ADT 2007 Annual Report Download - page 50

Elements of Compensation Table
Pay Element Objective Key Features
Base salary • Recognize value of individual to Tyco • Managed by reference to Career
(fixed) based on his/her role, skill, Bands.
performance, potential, contributions • Reviewed annually.
and leadership. • Pay adjustments for our named
• Attract and retain executive talent in executive officers occur every
the markets in which we compete for 12–24 months.
talent.
Annual • Reward financial performance that we • Performance goals approved annually
incentives believe benefits our business and by the Board and relate to Company
(variable) drives long-term shareholder value and/or group, division or business unit
creation. performance.
• Reward execution of operating plan • Threshold, target and maximum
and other strategic initiatives. incentive opportunities vary by Career
• Place a meaningful proportion of Band.
total cash compensation at risk. • Target incentive opportunities range
• Allow for meaningful pay from 75% to 100% of base salary
differentiation tied to performance of for our named executive officers.
individual and groups. • Payouts range from 0% to 200% of
target, with discretionary adjustments
by individual of +/-25% based on
qualitative performance measures.
Long-term • Align our executives’ interests with • Current policy is to grant 1⁄3 of awards
incentives our shareholders’ interests. in stock options, 1⁄3 in RSUs and 1⁄3 in
(fixed (RSUs) • Link a significant portion of our performance shares (based on the
and variable executives’ total pay opportunity to grant date fair value of the awards).
(stock options share price. • Stock options and RSUs vest over
and • Attract and retain talent. four years and performance shares
performance • Provide long-term accountability. vest over three years.
shares)) • Provide performance-based • Target award values generally
opportunities for wealth determined by Career Band.
accumulation. • Individual award decisions reflect
consideration of each executive’s
performance, skill, potential and
expected contributions.
Executive • Provide competitive perquisite • Generally consists of a supplemental
benefit compensation. savings and retirement plan,
programs and supplemental insurance
perquisites benefits (executive life, disability and
(fixed) long-term care), tax gross-up
payments, a cash perquisite allowance
program, and use of the corporate
aircraft.(1)
• No defined benefit plans for U.S.
executives.(1)
(1) Mr. Breen is the only executive who is pre-approved to use the Company aircraft for personal use.
Mr. Breen also receives retirement benefits under the provisions of his employment agreement. He
is the only named executive officer with a pension benefit. In addition, Mr. Breen receives tax
30 2008 Proxy Statement