ADT 2012 Annual Report Download - page 69

Change in Control and Severance Benefits
The severance plans adopted and implemented by our Compensation Committee are substantially the same
as those in place at Tyco prior to the Separation. Each of our named executive officers in fiscal year 2012 was
eligible to participate in the Tyco Severance Plan for U.S. Officers and Executives (the “Tyco Severance Plan”).
In fiscal year 2012, Mr. Gursahaney was the only one of our named executive officers eligible to participate in
the Tyco Change in Control Severance Plan (the “Tyco CIC Severance Plan”). Ms. Mikells, however, would
have been eligible to receive certain benefits in accordance with the terms of the Tyco CIC Severance Plan had
there been a Change in Control, as defined under the plan, prior to Separation. These plans are the same as the
Company’s plans described in “—Elements of Compensation—Post Separation Programs—Change in Control
and Severance Benefits” above in all material respects, except that the cash benefit payable upon qualifying
terminations was as noted below:
Tyco Severance Plan: Two times base salary and two times annual
bonus target for Mr. Gursahaney.
1.5 times base salary and 1.5 times annual bonus
target for Ms. Mikells.
One times base salary and one times annual
bonus target for Messrs. Boerema and Edoff and
Ms. Graham.
Tyco CIC Severance Plan: Two times base salary and two times annual
bonus target for Mr. Gursahaney.
Messrs. Boerema and Edoff and Mses. Mikells
and Graham were not eligible to participate in
the Tyco CIC Severance Plan.(1)
(1) Ms. Mikells would have been eligible to receive a cash benefit of 1.5 times base salary and 1.5 times annual
bonus target only if she had a qualifying termination in the event of a Change in Control prior to the
Separation.
Risk Assessment of Compensation Programs
Our Compensation Committee will periodically review the risks arising from our compensation programs to
determine whether any such risks are material to us. We have determined that the structure of our compensation
programs for 2013 does not create any risks that are reasonably likely to have a material adverse effect on ADT.
Prior to the Separation, a similar review was conducted by the Tyco Compensation Committee, who determined
that the pre-Separation Tyco compensation programs did not create inappropriate or unintended material risk to
Tyco as a whole.
Stock Ownership Guidelines
Following the Separation, our Compensation Committee adopted ADT stock ownership guidelines. The
Compensation Committee believes that executives who own and hold a significant amount of Company stock are
aligned with long-term shareholder interests. The current stock ownership requirement for our executive officers
is six times base salary for Mr. Gursahaney and three times base salary for each other executive officer, including
each of our named executive officers. ADT shares that count towards meeting the stock ownership requirement
include RSUs, PSUs (at target), shares acquired through our benefit plans, and shares otherwise beneficially
owned by the executive. We generally require the executive to reach the required multiple in a period of years
equal to the multiple. In addition, our stock retention guidelines require that our executive officers retain 75% of
net (after-tax) shares acquired from the exercise of stock options or the vesting of RSUs until they attain their
target stock ownership goal. As of December 31, 2012, all of our named executive officers met or exceeded the
applicable stock ownership multiple guideline.
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