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Employee Stock-Based Compensation | 12 Months Ended
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Mar. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Employee Stock-Based Compensation | Employee Stock-Based Compensation As of March 31, 2024, the Company offers the 2006 Employee Share Purchase Plan (Non-U.S.), as amended and restated ("2006 ESPP"), the 1996 Employee Share Purchase Plan (U.S.), as amended and restated ("1996 ESPP"), and the 2006 Stock Incentive Plan ("2006 Plan") as amended and restated. Shares issued to employees as a result of purchases or exercises under these plans are generally issued from shares held in treasury stock. Under the 1996 ESPP and 2006 ESPP plans, eligible employees may purchase shares at the lower of 85% of the fair market value at the beginning or the end of each offering period, which is generally six months. Subject to continued participation in these plans, purchase agreements are automatically executed at the end of each offering period. An aggregate of 29.0 million shares were reserved for issuance under the 1996 and 2006 ESPP plans. As of March 31, 2024, a total o f 3.1 million sha res were available for new awards under these plans. The 2006 Plan provides for the grant to eligible employees and non-employee directors of stock options, stock appreciation rights, and restricted stock units. Awards under the 2006 Plan may be conditioned on continued employment, the passage of time or the satisfaction of performance and market vesting criteria. The 2006 Plan, as amended, has no expiration date. On June 29, 2022, the Board authorized 3.3 million additional shares for issuance under the 2006 Plan. An aggregate of 33.8 million shares were reserved for issuance under the 2006 Plan. As of March 31, 2024, a total of 7.6 million shares were available for new awards under this plan. Stock options granted to employees under the 2006 Plan have terms not exceeding ten years and are issued at exercise prices not less than the fair market value on the date of grant. Service-based restricted stock units ("RSUs") granted to employees under the 2006 Plan generally vest in four equal annual installments on the grant date anniversary. RSUs granted to non-executive board members under the 2006 Plan vest on the grant date anniversary, or if earlier and only if the non-executive board member is not re-elected as a director at the annual general meeting, the date of the next annual general meeting following the grant date. Restricted stock units with certain market- and performance-based conditions ("PSUs") granted to employees under the 2006 Plan generally vest at the end of the three-year performance period upon meeting predetermined financial metrics over three years, with the number of shares to be received upon vesting determined based on constant currency revenue growth rate, adjusted operating income (loss) and the Company's total shareholder return ("TSR") relative to the performance of companies in the Russell 3000 Index over the same three years period. The following table summarizes share-based compensation expense and total income tax benefit recognized for fiscal years 2024, 2023 and 2022 (in thousands):
|  | Years Ended March 31,
|  | 2024 |  | 2023 |  | 2022
Cost of goods sold |  | $ | 8,004 |  |  | $ | 5,635 |  |  | $ | 6,695 |
Marketing and selling |  | 35,780 |  |  | 34,707 |  |  | 37,796 |
Research and development |  | 17,836 |  |  | 15,292 |  |  | 18,356 |
General and administrative |  | 21,269 |  |  | 15,148 |  |  | 30,632 |
Total share-based compensation expense |  | 82,889 |  |  | 70,782 |  |  | 93,479 |
Income tax benefit |  | (15,305) |  |  | (9,750) |  |  | (26,987) |
Total share-based compensation expense, net of income tax benefit |  | $ | 67,584 |  |  | $ | 61,032 |  |  | $ | 66,492 |
The income tax benefit in the respective periods primarily consisted of tax benefits related to the share-based compensation expense for the period and direct tax benefit realized, including net excess tax benefits recognized from share-based awards vested or exercised during the period. Share-based compensation costs capitalized as part of inventory were $6.3 million, $5.6 million, and $5.2 million for the fiscal year ended March 31, 2024, 2023 and 2022, respectively. As of March 31, 2024, there was $137.7 million of total future stock-based compensation cost to be recognized over a weighted-average period of 2.3 years. The estimates of share-based compensation expense require a number of complex and subjective assumptions including stock price volatility, employee exercise patterns, probability of achievement of the set performance condition, dividend yield, related tax effects and the selection of an appropriate fair value model. The grant date fair value of the stock options and ESPP using the Black-Scholes-Merton option-pricing valuation model and the grant date fair value of the PSUs using the Monte-Carlo simulation method are determined with the following assumptions:
|  |  | Stock Options(1) |  | Employee Stock Purchase Plans
|  |  | Year Ended March 31, |  | Years Ended March 31,
|  |  | 2022 |  |  |  | 2024 |  | 2023 |  | 2022
Expected dividend rate |  |  | 1.18 | % |  |  |  | 1.61 | % |  | 1.78 | % |  | 1.03 | %
Risk-free interest rate |  |  | 1.99 | % |  |  |  | 5.36 | % |  | 3.86 | % |  | 0.27 | %
Expected volatility |  |  | 34 | % |  |  |  | 33 | % |  | 46 | % |  | 35 | %
Expected term (years) |  |  | 6.2 |  |  |  | 0.5 |  | 0.5 |  | 0.5
Weighted average grant date fair value per share |  |  | $ | 25.88 |  |  |  | $ | 19.02 |  | $ | 16.32 |  | $ | 23.55
(1) No stock options were granted for fiscal years 2024 and 2023.
PSUs |  | Years Ended March 31,
|  | 2024 |  | 2023 |  | 2022
Expected dividend rate |  | 1.90 | % |  | 1.46 | % |  | 0.78 | %
Risk-free interest rate |  | 3.83 | % |  | 2.78 | % |  | 0.31 | %
Expected volatility |  | 41 | % |  | 39 | % |  | 37 | %
Expected term (years) |  | 3.0 |  | 3.0 |  | 3.0
The expected dividend rate assumption is based on the Company's history and future expectations of dividend payouts. The unvested PSUs or unexercised options are not eligible for these dividends. The expected term is based on the purchase offerings periods expected to remain outstanding for employee stock purchase plan or the performance period for PSUs. The expected term for stock options represents the estimated period of time until option exercise. Since the Company has limited historical stock option exercise experience, the Company used the simplified method in estimating the expected term, which is calculated as the average of the sum of the vesting term and the original contractual term of the stock options. Expected volatility is based on historical volatility using the Company's daily closing prices, or including the volatility of components of the Russell 3000 Index for PSUs, over the expected term. The Company considers the historical price volatility of its shares as most representative of future volatility. The risk-free interest rate assumptions are based upon the implied yield of U.S. Treasury zero-coupon issues or Switzerland government bonds appropriate for the expected term of the Company's share-based awards. For PSUs, the Company estimates the probability and timing of the achievement of the set performance condition at the time of the grant based on the historical financial performance and the financial forecast in the remaining performance period and reassesses the probability in subsequent periods when actual results or new information become available. A summary of the Company's stock option activities under all stock plans for fiscal years 2024, 2023 and 2022 is as follows:
|  | Number of Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term |  | Aggregate Intrinsic Value |  |  |  |
|  | (In thousands) |  |  |  | (Years) |  | (In thousands) |  |  |  |
Outstanding, March 31, 2021 |  | 622 |  |  |  |  |  |  |  |  |  |  |
Granted |  | 842 |  |  |  |  |  |  |  |  |  |  |
Exercised |  | (71) |  |  |  |  |  |  | $ | 5,573 |  |  |  |  |
Outstanding, March 31, 2022 |  | 1,393 |  |  |  |  |  |  |  |  |  |  |
Exercised |  | (155) |  |  |  |  |  |  | $ | 6,482 |  |  |  |  |
Forfeited |  | (118) |  |  |  |  |  |  |  |  |  |  |
Outstanding, March 31, 2023 |  | 1,120 |  |  | $ | 66 |  |  | 7.6 |  | $ | 7,491 |  |  |  |  |
Exercised |  | (181) |  |  | $ | 43 |  |  |  |  | $ | 6,160 |  |  |  |  |
Forfeited |  | (176) |  |  | $ | 80 |  |  |  |  |  |  |  |  |
Outstanding, March 31, 2024 |  | 763 |  |  | $ | 68 |  |  | 7.0 |  | $ | 16,243 |  |  |  |  |
Vested and exercisable, March 31, 2024 |  | 489 |  |  | $ | 61 |  |  | 6.5 |  | $ | 13,960 |  |  |  |  |
A summary of the Company's RSU and PSU activities for fiscal years 2024, 2023 and 2022 is as follows:
|  | Number of Shares |  | Weighted-Average Grant Date Fair Value |  | Aggregate Fair Value |  |  |  |
|  | (In thousands) |  |  |  | (In thousands) |  |  |  |
Outstanding, March 31, 2021 |  | 3,643 |  |  | $ | 45 |  |  |  |  |  |  |
Granted—RSUs |  | 868 |  |  | $ | 103 |  |  |  |  |  |  |
Granted—PSUs |  | 203 |  |  | $ | 124 |  |  |  |  |  |  |
Vested |  | (1,463) |  |  |  |  | $ | 133,977 |  |  |  |  |
Forfeited |  | (205) |  |  |  |  |  |  |  |  |
Outstanding, March 31, 2022 |  | 3,046 |  |  | $ | 68 |  |  |  |  |  |  |
Granted—RSUs |  | 1,584 |  |  | $ | 53 |  |  |  |  |  |  |
Granted—PSUs |  | 407 |  |  | $ | 69 |  |  |  |  |  |  |
Vested |  | (1,143) |  |  |  |  | $ | 85,152 |  |  |  |  |
Forfeited |  | (438) |  |  |  |  |  |  |  |  |
Outstanding, March 31, 2023 |  | 3,456 |  |  | $ | 66 |  |  |  |  |  |  |
Granted—RSUs |  | 1,396 |  |  | $ | 59 |  |  |  |  |  |  |
Granted—PSUs |  | 457 |  |  | $ | 67 |  |  |  |  |  |  |
Vested |  | (1,200) |  |  | $ | 58 |  |  | $ | 92,340 |  |  |  |  |
Forfeited |  | (631) |  |  | $ | 73 |  |  |  |  |  |  |
Outstanding, March 31, 2024 |  | 3,478 |  |  | $ | 65 |  |  |  |  |  |  |
The shares outstanding as of March 31, 2024 above include 0.7 million shares of PSUs. The Company presents the number of PSUs and weighted-average grant date fair value at 100 percent of the performance target; however, the aggregate fair value of shares vested is based on the actual number of PSUs vested according to achievement of the financial metrics over the performance period.

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