ADT 2006 Annual Report Download - page 20

• Established governance guidelines.
Board Operation
The Board meets at least six times annually and committee meetings are normally held in
conjunction with Board meetings. Additional Board meetings are held throughout the year, as may be
necessary, to advise management and consider matters affecting the Company’s operations. Frequent
Board meetings are critical not only for timely decisions but also for directors to be well informed
about Tyco’s current operations and issues. One of these meetings is scheduled in conjunction with the
Company’s Annual General Meeting. Board members are required to attend the Annual General
Meeting. The Lead Director, in consultation with the Chairman/CEO, is responsible for setting meeting
agendas with input from the other directors. An executive session of independent non-executive
directors, chaired by the Lead Director, is held at each formal meeting of the Board. Strategic planning
and succession planning sessions are held annually at a regular Board meeting.
The Chairman/CEO and committee chairs are responsible for conducting meetings and informal
consultations in a manner that encourages informed, meaningful, and probing deliberations.
Presentations at Board meetings are concise and focused and include adequate time for discussion and
decision-making. Directors receive the agenda and materials for meetings in advance. Directors may
ask for additional information from, or meet with, senior management at any time.
The Board’s intent is for directors to attend all regularly scheduled Board and committee meetings
in person. Decisions by the Board and its committees are recorded in the minutes of their meetings,
and copies of the minutes are forwarded to all directors after each Board and committee meeting for
review, comment, and adoption.
Board Advisors
Consistent with their respective charters, the Board and its committees 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 an evaluation of individual directors.
This self-evaluation leads to a full Board discussion of the results. The evaluation process includes the
following:
• Solicitation of Committee and Board performance assessments from each director using written
appraisals followed by individual interviews;
• Informal discussion with the Lead Director and each director as part of the evaluation;
• Review of the qualifications and performance of all Board members in connection with their
renomination to the Board;
• The Nominating and Governance Committee, the Audit Committee, and the Compensation and
Human Resources Committee each conduct an annual self-evaluation of their performance and
procedures, including the adequacy of their committee charters; and
• In concluding its self-evaluation, the Board meets in executive session to review and discuss the
annual evaluation results.
Board Compensation and Share Ownership
Non-employee director compensation consists of a cash retainer and an award of deferred stock
units. A majority of the directors’ annual compensation is provided as equity. This component reflects
the Board’s belief that director compensation should be tied to the performance of Tyco’s common
shares. The Compensation and Human Resources Committee, jointly with the Nominating and
Governance Committee, periodically reviews the directors’ compensation and recommends changes as
appropriate. In addition, the compensation consultant independently engaged by the Compensation and
8 2007 Proxy Statement