ADT 2007 Annual Report Download - page 48

Benchmarking
The Compensation Committee evaluates many factors when setting executive compensation. These
include the executive’s location on our Career Band (see ‘‘Elements of Compensation’’ below); the
relative complexity of the executive’s role within the organization; the executive’s performance and
potential for future advancement; the compensation paid by our peer group and other companies
identified by relevant market survey data; and internal pay equity considerations. When setting
compensation targets, the Compensation Committee considers executive compensation practices in our
peer group and other market sources, but it does not target the same percentile within the peer group
for each executive. Rather, it uses its judgment, the advice of its consultant, and management’s
recommendations when determining target compensation levels for executives.
Pre- and Post-Separation Benchmarking
The composition of Tyco’s peer group changed during fiscal year 2007 due to the Separation. Prior
to the Separation, Tyco’s peer group consisted of large industrial companies. In March 2007, we began
to refine our peer group to better reflect the Company after Separation, when our service business
would generate a greater percentage of our revenue and earnings. The Compensation Committee and
management concluded that a new peer group comprised of industrial companies and service-based
companies (including companies outside of our industry) would better reflect the competitive landscape
in which Tyco would be operating. The following table identifies the companies in our pre-Separation
peer group and those currently in our post-Separation peer group.
Pre-Separation Post-Separation Peer
Companies Peer Group Group
3M ................................... ឡឡ
Deere & Co. ............................ ឡ
DirecTV ............................... ឡ
Du Pont ............................... ឡ
Emerson Electric ......................... ឡឡ
FedEx ................................. ឡ
General Dynamics ........................ ឡ
General Electric ......................... ឡ
Honeywell International .................... ឡឡ
Illinois Tool Works ........................ ឡ
Ingersoll-Rand ........................... ឡឡ
IBM .................................. ឡ
ITT Industries ........................... ឡ
L-3 Communications ...................... ឡ
Johnson & Johnson ....................... ឡ
Johnson Controls ......................... ឡ
Lockheed Martin ......................... ឡ
Masco ................................. ឡ
Motorola ............................... ឡ
Procter & Gamble ........................ ឡ
Raytheon ............................... ឡ
Sprint Nextel ............................ ឡ
Textron ................................ ឡ
United Technologies ....................... ឡឡ
Waste Management ....................... ឡ
UPS .................................. ឡ
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