Share-based compensation

The Company accounts for share-based payment awards granted to employees and directors by recording compensation expense based on estimated fair values. The Company estimates the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period. The Company determines the value of each option award that contains a market condition using a Monte Carlo Simulation valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation — Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent the Company's best estimates. The Company's estimates of the fair values of stock options granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option modifications, estimates of forfeitures, and the related income tax impact.

Share-based compensation expense for all share-based arrangements for the three and nine months ended December 31, 2015 and December 31, 2014 was as follows:



	Three months ended December 31				Nine months ended December 31
(in thousands)	2015		2014		2015		2014
Cost of revenue	$	266	$	317	$	771	$	932
Research and development	511		797		1,598		2,473
Selling and marketing	829		599		2,978		2,228
General and administrative	1,480		1,569		5,080		5,882
Total	$	3,086	$	3,282	$	10,427	$	11,515

Stock options granted generally vest over a four-year period, with 25% of the shares vesting after one year and monthly vesting thereafter. The options generally expire ten years from the date of grant. For the nine months ended December 31, 2015, the Company granted 0.1 million stock options at a weighted average grant date fair value of $6.56 per share. For the three months ended December 31, 2015 and December 31, 2014, share-based compensation expense related to stock options and the Company's employee stock purchase plan was $0.6 million and $1.9 million, respectively. For the nine months ended December 31, 2015 and December 31, 2014, share-based compensation expense related to stock options and the Company's employee stock purchase plan was $3.1 million and $5.9 million, respectively.

Certain of the Company's management-level employees receive performance stock options, which gives the recipient the right to receive common stock that is contingent upon achievement of specified pre-established performance goals over the performance period, which is generally three years subject to the recipient's continued service with the Company. The performance goals for the performance stock options are based on the measurement of the Company's total stockholder return, on a percentile basis, compared to a comparable group of companies. Depending on the outcome of the performance goals, the recipient may ultimately earn performance stock options equal to or less than the number of performance stock options granted. For the three months ended December 31, 2015 and December 31, 2014, share based compensation expense related to performance stock options was $0.2 million and $0.2 million, respectively. For the nine months ended December 31, 2015 and December 31, 2014, share based compensation expense related to performance stock options was $0.5 million and $0.5 million, respectively.

Certain of the Company's management-level employees also receive performance stock units, which gives the recipient the right to receive common stock that is contingent upon achievement of specific pre-established performance goals over the performance period, which is generally two years subject to the recipient's continued service with the Company. The performance goals are based on achieving certain levels of total licensing revenue over the performance period. Depending on the outcome of the performance goals, the recipient may ultimately earn performance stock units between 0% and 200% of the number of performance stock units granted. For the nine months ended December 31, 2015, the Company granted 0.3 million performance stock units at a weighted average granted date fair value of $12.63 per performance stock unit. For the three months ended December 31, 2015 and December 31, 2014, share-based compensation expense related to performance stock units was $0.6 million and $17 thousand, respectively. For the nine months ended December 31, 2015 and December 31, 2014, share-based compensation expense related to performance stock units was $2.1 million and $1.0 million, respectively.

Certain of the Company's employees, including certain management level employees, receive time-based restricted stock units. These restricted stock units vest over one to three years based upon a recipient's continued service with the Company. For the nine months ended December 31, 2015, the Company granted 0.5 million restricted stock units at a weighted average grant date fair value of $12.63 per restricted stock unit. For the three months ended December 31, 2015 and December 31, 2014, share-based compensation expense related to restricted stock units was $1.7 million and $1.5 million, respectively. For the nine months ended December 31, 2015 and December 31, 2014, share-based compensation expense related to restricted stock units was $4.7 million and $4.1 million, respectively.