Paychex (PAYX) 10-K risk factor changes: FY2024 vs FY2023

Our future success will depend on our ability to: enhance our current solutions and introduce new solutions in order to keep pace with solutions offered by our competitors, including the successful utilization of [removed: artificial intelligence] [added: AI] and machine learning solutions; enhance capabilities and increase the performance of our internal systems, particularly our systems that meet our clients’ requirements; and adapt to technological advancements and changing industry standards.

The failure to continually develop enhancements and use of technologies such as robotics and other workflow automation tools, natural language processing, and [removed: artificial intelligence/machine] [added: AI/machine] learning may impact our ability to increase the efficiency of and reduce costs associated with operational risk management and compliance activities.

Our solutions rely on software and computing systems that can encounter development delays, and the underlying software may contain undetected errors, [removed: viruses] [added: bias, viruses,] or defects.

In addition, we rely on technologies and software supplied by third parties that may also contain undetected errors, [removed: viruses] [added: bias, viruses,] or defects that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The [removed: rapid speed] [added: increasing velocity] of disruptive innovations involving cyberattacks, security [removed: vulnerabilities] [added: vulnerabilities,] and Internet disruptions enabled by new and emerging [removed: technologies] [added: technologies, such as advancements in AI and machine learning,] may outpace our organization's ability to compete and/or manage the risk appropriately.

In addition, [removed: cybercriminals] [added: threat actors] may seek to engage in payment-related fraud or by more frequently attempting to gain access to our systems through phishing or other means.

Furthermore, security industry experts and government officials have warned about the risks of [removed: hackers] [added: threat actors] and cyberattacks targeting IT products and businesses.

Furthermore, if any of our solutions [removed: contains] [added: contain] a software vulnerability, the vulnerability may be exploited to obtain access to our data or our clients’ data.

While we have security systems and IT infrastructure in place designed to detect and protect against unauthorized access to such information, [added: including our Cyber Fusion Center,] if our security measures are breached, either internally or externally, our business could be substantially harmed, and we could incur significant liabilities.

Service providers include, but are not limited to, [removed: couriers used to deliver client payroll checks,] banks used to electronically transfer funds from clients to their employees, [removed: and] information technology vendors servicing cloud-based [removed: platforms.][added: platforms, and couriers used to deliver client payroll checks.]

If we experience a sudden or unexpected increase in claims activity, [added: or] our [added: reserves were insufficient for claims activity, our] costs could increase.

If a significant number of our clients are unable to cover payments we make on their [removed: behalf,] [added: behalf or we are not able to collect purchased receivable balances,] our results of operations [removed: will] [added: and financial condition could] be materially adversely impacted.

A change in regulations either decreasing the amount of taxes to be withheld or allowing less time to remit taxes to applicable tax or regulatory agencies could adversely impact [added: our] interest income.

The [removed: Agreement] [added: Agreement, and the credit agreements providing for our credit facilities,] also [removed: contains] [added: contain] financial covenants, which are reviewed for compliance on a quarterly basis, that require us not to exceed a maximum leverage ratio of 3.5:1.0 and a minimum interest coverage ratio of 2.0:1.0.

Our reputation, results of operations, or financial condition may be adversely impacted if we fail to comply with data privacy [added: and AI] laws and regulations.

Certain solutions are enhanced with the use of [removed: artificial intelligence] [added: AI] and machine learning.

Our solutions are subject to various complex government laws and regulations on the federal, state, and local levels, including those governing personal privacy, [added: AI and machine learning,] as well as ethical considerations.

[removed: In the U.S., we are subject to rules and regulations promulgated under the authority of the Federal Trade] Commission, the Health Insurance Portability and Accountability Act of 1996, the Family Medical Leave Act of 1993, the ACA, federal and state labor and employment laws, and state data breach notification and data privacy laws, such as the California Consumer Privacy Act, as amended.

[added: The regulatory] framework for [removed: privacy] [added: privacy, AI, and machine learning] issues [removed: is] [added: are] rapidly evolving and future enactment of more restrictive laws, rules, or regulations and/or future enforcement actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our business and noncompliance could result in regulatory penalties and significant legal liability.

Our intellectual property could be wrongfully acquired as a result of [added: the use of AI tools,] a [removed: cyberattack] [added: cyberattack,] or other wrongful conduct by employees or third-parties.

The damages sought against us in some of these [removed: litigation] [added: legal] proceedings could be substantial.

We and our clients are subject to the impacts related to inflationary pressure, [removed: the recent] [added: changes in interest rates, potential] instability of the banking environment, [added: climate change-based obligations,] and other macroeconomic and/or political events.

Further, [removed: rising] inflation may negatively impact our business, raise costs and reduce profitability.

Growth in [removed: services for] [added: customizable] funding [added: solutions offered to our clients by the purchasing of their accounts receivable through non-recourse arrangements, including funding] payrolls of our clients in the temporary staffing [removed: industry] [added: industry,] may be constricted if access to financing becomes limited.

If that were to occur, there could be a material adverse effect on our business and results of operations.

We establish workers’ compensation insurance reserves to provide for the estimated costs of paying claims up to per occurrence liability limits.

These reserves include estimates of certain expenses associated with processing and settling these claims.

Similarly, our ability to operate our Purchased Receivable reporting unit is dependent on the ability of our clients' clients to remit their accounts receivable to us.

Additionally, as federal, state, and international regulations become more complex, the risk that we may be unable to comply with those regulations increases, particularly in the event there are different or additional regulatory standards in different jurisdictions.

In the U.S., we are subject to rules and regulations promulgated under the authority of the Federal Trade

Additionally, there is uncertainty regarding intellectual property ownership and license rights of AI algorithms and content generated by AI and we could become subject to similar claims of infringement as we expand our use of AI.

The regulatory

[removed: We] [added: Within our HCM solutions, we] offer a comprehensive portfolio of HCM technology and HR advisory solutions that [removed: help] [added: allow] our clients [removed: navigate the evolving challenges of HR.][added: to meet their diverse HR and payroll needs.]

Paychex was incorporated in Delaware in [removed: 1979] [added: 1979, maintains a corporate headquarters in Rochester, New York,] and has a fiscal year that ends [added: on] May 31st.

[removed: In addition, the] [added: The] workplace is rapidly changing as employees increasingly become mobile, work remotely, and expect a user experience similar to consumer-oriented applications.

Paychex offers a [removed: wide] [added: full] range of [removed: solutions – including HR outsourcing,] [added: integrated] HCM [removed: technology, payroll processing, retirement and insurance] solutions [removed: – allowing] [added: from hire to retire for businesses and their employees that allows] us to customize our offering to the client's business, whether it is small or large, simple or complex.

We believe that we have the breadth of solutions to cover the spectrum of the employee life cycle, but we also allow [removed: integration] [added: integrations] with [removed: some of the most] popular HR, accounting, point-of-sale, and productivity [removed: applications on the market today.][added: applications.]

Streamlined workforce management that combines technology with [removed: flexible] [added: flexible, tech-enabled] support options;

Modern, mobile, and intuitive user experience [removed: and] [added: with] self-service capabilities;

Expertise in HR and payroll with our technology backed by [removed: over] [added: approximately] 250 compliance experts and [removed: approximately 700] [added: over 650] HR business [removed: professionals.][added: professionals;]

We market our solutions through [removed: our] [added: a combination of] direct and virtual sales forces [removed: which are] [added: and ecommerce solutions] supported by various [removed: corporate] [added: digital] lead generation and [added: multi-channel] marketing initiatives.

Over 50% of our revenues are [removed: gained] from [removed: our services beyond] [added: solutions other than] payroll processing.

[removed: Providing industry-leading, integrated technology.] [added: Leveraging technology innovations.] We continue to invest significantly in our proprietary, award-winning Paychex Flex® platform and mobility applications to maximize efficiency and functionality for our clients and their employees.

[removed: Our] [added: Expand our share of wallet. We offer a full-suite of integrated solutions incorporating a] unique combination of [removed: industry leading] [added: industry-leading] HR technology and HR advisory solutions [added: that] sets us apart in the industry.

Growing our client [removed: base.] [added: base and market share.] We [removed: believe we] operate in a [removed: significantly under-penetrated] [added: large] and growing market, with [removed: untapped] [added: significant] potential to expand within our current target markets.

Engaging in strategic acquisitions. We utilize acquisitions, when appropriate, as a means to expand our portfolio, enter new [removed: markets] [added: markets,] or increase our scale.

We will continue to evaluate and monitor potential acquisitions and target acquisitions that are [removed: in alignment] [added: aligned] with our overall strategy.

We closely monitor the evolving challenges and needs of small- and medium-sized businesses, and proactively aid our clients in navigating macroeconomic challenges, legislative changes, and other complexities they [added: may] face.

In the fiscal year ended May 31, [removed: 2023] [added: 2024] (“fiscal [removed: 2023”),] [added: 2024”),] top challenges for employers were macroeconomic pressures including inflation and interest rates, maintaining sufficient staffing levels, providing appropriate employee development, keeping technology current, and ensuring legal and regulatory compliance.

We provide a unique blend of innovative technology solutions, backed by our extensive compliance and HR expertise, that help customers more effectively hire, [removed: engage, train,] [added: develop,] and retain top talent in this challenging workforce environment.

We believe our Paychex mobile solutions add greater value and convenience for our clients and their employees by allowing them instant access on their mobile device, and [removed: we have experienced strong growth in] [added: usage of our] mobile and self-service [removed: usage over the past year.][added: capabilities continue to grow.]

HR and Compliance Expertise: Paychex [removed: supports] [added: augments] its HCM software solutions with 50+ years of experience.

We have [removed: approximately 700] [added: over 650] HR business professionals who are dedicated to our clients and have the experience and training to provide HR best practices and advice.

In addition, we have [removed: over] [added: approximately] 250 compliance professionals who are in real-time contact with tax agencies and regulators to understand upcoming or newly enacted laws and regulations and advocate for our clients’ interests.

The contributions of these compliance experts are intended to ensure that our HCM solutions are updated [added: in a] timely [added: fashion] to adhere to [added: applicable] regulations and to help our clients stay in compliance.

Our Paychex Flex Intelligence Engine allows individual preference on learning style - via written how-to-documents, tutorial-style video vignettes, or [removed: a] guided interactive [removed: tour.][added: tours.]

For fiscal [removed: 2023,] [added: 2024,] client retention was in the range of 82% to 83% of our beginning client base.

Our retirement services solutions offer many plan design options to meet the client’s requirements, as well as [added: various] investment options.

[removed: Our] Readychex solution provides a cost-effective solution that offers the benefit of convenient, one-step payroll account reconciliation for employers.

This information aids [removed: the government] [added: federal and state governments] in enforcing child support orders and minimizes fraudulent unemployment and workers’ compensation insurance claims.

Paychex HR Online offers powerful tools for managing employee personnel information, performance management, HR [removed: compliance] [added: compliance,] and reporting.

[added: Paychex Flex HR Connect] provides the ability to digitally submit questions, requests, and incident reports directly to HR through an easy-to-use workflow.

We offer the PEO Protection Plus Package, which helps business owners protect their bottom line from unforeseen costs, including cyberattacks and employee [removed: lawsuits, as exposure to these risks rapidly increased during the COVID-19 pandemic and other economic concerns.][added: lawsuits.]

Our virtual sales force manages inbound sales [removed: leads for the under twenty employee space,] [added: leads,] sales in areas without a direct sales force presence, and sales of various ancillary solutions.

[removed: Our internal database source] [added: Census data] indicates that in the U.S., there are [removed: approximately 8] [added: over 6] million employer firms in our target markets.

[removed: Our] [added: We believe our] solutions also compete with a variety of providers of HR services, such as retirement services companies, insurance companies, HR and benefits consulting firms, and national and regional PEOs.

[removed: We believe that our] [added: Our] leading-edge technology and mobility applications, combined with personalized support provided by industry professionals and our technology-enabled solution capabilities, [removed: distinguishes] [added: differentiates] us from our competitors.

We strive to foster a [removed: diverse, equitable,] [added: workplace that encompasses diversity, equity,] and [removed: inclusive (“DE&I”) workplace;] [added: inclusion (“DE&I”);] attract, retain, and develop talented employees; and keep them safe.

Our Employees: As of May 31, [removed: 2023,] [added: 2024,] we employed approximately [removed: 16,600] [added: 16,500] people, primarily in the U.S. and on a full-time basis.

As a result of our commitment to these principles, in [removed: 2023] [added: 2024] we were recognized by Ethisphere, a global leader in defining and advancing the standards of ethical business practices, as one of the World’s Most Ethical Companies.

We have achieved this recognition [removed: 15] [added: 16] times, and consecutively since 2012.

In addition, we were also recognized by Forbes as a Best Employer for Diversity for [removed: 2023.][added: 2024.]

We are an industry-leading human capital management (“HCM”) company delivering a full suite of technology and advisory services in human resources (“HR”), employee benefit solutions, insurance, and payroll processing.

As of May 31, 2024, we served greater than 745,000 small- to medium-sized businesses and their employees across the U.S. and parts of Europe.

Organizations are faced with continuous evolution in employer-employee relations including: an increasing number and complexity of federal, state, and local regulations; changing workforce dynamics; and challenges attracting and retaining talent.

Advanced data analytics and artificial intelligence (“AI”) capabilities powered by large data sets.

Our strategy is to be the digitally driven HR leader, serving as an essential partner to small-to-medium sized businesses by providing them with the technology and advisory services they need for HR, payroll, benefits, and insurance.

We continually invest in new demand generation, sales tools, go-to-market strategies along with channel partnerships, eCommerce, and digital marketing.

We intend to continue to increase penetration across our HCM software, HR outsourcing, retirement, insurance, and payments offerings.

We believe we are well positioned to capture the AI opportunity with large and growing data sets,

predictive analytics and AI models, and increased AI investments to improve efficiency, enhance the customer experience, and unlock new growth opportunities.

Our

HR solutions: Our HR solutions allow businesses to outsource and simplify their HR administration and compliance support.

These bundled services incorporate integrated HCM technology solutions and HR advisory services through both virtual and on-site availability of a professionally trained HR representative.

Clients can opt for different levels of HR outsourcing from our low-touch HR solutions to our full-service HR Pro package.

We also offer HR support to non-payroll clients through our HR Partner Plus solution.

Alterna Capital Solutions, LLC (“Alterna”), which was acquired in July 2023, offers funding to small businesses through the purchase of outstanding accounts receivable balances under non-recourse agreements.

Paychex ranked number four on the list, the fourth consecutive year in the top ten.

We are a leading provider of human capital management (“HCM”) solutions for human resources (“HR”), payroll, benefits, and insurance for small- to medium-sized businesses and their employees across the U.S. and parts of Europe.

We maintain our corporate headquarters in Rochester, New York, and serve clients throughout the U.S. and parts of Europe.

As of May 31, 2023, we served approximately 740,000 payroll and PEO clients.

Organizations are faced with complex and ever-changing requirements, including diverse and complicated federal, state, and local regulations across multiple jurisdictions.

Our comprehensive solutions allow our clients to manage their workforces effectively from hire to retire.

We provide leading-edge HCM technology, coupled with human expertise, to make complex HR, payroll, and benefits issues simple for our clients.

Our strategy is to be the leading provider of HCM solutions for HR, payroll, benefits, and insurance by being an essential partner to small- and medium-sized businesses.

Delivering superior client experiences. Our flexible and technology-enabled service model allows us to provide a personalized experience for our clients and their employees.

We continue to invest in artificial intelligence ("AI") and self-service capabilities to allow clients and their employees easy, intuitive, and flexible service how, when, and where they want it.

Expanding our leadership in HR. We have a comprehensive suite of value-added HR solutions for our clients and their employees.

Our solutions include industry leading HR technology with comprehensive HR outsourcing delivered by approximately 700 HR business professionals.

We have made substantial investments in new demand generation and sales tools and expanding certain areas of our sales force.

We continue to focus on sales productivity with the intent of increasing our market share across all our solutions.

Within our HCM solutions we offer a comprehensive portfolio of HCM technology and HR advisory solutions that allow our clients to meet their diverse HR and payroll needs.

HR solutions: Our ASO offers businesses a combined package that includes payroll, employer compliance, HR and employee benefits administration, risk management outsourcing, and both virtual and on-site availability of a professionally trained HR representative, among other services.

Paychex HR Essentials is a lower touch solution that provides support to our clients over the phone or online to help manage employee-related topics.

Paychex Flex HR Connect

Employee Retention Tax Credit Service, which proactively helps businesses retroactively identify tax credits available under the COVID-19 Cares Act, based on wages already paid, and file amended returns to claim the credit.

Paychex ranked number five on the prestigious list for the second year.

For the fiscal year ended May 31, [removed: 2023][added: 2024]

As of November 30, [removed: 2022,] [added: 2023,] the last business day of the most recently completed second fiscal quarter, shares held by non-affiliates of the registrant had an aggregate market value of [removed: $31,621,134,084] [added: $32,214,666,636] based on the closing price reported for such date on the NASDAQ Global Select Market.

As of June 30, [removed: 2023, 360,545,780] [added: 2024, 360,126,911] shares of the registrant’s common stock, $0.01 par value, were outstanding.

Portions of the registrant’s definitive proxy statement to be issued in connection with its Annual Meeting of Stockholders to be held on or about October [removed: 12, 2023,] [added: 10, 2024,] to the extent not set forth herein, are incorporated by reference into Part III, Items 10 through 14, inclusive.

For the fiscal year ended May 31, [removed: 2023][added: 2024]

| [Item 2](#properties) | [Properties](#properties) | [removed: 17] [added: 18] | |

| [Item 3](#legalproceedings) | [Legal Proceedings](#legalproceedings) | [removed: 17] [added: 18] | |

| [Item 4](#minesafetydisclosures) | [Mine Safety Disclosures](#minesafetydisclosures) | [removed: 17] [added: 18] | |

| [Item 5](#marketforcommonequity) | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity](#marketforcommonequity) [Securities](#marketforcommonequity) | [removed: 18] [added: 19] | |

| [Item 6](#selectedfinancialdata) | [\[Reserved\]](#selectedfinancialdata) | [removed: 19] [added: 21] | |

| [Item 7](#mda) | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#mda) | [removed: 20] [added: 22] | |

| [Item 7A](#marketrisk) | [Quantitative and Qualitative Disclosures About Market Risk](#marketrisk) | [removed: 33] [added: 35] | |

| [Item 8](#financialstatementsandsupplementarydata) | [Financial Statements and Supplementary Data](#financialstatementsandsupplementarydata) | [removed: 36] [added: 37] | |

| [Item 9](#changesanddisagreements) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#changesanddisagreements) | [removed: 70] [added: 72] | |

| [Item 9A](#controlsandprocedures) | [Controls and Procedures](#controlsandprocedures) | [removed: 70] [added: 72] | |

| [Item 9B](#otherinformation) | [Other Information](#otherinformation) | [removed: 70] [added: 72] | |

| [Item 9C](#disclosureregardingforeignjurisdictions) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#disclosureregardingforeignjurisdictions) | [removed: 70] [added: 72] | |

| [Item 10](#directorsexecutiveofficers) | [Directors, Executive Officers and Corporate Governance](#directorsexecutiveofficers) | [removed: 71] [added: 73] | |

| [Item 11](#executivecompensation) | [Executive Compensation](#executivecompensation) | [removed: 72] [added: 74] | |

| [Item 12](#securityownership) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#securityownership) | [removed: 72] [added: 75] | |

| [Item 13](#certainrelationships) | [Certain Relationships and Related Transactions, and Director Independence](#certainrelationships) | [removed: 73] [added: 75] | |

| [Item 14](#principalaccountingfees) | [Principal Accounting Fees and Services](#principalaccountingfees) | [removed: 73] [added: 75] | |

| [Item 15](#exhibitsandfinancialstatementschedules) | [Exhibits and Financial Statement Schedules](#exhibitsandfinancialstatementschedules) | [removed: 74] [added: 76] | |

| [Item 16](#item_16) | [Form 10-K Summary](#item_16) | [removed: 76] [added: 78] | |

| | [Signatures](#signatures) | [removed: 77] [added: 79] | |

Forward-looking statements can be identified by such words and phrases as “expect,” “estimate,” “intend,” “intent,” “outlook,” “will,” “would,” “projections,” “strategy,” “mission,” “anticipate,” “believe,” “could,” “may,” “target,” “potential,” “purpose,” “design,” [removed: and] [added: “might,”and] other similar words or phrases.

changes in governmental [removed: regulations] [added: regulations, laws,] and policies;

our compliance with data privacy [added: and artificial intelligence] laws and regulations;

volatility in the political and economic environment, including [removed: rising inflation;][added: inflation and interest rate changes;]

Our investor presentation regarding the financial results for the fiscal year ended May 31, [removed: 2023] [added: 2024] is available and accessible on our Paychex Investor Relations portal at https://investor.paychex.com.

| [Item 1C](#cybersecurity) | [Cybersecurity](#cybersecurity) | 17 | |

None.

[Table of Contents](#tableofcontents)

Item 2. Properties

We owned and leased the following properties as of May 31, 2023:

| | | | | |

| --- | --- | --- | --- | --- |

| | | Square feet | | |

| Owned facilities: | | | | |

| Rochester, New York | | | 832,000 | |

| Other U.S. locations | | | 30,000 | |

| Total owned facilities | | | 862,000 | |

| Leased facilities: | | | | |

| Rochester, New York | | | 90,000 | |

| Other U.S. locations | | | 957,000 | |

| International locations | | | 144,000 | |

| Total leased facilities | | | 1,191,000 | |

Our facilities in Rochester, New York house various distribution, processing, and technology functions, certain ancillary functions, a telemarketing unit, and other back-office functions.

Facilities outside of Rochester, New York are in various locations throughout the U.S. and house our service centers, fulfillment centers and sales functions.

Our international locations primarily house our European operations in Denmark and Germany and a location in India houses information technology, service, and sales support functions.

Item 3. Legal Proceedings

We are subject to various claims and legal matters that arise in the normal course of our business.

Refer to Note P of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K for further discussion of our legal proceedings, if any.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock trades on the NASDAQ Global Select Market under the symbol “PAYX”.

Dividends have historically been paid on our common stock in August, November, February, and May.

The level and continuation of future dividends are dependent on our future earnings and cash flows and are subject to the discretion of our Board of Directors (the “Board”).

As of June 30, 2023, there were 8,698 holders of record of our common stock, which includes registered holders and participants in the Paychex, Inc. Dividend Reinvestment and Stock Purchase Plan.

There were also 3,317 participants in the Paychex, Inc. Qualified Employee Stock Purchase Plan and 4,032 participants in the Paychex, Inc. Employee Stock Ownership Plan.

In July 2021, our Board approved a program to repurchase up to $400.0 million of our common stock with authorization that expires on January 31, 2024.

The purpose of this program is to manage common stock dilution.

There were no shares repurchased during fiscal 2023 and $327.1 million remains available for share repurchases in total under the program.

The following graph shows a five-year comparison of the total cumulative returns of investing $100 on May 31, 2018, in Paychex common stock, the S&P 500 Index, and a Peer Group Index.

All comparisons of stock price performance shown assume reinvestment of dividends.

We are a participant in the S&P 500 Index, a market group of companies with a larger than average market capitalization.

Our Peer Group is a group of companies with comparable revenue and net income, who are in a comparable industry, or who are direct competitors of Paychex (as detailed below).


| | | | | | | | | | | | | | | | | | | | | | | | | |

Risk Management and Strategy

We are committed to protecting the confidentiality, integrity, and availability of our systems and information.

Our security program is intended to assess, identify, and manage risks from cybersecurity threats, and is aligned with the National Institute of Standards and Technology Version 2.0 Cybersecurity Framework (“NIST CSF”).

The NIST CSF provides a flexible model for identifying and managing cybersecurity risks.

Our security infrastructure uses a layered controls approach, incorporating various capabilities guided by the NIST CSF and other industry standards and best practices.

We routinely invest in our security processes and capabilities, including those related to our risk management and assessment programs, vulnerability and intrusion detection, incident response plans, and other advanced detection, prevention, and protection capabilities.

We conduct regular assessments of cybersecurity risks to identify threats to us and potential vulnerabilities that could negatively affect our business operations if exploited.

We track cybersecurity risks within our enterprise risk management system with cybersecurity threats considered to be among the top-priority risks to us.

In addition, our Enterprise Security Organization (the “ESO”) conducts technical risk assessments, and, in some instances, we engage with third-party experts to assist with or perform technical risk assessments.

The results of these risk assessments are reported to management.

Our processes require escalation of significant cybersecurity risks to management and Paychex’s Audit Committee derived from the Board of Directors (the “Board”).

The ESO is led by our Chief Information Security Officer (“CISO”) and seeks to maintain a consistent, resilient, and secure infrastructure by partnering with resources across the Company.

The ESO implements numerous cybersecurity processes and capabilities, which include but are not limited to: assessing risk associated with significant infrastructure or operational changes and the introduction of new technologies; administering our third-party service provider risk management program; managing secure software development and change management; managing access management and logical access controls, identifying security vulnerabilities through automated scanning technologies; performing penetration testing and due diligence assessments; and protecting the confidentiality, integrity, and availability of the Company’s data in transit.

The ESO includes the activities of the Paychex Cyber Fusion Center, which provides 24x7x365 cybersecurity monitoring and incident response.

We maintain incident response plans which outline the escalation, investigation, reporting, and overall response procedures depending on the type and severity of incidents.

As part of our security program, we require all employees to take information security awareness training upon hire and annually thereafter.

We provide additional ongoing training to our employees about security best practices and awareness, including internal phishing simulations.

We maintain a program designed to assess and manage the cybersecurity-related risk associated with third-party service providers that we rely on as part of providing services to our clients.

This program incorporates a risk-based approach based on service criticality and type of information.

Vendor risk assessments are performed and documented within our vendor management system.

As part of the vendor risk assessment, we conduct an information security program evaluation of critical third-party providers before engagement and, based on our assessment of the vendor’s risk, contractually require certain third parties we engage to implement security programs commensurate with their risk profile.

As of May 31, 2024, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, and financial condition.

We continue to invest in cyber-resilience and cyber-threat response preparedness as we anticipate ongoing risks from cybersecurity threats.

Refer to the “Risk Factors” section contained in Item 1A of this Form 10-K for more information on our cybersecurity-related risks.

Governance

Cybersecurity risks are overseen by the Audit Committee of our Board.

Annually, the Audit Committee reviews an assessment of our risk management processes with the Board.

The Audit Committee is responsible for reviewing significant cybersecurity risk exposures and the steps management has taken to monitor, control, and report such exposures.

The Audit Committee receives quarterly updates from our CISO regarding our cybersecurity risk management program.

These updates include a status of current capabilities, ongoing initiatives, and the evolving cybersecurity threat landscape.

Our management is responsible for implementing our security program, which is overseen by our Security Governance Council (the “SGC”) that regularly reports to our CEO and Audit Committee.

The SGC is chaired by our CISO and is comprised of senior leaders and key personnel throughout the Company to support cross-functional representation.

The members of the SGC are comprised of our executives and managers who understand our business operations, including but not limited to individuals

[Table of Contents](#tableofcontents)

from the following departments: Operations, Information Technology, Finance, Internal Audit, Legal, Human Resources and Organizational Development, and Risk Management.

The SGC meets on a quarterly basis with the mission to develop, coordinate, and sustain the organization’s enterprise security program; coordinate and respond to security risks and incidents; and develop, implement, and maintain the organization’s enterprise security strategy in alignment with, or in support of, business goals and objectives.

The recommendations of the SGC are considered when updating the information security policies, procedures, and standards at Paychex.

Our CISO has over two decades of experience in various roles involving information security: developing and implementing cybersecurity programs to protect the confidentiality, integrity, and availability of information systems and data.

Our CISO has earned relevant degrees and holds several information security certifications, including the Certified Chief Information Security Officer certification.

Prior to joining Paychex in September 2019, he served as VP and CISO at a publicly traded company in the HCM industry.

The following table shows the executive officers of the Company as of May 31, [removed: 2023,] [added: 2024,] and information regarding their positions and business experience.

| John B. Gibson | | [removed: 57] [added: 58] | | Mr. Gibson has served as President and CEO of the Company since October 2022. Prior to serving as President and CEO, Mr. Gibson was promoted to the role of President and Chief Operating Officer in December 2021, leading the daily operations of the company, including sales, service, marketing, and management. Mr. Gibson joined Paychex as Senior Vice President of Service in May 2013, bringing with him more than 20 years of experience in HR solutions, technology, and business services. Prior to Paychex, Mr. Gibson served in senior executive positions at HR outsourcing and technology companies, including Ameritech (now AT&T) and Convergys, where he served as president of the HR management division providing comprehensive global HR solutions to clients in 68 countries. |

| Mark A. Bottini | | [removed: 62] [added: 63] | | Mr. Bottini joined Paychex in October 2011 as Senior Vice President of [removed: Sales.] [added: Sales and is a member of the Executive Committee.] From 2008 to 2011, Mr. Bottini served as Vice President of Sales for Ricoh, North America, a provider of advanced office technology and innovative document imaging products, services, and software. He assumed his most recent position with Ricoh when Ricoh acquired IKON Office Solutions, Inc. During his nearly 20 years with IKON, Mr. Bottini served in a variety of sales leadership and field management roles. |

| Michael E. Gioja | | [removed: 65] [added: 66] | | Mr. Gioja was named Senior Vice President of Information Technology and Product Development in July [removed: 2011.] [added: 2011 and is a member of the Executive Committee.] Mr. Gioja has been with the Company since November 2008 and previously served as Senior Vice President of Information, Technology, Product Management, and Development and Vice President of Product Management. Previously, he was Chief Information Officer and Executive Vice President of Products and Services for Workstream, Inc., a provider of on-demand enterprise talent management solutions and services. |

| Elizabeth Roaldsen | | [removed: 51] [added: 52] | | Ms. Roaldsen joined the Company in May 2023 as Senior Vice President of Operations and Customer [removed: Experience.] [added: Experience and is a member of the Executive Committee.] Prior to joining the Company, she served as Managing Director, head of enterprise business services, and wholesale banking at HSBC from 2021 through 2023. Previously, Ms. Roaldsen served in various roles of increasing responsibility at State Street Corporation from 2010 to 2021, most recently as Executive Vice President Head of Global Operations and Asset Servicing. |

| Robert L. Schrader | | [removed: 51] [added: 52] | | Mr. Schrader [removed: was named Vice President, Finance] [added: has served as Chief Financial Officer since October 2023] and [removed: Investor Relations in January 2023.] [added: is a member of the Executive Committee.] He joined the Company in December 2014 and previously held roles as Vice [added: President, Finance and Investor Relations, Vice] President and Controller, Senior Director of Financial Planning and Analysis and Director of Internal Audit. Prior to joining Paychex, he served as a Chief Financial Officer for Unither Manufacturing, LLC, and held various senior management positions during his ten-year career at Bausch & Lomb, including Vice President of Finance and Controller of Global Quality and Operations. Previously in his career, he held leadership roles with a public accounting firm. |

The additional information required by this item is set forth in the Company’s Definitive Proxy Statement for its [removed: 2023] [added: 2024] Annual Meeting of Stockholders, anticipated to be held on or about October [removed: 12, 2023,] [added: 10, 2024,] in the sections “PROPOSAL 1: ELECTION OF DIRECTORS FOR A ONE-YEAR TERM,” “CORPORATE GOVERNANCE,” [added: “DELINQUENT SECTION 16(A) REPORTS”] and “CODE OF BUSINESS ETHICS AND CONDUCT” and is incorporated herein by reference.

The information required by this item is set forth in the Company’s Definitive Proxy Statement for its [removed: 2023] [added: 2024] Annual Meeting of Stockholders, anticipated to be held on or about October [removed: 12, 2023,] [added: 10, 2024,] in the sections “COMPENSATION DISCUSSION AND ANALYSIS,” “NAMED EXECUTIVE OFFICER COMPENSATION,” “DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED MAY 31, [removed: 2023,”] [added: 2024,”] “THE COMPENSATION AND LEADERSHIP COMMITTEE REPORT” and the sub-heading “Compensation and Leadership Committee Interlocks and Insider Participation” within the section “CORPORATE GOVERNANCE” and is incorporated herein by reference.

The information required by this item is set forth below and in the Company’s Definitive Proxy Statement for its [removed: 2023] [added: 2024] Annual Meeting of Stockholders, anticipated to be held on or about October [removed: 12, 2023,] [added: 10, 2024,] under the section “BENEFICIAL OWNERSHIP OF PAYCHEX COMMON STOCK,” and is incorporated herein by reference.

The Company maintains [added: an] equity compensation [removed: plans] [added: plan] in the form of [added: a] stock incentive [removed: plans.][added: plan.]

Under the Paychex, Inc. 2002 Stock Incentive Plan, as last amended and restated effective October 15, 2020 (the “2002 Plan”), non-qualified or incentive stock options, restricted stock, restricted stock units, performance shares, and performance stock options have been awarded to [added: employees and the Board.]

Refer to Note [removed: E] [added: F] of the Notes to Consolidated Financial Statements, contained in Item 8 of this Form 10-K, for more information on the Company’s stock incentive [removed: plans.][added: plan.]

The following table details information on securities authorized for issuance upon the exercise of outstanding options under the Company’s equity compensation [removed: plans] [added: plan] as of May 31, [removed: 2023:][added: 2024:]

The information required by this item is set forth in the Company’s Definitive Proxy Statement for its [removed: 2023] [added: 2024] Annual Meeting of Stockholders, anticipated to be held on or about October [removed: 12, 2023,] [added: 10, 2024,] under the sub-headings “Board Meetings and Committees,” “Policy on Transactions with Related Persons,” and “Transactions with Related Persons” within the section “CORPORATE GOVERNANCE,” and is incorporated herein by reference.

The information required by this item is set forth in the Company’s Definitive Proxy Statement for its [removed: 2023] [added: 2024] Annual Meeting of Stockholders, anticipated to be held on or about October [removed: 12, 2023,] [added: 10, 2024,] under the section “PROPOSAL [removed: 4:] [added: 3:] RATIFICATION OF THE SELECTION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM,” and is incorporated herein by reference.

| 1. | | | Financial Statements See Financial Statements and Supplementary Data Table of Contents at page [removed: 36.] [added: 37.] | | |

| | | | Financial statement schedules required to be filed by Item 8 of this Form 10-K include Schedule II — Valuation and Qualifying Accounts. See Financial Statements and Supplementary Data Table of Contents at page [removed: 36.] [added: 37.] All other schedules are omitted as the required matter is not present, the amounts are not significant, or the information is shown in the financial statements or the notes thereto. | | |

| [added: #] | | | [removed: (2.1)] [added: (10.38)] | | [removed: [Stock Purchase Agreement by and among Oasis Outsourcing Acquisition Corporation, Oasis Outsourcing Group Holdings, L.P.,] [added: [Agreement between Paychex, Inc.] and [removed: Paychex North America Inc.,] [added: Efrain Rivera, dated as of December 15, 2023,] incorporated herein by reference [removed: from] [added: to] Exhibit [removed: 2.1] [added: 10.1] to the Company’s Form 10-Q filed with the Commission on December 21, [removed: 2018](https://www.sec.gov/Archives/edgar/data/723531/000072353118000048/payx-20181130xex2_1.htm).] [added: 2023.](https://www.sec.gov/Archives/edgar/data/723531/000095017023072195/payx-ex10_1.htm)] |

| | | | [removed: (10.20)] [added: (10.21)] | | [removed: [2017] [added: [2019] Credit Agreement, dated as of [removed: September 17, 2021,] [added: July 31, 2019,] by and among Paychex of New York, the Company, the lender parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and others, as amended by Amendment No. 1 as of [removed: November 21, 2018, Amendment No. 2 as of July 31, 2019,] [added: September 17, 2021,] and Amendment No. 3 as of [removed: September 17, 2021,] [added: April 12, 2024,] incorporated herein by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Commission on [removed: September 20, 2021.](https://www.sec.gov/Archives/edgar/data/0000723531/000072353121000038/payx-20210917xex10_1.htm)] [added: April 16, 2024](https://www.sec.gov/Archives/edgar/data/723531/000095017024044821/payx-ex10_1.htm)] |

| | | | [removed: (10.21)] [added: (10.20)] | | [removed: [2019] [added: [2017] Credit Agreement, dated as of [removed: July 31, 2019,] [added: August 17, 2017,] by and among Paychex of New York, the Company, the lender parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and others, as amended by Amendment No. 1 as of [added: November 21, 2018, Amendment No. 2 as of July 31, 2019, Amendment No. 3 as of] September 17, 2021, [added: and Amendment No. 5 as of April 12, 2024,] incorporated herein by reference to Exhibit 10.2 to the Company's Form 8-K filed with the Commission on [removed: September 20, 2021.](https://www.sec.gov/Archives/edgar/data/0000723531/000072353121000038/payx-20210917xex10_2.htm)] [added: April 16, 2024.](https://www.sec.gov/Archives/edgar/data/723531/000095017024044821/payx-ex10_2.htm)] |

| # | | | (10.29) | | [Paychex, Inc. 2002 Stock Incentive Plan (as amended and restated effective October 15, 2020) Amended Form of Restricted Stock Unit Award Agreement (Senior Management), [removed: incorporated](https://www.sec.gov/Archives/edgar/data/723531/000095017022019048/payx-ex10_3.htm)] [added: incorporated herein by reference to Exhibit 10.3 to the Company's Form 10-Q filed with the Commission on September 29, 2022.](https://www.sec.gov/Archives/edgar/data/723531/000095017022019048/payx-ex10_3.htm)] |

| [added: #] | | | [added: (10.36)] | | [removed: [herein] [added: [Paychex, Inc. 2002 Stock Incentive Plan (as amended and restated effective October 15, 2020) Form of Performance Restricted Stock Unit Award Agreement, incorporated herein] by reference to Exhibit [removed: 10.3] [added: 10.1] to the [removed: Company's] [added: Company’s] Form 10-Q filed with the Commission on September [removed: 29, 2022.](https://www.sec.gov/Archives/edgar/data/723531/000095017022019048/payx-ex10_3.htm)] [added: 28, 2023.](https://www.sec.gov/Archives/edgar/data/723531/000095017023050438/payx-ex10_1.htm)] |

| * | | | (21.1) | | [Subsidiaries of the [removed: Registrant.](https://www.sec.gov/Archives/edgar/data/723531/000095017023032988/payx-ex21_1.htm)] [added: Registrant.](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex21_1.htm)] |

| * | | | (23.1) | | [Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers [removed: LLP.](https://www.sec.gov/Archives/edgar/data/723531/000095017023032988/payx-ex23_1.htm)] [added: LLP.](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex23_1.htm)] |

| * | | | (24.1) | | [Power of [removed: Attorney.](https://www.sec.gov/Archives/edgar/data/723531/000095017023032988/payx-ex24_1.htm)] [added: Attorney.](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex24_1.htm)] |

| * | | | (31.1) | | [Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017023032988/payx-ex31_1.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex31_1.htm)] |

| * | | | (31.2) | | [Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017023032988/payx-ex31_2.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex31_2.htm)] |

| * | | | (32.1) | | [Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017023032988/payx-ex32_1.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex32_1.htm)] |

| * | | | (32.2) | | [Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017023032988/payx-ex32_2.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex32_2.htm)] |

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on July [removed: 14, 2023.][added: 11, 2024.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on July [removed: 14, 2023.][added: 11, 2024.]

| [removed: Efrain Rivera,] [added: Robert L. Schrader,] Senior Vice President and Chief Financial Officer | |

| Mason Argiropoulos | | 46 | | Mr. Argiropoulos joined the Company as Chief Human Resources Officer in April 2024 and is a member of the Executive Committee. From 2018 to 2024, Mr. Argiropoulos served as Chief Human Resources Officer for UnitedLex, a global legal services provider. Prior to his time at UnitedLex, Mr. Argiropoulos held various senior management positions at iQor, a global business process outsourcing firm, including serving as Chief Human Resources Officer from 2012 to 2018. |

| Sipi Bhandari | | 53 | | Ms. Bhandari joined the Company as Chief Legal Officer, Chief Ethics Officer and Secretary in May 2024 and is a member of the Executive Committee. Before joining the Company, Ms. Bhandari served as SVP, Deputy General Counsel and Corporate Secretary at AIG from 2022 to 2024. Prior to joining AIG, Ms. Bhandari held a number of senior leadership roles at FreddieMac from 2020 to 2022, Deutsche Bank from 2007 to 2020, and Viacom (now Paramount Global). Previously, Ms. Bhandari was an associate at Davis Polk & Wardwell after beginning her legal career as a law clerk for the Hon. John M. Duhé, Jr. of the Fifth Circuit Court of Appeals. |

| Beaumont Vance | | 55 | | Mr. Vance joined the Company as Senior Vice President of Data, Analytics, and AI in March 2024 and is a member of the Executive Committee. From 2021 to 2024, Mr. Vance served as Managing Director of AI and Investments at WestCap Management, a private equity firm. Prior to WestCap, he spent time at TD Ameritrade from 2017 to 2021, Fidelity, Sun Microsystems, and Vicorp Restaurants primarily in Data Science, Risk Management, and AI leadership roles. |

| Christopher Simmons | | 55 | | Mr. Simmons was named Vice President, Controller and Treasurer in October 2023. Mr. Simmons joined the Company in 2014 and has held various leadership roles within the corporate finance department, most recently as Vice President and Treasurer. Prior to joining the Company, Mr. Simmons held various senior management positions, including Global Vice President of Corporate Taxes and Director of External Tax Reporting at Bausch & Lomb. Before joining Bausch & Lomb, he held leadership roles with the tax consulting practice of a global public accounting firm. |

Insider Trading Policy: The Company has adopted an insider trading policy, for all employees, designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the Company.

Insiders , who include our directors, executive officers, and certain employees whose duties involve access to material non-public information, may buy and sell the Company’s stock within an open “window period”, which begins on the second business day after earnings are announced and ends the last day of the last month of each quarter.

Insiders are prohibited from purchasing or selling the Company’s stock if they are in possession of material non-public information, even if it is within the open “window period.” The Company reserves the right to impose an “event-specific blackout period” if it deems insiders to have “insider information,” regardless if it is an open “window period” and it may do so with little or no notice.

Employees subject to the “event-specific black-out period” will be notified by the Chief Financial Officer or Chief Legal Officer.

| Equity compensation plan approved by security holders | | | | 3.3 | | | $ | | 78.04 | | | | | 13.5 | |

Refer to Note F of the Notes to Consolidated Financial Statements, contained in Item 8 of this Form 10-K, for more information on the Company’s stock incentive plan.

| | | | | | |

| # | | | (10.37) | | [Paychex, Inc. 2002 Stock Incentive Plan (as amended and restated effective October 15, 2020) Form of Restricted Stock Unit Award Agreement pursuant to 2021 Officer Performance Share Award (Director), incorporated herein by reference to Exhibit 10.2 to the Company’s Form 10-Q filed with the Commission on September 28, 2023.](https://www.sec.gov/Archives/edgar/data/723531/000095017023050438/payx-ex10_2.htm) |

| * | | | (19.1) | | [Insider Trading Policy](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex19_1.htm) |

| * | | | (97.1) | | [Policy For The Recovery Of Erroneously Awarded Compensation](https://www.sec.gov/Archives/edgar/data/723531/000095017024082958/payx-ex97_1.htm) |

| /s/ Christopher Simmons | |

| Christopher Simmons, Vice President, Controller and Treasurer | |

| Efrain Rivera | | 66 | | Mr. Rivera joined Paychex in June 2011 and now serves as Senior Vice President and Chief Financial Officer. Prior to joining the Company, Mr. Rivera served as Vice President of Finance and Administration for Houghton College from 2009 to 2011. He previously served for over twenty years with Bausch & Lomb Incorporated, a world leader in the development, manufacture, and marketing of eye health products, most recently as Corporate Vice President and Chief Financial Officer from 2007 to 2009. |

| Karen E. Saunders McClendon​ | | 57 | | Ms. Saunders McClendon joined the Company in April 2021 as Vice President and Chief Human Resources Officer. Prior to joining the Company, she served as Vice President of Human Resources for Comcast Cable from 2013 to 2021. From 2009 to 2013, she served as Vice President of Human Resources for Aramark. |

| Stephanie L. Schaeffer | | 53 | | Ms. Schaeffer was named Vice President and Chief Legal Officer in January 2006. In 2011, she was appointed Corporate Secretary. She joined Paychex in 2000 as Corporate Counsel and was promoted to Director of Legal Affairs in 2004. In her current role, she is responsible for overseeing all the Company's legal functions, including litigation, corporate governance, and regulatory matters. |

employees and the Board.

| Equity compensation plans approved by security holders | | | | 3.8 | | | $ | | 72.52 | | | | | 14.2 | |

| * | | | 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |

| * | | | 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. |

| * | | | 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |

| * | | | 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |

| /s/ Efrain Rivera | |

| Robert L. Schrader, Vice President, Finance and Investor Relations | |