8-KMaterial Agreements

AUTOMATIC DATA PROCESSING INC 8-K Report, Material Agreement (Apr 29, 2005)

Filed April 29, 2005For Securities:ADP

Summary

Automatic Data Processing, Inc. (ADP) has filed an 8-K report on April 29, 2005, detailing a new employment letter agreement with its Chairman and CEO, Arthur F. Weinbach, effective April 28, 2005. This agreement outlines the terms of Mr. Weinbach's continued employment, focusing on his compensation, equity awards, and termination provisions. The agreement is structured with successive one-year terms, providing clarity on the executive's role and ADP's commitment. Key aspects for investors include the guaranteed minimum annual base salary and target bonus, alongside significant performance-based restricted stock and stock option awards. The terms also address continuity of equity award vesting upon retirement and provide substantial severance benefits in cases of termination without cause or following a change in control. These provisions aim to retain key leadership and align executive interests with shareholder value, particularly during periods of potential transition.

Key Highlights

  • 1ADP entered into a new employment letter agreement with Chairman and CEO Arthur F. Weinbach on April 28, 2005.
  • 2The agreement sets a minimum annual base salary of $850,000 and a target annual bonus of $750,000.
  • 3Mr. Weinbach will receive annual performance-based restricted stock awards valued at a minimum of $1,000,000.
  • 4He is also granted a minimum of 170,000 stock options annually, with provisions for accelerated vesting upon retirement.
  • 5The agreement includes provisions for 18 months of base salary continuation if terminated without cause.
  • 6In the event of a change in control, Mr. Weinbach is eligible for a termination payment ranging from 100% to 300% of his annual compensation, along with accelerated vesting of stock options and removal of restrictions on certain restricted stock.
  • 7The agreement addresses excise tax gross-up payments related to change-in-control compensation.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose a new employment letter agreement between Automatic Data Processing, Inc. (ADP) and its Chairman and Chief Executive Officer, Arthur F. Weinbach. This agreement details the terms of his compensation, equity awards, and separation benefits.

Mr. Weinbach's compensation includes a minimum annual base salary of $850,000 and a minimum target annual bonus of $750,000. Additionally, he is eligible for performance-based restricted stock awards with a minimum market value of $1,000,000 annually and at least 170,000 stock options per year.

If ADP terminates Mr. Weinbach's employment without cause, he is entitled to 18 months of his base salary and continued vesting of his equity awards. In the event of a change in control, he could receive a termination payment of 100% to 300% of his total annual compensation, along with full vesting of stock options and removal of restrictions on certain restricted stock.

The agreement ensures that Mr. Weinbach receives significant annual grants of restricted stock and stock options. Importantly, all unvested stock options will fully vest upon his retirement. Furthermore, in the event of retirement, his restricted stock will continue to vest as if he were still an employee, and restrictions on certain restricted stock may be removed if employment terminates following a change in control.