ADC Telecommunications, Inc.

13625 Technology Drive

Eden Prairie, Minnesota 55344-2252

(952) 938-8080

 

ADC TELECOMMUNICATIONS, INC.

 

January 20, 2009

 

Dear ADC Shareowner:

 

You cordially are invited to attend the annual shareowners’ meeting of ADC Telecommunications, Inc., which will be held in the Auditorium at ADC’s World Headquarters on Wednesday, March 4, 2009, at 9:00 a.m. Central Standard Time. ADC’s World Headquarters are located at 13625 Technology Drive, Eden Prairie, Minnesota 55344. Details of the business to be conducted at the annual meeting are given in the attached notice of annual shareowners’ meeting.

 

If you do not plan to attend the annual meeting, please vote your shares either by telephone, Internet or the mail. Instructions on voting your shares are on the notice of Internet availability of proxy materials you received for the annual meeting. If you received paper copies of our proxy materials, instructions on voting your shares are on the enclosed proxy card. If you decide to attend the annual meeting and wish to change your proxy vote, you may do so automatically by voting in person at the annual meeting.

 

We look forward to seeing you at the annual meeting.

 

Robert E. Switz
Chairman of the Board, President and Chief
Executive Officer

 

YOUR VOTE IS IMPORTANT

 

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ADC Telecommunications, Inc.

13625 Technology Drive

Eden Prairie, Minnesota 55344-2252

(952) 938-8080

 

NOTICE OF ANNUAL SHAREOWNERS’ MEETING

TO BE HELD MARCH 4, 2009

 

To the Shareowners of ADC Telecommunications, Inc.:

 

NOTICE IS HEREBY GIVEN that the annual shareowners’ meeting of ADC Telecommunications, Inc. will be held in the Auditorium of ADC’s World Headquarters, 13625 Technology Drive, Eden Prairie, Minnesota 55344, on Wednesday, March 4, 2009, at 9:00 a.m. Central Standard Time, for the purpose of considering and acting upon:

 

1. The election of four directors for terms expiring in 2012;

 

2. A proposal to set the number of directors at eleven;

 

3. The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our 2009 fiscal year (expected to end on September 30, 2009); and

 

4. The transaction of such other business as may come properly before the meeting or any adjournment thereof.

 

Shareowners of record at the close of business on January 6, 2009, are the only persons entitled to notice of, and to vote at, the annual meeting.

 

Your attention is directed to the proxy statement. We encourage you to vote on the Internet or by telephone in order to reduce our mailing and handling expenses. If you choose to return the proxy card by mail, we have enclosed an envelope addressed to ADC for which no postage is required if mailed in the United States.

 

By Order of the Board of Directors

 

 

Jeffrey D. Pflaum
Vice President, General Counsel
and Secretary

 

January 20, 2009

 

TABLE OF CONTENTS

 

ADC Telecommunications, Inc.

13625 Technology Drive

Eden Prairie, Minnesota 55344-2252

(952) 938-8080

 

 

PROXY STATEMENT

 

ANNUAL SHAREOWNERS’ MEETING

TO BE HELD ON MARCH 4, 2009

 

 

 

This proxy statement has been prepared on behalf of the Board of Directors of ADC Telecommunications, Inc. in connection with the solicitation of proxies for our annual shareowners’ meeting to be held on Wednesday, March 4, 2009, and at any and all adjournments of the annual meeting. The cost of soliciting proxies, including the cost of preparing and mailing the notice of annual shareowners’ meeting, the notice of Internet availability of proxy materials, and this proxy statement, is being paid by us. In addition, we will, upon the request of brokers, dealers, banks, voting trustees and their nominees who are holders of record of shares of our common stock on the record date specified below, bear their reasonable expenses for mailing copies of these materials to the beneficial owners of these shares. We have engaged The Proxy Advisory Group, LLC, to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements that are not expected to exceed $15,000 in the aggregate. In addition, our officers and other employees may solicit proxies in person or by telephone or facsimile but will receive no extra compensation for these services. This proxy statement and the forms of proxy are first being made available to shareowners on or around January 20, 2009.

 

Shareowners of record at the close of business on January 6, 2009, are the only persons entitled to notice of, and to vote at, the annual meeting. As of that date, there were 96,472,273 issued and outstanding shares of our common stock, our only outstanding voting securities. Each shareowner is entitled to one vote for each share held, and there is no cumulative voting.

 

Shareowners can vote their shares through the Internet, by telephone or by mail. Instructions on voting your shares are on the notice of Internet availability of proxy materials you received for the annual meeting. If you received paper copies of our proxy materials, instructions on voting your shares are on the enclosed proxy card. The Internet and telephone voting procedures are designed to verify shareowners’ identities, allow shareowners to give voting instructions and confirm that their instructions have been recorded properly. Shareowners who vote through the Internet should be aware that they may incur costs to access the Internet, such as usage charges from telephone companies or Internet service providers, and that these costs must be borne by the shareowner. Shareowners who vote by Internet or telephone need not return a proxy card by mail.

 

Whether shareowners submit their proxies by mail, telephone or the Internet, a shareowner may revoke a proxy by sending a written notice of revocation or submitting another proxy with a later date (either by mail, telephone or the Internet) at any time prior to the date of the annual meeting or by voting in person at the annual meeting. Unless so revoked, properly executed proxies will be voted in the manner set forth in this proxy statement or as otherwise specified by the shareowner giving the proxy.

 

Important Notice Regarding the Availability of Proxy Materials for the Shareowners’ Meeting to be Held on March 4, 2009: This proxy statement and our 2008 Annual Report and Form 10-K are available at www.proxyvote.com

 

The following table sets forth the number of shares of our common stock that were beneficially owned as of January 2, 2009 by our directors, our executive officers included in the Summary Compensation Table set forth under the caption “Executive Compensation” below, all of our directors and executive officers as a group and all shareowners known by us to be beneficial owners of more than five percent of our common stock. Except as otherwise indicated, the shareowners listed in the table have sole voting and investment power with respect to the common stock owned by them, and the shares are not subject to any pledge.

 

 

 

 

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership of our common stock and other equity securities with the United States Securities and Exchange Commission (the “SEC”). Executive officers, directors and greater-than-10% shareowners are required by the SEC regulation to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on a review of the copies of Section 16(a) reports furnished to us during fiscal 2008, all Section 16(a) filing requirements applicable to our executive officers, directors and greater-than-10%

beneficial owners were satisfied on a timely basis in fiscal 2008, except that Steven Nemitz, Vice President and Controller, filed one late report on Form 3/A to disclose 16 shares of our common stock that were omitted inadvertently from Mr. Nemitz’ initial Form 3 report.

 

Our Board of Directors (the “Board”) is committed to sound and effective corporate governance practices. The Board has adopted written Principles of Corporate Governance which govern the composition of the Board, Board meetings and procedures and the standing committees of the Board. The Board has the following standing committees: Audit Committee, Compensation Committee, Governance Committee (which includes Board nomination responsibility), and Finance and Strategic Planning Committee. Each of these committees has a written charter. Our Principles of Corporate Governance and the charters for each of our standing committees are available for review on our website at www.adc.com/investorrelations/corporategovernance.

 

Our Principles of Corporate Governance provide that a majority of our directors and all members of our Audit Committee, Compensation Committee and Governance Committee will be independent. Our Board makes an annual determination regarding the independence of each Board member under the current NASDAQ Global Select Market listing standards. Our Board has determined that all of our directors are independent under these standards, except for our Chairman Robert E. Switz, who also serves as our President and Chief Executive Officer. In fiscal 2008, we added the position of Independent Lead Director to our Board and Mr. Gilligan currently serves in that capacity. A description of the roles of Independent Lead Director and Executive Chairman can be found on our website at www.adc.com/investorrelations/corporategovernance.

 

During fiscal 2008, our independent directors met in an executive session of the Board without management on five occasions. Under our Principles of Corporate Governance, executive sessions of the Board are led by our Independent Lead Director, or, in his absence, by the Chair of the Governance Committee. In addition, each of our Board’s standing committees regularly meets in an executive session led by the Chair of the committee.

 

We maintain a Global Business Conduct Program which sets forth our standards for ethical behavior and legal compliance and governs the manner in which we conduct our business. Our Global Business Conduct Program includes a Financial Code of Ethics applicable to all directors, officers and employees. We conduct required ethics training for our employees. A copy of our Global Business Conduct Program and our Financial Code of Ethics can be found on our website at www.adc.com/investorrelations/corporategovernance.

 

Each of our directors is expected to make reasonable efforts to attend all meetings of the Board, meetings of each committee on which he or she serves and our annual shareowners’ meeting. All ten of our directors who were serving on the Board at the time of our 2008 annual meeting attended that meeting. During fiscal 2008, the Board held eight meetings. During fiscal 2008, each of our directors attended at least 75% of the aggregate of the total number of these meetings plus the total number of meetings of all committees of the Board on which he or she served.

 

The Audit Committee has sole authority to appoint, review and discharge our independent registered public accounting firm. The Audit Committee also reviews and approves in advance the services provided by our independent registered public accounting firm, oversees our internal audit function, reviews our internal accounting controls and administers our Global Business Conduct Program. The Audit Committee currently is composed of Ms. Martin and Messrs. Blanchard, Foret, Wangberg and Wunsch, all of whom meet the existing independence and experience requirements of the NASDAQ Global Select Market and the SEC. Mr. Foret is the Chair of this committee. The Board has determined that each of Messrs. Blanchard and Foret and

Ms. Martin may be considered an “audit committee financial expert” under the rules of the SEC. During fiscal 2008, the Audit Committee held seven meetings. The Audit Committee appointed Ernst & Young LLP as our independent registered public accounting firm for fiscal 2009 and is recommending that our shareowners ratify this appointment at our annual meeting. The report of our Audit Committee is found on page 37 of this proxy statement.

 

The Compensation Committee determines the compensation for our executive officers and non-employee directors, establishes our compensation policies and practices, and reviews annual financial performance under our employee incentive plans. The Compensation Committee currently is composed of Messrs. Blanchard, Gilligan, Rehfeld and Wunsch, all of whom are independent under the current NASDAQ Global Select Market listing standards. Mr. Rehfeld is the Chair of this committee. During fiscal 2008, the Compensation Committee held eight meetings.

 

The Governance Committee reviews and makes recommendations to the Board regarding nominees for director, establishes and monitors compliance with our Principles of Corporate Governance and conducts an annual review of the effectiveness of our Board and the performance of our President and Chief Executive Officer. The Governance Committee will consider qualified director nominees recommended by shareowners. Our process for receiving and evaluating Board member nominations from our shareowners is described below under the caption “Nominations.” The Governance Committee currently is composed of Dr. Spivey and Messrs. Boyle, Rehfeld and Wangberg, all of whom are independent under the current NASDAQ Global Select Market listing standards. Mr. Wangberg is the Chair of this committee. During fiscal 2008, the Governance Committee held five meetings.

 

The Finance and Strategic Planning Committee assists the Board with respect to strategic planning, the evaluation of investment, acquisition and divestiture transactions, and the review of any proposed changes to ADC’s capital structure. The Finance and Strategic Planning Committee is composed of Dr. Spivey, Ms. Martin and Messrs. Boyle, Foret and Gilligan, all of whom are independent under the current NASDAQ Global Select Market listing standards. Mr. Boyle is the Chair of this committee. During fiscal 2008, the Finance and Strategic Planning Committee held four meetings.

 

Our Governance Committee is the standing committee responsible for selecting the slate of director nominees for election by our shareowners. The committee recommends these nominees to the Board for approval. All director nominees approved by the Board and all directors appointed to fill any vacancies created between our annual meetings of shareowners are required to stand for election by our shareowners at the next annual shareowners’ meeting. During fiscal 2008, our Governance Committee utilized the services of a third-party search firm to assist in the identification and evaluation of Board member candidates. The Committee may also engage similar firms to provide these services in the future, as it deems necessary or appropriate.

 

Our Governance Committee determines the selection criteria and qualifications for director nominees. As set forth in our Principles of Corporate Governance, a candidate must possess the ability to apply good business judgment and properly exercise his or her duties of loyalty and care. Candidates should also exhibit proven leadership capabilities, high integrity and experience in senior levels of responsibility in their chosen fields, and have the ability to grasp complex business and financial concepts and communications technologies. In general, candidates will be preferred who hold a senior level position in business, finance, law, education, research or government. The Governance Committee considers these criteria in evaluating nominees recommended to the Governance Committee by shareowners. When current Board members are considered for nomination for reelection, the Governance Committee also takes into consideration their prior contributions, performance and meeting attendance records with ADC.

 

The Governance Committee will consider for possible nomination qualified Board candidates who are submitted by our shareowners by the deadline set forth in our annual proxy statement for shareholder proposals to be considered for inclusion in our proxy statement. Shareowners wishing to make such a submission may do so by sending the following information to the ADC Governance Committee, c/o ADC

Corporate Secretary, P.O. Box 1101, Minneapolis, MN 55440: (1) name of the candidate and a resume or brief biographical summary; (2) contact information for the candidate and evidence of the candidate’s willingness to serve as a director if elected; and (3) a signed statement regarding the submitting shareowner’s status as a shareowner and the number of shares currently held by such shareowner.

 

The Governance Committee will make a preliminary assessment of each proposed nominee based upon the resume or biographical summary, his or her willingness to serve as a director and other information obtained by the committee. Each proposed nominee is evaluated against the criteria set forth above and our specific needs at the time. Based upon the preliminary assessment, those candidates who appear best suited to be directors of ADC may be invited to participate in a series of interviews, which are used as a further means of evaluating potential candidates. On the basis of information obtained during this process, the Governance Committee determines which nominees to recommend to the Board for submission to our shareowners at the next annual meeting. The Governance Committee uses the same process for evaluating all proposed nominees, regardless of the original source of the candidate.

 

No candidates for director nominations were submitted to the Governance Committee by any shareowner in connection with the 2009 annual meeting. Any shareowners desiring to present a nomination for consideration by the Governance Committee prior to our 2010 annual meeting must do so by September 22, 2009, in order to provide adequate time for the Committee to give due consideration to the nominee.

 

The Board has implemented a process by which our shareowners may send written communications to the Board. Any shareowner desiring to communicate with the Board, or one or more of our directors, may send a letter addressed to the ADC Board of Directors, c/o ADC Corporate Secretary, P.O. Box 1101, Minneapolis, MN 55440. The Corporate Secretary has been instructed by the Board to forward promptly all such communications to the Board or to the individual Board members specifically addressed in the communication.

 

The Board maintains a written policy regarding transactions with related parties. Under the policy, a “related party” includes any (1) ADC executive officer, director or director nominee, (2) shareowner who beneficially owns more than 5% of our common stock, (3) immediate family member of any of the foregoing, or (4) firm, corporation, charity or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has control or a substantial ownership interest. In accordance with the policy, the Audit Committee is responsible for the review and approval or ratification of any “interested transaction” with a related party. An “interested transaction” is defined in the policy as any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which ADC is a participant and any related party has or will have a material direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). In determining whether to approve or ratify an interested transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the interested transaction is on terms generally consistent with those available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction.

 

Also, as further described in the policy, the Audit Committee pre-approved the following transactions:

 

 

 

In connection with each regularly scheduled meeting of the Audit Committee, a summary of each new interested transaction deemed pre-approved pursuant to the policy and each new interested transaction pre-approved by the Chair is to be provided to the Audit Committee for its review.

 

Cash Fees.  During fiscal 2008, we paid our non-employee directors:

 

 

In addition, we provided a retainer to Mr. Blanchard for his service as Non-Executive Chairman of the Board at an annualized rate of $100,000 in fiscal 2008. Following Mr. Blanchard’s resignation from this position in connection with his pending retirement from our Board, we appointed Mr. Gilligan as our Independent Lead Director and provided Mr. Gilligan with a cash retainer at an annualized rate of $75,000 for his services as Independent Lead Director. Further, the Chair of each committee of the Board received the following cash retainers:

 

 

Equity Awards.  Restricted stock awards having an approximate value of $70,000 on the date of grant are made to each non-employee director on the first business day after each annual shareowners’ meeting. For fiscal 2008, each non-employee director received those restricted stock units on March 7, 2008, with the exception of Dr. Prabhu and Mr. Roberts, who were not directors at that time. The restricted stock units vest on the first anniversary of the date of grant, and the shares underlying the restricted stock units are distributed 90 days following termination of Board service. Dr. Prabhu and Mr. Roberts each received restricted stock units upon their appointment to the Board on November 1, 2008, having a value of approximately $23,600 as of that date. This represented a prorated portion of the annual grant made to other non-employee directors in March 2008 and served as partial compensation for Dr. Prabhu and Mr. Robert’s Board service from November 1, 2008 through the 2009 annual shareowners’ meeting.

 

Deferred Compensation Plan.  Directors may defer any portion of their cash or stock compensation pursuant to our Compensation Plan for Non-Employee Directors of ADC Telecommunications, Inc. Cash compensation may be deferred into an interest bearing account based upon the prime commercial rate of Wells Fargo Bank, N.A. Stock compensation deferred is converted to phantom stock indexed to ADC common stock. Any stock deferrals are converted to ADC common stock at the time of the director’s termination from the Board. None of our non-employee directors deferred compensation pursuant to our Compensation Plan for Non-Employee Directors of ADC Telecommunications, Inc. during fiscal 2008.

 

Charitable Donation Programs.  We offer two charitable donation programs in which our non-employee directors may participate. Under our Corporate Leaders in Community Program (the “CLIC Program”), we will make a charitable contribution of up to $5,000 in any one year period to a charitable organization in which a non-employee director is involved. Under our Matching Gift Program (the “Matching Gift Program”), we will match dollar for dollar up to $1,000 per year donations made by our non-employee directors to charitable organizations.

 

Reimbursements.  Non-employee directors are reimbursed for expenses (including costs of travel, food and lodging) incurred in attending Board, committee and shareowner meetings. Directors generally use commercial transportation or their own transportation. Directors also are reimbursed for reasonable expenses associated with other business activities related to their Board service, including participation in director education programs and memberships in director organizations.

Liability Insurance.  We also pay premiums on directors’ and officers’ liability insurance policies covering directors.

 

Director Compensation Table.  The following table discloses the cash, equity awards and other compensation earned by or paid or awarded to, as the case may be, each of our non-employee directors for fiscal 2008.

 

Fiscal 2008 Director Compensation

 

 

 

 

The Compensation Committee periodically reviews Board compensation based on market analysis provided by the Compensation Committee’s compensation consultant, F. W. Cook & Co., Inc. (“F.W. Cook”). The compensation consultant advises the Compensation Committee regarding the competitive position of Board compensation relative to our peer group (as described in the CD&A later in this proxy statement). There are no planned changes to director compensation for fiscal 2009.

 

Our directors are divided into three classes. The members of each class are elected to serve three-year terms, with the term of office of each class ending in successive years. Ms. Martin, Dr. Prabhu, Mr. Rehfeld, and Mr. Roberts are the directors in the class with a term expiring at the annual meeting who are being recommended for election. Dr. Prabhu and Mr. Roberts became members of our Board on November 1, 2008 by action of our Board at the recommendation of our Governance Committee after a search and evaluation process conducted with the assistance of a third-party search firm. Also, following the recommendation of our Governance Committee, our Board has nominated Ms. Martin, Dr. Prabhu, Mr. Rehfeld, and Mr. Roberts for election to the Board at the annual meeting with terms expiring at our annual shareowners’ meeting in 2012.

 

The Board recommends that you vote FOR the above-named nominees for election as directors. Proxies solicited by the Board will, unless otherwise directed, be voted to elect these nominees.

 

In accordance with Minnesota law, directors are elected by a plurality of votes cast. This means that since shareowners will be electing four directors with terms expiring in 2012, the four nominees receiving the highest number of votes will be elected. However, in an uncontested election (where, as at the annual meeting, the number of nominees does not exceed the number of directors to be elected), any nominee for director who receives more votes “withheld” from his or her election than votes “for” his or her election (a “Majority Withheld Vote”) is required under our Majority Vote Policy to offer to tender his or her resignation promptly following certification of the shareowner vote. The Governance Committee will consider the resignation offer and recommend to the Board whether to accept it. The Board will act on the Governance Committee’s recommendation within 90 days following certification of the shareowner vote. The Board promptly will disclose its decision-making process and decision whether to accept the director’s resignation offer (and the reasons for rejecting the resignation offer, if applicable) in a Form 8-K furnished to the SEC. Any director who offers to tender his or her resignation as described above will not participate in the Governance Committee’s recommendation or Board action regarding whether to accept the resignation offer. However, if each member of the Governance Committee received a Majority Withheld Vote at the same election, then the independent directors who did not receive a Majority Withheld Vote will appoint a committee amongst themselves to consider the resignation offers and recommend to the Board whether to accept them. If the only directors who did not receive a Majority Withheld Vote in the same election constitute three or fewer directors, all directors may participate in the action regarding whether to accept the resignation offers.

 

Shares represented by proxies as to which the authority to vote for a nominee has been withheld will be deemed present and entitled to vote for purposes of determining the existence of a quorum and calculating the numbers of votes cast, but will be deemed not to have been voted in favor of the candidate with respect to whom the proxy authority has been withheld. In the unlikely event that the nominees are not candidates for election at the annual meeting, the persons named as proxies will vote for such other persons as the Board or proxies may designate.

 

Set forth below is information regarding the nominees to the Board and the other incumbent directors who will continue to serve after the annual meeting.

 

 

Ms. Martin has been a director of ADC since March 2004. Ms. Martin has served as Senior Vice President and Chief Financial Officer for Capella Education Company, the publicly held parent company of Capella University, an accredited on-line university, since 2004. From 2002 to 2004, Ms. Martin served as Executive Vice President and Chief Financial Officer of World Data Products, Inc., an industry-leading provider of server, storage, network and telecom solutions worldwide. From 1993 to 2001, Ms. Martin was employed by Deluxe Corporation during which time she held a number of positions, including Senior Vice President and Chief Financial Officer, Vice President and Corporate Controller, Vice President and Controller of Deluxe Financial Services Group, Vice President and Controller of Paper Payment Systems Division, Director of Accounting Services, and Director of Internal Audit. Prior to joining Deluxe Corporation, Ms. Martin served as International Controller for Carlson Companies, a privately held international conglomerate. Ms. Martin is also a director of MTS Systems Corporation.

 

Dr. Prabhu has been a director of ADC since November 2008. Dr. Prabhu served as Chief Executive Officer and President of Tellabs, a company that designs, develops, deploys and supports telecommunications networking products around the world, from February 2004 until his retirement in February 2008. Prior to joining Tellabs, Dr. Prabhu held various engineering and management positions at Alcatel, including Chief Operating Officer of Alcatel and Chief Executive Officer of Alcatel USA. From November 2001 until February 2004, Dr. Prabhu was a venture partner in Morgenthaler Ventures, a venture capital firm. Dr. Prabhu is also a director of Altera Corp., Tekelec, Inc., and ADVA Optical Networking.

 

Mr. Rehfeld has been a director of ADC since September 2004. Mr. Rehfeld has served as an adjunct professor for the Executive MBA program at Pepperdine University in California since 1998. Mr. Rehfeld served as Chief Executive Officer of Spruce Technologies, Inc., a DVD authoring software company, during 2001. From 1997 to 2001, Mr. Rehfeld served as Chairman and Chief Executive Officer of ProShot Golf, Inc. He also served as President and Chief Executive Officer of Proxima Corporation from 1995 to 1997 and as President and Chief Executive Officer of ETAK, Inc. from 1993 to 1995. Mr. Rehfeld is also a director of AmeriChip International Inc, Primal Solutions, Inc., and Local.com Corporation. He is also Chairman of the Forum of Corporate Directors in Orange County, California.

 

Mr. Roberts has been a director of ADC since November 2008. Since June 2007, Mr. Roberts has served as Chairman of the Board, President and Chief Executive Officer of Carlisle Companies, a diversified global manufacturing company. Previously he served as Chairman (from April 2006 to June 2007) and President and Chief Executive Officer (from June 2001 to June 2007) of Graco Inc., a manufacturer of fluid handling systems and components used in vehicle lubrication, commercial and industrial settings. Mr. Roberts is also a director of Franklin Electric Co., Inc. and Arctic Cat, Inc. Mr. Roberts and Arctic Cat Inc. previously announced on December 23, 2008 that Mr. Roberts will resign from the Arctic Cat Board of Directors effective as of March 31, 2009.

 

Mr. Boyle has been a director of ADC since November 1999. Mr. Boyle was appointed Chief Executive officer of Arbor Networks, Inc., a company that researches next-generation cyber threats and develops

solutions that prevent network attacks, in June 2005. Prior to joining Arbor Networks, Mr. Boyle served as President and Chief Executive Officer of Equallogic, Inc., a company that develops networked storage by building intelligent storage solutions that extend the benefits of consolidated storage throughout the enterprise, from 2003 to 2004. From April 2000 to July 2003, Mr. Boyle served as Chief Executive Officer of Cogentric, Inc., a provider of solutions to enable decision makers to evaluate and enhance their Web-based capabilities. He served as Senior Vice President of ADC from October 1999 to April 2000 following our acquisition of Saville Systems PLC. Prior to joining ADC, Mr. Boyle served as President and Chief Executive Officer of Saville Systems PLC from August 1994 to October 1999 and as Saville’s Chairman of the Board from April 1998 to October 1999. Mr. Boyle is also a director of Arbor Networks.

 

Dr. Spivey has been a director of ADC since September 2004. Dr. Spivey most recently served as President and Chief Executive Officer of Luminent, Inc., a fiber optics transmission products manufacturer, from July 2000 to November 2001. From 1997 to 2000, Dr. Spivey served as Network Products Group President for Lucent Technologies. He also served as Vice President of the Systems & Components Group at AT&T Corporation/Lucent Technologies from 1994 to 1997. Dr. Spivey is also a director of Novellus Systems, Inc., Raytheon Company, The Laird Group, PLC and Cascade Microtech, Inc.

 

Mr. Switz has been a director of ADC since August 2003 and was appointed Chairman of the Board in August 2008. Mr. Switz has been President and Chief Executive Officer of ADC since August 2003. From January 1994 until August 2003, Mr. Switz served ADC as Chief Financial Officer as well as Executive Vice President and Senior Vice President. Mr. Switz also served as President of ADC’s former Broadband Access and Transport Group from November 2000 to April 2001. Prior to joining ADC, Mr. Switz was employed by Burr-Brown Corporation, a manufacturer of precision micro-electronics, most recently as Vice President, Chief Financial Officer and Director, Ventures & Systems Business. Mr. Switz is also a director of Broadcom Corporation, Micron Technology, Inc. and the Telecommunication Industry Association (TIA).

 

Mr. Wangberg has been a director of ADC since October 2001. Mr. Wangberg served as Chief Executive Officer and Chairman of the Board of TechTV (formerly ZDTV, Inc.), a cable television network focused on technology information, news and entertainment, from August 1997 until his retirement from these positions in July 2002. Previously, Mr. Wangberg was Chief Executive Officer and Chairman of the Board of StarSight Telecast, Inc., an interactive navigation and program guide company, from February 1995 to August 1997. Mr. Wangberg is also a director of Charter Communications, Inc.

 

Mr. Foret has been a director of ADC since February 2003. From September 1998 to September 2002, Mr. Foret served as Executive Vice President and Chief Financial Officer of Northwest Airlines, Inc., a commercial airline company. From September 1998 to September 2002, he also served as Chairman and Chief Executive Officer of Northwest Airlines Cargo Inc., a subsidiary of Northwest Airlines that specializes in cargo transport. From May 1998 to September 1998, Mr. Foret served as a Special Projects Officer of Northwest Airlines, Inc. Prior to that time he served as President and Chief Operating Officer of Atlas Air, Inc. from June 1996 to September 1997 and as Executive Vice President and Chief Financial Officer of Northwest Airlines, Inc. from September 1993 to May 1996. Mr. Foret previously held other senior management positions with various companies including Northwest Airlines, Continental Airlines Holdings, Inc. and KLH Computers, Inc. Mr. Foret is also a director of Delta Air Lines, Inc., URS Corporation and Nash Finch Company.

 

Mr. Gilligan has been a director of ADC since September 2004 and has been Independent Lead Director since August 2008. Since October 2004, Mr. Gilligan has served as the Chief Executive Officer of United Subcontractors, Inc., a nationwide construction services company. Prior to joining USI, Mr. Gilligan served as President and Chief Executive Officer of the Automation and Control Solutions Division of Honeywell International, a diversified technology and manufacturing company, from 2001 to 2004. From 2000 to 2001, Mr. Gilligan served as President of the Home and Building Control Division of Honeywell International. He also served as President of the Solutions and Services Division of Honeywell International from 1997 to 1999 and as Vice President and General Manager of the North American Region of the Home and Building Control Division from 1994 to 1997. Mr. Gilligan is also a director of United Subcontractors, Inc. and Graco Inc.

Mr. Wunsch has been a director of ADC since 1991. Mr. Wunsch served in executive positions with Harris Bank N. A. and Harris myCFO, Inc., which are subsidiaries of the Bank of Montreal, from March 2002 through September 2006. He was an independent consultant in the financial services industry from December 2001 to March 2002. He was President and Chief Executive Officer of Family Financial Strategies, Inc., a registered investment advisory company, from 1997 to 2002. From 1990 to 1997, he served as President of Perrybell Investments, Inc., a registered investment advisory company.

 

As we announced last July, Mr. Blanchard is retiring from our Board effective as of March 4, 2009. In connection with the retirement of Mr. Blanchard and the proposal to elect the nominated directors above, the Board has approved and recommends that the shareowners approve at the annual meeting, a proposal to set the number of directors at eleven. Our Board currently believes that an eleven member Board will be sufficient to meet our needs. In accordance with our Articles of Incorporation and Restated Bylaws, the Board may in the future increase the size of the Board without shareowner approval, provided that any person named by the Board to fill a newly created vacancy must stand for election at the next annual meeting of shareowners following his or her appointment.

 

The Board recommends that you vote FOR setting the size of our Board at eleven. Proxies solicited by the Board will, unless otherwise directed, be voted to set the number of members of our Board at eleven.

 

The affirmative vote of the owners of a majority of the outstanding shares of our common stock is required for the approval of this proposal. If a shareowner abstains from voting on this proposal, then the shares held by that shareowner will be deemed present at the annual meeting for purposes of determining a quorum and for calculating the number of votes cast, but will not be deemed to have been voted in favor of this proposal.

 

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis (the “CD&A”) with management. Based on our review and discussions with management, we recommend to the Board that the CD&A be included in this proxy statement and in our Annual Report on Form 10-K for the year ended October 31, 2008.

 

The Compensation Committee:
John E. Rehfeld, Chair
John A. Blanchard III
J. Kevin Gilligan
John D. Wunsch

 

Overview

 

This CD&A describes the major elements of our compensation program for the executive officers named in the Summary Compensation Table on page 26 of this proxy statement (the “named executive officers”). This CD&A also discusses the objectives, philosophy, processes and decisions underlying the compensation of the named executive officers. The CD&A should be read together with the executive compensation tables and related footnotes found later in this proxy statement.

 

The principal elements of our executive compensation program for fiscal 2008 were:

 

 

The Role of the Compensation Committee

 

The Compensation Committee reviews and approves executive compensation programs and specific compensation arrangements with the named executive officers. The Compensation Committee is composed entirely of independent outside directors. A brief summary of the role of the Compensation Committee is found in the section entitled “Corporate Governance and Board Matters” in this proxy statement. For more information on the role and responsibilities of the Compensation Committee, we encourage you to review the Compensation Committee Charter, which is posted on our website at http://www.adc.com/investorrelations/downloads/compcommitteecharter2007.pdf.

 

The Role of the Compensation Consultant

 

The Compensation Committee charter permits the Compensation Committee to engage independent outside advisors to assist the Compensation Committee in the fulfillment of its responsibilities. The Compensation Committee engages an independent executive compensation consultant, who provides it with information, advice and counsel. Typically, the consultant assists the Compensation Committee by independently reviewing:

 

 

In determining executive compensation for fiscal 2008, the Compensation Committee engaged F.W. Cook as its independent consultant. This selection was made directly by the Compensation Committee. F.W. Cook provides no other compensation or benefit consulting services to ADC.

 

During fiscal 2008, F.W. Cook met regularly with the Compensation Committee in its scheduled meetings. Separately, F.W. Cook also met with the Chair of the Compensation Committee and management representatives in preparation for scheduled Compensation Committee meetings. In these preparation meetings, the efficacy of executive compensation programs was discussed, market survey and peer group data was reviewed, and new programs and modifications to existing programs were reviewed. F.W. Cook offered its opinions concerning management recommendations, made its own recommendations and otherwise advised the Compensation Committee concerning executive compensation at ADC, including compensation for Mr. Switz and the other named executive officers. F.W. Cook also advised the Compensation Committee on the composition of the below described peer group. On occasion, F.W. Cook was directed to perform analysis concerning potential new programs or other matters of interest to the Compensation Committee.

 

The Role of Executive Management in the Process of Determining Executive Compensation

 

Mr. Switz makes recommendations to the Compensation Committee regarding executive compensation decisions for the other named executive officers. Each of these other executives reports directly to Mr. Switz. Ms. Owen, our Vice President and Chief Administrative Officer, is responsible for administering our executive compensation program. Ms. Owen also reviews significant proposals or topics impacting executive compensation with the Compensation Committee. Mr. Mathews, our Chief Financial Officer, provides information and analysis on various aspects of our executive compensation plans, including financial analysis relevant to the process of establishing performance targets for our Management Incentive Plan (“MIP”) and our Executive Management Incentive Plan (“EMIP”) as well for performance-based restricted stock unit (“PSU”) awards. Mr. Pflaum, our General Counsel, acts as Secretary to the Compensation Committee as well as the full Board and other Board committees. Although members of our management team participate in the process of determining executive compensation, the Compensation Committee also meets regularly in executive session without any members of the management team present. The Compensation Committee makes the final determination of the executive compensation package provided to each of our named executive officers.

Key Considerations and Process

 

Program Objectives and Reward Philosophy

 

Our Compensation Committee is guided by the following key objectives and reward philosophies in the design and implementation of our executive compensation program:

 

 

References in the CD&A to “total compensation” refer to the sum of base salary, target annual cash incentives and the fair value of long-term equity incentives on the date of grant and do not necessarily tie to the values found in the Summary Compensation Table found on page 26 and supplemental tables.

 

In applying our program objectives and reward philosophies, the Compensation Committee takes into account the following key considerations and uses the following processes:

 

Competitive Market Assessment.  We regularly conduct a competitive market assessment for each of the primary elements of our executive compensation program. The Compensation Committee does not apply any formulaic approach in setting compensation resulting from the market assessment. Instead, as described above, this information is used to help determine a potential range of compensation, which is then balanced against a variety of other factors in making a final determination of each executive’s compensation. The Compensation Committee used the following sources of information in setting total compensation for fiscal 2008:

 

 

 

Financial and Strategic Objectives.  Our management team developed our fiscal 2008 annual operating plan and our fiscal 2008 three-year strategic plan, the latter of which was approved by our Board. The Compensation Committee utilizes these financial and strategic plans in the development of compensation plans and performance goals for our named executive officers for the next fiscal year.

 

Considerations for Mr. Switz.  The Compensation Committee considers the following additional factors in setting the compensation arrangements for Mr. Switz:

 

 

In determining Mr. Switz’s total compensation for fiscal 2008, the Compensation Committee met with F.W. Cook. The Compensation Committee’s desire was to recognize ADC’s strong financial performance, Mr. Switz’s sustained leadership and contribution to the organization through both positive and negative business cycles, and his management of the transitions of certain senior executive positions during the past fiscal year, and to reinforce its philosophy that strong performance should yield above-median reward.

 

The Compensation Committee reviewed analysis by F.W. Cook regarding ADC’s composite performance relative to our identified peer group. It also reviewed information concerning Mr. Switz’s total compensation compared to the median range of total compensation of the CEOs of companies within our peer group. Mr. Switz’s total compensation was within that desired median range.

 

Considerations for Other Named Executive Officers.  The Compensation Committee considers the following factors in setting the compensation arrangements for each of the other named executive officers:

 

 

 

Application to our Fiscal 2008 Executive Compensation Program

 

Compensation Mix.

 

Fiscal 2008 Compensation Mix.  The table below illustrates the manner for fiscal 2008 in which (a) the overall mix of total compensation was allocated between performance and non-performance based elements for each of the named executive officers; (b) performance based compensation was allocated between annual and long-term elements; and (c) total compensation was allocated between cash and equity.

 

Fiscal 2008
Total Compensation Mix(1)

 

 

 

 

Analysis.  The compensation mix for our named executive officers in fiscal 2008 was weighted significantly toward performance-based compensation in accordance with our pay for performance reward philosophy. This mix of compensation elements is within the median range for the mix of executive compensation provided by the companies included in our peer group and the market survey data described earlier in this CD&A.

Base Salaries.

 

Fiscal 2008 Base Salaries.  We pay a competitive base salary to help us attract and retain talented executives. The amount of the annualized base salary and the year-over-year increase for each of the named executive officers in fiscal 2008 is set forth in the following table:

 

Fiscal 2008 Base Salary Table

 

 

In fiscal 2008, Mr. Switz, received a 4.5% base salary increase based upon the competitiveness of his base salary relative to our peer group and an assessment of his performance in fiscal 2007. Annual base salary increases for the other named executive officers were in the range of 5.0% to 7.1%, and the average annual base salary increase for all named executive officers was 5.62%.

 

Analysis.  Base salaries for each of our named executive officers in fiscal 2008 fall within the median range of salaries paid by the companies in our peer group and the salary surveys we reviewed and are consistent with our competitive pay philosophy. The range of annual salary increases is consistent with those given by companies in both our peer group and the market surveys we reviewed and is consistent with our competitive pay philosophy.

 

Annual Cash Incentives.

 

Annual Cash Incentive Plans.  The primary objective of our annual incentive plans is to provide annual financial incentives for our executives to achieve our key company-wide and business unit financial and strategic goals. This is consistent with our pay for performance reward philosophy. Our named executive officers participate in one of the following two annual cash incentive plans:

 

 

Under both the EMIP and the MIP, the Compensation Committee establishes performance goals and determines the payout amounts for each of the named executive officers. Under the MIP, 25% of their target incentive for each executive is based on the achievement of individual business objectives. These objectives are based on the participant’s organizational role, responsibilities, and function. The EMIP does not include an individual performance component.

 

Target Amount of Annual Incentive Payout.  The Compensation Committee reviews and approves an annual incentive target payout amount (which is a dollar amount stated as a percentage of base salary) under the EMIP and MIP for each named executive officer.

 

Under the MIP, each named executive officer may earn from 0% to 200% of their individual target payout amount. The actual payout amount under the MIP depends on company-wide and business unit financial performance and on the achievement of individual business objectives. At the end of fiscal 2008, Mr. Switz assessed the performance of each named executive officer (other than himself) against their individual business objectives and made a recommendation to the Compensation Committee on the amount of payout to be made to each of the other named executive officers in relation to his or her individual business objectives. The Compensation Committee approved the final amount of each MIP payout. For the named executive officers other than Mr. O’Brien, 75% of the MIP target was based upon company-wide performance goals. For Mr. O’Brien, 37.5% of his targeted percentage was based upon financial performance of the business unit he oversees and the remaining 37.5% was tied to company-wide financial performance goals.

Under the terms of the EMIP, the Compensation Committee establishes a financial threshold that must be achieved as a condition to any incentive payout. The Compensation Committee then has the discretion to lower (but not raise) the amount actually paid under the EMIP if the specified financial threshold is achieved. For purposes of determining the final incentive payout amount under the EMIP for fiscal 2008, the Compensation Committee administered the EMIP such that the payout amount for Mr. Switz was the same as it would have been under the MIP based upon performance against the company-wide financial goals established under the 2008 MIP (as described below).

 

Fiscal 2008 Incentive Plan Performance Goals and Results.  For fiscal 2008, the performance goals established for the MIP were derived from our annual operating plan, which targeted revenue and profitability growth at rates higher than the global revenue growth rates expected for our overall industry at the time the plan was established. The following company-wide performance metrics were used for the 2008 MIP:

 

 

The following table sets forth the business goals for the fiscal 2008 MIP and the corresponding financial results for the year:

 

Fiscal 2008 Incentive Plan Business Performance Goals and Results

 

 

 

 

The following table sets forth the fiscal 2008 awards paid under the MIP and the EMIP to our named executive officers:

 

Fiscal 2008 Annual Incentive Summary(1)

 

 

 

 

Analysis.  The value of the target payout amounts for our MIP is near the market medians of short-term incentives paid to individuals holding similar positions at the companies in the market survey data and peer group data that we reviewed for fiscal 2008. As depicted above, the named executive officers, other than Mr. Switz, were awarded payouts ranging from 90.0% to 91.5% of their total targeted MIP payout amount for fiscal 2008. Mr. Switz received 90.7% of his total targeted EMIP payout amount for fiscal 2008, which was approximately at the median of the short-term incentive payments made by companies included in the peer group data that we reviewed for fiscal 2008.

 

Consistent with our pay for performance philosophy, over the past three fiscal years, the payout for performance against goals for the named executive officers has ranged from 0% to 126.11% of the annual target payout amount. The volatile and challenging industry and market conditions in which ADC operates contributes to significant variations in annual performance against goals and incentive payout amounts against the target level of payout.

 

Long-Term Equity Incentives in Fiscal 2008.

 

Program Design for Long-Term Equity Incentives.  We make long-term equity incentive awards to our executive officers typically in December of each year. These awards represent the largest component of the targeted value of the total compensation paid to our named executive officers. The primary objectives of our equity incentive program are to:

 

 

The following types of equity compensation awards were used in fiscal 2008:

 

 

 

PSUs Granted in Fiscal 2008

 

For grants made in fiscal 2008, the EPS target was tied directly to the planned results of our three-year strategic financial plan, a plan developed by our senior executives and approved by the Board. When designed, the plan is meant to be a realistic depiction of the three-year financial aspirations of the company which, while challenging, are designed to be achievable. In addition, the PSUs granted during fiscal 2008 have a range of potential payout amounts from 0% to 200% of the targeted value of the PSU award. This is different from the “cliff” type vesting used in fiscal 2006 and 2007, which have an all or nothing payout design based on achievement of a specified performance target. Due to the three-year vesting period and the general uncertainty regarding the global economy, including the telecommunications industry, the likelihood that the performance target will be achieved may vary greatly from time to time. At this time, we believe the likelihood of achieving the performance target for the fiscal 2008 PSU grants is no more than 50%. Neither the Compensation Committee, nor ADC, can give any assurances that this estimation will remain the same.

 

The Compensation Committee believes the fiscal 2008 PSU design provides incentive to our executives to continue to drive performance throughout the entire three-year vesting period ending October 31, 2010.

 

PSUs Granted During Fiscal 2006 and 2007

 

Subject to each recipient’s continued employment with ADC through January 11, 2009, the fiscal 2006 PSUs will all vest because we achieved $2.21 cumulative EPS during the performance period exceeding the financial performance threshold. An ESP target of $2.16 for the fiscal 2006 PSUs was established by calculating a 6% compounded annual growth rate based on our fiscal 2005 EPS, the baseline year’s actual achievement. The Compensation Committee arrived at the 6% growth rate based on an average U.S. gross domestic product growth rate of 3% plus a forecasted telecommunications infrastructure industry growth rate of 3%. Fiscal 2007 grants of PSUs were made under a similar methodology as those granted in fiscal 2006 using our cumulative adjusted EPS goal. Based on performance through October 31, 2008, these grants are likely to vest on January 9, 2010. Neither the Compensation Committee, nor ADC, can give any assurances that this estimation will remain the same.

 

At the time the PSU awards for fiscal 2006 and 2007 were granted, the Compensation Committee expressly reserved the discretion to take into account extraordinary circumstances and material unforeseen events that may occur during the performance measurement period when calculating performance against the EPS target. To date, the Compensation Committee has exercised this discretion on two occasions. Once, to exclude a special $10 million contribution by ADC to the ADC Foundation, the proceeds of which will be used for charitable purposes. The other occasion was to exclude the impairment charges and any future recovery of those impairment charges related to auction rate securities held by ADC due to the fact that such charges arise from extraordinary

developments in the credit markets and do not reflect the on-going financial performance of our business operations.

 

 

In fiscal 2008, we began to offer our executives the ability to indicate a preference among a defined mix of different types of equity compensation awards. Our named executive officers (other than Mr. Switz) as well as approximately 100 of our senior managers were eligible to participate in the equity choice program. Our executives were able to indicate a preference for their individual annual equity grants to be made in the form of: (i) 100% stock options; (ii) a mix of one-half stock options and one-half PSUs in approximately equal amounts by value; or (iii) a mix of one-third stock options, one-third PSUs and one-third RSUs in approximately equal amounts by value at the time of grant. After a named executive officer indicated his or her preference, our Compensation Committee made the final determination of the actual amount and form of equity compensation awards made to the named executive officer. In designing this plan, we valued an RSU higher than we valued a PSU and we valued a PSU higher than we valued a stock option. Therefore, to deliver the same targeted value, a recipient would receive a lower number of RSUs when compared to PSUs and a lower number of PSUs when compared to stock options.

 

This program of allowing executives to indicate a preference is intended to recognize that each participant has unique financial circumstances and personal preferences. We believe that this new equity choice program differentiates ADC as an attractive and innovative employer and will enhance our efforts to retain and attract superior executive talent.

 

For fiscal 2008, the named executive officers received equity awards in the following percentages:

 

Fiscal 2008 Equity Award Percentages at Time of Grant

 

 

Analysis.  Our long-term incentives are consistent in value with those offered by our competition based on our analysis of both compensation survey information and our peer group. The equity compensation awards made to Mr. Switz in fiscal 2008 were made based upon an analysis presented by F.W. Cook and a determination by the Compensation Committee that the grants established total compensation within a desired median range of total compensation of the CEOs of companies within our peer group. The Compensation Committee believes these grants recognized Mr. Switz’ strong financial management of ADC and provided him with significant motivation for future success. The specific numbers of stock options, PSUs and RSUs that were granted to each of our named executive officers in fiscal 2008 are set forth in the table entitled “Fiscal 2008 Grants of Plan-Based Awards” in the executive compensation tables found later in this proxy statement.

 

Executive Stock Ownership Guidelines.  The Compensation Committee also maintains ADC stock ownership targets for executive officers as another means of aligning the interests of the named executive officers and the interests of our shareowners. The stock ownership targets for our named executive officers are expressed as a fixed number of shares below, which represent the targeted number of shares that each named executive officer is to own over time. For equity compensation awards made since fiscal 2004, the

Compensation Committee instituted a requirement that each executive officer must hold at least 50% of shares received upon the exercise of stock options and the vesting of PSUs and RSUs (after reduction for the payment of taxes and the exercise costs) until such time as the targeted stock ownership level is achieved by the executive.

 

 

 

 

Executive Severance Pay.

 

The levels of severance pay and benefits that may be provided under our severance pay arrangements and practices are competitive with market practices. Our Compensation Committee believes that severance pay and benefits are important elements of a total compensation program designed to attract and retain senior executives. Executive severance pay, including our Executive Change-in-Control Severance Pay Plan, is described in detail in the section entitled “Employment, Severance, and Change in Control Arrangements” beginning on page 32 of this proxy statement.

 

Executive Benefits and Perquisites.

 

Primary Benefits.  Our named executive officers are eligible to participate in the same employee benefit plans in which all other eligible U.S. salaried employees participate. These plans include medical, dental, life insurance, disability and a qualified retirement savings plan. We also maintain a nonqualified savings plan in which our named executive officers are eligible to participate. This nonqualified plan has the same general plan features and benefits as our qualified retirement plan and is designed for all United States salaried employees who are affected by tax law limits on compensation, contributions and/or deductions.

 

Cash Allowance in lieu of Perquisites.  For a number of years, we have provided each named executive officer with an annual cash allowance in lieu of providing the perquisites available at many other companies. In fiscal 2008, we provided our named executive officers with an annual executive allowance that could be used at their discretion for any purpose, including for various professional services (such as financial counseling, tax preparation, estate planning and investment advice), club membership, automobile purchase/lease, or home security systems and services. The specific allowance amount paid to each of the named executive officers in fiscal 2008 is reflected in the Summary Compensation Table found on page 26 of this proxy statement.

 

Other Perquisites.  In addition to a cash allowance for Mr. Switz, we reimburse club membership fees pursuant to the terms of his employment agreement. We also allow Mr. Switz periodic use of a leased company fleet vehicle for which we pay lease maintenance and registration fees and Mr. Switz pays all operating costs.

 

Charitable Donation Program.  Our named executive officers may participate in our CLIC Program. Under the CLIC Program, we will make a charitable contribution of up to $5,000 in any one year period to a charitable organization in which a named executive officer actively is involved.

 

Analysis.  The overall value of our benefit plans and perquisites is competitive with market practices based on our analysis of market surveys and peer group data.

Additional Information and Considerations

 

Accounting, Tax and Financial Considerations.  The Compensation Committee carefully considers the accounting, tax and financial consequences of the executive compensation and benefit programs implemented by ADC. The following are some of the more important considerations we took into account when implementing our compensation programs:

 

 

Executive Compensation Changes Anticipated in Fiscal 2009.  We implemented certain changes to our executive compensation program for fiscal 2009. These changes are intended to aid us in attracting, motivating and retaining key employees going forward. The primary changes for fiscal 2009 include:

 

 

Fiscal Year End Change.  As previously announced, we are planning to change our fiscal year end date from October 31 to September 30 effective as of September 30, 2009. Because our fiscal year 2009 will be a

shortened (or “transition”) year, we have modified certain executive compensation elements to ensure congruity with that shorter year. Specifically, the following one-time modifications will occur:

 

 

The following table shows the cash and non-cash compensation for the last two fiscal years awarded to or earned by individuals who served as our chief executive officer or chief financial officer and each of our three other most highly compensated executive officers during fiscal 2008 (collectively, the “named executive officers”).

 

Summary Compensation Table

 

 

 

 

 

Fiscal 2008 All Other Compensation

 

 

 

 

 

The following table summarizes the fiscal 2008 grants of equity and non-equity plan-based awards to the named executive officers. All of these equity and non-equity plan-based awards were granted under our GSIP, EMIP and 2008 MIP.

 

Fiscal 2008 Grants of Plan-Based Awards

 

 

 

 

The following table shows the unexercised stock options, unvested RSUs, and unvested PSUs held as of October 31, 2008 by the named executive officers.

 

Outstanding Equity Awards at Fiscal Year-End