What are the key changes made to the Supplemental Officers’ Retirement Plan (SORP)?

The SORP was amended to exclude amounts received by participants under certain specified programs that were not intended to be considered 'compensation' for the plan's purposes. This adjustment clarifies what constitutes regular compensation under the retirement plan.

How does the amendment to the Change in Control Severance Plan affect executives?

The Change in Control Severance Plan for Corporate Officers was updated to incorporate two new performance-based restricted stock programs. This means that the severance provisions will now consider these equity awards, potentially aligning them with change-in-control events.

What is the primary objective of the Growth Incentive Program (GIP)?

The GIP is a long-term incentive bonus program designed to motivate key executives to accelerate long-term revenue growth rates and achieve multi-year earnings per share (EPS) growth. It focuses executive compensation on key financial performance indicators.

When will bonuses under the GIP be paid, and what are the conditions for payout?

Bonus payments under the GIP are contingent upon the achievement of pre-established performance goals, including revenue growth and net operating income growth. The Compensation Committee will determine achievement after the end of fiscal year 2008, with payments expected in early fiscal year 2009. No bonus is paid if either threshold financial performance or revenue growth targets are not met.

ADP 8-K: Material Agreements

Summary

This Form 8-K filing by Automatic Data Processing, Inc. (ADP) on June 16, 2006, primarily concerns amendments to executive compensation plans. Key changes include adjustments to the Supplemental Officers’ Retirement Plan (SORP) and the Change in Control Severance Plan for Corporate Officers. The SORP amendment aims to exclude certain non-standard compensation components from its calculations, ensuring a clearer focus on core compensation metrics. The Change in Control plan was updated to incorporate two new performance-based restricted stock programs, aligning executive incentives with shareholder value creation in potential acquisition scenarios. Additionally, the filing details a three-year Growth Incentive Program (GIP) approved on August 11, 2005, for key executives. This program is designed to drive long-term revenue and earnings per share growth, with performance criteria including revenue, net operating income, sales, and EPS growth. The GIP outlines specific bonus targets and payout structures, with potential maximum bonuses for named executive officers detailed, payable after fiscal year 2008 performance is assessed. Investors should note these actions reflect ADP's strategic focus on executive retention, performance alignment, and long-term growth.

Key Highlights

1ADP amended its Supplemental Officers’ Retirement Plan (SORP) effective June 15, 2006, to exclude specific programs from compensation calculations.
2The Company also amended its Change in Control Severance Plan for Corporate Officers to include new performance-based restricted stock programs.
3A three-year Growth Incentive Program (GIP) was approved on August 11, 2005, for key executives.
4The GIP aims to incentivize long-term revenue and earnings per share growth.
5Performance metrics for the GIP include revenue growth, net operating income growth, sales growth, and earnings per share growth.
6Bonus payouts under the GIP are contingent on achieving threshold financial performance and revenue growth targets, with a maximum payout of 150% of the target bonus.
7Potential maximum bonuses for named executive officers under the GIP are detailed, with payouts expected in fiscal year 2009 after performance assessment for fiscal year 2008.

AUTOMATIC DATA PROCESSING INC 8-K Report, Material Agreement (Jun 16, 2006)

Summary

Key Highlights

Frequently Asked Questions