ADT 2008 Annual Report Download - page 49

Aggregate Percentage Allocation of Pay for Named Executive Officers for Fiscal 2008
Type of Pay Pay Elements % of Total Pay % of Type of Pay
Fixed Pay ..................... FY08 Base Salary 9% 43%
FY08 Cash Retention 1%
FY08 Restricted Units 26%
FY07 Change in Pension Value 3%
FY07 All Other Compensation. 4%
‘‘At risk’’ Variable Pay ............. FY08 Target Bonus 9% 57%
FY08 Performance Share Units 23%
FY08 Stock Options 25%
100%
Cash Compensation .............. FY08 Base Salary 9% 26%
Short-term Compensation FY08 Target Bonus 9%
FY08 Cash Retention 1%
FY07 Change in Pension Value 3%
FY07 All Other Compensation. 4%
Share-based Compensation ......... FY08 Stock Options 25% 74%
Long-term Compensation FY08 Performance Share Units 23%
FY08 Restricted Stock Units 26%
100%
Based on its most recent assessment of competitive pay and its tally sheet review, the
Compensation Committee determined that existing base salaries and resulting target bonus
opportunities remained appropriate for Messrs. Breen, Coughlin and Gursahaney, and that increases in
the base salaries and resulting target bonus opportunities were appropriate for Messrs. Evard and
Oliver (to $460,000 and $600,000, respectively).
Further, the Compensation Committee determined that a special award was appropriate for
Mr. Gursahaney, the leader of our ADT business segment, and Mr. Oliver, the leader of our Safety
Products and Electrical and Metals business segments. Consequently, the Committee granted each of
them an award of equity with a grant date value of $1 million. The grants were awarded to recognize
the contributions and leadership of each executive since joining Tyco, the critical importance of the
businesses they lead to Tyco’s overall success, the potential of each executive to be successful in new
leadership roles within Tyco, and the Company’s perception of their marketability. The grants consisted
of time-based stock options (50%) and RSUs (50%). The structure of the awards—including grant date
present value, mix of stock options and restricted units, and vesting requirements—was designed to
reflect the value and mix of all vested and unvested equity held by each executive. At the same time,
the grants provided retentive benefits to the Company, since the value of the awards would only be
realized by Messrs. Gursahaney and Oliver over time. The Board approved these grants in August
2008.
Executive Compensation Philosophy
The Compensation Committee believes that the Company’s executive compensation plans reflect
the philosophy set forth in the ‘‘Introduction’’ to this Compensation Discussion and Analysis. The
Committee has continued to refine the components of the executive compensation plans to recognize
both the short-term and long-term goals of the Company, and the changed environment in which the
Company now operates. For example, following the fiscal 2007 Separation, the Committee modified the
executive compensation program to better reflect Tyco’s transformation into a smaller enterprise with a
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