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Share-Based Compensation | 12 Months Ended
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Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Compensation | Share-Based Compensation We provide share-based compensation to our employees, officers and non-employee directors, including stock options, an employee stock purchase plan (“ESPP”), restricted stock units (“RSUs”), performance-based restricted stock units (“PeRSUs”) and total shareholder return units (“TSRUs”) (collectively, “share-based awards”). Most of our share-based awards are granted in the first quarter of each fiscal year. Compensation expense for the share-based awards is recognized for the portion of awards ultimately expected to vest. We estimate the number of share-based awards that will ultimately vest primarily based on historical experience. The estimated forfeiture rate established upon grant is re-assessed throughout the requisite service period and is adjusted when actual forfeitures occur. The actual forfeitures in future reporting periods could be higher or lower than current estimates. The compensation expense recognized has been classified in the consolidated statements of operations or capitalized in the consolidated balance sheets in the same manner as cash compensation paid to our employees. There were no material share-based compensation expenses capitalized as part of the cost of an asset in 2018, 2017 and 2016. Impact on Net Income The components of share-based compensation expense and related tax benefits are as follows:
| Years Ended March 31,
(In millions) | 2018 |  | 2017 |  | 2016
Restricted stock unit awards (1) | $ | 46 |  |  | $ | 79 |  |  | $ | 88 |
Stock options | 14 |  |  | 24 |  |  | 22 |
Employee stock purchase plan | 9 |  |  | 12 |  |  | 13 |
Share-based compensation expense (2) | 69 |  |  | 115 |  |  | 123 |
Tax benefit for share-based compensation expense (3) | (28 | ) |  | (92 | ) |  | (41 | )
Share-based compensation expense, net of tax | $ | 41 |  |  | $ | 23 |  |  | $ | 82 |
(1) | Includes compensation expense recognized for RSUs, PeRSUs and TSRUs. Our TSRUs were awarded beginning in 2015.
(2) | 2016 includes non-cash credits of $14 million representing the reversal of previously recognized share-based compensation expense, which was recorded due to employee terminations associated with the March 2016 Cost Alignment Plan.
(3) | Income tax benefit is computed using the tax rates of applicable tax jurisdictions. Additionally, a portion of pre-tax compensation expense is not tax-deductible. Income tax expense for 2018 and 2017 included discrete income tax benefits of $8 million and $54 million related to the adoption of the amended accounting guidance on share-based compensation.
Stock Plans In July 2013, our stockholders approved the 2013 Stock Plan to replace the 2005 Stock Plan. These stock plans provide our employees, officers and non-employee directors the opportunity to receive equity-based, long-term incentives in the form of stock options, restricted stock, RSUs, PeRSUs, TSRUs and other share-based awards. The 2013 Stock Plan reserves 30 million shares plus the remaining number of shares reserved but unused under the 2005 Stock Plan. As of March 31, 2018, 28 million shares remain available for future grant under the 2013 Stock Plan. Stock Options Stock options are granted with an exercise price at no less than the fair market value and those options granted under the stock plans generally have a contractual term of seven years and follow a four year vesting schedule. Compensation expense for stock options is recognized on a straight-line basis over the requisite service period and is based on the grant-date fair value for the portion of the awards that is ultimately expected to vest. We use the Black-Scholes options-pricing model to estimate the fair value of our stock options. Once the fair value of an employee stock option is determined, current accounting practices do not permit it to be changed, even if the estimates used are different from actual. The options-pricing model requires the use of various estimates and assumptions as follows:
• | Expected stock price volatility is based on a combination of historical volatility of our common stock and implied market volatility. We believe that this market-based input provides a reasonable estimate of our future stock price movements and is consistent with employee stock option valuation considerations.
• | Expected dividend yield is based on historical experience and investors’ current expectations.
• | The risk-free interest rate for periods within the expected life of the option is based on the constant maturity U.S. Treasury rate in effect at the time of grant.
• | Expected life of the options is based primarily on historical employee stock option exercises and other behavior data and reflects the impact of changes in contractual life of current option grants compared to our historical grants.
Weighted-average assumptions used to estimate the fair value of employee stock options were as follows:
| Years Ended March 31,
| 2018 |  | 2017 |  | 2016
Expected stock price volatility | 25% |  | 21% |  | 21%
Expected dividend yield | 0.8% |  | 0.7% |  | 0.4%
Risk-free interest rate | 1.7% |  | 1.1% |  | 1.4%
Expected life (in years) | 4.5 |  | 4 |  | 4
The following is a summary of stock options outstanding at March 31, 2018:
|  | Options Outstanding |  | Options Exercisable
Range of Exercise Prices |  | Number of Options Outstanding at Year End (In millions) |  | Weighted- Average Remaining Contractual Life (Years) |  | Weighted- Average Exercise Price |  | Number of Options Exercisable at Year End (In millions) |  | Weighted- Average Exercise Price
$ | 76.55 |  | – | $ | 158.24 |  |  | 1 |  | 2 |  | $ | 108.17 |  |  | 1 |  | $ | 106.05 |
158.25 |  | – | 239.93 |  |  | 2 |  | 4 |  | 190.18 |  |  | 1 |  | 199.13 |
|  |  |  | 3 |  |  |  |  |  | 2 |  |
The following table summarizes stock option activity during 2018:
(In millions, except per share data) | Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (2)
Outstanding, March 31, 2017 | 4 |  | $ | 145.76 |  |  | 4 |  | $ | 97 |
Granted | 1 |  | 157.45 |  |  |  |  |
Cancelled | (1) |  | 180.79 |  |  |  |  |
Exercised | (1) |  | 86.95 |  |  |  |  |
Outstanding, March 31, 2018 | 3 |  | $ | 161.27 |  |  | 4 |  | $ | 36 |
Vested and expected to vest (1) | 3 |  | $ | 160.28 |  |  | 4 |  | $ | 35 |
Vested and exercisable, March 31, 2018 | 2 |  | 147.76 |  |  | 2 |  | 35 |
(1) | The number of options expected to vest takes into account an estimate of expected forfeitures.
(2) | The intrinsic value is calculated as the difference between the period-end market price of the Company’s common stock and the exercise price of “in-the-money” options.
The following table provides data related to stock option activity:
| Years Ended March 31,
(In millions, except per share data) | 2018 |  | 2017 |  | 2016
Weighted-average grant date fair value per stock option | $ | 34.24 |  |  | $ | 32.19 |  |  | $ | 44.04 |
Aggregate intrinsic value on exercise | $ | 60 |  |  | $ | 97 |  |  | $ | 107 |
Cash received upon exercise | $ | 77 |  |  | $ | 54 |  |  | $ | 47 |
Tax benefits realized related to exercise | $ | 22 |  |  | $ | 38 |  |  | $ | 42 |
Total fair value of stock options vested | $ | 20 |  |  | $ | 18 |  |  | $ | 18 |
Total compensation cost, net of estimated forfeitures, related to unvested stock options not yet recognized, pre-tax | $ | 15 |  |  | $ | 21 |  |  | $ | 20 |
Weighted-average period in years over which stock option compensation cost is expected to be recognized | 2 |  |  | 2 |  |  | 2 |
Restricted Stock Unit Awards RSUs, which entitle the holder to receive at the end of a vesting term a specified number of shares of the Company’s common stock, are accounted for at fair value at the date of grant. Total compensation expense for RSUs under our stock plans is determined by the product of the number of shares that are expected to vest and the grant date market price of the Company’s common stock. The Compensation Committee determines the vesting terms at the time of grant. These awards generally vest in three to four years. We recognize compensation expense for RSUs on a straight-line basis over the requisite service period. Non-employee directors receive an annual grant of RSUs, which vest immediately and are expensed upon grant. The director may elect to receive the underlying shares immediately or defer receipt of the shares if they meet director stock ownership guidelines. The shares will be automatically deferred for those directors who do not meet the director stock ownership guidelines. At March 31, 2018, approximately 117,000 RSUs for our directors are vested. PeRSUs are RSUs for which the number of RSUs awarded is conditional upon the attainment of one or more performance objectives over a specified period. Each year, the Compensation Committee approves the target number of PeRSUs representing the base number of awards that could be granted if performance goals are attained. PeRSUs are accounted for as variable awards until the performance goals are reached at which time the grant date is established. Total compensation expense for PeRSUs is determined by the product of the number of shares eligible to be awarded and expected to vest, and the market price of the Company’s common stock, commencing at the inception of the requisite service period. During the performance period, the compensation expense for PeRSUs is re-computed using the market price and the performance modifier at the end of a reporting period. At the end of the performance period, if the goals are attained, the awards are granted and classified as RSUs and accounted for on that basis. We recognize compensation expense for these awards on a straight-line basis over the requisite aggregate service period of generally four years. TSRUs replaced PeRSUs for our executive officers beginning in 2015. The number of vested TSRUs is assessed at the end of a three-year performance period and is conditioned upon attainment of a total shareholder return metric relative to a peer group of companies. We use the Monte Carlo simulation model to measure the fair value of TSRUs. TSRUs have a requisite service period of approximately three years. Expense is attributed to the requisite service period on a straight-line basis based on the fair value of the TSRUs. For TSRUs that are designated as equity awards, the fair value is measured at the grant date. For TSRUs that are eligible for cash settlement and designated as liability awards, we remeasure the fair value at the end of each reporting period and also adjust a corresponding liability on our balance sheet for changes in fair value. The weighted-average assumptions used to estimate the fair value of TSRUs are as follows:
| Years Ended March 31,
| 2018 |  | 2017 |  | 2016
Expected stock price volatility | 29% |  | 23% |  | 18%
Expected dividend yield | 0.8% |  | 0.7% |  | 0.4%
Risk-free interest rate | 1.5% |  | 1.1% |  | 0.9%
Expected life (in years) | 3 |  | 3 |  | 3
The following table summarizes activity for restricted stock unit awards (RSUs, PeRSUs, and TSRUs) during 2018:
(In millions, except per share data) | Shares |  | Weighted- Average Grant Date Fair Value Per Share
Nonvested, March 31, 2017 | 2 |  | $ | 188.54 |
Granted | 1 |  | 159.49 |
Vested | (1) |  | 172.02 |
Nonvested, March 31, 2018 | 2 |  | $ | 176.74 |
The following table provides data related to restricted stock unit award activity:
| Years Ended March 31,
(In millions) | 2018 |  | 2017 |  | 2016
Total fair value of shares vested | $ | 156 |  |  | $ | 109 |  |  | $ | 104 |
Total compensation cost, net of estimated forfeitures, related to nonvested restricted stock unit awards not yet recognized, pre-tax | $ | 97 |  |  | $ | 99 |  |  | $ | 144 |
Weighted-average period in years over which restricted stock unit award cost is expected to be recognized | 2 |  |  | 2 |  |  | 2 |
ESPP The Company has an ESPP under which 21 million shares have been authorized for issuance. The ESPP allows eligible employees to purchase shares of our common stock through payroll deductions. The deductions occur over three-month purchase periods and the shares are then purchased at 85% of the market price at the end of each purchase period. Employees are allowed to terminate their participation in the ESPP at any time during the purchase period prior to the purchase of the shares. The 15% discount provided to employees on these shares is included in compensation expense. The shares related to funds outstanding at the end of a quarter are included in the calculation of diluted weighted average shares outstanding. These amounts have not been significant for all the years presented. We recognize costs for employer matching contributions as ESPP expense over the relevant purchase period. Shares issued under the ESPP were not material in 2018, 2017, and 2016. At March 31, 2018, 3 million shares remain available for issuance.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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