DEFA14A: Zebra Technologies Urges Stockholder Support for Director Elections and Executive Compensation at 2024 Annual Meeting

Zebra Technologies is seeking stockholder support for the election of directors, executive compensation, and auditor ratification at its upcoming annual meeting on May 9, 2024.

Summary

• Zebra Technologies is soliciting stockholder support for key proposals at its 2024 Annual Meeting.
• The company recommends voting for the election of Class I directors, the advisory vote on executive compensation, and the ratification of Ernst & Young LLP as auditors.
• Zebra highlights its experienced and diverse board, performance-based executive compensation program, and commitment to long-term value creation.
• The company invested approximately 11% of its FY23 sales in R&D ($519 million) and has a global presence with approximately 9,750 employees in 55 countries.
• Zebra acknowledges industry sales declines due to customers absorbing capacity built during the pandemic but anticipates a return to growth in 2024.
• In March 2023, Bill Burns was promoted to CEO, and Anders Gustafsson transitioned to Executive Chair, with Michael Smith appointed Lead Independent Director.
• Executive compensation adjustments were made to reflect the new roles of Mr. Burns and Mr. Gustafsson.
• Zebra emphasizes its commitment to stockholder engagement and incorporating feedback into board actions regarding corporate governance and executive compensation.
• The company's board is diverse, with 30% women and 20% ethnic diversity, and has undergone active refreshment with the addition of four new directors and a director nominee in the last four years.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both positive aspects like market leadership and strategic initiatives, while also acknowledging industry challenges and lower than target incentive payouts. The focus on stockholder engagement and governance best practices contributes to a moderately positive sentiment.

Positives

• Zebra has a strong track record of innovation and is a market leader in enterprise mobile computing, barcode printing, and data capture solutions.
• The company is enhancing its growth profile through complementary areas like RFID, Machine Vision, and Software.
• Zebra has a diverse and experienced board with ongoing refreshment.
• The company has a robust stockholder engagement program and incorporates feedback into its governance and compensation practices.
• Executive compensation is performance-based and aligned with stockholder interests.
• The company is taking cost and go-to-market actions to position itself for a return to growth in 2024.

Negatives

• The industry has been experiencing sales declines due to customers navigating a challenging environment and absorbing capacity built during the pandemic.
• Short-term incentive for 2023 performance paid out at 18.1% of target for all NEOs.
• Performance-vested restricted stock for which the performance period concluded December 31, 2023 earned at 33.3% of target.

Risks

• Customer acceptance of Zebra's offerings and competitors' offerings could impact results.
• Emerging technologies and changes in customer requirements pose a risk.
• Global market conditions and credit/capital market volatility may have adverse effects.
• Natural disasters, man-made disasters, public health issues, and cybersecurity incidents could negatively impact the business.
• The ability to purchase sufficient materials and meet customer demand could impact results.
• Foreign exchange rates, customs duties, and trade policies may have an adverse effect.
• Changes in governmental policies, regulations, or laws, as well as litigation or tax matters, could adversely affect the business.
• The success of integrating acquisitions could affect profitability and competitive position.

Future Outlook

Zebra anticipates a return to growth in 2024, driven by stabilized end-market demand trends and cost/go-to-market actions.

Management Comments

• We value our stockholders continued support and contributions to Zebras success.
• Mr. Gustafsson created tremendous value for stockholders during his service as CEO and continues to deliver unique contributions to the Board.

Industry Context

The document acknowledges the industry-wide sales declines due to the pandemic's impact on customer capacity, indicating Zebra is facing similar challenges as its competitors. However, the company is positioning itself to capitalize on the secular trends of digitization and automation in the supply chain.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors.
• However, it mentions Zebra's #1 market share in enterprise mobile computing, barcode printing, and data capture solutions, suggesting a leading position in these areas.
• The document also highlights Zebra's focus on complementary areas like RFID and Machine Vision, which aligns with the industry trend of offering end-to-end solutions.

Management Changes

Corporate Governance

Stakeholder Impact

• Stockholders are impacted by the board's decisions on executive compensation and corporate governance.
• Employees are impacted by the company's focus on inclusion and diversity and employee engagement.
• Customers are impacted by the company's ability to innovate and deliver industry-tailored solutions.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its Annual Meeting on May 9, 2024.

Key Dates

Keywords

stockholder engagement, executive compensation, board of directors, annual meeting, corporate governance, Zebra Technologies