Employee Benefit Plans Employee Benefit Plans (Notes)

6 Months Ended

Dec. 31, 2018

The components of net pension expense were as follows:



	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2018			2017			2018			2017
Service cost – benefits earned during the period	$	14.9		$	18.6		$	29.9		$	37.3
Interest cost on projected benefits	19.7			16.3			39.3			32.6
Expected return on plan assets	(33.0		)	(34.3		)	(65.9		)	(68.6		)
Net amortization and deferral	—			2.1			0.1			4.2
Settlement charges and special termination benefits	12.8			—			28.1			—
Net pension expense	$	14.4		$	2.7		$	31.5		$	5.5

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. The early retirement offer was made to about 3,500 eligible associates, or approximately 6 percent of the Company’s workforce, with approximately 2,200 ADP associates opting to participate. The Company also extended to all employees participating in VERP the opportunity to continue health care coverage at active employee contribution rates for up to 24 months following retirement. The Company recorded $12.1 million and $21.4 million of expenses within selling, general, and administrative expenses related to the continuing health coverage for VERP participants who exited the Company during the three and six months ended December 31, 2018, respectively, and anticipates recording a charge for the remaining participants who will exit and continue health coverage during remainder of fiscal 2019, which may total up to $8 million, but is based on the number of associates electing this benefit and the health care option selected by each associate.

In addition, for the three and six months ended December 31, 2018, the Company recorded $12.8 million and $28.1 million of non-cash settlement charges and of special termination benefits, respectively. The Company anticipates recording additional non-cash settlement charges of up to $2 million through the remainder of fiscal 2019, within Other income, net, on the Statements of Consolidated Earnings, 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.

Stock-Based Compensation Plans

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 2.2 million and 1.4 million shares in the three months ended December 31, 2018 and 2017, respectively, and repurchased 3.8 million and 3.6 million shares in the six months ended December 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 pre-tax stock-based compensation expense for the three and six months ended December 31, 2018 and 2017, respectively:



	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2018		2017		2018		2017
Operating expenses	$	3.4	$	5.4	$	8.8	$	10.6
Selling, general and administrative expenses	30.4		27.5		58.4		56.1
System development and programming costs	4.8		5.8		9.8		11.0
Total stock-based compensation expense	$	38.6	$	38.7	$	77.0	$	77.7

Beginning September 1, 2018, time-based restricted stock and time-based restricted stock units granted generally vest ratably over 3 years, and performance-based restricted stock and performance-based restricted stock units granted generally vest over a one to three-year performance period and a subsequent service period of up to 38 months. The methods and assumptions used in the determination of the fair value of stock-based awards are generally consistent with those described in the Company's Form 10-K for Fiscal 2018 other than the change noted above. See the Company's Annual Report on Form 10-K for fiscal 2018 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.