Annual report [Section 13 and 15(d), not S-K Item 405]

Stock-Based Compensation Plans (Tables)

v3.25.2
Stock-Based Compensation Plans (Tables)
 12 Months Ended
May 31, 2025
Stock Options [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Stock Option Activity

The following table summarizes stock option activity for fiscal 2025:

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

average

 

 

 

 

 

 

 

Shares

 

 

average

 

 

remaining

 

 

Aggregate

 

 

 

subject

 

 

exercise price

 

 

contractual

 

 

intrinsic

 

In millions, except per share amounts

 

to options(1)

 

 

per share

 

 

term (years)

 

 

value(2)

 

Outstanding as of May 31, 2024

 

 

3.3

 

 

$

 

78.05

 

 

 

 

 

 

 

 

Granted

 

 

0.3

 

 

$

 

122.56

 

 

 

 

 

 

 

 

Exercised

 

 

(0.6

)

 

$

 

68.54

 

 

 

 

 

 

 

 

Forfeited

 

 

(0.0

)

 

$

 

120.11

 

 

 

 

 

 

 

 

Outstanding as of May 31, 2025

 

 

3.0

 

 

$

 

84.33

 

 

 

4.4

 

 

$

 

217.8

 

Exercisable as of May 31, 2025

 

 

2.5

 

 

$

 

76.81

 

 

 

3.6

 

 

$

 

199.4

 

 

(1)
Includes the activity related to long-term incentive plan stock options granted in July 2016, which vested in fiscal 2021.
(2)
Total shares valued at the market price of the underlying stock as of May 31, 2025 less the exercise price.
Other Information Pertaining to Stock Option

Other information pertaining to stock option grants is as follows:

 

 

 

Year ended May 31,

 

In millions, except per share amounts

 

2025

 

2024

 

2023

 

Weighted-average grant-date fair value per share of stock options granted

 

$

 

27.54

 

$

 

27.21

 

$

 

27.58

 

Total intrinsic value of stock options exercised

 

$

 

42.0

 

$

 

40.3

 

$

 

11.0

 

 

Black-Scholes fair value assumptions: The fair value of stock option grants was estimated at the date of grant using a Black-Scholes option pricing model. The weighted-average assumptions used for valuation are as follows:

 

 

Year ended May 31,

 

2025

 

2024

 

2023

Risk-free interest rate

 

 

4.2

 

%

 

 

 

4.1

 

%

 

 

 

3.2

 

%

Dividend yield

 

 

3.2

 

%

 

 

 

3.1

 

%

 

 

 

2.6

 

%

Volatility factor

 

 

0.25

 

 

 

 

 

0.25

 

 

 

 

 

0.27

 

 

Expected option life in years

 

 

6.5

 

 

 

 

 

6.6

 

 

 

 

 

6.6

 

 

 

Risk-free interest rates are yields for zero coupon U.S. Treasury notes maturing approximately at the end of the expected option life. The estimated volatility factor is based on a combination of historical volatility, using stock prices over a period equal to the expected option life, and implied market volatility. The expected option life is based on historical exercise behavior.

 

Restricted Stock Units and Restricted Stock Awards: An RSU is an agreement to issue shares at the time of vesting with no associated exercise cost for the recipient. For each unit granted, the holder will receive one share of Paychex common stock at the time of vesting. Prior to fiscal 2023, the Company also granted RSAs to certain executives and outside directors. All shares underlying RSAs are restricted in that they are not transferable until they vest. If the recipient does not vest in the awards, due to leaving Paychex, all shares or units, and any dividends accrued thereon, when applicable, will be forfeited and returned to the Company.
Weighted-Average Assumptions The weighted-average assumptions used for valuation are as follows:

 

 

Year ended May 31,

 

2025

 

2024

 

2023

Risk-free interest rate

 

 

4.2

 

%

 

 

 

4.1

 

%

 

 

 

3.2

 

%

Dividend yield

 

 

3.2

 

%

 

 

 

3.1

 

%

 

 

 

2.6

 

%

Volatility factor

 

 

0.25

 

 

 

 

 

0.25

 

 

 

 

 

0.27

 

 

Expected option life in years

 

 

6.5

 

 

 

 

 

6.6

 

 

 

 

 

6.6

 

 
Time Based Restricted Stock Units and Restricted Stock Awards [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
RSU Activity

The following table summarizes time-based RSU and RSA activity for fiscal 2025:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

 

 

average

 

 

 

 

 

 

 

 

 

Total

 

 

grant-date

 

 

 

 

 

 

 

 

 

RSUs and

 

 

fair value

 

In millions, except per share amounts

 

RSUs

 

 

RSAs

 

 

RSAs

 

 

per share

 

Nonvested as of May 31, 2024

 

 

1.3

 

 

 

0.0

 

 

 

1.3

 

 

$

 

110.54

 

Granted (1)

 

 

0.8

 

 

 

0.1

 

 

 

0.9

 

 

$

 

116.67

 

Vested

 

 

(0.4

)

 

 

(0.0

)

 

 

(0.4

)

 

$

 

102.12

 

Forfeited

 

 

(0.2

)

 

 

—

 

 

 

(0.2

)

 

$

 

114.64

 

Nonvested as of May 31, 2025

 

 

1.5

 

 

 

0.1

 

 

 

1.6

 

 

$

 

123.30

 

 

 

(1)
Grant number includes Replacement Awards of 0.3 million RSUs and 0.1 million RSAs granted in connection with the Paycor acquisition.
Other Information Pertaining to RSUs

Other information pertaining to time-based RSUs and RSAs is as follows:

 

 

 

Year ended May 31,

 

In millions, except per share amounts

 

2025

 

 

2024

 

 

2023

 

Weighted-average grant-date fair value per share of RSUs/RSAs granted

 

$

 

116.67

 

 

$

 

114.95

 

 

$

 

127.75

 

Total fair value of RSUs/RSAs vested

 

$

 

54.7

 

 

$

 

60.1

 

 

$

 

63.7

 
Performance Based Restricted Stock Units and Restricted Stock Awards [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Restricted Stock Awards Activity

The following table summarizes performance-based RSU and RSA activity for fiscal 2025:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

 

 

average

 

 

 

 

 

 

 

 

 

Total

 

 

grant-date

 

 

 

 

 

 

 

 

 

RSUs and

 

 

fair value

 

In millions, except per share amounts

 

RSUs

 

 

RSAs

 

 

RSAs

 

 

per share

 

Nonvested as of May 31, 2024

 

 

0.3

 

 

 

0.1

 

 

 

0.4

 

 

$

 

109.87

 

Granted (1)

 

 

0.2

 

 

 

—

 

 

 

0.2

 

 

$

 

125.17

 

Vested

 

 

(0.1

)

 

 

(0.1

)

 

 

(0.2

)

 

$

 

107.73

 

Forfeited

 

 

(0.1

)

 

 

—

 

 

 

(0.1

)

 

$

 

113.37

 

Nonvested as of May 31, 2025

 

 

0.3

 

 

 

—

 

 

 

0.3

 

 

$

 

118.49

 

 

(1)
Granted number assumes achievement of performance goals at target. Actual number of shares to be earned may differ from this amount.
Other Information Pertaining to Restricted Stock Awards

Other information pertaining to performance-based RSUs and RSAs is as follows:

 

 

 

Year ended May 31,

 

In millions, except per share amounts

 

2025

 

 

2024

 

 

2023

 

Weighted-average grant-date fair value per share of RSUs/RSAs granted

 

$

 

125.17

 

 

$

 

114.23

 

 

$

 

108.31

 

Total fair value of RSUs/RSAs vested

 

$

 

14.6

 

 

$

 

0.4

 

 

$

 

13.1

 
Performance Based Restricted Stock Units [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Weighted-Average Assumptions The weighted-average assumptions used for valuation are as follows:

 

 

 

Year ended May 31,

 

 

 

 

 

 

 

 

 

2025

Risk-free interest rate

 

 

 

 

 

 

 

 

 

 

4.2

 

%

Dividend yield

 

 

 

 

 

 

 

 

 

 

3.3

 

%

Volatility factor

 

 

 

 

 

 

 

 

 

 

0.24

 

 

Measurement period in years

 

 

 

 

 

 

 

 

 

 

2.9