8-KLeadership ChangesExhibits & Filings

AUTOMATIC DATA PROCESSING INC 8-K Report, Executive Changes (Aug 13, 2008)

Filed August 13, 2008For Securities:ADP

Summary

Automatic Data Processing, Inc. (ADP) filed a Form 8-K on August 13, 2008, to report amendments to its 2000 Stock Option Plan for employees. The primary change involves the form of stock option award agreement, which will govern future grants. These amendments aim to provide greater clarity and potential benefits for employees regarding the vesting and exercise periods of their stock options, particularly in cases of retirement, death, or disability. Key adjustments include a standardized four-year vesting period, continued vesting for employees meeting "normal retirement" criteria, and accelerated vesting upon death or disability. The period for exercising vested options also sees modifications, with extended timelines for those retiring or experiencing death/disability, while generally limiting exercise to 60 days post-termination for other scenarios. Investors should note that these changes are designed to enhance employee retention and provide financial security to executives and key personnel under specific circumstances.

Key Highlights

  • 1ADP has amended the form of stock option award agreement used for its 2000 Stock Option Plan.
  • 2New stock option awards will have a four-year vesting period.
  • 3Vesting will continue for employees who retire and meet the Company's "normal retirement" conditions (age 55+ with 10+ years of service).
  • 4Stock options will fully vest and become exercisable upon the death or total and permanent disability of the optionholder.
  • 5Exercise periods for vested options are modified, generally extending for retirement, death, or disability.
  • 6For most terminations, options must be exercised within 60 days.
  • 7Options will not remain exercisable beyond the tenth anniversary of their grant date.

Frequently Asked Questions

The main purpose of this filing is to inform investors that Automatic Data Processing, Inc. (ADP) has updated its standard stock option award agreement for employees under its 2000 Stock Option Plan. These changes affect how stock options will be granted and managed in the future.

The updated agreement allows for continued vesting of stock options for employees who retire after their first anniversary of the grant date, provided they meet ADP's definition of "normal retirement." This means they must be at least 55 years old with 10 or more years of service.

In the event of death or total and permanent disability, all stock options will become fully vested and exercisable. This applies to active employees, former employees who met retirement criteria, and certain former employees who retired recently under specific conditions.

The exercise period varies. Generally, options must be exercised within 60 days of employment termination. However, for terminations due to death or disability, the period is extended to 12 or 36 months depending on retirement criteria. Retired employees meeting normal retirement criteria have 37 months, while those retiring under specific age/service thresholds have 12 months.