ADT 2015 Annual Report Download - page 45

COMPENSATION OF EXECUTIVE OFFICERS—CONTINUED
•newly hired Executive Officer compensation packages;
•regulatory developments and market trends related to executive
compensation;
•an evaluation of whether the pay programs encourage the
Company’s executives to take undue risks; and
•assistance with stockholder communications, including the
Company’s stockholder engagement process and the
Compensation Discussion and Analysis.
Although Farient provides advice to the Compensation Committee, it
does not determine nor recommend the exact amount or form of
compensation for the Executive Officers, including the NEOs. Farient
provides no services to the Company other than consulting services
provided to the Compensation Committee.
Prior to the retention of a compensation consultant or any other
external advisor, and from time to time as the Compensation
Committee deems appropriate, the Committee assesses the
independence of such advisor from management, taking into
consideration all factors relevant to such advisor’s independence,
including the factors specified in the NYSE listing rules.
The Compensation Committee has assessed Farient’s
independence, taking into account the following factors:
•Any other services provided by Farient to the Company;
•Farient’s fees received from ADT as a percentage of Farient’s total
revenue;
•the policies and procedures the Company has in place to prevent
conflicts of interest;
•any business or personal relationships between Farient and the
members of the Compensation Committee;
•any ownership of Company stock by the individuals of Farient
performing consulting services for the Compensation Committee;
and
•any business or personal relationship of Farient with an Executive
Officer of the Company.
Farient has provided the Compensation Committee with appropriate
assurances and confirmation of its independent status. The
Compensation Committee believes that Farient has been
independent throughout its service for the Committee and that no
conflict of interest exists between Farient and the Compensation
Committee.
Role of Management
In making determinations with respect to executive compensation, the
Compensation Committee considers input from a number of sources,
including management. Specifically, the CEO and Chief Human
Resources Officer (“CHRO”) provide insight to the Compensation
Committee on specific decisions and recommendations related to the
compensation of the NEOs. The Compensation Committee believes
that the input of the CEO and CHRO with respect to the assessment
of individual performance, succession planning and retention is a key
component of the process. The CHRO also supervises the
preparation of materials for each Compensation Committee meeting,
including individual and Company performance metrics, competitive
market data and, in conjunction with the CEO, individual
compensation recommendations for the Company’s executives. No
Executive Officer, including the CEO, has a role in determining his or
her own compensation.
Benchmarking
The Compensation Committee considers a number of factors in
determining target total compensation for each of the Company’s
Executive Officers. These factors include, but are not limited to,
position specific market data, the executive’s experience and
performance, and internal pay equity. While the Compensation
Committee strives to generally target executive compensation at the
median of the Company’s competitive market (including both
selected peer companies and the broader competitive market) in the
aggregate, it also applies discretion based upon its review of the
factors noted above to make individual compensation decisions for
the Company’s Executive Officers. In addition, the Compensation
Committee may target above-median market compensation for
specific individuals for a variety of reasons, including, but not limited
to:
•specific organizational considerations, for example, because the
role is considered critical to delivering on our overall business
strategy;
•the need for specific expertise in building new or improving upon
existing business functions, particularly in the process of hiring
candidates from external sources; and
•the retention of key executives the Company believes are critical
to its success.
Similarly, the Compensation Committee may target below-median
compensation if individuals are new in their roles or are performing a
role that is narrower than what is typical in the market.
Peer Group Development
The Compensation Committee, with the assistance of Farient, its
independent compensation consultant, has developed a peer group
for use in making compensation decisions. While the Compensation
Committee considers the executive compensation data at peer group
companies, it is not the sole factor in the decision-making process.
The Compensation Committee also considers general industry data
from third party providers in its review of compensation for the
Executive Officers. Neither the Compensation Committee nor
management has any input into the companies included in these
general industry surveys. The table below highlights how the
companies included in the peer group were chosen, and how the
compensation information related to these companies is used.
The ADT Corporation 2016 Proxy Statement 35
PROXY STATEMENT