•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 and Time-Based Restricted Stock Units. Time-based restricted stock and time-based restricted stock units generally vest ratably over 3 years. Awards are forfeited if the employee ceases to be employed by the Company prior to vesting.

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 9.2 million shares in fiscal 2022 as compared to 8.2 million shares repurchased in fiscal 2021. 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 22.1 million, 10.7 million, and 34.6 million during fiscal years 2022, 2021, and 2020, respectively.

The following table represents stock-based compensation expense and related income tax benefits in each of fiscal 2022, 2021, and 2020, respectively:


Years ended June 30,	2022		2021		2020
Operating expenses	$	19.7	$	17.9	$	13.7
Selling, general and administrative expenses	155.7		133.9		99.1
System development and programming costs	26.3		23.5		18.0
Total pretax stock-based compensation expense	$	201.7	$	175.3	$	130.8

Income tax benefit	$	49.1	$	43.0	$	32.2

As of June 30, 2022, the total remaining unrecognized compensation cost related to non-vested stock options, restricted stock units, and restricted stock awards amounted to $18.9 million, $53.9 million, and $116.2 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 2.2 years, 1.5 years, and 1.7 years, respectively.

Stock Options:


	Number of Options (in thousands)	Weighted Average Price (in dollars)
Options outstanding at July 1, 2021	3,705	$	135
Options granted	792	$	207
Options exercised	(860)	$	127
Options forfeited/cancelled	(163)	$	166
Options outstanding at June 30, 2022	3,474	$	152
Options exercisable at June 30, 2022	1,553	$	128
Shares available for future grants, end of year	21,862
Shares reserved for issuance under stock option plans, end of year	25,336

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, 2021	1,141	200
Restricted shares/units granted	504	89
Restricted shares/units vested	(511)	(101)
Restricted shares/units forfeited	(113)	(15)
Restricted shares/units outstanding at June 30, 2022	1,021	173

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, 2021	247	700
Restricted shares/units granted	114	386
Restricted shares/units vested	(114)	(263)
Restricted shares/units forfeited	(25)	(66)
Restricted shares/units outstanding at June 30, 2022	222	757

The aggregate intrinsic value of outstanding stock options and exercisable stock options as of June 30, 2022 was $203.1 million and $127.0 million, respectively, which have a remaining life of 7 years and 6 years, respectively. The aggregate intrinsic value for stock options exercised in fiscal 2022, 2021, and 2020 was $80.8 million, $58.6 million, and $78.0 million, respectively.

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


	2022			2021			2020
Risk-free interest rate	0.0		%	0.1		%	1.4		%
Dividend yield	1.8		%	2.6		%	1.9		%
Weighted average volatility factor	22.7		%	25.8		%	19.3		%
Weighted average expected life (in years)	4.9			5.4			5.4
Weighted average fair value (in dollars)	$	33.03		$	21.66		$	24.40

The weighted average fair values of shares granted were as follows:


Year ended June 30,	2022		2021		2020
(in dollars)
Performance-based restricted stock	$	206.86	$	138.53	$	169.84
Time-based restricted stock	$	208.08	$	141.52	$	167.16

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, 2022 and 2021 is as follows:


June 30,	2022		2021

Change in plan assets:
Fair value of plan assets at beginning of year	$	2,306.3	$	1,988.8
Actual return on plan assets	(406.7)		385.2
Employer contributions	10.7		10.9
Currency translation adjustments	(16.4)		21.8
Benefits paid	(93.4)		(100.4)
Fair value of plan assets at end of year	$	1,800.5	$	2,306.3

Change in benefit obligation:
Benefit obligation at beginning of year	$	2,149.3	$	2,180.1
Service cost	5.7		4.9
Interest cost	52.3		51.4
Actuarial loss (a)	(319.2)		(11.8)
Currency translation adjustments	(22.5)		25.1
Plan changes	6.8		—

Benefits paid	(93.4)		(100.4)
Projected benefit obligation at end of year	$	1,779.0	$	2,149.3

Funded status - plan assets less benefit obligations	$	21.5	$	157.0

The amounts recognized on the Consolidated Balance Sheets as of June 30, 2022 and 2021 consisted of:


June 30,	2022		2021

Noncurrent assets	$	148.5	$	320.5
Current liabilities	(5.3)		(6.0)
Noncurrent liabilities	(121.7)		(157.5)
Net amount recognized	$	21.5	$	157.0

The Company's pension plans with projected benefit obligations in excess of plan assets as of June 30, 2022 and 2021 had the following projected benefit obligation and fair value of plan assets:


June 30,	2022		2021

Projected benefit obligation	$	145.5	$	182.2

Fair value of plan assets	$	18.5	$	18.7

The Company's pension plans with accumulated benefit obligations in excess of plan assets as of June 30, 2022 and 2021 had the following accumulated benefit obligation and fair value of plan assets:


June 30,	2022		2021

Accumulated benefit obligation	$	132.0	$	168.3
Fair value of plan assets	$	18.5	$	18.7

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


	2022		2021		2020
Service cost – benefits earned during the period	$	5.7	$	4.9	$	59.7
Interest cost on projected benefits	52.3		51.4		61.8
Expected return on plan assets	(127.9)		(121.3)		(117.9)
Net amortization and deferral	7.5		9.3		6.8
Special termination benefits, plan curtailments, and settlement charges	9.0		2.9		(22.0)
Net pension (income)/expense	$	(53.4)	$	(52.8)	$	(11.6)

As a result of the freeze of the U.S. pension plan, described above, the Company recognized $17.0 million of prior service credits during fiscal 2020 within Other (income)/expense, net, which were previously recognized within accumulated other comprehensive income (loss) (see Note 13).

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 $340.9 million and $7.4 million, respectively, at June 30, 2022. There is no remaining transition obligation for the defined benefit pension plans included in accumulated other comprehensive income (loss).

Assumptions used to determine the actuarial present value of benefit obligations were:


Years ended June 30,	2022		2021

Discount rate	4.60	%	2.55	%
Interest crediting rate	3.25	%	3.25	%
Increase in compensation levels	N/A		N/A

Assumptions used to determine the net pension expense generally were:


Years ended June 30,	2022		2021		2020

Discount rate	2.55	%	2.45	%	3.40	%
Interest crediting rate	3.25	%	3.25	%	3.25	%
Expected long-term rate of return on assets	6.75	%	6.75	%	6.75	%
Increase in compensation levels	N/A		4.00	%	4.00	%

The Company's pension plans' asset allocations at June 30, 2022 and 2021 by asset category were as follows:


	2022		2021

Cash and cash equivalents	2	%	1	%
Fixed income securities	39	%	38	%
U.S. equity securities	19	%	19	%
International equity securities	15	%	15	%
Global equity securities	25	%	27	%
	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' assets are currently invested in various asset classes with differing expected rates of return, correlations, and volatilities, including large capitalization and small capitalization U.S. equities, international equities, U.S. fixed income securities, and cash.

The target asset allocation ranges for the U.S. plan are generally as follows:


U.S. fixed income securities			35% - 45%
U.S. equity securities			14% - 24%
International equity securities			11% - 21%
Global equity securities			20% - 30%

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.

None of the pension plans' assets are directly invested in the Company's stock, although the pension plans may hold a minimal amount of Company stock to the extent of the Company's participation in equity indices.

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, 2022.

The following table presents the investments of the pension plans measured at fair value at June 30, 2022:


	Level 1		Level 2		Level 3		Total

Commingled trusts	$	—	$	798.2	$	—	$	798.2
Government securities	—		350.7		—		350.7
Mutual funds	11.0		252.6		—		263.6
Corporate and municipal bonds	—		322.4		—		322.4
Mortgage-backed security bonds	—		32.8		—		32.8
Total pension asset investments	$	11.0	$	1,756.7	$	—	$	1,767.7

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
U.S. 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 benefits expected to be paid in each year from fiscal 2023 to the year ended June 30, 2027 are $122.3 million, $128.6 million, $135.2 million, $115.9 million, and $126.0 million, respectively. The aggregate benefits expected to be paid in the five fiscal years from the year ended June 30, 2028 to the year ended June 30, 2032 are $644.1 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, 2022 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 $153.1 million, $130.8 million, and $112.7 million for the calendar years ended December 31, 2021, 2020, and 2019, respectively.