ADT 2005 Annual Report Download - page 25

The Board consists of a substantial majority of independent directors who meet a stringent
definition of independence. See ‘‘Independence of Nominees for Director’’ below. The independent
directors of the Board, acting in executive session, elect a Lead Director to serve as chair of the
Nominating and Governance Committee. In fiscal 2005, the independent directors elected John A. Krol
as the Lead Director. The Lead Director, among other things, sets the Board agendas with Board and
management input, facilitates communications among directors, works with the Chief Executive Officer
to ensure appropriate information flow to the Board and chairs an executive session of the independent
directors at each formal Board meeting. The Board also maintains two other standing committees—the
Audit Committee and the Compensation and Human Resources Committee. All three committees are
entirely composed of independent directors. Assignments to, and chairs of, the committees are
recommended by the Nominating and Governance Committee and selected by the Board. All
committees report on their activities to the Board.
To ensure effective discussion and decision making, while at the same time having a sufficient
number of independent directors for its three committees, the Board is normally constituted of between
ten and thirteen directors. Shareholders have the authority to set the number of directors at the annual
general meeting, and the directors have the authority to fill any vacancy that may arise during the year.
The Nominating and Governance Committee reviews the Board’s organization annually and
recommends appropriate changes to the Board.
The Company believes the positions of Chairman of the Board and Chief Executive Officer should
be held by the same person, unless circumstances dictate otherwise. The Company has adopted a
counterbalancing governance structure, including:
• A designated Lead Director;
• A substantial majority of independent directors;
• All Directors annually elected by a majority of votes cast at the annual general meeting;
• Committees entirely composed of independent directors; and
• Established governance guidelines.
Board Operation
The Board normally has six regularly scheduled meetings per fiscal year and committee meetings
are normally held in conjunction with Board meetings. The Board and committee chairs are responsible
for conducting meetings and informal consultations in a fashion that encourages informed, meaningful
and probing deliberations. Directors receive the agenda and materials in advance of meetings and may
ask for additional information from, or meet with, senior managers at any time. Strategic planning and
succession planning sessions are held annually at regular Board meetings.
Board Advisors
The Board and its committees (consistent with their respective charters) may retain their own
advisors as they determine necessary to carry out their responsibilities.
Board Self-Evaluation
The Nominating and Governance Committee coordinates an annual evaluation process by the
directors of the Board’s performance and procedures, including evaluation of individual directors. This
self-evaluation leads to a full Board discussion of the results. The evaluation process includes the
following:
• The Lead Director informally consults with each of the directors as part of the evaluation.
2006 Proxy Statement 7