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Share-Based Compensation (Notes) | 6 Months Ended
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Sep. 30, 2021
Share-based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation We maintain a long-term incentive plan that makes available shares for grants, at the discretion of the Board of Directors or the Compensation and Organizational Development Committee of the Board of Directors, to officers, directors, and key employees in the form of stock options, restricted shares, restricted share units, stock appreciation rights and share grants. We satisfy share award incentives through the issuance of new ordinary shares. Stock options provide the right to purchase our shares at the market price on the date of grant, or for options granted to employees in fiscal 2019 and thereafter, 110% of the market price on the date of grant, subject to the terms of the plan and agreements. Generally, one-fourth of the stock options granted to employees become exercisable for each full year of employment following the grant date. Stock options granted generally expire 10 years after the grant date, or in some cases earlier if the option holder is no longer employed by us. Restricted shares and restricted share units generally cliff vest after a four year period or vest in tranches of one-fourth of the number granted for each year of employment after the grant date. As of September 30, 2021, 3,257,138 ordinary shares remained available for grant under the long-term incentive plan. The fair value of stock option awards was estimated at their grant date using the Black-Scholes-Merton option pricing model. This model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics that are not present in our option grants. If the model permitted consideration of the unique characteristics of employee stock options, the resulting estimate of the fair value of the stock options could be different. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our Consolidated Statements of Income. The expense is classified as cost of goods sold or selling, general and administrative expenses in a manner consistent with the employee’s compensation and benefits. The following weighted-average assumptions were used for options granted during the first six months of fiscal 2022 and 2021:
|  | Fiscal 2022 |  | Fiscal 2021
Risk-free interest rate |  | 1.16 | % |  | 0.46 | %
Expected life of options |  | 5.9 years |  | 6.0 years
Expected dividend yield of stock |  | 0.97 | % |  | 0.96 | %
Expected volatility of stock |  | 24.37 | % |  | 23.04 | %
The risk-free interest rate is based upon the U.S. Treasury yield curve. The expected life of options is reflective of historical experience, vesting schedules and contractual terms. The expected dividend yield of stock represents our best estimate of the expected future dividend yield. The expected volatility of stock is derived by referring to our historical stock prices over a time frame similar to that of the expected life of the grant. An estimated forfeiture rate of 2.85% and 2.78% was applied in fiscal 2022 and 2021, respectively. This rate is calculated based upon historical activity and represents an estimate of the granted options not expected to vest. If actual forfeitures differ from this calculated rate, we may be required to make additional adjustments to compensation expense in future periods. The assumptions used above are reviewed at the time of each significant option grant, or at least annually. A summary of share option activity is as follows:
|  | Number of Options |  | Weighted Average Exercise Price Per Share |  | Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Outstanding at March 31, 2021 |  | 1,637,047 |  |  | $ | 112.03 |  |  |  |  |
Granted |  | 214,734 |  |  | 210.79 |  |  |  |  |
Exercised |  | (112,199) |  |  | 68.78 |  |  |  |  |
Forfeited |  | — |  |  | — |  |  |  |  |
Outstanding at September 30, 2021 |  | 1,739,582 |  |  | $ | 127.01 |  |  | 6.7 years |  | $ | 135,815 |
Exercisable at September 30, 2021 |  | 1,094,684 |  |  | $ | 99.58 |  |  | 5.7 years |  | $ | 114,798 |
We estimate that 626,598 of the non-vested stock options outstanding at September 30, 2021 will ultimately vest. The aggregate intrinsic value in the table above represents the total pre-tax difference between the $204.28 closing price of our ordinary shares on September 30, 2021 over the exercise prices of the stock options, multiplied by the number of options outstanding or outstanding and exercisable, as applicable. The aggregate intrinsic value is not recorded for financial accounting purposes and the value changes daily based on the daily changes in the fair market value of ordinary shares. The total intrinsic value of stock options exercised during the first six months of fiscal 2022 and fiscal 2021 was $16,076 and $25,244, respectively. Net cash proceeds from the exercise of stock options were $7,829 and $20,600 for the first six months of fiscal 2022 and fiscal 2021, respectively. The weighted average grant date fair value of stock option grants was $37.34 and $27.66 for the first six months of fiscal 2022 and fiscal 2021, respectively. Stock appreciation rights (“SARS”) carry generally the same terms and vesting requirements as stock options except that they are settled in cash upon exercise and therefore, are classified as liabilities. As of September 30, 2021, we no longer have outstanding SARS. The fair value of the outstanding SARS as of September 30, 2020 was $448. A summary of the non-vested restricted share and share unit activity is presented below:
|  | Number of Restricted Shares |  | Number of Restricted Share Units |  | Weighted-Average Grant Date Fair Value
Non-vested at March 31, 2021 |  | 533,323 |  |  | 29,500 |  |  | $ | 121.35 |
Granted |  | 112,036 |  |  | 14,189 |  |  | 192.85 |
Vested |  | (170,619) |  |  | (15,534) |  |  | 96.19 |
Forfeited |  | (8,425) |  |  | (430) |  |  | 153.97 |
Non-vested at September 30, 2021 |  | 466,315 |  |  | 27,725 |  |  | $ | 148.57 |
Restricted shares granted are valued based on the closing stock price at the grant date. The value of restricted shares and units that vested during the first six months of fiscal 2022 at the time of grant was $17,865. As of September 30, 2021, there was a total of $61,084 in unrecognized compensation cost related to non-vested share-based compensation granted under our share-based compensation plan. We expect to recognize the cost over a weighted average period of 2.2 years. Cantel Share Based Compensation Plan In connection with the June 2, 2021, acquisition of Cantel, outstanding, non-vested Cantel restricted share units were replaced with STERIS restricted share units. A total of 280,402 STERIS restricted share units replaced Cantel awards based on a ratio of one Cantel restricted share unit to 0.4262 STERIS restricted share units. Cantel time based restricted share units were replaced with STERIS restricted share units with the same three-year pro-rata vesting terms based on the original award date. Performance and market based Cantel restricted share units were replaced with time based STERIS restricted share units that vest pro rata over the remaining one, two or three anniversaries from the original Cantel award date. The number of performance restricted share units was replaced based on the original target achievement level. All replacement restricted share units retained dividend accumulation rights. The fair value of each STERIS restricted share unit awarded on June 2, 2021 to replace outstanding non-vested Cantel restricted share units was $191.18 based on the closing price of STERIS ordinary shares on June 2, 2021. Approximately $18,173 of the total $53,607 grant date fair value was attributable to pre-acquisition services provided and was recorded as a component of purchase consideration in connection with the acquisition of Cantel. During the first six months of fiscal 2022, recognition of unamortized share-based compensation expense totaling $17,985 was accelerated in connection with the termination of certain Cantel employees in fiscal 2022. As a result of the formal notices provided and the terms of the Cantel share based compensati on plans and Cantel Executive Severance and Change of Control Plan, the restricted share units vested requiri ng acceleration of the remaining related compensation cost. As of September 30, 2021, there was a total of $12,521 in unrecognized compensation cost related to non-vested STERIS restricted share units awarded to replace Cantel restricted share units. A summary of the non-vested restricted share units activity associated with the Cantel share-based compensation plans is presented below:
|  |  |  | Number of Restricted Share Units |  | Weighted-Average Grant Date Fair Value
Non-vested at March 31, 2021 |  |  |  | — |  |  | $ | — |
Granted |  |  |  | 280,402 |  |  | $ | 191.18 |
Vested |  |  |  | (157,821) |  |  | 191.18 |
Forfeited |  |  |  | (3,380) |  |  | 191.18 |
Non-vested at September 30, 2021 |  |  |  | 119,201 |  |  | $ | 191.18 |

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