What is the main purpose of this 8-K filing?

The main purpose of this 8-K filing is to report on a material definitive agreement between ADP and Gary C. Butler, formalizing the terms of his employment as he transitions into the role of Chief Executive Officer.

When will Gary C. Butler officially become CEO of ADP?

Gary C. Butler is scheduled to become the Chief Executive Officer and President of ADP on August 31, 2006, succeeding the retiring Arthur F. Weinbach.

What are the key components of Gary C. Butler's compensation package?

Mr. Butler's compensation includes a base salary of at least $850,000 annually, a target bonus of at least $1,200,000, restricted stock awards tied to performance, and annual stock option grants commencing in fiscal year 2007, along with a perquisite allowance.

What happens to Gary C. Butler's compensation and benefits if his employment is terminated without cause?

If ADP terminates Mr. Butler's employment for reasons other than cause, death, disability, or a Change in Control, he will continue to receive his annual base salary for 24 months, his stock options will continue to vest, restrictions on his restricted stock will continue to lapse, and he will participate in ongoing incentive programs as if he were still employed.

How does the agreement address a 'Change in Control' situation?

In the event of a 'Change in Control,' if Mr. Butler's employment is terminated without cause or he resigns for 'good reason' within a specified period (up to three years after the Change in Control), he is entitled to a significant termination payment (ranging from 100% to 300% of his total annual compensation), full vesting of stock options, removal of restrictions on restricted stock, and guaranteed payouts under incentive programs, along with an excise tax gross-up.

ADP 8-K: Material Agreements

Summary

This 8-K filing reports on a material definitive agreement between Automatic Data Processing, Inc. (ADP) and Gary C. Butler, outlining the terms of his employment as he transitions to Chief Executive Officer. Effective August 31, 2006, Mr. Butler will succeed Arthur F. Weinbach as CEO. The agreement details his compensation package, including base salary, bonus targets, restricted stock awards, and stock options, with provisions for annual review and potential increases. It also establishes terms for his board membership and the duration of his employment agreement. The filing also extensively covers severance and termination benefits for Mr. Butler under various scenarios, including termination for cause, termination without cause, death or disability, voluntary resignation, and in the event of a Change in Control. These provisions are designed to provide financial security and align Mr. Butler's interests with those of the company and its shareholders, particularly during transitional periods and potential corporate events.

Key Highlights

1Automatic Data Processing, Inc. (ADP) has entered into a material definitive agreement with Gary C. Butler.
2Gary C. Butler is set to become the new Chief Executive Officer and President of ADP, succeeding Arthur F. Weinbach, effective August 31, 2006.
3Mr. Butler's compensation package includes a minimum annual base salary of $850,000 and a target bonus of $1,200,000, effective July 1, 2006.
4The agreement details significant equity-based compensation, including restricted stock awards and annual stock option grants starting from fiscal year 2007.
5Comprehensive severance packages are outlined for various termination scenarios, including termination without cause, death/disability, and Change in Control events.
6The agreement includes provisions for continuation of compensation, vesting of stock options, and lapse of restrictions on restricted stock under specific termination conditions.
7A "Change in Control" clause provides substantial financial protection and potential payouts for Mr. Butler, including excise tax gross-ups.

AUTOMATIC DATA PROCESSING INC 8-K Report, Material Agreement (Jun 28, 2006)

Summary

Key Highlights

Frequently Asked Questions