<Page>
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
<Table>
FILED BY THE REGISTRANT /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
</Table>
<Table>
TYCO INTERNATIONAL LTD.
- ------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE
REGISTRANT)
</Table>
Payment of Filing Fee (Check the appropriate box):
<Table>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</Table>
<Page>
[TYCO LOGO]
January 28, 2002
Dear Shareholder,
I am pleased to invite you to attend our 2002 Annual General Meeting of
Shareholders, which will be held on February 21, 2002 at 9:30 a.m., Atlantic
Time, at the Fairmont Hamilton Princess Hotel, 76 Pitts Bay Road, Pembroke HM
08, Bermuda.
As discussed in the accompanying proxy statement, you will be asked at the
Annual General Meeting to elect the Board of Directors and to re-appoint our
auditors and authorize the Board of Directors to fix the auditor's remuneration.
Your vote is important. Whether or not you are able to attend, it is
important that your shares be represented at the meeting. Accordingly, please
sign, date and return the enclosed proxy card at your earliest convenience.
As announced on January 22, 2002, we plan to separate Tyco into four
independent, publicly traded companies: Security and Electronics; Healthcare;
Fire Protection and Flow Control; and Financial Services. We will update you on
the details of the transactions contemplated under this plan in the following
months. Our objective has always been to deliver value to our shareholders. That
is why we are taking these actions, and why we are very excited about the
future.
Thank you for your cooperation.
Yours sincerely,
/s/ L. Dennis Kozlowski
L. DENNIS KOZLOWSKI
Chairman and
Chief Executive Officer
Tyco International Ltd.
The Zurich Centre, Second Floor, 90 Pitts Bay Road, Pembroke HM 08, Bermuda
<Page>
TYCO INTERNATIONAL LTD.
NOTICE OF 2002 ANNUAL GENERAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 2002 Annual General Meeting of Shareholders
of Tyco International Ltd. will be held on February 21, 2002 at 9:30 a.m.,
Atlantic Time, at the Fairmont Hamilton Princess Hotel, 76 Pitts Bay Road,
Pembroke HM 08, Bermuda, for the following purposes:
- To receive Tyco's audited consolidated financial statements for the fiscal
year ended September 30, 2001;
- To elect the Board of Directors; and
- To re-appoint PricewaterhouseCoopers as the independent auditors and to
authorize the Board of Directors to fix the auditors' remuneration.
Tyco's 2001 Annual Report to shareholders, which includes the audited
consolidated financial statements of Tyco for the fiscal year ended
September 30, 2001, is being mailed to shareholders along with the attached
proxy statement.
Notice of the meeting has been sent to all holders of record of Tyco common
shares at the close of business on January 21, 2002. Each holder of a common
share is entitled to one vote for each share held on any matter decided on a
poll. Notice of the meeting has also been sent to Computershare Trust Company of
Canada (the "Trustee"), who is the holder of a special voting preference share
in Tyco (the "Preference Share") under a voting and exchange trust agreement.
Pursuant to that trust agreement, each registered holder of exchangeable shares
("Exchangeable Shares") of CIT Exchangeco Inc., a Canadian subsidiary of Tyco,
can instruct the Trustee how to vote at the meeting. On a poll, the Trustee is
entitled to 0.6907 of a vote for each outstanding Exchangeable Share (other than
Exchangeable Shares owned by Tyco and its affiliates) for which the Trustee has
received timely voting instructions. A poll will be taken on each proposal to be
put to the meeting.
The holders of Tyco common shares and the Trustee will vote together as a
single class on all matters. Proxy cards are enclosed for shareholders who hold
Tyco common shares. Notice will also be mailed to shareholders who become
holders of record of Tyco common shares through February 14, 2002. All holders
of record of Tyco shares on the date of the meeting will be entitled to attend
and vote at the meeting. Any Tyco shareholder who does not receive a copy of the
proxy statement and accompanying proxy card may obtain a copy at the meeting or
by contacting Tyco at (441) 292-8674.
Tyco shareholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend the meeting, please sign, date and return the
enclosed proxy card to ensure that your shares are represented at the meeting.
Registered Tyco shareholders who attend the meeting may vote their shares
personally, even though they have sent in proxies.
If your Tyco shares are held in a brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares "held in street
name," and these proxy materials are being forwarded to you by your broker or
nominee. Your name does not appear on the register of shareholders and, in order
to be admitted to the meeting, you must bring a letter or account statement
showing that you are the beneficial owner of the shares. You will not be able to
vote at the meeting and you should instruct your broker or nominee how to vote
on your behalf. If you are a participant in a Tyco benefit plan, your proxy card
will serve as voting instructions to the trustee(s) of such plan. Voting
instruction cards are enclosed for holders of Exchangeable Shares who should
follow carefully the instructions which accompany this Proxy Statement.
By Order of the Board of Directors,
Mark A. Belnick
Executive Vice President and
Chief Corporate Counsel
January 28, 2002
IMPORTANT: PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE. THE PROXY IS REVOCABLE AND IT WILL NOT BE USED IF YOU: GIVE WRITTEN
NOTICE OF REVOCATION TO THE SECRETARY AT TYCO INTERNATIONAL LTD., THE ZURICH
CENTRE, SECOND FLOOR, 90 PITTS BAY ROAD, PEMBROKE HM 08, BERMUDA PRIOR TO THE
VOTE TO BE TAKEN AT THE MEETING; LODGE A LATER-DATED PROXY; OR ATTEND AND VOTE
AT THE MEETING.
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
--------
INTRODUCTION................................................ 1
Solicitation of Proxies................................... 1
Registered and Principal Executive Offices................ 1
Voting Rights............................................. 1
Required Vote............................................. 2
Voting Your Proxy......................................... 2
Costs of Solicitation..................................... 3
PRESENTATION OF FINANCIAL STATEMENTS........................ 3
PROPOSAL NUMBER ONE--ELECTION OF DIRECTORS.................. 4
Nominees for Director..................................... 4
PROPOSAL NUMBER TWO--RE-APPOINTMENT OF INDEPENDENT
AUDITORS.................................................. 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 8
BOARD OF DIRECTORS COMMITTEES AND REPORTS; DIRECTOR AND
EXECUTIVE COMPENSATION.................................... 10
Board Meetings and Committees............................. 10
Summary of Directors' Compensation........................ 11
Audit Committee Report.................................... 12
Executive Officers........................................ 13
Executive Compensation.................................... 14
SHAREHOLDER RETURN PERFORMANCE PRESENTATION................. 25
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 26
SHAREHOLDER PROPOSALS FOR THE 2003 ANNUAL GENERAL MEETING... 26
UNITED STATES SECURITIES AND EXCHANGE COMMISSION REPORTS.... 26
GENERAL..................................................... 26
</Table>
<Page>
PROXY STATEMENT
2002 ANNUAL GENERAL MEETING OF SHAREHOLDERS
FEBRUARY 21, 2002
INTRODUCTION
SOLICITATION OF PROXIES
This proxy statement and accompanying proxy card are furnished in connection
with the solicitation of proxies by and on behalf of the Board of Directors of
Tyco International Ltd. ("Tyco" or the "Company") in connection with the 2002
Annual General Meeting of Shareholders of Tyco to be held on February 21, 2002.
This proxy statement and the accompanying proxy card are being mailed on or
about January 28, 2002 to Tyco common shareholders and to Computershare Trust
Company of Canada (the "Trustee"), who holds a special voting preference share
of Tyco (the "Preference Share") under a voting and exchange trust agreement
pursuant to which each registered holder of exchangeable shares ("Exchangeable
Shares") of CIT Exchangeco Inc., a Canadian subsidiary of Tyco, can instruct the
Trustee how to vote at the meeting.
REGISTERED AND PRINCIPAL EXECUTIVE OFFICES
The registered and principal executive offices of Tyco are located at The
Zurich Centre, Second Floor, 90 Pitts Bay Road, Pembroke HM 08, Bermuda. The
telephone number there is (441) 292-8674.
VOTING RIGHTS
Notice of the meeting has been sent to all holders of record of Tyco common
shares and of the Preference Share at the close of business on January 21, 2002.
On that date, there were outstanding and entitled to vote 1,993,231,125 common
shares, including 27,048,871 common shares owned by subsidiaries of Tyco and
including 3,738,435 common shares representing the assumed conversion of
Exchangeable Shares (but excluding Exchangeable Shares owned by Tyco and its
affiliates which will not be voted). Notice will also be mailed to shareholders
who become holders of record of Tyco common shares through February 14, 2002.
Any Tyco shareholder who does not receive a copy of the proxy statement and
accompanying proxy card may obtain a copy at the meeting or by contacting Tyco
at (441) 292-8674. All holders of record of Tyco shares on the date of the
meeting will be entitled to attend and vote at the meeting. A poll will be taken
on each proposal to be put to the meeting. Every holder of a common share will
be entitled to one vote per share on each proposal and the Trustee will be
entitled to 0.6907 of a vote for each outstanding Exchangeable Share (other than
Exchangeable Shares owned by Tyco and its affiliates) for which the Trustee has
received timely voting instructions. Two holders of common shares present in
person or by proxy form a quorum for the transaction of business.
For admission to the meeting, registered Tyco shareholders (those who own
Tyco shares in their own names) should come to the Registered Shareholders
check-in area, where their ownership will be verified. Those who have beneficial
ownership of shares held by a bank or broker (often referred to as "holding in
street name") should come to the Beneficial Owners check-in area. To be
admitted, beneficial owners must bring account statements or letters from their
banks or brokers showing that they own Tyco shares, but they will not be able to
vote at the meeting. Beneficial shareholders should instruct their broker or
bank how to vote on their behalf. Holders of Exchangeable Shares should also
come to the Beneficial Owners check-in area for admission to the meeting. Voting
instruction cards are enclosed for holders of Exchangeable Shares who should
follow carefully the instructions that accompany this proxy statement.
Registration will begin at 9:00 a.m., and the meeting will begin at 9:30 a.m.
The proxy card that is being mailed with this proxy statement to holders of
record is also being sent to persons who have interests in Tyco shares through
participation in the stock funds of the Tyco retirement savings plans and
employee stock purchase plans. Such persons are not eligible to vote directly at
the
1
<Page>
meeting. They may, however, instruct the trustees of such plans how to vote the
shares represented by their interests. The enclosed proxy card will also serve
as voting instructions for the trustees of the plans.
REQUIRED VOTE
The affirmative vote of a majority of the shares represented and voting at
the meeting is required for the election of directors and the re-appointment of
Tyco's independent auditors and authorization for the Board of Directors to fix
the auditors' remuneration. The holders of Tyco common shares and the Trustee
will vote together as a single class on all matters. Pursuant to Bermuda law,
(i) shares represented at the meeting whose votes are withheld on any matter,
(ii) shares which are represented by "broker non-votes" (i.e., shares held by
brokers which are represented at the meeting but with respect to which the
broker is not empowered to vote on a particular proposal) and (iii) shares which
abstain from voting on any matter are not included in the determination of the
shares voting on such matter but are counted for quorum purposes.
VOTING YOUR PROXY
A proxy card has been enclosed with this document.
Tyco shares represented by a properly executed proxy will be voted as
directed on the proxy card. In the absence of contrary direction from a
shareholder, proxies held by the chairman of the meeting will be voted FOR the
election of eleven (11) directors and FOR the re-appointment of Tyco's
independent auditors and authorization for the Board of Directors to fix the
auditors' remuneration.
A registered Tyco shareholder may revoke a proxy by giving written notice of
revocation to Tyco's Secretary at Tyco's registered office at any time before it
is voted, by submitting a later-dated proxy or by attending the meeting and
voting in person.
Tyco shareholders should complete and return the proxy card as soon as
possible. To be valid, the proxy card must be completed in accordance with the
instructions on it and received at any one of the addresses set forth below by
the times (being local times) and dates specified:
IN BERMUDA:
by 8:00 a.m. on February 21, 2002 by hand or mail at:
Tyco International Ltd.
The Zurich Centre
Second Floor, 90 Pitts Bay Road
Pembroke HM 08, Bermuda
IN THE UNITED KINGDOM:
by 5:00 p.m. on February 20, 2002 by hand or mail at:
Tyco International Ltd.
c/o Tyco Holdings (UK) Limited
27th Floor, Tower 42
The International Financial Centre
25 Old Broad Street
London EC2N 1HQ
United Kingdom
2
<Page>
IN AUSTRALIA:
by 5:00 p.m. on February 20, 2002 by hand or mail at:
Tyco International Ltd.
c/o Tyco International Pty. Limited
Level 6
12 Help Street
Chatswood NSW 2067
Australia
IN THE UNITED STATES:
by 8:00 a.m. on February 21, 2002 by mail at:
Tyco International Ltd.
c/o Mellon Investor Services
P.O. Box 3547
South Hackensack, NJ 07606-9247
United States of America
COSTS OF SOLICITATION
The cost of solicitation of proxies will be paid by Tyco. Tyco has engaged
MacKenzie Partners, Inc. as the proxy solicitor for the meeting for an
approximate fee of $9,500. (All references to "$" in this proxy statement are to
United States dollars.) In addition to the use of the mails, certain directors,
officers or employees of Tyco may solicit proxies by telephone or personal
contact. Upon request, Tyco will reimburse brokers, dealers, banks and trustees,
or their nominees, for reasonable expenses incurred by them in forwarding proxy
materials to beneficial owners of shares.
PRESENTATION OF FINANCIAL STATEMENTS
In accordance with Section 84 of the Companies Act 1981 of Bermuda, Tyco's
audited consolidated financial statements for the fiscal year ended
September 30, 2001 will be presented at the meeting. These statements have been
approved by Tyco's directors. There is no requirement under Bermuda law that
such statements be approved by shareholders, and no such approval will be sought
at the meeting.
3
<Page>
PROPOSAL NUMBER ONE--ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR
The election of directors will take place at the meeting. Each of the
directors elected will serve until the 2003 Annual General Meeting. All nominees
have served as directors since our last annual meeting. Tyco's management is not
aware of any reason why any of the nominees will not be able to serve.
Election of the nominees to the Board of Directors will require the
affirmative vote of a majority of the votes cast by holders of the shares
represented at the meeting in person or by proxy.
Information as of November 30, 2001 regarding the nominees, including all
positions and offices with Tyco and their principal occupations and employment
during the past five years, is set forth below. Former Tyco refers to Tyco
International Ltd., a Massachusetts corporation at the time, that merged with a
wholly-owned subsidiary of ADT Limited, a Bermuda company, in July 1997. In the
merger, ADT Limited, as the continuing public company, changed its name to Tyco
International Ltd. Former Tyco became a wholly-owned subsidiary of Tyco and
changed its name to Tyco International (US) Inc.
<Table>
<Caption>
% OF
OUTSTANDING
NUMBER OF COMMON
COMMON SHARES
DIRECTOR SHARES OWNED OWNED
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS AGE SINCE BENEFICIALLY(1) BENEFICIALLY
- -------------------------------------------------- --------- -------- ---------------- ------------
L. Dennis Kozlowski............................ 55 1997 13,364,508(2) (12)
Chairman of the Board, President and Chief
Executive Officer, Tyco (July 1997-present);
Chairman of the Board, Former Tyco (January
1993-July 1997); Chief Executive Officer, Former
Tyco (July 1992-present); President, Former Tyco
(1989-present); Director, Raytheon Company
Lord Ashcroft KCMG............................. 55 1984 5,983,552(3)(13) (12)
Chairman, Carlisle Holdings Limited (services
company) (1987-present); Chairman of the Board
and Chief Executive Officer of ADT Limited
(1984-July 1997)
Joshua M. Berman (4)........................... 63 1997 171,800(4)(13) (12)
Vice President, Tyco (July 1997-present);
Counsel to Kramer Levin Naftalis & Frankel LLP
(counselors at law) (April 1985-February 2000);
Director, Former Tyco (1967-1997)
Richard S. Bodman*+............................ 63 1997 147,794(5)(13) (12)
Managing General Partner, VMS Group (venture
capital) (May 1996-present); Senior Vice
President, Corporate Strategy and Development,
AT&T Corporation (communications) (August
1990-May 1996); Director, Internet Security
Systems, Inc. and Knology, Inc.; Director,
Former Tyco (1992-1997)
</Table>
4
<Page>
<Table>
<Caption>
% OF
OUTSTANDING
NUMBER OF COMMON
COMMON SHARES
DIRECTOR SHARES OWNED OWNED
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS AGE SINCE BENEFICIALLY(1) BENEFICIALLY
- -------------------------------------------------- --------- -------- ----------------- ------------
John F. Fort, III*+............................. 60 1997 151,692(6)(13) (12)
Chairman of the Board of Directors, Insilco
Corp. (diversified manufacturer) (November
1998-present); Chairman of the Board and Chief
Executive Officer, Former Tyco (1982-1992);
Director, Thermadyne Holdings Corporation, Roper
Industries, Inc. and Manufacturers' Services
Limited; Director, Former Tyco (1982-1997)
Stephen W. Foss**............................... 59 1997 130,733(7)(13) (12)
Chairman and Chief Executive Officer, Foss
Manufacturing Company, Inc. (manufacturer of
synthetic fibers and non-woven fabrics)
(1969-present); Director, Ameron International
Corporation; Director, Former Tyco (1983-1997)
Wendy E. Lane*.................................. 50 2000 22,217(8)(13) (12)
Chairman, Lane Holdings, Inc. (private equity
investment firm) (1992-present); Director,
Laboratory Corporation of America Holdings
James S. Pasman, Jr.**.......................... 70 1992 41,657(9)(13) (12)
Director, CSAM Income Fund, Inc., CSAM High
Yield Fund, Inc. and Education Management
Corporation; Trustee, Deutsche Bank VIT Funds;
Director of approximately 50 funds in the
Warburg Pincus Funds Complex and the Credit
Suisse Institutional Funds Complex
W. Peter Slusser**.............................. 72 1992 39,244(10)(13) (12)
President, Slusser Associates, Inc. (investment
banking firm) (1988-present); Director, Ampex
Corporation and Sparton Corporation
Mark H. Swartz.................................. 41 2001 5,746,095(11) (12)
Executive Vice President and Chief Financial
Officer, Tyco (July 1997-present); Vice
President and Chief Financial Officer, Former
Tyco (February 1995-present); Director of
Mergers and Acquisitions, Former Tyco
(1993-1995)
Joseph F. Welch................................. 66 2001 3,800(13) (12)
President and Chief Executive Officer, The
Bachman Company (snack food producer)
(1980-present)
</Table>
- ------------------------
* Member of Audit Committee
** Member of Compensation Committee
+ Member of Corporate Governance and Nominating Committee
5
<Page>
(1) The amounts shown are the number of common shares owned beneficially as of
November 30, 2001, based on information furnished by the persons named. A
person is deemed to be the beneficial owner of shares if such person, either
alone or with others, has the power to vote or to dispose of such shares.
Shares beneficially owned by a person include shares of which the person has
the right to acquire beneficial ownership within 60 days, including under
stock options that were exercisable on November 30, 2001 or that become
exercisable within 60 days after November 30, 2001. The amounts shown do not
reflect common shares or options (including those options exercisable on
November 30, 2001 or becoming exercisable within 60 days of November 30,
2001) of TyCom Ltd., which was amalgamated with a subsidiary of Tyco on
December 18, 2001. In the amalgamation, each outstanding TyCom common share
was converted into 0.3133 of a Tyco common share, and each outstanding
option to purchase TyCom shares was converted into an option to purchase
Tyco shares in a corresponding ratio. The number of TyCom shares held by
each of the director nominees as of November 30, 2001 was as follows:
Mr. Kozlowski's KFT Family Parternship, L.P.--200,000 shares;
Mr. Berman--10,000 shares; Mr. Fort--9,000 shares; Mr. Pasman--5,000 shares;
Mr. Slusser--1,000 shares; and Mr. Swartz' family partnership--75,000
shares. Options to purchase TyCom shares were converted to options to
purchase the following number of Tyco common shares, at an exercise price of
$102.14 per share: Mr. Kozlowski--62,660 shares; Mr. Swartz--39,163 shares;
and each of the other directors except Mr. Welch--2,193 shares. There were
1,976,872,383 Tyco common shares (including 3,931,546 common shares
representing the assumed conversion of the Exchangeable Shares not owned by
Tyco and its affiliates) outstanding as of November 30, 2001 (this amount
does not include any Tyco shares issuable in exchange for TyCom shares).
(2) The amount shown includes 10,435,192 shares that Mr. Kozlowski has the right
to acquire through the exercise of stock options. The amount also includes
1,558,870 shares which are held by the KFT Family Partnership, L.P., of
which Mr. Kozlowski is the sole general partner; and 391,075 shares which
are held by the DCS Family Partnership L.P., of which Mr. Kozlowski controls
all the general partnership interest. The amount shown excludes
523,800 shares held in a charitable remainder trust, of which Mr. Kozlowski
disclaims beneficial ownership.
(3) The amount shown consists of 5,947,180 shares held by or on behalf of a
company controlled by the trustee of a family trust in which Lord Ashcroft
is beneficially interested and 36,372 shares that Lord Ashcroft has the
right to acquire through the exercise of stock options.
(4) The amount shown includes 105,896 shares held in two charitable remainder
trusts of which Mr. Berman is co-trustee and Mr. Berman and members of his
immediate family are life unitrust beneficiaries. The amount shown also
includes 43,800 shares that Mr. Berman has the right to acquire through the
exercise of stock options. The law firm of Kramer Levin Naftalis & Frankel
LLP has performed and continues to perform legal services for Tyco.
(5) The amount shown includes 43,800 shares that Mr. Bodman has the right to
acquire through the exercise of stock options.
(6) The amount shown includes 31,862 shares that Mr. Fort has the right to
acquire through the exercise of stock options and excludes 2,142 shares
which are held by Mr. Fort as custodian for his child and 3,250 shares held
by his spouse, of which Mr. Fort disclaims beneficial ownership.
(7) The amount shown includes 23,620 shares that Mr. Foss has the right to
acquire through the exercise of stock options. The amount shown also
includes 42,856 shares held by the Foss Manufacturing Company Pension Plan
and 10,000 shares held by the A.S. Foss Foundation.
(8) The amount shown includes 19,065 shares that Ms. Lane has the right to
acquire through the exercise of stock options.
(9) The amount shown includes 37,809 shares that Mr. Pasman has the right to
acquire through the exercise of stock options.
(10) The amount shown includes 31,713 shares that Mr. Slusser has the right to
acquire through the exercise of stock options.
6
<Page>
(11) The amount shown includes 5,076,623 shares that Mr. Swartz has the right to
acquire through the exercise of stock options. The amount shown also
includes 368,563 shares held by a family partnership and 900 shares held in
custody for his children.
(12) Less than 1%.
(13) The amounts shown do not include options awarded as director compensation
for the fiscal year ending September 30, 2002, as follows: Ms. Lane, Lord
Ashcroft and each of Messrs. Berman, Bodman, Foss, Pasman and Welch--options
for 24,660 shares; Mr. Fort--options for 20,000 shares; and
Mr. Slusser--options for 22,330 shares. These options will become
exercisable on October 1, 2002. See "Board of Directors Committees and
Reports; Director and Executive Compensation--Summary of Directors'
Compensation" below.
Frank E. Walsh, Jr., who was a member of the Corporate Governance and
Nominating Committee, will not be standing for re-election.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
THE ELEVEN (11) NOMINEES.
PROPOSAL NUMBER TWO--RE-APPOINTMENT OF INDEPENDENT AUDITORS
In accordance with Section 89 of the Companies Act 1981 of Bermuda, Tyco's
shareholders have the authority to appoint Tyco's independent auditors and to
authorize the Board of Directors to fix the auditors' remuneration. At the
meeting, shareholders will be asked to re-appoint PricewaterhouseCoopers as
Tyco's independent auditors and to authorize the Board of Directors to fix their
remuneration. Audit services performed by PricewaterhouseCoopers for Tyco in
fiscal 2001 included the examination of the consolidated financial statements of
Tyco and its subsidiaries. Appointment of the independent auditors requires the
affirmative vote of a majority of the votes cast by the holders of shares
represented at the meeting in person or by proxy.
In addition to retaining PricewaterhouseCoopers to audit the consolidated
financial statements of Tyco and its subsidiaries for fiscal 2001, Tyco retained
PricewaterhouseCoopers, as well as other accounting and consulting firms, to
provide various consulting services in fiscal 2001, and expects to continue to
do so in the future. The aggregate fees billed for professional services by
PricewaterhouseCoopers in fiscal 2001 for these various services were:
- AUDIT FEES: $13.2 million for services rendered for the annual audit of
Tyco's consolidated financial statements for fiscal 2001 and the quarterly
reviews of the financial statements included in Tyco's Forms 10-Q;
- FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES:
$3.6 million for services rendered in connection with the design or
implementation of hardware or software systems that aggregate source data
underlying the financial statements or generate information that is
significant to the financial statements taken as a whole; and
- ALL OTHER FEES: $18.1 million for tax-related services; $9.8 million for
non-financial statement audit services such as due diligence procedures
associated with mergers and acquisitions, accounting consultation, SEC
registration statement related work, benefit plan audits, etc.; and
$6.4 million for statutory audit work in non-U.S. countries unrelated to
the financial statement audit.
Representatives of PricewaterhouseCoopers expect to be present at the
meeting. They will be given the opportunity to make a statement if they desire
to do so, and they will be available to respond to appropriate questions.
The audit committee has considered whether the provision of non-audit
services by PricewaterhouseCoopers is compatible with maintaining the auditor's
independence.
7
<Page>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RE-APPOINTMENT OF PRICEWATERHOUSECOOPERS AS TYCO'S INDEPENDENT AUDITORS AND TO
AUTHORIZE THE BOARD OF DIRECTORS TO FIX THE AUDITORS' REMUNERATION.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Tyco common
shares by (i) those persons known by Tyco to own beneficially more than 5% of
Tyco's outstanding common shares; (ii) each of the executive officers named
under "Board of Directors Committees and Reports; Director and Executive
Compensation--Executive Compensation" below, other than Messrs. Kozlowski and
Swartz; (iii) Frank E. Walsh, Jr., a current director; and (iv) all current
directors and executive officers of Tyco as a group. See "Proposal Number
One--Election of Directors--Nominees for Director" on page 4 for the beneficial
ownership of common shares by Messrs. Kozlowski and Swartz and the other Tyco
directors.
<Table>
<Caption>
NUMBER OF
COMMON SHARES % OF OUTSTANDING
OWNED COMMON SHARES
BENEFICIAL OWNER BENEFICIALLY(1) OWNED BENEFICIALLY
- ---------------- --------------- ------------------
AXA Financial, Inc.(2)...................................... 116,287,880 6.7%
1290 Avenue of the Americas
New York, New York 10104
Putnam Investments, LLC(3).................................. 85,855,060 5.1%
One Post Office Square
Boston, Massachusetts 02109
Jerry R. Boggess............................................ 558,546(4) *
Juergen W. Gromer........................................... 334,654(5) *
Richard J. Meelia........................................... 1,231,804(6) *
Frank E. Walsh, Jr.......................................... 380,634(7) *
All current directors and executive officers as a group 30,578,330(8) 1.5%
(17 persons)..............................................
</Table>
- ------------------------
* Less than 1%
(1) The amounts and percentages shown are amounts and percentages owned
beneficially as of November 30, 2001 (except for AXA Financial, Inc. and
Putnam Investments, LLC, where the amounts are as of December 31, 2000),
based on information furnished or publicly disclosed in Schedules 13G or 13D
by the persons named. A person is deemed to be the beneficial owner of
shares if such person, either alone or with others, has the power to vote or
to dispose of such shares. Shares beneficially owned by a person include
shares that the person has the right to acquire under stock options that
were exercisable on November 30, 2001 or that become exercisable within
60 days after November 30, 2001. The amounts shown do not reflect TyCom
common shares or options (including those options exercisable on
November 30, 2001 or becoming exercisable within 60 days of November 30,
2001). For TyCom shares and options held as of November 30, 2001 by Tyco's
other directors, including Messrs. Kozlowski and Swartz, see the table in
"Proposal Number One--Election of Directors--Nominees for Director" on page
4. The TyCom shares held as of November 30, 2001 by Mr. Walsh, a current
Tyco director, by Tyco's other executive officers, and by all current
directors and executive officers as a group are as follows:
Mr. Walsh--100,000 shares; Mr. Boggess--80,000 shares; Dr. Gromer--1,000
shares; Mr. Meelia--20,000 shares; Mr. Belnick--10,000 shares; and all
current Tyco directors and executive officers as a group--511,000 shares.
Options to purchase TyCom shares were converted to options to purchase the
following number of Tyco common shares, at an exercise price of $102.14 per
share: Mr. Walsh--2,193 shares; Mr. Belnick--7,833 shares; and for all
current
8
<Page>
directors and executive officers as a group--129,393 shares. There were
1,976,872,383 Tyco common shares (including 3,931,546 common shares
representing the assumed conversion of the Exchangeable Shares not owned by
Tyco and its affiliates) outstanding as of November 30, 2001 (this amount
does not include any Tyco shares issuable in exchange for TyCom shares).
(2) The amount shown and the following information is derived from Amendment No.
3 to Schedule 13G dated February 12, 2001 filed jointly on behalf of AXA
Financial, Inc.; four French mutual insurance companies (AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil Vie Assurance
Mutuelle, AXA Courtage Assurance Mutuelle) as a group; AXA; and their
subsidiaries. According to the Schedule 13G, each of the French mutual
insurance companies and AXA has sole voting power over 58,716,629 of such
shares, shared voting power over 29,247,057 of such shares, sole dispositive
power over 115,496,982 of such shares and shared dispositive power over
790,898 of such shares. AXA Financial, Inc. has sole voting power over
56,122,641 of such shares, shared voting power over 29,247,057 of such
shares, sole dispositive power over 113,217,394 of such shares and shared
dispositive power over 117,398 of such shares. The shares are beneficially
owned directly by AXA entities or subsidiaries of AXA Financial, Inc. as
follows: AXA Investment Managers--France (584,906 shares), AXA Investment
Managers--Hong Kong (120,339 shares), AXA Investment Managers--U.K.
(1,527,593 shares), AXA Colonia Konzern AG (Germany) (30,000 shares), AXA
Rosenberg (U.S.) (673,500 shares), Alliance Capital Management L.P.
(112,918,979 shares, which includes 1,879,500 shares which may be acquired
or disposed of upon exercise of options) and The Equitable Life Assurance
Society of the United States (415,813 shares). The address of AXA is 25,
avenue Matignon, 75008 Paris, France. In the Schedule 13G, each of the
French mutual insurance companies, as a group, and AXA expressly declares
that the filing shall not be construed as an admission that it is, for
purposes of Section 13(d), the beneficial owner of any securities. Each of
the AXA Financial, Inc. subsidiaries operates under independent management
and makes independent decisions. The addresses of the French mutual
companies are as follows: AXA Conseil Vie Assurance Mutuelle, AXA Assurances
I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle, 370, rue Saint Honore,
75001 Paris, France; and AXA Courtage Assurance Mutuelle, 26, rue Louis
le Grand, 75002 Paris, France. The address of AXA Financial, Inc. is
1290 Avenue of the Americas, New York, New York 10104.
(3) The amount shown and the following information is derived from Schedule 13G
dated February 22, 2001 filed jointly on behalf of Putnam Investments, LLC
("Putnam"), Marsh & McLennan Companies, Inc. ("Marsh & McLennan"), Putnam
Investment Management, LLC ("PIM") and The Putnam Advisory Company, LLC
("PAC"). According to the Schedule 13G, Putnam, which is a wholly-owned
subsidiary of Marsh & McLennan, wholly owns two registered investment
advisers: (i) PIM, which is the investment adviser to the Putnam family of
mutual funds and (ii) PAC, which is the investment adviser to Putnam's
institutional clients. Both subsidiaries have dispositive power over the
shares as investment managers, but each of the mutual funds' trustees have
voting powers over the shares held by each fund, and PAC has shared voting
power over the shares held by the institutional clients. Marsh & McLennan
and Putnam declare that the filing shall not be deemed an admission by
either or both of them that they are, for the purposes of
Section 13(d) or 13(g), the beneficial owner of any shares, and state that
neither of them have any power to vote or dispose of, or direct the voting
or disposition of, any of the shares. According to the Schedule 13G, PIM has
shared dispositive power over 61,371,442 shares, but no power to vote or
direct the voting of, any of the shares; PAC has shared voting power over
9,333,652 shares and shared dispositive power over 24,483,618 shares, but no
power to direct the voting or disposition of any other shares; Putnam has
shared voting power over 9,333,652 shares and shared dispositive power over
85,855,060 shares and Marsh & McLennan has no power to vote or dispose of,
or direct the voting or disposition of, any of the shares. The address for
Marsh & McLennan is 1166 Avenue of the Americas, New York, New York 10036.
The address for Putnam, PIM and PAC is One Post Office Square, Boston,
Massachusetts 02109.
9
<Page>
(4) The amount shown includes 398,894 shares that Mr. Boggess has the right to
acquire through the exercise of stock options.
(5) The amount shown includes 48,641 shares that Dr. Gromer has the right to
acquire through the exercise of stock options.
(6) The amount shown includes 1,055,941 shares that Mr. Meelia has the right to
acquire through the exercise of stock options.
(7) The amount shown includes 21,596 shares that Mr. Walsh has the right to
acquire through the exercise of stock options and 174,535 shares which are
held by Waterville Partners, L.P. Mr. Walsh is a controlling stockholder of
a corporate general partner and holds a limited interest in Waterville
Partners, L.P. The amount shown does not include options for 24,660 shares
awarded as director compensation for the fiscal year ending September 30,
2002, of which options for 4,660 shares have vested and become exercisable
on October 1, 2002.
(8) The amount shown includes 18,935,856 shares that these persons have the
right to acquire through the exercise of stock options.
BOARD OF DIRECTORS COMMITTEES AND REPORTS; DIRECTOR AND EXECUTIVE COMPENSATION
BOARD MEETINGS AND COMMITTEES
The Board of Directors held eight (8) meetings during fiscal 2001. Each
director attended at least 75% of the aggregate of: (1) the number of Board
meetings held during the period in which he or she was a director and (2) the
number of meetings of all committees on which he or she served (held during the
periods that he or she served).
The Board has an Audit Committee, which makes such recommendations to the
Board as it deems appropriate, including recommendations as to the appointment
of independent auditors. Messrs. Bodman and Fort and Ms. Lane served as members
of the Audit Committee during fiscal 2001. The Audit Committee had five (5)
official meetings and several informal discussions during the year. The Audit
Committee Report is set forth below.
The Board has a Compensation Committee, which approves all of the policies
under which compensation is awarded to Tyco's Chief Executive Officer, reviews
and, as required, approves such policies for executive officers and key
managers, and oversees the administration of executive compensation programs.
Messrs. Foss, Pasman and Slusser served as members of the Compensation Committee
during fiscal 2001. Mr. Philip Hampton, who passed away in April 2001, served as
Chairman of the Compensation Committee during part of the fiscal year. The
Compensation Committee had seven (7) official meetings and several informal
discussions during fiscal 2001. The Compensation Committee Report is set forth
below.
The Board has a Corporate Governance and Nominating Committee, which is
responsible for evaluating the Board's structure, personnel and processes and
makes recommendations to the full Board regarding nominations of individuals for
election to the Board of Directors. Messrs. Bodman, Fort and Walsh served as
members of the Corporate Governance and Nominating Committee during fiscal 2001.
Mr. Hampton served as Chairman of the Corporate Governance and Nominating
Committee during part of the fiscal year and was subsequently replaced with
Mr. Walsh. The Committee will consider nominations submitted by shareholders. To
recommend a nominee, a shareholder should write to Tyco's Secretary at Tyco's
registered address in Pembroke, Bermuda. Any such recommendation must include
the name and address of the candidate, a brief biographical description or
statement of the qualifications of the candidate and the candidate's signed
consent to serve as a director if elected. Under Tyco's bye-laws, generally no
person is eligible for election to the office of director at any general meeting
unless, not less than six and not more than 28 calendar days before the day of
the meeting, there has been given to the
10
<Page>
Secretary notice in writing by a shareholder (other than the person to be
proposed) entitled to attend and vote at the meeting and the signed consent of
the nominee to serve as a director. Corporate Governance and Nominating
Committee members communicated with one another informally, but did not hold a
formal meeting in fiscal 2001.
SUMMARY OF DIRECTORS' COMPENSATION
Director remuneration consists principally of cash and, for non-employee
directors, an award of stock options. The option component reflects the Board's
belief that director compensation should be tied to the performance of the
Company's stock. All stock options have an exercise price equal to the market
value of a Tyco common share on the date of grant. During the year, the cash
remuneration for directors who are also Company employees was eliminated.
Non-employee directors may make an irrevocable election each year to receive
some or all of their annual cash remuneration in one or more of the following
forms:
- phantom Tyco common shares under a deferred compensation plan,
- interest in a director's trust that is invested in Tyco common shares, or
- Tyco stock options.
Under the deferred compensation plan, a director's account is credited with
an amount equal to the dividends on the phantom shares in the account as if they
were owned. Payments from the account are made in cash in either a lump sum or
up to ten annual installments. A director serving as a member of the Board may
elect to receive the lump sum a minimum of five years after deferral. A director
who has ceased to be a member of the Board may elect to receive the lump sum or
commence payment of the annual installments at any time after termination of
service. However, the lump sum must be paid or the installments must commence
upon termination of service if at the time the director is age 70 or older.
A director is the owner of the shares held in the director's account under
the director's trust. The director may vote these shares, and the director may
withdraw the shares from the account or sell the shares at any time. Any shares
remaining in the account at the time the director terminates his service on the
Board will be distributed to him at that time.
The number of options a director may elect to receive instead of cash
remuneration is calculated using the Black-Scholes option pricing model. As
described below, those directors who elected in fiscal 2001 and fiscal 2002 to
receive all or part of their cash remuneration in the form of equity based
compensation did so under this alternative.
The directors' fiscal 2001 remuneration consisted of $75,000 in cash and
10,000 stock options. Mr. Kozlowski did not receive the director option award,
but did receive $75,000 in cash. Mr. Welch was elected to the Board on
March 27, 2001 and received compensation prorated for his length of service on
the Board during the 2001 fiscal year, as described in the following paragraph.
Mr. Swartz, who was also elected as a director on March 27, 2001, did not
receive any additional remuneration for his services as a director.
Messrs. Ashcroft, Berman, Bodman, Foss, Pasman, Slusser, and Walsh, and
Ms. Lane, elected to receive some or all of their cash compensation for fiscal
2001 in stock options. Under this election, the directors were granted options
to purchase 4,510 Tyco common shares, other than Mr. Slusser who was granted
options to purchase 1,804 shares. These options vested immediately but only
became exercisable on October 3, 2001. Mr. Welch received a pro-rata grant of
options to purchase 5,833 shares which vest and become exercisable on March 27,
2002. He elected to receive his pro-rata cash remuneration in the form of
options to purchase 2,630 shares, which were immediately vested but are not
exercisable until March 27, 2002.
11
<Page>
Under the terms of the option restoration feature described below,
Mr. Walsh received options to purchase 7,086 shares on November 30, 2000 with an
expiration date equal to that of the options they restored. Mr. Foss received
options to purchase 10,471 shares on September 21, 2001 with the same expiration
dates of the options they restored.
On October 1, 2001, each non-employee director was granted a stock option
with respect to compensation for fiscal 2002 to purchase 20,000 Tyco common
shares. All non-employee directors other than Mr. Fort elected to receive some
or all of the $80,000 cash component of their compensation in the form of
options. Under this election, the directors were granted options to purchase
4,660 Tyco common shares, other than Mr. Slusser who was granted options to
purchase 2,330 shares. The 20,000 options that all non-employee directors
received will vest and become exercisable on October 1, 2002. The options that
directors elected to receive in lieu of the cash component of their compensation
are immediately vested, but not exercisable until October 1, 2002.
The options received by non-employee directors allow the directors to pay
their exercise price by surrender of common shares. The options also have a
feature whereby the director is granted a restoration option to purchase one
Tyco common share for each share surrendered in payment of the option exercise
price.
All option grants to non-employee directors are made under the Tyco
International Ltd. Long Term Incentive Plan. Except in the case of restoration
options, all option grants have a term of ten years from date of grant.
Restoration options have a term ending on the expiration date of the options
they replace.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is composed of three
independent directors and operates under a written charter adopted by the Board
of Directors.
Management is responsible for Tyco's internal controls, financial reporting
process and compliance with laws and regulations and ethical business standards.
The independent accountants are responsible for performing an independent audit
of Tyco's consolidated financial statements in accordance with generally
accepted auditing standards and to issue a report thereon. The Committee's
responsibility is to monitor and oversee these processes.
In this context, the Committee has met and held discussions with management
and the independent auditors. Management represented to the Committee that
Tyco's consolidated financial statements were prepared in accordance with
generally accepted accounting principles in the United States, and the Committee
has reviewed and discussed the consolidated financial statements with management
and the independent accountants. The Committee discussed with the independent
auditors matters required to be discussed by Statement on Auditing Standards No.
61 (Communication with Audit Committees).
Tyco's independent auditors also provided to the Committee the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
Based upon the Committee's review and discussions referred to above, the
Committee recommended that the Board of Directors include Tyco's audited
consolidated financial statements in Tyco's Annual Report on Form 10-K for the
year ended September 30, 2001 filed with the Securities and Exchange Commission.
Submitted by the Audit Committee,
John F. Fort, III (Chairman)
Richard S. Bodman
Wendy E. Lane
12
<Page>
EXECUTIVE OFFICERS
Tyco's executive officers and executive officers of certain subsidiaries are
as follows (ages as of January 28, 2002):
L. Dennis Kozlowski, age 55, Chairman of the Board, President and Chief
Executive Officer since July 1997. Chairman of the Board of Former Tyco from
January 1993 to July 1997; Chief Executive Officer of Former Tyco since
July 1992; President of Former Tyco since 1989; associated with Former Tyco
since 1975.
Mark H. Swartz, age 41, Executive Vice President and Chief Financial Officer
since July 1997. Director since 2001. Vice President and Chief Financial Officer
of Former Tyco since February 1995; Director of Mergers and Acquisitions of
Former Tyco from 1993 to 1995; associated with Former Tyco since 1991.
Mark A. Belnick, age 55, Executive Vice President and Chief Corporate
Counsel since September 1998. Prior to joining Tyco, Mr. Belnick was a senior
partner at the international law firm of Paul, Weiss, Rifkind, Wharton &
Garrison since 1987.
Jerry R. Boggess, age 57, President of Tyco Fire and Security Services since
August 1993. Vice President of Former Tyco since February 1996; associated with
Former Tyco since 1968.
Albert R. Gamper, Jr., age 59, President and Chief Executive Officer of Tyco
Capital Corporation (formerly The CIT Group, Inc., acquired by Tyco in
June 2001) since December 1989.
Juergen W. Gromer, age 57, President of Tyco Electronics since April 1999.
Senior Vice President, Worldwide Sales and Service, of AMP Incorporated
(acquired by Tyco in April 1999) from 1998 to April 1999; President, Global
Automotive Division, and Corporate Vice President of AMP from 1997 to 1998; Vice
President and General Manager of various divisions of AMP from 1990 to 1997.
Richard J. Meelia, age 52, President of Tyco Healthcare Group since 1995.
Group President of Kendall Healthcare Products Company (acquired by Former Tyco
in October 1994) from January 1991 to 1995; Vice President of Former Tyco since
June 2000.
13
<Page>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below presents the annual and long-term compensation for services
in all capacities to Tyco and its subsidiaries for the periods shown for Tyco's
Chief Executive Officer and the other four most highly compensated executive
officers of Tyco during fiscal 2001. These executives are referred to as the
named officers.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
ANNUAL COMPENSATION(1) LONG TERM COMPENSATION
--------------------------------------------------- ----------------------------
OTHER RESTRICTED SHARES
NAME & PRINCIPAL CASH STOCK ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS(3) BONUS(4) COMPENSATION(5) AWARD(S)(6) STOCK OPTIONS COMPENSATION(7)
- ---------------- ---- ---------- ---------- ---------- --------------- ------------- ------------- ---------------
L. Dennis Kozlowski...... 2001 $1,650,000 $4,000,000 $219,543 $30,398,880 1,439,135 $4,313,553
CHAIRMAN & CEO, 2000 1,350,000 2,800,000 143,652 21,207,540 5,357,798(8) 383,500
TYCO INTERNATIONAL LTD. 1999 1,350,000 3,200,000 81,960 25,707,178 6,621,834 305,041
Richard J. Meelia........ 2001 624,519 7,553,350 $4,334,559 151,578 264,607 79,462
PRESIDENT, TYCO 2000 600,000 800,000 774,878 114,510 128,800 221,400
HEALTHCARE GROUP 1999 567,980 2,619,900 3,246,355 35,978 790,564 101,851
Jerry R. Boggess......... 2001 600,000 6,078,510 1,868,281 101,726 408,218 103,351
PRESIDENT, TYCO FIRE & 2000 550,000 438,131 435,952 79,224 500,644 226,769
SECURITY SERVICES 1999 500,000 3,381,782 2,086,401 27,641 198,236 255,072
Mark H. Swartz........... 2001 968,750 2,000,000 500,014 277,856 15,199,440 788,425 2,112,968
EVP & CFO, TYCO 2000 768,750 1,400,000 171,039 10,603,770 2,692,649(8) 121,448
INTERNATIONAL LTD. 1999 750,000 1,600,000 63,066 12,029,641 2,976,480 86,948
Juergen Gromer (2)....... 2001 660,000 1,750,000 424,261 256
PRESIDENT, TYCO 2000 625,000 7,987,183 4,899,762 474,380
ELECTRONICS
</Table>
- ------------------------------
(1) Under the Tyco Deferred Compensation Plan, the amount of total salary and
bonus that has been deferred for fiscal 2001 is: Mr. Meelia: $5,977,272;
Mr. Boggess: $3,039,255, and Mr. Swartz: $2,655,625.
(2) Dr. Gromer's salary and bonus for fiscal 2001 was paid in German marks, but
now is paid in Euros. The salary and bonus amounts have been converted using
the ratio of one U.S. dollar to 2.12 German marks. Dr. Gromer was not an
executive officer prior to fiscal year 2000.
(3) The bonus amounts shown in the table for Messrs. Kozlowski and Swartz
reflect annual bonus payments based on Tyco performance during fiscal 2001
as determined by the Compensation Committee using the established
performance objectives. The bonus amounts shown in the table for fiscal 2001
for Mr. Meelia, Mr. Boggess, and Dr. Gromer reflect annual bonus payments
that were based solely on the performance of their respective divisions
during fiscal 2001.
(4) Certain bonuses were payable in common shares. The number of shares awarded
to Division Presidents is based on division performance, but the overall
value of the shares is based on company performance as a whole. Bonus shares
for fiscal 2001 are as follows: Mr. Meelia--96,970 shares,
Mr. Boggess--41,796 shares and Mr. Swartz--11,186 shares. The amount listed
in the table reflects the market value of the shares on the date shares
vested.
(5) The amounts shown in this column represent interest credited on deferred
compensation in excess of 120% of the applicable federal long-term rate.
(6) Restricted shares were issued under the restricted share program whereby
specific performance criteria determine the number of shares that vest for
the fiscal year. If the performance criteria are not met resulting in some
or all of the shares not being earned (i.e., not vesting) within the
three-year period, those shares are forfeited and must be returned to the
Company. The values shown are the fair market value on the date of the
grant. As of September 30, 2001, Messrs. Kozlowski and Swartz held 189,065
and 94,533 shares of restricted stock, respectively, with a fair market
value of $8,604,991 and $4,302,518, respectively, on such date. Recipients
of restricted shares have the right to vote such shares and receive
dividends.
14
<Page>
(7) This note identifies compensation in this column reported for fiscal 2001.
The amounts shown in the table reflect Tyco contributions made on behalf of
the named officers under Tyco's qualified and non-qualified defined
contribution plans, as follows:
<Table>
<Caption>
COMPANY MATCHING CONTRIBUTION COMPANY CONTRIBUTION
NAME (QUALIFIED PLAN) (NON-QUALIFIED PLAN)
- ---- ----------------------------- --------------------
Mr. Kozlowski.................... $13,600 $397,450
Mr. Meelia....................... 10,698 64,971
Mr. Boggess...................... 13,600 68,450
Mr. Swartz....................... 8,713 126,300
</Table>
The amounts shown in the table for Messrs. Kozlowski and Swartz,
respectively, also include life insurance premiums and related tax gross up
of $3,827,503 and $1,977,935. The amount shown for Mr. Kozlowski also
includes director's fees of $75,000. Mr. Kozlowski will no longer earn a
directors' fee beginning in fiscal 2002. The amount shown for Mr. Meelia
also includes an Employee Stock Purchase Plan company match of $2,100 and
taxable life insurance premium of $1,581. The amount shown for Mr. Boggess
also includes an Employee Stock Purchase Plan company match of $2,700 and
$18,179 for financial planning services. Tyco has established an executive
life insurance program whereby an executive can elect to receive life
insurance coverage in lieu of a portion of his deferred compensation.
Although this benefit is cost neutral to Tyco, the amount in the table
includes $112 for Mr. Meelia and $422 for Mr. Boggess that is the deemed
economic benefit to them for the life insurance coverage for the year.
(8) Includes options that were granted to Messrs. Kozlowski and Swartz from
TyCom that, upon the amalgamation of TyCom with a subsidiary of Tyco, were
converted into options to purchase common shares of Tyco.
15
<Page>
OPTION GRANTS IN FISCAL 2001
The following table shows all grants of stock options to the named officers
during fiscal 2001 under the Tyco International Ltd. Long Term Incentive Plan
("LTIP").
<Table>
<Caption>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------
NO. OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR(6) ($/SHARE) DATE VALUE(7)
- ---- ----------------- ------------------ --------- ---------- ----------
L. Dennis Kozlowski.......... 600,000(1) 1.78% $53.0484 10/23/2010 $8,460,000
400(1) 0.00 55.5000 10/29/2010 5,932
17,800(1) 0.05 55.4375 10/29/2010 263,618
148,000(1) 0.44 56.6120 10/30/2010 2,240,720
14,600(1) 0.04 53.0000 12/25/2010 198,414
400(1) 0.00 53.0625 12/25/2010 5,444
20,000(1) 0.06 60.0000 1/15/2011 310,600
350,000(1) 1.04 62.2142 1/29/2011 5,614,000
20,000(1) 0.06 54.5000 3/8/2011 283,000
107,935(1) 0.32 53.0300 6/19/2011 1,749,626
155,000(1) 0.46 54.9150 7/2/2011 2,622,600
5,000(1) 0.01 44.1800 9/26/2011 65,150
Richard J. Meelia............ 250,000(2) 0.74 50.6648 10/2/2010 3,145,000
14,607(3) 0.04 53.0484 10/23/2010 205,959
Jerry R. Boggess............. 400,000(2) 1.19 50.6648 10/2/2010 5,032,000
8,218(3) 0.02 53.0484 10/23/2010 115,874
Mark H. Swartz............... 300,000(1) 0.89 53.0484 10/23/2010 4,230,000
74,000(1) 0.22 56.6120 10/30/2010 1,120,360
175,000(1) 0.52 62.2142 1/29/2011 2,807,000
107,958(4) 0.32 60.7878 10/28/2007 1,678,747
53,967(1) 0.16 53.0300 6/19/2011 874,805
77,500(1) 0.23 54.9150 7/2/2011 1,311,300
Juergen Gromer............... 133,333(2) 0.40 50.6648 10/2/2010 1,677,329
266,667(2)(5) 0.79 50.6648 11/2/2010 3,354,671
16,564(3) 0.05 53.0484 10/23/2010 233,552
7,697(3)(5) 0.02 53.0484 11/23/2010 108,528
</Table>
Certain options granted to the named officers include a restoration feature.
Under this feature, the Company grants restoration options to replace exercised
options or shares sold, if the shares or share proceeds (1) are used to pay the
exercise price of stock options, (2) are applied to satisfy tax withholding
obligations or repay indebtedness to Tyco or (3) are sold by trusts for tax
planning purposes. In certain cases, restoration options are granted to an
executive who has sold vested restricted shares to Tyco or a subsidiary thereof.
The restoration feature is designed to enable the executive to maintain the
level of his equity interest in Tyco. Restoration options are granted at an
exercise price which is equal to the market price of Tyco common shares on the
grant date.
(1) Restoration options granted with an exercise price equal to the market price
of Tyco shares on the date of grant; vested immediately, but not exercisable
for two months; and having a term of ten years from the grant date.
(2) Options granted with an exercise price equal to the market price of Tyco
shares on the date of grant; vesting three years from the date of grant; and
having a term of ten years from the date of grant.
16
<Page>
(3) Restoration options granted with an exercise price equal to the market price
of Tyco shares on the date of grant; vesting immediately; and having a term
equal to ten years from the date of grant.
(4) Restoration options granted with an exercise price equal to the market price
of Tyco shares on the date of grant; vesting immediately, but not
exercisable for two months; and having a term equal to the remaining term of
the options they replaced.
(5) The portion of Dr. Gromer's options that are allocated to his Swiss
compensation expire ten years and one month from the date of grant.
(6) Represents the percentage of all options granted in fiscal 2001 under the
LTIP and the Tyco International Ltd. Long Term Incentive Plan II.
(7) All options were granted at an exercise price equal to the market price of
Tyco's common shares on the date of grant. Tyco, like all public companies,
is required to indicate an option value using one of the methods prescribed
by the United States Securities and Exchange Commission. Tyco chose to use
the Black-Scholes option pricing model, which is a method of calculating a
theoretical value of the options based upon a mathematical formula using
certain assumptions. For an executive to realize the values shown in the
table for the options, the price of a Tyco share would have to increase
substantially above the exercise price of the option. For example, in order
for Mr. Kozlowski to realize the pre-tax gain equal to the value of
$8.46 million shown for the first grant of options listed, Tyco's per-share
price would have to increase by $14.10 above the grant price before
Mr. Kozlowski exercises those options--an increase of approximately 26.6%.
Such an increase would correspond to a pre-tax gain of over $27.2 billion
for Tyco's shareholders in the aggregate based on the number of Tyco shares
outstanding at September 30, 2001. Mr. Kozlowski's share would be about
three-hundreds of one percent (0.03%) of the potential gain for all
shareholders.
The following assumptions were used in calculating the Black-Scholes values
shown on the table: an assumed option life of three years; interest rates of
3.19%--5.83%, which represent the yield of a zero coupon Treasury strip with
a maturity date similar to the assumed exercise period; assumed annual
volatility of underlying shares of 29.11%--38.56%, calculated based on
36 months of historical Tyco share price movement; quarterly dividend
payment of $0.0125 per share; and the vesting schedule indicated for the
respective option grant.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
Shown below is information with respect to aggregate option exercises by the
named officers in the fiscal year ended September 30, 2001 and with respect to
unexercised stock options held by them at September 30, 2001.
<Table>
<Caption>
NO. OF SECURITIES UNDERLYING VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR END HELD AT FISCAL YEAR END(1)
ACQUIRED VALUE ------------------------------ ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ------------ -------------
L. Dennis Kozlowski(2)........ 0 $ 0 10,148,787 1,087,980 $ 6,667 $ 0
Richard J. Meelia............. 0 0 808,971 650,000 11,667,377 5,132,960
Jerry Boggess................. 200,000 8,082,250 207,098 1,000,000 3,586,572 5,123,530
Mark H. Swartz (2)............ 333,333(3) 13,700,086 5,010,067 567,487 0 0
Juergen Gromer................ 85,732 3,008,291 48,641 1,450,000 105,225 6,823,215
</Table>
- --------------------------
(1) Based on the volume weighted average price on September 28, 2001 of Tyco
common shares of $45.5134.
(2) Includes options that were granted to Messrs. Kozlowski and Swartz from
TyCom that, upon the amalgamation of TyCom with a subsidiary of Tyco, were
converted to options to purchase common shares of Tyco.
(3) Shares issued on exercise of options transferred by Mr. Swartz to a family
partnership. Shares continue to be held by the partnership.
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<Page>
RETIREMENT PLANS
Mr. Kozlowski, Mr. Swartz and Dr. Gromer participate in defined benefit or
actuarial retirement plans maintained by Tyco or a subsidiary.
Messrs. Kozlowski and Swartz participate in individual Executive Retirement
Arrangements maintained by Tyco (the "ERA"). Under the ERA, Mr. Kozlowski has a
fixed lifetime benefit commencing at his normal retirement age of 65 that has a
present value of $343,112 monthly. Mr. Swartz's fixed lifetime benefit at his
normal retirement age of 65 has a present value of $155,301 monthly. Retirement
benefits are available at earlier ages and alternative forms of benefits can be
elected. Any such variations would be actuarially equivalent to the fixed
lifetime benefit starting at age 65.
At the time of Tyco's acquisition of AMP in 1999, Dr. Gromer was a member of
a defined benefit pension plan which covered eligible AMP employees in Germany.
As a result, Dr. Gromer is entitled to receive from Tyco upon retirement at age
65 a defined pension benefit that is determined primarily based on his annual
base salary as of three years prior to the date of his retirement and his years
of service with Tyco at the time of his retirement.
The following table sets forth the estimated annual benefits payable under
the Tyco Electronics (formerly AMP) pension plan for the compensation amounts
and the years of credited service specified in the table. Under the pension
plan, no more than a maximum of 30 years of credited service may be recognized
for benefit accrual purposes.
<Table>
<Caption>
YEARS OF CREDITED SERVICE AND RELATED ESTIMATED
ANNUAL BENEFITS PAYABLE UPON RETIREMENT
-------------------------------------------------
COMPENSATION 15 20 25 30
- ------------ ---------- ---------- ---------- ----------
$615,562 $214,991 $301,476 $394,637 $494,431
646,340 229,762 321,028 418,882 523,278
677,118 244,861 340,930 443,454 552,387
707,896 260,289 361,183 468,355 581,758
738,674 276,041 381,785 493,583 611,391
</Table>
(CONVERTED FROM GERMAN MARKS USING A CONVERSION RATIO OF 1 USD TO 2.12 DEM.)
The annual benefits shown in the table assume the employee would receive his
retirement benefits under the pension plan in the form of a single life annuity
upon normal retirement at age 65.
The compensation of Dr. Gromer covered by the pension plan would be the base
salary amount that is noted in the "Salary" column of the SUMMARY COMPENSATION
TABLE on page 14, less statutory payments for specified holiday and vacation
time. Dr. Gromer's current covered compensation, designated in German marks, is
1,304,991, which converts to $615,562 using a conversion ratio of one U.S.
dollar to 2.12 German marks. As of September 30, 2001, for purposes of
calculating benefits accrued under the pension plan, Dr. Gromer had 23 years and
9 months of credited service with Tyco.
Dr. Gromer has another AMP pension benefit funded through an insurance
policy. At September 30, 2001, Dr. Gromer had accrued a taxable pension payable
at retirement through this insurance in the amount of $3,468 annually. This
amount is subject to increase in future periods only to the extent of dividends
on the insurance policy.
RETENTION AND SEVERANCE AGREEMENTS
The Company has entered into retention agreements with Messrs. Kozlowski and
Swartz, the provisions of which are summarized in "--Board Compensation
Committee Report on Executive Compensation" below. In addition, a severance
arrangement with Mr. Meelia provides for a severance payment equal to three
times the sum of his average base salary, perquisite allowance and bonus in the
event of his termination of employment. For three years following severance,
Mr. Meelia may not compete with the Company.
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EXECUTIVE LIFE INSURANCE
Tyco has purchased executive life insurance policies for Messrs. Kozlowski
and Swartz and has agreed to pay the premiums for these insurance policies on a
tax-neutral basis for a ten-year period. In the event the policies do not earn
specified interest amounts, Tyco will make specified supplemental premium
payments. The premium payments will be made even if either executive should
terminate employment with Tyco during the ten year period. The amounts paid for
premiums and tax reimbursement in fiscal 2001 are included under the caption ALL
OTHER COMPENSATION in the SUMMARY COMPENSATION TABLE on page 14.
RELATED PARTY TRANSACTIONS
The 1983 Key Employee Corporate Loan Program, as amended, funded by Tyco
International (US) Inc., is designed to encourage ownership of Tyco common
shares by executives and other key employees. Loans under the program may be
used for the payment of taxes due as a result of the vesting of ownership of
shares granted under Tyco's restricted share ownership plan.
The Compensation Committee administers the loan program. The Committee
authorizes loans, which may not exceed the amount allowable under any regulation
of the United States Treasury or other state or federal statute. Loans may be
required to be secured by Tyco common shares owned by the borrower or may be
unsecured. Loans under the loan program generally bear interest at Tyco's
incremental short-term borrowing rate (which was 3.7% for 2001). The loans are
generally repayable in ten years or when the borrower reaches age 69, whichever
occurs first, except that earlier payments must be made in the event that the
borrower's employment with Tyco or its subsidiaries terminates. The borrower is
also required to make loan payments upon the sale or other disposition of Tyco
common shares with respect to which loans have been granted, other than gifts to
certain family members.
At September 30, 2001, the amount of loans outstanding under the loan
program totaled $11,230,192, of which $0 was outstanding for Mr. Kozlowski,
$231,718 was outstanding for Mr. Boggess, $20,702 was outstanding for
Mr. Meelia and $0 was outstanding for Mr. Swartz. The largest amount of
indebtedness under the program during fiscal 2001 for each of the named officers
was $23,009,703 for Mr. Kozlowski, $6,500,000 for Mr. Swartz, $20,702 for
Mr. Meelia and $231,718 for Mr. Boggess. Dr. Gromer did not have a loan under
the program during fiscal 2001.
Mr. Walsh, a director, was instrumental in bringing about the acquisition by
a subsidiary of the Company of The CIT Group, Inc. (now Tyco Capital
Corporation) of Livingston, New Jersey. For his services, Tyco paid Mr. Walsh a
fee of $10 million. In addition, at Mr. Walsh's request, Tyco contributed
$10 million to a charitable fund established under The Community Foundation of
New Jersey. Mr. Walsh, as trustee of this fund, recommends the public charities
to which contributions are made. At the time of the acquisition, Mr. Walsh owned
50,000 shares of common stock of The CIT Group, Inc., which were converted to
34,535 Tyco common shares at the exchange ratio applicable to all stockholders
of CIT.
Certain Tyco directors and executive officers owned TyCom shares or TyCom
options, which were converted to Tyco shares and Tyco options upon the
amalgamation of a subsidiary of Tyco with TyCom at the exchange ratio applicable
to all holders of TyCom shares and options. See footnote (1) in "Proposal Number
One--Nominees for Director" and footnote (1) in "Security Ownership of Certain
Beneficial Owners and Management" for information regarding their holdings as of
November 30, 2001.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed solely of
independent directors, none of whom has any interlocking relationships with Tyco
that are subject to disclosure under rules of the SEC relating to proxy
statements. The Compensation Committee approves all of the policies under which
compensation is paid or awarded to Tyco's Chief Executive Officer, reviews and,
as required, approves such policies for executive officers and key managers, and
has oversight of the administration of executive compensation programs. The
Compensation Committee reviews the compensation policies in light, among other
things, of the competitive environment in which Tyco must compete for superior
executive talent and
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<Page>
the benefit to the Company and its shareholders of having a large portion of
incentive compensation tied to the equity value of the Company.
The elements of Tyco's compensation program for its executives are base
salary, annual incentive bonus opportunity, and long-term, equity-based
incentive compensation. The cash incentive bonus opportunity for the Company's
Chief Executive Officer and Chief Financial Officer is based on increases in
operating cash flow and growth in net income, each as defined. These executives
also receive restricted shares that vest based on increases in earnings per
share, as defined. The cash and equity bonus opportunity for division presidents
are based on increases in earnings before interest and taxes ("EBIT") and
operating cash flow of their respective divisions, except for Tyco Capital
Corporation for which the relevant measure is pre-tax income.
Executive compensation for fiscal year 2001 reflected the completion of
another successful year for the Company overall. Fiscal 2001 is the eighth
consecutive year in which Tyco substantially increased revenues and earnings.
Revenues for fiscal 2001 increased to $36.3 billion, a 26% increase over fiscal
year 2000 revenues of $28.9 billion. Income before non-recurring charges and
credits, extraordinary items, and the adoption of SAB 101, rose to $2.81 per
diluted share, an increase of 29% over the prior year's diluted per share
earnings of $2.18 before such items. Free cash flow for the year reached
$4.7 billion. In addition, Tyco continued its strategy of combining organic
growth and recurring revenue with strategic acquisitions that complement its
diversified mix of core businesses. To this end, Tyco finalized the acquisition
of Mallinckrodt Inc., a $3 billion dollar health care company, InnerDyne, Inc.,
also a heath care company, and successfully completed many other acquisitions.
These included SecurityLink, which was the electronic security systems business
of Cambridge Protection Industries, L.L.C., and Simplex Time Recorder in the
Fire and Security sector, and Lucent Power Systems in the Electronics sector.
Tyco expanded the total package of services it is able to offer customers and
business segments with its entry into the financial services arena through the
acquisition of The CIT Group, Inc. (now renamed Tyco Capital Corporation). Tyco
completed the sale of its ADT Automotive unit in October 2000. Also in fiscal
2001, Tyco entered into agreements for the acquisition of other companies that
complement its business strategy. Among these are Sensormatic Electronics
Corporation in the Fire and Security industry, which was completed in the first
quarter of fiscal 2002, and C.R. Bard, Inc. in the health care industry, which
is expected to be completed in fiscal 2002. Executive compensation was directly
tied to, and is reflective of, this extraordinary performance.
During fiscal 2001, the Committee took steps to ensure the continued
leadership of the executive management of the Company. In this connection, at
the Committee's request and approval, Tyco entered into retention agreements
with L. Dennis Kozlowski, described in the CEO compensation section below, and
with Mark H. Swartz. The agreement with Mr. Swartz, which is filed as an exhibit
to Tyco's Annual Report on Form 10-K for the fiscal year ended September 30,
2001, requires him to serve as the Executive Vice President and Chief Financial
Officer of the Company until at least January 22, 2006 and, after termination of
employment, to be available as a consultant to Tyco for up to 30 days a year for
a period of three years. Under the agreement, Mr. Swartz is subject to
noncompetition, confidentiality, and nonsolicitation requirements. The
agreement, as amended, includes an award of 500,000 shares of restricted stock
made on January 22, 2002 with vesting of the shares on January 22, 2006.
Mr. Swartz is entitled to sell the restricted shares to Tyco once the shares
vest at their fair market value on the date he elects to do so. If Mr. Swartz is
terminated for Cause (as defined) or voluntarily resigns without Good Reason (as
defined) prior to January 22, 2006, no payments are due under the agreement and
the restricted shares will not vest. However, if Mr. Swartz is terminated (other
than for Cause) or leaves for Good Reason, he will receive a lump sum payment
equal to three times the sum of his annual base salary and highest annual
incentive compensation earned within the prior six year period. Additionally,
all options and restricted shares under the agreement or any company program not
already vested will become vested. Mr. Swartz will receive payment for his
services as a consultant annually in the amount of 1/12 of the sum of his last
annual base salary and highest annual incentive compensation, and he will
continue to receive contribution credits under the nonqualified retirement plan.
In addition, during the three-year consulting period, and for a
20
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period of three years thereafter, Mr. Swartz will continue to receive welfare,
fringe, and other benefits comparable to those provided prior to termination
including, among other benefits, access to company facilities and services.
After that, Mr. Swartz will be able to purchase benefits and services from the
Company at cost. Should termination be as a result of a Change of Control (as
defined), the agreement provides protection for excise taxes under Section 280G
of the United States Internal Revenue Code.
The Compensation Committee believes that evaluation of the overall
performance of Tyco's senior executives cannot be reduced to a fixed formula and
that the prudent use of discretion in determining pay levels is in the best
interests of Tyco and its shareholders. While achieving preset goals is
fundamental to an incentive compensation scheme, the Compensation Committee
cannot anticipate all events, including those beyond the control of management,
which may have a material effect on performance goals. Under certain
circumstances, the Compensation Committee's use of discretion in determining
amounts of compensation may be appropriate. The Compensation Committee is aware
that this policy may cause a loss in corporate tax deductions under
Section 162(m) of the United States Internal Revenue Code.
At the end of each fiscal year, the Compensation Committee reviews with the
Chief Executive Officer the individual performance of each of the other
executive officers and reviews his recommendations for the appropriate
compensation awards and the financial and other objectives for each of the
executive officers for the following year.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee meets at least annually to consider and make its
determination regarding the total compensation of the Chief Executive Officer
for the ensuing year. The Compensation Committee determines this compensation
based on:
- its assessment of the individual performance of the Chief Executive
Officer,
- a review of Tyco's operating performance (including earnings per share,
cash flow generation, and such factors as revenue, operating income, net
income, and strategic acquisitions),
- an analysis of total returns to shareholders relative to total returns
generated by comparable public companies, and
- a review of compensation of the chief executive officers of companies with
generally comparable businesses of approximately the same size at the time
of the review.
The Committee retains a nationally recognized consulting firm to review and
analyze Tyco's executive compensation practices relative to the Company's
performance, as well as the marketplace for executive talent. The Committee also
observed that Tyco and Mr. Kozlowski's leadership of Tyco have received many
favorable comments from the business and financial community. The Committee
noted that Tyco was named the best performing company by BUSINESS WEEK in its
Spring 2001 special edition featuring its choice of the 50 best performing
companies and that more recently Mr. Kozlowski was named one of the top 25
managers of the year by BUSINESS WEEK in its January 14, 2002 edition.
Mr. Kozlowski has led Tyco from a $3 billion manufacturing corporation in
1993 to a $36 billion diversified service and manufacturing corporation in 2001
that has provided 910% in total cumulative shareholder return from
1993 - 2001. In addition, Mr. Kozlowski grew revenue an average of 38% per year
from 1993-2001. During Mr. Kozlowski's tenure as Chief Executive Officer, Tyco
has consistently enjoyed a strong balance sheet, with debt levels appropriate
for a company of its size and scope of operations, and with investment grade
ratings that allow the Company efficiently to address and service its capital
requirements.
Based on these and other factors, the Compensation Committee determined that
it is in Tyco's best interests to assure the continued leadership of
Mr. Kozlowski. At the Committee's request and approval, Tyco entered into a
retention agreement with Mr. Kozlowski. The agreement, which is filed as an
exhibit for Tyco's Annual Report on Form 10-K for the fiscal year ended
September 30, 2001, requires Mr. Kozlowski to serve as the Chairman, President
and Chief Executive Officer of the Company until at least November 16, 2008 and,
after retirement, to be available as a consultant to Tyco for up to 30 days a
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<Page>
year for the remainder of his life. Under the agreement, Mr. Kozlowski is
subject to noncompetition, confidentiality, and nonsolicitation requirements.
The agreement, as amended, includes an award of 800,000 shares of restricted
stock made in January 2002 with 1/8 of the shares vesting each year beginning in
January 2002 and full vesting upon Mr. Kozlowski's 62nd birthday on
November 16, 2008. Mr. Kozlowski is entitled to sell the restricted shares to
Tyco once the shares vest at the fair market value on the date he elects to do
so. Under the agreement, Mr. Kozlowski may retire at any time after
November 16, 2008, and, with the consent of Tyco's Board of Directors, may
retire before that date. If Mr. Kozlowski is terminated for Cause or voluntarily
resigns without Good Reason (as defined) prior to November 16, 2008, he will
receive no retirement payments under the agreement and any remaining shares will
not vest. However, if Mr. Kozlowski is terminated by the Board without Cause,
leaves for Good Reason on or after a Change of Control (as defined) or retires,
he will receive a lump sum payment equal to three times the sum of his annual
base salary and highest annual incentive compensation earned within the prior
eight year period. Additionally, all options and restricted shares under the
agreement or any company program not already vested will become vested at that
time. He will also receive payment for his services as a consultant annually in
the amount of 1/12 of the sum of his last annual base salary and highest annual
incentive compensation. Mr. Kozlowski will continue to receive welfare, fringe,
and other benefits comparable to those provided prior to retirement including,
among other benefits, access to company facilities and services, and will
receive three additional years of credits under the nonqualified retirement
plan. Should termination be as a result of a Change of Control, the agreement
provides protection for excise taxes under Section 280G of the United States
Internal Revenue Code.
For fiscal 2001, Mr. Kozlowski received a base salary of $1.65 million and,
based on a 38.9% increase in Net Income before non-recurring items and a 31.3%
increase in Operating Cash Flow, a cash bonus in the amount of $4 million, as
shown in the SUMMARY COMPENSATION TABLE on page 14. Mr. Kozlowski was granted
600,000 shares of performance-based restricted stock on October 1, 2001. If the
pre-determined specified performance criteria are met, these shares will vest
over a period of up to three years. After three years, any remaining unearned
shares will be forfeited and returned to the Company.
Mr. Kozlowski also received restoration options in accordance with the
restoration option provision of the Company's option program. The restoration
provision enables executive officers to use certain earned equity awards and
certain proceeds from the sale of shares acquired upon the exercise of options
to pay option exercise costs, repay indebtedness owed to Tyco International
(US) Inc., or for tax planning purposes while maintaining their equity position
in Tyco.
The Committee has compared the performance of Former Tyco in fiscal 1993,
the year Mr. Kozlowski became chairman of Former Tyco, and the performance of
Tyco in fiscal 2000 and fiscal 2001, as follows:
<Table>
<Caption>
FORMER TYCO TYCO '93--'01 '00--'01
TYCO FISCAL FISCAL FISCAL % %
1993 2000 2001 INCREASE INCREASE
----------- -------- -------- -------- --------
Annual net revenues (in billions)............. $ 3.1 $ 28.9 $ 36.3 1071% 26%
Net income before non-recurring items
(in millions)............................... $99.7 $3,726.4 $5,149.2 5065% 38%
Diluted earnings per share before
non-recurring items(1)...................... $0.27 $ 2.18 $ 2.81 941% 29%
Market price of a common share (at year
end)(1)..................................... $5.17 $ 51.88 $ 45.50 780% (12%)
Aggregate market value of outstanding common
shares (at year end) (in billions).......... $ 1.9 $ 87.4 $ 88.1 4537% 1%
</Table>
- ------------------------
(1) Adjusted for stock splits
22
<Page>
The graph below compares cumulative total shareholder return on the common
shares of Former Tyco, which were converted into shares of the Company in the
merger of ADT and Former Tyco on July 2, 1997, against the cumulative total
return of the Dow Jones Industrial-Diversified Index and the S&P 500 Index. The
table assumes an investment of $100 on June 30, 1993, and includes re-investment
of dividends. The graph reflects growth in shareholder value during
Mr. Kozlowski's tenure as Chairman of Former Tyco and Tyco. Former Tyco used a
June 30 fiscal year end. Following the merger, Tyco changed its fiscal year end
to September 30. Therefore, the graph below shows the cumulative total return as
of the end of each of the three years in the period ended June 30, 1996, as of
July 2, 1997, the consummation date of the merger between ADT Limited and Former
Tyco, the three-month transition period ended September 30, 1997 and the fiscal
years ended September 30, 1998, 1999, 2000, and 2001. As noted in the graph and
table below, although Tyco's cumulative total shareholder return showed a 12.2%
decline from September 30, 2000 to September 30, 2001, the S&P 500 and Dow Jones
declines in cumulative total shareholder return were more than double
that--26.7% and 26.3%, respectively--over the same time period.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------------------------
6/93 6/94 6/95 6/96 7/2/97 9/97 9/98 9/99 9/00 9/01
TYCO INTERNATIONAL LTD....................... 100.00 112.10 132.76 201.64 376.37 408.32 550.85 1030.63 1036.76 910.29
S&P 500...................................... 100.00 101.41 127.84 161.09 216.99 233.24 254.34 325.06 368.24 270.21
DOW JONES INDUSTRIAL-DIVERSIFIED............. 100.00 101.46 125.70 176.89 256.23 272.67 289.42 429.30 530.35 390.83
</Table>
The Committee considers Mr. Kozlowski's level of compensation appropriate in
view of his performance and continued leadership of Tyco during fiscal 2001.
SUMMARY
Tyco's philosophy is to hire and retain the best executive talent. Tyco
believes in competitive pay to keep and continually motivate exceptionally
talented executives--if such pay is merited by performance. Tyco generally
employs entrepreneurial executives, those that are willing to have a significant
amount of their pay tied to performance and the equity of the Company. Tyco's
executive compensation program reflects this focus. It offers the executive
significant financial rewards when Tyco and the executive achieve excellent
results. At lower levels of performance, where expected compensation targets are
not achieved, executive compensation is sharply reduced. Executives are
ineligible for cash bonuses and do not benefit
23
<Page>
from equity-based compensation. Thus, in order for Mr. Kozlowski and Mr. Swartz
to have earned a cash bonus in fiscal 2001, the Company had to achieve a minimum
of 15% growth in net income and at least a 10% growth in operating cash flow
over fiscal 2000. The performance criterion required to vest the minimum number
of restricted shares granted to these executives was a growth rate in earnings
per share before non-recurring items of at least 15% over fiscal 2000. The
Committee reports that the Company achieved each of these benchmarks, reflecting
superior performance notwithstanding a very difficult business and economic
environment.
The Committee believes that Tyco's executive compensation program, which is
based on this philosophy, is in the best interest of shareholders and that
executive compensation in fiscal 2001 is consistent with the focus and goals of
the program.
The members of the Compensation Committee would like to acknowledge the
long-term service and guidance of Mr. Philip Hampton, who was Chairman of this
Committee prior to his death in April 2001.
Submitted by the Compensation Committee,
Stephen W. Foss, Chairman
James S. Pasman
W. Peter Slusser
24
<Page>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a graph comparing the cumulative total shareholder return
on Tyco common shares (Tyco was named ADT Limited prior to July 2, 1997) against
the cumulative total return of the S&P Services (Commercial and Consumer) Index,
the Dow Jones Industrial-Diversified Index and the S&P 500 Index, assuming
investment of $100 on December 31, 1996, including re-investment of dividends.
In September 1997, Tyco changed its fiscal year end from December 31 to
September 30. Therefore, the graph below shows the cumulative total return as of
the nine-month transition period ended September 30, 1997 and the fiscal years
ended September 30, 1998, 1999, 2000 and 2001. Also shown is the cumulative
total return as of July 2, 1997, the consummation date of the merger between ADT
and Former Tyco.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
CUMULATIVE TOTAL RETURN
--------------------------------------------------------------------------
12/96 7/2/97 9/97 9/98 9/99 9/00 9/01
-------- -------- -------- -------- -------- -------- --------
TYCO INTERNATIONAL LTD. (FORMERLY ADT LIMITED)....... 100.00 158.47 179.48 242.13 453.03 455.72 400.13
S & P 500............................................ 100.00 120.61 129.64 141.37 180.68 204.68 150.19
DOW JONES INDUSTRIAL-DIVERSIFIED..................... 100.00 127.62 135.81 144.15 213.83 264.16 194.66
S & P SERVICES (COMMERCIAL & CONSUMER)............... 100.00 108.39 124.68 107.26 101.02 72.76 89.85
</Table>
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Tyco's
officers and directors, and persons who own more than ten percent of Tyco's
common shares to file reports of ownership and changes in ownership of such
shares with the Securities and Exchange Commission and the New York Stock
Exchange. These persons are required by SEC regulation to furnish Tyco with
copies of all Section 16(a) forms they file. Based solely on Tyco's review of
the copies of such forms it has received and written representations from
certain reporting persons confirming that they were not required to file
Forms 5 for specified fiscal years, Tyco believes that all its officers and
directors complied with all filing requirements applicable to them with respect
to transactions during fiscal 2001, except that due to an administrative error
at Tyco, a charitable gift of 24,000 Tyco common shares by Mr. Boggess in
December 1999 was not reported on his Form 5 filed on November 13, 2000 and was
reported instead on an amendment to the Form 5 filed on March 9, 2001; and the
acquisition of 34,535 Tyco common shares by Mr. Walsh on June 1, 2001 in
exchange for 50,000 shares of The CIT Group, Inc., in connection with the merger
of CIT with a subsidiary of Tyco, was reported late on a Form 4 filed on
November 7, 2001.
SHAREHOLDER PROPOSALS FOR THE 2003 ANNUAL GENERAL MEETING
In accordance with the rules established by the SEC, any shareholder
proposal submitted pursuant to Rule 14a-8 intended for inclusion in the proxy
statement for next year's annual general meeting of shareholders must be
received by Tyco no later than September 30, 2002. Such proposals should be sent
to Tyco's Chief Corporate Counsel at The Zurich Centre, Second Floor, 90 Pitts
Bay Road, Pembroke HM 08, Bermuda. To be included in the proxy statement, the
proposal must comply with the requirements as to form and substance established
by the SEC and must be a proper subject for shareholder action under Bermuda
law.
In addition, for proposals submitted outside of the Rule 14a-8 procedures,
Bermuda law provides that only Tyco shareholders holding not less than 5% of the
total voting rights or 100 or more registered Tyco shareholders together may
require a proposal to be submitted to an annual general meeting. Generally,
notice of such a proposal must be deposited at the registered office of Tyco not
less than six weeks before the date of the meeting, unless the meeting is
subsequently called for a date six weeks or less after the notice has been
deposited. Under SEC Rule 14a-4, proxies may be voted on matters properly
brought before a meeting under this procedure in the discretion of management
without additional proxy statement disclosure about the matter unless Tyco is
notified about the matter at least 45 days before the first anniversary of the
date on which this proxy statement is first mailed to shareholders. The deadline
under Rule 14a-4 for next year's meeting is December 14, 2002.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION REPORTS
Copies of our Annual Report on Form 10-K for the fiscal year ended
September 30, 2001, as filed with the SEC (without exhibits), are available to
shareholders free of charge by writing to Tyco International Ltd., The Zurich
Centre, Second Floor, 90 Pitts Bay Road, Pembroke HM 08, Bermuda.
GENERAL
The enclosed proxy is solicited on behalf of Tyco's Board of Directors.
Unless otherwise directed, proxies held by the chairman of the meeting will be
voted to elect the directors named on the proxy card and FOR re-appointing the
auditors and authorizing the Board of Directors to fix the auditors'
remuneration. If any matter other than those described in this proxy statement
properly comes before the meeting, or with respect to any adjournment or
postponement thereof, the chairman will vote the shares represented by such
proxies in accordance with his best judgment.
26
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TYCO INTERNATIONAL LTD.
A PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Proxy Card for use at the 2002 Annual General Meeting (the "Meeting") of
Shareholders of Tyco International Ltd., a company organized under the laws of
Bermuda ("Tyco"), to be held on February 21, 2002 at 9:30 a.m., Atlantic Time,
at the Fairmont Hamilton Princess Hotel, 76 Pitts Bay Road, Pembroke HM 08,
Bermuda.
The undersigned, being a holder of common shares of Tyco, hereby appoints as
his/her proxy at the Meeting the Chairman of the Meeting and directs such proxy
to vote (or abstain from voting) at the Meeting as indicated on the reverse of
this card or, to the extent that no such indication is given, as set forth
herein and authorizes the Chairman to vote in his discretion on such other
business as may properly come before the Meeting or any adjournment or
postponement thereof.
Please indicate on the reverse of this card how your shares are to be voted.
If this card is returned duly signed but without any indication as to how your
shares are to be voted in respect of any of the resolutions described on the
reverse, you will be deemed to have directed the proxy to vote FOR both
proposals.
In order to be effective, completed proxy cards should be received at one of
the addresses and by the time (being local time) specified below:
IN BERMUDA: Tyco International Ltd., The Zurich Centre, Second Floor,
90 Pitts Bay Road, Pembroke HM 08, Bermuda, by 8:00 a.m. on February 21,
2002;
IN THE UNITED KINGDOM: Tyco International Ltd., c/o Tyco Holdings (UK)
Limited, 27th Floor, Tower 42, The International Financial Centre, 25 Old
Broad Street, London EC2N 1HQ, United Kingdom, by 5:00 p.m. on February 20,
2002;
IN AUSTRALIA: Tyco International Ltd., c/o Tyco International Pty. Limited,
Level 6, 12 Help Street, Chatswood NSW 2067, Australia, by 5:00 p.m. on
February 20, 2002;
IN THE UNITED STATES: Tyco International Ltd., c/o Mellon Investor Services,
P.O. Box 3547, South Hackensack, New Jersey 07606-9247, United States of
America, by 8:00 a.m. on February 21, 2002.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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Please indicate with an "X" in the appropriate space how you wish your votes to
be cast. IF NO INDICATION IS GIVEN, PROXIES HELD BY THE CHAIRMAN OF THE MEETING
WILL BE VOTED TO ELECT THE ELEVEN NOMINEES AND FOR THE RE-APPOINTMENT OF THE
AUDITORS.
Please mark your votes as indicated in this example /X/
The Board of Directors recommends a vote "FOR" the following proposals:
1. Election of the 11 nominees listed below to the Board of Directors
/ / FOR / / WITHHOLD AUTHORITY / / FOR ALL EXCEPT*
L. Dennis Kozlowski, Lord Ashcroft KCMG, Joshua M. Berman, Richard S. Bodman,
John F. Fort, Stephen W. Foss, Wendy E. Lane, James S. Pasman, Jr., W. Peter
Slusser, Mark H. Swartz and Joseph F. Welch
To vote for all nominees, mark the "For" box. To withhold voting for all
nominees, mark the "Withhold Authority" box. To withhold voting for a particular
nominee (or nominees), mark the "For All Except" box and enter the name(s) of
the exception(s) in the space provided.
* Exceptions: _________________________________________________________________
2. Re-appointment of PricewaterhouseCoopers as Tyco's independent auditors and
authorization for the Board of Directors to fix the auditors' remuneration
/ / FOR / / AGAINST / / ABSTAIN
Note:
1. In the case of a corporation, this proxy must be under its common seal or
signed by a duly authorized officer or director whose designation must be
stated.
2. In the case of joint holders, any holder may sign, but the vote of the senior
who tenders a vote, whether in person or by proxy, will be accepted to the
exclusion of the votes of the other joint holders and for this purpose seniority
will be determined by the order in which the names stand in the Register of
Shareholders.
3. Please sign as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
Signature _______________ Signature/Title ______________ Date __________________
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