8-KLeadership ChangesMaterial AgreementsExhibits & Filings

AUTOMATIC DATA PROCESSING INC 8-K Report, Material Agreement (Oct 20, 2005)

Filed October 20, 2005For Securities:ADP

Summary

This 8-K filing by Automatic Data Processing, Inc. (ADP) announces the entry into a material definitive agreement related to the hiring of James D. Aramanda as a Group President. Mr. Aramanda, previously Vice Chairman of Mellon Financial Corporation, brings significant experience in administration and consulting services relevant to ADP's business. The agreement outlines his compensation, bonuses, stock awards, and severance provisions, setting terms for his employment which is anticipated to begin by December 1, 2005. Key details of the agreement include a three-year initial term, a base salary of $525,000 with a target bonus of 60% (guaranteed at 100% for fiscal year 2006 if he starts by December 1, 2005), and significant one-time and performance-based bonuses totaling $1,290,000 in the first year. He is also set to receive substantial restricted stock awards and initial stock options, with provisions for continued employment and potential repayment of bonuses under certain voluntary resignation or termination for cause scenarios. The filing provides transparency into the executive compensation structure for a key leadership hire.

Key Highlights

  • 1ADP has appointed James D. Aramanda as a Group President.
  • 2Mr. Aramanda's employment agreement has an initial term of three years, with provisions for automatic renewal.
  • 3His starting base salary is set at $525,000 annually.
  • 4A guaranteed 100% annual target bonus for fiscal year 2006 is provided if he starts by December 1, 2005.
  • 5Significant one-time bonuses totaling $1,290,000 are detailed, with repayment obligations if he leaves voluntarily or is terminated for cause within specified periods.
  • 6Mr. Aramanda will receive performance-based restricted stock awards and initial stock options, reflecting a strong performance-based incentive structure.
  • 7The agreement includes provisions for severance, participation in executive benefit plans, and participation in the company's Change in Control Severance Plan.

Frequently Asked Questions

James D. Aramanda is a new Group President at ADP. He previously served as Vice Chairman of Mellon Financial Corporation since 2003, and from 1994 to 2002, he was the chief executive officer of Mellon Investor Services. His experience is in areas such as 401(k), pension, benefit, and shareholder administration, as well as actuarial and consulting services.

Mr. Aramanda's compensation package includes an initial base salary of $525,000, an annual target bonus of 60% of his base salary (guaranteed at 100% for FY2006 if he starts by December 1, 2005), a one-time bonus of $450,000 paid within 30 days of his start date, and another bonus of $840,000 on or about February 1, 2006. He will also receive performance-based restricted stock awards and stock options.

Yes, Mr. Aramanda is obligated to repay the $450,000 one-time bonus if he voluntarily leaves the company or is discharged 'for cause' within two years of his start date. He must also repay the $840,000 bonus if he voluntarily leaves or is discharged 'for cause' within one year of his start date.

Mr. Aramanda will be granted performance-based restricted stock awards totaling 40,000 shares with restrictions lapsing on January 1, 2007, and January 1, 2008, subject to performance criteria and continued employment. An additional 4,125 shares are for fiscal year 2007. He will also receive an initial stock option grant of 67,000 shares around January 2006, with subsequent annual grants generally in the range of 33,500 options.