ADT 2005 Annual Report Download - page 30

(3) Mr. Krol served as both the Lead Director and Chair of the Nominating and Governance
Committee.
(4) Mr. McDonald served as the Chair of the Compensation and Human Resources Committee.
(5) Mr. York served as the Chair of the Audit Committee.
(6) Mr. McDonald deferred $98,000 of his fiscal 2005 cash compensation in accordance with the Tyco
International Ltd. Deferred Compensation Plan for Directors (the ‘‘Director Deferred
Compensation Plan’’).
Under the Director Deferred Compensation Plan, each non-employee director may make an
election to defer some or all of his or her cash remuneration for that year. Under the plan, an
unfunded deferred compensation bookkeeping account is established for each director who elects to
defer cash remuneration otherwise payable during the year. The director may choose the deemed
investment of amounts credited to his/her deferred compensation account into the Interest Income
Measurement Fund or a U.S. Equity Index Commingled Measurement Fund. Earnings and/or losses on
the Measurement Funds mirror the investment results of funds available under the Company’s 401(k)
retirement savings and investment plans. Each director may elect to receive a distribution of the
amounts credited to his or her deferred compensation account in a lump sum cash payment either at
termination from the Board or at the end of five years or such other period in five-year increments
after it is deferred. Any unpaid balances will be distributed to a director upon the later of his or her
attainment of age 70 and his or her termination from the board. As of the end of fiscal 2005, one
director, Mr. McDonald, had enrolled in the plan.
Fiscal 2006 Compensation
In August 2005, the Compensation and Human Resources Committee of the Board of Directors
retained an independent consulting firm to conduct a review of the current Board compensation
structure and benchmark it against the compensation for the directors of our peer companies. Based on
the results of the review, the Board of Directors decided not to change director compensation for fiscal
2006. The annual cash retainer for fiscal 2006 remains at $80,000. The Lead Director and Chair of the
Audit Committee will each receive an additional annual fee of $20,000 and the Chair of the
Compensation and Human Resources Committee and the Chair of the Nominating and Governance
Committee will each receive an additional annual fee of $15,000, in recognition of the responsibilities
required in these roles. All retainers and fees are payable quarterly and are pro-rated if the director
begins or ends Board service during the quarter.
In addition to the cash retainers and fees, on October 3, 2005, each director received a grant of
DSUs under the 2004 Stock and Incentive Plan with a value of $120,010 based on the average fair
market value of a common share for the 60 calendar day period immediately preceding the grant date.
That value per share was $28.30. Therefore, each Board member was credited with 4,241 DSUs. Under
the terms of the grant agreements, each DSU is vested when granted and will be payable in the form
of Tyco common shares within 30 days following termination of service as a Board member. Dividend
equivalents are credited to each Board member’s DSU account at the same time and in the same
amount as dividends that are paid to shareholders on common shares, and are used to increase the
number of DSUs in the account based on the fair market value of a common share on the dividend
payment date.
12 2006 Proxy Statement