ADT 2006 Annual Report Download - page 53

to vested restricted shares based on the Company’s actual achievement of the performance goals for
fiscal year 2006, and the remaining two-thirds of the granted units will convert to vested restricted
shares on a 1-for-1 basis. The average price of Tyco common shares in fiscal 2006 was $26.92.
Under Mr. Breen’s leadership as the Company’s Chief Executive Officer, the Company increased
its organic revenue growth, generated strong cash flow and further strengthened its balance sheet in
2006. In addition to the progress made toward achieving the Proposed Separation, the company also
continued to refine its business mix with three acquisitions in targeted growth markets in Healthcare
and the disposition of the Printed Circuit Group business in Electronics. Also, the Company recently
received a rating of 10 out of 10 from Governance Metrics International on the Company’s corporate
governance, reflecting Mr. Breen’s and the Company’s continued commitment to the highest possible
corporate governance standards. During fiscal 2006, Mr. Breen met his goals of establishing an effective
program management office to assure the successful separation of Tyco into three separate companies;
maintaining adequate company-wide control environment and integrating Sarbanes-Oxley processes
across the three businesses; defining optimum future company structures to support all three stand
alone businesses; staffing the critical functional organizations of the three businesses with effective
public company capabilities and realizing sourcing savings of $275 million ($37 million above plan).
During 2006, the Committee reviewed a full tally sheet analysis prepared by its compensation
consultant of the CEO’s total compensation, including pension values and severance payments under
various scenarios. Based on the performance of the Company and the unique challenges that it faced
during fiscal 2006, the CEO’s performance evaluation and the Committee’s total CEO compensation
review, the Committee considers Mr. Breen’s level of total compensation, including severance and all
pension values, appropriate, and continues to value his outstanding leadership of the Company.
Certain Other Executive Officers
The remaining four Named Officers are Christopher J. Coughlin, Executive Vice President and
Chief Financial Officer, William B. Lytton, Executive Vice President and General Counsel, Juergen
Gromer, President and Vice Chairman of Tyco Electronics and Thomas Lynch, Chief Executive Officer,
Tyco Electronics. The details of the compensation for these individuals are described in the tables and
footnotes above.
Summary
We are guided by the principle that the Company’s total compensation program must not only
promote our shareholder’s long term value growth, but also be competitive, support our overall strategy
and objectives, and provide significant rewards for outstanding financial performance while establishing
clear consequences for under-performance. The Annual Incentive Plan takes into account Tyco’s overall
performance, as well as segment and business unit objectives. Annual bonus and long-term awards take
into account not only objective financial goals, but also individual performance goals and behaviors that
reinforce our core values, including accountability and the highest standards of corporate governance.
Submitted by the Compensation and Human Resources Committee:
Mackey J. McDonald, Chair
Dennis C. Blair
Rajiv L. Gupta
December 8, 2006
Compensation Committee Interlocks and Insider participation
None of our executive officers serves as a member of the board of directors or compensation
committee of any entity that has one or more of its executive officers serving as a member of our
Compensation and Human Resources Committee. In addition, none of our executive officers serves as
a member of the compensation committee of any entity that has one or more of its executive officers
serving as a member of our Board of Directors.
2007 Proxy Statement 41