ADT 2012 Annual Report Download - page 75

Tyco made its annual grant of equity for fiscal year 2012 in October 2011. The award for each of our named
executive officers (excluding Ms. Mikells, whose grant of equity was not made as part of the annual grant)
consisted of a mix of stock options, PSUs and RSUs. For stock options, the exercise price equals the fair market
value of Tyco common stock on the date of grant. Stock options generally vest in equal installments over a
period of four years. Each option holder has 10 years to exercise his or her stock option from the date of grant,
unless forfeited earlier. PSUs generally vest at the end of three-year performance cycles, with the number of
shares delivered dependent on the achievement of applicable performance criteria. Anywhere between zero and
200% of the target number shares may be delivered based on performance. PSUs generally accrue dividend
equivalent units, which are subject to the same performance conditions applicable to the underlying award, but
do not carry voting rights. RSUs generally vest in equal installments over four years, accrue dividend equivalents
subject to the same vesting restrictions as the underlying award, and do not carry voting rights.
In general forfeiture provisions for all types of equity awards are as follows:
Event Vesting Exercisability of Options
Voluntary termination of
employment (other than retirement):
Unvested awards are forfeited as
of termination of employment.
Vested options expire on the
earlier of (i) original expiration
date, or (ii) 90 days after
termination of employment.
Involuntary termination of
employment not for cause:
Unvested awards are forfeited as
of termination of employment,
except with respect to a change-in-
control, divestiture or outsourcing
event (in which case pro rata
vesting generally applies). Certain
executives are entitled to receive
an additional year of stock option
vesting.
Vested options expire on the
earlier of (i) original expiration
date, or (ii) 90 days after
termination of employment
(except with respect to a
change-in-control, divestiture or
outsourcing event, in which case
the 90 days is extended to one to
three years).
Termination of employment for
cause:
Unvested awards are immediately
forfeited as of termination of
employment.
Vested options are immediately
cancelled upon termination of
employment.
Retirement (defined as termination of
employment for reasons other than
cause on or after age 55 if the sum of
age and full years of service with the
Company is at least 60):
Unvested awards that have been
granted within twelve months are
forfeited if retirement occurs less
than twelve months after the grant
date. On or after the 1st
anniversary of the grant date,
unvested awards accelerate and
vest pro rata based on the number
of months completed in the
vesting period.
Vested options expire on the
earlier of (i) original expiration
date, or (ii) three years after
termination of employment.
Disability or death: Unvested awards become fully
vested as of termination of
employment.
Vested awards expire on the
earlier of (i) original expiration
date, or (ii) three years after
termination of employment.
As discussed above under “Compensation Discussion and Analysis—Elements of Compensation—Tyco
Programs—Long-Term Incentive Awards,” on July 12, 2012 the Committee and the Board authorized the
truncation of performance periods for all outstanding PSUs in order to facilitate the completion of the Separation.
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