ADT 2007 Annual Report Download - page 60

Working with its consultant, the Compensation Committee chose the total shareholder return metric
because it considered it a critical performance indicator, could easily be implemented starting with the
first trading day after the Separation, and did not require the establishment of financial goals that were
indeterminable in the months prior to the Separation. The Compensation Committee chose to compare
our performance with the performance of the S&P 500 Industrials companies because this group
represented an established index that investors were likely to rank our performance against and was of
sufficient size to provide for robust performance comparisons.
Executive Benefit Plans and Other Elements of Compensation
All of our named executive officers are eligible to participate in benefit plans that are available to
substantially all of our other U.S. employees. These benefit programs include Tyco’s tax-qualified
401(k) Retirement Savings and Investment Plans (‘‘RSIPs’’) and its medical insurance, dental insurance,
life insurance, long-term disability and long-term care plans. The retirement programs at Tyco do not
include active defined benefit plans for our named executive officers or for other U.S. executives,
except that Mr. Breen is entitled to pension benefits under his employment agreement. Besides the
plans that are available to substantially all of its U.S. employees, Tyco offers additional benefits to its
executive officers. We believe these additional benefits are competitive and consistent with our overall
compensation philosophy. They are designed to ensure that we can effectively retain our executive
officers and compete for new talent while constraining costs and administrative burdens. These
additional benefits primarily consist of:
• Tyco’s Supplemental Savings and Retirement Plan (the ‘‘SSRP’’);
• supplemental insurances benefits (executive life, disability and long-term care);
• the cash perquisite allowance program; and
• the use of the corporate aircraft.
Tyco Supplemental Savings and Retirement Plan
This plan allows for deferral of base salary and bonus. All executives earning more than $100,000
per year are eligible to participate in the SSRP. The SSRP provides our executives with the opportunity
to:
• contribute retirement savings in addition to amounts permitted under the RSIPs;
• defer compensation on a tax-deferred basis and receive tax-deferred earnings growth; and
• receive any Company contributions that were reduced under the RSIP due to IRS and plan
limits.
Other Supplemental Insurance Benefits
These programs provide life insurance, long-term disability insurance and long-term care insurance
for our Senior Officers. Our executive life insurance program typically provides a death benefit equal to
approximately two times base salary and allows the Senior Officer to elect to pay additional premiums
into the plan. Our executive disability insurance program ensures salary continuation above the
$15,000 monthly disability benefit provided by our broad-based plan if the Senior Officer becomes
disabled. Tyco also provides long-term care insurance to its Senior Officers and their spouses in the
event of chronic illness or disability. Under the program, Tyco pays the premium of the insurance for
10 years, after which it is fully paid. If the executive leaves prior to the end of the 10 year payment
period, he or she has the option to continue making payments under the policy.
In connection with the life insurance and long-term disability insurance programs, Tyco also
provides tax gross-ups on the imputed income of our Senior Officers attributable to these plans. In
addition, our Senior Officers can elect to continue to receive supplemental insurance benefits at their
expense when they leave the Company. In limited instances, Tyco is responsible for paying the
40 2008 Proxy Statement