ADT 2010 Annual Report Download - page 60

previously granted awards, the Compensation Committee added restricted stock units to help balance
the volatility inherent in stock options and performance share units with the retentive value of
restricted stock units for key executives. For named executive officers other than the Chief Executive
Officer, performance share units and stock options each comprised 40% of the overall award and
restricted stock units comprised 20%. For the Chief Executive Officer, the Compensation Committee
determined that it was appropriate to maintain 100% alignment with shareholder returns through
performance-based equity grants. It therefore maintained the 50-50 mix of stock options and
performance share units for the fiscal 2011 grant for Mr. Breen. With respect to the 2011 performance
share units, the Compensation Committee introduced an additional performance measure to the
program design. In addition to the existing total shareholder return component, the 2011 plan includes
a cumulative earnings per share measure over the same three-year period to which the total
shareholder return measure applies. The Compensation Committee believes that this combination of
relative and absolute measure best focuses management on the measures that drive shareholder value.
Executive Benefit Plans and Other Elements of Compensation
All of our named executive officers are eligible to participate in the benefit plans that are available
to substantially all of our other U.S. employees. These benefit programs include Tyco’s tax-qualified
401(k) Retirement Savings and Investment Plans (‘‘RSIPs’’) and its medical insurance, dental insurance,
life insurance, long-term disability and long-term care plans. The retirement programs at Tyco do not
include active defined benefit plans for our named executive officers or for other U.S. executives,
except that Mr. Breen is entitled to pension benefits under his employment agreement. Besides the
plans that are available to substantially all of its U.S. employees, Tyco offers additional limited
perquisites and other benefits to its named executive officers and certain other senior executives. These
perquisites and benefits are competitive with those provided to similarly situated executives and
consistent with our overall compensation philosophy. They are designed to ensure that we can
effectively retain our named executive officers and compete for new talent while containing costs and
administrative burdens. These additional benefits primarily consist of:
• Tyco’s Supplemental Savings and Retirement Plan (the ‘‘SSRP’’);
• supplemental insurance benefits (executive life, disability and long-term care);
• a cash perquisite allowance program; and
• use of the corporate aircraft.
Tyco Supplemental Savings and Retirement Plan
This is a deferred compensation plan that permits the elective deferral of base salary and
performance-based bonus for all executives earning more than $110,000 per year. However, not all
executives eligible to participate in the SSRP elect to do so. The SSRP provides our executives with the
opportunity to:
• contribute retirement savings in addition to amounts permitted under the RSIPs;
• defer compensation on a tax-deferred basis and receive tax-deferred market-based growth; and
• receive any Company contributions that were reduced under the RSIPs due to IRS
compensation limits.
Other Supplemental Insurance Benefits
These programs provide life insurance, long-term disability insurance and long-term care insurance
to certain executives. Our executive life insurance program typically provides a death benefit equal to
approximately two times base salary, and allows the named executive officer to elect to pay additional
premiums into the plan. Our executive disability insurance program ensures salary continuation above
the $15,000 monthly benefit limit provided by our broad based disability plan. The executive long-term
52 2011 Proxy Statement