ADT 2008 Annual Report Download - page 78

• Free cash flow;
• Free cash flow per Share;
• Revenue (or any component thereof);
• Revenue growth;
• Working capital days; or
• Subscriber attrition for security services.
In applying Performance Measures, the Committee may, in its discretion, exclude, within the
first 90 days of the Performance Cycle, unusual or infrequently occurring charges, the cumulative effect
of changes in the law, regulations or accounting treatment, and may determine at the time of grant to
exclude other items, each in accordance with GAAP (to the extent applicable) and as identified in the
financial statements, notes to the financial statements or discussion and analysis of management.
Limitation on Awards.
Under the current Plan, the maximum amount that may be paid in cash or common shares to any
one employee pursuant to Short-Term Performance Bonuses or Long Term Performance Awards for any
Performance Cycle of 12 months is $5 million. We are proposing to amend the Plan to clarify that the
maximum amount that may be paid in cash or Shares in respect of such Awards for Performance
Cycles of more than 12 month be $5 million per year, adjusted proportionally to reflect the actual
length of the Performance Cycle, and regardless of when the Award is actually paid. This adjustment
will permit payouts of more than $5 million in a 12-month period in respect of overlapping
Performance Cycles, but will continue to limit the amount that may be earned in respect of any
12-month period to $5 million.
Director Awards.
As part of the Amendment, we are proposing to change the types of equity that may be used for
Directors annual remuneration. Under the Current plan, directors receive Awards consisting of
Deferred Stock Units on the first day of the fiscal year. The value of these Awards are determined by
the Board in advance of the grant, but may not exceed $200,000, based upon the aggregate Fair Market
Value of the underlying common shares as determined on the date of grant. In the past, directors have
received an annual Deferred Stock Unit Award with a Fair Market Value equal to approximately
$120,000. As part of the Amendment, we are proposing to broaden the forms of equity that may be
used in connection with directors’ annual remuneration. We are proposing that the types of Awards
that may be used include Shares, Stock Options, Restricted Stock, Restricted Units and/or Deferred
Stock Units, or any combination thereof. This change will provide the Board with maximum flexibility
in determining what form of equity to use for director remuneration. Awards granted to directors
under the Plan will be subject to any vesting schedule that the Committee may determine and set forth
in the Award Certificate.
The Board recommends that shareholders vote FOR proposal number three.
2009 Proxy Statement 61