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Stock-Based Compensation
 12 Months Ended
Mar. 31, 2016
Share-based Compensation [Abstract]  
Stock-Based Compensation And Employee Benefit Plans
(15)  STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS
Valuation Assumptions
We estimate the fair value of stock-based awards on the date of grant. We recognize compensation costs for stock-based awards to employees based on the grant-date fair value using a straight-line approach over the service period for which such awards are expected to vest.
The determination of the fair value of market-based restricted stock units, stock options and ESPP 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 determine the fair value of our stock-based awards as follows:

•
Restricted Stock Units. The fair value of 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 determined 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 determined 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. Expected term is determined 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 year 2016.
The assumptions used in the Black-Scholes valuation model to value our stock option grants and ESPP were as follows:
 
 
Stock Option Grants
 
ESPP
 
 
Year Ended March 31,
 
Year Ended March 31,
 
 
2015
 
2014
 
2016
 
2015
 
2014
Risk-free interest rate
 
1.1 -1.9%

 
1.6%

 
0.3 - 0.6%

 
0.04 - 0.2%

 
0.1
%
Expected volatility
 
36 - 40%

 
37 - 42%

 
32 - 36%

 
30 - 35%

 
36 - 38%

Weighted-average volatility
 
38
%
 
37
%
 
33
%
 
34
%
 
38
%
Expected term
 
4.5 years

 
4.5 years

 
6 - 12 months

 
6 - 12 months

 
6 - 12 months

Expected dividends
 
None

 
None

 
None

 
None

 
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,
 
2016
 
2015
 
2014
Risk-free interest rate
1.0
%
 
0.9
%
 
0.4
%
Expected volatility
14 - 53%

 
16 - 79%

 
16 - 58%

Weighted-average volatility
26
%
 
30
%
 
31
%
Expected dividends
None

 
None

 
None


Stock-Based Compensation Expense
Employee stock-based compensation expense recognized during the fiscal years ended March 31, 2016, 2015 and 2014 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. In subsequent periods, if actual forfeitures differ from those estimates, an adjustment to stock-based compensation expense will be recognized at that time.
The following table summarizes stock-based compensation expense resulting from stock options, restricted stock units, market-based restricted stock units, and the ESPP included in our Consolidated Statements of Operations (in millions):
 
 
Year Ended March 31,
 
 
2016
 
2015
 
2014
Cost of revenue
 
$
2

 
$
2

 
$
2

Research and development
 
103

 
82

 
90

Marketing and sales
 
24

 
21

 
26

General and administrative
 
49

 
39

 
32

Stock-based compensation expense
 
$
178

 
$
144

 
$
150


During the fiscal years ended March 31, 2016 we recognized a $38 million deferred income tax benefit related to our stock-based compensation expense. During the fiscal years ended March 31, 2015 and 2014, we did not recognize any benefit from income taxes related to our stock-based compensation expense.
As of March 31, 2016, our total unrecognized compensation cost related to restricted stock and restricted stock units (collectively referred to as “restricted stock rights”) was $243 million and is expected to be recognized over a weighted-average service period of 1.3 years. Of the $243 million of unrecognized compensation cost, $26 million relates to market-based restricted stock units. As of March 31, 2016, our total unrecognized compensation cost related to stock options was $9 million and is expected to be recognized over a weighted-average service period of 1.4 years.
For the fiscal year ended March 31, 2016, we recognized $83 million of income tax benefit from the exercise of stock-based compensation, net of $3 million of deferred tax write-offs; of this amount $86 million of excess tax benefit related to stock-based compensation deductions was reported in the financing activities on our Consolidated Statements of Cash Flows. For fiscal years ended fiscal years ended 2015 and 2014, we recognized $22 million and $13 million, respectively, of excess tax benefit from stock-based compensation deductions; this amount is reported in the financing activities on our Consolidated Statement of Cash Flows.
Summary of Plans and Plan Activity
Equity Incentive Plans
Our 2000 Equity Incentive Plan, as amended, (the “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. Pursuant to the 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.
A total of 15.2 million options or 10.7 million restricted stock units were available for grant under our Equity Plan as of March 31, 2016.
Stock Options
Options granted under the Equity Plan generally expire ten years from the date of grant and generally vest according to one of the following schedules:

•
35 month vesting with  1/3 cliff vesting after 11, 23 and 35 months or;
•
50 month vesting with 24% of the shares cliff vesting after 12 months and the ratably over the following 38 months.
The following table summarizes our stock option activity for the fiscal year ended March 31, 2016: 
 
 
Options
(in thousands)
 
Weighted-
Average
Exercise Prices
 
Weighted-
Average
Remaining
Contractual
Term  (in years)
 
Aggregate
Intrinsic Value
(in millions)
Outstanding as of March 31, 2015
 
4,920

 
$
37.44

 
 
 
 
Granted
 
6

 
66.08

 
 
 
 
Exercised
 
(1,594
)
 
42.43

 
 
 
 
Forfeited, cancelled or expired
 
(54
)
 
35.61

 
 
 
 
Outstanding as of March 31, 2016
 
3,278

 
$
35.09

 
5.61
 
$
101

Vested and expected to vest
 
3,163

 
$
35.22

 
5.53
 
$
97

Exercisable as of March 31, 2016
 
2,206

 
$
36.55

 
4.46
 
$
65



The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price as of March 31, 2016, which would have been received by the option holders had all the option holders exercised their options as of that date. The weighted-average grant date fair values of stock options granted during fiscal years 2015 and 2014 were $12.01 and $8.61, respectively. The total intrinsic values of stock options exercised during fiscal years 2016, 2015, and 2014 were $38 million, $22 million and $16 million, respectively. We issue new common stock from our authorized shares upon the exercise of stock options.

The following table summarizes outstanding and exercisable stock options as of March 31, 2016: 
 
 
Options Outstanding
 
Options Exercisable
Range of
Exercise Prices
 
Number
of Shares
(in thousands)
 
Weighted-
Average
Remaining
Contractual
Term  (in years)
 
Weighted-
Average
Exercise
Prices
 
Potential
Dilution
 
Number
of Shares
(in thousands)
 
Weighted-
Average
Exercise
Prices
 
Potential
Dilution
$11.53 - $23.83
 
317

 
3.39
 
$
19.10

 
0.1
%
 
313

 
$
19.18

 
0.1
%
26.25 - 26.25
 
1,000

 
7.58
 
26.25

 
0.3
%
 
580

 
26.25

 
0.2
%
27.49 - 35.70
 
853

 
8.21
 
35.50

 
0.3
%
 
343

 
35.21

 
0.1
%
36.00 - 59.63
 
1,108

 
2.47
 
47.33

 
0.4
%
 
970

 
48.78

 
0.3
%
$11.53 - $59.63
 
3,278

 
5.61
 
$
35.09

 
1.1
%
 
2,206

 
$
36.55

 
0.7
%

Potential dilution is computed by dividing the options in the related range of exercise prices by 301 million shares of common stock, which were issued and outstanding as of March 31, 2016.
Restricted Stock Rights
We grant restricted stock rights under our 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 the number of restricted stock units is typically issued net of required tax withholding requirements, if any. Restricted stock is issued and outstanding upon grant; however, restricted stock award holders are restricted from selling the shares until they vest. Upon granting or vesting of restricted stock, as the case may be, we will typically withhold shares to satisfy tax withholding requirements. Restricted stock rights are subject to forfeiture and transfer restrictions. Vesting for restricted stock rights is based on the holders’ continued employment with us through each applicable vest date. If the vesting conditions are not met, unvested restricted stock rights will be forfeited.
Generally, our restricted stock rights vest according to one of the following vesting schedules:

•
One-year vesting with 100% cliff vesting at the end of one year;
•
35 month vesting with  1/3 cliff vesting after 11, 23 and 35 months;
•
Three-year vesting with  1/3 cliff vesting at the end of each year;
•
Three-year vesting with 100% cliff vesting at the end of year three;
•
Three-year vesting with  1/2 cliff vesting after 18 and 36 months;
•
Three-year vesting with 2/3 and 1/3 vesting cliff vesting after 24 and 36 months;
•
Three-year vesting with  1/4, 7/20, 1/5,  and  1/5 of the shares cliff vesting respectively at the end of each of the first 6 months, 1st, 2nd, and 3rd years;
•
40 month vesting with 1/3 cliff vesting after 16, 28, and 40 months;
•
41 month vesting with 1/3 cliff vesting after 17, 29 and 41 months;
•
Four-year vesting with  1/4 cliff vesting at the end of each year;
•
51 month vesting with 1/10, 3/10, 3/10, 3/10 of the shares cliff vesting respectively after 15, 27, 39 and 51 months or;
•
Five-year vesting with  1/9,  2/9,  3/9,  2/9 and  1/9 of the shares cliff vesting respectively at the end of each of the 1st, 2nd, 3rd, 4th, and 5th years.
Each restricted stock right granted reduces the number of shares available for grant by 1.43 shares under our Equity Plan. The following table summarizes our restricted stock rights activity, excluding market-based restricted stock unit activity which is discussed below, for the fiscal year ended March 31, 2016: 
 
 
Restricted
Stock Rights
(in thousands)
 
Weighted-
Average Grant
Date Fair Values
Balance as of March 31, 2015
 
10,855

 
$
26.20

Granted
 
3,035

 
64.40

Vested
 
(5,809
)
 
22.65

Forfeited or cancelled
 
(924
)
 
35.78

Balance as of March 31, 2016
 
7,157

 
$
44.04



The grant date fair value of restricted stock rights 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 rights granted during fiscal years 2016, 2015, and 2014 were $64.40, $37.22 and $23.01 respectively. The fair values of restricted stock rights that vested during fiscal years 2016, 2015, and 2014 were $372 million, $209 million and $163 million, respectively.
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 received at vesting will range from zero percent 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, generally over a one-year, two-year cumulative and three-year cumulative period. In the table below, we present shares granted at 100 percent of target of the number of market-based restricted stock units that may potentially vest. The maximum number of shares of common stock that could vest is approximately 0.8 million for market-based restricted stock units granted during the fiscal year 2016. As of March 31, 2016, the maximum number of shares that could vest is approximately 1.3 million for market-based restricted stock units outstanding.
The following table summarizes our market-based restricted stock unit activity for the year ended March 31, 2016: 
 
 
Market-Based
Restricted  Stock
Units
(in thousands)
 
Weighted-
Average  Grant
Date Fair Value
Balance as of March 31, 2015
 
663

 
$
31.82

Granted
 
395

 
79.81

Vested
 
(742
)
 
25.77

Vested above target
 
371

 
25.77

Forfeited or cancelled
 
(51
)
 
40.10

Balance as of March 31, 2016
 
636

 
$
64.49


The weighted-average grant date fair values of market-based restricted stock units granted during fiscal years 2016, 2015, and 2014 were $79.81, $48.14, and $30.18, respectively. The fair values of market-based restricted stock units that vested during fiscal years 2016, 2015, and 2014 were $47 million, $23 million, and $7 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.
During fiscal year 2016, we issued approximately 0.9 million shares under the ESPP with purchase prices ranging from $32.16 to $54.78. During fiscal year 2015, we issued approximately 1.4 million shares under the ESPP with exercise prices for purchase rights ranging from $22.64 to $32.16. During fiscal year 2014, we issued approximately 2.2 million shares under the ESPP with exercise prices for purchase rights ranging from $11.33 to $22.64. During fiscal years 2016, 2015, and 2014, the estimated weighted-average fair values of purchase rights were $12.97, $8.26 and $4.67, respectively. 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, 2016, 5.2 million shares were available for grant under our ESPP.
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 $8 million and $9 million as of March 31, 2016 and 2015, respectively. As of March 31, 2016 and 2015, $8 million and $9 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 permit us to make discretionary contributions to employees’ accounts based on our financial performance. We contributed an aggregate of $27 million, $27 million and $16 million to these plans in fiscal years 2016, 2015, and 2014, respectively.
Stock Repurchase Program

In May 2014, a special committee of our Board of Directors, on behalf of the full Board of Directors, authorized a two-year program to repurchase up to $750 million of our common stock. Since inception, we repurchased approximately 9.2 million shares for approximately $394 million under this program.

In May 2015, our Board of Directors authorized a program to repurchase up to $1 billion of our common stock. This stock repurchase program, which expires on May 31, 2017, supersedes and replaces the stock repurchase authorization approved in May 2014. 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 any specific number of shares under this program and it may be modified, suspended or discontinued at any time. We repurchased approximately 6.9 million shares for approximately $461 million under this program during fiscal year 2016. We continue to actively repurchase shares.

In February 2016, we announced a new $500 million stock repurchase program. This new program was incremental to the existing two-year $1 billion stock repurchase program announced in May 2015. We completed repurchases under the February 2016 program during the quarter ended March 31, 2016. We repurchased approximately 7.8 million shares for approximately $500 million under this new program.


The following table summarizes total shares repurchased during fiscal years 2016 and 2015:
 
May 2014 Program
 
May 2015 Program
 
February 2016 Program
 
Total
(In millions)
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
Fiscal Year 2015
8.2

 
$
337

 
—

 
$
—

 
—

 
$
—

 
8.2

 
$
337

Fiscal Year 2016
1.0

 
$
57

 
6.9

 
$
461

 
7.8

 
$
500

 
15.7

 
$
1,018



During fiscal year 2014, we did not repurchase any shares of our common stock.