ADT 2009 Annual Report Download - page 61

Target Allocation of Fiscal 2009 Pay for Named Executive Officers
Fixed Variable
Short-term Long-term
Base All Other Comp Total (Cash-based) (share-based) Total
Breen .......................... 11% 19% 30% 13% 57% 70%
Coughlin ........................ 17% 7% 24% 16% 60% 76%
Oliver .......................... 18% 6% 24% 17% 59% 76%
Gursahaney ..................... 17% 6% 23% 17% 60% 77%
Evard .......................... 21% 8% 29% 15% 56% 71%
Fixed compensation includes base salary, supplemental benefits and perquisites (including pension
benefits for Mr. Breen). Variable compensation includes target amounts under the annual incentive
compensation program (short-term), and the grant date fair value of equity granted under the
long-term incentive compensation plan (long-term) (calculated at target value for performance share
units). The special bonuses paid to Messrs. Oliver and Gursahaney for fiscal 2009, described below, are
not included in the chart because these were not considered at the time the Compensation Committee
determined target allocation of pay.
Elements of Compensation
We use a Career Band structure to (i) increase control over compensation and benefit programs
and costs; (ii) align our programs with market practices; and (iii) provide internal pay equity across all
of our businesses. The Career Band structure incorporates four primary elements of compensation,
which the Compensation Committee believes provide it with the ability to structure pay for
performance:
• base salary;
• annual incentive compensation paid in the form of cash bonuses;
• long-term incentive compensation, which includes stock options and performance-based stock
units, and, for employees other than our Senior Officers, time-vested restricted stock units; and
• benefit programs that are specifically designed for the Company’s executive management.
The Career Band structure establishes the range of base salary levels for eight career categories. It
also establishes eligibility and target levels for annual incentive compensation, eligibility for long-term
incentive compensation, and eligibility for participation in the benefit and perquisite programs. The key
features of the four primary elements of compensation are described below.
Base Salary
Base salary recognizes the value of an individual to Tyco based on his/her role, skill, performance,
contribution, leadership and potential. It is critical in attracting and retaining executive talent in the
markets in which we compete for talent. Base salaries for our Senior Officers are managed by
reference to Career Bands, and are reviewed annually by both the Compensation Committee and the
Board. During fiscal 2009, the Company implemented a number of measures to contain costs, including
a salary freeze for many employees. As a result, no salary increases were approved for Senior Officers.
In addition, in connection with certain cost-saving measures in the Safety Products business segment,
Mr. Oliver, the president of Safety Products and Electrical & Metal Products, voluntarily participated in
a temporary pay reduction.
2010 Proxy Statement 41