ADT 2014 Annual Report Download - page 46

FISCAL YEAR 2014 NEO COMPENSATION—CONTINUED
(1) Amounts reported in columns (d) through (f) represent potential annual performance bonuses that the named executive officers could have earned under the Company’s Officer Short-Term
Bonus Plan for fiscal year 2014. The range of potential payouts is based upon the Guideline Formula the Compensation Committee uses to exercise its available “negative discretion” under
the plan. The Compensation Committee established a maximum payout of 200% of target. Threshold amounts assume minimum performance levels are achieved with respect to each
performance measure. For Ms. DeVard, amounts represent the annualized threshold, target and maximum, although her actual bonus opportunity was pro-rated based upon her hire date as
discussed above.
(2) Amounts in (g) through (i) represent potential share payouts with respect to PSU awards that were made in connection with the fiscal year 2014 long-term incentive grant. PSU awards will
vest at the end of the three-year performance period, based upon the Company’s performance against its Steady State Free Cash Flow Growth and Relative Total Shareholder Return targets.
The threshold amounts shown above reflect the number of shares which would be delivered assuming that threshold attainment was met for the performance metrics. The maximum amounts
shown assume maximum attainment against performance metrics. PSUs accrue dividend equivalent units, but these equivalents are ultimately delivered to the recipient only to the extent that
the underlying awards vest based upon performance.
(3) Amounts in column (m) show the grant date fair value of the Stock Option, RSU and PSU awards granted to the NEOs. These amounts represent the fair value of the entire amount of the
award calculated in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. For grants of Stock Options, amounts are computed by multiplying the fair value of the
award (as determined under the Black-Scholes option pricing model) by the total number of options granted. For grants of RSUs, fair value is computed by multiplying the total number of
shares subject to the award by the closing price of the Company’s common stock on the date of grant. For grants of PSUs, fair value is based on a model that considers the closing price of
the Company’s common stock on the date of grant, the range of shares subject to such stock award, and the estimated probabilities of vesting outcomes. The value of PSUs included in the
table assumes target performance. However, the actual number of shares that will be delivered with respect to the PSUs will be determined based on performance through the end of the three-
year performance period.
(4) Amounts represent grants of PSUs, RSUs and/or Stock Options with respect to our annual long-term incentive plan.
(5) PSUs which vest subject to the Company’s SSFCF performance relative to target.
(6) PSUs which vest subject to the Company’s TSR performance relative to target.
(7) Amounts represent grants of RSUs and Stock Options with respect to sign-on equity awards for Mr. Geltzeiler and Ms. DeVard.
(8) Amount represents one-time grant of RSUs for Mr. Bleisch to recognize his extraordinary efforts in supporting our special governance needs in fiscal years 2013 and 2014.
The Company made its annual grant of equity for fiscal year 2014 in November 2013. The annual award for each of our NEOs (excluding
Ms. DeVard, whose grant of equity was not made as part of the annual grant process) consisted of a mix of PSUs, RSUs and Stock Options.
For Stock Options (including those granted to Ms. DeVard), the exercise price equals the closing price of the Company’s common stock on the
date of grant. Stock Options granted as part of the annual award process 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 a
three-year performance cycle, 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 granted as part
of the annual award process generally vest in equal installments over four years, accrue dividend equivalent units subject to the same vesting
restrictions as the underlying award, and do not carry voting rights.
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