ADT 2011 Annual Report Download - page 47

Board Evaluation
The Nominating and Governance Committee coordinates an annual evaluation process by the
Directors of the Board’s performance and procedures, as well as that of each committee. This
evaluation leads to a full Board discussion of the results. In connection with the evaluation process:
• the lead Director informally consults with each of the Directors;
• the qualifications and performance of all Board members are reviewed in connection with their
re-nomination to the Board;
• 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 Tyco common
stock or its equivalent. During fiscal 2011, the Board approved an increase in the ownership multiple
from three times their annual cash retainer to five times the retainer. Directors are expected to attain
these minimum stock ownership guideline within five 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 two of our current Directors
hold the minimum amount of five times the annual retainer. Both Mr. Daniels and Mr. Paliwal recently
joined the Board and each of them is expected to reach the minimum stock ownership level within the
recommended time period. 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;
2012 Proxy Statement 33