ADT 2008 Annual Report Download - page 47

Chief Executive Officer’s compensation, evaluates his performance in light of those goals and
objectives, and, based upon this evaluation, recommends his compensation for approval by the
independent members of the Board.
With respect to the Company’s other Senior Officers and employees, it is the Chief Executive
Officer and the Senior Vice President, Human Resources and Internal Communications, who develop
the pay strategies and recommendations, which the Compensation Committee then reviews and
discusses. However, the authority to approve those strategies and recommendations resides with
different parties according to the employee’s level. For Senior Officers, decisions must be approved by
the independent members of the Board, subject to the Compensation Committee’s authority regarding
performance measures. For employees below the level of Senior Officer, the Board has granted the
Chief Executive Officer and his designees the authority to approve pay actions. However, the
Compensation Committee is responsible for approving actions related to other aspects of these
employee’s compensation, such as the size of bonus pools, annual incentive plan performance goals,
equity award design, equity value ranges and share pools.
Tally Sheets and Composite Pay Mix Analysis
The Compensation Committee assesses all components of pay when evaluating pay decisions for
the Company’s Senior Officers, including the named executive officers. The Committee bases its
assessment on tally sheets prepared by Company management for each officer. Tally sheets identify the
value of each pay element, including base salary, annual bonus, sign-on or other cash payments,
long-term incentives, and benefit and perquisite payments. The tally sheets help the Committee
understand the effect that changing any pay element will have on the total pay provided to each
executive, and the effect that changing core elements (base salary, target bonus and share-based
compensation) will have on our competitive positioning. Tally sheets also reveal how well each pay
element is aligned with our philosophy and objectives.
The pie chart below summarizes, for the named executive officers as a group, the distribution of
total pay by pay element for fiscal 2008. This composite view is based on tally sheet information that
the Committee reviews for each individual officer during the year. The information summarized
consists of each executive’s base salary and target bonus opportunity during the fiscal year; the value of
any retention payments paid during the fiscal year; the grant date fair value of stock options and
restricted units; the grant date target value of long-term performance awards granted on July 2, 2007
(in connection with the accelerated fiscal 2008 annual equity award) and August 18, 2008 (in
connection with special awards granted to Messrs. Gursahaney and Oliver); the value of Mr. Breen’s
change in pension benefits from September 2006 to September 2007, and the value of all other
compensation provided to the executive at the end of the preceding fiscal year. In the case of all other
compensation, the previous year’s value is used because the final value is not determined until after the
end of the fiscal year during which the compensation is paid. As for the July 2007 grant, the Company
did not grant its 2008 annual equity award in fiscal 2008. Rather, the grant was accelerated to coincide
with the Separation, which occurred in the third quarter of fiscal 2007. As a result, the value of these
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