ADT 2012 Annual Report Download - page 53

compensation, benefits and human resources policies and objectives; (2) determining whether our officers,
directors and employees are compensated in accordance with those policies and objectives; and (3) fulfilling the
board’s responsibilities relating to compensation of our executives. Our Compensation Committee reviews and
recommends compensation for our Chief Executive Officer to our Board of Directors. Our Compensation
Committee has direct approval authority, without the ratification of our Board of Directors, over the
compensation of our other “senior officers” (i.e., those “Section 16” officers who are required to report trading in
ADT securities under SEC rules) and “senior executives” (those executives who are not senior officers, but who
have a base salary of $350,000 or greater), including each of our named executive officers.
In anticipation of the Separation, the Tyco Compensation Committee played an active oversight role in the
design of our executive compensation programs, approving and recommending to our Compensation Committee
and our Board of Directors certain actions with respect to our post-Separation executive officers. These
recommendations, which were ratified by our Board of Directors on September 28, 2012, included the levels of
compensation of our named executive officers following the Separation, including base salary, target annual
incentive award and target long-term incentive award values, as well as the target value of one-time equity
awards granted in fiscal year 2013 (the “Founders’ Grants”, discussed in “—Elements of Compensation—Long-
Term Incentive Awards—Post-Separation Programs” below).
Tyco Programs. The Tyco Compensation Committee consisted exclusively of independent directors, who
were also “outside directors” as defined in Section 162(m) of the Code. During fiscal year 2012, the Tyco
Compensation Committee had direct approval authority over the compensation of Mr. Gursahaney. The approval
authority for compensation decisions relating to Messrs. Boerema and Edoff and Mses. Mikells and Graham was
delegated to Tyco’s Chief Executive Officer and its Senior Vice President, Human Resources. Ms. Mikells’
compensation was, however, approved by the Tyco Compensation Committee upon her hiring in April, 2012.
Role of Independent Compensation Consultant and Company Management
Post-Separation Programs. In carrying out its role in establishing executive compensation plans, our
Compensation Committee receives advice from an independent compensation consultant, and considers pay
strategies and recommendations prepared by the Company’s management. Under its charter, our Compensation
Committee has the sole authority to retain, compensate and terminate the independent compensation consultant
and any other advisors necessary to assist it in its evaluation of non-employee director, chief executive officer or
other senior executive compensation. Our Compensation Committee selected Farient Advisors LLC (“Farient”)
to be its independent compensation consultant following the Separation. Among the responsibilities of Farient
following the Separation are the following:
• providing an ongoing review and critique of our executive compensation philosophy, the strategies
associated with it, and the composition of the peer group of companies;
• preparing periodic competitive compensation analyses and conveying advice regarding ADT’s
compensation program design, pay mix, pay levels, corporate performance and goal-setting, and pay
for performance alignment;
• presenting updates on market trends;
• attending regular and special meetings of our Compensation Committee;
• regularly conducting private meetings with our Compensation Committee and/or Board without the
presence of management representatives; and
• conducting an ongoing review and critique of our director compensation programs.
Our independent compensation consultant develops pay strategies and recommendations relating to our
Chief Executive Officer, which such consultant provides to our Compensation Committee. Our Compensation
Committee and the independent compensation consultant together review and discuss all matters involving the
Chief Executive Officer’s compensation. Our Compensation Committee reviews and approves the performance
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