ADT 2007 Annual Report Download - page 51

assistance payments for New York State and City Income Tax on his Tyco-source compensation
pursuant to his employment contract. All named executive officers participating in our executive
life and long-term disability programs receive tax gross-up payments on the imputed income for
the costs associated with their participation in such programs.
In determining compensation packages for our Senior Officers, the Compensation Committee
seeks to strike an appropriate balance between fixed and variable compensation and between annual
and long-term compensation. We believe that making a significant portion of our named executive
officers’ compensation variable and long-term supports our executive compensation philosophy, as these
forms of compensation primarily depend on performance. At the same time, we emphasize stock-based
compensation to allow those most accountable for our long-term success to acquire and hold Company
stock.
Base Salary
Base salaries for our Senior Officers are reviewed annually by both the Compensation Committee
and the full Board. However, base salary adjustments generally occur at intervals ranging from 12 to
24 months, depending on the role of the Senior Officer, the relationship of his or her salary to market
pay levels and internal pay equity considerations. Mr. Breen’s base salary is contractually set at a
minimum of $1.5 million pursuant to his employment agreement. Mr. Breen last received a base salary
increase in 2006. Decisions regarding base salaries for Mr. Breen and the other named executive
officers typically are based on the following factors:
• individual performance;
• Company or business unit performance, as applicable;
• any increase in responsibilities or span of control;
• competitive data from our peer group;
• criticality of the individual’s role in achieving Company objectives; and
• each individual’s potential for advancement.
During its annual reviews of base salaries in fiscal year 2007, the Board approved a base salary
increase for Mr. Coughlin from $750,000 to $800,000, representing an annualized increase of
approximately 2.9% since he was hired in March 2005. The Board approved this increase after
considering Mr. Coughlin’s performance and leadership since joining Tyco; his efforts in connection
with the Separation and the restructuring of our businesses; the base salaries paid to similarly situated
executives in our pre-Separation peer group; and the base salaries paid to our Chief Executive Officer
and other Senior Officers.
The Board also approved a base salary increase for Mr. Davidson from $414,000 to $430,000,
representing an annualized increase of approximately 2.7% since the date of his last base salary
adjustment. The Board approved the increase after considering Mr. Davidson’s performance; the
progress made by the Company in implementing internal controls across the organization;
Mr. Davidson’s contributions in the development of the Controller’s organization; his assistance in the
preparation of Tyco Electronics and Covidien for public status in connection with the Separation; the
base salaries paid to similarly situated executives identified by market data; and the base salaries paid
to our CFO and other Senior Officers.
Finally, the Board approved a base salary increase for Mr. Gursahaney from $500,000 to $560,000,
representing an annualized increase of approximately 12% since his last base salary adjustment. The
Board approved the increase as a result of his expanded responsibilities as the new President of ADT
Worldwide; his leadership and contributions to the Separation and the restructuring of our remaining
2008 Proxy Statement 31