Questions and Answers
About the Annual Meeting and Voting
DO YOU EXPECT OTHER CANDIDATES TO BE
NOMINATED FOR ELECTION AS DIRECTORS AT THE ANNUAL MEETING IN OPPOSITION TO
THE BOARDS NOMINEES?
|
|
Yes, Pershing Square, a stockholder
of the company, which is reported to beneficially own approximately [8.3]%
of our common stock (inclusive of common stock underlying certain
derivative securities) has notified the company of its intent to nominate
a slate of three nominees for election as directors at the 2017 Annual
Meeting in opposition to the nominees recommended by our board of
directors. Our board of directors does not endorse any Pershing Square
nominee and unanimously recommends that you vote
FOR
the election of
each of the nominees proposed by the board of directors by using the
enclosed
WHITE
proxy card. The board of directors strongly urges you
not
to sign or return any proxy card sent to you by Pershing
Square.
|
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 10 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 10 director
nominees nominated by the board, as described in this proxy
statement
|
|
Proposal 2:
Advisory resolution approving the compensation of the
companys named executive officers as disclosed in the Compensation
Discussion and Analysis section on page
38
of this proxy statement and
accompanying compensation tables
|
|
●
For
●
Against
●
Abstain
|
|
FOR
|
|
Proposal 3:
Advisory
vote to approve
the frequency of the
companys executive compensation advisory vote
|
|
●
One Year
●
Two Years
●
Three Years
●
Abstain
|
|
ONE YEAR
|
|
Proposal 4:
Ratification of the appointment of Deloitte &
Touche LLP as our independent registered public accounting firm for fiscal
year 2018
|
|
●
For
●
Against
●
Abstain
|
|
FOR
|
|
Proposal 5:
Stockholder proposal submitted by Pershing Square to
repeal certain provisions or amendments to the amended and restated
by-laws of the company adopted without stockholder approval after August
2, 2016 and up to and including the date of the 2017 Annual Meeting, if
properly introduced at the 2017 Annual Meeting
|
|
●
For
●
Against
●
Abstain
|
|
AGAINST
|
|
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.
|
5
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
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 BROKER
NON-VOTES OR ABSTENTIONS?
|
|
Proposal 1:
Pershing Square has notified the
board of directors of its intent to nominate a slate of three nominees for
election as directors of the company at the 2017 Annual Meeting in
opposition to the nominees recommended by our board of directors. As a
result, the election of directors is considered a contested election as
defined in the companys amended and restated bylaws. This means that,
although the company does not know whether Pershing Square will, in fact,
nominate any individuals for election as directors at the 2017 Annual
Meeting, the 10 nominees receiving the highest number of FOR votes will
be elected at the 2017 Annual Meeting. If you return a signed
WHITE
proxy card or otherwise complete your voting by proxy online or by
telephone but do not provide direction with respect to voting on any of
the nominees, your shares will be voted for all nominees. As discussed
above, if your broker holds your shares, your broker is not entitled to
vote your shares on this proposal without your instruction.
Votes withheld and broker non-votes are not votes cast and will result in the
applicable nominees receiving fewer FOR votes for purposes of determining the nominee
receiving the highest number of FOR votes.
Proposal 2:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy 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. As
discussed above, if your broker holds your shares, your broker is not
entitled to vote your shares on this proposal without your instruction.
Broker non-votes 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. 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
carefully
the results of this advisory vote when formulating future
executive compensation policy.
Proposal 3:
Stockholders may cast their vote on
their preferred voting frequency by choosing the option of every one year,
two years or three years, or they may abstain from voting on this
proposal. The frequency that receives the highest number of votes cast by
stockholders at the Annual Meeting will be considered the advisory vote of
our stockholders. Abstentions will have no effect on the outcome of this
advisory vote. As discussed above, if your broker holds your shares, your
broker is not entitled to vote your shares on this proposal without your
instruction. Broker non-votes will have no effect on the outcome of this
advisory vote. Because the vote on this proposal is advisory in nature, it
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 carefully the results of this vote in making a determination
about the frequency of future executive compensation advisory
votes.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
6
|
Table of
Contents
Questions and Answers
About the Annual Meeting and Voting
|
|
Proposal 4:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy 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 2018. 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. As discussed above,
if your broker holds your shares, your broker is not entitled to vote your
shares on this proposal without your instruction. Broker non-votes 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 5:
Under the companys amended and
restated by-laws, the stockholder proposal submitted by Pershing Square to
repeal certain provisions or amendments to the amended and restated
by-laws of the company adopted without stockholder approval after August
2, 2016 and up to and including the date of the 2017 Annual Meeting, if
properly introduced at the 2017 Annual Meeting, requires the affirmative
vote of a majority of the shares represented in person or by proxy at the
2017 Annual Meeting. 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. As discussed above, if your broker holds
your shares, your broker is not entitled to vote your shares on this
proposal without your instruction. Broker non-votes 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.
Other Items:
If any other item requiring a
stockholder vote should come before the meeting, the vote required will be
determined in accordance with applicable law, the rules of the NASDAQ
Stock Market (NASDAQ) and our amended and restated certificate of
incorporation and amended and restated
by-laws.
|
7
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Questions and Answers
About the Annual Meeting and Voting
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 2017 Annual Meeting by:
●
submitting a valid, later-dated proxy card in a timely
manner;
●
submitting a later-dated vote by telephone or through the Internet
in a timely manner;
●
giving written notice of such revocation to the companys corporate
secretary prior to or at the 2017 Annual Meeting or by voting in person at
the 2017 Annual Meeting; or
●
attending and voting at the Annual Meeting (although attendance at
the meeting will not by itself revoke a proxy).
If your shares are held in street
name (i.e., held of record by a broker, bank or other nominee) and you
wish to revoke a proxy, you should contact your bank, broker or nominee
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.
If you have previously signed a
proxy card sent to you by Pershing Square or otherwise voted according to
instructions provided by Pershing Square, you may change your vote by
marking, signing, dating and returning the enclosed
WHITE
proxy card in
the accompanying post-prepaid envelope or by voting by telephone or via
the Internet by following the instructions on the
WHITE
proxy card
.
Submitting a proxy card sent to you by Pershing Square will revoke votes
you have previously made by the companys
WHITE
proxy card.
Only the latest validly executed
proxy that you submit will be counted.
|
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 proxy
solicitation. If Pershing Square nominates its slate of nominees for
election as directors or introduces the Pershing Square proposal at the
2017 Annual Meeting, the 2017 Annual Meeting will be a contested proxy
solicitation.
All proxies, ballots and vote
tabulations that identify stockholders are confidential. An independent
tabulator will inspect and tabulate your proxy whether you vote by mail,
using the Internet or by telephone. Your vote will not be disclosed to
anyone other than the independent tabulator without your consent, except
as described above.
|
WHERE CAN I FIND THE VOTING RESULTS
OF THE ANNUAL MEETING?
|
|
The preliminary voting results will
be published in the companys current report on Form 8-K, which we are
required to file with the
SEC
within four
business days following the 2017 Annual Meeting. The final voting results,
which are tallied and certified by independent inspectors, will be
published as soon as possible
thereafter.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
8
|
Table of
Contents
Questions and Answers
About the Annual Meeting and Voting
WHO IS PAYING FOR THE PREPARATION
AND MAILING OF THE PROXY MATERIALS
AND HOW
WILL SOLICITATIONS BE MADE?
|
|
We will pay the expenses of
soliciting proxies on the
WHITE
proxy card. Proxies on the
WHITE
proxy card may be solicited on our behalf by directors, officers or
employees in person or by telephone, mail, electronic transmission,
facsimile transmission or telegram. The company will request brokerage
houses and other custodians, nominees and fiduciaries to forward
soliciting material on our behalf to stockholders and the company will
reimburse such institutions for their out-of-pocket expenses
incurred.
We have hired Innisfree to assist us
in the solicitation of proxies for a fee of up to
$[ ]
, plus
out-of-pocket expenses. In connection with its retention, Innisfree has
agreed to provide consulting and analytic services upon request. Innisfree
estimates that approximately [ ] of its employees will assist in the
companys proxy solicitation. In addition to mail and email, proxies on
the
WHITE
proxy card may be solicited personally, in person or by telephone,
mail, electronic transmission, facsimile transmission or telegram, by
certain of our directors, officers and employees named in Annex A without
special compensation, other than reimbursement for expenses. Additional
information about persons who are participants in this proxy solicitation
is set forth in Annex A. Our aggregate expenses in connection with our
solicitation of proxies, excluding salaries and wages of our officers and
regular employees, are expected to aggregate to approximately $[ ], of
which approximately $[ ] has been spent to date.
|
WHAT DOES IT MEAN IF I RECEIVE MORE
THAN ONE PACKAGE OF PROXY MATERIALS?
|
|
This means that you have multiple
accounts holding Automatic Data Processing, Inc. shares. These may
include: accounts with our transfer agent, Wells Fargo Transfer Agent
Services, shares held by the administrator of our employee stock purchase
plan, and accounts with a broker, bank or other holder or record. In order
to vote all of the shares held by you in multiple accounts, you will need
to vote the shares held in each account separately. Please follow the
voting instructions provided on the
WHITE
proxy
card that
you receive to ensure that all of your shares are
voted.
|
9
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Background to the Solicitation
On August 1, 2017, Bill Ackman of Pershing
Square contacted ADP Chief Executive Officer Carlos Rodriguez by phone,
informing him that Pershing Square held an approximately 8% interest in the
company and that it had identified individuals to nominate to the companys
board of directors. Mr. Ackman stated that Pershing Square believed it could
help the company create substantial value. Mr. Ackman also stated that he did
not believe that Mr. Rodriguez was the right person to lead the company going
forward.
On that call, Mr. Ackman requested that
the company extend by 30 days the August 10, 2017 deadline for submitting
stockholder nominations to the board in connection with the 2017 Annual Meeting.
He stated that he was preparing a presentation for the board of directors that
would not be ready in time to present to the board and engage in a dialogue
prior to that deadline and that he had plans to be out of the country on
vacation during that week. Mr. Ackman stated his desire to meet with the full
board and suggested the third or fourth week in August as a possible timeframe.
He added that, if an extension was not granted, he intended to launch a proxy
fight in which he would nominate five individuals for election to the board. Mr.
Ackman offered no explanation for why he had not attempted to engage earlier in
a dialogue with the company or why any discussion could not continue after a
submission of nominees.
Later on August 1, 2017, Mr. Rodriguez
emailed Mr. Ackman and asked Mr. Ackman to share his proposed list of directors
to help the board in considering the request for a 30-day extension. Mr. Ackman
responded by email later that day, stating that he was requesting an extension
to avoid having to launch a proxy contest, adding that a formal submission of
candidates would require public disclosure on Pershing Squares Schedule 13D and
create a perception, which would be amplified by the press, that Pershing Square
and the company were at war. In that email, Mr. Ackman stated that he was
seeking a sufficient period of time to have discussions and that, if he could
meet with the board in the third or fourth week in August, a 30-45 day
extension should suffice.
In the same email, Mr. Ackman said that he
would share his proposed candidates with the board, stating [w]hen we do meet,
among other things, we will share our proposed candidates for the board. To give
you
a preview, they include myself and four independent directors. Mr. Ackman
proceeded to provide the following descriptions of the four nominees other than
himself:
Director A is the retired Vice Chairman,
a member of the executive committee, formerly the CFO, of a global company with
more than $25 billion in revenues where he worked for more than 25 years. Among
other responsibilities, he oversaw technology, project development, finance,
human resources, legal, and strategic planning. He has served on multiple public
company boards and currently serves on one public board with a market cap in
excess of $12 billion.
Director B is formerly the CIO and Vice
Chairman of a large publicly traded financial services company and CEO of a
privately held technology company. She has served on multiple public company
boards including several S&P 100 and S&P 500 companies.
Director C was formerly the CEO of private
equity backed industrial manufacturing company with more than $1 billion in
revenue. She is an expert in restructuring and operational efficiency. She
serves on three other company boards, in one case as lead director, with
combined market caps in excess of $70 billion.
Director D is a member of the board of
directors of two public companies with combined market caps of more than $15
billion. She is currently the CEO of the largest subsidiary of one of these
companies.
On August 2, 2017, Mr. Rodriguez, together
with advisors and members of the companys management, briefed the companys
board of directors on Mr. Ackmans request for an extension of the nomination
deadline. The board and its advisors engaged in an extensive discussion which
addressed, among other matters (i) the fact that the nomination deadline was
well known, having been disclosed in the companys proxy
statement for the 2016 Annual Meeting of Stockholders, and the absence of any
justification from Mr. Ackman for his failure to engage with the company
earlier, (ii) the fact that an extension of the nomination deadline would not
avoid disclosure of Pershing Squares interest in nominating directors, as Mr.
Ackman had suggested, as the extension would entail its own public disclosure,
Pershing Square would be required
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
10
|
Table of
Contents
Background to the
Solicitation
to disclose their intent to nominate directors
on their Schedule 13D that was expected to be filed on August 7, 2017, and
Pershing Squares investment in the company had already been the subject of
media reports, (iii) the likelihood that any reasonable extension period would
provide enough time to reach a resolution that would be acceptable to both the
company and Mr. Ackman, (iv) the fact that Mr. Ackman was requesting this
extension despite having offered no details with respect to his plans for the
company or his proposed nominees and (v) the fact that, from the companys point
of view, nothing should prevent the parties from continuing a constructive
dialogue after the submission of board nominees if Mr. Ackman chose to proceed
with the nomination. Following its discussion, the board determined that, prior
to making a decision with respect to an extension of the deadline, Mr. Rodriguez
and John Jones, the chair of the board of directors, should attempt to meet with
Mr. Ackman to better understand his ideas for improving the company and the
attributes that Mr. Ackman believed his proposed nominees would bring to the
board.
Later on August 2, 2017, Mr. Ackman
phoned Mr. Rodriguez and reiterated his request to extend the nomination
deadline. Mr. Rodriguez noted that the board had met to consider Mr. Ackmans
extension request and had instructed Mr. Rodriguez and Mr. Jones to meet with
Mr. Ackman. Mr. Ackman said he was unable to meet with anyone before beginning
his vacation the next day and that he preferred to meet with the entire board,
following an extension of the deadline. Mr. Rodriguez stated that the board had
instructed him that the meeting among himself, Mr. Ackman and Mr. Jones would
need to happen before the board would consider extending the nomination deadline
and that he and Mr. Jones were prepared to meet with Mr. Ackman the following
day. Mr. Ackman asked to speak with Mr. Jones in advance of a meeting and Mr.
Rodriguez agreed to arrange a conversation.
Later on August 2, 2017, Mr. Ackman
phoned Mr. Jones, who asked Mr. Ackman what Pershing Squares ideas were for
value creation. Mr. Ackman stated that he was not yet ready to discuss his
specific ideas for improving the company (and when he was ready, he would want
to share those ideas directly with the full board, not just a subset) and
that he
believed the company needs transformational changes to its business in
order to substantially improve
the companys profitability and competitiveness.
He added his belief that a CEO recruited from outside the company would be
necessary to accomplish that change. Mr. Ackman indicated that he felt that an
extension of the nomination deadline was necessary and appropriate, that any
meeting prior to the time he finished his proposed presentation on the company
would be fruitless because he would not be able to share specific ideas, and
that there was no time for a meeting before he left for vacation. He noted that
he could be willing to accept fewer than five seats on the board, so long as the
board accepted his as yet non-specific views as to how to transformationally
change the company. After Mr. Jones indicated that the board would not be in a
position to consider the extension request without a meeting among Mr. Jones,
Mr. Rodriguez and Mr. Ackman, Mr. Ackman agreed to attend the meeting with Mr.
Rodriguez and Mr. Jones.
Later on August 2, 2017,
representatives from Cadwalader, Wickersham and Taft LLP (Cadwalader),
Pershing Squares outside counsel, spoke via telephone with representatives from
Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul Weiss), the companys
outside counsel, to discuss Pershing Squares request that the company provide
to Pershing Square the form of agreement for proposed nominees for election to
the board required by the companys bylaws. After the call, representatives from
Cadwalader sent a letter to Paul Weiss formally requesting that such form of
agreement be provided no later than August 4, 2017.
On August 3, 2017, Mr. Ackman and
Brian Welch from Pershing Square met with Mr. Rodriguez and Mr. Jones and
reiterated Pershing Squares request for an extension of the nominating
deadline. Mr. Ackman noted that he would accept an initial seven-day extension
and that the deadline could be extended further if negotiations were productive,
but that he would prefer a longer initial period to avoid the need for further
extensions. Mr. Rodriguez asked Mr. Ackman if he seriously expected a Fortune
500 company to change a published deadline so as to not interfere with his
vacation, to which Mr. Ackman
replied, Im
dead
serious. He
added that, if he
were not granted the extension, he intended to submit director nominations
together with the filing of Pershing Squares Schedule 13D filing on the
following Monday. Mr. Rodriguez offered to try to arrange to have Mr. Ackman
meet with the board
11
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Background to the
Solicitation
prior to the August 10,
2017 deadline,
noting that he was
not sure he would be able to convene the entire board in person on that
timeline. Mr. Ackman replied that he would not be available to meet during that
period because he would be on his vacation and that, in any event, he needed
more time to complete his presentation.
In that conversation, Mr. Ackman
stated that, once he nominated directors to the board, he would be committed to
a proxy fight and would not consider any settlement. He stated that, if he
engaged in a proxy fight, he would use his ability to generate media coverage to
damage both Mr. Rodriguez and the company, and that that would be bad for the
companys clients, employees and stockholders. He also noted that he could
consider accepting the addition of fewer than five directors to the board,
potentially as additions to the existing board rather than replacements. He
noted, however, that he could only consider that prior to nominating directors
and then only if the board accepted his ideas for the company and gave him a
significant say in who would replace Mr. Rodriguez as CEO.
During the meeting, Mr. Ackman again
stated his belief that transformational change was needed at the company. He
asserted that he had spoken with 85 former executives of the company, over six
months of due diligence. Mr. Ackman reiterated his belief that Mr. Rodriguez was
not the right CEO to take the company forward and that he had a specific CEO
candidate in mind, but that he was not yet prepared to tell the company who that
candidate was.
At the conclusion of the meeting, Mr.
Rodriguez and Mr. Jones stated they would take Mr. Ackmans request for an
extension and a meeting with the full board back to the board for consideration.
Following the meeting, Mr. Ackman departed for his vacation.
Following the meeting on August 3,
2017, Mr. Ackman called Mr. Rodriguez, saying that he was concerned he had come
on too strong in their earlier conversation. Mr. Ackman stated that
he might be
able
to work with Mr. Rodriguez as long as Mr. Rodriguez was willing to embrace Mr.
Ackmans vision for the company and Mr. Ackman was able to conclude that Mr.
Rodriguez would be prepared to make the kind of changes that Mr. Ackman thought
were necessary.
Later on August 3, 2017, a
representative of Cadwalader spoke by phone with a representative of Paul Weiss.
The Cadwalader representative reiterated Mr. Ackmans statement from his meeting
with Mr. Rodriguez and Mr. Jones that, once he formally nominated directors to
the board, he would be committed to a proxy fight and would not consider any
settlement.
Also later on August 3, 2017, Mr.
Ackman sent two emails to Mr. Rodriguez. In those emails, Mr. Ackman recommended
that Mr. Rodriguez speak with David Weinreb, the CEO of Howard Hughes
Corporation, Juan Ramon Alaix, the CEO of Zoetis, and Hunter Harrison, the
former CEO of Canadian Pacific, regarding their experiences working with Mr.
Ackman. Mr. Ackman stated his view that having the support of an 8% stockholder
on the board would allow Mr. Rodriguez to dramatically accelerate change at the
company without regard to short term considerations. Mr. Ackman explained that
in his experience, directors often find it helpful to have a major stockholder
in the boardroom when dramatic change is underway. Mr. Ackman stated that he
would be excited to work with Mr. Rodriguez if he shared Pershing Squares view
of the companys opportunity.
Also on August 3, 2017, Paul Weiss
sent to Cadwalader the form of agreement for proposed nominees for election to
the board required by the companys bylaws.
On the evening of August 3, 2017, the
board of directors held a telephonic meeting, together with members of
management and advisors. In light of Mr. Ackmans expressed desire to replace
Mr. Rodriguez as CEO, Mr. Rodriguez elected not to attend the meeting. Mr. Jones
updated the board on the conversation with Mr. Ackman over the preceding day. He
noted that Mr. Ackman had suggested that he could accept an initial extension of
the nomination deadline of seven days, but also noted that with such a short
period the company would have to provide additional extensions continuously in
order to forestall Mr. Ackmans threatened proxy fight and would, in the end,
likely end up with the same 30 to 45 day period Mr. Ackman had originally
stated should suffice. Following discussion among the board members and other
participants, the board concluded that it was not in the best interests of the
company and its stockholders to grant an extension to the nomination
deadline.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
12
|
Table of
Contents
Background to the
Solicitation
On the morning of August 4, 2017, Mr.
Jones emailed Mr. Ackman, informing him that the board had determined not to
extend the nomination deadline. Mr. Jones noted that, in response to Mr.
Ackmans request to meet with the full board, the board was prepared to meet
with Mr. Ackman when Mr. Ackman was ready to do so, whether that was before or
after the nomination deadline. Mr. Jones also noted the companys concern that
Pershing Square had spoken with dozens of people with regard to the company,
with resulting leaks in the press and media speculation and that, in the
interests of correcting the selective information currently in the market, the
company intended to issue a press release.
Shortly after that email was sent to
Mr. Ackman, the company issued a press release stating that the board had
rejected Mr. Ackmans request for an extension of the nomination deadline. Later
that day, Mr. Rodriguez also released a letter to the company employees
informing them of Mr. Ackmans August 1 call, Mr. Ackmans request for an
extension of the nomination deadline and the boards rejection of Mr. Ackmans
request.
Later on August 4, 2017, Pershing
Square issued a press release announcing an 8% stake in the company and
expressed its disappointment that the company had denied Pershing Squares
request for an extension of the advance notice deadline for director nominations
in connection with the 2017 Annual Meeting. Pershing Square stated that it
intended to nominate a minority slate of directors to the board.
On August 6, 2017, Mr. Rodriguez sent
an email to Mr. Ackman in error, which was intended for the companys general
counsel, Michael Bonarti. Mr. Rodriguezs misdirected email forwarded Mr.
Ackmans email of August 3, in which Mr. Ackman for the first time claimed he
was open to working with Mr. Rodriguez, contradicting Mr. Ackmans earlier
assertions that Mr. Rodriguez needed to be replaced as CEO. In his email,
intended for Mr. Bonarti, Mr. Rodriguez first stated that he did not find Mr.
Ackmans statement that he was willing to work with Mr. Rodriguez to be
credible, and he noted to Mr. Bonarti that Mr. Ackmans willingness to work with
him was conditioned on his having the same view of the opportunity. Mr.
Rodriguez explained that he had already told Mr. Ackman that he did not share
Mr. Ackmans view.
In response to Mr. Rodriguezs errant
email, Mr. Ackman sent an email to Mr. Rodriguez in which he asserted that his
email had been sent in good faith. Mr. Ackman asserted that, based on
conversations with third parties, he had been under the impression that Mr.
Rodriguez had only intended to remain with the company for a year or so more and
would not be prepared for a major transformation that would take time and
require management changes. He stated that, upon realizing Mr. Rodriguez
intended to remain with the company, he had expressed a good faith willingness
to work with Mr. Rodriguez.
Mr. Ackman also asserted his belief
that the description of his positions in the companys August 4 press release
had been misleading, notwithstanding the fact that: (i) Mr. Ackman had stated in
his August 1,
2017 email
that a 30-45 day extension should suffice for his
discussions with the board, and had only later suggested an initial seven-day
period that would need to be continuously extended if the company wanted to
forestall a proxy fight, (ii) Mr. Ackman had stated on multiple occasions that
Mr. Rodriguez should be replaced as CEO and had conditioned the possibility of
Mr. Rodriguez remaining as CEO on Mr. Rodriguez sharing Mr. Ackmans view of the
company, which Mr. Rodriguez had stated he did not share and (iii) Mr. Ackman
had, in his August 1 email, provided detailed descriptions of four nominees, in
addition to himself, for nomination to a ten-person board.
In the email, Mr. Ackman questioned
whether Mr. Rodriguez and Mr. Jones had accurately described their conversations
with Mr. Ackman to the board of directors. Mr. Ackman further stated that
Pershing Square would nominate directors in advance of the August 10th deadline.
Mr. Ackman requested that Mr. Rodriguez share the email correspondence with the
entire board. Mr. Rodriguez responded that he did not agree with the substance
of Mr. Ackmans email but agreed to share it with the full board and did so that
day.
On August 7, 2017, Pershing Square
delivered its Notice of Stockholder Proposal and Nomination of Candidates for
Election to the board
of
the company. The notice informed the company, among
other things, of
Pershing Squares
intent to nominate Mr. Ackman, Ms. Hagen and Mr. Unruh for election to the board at the 2017
Annual Meeting. According to Pershing Square, Ms. Hagen and Mr. Unruh
13
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Background to the
Solicitation
were two
of the candidates whose backgrounds had been described in Mr. Ackmans August 1,
2017 email to Mr. Rodriguez.
Also on August 7, 2017, Pershing
Square issued a press release announcing its director nominees and filed its
initial Schedule 13D with respect to the company with the SEC, which disclosed
an approximately 8.3% stake in the company, predominantly held through
derivative securities. Also on August 7, 2017, the company was notified that
filings for Hart-Scott-Rodino Antitrust Improvements Act clearance had been made
on behalf of four Pershing Square funds with the Federal Trade Commission and
the Department of Justice.
Following Pershing Squares
submission of its director
nominations,
consistent with the charter of the
nominating/
corporate governance committee of the board (the Nominating
Committee), the Nominating Committee commenced a review of the qualifications
of the Pershing Square nominees. On August 7, 2017, a representative of Paul
Weiss phoned a representative of Cadwalader and requested that Pershing Square
arrange for its nominees to submit standard Director and Officer questionnaires
to the company, and be interviewed by the Nominating Committee. The next day,
after the company represented through counsel that its review of those nominees
would be conducted in good faith and with an open mind, Pershing Square agreed
to arrange for that information to be provided and to make its candidates
available to be interviewed. Representatives of Cadwalader and Paul Weiss
communicated over the following days to arrange interviews of the
nominees.
On August 8, 2017, Mr. Ackman and Mr.
Jones exchanged emails regarding the scheduling of a meeting between Pershing
Square and the full board of directors.
On August 10, 2017, Pershing Square
delivered to the company a demand for a copy of the companys stockholder list
pursuant to Section 220 of the Delaware General Corporation Law.
Also on August 10, 2017, Mr. Jones
notified Mr. Ackman via email that the board
was
available to meet at a specified
time on September 5, 2017. The same day, by email, Mr. Ackman thanked Mr.
Jones.
On August 14, 2017, Pershing Square
filed with the SEC a preliminary proxy statement in connection with the 2017
Annual Meeting.
Also on August 14, 2017, the
Nominating Committee interviewed Ms. Hagen by phone.
On August 16, 2017, the Nominating
Committee interviewed Mr. Unruh by phone.
On August 17, 2017, Pershing Square
held a public webcast and issued a presentation setting out its views regarding
the company. Later that day, the company issued a press release and
communications to employees commenting on the presentation.
Later on August 17, 2017, the
Nominating Committee interviewed Mr. Ackman by phone.
Also on August 17, 2017, Paul Weiss
delivered a response to Pershing Squares demand for a copy of the companys
Stockholder list pursuant to Section 220 of the Delaware General Corporation
Law.
Later on August 17, 2017, the
Nominating Committee held a telephonic meeting. Following extensive discussion,
the Nominating Committee determined, based upon its interviews with the Pershing
Square nominees, and its review of biographical and other information with
respect to the nominees provided in questionnaires and obtained through public
records, that none of the three nominees possessed backgrounds, skills or
expertise that were additive or superior to those of the existing Board members.
As such, the Nominating Committee declined to recommend any of the Pershing
Square nominees be included in the boards slate of director nominees for the
2017 Annual Meeting of Stockholders.
On August 19, 2017, the board held a
telephonic meeting at which at which the members of the Nominating Committee
reported on their review of, and their recommendation with respect to, the
Pershing Square nominees. Following extensive discussion, the board determined
to accept the recommendation of the Nominating Committee that none of the
Pershing Square nominees be included in the boards slate of director nominees
for the 2017 Annual Meeting of Stockholders.
On August
22
, the company filed
with the SEC a preliminary proxy statement in connection with the 2017 Annual
Meeting.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
14
|
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 2018 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.
Name
|
|
Age
|
|
Served as
a
Director
Continuously
Since
|
|
Principal Occupation
|
Peter Bisson
|
|
60
|
|
2015
|
|
Retired Director and Global Leader of the High-Tech
Practice at McKinsey & Company
|
Richard T. Clark
|
|
71
|
|
2011
|
|
Retired Chairman and Chief Executive Officer of Merck
& Co., Inc.
|
Eric C. Fast
|
|
68
|
|
2007
|
|
Retired Chief Executive Officer of Crane Co., a
manufacturer of industrial products
|
Linda R. Gooden
|
|
64
|
|
2009
|
|
Retired Executive Vice President of Lockheed Martin
Corporation Information Systems & Global Solutions
|
Michael P. Gregoire
|
|
51
|
|
2014
|
|
Chief Executive Officer and Director of CA
Technologies
|
R. Glenn Hubbard
|
|
59
|
|
2004
|
|
Dean of Columbia Universitys Graduate School of
Business
|
John P. Jones
(Board Chairman)
|
|
66
|
|
2005
|
|
Retired Chairman and Chief Executive Officer of Air
Products and Chemicals, Inc., an industrial gas and related industrial
process equipment business
|
William J. Ready
|
|
37
|
|
2016
|
|
Executive Vice President, Chief Operating Officer,
PayPal
|
Carlos A. Rodriguez
|
|
53
|
|
2011
|
|
President and Chief Executive Officer of Automatic Data
Processing, Inc.
|
Sandra S. Wijnberg
|
|
61
|
|
2016
|
|
Executive Advisor, and Former Partner and Chief
Administrative Officer of Aquiline Holdings
|
The board of directors possesses an
appropriate mix of skills, experience and leadership designed to drive board
performance and properly oversee the interests of the company, including
corporate strategy.
15
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
The board of directors recommends that
you vote on the WHITE proxy card or by Internet or telephone as set forth on the
WHITE proxy card
FOR the election of each of our nominees to serve as
directors of the company until the 2018 Annual Meeting of Stockholders, or, in
each case, until their successors are elected and qualified.
Pershing Square has notified the company of its intent to nominate its slate of three nominees for election as
directors at the 2017 Annual Meeting. As a result, the election of directors is considered a contested election as defined in the companys amended and restated by-laws, and the 10 nominees receiving the highest
number of FOR votes will be elected. Votes withheld and broker non-votes are not votes cast and will result in
the applicable nominees receiving fewer FOR votes for purposes of determining the nominee receiving the
highest number of FOR votes.
Our board does not endorse any Pershing Square nominee and unanimously recommends that you disregard
any proxy card that may be sent to you by Pershing Square. Voting to withhold with respect to any of
Pershing Squares nominees on its proxy card is not the same as voting for our boards nominees, because
a vote to withhold with respect to any of Pershing Squares nominees on its proxy card will revoke any
previous proxy submitted by you. If you have already voted using a proxy card sent to you by Pershing Square,
you have every right to change it and we urge you to revoke that proxy by voting in favor of our boards
nominees by using the enclosed WHITE proxy card. Only the latest validly executed proxy that you submit will
be counted.
If you have any questions or require any
assistance with voting your shares, please contact our proxy solicitor at the
contact listed below:
Innisfree M&A
Incorporated
Stockholders may call toll-free
(877) 750-0510
Banks and brokers may call collect at (212)
750-5833
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
16
|
Table of Contents
Below are summaries of the principal
occupations, business experience, background, and key skills and qualifications
of the nominees. The key skills and qualifications are not intended to be an
exhaustive list of each nominees skills or contributions to the board, but
rather the specific skills and qualifications that led to the conclusion that
the person should serve as a director for the company.
Peter Bisson
|
Director since:
2015
Age:
60
Independent
|
|
Retired Director at McKinsey
& Company
Mr. Bisson was a Director and the
Global Leader of the High-Tech Practice at McKinsey & Company prior to
his retirement in June 2016. Mr. Bisson also held a number of other
leadership positions at McKinsey & Company, including chair of its
knowledge committee, which guides the firms knowledge investment and
communication strategies, member of the firms shareholders committee, and
leader of the firms strategy and telecommunications practices. In more
than 30 years at McKinsey & Company, Mr. Bisson advised a variety of
multinational public companies, including ADP, in the technology-based
products and services industry. Mr. Bisson is also a director of Gartner
Inc.
Key Skills &
Qualifications
Mr. Bissons experience includes
advising clients on corporate strategy and M&A, design and execution
of performance improvement programs, marketing and technology development.
Mr. Bissons broad experience in the technology industry is a valuable
asset to our board of directors and contributes to the oversight of the
companys strategic direction and
growth.
|
Richard T.
Clark
|
Director since:
2011
Age:
71
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 the lead independent director
of Corning Incorporated, a global manufacturing company, and previously
served on the advisory board of American Securities, a private equity
firm, from 2011 to 2014.
Key Skills &
Qualifications
With a proven track record of
leadership and achievement, Mr. Clark has significant business experience
in navigating through complex regulatory environments and offers our board
of directors broad managerial, operational and strategic planning
expertise, as well as extensive experience in the issues facing public
companies and multinational businesses.
|
17
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Eric C. Fast
|
Director since:
2007
Age:
68
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 a director of Regions Financial Corporation and serves as a
director/trustee of the twelve investment companies in the Lord Abbett
Family of Funds. 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.
Key Skills &
Qualifications
As a former chief executive officer,
Mr. Fast brings broad managerial and operational expertise, as well as
experience in risk management matters, to our board. 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
Age:
64
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 serves on the
boards of General Motors Company and The Home Depot. She is also a
director of WGL Holdings, Inc., a public utility holding company, and
Washington Gas Light Company, a subsidiary of WGL Holdings,
Inc.
Key Skills &
Qualifications
Ms. Gooden brings to our board of
directors broad managerial and operational expertise, as well as
experience in business restructuring, finance and risk management. She has
a strong background in cybersecurity and information technology, as well
as a proven track record of achievement and sound business judgment
demonstrated throughout her career with Lockheed Martin
Corporation.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
18
|
Table of Contents
Michael P. Gregoire
|
Director since:
2014
Age:
51
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 a director from April
2005 to April 2012, and as chairman of the board from May 2008 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.
Key Skills &
Qualifications
Mr. Gregoire brings to our board of
directors extensive executive leadership experience with public companies
in the software and services business and strong experience in the
technology industry and cybersecurity matters. 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
Age:
59
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.
Key Skills &
Qualifications
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.
|
19
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
John P. Jones
|
Director since:
2005
Age:
66
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 2006 to
2012.
Key Skills &
Qualifications
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 has significant experience
in operating within a highly regulated framework and brings to the board
of directors extensive experience in issues facing public companies and
multinational businesses, including organizational management, strategic
planning, and risk management matters, combined with proven business and
financial acumen.
|
William J. Ready
|
Director since:
2016
Age:
37
Independent
|
|
Executive Vice President, Chief
Operating Officer, PayPal
Mr. Ready has been PayPals
executive vice president, chief operating officer since September 2016 and
prior to that, senior vice president, global head of product and
engineering since January 2015. Since August 2011, he had been the chief
executive officer of Braintree, a mobile and web payment systems company
acquired by PayPal in 2013. He continues to lead Braintree in his capacity
as chief operating officer of PayPal. Prior to Braintree, Mr. Ready was
executive in residence at Accel Partners, a leading Silicon Valley venture
capital and growth equity firm. A veteran of the payments industry, Mr.
Ready also
served as president of iPay Technologies from 2008 to 2011.
He also worked as a strategy consultant for McKinsey & Company, where
he advised leading financial technology companies.
Key Skills &
Qualifications
Mr. Ready possesses strong expertise
in the technology-based products and services industry, which is a
valuable asset to our board of directors and contributes to the oversight
of the companys strategic direction and growth. He also brings to our
board of directors deep operational experience and knowledge of the
technology industrys consumer space, including related cybersecurity
matters.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
20
|
Table of Contents
Carlos A. Rodriguez
|
Director since:
2011
Age:
53
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 was also a director of Hubbell Inc., a
manufacturer of electrical and electronic products, from 2009 to
2016.
Key Skills &
Qualifications
In addition to broad managerial,
operational and strategic planning expertise, Mr. Rodriguez brings a
wealth of business acumen and leadership experience to our board of
directors, including a deep knowledge of the HCM industry and unique
understanding of our business, coupled with a proven track record of
integrity, achievement, and strategic
vision.
|
Sandra S. Wijnberg
|
Director since:
2016
Age:
61
Independent
|
|
Executive Advisor, and Former
Partner and Chief Administrative Officer of Aquiline
Holdings
Ms. Wijnberg is an executive advisor
to and former partner, chief administrative officer and member of the
board of Aquiline Holdings, a registered investment advisory firm she
joined in 2007. From 2014 to 2015, Ms. Wijnberg left Aquiline Holdings to
work in Jerusalem at the behest of the U.S. State Department as the deputy
head of mission, Office of the Quartet. Prior to joining Aquiline
Holdings, she was the senior vice president and chief financial officer of
Marsh & McLennan Companies, Inc., from January 2000 to April 2006.
From 1997 to 2000, Ms. Wijnberg was the senior vice president, treasurer
and (from 1999 to 2000) interim chief financial officer of YUM! Brands,
Inc. She is a director of T. Rowe Price and previously served on the
boards of Tyco International plc from 2003 to 2016 and TE Connectivity
Ltd. from 2007 to 2009.
Key Skills &
Qualifications
Ms. Wijnberg is a seasoned business
leader with strong financial acumen and significant corporate finance,
business operations, insurance and risk management expertise, as well as
international experience that provides a valuable global perspective to
our board of directors.
|
21
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Stockholder Approval Required
Pershing Square has notified the company of its intent to nominate its slate of three nominees for election as
directors at the 2017 Annual Meeting. As a result, the election of directors is considered a contested election
as defined in the companys amended and restated by-laws, and the 10 nominees receiving the highest
number of FOR votes will be elected. Votes withheld and broker non-votes are not votes cast and will result in
the applicable nominees receiving fewer FOR votes for purposes of determining the nominee receiving the
highest number of FOR votes.
|
|
THE BOARD OF DIRECTORS
RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE ELECTION OF EACH OF
OUR
NOMINEES TO THE BOARD OF DIRECTORS ON THE WHITE PROXY
CARD.
|
Our board does not endorse any Pershing Square nominee and unanimously recommends that you disregard
any proxy card that may be sent to you by Pershing Square. Voting to withhold with respect to any of
Pershing Squares nominees on its proxy card is not the same as voting for our boards nominees, because
a vote to withhold with respect to any of Pershing Squares nominees on its proxy card will revoke any
previous proxy submitted by you. If you have already voted using a proxy card sent to you by Pershing Square,
you have every right to change it and we urge you to revoke that proxy by voting in favor of our boards
nominees by using the enclosed WHITE proxy card. Only the latest validly executed proxy that you submit will
be counted.
Annex A sets forth information relating to
our directors, nominees for directors and certain of our officers and employees
who are considered participants in our solicitation under the rules of the SEC
by reason of their position as directors of the company, as nominees for
directors or because they may be soliciting proxies on our behalf.
If you have any questions or require any
assistance with voting your shares, please contact our proxy solicitor at the
contact listed below:
Innisfree M&A
Incorporated
Stockholders may call toll-free
(877) 750-0510
Banks and brokers may call collect at (212)
750-5833
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
22
|
Table of Contents
Corporate Governance
The board of directors categorical
standards of director independence are consistent with NASDAQ listing standards
and are available in the companys corporate governance principles on our
corporate website at www.adp.com. To access these documents, click on Investor
Relations, then Corporate Governance, and then Governance Documents. The
board of directors has determined that Ms. Gooden, Ms. Wijnberg and Messrs.
Bisson, Clark, Fast, Gregoire, Hubbard, Jones and Ready meet these standards and
are independent directors for purposes of the NASDAQ listing standards. All
current members of the audit, compensation, nominating/corporate governance, and
corporate development and technology advisory committees are
independent.
In the ordinary course of business, the
company has business relationships with certain companies in which ADP directors
also serve as executive officers or on the board of directors, including for
example, software services and human capital management services. Based on the
standards described above, the board of directors has determined that none of
these transactions or relationships, nor the associated amounts paid to the
parties, was material or would impede the exercise of independent
judgment.
It is our policy that our directors attend
the Annual Meetings of Stockholders. All of our directors then in office
attended our 2016 Annual Meeting of Stockholders.
During fiscal year 2017, our board of
directors held six 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 2017.
Executive sessions of the non-management
directors are held during each board of directors and committee meeting. Mr.
Jones, our independent non-executive chairman of the board, presided 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. Jones, 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.
Board Composition and Director Succession
Planning
|
The board takes a thoughtful approach to
its composition to ensure alignment with the companys evolving corporate
strategy. We believe our board composition strikes a balanced approach to
director tenure and allows the board to benefit from a mix of newer directors
who bring fresh perspectives and seasoned directors who bring continuity and a
deep understanding of our complex business. We
refresh our board and assess our board
succession plans regularly with this balance of tenure and experience in mind.
We have added four new directors since 2014. As of our 2017 Annual Meeting, the
average age of our director nominees is 59 years and the average tenure of our
independent directors is 6.8 years.
23
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Our director succession planning is
conducted in the context of a skillset review designed to focus on key areas of
skills and experience deemed to be most helpful to driving board performance.
Our nominating/corporate governance committee evaluates these desired attributes
on an ongoing basis and adds new skills and qualifications as necessary in light
of the companys changing strategy and needs.
Individual director evaluations are also
conducted by the nominating/corporate governance committee on an annual basis,
in close coordination with our chairman. The form of assessment used to facilitate
this review is refreshed each year to ensure relevance and covers a broad array
of topics relevant to individual performance such as
knowledge, expertise, commitment,
preparation, integrity and judgment. This process facilitates director
succession planning as it helps identify opportunities to enhance individual
performance and any relevant feedback is communicated to the individual
director.
In addition to individual evaluations, the
nominating/ corporate governance committee, working with our chairman, conducts
a thorough evaluation at the board and committee levels to ensure the
effectiveness of the directors and their ability to work as a team in the
long-term interest of the company. This assessment is conducted through a
questionnaire process, which is also refreshed each year, and designed to elicit
feedback with respect to areas such as board/committee structure, governance,
communication, culture, risk and strategy. Responses are shared and discussed
with the nominating/corporate governance committee. The committee then shares
the output of this process with the full board along with a series of
recommendations that are subsequently implemented to improve board and committee
performance, practices and procedures.
Besides the foregoing practices, the
company also has a director retirement policy in place to promote thoughtful
board refreshment, as set forth in further detail under Retirement Policy on
page
25
of this proxy statement.
Director Nomination Process
|
Our nominating process ensures our board
consists of a well-qualified and diverse group of leaders who bring an important
mix of boardroom and operating experience. 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
, or were
, 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 diversity of thought and
background, as well as individual qualities such as professional experience,
skills, education, and training. While not a formal policy, our
nominating/corporate governance committee also considers a range of types of
diversity, including race, gender,
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
24
|
Table of Contents
ethnicity, age, culture and geography. The
nominating/ corporate governance committee retains a third party search firm
from time to time to identify and evaluate, as appropriate, potential nominees
to the board.
Nominations of candidates for our board of
directors by our stockholders for consideration at our 2018 Annual Meeting of
Stockholders are subject to the deadlines and other requirements described under
Stockholder Proposals on page
86
of this proxy statement.
Our director retirement policy provides
that, subject to such exceptions on a case by case basis as the board of
directors shall determine, no person will be nominated by the board of directors
to serve as a director 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
|
|
CDTAC
|
Peter Bisson
|
|
|
|
|
|
X
|
|
X
|
Richard T. Clark
|
|
F
|
|
C
|
|
|
|
|
Eric C. Fast
|
|
C, F
|
|
X
|
|
|
|
|
Linda R. Gooden
|
|
F
|
|
|
|
|
|
C
|
Michael P. Gregoire
|
|
|
|
|
|
X
|
|
X
|
R. Glenn Hubbard
|
|
|
|
X
|
|
C
|
|
|
William J. Ready
|
|
|
|
|
|
X
|
|
X
|
Sandra Wijnberg
|
|
F
|
|
|
|
|
|
X
|
Number of meetings held in fiscal year
2017
|
|
7
|
|
5
|
|
3
|
|
5
|
AC - Audit Committee
|
|
CDTAC - Corporate Development and
Technology
|
CC - Compensation Committee
|
|
Advisory Committee
|
NCGC - Nominating / Corporate Governance
Committee
|
|
F - Financial Expert
|
|
|
C -
Committee Chair
|
25
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Audit Committee
|
Eric C. Fast
Committee Chair
Other
committee
members:
Richard T. Clark
Linda
R. Gooden
Sandra S. Wijnberg
|
|
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;
●
the appointment, compensation, retention and performance of our
independent auditors and the selection of the lead audit partner;
and
●
the performance of our corporate audit department.
The audit committee acts under a
written charter, which is available online on our corporate website at
www.adp.com. To access this document, click on Investor Relations, then
Corporate Governance, and then Governance Documents. The members of
the audit committee are independent and financially literate under NASDAQ
listing standards. A further description of the role of the audit
committee is set forth on page
80
under Audit Committee
Report.
|
Nominating/Corporate Governance
Committee
|
R. Glenn Hubbard
Committee Chair
Other
committee
members:
Peter Bisson
Michael P.
Gregoire
William J. Ready
|
|
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 on our
corporate website at www.adp.com. To access this document, click on
Investor Relations, then Corporate Governance, and then Governance
Documents. The members of the nominating/corporate governance committee
satisfy the independence requirements of NASDAQ listing
standards.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
26
|
Table of Contents
Compensation
Committee
|
Richard T. Clark
Committee Chair
Other
committee
members:
Eric C. Fast
R. Glenn
Hubbard
|
|
The
compensation committee sets and administers our executive compensation
program. See Compensation Discussion and Analysis on page
38
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 2017, the compensation committee
sought advice from FW Cook, an independent compensation consulting firm
specializing in executive and director compensation. For further
information about FW Cooks services to the compensation committee, see
Compensation Discussion and Analysis under Compensation Consultant on
page
45
of this proxy statement.
The compensation committee acts
under a written charter, which is available online on our corporate
website at www.adp.com. To access this document, click on Investor
Relations, then Corporate Governance, and then Governance Documents.
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 and Technology Advisory Committee
|
Linda R. Gooden
Committee Chair
Other
committee
members:
Peter Bisson
Michael P.
Gregoire
William J. Ready
Sandra S. Wijnberg
|
|
The corporate development and technology advisory
committees principal functions are to act in an advisory capacity to the
board and management concerning potential acquisitions, strategic
investments, divestitures and matters of technology and
innovation.
The corporate development and
technology advisory committee acts under a written charter, which is
available online on our corporate website at www.adp.com. To access this
document, click on Investor Relations, then Corporate Governance, and
then Governance Documents.
|
27
|
|
|
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.
As set forth in more detail below, the board of directors performs this
oversight function periodically as part of its meetings and also through its
audit, compensation and nominating/corporate governance committees, each of
which examines various components
of risk as part of its assigned
responsibilities. In addition, our corporate development and technology advisory
committee acts in an advisory capacity to the board with respect to certain
risks assigned to oversight of the full board. Our committees report back on
risk oversight matters directly to the board of directors on a regular basis.
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.
Strategic
|
Operations-
Front Office
|
Operations-
Back Office
|
Information
Technology
|
Financial &
Reporting
|
Legal &
Compliance
|
Corporate
Strategy
& Initiatives
|
Product
Development
|
People/HR
|
Information
Assurance
|
Treasury
Management
|
Laws &
Regulations
|
Third
Party
Relationships
|
Sales & Marketing
|
Physical Assets
|
IT Development &
Production Support
|
Tax Strategy &
Management
|
Ethics Program
|
External
Environment
|
Implementation
|
Procurement
|
IT Operations
|
Risk Management
(i.e.,
Insurance/
Indemnity)
|
Legal
|
External
Communications
|
Service Delivery
|
Money Movement
|
Information
Availability &
Continuity
|
Reporting
|
Corporate
Governance
|
Finance Operations
|
Decision Support
and
FP&A
|
Acquisitions &
Divestitures
|
|
Service Operations
|
Technology
Strategy &
Management
|
Capital Strategy
&
Management
|
|
= Full Board
|
|
= Compensation Committee
|
= Audit Committee
|
|
= Nominating / Corporate Governance
Committee
|
Audit Committee
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, including quarterly
reports from our chief security officer, who is tasked with monitoring physical
and cybersecurity risks.
Nominating/Corporate Governance
Committee
Our nominating/corporate governance
committee oversees risks associated with board structure and other corporate
governance policies and practices, including matters of corporate citizenship
and the review and approval of any related-person transactions under our Related
Persons Transaction Policy.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
28
|
Table of Contents
Compensation Committee
Our compensation committee oversees risks
related to compensation policies and practices, including management succession
planning and our talent strategy, including the recruitment, development and
retention of executive talent.
Compensation
Committee
Our compensation committee
considered the risks presented by the companys compensation policies and
practices at its meetings in August 2016 and 2017 and believes that our
policies and practices of compensating employees do not encourage
excessive or unnecessary risk-taking for the following reasons:
|
✓
Our incentive plans have diverse performance measures,
including company and business unit financial measures,
key strategic objectives
, and individual goals;
✓
Our compensation programs balance annual and long-term
incentive opportunities;
✓
We cap incentive plan payouts within a reasonable
range;
✓
The mix of performance-based equity awards and stock
options in our long-term incentive programs serves the best interests of
stockholders and the company;
|
|
✓
Our stock ownership guidelines link the interests of our
executive officers to those of our stockholders; and
✓
Our clawback policy allows for the recovery of both cash
and equity incentive compensation from any current or former executive who
engages in any activity that is in conflict with or adverse to the
companys interests, including fraud or conduct contributing to any
financial restatements or irregularities.
|
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.
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
29
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
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.
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
. To access this document, click on Investor Relations, then Corporate
Governance, and then Governance Documents. 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 under Investor Relations in the
Corporate Governance tab. 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. Clark, Fast and Hubbard are the
three independent directors who sit on the compensation committee. No
compensation committee member has ever been an officer of the company. During
fiscal year 2017 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.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
30
|
Table of Contents
Compensation of Non-Employee
Directors
The annual retainer for non-employee
directors is $290,000, $175,000 of which is paid in the form of deferred stock
units and $115,000 of which may, at the election of each director, be paid in
cash or in deferred stock units. In addition, the chairman of our board of
directors
receives
an incremental retainer of $165,000, $82,500 of which is paid
in the form of deferred stock units and $82,500 of which may, at the election of
the chairman, be paid in cash or in deferred stock units. This incremental
retainer resulted in a total annual retainer of $455,000 for the chairman of our
board of directors
in fiscal year 2017
. The chair of the audit committee was paid an additional
annual retainer of $20,000, and each chair of the compensation, nominating/
corporate governance committee, and corporate development and technology
advisory committees was paid an additional annual retainer of $15,000. 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. Directors who are employees of the company or any
of our subsidiaries receive no remuneration for services as a
director.
The nominating/corporate governance
committee is responsible for reviewing, evaluating, and making recommendations
to the board on an annual basis with respect to all aspects of non-employee
director compensation. The full board then reviews these recommendations and
makes a final determination on the compensation of our non-employee directors.
During fiscal year 2017, the nominating/corporate governance committee engaged
FW Cook, compensation consultant to the compensation committee, to review the
design and competitiveness of our non-employee director compensation program. In
connection with this annual review, the board of directors approved an increase
to $200,000 for the chairmans incremental retainer, to be effective at the time
of the 2017 Annual Meeting of Stockholders, $100,000 of which will be paid in
the form of deferred stock units and $100,000 of which
may, at the election of
the chairman, be paid in cash or in deferred stock units. Other than Ms.
Gooden, all of our non-employee directors chose to receive the entire elective
portion of their annual retainers in the form of deferred stock units during
fiscal year 2017. 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 $175,000, or $257,500 in the case of
the chairman of the board of directors ($275,000 in fiscal year 2018), 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
31
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Non-Employee Directors
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.
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. 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 2017.
DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR
2017
Name
|
|
|
Fees Earned
or Paid
in
Cash
(7)
($)
|
|
Stock
Awards
(8)
($)
|
|
All Other
Compensation
(9)
($)
|
|
Total
($)
|
(a)
|
|
|
(b)
|
|
(c)
|
|
(g)
|
|
(h)
|
Ellen R. Alemany
(1)
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$50,000
|
|
|
$50,000
|
Peter Bisson
|
|
|
$115,000
|
|
|
|
$175,000
|
|
|
|
$20,000
|
|
|
$310,000
|
Richard T. Clark
(2)
|
|
|
$125,000
|
|
|
|
$175,000
|
|
|
|
$40,000
|
|
|
$340,000
|
Eric C. Fast
(3)
|
|
|
$135,000
|
|
|
|
$175,000
|
|
|
|
$16,000
|
|
|
$326,000
|
Linda R. Gooden
(4)
|
|
|
$130,000
|
|
|
|
$175,000
|
|
|
|
$0
|
|
|
$305,000
|
Michael P. Gregoire
|
|
|
$115,000
|
|
|
|
$175,000
|
|
|
|
$5,000
|
|
|
$295,000
|
R. Glenn Hubbard
(5)
|
|
|
$130,000
|
|
|
|
$175,000
|
|
|
|
$0
|
|
|
$305,000
|
John P. Jones
(6)
|
|
|
$197,500
|
|
|
|
$257,500
|
|
|
|
$0
|
|
|
$455,000
|
William J. Ready
|
|
|
$115,000
|
|
|
|
$175,000
|
|
|
|
$0
|
|
|
$290,000
|
Sandra S. Wijnberg
|
|
|
$115,000
|
|
|
|
$175,000
|
|
|
|
$20,000
|
|
|
$310,000
|
(1)
|
Ms. Alemany
resigned from the board of directors effective as of the date of our 2016
Annual Meeting of Stockholders.
|
|
(2)
|
As chair of the
compensation committee, Mr. Clark receives a $15,000 annual retainer,
which is normally included in fees earned. In fiscal year 2016, Mr. Clark
was inadvertently credited with approximately 57 additional deferred stock
units in connection with his retainer, with a grant date fair value equal
to $5,000. In light of this overpayment, Mr. Clarks fiscal year 2017
retainer was reduced by $5,000, and such reduction is reflected in the
fees earned column.
|
|
(3)
|
As chair of the
audit committee, Mr. Fast received a $20,000 annual retainer, which is
included in fees earned.
|
|
(4)
|
As chair of the
corporate development and technology advisory committee, Ms. Gooden
received a $15,000 annual retainer, which is included in fees
earned.
|
|
(5)
|
As chair of the
nominating/corporate governance committee, Mr. Hubbard received a $15,000
annual retainer, which is included in fees earned.
|
|
(6)
|
Mr. Jones is the
non-executive chairman of the board of
directors.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
32
|
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 2017 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, 2017 included in our annual report on Form 10-K for the fiscal
year ended June 30, 2017.
|
|
|
The grant date fair
value for each deferred stock unit award granted to directors in fiscal
year 2017 (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
|
|
Peter Bisson
|
11/8/2016
|
|
$290,000
|
|
Richard T. Clark
|
11/8/2016
|
|
$300,000
|
|
Eric C. Fast
|
11/8/2016
|
|
$310,000
|
|
Linda R. Gooden
|
11/8/2016
|
|
$190,000
|
|
Michael P. Gregoire
|
11/8/2016
|
|
$290,000
|
|
R.
Glenn Hubbard
|
11/8/2016
|
|
$305,000
|
|
John P. Jones
|
11/8/2016
|
|
$455,000
|
|
William J. Ready
|
11/8/2016
|
|
$290,000
|
|
Sandra S. Wijnberg
|
11/8/2016
|
|
$290,000
|
|
The aggregate
number of outstanding deferred stock units held by each director at June
30, 2017 is as follows: Mr. Bisson, 6,888; Mr. Clark, 22,040; Mr. Fast,
35,958; Ms. Gooden, 28,996; Mr. Gregoire, 11,507; Mr. Hubbard, 40,937; Mr.
Jones, 43,923; Mr. Ready, 5,874; and Ms. Wijnberg, 4,260.
|
|
|
In fiscal year
2017, no stock option awards were granted. The aggregate number of
outstanding stock options held by each director at June 30, 2017 is as
follows: Mr. Jones, 11,376.
|
|
(9)
|
For Ms. Alemany,
this amount reflects a donation made by the ADP Foundation to a charitable
organization of her choice in connection with her years of service and
contributions as a director of the company. For the other directors,
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 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, 2017.
|
33
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
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
(NEOs)
included in the Summary Compensation Table below, (iii) all company directors and executive
officers as a group (including the NEOs) 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 15, 2017 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
|
Peter Bisson
|
|
|
6,888
|
|
|
*
|
Michael A. Bonarti
|
|
|
86,477
|
|
|
*
|
Richard T. Clark
|
|
|
22,040
|
|
|
*
|
Eric C. Fast
|
|
|
35,958
|
|
|
*
|
Edward B. Flynn
|
|
|
91,506
|
|
|
*
|
Linda R. Gooden
|
|
|
31,071
|
|
|
*
|
Michael P. Gregoire
|
|
|
11,507
|
|
|
*
|
R.
Glenn Hubbard
|
|
|
41,937
|
|
|
*
|
John P. Jones
|
|
|
55,299
|
|
|
*
|
Dermot J. OBrien
|
|
|
58,980
|
|
|
*
|
William J. Ready
|
|
|
5,874
|
|
|
*
|
Carlos A. Rodriguez
|
|
|
298,955
|
|
|
*
|
Jan
Siegmund
|
|
|
180,353
|
|
|
*
|
Sandra S. Wijnberg
|
|
|
4,260
|
|
|
*
|
BlackRock, Inc.
(2)
|
|
|
30,226,443
|
|
|
6.7%
|
Pershing Square Capital Management,
L.P.
(3)
|
|
|
36,803,675
|
|
|
8.3%
|
The
Vanguard Group, Inc.
(4)
|
|
|
32,757,158
|
|
|
7.26%
|
Directors and executive officers as a group
23 persons,
|
|
|
|
|
|
|
including those directors
and executive officers named above
|
|
|
1,298,001
|
|
|
*
|
Footnotes:
|
*
|
Indicates less than one
percent.
|
|
|
(1)
|
Includes: (i) 348,975 shares
that may be acquired upon the exercise of stock options that are
exercisable on or prior to October 15, 2017 held by the following
directors and executive officers: Mr. Jones (11,376), Mr. Bonarti
(35,169), Mr. Flynn (34,080), Mr. OBrien (22,965), Mr. Rodriguez
(137,984), and Mr. Siegmund (107,401); and (ii) 530,469 shares subject to
stock options held by the directors and executive officers as a group.
Includes: (i) 89,904 shares that were acquired by the following executive
officers in connection with the vesting of
performance-based
stock units based
on the achievement of certain financial objectives for the fiscal year
2015 through fiscal year 2017 three-year performance period: Mr. Bonarti
(7,983), Mr. Flynn (7,983), Mr. OBrien (8,270) Mr. Rodriguez (50,840),
and Mr. Siegmund (14,828); and (ii) 124,859 such shares acquired by the
officers as a group. Includes shares issuable upon settlement of deferred
stock units held by non-employee directors as follows: Mr. Bisson (6,888),
Mr. Clark (22,040), Mr. Fast (35,958), Ms. Gooden (28,996), Mr. Gregoire
(11,507), Mr. Hubbard (40,937), Mr. Jones (43,923), Mr. Ready (5,874) and
Ms. Wijnberg (4,260). Our directors do not have any voting rights with
respect to these deferred stock units.
|
|
(2)
|
Information is furnished in
reliance on the Schedule 13G/A of BlackRock, Inc. (BlackRock) filed on
January 19, 2017. The address of BlackRock, Inc. is 55 East 52nd Street,
New York, NY 10055. BlackRock has sole dispositive power over 30,226,443
shares. BlackRock has sole voting authority over 24,823,365 shares and no
voting authority over 5,403,078 shares. The 30,226,443 shares reported are
owned, directly or indirectly, by BlackRock (Luxembourg) S.A.,
BlackRock
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
34
|
Table of Contents
Security Ownership of
Certain Beneficial Owners and Management
|
(Netherlands) B.V.,
BlackRock (Singapore) Limited, BlackRock Advisors (UK) Limited, BlackRock
Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset
Management Deutschland AG, BlackRock Asset Management Ireland Limited,
BlackRock Asset Management North Asia Limited, BlackRock Asset Management
Schweiz AG, BlackRock Capital Management, BlackRock Financial Management,
Inc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd, BlackRock
Institutional Trust Company, N.A., BlackRock International Limited,
BlackRock Investment Management (Australia) Limited, BlackRock Investment
Management (UK) Ltd, BlackRock Investment Management, LLC, BlackRock Japan
Co Ltd and BlackRock Life Limited.
|
|
(3)
|
Information is
furnished in reliance on the Schedule 13D of Pershing Square Capital
Management, L.P. (Pershing Square Capital Management) filed on August 7,
2017. The address of Pershing Square Capital Management is 888 Seventh
Avenue, 42nd Floor, New York, NY 10019. Pershing Square Capital
Management, PS Management GP, LLC and William A. Ackman (the Pershing
Persons) beneficially own 36,803,675 shares, which number includes:
1,750,867 shares, 4,044,808 shares underlying over-the-counter forward
purchase contracts, and 31,008,000 shares underlying listed and
over-the-counter American-style call options. The Pershing Persons have
shared voting power and shared dispositive power over the 36,803,675
shares beneficially owned by the Pershing Persons.
|
|
(4)
|
Information is
furnished in reliance on the Schedule 13G/A of The Vanguard Group, Inc.
(Vanguard) filed on February 9, 2017. The address of The Vanguard Group,
Inc. is 100 Vanguard Blvd., Malvern, PA 19355. Vanguard shares dispositive
power over 812,471 shares and has sole dispositive power over 31,944,687 shares.
Vanguard has sole voting authority over 710,989 shares, shared voting authority over 109,212 shares and no voting
authority over 32,046,169 shares.
|
Equity Compensation Plan
Information
The following table sets forth information
as of June 30, 2017, regarding compensation plans under which the companys
equity securities are authorized for issuance.
Plan category
|
|
Number of
securities
to be issued upon
exercise of outstanding
options,
warrants
and rights
|
|
Weighted-average
exercise price
of
outstanding
options, warrants
and rights
|
|
Number of securities
remaining available for
future
issuance under
equity compensation
plans (excluding
securities
reflected
in Column(a))
|
|
|
|
(a)
|
|
|
|
|
(b)
|
|
|
|
(c)
|
|
|
Equity compensation plans approved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by stockholders
|
|
|
5,365,603
|
(1)
|
|
|
|
$75.36
|
|
|
|
22,262,119
|
(2)
|
|
Equity compensation plans not
approved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by stockholders
|
|
|
0
|
|
|
|
|
$
|
|
|
|
0
|
|
|
Total
|
|
|
5,365,603
|
|
|
|
|
$75.36
|
|
|
|
22,262,119
|
|
|
Footnotes:
|
(1)
|
Includes (i) 884,631 shares
issuable under our
performance-based
stock unit (PSU) program in settlement of
PSUs outstanding as of June 30, 2017 (based on actual performance and
accrued dividend equivalents for performance periods ending on or prior to
June 30, 2017, and assuming maximum performance for performance periods
not yet completed),
(ii) 60,471
shares issuable pursuant to deferred
restricted stock units issued prior to June 30, 2017, (iii)
200,384
shares issuable upon settlement of deferred
stock units held by our directors as of June 30, 2017, and (iv)
36,947 shares issuable in settlement of performance
restricted stock units issued prior to June 30, 2017. The remaining
balance of 4,183,170 consists of outstanding stock options. Weighted
average exercise price shown in column (b) of this table does not take
into account PSUs or deferred stock
units.
|
|
(2)
|
Includes 20,013,388 shares
available for future issuance under the 2008 Omnibus Award Plan and
2,248,731 shares of common stock remaining available for future issuance
under the Employees Savings-Stock Purchase Plan, each as of June 30,
2017. Approximately 249,000 shares of common stock were subject to
purchase as of June 30, 2017, under the Employees Savings-Stock Purchase
Plan.
|
35
|
|
|
Automatic Data
Processing, Inc.
Proxy
Statement
|
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 2017 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 executive performance and levels of
responsibility, encouraging our executive officers to remain focused on both
short-term and long-term financial and strategic goals of the company and
linking executive performance to the creation of stockholder value.
We urge stockholders to read the
Compensation Discussion and Analysis section appearing on pages
38
through
57
of this proxy statement, as well as the Summary Compensation Table For Fiscal
Year 2017 and related compensation tables and narrative appearing on pages
58
through
79
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 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. As discussed above, if your broker holds your shares, your broker
is not entitled to vote your shares on this proposal without your instruction.
Broker non-votes 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. 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
carefully
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.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
36
|
Table of
Contents
|
Proposal 3
Advisory Vote on Frequency of
the Executive Compensation Advisory Vote
|
In accordance with Section 14A of
the
Exchange Act,
we are seeking an advisory vote
from our stockholders (the Say-When-on-Pay Vote) on how often the company
should hold future advisory votes on compensation for our named executive
officers similar to Proposal 2. This Say-When-on-Pay Vote must be submitted to
stockholders at least once every six years.
We last held an advisory vote on the
frequency of the executive compensation advisory vote during our 2011 Annual
Meeting of Stockholders. During this meeting, the board recommended, and a
majority of stockholders voted
for, a frequency of one year. As a result,
for the past six years, the board has determined to hold an annual advisory vote
on executive compensation.
After careful consideration, the board
maintains its recommendation that you vote to hold an advisory vote on executive
compensation with a frequency of
ONE YEAR
. We continue to believe that an annual
vote will facilitate frequent input and discussions with stockholders on
executive compensation and corporate governance matters and is consistent with
our policy of reviewing our compensation program annually.
Stockholder Approval Required
|
Stockholders may cast their vote on their
preferred voting frequency by choosing the option of every one year, two years
or three years, or they may abstain from voting on this proposal. The frequency
that receives the highest number of votes cast by stockholders at the 2017
Annual Meeting will be considered the advisory vote of our stockholders.
Abstentions will have no effect on the outcome of this advisory vote. As
discussed above, if your broker holds your shares, your broker is not entitled
to vote your shares on this proposal without your instruction. Broker non-votes
will have no effect on the outcome of this advisory vote. Because the vote on
this proposal is advisory in nature, it will not be binding on or overrule any
decisions by the compensation committee or the board of directors.
Although this advisory vote is
non-binding, the board and compensation committee value the opinion of our
stockholders and will consider carefully the results of this vote in making a
determination about the frequency of future executive compensation advisory
votes.
Notwithstanding the boards present
recommendation and the voting results, the board may in the future decide to
conduct advisory votes on a different frequency basis and may vary its practice
based on future discussions with stockholders and/or changes to our executive
compensation practices and programs.
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE
FOR
THE OPTION OF HOLDING AN ADVISORY VOTE ON
EXECUTIVE COMPENSATION
WITH A FREQUENCY OF
ONE
YEAR
.
|
37
|
|
|
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 2017 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;
|
●
|
Edward B. Flynn, our President,
Global Enterprise Solutions;
|
●
|
Michael A. Bonarti, our General
Counsel and Secretary; and
|
●
|
Dermot J. 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).
|
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 financial and strategic
goals of the company. Each year the compensation committee sets rigorous and
challenging performance measures aligned to these company goals. We continue to
believe that growth in revenue, adjusted EBIT (as defined below), new business
bookings and net income are the most important measures of the successful
execution of our objectives and the delivery of sustainable long-term
stockholder value.
At our 2016 Annual Meeting of
Stockholders, our stockholders approved the compensation of our fiscal year 2016
NEOs by a vote of approximately 96% in favor. Given this strong support and the
companys continued good performance, the compensation committee retained the
basic foundation of our overall
compensation program during fiscal year
2017, but made certain changes as described in this CD&A to ensure that the
program continued to support our key financial and strategic
objectives.
Fiscal Year 2017 Business
Highlights
In fiscal year 2017, we continued to
leverage the strength of our business model and our proven ability to execute by
making smart investments that enhance our service capabilities
and
our sales force
,
and deliver cloud solutions. Our business strategy is based on the following
three strategic pillars, which are designed to position ADP as the global market
leader in technology-enabled human capital management (HCM)
services:
●
|
Grow a complete suite of cloud-based
HCM solutions;
|
●
|
Grow and scale our market-leading
Human Resources Business Process Outsourcing solutions by leveraging our
platforms and processes; and
|
●
|
Leverage our global presence to
offer clients HCM solutions where they do
business.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
38
|
Table of Contents
Compensation Discussion
and Analysis
During fiscal year 2017, we continued to
focus on our global HCM strategy, and our results reflect the strength of our
underlying business model, our success in the market, and our focus on growth.
This focus is evidenced by our sustained investments in product innovation,
service and our sales force, as well as the divestiture of our Consumer
Healthcare Spending Account (CHSA) and COBRA businesses (the CHSA and COBRA
divestiture). While we had softer new business bookings and faced some pressure
on our client retention and margins, our key business results in fiscal year
2017 continued to reflect a strong enterprise, with solid revenue growth,
consistent, healthy cash flows and low capital expenditure requirements. We
expect to maintain our planned strategic investments in innovation, service and
sales in fiscal year 2018 as we grow through the pressure we faced in fiscal
year 2017 and continue to drive further operating efficiencies as we leverage
our strategies and the scale of our operations.
Our financial performance impacted the
compensation of our executive officers in several ways, most notably our annual
cash bonus plan and performance-based stock unit (PSU) program. The
compensation committees determination of incentive compensation under our
annual cash bonus
plan
for all of our executive officers, including our NEOs,
was based on fiscal year 2017 revenue growth, new business bookings growth, and
adjusted earnings before interest and taxes (EBIT) growth. Targets and results
exclude the impact of certain items pursuant to predetermined parameters
established by the compensation committee at the time that targets were set. As
such, the targets below for revenue growth and adjusted EBIT growth reflect the
impact of the CHSA and COBRA divestiture in order to properly reflect the
companys continuing operations.
Annual Cash
Bonus
|
|
|
|
|
Plan Measures
|
|
Plan Targets
|
|
Plan Results
|
Revenue Growth
|
|
7.3%
|
|
6.4%, excluding the impact of foreign
currency fluctuations in excess of the fluctuations assumed in the
target
|
New Business Bookings Growth
|
|
5.0%
|
|
-5.4%
|
Adjusted Earnings Before
Interest And
Taxes (EBIT) Growth
1
|
|
8.8%
|
|
7.8%, excluding the impacts
of:
|
|
|
|
|
●
a gain on the
CHSA and COBRA
divestiture;
●
charges related to our
service alignment initiative and workforce optimization effort;
and
●
foreign currency
fluctuations in excess of the fluctuations assumed in the
target
|
1
|
Our adjusted EBIT measure
excludes the impact of taxes, certain interest expense, and certain
interest income.
|
39
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
The incentive compensation under our PSU
program was based on fiscal year 2017 net income growth and, for prior-year
awards, earnings per share growth. Targets and results exclude the impact of
certain items pursuant to predetermined parameters established by the
compensation
committee at the time that targets were
set. As such, the targets below for net income growth and earnings per share
growth reflect the impact of the CHSA and COBRA divestiture in order to properly
reflect the companys continuing operations.
PSU Program Measures
|
|
Program Targets
|
|
Program
Results
|
Net Income Growth
|
|
8.6%
|
|
9.7%, excluding the impacts
of:
●
a gain on the
CHSA and COBRA
divestiture;
●
charges related to
our service alignment initiative and workforce optimization effort;
●
Accounting Standard
Update 2016-09 on stock-based compensation;
●
acquisitions;
and
●
foreign currency
fluctuations in excess of the fluctuations assumed in the
target
|
Earnings Per Share Growth
|
|
10.1%
|
|
11.7%, excluding the impacts
of:
●
a gain on the
CHSA and COBRA
divestiture;
●
charges related to
our service alignment initiative and workforce optimization effort;
●
Accounting Standard
Update 2016-09 on stock-based compensation;
●
acquisitions;
and
●
foreign currency
fluctuations in excess of the fluctuations assumed in the target
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
40
|
Table of Contents
Compensation Discussion
and Analysis
Elements of 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. The following table summarizes
the major elements of our fiscal year 2017 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 strategic performance
goals
|
|
Payment based on achievement of
company-wide, business unit and strategic performance
goals
|
Performance-Based Stock
Unit
(PSU) Awards
|
|
To motivate executive officers to
achieve certain longer-term goals and create long-term alignment with
stockholders
|
|
Awards based on target growth in net
income, with earned shares issued following applicable performance
period
|
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
|
|
Granted annually based on pay grades
and individual performance, and vesting over four years
|
Time-Based Restricted
Stock
Awards
|
|
To attract and retain executive
officers
|
|
Awarded at the discretion of the
compensation committee, mostly to attract new talent and for long-term
retention of critical executives as well as part of management succession
planning
|
For fiscal year 2017, our NEOs received
cash bonuses that averaged approximately 82.3% of target.
A payout percentage of 111% was achieved
under our PSU program as a result of our fiscal year 2017 net income growth.
This net income payout percentage applies to year 1 of the fiscal year 2017
award. This award will be earned and issued following the end of the
corresponding three-year performance period ending in fiscal year 2019.
In addition, a payout percentage of 127%
was achieved under our PSU program as a result of our fiscal year 2017 earnings
per share growth (for prior-year awards). This earnings per share payout
percentage applies to year 2 of
the fiscal year 2016 award and to year 3
of the fiscal year 2015 award. The fiscal year 2016 award will be earned and
issued following the end of the corresponding three-year performance period
ending in fiscal year 2018. The end of fiscal year 2017
marked
the end of the
three-year performance period for PSU awards granted in fiscal year 2015. Based
on the average of the three-fiscal years, these awards earned a payout
percentage of 112%. As further described on page
52
of this proxy statement
under PSU Awards, the payout percentages achieved for each of the individual
three fiscal years in the applicable performance period are averaged to obtain
the award level earned and issued as a percentage of target.
41
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
The tables below illustrate the alignment
between company performance and the incentive compensation paid to Mr. Rodriguez
for fiscal year 2017:
The following is a summary of fiscal year
2017 total direct compensation for our NEOs:
Name
|
|
Base Salary
|
|
Annual Bonus
|
|
PSUs
(1)(2)
|
|
Stock Options
(1)
|
|
Restricted Stock
(1)
|
|
Total
|
Mr.
Rodriguez
|
|
$1,030,000
|
|
$1,384,300
|
|
$4,350,000
|
|
$3,000,000
|
|
$0
|
|
$9,764,300
|
Mr.
Siegmund
|
|
$675,000
|
|
$567,000
|
|
$1,182,000
|
|
$532,500
|
|
$500,000
|
|
$3,456,500
|
Mr.
Flynn
|
|
$579,200
|
|
$454,200
|
|
$718,100
|
|
$375,000
|
|
$2,000,000
|
|
$4,126,500
|
Mr.
Bonarti
|
|
$530,000
|
|
$356,200
|
|
$734,400
|
|
$405,000
|
|
$0
|
|
$2,025,600
|
Mr.
OBrien
|
|
$540,000
|
|
$362,900
|
|
$718,300
|
|
$375,000
|
|
$0
|
|
$1,996,200
|
Footnotes:
|
1
|
Equity amounts are the grant
date fair values for the fiscal year 2017 equity awards, which are the
same amounts disclosed in the Summary Compensation Table for Fiscal Year
2017 on page
58
of this proxy statement.
Amounts are rounded for ease of presentation.
Mr. Siegmunds award is subject
to a performance condition as further described on page
53
of this
CD&A.
|
|
2
|
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. The amounts for the PSU
awards represent the grant date fair value of one-third of each of the
fiscal years 2015, 2016 and 2017 target
awards.
|
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:
✓
|
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 financial and strategic goals of the company and to link
executive performance to stockholder value.
|
|
|
✓
|
Annual say-on-pay
vote:
We hold an advisory say-on-pay
vote to approve our NEO compensation on an annual basis, consistent with
our stockholders advisory vote at our November 2011 stockholder
meeting.
|
✓
|
Clawback policy:
ADPs Clawback Policy allows for the recovery of both
cash and equity incentive compensation from any current or former
executive who engages in any activity that is in conflict with or adverse
to ADPs interests, including fraud or conduct contributing to any
financial restatements or irregularities.
|
|
|
✓
|
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 NEOs have a stock ownership guideline of three times base salary.
Executive officers whose ownership levels are below target ownership
levels are required to retain as shares of common stock at least 75% of
post-tax net
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
42
|
Table of Contents
Compensation Discussion
and Analysis
|
gains on stock option exercises, and
75% of shares (net of taxes) received upon vesting of restricted stock or
received under our PSU program.
|
|
|
✓
|
Double-trigger change in control
payments:
Our Change in Control
Severance Plan for Corporate Officers includes double-trigger
provisions, 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.
|
|
|
✓
|
Limited
perquisites:
We provide limited
perquisites that are viewed as consistent with our overall compensation
philosophy.
|
|
|
✓
|
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 FW Cook as an independent
compensation consultant. FW Cook 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.
|
|
|
✓
|
Stockholder
engagement:
As described under
Stockholder Engagement Process on page
xi
of this proxy statement, our
investor engagement program promotes an active dialogue with our largest
stockholders on a range of topics related to our strategy, corporate
governance and executive compensation
practices.
|
|
|
As part of our commitment to
principles of good governance, we do not engage in the following
practices:
|
✗
|
No-hedging policy:
We prohibit
our directors and executive officers from engaging in any hedging or
similar transactions involving ADP securities.
|
✗
|
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.
|
✗
|
No repricing of underwater stock
options without stockholder approval:
We may 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 without stockholder
approval.
|
✗
|
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.
|
✗
|
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.
|
✗
|
No current dividends on unearned
performance stock units:
We do not pay
dividends in respect of unearned PSUs; rather, dividend equivalents are
accrued over the applicable performance period and are paid only if the
units are earned and shares are issued at the end of the performance
period.
|
Looking Forward
As further described below under
Compensation Review and Determination, changes have been made to the companys
compensation peer group for fiscal year 2018 to ensure that our peer group
remains appropriate from the perspectives of business model comparability,
revenue and market capitalization.
Commencing with fiscal year 2020, the
companys Supplemental Officers Retirement Plan (SORP) will be frozen. As part
of the freeze, benefits under the SORP will continue to accrue through June 30,
2019; thereafter, participants will retain their accrued benefit with no future
accruals due to pay and/or service. (The SORP was previously closed to new
entrants in January 2014.) The compensation committee approved this change in
order to move to a total rewards mix more in line with market practice and the
companys peer group.
43
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
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 dampen 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 stockholder value varies directly with the level of
responsibility and accountability to stockholders. 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 ranges for
base salaries, total annual cash compensation and 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 be above or below targeted levels depending on the overall
performance of the company, performance of a business unit and achievement of
strategic performance goals. We have adopted this compensation design to provide
meaningful incentives for our key executives to achieve desired results. We also
believe that it is important for our executive officers to have an ongoing
long-term investment in the company as outlined on page
56
of this proxy
statement under Stock Ownership Guidelines.
We have a clear strategy to maximize
sustainable long-term stockholder value that includes balancing growth,
profitability and risk, with clear financial goals that allow us to continue to
innovate technologically and expand globally. Each year the compensation
committee sets rigorous and challenging performance measures aligned to these
objectives. We continue to believe that growth in revenue, adjusted EBIT, new
business bookings and net income are the most important measures of the
successful execution of our objectives and the delivery of sustainable long-term
stockholder value.
At the direction of our board of
directors, we expanded our investor engagement program in fiscal year 2017 to
include outreach focused on the companys strategy, corporate governance and
executive compensation
programs
. We contacted stockholders representing more
than a third of our shares outstanding, and during fiscal year 2017, we
discussed our strategy, corporate governance and broader executive compensation
programs
with stockholders representing about 20% of our shares outstanding. We
observed that these investors were generally supportive of the linkage of our
performance measures to our executive compensation program. As described under
Stockholder Engagement Process on page
xi
of this proxy statement, we
continue to engage with our stockholders on our executive compensation program
and practices and we look forward to maintaining this ongoing dialogue as well
as incorporating feedback into our plans as appropriate.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
44
|
Table of Contents
Compensation Discussion
and Analysis
Growth in revenue, adjusted EBIT and new
business bookings are important performance measures in annual cash bonus
determinations, and net income is used to determine the number of shares earned
in a performance period under our PSU program. For awards granted in fiscal
years 2015 and 2016, earnings per share growth was used to determine the number
of shares earned in a performance period. These performance criteria were chosen
for the variable incentive plans because they focus our executive officers on
the companys long-term goals of increasing the growth and profitability of our
business, which are the key drivers of sustainable increases in stockholder
value.
Consistent with our pay for performance
philosophy, our NEOs compensation is structured with a significant portion of
their total compensation at risk. This at-risk compensation increased on a
year-over-year basis as a proportion of the total target pay mix and includes
long-term incentive awards, which are paid
based on the performance of the company as a whole, and annual cash bonuses,
which are paid on the basis of the bonus objectives established by the
compensation committee as described below under Fiscal Year 2017 Target Bonus
Objectives.
The mix of target total direct
compensation (base salary, cash bonus and long-term incentive awards) for fiscal
year 2017 was designed to deliver the following approximate proportions of total
compensation to Mr. Rodriguez, our chief executive officer, and the other NEOs
(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. Mr. Rodriguezs higher portion of at-risk
compensation reflects his greater responsibility for overall company
performance.
|
|
Compensation Consultant
The compensation committee has engaged FW
Cook 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 compensation awards. The specific matters on which FW Cook
provided advice in fiscal year 2017 were the market trends and regulatory
developments in executive compensation and the design of executive compensation
programs and practices, including the changes to chief executive officer pay
levels and reviewing long-term
incentive guidelines. In June 2016, FW
Cook delivered to our compensation committee the results of a competitive
assessment of compensation for use in determining fiscal year 2017 target
compensation for Mr. Rodriguez. FW Cook also examined the mix of proposed PSU
awards and stock option grants for our NEOs in fiscal year 2017 and confirmed
that the proposals for the NEOs were reasonable and customary, given the
companys size and structure. In addition, in April 2017, FW Cook reviewed the
companys executive compensation peer group and recommended changes for fiscal
year 2018, as described under Looking Forward and Fiscal Year 2018 Peer
Group.
45
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
As part of its ongoing support to the
compensation committee, FW Cook also reviews executive compensation disclosures
(including this CD&A), 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
compensation committees meetings. In addition, during fiscal year 2017, our
nominating/corporate governance committee engaged FW Cook to review the design
and competitiveness of our non-employee director compensation
program.
The compensation committee determined that
the work of FW Cook did not raise any conflicts of interest in fiscal year 2017.
In making this assessment, the compensation committee considered the
independence factors enumerated in Rule 10C-1(b) under the Securities Exchange
Act of 1934, as amended, and applicable Nasdaq listing standards, including the
level of fees received from the company as a percentage of FW Cooks total
revenue,
the policies and procedures employed by FW Cook to prevent conflicts of
interest, the fact that FW Cook does not provide any other services to the
company (other than the director compensation program review), and whether the
individual FW Cook 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
ADP uses a customized peer group to
benchmark our executive officers pay levels and our financial performance in
connection with pay-for-performance evaluations, as well as our practices
concerning equity compensation and other executive compensation programs. The
customized peer group was developed with assistance from FW Cook based upon the
following criteria: comparable business model, company size, executive talent
sources, competition for investor capital, companies considered to be our peers
by investors, and overall reasonableness.
Fiscal Year 2017 Compensation Peer
Group
Accenture plc
|
eBay Inc.
|
Paychex, Inc.
|
Aon plc
|
Fidelity National Information
Services, Inc.
|
Qualcomm
Incorporated
|
CA, Inc.
|
Fiserv, Inc.
|
TE Connectivity
Ltd.
|
CGI Group
|
Intuit Inc.
|
Visa Inc.
|
Cognizant Technology Solutions
Corp.
|
Leidos Holdings,
Inc.
|
The Western Union
Company
|
Discover Financial
Services
|
MasterCard
Incorporated
|
Xerox
Corporation
|
DXC Technology Company
|
Omnicom Group Inc.
|
|
In benchmarking the total cash and
long-term incentive compensation for the NEOs, the compensation committee
reviewed the market compensation data from the customized peer group at its June
2016 meeting. The compensation committee considered that, compared with the peer
group, the company compares at the 65th percentile of revenue and the 79th
percentile of market capitalization. Based on the four most recently reported
quarters as of March 31, 2016, revenue among companies in the peer group ranged
from approximately $2.9 billion to $31.6 billion, and market
capitalization
ranged from approximately $3.6 billion to $183.7 billion. The compensation
committee also considered third-party survey data (including the
Radford Global Technology Survey, the Towers Watson® U.S.
General Industry Executive Database, the Hewitt Associates® Executive Total
Compensation by Industry Survey, the
Mercer
U.S. General Industry Executive
Database and the Equilar Inc.® Top 25 Database) as a reference point to
understand general industry compensation practices.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
46
|
Table of Contents
Compensation Discussion
and Analysis
The compensation committee examines
summary compensation sheets detailing the amounts and mix of base salary, cash
bonus, and long-term equity incentives for each of our NEOs, 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 individual executive targets
above or below the median when warranted in the judgment of the compensation
committee. The degree to which target compensation for an executive 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 more experience in their
roles may be positioned higher in the range. The competitive positioning of Mr.
Rodriguezs target compensation continues to compare below the median of our
customized peer group.
Fiscal Year 2018 Peer
Group
In connection with its annual review of
the companys peer group, the compensation committee has made changes for fiscal
year 2018 to ensure that our peer group remains appropriate from the
perspectives of business
model comparability, revenue and market
capitalization. Qualcomm Incorporated and Xerox Corporation have been removed
due to M&A activity which impacted business model comparability. CA, Inc.
Intuit Inc., Paychex, Inc. and The Western Union Company have been removed due
to their smaller revenue size. Marsh & McLennan Companies, Inc., PayPal
Holdings, Inc., Salesforce.com, Inc. and Thomson Reuters Corporation were added
due to business model, revenue and market capitalization alignment, resulting in
an 18-company peer group for fiscal year 2018 compensation decisions.
Differences in Compensation of Our
NEOs
The compensation committee approved the
pay mix for our chief executive officer, which is designed 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 compensation for their
other NEOs.
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 of that individual compensation element for each
executive officer 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.
47
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
Cash Compensation
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 NEOs received the following annual
salary increases in fiscal year 2017:
Named Executive Officer (NEO)
|
Fiscal Year 2016
Salary
|
|
Increase
|
|
Fiscal Year 2017
Salary
|
Mr.
Rodriguez
|
|
$1,000,000
|
|
|
|
3.0
|
%
|
|
|
|
$1,030,000
|
|
Mr.
Siegmund
|
|
$650,000
|
|
|
|
3.9
|
%
|
|
|
|
$675,000
|
|
Mr.
Flynn
|
|
$525,000
|
|
|
|
14.3
|
%
|
|
|
|
$600,000
|
|
Mr.
Bonarti
|
|
$510,000
|
|
|
|
3.9
|
%
|
|
|
|
$530,000
|
|
Mr.
OBrien
|
|
$520,000
|
|
|
|
3.8
|
%
|
|
|
|
$540,000
|
|
Salary increases for the NEOs were made
effective July 1, 2016, the first day of the 2017 fiscal year. Mr. Flynns
salary increased by 4.8% effective July 1, 2016, and subsequently by 9.1%
effective January 1, 2017, in connection with his appointment as President,
Global Enterprise Solutions.
Annual Cash Bonus
Overview
We paid our NEOs cash bonuses for fiscal
year 2017 based on the attainment of company-wide, business unit, and strategic
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. For fiscal year 2017, these target bonus
percentages ranged from 80% to 160% of base salary for the NEOs. We also assign
a percentage value to each bonus component of each NEOs annual cash bonus plan
and then determine the target bonus amount linked to each component. We
establish these performance ranges to provide our NEOs with a strong incentive
to exceed the targets. The maximum bonus payment for our NEOs is 200% of the
target bonus level. There is no minimum payment level, and no award is payable
if threshold performance goals are not achieved.
The compensation committee establishes and
approves annual target bonus objectives and award opportunities for each of our
NEOs. 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 NEOs participated in the discussions surrounding their
bonus objectives so that they could provide 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 NEO receives a final version of his individualized bonus plan
after it is approved by the compensation committee. Except in extraordinary
circumstances, bonus objectives are not modified during the fiscal year, and no
bonus objectives were modified for fiscal year 2017.
In August 2016, the compensation committee
established a threshold corporate performance target based on adjusted EBIT
margin. This metric must be met or exceeded before annual incentive awards are
made to our NEOs. Once the threshold corporate performance target is achieved,
each NEO becomes eligible to receive up to the maximum potential annual bonus.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
48
|
Table of Contents
Compensation Discussion
and Analysis
When making final payout determinations,
the compensation committee may exercise negative discretion to award less than
the maximum potential bonus. This process allows the entire amount of the annual
incentive award to be considered performance-based and tax deductible under
Section 162(m) of the Internal Revenue Code.
The compensation committee reviews the
performance of each of our NEOs relative to his annual fiscal year 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 our executive
officers.
NEOs Fiscal Year 2017
Bonuses
Fiscal year 2017 target bonuses were the
same as a percentage of base salary as in fiscal year 2016 for all the NEOs. The
threshold corporate performance goal for fiscal year 2017 was adjusted EBIT
margin of 15%. As the threshold performance level was achieved, the annual
bonuses were based on the performance of the company and the business units as
well as the strategic progress realized for the 2017 fiscal year against the
NEOs bonus objectives. The approved annual cash bonuses are as
follows:
Named Executive Officer (NEO)
|
Target Bonus
as % of
Base
Salary
|
|
Target
Bonus
Amount
|
|
Maximum
Bonus as %
of
Target
|
|
Actual
Bonus
Amount
|
|
Bonus
Amount as %
of
Target
|
Mr.
Rodriguez
|
160
|
%
|
|
$1,648,000
|
|
200
|
%
|
|
$1,384,300
|
|
84.0
|
%
|
Mr.
Siegmund
|
100
|
%
|
|
$675,000
|
|
200
|
%
|
|
$567,000
|
|
84.0
|
%
|
Mr.
Flynn
|
100
|
%
|
|
$600,000
|
|
200
|
%
|
|
$454,200
|
|
75.7
|
%
|
Mr.
Bonarti
|
80
|
%
|
|
$424,000
|
|
200
|
%
|
|
$356,200
|
|
84.0
|
%
|
Mr.
OBrien
|
80
|
%
|
|
$432,000
|
|
200
|
%
|
|
$362,900
|
|
84.0
|
%
|
Fiscal Year 2017 Target Bonus
Objectives
The table below indicates the degree to
which each target bonus objective for our NEOs was satisfied. The percentage of
target bonus paid to each NEO is calculated as a weighted average of the
percentages achieved for each individual objective.
|
Mr. Rodriguez
|
|
Mr. Siegmund
|
|
Mr. Flynn
|
|
Mr. Bonarti
|
|
Mr. OBrien
|
Bonus
Objectives
|
Target
Weight
|
|
Payout
as %
of
Target
|
|
Target
Weight
|
|
Payout
as %
of
Target
|
|
Target
Weight
|
|
Payout
as %
of
Target
|
|
Target
Weight
|
|
Payout
as %
of
Target
|
|
Target
Weight
|
|
Payout
as %
of
Target
|
Revenue Growth
|
20.0
|
%
|
|
88.8
|
%
|
|
20.0
|
%
|
|
88.8
|
%
|
|
17.5
|
%
|
|
88.8
|
%
|
|
20.0
|
%
|
|
88.8
|
%
|
|
20.0
|
%
|
|
88.8
|
%
|
Adjusted EBIT Growth
|
20.0
|
%
|
|
90.0
|
%
|
|
20.0
|
%
|
|
90.0
|
%
|
|
20.0
|
%
|
|
90.0
|
%
|
|
20.0
|
%
|
|
90.0
|
%
|
|
20.0
|
%
|
|
90.0
|
%
|
New Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bookings Growth
|
20.0
|
%
|
|
0
|
%
|
|
20.0
|
%
|
|
0
|
%
|
|
17.5
|
%
|
|
0
|
%
|
|
20.0
|
%
|
|
0
|
%
|
|
20.0
|
%
|
|
0
|
%
|
Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
5.0
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client Retention
|
|
|
|
|
|
|
|
|
|
|
|
|
5.0
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Objectives
|
40.0
|
%
|
|
120.5
|
%
|
|
40.0
|
%
|
|
120.5
|
%
|
|
35.0
|
%
|
|
120.5
|
%
|
|
40.0
|
%
|
|
120.5
|
%
|
|
40.0
|
%
|
|
120.5
|
%
|
The bonus objectives were designed to
reward achievement of goals that are aligned with the key components of our
financial and strategic success, the degree to which the NEOs have
responsibility for overall company performance or individual business unit
results, and to provide a set of
common objectives that facilitate
collaborative engagement. In setting target performance goals, we consider a
variety of factors including our short- and long-range strategic plan and the
annual budget reviewed by our board, the guidance provided by management on key elements of
49
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
financial performance, and the
key strategic objectives that are viewed as important leading indicators of our
transformation, creation of long-term value and
future success. The compensation committee established the following financial
and strategic goals for our NEOs in August 2016 (the business unit goals
associated with the position that Mr. Flynn undertook in January 2017 were
established in September 2016):
Revenue Growth:
7.3% as a target objective (which includes the assumed impact
of foreign currency fluctuations anticipated at the time the target was
established and the impact of the CHSA and COBRA divestiture), with 200% of
target to be awarded for revenue growth of 10.3% or greater, and 0% of target to
be awarded for revenue growth below 3.3%.
Adjusted Earnings Before Interest and
Taxes (EBIT) Growth:
8.8% as a target objective (which includes
the assumed impact of foreign currency fluctuations anticipated at the time the
target was established and the impact of the CHSA and COBRA divestiture; and
excludes one-time events other than acquisitions), with 200% of target to be
awarded for adjusted EBIT growth of 12.8% or greater, and 0% of target to be
awarded for adjusted EBIT growth below 3.8%.
New Business Bookings
Growth:
5.0% as a target objective, with 200%
of target to be awarded for new business bookings growth of 8.0% or greater, and
0% of target to be awarded for new business bookings growth below
2.0%.
Business Unit
Performance:
For Mr. Flynn, achieve operating
income and client retention goals for his business unit. The target weight
percentages for operating income and client retention in the table reflect the
portion of the year for which Mr. Flynn has served in his new role.
For each metric described above, the award
level achieved within each range, as a percentage of target, is determined by
linear interpolation between the lower and upper bounds.
Strategic Objectives:
Strategic objectives for our NEOs are aligned with our key
strategic goals to simplify, innovate and grow for fiscal year 2017. The
percentage of target awarded for achievement of strategic objectives equals the
average of the percentages achieved for each of the nine strategic objectives
set forth below.
The targets for each specific objective
are established to be challenging and are measurable, quantifiable goals. The
calculation of performance against these objectives is formulaic to reflect the
proportionate level of achievement relative to the target.
Strategic
Objectives
|
|
Achievement
|
●
|
Simplify
|
|
|
|
|
|
|
|
|
|
●
|
Increase percentage of clients and
percentage of revenues on strategic platforms
|
|
97.5
|
%
|
|
|
|
|
|
|
|
●
|
Reduce the number of U.S. non-sales
locations
|
|
135.0
|
%
|
|
|
|
|
|
|
|
●
|
Reduce service complexity by reducing the percentage of
service & implementation tools
|
|
130.0
|
%
|
●
|
Innovate
|
|
|
|
|
|
|
|
|
|
●
|
Increase spend in research & development
(R&D) and increase the percentage spend on innovation
R&D
|
|
101.0
|
%
|
|
|
|
|
|
|
|
●
|
Reduce number of low value service client
contacts
|
|
122.0
|
%
|
|
|
|
|
|
|
|
●
|
Achieve goals in technology strategy including deployment
of key new platforms
|
|
105.0
|
%
|
●
|
Grow
|
|
|
|
|
|
|
|
|
|
●
|
Achieve our client growth goal
|
|
154.0
|
%
|
|
|
|
|
|
|
|
●
|
Improve client experience by demonstrating improvement in net
promoter scores
|
|
41.7
|
%
|
|
|
|
|
|
|
|
●
|
Continue focus on human capital
by maintaining a threshold favorable associate engagement score as
measured by our annual associate engagement survey conducted by a third
party and by demonstrating quantifiable improvement in workforce
diversity
|
|
200.0
|
%
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
50
|
Table of Contents
Compensation Discussion
and Analysis
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 2017, long-term incentives were awarded in the form of PSUs and
stock option grants. In special situations, we selectively award time-based
restricted stock. 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.
For all of our NEOs except our chief
executive officer, we target a long-term incentive compensation mix of 70% PSU
awards and 30% stock options. For fiscal year 2017, the compensation committee
approved a long-term incentive mix for the chief executive officer of 60% PSU
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 PSU
awards and stock option grants. In fiscal year 2017, Messrs. Siegmund and Flynn
received a time-based restricted stock award, which is discussed below under
Time-Based Restricted Stock.
As part of our annual market analysis of
compensation data, we compare our long-term equity incentive grant values with
competitive levels. We establish target long-term incentive award values and
ranges for each executive level and set the midpoints of such ranges at the
market median levels. The compensation committee reviews the target award values
and ranges annually to ensure that the resulting awards 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.
The target long-term incentive mix
approved for fiscal year 2017 grants is shown in the following chart:
1 PSUs reflect the entire PSU target
award based on the three-year target opportunity.
51
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
At its June 2016 meeting, the compensation
committee approved target awards of PSUs and stock options for all NEOs for
fiscal year 2017, which were granted in September 2016. The PSU awards (based on
the three-year target
opportunity) will be earned and issued
following the end of the three-year performance period in fiscal year 2019. The
PSUs and stock option grants for fiscal year 2017 are summarized in the table
below:
Named Executive Officer (NEO)
(1)
|
|
Target PSU Award
|
|
Stock
Options
|
|
Total
|
Mr. Rodriguez
|
|
|
$4,500,000
|
|
|
|
$3,000,000
|
|
|
$7,500,000
|
Mr.
Siegmund
|
|
|
$1,242,500
|
|
|
|
$532,500
|
|
|
$1,775,000
|
Mr.
Flynn
|
|
|
$875,000
|
|
|
|
$375,000
|
|
|
$1,250,000
|
Mr.
Bonarti
|
|
|
$945,000
|
|
|
|
$405,000
|
|
|
$1,350,000
|
Mr.
OBrien
|
|
|
$875,000
|
|
|
|
$375,000
|
|
|
$1,250,000
|
1
|
Amounts are rounded for ease
of presentation.
|
PSU Awards
Our PSU program is based on financial
objectives that are measured over a three-year performance period consisting of
three one-year net income performance goals. We believe the three-year PSU
program will further the companys long-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 total
vesting period. The fiscal year 2017 target award opportunity under the PSU
program, which was granted in September 2016, will be earned and issued in
September 2019 based upon the achievement of net income performance goals for
fiscal years 2017, 2018 and 2019.
For purposes of our PSU awards, the
performance goals and corresponding target award ranges are typically
established and communicated to our executive officers (including the NEOs) in
the first quarter of each respective fiscal year, and for the 2017 performance
year were approved by the compensation committee in August 2016. After the
conclusion of each fiscal year, the compensation committee confirms the
performance results and determines the award achieved for such fiscal year, as a
percentage of target, based on these results by using linear interpolation
between the lower and upper bounds of the applicable percentage range. Under the
PSU program, after the end of the three-year performance period, the award
levels achieved as a percentage of target for each of the individual three
fiscal years in the applicable performance period will be averaged to obtain the
overall award level earned and issued as a percentage of target. However,
notwithstanding the achievement of net
income results (or, earnings per share results for awards prior to fiscal year
2017), if the companys total stockholder 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. Commencing with the fiscal year 2017 PSU awards,
net income replaced earnings per share as the key performance metric used to
calculate such awards. The compensation committee implemented this change
because, like earnings per share, net income holds management accountable for
the execution of our growth strategy and our focus on profitability but, unlike
earnings per share, is unaffected by our share repurchase program. By
eliminating the impact of share repurchases on our performance, and accordingly,
on the determination of payouts under the PSU program, the committee believes
that the program fosters greater management objectivity with regard to
alternative uses of excess capital and a stronger line of sight between
operational performance and payout. Earnings per share will continue to be the
performance metric for the fiscal year 2015 and 2016 PSU awards.
In August 2016, the compensation committee
established net income and earnings per share growth goals and corresponding
award ranges for fiscal year 2017 under the
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
52
|
Table of Contents
Compensation Discussion
and Analysis
PSU program. Our net income growth and
earnings per share growth for fiscal year 2017, as described in further detail
above under Fiscal Year 2017 Business Highlights, were 9.7% and 11.7%,
respectively, which resulted in an earned award level for the fiscal 2017
performance year in
the
amounts
of 111% and 127% of target,
respectively. The following table shows the annual net income and earnings per
share targets, results and corresponding award levels achieved for fiscal years
2015, 2016 and 2017, in each case as a percentage of target:
FY
|
|
Performance Metric
|
|
Threshold
|
|
Target
|
|
Stretch
|
|
Actual
|
|
Achievement
|
2017
|
|
Net
Income Growth
|
|
|
3.6%
|
|
|
|
8.6%
|
|
|
|
13.6%
|
|
|
|
9.7%
|
|
|
|
111%
|
|
2017
|
|
EPS
Growth
|
|
|
7.1%
|
|
|
|
10.1%
|
|
|
|
13.1%
|
|
|
|
11.7%
|
|
|
|
127%
|
|
2016
|
|
EPS
Growth
|
|
|
10.5%
|
|
|
|
13.5%
|
|
|
|
16.5%
|
|
|
|
12.8%
|
|
|
|
88%
|
|
2015
|
|
EPS
Growth
|
|
|
8.3%
|
|
|
|
11.3%
|
|
|
|
14.3%
|
|
|
|
12.5%
|
|
|
|
120%
|
|
Award levels achieved for each fiscal year
in the three-year performance period are, as a percentage of target, 50% for
threshold performance, 100% for target performance, 150% for stretch
performance, and 0% for below threshold performance. The award level achieved
within each range, as a percentage of target, is determined by linear
interpolation between the lower and upper bounds. Dividends are paid only with
respect to shares of ADP stock that have been issued in connection with PSUs
earned. The end of fiscal year 2017 marks the end of the three-year performance
period for PSU awards granted in fiscal year 2015. Based on the average of the
three-fiscal years, these awards earned a payout percentage of 112%.
Stock Options
We grant stock options to our executive
officers, which vest over four years. We determine target award ranges for each
pay grade based on our annual review of our long-term incentive compensation
program. 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, FW
Cook.
While the compensation committee can
consider a stock option grant at any time for our executive officers, stock
option grants are generally made in September on the
same date PSU awards are granted.
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. In fiscal year 2017, the
compensation committee approved special time-based restricted stock awards for
Messrs. Siegmund and Flynn, vesting over three years.
These awards were granted as part of the
management succession planning process as we believe these executives are
critical to retain for the future success of the company. In addition, for Mr.
Flynn, the award served to bridge the gap in his equity compensation in
connection with the new role he undertook in fiscal year 2017.
Similar to the annual cash bonuses,
vesting of the award for Mr. Siegmund is subject to the same threshold corporate
performance target based on adjusted EBIT margin. If this goal is achieved, the
award vests upon satisfying the time-based condition. The performance condition
allows his award to be considered performance-based and tax deductible under
Section 162(m) of the Internal Revenue Code. The time-based restricted stock
grants for fiscal year 2017 are summarized in the table
below:
Named Executive Officer (NEO)
(1)
|
|
Time-Based
Restricted
Stock
|
Mr.
Siegmund
|
|
|
$500,000
|
|
Mr.
Flynn
|
|
|
$2,000,000
|
|
1
|
Amounts are rounded for ease
of presentation.
|
53
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
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 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 and severance
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), including our NEOs. Our NEOs also participate in the Automatic Data
Processing, Inc. Pension Retirement Plan, a tax-qualified, defined benefit, cash
balance pension plan. The Pension Retirement Plan became closed to new
participants as of January 2015. In addition, our NEOs participate in the
Supplemental Officers Retirement Plan, which provides retirement benefits to our
executive officers in excess of those generally available under the Pension
Retirement Plan. The Supplemental Officers Retirement Plan was closed to new
participants beginning in January 2014, and beginning on July 1, 2019, the
Supplemental Officers Retirement Plan will be frozen; thereafter, participants
will retain their accrued benefit with no future accruals due to pay and/or
service. Our executive officers who do not participate in the Supplemental
Officers Retirement Plan are automatically enrolled in the Automatic Data
Processing, Inc. Executive Retirement Plan, which provides supplemental
retirement benefits in excess of amounts available under our tax-qualified
pension and other retirement plans. Our NEOs do not participate in the Executive
Retirement Plan.
Deferred Compensation
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 for its NEOs or otherwise contribute any amounts to the
NEOs 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.
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 NEOs in fiscal year 2017.
Change in Control
Arrangements
The Automatic Data Processing, Inc. Change
in Control Severance Plan for Corporate Officers is designed to: (i) retain our
corporate officers (including the NEOs) and (ii) 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.
Our Change in Control Severance Plan for
Corporate Officers is described in more detail below under Potential Payments
To Named Executive Officers Upon Termination or Change in Control. Under this
plan, our executive officers have separation entitlements that differ from one
another. Mr. Rodriguez is entitled to severance equal to
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
54
|
Table of Contents
Compensation Discussion
and Analysis
two times base salary and bonus upon
termination of employment without cause or with good reason, while our other
NEOs are entitled to severance equal 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 position. 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. Our Change in Control Severance Plan for
Corporate Officers also provides that the vesting of all unvested equity awards
would be accelerated under qualifying 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 two-year period after a change in control.
Corporate Officer Severance
Plan
ADPs Corporate Officer Severance Plan is
for purposes of involuntary terminations other than for cause in the absence of
a change in control. This plan is designed to: (i) attract and retain executive
officers by a level of protection against involuntary job loss, (ii) provide an
appropriate level of benefit to enable executive officers to transition to new
employment, and (iii) secure restrictive covenants such as non-compete,
non-solicitation, etc.
Our Corporate Officer Severance Plan is
described in more detail below under Potential Payments To Named Executive
Officers Upon Termination or Change in Control. Under a qualifying termination,
executive officers receive 18 months of base salary continuation (24 months for
the chief executive officer), prorated bonus for year of termination, and
continuation of vesting of equity awards during the salary continuation period,
subject to proration in respect of certain performance-based equity
awards.
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 position.
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 NEOs, 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 pay 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. For
example, the portion of our chief executive officers base salary above
$1,000,000 is not tax deductible, and compensation attributable to the vesting
of certain time-based restricted stock may 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.
Clawback Policy
We adopted a Clawback Policy in fiscal
year 2015 that provides the compensation committee with discretion to recover
both cash and equity incentive compensation from all current and former
executives. A recipients
55
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
award may be forfeited and required to be
recovered, 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.
No-Hedging and No-Pledging
Policy
Our insider trading policy prohibits our
directors and executive officers from engaging in any hedging or similar
transactions involving ADP securities. Our insider trading policy also prohibits
our directors and executive officers from holding ADP securities in a margin
account or pledging ADP securities as collateral for a loan.
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).
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 Messrs. Siegmund, Flynn, Bonarti 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 or received under our PSU program. As
of the end of fiscal year 2017, all NEOs met the stock ownership
guidelines.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
56
|
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 2017 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 2017 proxy statement.
Compensation Committee of the Board of
Directors
Richard T. Clark, Chair
Eric C.
Fast
R. Glenn Hubbard
57
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of Executive
Officers
Summary Compensation
Table for Fiscal Year 2017
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
(1)
|
|
Option
Awards
($)
(1)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(2)
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
(3)
|
|
All
Other
Compensation
($)
(4)
|
|
Total
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
Carlos A.
Rodriguez
|
|
2017
|
|
$1,030,000
|
|
$0
|
|
$4,350,006
|
|
$2,999,991
|
|
|
$1,384,300
|
|
|
|
$806,428
|
|
|
$64,975
|
|
$10,635,700
|
President and Chief
|
|
2016
|
|
$1,000,000
|
|
$0
|
|
$3,318,779
|
|
$2,599,995
|
|
|
$1,600,000
|
|
|
|
$2,284,506
|
|
|
$64,683
|
|
$10,867,963
|
Executive Officer
|
|
2015
|
|
$1,000,000
|
|
$0
|
|
$1,977,567
|
|
$2,079,992
|
|
|
$1,971,200
|
|
|
|
$1,190,038
|
|
|
$62,738
|
|
$8,281,535
|
Jan
Siegmund
|
|
2017
|
|
$675,000
|
|
$0
|
|
$1,681,969
|
|
$532,498
|
|
|
$567,000
|
|
|
|
$350,958
|
|
|
$67,842
|
|
$3,875,267
|
Chief Financial Officer
|
|
2016
|
|
$650,000
|
|
$0
|
|
$1,578,039
|
|
$419,988
|
|
|
$688,400
|
|
|
|
$833,052
|
|
|
$60,621
|
|
$4,230,100
|
|
|
2015
|
|
$590,000
|
|
$0
|
|
$1,637,989
|
|
$389,990
|
|
|
$581,500
|
|
|
|
$397,745
|
|
|
$48,630
|
|
$3,645,854
|
Edward B.
Flynn
|
|
2017
|
|
$579,167
|
|
$0
|
|
$2,718,044
|
|
$374,997
|
|
|
$454,200
|
|
|
|
$312,692
|
|
|
$60,606
|
|
$4,499,706
|
President, Global
|
|
2016
|
|
$525,000
|
|
$0
|
|
$566,948
|
|
$239,999
|
|
|
$556,000
|
|
|
|
$618,477
|
|
|
$60,905
|
|
$2,567,329
|
Enterprise Solutions
|
|
2015
|
|
$475,000
|
|
$0
|
|
$1,872,473
|
|
$209,996
|
|
|
$472,200
|
|
|
|
$308,894
|
|
|
$43,204
|
|
$3,381,767
|
Michael A.
Bonarti
|
|
2017
|
|
$530,000
|
|
$0
|
|
$734,393
|
|
$404,995
|
|
|
$356,200
|
|
|
|
$195,572
|
|
|
$49,132
|
|
$2,270,292
|
General Counsel and
|
|
2016
|
|
$510,000
|
|
$0
|
|
$561,115
|
|
$232,498
|
|
|
$432,100
|
|
|
|
$422,449
|
|
|
$50,218
|
|
$2,208,380
|
Secretary
|
|
2015
|
|
$480,000
|
|
$0
|
|
$1,122,522
|
|
$209,996
|
|
|
$414,000
|
|
|
|
$160,461
|
|
|
$51,862
|
|
$2,438,841
|
Dermot J.
OBrien
|
|
2017
|
|
$540,000
|
|
$0
|
|
$718,259
|
|
$374,997
|
|
|
$362,900
|
|
|
|
$153,359
|
|
|
$52,749
|
|
$2,202,264
|
Chief Human
|
|
2016
|
|
$520,000
|
|
$0
|
|
$1,081,293
|
|
$232,498
|
|
|
$440,500
|
|
|
|
$287,850
|
|
|
$36,689
|
|
$2,598,830
|
Resources Officer
|
|
2015
|
|
$501,400
|
|
$0
|
|
$392,360
|
|
$217,489
|
|
|
$432,400
|
|
|
|
$151,579
|
|
|
$44,840
|
|
$1,740,068
|
(1)
|
Amounts set forth
in the Stock Awards and Option Awards columns represent the aggregate
grant date fair value of awards granted in fiscal years 2017, 2016 and
2015 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, 2017 included in our annual report on Form 10-K
for the fiscal year ended June 30, 2017. The amounts shown in the Stock
Awards column in respect of the performance-based stock unit awards
(PSU) reflect the grant date fair value of such awards based upon the
probable outcome of the performance condition as of the grant date. The
awards for fiscal year 2017 are comprised of the PSU awards and time-based
stock awards. Consistent with the requirements of ASC Topic 718, the
amounts relating to the PSU awards for fiscal year 2017
represent
the sum
of (i) the grant date fair value of the third of three tranches of
the
PSU
award that was granted in September 2014, (ii) the grant date fair value
of the second of three tranches of the PSU award that was granted in
September 2015 and (iii) the grant date fair value of the first of three
tranches of the PSU award that was granted in September 2016, reflecting
that the EPS goal for the tranches relating to the September 2014 and 2015
awards, and the net income goal for the tranche relating to the September
2016 award,
were
established in fiscal year 2017. The amount relating to
the PSU awards for fiscal year 2016 represents the grant date fair value
of the first of three tranches of the PSU award that was granted in
September 2015, the second of three tranches of the PSU award that was
granted in September 2014, and the third of three tranches of the PSU
award that was granted in September 2013, reflecting that the EPS
goal
for such tranches was established in fiscal year 2016; and the amount
relating to the PSU awards for fiscal
year
2015 represents the grant date fair
value of the first of three tranches of the PSU award that was granted in
September 2014, and the second of three tranches of the PSU award that was
granted in September 2013, reflecting that the EPS
goal
for such tranches
was established in fiscal year 2015. Remaining portions of the fiscal year
2017 award will be linked to net income goals for fiscal year 2018 and
fiscal year 2019 and will be reported in the Summary Compensation Table in
such fiscal years; and the remaining portion of the fiscal year 2016 award
will be linked to the EPS goal for fiscal year 2018 and will be reported
in such fiscal year. The grant date fair value of the PSU awards granted
in fiscal years 2017, 2016, and 2015, respectively, assuming achievement
of the maximum level of performance are: Mr. Rodriguez, $6,525,009,
$4,978,168, and $2,966,351; Mr. Siegmund, $1,773,053, $1,467,066, and
$957,120; Mr. Flynn, $1,077,119, $850,421, and $558,798; Mr. Bonarti,
$1,101,589, $841,672, and $558,798; and Mr. OBrien, $1,077,389, $872,004,
and $588,486.
|
|
(2)
|
Performance-based
bonuses paid under the annual cash bonus
plan
are shown in this column.
A discussion of our annual cash bonus
plan
may be found in our
Compensation Discussion and Analysis under Cash Compensation - Annual
Cash Bonus.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
58
|
Table of Contents
Compensation of
Executive Officers
(3)
|
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, 2014 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; the present value as of
June 30, 2015 is based on the RP-2014 white collar mortality table
(projected generationally using scale MP-2014 for both plans and applying
a white collar adjustment for the Supplemental Officers Retirement Plan
only), a 3.25% interest crediting rate for the pension plan, and a 4.25%
discount rate; the present value as of June 30, 2016 is based on the
RP-2014 mortality table with post-2006 improvements removed (projected
generationally using scale MP-2015 for both plans and applying a white
collar adjustment for the Supplemental Officers Retirement Plan only), a
3.25% interest crediting rate for the pension plan, and a 3.4% discount
rate; and the present value as of June 30, 2017 is based on the RP-2014
white collar mortality table with post-2006 improvements removed
(projected generationally using scale MP-2016), a 3.25% interest crediting
rate for the pension plan, and a 3.7% discount rate.
|
|
(4)
|
Please refer to the
All Other Compensation for Fiscal Year 2017 table below for further
information.
|
All Other Compensation For Fiscal
Year 2017
Name
|
|
Other
Benefits
(1)
|
|
Matching
Charitable
Contributions
(2)
|
|
Total
|
Carlos A. Rodriguez
|
|
$44,975
|
|
$20,000
|
|
$64,975
|
Jan Siegmund
|
|
$40,744
|
|
$27,098
|
|
$67,842
|
Edward B. Flynn
|
|
$38,566
|
|
$22,040
|
|
$60,606
|
Michael A. Bonarti
|
|
$29,132
|
|
$20,000
|
|
$49,132
|
Dermot J. OBrien
|
|
$27,189
|
|
$25,560
|
|
$52,749
|
(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,
$31,329; Mr. Siegmund, $28,369; Mr. Flynn, $25,034; Mr. Bonarti, $16,991;
and Mr. OBrien, $18,241.
|
|
|
(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 $1,271; and Mr. Flynn $1,271.
|
|
|
(c)
|
Matching
contributions to the companys Retirement and Savings Plan (available to
the companys associates generally): Mr. Rodriguez, $11,235; Mr. Siegmund,
$11,235; Mr. Flynn, $11,235; Mr. Bonarti, $11,235; and Mr. OBrien,
$8,025.
|
|
|
(d)
|
Life insurance and
accidental death and dismemberment premiums paid by the company (available
to the companys associates generally): Mr. Rodriguez, $1,140; Mr.
Siegmund, $1,140; Mr. Flynn, $1,026; Mr. Bonarti, $906; and Mr. OBrien,
$923.
|
|
|
(e)
|
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 travel
expenses, including hotels, meals and transportation.
|
|
(2)
|
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 $20,000 in a calendar year, this table
reflects matching charitable contributions for the fiscal year ended June
30, 2017.
|
59
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Executive Officers
Grants of Plan-Based Awards Table for
Fiscal Year 2017
Name
|
|
Grant
Date
(1)
|
|
Date
of
Corporate
Action
|
|
Plan
Under
which
Grant
was
Made
(2)
|
|
|
Estimated Future
Payouts Under
Non-Equity Incentive Plan
Awards
|
|
Estimated Future Payouts
Under Equity Incentive
Plan
Awards
(3)
|
|
All
Other
Stock
Awards:
Number of
Shares of
Stock or
Units
#
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options #
|
|
Exercise
or Base
Price
of
Option
Awards
($/Share)
|
|
Grant Date
Fair Value
of Stock
and
Option
Awards
($)
(4)
|
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
|
|
$1,648,000
|
|
$3,296,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
7,068
|
|
14,137
|
|
|
21,205
|
|
|
|
|
|
|
|
|
|
|
$1,281,214
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
8,655
|
|
17,310
|
|
|
25,965
|
|
|
|
|
|
|
|
|
|
|
$1,568,805
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
8,275
|
|
16,551
|
|
|
24,826
|
|
|
|
|
|
|
|
|
|
|
$1,499,987
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
6/2/2016
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
208,913
|
|
|
$90.63
|
|
$2,999,991
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan Siegmund
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$675,000
|
|
$1,350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
2,062
|
|
4,123
|
|
|
6,185
|
|
|
|
|
|
|
|
|
|
|
$373,676
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
2,175
|
|
4,350
|
|
|
6,525
|
|
|
|
|
|
|
|
|
|
|
$394,210
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
2,285
|
|
4,570
|
|
|
6,855
|
|
|
|
|
|
|
|
|
|
|
$414,149
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
6/2/2016
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,082
|
|
|
$90.63
|
|
$532,498
|
|
|
8/2/2016
|
|
6/2/2016
|
|
TBRS
|
(8)
|
|
|
|
|
|
|
|
-
|
|
5,683
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
$499,934
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward B. Flynn
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$579,167
|
|
$1,158,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
1,110
|
|
2,220
|
|
|
3,330
|
|
|
|
|
|
|
|
|
|
|
$201,186
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
1,243
|
|
2,485
|
|
|
3,728
|
|
|
|
|
|
|
|
|
|
|
$225,246
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
1,609
|
|
3,218
|
|
|
4,827
|
|
|
|
|
|
|
|
|
|
|
$291,647
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
6/2/2016
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,114
|
|
|
$90.63
|
|
$374,997
|
|
|
12/1/2016
|
|
11/21/2016
|
|
TBRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,883
|
|
|
|
|
|
|
|
$1,999,965
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bonarti
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$424,000
|
|
$848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
1,110
|
|
2,220
|
|
|
3,330
|
|
|
|
|
|
|
|
|
|
|
$201,186
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
1,204
|
|
2,408
|
|
|
3,612
|
|
|
|
|
|
|
|
|
|
|
$218,207
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
1,738
|
|
3,476
|
|
|
5,214
|
|
|
|
|
|
|
|
|
|
|
$315,000
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
6/2/2016
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,203
|
|
|
$90.63
|
|
$404,995
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermot J. OBrien
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$432,000
|
|
$864,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
1,150
|
|
2,300
|
|
|
3,449
|
|
|
|
|
|
|
|
|
|
|
$208,405
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
1,204
|
|
2,408
|
|
|
3,612
|
|
|
|
|
|
|
|
|
|
|
$218,207
|
|
|
9/1/2016
|
|
8/2/2016
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
1,609
|
|
3,218
|
|
|
4,827
|
|
|
|
|
|
|
|
|
|
|
$291,647
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
6/2/2016
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,114
|
|
|
$90.63
|
|
$374,997
|
(1)
|
The grant dates shown in
column (b) of the table were determined pursuant to FASB ASC Topic 718.
The dates shown in column (bb) are the dates on which our compensation
committee set target award amounts under the PSU program and approved the
stock option and TBRS award amounts.
|
|
(2)
|
PSU refers to our
performance-based stock unit award program and TBRS refers to our
time-based restricted stock 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.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
60
|
Table of Contents
Compensation of
Executive Officers
(4)
|
We computed the grant date
fair value of each PSU and TBRS award 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, 2017 included in our annual report on Form 10-K for the
fiscal year ended June 30, 2017.
|
|
(5)
|
Consistent with the
requirements of ASC Topic 718, the amount represents the third of three
tranches of the PSU award that was granted in September 2014 for which the
grant date fair value was established in September 2016. The units earned
from this award will be paid out in September 2017.
|
|
(6)
|
Consistent with the
requirements of ASC Topic 718, the amount represents the second of three
tranches of the PSU award that was granted in September 2015 for which the
grant date fair value was established in September 2016. The units earned
from this award will be paid out in September 2018.
|
|
(7)
|
Consistent with the
requirements of ASC Topic 718, the amount represents the first of three
tranches of the PSU award that was granted in September 2016 for which the
grant date fair value was established in September 2016. The units earned
from this award will be paid out in September 2019.
|
|
(8)
|
The vesting of the TBRS award
for Mr. Siegmund is subject to a one-year corporate performance target
based on
adjusted
EBIT margin as described on page
53
of the
CD&A.
|
Restricted
Stock/Performance Stock Units
We grant restricted stock under our 2008
Omnibus Award Plan. Restricted stock awards vest over periods determined by our
compensation committee. In fiscal year 2014, we introduced a performance-based
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 three-year PSU program replaced our performance-based restricted stock
program for senior executives. 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 prorated 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 PSU awards will be entitled
to receive dividends paid only with respect to shares
of 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 PSU 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.
61
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Executive Officers
Stock Options
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.
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
12
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
12
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.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
62
|
Table of Contents
Compensation of
Executive Officers
Outstanding Equity Awards for Fiscal
Year-End 2017
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
Name
|
|
|
Grant
Date
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Exercisable)
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Unexercisable)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or Units of
Stock That
Have Not
Vested
(#)
|
|
Market
Value
of
Shares or
Units of
Stock That
Have Not
Vested
($)
(1)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
(2)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
(1)
|
(a)
|
|
|
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
(i)
|
|
(j)
|
Carlos A.
Rodriguez
|
|
1/23/2014
|
|
|
|
|
|
|
33,536
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
72,727
|
|
|
|
72,727
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
148,176
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
208,913
|
|
|
$90.63
|
|
8/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,217
|
|
|
|
$3,813,203
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,371
|
|
|
|
$1,882,317
|
|
Jan Siegmund
|
|
1/26/2012
|
|
|
12,798
|
|
|
|
|
|
|
$49.07
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013
|
|
|
28,440
|
|
|
|
|
|
|
$52.65
|
|
1/24/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
27,300
|
|
|
|
9,103
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
13,636
|
|
|
|
13,636
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
7,978
|
|
|
|
23,936
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
37,082
|
|
|
$90.63
|
|
8/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,492
|
|
|
$870,120
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,985
|
|
|
$510,763
|
|
|
|
|
|
|
|
|
|
|
|
9/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,716
|
|
|
$790,581
|
|
|
|
|
|
|
|
|
|
|
|
8/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,683
|
|
|
$582,280
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,352
|
|
|
|
$958,184
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,072
|
|
|
|
$519,711
|
|
Edward B. Flynn
|
|
1/25/2013
|
|
|
5,120
|
|
|
|
|
|
|
$52.65
|
|
1/24/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
5,972
|
|
|
|
5,973
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
7,342
|
|
|
|
7,343
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
4,559
|
|
|
|
13,678
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
26,114
|
|
|
$90.63
|
|
8/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,282
|
|
|
$643,654
|
|
|
|
|
|
|
|
|
|
|
|
12/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,883
|
|
|
$2,139,672
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,343
|
|
|
|
$547,492
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,572
|
|
|
|
$365,985
|
|
63
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Executive Officers
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
Name
|
|
|
Grant
Date
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Exercisable)
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Unexercisable)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or Units of
Stock
That
Have Not
Vested
(#)
|
|
Market
Value
of
Shares or
Units
of
Stock That
Have
Not
Vested
($)
(1)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not Vested
(#)
(2)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested
($)
(1)
|
(a)
|
|
|
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
Michael A.
Bonarti
|
|
1/23/2014
|
|
|
11,944
|
|
|
|
5,973
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
7,342
|
|
|
|
7,343
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
4,416
|
|
|
|
13,251
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
28,203
|
|
|
$90.63
|
|
8/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,674
|
|
|
$478,898
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,176
|
|
|
|
$530,382
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,858
|
|
|
|
$395,290
|
|
Dermot J.
OBrien
|
|
1/23/2014
|
|
|
|
|
|
|
5,973
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
7,604
|
|
|
|
7,605
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
4,416
|
|
|
|
13,251
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
26,114
|
|
|
$90.63
|
|
8/31/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,442
|
|
|
$557,587
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,176
|
|
|
|
$530,382
|
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,572
|
|
|
|
$365,985
|
|
(1)
|
Market value based
on June 30, 2017 closing price of our common stock of $102.46 per
share.
|
|
(2)
|
The amount shown
for the PSU award granted on September 1, 2015 includes only units
relating to two-thirds of the full target award for which an EPS goal has
been established, and reflects the number of units earned based on
performance against the EPS goal for fiscal years 2016 and 2017. The
amount shown for the PSU award granted on September 1, 2016 includes only
units relating to one-third of the full target award for which a net
income goal has been established, and reflects the number of units earned
based on performance against the related goal for fiscal year 2017. All
amounts exclude accrued dividend equivalents. In each case, the amounts
shown are subject to potential reduction based on our actual TSR
performance over the entire three-fiscal-year period ending June 30, 2018
and June 30, 2019, respectively.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
64
|
Table of Contents
Compensation of
Executive Officers
Outstanding Equity
Vesting Schedule for Fiscal Year-End 2017
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
Grant Date
|
|
Vesting from Grant Date
|
|
Grant or
Award
Date
|
|
Vesting Schedule
|
Carlos A. Rodriguez
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
9/1/2015
|
|
|
100% vests on 6/30/2018
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
9/1/2016
|
|
|
100% vests on 6/30/2019
|
|
|
|
|
|
|
25% vested on 1/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vested on 1/22/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
25% vested on 9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2020
|
|
|
|
|
|
|
Jan Siegmund
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
7/1/2014
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
|
|
|
25% vested on 1/23/2017
|
|
|
6/30/2015
|
|
|
50% vests on 6/30/2018
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
|
|
|
50% vests on 6/30/2019
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
9/14/2015
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vested on 1/22/2017
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
8/2/2016
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
9/1/2015
|
|
|
25% vested on 9/1/2016
|
|
|
9/1/2015
|
|
|
100% vests on 6/30/2018
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
9/1/2016
|
|
|
100% vests on 6/30/2019
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
|
|
|
9/1/2016
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2020
|
|
|
|
|
|
|
Edward B. Flynn
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
6/30/2015
|
|
|
29% vested on 12/31/2015
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
|
|
29% vested on 12/31/2016
|
|
|
|
|
|
|
25% vested on 1/23/2017
|
|
|
|
|
|
42% vests on 12/31/2017
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
12/1/2016
|
|
|
16% vests on 12/1/2017
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
42% vests on 12/1/2018
|
|
|
|
|
|
|
25% vested on 1/22/2017
|
|
|
|
|
|
42% vests on 12/1/2019
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
9/1/2015
|
|
|
100% vests on 6/30/2018
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
9/1/2016
|
|
|
100% vests on 6/30/2019
|
65
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Executive Officers
|
Option Awards
|
|
Stock Awards
|
|
Grant Date
|
|
Vesting from Grant Date
|
|
Grant or
Award Date
|
|
Vesting Schedule
|
|
9/1/2015
|
|
25% vested on 9/1/2016
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
9/1/2016
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
|
25% vests on 9/1/2020
|
|
|
|
|
Michael A. Bonarti
|
1/23/2014
|
|
25% vested on 1/23/2015
|
|
6/30/2015
|
|
50% vested on 6/30/2017
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
50% vests on 6/30/2018
|
|
|
|
25% vested on 1/23/2017
|
|
9/1/2015
|
|
100% vests on 6/30/2018
|
|
|
|
25% vests on 1/23/2018
|
|
9/1/2016
|
|
100% vests on 6/30/2019
|
|
1/22/2015
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
25% vested on 1/22/2017
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
9/1/2015
|
|
25% vested on 9/1/2016
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
9/1/2016
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
|
25% vests on 9/1/2020
|
|
|
|
|
Dermot J. OBrien
|
1/23/2014
|
|
25% vested on 1/23/2015
|
|
6/30/2016
|
|
50% vests on 7/1/2018
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
25% vested on 1/23/2017
|
|
9/1/2015
|
|
100% vests on 6/30/2018
|
|
|
|
25% vests on 1/23/2018
|
|
9/1/2016
|
|
100% vests on 6/30/2019
|
|
1/22/2015
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
25% vested on 1/22/2017
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
9/1/2015
|
|
25% vested on 9/1/2016
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
9/1/2016
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
|
25% vests on 9/1/2020
|
|
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
66
|
Table of Contents
Compensation of
Executive Officers
Option Exercises and Stock Vested Table
for Fiscal Year 2017
|
Option
Awards
|
|
Stock Awards
(6)
|
Name
|
Number
of
Shares
Acquired on
Exercise
|
|
Value
Realized
on
Exercise
|
|
Number of
Shares
Acquired
on
Vesting
|
|
Value
Realized
on
Vesting
|
(a)
|
|
(b)
|
|
|
(c)
|
|
(d)
|
|
(e)
|
Carlos A. Rodriguez
(1)
|
|
196,062
|
|
|
$6,047,893
|
|
42,191
|
|
$3,711,542
|
Jan
Siegmund
(2)
|
|
15,642
|
|
|
$858,456
|
|
15,064
|
|
$1,325,180
|
Edward B. Flynn
(3)
|
|
41,521
|
|
|
$1,658,848
|
|
15,876
|
|
$1,470,995
|
Michael A. Bonarti
(4)
|
|
11,092
|
|
|
$461,681
|
|
14,089
|
|
$1,307,136
|
Dermot J. OBrien
(5)
|
|
23,036
|
|
|
$863,195
|
|
10,043
|
|
$883,483
|
(1)
|
Mr. Rodriguez exercised options
to purchase 67,064 shares on July 11, 2016 with an exercise price of
$69.72 and a market price of $95.00; 79,606 shares on February 15, 2017
with a weighted average exercise price of $59.84 and a weighted average
market price of $99.05; and 49,392 shares on May 24, 2017 with an exercise
price of $75.10 and a weighted average market price of $100.01. He
acquired 42,191 shares with a market price of $87.97 on August 2,
2016.
|
(2)
|
Mr. Siegmund exercised options to
purchase 11,376 shares on December 13, 2016 with an exercise price of
$43.53 and a market price of $99.00; and 4,266 shares on January 3, 2017
with an exercise price of $49.07 and a market price of $102.38. He
acquired 15,064 shares with a market price of $87.97 on August 2,
2016.
|
(3)
|
Mr. Flynn exercised options to
purchase 41,521 shares on February 1, 2017 with a weighted average
exercise price of $55.95 and a market price of $95.99. He acquired 2,124
shares with a market price of $92.75 on July 5, 2016; 9,415 shares with a
market price of $87.97 on August 2, 2016; and 4,337 shares with a market
price of $102.78 on December 30, 2016.
|
(4)
|
Mr. Bonarti exercised options to
purchase 11,092 shares on January 25, 2017 with a weighted average
exercise price of $61.84 and a weighted average market price of $103.46.
He acquired 9,415 shares with a market price of $87.97 on August 2, 2016;
and 4,674 shares with a market price of $102.46 on June 30,
2017.
|
(5)
|
Mr. OBrien exercised options to
purchase 23,036 shares on January 25, 2017 with a weighted average
exercise price of $65.92 and a weighted average market price of $103.39.
He acquired 10,043 shares with a market price of $87.97 on August 2,
2016.
|
(6)
|
For the number of shares acquired
on vesting, fractional shares issued have been rounded to the nearest
whole number.
|
67
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Executive Officers
Pension Benefits for Fiscal Year
2017
Name
|
Plan Name
|
|
Number
of
Years
Credited
Service
(1)
|
|
Present
Value
of
Accumulated
Benefit
(2)(3)(4)
|
|
Payments
During Last
Fiscal
Year
|
(a)
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
Carlos A. Rodriguez
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
16.50
|
|
|
|
$213,647
|
|
|
$0
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
14.08
|
|
|
|
$6,735,438
|
|
|
$0
|
Jan Siegmund
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
17.50
|
|
|
|
$223,651
|
|
|
$0
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
12.58
|
|
|
|
$2,630,094
|
|
|
$0
|
Edward B. Flynn
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
27.50
|
|
|
|
$415,770
|
|
|
$0
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
10.17
|
|
|
|
$2,052,264
|
|
|
$0
|
Michael A. Bonarti
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
19.50
|
|
|
|
$240,061
|
|
|
$0
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
7.00
|
|
|
|
$1,063,024
|
|
|
$0
|
Dermot J. OBrien
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
4.50
|
|
|
|
$41,509
|
|
|
$0
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
5.16
|
|
|
|
$765,035
|
|
|
$0
|
(1)
|
Consists of the number of
years of service credited as of June 30, 2017 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, 2017 under the Pension Retirement Plan
and the Supplemental Officers Retirement Plan using the RP-2014 white
collar mortality table with post-2006 improvements removed (projected
generationally using scale MP-2016)
,
a 3.25% interest crediting rate for
the pension plan, and a 3.7% discount 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, 2017 are as
follows: Mr. Rodriguez, $225,181; Mr. Siegmund, $235,601; Mr. Flynn,
$429,237; Mr. Bonarti, $254,146; and Mr. OBrien,
$44,057.
|
|
(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
|
|
|
68
|
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 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 (SORP), which is a
non-qualified defined benefit plan that pays a lump sum or an annuity upon
retirement. Eligible participants include the NEOs and other officers of the
company with titles of corporate vice president and above. Commencing with
fiscal year 2020, the SORP will be frozen. As part of the freeze, benefits under
the SORP will continue to accrue through June 30, 2019; thereafter, participants
will retain their accrued benefit with no future accruals due to pay and/or
service. The SORP was previously closed to new entrants in January 2014. On
August 14, 2008, our board of directors approved amendments to the SORP, which
implemented changes to the SORP 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, 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 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 SORP, and also provide that effective after December
31, 2009, our chief executive officer would no longer be able to grant service
credit in his discretion to SORP participants who are involuntarily terminated
or who receive severance from the company.
All participants
must have at least five years of service to receive any benefit under the SORP.
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 SORP.
SORP 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 Internal Revenue 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 benefit, payable as a life
annuity or, if elected, a guaranteed payment for 120 months only.
The amount of the annual benefit is
determined by multiplying the 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 participants with more than 20 years of service only,
added to that first amount will be an amount determined by
69
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Executive Officers
multiplying the
participants final average annual pay by a factor of 1%, up to five additional
years of service, and the participants vested percentage.
Final average annual pay 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 will
be limited to 45% of a participants final average annual pay. A participant
whose benefit payments begin before the first day of the month on or after the
participants 65
th
birthday will receive payments
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 65
th
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
62
nd
birthday.
If within 24 months after a participants
employment terminates he or she 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 SORP.
Deferred Compensation
Program
|
Under the ADP
Deferred Compensation Plan, all U.S. executives of the company (including the
NEOs) can defer all or a portion of their annual cash bonuses, which may be
allocated to notional investments selected by the participant. Prior to fiscal
2015, participants could 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, and was 1.75% for fiscal year 2017. Beginning
January 1, 2015, the company replaced these two investment options with certain
diversified investment funds that mirror the investment options available in the
companys 401(k) plan. The company does not match deferrals by the NEOs or
otherwise contribute any amounts to their deferred compensation
accounts.
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 must comply with the
redeferral rules in effect under Section 409A of the Internal Revenue 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
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.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
70
|
Table of Contents
Compensation of
Executive Officers
Non-Qualified Deferred Compensation For
Fiscal Year 2017
Name
|
Executive
Contributions in
2017
(1)
|
|
Aggregate
Earnings
in
2017
(2)
|
|
Aggregate
Balance
at
June 30, 2017
(3)
|
(a)
|
(b)
|
|
(d)
|
|
(f)
|
Carlos A. Rodriguez
|
|
$0
|
|
|
|
$107,350
|
|
|
|
$707,802
|
|
Jan
Siegmund
|
|
$141,750
|
|
|
|
$275,393
|
|
|
|
$2,274,062
|
|
Edward B. Flynn
|
|
$0
|
|
|
|
$114,911
|
|
|
|
$810,295
|
|
Michael A. Bonarti
|
|
$0
|
|
|
|
$0
|
|
|
|
$0
|
|
Dermot J. OBrien
|
|
$0
|
|
|
|
$0
|
|
|
|
$0
|
|
(1)
|
The amount listed in this
column (b) reflects 25% of the annual bonus earned for fiscal year 2017 by
Mr. Siegmund ($567,000), which he deferred.
|
|
(2)
|
The earnings amounts are not
reported as compensation in fiscal year 2017 in the Summary Compensation
Table, as they do not represent above-market or preferential earnings on
deferred compensation.
|
|
(3)
|
The amounts listed in column
(f) reflect each NEOs aggregate balance at June 30, 2017, which is equal
to the balance at June 30, 2016, increased by the NEOs
earned
contributions and
earnings in fiscal year 2017,
and
including, for Mr. Siegmund, an amount equal to
$172,100, which represents the 25% portion of his annual bonus for fiscal
2016 that was payable in fiscal year 2017 and reported in the Summary
Compensation Table for fiscal year 2016 but deferred by Mr. Siegmund. The
following amounts were previously reported as compensation in the Summary
Compensation Table for previous years: Mr. Siegmund,
$658,615.
|
71
|
|
|
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 NEOs participate in
the change in control plan. As of June 30, 2017, there were 17 eligible
participants in the change in control plan.
The change in control plan provides that a
participant who is involuntarily terminated by the company without cause or who
leaves 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% (or in the case of our chief executive officer, 200%) 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;
and
|
●
|
The number of shares
the participant would have been entitled to receive under the then-ongoing
performance-based equity programs had all applicable performance goals
been achieved at 100% target rate.
|
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:
●
|
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.
|
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;
|
●
|
conviction of, or the
pleading of guilty or nolo contendere to, a felony involving the assets or
business of the company; or
|
●
|
willful and continued
failure to substantially perform ones duties after written notice by the
board of directors.
|
The change in control payments potentially
due to the NEOs are payable solely pursuant to the terms of the change in
control plan and applicable terms of the award agreements.
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 Securities Exchange Act of 1934, as
amended), 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;
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
72
|
Table of Contents
Potential Payments to
Named Executive Officers Upon Termination or Change in
Control
●
|
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.
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, 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 are conditioned upon the participants execution of a release of claims
in favor of the company.
Corporate
Officer Severance Plan
|
Effective May 6, 2015, ADP adopted the
Corporate Officer Severance Plan for purposes of involuntary terminations other
than for cause in the absence of a change in control.
All NEOs participate in the severance
plan. As of June 30, 2017, there were 17 eligible participants in the severance
plan.
The severance plan provides that a
participant who is involuntarily terminated by the company without cause (other
than during the two-year period following the occurrence of a change in control)
will receive:
●
|
18 (or in the case of the CEO, 24)
months of continued base salary;
|
●
|
A prorated annual bonus for the year
of termination, based on actual performance for the full fiscal year, but
assuming that all non-financial and other subjective and qualitative
performance criteria are achieved at a level equal to the weighted-average
percentage achievement of all applicable financial and other objective and
non-qualitative performance criteria;
|
●
|
Continued vesting of his or her
stock options and time-vested restricted stock and restricted stock unit
awards during the period of continued base salary payments (the Severance
Period); and
|
●
|
The number of shares of stock (or
cash, in the case of cash-settled awards) that the participant would have
been entitled to receive based on the actual achievement of the applicable
performance goals in each of the then-ongoing performance-based restricted
stock and PSU programs, prorated to reflect the portion of the applicable
performance period elapsed through the last day of the Severance
Period.
|
The severance plan defines cause
as:
|
●
|
Failure to perform duties (other
than due to physical or mental illness or injury), which failure amounts
to an intentional and extended neglect of duties, to the extent not cured
within 15 days following written notice;
|
●
|
Engaging in conduct that is
materially injurious to the company or an
affiliate;
|
73
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Potential Payments to
Named Executive Officers Upon
Termination or Change in
Control
●
|
Conviction of, or the pleading of
guilty or nolo contendere to, a felony involving as a material element
fraud or dishonesty; or
|
●
|
The consistent failure to follow the
lawful instructions of the board of directors or a direct superior, which
failure amounts to an intentional and extended neglect of
duties.
|
The severance payments potentially due to
the NEOs are payable solely pursuant to the terms of the severance plan (other
than if benefits are payable pursuant to the change in control plan).
Certain executives, including the NEOs,
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 NEOs) 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 NEOs at June 30, 2017, see Deferred
Compensation Program above.
Termination and
Change in Control Tables
|
The following tables set forth the
payments that each of our NEOs who were serving as executive officers as of June
30, 2017, would have received under various termination scenarios on June 30,
2017. Pension benefits, which are described under Pension Benefits for Fiscal
Year 2017 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. Pursuant to the companys Corporate Officer Severance Plan, each of
our NEOs would
also receive a prorated annual bonus
for the year of termination, based on actual performance for the full fiscal
year, in the event of an involuntary termination without cause prior to June 30,
2017. Please refer to page
73
in this proxy statement for a description of the
Corporate Officer Severance Plan. 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 NEOs 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,
2017.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
74
|
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
Payment
Elements
|
|
Termination
Following
Change
In Control
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Without Cause
|
|
Retirement
|
Termination Payment
|
|
|
$5,337,750
|
(1)
|
|
|
$0
|
|
$0
|
|
|
|
$2,060,000
|
(2)
|
|
|
$0
|
Stock Options
(3)
|
|
|
$8,776,328
|
|
|
|
$8,776,328
|
|
$8,776,328
|
|
|
|
$6,189,237
|
|
|
|
$0
|
PSUs
(4)
|
|
|
$10,723,135
|
|
|
|
$5,670,557
|
|
$5,670,557
|
|
|
|
$11,190,240
|
|
|
|
$0
|
Supplemental Officers
Retirement Plan
|
|
|
$0
|
|
|
|
$0
|
|
$6,346,725
|
(5)
|
|
|
$0
|
|
|
|
$0
|
Total
|
|
|
$24,837,213
|
|
|
|
$14,446,885
|
|
$20,793,610
|
|
|
|
$19,439,477
|
|
|
|
$0
|
(1)
|
Represents payment of two
times each of (i) the highest rate of annual salary during the calendar
year in which employment terminates or the year immediately prior to the
termination ($1,030,000) and (ii) the average annual bonus for the two
most recently completed calendar years ($1,638,875).
|
|
(2)
|
Represents an amount equal to
two times annual salary ($1,030,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2017 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $102.46 per share. Amounts in the Involuntary
Termination Without Cause column assume unvested options that would vest
during the severance period (24 months) immediately vested and were
exercised on June 30, 2017.
|
|
(4)
|
Amount in the Termination
Following a Change in Control column represents amount attributable to the
fiscal years 2016 and 2017 PSU programs assuming performance goals of this
program will be achieved at 100% target rate. Amounts in the Death and
Disability columns represent the sum of (a) two-thirds of the fiscal year
2016 PSU award based on performance goals achieved at 88% target rate for
fiscal year 2016, at 127% target rate for fiscal year 2017, and an assumed
achievement at target rate for fiscal year 2018 plus (b) one-third of the
fiscal year 2017 PSU award based on performance goals achieved at 111%
target rate for fiscal year 2017 and an assumed achievement at target rate
for fiscal years 2018 and 2019. Amounts in the Involuntary Termination
Without Cause column represent the sum of (x) the full fiscal year 2016
PSU award based on performance goals achieved at 88% target rate for
fiscal year 2016, at 127% target rate for fiscal year 2017, and an assumed
achievement at target rate for fiscal year 2018 plus (y) the full fiscal
year 2017 PSU award based on performance goals achieved at 111% target
rate for fiscal year 2017 and an assumed achievement at target rate for
fiscal years 2018 and 2019. All amounts include accrued dividend
equivalents through June 30, 2017.
|
|
(5)
|
Represents present value of
the incremental benefit using the RP-2014 white collar mortality table
with post-2006 improvements removed (projected generationally using scale
MP-2016) and a 3.7% discount rate, assuming disability occurring on June
30, 2017.
|
75
|
|
|
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
JAN SIEGMUND
Payment
Elements
|
|
Termination
Following
Change
In Control
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Without Cause
|
|
Retirement
|
Termination Payment
|
|
|
$1,959,488
|
(1)
|
|
|
$0
|
|
$0
|
|
|
|
$1,012,500
|
(2)
|
|
|
$0
|
Stock Options
(3)
|
|
|
$1,607,771
|
|
|
|
$1,607,771
|
|
$1,607,771
|
|
|
|
$1,062,048
|
|
|
|
$0
|
Restricted Stock
(4)
|
|
|
$2,753,745
|
|
|
|
$2,753,745
|
|
$2,753,745
|
|
|
|
$1,085,623
|
|
|
|
$0
|
PSUs
(5)
|
|
|
$2,823,062
|
|
|
|
$1,469,321
|
|
$1,469,321
|
|
|
|
$2,698,093
|
|
|
|
$0
|
Supplemental Officers
Retirement Plan
|
|
|
$0
|
|
|
|
$0
|
|
$2,455,619
|
(6)
|
|
|
$0
|
|
|
|
$0
|
Total
|
|
|
$9,144,066
|
|
|
|
$5,830,837
|
|
$8,286,456
|
|
|
|
$5,858,264
|
|
|
|
$0
|
(1)
|
Represents payment of 1.5
times each of (i) the highest rate of annual salary during the calendar
year in which employment terminates or the year immediately prior to the
termination ($675,000) and (ii) the average annual bonus for the two most
recently completed calendar years ($631,325).
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($675,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2017 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $102.46 per share. Amounts in the Involuntary
Termination Without Cause column assume unvested options that would vest
during the severance period (18 months) immediately vested and were
exercised on June 30, 2017.
|
|
(4)
|
Amounts include the vesting of
time-based restricted stock awards.
|
|
(5)
|
Amount in the Termination
Following a Change in Control column represents amount attributable to the
fiscal years 2016 and 2017 PSU programs assuming performance goals of this
program will be achieved at 100% target rate. Amounts in the Death and
Disability columns represent the sum of (a) two-thirds of the fiscal year
2016 PSU award based on performance goals achieved at 88% target rate for
fiscal year 2016, at 127% target rate for fiscal year 2017, and an assumed
achievement at target rate for fiscal year 2018 plus (b) one-third of the
fiscal year 2017 PSU award based on performance goals achieved at 111%
target rate for fiscal year 2017 and an assumed achievement at target rate
for fiscal years 2018 and 2019. Amounts in the Involuntary Termination
Without Cause column represent the sum of (x) the full fiscal year 2016
PSU award based on performance goals achieved at 88% target rate for
fiscal year 2016, at 127% target rate for fiscal year 2017, and an assumed
achievement at target rate for fiscal year 2018, plus (y) five-sixths of
the full fiscal year 2017 PSU award based on performance goals achieved at
111% target rate for fiscal year 2017 and an assumed achievement at target
rate for fiscal years 2018 and 2019. All amounts include accrued dividend
equivalents through June 30, 2017.
|
|
(6)
|
Represents present value of
the incremental benefit using the RP-2014 white collar mortality table
with post-2006 improvements removed (projected generationally using scale
MP-2016) and a 3.7% discount rate, assuming disability occurring on June
30, 2017.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
76
|
Table of Contents
Potential Payments to
Named Executive Officers Upon
Termination or Change in
Control
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
EDWARD B. FLYNN
Payment
Elements
|
|
Termination
Following
Change In
Control
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Without Cause
|
|
Retirement
|
Termination Payment
|
|
|
$1,633,151
|
(1)
|
|
|
$0
|
|
$0
|
|
|
|
$868,751
|
(2)
|
|
|
$0
|
Stock Options
(3)
|
|
|
$995,119
|
|
|
|
$995,119
|
|
$995,119
|
|
|
|
$995,119
|
|
|
|
$686,191
|
Restricted Stock
(4)
|
|
|
$2,783,277
|
|
|
|
$2,783,277
|
|
$2,783,277
|
|
|
|
$1,884,600
|
|
|
|
$0
|
PSUs
(5)
|
|
|
$1,802,981
|
|
|
|
$905,178
|
|
$905,178
|
|
|
|
$1,705,725
|
|
|
|
$905,178
|
Supplemental Officers
Retirement Plan
|
|
|
$0
|
|
|
|
$0
|
|
$1,016,254
|
(6)
|
|
|
$0
|
|
|
|
$0
|
Health Coverage
(7)
|
|
|
$183,000
|
|
|
|
$0
|
|
$183,000
|
|
|
|
$183,000
|
|
|
|
$183,000
|
Total
|
|
|
$7,397,528
|
|
|
|
$4,683,574
|
|
$5,882,828
|
|
|
|
$5,637,195
|
|
|
|
$1,774,369
|
(1)
|
Represents payment of 1.5
times each of (i) the highest rate of annual salary during the calendar
year in which employment terminates or the year immediately prior to the
termination ($579,167) and (ii) the average annual bonus for the two most
recently completed calendar years ($509,600).
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($579,167).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2017 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $102.46 per share. Amounts in the Retirement column
assume a retirement date of June 30, 2017, and assume all unvested options
granted more than one year prior to the retirement date immediately vested
and were exercised on June 30, 2017.
|
|
(4)
|
Amounts include the vesting of
time-based restricted stock awards.
|
|
(5)
|
Amount in the Termination
Following a Change in Control column represents amount attributable to the
fiscal years 2016 and 2017 PSU programs assuming performance goals of this
program will be achieved at 100% target rate.
|
|
|
Amounts in the Death,
Disability, and Retirement columns represent the sum of (a) two-thirds of
the fiscal year 2016 PSU award based on performance goals achieved at 88%
target rate for fiscal year 2016, at 127% target rate for fiscal year
2017, and an assumed achievement at target rate for fiscal year 2018 plus
(b) one-third of the fiscal year 2017 PSU award based on performance goals
achieved at 111% target rate for fiscal year 2017 and an assumed
achievement at target rate for fiscal years 2018 and 2019. Amounts in the
Involuntary Termination Without Cause column represent the sum of (x) the
full fiscal year 2016 PSU award based on performance goals achieved at 88%
target rate for fiscal year 2016, at 127% target rate for fiscal year
2017, and an assumed achievement at target rate for fiscal year 2018, plus
(y) five-sixths of the full fiscal year 2017 PSU award based on
performance goals achieved at 111% target rate for fiscal year 2017 and an
assumed achievement at target rate for fiscal years 2018 and 2019. All
amounts include accrued dividend equivalents through June 30,
2017.
|
|
(6)
|
Represents present value of
the incremental benefit using the RP-2014 white collar mortality table
with post-2006 improvements removed (projected generationally using scale
MP-2016) and a 3.7% discount rate, assuming disability occurring on June
30, 2017.
|
|
(7)
|
Represents the present value
of Mr. Flynn's health coverage under our retiree medical plan using a
discount rate of 3.64% and a medical inflation rate beginning at 6.8% for
2017-2018 and ultimately settling at 4.5% by
2039.
|
77
|
|
|
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
MICHAEL A. BONARTI
Payment
Elements
|
|
Termination
Following
Change
In Control
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Without Cause
|
|
Retirement
|
Termination Payment
|
|
|
$1,407,900
|
(1)
|
|
|
$0
|
|
$0
|
|
|
|
$795,000
|
(2)
|
|
|
$0
|
Stock Options
(3)
|
|
|
$1,008,149
|
|
|
|
$1,008,149
|
|
$1,008,149
|
|
|
|
$662,272
|
|
|
|
$0
|
Restricted Stock
(4)
|
|
|
$478,898
|
|
|
|
$478,898
|
|
$478,898
|
|
|
|
$478,898
|
|
|
|
$0
|
PSUs
(5)
|
|
|
$1,858,732
|
|
|
|
$915,626
|
|
$915,626
|
|
|
|
$1,749,258
|
|
|
|
$0
|
Supplemental Officers
Retirement Plan
|
|
|
$0
|
|
|
|
$0
|
|
$1,449,963
|
(6)
|
|
|
$0
|
|
|
|
$0
|
Total
|
|
|
$4,753,679
|
|
|
|
$2,402,673
|
|
$3,852,636
|
|
|
|
$3,685,428
|
|
|
|
$0
|
(1)
|
Represents payment of 1.5
times each of (i) the highest rate of annual salary during the calendar
year in which employment terminates or the year immediately prior to the
termination ($530,000) and (ii) the average annual bonus for the two most
recently completed calendar years ($408,600).
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($530,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2017 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $102.46 per share. Amounts in the Involuntary
Termination Without Cause column assume unvested options that would vest
during the severance period (18 months) immediately vested and were
exercised on June 30, 2017.
|
|
(4)
|
Amounts include the vesting of
time-based restricted stock awards.
|
|
(5)
|
Amount in the Termination Following a Change
in Control column represents amount attributable to the fiscal years 2016
and 2017 PSU programs assuming performance goals of this program will be
achieved at 100% target rate.
Amounts in
the Death and Disability columns represent the sum of (a) two-thirds of
the fiscal year 2016 PSU award based on performance goals achieved at 88%
target rate for fiscal year 2016, at 127% target rate for fiscal year
2017, and an assumed achievement at target rate for fiscal year 2018 plus
(b) one-third of the fiscal year 2017 PSU award based on performance goals
achieved at 111% target rate for fiscal year 2017 and an assumed
achievement at target rate for fiscal years 2018 and 2019. Amounts in the
Involuntary Termination Without Cause column represent the sum of (x) the
full fiscal year 2016 PSU award based on performance goals achieved at 88%
target rate for fiscal year 2016, at 127% target rate for fiscal year
2017, and an assumed achievement at target rate for fiscal year 2018, plus
(y) five-sixths of the full fiscal year 2017 PSU award based on
performance goals achieved at 111% target rate for fiscal year 2017 and an
assumed achievement at target rate for fiscal years 2018 and 2019. All
amounts include accrued dividend equivalents through June 30,
2017.
|
|
(6)
|
Represents present value of
the incremental benefit using the RP-2014 white collar mortality table
with post-2006 improvements removed (projected generationally using scale
MP-2016) and a 3.7% discount rate, assuming disability occurring on June
30, 2017.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
78
|
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
|
|
|
$1,438,613
|
(1)
|
|
|
$0
|
|
$0
|
|
|
|
$810,000
|
(2)
|
|
|
$0
|
Stock Options
(3)
|
|
|
$987,589
|
|
|
|
$987,589
|
|
$987,589
|
|
|
|
$651,998
|
|
|
|
$0
|
Restricted Stock
(4)
|
|
|
$557,587
|
|
|
|
$557,587
|
|
$557,587
|
|
|
|
$278,794
|
|
|
|
$0
|
PSUs
(5)
|
|
|
$1,778,105
|
|
|
|
$887,764
|
|
$887,764
|
|
|
|
$1,679,605
|
|
|
|
$0
|
Supplemental Officers
Retirement Plan
|
|
|
$0
|
|
|
|
$0
|
|
$1,239,042
|
(6)
|
|
|
$0
|
|
|
|
$0
|
Total
|
|
|
$4,761,894
|
|
|
|
$2,432,940
|
|
$3,671,982
|
|
|
|
$3,420,397
|
|
|
|
$0
|
(1)
|
Represents payment of 1.5
times each of (i) the highest rate of annual salary during the calendar
year in which employment terminates or the year immediately prior to the
termination ($540,000) and (ii) the average annual bonus for the two most
recently completed calendar years ($419,075).
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($540,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2017 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $102.46 per share. Amounts in the Involuntary
Termination Without Cause column assume unvested options that would vest
during the severance period (18 months) immediately vested and were
exercised on June 30, 2017.
|
|
(4)
|
Amounts include the vesting of
time-based restricted stock awards.
|
|
(5)
|
Amount in the Termination
Following a Change in Control column represents amount attributable to the
fiscal years 2016 and 2017 PSU programs assuming performance goals of this
program will be achieved at 100% target rate. Amounts in the Death and
Disability columns represent the sum of (a) two-thirds of the fiscal year
2016 PSU award based on performance goals achieved at 88% target rate for
fiscal year 2016, at 127% target rate for fiscal year 2017, and an assumed
achievement at target rate for fiscal year 2018 plus (b) one-third of the
fiscal year 2017 PSU award based on performance goals achieved at 111%
target rate for fiscal year 2017 and an assumed achievement at target rate
for fiscal years 2018 and 2019. Amounts in the Involuntary Termination
Without Cause column represent the sum of (x) the full fiscal year 2016
PSU award based on performance goals achieved at 88% target rate for
fiscal year 2016, at 127% target rate for fiscal year 2017, and an assumed
achievement at target rate for fiscal year 2018, plus (y) five-sixths of
the full fiscal year 2017 PSU award based on performance goals achieved at
111% target rate for fiscal year 2017 and an assumed achievement at target
rate for fiscal years 2018 and 2019. All amounts include accrued dividend
equivalents through June 30, 2017.
|
|
(6)
|
Represents present value of
the incremental benefit using the RP-2014 white collar mortality table
with post-2006 improvements removed (projected generationally using scale
MP-2016) and a 3.7% discount rate, assuming disability occurring on June
30, 2017.
|
79
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Audit Committee
Report
The audit committee oversees the financial
management and financial reporting procedures of the company, and the
appointment, compensation, retention and performance of the companys
independent auditors, on behalf of the board of directors. A further description
of the role and members of the audit committee is set forth on page
26
under
Audit Committee.
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 2017, 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 2017,
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, 2017 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, 2017 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 2018.
The audit committee has discussed with
Deloitte & Touche LLP the matters that are required to be discussed by
Public Company Accounting Oversight Board Auditing Standard No. 16
(Communications with Audit Committees) and the SEC Rule 2-07. 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 discussed with Deloitte & Touche LLP the
overall scope and plans for its audit and engagement. The committee 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 impaired or compromised
Deloitte & Touche LLPs independence and concluded that those services did
not. 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
|
|
|
80
|
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, 2017. In addition, the committee concluded that
the appointment of Deloitte & Touche LLP is in the best interest of the
company and its stockholders, and appointed Deloitte & Touche LLP as the
independent auditors for the company for the fiscal year 2018, subject to the
ratification by the stockholders at the 2017 Annual Meeting of Stockholders.
Audit Committee of the Board of
Directors
Eric C. Fast, Chair
Richard T. Clark
Linda R. Gooden
Sandra S. Wijnberg
August 1, 2017
81
|
|
|
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 2017,
the audit committee retained Deloitte & Touche LLP to provide
various services in fiscal year 2017 and
fiscal year 2016. The aggregate fees billed by Deloitte & Touche LLP in
fiscal year 2017 and fiscal year 2016 for these various services
were:
Type of Fees
|
FY 2017
|
FY 2016
|
|
($ in
thousands)
|
Audit Fees
|
$8,820
|
$8,125
|
Audit-Related Fees
|
1,252
|
50
|
Tax
Fees
|
1,015
|
523
|
All
Other Fees
|
175
|
670
|
Total
|
$11,262
|
$9,368
|
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, in fiscal year 2017, for audit services rendered
in connection with certain acquisitions and the divestiture of our CHSA and
COBRA businesses; tax fees are fees for tax compliance, tax advice and tax
planning; 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 2017 and fiscal year 2016 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
|
|
|
82
|
Table of
Contents
|
Proposal 4
Appointment of Independent
Registered Public Accounting Firm
|
At the
2017
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, 2017.
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 represented 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 for fiscal year
2018. 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. As
discussed above, if your broker holds your shares, your broker is not entitled
to vote your shares on this proposal without your instruction.
Broker non-votes 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.
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE COMPANYS INDEPENDENT AUDITORS FOR FISCAL
YEAR 2018.
|
83
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
|
Proposal 5
Stockholder Proposal to Repeal
Certain Provisions of or Amendments to the By-Laws of the Company Adopted
since August 2, 2016
|
The company has received notice from
Pershing Square of its intention to present the following resolution for action
at the annual meeting, which would allow stockholders of the company to amend or
repeal any amendments to the amended and restated by-laws of the company adopted
by the board without stockholder approval subsequent to
August 6, 2016 and up to and including the
date of the companys 2017 Annual Meeting. Adoption of the Pershing Square
proposal would have the effect of repealing any provisions or amendments of the
by-laws adopted without stockholder approval after August 6, 2016 and prior to
the companys 2017 Annual Meeting.
Proposal to Repeal New
By-Laws
RESOLVED, that each provision of or amendment to the By-Laws, adopted by
the Board without the approval of the Corporations stockholders after August 2,
2016 (the date of the most recent publicly disclosed By-Laws) and up to and
including the date of the 2017 annual meeting of stockholders of the Corporation
be, and they hereby are, repealed.
Stockholder Approval Required
|
Under the companys amended and restated by-laws, the stockholder
proposal submitted by Pershing Square to repeal certain provisions or amendments to the amended and restated by-laws of the
company adopted without stockholder approval after August 2, 2016 and up to and including the date of the 2017 Annual
Meeting, if properly introduced at the meeting, requires the affirmative vote of a majority of the shares represented in
person or by proxy at the Annual Meeting. 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. As discussed above, if your broker holds your
shares, your broker is not entitled to vote your shares on this proposal without your instruction.
Broker non-votes will not
have any effect on the outcome of this proposal because the non-votes are not considered in determining the number of votes
necessary for approval.
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE
AGAINST
THE ADOPTION OF THE PERSHING SQUARE
PROPOSAL.
|
Pershing Squares proposal seeks to repeal
any provisions or amendments of the companys amended and restated by-laws
adopted without stockholder approval after August 2, 2016 and prior to the
companys 2017 Annual Meeting, without regard to the subject matter of any bylaw
provisions or amendment in question.
No provisions or amendments to the
companys by-laws have been adopted subsequent to August 2, 2016. While the
board of directors does not currently expect to adopt any amendments to the
by-laws prior to the companys 2017 Annual Meeting, the board could determine
prior to the 2017 Annual Meeting that an amendment is necessary and in the best
interest of the stockholders. The board believes that the automatic repeal of
any by-law amendment, irrespective of its content, duly adopted by the board
(whether with or without stockholder approval) could have the effect of
repealing one or more properly adopted by-law amendments that the board
determined to be in the best interests of the company and its stockholders and
adopted in furtherance of its fiduciary duties, including in response to future
events not yet known to the company. Furthermore, as a public company subject to
the federal
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
84
|
Table of
Contents
proxy rules, it might be impracticable
if not impossible for the company to obtain stockholder approval for a
necessary by-law amendment within a timeframe necessary to serve the best
interests of the company and its stockholders.
As the board is fully empowered by its
governing
documents and applicable law to alter, amend, or repeal provisions to
the companys by-laws in accordance with its fiduciary duties and no provision
of the companys bylaws is expected to be impacted by the Pershing Square
proposal, we believe this proposal represents no purpose other than to limit
board actions otherwise permitted by the companys governing documents and
Delaware law.
For these reasons, the board urges
stockholders to vote
AGAINST
the Pershing Square proposal.
Our board does not endorse the Pershing
Square proposal and unanimously recommends that you disregard any proxy card
that may be sent to you by Pershing Square. If you have already voted using a
proxy card sent to you by Pershing Square, you have every right to change it and
we urge you to revoke that proxy by voting in favor of our boards nominees by
using the enclosed WHITE proxy card. Only the latest validly executed proxy that
you submit will be counted.
If you have any questions or require any
assistance with voting your shares, please contact our proxy solicitor at the
contact listed below:
Innisfree M&A
Incorporated
Stockholders may call toll-free
(877) 750-0510
Banks and brokers may call collect at (212)
750-5833
85
|
|
|
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, 2017,
all filing requirements under Section 16(a) of
the Exchange Act applicable
to our non-employee directors, officers and
beneficial owners have been complied with.
Stockholder
Proposals
If a stockholder intends to submit any
proposal for inclusion in the companys proxy statement for the companys 2018
Annual Meeting of Stockholders in accordance with Rule 14a-8 under
the
Exchange Act,
the proposal must be received by
the corporate secretary of the company no later than
[ ]
, 2018. 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
SEC
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 (other than a proxy
access nomination, which is described below) 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 2018
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 2017 Annual Meeting of
Stockholders, or [ ], 2018.
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 [ ], 2018, and no later than on [ ], 2018, unless the date of our 2018
Annual Meeting of Stockholders occurs more than 30 days before or 60 days after
the first anniversary of the 2017 Annual Meeting of Stockholders. In that case,
our amended and restated bylaws provide that we must receive the notice no
earlier than the 120
th
day prior to the date of the 2018 Annual
Meeting of Stockholders and not later than the 90
th
day prior to the
date of the 2018 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.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
86
|
Table of
Contents
Proxy Access
Our by-laws have proxy access
provisions that permit a stockholder, or a group of up to twenty stockholders,
that owns 3% or more of our stock continuously for at least three years, to
nominate and include in our proxy materials candidates for election as
directors. Such stockholder or group may nominate up to the greater of two
individuals or 20% of our board of directors, provided that the stockholder or
group and the nominee(s) satisfy the requirements specified in our by-laws. In
order to be properly brought before the 2018 Annual Meeting of Stockholders, a
stockholders notice of nomination of one or more director candidates pursuant
to the proxy access provisions of our amended and restated by-laws must be
received by no earlier than [ ], 2018 and no later than [ ],
2018 (i.e., no earlier than the
150
th
day and no later than the 120
th
day prior to the first
anniversary of the date our definitive proxy statement was first released to
stockholders in connection with the preceding years annual meeting of
stockholders), unless the date of our 2018 Annual Meeting of Stockholders occurs
more than 30 days before or 60 days after the first anniversary of the 2017
Annual Meeting of Stockholders. In that case, our amended and restated bylaws
provide that we must receive the notice no earlier than the 180
th
day prior to
the date of the 2018 Annual Meeting of Stockholders and not later than the
90
th
day prior to the date of the 2018 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 by-laws. You may contact our corporate secretary at our principal
executive offices for a copy of the relevant by-law provisions regarding the
requirements for making stockholder proposals and nominating director candidates
pursuant to advance notice or proxy access.
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.
87
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
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, 2017 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
|
|
[ ], 2017
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
88
|
Table of
Contents
Annex A
Supplemental Information
Regarding Participants
The following tables (Nominees and
Officers and Employees) set forth the name and business address of all of our
directors and the Boards nominees for election at our 2017 Annual Meeting of
Stockholders, and the name, present principal occupation and business address of
our
officers and employees who, under the
rules of the SEC, are considered to be participants in our solicitation of
proxies from our stockholders in connection with our 2017 Annual Meeting
(collectively, the Participants).
The principal occupations of our nominees
to the board of directors are set forth under the sections above titled
Election of Directors of this proxy statement. The name of the directors are
set forth below and the business addresses for all the directors is c/o
Automatic Data Processing, Inc.,
P.O. Box 34
, Roseland, NJ
07068.
Name
|
Peter Bisson
|
Richard T. Clark
|
Eric C. Fast
|
Linda R. Gooden
|
Michael P. Gregoire
|
R.
Glenn Hubbard
|
John P. Jones
|
William J. Ready
|
Carlos A. Rodriguez
|
Sandra S. Wijnberg
|
Officer and
Employees
The principal occupations of our officers
and employees who are considered Participants are set forth below. The principal
occupation refers to such persons position with the company, and the business
address for each person is c/o Automatic Data Processing, Inc.,
P.O. Box 34
, Roseland, NJ 07068.
Name
|
|
Position
|
Brock Albinson
|
|
Corporate Controller, Principal Accounting
Officer
|
John Ayala
|
|
President, Major Account Services and ADP Canada
|
Maria Black
|
|
President, Small Business Solutions and Human Resources
Outsourcing
|
Michael A. Bonarti
|
|
Corporate Vice President; General Counsel and
Secretary
|
Deborah L. Dyson
|
|
President, National Account Services
|
Michael C. Eberhard
|
|
Corporate Vice President and Treasurer
|
Edward B. Flynn III
|
|
President, Global Enterprise Solutions
|
Christian Greyenbuhl
|
|
Vice President, Investor Relations
|
Dermot J. OBrien
|
|
Chief Human Resources Officer
|
Tom
Perrotti
|
|
President, Worldwide Sales and Marketing
|
Doug Politi
|
|
President, Added Value Services
|
Carlos A. Rodriguez
|
|
President and Chief Executive Officer
|
Stuart Sackman
|
|
Corporate Vice President, Global Product and
Technology
|
Jan
Siegmund
|
|
Corporate Vice President and Chief Financial
Officer
|
Don
Weinstein
|
|
Chief Strategy Officer
|
Dorothy Wisniowski
|
|
Vice President, Assistant Corporate
Secretary
|
A-1
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Supplemental
Information Regarding Participants
Information Regarding
Ownership of Company Securities By Participants
The amount of the companys securities
beneficially owned by directors and NEOs as of August 15, 2017, including the
number of securities for which beneficial ownership can be acquired within 60
days of such date, is set forth in the table appearing under the heading
Security Ownership of Certain Beneficial Owners and Management above. The
amount of the companys securities
beneficially owned as of the same date, including the number of securities for
which beneficial ownership can be acquired within 60 days of such date, for the
remaining Participants is set forth in the table below.
Name of Participant
|
|
Shares Beneficially
Owned
(1)
|
Brock Albinson
|
|
|
9,592
|
|
John Ayala
|
|
|
32,929
|
|
Maria Black
|
|
|
28,408
|
|
Deborah L. Dyson
|
|
|
45,538
|
|
Michael C. Eberhard
|
|
|
79,401
|
|
Christian Greyenbuhl
|
|
|
5,469
|
|
Tom
Perrotti
|
|
|
22,593
|
|
Doug Politi
|
|
|
60,795
|
|
Stuart Sackman
|
|
|
47,824
|
|
Don
Weinstein
|
|
|
39,815
|
|
Dorothy Wisniowski
|
|
|
2,554
|
|
Notes to Participant Stock Ownership
Table
|
|
|
(1)
|
Includes:
185,331 shares that may be acquired upon the exercise of stock options that are exercisable on or prior to October 15, 2017: Mr. Albinson (5,132), Mr. Ayala (11,260), Ms. Black (17,227), Ms. Dyson (24,266), Mr. Eberhard (40,730), Mr. Greyenbuhl (3,427), Mr. Perrotti (6,783), Mr. Politi (36,077), Mr. Sackman (26,769), Mr. Weinstein (13,250), and Ms. Wisniowski (410). Includes 404 shares that are indirectly beneficially owned by Mr. Eberhard as custodian for a child.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
A-2
|
Table of
Contents
Supplemental
Information Regarding Participants
Information Regarding
Transactions in the Companys Securities by Participants
The following table sets forth information
regarding purchases and sales of the companys securities by each Participant
during the past two years. No part of the purchase price or market value of
these securities is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities.
Company Securities Purchased or Sold
(August
15, 2015 through August 15, 2017)
|
Name
|
|
Transaction
Date
|
|
Number of
Shares
|
|
Transaction
Description
|
Brock Albinson
|
|
|
9/1/15
|
|
|
|
2,703
|
|
|
|
TBRSG
|
|
|
|
|
9/3/15
|
|
|
|
483
|
|
|
|
TBRST
|
|
|
|
|
9/4/15
|
|
|
|
234
|
|
|
|
SALE
|
|
|
|
|
1/25/16
|
|
|
|
1,250
|
|
|
|
SOX
|
|
|
|
|
1/25/16
|
|
|
|
1,156
|
|
|
|
10b-5
|
|
|
|
|
1/26/16
|
|
|
|
243
|
|
|
|
SOX
|
|
|
|
|
1/26/16
|
|
|
|
211
|
|
|
|
10b-5
|
|
|
|
|
7/1/16
|
|
|
|
378
|
|
|
|
SOX
|
|
|
|
|
7/1/16
|
|
|
|
378
|
|
|
|
10b-5
|
|
|
|
|
9/2/16
|
|
|
|
522
|
|
|
|
TBRST
|
|
|
|
|
9/6/16
|
|
|
|
249
|
|
|
|
10b-5
|
|
|
|
|
1/23/17
|
|
|
|
1,152
|
|
|
|
SOX
|
|
|
|
|
1/23/17
|
|
|
|
1,051
|
|
|
|
10b-5
|
|
|
|
|
1/25/17
|
|
|
|
484
|
|
|
|
SOX
|
|
|
|
|
1/25/17
|
|
|
|
407
|
|
|
|
10b-5
|
|
John Ayala
|
|
|
9/2/15
|
|
|
|
2,150
|
|
|
|
PSUT
|
|
|
|
|
9/3/15
|
|
|
|
1,027
|
|
|
|
10b-5
|
|
|
|
|
1/4/16
|
|
|
|
9,386
|
|
|
|
SOX
|
|
|
|
|
1/4/16
|
|
|
|
8,140
|
|
|
|
10b-5
|
|
|
|
|
8/2/16
|
|
|
|
6,904
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
2,572
|
|
|
|
PSUT
|
|
|
|
|
9/6/16
|
|
|
|
1,083
|
|
|
|
10b-5
|
|
|
|
|
1/3/17
|
|
|
|
8,814
|
|
|
|
SOX
|
|
|
|
|
1/3/17
|
|
|
|
8,814
|
|
|
|
10b-5
|
|
|
|
|
1/27/17
|
|
|
|
24,442
|
|
|
|
SOX
|
|
|
|
|
1/27/17
|
|
|
|
24,028
|
|
|
|
10b-5
|
|
|
|
|
8/1/17
|
|
|
|
6,720
|
|
|
|
PSU
|
|
Maria Black
|
|
|
9/3/15
|
|
|
|
692
|
|
|
|
TBRST
|
|
|
|
|
9/11/15
|
|
|
|
296
|
|
|
|
SALE
|
|
|
|
|
7/1/16
|
|
|
|
2,366
|
|
|
|
SOX
|
|
|
|
|
7/1/16
|
|
|
|
1,855
|
|
|
|
10b-5
|
|
|
|
|
9/2/16
|
|
|
|
1,054
|
|
|
|
TBRST
|
|
|
|
|
9/2/16
|
|
|
|
527
|
|
|
|
10b-5
|
|
|
|
|
1/3/17
|
|
|
|
2,631
|
|
|
|
SOX
|
|
|
|
|
1/3/17
|
|
|
|
2,631
|
|
|
|
10b-5
|
|
|
|
|
1/4/17
|
|
|
|
610
|
|
|
|
SOX
|
|
|
|
|
8/1/17
|
|
|
|
3,789
|
|
|
|
PSU
|
|
A-3
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Supplemental
Information Regarding Participants
Company Securities Purchased or Sold
(August
15, 2015 through August 15, 2017)
|
Name
|
|
Transaction
Date
|
|
Number of
Shares
|
|
Transaction
Description
|
Peter Bisson
|
|
|
11/10/15
|
|
|
|
2,990
|
|
|
|
DSU
|
|
|
|
|
11/8/16
|
|
|
|
3,181
|
|
|
|
DSU
|
|
Michael A. Bonarti
|
|
|
9/2/15
|
|
|
|
4,424
|
|
|
|
PSUT
|
|
|
|
|
9/3/15
|
|
|
|
1,027
|
|
|
|
10b-5
|
|
|
|
|
1/26/16
|
|
|
|
26,733
|
|
|
|
SOX
|
|
|
|
|
1/26/16
|
|
|
|
26,733
|
|
|
|
10b-5
|
|
|
|
|
8/2/16
|
|
|
|
9,415
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
4,575
|
|
|
|
PSUT
|
|
|
|
|
9/6/16
|
|
|
|
4,840
|
|
|
|
10b-5
|
|
|
|
|
1/25/17
|
|
|
|
11,092
|
|
|
|
SOX
|
|
|
|
|
6/30/17
|
|
|
|
1,742
|
|
|
|
TBRST
|
|
|
|
|
7/3/17
|
|
|
|
2,932
|
|
|
|
10b-5
|
|
|
|
|
8/1/17
|
|
|
|
7,983
|
|
|
|
PSU
|
|
Richard T. Clark
|
|
|
11/10/15
|
|
|
|
3,220
|
|
|
|
DSU
|
|
|
|
|
11/8/16
|
|
|
|
3,290
|
|
|
|
DSU
|
|
Deborah L. Dyson
|
|
|
9/3/15
|
|
|
|
610
|
|
|
|
SOE
|
|
|
|
|
9/3/15
|
|
|
|
610
|
|
|
|
SALE
|
|
|
|
|
9/3/15
|
|
|
|
587
|
|
|
|
TBRST
|
|
|
|
|
3/1/16
|
|
|
|
350
|
|
|
|
10b-5
|
|
|
|
|
8/1/16
|
|
|
|
898
|
|
|
|
SOX
|
|
|
|
|
8/1/16
|
|
|
|
898
|
|
|
|
10b-5
|
|
|
|
|
9/2/16
|
|
|
|
1,086
|
|
|
|
TBRST
|
|
|
|
|
1/3/17
|
|
|
|
2,087
|
|
|
|
SOX
|
|
|
|
|
1/3/17
|
|
|
|
2,087
|
|
|
|
10b-5
|
|
|
|
|
1/4/17
|
|
|
|
1,155
|
|
|
|
SOX
|
|
|
|
|
8/1/17
|
|
|
|
6,422
|
|
|
|
TBRSG
|
|
|
|
|
8/1/17
|
|
|
|
3,789
|
|
|
|
PSU
|
|
Michael C. Eberhard
|
|
|
9/2/15
|
|
|
|
1,212
|
|
|
|
PSUT
|
|
|
|
|
7/1/16
|
|
|
|
3,412
|
|
|
|
SOX
|
|
|
|
|
7/1/16
|
|
|
|
3,412
|
|
|
|
10b-5
|
|
|
|
|
8/2/16
|
|
|
|
3,891
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
1,337
|
|
|
|
PSUT
|
|
|
|
|
12/16/16
|
|
|
|
11,376
|
|
|
|
SOX
|
|
|
|
|
12/16/16
|
|
|
|
11,376
|
|
|
|
10b-5
|
|
|
|
|
3/6/17
|
|
|
|
500
|
|
|
|
SOX
|
|
|
|
|
3/6/17
|
|
|
|
500
|
|
|
|
10b-5
|
|
|
|
|
3/17/17
|
|
|
|
7,463
|
|
|
|
SOX
|
|
|
|
|
3/17/17
|
|
|
|
7,463
|
|
|
|
10b-5
|
|
|
|
|
7/1/17
|
|
|
|
4,881
|
|
|
|
TBRSG
|
|
|
|
|
8/1/17
|
|
|
|
6,720
|
|
|
|
PSU
|
|
Eric C. Fast
|
|
|
11/10/15
|
|
|
|
3,220
|
|
|
|
DSU
|
|
|
|
|
11/8/16
|
|
|
|
3,400
|
|
|
|
DSU
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
A-4
|
Table of
Contents
Supplemental
Information Regarding Participants
Company Securities Purchased or
Sold
(August 15, 2015 through August 15, 2017)
|
Name
|
|
Transaction
Date
|
|
Number of
Shares
|
|
Transaction
Description
|
Edward B. Flynn
|
|
|
9/2/15
|
|
|
|
4,424
|
|
|
|
PSUT
|
|
|
|
|
12/31/15
|
|
|
|
2,249
|
|
|
|
TBRST
|
|
|
|
|
1/1/16
|
|
|
|
154
|
|
|
|
ESPP
|
|
|
|
|
2/18/16
|
|
|
|
5,747
|
|
|
|
10b-5
|
|
|
|
|
7/1/16
|
|
|
|
142
|
|
|
|
ESPP
|
|
|
|
|
7/1/16
|
|
|
|
730
|
|
|
|
TBRST
|
|
|
|
|
8/2/16
|
|
|
|
9,415
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
3,611
|
|
|
|
PSUT
|
|
|
|
|
12/1/16
|
|
|
|
20,883
|
|
|
|
TBRSG
|
|
|
|
|
12/30/16
|
|
|
|
2,249
|
|
|
|
TBRST
|
|
|
|
|
1/1/17
|
|
|
|
128
|
|
|
|
ESPP
|
|
|
|
|
2/1/17
|
|
|
|
41,521
|
|
|
|
SOX
|
|
|
|
|
2/1/17
|
|
|
|
41,521
|
|
|
|
10b-5
|
|
|
|
|
3/6/17
|
|
|
|
8,873
|
|
|
|
10b-5
|
|
|
|
|
7/1/17
|
|
|
|
120
|
|
|
|
ESPP
|
|
|
|
|
8/1/17
|
|
|
|
7,983
|
|
|
|
PSU
|
|
Linda R. Gooden
|
|
|
11/10/15
|
|
|
|
3,105
|
|
|
|
DSU
|
|
|
|
|
2/5/16
|
|
|
|
4,266
|
|
|
|
SOE
|
|
|
|
|
2/5/16
|
|
|
|
4,266
|
|
|
|
SALE
|
|
|
|
|
11/8/16
|
|
|
|
2,083
|
|
|
|
DSU
|
|
Michael P. Gregoire
|
|
|
11/10/15
|
|
|
|
2,990
|
|
|
|
DSU
|
|
|
|
|
11/8/16
|
|
|
|
3,181
|
|
|
|
DSU
|
|
Christian Greyenbuhl
|
|
|
9/3/15
|
|
|
|
284
|
|
|
|
TBRSG
|
|
|
|
|
10/30/15
|
|
|
|
170
|
|
|
|
SALE
|
|
|
|
|
9/2/16
|
|
|
|
243
|
|
|
|
TBRSG
|
|
|
|
|
11/25/16
|
|
|
|
300
|
|
|
|
SALE
|
|
R. Glenn Hubbard
|
|
|
11/10/15
|
|
|
|
3,105
|
|
|
|
DSU
|
|
|
|
|
11/8/16
|
|
|
|
3,345
|
|
|
|
DSU
|
|
Dermot J. OBrien
|
|
|
9/2/15
|
|
|
|
4,340
|
|
|
|
PSUT
|
|
|
|
|
1/1/16
|
|
|
|
154
|
|
|
|
ESPP
|
|
|
|
|
1/25/16
|
|
|
|
5,119
|
|
|
|
SOX
|
|
|
|
|
1/25/16
|
|
|
|
4,544
|
|
|
|
10b-5
|
|
|
|
|
1/26/17
|
|
|
|
575
|
|
|
|
10b-5
|
|
|
|
|
6/7/16
|
|
|
|
8,532
|
|
|
|
SOX
|
|
|
|
|
6/7/16
|
|
|
|
8,532
|
|
|
|
10b-5
|
|
|
|
|
6/30/16
|
|
|
|
5,442
|
|
|
|
TBRSG
|
|
|
|
|
7/1/16
|
|
|
|
142
|
|
|
|
ESPP
|
|
|
|
|
8/2/16
|
|
|
|
10,043
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
4,994
|
|
|
|
PSUT
|
|
|
|
|
9/6/16
|
|
|
|
5,048
|
|
|
|
10b-5
|
|
|
|
|
1/1/17
|
|
|
|
128
|
|
|
|
ESPP
|
|
|
|
|
1/25/17
|
|
|
|
23,036
|
|
|
|
SOX
|
|
|
|
|
1/25/17
|
|
|
|
23,036
|
|
|
|
10b-5
|
|
|
|
|
7/1/17
|
|
|
|
120
|
|
|
|
ESPP
|
|
|
|
|
8/1/17
|
|
|
|
8,270
|
|
|
|
PSU
|
|
A-5
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Supplemental
Information Regarding Participants
Company Securities Purchased or Sold
(August
15, 2015 through August 15, 2017)
|
Name
|
|
Transaction
Date
|
|
Number of
Shares
|
|
Transaction
Description
|
John P. Jones
|
|
|
9/8/15
|
|
|
|
6,242
|
|
|
|
SOE
|
|
|
|
|
9/8/15
|
|
|
|
6,242
|
|
|
|
SALE
|
|
|
|
|
11/10/15
|
|
|
|
4,887
|
|
|
|
DSU
|
|
|
|
|
3/11/16
|
|
|
|
6,242
|
|
|
|
SOE
|
|
|
|
|
3/11/16
|
|
|
|
6,242
|
|
|
|
SALE
|
|
|
|
|
11/8/16
|
|
|
|
4,991
|
|
|
|
DSU
|
|
|
|
|
3/1/17
|
|
|
|
5,688
|
|
|
|
SOE
|
|
|
|
|
3/1/17
|
|
|
|
5,688
|
|
|
|
SALE
|
|
Tom Perrotti
|
|
|
9/2/15
|
|
|
|
1,095
|
|
|
|
PSUT
|
|
|
|
|
9/8/15
|
|
|
|
522
|
|
|
|
SALE
|
|
|
|
|
1/26/16
|
|
|
|
6,226
|
|
|
|
SOX
|
|
|
|
|
1/26/16
|
|
|
|
5,610
|
|
|
|
10b-5
|
|
|
|
|
8/2/16
|
|
|
|
3,515
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
1,208
|
|
|
|
PSUT
|
|
|
|
|
9/6/16
|
|
|
|
577
|
|
|
|
10b-5
|
|
|
|
|
1/3/17
|
|
|
|
2,495
|
|
|
|
SOX
|
|
|
|
|
1/3/17
|
|
|
|
2,495
|
|
|
|
10b-5
|
|
|
|
|
1/4/17
|
|
|
|
240
|
|
|
|
SOX
|
|
|
|
|
1/23/17
|
|
|
|
1,023
|
|
|
|
SOX
|
|
|
|
|
1/23/17
|
|
|
|
915
|
|
|
|
10b-5
|
|
|
|
|
1/25/17
|
|
|
|
1,139
|
|
|
|
SOX
|
|
|
|
|
1/25/17
|
|
|
|
957
|
|
|
|
10b-5
|
|
|
|
|
3/17/17
|
|
|
|
3,041
|
|
|
|
SOX
|
|
|
|
|
3/17/17
|
|
|
|
2,868
|
|
|
|
10b-5
|
|
|
|
|
8/1/17
|
|
|
|
3,307
|
|
|
|
PSU
|
|
Doug Politi
|
|
|
9/2/15
|
|
|
|
1,484
|
|
|
|
PSUT
|
|
|
|
|
1/1/16
|
|
|
|
89
|
|
|
|
ESPP
|
|
|
|
|
1/4/16
|
|
|
|
1,650
|
|
|
|
10b-5
|
|
|
|
|
4/1/16
|
|
|
|
6,825
|
|
|
|
SOX
|
|
|
|
|
4/1/16
|
|
|
|
6,825
|
|
|
|
10b-5
|
|
|
|
|
7/1/16
|
|
|
|
82
|
|
|
|
ESPP
|
|
|
|
|
8/2/16
|
|
|
|
4,394
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
1,637
|
|
|
|
PSUT
|
|
|
|
|
1/1/17
|
|
|
|
92
|
|
|
|
ESPP
|
|
|
|
|
1/3/17
|
|
|
|
6,370
|
|
|
|
SOX
|
|
|
|
|
1/3/17
|
|
|
|
6,370
|
|
|
|
10b-5
|
|
|
|
|
7/1/17
|
|
|
|
92
|
|
|
|
ESPP
|
|
|
|
|
8/1/17
|
|
|
|
4,562
|
|
|
|
PSU
|
|
William J. Ready
|
|
|
1/19/16
|
|
|
|
2,693
|
|
|
|
DSU
|
|
|
|
|
11/8/16
|
|
|
|
3,181
|
|
|
|
DSU
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
A-6
|
Table of
Contents
Supplemental
Information Regarding Participants
Company Securities Purchased or
Sold
(August 15, 2015 through August 15, 2017)
|
Name
|
|
Transaction
Date
|
|
Number of
Shares
|
|
Transaction
Description
|
Carlos A. Rodriguez
|
|
|
9/2/15
|
|
|
|
19,825
|
|
|
|
PSUT
|
|
|
|
|
9/3/15
|
|
|
|
9,100
|
|
|
|
10b-5
|
|
|
|
|
1/1/16
|
|
|
|
154
|
|
|
|
ESPP
|
|
|
|
|
3/10/16
|
|
|
|
100,110
|
|
|
|
SOX
|
|
|
|
|
3/10/16
|
|
|
|
100,110
|
|
|
|
10b-5
|
|
|
|
|
7/1/16
|
|
|
|
142
|
|
|
|
ESPP
|
|
|
|
|
7/11/16
|
|
|
|
67,064
|
|
|
|
SOX
|
|
|
|
|
7/11/16
|
|
|
|
67,064
|
|
|
|
10b-5
|
|
|
|
|
8/2/16
|
|
|
|
42,191
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
21,877
|
|
|
|
PSUT
|
|
|
|
|
9/6/16
|
|
|
|
6
|
|
|
|
ADJ
|
|
|
|
|
9/6/16
|
|
|
|
10,000
|
|
|
|
10b-5
|
|
|
|
|
1/1/17
|
|
|
|
128
|
|
|
|
ESPP
|
|
|
|
|
2/15/17
|
|
|
|
79,606
|
|
|
|
SOX
|
|
|
|
|
2/15/17
|
|
|
|
79,606
|
|
|
|
10b-5
|
|
|
|
|
5/24/17
|
|
|
|
49,392
|
|
|
|
SOX
|
|
|
|
|
5/24/17
|
|
|
|
49,392
|
|
|
|
10b-5
|
|
|
|
|
7/1/17
|
|
|
|
120
|
|
|
|
ESPP
|
|
|
|
|
7/27/17
|
|
|
|
36,363
|
|
|
|
SOX
|
|
|
|
|
7/27/17
|
|
|
|
36,363
|
|
|
|
10b-5
|
|
|
|
|
8/1/17
|
|
|
|
50,840
|
|
|
|
PSU
|
|
Stuart Sackman
|
|
|
8/17/15
|
|
|
|
1,365
|
|
|
|
SOX
|
|
|
|
|
8/17/15
|
|
|
|
1,365
|
|
|
|
10b-5
|
|
|
|
|
9/2/15
|
|
|
|
1,060
|
|
|
|
PSUT
|
|
|
|
|
9/3/15
|
|
|
|
1,784
|
|
|
|
10b-5
|
|
|
|
|
11/16/15
|
|
|
|
1,772
|
|
|
|
SOX
|
|
|
|
|
11/16/15
|
|
|
|
1,772
|
|
|
|
10b-5
|
|
|
|
|
1/19/16
|
|
|
|
3,160
|
|
|
|
TBRSG
|
|
|
|
|
8/2/16
|
|
|
|
3,138
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
1,078
|
|
|
|
PSUT
|
|
|
|
|
9/6/16
|
|
|
|
2,060
|
|
|
|
10b-5
|
|
|
|
|
12/16/16
|
|
|
|
2,616
|
|
|
|
SOX
|
|
|
|
|
12/16/16
|
|
|
|
2,616
|
|
|
|
10b-5
|
|
|
|
|
1/3/17
|
|
|
|
2,057
|
|
|
|
SOX
|
|
|
|
|
1/3/17
|
|
|
|
2,057
|
|
|
|
10b-5
|
|
|
|
|
1/4/17
|
|
|
|
559
|
|
|
|
SOX
|
|
|
|
|
1/19/17
|
|
|
|
572
|
|
|
|
TBRST
|
|
|
|
|
8/1/17
|
|
|
|
3,307
|
|
|
|
PSU
|
|
A-7
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
Supplemental
Information Regarding Participants
Company Securities Purchased or Sold
(August
15, 2015 through August 15, 2017)
|
Name
|
|
Transaction
Date
|
|
Number of
Shares
|
|
Transaction
Description
|
Jan Siegmund
|
|
|
9/2/15
|
|
|
|
7,659
|
|
|
|
PSUT
|
|
|
|
|
9/3/15
|
|
|
|
5,992
|
|
|
|
10b-5
|
|
|
|
|
1/1/16
|
|
|
|
154
|
|
|
|
ESPP
|
|
|
|
|
4/1/16
|
|
|
|
13,651
|
|
|
|
SOX
|
|
|
|
|
4/1/16
|
|
|
|
13,651
|
|
|
|
10b-5
|
|
|
|
|
7/1/16
|
|
|
|
142
|
|
|
|
ESPP
|
|
|
|
|
7/11/16
|
|
|
|
3,292
|
|
|
|
10b-5
|
|
|
|
|
8/2/16
|
|
|
|
15,064
|
|
|
|
PSU
|
|
|
|
|
8/2/16
|
|
|
|
7,716
|
|
|
|
TBRS
|
|
|
|
|
9/3/16
|
|
|
|
8,472
|
|
|
|
PSUT
|
|
|
|
|
9/7/16
|
|
|
|
6,592
|
|
|
|
10b-5
|
|
|
|
|
12/13/16
|
|
|
|
11,376
|
|
|
|
SOX
|
|
|
|
|
12/13/16
|
|
|
|
11,376
|
|
|
|
10b-5
|
|
|
|
|
1/3/17
|
|
|
|
128
|
|
|
|
ESPP
|
|
|
|
|
1/3/17
|
|
|
|
4,266
|
|
|
|
SOX
|
|
|
|
|
1/3/17
|
|
|
|
4,266
|
|
|
|
10b-5
|
|
|
|
|
7/1/17
|
|
|
|
120
|
|
|
|
ESPP
|
|
|
|
|
8/1/17
|
|
|
|
5,683
|
|
|
|
TBRS
|
|
|
|
|
8/1/17
|
|
|
|
14,828
|
|
|
|
PSU
|
|
Don Weinstein
|
|
|
10/30/15
|
|
|
|
1,616
|
|
|
|
SOE
|
|
|
|
|
10/30/15
|
|
|
|
1,616
|
|
|
|
SALE
|
|
|
|
|
8/2/16
|
|
|
|
2,511
|
|
|
|
PSU
|
|
|
|
|
9/3/16
|
|
|
|
863
|
|
|
|
PSUT
|
|
|
|
|
7/3/17
|
|
|
|
1,933
|
|
|
|
SOX
|
|
|
|
|
7/3/17
|
|
|
|
1,933
|
|
|
|
10b-5
|
|
|
|
|
8/1/17
|
|
|
|
2,760
|
|
|
|
PSU
|
|
Sandra S. Wijnberg
|
|
|
8/2/16
|
|
|
|
1,079
|
|
|
|
DSU
|
|
|
|
|
11/8/16
|
|
|
|
3,181
|
|
|
|
DSU
|
|
Dorothy Wisniowski
|
|
|
9/1/16
|
|
|
|
1,103
|
|
|
|
TBRSG
|
|
|
|
|
9/1/16
|
|
|
|
1,041
|
|
|
|
TBRSG
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
A-8
|
Table of
Contents
Supplemental
Information Regarding Participants
|
|
Key to Abbreviations Used
|
10b-5
|
|
Sale Pursuant to 10b5-1 Plan
|
ADJ
|
|
Adjustment to Previously Reported
Number of Shares Liquidated when the ADP Stock Fund Balance was Transferred
|
DSU
|
|
Deferred Stock Units Granted
|
ESPP
|
|
Employee Stock Purchase Plan Shares
|
PSU
|
|
Performance-Based
Stock Units Earned in Shares
|
PSUT
|
|
Performance-Based
Stock Unit Tax Payment
|
SALE
|
|
Open Market Sale
|
SOE
|
|
Stock Option Exercise
|
SOX
|
|
Stock Option Exercise
Pursuant to 10b5-1 Plan
|
TBRS
|
|
Time-Based Restricted Stock Earned
|
TBRSG
|
|
Time Based Restricted Stock Grant
|
TBRST
|
|
Time Based Restricted Stock
Taxes
|
Miscellaneous Information
Regarding Participants
1.
|
Except as described in this Annex
A or otherwise disclosed in this proxy statement, to the companys
knowledge:
|
●
|
No Participant owns any securities
of the company of record that such Participant does not own
beneficially.
|
●
|
No Participant is, or was within the
past year, a party to any contract, arrangements or understandings with
any person with respect to any securities of the company, including, but
not limited to joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or
profits, or the giving or withholding of
proxies.
|
●
|
No associate of any Participant owns
beneficially, directly or indirectly, any securities of the company. No
Participant owns beneficially, directly or indirectly, any securities of
any parent or subsidiary of the company.
|
●
|
No Participant nor any associate of
a Participant is a party to any transaction, since the beginning of the
companys last fiscal year, or any currently proposed transaction, in
which (i) the company was or is to be a participant, (ii) the amount
involved exceeds $120,000 and (iii) any Participant or any related person
thereof had or will have a direct or indirect material
interest.
|
●
|
No Participant, nor any associate of
a Participant, has any arrangement or understanding with any person (i)
with respect to any future employment by the company or its affiliates or
(ii) with respect to any future transactions to which the company or any
of its affiliate will or may be a party.
|
●
|
No Participant has any substantial
interest, direct or indirect, by security holdings or otherwise, in any
matter to be acted upon at the annual
meeting.
|
2.
|
R. Glen Hubbard, a member of the board of directors of the company and the chair of the
nominating/corporate governance committee, has informed the company that Pershing Square Capital
Management, L.P., an affiliate of Pershing Square and a participant in the solicitation of proxies for the
Pershing Square nominees, has, every year since 2008, made a donation averaging approximately $87,500
per annum to Columbia Universitys Graduate School of Business, where Professor Hubbard serves as Dean
and Russell L. Carson Professor of Finance and Economics. Professor Hubbard has also informed the company that he was engaged in early February 2017 as an economic and damages expert witness by
counsel representing Pershing Square and another party as defendants in a class action securities litigation.
Mr. Hubbard was paid $129,000 for his services.
|
A-9
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
PLEASE VOTE TODAY!
SEE REVERSE SIDE
FOR THREE EASY WAYS TO VOTE.
▼TO VOTE BY MAIL, PLEASE DETACH HERE, SIGN AND DATE PROXY
CARD, AND RETURN IN THE POSTAGE-PAID ENVELOPE
PROVIDED▼
|
Preliminary Proxy Card Subject to Completion
THIS PROXY IS SOLICITED ON BEHALF
OF
THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS [ ]
2017
The undersigned hereby appoints John P.
Jones and Carlos A. Rodriguez, 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 2017 Annual Meeting of Stockholders of Automatic Data
Processing, Inc. to be held at [ ], on [ ], 2017 at [ ] a.m., or at any
adjournment or postponement thereof, according to the number of votes that the
undersigned would be entitled to cast if personally present. Either of said
attorneys and proxies or substitutes, who shall be present at such meeting or at
any adjournment or postponement thereof, shall have all the powers granted to
such attorneys and proxies.
This Proxy, when properly executed,
will be voted as directed herein and, if no direction is given, will be voted
FOR the election of the nominees in Proposal 1, FOR Proposals 2 and 4, ONE YEAR
on Proposal 3, and AGAINST Proposal 5 on the reverse side. Mr. Jones and Mr.
Rodriguez, and each of them, are authorized to vote upon any other matters that
may properly come before the Annual Meeting.
The undersigned acknowledges receipt of
the Notice of Annual Meeting of Stockholders and the Proxy Statement, each dated
[ ]. By executing this Proxy, the undersigned hereby revokes all prior proxies
that the undersigned has given with respect to the Annual Meeting and any
adjournment or postponement thereof.
(Continued, and to be signed and
dated on the reverse side.)
Table of Contents
Preliminary
Proxy Card
Subject to
Completion
AUTOMATIC DATA PROCESSING,
INC.
YOUR VOTE IS IMPORTANT
Please take a moment now to vote your
shares of Automatic Data Processing, Inc.
Common Stock for the upcoming
Annual Meeting of Stockholders.
YOU CAN VOTE TODAY IN ONE OF THREE
WAYS:
1.
|
Vote by Telephone
Call toll-free from the U.S. or Canada at
(866) 252-6935
on a touch-tone telephone. If outside the U.S. or Canada,
call
(646) 880-9089
. Please follow the simple instructions provided. You
will be required to provide the unique control number printed
below.
|
OR
2.
|
Vote by Internet
Please access
https://www.proxyvotenow.com/adp
and follow the simple instructions provided. Please note you must
type an s after http. You will be required to provide the unique control
number printed below.
|
CONTROL
NUMBER:
|
|
|
You may vote by telephone or Internet 24
hours a day, 7 days a week. Your telephone or Internet vote authorizes
the
named proxies to vote your shares in the same manner as if you had
signed and mailed a proxy card.
|
OR
3.
|
Vote by Mail
If you do not have access to a touch-tone
telephone or to the Internet, please sign, date and return the proxy card
in the envelope provided, or mail to: Automatic Data Processing, Inc., c/o
Innisfree M&A Incorporated, FDR Station, P.O. Box 5155, New York, NY
10150-5155.
|
▼ TO VOTE BY MAIL, PLEASE DETACH HERE, SIGN AND DATE PROXY
CARD, AND RETURN IN THE POSTAGE-PAID ENVELOPE PROVIDED
▼
|
|
Please mark vote
as in this
sample
|
|
The Board of Directors recommends you
vote FOR all nominees for director,
FOR Proposals 2 and 4, ONE YEAR on
Proposal 3, and AGAINST Proposal 5.
|
|
|
|
WITHHOLD
|
|
FOR ALL
|
1. Election of Directors
|
|
FOR ALL
|
|
ALL
|
|
EXCEPT
|
Nominees:
|
|
☐
|
|
☐
|
|
☐
|
01 Peter Bisson, 02 Richard T. Clark,
03 Eric C. Fast, 04 Linda R. Gooden, 05 Michael P. Gregoire, 06 R.
Glenn Hubbard, 07 John P. Jones, 08 William J. Ready, 09 Carlos A.
Rodriguez, 10 Sandra S. Wijnberg
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:
________________________________________
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
2.
|
Advisory Vote on Executive Compensation.
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 YEAR
|
|
2 YEARS
|
|
3 YEARS
|
|
ABSTAIN
|
3.
|
Advisory Vote on the Frequency
of Advisory
Votes on
Executive Compensation.
|
|
☐
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
4.
|
Ratification of the Appointment of Auditors.
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
5.
|
If
Properly Presented at the Annual Meeting, a
Stockholder Proposal Regarding
the Repeal of
Certain By-Laws of the Company.
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
Date:________________________,
2017
_____________________________________________________
Signature
_____________________________________________________
Signature (if
jointly held)
_____________________________________________________
Title
NOTE: 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.
|
Automatic Data Processing (NASDAQ:ADP)
Historical Stock Chart
From Apr 2024 to May 2024
Automatic Data Processing (NASDAQ:ADP)
Historical Stock Chart
From May 2023 to May 2024