Share-Based Compensation

12 Months Ended

Mar. 31, 2020

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):



	Year Ended March 31,
	2020		2019		2018
Cost of sales ⁽¹⁾	$	20.9	$	14.9	$	13.8
Research and development	82.9		72.0		42.5
Selling, general and administrative	66.4		62.3		36.9
Special charges and other, net	—		17.2		—
Pre-tax effect of share-based compensation	170.2		166.4		93.2
Income tax benefit	36.9		35.5		28.3
Net income effect of share-based compensation	$	133.3	$	130.9	$	64.9

⁽¹⁾ 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. During the fiscal year ended March 31, 2019, $17.2 million of share-based compensation expense was capitalized to inventory and $14.9 million of previously capitalized share-based compensation expense in inventory was sold. During the fiscal year ended March 31, 2018, $11.9 million of share-based compensation expense was capitalized to inventory and $13.8 million of previously capitalized share-based compensation expense in inventory was sold.

Microsemi Acquisition-related Equity Awards

In connection with its acquisition of Microsemi on May 29, 2018, the Company assumed certain restricted stock units (RSUs), stock appreciation rights (SARs), and stock options granted by Microsemi. The assumed awards were measured at the acquisition date based on the estimated fair value, which was a total of $175.4 million. A portion of that fair value, $53.9 million, which represented the pre-acquisition vested service provided by employees to Microsemi, was included in the total consideration transferred as part of the acquisition. As of the acquisition date, the remaining portion of the fair value of those awards was $121.5 million, representing post-acquisition share-based compensation expense that will be recognized as these employees provide service over the remaining vesting periods.

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 uses RSUs as its primary equity incentive compensation instrument for employees. Under the 2004 plan, 32,194,859 shares of common stock have been authorized for issuance and 8,640,662 shares of common stock remain available for future grants as of March 31, 2020.

Restricted Stock Units

RSU share activity under the 2004 Plan is set forth below:



	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested shares at March 31, 2017	6,419,456		$	42.06
Granted	1,267,536		$	77.26
Forfeited	(279,051	)	$	49.65
Vested	(1,735,501	)	$	38.00
Nonvested shares at March 31, 2018	5,672,440		$	50.79
Granted	1,951,408		$	77.83
Assumed upon acquisition	1,805,680		$	91.70
Forfeited	(408,242	)	$	73.36
Vested	(2,729,324	)	$	61.51
Nonvested shares at March 31, 2019	6,291,962		$	64.81
Granted	2,182,044		$	88.17
Forfeited	(340,659	)	$	75.50
Vested	(2,391,294	)	$	57.47
Nonvested shares at March 31, 2020	5,742,053		$	76.11

The total intrinsic value of RSUs which vested during the fiscal years ended March 31, 2020, 2019 and 2018 was $223.9 million, $229.3 million and $146.0 million, respectively. The aggregate intrinsic value of RSUs outstanding at March 31, 2020 was $389.3 million, calculated based on the closing price of the Company's common stock of $67.80 per share on March 31, 2020. The amount of unearned share-based compensation currently estimated to be expensed in the remainder of fiscal 2021 through fiscal 2025 related to unvested share-based payment awards at March 31, 2020 is $263.2 million. The weighted average period over which the unearned share-based compensation is expected to be recognized is approximately 2.03 years.

Stock Options and Stock Appreciation Rights

Stock option and stock appreciation right (SAR) activity under the Company's stock incentive plans in the three years ended March 31, 2020 is set forth below:



	Number of Shares		Weighted Average Exercise Price per Share
Outstanding at March 31, 2017	433,117		$	31.51
Exercised	(131,666	)	$	31.75
Forfeited or expired	(17,111	)	$	34.73
Outstanding at March 31, 2018	284,340		$	31.21
Assumed upon acquisition	141,751		$	25.86
Exercised	(140,118	)	$	27.67
Forfeited or expired	(4,091	)	$	39.62
Outstanding at March 31, 2019	281,882		$	30.16
Exercised	(130,419	)	$	28.71
Forfeited or expired	(2,453	)	$	20.02
Outstanding at March 31, 2020	149,010		$	31.59

The total intrinsic value of options and SARs exercised during the fiscal years ended March 31, 2020, 2019 and 2018 was $8.4 million, $8.3 million and $7.4 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, 2020 was $10.1 million. The aggregate intrinsic values were calculated based on the closing price of the Company's common stock of $67.80 per share on March 31, 2020. As of March 31, 2020, the weighted average remaining contractual term for options and SARs outstanding and exercisable was 2.66 years.

As of March 31, 2020 and March 31, 2019, the number of option and SAR shares exercisable was 149,010 and 278,591, respectively, and the weighted average exercise price per share was $31.59 and $30.03, respectively.

There were no stock options granted in the fiscal years ended March 31, 2020, 2019 and 2018.

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, 16,289,436 shares of common stock have been authorized for issuance and 6,347,253 shares remain available for future purchases as of March 31, 2020.

Employees purchased 787,284 shares of common stock in the fiscal year ended March 31, 2020 for a purchase price of $55.6 million under the employee stock purchase plans compared to 549,796 shares of common stock for a purchase price of $39.6 million in the fiscal year ended March 31, 2019 and 828,015 shares of common stock for a purchase price of $38.2 million in the fiscal year ended March 31, 2018. As of March 31, 2020, unrecognized share-based compensation costs related to the employee stock plans totaled $5.8 million, which will be recognized over a period of approximately five months.