Business Context and Reporting Period
Company: Automatic Data Processing, Inc. (ADP)
Filing Type: Form 8-K (Current Report)
Date of Report: November 12, 2008
Event Reported: Approval of the 2008 Omnibus Award Plan by stockholders on November 11, 2008, at the 2008 Annual Meeting.
Key Financial Metrics
This filing is a corporate governance report regarding equity compensation and does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The filing text does not provide a clear value for these metrics.
Material Changes
The primary material change is the adoption of the 2008 Omnibus Award Plan, which consolidates and replaces previous equity incentive programs. Key features include:
- Total Shares Authorized: Approximately 31 million shares of common stock available for awards. This consists of 5 million new shares plus approximately 26 million shares remaining from prior plans (2000 Stock Option Plan, 2003 Director Stock Plan, Key Employees' Restricted Stock Plan, and Executive Incentive Compensation Plan).
- Plan Term: 10 years.
- Administration: Administered by the Compensation Committee or the Board of Directors.
Guidance, Outlook, and Plan Details
Award Types: The plan authorizes grants of nonqualified and incentive stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, other stock-based awards, and performance compensation awards (including cash bonuses).
Individual Limits:
- Options/SARs: No participant may be granted awards covering more than 3,000,000 shares in any consecutive 36-month period.
- Performance Awards: No more than 300,000 shares (or equivalent fair market value) may be granted to a single participant for a single fiscal year.
- Cash Bonuses: Maximum payable amount is $5,000,000 per participant for any single fiscal year.
Performance Metrics: Performance compensation awards may be conditioned on a wide range of goals, including net earnings, revenue growth, operating margins, cash flow measures, return on investment, share price, and customer satisfaction.
Directors' Compensation: Non-employee directors will receive deferred stock units equal to the fixed portion of their annual retainer. These units accrue dividend equivalents and interest, payable 30 days after the director ceases service.
Investor Verification Checklist
- Verify the exact number of shares remaining from "Prior Plans" to confirm the total 31 million share pool calculation.
- Review the specific vesting schedules and performance targets established by the Compensation Committee for the first grants under this plan.
- Monitor future filings for the actual number of shares granted to executives under the new 3 million share annual limit.
- Check for any repricing of options or SARs, which requires stockholder approval under the plan's amendment provisions.