<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Automatic Data Processing, Inc.
...............................................................................
(Name of Registrant as Specified In Its Charter)
James B. Benson, General Counsel/Corporate Vice President
...............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
........................................................................
2) Aggregate number of securities to which transaction applies:
........................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to
Exchange Act Rule 0-11:(1)
........................................................................
4) Proposed maximum aggregate value of transaction:
........................................................................
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................
2) Form, Schedule or Registration Statement No:
.................................................
3) Filing Party:
Automatic Data Processing, Inc.
.................................................
4) Date Filed:
September 9, 1994
.................................................
<PAGE>
[LOGO] AUTOMATIC DATA PROCESSING, INC.
ONE ADP BOULEVARD - ROSELAND, NEW JERSEY 07068
---------------------
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
------------------------
To the Stockholders:
PLEASE TAKE NOTICE that the 1994 Annual Meeting of Stockholders of AUTOMATIC
DATA PROCESSING, INC. (the "Company") will be held at 10:00 a.m., Tuesday,
November 15, 1994 at the Company's corporate headquarters, ONE ADP BOULEVARD,
ROSELAND, NEW JERSEY 07068, for the following purposes:
1. To elect a Board of Directors (Proposal 1);
2. To approve the Company's 1994 Executive Incentive Compensation Plan
(Proposal 2);
3. To approve an amendment to the Restated Certificate of Incorporation of
the Company to increase the number of authorized shares of Common Stock
of the Company to 500,000,000 shares (Proposal 3);
4. To ratify the appointment of Deloitte & Touche LLP to serve as the
Company's independent certified public accountants for the fiscal year
begun July 1, 1994 (Proposal 4); and
5. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only the holders of Common Stock of record at the close of business on
September 16, 1994 are entitled to vote at the meeting. Each stockholder is
entitled to one vote for each share of Common Stock held on the record date.
By order of the Board of Directors
FRED S. LAFER
SECRETARY
September 21, 1994
Roseland, New Jersey
THE PRESENCE IN PERSON AND/OR THE REPRESENTATION BY PROXY OF THE HOLDERS OF
A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF STOCK ENTITLED TO VOTE IS
NECESSARY AND SUFFICIENT TO CONSTITUTE A QUORUM. IN ADDITION, THE AFFIRMATIVE
VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OUTSTANDING AND ENTITLED TO VOTE
IS REQUIRED TO APPROVE THE PROPOSED AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION. ACCORDINGLY, IF YOU DO NOT EXPECT TO BE PRESENT AT
THE MEETING, PLEASE EXECUTE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, SO
THAT YOUR SHARES OF STOCK MAY BE REPRESENTED AT THE MEETING.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF
[LOGO] AUTOMATIC DATA PROCESSING, INC.
ONE ADP BOULEVARD - ROSELAND, NEW JERSEY 07068
TO BE HELD ON NOVEMBER 15, 1994
SOLICITATION AND REVOCATION OF PROXY
The accompanying proxy is being solicited by the Board of Directors of the
Company for use at the forthcoming Annual Meeting of Stockholders. Each
stockholder giving such a proxy has the power to revoke the same at any time
before it is voted by so notifying the Secretary of the Company in writing. All
expenses in connection with the solicitation will be borne by the Company. This
proxy statement and the accompanying proxy are being mailed to the stockholders
on or about September 21, 1994.
The Company has one class of securities outstanding and entitled to vote at
the Annual Meeting of Stockholders, its Common Stock, par value $.10 per share.
At the close of business on September 16, 1994, the record date for
determination of stockholders entitled to notice of and to vote at the meeting,
the Company had issued and outstanding shares of Common Stock
(excluding treasury shares not entitled to vote). Each outstanding
share of Common Stock is entitled to one vote with respect to each matter to be
voted on at the meeting.
The representation in person or by proxy of a majority of the shares
entitled to vote shall constitute a quorum at the Annual Meeting of
Stockholders. Directors are elected by a plurality of the affirmative votes
cast. The affirmative vote of the holders of a majority of the shares cast is
required to approve the proposed 1994 Executive Incentive Compensation Plan and
to ratify the appointment of Deloitte & Touche LLP as the Company's independent
certified public accountants. The affirmative vote of the holders of a majority
of the shares outstanding and entitled to vote is required to approve the
proposed amendment to the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock of the Company. Under
the Company's Restated Certificate of Incorporation and By-laws and under
Delaware law, abstentions and "non-votes" are counted as present in determining
whether the quorum requirement is satisfied. With regard to the election of
Directors, votes may be cast in favor or withheld. Votes that are withheld will
be excluded entirely from the vote and will have no effect. Abstentions may be
specified on all proposals (other than the election of Directors) and will have
the effect of a negative vote. Under applicable Delaware law, a non-vote will
have no effect on the outcome of the election of Directors, the adoption of the
1994 Executive Incentive Compensation Plan or the ratification of the
appointment of Deloitte & Touche LLP, but will have the effect of a negative
vote on the amendment to the Company's Restated Certificate of Incorporation. A
"non-vote" occurs when a nominee holding shares for a beneficial owner votes on
one proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner.
PROPOSAL 1
ELECTION OF DIRECTORS
Properly executed proxies will be voted as marked, and if not marked, will
be voted in favor of the election of the persons named below (each of whom is
now a director) as directors to serve until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified. If any
<PAGE>
nominee does not remain a candidate at the time of the meeting (a situation
which management does not anticipate), proxies solicited hereunder will be voted
in favor of those nominees who do remain as candidates and may be voted for
substitute nominees designated by the Board of Directors.
<TABLE>
<CAPTION>
SERVED AS A
DIRECTOR
CONTINUOUSLY
NAME AGE SINCE PRINCIPAL OCCUPATION
- - - ------------------------------- --- ------------ -------------------------------------------------------------
<S> <C> <C> <C>
Joseph A. Califano, Jr. 63 1982 Chairman of the Board and President, Center on Addiction and
Substance Abuse at Columbia University (1)
Leon G. Cooperman 51 1991 Chairman and Chief Executive Officer, Omega Advisors, Inc. an
investment partnership (2)
Edwin D. Etherington 69 1973 Management advisor (3)
Ann Dibble Jordan 59 1993 Consultant (4)
Harvey M. Krueger 65 1967 Senior Managing Director of Lehman Brothers, investment
bankers (5)
Charles P. Lazarus 70 1987 Chairman of the Board of Toys "R" Us, Inc., a toy specialty
retail chain (6)
Frederic V. Malek 57 1978 Chairman, Thayer Capital Partners, a merchant banking firm;
and Co-Chairman, CB Commercial Real Estate Group (7)
Henry Taub 67 1961 Chairman of the Executive Committee of the Board (8)
Laurence A. Tisch 71 1972 Chairman, President and Chief Executive Officer of CBS, Inc.,
which is engaged in the broadcasting business (9)
Arthur F. Weinbach 51 1989 President and Chief Operating Officer of the Company (10)
Josh S. Weston 65 1977 Chairman of the Board and Chief Executive Officer of the
Company (11)
<FN>
- - - ------------------------
(1) Mr. Califano was a senior partner in the Washington, D.C. office of Dewey
Ballantine from 1983 through 1992. He is also a director of Authentic
Fitness Corporation, Blue Cross & Blue Shield of Maryland, Inc., Chrysler
Corporation, K Mart Corporation, New York Telephone, The Travelers, Inc.
and Warnaco.
(2) Mr. Cooperman was Chairman and Chief Executive Officer of Goldman Sachs
Asset Management from 1989 until July 1991, and is a limited partner of
Goldman, Sachs & Co. Prior to that time, Mr. Cooperman spent 22 years in
Goldman Sachs' Investment Research Department, in which he served as
partner-in-charge, co-chairman of the Investment Policy Committee and
chairman of the Stock Selection Committee.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(3) Mr. Etherington has been a management advisor for more than the past five
years. He is also President Emeritus of Wesleyan University and is also a
director of United States Trust Company.
(4) Mrs. Jordan is the former Director, Social Services Department, Chicago
Lying-In Hospital, University of Chicago Medical Center, a position she
assumed in 1970. She is also a director of Capital Cities/ABC, Inc.,
Hechinger Company, Johnson & Johnson Corporation, National Health
Laboratories Inc., Salant Corporation and The Travelers, Inc.
(5) Mr. Krueger has been a Senior Managing Director of Lehman Brothers and its
predecessor companies for more than the past five years. He is also a
director of Chaus, Inc., Club Med Inc., IVAX Corporation and R.G. Barry
Corporation.
(6) Mr. Lazarus has been Chairman of the Board of Toys "R" Us, Inc. for more
than the past five years. He is also a director of Loral Corporation.
(7) Mr. Malek has been Chairman of Thayer Capital Partners since 1992. During
1992 he was Campaign Manager, Bush-Quayle '92. Prior to that time, he was
Vice-Chairman of Northwest Airlines, Inc. from 1990 until December 1991,
and was President of Northwest Airlines from 1989 to 1990. Mr. Malek is
also a director of American Management Systems Corporation, FPL Group
Incorporated, Northwest Airlines, Inc., ICF Kaiser International, Inc.,
Manor Care Corp., National Education Corporation and various Paine Webber
mutual funds.
(8) Mr. Taub became Honorary Chairman of the Company's Board of Directors in
1986 and has been Chairman of the Executive Committee since 1983. He is
also a director of Bank Leumi Trust Company of New York, Hasbro, Inc. and
Rite Aid Corp.
(9) Mr. Tisch has been Chairman, President and Chief Executive Officer of CBS,
Inc. since December 1990, after having served as President and Chief
Executive Officer of CBS, Inc. since January 1987. He is also a director of
Bulova Corporation, CNA Financial Corporation, Petrie Stores Corporation
and R.H. Macy & Co., Inc.
(10) Mr. Weinbach became President and Chief Operating Officer of the Company in
January, 1994 after having served as Executive Vice President since August
of 1992. Prior to that time, he had been Senior Vice President,
Administration and Finance, for more than the past five years.
(11) Mr. Weston has been Chairman of the Board and Chief Executive Officer of
the Company for more than the past five years. He is also a director of
Public Service Enterprise Group and Shared Medical Systems Corporation.
</TABLE>
3
<PAGE>
DIRECTORS' MEETINGS, COMMITTEES AND FEES
During the last fiscal year five meetings of the Board of Directors were
held. All directors attended at least 75%, in the aggregate, of the number of
meetings of the Board of Directors and the committees of which they were
members.
The Company has a standing Audit Committee composed of Messrs. Califano,
Cooperman, Etherington and Krueger, and Mrs. Jordan. Mr. Krueger is the
Chairman. The principal functions of the Audit Committee are to (i) make
recommendations to the full Board of Directors concerning the appointment of
independent auditors, (ii) review the scope of the audit and related fees, (iii)
review the Company's accounting principles, policies and reporting practices
with the independent and internal auditors and management, (iv) discuss with the
independent auditors the results of their audit and determine what action, if
any, is required with respect to the Company's internal controls and (v)
consider other audit and non-audit matters from time to time as requested by the
full Board of Directors. The Audit Committee met four times during fiscal 1994.
The Company has a Compensation Committee composed of Messrs. Lazarus, Malek
and Tisch. Mr. Malek is the Chairman. The purpose of the Compensation Committee
is to develop guidelines and review the compensation and performance of officers
of the Company, to review and approve criteria for granting bonuses and options
to officers of the Company and to determine the grant of options to other
employees of the Company. The Compensation Committee also serves as the
organization committee of the Board of Directors to develop plans for managerial
succession and to perform the functions of a nominating committee. The
Compensation Committee met five times in fiscal 1994.
The Company has an Executive Committee composed of Messrs. Krueger, Malek,
Taub and Weston. Mr. Taub is the Chairman. The purpose of the Executive
Committee is to act in the absence of the Board of Directors. The Executive
Committee met three times in fiscal 1994.
Non-officer directors are paid an annual retainer of $25,000, plus $1,000
for each Board of Directors meeting attended. In addition, non-officer directors
are paid $750 for each committee meeting attended, except for the chairman of
such committee, who is paid $1,000 for each meeting he attends, and except that
each non-officer member of the Executive Committee is paid $1,000 for each
meeting he attends. Non-officer directors may elect to defer payment of the
above amounts. In addition, Mr. Etherington, a director, received $10,000 during
the fiscal year for various consultive type services to the Company. There are
no fees paid to officer directors or other fee arrangements provided by the
Company.
The non-employee directors of the Company are entitled to participate in the
1989 Non-Employee Director Stock Option Plan (the "Directors' Plan") pursuant to
which options for 5,000 shares of Common Stock have been granted to each of the
Company's non-employee directors (other than Mr. Cooperman and Mrs. Jordan) at
an exercise price of $45.82 per share (now 10,000 shares at an exercise price of
$22.91 per share after adjustment for the Company's two-for-one stock split in
1991). Mr. Cooperman has been granted an option for 10,000 shares of Common
Stock at an exercise price of $38.68 per share and Mrs. Jordan has been granted
an option for 5,000 shares of Common Stock at an exercise price of $52.29 per
share. Options for 5,000 shares of Common Stock will automatically be granted to
persons who become non-employee directors at any time after the adoption of the
Directors' Plan. In addition, each non-employee director will be granted an
additional 5,000 options for shares of Common Stock on the first business day
after each fifth anniversary of the date of the initial grant to each such
non-employee director, provided that he or she is then still serving in such
capacity.
4
<PAGE>
Prior to the forthcoming Annual Meeting of Stockholders, the fifth anniversary
of the initial grant of options to Messrs. Califano, Etherington, Krueger,
Lazarus, Malek and Tisch will occur, and it is expected that each will receive a
grant of an additional 5,000 options for shares of Common Stock if he is still
serving in his capacity as a director on such date. All options have been and
will be granted at the fair market value of the Common Stock, determined on the
basis of the closing price of the Common Stock in consolidated trading on the
date of grant, as reported in The Wall Street Journal. The Directors' Plan was
adopted on November 2, 1989 and will remain in effect until terminated by action
of the Board of Directors. Twenty percent of the options granted under the
Directors' Plan become exercisable on the first anniversary of the date such
options were granted, and twenty percent become exercisable on each successive
anniversary date until all such options are exercisable; provided, that options
become exercisable only if the director is then still serving in such capacity.
All options granted under the Directors' Plan shall have a term of ten years.
In addition, a director who chooses to retire after 20 years of service in
such capacity and having attained the age of 70, will receive a pension of
$25,000 per year for the remainder of his or her life. If a director chooses to
retire after having attained the age of 65 with 15 years of service, he or she
will receive a pension of $12,500 per year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
The following table contains information as of August 26, 1994 with respect
to the beneficial ownership of Common Stock of the Company by each director and
nominee for director of the Company, by each of the five most highly compensated
executive officers of the Company and by all directors and executive officers of
the Company as a group (including the named individuals). Unless otherwise noted
in the footnotes following the table, the persons as to whom the information is
given had sole voting and investment power over the shares of Common Stock shown
as beneficially owned. To the knowledge of the management of the Company, no
person beneficially owned as of August 26, 1994 more than 5% of the outstanding
shares of the Company's Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
-------------------------------------------------
RIGHT TO
ACQUIRE BEFORE
HELD AS OF OCTOBER 25, 1994 PERCENT OF
NAME AUGUST 26, 1994 UNDER OPTIONS CLASS (2)
- - - ------------------------------------------------ --------------- ---------------- ----------
<S> <C> <C> <C>
Gary C. Butler 111,295 28,000 0
Joseph A. Califano, Jr. 400 8,000 0
Robert J. Casale 22,106 60,000 0
Leon G. Cooperman 1,000 3,500 0
Edwin D. Etherington 4,800 2,000 0
Ann Dibble Jordan 100 0 0
Harvey M. Krueger 8,000 8,000 0
Charles P. Lazarus 2,000 8,000 0
Frederic V. Malek 2,000 8,000 0
Glenn W. Marschel 35,947 88,000 0
Henry Taub 2,703,214 0 2.0 %
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
-------------------------------------------------
RIGHT TO
ACQUIRE BEFORE
HELD AS OF OCTOBER 25, 1994 PERCENT OF
NAME AUGUST 26, 1994 UNDER OPTIONS CLASS (2)
- - - ------------------------------------------------ --------------- ---------------- ----------
Laurence A. Tisch 1,600 8,000 0
<S> <C> <C> <C>
Arthur F. Weinbach 87,294 143,000 0
Josh S. Weston 227,534 396,895 0
Directors and Officers as a group 3,354,365 939,195 3.1 %
(22 persons, including those named above)
<FN>
- - - ------------------------
(1) In addition, information is furnished below with respect to beneficial
ownership, as of August 26, 1994, by members of the immediate family
of certain of the directors and officers and by certain other persons,
as to which such directors and officers disclaim beneficial interest:
(a) Members of Mr. Taub's immediate family were potential beneficiaries of
charitable trusts or owned outright an aggregate of 95,906 shares of Common
Stock of the Company, and a charitable foundation of which Mr. Taub is an
officer owned an aggregate of 6,487 shares of Common Stock of the Company.
(b) Members of Mr. Malek's immediate family were potential beneficiaries
of charitable trusts or owned outright an aggregate of 800 shares of
Common Stock of the Company.
(c) Mr. Weston's daughter owned 200 shares of Common Stock of the Company.
(d) Mr. Butler's children owned 300 shares of Common Stock of the Company.
(e) Members of the immediate family of non-director officers of the
Company owned 48,435 shares of Common Stock of the Company.
(2) Ownership of less than 1% is reflected as "0" in the table.
</TABLE>
STOCKHOLDER APPROVAL REQUIRED
Directors shall be elected by a plurality of the affirmative votes cast at
the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS.
COMPENSATION OF EXECUTIVE OFFICERS
The following sections of this proxy statement cover the components of the
total compensation of the five most highly compensated executive officers of the
Company. These sections include: (i) a series of tables covering annual and
long-term compensation; (ii) a pension plan table summarizing the annual
benefits payable under the Company's defined benefit retirement plans; (iii) a
report by the Compensation Committee of the Board of Directors describing the
Company's compensation policies for fiscal 1994 for its executive officers and
the rationale upon which its chief executive officer's
6
<PAGE>
compensation for fiscal 1994 was based; and (iv) a performance graph comparing
the Company's total stockholder return to the S&P 500 and the S&P Computer
Software Services Indices over a five year period.
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of the Company's Chief
Executive Officer and the four other most highly compensated executive officers
for services in all capacities to the Company for the three years ended June 30,
1994.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
NUMBER OF
SECURITIES
ANNUAL RESTRICTED UNDERLYING
YEAR COMPENSATION(1) STOCK OPTIONS ALL OTHER
NAME AND ENDED --------------------- AWARDS GRANTED COMPENSATION
PRINCIPAL POSITION JUNE 30, SALARY BONUS (2) (3) (4)
- - - ------------------------------------------- ----------- ---------- --------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Josh S. Weston 1994 $1,068,750 $ -- $1,179,640 -- $ 6,521
Chairman and Chief Executive Officer 1993 $1,005,000 $ -- $ -- 20,000 $ 6,021
1992 $ 945,000 $ -- $ -- -- $ 5,579
Arthur F. Weinbach 1994 $ 405,833 $ 210,000 $ 447,844 40,000 $ 3,520
President and Chief 1993 $ 365,000 $ 175,000 $1,271,650 20,000 $ 3,020
Operating Officer 1992 $ 341,250 $ 190,000 $ -- -- $ 2,909
Robert J. Casale 1994 $ 366,923 $ 175,000 $ -- 15,000 $ 3,529
Group President 1993 $ 356,250 $ 175,000 $ 695,000 30,000 $ 3,029
1992 $ 345,000 $ 185,000 $ -- -- $ 2,908
Glenn W. Marschel 1994 $ 367,500 $ 170,000 $ 996,656 15,000 $ 2,959
Group President 1993 $ 331,250 $ 166,000 $ -- 20,000 $ 2,459
1992 $ 282,500 $ 138,000 $ -- -- $ 2,408
Gary C. Butler 1994 $ 286,250 $ 180,000 $ 341,656 10,000 $ 2,980
Group President 1993 $ 268,750 $ 172,000 $ 445,000 30,000 $ 2,480
1992 $ 246,250 $ 144,000 $ -- -- $ 2,437
</TABLE>
- - - ------------------------
(1) None of the named executive officers received any perquisites or other
personal benefits of an amount, or any other annual compensation of a type,
required to be reported by the Securities and Exchange Commission pursuant
to applicable rules and regulations.
(2) The dollar values shown in the Restricted Stock Awards column are based on
the closing market price of the Company's Common Stock on the date the
restricted shares were granted. Restricted shares may not be transferred or
pledged, but such Company-imposed restrictions lapse with the passage of
time (over periods of up to five years) and continued employment with the
Company.
As of June 30, 1994, the aggregate number of shares of restricted stock
held by a named executive officer and the aggregate fair market value of
such shares (calculated by multiplying the aggregate number of shares held
by such a named executive officer by $53 1/8, the closing price on the New
York Stock Exchange of the Company's Common Stock on June 30, 1994) was:
Mr. Weston, 22,000 shares ($1,168,750); Mr. Weinbach, 30,900 shares
($1,641,562); Mr. Casale, 17,600 shares ($935,000); Mr. Marschel, 26,800
shares ($1,423,750), and Mr. Butler, 22,500 shares ($1,195,312).
7
<PAGE>
The restricted stock awards to the named executive officers reported in the
table that vest, in whole or in part, in under three years from the date of
grant are as follows:
(i) Mr. Weston received a grant of 22,000 restricted shares in fiscal
1994, of which 11,000 shares may vest in both fiscal 1996 and 1997
depending on the achievement by the Company of certain earnings per
share objectives;
(ii) Mr. Weinbach received a grant of 23,200 restricted shares in
fiscal 1993, of which 800 shares vested in fiscal 1994, and 5,600
shares vest in each of the next four fiscal years; and a grant of
8,500 shares in fiscal 1994 which vest 500 shares per year in fiscal
1995 through 1998 and vest 6,500 shares in fiscal 1999;
(iii) Mr. Casale received a grant of 13,000 restricted shares in fiscal
1993, of which 4,200 shares vest in each of fiscal 1996 and 1997, and
4,600 vest in fiscal 1998;
(iv) Mr. Marschel received grants of 19,500 restricted shares in fiscal
1994, of which 700 shares vested in 1994, 1,200 in fiscal 1995, 1,300
in fiscal 1996, 5,300 in fiscal 1997, and 5,500 in fiscal 1998 and
1999; and
(v) Mr. Butler received a grant of 8,800 restricted shares in fiscal
1993, of which 800 shares vest in fiscal 1996 and 4,000 shares vest
in each of the next two fiscal years; and a grant of 6,500 shares in
fiscal 1994, of which 500 shares per year vest in fiscal 1995 through
1998 and 4,500 shares vest in fiscal 1999.
Dividends are paid on restricted stock at the same rate as other outstanding
shares of the Company's Common Stock. In the event of a change in control of
the Company, the unvested portion of the restricted stock of Messrs.
Weinbach, Casale, Marschel and Butler will be subject to limited accelerated
vesting.
(3) The Company does not award Stock Appreciation Rights (SARs).
(4) Consists of the sum of (i) $2,500 per person per year contribution to the
Company's Retirement and Savings Plan (401(k)), and (ii) compensatory
split-dollar insurance premiums (with a statistically calculated economic
benefit to the executive determined by Phoenix Home Life Insurance Company
for W-2 income purposes).
STOCK OPTION PLANS
The Company has in effect a 1981 Key Employees' Stock Option Plan (the "1981
Plan") and a 1990 Key Employees' Stock Option Plan (the "1990 Plan"). The 1981
Plan and the 1990 Plan collectively are referred to as the "Option Plans".
Officers and key employees are eligible to participate in the Option Plans,
which permit the issuance, in addition to non-qualified options, of "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. The Company has ceased granting options under
the 1981 Plan, but outstanding options under the 1981 Plan will remain valid. In
the event of a change in control of the Company, the unvested portion of the
stock options of Messrs. Weinbach, Casale, Marschel and Butler will be subject
to limited accelerated vesting.
The Option Plans are administered by the Compensation Committee of the Board
of Directors. The Committee has the authority to determine the employees to whom
options will be granted and, subject to the Option Plans, the terms and amount
of options granted.
8
<PAGE>
ISOs expire no more than ten years from their date of grant, with an
exercise price equal to 100% of the fair market value on the date of grant.
Non-qualified options may expire as much as twelve years after the date of
grant, but the exercise price need not be equal to 100% of the fair market value
on the grant date.
An optionee has no rights as a stockholder with respect to any shares
covered by his options until the date of issuance of a stock certificate to him
for such shares. During the life of the optionee, the option is exercisable only
by him. No option is exercisable more than 15 days after termination of
employment, or (if termination is due to the death of an optionee) more than six
months after the appointment and qualification of an executor or administrator
of the deceased optionee's estate or twelve (12) months after the death of the
optionee, whichever occurs earlier.
The following table sets forth certain information concerning stock option
grants to the named executive officers during the fiscal year ended June 30,
1994.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE GRANT DATE
GRANTED FISCAL YEAR PRICE EXPIRATION VALUE
NAME (#) (%) ($/SHARE) DATE ($)
- - - ----------------------------------------------- ---------- ----------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(1) (2)
Josh S. Weston -- -- -- -- --
Arthur F. Weinbach 40,000 1.3 $ 51.20 4/28/04 $ 619,000
Robert J. Casale 15,000 .5 $ 51.20 4/28/04 $ 232,000
Glenn W. Marschel 15,000 .5 $ 51.20 4/28/04 $ 232,000
Gary C. Butler 10,000 .3 $ 51.20 4/28/04 $ 155,000
</TABLE>
- - - ------------------------
(1) All options were granted pursuant to the 1990 Plan. The options were
granted at an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant. The options were granted for
terms of ten years, and vest during periods from four to six years
subsequent to the date of grant.
(2) The grant date values were calculated on the basis of the Black-Scholes
option pricing model. Options were assumed to be exercised seven years
after the date of grant, based on historical experience. A risk-free
interest rate of 6.9%, stock price volatility of 17% and the dividend yield
of 1% as of the date of grant were used in the calculation. A discount of
14% was applied to the calculated value to reflect the risk of forfeiture
during the option term. The actual value of the options will depend on the
market value of the Company's Common Stock on the dates the options are
exercised. No realization of value from the options is possible without an
increase in the price of the Company's Common Stock, which would benefit
all stockholders commensurately.
9
<PAGE>
AGGREGATED OPTION EXERCISES
FOR FISCAL YEAR ENDED JUNE 30, 1994
AND OPTION VALUES AS OF JUNE 30, 1994
The following table sets forth certain information concerning option
exercises during the last fiscal year by the named executive officers and
unexercised options held by such officers at the end of the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT 6/30/94 6/30/94
SHARES ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED -------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - --------------------------------- --------------- ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Josh S. Weston 15,105 $ 612,703 396,895 150,000 $ 14,229,000 $ 3,603,000
Arthur F. Weinbach 26,000 $ 1,026,562 127,000 135,000 $ 4,397,000 $ 2,447,000
Robert J. Casale -- $ -- 54,000 110,000 $ 1,861,000 $ 2,186,000
Glenn W. Marschel 5,572 $ 191,537 80,000 116,000 $ 2,554,000 $ 2,398,000
Gary C. Butler 6,000 $ 200,775 16,000 117,000 $ 504,000 $ 2,366,000
</TABLE>
DEFINED BENEFIT PLANS
The following table shows the estimated annual retirement benefits payable
under the Company's retirement program, consisting of the Retirement Capital
Accumulation Plan (the "Pension Plan") and the Supplemental Officers' Retirement
Plan (the "Supplemental Retirement Plan"), to persons in specified average
compensation and credited service classifications, assuming retirement at age
65.
<TABLE>
<CAPTION>
FINAL
5-YEAR YEARS OF CREDITED SERVICE AT RETIREMENT
AVERAGE ---------------------------------------------------------------
COMPENSATION 10 15 20 25 30
- - - ------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 400,000 $ 65,000 $ 100,000 $ 118,000 $ 129,000 $ 145,000
500,000 80,000 123,000 143,000 154,000 170,000
600,000 95,000 145,000 168,000 179,000 195,000
700,000 110,000 168,000 193,000 204,000 220,000
800,000 125,000 190,000 218,000 229,000 245,000
900,000 140,000 213,000 243,000 254,000 270,000
1,000,000 155,000 235,000 268,000 279,000 295,000
</TABLE>
Compensation covered by the Pension Plan is limited to January 1 base salary
up to the current compensation limit in effect for the plan year. Compensation
covered under the Supplemental Retirement Plan includes cash compensation and
compensation from restricted stock vesting during the year. Benefits under the
Supplemental Retirement Plan are subject to reduction for social security,
Pension Plan and 401(k) benefits.
Messrs. Weinbach, Casale, Marschel, and Butler have, in the aggregate, 13,
5, 22 and 18 years of credited service respectively under the Pension Plan and
5, 4, 5 and 5 years under the Supplemental Retirement Plan.
10
<PAGE>
Mr. Weston is not a participant in the Supplemental Officers' Retirement
Plan and, accordingly, the table above does not reflect his retirement benefit.
EMPLOYMENT AGREEMENTS
Josh S. Weston, the Chairman of the Board and Chief Executive Officer, as
well as a director, of the Company, entered into an extension of his employment
agreement in June 1994 which extends his term of employment until July 31, 1996.
Mr. Weston's annual salary during the term of the agreement will be $1,000,000
for each of fiscal 1995 and 1996. The agreement provides that, subject to the
approval by the stockholders of the Company's 1994 Executive Incentive
Compensation Plan (Proposal 2), beginning with the Company's 1995 fiscal year,
Mr. Weston will be eligible to receive an annual bonus of up to $200,000 and to
vest in up to 11,000 shares of restricted stock per year based upon the
Company's earnings per share performance during the year. The agreement also
provides for Mr. Weston to receive an annual retirement benefit of $550,000 in
addition to the benefits he will receive under the Pension Plan, which benefits
are estimated to be approximately $75,000 per year.
Messrs. Weinbach, Casale, Marschel and Butler have entered into agreements
with the Company which provide for a defined severance period, not to exceed
nine months, in the event of a termination of their employment resulting from a
change in control of the Company.
CERTAIN TRANSACTIONS
Harvey M. Krueger, a director of the Company, is a Senior Managing Director
of Lehman Brothers, which provided various investment banking and brokerage
services to the Company in the past fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
The Compensation Committee of the Board of Directors is composed of three
outside directors: Messrs. Lazarus, Malek and Tisch.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for setting on behalf of the Board of Directors the base salaries
and the total compensation levels of the Chairman and Chief Executive Officer,
the President and Chief Operating Officer and the presidents of the Employer
Services, Brokerage Services and Dealer Services businesses, as well as a
structure for other key executives of the Company. The Committee determines the
grant of all stock options and reviews all recommendations for grants of all
restricted stock to these and other key executives.
COMPENSATION POLICIES
The Company's executive compensation policies for fiscal 1994, which were
reviewed by the Committee, were designed to emphasize both competitive and
variable compensation, with direct linkages to business objectives and
exceptional performance.
The primary components of the compensation package for key executives for
fiscal 1994 were base salary, bonus, restricted stock and stock options. The
Company and the Committee have always believed that stock ownership in the form
of restricted stock and longer-term stock option vesting is vital in linking
management to stockholder interests. The Company sets its salary and bonus
targets
11
<PAGE>
BELOW the median of market range levels of comparable companies included in the
S&P 500 Index. Therefore, executives derive more from stock price appreciation
as a percent of total compensation than in a company whose base salary levels
are set at market levels or higher.
ANNUAL COMPENSATION
Annual compensation consists of a base salary and a cash bonus. The base
salaries for executives for fiscal 1994 were determined based upon the job grade
of the position, the salary range of the job grade and the performance of the
executive.
Key executives earned cash bonuses in fiscal 1994 based upon individual
annual accomplishments versus individual pre-established goals that included
business growth and increased profitability. Performance goals also included
quality/service, product development, organizational development and leadership.
LONG-TERM COMPENSATION
Long-term compensation is comprised of restricted stock and stock options.
The Company has from time to time sold shares of restricted stock to executive
officers and other key employees, at par value, in recognition of their
individual levels of relative responsibility and prospective contributions to
the business. Company imposed restrictions on transfer or pledge of the
restricted stock generally lapse over the ensuing five years, and are subject to
continued employment. The restricted stock plan is designed to encourage stock
ownership, longevity, and long-term performance. The Committee also considers
the dollar value of annually vested restricted stock in setting annual cash
compensation.
Stock options are granted, usually every two years, to executive officers
and other key employees in amounts based upon their job grade and individual
performance. Stock options are granted at fair market value as of the date of
grant, and have a term of up to ten years. Stock options provide incentive for
the creation of stockholder value over the long-term, and also significantly aid
in executive recruiting and retention.
Restricted stock and stock option grants were made to individual key
executives during fiscal 1994 on a basis consistent with the above guidelines.
BENEFITS
The Company provided certain supplemental benefits to key executives during
fiscal 1994 to ensure that it could compete effectively for executive talent.
These supplemental benefits included additional company paid life insurance and
certain additional retirement benefits described in the "Defined Benefit Plans"
section of this proxy statement.
CEO COMPENSATION
The Committee meets annually without the Chief Executive Officer present to
evaluate his performance and to determine his compensation.
The base salary for fiscal 1994 for Mr. Weston, the Chief Executive Officer,
was determined by the terms of his employment agreement with the Company, as
described in the "Employment Agreements" section of this proxy statement. Under
the terms of that agreement, his salary could only grow if earnings per share
grew. In fiscal 1994, Mr. Weston's base salary was increased by 6.34%, which
approximated one-half the annual percentage increase in the Company's earnings
per share for the
12
<PAGE>
previous two years. His cash compensation has always been below the median of
the base compensation of chief executive officers at companies included in the
S&P 500 Index with annual revenues between $1 and $5 billion, as surveyed by the
Company.
As a matter of policy, Mr. Weston has not received a cash bonus, and he did
not receive a bonus as part of his compensation for fiscal 1994. The incentives
of the Chief Executive Officer were provided in the form of restricted stock and
stock options. This ensured that the Chief Executive Officer and the Company's
stockholders would have a commonality of purpose in enhancing stockholder value.
In order to address recent changes to the tax laws limiting the deductibility of
employee compensation in excess of $1,000,000, commencing with the 1995 fiscal
year and subject to the approval by the stockholders of the 1994 Executive
Incentive Compensation Plan, the Chief Executive Officer will be eligible to
receive a cash bonus, as well as restricted stock, based upon the Company's
earnings per share performance during the year.
In recognition of the Company's superior financial results and stock
performance relative to the S&P 500 and Computer Software Services Indices over
the last five years, the Committee has granted Mr. Weston, during that period,
stock options totaling 310,000 shares. In fiscal 1994, the Company achieved a
14% earnings per share growth, its 33rd consecutive year of double digit
earnings per share growth. Based on those results and as part of his future
compensation under the 1994 Executive Incentive Compensation Plan, Mr. Weston
received 22,000 shares of restricted stock, which vests subject to the terms of
the Plan. The Committee believes that Mr. Weston's leadership has been
instrumental in achieving the Company's unparalleled record of 132 consecutive
quarters of double-digit growth in earnings per share.
Compensation Committee
of the Board of Directors
Frederic V. Malek, Chairman
Charles P. Lazarus
Lawrence A. Tisch
13
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative return on the Common Stock of
the Company for the most recent five years with the cumulative total return on
the S&P 500 Index and the S&P Computer Software Services Index ("CSSI") over the
same period, assuming an initial investment of $100 on June 30, 1989, with all
dividends reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 INDEX COMPUTER SOFTWARE & SERVICES ADP, INC.
<S> <C> <C> <C>
Jun-89 100.00 100.00 100.00
Jun-90 116.49 122.61 139.39
Jun-91 125.10 106.33 166.06
Jun-92 141.88 119.98 220.62
Jun-93 161.22 177.22 250.08
Jun-94 163.49 200.76 279.64
</TABLE>
PROPOSAL 2
APPROVAL OF 1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
Since the recent tax legislation limits the Company's right to deduct
employee compensation in excess of $1,000,000 per year, the Compensation
Committee has reviewed the Company's incentive compensation program as it
applies particularly to its Chief Executive Officer and, furthermore, as it
applies generally to its executive officers. In order for compensation in excess
of $1,000,000 to be deductible to the Company under the Internal Revenue Code,
such compensation must be paid pursuant to the Company's 1994 Executive
Incentive Compensation Plan. Stockholder approval of the Plan is necessary to
pay the compensation earned under the Plan.
The Plan adopted by the Committee provides that any compensation paid to the
current Chief Executive Officer in excess of his base salary will be earned by
him by way of cash bonus and restricted stock under the Plan. If the Plan is
approved by stockholders, the first awards to the Chief Executive Officer will
be made in July of 1995. The full text of the Plan is annexed as Exhibit "A".
Under the power granted to the Committee, it selects the executive officers
eligible for incentive compensation awards and determines the nature of the
incentive together with the goals and limitations for eligibility. It not only
has the power to set the maximum incentive compensation, but can also
14
<PAGE>
determine whether the incentive compensation or payment of the incentive
compensation should be reduced or eliminated totally. The Chief Executive
Officer is expected to be the only person receiving an award for fiscal 1995.
The amount of the annual cash incentive paid to the current Chief Executive
Officer will be tied to earnings per share results. Vesting of restricted stock
will likewise depend upon earnings per share results. The following table sets
forth the amount of the cash and restricted stock that would have been awarded
to Mr. Weston, as Chief Executive Officer, based on the earnings per share
results of the Company for the 1994 fiscal year, if the Plan had been in effect
for that year:
NEW PLAN BENEFITS
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
DOLLAR VALUE RESTRICTED
($) STOCK
-------------- ---------------
<S> <C> <C>
Josh S. Weston $ 128,000 11,000
</TABLE>
The amount of any compensation paid under the Plan to any executive officer
of the Company other than the current Chief Executive Officer will be related to
earnings per share targets, return on investment and division profits.
In calculating whether or not incentive results have been achieved, the
Committee will exclude significant unusual or one-time charges or income,
including gains and losses resulting from divestitures, acquisitions, currency
fluctuations or changes in accounting which are distortive of results on a
year-by-year comparative basis. Likewise, it will exclude other items unusual in
nature because of their frequency or size or resulting from changes in
applicable laws.
No participant may receive more than $400,000 in cash and 15,000 shares of
restricted stock under the Plan in any fiscal year.
Under the Internal Revenue Code, as currently in effect, all grants and
awards under the Plan will be taxable to the participants as ordinary income and
will be deductible by the Company as compensation.
STOCKHOLDER APPROVAL REQUIRED
Approval of the 1994 Executive Incentive Compensation Plan by the
affirmative vote of the holders of a majority of the shares cast on the Plan is
required.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE 1994 EXECUTIVE INCENTIVE COMPENSATION PLAN.
15
<PAGE>
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF SHARES OF COMMON STOCK AUTHORIZED THEREUNDER
The Board of Directors of the Company has adopted a resolution declaring it
advisable to amend the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock of the Company, par
value $.10 per share, from 200,000,000 to 500,000,000 shares.
The amendment will provide additional shares of Common Stock that could be
issued from time to time by the Board of Directors, without soliciting further
stockholder approval, for various corporate purposes including, but not limited
to, acquisitions of other companies and stock dividends, stock splits and other
distributions. At this time, the Board of Directors has no specific plans for
utilizing the authorized but unissued and unreserved shares; however, the Board
believes it is desirable to have the authorized capital of the Company
sufficiently flexible so that future business needs and corporate opportunities
may be dealt with by the Board of Directors without further stockholder action.
Although some of such additional authorized shares could be used in a
transaction to thwart a takeover attempt, such is not the current intention of
the Board of Directors, nor is the Board aware of any threatened takeover.
If adopted by the stockholders, the proposed amendment will be accomplished
by the filing of a Certificate of Amendment and Restatement of the Restated
Certificate of Incorporation, substantially in the form of Exhibit "B" hereto,
with the Secretary of State of the State of Delaware, which would be expected to
be accomplished promptly following stockholder approval.
Financial statements are not included in this proxy statement, as they are
not deemed to be material to a decision upon the proposed amendment.
Holders of Common Stock of the Company have no pre-emptive rights to
subscribe for or purchase or receive any additional shares, bonds, debentures or
other securities of the Company.
STOCKHOLDER APPROVAL REQUIRED
Approval of the proposed amendment to the Company's Restated Certificate of
Incorporation by the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote is required.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION.
PROPOSAL 4
APPOINTMENT OF AUDITORS
At the Annual Meeting of Stockholders, the stockholders will vote on the
ratification of the appointment of Deloitte & Touche LLP, certified public
accountants, as independent auditors to audit the accounts of the Company and
its subsidiaries for the fiscal year begun July 1, 1994. A representative of
Deloitte & Touche LLP will be present at the Annual Meeting of Stockholders and
will have an opportunity to make a statement if he desires. He will be available
to answer appropriate questions.
16
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF THE AUDITORS.
OTHER MATTERS
So far as the Board of Directors is aware, only the aforementioned matters
will be acted upon at the meeting. If any other matters properly come before the
meeting, the accompanying proxy may be voted on such other matters in accordance
with the best judgment of the person or persons voting said proxy.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1995 Annual Meeting
must be received by the Company for inclusion in the 1995 Proxy Statement no
later than May 24, 1995.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended June 30, 1994, which
is not a part of the proxy soliciting material, is being mailed to the Company's
stockholders together with this proxy statement.
For the Board of Directors
Fred S. Lafer
SECRETARY
Roseland, New Jersey
September 21, 1994
17
<PAGE>
EXHIBIT A
AUTOMATIC DATA PROCESSING, INC.
1994 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSE.
The principal purposes of the Automatic Data Processing, Inc. 1994 Executive
Incentive Compensation Plan (the "Plan") are to provide incentives and rewards
to officers of Automatic Data Processing, Inc., and its subsidiaries and
divisions ("ADP"), who have significant responsibility for the success and
growth of ADP and to assist ADP in attracting, motivating and retaining key
employees on a competitive basis.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Committee of the Board of
Directors of ADP (the "Committee"). The Committee shall be appointed by the
Board of Directors and shall consist of two or more outside, disinterested
members of the Board.
The Committee shall have all the powers vested in it by the terms of this
plan, such powers to include authority (with the limitations described herein)
to select the persons to be granted awards under the plan, to determine the time
when awards will be granted, as well as the type, size and terms of awards, and
to determine whether objectives and conditions for earning awards have been met,
to determine whether awards will be paid at the end of the award period or
deferred, and to determine whether an award or payment of an award should be
reduced or eliminated.
The Committee shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines
and instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable. The Committee's
interpretations of the Plan, and all actions taken and determinations made by
the Committee pursuant to the powers vested in it hereunder, shall be conclusive
and binding on all parties concerned, including ADP, its shareholders and any
person receiving an award under the Plan.
In calculating whether or not incentive results have been achieved, the
Committee will exclude significant unusual or one time charges or income,
including gains and losses resulting from divestitures, acquisitions, currency
fluctuations or changes in accounting which are distortive of results on a
year-by-year comparative basis. Likewise, it will exclude other items unusual in
nature because of their frequency or size or resulting from changes in
applicable laws.
3. ELIGIBILITY.
Executive officers of ADP may be granted awards under the Plan. The
Committee, in its discretion, may also grant awards to officers of ADP and its
divisions and subsidiaries.
4. AWARDS OF INCENTIVE COMPENSATION.
(a) TYPES OF INCENTIVE COMPENSATION AWARDS. Executive officers of ADP may
be granted annual incentive cash and stock awards under the Plan for periods
commencing in July of each year, provided, however, that if an individual
becomes an executive officer during a fiscal year that individual may be granted
an incentive compensation award for that year upon his or her becoming an
executive officer. The Committee may, in its discretion, grant annual incentive
awards to non-executive officers in July of each year.
<PAGE>
(b) PERFORMANCE TARGETS. The Committee will establish specific targets
which must be met in order for an award to be earned under this Plan. The
targets will comprise all or portions of the following: growth in earnings per
share, return on investment and divisional profits.
(c) PAYMENT OF INCENTIVE COMPENSATION. Awards will be payable upon
certification by the Committee that ADP achieved the specified performance
target for the preceding year. No payment will be made if the minimum target is
not met.
(d) NEGATIVE DISCRETION. Notwithstanding the attainment by ADP of the
specified earnings targets, the Committee has the discretion, by participant, to
reduce some or all of an award that would be otherwise paid.
(e) MAXIMUM AWARDS. No participant may receive more than a maximum of
$400,000 in cash and 15,000 shares of restricted stock under the Plan in any
fiscal year.
5. MISCELLANEOUS PROVISIONS.
(a) GUIDELINES. The Committee may adopt from time to time written policies
for its implementation of the Plan.
(b) WITHHOLDING TAXES. ADP shall have the right to deduct from all
payments, whether in cash or stock, any federal, state, local or foreign taxes
required by law to be withheld with respect to such payments.
(c) NO RIGHTS TO AWARDS. No employee or other person shall have any claim
or right to be granted an award under the Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving any employee any right to be
retained in the employ of ADP or any of its subsidiaries, divisions or
affiliates.
(d) COSTS AND EXPENSES. The cost and expenses of administering the Plan
shall be borne by ADP and not charged to any award nor to any employee receiving
an award.
(e) FUNDING OF PLAN. The Plan shall be unfunded. ADP shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any award under the Plan.
6. EFFECTIVE DATE, AMENDMENTS AND TERMINATION.
(a) EFFECTIVE DATE. The Plan shall become effective on the date it is
approved by ADP's shareholders.
(b) AMENDMENTS. The Committee may at any time terminate or from time to
time amend the Plan in whole or in part, but no such action shall adversely
affect any rights or obligations with respect to any awards theretofore made
under the Plan.
Unless the shareholders of ADP shall have first approved thereof, no
amendment of the Plan shall be effective which would increase the maximum amount
which can be paid to any one participant under the Plan, which would change the
performance criteria for payment of awards or which would modify the
requirements as to eligibility for participation in the Plan.
(c) TERMINATION. No awards shall be made under the Plan after June 30,
2004.
<PAGE>
EXHIBIT B
AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
AUTOMATIC DATA PROCESSING, INC.
------------------------
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 242 AND 245 OF
THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
------------------------
We, the Chairman of the Board and Chief Executive Officer and the Senior
Vice President and Secretary, respectively, of Automatic Data Processing, Inc.,
a corporation existing under the laws of the State of Delaware, do hereby
certify under the seal of said corporation as follows:
I. That the name of the corporation is AUTOMATIC DATA PROCESSING, INC.
(hereinafter called the "Corporation").
II. That the Certificate of Incorporation of the Corporation was filed by
the Secretary of State on the 12th day of June 1961.
III. That this Certificate amends the Certificate of Incorporation by
increasing the number of authorized shares of Common Stock of the Corporation to
500,000,000 shares.
IV. That the amendment and the restatement of the Certificate of
Incorporation of the Corporation have been duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware by an affirmative vote of the holders of a majority of all
outstanding stock entitled to vote at a meeting of stockholders.
V. That the text of the Certificate of Incorporation of the Corporation, as
heretofore amended, is hereby restated, as further amended by this Certificate,
to read in its entirety as follows:
CERTIFICATE OF INCORPORATION
OF
AUTOMATIC DATA PROCESSING, INC.
We, the undersigned, in order to form a corporation for the purposes
hereinafter stated, pursuant to the provisions of Chapter 1 of Title 8 of the
Delaware Code of 1953, do hereby certify as follows:
FIRST: The name of the corporation is AUTOMATIC DATA PROCESSING, INC.
(hereinafter called the "Corporation").
SECOND: The address of the Corporation's registered office is 306 South
State Street, City of Dover, County of Kent, State of Delaware; and its
registered agent at such address is United States Corporation Company.
<PAGE>
THIRD: The nature of the business and purposes to be conducted or promoted
by the Corporation are to engage in, carry on and conduct any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware; and in addition to, and without limiting the
generality of, the foregoing, the following:
(a) To engage in the business of preparing payrolls, performing
statistical, tabulating and clerical services of all kinds, conducting
research and analytical or statistical studies, preparing business reports
and surveys, rendering consulting services to business and performing
business services of any and all kinds of a similar nature;
(b) To engage in, carry on, conduct and/or participate in any general or
specific branch or phase of the activities, enterprises, or businesses
authorized in this Certificate in the State of Delaware or in any other
state of the United States and in all foreign countries, and in all
territories, possessions and other places, and in connection with the same,
or any thereof, to be and act either as principal, agent, contractor or
otherwise;
(c) To do everything necessary, suitable, convenient or proper for the
accomplishment, attainment or furtherance of, to do every other act or thing
incidental or appurtenant to, growing out of or connected with, the purposes
set forth in this Certificate, whether alone or in association with others;
to possess all the rights, powers and privileges now or hereafter conferred
by the laws of the State of Delaware upon corporations organized under the
General Corporation Law of the State of Delaware (as the same may be amended
from time to time) or any statute which may be enacted to supplement or
replace it, and, in general, to carry on any of the activities and to do any
of the things herein set forth to the same extent and as fully as a natural
person or a partnership, association, corporation or other entity, or any of
them, might or could do; provided, that nothing herein set forth shall be
construed as authorizing the Corporation to possess any purpose, object, or
power, or to do any act or thing, forbidden by law to a corporation
organized under the General Corporation Law of the State of Delaware. The
foregoing provisions of this Article shall be construed as purposes, objects
and powers, and each as an independent purpose, object and power, in
furtherance, and not in limitation, of the purposes, objects and powers
granted to the Corporation by the laws of the State of Delaware; and except
as otherwise specifically provided in any such provision, no purpose, object
or power herein set forth shall be in any way limited or restricted by
reference to, or inference from, any other provision of this Certificate.
FOURTH: The total number of shares which the Corporation shall have
authority to issue is Five Hundred Million Three Hundred Thousand (500,300,000),
consisting of Three Hundred Thousand (300,000) shares of Preferred Stock, of the
par value of One Dollar ($1.00) per share (hereinafter called "Preferred
Stock"), and Five Hundred Million (500,000,000) shares of Common Stock, of the
par value of Ten Cents ($.10) per share (hereinafter called "Common Stock").
The Board of Directors is hereby authorized to issue the shares of the
Preferred Stock in one or more series, to fix by resolution, to the extent now
or hereafter permitted by the laws of the State of Delaware, the designation of
such series, the dividend rate of such series and the date or dates and other
provisions respecting the payment of dividends, the provisions, if any, for a
sinking fund for the shares of such series, the preferences of such series with
respect to dividends and in the event of the liquidation or dissolution of the
Corporation, the provisions, if any, respecting the redemption of the shares of
such series, the voting rights, if any, of the shares of such series, the terms,
if any, upon which
2
<PAGE>
the shares of such series shall be convertible into or exchangeable for any
other shares of stock of the Corporation and any other relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, of the shares of such series.
Subject to the payment or setting apart for payment of any preferential
dividends which the holders of shares of any series of Preferred Stock shall be
entitled to receive, the holders of the Common Stock shall be entitled to
receive such dividends as may be declared thereon from time to time by the Board
of Directors, in its discretion, from any assets legally available for the
payment of dividends.
In the event of the liquidation or dissolution of the Corporation, whether
voluntary or involuntary, after distribution to the holders of all shares of any
series of Preferred Stock which shall be entitled to a preference over the
holders of Common Stock of the full preferential amounts to which they are
entitled, the holders of Common Stock shall be entitled to share ratably in the
distribution of the remaining assets of the Corporation available for
distribution to shareholders.
Except as otherwise expressly provided in any resolution adopted by the
Board of Directors granting voting rights to the holders of shares of any series
of Preferred Stock and except as otherwise required by law, the entire voting
power of the Corporation shall be vested in the Common Stock, and each share of
Common Stock shall have one vote for each share thereof held.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and it is expressly
provided that the same are intended to be in furtherance and not in limitation
or exclusion of the powers conferred by law:
1. Members of the Board of Directors may be elected either by written
ballot or by voice-vote.
2. The Board of Directors may from time to time make, alter, or repeal
the By-laws of the Corporation; provided, that any By-laws made, amended, or
repealed by the Board of Directors may be amended or repealed, and new
By-laws may be made, by the stockholders of the Corporation.
3. The Corporation shall indemnify all directors and officers of the
Corporation to the full extent permitted by the General Corporation Law of
the State of Delaware (and in particular Paragraph 145 thereof), as from
time to time amended, and may purchase and maintain insurance on behalf of
such directors and officers. In addition, the Corporation shall, in the
manner and to the extent as the By-laws of the Corporation shall provide,
indemnify to the full extent permitted by the General Corporation law of the
State of Delaware (and in particular Paragraph 145 thereof), as from time to
time amended, such other persons as the By-laws shall provide, and may
purchase and maintain insurance on behalf of such other persons.
4. A director of the Corporation shall not be held personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any
3
<PAGE>
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this paragraph by the stockholders of the
Corporation shall not adversely affect any right or protection of any
director of the Corporation existing at the time of, or for or with respect
to any acts or omissions occurring prior to, such repeal or modification.
SIXTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such a manner as the said Court directs. If a majority in
number representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
IN WITNESS WHEREOF, We, Josh S. Weston, Chairman of the Board and Chief
Executive Officer, and Fred S. Lafer, Senior Vice President and Secretary, of
AUTOMATIC DATA PROCESSING, INC., have signed this Certificate and caused the
corporate seal of the corporation to be hereunto affixed this day of
November, 1994.
------------------------------------
Josh S. Weston
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Attest: ----------------------------
Fred S. Lafer
SENIOR VICE PRESIDENT AND SECRETARY
[Corporate Seal]
4
<PAGE>
[Form of Proxy -- Front]
[LOGO] AUTOMATIC DATA PROCESSING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROPERLY EXECUTED PROXIES WILL BE VOTED AS MARKED AND, IF NOT MARKED, WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN THE ACCOMPANYING PROXY
STATEMENT AND FOR PROPOSALS (2), (3) AND (4) ON THE REVERSE SIDE.
The undersigned hereby appoints Henry Taub and Josh S. Weston, and each of
them, attorneys and proxies with full power of substitution, in the name, place
and stead of the undersigned, to vote as proxy at the 1994 Annual Meeting of
Stockholders of Automatic Data Processing, Inc. to be held at the corporate
offices of the Company, ONE ADP BOULEVARD, ROSELAND, NEW JERSEY 07068, on
Tuesday, November 15, 1994 at 10:00 A.M., or at any adjournment or adjournments
thereof, according to the number of votes that the undersigned would be entitled
to cast if personally present.
Either of said attorneys and proxies or substitutes, who shall be present at
such meeting or at any adjournment or adjournments thereof, shall have all the
powers granted to such attorneys and proxies.
PLEASE DATE, SIGN AND MAIL PROXY PROMPTLY IN THE SELF-ADDRESSED RETURN ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. WHEN SIGNING AS AN
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL
TITLE AS SUCH. IF SHARES ARE HELD JOINTLY, BOTH OWNERS SHOULD SIGN.
The nominees for Director are Joseph A. Califano, Jr., Leon G. Cooperman, Edwin
D. Etherington, Ann Dibble Jordan, Harvey M. Krueger, Charles P. Lazarus,
Frederic V. Malek, Henry Taub, Laurence A. Tisch, Arthur F. Weinbach and Josh S.
Weston.
<PAGE>
[Form of Proxy -- Back]
MARK VOTES LIKE THIS /X/
<TABLE>
<S> <C> <C>
ACCOUNT NUMBER COMMON
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
The Board of Directors Recommends a vote FOR the proposals regarding:
(1) Election of Directors FOR WITHHOLD
(INSTRUCTIONS: To withhold authority to vote for all nominees listed Authority to vote for
any individual nominee, write that nominee's name on the reverse side all
in the space provided below.) (except as marked to nominees on the
the contrary) / / reverse
side / /
----------------------------------------- FOR AGAINST ABSTAIN
(2) Approval of 1994 Executive Incentive Compensation / / / / / /
Plan
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
(3) Amendment of the Company's Restated Certificate of
Incorporation / / / / / /
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
(4) Appointment of Deloitte & Touche LLP / / / / / /
(5) Upon any and all other matters which may properly come before the meeting or any adjournment
thereof.
</TABLE>
<TABLE>
<S> <C> <C>
John Doe
123 Main Street
New York, New York 10005 Signature DATE
Signature DATE
</TABLE>
IF YOU RECEIVE DUPLICATE MAILINGS AND WOULD LIKE TO ELIMINATE THEM, PLEASE MARK
THIS BOX / /
<PAGE>
ADP'S TELEPHONE PROXY VOTING SERVICE
Quick * Convenient * Immediate
Now you can vote your proxy right over the telephone. It's fast, convenient,
and your Proxy is immediately confirmed and posted.
Just dial 1-800-VOTE ADP and follow the 4 easy steps below. If you prefer, you
can send in your proxy vote by filling out the attached proxy form below.
Phone 1-800-VOTE ADP
1-800-868-3237
///////////////////////////////////////////////////////////////////////////////
// //
// JUST FOLLOW THESE 4 EASY STEPS: //
// //
// 1. Read the accompanying Proxy Statement and the proxy form below. //
// //
// 2. Phone the toll free number printed above. //
// //
// 3. Once you've been connected, enter your Control Number printed on //
// the top center of the proxy form below. //
// //
// 4. Then follow the simple instructions the Vote ADP voice will //
// provide you. //
// //
///////////////////////////////////////////////////////////////////////////////
///////////////////////////////////////////////////////////////////////////////
// //
// DIRECTOR NOMINEES: (01)JOSEPH A. CALIFANO, JR., (02)LEON G. COOPERMAN, //
// //
// (03)EDWIN D. ETHERINGTON, (04)ANN DIBBLE JORDAN, (05)HARVEY M. KRUEGER, //
// //
// (06)CHARLES LAZARUS, (07)FREDERIC V. MALEK, (08)HENRY TAUB, //
// //
// (09)LAURENCE A. TISCH, (10)ARTHUR F. WEINBACH, (11)JOSH S. WESTON //
// //
///////////////////////////////////////////////////////////////////////////////
