ADT 2013 Annual Report Download - page 20

CORPORATE GOVERNANCE OF THE COMPANY—CONTINUED
Board Responsibilities
The Board of Directors is responsible for:
•Reviewing and approving management’s strategic and business plans.
•Reviewing and approving financial plans, objectives, and actions including significant capital allocations and expenditures.
•Monitoring management execution of corporate plans and objectives.
•Advising management on significant decisions and reviewing and approving major transactions.
•Recommending director candidates for election by stockholders.
•Appraising the Company’s major risks and overseeing that appropriate risk management and control procedures are in place.
•Selecting, monitoring, evaluating, compensating, and if necessary replacing the Chief Executive Officer and other senior executives, and
seeing that management development and succession plans are maintained for these executive positions.
•Determining the Chief Executive Officer’s compensation, and approving senior executives’ compensation, based on performance in meeting
pre-determined standards and objectives.
•Determining that procedures are in place and designed to promote compliance with laws and regulations and setting an ethical “tone at the top.”
•Determining that procedures are in place designed to promote integrity and candor in the audit of the Company’s financial statements and
operations, and in all financial reporting and disclosure.
•Designing and assessing the effectiveness of its own governance practices and procedures.
•Periodically monitoring and reviewing stockholder communications sent to the Company.
Board Leadership Structure
The Board of Directors does not have a formal policy regarding the separation of the roles of Chairman and Chief Executive Officer, as it believes
it is in the best interests of the Company to make that determination based on the direction of the Company and the membership of the Board at
a given time. The Company has had an independent Chairman since its separation from Tyco in September 2012, and the Board believes that
having separate Chairman and Chief Executive Officer positions, and having an independent director serve as Chairman, continues to be the
appropriate leadership structure for the Company at this time. The Board of Directors believes that the current leadership structure enables the
Chief Executive Officer to focus on the operations of the Company’s business, while the independent Chairman focuses on leading the Board in
its responsibilities and helping the Board ensure that management is acting in the best interests of the Company and its stockholders.
Board Risk Management
Risk is an inherent part of ADT’s business activities and risk management is critical to the Company’s innovation and success. The Company’s
compensation programs are designed to motivate employees to take appropriate levels of risks that are aligned with the Company’s strategic
goals, without encouraging or rewarding excessive risk. The Board of Directors is responsible for appraising the Company’s major risks and for
determining that appropriate risk management and control procedures are in place and that senior executives take the appropriate steps to
manage all major risks.
During fiscal year 2013, with oversight by the Board of Directors, the Company implemented its enterprise risk management (“ERM”) program
and conducted an annual risk assessment survey covering risks, among others, in finance, operations, strategy, compliance, information
technology, human resources, environment, health, safety and welfare, brand reputation, innovation, litigation, risk management, public affairs
and competition. The Board of Directors has delegated responsibility for the oversight of the ERM program to its Nominating and Governance
Committee. The Company formed the Enterprise Risk Management Council (the “ERMC”), which is chaired by the Chief Legal Officer, and
consists of other senior executives from Risk Management, Internal Audit, Internal Controls and Compliance, IT, Corporate Development,
Operations, Finance, Innovation and Technology, EHS&W and Brand. The ERMC meets periodically to (i) review the results of the annual risk
assessment survey and to identify the top enterprise risks, (ii) determine specified risk owners, (iii) monitor the implementation of mitigation plans,
and (iv) update and obtain direction from the Nominating and Governance Committee on a regular basis.
Throughout the year, the Board of Directors dedicates a portion of their meetings to review and discuss specific risks and mitigation processes in
greater detail. Oversight of certain specific risks is delegated to the following committees of the Board of Directors:
Audit Committee—oversees risks relating to the Company’s major financial risk exposures including financial statements and financial reporting
and controls, internal controls, and legal, regulatory and compliance risks, and steps taken by management to monitor and control such
exposures.
Compensation Committee—oversees risks arising from the Company’s compensation policies and programs for all employees, including non-
executive officers, and the non-management directors.
Nominating and Governance—oversees risks related to the Company’s governance structure and process as well as oversee the ERMC as
described above.
8The ADT Corporation 2014 Proxy Statement
PROXY STATEMENT