ADT 2010 Annual Report Download - page 61

care insurance program covers certain executives and their spouses in the event of chronic illness or
disability. Under the program, Tyco pays the long-term care premium for 10 years, after which the
insurance is fully paid. If the executive leaves prior to the end of the 10-year payment period, he or she
has the option to continue making the premium payments to maintain the coverage.
On January 1, 2010, Tyco ceased the practice of paying tax gross-ups for its senior executives on
life insurance and long-term disability insurance programs, as the Compensation Committee determined
that this benefit was not in line with best practices. Senior executives 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. Effective December 2010, the Company will no
longer make premium payments for the supplemental life, disability and long-term care benefits
described above for newly hired or promoted executives.
Cash Perquisite Allowance Plan
Our cash perquisite plan provides our named executive officers with a cash payment equal to 10%
of their annual base salary, up to a maximum annual benefit of $70,000, in lieu of more traditional
perquisite benefits. Named executive 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 executives 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 executives may use corporate aircraft or chartered aircraft for
business travel. Mr. Breen is the only executive 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. There are no gross-ups paid with respect to Mr. Breen’s personal use of aircraft.
Change in Control and Severance Benefits
We believe that our employment and severance arrangements are essential in attracting and
retaining the executive talent necessary to manage our diverse businesses, and are competitive with
those provided to executive officers at other large companies publicly traded in the U.S. Mr. Breen’s
employment agreement provides for benefits if he is terminated in connection with a change in control
or under other specified circumstances, and the information in the tables below reflects the terms of
the agreement.
For our other named executive officers, who do not have employment agreements, the Tyco
International Severance Plan for U.S. Officers and Executives (the ‘‘Severance Plan’’) and the Tyco
International Change in Control Severance Plan for Certain U.S. Officers and Executives (the ‘‘CIC
Severance Plan’’) generally govern the benefits that accrue upon termination. As described below, a
‘‘double trigger’’ is required under the CIC Severance Plan before most benefits become available to
the executives covered by that plan.
The table below summarizes the key terms and provisions of the severance plans that are currently
in effect. Refer to the ‘‘Potential Payments Upon Termination and Change in Control’’ table for the
estimated dollar value of the benefits available under the severance plans in effect as of our fiscal
year-end.
2011 Proxy Statement 53