DEF 14A 1 adp4094281-def14a.htm DEFINITIVE PROXY STATEMENT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material under §240.14a-12

Automatic Data Processing, Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
  No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11


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AUTOMATIC DATA PROCESSING, INC.
One ADP Boulevard
Roseland, New Jersey 07068

Notice of 2022 Annual Meeting of Stockholders
_____________________________________________________

The 2022 Annual Meeting of Stockholders of Automatic Data Processing, Inc. will take place at 10:00 a.m., Eastern Standard Time on Wednesday, November 9, 2022. The Annual Meeting will be held virtually and stockholders can access the meeting by visiting www.virtualshareholdermeeting.com/ADP2022.

A Notice of Internet Availability of Proxy Materials or the proxy statement for the 2022 Annual Meeting of Stockholders is first being mailed to stockholders on or about Thursday, September 22, 2022.

The purposes of the meeting are to:

1. Elect a board of directors;
   
2. Hold an advisory vote on executive compensation;
   
3. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2023;
 
4. Approve an amendment to the Automatic Data Processing, Inc. Amended and Restated Employees’ Savings-Stock Purchase Plan to increase by 5,000,000 shares the number of shares of our common stock that may be acquired by employees thereunder; and
 
5. Transact any other business that may properly come before the meeting or any adjournment(s) or postponement(s) thereof.

Only stockholders of record at the close of business on September 12, 2022 are entitled to receive notice of, to attend, and to vote at the 2022 Annual Meeting. If you plan to attend the virtual meeting, please note the registration and log-in procedures described under “How Can I Participate in the Meeting?” on page 1 of the proxy statement. A list of the stockholders entitled to vote at the Annual Meeting will be available for inspection during the Annual Meeting at www.virtualshareholdermeeting.com/ADP2022, upon registration and log-in.

Your vote is important, and we urge you to vote whether or not you plan to attend the virtual meeting. The Notice of Internet Availability of Proxy Materials instructs you on how to access our proxy materials and vote via the Internet. If you receive a paper copy of the proxy materials, you may also vote by telephone or by completing, signing, dating and returning the accompanying printed proxy in the enclosed envelope, which requires no postage if mailed in the United States.

By order of the Board of Directors
 
DOROTHY WISNIOWSKI
Secretary

September 22, 2022
Roseland, New Jersey


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TABLE OF CONTENTS

      Page
2022 Proxy Statement Summary i
   
Questions and Answers About the Annual Meeting and Voting 1
   
Proposal 1 Election of Directors 7
Stockholder Approval Required 16
   
Corporate Governance 17
Board Leadership Structure 17
Board Composition and Director Succession Planning 17
Director Nomination Process 18
Director Orientation and Continuing Education 19
Director Overboarding Policy 19
Retirement Policy 20
Committees of the Board of Directors 20
Audit Committee 21
Nominating/Corporate Governance Committee 22
Compensation and Management Development Committee 23
Corporate Development and Technology Advisory Committee 23
The Board’s Role in Risk Oversight 24
The Board’s Role in Strategy Oversight 28
The Board’s Role in Human Capital Management and Talent Development 28
Corporate Social Responsibility and Sustainability 29
Communications with All Interested Parties 30
Transactions with Related Persons 30
Availability of Corporate Governance Documents 31
Compensation Committee Interlocks and Insider Participation 31
   
Compensation of Non-Employee Directors 32
Director Compensation Table For Fiscal Year 2022 34
   
Security Ownership of Certain Beneficial Owners and Management 36
   
Equity Compensation Plan Information 38
   
Proposal 2 Advisory Vote on Executive Compensation 39
Stockholder Approval Required 39
   
Compensation Discussion and Analysis 40
Executive Summary 40
Compensation Principles 49
Cash Compensation 52
Long-Term Incentive Compensation Programs 56
Other Compensation Components and Considerations 59


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Compensation and Management Development Committee Report       62
 
Compensation of Executive Officers 63
Summary Compensation Table for Fiscal Year 2022 63
All Other Compensation for Fiscal Year 2022 65
Grants of Plan-Based Awards Table for Fiscal Year 2022 67
Restricted Stock/Performance Stock Units 68
Stock Options 69
Outstanding Equity Awards for Fiscal Year-End 2022 70
Outstanding Equity Vesting Schedule for Fiscal Year-End 2022 72
Option Exercises and Stock Vested Table for Fiscal Year 2022 75
Pension Benefits for Fiscal Year 2022 76
Automatic Data Processing, Inc. Pension Retirement Plan 77
Supplemental Officers Retirement Plan 77
Deferred Compensation Program 78
Executive Retirement Plan 78
Canada Supplementary Excess Retirement Plan 79
Non-Qualified Deferred Compensation for Fiscal Year 2022 80
 
Potential Payments to Named Executive Officers Upon Termination or Change in Control 81
Change in Control Severance Plan for Corporate Officers 81
Corporate Officer Severance Plan 82
Health Coverage 83
Deferred Compensation 83
Termination and Change in Control Tables 83
Potential Payments upon Termination or Change in Control for Carlos A. Rodriguez 84
Potential Payments upon Termination or Change in Control for Don McGuire 85
Potential Payments upon Termination or Change in Control for Maria Black 86
Potential Payments upon Termination or Change in Control for John C. Ayala 87
Potential Payments upon Termination or Change in Control for Donald Weinstein 88
Potential Payments upon Termination or Change in Control for Kathleen A. Winters 89
   
CEO Pay Ratio 90
   
Audit Committee Report 91
   
Independent Registered Public Accounting Firm’s Fees 93
   
Proposal 3 Appointment of Independent Registered Public Accounting Firm 94
Stockholder Approval Required 94


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Proposal 4 Approval of an Amendment to the Automatic Data Processing, Inc. Amended and Restated Employees’ Savings-Stock Purchase Plan       95
Stockholder Approval Required 98
     
Stockholder Proposals and Nominations 99
     
Electronic Delivery of Future Stockholder Communications 101
     
Appendix A: Reconciliation of GAAP and Non-GAAP Information A-1
     
Appendix B: Automatic Data Processing, Inc. Amended and Restated Employees’ Savings-Stock Purchase Plan B-1


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2022 Proxy Statement Summary

Our summary highlights certain information contained elsewhere in the proxy statement and does not contain all of the information that you should consider. You should read the entire proxy statement carefully before voting.

2022 Annual Meeting of Stockholders
Time and Date 10:00 a.m. Eastern Standard Time, November 9, 2022
Live Webcast www.virtualshareholdermeeting.com/ADP2022
Record Date Stockholders of record at the close of business on September 12, 2022 are entitled to vote at the virtual meeting or by proxy.
Admission      

The Annual Meeting will be a virtual meeting conducted on the following website: www.virtualshareholdermeeting.com/ADP2022

To participate in the virtual meeting, you will need the 16-digit control number that is printed in the blue box on your Notice of Internet Availability of Proxy Materials or in the box marked by the arrow on your proxy card (if you received a printed copy of the proxy materials). If your shares are held in the name of a bank, brokerage firm or other nominee, you should follow the instructions provided by them in order to participate in the virtual meeting. We recommend that you log in 15 minutes before the start of the 2022 Annual Meeting to ensure sufficient time to complete the check-in procedures.

Proxy Materials

Under rules adopted by the Securities and Exchange Commission (“SEC”), we are furnishing proxy materials to our stockholders primarily via the Internet instead of mailing printed copies of those materials to each stockholder.

On September 22, 2022, we commenced the mailing to our stockholders of a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials. Our proxy materials were mailed to those stockholders who have previously asked to receive paper copies. If you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.

How to Vote

The Notice of Internet Availability of Proxy Materials instructs you on how to vote through the Internet.

If you receive a paper copy of the proxy materials, you may also vote your shares by telephone or by completing, signing, dating and returning the accompanying printed proxy in the enclosed envelope, which requires no postage if mailed in the United States.


Voting Matters and Board Voting Recommendation
      Proposal       Board
Recommendation
      Page Reference For
More Detail
Proposal 1: Election of directors For Each Nominee 7
Proposal 2: Advisory resolution to approve compensation of named executive officers For 39
Proposal 3: Ratification of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2023 For 94
Proposal 4: Approve an Amendment to the Employees’ Savings-Stock Purchase Plan For 95

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2022 Proxy Statement Summary

The board of directors has nominated the following individuals for election as directors. Please refer to page 7 in this proxy statement for important information about the qualifications and experience of each of the following director nominees. Each director nominee has consented to being named in this proxy statement and has agreed to serve if elected. The board of directors recommends a vote FOR each of the nominees for director.

Election of Directors (Proposal 1)
Name Age Director
Since
Principal Occupation Independent Committee
Memberships
AC CMDC NCGC CDTAC
Peter Bisson 65 2015 Retired Director and Global Leader of the High-Tech Practice at McKinsey & Company Chair
David V. Goeckeler 60 2022 CEO of Western Digital Corporation
Linnie M. Haynesworth 65 2020 Retired Sector Vice President and General Manager of Northrop Grumman Corporation
John P. Jones
(Board Chairman)
71 2005 Retired Chairman and Chief Executive Officer of Air Products and Chemicals, Inc.
Francine S. Katsoudas 52 2019 Executive Vice President and Chief People, Policy & Purpose Officer of Cisco Systems, Inc.
Nazzic S. Keene 61 2020 Chief Executive Officer of Science Applications International Corporation
Thomas J. Lynch(1) 67 2018 Chairman and Former Chief Executive Officer of TE Connectivity Ltd.
Scott F. Powers 63 2018 Former President and Chief Executive Officer of State Street Global Advisors Chair
William J. Ready 42 2016 Chief Executive Officer of Pinterest, Inc.
Carlos A. Rodriguez 58 2011 Chief Executive Officer of Automatic Data Processing, Inc.
Sandra S. Wijnberg 66 2016 Former Executive Advisor, Partner and Chief Administrative Officer of Aquiline Holdings ,
Chair

AC – audit committee
CMDC – compensation and management development committee
NCGC – nominating/corporate governance committee
CDTAC – corporate development and technology advisory committee
Chair – committee chair
– financial expert member of audit committee

(1) Mr. Clark is not standing for re-election. Effective immediately after our Annual Meeting, Mr. Lynch will become the chair of our CMDC.

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2022 Proxy Statement Summary

 

We believe our board composition strikes a balanced approach to director tenure and allows the board to benefit from a mix of newer directors who bring fresh perspectives and seasoned directors who bring continuity and a deep understanding of our complex business

Director Nominee Highlights
91% are independent
10 of our 11 director nominees are independent
36% are women
4 of our 11 director nominees are women
27% are racially diverse
3 of our 11 director nominees are racially diverse
2 Hispanic/Latino director nominees
1 Black director nominee
Average age of 61 years
As of our 2022 Annual Meeting, the average age of our 11 director nominees will be 61 years


Our director nominees bring to the board a balance of skills and expertise aligned to our strategic direction

A more detailed matrix of relevant skills by individual director is set forth on page 9.

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2022 Proxy Statement Summary

Advisory Resolution to Approve Executive Compensation (Proposal 2)

Consistent with the stockholders’ advisory vote at our 2017 Annual Meeting of Stockholders, we determined to hold the advisory say-on-pay vote to approve our named executive officer (“NEO”) compensation on an annual basis. Therefore, we are asking our stockholders to approve, on an advisory basis, our named executive officer compensation for fiscal year 2022. Our stockholders will have the opportunity to approve, on an advisory basis, our NEO compensation for fiscal year 2023 at the 2023 Annual Meeting of Stockholders.

The board of directors recommends a vote FOR this resolution because it believes that the policies and practices described in the “Compensation Discussion and Analysis” section beginning on page 40 of this proxy statement are effective in achieving the company’s goals of linking pay to performance and levels of responsibility, encouraging our executive officers to remain focused on both short-term and long-term financial, transformation, client satisfaction and environmental, social and governance (“ESG”) goals of the company, and aligning the interests of our executive officers with the interests of our stockholders by linking executive performance to stockholder value.

At our 2021 Annual Meeting of Stockholders, our stockholders approved the compensation of our fiscal year 2021 NEOs by a vote of approximately 82% in favor.

Ratification of the Appointment of Auditors (Proposal 3)
We are asking our stockholders to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2023. A summary of fees paid to Deloitte & Touche LLP for services provided in fiscal years 2022 and 2021 is provided on page 93 of this proxy statement. The board of directors recommends a vote FOR this ratification.
Approve the Amendment to the Employees’ Savings-Stock Purchase Plan (Proposal 4)

We are asking our stockholders to approve an amendment to the Automatic Data Processing, Inc. Amended and Restated Employees’ Savings-Stock Purchase Plan (as amended, the “Purchase Plan”) to increase by 5,000,000 shares the number of shares of our common stock that can be acquired by employees thereunder, so that the total number of shares available for future issuance under the Purchase Plan is 5,284,914, which reflects the remaining shares available prior to the proposed amendment plus the additional 5,000,000 shares.

The share reserve under the Purchase Plan has not been increased since 2010. Our stockholders adopted the Purchase Plan at the 1968 Annual Meeting of Stockholders, and it has been amended and approved by our stockholders from time to time since then.

We believe there are benefits to the additional incentive inherent in the ownership of our capital stock by our eligible associates, who are important to us. The board of directors recommends a vote FOR this amendment.



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2022 Proxy Statement Summary

Fiscal Year 2022 Business Highlights

Our Strategic Pillars. Our business strategy is based on three strategic pillars, which are designed to position us as the global market leader in human capital management (“HCM”) technology and services:

Our Strategic Pillars
HCM Solutions HRO Solutions Global Solutions

Grow a complete suite of cloud-based HCM solutions (HCM Solutions)
Grow and scale our market-leading HR outsourcing solutions (HRO Solutions)
Leverage our global presence to offer clients HCM solutions wherever they do business (Global Solutions)

ADP delivered financial results and performance exceeding its expectations on multiple fronts for fiscal year 2022:

 
HIGHLIGHTS     STOCKHOLDER FRIENDLY ACTIONS
$16.5 billion in revenue
15% Earnings Per Share Growth to $7.00 for the year
Record level of over $2 billion in new business bookings
990K+ clients globally, up 7% year over year
Over 39 million workers paid across 140 countries and territories and 1 in 6 U.S. workers paid
$3.6 billion in cash returned to stockholders
$1.7 billion Dividends
$2.0 billion Share Repurchases
47 Consecutive Years of Dividend Increases
 
 
INNOVATION
Significant progress on the roll-out of a new unified user experience (“UX”) across our strategic products and solutions
Transitioned hundreds of thousands of clients, generating positive feedback from this transition to even more intuitive HCM workflows
Expanded DataCloud capabilities including Global Insight Dashboard for multinational clients, as well as enhanced Diversity, Equity, and Inclusion (“DEI”) capabilities to better enable clients to improve on DEI matters
Several enhancements to Wisely program including launch of Bill Pay, self-enrollment, full digital wallet capability, and more deeply integrated Earned Wage Access solution, all of which combine for a more frictionless and more powerful experience for workers
Awarded an unprecedented seventh consecutive top HR product award at annual HR Tech conference

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2022 Proxy Statement Summary

We are the leading provider of cloud-based HCM technology solutions to employers around the world. Through our extensive suite of products, coupled with industry and compliance expertise, we help our clients navigate a highly dynamic world of work in order to give them peace-of-mind and reduce the time and effort they allocate to non-core tasks. This, in turn, allows our clients to better focus on what matters most to them – running their businesses.

Over the decades since pioneering our industry, we have reshaped HCM time and again by continuously innovating across our technology platforms and service solutions. Our commitment to innovation is continuous amid challenging business and operating environments – whether it be a global recession or bull market, an international conflict or global pandemic. We believe businesses, our clients, serve as a force for progress, and we remain committed to rethinking a better, more personalized world at work to help our clients and their workers achieve their full potential. That commitment underpins our drive to innovate across our portfolio in order to deliver sustainable, profitable growth.

In this context, ADP remained focused on delivering exceptional value to our clients in fiscal year 2022. The dedication and resilience demonstrated by our associates resulted in revenue and earnings growth that was consistently ahead of our own expectations. Our strong top-line revenue growth, balanced with solid margin performance, drove earnings per share (“EPS”) growth
of 15%. Other key business drivers such as new business bookings and client retention reached impressive levels and our overall results, together with our focus on sound capital allocation, have served to further strengthen our business model with high levels of recurring revenue, strong operating cash flow, and a solid balance sheet.

Our strategy continues to be the same -- leverage the strength of our model to reinforce our competitive position by, first and foremost, reinvesting in the business. We believe that balancing investments in innovative solutions, client service tools, and distribution is critical in strengthening our market-leading offerings. We supplement these investments through a disciplined approach to M&A. This focus on delivering top-line revenue growth, while also improving the efficiency and effectiveness of our operations, is complemented by a commitment to return excess cash to stockholders through dividends and disciplined share buybacks.

Excellent execution across our business, together with our steady investments in sales, product, technology, and our digital transformation, have positioned us favorably to support the creation of long-term stockholder value by balancing top-line revenue growth with margin improvement to drive EPS growth. As we look ahead to fiscal year 2023 and beyond, we are focused on market-leading innovation, further simplification of our product portfolio, continued digital transformation and an unwavering commitment to best-in-class service.


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2022 Proxy Statement Summary

Compensation Principles

We believe that compensation should be designed to create a direct link between performance and stockholder value. Five principles that guide our decisions involving executive compensation are that compensation should be:

1 based on (i) the overall performance of the company, (ii) the performance of each executive’s business unit when applicable and (iii) each executive’s individual performance
  
2 closely aligned with the short-term and long-term financial, transformation, client satisfaction and ESG objectives that build sustainable long-term stockholder value
 
3 competitive, in order to attract and retain executives critical to our long-term success
 
4 consistent with high standards of corporate governance and best practices
 
5 designed to dampen the incentive for executives to take excessive risks or to behave in ways that are inconsistent with the company’s strategic planning processes and high ethical standards

2022 Compensation Highlights

Consistent with our pay for performance philosophy, the compensation of our NEOs is structured with a significant portion of their total compensation at risk and paid based on the performance of the company as a whole. Our financial performance in fiscal year 2022 impacted the compensation for all of our executive officers, not just our

NEOs, in several ways, most notably through our annual cash bonus plan and performance-based stock unit (“PSU”) program. Please refer to the “Compensation Discussion and Analysis” section on page 40 of this proxy statement, and the tables and narratives that follow on page 63 of this proxy statement, for more details concerning the compensation of our NEOs.



Key highlights of our fiscal year 2022 executive compensation program
Base salary: Our NEOs received salary increases in fiscal year 2022. Salaries increased by 3.0% for NEOs who did not experience a change in role during the fiscal year. Salary increases ranged from 16.7% to 45.4% for NEOs who were appointed to new positions during the fiscal year, as set forth in greater detail on page 52 of this proxy statement.
Annual cash
bonus:
Fiscal year 2022 target bonuses were the same as a percentage of base salary as in fiscal year 2021 for all the NEOs except for Mr. McGuire, whose target bonus percentage increased from 80% to 150%, and for each of Ms. Black and Mr. Ayala, whose target percentage increased from 100% to 150%, to align closer to market for their new roles, effective at the time of their appointments and prorated accordingly for fiscal year 2022. Annual bonuses were based on the financial performance of the company as well as transformation, client satisfaction and ESG performance goals. For fiscal year 2022, our NEOs received cash bonuses that averaged 155.1% of target.
Equity awards: As part of our equity compensation program in fiscal year 2022, consistent with fiscal year 2021, we granted our executive officers PSUs and stock options.

2022 Incentive Compensation Performance Metrics

Performance for all metrics, including the transformation, client satisfaction and ESG objectives under the annual cash bonus plan, are formulaically measured, based on predetermined and objectively quantifiable goals. Targets and results for our financial metrics exclude the impact of

certain limited items pursuant to predetermined categories of adjustments established by the committee at the time that targets were set.

The committee’s determination of incentive compensation under our annual cash bonus plan for our executive officers, including our NEOs, was based on fiscal year 2022 revenue



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2022 Proxy Statement Summary

growth, new business bookings growth, and adjusted EBIT growth as well as transformation, client satisfaction and ESG objectives.

These fiscal year 2022 goals were established consistent with the committee’s long-standing methodology in setting such goals and as such, align to the financial earnings

guidance ADP set in July 2021 for fiscal year 2022 and reflect ADP’s expectations and assumptions at that time.

Details with regard to the transformation, client satisfaction and ESG objectives are provided on page 55 and the financial goals and performance results are summarized below.



Annual Cash Bonus
Plan Measures
      Plan Targets       Plan Results
Revenue Growth 7.2% 10.9%, excluding the impact of foreign currency fluctuations in excess of the fluctuations assumed in the target
New Business Bookings Growth(1) 17.9% 18.4%
Adjusted EBIT Growth(2) 8.1% 15.2%, excluding the impact of foreign currency fluctuations in excess of the fluctuations assumed in the target

1 For fiscal year 2022, our new business bookings definition includes annualized recurring revenues anticipated from sales orders to new and existing clients for Employer Services and Professional Employer Organization (“PEO”) Services. It excludes revenue that is one-time in nature and zero-margin benefits pass-throughs.
2 Our adjusted EBIT measure excludes the impact of taxes, certain interest expense, certain interest income, and certain other items. We continue to include the interest income earned on investments associated with our client funds extended investment strategy and interest expense on borrowings related to our client funds extended investment strategy as we believe these amounts to be fundamental to the underlying operations of our business model. Refer to the table in Appendix A for a reconciliation from net earnings to adjusted EBIT for fiscal years 2022 and 2021.

For fiscal year 2022, our NEOs received cash bonuses that averaged 155.1% of target.

The incentive compensation under our PSU program was based on adjusted net income growth for fiscal year 2022. Targets and results exclude the impact of certain limited items pursuant to predetermined categories of adjustments established by the committee at the time the targets were set.
The adjusted net income goal was established consistent with the committee’s long-standing methodology in setting such a goal and as such, aligns to the financial earnings guidance ADP set in July 2021 for fiscal year 2022 and reflects ADP’s expectations and assumptions at that time.


PSU Program Measure Program Target Program Result
Adjusted Net Income Growth(3)       8.1%       16.4%, excluding the impacts of:
Foreign currency fluctuations in excess of the fluctuations assumed in the target
Asset write downs related to vacating certain leases early of $9.6 million and unplanned asset impairments of internally developed and purchased software of $9.5 million
A reversal of an accounts receivable write-down adjustment recorded in fiscal year 2020 which was incremental to the normal and customary accounts receivable reserve methodology

3 Our adjusted net income measure excludes the impact of certain one-time charges and benefits reflecting specific items that are not fundamental to our underlying business operations. Refer to the table in Appendix A for further detail on these items and a reconciliation from net earnings to adjusted net income for fiscal years 2022 and 2021.

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2022 Proxy Statement Summary

A payout percentage of 150% was achieved under our PSU program as a result of our fiscal year 2022 adjusted net income growth. This payout percentage would have been achieved even in the absence of the predetermined categories of adjustments reported in the table above. This payout percentage applies to year 1 of the fiscal year 2022 award, to year 2 of the fiscal year 2021 award and to year 3 of the fiscal year 2020 award. These awards will be earned and issued following the end of the corresponding three-year performance period ending in fiscal years 2024, 2023 and 2022, respectively.

The end of fiscal year 2022 marked the end of the three-year performance period for PSU awards granted in fiscal year 2020. Based on the average of the three fiscal years, these awards earned a payout percentage of 117%. As further described in the table on page 44, the payout percentages achieved for each of the individual three fiscal years in the applicable performance period are averaged to obtain the award level earned and issued as a percentage of target.


2022 Total Direct Compensation

A summary of fiscal year 2022 total direct compensation for our NEOs is set forth in the following table:

Name Base
Salary
Annual
Bonus
PSUs(3)(4) Stock
Options(3)
Restricted
Stock(5)
Total
Carlos A. Rodriguez
Chief Executive Officer
   $1,164,200    $3,627,600    $9,813,500    $5,800,000    $0    $20,405,300
Don McGuire(1)
Chief Financial Officer
$603,173 $1,306,040 $1,587,400 $420,000 $2,035,200 $5,951,813
Maria Black
President, ADP
$709,000 $1,558,000 $3,272,100 $1,020,000    $0 $6,559,100
John C. Ayala
Chief Operating Officer
$658,600 $1,363,300 $3,022,100 $1,020,000 $0 $6,064,000
Donald Weinstein
Corporate Vice President, Global Product & Technology
$618,000 $962,800 $2,596,700 $1,020,000    $0 $5,197,500
Kathleen A. Winters(2)
Former Chief Financial Officer
$168,350 $0 $2,795,600 $1,020,000 $0 $3,983,950

Footnotes:

1 Mr. McGuire’s salary was paid in his home country currency of Canadian dollars (CAD) and his salary amount has been converted to USD based on the average daily exchange rate for fiscal year 2022 of .790000 (CAD to USD). Mr. McGuire’s annual bonus has been converted from Canadian dollars (CAD) to USD using the June 2022 mid-month exchange rate of 0.784691 (CAD to USD), in accordance with the company's standard policy for globally mobile associates under the company’s annual cash bonus plan.
2 Ms. Winters’ salary reflects amounts paid through her last day of employment of September 30, 2021. Ms. Winters was not eligible for a bonus for fiscal year 2022.

3

Equity amounts are the grant date fair values for fiscal year 2022, which are the same amounts disclosed in the “Summary Compensation Table for Fiscal Year 2022” on page 63 of this proxy statement. Amounts are rounded for ease of presentation.

4 Only the grant date fair value, calculated in accordance with FASB ASC Topic 718, for the performance year in which performance targets are set is reported. Accordingly, the amounts for the PSU awards represent the grant date fair value of the first, second and third tranche of the target awards that were granted in fiscal years 2022, 2021 and 2020, respectively.

5

Mr. McGuire’s restricted stock award, granted in the form of restricted stock units (as he was an international participant at time of grant), was made in connection with his promotion to chief financial officer. The actual grant date fair value differs slightly from the award target amount of $2,100,000 as it was calculated in accordance with FASB ASC Topic 718 and reflects a discount for no dividend payments during the vesting period.


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2022 Proxy Statement Summary

The mix of target total direct compensation (base salary, cash bonus and long-term incentive awards) for fiscal year 2022 was designed to deliver the following approximate

proportions of total compensation to Mr.Rodriguez, our chief executive officer, and the other NEOs if company and individual target levels of performance are achieved:



Compensation Good Governance and Best Practices

Our compensation programs reflect our strong commitment to good governance.

What we do
Pay for performance: We design our compensation programs to link pay to performance and levels of responsibility, to encourage our executive officers to remain focused on both the short-term and long-term financial, transformation, client satisfaction and ESG goals of the company and to link executive performance to stockholder value.
Annual say-on-pay vote: We hold an advisory say-on-pay vote to approve our NEO compensation on an annual basis.
Clawback policy: ADP’s Clawback Policy allows for the recovery of both cash and equity incentive compensation from any current or former executive who engages in any activity that is in conflict with or adverse to ADP’s interests, including fraud or conduct contributing to any financial restatements or irregularities.
Stock ownership guidelines: We maintain stock ownership guidelines to encourage equity ownership by our executive officers.
Limited perquisites: We provide limited perquisites that are viewed as consistent with our overall compensation philosophy.
     
Double trigger change in control payments: Our Change in Control Severance Plan for Corporate Officers includes “double-trigger” provisions, such that payments of cash and vesting of equity awards occur only if termination of employment without cause or with good reason occurs during the two-year period after a change in control.
Independence of our compensation and management development committee and advisor:The compensation and management development committee of our board of directors, which is comprised solely of independent directors, utilizes the services of FW Cook as an independent compensation consultant. FW Cook reports to the committee, does not perform any other services for the company other than in connection with an annual review of competitive director compensation for the nominating/corporate governance committee of our board of directors, and has no economic or other ties to the company or the management team that could compromise their independence and objectivity.

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2022 Proxy Statement Summary

What we do
Equity plan best practices: Our 2018 Omnibus Award Plan, approved by stockholders in November 2018, incorporates certain governance best practices, including a minimum vesting period of one-year (with certain limited exceptions), a minimum 100% fair market value exercise price (except for substitute awards from an acquired or merged company), no “liberal share recycling” of stock options or stock appreciation rights and no “liberal” change in control definition.
     
Stockholder engagement: As described below under “Fiscal Year 2022 Stockholder Engagement,” our investor engagement program promotes an active dialogue with our largest stockholders on a range of topics related to our strategy, corporate governance and executive compensation programs.

What we don’t do

No-hedging policy: We prohibit all of our directors and employees, including our executive officers, from engaging in any hedging or similar transactions involving ADP securities.
No-pledging policy: We prohibit all of our directors and employees, including our executive officers, from holding ADP securities in a margin account or pledging ADP securities as collateral for a loan.
No repricing of underwater stock options without stockholder approval: We may not lower the exercise price of any outstanding stock options or otherwise provide economic value to the holders of underwater stock options in exchange for the forfeiture of such awards without stockholder approval.
No discount stock options: The exercise price of our stock options is not less than 100% of the fair market value of our common stock on the date of grant. 
No IRC Section 280G or 409A tax gross-ups: We do not provide tax gross-ups under our change in control provisions or deferred compensation programs.
No current dividends on unearned performance stock units: We do not pay dividends in respect of unearned PSUs; rather, dividend equivalents are accrued over the applicable performance period and are paid only if the units are earned and shares are issued at the end of the performance period.

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2022 Proxy Statement Summary

Fiscal Year 2022 Corporate Governance Highlights

We have a history of strong corporate governance. We are committed to sound corporate governance practices that provide our stockholders with meaningful rights and foster strong independent leadership in our boardroom.

ADP Corporate Governance Framework
Annual election of directors 
Majority voting standard
One share, one vote
Proxy access by-law
Subject to certain exceptions on a case by case basis, a “no overboarding” policy which states that no non-executive director can serve on more than 4 public boards (including ADP) and, in the case of a director who is an executive officer of ADP or other company, no more than 2 public boards (including ADP)
No poison pill
Independent board chair and independent board committees
Stockholder ability to call special meetings
Stockholder right to act by written consent
Annual board assessment of corporate governance best practices
     
Significant board role in strategy and risk oversight, including annual strategy session
Annual product session
Non-employee director pay limits and stock ownership requirements
Annual succession planning review
Director orientation and continuing education for directors
Active stockholder engagement to better understand investor perspectives
Comprehensive corporate social responsibility (“CSR”)/ sustainability report detailing environmental, social and governance (“ESG”) matters, including information security, privacy and diversity
Executive sessions of independent directors held regularly

We firmly believe that creating sustainable long-term value for stockholders is enabled through such strong governance practices and open dialogue with stockholders through continuous direct engagement.

Our fiscal year 2022 corporate governance actions and enhancements included:

Ongoing board refreshment with the appointment of a new board member with domain expertise in cloud computing infrastructure, software development, cybersecurity, and data protection (February 2022)
   
Issued fourth global corporate social responsibility report, including EEO-1 disclosure, and aligned to the Sustainability Accounting Standards Board (SASB) reporting framework and the Global Reporting Initiative (GSI) framework (March 2022)
 
Pledged to achieve net zero greenhouse gas emissions by 2050 and subsequently committed to short- and medium-term targets towards this commitment (September 2021 and August 2022)
   
Introduced an environmental footprint objective into annual executive bonus plan for FY’22 (August 2021)

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2022 Proxy Statement Summary

Fiscal Year 2022 Stockholder Engagement

Invited stockholders representing nearly half of our shares outstanding to discuss our strategy, corporate governance and executive compensation programs, and held meetings with stockholders representing over 30% of our shares outstanding
    
Over 100 meetings held with top-50 stockholders to discuss business performance and seek overall feedback

Our Stockholder and Stakeholder Engagement Process

We value stockholder engagement and feedback as we strive to deliver strong financial performance and sustained value creation for our investors. Our ongoing investor engagement program includes outreach focused on the company’s strategy, corporate governance and executive compensation programs. In addition to management, many of these engagements include participation by certain members of our board of directors. Director participation will continue to be part of our engagement program in fiscal year 2023.

What we learn through our ongoing engagements is regularly shared with our board of directors and incorporated into our disclosures, plans and practices, as appropriate. For example, over the past year, investors have sought to better understand our environmental sustainability program and efforts to reduce greenhouse gas emissions. In response, as set forth in “Corporate Social Responsibility and Sustainability” below, ADP has been working through a series of workstreams as an enterprise this past year to develop targets and a climate roadmap of initiatives that will drive reduction in our GHG emissions. Further detail on our near-term focus areas and specific short and medium-term targets are available on investors.adp.com.


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2022 Proxy Statement Summary

We engage with many other stakeholders throughout the year on a range of sustainability and CSR issues, including talent activation, culture and human capital. Active stakeholder engagement and dialogue is an integral part of our sustainability commitment and continues to drive our work on our CSR and sustainability reporting, intended

to capture the issues most important to our business and our stakeholders. In line with these efforts, we are also committed to working collaboratively with a number of third-party providers of ESG reports and ratings to ensure we transparently provide the appropriate information to improve the accuracy of their data.


We look forward to maintaining this ongoing dialogue with our investors and other stakeholders.
We are committed to proactively engaging with stockholders
Our Board is highly attuned to stockholder feedback, including governance & compensation best practices
 
Monitor & Assessment
Board and management review:
Annual meeting voting results
Investor feedback from investor relations & governance engagement
Trends and best practices across the governance, executive compensation, regulatory, and environmental & social landscape
This review allows ADP to identify and prioritize potential topics for discussion
Outreach & Engagement
ADP regularly meets with stockholders to actively gather feedback on a range of issues
Invited stockholders representing nearly half of our shares outstanding to discuss our strategy, corporate governance and executive compensation programs, and held meetings with stockholders representing over 30% of our shares outstanding
        
Evaluation & Response
Board of directors and key committees evaluate and discuss feedback from stockholders and key stakeholders
ADP enhances disclosure and practices, as appropriate
ADP updates governance documents to align with best practices and incorporates feedback, as appropriate
         

Corporate Social Responsibility and Sustainability

We have a duty as global citizens to act responsibly for the greater good, to enable truly inclusive cultures and to do our part to protect shared resources. ADP is committed to delivering more human, simple and sustainable business solutions for all of those we serve. We firmly believe diverse

workforces drive innovation and lead to better corporate performance. We value and intentionally choose to cultivate a culture that embraces all forms of gender, race, ethnicity, age, sexual identity and orientation, veteran status and ability. We strive to embody an inclusive culture that extends beyond our diversity and inclusion function and believe that leadership drives performance and innovation


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2022 Proxy Statement Summary

through employee growth, belonging and greater purpose. Our commitment to corporate social responsibility (“CSR”) is a core principle within ADP’s mission, vision and values, and encompasses everything from corporate governance, ethics and environmental stewardship to diversity, philanthropy and promoting employee growth and

belonging around the world. We believe sustainability is about creating value for all of our stakeholders: our people, our clients, our partners, our investors and our community at large. We continue to deepen our sustainability efforts in four key pillars:


Innovation       Associates       Community       Environment

At ADP, we design for people. By working at the forefront of our clients’ needs, we anticipate trends and create solutions together. Our innovation strategy is simple: We innovate by anticipating the future of work, the future of HCM and the future of pay in order to meet the evolving and unique needs of our clients and their workers.

Our long-term business success is closely linked to our commitment to creating an environment in which our associates thrive. We believe in a competitive, inclusive and diverse workforce that represents the communities we serve. This is vital in building a company where our employees feel valued, welcome, and can achieve their full potential.

Responsibility to the world around us is at the heart of our business. We believe that our company is only as strong as the communities in which we operate. By elevating our communities, we support critical causes and provide a foundation for our business to continue thriving.

Environmental sustainability is integral to both our CSR program and our business strategy. We understand which environmental issues are relevant to our business and offer opportunities for us to make a meaningful impact. We also believe that creating sustainable products and streamlining our operations drives efficiency, innovation and, ultimately, long-term value-creation.

Fiscal Year 2022 Sustainability Highlights and Looking Ahead

Issued fourth CSR report (March 2022)
    
EE0-1 report disclosure in CSR report (March 2022)

Increasing energy efficiency and reducing greenhouse gas emissions associated with our operations are central goals for our environmental sustainability program. In 2021, ADP committed as an organization to achieve net zero greenhouse gas emissions across scopes 1, 2 and 3 by 2050.

As an enterprise, we have been working through a series of workstreams this past year to develop our targets and a climate roadmap of initiatives that will drive reduction in our GHG emissions. Further detail on our near-term focus areas and specific short and medium-term targets are available on investors.adp.com.


CSR and Sustainability Governance

Our board of directors is squarely focused on the sustainability of our business for the long-term. In line with this focus, the nominating/corporate governance committee oversees the company’s policies and programs on issues of corporate citizenship, including our CSR and environmental sustainability program, as well as ADP’s philanthropic activities. The committee receives periodic reports and updates from the company’s chief diversity and

talent officer (“CDTO”) and reports back on these matters to the full board. Our board members have complete and open access to senior members of management, including our CDTO. ADP’s CSR and sustainability activities are coordinated by our CDTO, who reports to ADP’s chief human resources officer.

We invite you to visit sustainability.adp.com to read more about our CSR and sustainability efforts.


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2022 Proxy Statement Summary

Important Dates for the 2023 Annual Meeting of Stockholders

Please refer to the “Stockholder Proposals and Nominations” section on page 99 of this proxy statement for more information regarding the applicable requirements for submission of stockholder proposals. If a stockholder intends to submit any proposal (including pursuant to our proxy access by-law) for inclusion in the company’s proxy statement for the company’s 2023 Annual Meeting of Stockholders in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the

“Exchange Act”), the proposal must be received by the corporate secretary of the company no later than May 25, 2023.

Separate from the requirements of Rule 14a-8 relating to the inclusion of a stockholder proposal in the company’s proxy statement, the company’s amended and restated by-laws require that notice of a stockholder nomination for candidates for our board of directors (other than pursuant to our proxy access by-law) or any other business to be considered at the company’s 2023 Annual Meeting of Stockholders must be received by the company no earlier than July 12, 2023, and no later than August 11, 2023.


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Proxy Statement

The board of directors of Automatic Data Processing, Inc. is soliciting your proxy to vote at the 2022 Annual Meeting of Stockholders to be held on November 9, 2022 at 10:00 a.m. Eastern Standard Time, and at any postponement(s) or adjournment(s) thereof. The 2022 Annual Meeting will be a virtual meeting conducted on the following website: www.virtualshareholdermeeting.com/ADP2022

Under rules adopted by the SEC, we are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies of those materials to each stockholder. On September 22, 2022, we commenced the mailing to our stockholders of a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our annual report on Form 10-K (which is not a part of the proxy soliciting material). This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the Annual Meeting, and help conserve natural resources.

Our proxy materials were mailed to those stockholders who have previously asked to receive paper copies. If you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.

The only outstanding class of securities entitled to vote at the meeting is our common stock, par value $0.10 per share. At the close of business on September 12, 2022, the record date for determining stockholders entitled to notice of, to attend, and to vote at the meeting, we had 415,291,672 issued and outstanding shares of common stock (excluding 223,420,770 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.

This proxy statement and our annual report on Form 10-K are also available on our corporate website at www.adp.com under “Financial Information” in the “Investors” section.


Questions and Answers About the Annual Meeting and Voting

WHY AM I
RECEIVING THESE
PROXY MATERIALS?
     

We are providing these proxy materials to holders of shares of the company’s common stock, par value $0.10 per share, in connection with the solicitation of proxies by our board of directors for the forthcoming 2022 Annual Meeting of Stockholders to be held on November 9, 2022 at 10:00 a.m. Eastern Standard Time, and at any postponement(s) or adjournment(s) thereof. The company will bear all expenses in connection with this solicitation.

HOW CAN I
PARTICIPATE IN
THE MEETING?

 

The 2022 Annual Meeting will be held in a virtual meeting format. The 2022 Annual Meeting will be conducted via live webcast, beginning promptly at 10:00 a.m. Eastern Standard Time on Wednesday, November 9, 2022.

Admission to the meeting is restricted to stockholders of record as of September 12, 2022 and/or their designated representatives. The 2022 Annual Meeting can be accessed from the following website: www.virtualshareholdermeeting.com/ADP2022

We recommend that you log in 15 minutes before the start of the 2022 Annual Meeting to ensure sufficient time to complete the check-in procedures.

To participate in the virtual meeting, you will need the 16-digit control number that is printed in the blue box on your Notice of Internet Availability of Proxy Materials or in the box marked by the arrow on your proxy card (if you received a printed copy of the proxy materials). If your shares are held in the name of a bank, brokerage firm or other nominee, you should follow the instructions provided by them in order to participate in the virtual meeting.

You will have the same rights and opportunities to participate as you would have at a physical annual meeting. You will be able to participate in the virtual meeting, vote your shares electronically, and submit your questions during the meeting by visiting the website identified above.


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Questions and Answers About the Annual Meeting and Voting

WHAT IF I HAVE
TECHNICAL
DIFFICULTIES
OR TROUBLE
ACCESSING THE
VIRTUAL MEETING?
     

If you encounter any technical difficulties logging into the website (www.virtualshareholdermeeting.com/ADP2022) or during the virtual meeting, there will be a 1-800 number and international number available on the website to assist you. Technical support will be available 15 minutes prior to the start time of the virtual meeting.

HOW MANY SHARES
MUST BE PRESENT TO
HOLD THE MEETING?

 

The representation in person or by proxy of a majority of the issued and outstanding shares of stock entitled to vote at the meeting constitutes a quorum. Under our amended and restated certificate of incorporation, our amended and restated by-laws and under Delaware law, abstentions and “broker non-votes” are counted as present in determining whether the quorum requirement is satisfied. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

HOW CAN I VOTE
MY SHARES?

 

The Notice of Internet Availability of Proxy Materials instructs you on how to vote through the Internet.

If you receive a paper copy of the proxy materials, you may also vote your shares by telephone or by completing, signing, dating and returning the accompanying printed proxy in the enclosed envelope, which requires no postage if mailed in the United States.

Unless contrary instructions are indicated on the proxy, all shares represented by valid proxies received pursuant to this solicitation (and not revoked before they are voted) will be voted in accordance with the recommendations of our board of directors as indicated below. If you are a registered stockholder who would ordinarily be delivering your completed proxy card in person at the meeting, please follow the voting instructions that will be available on the website (www.virtualshareholdermeeting.com/ADP2022) during the 2022 Annual Meeting.

IF I HOLD SHARES
IN STREET NAME,
DOES MY BROKER
NEED INSTRUCTIONS
IN ORDER TO VOTE
MY SHARES?

 

If your shares are held in “street name” (i.e., your shares are held by a bank, brokerage firm or other nominee), you must provide voting instructions to your bank or broker by the deadline provided in the materials you receive from your bank or broker.

If you hold your shares in street name and you do not instruct your bank or broker as to how to vote your shares, your bank or broker may only vote your shares in its discretion on the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2023 (Proposal 3), but will not be allowed to vote your shares on any of the other proposals described in this proxy statement, including the election of directors.

Under applicable Delaware law, a broker non-vote will have no effect on the outcome of any of the other proposals described in this proxy statement because the non-votes are not considered in determining the number of votes necessary for approval.


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Questions and Answers About the Annual Meeting and Voting

WHAT MATTERS WILL
BE VOTED ON AT
THE MEETING, WHAT
ARE MY VOTING
CHOICES, AND HOW
DOES THE BOARD
OF DIRECTORS
RECOMMEND THAT
I VOTE?

      Proposal       Voting Choices       Board Recommendation

Proposal 1: Election of the 11 nominees named in this proxy statement to serve on the company’s board of directors

For
Against
Abstain

FOR election of all 11 director nominees

Proposal 2: Advisory resolution approving the compensation of the company’s named executive officers as disclosed in the “Compensation Discussion and Analysis” section on page 40 of this proxy statement and accompanying compensation tables

For
Against
Abstain

FOR

Proposal 3: Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2023

For
Against
Abstain

FOR

Proposal 4: Approve an Amendment to the Employees’ Savings-Stock Purchase Plan

For
Against
Abstain

FOR

So far as the board of directors is aware, only the above 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 the proxy.


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Questions and Answers About the Annual Meeting and Voting

HOW MANY VOTES
ARE NEEDED TO
APPROVE THE
PROPOSALS, AND
WHAT IS THE
EFFECT OF BROKER
NON-VOTES
OR ABSTENTIONS?
     

Proposal 1:

The affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote thereon is required to elect a director, provided that if the number of nominees exceeds the number of directors to be elected (a situation that the company does not anticipate), the directors shall be elected by the vote of a plurality of the shares represented in person or by proxy. Votes may be cast in favor of or against each nominee, or a stockholder may abstain from voting. Abstentions will have the effect of a negative vote, provided that if the number of nominees exceeds the number of directors to be elected, abstentions will be excluded entirely and will have no effect on the vote. If your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instruction. A broker non-vote will have no effect on the outcome of this proposal because the non-votes are not considered in determining the number of votes necessary for approval.

Proposal 2:

The affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote thereon is required to approve the advisory resolution on executive compensation. Votes may be cast in favor of or against this proposal or a stockholder may abstain from voting. Abstentions will have the effect of a negative vote. If your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instruction. A broker non-vote will have no effect on the outcome of the advisory resolution because the non-votes are not considered in determining the number of votes necessary for approval. Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to any named executive officer and will not be binding on or overrule any decisions by the compensation and management development committee or the board of directors.

Because we value our stockholders’ views, however, the compensation and management development committee and the board of directors will consider carefully the results of this advisory vote when formulating future executive compensation policy.

Proposal 3:

The affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote thereon is required to ratify the appointment of Deloitte & Touche LLP as the company’s independent registered public accounting firm for fiscal year 2023. Votes may be cast in favor of or against this proposal or a stockholder may abstain from voting. Abstentions will have the effect of a negative vote. Brokers have the authority to vote shares for which their customers did not provide voting instructions on the ratification of the appointment of Deloitte & Touche LLP.

Proposal 4:

The affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote thereon is required to approve the amendment to our Employees’ Savings-Stock Purchase Plan. Votes may be cast in favor of or against this proposal or a stockholder may abstain from voting. Abstentions will have the effect of a negative vote. If your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instruction. Broker non-votes will have no effect on the outcome of this proposal because the non-votes are not considered in determining the number of votes necessary for approval.


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Questions and Answers About the Annual Meeting and Voting

MAY I REVOKE MY
PROXY OR CHANGE
MY VOTE?
     

If your shares are registered in your name, you may revoke your proxy and change your vote prior to the completion of voting at the Annual Meeting by:

submitting a valid, later-dated proxy card or a later-dated vote in accordance with the voting instructions on the Notice of Internet Availability of Proxy Materials in a timely manner; or
giving written notice of such revocation to the company’s corporate secretary prior to the Annual Meeting or by voting at the Annual Meeting by following the instructions that will be available on the website (www.virtualshareholdermeeting.com/ADP2022) during the Annual Meeting

If your shares are held in “street name,” you should contact your bank or broker and follow its procedures for changing your voting instructions. You also may vote at the Annual Meeting by following the instructions provided by your bank or broker.

Only the latest validly executed proxy that you submit will be counted.

IS MY VOTE
CONFIDENTIAL?

 

Proxies and ballots identifying the vote of individual stockholders will be kept confidential from our management and directors, except as necessary to meet legal requirements in cases where stockholders request disclosure or in a contested election.

WHERE CAN I
FIND THE VOTING
RESULTS OF THE
ANNUAL MEETING?

 

The preliminary voting results will be announced at the Annual Meeting. The final voting results, which are tallied by independent tabulators and certified by independent inspectors, will be published in the company’s current report on Form 8-K, which we are required to file with the SEC within four business days following the Annual Meeting.

HOW CAN I ASK A
QUESTION DURING
THE VIRTUAL
ANNUAL MEETING?

 

You will be able to submit a written question during the Annual Meeting by following the instructions that will be available on the Annual Meeting website (www.virtualshareholdermeeting.com/ADP2022). As part of the virtual Annual Meeting, we will hold a question and answer session, during which we intend to answer questions submitted in accordance with our Annual Meeting rules (which will be available on the website) and that are relevant to the company and the meeting matters, as time permits. Questions and answers will be grouped by topic, and substantially similar questions will be grouped and answered once. If time does not permit us to address each question received during the Annual Meeting, the company’s answers will be posted to our corporate website at www.adp.com in the “Investors” section as soon as possible after the Annual Meeting.

WHO IS PAYING FOR
THE PREPARATION
AND MAILING
OF THE PROXY
MATERIALS
AND HOW WILL
SOLICITATIONS
BE MADE?

 

We are making this solicitation of proxies on behalf of our board of directors and will pay the solicitation costs. Our directors, officers and other employees may, without additional compensation except reimbursement for actual expenses, solicit proxies by mail, in person or by telecommunication. In addition, we have retained Innisfree M&A Incorporated at a fee estimated to be approximately $25,000, plus reasonable out-of-pocket expenses, to assist in the solicitation of proxies. We will reimburse brokers, fiduciaries, custodians, and other nominees for out-of-pocket expenses incurred in sending our proxy materials to, and obtaining instructions relating to such materials from, beneficial owners.

If you have any questions about giving your proxy or require assistance, please contact our proxy solicitor at:

INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th
Floor New York, NY 10022
Stockholders call toll-free: (877) 687-1865
Banks and brokers call collect: (212) 750-5833


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Questions and Answers About the Annual Meeting and Voting

WHAT IS “HOUSEHOLDING?”      

To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding our stock but share the same address, we have adopted a procedure known as “householding.” Under this procedure, certain stockholders of record who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive only one copy of our Notice of Internet Availability of Proxy Materials and, as applicable, any additional proxy materials that are delivered until such time as one or more of these stockholders notifies us that they want to receive separate copies. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.

If you are a registered stockholder and choose to have separate copies of our Notice of Internet Availability of Proxy Materials, proxy statement and annual report on Form 10-K mailed to you, you must “opt-out” by writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York, 11717 or by calling 1-866-540-7095 and we will cease householding all such disclosure documents within 30 days. If we do not receive instructions to remove your accounts from this service, your accounts will continue to be “householded” until we notify you otherwise. If you own our common stock in nominee name (such as through a broker), information regarding householding of disclosure documents should have been forwarded to you by your broker.

You can also contact Broadridge Financial Solutions, Inc. at 1-866-540-7095 if you received multiple copies of the Annual Meeting materials and would prefer to receive a single copy in the future.


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   Proposal 1
Election of Directors

The board of directors has nominated the following individuals for election as directors. Properly executed proxies will be voted as marked. Executed but unmarked proxies will be voted in favor of electing each of the below director nominees to serve on the board of directors until

the 2023 Annual Meeting of Stockholders and until their successors are duly elected and qualified. Richard T. Clark is not standing for re-election and will be retiring from the board as of November 9, 2022.


Name       Age       Served as a
Director
Continuously
Since
      Principal Occupation
Peter Bisson 65 2015 Retired Director and Global Leader of the High-Tech Practice at McKinsey & Company
David V. Goeckeler 60 2022 Chief Executive Officer of Western Digital Corporation
Linnie M. Haynesworth 65 2020 Retired Sector Vice President and General Manager, Northrop Grumman Corporation
John P. Jones
(Board Chairman)
71 2005 Retired Chairman and Chief Executive Officer of Air Products and Chemicals, Inc.
Francine S. Katsoudas 52 2019

Executive Vice President and Chief People, Policy & Purpose Officer of Cisco Systems, Inc.

Nazzic S. Keene 61 2020 Chief Executive Officer of Science Applications International Corporation
Thomas J. Lynch   67   2018 Chairman and Former Chief Executive Officer of TE Connectivity Ltd.
Scott F. Powers 63 2018 Former President and Chief Executive Officer of State Street Global Advisors
William J. Ready 42 2016

Chief Executive Officer of Pinterest, Inc.

Carlos A. Rodriguez 58 2011 Chief Executive Officer of Automatic Data Processing, Inc.
Sandra S. Wijnberg 66 2016 Former Executive Advisor, Partner and Chief Administrative Officer of Aquiline Holdings

Director Nominee Highlights

       

10 of our 11 director nominees are independent

Average tenure of independent director nominees is 5.6 years

 

36%
4 of our 11 director nominees are women

27%
3 of our 11 director nominees are racially diverse

     

2 Hispanic/Latino director nominees
1 Black director nominee


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Proposal 1

ADP BOARD OF DIRECTORS’ SKILLS & EXPERIENCE

The board of directors possesses an appropriate mix of skills, experience and leadership designed to drive board performance and properly oversee the interests of the company, including our strategy of long-term sustainable stockholder value creation. Currently, the board of directors is interested in maintaining a mix of skills and experience that include the following:

Cybersecurity experience in the IT, enterprise risk management and legal contexts. Understanding and familiarity with application of management frameworks such as the NIST Cybersecurity Framework, to the operating requirements of the business.

Industry Knowledge in Human Capital Management (HCM) and Human Resources Outsourcing (HRO), including experience in managing or supervising human capital management and human resources outsourcing services.

Capital Markets experience, such as mergers and acquisitions and capital market activities involving the issuance of public company debt and/or equity.

International experience in managing or supervising a business with global operations, particularly in countries outside the U.S. where ADP does business or would like to do business. Familiarity with compliance issues facing companies with global operations.

Enterprise Risk Management (ERM) experience in managing/supervising systems or processes for identifying, assessing and mitigating the total risk of a global business enterprise.

Product Marketing/Management experience managing or supervising business to business product marketing, and/or product design and product management, in particular, relating to the software industry or the financial, IT or outsourcing services industry.

Financial Expertise, including senior financial leadership experience at a large global public company or financial institution.

Public Company CEO experience at a large global public company.

Other Public Board experience, including current or recent membership on one or more large-cap public company boards.

General Operations experience, including managing/supervising operations and business process improvement activities. Familiarity with development, implementation and reporting of service excellence, quality standards, operational performance metrics and targets.

Strategic Planning/Business Development experience, including managing/supervising the strategic planning process for a global business and the associated development and implementation of specific growth opportunities.

Government and Regulatory experience in dealing directly with regulatory agencies and government officials and experience in overseeing compliance issues pertaining to the management of business activities in a regulated environment.

Technology experience relating to cloud computing, software development, technology architecture and digital transformation through the development and evolution of technology platforms to provide clients digital choices, solutions and functionality, end to end.

Human Resources (HR)/Compensation experience as head of HR or direct supervision of an HR leader at a global or public company. Experience in talent acquisition and management, training and development, research/analytics, and employee engagement.

Transformation experience in overseeing and executing enterprise-wide transformational, cost management, cost-reduction and/or restructuring initiatives, including managing large-scale/global business process innovation efforts.


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Proposal 1

As discussed in further detail below, our nominating/corporate governance committee evaluates these desired attributes on an ongoing basis and adds new skills and qualifications as the company’s strategy and needs evolve.

In addition, as required by Nasdaq, please see below detailed information regarding Board diversity.

Board Diversity Matrix
(as of September 22, 2022)
Total Number of Directors: 12
Female Male Non-Binary Did Not Disclose Gender
Part I: Gender Identity
Directors 4 8 0 0
Part II: Demographic Background:
African American or Black 1 0 0 0
Alaskan Native or Native American 0 0 0 0
Asian 0 0 0 0
Hispanic or Latinx 1 1 0 0
Native Hawaiian or Pacific Islander 0 0 0 0
White 3 7 0 0
Two or more races or ethnicities 1 0 0 0
LGBTQ+ 0
Did Not Disclose Demographic Background: 0

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Proposal 1

Below are summaries of the principal occupations, business experience, background, and key skills and qualifications of the nominees. The key skills and qualifications are not intended to be an exhaustive list of each nominee’s skills or contributions to the board, but rather the specific skills and qualifications that led to the conclusion that the person should serve as a director for the company.

Peter Bisson

Director since: 2015
Age: 65
Independent
Committees:
CDTAC, Chair
Nominating/
Corporate
Governance
     
Retired Director at McKinsey & Company
Mr. Bisson was a director and the global leader of the High-Tech Practice at McKinsey & Company prior to his retirement in June 2016. Mr. Bisson also held a number of other leadership positions at McKinsey & Company, including chair of its knowledge committee, which guides the firm’s knowledge investment and communication strategies, member of the firm’s shareholders committee, and leader of the firm’s strategy and telecommunications practices. In more than 30 years at McKinsey & Company, Mr. Bisson advised a variety of multinational public companies, including ADP, in the technology-based products and services industry. He is a special advisor to Brighton Park Capital and a director of Gartner Inc.
Key Skills & Qualifications
Mr. Bisson’s experience includes advising clients on corporate strategy and M&A, design and execution of performance improvement programs, marketing and technology development. Mr. Bisson’s broad experience in the technology industry is a valuable asset to our board of directors and contributes to the oversight of the company’s strategic direction and digital transformation.

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David V. Goeckeler

Director since: 2022
Age: 60
Independent
Committees:
CDTAC
CMDC
     
Chief Executive Officer of Western Digital Corporation
Mr. Goeckeler has been chief executive officer and a member of the board of directors of Western Digital since March 2020. Prior to his current role, he served as executive vice president and general manager of the networking and security business of Cisco Systems, Inc., from July 2017 to March 2020. From May 2016 to July 2017, Mr. Goeckeler served as senior vice president and general manager for Cisco’s networking and security business group, and served as senior vice president and general manager for its security business from 2014 to 2016.
Key Skills & Qualifications
Mr. Goeckeler is a transformational technology veteran with an extensive background leading large-scale development operations that deliver disruptive innovation across critical infrastructure segments. His strategic thought-leadership coupled with deep domain expertise in cloud computing infrastructure, modern software development and business models, cybersecurity and data protection are incredibly valuable to the board as ADP continues to drive innovation across its HCM technology portfolio and accelerates its digital transformation.

Linnie M. Haynesworth

Director since: 2020
Age: 65
Independent
Committees:
Audit
CDTAC
     
Retired Sector Vice President and General Manager, Northrop Grumman Corporation
Ms. Haynesworth retired in 2019 as the Sector Vice President and General Manager of the Cyber and Intelligence Mission Solutions Division for Northrop Grumman Corporation’s (“NGC”) Mission Systems Sector after assuming this role in 2016. She previously served as Sector Vice President and General Manager of the Intelligence, Surveillance and Reconnaissance Division within the former Information Systems sector of NGC, and also led NGC’s Federal and Defense Technologies Division. Before joining Information Systems at NGC, she was Vice President for aerospace products with the NGC Aerospace Systems sector and served as program manager for its Defense Weather Satellite System. She began her career at NGC in 1979 and also held other leadership roles in business development, engineering, supply chain and program positions of increasing responsibility in multiple areas of the company. Ms. Haynesworth is a member of the Defense Business Board and is currently a director of Micron Technology, Inc. and Truist Financial Corporation.
Key Skills & Qualifications
Ms. Haynesworth brings a proven track record of achievement and extensive expertise in technology integration, cybersecurity, enterprise strategy, risk management and large complex system development, delivery and deployment. With 40 years in the industry, her insight and breadth of experience are invaluable contributions to ADP, given the integral nature of technology and security to our products, business processes and infrastructure.

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Proposal 1

John P. Jones

Director since: 2005
Age: 71
Independent
Chairman
     
Retired Chairman and Chief Executive Officer of Air Products and Chemicals, Inc.
Mr. Jones is the retired chairman of the board, chief executive officer, and president of Air Products and Chemicals, Inc., an industrial gas and related industrial process equipment business. Mr. Jones served as chairman of Air Products and Chemicals, Inc. from October 2007 until April 2008, as chairman and chief executive officer from September 2006 until October 2007, and as chairman, president, and chief executive officer from December 2000 through September 2006. He also served as a director of Sunoco, Inc. from 2006 to 2012.
Key Skills & Qualifications
With a track record of achievement and sound business judgment demonstrated during his thirty-six year tenure at Air Products and Chemicals, Inc., including as CEO, Mr. Jones understands how to operate effectively within highly regulated and complex frameworks and brings to the board of directors extensive experience in issues facing public companies and multinational businesses, including organizational management, strategic planning, and risk management matters, combined with proven business and financial acumen.

Francine S. Katsoudas

Director since: 2019
Age: 52
Independent
Committees:
CMDC
Nominating/
Corporate
Governance
     
Executive Vice President and Chief People, Policy & Purpose Officer of Cisco Systems, Inc.
Ms. Katsoudas has been the executive vice president and chief people, policy & purpose officer of Cisco Systems, Inc. since March 2021, and prior to that, the chief people officer since 2015. Prior to these roles, she served in various positions of increasing responsibility at Cisco, since joining the company in 1996. Prior to Cisco, Ms. Katsoudas worked in both the financial and professional services industries with a focus on customer service and operations.
Key Skills & Qualifications
As an innovative human resources leader with a ‘voice of the customer’ mindset in organizational talent and strategy, Ms. Katsoudas brings valuable perspective and insight to the board of directors and contributes to the oversight of the company’s strategy and ongoing transformation to drive solutions in a rapidly evolving, dynamic HCM market.

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Nazzic S. Keene

Director since: 2020
Age: 61
Independent
Committees:
Audit
CDTAC
     
Chief Executive Officer of Science Applications International Corporation (SAIC)
Ms. Keene has been the CEO and member of the SAIC board since August 2019, and prior to that, she served as COO since 2017, as President, Global Markets and Missions, from 2013 to 2017, and as SVP, Corporate Strategy and Planning from 2012 to 2013. Prior to joining SAIC, Ms. Keene was the senior vice president and general manager for U.S. enterprise markets at CGI and led that company’s U.S. expansion.
Key Skills & Qualifications
As a well-respected industry leader with three decades of experience in information systems and technology services, as well as more than 20 years in executive management, Ms. Keene’s leadership and strategic expertise in technology-driven solutions, digital transformation and cybersecurity is instrumental to the board and the shaping of ADP’s vision for its HCM technology portfolio.

Thomas J. Lynch

Director since: 2018
Age: 67
Independent
Committees:
CMDC
Nominating/
Corporate
Governance
Effective
November 2022:
CMDC, Chair
     
Chairman and Former Chief Executive Officer of TE Connectivity Ltd.
Mr. Lynch has been the chairman of TE Connectivity Ltd., a leading global technology and manufacturing company, since 2013 and previously served as chief executive officer from January 2006 to March 2017. Before becoming CEO of TE Connectivity Ltd., Mr. Lynch was president of Tyco Engineered Products and Services since joining Tyco International in September 2004. Prior to that, he held various positions at Motorola, including executive vice president of Motorola and president and chief executive officer of Motorola’s Personal Communications sector, from August 2002 to September 2004. In addition to TE Connectivity Ltd., Mr. Lynch is currently a director of Cummins Inc. He previously served on the board of Thermo Fisher Scientific Inc. from 2009 until May 2022.
Key Skills & Qualifications
Mr. Lynch possesses extensive executive leadership experience as a former CEO and sitting chairman of a large-cap public company. In addition to his broad managerial experience, he is a seasoned leader with a deep operational background and technology expertise. This breadth of experience enriches his contributions to the board, particularly with respect to transformation, innovation, strategic planning and compensation matters.

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Proposal 1

Scott F. Powers

Director since: 2018
Age: 63
Independent
Committees:
CMDC
Nominating/
Corporate
Governance, Chair
     
Former President and Chief Executive Officer of State Street Global Advisors
Mr. Powers was the president and chief executive officer of State Street Global Advisors, from 2008 until his retirement in 2015. Before joining State Street, Mr. Powers was the president and chief executive officer of Old Mutual Asset Management, the U.S.-based global asset management business of Old Mutual plc, from 2001 to 2008. He also held executive roles at Mellon Institutional Asset Management and Boston Company Asset Management. Mr. Powers is currently a director of PulteGroup, Inc. and Sun Life Financial Inc. and previously a member of the board of directors of Whole Foods Market, Inc. in 2017.
Key Skills & Qualifications
With over three decades of experience leading and advising firms in the investment management industry, Mr. Powers has extensive global operational and business expertise. In addition, as the former CEO of State Street Global Advisors, his background in overseeing and guiding ESG-related engagement with invested companies is a tremendous asset to ADP. The valuable blend of these critical skills and his investor mindset support the board in its oversight of the company’s strategic direction, growth and transformation.

William J. Ready

Director since: 2016
Age: 42
Independent
Committees:
Audit
CDTAC
     
Chief Executive Officer of Pinterest, Inc.
Mr. Ready is the chief executive officer and member of the board of directors of Pinterest, Inc. since June 2022. Prior to that, Mr. Ready was the president of commerce, payments & next billion users at Google from January 2020 until June 2022. Previously, Mr. Ready was PayPal’s executive vice president and chief operating officer from October 2016 through July 2019. Prior to that, he was PayPal’s senior vice president, global head of product and engineering since January 2015. Since August 2011, he had been the chief executive officer of Braintree, a mobile and web payment systems company acquired by PayPal in 2013. He continued to lead Braintree in his capacity as chief operating officer of PayPal. Prior to Braintree, Mr. Ready was executive in residence at Accel Partners, a leading Silicon Valley venture capital and growth equity firm. A veteran of the payments industry, Mr. Ready also served as president of iPay Technologies from 2008 to 2011. He also worked as a strategy consultant for McKinsey & Company, where he advised leading financial technology companies. Mr. Ready is a special advisor to Brighton Park Capital, a senior advisor and limited partner of Silversmith Capital Partners, and a director of Williams-Sonoma and Venminder, a private company.
Key Skills & Qualifications
Mr. Ready possesses strong expertise in the technology-based products and services industry, which is a valuable asset to our board of directors and contributes to the oversight of the company’s strategic direction and growth. He also brings to our board of directors deep operational experience and knowledge of the technology industry’s consumer, payments and money movement spaces, as well as cybersecurity expertise.

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Carlos A. Rodriguez

Director since: 2011
Age: 58
Management
     
Chief Executive Officer of Automatic Data Processing, Inc.
Mr. Rodriguez is chief executive officer of the company. He served as president and chief operating officer of the company before he was appointed to his current position in November 2011 and as president through 2021. Having started his career at the company in 1999, Mr. Rodriguez previously served as president of several key businesses, including National Accounts Services, Employer Services International, Small Business Solutions, and Professional Employer Organization, giving him deep institutional knowledge across the company’s business. Mr. Rodriguez is currently a director of Microsoft Corporation.
Key Skills & Qualifications
In addition to broad managerial, operational and strategic planning expertise, Mr. Rodriguez brings a wealth of business acumen and leadership experience to our board of directors, including a deep knowledge of the HCM industry and unique understanding of our business, coupled with a proven track record of integrity, achievement and strategic vision.

Sandra S. Wijnberg

Director since: 2016
Age: 66
Independent
Committees:
Audit, Chair
Nominating/
Corporate
Governance
     
Former Executive Advisor, Partner and Chief Administrative Officer of Aquiline Holdings
Ms. Wijnberg was an executive advisor of Aquiline Holdings, a registered investment advisory firm, from 2015 to 2019, and prior to that, a partner and the chief administrative officer of Aquiline Holdings from 2007 to 2014. From 2014 to 2015, Ms. Wijnberg left Aquiline Holdings to work in Jerusalem at the behest of the U.S. State Department as the deputy head of mission, Office of the Quartet. Prior to joining Aquiline Holdings, she was the senior vice president and chief financial officer of Marsh & McLennan Companies, Inc., from January 2000 to April 2006, and before that, the treasurer and interim chief financial officer of YUM! Brands, Inc. She is a director of Cognizant Technology Solutions Corporation and T. Rowe Price Group, Inc. and the lead director of Hippo Holdings Inc. She previously served on the boards of Tyco International plc from 2003 to 2016 and TE Connectivity Ltd. from 2007 to 2009.
Key Skills & Qualifications
Ms. Wijnberg is a seasoned business leader with strong financial acumen and significant corporate finance, accounting, strategic planning, insurance and risk management expertise. Her international experience also provides a valuable global perspective to our board of directors.

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Proposal 1

It is expected that all nominees proposed by our board of directors will be able to serve on the board if elected. However, if before the election one or more nominees is unable to serve or for good cause will not serve (a situation that we do not anticipate), the proxy holders will vote the proxies for the remaining nominees and for substitute nominees chosen by the board of directors (unless the board reduces the number of directors to be elected).

If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected, and includes certain biographical and other information about such nominees required by the rules of the SEC.


Stockholder Approval Required

At the 2022 Annual Meeting of Stockholders, directors will be elected by the affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote thereon, provided that if the number of nominees exceeds the number of directors to be elected (a situation we do not anticipate), the directors will be elected by the vote of a plurality of the shares represented in person or by proxy.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS.



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Corporate Governance

The board of directors’ categorical standards of director independence are consistent with Nasdaq listing standards and are available in the company’s corporate governance principles on our corporate website at www.adp.com. To access these documents, click on “Investors,” then “Corporate Governance,” and then “Governance Documents.” The board of directors has determined that Mses. Haynesworth, Katsoudas, Keene and Wijnberg and Messrs. Bisson, Goeckeler, Jones, Lynch, Powers and Ready meet these standards and are independent for purposes of the Nasdaq listing standards. All current members of the audit, compensation and management development, nominating/corporate governance, and corporate development and technology advisory committees are independent.

In the ordinary course of business, the company has business relationships with certain companies in which ADP directors also serve as executive officers or on the board of directors, including for example, hardware, software, HCM and other technology services. Based on the standards described above, the board of directors has determined that none of these transactions or relationships, nor the associated amounts paid to the parties, was material or would impede the exercise of independent judgment.

It is our policy that our directors attend the Annual Meetings of Stockholders. All of our directors then in office attended our 2021 Annual Meeting of Stockholders.

During fiscal year 2022, our board of directors held six (6) meetings. Each April, June and November, these board meetings consist of two-day sessions so that our board has ample opportunity to evaluate and discuss our strategy, product portfolio and talent.

All of our incumbent directors attended at least 75%, in the aggregate, of the meetings of the board of directors and the committees of which they were members during the periods that they served on our board of directors during fiscal year 2022.

Executive sessions of the non-management directors are held during each meeting of the committees and the board of directors. Mr. Jones, our independent non-executive chairman of the board, presided at each executive session of the board of directors.



Board Leadership Structure

Our corporate governance principles do not require the separation of the roles of chairman of the board and chief executive officer because the board believes that effective board leadership can depend on the skills and experience of, and personal interaction between, people in leadership roles. Our board of directors is currently led by Mr. Jones, our independent non-executive chairman of the board. Mr. Rodriguez, our chief executive officer, serves as a member of the board of directors. The board of directors

believes this leadership structure is in the best interests of the company’s stockholders at this time. Separating these positions allows our chief executive officer to focus on developing and implementing the company’s business plans and supervising the company’s day-to-day business operations, and allows our chairman of the board to lead the board of directors in its oversight, advisory, and risk management roles.


Board Composition and Director Succession Planning

The board takes a thoughtful approach to its composition to ensure alignment with the company’s evolving corporate strategy. We believe our board composition strikes a balanced approach to director tenure and allows the board

to benefit from a mix of newer directors who bring fresh perspectives and seasoned directors who bring continuity and a deep understanding of our complex business. We refresh our board and assess our board succession plans


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regularly with this balance of tenure and experience in mind. Six of our director nominees have a tenure of five years or less. As of our 2022 Annual Meeting, the average age of our eleven director nominees will be 61 years and the average tenure of our ten independent director nominees will be 5.6 years.

Our director succession planning is conducted in the context of a skillset review designed to focus on key areas of skills and experience deemed to be most helpful to driving board performance. Our nominating/corporate governance committee evaluates these desired attributes on an ongoing basis and adds new skills and qualifications as necessary in light of the company’s changing strategy and needs.

Individual director evaluations are also conducted by the nominating/corporate governance committee on an annual basis, in close coordination with our chairman.

The form of assessment used to facilitate this review is refreshed each year to ensure relevance and covers a broad array of topics relevant to individual performance such as knowledge, expertise, commitment, preparation, integrity and judgment. This process facilitates director succession planning as it helps identify opportunities to enhance individual performance and any relevant feedback is communicated to the individual director.

In addition to individual evaluations, the nominating/ corporate governance committee, working with our chairman, conducts a thorough evaluation at the board and committee levels to ensure the effectiveness of the directors and their ability to work as a team in the long-term interest of the company. This assessment is conducted through a questionnaire process, which is also refreshed each year, and designed to elicit feedback with respect to areas such as board/committee structure, governance, communication, culture, risk and strategy. Responses are shared and discussed with the nominating/corporate governance committee. The committee then shares the output of this process with the full board along with a series of recommendations that are subsequently implemented to improve board and committee performance, practices and procedures.

The company also has a director retirement policy in place to promote thoughtful board refreshment, as set forth in further detail under “Retirement Policy” on page 20 of this proxy statement.


Director Nomination Process

Our nominating process ensures our board consists of a well-qualified and diverse group of leaders who bring an important mix of boardroom and operating experience. When the board of directors decides to recruit a new member, or when the board of directors considers any director candidates submitted for consideration by our stockholders, it seeks strong candidates who, ideally, meet all of its categorical standards of director independence, and who complement our identified board skillset needs. Additionally, candidates should possess the following personal characteristics: (i) business community respect for his or her integrity, ethics, principles, insights and

analytical ability; and (ii) ability and initiative to frame insightful questions, speak out and challenge questionable assumptions and disagree without being disagreeable.

The nominating/corporate governance committee will not consider candidates who lack the foregoing personal characteristics.

To ensure that our board is composed of directors with sufficiently diverse and independent perspectives, our nominating/corporate governance committee considers a wide range of other factors in determining the composition of our board of directors, including diversity of thought,


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individual qualities such as professional experience, skills, education and training, and a range of types of diversity, including race, gender, ethnicity, age, culture and geography.

The nominating/corporate governance committee retains a third-party search firm from time to time to identify and evaluate, as appropriate, potential nominees to the board, including in connection with the appointment of Mr. Goeckeler in fiscal year 2022.

Nominations of candidates for our board of directors by our stockholders for consideration at our 2023 Annual Meeting of Stockholders are subject to the deadlines and other requirements described under “Stockholder Proposals and Nominations” on page 99 of this proxy statement.


Director Orientation and Continuing Education

Our orientation program is structured to acquaint our new directors with our business, strategy, product portfolio, industry and competitive considerations, organizational talent, and capital structure, as well as the legal and ethical responsibilities of our board. Key members of our management team spearhead the program through a series of one-on-one sessions with each new director, with each session concentrated on a specific area of focus. As there are multiple sessions of this nature, we strive to stagger

and prioritize these meetings accordingly, tailored to our directors’ profiles and committee assignments, among other things.

Our program is time intensive but we believe the program is instrumental in driving board performance. In addition to our orientation program, we encourage continuing education for our directors, including through external opportunities, and we assist in finding appropriate courses and fully reimbursing for such programs.


Director Overboarding Policy

Our overboarding policy states that subject to such exceptions on a case by case basis as the board shall determine, no non-executive director can serve on more than 4 public boards (including ADP) and, in the case of a director who is an executive officer of ADP or other company, no more than 2 public boards (including ADP). Effective June 29, 2022, Mr. Ready became chief executive officer of Pinterest, Inc. and a member of Pinterest’s board of directors. In addition to ADP, Mr. Ready also serves on the board of Williams-Sonoma. ADP and our board have spoken in depth with Mr. Ready to better understand his new commitments.

Our board then evaluated Mr. Ready’s many contributions, including his attendance and participation in all board and committee meetings in 2021 and 2022 to date. Specifically, the board considered his deep and distinctive operational experience and knowledge of the technology industry’s consumer, payments and money movement spaces, experience in founding, leading and scaling innovative startups, and cybersecurity expertise. The board further considered the number of board objectives for which

Mr. Ready provides great insight and value in all of the foregoing respects and the benefit to the board of his continued service, given his relatively short tenure on the board since 2016. Our board also believes that Mr. Ready’s new chief executive officer role, which possesses the highest degree of responsibility and leadership in a company, will contribute to and inform his work and service on the ADP board. Our board concluded that Mr. Ready is an invaluable member of our board who will be able to effectively balance his time commitments and has recommended that Mr. Ready continue to serve on ADP’s board in excess of the limitation discussed in this section.


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Retirement Policy

Our director retirement policy provides that, subject to such exceptions on a case by case basis as the board of directors shall determine, no person will be nominated by the board of directors to serve as a director following the date the director turns 72.

Management directors who are no longer officers of the company are required to offer to resign from the board of directors.


Committees of the Board of Directors

During fiscal year 2022, our board of directors held six (6) meetings. Each April, June and November, these board meetings consist of two-day sessions so that our board has ample opportunity to evaluate and discuss our strategy, product portfolio and talent.

The table below provides the current membership and meeting information for each of the committees of the board of directors.

Name       Audit       Compensation
& Management
Development
(CMDC)
      Nominating/
Corporate
Governance (NCGC)
      Corporate Development
& Technology
Advisory (CDTAC)
Peter Bisson Chair
Richard T. Clark Chair
David V. Goeckeler
Linnie M. Haynesworth
Francine S. Katsoudas
Nazzic S. Keene
Thomas J. Lynch
Scott F. Powers Chair
William J. Ready
Sandra S. Wijnberg Chair,
Number of meetings held in fiscal year 2022 7 5 3 4

- Financial expert member of audit committee


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Audit Committee

Sandra S. Wijnberg
Committee Chair

Other
committee members:
Richard T. Clark
Linnie M. Haynesworth
Nazzic S. Keene
William J. Ready

All members are independent and financially literate under Nasdaq listing standards
     

The audit committee’s principal functions are to assist the board of directors in fulfilling its oversight responsibilities with respect to:

our systems of internal controls regarding finance, accounting, legal compliance, and ethical behavior;
our auditing, accounting and financial reporting processes generally;
our financial statements and other financial information that we provide to our stockholders, the public and others;
our compliance with legal and regulatory requirements;
the appointment, compensation, retention and performance of our independent auditors and the selection of the lead audit partner; and
the performance of our corporate audit department.

The audit committee acts under a written charter, which is available online on our corporate website at www.adp.com. To access this document, click on “Investors,” then “Corporate Governance,” and then “Governance Documents.” A further description of the role of the audit committee is set forth on page 91 under “Audit Committee Report.”


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Nominating/Corporate Governance Committee

Scott F. Powers
Committee Chair

Other
committee members:
Peter Bisson
Francine S. Katsoudas
Thomas J. Lynch
Sandra S. Wijnberg

All members are independent under Nasdaq listing standards
     

The principal functions of the nominating/corporate governance committee are to:

identify individuals qualified to become members of the board of directors and recommend a slate of nominees to the board of directors annually;
ensure that the audit, compensation and management development, and nominating/corporate governance committees of the board of directors have the benefit of qualified and experienced independent directors;
review and reassess annually the adequacy of the board of directors’ corporate governance principles and recommend changes as appropriate;
oversee the evaluation of the board of directors and committees; and
review our policies and programs that relate to matters of corporate citizenship, including environmental sustainability.

The nominating/corporate governance committee acts under a written charter, which is available online on our corporate website at www.adp.com. To access this document, click on “Investors,” then “Corporate Governance,” and then “Governance Documents.”


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Compensation and Management Development Committee

Richard T. Clark
Committee Chair

Other
committee members:
David V. Goeckeler
Francine S. Katsoudas
Thomas J. Lynch
Scott F. Powers

All members are independent under Nasdaq listing standards
     

The compensation and management development committee sets and administers our executive compensation programs. See “Compensation Discussion and Analysis” on page 40 of this proxy statement.

The compensation and management development committee is authorized to engage the services of outside advisors, experts and others to assist the committee. For fiscal year 2022, the compensation and management development committee sought advice from FW Cook, an independent compensation consulting firm specializing in executive and director compensation. For further information about FW Cook’s services to the compensation and management development committee, see “Compensation Consultant” on page 50 of this proxy statement.

The compensation and management development committee acts under a written charter, which is available online on our corporate website at www.adp.com. To access this document, click on “Investors,” then “Corporate Governance,” and then “Governance Documents.” Each member of the compensation and management development committee is a “Non-Employee Director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended. The compensation and management development committee may form and delegate authority to subcommittees when appropriate, provided that the subcommittees are composed entirely of directors who satisfy the applicable independence requirements of Nasdaq.


Corporate Development and Technology Advisory Committee

Peter Bisson
Committee Chair

Other
committee members:
David V. Goeckeler
Linnie M. Haynesworth
Nazzic S. Keene
William J. Ready

     

The corporate development and technology advisory committee’s principal functions are to act in an advisory capacity to the board and management concerning potential acquisitions, strategic investments, divestitures and matters of technology and innovation.

The corporate development and technology advisory committee acts under a written charter, which is available online on our corporate website at www.adp.com. To access this document, click on “Investors,” then “Corporate Governance,” and then “Governance Documents.”


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The Board’s Role in Risk Oversight

Our board of directors provides oversight with respect to the company’s enterprise risk assessment and risk management activities, which are designed to identify, prioritize, assess, monitor and mitigate the various risks confronting the company, including risks that are related to the achievement of the company’s operational and financial strategy. As set forth in more detail below, the board of directors performs this oversight function periodically as part of its meetings and also through its audit, compensation and management development, and nominating/corporate governance committees, each of which examines various components

of risk as part of its assigned responsibilities. In addition, our corporate development and technology advisory committee advises the board with respect to certain risks assigned to oversight of the full board, principally around technology and innovation, strategic investments, acquisitions and divestitures.

Our committees report back on risk oversight matters directly to the board of directors on a regular basis. Management is responsible for implementing and supervising day-to-day risk management processes and reporting to the board of directors and its committees as necessary.



     

Compensation and
Management Development
Committee

3

Internal Operations (Talent Management Risk)

Audit Committee

3

Internal Operations

4 Info Tech / Cybersecurity
5

Financial Management & Reporting

6

Legal & Compliance

Board

1

Strategic

2

Client-Facing Operations

4

Info Tech / Cybersecurity (Components of Info, System Reliability and Data Management Risk)

5

Financial Management & Reporting (Components of Financial Op Risk and External Economic Risk)

Nominating Committee

6

Legal & Compliance (Corporate Governance)



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Audit Committee

Our audit committee focuses on financial risks, including reviewing with management, our internal auditors, and our independent auditors, the company’s major financial risk exposures, the adequacy and effectiveness of accounting and financial controls, and the steps management has taken to monitor and control financial risk exposures.

In addition, our audit committee reviews risks related to compliance with applicable laws, regulations, and ethical standards, and also operational risks related to information security and system disruption. Our audit committee regularly receives, reviews and discusses with management presentations and analyses on various risks confronting the company.


Oversight of Cybersecurity
Our board of directors recognizes that security is integral to our products, our business processes and infrastructure. The mission of our global security organization (“GSO”) is to protect client data and funds and prevent security incidents. Our GSO is tasked with monitoring physical and cybersecurity risks, including operational risks related to information security and system disruption. A cross-functional, enterprise-wide management program operates to ensure our global security program’s effectiveness and members of the company’s executive committee, through an executive security council, routinely review strategy, policy, program effectiveness, standards enforcement and cyber issue management. Our board of directors and our audit committee are actively engaged in the oversight of our global information security program. More information on our program is available on our corporate website, at www.adp.com. To access this information, click on “About ADP,” then “Data Security.”

Our audit committee receives regular, quarterly reports on these matters from our chief security officer, including on the status of projects to strengthen the company’s security systems and improve cyber readiness, as well as on existing and emerging threat landscapes. Concurrent and in addition to these reports, our chief administrative officer (who oversees legal, security and compliance matters) provides a legal, regulatory and ethics update at each meeting of the audit committee, which includes matters of cybersecurity.     Given the importance of information security to our stakeholders, our board also receives an annual report from our chief security officer to review our program for managing these security risks.

Our global information security program is subject to an annual third-party assessment overseen by our board of directors and this assessment reviews all aspects of our cyber program.     Members of our board also observe an annual cybersecurity table-top exercise conducted by senior management to validate, test and assess the effectiveness and adequacy of certain roles and decision-making processes in the event of an incident.
Findings are reported to our board and in response, ADP develops initiatives to improve our maturity across each of the five pillars of the National Institute of Standards and Technology Cybersecurity Framework.      
The status of these initiatives is then reviewed with our audit committee during its quarterly meetings. This governance process ensures an environment of continuous improvement.        
In advance of these quarterly meetings, members of our audit committee with cybersecurity expertise informally convene to advise and provide guidance.        


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Oversight of Privacy
Intertwined with our global information security program is our global privacy program. Our audit committee oversees matters of privacy, and receives reports on these matters at each meeting from our chief administrative officer, as well as regular updates from our head of compliance, including on related risk assessment and risk management activities. On a management level, ADP’s privacy program is led by ADP’s global chief privacy officer and the members of the global data privacy and governance team, in cooperation with the privacy stewards of all of ADP’s business units and functional areas. Our global chief privacy officer provides regular reports to our company’s executive committee, and our audit committee is actively engaged in the oversight of our global privacy program. Our privacy program, in cooperation with the chief data officer, also is responsible for our artificial intelligence (“AI”) ethics program, which ensures compliance with AI ethical principles and regulatory requirements. AI governance is integrated with the reporting discussed above.

ADP’s Privacy Commitment: We are committed to compliance with privacy requirements and the protection of all personal data processed by ADP. ADP has adopted a set of privacy principles that serve as the foundation for our global privacy program, which includes our global privacy policy and our binding corporate rules (BCRs), all of which may be found in greater detail on our corporate website, at www.adp.com. To access this information, click on “About ADP,” then “Data Privacy.”
 
Our BCRs cover the transfer of data between ADP affiliates across the globe and ensure the highest standard of protection to personal data processed by ADP, regardless of where such data is being processed. Our BCRs establish the rules for processing personal data at ADP as both a data processor (covering the processing of clients’ data in the European Union) and a data controller (covering the data of our employees under a controller workplace code, and other business associates under a business controller code regardless of where such data is being collected). We continue to rank among an elite number of companies worldwide to have gained regulators’ approval to implement BCRs as both a data processor and data controller.
 

Our AI Ethics Principles establish a framework for how the AI enabled products and services we offer are developed and implemented, including those utilizing machine learning. These principles cover human oversight, governance, privacy-by-design, explainability and transparency, data quality, a culture of responsible AI, and inclusion and training. We also have an AI and data ethics committee composed of industry leaders and ADP experts that evaluates new uses of data, including those involving AI, for compliance with both our ethics principles and governing laws. More information, including our Ethics in AI position statement, can be found at sustainability.adp.com.


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Compensation and Management Development Committee

Our compensation and management development committee oversees risks related to compensation policies and practices, including management succession planning and our talent strategy, including the recruitment, development and retention of executive talent.

Compensation and Risk Management
Our compensation and management development committee considered the risks presented by the company’s compensation policies and practices at its meetings in August 2021 and 2022 and believes that our policies and practices of compensating employees do not encourage excessive or unnecessary risk-taking for the following reasons:

Diverse Performance Measures. Our incentive plans have diverse performance measures, including company and business unit financial measures, key transformation, client satisfaction and ESG objectives, and individual goals.        Balance. Our compensation programs balance annual and long-term incentive opportunities, cash and equity, and fixed and variable incentives.

Payout Caps. We cap incentive plan payouts within a reasonable range.     Mix. The mix of performance-based equity awards and stock options/RSUs in our long-term incentive programs serves the best interests of stockholders and the company.     Stock Ownership Guidelines. Our stock ownership guidelines link the interests of our executive officers to those of our stockholders.

Clawback Policy. Our clawback policy allows for the recovery of both cash and equity incentive compensation from any current or former executive who engages in any activity that is in conflict with or adverse to the company’s interests, including fraud or conduct contributing to any financial restatements or irregularities.     Other. We prohibit our directors and all of our employees from engaging in any hedging or similar transactions involving ADP securities, holding ADP securities in a margin account, or pledging ADP securities as collateral for a loan. Any transactions in ADP securities by our executive officers are executed through a 10b5-1 program.

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Nominating/Corporate Governance Committee

Our nominating/corporate governance committee oversees risks associated with board structure and other corporate governance policies and practices, including matters of corporate citizenship (such as ESG matters) and the review and approval of any related-person transactions under our Related Persons Transaction Policy.

The Board’s Role in Strategy Oversight

Our directors take an active role in the oversight of the company’s strategy at both a board and committee level, with management responsible for the execution of our business strategy. In addition to regular performance updates to the board and committees, the company
convenes a dedicated strategy session and product session each year with the board. This ongoing effort enables the board to focus on company performance over the short, medium and long-term horizons, as well as the quality of operations and industry trends.


Annual Strategy Session       Annual Operating Plan and Capital Structure Review     Strategy and Transformation Roadmap. Our board and CDTAC receive updates at each meeting on the company’s strategic progress, ongoing transformation and innovation journey.

Executive Sessions. Independent directors also hold regularly scheduled executive sessions without company management present, at which strategy is discussed.     Stockholder Engagement. Members of our board, including our independent chairman, actively participate in stockholder engagement. Our board also regularly discusses and reviews feedback on strategy from our stockholders and stakeholders.
         
Annual Product Session. Broad product portfolio review by board with live demos and interaction with key company product developers, programmers, implementation specialists, and sales and marketing teams, providing perspective on the entire life cycle of our key strategic and next-gen solutions.     Operational Site Visits. Board discussions are enriched through ongoing visits to, and meetings with local associates at, ADP locations that are strategically important to our business, such as our OneADP centers of excellence and our Innovation Labs.

The Board’s Role in Human Capital Management and Talent Development

As part of its focus on human capital management and tight integration with company strategy, a key responsibility of our board of directors is to ensure that ADP has a strong, performance-driven senior management team in place. In connection with this responsibility, our board of directors oversees the development and retention of senior talent to ensure that an appropriate succession plan is in place for our CEO as well as the members of the company’s executive committee that directly support our CEO.

Our compensation and management development committee regularly reviews the bench strength of our senior management talent, including readiness to take on additional leadership roles and developmental opportunities needed to prepare senior leaders for greater responsibilities.
As part of building a diverse and inclusive workforce to support a culture of openness and innovation at ADP, our compensation and management development committee also regularly assesses the talent pool of candidates just below the executive committee level to ensure a robust and diverse talent pipeline. In parallel, the company shares with other committees of the board, as appropriate, a similar view of the talent pipeline of various functions and businesses within the company. For example, the company annually shares with CDTAC our talent acquisition strategy, evolving skill mix, composition and talent pipeline of the company’s global product and technology organization.


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While our compensation and management development committee has the primary responsibility to develop succession plans for the CEO position, it regularly reports to the board of directors and decisions are made at the board level. In connection with this responsibility for developing managerial succession plans, our board of directors reviews, at least annually, the short, medium and long-term succession plans for the company’s senior management, including the CEO.
This annual review also includes a review of the company’s broader HCM practices around culture, engagement, and diversity and inclusion. In addition, our board meets regularly with high-potential executives from ADP’s various business units at each regular board meeting, which provides our board with greater, direct exposure to a broader group of pipeline candidates.


Corporate Social Responsibility and Sustainability

We have a duty as global citizens to act responsibly for the greater good, to enable truly inclusive cultures and to do our part to protect shared resources. ADP is committed to delivering more human, simple and sustainable business solutions for all of those we serve. We firmly believe diverse workforces drive innovation and lead to better corporate performance. We value and intentionally choose to cultivate a culture that embraces all forms of gender, race, ethnicity, age, sexual identity and orientation, veteran status and ability. We strive to embody an inclusive culture that extends beyond our diversity and inclusion function and believe that leadership drives performance and innovation
through employee growth, belonging and greater purpose. Our commitment to corporate social responsibility (“CSR”) is a core principle within ADP’s mission, vision and values, and encompasses everything from corporate governance, ethics and environmental stewardship to diversity, philanthropy and promoting employee growth and belonging around the world. We believe sustainability is about creating value for all of our stakeholders: our people, our clients, our partners, our investors and our community at large. We continue to deepen our sustainability efforts in four key pillars:


Innovation       Associates       Community       Environment
At ADP, we design for people. By working at the forefront of our clients’ needs, we anticipate trends and create solutions together. Our innovation strategy is simple: We innovate by anticipating the future of work, the future of HCM and the future of pay in order to meet the evolving and unique needs of our clients and their workers. Our long-term business success is closely linked to our commitment to creating an environment in which our associates thrive. We believe in a competitive, inclusive and diverse workforce that represents the communities we serve. This is vital in building a company where our employees feel valued, welcome, and can achieve their full potential.

Responsibility to the world around us is at the heart of our business. We believe that our company is only as strong as the communities in which we operate. By elevating our communities, we support critical causes and provide a foundation for our business to continue thriving.

Environmental sustainability is integral to both our CSR program and our business strategy. We understand which environmental issues are relevant to our business and offer opportunities for us to make a meaningful impact. We also believe that creating sustainable products and streamlining our operations drives efficiency, innovation and, ultimately, long-term value-creation.

Fiscal Year 2022 Sustainability Highlights and Looking Ahead

Issued fourth CSR report (March 2022)       EE0-1 report disclosure in CSR report (March 2022)

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Increasing energy efficiency and reducing greenhouse gas emissions associated with our operations are central goals for our environmental sustainability program. In 2021, ADP committed as an organization to achieve net zero greenhouse gas emissions across scopes 1, 2 and 3 by 2050.
As an enterprise, we have been working through a series of workstreams this past year to develop our targets and a climate roadmap of initiatives that will drive reduction in our GHG emissions. Further detail on our near-term focus areas and specific short and medium-term targets are available on investors.adp.com.


CSR and Sustainability Governance

Our board of directors is squarely focused on the sustainability of our business for the long-term. In line with this focus, the nominating/corporate governance committee oversees the company’s policies and programs on issues of corporate citizenship, including our CSR and environmental sustainability program, as well as ADP’s philanthropic activities. The committee receives periodic reports and updates from the company’s chief diversity and
talent officer (“CDTO”) and reports back on these matters to the full board. Our board members have complete and open access to senior members of management, including our CDTO. ADP’s CSR and sustainability activities are coordinated by our CDTO, who reports to ADP’s chief human resources officer.

We invite you to visit sustainability.adp.com to read more about our CSR and sustainability efforts.


Communications with All Interested Parties

All interested parties who wish to communicate with the board of directors, the audit committee, or the non-management directors, individually or as a group, may do so by sending a detailed letter to Mail Stop #E405, One ADP Boulevard, Roseland, New Jersey 07068, leaving a message for a return call at 973-974-5770 or sending an email to adp.audit.committee@adp.com. We will relay any such communication to the non-management director to which such communication is addressed, if applicable, or to the most appropriate committee chairperson, the chairman
of the board, or the full board of directors, unless, in any case, it is outside the scope of matters considered by the board of directors or duplicative of other communications previously forwarded to the board of directors.

Communications to the board of directors, the non-management directors, or to any individual director that relate to the company’s accounting, internal accounting controls, or auditing matters are referred to the chairperson of the audit committee.


Transactions with Related Persons

We have a written “Related Persons Transaction Policy” pursuant to which any transaction between the company and a “related person” in which such related person has a direct or indirect material interest, and where the amount involved exceeds $120,000, must be submitted to our nominating/corporate governance committee for review, approval, or ratification.

A “related person” means a director, executive officer or beneficial holder of more than 5% of the company’s outstanding common stock, or any immediate family member of the foregoing, as well as any entity at which any such person is employed, is a partner or principal

(or holds a similar position), or is a beneficial owner of a 10% or greater direct or indirect equity interest in that entity. Our directors and executive officers must inform our general counsel at the earliest practicable time of any plan to engage in a potential related person transaction. This policy requires our nominating/corporate governance committee to be provided with full information concerning the proposed transaction, including the benefits to the company and the related person, any alternative means by which to obtain like benefits, and terms that would prevail in a similar transaction with an unaffiliated third party. In considering whether to approve any such transaction, the nominating/corporate governance committee will consider


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all relevant factors, including the nature of the interest of the related person in the transaction and whether the transaction may involve a conflict of interest.

Specific types of transactions are excluded from the policy, such as, for example, transactions in which the related person’s interest derives solely from his or her service as a director of another entity that is a party to the transaction.

The spouse of James Sperduto, President, Small Business Services, Retirement Services and Insurance Services, and the sibling of Brian Michaud, President, Smart Compliance Solutions, are employed as associates at the company and received total cash compensation for fiscal year 2022 in excess of $120,000.


Availability of Corporate Governance Documents

Our Corporate Governance Principles and Related Persons Transaction Policy may be viewed online on the company’s website at www.adp.com. To access these documents, click on “Investors,” then “Corporate Governance,” and then “Governance Documents.” Our Code of Business Conduct & Ethics and Code of Ethics for Principal Executive

Officer and Senior Financial Officers may be found at www.adp.com under “Investors” in the “Corporate Governance” tab. In addition, these documents are available in print to any stockholder who requests them by writing to Investor Relations at the company’s headquarters.


Compensation Committee Interlocks and Insider Participation

Ms. Katsoudas and Messrs. Clark, Goeckeler, Lynch and Powers are the five independent directors who currently sit on the compensation and management development committee. No committee member has ever been an officer of the company. During fiscal year 2022 and as of the date of this proxy statement, no committee member has been an employee of the company or eligible to participate in our employee compensation programs or plans, other than the company’s amended and restated 2008 Omnibus

Award Plan under which non-employee directors previously have received stock option grants and deferred stock units (“DSUs”) or, in the case of our 2018 Omnibus Award Plan, DSUs. None of our executive officers have served on the compensation and management development committee or on the board of directors of any entity that employed any of the compensation and management development committee members or directors of the company.


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Compensation of Non-Employee Directors

Our nominating/corporate governance committee reviews and evaluates non-employee director compensation on an annual basis to ensure that our directors are compensated appropriately for their time commitment and responsibilities. The nominating/corporate governance

committee makes recommendations to the board of directors, as appropriate, based on its review, benchmark information from peer companies, and other relevant data. The elements of our non-employee director compensation program are as follows:


Compensation Element Fiscal Year 2022 Compensation
Director Annual Retainer
$215,000 Deferred Stock Units (“DSUs”)
$115,000 Cash or DSUs
Additional Non-Executive Chairman Retainer
$100,000 DSUs
$100,000 Cash or DSUs
Committee Chair Retainers (Cash, Deferred or DSUs)
Audit: $20,000
Compensation and Management Development: $15,000
Nominating/Corporate Governance: $15,000
Corporate Development and Technology Advisory: $15,000
Meeting Fees (Cash, Deferred or DSUs)

Board Meetings:

$2,000, per meeting, beginning with the eighth meeting

Committee Meetings:

$1,500 per meeting, beginning with the eighth meeting

Annual Retainers

The annual retainer for non-employee directors is $330,000, $215,000 of which is paid in the form of DSUs and $115,000 of which may, at the election of each director, be paid in cash or in DSUs.

In addition, the chairman of our board of directors receives an incremental retainer of $200,000, $100,000 of which is paid in the form of DSUs and $100,000 of which may, at the election of the chairman, be paid in cash or in DSUs. This incremental retainer resulted in a total annual retainer of $530,000 for the chairman of our board of directors in fiscal year 2022.

The chair of the audit committee was paid an additional annual retainer of $20,000, and each chair of the compensation and management development, nominating/corporate governance, and corporate development and technology advisory committees was paid an additional annual retainer of $15,000. The additional annual retainer may, at the election of each committee chair, be paid in cash, deferred or paid in DSUs.

Meeting Fees

Meeting fees are not paid in respect of the first seven meetings of the board of directors or of any individual committee. Non-employee directors receive $2,000 for each board of directors meeting attended and $1,500 for each committee meeting attended beginning with the eighth meeting of the board of directors or any individual committee, as applicable. Meeting fees may, at the election of each director, be paid in cash, deferred, or paid in DSUs. Under our current 2018 Omnibus Award Plan (“2018 Omnibus Award Plan”) and prior amended and restated 2008 Omnibus Award Plan (the “Prior Plan”), a director may specify whether, upon separation from the board, he or she would like to receive any deferred cash amounts in a lump-sum payment or in a series of substantially equal annual payments over a period ranging from two to ten years. There were no meeting fees paid to the non-employee directors for fiscal year 2022.


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Compensation of Non-Employee Directors

Deferral Policy

Pursuant to our 2018 Omnibus Award Plan (and previously, under our Prior Plan), each non-employee director is credited with an annual grant of DSUs on the date established by the board for the payment of the annual retainer equal in number to the quotient of the non-elective portion of the retainer ($215,000 for fiscal year 2022 and $315,000 in the case of the chairman), divided by the closing price of a share of our common stock on the date this amount is credited. The elective portion of the annual retainer is credited in the same manner for directors who elect DSUs. DSUs are fully vested when credited to a director’s account. When a dividend is paid on our common stock, each director’s account is credited with an amount equal to the cash dividend. When a director ceases to serve on our board, such director will receive a number of shares of common stock equal to the number of DSUs in such director’s account and a cash payment equal to the dividend payments accrued, plus interest on the dividend equivalents from the date such dividend equivalents were credited. The interest will be paid with respect to each twelve-month period beginning on November 1 of such period to the date of payment and will be equal to the rate for five-year U.S. Treasury Notes published in The Wall Street Journal® on the first business day of November of each such twelve-month period plus 0.50%. Non-employee directors do not have any voting rights with respect to their DSUs. All of our non-employee directors chose to receive the entire elective portion of their annual retainers in the form of DSUs during fiscal year 2022.

Role of the Nominating/Corporate Governance Committee

The nominating/corporate governance committee is responsible for reviewing, evaluating, and making recommendations to the board on an annual basis with respect to all aspects of non-employee director compensation. The full board then reviews these recommendations and makes a final determination on the compensation of our non-employee directors. During fiscal year 2022, the nominating/corporate governance committee engaged FW Cook, compensation consultant to the compensation and management development committee, to review the design and competitiveness of our non-employee director compensation program.

Changes to Director Compensation in Fiscal Year 2023

In connection with the annual review discussed above, the board of directors approved an increase in (i) the non-elective portion of the annual retainer to $225,000 (from $215,000), (ii) the elective portion of the annual retainer to $120,000 (from $115,000), and (iii) the audit committee chair annual retainer to $25,000 (from $20,000), each to be effective at the time of the 2022 Annual Meeting of Stockholders. There were no other changes made to the non-employee director compensation program for fiscal year 2023.

Stock Ownership Guidelines

Our stock ownership guidelines are intended to promote ownership in the company’s stock by our non-employee directors and to align their financial interests more closely with those of other stockholders of the company. Each non-employee director has a minimum stockholding requirement of our common stock equal to five times his or her annual cash retainer.


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Compensation of Non-Employee Directors

Directors who are employees of the company or any of our subsidiaries receive no remuneration for services as a director. The following table shows compensation for our non-employee directors for fiscal year 2022.

DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2022

Name       Fees Earned
or Paid in
Cash(7)
($)
      Stock
Awards(8)
($)
      All Other
Compensation(9)
($)
      Total
($)
(a) (b) (c) (g) (h)
Peter Bisson(1)     $130,000      $215,000         

$20,000

       $365,000
Richard T. Clark(2) $130,000 $215,000

$20,000

$365,000
David V. Goeckeler(3) $84,522 $158,358

$0

$242,880
Linnie M. Haynesworth $115,000 $215,000

$20,000

$350,000
John P. Jones(4) $215,000 $315,000

$0

$530,000
Francine S. Katsoudas $115,000 $215,000

$0

$330,000
Nazzic S. Keene $115,000 $215,000

$19,891

$349,891
Thomas J. Lynch $115,000 $215,000

$20,000

$350,000
Scott F. Powers(5) $130,000 $215,000

$20,000

$365,000
William J. Ready $115,000 $215,000

$0

$330,000
Sandra S. Wijnberg(6) $135,000 $215,000

$40,000

$390,000

(1) As chair of the corporate development and technology advisory committee, Mr. Bisson received a $15,000 annual retainer, which is included in fees earned.
(2) As chair of the compensation and management development committee, Mr. Clark received a $15,000 annual retainer, which is included in fees earned.
(3) Mr. Goeckeler became a director as of February 14, 2022.
(4) Mr. Jones is the non-executive chairman of the board of directors.
(5) As chair of the nominating/corporate governance committee, Mr. Powers received a $15,000 annual retainer, which is included in fees earned.
(6) As chair of the audit committee, Ms. Wijnberg received a $20,000 annual retainer, which is included in fees earned.
(7) Represents the following, whether received as cash, deferred or received as DSUs: (i) the elective portion of directors’ annual retainer, (ii) annual retainers for committee chairs and (iii) board and committee meeting fees. See footnote 8 below for additional information about DSUs held by directors.
(8) Represents the non-elective portion of the annual retainer required to be credited in DSUs to a director’s annual retainer account. Amounts set forth in the Stock Awards column represent the aggregate grant date fair value for fiscal year 2022 as computed in accordance with FASB Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), disregarding estimates of forfeitures related to service-based vesting conditions. For additional information about the assumptions used in these calculations, see Note 10 to our audited consolidated financial statements for the fiscal year ended June 30, 2022 included in our annual report on Form 10-K for the fiscal year ended June 30, 2022.

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Compensation of Non-Employee Directors

       The grant date fair value for each DSU award granted to directors in fiscal year 2022 (including in respect of elective deferrals of amounts otherwise payable in cash), calculated in accordance with FASB ASC Topic 718, is as follows:

       Director       Grant Date       Grant Date
Fair Value
  Peter Bisson 11/10/2021 $345,000
  Richard T. Clark 11/10/2021 $345,000
  David V. Goeckeler 04/06/2022 $242,880
  Linnie M. Haynesworth 11/10/2021 $330,000
  John P. Jones 11/10/2021 $530,000
  Francine S. Katsoudas 11/10/2021 $330,000
  Nazzic S. Keene 11/10/2021 $330,000
  Thomas J. Lynch 11/10/2021 $330,000
  Scott F. Powers 11/10/2021 $345,000
  William J. Ready 11/10/2021 $330,000
  Sandra S. Wijnberg 11/10/2021 $350,000

The aggregate number of outstanding DSUs held by each director at June 30, 2022 is as follows: Mr. Bisson, 16,889; Mr. Clark, 32,278; Mr. Goeckeler, 1,021; Ms. Haynesworth, 3,240; Mr. Jones, 60,081; Ms. Katsoudas, 5,993; Ms. Keene, 4,463; Mr. Lynch, 8,424; Mr. Powers, 8,666; Mr. Ready, 15,633; and Ms. Wijnberg, 14,480.

(9) Reflects contributions by the ADP Foundation that match the charitable gifts made by our directors. The ADP Foundation makes matching charitable contributions in an amount not to exceed $20,000 in a calendar year in respect of any given director’s charitable contributions for that calendar year. Amounts may exceed $20,000 because, while matching charitable contributions are limited to $20,000 in a calendar year, this table reflects matching charitable contributions for the fiscal year ended June 30, 2022.

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Security Ownership of Certain Beneficial Owners and Management

The following table contains information regarding the beneficial ownership of the company’s common stock by (i) each director and nominee for director of the company, (ii) each of our named executive officers (“NEOs”) included in the Summary Compensation Table, (iii) all company directors and executive officers as a group (including the NEOs) and (iv) all stockholders that are known to the company to be the beneficial owners of more than 5% of the outstanding shares of the company’s common

stock. Unless otherwise noted in the footnotes following the table, each person listed below has sole voting and investment power over the shares of common stock reflected in the table. Unless otherwise noted in the footnotes following the table, the information in the table is as of August 15, 2022 and the address of each person named is Mail Stop #450, One ADP Boulevard, Roseland, New Jersey, 07068.


Name of Beneficial Owner       Amount and Nature of
Beneficial Ownership
(1)
      Percent
John C. Ayala 83,970 *
Peter Bisson 16,889 *
Maria Black 77,001 *
Richard T. Clark 32,278 *
David V. Goeckeler 1,021 *
Linnie M. Haynesworth 3,240 *
John P. Jones 60,081 *
Francine S. Katsoudas 5,993 *
Nazzic S. Keene 4,478 *
Thomas J. Lynch 9,034 *
Don McGuire 34,511 *
Scott F. Powers(2) 10,116 *
William J. Ready 15,633 *
Carlos A. Rodriguez(2) 438,012 *
Donald Weinstein 91,540 *
Sandra S. Wijnberg 14,480 *
Kathleen A. Winters(3) 34,288 *
BlackRock, Inc.(4) 31,994,622 7.6 %
The Vanguard Group, Inc.(5) 38,508,651 9.14 %
Directors, director nominees and executive officers as a group 31 persons, including those directors and executive officers named above(6)            1,368,032                  *            

Footnotes:

* Indicates less than one percent.
(1) Includes: (i) 514,690 shares that may be acquired upon the exercise of stock options that are exercisable on or prior to October 14, 2022 held by the following executive officers: Mr. Ayala (45,664), Ms. Black (34,238), Mr. McGuire (13,092), Mr. Rodriguez (341,323) and Mr. Weinstein (50,505) as well as 29,868 shares that may be acquired by Ms. Winters upon the exercise of stock options that were exercisable on or prior to September 30, 2021, her last day of employment with the company; and (ii) 758,398 shares subject to stock options held by the executive officers as a group. Includes (i) 5,198 shares to be acquired prior to October 14, 2022 in connection with the vesting of restricted stock units (“RSUs”) held by Mr. McGuire and (ii) 6,435 shares to be acquired in connection with the vesting of RSUs held by the executive officers as a group.

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Security Ownership of Certain Beneficial Owners and Management

Includes: (i) 101,881 shares that were acquired by the following executive officers in connection with the vesting of performance-based stock units based on the achievement of certain financial objectives for the fiscal year 2020 through fiscal year 2022 three-year performance period: Mr. Ayala (14,279), Ms. Black (14,279), Mr. McGuire (5,864), Mr. Rodriguez (55,730) and Mr. Weinstein (11,729) and (ii) 147,382 such shares acquired by the executive officers as a group.
Includes shares issuable upon settlement of deferred stock units held by non-employee directors as follows: Mr. Bisson (16,889), Mr. Clark (32,278), Mr. Goeckeler (1,021), Ms. Haynesworth (3,240), Mr. Jones (60,081), Ms. Katsoudas  (5,993), Ms. Keene (4,463), Mr. Lynch (8,424), Mr. Powers (8,666), Mr. Ready (15,633) and Ms. Wijnberg (14,480). Our directors do not have any voting rights with respect to these deferred stock units.
(2) In the case of Mr. Powers, includes 1,450 shares held in trust. In the case of Mr. Rodriguez, includes 13,813 held in trust.
(3) The number of shares owned by Ms. Winters is based on information as of September 30, 2021, which was Ms. Winters’ last day of employment with the company.
(4) Information is furnished in reliance on the Schedule 13G/A of BlackRock, Inc. (“BlackRock”) filed on February 1, 2022. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. BlackRock has sole dispositive power over 31,994,622 shares. BlackRock has sole voting power over 27,433,982 and no voting power over 4,560,640 shares. The 31,994,622 shares reported are owned, directly or indirectly, by BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, Aperio Group, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited, and BlackRock Fund Managers Ltd.
(5) Information is furnished in reliance on the Schedule 13G/A of The Vanguard Group, Inc. (“Vanguard”) filed on February 9, 2022. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. Vanguard shares dispositive power over 1,783,314 shares and has sole dispositive power over 36,725,337 shares. Vanguard has sole voting power over no shares, shared voting power over 714,685 shares and no voting power over 37,793,966 shares.
(6) Includes 15,263 shares held in trust and 1,606 shares held by a spouse.

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Equity Compensation Plan Information

The following table sets forth information as of June 30, 2022, regarding compensation plans under which the company’s equity securities are authorized for issuance.

Plan category       Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
      Weighted-average
exercise price of
outstanding
options, warrants
and rights
      Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in Column(a))
(a)          (b)          (c)
Equity compensation plans approved by stockholders 4,691,139 (1)  $151.61 22,788,026 (2) 
Equity compensation plans not approved by stockholders 0 $— 0
Total            4,691,139            $151.61           22,788,026          

Footnotes:

(1) This amount includes outstanding awards under our amended and restated 2008 Omnibus Award Plan (“Prior Plan”) and 2018 Omnibus Award Plan. Includes (i) 946,271 shares issuable under our performance-based stock unit (“PSU”) program in settlement of PSUs outstanding as of June 30, 2022 (based on actual performance and accrued dividend equivalents for performance periods ending on or prior to June 30, 2022, and assuming maximum performance for performance periods not yet completed), (ii) 15,596 shares issuable pursuant to deferred restricted stock units issued prior to June 30, 2022, (iii) 171,168 shares issuable upon settlement of deferred stock units (“DSUs”) held by our non-employee directors as of June 30, 2022, (iv) 66,154 shares issuable in settlement of performance restricted stock units issued prior to June 30, 2022, and (v) 12,871 shares issuable in settlement of restricted stock units outstanding as of June 30, 2022. The remaining balance consists of 3,479,079 outstanding employee stock options. Weighted average exercise price shown in column (b) of this table does not take into account PSUs, deferred restricted stock units, DSUs, performance restricted stock units or restricted stock units.
(2) The 2018 Omnibus Award Plan, which was approved by stockholders on November 6, 2018, is the only equity compensation plan under which ADP currently grants equity awards. Includes 22,366,353 shares available for future issuance under the 2018 Omnibus Award Plan and 421,673 of common stock remaining available for future issuance under the Employees’ Savings-Stock Purchase Plan, each as of June 30, 2022. Approximately 136,759 shares of common stock were subject to purchase as of June 30, 2022, under the Employees’ Savings-Stock Purchase Plan. If any award granted under the 2018 Omnibus Award Plan or the Prior Plan expires, terminates, is canceled or is forfeited without being settled or exercised, shares of our common stock subject to such award will be made available for future grant under the 2018 Omnibus Award Plan. In addition, if shares issuable upon vesting or settlement of an award under the 2018 Omnibus Award Plan or the Prior Plan are withheld by the company, or if shares owned by a participant are surrendered or tendered to the company, in payment of taxes required to be withheld in respect of the award (other than an award of options or stock appreciation rights), such shares will be made available for future grant under the 2018 Omnibus Award Plan. Unless cash-settled, any equity grant made under our 2018 Omnibus Award Plan reduces the authorized share reserve on a one-for-one basis.

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Proposal 2
Advisory Vote on Executive Compensation

We are asking stockholders to approve the following advisory resolution at the Annual Meeting:

RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the company’s named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables and the related narrative disclosure in the company’s proxy statement for the 2022 Annual Meeting of Stockholders.

The board of directors recommends a vote FOR this resolution because it believes that the policies and practices described in the Compensation Discussion and Analysis are effective in achieving the company’s goals of linking pay to executive performance and levels of responsibility, encouraging our executive officers to remain

focused on both short-term and long-term financial, transformation, client satisfaction and ESG goals of the company, and aligning the interests of our executive officers with the interests of our stockholders by linking executive performance to stockholder value.

We urge stockholders to read the Compensation Discussion and Analysis section appearing on pages 40 through 61 of this proxy statement, as well as the “Summary Compensation Table For Fiscal Year 2022” and related compensation tables and narrative appearing on pages 63 through 90 of this proxy statement, which provide detailed information on the company’s compensation policies and practices and the compensation of our named executive officers.


Stockholder Approval Required

The affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to vote thereon is required to approve the advisory resolution on executive compensation. Properly executed proxies will be voted as marked. Executed but unmarked proxies will be voted in favor of the advisory resolution on executive compensation. Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to any named executive officer and will not be binding on or overrule any decisions by the compensation and management development committee or the board of directors.

Because we value our stockholders’ views, however, the compensation and management development committee and the board of directors will consider carefully the results of this advisory vote when formulating future executive compensation policy.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.

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Compensation Discussion and Analysis

The following Compensation Discussion and Analysis, or “CD&A,” section of this proxy statement discusses the material elements of our fiscal year 2022 executive compensation programs for the following persons, who are our named executive officers, or “NEOs:”

Name       Title
Carlos A. Rodriguez Chief Executive Officer
Don McGuire Chief Financial Officer
Maria Black President, ADP
John C. Ayala Chief Operating Officer
Donald Weinstein Corporate Vice President, Global Product & Technology
Kathleen A. Winters Former Chief Financial Officer

Mr. McGuire was appointed as chief financial officer on October 1, 2021 and Ms. Winters’ last day of employment with the company was September 30, 2021. Ms. Black was appointed as president, ADP and Mr. Ayala was appointed as chief operating officer, each effective January 1, 2022.

The CD&A also provides an overview of our executive compensation philosophy and explains how the compensation and management development committee of our board of directors (the “committee”) arrives at specific compensation decisions involving the NEOs.

In addition, the CD&A explains how our executive compensation programs are designed and operate with respect to our NEOs by discussing the following fundamental aspects of our compensation programs:


compensation principles     cash compensation     long-term incentive compensation     other compensation components and considerations (including retirement benefits and deferred compensation)

Executive Summary

Stockholder Support for our Compensation Programs

The committee continuously evaluates the degree to which our compensation programs link pay to performance and support the evolution of objectives that underpin our strategy and the related implication for human capital planning. In particular, the committee takes steps to ensure that the programs encourage our executive officers to remain focused on both the short-term and long-term financial, transformation, client satisfaction and ESG goals of the company and that the metrics included in both our annual and long-term incentive compensation plans complement each other to create a balanced focus on year-over-year improvement and sustainable long-term value creation. Each year the committee sets rigorous and challenging performance targets aligned to these company goals. We continue to believe that growth in revenue, new business bookings, adjusted earnings before interest and taxes (“EBIT”) and adjusted net income (each

as defined on pages 43 and 44) are the most important measures of the successful execution of our objectives and the delivery of sustainable long-term stockholder value. We also believe that our transformation, client satisfaction and ESG objectives are important leading indicators of the company’s transformation progress, long-term value, ability to cultivate a diverse and inclusive culture with purpose, and future success.

At our 2021 Annual Meeting of Stockholders, our stockholders approved the compensation of our fiscal year 2021 NEOs by a vote of approximately 82%. While we believe this result reflected continued support for our compensation programs, it represented a decrease against the fiscal year 2020 vote of approximately 90%. Our committee sought to better understand these trends and directly engaged with our investors. Our fiscal year 2021 goals were established to reflect ADP’s financial expectations and assumptions at the time they were


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set in July 2020. As this occurred during the midst of the pandemic, the financial targets that we set were lower than the prior year and we did not anticipate the better-than-expected recovery and outperformance that followed for ADP. Consistent with the committee’s long-standing methodology in setting such goals, no discretionary adjustments were made to our ultimate payout. As a result, the payout reflected the formulaic outcome and we understand that certain investors did not view this outcome favorably. This situation, however, did not recur for fiscal year 2022, as our financial targets were set above our fiscal year 2021 actual results.

Informed by additional feedback on the linkage between executive performance and stockholder value, the committee undertook a holistic evaluation of the company’s compensation program. The committee retained the basic

foundation of our overall compensation program during fiscal year 2022, but made certain changes for fiscal year 2023, as described more fully in this CD&A. These changes are intended to ensure that the overall program balances the need to drive the right management behavior, retain key talent and align to the interests of our stockholders.

Fiscal Year 2022 Organizational Updates

In January 2022, Ms. Black transitioned from president, worldwide sales and marketing, to a newly created role of president, ADP. In this new position, Ms. Black has responsibilities for sales, marketing, and all business operations. To support her in this expanded capacity, John Ayala was appointed to the newly created role of chief operating officer and reports to Ms. Black. Mr. Ayala has responsibility for our business units on a global basis.


Fiscal Year 2022 Business Highlights

Our Strategic Pillars. Our business strategy is based on three strategic pillars, which are designed to position us as the global market leader in human capital management (“HCM”) technology and services:

Our Strategic Pillars
HCM Solutions HRO Solutions Global Solutions

Grow a complete suite of cloud-based HCM solutions (HCM Solutions)
Grow and scale our market-leading HR outsourcing solutions (HRO Solutions)
Leverage our global presence to offer clients HCM solutions wherever they do business (Global Solutions)

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Compensation Discussion and Analysis

ADP delivered financial results and performance exceeding its expectations on multiple fronts for fiscal year 2022:

 
HIGHLIGHTS     STOCKHOLDER FRIENDLY ACTIONS
$16.5 billion in revenue
15% Earnings Per Share Growth to $7.00 for the year
Record level of over $2 billion in new business bookings
990K+ clients globally, up 7% year over year
Over 39 million workers paid across 140 countries and territories and 1 in 6 U.S. workers paid
$3.6 billion in cash returned to stockholders
$1.7 billion Dividends
$2.0 billion Share Repurchases
47 Consecutive Years of Dividend Increases
 
 
INNOVATION
Significant progress on the roll-out of a new unified user experience (“UX”) across our strategic products and solutions
Transitioned hundreds of thousands of clients, generating positive feedback from this transition to even more intuitive HCM workflows
Expanded DataCloud capabilities including Global Insight Dashboard for multinational clients, as well as enhanced Diversity, Equity, and Inclusion (“DEI”) capabilities to better enable clients to improve on DEI matters
Several enhancements to Wisely program including launch of Bill Pay, self-enrollment, full digital wallet capability, and more deeply integrated Earned Wage Access solution, all of which combine for a more frictionless and more powerful experience for workers
Awarded an unprecedented seventh consecutive top HR product award at annual HR Tech conference

We are the leading provider of cloud-based HCM technology solutions to employers around the world. Through our extensive suite of products, coupled with industry and compliance expertise, we help our clients navigate a highly dynamic world of work in order to give them peace-of-mind and reduce the time and effort they allocate to non-core tasks. This, in turn, allows our clients to better focus on what matters most to them – running their businesses.

Over the decades since pioneering our industry, we have reshaped HCM time and again by continuously innovating across our technology platforms and service solutions. Our commitment to innovation is continuous amid challenging business and operating environments – whether it be a global recession or bull market, an international conflict or global pandemic. We believe businesses, our clients, serve as a force for progress, and we remain committed

to rethinking a better, more personalized world at work to help our clients and their workers achieve their full potential. That commitment underpins our drive to innovate across our portfolio in order to deliver sustainable, profitable growth.

In this context, ADP remained focused on delivering exceptional value to our clients in fiscal year 2022. The dedication and resilience demonstrated by our associates resulted in revenue and earnings growth that was consistently ahead of our own expectations. Our strong top-line revenue growth, balanced with solid margin performance, drove earnings per share (“EPS”) growth of 15%. Other key business drivers such as new business bookings and client retention reached impressive levels and our overall results, together with our focus on sound


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capital allocation, have served to further strengthen our business model with high levels of recurring revenue, strong operating cash flow, and a solid balance sheet.

Our strategy continues to be the same -- leverage the strength of our model to reinforce our competitive position by, first and foremost, reinvesting in the business. We believe that balancing investments in innovative solutions, client service tools, and distribution is critical in strengthening our market-leading offerings. We supplement these investments through a disciplined approach to M&A. This focus on delivering top-line revenue growth, while also improving the efficiency and effectiveness of our operations, is complemented by a commitment to return excess cash to stockholders through dividends and disciplined share buybacks.

Excellent execution across our business, together with our steady investments in sales, product, technology, and our digital transformation, have positioned us favorably to support the creation of long-term stockholder value by balancing top-line revenue growth with margin improvement to drive EPS growth. As we look ahead to fiscal year 2023 and beyond, we are focused on market-leading innovation, further simplification of our product portfolio, continued digital transformation and an unwavering commitment to best-in-class service.

2022 Incentive Compensation Performance Metrics

Our financial performance impacted the compensation of our executive officers in several ways, most notably through our annual cash bonus plan and performance-based stock unit (“PSU”) program.

Performance for all metrics, including the transformation, client satisfaction and ESG objectives under the annual cash bonus plan, are formulaically measured, based on predetermined and objectively quantifiable goals. Targets and results for our financial metrics exclude the impact of certain limited items pursuant to predetermined categories of adjustments established by the committee at the time that targets were set.

The committee’s determination of incentive compensation under our annual cash bonus plan for our executive officers, including our NEOs, was based on fiscal year 2022 revenue growth, new business bookings growth, and adjusted EBIT growth as well as transformation, client satisfaction and ESG objectives.

These fiscal year 2022 goals were established consistent with the committee’s long-standing methodology in setting such goals and as such, align to the financial earnings guidance ADP set in July 2021 for fiscal year 2022 and reflect ADP’s expectations and assumptions at that time.


Details with regard to the transformation, client satisfaction and ESG objectives are provided on page 55 and the financial goals and performance results are summarized below.

Annual Cash Bonus
Plan Measures
      Plan
Targets
      Plan Results
Revenue Growth 7.2% 10.9%, excluding the impact of foreign currency fluctuations in excess of the fluctuations assumed in the target
New Business Bookings Growth(1) 17.9% 18.4%
Adjusted EBIT Growth(2) 8.1% 15.2%, excluding the impact of foreign currency fluctuations in excess of the fluctuations assumed in the target

1 For fiscal year 2022, our new business bookings definition includes annualized recurring revenues anticipated from sales orders to new and existing clients for Employer Services and Professional Employer Organization (“PEO”) Services. It excludes revenue that is one-time in nature and zero-margin benefits pass-throughs.
2 Our adjusted EBIT measure excludes the impact of taxes, certain interest expense, certain interest income, and certain other items. We continue to include the interest income earned on investments associated with our client funds extended investment strategy and interest expense on borrowings related to our client funds extended investment strategy as we believe these amounts to be fundamental to the underlying operations of our business model. Refer to the table in Appendix A for a reconciliation from net earnings to adjusted EBIT for fiscal years 2022 and 2021.

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Compensation Discussion and Analysis

For fiscal year 2022, our NEOs received cash bonuses that averaged 155.1% of target.

The incentive compensation under our PSU program was based on adjusted net income growth for fiscal year 2022. Targets and results exclude the impact of certain limited items pursuant to predetermined categories of adjustments established by the committee at the time the targets were set.
The adjusted net income goal was established consistent with the committee’s long-standing methodology in setting such a goal and as such, aligns to the financial earnings guidance ADP set in July 2021 for fiscal year 2022 and reflects ADP’s expectations and assumptions at that time.


PSU Program Measure Program Target Program Result
Adjusted Net Income Growth(1)       8.1%       16.4%, excluding the impacts of:
Foreign currency fluctuations in excess of the fluctuations assumed in the target
Asset write downs related to vacating certain leases early of $9.6 million and unplanned asset impairments of internally developed and purchased software of $9.5 million
A reversal of an accounts receivable write-down adjustment recorded in fiscal year 2020 which was incremental to the normal and customary accounts receivable reserve methodology

1 Our adjusted net income measure excludes the impact of certain one-time charges and benefits reflecting specific items that are not fundamental to our underlying business operations. Refer to the table in Appendix A for further detail on these items and a reconciliation from net earnings to adjusted net income for fiscal years 2022 and 2021.

A payout percentage of 150% was achieved under our PSU program as a result of our fiscal year 2022 adjusted net income growth. This payout percentage would have been achieved even in the absence of the predetermined categories of adjustments reported in the table above. This payout percentage applies to year 1 of the fiscal year 2022 award, to year 2 of the fiscal year 2021 award and to year 3 of the fiscal year 2020 award. These awards will be earned and issued following the end of the corresponding three-year performance period ending in fiscal years 2024, 2023 and 2022, respectively.
The end of fiscal year 2022 marked the end of the three-year performance period for PSU awards granted in fiscal year 2020. Based on the average of the three fiscal years, these awards earned a payout percentage of 117%.

As described in the table below, the payout percentages achieved for each of the individual three fiscal years in the applicable performance period are averaged to obtain the award level earned and issued as a percentage of target.


PSU
Award
      Annual Achievement Percentage       Award
Payout
      Payout
Date
Year 1       Year 2       Year 3
FY’20 50% 150% 150% 117% September 2022
FY’21 150% 150% TBD TBD September 2023
FY’22 150% TBD TBD TBD September 2024

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Compensation Discussion and Analysis

Elements of Compensation

The committee determines the compensation of our chief executive officer and all other executive officers. When making decisions related to officers, including the NEOs (other than our chief executive officer), the committee considers recommendations from the chief executive officer as well as guidance from its independent compensation consultant. The following table summarizes the major elements of our fiscal year 2022 executive officer compensation programs.

Compensation Element       Objectives       Key Characteristics
Base Salary To provide a fixed amount for performing the duties and responsibilities of the position Determined based on overall performance, level of responsibility, competitive compensation data and comparison to other company executives
Annual Cash Bonus To motivate executive officers to achieve company-wide, business unit and transformation, client satisfaction and ESG performance goals Payment based on achievement of company-wide, business unit and transformation, client satisfaction and ESG performance goals
Performance-Based Stock Unit (“PSU”) Awards To motivate executive officers to achieve certain longer-term goals and create long-term alignment with stockholders Awards based on target growth in adjusted net income, with earned shares issued following applicable performance period
Stock Options To align the interests of executive officers with long-term stockholders’ interests and ensure that realized compensation occurs only when there is a corresponding increase in stockholder value Granted annually and vesting over four years. Realized value of award is based on stock price appreciation following the date of grant over a ten-year term
Time-Based Restricted Stock Awards To attract and retain executive officers Awarded on a limited, non-recurring basis to attract and recruit new talent and for long-term retention of critical executives, as well as part of management succession planning

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Compensation Discussion and Analysis

The tables below illustrate the alignment between company performance and the incentive compensation paid to Mr. Rodriguez for fiscal year 2022. In the case of PSUs, the table reflects a payout of 117% based on the average of the annual achievement percentages of 50%, 150% and 150% for the three-year performance period comprised of fiscal years 2020, 2021 and 2022, respectively.

   

The following is a summary of fiscal year 2022 total direct compensation for our NEOs:

Name Base Salary Annual Bonus PSUs(3)(4) Stock Options(3)     Restricted
Stock(5)
    Total
Mr. Rodriguez        $1,164,200            $3,627,600            $9,813,500            $5,800,000            $0            $20,405,300    
Mr. McGuire(1) $603,173 $1,306,040 $1,587,400 $420,000 $2,035,200 $5,951,813
Ms. Black $709,000 $1,558,000 $3,272,100 $1,020,000 $0 $6,559,100
Mr. Ayala $658,600 $1,363,300 $3,022,100 $1,020,000 $0 $6,064,000
Mr. Weinstein $618,000 $962,800 $2,596,700 $1,020,000 $0 $5,197,500
Ms. Winters(2) $168,350 $0 $2,795,600 $1,020,000 $0 $3,983,950

Footnotes:
1 Mr. McGuire’s salary was paid in his home country currency of Canadian dollars (CAD) and his salary amount has been converted to USD based on the average daily exchange rate for fiscal year 2022 of .790000 (CAD to USD). Mr. McGuire’s annual bonus has been converted from Canadian dollars (CAD) to USD using the June 2022 mid-month exchange rate of 0.784691 (CAD to USD), in accordance with the company's standard policy for globally mobile associates under the company’s annual cash bonus plan.
 
2 Ms. Winters’ salary reflects amounts paid through her last day of employment of September 30, 2021. Ms. Winters was not eligible for a bonus for fiscal year 2022.
 
3 Equity amounts are the grant date fair values for fiscal year 2022, which are the same amounts disclosed in the “Summary Compensation Table for Fiscal Year 2022” on page 63 of this proxy statement. Amounts are rounded for ease of presentation.
 
4 Only the grant date fair value, calculated in accordance with FASB ASC Topic 718, for the performance year in which performance targets are set is reported. Accordingly, the amounts for the PSU awards represent the grant date fair value of the first, second and third tranche of the target awards that were granted in fiscal years 2022, 2021 and 2020, respectively.
 
5 Mr. McGuire’s restricted stock award, granted in the form of restricted stock units (as he was an international participant at time of grant), was made in connection with his promotion to chief financial officer. The actual grant date fair value differs slightly from the award target amount of $2,100,000 as it was calculated in accordance with FASB ASC Topic 718 and reflects a discount for no dividend payments during the vesting period.

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Compensation Discussion and Analysis

Good Governance and Best Practices

We are committed to ensuring that our compensation programs reflect principles of good governance.

What we do

Pay for performance: We design our compensation programs to link pay to performance and levels of responsibility, to encourage our executive officers to remain focused on both the short-term and long-term financial, transformation, client satisfaction and ESG goals of the company and to link executive performance to stockholder value.

Annual say-on-pay vote: We hold an advisory say-on-pay vote to approve our NEO compensation on an annual basis.

Clawback policy: ADP’s Clawback Policy allows for the recovery of both cash and equity incentive compensation from any current or former executive who engages in any activity that is in conflict with or adverse to ADP’s interests, including fraud or conduct contributing to any financial restatements or irregularities.

Stock ownership guidelines: We maintain stock ownership guidelines to encourage equity ownership by our executive officers. Mr. Rodriguez’s stock ownership guideline is six times his base salary. The other NEOs have a stock ownership guideline of three times base salary. Executive officers whose ownership levels are below target ownership levels are required to retain as shares of common stock at least 75% of post-tax net gains on stock option exercises, and 75% of shares (net of taxes) received upon vesting of restricted stock or received under our PSU program.

Limited perquisites: We provide limited perquisites that are viewed as consistent with our overall compensation philosophy.

Double trigger change in control payments: Our Change in Control Severance Plan for Corporate Officers includes “double-trigger” provisions, such that payments of cash and vesting of equity awards occur only if termination of employment without cause or with good reason occurs during the two-year period after a change in control.

Independence of our compensation and management development committee and advisor: The compensation and management development committee of our board of directors, which is comprised solely of independent directors, utilizes the services of FW Cook as an independent compensation consultant. FW Cook reports to the committee, does not perform any other services for the company other than in connection with an annual review of competitive director compensation for the nominating/corporate governance committee of our board of directors, and has no economic or other ties to the company or the management team that could compromise their independence and objectivity.

Equity plan best practices: Our 2018 Omnibus Award Plan, approved by stockholders in November 2018, incorporates certain governance best practices, including a minimum vesting period of one-year (with certain limited exceptions), a minimum 100% fair market value exercise price (except for substitute awards from an acquired or merged company), no “liberal share recycling” of stock options or stock appreciation rights and no “liberal” change in control definition.

Stockholder engagement: As described under “Fiscal Year 2022 Stockholder Engagement” on page xiii of this proxy statement, our investor engagement program promotes an active dialogue with our largest stockholders on a range of topics related to our strategy, corporate governance and executive compensation programs.


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What we don’t do

No-hedging policy: We prohibit all of our directors and employees, including our executive officers, from engaging in any hedging or similar transactions involving ADP securities.

No-pledging policy: We prohibit all of our directors and employees, including our executive officers, from holding ADP securities in a margin account or pledging ADP securities as collateral for a loan.

No repricing of underwater stock options without stockholder approval: We may not lower the exercise price of any outstanding stock options or otherwise provide economic value to the holders of underwater stock options in exchange for the forfeiture of such awards without stockholder approval.

No discount stock options: The exercise price of our stock options is not less than 100% of the fair market value of our common stock on the date of grant.

No IRC Section 280G or 409A tax gross-ups: We do not provide tax gross-ups under our change in control provisions or deferred compensation programs.

No current dividends on unearned PSUs: We do not pay dividends in respect of unearned PSUs; rather, dividend equivalents are accrued over the applicable performance period and are paid only if the units are earned and shares are issued at the end of the performance period.


Looking Forward

In fiscal year 2022, the committee conducted an in-depth review of the overall incentive structure and approved changes to the long-term incentive (“LTI”) design for our executive officers for fiscal year 2023. The new design was informed by investor commentary and observations as well as input from the committee’s independent compensation consultant.

Under the new design, LTI is delivered in a mix of 75% PSUs and 25% restricted stock units (“RSUs”). In the prior design, PSUs represented 60% and 70% of total LTI for our CEO and other NEOs, respectively, with the remainder delivered via stock options. The new mix is intended to provide consistency among our NEOs, increase the focus on performance-based awards, more closely align with peer group most prevalent practices, and more strongly support talent retention objectives by reducing the impact of stock price volatility on realizable value.

In addition to the change in LTI mix, we also changed the performance metrics in the PSU plan to create better balance. Under the prior design, adjusted net income was used as the sole metric and there was a cap on payout at the target number of shares if 3-year total shareholder return (“TSR”) was negative. The new design retains adjusted net income, weighted 67%, as well as

the TSR-based payout cap and adds revenue excluding zero-margin benefits pass-throughs, weighted 33%. We believe the addition of a revenue growth metric, coupled with adjusted net income growth, promotes focus on both the top line and bottom line performance of the business. The new revenue metric differs materially from that used in our annual cash bonus plan which includes zero-margin benefits pass-throughs.

The new design also adds relative TSR as a metric that modifies the final payout based on our 3-year TSR performance versus the S&P 500 companies. The S&P 500 was chosen because the index consists of a broad group of companies that represent investors’ alternative capital investment opportunities, thereby aligning the PSU payout opportunity to the long-term investment experience of our stockholders. Last, in reflection of the increased performance focus of the overall LTI program and to align with the most prevalent practice among our peers and broader industry, as well as to encourage our executives to achieve stretch goals, we increased the maximum PSU payout opportunity from 150% of the target shares to 200%, while capping the payout to 100% if our company’s three-year TSR is negative.


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Compensation Discussion and Analysis

Compensation Principles

We believe that compensation should be designed to create a direct link between performance and stockholder value. Five principles that guide our decisions involving executive compensation are that compensation should be:

1 based on (i) the overall performance of the company, (ii) the performance of each executive’s business unit when applicable and (iii) each executive’s individual performance
 
2 closely aligned with the short-term and long-term financial, transformation, client satisfaction and ESG objectives that build sustainable long-term stockholder value
 
3 competitive, in order to attract and retain executives critical to our long-term success
 
4 consistent with high standards of corporate governance and best practices
 
5 designed to dampen the incentive for executives to take excessive risks or to behave in ways that are inconsistent with the company’s strategic planning processes and high ethical standards

Our compensation programs are designed so that target pay reflects relative levels of responsibility among our key executives, and such that the proportion of pay tied to operating performance and changes in stockholder value varies directly with the level of responsibility and accountability to stockholders. We assign all executives to pay grades by comparing their position-specific duties and responsibilities with market data and our internal management structure. Each pay grade has ranges for base salaries, total annual cash compensation and annual equity grants based on market competitive levels. Executives are positioned within these ranges based on a variety of factors, most notably their experience and skill set and their performance over time.

We design our performance-based compensation so that actual, realized compensation will vary relative to the target award opportunity based on performance. As such, actual compensation amounts may be above or below targeted levels depending on the overall performance of the company, performance of a business unit and achievement of performance goals that support our strategy. We have adopted this compensation design to provide meaningful incentives for our key executives to achieve desired results. We also believe that it is important for our executive officers to have an ongoing long-term investment in the company as outlined on page 61 of this proxy statement under “Stock Ownership Guidelines.”

We have a clear strategy to maximize sustainable long-term stockholder value that includes balancing growth, profitability and risk, with clear financial goals that allow us to continue to innovate technologically and expand globally. Each year the committee sets rigorous and challenging performance measures aligned to these objectives. We continue to believe that growth in revenue, new business bookings, adjusted EBIT and adjusted net income are the most important measures of the successful execution of our objectives and the delivery of sustainable long-term stockholder value.

In fiscal year 2022, we continued to engage with our investor community. We contacted stockholders representing nearly half our shares outstanding and we discussed our strategy, corporate governance and executive compensation programs with stockholders representing over 30% of our shares outstanding.

To date, the feedback from these engagements have been very positive. While we do receive certain institution-specific observations of pay practices from time to time (which we are implementing for fiscal year 2023 onward as set forth in greater detail in “Looking Forward” above), we observed that these investors are broadly supportive of the linkage of our performance measures to our executive compensation programs. As described under “Fiscal Year 2022 Stockholder Engagement” on page xiii of this proxy statement, we continue to engage with our stockholders on our executive compensation programs and we look forward to maintaining this ongoing dialogue as well as incorporating feedback into our plans as appropriate.


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Growth in revenue, adjusted EBIT and new business bookings are important performance measures in annual cash bonus determinations, and adjusted net income is used to determine the number of shares earned in a performance period under our PSU program. These performance criteria were chosen for the variable incentive plans because they focus our executive officers on the company’s long-term goals of increasing the growth and profitability of our business, which are the key drivers of sustainable increases in stockholder value.

Consistent with our pay-for-performance philosophy, our NEOs’ compensation is structured with a significant portion of their total compensation at risk. This at-risk compensation includes long-term incentive awards, which are paid based on the performance of the company as a

whole, and annual cash bonuses, which are paid on the basis of the bonus objectives established by the committee as described below under “Fiscal Year 2022 Target Bonus Objectives.”

The mix of target total direct compensation (base salary, cash bonus and long-term incentive awards) for fiscal year 2022 was designed to deliver the following approximate proportions of total compensation to Mr. Rodriguez, our chief executive officer, and the other NEOs if company and individual target levels of performance are achieved. The target pay mix reflects the PSU target award based on the three-year target opportunity. Mr. Rodriguez’s higher portion of at-risk compensation reflects his greater responsibility for overall company performance.




Compensation Consultant

The committee has engaged FW Cook to provide assistance with the design of our compensation programs, the development of comparative market-based compensation data for the chief executive officer position and the determination of the chief executive officer’s target compensation awards. The specific matters on which FW Cook provided advice in fiscal year 2022 were the market trends and regulatory developments in executive compensation and the design of executive compensation programs and practices, including the changes to chief executive officer pay levels and reviewing long-term incentive guidelines for all eligible levels. In June 2021, FW Cook delivered to our committee the results of a competitive assessment of compensation for use in determining fiscal year 2022 target compensation for Mr. Rodriguez. FW Cook also examined the mix of

proposed PSU awards and stock option grants for our NEOs for fiscal year 2022 and confirmed that the proposals for the NEOs were reasonable and customary, given the company’s size and structure. In addition, in January 2022, FW Cook reviewed the company’s executive compensation peer group and recommended no changes to the peer group for fiscal year 2023. In April 2022, FW Cook reviewed and provided input on the new LTI design for fiscal year 2023 described above under “Looking Forward.”

As part of its ongoing support to the committee, FW Cook also reviews executive compensation disclosures (including this CD&A), reviews and provides comments on changes to the committee’s charter, advises on emerging trends and the implications of regulatory and governance developments, and reviews and provides commentary on materials and proposals prepared by management that are presented at the committee’s meetings. In addition, our


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nominating/corporate governance committee engaged FW Cook to review the design and competitiveness of our non-employee director compensation program.

The committee determined that the work of FW Cook did not raise any conflicts of interest in fiscal year 2022. In making this assessment, the committee considered the independence factors enumerated in Rule 10C-1(b) under the Securities Exchange Act of 1934, as amended, and applicable Nasdaq listing standards, including the level of fees received from the company as a percentage of FW Cook’s total revenue, the policies and procedures employed by FW Cook to prevent conflicts of interest, the fact that FW Cook does not provide any other services to the company (other than the director compensation program review), and whether the individual FW Cook advisers to the committee own any stock of the company or have any business or personal relationships with members of the committee or our executive officers.

Compensation Review and Determination

ADP uses a customized peer group to benchmark our executive officers’ pay levels and our financial performance in connection with pay-for-performance evaluations, as well as our practices concerning equity compensation and other executive compensation programs. The customized peer group was developed with assistance from FW Cook based upon the following criteria: comparable business model, company size, executive talent sources, competition for investor capital, companies considered by our investors to be our peers, and overall reasonableness. In connection with its annual review of the company’s peer group, the committee made changes for fiscal year 2022 to ensure that our peer group remains appropriate from the perspectives of business model comparability, revenue and market capitalization. DXC Technology and Thomson Reuters were removed due to expected changes in business fit and size, following certain divestitures. Intuit was added as it competes with ADP in payroll services and has grown to become a comparably sized company. These changes result in a 17-company peer group for fiscal year 2022.


Fiscal Year 2022 Compensation Peer Group
Accenture plc Fidelity National Information Services, Inc. Omnicom Group Inc.
Aon plc Fiserv, Inc. PayPal Holdings, Inc.
CGI Inc. Intuit Inc. Salesforce.com, Inc.
Cognizant Technology Solutions Corp. Leidos Holding, Inc. TE Connectivity Ltd.
Discover Financial Services Marsh & McLennan Companies, Inc. Visa Inc.
eBay Inc. MasterCard Incorporated  

In benchmarking the total cash and long-term incentive compensation for the NEOs, the committee reviewed the market compensation data from the customized peer group at its June 2021 meeting. The committee considered that, compared with the peer group, the company compares at the 49th and 56th percentiles, respectively, regarding revenue and market capitalization. Based on the four most recently reported quarters as of April 30, 2021, revenue among companies in the peer group ranged from approximately $5.9 billion to $45.7 billion, and market capitalization ranged from approximately $14.3 billion to $498.1 billion. The committee also considered third-party survey data (including the Radford Global Technology Survey, the Towers Watson® U.S. General Industry Executive Database,

the Hewitt Associates® Executive Total Compensation by Industry Survey and the Equilar Inc.® Top 25 Database) as reference points to understand general industry compensation practices.

The committee examines compensation summaries detailing the amounts and mix of base salary, cash bonus, and long-term equity incentives for each of our NEOs, which compare the amounts and mix to competitive compensation practices. We generally target base salary, annual cash bonus and long-term equity incentives at the median of competitive compensation levels, but we will set individual executive targets above or below the median when warranted in the judgment of the committee.


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The degree to which target compensation for an executive ranges above or below the median competitive rate is primarily based on each executive’s skill set and experience relative to market peers. Executives who are new in their roles and therefore less experienced than market peers are typically positioned lower in the range, whereas executives with more experience in their roles may be positioned higher in the range. The competitive positioning of Mr. Rodriguez’s target compensation compares slightly above the median of our customized peer group.

Differences in Compensation of Our NEOs

The committee approved the pay mix for our chief executive officer, which is designed to be competitive when measured against the pay packages of other chief executive officers as indicated by the compensation study.

We have found that due to the broad responsibilities and the experience required for the chief executive officer position, compensation for chief executive officers in public companies that are similar in size to ours is significantly higher than compensation for their other NEOs.

When determining the compensation level for each of our executive officers, the committee reviews each individual compensation element based on the previous year’s level, as well as how the proposed level of that individual compensation element for each executive officer would compare to the other executive officers. The aggregate level for each executive officer’s compensation is then compared against the executive’s previous year’s totals and against compensation of other executive officers of the company.


Cash Compensation

Base Salary

Base salaries are a fixed amount paid to each executive for performing his or her normal duties and responsibilities. We determine the amount based on the executive’s overall performance, level of responsibility, competitive compensation practices data, and comparison to other company executives.
Based on these criteria, our NEOs received annual salary increases in fiscal year 2022, as summarized in the table below.


Named Executive Officer (NEO)       Fiscal Year-End 2021 Salary       Fiscal Year-End 2022 Salary       Increase
Mr. Rodriguez       $1,130,250             $1,164,200             3.0 %      
Mr. McGuire $447,535 $650,577 45.4 %
Ms. Black $600,000 $800,000 33.3 %
Mr. Ayala $600,000 $700,000 16.7 %
Mr. Weinstein $600,000 $618,000 3.0 %
Ms. Winters $653,800 $673,400 3.0 %

Mr. McGuire’s salary was paid in his home country currency of Canadian dollars (CAD) for fiscal years 2021 and 2022 and his salary amounts have been converted to USD based on the average daily exchange rate for fiscal year 2022 of .790000 (CAD to USD). Mr. McGuire’s salary increased by 3.0%, effective July 1, 2021, and subsequently by 41.1%, effective October 1, 2021, in connection with his appointment as chief financial officer. Ms. Black’s salary increased by 3.0%, effective July 1, 2021, and subsequently by 29.4%, effective January 1, 2022, in connection with her appointment as president, ADP. Mr. Ayala’s salary increased by 3.0%, effective July 1, 2021, and subsequently by 13.3%, effective January 1, 2022, in connection with his appointment as chief operating officer.

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Annual Cash Bonus

Overview

We paid our NEOs cash bonuses for fiscal year 2022 based on the attainment of financial, transformation, client satisfaction and ESG performance goals established at the beginning of the fiscal year. All of the company’s goals are objectively measurable and were established consistent with the committee’s long-standing methodology in setting such goals. These fiscal year 2022 goals align to the financial earnings guidance ADP set in July 2021 for fiscal year 2022 and reflect ADP’s expectations and assumptions at that time. For each executive officer, we establish a target bonus amount, which is initially expressed as a percentage of projected year-end annual base salary. For fiscal year 2022, these target bonus percentages ranged from 100% to 200% of base salary for the NEOs. We also assign a percentage value to each bonus component of each NEO’s annual cash bonus plan and then determine the target bonus amount linked to each component. We establish these performance ranges to provide our NEOs with a strong incentive to exceed the targets. The maximum bonus payment for our NEOs is 200% of the target bonus level. There is no minimum payment level, and no bonus is payable if threshold performance goals are not achieved.

The committee establishes and approves annual target bonus objectives and award opportunities for each of our NEOs. In making these determinations, the committee considers a variety of factors, including market data, each officer’s relative level of responsibility, and the chief executive officer’s recommendations for executives other than himself. Our NEOs participated in the discussions surrounding their bonus objectives so that they could provide input and understand the expectations of each bonus plan component, but they did not participate in the

setting of the target bonus award opportunities nor did they participate in the committee’s voting or deliberations regarding their individual compensation amounts. Each NEO receives a final version of his or her individualized bonus plan after it is approved by the committee. Except in extraordinary circumstances, bonus objectives are not modified during the fiscal year, and no bonus objectives were modified for fiscal year 2022.

The committee reviews the performance of each of our NEOs relative to his or her annual fiscal year bonus plan objectives at its regularly scheduled August meeting, which is the first meeting following the end of our fiscal year. Based on this review, the committee determines and approves the annual cash bonuses for our executive officers.

NEOs’ Fiscal Year 2022 Bonuses

Our fiscal year 2022 annual cash bonus plan measures consisted of (i) revenue growth, weighted at 20%, (ii) new business bookings growth, weighted at 20%, (iii) adjusted EBIT growth, weighted at 20%, (iv) company transformation objectives, weighted at 20%, (v) client satisfaction (net promoter score and client retention targets), weighted at 10%, and (vi) ESG objectives (diversity & inclusion and environmental footprint targets), weighted at 10%. Fiscal year 2022 target bonuses were the same as a percentage of base salary as in fiscal year 2021 for Mr. Rodriguez and Mr. Weinstein. The target bonus percentage for Mr. McGuire increased from 80% to 150% and for each of Ms. Black and Mr. Ayala increased from 100% to 150%, to align closer to market for their new roles, effective at the time of their appointments and prorated accordingly for fiscal year 2022.


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Following the conclusion of fiscal year 2022, the committee assessed the performance of the company and the strategic progress realized for the 2022 fiscal year against the NEOs’ bonus objectives. The approved annual cash bonuses are as follows:

Named Executive Officer (NEO)    Target Bonus
as % of
Base Salary
   Target
Bonus
Amount
   Maximum
Bonus as %
of Target
   Actual
Bonus
Amount
   Bonus
Amount as %
of Target
Mr. Rodriguez    200 %       $2,328,400       200 %             $3,627,600             155.8 %      
Mr. McGuire1 132.5 % $856,221 200 % $1,306,040 152.5 %
Ms. Black 125 % $1,000,000 200 % $1,558,000 155.8 %
Mr. Ayala 125 % $875,000 200 % $1,363,300 155.8 %
Mr. Weinstein 100 % $618,000 200 % $962,800 155.8 %
1

Mr. McGuire’s target and actual bonus have been converted from Canadian dollars (CAD) to USD using the June 2022 mid-month exchange rate of 0.784691 (CAD to USD), in accordance with the company’s standard policy for globally mobile associates under the company’s annual cash bonus plan.

Fiscal Year 2022 Target Bonus Objectives

The table below indicates the degree to which each target bonus objective for our NEOs was satisfied. The percentage of target bonus paid to each NEO is calculated as a weighted average of the percentages achieved for each individual objective.

The bonus objectives were designed to reward outcomes that are aligned with the key components of our financial and strategic success, the degree to which the NEOs have responsibility for overall company performance or individual business unit results, and to provide a set of common objectives that facilitate collaborative engagement throughout the company.

Mr. McGuire’s target weights are slightly different for fiscal year 2022 due to his role as president, employer services international, prior to his appointment as chief financial officer, in which he was also measured on his business unit financial metrics. For the period as president, employer services international, Mr. McGuire was measured on the business unit EBIT, retention and new business, each weighted 1.5%, that achieved 102.2%, 111.9% and 76.5% of target, respectively. As such, the company objectives of revenue growth, new business bookings growth and adjusted EBIT growth, are each weighted 18.5% for Mr. McGuire.


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The committee established the following objectives for our NEOs in 2021, and the formulaic achievement levels for fiscal year 2022 are as follows:

Annual Bonus Plan Performance Measures    Weight    Threshold    Target    Stretch    Actual    Achievement
Revenue Growth    20 %       4.2 %       7.2 %       10.2 %       10.9 %       200.0 %   
New Business Bookings Growth 20 % 10.9 % 17.9 % 24.9 % 18.4 % 107.1 %
Adjusted EBIT Growth(1) 20 % 3.1 % 8.1 % 13.1 % 15.2 % 200.0 %
Transformation
Reduce low value contact per client
4 % 123.8 %
Achieve digital sales goal
4 % 133.3 %
Achieve client count percentage goal on Next Generation Solutions
4 % 0.0 %
Achieve goal for percentage of revenues on strategic platforms
4 % 135.3 %
Achieve goal for sales from newest products
4 % 146.7 %
Client Satisfaction
Improve client experience by demonstrating achievement of net promoter score goals
5 % 100.0 %
Achieve client retention goal
5 % 90.8 % 91.3 % 91.8 % 92.1 % 200.0 %
ESG
Environmental: Increase percentage of paperless direct deposit paystubs
5 % 84.0 % 85.0 % 87.0 % 87.3 % 200.0 %
DE&I: Improve the percentage of female executives
2.5 % 33.1 % 33.6 % 34.6 % 34.0 % 140.0 %
DE&I: Improve the percentage of executives from underrepresented groups
2.5 % 24.9 % 25.4 % 26.4 % 26.1 % 170.0 %
1 Refer to the table in Appendix A for a reconciliation from net earnings to adjusted EBIT for fiscal years 2022 and 2021.

In setting target financial performance goals, we consider a variety of factors including our short- and long-range strategic plan, the annual budget reviewed by our board, and the guidance provided by management on key elements of financial performance. Achievement levels are, as a percentage of target, 50% for threshold performance, 100% for target performance, 200% for stretch performance, and 0% for below threshold performance. The targets for revenue growth and adjusted EBIT growth reflect an assumed impact of foreign currency fluctuations anticipated at the time the targets were established. For each metric described above, the award level achieved within each range, as a percentage of target, is determined by linear interpolation between the lower and upper bounds.

Transformation, client satisfaction and ESG objectives for our NEOs are aligned with our key strategic goals for fiscal year 2022 and are viewed as important leading indicators of our ongoing transformation, creation of long-term value and future success.

The targets for each objective are established to be challenging and rigorous and require strong performance for achievement. The targets are measurable, quantifiable goals. There is no subjectivity applied to the calculation of performance against these objectives. The calculation of performance is formulaic to reflect the proportionate level of achievement relative to the target. Targets for certain measures are considered confidential business information, disclosure of which could harm our operating performance or ability to compete.


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Long-Term Incentive Compensation Programs

We believe that long-term incentive compensation is a significant factor in attracting and retaining key executives and in aligning their interests directly with the interests of our stockholders. For fiscal year 2022, long-term incentives were awarded in the form of PSUs and stock option grants. In special situations, we selectively award time-based restricted stock. The committee selected these awards because they ensure that the overall long-term incentive program is closely tied to changes in stockholder value and the degree to which critical operating objectives are attained and support our talent retention objectives.

For all of our NEOs, except our chief executive officer, we targeted a long-term incentive compensation mix of 70% PSU awards and 30% stock options for fiscal year 2022. The committee also approved a long-term incentive mix for the chief executive officer of 60% PSU awards and 40% stock options. For the composition and mix of LTI for fiscal year 2023, please see our discussion in “Looking Forward” in this CD&A.

The committee may also from time to time grant discretionary awards of time-based restricted stock to our executive officers. These awards are for special situations to assist us in the recruitment, promotion or retention of executive officers and are not considered in the target

allocation of total long-term incentive compensation between PSU awards and stock option grants. In fiscal year 2022, Mr. McGuire received a one-time time-based restricted stock unit award in connection with his promotion to chief financial officer, which is discussed below under “Time-Based Restricted Stock.”

As part of our annual market analysis of compensation data, we compare our long-term equity incentive grant values with competitive levels. We establish target long-term incentive award values and ranges for each executive level and set the midpoints of such ranges at the market median levels. The committee reviews the target award values and ranges annually to ensure that the resulting awards remain generally consistent with our median compensation philosophy.

Prior to the beginning of each fiscal year, we analyze the target performance stock award and stock option grant levels to confirm that our desired target long-term incentive compensation values are appropriate in the context of the compensation studies referred to under “Compensation Review and Determination” above. When comparing our desired values to these compensation studies, we look at both equity elements in total.


The target long-term incentive mix approved for fiscal year 2022 grants is shown in the following chart:


1 PSUs reflect the entire PSU target award based on the three-year target opportunity.

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At its June 2021 meeting, the committee approved target awards of PSUs and stock options for all NEOs for fiscal year 2022, which were granted in September 2021. The committee also approved additional PSUs for Mr. McGuire, Ms. Black and Mr. Ayala at the time of the appointments to their new roles during fiscal year 2022 and these PSUs are

reflected in the long-term incentive mix for other NEOs in the chart above. The PSU awards (based on the three-year target opportunity) will be earned and issued following the end of the three-year performance period in fiscal year 2024. The PSUs and stock option grants for fiscal year 2022 are summarized in the table below:


Named Executive Officer (NEO)       Target PSU Award (1)       Stock Options (1)       Total
Mr. Rodriguez          $8,700,000                $5,800,000       $14,500,000
Mr. McGuire $2,580,000 $420,000 $3,000,000
Ms. Black $3,980,000 $1,020,000 $5,000,000
Mr. Ayala $3,230,000 $1,020,000 $4,250,000
Mr. Weinstein $2,380,000 $1,020,000 $3,400,000
Ms. Winters $2,380,000 $1,020,000 $3,400,000

1 Amounts are rounded for ease of presentation.

PSU Awards

Our PSU program is based on financial objectives that are measured over a three-year performance period consisting of three one-year adjusted net income performance goals. We believe that the three-year PSU program will further the company’s long-term financial goals by tying a substantial portion of the total compensation opportunity to multi-year performance and better promote talent retention by imposing a meaningful total vesting period. The fiscal year 2022 target award opportunity under the PSU program, which was granted in September 2021, will be earned and issued in September 2024 based upon the achievement of performance goals for fiscal years 2022, 2023 and 2024.

For purposes of our PSU awards, the performance goals and corresponding target award ranges are typically established and communicated to our executive officers (including the NEOs) in the first quarter of each respective fiscal year. After the conclusion of each fiscal year, the committee confirms the performance results and determines the award achieved for such fiscal year, as a percentage of target, based on these results by using linear interpolation between the lower and upper bounds of the applicable percentage range. Under the PSU program, after the end of the three-year performance period, the award levels achieved as a percentage of target for each of the individual three fiscal years in the applicable performance period will be averaged to obtain the overall award level

earned and issued as a percentage of target. However, notwithstanding the achievement of adjusted net income results, if the company’s total stockholder return is not positive for the three-year performance period, the total number of PSUs awarded may not exceed 100% of the target award.

The PSU award earned will be credited with dividend equivalents from the grant date of the target award until the issuance date, assuming all dividends were reinvested in ADP stock at the time dividends are paid. The issuance of the total number of PSUs earned will be made in the form of shares of ADP stock in September following the conclusion of the three-year performance period.

Commencing with the fiscal year 2017 PSU awards, adjusted net income replaced earnings per share as the key performance metric used to calculate such awards. The committee implemented this change because, like earnings per share, adjusted net income holds management accountable for the execution of our growth strategy and our focus on profitability but, unlike earnings per share, is unaffected by our share repurchase program. By eliminating the impact of share repurchases on our performance, and accordingly, on the determination of payouts under the PSU program, the committee believes that the program fosters greater management objectivity with regard to alternative uses of excess capital and a stronger line of sight between operational performance and payout.


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Our adjusted net income growth for fiscal year 2022, as described in further detail above under “2022 Incentive Compensation Performance Metrics,” was 16.4%, which resulted in an earned award level for the fiscal 2022 performance year in the amount of 150% of target. This goal was established consistent with the committee’s long-standing methodology in setting such a goal and

as such, aligns to the financial earnings guidance ADP set in July 2021 for fiscal year 2022 and reflects ADP’s expectations and assumptions at that time.

The following table shows the annual targets, results and award levels achieved for fiscal years 2020, 2021 and 2022, in each case as a percentage of target:


FY       Performance Metric (1)       Threshold       Target       Stretch       Actual       Achievement
2022 Adjusted Net Income Growth    3.1 %      8.1 %     13.1 %     16.4 %          150 %      
2021 Adjusted Net Income Growth -20.7 % -14.7 % -8.7 % 0.3 % 150 %
2020 Adjusted Net Income Growth 8.5 % 11.5 % 14.5 % 8.5 % 50 %

1 Refer to the table in Appendix A for a reconciliation from net earnings to adjusted net income for fiscal years 2022, 2021 and 2020.

Award levels achieved for each fiscal year in the three-year performance period are, as a percentage of target, 50% for threshold performance, 100% for target performance, 150% for stretch performance, and 0% for below threshold performance. The award level achieved within each range, as a percentage of target, is determined by linear interpolation between the lower and upper bounds. Dividends are paid only with respect to shares of ADP stock that have been issued in connection with PSUs earned. The end of fiscal year 2022 marks the end of the three-year performance period for PSU awards granted in fiscal year 2020. Based on the average of the three fiscal years, these awards earned a payout percentage of 117%.

Stock Options

For fiscal year 2022, we granted stock options to our executive officers, which vest over four years. We determine target award ranges based on our annual review of our long-term incentive compensation programs. The committee determined and approved stock option grants for our chief executive officer as part of a review of his entire compensation package based on the guidance of its independent compensation consultant, FW Cook.

While the committee can consider a stock option grant at any time for our executive officers, stock option grants are generally made in September on the same date PSU awards are granted. Additional stock option grants may be made to assist us in recruiting, promoting or retaining executive officers. However, starting with fiscal year 2023, we are eliminating stock options from our long-term incentive compensation program in lieu of RSUs. For further details, please see “Looking Forward” in this CD&A.

Time-Based Restricted Stock

The committee may, from time to time, grant awards of time-based restricted stock to our executive officers. These grants assist us in the recruitment, promotion and retention of executive officers and, while used only occasionally, are important in building our leadership team and succession strategy. In fiscal year 2022, after careful consideration and extensive discussion, the committee approved a special time-based restricted stock unit award for Mr. McGuire with a grant value of $2,035,200. This award vests 50% on the first and second anniversaries of the grant date and is intended to recognize the new and increased responsibilities as chief financial officer, the importance of his role to the execution of the company’s long-term strategy, and the criticality of retaining Mr. McGuire over the long term.


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Other Compensation Components and Considerations

In addition to the compensation components discussed above and the opportunity to participate in the same Employees’ Savings-Stock Purchase Plan and health and welfare benefits available to our U.S. associates generally, we offer our executive officers retirement benefits, deferred compensation, limited perquisites, and change in control and severance protection. We believe these additional benefits are fair, competitive, consistent with our overall compensation philosophy and designed to ensure that we can effectively retain our executive officers as well as effectively compete for executive talent.

Retirement Benefits

All U.S. executive officers can participate in our 401(k) Plan, including our NEOs. Our NEOs, with the exception of Mr. McGuire and Ms. Winters, also participated in the Pension Retirement Plan, a tax-qualified, defined benefit, cash balance pension plan. The Pension Retirement Plan was closed to new participants as of January 2015 and was frozen as of July 1, 2020. Effective as of July 1, 2020, the matching contribution under our 401(k) Plan for participants impacted by the Pension Retirement Plan freeze was increased to $1.00 for every $1.00 a participant contributes up to 6% of eligible pay. Previously, Pension Retirement Plan participants received a 401(k) matching contribution of up to $.70 for every $1.00 up to 6% of eligible pay. The committee approved these changes in 2020 to align our retirement programs to the market.

In addition, Messrs. Rodriguez and Ayala participated in the Supplemental Officers Retirement Plan (“SORP”), a non-qualified, defined benefit plan which provides retirement benefits in excess of those generally available under the Pension Retirement Plan. The SORP was closed to new participants beginning in January 2014 and was frozen effective July 1, 2019, with no future accruals due to pay and/or service. As of July 1, 2019, Messrs. Rodriguez and Ayala were automatically enrolled in the Automatic Data Processing, Inc. Executive Retirement Plan (“ERP”), a non-qualified, defined contribution plan in which the other NEOs participate, and which provides supplemental retirement benefits in excess of amounts available under our tax-qualified pension and other retirement plans. Mr. McGuire participated in a Canadian excess plan similar

to the ERP during fiscal year 2022, but subsequently enrolled in the ERP upon his localization in the U.S. as of July 1, 2022.

Deferred Compensation

U.S. executive officers may defer all or a portion of their annual cash bonuses into a deferred compensation account. We make this program available to our executive officers to be competitive, to facilitate the recruitment of new executives and to provide our executive officers with a tax-efficient way to save for retirement. The company does not match deferrals for its NEOs or otherwise contribute any amounts to the NEOs’ deferred compensation amounts. Since the deferral accounts are made up of funds already earned by the executive officers, we do not consider the executive’s deferred account balances, or investment earnings or losses on such balances, when we make compensation decisions.

Perquisites

We provide each of our executive officers the use of automobiles leased by the company. Consistent with our policy towards all attendees, we pay for the spouses of our executive officers to accompany them to our annual sales President’s Club events. In addition, the ADP Foundation makes contributions that match the charitable gifts made by our U.S. executive officers up to a maximum of $20,000 per calendar year.

Finally, company policy permits Mr. Rodriguez to use the company’s aircraft for personal travel in order to maximize his business availability and productivity, provided that he reimburses the company for the aggregate incremental cost incurred by the company in connection with any such personal use.

In accordance with the company’s standard policies available to all associates in the company’s relocation program, Mr. McGuire and Ms. Black received tax reimbursement payments associated with relocation benefits and an expatriate assignment in the case of Mr. McGuire and a previous expatriate assignment in the case of Ms. Black.


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Compensation Discussion and Analysis

Change in Control Arrangements

The Automatic Data Processing, Inc. Change in Control Severance Plan for Corporate Officers is designed to: (i) retain our corporate officers (including the NEOs) and (ii) align their interests with our stockholders’ interests so that they can consider transactions that are in the best interests of our stockholders and maintain their focus without concern regarding how any such transaction might personally affect them.

Our Change in Control Severance Plan for Corporate Officers is described in more detail below under “Potential Payments To Named Executive Officers Upon Termination or Change in Control.” Under this plan, our chief executive officer is entitled to severance equal to two times base salary and bonus upon termination of employment without cause or with good reason, while our other NEOs are entitled to severance equal to one and one-half times base salary and bonus. We believe that a higher severance multiple for our chief executive officer is needed in order to attract the individual we believe is best suited for the position. Our chief executive officer is the individual the public and our stockholders most closely identify as the face of the company. The chief executive officer has the greatest individual impact on our success and faces the greatest personal risks when the company takes risks. Our Change in Control Severance Plan for Corporate Officers also provides that the vesting of all unvested equity awards would be accelerated under qualifying termination scenarios based on a “double-trigger” in which payments of cash and vesting of equity awards occur only if termination of employment without cause or by a participant for good reason occurs during the two-year period after a change in control.

Corporate Officer Severance Plan

ADP’s Corporate Officer Severance Plan is for purposes of involuntary terminations other than for cause in the absence of a change in control. This plan is designed to: (i) attract and retain executive officers by a level of protection against involuntary job loss, (ii) provide an appropriate level of benefit to enable executive officers to transition to new employment, and (iii) secure restrictive covenants such as non-compete, non-solicitation, etc.

Our Corporate Officer Severance Plan is described in more detail below under “Potential Payments To Named Executive Officers Upon Termination or Change in Control.” Under a qualifying termination, executive officers receive 18 months of base salary continuation (24 months for the chief executive officer), prorated bonus for year of termination, and continuation of vesting of equity awards during the salary continuation period, subject to proration in respect of certain performance-based equity awards.

The severance formulas we use for executive officers are each designed to provide the level of temporary replacement income we feel is appropriate for that position.

Accounting and Tax Considerations

We consider accounting and tax implications when we design our equity-based and cash compensation programs and when we make awards or grants. Section 162(m) of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017, generally limits the deductibility of certain compensation in excess of $1 million paid in any one year to any “covered employee.” A “covered employee” under Section 162(m) is any employee who has served as our CEO, CFO or other NEO for tax years after December 31, 2016. Prior to the amendment, qualified performance-based compensation was not subject to this deduction limit if certain requirements were met. Under the Tax Cuts and Jobs Act of 2017, the performance-based exception has been repealed, unless compensation paid to any “covered employee” qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.

Historically, we strove to make only those cash and equity-based awards and grants that qualified as performance-based compensation or that we otherwise could deduct when determining our corporate taxes. We do not expect the disallowance of a deduction for compensation paid to our NEOs in excess of $1 million, as a result of these changes to Section 162(m), to significantly alter our compensation programs. The overriding consideration when evaluating the pay level or design component of any portion of our executives’ compensation is the effectiveness of the pay component and the stockholder value that management and the committee believe the pay component reinforces.


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Compensation Discussion and Analysis

Clawback Policy

We adopted a Clawback Policy in fiscal year 2015 that provides the committee with discretion to recover both cash and equity incentive compensation from all current and former executives. A recipient’s award may be forfeited and required to be recovered, as applicable, if the recipient engages in activity that is in conflict with or adverse to our interests, including but not limited to fraud or conduct contributing to any financial restatements or irregularities, or if the recipient violates a restrictive covenant.

No-Hedging and No-Pledging Policy

Our insider trading policy prohibits all of our directors and employees, including our executive officers, from engaging in any hedging or similar transactions involving ADP securities. The policy also prohibits all of our directors and employees, including our executive officers, from holding ADP securities in a margin account or pledging ADP securities as collateral for a loan. Our insider trading policy is available online on our corporate website at www.adp.com. To access this document, click on “About ADP,” then “Corporate Responsibility,” “See Our Commitments” and then “Ethics.”

Stock Ownership Guidelines

The committee has established stock ownership guidelines to encourage equity ownership by our executive officers in order to reinforce the link between their financial interests and those of our stockholders. We set the stock ownership guidelines on the basis of each executive officer’s pay grade, expressed as a multiple of the executive officer’s base salary on the first day of the fiscal year. Stock ownership (as defined under the guidelines) consists of stock owned outright by the executive officer or beneficially through ownership by direct family members (spouses and/or dependent children).

Under our stock ownership guidelines, Mr. Rodriguez is expected to own an amount of our stock equal in value to six times his base salary and our other NEOs are expected to own an amount of our stock equal in value to three times their respective base salaries. Executive officers whose ownership levels are below the minimum required levels are required to retain as shares of common stock at least 75% of post-tax net gains on stock option exercises, and 75% of shares (net of taxes) received upon vesting of restricted stock or received under our PSU program. As of the end of fiscal year 2022, all NEOs met the stock ownership guidelines.


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Compensation and Management Development Committee Report

The compensation and management development committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section of the company’s 2022 proxy statement. Based on its review and discussions with management, the compensation and management development committee recommended to the board of directors that the Compensation Discussion and Analysis be included in the company’s 2022 proxy statement.

Compensation and Management Development Committee of the Board of Directors

Richard T. Clark, Chair
David V. Goeckeler
Francine S. Katsoudas
Thomas J. Lynch
Scott F. Powers

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Compensation of Executive Officers

Summary Compensation Table for Fiscal Year 2022

Name and
Principal Position
Year Salary
($)(1)
Bonus
($)(2)
Stock
Awards
($)(3)
Option
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)(4)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
All Other
Compensation
($)(6)
Total
($)
(a)    (b)    (c)    (d) (e) (f) (g) (h) (i) (j)
Carlos A. Rodriguez 2022    $1,164,200    $0       $9,813,507       $5,799,969       $3,627,600          $0          $421,816    $20,827,092
Chief Executive 2021 $941,875 $0 $6,517,790 $5,099,999 $3,996,600 $0 $428,995 $16,985,259
Officer 2020 $988,969 $0 $7,554,200 $5,099,990 $1,164,200 $2,652,132 $186,157 $17,645,648
Don McGuire 2022 $603,173 $0 $3,622,595 $419,976 $1,306,040 $0 $1,508,633 $7,460,417
Chief Financial Officer
Maria Black 2022 $709,000 $0 $3,272,096 $1,019,999 $1,558,000 $0 $320,185 $6,879,280
President, ADP 2021 $592,501 $0 $1,809,479 $989,992 $1,060,800 $1,618 $495,874 $4,950,264
2020 $550,350 $0 $3,828,048 $839,994 $237,800 $65,511 $118,698 $5,640,401
John C. Ayala 2022 $658,600 $0 $3,022,146 $1,019,999 $1,363,300 $0 $184,942 $6,248,987
Chief Operating 2021 $592,501 $0 $1,809,479 $989,992 $1,060,800 $0 $160,801 $4,613,573
Officer 2020 $550,350 $0 $3,828,048 $839,994 $293,800 $433,421 $85,088 $6,030,701
Donald Weinstein 2022 $618,000 $0 $2,596,714 $1,019,999 $962,800 $0 $177,385 $5,374,898
Corporate Vice 2021 $592,501 $0 $1,604,178 $989,992 $1,060,800 $2,248 $170,671 $4,420,390
President, Global
Product and 2020 $566,325 $0 $3,317,905 $689,983 $262,700 $42,395 $83,487 $4,962,795
Technology
Kathleen A. Winters 2022 $168,350 $0 $2,795,644 $1,019,999 $0 $0 $49,107 $4,033,100
Former Chief Financial 2021 $645,627 $0 $1,340,924 $989,992 $1,733,900 $0 $208,437 $4,918,880
Officer(7) 2020 $645,627 $1,250,000 $699,967 $899,994 $505,100 $0 $131,905 $4,132,593

(1)      

For fiscal year 2022, Mr. McGuire’s salary was paid in his home country currency of Canadian dollars (CAD) and has been converted to USD based on the average daily exchange rate for fiscal year 2022 of 0.790000 (CAD to USD). For fiscal years 2021 and 2020, salaries reflect temporary reductions related to the COVID-19 pandemic, including a 50% voluntary pay cut for Mr. Rodriguez that started in April 2020 and ended in October 2020, and a 10% cut for the other NEOs, that started in May 2020 and ended in August 2020.

(2)

For fiscal year 2020, reflects sign-on bonus Ms. Winters received in connection with being hired as chief financial officer in April 2019, paid six months after her start date.

(3)

Amounts set forth in the Stock Awards and Option Awards columns represent the aggregate grant date fair value of awards granted in fiscal years 2022, 2021 and 2020 computed in accordance with FASB ASC Topic 718, disregarding estimates of forfeitures related to service-based vesting conditions. For additional information about the assumptions used in these calculations, see Note 10 to our audited consolidated financial statements for the fiscal year ended June 30, 2022 included in our annual report on Form 10-K for the fiscal year ended June 30, 2022. The amounts shown in the Stock Awards column in respect of the performance-based stock unit awards (“PSU”) reflect the grant date fair value of such awards based upon the probable outcome of the performance condition as of the grant date. The awards for fiscal year 2022 are comprised of PSU awards for all NEOs, and also include a time-based restricted stock unit award for Mr. McGuire. Consistent with the requirements of ASC Topic 718, the amounts relating to the PSU awards for fiscal year 2022 represent the sum of (i) the grant date fair value of the third of three tranches of the PSU award that was granted in September 2019, (ii) the grant date fair value of the second of three tranches of the PSU award that was granted in September 2020 and (iii) the grant date fair value of the first of three tranches of the PSU award that was granted in September 2021, and additionally for Mr. McGuire, the grant date fair value of the first of three tranches of the PSU award that was granted in October 2021, and additionally for Ms. Black and Mr. Ayala, the grant date fair value of the first of three tranches of the PSU award that was granted in January 2022, in each case,

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reflecting that the adjusted net income goal for the tranches was established in fiscal year 2022. The awards for fiscal year 2021 are comprised of PSU awards for all NEOs. Consistent with the requirements of ASC Topic 718, the amounts relating to the PSU awards for fiscal year 2021 represent the sum of (i) the grant date fair value of the third of three tranches of the PSU award that was granted in September 2018, (ii) the grant date fair value of the second of three tranches of the PSU award that was granted in September 2019 and (iii) the grant date fair value of the first of three tranches of the PSU award that was granted in September 2020, in each case, reflecting that the adjusted net income goal for the tranches was established in fiscal year 2021. The awards for fiscal year 2020 are comprised of PSU awards for all NEOs, and also include time-based restricted stock awards for Ms. Black, and Messrs. Ayala and Weinstein. The amounts relating to the PSU awards for fiscal year 2020 represent the sum of (i) the grant date fair value of the third of three tranches of the PSU award that was granted in September 2017, (ii) the grant date fair value of the second of three tranches of the PSU award that was granted in September 2018 and (iii) the grant date fair value of the first of three tranches of the PSU award that was granted in September 2019, in each case, reflecting that the adjusted net income goal for the tranches was established in fiscal year 2020. Remaining portions of the fiscal year 2022 award will be linked to adjusted net income goals for fiscal years 2023 and 2024, respectively, and will be reported in the Summary Compensation Table in such fiscal years; the remaining portion of the fiscal year 2021 award will be linked to the adjusted net income goal for fiscal year 2023 and will be reported in such fiscal year. The grant date fair value of the PSU awards granted in fiscal years 2022, 2021, and 2020, respectively, assuming achievement of the maximum level of performance are: Mr. Rodriguez, $14,720,261, $9,776,685, and $11,331,300; Mr. McGuire, $2,381,055; Ms. Black $4,908,144, $2,714,219, and $2,742,237; Mr. Ayala, $4,533,219, $2,714,219 and $2,742,237; Mr. Weinstein, $3,895,071, $2,406,267 and $1,977,023; and Ms. Winters, $4,193,466, $2,011,386, and $1,049,951.

(4)

Performance-based bonuses paid under the annual cash bonus plan are shown in this column. A discussion of our annual cash bonus plan may be found in our Compensation Discussion and Analysis under “Cash Compensation-Annual Cash Bonus.” Mr. McGuire’s fiscal year 2022 annual cash bonus was earned in Canadian dollars and converted to USD using the June 2022 mid-month exchange rate of 0.784691 (CAD to USD), in accordance with the company’s standard policy for globally mobile associates.

(5)

Amounts shown reflect the aggregate increase during the last fiscal year in the present value of the executive’s benefit under our tax-qualified cash balance pension plan, the Automatic Data Processing, Inc. Pension Retirement Plan, and our non-qualified supplemental retirement plan, the Supplemental Officers Retirement Plan (“SORP”). Our SORP was frozen as of July 1, 2019. Therefore, actual accrued SORP benefits will not change going forward. However, the Change in Pension Value disclosed in column (h) will fluctuate from year-to-year, reflecting annual changes in the underlying discount rates and mortality rates. There were no above-market or preferential earnings on nonqualified deferred compensation. The Pension Retirement Plan and the SORP provide benefits in the form of a lump sum and/ or an annuity. We calculated the present value as of June 30, 2019 based on the RP-2014 white collar mortality table with post-2006 improvements removed (projected generationally using scale MP-2018), a 3.25% interest crediting rate for the pension retirement plan, and a 3.4% discount rate; the present value as of June 30, 2020 is based on the Pri-2012 white collar mortality table (projected generationally using scale MP-2019), a 3.25% interest crediting rate for the pension retirement plan, and a 2.45% discount rate; the present value as of June 30, 2021 is based on the Pri-2012 white collar mortality table (projected generationally using scale MP-2020), a 3.25% interest crediting rate for the pension retirement plan, and a 2.55% discount rate; and the present value as of June 30, 2022 is based on the Pri-2012 white collar mortality table (projected generationally using scale MP-2021), a 3.25% interest crediting rate for the pension retirement plan, and a 4.60% discount rate. For fiscal year 2022, the change in value decreased for Messrs. Rodriguez ($3,620,505), Ayala ($583,480), and Weinstein ($35,561), and for Ms. Black ($65,488), primarily driven by a change in the discount rate.

(6)

Please refer to the “All Other Compensation for Fiscal Year 2022” table below for further information.

(7)

Fiscal year 2022 compensation for Ms. Winters is reflected through her last day of employment with the company of September 30, 2021. She was not eligible for a fiscal year 2022 performance-based bonus under the annual cash bonus plan.


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All Other Compensation for Fiscal Year 2022

Name Other
Benefits(1)
Tax
Payments(2)
  Matching
Charitable
Contributions(3)
Total
Carlos A. Rodriguez $401,816             $0                   $20,000             $421,816
Don McGuire(4) $578,052 $930,581 $0 $1,508,633
Maria Black $249,198 $48,558 $22,429 $320,185
John C. Ayala $174,692 $0 $10,250 $184,942
Donald Weinstein $158,335 $0 $19,050 $177,385
Kathleen A. Winters $49,107 $0 $0 $49,107

(1)      

Other Benefits include:

(a)      

Actual cost to the company of leasing automobiles (and covering related maintenance, registrations and insurance fees) used for personal travel: Mr. Rodriguez, $17,430; Mr. McGuire, $17,449; Ms. Black, $14,070; Mr. Ayala, $11,911; Mr. Weinstein, $30,505 (inclusive of $18,278 in vehicle repairs); and Ms. Winters, $5,045. For Mr. McGuire, reflects the combined cost to the company of leasing an automobile while on assignment in the United Kingdom, and leasing an automobile for one-month in the United States while planning for his localization to the country.

(b)

For Ms. Black and Mr. Weinstein, includes $200 (associate only) and $400 (associate and spouse) respectively of taxable gift cards related to achieving health and wellness goals under the company’s Voluntary Wellness Program offered during calendar year 2021 (available to the company’s associates generally). For Mr. McGuire, includes $1,892 related to the cost of an executive annual physical exam (available to the company’s Canadian executives generally).

(c)

Matching contributions to the company’s Retirement and Savings Plan (available to the company’s associates generally): Mr. Rodriguez, $17,850; Ms. Black, $17,850; Mr. Ayala, $17,850; Mr. Weinstein, $17,850; and Ms. Winters, $17,850. Company contributions pursuant to the Automatic Data Processing, Inc. Executive Retirement Plan (“ERP”) for ERP participants (which include amounts that were earned for fiscal year 2022 but not yet credited to the participants’ accounts): Mr. Rodriguez, $365,494; Ms. Black, $163,510; Mr. Ayala, $143,902; and Mr. Weinstein, $108,614. For Mr. McGuire, $163,963 related to company contributions to the Canadian Supplementary Excess Retirement plan (available to the company’s Canada-based executives generally, including amounts that were earned for fiscal year 2022 but not yet credited to his account).

(d)

Life insurance and accidental death and dismemberment premiums paid by the company (available to the company’s associates generally): Mr. Rodriguez, $1,042; Mr. McGuire, $1,223; Ms. Black, $1,042; Mr. Ayala, $1,029; Mr. Weinstein, $966; and Ms. Winters, $263.

(e)

For Mr. McGuire includes the following related to his expatriate assignment in the United Kingdom, with benefits that are in accordance with the company’s standard policies and available to associates in the company’s global long-term assignment program: housing, $161,248; global health care plan premium, $38,333; home leave travel, $28,200; goods and services allowance, $20,580; utilities allowance, $9,483; and long-term storage, $5,077. Total also includes $130,604 in vacation pay related to Mr. McGuire’s bonus, which is pursuant to Canada’s employment standards act.

(f)

For Ms. Black, includes expenses of $52,526 associated with the company’s relocation program, which to the extent necessary, is available to all associates in the company’s relocation program.

(g)

For Ms. Winters, includes $25,949 received in accrued unused vacation pay at the time of her departure from the company.


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(h) Personal travel on the company’s aircraft by Mr. Rodriguez and his immediate family. Mr. Rodriguez’s immediate family may also occasionally accompany him on the company’s aircraft when he is traveling on company business. Pursuant to company policy as CEO, Mr. Rodriguez reimbursed the company for the amount of aggregate incremental cost incurred by the company in connection with any such personal use. Incremental cost is calculated by multiplying the personal flight time including empty aircraft positioning time, by the aircraft’s hourly variable operating cost. Variable operating cost includes maintenance, fuel, cleaning, landing fees, flight fees, catering, and crew travel expenses, including hotels, meals and transportation.
(2) For Mr. McGuire, reflects the incremental cost to the company of tax-related payments associated with his expatriate assignment in the United Kingdom that concluded at the end of fiscal year 2022. For Ms. Black, reflects the incremental cost to the company of tax-related payments associated with relocation benefits, including a previous expatriate assignment. Tax payments are in accordance with the company’s standard policies and available to all associates in the company’s relocation program.

(3)

Reflects matching charitable contributions made by the ADP Foundation in an amount not to exceed $20,000 in a calendar year in respect of any given US-based named executive officer’s charitable contributions for that calendar year. Amounts may exceed $20,000 because, while matching charitable contributions are limited to $20,000 in a calendar year, this table reflects matching charitable contributions for the fiscal year ended June 30, 2022.

(4) Unless otherwise noted, values for Mr. McGuire have been converted from CAD to USD or GBP to USD based on the average daily exchange rates for fiscal year 2022 of 0.790000 (CAD to USD) or 1.329077 (GBP to USD) respectively, depending on invoiced currency. The total related to the cash bonus vacation pay in footnote (1)(e) is converted to USD using the June 2022 mid-month exchange rate of 0.784691 (CAD to USD), in accordance with the company’s standard policy for globally mobile associates, as it relates to the annual cash bonus plan.

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Grants of Plan-Based Awards Table for Fiscal Year 2022

Grant
Date(1)
Date of
Corporate
Action(1)
Plan Under
which Grant
was Made(2)


Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
Estimated Future Payouts
Under Equity Incentive
Plan Awards(3)
  All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
#
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
#
  Exercise
or Base
Price of
Option
Awards
($/Share)
  Grant
Date Fair
Value of
Stock and
Option
Awards
($)(4)
Name         Threshold
$
  Target
$
  Maximum
$
  Threshold
#
  Target
#
  Maximum
#
(a) (b) (bb) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l)
Carlos A. Rodriguez Cash Bonus $0 $2,328,400 $4,656,800
9/1/2021 8/4/2021 PSU (5)  7,507 15,014 22,521 $3,105,796
9/1/2021 8/4/2021 PSU (6)  9,204 18,407 27,611 $3,807,741
9/1/2021 8/4/2021 PSU (7)  7,010 14,019 21,029 $2,899,970
9/1/2021 6/3/2021 Stock Options 175,597 $206.86 $5,799,969
Don McGuire Cash Bonus (8) $0 $856,221 $1,712,443
9/1/2021 8/4/2021 PSU (5) 790 1,580 2,370 $326,770
9/1/2021 8/4/2021 PSU (6) 969 1,937 2,906 $400,688
9/1/2021 8/4/2021 PSU (7) 790 1,579 2,369 $326,632
10/1/2021 9/11/2021 PSU (9) 1,320 2,640 3,960 $533,280
9/1/2021 6/3/2021 Stock Options 12,715 $206.86 $419,976
10/1/2021 9/11/2021 TBRS 10,396 $2,035,225
Maria Black