ADT 2009 Annual Report Download - page 67

In connection with the life insurance and long-term disability insurance programs, Tyco has
eliminated the payment of tax gross-ups for Senior Officers on the imputed income attributable to the
premiums paid on these plans, beginning January 1, 2010. 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 Company’s cost of the supplemental insurances for
Mr. Breen if he is terminated, as set forth in his employment agreement.
Cash Perquisite Allowance Plan
Our cash perquisite allowance plan, implemented in 2003, replaced our prior executive perquisite
programs. Those programs had provided a number of benefits to our executives (including company
cars, club dues and tax preparation services) that were costly and administratively burdensome. The
current plan provides our Senior Officers with a cash payment equal to 10% of their annual base
salary, up to a maximum annual benefit of $70,000. Senior Officers receive their cash perquisite
allowance in four quarterly installments. We do not restrict the types of expenses to which the
allowance can be applied. There are no gross-ups paid with respect to this benefit. The Compensation
Committee periodically reviews the perquisite allowance provided to Senior Officers in the context of
their total remuneration package. The Compensation Committee has determined that the plan is within
an appropriate range of competitive compensation practices of similar companies identified in industry
survey data.
Use of Corporate Aircraft
Mr. Breen and the other Senior Officers use corporate aircraft or chartered aircraft for business
travel. Mr. Breen is the only executive currently pre-approved to use Company aircraft for non-business
purposes, although other named executive officers may do so, by exception, if expressly approved by
Mr. Breen.
Role of Independent Compensation Consultant and Company Management
In carrying out its role in establishing executive compensation plans, the Compensation Committee
receives advice from an independent compensation consultant, and considers pay strategies and
recommendations prepared by the Company’s management. Under its charter, the Compensation
Committee has the sole authority to retain, compensate and terminate the independent compensation
consultants and any other advisors necessary to assist it in its evaluation of director, CEO or other
senior executive compensation. Since fiscal 2007, the Committee has retained ExeQuity LLP
(‘‘ExeQuity’’) as its independent compensation consultant. Among the responsibilities of ExeQuity are
the following:
• conducting an ongoing review and critique of Tyco’s director compensation programs;
• providing an ongoing review and critique of Tyco’s executive compensation philosophy, the
strategies associated with it, and the composition of the peer group of companies;
• preparing periodic analyses of data, including data on competitive executive compensation;
• presenting updates on market trends;
• attending regular and special meetings of the Compensation Committee; and
• regularly conducting private meetings with the Compensation Committee and/or Board without
management representatives.
In general, the independent compensation consultant develops pay strategies and recommendations
relating to the Chief Executive Officer, which the consultant provides to the Compensation Committee.
The Compensation Committee and the consultant then review and discuss all matters involving the
Chief Executive Officer’s compensation. After this review, the Compensation Committee prepares its
2010 Proxy Statement 47