ADP 2015 Annual Report Download - page 62

Download and view the complete annual report

Please find page 62 of the 2015 ADP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

•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 programs. The
Company repurchased 13.8 million shares in fiscal 2016 as compared to 18.2 million shares repurchased in fiscal 2015 . 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 $25.2 million , $25.2 million , and $1.2 million during fiscal years 2016 , 2015 , and 2014 , respectively.
The following table represents stock-based compensation expense and related income tax benefits in each of fiscal 2016 , 2015 , and 2014 , respectively:
Years ended June 30,
2016
2015
2014
Operating expenses
$ 23.1
$ 27.0
$ 21.7
Selling, general and administrative expenses
97.4
95.8
79.5
System development and programming costs
17.1
20.4
15.9
Total pretax stock-based compensation expense
$ 137.6
$ 143.2
$ 117.1
Income tax benefit
$ 49.6
$ 51.1
$ 42.2
Stock-based compensation expense attributable to employees of the discontinued operations are included in discontinued operations on the Statements of
Consolidated Earnings and therefore not presented in the table above. For fiscal 2015 and 2014 , such stock-based compensation expense was $5.5 million and
$21.2 million , respectively.
As a result of the spin-off of CDK, the number of vested and unvested ADP stock options, their strike price, and the number of unvested performance-
based and time-based restricted shares and units were adjusted to preserve the intrinsic value of the awards immediately prior to the spin-off using an adjustment
ratio based on the market close price of ADP stock prior to the spin-off and the market open price of ADP stock subsequent to the spin-off. Since these adjustments
were considered to be a modification of the awards in accordance to ASC 718, "Stock Compensation," the Company compared the fair value of the awards
immediately prior to the spin-off to the fair value immediately after the spin-off to measure potential incremental stock-based compensation expense, if any. The
adjustments did not result in an increase in the fair value of the awards and, accordingly, the Company did not record incremental stock-based compensation
expense. Unvested ADP stock options, unvested restricted stock, and unvested restricted stock units held by CDK employees were replaced by CDK awards
immediately following the spin-off. The stock-based compensation expense associated with the original grant of ADP awards to remaining ADP employees will
continue to be recognized within earnings from continuing operations in the Company's Statements of Consolidated Earnings.
As of June 30, 2016 , the total remaining unrecognized compensation cost related to non-vested stock options, restricted stock units, and restricted stock
awards amounted to $12.2 million , $28.0 million , and $67.7 million , respectively, which will be amortized over the weighted-average remaining requisite service
periods of 1.7 years , 1.2 years , and 1.3 years , respectively.
59