Employee Benefit Plans

9 Months Ended

Mar. 31, 2018

Compensation and Retirement Disclosure [Abstract]

Stock-based Compensation Plans

The Company's share-based compensation consists of stock options, time-based restricted stock, time-based restricted stock units, performance-based restricted stock, and performance-based restricted stock units. The Company also offers an employee stock purchase plan for eligible employees.

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 programs. The Company repurchased 1.7 million and 1.9 million shares in the three months ended March 31, 2018 and 2017, respectively and repurchased 5.3 million and 10.4 million shares in the nine months ended March 31, 2018 and 2017, respectively. 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.

The following table represents stock-based compensation expense for the three and nine months ended March 31, 2018 and 2017, respectively:



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2018		2017		2018		2017
Operating expenses	$	4.8	$	4.6	$	15.4	$	16.4
Selling, general and administrative expenses	31.8		25.1		87.9		71.0
System development and programming costs	5.1		4.6		16.1		13.8
Total stock-based compensation expense	$	41.7	$	34.3	$	119.4	$	101.2

The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the Company's fiscal 2017 Form 10-K. See the Company's Annual Report on Form 10-K for fiscal 2017 for a detailed description of the Company's stock-based compensation awards and employee stock purchase plan, including information related to vesting terms, service and performance conditions, payout percentages, and process for estimating the fair value of stock options granted.

Employee Benefit Plans

Pension Plans

The components of net pension expense were as follows:



	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2018			2017			2018			2017
Service cost – benefits earned during the period	$	18.7		$	20.2		$	55.9		$	60.6
Interest cost on projected benefits	16.4			14.9			49.0			45.0
Expected return on plan assets	(34.4		)	(33.9		)	(103.0		)	(101.9		)
Net amortization and deferral	2.1			4.8			6.3			14.4
Net pension expense	$	2.8		$	6.0		$	8.2		$	18.1

On March 1, 2018, the Company announced that it is offering a voluntary early retirement program ("VERP") to certain eligible U.S.-based associates aged 55 or above with at least 10 years of service. The early retirement offer has been made to about 3,500 eligible associates, or approximately 6 percent of the Company’s workforce, who will meet the specific age and years of service criteria as of June 30, 2018. The Company also extended to all employees participating in the VERP the opportunity to continue health care coverage at active employee contribution rates for up to 24 months following retirement. ADP intends to fund a significant majority of the program costs from the existing surplus in ADP’s U.S. defined benefit plan, with the remaining portion of expenses expected to be funded from ADP’s U.S. corporate cash balances.

Associates were required to finalize their election by May 1, 2018. The Company will recognize estimated certain special termination benefit pre-tax charges of approximately $300 million in the fourth quarter of fiscal 2018. In addition, during the fourth quarter of fiscal 2018 the Company anticipates recording a non-cash settlement charge which is contingent on the number of participants electing the lump sum payment option and other actuarial assumptions, including the discount rate and long-term rate of return on assets. Lastly, the Company anticipates recording a cash charge for continued health care coverage, which is dependent upon the number of associates electing this benefit and the health care option selected by each associate.