Employee Benefit Plans

9 Months Ended

Mar. 31, 2019

The components of net pension expense were as follows:



	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2019			2018			2019			2018
Service cost – benefits earned during the period	$	14.9		$	18.7		$	44.9		$	55.9
Interest cost on projected benefits	19.7			16.4			59.0			49.0
Expected return on plan assets	(32.9		)	(34.4		)	(98.9		)	(103.0		)
Net amortization and deferral	—			2.1			0.1			6.3
Settlement charges and special termination benefits	7.8			—			35.9			—
Net pension expense	$	9.5		$	2.8		$	41.0		$	8.2

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 $2.2 million and $23.6 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 nine months ended March 31, 2019, respectively. The Company does not expect to record material charges for the remainder of fiscal 2019.

In addition, for the three and nine months ended March 31, 2019, the Company recorded $7.8 million and $35.9 million of non-cash settlement charges and of special termination benefits, respectively. The Company does not expect to record material charges for the remainder of fiscal 2019, within Other income, net, on the Statements of Consolidated Earnings.

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 1.6 million and 1.7 million shares in the three months ended March 31, 2019 and 2018, respectively, and repurchased 5.4 million and 5.3 million shares in the nine months ended March 31, 2019 and 2018, 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 nine months ended March 31, 2019 and 2018, respectively:



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2019		2018		2019		2018
Operating expenses	$	4.1	$	4.8	$	12.9	$	15.4
Selling, general and administrative expenses	36.1		31.8		94.6		87.9
System development and programming costs	5.0		5.1		14.7		16.1
Total stock-based compensation expense	$	45.2	$	41.7	$	122.2	$	119.4

Beginning September 1, 2018, time-based restricted stock and time-based restricted stock units granted generally vest ratably over 3 years. 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 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.