UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

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☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to Section 240.14a-12

ADT INC.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

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ADT INC.

1501 Yamato Road

Boca Raton, FL 33431

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

April 12, 2021

You are cordially invited to attend the 2021 Annual Meeting of Stockholders of ADT Inc. (the “Company”). The Annual Meeting of Stockholders will be held on Wednesday, May 26, 2021 at 8:30 a.m., local time, at the Farmer’s Table Event Center, 1901 N. Military Trail, Boca Raton, FL 33431 for the following purposes:

 

•

To elect James DeVries, Tracey Griffin, David Ryan and Lee Solomon to the Board of Directors of the Company (the “Board of Directors”) as Class I directors, in each case, for a term of three years expiring at the Annual Meeting of Stockholders to be held in 2024;

 

•

To conduct an advisory vote to approve the compensation of the Company’s named executive officers;

 

•

To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and

 

•

To transact such other business as may properly come before the Annual Meeting of Stockholders, or any postponement or adjournment thereof.

Holders of the Company’s common stock, par value $0.01 per share, of record at the close of business on April 1, 2021 are entitled to notice of, and to vote on all matters presented at, the Annual Meeting of Stockholders or any postponements or adjournments thereof.

Holders of the Company’s Class B common stock, par value $0.01 per share, of record at the close of business on April 1, 2021 are entitled to notice of, and to vote on all matters presented at, the Annual Meeting of Stockholders or any postponements or adjournments thereof, except for the election of directors.

We will furnish proxy materials to all of our stockholders via the Internet in order to expedite stockholders’ receipt of proxy materials while lowering the cost of delivery and reducing the environmental impact of our Annual Meeting of Stockholders.

Accordingly, we are mailing to our stockholders of record and beneficial owners a Notice of lnternet Availability of Proxy Materials, which provides instructions on how to access the attached proxy statement and our annual report to stockholders for the fiscal year ended December 31, 2020 via the Internet and how to vote online. The Notice of lnternet Availability of Proxy Materials also contains instructions on how to obtain the proxy materials in printed form.

We intend to hold our Annual Meeting of Stockholders in person. However, we are actively monitoring the coronavirus (COVID-19) pandemic. We are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting of Stockholders in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our investor relations website at https://investor.adt.com/financials/annual-reports-and-proxies/ for updated information. If you are planning to attend our meeting, please check the website prior to the meeting date. As always, we encourage you to vote your shares prior to the annual meeting.

Dated: April 12, 2021

By order of the Board of Directors

 

David Smail

Executive Vice President, Chief Legal Officer and Secretary

TABLE OF CONTENTS

 

 

 

Table of Contents

 

 

		2021 PROXY STATEMENT

SOME QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT

 

 

 

SOME QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT

 

Q:	Who is receiving these proxy materials?

 

A:

Holders of the common stock, $0.01 par value (“Common Stock”), and holders of Class B common stock, $0.01 par value (“Class B Common Stock”), of ADT Inc. (the “Company”) are receiving these proxy materials. We refer to the holders of Common Stock as our Common Stockholders. We refer to our holders of Class B Common Stock as our Class B Common Stockholders. We refer to all of our holders of Common Stock and Class B Common Stock together as ”stockholders” in the proxy materials.

 

Q:	Why did I receive these proxy materials?

 

A:

The Board of Directors (the “Board of Directors”) of the Company is soliciting proxies for our 2021 Annual Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will be held on Wednesday, May 26, 2021 at 8:30 a.m., local time, at the Farmer’s Table Event Center, 1901 N. Military Trail, Boca Raton, FL 33431. The information included in this proxy statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of the Board of Directors and our most highly paid executive officers, and other required information. Our annual report to stockholders for the fiscal year ended December 31, 2020 is available to review with this proxy statement. We are mailing a notice of the Annual Meeting (and, for those who request it, a paper copy of this proxy statement and the enclosed form of proxy) to our stockholders on or about April 12, 2021.

 

Q:	Who can vote at the Annual Meeting?

 

A:

All stockholders of record at the close of business on April 1, 2021, the record date for this year’s Annual Meeting, are entitled to attend and to vote on all items properly presented at the Annual Meeting, except that Class B Common Stockholders are not entitled to vote on the election of directors.

 

Q:	What are my voting rights?

 

A:

Each share of Common Stock is entitled to one vote on each matter properly presented at the Annual Meeting. Each share of Class B Common Stock is entitled to vote on each matter properly presented at the Annual Meeting, except for the election of directors. Shares of Class B Common Stock are voted on a one-to-one as-converted to Common Stock basis on the matters upon which the Class B Common Stockholders are entitled to vote at the Annual Meeting. At the close of business on April 1, 2021, the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting, there was an aggregate of 829,620,814 shares of common stock outstanding consisting of 774,876,289 shares of Common Stock and 54,744,525 shares of Class B Common Stock. A list of all stockholders as of the record date will be available during ordinary business hours at the Company’s principal place of business located at 1501 Yamato Road, Boca Raton, FL 33431, from the Secretary of the Company, at least 10 days before the Annual Meeting, and will also be available at the Annual Meeting.

 

Q:	Who is asking me for my vote?

 

A:	The Company is soliciting your proxy on behalf of the Board of Directors. We will pay the entire cost of this proxy solicitation, including the cost of preparing and mailing the Notice of Internet Availability of Proxy Materials and the proxy statement.

 

Q:	How will COVID-19 affect the Annual Meeting?

 

A:

As of the printing of this proxy statement, the Company is planning to hold its Annual Meeting in person, on Wednesday, May 26, 2021 at 8:30 a.m., local time, at the Farmer’s Table Event Center, 1901 N. Military Trail, Boca Raton, FL 33431. If circumstances require that we hold a virtual stockholders meeting, the Company will issue a public announcement. Please monitor the ADT Investor Relations page for the latest information at https://investor.adt.com/financials/annual-reports-and-proxies/.

 

		2021 PROXY STATEMENT		1

SOME QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT

 

 

 

Q:	How does the Board of Directors recommend that I vote?

 

A:	The Board of Directors recommends that you vote:

 

•

FOR the election of each of the director nominees, if you are a Common Stockholder;

 

•

FOR the approval of, on an advisory basis, the compensation of the Company’s named executive officers;

 

•

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and

 

•

In your discretion on such other business as may properly come before the Annual Meeting or any postponement(s) or adjournment(s) thereof, where no choice is specified.

 

Q:	What proposals will be voted on at the Annual Meeting?

 

A:	The three matters scheduled to be voted on at the Annual Meeting are:

 

1.

The election of James DeVries, Tracey Griffin, David Ryan and Lee Solomon to the Board of Directors as Class I directors, in each case, for a term of three years expiring at the Annual Meeting of Stockholders to be held in 2024;

 

2.

An advisory vote to approve the compensation of the Company’s named executive officers; and

 

3.

The ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021.

In addition, such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof may be voted on. Class B Common Stockholders are not entitled to vote upon the election of directors.

 

Q:	Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full printed set?

 

A:

In accordance with the rules of the Securities and Exchange Commission (the “SEC”), the Company is providing access to its proxy materials via the Internet. Accordingly, the Company is mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to stockholders of record and beneficial owners. All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or to request a printed set of the proxy materials. Instructions on how to access the proxy materials via the Internet or to request a printed set may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

 

Q:	Where can I view the proxy materials on the Internet?

 

A:	The Notice provides you with instructions on how to:

 

•

View proxy materials for the Annual Meeting via the Internet; and

 

•

Instruct the Company to send future proxy materials to you by email.

You can view the proxy materials for the Annual Meeting online at https://investor.adt.com/ by clicking on the dropdown menu entitled “Financials” and selecting “Annual Reports and Proxies.”

 

Q:	How do I vote?

 

A:

If you are a stockholder on the record date, you may vote by following the instructions for voting in the Notice. If you receive paper copies of these proxy materials, you can vote by completing, signing and dating the proxy card you received from us (the “Proxy Card”) and returning it in the enclosed envelope. Alternatively, you may attend the Annual Meeting and vote your shares in person.

 

2		2021 PROXY STATEMENT

SOME QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT

 

 

 

If you or your proxy wish to vote in person at the meeting, you or your proxy will need to bring valid government-issued photo identification plus:

For registered stockholders, either the (1) Notice of Internet Availability of Proxy Materials or (2) Proxy Card;

For proxies voting on behalf of a registered stockholder, (1) a valid written “legal proxy” signed by the registered stockholder naming the proxy plus (2) either the stockholder’s (i) Notice of Internet Availability of Proxy Materials or (ii) Proxy Card; or

For beneficial stockholders who hold shares through a broker/nominee or a proxy for a beneficial stockholder, (1) a written “legal proxy” signed by the broker or other nominee/firm that holds the shares naming the proxy holder voting at the meeting plus (2) either the (i) Notice of Internet Availability of Proxy Materials or (ii) Voting Instruction Form you received from your broker/nominee.

You may also vote via the Internet by following the instructions for voting in the Notice. If you vote online, by phone or by mailing in a proxy card, you or your legally appointed proxy may still attend the Annual Meeting and vote in person but, in that case, only your in-person votes will count.

 

Q:	Can I change my vote after I have delivered my proxy?

 

A:	Yes. You may change your vote at any time before voting concludes at the Annual Meeting by:

 

•

Providing another proxy, or using any of the available methods for voting, with a later date;

 

•

Notifying the Company’s Secretary in writing before the Annual Meeting that you wish to revoke your proxy; or

 

•

Voting in person at the Annual Meeting.

 

Q:	What is a quorum?

 

A:

For the purposes of the Annual Meeting, a “quorum” is a majority in voting power of the combined outstanding shares of Common Stock and Class B Common Stock owned by stockholders on the record date entitled to vote at the meeting, represented in person or by proxy. Broker non-votes (as further described below) and abstentions are counted for purposes of determining whether a quorum is present.

 

Q:	What is broker “discretionary” voting?

 

A:

Under the rules of the New York Stock Exchange (“NYSE”), brokers who have transmitted proxy materials to customers may vote the shares of customers who fail to provide voting instructions on “routine matters,” but not on “non-routine matters.” When a broker’s customer does not provide the broker with voting instructions on non-routine matters, the broker cannot vote on those matters and instead reports the number of such shares as broker “non-votes.” Broker non-votes are counted as present for the purpose of determining the presence of a quorum for the transaction of business, but they are not counted as shares voting. Thus, broker non-votes can have the effect of preventing approval of certain proposals where the number of affirmative votes, although a majority of the votes cast, does not constitute a majority of the voting power present.

Non-routine matters include the election of directors (Proposal 1) and the advisory vote to approve the compensation of the Company’s named executive officers (“NEOs”) (Proposal 2). Therefore, if you hold your shares in street name through a broker, you must cast your vote if you want it to count in respect of these non-routine matters. The ratification of the appointment of the Company’s independent registered public accounting firm is a routine matter, so brokers will have discretion to vote any uninstructed shares on that proposal (Proposal 3).

 

Q:	How are matters presented at the Annual Meeting approved?

 

A:	Directors are elected by a plurality of the votes cast by our Common Stockholders at the Annual Meeting (Proposal 1). Class B Common Stockholders are not entitled to vote on the election of directors.

The affirmative vote of the holders of a majority in voting power of the shares of Common Stock and Class B Common Stock, voting together as a single class, present in person or represented by proxy and entitled to vote at the Annual Meeting, is needed to approve the proposals to: (i) approve, on an advisory basis, the compensation of the Company’s NEOs (Proposal 2) and (ii) ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 3).

 

		2021 PROXY STATEMENT		3

SOME QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT

 

 

 

With respect to all of the aforementioned proposals, abstentions and broker non-votes will be counted as present for purposes of establishing a quorum.

Abstentions and broker non-votes will have no effect on the election of directors (Proposal 1). However, abstentions will have the effect of votes “against” (i) the proposal to approve, on an advisory basis, the compensation of the Company’s NEOs (Proposal 2) and (ii) the proposal to ratify the appointment of PwC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 3).

Brokers have discretion to vote any uninstructed shares with respect to the proposal to ratify the appointment of PwC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 3). Brokers do not have discretion to vote any uninstructed shares on (i) the election of directors (Proposal 1) and (ii) the proposal to approve, on an advisory basis, the compensation of the Company’s NEOs (Proposal 2).

 

Q:	May I vote confidentially?

 

A:	Yes. Our policy is to keep your vote confidential, except as otherwise legally required, to allow for the tabulation and certification of votes and to facilitate proxy solicitation.

 

Q:	Who will count the votes?

 

A:	A representative of Mediant, Inc. will count the votes and act as the inspector of election for the Annual Meeting.

 

Q:	What if additional matters are presented at the Annual Meeting?

 

A:

We do not know of any business to be considered at the Annual Meeting other than the proposals described in this proxy statement. If any other business is presented at the Annual Meeting, your properly executed proxy gives authority to David Smail, our Executive Vice President, Chief Legal Officer and Secretary, and to Jeffrey Likosar, our Executive Vice President, Chief Financial Officer and Treasurer, to vote on such matters at their discretion.

 

Q:	Where can I find the voting results from the Annual Meeting?

 

A:	We will announce preliminary voting results at the Annual Meeting and will publish final results in a Current Report on Form 8-K that we will file with the SEC after the date of the Annual Meeting.

 

Q:	How can I obtain information about the Company?

 

A:

A copy of our fiscal 2020 Annual Report on Form 10-K is available on our website at https://investor.adt.com/. Stockholders may also obtain a free copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, including the financial statements and the financial statement schedules, by visiting our website or by sending a request in writing to David Smail, Executive Vice President, Chief Legal Officer and Secretary, ADT Inc., 1501 Yamato Road, Boca Raton, FL 33431. Capitalized terms used in, but not defined in, this proxy statement have meanings as defined in our fiscal 2020 Annual Report on Form 10-K.

 

Q:	When are stockholder proposals due for consideration at next year’s annual meeting?

 

A:

Under SEC rules, for stockholder proposals to be considered for inclusion in the proxy statement for the 2022 Annual Meeting of Stockholders, they must be submitted in writing to our Secretary at ADT Inc., 1501 Yamato Road, Boca Raton, FL 33431, on or before December 15, 2021. In addition, our bylaws provide that for directors to be nominated or other proposals to be properly presented at the 2022 Annual Meeting of Stockholders, an additional notice of any nomination or proposal must be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. If the date of the 2022 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after such anniversary date, any such notice by the stockholder to be timely must be received by us not earlier than the close of business on the 120th day prior to the 2022 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to the 2022 Annual Meeting of Stockholders or, if the first public announcement of the date of the 2022 Annual Meeting of Stockholders is less than 100 days prior to such meeting, the 10th day following the day on which public announcement of the date of the 2022 Annual Meeting of Stockholders is first made by the Company.

 

4		2021 PROXY STATEMENT

PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

PROPOSAL 1 — ELECTION OF DIRECTORS

Directors hold office until the third succeeding annual meeting of stockholders and until the election and qualification of their successors. Under the Company’s bylaws and amended and restated certificate of incorporation, the Board of Directors can change the number of directors comprising the entire Board of Directors so long as the number is not more than 15. The Board of Directors currently consists of 12 directors.

All of the nominees are members of the current Board of Directors. If any nominee for election to the Board of Directors should be unable to accept their nomination or election as a director, which is not expected, your proxy may be voted for a substitute or substitutes designated by the Board of Directors, or the number of directors constituting the Board of Directors may be reduced in accordance with the Company’s bylaws and certificate of incorporation.

Directors will be elected by the holders of a plurality of the voting power of our Common Stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions and broker non-votes will not be counted for purposes of the election of directors. Under our amended and restated certificate of incorporation, holders of Class B Common Stock are not entitled to vote for the election of directors.

 

		The Board of Directors recommends that the stockholders vote FOR the election of the nominees for Class I directors listed below.

The term of the following four Class I directors will expire at the Annual Meeting. Messrs. DeVries, Ryan, Solomon and Ms. Griffin are the only nominees for election at the Annual Meeting for a term that will expire at the 2024 Annual Meeting of Stockholders and until each of their successors has been duly elected and qualified.

Class I Directors

 

 

 

James D. DeVries
Age: 58   Director Since: 2018   President and Chief Executive Officer   Committees: •  Executive •  Nominating and Corporate Governance		James D. DeVries is a member of our Board of Directors, and our President and Chief Executive Officer. Mr. DeVries was appointed as our President in September 2017 and as our Chief Executive Officer in December 2018. From May 2, 2016 to September 2017, Mr. DeVries served as our Executive Vice President and Chief Operating Officer. From December 2014 to May 2016, Mr. DeVries served as Executive Vice President of Brand Operations at Allstate Insurance Company, the second largest personal lines insurer in the United States. During his tenure at Allstate, Mr. DeVries led the operations organization, comprising approximately 7,000 employees in the United States, Northern Ireland and India, and was responsible for, among other things, customer care centers, outbound and inbound phone sales, procurement, technical support, life underwriting and claims, real estate, administration, and fleet management. From March 2008 to December 2014, Mr. DeVries served as Executive Vice President and Chief Administrative Officer of Allstate, where he was accountable for, among other things, real estate and administration, human resources, and procurement. Prior to joining Allstate in 2008, Mr. DeVries served in various executive and management roles at Principal Financial Group, Ameritech, Quaker Oats Company, and Andrew Corporation. Mr. DeVries is a board member of Amsted Industries Inc., a diversified global manufacturer of industrial components serving primarily the railroad, vehicular, and construction and building markets, and a past board member of the Human Resources Management Association of Chicago, the Chicago Public Library Foundation, and the Boys & Girls Clubs of Central Iowa. Mr. DeVries received a bachelor’s degree from Trinity College, which is now known as Trinity International University, a master’s degree from Loyola University, and an MBA from the Kellogg School of Management at Northwestern University.

 

		2021 PROXY STATEMENT		5

PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

Tracey R. Griffin
Age: 56   Director Since: 2018   INDEPENDENT   Committees •  Audit		Tracey R. Griffin is a member of our Board of Directors. Ms. Griffin currently serves as the Chief Financial Officer and Chief Operating Officer of Framebridge, Inc., an online custom framing brand. Prior to her position at Framebridge, Ms. Griffin served as Chief Financial Officer of Austin-based lifestyle retail brand Kendra Scott, from September 2018 to November 2019. Prior to that, Ms. Griffin served as Chief Financial Officer of PANDORA Americas, a global affordable jewelry brand, from February 2016 to September 2018, following her tenure as Chief Operating Officer from October 2014 to February 2016. In these roles at PANDORA, Ms. Griffin was responsible for implementing and overseeing strategic growth initiatives across the company, including its expansion into Latin America. Prior to that, she served as a Senior Partner at McKinsey & Company, a global management consulting firm, where she focused on retail and consumer goods clients. Ms. Griffin currently serves on the board of directors of The Children’s Place, a specialty, mall-based retailer, where she also sits on the Audit Committee. In addition, Ms. Griffin sits on the non-profit organization Partnership for a Healthier America, where she is the Chairman of the Finance and Audit Committee, and has previously served on the Board and Strategy Committee of the United Negro College Fund (UNCF). Ms. Griffin received her BS in Finance from Georgetown University and an MBA from the Stanford Graduate School of Business.

 

David C. Ryan
Age: 51   Director Since: 2016		David C. Ryan is a member of our Board of Directors and a board designee of certain investors (the “Co- Investors”) in our indirect parent entities other than Apollo Global Management, LLC, its subsidiaries, and its affiliates (“Apollo” or our “Sponsor”). Mr. Ryan has also been a manager of Prime Security Services Borrower, LLC, a Delaware limited liability company and indirect wholly owned subsidiary of the Company (“Prime Borrower”), from May 2016 to July 2019. Mr. Ryan has been an Adviser to Birchtree Fund Investments Private Limited since August 2016. Mr. Ryan retired from his position as President of Goldman Sachs Asia Pacific ex-Japan in December 2013, a position he held since the beginning of 2011. Mr. Ryan has over 22 years of experience in various senior roles at Goldman Sachs. Mr. Ryan also serves on the boards of directors of Mapletree Investments Pte Ltd. and Mapletree Oakwood Holdings, both Singapore-based real estate development, investment, capital and property management companies, and Tiga Acquisition Corp. a Singapore-based company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Mr. Ryan received his BA in Economics and Political Science from Yale University.

 

Lee J. Solomon
Age: 49   Director Since: 2016		Lee J. Solomon is a member of our Board of Directors and a designee of Apollo. He is a Partner at Apollo Private Equity, having joined in 2009. Previously, Mr. Solomon was an executive in the media industry, and prior to that, he served as a Principal at Grosvenor Park, a film finance joint venture with Fortress Investment Group. Prior to that, he was the Executive Vice President of Business Affairs for Helkon Media, a motion picture production and distribution company. Mr. Solomon also serves on the board of directors of Terrier Gamut Holdings, Inc. and Terrier Media Holdings, Inc. (d/b/a Cox Media Group. a North American broadcasting company that owns and operates television stations.), Aspen Holdco, LLC (parent of Coinstar, a fully automated network of self-service coin-counting machines), ecoATM Parent LLC, which operates used mobile phone trade-in kiosks and an on-line trade-in site, and Redwood Holdco, LLC (parent of Redbox, which operates kiosks for consumers to rent or purchase DVD and Blu-ray movies). He previously served on the board of directors of AP NMT JV Newco B.V. (parent of Endemol Shine Group, a media and entertainment company) and Mood Media Corporation, an international provider of interactive mobile marketing products. Mr. Solomon received his MBA from The Stern School of Business at New York University and graduated from the University of Rochester with a BA in Economics and Political Science.

 

6		2021 PROXY STATEMENT

PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

Class II Directors

 

 

The term of the following four Class II directors will expire at the 2022 Annual Meeting of Stockholders.

 

Andrew D. Africk
Age: 54   Director Since: 2016   INDEPENDENT   Committees •  Audit •  Compensation		Andrew D. Africk is a member of our Board of Directors. Mr. Africk has also served as a manager of Prime Borrower since its formation in July 2015 until July 2019. Mr. Africk is the founder of Searay Capital LLC, a private investment company. Mr. Africk established Searay Capital in July 2013 after 21 years leading private equity and capital markets investments for Apollo. As a Senior Partner at Apollo, Mr. Africk was responsible for investments in technology and communications, and he has over 25 years of experience financing, analyzing and investing in public and private companies. In the last five years, Mr. Africk has served on the boards of directors of public companies Suncoke Energy Inc., a raw material processing and handling company, and RPX Corporation, a provider of patent risk management services. Additionally, Mr. Africk serves on the Board of Overseers of the University of Pennsylvania School of Engineering and Applied Science. Mr. Africk graduated from UCLA with a B.A. in Economics, from the University of Pennsylvania Law School with a J.D., and from the University of Pennsylvania’s Wharton School of Business with an MBA.

 

Matthew H. Nord
Age: 41   Director Since: 2016		Matthew H. Nord is a member of our Board of Directors and a designee of Apollo. He is Co-Lead Partner at Apollo Private Equity having joined in 2003. Previously, Mr. Nord was a member of the Investment Banking division of Salomon Smith Barney Inc. Mr. Nord serves on several boards of directors, including Intrado Corporation, a global provider of technology-driven communication services, Tech Data Corporation, an information technology distribution company, and LifePoint Health, Inc., an operator of health systems in non-urban markets in the U.S. Mr. Nord also serves on the Board of Trustees of Montefiore Health System, a medical center in the Bronx, N.Y., and on the Board of Overseers of the University of Pennsylvania’s Weitzman School of Design. Mr. Nord previously served on the boards of directors of Novitex Holdings, Inc., Exela Technologies, Inc. f/k/a Novitex Holdings, Inc., a provider of comprehensive on-site outsourcing services, and Presidio, Inc., an IT solutions provider. Mr. Nord graduated summa cum laude with a B.S. in Economics from the University of Pennsylvania’s Wharton School of Business.

 

		2021 PROXY STATEMENT		7

PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

Eric L. Press
Age: 55   Director Since: 2016   Committees •  Nominating and Corporate Governance		Eric L. Press is a member of our Board of Directors and a designee of Apollo. Mr. Press is a Senior Partner at Apollo, having joined in 1998. In his time with Apollo, he has been involved in many of the firm’s investments in basic industrials, metals, lodging/gaming/leisure and financial services. Prior to joining Apollo, Mr. Press worked at the law firm of Wachtell, Lipton, Rosen & Katz, specializing in mergers, acquisitions, restructurings and related financing transactions. Prior thereto, Mr. Press was a consultant with The Boston Consulting Group, a management consulting firm focused on corporate strategy. Mr. Press also serves on the boards of directors of Gamenet Group S.p.A., an integrated gaming operator based in Italy, Apollo Commercial Real Estate Finance, Inc., a public real estate investment trust, Eagle LM5 Holdings Inc., a holding company associated with a former investment in Constellis, a global provider of risk management, security, training, and global support services, and DSB Parent L.P. (parent of LifePoint Health Inc., an operator of health systems in non-urban markets in the U.S.). He previously served on the boards of directors of Caesars Entertainment Corporation, a casino-entertainment company, Princimar Chemical Holdings, LLC, a holding company for an investment in a shipping company that operated in the chemical shipping sector, PlayAGS, Inc., a designer, manufacturer, and distributor of slot machines, and Verso Corporation, a supplier of coated papers to catalog and magazine publishers. He graduated magna cum laude from Harvard College with an AB in economics and Yale Law School, where he was a Senior Editor of the Yale Law Journal.

 

Matthew E. Winter
Age: 64   Director Since: 2018   INDEPENDENT   Committees •  Audit (Chairman)		Matthew E. Winter is a member of our Board of Directors. Mr. Winter was the President of The Allstate Corporation from January 2015 to February 2018, and prior to that, served as the President, Allstate Personal Lines for The Allstate Corporation from January 2013 to January 2015. Mr. Winter joined The Allstate Corporation in 2009 as President and Chief Executive Officer of Allstate Financial. Mr. Winter also serves on the board of directors and the Audit and Compensation Committees of H&R Block Inc., a tax preparation company, and on the board of directors and Compensation Committee and Finance, Investment & Risk Management Committee of the Hartford Financial Services Group, an investment and insurance company. Mr. Winter holds a Bachelor of Science degree from the University of Michigan, a Juris Doctor degree from the Albany Law School of Union University, and a Master of Laws degree from the University of Virginia School of Law.

 

8		2021 PROXY STATEMENT

PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

Class III Directors

 

 

The term of the following four Class III directors will expire at the 2023 Annual Meeting of Stockholders.

 

Marc. E. Becker
Age: 48   Director Since: 2016   Committees •  Compensation (Chairman) •  Executive (Chairman) •  Nominating and Corporate Governance (Chairman)		Marc E. Becker is the chairman of our Board of Directors and a designee of Apollo. Mr. Becker joined Apollo in 1996 and is a Senior Partner based in New York. Prior to joining Apollo in 1996, Mr. Becker was employed by Smith Barney Inc. within its Investment Banking division. Mr. Becker is actively involved in a number of non-profit organizations and serves as a board member of the TEAK Fellowship, a New York City based non-profit, and Park Avenue Synagogue. Previously, Mr. Becker has also served on the boards of directors of OneMain Holdings Inc., a consumer lending company, Sun Country Airlines Holdings, Inc., a U.S. airline, CEVA Holdings LLC, a supply chain management company, Pinnacle Agriculture Holdings, LLC, a holding company for an agricultural input distribution business investment, Realogy Holdings Corp., a provider of residential real estate services in the U.S., Mount Sinai Children’s Center Foundation, which provides philanthropic support for Mount Sinai and Mount Sinai Kravis Children’s Hospital, and Vantium Management L.P., a management entity for an investment in a company that acquired and serviced non-conforming residential loans. Mr. Becker graduated cum laude with a BS in Economics from the University of Pennsylvania’s Wharton School of Business.

 

Stephanie Drescher
Age: 48   Director Since: 2017		Stephanie Drescher is a member of our Board of Directors and a designee of Apollo. Ms. Drescher is a Senior Partner at Apollo, having joined in 2004, and is a member of the firm’s Management Committee. Prior to joining Apollo, Ms. Drescher was employed by JP Morgan for ten years, primarily in its Alternative Investment group. Ms. Drescher has served on the boards of directors of the JP Morgan Venture Capital Funds I and II, JP Morgan Corporate Finance Funds I and II, JP Morgan Private Investments Inc., and Allied Waste, which owned and operated solid waste collection businesses, recycling facilities, and landfills in the United States. Ms. Drescher is currently on the boards of directors of The Student Leadership Network, and the Allen Stevenson School. Ms. Drescher graduated summa cum laude, Phi Beta Kappa from Barnard College of Columbia University and earned her MBA from Columbia Business School.

 

		2021 PROXY STATEMENT		9

PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

 

Reed B. Rayman
Age: 34   Director Since: 2016   Committees •  Compensation •  Executive		Reed B. Rayman is a member of our Board of Directors and a designee of Apollo. Mr. Rayman is a Partner at Apollo, a leading global alternative investment manager, where he has worked since 2010. Mr. Rayman previously was employed by Goldman, Sachs & Co. in both its Industrials Investment Banking and Principal Strategies groups from 2008 to 2010. Mr. Rayman serves on the boards of directors of Camaro Parent LLC (parent of CareerBuilder, an employment website), Aspen Holdco, LLC (parent of Coinstar, a fully automated network of self-service coin-counting machines), EcoATM Parent, LLC, which operates used mobile phone trade-in kiosks and an on-line trade-in site, Sherwood Holdings I, Inc. (parent of Shutterfly, an e-commerce platform and manufacturer of personalized photo based products) and Redwood Holdco, LLC (parent of Redbox, which operates kiosks for consumers to rent or purchase DVD and Blu-ray movies). He previously served on the boards of directors of Mood Media Corporation and Verso Corporation. Mr. Rayman holds a B.A. in Economics from Harvard University.

 

Sigal Zarmi
Age: 57   Director Since: 2021   INDEPENDENT		Sigal Zarmi is a member of our Board of Directors. Ms. Zarmi is currently Managing Director, International Chief Information Officer and Global Head of Transformation at Morgan Stanley. In that capacity, Ms. Zarmi is charged with setting the vision, strategy and execution for driving an agile culture, innovation and digital transformation in cyber, data and technology across Morgan Stanley. As International Chief Information Officer, she manages a diverse global technology footprint outside the U.S., optimizing the organization, platforms, systems and processes for a complex global bank. She also sits on the bank’s EMEA Operating Committee. Ms. Zarmi joined Morgan Stanley in 2018 and, prior to that, was a partner at PricewaterhouseCoopers from December 2014 to September 2018. While with PricewaterhouseCoopers, Ms. Zarmi served as Vice Chairman, Global and U.S. Chief Information Officer, where she led a global digital transformation and was instrumental in designing and implementing new innovative technologies. She began her career as a developer at Motorola. Ms. Zarmi holds an MBA from Columbia University and a B.S. in Engineering from the Technion—Israel Institute of Technology. Ms. Zarmi served on the board of Alfresco Inc., a leading digital business platform company, and as an advisory board member to each of Nutanix, a global leader in cloud software and a pioneer in hyperconverged infrastructure solutions, and Nuvo Cares, an emerging leader in maternal-fetal health through new technology, tools and practices. Ms. Zarmi also serves with the non-profit organizations Society of Information Management as a board member and as an advisory board member with Ability Beyond. Among her community commitments, Ms. Zarmi advocates for women in technology by providing mentorship to aspiring entrepreneurs and technologists.

 

10		2021 PROXY STATEMENT

CORPORATE GOVERNANCE

 

 

 

CORPORATE GOVERNANCE

Controlled Company

 

 

Our Common Stock is listed on the NYSE. As Apollo controls more than 50% of the combined voting power of the Company, we are considered a “controlled company” for the purposes of that exchange’s rules and corporate governance standards. We have availed ourselves of the “controlled company” exception under the NYSE rules, which exempts us from certain requirements, including the requirements that we have a majority of independent directors on our Board of Directors and that the compensation committee of our Board of Directors (the “Compensation Committee”) and nominating and corporate governance committee of our Board of Directors (the “Nominating and Corporate Governance Committee”) be comprised entirely of independent directors. The audit committee of our Board of Directors (the “Audit Committee”) is comprised entirely of independent members.

If at any time we cease to be a “controlled company” under the NYSE rules, the Board of Directors will take all action necessary to comply with the applicable NYSE rules, including appointing a majority of independent directors to the Board of Directors and ensuring that our Compensation Committee and our Nominating and Corporate Governance Committee are comprised entirely of independent directors, subject to a permitted “phase-in” period.

Director Independence

 

 

We have availed ourselves of the “controlled company” exception under the NYSE rules, which exempts us from certain requirements, including that we have a majority of independent directors on our Board of Directors (see “Corporate Governance—Controlled Company”). No director qualifies as independent unless the Board of Directors affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). The Board of Directors broadly considers all relevant facts and circumstances relative to independence and considers the issue not merely from the standpoint of the director, but also from the viewpoint of persons or organizations with which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships (among others). In accordance with the NYSE listing standards, the Board of Directors considers the following categorical standards of director independence, according to which independent directors:

 

•

Are not, nor have been within the last three years, an employee of the listed company, or an immediate family member is, or has been within the last three years, an executive officer, of the listed company;

 

•

Have not received, nor have an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the listed company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

 

•

(a) Are not a current partner or employee of a firm that is the listed company’s internal or external auditor; (b) do not have an immediate family member who is a current partner of such a firm; (c) do not have an immediate family member who is a current employee of such a firm and personally works on the listed company’s audit; or (d) were not, and do not have an immediate family member who was, within the last three years, a partner or employee of such a firm and personally worked on the listed company’s audit within that time;

 

•

Are not, and do not have an immediate family member who is, or has been within the last three years, employed as an executive officer of another company where any of the listed company’s present executive officers at the same time serves or served on that company’s compensation committee;

 

•

Are not a current employee, or an immediate family member is not a current executive officer, of a company that has made payments to, or received payments from, the listed company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues; and

 

		2021 PROXY STATEMENT		11

CORPORATE GOVERNANCE

 

 

 

•

Do not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the issuer or any subsidiary thereof.

The listing standards of the NYSE and the rules of the SEC require the members of a company’s audit committee to be independent. As a “controlled company,” the majority of our Board of Directors is not required to be independent.

The Board of Directors has determined that Mr. Africk, Ms. Griffin, Mr. Winter and Ms. Zarmi are our independent directors, as such term is defined by the applicable rules and regulations of the SEC and the NYSE. Our Audit Committee is comprised of Mr. Africk, Ms. Griffin and Mr. Winter, who serves as chair.

Board of Directors Leadership Structure and Board’s Role in Risk Oversight

 

 

The Board of Directors has an oversight role, as a whole and also at the committee level, in overseeing management of the Company’s risks. The Board of Directors regularly reviews information regarding our credit, liquidity, and operations, as well as the risks associated with each, and takes an active role in reviewing our enterprise risk management process. The Compensation Committee is responsible for overseeing the management of risks relating to employee compensation plans and arrangements, and the Audit Committee is responsible for overseeing the management of financial risks, which also more broadly encompasses enterprise risk management, including compliance, cybersecurity and related risks. While each committee is responsible for evaluating certain risks, and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks.

The Chairman of our Board of Directors and our Chief Executive Officer (“CEO”) are currently separate. Our Board of Directors does not currently have a policy as to whether the role of Chairman of our Board of Directors and the CEO should be separate. Our Board of Directors believes that the Company and its stockholders are best served by maintaining the flexibility to determine whether the Chairman and CEO positions should be separated or combined at a given point in time in order to provide appropriate leadership for us at that time. In addition, our Board of Directors does not currently have a policy as to whether an independent director may be appointed as lead director.

The Board of Directors understands that no single approach to board leadership is universally accepted and that the appropriate leadership structure may vary based on several factors, such as a company’s size, industry, operations, history and culture. Accordingly, our Board of Directors, with the assistance of the Nominating and Corporate Governance Committee, assesses its leadership structure in light of these factors and the current environment to achieve the optimal model for us and for our stockholders.

The composition of the Board of Directors, the tenure of the directors with the Company, the overall experience of the directors and the experience that the directors have had with the Chairman and the executive management group permit and encourage each member to take an active role in all discussions, and each member does actively participate in all substantive discussions. We believe that our current Board of Directors leadership structure is serving the Company well at this time.

Board of Directors Meetings and Committees

 

 

In fiscal 2020, the Board of Directors held eight meetings. All directors attended at least 75% of the meetings of the Board of Directors and of the committees on which they served.

Recent representative discussion topics of the Board of Directors included:

 

•

The impact of COVID-19 on team members, customers and the operations across the Company generally.

 

•

Enterprise Risk Management and associated risk mitigation efforts including the approval of a company-wide Risk Appetite Statement.

 

•

Budget in light of key strategic investment areas including with respect to the implementation of the Google partnership and internal development of a next generation platform. The Board of Directors discussed the proposed partnership and

 

12		2021 PROXY STATEMENT

CORPORATE GOVERNANCE

 

 

 

potential investment by Google in the Company during multiple meetings prior to the consummation of these transactions.

 

•

Certain capital structure and cost of funds considerations.

 

•

Mergers and acquisitions activity, including the acquisition of Defenders and various strategic tuck in acquisitions across the business.

 

•

The Company’s strategic initiatives including with respect to the acceleration of capital efficient growth, maintaining a market leadership position, brand management, go to market initiatives, innovation in products and offerings, and prioritizing the customer experience.

 

•

Reviews by each committee Chairperson of the matters discussed during their most recent committee meetings, together with any committee recommended actions for the consideration of the Board of Directors.

The Board of Directors has four committees:

 

•

Audit;

 

•

Compensation;

 

•

Executive; and

 

•

Nominating and Corporate Governance.

Each of these committees operates under written charters which are available at the Company’s website at https://investor.adt.com/ by clicking on “Governance,” “Governance Documents,” and then the name of the respective committee. Committee charters are also available in print upon the written request of any stockholder. The current committee membership of our Board of Directors is as follows:

 

Name		Audit Committee		Compensation Committee		Executive Committee		Nominating and   Corporate Governance Committee
Marc E. Becker
James D. DeVries
Andrew D. Africk
Tracey R. Griffin
Eric L. Press
Reed B. Rayman
Matthew E. Winter

 = Member              = Committee Chair

Audit Committee

 

 

In fiscal 2020, the Audit Committee held eight meetings. Our Audit Committee consists of Messrs. Winter (Chair) and Africk, and Ms. Griffin. Our Board of Directors has determined that each of Mr. Africk, Ms. Griffin and Mr. Winter qualify as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K and that each of Mr. Africk, Ms. Griffin and Mr. Winter are independent as independence is defined in Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and under the NYSE listing standards. The principal duties and responsibilities of our Audit Committee include the following:

 

•

To prepare the annual Audit Committee report to be included in our annual proxy statement;

 

•

To oversee and monitor our accounting, tax, treasury, financial reporting, external reporting, and asset-safeguarding policies and processes;

 

		2021 PROXY STATEMENT		13

CORPORATE GOVERNANCE

 

 

 

•

To oversee and monitor the integrity of our financial statements and internal controls;

 

•

To oversee and monitor the independence, retention, performance, and compensation of our independent auditor;

 

•

To oversee and monitor the performance of our internal audit function;

 

•

To discuss, oversee, and monitor policies with respect to risk assessment and risk management;

 

•

To discuss with management our information technology and cybersecurity risks and concerns on an annual basis, and more frequently if and as needed;

 

•

To oversee and monitor our compliance with legal and regulatory requirements and the implementation and effectiveness of our compliance and ethics programs;

 

•

To review and evaluate any actual or potential conflict of interest regarding a related person transaction;

 

•

To engage with management periodically regarding management’s environmental, social and governance (“ESG”) related initiatives and the use and reporting of related ESG metrics;

 

•

To conduct investigations the Committee deems appropriate; and

 

•

To provide regular reports to the Board of Directors.

The Audit Committee has the authority to retain counsel and advisors to fulfill its responsibilities and duties and to form and delegate authority to subcommittees.

Recent representative discussion topics of the Audit Committee included:

 

•

Review of accounting and disclosure implications stemming from the impact of COVID-19 and related internal control requirements of a work from home environment.

 

•

An advanced Enterprise Risk Management framework, including the recommendation to the Board of Directors of a company-wide Risk Appetite Statement.

 

•

Cybersecurity.

 

•

Disclosure and internal control implications of a strategic relationship with Google and investment by Google in the Company.

 

•

Integration considerations relating to the Company’s various M&A activities, including the Company’s acquisition of Defenders.

 

•

Tax and Treasury operations and ongoing strategies.

 

•

Compliance and ethics matters, including the approval of a charter for a newly formed Ethics and Compliance Committee.

 

•

Disclosures relating to ESG, corporate responsibility and related metrics.

 

•

Review of regulatory and legislative developments impacting the Company and industry.

Executive Committee

 

 

Our Executive Committee of the Board of Directors (the “Executive Committee”) consists of Messrs. Becker (Chair), DeVries, and Rayman. Subject to certain exceptions, the Executive Committee generally may exercise all of the powers and duties of the Board of Directors when the Board of Directors is not in session, or when it is impractical to call a special meeting of the Board of Directors, and to implement the policy decisions of the Board of Directors. The Executive Committee serves at the pleasure of our Board of Directors. This committee and any of its members may continue to serve or be changed once our Sponsor no longer owns a controlling interest in us.

 

14		2021 PROXY STATEMENT

CORPORATE GOVERNANCE

 

 

 

Compensation Committee

 

 

In fiscal 2020, the Compensation Committee held five meetings. Our Compensation Committee consists of Messrs. Becker (Chair), Rayman, and Africk. The principal duties and responsibilities of the Compensation Committee include the following:

 

•

Review and make recommendations to the Board of Directors with respect to the Company’s compensation strategy to ensure it is appropriate to attract, retain and motivate senior management and other key employees;

 

•

Review and make recommendations to the Board with respect to the executive compensation philosophy, policies and programs that in the Committee’s judgment support the Company’s overall business strategy and review and discuss, at least annually, the material risks associated with executive compensation structure, policies and programs to determine whether such structure, policies and programs encourage excessive risk-taking and evaluate compensation policies and practices that could mitigate any such risk;

 

•

On an annual basis, review and make recommendations to the Board with respect to corporate goals and objectives relevant to the compensation of the Company’s CEO, evaluate the CEO’s performance in light of these goals and objectives, and determine and approve CEO compensation based on this evaluation;

 

•

On an annual basis, review and approve corporate goals and objectives relevant to the compensation of the Company’s other executive officers, evaluate the executive officers’ performance in light of those goals and objectives, and determine executive officer compensation based on this evaluation;

 

•

Review, approve and administer the Company’s incentive compensation, equity-based and pension plans;

 

•

Review and approve any employment agreement or compensatory transaction with an executive officer of the Company, other than the CEO, involving compensation in excess of $120,000 per year;

 

•

Establish and periodically review policies concerning perquisite benefits;

 

•

Develop and recommend to the Board for approval a CEO and executive officer succession plan; and

 

•

Prepare an annual compensation committee report and take such other actions as are necessary and consistent with the governing law and our organizational documents.

Recent representative discussion topics of the Compensation Committee included:

 

•

The evaluation of compensation performance goals and incentive plan structure and related impact on risk taking by senior executives and employees.

 

•

Policies designed to foster alignment between management and our stockholders, including the approval of an Incentive Compensation Clawback Policy and Stock Ownership Guidelines.

 

•

Consideration of the appropriate peer group for compensation and talent acquisition purposes.

 

•

Corporate goals and objectives relevant to the compensation of the CEO and other executive management and consideration of long term shareholder value.

We have elected to avail ourselves of the “controlled company” exception under the NYSE rules, which exempts us from the requirement that we have a Compensation Committee comprised entirely of independent directors.

Nominating and Corporate Governance Committee

 

 

Our Board of Directors established a Nominating and Corporate Governance Committee. In fiscal 2020, the Nominating and Corporate Governance Committee held two meetings. Our Nominating and Corporate Governance Committee consists of Messrs. Becker (Chair), Press, and DeVries. The principal duties and responsibilities of the Nominating and Corporate Governance Committee include the following:

 

•

To identify candidates qualified to become directors of the Company, consistent with criteria approved by our Board of Directors;

 

		2021 PROXY STATEMENT		15

CORPORATE GOVERNANCE

 

 

 

•

To recommend to our Board of Directors nominees for election as directors at the next annual meeting of stockholders or a special meeting of stockholders at which directors are to be elected, as well as to recommend directors to serve on the committees of the Board of Directors;

 

•

To recommend to our Board of Directors candidates to fill vacancies and newly created directorships on the Board of Directors;

 

•

To review stockholder proposals affecting corporate governance and to make recommendations to the Board accordingly;

 

•

To identify best practices and recommend corporate governance principles, including giving proper attention and making effective responses to stockholder concerns regarding corporate governance;

 

•

To develop, review, and assess the adequacy of our corporate governance principles and guidelines periodically and recommend to our Board of Directors any changes deemed appropriate; and

 

•

To oversee the evaluation of our Board of Directors and its committees.

Recent representative discussion topics of the Nominating and Corporate Governance Committee included:

 

•

Director recruitment and nominations and a recommendation to appoint Ms. Sigal Zarmi to the Board of Directors.

 

•

Review of certain governance matters, such as the continued adequacy of the Board of Directors’ Governance Principles, over-boarding and ESG matters.

 

•

Assessment of the effectiveness of the Board of Directors and committees of the Board of Directors in providing proper governance and oversight.

 

•

Review of regulatory and legislative developments impacting the Company and industry.

We have elected to avail ourselves of the “controlled company” exception under the NYSE rules, which exempts us from the requirement that we have a Nominating and Corporate Governance Committee comprised entirely of independent directors.

Compensation Committee Interlocks and Insider Participation

 

 

Members of the Compensation Committee during 2020 included Messrs. Africk, Becker and Rayman. None of the members of the Compensation Committee in 2020 were, at any time during 2020 or at any other time, an officer or employee of the Company.

None of our executive officers has served as a member of the Board of Directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our Board of Directors or Compensation Committee during 2020.

Except as described in the section entitled “Certain Relationships and Related Person Transactions” below, none of the members of the Compensation Committee had or has any relationships with us that are required to be disclosed under Item 404 of Regulation S-K.

Identifying and Evaluating Candidates for the Board of Directors

 

 

In considering possible candidates to serve on the Board of Directors, the Nominating and Corporate Governance Committee will take into account all appropriate qualifications, qualities and skills in the context of the current make-up of the Board of Directors and will consider the entirety of each candidate’s credentials, including, among other things, their individual background, experience and knowledge. In addition, the Nominating and Corporate Governance Committee will evaluate each nominee according to the following criteria:

 

•

Nominees should have a reputation for integrity, honesty and adherence to high ethical standards;

 

•

Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company, and should be willing and able to contribute positively to the decision-making process of the Company;

 

•

Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board of Directors and its committees;

 

•

Nominees should have the interest and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders;

 

•

Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director; and

 

16		2021 PROXY STATEMENT

CORPORATE GOVERNANCE

 

 

 

•

Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, gender identity, sexual orientation, age, disability, political affiliation or any other basis proscribed by law. The value of diversity on the Board of Directors should be considered.

Stockholders may recommend director candidates for consideration by the Nominating and Corporate Governance Committee. To have a candidate considered by the Nominating and Corporate Governance Committee, a stockholder must submit the recommendation in writing and must include the following information:

 

•

The name and address of the stockholder, as they appear on the Company’s books and records, and evidence of the stockholder’s ownership of Company stock, including the class or series and number of shares owned and the length of time of ownership;

 

•

A description of all arrangements or understandings between the stockholder and each candidate pursuant to which the nomination is being made;

 

•

The name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a director of the Company and the person’s consent to be named as a director if nominated by the Board of Directors; and

 

•

Such other information regarding each proposed candidate required under the bylaws of the Company and as would be required to be included in a proxy statement under the rules of the SEC if such candidate had been nominated by the Board of Directors.

Each such recommendation must be sent to the Secretary of the Company at ADT Inc., 1501 Yamato Road, Boca Raton, FL 33431 and must be received within the time indicated above under “When are stockholder proposals due for consideration at next year’s annual meeting?” The Nominating and Corporate Governance Committee will evaluate stockholder recommended director candidates in the same manner as it evaluates director candidates identified by other means.

Corporate Governance Guidelines

 

 

Our Board of Directors has adopted a code of business conduct and ethics that applies to all of our directors, officers, and employees, and is intended to comply with the relevant listing requirements for a code of conduct as well as qualify as a “code of ethics” as defined by the rules of the SEC. The code of business conduct and ethics contains general guidelines for conducting our business consistent with the highest standards of business ethics. The Company also maintains an ethics hotline as set forth in our code of business conduct and ethics so that any suspected violation of our code of business conduct and ethics can be reported confidentially, without fear of reprisal. We intend to disclose future amendments to certain provisions of our code of business conduct and ethics, or waivers of such provisions applicable to any principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, and our directors, on our website at https://investor.adt.com/. The code of business conduct and ethics is made available on our website.

We have Board Governance Principles that address significant issues of corporate governance and set forth procedures by which our managers and Board of Directors carry out their respective responsibilities. The principles are available for viewing on our website at https://investor.adt.com/. We will also provide the Board Governance Principles, free of charge, to stockholders who request them. Such requests should be directed to our Secretary at ADT Inc., 1501 Yamato Road, Boca Raton, FL 33431.

Environmental, Social and Governance Initiatives

 

 

We recognize the importance of corporate responsibility and have tracked our ESG initiatives in internal annual and periodic reporting for several years. We also recently began to more formally report publicly on our corporate Environmental, Social and Governance (ESG) initiatives. For example, we have included enhanced disclosure in our 2020 Annual Report on Form 10-K and we have published to our website our 2020 SASB Index Report, which is a Sustainability Accounting Standard’s Board (SASB) aligned report that reflects certain of our ESG metrics. This report can be found on our investor relations website at https://investor.adt.com/.

 

		2021 PROXY STATEMENT		17

CORPORATE GOVERNANCE

 

 

 

Executive Sessions of Non-Management Directors

 

 

The non-management directors of the Company meet in executive sessions without management on a regular basis. Under the Company’s Board Governance Principles, the Chairman presides at such executive sessions (the “Presiding Director”). In the absence of the Presiding Director, the non-management directors will designate another director who is present to preside over such executive sessions.

Apollo Approval of Certain Matters and Rights to Nominate Certain Directors

 

 

As long as funds affiliated with or managed by Apollo beneficially own a majority of our outstanding common stock, Apollo will be able to control all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, and certain corporate transactions. See “Certain Relationships and Related Person Transactions.”

Compensation Risk Assessment

 

 

We believe that the performance goals and incentive plan structures generally established under the Company’s executive, annual and long-term incentive programs would not contribute to excessive risk taking by our senior executives or employees. The approved goals under our incentive programs are consistent with our financial operating plans and strategies, and these programs are discussed and reviewed by the Compensation Committee. The Company’s compensation systems are balanced, rewarding both short-term and long-term performance, and its performance goals are team oriented, rather than individually focused, and include measurable factors and objective criteria. The Compensation Committee is actively engaged in setting compensation systems, monitoring those systems during the year and using discretion in making rewards, as necessary. As a result of the procedures and practices described above, the Compensation Committee believes that the Company’s compensation policies and practices for its employees do not encourage risk-taking that is reasonably likely to have a material adverse effect on the Company.

Communications with the Board of Directors

 

 

Stockholders and other interested parties desiring to communicate directly with the full Board of Directors, the Audit Committee, the non-management directors as a group or with any individual director or directors may do so by sending such communication in writing, addressed to the attention of the intended recipient(s), c/o Secretary and Chief Legal Officer, ADT Inc., 1501 Yamato Road, Boca Raton, FL 33431. The Company also maintains an ethics hotline where any suspected violation of our code of business conduct and ethics can be reported confidentially. More information about the hotline can be found at https://investor.adt.com under the Governance tab. Interested parties may communicate anonymously and/or confidentially if they desire. All communications received that relate to accounting, internal accounting controls or auditing matters will be referred to the chairman of the Audit Committee unless the communication is otherwise addressed. All other communications received will be forwarded to the appropriate director or directors.

Director Attendance at Annual Meeting

 

 

The Company encourages all of our directors to attend each Annual Meeting of Stockholders. Six of our directors attended the 2020 Annual Meeting of Stockholders either remotely or in person.

 

18		2021 PROXY STATEMENT

EXECUTIVE OFFICERS

 

 

 

EXECUTIVE OFFICERS

The names of the current executive officers of the Company (and their respective ages as of the date of this proxy statement) are set forth below.

 

Name		Age		Position
James D. DeVries		58		President and Chief Executive Officer, Director
Jeffrey A. Likosar		50		Executive Vice President, Chief Financial Officer and Treasurer
James P. Boyce		64		President, Chief Business Development Officer
Daniel M. Bresingham		49		Executive Vice President, Commercial
David W. Smail		55		Executive Vice President, Chief Legal Officer and Secretary
Donald M. Young		56		Chief Information Officer and Executive Vice President, Field Operations
Harriet K. Harty		54		Senior Vice President, Chief Administrative Officer
Zachary S. Susil		38		Vice President, Controller and Chief Accounting Officer

James D. DeVries. For the biography of James D. DeVries, please see “Proposal 1—Election of Directors—Class I Directors.”

 

Jeffrey A. Likosar is our Executive Vice President, Chief Financial Officer and Treasurer. Prior to joining the Company, from February 2014 to September 2016, Mr. Likosar served as CFO of Gardner Denver, a leading global provider of high-quality industrial equipment, technologies, and services to a broad and diverse customer base through a family of highly recognized brands. Mr. Likosar was responsible for all aspects of the financial function in this role. From November 2008 to February 2014, Mr. Likosar served in various capacities at Dell Inc., a privately owned multinational computer technology company, including as Chief Financial Officer, End User Computing and Operations, and Vice President of Financial Planning and Analysis and Acquisition Integration. Prior to joining Dell, Mr. Likosar spent most of his career at GE across the Appliances, Plastics, and Aviation Divisions. His roles included Chief Financial Officer of Resins (in GE’s Plastics Division) and Chief Financial Officer of Military Systems (in GE’s Aviation Division), in addition to various other roles in the Plastics and Appliances Divisions. Mr. Likosar began his career at GE Appliances as an analyst in the Financial Management Program and holds a bachelor’s degree in Business Administration from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.

 

James P. Boyce is President, Chief Business Development Officer at ADT. Before joining ADT in January 2020, Mr. Boyce was President and CEO of Defenders, Inc. (“Defenders”), which was our largest partner and only Authorized Premier Provider at the time we acquired it in January 2020. Prior to joining Defenders in 2011, Mr. Boyce held multiple senior executive positions at Convergys Corporation, including President of Global Business Units. He also spent 20 years at Procter & Gamble, holding executive positions in General Management, and Sales and Marketing, including Vice President, Global eBusiness. Mr. Boyce earned a Bachelor of Science degree, graduating magna cum laude from Boston College Carroll School of Management.

 

Daniel M. Bresingham is our Executive Vice President, Commercial. Previously, Mr. Bresingham served as our Executive Vice President and Chief Administrative Officer from March 2018 to December 2018. From October 2016 to March 2018, Mr. Bresingham was our Executive Vice President, Chief of Staff, and Treasurer. Prior to that, Mr. Bresingham served as Chief Financial Officer of Prime Borrower from July 2015 to October 2016. From April 2010 to June 2015, Mr. Bresingham served as the Chief Financial Officer of Protection One. Prior to joining the Company, Mr. Bresingham served as Chief Financial Officer of Stanley Convergent Security Solutions from January 2007 through April 2010 and was the Controller of HSM Electronic Protection Services from November 2004 to January 2007. Mr. Bresingham also has senior management experience in the

 

		2021 PROXY STATEMENT		19

EXECUTIVE OFFICERS

 

 

 

telecommunications industry and public accounting experience from his time at Arthur Andersen and PricewaterhouseCoopers. Mr. Bresingham holds a bachelor’s degree in Accounting from the University of Illinois at Urbana-Champaign and an MBA from the University of Chicago.

 

David W. Smail is our Executive Vice President, Chief Legal Officer and Secretary. Prior to joining the Company, from August 2015 to September 2018, Mr. Smail served as Executive Vice President & Chief Legal Officer for Scientific Games Corporation, a leading developer and provider of technology-based products, systems, platforms, and services for the global gaming and lottery industries. Prior to that he held the role of Executive Vice President & General Counsel at Morgans Hotel Group, an international hospitality company, and before that was Executive Vice President and Group General Counsel of global advertising and communications services business Havas S.A. He also was previously a partner in the international law firm Hogan Lovells (previously Hogan & Hartson). Mr. Smail holds a Bachelor of Arts degree, summa cum laude, in Biology and French from Macalester College, and a Juris Doctor degree, cum laude, from Harvard Law School.

 

Donald M. Young is our Chief Information Officer and Executive Vice President, Field Operations. Previously Mr. Young was our Senior Vice President and Chief Information Officer from May 2016 to December 2018. Mr. Young served as the Chief Operating Officer and Chief Information Officer of Prime Borrower from July 2015 to May 2016, and for Protection One from June 2010 to July 2015. Mr. Young joined the alarm industry in 1988 after serving four years in the United States Air Force as a Computer Programmer Analyst. Since then, he has worked as Central Station Manager, Operations and General Manager, Corporate Director, Director of Call Center Operations, Vice President of Information Technology, Chief Information Officer and Chief Operating Officer. Mr. Young is currently President of The Monitoring Association (TMA) and past President of the Partnership for Priority Video Alarm Response (PPVAR). He is also an SSI Alarm Industry Hall of Fame member. Mr. Young holds an Associate of Science degree in Data Processing from the Community College of the Air Force and a Bachelor of Science degree in Information Technology Management from America Military University.

 

Harriet K. Harty joined ADT in July 2020 as the Chief Administrative Officer. Ms. Harty is a Senior Business Executive with a strong combination of financial acumen, operational excellence and human resources expertise. Prior to joining ADT, Ms. Harty served roughly 25 years at Allstate in various leadership roles, including as their Chief Human Resource Officer, and, just prior to ADT, served as the Executive Vice President and Chief Human Resources Officer at Sompo International. Ms. Harty also serves as an advisory board member for After School Matters and has served as a Board Member for Women Employed. She earned a Master of Business Administration in Marketing from the University of Illinois at Chicago and a Bachelor of Science in Accountancy from Northeastern Illinois University in Chicago. She is also a Certified Public Accountant.

 

Zachary S. Susil is our Vice President, Controller and Chief Accounting Officer. Mr. Susil was appointed Chief Accounting Officer in April 2019 and has served as Vice President and Controller since January 2017. Previously, Mr. Susil served as Director of External Reporting and Accounting Research and Policy for The ADT Corporation from November 2015 to December 2016 and Director of Accounting Research and Policy from March 2015 to October 2015. Mr. Susil held various accounting positions at The ADT Corporation from September 2012. Prior to joining The ADT Corporation, Mr. Susil held positions at Tyco International Ltd and Ernst & Young LLP. Mr. Susil is a Certified Public Accountant in the state of Florida and graduated from the University of Florida with both a bachelor’s and a master’s degree in Accounting.

 

20		2021 PROXY STATEMENT

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis section of the proxy statement describes in detail the Company’s executive compensation philosophy and programs, as well as the compensation decisions made by the Compensation Committee and the factors which were considered in making those decisions. This Compensation Discussion and Analysis focuses on the compensation of our named executive officers (“NEOs”) who, for fiscal year 2020, are listed below.

 

NAME		AGE		TITLE
James D. DeVries		58		President and Chief Executive Officer
Jeffrey A. Likosar		50		Executive Vice President, Chief Financial Officer and Treasurer
James P. Boyce		64		President, Chief Business Development Officer
Daniel M. Bresingham		49		Executive Vice President, Commercial
Donald M. Young		56		Chief Information Officer and Executive Vice President, Field Operations
Jamie E. Haenggi(1)		51		Executive Vice President, Chief Customer Officer since August 2020. Prior to August 2020, Senior Vice President, Chief Customer Officer.

 

(1)	Ms. Haenggi was not an executive officer at December 31, 2020. Based on her 2020 compensation, however, she would have been a NEO had she been an executive officer at such time.

Executive Compensation - Compensation Discussion and Analysis Table of Contents

 

 

 

 

		2021 PROXY STATEMENT		21

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

2020 Highlights

 

 

In an extraordinarily challenging year, our efforts and resilient business model allowed us to deliver full year 2020 results in-line with or above our pre-pandemic financial outlook.

Strong demand from our residential customers more than offset the severe impact of the COVID-19 pandemic on our commercial business. For the full year, we grew our residential net subscriptions as we capitalized on external demand catalysts and continued to drive sustainable internal improvements to our subscriber acquisition engine.

Full year U.S. Gross RMR additions totaled $52.6 million, while our interactive take-rate increased to 86%. We also passed the milestone of 3 million residential interactive customers.

 

Our focus on capital efficient growth, and the cost of acquiring subscribers, improved to a record revenue payback period of 2.2 years. This efficiency was driven by our successful consumer pricing and financing initiatives, as well as benefits from our acquisition of Defenders Holdings, Inc.

Our gross attrition improved by 30 basis points to 13.1%, as relocations across the country were less common than normal in the second and third quarters of 2020 and, importantly, our customer satisfaction was strong.

 

We also delivered on our commitment to drive strategic partnerships and alliances to expand our reach and offerings, and ultimately to better serve our customers. On the residential front we entered a long-term relationship with D.R. Horton, the nation’s largest homebuilder. In commercial, we completed the integration of our Red Hawk operations and added a number of tuck-in acquisitions to better position the business for the post-COVID-19 recovery. In mobile, we introduced the Company to a broader set of potential customers through the national rollout of our partnerships with Lyft, Inc. and Instacart. Our most transformative partnership of 2020 was with Google LLC. The foundation for this partnership is a shared vision for the future of the smart and helpful home and a steadfast commitment to our customers.

 

2020 Commitment to Drive Strategic Partnerships and Alliances
D.R. Horton
Lyft
Instacart
Google

 

22		2021 PROXY STATEMENT

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Executive Compensation Philosophy

The Company’s executive compensation program is guided by the following principles, which make up our executive compensation philosophy:

Pay for Performance. Compensation opportunities are designed to align executives’ pay with the Company’s performance and are focused on producing sustainable long-term growth.

Attract, Promote and Retain Talented Management Team. We compete for talent with other companies both smaller and larger, and both in our market and in other industries. To attract and retain executives with the experience necessary to achieve our business goals, compensation must be competitive and appropriately balanced between fixed compensation and at-risk compensation.

Align Management’s Interests with Interests of Stockholders. We believe that management should have a significant financial stake in the Company to align their interests with those of the stockholders and to encourage the creation of long-term value. Therefore, equity awards make up a substantial component of executive compensation.

Our executive compensation program has three key elements, which have been designed to reflect the above-mentioned principles: base salary, annual cash incentive compensation, and long-term equity compensation. We also provide limited perquisites and retirement benefits to our NEOs.

Prior to our initial public offering (“IPO”) in January 2018, our executive compensation program promoted direct ownership in the business, alignment of the interests of management with our Sponsor and a focus on long-term success. Prior to our IPO, each of Messrs. DeVries, Likosar, Bresingham and Young, and Ms. Haenggi had made a direct investment in Prime Security Services TopCo Parent, L.P. (“Prime TopCo LP”) and were granted profits interests under the operating agreement for Prime TopCo LP (the “LP Agreement”), 50% of which vest based on performance and the remaining 50% of which vest based on service. Following our IPO, our executive compensation program continued to have a significant equity compensation component. We have aimed to ensure that the base salary and target annual incentive levels of each NEO are competitive to appropriately retain and reward our NEOs for their ongoing service and achievements.

We believe that the design of our executive compensation program and our compensation practices support our compensation philosophy. Each year, our Compensation Committee evaluates our compensation philosophy to determine whether it should be adjusted, as well as each of the elements of our compensation program, and may make changes as it deems appropriate.

 

				WHAT WE DO				WHAT WE DO NOT DO
We align executive compensation with the interests of the Company’s stockholders				Pay clearly aligned with performance
				Executive compensation program designed to ensure majority of value is at risk
				Double-trigger change in control provisions for cash and equity awards
We design the Company’s executive compensation program to avoid excessive risk and promote sustainable growth				Annual evaluation of risk in compensation programs to ensure mitigation of undue risk
				Mix of compensation components (fixed and variable pay, short- and long-term incentives) that encourage 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
				Pay Recoupment Policy
We adhere to executive compensation best practices				Independent compensation consultant				No repricing of underwater stock options
				Reasonable post-employment/change in control provisions				No inclusion of the value of equity awards in severance calculations
				Limited perquisites				No excise tax gross-ups upon change in control
								No hedging of our stock is permitted by employees or directors

 

		2021 PROXY STATEMENT		23

 

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Process for Determining Executive Officer Compensation (including NEOs)

 

 

Role of Compensation Committee and Board of Directors

Our Compensation Committee is responsible for, among other things, overseeing our overall compensation structure, policies and programs, including assessing whether our compensation structure results in appropriate compensation levels and incentives for executive management and employees, and for reviewing the performance of and approving the compensation awarded to our executive officers and other senior officers who are subject to the filing requirements of Section 16 of the Exchange Act. In addition, our Compensation Committee is responsible for the approval of equity awards to all of our employees, including grants made to our executive officers, provided that grants to our executive officers are ratified by the full Board of Directors based upon the recommendation of the Compensation Committee, and the Board of Directors approves, pursuant to Rule 16b-3 of the Exchange Act, the exemption of such grants, acquisition of shares of our Common Stock upon settlement or exercise of such grants and subsequent dispositions of such shares of our Common Stock from liability under Section 16(b) of the Exchange Act. In addition, both the Compensation Committee and the Board of Directors review annually the corporate goals and objectives applicable to the compensation of our executive officers and, in the case of our CEO, the Board of Directors approves such goals and objectives based upon the recommendation of the Compensation Committee. The Compensation Committee also ratifies, from time to time, the authority of our CEO to approve equity grants to our employees under our Policy and Procedures for Granting Equity-Based Awards, other than to our executive officers and subject to certain other restrictions as set forth in such policy.

Role of Management

In making determinations with respect to executive compensation for executive officers, our Compensation Committee considers input from the CEO. The CEO provides insight to the Compensation Committee on specific decisions and recommendations related to the compensation of the executive officers other than himself. Our Compensation Committee believes that the input of the CEO with respect to the assessment of individual performance, succession planning and retention is a key component of the process.

Role of Independent Compensation Consultant

The Compensation Committee has the authority to retain, compensate, and terminate an independent compensation consultant and any other advisors necessary to assist in its evaluation of executive compensation.

The Board of Directors retained Pearl Meyer & Partners, LLC (“Pearl Meyer”), a compensation consulting firm, as its independent external advisor to assist it in its evaluation of executive compensation, and to provide insight and market perspective on our current compensation programs.

In selecting Pearl Meyer, the Board of Directors reviewed their independence, including the factors prescribed by the SEC, and concluded that there were no conflicts of interest that would preclude them from serving as an independent advisor to the Board. Pearl Meyer does not provide other services to us, except at the direction of our Board of Directors or Compensation Committee. We do not have any other relationships with Pearl Meyer.

Role of External Market Data

The Compensation Committee considers a number of factors in determining target total compensation for each of the Company’s executive officers (including our NEOs). 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;

 

24		2021 PROXY STATEMENT

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

•

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 Pearl Meyer, 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 our executive officers (including our NEOs). 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.

 

How Peer Group Companies are Selected		How Peer Group Data is Utilized
•  Similar or related industry sector •  Generally focused on business models that generate subscription-based recurring revenue •  Provide a technology-enabled service •  Primarily business-to-consumer (B2C) focused, although companies that are business-to-business (B2B) focused are also considered •  Generally between $2 billion and $10 billion in revenue		•  As an input in determining base salaries, annual incentive targets and long-term incentive award targets •  As an input in the design of compensation plans •  To validate whether our executive compensation program is aligned with Company performance •  To benchmark the form and mix of equity awards granted to our employees

The Compensation Committee will review the peer group periodically to determine whether any significant changes to the business conditions of the Company or any of its peers would warrant any changes to the peer group. The peer group utilized for fiscal year 2020 was:

 

Stanley Black & Decker, Inc.		Expedia Group, Inc.		Republic Services, Inc.
Frontier Communications Corporation(1)		Cintas Corporation		Sirius XM Holdings Inc.
Spotify Technology S.A.		Telephone and Data Systems, Inc.		The Brink’s Company
ServiceMaster Global Holdings, Inc.		Rollins, Inc.

 

(1)	Frontier Communication Corporation was removed from the Company’s 2021 peer group.

2020 Advisory Vote on Executive Compensation

 

 

At our 2020 Annual Meeting, over 99% of the shares voted were cast in favor of our advisory vote to approve the compensation of our NEOs.

We recognize that the business and executive compensation environments continue to evolve, and we are committed to having compensation programs and practices that support our business objectives, promote good corporate governance and align executive pay with our performance. The compensation committee will continue to consider the results from this year’s and future advisory stockholder votes regarding our executive compensation programs. See “Proposal 2—Advisory Vote to Approve the Compensation of our Named Executive Officers” for additional information.

 

		2021 PROXY STATEMENT		25

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Elements of Executive Compensation

 

 

The Company’s total direct compensation program consists of three main elements: base salary, annual cash incentives, and equity-based long-term incentives. A significant majority of our NEOs’ total direct compensation is performance-based and at risk. The Company also provides various benefit and retirement programs, as well as an annual executive physical for our NEOs (and executive officers). The table below provides an overview of the elements of the Company’s executive compensation program, a brief description of each compensation element, and the reason for inclusion in the executive compensation program.

COMPENSATION DASHBOARD

Fiscal Year 2020

Annual Total Direct Compensation

 

 

 

26		2021 PROXY STATEMENT

ECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Other Elements of Compensation

 

Benefits				Retirement Programs				Perquisites
•  To promote the health, wellness and well-being of executives   •  Includes medical, dental and disability plans   •  The NEOs are eligible to participate in the same benefit plans applicable to the Company’s employee population as a whole				•  The NEOs generally are eligible to participate in the same basic retirement plan available to the Company’s non-union employee population as a whole   •  Includes both retirement savings plan and deferred compensation plan				•  The Company generally believes that providing perquisites to our executives that are not provided to the employee population as a whole is not aligned to stockholder interests and best practices   •  The only exceptions are that our CEO is provided reimbursement of certain travel and housing expenses on a grossed up for taxes basis each calendar year and certain executives, including the NEOs, are eligible to receive an annual physical examination at the Company’s expense   •  Additional detail can be found in this section under the heading “Executive Benefits and Limited Perquisites.”

Base Salary

 

 

Each NEO is party to an employment agreement or offer letter, as applicable, that provides for a fixed base salary, subject to annual review. Base salaries may be increased, but may not be decreased. The Compensation Committee reviews base salary levels on an annual basis to determine whether the base salary level is appropriate given the NEO’s job responsibilities, experience, value to the Company, and market pay level. Base salary levels are determined by taking into consideration all elements of compensation as a whole, and based on individual position, experience, and competitive market base salaries for similar positions.

In February 2020, the Compensation Committee approved base salary increases, effective March 29, 2020, of 2.5% for each of Mr. DeVries to $1,025,000, Mr. Likosar to $666,250, Mr. Bresingham to $533,000, and Mr. Young to $533,000. Ms. Haenggi received a base salary increase of 8.7% to $500,000.

The following are the actual base salaries for each of the NEOs as of December 31, 2019 and 2020 (actual salary paid in respect of 2020 appears in the Summary Compensation Table).

 

Name		Base Salary December 31, 2019				Base Salary December 31, 2020				Increase %
James D. DeVries		$	1,000,000			$	1,025,000			2.5
Jeffrey A. Likosar		$	650,000			$	666,250			2.5
James P. Boyce		$	—			$	655,000			(i)
Daniel M. Bresingham		$	520,000			$	533,000			2.5
Donald M. Young		$	520,000			$	533,000			2.5
Jamie E. Haenggi		$	460,000			$	500,000			8.7

 

(i)	Mr. Boyce began his employment with the company on January 6, 2020.

 

		2021 PROXY STATEMENT		27

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Annual Incentive Compensation

 

 

The second component of executive officer compensation is an annual cash incentive based on Company performance. Tying a portion of total compensation to annual Company performance permits us to adjust the performance metrics each year to reflect changing objectives and to emphasize those that may be of special importance for a particular year. Through the annual incentive program, we seek to provide an appropriate amount of short-term cash compensation that is at risk and tied to the achievement of certain short-term performance goals.

For 2020, the target bonus opportunities for our NEOs were as follows:

 

Name		Target Bonus    % of Base Salary
James D. DeVries		125%
Jeffrey A. Likosar		100%
James P. Boyce		100%
Daniel M. Bresingham		100%
Donald M. Young		100%
Jamie E. Haenggi		70%

For the 2020 fiscal year, the annual incentive plan (the “2020 AIP”) was approved with a design that reflects the Company’s focus as a primarily subscriber-based business with significant recurring monthly revenues. The metrics utilized in the 2020 AIP were selected to drive results in those categories that we believed would have the most significant impact on the success of our subscriber-based business. The metrics utilized for the 2020 fiscal year, as well as the respective weightings for each metric, are set forth below.

 

Performance Metric		Weighting				Target				Actual Performance				Performance as a % of Target				Weighted Average Payout
Adjusted EBITDA ($Millions)(a)			25	%		$	2,236			$	2,199				98.4	%			18.1	%
Revenue Payback Period (including upgrades and add-ons)(b)			25	%			2.3x				2.2x				102.4	%			34.4	%
Gross RMR Additions (excluding wholesale) ($Millions)(c)			25	%		$	50.8			$	52.6				103.7	%			47.9	%
Gross Customer Revenue Attrition (excluding DIY)(d)			25	%			14.1	%			13.1	%			106.9	%			50.0	%
TOTAL																			150.4	%

 

(a)

We define Adjusted EBITDA as net income or loss adjusted for (i) interest, (ii) taxes, (iii) depreciation and amortization, including depreciation of subscriber system assets and other fixed assets and amortization of dealer and other intangible assets, (iv) amortization of deferred costs and deferred revenue associated with subscriber acquisitions, (v) share-based compensation expense, (vi) merger, restructuring, integration, and other, (vii) losses on extinguishment of debt, (viii) radio conversion costs, (ix) financing and consent fees, (x) foreign currency gains/losses, (xi) acquisition related adjustments, and (xii) other charges and non-cash items.

 

(b)

Revenue payback period measures the net subscriber acquisitions cost (SAC) incurred in the period divided by the recurring monthly revenue added during the period, and represents the approximate time, in years (rounded), required to recover our net SAC through contractual monthly recurring fees. Net subscriber acquisition cost represents the costs of acquiring new customers and installation expenditures, net of installation revenues.

 

(c)	Gross Recurring Monthly Revenue (RMR) generated in the period by contractual recurring fees for monitoring and other recurring services provided to our customers, excluding contracts monitored but not owned.

 

(d)

Gross customer revenue attrition for 2020 is defined as RMR lost as a result of customer attrition, net of dealer charge-backs and reinstated customers, excluding contracts monitored but not owned and DIY customers. Customer sites are considered canceled when all services are terminated. Dealer charge-backs represent customer cancellations charged back to the dealers because the customer canceled service during the charge-back period, which is generally 13 months.

 

28		2021 PROXY STATEMENT

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

The following table summarizes the calculation of bonuses for fiscal year 2020 paid to each of the NEOs.

 

Name		Base Salary				Bonus Target %		Bonus Target				Business Performance		Actual Bonus Paid for Fiscal Year 2020
James D. DeVries		$	1,025,000			125%		$	1,281,250			150.4%		$	1,927,000
Jeffrey A. Likosar		$	666,250			100%		$	666,250			150.4%		$	1,002,040
James P. Boyce(1)		$	655,000			100%		$	655,000			150.4%		$	985,120
Daniel M. Bresingham(2)		$	533,000			100%		$	533,000			130.0%		$	692,900
Donald M. Young		$	533,000			100%		$	533,000			150.4%		$	801,632
Jamie E. Haenggi(2)		$	500,000			70%		$	350,000			165.0%		$	577,500

 

(1)

Mr. Boyce has served as our President, Chief Business Development Officer since January 6, 2020. In accordance with his offer letter his 2020 AIP incentive award was based on the full calendar year results. The actual bonus payment is based on the actual level of achievement of the applicable performance goals for the year.

 

(2)	Mr. Bresingham’s and Ms. Haenggi’s bonus payout percentage is based upon the Compensation Committee’s review of his/her individual performance against full year 2020 objectives.

Non-GAAP Measures – Adjusted EBITDA

 

 

We believe that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors about our operating profitability adjusted for certain non-cash items, non-routine items that we do not expect to continue at the same level in the future, as well as other items that are not core to our operations. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures.

We define Adjusted EBITDA as net income or loss adjusted for (i) interest, (ii) taxes, (iii) depreciation and amortization, including depreciation of subscriber system assets and other fixed assets and amortization of dealer and other intangible assets, (iv) amortization of deferred costs and deferred revenue associated with subscriber acquisitions, (v) share-based compensation expense, (vi) merger, restructuring, integration, and other, (vii) losses on extinguishment of debt, (viii) radio conversion costs, (ix) financing and consent fees, (x) foreign currency gains/losses, (xi) acquisition related adjustments, and (xii) other charges and non-cash items.

There are material limitations to using Adjusted EBITDA. Adjusted EBITDA does not take into account certain significant items, including depreciation and amortization, interest, taxes, and other adjustments which directly affect our net income or loss. These limitations are best addressed by considering the economic effects of the excluded items independently and by considering Adjusted EBITDA in conjunction with net income or loss as calculated in accordance with GAAP.

We provide reconciliations of our non-GAAP metrics to their most comparable GAAP metrics as required by the rules and regulations of the SEC, and such reconciliations can be found on both the SEC’s and our Company websites.

Long-Term Equity Compensation

 

 

The Company’s long-term incentive compensation program is designed to provide a significant portion of our executives’ compensation opportunity in equity-based instruments. We believe that long-term equity compensation is important to assure that the interests of our executives are aligned with those of our stockholders, thus promoting value-creation for our executives and our stockholders. The annual equity award grant process occurs in conjunction with our annual assessment of individual performance and potential and takes into account the competitive compensation landscape. In addition to annual grants, the Company may make equity grants in certain other circumstances, such as for new hires or promotions, or to recognize an individual’s extraordinary contributions to the Company.

 

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In connection with our IPO in January 2018, our Board of Directors adopted, and our stockholders approved, our 2018 Omnibus Incentive Plan (as amended, the “Omnibus Incentive Plan”), pursuant to which we are permitted to grant awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards as permitted under the Omnibus Incentive Plan. The Omnibus Incentive Plan is designed to align the interests of our management team with our stockholders.

2020 Long-Term Incentive Plan Equity Awards

 

 

For fiscal year 2020, awards of equity under our annual long-term incentive program (the “2020 LTIP”) were delivered to employees in the form of RSUs. The following table describes the general terms and conditions applicable of awards under our 2020 LTIP:

 

Grant Type		Vesting		Other Terms & Conditions
RSUs		Generally, one-third per year, subject to continued employment through each applicable vesting date		Accumulate dividend equivalent units with respect to dividends, which vest in accordance with the vesting of the underlying RSU award

Target 2020 long-term incentive opportunities for Messrs. DeVries, Likosar, Bresingham and Young, and Ms. Haenggi were approved in early 2020. Mr. Boyce’s 2020 long-term incentive opportunity was set forth in his offer letter when he was hired in January of 2020. Prior to approval of the 2020 long-term incentive opportunities for our NEOs, the Compensation Committee reviewed and determined that the amounts remain market competitive. Target 2020 long-term incentive opportunities and the number of RSUs awarded to our NEOs are set forth in the table below:

 

Name		Aggregate Value of 2020 LTI Award				Stock Options  Awarded(1)				RSUs Awarded (#)
						(#)
James D. DeVries		$	4,500,000								853,889
Jeffrey A. Likosar		$	1,000,000								189,753
James P. Boyce (2)		$	1,136,787				231,578				100,000
Daniel M. Bresingham		$	600,000								113,851
Donald M. Young		$	600,000								113,851
Jamie E. Haenggi		$	600,000								113,851

 

(1)	Stock options had an exercise price of $6.25 per share.

 

(2)

The 2020 target long-term incentive opportunity for Mr. Boyce reflects his sign-on equity award opportunity. Further details of Mr. Boyce’s sign-on equity award are described following the tabular disclosure below under the headings “Employment Arrangements” and “Potential Payments upon Termination or Change in Control.”

Special Equity Awards

 

 

In February 2020, the Compensation Committee approved special equity awards in the form of non-qualified stock options and RSUs to certain key employees of the Company, including Messrs. DeVries, Likosar, Bresingham and Young, and Ms. Haenggi, to provide an additional incentive to such employees to drive the Company’s performance and promote the long-term retention of such employees. The grant value of the special equity awards was weighted equally between non-qualified stock options and RSUs. The special equity awards vest as to one-third of the shares subject to the awards per year over a period of three years from the date of grant. Non-qualified stock options have an exercise price equal to the closing price of the Company’s common stock on the date of grant and expire on the 10th anniversary of the date of grant unless forfeited earlier. RSUs are eligible to receive cash dividend equivalents currently to the extent the Company pays

 

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dividends to its stockholders; provided, that to the extent the holder terminates employment under certain circumstances prior to the third anniversary of the date of grant, the Company may claw back any dividend equivalents paid in respect of unvested RSUs. Shares delivered upon settlement of RSUs may not be transferred, except on a pro rata basis to the extent our Sponsor sells or otherwise disposes of its shares of our common stock. The special equity awards were in addition to the annual equity awards that were approved by the Compensation Committee in February 2020.

 

Name		Aggregate Value of 2020 Special Equity Award				Stock Options Awarded(1) (#)				RSUs Awarded (#)
James D. DeVries		$	6,431,457				1,202,458				627,124
Jeffrey A. Likosar		$	6,588,192				1,231,762				642,407
Daniel M. Bresingham		$	6,744,947				1,261,070				657,692
Donald M. Young		$	6,744,947				1,261,070				657,692
Jamie E. Haenggi		$	5,781,383				1,080,917				563,736

 

(1)	Stock options had an exercise price of $5.27 per share.

Employment Arrangements

 

 

Each of our NEOs is party to an employment agreement or offer letter, as applicable, with one of our operating subsidiaries, which specifies the terms of the executive’s employment, including certain compensation levels, and is intended to assure us of the executive’s continued employment and to provide stability in our senior management team. In addition to the terms of these employment arrangements described under the heading “—Employment Arrangements” which follows the Summary Compensation Table below, the employment agreement or offer letter, as applicable, provides for certain severance payments and benefits following a termination of employment under certain circumstances. For details on the severance payments and benefits payable to each of our NEOs, see “—Potential Payments upon Termination or Change in Control with NEOs.”

Supplemental Savings and Retirement Plan

 

 

All of our NEOs are eligible to participate in the ADT Supplemental Savings and Retirement Plan (the “SSRP”), a deferred compensation plan that permits the elective deferral of base salary and annual performance-based bonus for executives in certain career bands. The SSRP provides eligible employees the opportunity to:

 

•

contribute retirement savings in addition to amounts permitted under the ADT Retirement Savings and Investment Plan (the “RSIP”);

 

•

defer compensation on a tax-deferred basis and receive tax-deferred market-based growth; and

 

•

receive any Company contributions that were reduced under the RSIP due to Internal Revenue Service (IRS) compensation limits.

Executive Benefits and Limited Perquisites

 

 

The Company’s executive officers, including the NEOs, are eligible to participate in the benefit plans that are available to substantially all of the Company’s employees, including defined contribution savings plans (e.g., the RSIP), medical, dental and life insurance plans and long-term disability plans, as well as discounts on the services we provide. Additionally, the Company provides relocation benefits when a move is required. None of the NEOs participate in a defined benefit pension plan.

We also provide limited perquisites to our NEOs, including an annual executive physical for all of our NEOs, and a monthly auto allowance for Messrs. Bresingham and Young and Ms. Haenggi, which was discontinued in September 2020. Mr. DeVries

 

		2021 PROXY STATEMENT		31

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

is also entitled to reimbursement for certain personal housing expenses and certain work-related travel expenses that, in each case, do not qualify as reimbursable business-related expenses, up to an annual maximum of $75,000 and an additional income tax gross-up payment related to such actual taxable reimbursements incurred.

Severance Benefits

 

 

Pursuant to the terms of his offer letter, Mr. Boyce is currently entitled to receive severance payments and benefits under the Defenders Executive Change in Control Severance Plan (the “Defenders Severance Plan”), a plan we acquired in connection with our acquisition of Defenders. Upon the expiration of the Defenders Severance Plan, he will be eligible to participate in The ADT Corporation Severance Plan for U.S. Officers and Executives (the “Severance Plan”). The amount to be received by Mr. Boyce under the Severance Plan or the Defenders Severance Plan will depend on the circumstances leading to his termination of service or employment with the Company. Severance for our other NEOs is pursuant to the terms of their respective employment agreements. Details with respect to the payments and benefits that would be payable under the plans or under the employment agreements to each of our NEOs, as applicable, are set forth in the section titled “Potential Payments upon Termination or Change in Control” below.

Other Compensation Policies and Practices

 

 

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: (i) buying, selling or engaging in transactions in the Company’s securities at any time while aware of material non-public information about the Company; (ii) 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 (iii) disclosing material non-public information to any unauthorized persons outside the Company. Each of the Company’s directors and Section 16 Officers, as well as any member of management who reports directly to the CEO, is required to receive the approval of the Company’s Chief Legal Officer prior to entering into any transaction in Company securities. This approval applies to each of our NEOs. Generally, trading by our directors, 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 quarterly earnings. Those who are subject to these 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 Chief Legal Officer. The Company intends for trading plans to include a minimum 30-day “cooling off” period before the plan becomes effective, and the trading plans may not be amended during their term. Directors and employees, including the NEOs, bear full responsibility for any violation of the Company’s insider trading policy.

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, or selling such securities “short,” 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, newswire 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 company’s Policy and Procedures for Granting Equity-Based Awards.

 

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EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Pay Recoupment (Clawback) Policy

To encourage sound financial reporting and increase individual accountability, we adopted a pay recoupment policy in October 2020 which 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 current or former executive officer that resulted from any restatement of the reported financial results of the Company or one of its segments, if any, due to material non-compliance with financial reporting requirements (unless due to a change in accounting policy or applicable law) caused or contributed to by such individual’s fraud, willful misconduct or gross negligence. Our Compensation Committee has the sole discretion to make any and all determinations under this policy and will periodically review this policy to determine whether any changes are warranted.

Stock Ownership Guidelines

 

 

In February 2021, our Board of Directors adopted stock ownership guidelines to help further align the long-term interests of our independent directors and our management with the long-term interests of our stockholders. Under these guidelines, certain individuals are required to own a multiple in value of their equity to their annual base salary or, in the case of our independent directors, their annual cash retainer, before they can sell any of their shares of common stock as follows:

 

Position		Multiple of Annual Base Salary or Annual Cash Retainer
CEO		6x
CFO		3x
Executive Officers and CEO Management Direct Reports		2x
CEO Designees		2x
Independent Directors		5x

Tax and Accounting Considerations

 

 

Section 162(m) of the Code

For income tax purposes, public companies may not deduct any portion of compensation that is in excess of $1 million paid in a taxable year to certain “covered employees,” including our NEOs, under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Once an individual becomes a “covered employee” under Section 162(m) of the Code, all current and future compensation to these individuals will remain subject to the limitation under Section 162(m) of the Code.

Section 162(m) of the Code provided a transition relief period exception, pursuant to which the deduction limit under Section 162(m) of the Code does not apply to certain compensation paid (or, in some cases, granted) pursuant to a plan or agreement that existed during the period in which the corporation was not publicly held, subject to certain requirements and limitations. Under Section 162(m) of the Code, this transition relief period ends upon the earliest of the following: (i) the expiration of the plan or agreement; (ii) the material modification of the plan or agreement; (iii) the issuance of all employer stock and other compensation that has been allocated under the plan; or (iv) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the corporation’s initial public offering occurs.

These tax effects are only one factor considered by our Compensation Committee when entering into compensation arrangements. Our Compensation Committee believes that it should not be constrained by the requirements of Section 162(m) of the Code if those requirements would impair flexibility in compensating our NEOs in a manner that can best promote our corporate objectives. We intend to continue to compensate our executive officers in a manner consistent with the best interests of our stockholders and reserve the right to award compensation that may not be deductible under Section 162(m) of the Code where the Company believes it is appropriate to do so.

 

		2021 PROXY STATEMENT		33

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Section 280G of the Code

Section 280G of the Code disallows a tax deduction with respect to certain payments to executives of companies that undergo a change in control, and Section 4999 of the Code imposes a 20% penalty on the individual receiving “excess parachute payments.” Generally, parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans, including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G based on the executive’s prior compensation.

The employment agreements with Messrs. DeVries, Likosar, Bresingham and Young, and Ms. Haenggi each provide that, to the extent the executive would be subject to Section 280G or 4999 of the Code, the executive’s parachute payments would be reduced to the extent that no portion of the payment shall be subject to the excise tax, but only if the executive’s net after-tax benefit would exceed what the net after-tax benefit would have been if such reduction were not made and the executive paid the applicable excise tax. We do not provide excise tax gross-ups to our NEOs.

REPORT OF THE COMPENSATION COMMITTEE

 

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Members of the Compensation Committee:

Marc E. Becker, Chairman

Reed B. Rayman

Andrew D. Africk

The Report of the Compensation Committee is not to be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent the Company specifically requests that such information be treated as soliciting material or specifically incorporates it by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.

 

34		2021 PROXY STATEMENT

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

Summary Compensation Table

 

 

The information set forth in the following table reflects compensation paid to or earned by the NEOs for fiscal years 2020, 2019 and 2018. The table reflects total compensation earned beginning in the later of fiscal year 2018 or the year an individual first became a NEO.

 

Name and Principal Position		Year				Salary ($)				Bonus(1) ($)				Stock Awards(2) ($)				Option Awards(3)				Non-Equity Incentive Plan Compensation(4) ($)		All Other Compensation(5)(6) ($)		Total ($)
James D. DeVries			2020				1,018,269								8,827,151				2,104,302			1,927,000		265,571			14,142,293
President and Chief Executive Officer			2019				1,000,000								3,941,997				2,250,000			853,750		1,297,512			9,343,259
			2018				690,769				2,929,413				1,749,147				11,873,605			579,069		171,308			17,993,311
Jeffrey A. Likosar			2020				661,875				63,177				5,432,607				2,155,584			1,002,040		91,226			9,406,509
Executive Vice President,			2019				575,646				39,643				2,233,696				499,999			443,950		949,169			4,742,103
Chief Financial Officer and Treasurer			2018				527,303				35,720				2,035,908				8,495,902			424,320		147,279			11,666,432
James P. Boyce(7)			2020				665,375				1,000,000				625,000				511,787			985,120		544,157			4,331,439
President, Chief Business Development Officer
Daniel M. Bresingham			2020				529,500								5,138,070				2,206,873			692,900		77,683			8,645,026
Executive Vice President Commercial			2019				517,308								2,158,418				299,999			355,160		964,587			4,295,472
			2018				510,000								1,577,190				7,465,933			408,000		62,780			10,023,903
Donald M. Young			2020				529,500								5,138,070				2,206,873			801,632		77,083			8,753,158
Chief Information Officer and			2019				517,308								2,158,418				299,999			355,160		967,187			4,298,072
Executive Vice President, Field Operations			2018				510,000								1,577,190				7,465,933			408,000		70,662			10,031,785
Jamie E. Haenggi			2020				489,231								4,489,773				1,891,605			577,500		6,550			7,454,659
EVP & Chief Customer Officer			2019				457,308								1,892,929				299,999			219,926		795,328			3,665,490
			2018				447,567								1,394,729				6,442,226			252,000		7,641			8,544,163

 

(1)

The amounts in this column represent for Mr. DeVries the value of the retention bonus, including the distribution bonus (in respect of accrued distributions on the Class A-2 Units of Prime TopCo LP underlying Mr. DeVries’ retention bonus, paid to Mr. DeVries in shares of our common stock), and for Mr. Likosar the value of the distribution bonus (in respect of accrued distributions on the Class A-2 Units of Prime TopCo LP underlying Mr. Likosar’s retention bonus paid to Mr. Likosar in connection with the vesting of the first, second and third installments of the retention bonus, payable in accordance with the terms of his employment agreement). For Mr. Boyce the amount represents the value of the discretionary transaction bonus paid to him upon the successful completion of the sale of Defenders to ADT Inc. in January 2020.

 

(2)	The values in the “Stock Awards” column for fiscal years 2020, 2019, and 2018 reflect the following:

 

•

2020: The grant date fair value of RSU awards made to Mr. Boyce on February 2, 2020 in connection with his employment at ADT and the grant date fair value of RSUs made to Messrs. DeVries, Likosar, Bresingham and Young, and Ms. Haenggi in connection with the 2020 LTIP and the grant date fair value of RSU awards made in connection with the 2020 Special Equity Awards.

•

2019: The grant date fair value of RSU awards made to Messrs. DeVries, Likosar, Bresingham and Young, and Ms. Haenggi in connection with the 2019 LTIP and a non-cash accounting charge representing the incremental fair value associated with the 2019 modification in connection with the amendment of the Performance Tranche of the Distributed Shares, in each case computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation” (“FASB ASC Topic 718”). The increase in fair value associated with the 2019 modification in connection with the amendment of the Performance Tranche of the Distributed Shares is as follows: Mr. DeVries $1,692,001; Mr. Likosar $1,733,697; Mr. Bresingham $1,858,422; Ms. Haenggi $1,592,933; and Mr. Young $1,858,422.

•

2018: The grant date fair value of RSU awards made in connection with the IPO and a non-cash accounting charge representing the incremental fair value associated with the 2018 modification in connection with the redemption of Class B Units, in each case computed in accordance with FASB ASC Topic 718. The increase in fair value associated with the January 16, 2018 modification in connection with the redemption of Class B Units is as follows: Mr. DeVries $649,153; Mr. Likosar $665,151; Mr. Bresingham $1,277,198; Ms. Haenggi $1,094,737; and Mr. Young $1,277,198. For Mr. Likosar, the reported value also includes the grant date fair value of the Retention Shares granted to him as described in further detail below in the section titled “Employment Arrangements.”

•

The assumptions used in the valuation of stock-based awards are discussed in Note 10 “Share-Based Compensation” in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

(3)	The values in the “Option Awards” column for fiscal years 2020, 2019 and 2018 reflect the following:

 

•

2020: The fair value associated with the grant of non-qualified stock options made to Mr. Boyce on February 3, 2020 in connection with his employment at ADT and the fair value associated with the grant of non-qualified stock options made in connection with 2020 Special Equity Awards to Messrs. DeVries, Likosar, Bresingham and Young, and Ms. Haenggi.

 

		2021 PROXY STATEMENT		35

EXECUTIVE COMPENSATION — COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

•

2019: The fair value associated with the grant of non-qualified stock options made in connection with 2019 LTIP.

•

2018: The fair value associated with both the grant of non-qualified stock options made in connection with the IPO and Top-Up Options. The grant date fair value of the Top-Up Options granted in 2018 are as follows: Mr. DeVries $7,803,607; Mr. Likosar $7,995,904; Mr. Bresingham $7,165,934; Ms. Haenggi $6,142,229; and Mr. Young $7,165,934. In connection with Mr. DeVries’ appointment as CEO on December 1, 2018, Mr. DeVries was awarded 1,000,000 stock options with a grant date fair value of $2,970,000.

•

The stock-based compensation amounts shown in this column reflect the aggregate grant date fair value, assuming no risk of forfeiture, of stock option awards calculated in accordance with FASB ASC Topic 718. We use the Black-Scholes option pricing model to estimate the fair value of stock options granted, which requires the input of both subjective and objective assumptions. The assumptions used in the valuation of stock-based awards are discussed in Note 10 “Share-Based Compensation” in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

(4)	The amounts reported in this column were earned under our annual cash incentive bonus program for the applicable year, which is described above. See “Executive Compensation—Annual Incentive Compensation.”

 

(5)	SSRP employer contributions are reported in the year earned rather than the successive year when the contribution amount is finalized.

 

(6)	Details with respect to the amounts in this column are set forth in the “All Other Compensation” table below.

 

(7)	James P. Boyce commenced employment with the Company on January 6, 2020. For 2020, Mr. Boyce served as President, Chief Business Development Officer.

Summary Compensation Table—All Other Compensation

 

 

The components of the “All Other Compensation” column in the Summary Compensation Table for each NEO are shown in the following table.

 

Name		Fiscal Year				Retirement  Plan Contributions(a) ($)				Miscellaneous(b) ($)				Total All Other Compensation ($)
James D. DeVries			2020				157,663				107,908				265,571
Jeffrey A. Likosar			2020				88,604				2,622				91,226
James P. Boyce			2020				—				544,157				544,157
Daniel M. Bresingham			2020				70,883				6,800				77,683
Donald M. Young			2020				70,883				6,200				77,083
Jamie E. Haenggi			2020				—				6,550				6,550

 

(a)	Amounts represent matching contributions made by the Company on behalf of each NEO to its tax-qualified 401(k) RSIP and to its non-qualified SSRP, as applicable.

 

(b)

Miscellaneous compensation in fiscal year 2020 includes: (i) for Mr. DeVries, $25,520 related to certain reimbursed housing expenses and approximately $37,761 in certain work-related travel expenses that did not qualify as reimbursable business expenses. In addition, Mr. DeVries received an additional payment in 2020, equal to $41,057, to gross him up for the taxes on the aforementioned expenses; (ii) the value of a monthly automotive allowance for Messrs. Bresingham and Young and Ms. Haenggi; (iii) the value of Company-paid contributions for life insurance benefits for all NEOs; and (iv) a payment in the amount of $532,922 to Mr. Boyce which amount represents his account balance as a participant in the Defenders, Inc. Deferred Compensation Plan. This payment was made in connection with the change in control of Defenders. The Defenders, Inc. Deferred Compensation Plan was terminated prior to, and contingent upon, the closing of the Defenders acquisition, and accordingly, there were no subsequent contributions or earnings with respect to this plan.

 

36		2021 PROXY STATEMENT