Share-based Awards

3 Months Ended

May 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Awards

NOTE 8—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 months ended May 31, 2017 and May 31, 2016 (in thousands):

	Three Months Ended
	May 31, 2017		May 31, 2016
Cost of revenue	$	3,948	$	4,305
Sales and marketing		20,612		18,440
Research and development		13,447		12,002
General and administrative		5,711		6,528
Total share-based compensation expense	$	43,718	$	41,275

Share-based compensation expense qualifying for capitalization was insignificant for each of the three months ended May 31, 2017 and May 31, 2016. Accordingly, no share-based compensation expense was capitalized during the three months ended May 31, 2017 and May 31, 2016.

During the three months ended May 31, 2017 and May 31, 2016, the Company granted the following share-based awards:

	Three Months Ended
	May 31, 2017					May 31, 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		838,395		$	86.17		934,890	$	75.45
Performance share units—target		261,760	(1)	$	87.99		360,676	$	76.70
Performance share awards		104,362	(2)	$	87.99		140,182	$	76.70
Total awards		1,204,517		$	86.72		1,435,748	$	75.89

(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.