Share-Based Compensation

12 Months Ended

Mar. 31, 2023

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,
	2023		2022		2021
Cost of sales (1)	$	27.2	$	34.3	$	26.6
Research and development	83.1		97.9		96.8
Selling, general and administrative	60.1		78.0		74.9

Pre-tax effect of share-based compensation	170.4		210.2		198.3
Income tax benefit	36.4		44.6		42.3
Net income effect of share-based compensation	$	134.0	$	165.6	$	156.0

(1) During the fiscal year ended March 31, 2023, $19.7 million of share-based compensation expense was capitalized to inventory and $27.2 million of previously capitalized share-based compensation expense in inventory was sold. 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.

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 the Company's common stock expected to be received at vesting will range from 0% to 200% of the target grant amount based on the TSR of the Company's 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 the Company's common stock expected to vest will range from 0% to 200% of the target grant amount based on the Company's two-year or 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 8,728,867 shares of common stock remain available for future grants as of March 31, 2023.

RSUs and PSUs share activity is set forth below:


	Number of Shares	Weighted Average Grant Date Fair Value
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
Granted	3,226,654	$	61.71

Forfeited	(864,262)	$	55.77
Vested	(3,423,935)	$	45.08
Nonvested shares at March 31, 2023	9,044,472	$	59.17

The total intrinsic value of RSUs and PSUs which vested during the fiscal years ended March 31, 2023, 2022 and 2021 was $256.3 million, $287.6 million and $218.5 million, respectively. The aggregate intrinsic value of RSUs and PSUs outstanding at March 31, 2023 was $757.7 million, calculated based on the closing price of the Company's common stock of $83.78 per share on March 31, 2023. The amount of unearned share-based compensation currently estimated to be expensed in the remainder of fiscal 2024 through fiscal 2028 related to unvested share-based payment awards at March 31, 2023 is $327.2 million. The weighted average period over which the unearned share-based compensation is expected to be recognized is approximately 2.15 years. The total number of PSUs granted in fiscal years ended March 31, 2023, 2022 and 2021 was 172,334 shares, 145,188 shares and 140,160 shares, respectively.

As of March 31, 2023, the number of options exercisable was 21,016 and the weighted average exercise price per share was $19.13.

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, 35,548,364 shares of common stock have been authorized for issuance and 10,052,828 shares remain available for future purchases as of March 31, 2023.

Employees purchased 1,424,850 shares of common stock in the fiscal year ended March 31, 2023 for an aggregate purchase price of $81.2 million under the employee stock purchase plans compared to 1,485,477 shares of common stock for an aggregate purchase price of $70.0 million in the fiscal year ended March 31, 2022 and 1,424,440 shares of common stock for a purchase price of $57.7 million in the fiscal year ended March 31, 2021. As of March 31, 2023, unrecognized share-based compensation costs related to the employee stock plans totaled $8.7 million, which will be recognized over a period of approximately five months.