ADT 2015 Annual Report Download - page 47

COMPENSATION OF EXECUTIVE OFFICERS—CONTINUED
The Compensation Committee reviews ownership levels annually.
Executive Officers are generally expected to continually make progress
toward reaching their ownership guidelines, but the Company has no set
requirement on how long an individual Executive Officer has to meet his
or her applicable guideline. In addition to the stock ownership guidelines,
the Compensation Committee maintains a policy that, until the
ownership guidelines are 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 PSUs or RSUs.
Insider Trading Policy and Equity Transaction Pre-
Approval
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; or
(3) disclosing material non-public information to any unauthorized
persons outside the Company.
Each of the Company’s Executive Officers, including the NEOs, is
required to receive the approval of the Company’s General Counsel
prior to entering into any transaction in Company securities.
Generally, trading by the Executive Officers and a limited group of
other Company employees is permitted only during announced “open
window” trading periods that follow the public release of the
Company’s periodic reports with the SEC. Employees who are
subject to trading restrictions, including the NEOs, may enter into a
trading plan under Rule 10b5-1 of the Securities Exchange Act of
1934. These trading plans may be entered into only during an open
window, and must be approved by the Company’s General Counsel.
The Company requires trading plans to include a minimum 90-day
“cooling off” period before the plan becomes effective, and the
trading plans may not be amended during their term. The NEO bears
full responsibility if he or she violates Company policy by permitting
shares to be bought or sold without pre-approval or when trading is
restricted.
Anti-Hedging Policy
The insider trading policy maintained by the Company contains a
provision which specifically prohibits all Company personnel from
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 options.
Equity Grant Practices
The Company’s practice is to grant annual equity awards to eligible
employees on or after the second trading day after financial and other
information about the Company has been widely released through a
press release, news wire or periodic 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 regular
Compensation Committee meetings.
Change in Control and Severance Benefits
The Company’s Executive Officers, including the NEOs, may be eligible
for certain benefits under either The ADT Corporation Severance Plan for
U.S. Officers and Executives (the “Severance Plan”) or The ADT
Corporation Change in Control Severance Plan (the “CIC Severance
Plan”), depending upon the circumstances leading to their termination of
service of employment with the Company. In the case of the CIC
Severance Plan, a “double trigger” is required before benefits become
available to the executives covered by that plan. We believe that the
benefits available to the NEOs under this plan are moderate in
comparison to the broader market. Details with respect to the key
provisions of the severance plans currently in effect and the payments
and benefits that would be payable under the plans are set forth in the
section titled “Potential Payments Upon Termination or Change in
Control” below.
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 this
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 operational 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 and share retention policy 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 Compensation Committee at its October 2015
meeting.
The ADT Corporation 2016 Proxy Statement 37
PROXY STATEMENT