PLEASE TAKE NOTICE that the 2004 Annual Meeting of Stockholders of AUTOMATIC DATA PROCESSING, INC. (the "Company") will be held at 10:00 a.m., Tuesday, November 9, 2004 at the Company's corporate headquarters, ONE ADP BOULEVARD, ROSELAND, NEW JERSEY, for the following purposes:
1. To elect a Board of Directors (Proposal 1);
2. To ratify the appointment of Deloitte & Touche LLP, an independent registered public accounting firm, to serve as the Company's independent certified public accountants for the fiscal year that began on July 1, 2004 (Proposal 2); and
3. To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof.
Only the holders of record of Common Stock at the close of business on September 10, 2004 (the "Record Date") are entitled to vote at the meeting. Each stockholder is entitled to one vote for each share of Common Stock held on the Record Date.
To gain admission to the Annual Meeting of Stockholders, you will need to show that you are a stockholder of the Company. If your shares are registered in your name and you plan to attend the Annual Meeting of Stockholders, please retain and bring the top portion of the proxy card as your admission ticket. 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 that you own Company stock, you will not be admitted to the Annual Meeting of Stockholders. Packages and bags will be inspected and they may have to be checked, among other security measures that may be used for the security of those attending the Annual Meeting of Stockholders. Please arrive early enough to allow yourself adequate time to clear security.
September 22, 2004
Roseland, New Jersey
The presence in person and/or the representation by proxy of the holders of record of a majority of the issued and outstanding shares of stock entitled to vote at the meeting is necessary and sufficient to constitute a quorum. Accordingly, if you do not expect to be present at the meeting, you may vote your shares of stock by phone, the Internet or by executing the accompanying proxy and returning it promptly in the enclosed envelope, which requires no postage if mailed in the United States.
The accompanying proxy is being solicited by the Board of Directors of the Company for use at the forthcoming Annual Meeting of Stockholders. Each stockholder giving such a proxy has the power to revoke the same at any time before it is voted by so notifying the Secretary of the Company in writing. All expenses in connection with the solicitation will be borne by the Company. This Proxy Statement and the accompanying proxy are being mailed to stockholders on or about September 22, 2004.
The Company has one class of securities outstanding and entitled to vote at the Annual Meeting of Stockholders, its common stock, par value $.10 per share ("Common Stock"). At the close of business on September 10, 2004, the record date for determining stockholders entitled to notice of and to vote at the meeting, the Company had 582,504,905 issued and outstanding shares of Common Stock (excluding 56,197,764 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.
The representation in person or by proxy of a majority of the issued and outstanding shares of stock entitled to vote shall constitute a quorum at the Annual Meeting of Stockholders. Directors are elected by a plurality of the affirmative votes cast. The affirmative vote of the holders of a majority of the shares present 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 Company's independent certified public accountants. Under the Company's Amended and Restated Certificate of Incorporation and By-Laws and under Delaware law, abstentions and "non-votes" are counted as present in determining whether the quorum requirement is satisfied. With regard to the election of directors, votes may be cast in favor or withheld. Votes that are withheld will be excluded entirely from the vote and will have no effect. Abstentions may be specified on the proposal to ratify the Company's independent certified public accountants and will have the effect of a negative vote. Under applicable Delaware law, a non-vote will have no effect on the outcome of any of the matters referred to in this Proxy Statement. A non-vote occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions from the beneficial owner.
The Company's Board of Directors has adopted a policy whereby stockholders' proxies are received by the Company's independent tabulators and the vote is certified by independent inspectors of election. Proxies and ballots that identify the vote of individual stockholders will be kept confidential from the Company's management and directors, except as necessary to meet legal requirements in cases where stockholders request disclosure or in a contested election.
Properly executed proxies will be voted as marked, and if not marked, will
be voted in favor of the election of 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 does not remain a candidate at the time of the meeting (a situation
that management does not anticipate), proxies solicited hereunder will be
voted in favor of those nominees who do remain as candidates and may be voted
for substitute nominees designated by the Board of Directors.
(1) Mr. Brenneman has been Chief Executive Officer of Burger King Corporation
since July 2004. He was Chairman and Chief Executive Officer of TurnWorks,
Inc. from October 2002 to July 2004 and also from May 2001 to June 2002. He
was President and Chief Executive Officer of PwC Consulting from June 2002
to October 2002, and was the President and Chief Operating Officer of Continental
Airlines, Inc. from May 1995 to May 2001. Mr. Brenneman is also a director
of The Home Depot, Inc. and Burger King Corporation.
(2) Mr. Brun has been the Chairman of Hamilton Lane since 1991. He is also
a director of Episcopal Academy and a trustee of the University of Buffalo
Foundation.
(3) Mr. Butler became President and Chief Operating Officer of the Company
in April 1998. He is also a director of Liberty Mutual Group and CIT Group
Inc.
(4) Mr. Califano has been Chairman of the Board and President of The National
Center on Addiction and Substance Abuse at Columbia University since 1992.
He is also a director of Viacom, Inc., Midway Games Inc. and Willis Group
Holdings Limited.
(5) Mr. Cooperman has been Chairman and Chief Executive Officer of Omega
Advisors, Inc. since 1991.
(6) Mr. Hubbard was named the Dean of the Graduate School of Business at
Columbia University on July 1, 2004 and has been the Russell L. Carson Professor
of Finance and Economics in the Department of Economics and Graduate School
of Business at Columbia University since 1994. From February 2001 until March
2003 he was Chairman of the U.S. Council of Economic Advisors. He is also
a director of Dex Media, Inc.
(7) Ms. Jordan is the former Director, Social Services Department, Chicago
Lying-In Hospital, University of Chicago Medical Center, a position she assumed
in 1970. She is also a director of Johnson & Johnson Corporation and Citigroup
Inc.
(8) Mr. Krueger is Vice Chairman of Lehman Brothers and has been a senior
officer of Lehman Brothers and its predecessor companies for more than the
past five years. He is also a director of Bernard Chaus, Inc. and Delta Galil
Industries Ltd.
(9) Mr. Malek has been Chairman of Thayer Capital Partners since 1992. He
is also a director of CB Richard Ellis Services, Inc., FPL Group, Inc., Manor
Care, Inc., Northwest Airlines Corporation and Federal National Mortgage Association.
(10) Mr. Taub has been Honorary Chairman of the Company's Board of Directors
since 1986.
(11) Mr. Weinbach became Chairman of the Board and Chief Executive Officer
of the Company in April 1998. He is also a director of First Data Corporation
and Schering Plough Corp.
Stockholder Approval Required
Directors shall be elected by a plurality of the affirmative votes cast
in person or by proxy at the meeting of stockholders.
ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS.
Corporate Governance
During the last fiscal year, the Board of Directors held seven meetings.
All directors attended at least 75%, in the aggregate, of the meetings of
the Board of Directors and the committees of which they were members, except
for Mr. Taub, who attended 70% of the meetings of the Board of Directors and
the committees of which he is a member.
The Board of Directors' categorical standards of director independence are
attached as Appendix A to this Proxy Statement. Directors who meet these standards
are considered to be "independent." Messrs. Brenneman, Brun, Califano,
Cooperman, Hubbard, Malek and Ms. Jordan meet these standards and are, therefore,
considered to be independent directors. Messrs. Butler, Krueger, Taub, Weinbach
and Weston (who is retiring at this Annual Meeting of Stockholders in accordance
with the retirement policy of the Board of Directors) do not meet these standards
and are, therefore, not considered to be independent directors. Based on the
foregoing categorical standards, all current members of the Audit, Compensation
and Nominating/Corporate Governance Committees are independent.
The table below provides membership and meeting information for each of
the committees of the Board of Directors.
(C) Chairperson of the committee.
(FE) Audit Committee financial expert.
* Mr. Weston is retiring at the 2004 Annual Meeting of Stockholders in accordance
with the retirement policy of the Board of Directors.
The Audit Committee acts under a written charter (the "Audit Committee
Charter"), which is required to be provided to stockholders every three
fiscal years, unless amended earlier. The members of the Audit Committee satisfy
the independence requirements of the New York Stock Exchange (NYSE) rules
currently in effect. The Audit Committee Charter may be viewed online on the
Company's website at www.adp.com under "Governance" in the "About
ADP" section. The principal functions of the Audit Committee are to:
(i) assist the Board of Directors in fulfilling its oversight responsibilities
with respect to (a) the Company's systems of internal controls regarding finance,
accounting, legal compliance and ethical behavior, (b) the Company's auditing,
accounting and financial reporting processes generally, (c) the Company's
financial statements and other financial information provided by the Company
to its stockholders, the public and others, (d) the Company's compliance with
legal and regulatory requirements and (e) the performance of the Company's
corporate audit department and independent auditors;
(ii) appoint, compensate and oversee the work of the independent auditors
(including resolution of disagreements between management and the independent
auditors regarding financial reporting) for the purpose of preparing its audit
report or related work;
(iii) review in advance and pre-approve all services to be provided by the independent
auditors, as permitted by applicable rules and regulations and the Auditor Independence
Policy (which is discussed in further detail below under "Independent Registered
Public Accounting Firms' Fees"), and in connection therewith to approve
all fees and other terms of engagement;
(iv) review and approve disclosures required to be included in the Securities
and Exchange Commission (the "SEC") periodic reports filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act");
and
(v) review the performance of the internal auditors and the independent
auditors on at least an annual basis.
The Compensation Committee acts under a written charter, which may be viewed
online on the Company's website at www.adp.com under "Governance"
in the "About ADP" section. The principal function of the Compensation
Committee is to assist the Board of Directors in discharging its responsibilities
in respect of compensation of the Company's executive officers by:
(i) evaluating the Chief Executive Officer's performance and setting the
Chief Executive Officer's compensation based on such evaluation; and
(ii) developing guidelines and reviewing the compensation and performance
of officers of the Company and other Company associates.
The Compensation Committee also develops plans for managerial succession.
The Nominating/Corporate Governance Committee acts under a written charter,
which may be viewed online on the Company's website at www.adp.com under "Governance"
in the "About ADP" section. The members of the Nominating/Corporate
Governance Committee satisfy the independence of the NYSE rules currently
in effect. The principal functions of the Nominating/Corporate Governance
Committee are to:
(i) develop policies on the size and composition of the Board of Directors;
(ii) identify individuals qualified to become members of the Board of Directors
and review candidates for Board membership;
(iii) recommend a slate of nominees to the Board of Directors annually;
(iv) ensure that the Audit, Compensation and Nominating/Corporate Governance
Committees of the Board of Directors have the benefit of qualified and experienced
independent directors;
(v) review and reassess the adequacy of the Board of Directors' corporate
governance principles (which principles may be viewed online on the Company's
website at www.adp.com under "Governance" in the "About ADP"
section) and recommend changes to such principles annually; and
(vi) advise the full Board of Directors on corporate governance matters.
When the Board of Directors decides to recruit a new member 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 significant technology, international or marketing backgrounds directly
related to the Company's technologies, markets and/or clients. The Board of
Directors will consider any such strong candidate provided he or she possesses
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.
If the Committee does not believe that a candidate possesses the above personal
characteristics, that candidate will not be considered. Stockholders who wish
the Nominating/Corporate Governance Committee to consider their recommendations
for nominees for the position of director should submit their recommendations
in writing to the Nominating/Corporate Governance Committee in care of the
Secretary of the Company at the Company's principal executive offices.
During the last fiscal year, non-employee directors were paid an annual
retainer of $55,000, which was paid in the form of restricted stock units
of Common Stock pursuant to the Company's 2003 Director Stock Plan, plus $1,500
in cash for each Board of Directors meeting attended. In addition, non-employee
directors were paid $1,000 in cash for each committee meeting attended if
such committee meeting was held on the same day a Board of Directors meeting
was held; otherwise, non-employee directors were paid $1,500 in cash for each
committee meeting attended. Further, the chairperson of the Audit Committee
was paid an additional annual retainer of $10,000 in cash and the chairperson
of each of the Executive Committee, Compensation Committee and Nominating/Corporate
Governance Committee was paid an additional annual retainer of $5,000 in cash.
During fiscal 2004, non-employee directors received grants under each of
the Company's 1989 Non-Employee Director Stock Option Plan ("1989 Directors'
Option Plan") and the 2000 Stock Option Plan (the "2000 Stock Option
Plan"). The vesting schedule for the options granted under such plans
was designed to ensure that at least 5,000 options become exercisable for
each non-employee director (other than Mr. Tisch, who retired from the Board
of Directors at last year's Annual Meeting of Stockholders, and Mr. Hubbard,
who was appointed to the Board of Directors during fiscal 2004) in each calendar
year through 2007.
Until last year's Annual Meeting of Stockholders, held on November 11, 2003,
the non-employee directors of the Company were entitled to participate in
the 1989 Directors' Option Plan. In fiscal 2004, options to purchase 22,500
shares of Common Stock were granted to each non-employee director (other than
Mr. Hubbard, who was not a member of the Board of Directors at that time)
at an exercise price of $37.81 per share under the 1989 Directors' Option
Plan. All options were granted at the fair market value of the Common Stock,
determined on the basis of the closing price of the Common Stock in consolidated
trading on the date of grant, as reported in The Wall Street Journal. In the
case of each of Messrs. Brenneman, Brun and Cooperman and Ms. Jordan, 20%
percent of the options granted under the 1989 Directors' Option Plan become
exercisable on the first anniversary of the date such options were granted,
and 20% percent become exercisable on each successive anniversary date thereafter
until all such options become exercisable; in the case of each of Messrs.
Califano, Krueger, Malek and Tisch, approximately 24.4%, 31.1%, 26.7%, 8.9%
and 8.9% of the options granted under the 1989 Directors' Option Plan become
exercisable on the first, second, third, fourth and fifth anniversary, respectively,
of the date such options were granted, provided that, for all such directors,
options become exercisable only if the director is then still serving in such
capacity, unless certain specified events occur, such as the death, disability
or retirement of a director, in which case the options shall immediately vest
and become fully exercisable. All options granted under the 1989 Directors'
Option Plan have a term of ten years. Following last year's Annual Meeting
of Stockholders, the 1989 Directors' Option Plan was amended to prohibit any
future grants thereunder.
Following last year's Annual Meeting of Stockholders, the non-employee directors
of the Company became eligible to participate in the 2000 Stock Option Plan.
Under the 2000 Stock Option Plan, upon initial election to the Board of Directors,
a non-employee director will receive a grant of options to purchase 5,000
shares of Common Stock. Thereafter, a non-employee director will receive an
annual grant of options to purchase 5,000 shares of Common Stock. All options
are granted at the fair market value of the Common Stock, determined on the
basis of the closing price of the Common Stock in consolidated trading on
the date of grant, as reported in The Wall Street Journal. All options granted
under the 2000 Stock Option Plan have a term of ten years. In fiscal 2004,
options to purchase 5,000 shares of Common Stock were granted to each non-employee
director (other than Messrs. Weston and Hubbard) at an exercise price of $39.225
per share under the 2000 Stock Option Plan. At the time he became a non-employee
director, January 2, 2004, Mr. Weston received options to purchase 5,000 shares
of Common Stock at an exercise price of $39.885 per share under the 2000 Stock
Option Plan. At the time he was appointed to the Board of Directors, Mr. Hubbard
received options to purchase 5,000 shares of Common Stock at an exercise price
of $41.79 per share under the 2000 Stock Option Plan. In the case of each
of Messrs. Califano, Krueger and Malek, 60% percent and 40% of such options
granted under the 2000 Stock Option Plan become exercisable on the fourth
and fifth anniversary, respectively, of the date such options were granted;
in the case of each of Mr. Brun and Ms. Jordan, all of such options granted
under the 2000 Stock Option Plan become exercisable on the sixth anniversary
of the date such options were granted; in the case of Mr. Brenneman, 10%,
10% and 80% of such options granted under the 2000 Stock Option Plan become
exercisable on the fourth, fifth and sixth anniversary, respectively, of the
date such options were granted; in the case of Mr. Cooperman, 10% of such
options granted under the 2000 Stock Option Plan become exercisable on each
of the first, second, third, fourth and fifth anniversary of the date such
options were granted and 50% become exercisable on the sixth anniversary of
the date such options were granted; in the case of Mr. Hubbard, all of such
options granted under the 2000 Stock Option Plan become exercisable on the
first anniversary of the date such options were granted; and in the case of
Mr. Weston, all of such options granted under the 2000 Stock Option Plan become
exercisable on the day prior to the 2004 Annual Meeting of Stockholders, at
which meeting Mr. Weston's retirement from the Board of Directors will become
effective. For all such directors, the options granted in fiscal 2004 under
the 2000 Stock Option Plan become exercisable only if the director is then
still serving in such capacity, unless certain specified events occur, such
as the death or disability of a director, in which case the options shall
immediately vest and become fully exercisable.
Any person who became a non-employee director after August 13, 1997 will
not be eligible to receive a pension from the Company. A non-employee director
(who was a director on August 13, 1997) who retires after 20 years of service
in such capacity and having attained the age of 70 will receive a pension
of $25,000 per year for the remainder of his or her life. If such non-employee
director retires after having attained the age of 65 with 15 years of service,
he or she will receive a pension of $12,500 per year.
The mandatory retirement age for directors is 72, except as noted below.
The Board of Directors may, upon the recommendation of the Nominating/Corporate
Governance Committee made annually, waive the mandatory retirement age requirement
for any director, except persons who first became directors after May 14,
2002. The Board of Directors waived the mandatory retirement age requirement
for Messrs. Califano, Krueger and Taub based on their respective contributions
to and involvement in the Board of Directors so that they may be nominated
at this Annual Meeting of Stockholders to serve as directors for the upcoming
year. Notwithstanding the foregoing annual waiver procedure (but subject to
an exception for Henry Taub, the Company's founder), the oldest member of
the Board of Directors, Mr. Weston, after serving as a director since 1977,
shall automatically retire at this Annual Meeting of Stockholders. The next
oldest member of the Board of Directors shall automatically retire at the
Company's 2005 Annual Meeting of Stockholders. This "then oldest director"
automatic retirement process shall continue until there are no directors over
the age of 72. Thereafter, all directors will automatically retire from the
Board of Directors at the Company's Annual Meeting of Stockholders following
the date he or she turns 72. As noted, this "then oldest director"
automatic retirement procedure portion of the Board of Directors' retirement
policy does not apply to Henry Taub, the Company's founder. Management directors
who are no longer officers of the Company are required to resign from the
Board of Directors. However, the Company's Chief Executive Officer may, provided
the Board of Directors approves, continue to serve as a director for a transition
period of up to one year after the date he or she ceases to be the Company's
Chief Executive Officer.
Executive sessions are held during each Board of Directors and committee
meeting. The Company has adopted a procedure by which the presiding director
at executive sessions of the Board of Directors shall change each meeting
and shall rotate, consecutively, among the independent chairpersons of the
Audit, Compensation and Nominating/Corporate Governance Committees.
The following table contains information as of August 31, 2004 with respect
to the beneficial ownership of Common Stock by (i) each director and nominee
for director of the Company, (ii) each of the executive officers (and former
executive officer) of the Company named in the Summary Compensation Table,
(iii) all directors and executive officers of the Company as a group (including
the named individuals) and (iv) all stockholders known to the Company to be
the beneficial owners of more than 5% of the outstanding shares of Common
Stock. Unless otherwise noted in the footnotes following the table, the persons
as to whom the information is given had sole voting and investment power over
the shares of Common Stock shown as beneficially owned.
*Indicates less than one percent.
** Mr. Fradin served as an executive officer of the Company until January
1, 2004.
(1) Includes shares that may be acquired upon the exercise of options granted
by the Company that are exercisable on or prior to October 30, 2004. The shares
beneficially owned include: (i) the following shares subject to such options
granted to the directors and executive officers indicated: 12,000 (Mr. Brenneman),
7,000 (Mr. Brun), 585,899 (Mr. Butler), 31,000 (Mr. Califano), 19,500 (Mr.
Cooperman), 329,164 (Mr. Daly), 46,500 (Mr. Fradin), 378,364 (Mr. Hogan),
22,000 (Ms. Jordan), 31,500 (Mr. Krueger), 11,500 (Mr. Malek), 133,834 (Mr.
Martone) and 957,123 (Mr. Weinbach); and (ii) 3,616,004 shares subject to
such options granted to the directors and executive officers (and former executive
officer) as a group.
(2) Excludes an aggregate of 2,800 shares of Common Stock that are owned
outright by members of Mr. Califano's immediate family or by charitable trusts
of which members of Mr. Califano's immediate family were potential beneficiaries.
Mr. Califano disclaims beneficial ownership of such shares.
(3) Includes 30,483 shares, representing the gain resulting from the exercise
of an option to purchase 38,000 shares of Common Stock on October 15, 2001.
Mr. Cooperman has elected to defer receipt of the shares representing such
gain.
(4) Includes 31,732 shares, representing the remaining gain resulting from
the exercise of an option to purchase 40,000 shares of Common Stock on November
1, 1999. At the time of such option's exercise, Mr. Krueger elected to defer
receipt of 35,258 shares representing the full amount of such gain; in fiscal
2004, Mr. Krueger received 3,526 shares that had been previously deferred.
(5) Excludes an aggregate of 3,200 shares of Common Stock that are owned
outright by members of Mr. Malek's immediate family or by charitable trusts
of which members of Mr. Malek's immediate family were potential beneficiaries.
Mr. Malek disclaims beneficial ownership of such shares.
(6) Excludes an aggregate of 311,907 shares of Common Stock that are owned
outright by members of Mr. Taub's immediate family or by charitable trusts
of which members of Mr. Taub's immediate family were potential beneficiaries.
Mr. Taub disclaims beneficial ownership of such shares.
(7) Includes 78,616 shares, representing (i) a gain of 42,877 shares resulting
from the exercise of an option to purchase 50,000 shares of Common Stock on
August 19, 1999 and (ii) a gain of 35,739 shares resulting from the exercise
of an option to purchase 40,000 shares of Common Stock on October 6, 2000.
In each case, Mr. Weinbach has elected to defer receipt of the shares representing
such gain.
(8) On February 13, 2004, Capital Research and Management Company filed
a statement on Schedule 13G with the Securities and Exchange Commission to
report that Capital Research and Management Company owned more than 5% of
the outstanding shares of Common Stock.
(9) Excludes an aggregate of 2,632 shares of Common Stock owned by members
of the immediate families of non-director officers of the Company. The non-director
officers of the Company disclaim beneficial ownership of such shares.
The following sections of this Proxy Statement cover the components of the
total compensation of the Company's Chief Executive Officer, the four other
most highly compensated executive officers of the Company and one former executive
officer of the Company. These sections include: (i) a series of tables covering
annual and long-term compensation; (ii) a pension plan table summarizing the
annual benefits payable under the Company's defined benefit retirement plans;
and (iii) a report by the Compensation Committee of the Board of Directors
describing the Company's compensation policies for fiscal 2004 for its executive
officers and the rationale upon which its Chief Executive Officer's compensation
for fiscal 2004 was based. Also included is a performance graph comparing
the Company's total stockholder return to the S&P 500 and a Peer Group
Index over a five year period.
Summary Compensation Table
The following table summarizes the compensation of the Company's Chief Executive
Officer, the four other most highly compensated executive officers, and one
former executive officer of the Company for services in all capacities to
the Company for the three years ended June 30, 2004.
* Mr. Fradin served as an executive officer of the Company until January
1, 2004.
(1) None of the named executive officers (or former named executive officer)
received any perquisites or other personal benefits of an amount, or any other
annual compensation of a type, required to be reported by the SEC pursuant
to applicable rules and regulations.
(2) The dollar values shown in the Restricted Stock Awards column are based
on the closing market price of the Common Stock on the date the restricted
shares were granted. Restricted shares may not be transferred or pledged,
but such Company-imposed restrictions lapse with the passage of time (generally
over periods of up to six years) and continued employment with the Company.
The restricted stock awards to the named executive officers reported in
the table that vest, in whole or in part, in under four years from the date
of grant, together with their vesting schedule, are as follows:
(i) Mr. Weinbach received a grant of 49,750 shares of restricted stock in
fiscal 2004, 8,450 of which vested in fiscal 2004, 8,450 of which will vest
in fiscal 2005 and 32,850 of which will vest in fiscal 2006. Mr. Weinbach
received a grant of 24,400 shares of restricted stock in fiscal 2003, 24,400
of which will vest in fiscal 2005.
(ii) Mr. Butler received a grant of 19,200 shares of restricted stock in
fiscal 2004, 6,400 of which vested in fiscal 2004, and 6,400 of which will
vest in each of fiscal 2005 and 2006. Mr. Butler received a grant of 41,200
shares of restricted stock in fiscal 2003, 20,600 of which will vest in each
of fiscal 2005 and 2006.
(iii) Mr. Martone received a grant of 9,000 shares of restricted stock in
fiscal 2004, 3,000 of which vested in fiscal 2004, and 3,000 of which will
vest in each of fiscal 2005 and 2006. Mr. Martone received a grant of 18,000
shares of restricted stock in fiscal 2003, 9,000 of which will vest in each
of fiscal 2005 and 2006.
(iv) Mr. Daly received a grant of 26,400 shares of restricted stock in fiscal
2004, 1,200 of which vested in fiscal 2004, 1,200 of which will vest in fiscal
2005, and 12,000 of which will vest in each of fiscal 2006 and 2007. Mr. Daly
received a grant of 21,600 shares of restricted stock in fiscal 2002, 10,800
of which vested in fiscal 2004 and 10,800 of which will vest in fiscal 2005.
(v) Mr. Hogan received a grant of 26,400 shares of restricted stock in fiscal
2004, 1,200 of which vested in fiscal 2004, 1,200 of which will vest in fiscal
2005, and 12,000 of which will vest in each of fiscal 2006 and 2007. Mr. Hogan
received a grant of 21,600 shares of restricted stock in fiscal 2002, 10,800
of which vested in fiscal 2004 and 10,800 of which will vest in fiscal 2005.
(vi) Mr. Fradin received a grant of 40,000 shares of restricted stock in
fiscal 2003, 20,000 of which will vest on January 1, 2005; the remaining 20,000
shares from this grant will be resold and returned to the Company at a price
of $.10 per share. Mr. Fradin received a grant of 12,000 shares of restricted
stock in fiscal 2004, of which 4,000 vested in fiscal 2004, 4,000 will vest
on January 1, 2005 and 4,000 will be resold and returned to the Company at
a price of $.10 per share.
Dividends are paid on restricted stock at the same rate as other outstanding
shares of Common Stock. In the event of a termination of their employment
following a change in control of the Company, the unvested portion of the
restricted stock of Messrs. Weinbach and Butler will be subject to accelerated
vesting as further described in this Proxy Statement under the heading "Employment
Agreements." In the event of a termination of their employment following
a change in control of the Company, the unvested portion of the restricted
stock of Messrs. Martone, Daly and Hogan will be subject to accelerated vesting
as further described in this Proxy Statement under the heading "Change
in Control Severance Plan for Corporate Officers."
(3) The Company does not award Stock Appreciation Rights (SARs).
(4) For the year ended June 30, 2004, all other compensation consists of
(i) Company matching contributions to the Company's Retirement and Savings
Plan In fiscal 2003, the Company surrendered all split-dollar insurance policies
for executive officers. Mr. Daly received a cash payment of $408 in fiscal
2004 in connection with the surrender of his insurance policy in accordance
with the terms thereof. None of the other executive officers received a payment
in fiscal 2004 upon the surrender of their policies.
In connection with the termination of his employment with the Company, Mr.
Fradin received severance payments totaling $261,999, a payment with respect
to unused vacation totaling $52,400 and payments relating to his 2004 accrued
benefits in the Supplemental Officers' Retirement Plan (described below under
"--Defined Benefit Plans") totaling $159,734.
Stock Option Plans
The Company has in effect a 1990 Key Employees' Stock Option Plan (the "1990
Stock Option Plan") and the 2000 Stock Option Plan. The 1990 Stock Option
Plan and the 2000 Stock Option Plan collectively are referred to as the "Option
Plans." Officers and key employees are eligible to participate in the
Option Plans, which permit the issuance, in addition to non-qualified options,
of "incentive stock options" ("ISOs") within the meaning
of section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The Company has ceased granting options under the 1990 Stock Option Plan,
but outstanding options under the 1990 Stock Option Plan remain valid. In
the event of a termination of their employment following a change in control
of the Company, the unvested portion of the stock options of Messrs. Weinbach
and Butler will be subject to accelerated vesting as further described in
this Proxy Statement under the heading "Employment Agreements."
In the event of a termination of their employment following a change in control
of the Company, the unvested portion of the stock options of Messrs. Martone,
Daly and Hogan will be subject to accelerated vesting as further described
in this Proxy Statement under the heading "Change in Control Severance
Plan for Corporate Officers."
The Option Plans are administered by the Compensation Committee of the Board
of Directors. The Compensation Committee has the authority to determine the
employees to whom options will be granted and, subject to the Option Plans,
the terms and amount of options granted.
ISOs and non-qualified options expire no more than ten years from their
date of grant, with an exercise price no less than 100% of the fair market
value on the date of grant. The Board of Directors has resolved that, once
granted, no ISO or non-qualified option may be repriced.
An optionee has no rights as a stockholder with respect to any shares covered
by his or her options until the date of issuance of a stock certificate to
him or her for such shares. During the life of the optionee, the option is
exercisable only by him or her. Except as otherwise provided in the applicable
award agreement or as described herein, no option is exercisable more than
60 days after termination of employment. Notwithstanding the foregoing, if
termination is due to the total and permanent disability of the optionee,
vested options remain exercisable for 12 months after termination (unless
such person dies during such 12-month period, in which case the period applicable
in case of death applies) or, if termination is due to the death of an optionee,
vested options remain exercisable until the earlier of six months after the
appointment and qualification of an executor or administrator of the deceased
optionee's estate or 12 months after the death of the optionee. In addition,
if the optionee is at least 55 years of age at the time of retirement and
has at least 10 years of service with the Company, then vested options will
remain exercisable for a period of 36 months from the date of such person's
retirement (unless such person dies during such 36-month period, in which
case other periods apply), or, if such retiree has five (but less than 10)
years of service with the Company, then vested options will remain exercisable
for a period of 12 months from the date of such person's retirement (unless
such person dies during such 12-month period, in which case other periods
apply).
*Mr. Fradin served as an executive officer of the Company until January
1, 2004.
(1) 720,000 options were granted pursuant to the 2000 Stock Option Plan.
The options were granted at an exercise price equal to the fair market value
of the Common Stock on the date of grant. The options were granted for terms
of ten years, and vest during periods of up to six years subsequent to the
date of grant.
(2) The grant date values were calculated on the basis of the Black-Scholes
option pricing model. Options were assumed to be exercised 6.5 years after
the date of grant, based on historical experience. A risk-free interest rate
of 3.75%, stock price volatility of 30.99% and a dividend yield of 0.94% was
used in the calculation of the option grants to Messrs. Weinbach, Butler,
Martone, Daly, Hogan and Fradin expiring on August 10, 2013. A risk-free interest
rate of 3.92%, stock price volatility of 29.00% and a dividend yield of 0.99%
was used in the calculation for the option grants to Messrs. Daly and Hogan
expiring on November 10, 2013. A risk-free interest rate of 4.48%, stock price
volatility of 29.26% and a dividend yield of 1.11% was used in the calculation
for the option grant to Mr. Martone expiring on May 10, 2014. An annual discount
factor of 3% was applied to the calculated value to reflect the risk of forfeiture
during the option term. The actual value of the options will depend on the
market value of the Common Stock on the dates the options are exercised. No
realization of value from the options is possible without an increase in the
price of the Common Stock from the date of grant, which increase would benefit
all stockholders commensurately.
The following table sets forth certain information concerning option exercises
during the last fiscal year by the named executive officers and unexercised
options held by such officers at the end of the last fiscal year.
*Mr. Fradin served as an executive officer of the Company until January
1, 2004.
Equity Compensation Plan Information
The following table sets forth information as of June 30, 2004 regarding
compensation plans under which the Company's equity securities are authorized
for issuance:
(1) Includes 8,021,637 shares of Common Stock remaining available for future
issuance under the Company's Employees' Savings-Stock Purchase Plan, which
shares and weighted average exercise prices are not reflected in Columns (a)
and (b) of this table.
(2) Represents (i) the 1989 Directors' Option Plan, (ii) the Key Employees'
Restricted Stock Plan, and (iii) the French Employees' Saving-Stock Option
Plan (the "French Plan"), none of which have been approved by the
Company's stockholders. The material terms of the 1989 Directors' Option Plan
are described above under "Election of Directors -- Corporate Governance,"
the material terms of the Key Employees' Restricted Stock Plan are described
in Note 10 to the Company's Consolidated Financial Statements included in
the Company's 2004 Annual Report and the material terms of the French Employees'
Saving-Stock Option Plan are described in footnote (5) below.
(3) Following stockholder approval of the amendment to the 2000 Stock Option
Plan at the Company's 2003 Annual Meeting of Stockholders, the 1989 Directors'
Option Plan was amended to prohibit any future stock option grants thereunder.
(4) Includes 3,187,300 shares of Common Stock reserved for issuance pursuant
to the Key Employees' Restricted Stock Plan.
Defined Benefit Plans
The following table shows the estimated annual retirement benefits payable
under the Company's retirement program, consisting of the Retirement Capital
Accumulation Plan (the "Pension Plan") and the Supplemental Officers'
Retirement Plan (the "Supplemental Retirement Plan"), to persons
in specified average compensation and credited service classifications, assuming
retirement at age 65.
Compensation covered by the Pension Plan is limited to January 1 base salary
up to the current compensation limit in effect for the plan year. Compensation
covered under the Supplemental Retirement Plan includes cash compensation
(paid or deferred) and compensation from restricted stock vesting during the
year. Benefits under the Supplemental Retirement Plan are subject to reduction
for social security, Pension Plan and 401(k) benefits under certain circumstances.
Messrs. Weinbach, Butler, Fradin, Martone, Daly and Hogan have 23, 28, 6,
16, 14 and 10 years of credited service, respectively, under the Pension Plan
and 15, 15, 7, 9, 10 and 9 years of credited service, respectively, under
the Supplemental Retirement Plan. In addition, unless his employment is terminated
for cause, Mr. Weinbach will receive the maximum benefits available under
the Supplemental Retirement Plan, and his benefit will not be reduced for
commencement prior to age 65 as long as the Compensation Committee deems his
retirement prior to age 65 is in the Company's best interest. The figures
shown on the table above are for a straight-life annuity commencing at age
65. Reduced benefits are available at earlier ages and in other forms of benefits.
Change in Control Severance Plan for Corporate Officers
To aid the Company in retaining its officers, the Company has in effect
the Automatic Data Processing, Inc. Change in Control Severance Plan for Corporate
Officers (the "CIC Plan"), which provides for the payment of specified
benefits to officers selected by the Board of Directors if their employment
terminates after a "change in control" (as defined below) of the
Company. All corporate officers of the Company ("Participants")
participate in the CIC Plan. As of August 31, 2004, there were 30 Participants
in the CIC Plan.
The CIC Plan provides that Participants who are terminated by the Company
without "cause" (as defined in the CIC Plan) or by the Participant
for "good reason" (as defined in the CIC Plan) (a "Qualifying
Termination") during the two-year period following the occurrence of
a change in control will receive a payment equal to 150% of such Participant's
"current total annual compensation." Participants who have a Qualifying
Termination during the third year following the occurrence of a change in
control will receive a payment equal to 100% of such Participant's current
total annual compensation. A Participant's "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.
In addition to the payments described in the preceding paragraph, options
to purchase Company stock held by Participants who have a Qualifying Termination
during the two-year period following the occurrence of a change in control
will become fully vested and exercisable. Options to purchase Company stock
held by Participants who have a Qualifying Termination during the third year
following the occurrence of a change in control will become fully vested and
exercisable to the extent that such options would have otherwise vested within
one year after the Qualifying Termination.
Likewise, restricted shares of Company stock ("Restricted Shares")
held by Participants who have a Qualifying Termination during the two-year
period following the occurrence of a change in control will become fully vested
as to those Restricted Shares for which vesting restrictions would otherwise
have lapsed within two years after the Qualifying Termination. Restricted
Shares held by Participants who have a Qualifying Termination during the third
year following the occurrence of a change in control will become fully vested
to the extent that vesting restrictions would have lapsed within one year
after the Qualifying Termination.
Generally, the CIC Plan supersedes any other change in control severance
plans, policies and practices of the Company with respect to the Participants.
Messrs. Weinbach and Butler are entitled to receive the greater of the benefits
and payments and more favorable conditions provided under their employment
agreements and the CIC Plan on an item-by-item basis.
A "change in control" as defined in the CIC Plan will have occurred
if (i) any "Person" (as defined in Section 3(a)(9) of the Exchange
Act), excluding the Company, any subsidiary of the Company, or any employee
benefit plan sponsored or maintained by the Company (including any trustee
of any such plan acting in its capacity as trustee), becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of securities
of the Company representing 35% or more of the total combined voting power
of the Company's then outstanding securities; (ii) there occurs a merger,
consolidation or other business combination of the Company (a "Transaction"),
other than a Transaction immediately following which the stockholders of the
Company immediately prior to the Transaction continue to be the beneficial
owners of securities of the resulting entity representing more than 65% of
the voting power in the resulting entity, in substantially the same proportions
as their ownership of Company voting securities immediately prior to the Transaction;
or (iii) there occurs 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. If instructed
by a Participant, the Company will reduce payments under the CIC Plan to avoid
the application of excise taxes pursuant to section 4999 of the Code.
Mr. Weinbach entered into an employment agreement with the Company as of
August 13, 2001. The agreement provides for successive one-year terms unless
terminated by the Company or Mr. Weinbach at least six months prior to the
end of the applicable one-year term. Mr. Weinbach's annual base salary is
to be no less than $750,000, and his annual target bonus is to be no less
than $485,000. The actual bonus paid to Mr. Weinbach is based upon his accomplishment
of pre-established business performance goals. The agreement provides that
Mr. Weinbach is to be granted performance-based restricted stock awards for
a number of shares so that restrictions may lapse in each fiscal year of the
Company on shares with a market value on the date of the award of at least
$1,000,000. The agreement also provides that Mr. Weinbach will at all times
own sufficient shares of restricted stock such that restrictions may lapse
during each of the following two fiscal years on a number of shares having
a market value on the date of their award of at least $1,000,000. The agreement
further provides that Mr. Weinbach is to be granted, on an annual basis, a
minimum of 170,000 options to purchase shares of Common Stock and that all
options to purchase Common Stock not yet vested at the time of Mr. Weinbach's
retirement would fully vest upon his retirement. If the Company terminates
Mr. Weinbach's employment without cause, then he is entitled to receive his
base salary for 18 months and continue to vest in his restricted stock awards
and stock options. If Mr. Weinbach's employment is terminated following a
"change in control" (as defined below) of the Company, he will receive
a termination payment equal to a percentage, ranging from 300% if such termination
occurs within two years after such change in control to 100% if it occurs
after the third year, of his annual base salary and his "current total
annual compensation" (as defined below). In addition, all of his stock
options will become fully vested and all of his restricted stock having restrictions
lapsing within three years after such termination shall have such restrictions
automatically removed.
The definition of a "change in control" in Mr. Weinbach's employment
agreement is the same as the definition of a "change in control"
under the CIC Plan except for the percentage in clause (i) of such CIC Plan
definition which is 25% under Mr. Weinbach's employment agreement.
Mr. Weinbach's "current total annual compensation" equals his
highest rate of annual salary during the calendar year in which his employment
terminates or the year immediately prior to the year of such termination plus
his average annual bonus compensation earned in respect of the two most recent
calendar years immediately preceding the calendar year in which his employment
terminates. Mr. Weinbach's employment agreement provides that in the event
any payment from the Company to him results in the imposition of an excise
tax under section 4999 of the Code, he will receive an additional payment
such that after the payment of all such excise taxes and any taxes on the
additional payments he will be in the same after-tax position as if no excise
tax had been imposed.
Mr. Butler entered into an agreement with the Company that provides that
if his employment is terminated following a "change in control"
(as defined below) of the Company, he will receive a termination payment equal
to a percentage, ranging from 200% if such termination occurs within two years
of such change in control to 100% if it occurs after the third year, of his
annual base salary and his average annual bonus for the prior two years. In
addition, all of his stock options will become fully vested and all of his
restricted stock having restrictions lapsing within three years after such
termination shall have such restrictions automatically removed.
The definition of a "change in control" in Mr. Butler's employment
agreement, as modified by the CIC Plan, is the same as the definition of a
"change in control" under Mr. Weinbach's employment agreement noted
above.
Mr. Butler's employment agreement provides that in the event any payment
from the Company to him results in the imposition of an excise tax under section
4999 of the Code, he will receive an additional payment such that after the
payment of all such excise taxes and any taxes on the additional payments
he will be in the same after-tax position as if no excise tax had been imposed.
Certain Transactions
Mr. Krueger, a director of the Company, is Vice Chairman of Lehman Brothers,
which provided various investment banking and brokerage services to the Company
in the past fiscal year.
The Compensation Committee of the Board of Directors is comprised of four
independent directors: Messrs. Brenneman, Brun, Califano and Malek.
The Compensation Committee of the Board of Directors (the "Committee")
acts under a written charter adopted by the Board of Directors, which may
be viewed online on the Company's website at www.adp.com under "Governance"
in the "About ADP" section. The Committee is responsible for setting,
on behalf of the Board of Directors, the base salaries and the total compensation
levels of the Chairman and Chief Executive Officer, the President and Chief
Operating Officer, the Senior Vice President and the Group Presidents of the
Employer Services, Brokerage Services and Dealer Services businesses, as well
as a structure for other key executives of the Company. The Committee grants
all stock options and reviews all recommendations for grants of restricted
stock to these and other key executives.
Compensation Policies
The Company's executive compensation policies for fiscal 2004, which were
reviewed by the Committee, were designed to emphasize both competitive and
variable compensation, with direct links to business objectives and exceptional
performance.
The primary components of the compensation package for key executives for
fiscal 2004 were base salary, bonus, restricted stock and stock options. The
Company and the Committee have always believed that stock ownership in the
form of restricted stock and longer-term stock option vesting is vital in
linking management to stockholder interests. The Company sets its total annual
compensation target (as described below) at the median of market range levels
of comparable sized companies. The Company's executives may derive more economic
benefit from stock option price appreciation, as a percentage of total compensation,
than from base salary and bonus combined. The Committee generally intends
to cause all eligible compensation to be exempt from the limitations of section
162(m) of the Code, but reserves the right to make non-exempt awards where
appropriate.
Annual Compensation
Total annual compensation consists of base salary, cash bonus and yearly
vesting of restricted stock. The base salaries for executives for fiscal 2004
were determined based upon the job grade of the position, the salary range
of the job grade and the performance of the executive.
Key executives earned cash bonuses in fiscal 2004 based upon both individual
and business annual accomplishments versus pre-established goals.
Long-Term Compensation
Long-term compensation is comprised of restricted stock and the expected
value of stock options. The Company has from time to time sold shares of restricted
stock to executive officers and other key employees, at par value, in recognition
of their individual levels of relative responsibility and prospective contributions
to the business. Company-imposed restrictions on transfer or pledge of the
restricted stock generally lapse over a period of up to six years, and are
subject to continued employment. The restricted stock plan is designed to
encourage stock ownership, longevity and long-term performance.
Stock options are granted to executive officers and other key employees
in amounts based upon their job grade and individual performance. Stock options
are granted at fair market value as of the date of grant, and have a term
of up to ten years. Stock options provide incentive for the creation of stockholder
value over the long-term, and also significantly aid in executive recruiting
and retention.
Restricted stock and stock option grants were made to individual key executives
during fiscal 2004 on a basis consistent with the above guidelines.
The Company provided certain supplemental benefits to key executives during
fiscal 2004 to ensure that it could compete effectively for executive talent.
These supplemental benefits included certain additional retirement benefits
described in the "Defined Benefit Plans" section of this Proxy Statement.
CEO Compensation
The Committee meets annually to evaluate the performance of the Chief Executive
Officer and to determine his compensation.
Mr. Weinbach earned a base salary of $784,750 and a bonus of $840,000 during
fiscal 2004. Mr. Weinbach's compensation is based on the satisfaction of specific
performance objectives and the terms of his employment agreement.
The long-term incentives provided to the Chief Executive Officer are provided
in the form of restricted stock and stock options. This ensures that the Chief
Executive Officer and the Company's stockholders have a commonality of purpose
in enhancing stockholder value. Mr. Weinbach's total compensation including
the long-term component approximates the market median of chief executive
officers at companies with annual revenues between $3 and $12 billion, as
surveyed by the Company.
Compensation Committee of the Board of Directors
Gregory D. Brenneman, Chairman Leslie A. Brun Joseph A. Califano, Jr.
The following graph compares the cumulative return on the Common Stock for
the most recent five years with the cumulative total return on the S&P
500 Index and a Peer Group Index* comprised of industry participants over
the same period, assuming an initial investment of $100 on June 30, 1999,
with all dividends reinvested.
*The Peer Group Index is comprised of the following companies (in February
2004, Concord EFS, Inc., formerly a member of the Peer Group Index, merged
into First Data Corporation):
The Audit Committee (the "Committee") is comprised of the four
independent members of the Board of Directors named below. Each member of
the Audit Committee satisfies the independence requirements of the NYSE rules
currently in effect. The Board of Directors has determined that Messrs. Brenneman
and Cooperman are audit committee financial experts. The Committee acts under
a written charter, which may be viewed online on the Company's website at
www.adp.com under "Governance" in the "About ADP" section.
The Committee oversees the financial management, the Company's 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 Company's 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 Committee that the Company's financial statements were prepared in
accordance with generally accepted accounting principles. The Committee also
reviewed and discussed the Company's audited financial statements with Deloitte
& Touche LLP, an independent registered public accounting firm, the Company's
independent auditors for fiscal 2004, which is responsible for expressing
an opinion on the conformity of the Company's audited financial statements
with generally accepted accounting principles.
The Committee has discussed with Deloitte & Touche LLP the matters that
are required to be discussed by Statement on Auditing Standards No. 61 (Communication
With Audit Committees), as amended. Deloitte & Touche LLP has provided
to the Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
and the Committee discussed with Deloitte & Touche LLP the firm's independence,
including the matters in those written disclosures. The Committee also considered
whether Deloitte & Touche LLP's provision of non-audit services to the
Company and its affiliates and the fees and costs billed and expected to be
billed by Deloitte & Touche LLP for those services, is compatible with
Deloitte & Touche LLP's independence. The Committee has discussed with
the Company's internal and independent auditors, with and without management
present, their evaluations of the Company's internal accounting controls and
the overall quality of the Company's 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 on a going-forward basis.
The Auditor Independence Policy is discussed in further detail below under
"Independent Registered Public Accounting Firms' Fees."
Based on the considerations referred to above, the Committee recommended
to the Board of Directors that the audited financial statements be included
in the Company's Annual Report on Form 10-K for fiscal 2004. In addition,
the Committee appointed Deloitte & Touche LLP as the independent auditors
for the Company for fiscal 2005.
Audit Committee of the Board of Directors
Leon G. Cooperman, Chairman Gregory D. Brenneman Joseph A. Califano, Jr.
In addition to retaining Deloitte & Touche LLP, an independent registered
public accounting firm, to audit the consolidated financial statements for
fiscal 2004, Deloitte & Touche LLP were retained by the Audit Committee
to provide various services in fiscal 2004 and fiscal 2003. The aggregate
fees billed by Deloitte & Touche LLP in fiscal 2004 and 2003 for these
various services were:
In the above table, in accordance with new SEC definitions, "audit
fees" are fees the Company paid Deloitte & Touche LLP for professional
services for the audit of the Company's consolidated financial statements
included in the Company's Annual Report on Form 10-K and review of financial
statements included in the Company's 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); "tax fees" are fees for tax compliance,
tax advice and tax planning; and "all other fees" are fees billed
by Deloitte & Touche LLP to the Company for any services not included
in the first three categories.
The Board of Directors has adopted a policy (the "Auditor Independence
Policy") that prohibits the Company's independent auditors from providing:
(i) bookkeeping or other services related to the accounting records or financial
statements of the Company; (ii) financial information systems design and implementation
services; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind
reports; (iv) actuarial services; (v) internal audit outsourcing services;
(vi) management functions or human resources; (vii) broker or dealer, investment
adviser or investment banking services; (viii) legal services and expert services
unrelated to the audit; and (ix) any other service that the Public Company
Accounting Oversight Board determines, by regulation, is impermissible. The
independent auditors are only permitted to provide services to the Company
that have been 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 Company's 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 the Company's
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.
At the Annual Meeting of Stockholders, the 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
auditors to audit the accounts of the Company and its subsidiaries for the
fiscal year that began on July 1, 2004. 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 of Stockholders 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 LLP's appointment as the Company's
independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
So far as the Board of Directors is aware, only the aforementioned 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 said proxy.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended June 30, 2004, the Company believes that all
filing requirements under Section 16(a) of the Exchange Act applicable to
its officers, directors and beneficial owners have been complied with, except
that there was an inadvertent omission to report (i) the sale of shares of
Company Common Stock in fiscal 2004 on a Form 4 filed on behalf of Mr. Op
de Beeck, an executive officer, which was subsequently reported in a Form
4 filed on behalf of Mr. Op de Beeck in August 2004 and (ii) the purchase
of shares of Company Common Stock in fiscal 2004 on a Form 4 filed on behalf
of Mr. Weston, a director, which was subsequently reported on in a Form 5
filed on behalf of Mr. Weston, and the transfer of funds representing Company
Common Stock in the 401(k) account of Mr. Weston on a Form 4 filed on behalf
of Mr. Weston, which was subsequently reported on in a Form 5 filed on behalf
of Mr. Weston.
Stockholder proposals intended to be presented at the 2005 Annual Meeting
of Stockholders must be received by the Company for inclusion in the 2005
Proxy Statement no later than May 25, 2005.
For any stockholder proposal that is not submitted for inclusion in the
2005 Proxy Statement (as described in the preceding paragraph) but is instead
sought to be presented directly at the 2005 Annual Meeting of Stockholders,
SEC rules permit management to vote proxies in its discretion if the Company
(a) receives notice of the proposal before the close of business on August
9, 2005 and advises stockholders in next year's Proxy Statement about the
nature of the matter and how management intends to vote on such matter, or
(b) does not receive notice of the proposal prior to the close of business
on August 9, 2005.
The Company's Annual Report for the fiscal year ended June 30, 2004, which
is not a part of the proxy soliciting material, is being mailed to the Company's
stockholders together with this Proxy Statement.
This Proxy Statement and the Company's Annual Report may be viewed online
at www.adp.com under "Investor Information" in the "About ADP"
section. Stockholders of record may elect to view future proxy statements
and annual reports over the Internet rather than receiving paper copies in
the mail and can thereby 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 following the instructions
that you will receive in connection with next year's 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. Your choice will remain in effect until you cancel it. You do not
have to elect Internet access each year.
In accordance with notices previously sent to stockholders, the Company
is delivering one annual report and Proxy Statement in one envelope addressed
to all stockholders who share a single address unless they have notified the
Company that they wish to "opt out" of the program known as "householding."
Householding is intended to reduce the Company's printing and postage costs.
If you are a registered stockholder and you choose not to have the aforementioned
disclosure documents sent to a single household address as described above,
you must "opt-out" by writing to ADP Investor Communication Services,
Sharelink Department, 51 Mercedes Way, Edgewood, New York 11717 or by calling
1-800-542-1061 and we will cease householding all such disclosure documents
within 30 days. If we do not receive instructions to remove your account(s)
from this service, your account(s) will continue to be "householded"
until we notify you otherwise.
If you own 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.
Stockholders who wish to communicate with the Board of Directors may send
a detailed letter to P.O. Box 34, Roseland, New Jersey 07068, leave a message
for a return call at 973-974-5770 or send an email to adp_audit_committee@adp.com.
Communications from stockholders will be relayed to the Board of Directors
unless they are outside the scope of matters considered by the Board of Directors
or duplicative of other communications previously forwarded to the Board of
Directors.
It is the Company's policy that members of the Board of Directors attend
the Annual Meetings of Stockholders. All of the members of the Board of Directors
that were elected at last year's meeting attended the Company's 2003 Annual
Meeting of Stockholders.
Roseland, New Jersey
A director who meets all of the following categorical standards shall be
presumed to be "independent":
o During the past five years, the Company has not employed the director,
and has not employed (except in a non-officer capacity) any of his or her
immediate family members.
o During any twelve-month period within the past five years, neither the
director nor any of his or her immediate family members has received more
than $60,000 per year in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred compensation
(provided such compensation is not contingent in any way on continued service).
o During the past five years, the director has not been employed (or affiliated
with) the Company's present or former internal or external auditors, nor has
any of his or her immediate family members been so employed or affiliated
in a professional capacity.
o During the past five years, neither the director, nor any of his or her
immediate family members, has been employed by a company where an executive
officer of the Company serves on such company's compensation (or equivalent)
committee.
o The director does not (directly or indirectly as a partner, shareholder
or officer of another company) provide consulting, legal or financial advisory
services to the Company or the Company's present or former auditors.
o During the past five years, the director has not been an employee or executive
officer, nor has any of his or her immediate family members been an executive
officer, of a company that makes payments to, or receives payments from, the
Company of property or services in an amount which, in any fiscal year of
such company, exceeds, 1% of such company's consolidated gross revenues.
o During the past five years, the director has not had a personal services
contract with the Company, its chairman, chief executive officer or other
executive officer, or any affiliate of the Company.
o During the past five years, the director has not been an employee, officer
or director of a foundation, university or other non-profit organization to
which the Company gave directly, or indirectly through the provision of services,
more than $100,000 per annum or 1% of the total annual donations received
(whichever is less).
o The director does not, either directly or indirectly as a partner, shareholder
or officer of another company, own more than 5% of the Company's common stock.
Dear Stockholder:
You are cordially invited to join us at the 2004 Annual Meeting of Stockholders
of Automatic Data Processing, Inc. This year's meeting will be held at the
corporate offices of the Company at One ADP Boulevard, Roseland, New Jersey,
on Tuesday, November 9, 2004, starting at 10:00 a.m. I hope you will be able
to attend. At the meeting we will (i) elect directors, (ii) vote on the appointment
of Deloitte & Touche LLP as independent 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 by 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 your 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 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.
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,
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 proposal (2) on the reverse side.
The undersigned hereby appoints Arthur F. Weinbach and Gary C. Butler, 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 2004 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 9, 2004 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 by the Internet, as described in the
instructions on the reverse side.
AUTOMATIC DATA PROCESSING, INC.
The Board of Directors recommends a vote FOR the proposals regarding:
Please sign below exactly as the name(s) appear on your stock certificate
(as indicated hereon). If the shares are issued in the names of two or more
persons, all such persons must sign the proxy.
HOUSEHOLDING ELECTION - Please indicate if you consent to
Served as a
Director
Continuously
Name Age Since Principal Occupation
-----------------------------------------------------------------------------------------------------------------------------------
Gregory D. Brenneman 42 2001 Chairman and Chief Executive Officer of Burger King Corporation, a privately held
company (1)
Leslie A. Brun 52 2003 Founder and Chairman of Hamilton Lane, a global private equity/advisor company (2)
Gary C. Butler 57 1996 President and Chief Operating Officer of the Company (3)
Joseph A. Califano, Jr. 73 1982 Chairman of the Board and President of The National Center on Addiction and
Substance Abuse at Columbia University (4)
Leon G. Cooperman 61 1991 Chairman and Chief Executive Officer of Omega Advisors, Inc., an investment
partnership (5)
R. Glenn Hubbard 46 2004 Dean of the Graduate School of Business at Columbia University (6)
Ann Dibble Jordan 69 1993 Consultant (7)
Harvey M. Krueger 75 1967 Vice Chairman of Lehman Brothers, investment bankers (8)
Frederic V. Malek 67 1978 Chairman of Thayer Capital Partners, a merchant
banking firm (9)
Henry Taub 77 1961 Honorary Chairman of the Board of the Company (10)
Arthur F. Weinbach 61 1989 Chairman of the Board and Chief Executive Officer
of the Company (11)
Nominating/Corporate
Name Audit Compensation Governance Executive
----------------------------------------------------------------------------------------------------------------------------
Gregory D. Brenneman X(FE) X(C) X
Leslie A. Brun X X
Gary C. Butler
Joseph A. Califano, Jr. X X
Leon G. Cooperman X(C) (FE) X X
R. Glenn Hubbard
Ann Dibble Jordan X X
Harvey M. Krueger X(C)
Frederic V. Malek X X(C) X
Henry Taub X
Arthur F. Weinbach X
Josh S. Weston* X
Meetings held in fiscal 2004 6 3 5 3
Shares of Common Stock
Name Beneficially Owned (1) Percent
--------------------------------------------------------------------------------------------------------------------------
Gregory D. Brenneman 12,000 *
Leslie A. Brun 9,000 *
Gary C. Butler 963,805 *
Joseph A. Califano, Jr. (2) 34,600 *
Leon G. Cooperman (3) 74,983 *
Richard J. Daly 417,078 *
Russell P. Fradin** 94,500 *
John Hogan 424,003 *
R. Glenn Hubbard 0 *
Ann Dibble Jordan 22,400 *
Harvey M. Krueger (4) 103,758 *
Frederic V. Malek (5) 19,500 *
S. Michael Martone 213,667 *
Henry Taub (6) 5,863,220 1.0066%
Arthur F. Weinbach (7) 1,550,796 *
Josh S. Weston 635,102 *
Capital Research and Management Company (8) 43,761,780 7.5126%
Directors and executive officers (and former executive officer) as a group (25
persons, including those directors and executive officers (and former executive
officer) named above) (9) 11,849,091 2.0216%
Annual
Compensation (1) Long-Term Compensation
-------------------------------------------------------------
Number of
Securities
Year Restricted Underlying
Name and Ended Stock Options All other
Principal Position June 30, Salary Bonus Awards Granted Compensation
----------------------------------------------------------------------------------------------------------------------------
(2) (3) (4)
Arthur F. Weinbach 2004 $784,750 $840,000 $1,940,748 340,000 $ 17,610
Chairman and Chief 2003 $759,438 $167,500 $ 844,240 184,998 $ 20,664
Executive Officer 2002 $735,000 $173,500 $1,452,776 182,125 $ 6,833
Gary C. Butler 2004 $663,776 $650,000 $ 748,992 200,000 $ 21,250
President and Chief 2003 $641,882 $120,000 $1,425,520 109,899 $ 6,312
Operating Officer 2002 $620,000 $108,500 $ -- 108,000 $ 6,289
S. Michael Martone 2004 $398,231 $275,790 $ 351,090 50,000 $ 23,599
Group President 2003 $375,754 $113,145 $ 622,800 30,459 $ 6,082
2002 $362,308 $117,058 $ -- 29,375 $ 6,073
Richard J. Daly 2004 $413,450 $280,400 $1,106,904 50,000 $ 13,965
Group President 2003 $403,004 $62,677 $ -- 30,039 $ 6,165
2002 $392,308 $72,023 $1,286,064 29,125 $ 6,148
John Hogan 2004 $413,450 $269,100 $1,106,904 50,000 $ 16,166
Group President 2003 $403,004 $60,993 $ -- 30,039 $ 6,115
2002 $392,308 $64,750 $1,286,064 29,125 $ 6,105
Russell P. Fradin* 2004 $262,000 $325,000 $ 468,120 30,000 $492,968
Former Group President 2003 $510,909 $111,864 $1,384,000 47,949 $ 5,845
2002 $493,750 $112,600 $ -- 46,500 $ 5,149
(401(k)) in the following amounts: Mr. Weinbach, $5,916, Mr. Butler, $5,916,
Mr. Martone, $5,916, Mr. Daly, $5,916, Mr. Hogan, $5,916 and Mr. Fradin, $5,916;
(ii) a Company car allowance in the following amounts: Mr. Weinbach, $8,794,
Mr. Butler, $9,077, Mr. Martone, $9,439, Mr. Daly, $5,975, Mr. Hogan, $10,250
and Mr. Fradin, $7,525; (iii) the amount paid by the Company on behalf of
executives' spouses that accompanied such executives on business travel and
associated tax payments related thereto, in the following amounts: Mr. Weinbach,
$2,900, Mr. Butler, $6,257, Mr. Martone, $5,750, Mr. Daly, $1,666 and Mr.
Fradin, $2,900; and (iv) the amount of income attributable to disqualifying
dispositions related to sales of shares of Common Stock purchased by executives
under the Company's Amended and Restated Employees' Savings-Stock Purchase
Plan within one year of purchase in the following amounts: Mr. Martone, $2,494
and Mr. Fradin, $2,494.
Option Grants in Last Fiscal Year
----------------------------------------------------------------------
Number of Percent of Total
Securities Options
Underlying Granted
Options to Employees Exercise Grant Date
Granted in Fiscal Year Price Expiration Value
Name (#)(1) (%) ($/Share) Date ($)(2)
----------------------------------------------------------------------------------------------------------------------------
Arthur F. Weinbach 250,000 1.38% $37.8100 8/10/2013 $2,923,223
90,000 .50% $37.8100 8/10/2013 $1,052,360
Gary C. Butler 135,000 .75% $37.8100 8/10/2013 $1,578,540
65,000 .36% $37.8100 8/10/2013 $ 760,038
S. Michael Martone 20,000 .11% $37.8100 8/10/2013 $ 241,091
30,000 .17% $46.4250 5/10/2014 $ 349,003
Richard J. Daly 20,000 .11% $37.8100 8/10/2013 $ 241,091
30,000 .17% $39.2250 11/10/2013 $ 349,003
John Hogan 20,000 .11% $37.8100 8/10/2013 $ 241,091
30,000 .17% $39.2250 11/10/2013 $ 349,003
Russell P. Fradin* 30,000 .17% $37.8100 8/10/2013 $ 361,636
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 6/30/04 at 6/30/04
(#) ($)
--------------------------------------------------------------
Shares Acquired
On Exercise Value Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------------------------------------------------
Arthur F. Weinbach 160,000 $4,458,192 787,123 990,000 $13,529,456 $2,727,200
Gary C. Butler 8,000 $ 227,800 471,899 536,000 $ 4,077,767 $1,859,760
S. Michael Martone 0 $ -- 124,834 149,000 $ 724,402 $ 462,850
Richard J. Daly 60,000 $1,567,527 290,164 190,000 $ 4,770,919 $ 423,872
John Hogan 0 $ -- 339,364 190,000 $ 6,341,708 $ 423,872
Russell P. Fradin* 345,949 $4,912,868 26,500 202,000 $ -- $ 430,420
Number of securities
Number of securities remaining available for
to be issued upon Weighted average future issuance under
exercise of exercise price of equity compensation
outstanding outstanding plans (excluding
options, warrants options, warrants securities reflected
Plan category and rights and rights in Column (a))
--------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
----------------------------------------------------------------------
Equity compensation plans approved by security holders 70,159,348 $41.52 30,452,637 (1)
Equity compensation plans not approved by security 323,500 $35.78 4,256,715 (3),(4),(5)
holders (2) ----------------------------------------------------------------------
Total 70,482,848 $41.49 34,709,352
========== ====== ==========
======================================================================
Years of Credited Service at Retirement
-----------------------------------------------------------------------------------------
Final
5-Year Average
Compensation 10 15 20 25 30
----------------------------------------------------------------------------------------------------------------------------
$ 500,000 83,000 129,000 153,000 172,000 201,000
750,000 121,000 185,000 216,000 235,000 264,000
1,000,000 158,000 241,000 278,000 297,000 326,000
1,500,000 233,000 354,000 403,000 422,000 451,000
2,000,000 308,000 466,000 528,000 547,000 576,000
2,500,000 383,000 579,000 653,000 672,000 701,000
3,000,000 458,000 691,000 778,000 797,000 826,000
EDGAR PRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AUTOMATIC DATA PROCESSING S&P 500 INDEX PEER GROUP
6/30/99 100.00 100.00 100.00
6/30/00 122.56 107.22 103.55
6/30/01 114.51 91.36 135.93
6/30/02 101.22 74.97 122.54
6/30/03 79.79 75.18 124.03
6/30/04 100.03 89.52 145.67
Ceridian Corp. Fiserv, Inc.
Computer Sciences Corporation Paychex, Inc.
DST Systems, Inc. SunGard Data Systems Inc.
Electronic Data Systems Corporation Total System Services, Inc.
First Data Corporation
Type of Fees FY 2004 FY 2003
-------------------------------------------------------------------------------
($ in thousands)
Audit Fees $4,605 $3,455
Audit-Related Fees 3,560 2,672
Tax Fees 1,453 1,374
All Other Fees -- 824
---------------------------------------
Total $9,618 $8,325
=======================================
September 22, 2004
/s/ Arthur F. Weinbach
----------------------
Arthur F. Weinbach
Chairman and Chief Executive Officer
[ADP logo] VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting
AUTOMATIC DATA PROCESSING, INC. instructions and for electronic delivery
PROXY SERVICES of information up until 11:59 P.M. Eastern
P.O. BOX 9162 Time the day before the cut-off date or
FARMINGDALE, NY 11735 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 then
follow the instructions.
ADMISSION TICKET VOTE BY MAIL
---------------- Mark, sign, and date your proxy card and
Please retain and present this top return it in the postage-paid envelope we
portion of the proxy card as your have provided or return it to Automatic
admission ticket together with a Data Processing, Inc. c/o ADP, 51 Mercedes
valid picture identification to Way, Edgewood, NY 11717. All proxy cards
gain admittance to the Annual must be received by the day before the
Meeting. cut-off date or the meeting date.
(1) Election of Directors
Nominees: For Withhold For All To withhold authority to vote, mark
01) Gregory D. Brenneman 07) Ann Dibble Jordan All All Except "For All Except" and write the
02) Leslie A. Brun 08) Harvey M. Krueger nominee's number on the line below.
03) Gary C. Butler 09) Frederic V. Malek
04) Joseph A. Califano, Jr. 10) Henry Taub [ ] [ ] [ ] -----------------------------------
05) Leon G. Cooperman 11) Arthur F. Weinbach
06) R. Glenn Hubbard
For Against Abstain
(2) Appointment of Deloitte & Touche LLP [ ] [ ] [ ]
(3) Upon any and all other matters which may properly come before the meeting
or any adjournment thereof.
receive certain future investor communications in a single Yes No
package per household [ ] [ ]
---------------------------------- ------- ----------------------- ------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date