Human Resources Strategy Bob Hetzel

Human Resources Six Sigma Structure Executive Steering Committee Daniel Casteel Division HR Champion Tonya Miller ADT HR Champion Mike Esposito SimplexGrinnell HR Champion Anne Liming Tyco Safety Products HR Champion Bob Hetzel TFS – Communication & Training Lisa Turner

Black Belt Life Cycle Selection Training Assigned Projects Application Appraisal/Exam Certification Ongoing Projects New Assignment

Human Resources Support Key areas of focus include: Recruiting, Screening and Selection Certification Career development and succession planning Early Exit Strategy Six Sigma Project Team Support Compensation Six Sigma changes our approach to work. It focuses on our customer / supplier relationships – internal and external. It’s a different use of metrics.

Recruiting, Screening & Selection Develop and post Black Belt and Project Champion position descriptions Identify high potential BB and PC talent through Leadership Planning Process (LPP) Employ behavioral interviewing techniques to screen candidates Phase I – Safety Products Training Position Allocation Wave I – Transactional (5 BBs) Wave II - Safety Products Mfg. – (30 BBs) Wave I - Design For Six Sigma – (30 BBs) Six Sigma changes our approach to work. It focuses on our customer / supplier relationships – internal and external. It’s a different use of metrics.

Black Belt certification is defined as: Completion training coursework Completion of required number of projects Delivery of required financial savings Passing black belt certification exam

Career Development and Succession Planning Assess Project Champion/Black Belt needs Create career development plans Provide career development coaching, mentoring and training as necessary Integrate assignments into Succession Planning process Ensure transition back into a business unit at the end of full time Black Belt and Project Champion assignments

Self-Select out of program Fail to satisfy classroom evaluation Early Exit Strategy Identify appropriate way to handle Black Belts and Project Champions who: Self-Select out of program Fail to satisfy classroom evaluation Do Not Complete Training Do not close projects Do not meet financial hurdles Six Sigma changes our approach to work. It focuses on our customer / supplier relationships – internal and external. It’s a different use of metrics.

Provide HR data, metrics and analysis Support Six Sigma Project Teams Provide HR data, metrics and analysis Address HR implications of business process improvements

Compensation Objectives Attract and retain high potential talent Reward and recognize specific six sigma achievements

Compensation Strategy Provide BB’s & PC’s an increase in total cash compensation compared to existing business role Delivered through an increased incentive opportunity Candidates will be selected from a wide range of roles and therefore, may have a wide range of base salary and target incentive opportunity Variation in pay is acceptable; no attempt to align compensation Higher compensated Black Belts should demonstrate higher competencies, and should generally focus on larger, more impactful projects

Most BB’s & PC’s will retain current annual base salary - Eligible for future salary increases in accordance with the company’s merit increase guidelines Annual performance review for BB’s conducted by Project Champion Annual performance review for PC’s conducted by BU Executives and Deployment Champion HR Champion will ensure performance management consistency

Annual Base Salary If a BB equity adjustment is necessary, it should occur following Black Belt Certification - Increase is based on successful completion of the training program Tyco Safety Products HR Champion and BU Executive Steering Committee, will be responsible for approving all BB and PC base salary increases - Provides equitable and consistent decision process across all business units

Title Assignment Full-Time Black Belt Part-Time Black Belt Assigned Six Sigma Black Belt title Part-Time Black Belt Retain current position title May use Six Sigma Black Belt designation

Certification Award Provide a compensation award upon Black Belt Certification - Amount of award is consistent for all TFS Black Belts; reinforces team relationship - Fulfillment of Certification requirements determined by Steering Committee Award provides recognition - of their personal achievement and development - the value of the certification to the company - the results of projects completed as part of the certification process

BB Certification Award Cash Award - $2,500 immediately upon certification - Applies to FT and PT Black Belts - Immediate recognition - Greater alignment to individual results Stock Options - One time special option grant at the time of Black Belt certification (number of shares TBD) - Long-term time commitment to recognize value - Greater alignment to Tyco International results

Incentive Compensation Target incentive opportunity increased 10 percentage points compared to FY03 incentive target for current position upon completion of Black Belt Certification - Applies to FT Black Belts only Supports importance of role within the company and the impact of their contributions to overall business performance - Full time Project Champions eligible for 10% increase as well Black Belt candidates not currently on an annual incentive plan in FY03 will receive an incentive opportunity equal to 10% of their current base salary - Applies to FT Black Belts only

Incentive Measurements 80% - EBIT and FCF of business unit aligned to Six Sigma projects - Provides a strong association to deployment projects as individuals in BB & PC roles will most likely focus on projects closely aligned to their business unit - Six Sigma savings and/or profit improvement are reflected in business unit financial measurements 20% - EBIT and FCF of next level up business unit - Supports teamwork across the Safety Products organization

Incentive Compensation Individual Modifier - Applies to Black Belts and Project Champions - Adjustment for individual performance goals not captured in the financial measurements - Recognizes both superior performance (positive modifier) and underperformance (negative modifier) - Amount of Modifier is discretionary, but reasonable, i.e. +/- 25% - Used to account for direct results of Six Sigma projects

Incentive Compensation Incentives will be paid on an annual basis - No quarterly payments; not consistent with timing of BB and PC contributions Proration of Target BB and PC Incentive Percentage 10 percentage point increase in BB incentive opportunity will prorated to the time of Black Belt Certification…not acceptance to the program - Full Time Project Champions 10% prorated for time on project BB’s and PC’s that self-select out or do not close projects - Revert back to original incentive percentage opportunity upon exit from the program - No incentive premium will be paid for the period of time that an employee was in the program

Incentive Compensation Balance of FY03 Year Guarantee FY03 incentive target equal to the amount Black Belt and Project Champion would have earned had he/she remained in former role

Incentive Payout Example Assumptions: Base salary = $100,000 Original Target Incentive (PII) = 20% of base salary or $20,000 Black Belt Premium = 20% + additional 10% = 30% or 30,000 Region Business Unit Result EBIT 40% FCF 10% Total Incentive Payment Ind. Modifier Final Incentive Incentive payout % of Base Salary PIII 18,000 4,500 45,000 20% 54,000 54.0% PII 12,000 3,000 30,000 33,000 33.0% PI 6,000 1,500 15,000 -5% 14,250 14.25%

Human Resources Support Deployment Timeline Six Sigma Mfg Posting/Selection March 27, 2003 Identify/Select Mfg BB Candidates April 8, 2003 Project Champion Training April 22, 2003 Mfg. BB FAStart Program April 29, 2003 Mfg. BB Training May 5, 2003 DFSS BB Training May 12, 2003