Share-Based Compensation

12 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Share-Based Compensation Expense

The following table presents the details of the Company's share-based compensation expense (in millions):


	Fiscal Year Ended March 31,
	2022		2021		2020
Cost of sales (1)	$	34.3	$	26.6	$	20.9
Research and development	97.9		96.8		82.9
Selling, general and administrative	78.0		74.9		66.4

Pre-tax effect of share-based compensation	210.2		198.3		170.2
Income tax benefit	44.6		42.3		36.9
Net income effect of share-based compensation	$	165.6	$	156.0	$	133.3

(1) During the fiscal year ended March 31, 2022, $21.2 million of share-based compensation expense was capitalized to inventory and $34.3 million of previously capitalized share-based compensation expense in inventory was sold. During the fiscal year ended March 31, 2021, $16.7 million of share-based compensation expense was capitalized to inventory and $26.6 million of previously capitalized share-based compensation expense in inventory was sold. During the fiscal year ended March 31, 2020, $19.8 million of share-based compensation expense was capitalized to inventory and $20.9 million of previously capitalized share-based compensation expense in inventory was sold.

Combined Incentive Plan Information

The Company has granted RSUs and stock options to employees and non-employee members of the Board of Directors under the Company’s 2004 Equity Incentive Plan (the 2004 plan). The Company grants RSUs with a service condition and PSUs under the 2004 plan. The Company uses RSUs with a service condition as its primary equity incentive compensation instrument for employees. The Company grants PSUs to a group of executive officers and employees. For the market-based PSUs, the number of shares of our common stock expected to be received at vesting will range from 0% to 200% of the target grant amount based on the TSR of our common stock measured against the TSR of a defined peer group of companies over the applicable two-year or three-year measurement period. TSR is a measure of the stock price appreciation plus any dividends paid in the performance period. For the performance-based PSUs, the number of shares of our common stock expected to vest will range from 0% to 200% of the target grant amount based on our three-year cumulative non-GAAP operating margin percentage. Under the 2004 plan, 64,389,717 shares of common stock have been authorized for issuance and 11,091,259 shares of common stock remain available for future grants as of March 31, 2022.

RSUs and PSUs share activity is set forth below:


	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested shares at March 31, 2019	12,583,924	$	32.41
Granted	4,364,088	$	44.09

Forfeited	(681,318)	$	37.75
Vested	(4,782,588)	$	28.74
Nonvested shares at March 31, 2020	11,484,106	$	38.06
Granted	4,678,494	$	50.69
Forfeited	(514,110)	$	41.69
Vested	(3,764,672)	$	32.07
Nonvested shares at March 31, 2021	11,883,818	$	44.77
Granted	2,995,991	$	74.36

Forfeited	(978,325)	$	51.17
Vested	(3,795,469)	$	43.77
Nonvested shares at March 31, 2022	10,106,015	$	53.30

The total intrinsic value of RSUs and PSUs which vested during the fiscal years ended March 31, 2022, 2021 and 2020 was $287.6 million, $218.5 million and $223.9 million, respectively. The aggregate intrinsic value of RSUs and PSUs outstanding at March 31, 2022 was $759.4 million, calculated based on the closing price of the Company's common stock of $75.14 per share on March 31, 2022. The amount of unearned share-based compensation currently estimated to be expensed in the remainder of fiscal 2023 through fiscal 2027 related to unvested share-based payment awards at March 31, 2022 is $303.8 million. The weighted average period over which the unearned share-based compensation is expected to be recognized is approximately 1.92 years. The total number of PSUs granted in fiscal years ended March 31, 2022, 2021 and 2020 was 145,188 shares, 140,160 shares and 32,734 shares, respectively.

Stock option and SARs activity under the Company's stock incentive plans in the three years ended March 31, 2022 is set forth below:


	Number of Shares	Weighted Average Exercise Price per Share
Outstanding at March 31, 2019	563,764	$	15.08


Exercised	(260,838)	$	14.36
Forfeited or expired	(4,906)	$	10.01
Outstanding at March 31, 2020	298,020	$	15.80


Exercised	(155,768)	$	15.74
Forfeited or expired	(1,258)	$	9.74
Outstanding at March 31, 2021	140,994	$	15.91


Exercised	(39,874)	$	13.96
Forfeited or expired	(1,788)	$	17.82
Outstanding at March 31, 2022	99,332	$	16.65

The total intrinsic value of options and SARs exercised during the fiscal years ended March 31, 2022, 2021 and 2020 was $2.6 million, $6.5 million and $8.4 million, respectively. This intrinsic value represents the difference between the fair market value of the Company's common stock on the date of exercise and the exercise price of each equity award.

The aggregate intrinsic value of options and SARs outstanding and exercisable at March 31, 2022 was $7.5 million. The aggregate intrinsic values were calculated based on the closing price of the Company's common stock of $75.14 per share on March 31, 2022. As of March 31, 2022, the weighted average remaining contractual term for options and SARs outstanding and exercisable was 1.37 years.

As of March 31, 2022 and March 31, 2021, the number of option and SAR shares exercisable was 99,332 and 140,994, respectively, and the weighted average exercise price per share was $16.65 and $15.91, respectively.

Employee Stock Purchase Plan

The Company’s 2001 Employee Stock Purchase Plan and the 1994 International Employee Stock Purchase Plan (collectively referred to as the employee stock purchase plans) allows eligible employees to purchase shares of the Company's common stock at 85% of the value of its common stock on specific dates. Since the inception of the employee stock purchase plans, 35,000,572 shares of common stock have been authorized for issuance and 10,929,886 shares remain available for future purchases as of March 31, 2022.

Employees purchased 1,485,477 shares of common stock in the fiscal year ended March 31, 2022 for a purchase price of $70.0 million under the employee stock purchase plans compared to 1,424,440 shares of common stock for a purchase price of $57.7 million in the fiscal year ended March 31, 2021 and 1,574,568 shares of common stock for a purchase price of $55.6 million in the fiscal year ended March 31, 2020. As of March 31, 2022, unrecognized share-based compensation costs related to the employee stock plans totaled $7.2 million, which will be recognized over a period of approximately five months.