Business Context and Reporting Period
Company: Automatic Data Processing, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 12, 2009
Event Date: November 10, 2009
Subject: Amendment to the Supplemental Officers Retirement Plan (SORP).
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The report focuses exclusively on corporate governance and executive compensation plan amendments.
Material Changes
The Board of Directors approved amendments to the SORP effective January 1, 2010. Key changes include:
- Grandfathered Participants: The definition of "final average annual pay" now excludes performance-based restricted stock awards. New benefit formulas were established for four named executive officers (Gary C. Butler, Christopher R. Reidy, Regina R. Lee, and Benito Cachinero).
- Benefit Caps: Mr. Butler's annual benefit is capped at 39% of final average annual pay. Messrs. Reidy and Cachinero and Ms. Lee are capped at 45%.
- Service Credit: Effective after December 31, 2009, the CEO can no longer grant discretionary service credit to participants who are involuntarily terminated or receive severance.
- Early Retirement: Calculations for grandfathered participants will generally use factors applicable to non-grandfathered participants, except for protected benefits accrued as of December 31, 2009.
Guidance, Outlook, and Risks
The filing contains no financial guidance, outlook, or management commentary regarding future business performance. The primary contingency noted is the transition to new benefit calculation formulas for specific executives starting January 1, 2010. The full text of the Amended and Restated SORP is filed as Exhibit 10.4.
Investor Verification Checklist
- Review Exhibit 10.4 (Amended and Restated SORP) for complete legal terms of the plan amendments.
- Verify the specific impact of excluding performance-based restricted stock from "final average annual pay" on the retirement benefits of the four named executives.
- Confirm the effective date of the new service credit restrictions regarding involuntary terminations (January 1, 2010).