ADT 2010 Annual Report Download - page 38

• the Nominating and Governance Committee, the Audit Committee and the Compensation
Committee each conduct an annual self-evaluation of their performance and procedures,
including the adequacy of their charters, and report those results to the Board.
Board Compensation and Stock Ownership
The Compensation Committee, in collaboration with the Nominating and Governance Committee,
periodically reviews the Directors’ compensation and recommends changes in the level and mix of
compensation to the full Board. See the Compensation Discussion and Analysis for a detailed
discussion of the Compensation Committee’s role in determining executive compensation.
To help align Board and shareholder interests, Directors are encouraged to own, at a minimum,
Tyco stock or stock units equal to three times their annual retainer within three years of joining the
Board. Once a Director satisfies the minimum stock ownership recommendation, the Director will
remain qualified, regardless of market fluctuations, under the guidelines as long as the Director does
not sell any stock. A majority of the Directors’ annual compensation is provided as equity, and all but
one of our current Directors hold the minimum amount of three times the annual retainer. Mr. Daniels
joined the Board in 2010 and is expected to reach the required stock ownership level on or before the
2012 Annual General Meeting of shareholders. Mr. Breen receives no additional compensation for
service as a Director.
Director Independence
To maintain its objective oversight of management, the Board consists of a substantial majority of
independent Directors. Directors meet stringent definitions of independence and for those Directors
that meet this definition, the Board will make an affirmative determination that a Director is
independent. Independent Directors:
• are not former officers or employees of the Company or its subsidiaries or affiliates, nor have
they served in that capacity within the last five years;
• have no current or prior material relationships with Tyco aside from their Directorship that
could affect their judgment;
• have not worked for, nor have any immediate family members that have worked for, been
retained by, or received anything of substantial value from the Company aside from his or her
compensation as a Director;
• have no immediate family member who is an officer of the Company or its subsidiaries or who
has any current or past material relationship with the Company;
• do not work for, nor does any immediate family member work for, consult with, or otherwise
provide services to, another publicly traded company on whose Board of Directors the Tyco
Chief Executive Officer or other member of senior management serves;
• do not serve as, nor does any immediate family member serve as, an executive officer of any
entity with respect to which the Company’s annual sales to, or purchases from, exceed 1% of
either entity’s annual revenues for the prior fiscal year;
• do not serve, nor does any immediate family member serve, on either the board of directors or
the compensation committee of any corporation that employs either a nominee for Director or a
member of the immediate family of any nominee for Director; and
• do not serve, nor does any immediate family member serve, as a director, trustee, executive
officer or similar position of a charitable or non-profit organization with respect to which the
Company or its subsidiaries made charitable contributions or payments in excess of 1% of such
30 2011 Proxy Statement