8-KLeadership ChangesExhibits & Filings

AUTOMATIC DATA PROCESSING INC 8-K Report, Executive Changes (Nov 24, 2008)

Filed November 24, 2008For Securities:ADP

Summary

This Form 8-K filing from Automatic Data Processing, Inc. (ADP) details the termination agreement with former Chief Operating Officer, S. Michael Martone, who is retiring on January 2, 2009. The agreement outlines significant severance payments and continued vesting of stock options and restricted stock, contingent on Mr. Martone adhering to non-competition and confidentiality clauses. The company is providing various benefits, including extended medical coverage, continued use of a leased car, and relocation assistance. This filing is important for investors as it clarifies the financial impact and terms associated with the departure of a key executive. The compensation package, while substantial, reflects the company's recognition of his service and aims to ensure a smooth transition and continued adherence to post-employment obligations. Investors should note the specific payment schedules for severance and bonuses, as well as the extended vesting periods for equity awards, which may influence future share availability and dilutive effects.

Key Highlights

  • 1S. Michael Martone, Chief Operating Officer, is retiring effective January 2, 2009.
  • 2ADP has entered into a Termination Agreement and Release with Mr. Martone.
  • 3Mr. Martone will receive severance pay totaling $775,000, paid in installments through December 2009.
  • 4He will also receive bonus payments totaling $1,075,000 ($775,000 for FY2009 target and $300,000 for service/performance), payable by September 1, 2009.
  • 5Unvested stock options will continue to vest through December 31, 2009, and all options will remain exercisable through December 31, 2012.
  • 6Mr. Martone will retain certain restricted shares with vesting dates extended to July 1, 2009, March 2009, and December 31, 2009, respectively.
  • 7The agreement includes extended benefit service credit, retiree medical plan eligibility, continued use of a leased car, and relocation assistance.

Frequently Asked Questions

The direct cash payments outlined in the agreement include $775,000 in severance, $775,000 as a FY2009 target bonus, and an additional $300,000 bonus for service and performance, totaling $1,850,000 in cash. Additionally, there are costs associated with continued benefits, car lease, and relocation expenses. The exact financial impact is subject to tax withholdings and deductions, and the timing of payments spans into 2009.

Mr. Martone's unvested stock options will continue to vest through December 31, 2009, with any remaining unvested options vesting on that date. All options will be exercisable until December 31, 2012. He will also retain certain restricted shares, with their restriction lapse dates extended, aligning with the termination agreement's terms.

Yes, Mr. Martone's entitlement to all compensation and benefits is contingent upon his execution of a general waiver and release of claims against the Company, and his adherence to specific non-competition, non-solicitation, non-disclosure, and confidentiality obligations.

The severance pay will be paid in installments starting July 2, 2009, through December 2009. The FY2009 target bonus and the additional bonus for service/performance will be paid by September 1, 2009.