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Motorola (MOT) had the usual start to its recently filed Proxy statement:

Dear fellow stockholder:

You are cordially invited to attend Motorola’s 2007 Annual Stockholders Meeting. The meeting will be held on Monday, May 7, 2007 at 4:30 p.m., local time, in the Rubloff Auditorium at The Art Institute of Chicago, 230 South Columbus Drive, Chicago, Illinois 60603.

At this year’s Annual Meeting, in addition to electing your entire 11 member board, we are asking stockholders to approve an amendment to the Motorola Employee Stock Purchase Plan of 1999 (the “MOTshare Plan”) to make 50 million additional shares available for purchase by employees. The MOTshare Plan encourages employees to own more shares of Motorola and thereby further aligns their interests with those of all Motorola stockholders.

I encourage each of you to vote your shares through one of the three convenient methods described in the enclosed Proxy Statement, and if your schedule permits, to attend the meeting. I would appreciate your support of the nominated directors and the proposed amendment to the MOTshare Plan. Your vote is important, so please act at your first opportunity.

On behalf of your Board of Directors, thank you for your continued support of Motorola.

The problem (for Motorola) is that there has been another proxy statement filed, this one by dissident shareholder Carl Icahn. Icahn has some different ideas as to how the shareholders should vote on the matters before them. Let’s take a look at each one.

The candidates nominated by the company as directors include the 10 current directors and David Dorman, retired chairman of AT&T. Icahn has nominated himself. Those 11 receiving the most votes will win, and only those votes cast in favor of a candidate will be counted.

According to Motorola’s filing, the compensation of directors is fairly favorable, though the company is large and it is unlikely any of the nominees “needs” the money.

During 2006, the annual retainer fee paid to each non-employee director was $100,000. In addition, (1) the chairs of the Audit and Legal and Compensation and Leadership Committees each received an additional annual fee of $15,000, (2) the chairs of the other committees each received an additional annual fee of $10,000, and (3) the members of the Audit and Legal Committee, other than the chair, each received an additional annual fee of $5,000. The Company also reimburses its directors, and in certain circumstances spouses who accompany directors, for travel, lodging and related expenses they incur in attending Board and committee meetings.

Including stock and other awards, most of the directors took home about a quarter-million dollars in 2006.

The next proposal is to increase the shares authorized for issuance as employee compensation:

The Board of Directors believes it is in the best interests of the Company to encourage stock ownership by employees of the Company. Accordingly, the Motorola Employee Stock Purchase Plan of 1999 (the “MOTshare Plan” or the “Plan”) was initially adopted in 1999 and authorized the sale to employees of up to an aggregate of 54.3 million shares of Common Stock issued under the Plan. In 2002, both the Board of Directors and the stockholders approved amending the Plan to increase the aggregate number of shares of Common Stock available for sale to employees by 50 million shares.

Having already approved the plan, the Board recommends voting in favor, while Icahn’s proxy makes no recommendation.

Proposal #3 would require a shareholder vote on management compensation plans. The Board does not like this plan, Icahn’s group does.

Proposal #4 seeks to amend the bylaws so that incentive compensation earned by managers could be taken back if it was later determined that the appropriate targets were not met. The Board opposes, and Icahn’s group has no opinion on the matter.

Source: Motorola's Proxy Battle: Icahn's At It Again