ADT 2005 Annual Report Download - page 44

Option Grants in Last Fiscal Year
The following table shows all grants of stock options to the Named Officers during fiscal 2005
under the Tyco International Ltd. 2004 Stock and Incentive Plan.
Individual Grants
Percent of Total
No. of Securities Options
Underlying Granted Exercise Grant Date
Options to Employees in Price Expiration Present
Name Granted(2) Fiscal Year(4) ($/Share) Date Value(5)
Edward D. Breen(1) ............ 200,000 1.11% $37.00 3/09/2015 $2,453,920
200,000 1.11% $41.00 3/09/2015 $2,211,760
200,000 1.11% $45.00 3/09/2015 $1,997,920
William B. Lytton .............. 250,000 1.39% $35.80 3/09/2015 $2,887,700
Juergen Gromer ............... 83,333 .46% $35.80 3/09/2015 $ 962,563
166,667(3) .92% $35.80 4/09/2015 $1,925,137
Richard Meelia ................ 200,000 1.11% $35.80 3/09/2015 $2,310,160
Thomas Lynch ................ 200,000 1.11% $35.80 3/09/2015 $2,310,160
David J. FitzPatrick ............. —
(6) 0% — — —
(1) Mr. Breen received premium priced stock options in fiscal 2005. These option grants vest one-third
per year on each anniversary of the grant date, with an exercise price per share equal to $37.00
with respect to the first 200,000 options, $41.00 with respect to the second 200,000 options and
$45.00 with respect to the third 200,000 options. The premium priced options have a ten-year term,
subject in certain cases to earlier expiration following termination of employment.
(2) Except for Mr. Breen, options were granted at an exercise price equal to the fair market value of
Tyco common shares on the date of grant. The options vest one-third per year on each anniversary
of the grant date. Except as indicated for Dr. Gromer, options have a ten-year term, subject in
certain cases to earlier expiration following termination of employment.
(3) Represents the portion (two-thirds) of Dr. Gromer’s total option grants that are made with respect
to his Swiss employment services. These options expire ten years and one month from the date of
grant.
(4) Represents the percentage of all options granted in fiscal 2005 under the Tyco International Ltd.
2004 Stock and Incentive Plan.
(5) Tyco, like all public companies, is required to show the potential realizable value of stock options
or a grant date present value. Tyco chose to show a grant date present value using the Black-
Scholes option-pricing model, which is a method of calculating the hypothetical value of the
options on the date of grant. All options, except Mr. Breen’s premium priced options, were
granted at an exercise price equal to the market value of Tyco’s common shares on the date of
grant. The following assumptions were used in calculating the Black-Scholes values: expected time
of exercise of five years (except, with respect to Mr. Breen’s premium priced options, six years and
Mr. Lynch, four years); risk-free interest rate of 4.11% (except, with respect to Mr. Breen’s
premium priced options, 4.25%); assumed annual volatility of underlying shares of 33%; dividend
yield of 1.12%; and vesting of 1⁄3 each year for three years from the date of grant. The interest rate
represents the yield of a zero coupon U.S. government bond on the grant date with a maturity
date similar to the expected life of the option and the assumed annual volatility and dividend yield
26 2006 Proxy Statement