ADT 2012 Annual Report Download - page 70

Pay Recoupment Policy
Our pay recoupment policy provides that, in addition to any other remedies available to it and subject to
applicable law, if our Board of Directors or any Committee of the Board determines that any annual or other
incentive payment, equity award or other compensation received by an executive officer resulted from any
financial result or operating metric that was impacted by the executive officer’s fraudulent or illegal conduct, the
Board or a Board Committee may recover from the executive officer that compensation it considers appropriate
under the circumstances. Our Board of Directors has the sole discretion to make any and all determinations under
this policy. We expect to update the pay recoupment policy when the regulations mandated by the Dodd-Frank
Act are implemented by the SEC.
Insider Trading Policy
The Company maintains an insider trading policy, applicable to all employees and directors. The policy
provides that the Company’s personnel may not buy, sell or engage in other transactions in the Company’s stock
while aware of material non-public information; buy or sell securities of other companies while aware of material
non-public information about those companies that they become aware of as a result of business dealings
between the Company and those companies; disclose material non-public information to any unauthorized
persons outside the Company; or engage in transactions in puts, calls, cashless collars, options or similar rights
and obligations involving the Company’s securities, other than the exercise of any Company-issued stock option.
The policy also restricts trading for a limited group of Company employees (including named executive officers
and directors) to defined window periods that follow our quarterly earnings releases.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code imposes a limit of $1.0 million on the amount of
compensation that can be deducted by ADT with respect to each of our named executive officers (other than
Ms. Mikells, our Chief Financial Officer), unless the compensation over $1.0 million qualifies as
“performance-based” under federal tax law. It is our policy to structure compensation arrangements with our
executive officers to qualify as performance-based so that compensation payments are deductible under U.S.
federal tax law, unless the benefit of such deductibility is outweighed by the need for flexibility or the attainment
of other corporate objectives. Potentially non-deductible forms of compensation include payments in connection
with the recruitment and retention of key employees, base salary over $1.0 million, discretionary bonus payments
and grants of time-based RSUs.
Compensation Committee Report on Executive Compensation
The Compensation Committee has reviewed and discussed with management this Compensation Discussion
and Analysis and, based on such review and discussions, has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and this
Proxy Statement.
Submitted by the Compensation Committee of the Board of Directors:
Dinesh Paliwal, Chair
Timothy Donahue
Robert Dutkowsky
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