ADT 2007 Annual Report Download - page 45

EXECUTIVE OFFICER COMPENSATION
Compensation Discussion and Analysis
Introduction
We believe that since 2003 we have made significant progress in aligning our executive
compensation programs with our core executive compensation philosophy, which is to pay for
performance. Since 2003, we:
• structured compensation packages so that a significant portion of the total compensation of our
named executive officers is tied to performance via annual incentive compensation and
long-term equity awards;
• emphasized equity as the primary component of long-term compensation for our top executives,
ensuring that pay opportunities are linked to shareholder returns; and
• replaced an executive perquisite program that was difficult to administer and monitor with a
more efficient plan that provides for a cash benefit capped at the lower of 10% of the
executive’s salary or $70,000 per year.
Fiscal Year 2007 Compensation Analysis
Performance
Current Named Executive Officers Based(1) Fixed(2) Long-Term(3) Annual(4)
Edward D. Breen ............................. 52% 48% 68% 32%
Christoper J. Coughlin ......................... 54% 46% 69% 31%
John Evard ................................. 51% 49% 56% 44%
Carol Anthony Davidson ........................ 51% 49% 56% 44%
Naren Gursahaney ............................ 52% 48% 64% 36%
(1) Includes (i) actual performance bonus awarded under the Company’s annual incentive
compensation plan for fiscal 2007 and (ii) the grant date (November 21, 2006) fair value of stock
options awarded to the named executive officers for fiscal 2007. Excludes retention bonuses paid to
Messrs. Evard and Davidson.
(2) Includes (i) salary paid for fiscal 2007, (ii) the grant date (November 21, 2006) fair value of
restricted stock units (‘‘RSUs’’) awarded to the named executive officers for fiscal 2007 and
(iii) the value of all other compensation (benefits and perquisites), as set forth in the footnotes to
the Summary Compensation Table. Excludes retention bonuses paid to Messrs. Evard and
Davidson.
(3) Includes the grant date (November 21, 2006) fair value of stock options and RSUs awarded to the
named executive officers for fiscal 2007.
(4) Includes (i) salary paid for fiscal 2007, (ii) actual performance bonus awarded under the
Company’s annual incentive compensation plan for fiscal 2007 and (iii) the value of all other
compensation (benefits and perquisites), as set forth in the footnotes to the Summary
Compensation Table. Excludes retention bonuses paid to Messrs. Evard and Davidson.
Our ability to successfully implement our compensation philosophy depends on the governance
structure we have in place. Accordingly, we have established disciplined procedures for overseeing the
setting of performance measures and goals, long-term incentive compensation, base salaries and the
size of annual incentive awards. We have also established strict procedures for overseeing the ultimate
payout of awards. Our Board has the sole authority to approve payments made to our Chief Executive
2008 Proxy Statement 25