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Stock-Based Compensation | 12 Months Ended
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Mar. 31, 2022
Share-Based Payment Arrangement, Noncash Expense [Abstract] |
Stock-Based Compensation And Employee Benefit Plans | (15) STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Valuation Assumptions We recognize compensation cost for stock-based awards to employees based on the awards’ estimated grant-date fair value using a straight-line approach over the service period for which such awards are expected to vest. We account for forfeitures as they occur. The estimation of the fair value of market-based restricted stock units, stock options and ESPP purchase rights is affected by assumptions regarding subjective and complex variables. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. We estimate the fair value of our stock-based awards as follows: •Restricted Stock Units and Performance-Based Restricted Stock Units. The fair value of restricted stock units and performance-based restricted stock units (other than market-based restricted stock units) is determined based on the quoted market price of our common stock on the date of grant. •Market-Based Restricted Stock Units. Market-based restricted stock units consist of grants of performance-based restricted stock units to certain members of executive management that vest contingent upon the achievement of pre-determined market and service conditions (referred to herein as “market-based restricted stock units”). The fair value of our market-based restricted stock units is estimated using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient. •Stock Options and Employee Stock Purchase Plan. The fair value of stock options and stock purchase rights granted pursuant to our equity incentive plans and our 2000 Employee Stock Purchase Plan, as amended (“ESPP”), respectively, is estimated using the Black-Scholes valuation model based on the multiple-award valuation method. Key assumptions of the Black-Scholes valuation model are the risk-free interest rate, expected volatility, expected term and expected dividends. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant for the expected term of the option. Expected volatility is based on a combination of historical stock price volatility and implied volatility of publicly-traded options on our common stock. An expected term is estimated based on historical exercise behavior, post-vesting termination patterns, options outstanding and future expected exercise behavior. There were an insignificant number of stock options granted during fiscal years 2022, 2021, and 2020. The estimated assumptions used in the Black-Scholes valuation model to value our ESPP purchase rights were as follows:
|  |  |  |  | ESPP Purchase Rights
|  |  |  |  | Year Ended March 31,
|  |  |  |  | 2022 |  | 2021 |  | 2020
Risk-free interest rate |  |  |  |  | 0.1 - 1.1% |  | 0.1 | % |  | 1.5 - 1.9%
Expected volatility |  |  |  |  | 25 - 30% |  | 32 - 39% |  | 23 - 37%
Weighted-average volatility |  |  |  |  | 27% |  | 36% |  | 26%
Expected term |  |  |  |  | 6 - 12 months |  | 6 - 12 months |  | 6 - 12 months
Expected dividends |  |  |  |  | 0.6% |  | 0.3 | % |  | None
The assumptions used in the Monte-Carlo simulation model to value our market-based restricted stock units were as follows:
| Year Ended March 31,
| 2022 |  | 2021 |  | 2020
Risk-free interest rate | 0.4% |  | 0.2 | % |  | 1.6 - 1.8%
Expected volatility | 24 - 76% |  | 23 - 63% |  | 14 - 65%
Weighted-average volatility | 40% |  | 37% |  | 29%
Expected dividends | None |  | None |  | None
Summary of Plans and Plan Activity Equity Incentive Plans At our Annual Meeting of Stockholders, held on August 8, 2019, our stockholders approved the 2019 Equity Incentive Plan (the “2019 Equity Plan”), which replaced our 2000 Equity Incentive Plan, as amended (the “2000 Equity Plan”). Our 2019 Equity Plan allows us to grant options to purchase our common stock and to grant restricted stock, restricted stock units and stock appreciation rights to our employees, officers, and directors, up to a maximum of 13.5 million shares, plus any shares authorized for grant or subject to awards under the 2000 Equity Plan that are not delivered to participants for any reason. Pursuant to the 2019 Equity Plan, incentive stock options may be granted to employees and officers and non-qualified options may be granted to employees, officers, and directors, at not less than 100 percent of the fair market value on the date of grant. Approximately 12.5 million options or 8.7 million restricted stock units were available for grant under our 2019 Equity Plan as of March 31, 2022. Stock Options Options granted under the 2019 Equity Plan and the 2000 Equity Plan generally expire ten years from the date of grant. All outstanding options under the 2019 Equity Plan and the 2000 Equity Plan are fully vested and exercisable. The following table summarizes our stock option activity for the fiscal year ended March 31, 2022:
|  | Options (in thousands) |  | Weighted- Average Exercise Prices |  | Weighted- Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in millions)
Outstanding as of March 31, 2021 |  | 267 |  |  | $ | 35.71 |  |  |  |  |
Assumed via acquisition |  | 150 |  |  | 60.87 |  |  |  |  |
Granted |  | 3 |  |  | 138.32 |  |  |  |  |
Exercised |  | (92) |  |  | 54.43 |  |  |  |  |
Forfeited, cancelled or expired |  | (42) |  |  | 67.04 |  |  |  |  |
Outstanding as of March 31, 2022 |  | 286 |  |  | $ | 39.28 |  |  | 2.75 |  | $ | 25 |
Vested and expected to vest |  | 286 |  |  | $ | 39.28 |  |  | 2.75 |  | $ | 25 |
Exercisable as of March 31, 2022 |  | 279 |  |  | $ | 38.06 |  |  | 2.65 |  | $ | 24 |
The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price as of March 31, 2022, which would have been received by the option holders had all the option holders exercised their options as of that date. The total intrinsic values of stock options exercised during fiscal years 2022, 2021, and 2020 were $8 million, $76 million, and $22 million, respectively. We issue new common stock from our authorized shares upon the exercise of stock options. Restricted Stock Units We grant restricted stock units under our 2019 Equity Plan to employees worldwide. Restricted stock units are unfunded, unsecured rights to receive common stock upon the satisfaction of certain vesting criteria. Upon vesting, a number of shares of common stock equivalent to the number of restricted stock units is typically issued net of required tax withholding requirements, if any. Restricted stock units are subject to forfeiture and transfer restrictions. Vesting for restricted stock units is based on the holders’ continued employment with us through each applicable vest date. If the vesting conditions are not met, unvested restricted stock units will be forfeited. Our restricted stock units generally vest over 35 months to four years. Each restricted stock unit granted reduces the number of shares available for grant by 1.43 shares under our 2019 Equity Plan. The following table summarizes our restricted stock units activity, excluding performance-based and market-based restricted stock unit activity which is discussed below, for the fiscal year ended March 31, 2022:
|  | Restricted Stock Units (in thousands) |  | Weighted- Average Grant Date Fair Values
Outstanding as of March 31, 2021 |  | 5,764 |  |  | $ | 113.25 |
Assumed via acquisition |  | 816 |  |  | 120.54 |
Granted |  | 4,598 |  |  | 139.66 |
Vested |  | (3,345) |  |  | 114.55 |
Forfeited or cancelled |  | (1,151) |  |  | 125.41 |
Outstanding as of March 31, 2022 |  | 6,682 |  |  | $ | 129.57 |
The grant date fair value of restricted stock units is based on the quoted market price of our common stock on the date of grant. The weighted-average grant date fair values of restricted stock units granted during fiscal years 2022, 2021, and 2020 were $136.78, $127.27, and $93.52 respectively. The fair values of restricted stock units that vested during fiscal years 2022, 2021, and 2020 were $457 million, $420 million, and $240 million, respectively. Performance-Based Restricted Stock Units Our performance-based restricted stock units vest upon the achievement of pre-determined performance-based milestones, including, but not limited to, management reporting milestones of net bookings and operating income metrics, as well as service conditions. If these performance-based milestones are not met but service conditions are met, the performance-based restricted stock units will not vest, in which case any compensation expense we have recognized to date will be reversed. Generally, the measurement periods of our performance-based restricted stock units are 3 to 4 years, with awards vesting after each annual measurement period or cliff-vesting after the completion of the total aggregate measurement period. Each quarter, we update our assessment of the probability that the performance milestones will be achieved. We amortize the fair values of performance-based restricted stock units over the requisite service period. The performance-based restricted stock units contain threshold, target and maximum milestones for each performance-based milestone. The number of shares of common stock to be issued at vesting will range from zero to 200 percent of the target number of performance-based restricted stock units attributable to each performance-based milestone based on the company’s performance as compared to these threshold, target and maximum performance-based milestones. Each performance-based milestone is weighted evenly and the number of shares that vest based on each performance-based milestone is independent from the other. The following table summarizes our performance-based restricted stock unit activity, presented with the maximum number of shares that could potentially vest, for the fiscal year ended March 31, 2022:
| Performance- Based Restricted Stock Units (in thousands) |  | Weighted- Average Grant Date Fair Value
Outstanding as of March 31, 2021 | 579 |  |  | $ | 110.51 |
Granted | 300 |  |  | 140.48 |
Vested | (266) |  |  | 110.51 |
Forfeited or cancelled | (423) |  |  | 117.33 |
Outstanding as of March 31, 2022 | 190 |  |  | $ | 142.60 |
Market-Based Restricted Stock Units Our market-based restricted stock units vest contingent upon the achievement of pre-determined market and service conditions. If these market conditions are not met but service conditions are met, the market-based restricted stock units will not vest; however, any compensation expense we have recognized to date will not be reversed. The number of shares of common stock to be issued at vesting will range from zero to 200 percent of the target number of market-based restricted stock units based on our total stockholder return (“TSR”) relative to the performance of companies in the Nasdaq-100 Index for each measurement period, over either a one-year, two-year cumulative and three-year cumulative period, a two-year and four-year cumulative period or a three-year period. The following table summarizes our market-based restricted stock unit activity, presented with the maximum number of shares that could potentially vest, for the year ended March 31, 2022:
|  | Market-Based Restricted Stock Units (in thousands) |  | Weighted- Average Grant Date Fair Value
Outstanding as of March 31, 2021 |  | 2,195 |  |  | $ | 134.60 |
Granted |  | 175 |  |  | 170.44 |
Vested |  | (271) |  |  | 123.82 |
Forfeited or cancelled |  | (778) |  |  | 146.26 |
Outstanding as of March 31, 2022 |  | 1,321 |  |  | $ | 134.69 |
The weighted-average grant date fair values of market-based restricted stock units granted during fiscal years 2022, 2021, and 2020 were $170.44, $145.78, and $109.04, respectively. The fair values of market-based restricted stock units that vested during fiscal years 2022, 2021, and 2020 were $37 million, $19 million, and $9 million, respectively. ESPP Pursuant to our ESPP, eligible employees may authorize payroll deductions of between 2 percent and 10 percent of their compensation to purchase shares of common stock at 85 percent of the lower of the market price of our common stock on the date of commencement of the applicable offering period or on the last day of each six-month purchase period. The following table summarizes our ESPP activity for fiscal years ended March 31, 2022, 2021 and 2020:
|  | Shares Issued (in millions) |  | Exercise Prices for Purchase Rights |  | Weighted-Average Fair Values of Purchase Rights
Fiscal Year 2020 |  | 0.7 |  |  | $74.70 - $74.89 |  | $ | 29.05 |
Fiscal Year 2021 |  | 0.7 |  |  | $74.70 - $119.37 |  | $ | 29.80 |
Fiscal Year 2022 |  | 0.6 |  |  | $113.39 - $118.14 |  | $ | 35.94 |
The fair values were estimated on the date of grant using the Black-Scholes valuation model. We issue new common stock out of the ESPP’s pool of authorized shares. As of March 31, 2022, 4.3 million shares were available for grant under our ESPP. Stock-Based Compensation Expense The following table summarizes stock-based compensation expense resulting from stock options, restricted stock units, market-based restricted stock units, performance-based restricted stock units, and the ESPP purchase rights included in our Consolidated Statements of Operations (in millions):
|  | Year Ended March 31,
|  | 2022 |  | 2021 |  | 2020
Cost of revenue |  | $ | 6 |  |  | $ | 5 |  |  | $ | 4 |
Research and development |  | 356 |  |  | 285 |  |  | 229 |
Marketing and sales |  | 54 |  |  | 46 |  |  | 37 |
General and administrative |  | 112 |  |  | 99 |  |  | 77 |
Stock-based compensation expense |  | $ | 528 |  |  | $ | 435 |  |  | $ | 347 |
During the fiscal years ended March 31, 2022, 2021, and 2020, we recognized $68 million, $56 million, and $43 million, respectively, of deferred income tax benefit related to our stock-based compensation expense. As of March 31, 2022, our total unrecognized compensation cost related to stock options, restricted stock units, market-based restricted stock units, and performance-based restricted stock units was $688 million and is expected to be recognized over a weighted-average service period of 1.8 years. Of the $688 million of unrecognized compensation cost, $634 million relates to restricted stock units, $46 million relates to market-based restricted stock units, and $8 million relates to performance-based restricted stock units at a 147 percent average payout. Deferred Compensation Plan We have a Deferred Compensation Plan (“DCP”) for the benefit of a select group of management or highly compensated employees and directors, which is unfunded and intended to be a plan that is not qualified within the meaning of section 401(a) of the Internal Revenue Code. The DCP permits the deferral of the annual base salary and/or director cash compensation up to a maximum amount. The deferrals are held in a separate trust, which has been established by us to administer the DCP. The trust is a grantor trust and the specific terms of the trust agreement provide that the assets of the trust are available to satisfy the claims of general creditors in the event of our insolvency. The assets held by the trust are classified as trading securities and are held at fair value on our Consolidated Balance Sheets. The assets and liabilities of the DCP are presented in other assets and other liabilities on our Consolidated Balance Sheets, respectively, with changes in the fair value of the assets and in the deferred compensation liability recognized as compensation expense. The estimated fair value of the assets was $21 million and $18 million as of March 31, 2022 and 2021, respectively. As of March 31, 2022 and 2021, $22 million and $19 million were recorded, respectively, to recognize undistributed deferred compensation due to employees. 401(k) Plan, Registered Retirement Savings Plan and ITP Plan We have a 401(k) plan covering substantially all of our U.S. employees, a Registered Retirement Savings Plan covering substantially all of our Canadian employees, and an ITP pension plan covering substantially all our Swedish employees. These plans may permit us to make discretionary contributions to employees’ accounts based on our financial performance. We contributed an aggregate of $41 million, $40 million, and $29 million to these plans in fiscal years 2022, 2021, and 2020, respectively. Stock Repurchase Program In May 2018, a Special Committee of our Board of Directors, on behalf of the full Board of Directors, authorized a program to repurchase up to $2.4 billion of our common stock. We completed repurchases under the May 2018 program in April 2020. In November 2020, our Board of Directors authorized a program to repurchase up to $2.6 billion of our common stock. This stock repurchase program expires on November 4, 2022. Under this program, we may purchase stock in the open market or through privately negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities and other market conditions. We are not obligated to repurchase a specific number of shares under this program and it may be modified, suspended or discontinued at any time. We are actively repurchasing shares under this program. The following table summarizes total shares repurchased during fiscal years 2022, 2021, and 2020:
|  |  | May 2018 Program |  | November 2020 Program |  | Total
(In millions) |  |  |  |  | Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount
Fiscal Year 2020 |  |  |  |  | 12.3 |  |  | $ | 1,207 |  |  | — |  |  | $ | — |  |  | 12.3 |  |  | $ | 1,207 |
Fiscal Year 2021 |  |  |  |  | 0.7 |  |  | $ | 78 |  |  | 4.9 |  |  | $ | 651 |  |  | 5.6 |  |  | $ | 729 |
Fiscal Year 2022 |  |  |  |  | — |  |  | $ | — |  |  | 9.5 |  |  | $ | 1,300 |  |  | 9.5 |  |  | $ | 1,300 |

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