Stock-Based Compensation

6 Months Ended

Jun. 30, 2025

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

11.STOCK-BASED COMPENSATION

The Company recognizes stock-based compensation expense related to awards of (i) restricted stock subject to time-based or no vesting conditions (“Time-Based Restricted Stock Awards”), (ii) restricted stock subject to market-based vesting conditions (“Market-Based Restricted Stock Awards”), (iii) restricted stock units subject to time-based vesting conditions (“RSUs”) and (iv) restricted stock units subject to performance-based vesting conditions (“PSUs”). During the three and six months ended June 30, 2025, awards were granted pursuant to the Paycom Software, Inc. 2023 Long-Term Incentive Plan.

The following table summarizes restricted stock awards activity for the six months ended June 30, 2025:

	Time-Based					Market-Based
	Restricted Stock Awards					Restricted Stock Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
	(in thousands)			(in dollars)		(in thousands)			(in dollars)
Unvested shares of restricted stock outstanding at December 31, 2024		1,140.3		$	230.10		195.7		$	244.14
Granted		570.9		$	220.20		188.4		$	203.53
Vested		(259.3	)	$	247.94		(159.8	)	$	187.98
Forfeited		(169.0	)	$	234.13		(33.5	)	$	229.57
Unvested shares of restricted stock outstanding at June 30, 2025		1,282.9		$	221.55		190.8		$	253.65

The following table summarizes PSU and RSU activity for the six months ended June 30, 2025:

	RSUs					PSUs
	Units			Weighted Average Grant Date Fair Value Per Unit		Units			Weighted Average Grant Date Fair Value Per Unit
	(in thousands)			(in dollars)		(in thousands)			(in dollars)
Unvested restricted stock units outstanding at December 31, 2024		23.6		$	198.54		23.7		$	181.24
Granted		80.1		$	213.06		80.1		$	213.06
Vested		(8.4	)	$	203.56		(23.7	)	$	181.24
Forfeited		(6.1	)	$	212.70		—		$	—
Unvested restricted stock units outstanding at June 30, 2025		89.2		$	210.13		80.1		$	213.06

For the six months ended June 30, 2025, our total non-cash stock-based compensation expense was $60.6 million. For the six months ended June 30, 2024, the Company recognized non-cash stock-based compensation expense, inclusive of forfeitures, that totaled a net benefit of $69.7 million.

The following table presents the non-cash stock-based compensation expense that is included within the specified line items in our consolidated statements of comprehensive income:

	Six Months Ended June 30,
	2025		2024
Non-cash stock-based compensation expense:
Operating expenses	$	9.4	$	7.2
Sales and marketing		12.5		10.3
Research and development		19.5		13.1
General and administrative		19.2		(100.3	)	(1)
Total non-cash stock-based compensation expense	$	60.6	$	(69.7	)

(1)The change in Chad Richison’s position from Chief Executive Officer to Co-Chief Executive Officer, effective February 7, 2024, triggered the forfeiture of 1,610,000 shares of restricted stock granted to him on November 23, 2020, in accordance with the terms of the award. As a result, $117.5 million of previously recognized compensation costs that were recorded in reporting periods prior to 2024 were reversed to additional paid-in capital in the consolidated balance sheets and to general and administrative expenses in the consolidated statements of comprehensive income.

The following table presents the unrecognized compensation cost and the related weighted average recognition period associated with unvested restricted stock awards and unvested restricted stock unit awards (including RSUs and PSUs) as of June 30, 2025:

	Restricted Stock		Restricted Stock
	Awards		Units
Unrecognized compensation cost	$	241.0	$	26.4
Weighted average period for recognition (years)		2.7		1.6

We capitalized stock-based compensation costs related to software developed for internal use of $8.5 million and $13.7 million for the three and six months ended June 30, 2025, respectively. We capitalized stock-based compensation costs related to software developed for internal use of $5.2 million and $8.8 million for the three and six months ended June 30, 2024, respectively.

In May 2023, our Board of Directors adopted a dividend policy under which we intend to pay quarterly cash dividends on our common stock. All unvested shares of restricted stock, RSUs and PSUs currently outstanding are entitled to receive dividends or dividend equivalents, provided that such dividends or dividend equivalents are withheld by the Company and distributed to the applicable holder upon the release of restrictions on such shares of restricted stock, RSUs or PSUs (i.e., upon vesting).