•Stock Options. Stock options are granted to employees at exercise prices equal to the fair market value of the Company's common stock on the dates of grant. Stock options generally vest ratably over 4 years and have a term of 10 years. Compensation expense is measured based on the fair value of the stock option on the grant date and recognized on a straight-line basis over the vesting period. Stock options are generally forfeited if the employee ceases to be employed by the Company prior to vesting. The Company determines the fair value of stock options issued using a binomial option-pricing model. The binomial option-pricing model considers a range of assumptions related to volatility, dividend yield, risk-free interest rate, and employee exercise behavior. Expected volatilities utilized in the binomial option-pricing model are based on a combination of implied market volatilities, historical volatility of the Company's stock price, and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The binomial option-pricing model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of a stock option grant is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding.

Time-based restricted stock cannot be transferred during the vesting period. Compensation expense relating to the issuance of time-based restricted stock is measured based on the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period. Dividends are paid on shares awarded under the time-based restricted stock program.

Time-based restricted stock units are settled in cash and cannot be transferred during the vesting period. Compensation expense relating to the issuance of time-based restricted stock units is recorded over the vesting period and is initially based on the fair value of the award on the grant date and is subsequently remeasured at each reporting date during the vesting period based on the change in the ADP stock price. No dividend equivalents are paid on units awarded under the time-based restricted stock unit program.

•Performance-Based Restricted Stock and Performance-Based Restricted Stock Units. Performance-based restricted stock and performance-based restricted stock units generally vest over a one to three year performance period and a subsequent service period of up to 38 months. Under these programs, the Company communicates “target awards” at the beginning of the performance period with possible payouts at the end of the performance period ranging from 0% to 150% of the “target awards.” Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting.

Performance-based restricted stock cannot be transferred during the vesting period. Compensation expense relating to the issuance of performance-based restricted stock is recognized over the vesting period based on the fair value of the award on the grant date with subsequent adjustments to the number of shares awarded during the performance period based on probable and actual performance against targets. After the performance period, if the performance targets are achieved, employees are eligible to receive dividends during the remaining vesting period on shares awarded under the performance-based restricted stock program.

Performance-based restricted stock units cannot be transferred and are settled in either cash or stock, depending on the employee's home country. Compensation expense relating to the issuance of performance-based restricted stock units settled in cash is recognized over the vesting period initially based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded during the performance period based on probable and actual performance against targets. In addition, compensation expense is remeasured at each reporting period during the vesting period based on the change in the ADP stock price. Compensation expense relating to the issuance of performance-based restricted stock units settled in stock is recorded over the vesting period based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded based on the probable and actual performance against targets. Dividend equivalents are paid on awards under the performance-based restricted stock unit program.

•Employee Stock Purchase Plan. The Company offers an employee stock purchase plan that allows eligible employees to purchase shares of common stock at a price equal to 95% of the market value for the Company's common stock on the last day of the offering period. This plan has been deemed non-compensatory and, therefore, no compensation expense has been recorded.

The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock awards. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company repurchased 8.2 million shares in fiscal 2021 as compared to 6.2 million shares repurchased in fiscal 2020. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions. Cash payments related to the settlement of vested time-based restricted stock units and performance-based restricted stock units were approximately 10.7 million, 34.6 million, and 26.6 million during fiscal years 2021, 2020, and 2019, respectively.

The following table represents stock-based compensation expense and related income tax benefits in each of fiscal 2021, 2020, and 2019, respectively:


Years ended June 30,	2021		2020		2019
Operating expenses	$	17.9	$	13.7	$	16.9
Selling, general and administrative expenses	133.9		99.1		131.2
System development and programming costs	23.5		18.0		19.2
Total pretax stock-based compensation expense	$	175.3	$	130.8	$	167.3

Income tax benefit	$	43.0	$	32.2	$	41.6

As of June 30, 2021, the total remaining unrecognized compensation cost related to non-vested stock options, restricted stock units, and restricted stock awards amounted to $19.2 million, $43.5 million, and $113.1 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 2.2 years, 1.6 years, and 1.8 years, respectively.

Stock Options:


	Number of Options (in thousands)	Weighted Average Price (in dollars)
Options outstanding at July 1, 2020	3,510	$	126
Options granted	1,153	$	139
Options exercised	(865)	$	(102)
Options forfeited/cancelled	(93)	$	(147)
Options outstanding at June 30, 2021	3,705	$	135
Options exercisable at June 30, 2021	1,433	$	117
Shares available for future grants, end of year	22,985
Shares reserved for issuance under stock option plans, end of year	26,690

Time-Based Restricted Stock and Time-Based Restricted Stock Units:


	Number of Shares (in thousands)	Number of Units (in thousands)
Restricted shares/units outstanding at July 1, 2020	905	180
Restricted shares/units granted	685	105
Restricted shares/units vested	(375)	(74)
Restricted shares/units forfeited	(74)	(11)
Restricted shares/units outstanding at June 30, 2021	1,141	200

Performance-Based Restricted Stock and Performance-Based Restricted Stock Units:


	Number of Shares (in thousands)	Number of Units (in thousands)
Restricted shares/units outstanding at July 1, 2020	179	851
Restricted shares/units granted	156	177
Restricted shares/units vested	(70)	(290)
Restricted shares/units forfeited	(18)	(38)
Restricted shares/units outstanding at June 30, 2021	247	700

The aggregate intrinsic value of outstanding stock options and exercisable stock options as of June 30, 2021 was $237.0 million and $116.9 million, respectively, which have a remaining life of 7 years and 6 years, respectively. The aggregate intrinsic value for stock options exercised in fiscal 2021, 2020, and 2019 was $58.6 million, $78.0 million, and $78.2 million, respectively.

The fair value for stock options granted was estimated at the date of grant using the following assumptions:


	2021			2020			2019
Risk-free interest rate	0.1		%	1.4		%	2.7		%
Dividend yield	2.6		%	1.9		%	1.9		%
Weighted average volatility factor	25.8		%	19.3		%	20.9		%
Weighted average expected life (in years)	5.4			5.4			5.4
Weighted average fair value (in dollars)	$	21.66		$	24.40		$	26.60

The Company has a defined benefit cash balance pension plan. The U.S. pension plan, which is currently closed to new entrants, was frozen effective July 1, 2020. As of July 1, 2020 and onward, participants will retain their accrued benefits and will not accrue any future benefits due to pay and/or service. The plan interest credit rate varies from year-to-year based on the ten-year U.S. Treasury rate. The Company's policy is to make contributions within the range determined by generally accepted actuarial principles.

The Company also has various retirement plans for its non-U.S. employees and maintains a Supplemental Officers Retirement Plan (“SORP”). The SORP is a defined benefit plan pursuant to which the Company pays supplemental pension benefits to certain corporate officers upon retirement based upon the officers' years of service and compensation. The SORP, which is currently closed to new entrants, was frozen effective July 1, 2019, with no future accruals due to pay and/or service.

The Company is required to (a) recognize in its Consolidated Balance Sheets an asset for a plan's net overfunded status or a liability for a plan's net underfunded status, (b) measure a plan's assets and its obligations that determine its funded status as of the end of the employer's fiscal year, and (c) recognize changes in the funded status of a defined benefit plan in the year in which the changes occur in accumulated other comprehensive income (loss).

The Company's pension plans' funded status as of June 30, 2021 and 2020 is as follows:


June 30,	2021		2020

Change in plan assets:
Fair value of plan assets at beginning of year	$	1,988.8	$	1,910.5
Actual return on plan assets	385.2		172.1
Employer contributions	10.9		9.8
Currency translation adjustments	21.8		(3.5)
Benefits paid	(100.4)		(100.1)
Fair value of plan assets at end of year	$	2,306.3	$	1,988.8

Change in benefit obligation:
Benefit obligation at beginning of year	$	2,180.1	$	1,951.2
Service cost	4.9		59.7
Interest cost	51.4		61.8
Actuarial loss	(11.8)		210.7
Currency translation adjustments	25.1		(3.6)
Plan changes	—		0.4

Benefits paid	(100.4)		(100.1)
Projected benefit obligation at end of year	$	2,149.3	$	2,180.1

Funded status - plan assets less benefit obligations	$	157.0	$	(191.3)

The Company's pension plans with accumulated benefit obligations in excess of plan assets as of June 30, 2021 and 2020 had the following projected benefit obligation, accumulated benefit obligation, and fair value of plan assets:


June 30,	2021		2020

Projected benefit obligation	$	182.2	$	2,046.5
Accumulated benefit obligation	$	168.3	$	2,034.4
Fair value of plan assets	$	18.7	$	1,835.4

The components of net pension (income)/ expense were as follows:


	2021		2020		2019
Service cost – benefits earned during the period	$	4.9	$	59.7	$	59.8
Interest cost on projected benefits	51.4		61.8		78.6
Expected return on plan assets	(121.3)		(117.9)		(131.8)
Net amortization and deferral	9.3		6.8		0.1
Special termination benefits, plan curtailments, and settlement charges	2.9		(22.0)		48.7
Net pension (income)/expense	$	(52.8)	$	(11.6)	$	55.4

In fiscal 2018, the Company offered a Voluntary Early Retirement Program (“VERP”) to certain eligible U.S. based associates aged 55 or above with at least 10 years of service. In fiscal 2019, the Company recorded $48.2 million of non-cash settlement charges and special termination benefits.

The net actuarial loss and prior service cost for the defined benefit pension plans that are included in accumulated other comprehensive income (loss) that have not yet been recognized as components of net periodic benefit cost are $145.8 million and $2.5 million, respectively, at June 30, 2021. There is no remaining transition obligation for the defined benefit pension plans included in accumulated other comprehensive income (loss). The estimated net actuarial loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic pension cost in fiscal 2022 are $6.6 million and $0.3 million, respectively.

The Company's pension plans' asset allocations at June 30, 2021 and 2020 by asset category were as follows:


	2021		2020

Cash and cash equivalents	1	%	1	%
Fixed income securities	38	%	44	%
U.S. equity securities	19	%	17	%
International equity securities	15	%	13	%
Global equity securities	27	%	25	%
	100	%	100	%

The Company's pension plans' asset investment strategy is designed to ensure prudent management of assets, consistent with long-term return objectives and the prompt fulfillment of all pension plan obligations. The investment strategy and asset mix were developed in coordination with an asset liability study conducted by external consultants to maximize the funded ratio with the least amount of volatility.

The pension plans' fixed income portfolio is designed to match the duration and liquidity characteristics of the pension plans' liabilities. In addition, the pension plans invest only in investment-grade debt securities to ensure preservation of capital. The pension plans' equity portfolios are subject to diversification guidelines to reduce the impact of losses in single investments. Investment managers are prohibited from buying or selling commodities and from the. short selling of securities.

The pension plans' investments included in Level 1 are valued using closing prices for identical instruments that are traded on active exchanges. The pension plans' investments included in Level 2 are valued utilizing inputs obtained from an independent pricing service, which are reviewed by the Company for reasonableness. To determine the fair value of our Level 2 plan assets, a variety of inputs are utilized, including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, new issue data, and monthly payment information. The pension plans have no Level 3 investments at June 30, 2021.

The following table presents the investments of the pension plans measured at fair value at June 30, 2021:


	Level 1		Level 2		Level 3		Total

Commingled trusts	$	—	$	1,060.2	$	—	$	1,060.2
Government securities	—		426.2		—		426.2
Mutual funds	10.2		345.7		—		355.9
Corporate and municipal bonds	—		417.2		—		417.2
Mortgage-backed security bonds	—		38.6		—		38.6
Total pension asset investments	$	10.2	$	2,287.9	$	—	$	2,298.1

The following table presents the investments of the pension plans measured at fair value at June 30, 2020:


	Level 1		Level 2		Level 3		Total

Commingled trusts	$	—	$	798.6	$	—	$	798.6
U.S. government securities	—		414.7		—		414.7
Mutual funds	7.3		274.8		—		282.1
Corporate and municipal bonds	—		434.8		—		434.8
Mortgage-backed security bonds	—		38.5		—		38.5
Total pension asset investments	$	7.3	$	1,961.4	$	—	$	1,968.7

The benefits expected to be paid in each year from fiscal 2022 to the year ended June 30, 2026 are $120.4 million, $112.9 million, $120.0 million, $111.0 million, and $115.7 million, respectively. The aggregate benefits expected to be paid in the five fiscal years from the year ended June 30, 2027 to the year ended June 30, 2031 are $643.7 million. The expected benefits to be paid are based on the same assumptions used to measure the Company's pension plans' benefit obligations at June 30, 2021 and includes estimated future employee service.

C. Retirement and Savings Plan. The Company has a 401(k) retirement and savings plan, which allows eligible employees to contribute up to 50% of their compensation annually and allows highly compensated employees to contribute up to 12% of their compensation annually. The Company matches a portion of employee contributions, which amounted to approximately $130.8 million, $112.7 million, and $110.9 million for the calendar years ended December 31, 2020, 2019, and 2018, respectively.