Advisory Resolution to Approve
Executive Compensation (Proposal 2)
Consistent with the stockholders advisory
vote at our 2011 Annual Meeting of Stockholders, we determined to hold the
advisory say-on-pay vote to approve our named executive officer compensation on
an annual basis. Therefore, we are asking our stockholders to approve, on an
advisory basis, our named executive officer compensation for fiscal year 2016.
Our stockholders will have the opportunity to approve, on an advisory basis, our
named executive officer compensation for fiscal year 2017 at 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 section on page 22 of
this proxy statement are effective in achieving the companys goals of linking
pay to performance and levels of responsibility, encouraging our executive
officers to remain focused on both short-term and long-term operational and
financial goals of the company and linking executive performance to stockholder
value.
At our 2015 Annual Meeting of
Stockholders, our stockholders approved the compensation of our fiscal year 2015
named executive officers by a vote of approximately 97% in favor.
Ratification of the Appointment of
Auditors (Proposal 3)
We are asking our stockholders to ratify
the selection of Deloitte & Touche LLP as our independent certified public
accountants for fiscal year 2017. A summary of fees paid to Deloitte &
Touche LLP for services provided in fiscal years 2015 and 2016 is provided on
page 62 of this proxy statement. The board of directors recommends a vote FOR
this ratification.
Fiscal Year 2016 Business
Highlights
Fiscal year 2016 was another exciting and
dynamic year that showcased our agility as we continued to adapt to the evolving
needs of our clients and the changing regulatory environment within our human
capital management (HCM) industry. During fiscal year 2016, 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 investments in product innovation, service, and our
sales force, as well as the disposition of the AdvancedMD
®
business.
Our key business metrics in fiscal year 2016 continued to reflect a strong
business model with a high percentage of recurring revenues, good margins, the
ability to generate consistent, healthy cash flows, strong client retention, and
low capital expenditure requirements.
The compensation committees determination
of incentive compensation under our cash bonus program for all of our executive
officers, including our named executive officers, was based on fiscal year 2016
revenue growth of 6.9%, excluding the incremental impact of foreign currency
fluctuations in excess of the fluctuations assumed in the target, compared to a
target of 7.3%, fiscal year 2016 new business bookings growth of 11.5% compared
to a target of 8.6%, and fiscal year 2016 operating income growth of 10.3%,
excluding the impact of certain items consistent with our adjusted EBIT reported
for fiscal year 2016 (i.e., taxes, certain interest expense and interest income,
a gain on sale of the AdvancedMD business, a gain on sale of a building, and a
severance charge related to a broad-based workforce optimization effort),
compared to a target of 11.6%. The incentive compensation under our PSU program
was based on fiscal year 2016 earnings per share growth of 12.8%, which excluded
the impact of the gain on sale of the AdvancedMD business, the gain on sale of a
building, and the severance charge related to a broad-based workforce
optimization effort, compared to a target of 13.5%.
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;
|
iii
|
|
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Automatic Data Processing, Inc.
Proxy Statement
|
Table of
Contents
2016 Proxy Statement
Summary
●
|
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.
|
2016 Compensation
Highlights
Consistent with our pay for performance
philosophy, the compensation of our named executive officers is structured with
a significant portion of their total compensation at risk
and paid based on the performance of the
company and the applicable business unit. Our financial performance in fiscal
year 2016 impacted the compensation for all of our executive officers, not just
our named executive officers, in several ways, most notably through our annual
cash bonus plan and performance-based restricted stock program. Please refer to
the Compensation Discussion and Analysis section on page 22 of this proxy
statement, and the tables and narratives that follow on page 39 of this proxy
statement, for more detail concerning the compensation of our named executive
officers.
The following are key highlights of our
fiscal 2016 executive compensation program:
●
Base
salary:
|
|
For fiscal
year 2016, we increased the base salary of each named executive officer
other than Messrs. Rodriguez and Flynn, which reflected a closing of the
gap to the median market rate. As a result of the 16.7% salary increase
received by Mr. Flynn during the second half of fiscal year 2015, he did
not receive a further salary increase for fiscal year
2016.
|
|
|
|
●
Annual cash
bonus:
|
|
Fiscal year
2016 target bonuses as a percentage of base salary increased from fiscal
year 2015 levels for all our named executive officers except for Mr.
Rodriguez. The target bonus percentage for each of Messrs. Siegmund,
Benjamin and Flynn increased from 80% to 100%, and from 70% to 80% for Mr.
OBrien. The threshold corporate performance goal established by the
compensation committee for fiscal year 2016 was EBIT margin of 15%. As
this performance goal was achieved, the annual bonuses were based on the
performance of the company, the business units and the individual named
executive officers for the 2016 fiscal year against the named executive
officers bonus objectives.
|
|
|
|
●
Equity
awards:
|
|
As part of our equity compensation
program in fiscal year 2016, consistent with fiscal year 2015, we granted
our executive officers performance stock units (PSUs)
and stock options,
and certain executives received time-based restricted stock awards. As a
result of our one-year earnings per share growth for fiscal year 2016, our
executive officers achieved a payout percentage of 88% under our PSU
program. This percentage payout applied to year 1 of the fiscal year 2016
award, which will be earned and issued at the end of the corresponding
three-year performance period ending in fiscal year 2018, to year 2 of the
fiscal year 2015 award, which will be earned and issued at the end of the
corresponding three-year performance period ending in fiscal year 2017,
and to year 3 of the fiscal year 2014 award, which was earned and issued
at a payout percentage of 103% at the end of the corresponding three-year
performance period ending in fiscal year
2016.
|
Automatic Data Processing, Inc.
Proxy Statement
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|
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iv
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Table of Contents
2016 Proxy Statement
Summary
A summary of fiscal year 2016 total direct
compensation for our named executive officers is set forth in the following
table:
|
|
Base
|
|
Annual
|
|
|
|
Stock
|
|
Restricted
|
|
|
Name
|
|
Salary
|
|
Bonus
|
|
PSUs
(1)(2)
|
|
Options
(1)
|
|
Stock
(1)
|
|
Total
|
Carlos A. Rodriguez
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
$1,000,000
|
|
$1,600,000
|
|
$3,318,779
|
|
$2,599,995
|
|
$0
|
|
$8,518,774
|
Jan Siegmund
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
$650,000
|
|
$688,400
|
|
$978,043
|
|
$419,988
|
|
$599,996
|
|
$3,336,427
|
Mark D. Benjamin
|
|
|
|
|
|
|
|
|
|
|
|
|
Division President
|
|
$525,000
|
|
$478,800
|
|
$636,820
|
|
$299,995
|
|
$599,996
|
|
$2,540,611
|
Edward B. Flynn
|
|
|
|
|
|
|
|
|
|
|
|
|
EVP, Worldwide Sales & Marketing
|
|
$525,000
|
|
$556,000
|
|
$566,948
|
|
$239,999
|
|
$0
|
|
$1,887,947
|
Dermot J. OBrien
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Human Resources Officer
|
|
$520,000
|
|
$440,500
|
|
$581,336
|
|
$232,498
|
|
$499,957
|
|
$2,274,291
|
Footnotes:
1
|
Equity amounts are the grant
date fair values for the fiscal year 2016 equity awards, which are the
same amounts disclosed in the Summary Compensation Table for Fiscal Year
2016 on page 39 of this proxy statement.
|
|
|
2
|
The amounts for the
performance stock unit awards represent the grant date fair value of
one-third of each of the fiscal year 2014, fiscal year 2015 and fiscal
year 2016 target awards. 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 mix of target total direct
compensation (base salary, cash bonus, and long-term incentive awards) for
fiscal year 2016 was designed to deliver the following approximate proportions
of total compensation to Mr. Rodriguez, our
chief executive officer, and the other
named executive officers (on average) if company and individual target levels of
performance are achieved:
v
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|
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Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
2016 Proxy Statement
Summary
Good Governance and Best
Practices
We are committed to ensuring that our
compensation programs reflect principles of good governance, including the
following:
✓
|
Pay for performance:
We design
our compensation programs to link pay to performance and levels of
responsibility, to encourage our executive officers to remain focused on
both the short-term and long-term operational and financial goals of the
company, and to link executive performance to stockholder
value.
|
✓
|
Annual say-on-pay vote:
We hold
an advisory say-on-pay vote to approve our named executive officer
compensation on an annual basis.
|
✓
|
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 any current or former
executives.
|
✓
|
Stock ownership guidelines:
We
maintain stock ownership guidelines to encourage equity ownership by our
executive officers.
|
✓
|
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.
|
✓
|
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
stock option repricing or discount stock options:
We do not lower the exercise price of any outstanding
stock options, and the exercise price of our stock options is not less
than 100% of the fair market value of our common stock on the date of
grant.
|
✓
|
Anti-hedging and anti-pledging policy:
We prohibit our directors and executive officers from engaging in
any hedging or similar transactions involving ADP securities, holding ADP
securities in a margin account, or pledging ADP securities as collateral
for a loan.
|
✓
|
Independence of our compensation committee and
advisor:
The compensation committee of
our board of directors, which is comprised solely of independent
directors, utilizes the services of Frederic W. Cook & Co., Inc. (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.
|
2016 Corporate Governance
Highlights
We are committed to sound corporate
governance practices that provide our stockholders with meaningful rights and
foster strong independent leadership in our boardroom, such as:
✓
|
Annual election of directors
|
✓
|
Majority voting standard
|
✓
|
One share, one vote
|
✓
|
Proxy access by-law
|
✓
|
No overboarding
policy
|
✓
|
No poison
pill
|
✓
|
Independent board
chair
|
✓
|
Stockholder ability to call special
meetings
|
✓
|
Stockholder right to act by written
consent
|
✓
|
Annual board assessment of corporate governance best
practices
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
vi
|
Table of Contents
2016 Proxy Statement
Summary
✓
|
Significant board role in strategy and risk
oversight
|
✓
|
Annual succession planning
review
|
We firmly believe that creating
sustainable long-term value for stockholders is enabled through such strong
governance practices and open dialogue with stockholders through continuous
direct engagement.
Building upon our effective framework for
corporate governance, our board of directors implemented proxy access in August
2016. Our proxy access by-law provision permits 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, subject to satisfaction of the
eligibility, notice and other requirements specified in our by-laws.
Stockholders may utilize proxy access beginning with the companys 2017 Annual
Meeting of Stockholders.
Stockholder Engagement
Process
We value stockholder engagement and
feedback as we continue to deliver strong financial performance and sustained
value creation for our investors. This year, at the direction of our board of
directors, we expanded our investor engagement program to include outreach to
our largest investors governance teams. These meetings are designed to keep our
board of directors attuned to our stockholders views, which provide useful
context as we seek to ensure the interests of our stockholders continue to be
addressed. Senior members of ADPs management team contacted investors
representing more than a third
of our shares outstanding, and we
anticipate being able to meet with stockholders representing about 20% of shares
outstanding as part of this outreach. We have begun open and informative
discussions about our strategy, governance, and executive compensation practices
and plan to continue to engage our stockholders to better understand and
consider their views. What we learn from our stockholders through our ongoing
discussions will be regularly shared with our board of directors.
Important Dates for the 2017 Annual
Meeting of Stockholders
Please refer to the Stockholder
Proposals section on page 64 of this proxy statement for more information
regarding the applicable requirements for submission of stockholder
proposals.
If a stockholder intends to submit any
proposal (including pursuant to our proxy access by-law) for inclusion in the
companys proxy statement for the companys 2017 Annual Meeting of Stockholders
in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, the proposal must be received by the corporate secretary of the company
no later than May 25, 2017.
Separate from the requirements of Rule
14a-8 relating to the inclusion of a stockholder proposal in the companys proxy
statement, the companys amended and restated by-laws require that notice of a
stockholder nomination for candidates for our board of directors (other than
pursuant to our proxy access by-law) or any other business to be considered at
the companys 2017 Annual Meeting of Stockholders must be received by the
company no earlier than July 11, 2017, and no later than August 10,
2017.
vii
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Proxy
Statement
The board of directors of Automatic Data
Processing, Inc. is soliciting your proxy to vote at the 2016 Annual Meeting of
Stockholders to be held on November 8, 2016 at 10:00 a.m. Eastern Standard Time,
and at any postponement(s) or adjournment(s) thereof. The meeting will be held
at our corporate headquarters, One ADP Boulevard, Roseland, New
Jersey.
Under rules adopted by the Securities and
Exchange Commission, we are furnishing proxy materials to our stockholders
primarily via the Internet, instead of mailing printed copies of those materials
to each stockholder. On September 22, 2016, we commenced the mailing to our
stockholders (other than those who previously requested electronic or paper
delivery of printed proxy materials) of a Notice of Internet Availability of
Proxy Materials containing instructions on how to access our proxy materials,
including our proxy statement and our annual report on Form 10-K (which is not a
part of the proxy soliciting material). This process is designed to expedite
stockholders receipt of proxy materials, lower the cost of the Annual Meeting,
and help conserve natural resources.
However, if you would prefer to receive
printed proxy materials, please follow the instructions included in the Notice
of Internet Availability of Proxy Materials. If you have previously elected to
receive our proxy materials electronically, you will continue to receive these
materials via e-mail unless you elect otherwise.
The only outstanding class of securities
entitled to vote at the meeting is our common stock, par value $0.10 per share.
At the close of business on September 9, 2016, the record date for determining
stockholders entitled to notice of, to attend, and to vote at the meeting, we
had 454,375,205 issued and outstanding shares of common stock (excluding
184,337,237 treasury shares not entitled to vote). Each outstanding share of
common stock is entitled to one vote with respect to each matter to be voted on
at the meeting.
This proxy statement and our annual report
on Form 10-K are also available on our corporate website at www.adp.com under
Financials in the Investor Relations section.
Questions and Answers
About the Annual Meeting and Voting
WHY AM
I
RECEIVING THESE
PROXY MATERIALS?
|
|
We are
providing these proxy materials to holders of shares of the companys
common stock, par value $0.10 per share, in connection with the
solicitation of proxies by our board of directors for the forthcoming 2016
Annual Meeting of Stockholders to be held on November 8, 2016 at 10:00
a.m. Eastern Standard Time, and at any postponement(s) or adjournment(s)
thereof. The company will bear all expenses in connection with this
solicitation.
|
HOW CAN I ATTEND
THE
MEETING?
|
|
Admission to the meeting is
restricted to stockholders and/or their designated representatives. If
your shares are registered in your name and you plan to attend the
meeting, your admission ticket will be the top portion of the proxy card.
If your shares are in the name of your broker or bank or you received your
proxy materials electronically, you will need to bring evidence of your
stock ownership, such as your most recent brokerage account
statement.
All stockholders will be required to
show valid picture identification. If you do not have valid picture
identification and either an admission ticket or proof of your stock
ownership, you will not be admitted to the meeting. For security purposes,
packages and bags will be inspected and you may be required to check these
items. Please arrive early enough to allow yourself adequate time to clear
security.
|
HOW MANY
SHARES MUST
BE
PRESENT TO HOLD
THE MEETING?
|
|
The representation in person or by
proxy of a majority of the issued and outstanding shares of stock entitled
to vote at the meeting constitutes a quorum. Under our amended and
restated certificate of incorporation and our amended and restated by-laws
and under Delaware law, abstentions and non-votes are counted as present
in determining whether the quorum requirement is satisfied. A non-vote
occurs when a nominee holding shares for a beneficial owner does not vote
on a particular proposal because the nominee does not have discretionary
voting power for that particular item and has not received instructions
from the beneficial owner.
|
1
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Questions and Answers
About the Annual Meeting and Voting
HOW CAN I VOTE
MY
SHARES?
|
|
The Notice of Internet Availability
of Proxy Materials instructs you on how to access your proxy card to vote
through the Internet or by telephone. If you receive a paper copy of the
proxy materials, you may also vote your shares by completing, signing,
dating and returning the accompanying printed proxy in the enclosed
envelope, which requires no postage if mailed in the United States. Unless
contrary instructions are indicated on the proxy, all shares represented
by valid proxies received pursuant to this solicitation (and not revoked
before they are voted) will be voted in accordance with the
recommendations of our board of directors as indicated below. If you are a
registered stockholder and attend the meeting, you may deliver your
completed proxy card in person.
|
IF I HOLD SHARES
IN STREET
NAME,
DOES MY BROKER
NEED INSTRUCTIONS
IN ORDER TO VOTE
MY
SHARES?
|
|
If your shares are held in street
name (i.e., your shares are held by a bank, brokerage firm or other
nominee), you must provide voting instructions to your bank or broker by
the deadline provided in the materials you receive from your bank or
broker. If you hold your shares in street name and you do not instruct
your bank or broker as to how to vote your shares, your bank or broker may
only vote your shares in its discretion on the ratification of the
appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for fiscal year 2017 (Proposal 3), but will not be
allowed to vote your shares on any of the other proposals described in
this proxy statement, including the election of directors. Under
applicable Delaware law, a broker non-vote will have no effect on the
outcome of any of the other proposals described in this proxy statement
because the non-votes are not considered in determining the number of
votes necessary for approval.
|
WHAT MATTERS
WILL BE VOTED
ON
AT THE MEETING,
WHAT ARE MY
VOTING CHOICES,
AND HOW
DOES
THE BOARD
OF DIRECTORS
RECOMMEND
THAT I
VOTE?
|
|
Proposal
|
|
Voting
Choices
|
|
Board
Recommendation
|
|
Proposal 1:
Election of the 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
|
|
Proposal 2:
Advisory resolution approving the compensation of the
companys named executive officers as disclosed in the Compensation
Discussion and Analysis section on page 22 of this proxy statement and
accompanying compensation tables
|
|
●
For
●
Against
●
Abstain
|
|
FOR
|
|
Proposal 3:
Ratification of the appointment of Deloitte & Touche
LLP as our independent registered public accounting firm for fiscal year
2017
|
|
●
For
●
Against
●
Abstain
|
|
FOR
|
|
So far as the board of directors is
aware, only the above matters will be acted upon at the meeting. If any
other matters properly come before the meeting, the accompanying proxy may
be voted on such other matters in accordance with the best judgment of the
person or persons voting the proxy.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
2
|
Table of Contents
Questions and Answers
About the Annual Meeting and Voting
HOW MANY VOTES
ARE NEEDED
TO
APPROVE THE
PROPOSALS, AND
WHAT IS THE EFFECT
OF
ABSTENTIONS OR
WITHHELD VOTES?
|
|
Proposal 1:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote thereon is required to elect a director, provided that if the
number of nominees exceeds the number of directors to be elected (a
situation that the company does not anticipate), the directors shall be
elected by the vote of a plurality of the shares represented in person or
by proxy. Votes may be cast in favor of all nominees, withheld from all
nominees or withheld from specifically identified nominees. Votes that are
withheld will have the effect of a negative vote, provided that if the
number of nominees exceeds the number of directors to be elected, withheld
votes will be excluded entirely and will have no effect on the vote. A
broker non-vote will have no effect on the outcome of this proposal
because the non-votes are not considered in determining the number of
votes necessary for approval.
Proposal 2:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote thereon is required to approve the advisory resolution on
executive compensation. Votes may be cast in favor of or against this
proposal or a stockholder may abstain from voting. Abstentions will have
the effect of a negative vote. A broker non-vote will have no effect on
the outcome of the advisory resolution because the non-votes are not
considered in determining the number of votes necessary for approval.
Because the vote on this proposal is advisory in nature, it will not
affect any compensation already paid or awarded to any named executive
officer and will not be binding on or overrule any decisions by the
compensation committee or the board of directors. Because we value our
stockholders views, however, the compensation committee and the board of
directors will consider the results of this advisory vote when formulating
future executive compensation policy.
Proposal 3:
The affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled
to vote thereon is required to ratify the appointment of Deloitte &
Touche LLP, an independent registered public accounting firm, as the
companys independent certified public accountants for fiscal year 2017.
Votes may be cast in favor of or against this proposal or a stockholder
may abstain from voting. Abstentions will have the effect of a negative
vote. Brokers have the authority to vote shares for which their customers
did not provide voting instructions on the ratification of the appointment
of Deloitte & Touche LLP.
|
MAY I REVOKE MY
PROXY OR
CHANGE
MY VOTE?
|
|
If your shares are registered in
your name, you may revoke your proxy and change your vote prior to the
completion of voting at the Annual Meeting by:
●
submitting a valid, later-dated proxy card or a later-dated vote in
accordance with the voting instructions on the Notice of Internet
Availability of Proxy Materials in a timely manner;
or
●
giving written notice of such revocation to the companys corporate
secretary prior to or at the Annual Meeting or by voting in person at the
Annual Meeting.
If your shares are held in street
name, you should contact your bank or broker and follow its procedures
for changing your voting instructions. You also may vote in person at the
Annual Meeting if you obtain a legal proxy from your bank or
broker.
|
3
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Questions and Answers
About the Annual Meeting and Voting
IS MY
VOTE
CONFIDENTIAL?
|
|
Proxies and ballots identifying the
vote of individual stockholders will be kept confidential from our
management and directors, except as necessary to meet legal requirements
in cases where stockholders request disclosure or in a contested
election.
|
WHERE CAN I FIND
THE VOTING
RESULTS
OF THE ANNUAL
MEETING?
|
|
The preliminary voting results will
be announced at the Annual Meeting. The final voting results, which are
tallied by independent tabulators and certified by independent inspectors,
will be published in the companys current report on Form 8-K, which we
are required to file with the Securities and Exchange Commission within
four business days following the Annual Meeting.
|
WHAT
IS
HOUSEHOLDING?
|
|
To reduce the expense of delivering
duplicate proxy materials to stockholders who may have more than one
account holding our stock but share the same address, we have adopted a
procedure known as householding. Under this procedure, certain
stockholders of record who have the same address and last name, and who do
not participate in electronic delivery of proxy materials, will receive
only one copy of our Notice of Internet Availability of Proxy Materials
and, as applicable, any additional proxy materials that are delivered
until such time as one or more of these stockholders notifies us that they
want to receive separate copies. Stockholders who participate in
householding will continue to have access to and utilize separate proxy
voting instructions.
If you are a registered stockholder
and choose to have separate copies of our Notice of Internet Availability
of Proxy Materials, proxy statement and annual report on Form 10-K mailed
to you, you must opt-out by writing to Broadridge Financial Solutions,
Inc., Householding Department, 51 Mercedes Way, Edgewood, New York, 11717
or by calling 1-866-540-7095 and we will cease householding all such
disclosure documents within 30 days. If we do not receive instructions to
remove your accounts from this service, your accounts will continue to be
householded until we notify you otherwise. If you own our common stock
in nominee name (such as through a broker), information regarding
householding of disclosure documents should have been forwarded to you by
your broker.
You can also contact Broadridge
Financial Solutions, Inc. at 1-866-540-7095 if you received multiple
copies of the Annual Meeting materials and would prefer to receive a
single copy in the future.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
4
|
Table of Contents
|
Proposal 1
Election of Directors
|
The board of directors has nominated the
following current directors for re-election as directors. Properly executed
proxies will be voted as marked. Unmarked proxies will be voted in favor of
electing the persons named below (each of whom is now a director) as directors
to serve until the next Annual Meeting of Stockholders and until their
successors are duly elected and qualified. If any nominee is no longer a
candidate at the time of the meeting (a situation that we do not anticipate),
proxies will be voted in favor of remaining nominees and may be voted for
substitute nominees designated by the board of directors.
Name
|
|
Age
|
|
Served as
a
Director
Continuously
Since
|
|
Principal Occupation
|
Peter Bisson
|
|
59
|
|
2015
|
|
Retired Director and Global Leader of the High-Tech
Practice at McKinsey & Company
|
Richard T. Clark
|
|
70
|
|
2011
|
|
Retired Chairman and Chief Executive Officer of Merck
& Co., Inc.
|
Eric C. Fast
|
|
67
|
|
2007
|
|
Retired Chief Executive Officer of Crane Co., a
manufacturer of industrial products
|
Linda R. Gooden
|
|
63
|
|
2009
|
|
Retired Executive Vice President of Lockheed Martin
Corporation Information Systems & Global Solutions
|
Michael P. Gregoire
|
|
50
|
|
2014
|
|
Chief Executive Officer and Director of CA
Technologies
|
R. Glenn Hubbard
|
|
58
|
|
2004
|
|
Dean of Columbia Universitys Graduate School of
Business
|
John P. Jones
(Board Chairman)
|
|
65
|
|
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
|
|
36
|
|
2016
|
|
Senior Vice President, Global Head of Product and
Engineering, PayPal
|
Carlos A. Rodriguez
|
|
52
|
|
2011
|
|
President and Chief Executive Officer of Automatic Data
Processing, Inc.
|
Sandra S. Wijnberg
|
|
60
|
|
2016
|
|
Executive Advisor, and Former Partner and Chief
Administrative Officer of Aquiline Holdings
|
5
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Below are summaries of the principal
occupations, business experience, and background of the nominees.
Peter
Bisson
|
Director since:
2015
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. His 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
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 serves on the advisory board of American Securities, a
private equity firm. With a proven track record of leadership and
achievement, Mr. Clark offers our board of directors broad managerial and
operational expertise, as well as extensive experience in the issues
facing public companies and multinational
businesses.
|
Eric C.
Fast
|
Director since:
2007
Independent
|
|
Retired Chief Executive Officer of Crane
Co.
Mr. Fast is
the retired chief executive officer, president, and director of Crane Co.,
a manufacturer of industrial products. Mr. Fast served as the chief
executive officer of Crane Co. from April 2001 until January 2014, as
president from 1999 through January 2013, and as a director from 1999 to
January 2014. Mr. Fast is also a director of National Integrity Life
Insurance Company and Regions Financial Corporation, 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. 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.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
6
|
Table of Contents
Linda R.
Gooden
|
Director since:
2009
Independent
|
|
Retired Executive Vice President
of Lockheed Martin Corporation Information Systems & Global
Solutions
Ms. Gooden
is the retired executive vice president information systems & global
solutions of Lockheed Martin Corporation, a position that she held from
January 2007 to March 2013. She previously served as deputy executive vice
president information & technology services of Lockheed Martin
Corporation from October 2006 to December 2006, and president, Lockheed
Martin Information Technology from September 1997 to December 2006. Ms.
Gooden 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. Ms. Gooden brings to our board of directors broad managerial and
operational expertise, a strong background in information technology, as
well as a proven track record of achievement and sound business judgment
demonstrated throughout her career with Lockheed Martin
Corporation.
|
Michael P.
Gregoire
|
Director since:
2014
Independent
|
|
Chief Executive Officer and
Director of CA Technologies
Mr. Gregoire
is chief executive officer and a director of CA Technologies. He served as
president and chief executive officer of Taleo Corporation, a provider of
on-demand talent management software solutions, from March 2005 until its
acquisition by Oracle Corporation in April 2012, as chairman of the board
from May 2008 to April 2012, and as a director from April 2005 to April
2012. Mr. Gregoire served as executive vice president, global services and
held various other senior management positions at PeopleSoft, Inc. from
May 2000 to January 2005. Mr. Gregoire was managing director for global
financial markets at Electronic Data Systems, Inc. from 1996 to April
2000, and in various other roles from 1988 to 1996. He has also served as
a director of ShoreTel, Inc. from November 2008 to January 2014 and the
chair of its compensation committee from July 2010 to January 2014. Mr.
Gregoire is also a director of NPower, a nonprofit information technology
services network, since September 2013. Mr. Gregoire brings to our board
of directors extensive executive leadership experience with public
companies in the software and services business and extensive experience
in the technology industry. In addition, his directorships at other public
companies provide him with broad experience on governance issues facing
public companies.
|
R. Glenn
Hubbard
|
Director since:
2004
Independent
|
|
Dean of Columbia Universitys
Graduate School of Business
Mr. Hubbard
has been the dean of Columbia Universitys Graduate School of Business
since 2004 and has been the Russell L. Carson professor of finance and
economics since 1994. He is also a director of BlackRock Closed-End Funds
and MetLife, Inc. and a member of the Panel of Economic Advisors for the
Federal Reserve Bank of New York. Mr. Hubbard served as a director of KKR
Financial Holdings, LLC from 2004 until 2014, Information Services Group,
Inc. from 2006 to 2008, Duke Realty Corporation from 2004 to 2008, Capmark
Financial Corporation from 2006 to 2008, Dex Media, Inc. from 2004 to
2006, and R.H. Donnelley Corporation in 2006. Mr. Hubbard was chairman of
the Presidents Council of Economic Advisers from 2001 to 2003. Mr.
Hubbard provides our board of directors with substantial knowledge of and
expertise in global macroeconomic conditions and economic, tax and
regulatory policies, as well as perspective on financial markets. In
addition, his directorships at other public companies provide him with
broad experience on governance issues facing public
companies.
|
7
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Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
John P.
Jones
|
Director since:
2005
Independent
|
|
Retired Chairman and Chief
Executive Officer of Air Products and Chemicals, Inc.
Mr. Jones is
the retired chairman of the board, chief executive officer, and president
of Air Products and Chemicals, Inc., an industrial gas and related
industrial process equipment business. Mr. Jones served as chairman of Air
Products and Chemicals, Inc. from October 2007 until April 2008, as
chairman and chief executive officer from September 2006 until October
2007, and as chairman, president, and chief executive officer from
December 2000 through September 2006. He also served as a director of
Sunoco, Inc. from 2006 to 2012. With a track record of achievement and
sound business judgment demonstrated during his thirty-six year tenure at
Air Products and Chemicals, Inc., Mr. Jones brings to the board of
directors extensive experience in issues facing public companies and
multinational businesses, including organizational management, strategic
planning, and corporate governance matters, combined with proven business
and financial acumen.
|
William J.
Ready
|
Director since:
2016
Independent
|
|
Senior Vice President, Global
Head of Product and Engineering, PayPal
Mr. Ready
has been PayPals senior vice president, global head of product and
engineering since January 2015. Since August 2011, he has been the chief
executive officer of Braintree, a mobile and web payment systems company
acquired by PayPal in 2013. 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 has also
served as president of iPay Technologies beginning in 2008 through its
sale in 2010. He also worked as a strategy consultant for McKinsey &
Company, where he advised leading financial technology companies. Mr.
Ready brings to our board of directors deep operational experience and
knowledge of the consumer space and technology industry.
|
Carlos A.
Rodriguez
|
Director since:
2011
Management
|
|
President and Chief Executive
Officer of Automatic Data Processing, Inc.
Mr.
Rodriguez is president and chief executive officer of the company. He
served as president and chief operating officer of the company before he
was appointed to his current position in November 2011. Having started his
career at the company in 1999, Mr. Rodriguez previously served as
president of several key businesses, including National Accounts Services,
Employer Services International, Small Business Services, and Professional
Employer Organization, giving him deep institutional knowledge across the
companys business. Mr. Rodriguez was also a director of Hubbell Inc., a
manufacturer of electrical and electronic products, from 2009 to 2016. Mr.
Rodriguez brings a wealth of business acumen and leadership experience to
our board of directors, coupled with a proven track record of integrity,
achievement, and strategic
vision.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
8
|
Table of Contents
Sandra S.
Wijnberg
|
Director since:
2016
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 previously served
on the boards of Tyco International plc from 2003 to 2016 and TE
Connectivity Ltd. from 2007 to 2009. Ms. Wijnberg is a seasoned business
leader with significant finance and business operations expertise as well
as international experience that provides a valuable perspective to our
board of directors.
|
Stockholder Approval
Required
|
At the 2016 Annual Meeting of
Stockholders, directors will be elected by the affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled to
vote thereon, provided that if the number of nominees exceeds the number of
directors to be elected (a situation we do not anticipate), the directors shall
be elected by the vote of a plurality of the shares represented in person or by
proxy.
|
|
THE BOARD
OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES TO THE BOARD OF DIRECTORS.
|
9
|
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|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Corporate Governance
The board of directors categorical
standards of director independence are consistent with NASDAQ Stock Market
(NASDAQ) listing standards and are available in the companys corporate
governance principles on our corporate website at www.adp.com under Investor
Relations in the Corporate Governance section. 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 and nominating/corporate governance committees are
independent.
It is our policy that our directors attend
the Annual Meetings of Stockholders. All of our directors then in office
attended our 2015 Annual Meeting of Stockholders.
During fiscal year 2016, our board of
directors held five 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 2016.
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.
Director Nomination
Process
|
When the board of directors decides to
recruit a new member, or when the board of directors considers any director
candidates submitted for consideration by our stockholders, it seeks strong
candidates who, ideally, meet all of its categorical standards of director
independence, and who are, preferably, senior executives of large companies who
have backgrounds directly related to our technologies, markets and/or clients.
Additionally, candidates should possess the following personal characteristics:
(i) business community respect for his or her integrity, ethics, principles,
insights and analytical ability; and (ii) ability and initiative to frame
insightful questions, speak out and challenge questionable assumptions and
disagree without being disagreeable. The nominating/corporate governance
committee will not consider candidates who lack the foregoing personal
characteristics. In addition, the
nominating/corporate governance committee considers a wide range of other
factors in determining the composition of our board of directors, including age,
diversity of background, diversity of thought, and other individual qualities
such as professional experience, skills, education, and training. 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, including in connection with the appointment of Mr. Ready and Ms.
Wijnberg in fiscal year 2016.
Nominations of candidates for our board of
directors by our stockholders for consideration at our 2016 Annual Stockholder
Meeting are subject to the deadlines and other requirements described under
Stockholder Proposals on page 64 of this proxy statement.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
10
|
Table of Contents
Retirement Policy
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
|
Ellen R. Alemany
|
|
X
|
|
|
|
|
|
X
|
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
|
Number of meetings held in fiscal year
2016
|
|
7
|
|
4
|
|
3
|
|
3
|
AC - Audit
Committee
|
|
CDTAC -
Corporate Development and Technology
|
CC -
Compensation Committee
|
|
Advisory
Committee
|
NCGC -
Nominating / Corporate Governance Committee
|
|
F - Financial
Expert
|
|
|
C - Committee
Chair
|
Effective immediately after the 2016
Annual Meeting of Stockholders, Ms. Wijnberg will serve on the audit committee
and the corporate development and technology advisory committee. Ms. Wijnberg is
deemed a financial expert for purposes of her service on the audit committee.
11
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Audit
Committee
|
Eric C. Fast
Committee Chair
Other
committee
members:
Ellen R. Alemany
Richard
T. Clark
Linda R. Gooden
|
|
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 under Investor Relations in the Corporate Governance
section. Effective immediately after the 2016 Annual Meeting of
Stockholders, Ms. Wijnberg will serve on the audit committee. The members
of the audit committee, including Ms. Wijnberg upon her service, are
independent and financially literate under NASDAQ listing standards. A
further description of the role of the audit committee is set forth on
page 60 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 under
Investor Relations in the Corporate Governance section. The members of
the nominating/corporate governance committee satisfy the independence
requirements of NASDAQ listing
standards.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
12
|
Table of Contents
Compensation Committee
|
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 22 of this proxy statement.
The compensation committee is
authorized to engage the services of outside advisors, experts and others
to assist the committee. For fiscal year 2016, the compensation committee
sought advice from Frederic W. Cook & Co., Inc., an independent
compensation consulting firm specializing in executive and director
compensation. For further information about Frederic W. Cook & Co.,
Inc.s services to the compensation committee, see Compensation
Discussion and Analysis under Compensation Consultant on page 27 of
this proxy statement.
The compensation committee acts
under a written charter, which is available online on our corporate
website at www.adp.com under Investor Relations in the
Corporate Governance section. 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:
Ellen R. Alemany
Peter
Bisson
Michael P. Gregoire
William J. Ready
|
|
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. Effective immediately after the 2016 Annual
Meeting of Stockholders, Ms. Wijnberg will serve on the corporate
development and technology advisory committee.
The corporate development and
technology advisory committee acts under a written charter, which is
available online on our corporate website at www.adp.com
under Investor Relations in the Corporate Governance
section.
|
13
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|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
The Boards Role in Risk
Oversight
Our board of directors provides oversight
with respect to the companys enterprise risk assessment and risk management
activities, which are designed to identify, prioritize, assess, monitor and
mitigate the various risks confronting the company, including risks that are
related to the achievement of the companys operational and financial strategy.
The board of directors performs this oversight function periodically as part of
its meetings and also through its committees, each of which examines various
components of enterprise risk as part of its assigned responsibilities.
Management is responsible for implementing and supervising day-to-day risk
management processes and reporting to the board of directors and its committees
as necessary.
Our audit committee focuses on financial
risks, including reviewing with management, the companys internal auditors, and
the companys independent auditors the companys major financial risk exposures,
the adequacy and effectiveness of accounting and financial controls, and the
steps management has taken to monitor and control financial risk exposures. In
addition, our audit committee reviews risks related to compliance with
applicable laws, regulations, and ethical standards, and also operational risks
related to information security and system disruption. Our audit committee
regularly receives, reviews and discusses with management presentations and
analyses on various risks confronting the company.
Our nominating/corporate governance
committee oversees risks associated with board structure and other corporate
governance policies and practices, including review and approval of any
related-person transactions under our Related Persons Transaction Policy. Our
compensation committee oversees risks related to compensation matters. Our
committees report on risk oversight matters directly to the board of directors
on a regular basis.
Our compensation committee considered
the risks presented by the companys compensation policies and practices at its
meetings in August 2015 and 2016 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, operational measures, 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
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
14
|
Table of Contents
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 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
under Investor Relations in the Corporate Governance section. Our
Code of Business Conduct & Ethics and Code of Ethics for Principal Executive
Officer and Senior Financial Officers may be
found at
www.adp.com
under Investor Relations
in the Corporate Governance section. In addition, these documents are
available in print to any stockholder who requests them by writing to Investor
Relations at the companys headquarters.
Security Ownership of
Certain Beneficial Owners and Management
The following table contains information
regarding the beneficial ownership of the companys common stock by (i) each
director and nominee for director of the company, (ii) each of our named
executive officers included in the Summary Compensation Table below (we refer to
such executive officers as named executive officers), (iii) all company
directors and executive officers as a group (including the named executive
officers) and (iv) all stockholders that are known to the company to be the
beneficial owners of more than 5% of the
outstanding shares of the companys common stock. Unless otherwise noted in the
footnotes following the table, each person listed below has sole voting and
investment power over the shares of common stock reflected in the table. Unless
otherwise noted in the footnotes following the table, the information in the
table is as of August 31, 2016 and the address of each person named is P.O. Box
34, Roseland, New Jersey, 07068.
Name of Beneficial Owner
|
Amount and Nature
of
Beneficial Ownership
(1)
|
|
Percent
|
Ellen R. Alemany
|
|
16,799
|
|
|
*
|
|
Mark D. Benjamin
|
|
113,822
|
|
|
*
|
|
Peter Bisson
|
|
3,707
|
|
|
*
|
|
Richard T. Clark
|
|
18,750
|
|
|
*
|
|
Eric C. Fast
|
|
32,558
|
|
|
*
|
|
Edward B. Flynn
|
|
88,237
|
|
|
*
|
|
Linda R. Gooden
|
|
28,988
|
|
|
*
|
|
Michael P. Gregoire
|
|
8,236
|
|
|
*
|
|
R.
Glenn Hubbard
|
|
38,592
|
|
|
*
|
|
John P. Jones
|
|
55,996
|
|
|
*
|
|
Dermot J. OBrien
|
|
53,285
|
|
|
*
|
|
William J. Ready
|
|
2,693
|
|
|
*
|
|
Carlos A. Rodriguez
|
|
178,117
|
|
|
*
|
|
Jan
Siegmund
|
|
142,045
|
|
|
*
|
|
Sandra S. Wijnberg
|
|
1,079
|
|
|
*
|
|
BlackRock, Inc.
(2)
|
|
27,999,497
|
|
|
6.1
|
%
|
The
Vanguard Group, Inc.
(3)
|
|
30,095,522
|
|
|
6.52
|
%
|
Directors and executive officers
as a group 25 persons,
|
|
|
|
|
|
|
including those directors and executive officers named
above
|
|
1,136,857
|
|
|
*
|
|
Footnotes:
|
*
|
Indicates less than one
percent.
|
|
|
(1)
|
Includes: (i) 247,584 shares that may be acquired upon
the exercise of stock options that are exercisable on or prior to October
31, 2016 held by the following directors and executive officers: Mr. Jones
(17,064), Mr. Benjamin (58,431), Mr. Flynn (45,192), Mr. OBrien (15,746),
Mr. Rodriguez (36,363), and Mr. Siegmund (74,788); and (ii) 403,854 shares
subject to stock options held by the directors and executive officers as a
group. Includes: (i) 85,500 shares that were acquired by the following
executive officers in connection with the vesting of performance stock
units based on the achievement of certain financial objectives for the
fiscal year 2014 through fiscal year 2016 three-year performance period:
Mr. Benjamin (8,787), Mr. Flynn (9,415), Mr. OBrien (10,043) Mr.
Rodriguez (42,191), and Mr. Siegmund (15,064); and (ii) 119,268 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: Ms. Alemany (16,799), Mr. Bisson (3,707), Mr. Clark (18,750), Mr.
Fast (32,558), Ms. Gooden (26,913), Mr. Gregoire (8,236), Mr. Hubbard
(37,592), Mr. Jones (38,932), Mr. Ready (2,693) and Ms. Wijnberg (1,079).
Our directors do not have any voting rights with respect to these deferred
stock units.
|
19
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Security Ownership of Certain
Beneficial Owners and Management
|
|
(2)
|
Information is furnished in
reliance on the Schedule 13G/A of BlackRock, Inc. (BlackRock) filed on
January 25, 2016. The address of BlackRock, Inc. is 55 East 52nd Street,
New York, NY 10055. BlackRock has sole investment power over 27,999,497
shares. BlackRock has sole voting authority over 22,790,702 shares and no
voting authority over 5,208,795 shares. The 27,999,497 shares reported are
owned, directly or indirectly, by BlackRock (Channel Islands) Ltd,
BlackRock (Luxembourg) S.A., BlackRock (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 13G/A of The Vanguard Group, Inc. (Vanguard)
filed on February 10, 2016. The address of The Vanguard Group, Inc. is 100
Vanguard Blvd., Malvern, PA 19355. Vanguard shares investment power over
722,675 shares with Vanguard Fiduciary Trust Company and also shares
investment power over 331,855 shares with Vanguard Investments Australia,
Ltd. Vanguard has sole investment power over 29,179,116 shares. Vanguard
has sole voting authority over 860,799 shares and no voting authority over
29,234,723 shares.
|
Equity Compensation Plan
Information
The following table sets forth information
as of June 30, 2016, 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
|
|
6,060,395
|
(1)
|
|
|
|
$64.99
|
|
|
|
24,430,661
|
(2)
|
|
Equity compensation plans not
approved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by stockholders
|
|
0
|
|
|
|
|
$
|
|
|
|
0
|
|
|
Total
|
|
6,060,395
|
|
|
|
|
$64.99
|
|
|
|
24,430,661
|
|
|
Footnotes:
|
(1)
|
Includes (i) 861,170
shares issuable under our performance stock unit (PSU) program in
settlement of PSUs outstanding as of June 30, 2016 (based on actual
performance and accrued dividend equivalents for performance periods
ending on or prior to June 30, 2016, and assuming maximum performance for
performance periods not yet completed), (ii) 70,294 shares issuable
pursuant to deferred restricted stock units issued prior to June 30, 2016,
(iii) 186,180 shares issuable upon settlement of deferred stock units held
by our directors as of June 30, 2016, and (iv) 56,731 shares issuable in
settlement of performance restricted stock units issued prior to June 30,
2016. The remaining balance of 4,886,020 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 21,681,179
shares available for future issuance under the 2008 Omnibus Award Plan and
2,749,482 shares of common stock remaining available for future issuance
under the Employees Savings-Stock Purchase Plan, each as of June 30,
2016. Approximately 257,698 shares of common stock were subject to
purchase as of June 30, 2016, under the Employees Savings-Stock Purchase
Plan.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
20
|
Table of Contents
|
Proposal 2
Advisory Vote on Executive
Compensation
|
We are asking stockholders to approve the
following advisory resolution at the Annual Meeting:
RESOLVED, that the stockholders approve,
on an advisory basis, the compensation of the companys named executive officers
as disclosed in the Compensation Discussion and Analysis, the accompanying
compensation tables and the related narrative disclosure in the companys proxy
statement for the 2016 Annual Meeting of Stockholders.
The board of directors recommends a vote
FOR this resolution because it believes that the policies and practices
described in the Compensation Discussion and Analysis are effective in achieving
the companys goals of linking pay to
performance and levels of responsibility,
encouraging our executive officers to remain focused on both short-term and
long-term operational and financial goals of the company and linking executive
performance to stockholder value.
We urge stockholders to read the
Compensation Discussion and Analysis section appearing on pages 22 through 37 of
this proxy statement, as well as the Summary Compensation Table For Fiscal Year
2016 and related compensation tables and narrative appearing on pages 39
through 59 of this proxy statement, which provide detailed information on the
companys compensation policies and practices and the compensation of our named
executive officers.
Stockholder Approval Required
|
The affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote
thereon at the meeting of stockholders is required to approve the advisory
resolution on named executive compensation. Because the vote on this proposal is
advisory in nature, it will not affect any compensation already paid or awarded
to any named executive officer and will not be binding on or overrule any
decisions by the compensation committee or the board of directors. Because we
value our
stockholders views, however, the
compensation committee and the board of directors will consider the results of
this advisory vote when formulating future executive compensation
policy.
|
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE
FOR
THE APPROVAL OF THE ADVISORY RESOLUTION ON
EXECUTIVE COMPENSATION.
|
21
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
The following Compensation
Discussion and Analysis, or CD&A, section of this proxy statement
discusses the material elements of our fiscal year 2016 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;
|
●
|
Mark D. Benjamin, our Division
President, Global Enterprise Services;
|
●
|
Edward B. Flynn, our Executive Vice
President, Worldwide Sales and Marketing; 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).
|
Executive
Summary
Strong Stockholder Support for our
Compensation Programs
The compensation committee continuously
evaluates the degree to which our compensation programs link pay to performance,
and takes steps to ensure that the program encourages our executive officers to
remain focused on both the short-term and long-term operational and financial
goals of the company.
At our 2015 Annual Meeting of
Stockholders, our stockholders approved the compensation of our fiscal year 2015
NEOs by a vote of approximately 97% in favor. Given this strong support and the
companys continued strong performance, the compensation committee retained the
basic foundation of our overall compensation program during fiscal year 2016,
but made certain changes to ensure that the program continued to support our key
human resource, financial and strategic objectives.
Fiscal Year 2016 Business
Highlights
Fiscal year 2016 was another exciting and
dynamic year that showcased our agility as we continued to adapt to the evolving
needs of our clients and the changing regulatory
environment within our human capital
management (HCM) industry. During fiscal year 2016, 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 investments in product innovation, service, and our sales
force, as well as the divestiture of the AdvancedMD business. Our key business
metrics in fiscal year 2016 continued to reflect a strong business model with a
high percentage of recurring revenues, good margins, the ability to generate
consistent, healthy cash flows, strong client retention, and low capital
expenditure requirements.
Our financial performance impacted the
compensation of our executive officers in several ways, most notably our annual
cash bonus plan and performance stock unit (PSU) program. The compensation
committees determination of incentive compensation under our cash bonus program
for all of our executive officers, including our named executive officers, was
based on fiscal year 2016 revenue growth of 6.9%, excluding the incremental
impact of foreign currency fluctuations in excess of the fluctuations assumed in
the target, compared to a target
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
22
|
Table of Contents
Compensation Discussion and
Analysis
|
|
of 7.3%, fiscal year 2016 new business
bookings growth of 11.5% compared to a target of 8.6%, and fiscal year 2016
operating income growth of 10.3%, excluding the impact of certain items
consistent with our adjusted EBIT reported for fiscal year 2016 (i.e., taxes,
certain interest expense and interest income, a gain on sale of the AdvancedMD
business, a gain on sale of a building, and a severance charge related to a
broad-based workforce
optimization effort), compared to a target
of 11.6%. The incentive compensation under our PSU program was based on fiscal
year 2016 earnings per share growth of 12.8%, which excluded the impact of the
gain on sale of the AdvancedMD business, the gain on sale of a building, and the
severance charge related to a broad-based workforce optimization effort,
compared to a target of 13.5%.
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 2016 executive officer compensation
programs.
Compensation Element
|
|
Objectives
|
|
Key Characteristics
|
Base Salary
|
|
To provide a fixed amount for
performing the duties and responsibilities of the position
|
|
Determined based on overall
performance, level of responsibility, pay grade, competitive compensation
data and comparison to other company executives
|
Annual Cash Bonus
|
|
To motivate executive officers to
achieve company-wide, business unit and individual performance
goals
|
|
Payment based on achievement of
company-wide, business unit and individual performance
goals
|
Performance-Based
Stock
Awards
|
|
To motivate executive officers to
achieve certain longer-term goals and create long-term alignment with
stockholders
|
|
Awards based on target growth in
earnings per share, with earned shares issued following applicable
performance and vesting periods
|
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 2016, our named executive
officers received cash bonuses that averaged approximately 101.8% of target. As
a result of our one-year earnings per share growth for fiscal year 2016, our
executive officers achieved a payout percentage of 88% under our PSU program.
This percentage payout applied to year 1 of the fiscal year 2016 award, which
will be earned and issued at the end of the corresponding three-year performance
period ending in fiscal year 2018, to year 2 of the fiscal year 2015 award,
which will be earned and issued at the end of the
corresponding three-year performance
period ending in fiscal year 2017, and to year 3 of the fiscal year 2014 award,
which was earned and issued at the end of the corresponding three-year
performance period ending in fiscal year 2016. As described on page 33 of this
proxy statement under Performance-Based Stock Awards, the payout percentages
achieved for each of the individual three fiscal years in the performance period
are averaged to obtain the award level earned and issued as a percentage of
target.
23
|
|
|
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 2016:
The following is a summary of fiscal year
2016 total direct compensation for our named executive officers:
Name
|
|
Base
Salary
|
|
Annual
Bonus
|
|
PSUs
(1)(2)
|
|
Stock
Options
(1)
|
|
Restricted
Stock
(1)
|
|
Total
|
Mr. Rodriguez
|
|
|
$1,000,000
|
|
|
|
$1,600,000
|
|
|
|
$3,318,779
|
|
|
|
$2,599,995
|
|
|
|
$0
|
|
|
$8,518,774
|
Mr. Siegmund
|
|
|
$650,000
|
|
|
|
$688,400
|
|
|
|
$978,043
|
|
|
|
$419,988
|
|
|
|
$599,996
|
|
|
$3,336,427
|
Mr. Benjamin
|
|
|
$525,000
|
|
|
|
$478,800
|
|
|
|
$636,820
|
|
|
|
$299,995
|
|
|
|
$599,996
|
|
|
$2,540,611
|
Mr. Flynn
|
|
|
$525,000
|
|
|
|
$556,000
|
|
|
|
$566,948
|
|
|
|
$239,999
|
|
|
|
$0
|
|
|
$1,887,947
|
Mr. OBrien
|
|
|
$520,000
|
|
|
|
$440,500
|
|
|
|
$581,336
|
|
|
|
$232,498
|
|
|
|
$499,957
|
|
|
$2,274,291
|
Footnotes:
|
1
|
Equity amounts are the grant
date fair values for the fiscal year 2016 equity awards, which are the
same amounts disclosed in the Summary Compensation Table for Fiscal Year
2016 on page 39 of this proxy statement.
|
|
|
2
|
The amounts for the PSU awards
represent the grant date fair value of one-third of each of the fiscal
years 2014, 2015 and 2016 target awards. 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.
|
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 operational and financial goals of the company and to link
executive performance to stockholder value.
|
✓
|
Annual say-on-pay
vote:
Consistent with our stockholders
advisory vote at our November 2011 stockholder meeting, we hold an
advisory say-on-pay vote to approve our named executive officer
compensation on an annual basis.
|
✓
|
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 named executive officers 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
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
24
|
Table of Contents
Compensation Discussion and
Analysis
|
|
|
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.
|
✓
|
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 Frederic W. Cook &
Co., Inc. (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 vii of this proxy statement, we
expanded our investor engagement program to promote an active dialogue
with our largest stockholders on a range of topics related to corporate
governance and executive compensation.
|
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 issued at the end of the performance
period.
|
Looking Forward
Commencing with fiscal year 2017 awards
granted under our PSU program, we will replace earnings per share with net
income 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 excellence and payout.
25
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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 vary above or below targeted levels depending on the overall
performance of the company, performance of a business unit and achievement of
individual performance goals. We have adopted this compensation design to
provide meaningful incentives for our key executives to achieve excellent
results. We also believe that it is important for our executive officers to have
an ongoing long-term investment in the company as outlined on page 37 of this
proxy statement under Stock Ownership Guidelines.
Growth in revenue, operating income and
new business bookings are important performance measures in annual cash bonus
determinations, and earnings per share growth has been used to determine the
number of shares earned in a performance period under our PSU program. The
earnings per share measurement we use is diluted earnings per share from
continuing operations. Commencing with fiscal year 2017 PSU awards, the earnings
per share measurement will be replaced with net income as the key performance
metric used to calculate such awards, as described above under Looking
Forward. These performance criteria were chosen for the variable incentive
plans because they focus our executive officers on the companys long-term
strategic goals of increasing the growth and profitability of our business,
which are the key drivers of sustainable increases in stockholder
value.
Consistent with our pay for performance
philosophy, our named executive officers compensation is structured with a
significant portion of their total compensation at risk. This at-risk portion
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 2016 Target Bonus Objectives.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
26
|
Table of Contents
Compensation Discussion and
Analysis
The mix of target total direct
compensation (base salary, cash bonus and long-term incentive awards) for fiscal
year 2016 was designed to deliver the following approximate proportions of total
compensation to Mr. Rodriguez, our chief executive officer, and the other named
executive officers (on average) if company and individual target
levels of performance are achieved. The
target pay mix reflects the PSU target award based on the three-year target
opportunity. 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 2016 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 2015, FW Cook
delivered to our compensation committee the results of a competitive assessment
of compensation for use in determining fiscal year 2016 target compensation for
Mr. Rodriguez. FW Cook also examined the mix of proposed performance-based stock
awards and stock option grants for our named executive officers in fiscal year
2016 and confirmed that the proposals for the named executive officers were
reasonable and customary, given the companys size and structure.
As part of its ongoing support to the
compensation committee, FW Cook also reviews executive compensation disclosures
(including this Compensation Discussion and Analysis), reviews and provides
comments on changes to the committees charter, advises on emerging trends and
the implications of regulatory and governance
developments, and reviews and provides
commentary on materials and proposals prepared by management that are presented
at the compensation committees meetings.
The compensation committee determined that
the work of FW Cook did not raise any conflicts of interest in fiscal year 2016.
In making this assessment, the compensation committee considered the
independence factors enumerated in Rule 10C-1(b) under the Securities Exchange
Act of 1934 and applicable Nasdaq listing standards, including the fact that FW
Cook does not provide any other services to the company, the level of fees
received from the company as a percentage of FW Cooks total revenue, policies
and procedures employed by FW Cook to prevent conflicts of interest, 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
In fiscal year 2016, we introduced a
customized peer group for use in the analysis of compensation levels and
practices. With the spin-off of our former Dealer Services business in fiscal
year 2015, and as ADP focuses on becoming a leading global provider of Human
Capital Management solutions, we believe that it is important to have a
customized peer group to benchmark our executive officers pay levels
27
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Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
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. The companies included in our
20-company peer group for fiscal year 2016 are as follows:
●
|
Accenture
plc
|
●
|
Aon plc
|
●
|
CA,
Inc.
|
●
|
CGI Group
|
●
|
Cognizant Technology Solutions
Corp.
|
●
|
Computer Sciences
Corp.
|
●
|
Discover Financial
Services
|
●
|
eBay
Inc.
|
●
|
Fidelity National Information Services,
Inc.
|
●
|
Fiserv,
Inc.
|
●
|
Intuit
Inc.
|
●
|
Leidos Holdings, Inc.
|
●
|
MasterCard
Incorporated
|
●
|
Omnicom Group
Inc.
|
●
|
Paychex,
Inc.
|
●
|
Qualcomm
Incorporated
|
●
|
TE Connectivity
Ltd.
|
●
|
Visa
Inc.
|
●
|
The Western
Union Company
|
●
|
Xerox
Corporation
|
In benchmarking the total cash and
long-term incentive compensation for the named executive officers, the
compensation committee reviewed the market compensation data from the customized
peer group at its June 2015 meeting. The compensation committee
considered that, compared with the peer
group, the company compares at the 55
th
percentile of revenue and the
75
th
percentile of market capitalization. Based on the four most
recently reported quarters as of January 31, 2015, revenue among companies in
the peer group ranged from approximately $2.6 billion to $32.4 billion, and
market capitalization ranged from approximately $3.1 billion to $157.0 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.
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 named executive officers,
which compare the amounts and mix to competitive compensation practices. We
generally target base salary, annual cash bonus and long-term equity incentives
at the median of competitive compensation levels, but we will set targets above
or below the median when warranted in the judgment of the compensation
committee. The degree to which target compensation ranges above or below the
median competitive rate is primarily based on each executives skill set and
experience relative to market peers. Executives who are new in their roles and
therefore less experienced than market peers are typically positioned lower in
the range, whereas executives with 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.
Differences in Compensation of Our
Named Executive Officers
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.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
28
|
Table of Contents
Compensation Discussion
and Analysis
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 named executive officers.
When determining the compensation level
for each of our executive officers, the compensation committee reviews each
individual compensation element based on the
previous years level, as well as how the
proposed level 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.
Base Salary
Base salaries are a fixed amount paid to
each executive for performing his or her normal duties and responsibilities. We
determine the amount based on the executives overall
performance, level of responsibility, pay
grade, competitive compensation practices data, and comparison to other company
executives. Based on these criteria, our named executive officers received the
following annual salary increases in fiscal year 2016:
Named Executive Officer
|
|
Fiscal Year 2015
Salary
|
|
Increase
|
|
Fiscal Year 2016
Salary
|
Mr.
Rodriguez
|
|
|
$1,000,000
|
|
|
0.0
|
%
|
|
|
$1,000,000
|
|
Mr.
Siegmund
|
|
|
$590,000
|
|
|
10.2
|
%
|
|
|
$650,000
|
|
Mr.
Benjamin
|
|
|
$450,000
|
|
|
16.7
|
%
|
|
|
$525,000
|
|
Mr.
Flynn
|
|
|
$525,000
|
|
|
0.0
|
%
|
|
|
$525,000
|
|
Mr.
OBrien
|
|
|
$501,400
|
|
|
3.7
|
%
|
|
|
$520,000
|
|
Salary increases for the named
executive officers were made effective July 1, 2015, the first day of the 2016
fiscal year. Our named executive officers salary increases for fiscal year 2016
reflected a closing of the gap to the median market rate. As a result of the
16.7% salary increase received by Mr. Flynn during the second half of fiscal
year 2015, he did not receive a further salary increase for fiscal year
2016.
Annual Cash Bonus
Overview
We paid our named executive officers cash
bonuses for fiscal year 2016 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. This target bonus percentage ranges from 80% to
160% of base salary for the named executive officers. We also assign a
percentage value to each bonus component of each named executive officers
annual cash bonus plan and then determine the target bonus amount linked to each
component. We establish these performance ranges to provide our named executive
officers with a strong incentive to exceed the targets. The maximum bonus
payment for our named executive officers 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.
29
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Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
The compensation committee establishes and
approves annual target bonus objectives and award opportunities for each of our
named executive officers. In making these determinations, the compensation
committee considers a variety of factors including market data, each officers
relative level of responsibility, and the chief executive officers
recommendations for executives other than himself. Our named executive officers
participated in the discussions surrounding their bonus objectives so that they
could provide input and understand the expectations of each bonus plan
component, but they did not participate in the setting of the target award
opportunities nor did they participate in the committees voting or
deliberations regarding their individual compensation amounts. Each named executive officer receives a
final version of his 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 2016.
In September 2015, the compensation
committee established a threshold corporate performance target based on earnings
before interest expense and taxes (EBIT) margin. This metric must be met or
exceeded before annual incentive awards are made to our named executive
officers. Once the threshold corporate performance target is achieved, each
named executive officer becomes eligible to receive up to the maximum potential
annual bonus. 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 named executive officers 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.
Named Executive Officers Fiscal
Year 2016 Bonuses
Fiscal year 2016 target bonuses, as a
percentage of base salary, increased from fiscal year 2015 levels for all our
named executive officers except for Mr. Rodriguez. The target bonus percentage
for each of Messrs. Siegmund, Benjamin and Flynn increased from 80% to 100%, and
from 70% to 80% for Mr. OBrien. The threshold corporate performance goal for
fiscal year 2016 was EBIT margin of 15%. As the threshold performance level was
achieved, the annual bonuses were based on the performance of the company, the
business units and the individual named executive officers for the 2016 fiscal
year against the named executive officers bonus objectives. The approved annual
cash bonuses are as follows:
Named Executive
Officer
|
|
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
|
%
|
|
$1,600,000
|
|
200%
|
|
$1,600,000
|
|
100.0
|
%
|
Mr. Siegmund
|
|
100
|
%
|
|
$650,000
|
|
200%
|
|
$688,400
|
|
105.9
|
%
|
Mr. Benjamin
|
|
100
|
%
|
|
$525,000
|
|
200%
|
|
$478,800
|
|
91.2
|
%
|
Mr. Flynn
|
|
100
|
%
|
|
$525,000
|
|
200%
|
|
$556,000
|
|
105.9
|
%
|
Mr. OBrien
|
|
80
|
%
|
|
$416,000
|
|
200%
|
|
$440,500
|
|
105.9
|
%
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
30
|
Table of Contents
Compensation Discussion
and Analysis
Fiscal Year 2016 Target Bonus
Objectives
The table below indicates the degree to
which each target bonus objective for our named executive officers was
satisfied. The percentage of target bonus paid to each named executive officer
is calculated as a weighted average of the percentages achieved for each
individual objective.
Mr. Rodriguez requested a reduction of his
bonus from the calculated payout, which was 105.9% of target, to recognize the
challenges faced by certain business units during fiscal year 2016. The
compensation committee approved this request and determined that Mr. Rodriguezs
bonus would be 100% of target.
|
Mr. Rodriguez
|
|
Mr. Siegmund
|
|
Mr. Benjamin
|
|
Mr. Flynn
|
|
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%
|
|
95.3
|
%
|
|
20.0%
|
|
95.3
|
%
|
|
15.0%
|
|
95.3%
|
|
20.0%
|
|
95.3
|
%
|
|
20.0%
|
|
95.3
|
%
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
20.0%
|
|
88.4
|
%
|
|
20.0%
|
|
88.4
|
%
|
|
20.0%
|
|
88.4%
|
|
20.0%
|
|
88.4
|
%
|
|
20.0%
|
|
88.4
|
%
|
New
Business
Bookings Growth
|
20.0%
|
|
185.3
|
%
|
|
20.0%
|
|
185.3
|
%
|
|
15.0%
|
|
185.3%
|
|
20.0%
|
|
185.3
|
%
|
|
20.0%
|
|
185.3
|
%
|
Business Unit
Operating Income
|
|
|
|
|
|
|
|
|
|
|
10.0%
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
Business Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Client Retention
|
|
|
|
|
|
|
|
|
|
|
10.0%
|
|
74.3%
|
|
|
|
|
|
|
|
|
|
|
Strategic Objectives
|
40.0%
|
|
79.9
|
%
|
|
40.0%
|
|
79.9
|
%
|
|
30.0%
|
|
79.9%
|
|
40.0%
|
|
79.9
|
%
|
|
40.0%
|
|
79.9
|
%
|
The bonus objectives were designed to
reward achievement of goals that are aligned with the key components of our
operational and strategic success, the degree to which the named executive
officers have responsibility for overall company performance or individual
business unit results, and to provide a set of common objectives that facilitate
collaborative engagement. The compensation committee established the following
financial and strategic goals for our named executive officers in September
2015:
Revenue Growth:
7.3% as a target objective (which includes assumed impact of
foreign currency fluctuations anticipated at the time the target was
established), 200% of target was to be awarded for revenue growth of 10.3% or
greater, and 0% of target was to be awarded for revenue growth below 3.0%.
Operating Income
Growth:
11.6% as a target objective before
taxes and excluding one-time events other than acquisitions, 200% of target was
to be awarded for operating income growth of 15.6% or greater, and 0% of target
was to be awarded for operating income growth below 6.0%.
New Business Bookings
Growth:
8.6% as a target objective, 200% of
target was to be awarded for new business bookings growth of 12.0% or greater,
and 0% of target was to be awarded for new business bookings growth below 2.0%.
Business Unit
Performance:
For Mr. Benjamin, achieve net
operating income and client retention goals for his business units.
31
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Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation Discussion
and Analysis
Strategic Objectives:
Strategic objectives for our named executive officers are
aligned with our key strategic and operational goals for fiscal year 2016. The
percentage of
target awarded for achievement of
strategic objectives equals the average of the percentages achieved for each
strategic objective category set forth below:
Strategic Objective
|
|
Achievement
|
●
R&D Initiatives:
Achieve planned
product release milestones and complete specific product development
objectives.
|
|
|
67.7%
|
|
●
Platform Rationalizations:
Retire certain
legacy platforms and complete planned migrations to our new strategic
platforms.
|
|
|
60.1%
|
|
●
Competition:
Achieve planned goals for
new client wins and reduction of losses relative to the market and key
competitors.
|
|
|
104.7%
|
|
●
Business Process Improvement:
Continue to
advance the implementation of our business process improvement program by
demonstrating improvement in net promoter scores, achievement of cost
savings goals, and implementation of planned
initiatives.
|
|
|
68.3%
|
|
●
Human
Capital:
Maintain a threshold favorable associate
engagement score as measured by our annual associate engagement survey
conducted by a third party, continue to demonstrate improvement in
workforce diversity, and achieve succession planning
objectives.
|
|
|
100%
|
|
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 2016, long-term incentives were awarded in the form of
performance-based stock 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 named executive officers
except our chief executive officer, we target a long-term incentive compensation
mix of 70% performance-based stock awards and 30% stock options. For fiscal year
2016, the compensation committee approved a long-term incentive mix for the
chief executive officer of 60% performance-based stock awards and 40% stock
options. The compensation committee believes that this incentive mix is
appropriate for the chief executive officer because of his greater role in
driving long-term stockholder value creation.
The compensation committee may also from
time to time grant discretionary awards of time-based restricted stock to our
executive officers. These awards are for special
situations and are not considered in the
target allocation of total long-term incentive compensation between
performance-based stock awards and stock option grants. In fiscal year 2016,
each of our named executive officers except for Messrs. Rodriguez 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.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
32
|
Table of Contents
Compensation Discussion and
Analysis
The target long-term incentive mix
approved for fiscal year 2016 grants is shown in the following chart:
1
|
Performance-Based Stock reflects the
entire PSU target award based on the three-year target
opportunity.
|
At its June 2015 meeting, the compensation
committee approved target awards of PSUs and stock options for all named
executive officers for fiscal year 2016, which were granted in September 2015.
The PSU awards (based on the
three-year target opportunity) will be
earned and issued in fiscal year 2019. The PSUs and stock option grants for
fiscal year 2016 are summarized in the table below:
Named Executive
Officer
(1)
|
|
Target PSU
Award
|
|
Stock
Options
|
|
Total
|
Mr. Rodriguez
|
|
|
$3,900,000
|
|
|
|
$2,600,000
|
|
|
$6,500,000
|
Mr. Siegmund
|
|
|
$980,000
|
|
|
|
$420,000
|
|
|
$1,400,000
|
Mr. Benjamin
|
|
|
$700,000
|
|
|
|
$300,000
|
|
|
$1,000,000
|
Mr. Flynn
|
|
|
$560,000
|
|
|
|
$240,000
|
|
|
$800,000
|
Mr. OBrien
|
|
|
$542,500
|
|
|
|
$232,500
|
|
|
$775,000
|
1
|
Amounts are rounded for ease
of presentation.
|
Performance-Based Stock
Awards
In fiscal year 2014, we introduced a PSU
program based on financial objectives that are measured over a three-year
performance period consisting of three one-year earnings per share performance
goals. We believe the three-year PSU program will further the companys longer
term financial goals by tying a substantial portion of the total compensation
opportunity to multi-year performance, and better promote talent retention by
lengthening the total vesting period. The fiscal year 2016 target award
opportunity under the PSU program, which was granted in September 2015, will be
earned and issued in September 2018 based upon the achievement of earnings per
share performance goals for fiscal years 2016, 2017 and 2018.
For purposes of our performance-based
stock awards, earnings per share goals and corresponding target award ranges are
typically established and communicated to our executive officers (including the
named executive officers) in the first quarter of each respective fiscal year,
and for the 2016 performance year were approved by the compensation committee in
August 2015. After the conclusion of each fiscal year, the compensation
committee confirms the earnings per share 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
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Proxy Statement
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Table of Contents
Compensation Discussion and Analysis
of the individual three fiscal years in
the performance period will be averaged to obtain the overall award level earned
and issued as a percentage of target. However, notwithstanding the achievement
of earnings per share results, 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. As described above under Looking Forward,
commencing
with fiscal year 2017 PSU awards, we will
replace earnings per share with net income as the key performance metric used to
calculate such awards.
In August 2015, the compensation committee
established earnings per share growth goals and corresponding award ranges for
the fiscal year 2016 target award under the PSU program. Our earnings per share
growth for fiscal year 2016, as described above under Fiscal Year 2016 Business
Highlights, was 12.8%, which resulted in an earned award level for the fiscal
2016 performance year in the amount of 88% of target. The following table shows
the annual earnings per share targets, results and corresponding award levels
achieved for fiscal years 2014, 2015 and 2016, in each case as a percentage of
target:
FY EPS Growth
|
|
Threshold
|
|
Target
|
|
Stretch
|
|
Actual
|
|
Achievement
|
2014
|
|
|
6.0
|
%
|
|
|
|
9.0
|
%
|
|
|
|
12.0
|
%
|
|
|
|
9.0
|
%
|
|
|
|
100
|
%
|
|
2015
|
|
|
8.3
|
%
|
|
|
|
11.3
|
%
|
|
|
|
14.3
|
%
|
|
|
|
12.5
|
%
|
|
|
|
120
|
%
|
|
2016
|
|
|
10.5
|
%
|
|
|
|
13.5
|
%
|
|
|
|
16.5
|
%
|
|
|
|
12.8
|
%
|
|
|
|
88
|
%
|
|
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 restricted stock that have been issued. The end of fiscal
year 2016 marks the end of the three-year performance period for PSU awards
granted in fiscal year 2014. Based on the average of the three-fiscal years,
these awards earned a payout percentage of 103%.
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 2016, the
compensation committee approved special time-based restricted stock awards for
Messrs. Siegmund, Benjamin and OBrien, with multi-year vesting periods ranging
from two to four years.
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34
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Compensation Discussion and
Analysis
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|
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.
Similar to the annual cash bonuses,
vesting of the awards for Messrs. Siegmund and Benjamin are subject to the same
threshold corporate performance target
based on EBIT margin. If this goal is
achieved, the award vests upon satisfying the time-based condition. The
performance condition allows their awards 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 2016 are summarized in the table
below:
Named Executive Officer
(1)
|
|
Time-Based
Restricted
Stock
|
Mr.
Siegmund
|
|
$600,000
|
Mr.
Benjamin
|
|
$600,000
|
Mr.
OBrien
|
|
$500,000
|
1
|
Amounts are rounded for ease
of presentation.
|
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 named executive officers. Our named executive officers 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 named executive officers 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. 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 named executive
officers 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 named executive officers or otherwise contribute any
amounts to the named executive officers deferred compensation amounts. Since
the deferral accounts are made up of funds already earned by the executive
officers, we do not consider the executives deferred account balances, or
investment earnings or losses on such balances, when we make compensation
decisions.
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
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Proxy Statement
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Table of Contents
Compensation Discussion and
Analysis
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calendar year. Finally, company policy
permits Mr. Rodriguez to occasionally use the companys aircraft for personal
travel in order to maximize his business availability and productivity, provided
that he reimburses the company for the aggregate incremental cost incurred by
the company in connection with any such personal use.
We did not make any tax gross-up payments
to our named executive officers in fiscal year 2016.
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 named executive officers)
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 two times base salary
and bonus upon termination of employment without cause or with good reason,
while our other named executive officers 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 CEO), 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 named executive officers, other than the chief financial officer). However,
qualifying performance-based compensation is not subject to the deduction limit
if certain requirements are met. We strive to make only those cash and
equity-based awards and grants that qualify as performance-based compensation or
that we otherwise can deduct when determining our corporate taxes. Our
stockholders have previously approved incentive plans (including our 2008
Omnibus Award Plan) that are intended to permit the company to make equity-based
awards and cash bonuses that may qualify as performance-based compensation for
purposes of Section 162(m). However, the overriding consideration when
evaluating the pay level or design component of any
Automatic Data Processing, Inc.
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36
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Table of Contents
Compensation Discussion and
Analysis
|
|
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.
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 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.
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, Benjamin, Flynn 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 2016, all named executive officers met the stock
ownership guidelines.
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Automatic Data Processing, Inc.
Proxy Statement
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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 2016 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 2016 proxy statement.
Compensation Committee of the Board of
Directors
Richard T. Clark, Chair
Eric C. Fast
R. Glenn Hubbard
Automatic Data Processing, Inc.
Proxy Statement
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38
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Table of Contents
Compensation of Executive
Officers
The following table summarizes the
compensation of our named executive officers for fiscal year 2016.
Summary Compensation
Table for Fiscal Year 2016
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
|
|
2016
|
|
$1,000,000
|
|
$0
|
|
$3,318,779
|
|
$2,599,995
|
|
|
$1,600,000
|
|
|
|
$2,284,506
|
|
|
$64,683
|
|
$10,867,963
|
President and
Chief
|
|
2015
|
|
$1,000,000
|
|
$0
|
|
$1,977,567
|
|
$2,079,992
|
|
|
$1,971,200
|
|
|
|
$1,190,038
|
|
|
$62,738
|
|
$8,281,535
|
Executive
Officer
|
|
2014
|
|
$900,000
|
|
$0
|
|
$3,141,881
|
|
$1,599,998
|
|
|
$1,471,680
|
|
|
|
$1,069,306
|
|
|
$54,282
|
|
$8,237,147
|
Jan
Siegmund
|
|
2016
|
|
$650,000
|
|
$0
|
|
$1,578,039
|
|
$419,988
|
|
|
$688,400
|
|
|
|
$833,052
|
|
|
$60,621
|
|
$4,230,100
|
Chief Financial
Officer
|
|
2015
|
|
$590,000
|
|
$0
|
|
$1,637,989
|
|
$389,990
|
|
|
$581,500
|
|
|
|
$397,745
|
|
|
$48,630
|
|
$3,645,854
|
|
|
2014
|
|
$550,001
|
|
$0
|
|
$1,121,800
|
|
$434,240
|
|
|
$449,680
|
|
|
|
$416,270
|
|
|
$28,981
|
|
$3,000,972
|
Mark D.
Benjamin
|
|
2016
|
|
$525,000
|
|
$0
|
|
$1,236,816
|
|
$299,995
|
|
|
$478,800
|
|
|
|
$467,241
|
|
|
$51,139
|
|
$3,058,991
|
Division
President
|
|
2015
|
|
$450,000
|
|
$0
|
|
$1,395,177
|
|
$267,796
|
|
|
$435,600
|
|
|
|
$174,819
|
|
|
$82,376
|
|
$2,805,768
|
Edward B.
Flynn
|
|
2016
|
|
$525,000
|
|
$0
|
|
$566,948
|
|
$239,999
|
|
|
$556,000
|
|
|
|
$618,477
|
|
|
$60,905
|
|
$2,567,329
|
EVP,
Worldwide
|
|
2015
|
|
$475,000
|
|
$0
|
|
$1,872,473
|
|
$209,996
|
|
|
$472,200
|
|
|
|
$308,894
|
|
|
$43,204
|
|
$3,381,767
|
Sales &
Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermot J.
OBrien
|
|
2016
|
|
$520,000
|
|
$0
|
|
$1,081,293
|
|
$232,498
|
|
|
$440,500
|
|
|
|
$287,850
|
|
|
$36,689
|
|
$2,598,830
|
Chief
Human
|
|
2015
|
|
$501,400
|
|
$0
|
|
$392,360
|
|
$217,489
|
|
|
$432,400
|
|
|
|
$151,579
|
|
|
$44,840
|
|
$1,720,768
|
Resources
Officer
|
|
2014
|
|
$488,001
|
|
$0
|
|
$747,867
|
|
$284,970
|
|
|
$349,115
|
|
|
|
$142,507
|
|
|
$47,225
|
|
$2,059,685
|
(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 2016, 2015 and 2014 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 9 to our
audited consolidated financial statements for the fiscal year ended June
30, 2016 included in our annual report on Form 10-K for the fiscal year
ended June 30, 2016. The amounts shown in the Stock Awards column in
respect of the performance-based stock awards 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 2016 are
comprised of the PSU awards and time-based restricted stock awards.
Consistent with the requirements of ASC Topic 718, the amount relating to
the PSU awards for fiscal year 2016 represents the sum of (i) the grant
date fair value of the third of three tranches of the PSU award that was
granted in September 2013, (ii) the grant date fair value of the second of
three tranches of the PSU award that was granted in September 2014 and
(iii) the grant date fair value of the first of three tranches of the PSU
award that was granted in September 2015, reflecting that the EPS goal for
each such tranche was established in fiscal year 2016; the amount relating
to the PSU awards for fiscal year 2015 represents the grant date fair
value of the second of three tranches of the PSU award that was granted in
September 2014 and the first of three tranches of the PSU award that was
granted in September 2013 reflecting the EPS goals for such tranches was
established in fiscal year 2015; and the amount relating to the PSU awards
for fiscal year 2014 represents the grant date fair value of the first of
three tranches of the PSU award that was granted in September 2013
reflecting that the EPS goal for such tranche was established in fiscal
year 2014. Remaining portions of these awards will be linked to EPS goals
for fiscal year 2017 and fiscal year 2018 and will be reported in the
Summary Compensation Table for those fiscal years. The grant date fair
values of the performance-based stock awards granted in fiscal years 2016,
2015, and 2014, respectively, assuming achievement of the maximum level of
performance, are: Mr. Rodriguez, $4,978,168, $2,966,351, and $4,712,822;
Mr. Siegmund, $1,467,066, $957,120, and $1,682,700; Mr. Benjamin,
$955,229, and $592,902; Mr. Flynn, $850,421, and $558,798; and Mr.
OBrien, $872,004, $588,486, and $1,121,800.
|
|
|
(2)
|
Performance-based bonuses paid
under the annual cash bonus program are shown in this column. A discussion
of our annual cash bonus program may be found in our Compensation
Discussion and Analysis under Cash Compensation - Annual Cash
Bonus.
|
39
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Automatic Data Processing, Inc.
Proxy Statement
|
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,
2013 based on the RP-2000 white collar mortality table (projected to
2020), a 3.25% interest crediting rate for the pension plan, and a 4.50%
discount rate; the present value as of June 30, 2014 is based on the
RP-2000 white collar mortality table (projected generationally using Scale
AA), a 3.25% interest crediting rate for the pension plan, and a 4.05%
discount rate; the present value as of June 30, 2015 is based on the
RP-2014 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; and 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.
|
|
|
(4)
|
Please refer to the All Other
Compensation for Fiscal Year 2016 table below for further
information.
|
All Other Compensation
For Fiscal Year 2016
Name
|
|
Other
Benefits
(1)
|
|
Matching
Charitable
Contributions
(2)
|
|
Total
|
Carlos A. Rodriguez
|
|
$44,683
|
|
$20,000
|
|
$64,683
|
Jan
Siegmund
|
|
$40,621
|
|
$20,000
|
|
$60,621
|
Mark D. Benjamin
|
|
$30,814
|
|
$20,325
|
|
$51,139
|
Edward B. Flynn
|
|
$37,695
|
|
$23,210
|
|
$60,905
|
Dermot J. OBrien
|
|
$20,449
|
|
$16,240
|
|
$36,689
|
(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, $30,525; Mr.
Siegmund, $27,802; Mr. Benjamin, $18,805; Mr. Flynn, $25,686; and Mr.
OBrien, $11,028.
|
|
|
|
|
(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, $1,354; Mr. Siegmund $601; and Mr. OBrien,
$601.
|
|
|
(c)
|
Matching contributions to the
companys Retirement and Savings Plan (available to the companys
associates generally): Mr. Rodriguez, $11,130; Mr. Siegmund, $11,130; Mr.
Benjamin, $11,130; Mr. Flynn, $11,130; and Mr. OBrien,
$7,950.
|
|
|
(d)
|
Life insurance and accidental
death and dismemberment premiums paid by the company (available to the
companys associates generally): Mr. Rodriguez, $1,674; Mr. Siegmund
$1,088; Mr. Benjamin, $879; Mr. Flynn, $879; and Mr. OBrien,
$870.
|
|
|
(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.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
40
|
Table of Contents
Compensation of Executive
Officers
|
|
(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 $20,000 in a calendar year, this table reflects matching
charitable contributions for the fiscal year ended June 30,
2016.
|
Grants of Plan-Based
Awards Table for Fiscal Year 2016
Name
|
|
Grant
Date
(1)
|
|
Date
of
Corporate
Action
(1)
|
|
Plan
Under
which
Grant
was
Made
(2)
|
|
Estimated
Future Payouts Under
Non-Equity Incentive
Plan
Awards
|
|
Estimated Future
Payouts
Under Equity Incentive Plan
Awards
(3)
|
|
All Other
Stock
Awards:
Number of
Shares
of
Stock or
Units #
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options #
|
|
Exercise
or
Base
Price of
Option
Awards
($/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
|
|
$1,600,000
|
|
$3,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
6,372
|
|
12,745
|
|
19,117
|
|
|
|
|
|
|
|
$957,127
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
7,068
|
|
14,137
|
|
21,205
|
|
|
|
|
|
|
|
$1,061,671
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
8,655
|
|
17,310
|
|
25,965
|
|
|
|
|
|
|
|
$1,299,981
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
6/4/2015
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,568
|
|
$75.10
|
|
$2,599,995
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan Siegmund
|
|
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$650,000
|
|
$1,300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
2,275
|
|
4,550
|
|
6,826
|
|
|
|
|
|
|
|
$341,739
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
2,062
|
|
4,123
|
|
6,185
|
|
|
|
|
|
|
|
$309,644
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
2,175
|
|
4,350
|
|
6,525
|
|
|
|
|
|
|
|
$326,660
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
6/4/2015
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,914
|
|
$75.10
|
|
$419,988
|
|
|
9/14/2015
|
|
|
|
|
|
TBRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,716
|
|
|
|
|
|
$599,996
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark D. Benjamin
|
|
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$525,000
|
|
$1,050,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
1,327
|
|
2,654
|
|
3,982
|
|
|
|
|
|
|
|
$199,348
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
1,359
|
|
2,719
|
|
4,078
|
|
|
|
|
|
|
|
$204,161
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
1,553
|
|
3,107
|
|
4,660
|
|
|
|
|
|
|
|
$233,311
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
6/4/2015
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,796
|
|
$75.10
|
|
$299,995
|
|
|
9/14/2015
|
|
|
|
|
|
TBRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,716
|
|
|
|
|
|
$599,996
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward B. Flynn
|
|
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$525,000
|
|
$1,050,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
1,422
|
|
2,844
|
|
4,266
|
|
|
|
|
|
|
|
$213,587
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
1,110
|
|
2,220
|
|
3,330
|
|
|
|
|
|
|
|
$166,712
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
1,243
|
|
2,485
|
|
3,728
|
|
|
|
|
|
|
|
$186,649
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
6/4/2015
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,237
|
|
$75.10
|
|
$239,999
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermot J. OBrien
|
|
|
|
|
|
|
|
Bonus
|
|
|
$0
|
|
$416,000
|
|
$832,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(5)
|
|
|
|
|
|
|
|
1,517
|
|
3,034
|
|
4,550
|
|
|
|
|
|
|
|
$227,826
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(6)
|
|
|
|
|
|
|
|
1,150
|
|
2,300
|
|
3,449
|
|
|
|
|
|
|
|
$172,694
|
|
|
9/1/2015
|
|
|
8/4/2015
|
|
|
PSU
|
(7)
|
|
|
|
|
|
|
|
1,204
|
|
2,408
|
|
3,612
|
|
|
|
|
|
|
|
$180,816
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
6/4/2015
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,667
|
|
$75.10
|
|
$232,498
|
|
|
6/30/2016
|
|
|
6/2/2016
|
|
|
TBRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,442
|
|
|
|
|
|
$499,957
|
(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 TBRS award amounts.
|
41
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of Executive
Officers
|
|
(2)
|
PSU refers to our performance
stock unit 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.
|
|
(4)
|
We computed the grant date
fair value of each restricted stock 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 9
to our audited consolidated financial statements for the fiscal year
ending June 30, 2016 included in our annual report on Form 10-K for the
fiscal year ended June 30, 2016.
|
|
(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 2013 for which the
grant date fair value was established in September 2015. The shares earned
from this award were paid out in September 2016.
|
|
(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 2014 for which the
grant date fair value was established in September 2015. The shares earned
from this award will be paid out in September 2017.
|
|
(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 2015 for which the
grant date fair value was established in September 2015. The shares earned
from this award will be paid out in September
2018.
|
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 stock
unit program based on financial objectives that are measured over a three-year
performance cycle comprised of three one-year performance periods. This new
three-year program replaced our performance-based restricted stock program. If,
after completion of the first measurement year of the three-year performance
period, a participants employment with the company is terminated prior to the
expiration of the performance period due to death, disability or retirement
(defined as voluntary termination of employment at or after age 65, or age 55
with 10 years of service), a participant will be entitled to receive a pro-rata
portion (based on the number of completed months in the performance period
through the date of termination of employment, divided by 36) of the PSUs earned
for such performance period (which, in the case of death or disability,
including any death or disability occurring after retirement, will be determined
by assuming 100% achievement for each measurement year in the performance period
not completed prior to the participants death or disability).
Recipients of performance-based restricted
stock and performance stock unit awards will be entitled to receive dividends
paid only with respect to shares of restricted stock that have been earned. We
require that executives agree to be bound by a restrictive covenant containing
non-compete, non-solicitation, and confidentiality obligations as a condition to
the grant.
Restricted stock and performance stock
unit awards under our 2008 Omnibus Award Plan allow the compensation committee
to cause a recipients award to be forfeited, and to require the recipient to
pay to the company any gain realized on the award (the fair market value, on the
applicable vesting date, of the shares delivered to the participant), if the
recipient engages in an activity that is in conflict with or adverse to the
companys interests, including but not limited to fraud or conduct contributing
to any financial restatements or irregularities, or if the recipient violates a
restrictive covenant.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
42
|
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 twelve
months following retirement (or per past company practice, the severance
end date, if later) to exercise their vested options (subject to extension
in the case of subsequent death);
|
●
|
option holders who die or become
disabled on or after eligibility for Normal Retirement will have 36 months
following their death or disability to exercise their vested options
(subject to extension in the case of subsequent death following a
disability); and
|
●
|
option holders who were not eligible
for Normal Retirement on the date of death or disability will have twelve
months following their death or disability to exercise their vested
options (subject to extension in the case of subsequent death following a
disability).
|
Stock option awards under our 2008 Omnibus
Award Plan allow our compensation committee to cause a recipients award to be
forfeited, and to require the recipient to pay to the company any option gain,
if the recipient engages in an activity that is in conflict with or adverse to
the companys interests, including but not limited to fraud or conduct
contributing to any financial restatements or irregularities, or if the
recipient violates a restrictive covenant.
43
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of Executive
Officers
|
Outstanding Equity Awards for Fiscal
Year-End 2016
|
|
|
|
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
|
|
1/25/2013
|
|
|
|
|
|
|
46,074
|
|
|
$52.65
|
|
1/24/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
67,064
|
|
|
|
67,068
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
36,363
|
|
|
|
109,091
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
197,568
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,404
|
|
|
|
$2,701,387
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,233
|
|
|
|
$1,399,437
|
|
Jan Siegmund
|
|
2/8/2011
|
|
|
11,376
|
|
|
|
|
|
|
$43.53
|
|
2/7/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2012
|
|
|
17,064
|
|
|
|
|
|
|
$49.07
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013
|
|
|
21,330
|
|
|
|
7,110
|
|
|
$52.65
|
|
1/24/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
18,200
|
|
|
|
18,203
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
6,818
|
|
|
|
20,454
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
31,914
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,492
|
|
$780,187
|
|
|
|
|
|
|
|
|
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,985
|
|
$457,972
|
|
|
|
|
|
|
|
|
|
|
9/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,716
|
|
$708,869
|
|
|
|
|
|
|
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,576
|
|
|
|
$787,880
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,828
|
|
|
|
$351,651
|
|
Mark D. Benjamin
|
|
2/9/2010
|
|
|
11,376
|
|
|
|
|
|
|
$35.78
|
|
2/8/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2011
|
|
|
7,963
|
|
|
|
|
|
|
$43.53
|
|
2/7/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2012
|
|
|
11,376
|
|
|
|
|
|
|
$49.07
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013
|
|
|
11,091
|
|
|
|
3,697
|
|
|
$52.65
|
|
1/24/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
11,944
|
|
|
|
11,945
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
4,681
|
|
|
|
14,046
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
22,796
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,492
|
|
$780,187
|
|
|
|
|
|
|
|
|
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,985
|
|
$457,972
|
|
|
|
|
|
|
|
|
|
|
9/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,716
|
|
$708,869
|
|
|
|
|
|
|
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,655
|
|
|
|
$519,480
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,734
|
|
|
|
$251,160
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
44
|
Table of Contents
Compensation of Executive
Officers
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
Name
|
|
Grant
Date
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Exercisable)
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
(Unexercisable)
|
|
Option
Exercise
Price
($)
|
|
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)
|
Edward B. Flynn
|
|
2/8/2011
|
|
|
2,844
|
|
|
|
|
|
|
$43.53
|
|
2/7/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2012
|
|
|
11,376
|
|
|
|
|
|
|
$49.07
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2013
|
|
|
15,357
|
|
|
|
5,120
|
|
|
$52.65
|
|
1/24/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
11,944
|
|
|
|
11,945
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
3,671
|
|
|
|
11,014
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
18,237
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,124
|
|
|
$195,125
|
|
|
|
|
|
|
6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,619
|
|
|
$975,568
|
|
|
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,617
|
|
$424,193
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,187
|
|
$200,928
|
Dermot J. OBrien
|
|
1/25/2013
|
|
|
|
|
|
|
5,120
|
|
|
$52.65
|
|
1/24/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
11,944
|
|
|
|
11,945
|
|
|
$69.72
|
|
1/22/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
3,802
|
|
|
|
11,407
|
|
|
$86.61
|
|
1/21/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
17,667
|
|
|
$75.10
|
|
8/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,783
|
|
$439,414
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,119
|
|
$194,649
|
|
|
6/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,442
|
|
|
$499,957
|
|
|
|
|
(1)
|
Market value based on June 30, 2016 closing price of our
common stock of $91.87 per share.
|
|
|
(2)
|
The amount shown for the PSU award granted on September
2, 2014 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
2015 and 2016. The amount shown for the PSU award granted on September 1,
2015 includes only units relating to one-third 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 year
2016. 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, 2017 and June 30, 2018,
respectively.
|
45
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of Executive
Officers
|
Outstanding Equity Vesting Schedule for
Fiscal Year-End 2016
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
Grant Date
|
|
Vesting from Grant date
|
|
Grant or
Award
Date
|
|
Vesting Schedule
|
Carlos A. Rodriguez
|
|
|
1/25/2013
|
|
|
25% vested on 1/25/2014
|
|
|
9/2/2014
|
|
|
100% vests on 6/30/2017
|
|
|
|
|
|
|
25% vested on 1/25/2015
|
|
|
9/1/2015
|
|
|
100% vests on 6/30/2018
|
|
|
|
|
|
|
25% vested on 1/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/25/2017
|
|
|
|
|
|
|
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
25% vests on 9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
Jan Siegmund
|
|
|
1/25/2013
|
|
|
25% vested on 1/25/2014
|
|
|
7/1/2014
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vested on 1/25/2015
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
|
|
|
25% vested on 1/25/2016
|
|
|
6/30/2015
|
|
|
50% vests on 6/30/2018
|
|
|
|
|
|
|
25% vests on 1/25/2017
|
|
|
|
|
|
50% vests on 6/30/2019
|
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
9/14/2015
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
|
|
|
25% vests on 1/23/2017
|
|
|
9/2/2014
|
|
|
100% vests on 6/30/2017
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
9/1/2015
|
|
|
100% vests on 6/30/2018
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
25% vests on 9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
Mark D. Benjamin
|
|
|
1/25/2013
|
|
|
25% vested on 1/25/2014
|
|
|
7/1/2014
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vested on 1/25/2015
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
|
|
|
25% vested on 1/25/2016
|
|
|
6/30/2015
|
|
|
50% vests on 6/30/2018
|
|
|
|
|
|
|
25% vests on 1/25/2017
|
|
|
|
|
|
50% vests on 6/30/2019
|
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
9/14/2015
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
|
|
|
25% vests on 1/23/2017
|
|
|
9/2/2014
|
|
|
100% vests on 6/30/2017
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
9/1/2015
|
|
|
100% vests on
6/30/2018
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
46
|
Table of Contents
Compensation of Executive
Officers
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
Grant Date
|
|
Vesting from Grant date
|
|
Grant or
Award
Date
|
|
Vesting Schedule
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
25% vests on 9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
Edward B. Flynn
|
|
|
1/25/2013
|
|
|
25% vested on 1/25/2014
|
|
|
7/1/2014
|
|
|
50% vested on 7/1/2015
|
|
|
|
|
|
|
25% vested on 1/25/2015
|
|
|
|
|
|
50% vests on 7/1/2016
|
|
|
|
|
|
|
25% vested on 1/25/2016
|
|
|
6/30/2015
|
|
|
29% vested on 12/31/2015
|
|
|
|
|
|
|
25% vests on 1/25/2017
|
|
|
|
|
|
29% vests on 12/31/2016
|
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
|
|
|
42% vests on 12/31/2017
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
9/2/2014
|
|
|
100% vests on 6/30/2017
|
|
|
|
|
|
|
25% vests on 1/23/2017
|
|
|
9/1/2015
|
|
|
100% vests on 6/30/2018
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
25% vests on 9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
Dermot J. OBrien
|
|
|
1/25/2013
|
|
|
25% vested on 1/25/2014
|
|
|
6/30/2016
|
|
|
50% vests on 7/1/2018
|
|
|
|
|
|
|
25% vested on 1/25/2015
|
|
|
|
|
|
50% vests on 7/1/2019
|
|
|
|
|
|
|
25% vested on 1/25/2016
|
|
|
9/2/2014
|
|
|
100% vests on 6/30/2017
|
|
|
|
|
|
|
25% vests on 1/25/2017
|
|
|
9/1/2015
|
|
|
100% vests on 6/30/2018
|
|
|
|
1/23/2014
|
|
|
25% vested on 1/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vested on 1/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/23/2018
|
|
|
|
|
|
|
|
|
|
1/22/2015
|
|
|
25% vested on 1/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 1/22/2019
|
|
|
|
|
|
|
|
|
|
9/1/2015
|
|
|
25% vests on 9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
25% vests on 9/1/2019
|
|
|
|
|
|
|
47
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of Executive
Officers
|
Option Exercises and Stock Vested Table
for Fiscal Year 2016
|
|
Option
Awards
|
|
Stock
Awards
|
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)
|
|
|
100,110
|
|
|
|
$3,485,056
|
|
|
|
38,234
|
|
|
|
$2,947,466
|
|
Jan
Siegmund
(2)
|
|
|
13,651
|
|
|
|
$740,198
|
|
|
|
13,651
|
|
|
|
$1,052,385
|
|
Mark D. Benjamin
(3)
|
|
|
12,185
|
|
|
|
$507,094
|
|
|
|
7,963
|
|
|
|
$613,891
|
|
Edward B. Flynn
(4)
|
|
|
0
|
|
|
|
$0
|
|
|
|
14,992
|
|
|
|
$1,196,883
|
|
Dermot J. OBrien
(5)
|
|
|
13,651
|
|
|
|
$491,391
|
|
|
|
9,101
|
|
|
|
$701,590
|
|
(1)
|
Mr. Rodriguez exercised options to purchase 100,110
shares on March 10, 2016 with a weighted average exercise price of $50.71
and a weighted average market price of $85.53. He acquired 38,234 shares
with a market price of $77.09 on September 2, 2015, upon lapse of
restrictions.
|
|
|
(2)
|
Mr. Siegmund exercised options to purchase 6 shares on
March 31, 2016 with an exercise price of $35.78 and a market price of
$90.00, and 13,645 shares on April 1, 2016 with an exercise price of
$35.78 and a market price of $90.00. He acquired 13,651 shares with a
market price of $77.09 on September 2, 2015, upon lapse of
restrictions.
|
|
(3)
|
Mr. Benjamin exercised options to purchase 12,185 shares
on August 31, 2015 with a weighted average exercise price of $36.18 and a
weighted average market price of $77.79. He acquired 7,963 shares with a
market price of $77.09 on September 2, 2015, upon lapse of
restrictions.
|
|
(4)
|
Mr. Flynn acquired 2,123 shares with a market price of
$80.89 on July 1, 2015, 4,337 shares with a market price of $84.72 on
December 31, 2015, 8,532 shares with a market price of $77.09 on September
2, 2015 all upon lapse of restrictions.
|
|
(5)
|
Mr. OBrien exercised options to purchase 4,544 shares
on January 25, 2016 with an exercise price of $52.65 and a market price of
$80.37, 575 shares on January 26, 2016 with an exercise price of $52.65
and a market price of $80.09, and 8,532 shares on June 7, 2016 with an
exercise price of $46.72 and a market price of $87.70. He acquired 9,101
shares with a market price of $77.09 on September 2, 2015, upon lapse of
restrictions.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
48
|
Table of Contents
Compensation of Executive
Officers
|
Pension Benefits for Fiscal Year
2016
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
|
|
|
15.50
|
|
|
|
$198,062
|
|
|
$0
|
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
13.08
|
|
|
|
$5,944,595
|
|
|
$0
|
Jan Siegmund
|
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
16.50
|
|
|
|
$208,001
|
|
|
$0
|
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
11.58
|
|
|
|
$2,294,786
|
|
|
$0
|
Mark D. Benjamin
|
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
22.50
|
|
|
|
$273,273
|
|
|
$0
|
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
8.16
|
|
|
|
$948,794
|
|
|
$0
|
Edward B. Flynn
|
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
26.50
|
|
|
|
$389,394
|
|
|
$0
|
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
9.17
|
|
|
|
$1,765,948
|
|
|
$0
|
Dermot J. OBrien
|
|
Automatic Data Processing, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Retirement Plan
|
|
|
3.50
|
|
|
|
$32,086
|
|
|
$0
|
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
4.16
|
|
|
|
$621,099
|
|
|
$0
|
(1)
|
Consists of the number of
years of service credited as of June 30, 2016 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, 2016 under the Pension Retirement Plan
and the Supplemental Officers Retirement Plan using 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) and a 3.4% discount rate.
For the Pension Retirement Plan only, we also used a 3.25% interest
crediting rate.
|
|
(3)
|
Cash balances under the
Pension Retirement Plan are included in the present values shown for the
Pension Retirement Plan in column (d) and, at June 30, 2016 are as
follows: Mr. Rodriguez, $201,862; Mr. Siegmund, $211,955; Mr. Benjamin,
$280,973; Mr. Flynn, $394,132; and Mr. OBrien, $32,778.
|
|
(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).
|
49
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of Executive
Officers
|
Automatic Data Processing, Inc. Pension
Retirement Plan
The Pension Retirement Plan is a
tax-qualified defined benefit plan covering substantially all U.S. employees of
the company; however, in January 2014, our board of directors approved an
amendment to close the Pension Retirement Plan to new participants beginning in
January 2015. Under the Pension Retirement Plan, the company credits
participants notional accounts with annual contributions, which are determined
based upon base salary and years
of service. The contributions range from
2.1% to 10% of base salary, and the accounts earn interest based upon the
ten-year U.S. Treasury constant maturity rates. Compensation used to determine
the benefits in any given year is limited to calendar year base salary up to the
IRS compensation limit in effect for the plan year. A participant must have
three years of service to receive any benefit.
Supplemental Officers Retirement
Plan
|
The company sponsors a Supplemental
Officers Retirement Plan, which is a non-qualified defined benefit plan that
pays a lump sum or an annuity upon retirement. Eligible participants include the
named executive officers and other officers of the company with titles of
corporate vice president and above. In January 2014, our board of directors
approved an amendment to close the Supplemental Officers Retirement Plan to new
participants beginning in January 2014.
On August 14, 2008, our board of directors
approved amendments to the Supplemental Officers Retirement Plan,
which implemented changes
to the Supplemental Officers Retirement Plan benefits formula and the early
retirement factors, in each case, used for any active employee not already
earning a benefit by January 1, 2008 or any participant who had not attained age
50 by January 1, 2009, 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 Supplemental Officers Retirement Plan, 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
Supplemental Officers Retirement Plan 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 Supplemental Officers
Retirement Plan. After 10 years of service, a participant will qualify for the
full annual benefit. We refer to the percentage of the benefit that has been
earned by a participant as the vested percentage. The vested percentage is
determined using a schedule set forth in the Supplemental Officers Retirement
Plan.
Supplemental Officers Retirement Plan
benefits begin on the earliest of (i) the later of attainment of age 60 and the
first day of the seventh month following separation from service, (ii)
disability, and (iii) death. Participants can receive their benefits in the form
of a single life annuity, a 25%, 50%, 75%, or 100% joint and survivor annuity
with a beneficiary, or a ten-year certain and life annuity. Subject to rules
required under Section 409A of the 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. Under certain circumstances, annual benefits are subject to reduction for
payments from social security, the Pension Retirement Plan, and the Retirement
and Savings Plan, and any retirement benefits from a former or subsequent
employer of the participant.
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
50
|
Table of Contents
Compensation of
Executive Officers
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 equal to the participants final
average annual pay multiplied by 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 which are reduced at a rate of 4/12 of 1% per month for
each month (up to 36 months) by which the participants benefit commencement
precedes the participants 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 62nd 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 Supplemental Officers
Retirement Plan.
Deferred Compensation
Program
|
Under the ADP Deferred Compensation Plan,
all U.S. executives of the company (including the named executive officers) 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 2.25%% for fiscal year 2016. Beginning
January 1, 2015, the company replaced these two investment options with certain
diversified investment funds that mirror the investment alternatives available
in the companys 401(k) plan. The company does not match deferrals by the named
executive officers or otherwise contribute any amounts to their deferred
compensation accounts.
Each participant has the option of making
a onetime 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 or stock
either in a lump sum payment or in installments. However, in the event of death,
disability, or termination of employment prior to age 65, or age 55 with 10
years of service, payments are made in a lump sum regardless of a participants
election. Deferred funds and the earnings on such deferrals made for fiscal year
2005 and later may be distributed to a participant following separation from
service only after a six-month delay. Distributions are subject to federal,
state, and local income taxes on both the principal amount and investment
earnings at the ordinary income rate in the year in which such payments are
made.
51
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Compensation of
Executive Officers
Non-Qualified Deferred Compensation for
Fiscal Year 2016
Name
|
|
Executive
Contributions
in
2016
(1)
|
|
Aggregate
Earnings
in
2016
(2)
|
|
Aggregate
Balance
at
June 30, 2016
(3)
|
(a)
|
|
|
(b)
|
|
|
|
(d)
|
|
|
|
(f)
|
|
Carlos A. Rodriguez
|
|
|
$0
|
|
|
|
$22,987
|
|
|
|
$600,453
|
|
Jan Siegmund
|
|
|
$145,375
|
|
|
|
$65,307
|
|
|
|
$1,684,819
|
|
Edward B. Flynn
|
|
|
$0
|
|
|
|
$25,685
|
|
|
|
$695,384
|
|
Mark D. Benjamin
|
|
|
$0
|
|
|
|
$4,213
|
|
|
|
$110,040
|
|
Dermot J. OBrien
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$0
|
|
(1)
|
The amounts listed in column
(b) reflect 25% of the annual bonus for fiscal year 2015 that was payable
in fiscal year 2016, but which was deferred by Mr. Siegmund; this amount
for Mr. Siegmund was reported as compensation in the Summary Compensation
Table for fiscal year 2015. In addition, 25% of the annual bonus earned
for fiscal year 2016 by Mr. Siegmund ($172,100) that was paid in September
2016 was also deferred by Mr. Siegmund; this amount was reported as
compensation in the Summary Compensation Table for fiscal year 2016. As
the amount in respect of the fiscal year 2016 bonus was not deferred until
after we concluded fiscal year 2016, such amount is not included in
columns (b) and (f).
|
|
|
(2)
|
The earnings amounts are not
reported as compensation in fiscal year 2016 in the Summary Compensation
Table, as they do not represent above-market or preferential earnings on
deferred compensation.
|
|
|
(3)
|
The following amounts were
previously reported as compensation in the Summary Compensation Table for
previous years: Mr. Siegmund, $486,515.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
52
|
Table of Contents
Potential Payments to Named Executive
Officers Upon Termination or Change in Control
Change in Control Severance Plan for
Corporate Officers
We maintain the Automatic Data Processing,
Inc., Change in Control Severance Plan for Corporate Officers, which provides
for the payment of specified benefits to officers selected by the board of
directors if their employment terminates under certain circumstances after a
change in control of the company. All named executive officers participate in
the change in control plan. As of June 30, 2016, there were 18 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 named executive officers are payable solely pursuant to the terms of
the change in control plan.
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;
|
|
|
●
|
there occurs a merger,
consolidation, or other business combination of the company (a
transaction), other than a transaction immediately following which the
|
53
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Potential Payments to
Named Executive Officers Upon
Termination or Change in
Control
|
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 named executive officers participate
in the severance plan. As of June 30, 2016, there were 18 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 performance stock unit 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;
|
|
|
●
|
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 named executive officers are payable solely pursuant to the terms of the
severance plan (other than if benefits are payable pursuant to the change in
control plan).
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
54
|
Table of Contents
Potential Payments to
Named Executive Officers Upon
Termination or Change in
Control
Health Coverage
Certain executives, including the named
executive officers, who terminate employment with the company after they have
attained age 55 and been credited with 10 years of service are eligible to
participate in the companys executive retiree medical plan.
Under the ADP Deferred Compensation Plan,
all U.S. executives of the company (including the named executive officers) can
defer into a deferred compensation account all or a portion of their annual cash
bonuses to be payable following separation from the company. For a description
of the ADP Deferred Compensation Plan and
aggregate deferred compensation for our named executive officers at June 30,
2016, see Deferred Compensation Program above.
Termination and Change in Control
Tables
|
The following tables set forth the
payments that each of our named executive officers who were serving as executive
officers as of June 30, 2016, would have received under various termination
scenarios on June 30, 2016. Pension benefits, which are described under Pension
Benefits for Fiscal Year 2016 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 named executive officers
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,
2016. Please refer to page 54 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 named executive
officers employment was terminated by the company without cause or by the
executive for good reason within two years following the change in control
occurring on June 30, 2016.
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
|
|
|
$5,207,040
|
(1)
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
|
$2,000,000
|
(2)
|
|
|
$0
|
Stock Options
(3)
|
|
|
$7,179,998
|
|
|
|
|
$7,179,998
|
|
|
|
$7,179,998
|
|
|
|
|
$5,332,116
|
|
|
|
$0
|
Performance Stock
Units
(4)
|
|
|
$9,194,344
|
|
|
|
|
$4,522,512
|
|
|
|
$4,522,512
|
|
|
|
|
$9,115,654
|
|
|
|
$0
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
$0
|
|
|
|
|
$0
|
|
|
|
$5,875,129
|
(5)
|
|
|
|
$0
|
|
|
|
$0
|
Total
|
|
|
$21,581,382
|
|
|
|
|
$11,702,510
|
|
|
|
$17,577,639
|
|
|
|
|
$16,447,770
|
|
|
|
$0
|
(1)
|
Represents payment of two times
each of (i) highest rate of annual salary during the calendar year in
which employment terminates or the year immediately prior to the
termination ($1,000,000) and (ii) average annual bonus for the two most
recently completed calendar years
($1,603,520).
|
55
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Potential Payments to
Named Executive Officers Upon
Termination or Change in
Control
(2)
|
Represents an amount equal to
two times annual salary ($1,000,000).
|
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2016 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $91.87 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, 2016.
|
|
(4)
|
Amount in the Termination
Following a Change in Control column represents amount attributable to the
fiscal years 2015 and 2016 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
2015 PSU award based on performance goals achieved at 120% target rate for
fiscal year 2015, at 88% target rate for fiscal year 2016, and an assumed
achievement at target rate for fiscal year 2017 plus (b) one-third of the
fiscal year 2016 PSU award based on performance goals achieved at 88%
target rate for fiscal year 2016 and an assumed achievement at target rate
for fiscal years 2017 and 2018. Amounts in the Involuntary Termination
Without Cause column represent the sum of (x) the full fiscal year 2015
PSU award based on performance goals achieved at 120% target rate for
fiscal year 2015, at 88% target rate for fiscal year 2016, and an assumed
achievement at target rate for fiscal year 2017 plus (y) the full fiscal
year 2016 PSU award based on performance goals achieved at 88% target rate
for fiscal year 2016 and an assumed achievement at target rate for fiscal
years 2017 and 2018. All amounts include accrued dividend equivalents
through June 30, 2016.
|
|
(5)
|
Represents present value of
the incremental benefit using the RP-2014 mortality table with post-2006
improvements removed (projected generationally using Scale MP-2015) and a
3.4% discount rate, assuming disability occurring on June 30,
2016.
|
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
|
|
|
$1,837,905
|
(1)
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$975,000
|
(2)
|
|
$0
|
Stock Options
(3)
|
|
|
$1,324,920
|
|
|
|
|
$1,324,920
|
|
|
|
$1,324,920
|
|
|
|
$1,021,458
|
|
|
$0
|
Restricted
Stock
(4)
|
|
|
$1,947,028
|
|
|
|
|
$1,947,028
|
|
|
|
$1,947,028
|
|
|
|
$0
|
|
|
$0
|
Performance Stock
Units
(5)
|
|
|
$2,485,443
|
|
|
|
|
$1,256,254
|
|
|
|
$1,256,254
|
|
|
|
$2,275,019
|
|
|
$0
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
$0
|
|
|
|
|
$0
|
|
|
|
$2,252,750
|
(6)
|
|
|
$0
|
|
|
$0
|
Total
|
|
|
$7,595,296
|
|
|
|
|
$4,528,202
|
|
|
|
$6,780,952
|
|
|
|
$4,271,477
|
|
|
$0
|
(1)
|
Represents payment of 1.5
times each of (i) highest rate of annual salary during the calendar year
in which employment terminates or the year immediately prior to the
termination ($650,000) and (ii) average annual bonus for the two most
recently completed calendar years (575,270).
|
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($650,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2016 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $91.87 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, 2016.
|
|
(4)
|
Amounts include the vesting of
time-based restricted stock awards.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
56
|
Table of Contents
Potential Payments to
Named Executive Officers Upon
Termination or Change in
Control
(5)
|
Amount in the Termination Following a Change in Control
column represents amount attributable to the fiscal years 2015 and 2016
PSU programs assuming performance goals of the programs 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 2015 PSU award based on
performance goals achieved at 120% target rate for fiscal year 2015, at
88% target rate for fiscal year 2016, and an assumed achievement at target
rate for fiscal year 2017, plus (b) one-third of the fiscal year 2016 PSU
award based on performance goals achieved at 88% target rate for fiscal
year 2016 and an assumed achievement at target rate for fiscal years 2017
and 2018. Amounts in the Involuntary Termination Without Cause column
represent the sum of (x) the full fiscal year 2015 PSU award based on
performance goals achieved at 120% target rate for fiscal year 2015, at
88% target rate for fiscal year 2016, and an assumed achievement at target
rate for fiscal year 2017, plus (y) five-sixths of the full fiscal year
2016 PSU award based on performance goals achieved at 88% target rate for
fiscal year 2016 and an assumed achievement at target rate for fiscal
years 2017 and 2018. All amounts include accrued dividend equivalents
through June 30, 2016.
|
|
|
(6)
|
Represents present value of the incremental benefit
using the RP-2014 mortality table with post-2006 improvements removed
(projected generationally using Scale MP-2015) and a 3.4% discount rate,
assuming disability occurring on June 30,
2016.
|
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
MARK D. BENJAMIN
Payment Elements
|
|
Termination
Following Change
In Control
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Without Cause
|
|
Retirement
|
Termination Payment
|
|
|
$1,400,221
|
(1)
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$787,500
|
(2)
|
|
|
$0
|
Stock Options
(3)
|
|
|
$865,772
|
|
|
|
|
$865,772
|
|
|
|
$865,772
|
|
|
|
$650,000
|
|
|
|
$0
|
Restricted
Stock
(4)
|
|
|
$1,947,028
|
|
|
|
|
$1,947,028
|
|
|
|
$1,947,028
|
|
|
|
$0
|
|
|
|
$0
|
Performance Stock
Units
(5)
|
|
|
$1,705,749
|
|
|
|
|
$849,734
|
|
|
|
$849,734
|
|
|
|
$1,553,607
|
|
|
|
$0
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
$0
|
|
|
|
|
$0
|
|
|
|
$1,748,459
|
(6)
|
|
|
$0
|
|
|
|
$0
|
Total
|
|
|
$5,918,770
|
|
|
|
|
$3,662,534
|
|
|
|
$5,410,993
|
|
|
|
$2,991,107
|
|
|
|
$0
|
(1)
|
Represents payment of 1.5
times each of (i) highest rate of annual salary during the calendar year
in which employment terminates or the year immediately prior to the
termination ($525,000) and (ii) average annual bonus for the two most
recently completed calendar years ($408,481).
|
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($525,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2016 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $91.87 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, 2016.
|
|
(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 2015 and 2016 PSU programs assuming performance goals of the
programs 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
2015 PSU award based on performance goals achieved at 120% target rate for
fiscal year 2015, at 88% target rate for fiscal year 2016, and an assumed
achievement at target rate for fiscal year 2017, plus (b) one-third of the
fiscal year 2016 PSU award based on performance goals achieved at 88%
target rate for fiscal year 2016 and an assumed achievement at target rate
for fiscal years 2017 and 2018. Amounts in the Involuntary Termination
Without Cause column represent the sum of (x) the full fiscal year 2015
PSU award based on performance goals achieved at 120% target rate for
fiscal year 2015,
|
57
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Potential Payments to
Named Executive Officers Upon
Termination or Change in
Control
|
at 88% target rate for fiscal
year 2016, and an assumed achievement at target rate for fiscal year 2017,
plus (y) five- sixths of the full fiscal year 2016 PSU award based on
performance goals achieved at 88% target rate for fiscal year 2016 and an
assumed achievement at target rate for fiscal years 2017 and 2018. All
amounts include accrued dividend equivalents through June 30,
2016.
|
|
|
(6)
|
Represents present value of
the incremental benefit using the RP-2014 mortality table with post-2006
improvements removed (projected generationally using Scale MP-2015) and a
3.4% discount rate, assuming disability occurring on June 30,
2016.
|
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
|
|
|
$1,467,253
|
(1)
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$787,500
|
(2)
|
|
|
|
$0
|
|
Stock Options
(3)
|
|
|
$829,213
|
|
|
|
|
$829,213
|
|
|
|
$829,213
|
|
|
|
$656,972
|
|
|
|
|
$0
|
|
Restricted
Stock
(4)
|
|
|
$1,170,671
|
|
|
|
|
$1,170,671
|
|
|
|
$1,170,671
|
|
|
|
$1,170,671
|
|
|
|
|
$0
|
|
Performance Stock
Units
(5)
|
|
|
$1,378,423
|
|
|
|
|
$689,248
|
|
|
|
$689,248
|
|
|
|
$1,257,078
|
|
|
|
|
$689,248
|
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
$0
|
|
|
|
|
$0
|
|
|
|
$1,144,205
|
(6)
|
|
|
$0
|
|
|
|
|
$0
|
|
Health Coverage
(7)
|
|
|
$239,000
|
|
|
|
|
$0
|
|
|
|
$239,000
|
|
|
|
$239,000
|
|
|
|
|
$239,000
|
|
Total
|
|
|
$5,084,560
|
|
|
|
|
$2,689,132
|
|
|
|
$4,072,337
|
|
|
|
$4,111,221
|
|
|
|
|
$928,248
|
|
(1)
|
Represents payment of 1.5
times each of (i) highest rate of annual salary during the calendar year
in which employment terminates or the year immediately prior to the
termination ($525,000) and (ii) average annual bonus for the two most
recently completed calendar years (453,169).
|
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($525,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2016 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $91.87 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, 2016.
|
|
(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 2015 and 2016 PSU programs assuming performance goals of the
programs 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 2015 PSU award based on performance goals achieved at 120%
target rate for fiscal year 2015, at 88% target rate for fiscal year 2016,
and an assumed achievement at target rate for fiscal year 2017, plus (b)
one-third of the fiscal year 2016 PSU award based on performance goals
achieved at 88% target rate for fiscal year 2016 and an assumed
achievement at target rate for fiscal years 2017 and 2018. Amounts in the
Involuntary Termination Without Cause column represent the sum of (x) the
full fiscal year 2015 PSU award based on performance goals achieved at
120% target rate for fiscal year 2015, at 88% target rate for fiscal year
2016, and an assumed achievement at target rate for fiscal year 2017, plus
(y) five-sixths of the full fiscal year 2016 PSU award based on
performance goals achieved at 88% target rate for fiscal year 2016 and an
assumed achievement at target rate for fiscal years 2017 and 2018. All
amounts include accrued dividend equivalents through June 30,
2016.
|
|
(6)
|
Represents present value of
the incremental benefit using the RP-2014 mortality table with post-2006
improvements removed (projected generationally using Scale MP-2015) and a
3.4% discount rate, assuming disability occurring on June 30,
2016.
|
|
(7)
|
Represents the present value
of Mr. Flynns health coverage under our retiree medical plan using a
discount rate of 3.38% and a medical inflation rate beginning at 7.1% for
2016-2017 and ultimately settling at 4.5% by
2038.
|
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
58
|
Table of Contents
Potential Payments to Named Executive Officers Upon Termination
or Change in Control
|
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE IN CONTROL FOR
DERMOT J. OBRIEN
Payment Elements
|
Termination
Following Change
In Control
|
|
Death
|
|
Disability
|
|
Involuntary
Termination
Without Cause
|
|
Retirement
|
Termination Payment
|
|
$1,400,406
|
(1)
|
|
$0
|
|
$0
|
|
|
|
$780,000
|
(2)
|
|
$0
|
Stock Options
(3)
|
|
$821,721
|
|
|
$821,721
|
|
$821,721
|
|
|
|
$653,571
|
|
|
$0
|
Restricted Stock
(4)
|
|
$499,957
|
|
|
$499,957
|
|
$499,957
|
|
|
|
$0
|
|
|
$0
|
Performance Stock Units
(5)
|
|
$1,381,051
|
|
|
$698,991
|
|
$698,991
|
|
|
|
$1,264,717
|
|
|
$0
|
Supplemental Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
$0
|
|
|
$0
|
|
$1,361,221
|
(6)
|
|
|
$0
|
|
|
$0
|
Total
|
|
$4,103,135
|
|
|
$2,020,669
|
|
$3,381,890
|
|
|
|
$2,698,288
|
|
|
$0
|
(1)
|
Represents payment of 1.5
times each of (i) highest rate of annual salary during the calendar year
in which employment terminates or the year immediately prior to the
termination ($520,000) and (ii) average annual bonus for the two most
recently completed calendar years (413,604).
|
|
|
(2)
|
Represents an amount equal to
1.5 times annual salary ($520,000).
|
|
(3)
|
Assumes all unvested options
immediately vested and were exercised on June 30, 2016 when the closing
price of a share of common stock of the company on the NASDAQ Global
Select Market was $91.87 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, 2016.
|
|
(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 2015 and 2016 PSU programs assuming performance goals of the
programs 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
2015 PSU award based on performance goals achieved at 120% target rate for
fiscal year 2015, at 88% target rate for fiscal year 2016, and an assumed
achievement at target rate for fiscal year 2017, plus (b) one-third of the
fiscal year 2016 PSU award based on performance goals achieved at 88%
target rate for fiscal year 2016 and an assumed achievement at target rate
for fiscal years 2017 and 2018. Amounts in the Involuntary Termination
Without Cause column represent the sum of (x) the full fiscal year 2015
PSU award based on performance goals achieved at 120% target rate for
fiscal year 2015, at 88% target rate for fiscal year 2016, and an assumed
achievement at target rate for fiscal year 2017, plus (y) five-sixths of
the full fiscal year 2016 PSU award based on performance goals achieved at
88% target rate for fiscal year 2016 and an assumed achievement at target
rate for fiscal years 2017 and 2018. All amounts include accrued dividend
equivalents through June 30, 2016.
|
|
(6)
|
Represents present value of
the incremental benefit using the RP-2014 mortality table with post-2006
improvements removed (projected generationally using Scale MP-2015) and a
3.4% discount rate, assuming disability occurring on June 30,
2016.
|
59
|
|
|
Automatic Data Processing, Inc.
Proxy Statement
|
Table of Contents
Audit Committee Report
The audit committee oversees the financial
management of the company, the companys independent auditors and financial
reporting procedures of the company on behalf of the board of directors. In
fulfilling its oversight responsibilities, the committee reviewed and discussed
the companys audited financial statements with management, which has primary
responsibility for the preparation of the financial statements. In performing
its review, the committee discussed the propriety of the application of
accounting principles by the company, the reasonableness of significant
judgments and estimates used in the preparation of the financial statements, and
the clarity of disclosures in the financial statements. Management represented
to the audit committee that the companys financial statements were prepared in
accordance with generally accepted accounting principles. The committee also
reviewed and discussed the companys audited financial statements with Deloitte
& Touche LLP, an independent registered public accounting firm, the
companys independent auditors for fiscal year 2016, 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 2016,
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, 2016 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, 2016 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 2017.
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
|
|
|
60
|
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, 2016. In addition, the committee appointed
Deloitte & Touche LLP as the independent auditors for the company for the
fiscal year 2017, subject to the ratification by the stockholders at the 2016
Annual Meeting of Stockholders.
Audit Committee of the Board of
Directors
Eric C. Fast, Chair
Ellen R.
Alemany
Richard T. Clark
Linda R. Gooden
August 2, 2016
61
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|
|
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 2016,
the audit committee retained Deloitte & Touche LLP to provide
various services in fiscal year 2016 and
fiscal year 2015. The aggregate fees billed by Deloitte & Touche LLP in
fiscal year 2016 and fiscal year 2015 for these various services
were:
Type of Fees
|
FY 2016
|
|
FY 2015
|
|
|
($ in
thousands)
|
|
Audit Fees
|
$8,125
|
|
$8,231
|
|
Audit-Related Fees
|
50
|
|
2,160
|
|
Tax
Fees
|
523
|
|
1,894
|
|
All
Other Fees
|
670
|
|
210
|
|
Total
|
$9,368
|
|
$12,495
|
|
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 2015, for audit services rendered
in connection with the spin-off of the companys Dealer Services business; tax
fees are fees for tax compliance, tax advice and tax planning, and, in fiscal
year 2015, for tax services rendered in connection with the spin-off of the
companys Dealer Services business; and all other fees are fees billed by
Deloitte & Touche LLP to the company for any services not included in the
first three categories.
The board of directors has adopted an
auditor independence policy that prohibits our independent auditors from
providing:
●
|
bookkeeping or other services
related to the accounting records or financial statements of the
company;
|
●
|
financial information systems design
and implementation services;
|
●
|
appraisal or valuation services,
fairness opinions or contribution-in-kind
reports;
|
●
|
actuarial
services;
|
●
|
internal audit outsourcing
services;
|
●
|
management functions or human
resources services;
|
●
|
broker or dealer, investment adviser
or investment banking services;
|
●
|
legal services and expert services
unrelated to the audit; and
|
●
|
any other service that the Public
Company Accounting Oversight Board or the Securities and Exchange
Commission determines, by regulation, is
impermissible.
|
The audit committee has adopted a policy
requiring that all audit, audit-related and non-audit services be pre-approved
by the audit committee. All services provided to us by the independent auditors
in fiscal year 2016 and fiscal year 2015 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
|
|
|
62
|
Table of Contents
|
Proposal 3
Appointment of Independent Registered
Public Accounting Firm
|
At the Annual Meeting, stockholders will
vote on the ratification of the appointment by the audit committee of Deloitte
& Touche LLP, an independent registered public accounting firm, as the
independent certified public accountants to audit the accounts of the company
and its subsidiaries for the fiscal year that began on July 1, 2016. Deloitte
& Touche LLP is a member of the SEC Practice Section of the American
Institute of Certified Public Accountants. A representative of Deloitte &
Touche LLP will be present at the Annual Meeting and will have an opportunity to
make a statement if he or she desires. He or she will be available to answer
appropriate questions.
Stockholder Approval Required
|
The affirmative vote of the holders of a
majority of the shares present in person or by proxy and entitled to vote
thereon at the meeting of stockholders is required to ratify Deloitte &
Touche LLPs appointment as the companys independent auditors.
|
|
THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE COMPANYS INDEPENDENT
AUDITORS.
|
63
|
|
|
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, 2016, all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934, as amended, 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 2017
Annual Meeting of Stockholders in accordance with Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, the proposal must be received by
the corporate secretary of the company no later than May 25, 2017. To be
eligible to submit such a proposal for inclusion in the companys proxy
materials for an annual meeting of stockholders pursuant to Rule 14a-8, a
stockholder must be a holder of either: (1) at least $2,000 in market value or
(2) 1% of the companys shares of common stock
entitled to be voted on the proposal, and
must have held such shares for at least one year, and continue to hold those
shares through the date of such annual meeting. Such proposal must also meet the
other requirements of the rules of the Securities and Exchange Commission
relating to stockholders proposals, including Rule 14a-8, including the
permissible number and length of proposals, the circumstances in which the
company is permitted to exclude proposals and other matters governed by such
rules and regulations.
Separate from the requirements of Rule
14a-8, relating to the inclusion of a stockholders proposal in the companys
proxy statement, the companys amended and restated by-laws require advance
notice for a stockholder to bring nominations of directors (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 2017
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 2016 Annual Meeting of
Stockholders, or November 8, 2017.
As a result, in order for the notice given
by a stockholder to comply with our amended and restated by-laws, it must be
received no earlier than July 11, 2017, and no later than on August 10, 2017,
unless the date of our 2017 Annual Meeting of Stockholders occurs more than 30
days before or 60 days after the first anniversary of the 2016 Annual Meeting of
Stockholders. In that case, our amended and restated by-laws provide that we
must receive the notice no earlier than the 120
th
day prior to the
date of the 2017 Annual Meeting of Stockholders and not later than the
90
th
day prior to the date of the 2017 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.
On August 2, 2016, the board of directors
amended and restated our by-laws to adopt 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 2017 Annual Meeting of Stockholders, a stockholders
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
64
|
Table of Contents
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 April 25, 2017 and no later
than May 25, 2017 (i.e., no earlier than the 150th day and no later than the
120th 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 2017 Annual
Meeting of Stockholders
occurs more than 30 days before or 60
days after the first anniversary of the 2016 Annual Meeting of Stockholders. In
that case, our amended and restated by-laws provide that we must receive the
notice no earlier than the 180
th
day prior to the date of the 2017
Annual Meeting of Stockholders and not later than the 90
th
day prior
to the date of the 2017 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.
65
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|
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, 2016 by mail,
we strongly encourage you to elect to view future proxy statements and annual
reports over the Internet and save the company the cost of producing and mailing
these documents. If you vote your shares over the Internet this year, you will
be given the opportunity to choose electronic access at the time you vote. You
can also choose electronic access by visiting the Investor Relations section of
our website at
www.adp.com
, or following the instructions that you will receive in
connection with next years annual meeting of stockholders. Stockholders who
choose electronic access will receive an e-mail next year containing the
Internet address to use to access the proxy statement and annual report on Form
10-K. Your choice will remain in effect until you cancel it. You do not have to
elect Internet access each year.
For the Board of
Directors
|
Michael A. Bonarti
|
Secretary
|
Roseland, New Jersey
September 22,
2016
Automatic Data Processing, Inc.
Proxy Statement
|
|
|
66
|
Table of
Contents
AUTOMATIC DATA PROCESSING, INC.
1 ADP
BOULEVARD
ROSELAND, NJ
07068
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet
to transmit your voting instructions and for electronic delivery of information
up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand
when you call and follow the instructions.
VOTE BY
MAIL
Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ADMISSION
TICKET
Please retain and present this
top portion of the proxy card as your admission ticket together with a
valid picture identification to gain admittance to the Annual
Meeting.
|
TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
E13741-P82523
|
KEEP THIS PORTION FOR YOUR
RECORDS
|
|
DETACH AND RETURN THIS PORTION
ONLY
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
|
AUTOMATIC DATA PROCESSING, INC.
|
For
All
|
Withhold
All
|
For All
Except
|
|
|
The Board
of Directors recommends a vote FOR the following:
|
|
|
|
|
|
|
|
1.
|
Election of Directors
|
|
|
☐
|
☐
|
☐
|
|
|
|
|
Nominees:
|
|
|
|
|
|
|
|
|
|
01)
|
Peter Bisson
|
06)
|
R. Glenn Hubbard
|
|
|
|
|
02)
|
Richard T. Clark
|
07)
|
John P. Jones
|
|
|
|
|
03)
|
Eric C. Fast
|
08)
|
William J. Ready
|
|
|
|
|
04)
|
Linda R. Gooden
|
09)
|
Carlos A. Rodriguez
|
|
|
|
|
05)
|
Michael P. Gregoire
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors
recommends a vote FOR the following proposals:
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
2.
|
Advisory Vote on Executive
Compensation.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
3.
|
Ratification of the Appointment
of Auditors.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
NOTE:
The proxies will vote in their discretion upon any and all other matters which may properly come before the meeting or any adjournment thereof.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly
as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name by authorized officer.
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
Date
|
|
|
Signature (Joint Owners)
|
Date
|
|
Table of
Contents
September 22, 2016
Dear Stockholder:
You are cordially invited to join us at the 2016 Annual Meeting of Stockholders of Automatic Data Processing, Inc. This years meeting will be held at the corporate offices of the Company at One ADP Boulevard, Roseland, New Jersey, on Tuesday, November 8, 2016, starting at 10:00 a.m. I hope you will be able to attend. At the meeting, we will (i) elect directors, (ii) hold an advisory vote on executive compensation, and (iii) vote on the ratification of the appointment of auditors.
It
is important that these shares be voted, whether or not you plan to be present
at the meeting. You should specify your choices by marking the appropriate boxes
on the proxy form on the reverse side, and date, sign and return your proxy form
in the enclosed, postage-paid return envelope as promptly as possible.
Alternatively, you may vote by phone or the Internet, as described on the
reverse side. If you date, sign and return your proxy form without specifying
your choices, these shares will be voted in accordance with the recommendation
of the Company's directors.
Please retain and present this top portion of the proxy card as your admission
ticket together with a valid picture identification to gain admittance to the
meeting. This ticket will admit only the stockholder listed on the reverse side
and is not transferable. If these shares are held in the name of your broker or
bank or you received your proxy materials electronically, you will need to bring
evidence of the stock ownership, such as the most recent brokerage account
statement.
As
in the past years, we will discuss the business of the Company and its
subsidiaries during the meeting. I welcome your comments and suggestions, and we
will provide time during the meeting for questions from stockholders. I am
looking forward to seeing you at the meeting.
Sincerely,
|
|
Carlos A.
Rodriguez
President and Chief Executive
Officer
|
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Combined Document containing Notice of 2016 Annual Meeting of Stockholders, Proxy Statement and
Annual Report on Form 10-K is available at www.proxyvote.com.
Proxy
This proxy is solicited on behalf of the
Board of Directors
Properly executed proxies received
by the day before the cut-off date or the meeting date will be voted as marked
and, if not marked, will be voted FOR the election of the nominees listed in the
accompanying Proxy Statement and FOR proposals (2) and (3) on the reverse
side.
The undersigned hereby appoints John P. Jones and Carlos A. Rodriquez, and each of them, attorneys and proxies with full power of substitution, in the name, place and stead of the undersigned, to vote as proxy at the 2016 Annual Meeting of Stockholders of Automatic Data Processing, Inc. to be held at the corporate offices of the Company,
ONE ADP BOULEVARD, ROSELAND, NEW JERSEY
, on Tuesday, November 8, 2016 at 10:00 a.m., or at any adjournment or adjournments thereof, according to the number of votes that the undersigned would be entitled to cast if personally present. If shares of Automatic Data Processing, Inc. Common Stock are issued to or held for the account of the undersigned under employee plans and voting rights attach to such shares (any of such plans, a "Voting Plan"), then the undersigned hereby directs the respective fiduciary of each applicable Voting Plan to vote all shares of Automatic Data Processing, Inc. Common Stock in the undersigned's name and/or account under such Voting Plan in accordance with the instructions given herein, at the Annual Meeting and at any adjournments or postponements thereof, on all matters properly coming before the Annual Meeting, including but not limited to the matters set forth on the reverse side. Either of said attorneys and proxies or substitutes, who shall be present at such meeting or at any adjournment or adjournments thereof, shall have all the powers granted to such attorneys and proxies.
Please date, sign and mail the proxy
promptly in the self-addressed return envelope which requires no postage if
mailed in the United States. When signing as an attorney, executor,
administrator, trustee or guardian, please give your full title as such. If
shares are held jointly, both owners should sign. Alternatively, you may vote by
phone or the Internet, as described in the instructions on the reverse
side.
Continued and to be signed on reverse
side
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