Edgar Filing: AUTOMATIC DATA PROCESSING INC

adp_def14a.htm

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

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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

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AUTOMATIC DATA PROCESSING, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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AUTOMATIC DATA PROCESSING, INC.

One ADP Boulevard ● Roseland, New Jersey 07068
__________________________

NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS
__________________________

The 2010 Annual Meeting of Stockholders of Automatic Data Processing, Inc. will be held at 10:00 a.m., Tuesday, November 9, 2010 at our corporate headquarters, One ADP Boulevard, Roseland, New Jersey, for the following purposes:

	1.		to elect a board of directors;

	2.		to 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;

	3.		to ratify the appointment of Deloitte & Touche LLP, an independent registered public accounting firm, to serve as our independent certified public accountants for the fiscal year 2011; and

	4.		to transact any other business that may properly come before the meeting or any adjournment(s) thereof.

Stockholders of record at the close of business on September 10, 2010 are entitled to vote at the meeting. Each stockholder is entitled to one vote for each share of common stock held at that time.

The presence in person and/or the representation by proxy of the holders of record of a majority of the issued and outstanding shares of stock entitled to vote at the meeting constitutes a quorum. If you do not expect to be present at the meeting, you may vote your shares of stock by phone, via the Internet or by executing and promptly returning the proxy accompanying printed proxy materials in the enclosed envelope, which requires no postage if mailed in the United States.

Admission to the meeting is restricted to stockholders and/or their designated representatives. If your shares are registered in your name and you plan to attend the meeting, your admission ticket will be the top portion of the proxy card. If your shares are in the name of your broker or bank or you received your proxy materials electronically, you will need to bring evidence of your stock ownership, such as your most recent brokerage account statement. All stockholders will be required to show valid picture identification. If you do not have valid picture identification and either an admission ticket or proof of your stock ownership, you will not be admitted to the meeting. For security purposes packages and bags will be inspected and you may be required to check these items. Please arrive early enough to allow yourself adequate time to clear security.

	By order of the Board of Directors

	MICHAEL A. BONARTI
	Secretary

September 24, 2010
Roseland, New Jersey

INTERNET AVAILABILITY OF PROXY MATERIALS

Under rules adopted by the Securities and Exchange Commission, 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 24, 2010, we commenced the mailing to our stockholders (other than those who previously requested electronic or paper delivery) 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. The Notice of Internet Availability of Proxy Materials also instructs you on how to access your proxy card to vote through the Internet or by telephone.

This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the annual meeting, and help conserve natural resources. However, 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.

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF

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

TO BE HELD ON NOVEMBER 9, 2010

SOLICITATION AND REVOCATION OF PROXY

The board of directors of Automatic Data Processing, Inc. is soliciting proxies for the forthcoming Annual Meeting of Stockholders. Each stockholder has the power to revoke a proxy at any time prior to voting at the meeting by notifying in writing the company’s secretary. The company will bear all expenses in connection with this solicitation. We made this Proxy Statement and the accompanying proxy available to stockholders on or about September 24, 2010.

The only outstanding class of securities entitled to vote at the meeting is our common stock, par value $.10 per share. At the close of business on September 10, 2010, the record date for determining stockholders entitled to notice of and to vote at the meeting, we had 492,481,053 issued and outstanding shares of common stock (excluding 146,221,616 treasury shares not entitled to vote). Each outstanding share of common stock is entitled to one vote with respect to each matter to be voted on at the meeting.

The representation in person or by proxy of a majority of the issued and outstanding shares of stock entitled to vote at the meeting constitutes a quorum. Under our Amended and Restated Certificate of Incorporation and By-Laws and under Delaware law, abstentions and “non-votes” are counted as present in determining whether the quorum requirement is satisfied. A 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.

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 all nominees, withheld from all nominees or withheld from specifically identified nominees. Votes that are withheld will have the effect of a negative vote, provided that if the number of nominees exceeds the number of directors to be elected, withheld votes will be excluded entirely and will have no effect on the vote.

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 (i) approve the amendment to the Employees’ Savings-Stock Purchase Plan and (ii) ratify the appointment of Deloitte & Touche LLP, an independent registered public accounting firm, as the company’s independent certified public accountants. Votes may be cast in favor of or against either proposal, or a stockholder may abstain from voting on either proposal. 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. Under applicable Delaware law, a broker non-vote will have no effect on the outcome of any of the matters referred to in this proxy statement because the non-votes are not considered in determining the number of votes necessary for approval.

Our board of directors has adopted a policy whereby stockholders’ proxies are received by our independent tabulators and the vote is certified by independent inspectors of election. 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.

PROPOSAL 1

ELECTION OF DIRECTORS

Our Directors

Properly executed proxies will be voted as marked. Unmarked proxies will be voted in favor of electing the persons named below (each of whom is now a director) as directors to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified. If any nominee is no longer a candidate at the time of the meeting (a situation that we do not anticipate), proxies will be voted in favor of remaining nominees and may be voted for substitute nominees designated by the board of directors.

		Served as a
		Director
		Continuously
Name	Age	Since	Principal Occupation
Gregory D. Brenneman	48	2001	Chairman of CCMP Capital Advisors, LLC, a private equity firm(1)

Leslie A. Brun	58	2003	Chairman and Chief Executive Officer of Sarr Group, LLC, a private equity firm(2)

Gary C. Butler	63	1996	President and Chief Executive Officer of Automatic Data Processing, Inc.(3)

Leon G. Cooperman	67	1991	Chairman and Chief Executive Officer of Omega Advisors, Inc., an investment firm(4)

Eric C. Fast	61	2007	President and Chief Executive Officer of Crane Co., a manufacturer of industrial products(5)

Linda R. Gooden	57	2009	Executive Vice President of Lockheed Martin Corporation Information Systems & Global Services(6)

R. Glenn Hubbard	52	2004	Dean of Columbia University’s Graduate School of Business(7)

John P. Jones	59	2005	Retired Chairman and Chief Executive Officer of Air Products and Chemicals, Inc.(8)

Sharon T. Rowlands	52	2008	Chief Executive Officer of Penton Media, Inc., a business to business media company(9)

Enrique T. Salem	44	2010	President and Chief Executive Officer of Symantec Corporation, a provider of information security, storage and systems management solutions(10)

Gregory L. Summe	53	2007	Vice Chairman of The Carlyle Group, a private equity firm(11)

____________________

(1)

Mr. Brenneman has been chairman of CCMP Capital Advisors, LLC since August 2008. He served as executive chairman of the board of Quiznos, a national quick-service restaurant chain, from August 2008 to July 2010 and as president and chief executive officer of Quiznos from January 2007 to August 2008. He has been the chairman and chief executive officer of TurnWorks, Inc., a private equity firm since November 1994. Mr. Brenneman served as chief executive officer and a board member of Burger King Corporation from August 2004 to April 2006 and as chairman of the board of directors from February 2005 to April 2006. He served as president and chief executive officer of PwC Consulting from June 2002 until its sale to International Business Machines Corporation and as president and a director of Continental Airlines, Inc. from 1996 to 2001. Mr. Brenneman is also a director of The Home Depot, Inc. A successful business leader with a proven track record, Mr. Brenneman brings to our board of directors extensive experience in the issues facing public companies and multinational businesses, including expertise in management, accounting, corporate finance and transactional matters. In addition, his directorships at other public companies provide him with broad experience on governance issues facing public companies.

(2)		Mr. Brun is chairman and chief executive officer of Sarr Group, LLC. He is the founder and chairman emeritus of Hamilton Lane, a private equity advisory and management firm where he was chairman from 1991 until 2005. Mr. Brun is also a director of Broadridge Financial Solutions, Inc., Merck & Co., Inc. and Philadelphia Media Holdings, LLC. Mr. Brun has extensive financial expertise, demonstrated by his career at Hamilton Lane and his prior experience as a managing director of the investment banking group of Fidelity Bank and as a vice president in the corporate finance division of E.F. Hutton & Co. Mr. Brun also brings to our board of directors management expertise and board leadership experience essential to a large public company. In addition, his directorships at other public companies provide him with broad experience on governance issues facing public companies.

(3)		Mr. Butler became president and chief executive officer of the company on August 31, 2006. He was president and chief operating officer of the company from April 1998 to August 31, 2006. Mr. Butler is also a director of Liberty Mutual Holding Company, Inc. He was a director of CIT Group, Inc. from February 2004 to May 2009. Mr. Butler started his career at the company in 1975 and held positions of increasing responsibility across business segments culminating with his appointment as chief executive officer in 2006. Mr. Butler brings deep institutional knowledge of the company’s business, structure, history and culture to our board of directors, as well as a track record of achievement, integrity and sound business judgment demonstrated throughout his career at the company.

(4)		Mr. Cooperman has been chairman and chief executive officer of Omega Advisors, Inc. since 1991. Mr. Cooperman retired from his positions as a general partner of Goldman, Sachs & Co. and as chairman and chief executive officer of Goldman Sachs Asset Management at the end of 1991, after twenty-five years of service. He is a Chartered Financial Analyst and a senior member and past president of the New York Society of Security Analysts. Mr. Cooperman is a skilled advisor with extensive financial, transactional, management and leadership experience. He provides our board of directors with critical insight into organizational management, accounting and financial matters.

(5)		Mr. Fast has been president and chief executive officer of Crane Co. since April 2001 and a director of Crane Co. since 1999. Mr. Fast is also a director of National Integrity Life Insurance and Regions Financial Corporation. He was a director of Convergys Corporation from 2000 to 2007. Mr. Fast also served as a managing director, co-head of global investment banking and a member of the management committee of Salomon Smith Barney from 1997 to 1998. Mr. Fast held those same positions at Salomon Brothers Inc. from 1995 until the merger of Salomon Brothers Inc. and Travelers/Smith Barney, and prior to that he was co-head of U.S. corporate finance at Salomon Brothers Inc. from 1991 to 1995. With years of demonstrated managerial ability, Mr. Fast contributes significant organizational management skills to our board of directors. Mr. Fast also has extensive financial and transactional experience demonstrated by his career in investment banking prior to his tenure at Crane Co.

(6)		Ms. Gooden has served as executive vice president – information systems & global solutions of Lockheed Martin Corporation since January 2007. She previously served as deputy executive vice president – information & technology services of Lockheed Martin Corporation from October 2006 to December 2006, and president, Lockheed Martin Information Technology from September 1997 to December 2006. Ms. Gooden has broad managerial and operational expertise, as well as a proven track record of achievement and sound business judgment demonstrated throughout her career with Lockheed Martin Corporation.

(7)		Mr. Hubbard has been the dean of Columbia University’s Graduate School of Business since 2004 and has been the Russell L. Carson professor of finance and economics since 1994. He is also a director of BlackRock Closed-End Funds, KKR Financial Holdings, LLC and MetLife, Inc. and a member of the Panel of Economic Advisors for the Federal Reserve Bank of New York. Mr. Hubbard served as a director of Information Services Group, Inc. from 2006 to 2008, Duke Realty Corporation from 2004 to 2008, Capmark Financial Corporation from 2006 to 2008, Dex Media, Inc. from 2004 to 2006 and R.H. Donnelley Corporation in 2006. Mr. Hubbard was chairman of the President’s Council of Economic Advisers from 2001 to 2003. Mr. Hubbard provides our board of directors with substantial knowledge of and expertise in global macroeconomic conditions and economic, tax and regulatory policies, as well as perspective on financial markets. In addition, his directorships at other public companies provide him with broad experience on governance issues facing public companies.

(8)		Mr. Jones is the retired chairman, 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 is also a director of Sunoco, Inc. With a track record of achievement and sound business judgment demonstrated during

		his thirty-six year tenure at Air Products and Chemicals, Inc., Mr. Jones brings to the board of directors extensive experience in issues facing public companies and multinational businesses, including organizational management, strategic planning and corporate governance matters, combined with proven business and financial acumen.

(9)		Ms. Rowlands has been chief executive officer of Penton Media, Inc. since November 2008. She was president (from 2000) and chief executive officer and president (from 2004) of Thomson Financial, a provider of information and technology solutions to the financial community, until May 2008. Ms. Rowlands is also a director of Constant Contact, Inc., a marketing services provider. With years of managerial and operational experience, Ms. Rowlands brings to the board of directors a reputation for leadership in business innovation and provides insight to the board of directors in support of the company’s focus on client service and business to business relationships.

(10)		Mr. Salem has been president, chief executive officer and a director of Symantec Corporation since April 2009. Mr. Salem was chief operating officer of Symantec Corporation from January 2008 to April 2009, group president, worldwide sales and marketing from April 2007 to January 2008, group president, consumer products from May 2006 to April 2007, senior vice president, consumer products and solutions from February 2006 to May 2006 and senior vice president, network and gateway security solutions from June 2004 to February 2006. Prior to joining Symantec Corporation he was president and chief executive officer of Brightmail Incorporated, an anti-spam software company. With years of demonstrated managerial ability, Mr. Salem brings to our board of directors extensive leadership experience, including oversight of global operations, as well as a strong background in information technology, data security, compliance and systems management.

(11)		Mr. Summe has been vice chairman of global buyout at The Carlyle Group since September 2009. He was executive chairman of PerkinElmer, Inc., a provider of health and safety technology and services, from February 2008 to April 2009. Between 1999 and February 2008, he was chairman and chief executive officer of PerkinElmer, Inc. From 2008 through September 2009, Mr. Summe served as a senior advisor at Goldman Sachs Capital Partners, a private equity business affiliated with Goldman, Sachs & Co. Mr. Summe is also a director of State Street Corporation. With a proven track record of success as chairman and chief executive officer of a public company with multinational operations, combined with his experience in the private equity sector, Mr. Summe brings to the board of directors extensive experience managing sophisticated businesses, insight into organizational and corporate governance issues, as well as financial acumen critical to a public company.

Stockholder Approval Required

At the 2010 Annual Meeting of Stockholders, directors shall 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 shall 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 THE NOMINEES TO THE BOARD OF DIRECTORS.

Corporate Governance

It is our policy that our directors attend the Annual Meetings of Stockholders. All of the current members of the board of directors who were elected at last year’s meeting attended our 2009 Annual Meeting of Stockholders.

During fiscal year 2010, our board of directors held five meetings. 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.

The board of directors’ categorical standards of director independence are consistent with NASDAQ listing standards and are available online at www.adp.com/about-us/governance/corporate-governance-principles/standards-of-director-independence.aspx. Directors meeting these standards are considered to be “independent.” Ms. Gooden, Ms. Rowlands and Messrs. Brenneman, Brun, Cooperman, Fast, Hubbard, Jones, Salem and Summe meet these standards and are, therefore, considered to be independent directors. Mr. Butler does not meet these standards and is, therefore, not considered to be an independent director. Based on the foregoing categorical standards, all current members of the audit, compensation and nominating/corporate governance committees are independent. Mr. Brun, our independent non-executive chairman of the board, is not a member of any of these board committees.

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

			Nominating/Corporate
Name	Audit	Compensation	Governance
Gregory D. Brenneman	X (financial expert)	X (chairman)
Leon G. Cooperman	X (chairman, financial expert)
Eric C. Fast	X (financial expert)
Linda R. Gooden	X
R. Glenn Hubbard	X (financial expert)	X
John P. Jones		X	X (chairman)
Sharon T. Rowlands			X
Gregory L. Summe			X
Meetings held in fiscal 2010	6	8	3

Board Leadership Structure

Our board of directors is currently led by Mr. Brun, our independent non-executive chairman of the board. Mr. Butler, our president and 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.

Executive Sessions

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

Director Nomination Process

When the board of directors decides to recruit a new member it seeks strong candidates who, ideally, meet all of its categorical standards of director independence, and who are, preferably, senior executives of large companies who have backgrounds directly related to our technologies, markets and/or clients. 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. In addition, the nominating/corporate governance committee considers a wide range of other factors in determining the composition of our board of directors, including age, diversity of background, diversity of thought and other individual qualities such as professional experience, skills, education and training. The nominating/corporate governance committee will also consider director candidates recommended by the stockholders. Stockholders wishing to recommend nominees for a director position should submit their recommendations in writing to the nominating/corporate governance committee in care of the company’s secretary at our principal executive offices. Candidates recommended by the stockholders will be considered using the same process and evaluation criteria as set forth above for proposed new members recruited by the board of directors.

Retirement Policy

Each director will automatically retire from the board of directors at the company’s Annual Meeting of Stockholders following the date he or she turns 72. Management directors who are no longer officers of the company are required to resign from the board of directors. However, the chief executive officer, with the board of director’s approval, may continue to serve as a director following the date he or she ceases to be our chief executive officer until the next Annual Meeting of Stockholders and, if re-elected at such meeting, may serve one additional year.

Audit Committee

The audit committee acts under a written charter, which is available online at http://www.adp.com/about-us/governance/audit-committee-charter.aspx. The members of the audit committee satisfy the independence requirements of NASDAQ listing standards. The audit committee’s principal functions are to assist the board of directors in fulfilling its oversight responsibilities with respect to (i) our systems of internal controls regarding finance, accounting, legal compliance and

ethical behavior, (ii) our auditing, accounting and financial reporting processes generally, (iii) our financial statements and other financial information which we provide to our stockholders, the public and others, (iv) our compliance with legal and regulatory requirements and (v) the performance of our corporate audit department and our independent auditors.

Nominating/Corporate Governance Committee

The nominating/corporate governance committee acts under a written charter, which is available online at http://www.adp.com/about-us/governance/nominating-corporate-governance-committee-charter.aspx. The members of the nominating/corporate governance committee satisfy the independence requirements of NASDAQ listing standards. The principal functions of the nominating/corporate governance committee are to (i) identify individuals qualified to become members of the board of directors and recommend a slate of nominees to the board of directors annually, (ii) ensure that the audit, compensation and nominating/corporate governance committees of the board of directors have the benefit of qualified and experienced independent directors, (iii) review and reassess annually the adequacy of the board of directors’ corporate governance principles and recommend changes as appropriate and (iv) oversee the evaluation of the board of directors and management and recommend to the board of directors senior managers to be elected as new corporate vice presidents of the company.

Compensation Committee

The compensation committee acts under a written charter, which is available online at http://www.adp.com/about-us/ governance/compensation-committee-charter.aspx. The members of the compensation committee satisfy the independence requirements of NASDAQ listing standards. In addition, each member of the compensation committee is a “Non-Employee Director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an “outside director” as defined in the regulations under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

The compensation committee sets and administers our executive compensation program. See “Compensation Discussion and Analysis” below.

The compensation committee is authorized to engage the services of outside advisors, experts and others to assist the committee. For fiscal year 2010, the committee sought advice from Frederic W. Cook & Co., Inc. (“Cook & Co.”), an independent compensation consulting firm specializing in executive and director compensation. For further information about Cook & Co.’s services to the compensation committee, see “Compensation Discussion and Analysis” below.

The Board’s Role in Risk Oversight

Our board of directors provides oversight with respect to the company’s risk assessment and risk management activities, which are designed to identify, prioritize, assess, monitor and mitigate material risks to the company, including financial, operational, compliance and strategic risks. The board of directors administers this oversight function principally through its audit committee and its compensation committee. The audit committee focuses on financial risks, including reviewing with management, the company’s internal auditors and the company’s 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. The audit committee also regularly receives, reviews and discusses with management presentations and analyses on our aggregate risk exposures, including market, credit and operational risks.

Our compensation committee considers risks presented by the company’s compensation policies and practices. The compensation committee believes that our compensation policies and practices do not encourage excessive and unnecessary risk-taking for the following reasons:

Our incentive plans have diverse performance measures, including company and business unit financial measures, operational measures and individual goals.
Our compensation programs balance annual and long-term incentive opportunities.
We cap incentive plan payouts within a reasonable range.
The mix of performance-based restricted stock and stock options in our long-term incentive programs serves the best interests of stockholders and the company.

Our stock ownership guidelines link the interests of our executive officers to those of our stockholders.
Our compensation recovery policy for new equity awards provides for the clawback of the value of awards in the event an employee engages in conduct contributing to a financial restatement.

Our compensation and audit committees report on risk oversight matters directly to the board of directors on a regular basis.

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 P.O. Box 34, 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, they are 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 audit 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. 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 audit 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 audit committee will consider 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 wife of Michael L. Capone, our vice president and chief information officer, is employed as an executive of the company and received total cash compensation for fiscal year 2010 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 under “Governance” in the “About ADP” section. 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 “Ethics” in the “About ADP” section. 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

Messrs. Brenneman, Hubbard and Jones are the three independent directors who sit on the compensation committee. No compensation committee member has ever been an officer of the company. During fiscal year 2010 and as of the date of this proxy statement, no compensation committee member has been an employee of the company or eligible to participate in our employee compensation programs or plans, other than the 2008 Omnibus Award Plan under which the non-employee

directors receive option grants. None of the executive officers of the company have served on the compensation committee or on the board of directors of any entity that employed any of the compensation committee members or directors of the company.

Compensation of Non-Employee Directors

All non-employee directors who served the entire year, other than Mr. Brun, the chairman of our board of directors, were paid an annual retainer of $105,000. Mr. Brun received an annual retainer of $200,000. Mr. Salem, who was initially elected to the board of directors on February 9, 2010, received an annual retainer of $84,000. The chairperson of the audit committee was paid an additional annual retainer of $10,000 and the chairperson of each of the compensation committee and the nominating/corporate governance committee was paid an additional annual retainer of $5,000. In addition, all non-employee directors receive $2,000 for each board of directors meeting attended and $1,500 for each committee meeting attended. Pursuant to our 2008 Omnibus Award Plan, $65,000 of the annual retainer was required to be paid in the form of deferred stock units of our common stock. Non-employee directors (including committee chairpersons) may elect to receive the elective portion of the annual retainer and meeting fees in cash, to defer the receipt of such amounts or to receive such amounts as deferred stock units of our common stock. All of our non-employee directors chose to receive the elective portion of their annual retainers as deferred stock units. Messrs. Brenneman, Cooperman, Malek and Ms. Gooden elected to receive all other elective amounts in cash, and Mr. Cooperman elected to have receipt of these amounts deferred. Messrs. Brun, Fast, Hubbard, Jones, Noski, Salem, Summe and Ms. Rowlands elected to receive all other elective amounts as deferred stock units. Under our 2008 Omnibus Award Plan a director may specify whether, upon separation from the board, he or she would like to receive the deferred cash amounts in such director’s deferred account in a lump sum payment or in a series of substantially equal annual payments over a period ranging from two to ten years.

Pursuant to our 2008 Omnibus Award Plan, each non-employee director is credited with an annual grant of deferred stock units on the date established by the board for the payment of the annual retainer equal in number to the quotient of $65,000 divided by the closing price of a share of our common stock on the date this amount is credited. Deferred stock units 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 deferred stock units 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 deferred stock units.

During fiscal year 2010, the non-employee directors were entitled to participate in the 2008 Omnibus Award Plan. Upon initial election to the board of directors, a non-employee director receives a grant of options to purchase 5,000 shares of common stock if such director will attend a regularly scheduled board of directors meeting prior to the next Annual Meeting of Stockholders. Thereafter, a non-employee director receives an annual grant of options to purchase 5,000 shares of common stock. All options granted under this plan have a term of ten years and were granted at the fair market value of the common stock as determined by the closing price of our common stock on the NASDAQ Global Select Market on the date of the grant. In November 2009, each non-employee director was granted options to purchase 5,000 shares of common stock at an exercise price of $43.13 per share. On February 9, 2010, upon attendance at his first meeting following election to the board of directors, Mr. Salem was granted options to purchase 5,000 shares of common stock at an exercise price of $40.70 per share.

Options granted to our non-employee directors under the 2008 Omnibus Award Plan are exercisable in four equal installments, with the first twenty-five percent becoming exercisable on the first anniversary of the option’s grant date, and the remaining three installments becoming exercisable on each successive anniversary date thereafter. The options vest only while a director is serving in such capacity, unless certain specified events occur, such as death or permanent disability, in which case the options immediately vest and become fully exercisable. In addition, non-employee directors who have been non-employee directors for at least ten years will have all of their options vested upon retirement from the board of directors and will have 36 months to exercise their options. Non-employee directors who have served as non-employee directors for

fewer than ten years at the time they retire or otherwise leave the board will not qualify for accelerated vesting, but will have 60 days to exercise their then vested options. Notwithstanding the foregoing, all options will expire no more than ten years from their date of grant.

Non-employee directors elected after August 13, 1997 are not eligible to receive a pension from the company. A non-employee director attaining the age of 70 (who was a director on August 13, 1997) who retires after 20 years of service will receive an annual pension of $25,000 for the remainder of his or her life. If such non-employee director retires after having attained the age of 65 with 15 years of service, he or she will receive an annual pension of $12,500 for the remainder of his or her life.

We have adopted changes to the compensation of our non-employee directors to become effective at the time of the 2010 Annual Meeting of Stockholders. Non-employee directors will no longer receive annual stock option grants. The annual retainer for non-employee directors who serve the entire year, other than the chairman of our board of directors, will be increased to $167,500, $110,000 of which will be paid in the form of deferred stock units and $57,500 of which may, at the election of each director, be paid in cash, deferred or paid in deferred stock units. The chairman of our board of directors will receive an annual retainer of $262,500, $205,000 of which will be paid in the form of deferred stock units and $57,500 of which may, at the election of the chairman of our board of directors, be paid in cash, deferred or paid in deferred stock units. Meeting fees will not be paid in respect of the first seven meetings of the board of directors or of any individual committee. Non-employee directors will 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.

We also adopted changes to our share ownership guidelines, which 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. Effective at the time of the 2010 Annual Meeting of Stockholders, each non-employee director will have a minimum shareholding requirement of our common stock equal to five times the annual cash retainer.

The following table shows compensation for our non-employee directors for fiscal year 2010.

DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2010

										Change in
										Pension
										Value and
										Nonqualified
	Fees Earned									Deferred			All Other
	or Paid in			Stock			Option			Compensation			Compensation(13)
Name	Cash(9) ($)			Awards(10) ($)			Awards(11) ($)			Earnings(12) ($)			($)				Total ($)
(a)	(b)			(c)			(d)			(f)			(g)				(h)
Gregory D. Brenneman(1)		$	74,500		$	65,000		$	40,300		$	0		$	10,000		$	189,800
Leslie A. Brun(2)		$	145,000		$	65,000		$	40,300		$	0		$	15,000		$	265,300
Leon G. Cooperman(3)		$	69,000		$	65,000		$	40,300		$	14,381		$	0		$	188,681
Eric C. Fast		$	59,000		$	65,000		$	40,300		$	0		$	10,000		$	174,300
Linda R. Gooden		$	58,500		$	65,000		$	40,300		$	0		$	0		$	163,800
R. Glenn Hubbard		$	64,500		$	65,000		$	40,300		$	0		$	20,000		$	189,800
John P. Jones(4)		$	71,500		$	65,000		$	40,300		$	0		$	0		$	176,800
Frederic V. Malek(5)		$	1,500		$	0		$	0		$	0		$	42,041		$	43,541
Charles H. Noski(6)		$	55,000		$	65,000		$	40,300		$	0		$	20,000		$	180,300
Sharon T. Rowlands		$	54,500		$	65,000		$	40,300		$	0		$	0		$	159,800
Enrique T. Salem(7)		$	25,000		$	65,000		$	34,250		$	0		$	0		$	124,250
Gregory L. Summe		$	54,500		$	65,000		$	40,300		$	0		$	40,000		$	199,800
Henry Taub(8)		$	0		$	0		$	0		$	0		$	55,656	(14)	$	55,656

____________________

(1)		As chairman of the compensation committee, Mr. Brenneman received a $5,000 annual retainer, which is included in fees earned.

(2)		Mr. Brun is the non-executive chairman of the board of directors.

(3)		As chairman of the audit committee, Mr. Cooperman received a $10,000 annual retainer, which is included in fees earned.

(4)		As chairman of the nominating/corporate governance committee, Mr. Jones received a $5,000 annual retainer, which is included in fees earned.

(5)		Mr. Malek retired on August 13, 2009.

(6)		Mr. Noski retired on May 3, 2010.

(7)		Mr. Salem became a director on February 9, 2010.

(8)		Mr. Taub retired on August 13, 2009.

(9)		Represents the following, whether received as cash, deferred or received as deferred stock units: (i) the elective portion of directors’ annual retainer, (ii) annual retainers for committee chairpersons and (iii) board and committee attendance fees. See footnote 10 below for additional information about deferred stock units held by directors.

(10)		Represents the portion of the annual retainer required to be credited in deferred stock units 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 2010 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 14 to our audited consolidated financial statements for the fiscal year ended June 30, 2010 included in our annual report on Form 10-K for the fiscal year ended June 30, 2010.

		The aggregate number of outstanding deferred stock units held by each director at June 30, 2010 is as follows: Mr. Brenneman, 13,368; Mr. Brun, 20,298; Mr. Cooperman, 13,368; Mr. Fast, 8,224; Ms. Gooden, 4,280; Mr. Hubbard, 13,549; Mr. Jones, 12,323; Ms. Rowlands, 7,532; Mr. Salem, 2,204; and Mr. Summe, 8,118.

		The grant date fair value for each deferred stock unit award granted to directors in fiscal year 2010, calculated in accordance with FASB ASC Topic 718, is as follows:

		Grant Date
Director	Grant Date	Fair Value
Gregory D. Brenneman	11/10/2009	$	105,000

Leslie A. Brun	8/13/2009	$	2,000
	11/10/2009	$	202,000
	2/9/2010	$	2,000
	4/29/2010	$	2,000
	6/11/2010	$	2,000

Leon G. Cooperman	11/10/2009	$	105,000

Eric C. Fast	8/13/2009	$	3,500
	10/29/2009	$	1,500
	11/10/2009	$	108,500
	2/3/2010	$	1,500
	2/9/2010	$	3,500
	4/29/2010	$	3,500
	6/11/2010	$	2,000

Linda R. Gooden	11/10/2009	$	105,000

		Grant Date
Director	Grant Date	Fair Value
R. Glenn Hubbard	8/13/2009	$	5,000
	9/10/2009	$	1,500
	9/24/2009	$	1,500
	10/29/2009	$	1,500
	11/10/2009	$	110,000
	2/3/2010	$	1,500
	2/9/2010	$	5,000
	6/11/2010	$	3,500

John P. Jones	7/28/2009	$	1,500
	8/13/2009	$	5,000
	9/10/2009	$	1,500
	9/24/2009	$	1,500
	11/10/2009	$	108,500
	2/9/2010	$	5,000
	4/29/2010	$	5,000
	6/11/2010	$	3,500

Charles H. Noski	7/28/2009	$	1,500
	8/13/2009	$	3,500
	9/10/2009	$	1,500
	9/24/2009	$	1,500
	11/10/2009	$	108,500
	2/9/2010	$	3,500

Sharon T. Rowlands	8/13/2009	$	3,500
	11/10/2009	$	107,000
	2/9/2010	$	3,500
	4/29/2010	$	3,500
	6/11/2010	$	2,000

Enrique T. Salem	2/9/2010	$	86,000
	4/29/2010	$	2,000
	6/11/2010	$	2,000

Gregory L. Summe	8/13/2009	$	3,500
	11/10/2009	$	107,000
	2/9/2010	$	3,500
	4/29/2010	$	3,500
	6/11/2010	$	2,000

(11)	Amounts set forth in the Option Awards column represent the aggregate grant date fair value for fiscal year 2010 as 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 14 to our audited consolidated financial statements for the fiscal year ended June 30, 2010 included in our annual report on Form 10-K for the fiscal year ended June 30, 2010.

	The aggregate number of shares underlying outstanding stock options held by each director at June 30, 2010 is as follows: Mr. Brenneman, 75,359; Mr. Brun, 75,359; Mr. Cooperman, 75,359; Mr. Fast, 15,000; Ms. Gooden, 10,000; Mr. Hubbard, 36,948; Mr. Jones, 31,461; Mr. Malek, 56,641; Ms. Rowlands, 15,000; Mr. Salem, 5,000; and Mr. Summe, 15,000.

	In fiscal year 2010, stock option awards were granted on November 10, 2009 to each of Messrs. Brenneman, Brun, Cooperman, Fast, Hubbard, Jones, Noski and Summe, Ms. Gooden and Ms. Rowlands. The grant date fair value of each such award, calculated in accordance with FASB ASC Topic 718, was $40,300. On February 9, 2010, Mr. Salem received a stock option award with a grant date fair value, calculated in accordance with FASB ASC Topic 718, of $34,250.

(12)	Reflects the aggregate increase in the present value of the pension benefit and actuarial plans. Non-employee directors who joined the board after August 13, 1997 are not eligible to receive this benefit. The present value as of June 30, 2009 are based on the RP-2000 white collar mortality table (projected to 2009) and a 6.8% discount rate. The present values as of June 30, 2010 are based on the RP-2000 white collar mortality table (projected to 2017) and a 5.25% discount rate. The change in the present value of pension benefit for Mr. Malek was negative $17,314; pursuant to Securities and Exchange Commission rules we reflected $0 for these amounts.

(13)	Reflects contributions by the ADP Foundation that match the charitable gifts made by our directors in the following amounts: Mr. Brenneman, $10,000; Mr. Brun, $15,000; Mr. Fast, $10,000; Mr. Hubbard, $20,000; Mr. Malek, $7,500; Mr. Noski, $20,000; and Mr. Summe, $40,000. 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. Also includes pension payments from the company to Mr. Malek in the amount of $34,541.

(14)	Reflects a $50,000 salary earned as an employee, and use of a car lease by the company with an aggregate incremental cost to the company of $5,656.

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 executive officers included in the Summary Compensation Table below (we refer to such executive officers as “named executive officers”), (iii) all company directors and executive officers as a group (including the named executive officers) 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 31, 2010 and the address of each person named is P.O. Box 34, Roseland, New Jersey, 07068.

	Amount and Nature of
Name of Beneficial Owner	Beneficial Ownership(1)	Percent
Gregory D. Brenneman	73,683	*
Leslie A. Brun	82,660	*
Gary C. Butler	1,780,298	*
Leon G. Cooperman(2)	142,138	*
Eric C. Fast	11,556	*
Linda R. Gooden	5,530	*
R. Glenn Hubbard	36,605	*
John P. Jones	29,007	*
Campbell B. Langdon	257,179	*
Regina R. Lee	172,396	*
Christopher R. Reidy	84,733	*
Carlos A. Rodriguez	145,003	*
Sharon T. Rowlands	11,364	*
Enrique T. Salem	2,251	*
Gregory L. Summe	11,450	*
Capital Research Global Investors(3)	25,833,043	5.3	%
Directors and executive officers as a group (24 persons,
including those directors and executive officers named above)(4)	3,587,147	*

____________________

* Indicates less than one percent.

(1)	Includes shares that may be acquired upon the exercise of options granted by the company that are exercisable on or prior to October 30, 2010 as follows: (i) shares subject to such options granted to the following directors and executive officers: 60,315 (Mr. Brenneman), 60,315 (Mr. Brun), 1,427,843 (Mr. Butler), 60,315 (Mr. Cooperman), 3,250 (Mr. Fast), 1,250 (Ms. Gooden), 21,904 (Mr. Hubbard), 16,417 (Mr. Jones), 176,251 (Mr. Langdon), 95,722 (Ms. Lee), 41,925 (Mr. Reidy), 85,888 (Mr. Rodriguez), 3,750 (Ms. Rowlands) and 3,250 (Mr. Summe); and (ii) 2,584,048 shares subject to such options granted to the directors and executive officers as a group. Includes shares issuable upon settlement of deferred stock units held by non-employee directors as follows: 13,368 (Mr. Brenneman), 20,345 (Mr. Brun), 13,368 (Mr. Cooperman), 8,306 (Mr. Fast), 4,280 (Ms. Gooden), 13,701 (Mr. Hubbard), 12,590 (Mr. Jones), 7,614 (Ms. Rowlands), 2,251 (Mr. Salem), and 8,200 (Mr. Summe).

(2)	Includes 33,455 shares representing the gain from exercising an option to purchase 38,000 shares of common stock on October 15, 2001. Mr. Cooperman deferred receipt of the shares representing such gain.

(3)	On August 13, 2010, Capital Research Global Investors, located at 333 South Hope Street, Los Angeles, CA 90071, filed a statement on Form 13F with the Securities and Exchange Commission to report that it beneficially held 25,833,043 shares of the company’s common stock as of June 30, 2010.

(4)	Includes 16,946 shares deferred by a non-director officer upon exercise of an option.

Equity Compensation Plan Information

The following table sets forth information as of June 30, 2010 regarding compensation plans under which the company’s equity securities are authorized for issuance:

Number of securities

remaining available for

Number of securities

Weighted-average

future issuance under

to be issued upon

exercise price of

equity compensation

exercise of outstanding

outstanding

plans (excluding

options, warrants

securities reflected

Plan category

and rights

in Column (a))

(a)

(b)

(c)

Equity compensation plans approved

by security holders

36,038,387

(1)

41.33

34,036,762

(2)

Equity compensation plans not approved

by security holders(3)

267,565

37.16

Total

36,305,952

41.30

34,036,762

____________________

(1)	Includes 935,185 shares of restricted stock issuable under our fiscal year 2010 one-year performance-based restricted stock program (which shares were issued in September 2010) and 103,264 shares issuable upon settlement of deferred stock units held by our directors. The remaining balance consists of outstanding stock options. Weighted average exercise price shown in column (b) of this table does not take into account awards under our performance-based restricted stock program or deferred stock units.

(2)	Includes 32,503,403 shares available for future issuance under the 2008 Omnibus Award Plan. Also includes 1,533,359 shares of common stock remaining available for future issuance under the Employees’ Savings-Stock Purchase Plan, which shares and weighted average exercise prices are not reflected in columns (a) and (b) of this table. Approximately 869,188 shares of common stock were subject to purchase as of June 30, 2010 under the Employees’ Savings-Stock Purchase Plan.

(3)	Represents (i) the 1989 Non-Employee Director Stock Option Plan and (ii) the Amended and Restated Employees’ Saving-Stock Option Plan for our employees based in France, neither of which have been approved by the company’s stockholders. Prior to 2004, the non-employee directors of the company were entitled to participate in the 1989 Non- Employee Director Stock Option Plan pursuant to which options to purchase 12,500 shares of common stock were automatically granted to persons who become non-employee directors. In addition, each non-employee director was granted an additional option to purchase 12,500 shares on the first business day after each fifth anniversary of the date of the initial grant to each such non-employee director, provided that he or she was then still serving in such capacity. All options granted under the 1989 Non-Employee Director Stock Option Plan were granted at the fair market value of

the common stock, determined on the basis of the closing price of the common stock in consolidated trading on the date of grant, as reported in The Wall Street Journal. Twenty percent of the options granted under the 1989 Non-Employee Director Stock Option Plan became exercisable on each anniversary of the date such options were granted until all such options were exercisable, provided that options became exercisable only if the director was then still serving in such capacity, unless certain specified events occurred such as the death, disability or retirement of a director, in which case the options immediately vested and became fully exercisable. All options granted under the 1989 Non-Employee Director Stock Option Plan have a term of ten years.

80,997 shares of common stock are subject to purchase during current purchase periods under the Employees’ Saving-Stock Option Plan for our employees based in France. The board of directors adopted the plan in January 1996 and terminated the plan in April 2009 with respect to future offerings thereunder. The plan was designed to satisfy French tax requirements. The plan offered our French employees an opportunity to purchase shares of common stock at 85% of the market value for such stock at the date the purchase price for the offering was determined. Employees of the company based in France were granted an option to purchase shares of our common stock under annual offerings that commenced on January 1 of each calendar year and continued for 48 months to close on December 31 of the fourth year following commencement. Each eligible employee could elect to receive stock options in each offering that would generally entitle such employee to purchase a whole number of shares of common stock equivalent in value to up to 10% of his or her base salary, based upon a price per share (in U.S. dollars) determined in advance of such offering by the French Stock Option Committee, subject to adjustment for currency rate changes over the term of the offering. Participating employees pay for the exercise of the stock options through monthly payroll deductions taken during the four-year period of each offering, and have the opportunity upon the close of the offering to exercise their stock options (or any portion thereof) and purchase the associated number of shares of common stock. To the extent a participating employee elects to purchase fewer shares of common stock than would be available under his or her full allotment of stock options, such employee would receive the cash remaining from the aggregate payroll deductions after taking into account his or her purchase of shares of common stock.

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

The compensation committee of our board of directors determines the compensation of our chief executive officer and reviews, modifies and approves the chief executive officer’s compensation recommendations for the other key executive officers. The compensation consulting firm Cook & Co. is engaged by the compensation committee to provide assistance with the design of our compensation programs, the review of comparative market-based compensation data and the determination of compensation awards.

This section of the proxy statement explains how our executive compensation programs are designed and operate with respect to our named executive officers by discussing the following fundamental aspects of our compensation program:

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

Fiscal year 2010 was a challenging year and our results continued to be impacted by the economic downturn, including high unemployment levels, record-low interest rates and volatile financial markets. However, as we look back over fiscal 2010, we were pleased that our financial results were better than we initially anticipated. The economy showed signs of stabilization early on in the fiscal year. Our financial results improved as we proceeded through the year, and we turned the corner during the fourth fiscal quarter as we reached positive inflection points in most of our key business metrics. Our business model with its highly recurring revenue base continued to generate strong, consistent cash flows, which enabled continued investment in our product offerings and in sales and client service associates. We also announced several strategic acquisitions and continued to return excess cash to stockholders. Our compensation committee was pleased with management’s fortitude and performance during this period, was encouraged by the continued improvement in our key business metrics and remains positive about the company’s longer-term outlook.

We design our compensation programs to link pay to performance and levels of responsibility, to encourage our executive officers to remain focused on both short-term and long-term operational and financial goals of the company and to link executive performance to stockholder value. As a consequence of the economic environment, we froze the target cash compensation for all of our executive officers for fiscal year 2010, except in the case of promotions or the assumption of additional responsibilities.

The difficulty of the environment and our resulting financial performance in fiscal year 2010 impacted the compensation of our executive officers because our compensation programs align the interests of executives with those of stockholders. Our fiscal year 2010 earnings per share growth was -0.4% compared to a target of -3.0% under our cash bonus program for our executive officers. Revenue growth was 1.0% compared to a target of -2.0%. These two elements were common to all of our executive officers. In fiscal year 2010, our named executive officers received cash bonuses that averaged approximately 123% of target. Our average two-year earnings per share growth rate for fiscal years 2009 and 2010 was below the threshold level, resulting in no awards to our executive officers under our two-year performance-based restricted stock program. Our one-year earnings per share growth for fiscal year 2010 resulted in awards to our executive officers of restricted stock under our one-year performance-based restricted stock program at 115% of target. Because the target awards were lower under this program, our executive officers received 8% fewer shares of performance-based restricted stock in fiscal year 2010 than the payout in fiscal year 2009.

Compensation Principles

We believe that compensation should be designed to create a direct link between performance and stockholder value. Four principles that guide us as we make decisions involving executive compensation are that compensation should be:

based on (i) each executive’s individual performance, (ii) the performance of such executive’s business unit and (iii) the overall performance of the company;
closely aligned with the short-term and long-term financial and strategic objectives that build sustainable long-term stockholder value;

competitive in order to attract and retain executives critical to our long-term success; and
consistent with high standards of corporate governance and designed to discourage the incentive for executives to take excessive risk or behave in ways that are inconsistent with the company’s strategic planning processes and internal standards of behavior.

Our compensation programs are designed to link pay with relative levels of responsibility among our key executives. Overall targeted compensation opportunities are generally similar for key executives who have comparable levels of responsibility. However, actual compensation amounts may differ depending on performance of a business unit and achievement of individual performance goals. 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 a base salary range, a total annual cash compensation range and corresponding annual equity grant ranges.

We design our performance-based compensation so that differences in performance will result in significant differences in the compensation our key executives receive. We have adopted this compensation design to provide meaningful incentives for our key executives to achieve excellent results.

Earnings per share growth and revenue growth are important performance measures in annual bonus determinations, and earnings per share growth is used to determine the number of shares earned in a performance period under our performance-based restricted stock programs. The earnings per share measurement we use is diluted earnings per share from continuing operations; however, we excluded the impact of certain favorable tax items in fiscal 2010 and fiscal 2009.

Elements of Compensation

The following table summarizes the major elements of our 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, pay grade, competitive compensation practices data and comparison to other company executives
Annual Cash Bonus	To motivate executive officers to achieve individual, business unit and company-wide business goals	Payment based on achievement of target individual, business unit and company-wide business goals
Performance-Based Restricted Stock Awards	To motivate executive officers to achieve certain longer-term goals	Awards based on target growth in earnings per share Shares issued following applicable performance periods, subject to an additional vesting period
Time-Based Restricted Stock Awards	To attract and retain executive officers	Awarded occasionally at the discretion of the compensation committee, mostly for long-term retention of critical executives as part of management succession planning
Stock Options	To attract and retain executive officers and align executive officers with long-term stockholders’ interests	Granted annually based on pay grades and individual performance Grants awarded since 2008 vest over four years
Retirement Plans	To attract and retain mid- to late-career executive talent	Provides a retirement benefit with a competitive income replacement ratio at normal retirement age

The mix of total direct compensation (base salary, annual incentive awards and long-term incentive awards) for fiscal year 2010 was designed to deliver the following approximate proportions of total compensation to our chief executive officer and the other named executive officers (on average) if company and individual target levels of performance are achieved:

Compensation Market Data

Our annual pay review focuses on base salary, annual bonus and long-term equity incentives. Our compensation committee examines summary compensation sheets detailing the amounts of these compensation components for each of our named executive officers and compares such amounts to competitive compensation practices. We generally target base salary, annual bonus and long-term equity incentives at the median of competitive compensation practices. We also consult compensation market data to determine if a specific component should be adjusted relative to other components while retaining the targeted compensation level.

We consult different sets of compensation data reflecting the practices of different groups of businesses to determine competitive compensation practices for our chief executive officer and other named executive officers.

Chief Executive Officer. In benchmarking the total cash and long-term incentive compensation of our chief executive officer, the compensation committee, at its June 2009 meeting, reviewed aggregated compensation data from all public companies within the indicated annual revenue range, which we believe is representative of the competitive environment we face with respect to senior executives. Utility companies were excluded because of the regulatory environment in which they operate. The following table contains information about the study and the position of Mr. Butler’s compensation as a percentile of the market:

	CEO Compensation Study	Mr. Butler’s Market Position
Comparison companies	180 publicly traded companies, excluding utility companies
Annual revenue of comparison companies	$6 billion – $12 billion
Pay practices analyzed	base salary annual bonus long-term incentives
Median base salary	$1,005,800	49th percentile
Median target cash compensation	$2,217,300	65th percentile
Median long-term incentive
compensation value	$4,335,700	38th percentile
Median target total cash and
long-term incentive compensation	$6,220,242	49th percentile
Source of data	Equilar, Inc.

Other Executive Officers. With respect to the total cash and long-term incentive compensation for Messrs. Reidy, Rodriguez, Langdon and Ms. Lee, we considered the following third-party statistical data reflecting the pay practices of publicly traded companies that participate in compensation surveys. The companies included for Messrs. Rodriguez and Langdon and Ms. Lee were based on a revenue range such that the median company revenue approximates the annual revenues of the business units that the executive officer lead.

	Number of	Annual Revenue of
Surveys used for Mr. Reidy	Companies Included	Included Companies
Towers Perrin U.S. General Industry Executive Database	124	$6 – $20 billion
Hewitt Associates Executive Total Compensation by Industry Survey	127	$5 – $25 billion
Mercer Human Resources U.S. General Industry Executive Database	80	> $5 billion

	Number of	Annual Revenue of
Surveys used for Messrs. Rodriguez and Langdon and Ms. Lee	Companies Included	Included Companies
Towers Perrin U.S. General Industry Executive Database	140	> $800 million
Hewitt Associates Executive Total Compensation by Industry Survey	179	$1 – $5 billion
Mercer Human Resources U.S. General Industry Executive Database	43	$1 – $5 billion

Differences in Compensation of Our Named Executive Officers

We carefully designed the pay mix for Mr. Butler to be competitive when measured against the pay packages of other CEOs as indicated by the compensation study. In addition to the results of the CEO compensation study, the compensation committee considered the history of Mr. Butler’s pay for the prior five years.

We have found that due to the broad responsibilities and the experience required for the CEO position, compensation for chief executive officers in public companies of size similar to ours is significantly higher than those for other named executive officers.

When determining the compensation level for each of our executive officers, the compensation committee reviews each individual compensation element based on the previous year’s level, as well as how the proposed level for that individual element 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.

Compensation Consultant

The compensation committee has consulted with Cook & Co. on matters related to the compensation of our key executive officers. Specific matters on which Cook & Co. provided advice include the design and mix of executive long-term incentive equity compensation programs and chief executive officer pay levels. In August 2009, Cook & Co. delivered to our compensation committee the results of a review of our compensation practices, including a summary of the company’s compensation philosophy and a history of recent program changes to better align with governance trends and “best practice”. Cook & Co. has not provided any services to management.

Cook & Co. examined the mix of restricted stock and options proposed to be granted to our named executive officers and confirmed that the proposals for the named executive officers appeared reasonable and customary, given the company’s size and structure.

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, pay grade, competitive compensation practices data and comparison to other company executives.

To help control expenses in the context of the worldwide economic downturn, none of the named executive officers received a merit increase in fiscal year 2010.

Ms. Lee and Mr. Rodriguez received the following salary increases in March 2010 to reflect additional responsibilities they assumed due to significant organizational changes:

Named Executive Officer		Increase
Ms. Lee		11.8%
Mr. Rodriguez		25.0%

Annual Cash Bonus

Overview

We paid our named executive officers cash bonuses for fiscal year 2010 based on the attainment of individual, business unit and company-wide business goals established at the beginning of the fiscal year.

For each executive officer, we establish a target bonus amount, which is initially expressed as a percentage of projected year-end annual base salary. This target bonus percentage ranges from 70% to 155% of base salary for the named executive officers. We also assign a percentage value to each bonus component of each named executive officer’s annual bonus plan and then determine the target bonus amount linked to each component. We establish these performance ranges to provide our named executive officers with a strong incentive to exceed the targets. The maximum bonus payment to our chief executive officer is 200% of his target bonus level. All other named executive officers have a maximum bonus payment of 175% of their respective target bonus levels. There is no minimum payment level.

The compensation committee establishes and approves the annual target bonus objectives and values for each of our named executive officers. Our chief executive officer recommends to the compensation committee the annual target bonus objectives and values for each of our named executive officers, but he does not recommend his own bonus values. Our named executive officers participate in the discussions surrounding their bonus objectives so that they can provide their input and understand the expectations of each bonus plan component. Each named executive officer receives a final version of his or her individualized bonus plan after it has been approved by the compensation committee. Except in extraordinary circumstances, bonus plan objectives are not modified during the fiscal year, and no bonus objectives were modified during fiscal year 2010.

The compensation committee reviews the performance of each of our executive officers relative to the officer’s annual fiscal year target 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 compensation committee determines and approves the annual cash bonuses for each of our executive officers.

Named Executive Officers’ Fiscal Year 2010 Bonuses

Fiscal year 2010 target bonuses for the named executive officers were the same as in fiscal year 2009. Following the conclusion of fiscal year 2010, the compensation committee considered the performance of the company, the business units and the individual named executive officers for the 2010 fiscal year against the named executive officers’ bonus objectives, assessed which of the individual bonus targets were met, exceeded or not fully achieved and approved cash bonuses as follows:

	Target Bonus as Percentage	Target Bonus		Actual Bonus		Bonus Amount as
Named Executive Officer	of Base Salary	Amount		Amount		Percentage of Target
Mr. Butler	155%	$	1,550,000	$	2,020,000	130%
Mr. Reidy	80%	$	425,900	$	557,900	131%
Ms. Lee	80%	$	380,000	$	468,900	123%
Mr. Rodriguez	80%	$	400,000	$	536,000	134%
Mr. Langdon	70%	$	315,000	$	305,600	97%

Each objective for our named executive officers was satisfied as set forth below (a detailed discussion of each target element follows under “— Fiscal Year 2010 Target Bonus Objectives”):

	Mr. Butler				Mr. Reidy				Ms. Lee				Mr. Rodriguez				Mr. Langdon
			Payout				Payout				Payout				Payout				Payout
	Target		as % of		Target		as % of		Target		as % of		Target		as % of		Target		as % of
Bonus Objective	Weight		Target		Weight		Target		Weight		Target		Weight		Target		Weight		Target
Earnings Per Share Growth	16.1	%	160	%	15.0	%	160	%	10.0	%	160	%	10.0	%	160	%	10.0	%	160	%
Revenue Growth	9.7	%	200	%	15.0	%	200	%	10.0	%	200	%	10.0	%	200	%	10.0	%	200	%
Corporate Strategy	32.3	%	100	%	20.0	%	113	%	10.0	%	80	%	10.0	%	75	%	10.0	%	75	%
Succession & Development	19.4	%	138	%	10.0	%	105	%	5.0	%	100	%	5.0	%	114	%	5.0	%	110	%
Service Profit Chain	9.7	%	130	%					5.0	%	140	%	5.0	%	160	%	5.0	%	100	%
Leadership					10.0	%	120	%	10.0	%	150	%	10.0	%	130	%	10.0	%	100	%
Return on Equity	6.5	%	150	%	10.0	%	150	%
Margin Improvement	6.5	%	60	%	10.0	%	60	%
Division Financial Performance									30.0	%	75	%	30.0	%	176	%	30.0	%	67	%
Division Initiatives									20.0	%	150	%	20.0	%	55	%	20.0	%	65	%
Security Initiative					5.0	%	100	%
Investor Relations					5.0	%	120	%

Fiscal Year 2010 Target Bonus Objectives

The compensation committee established -3.0% earnings per share growth as a common target bonus objective for each of our named executive officers. This target was within the range of our fiscal 2010 forecast of -1.0% to -5.0% earnings per share growth. Mr. Butler’s target bonus objectives limited the payout to two times the target, but did not otherwise specify the payout for achieving earnings per share growth higher than -3.0%. For the other named executive officers, 200% of target was to be awarded for earnings per share growth of 1.0% or greater, and 0% of target was to be awarded for earnings per share growth of less than -7.0%.

The compensation committee also established -2.0% revenue growth as a common target bonus objective. This target was within the range of our fiscal 2010 forecast of -1.0% to -4.0% revenue growth. Mr. Butler’s target bonus objectives limited the payout to two times the target, but did not otherwise specify the payout for achieving revenue growth higher than -2.0%. For the other named executive officers, 200% of target was to be awarded for revenue growth of 0.0% or greater, and 0% of target was to be awarded for revenue growth of less than -5.0%.

The other target bonus objectives for the named executive officers are set forth in detail below.

Corporate Strategy: Develop new strategies to increase our sales and revenue growth rates for fiscal years 2012 through 2015. Improve market share gains, with emphasis on having a plan to address competitive threats. For Messrs. Butler and Reidy, achieve 1% to 1.5% of plan revenue through strategic acquisitions and strategically review our balance sheet, credit rating options, extended portfolio strategy, share repurchase levels, dividend policy and other methods designed to return excess cash to stockholders.

Succession and Executive Development: Achieve the following specified milestones in our succession planning and executive development initiatives:

Strengthen our leadership pipeline;
Foster the success and development of specified executives; and
Continue improving the representation of female and minority executives.

Service Profit Chain: Improve our service profit chain by enhancing service quality, increasing client satisfaction and retention levels and improving associate turnover levels.

Leadership: Achieve quality leadership accomplishments, successful involvement on the executive committee and, in the case of Mr. Reidy, an effective control environment.

Return on Equity: Achieve target return on equity of 20.0% from continuing operations. Maximum allocation for 21.0% return on equity from continuing operations.

Margin Improvement: Achieve initiatives to drive margin improvement for fiscal year 2011.

Division Financial Performance: For Ms. Lee and Messrs. Rodriguez and Langdon, successfully achieve revenue, net operating income, sales growth and client retention equal to their respective divisions’ fiscal year 2010 planned results.

Division Initiatives: For Ms. Lee and Messrs. Rodriguez and Langdon, drive division margin improvement for fiscal year 2011 and achieve 1.0% to 3.0% of plan revenue through strategic acquisitions.

Security: Implement an effective vendor management program, conduct a global data classification assessment and successfully complete enterprise-wide security initiatives.

Investor Relations: Achieve further improvements in investor relations, increased involvement of other executives and increased progress with the international investment community.

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 to the interests of our stockholders. Long-term incentives are awarded in the form of restricted stock awards and stock option grants.

Based on the review conducted by Cook & Co., we decided to slightly increase our emphasis on performance-based restricted stock awards over stock options. As a result, for all of our named executive officers except our chief executive officer we have increased the performance-based restricted stock target awards from 60% to 70% of total long-term incentive compensation value and reduced the stock option awards by a corresponding amount. Mr. Butler’s employment agreement provides for a minimum annual stock option grant that results in a long-term incentive mix with a greater portion of stock options than the other named executive officers. For fiscal year 2010, Mr. Butler’s target long-term incentive mix had 45% of the value in performance-based restricted stock and 55% in stock options. We believe these grant value mixes provide us with a strong executive attraction and retention program. The compensation committee may also from time to time grant discretionary awards of time-based restricted stock to our executive officers. These awards are not considered in the target allocation of total long-term incentive compensation between performance-based restricted stock awards and stock option grants.

The current target long-term incentive mix for executive officers is shown in the following chart:

We use a fixed share grant methodology for determining each award to our named executive officers, which the compensation committee reviews annually to ensure that the resulting value remains generally consistent with our median compensation philosophy. As with base salary and bonus, management provides the compensation committee with a history of its equity grant practices for the preceding four years and an analysis of the grant size consistent with our target, the median of competitive compensation practices, for each named executive officer.

Prior to the beginning of each fiscal year, we analyze the performance-based restricted stock and stock option target award and 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 Market Data” above. When comparing our desired values to these compensation studies, we look at both equity elements in total.

Uncertainty in the worldwide economic environment has made projecting earnings per share growth challenging. In response, the compensation committee established a one-year performance period for our performance-based restricted stock program beginning in fiscal year 2010; the other terms of our performance-based restricted stock program did not change. One-year performance-based restricted stock award targets were set in September 2009 for the fiscal year 2010 performance period.

At its August 2009 meeting, the compensation committee approved target awards of one-year performance based restricted stock for fiscal year 2010 and stock option grants for Mr. Butler. At its February 2010 meeting, the compensation committee approved stock option grants for the other named executive officers. Performance-based restricted stock and stock option awards for fiscal year 2010 are summarized in the table below:

Named Executive Officer	Target PBRS Award		Stock Options
Mr. Butler		34,000		225,000
Mr. Reidy		10,400		20,000
Ms. Lee		7,200		17,000
Mr. Rodriguez		7,200		17,000
Mr. Langdon		7,200		17,000

The employment agreements of Messrs. Butler and Reidy affect their long-term incentive compensation.

Mr. Butler’s employment agreement provides that if his performance goals under the applicable performance-based restricted stock program have been achieved at the 100% target level, the company will issue Mr. Butler at least 32,000 shares of restricted stock. Mr. Butler’s employment agreement also provides for a grant of stock options covering a minimum of 200,000 shares of common stock each fiscal year during the term of the employment agreement. The Committee agreed to these amounts through an arms-length negotiation with Mr. Butler.

Mr. Reidy’s employment agreement provides that if his performance goals under the applicable performance-based restricted stock program have been achieved at the 100% target level, the company will issue Mr. Reidy 13,000 shares of restricted stock; however, due to the one-year performance based restricted stock program his fiscal year 2010 target award was set at 80% of this amount (10,400 shares). Mr. Reidy’s employment agreement also provides for a grant of stock options covering a minimum of 20,000 shares of common stock each fiscal year during the term of the employment agreement. We agreed to these amounts through an arms-length negotiation with Mr. Reidy. In determining the grant sizes, we took into account restricted stock and option arrangements Mr. Reidy had with his prior employer and our review of competitive equity compensation practices.

Messrs. Butler’s and Reidy’s employment agreements are summarized in more detail below under “Mr. Butler Employment Agreement” and “Mr. Reidy Employment Agreement”, respectively.

Performance-Based Restricted Stock

We use a performance-based restricted stock program to align the compensation of our key executives with long-term company operating performance.

Fiscal Years 2009-2010: In September 2008, we established that under our two-year performance-based restricted stock program for fiscal years 2009 and 2010, average two-year earnings per share growth of more than 10% would be required to receive the awards at the target level and that awards would be adjusted upward or downward at the end of the performance period as follows:

	Restricted Stock Grant as
Average Earnings Per Share Growth	Percentage of Target
7% or under		0%
>7% to 8.5%		75%
>8.5% to 10%		90%
>10% to 14%		100%
>14% to 17%		115%
Over 17%		125%

Our actual average two-year annual earnings per share growth rate for fiscal years 2009 and 2010 was 4.4%, resulting in no awards of restricted stock.

Fiscal Year 2010: In September 2009, due to the uncertainty in the economy and the difficulty projecting two years of earnings per share growth, we established target earnings per share growth of more than -4% for fiscal year 2010. Awards were to be adjusted upward or downward at the end of the performance period as follows:

	Restricted Stock Grant as
Earnings Per Share Growth	Percentage of Target
-9% or under		0%
>-9% to -6%		75%
>-6% to -4%		90%
>-4% to -1%		100%
>-1% to 1%		115%
Over 1%		125%

Our actual earnings per share growth for fiscal year 2010 was -0.4%, resulting in awards of restricted stock at 115% of target level. These shares of restricted stock were issued in September 2010 and are scheduled to vest fully in March 2011. The program provides that if an executive officer terminates his or her employment with the company prior to the March 2011 vesting date, the unvested restricted stock will be forfeited. However, Mr. Langdon’s shares will be permitted to vest in accordance with his separation agreement. See “Termination Agreement with Mr. Langdon” below.

Uncertainty in the worldwide economic environment has continued to make projecting earnings per share growth challenging. In response, the compensation committee maintained a one-year performance period for our fiscal year 2011 performance-based restricted stock program.

Dividends are paid in respect of performance-based restricted stock after shares are granted and not during the performance period.

Time-Based Restricted Stock

The compensation committee may from time to time grant discretionary awards of time-based restricted stock to our executive officers. These discretionary grants assist us in the recruitment, promotion or retention of executive officers.

In March 2010, Ms. Lee and Mr. Rodriguez were each granted 9,500 shares of restricted stock in recognition of their additional responsibilities due to significant organizational changes. These awards and their long-term vesting schedule are designed to aid in the retention of these key executives. Each award is scheduled to vest as follows: 5,000 shares in March 2011; 1,500 shares in March 2012; 1,500 shares in March 2013; and 1,500 shares in March 2014.

Stock Options

We grant stock options to our executive officers (other than our chief executive officer) based upon their pay grades. Stock options granted in April 2008 and thereafter generally vest over four years. The grant level for each pay grade is determined based on our annual review of our long-term incentive compensation program. Our chief executive officer recommends to the compensation committee the number of stock options for our executive officers, other than himself. The compensation 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 compensation consultant Cook & Co. The compensation committee approved stock option grants to Mr. Butler in August 2009, and to Messrs. Reidy, Rodriguez, Langdon and

Ms. Lee in February 2010. The grant levels approved by the compensation committee for fiscal year 2010 were consistent with the grant levels approved for fiscal year 2009. Additional stock option grants may be made to assist us in recruiting, promoting or retaining executive officers.

While the compensation committee can consider a stock option grant at any time for our executive officers, it makes most stock option grants at its first meeting in the calendar year. We do not coordinate this meeting date with any regularly scheduled announcement or corporate event.

Other Compensation Components and Considerations

In addition to the components discussed above and the opportunity to participate in the same Employees’ Savings-Stock Purchase Plan and the same health and welfare benefits available to our US associates generally, we offer our executive officers retirement benefits, deferred compensation, perquisites, and change in control 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 executive officers can participate in the Automatic Data Processing, Inc. Retirement and Savings Plan (our 401(k) plan) and are automatically enrolled in the Automatic Data Processing, Inc. Pension Retirement Plan (a tax-qualified, defined benefit, cash balance pension plan) and the Supplemental Officers Retirement Plan. The Supplemental Officers Retirement Plan provides retirement benefits to our executive officers in excess of those generally available under our qualified cash balance pension plan. The Supplemental Officers Retirement Plan enables us to attract and retain senior and experienced mid- to late-career executive talent necessary to achieve growth and provides these executive officers with a retirement benefit targeted to a competitive income replacement ratio at normal retirement age.

Deferred Compensation

All executive officers may defer all or a portion of their annual 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. 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

Mr. Butler receives a fixed annual perquisite allowance of $125,000 that he allocates based on his personal needs.

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. Finally, the ADP Foundation makes contributions that match the charitable gifts made by our executive officers (including the named executive officers) up to a maximum of $20,000 per calendar year.

Beginning in fiscal year 2010, we eliminated tax gross-up payments to our executive officers that had previously been permitted in connection with travel benefits and personal airplane usage. In fiscal year 2010 we also eliminated reimbursement for executive physical examinations that had previously been paid for by the company. Adult physicals are now a covered benefit under the company’s medical plan, which was not the case when this perquisite was first implemented. We did not make any tax gross-up payments to our named executive officers in fiscal year 2010, except for payments related to relocation expenses, which are available to all participants in the company’s relocation program.

Change in Control and Severance Arrangements

The Automatic Data Processing, Inc. Change in Control Severance Plan for Corporate Officers is designed (i) to retain our executive officers (including the named executive officers) and our staff vice presidents and (ii) to 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. In addition, Messrs. Butler and Reidy have individual arrangements described below under “Potential Payments Upon Termination or Change of Control.”

Our executive officers have different separation entitlements from one another. Our chief executive officer is entitled to severance equal to approximately three times base salary and bonus under some termination scenarios, while our other executive officers are entitled to severance equal to approximately one 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 office. Our chief executive officer is the individual the public and our stockholders most closely identify as the face of the company. He has the greatest individual impact on our success, and he 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 certain unvested equity awards may be accelerated under some termination scenarios.

The severance formulas we use for executive officers are each designed to provide the level of replacement income we feel is appropriate for that office, but the compensation our executive officers may receive after termination of employment or a change in control is not taken into account when current compensation levels are determined.

Accounting and Tax Considerations

We consider the accounting and tax implications when we design our equity-based and cash compensation programs and when we make awards or grants. Our goal is to make only equity-based awards and grants that we can deduct when determining our taxes. However, the overriding consideration when evaluating the pay level or design component of any portion of our executives’ compensation is the effectiveness of the component and the stockholder value that management and the compensation committee believe the pay component reinforces.

We try to maximize the tax deductibility of compensation payments to executive officers. Our stockholders have approved our incentive plans that are designed and administered to provide performance-based compensation that is awarded to our executive officers, and therefore not subject to the deduction limits of Section 162(m) of the Internal Revenue Code. The compensation committee may, however, award compensation that is not deductible under Section 162(m) when, in the exercise of the committee’s judgment, such pay would be in the best interests of the company and its stockholders.

Compensation Recovery

Our 2008 Omnibus Award Plan gives the compensation committee the flexibility to grant cash and equity awards that the company may recover if a recipient engages in certain types of misconduct. Beginning in February 2009, stock options and restricted stock awards under our 2008 Omnibus Award Plan allow the compensation committee to cause a recipient’s award to be forfeited, and to require the recipient to pay to us any option gain and/or the value of vested restricted stock, 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.

Share Ownership Guidelines

The compensation committee established share 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 share 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) includes shares owned outright by the executive officer or beneficially through ownership by direct family members (spouses and/or dependent children), or shares owned through our Retirement and Savings Plan. Under our share ownership guidelines, Mr. Butler is encouraged to own an amount of our stock equal in value to five times his base salary, while Messrs. Reidy and Rodriguez and Ms. Lee are encouraged to own an amount of our stock equal in value to three times their respective base salaries.

Separation Arrangement with Mr. Langdon

Mr. Langdon terminated from the company on June 30, 2010. Taking into account the years of valuable service Mr. Langdon provided to the company, we agreed to provide separation benefits to him that consist in part of cash payments, continued vesting of certain equity awards and continued participation in our stock plans. The arrangement for Mr. Langdon is consistent with the separation arrangements we sometimes provide to departing executives whose long-term service deserves special recognition over and above the fixed pay and benefits that have already been earned before the executive’s departure.

COMPENSATION COMMITTEE REPORT

The compensation committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis section of the company’s 2010 proxy statement. Based on its review and discussions with management, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in the company’s 2010 proxy statement.

	Compensation Committee
	of the Board of Directors

	Gregory D. Brenneman, Chairman
	R. Glenn Hubbard
	John P. Jones

COMPENSATION OF EXECUTIVE OFFICERS

The following table summarizes the compensation of our named executive officers for fiscal year 2010.

Summary Compensation Table For Fiscal Year 2010

												Change in
												Pension
												Value and
										Non-Equity		Nonqualified
										Incentive		Deferred
						Stock		Option		Plan		Compensation		All Other
Name and						Awards		Awards		Compensation		Earnings		Compensation
Principal Position	Year	Salary ($)		Bonus ($)		($) (1)		($) (1)		($) (2)		($) (3)		($) (4)		Total ($)
(a)	(b)	(c)		(d)		(e)		(f)		(g)		(h)		(i)		(j)
Gary C. Butler	2010	$	1,000,000	$	0	$	1,440,580	$	1,723,500	$	2,020,000	$	2,761,828	$	176,025	$	9,121,933
President and Chief	2009	$	1,000,000	$	0	$	1,659,200	$	1,982,250	$	1,295,000	$	1,722,475	$	192,032	$	7,850,957
Executive Officer	2008	$	900,000	$	0	$	1,951,688	$	2,268,000	$	2,579,405	$	1,095,792	$	184,641	$	8,979,526

Christopher R. Reidy	2010	$	532,400	$	0	$	440,648	$	137,000	$	557,900	$	303,301	$	42,199	$	2,013,448
Chief Financial	2009	$	532,400	$	0	$	507,520	$	144,000	$	346,600	$	129,759	$	43,808	$	1,704,087
Officer	2008	$	510,000	$	21,780	$	990,113	$	156,000	$	524,520	$	99,853	$	35,847	$	2,338,113

Regina R. Lee	2010	$	441,667	$	0	$	703,209	$	116,450	$	468,900	$	386,891	$	97,788	$	2,214,905
Division President	2009	$	425,000	$	0	$	351,360	$	122,400	$	260,580	$	140,253	$	37,100	$	1,336,693

Carlos A. Rodriguez	2010	$	433,333	$	0	$	703,209	$	116,450	$	536,000	$	226,893	$	54,194	$	2,070,079
Division President	2009	$	400,000	$	35,504	$	351,360	$	122,400	$	174,496	$	47,809	$	161,375	$	1,292,944

Campbell B. Langdon	2010	$	450,000	$	0	$	305,064	$	116,450	$	305,600	$	308,909	$	494,965	$	1,980,988
Division President

____________________

(1)		Amounts set forth in the Stock Awards and Option Awards columns represent the aggregate grant date fair value of awards granted in fiscal years 2010, 2009 and 2008 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 14 to our audited consolidated financial statements for the fiscal year ended June 30, 2010 included in our annual report on Form 10-K for the fiscal year ended June 30, 2010. The amounts shown in the Stock Awards column reflect the grant date fair value of performance-based restricted stock based upon the probable outcome of the performance condition as of the grant date. The maximum value of the performance-based restricted stock awards granted in fiscal year 2010 assuming achievement of the highest level of performance are: Mr. Butler, $1,800,725; Mr. Reidy, $550,810; Ms. Lee, $381,330; Mr. Rodriguez, $381,330; and Mr. Langdon, $381,330.

(2)		Performance-based bonuses paid under the annual cash bonus program are shown in this column. A discussion of our annual cash bonus program may be found in our Compensation Discussion and Analysis under “Cash Compensation - Annual Cash Bonus”.

(3)		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. There were no above-market or preferential earnings on nonqualified deferred compensation. The Pension Retirement Plan and the Supplemental Officers Retirement Plan provide benefits in the form of a lump sum and/or an annuity. We calculated a present value of the executive’s benefit using an interest rate, a discount rate and a mortality assumption. We calculated the present value as of June 30, 2007 using the RP-2000 white collar mortality rate (projected to 2007), a 4.75% interest crediting rate for the pension plan, and a 6.25% discount rate; we calculated the present value as of June 30, 2008 using the RP-2000 white collar mortality rate (projected to 2008), a 4.50% interest crediting rate for the pension plan, and a 6.95% discount rate; the present value as of June 30, 2009 is based on the RP-2000 white collar mortality table (projected to 2009), a 4.25% interest crediting rate for the pension plan, and a 6.8% discount rate; the present value as of June 30, 2010 is based on the RP-2000 white collar mortality table (projected to 2017), a 3.75% interest crediting rate for the pension plan, and a 5.25% discount rate.

(4)		Please refer to the “All Other Compensation” table below for further information.

ALL OTHER COMPENSATION FOR FISCAL YEAR 2010

							Matching
	Other		Tax		Perquisite		Charitable
Name	Benefits		Payments		Allowance		Contributions		Severance		Total
	(1)		(2)		(3)		(4)
Gary C. Butler	$	31,025	$	0	$	125,000	$	20,000	$	0	$	176,025
Christopher R. Reidy	$	28,199	$	0	$	0	$	14,000	$	0	$	42,199
Regina R. Lee	$	86,646	$	11,142	$	0	$	0	$	0	$	97,788
Carlos A. Rodriguez	$	41,644	$	0	$	0	$	12,550	$	0	$	54,194
Campbell B. Langdon	$	40,465	$	0	$	0	$	4,500	$	450,000	$	494,965

____________________

(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. Butler, $19,619; Mr. Reidy $19,958; Ms. Lee, $18,371; Mr. Rodriguez, $15,620; and Mr. Langdon, $24,869.

	(b)	Amount paid by company on behalf of the executives’ spouses who accompanied such executives on business travel: Ms. Lee, $1,300; and Mr. Langdon, $4,553.

	(c)	Relocation expense (available to the company’s associates generally): Ms. Lee, $55,891; and Mr. Rodriguez, $14,897.

	(d)	Matching contributions to the company’s Retirement and Savings Plan (available to the company’s associates generally): Mr. Butler, $10,290; Mr. Reidy, $7,350; Ms. Lee, $10,290; Mr. Rodriguez, $10,290; and Mr. Langdon, $10,290.

	(e)	Life insurance and accidental death and dismemberment premiums paid by the company (available to the company’s associates generally): Mr. Butler, $1,116; Mr. Reidy, $891; Ms. Lee, $795; Mr. Rodriguez, $837; and Mr. Langdon, $753.

(2)	Gross-up for relocation expense (available to all participants in the relocation program) for Ms. Lee, $11,142.

(3)	Pursuant to the provisions of his employment agreement, Mr. Butler has an annual perquisite allowance of $125,000, which he used in fiscal year 2010 to fully reimburse the company for his personal use of aircraft chartered by the company and the incremental cost to the company of his personal use of aircraft owned by the company. Personal use of the aircraft benefit is valued at the actual incremental cost to the company of providing the benefit to the executive. With respect to the aircraft chartered by the company, the incremental cost is the contracted per-hour cost, including empty aircraft positioning costs, plus any fuel surcharges, additional catering or landing fees, taxes and segment fees. With respect to the aircraft owned by the company, the 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 traveling expenses, including hotels, meals and transportation. Since the aircraft owned by the company is primarily used for business travel, we do not include the fixed costs that do not change based on usage, such as crew salaries as well as hangar, insurance and management fees.

(4)	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 named executive officer’s charitable contributions for that calendar year.

GRANTS OF PLAN-BASED AWARDS TABLE FOR FISCAL YEAR 2010

														All Other	All Other
														Stock	Option					Grant Date
									Estimated Future Payouts					Awards:	Awards:		Exercise or			Fair
			Plan	Estimated Future Payouts Under					Under Equity Incentive Plan					Number of	Number of		Base Price			Value of
		Date of	Under Which	Non-Equity Incentive Plan Awards					Awards					Shares of	Securities		of Option			Stock
	Grant	Corporate	Grant Was	Threshold	Target		Maximum		Threshold	Target		Maximum		Stock	Underlying		Awards			and Option
Name	Date	Action	Made	$	$		$		#	#		#		or Units #	Options #		($/Share)			Awards $
(a)	(b)	(bb)		(c)	(d)		(e)		(f)	(g)		(h)		(i)	(j)		(k)			(l)
Gary C. Butler	—		Cash Bonus	$0	$	1,550,000	$	3,100,000
	11/11/2009	9/24/2009	1-Yr. PBRS						0		34,000		42,500							$	1,440,580
	8/13/2009	8/13/2009	Stock Options													225,000		$	38.74	$	1,723,500

Christopher R. Reidy	—		Cash Bonus	$0	$	425,900	$	745,360
	11/11/2009	9/24/2009	1-Yr. PBRS						0		10,400		13,000							$	440,648
	2/10/2010	2/10/2010	Stock Options													20,000		$	40.70	$	137,000

Regina R. Lee	—		Cash Bonus	$0	$	380,000	$	665,000
	11/11/2009	9/24/2009	1-Yr. PBRS						0		7,200		9,000							$	305,064
	3/3/2010	3/3/2010	TBRS											9,500						$	398,145
	2/10/2010	2/10/2010	Stock Options													17,000		$	40.70	$	116,450

Carlos A. Rodriguez	—		Cash Bonus	$0	$	400,000	$	700,000
	11/11/2009	9/24/2009	1-Yr. PBRS						0		7,200		9,000							$	305,064
	3/3/2010	3/3/2010	TBRS											9,500						$	398,145
	2/10/2010	2/10/2010	Stock Options													17,000		$	40.70	$	116,450

Campbell B. Langdon	—		Cash Bonus	$0	$	315,000	$	551,250
	11/11/2009	9/24/2009	1-Yr. PBRS						0		7,200		9,000							$	305,064
	2/10/2010	2/10/2010	Stock Options													17,000		$	40.70	$	116,450

In the foregoing Grants of Plan-Based Awards table, we refer to our one-year performance-based restricted stock program as 1-Yr PBRS and to our time-based restricted stock program as TBRS, both of which are granted under our 2008 Omnibus Award Plan. Stock options were also granted under the company’s 2008 Omnibus Award Plan.

The grant dates shown in column (b) of the table were determined pursuant FASB ASC Topic 718. Column (bb) of the table shows the actual dates on which our compensation committee:

set target award amounts under the one-year performance-based restricted stock program;
awarded restricted stock under the time-based restricted stock program; and
granted stock options.

In determining the foregoing awards and grants, we took into account the employment agreements with Messrs. Butler and Reidy, which are summarized below.

We computed the grant date fair value of each restricted stock award and option grant shown in column (l) 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 14 to our audited consolidated financial statements for the fiscal year ended June 30, 2010 included in our annual report on Form 10-K for the fiscal year ended June 30, 2010.

Mr. Butler Employment Agreement

Mr. Butler entered into an employment agreement with the company on June 28, 2006. The agreement provides for successive one-year terms beginning on August 31, 2006 unless terminated by the company or Mr. Butler at least six months before the end of the applicable one-year term.

Mr. Butler’s annual base salary is at least $850,000, and his annual target bonus is at least $1,200,000. The actual bonus paid to Mr. Butler is based upon his accomplishment of pre-established performance goals established by the compensation committee. If the performance goals established by the compensation committee under the applicable two-year performance-based restricted stock program have been achieved at the 100% target level, the company will issue Mr. Butler at least 32,000 shares of restricted stock. If the performance goals for any such program are exceeded or are not achieved, the number of shares of restricted stock issued to Mr. Butler will be increased or decreased, as appropriate.

Pursuant to the employment agreement, Mr. Butler received a one-time stock option grant of 150,000 shares of common stock on July 1, 2006. In addition, Mr. Butler will be granted stock options for a minimum of 200,000 shares of common stock each fiscal year during the term of the employment agreement. Subject to the attainment of any pre-established performance goals that may be set by the compensation committee (in its sole discretion), each stock option will vest in five equal annual installments of 20% each, commencing one year after the applicable grant date.

The company will pay Mr. Butler a perquisite allowance of $125,000 each fiscal year. The salary, bonus, stock and other arrangements for Mr. Butler will be reviewed annually by the compensation committee and may be increased in its sole discretion. Mr. Butler is also entitled to participate in all of the company’s then current pension, 401(k), medical and health, life, accident, disability and other insurance programs, stock purchase and other plans and arrangements (including all policies relating to the exercise of stock options following a person’s retirement from, or cessation of employment with, the company) that are generally available to other senior executives of the company.

Mr. Butler’s employment agreement also contains provisions related to change in control or termination, which are summarized below under “Potential Payments to Named Executive Officers Upon Termination or Change In Control.”

Mr. Reidy Employment Agreement

Mr. Reidy entered into an employment agreement with the company on August 1, 2006. Mr. Reidy’s annual base salary is at least $500,000, and his annual target bonus is at least $400,000. The actual bonus paid to Mr. Reidy is based upon his accomplishment of pre-established performance goals established by the compensation committee. If the performance goals established by the compensation committee under the applicable two-year performance-based restricted stock program have been achieved at the 100% target level, the company will issue Mr. Reidy 13,000 shares of restricted stock. If the performance goals for any such program are exceeded or are not achieved, the number of shares of restricted stock issued to Mr. Reidy will be increased or decreased, as appropriate. Commencing in January 2008, Mr. Reidy will be granted stock options for a minimum of 20,000 shares of common stock each fiscal year during the term of the employment agreement.

Mr. Reidy’s employment agreement also contains provisions related to his involuntary termination from the company, which are summarized below under “Potential Payments to Named Executive Officers Upon Termination or Change In Control.”

Restricted Stock

We currently grant restricted stock under our 2008 Omnibus Award Plan. Restricted stock awards granted in connection with our performance-based restricted stock program vest six months following issuance. Other restricted stock awards vest over periods determined by our compensation committee. Holders of shares of restricted stock are entitled to receive dividends paid on their restricted shares.

Beginning in February 2009, restricted stock awards under our 2008 Omnibus Award Plan allow the compensation committee to cause a recipient’s award to be forfeited, and to require the recipient to pay to us any gain realized on the award (the fair market value, on the applicable vesting date, of the shares delivered to the participant), if the recipient engages in an 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.

Stock Options

We currently grant stock options under our 2008 Omnibus Award Plan. Stock options have an exercise price equal to our closing stock price on the date of grant, although options granted before January 2007 under our 2000 Stock Option Plan have an exercise price equal to the average of the high and the low sales prices of our stock on the day of grant. Stock options have a term of up to ten years from the date of grant. No option may be exercised after the expiration of its ten-year term.

Stock options granted in April 2008 and thereafter generally vest over four years. Options granted prior to April 2008 generally vest over a five-year period, beginning on the second anniversary of the grant date (for all key executives of the company, including the named executive officers other than Mr. Butler, whose options started vesting on the first anniversary of the grant date), or the first anniversary of the grant date (for all other optionholders).

Stock options granted under our 2008 Omnibus Award Plan become fully vested and exercisable upon the death or disability of an optionholder who (i) is an active employee, (ii) satisfied the company’s retirement criteria and retired on or after age 55 with ten years of service (Normal Retirement) or (iii) retired in the previous twelve months on or after age 55 with between five and ten years of service with the company and its subsidiaries. Stock options will continue to vest following a Normal Retirement that occurs after the first anniversary of an option’s grant date.

Vested options granted under our 2008 Omnibus Award Plan may generally be exercised for up to 60 days following an optionholder’s termination of employment with the company, provided that:

optionholders who retire on or after Normal Retirement will have up to 37 months following retirement to exercise their vested options (subject to extension in the case of subsequent death);
optionholders who retire on or after age 55 with between five and ten years of service will have up to twelve months following retirement to exercise their vested options (subject to extension in the case of subsequent death);
optionholders who die or become disabled on or after eligibility for Normal Retirement will have up to 36 months following their death or disability to exercise their vested options (subject to extension in the case of subsequent death following a disability); and
optionholders who were not eligible for Normal Retirement on the date of death or disability will have up to twelve months following their death or disability to exercise their vested options (subject to extension in the case of subsequent death following a disability).

Beginning in February 2009, stock option awards under our 2008 Omnibus Award Plan allow the compensation committee to cause a recipient’s award to be forfeited, and to require the recipient to pay to us any option gain, if the recipient engages in an 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.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2010

	Option Awards									Stock Awards
														Equity
														Incentive
													Equity	Plan
													Incentive	Awards:
													Plan	Market
													Awards:	or Payout
													Number of	Value of
											Market		Unearned	Unearned
		Number of		Number of						Number	Value of		Shares,	Shares,
		Securities		Securities						of Shares	Shares or		Units or	Units or
		Underlying		Underlying						or Units of	Units of		Other	Other
		Unexercised		Unexercised		Option				Stock That	Stock That		Rights	Rights That
		Options (#)		Options (#)		Exercise			Option	Have Not	Have Not		That Have	Have Not
	Grant	(Exercisable)		(Unexercisable)		Price			Expiration	Vested	Vested		Not Vested	Vested
Name	Date (1)	(2)		(2)		($) (2)			Date	(#)	($) (3)		(#) (4)	($)
(a)		(b)		(c)		(e)			(f)	(g)	(h)		(i)	(j)
Gary C. Butler	8/14/2000		109,750		0		$	51.11	8/14/2010
	8/13/2001		109,750		0		$	44.06	8/13/2011
	9/21/2001		8,780		0		$	39.64	9/20/2011
	7/22/2002		87,689		0		$	29.38	7/21/2012
	8/12/2002		109,750		0		$	33.58	8/11/2012
	8/11/2003		219,499		0		$	34.45	8/10/2013
	8/11/2004		79,020		19,755		$	35.56	8/10/2014
	8/11/2005		65,850		43,900		$	40.51	8/10/2015
	7/1/2006		230,475		153,650		$	41.50	6/30/2016
	8/9/2007		80,000		120,000		$	47.55	8/8/2017
	8/14/2008		56,250		168,750		$	45.34	8/13/2018
	8/13/2009				225,000		$	38.74	8/12/2019
	9/1/2010									39,100	$	1,574,166

Christopher R. Reidy	10/2/2006		32,925		49,387		$	42.98	10/1/2016
	1/31/2008		4,000		16,000		$	40.28	1/30/2018
	2/10/2009		5,000		15,000		$	37.58	2/9/2019
	2/9/2010				20,000		$	40.70	2/8/2020
	4/30/2008									6,000	$	241,560
	2/10/2009									5,000	$	201,300
	9/1/2010									11,960	$	481,510

Regina R. Lee	5/15/2001		13,170				$	48.12	5/14/2011
	9/21/2001		2,496				$	39.64	9/20/2011
	5/6/2002		12,072				$	45.84	5/6/2012
	7/22/2002		5,487				$	29.38	7/21/2012
	5/13/2003		12,072				$	31.28	5/12/2013
	11/11/2003		6,585				$	35.74	11/10/2013
	5/11/2004		12,072				$	42.30	5/10/2014
	1/27/2005		8,780		2,195		$	39.40	1/26/2015
	1/27/2006		7,902		5,268		$	40.70	1/26/2016
	1/26/2007		7,463		11,194		$	42.94	1/25/2017
	4/25/2007				30,000		$	44.91	4/24/2017
	1/31/2008		3,400		13,600		$	40.28	1/30/2018
	2/10/2009		4,250		12,750		$	37.58	2/9/2019
	2/9/2010				17,000		$	40.70	2/8/2020
	4/25/2007									10,000	$	402,600
	4/30/2008									12,000	$	483,120
	2/10/2009									8,500	$	342,210
	3/3/2010									9,500	$	382,470
	9/1/2010									8,280	$	333,353

Carlos A. Rodriguez	5/15/2001		13,170				$	48.12	5/14/2011
	9/21/2001		2,511				$	39.64	9/20/2011
	5/6/2002		13,170				$	45.84	5/5/2012

	Option Awards									Stock Awards
														Equity
														Incentive
													Equity	Plan
													Incentive	Awards:
													Plan	Market
													Awards:	or Payout
													Number of	Value of
											Market		Unearned	Unearned
		Number of		Number of						Number	Value of		Shares,	Shares,
		Securities		Securities						of Shares	Shares or		Units or	Units or
		Underlying		Underlying						or Units of	Units of		Other	Other
		Unexercised		Unexercised		Option				Stock That	Stock That		Rights	Rights That
		Options (#)		Options (#)		Exercise			Option	Have Not	Have Not		That Have	Have Not
	Grant	(Exercisable)		(Unexercisable)		Price			Expiration	Vested	Vested		Not Vested	Vested
Name	Date (1)	(2)		(2)		($) (2)			Date	(#)	($) (3)		(#) (4)	($)
(a)		(b)		(c)		(e)			(f)	(g)	(h)		(i)	(j)
	7/22/2002		2,634				$	29.38	7/21/2012
	5/13/2003		5,268				$	31.28	5/12/2013
	8/11/2003		4,390				$	34.45	8/10/2013
	5/11/2004		16,462				$	42.30	5/10/2014
	1/27/2005		8,780		2,195		$	39.40	1/26/2015
	1/27/2006		6,585		4,390		$	40.70	1/26/2016
	1/26/2007		5,268		7,902		$	42.94	1/25/2017
	4/25/2007				30,000		$	44.91	4/24/2017
	1/31/2008		3,400		13,600		$	40.28	1/30/2018
	2/10/2009		4,250		12,750		$	37.58	2/9/2019
	2/9/2010				17,000		$	40.70	2/8/2020
	4/25/2007									10,000	$	402,600
	4/30/2008									12,000	$	483,120
	2/10/2009									8,500	$	342,210
	3/3/2010									9,500	$	382,470
	9/1/2010									8,280	$	333,353

Campbell B. Langdon	8/28/2000		54,875				$	54.02	8/8/2010
	9/21/2001		3,429				$	39.64	9/20/2011
	10/22/2001		16,462				$	44.96	10/21/2011
	7/22/2002		20,742				$	29.38	7/21/2012
	11/12/2002		16,462				$	38.65	11/11/2012
	8/11/2003		13,170				$	34.45	8/10/2013
	11/11/2003		19,755		3,951		$	35.74	11/10/2013
	1/27/2005		10,536		2,634		$	39.40	1/26/2015
	1/27/2006		7,902		5,268		$	40.70	1/26/2016
	1/26/2007		5,268		7,902		$	42.94	1/25/2017
	4/25/2007				30,000		$	44.91	4/24/2017
	1/31/2008		3,400		13,600		$	40.28	1/30/2018
	2/10/2009		4,250		12,750		$	37.58	2/9/2019
	2/9/2010				17,000		$	40.70	2/8/2020
	4/25/2007									10,000	$	402,600
	4/30/2008									12,000	$	483,120
	2/10/2009									8,500	$	342,210
	9/1/2010									8,280	$	333,353

____________________

(1)		We have included in the table awards under our one-year performance-based restricted stock program for fiscal year 2010. Such awards were formally made on September 1, 2010.

(2)		The option awards and exercise price of options granted prior to March 30, 2007 have been adjusted to reflect the spin-off of our former Brokerage Services Group business on March 30, 2007.

(3)		Market value based on June 30, 2010 closing price of our common stock of $40.26 per share.

(4)		Our performance during the two-year performance-based restricted stock program spanning fiscal years 2009 and 2010 resulted no awards; therefore, no shares are reported.

OUTSTANDING EQUITY VESTING SCHEDULE FOR FISCAL YEAR-END 2010

Option Awards

Stock Awards

Grant or

Grant Date

Vesting from Grant Date

Award Date

Vesting Schedule

Gary C. Butler

8/14/2000

20% vested on 8/14/2001

9/1/2010

Stock will vest six months after grant date.

20% vested on 8/14/2002

20% vested on 8/14/2003

20% vested on 8/14/2004

20% vested on 8/14/2005

8/13/2001

60% vested on 8/13/2004

20% vested on 8/13/2005

10% vested on 8/13/2006

10% vested on 8/13/2007

9/21/2001

100% vested on 9/1/2002

7/22/2002

20% vested on 7/22/2003

20% vested on 7/22/2004

20% vested on 7/22/2005

20% vested on 7/22/2006

20% vested on 7/22/2007

7/22/2002

100% vested on 9/1/2003

8/12/2002

40% vested on 8/12/2004

20% vested on 8/12/2005

20% vested on 8/12/2006

20% vested on 8/12/2007

8/11/2003

20% vested on 8/11/2005

20% vested on 8/11/2006

20% vested on 8/11/2007

20% vested on 8/11/2008

20% vested on 8/11/2009

8/11/2004

20% vested on 8/11/2006

20% vested on 8/11/2007

20% vested on 8/11/2008

20% vested on 8/11/2009

20% vested on 8/11/2010

8/11/2005

20% vested on 8/11/2007

20% vested on 8/11/2008

20% vested on 8/11/2009

20% vested on 8/11/2010

20% vests on 8/11/2011

7/1/2006

20% vested on 7/1/2007

20% vested on 7/1/2008

20% vested on 7/1/2009

20% vested on 7/1/2010

20% vests on 7/1/2011

8/9/2007

20% vested on 8/9/2008

20% vested on 8/9/2009

20% vested on 8/9/2010

20% vests on 8/9/2011

20% vests on 8/9/2012

8/14/2008

25% vested on 8/14/2009

25% vested on 8/14/2010

25% vests on 8/14/2011

25% vests on 8/14/2012

8/13/2009

25% vested on 8/13/2010

25% vests on 8/13/2011

25% vests on 8/13/2012

25% vests on 8/13/2013

Option Awards

Stock Awards

Grant or

Grant Date

Vesting from Grant Date

Award Date

Vesting Schedule

Christopher R. Reidy

10/2/2006

20% vested on 10/2/2008

4/30/2008

50% vests on 4/30/2012

20% vested on 10/2/2009

50% vests on 4/30/2013

20% vests on 10/2/2010

2/10/2009

20% vests 2/10/2013

20% vests on 10/2/2011

80% vests 2/10/2014

20% vests on 10/2/2012

9/1/2010

Stock will vest six months after grant date.

1/31/2008

20% vested on 1/31/2010

20% vests on 1/31/2011

20% vests on 1/31/2012

20% vests on 1/31/2013

20% vests on 1/31/2014

2/10/2009

25% vested on 2/10/2010

25% vests on 2/10/2011

25% vests on 2/10/2012

25% vests on 2/10/2013

2/9/2010

25% vests on 2/9/2011

25% vests on 2/9/2012

25% vests on 2/9/2013

25% vests on 2/9/2014

Regina R. Lee

5/15/2001

20% vested on 5/15/2002

4/25/2007

50% vests on 1/1/2011

20% vested on 5/15/2003

25% vests on 1/1/2012

20% vested on 5/15/2004

25% vests on 1/1/2013

20% vested on 5/15/2005

4/30/2008

50% vests on 4/30/2012

20% vested on 5/15/2006

50% vests on 4/30/2013

9/21/2001

100% vested on 9/1/2002

2/10/2009

100% vests on 2/10/2014

5/6/2002

20% vested on 5/6/2003

3/3/2010

53% vests on 3/3/2011

20% vested on 5/6/2004

16% vests on 3/3/2012

20% vested on 5/6/2005

16% vests on 3/3/2013

20% vested on 5/6/2006

15% vests on 3/3/2014

20% vested on 5/6/2007

9/1/2010

Stock will vest six months after grant date.

5/13/2003

20% vested on 5/13/2004

20% vested on 5/13/2005

20% vested on 5/13/2006

20% vested on 5/13/2007

20% vested on 5/13/2008

11/11/2003

20% vested on 11/11/2004

20% vested on 11/11/2005

20% vested on 11/11/2006

20% vested on 11/11/2007

20% vested on 11/11/2008

5/11/2004

20% vested on 5/11/2005

20% vested on 5/11/2006

20% vested on 5/11/2007

20% vested on 5/11/2008

20% vested on 5/11/2009

1/27/2005

20% vested on 1/27/2007

20% vested on 1/27/2008

20% vested on 1/27/2009

20% vested on 1/27/2010

20% vests on 1/27/2011

1/27/2006

20% vested on 1/27/2008

20% vested on 1/27/2009

20% vested on 1/27/2010

20% vests on 1/27/2011

20% vests on 1/27/2012

Option Awards

Stock Awards

Grant or

Grant Date

Vesting from Grant Date

Award Date

Vesting Schedule

1/26/2007

20% vested on 1/26/2009

20% vested on 1/26/2010

20% vests on 1/26/2011

20% vests on 1/26/2012

20% vests on 1/26/2013

4/25/2007

20% vests on 4/25/2011

40% vests on 4/25/2012

40% vests on 4/25/2013

1/31/2008

20% vested on 1/31/2010

20% vests on 1/31/2011

20% vests on 1/31/2012

20% vests on 1/31/2013

20% vests on 1/31/2014

2/10/2009

25% vested on 2/10/2010

25% vests on 2/10/2011

25% vests on 2/10/2012

25% vests on 2/10/2013

2/9/2010

25% vests on 2/9/2011

25% vests on 2/9/2012

25% vests on 2/9/2013

25% vests on 2/9/2014

Carlos A. Rodriguez

5/15/2001

20% vested on 5/15/2002

4/25/2007

50% vests on 1/1/2011

20% vested on 5/15/2003

25% vests on 1/1/2012

20% vested on 5/15/2004

25% vests on 1/1/2013

20% vested on 5/15/2005

4/30/2008

50% vests on 4/30/2012

20% vested on 5/15/2006

50% vests on 4/30/2013

9/21/2001

100% vested 9/1/2002

2/10/2009

100% vests on 2/10/2014

5/6/2002

20% vested on 5/6/2003

3/3/2010

53% vests on 3/3/2011

20% vested on 5/6/2004

16% vests on 3/3/2012

20% vested on 5/6/2005

16% vests on 3/3/2013

20% vested on 5/6/2006

15% vests on 3/3/2014

20% vested on 5/6/2007

9/1/2010

Stock will vest six months after grant date.

7/22/2002

20% vested on 7/22/2003

20% vested on 7/22/2004

20% vested on 7/22/2005

20% vested on 7/22/2006

20% vested on 7/22/2007

5/13/2003

20% vested on 5/13/2005

20% vested on 5/13/2006

20% vested on 5/13/2007

20% vested on 5/13/2008

20% vested on 5/13/2009

8/11/2003

20% vested on 8/11/2004

20% vested on 8/11/2005

20% vested on 8/11/2006

20% vested on 8/11/2007

20% vested on 8/11/2008

5/11/2004

20% vested on 5/11/2006

20% vested on 5/11/2007

20% vested on 5/11/2008

20% vested on 5/11/2009

20% vested on 5/11/2010

Option Awards

Stock Awards

Grant or

Grant Date

Vesting from Grant Date

Award Date

Vesting Schedule

1/27/2005

20% vested on 1/27/2007

20% vested on 1/27/2008

20% vested on 1/27/2009

20% vested on 1/27/2010

20% vests on 1/27/2011

1/27/2006

20% vested on 1/27/2008

20% vested on 1/27/2009

20% vested on 1/27/2010

20% vests on 1/27/2011

20% vests on 1/27/2012

1/26/2007

20% vested on 1/26/2009

20% vested on 1/26/2010

20% vests on 1/26/2011

20% vests on 1/26/2012

20% vests on 1/26/2013

4/25/2007

20% vests on 4/25/2011

40% vests on 4/25/2012

40% vests on 4/25/2013

1/31/2008

20% vested on 1/31/2010

20% vests on 1/31/2011

20% vests on 1/31/2012

20% vests on 1/31/2013

20% vests on 1/31/2014

2/10/2009

25% vested on 2/10/2010

25% vests on 2/10/2011

25% vests on 2/10/2012

25% vests on 2/10/2013

2/9/2010

25% vests on 2/9/2011

25% vests on 2/9/2012

25% vests on 2/9/2013

25% vests on 2/9/2014

Campbell B. Langdon

8/28/2000

16% vested on 8/28/2001

4/25/2007

50% vests on 1/1/2011

16% vested on 8/28/2002

25% vests on 1/1/2012