Table of Contents
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 (Amendment No. )
Filed by the Registrant
[X] |
|
Filed by a Party other than
the Registrant [ ] |
|
|
|
|
|
Check the appropriate
box: |
|
|
[ ] |
|
Preliminary Proxy
Statement |
[ ]
|
Soliciting Material Under Rule
14a-12 |
[ ] |
|
Confidential, For Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
|
[X] |
|
Definitive Proxy
Statement |
|
[ ] |
|
Definitive Additional
Materials |
|
|
Automatic Data Processing, Inc. |
|
|
(Name of Registrant as
Specified In Its Charter) |
|
|
|
|
|
|
|
|
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant) |
|
Payment of Filing Fee (Check
the appropriate box): |
[X] |
|
No fee required. |
[
] |
|
Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) 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 of Contents
AUTOMATIC DATA PROCESSING, INC.
One
ADP Boulevard
Roseland, New Jersey 07068
Notice of 2014 Annual Meeting of
Stockholders
________________________________
The 2014 Annual Meeting of Stockholders of
Automatic Data Processing, Inc. will take place at 10:00 a.m., Eastern Standard
Time, Tuesday, November 11, 2014 at our corporate headquarters, One ADP
Boulevard, Roseland, New Jersey.
A Notice of Internet Availability of Proxy
Materials or the proxy statement for the 2014 Annual Meeting of Stockholders is
first being mailed to stockholders on or about September 25, 2014.
The purposes of the meeting are
to:
|
1. |
|
Elect a board of
directors; |
|
|
|
2. |
|
Hold an advisory vote on
executive compensation; |
|
|
|
3. |
|
Ratify the appointment of
Deloitte & Touche LLP, an independent registered public accounting
firm, to serve as our independent certified public accountants for fiscal
year 2015; and |
|
|
|
4. |
|
Transact any other business that
may properly come before the meeting or any adjournment(s)
thereof. |
Only stockholders of record at the close
of business on September 12, 2014 are entitled to receive notice of, to attend,
and to vote at the meeting. If you plan to
attend the meeting in person, please note the admission procedures described
under How Can I Attend the Meeting? on page 1 of the proxy
statement.
Your vote is important, and we urge you to
vote whether or not you plan to attend the meeting. The Notice of Internet
Availability of Proxy Materials instructs you on how to access your proxy card
to vote via the Internet or by telephone. If you receive a paper copy of the
proxy materials, you may also vote by completing, signing, dating and returning
the accompanying printed proxy in the enclosed envelope, which requires no
postage if mailed in the United States.
|
By order of the Board of
Directors |
|
|
MICHAEL A. BONARTI |
|
Secretary |
|
September 25, 2014 |
|
Roseland, New Jersey |
|
TABLE OF CONTENTS
Table of
Contents
Table of
Contents
2014 Proxy Statement Summary
This summary highlights certain information
contained elsewhere in the proxy statement. This summary does not contain
all of the information that you should consider. You should read the
entire proxy statement carefully before voting. |
|
2014 Annual Meeting of
Stockholders
|
|
10:00 a.m. Eastern Standard Time,
Tuesday, November 11, 2014 |
|
|
|
|
|
One ADP Boulevard, Roseland, New
Jersey, 07068 |
|
|
|
|
|
Stockholders of record at the close
of business on September 12, 2014 are entitled to vote at the meeting in
person or by proxy. |
|
|
|
|
|
Admission to the meeting is
restricted to stockholders and/or their designated representatives. All
stockholders will be required to show valid picture identification in
order to be admitted to the meeting. |
|
|
|
|
|
Under rules adopted by the
Securities and Exchange Commission, we are furnishing proxy materials to
our stockholders primarily via the Internet, instead of mailing printed
copies of those materials to each stockholder. On September 25, 2014, we
commenced the mailing to our stockholders (other than those who previously
requested electronic or paper delivery) of a Notice of Internet
Availability of Proxy Materials containing instructions on how to access
our proxy materials. If you would prefer to receive printed proxy
materials, please follow the instructions included in the Notice of
Internet Availability of Proxy Materials. |
|
|
|
|
|
The Notice of Internet Availability
of Proxy Materials instructs you on how to access your proxy card to vote
through the Internet or by telephone. If you receive a paper copy of the
proxy materials, you may also vote your shares by completing, signing,
dating and returning the accompanying printed proxy in the enclosed
envelope, which requires no postage if mailed in the United
States. |
Voting Matters and Board Voting
Recommendations
|
|
Proposal |
|
Board Recommendation |
|
Page Reference For More
Detail |
Proposal 1: |
|
Election of directors |
|
For Each Nominee |
|
5 |
Proposal 2: |
|
Advisory resolution to approve compensation of named
executive officers |
|
For |
|
21 |
Proposal 3: |
|
Ratification of Deloitte & Touche LLP as our
independent registered public accounting firm for fiscal year
2015 |
|
For |
|
67 |
i |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
2014 Proxy Statement Summary |
|
Election of Directors (Proposal
1)
The board of directors has nominated the
following current directors for re-election as directors. Please refer to page 6
in the proxy statement for important information about the qualifications and
experience of each of the following director nominees.
|
|
|
|
Director Since |
|
|
|
|
|
Committee Memberships |
Name |
|
Age |
|
|
Principal Occupation |
|
Independent |
|
AC |
|
CC |
|
NCGC |
|
CDAC |
Ellen R. Alemany |
|
58 |
|
2011 |
|
Retired Chairman and Chief Executive
Officer of Citizens Financial Group, Inc. and Head of RBS
Americas |
|
X |
|
|
|
|
|
X |
|
X |
Leslie A. Brun |
|
62 |
|
2003 |
|
Chairman and Chief Executive Officer
of Sarr Group, LLC |
|
X |
|
|
|
|
|
|
|
|
Richard T. Clark |
|
68 |
|
2011 |
|
Retired Chairman and Chief Executive
Officer of Merck & Co., Inc. |
|
X |
|
X |
|
X |
|
|
|
|
Eric C. Fast |
|
65 |
|
2007 |
|
Retired Chief Executive Officer of
Crane Co. |
|
X |
|
C, F |
|
|
|
|
|
X |
Linda R. Gooden |
|
61 |
|
2009 |
|
Retired Executive Vice President of
Lockheed Martin Corporation Information Systems & Global
Solutions |
|
X |
|
X |
|
|
|
|
|
C |
Michael P. Gregoire |
|
48 |
|
2014 |
|
Chief Executive Officer and Director
of CA Technologies |
|
X |
|
|
|
|
|
X |
|
X |
R. Glenn Hubbard |
|
56 |
|
2004 |
|
Dean of Columbia Universitys Graduate
School of Business |
|
X |
|
F |
|
X |
|
|
|
|
John P. Jones |
|
63 |
|
2005 |
|
Retired Chairman and Chief Executive
Officer of Air Products and Chemicals, Inc. |
|
X |
|
|
|
X |
|
C |
|
|
Carlos A. Rodriguez |
|
50 |
|
2011 |
|
President and Chief Executive Officer
of Automatic Data Processing, Inc. |
|
|
|
|
|
|
|
|
|
|
AC Audit Committee
CC Compensation Committee
C Committee Chair
F Financial
Expert
NCGC Nominating / Corporate Governance
Committee
CDAC Corporate Development Advisory Committee
Advisory Resolution to Approve
Executive Compensation (Proposal 2)
Consistent with the stockholders advisory
vote at our 2011 Annual Meeting of Stockholders, we determined to hold the
advisory say-on-pay vote to approve our named executive officer compensation on
an annual basis. Therefore, we are asking our stockholders to approve, on an
advisory basis, our named executive officer compensation for fiscal year 2014.
Our stockholders will
have the opportunity to approve, on an
advisory basis, our named executive officer compensation for fiscal year 2015 at
the 2015 Annual Meeting of Stockholders.
The board of directors recommends a vote
FOR this resolution because it believes that the policies and practices
described in the Compensation Discussion and Analysis section on page 22 of
the proxy statement are effective in achieving the companys goals of linking
pay to performance and levels of responsibility, encouraging our
Automatic Data Processing, Inc. Proxy Statement |
| |
ii |
Table of
Contents
2014 Proxy Statement Summary |
|
executive officers to remain focused on
both short-term and long-term operational and financial goals of the company and
linking executive performance to stockholder value.
At our 2013 Annual Meeting of
Stockholders, our stockholders approved the compensation of our fiscal year 2013
named executive officers by a vote of approximately 97% in favor.
Ratification of the Appointment of
Auditors (Proposal 3)
We are asking our shareholders to ratify
the selection of Deloitte & Touche LLP (Deloitte) as our independent
certified public accountants for fiscal year 2015. A summary of fees paid to
Deloitte for services provided in fiscal years 2013 and 2014 is provided on page
66 of the proxy statement.
Fiscal Year 2014 Business
Highlights
In fiscal year 2014, we demonstrated our
focus and commitment to sustaining our position as a global leader of Human
Capital Management solutions through our product innovations and our decision to
spin off our Dealer Services business into its own independent, publicly traded
company. Our fiscal year 2014 results continue to reflect the strength of our
underlying business model, including the diversity of our client base and
products. Fiscal year 2014 revenue growth was 8.1% compared to a target of 7.6%,
and adjusted operating income growth was 8.1% compared to a target of 8.6%.
Fiscal year 2014 adjusted earnings per share growth was 9.0% compared to a
target of 9.0%.
Compensation Principles
We believe that compensation should be
designed to create a direct link between performance and stockholder value. Five
principles that guide our decisions involving executive compensation are that
compensation should be:
- based on (i) the overall performance of the
company, (ii) the performance of each
executives business unit, and (iii) each
executives individual performance;
- closely aligned with the short-term and
long-term financial and strategic objectives
that build sustainable long-term stockholder
value;
- competitive, in order to attract and retain
executives critical to our long-term
success;
- consistent with high standards of corporate
governance and best practices; and
- designed to discourage the incentive for
executives to take excessive risks or to behave
in ways that are inconsistent with the
companys strategic planning processes and high
ethical standards.
Good Governance and Best
Practices
We are committed to ensuring that our
compensation programs reflect principles of good governance, including the
following:
ü |
|
Pay for
performance: We design our compensation
programs to link pay to performance and levels of responsibility, to
encourage our executive officers to remain focused on both the short-term
and long-term operational and financial goals of the company, and to link
executive performance to stockholder value. |
|
|
|
ü |
|
Annual say-on-pay
vote: We hold an advisory say-on-pay vote to
approve our named executive officer compensation on an annual
basis. |
|
|
|
ü |
|
Clawback
policy: We maintain a compensation recovery,
or clawback, provision in our 2008 Omnibus Award
Plan. |
|
|
|
ü |
|
Stock ownership
guidelines: We maintain stock ownership
guidelines to encourage equity ownership by our executive
officers. |
|
|
|
ü |
|
Double trigger
change in control payments: Our Change in
Control Severance Plan for Corporate Officers is based on a double
trigger, such that payments of cash and vesting of equity awards occur
only if termination of employment without cause or with good reason occurs
during the two-year period after a change in control. |
|
|
|
ü |
|
Limited
perquisites: We provide limited, reasonable
perquisites that we believe are consistent with our overall compensation
philosophy. |
|
|
|
ü |
|
No IRC Section 280G
or 409A tax gross-ups: We do not provide tax
gross-ups under our change in control provisions or deferred compensation
programs. |
iii |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
2014 Proxy Statement Summary |
|
ü |
|
No stock option
repricing or discount stock options: We do
not lower the exercise price of any outstanding stock options, and the
exercise price of our stock options is not less than 100% of the fair
market value of our common stock on the date of grant. |
|
|
|
ü |
|
Anti-hedging or
pledging policy: We prohibit our directors
and executive officers from engaging in any hedging or similar
transactions involving ADP securities, holding ADP securities in a margin
account, or pledging ADP securities as collateral for a
loan. |
|
|
|
ü |
|
Independence of our
compensation committee and advisor: The
compensation committee of our board of directors, which is comprised
solely of independent directors, utilizes the services of Frederic W. Cook
& Co., Inc. (Cook & Co.) as an independent compensation
consultant. Cook & Co. reports to the compensation committee, does not
perform any other services for the company other than in connection with
an annual review of competitive director compensation for
the |
|
|
nominating/corporate
governance committee of our board of directors, and has no economic or
other ties to the company or the management team that could compromise
their independence or objectivity. |
2014 Compensation
Highlights
Please refer to the Compensation
Discussion and Analysis section on page 22 of the proxy statement, and the
tables and narratives that follow on page 37 of the proxy statement, for more
detail concerning the compensation of our named executive officers.
Consistent with our pay for performance
philosophy, the compensation of our named executive officers is structured with
a significant portion of their total compensation at risk and paid based on the
performance of the company and the applicable business unit. Our financial
performance in fiscal year 2014 impacted the compensation for all of our
executive officers, not just our named executive officers, in several ways, most
notably through our annual cash bonus plan and performance-based restricted
stock program.
The following are key highlights of our fiscal 2014
executive compensation program:
|
|
For fiscal
year 2014, we increased the base salary of each named executive officer by
an average of 3.8%. |
|
|
|
|
|
For fiscal
year 2014, we maintained annual cash bonus targets for the named executive
officers at fiscal year 2013 levels. In fiscal year 2014, our named
executive officers received cash bonuses that averaged approximately
106.1% of target. |
|
|
|
- Performance-based restricted stock
(PBRS), performance stock unit (PSU), and stock
options:
|
|
As part of
our equity compensation program in fiscal year 2014, in addition to stock
option grants, we introduced a performance stock unit (PSU) program based
on financial objectives that are measured over a three-year performance
cycle comprised of three one-year performance periods. This new three-year
program replaces our current PBRS program. The shift from the two-year
vesting schedule of the PBRS program to a three-year vesting schedule of
the PSU program results in a gap in our annual vesting schedule with no
vesting opportunity in fiscal year 2016. We addressed this gap with a
one-time transition grant award opportunity under our PBRS program in
fiscal year 2014, which will vest in September of fiscal year 2016 in
accordance with the current
program. |
Automatic Data Processing, Inc. Proxy Statement |
| |
iv |
Table of Contents
2014 Proxy Statement
Summary |
A summary of fiscal year 2014 total direct
compensation for our named executive officers is set forth in the following
table:
|
|
Base |
|
Annual |
|
|
|
|
|
Stock |
|
|
Name |
|
Salary |
|
Bonus |
|
PBRS |
|
PSUs |
|
Options |
|
Total |
Carlos A. Rodriguez |
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief Executive Officer |
|
$900,000 |
|
$1,471,680 |
|
$2,341,875 |
|
$800,006 |
|
$1,599,998 |
|
$7,113,559 |
Jan Siegmund |
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
$550,001 |
|
$449,680 |
|
$836,160 |
|
$285,640 |
|
$434,240 |
|
$2,555,721 |
Regina R. Lee |
|
|
|
|
|
|
|
|
|
|
|
|
President, Major
Account Services and |
|
|
|
|
|
|
|
|
|
|
|
|
ADP Canada |
|
$530,503 |
|
$450,713 |
|
$766,480 |
|
$261,837 |
|
$434,240 |
|
$2,443,773 |
Steven J. Anenen |
|
|
|
|
|
|
|
|
|
|
|
|
President, Dealer Services |
|
$475,004 |
|
$391,020 |
|
$592,280 |
|
$202,328 |
|
$284,970 |
|
$1,945,602 |
Dermot J. OBrien |
|
|
|
|
|
|
|
|
|
|
|
|
Chief Human Resources Officer |
|
$488,001 |
|
$349,115 |
|
$557,440 |
|
$190,427 |
|
$284,970 |
|
$1,869,953 |
The mix of total direct compensation (base
salary, cash bonus, and long-term incentive awards) for fiscal year 2014 was
designed to deliver the following approximate proportions of total compensation
to Mr. Rodriguez, our chief executive officer, and the other named executive
officers (on average) if company and individual target levels of performance are
achieved:
Important Dates for the 2015 Annual
Meeting of Stockholders
Please refer to the Stockholder
Proposals section on page 68 of the proxy statement for more information
regarding the applicable requirements for submission of stockholder
proposals.
If a stockholder intends to submit any
proposal for inclusion in the companys proxy statement for the companys 2015
Annual Meeting of Stockholders in accordance with Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, the proposal must be received by
the corporate secretary of the company no later than May 28, 2015.
Separate from the requirements of Rule
14a-8 relating to the inclusion of a stockholder proposal in the companys proxy
statement, the companys amended and restated by-laws require that notice of a
stockholder nomination for candidates for our board of directors or any other
business to be considered at the companys 2015 Annual Meeting of Stockholders
must be received by the company no earlier than July 14, 2015, and no later than
the close of business (5:30 p.m. Eastern Daylight Time) on August 13,
2015.
v |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Proxy
Statement
The board of directors of Automatic Data
Processing, Inc. is soliciting your proxy to vote at the 2014 Annual Meeting of
Stockholders to be held on November 11, 2014 at 10:00 a.m. Eastern Standard
Time, and at any postponement(s) or adjournment(s) thereof. The meeting will be
held at our corporate headquarters, One ADP Boulevard, Roseland, New
Jersey.
Under rules adopted by the Securities and
Exchange Commission, we are furnishing proxy materials to our stockholders
primarily via the Internet, instead of mailing printed copies of those materials
to each stockholder. On September 25, 2014, we commenced the mailing to our
stockholders (other than those who previously requested electronic or paper
delivery of printed proxy materials) of a Notice of Internet Availability of
Proxy Materials containing instructions on how to access our proxy materials,
including our proxy statement and our annual report on Form 10-K (which is not a
part of the proxy soliciting material). This process is designed to expedite
stockholders receipt of proxy materials, lower the cost of the Annual Meeting,
and help conserve natural resources.
However, if you would prefer to receive
printed proxy materials, please follow the instructions included in the Notice
of Internet Availability of Proxy Materials. If you have previously elected to
receive our proxy materials electronically, you will continue to receive these
materials via e-mail unless you elect otherwise.
The only outstanding class of securities
entitled to vote at the meeting is our common stock, par value $0.10 per share.
At the close of business on September 12, 2014, the record date for determining
stockholders entitled to notice of, to attend, and to vote at the meeting, we
had 482,065,865 issued and outstanding shares of common stock (excluding 156,646,577 treasury
shares not entitled to vote). Each outstanding share of common stock is entitled
to one vote with respect to each matter to be voted on at the
meeting.
This proxy statement and our annual report
on Form 10-K are also available on our corporate website at www.adp. com under
Financials in the Investor Relations section.
Questions
and Answers About the Annual Meeting and Voting
WHY AM I
RECEIVING THESE PROXY MATERIALS? |
|
We are
providing these proxy materials to holders of shares of the companys
common stock, par value $0.10 per share, in connection with the
solicitation of proxies by our board of directors for the forthcoming 2014
Annual Meeting of Stockholders to be held on November 11, 2014 at 10:00
a.m. Eastern Standard Time, and at any postponement(s) or adjournment(s)
thereof. The company will bear all expenses in connection with this
solicitation. |
HOW CAN I
ATTEND THE MEETING? |
|
Admission to
the meeting is restricted to stockholders and/or their designated
representatives. If your shares are registered in your name and you plan
to attend the meeting, your admission ticket will be the top portion of
the proxy card. If your shares are in the name of your broker or bank or
you received your proxy materials electronically, you will need to bring
evidence of your stock ownership, such as your most recent brokerage
account statement.
All stockholders will be required to
show valid picture identification. If you do not have valid picture
identification and either an admission ticket or proof of your stock
ownership, you will not be admitted to the meeting. For security purposes,
packages and bags will be inspected and you may be required to check these
items. Please arrive early enough to allow yourself adequate time to clear
security. |
1 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Questions and Answers About the Annual Meeting
and Voting |
HOW MANY SHARES MUST BE PRESENT TO HOLD
THE MEETING? |
|
The
representation in person or by proxy of a majority of the issued and
outstanding shares of stock entitled to vote at the meeting constitutes a
quorum. Under our amended and restated certificate of incorporation and
our amended and restated bylaws and under Delaware law, abstentions and
non-votes are counted as present in determining whether the quorum
requirement is satisfied. A non-vote occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power for that particular item
and has not received instructions from the beneficial
owner. |
HOW CAN I VOTE MY SHARES? |
|
The Notice
of Internet Availability of Proxy Materials instructs you on how to access
your proxy card to vote through the Internet or by telephone. If you
receive a paper copy of the proxy materials, you may also vote your shares
by completing, signing, dating and returning the accompanying printed
proxy in the enclosed envelope, which requires no postage if mailed in the
United States. Unless contrary instructions are indicated on the proxy,
all shares represented by valid proxies received pursuant to this
solicitation (and not revoked before they are voted) will be voted in
accordance with the recommendations of our board of directors as indicated
below. If you are a registered stockholder and attend the meeting, you may
deliver your completed proxy card in person. |
IF I HOLD
SHARES IN STREET NAME, DOES MY BROKER NEED INSTRUCTIONS IN
ORDER TO VOTE MY SHARES? |
|
If your shares are held
in street name (i.e., your shares are held by a bank, brokerage firm or
other nominee), you must provide voting instructions to your bank or
broker by the deadline provided in the materials you receive from your
bank or broker. If you hold your shares in street name and you do not
instruct your bank or broker as to how to vote your shares, your bank or
broker may only vote your shares in its discretion on the ratification of
the appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for fiscal year 2015 (Proposal 3), but will not be
allowed to vote your shares on any of the other proposals described in
this proxy statement, including the election of directors. Under
applicable Delaware law, a broker non-vote will have no effect on the
outcome of any of the other proposals described in this proxy statement
because the non-votes are not considered in determining the number of
votes necessary for approval. |
WHAT MATTERS WILL BE VOTED ON
AT THE MEETING, WHAT ARE MY VOTING CHOICES, AND HOW DOES
THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
|
|
Proposal |
|
Voting
Choices |
|
Board
Recommendation |
|
Proposal 1: Election of the 9
nominees named in this proxy statement to serve on the companys board of
directors |
|
- For all
- For all except
identified director nominee(s)
- Withhold all
|
|
FOR election of all 9 director
nominees |
Proposal 2: Advisory resolution approving the
compensation of the companys named executive officers as disclosed in the
COMPENSATION DISCUSSION AND ANALYSIS section on page 22 of this proxy
statement |
|
|
|
FOR |
Proposal 3: Ratification of the
appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for fiscal year 2015 |
|
|
|
FOR |
|
|
|
So far as
the board of directors is aware, only the above matters will be acted upon
at the meeting. If any other matters properly come before the meeting, the
accompanying proxy may be voted on such other matters in accordance with
the best judgment of the person or persons voting the
proxy. |
Automatic Data Processing, Inc. Proxy Statement |
| |
2 |
Table of Contents
Questions and Answers About the Annual
Meeting and Voting |
HOW MANY
VOTES ARE NEEDED TO APPROVE THE PROPOSALS, AND WHAT IS THE
EFFECT OF ABSTENTIONS OR WITHHELD VOTES? |
|
Proposal 1:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote thereon is required to elect a director, provided that if the
number of nominees exceeds the number of directors to be elected (a
situation that the company does not anticipate), the directors shall be
elected by the vote of a plurality of the shares represented in person or
by proxy. Votes may be cast in favor of all nominees, withheld from all
nominees or withheld from specifically identified nominees. Votes that are
withheld will have the effect of a negative vote, provided that if the
number of nominees exceeds the number of directors to be elected, withheld
votes will be excluded entirely and will have no effect on the vote. A
broker non-vote will have no effect on the outcome of this proposal
because the non-votes are not considered in determining the number of
votes necessary for approval.
Proposal 2:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote thereon is required to approve the advisory resolution on
executive compensation. Votes may be cast in favor of or against this
proposal or a stockholder may abstain from voting. Abstentions will have
the effect of a negative vote. Because the vote on this proposal is
advisory in nature, it will not affect any compensation already paid or
awarded to any named executive officer and will not be binding on or
overrule any decisions by the compensation committee or the board of
directors. Because we value our stockholders views, however, the
compensation committee and the board of directors will consider the
results of this advisory vote when formulating future executive
compensation policy. A broker non-vote will have no effect on the outcome
of the advisory resolution because the non-votes are not considered in
determining the number of votes necessary for approval.
Proposal 3:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote thereon is required to ratify the appointment of Deloitte &
Touche LLP, an independent registered public accounting firm, as the
companys independent certified public accountants for fiscal year 2015.
Votes may be cast in favor of or against this proposal or a stockholder
may abstain from voting. Abstentions will have the effect of a negative
vote. Brokers have the authority to vote shares for which their customers
did not provide voting instructions on the ratification of the appointment
of Deloitte & Touche LLP. |
MAY I REVOKE
MY PROXY OR CHANGE MY VOTE? |
|
If your shares are registered in
your name, you may revoke your proxy and change your vote prior to the
completion of voting at the Annual Meeting by:
- submitting a valid, later-dated proxy card
or a later-dated vote in accordance with the voting instructions on the Notice of Internet Availability of
Proxy Materials in a timely manner;
or
- giving written notice of such revocation to
the companys corporate secretary prior to or at the Annual Meeting or by voting in person at the Annual
Meeting.
If your shares are held in street
name, you should contact your bank or broker and follow its procedures
for changing your voting instructions. You also may vote in person at the
Annual Meeting if you obtain a legal proxy from your bank or
broker. |
3 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Questions and Answers About the Annual
Meeting and Voting |
IS MY VOTE CONFIDENTIAL? |
|
Proxies and ballots identifying the
vote of individual stockholders will be kept confidential from our
management and directors, except as necessary to meet legal requirements
in cases where stockholders request disclosure or in a contested
election. |
WHERE CAN I FIND THE VOTING RESULTS OF THE
ANNUAL MEETING? |
|
The preliminary voting results will
be announced at the Annual Meeting. The final voting results, which are
tallied by independent tabulators and certified by independent inspectors,
will be published in the companys current report on Form 8-K, which we
are required to file with the Securities and Exchange Commission within
four business days following the Annual Meeting. |
WHAT IS HOUSEHOLDING? |
|
To reduce the expense of delivering
duplicate proxy materials to stockholders who may have more than one
account holding our stock but share the same address, we have adopted a
procedure known as householding. Under this procedure, certain
stockholders of record who have the same address and last name, and who do
not participate in electronic delivery of proxy materials, will receive
only one copy of our Notice of Internet Availability of Proxy Materials
and, as applicable, any additional proxy materials that are delivered
until such time as one or more of these stockholders notifies us that they
want to receive separate copies. Stockholders who participate in
householding will continue to have access to and utilize separate proxy
voting instructions.
If you are a registered stockholder
and choose to have separate copies of our Notice of Internet Availability
of Proxy Materials, proxy statement and annual report on Form 10-K mailed
to you, you must opt-out by writing to Broadridge Financial Solutions,
Inc., Householding Department, 51 Mercedes Way, Edgewood, New York, 11717
or by calling 1-800-542-1061 and we will cease householding all such
disclosure documents within 30 days. If we do not receive instructions to
remove your accounts from this service, your accounts will continue to be
householded until we notify you otherwise. If you own our common stock
in nominee name (such as through a broker), information regarding
householding of disclosure documents should have been forwarded to you by
your broker.
You can also contact Broadridge
Financial Solutions, Inc. at 1-800-542-1061 if you received multiple
copies of the Annual Meeting materials and would prefer to receive a
single copy in the future. |
Automatic Data Processing, Inc. Proxy Statement |
| |
4 |
Table of Contents
|
Proposal
1 Election of Directors |
The board of directors has nominated the
following current directors for re-election as directors. Properly executed
proxies will be voted as marked. Unmarked proxies will be voted in favor of
electing the persons named below (each of whom is now a director) as directors
to serve until the next Annual Meeting of Stockholders and until their
successors are duly elected and qualified. If any nominee is no longer a
candidate at the time of the meeting (a situation that we do not anticipate),
proxies will be voted in favor of remaining nominees and may be voted for
substitute nominees designated by the board of directors.
|
|
|
|
Served as
a |
|
|
|
|
|
|
Director |
|
|
|
|
|
|
Continuously |
|
|
Name |
|
Age |
|
Since |
|
Principal Occupation |
Ellen R. Alemany |
|
58 |
|
2011 |
|
Retired Chairman and Chief Executive Officer of Citizens
Financial Group, Inc. and Head of RBS Americas |
Leslie A. Brun |
|
62 |
|
2003 |
|
Chairman and Chief Executive Officer of Sarr Group, LLC,
an investment holding company |
Richard T. Clark |
|
68 |
|
2011 |
|
Retired Chairman and Chief Executive Officer of Merck
& Co., Inc. |
Eric C. Fast |
|
65 |
|
2007 |
|
Retired Chief Executive Officer of Crane Co., a
manufacturer of industrial products |
Linda R. Gooden |
|
61 |
|
2009 |
|
Retired Executive Vice President of Lockheed Martin
Corporation Information Systems & Global Solutions |
Michael P. Gregoire |
|
48 |
|
2014 |
|
Chief Executive Officer and Director of CA
Technologies |
R. Glenn Hubbard |
|
56 |
|
2004 |
|
Dean of Columbia Universitys Graduate School of
Business |
John P. Jones |
|
63 |
|
2005 |
|
Retired Chairman and Chief Executive Officer of Air
Products and Chemicals, Inc., an industrial gas and related industrial
process equipment business |
Carlos A. Rodriguez |
|
50 |
|
2011 |
|
President and Chief Executive Officer of Automatic Data
Processing, Inc. |
Messrs. Gregory D. Brenneman and Gregory
L. Summe have notified the board of directors that they will not stand for
re-election at the conclusion of their current term ending at the 2014 Annual
Meeting of Stockholders.
5 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Below are summaries of the principal
occupations, business experience, and background of the nominees.
Ellen R. Alemany |
Director since:
2011
Independent |
|
Retired Chairman and Chief
Executive Officer of Citizens Financial Group, Inc. and Head of RBS
Americas
Ms. Alemany is the retired Head of
RBS Americas, the management structure that oversees The Royal Bank of
Scotlands businesses in the Americas, and chief executive officer of RBS
Citizens Financial Group, Inc., an RBS subsidiary. Ms. Alemany retired
from RBS in September 2013. She joined RBS as the Head of RBS Americas in
June 2007, and was named to the additional role of chief executive officer
of RBS Citizens Financial Group, Inc. in March 2008. She was also
appointed the chairman of RBS Citizens Financial Group, Inc. in March
2009. Ms. Alemany joined RBS from Citigroup, where she served as the chief
executive officer for global transaction services from February 2006 until
April 2007. Ms. Alemany joined Citigroup in 1987, and held a number of
senior positions during her tenure, including executive vice president for
the commercial business group from March 2003 until January 2006, and also
CitiCapital, where she served as president and chief executive officer
from September 2001 until January 2006. Prior to being appointed executive
vice president for the commercial business group in 2003, Ms. Alemany also
held a number of executive positions in Citigroups Global Corporate Bank.
Ms. Alemany is a director of Fidelity National Information Services, Inc.
and a director of CIT Group Inc. With over 30 years of management
experience in financial services and a proven track record of achievement
and leadership, Ms. Alemany brings a wealth of managerial and operational
expertise to our board of directors, as well as extensive experience in
the issues facing multinational
businesses. |
Leslie A.
Brun |
Director since:
2003
Independent |
|
Chairman and Chief Executive
Officer of Sarr Group, LLC
Mr. Brun is chairman and chief
executive officer of Sarr Group, LLC, an investment holding company that
manages Mr. Bruns personal and family investments. He is the founder and
was chairman emeritus of Hamilton Lane, a private equity advisory and
management firm where he served as chief executive officer and chairman
from 1991 until 2005. Mr. Brun also serves as the chairman of the board of
directors of Broadridge Financial Solutions, Inc., a director and chairman
of the audit committee of Merck & Co., Inc., and a director of NXT
Capital. In addition, Mr. Brun is a former managing director and head of
investor relations at CCMP Capital Advisors, LLC, a global private equity
firm. Mr. Brun has extensive financial expertise coupled with a track
record of achievement demonstrated by his career at Hamilton Lane, his
experience as a managing director and co-founder of the investment banking
group of Fidelity Bank, and as a vice president in the corporate finance
division of E.F. Hutton & Co. Mr. Brun also brings to our board of
directors management expertise and board leadership experience essential
to a large public company. In addition, his directorships at other public
companies provide him with broad experience on governance issues facing
public companies. |
Automatic Data Processing, Inc. Proxy Statement |
| |
6 |
Table of Contents
Richard T.
Clark |
Director since:
2011
Independent |
|
Retired Chairman and Chief
Executive Officer of Merck & Co., Inc.
Mr. Clark is the retired chairman of
the board, chief executive officer, and president of Merck & Co., Inc.
Mr. Clark served as chairman of Merck & Co., Inc. from April 2007
until December 2011, as chief executive officer from May 2005 until
December 2010, and as president from May 2005 until April 2010. He held a
variety of other positions during his 39-year tenure at Merck, including
president of the Merck manufacturing division from June 2003 to May 2005,
and chairman and chief executive officer of Medco Health Solutions,
Inc. from March 2002 to June 2003. Mr. Clark is a director of Corning
Incorporated, a global manufacturing company, and serves on the advisory
board of American Securities, a private equity firm. With a proven track
record of leadership and achievement, Mr. Clark offers our board of
directors broad managerial and operational expertise, as well as extensive
experience in the issues facing public companies and multinational
businesses. |
Eric C.
Fast |
Director since:
2007
Independent |
|
Retired Chief Executive Officer
of Crane Co.
Mr. Fast is the retired chief
executive officer, president, and director of Crane Co., a manufacturer of
industrial products. Mr. Fast served as the chief executive officer of
Crane Co. from April 2001 until January 2014, as president from 1999
through January 2013, and as a director from 1999 to January 2014. Mr.
Fast is also a director of National Integrity Life Insurance Company and
Regions Financial Corporation. He was a director of Convergys Corporation
from 2000 to 2007. Mr. Fast also served as a managing director, co-head of
global investment banking, and a member of the management committee of
Salomon Smith Barney from 1997 to 1998. Mr. Fast held those same positions
at Salomon Brothers Inc. from 1995 until the merger of Salomon Brothers
Inc. and Travelers/Smith Barney, and prior to that he was co-head of U.S.
corporate finance at Salomon Brothers Inc. from 1991 to 1995. Mr. Fast has
extensive financial and transactional experience, demonstrated by his
career in investment banking prior to his tenure at Crane Co. With years
of demonstrated leadership ability, Mr. Fast contributes significant
organizational skills to our board of directors, including expertise in
financial, accounting, and transactional
matters. |
Linda R.
Gooden |
Director since:
2009
Independent |
|
Retired Executive Vice President
of Lockheed Martin Corporation Information Systems & Global
Solutions
Ms. Gooden is the retired executive
vice president information systems & global solutions of Lockheed
Martin Corporation, a position that she held from January 2007 to March
2013. She previously served as deputy executive vice president
information & technology services of Lockheed Martin Corporation from
October 2006 to December 2006, and president, Lockheed Martin Information
Technology from September 1997 to December 2006. Ms. Gooden is a director
of WGL Holdings, Inc., a public utility holding company, and director of
Washington Gas Light Company, a subsidiary of WGL Holdings, Inc. Ms.
Gooden brings to our board of directors broad managerial and operational
expertise, a strong background in information technology, as well as a
proven track record of achievement and sound business judgment
demonstrated throughout her career with Lockheed Martin
Corporation. |
7 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Michael P.
Gregoire |
Director since:
2014
Independent |
|
Chief Executive Officer and
Director of CA Technologies
Mr. Gregoire is chief executive
officer and a director of CA Technologies. He served as president and
chief executive officer of Taleo Corporation, a provider of on-demand
talent management software solutions, from March 2005 until its
acquisition by Oracle Corporation in April 2012, as chairman of the board
from May 2008 to April 2012, and as a director from April 2005 to April
2012. Mr. Gregoire served as executive vice president, global services and
held various other senior management positions at PeopleSoft, Inc. from
May 2000 to January 2005. Mr. Gregoire was managing director for global
financial markets at Electronic Data Systems, Inc. from 1996 to April
2000, and in various other roles from 1988 to 1996. He has also served as
a director of ShoreTel, Inc. from November 2008 to January 2014 and the
chair of its compensation committee from July 2010 to January 2014. Mr.
Gregoire is also a director of NPower, a nonprofit information technology
services network, since September 2013. Mr. Gregoire brings to our board
of directors extensive executive leadership experience with public
companies in the software and services business and extensive experience
in the technology industry. In addition, his directorships at other public
companies provide him with broad experience on governance issues facing
public companies. |
R. Glenn
Hubbard |
Director since:
2004
Independent |
|
Dean of Columbia Universitys
Graduate School of Business
Mr. Hubbard has been the dean of
Columbia Universitys Graduate School of Business since 2004 and has been
the Russell L. Carson professor of finance and economics since 1994. He is
also a director of BlackRock Closed-End Funds and MetLife, Inc. and a
member of the Panel of Economic Advisors for the Federal Reserve Bank of
New York. Mr. Hubbard served as a director of KKR Financial Holdings, LLC
from 2004 until 2014, Information Services Group, Inc. from 2006 to 2008,
Duke Realty Corporation from 2004 to 2008, Capmark Financial Corporation
from 2006 to 2008, Dex Media, Inc. from 2004 to 2006, and R.H. Donnelley
Corporation in 2006. Mr. Hubbard was chairman of the Presidents Council
of Economic Advisers from 2001 to 2003. Mr. Hubbard provides our board of
directors with substantial knowledge of and expertise in global
macroeconomic conditions and economic, tax and regulatory policies, as
well as perspective on financial markets. In addition, his directorships
at other public companies provide him with broad experience on governance
issues facing public companies. |
John P.
Jones |
Director since:
2005
Independent |
|
Retired Chairman and Chief
Executive Officer of Air Products and Chemicals, Inc.
Mr. Jones is the retired chairman of
the board, chief executive officer, and president of Air Products and
Chemicals, Inc., an industrial gas and related industrial process
equipment business. Mr. Jones served as chairman of Air Products and
Chemicals, Inc. from October 2007 until April 2008, as chairman and chief
executive officer from September 2006 until October 2007, and as chairman,
president, and chief executive officer from December 2000 through
September 2006. He also served as a director of Sunoco, Inc. from 2010 to
2012. With a track record of achievement and sound business judgment
demonstrated during his thirty-six year tenure at Air Products and
Chemicals, Inc., Mr. Jones brings to the board of directors extensive
experience in issues facing public companies and multinational businesses,
including organizational management, strategic planning, and corporate
governance matters, combined with proven business and financial
acumen. |
Automatic Data Processing, Inc. Proxy Statement |
| |
8 |
Table of Contents
Carlos A.
Rodriguez |
Director since:
2011
Management |
|
President and Chief Executive
Officer of Automatic Data Processing, Inc.
Mr. Rodriguez is president and chief
executive officer of the company. He served as president and chief
operating officer of the company before he was appointed to his current
position in November 2011. Having started his career at the company in
1999, Mr. Rodriguez previously served as president of several key
businesses, including National Accounts Services, Employer Services
International, Small Business Services, and Professional Employer
Organization, giving him deep institutional knowledge across the companys
business. Mr. Rodriguez is also a director of Hubbell Inc., a manufacturer
of electrical and electronic products. Mr. Rodriguez brings a wealth of
business acumen and leadership experience to our board of directors,
coupled with a proven track record of integrity, achievement, and
strategic vision. |
Stockholder Approval
Required |
At the 2014 Annual Meeting of
Stockholders, directors will be elected by the affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled to
vote thereon, provided that if the number of nominees exceeds the number of
directors to be elected (a situation we do not anticipate), the directors shall
be elected by the vote of a plurality of the shares represented in person or by
proxy.
|
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES TO THE BOARD
OF DIRECTORS. |
9 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Corporate Governance
The board of directors categorical
standards of director independence are consistent with NASDAQ Stock Market
(NASDAQ) listing standards and are available online at:
http://www.adp.com/who-we-are/corporate-social-responsibility/working-with-adp/governance/standards-of-director-independence.aspx.
Directors meeting these standards are considered to be independent. Ms.
Alemany, Ms. Gooden, and Messrs. Brenneman, Brun, Clark, Fast, Gregoire,
Hubbard, Jones, and Summe meet these standards and are, therefore, considered to
be independent directors. Mr. Rodriguez does not meet these standards and is,
therefore, not considered to be an independent director. Based on the foregoing
categorical standards, all current members of the audit, compensation and
nominating/corporate governance committees are independent. Mr. Brun, our
independent non-executive chairman of the board, is not a member of any of these
board committees.
It is our policy that our directors attend
the Annual Meetings of Stockholders. All of our directors attended our 2013
Annual Meeting of Stockholders.
During fiscal year 2014, our board of
directors held 5 meetings. All of our incumbent directors attended at least 75%,
in the aggregate, of the meetings of the board of directors and the committees
of which they were members during the periods that they served on our board of
directors during fiscal year 2014, with the exception of Mr. Gregoire, who was
appointed to serve on the board of directors in January 2014 and, due to a
commitment made prior to his appointment to the board of directors, was unable to attend one
meeting of the Corporate Development Advisory Committee, which was one of three
total meetings of the board of directors and the committees of which he was a
member during the period in which he served as a director.
Executive sessions of the non-management
directors are held during each board of directors and committee meeting. Mr.
Brun, our independent non-executive chairman of the board, presides at each
executive session of the board of directors.
Board Leadership
Structure |
Our Corporate Governance Principles do not
require the separation of the roles of chairman of the board and chief executive
officer because the board believes that effective board leadership can depend on
the skills and experience of, and personal interaction between, people in
leadership roles. Our board of directors is currently led by Mr. Brun, our
independent non-executive chairman of the board. Mr. Rodriguez, our chief
executive officer, serves as a member of the board of directors. The board of
directors
believes this leadership structure is in
the best interests of the companys stockholders at this time. Separating these
positions allows our chief executive officer to focus on developing and
implementing the companys business plans and supervising the companys
day-to-day business operations, and allows our chairman of the board to lead the
board of directors in its oversight, advisory, and risk management
roles.
Director Nomination
Process |
When the board of directors decides to
recruit a new member, or when the board of directors considers any director
candidates submitted for consideration by our stockholders, it seeks strong
candidates who, ideally, meet all of its categorical standards of director
independence, and who are, preferably, senior executives of large companies who
have backgrounds directly related to our technologies, markets and/or clients.
Additionally, candidates should possess the following personal characteristics:
(i) business community respect for his or her integrity, ethics, principles,
insights and
analytical ability; and (ii) ability and
initiative to frame insightful questions, speak out and challenge questionable
assumptions and disagree without being disagreeable. The nominating/corporate
governance committee will not consider candidates who lack the foregoing
personal characteristics. In addition, the nominating/corporate governance
committee considers a wide range of other factors in determining the composition
of our board of directors, including age, diversity of background, diversity of
thought, and other individual qualities such as professional experience, skills,
education, and training.
Automatic Data Processing, Inc. Proxy Statement |
| |
10 |
Table of
Contents
Nominations of candidates for our board of
directors by our stockholders for consideration at our 2015 Annual Stockholder
Meeting are subject to the deadlines and
other requirements described under
Stockholder Proposals on page 68 of this proxy statement.
Each director will automatically retire
from the board of directors at the companys Annual Meeting of Stockholders
following the date he or she turns 72. Management
directors who are no longer officers of
the company are required to offer to resign from the board of
directors.
Committees of the Board of
Directors |
The table below provides membership and
meeting information for each of the committees of the board of
directors.
|
|
Committee
Memberships |
Name |
|
AC |
|
CC |
|
NCGC |
|
CDAC |
Ellen R.
Alemany |
|
|
|
|
|
X |
|
X |
Gregory D.
Brenneman(1) |
|
F |
|
C |
|
|
|
|
Richard T.
Clark |
|
X |
|
X |
|
|
|
|
Eric C.
Fast |
|
C, F |
|
|
|
|
|
X |
Linda R.
Gooden |
|
X |
|
|
|
|
|
C |
Michael P.
Gregoire |
|
|
|
|
|
X |
|
X |
R. Glenn
Hubbard |
|
F |
|
X |
|
|
|
|
John P.
Jones |
|
|
|
X |
|
C |
|
|
Gregory L.
Summe(1) |
|
|
|
X |
|
X |
|
|
Number of
meetings held in fiscal 2014 |
|
8 |
|
5 |
|
3 |
|
1 |
|
|
AC Audit
Committee |
CDAC
Corporate Development Advisory Committee |
CC Compensation
Committee |
F
Financial Expert |
NCGC Nominating / Corporate Governance
Committee |
C Committee
Chair |
Footnotes:
(1) |
Messrs. Brenneman
and Summe have notified the board of directors that they will not stand
for re-election at the conclusion of their current term ending at the 2014
Annual Meeting of Stockholders. |
|
|
11 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Audit Committee |
Eric C. Fast Committee Chair
Other committee
members: Gregory D.
Brenneman Richart T. Clark Linda R. Gooden R. Glenn
Hubbard |
|
The audit committees principal
functions are to assist the board of directors in fulfilling its oversight
responsibilities with respect to:
- our systems of internal controls regarding
finance, accounting, legal compliance, and ethical behavior;
- our auditing, accounting and financial
reporting processes generally;
- our financial statements and other financial
information that we provide to our stockholders, the public and others;
- our compliance with legal and regulatory
requirements; and
- the performance of our corporate audit
department and our independent auditors.
The audit committee acts under a
written charter, which is available online at http://www.adp.
com/who-we-are/corporate-social-responsibility/working-with-adp/governance/audit-committee-charter.aspx.
The members of the audit committee satisfy the independence requirements
of NASDAQ listing standards. |
Nominating/Corporate Governance
Committee |
John P. Jones Committee Chair
Other committee
members: Ellen R. Alemany Michael
P. Gregoire Gregory L.
Summe |
|
The principal functions of the
nominating/corporate governance committee are to:
- identify individuals qualified to become
members of the board of directors and recommend a slate of nominees to the board of directors
annually;
- ensure that the audit, compensation and
nominating/corporate governance committees of the board of directors have the benefit of qualified and
experienced independent directors;
- review and reassess annually the adequacy of
the board of directors corporate governance principles and recommend changes as appropriate;
- oversee the evaluation of the board of
directors and management and recommend to the board of directors senior managers to be elected as new corporate
vice presidents of the company;
and
- review our policies and programs that relate
to matters of corporate citizenship.
The nominating/corporate governance
committee acts under a written charter, which is available online at
http://www.adp.com/who-we-are/corporate-social-responsibility/working-with-adp/governance/nominating-corporate-governance-committee-charter.aspx. The
members of the nominating/corporate governance committee satisfy the
independence requirements of NASDAQ listing standards. |
Automatic Data Processing, Inc. Proxy Statement |
| |
12 |
Table of
Contents
Compensation
Committee |
Gregory D.
Brenneman Committee
Chair
Other committee
members: Richard T. Clark R.
Glenn Hubbard John P. Jones Gregory L.
Summe |
|
The compensation committee sets and
administers our executive compensation program. See Compensation
Discussion and Analysis on page 22 of this proxy statement.
The compensation committee is
authorized to engage the services of outside advisors, experts and others
to assist the committee. For fiscal year 2014, the compensation committee
sought advice from Frederic W. Cook & Co., Inc., an independent
compensation consulting firm specializing in executive and director
compensation. For further information about Frederic W. Cook & Co.,
Inc.s services to the compensation committee, see Compensation
Discussion and Analysis under Compensation Consultant on page 26 of
this proxy statement.
The compensation committee acts
under a written charter, which is available online at
http://www.adp.com/who-we-are/corporate-social-responsibility/working-with-adp/governance/
compensation-committee-charter.aspx. The members of the compensation
committee satisfy the independence requirements of NASDAQ listing
standards. In addition, each member of the compensation committee is a
Non-Employee Director as defined in Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, and an outside director as defined in
the regulations under Section 162(m) of the Internal Revenue Code of 1986,
as amended. The compensation committee may form and delegate authority to
subcommittees when appropriate, provided that the subcommittees are
composed entirely of directors who satisfy the applicable independence
requirements of NASDAQ. |
Corporate Development Advisory
Committee |
Linda R. Gooden Committee Chair
Other committee
members: Ellen R. Alemany Eric C.
Fast Michael P. Gregoire |
|
The corporate development advisory
committees principal functions are to assist the board of directors and
management in reviewing and assessing potential acquisitions, strategic
investments and divestitures.
The corporate development advisory
committee acts under a written charter, which is available online at
http://www.adp.com/who-we-are/corporate-social-responsibility/working-with-adp/
governance/corporate-development-advisory-committee-charter.aspx. The
members of the corporate development advisory committee satisfy the
independence requirements of NASDAQ listing
standards. |
13 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
The Boards Role in Risk
Oversight
Our board of directors provides oversight
with respect to the companys enterprise risk assessment and risk management
activities, which are designed to identify, prioritize, assess, monitor and
mitigate the various risks confronting the company, including risks that are
related to the achievement of the companys operational and financial strategy.
The board of directors performs this oversight function periodically as part of
its meetings and also through its committees, each of which examines various
components of enterprise risk as part of its assigned responsibilities.
Management is responsible for implementing and supervising day-to-day risk
management processes and reporting to the board of directors and its committees
as necessary.
Our audit committee focuses on financial
risks, including reviewing with management, the companys internal auditors, and
the companys independent auditors the companys major financial risk exposures,
the adequacy and effectiveness of accounting and financial controls, and the
steps management has taken to monitor and control financial risk exposures. In
addition, our audit committee reviews risks related to compliance with
applicable laws, regulations, and ethical standards, and also operational risks
related to information security and system disruption. Our audit committee
regularly receives, reviews and discusses with management presentations and
analyses on various risks confronting the company.
Our nominating/corporate governance
committee oversees risks associated with board structure and other corporate
governance policies and practices, including review and approval of any
related-party transactions under our Related Persons Transaction Policy. Our
compensation
committee oversees risks related to
compensation matters. Our committees report on risk oversight matters directly
to the board of directors on a regular basis.
Our compensation committee considered the
risks presented by the companys compensation policies and practices at its
meetings in August 2013 and 2014 and believes that our policies and practices of
compensating employees do not encourage excessive or unnecessary risk-taking for
the following reasons:
ü |
|
Our incentive plans
have diverse performance measures, including company and business unit
financial measures, operational measures, and individual
goals; |
|
|
|
ü |
|
Our compensation
programs balance annual and long-term incentive
opportunities; |
|
|
|
ü |
|
We cap incentive plan
payouts within a reasonable range; |
|
|
|
ü |
|
The mix of
performance-based restricted stock and stock options in our long-term
incentive programs serves the best interests of stockholders and the
company; |
|
|
|
ü |
|
Our stock ownership
guidelines link the interests of our executive officers to those of our
stockholders; and |
|
|
|
ü |
|
Our
compensation recovery policy for equity awards provides for the clawback
of the value of awards in the event an employee engages in conduct
contributing to a financial
restatement. |
Communications with All
Interested Parties |
All interested parties who wish to
communicate with the board of directors, the audit committee, or the
non-management directors, individually or as a group, may do so by sending a
detailed letter to P.O. Box 34, Roseland, New Jersey 07068, leaving a message
for a return call at 973-974-5770 or sending an email to
adp_audit_committee@adp.com. We will relay any such communication to the
non-management director to which such communication is addressed, if applicable,
or to the most appropriate committee chairperson, the chairman of the board, or
the full board of directors,
unless, in any case, it is outside the
scope of matters considered by the board of directors or duplicative of other
communications previously forwarded to the board of directors. Communications to
the board of directors, the non-management directors, or to any individual
director that relate to the companys accounting, internal accounting controls,
or auditing matters are referred to the chairperson of the audit
committee.
Automatic Data Processing, Inc. Proxy Statement |
| |
14 |
Table of
Contents
Transactions with Related
Persons
We have a written Related Persons
Transaction Policy pursuant to which any transaction between the company and a
related person in which such related person has a direct or indirect material
interest, and where the amount involved exceeds $120,000, must be submitted to
our nominating/corporate governance committee for review, approval, or
ratification.
A related person means a director,
executive officer or beneficial holder of more than 5% of the companys
outstanding common stock, or any immediate family member of the foregoing, as
well as any entity at which any such person is employed, is a partner or
principal (or holds a similar position), or is a beneficial owner of a 10% or
greater direct or indirect equity interest. Our directors and executive officers
must inform our general counsel at the earliest practicable time of any plan to
engage in a potential related person transaction.
This policy requires our
nominating/corporate governance committee to be provided with full information
concerning the proposed transaction, including the benefits to the company and
the related person, any alternative means by which to obtain like benefits, and
terms that would prevail in a similar transaction with an unaffiliated third
party. In considering whether to approve any such transaction, the
nominating/corporate governance committee will consider all relevant factors,
including the nature of the interest of the related person in the transaction
and whether the transaction may involve a conflict of interest.
Specific types of transactions are
excluded from the policy, such as, for example, transactions in which the
related persons interest derives solely from his or her service as a director
of another entity that is a party to the transaction.
The wife of Michael L. Capone, our vice
president and chief information officer, is employed as an executive of the
company and received total cash compensation for fiscal year 2014 in excess of
$120,000.
Availability of Corporate
Governance Documents |
Our Corporate Governance Principles and
Related Persons Transaction Policy may be viewed online on the companys website
at www.adp.com under Investor Relations in the Corporate Governance section. Our
Code of Business Conduct & Ethics and Code of Ethics for Principal Executive
Officer and Senior Financial Officers may
be found at www.adp.com in the Who We Are section, under Working with ADP. In
addition, these documents are available in print to any stockholder who requests
them by writing to Investor Relations at the companys
headquarters.
Compensation Committee
Interlocks and Insider Participation |
Messrs. Brenneman, Clark, Hubbard, Jones
and Summe are the five independent directors who sit on the compensation
committee. No compensation committee member has ever been an officer of the
company. During fiscal year 2014 and as of the date of this proxy statement, no
compensation committee member has been an employee of the company or eligible to
participate in our employee compensation programs or plans, other than the
companys
2008 Omnibus Award Plan under which
non-employee directors have received stock option grants and deferred stock
units. None of the executive officers of the company have served on the
compensation committee or on the board of directors of any entity that employed
any of the compensation committee members or directors of the
company.
15 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Compensation of Non-Employee
Directors
The annual retainer for non-employee
directors, other than Mr. Brun, the chairman of our board of directors, is
$220,000, $130,000 of which is paid in the form of deferred stock units and
$90,000 of which may, at the election of each director, be paid in
cash or in
deferred stock units. The chairman of our board of directors receives an annual
retainer of $385,000, $230,000 of which is paid in the form of deferred stock
units and $155,000 of which may, at the election of the chairman of our board of
directors, be paid in cash or in deferred stock units. The chairperson of the audit
committee was paid an additional annual retainer of $15,000 and the chairperson
of each of the compensation committee and the nominating/corporate governance
committee was paid an additional annual retainer of $10,000. Meeting fees are not paid
in respect of the first seven meetings of the board of directors or of any
individual committee. Non-employee directors receive $2,000 for each board of
directors meeting attended and $1,500 for each committee meeting attended
beginning with the eighth meeting of the board of directors or any individual
committee, as applicable. Meeting fees and the additional annual retainer may,
at the election of each director, be paid in cash, deferred, or paid in deferred
stock units.
Effective at the time of the 2014 Annual
Meeting of Stockholders, an additional annual retainer of $10,000 will be
established for the chairperson of the corporate development advisory committee,
and the additional annual retainer for the chairperson of the compensation
committee will be increased to $15,000. In addition, the annual retainer for
each non-employee director (including the chairman of our board of directors)
will be increased by $10,000, payable as to $5,000 in the form of deferred stock
units and as to $5,000 in cash or deferred stock units at the election of each
director.
All of our non-employee directors chose to
receive the entire elective portion of their annual retainers in the form of
deferred stock units except for Mr. Brenneman, who elected to receive the amount
of his additional annual retainer in cash. Under our 2008 Omnibus Award Plan a
director may specify whether, upon separation from the board, he or she would
like to receive the deferred cash amounts in such directors deferred account in
a lump sum payment or in a series of substantially equal annual payments over a
period ranging from two to ten years.
Pursuant to our 2008 Omnibus Award Plan,
each non-employee director is credited with an annual grant of deferred stock
units on the date established by the board for the payment of the annual
retainer equal in number to the quotient of $130,000, or $230,000 in the case of
the chairman of the board of directors, divided by the closing price of a share
of our common stock on the date this amount is credited. Deferred stock units
are fully vested when credited to a directors account. When a dividend is paid
on our common stock, each directors account is credited with an amount equal to
the cash dividend. When a director ceases to serve on our board, such director
will receive a number of shares of common stock equal to the number of deferred
stock units in such directors account and a cash payment equal to the dividend
payments accrued, plus interest on the dividend equivalents from the date such
dividend equivalents were credited. The interest will be paid with respect to
each twelve-month period beginning on November 1 of such period to the date of
payment and will be equal to the rate for five-year U.S. Treasury Notes
published in The Wall Street Journal® on the first business day of November of
each such twelve-month period plus 0.50%. Non-employee directors do not have
any voting rights with respect to their deferred stock units.
Non-employee directors no longer receive
annual stock option grants. Prior to our 2010 Annual Meeting of Stockholders,
upon initial election to the board of directors, a non-employee director
received a grant of options to purchase 5,000 shares of common stock if such
director attended a regularly scheduled board of directors meeting prior to the
next Annual Meeting of Stockholders. Thereafter,
a non-employee director received an annual grant of options to purchase 5,000
shares of common stock. All such options were granted under the 2008 Omnibus
Award Plan, have a term of ten years, and were granted at the fair market value
of the common stock as determined by the closing price of our common stock on
the NASDAQ Global Select Market on the date of the grant.
Options granted to our non-employee
directors under the 2008 Omnibus Award Plan are exercisable in four equal
installments, with the first twenty-five percent becoming exercisable on the
first anniversary of the options grant date, and the remaining three
installments becoming exercisable on each successive anniversary date
thereafter. The options vest only while a director is serving in such
Automatic Data Processing, Inc. Proxy Statement |
| |
16 |
Table of
Contents
Compensation of Non-Employee
Directors |
|
capacity, unless certain specified events
occur, such as death or permanent disability, in which case the options
immediately vest and become fully exercisable. In addition, non-employee
directors who have been non-employee directors for at least ten years will have
all of their options vested upon retirement from the board of directors and will
have 36 months to exercise their options. Non-employee
directors who have served as non-employee
directors for fewer than ten years at the time they retire or otherwise leave
the board will not qualify for accelerated vesting, but will have 60 days to
exercise their then-vested options. Notwithstanding the foregoing, all options
will expire no more than ten years from their date of grant.
Our share ownership guidelines are intended to
promote ownership in the companys stock by our non-employee directors and
to align their financial interests more closely with those of other
stockholders of the company. Each non-employee director has a minimum
shareholding requirement of our common stock equal to five times his or
her annual cash retainer. |
|
The following table shows compensation for
our non-employee directors for fiscal year 2014.
DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR
2014
Name |
|
Fees Earned or Paid
in Cash(7) ($) |
|
Stock Awards(8) ($) |
|
All
Other Compensation(9) ($) |
|
Total ($) |
(a) |
|
|
(b) |
|
|
|
(c) |
|
|
|
(g) |
|
|
(h) |
Ellen Alemany |
|
|
$90,000 |
|
|
|
$130,000 |
|
|
|
$2,500 |
|
|
$222,500 |
Gregory D. Brenneman(1) |
|
|
$100,000 |
|
|
|
$130,000 |
|
|
|
$0 |
|
|
$230,000 |
Leslie A. Brun(2) |
|
|
$155,000 |
|
|
|
$230,000 |
|
|
|
$15,000 |
|
|
$400,000 |
Richard T. Clark |
|
|
$90,000 |
|
|
|
$130,000 |
|
|
|
$20,000 |
|
|
$240,000 |
Eric C. Fast(3) |
|
|
$105,000 |
|
|
|
$130,000 |
|
|
|
$15,000 |
|
|
$250,000 |
Linda R. Gooden |
|
|
$90,000 |
|
|
|
$130,000 |
|
|
|
$10,000 |
|
|
$230,000 |
Michael P. Gregoire(4) |
|
|
$75,000 |
|
|
|
$108,333 |
|
|
|
$0 |
|
|
$183,333 |
R.
Glenn Hubbard |
|
|
$90,000 |
|
|
|
$130,000 |
|
|
|
$35,000 |
|
|
$255,000 |
John P. Jones(5) |
|
|
$100,000 |
|
|
|
$130,000 |
|
|
|
$0 |
|
|
$230,000 |
Enrique T. Salem(6) |
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
|
$0 |
Gregory L. Summe |
|
|
$90,000 |
|
|
|
$130,000 |
|
|
|
$20,000 |
|
|
$240,000 |
Footnotes: |
(1) |
As chairman of the
compensation committee, Mr. Brenneman received a $10,000 annual retainer,
which is included in fees earned. |
|
|
(2) |
Mr. Brun is the
non-executive chairman of the board of directors. |
|
|
(3) |
As chairman of the
audit committee, Mr. Fast received a $15,000 annual retainer, which is
included in fees earned. |
|
|
(4) |
Mr. Gregoire became a
director on January 23, 2014. |
|
|
(5) |
As chairman of the
nominating/corporate governance committee, Mr. Jones received a $10,000
annual retainer, which is included in fees earned. |
|
|
(6) |
Mr. Salem resigned
from the board of directors at the conclusion of his term ending at the
2013 Annual Meeting of Stockholders. |
17 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation of Non-Employee
Directors |
|
(7) |
Represents the following,
whether received as cash, deferred or received as deferred stock units:
(i) the elective portion of directors annual retainer, (ii) annual
retainers for committee chairpersons and (iii) board and committee
attendance fees. See footnote 8 below for additional information about
deferred stock units held by directors. |
|
|
(8) |
Represents the portion of the
annual retainer required to be credited in deferred stock units to a
directors annual retainer account. Amounts set forth in the Stock Awards
column represent the aggregate grant date fair value for fiscal year 2014
as computed in accordance with FASB Accounting Standards Codification
Topic 718 (FASB ASC Topic 718), disregarding estimates of forfeitures
related to service-based vesting conditions. For additional information
about the assumptions used in these calculations, see Note 11 to our
audited consolidated financial statements for the fiscal year ended June
30, 2014 included in our annual report on Form 10-K for the fiscal year
ended June 30, 2014. |
|
|
The grant date fair value for
each deferred stock unit award granted to directors in fiscal year 2014
(including in respect of elective deferrals of amounts otherwise payable
in cash), calculated in accordance with FASB ASC Topic 718, is as
follows: |
|
Director |
Grant Date |
|
Grant Date Fair Value |
|
Ellen Alemany |
11/12/2013 |
|
$220,000 |
|
Gregory D. Brenneman |
11/12/2013 |
|
$220,000 |
|
Leslie A. Brun |
11/12/2013 |
|
$370,000 |
|
Richard T. Clark |
11/12/2013 |
|
$220,000 |
|
Eric C. Fast |
11/12/2013 |
|
$235,000 |
|
Linda R. Gooden |
11/12/2013 |
|
$220,000 |
|
Michael P. Gregoire |
1/23/2014 |
|
$183,333 |
|
R.
Glenn Hubbard |
11/12/2013 |
|
$220,000 |
|
John P. Jones |
11/12/2013 |
|
$230,000 |
|
Gregory L. Summe |
11/12/2013 |
|
$220,000 |
|
The aggregate number of
outstanding deferred stock units held by each director at June 30, 2014 is
as follows: Ms. Alemany, 9,759; Mr. Brenneman, 27,534; Mr. Brun, 44,310;
Mr. Clark, 11,117; Mr. Fast, 23,255; Ms. Gooden, 18,446; Mr. Gregoire,
2,311; Mr. Hubbard, 27,936; Mr. Jones, 27,402; Mr. Summe,
22,366. |
|
|
In fiscal year 2014, no stock
option awards were granted. The aggregate number of outstanding stock
options held by each director at June 30, 2014 is as follows: Mr.
Brenneman, 4,750; Mr. Brun, 1,250; Ms. Gooden, 3,750; Mr. Jones,
31,461. |
|
(9) |
Reflects contributions by the
ADP Foundation that match the charitable gifts made by our directors. The
ADP foundation makes matching charitable contributions in an amount not to
exceed $20,000 in a calendar year in respect of any given directors
charitable contributions for that calendar year. Amounts in the Director
Compensation Table may exceed $20,000 because, while matching charitable
contributions are limited to the $20,000 in a calendar year, the Director
Compensation Table reflects matching charitable contributions for the
fiscal year ended June 30, 2014. |
Automatic Data Processing, Inc. Proxy Statement |
| |
18 |
Table of
Contents
Security Ownership of Certain
Beneficial Owners and Management
The following table contains information
regarding the beneficial ownership of the companys common stock by (i) each
director and nominee for director of the company, (ii) each of our named
executive officers included in the Summary Compensation Table below (we refer to
such executive officers as named executive officers), (iii) all company
directors and executive officers as a group (including the named executive
officers) and (iv) all stockholders that are known to the company to be the
beneficial owners of more than 5% of the
outstanding shares of the companys common stock. Unless otherwise noted in the
footnotes following the table, each person listed below has sole voting and
investment power over the shares of common stock reflected in the table. Unless
otherwise noted in the footnotes following the table, the information in the
table is as of August 31, 2014 and the address of each person named is P.O. Box
34, Roseland, New Jersey, 07068.
Name of Beneficial Owner |
Amount and Nature
of Beneficial Ownership(1) |
|
Percent |
Ellen Alemany |
|
9,759 |
|
|
* |
Steven J. Anenen(2) |
|
144,140 |
|
|
* |
Gregory D. Brenneman |
|
27,534 |
|
|
* |
Leslie A. Brun |
|
46,494 |
|
|
* |
Richard T. Clark |
|
11,117 |
|
|
* |
Eric C. Fast |
|
23,255 |
|
|
* |
Linda R. Gooden |
|
22,196 |
|
|
* |
Michael P. Gregoire |
|
2,311 |
|
|
* |
R.
Glenn Hubbard |
|
28,936 |
|
|
* |
John P. Jones |
|
53,376 |
|
|
* |
Regina R. Lee |
|
182,784 |
|
|
* |
Dermot J. OBrien |
|
20,124 |
|
|
* |
Carlos A. Rodriguez |
|
179,764 |
|
|
* |
Jan
Siegmund |
|
102,613 |
|
|
* |
Gregory L. Summe |
|
22,366 |
|
|
* |
The
Vanguard Group, Inc.(3) |
|
28,571,068 |
|
|
5.9% |
Directors and executive officers as a group
(27 persons, |
|
|
|
|
|
including those directors and
executive officers named above) |
|
1,557,370 |
|
|
* |
Footnotes: |
* |
Indicates less than
one percent. |
|
|
(1) |
Includes: (i) 285,974
shares that may be acquired upon the exercise of stock options that are
exercisable on or prior to October 31, 2014 held by the following
directors and executive officers: 57,250 (Mr. Anenen), 3,750 (Ms. Gooden),
25,974 (Mr. Jones), 82,250 (Ms. Lee), 59,500 (Mr. Rodriguez), and 57,250
(Mr. Siegmund); and (ii) 689,922 shares subject to stock options held by
the directors and executive officers as a group. Includes shares issuable
upon settlement of deferred stock units held by non-employee directors as
follows: 9,759 (Ms. Alemany), 27,534 (Mr. Brenneman), 44,494 (Mr. Brun),
11,117 (Mr. Clark), 23,255 (Mr. Fast), 18,446 (Ms. Gooden), 2,311 (Mr.
Gregoire), 27,936 (Mr. Hubbard), 27,402 (Mr. Jones), and 22,366 (Mr.
Summe). |
|
(2) |
Includes 16,946 shares
that Mr. Anenen deferred upon exercise of stock options prior to
2002. |
|
(3) |
Information is
furnished in reliance on the Form 13F of The Vanguard Group, Inc.
(Vanguard) filed on August 11, 2014. The address of The Vanguard Group,
Inc. is P.O. Box 2600, V26, Valley Forge, PA 19482-2600. Vanguard shares
investment power over 636,095 shares with Vanguard Fiduciary Trust Company
and also shares investment power over 135,931 shares with Vanguard
Investments Australia Ltd. Vanguard has sole investment power over
27,799,042 shares. Vanguard has sole voting authority over 813,719 shares
and no voting authority over 27,757,349
shares. |
19 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Equity Compensation Plan
Information
The following table sets forth information
as of June 30, 2014, regarding compensation plans under which the companys
equity securities are authorized for issuance:
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
remaining available for |
|
Number of
securities |
|
Weighted-average |
|
future issuance under |
|
to be issued
upon |
|
exercise
price of |
|
equity compensation |
|
exercise of
outstanding |
|
outstanding |
|
plans (excluding |
|
options,
warrants |
|
options,
warrants |
|
securities reflected |
Plan category |
and rights |
|
and rights |
|
in Column(a)) |
|
(a) |
|
(b) |
|
(c) |
Equity compensation plans approved |
|
|
|
|
|
|
|
|
|
|
|
by stockholders |
8,525,979 |
(1) |
|
|
$51.96 |
|
|
|
27,984,869 |
(2) |
|
Equity compensation plans not
approved |
|
|
|
|
|
|
|
|
|
|
|
by stockholders |
0 |
|
|
|
$ |
|
|
|
0 |
|
|
Total |
8,525,979 |
|
|
|
$51.96 |
|
|
|
27,984,869 |
|
|
Footnotes: |
(1) |
Includes (i) 237,334 shares of
restricted stock issuable under our fiscal year 2014 one-year
performance-based restricted stock program (which were issued in September
2014), (ii) 85,355 deferred restricted stock units issuable under our
one-year performance-based restricted stock program prior to June 30,
2014, (iii) 214,436 shares issuable upon settlement of deferred stock
units held by our directors as of June 30, 2014, and (iv) 16,946 shares deferred by Steven J.
Anenen upon his exercise of stock options prior to 2002. The remaining
balance consists of outstanding stock options. Weighted average exercise
price shown in column (b) of this table does not take into account awards
under our performance-based restricted stock program, deferred restricted
stock units, or deferred shares. |
|
|
(2) |
Includes 24,404,578 shares
available for future issuance under the 2008 Omnibus Award Plan and
3,817,625 shares of common stock remaining available for future issuance
under the Employees Savings-Stock Purchase Plan, each as of June 30, 2014. Approximately 276,990
shares of common stock were subject to purchase as of June 30, 2014, under
the Employees Savings-Stock Purchase Plan. |
Automatic Data Processing, Inc. Proxy Statement |
| |
20 |
Table of Contents
|
Proposal
2 Advisory Vote on Executive
Compensation |
We are asking stockholders to approve the
following advisory resolution at the Annual Meeting:
RESOLVED, that the stockholders approve, on an
advisory basis, the compensation of the companys named executive officers as
disclosed in the Compensation Discussion and Analysis, the accompanying
compensation tables and the related narrative disclosure in the companys proxy
statement for the 2014 Annual Meeting of Stockholders.
The board of directors recommends a vote
FOR this resolution because it believes that the policies and practices
described in the Compensation Discussion and Analysis are effective in achieving
the companys goals
of linking pay to performance and levels
of responsibility, encouraging our executive officers to remain focused on both
short-term and long-term operational and financial goals of the company and
linking executive performance to stockholder value.
We urge stockholders to read the
Compensation Discussion and Analysis section appearing on pages 22 through 35 of
this proxy statement, as well as the Summary Compensation Table For Fiscal Year
2014 and related compensation tables and narrative appearing on pages 37
through 63 of this proxy statement, which provide detailed information on the
companys compensation policies and practices and the compensation of our named
executive officers.
Stockholder Approval
Required |
The affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote
thereon at the meeting of stockholders is required to approve the advisory
resolution on named executive compensation. Because the vote on this proposal is
advisory in nature, it will not affect any compensation already paid or awarded
to any named executive officer and will not be binding on or overrule any
decisions by the compensation committee or the board of directors. Because we
value our stockholders views, however, the compensation committee
and the board of directors will consider
the results of this advisory vote when formulating future executive compensation
policy.
|
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE ADVISORY RESOLUTION ON
EXECUTIVE COMPENSATION. |
21 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Compensation Discussion and
Analysis
The following Compensation Discussion and
Analysis, or CD&A, section of this proxy statement discusses the material
elements of our fiscal year 2014 executive compensation programs for the
following persons, who are our named executive officers, or NEOs:
- Carlos A. Rodriguez, our Chief Executive
Officer;
- Jan Siegmund, our Chief Financial Officer;
- Regina R. Lee, our Division President, Employer
Services-Major Account Services and ADP Canada;
- Steven J. Anenen, our Division President, Dealer
Services; and
- Dermot OBrien, our Chief Human Resources
Officer
The CD&A also provides an overview of
our executive compensation philosophy and explains how the compensation
committee of our board of directors arrives at specific compensation decisions
involving the NEOs. In addition, the CD&A explains how our executive
compensation programs are designed and operate with respect to our NEOs by
discussing the following fundamental aspects of our compensation
programs:
- compensation principles;
- cash compensation;
- long-term incentive compensation; and
- other compensation components and considerations
(including retirement benefits and deferred compensation).
The compensation committee of our board of
directors determines the compensation of our chief executive officer and all
other executive officers. When making decisions related to officers, including
the NEOs (other than our chief executive officer), the committee considers
recommendations from the chief executive officer.
Executive
Summary
Strong Stockholder Support for our
Compensation Programs
The compensation committee continuously
evaluates the degree to which our compensation programs link pay to performance,
and takes steps to ensure that the program encourages our executive officers to
remain focused on both the short-term and long-term operational and financial
goals of the company.
At our 2013 Annual Meeting of
Stockholders, our stockholders approved the compensation of our fiscal year 2013
NEOs by a vote of approximately 97% in favor. Given this strong support and the
companys continued strong performance, the compensation committee retained the
basic foundation of our overall compensation program during fiscal year 2014,
but made certain changes to ensure
that the program continued to support our
key human resource and financial objectives. Commencing with fiscal year 2014,
the performance measurement period for grants under our performance-based equity
program has been changed from a single 12-month period to three individual
12-month periods.
Fiscal Year 2014 Business
Highlights
In fiscal year 2014, we demonstrated our
focus and commitment to sustaining our position as a global leader of Human
Capital Management solutions through our product innovations and our decision to
spin off our Dealer Services business into its own independent, publicly traded
company. Our fiscal year 2014 results continue to reflect the strength of our
underlying business model, including
Automatic Data Processing, Inc. Proxy Statement |
| |
22 |
Table of Contents
Compensation Discussion and
Analysis |
|
the diversity of our client base and
products. Our financial performance impacted the compensation of our executive
officers in several ways, most notably our annual cash bonus plan and
performance-based restricted stock (PBRS) program. The compensation committees
determination of incentive compensation under our cash bonus program for all of
our executive officers, not just our named executive officers, was based on
fiscal year 2014 revenue growth of 8.1% compared to a target of 7.6%, and
adjusted operating income growth of 8.1% compared to a target of 8.6%. The
incentive compensation under our PBRS program was based on fiscal year 2014
adjusted earnings per share growth of 9.0% compared to a target of 9.0%. The
operating income and earnings per share results considered by the compensation
committee exclude the impact of certain non-recurring items consisting of
non-tax-deductible expenses incurred in fiscal year 2014 related to the spin-off
of our Dealer Services business scheduled for
Good Governance and Best
Practices
We are committed to ensuring that our
compensation programs reflect principles of good governance. The following
practices are key aspects of our programs:
ü |
|
Pay for performance: We design
our compensation programs to link pay to performance and levels of
responsibility, to encourage our executive officers to remain focused on
both the short-term and long-term operational and financial goals of the
company and to link executive performance to stockholder
value. |
|
|
|
ü |
|
Annual say-on-pay vote:
Consistent with our stockholders advisory vote at our November 2011
stockholder meeting, we hold an advisory say-on-pay vote to approve our
named executive officer compensation on an annual
basis. |
October 2014 and a non-tax-deductible,
non-cash goodwill impairment charge recorded in the fourth quarter of fiscal
year 2013. The fiscal year 2014 results considered by the compensation committee
also exclude operating results of the companys Occupational Health and Safety
services business, which the company classified as discontinued operations
during fiscal year 2014, and a gain resulting from the sale of this business
completed in February 2014. For fiscal year 2014, our named executive officers
received cash bonuses that averaged approximately 106.1% of target. Our one-year
earnings per share growth for fiscal year 2014 resulted in awards to our named
executive officers of restricted stock under our PBRS program at 100% of
target.
The tables below illustrate the alignment
between company performance and the incentive compensation paid to Mr. Rodriguez
for fiscal year 2014:
ü |
|
Clawback policy: We maintain a compensation recovery, or clawback
provision in our 2008 Omnibus Award Plan. |
|
|
|
ü |
|
Stock ownership guidelines: We
maintain stock ownership guidelines to encourage equity ownership by our
executive officers. Mr. Rodriguezs stock ownership guideline is six times
his base salary. The other named executive officers have a stock ownership
guideline of three times base salary. Executive officers whose ownership
levels are below targeted ownership levels are required to retain as
shares of common stock at least 75% of post-tax net gains on stock option
exercises, and 75% of shares (net of taxes) received upon vesting of
restricted stock. |
23 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Compensation Discussion and
Analysis |
|
ü |
|
Double trigger change in control
payments: Our Change in Control
Severance Plan for Corporate Officers is based on a double trigger, such
that payments of cash and vesting of equity awards occur only if
termination of employment without cause or with good reason occurs during
the two-year period after a change in control. |
|
|
|
ü |
|
Limited perquisites: We provide
limited, reasonable perquisites that are viewed as consistent with our
overall compensation philosophy. |
|
|
|
ü |
|
Independence of our compensation committee and
advisor: The compensation committee of
our board of directors, which is comprised solely of independent
directors, utilizes the services of Frederic W. Cook & Co., Inc.
(Cook & Co.) as an independent compensation consultant. Cook &
Co. reports to the compensation committee, does not perform any other
services for the company other than in connection with an annual review of
competitive director compensation for the nominating/corporate governance
committee of our board of directors, and has no economic or other ties to
the company or the management team that could compromise their
independence and objectivity. |
As part of our commitment to principles of
good governance, we do not engage in the following practices:
û |
|
No-hedging policy: We prohibit
our directors and executive officers from engaging in any hedging or
similar transactions involving ADP securities. |
|
|
|
û |
|
No-pledging policy: We prohibit
our directors and executive officers from holding ADP securities in a
margin account or pledging ADP securities as collateral for a
loan. |
|
|
|
û |
|
No
repricing of underwater stock options:
We do not lower the exercise price of any outstanding stock options or
otherwise provide economic value to the holders of underwater stock
options in exchange for the forfeiture of such awards. |
|
|
|
û |
|
No
discount stock options: The exercise
price of our stock options is not less than 100% of the fair market value
of our common stock on the date of
grant. |
û |
|
No IRC Section 280G or 409A tax
gross-ups: We do not provide tax
gross-ups under our change in control provisions or deferred compensation
programs. |
|
|
|
û |
|
No
current dividends on unearned performance stock units. We do not pay dividends in respect of unearned
performance stock units; rather, dividend equivalents are accrued over the
applicable performance period and are paid only if the units are earned
and shares issued at the end of the performance
period. |
Fiscal Year 2014 Executive Compensation
Highlights
For fiscal year 2014, we maintained annual
cash bonus targets at fiscal year 2013 levels and increased the base salary of
each named executive officer by an average of 3.8%. In fiscal year 2014, we
introduced a performance stock unit (PSU) program based on financial objectives
that are measured over a three-year performance cycle comprised of three
one-year performance periods. This new three-year program replaces our current
PBRS program. The fiscal year 2014 target award opportunity under the new
three-year PSU program will be earned and issued in fiscal year 2017 based upon
the achievement of earnings per share performance goals for fiscal years 2014,
2015 and 2016. The shift from the two-year vesting schedule of the current PBRS
program to a three-year vesting schedule of the new PSU program results in a gap
in our annual vesting schedule with no vesting opportunity in fiscal year 2016.
We have addressed this gap with a one-time transition grant award opportunity
under our current PBRS program in fiscal year 2014, which will vest in September
of fiscal year 2016 in accordance with the current program. The new PSU program,
combined with this one-time transition grant, do not result in an incremental
realizable compensation opportunity but rather continue to provide an annual
vesting opportunity without any gap in fiscal year 2016, thereby avoiding
possible retention risk in the absence of the vesting opportunity in fiscal year
2016. For a description of our PSU program see Performance-Based Stock Awards on
page 32 of this proxy statement.
Automatic Data Processing, Inc. Proxy Statement |
| |
24 |
Table of Contents
Compensation Discussion and
Analysis |
|
A summary of fiscal year 2014 total direct
compensation for our named executive officers is set forth in the following
table, and additional detail is presented in the subsequent
discussion as well as the tables and
narratives that follow this CD&A:
Name |
|
Base Salary |
|
Annual Bonus |
|
PBRS(1) |
|
PSUs(1)(2) |
|
Stock Options(1) |
|
Total |
Mr.
Rodriguez |
|
$900,000 |
|
$1,471,680 |
|
|
$2,341,875 |
|
$800,006 |
|
$1,599,998 |
|
|
$7,113,559 |
Mr. Siegmund |
|
$550,001 |
|
$449,680 |
|
|
$836,160 |
|
$285,640 |
|
$434,240 |
|
|
$2,555,721 |
Ms.
Lee |
|
$530,503 |
|
$450,713 |
|
|
$766,480 |
|
$261,837 |
|
$434,240 |
|
|
$2,443,773 |
Mr.
Anenen |
|
$475,004 |
|
$391,020 |
|
|
$592,280 |
|
$202,328 |
|
$284,970 |
|
|
$1,945,602 |
Mr.
OBrien |
|
$488,001 |
|
$349,115 |
|
|
$557,440 |
|
$190,427 |
|
$284,970 |
|
|
$1,869,953 |
Footnotes: |
1 |
Equity amounts are the grant
date fair values for the fiscal year 2014 equity awards, which are the
same amounts disclosed in the Summary Compensation Table for Fiscal Year
2014 on page 37 of this proxy statement. |
|
|
2 |
The amounts for the
performance stock unit awards represent the grant date fair value of
one-third of the target award. In accordance with FASB ASC Topic 718, only
the grant date fair value for the performance year in which performance
targets are set is reported. |
We believe that compensation should be
designed to create a direct link between performance and stockholder value. Five
principles that guide our decisions involving executive compensation are that
compensation should be:
- based on (i) the overall performance of the
company, (ii) the performance of such executives business unit and
(iii) each executives individual performance;
- closely aligned with the short-term and long-term
financial and strategic objectives that build sustainable long-term
stockholder value;
- competitive, in order to attract and retain
executives critical to our long-term success;
- consistent with high standards of corporate
governance and best practices; and
- designed to discourage the incentive for
executives to take excessive risks or to behave in ways that are
inconsistent with the companys strategic
planning processes and high ethical standards.
Our compensation programs are designed so
that target pay reflects relative levels of responsibility among our key
executives, and such that the proportion of pay tied to operating performance
and changes in shareholder value varies directly with the level of
responsibility and accountability to shareholders. We assign all executives to
pay grades by comparing their position-specific duties and responsibilities with
market data and our internal management structure. Each pay grade has a base
salary range and a total annual cash compensation range, as well as ranges for
annual equity grants. Executives are
positioned within these ranges based on a
variety of factors, most notably their experience and skill set and their
performance over time.
We design our performance-based
compensation so that actual, realized compensation will vary relative to the
target award opportunity based on performance. As such, actual compensation
amounts may vary above or below targeted levels depending on the overall
performance of the company, performance of a business unit and achievement of
individual performance goals. We have adopted this compensation design to
provide meaningful incentives for our key executives to achieve excellent
results. We also
25 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Compensation Discussion and
Analysis |
|
believe that it is important for our
executive officers to have an ongoing long-term investment in the company as
outlined on page 35 of this proxy statement under Stock Ownership
Guidelines.
Growth in revenue and operating income are
important performance measures in annual cash bonus determinations, and earnings
per share growth is used to determine the number of shares earned in a
performance
period under our performance-based stock
program. These performance criteria were chosen for the variable incentive plans
because they focus our executive officers on the companys long-term strategic
goals of increasing the growth and profitability of our business, which are the
key drivers of sustainable increases in stockholder value. The earnings per
share measurement we use is diluted earnings per share from continuing
operations.
Elements of Compensation
The following table summarizes the major
elements of our fiscal year 2014 executive officer compensation
programs.
Compensation Element |
|
Objectives |
|
Key Characteristics |
Base Salary |
|
To provide a fixed amount for performing the duties and
responsibilities of the position |
|
Determined based on overall performance, level of
responsibility, pay grade, competitive compensation data and comparison to
other company executives |
Annual Cash Bonus |
|
To motivate executive officers to achieve company-wide,
business unit and individual performance goals |
|
Payment based on achievement of company-wide, business unit
and individual performance goals |
Performance-Based Stock Awards |
|
To motivate executive officers to achieve certain longer-term
goals and create long-term alignment with stockholders |
|
|
Stock Options |
|
To align the interests of executive officers with long-term
stockholders interests and ensure that realized compensation occurs only
when there is a corresponding increase in stockholder value |
|
|
Consistent with our pay for performance
philosophy, our named executive officers compensation is structured with a
significant portion of their total compensation at risk and paid based on the
performance of the company as a whole and the applicable business unit, and the
achievement of individual performance goals. The mix of total direct
compensation (base salary, cash bonus and long-term incentive awards) for fiscal
year 2014 was designed to deliver the following approximate proportions of total
compensation to Mr. Rodriguez, our chief executive officer, and the other named
executive officers (on average) if company and individual target levels of
performance are achieved. The target pay mix reflects the PSU target award based
on the three-year target opportunity and does not include the PBRS transition
award. Mr. Rodriguezs higher portion of at-risk compensation reflects his
greater responsibility for overall company performance.
Compensation Consultant
The compensation committee has engaged
Cook & Co. to provide assistance with the design of our compensation
programs, the development of comparative market-based compensation data for the
chief executive officer position and the determination of the chief executive
officers target
Automatic Data Processing, Inc. Proxy Statement |
| |
26 |
Table of Contents
Compensation Discussion and
Analysis |
|
compensation awards. The specific matters
on which Cook & Co. provided advice in fiscal year 2014 were the design of
executive compensation programs and practices, including the changes to
long-term incentives, and chief executive officer pay levels. In June 2013, Cook
& Co. delivered to our compensation committee the results of a competitive
assessment of compensation for use in determining fiscal year 2014 target
compensation for Mr. Rodriguez. Cook & Co. also examined the mix of proposed
performance-based stock awards and stock option grants for our named executive
officers in fiscal year 2014 and confirmed that the proposals for the named
executive officers appeared reasonable and customary, given the companys size
and structure.
As part of its ongoing support to the
compensation committee, Cook & Co. also reviews executive compensation
disclosures (including this Compensation Discussion and Analysis), reviews and
provides comments on changes to the committees charter, advises on emerging
trends and the implications of regulatory and governance developments, and
reviews and provides commentary on materials and proposals prepared by
management that are presented at the committees meetings.
The compensation committee determined that
the work of Cook & Co. did not raise any conflicts of interest in fiscal
year 2014. In making this assessment, the compensation committee considered the
independence factors enumerated in Rule 10C-1(b) under the Securities Exchange
Act of 1934 and applicable Nasdaq listing standards, including the fact that
Cook & Co. does not provide any other services to the company, the level of
fees received from the company as a percentage of Cook & Co.s total
revenue, policies and procedures employed by Cook & Co. to prevent conflicts
of interest, and whether the individual Cook & Co. advisers to the
compensation committee own any stock of the company or have any business or
personal relationships with members of the compensation committee or our
executive officers.
Compensation Review and
Determination
Our annual pay review focuses on base
salary, annual cash bonus and long-term equity incentives. In determining the
compensation of our named executive officers, we consider the type of business
we are in and the nature of our organization. The compensation committee also
considers
market data provided by their independent
compensation consultant and by management. The compensation committee examines
summary compensation sheets detailing the amounts and mix of base salary, cash
bonus, and equity grants for each of our named executive officers, which compare
the amounts and mix to competitive compensation practices. We generally target
base salary, annual cash bonus and long-term equity incentives at the median of
competitive compensation levels, but we will set targets above or below the
median when warranted in the judgment of the compensation committee. The degree
to which target compensation ranges above or below the median competitive rate
is primarily based on each executives skill set and experience relative to
market peers. Executives who are new in their roles and therefore less
experienced than market peers are typically positioned lower in the range,
whereas executives with long tenure in their role may be positioned higher in
the range.
We consult different sets of compensation
data reflecting the levels and practices of different groups of businesses to
determine competitive compensation levels for our chief executive officer and
other named executive officers.
Chief Executive
Officer. In benchmarking Mr. Rodriguezs
compensation, the compensation committee at its June 2013 meeting, reviewed the
market compensation data from all U.S. public companies with annual revenue
between $8 billion and $14 billion based on results as of April 30, 2013 (100
companies), which we believe is representative of the competitive environment we
face with respect to senior executives. Utility companies were excluded because
of the regulatory environment in which they operate. The median base salary,
median target cash compensation and median target direct compensation (total
cash plus long-term incentive compensation) of the comparison companies were
$1,071,000, $2,695,000 and $8,760,000, respectively.
For fiscal year 2014, Mr. Rodriguezs base
salary was at the 13th percentile, his target cash compensation was
at the 20th percentile and his target direct compensation was at the
25th percentile of the compensation of the chief executive officers
of the comparison companies. The competitive positioning reflected Mr.
Rodriguezs recent promotion into the CEO role, and it is the compensation
committees
27 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Compensation Discussion and
Analysis |
|
intention to increase his target
compensation towards the median over time as his tenure increases assuming
continued strong performance.
Other Named Executive
Officers. With respect to the total cash and
long-term incentive compensation for Ms. Lee and Messrs. Siegmund, Anenen, and
OBrien, management provided the compensation committee with competitive
compensation market data based on compensation surveys reflecting the pay
practices of publicly traded companies. The surveys used were the Towers
Watson® U.S. General Industry Executive Database, the Hewitt
Associates® Executive Total Compensation by Industry Survey, the
Mercer Human Resources U.S. General Industry Executive Database and, for Messrs.
Siegmund and OBrien, the Equilar Inc.® Top 25 Database. The number
of companies included in the surveys ranged from 14 to 123. The survey data is
general and provides broad ranges. The compensation committee therefore does not
review the actual companies or the compensation information of the specific
organizations included in each sample, but rather reviews the interquartile
range (i.e., median as well as the 25th and 75th
percentiles). The companies included for Messrs. Siegmund and OBrien were based
on a revenue range such that the median company revenue approximates the annual
revenue of ADP. The companies included for
Ms. Lee and Mr. Anenen were based on a
revenue range such that the median company revenue approximates the annual
revenue of the business units that the executive officer leads.
Differences in Compensation of Our
Named
Executive Officers
We carefully designed the pay mix for our
chief executive officer to be competitive when measured against the pay packages
of other chief executive officers as indicated by the compensation
study.
We have found that due to the broad
responsibilities and the experience required for the chief executive officer
position, compensation for chief executive officers in public companies that are
similar in size to ours is significantly higher than those for other named
executive officers.
When determining the compensation level
for each of our executive officers, the compensation committee reviews each
individual compensation element based on the previous years level, as well as
how the proposed level for that individual element would compare to the other
executive officers. The aggregate level for each executive officers
compensation is then compared against the executives previous years totals and
against compensation of other executive officers of the
company.
Base Salary
Base salaries are a fixed amount paid to
each executive for performing his or her normal duties and responsibilities. We
determine the amount based on the executives overall performance, level of
responsibility, pay grade, competitive
compensation practices data and comparison
to other company executives. Based on these criteria, our named executive
officers received the following annual salary increases in fiscal year
2014:
Named Executive Officer |
|
FY13 Salary |
|
Increase |
|
FY14 Salary |
Mr.
Rodriguez |
|
$850,000 |
|
5.9% |
|
$900,000 |
Mr.
Siegmund |
|
$525,000 |
|
4.8% |
|
$550,001 |
Ms.
Lee |
|
$516,254 |
|
2.8% |
|
$530,503 |
Mr.
Anenen |
|
$462,376 |
|
2.7% |
|
$475,004 |
Mr.
OBrien |
|
$475,000 |
|
2.7% |
|
$488,001 |
Salary increases for the named executive
officers were made effective July 1, 2013, the first day of the 2014 fiscal
year.
Automatic Data Processing, Inc. Proxy Statement |
| |
28 |
Table of Contents
Compensation Discussion and
Analysis |
|
Annual Cash Bonus
Overview
We paid our named executive officers cash
bonuses for fiscal year 2014 based on the attainment of company-wide, business
unit and individual performance goals established at the beginning of the fiscal
year.
For each executive officer, we establish a
target bonus amount, which is initially expressed as a percentage of projected
year-end annual base salary. This target bonus percentage ranges from 70% to
160% of base salary for the named executive officers. We also assign a
percentage value to each bonus component of each named executive officers
annual cash bonus plan and then determine the target bonus amount linked to each
component. We establish these performance ranges to provide our named executive
officers with a strong incentive to exceed the targets. The maximum bonus
payment to all our named executive officers is 200% of the target bonus levels.
There is no minimum payment level and the entire award opportunity is forfeited
if threshold performance goals are not achieved.
The compensation committee establishes and
approves the annual target bonus objectives and award opportunities for each of
our named executive officers. In making these determinations, the compensation
committee considers a variety of factors including market data, each officers
relative level of responsibility, and the chief executive officers
recommendations for executives other than himself. Our named executive officers
participated in the
discussions surrounding their bonus
objectives so that they could provide their input and understand the
expectations of each bonus plan component, but they did not participate in the
setting of the target award opportunities nor did they participate in the
committees voting or deliberations regarding their individual compensation
amounts. Each named executive officer receives a final version of his or her
individualized bonus plan after it was approved by the compensation committee.
Except in extraordinary circumstances, bonus objectives are not modified during
the fiscal year, and no bonus objectives were modified during fiscal year
2014.
The compensation committee reviews the
performance of each of our named executive officers relative to his or her
annual fiscal year target bonus plan objectives at its regularly scheduled
August meeting, which is the first meeting following the end of our fiscal year.
Based on this review, the compensation committee determines and approves the
annual cash bonuses for each of our executive officers.
Named Executive Officers Fiscal
Year 2014 Bonuses
Fiscal year 2014 target bonuses for the
named executive officers were the same in percentage terms as in fiscal year
2013. Following the conclusion of fiscal year 2014, the compensation committee
considered the performance of the company, the business units and the individual
named executive officers for the 2014 fiscal year against the named executive
officers bonus objectives, assessed which of the individual bonus targets were
met, exceeded or not fully achieved and approved cash bonuses as
follows:
|
|
Target
Bonus |
|
Target |
|
Maximum |
|
Actual |
|
Bonus |
|
|
as %
of |
|
Bonus |
|
Bonus as % |
|
Bonus |
|
Amount as
% |
Named Executive Officer |
|
Base Salary |
|
Amount |
|
of Target |
|
Amount |
|
of Target |
Mr.
Rodriguez |
|
160% |
|
|
$1,440,000 |
|
200% |
|
$1,471,680 |
|
102.2% |
Mr.
Siegmund |
|
80% |
|
|
$440,000 |
|
200% |
|
$449,680 |
|
102.2% |
Ms.
Lee |
|
80% |
|
|
$424,400 |
|
200% |
|
$450,713 |
|
106.2% |
Mr.
Anenen |
|
70% |
|
|
$332,500 |
|
200% |
|
$391,020 |
|
117.6% |
Mr.
OBrien |
|
70% |
|
|
$341,600 |
|
200% |
|
$349,115 |
|
102.2% |
29 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation Discussion and
Analysis |
|
Fiscal Year 2014 Target Bonus
Objectives
Each objective for our named executive
officers was satisfied as set forth below:
|
|
Mr.
Rodriguez |
|
Mr. Siegmund |
|
Ms. Lee |
|
Mr. Anenen |
|
Mr. OBrien |
|
|
|
|
|
Payout |
|
|
|
|
Payout |
|
|
|
|
Payout |
|
|
|
|
Payout |
|
|
|
|
Payout |
|
|
Target |
|
as %
of |
|
Target |
|
as %
of |
|
Target |
|
as %
of |
|
Target |
|
as %
of |
|
Target |
|
as %
of |
Bonus Objectives |
|
Weight |
|
Target |
|
Weight |
|
Target |
|
Weight |
|
Target |
|
Weight |
|
Target |
|
Weight |
|
Target |
Revenue Growth |
|
20.0 |
% |
|
114.7 |
% |
|
20.0 |
% |
|
114.7 |
% |
|
15.0 |
% |
|
114.7 |
% |
|
15.0 |
% |
|
114.7 |
% |
|
20.0 |
% |
|
114.7 |
% |
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth |
|
20.0 |
% |
|
95.5 |
% |
|
20.0 |
% |
|
95.5 |
% |
|
20.0 |
% |
|
95.5 |
% |
|
20.0 |
% |
|
95.5 |
% |
|
20.0 |
% |
|
95.5 |
% |
Sales Growth |
|
20.0 |
% |
|
89.1 |
% |
|
20.0 |
% |
|
89.1 |
% |
|
15.0 |
% |
|
89.1 |
% |
|
|
|
|
|
|
|
20.0 |
% |
|
89.1 |
% |
Division Financial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
20.0 |
% |
|
123.5 |
% |
|
35.0 |
% |
|
137.1 |
% |
|
|
|
|
|
|
Strategic Objectives |
|
40.0 |
% |
|
106.0 |
% |
|
40.0 |
% |
|
106.0 |
% |
|
30.0 |
% |
|
106.0 |
% |
|
30.0 |
% |
|
111.0 |
% |
|
40.0 |
% |
|
106.0 |
% |
The bonus objectives were designed to
reward achievement of goals that are aligned with the key components of our
operational and strategic success, the degree to which the named executive
officers have responsibility over overall company performance or individual
division results, and to provide a set of common objectives that facilitate
collaborative engagement. The compensation committee established the following
financial goals for our named executive officers:
Revenue Growth: 7.6% as a target objective, 200% of target was to be awarded
for revenue growth of 11.0% or greater, and 0% of target was to be awarded for
revenue growth below 3.0%.
Operating Income: 8.6% as a target objective, 200% of target was to be awarded
for operating income growth of 12% or greater, and 0% of target was to be
awarded for operating income growth below 3.0%.
Sales Growth (ES
Worldwide): 8.7% as a target objective, 200%
of target was to be awarded for sales growth of 12% or greater, and 0% of target
was to be awarded for negative sales growth. This objective is not included in
Mr. Anenens bonus plan.
Division Financial
Performance: Successfully achieve net
operating income, client retention and, in the case of Mr. Anenen, sales, equal
to their respective divisions target results for fiscal year 2014.
Strategic Objectives:
- Increase percent of new product R&D spend as a
percent of total R&D.
- Complete platform migration and
rationalizations planned for fiscal year
2014.
- Improve market share gains against key
competitors.
- Continue to improve the business process
improvement program.
- Solidify leadership team and build talent
pipeline. Build a solid succession plan for
senior leadership team.
Continue to drive
improvement in diversity. Maintain associate
engagement scores above the 75th percentile of
the industry benchmark.
Long-Term Incentive
Compensation Programs |
We believe that long-term incentive
compensation is a significant factor in attracting and retaining key executives
and in aligning their interests directly with the interests of our stockholders.
For fiscal year 2014, long-term incentives are awarded in the form of
performance-based stock awards and stock option grants. The compensation
committee selected these awards because
they ensure that the overall long-term incentive program is closely tied to
changes in stockholder value and the degree to which critical operating
objectives are attained, and support our talent retention
objectives.
Automatic Data Processing, Inc. Proxy Statement |
| |
30 |
Table of
Contents
Compensation Discussion and
Analysis |
|
For all of our named executive officers
except our chief executive officer, we target a long-term incentive compensation
mix of 70% performance-based stock awards and 30% stock options. For fiscal year
2014, the compensation committee approved a long-term incentive mix for the
chief executive officer of 60% performance-based stock awards and 40% stock
options. The compensation committee believes that this incentive mix is
appropriate for the chief executive officer because of his greater role in
driving long-term stockholder value creation.
The compensation committee may also from
time to time grant discretionary awards of time-based restricted stock to our
executive officers. These awards are for special situations and are not
considered in the target allocation of total long-term incentive compensation
between performance-based stock awards and stock option grants. No such awards
were made to our executive officers in fiscal year 2014.
The target long-term incentive mix
approved for fiscal year 2014 grants is shown in the following chart:
1
|
Performance-Based Stock
reflects the entire PSU target award based on the three-year target
opportunity and does not include the PBRS transition
award. |
As part of our annual market analysis of
compensation data, we compare our long-term equity incentive grant values with
competitive levels. We establish share grant target amounts or ranges of target
amounts for each executive level and set the midpoints of such ranges at the
market median levels. The compensation committee reviews the share grant targets
and target ranges annually to ensure that the resulting awards based on current
stock price and option fair value remain generally consistent with our median
compensation philosophy.
Prior to the beginning of each fiscal
year, we analyze the target performance stock award and stock option grant
levels to confirm that our desired target long-term incentive compensation
values are appropriate in the context of the compensation studies referred to
under Compensation Review and Determination above. When comparing our desired
values to these compensation studies, we look at both equity elements in
total.
At its June 2013 meeting, the compensation
committee approved target awards of PSUs for all named executive officers, which
were granted in September 2013 and will be earned and issued in fiscal year
2017. The named executive officers were also granted a one-time transition PBRS
target award in order to provide a vesting opportunity in fiscal year 2016,
which would otherwise be absent as a result of our shift from the two-year
vesting schedule of the PBRS program to a three-year vesting schedule of the new
PSU program. The transition PBRS awards are the same size as the PSU awards. At
its January 2014 meeting, the compensation committee approved stock option
grants for the named executive officers for fiscal year 2014. The
performance-based stock awards (at target) and stock option grants for fiscal
year 2014 are summarized in the table below:
Named Executive Officer |
|
Target PSU
Award |
|
Target PBRS
Award |
|
Stock
Options |
Mr.
Rodriguez |
|
|
33,609 |
|
|
|
33,609 |
|
|
|
117,907 |
|
Mr.
Siegmund |
|
|
12,000 |
|
|
|
12,000 |
|
|
|
32,000 |
|
Ms.
Lee |
|
|
11,000 |
|
|
|
11,000 |
|
|
|
32,000 |
|
Mr.
Anenen |
|
|
8,500 |
|
|
|
8,500 |
|
|
|
21,000 |
|
Mr.
OBrien |
|
|
8,000 |
|
|
|
8,000 |
|
|
|
21,000 |
|
31 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation Discussion and
Analysis |
|
Performance-Based Stock
Awards
In fiscal year 2014, we introduced a PSU
program based on financial objectives that are measured over a three-year
performance period consisting of three one-year earnings per share performance
goals. This new three-year PSU program replaces our current PBRS program. The
fiscal year 2014 target award opportunity under the new PSU program, which was
granted in September 2013, will be earned and issued in September 2016 based
upon the achievement of earnings per share performance goals for fiscal years
2014, 2015 and 2016. The transition PBRS grant opportunity awarded by the
compensation committee to fill the gap in the performance-based equity vesting
schedule in fiscal year 2016 will be earned based on the achievement of earnings
per share performance goals for fiscal year 2014 and, to the extent earned based
on the achievement of such performance goals, will vest in September 2015. We
believe the new three-year PSU program will further the companys longer term
financial goals by tying a substantial portion of the total compensation
opportunity to multi-year performance, and better promote talent retention by
lengthening the performance period.
For purposes of our performance-based
stock awards, the earnings per share goals and corresponding award ranges are
typically established and communicated to our executive officers (including the
named executive officers) in the first quarter of each respective fiscal year,
and for the 2014 performance year were approved by the compensation
committee in August 2013. After the
conclusion of each fiscal year, the compensation committee confirms the earnings
per share results and determines the percentage of target achieved based on such
results by using linear interpolation between the lower and upper bounds of the
award range. Under the PSU program, after the end of the three-year performance
period, the percentages for each of the individual three fiscal years in the
performance period will be averaged to obtain the percentage of target award
earned. However, notwithstanding the achievement of earnings per share results,
if the companys total shareholder return is not positive for the three-year
performance period, the total number of PSUs awarded may not exceed 100% of the
target award. The PSU award earned will also be credited with dividend
equivalents from the grant date of the target award until the issuance date,
assuming all dividends were reinvested in ADP stock at the time dividends are
paid. The issuance of the total number of PSUs earned will be made in the form
of shares of ADP stock in September following the conclusion of the three-year
performance period.
In August 2013, the compensation committee
established earnings per share growth goals and corresponding award ranges for
the fiscal year 2014 target award under the PSU program and transition award
under the PBRS programs as follows, with the percentage earned within each range
to be determined by linear interpolation between the lower and upper
bounds:
|
|
|
Restricted
Stock Grant as |
Earnings Per Share Growth |
|
|
Percentage of
Target |
Under 6% |
|
|
0 |
% |
6% |
|
|
50 |
% |
9% |
|
|
100 |
% |
12% or more |
|
|
150 |
% |
Our actual earnings per share growth for
fiscal year 2014, adjusted for certain non-recurring items as described above
under Fiscal Year 2014 Business Highlights, was 9.0%, resulting in the
transition PBRS awards being earned at 100% of target level. The transition PBRS
awards were
settled by the issuance in September 2014
of restricted shares that will vest in September 2015, subject to the
executives continued employment with the company through the vesting date.
Dividends are paid only with respect to shares of restricted stock that have
been issued.
Automatic Data Processing, Inc. Proxy Statement |
| |
32 |
Table of
Contents
Compensation Discussion and
Analysis |
|
Stock Options
We grant stock options to our executive
officers based upon their pay grades (other than our chief executive officer).
Stock options generally vest over four years. The grant level for each pay grade
is determined based on our annual review of our long-term incentive compensation
program. Our chief executive officer recommends to the compensation committee
the number of stock options for our executive officers, other than himself. The
compensation committee determined and approved stock option grants for our chief
executive officer as part of a review of his entire compensation package based
on the guidance of its independent compensation consultant, Cook &
Co.
While the compensation committee can
consider a stock option grant at any time for our executive officers, it makes
its regularly scheduled stock option grants at
its first meeting in January of each
calendar year. The compensation committee generally sets its calendar of
meetings in August of each year and we do not coordinate the January meeting
date, or any other meeting dates, with any regularly scheduled announcement or
corporate event. Additional stock option grants may be made to assist us in
recruiting, promoting or retaining executive officers.
Time-Based Restricted
Stock
The compensation committee may from time
to time grant discretionary awards of time-based restricted stock to our
executive officers. These discretionary grants assist us in the recruitment,
promotion or retention of executive officers. Our named executive officers did
not receive any time-based restricted stock grants in fiscal year
2014.
Other Compensation
Components and Considerations |
In addition to the compensation components
discussed above and the opportunity to participate in the same Employees
Savings-Stock Purchase Plan and the same health and welfare benefits available
to our U.S. associates generally, we offer our executive officers retirement
benefits, deferred compensation, limited perquisites and change in control
protection. We believe these additional benefits are fair, competitive,
consistent with our overall compensation philosophy and designed to ensure that
we can effectively retain our executive officers as well as effectively compete
for executive talent.
Retirement Benefits
All executive officers can participate in
the Automatic Data Processing, Inc. Retirement and Savings Plan (our 401(k)
plan) and are automatically enrolled in the Automatic Data Processing, Inc.
Pension Retirement Plan (a tax-qualified, defined benefit, cash balance pension
plan). These plans are generally available to all U.S. associates; however, the
Pension Retirement Plan will become closed to new participants as of January
2015. Our named executive officers also participate in the Supplemental Officers
Retirement Plan, which provides retirement benefits to
our executive officers in excess of those
generally available under our qualified cash balance pension plan. The
Supplemental Officers Retirement Plan, which was closed to new participants
beginning in January 2014, enables us to retain experienced senior executive
talent necessary to achieve growth by providing for their financial security
following their retirement, and provides these executive officers with a
retirement benefit targeted to a competitive income replacement ratio at normal
retirement age.
Deferred Compensation
All executive officers may defer all or a
portion of their annual cash bonuses into
a deferred compensation account. We make this program available to our executive
officers to be competitive, to facilitate the recruitment of new executives and
to provide our executive officers with a tax efficient way to save for
retirement. The company does not match deferrals by its named executive officers
or otherwise contribute any amounts to the named executive officers deferred
compensation amounts. Since the deferral accounts are made up of funds already
earned by the executive officers, we do not consider the
executives deferred account balances, or investment earnings or losses on such
balances, when we make compensation decisions.
33 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation Discussion and
Analysis |
|
Perquisites
We provide each of our executive officers
the use of automobiles leased by the company. Consistent with our policy towards
all attendees, we pay for the spouses of our executive officers to accompany
them to our annual sales Presidents Club events. In addition, the ADP
Foundation makes contributions that match the charitable gifts made by our
executive officers up to a maximum of $20,000 per calendar year. Finally,
company policy permits Mr. Rodriguez to occasionally use the companys aircraft
for personal travel in order to maximize his business availability and
productivity, provided that he reimburses the company for the aggregate
incremental cost incurred by the company in connection with any such personal
use.
We did not make any tax gross-up payments
to our named executive officers in fiscal year 2014, except for payments related
to relocation expenses, which are available to all U.S. associates who
participate in the companys relocation program.
Change in Control and Severance
Arrangements
The Automatic Data Processing, Inc. Change
in Control Severance Plan for Corporate Officers is designed (i) to retain our
corporate officers (including the named executive officers) and our staff vice
presidents and (ii) to align their interests with our stockholders interests so
that they can consider transactions that are in the best interests of our
stockholders and maintain their focus without concern regarding how any such
transaction might personally affect them. In addition, Mr. Rodriguezs
employment agreement, which was entered into in December 2011, contains
provisions related to severance and change in control as described below under
Potential Payments to Named Executive Officers Upon Termination or Change in
Control.
Under our Change in Control Severance Plan
for Corporate Officers (described below under Potential Payments To Named
Executive Officers Upon Termination or Change in Control), our executive
officers have separation entitlements that differ from one another.
Under the plan as in effect during fiscal year 2014, Mr. Rodriguez was entitled
to severance equal to approximately one
and one-half to two times base salary
and bonus upon termination of employment without cause or with good reason,
while our other named executive officers were entitled to severance equal to
approximately one to one and one-half times base salary and bonus. We believe
that a higher severance multiple for our chief executive officer is needed in
order to attract the individual we believe is best suited for the office. Our
chief executive officer is the individual the public and our stockholders most
closely identify as the face of the company. He has the greatest individual
impact on our success, and he faces the greatest personal risks when the company
takes risks. Under the plan as in effect during fiscal year 2014, our Change in
Control Severance Plan for Corporate Officers also provided that the vesting of
certain unvested equity awards would be accelerated under some termination
scenarios based on a double trigger in which payments of cash and vesting of
equity awards occur only if termination of employment without cause or with good
reason occurs during the 3-year period after a change in control. In August
2014, we made certain amendments to the plan to be effective in future years, as
described in more detail below under Potential Payments to Named Executive
Officers Upon Termination or Change in Control.
The severance formulas we use for
executive officers are each designed to provide the level of temporary
replacement income we feel is appropriate for that office, but the compensation
our executive officers may receive after termination of employment or a change
in control is not taken into account when current compensation levels are
determined.
In April 2014, as previously disclosed, we
entered into a Separation Agreement and Release with Ms. Lee regarding her
departure from the company to be effective December 31, 2014. The terms of the
Separation Agreement and Release are described below under Potential Payments
to Named Executive Officers Upon Termination or Change in Control. The
compensation committee believes that the terms of the Separation Agreement and
Release are reasonable and appropriate in light of Ms. Lees significant
contributions to the company in a senior leadership role and her 32 years of
dedicated service to the company.
Automatic Data Processing, Inc. Proxy Statement |
| |
34 |
Table of
Contents
Compensation Discussion and
Analysis |
|
Accounting and Tax
Considerations
We consider accounting and tax
implications when we design our equity-based and cash compensation programs and
when we make awards or grants. In particular, Section 162(m) of the Internal
Revenue Code generally disallows a tax deduction to public companies for
compensation over $1,000,000 paid to covered employees (which are defined as
our named executive officers, other than the chief financial officer). However,
qualifying performance-based compensation is not subject to the deduction limit
if certain requirements are met. We strive to make only those cash and
equity-based awards and grants that qualify as performance-based compensation or
that we otherwise can deduct when determining our corporate taxes. Our
stockholders have previously approved incentive plans (including our 2008
Omnibus Award Plan) that are intended to permit the company to make equity-based
awards and cash bonuses that may qualify as performance-based compensation for
purposes of Section 162(m). However, the overriding consideration when
evaluating the pay level or design component of any portion of our executives
compensation is the effectiveness of the component and the stockholder value
that management and the compensation committee believe the pay component
reinforces. The compensation committee may, however, award compensation that is
not deductible under Section 162(m) when, in the exercise of the committees
judgment, it would be in the best interests of the company and its stockholders
to do so. Compensation attributable to the vesting of time-based restricted
stock does not qualify as performance-based compensation, and therefore may not
be deductible to the extent it results in aggregate non-performance based
compensation in excess of $1,000,000. With the exception of Mr. OBrien, who
received a one-time grant of 15,000 shares of time-based restricted stock in
April of 2012 in connection with being hired as our chief human resources
officer, our named executive officers have not received any time-based
restricted stock since fiscal year 2010.
Compensation Recovery
(Clawback)
Our stock option, restricted stock award,
and PSU award agreements pursuant to our 2008 Omnibus Award Plan permit the
compensation committee to cause a recipients award to be forfeited, and to
require the recipient to pay to us any option gain and/or the value of vested
restricted stock, as applicable, if the recipient engages in activity that is in
conflict with or adverse to our interests, including but not limited to fraud or
conduct contributing to any financial restatements or irregularities, or if the
recipient violates a restrictive covenant.
Stock Ownership
Guidelines
The compensation committee has established
stock ownership guidelines to encourage equity ownership by our executive
officers in order to reinforce the link between their financial interests and
those of our stockholders. We set the stock ownership guidelines on the basis of
each executive officers pay grade, expressed as a multiple of the executive
officers base salary on the first day of the fiscal year. Stock ownership (as
defined under the guidelines) consists of stock owned outright by the executive
officer or beneficially through ownership by direct family members (spouses
and/or dependent children), or stock owned through our Retirement and Savings
Plan.
Under our stock ownership guidelines, Mr.
Rodriguez is expected to own an amount of our stock equal in value to six times
his base salary and Ms. Lee and Messrs. Siegmund, Anenen and OBrien are
expected to own an amount of our stock equal in value to three times their
respective base salaries. Executive officers whose ownership levels are below
the minimum required levels are required to retain as shares of common stock at
least 75% of post-tax net gains on stock option exercises, and 75% of shares
(net of taxes) received upon vesting of restricted stock. As of the end of
fiscal year 2014, all named executive officers met the stock ownership
guidelines, with the exception of Mr. OBrien, who was hired in April
2012.
35 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation Committee Report
The compensation committee has reviewed
and discussed with management the foregoing Compensation Discussion and Analysis
section of the companys 2014 proxy statement. Based on its review and
discussions with management, the compensation committee recommended to the board
of directors that the Compensation Discussion and Analysis be included in the
companys 2014 proxy statement.
Compensation Committee of the Board of
Directors
Gregory D. Brenneman, Chairman
Richard T. Clark
R. Glenn Hubbard
John P. Jones
Gregory L.
Summe
Automatic Data Processing, Inc. Proxy Statement |
| |
36 |
Table of
Contents
Compensation of Executive
Officers
The following table summarizes the
compensation of our named executive officers for fiscal year 2014.
Summary Compensation Table for Fiscal Year
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
|
|
Name and |
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Principal Position |
|
Year |
|
($) |
|
($) |
|
($)(2) |
|
($)(2) |
|
($)(3) |
|
($)(4) |
|
($)(5) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
Carlos A.
Rodriguez |
|
2014 |
|
$900,000 |
|
$0 |
|
|
$3,141,881 |
|
|
$1,599,998 |
|
|
|
$1,471,680 |
|
|
|
$1,069,306 |
|
|
|
$54,282 |
|
|
|
$8,237,147 |
|
President and Chief |
|
2013 |
|
$850,000 |
|
$0 |
|
|
$2,223,135 |
|
|
$1,396,440 |
|
|
|
$1,437,520 |
|
|
|
$379,644 |
|
|
|
$51,016 |
|
|
|
$6,337,755 |
|
Executive
Officer |
|
2012 |
|
$729,744 |
|
$0 |
|
|
$926,200 |
|
|
$1,673,900 |
|
|
|
$1,452,400 |
|
|
|
$636,696 |
|
|
|
$50,482 |
|
|
|
$5,469,422 |
|
Jan
Siegmund |
|
2014 |
|
$550,001 |
|
$0 |
|
|
$1,121,800 |
|
|
$434,240 |
|
|
|
$449,680 |
|
|
|
$416,270 |
|
|
|
$28,981 |
|
|
|
$3,000,972 |
|
Chief
Financial |
|
2013 |
|
$492,484 |
|
$0 |
|
|
$428,625 |
|
|
$215,500 |
|
|
|
$484,680 |
|
|
|
$43,364 |
|
|
|
$27,743 |
|
|
|
$1,692,396 |
|
Officer |
|
2012 |
|
$415,001 |
|
$0 |
|
|
$347,325 |
|
|
$132,150 |
|
|
|
$358,500 |
|
|
|
$379,772 |
|
|
|
$32,997 |
|
|
|
$1,665,745 |
|
Regina R.
Lee |
|
2014 |
|
$530,503 |
|
$0 |
|
|
$1,028,317 |
|
|
$434,240 |
|
|
|
$450,713 |
|
|
|
$563,385 |
|
|
|
$25,618 |
|
|
|
$3,032,776 |
|
Division President |
|
2013 |
|
$516,254 |
|
$0 |
|
|
$685,800 |
|
|
$215,500 |
|
|
|
$416,720 |
|
|
|
$180,371 |
|
|
|
$67,578 |
|
|
|
$2,082,223 |
|
|
|
2012 |
|
$500,004 |
|
$0 |
|
|
$555,720 |
|
|
$176,200 |
|
|
|
$468,800 |
|
|
|
$729,497 |
|
|
|
$80,843 |
|
|
|
$2,511,064 |
|
Steven J.
Anenen |
|
2014 |
|
$475,004 |
|
$0 |
|
|
$794,608 |
|
|
$284,970 |
|
|
|
$391,020 |
|
|
|
$679,641 |
|
|
|
$35,142 |
|
|
|
$2,660,385 |
|
Division President |
|
2013 |
|
$462,376 |
|
$0 |
|
|
$514,350 |
|
|
$155,160 |
|
|
|
$332,726 |
|
|
|
$199,410 |
|
|
|
$31,957 |
|
|
|
$1,695,979 |
|
|
|
2012 |
|
$450,001 |
|
$0 |
|
|
$416,790 |
|
|
$132,150 |
|
|
|
$373,000 |
|
|
|
$980,380 |
|
|
|
$32,002 |
|
|
|
$2,384,323 |
|
Dermot J.
OBrien |
|
2014 |
|
$488,001 |
|
$0 |
|
|
$747,867 |
|
|
$284,970 |
|
|
|
$349,115 |
|
|
|
$142,507 |
|
|
|
$47,225 |
|
|
|
$2,059,685 |
|
Chief
Human |
|
2013 |
|
$475,000 |
|
$50,000 |
(1) |
|
$485,775 |
|
|
$155,160 |
|
|
|
$351,453 |
|
|
|
$61,508 |
|
|
|
$30,887 |
|
|
|
$1,609,783 |
|
Resources
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes: |
(1) |
Sign on bonus Mr. OBrien received in connection with
being hired as chief human resources officer. |
|
|
(2) |
Amounts set forth in the Stock Awards and Option Awards
columns represent the aggregate grant date fair value of awards granted in
fiscal years 2014, 2013 and 2012 computed in accordance with FASB ASC
Topic 718, disregarding estimates of forfeitures related to service-based
vesting conditions. For additional information about the assumptions used
in these calculations, see Note 11 to our audited consolidated financial
statements for the fiscal year ended June 30, 2014 included in our annual
report on Form 10-K for the fiscal year ended June 30, 2014. The amounts
shown in the Stock Awards column reflect the grant date fair value of
performance-based stock awards based upon the probable outcome of the
performance condition as of the grant date. The awards for fiscal year
2014 are comprised of the PSU awards and the transition PBRS awards.
Consistent with the requirements of ASC Topic 718, the value of the PSUs
is based on one-third of the full number of target shares for which an EPS
goal was established in fiscal year 2014 under the awards made in
September 2013 which are scheduled to be paid out in September 2016.
Remaining portions of these awards will be linked to EPS goals established
for fiscal year 2015 and fiscal year 2016 and will be reported in the
Summary Compensation Table for those fiscal years. The maximum value of
the performance-based stock awards granted in fiscal years 2014, 2013, and
2012, respectively, assuming achievement of the highest level of
performance are: Mr. Rodriguez, $4,712,822, $3,334,703, and $1,389,300;
Mr. Siegmund, $1,682,700, $642,938, and $520,988; Ms. Lee, $1,542,475,
$1,028,700, and $833,580; Mr. Anenen, $1,191,912, $771,525, and $625,185;
Mr. OBrien, $1,121,800, and $728,662. |
|
(3) |
Performance-based bonuses paid under the annual cash
bonus program are shown in this column. A discussion of our annual cash
bonus program may be found in our Compensation Discussion and Analysis
under Cash CompensationAnnual Cash
Bonus. |
37 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation of Executive Officers |
|
(4) |
Amounts shown reflect the
aggregate increase during the last fiscal year in the present value of the
executives benefit under our tax-qualified cash balance pension plan, the
Automatic Data Processing, Inc. Pension Retirement Plan, and our
non-qualified supplemental retirement plan, the Supplemental Officers
Retirement Plan. There were no above-market or preferential earnings on
nonqualified deferred compensation. The Pension Retirement Plan and the
Supplemental Officers Retirement Plan provide benefits in the form of a
lump sum and/or an annuity. We calculated the present value as of June 30,
2011 based on the RP-2000 white collar mortality table (projected to
2018), a 3.90% interest crediting rate for the pension plan, and a 5.40%
discount rate; the present value as of June 30, 2012 is based on the
RP-2000 white collar mortality table (projected to 2019), a 3.25% interest
crediting rate for the pension plan, and a 3.90% discount rate; the
present value as of June 30, 2013 is based on the RP-2000 white collar
mortality table (projected to 2020), a 3.25% interest crediting rate for
the pension plan, and a 4.5% discount rate; the present value as of June
30, 2014 is based on the RP-2000 white collar mortality table (projected
generationally using Scale AA), a 3.25% interest crediting rate for the
pension plan, and a 4.05% discount rate. |
|
|
(5) |
Please refer to the All Other
Compensation for Fiscal Year 2014 table below for further
information. |
All Other Compensation For Fiscal Year
2014
|
|
|
|
|
|
Matching |
|
|
|
|
Other |
|
Tax |
|
Charitable |
|
|
Name |
|
Benefits(1) |
|
Payments(2) |
|
Contributions(3) |
|
Total |
Carlos A. Rodriguez |
|
$32,582 |
|
$0 |
|
$21,700 |
|
$54,282 |
Jan
Siegmund |
|
$14,981 |
|
$0 |
|
$14,000 |
|
$28,981 |
Regina R. Lee |
|
$18,109 |
|
$1,009 |
|
$6,500 |
|
$25,618 |
Steven J. Anenen |
|
$35,142 |
|
$0 |
|
$0 |
|
$35,142 |
Dermot J. OBrien |
|
$25,525 |
|
$0 |
|
$21,700 |
|
$47,225 |
Footnotes: |
(1) |
Other Benefits
include: |
|
|
(a) |
Actual cost to the company of leasing automobiles (and
covering related maintenance, registrations and insurance fees) used for
personal travel: Mr. Rodriguez, $17,075; Mr. Siegmund, $295; Ms. Lee,
$1,715; Mr. Anenen, $18,257; and Mr. OBrien, $17,009. |
|
|
|
|
(b) |
Amount paid by the company on behalf of the executives
and their spouses or significant others who accompanied them in connection
with travel sponsored by the company: Mr. Rodriguez, $3,612; Mr. Siegmund,
$2,980; Ms. Lee, $3,600; and Mr. Anenen, $5,300. |
|
|
(c) |
Relocation expense (available to the companys
associates generally): Ms. Lee, $1,119. |
|
|
(d) |
Matching contributions to the companys Retirement and
Savings Plan (available to the companys associates generally): Mr.
Rodriguez, $10,815; Mr. Siegmund, $10,815; Ms. Lee, $10,815; Mr. Anenen,
$10,815; and Mr. OBrien, $7,725. |
|
|
(e) |
Life insurance and accidental death and dismemberment
premiums paid by the company (available to the companys associates
generally): Mr. Rodriguez, $1,080; Mr. Siegmund $891; Ms. Lee, $860; Mr.
Anenen, $770; and Mr. OBrien, $791. |
|
|
(f) |
Other benefits include occasional personal travel on the
companys aircraft by Mr. Rodriguez and his immediate family. Mr.
Rodriguezs immediate family may also occasionally accompany him on the
companys aircraft when he is traveling on company business. Pursuant to
company policy, Mr. Rodriguez reimbursed the company for the amount of
aggregate incremental cost incurred by the company in connection with any
such personal use. Incremental cost is calculated by multiplying the
personal flight time, including empty aircraft positioning time, by the
aircrafts hourly variable operating cost. Variable operating cost
includes maintenance, fuel, cleaning, landing fees, flight fees, catering,
and crew traveling expenses, including hotels, meals and
transportation. |
Automatic Data Processing, Inc. Proxy Statement |
| |
38 |
Table of
Contents
Compensation of Executive
Officers |
|
(2) |
Gross-up for relocation
expense (available to all participants in the relocation
program). |
|
|
(3) |
Reflects matching charitable
contributions made by the ADP Foundation in an amount not to exceed
$20,000 in a calendar year in respect of any given named executive
officers charitable contributions for that calendar year. Amounts may
exceed $20,000 because, while matching charitable contributions are
limited to $20,000 in a calendar year, this table reflects matching
charitable contributions for the fiscal year ended June 30,
2014. |
Grants of Plan-Based Awards Table for
Fiscal Year 2014
|
|
Grant Date(1) |
|
Date of Corporate
Action |
|
Plan Under which Grant was Made(2) |
|
Estimated Future
Payouts Under Non-Equity Incentive Plan Awards |
|
Estimated Future Payouts Under Equity
Incentive Plan Awards(3) |
|
All
Other Stock Awards: Number of Shares of Stock or
Units # |
|
All
Other Option Awards: Number
of Securities Underlying Options # |
|
Exercise or
Base Price of Option Awards ($/Share) |
|
Grant Date Fair
Value of Stock and
Option Awards ($)(4) |
Name |
|
|
|
|
Threshold $ |
|
Target $ |
|
Maximum $ |
|
Threshold # |
|
Target # |
|
Maximum # |
|
|
|
|
(a) |
|
(b) |
|
(bb) |
|
|
|
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
(k) |
|
(l) |
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carlos A.
Rodriguez |
|
|
|
|
|
Bonus |
|
|
$0 |
|
$1,440,000 |
|
$2,880,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
8/6/2013 |
|
PBRS |
|
|
|
|
|
|
|
|
16,805 |
|
33,609 |
|
50,414 |
|
|
|
|
|
|
|
$2,341,875 |
|
|
9/3/2013 |
|
8/6/2013 |
|
PSU |
(5) |
|
|
|
|
|
|
|
5,602 |
|
11,203 |
|
16,805 |
|
|
|
|
|
|
|
$800,006 |
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,907 |
|
$79.31 |
|
$1,599,998 |
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan
Siegmund |
|
|
|
|
|
Bonus |
|
|
$0 |
|
$440,000 |
|
$880,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
8/6/2013 |
|
PBRS |
|
|
|
|
|
|
|
|
6,000 |
|
12,000 |
|
18,000 |
|
|
|
|
|
|
|
$836,160 |
|
|
9/3/2013 |
|
8/6/2013 |
|
PSU |
(5) |
|
|
|
|
|
|
|
2,000 |
|
4,000 |
|
6,000 |
|
|
|
|
|
|
|
$285,640 |
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000 |
|
$79.31 |
|
$434,240 |
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regina R.
Lee |
|
|
|
|
|
Bonus |
|
|
$0 |
|
$424,400 |
|
$848,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
8/6/2013 |
|
PBRS |
|
|
|
|
|
|
|
|
5,500 |
|
11,000 |
|
16,500 |
|
|
|
|
|
|
|
$766,480 |
|
|
9/3/2013 |
|
8/6/2013 |
|
PSU |
(5) |
|
|
|
|
|
|
|
1,833 |
|
3,667 |
|
5,500 |
|
|
|
|
|
|
|
$261,837 |
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000 |
|
$79.31 |
|
$434,240 |
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven J.
Anenen |
|
|
|
|
|
Bonus |
|
|
$0 |
|
$332,500 |
|
$665,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
8/6/2013 |
|
PBRS |
|
|
|
|
|
|
|
|
4,250 |
|
8,500 |
|
12,750 |
|
|
|
|
|
|
|
$592,280 |
|
|
9/3/2013 |
|
8/6/2013 |
|
PSU |
(5) |
|
|
|
|
|
|
|
1,417 |
|
2,833 |
|
4,250 |
|
|
|
|
|
|
|
$202,328 |
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000 |
|
$79.31 |
|
$284,970 |
Dermot J.
OBrien |
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus |
|
|
$0 |
|
$341,600 |
|
$683,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
8/6/2013 |
|
PBRS |
|
|
|
|
|
|
|
|
4,000 |
|
8,000 |
|
12,000 |
|
|
|
|
|
|
|
$557,440 |
|
|
9/3/2013 |
|
8/6/2013 |
|
PSU |
(5) |
|
|
|
|
|
|
|
1,333 |
|
2,667 |
|
4,000 |
|
|
|
|
|
|
|
$190,427 |
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000 |
|
$79.31 |
|
$284,970 |
Footnotes: |
(1) |
The grant date shown in
column (b) of the table was determined pursuant to FASB ASC Topic 718.
The grant date shown in column (bb) shows the date on which our
compensation committee set target award amounts under the PBRS and PSU
program. |
|
|
(2) |
PBRS refers to our
performance-based restricted stock program and PSU refers to our
performance stock unit program under our 2008 Omnibus Award Plan. Stock
options were also granted under our 2008 Omnibus Award
Plan. |
|
(3) |
No payouts will be made if
actual performance is below threshold
level. |
39 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation of Executive
Officers |
(4) |
We computed the grant date
fair value of each PBRS, PSU and option grant shown in column (l) in
accordance with FASB ASC Topic 718, disregarding estimates of forfeitures
related to service-based vesting conditions. For additional information
about the assumptions used in these calculations, see Note 11 to our
audited consolidated financial statements for the fiscal year ending June
30, 2014 included in our annual report on Form 10-K for the fiscal year
ended June 30, 2014. |
|
|
(5) |
Consistent with the
requirements of ASC Topic 718, the amount represents the first third of
the performance stock unit award made in September 2013 for which the
grant date fair value was established in September 2013. The units earned
from this award will be paid out in September 2016.
|
Automatic Data Processing, Inc. Proxy Statement |
| |
40 |
Table of
Contents
Compensation of Executive
Officers |
Mr. Rodriguezs Employment
Agreement
Mr. Rodriguez entered into an employment
agreement with the company on December 14, 2011. Mr. Rodriguezs employment
agreement provides for a three year term that begins November 8, 2011 and
expires November 7, 2014. The employment agreement provides Mr. Rodriguez with
an annual base salary of at least $800,000, and an annual target bonus of at
least 160% of the base salary (without any proration for the companys 2012
fiscal year). The actual bonus paid to Mr. Rodriguez will be based upon
accomplishment of performance goals established by the compensation committee
each year.
Pursuant to the employment agreement, on
January 26, 2012, Mr. Rodriguez received a stock option grant of 40,000 shares
that was determined by the compensation committee prior to his promotion to
chief executive officer as part of his fiscal 2012 long-term incentive
compensation, plus an additional special stock option grant of 150,000 shares in
recognition of his promotion to chief executive officer. Each stock option grant
is scheduled to vest in four equal annual installments of 25% each, commencing
one year after the grant date.
Mr. Rodriguezs employment agreement also
contains provisions related to his involuntary termination from the company,
which are summarized on page 56 of this proxy statement.
In addition, Mr. Rodriguezs employment
agreement provides that he is entitled to participate in all of the companys
pension, 401(k), medical and health, life, accident, disability and other
insurance programs, equity plans and other compensation and benefits plans and
arrangements that are generally available to other company executives, such as
the companys Pension Retirement Plan and Supplemental Officers Retirement Plan,
which are described on page 51 of this proxy statement under Automatic Data
Processing, Inc. Pension Retirement Plan and Supplemental Officers Retirement
Plan.
Mr. OBriens Employment
Agreement |
Mr.
OBrien entered into an employment agreement with the company on March 15, 2012.
The employment agreement provides Mr. OBrien with an initial annual base salary
of $475,000, and an annual target bonus of 70% of the base salary (prorated for
fiscal year 2012 to reflect the full number of months of employment with the
company prior to June 30, 2012). The employment agreement also provides that the actual bonus paid to Mr. OBrien will be
based upon accomplishment of performance goals established by the chief
executive officer each year, provided that his actual bonus for fiscal year 2012
and fiscal year 2013 will be no less than his target bonus for such years so
long as his employment is not terminated by the company for cause, due to
disability, due to death or by Mr. OBrien without good reason (each as
defined in his employment agreement). Pursuant to the employment agreement, Mr.
OBrien also received a cash sign-on bonus of $50,000, payable 75 days after his
effective start date.
Pursuant to the employment agreement, on
April 30, 2012, Mr. OBrien received a grant of 15,000 shares of time-based
restricted stock, the restrictions on which lapsed as to 8,000 shares on March
1, 2013, and 4,000 shares on May 1, 2014, and lapse as to 3,000 shares on May 1,
2015. He was also eligible to participate in the fiscal year 2013 PBRS program
with a target of 8,500 shares of restricted stock if the applicable performance
objectives are achieved, with the actual number of shares earned to be based on
performance in accordance with the terms of the PBRS program. The
restricted stock issued to Mr. OBrien pursuant to the 2013 PBRS program vested in September 2014. Pursuant to the
employment agreement, Mr. OBrien was offered an initial stock option grant of
30,000 shares at the next meeting of the compensation committee following his
start date, scheduled to vest in four equal annual installments of 25% each
commencing one year after the grant date.
41 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation of Executive
Officers |
Mr. OBriens employment agreement also
contains provisions related to his involuntary termination from the company
(including participation in the Change in Control Severance Plan for Corporate
Officers), which are summarized on page 57 of this proxy statement.
In addition, Mr. OBriens employment
agreement provides that he is entitled to participate in all of the companys
pension, 401(k), medical and health, life, accident, disability and other
insurance programs, equity plans and other compensation and benefits plans and
arrangements that are generally available to other company executives, such as
the companys Pension Retirement Plan and Supplemental
Officers Retirement Plan, which are
described on page 51 of this proxy statement under Automatic Data Processing,
Inc. Pension Retirement Plan and Supplemental Officers Retirement
Plan.
Mr. OBriens employment agreement also
provides that he has continuing rights for indemnification under the companys
charter or bylaws or other policies and procedures in effect on March 15, 2012
including coverage by directors and officers liability insurance, should the
company provide such insurance for senior management and whether through an
independent or captive insurer and under any indemnification trust.
Restricted Stock/Performance Stock
Units |
We grant restricted stock under our 2008
Omnibus Award Plan. Restricted stock awards granted in connection with our PBRS
program will vest 12 months following issuance. Other restricted stock awards
will vest over periods determined by our compensation committee.
In fiscal year 2014, we introduced a
performance stock unit program based on financial objectives that are measured
over a three-year performance cycle comprised of three one-year performance
periods. This new three-year program replaces our performance-based restricted
stock program. If, after completion of the first measurement year of the
three-year performance period, a participants employment with the Company is
terminated prior to the expiration of the performance period due to death,
disability or retirement (defined as voluntary termination of employment at or
after age 65, or age 55 with 10 years of service), a participant will be
entitled to receive a pro-rata portion (based on the number of completed months
in the performance period through the date of termination of employment, divided
by 36) of the PSUs earned for such performance period (which, in the case of
death or disability, including any death or disability
occurring after retirement, will be
determined by assuming 100% achievement for each measurement year in the
performance period not completed prior to the participants death or
disability).
Recipients of performance-based restricted
stock and performance stock unit awards will be entitled to receive dividends
paid only with respect to shares of restricted stock that have been earned. We
require that executives agree to be bound by a restrictive covenant containing
non-compete, non-solicitation, and confidentiality obligations as a condition to
the grant.
Restricted stock and performance stock
unit awards under our 2008 Omnibus Award Plan allow the compensation committee
to cause a recipients award to be forfeited, and to require the recipient to
pay to the company any gain realized on the award (the fair market value, on the
applicable vesting date, of the shares delivered to the participant), if the
recipient engages in an activity that is in conflict with or adverse to the
companys interests, including but not limited to fraud or conduct contributing
to any financial restatements or irregularities, or if the recipient violates a
restrictive covenant.
We grant stock options under our 2008
Omnibus Award Plan with an exercise price equal to our closing stock price on
the date of grant. No option may be exercised after the expiration of its
ten-year term. We require that executives
agree to be bound by a restrictive
covenant containing non-compete, non-solicitation, and confidentiality
obligations as a condition to the grant.
Automatic Data Processing, Inc. Proxy Statement |
| |
42 |
Table of
Contents
Compensation of Executive
Officers |
Stock options granted under our 2008
Omnibus Award Plan become fully vested and exercisable upon the death or
disability of an option holder who (i) is an active employee, (ii) satisfied the
companys retirement criteria and retired on or after age 55 with 10 years of
service (Normal Retirement), or (iii) retired in the previous twelve months on
or after age 55 with between five and 10 years of service. Stock options will
continue to vest following a Normal Retirement that occurs after the first
anniversary of an options grant date.
Vested options granted under our 2008
Omnibus Award Plan may generally be exercised for up to 60 days following an
option holders termination of employment with the company (or per past company
practice, the severance end date, if later), provided that:
- option holders who retire on or after Normal
Retirement will have 37 months following
retirement (or per past company practice, the
severance end date, if later) to exercise their
vested options (subject to extension in the case of subsequent death);
- option holders who retire on or after age 55
with between five and 10 years of service will
have twelve months following retirement (or per
past company
practice, the severance end date, if later) to exercise their vested options (subject to extension in the case
of subsequent death);
- option holders who die or become disabled on or
after eligibility for Normal Retirement will
have 36 months following their death or
disability to exercise their vested options
(subject to extension in the case of subsequent death following a disability); and
- option holders who were not eligible for
Normal Retirement on the date of death or
disability will have twelve months following
their death or disability to exercise their
vested options (subject to extension in the case of subsequent death following a disability).
Stock option awards under our 2008 Omnibus
Award Plan allow our compensation committee to cause a recipients award to
be forfeited, and to require the recipient to pay to the company any option
gain, if the recipient engages in an activity that is in conflict with or
adverse to the companys interests, including but not limited to fraud or
conduct contributing to any financial restatements or irregularities, or if the
recipient violates a restrictive covenant.
43 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation of Executive
Officers |
Outstanding Equity Awards for Fiscal
Year-End 2014
|
|
|
|
Option Awards |
|
Stock
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Plan
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of |
|
Market
or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
Unearned |
|
Payout
Value |
|
|
|
|
Number
of |
|
Number
of |
|
|
|
|
|
|
|
Number |
|
Value
of |
|
Shares, |
|
of
Unearned |
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
of
Shares |
|
Shares
or |
|
Units
or |
|
Shares,
Units |
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
or Units of
|
|
Units
of |
|
Other |
|
or
Other |
|
|
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
Stock That
|
|
Stock
That |
|
Rights |
|
Rights
That |
|
|
|
|
Options |
|
Options |
|
Exercise |
|
Option |
|
Have
Not |
|
Have
Not |
|
That
Have |
|
Have
Not |
|
|
Grant |
|
(#) |
|
(#) |
|
Price |
|
Expiration |
|
Vested |
|
Vested |
|
Not
Vested |
|
Vested |
Name |
|
Date(1) |
|
(Exercisable) |
|
(Unexercisable) |
|
($) |
|
Date |
|
(#) |
|
($)(2) |
|
(#)(3)
|
|
($)(2)
|
(a) |
|
|
|
(b) |
|
(c) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
Carlos A. Rodriguez |
|
2/8/2011 |
|
|
|
|
|
|
5,000 |
|
|
|
$49.52 |
|
|
2/7/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2012 |
|
|
|
|
|
|
95,000 |
|
|
|
$55.82 |
|
|
1/25/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013 |
|
|
40,500 |
|
|
|
121,500 |
|
|
|
$59.89 |
|
|
1/24/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
|
|
|
117,907 |
|
|
|
$79.31 |
|
|
1/22/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,900 |
|
|
$3,083,992 |
|
|
|
|
|
|
|
|
|
|
9/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,609 |
|
|
$2,664,522 |
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,203 |
|
|
|
$888,174 |
|
Jan Siegmund |
|
1/31/2008 |
|
|
12,000 |
|
|
|
|
|
|
|
$40.28 |
|
|
1/30/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2009 |
|
|
12,000 |
|
|
|
|
|
|
|
$37.58 |
|
|
2/9/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2010 |
|
|
12,000 |
|
|
|
|
|
|
|
$40.70 |
|
|
2/8/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2011 |
|
|
7,500 |
|
|
|
2,500 |
|
|
|
$49.52 |
|
|
2/7/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2012 |
|
|
7,500 |
|
|
|
7,500 |
|
|
|
$55.82 |
|
|
1/25/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013 |
|
|
6,250 |
|
|
|
18,750 |
|
|
|
$59.89 |
|
|
1/24/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
|
|
|
32,000 |
|
|
|
$79.31 |
|
|
1/22/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
$594,600 |
|
|
|
|
|
|
|
|
|
|
9/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
$951,360 |
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
$317,120 |
|
Regina R. Lee |
|
1/31/2008 |
|
|
17,000 |
|
|
|
|
|
|
|
$40.28 |
|
|
1/30/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2009 |
|
|
17,000 |
|
|
|
|
|
|
|
$37.58 |
|
|
2/9/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2010 |
|
|
17,000 |
|
|
|
|
|
|
|
$40.70 |
|
|
2/8/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2011 |
|
|
15,000 |
|
|
|
5,000 |
|
|
|
$49.52 |
|
|
2/7/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2012 |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
$55.82 |
|
|
1/25/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013 |
|
|
6,250 |
|
|
|
18,750 |
|
|
|
$59.89 |
|
|
1/24/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
|
|
|
32,000 |
|
|
|
$79.31 |
|
|
1/22/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
$951,360 |
|
|
|
|
|
|
|
|
|
|
9/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
$872,080 |
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,667 |
|
|
|
$290,693 |
|
Automatic Data Processing, Inc. Proxy Statement |
| |
44 |
Table of
Contents
Compensation of Executive
Officers |
|
|
|
|
Option Awards |
|
Stock
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Plan
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of |
|
Market
or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
Unearned |
|
Payout
Value |
|
|
|
|
Number
of |
|
Number
of |
|
|
|
|
|
|
|
Number |
|
Value
of |
|
Shares, |
|
of
Unearned |
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
of
Shares |
|
Shares
or |
|
Units
or |
|
Shares,
Units |
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
or Units of
|
|
Units
of |
|
Other |
|
or
Other |
|
|
|
|
Unexercised |
|
Unexercised |
|
Option |
|
|
|
Stock That
|
|
Stock
That |
|
Rights |
|
Rights
That |
|
|
|
|
Options |
|
Options |
|
Exercise |
|
Option |
|
Have
Not |
|
Have
Not |
|
That
Have |
|
Have
Not |
|
|
Grant |
|
(#) |
|
(#) |
|
Price |
|
Expiration |
|
Vested |
|
Vested |
|
Not
Vested |
|
Vested |
Name |
|
Date(1) |
|
(Exercisable) |
|
(Unexercisable) |
|
($) |
|
Date |
|
(#) |
|
($)(2) |
|
(#)(3) |
|
($)(2) |
(a) |
|
|
|
(b) |
|
(c) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
Steven J. Anenen |
|
1/31/2008 |
|
|
17,000 |
|
|
|
|
|
|
|
$40.28 |
|
|
1/30/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2010 |
|
|
17,000 |
|
|
|
|
|
|
|
$40.70 |
|
|
2/8/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2011 |
|
|
11,250 |
|
|
|
3,750 |
|
|
|
$49.52 |
|
|
2/7/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2012 |
|
|
7,500 |
|
|
|
7,500 |
|
|
|
$55.82 |
|
|
1/25/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013 |
|
|
4,500 |
|
|
|
13,500 |
|
|
|
$59.89 |
|
|
1/24/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
|
|
|
21,000 |
|
|
|
$79.31 |
|
|
1/22/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
|
|
$713,520 |
|
|
|
|
|
|
|
|
|
|
9/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500 |
|
|
$673,880 |
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,833 |
|
|
|
$224,627 |
|
Dermot J. OBrien |
|
6/7/2012 |
|
|
|
|
|
|
15,000 |
|
|
|
$53.15 |
|
|
6/6/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013 |
|
|
|
|
|
|
13,500 |
|
|
|
$59.89 |
|
|
1/24/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014 |
|
|
|
|
|
|
21,000 |
|
|
|
$79.31 |
|
|
1/22/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/30/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000 |
|
|
$237,840 |
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500 |
|
|
$673,880 |
|
|
|
|
|
|
|
|
|
|
9/2/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000 |
|
|
$634,240 |
|
|
|
|
|
|
|
|
|
|
9/3/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,667 |
|
|
|
$211,413 |
|
Footnotes: |
(1) |
We have included in the table awards under our one-year
performance-based restricted stock program for fiscal year 2014. Such
awards were formally made on September 2, 2014. |
|
|
(2) |
Market value based on June 30, 2014 closing price of our
common stock of $79.28 per share. |
|
(3) |
The amounts shown for the PSU awards granted on
September 3, 2013 include only the first one-third tranche of the award
for which an EPS goal has been established, and reflect the number of
units earned based on performance against the EPS goal for fiscal year
2014 (subject to potential reduction based on our actual TSR performance
over the entire three-fiscal-year period ending June 30,
2016). |
45 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation of Executive
Officers |
Outstanding Equity Vesting Schedule for
Fiscal Year-End 2014
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
Grant or |
|
|
Name |
|
Grant Date |
|
Vesting from Grant Date |
|
Award Date |
|
Vesting Schedule |
Carlos A. Rodriguez |
|
2/8/2011 |
|
25% vested on 2/8/2012 |
|
9/3/2013 |
|
100% vests on 9/3/2014 |
|
|
|
|
25% vested on 2/8/2013 |
|
9/2/2014 |
|
100% vests on 9/2/2015 |
|
|
|
|
25% vested on 2/8/2014 |
|
9/3/2013 |
|
100% vests on 6/30/2016 |
|
|
|
|
25% vests on 2/8/2015 |
|
|
|
|
|
|
1/26/2012 |
|
25% vested on 1/26/2013 |
|
|
|
|
|
|
|
|
25% vested on 1/26/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2016 |
|
|
|
|
|
|
1/25/2013 |
|
25% vested on 1/25/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2017 |
|
|
|
|
|
|
1/23/2014 |
|
25% vests on 1/23/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2017 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2018 |
|
|
|
|
Jan Siegmund |
|
1/31/2008 |
|
20% vested on 1/31/2010 |
|
9/3/2013 |
|
100% vests on 9/3/2014 |
|
|
|
|
20% vested on 1/31/2011 |
|
9/2/2014 |
|
100% vests on 9/2/2015 |
|
|
|
|
20% vested on 1/31/2012 |
|
9/3/2013 |
|
100% vests on 6/30/2016 |
|
|
|
|
20% vested on 1/31/2013 |
|
|
|
|
|
|
|
|
20% vested on 1/31/2014 |
|
|
|
|
|
|
2/10/2009 |
|
25% vested on 2/10/2010 |
|
|
|
|
|
|
|
|
25% vested on 2/10/2011 |
|
|
|
|
|
|
|
|
25% vested on 2/10/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/10/2013 |
|
|
|
|
|
|
2/9/2010 |
|
25% vested on 2/9/2011 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2013 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2014 |
|
|
|
|
|
|
2/8/2011 |
|
25% vested on 2/8/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/8/2013 |
|
|
|
|
|
|
|
|
25% vested on 2/8/2014 |
|
|
|
|
|
|
|
|
25% vests on 2/8/2015 |
|
|
|
|
|
|
1/26/2012 |
|
25% vested on 1/26/2013 |
|
|
|
|
|
|
|
|
25% vested on 1/26/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2016 |
|
|
|
|
|
|
1/25/2013 |
|
25% vested on 1/25/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2017 |
|
|
|
|
Automatic Data Processing, Inc. Proxy Statement |
| |
46 |
Table of
Contents
Compensation of Executive
Officers |
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
Grant or |
|
|
Name |
|
Grant Date |
|
Vesting from Grant Date |
|
Award Date |
|
Vesting Schedule |
|
|
1/23/2014 |
|
25% vests on 1/23/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2017 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2018 |
|
|
|
|
Regina R. Lee |
|
1/31/2008 |
|
20% vested on 1/31/2010 |
|
9/3/2013 |
|
100% vests on 9/3/2014 |
|
|
|
|
20% vested on 1/31/2011 |
|
9/2/2014 |
|
100% vests on 9/2/2015 |
|
|
|
|
20% vested on 1/31/2012 |
|
9/3/2013 |
|
100% vests on 6/30/2016 |
|
|
|
|
20% vested on 1/31/2013 |
|
|
|
|
|
|
|
|
20% vested on 1/31/2014 |
|
|
|
|
|
|
2/10/2009 |
|
25% vested on 2/10/2010 |
|
|
|
|
|
|
|
|
25% vested on 2/10/2011 |
|
|
|
|
|
|
|
|
25% vested on 2/10/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/10/2013 |
|
|
|
|
|
|
2/9/2010 |
|
25% vested on 2/9/2011 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2013 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2014 |
|
|
|
|
|
|
2/8/2011 |
|
25% vested on 2/8/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/8/2013 |
|
|
|
|
|
|
|
|
25% vested on 2/8/2014 |
|
|
|
|
|
|
|
|
25% vests on 2/8/2015 |
|
|
|
|
|
|
1/26/2012 |
|
25% vested on 1/26/2013 |
|
|
|
|
|
|
|
|
25% vested on 1/26/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2016 |
|
|
|
|
|
|
1/25/2013 |
|
25% vested on 1/25/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2017 |
|
|
|
|
|
|
1/23/2014 |
|
25% vests on 1/23/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2017 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2018 |
|
|
|
|
47 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of
Contents
Compensation of Executive
Officers |
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
Grant or |
|
|
Name |
|
Grant Date |
|
Vesting from Grant Date |
|
Award Date |
|
Vesting Schedule |
Steven J. Anenen |
|
1/31/2008 |
|
20% vested on 1/31/2010 |
|
9/3/2013 |
|
100% vests on 9/3/2014 |
|
|
|
|
20% vested on 1/31/2011 |
|
9/2/2014 |
|
100% vests on 9/2/2015 |
|
|
|
|
20% vested on 1/31/2012 |
|
9/3/2013 |
|
100% vests on 6/30/2016 |
|
|
|
|
20% vested on 1/31/2013 |
|
|
|
|
|
|
|
|
20% vested on 1/31/2014 |
|
|
|
|
|
|
2/9/2010 |
|
25% vested on 2/9/2011 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2013 |
|
|
|
|
|
|
|
|
25% vested on 2/9/2014 |
|
|
|
|
|
|
2/8/2011 |
|
25% vested on 2/8/2012 |
|
|
|
|
|
|
|
|
25% vested on 2/8/2013 |
|
|
|
|
|
|
|
|
25% vested on 2/8/2014 |
|
|
|
|
|
|
|
|
25% vests on 2/8/2015 |
|
|
|
|
|
|
1/26/2012 |
|
25% vested on 1/26/2013 |
|
|
|
|
|
|
|
|
25% vested on 1/26/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/26/2016 |
|
|
|
|
|
|
1/25/2013 |
|
25% vested on 1/25/2014 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2017 |
|
|
|
|
|
|
1/23/2014 |
|
25% vests on 1/23/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2017 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2018 |
|
|
|
|
Dermot J. OBrien |
|
6/7/2012 |
|
25% vested on 6/7/2013 |
|
4/30/2012 |
|
53% vested on 3/1/13 |
|
|
|
|
25% vested on 6/7/2014 |
|
|
|
27% vested on 3/1/14 |
|
|
|
|
25% vests on 6/7/2015 |
|
|
|
20% vests on 5/1/15 |
|
|
|
|
25% vests on 6/7/2016 |
|
9/3/2013 |
|
100% vests on 9/3/2014 |
|
|
1/25/2013 |
|
25% vested on 1/25/2014 |
|
9/2/2014 |
|
100% vests on 9/2/2015 |
|
|
|
|
25% vests on 1/25/2015 |
|
9/3/2013 |
|
100% vests on 6/30/2016 |
|
|
|
|
25% vests on 1/25/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/25/2017 |
|
|
|
|
|
|
1/23/2014 |
|
25% vests on 1/23/2015 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2016 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2017 |
|
|
|
|
|
|
|
|
25% vests on 1/23/2018 |
|
|
|
|
Automatic Data Processing, Inc. Proxy Statement |
| |
48 |
Table of
Contents
Compensation of Executive
Officers |
Option Exercises and Stock Vested Table
for Fiscal Year 2014
|
|
Option
Awards |
|
Stock
Awards |
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
Shares |
|
Value |
|
Shares |
|
Value |
|
|
Acquired on |
|
Realized |
|
Acquired on |
|
Realized |
Name |
|
Exercise |
|
on Exercise |
|
Vesting |
|
on Vesting |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
Carlos A.
Rodriguez(1) |
|
|
119,650 |
|
|
|
$3,121,935 |
|
|
|
10,000 |
|
|
$747,830 |
Jan
Siegmund(2) |
|
|
28,170 |
|
|
|
$1,007,910 |
|
|
|
5,250 |
|
|
$390,863 |
Regina R. Lee(3) |
|
|
61,827 |
|
|
|
$2,247,470 |
|
|
|
1,500 |
|
|
$747,830 |
Steven J.
Anenen(4) |
|
|
54,314 |
|
|
|
$2,133,293 |
|
|
|
5,000 |
|
|
$372,250 |
Dermot J.
OBrien(5) |
|
|
19,500 |
|
|
|
$477,165 |
|
|
|
4,000 |
|
|
$310,480 |
Footnotes: |
(1) |
Mr. Rodriguez exercised options to purchase 24,650
shares on March 31, 2014 with a weighted average exercise price of $44.48
and a market price of $77.23, 24,227 shares on January 2, 2014 with an
exercise price of $55.82 and a market price of $80.01, 23,273 shares on
January 3, 2014 with an exercise price of $55.82 and a market price of
$80.67, 43,189 shares on June 9, 2014 with an exercise price of $55.82 and
a market price of $80.00, 4,311 shares on June 10, 2014 with an exercise
price of $55.82 and a market price of $80.04. He acquired 8,500 shares
with a market price of $74.45 on February 10, 2014, and 1,500 shares with
a market price of $76.67 on March 3, 2014, each upon lapse of
restrictions. |
|
|
(2) |
Mr. Siegmund exercised options to purchase 28,170 shares
on January 2, 2014 with a weighted average exercise price of $43.99 and a
market price of $79.77. He acquired 5,250 shares with a market price of
$74.45 on February 10, 2014, upon lapse of restriction. |
|
(3) |
Ms. Lee exercised options to purchase 61,827 shares on
January 2, 2014 with a weighted average exercise price of $43.42 and a
market price of $79.77. She acquired 8,500 shares with a market price of
$74.45 on February 10, 2014, and 1,500 shares with a market price of
$76.67 on March 3, 2014, each upon lapse of restrictions. |
|
(4) |
Mr. Anenen exercised options to purchase 54,314 shares
on January 2, 2014 with a weighted average exercise price of $40.49 and a
market price of $79.77. He acquired 5,000 shares with a market price of
$74.45 on February 10, 2014, upon lapse of restriction. |
|
(5) |
Mr. OBrien exercised options to purchase 7,500 shares
on January 2, 2014 with an exercise price of $53.15 and a market price of
$79.82, 4,500 shares on January 27, 2014 with an exercise price of $59.89
and a market price of $76.96, and 7,500 shares on June 9, 2014 with an
exercise price of $53.15 and a market price of $79.86. He acquired 4,000
shares with a market price of $77.62 on May 1, 2014, upon lapse of
restrictions. |
49 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Compensation of Executive
Officers |
|
Pension Benefits for Fiscal Year
2014
|
|
|
|
Number |
|
Present |
|
|
|
|
|
|
of Years |
|
Value of |
|
Payments |
|
|
|
|
Credited |
|
Accumulated |
|
During
Last |
Name |
|
Plan Name |
|
Service(1) |
|
Benefit(2)(3)(4) |
|
Fiscal Year |
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
(e) |
Carlos A. Rodriguez |
|
Automatic Data Processing, Inc. |
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan |
|
|
13.50 |
|
|
$142,289 |
|
$0 |
|
|
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
11.08 |
|
|
$2,525,824 |
|
$0 |
Jan Siegmund |
|
Automatic Data Processing, Inc. |
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan |
|
|
14.50 |
|
|
$150,856 |
|
$0 |
|
|
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
9.58 |
|
|
$1,121,134 |
|
$0 |
Regina R. Lee |
|
Automatic Data Processing, Inc. |
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan |
|
|
31.50 |
|
|
$380,325 |
|
$0 |
|
|
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
9.58 |
|
|
$2,161,681 |
|
$0 |
Steven J. Anenen |
|
Automatic Data Processing, Inc. |
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan |
|
|
37.50 |
|
|
$492,990 |
|
$0 |
|
|
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
15.08 |
|
|
$3,293,119 |
|
$0 |
Dermot J. OBrien |
|
Automatic Data Processing, Inc. |
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan |
|
|
1.50 |
|
|
$11,330 |
|
$0 |
|
|
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
2.17 |
|
|
$202,426 |
|
$0 |
Footnotes: |
(1) |
Consists of the number of
years of service credited as of June 30, 2014 for the purpose of
determining benefit service under the applicable pension plan. Credited
service is defined in the Supplemental Officers Retirement Plan as the
number of months elapsed from the later of a participants entry into the
plan and January 1, 1989 and subject, in the case of vesting, to a
schedule set forth in the Supplemental Officers Retirement Plan.
Executives must be selected for participation in the Supplemental Officers
Retirement Plan. Credited service under the Pension Retirement Plan is
defined as elapsed time of employment with the company starting on January
1 following the completion of six months of service. |
|
|
(2) |
The Pension Retirement Plan
and Supplemental Officers Retirement Plan provide benefits in the form of
a lump sum and/or an annuity. We calculated a present value of the
executives benefit using an interest crediting rate, a discount rate and
a mortality assumption. We calculated the actuarial present values of
accumulated benefits as of June 30, 2014 under the Pension Retirement Plan
and the Supplemental Officers Retirement Plan using the RP-2000 white
collar mortality table (projected generationally using Scale AA) and a
4.05% discount rate. For the Pension Retirement Plan only, we also used a
3.25% interest crediting rate. |
|
(3) |
Cash balances under the
Pension Retirement Plan are included in the present values shown for the
Pension Retirement Plan in column (d) and, at June 30, 2014 are as
follows: Mr. Rodriguez, $159,865; Mr. Siegmund, $169,333; Ms. Lee, $
381,822; Mr. Anenen, $454,772 and Mr. OBrien, $12,889. |
|
(4) |
The present values of
accumulated benefits for the Pension Retirement Plan and the Supplemental
Officers Retirement Plan were determined based on the retirement at age of
65 (normal retirement age under these
Plans). |
Automatic Data Processing, Inc. Proxy Statement |
| |
50 |
Table of Contents
Compensation of Executive
Officers |
|
Automatic Data Processing, Inc. Pension
Retirement Plan
The Pension Retirement Plan is a
tax-qualified defined benefit plan covering substantially all U.S. employees of
the company; however, in January 2014, our board of directors approved an
amendment to close the Pension Retirement Plan to new participants beginning in
January 2015. Under the Pension Retirement Plan, the company credits
participants notional accounts with annual contributions, which are determined
based upon base salary and years
of service. The contributions range from
2.1% to 10% of base salary, and the accounts earn interest based upon the
ten-year U.S. Treasury constant maturity rates. Compensation used to determine
the benefits in any given year is limited to calendar year base salary up to the
IRS compensation limit in effect for the plan year. A participant must have
three years of service to receive any benefit.
Supplemental Officers
Retirement Plan |
The company sponsors a Supplemental
Officers Retirement Plan, which is a non-qualified defined benefit plan that
pays a lump sum or an annuity upon retirement. Eligible participants include the
named executive officers and other officers of the company with titles of
corporate vice president and above.
On August 14, 2008, our board of directors
approved amendments to the Supplemental Officers Retirement Plan. These
amendments included changes to the Supplemental Officers Retirement Plan
benefits formula and the early retirement factors, in each case, used for any
active employee not already earning a benefit by January 1, 2008 or any
participant who had not attained age 50 by January 1, 2009 (we refer to such
participants as non-grandfathered participants, and to all other participants
as grandfathered participants), as well as changes relating to the forms of
benefit available for all current and future participants.
On November 10, 2009, our board of
directors approved additional amendments effective January 1, 2010, to (1)
exclude performance-based restricted stock awards from the definition of final
average compensation of grandfathered participants, (2) change the formulas used
to compute benefits for grandfathered participants after 2009, (3) provide that
for both benefit accrual and vesting credit, service will be determined based on
the number of months elapsed from the later of a participants entry into the
plan and January 1, 1989, and subject, in the case of vesting, to a schedule set
forth in the Supplemental Officers Retirement Plan, and (4) provide that
effective after December 31, 2009, our chief executive officer would no
longer be able to grant service credit in
his discretion to Supplemental Officers Retirement Plan participants who are
involuntarily terminated or who receive severance from the company.
In January 2014, our board of directors
approved an amendment to close the Supplemental Officers Retirement Plan to new
participants beginning in January 2014.
All participants must have at least five
years of service to receive any benefit under the Supplemental Officers
Retirement Plan. After 10 years of service, a participant will qualify for the
full annual benefit. We refer to the percentage of the benefit that has been
earned by a participant as the vested percentage. The vested percentage is
determined using a schedule set forth in the Supplemental Officers Retirement
Plan.
Supplemental Officers Retirement Plan
benefits begin on the earliest of (i) the later of attainment of age 60 and the
first day of the seventh month following separation from service, (ii)
disability, and (iii) death. Participants can receive their benefits in the form
of a single life annuity, a 25%, 50%, 75%, or 100% joint and survivor annuity
with a beneficiary, or a ten-year certain and life annuity. Subject to rules
required under Section 409A of the Code, participants may generally also elect
to have either 25% or 50% of their benefits paid in a single lump sum. A
participant who terminates employment by reason of disability is eligible to
receive an unreduced benefit payable as of the participants termination. Upon
the death of a participant, the participants surviving spouse or other
designated beneficiary is eligible to receive a 50% survivor
51 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Compensation of Executive
Officers |
|
benefit, payable as a life annuity or, if
elected, a guaranteed payment for 120 months only. Under certain circumstances,
annual benefits are subject to reduction for payments from social security, the
Pension Retirement Plan, and the Retirement and Savings Plan, and any retirement
benefits from a former or subsequent employer of the participant.
For grandfathered participants, prior to
January 1, 2010, the amount of the annual benefit is determined by multiplying
the average annual compensation of a participant for the five full consecutive
calendar years during which he received the highest amount of compensation (we
refer to such average annual compensation as final average annual pay) by a
factor of 1.5%, the number of years of service, and the participants vested
percentage. The maximum annual plan benefit that may be paid to grandfathered
participants was limited to 25% of a participants final average annual pay
(which we express as a maximum service period of 16.67 years).
Since January 1, 2010, the Supplemental
Officers Retirement Plan benefits of Ms. Lee and
Mr. Anenen, who are grandfathered participants, are equal to the product of (i)
the participants final average annual pay, (ii) future service period up to
18.75 years, (ii) 2.4%, and (iv) the participants vested percentage. The annual
plan benefit for each of Ms. Lee and Mr. Anenen cannot exceed 45% of the
participants final average annual pay.
A grandfathered participants benefit
under the Supplemental Officers Retirement Plan will
not be less than the participants benefit determined as of December 31, 2009,
taking into account the participants actual vesting service through the date of
the participants termination of employment.
Early retirement benefits for
grandfathered participants will be calculated using the factors applicable to
non-grandfathered participants, except when determining the protected early
retirement benefit accrued as of December 31, 2009.
For grandfathered participants,
compensation covered under the Supplemental Officers Retirement Plan includes
base salary and bonus amounts (paid or deferred) and,
for periods before January 1, 2010,
compensation realized from restricted stock vesting during the fiscal year. A
grandfathered participant whose benefit payments begin before the first day of
the month on or after the participants 65th birthday will receive payments
which are reduced at a rate of 5/12 of 1% per month for each full month by which
the participants benefit commencement precedes the participants 65th
birthday.
For non-grandfathered participants, the
amount of the annual benefit is determined by multiplying such participants
final average annual pay by a factor of 2%, the number of years of service (up
to 20 years), and the participants vested percentage. For non-grandfathered
participants with more than 20 years of service only, added to that first amount
will be an amount equal to such participants final average annual pay
multiplied by 1%, up to five additional years of service, and the participants
vested percentage. Final average annual pay for non-grandfathered participants
will be based on salary, bonuses, and incentive payment awards, excluding
restricted stock and other stock-based awards. The maximum annual plan benefit
that may be paid to non-grandfathered participants will be limited to 45% of a
participants final average annual pay. A non-grandfathered participant whose
benefit payments begin before the first day of the month on or after the
participants 65th birthday will receive payments which are reduced at a rate of
4/12 of 1% per month for each month (up to 36 months) by which the participants
benefit commencement precedes the participants 65th birthday, and, if
applicable, further reduced at a rate of 5/12 of 1% for each month by which the
benefit commencement precedes the participants 62nd birthday. Non-grandfathered
participants cannot receive a benefit less than the benefit they had accrued on
December 31, 2008, under the formula applicable to grandfathered
participants.
If within 24 months after a participants
employment terminates he violates the non-competition provisions of any
agreement such participant has entered into with the company, such participant
will forfeit all of his or her benefits under the Supplemental Officers
Retirement Plan.
Automatic Data Processing, Inc. Proxy Statement |
| |
52 |
Table of Contents
Compensation of Executive
Officers |
|
Deferred Compensation Program
Under the ADP Deferred Compensation Plan,
all U.S. executives of the company (including the named executive officers) can
defer into a deferred compensation account all or a portion of their annual cash
bonuses. They can choose two investment options for their cash bonus deferrals:
a fixed income fund or a fund designed to track the performance of the Standard
& Poors index of 500 leading U.S. companies. The fixed fund rate is adjusted each
fiscal year. For fiscal year 2014, the fixed fund rate was 1.75%. The company
does not match deferrals by the named executive officers or otherwise contribute
any amounts to their deferred compensation accounts.
The program does not allow changes to the
investment fund choice once the annual deferral is made to the account. Each
participant has the option of making a one-time election changing the timing
and/or the form
of distributions from his or her account.
Any such change is required to comply with the redeferral rules in effect
under Section 409A of the Code and may be used only to delay the timing and/or
change the number of payments to be received. Participants may elect to receive
payments of their deferred funds or stock either in a lump sum payment or in
installments. However, in the event of death, disability, or termination of
employment prior to age 65, or age 55 with 10 years of service, payments are
made in a lump sum regardless of a participants election. Deferred funds and
the earnings on such deferrals made for fiscal year 2005 and later may be
distributed to a participant following separation from service only after a
six-month delay. Distributions are subject to federal, state, and local income
taxes on both the principal amount and investment earnings at the ordinary
income rate in the year in which such payments are made.
Non-Qualified Deferred Compensation for
Fiscal Year 2014
|
|
Executive |
|
Aggregate |
|
Aggregate |
|
|
Contributions in |
|
Earnings in |
|
Balance at |
Name |
|
2014(1) |
|
2014(2) |
|
June 30,
2014(3) |
(a) |
|
(b) |
|
(d) |
|
(f) |
Carlos A. Rodriguez |
|
|
$0 |
|
|
|
$73,457 |
|
|
|
$543,439 |
|
Jan
Siegmund |
|
|
$121,170 |
|
|
|
$206,192 |
|
|
|
$1,275,745 |
|
Regina R. Lee |
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
Steven J. Anenen |
|
|
$166,363 |
|
|
|
$225,656 |
|
|
|
$2,186,942 |
|
Dermot J. OBrien |
|
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
Footnotes: |
(1) |
The amounts listed in column
(b) reflect 25%, and 50% of the annual bonuses for fiscal year 2013 that
were payable in fiscal year 2014, but which were deferred by Messrs.
Siegmund and Anenen, respectively; the amounts for Messrs. Siegmund and
Anenen were reported as compensation in the Summary Compensation Table for
fiscal year 2013. In addition, 25% and 40% of the annual bonuses earned
for fiscal year 2014 by Messrs. Siegmund $112,420 and Anenen $156,408,
respectively, that were paid in August 2014 were also deferred; these
amounts were reported as compensation in the Summary Compensation Table
for fiscal year 2014. As the amount in respect of the fiscal year 2014
bonus was not deferred until after we concluded fiscal year 2014, such
amount is not included in columns (b) and (f). |
|
|
(2) |
The earnings amounts are not
reported as compensation in fiscal year 2014 in the Summary Compensation
Table, as they do not represent above-market or preferential earnings on
deferred compensation. |
|
(3) |
The following amounts were
previously reported as compensation in the Summary Compensation Table for
previous years: Mr. Siegmund, $228,720 and Mr. Anenen,
$579,513. |
53 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Potential Payments to Named
Executive Officers Upon Termination or Change in Control
Change in Control Severance Plan for
Corporate Officers
We maintain the Automatic Data Processing,
Inc., Change in Control Severance Plan for Corporate Officers, which provides
for the payment of specified benefits to officers selected by the board of
directors if their employment terminates under certain circumstances after a
change in control of the company. All named executive officers participate in
the change in control plan. As of June 30, 2014, there were 31 eligible
participants in the change in control plan.
During fiscal year 2014, the change in
control plan provided for the following:
- Participants who are involuntarily terminated by
the company without cause or who leave for good
reason during the two-year period following the
occurrence of a change in control will
receive:
- A lump sum payment equal to 150% of such
participants current total annual compensation;
- Full vesting of his or her stock
options;
- Full vesting of restricted shares issued under the
time-based restricted stock program, to the extent that such vesting
restrictions would otherwise have lapsed within two years after the date of
termination; and
- The number of restricted shares the participant
would have been entitled to receive under the then ongoing performance-based
restricted stock programs had the performance goals been achieved at 100%
target rate.
- Participants who are involuntarily terminated by
the company without cause or who leave for good
reason during the third year following the
occurrence of a change in control will
receive:
- A lump sum payment equal to 100% of such
participants current total annual compensation;
- Full vesting of his or her stock
options, to the extent that such options would have otherwise vested within
one year after the date of termination; and
- Full vesting of restricted shares issued under the
time-based restricted stock program, to the extent that such vesting
restrictions would otherwise have lapsed within one year after the date of
termination.
A participants current total annual
compensation equals his or her highest rate of annual salary during the calendar
year in which his or her employment terminates or the year immediately prior to
the year of such termination, plus his or her average annual bonus compensation
earned in respect of the two most recent calendar years immediately preceding
the calendar year in which his or her employment terminates.
The change in control plan defines good
reason as the occurrence of any of the following events after a change in
control without the participants written consent:
- material diminution in the value and importance of
a participants position, duties,
responsibilities, or authority as of the date
immediately prior to the change in control;
or
- a reduction in a participants aggregate
compensation or benefits; or
- a failure of any successor of the company to
assume in writing the obligations under the
change in control plan.
The change in control plan defines cause
as:
- gross negligence or willful misconduct by a
participant, which is materially injurious to
the company, monetarily or otherwise;
- misappropriation or fraud with regard to the
company or its assets; or
- conviction of, or the pleading of guilty or
nolo contendere to, a felony involving the
assets or business of the company.
Automatic Data Processing, Inc. Proxy Statement |
| |
54 |
Table of Contents
Potential Payments to Named Executive Officers
Upon Termination or Change in Control |
|
The change in control payments potentially
due to Ms. Lee and Messrs. Anenen and Siegmund are payable solely pursuant to
the terms of the change in control plan. However, Messrs. Rodriguez and OBrien
are each entitled to receive the greater of the benefits and payments provided
under the change in control plan and/or their employment agreements. Certain
terms of Messrs. Rodriguezs and OBriens employment agreement are summarized
below and on pages 56 and 57 of this proxy statement.
A change in control will have occurred
under the change in control plan if:
- any person (as defined in Section 3(a)(9) of
the Exchange Act), excluding the company, any
subsidiary of the company, or any employee
benefit plan sponsored or maintained by the
company (including any trustee of any such plan
acting in its capacity as trustee), becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of securities of the company
representing 35% or more of the total combined
voting power of the companys then-outstanding
securities;
- there occurs a merger, consolidation, or other
business combination of the company (a
transaction), other than a transaction
immediately following which the stockholders of
the company, immediately prior to the
transaction, continue to be the beneficial owners of securities of the resulting entity representing more than 65% of the voting power in the resulting entity,
in substantially the same proportions as their
ownership of the company voting securities
immediately prior to the transaction; or
- there occurs the sale of all or substantially all
of the companys assets, other than a sale
immediately following which the stockholders of
the company immediately prior to the sale are
the beneficial owners of securities of the purchasing entity representing more than 65% of the voting power in the purchasing entity, in
substantially the same proportions as their
ownership of the company voting securities
immediately prior to the transaction.
If instructed by a participant, the
company will reduce payments under the change in control plan to avoid the
application of excise taxes pursuant to Section 4999 of the Internal Revenue
Code.
On August 5, 2014, the company amended the
change in control plan as follows:
- The window of severance protection following a
change in control was reduced from three years
to two years, and for Mr. Rodriguez only, the
severance payment was preserved at 200% of his
current total annual compensation as provided
in his employment agreement.
- The treatment of outstanding equity awards
was amended to provide that all time-vested
awards would become fully vested upon a
termination of employment under the plan, and
that all performance-vested awards would become
vested at the target rate.
- The reduction of amounts payable under the plan
to avoid excise taxes pursuant to Section 4999
of the Internal Revenue Code was made mandatory
for all participants unless the after-tax
amount to be received by a participant without
such a reduction would be greater than the
after-tax amount that would be received after
such reduction.
- All payments under the plan were made
conditioned upon the participants execution of
a release of claims in favor of the
company.
- The cause definition under the plan was amended
to include a willful and continued failure to
substantially perform ones duties after
written notice by the board of
directors.
- The good reason definition was revised to
include only the following
prongs:
- A material diminution in the participants
position, duties, responsibilities, or authority as of the date immediately
prior to the change in control; or
- a reduction in a participants base compensation
or a failure to provide incentive compensation opportunities at least as
favorable in the aggregate as those provided immediately prior to the change
in control; or
- a failure to provide employee benefits at least as
favorable in the aggregate as those provided immediately prior to the change
in control; or
- a failure of any successor of the company to
assume in writing the obligations under the change in control
plan.
55 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Potential Payments to Named Executive Officers
Upon Termination or Change in Control |
|
Employment Agreement with Mr.
Rodriguez
Mr. Rodriguez entered into an employment
agreement with the company on December 14, 2011. The employment agreement
provides that the companys obligation to make payments to Mr. Rodriguez will
cease on the date he is terminated for cause, i.e., if he has:
- been convicted of or pled nolo contendere to a
criminal act for which the punishment under applicable law may be imprisonment
for more than one year;
- willfully or recklessly failed or refused to
perform his material obligations as president and chief executive
officer;
- committed any act or omission of gross negligence
in the performance of his material duties under the employment
agreement;
- committed any act of willful or reckless
misconduct;
- violated any of his restrictive covenants;
or
- violated either the companys code of business
conduct and ethics, or the companys code of ethics for principal executive
officer and senior financial officers.
If Mr. Rodriguezs employment is
terminated for any reason other than for cause (as described above), and other
than due to death or permanent or serious disability or his resignation from the
company for any reason, Mr. Rodriguez will receive (subject to his delivery of
an irrevocable release of claims against the company):
- an amount (in addition to any previously accrued
but unpaid amounts) equal to 2.6 times his annual salary for the fiscal year
of termination, payable in monthly installments over 12 months; and
- a bonus for the fiscal year of termination that he
would have otherwise received if his employment had not been terminated, based
upon his (and to the extent applicable, the companys) actual full-year
performance, as determined by the compensation committee, prorated to reflect
the portion of the fiscal year worked through the date of
termination.
If Mr. Rodriguez dies or becomes
permanently and seriously disabled, either physically or mentally, so that he is
absent from his office due to such disability and otherwise unable substantially
to perform his services under the employment agreement, the company may
terminate his employment. Under such circumstances, the company will continue to
pay Mr. Rodriguezs full compensation up to and including the effective date of
his termination upon his death or for disability.
If Mr. Rodriguez elects to voluntarily
resign from the company for any reason, the company will continue to pay Mr.
Rodriguezs full compensation up to the date his employment ends.
Mr. Rodriguezs employment agreement
provides that he will continue to participate in the change in control plan
described above. Following a change in control of ADP, as defined under the
plan, and a subsequent termination of Mr. Rodriguezs employment by the company
without cause, or by Mr. Rodriguez for good reason, Mr. Rodriguez will be
entitled to the greater of the benefits and payments under the change in control
plan (based on a severance benefit multiple of 200%) and his employment
agreement.
Mr. Rodriguez has also agreed to comply
with certain restrictive covenants, including non-competition, non-solicitation,
and non-hire covenants that apply for two years following termination of his
employment.
Automatic Data Processing, Inc. Proxy Statement |
| |
56 |
Table of Contents
Potential Payments to Named Executive Officers
Upon Termination or Change in Control |
|
Employment Agreement with Mr.
OBrien
Mr. OBrien entered into an employment
agreement with the company on March 15, 2012. The employment agreement provides
that the companys obligation to make payments to Mr. OBrien will cease on the
date he is terminated for cause, i.e., if he has:
- been convicted of or pled nolo contendere to a
criminal act for which the punishment under
applicable law may be imprisonment for more
than one year;
- willfully or recklessly failed or refused to
perform his material obligations as corporate vice president of human
resources;
- committed any act or omission of gross
negligence in the performance of his material duties under the employment
agreement;
- committed any act of willful or reckless
misconduct in the performance of his material duties under the employment
agreement;
- violated any of his restrictive covenants;
or
- violated the companys code of business conduct and
ethics.
If Mr. OBriens employment is terminated
by the company for any reason other than for cause (as described above), or by
his resignation from the company for good reason (as described below), Mr.
OBrien will receive (subject to his delivery of an irrevocable release of
claims against the company):
- an amount (in addition to any previously accrued
but unpaid amounts) equal to the sum of his annual salary and target bonus,
payable within 10 days after the effective date of the release of claims;
and
- a bonus for the fiscal year of termination that he
would have otherwise received if his employment had not been terminated, based
upon his (and to the extent applicable, the companys) actual full-year
performance, as determined by the compensation committee, prorated to reflect
the portion of the fiscal year worked through the date of
termination.
Mr. OBriens employment agreement defines
good reason as the occurrence of any of the following events:
- a material diminution in Mr. OBriens base salary
that is not part of a general reduction of base salary of the senior
management team, applied proportionately;
- a change in Mr. OBriens reporting line such that
he reports to someone other than the chief executive officer;
- a change in Mr. OBriens duties and authority
such that he no longer presides as the most senior executive with overall
responsibility for Human Resources;
- a reduction in Mr. OBriens pay grade level;
or
- a material breach by the company of Mr.
OBriens employment agreement or any other agreement to which he is a
party.
In addition, if such termination without
cause, or resignation for good reason, becomes effective prior to May 1, 2015,
then any unvested shares of his initial grant of time-based restricted stock and
shares of restricted stock granted in respect of the companys fiscal year 2013
PBRS program, as well as the unvested portion of his initial grant of stock
options, shall accelerate and vest in full, provided that any vested options
must be exercised within 60 days of the date of acceleration.
If Mr. OBrien dies or becomes permanently
and seriously disabled, either physically or mentally, so that he is absent from
his office due to such disability and otherwise unable substantially to perform
his services under the employment agreement, the company may terminate his
employment. Under such circumstances, the company will continue to pay Mr.
OBriens full compensation up to and including the effective date of his
termination upon his death or for disability.
57 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Potential Payments to Named Executive Officers
Upon Termination or Change in Control |
|
If Mr. OBrien elects to voluntarily
resign from the company for any reason (other than good reason), the company
will continue to pay Mr. OBriens full compensation up to the date his
employment ends.
Mr. OBriens employment agreement
provides that he will participate in the change in control plan described above,
and, as noted above, in the event of a change in control of
ADP, as defined under the plan, Mr.
OBrien will be entitled to the greater of the benefits and payments under the
change in control plan and his employment agreement.
Mr. OBrien has also agreed to comply with
certain restrictive covenants, including non-competition, non-solicitation, and
non-hire covenants that apply for two years following termination of his
employment.
Certain executives, including
the named executive officers, who terminate employment with the company after
they have attained age 55 and been credited with 10 years of service are
eligible to participate in the companys executive retiree medical
plan.
Under the ADP Deferred Compensation Plan,
all U.S. executives of the company (including the named executive officers) can
defer into a deferred compensation account all or a portion of their annual cash
bonuses to be payable following separation from the company. For a
description of the ADP Deferred
Compensation Plan and aggregate deferred compensation for our named executive
officers at June 30, 2014, see Deferred Compensation Program above.
Termination and Change in
Control Tables |
The following tables set forth the
payments that each of our named executive officers who were serving as executive
officers as of June 30, 2014, would have received under various termination
scenarios on June 30, 2014. Pension benefits, which are described under Pension
Benefits for Fiscal Year 2014 above, and deferred compensation balances, which
are described under Deferred Compensation Program above, are not included in
the tables below in accordance with applicable
information statement disclosure
requirements except to the extent of any incremental value payable in any of
such termination scenarios. With regard to the payments on a change in control,
the amounts detailed below presume that (x) the change in control includes a
change in control of the company and (y) each named executive officers
employment was terminated by the company without cause or by the executive for
good reason within two years following the change in control occurring on June
30, 2014.
Automatic Data Processing, Inc. Proxy Statement |
| |
58 |
Table of Contents
Potential Payments to Named Executive Officers
Upon Termination or Change in Control |
|
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
CARLOS A. RODRIGUEZ
|
Termination |
|
|
|
|
|
|
Involuntary |
|
|
|
Following Change |
|
|
|
|
|
|
Termination |
|
|
Payment Elements |
In Control |
|
Death |
|
Disability |
|
Without
Cause |
|
Retirement |
Termination Payment |
|
$4,699,560 |
(1) |
|
$0 |
|
$0 |
|
|
|
$3,811,680 |
(2) |
|
|
$0 |
Stock Options(3) |
|
$4,733,385 |
|
|
$4,733,385 |
|
$4,733,385 |
|
|
|
$0 |
|
|
|
$0 |
Restricted Stock(4) |
|
$5,748,514 |
|
|
$5,748,514 |
|
$5,748,514 |
|
|
|
$0 |
|
|
|
$0 |
Performance Stock Units(5) |
|
$2,664,522 |
|
|
$888,174 |
|
$888,174 |
|
|
|
$0 |
|
|
|
$0 |
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
$0 |
|
|
$0 |
|
$3,674,569 |
(6) |
|
|
$0 |
|
|
|
$0 |
Total |
|
$17,845,981 |
|
|
$11,370,073 |
|
$15,044,642 |
|
|
|
$3,811,680 |
|
|
|
$0 |
Footnotes: |
(1) |
Represents payment of two times each of (i) highest rate
of annual salary during the calendar year in which employment terminates
or the year immediately prior to the termination ($900,000) and (ii)
average annual bonus for the two most recently completed calendar years
($1,449,780). |
|
|
(2) |
Represents an amount equal to 2.6 times annual salary
($900,000) and actual annual bonus ($1,471,680). |
|
(3) |
Assumes all unvested options immediately vested and were
exercised on June 30, 2014 when the closing price of a share of common
stock of the company on the NASDAQ Global Select Market was $79.28 per
share. |
|
(4) |
Amounts include $3,083,992 attributable to the vesting
of the fiscal year 2013 PBRS program and $2,664,522 attributable to the
fiscal year 2014 PBRS program based on performance goals achieved at 100%
target rate. |
|
(5) |
Amount in the Termination Following a Change in Control
column represents amount attributable to the fiscal year 2014 PSU program
assuming performance goals of this program will be achieved at 100% target
rate. Amounts in the Death and Disability columns represent one-third of
the fiscal year 2014 PSU award based on performance goals achieved at 100%
target rate for fiscal year 2014 and an assumed achievement at target rate
for fiscal years 2015 and 2016. |
|
(6) |
Represents present value of the incremental benefit
using the RP-2000 white collar mortality table (projected generationally
using Scale AA) and a 4.05% discount rate, assuming disability occurring
on June 30, 2014. |
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
JAN SIEGMUND
|
|
Termination |
|
|
|
|
|
|
Involuntary |
|
|
|
|
Following Change |
|
|
|
|
|
|
Termination |
|
|
Payment Elements |
|
In Control |
|
Death |
|
Disability |
|
Without Cause |
|
Retirement |
Termination Payment |
|
|
$1,491,578 |
(1) |
|
$0 |
|
$0 |
|
|
$0 |
|
$0 |
Stock Options(2) |
|
|
$613,913 |
|
|
$613,913 |
|
$613,913 |
|
|
$0 |
|
$0 |
Restricted Stock(3) |
|
|
$1,545,960 |
|
|
$1,545,960 |
|
$1,545,960 |
|
|
$0 |
|
$0 |
Performance Stock Units(4) |
|
|
$951,360 |
|
|
$317,120 |
|
$317,120 |
|
|
$0 |
|
$0 |
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
$0 |
|
|
$0 |
|
$1,669,814 |
(5) |
|
$0 |
|
$0 |
Total |
|
|
$4,602,811 |
|
|
$2,476,993 |
|
$4,146,807 |
|
|
$0 |
|
$0 |
59 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Potential Payments to Named
Executive Officers Upon Termination or Change in
Control |
Footnotes:
(1) |
Represents payment of one and one-half times each of (i)
highest rate of annual salary during the calendar year in which employment
terminates or the year immediately prior to the termination ($550,001) and
(ii) average annual bonus for the two most recently completed calendar
years ($444,385). |
|
|
(2) |
Assumes all unvested options immediately vested and were
exercised on June 30, 2014 when the closing price of a share of common
stock of the company on the NASDAQ Global Select Market was $79.28 per
share. |
|
(3) |
Amounts include $594,600 attributable to the vesting of
the fiscal year 2013 PBRS program and $951,360 attributable to the fiscal
year 2014 PBRS program based on performance goals achieved at 100% target
rate. |
|
(4) |
Amount in the Termination Following a Change in Control
column represents amount attributable to the fiscal year 2014 PSU program
assuming performance goals of this program will be achieved at 100% target
rate. Amounts in the Death and Disability columns represent one-third of
the fiscal year 2014 PSU award based on performance goals achieved at 100%
target rate for fiscal year 2014 and an assumed achievement at target rate
for fiscal years 2015 and 2016. |
|
(5) |
Represents present value of the incremental benefit
using the RP-2000 white collar mortality table (projected generationally
using Scale AA) and a 4.05% discount rate, assuming disability occurring
on June 30, 2014. |
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
REGINA R. LEE
Payment Elements |
|
Termination Following
Change In Control |
|
Death |
|
Disability |
|
Involuntary Termination Without Cause |
|
Retirement |
Termination Payment |
|
$1,453,111 |
(1) |
|
$0 |
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
Stock Options(2) |
|
$746,963 |
|
|
$746,963 |
|
$746,963 |
|
|
|
|
|
|
|
$0 |
|
Restricted
Stock(3) |
|
$1,823,440 |
|
|
$1,823,440 |
|
$1,823,440 |
|
|
|
$0 |
|
|
|
$0 |
|
Performance Stock
Units(4) |
|
$872,080 |
|
|
$290,693 |
|
$290,693 |
|
|
|
$0 |
|
|
|
$290,693 |
|
Supplemental
Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
$0 |
|
|
$0 |
|
$1,293,347 |
(5) |
|
|
$0 |
|
|
|
$0 |
|
Health
Coverage(6) |
|
$165,000 |
|
|
$0 |
|
$165,000 |
|
|
|
$165,000 |
|
|
|
$165,000 |
|
Total |
|
$5,060,594 |
|
|
$2,861,096 |
|
$4,319,443 |
|
|
|
$165,000 |
|
|
|
$455,693 |
|
Footnotes:
(1) |
Represents payment of one and one-half times each of (i)
highest rate of annual salary during the calendar year in which employment
terminates or the year immediately prior to the termination ($530,503) and
(ii) average annual bonus for the two most recently completed calendar
years ($438,238). |
|
|
(2) |
Assumes all unvested options immediately vested and were
exercised on June 30, 2014 when the closing price of a share of common
stock of the company on the NASDAQ Global Select Market was $79.28 per
share. |
|
(3) |
Amounts include $951,360 attributable to the vesting of
the fiscal year 2013 PBRS program and $872,080 attributable to the fiscal
year 2014 PBRS program based on performance goals achieved at 100% target
rate. |
|
(4) |
Amount in the Termination Following a Change in Control
column represents amount attributable to the fiscal year 2014 PSU program
assuming performance goals of this program will be achieved at 100% target
rate. Amounts in the Death, Disability and Retirement columns represent
one-third of the fiscal year 2014 PSU award based on performance goals
achieved at 100% target rate for fiscal year 2014 and an assumed
achievement at target rate for fiscal years 2015 and 2016. In the event of
retirement, the actual payout would be made in September 2016 based on
actual performance for the three-year performance period. |
|
Automatic Data Processing, Inc. Proxy Statement |
| |
60 |
Table of Contents
Potential Payments to Named
Executive Officers Upon Termination or Change in
Control |
(5) |
Represents present value of the incremental benefit
using the RP-2000 white collar mortality table (projected generationally
using Scale AA) and a 4.05% discount rate, assuming disability occurring
on June 30, 2014. |
|
|
(6) |
Represents the present value of Ms. Lees health
coverage under our retiree medical plan using a discount rate of 3.80% and
a medical inflation rate beginning at 7.11% for 2014-2015 and ultimately
settling at 4.50% by 2028. |
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
STEVEN J. ANENEN
|
|
Termination |
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
Following Change |
|
|
|
|
|
|
Termination |
|
|
|
|
Payment Elements |
|
In Control |
|
Death |
|
Disability |
|
Without
Cause |
|
Retirement |
Termination Payment |
|
$1,248,558 |
(1) |
|
$0 |
|
$0 |
|
|
|
$0 |
|
|
|
$0 |
|
Stock Options(2) |
|
$549,315 |
|
|
$549,315 |
|
$549,315 |
|
|
|
$0 |
|
|
|
$0 |
|
Restricted Stock(3) |
|
$1,387,400 |
|
|
$1,387,400 |
|
$1,387,400 |
|
|
|
$0 |
|
|
|
$0 |
|
Performance Stock Units(4) |
|
$673,880 |
|
|
$224,627 |
|
$224,627 |
|
|
|
$0 |
|
|
|
$224,627 |
|
Supplemental Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
$0 |
|
|
$0 |
|
$549,031 |
(5) |
|
|
$0 |
|
|
|
$0 |
|
Health Coverage(6) |
|
$90,000 |
|
|
$0 |
|
$90,000 |
|
|
|
$90,000 |
|
|
|
$90,000 |
|
Total |
|
$3,949,153 |
|
|
$2,161,342 |
|
$2,800,373 |
|
|
|
$90,000 |
|
|
|
$314,627 |
|
Footnotes:
(1) |
Represents payment of one and one-half times each of (i)
highest rate of annual salary during the calendar year in which employment
terminates or the year immediately prior to the termination ($475,004) and
(ii) average annual bonus for the two most recently completed calendar
years ($357,368). |
|
|
(2) |
Assumes all unvested options immediately vested and were
exercised on June 30, 2014 when the closing price of a share of common
stock of the company on the NASDAQ Global Select Market was $79.28 per
share. |
|
(3) |
Amounts include $713,520 attributable to the vesting of
the fiscal year 2013 PBRS program and $673,880 attributable to the fiscal
year 2014 PBRS program based on performance goals achieved at 100% target
rate. |
|
(4) |
Amount in the Termination Following a Change in Control
column represents amount attributable to the fiscal year 2014 PSU program
assuming performance goals of this program will be achieved at 100% target
rate. Amounts in the Death, Disability and Retirement columns represent
one-third of the fiscal year 2014 PSU award based on performance goals
achieved at 100% target rate for fiscal year 2014 and an assumed
achievement at target rate for fiscal years 2015 and 2016. In the event of
retirement, the actual payout would be made in September 2016 based on
actual performance for the three-year performance period. |
|
(5) |
Represents present value of the incremental benefit
using the RP-2000 white collar mortality table (projected generationally
using Scale AA) and a 4.05% discount rate, assuming disability occurring
on June 30, 2014. |
|
(6) |
Represents the present value of Mr. Anenens health
coverage under our retiree medical plan using a discount rate of 3.80% and
a medical inflation rate beginning at 7.11% for 2014-2015 and ultimately
settling at 4.50% by 2028. |
61 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Potential Payments to Named
Executive Officers Upon Termination or Change in
Control |
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
DERMOT J. OBRIEN
Payment Elements |
|
Termination Following
Change In Control |
|
Death |
|
Disability |
|
Involuntary Termination Without Cause |
|
Retirement |
Termination Payment |
|
$1,147,284 |
(1) |
|
$0 |
|
$0 |
|
|
$829,601 |
(2) |
|
$0 |
Stock Options(3) |
|
$653,715 |
|
|
$653,715 |
|
$653,715 |
|
|
$653,715 |
|
|
$0 |
Restricted
Stock(4) |
|
$1,585,600 |
|
|
$1,347,760 |
|
$1,347,760 |
|
|
$911,720 |
|
|
$0 |
Performance Stock
Units(5) |
|
$673,880 |
|
|
$224,627 |
|
$224,627 |
|
|
$0 |
|
|
$0 |
Supplemental
Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plan |
|
$0 |
|
|
$0 |
|
$560,882 |
(6) |
|
$0 |
|
|
$0 |
Total |
|
$4,060,479 |
|
|
$2,226,102 |
|
$2,786,984 |
|
|
$2,395,036 |
|
|
$0 |
Footnotes:
(1) |
Represents payment of one and one-half times each of (i)
highest rate of annual salary during the calendar year in which employment
terminates or the year immediately prior to the termination ($488,001) and
(ii) average annual bonus for the two most recently completed calendar
years ($276,855). |
|
|
(2) |
Represents an amount equal to one times annual salary
($488,001) and target bonus ($332,500). |
|
(3) |
Assumes all unvested options immediately vested and were
exercised on June 30, 2014 when the closing price of a share of common
stock of the company on the NASDAQ Global Select Market was $79.28 per
share. |
|
(4) |
Amount in the Termination Following Change in Control
column includes $237,840 attributable to the vesting of time-based
restricted stock, $673,880 attributable to the vesting of the fiscal year
2013 PBRS program and $673,880 attributable to the fiscal year 2014 PBRS
program based on performance goals achieved at 100% target rate. Amounts
in the Death and Disability columns include $673,880 attributable to the
vesting of the fiscal year 2013 PBRS program and $673,880 attributable to
the fiscal year 2014 PBRS program based on performance goals achieved at
100% target rate. Amount in the Involuntary Termination Without Cause
column includes $237,840 attributable to the vesting of time-based
restricted stock and $673,880 attributable to the vesting of the fiscal
year 2013 PBRS program. |
|
(5) |
Amount in the Termination Following a Change in Control
column represents amount attributable to the fiscal year 2014 PSU program
assuming performance goals of this program will be achieved at 100% target
rate. Amounts in the Death and Disability columns represent one-third of
the fiscal year 2014 PSU award based on performance goals achieved at 100%
target rate for fiscal year 2014 and an assumed achievement at target rate
for fiscal years 2015 and 2016. |
|
(6) |
Represents present value of the incremental benefit
using the RP-2000 white collar mortality table (projected generationally
using Scale AA) and a 4.05% discount rate, assuming disability occurring
on June 30, 2014. |
|
Ms. Lees Separation Agreement |
In April 2014, the company entered into a
Separation Agreement and Release with Ms. Lee regarding her departure from the
company to be effective December 31, 2014. In consideration for her 32 years of
dedication to the company, a customary release of claims against the company,
and her continued compliance with customary post-departure restrictive
covenants, Ms. Lee will be entitled to receive (i) a separation payment of
$530,500 paid out in twelve equal monthly installments on the
companys regular monthly payroll dates
beginning on her departure date, (ii) a bonus payment in accordance with the
companys customary cycle (based upon a full year target bonus of $424,000) in
respect of the 2014 fiscal year in accordance with achievement of associated
performance objectives, (iii) a cash payment of $212,000, as a bonus in respect
of the first six months of the 2015 fiscal year, payable on or prior to her
departure date, (iv) 12,000 shares awarded under the PBRS program in September
2012 (with
Automatic Data Processing, Inc. Proxy Statement |
| |
62 |
Table of Contents
Potential Payments to Named
Executive Officers Upon Termination or Change in
Control |
vesting of such shares to occur in
September 2014), (v) any shares earned in respect of the September 2013 target
award of 11,000 PBRS shares, subject to the achievement of the companys
performance goals applicable to such award, with vesting of such shares to occur
in September 2015, (vi) 30/36 of the share units earned in respect of the
September 2013 target award of 11,000 units under the PSU program, subject to
the achievement of the companys performance goals applicable to such award,
with any such award to be paid within 20 business days of September 1, 2016,
(vii) continued vesting through December 31, 2018, of all unvested outstanding
stock options, with all vested
stock options remaining exercisable until
the earlier of their scheduled expiration date and January 31, 2019 (or January
31, 2018, in the case of the stock option grant dated January 31, 2008), (viii)
her company-provided car through December 31, 2015, and (ix) reimbursement for
the costs associated with the closing of the sale of her home in Morristown, New
Jersey, and the moving of her household goods from her Morristown, New Jersey,
home to another location agreed to by the company, up to a total of
$125,000.
63 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Audit Committee Report
The audit committee oversees the financial
management of the company, the companys independent auditors and financial
reporting procedures of the company on behalf of the board of directors. In
fulfilling its oversight responsibilities, the committee reviewed and discussed
the companys audited financial statements with management, which has primary
responsibility for the preparation of the financial statements. In performing
its review, the committee discussed the propriety of the application of
accounting principles by the company, the reasonableness of significant
judgments and estimates used in the preparation of the financial statements, and
the clarity of disclosures in the financial statements. Management represented
to the audit committee that the companys financial statements were prepared in
accordance with generally accepted accounting principles. The committee also
reviewed and discussed the companys audited financial statements with Deloitte
& Touche LLP, an independent registered public accounting firm, the
companys independent auditors for fiscal year 2014, which is responsible for
expressing an opinion on the conformity of the companys audited financial
statements with generally accepted accounting principles in accordance with
standards of the Public Company Accounting Oversight Board.
During the course of fiscal year 2014,
management completed the documentation, testing and evaluation of the companys
system of internal control over financial reporting in response to the
requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and
related regulations. The audit committee was kept apprised of the progress of
the evaluation and provided oversight and advice to management during the
process. In connection with this oversight, the audit committee received
periodic updates provided by management and Deloitte & Touche LLP at each
audit committee meeting. At the conclusion of the process, management provided
the audit committee with, and the audit committee reviewed, a report on the
effectiveness of the companys internal control over financial reporting. The
audit committee also reviewed the report of management contained in the annual
report on Form 10-K for the fiscal year ended June 30, 2014 filed with the SEC,
as well as Deloitte & Touche LLPs Report of Independent Registered Public
Accounting Firm included in the annual report on Form 10-K for the fiscal year
ended June 30, 2014 related to its audit of the consolidated financial
statements and financial statement schedule, and the effectiveness of internal
control over financial reporting. The audit committee continues to oversee the
companys efforts related to its internal control over financial reporting and
managements preparations for the evaluation in fiscal year 2015.
The audit committee has discussed with
Deloitte & Touche LLP the matters that are required to be discussed by
Public Accounting Oversight Board Auditing Standard No. 16 (Communications with
Audit Committees) and the SEC Rule 207. Deloitte & Touche LLP has provided
to the committee the written disclosures and the letter required by applicable
requirements of the Public Company Accounting Oversight Board regarding Deloitte &
Touche LLPs communications with the audit committee concerning independence,
and the committee discussed with Deloitte & Touche LLP the firms
independence, including the matters in those written disclosures. The committee
also considered whether Deloitte & Touche LLPs provision of non-audit
services to the company and its affiliates and the fees and costs billed and
expected to be billed by Deloitte & Touche LLP for those services, is
compatible with Deloitte & Touche LLPs independence. The audit committee
has discussed with the companys internal auditors and with Deloitte &
Touche LLP, with and without management present, their respective evaluations of
the companys internal accounting controls and the overall quality of the
companys financial reporting.
In addition, the committee discussed with
management, and took into consideration when issuing this report, the Auditor
Independence Policy, which prohibits the company or any of its affiliates from
entering into most non-audit related consulting arrangements with its
independent auditors. The Auditor Independence Policy is discussed in further
detail below under Independent Registered Public Accounting Firms
Fees.
Automatic Data Processing, Inc. Proxy Statement |
| |
64 |
Table of Contents
Based on the considerations referred to
above, the audit committee recommended to the board of directors that the
audited financial statements be included in our annual report on Form 10-K for
the fiscal year ended June 30, 2014. In addition, the committee appointed
Deloitte & Touche LLP as the independent auditors for the company for the
fiscal year 2015, subject to the ratification by the stockholders at the 2014
Annual Meeting of Stockholders.
Audit Committee of the Board of
Directors
Eric C. Fast, Chairman
Gregory D.
Brenneman
Richard T. Clark
Linda R. Gooden
R. Glenn Hubbard
65 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Independent Registered Public
Accounting
Firms Fees
In addition to retaining Deloitte &
Touche LLP to audit the consolidated financial statements for fiscal year 2014,
the audit committee retained Deloitte & Touche LLP to provide
various services in fiscal year 2014 and
fiscal year 2013. The aggregate fees billed by Deloitte & Touche LLP in
fiscal year 2014 and fiscal year 2013 for these various services
were:
Type of Fees |
|
FY 2014 |
|
FY 2013 |
|
|
($ in
thousands) |
Audit Fees |
|
|
$8,547 |
|
|
|
$8,148 |
|
Audit-Related Fees |
|
|
5,545 |
|
|
|
1,784 |
|
Tax
Fees |
|
|
2,551 |
|
|
|
1,541 |
|
All
Other Fees |
|
|
42 |
|
|
|
242 |
|
Total |
|
|
$16,685 |
|
|
|
$11,715 |
|
In the above table, in accordance with the
SEC definitions, audit fees are fees we paid Deloitte & Touche LLP for
professional services for the audit of the companys consolidated financial
statements included in our annual report on Form 10-K and review of financial
statements included in our quarterly reports on Form 10-Q, services that are
normally provided by Deloitte & Touche LLP in connection with statutory and
regulatory filings or engagements or any other services performed by Deloitte
& Touche LLP to comply with generally accepted auditing standards;
audit-related fees are fees billed by Deloitte & Touche LLP for assurance
and related services that are typically performed by the independent public
accountant (e.g., due diligence services, employee benefit plan audits and
internal control reviews), and audit services rendered in connection with the
planned spin-off of the companys Dealer Services business; tax fees are fees
for tax compliance, tax advice and tax planning, and tax services rendered in
connection with the planned spin-off of the companys Dealer Services business;
and all other fees are fees billed by Deloitte & Touche LLP to the company
for any services not included in the first three categories.
The board of directors has adopted an
auditor independence policy that prohibits our independent auditors from
providing:
- bookkeeping or other services related to the
accounting records or financial statements of
the company;
- financial information systems design and
implementation services;
- appraisal or valuation services, fairness opinions
or contribution-in-kind reports;
- actuarial services;
- internal audit outsourcing services;
- management functions or human resources
services;
- broker or dealer, investment adviser or
investment banking services;
- legal services and expert services unrelated to
the audit; and
- any other service that the Public Company
Accounting Oversight Board or the Securities
and Exchange Commission determines, by
regulation, is impermissible.
The audit committee has adopted a policy
requiring that all audit, audit-related and non-audit services be pre-approved
by the audit committee. All services provided to us by the independent auditors
in fiscal year 2014 and fiscal year 2013 were pre-approved by the audit
committee. The independent auditors may only perform non-prohibited non-audit
services that have been specifically approved in advance by the audit committee,
regardless of the dollar value of the services to be provided. In addition,
before the audit committee will consider granting its approval, the companys
management must have determined that such specific non-prohibited non-audit
services can be best performed by the independent auditors based on its in-depth
knowledge of our business, processes and policies. The audit committee, as part
of its approval process, considers the potential impact of any proposed work on
the independent auditors independence.
Automatic Data Processing, Inc. Proxy Statement |
| |
66 |
Table of Contents
|
Proposal
3 Appointment of Independent
Registered Public Accounting Firm |
At the Annual Meeting, stockholders will
vote on the ratification of the appointment by the audit committee of Deloitte
& Touche LLP, an independent registered public accounting firm, as the
independent certified public accountants to audit the accounts of the company
and its subsidiaries for the fiscal year that began on July 1, 2014. Deloitte
& Touche LLP is a member of the SEC Practice Section of the American
Institute of Certified Public Accountants. A representative of Deloitte &
Touche LLP will be present at the Annual Meeting and will have an opportunity to
make a statement if he or she desires. He or she will be available to answer
appropriate questions.
Stockholder Approval Required |
The affirmative vote of the holders of a
majority of the shares present in person or by proxy and entitled to vote
thereon at the meeting of stockholders is required to ratify Deloitte &
Touche LLPs appointment as the companys independent auditors.
|
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE COMPANYS INDEPENDENT
AUDITORS. |
67 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
Section 16(a) Beneficial Ownership
Reporting Compliance
We believe that during the fiscal year
ended June 30, 2014, all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934, as amended, applicable to our non-employee
directors and beneficial owners have been complied with. We also believe that
during the fiscal year
ended June 30, 2014, all such filing
requirements applicable to our officers have been complied with, except that
there was an inadvertent omission to timely file a Form 4 on behalf of Mr.
Joseph H. Timko, which was subsequently remedied by filing a Form 4 on August
13, 2013.
Stockholder Proposals
If a stockholder intends to submit any
proposal for inclusion in the companys proxy statement for the companys 2015
Annual Meeting of Stockholders in accordance with Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, the proposal must be received by
the corporate secretary of the company no later than May 28, 2015. To be
eligible to submit such a proposal for inclusion in the companys proxy
materials for an annual meeting of stockholders pursuant to Rule 14a-8, a
stockholder must be a holder of either: (1) at least $2,000 in market value or
(2) 1% of the companys shares of common stock entitled to be voted on the
proposal, and must have held such shares for at least one year, and continue to
hold those shares through the date of such annual meeting. Such proposal must
also meet the other requirements of the rules of the Securities and Exchange
Commission relating to stockholders proposals, including Rule 14a-8, including
the permissible number and length of proposals, the circumstances in which the
company is permitted to exclude proposals and other matters governed by such
rules and regulations.
Separate from the requirements of Rule
14a-8, relating to the inclusion of a stockholders proposal in the companys
proxy statement, the companys amended and restated by-laws require advance
notice for a stockholder to bring nominations of directors or any other business
to be considered at any annual meeting of stockholders. Specifically, our
amended and restated by-laws require that stockholders wishing to nominate
candidates for election as directors or propose any other business to be
considered at our 2015 Annual Meeting of Stockholders must notify the company of
their intent in a written notice delivered
to the company in care of the companys
corporate secretary at our principal executive offices not less than 90 nor more
than 120 days before the first anniversary of the date of the 2014 Annual
Meeting of Stockholders, or November 11, 2015.
As a result, in order for the notice given
by a stockholder to comply with our amended and restated by-laws, it must be
received no earlier than July 14, 2015, and no later than the close of business
(5:30 p.m. Eastern Daylight Time) on August 13, 2015, unless the date of our
2015 Annual Meeting of Stockholders occurs more than 30 days before or 60 days
after the first anniversary of the 2014 Annual Meeting of Stockholders. In that
case, our amended and restated bylaws provide that we must receive the notice no
earlier than the close of business on the 120th day prior to the date
of the 2015 Annual Meeting of Stockholders and not later than the close of
business on the later of the 90th day prior to the date of the 2015
Annual Meeting of Stockholders or the tenth day following the day on which we
first make a public announcement of the date of the meeting. To be in proper
form, a stockholders notice must also include the specified information
described in our amended and restated bylaws. You may contact our corporate
secretary at our principal executive offices for a copy of the relevant bylaw
provisions regarding the requirements for making stockholder proposals and
nominating director candidates.
If a stockholders nomination or proposal
is not in compliance with the requirements set forth in our amended and restated
by-laws, the company may disregard such nomination or
proposal.
Automatic Data
Processing, Inc. Proxy
Statement |
| |
68 |
Table of Contents
Electronic Delivery of Future Stockholder
Communications
If you receive this proxy statement and
our annual report on Form 10-K for the fiscal year ended June 30, 2014 by mail,
we strongly encourage you to elect to view future proxy statements and annual
reports over the Internet and save the company the cost of producing and mailing
these documents. If you vote your shares over the Internet this year, you will
be given the opportunity to choose electronic access at the time you vote. You
can also choose electronic access by visiting the Investor Relations section of
our website at www.adp.com, or following the instructions that you will receive in
connection with next years annual meeting of stockholders. Stockholders who
choose electronic access will receive an e-mail next year containing the
Internet address to use to access the proxy statement and annual report on Form
10-K. Your choice will remain in effect until you cancel it. You do not have to
elect Internet access each year.
For the Board of
Directors |
|
Michael A. Bonarti |
Secretary |
Roseland, New Jersey
September 25,
2014
69 |
| |
Automatic Data Processing, Inc. Proxy Statement |
Table of Contents
AUTOMATIC DATA PROCESSING, INC.
1 ADP
BOULEVARD
ROSELAND, NJ
07068
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet
to transmit your voting instructions and for electronic delivery of information
up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand
when you call and follow the instructions.
VOTE BY
MAIL
Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ADMISSION
TICKET
Please retain and present this
top portion of the proxy card as your admission ticket together with a
valid picture identification to gain admittance to the Annual
Meeting. |
TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
|
M78400-P55887 |
KEEP THIS PORTION FOR YOUR
RECORDS |
|
DETACH AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. |
AUTOMATIC DATA PROCESSING, INC. |
For All |
Withhold All |
For All Except |
|
|
The Board
of Directors recommends a vote FOR the following: |
|
|
|
|
|
|
|
1. |
Election of Directors |
|
|
c |
c |
c |
|
|
|
|
Nominees: |
|
|
|
|
|
|
|
|
|
01) |
Ellen R.
Alemany |
06) |
Michael P. Gregoire |
|
|
|
|
02) |
Leslie A.
Brun |
07) |
R.
Glenn Hubbard |
|
|
|
|
03) |
Richard T.
Clark |
08) |
John
P. Jones |
|
|
|
|
04) |
Eric C.
Fast |
09) |
Carlos
A. Rodriguez |
|
|
|
|
05) |
Linda R.
Gooden |
|
|
|
|
|
To withhold authority
to vote for any individual nominee(s), mark For All Except and write the
number(s) of the nominee(s) on the line
below. |
|
|
|
|
|
|
|
|
|
The Board of Directors
recommends a vote FOR the following proposals: |
|
For |
|
Against |
|
Abstain |
|
|
|
2. |
Advisory Vote on Executive
Compensation. |
|
c |
|
c |
|
c |
|
|
|
3. |
Ratification of the Appointment
of Auditors. |
|
c |
|
c |
|
c |
|
|
|
NOTE: The proxies will vote in their discretion upon any and
all other matters which may properly come before the meeting or any
adjournment thereof. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly
as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name by authorized officer. |
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX] |
Date |
|
|
Signature (Joint Owners) |
Date |
|
Table of Contents
September
25, 2014
Dear Stockholder:
You are cordially invited to join us at the 2014 Annual Meeting of Stockholders
of Automatic Data Processing, Inc. This years meeting will be held at the
corporate offices of the Company at One ADP Boulevard, Roseland, New Jersey, on
Tuesday, November 11, 2014, starting at 10:00 a.m. I hope you will be able to
attend. At the meeting, we will (i) elect directors, (ii) hold an advisory vote
on executive compensation, and (iii) vote on the ratification of the appointment
of auditors.
It
is important that these shares be voted, whether or not you plan to be present
at the meeting. You should specify your choices by marking the appropriate boxes
on the proxy form on the reverse side, and date, sign and return your proxy form
in the enclosed, postage-paid return envelope as promptly as possible.
Alternatively, you may vote by phone or the Internet, as described on the
reverse side. If you date, sign and return your proxy form without specifying
your choices, these shares will be voted in accordance with the recommendation
of the Company's directors.
Please retain and present this top portion of the proxy card as your admission
ticket together with a valid picture identification to gain admittance to the
meeting. This ticket will admit only the stockholder listed on the reverse side
and is not transferable. If these shares are held in the name of your broker or
bank or you received your proxy materials electronically, you will need to bring
evidence of the stock ownership, such as the most recent brokerage account
statement.
As
in the past years, we will discuss the business of the Company and its
subsidiaries during the meeting. I welcome your comments and suggestions, and we
will provide time during the meeting for questions from stockholders. I am
looking forward to seeing you at the meeting.
Sincerely, |
|
Carlos A.
Rodriguez President and Chief Executive
Officer |
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Combined Document containing Notice of 2014 Annual Meeting
of Stockholders, Proxy Statement and
Annual Report on Form 10-K is available
at www.proxyvote.com.
Proxy
This proxy is solicited on behalf of the
Board of Directors
Properly executed proxies received
by the day before the cut-off date or the meeting date will be voted as marked
and, if not marked, will be voted FOR the election of the nominees listed in the
accompanying Proxy Statement and FOR proposals (2) and (3) on the reverse
side.
The undersigned hereby appoints Leslie
A. Brun and Carlos A. Rodriquez, and each of them, attorneys and proxies with
full power of substitution, in the name, place and stead of the undersigned, to
vote as proxy at the 2014 Annual Meeting of Stockholders of Automatic Data
Processing, Inc. to be held at the corporate offices of the Company,
ONE ADP BOULEVARD, ROSELAND, NEW
JERSEY, on Tuesday, November 11, 2014 at
10:00 a.m., or at any adjournment or adjournments thereof, according to the
number of votes that the undersigned would be entitled to cast if personally
present. If shares of Automatic Data Processing, Inc. Common Stock are issued to
or held for the account of the undersigned under employee plans and voting
rights attach to such shares (any of such plans, a "Voting Plan"), then the
undersigned hereby directs the respective fiduciary of each applicable Voting
Plan to vote all shares of Automatic Data Processing, Inc. Common Stock in the
undersigned's name and/or account under such Voting Plan in accordance with the
instructions given herein, at the Annual Meeting and at any adjournments or
postponements thereof, on all matters properly coming before the Annual Meeting,
including but not limited to the matters set forth on the reverse side. Either
of said attorneys and proxies or substitutes, who shall be present at such
meeting or at any adjournment or adjournments thereof, shall have all the powers
granted to such attorneys and proxies.
Please date, sign and mail the proxy
promptly in the self-addressed return envelope which requires no postage if
mailed in the United States. When signing as an attorney, executor,
administrator, trustee or guardian, please give your full title as such. If
shares are held jointly, both owners should sign. Alternatively, you may vote by
phone or the Internet, as described in the instructions on the reverse
side.
Continued and to be signed on reverse
side
Automatic Data Processing (NASDAQ:ADP)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Automatic Data Processing (NASDAQ:ADP)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024