ADT 2009 Annual Report Download - page 74

egregious conduct, that is likely to have a materially detrimental impact on the Company and its
employees. Whether an executive’s termination is due to ‘‘Cause’’ under the CIC Severance Plan is
determined by the administrator of the CIC Severance Plan.
The CIC Severance Plan generally defines ‘‘Good Reason Resignation’’ as any retirement or
termination of employment by an executive that is not initiated by the Company and that is caused by
any one or more of the following events, provided the event occurs in the period beginning 60 days
before the change in control date and ending two years after that date:
• Without the executive’s written consent, the Company assigns the executive any duties
inconsistent in any material respect with his or her authority, duties or responsibilities, or any
other action by the Company which results in a significant diminution in such authority, duties
or responsibilities;
• Without the executive’s written consent, the Company makes a material change in the
geographic location at which the executive performs services to a location that is more than 60
miles from his or her existing principal place of employment;
• Without the executive’s written consent, the Company reduces the executive’s base compensation
and benefits, taken as a whole; or
• The Company fails to obtain a satisfactory agreement from any successor to assume and agree
to perform the Company’s obligations to the executive under the CIC Severance Plan.
If an executive remains employed for more than 150 days following the occurrence of any event set
forth above, any subsequent retirement or termination of employment by the executive that is not
initiated by the Company will not constitute a ‘‘Good Reason Resignation.’’ Whether an executive’s
termination is as a result of a ‘‘Good Reason Resignation’’ is determined by the administrator of the
CIC Severance Plan.
Pay Recoupment Policy
Tyco has a successful track record of recouping pay it considers wrongfully earned by executives.
To demonstrate our full commitment to shareholders on this issue, the Board approved a Pay
Recoupment Policy for Tyco. The policy provides that, in addition to any other remedies available to
the Company and subject to the applicable law, if the Board or any Compensation Committee of the
Board determines that any Short-Term Bonus payment, incentive payment, equity award or other
compensation received by a Senior Officer resulted from any financial result or operating metric that
was impacted by the Senior Officer’s fraudulent or illegal conduct, the Board or a Board Committee
may recover from the Senior Officer that compensation it considers appropriate under the
circumstances. The Board has the sole discretion to make any and all determinations under this policy.
Stock Ownership Guidelines
In 2003, the Board established stock ownership and share retention guidelines for all Senior
Officers. The Board believes that executives who own and hold a significant amount of Company stock
are aligned with long-term shareholder interests. Currently, 12 Senior Officers, including our five
current named executive officers, are covered by the stock ownership and retention guidelines. The
Compensation Committee reviews our Senior Officers’ compliance with our stock ownership guidelines
annually.
The stock ownership requirement for our Senior Officers ranges from two times base salary to
10 times base salary (in the case of our Chief Executive Officer). Tyco shares that count towards
meeting the stock ownership requirement include restricted stock, RSUs, DSUs, performance share
units, shares acquired through our 401(k) plan or the Employee Stock Purchase Program, and shares
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