Share-based Awards

The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the employee requisite service period, typically on a straight-line basis. The Company estimates the fair value of stock options using the Black-Scholes-Merton valuation model. The fair value of nonvested share awards, nonvested share units and performance share units are measured at their underlying closing share price on the day of grant.

The following summarizes share-based compensation expense recognized in the Company’s Consolidated Financial Statements for the three and nine months ended November 30, 2017 and November 30, 2016 (in thousands):



	Three Months Ended				Nine Months Ended
	November 30, 2017		November 30, 2016		November 30, 2017		November 30, 2016
Cost of revenue	$	4,199	$	4,037	$	12,408	$	12,396
Sales and marketing	23,278		26,624		64,708		65,426
Research and development	14,937		13,814		42,603		38,785
General and administrative	9,904		10,266		23,264		24,766
Total share-based compensation expense (1)	$	52,318	$	54,741	$	142,983	$	141,373

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(1)	Total share-based compensation expense includes $2.9 million and $2.0 million respectively, of expense related to the Company’s employee stock purchase plan (“ESPP”) for the three months ended November 30, 2017 and November 30, 2016 and $8.8 million and $2.0 million, respectively, for the nine months ended November 30, 2017 and November 30, 2016.

Share-based compensation expense qualifying for capitalization was insignificant for each of the three and nine months ended November 30, 2017 and November 30, 2016. Accordingly, no share-based compensation expense was capitalized during the three and nine months ended November 30, 2017 and November 30, 2016.

During the three and nine months ended November 30, 2017 and November 30, 2016, the Company granted the following share-based awards:



	Three Months Ended
	November 30, 2017			November 30, 2016
	Shares and Shares Underlying Awards	Weighted Average Per Share Award Fair Value		Shares and Shares Underlying Awards	Weighted Average Per Share Award Fair Value
Service-based shares and share units	699,066	$	120.89	949,421	$	76.19



	Nine Months Ended
	November 30, 2017				November 30, 2016
	Shares and Shares Underlying Awards		Weighted Average Per Share Award Fair Value		Shares and Shares Underlying Awards	Weighted Average Per Share Award Fair Value
Service-based shares and share units	1,585,904		$	101.85	2,017,861	$	75.62
Performance share units—target	261,760	(1)	$	87.99	362,502	$	76.68
Performance share awards	104,362	(2)	$	87.99	140,182	$	76.70
Total awards	1,952,026		$	99.25	2,520,545	$	75.83

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(1) Certain executives and senior management were awarded a target number of performance share units (“PSUs”). PSU grantees may earn up to 200% of the target number of PSUs. Half of the target number of PSUs can be earned by the grantees depending upon the Company’s financial performance measured against the financial performance of specified peer companies during a three-year performance period beginning on March 1, 2017. The remaining target number of PSUs can be earned by the grantees depending upon the Company’s total shareholder return performance measured against the total shareholder return performance of specified peer companies during a three-year period beginning on March 1, 2017.

(2) Certain executives were granted restricted stock awards. These shares were awarded subject to the achievement of a specified dollar amount of revenue for the fiscal year ending February 28, 2018 (the “RSA Performance Goal”). If the Company fails to achieve the RSA Performance Goal for the fiscal year ending February 28, 2018, then all such shares are forfeited. If the Company achieves the RSA Performance Goal for the fiscal year ending February 28, 2018, then 25% of the restricted stock vests on or about July 16, 2018, and the remainder vests ratably on a quarterly basis over the course of the subsequent three-year period, provided that the grantee’s business relationship with the Company has not ceased.