ADT 2006 Annual Report Download - page 38

Retirement Plans
Messrs. Breen, Lytton and Dr. Gromer participate in defined benefit retirement plans (‘‘pension
plans’’) maintained by Tyco or a subsidiary, as described below.
As part of his employment agreement, Mr. Breen is provided with a Supplemental Retirement
Benefit. Commencing at age 60, or upon his retirement if after age 60, Mr. Breen will receive a
monthly annuity based upon 50% of the highest average of the sum of his monthly base salary and
actual annual bonus (spread equally over the bonus period for which it is paid) from Tyco during any
consecutive 36-month period within the 60-month period prior to his termination. This monthly annuity
is offset by any benefits provided under a defined benefit plan maintained by any prior employer and
his benefits attributable to the company match under Tyco’s 401(k) and supplemental defined
contribution plans, increased at a specified interest rate. One-half of the monthly amount will continue
to his surviving spouse in the event of his death. Mr. Breen’s normal retirement date is at age 60.
Retirement benefits are available at an earlier age but would be reduced by 0.25% for each month or
partial month that he commences payment of the benefit prior to age 60 and an additional 0.25% each
month or partial month prior to age 60 if his termination of employment is voluntary without good
reason or for cause (as such terms are defined in his employment agreement). Subject to certain
limitations, Mr. Breen may elect to receive the actuarial equivalent of his annuity in the form of a lump
sum payment or installments. Mr. Breen recently made an election to receive payment in the form of a
lump sum to commence at the later of (i) termination of employment or (ii) attainment of age 60 in
accordance with transition rules to recently enacted tax legislation.
The following table shows the estimated annualized benefits payable under the terms of
Mr. Breen’s agreement for the compensation and years of credited service shown, assuming that
benefits are paid in the form of a life and 50% survivor annuity upon normal retirement at age 60.
Years of Credited Service and Related Estimated
Annual Benefits Payable Upon Normal Retirement
Compensation 5 10 15
$3,250,000 $1,625,000 $1,625,000 $1,625,000
$3,350,000 $1,675,000 $1,675,000 $1,675,000
$3,450,000 $1,725,000 $1,725,000 $1,725,000
$3,550,000 $1,775,000 $1,775,000 $1,775,000
$3,650,000 $1,825,000 $1,825,000 $1,825,000
$3,750,000 $1,875,000 $1,875,000 $1,875,000
$3,850,000 $1,925,000 $1,925,000 $1,925,000
$3,900,000 $1,950,000 $1,950,000 $1,950,000
Mr. Breen is currently age 50 and has four years of service. The amounts in the table shown above
would be reduced by Mr. Breen’s prior employer offset of $55,000 per year at normal retirement and
the amounts attributable to the company match in Tyco’s defined contribution plans as described above.
Mr. Breen’s pension benefit, as well as his prior employer offset, vest ratably each month over his first
five years of service; he was 83% vested as of September 30, 2006. Upon a change of control,
Mr. Breen’s benefit becomes fully vested and is paid out immediately.
As part of his employment agreement, Mr. Lytton is provided with a Supplemental Retirement
Benefit. Commencing at age 62, or upon his retirement if after age 62, Mr. Lytton will receive a
monthly annuity based upon the product of 6.25% multiplied by his years of service with Tyco,
multiplied by the highest average of the sum of his monthly base salary and actual annual bonus
(spread equally over the bonus period for which it is paid) from Tyco during any consecutive 36-month
period within the 60-month period prior to his termination. This monthly annuity is offset by any
benefits provided under a defined benefit plan maintained by his immediately preceding employer and
his benefits attributable to the company match under Tyco’s 401(k) and supplemental defined
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