ADT 2013 Annual Report Download - page 43

COMPENSATION OF EXECUTIVE OFFICERS—CONTINUED
Stock Ownership and Retention Guidelines
The Compensation Committee believes that requiring executives to own and hold a significant amount of Company stock aligns the executives’
interests with those of our stockholders. The Compensation Committee has established the following ownership guidelines:
Level Ownership Guideline (as a multiple of base salary)
Chief Executive Officer 6x
Other Executive Officers 3x
The Compensation Committee reviews ownership levels annually.
Executive Officers are generally expected to meet the ownership
guidelines within a number of years equal to the base salary multiple
(i.e., six years for the CEO and three years for other Executive
Officers). As of the most recent review by the Compensation
Committee (on May 8, 2013), all but two of our Executive Officers
(each of whom was hired during fiscal year 2013) either met the
guideline or were progressing towards meeting the guideline within
the prescribed number of years allowed. In addition to the ownership
guidelines, the Compensation Committee also maintains a
requirement that, until the ownership guideline is met, all Executive
Officers must retain a minimum of 75% of net (after-tax) shares
acquired through the exercise of Stock Options or the vesting of
RSUs.
Equity Grant Practices
The Company’s practice is to grant annual equity awards to eligible
employees on or after the second trading day after information about
the Company has been widely released through a press release,
news wire or report filed with the SEC. This timing ensures that annual
equity grants are made at a time when the market has the greatest
amount of information concerning the Company’s performance,
including its financial condition and results of operations, as is
reasonably possible. All other equity grants during the year, which are
generally comprised of new hire awards or other one-time grants, are
made in conjunction with the timing of Compensation Committee
meetings.
Insider Trading Policy
The Company maintains an insider trading policy, applicable to all
employees and directors, which prohibits the Company’s personnel
from: (1) buying, selling or engaging in transactions in the Company’s
securities at any time while aware of material non-public information
about the Company; (2) buying or selling 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; (3) disclosing
material non-public information to any unauthorized persons outside
the Company; or (4) engaging 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
number of Company employees (including the Executive Officers) and
the members of the Company’s Board of Directors to defined window
periods that follow the timing of the filing of the Company’s periodic
reports with the SEC.
Pay Recoupment Policy
The Company’s pay recoupment policy provides that, in addition to
any other remedies available to it and subject to applicable law, the
Company may recover any incentive compensation (whether in the
form of cash or equity) paid by the Company to any Executive Officer
that resulted from any financial result or operating metric that was
impacted by the Executive Officer’s fraudulent or illegal conduct. Our
Board of Directors has the sole discretion to make any and all
determinations under this policy. The Compensation Committee
periodically reviews the policy to determine whether any changes are
warranted.
Risk Mitigation in Compensation Program
Design
The Company’s compensation programs are designed to motivate
employees to take appropriate levels of risk that are aligned with the
Company’s strategic goals, without encouraging or rewarding
excessive risk. Among the program features which balance and
guard against excessive risk-taking include:
•A mix of compensation components (fixed and variable pay,
annual and long-term incentives, cash and equity) that encourage
a focus on both the short and long-term interests of the Company
and its stockholders;
•Incentive awards with payouts based upon a variety of financial
and strategic objectives, which minimizes the risk associated with
any single performance measure;
•Incentive plans that cap maximum awards and which are not
overly leveraged;
•Stock ownership guidelines that align executive and stockholder
interests;
•A pay recoupment policy designed to deter excessive risk-taking;
and
•An annual risk assessment of the Company’s compensation
programs by the Compensation Committee.
The Company has concluded that its compensation programs and
policies are not reasonably likely to have a materially adverse effect on
the Company. This conclusion is based on a risk assessment that
was performed by management in conjunction with Farient and
presented to and reviewed with the Committee at its September
2013 meeting.
The ADT Corporation 2014 Proxy Statement 31
PROXY STATEMENT