveillance and analytics, a very substantial move for this company that opens doors to an addressable market that is in excess of $11 billion of opportunity for us. We acquired managed services networks, managed networks for land mobile radio in Chile, a company by the name of Interexport, and we continued our investments in command center software, which complement both incident management with situational awareness.
We were pleasantly happy about winning the FirstNet Award as a subcontractor to AT&T last March or April. And then lastly, and particularly interesting, is despite all of the strong results in '17, we ended the year with record backlog. Record backlog, backlog being that which is sold, but not yet recognized for revenue. Exiting the period of 2017 with record backlog speaks to the strong foundation and the continued momentum of this organization. We also were proud of being 3rd ranked by Fortune's Most Admired List in the category of network and other communications. It's a sample of 13 different firms. I think we were 7th or 8th, quite frankly, last year. We've made significant improvement, and they evaluate the strength of the company on a number of different facets.
But this move up to third, and we would like to move further north, again, is, I think, an external testament to the strength and the momentum of Motorola Solutions. And finally, I just point you to remember in September 2011—January 1, rather—we separated Motorola. We launched Motorola Solutions Inc. We were the remaining entity. We are 90 years old this September, but since the inception of Motorola Solutions Inc. on January 1, we've had a very healthy total shareholder return, which is both stock appreciation plus reinvested dividends, outpacing the overall market, the S&P 500, and also outpacing the S&P Communications Equipment Index, which is used to look at some of our competitors. So I think my final message to you is a very strong 2017.
By the way, we're off to a record Q1, I should note. It's the best Q1 we've had in the history of the company. That too accumulated record backlog. We closed on the Avigilon acquisition and Airbus Plant CML, and I want to thank my colleagues on the board and the team, my management team, because I feel very good about our competitive position, and I appreciate all that you've done. So with that, I'll take any questions that you may have. Sister?
You know, we're reading and dismayed and so on and so forth, with the disclosures of companies like Facebook and Equifax and so on. Do the companies that you've acquired work in the areas of security, I guess is what I'm asking?
The answer is yes, and Avigilon, as an example, is a video surveillance and analytics company, primarily, Sister, for corporations, Fortune 500, less so for city and public safety.
Mm-hmm.
But we will be taking that company and that team more into the national security and homeland security space.
Thank you.
Thank you, Sister. Any other final thoughts and questions? Again, I appreciate you coming, and I appreciate the time that you spend to give us, feedback. And we hear you. Whether it's implementation of policies, disclosure, we appreciate the feedback, and we appreciate, you spending the time with us this afternoon. With no other questions, I will call this meeting, adjourned. Thanks again for coming.
Ladies and gentlemen, that concludes our 2018 Annual Meeting of Stockholders. Thank you for your attendance and your ownership of Motorola Solutions.