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UNITED STATES |
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SECURITIES AND EXCHANGE COMMISSION
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______________ |
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FORM 8-K
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Pursuant to Section
13 or 15(d) of The
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Date of Report (Date of earliest event reported): June 16, 2006 (August 11, 2005 ) |
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AUTOMATIC DATA PROCESSING, INC. |
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(Exact name of registrant as specified in its charter) |
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Delaware |
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1-5397 |
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22-1467904 |
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(State or other
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(Commission File Number) |
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(IRS Employer Identification No.) |
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One ADP Boulevard, Roseland, New Jersey |
07068 |
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(Address of principal executive offices) |
(Zip Code) |
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Registrant’s telephone number, including area code: (973) 974-5000 |
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N/A |
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(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
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(17 CFR 240.14d-2(b)) |
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
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(17 CFR 240.13e-4(c)) |
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Item 1.01. |
Entry into a Material Definitive Agreement |
(1) Amendment to Supplemental Officers Retirement Plan and Change in Control Severance Plan for Corporate Officers
On June 15, 2006 the Compensation Committee of the board of directors (the “Compensation Committee”) of Automatic Data Processing, Inc. (the “Company” or “ADP”) amended the Company’s Supplemental Officers’ Retirement Plan (“SORP”) to avoid including as “compensation” thereunder amounts received by participants under certain specified programs that were not intended to be part of a participant’s normal compensation metrics. In addition, the Compensation Committee amended the Company’s Change in Control Severance Plan for Corporate Officers in order to include the Company’s two new performance based restricted stock programs.
A copy of the amended SORP is attached as Exhibit 10.4 to this Form 8-K and is incorporated herein by reference. A copy of the amended Change in Control Severance Plan for Corporate Officers is attached as Exhibit 10.10 to this Form 8-K and is incorporated herein by reference.
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(2) |
Growth Incentive Program |
On August 11, 2005 the Compensation Committee approved a three year growth incentive program (“GIP”) for the Company under the Company’s 2001 Executive Incentive Compensation Plan. The GIP is a long-term incentive bonus program designed to focus ADP’s key executives on the goal of accelerating long-term revenue growth rates while delivering multi-year earnings per share growth, and provides participating senior executive officers with incentive compensation based upon the achievement of pre-established performance goals. The approved performance criteria include revenue growth, net operating income growth, sales growth and earnings per share growth.
The GIP is a three year program, with performance metrics set at the beginning of the program period. The program may be renewed in subsequent fiscal years for successive three year periods. Bonus targets for participants will be established at the beginning of the performance period based on a percentage of either beginning of period base pay or a participant’s starting annual bonus target. One-half of the target bonus will be paid if threshold financial performance is achieved and there is also attainment of revenue growth targets. The maximum payout for any participant will be 150% of target. Underachievement of either threshold financial performance or revenue growth targets will result in no bonus amount being paid. Management may modify the program, including redefining financial objectives, based on unforeseen business issues.
Each of Mr. Gary C. Butler, President and Chief Operating Officer, Mr. S. Michael Martone, Group President (Employer Services), Mr. Richard J. Daly, Group President (Brokerage Services) and Mr. John Hogan, Group President (Brokerage Services), each of whom was included as a “Named Executive Officer” in the Company’s 2005 annual proxy statement, participate in the GIP. Achievement of all of the performance objectives applicable to each
Named Executive Officer for the current three year program could result in maximum bonuses under the GIP in the following amounts:
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Mr. Butler |
$756,000 |
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Mr. Martone |
$483,300 |
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Mr. Daly |
$330,000 |
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Mr. Hogan |
$330,000 |
The Compensation Committee will determine whether the performance objectives were achieved after the end of the Company’s fiscal year 2008, and any bonus payments earned will be made early in fiscal year 2009.
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Item 9.01 |
Financial Statements and Exhibits |
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(c) |
Exhibits |
The following exhibits are filed as part of this Report on Form 8-K:
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Exhibit
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Description |
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10.4 |
Supplemental Officers’ Retirement Plan, as amended as of June 15, 2006 (Management Compensatory Plan) |
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10.10 |
Change in Control Severance Plan for Corporate Officers, as amended as of June 15, 2006 (Management Compensatory Plan) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 16, 2006
AUTOMATIC DATA PROCESSING, INC.
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By: |
/s/ James B. Benson |
Name: James B. Benson
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Title: |
Vice President |
Exhibit Index
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Exhibit Number |
Description |
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10.4 |
Supplemental Officers’ Retirement Plan, as amended as of June 15, 2006 (Management Compensatory Plan) |
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10.10 |
Change in Control Severance Plan for Corporate Officers, as amended as of June 15, 2006 (Management Compensatory Plan) |
AUTOMATIC DATA PROCESSING, INC.
SUPPLEMENTAL OFFICERS RETIREMENT PLAN
(as amended on May 14, 2002, as further amended on January 27, 2005,
and as further amended on June 15, 2006)
The purpose of this Supplemental Officers Retirement Plan (the “Plan”) is to provide an additional means by which AUTOMATIC DATA PROCESSING, INC. may attract, retain and encourage the productive efforts of a select group of corporate vice presidents and more senior corporate officers who provide valuable services to AUTOMATIC DATA PROCESSING, INC. and its subsidiaries . The Plan provides supplemental retirement benefits to qualifying participants.
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The Plan is as follows: |
ARTICLE I
DEFINITIONS
The following terms when used in this Plan shall have the designated meaning, unless a different meaning is clearly required by the context.
1.1 Annual Plan Benefit. The Annual Plan Benefit shall be the annual amount of a Participant’s Plan benefit calculated in accordance with the provisions of Section 3.1 below.
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1.2 |
Annual Benefit Multiplier. The Annual Benefit Multiplier shall be 1-1/2%. |
1.3 Committee. Three board members or senior officers of the Corporation appointed from time to time by the Board of Directors of the Company.
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1.4 |
Board. The Board of Directors of the Company. |
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1.5 |
Code. The Internal Revenue Code of 1986, as amended. |
1.6 Company. Automatic Data Processing, Inc. (“ADP”) and its subsidiaries, and ADP’s successors.
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1.7 |
Early Retirement Date. The date on which a Participant attains age sixty (60). |
1.8
Final Average Annual Pay.
The average annual compensation of a Participant for the five full consecutive calendar years during his Future Service period during which he received the largest total amount of compensation. For this purpose, a Participant’s “compensation” shall mean the total compensation actually paid or accrued by the Company to or for such Participant including, without limitation, bonuses paid or accrued (other than any
1.9 Future Service. A Participant’s period of full calendar years of continuous employment with the Company after his Plan participation has begun. Leaves of absence of less than six months may be taken into account as Future Service, to the extent provided by the Committee. The Committee may, in the applicable Supplement, grant a Participant prior service credit for determining the length of his Future Service period.
1.10 Government Sponsored Plan Benefits. The annual amount of benefits to which a Participant is entitled on his Normal Retirement Date under all government sponsored retirement benefit plans (including, without limitation, Participant’s Social Security benefits). A Participant’s government sponsored retirement plan benefits shall be expressed as an annual amount in the form of an actuarially equivalent straight life annuity starting on his Normal Retirement Date.
1.11 Maximum Annual Benefit Limitation. The Maximum Annual Benefit Limitation shall be 25% of a Participant’s Final Average Annual Pay.
1.12 Normal Retirement Date. The date on which the Participant attains age sixty-five (65).
1.13 Other Retirement Benefits. The sum of the Participant’s Private Sector Plan Benefits and his Government Sponsored Plan Benefits.
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1.14 Participant. An individual who has been designated as a Participant by the Committee pursuant to Article II.
1.15 Private Sector Plan Benefits. The annual amount of benefits to which a Participant is entitled on his Normal Retirement Date under all retirement plans maintained by the Company (other than this Plan), or by any former or subsequent employer of Participant (other than a governmental body covered by Section 1.10 above), whether as a periodic payment, as a lump sum, or otherwise. A Participant’s Private Sector Plan Benefits shall be expressed as an annual amount in the form of an actuarially equivalent straight life annuity starting at his Normal Retirement Date.
1.16 Supplement. A supplement attached to and made a part of this Plan, which shall set forth for each Participant any special conditions applicable to him.
1.17 Termination of Employment. References hereunder to a Participant’s termination of employment, the date a Participant’s employment terminates and the like, shall refer to the ceasing of the Participant’s employment with the Company for any reason.
1.18 Vested Percentage. Except to the extent set forth in Sections 3.4 and 5.5, until a Participant completes 5 full calendar years of Future Service, such Participant’s Vested Percentage shall be 0% and he shall not be entitled to any Plan benefits hereunder. Upon completing 5, 6, 7, 8, 9, and 10 or more full calendar years of Future Service, a Participant’s Vested Percentage shall be 50%, 60%, 70%, 80%, 90%, and 100%, respectively. The Committee may, in the applicable Supplement, grant a Participant prior service credit for determining his Vesting Percentage purposes. Any Participant who has passed the age of 55 and served as a corporate officer for more than 5 years as of the effective date of this Plan, January 1, 1989, shall be 100% vested in all of his plan benefits hereunder.
ARTICLE II
ELIGIBILITY
(a) The Committee may at any time and from time to time (but prospectively only) designate any corporate vice president or any more senior corporate officer of the Company as a Participant in the Plan; provided that such person participates to the maximum extent permissible in the Company’s other retirement plans (including, without limitation, the Automatic Data Processing, Inc. Retirement and Savings Plan and the Automatic Data Processing, Inc. Pension Retirement Plan) during the entire period he is a Participant in the Plan.
(b) A person shall automatically cease to be a Participant on the earlier to occur of the date on which: (i) he is no longer a corporate vice president or a more senior corporate officer of the Company; or (ii) he ceases to participate to the maximum extent permissible in the Company’s retirement plans (including, without limitation, the Automatic Data Processing, Inc. Retirement and Savings Plan and the Automatic Data Processing, Inc. Pension Retirement Plan).
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ARTICLE III
RETIREMENT BENEFITS
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3.1 |
In General. |
(a) A Participant’s Annual Plan Benefit is the product of (i) his Final Average Annual Pay, (ii) his Future Service period, (iii) the Annual Benefit Multiplier and (iv) his Vested Percentage; provided that, in no event, may the Participant’s Annual Plan Benefit exceed the Maximum Annual Benefit Limitation applicable to him.
(b) In addition, the Annual Plan Benefits otherwise payable to a Participant under the Plan’s basic benefit formula set forth in Section 3.1(a) above shall be reduced to the extent necessary to cause the total of (i) Participant’s Annual Plan Benefits and (ii) Participant’s annual Other Retirement Benefits not to exceed 60% of Participant’s Final Average Annual Pay.
(c) A Participant’s benefits under this Plan shall be expressed as an annual amount in the form of a straight life annuity or, at the Committee’s election, another actuarially equivalent payment option, starting as at the date the payments to such Participant under this Article III begin.
3.2 Normal Retirement Benefit. If a Participant wishes to receive Plan benefits on and after his Normal Retirement Date, the Company will pay the Participant a monthly benefit, starting on the first of the month after Normal Retirement Date and ending with the payment for the month in which his death occurs; provided that no benefit shall be paid hereunder unless and until such Participant has ceased to be employed by the Company. Such monthly benefit shall be one-twelfth of such Participant’s Annual Plan Benefit determined in accordance with the provisions of Section 3.1 above.
3.3 Early Retirement Benefit. If a Participant wishes to receive Plan benefits commencing on or after his Early Retirement Date and before his Normal Retirement Date, the Company will, at Participant’s request, pay the Participant a monthly benefit starting on the first of the month after his Early Retirement Date after which he requested that he begin receiving benefits under the Plan and ending with the payment for the month in which his death occurs; provided that no benefit shall be paid hereunder unless and until such Participant has ceased to be employed by the Company. Such monthly benefit shall be in an amount equal to the product of the monthly benefit the Participant would have received under Section 3.2 if the Participant had elected to commence receiving payments under the Plan on his Normal Retirement Date, actuarially reduced to reflect the commencement of the payment of Plan benefits before his Normal Retirement Date. The Committee may, in its discretion, reduce a Participant’s Plan benefits by less than a straight actuarially reduced amount if Participant begins to receive Plan benefits after his Early Retirement Date and before his Normal Retirement Date.
3.4
Disability Retirement Benefit.
If a Participant shall incur a Disability while employed by the Company, the Company shall pay such Participant a monthly benefit starting on the first day of the calendar month after the date his Disability begins and ending with the
3.5 No Duplication. In no event shall benefits become payable to any Participant under more than one Section of this Article III.
ARTICLE IV
FORFEITURES
4.1 Forfeiture for Competitive Employment. If a Participant violates the non-competition provisions of any agreement he has entered into with the Company after his employment terminates, or if his employment with the Company is terminated on account of his dishonesty or gross negligence, such Participant shall forever and irrevocably forfeit all benefits otherwise due him under the terms of the Plan.
4.2 Limitation. If any provision of this Article IV shall be unenforceable as a matter of law, it shall be construed to apply to the greatest extent permitted by law so as to give effect to its intended purposes.
ARTICLE V
CONDITIONS RELATED TO BENEFITS
5.1 Administration of Plan. The Committee shall administer the Plan and shall have the sole and exclusive authority to interpret, construe and apply its provisions. The Committee shall have the power to establish, adopt and revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan and the operation of the Committee’s activities in connection therewith. All decisions of the Committee shall be by vote or written consent of the majority of its members and shall be final and binding. Members of the Committee shall be eligible to participate in the Plan while serving as a member of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member in his capacity as a Participant.
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5.2 Grantor Trust. The Committee may, at its discretion, have the Company create a grantor trust (within the meaning of section 671 of the Code) in connection with the adoption of this Plan to which it may from time to time contribute amounts to accumulate an appropriate reserve against its obligations hereunder. Notwithstanding the creation of such trust, the benefits hereunder shall be a general obligation of the Company. Except to the extent that the benefit amounts payable hereunder have been specifically transferred for an identified Participant into the Automatic Data Processing, Inc. Retirement and Savings Plan (the “Pension Plan”) pursuant to the terms and conditions of the Pension Plan and are payable thereunder, a Participant shall have only a contractual right as a general creditor of the Company to the amounts, if any, payable hereunder and such right shall not be secured by any assets of the Company or the trust.
5.3 No Right to Company Assets. Except to the extent that benefit amounts have been specifically transferred for an identified Participant into the Pension Plan pursuant to the terms and conditions of the Pension Plan and are payable thereunder, neither a Participant nor any other person shall acquire by reason of the Plan any right in or title to any assets, funds or property of the Company whatsoever including, without limiting the generality of the foregoing, any specific funds or assets which the Company may set aside in anticipation of a liability hereunder, nor in any policy or policies of insurance on the life of a Participant owned by the Company.
5.4 No Employment Rights. Nothing herein shall constitute a contract of continuing employment or in any manner obligate the Company to continue the service of a Participant, or obligate a Participant to continue in the service of the Company, and nothing herein shall be construed as fixing or regulating the compensation paid to a Participant.
5.5 Company’s Right to Terminate and Amend. The Company reserves the right in its sole discretion at any time to amend the Plan in any respect or terminate the Plan. Notwithstanding the foregoing, no such amendment or termination shall reduce the amount of the benefit theretofore vested by any Participant or change the conditions required to be satisfied to receive payment of such past accrued benefit based on the provisions of the Plan as theretofore in effect. For this purpose, the amount of a Participant’s accrued benefit as of the date of any plan amendment or termination shall be determined as if the Participant was then retiring in accordance with Section 3.3 with his actual Vested Percentage accrued as at such date; provided that if the Company is terminating the Plan and if a Participant has not completed at least 5 years of Future Service, Participant’s Vested Percentage shall be (i) 40% if he has completed 4 years of Future Service, (ii) 30% if he has completed 3 years of Future Service, (iii) 20% if he has completed 2 years of Future Service, (iv) 10% if he has completed 1 year of Future Service, and (v) 0% if he has not completed 1 year of Future Service.
5.6 Protective Provisions. The Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder.
5.7 Right of Offset. If at the time any payment is to be made hereunder a Participant is indebted to the Company or otherwise subject to a monetary claim by the Company, the payments remaining to be paid to the Participant under the Plan may, at the Company’s discretion, be reduced by setoff against the amount of such indebtedness or claim.
5.8 No Third Party Rights. Nothing in this Plan or any trust established pursuant to Section 5.2 hereof shall be construed to create any rights hereunder in favor of any person (other than the Company and any Participant) or to limit the Company’s right to amend or terminate the Plan in any manner subject to Section 5.5 hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Nonassignability. No rights or payments to any Participant shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and no attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be valid, nor shall any such benefit or payment be in any way liable for or subject to the debts, contracts, liabilities, engagements or torts of any Participant or subject to levy, garnishment, attachment, execution or other legal or equitable process. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant, nor be transferable by operation of law in the event of a Participant’s bankruptcy or insolvency.
6.2 Withholding. To the extent required by law the Company shall be entitled to withhold from any payments due hereunder any federal, state and local taxes required to be withheld in connection with such payment.
6.3 Gender and Number. Wherever appropriate herein, the masculine shall mean the feminine and the singular shall mean the plural or vice versa.
6.4 Notice. Any notice required or permitted to be made under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to (a) in the case of notice to the Company or the Committee, the principal office of the Company, directed to the attention of the Secretary of the Committee, and (b) in the case of a Participant, such Participant’s home or business address maintained in the Company’s personnel records. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or on the receipt for registration or certification.
6.5 Validity. In the event any provision of this Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan.
6.6 Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of New Jersey.
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ARTICLE VII
SPOUSAL BENEFITS
In the event of the death of a participant who is at least 35 years of age at the time of his death and who is vested in accordance with the provisions of Paragraph 1.18, the surviving spouse is entitled to receive 50% of the death benefit which the participant would have been entitled to receive at the time of his death. Such benefit shall be payable monthly as a straight life annuity benefit and shall be calculated in accordance with the benefit which the participant would have been entitled to at the normal retirement age of 65 or, at the election of the spouse, in accordance with the early retirement provision actuarily reduced.
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AUTOMATIC DATA PROCESSING, INC.
CHANGE IN CONTROL SEVERANCE PLAN
FOR
CORPORATE OFFICERS
(as amended as of June 15, 2006)
The purpose of this Change in Control Severance Plan for Corporate Officers (the “Plan”) is to enable Automatic Data Processing, Inc., a Delaware corporation (the “Company”), to offer a form of income protection to “Participants” (as defined in Section 7.5 below) in the event their employment with the Company terminates under certain circumstances due to a “Change in Control” (as defined in Section 7.2 below).
ARTICLE I: BENEFITS
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1.1 |
Eligibility for Benefits; Benefits; Payment; and Rights of Participants . |
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(a) |
If a Change in Control occurs prior to the date a Participant’s employment with the Company terminates, then upon the termination of the Participant’s employment by the Company without “Cause” (as defined in Section 7.1 below) or by the Participant for “Good Reason” (as defined in Section 7.4 below) (individually, a “Qualifying Termination”), such Participant shall be paid the applicable “Severance Benefit” (as defined below) and shall receive the additional benefits described in this Article I. The term “Severance Benefit” shall mean: |
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(i) |
if the Qualifying Termination occurs during the two year period following the Change in Control, an amount equal to 150% of the Participant’s “Current Total Annual Compensation” (as defined in Section 7.3 below); and |
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(ii) |
if the Qualifying Termination occurs during the third year after the Change in Control, an amount equal to 100% of the Participant’s Current Total Annual Compensation. |
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(b) |
Any Participant entitled to a Severance Benefit (in accordance with Section 1.1(a) above) shall receive his Severance Benefit in the form of a lump-sum payment within 30 business days, or at such earlier time as required by applicable law, after his employment with the Company terminates. |
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1.2 |
Additional Benefits . A Participant entitled to receive a Severance Benefit shall also receive the following additional benefits: |
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(a) |
The Company shall cause options to purchase Company stock (“Stock Options”) held by a Participant that are not fully vested and exercisable on the date of the Qualifying Termination to: |
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(i) |
where the Qualifying Termination occurs during the two year period following the Change in Control, become fully vested and exercisable as of the date of such Qualifying Termination; and |
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(ii) |
where the Qualifying Termination occurs during the third year after the Change in Control, become fully vested and exercisable as of the date of such Qualifying Termination as to those Stock Options that would otherwise have vested within one year after the Qualifying Termination. |
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(b) |
The Company shall cause unvested restricted shares of Company stock (the “Restricted Shares”) held by a Participant on the date of the Qualifying Termination to: |
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(i) |
where the Qualifying Termination occurs during the two year period following the Change in Control, become fully vested as of the date of such Qualifying Termination as to those Restricted Shares for which the vesting restrictions would otherwise have lapsed within two years after the Qualifying Termination; and |
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(ii) |
where the Qualifying Termination occurs during the third year after the Change in Control, become fully vested as of the date of such Qualifying Termination as to those Restricted Shares for which the vesting restrictions otherwise would have lapsed within one year after the Qualifying Termination. |
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(c) |
Where the Qualifying Termination occurs during the two year period following the Change in Control, the number of shares of Restricted Stock a Participant would have been entitled to receive had the performance goals been achieved at the 100% target rate in each of the then ongoing 2-year performance-based restricted stock programs (PBRS) and the 2-year accelerated revenue growth programs (ARP), and/or any successor programs to the PBRS and ARP programs, shall be sold by the Company to such Participant on the date of the Qualifying Termination. |
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1.3 |
Reduction of Payments . If a Participant determines that his receipt of any payment and/or non-monetary benefit under this Plan (including, without limitation, the accelerated vesting of Stock Options and/or Restricted Shares) (collectively, the “Payments”) would cause him to become subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Company shall, as and only as instructed by such Participant in writing prior to the date of his Qualifying Termination, reduce his |
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Payments in the manner and in the amounts determined by the Participant to be necessary to avoid the application of such excise tax. If requested by a Participant, the Company shall, at the Company’s expense, determine and advise the Participant prior to his Qualifying Termination of the amount by which the Company would report to the Internal Revenue Service that the Payments to the Participant constitute “excess parachute payments,” as defined in Section 280G of the Code if the Participant does not elect to reduce the Payments as described in this Section 1.3.
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1.4 |
Rights of Participants . Nothing contained herein shall be held or construed to create any liability or obligation on the Company to retain any Participant in its service or in a corporate officer position. All Participants shall remain subject to discharge or discipline to the same extent as if the Plan did not exist. |
ARTICLE II: FUNDING
2.1 Funding . The Plan shall be funded out of the general assets of the Company as and when benefits are payable under the Plan. All Participants shall be solely general creditors of the Company.
ARTICLE III: ADMINISTRATION OF THE PLAN
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3.1 |
Plan Administrato r. The general administration of the Plan shall be placed with the Compensation Committee of the Board or an administrative committee appointed by the Board (the “Committee”). |
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3.2 |
Reimbursement of Expenses of Committe e. The Company shall pay or reimburse the members of the Committee for all reasonable expenses incurred in connection with their duties hereunder. |
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3.3 |
Action by the Plan Committee . Decisions of the Committee shall be made by a majority of its members attending a meeting at which a quorum is present (which meeting may be held telephonically), or by written action in accordance with applicable law. No member of the Committee may act with respect to a matter which involves only that member. |
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3.4 |
Delegation of Authority . The Committee may delegate any and all of its powers and responsibilities hereunder to other persons by formal resolution filed with and accepted by the Board. Any such delegation shall not be effective until it is accepted by the Board and the persons designated and may be rescinded at any time by written notice from the Committee to the person to whom the delegation is made. |
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3.5 |
Retention of Professional Assistanc e. The Committee may employ such legal counsel, accountants and other persons as may be required in carrying out its |
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work in connection with the Plan, and the Company shall pay the fees and expenses of such persons.
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3.6 |
Accounts and Records . The Committee shall maintain such accounts and records regarding the fiscal and other transactions of the Plan, and such other data as may be required to carry out its functions under the Plan and to comply with all applicable laws. |
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3.7 |
Compliance with Applicable Law . The Company shall be deemed the administrator of the Plan for the purposes of any applicable law and shall be responsible for the preparation and filing of any required returns, reports, statements or other filings with appropriate governmental agencies. The Company shall also be responsible for the preparation and delivery of information to persons entitled to such information under any applicable law. |
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3.8 |
Reimbursement of Expenses . If any contest or dispute shall arise under this Plan involving termination of a Participant’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall, immediately after the date a court issues a final order from which no appeal can be taken, or with respect to which the time period to appeal has expired, reimburse such Participant for all reasonable legal fees and expenses, if any, paid by the Participant in connection with such contest or dispute (together with interest in an amount equal to the Chase Manhattan Bank prime rate from time to time in effect, such interest to begin to accrue on the dates Participant actually paid such fees and expenses through the date of payment thereof); provided, however, the Participant shall not be entitled to any reimbursement for his legal fees and expenses if a court has made a final determination that the Participant’s position was without merit. |
ARTICLE IV: AMENDMENT AND TERMINATION
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4.1 |
Amendment and Termination . The Company reserves the right to amend or terminate, in whole or in part, any or all of the provisions of this Plan by action of the Board at any time; provided, that, following a Change in Control, the Company shall no longer have the power to amend or terminate the Plan, except for amendments to comply with changes in applicable law which do not reduce the benefits and payments due hereunder in the event of a Qualifying Termination; provided, further, that, in no event shall any amendment reducing the benefits provided hereunder or any Plan termination be effective until at least six months after the date of the applicable action by the Board. |
ARTICLE V: SUCCESSORS
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5.1 |
Successors . The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially |
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all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. In such event, the term “Company”, as used in this Plan, shall mean the Company, as applicable, as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by the terms and provisions of this Plan.
ARTICLE VI: MISCELLANEOUS
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6.1 |
No Duty to Mitigate/Set-of f. No Participant entitled to receive a Severance Benefit shall be required to seek other employment or to attempt in any way to reduce any amounts payable to him pursuant to this Plan. The Severance Benefit payable hereunder shall not be reduced by any compensation earned by the Participant as a result of employment by another employer or otherwise. The Company’s obligations to pay the Severance Benefits and to perform its obligations hereunder shall not be affected by any circumstances including without limitation, any set off, counterclaim, recoupment, defense or other right which the Company may have against the Participant. |
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6.2 |
Headings . The headings of the Plan are inserted for convenience of reference only and shall have no effect upon the meaning of the provisions hereof. |
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6.3 |
Use of Words . Whenever used in this instrument, a masculine pronoun shall be deemed to include the masculine and feminine gender, and a singular word shall be deemed to include the singular and plural, in all cases where the context so requires. |
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6.4 |
Controlling Law . The construction and administration of the Plan shall be governed the laws of the State of New York (without reference to rules relating to conflicts of law). |
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6.5 |
Withholding . The Company shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it reasonably believes it may have to withhold federal, state or local income or other taxes incurred by reason of payments pursuant to this Plan. |
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6.6 |
Severability . Should any provision of the Plan be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions of the Plan unless such determination shall render impossible or impracticable the functioning of the Plan, and in such case, an appropriate provision or provisions shall be adopted so that the Plan may continue to function properly. |
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6.7 |
Rights Under Other Plans, Policies, Practices and Agreements . |
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(a) |
Other than as expressly provided herein, the Plan does not supersede any other plans, policies, and/or practices of the Company. |
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(b) |
The Plan supersedes any other change in control severance plans, policies and/or practices of the Company as to the Participants; provided, that, the Plan shall not supersede any individual executed agreement or arrangement between a single Participant and the Company in effect on March 21, 2001 or thereafter, which agreement specifically addresses payments or benefits made or provided upon termination of employment or in connection with a Change in Control including, but not limited to, the agreements set out on Appendix “A” hereto (an “Additional Agreement”). If a Participant is due benefits or payments under both an Additional Agreement and the Plan and/or where the Plan and the applicable Additional Agreement have inconsistent or conflicting terms and conditions, the Participant shall receive the greater of the benefits and payments, and the more favorable terms and conditions to him, under the Additional Agreement and the Plan, determined on an item-by-item basis. |
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6.8 |
Insurance . The Company shall continue to cover the Participants, or cause the Participants to be covered, under any director and officer insurance maintained after a Change in Control for directors and officers of the Company or its successor (whether by the Company or another entity) at no less of a level as that maintained by the Company or its successor for its directors and officers. Such coverage shall continue for any period during which the Participant may have any liability for his actions or omissions. Following a Change in Control and in addition to any rights under any other indemnification agreement, the Company or its successor shall indemnify the Participant to the fullest extent permitted by law against any claims, suits, judgments, expenses arising from, out of, or in connection with the Participant’s services as an officer or director of the Company, or as a fiduciary of any benefit plan of the Company. |
ARTICLE VII: DEFINITIONS .
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7.1 |
“Cause” shall mean: (A) gross negligence or willful misconduct by a Participant which is materially injurious to the Company, monetarily or otherwise; (B) misappropriation or fraud with regard to the Company or its assets; or (C) conviction of, or the pleading of guilty or nolo contendere to, a felony involving the assets or business of the Company. For purpose of the preceding sentence, no act or failure to act by a Participant shall be considered “willful” unless done or omitted to be done by such Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, or based upon the advice of counsel for the Company, shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company. |
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7.2 |
“Change in Control” shall mean the occurrence of any of the following: (A) any “Person” (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding the Company, any subsidiary of the Company, or any employee benefit plan sponsored or maintained by the Company (including any trustee of any such plan acting in his capacity as trustee), becoming 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 Company’s then outstanding securities; (B) the merger, consolidation or other business combination of the Company (a “Transaction”), other than a Transaction immediately following which the stockholders of the Company immediately prior to the Transaction continue to be the beneficial owners of securities of the resulting entity representing more than 65% of the voting power in the resulting entity, in substantially the same proportions as their ownership of Company voting securities immediately prior to the Transaction; or (C) the sale of all or substantially all of the Company’s 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 Company voting securities immediately prior to the Transaction. |
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7.3 |
“Current Total Annual Compensation” shall be the sum of the following amounts: (A) the greater of a Participant’s highest rate of annual salary during the calendar year in which his employment terminates or such Participant’s highest rate of annual salary during the calendar year immediately prior to the year of such termination; and (B) the average of a Participant’s annual bonus compensation (prior to any bonus deferral election) earned in respect of the two most recent calendar years immediately preceding the calendar year in which the Participant’s employment terminated. |
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7.4 |
“Good Reason” shall mean the occurrence of any of the following events after a Change in Control without the Participant’s express written consent: (A) material diminution in the value and importance of a Participant’s position, duties, responsibilities or authority as of the date immediately prior to the Change in Control; or (B) a reduction in a Participant’s aggregate compensation or benefits; or (C) a failure of any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) of the Company to assume in writing the obligations hereunder. A termination for Good Reason shall mean a termination by a Participant effected by written notice given by the Participant to the Company within 30 days after the occurrence of the Good Reason event, unless the Company shall, within 15 days after receiving such notice, take such action as is necessary to fully remedy such Good Reason event in which case the Good Reason event shall be deemed to have not occurred. |
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7.5 |
“Participant” shall mean an employee who is a corporate officer of the Company on the date of a Change in Control as a result of his election by the Board. |
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Notwithstanding the foregoing, if an employee who is not a corporate officer on the date of a Change in Control reasonably demonstrates that, in contemplation of the Change in Control or at the request of a party which subsequently causes a Change in Control, the Company removed him from such office, such employee shall also be a Participant.
As authorized by the Compensation Committee
of the Board of Directors of Automatic Data
Processing, Inc. on January 23, 2001, and as
ratified and adopted by the Board of Directors
of Automatic Data Processing, Inc. on
March 21, 2001, and as amended by the
Compensation Committee of the Board of
Directors of Automatic Data Processing, Inc.
on June 15, 2006.
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By: |
/s/ James B. Benson |
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James B. Benson, General Counsel, |
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Corporate Vice President & Secretary |
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