Share-Based Compensation

12 Months Ended

Mar. 31, 2012

Share-Based Compensation [Abstract]

Share-Based Compensation

(9) Share-Based Compensation

We have various share-based compensation plans that authorize, among other types of awards, (i) the discretionary granting of stock options to purchase shares of our common stock, and (ii) the discretionary issuance of nonvested common stock in the form of time-based and market-based nonvested stock units. Options granted to employees generally vest monthly over four years and have a term of six years. Options granted to non-employee board members become fully vested within one year from the date of grant and have terms of ten years with respect to grants through fiscal 2008 and six years for all subsequent grants. Time-based nonvested stock units primarily vest in annual increments over one or three years, and market-based nonvested stock units vest in 50% increments over two- and three-year periods upon achievement of certain targets related to our relative shareholder return as compared to the NASDAQ-100 Index over each performance period.

We did not grant any stock options during fiscal 2012 and 2011 and granted 0.2 million stock options during fiscal 2010. We granted 4.6 million, 3.3 million and 3.0 million nonvested stock units during fiscal 2012, 2011 and 2010, respectively. There were no significant modifications made to any share-based grants during these periods. At March 31, 2012, there were 14.7 million shares available for grant under our share-based compensation plans. However, certain of our plans require us to reduce shares available for grant by a factor of 2.25 shares or 2.0 shares, depending on the plan from which the awards are issued, for the maximum number of shares that could be issued for each grant of nonvested stock.

We also sponsor an employee stock purchase plan that permits eligible employees to acquire shares of our stock at a 15% discount to the lower of the market price of our common stock at the beginning or end of six-month offering periods.

Share-based compensation expense is measured at the date of grant based on the fair value of the award and is recognized as compensation expense on a straight-line basis over the requisite service period of the award, which is generally the vesting period. We estimate the fair value of stock options and employee stock purchase plan awards using the Black-Scholes option pricing model. We use the fair value of the Company’s common stock at the date of grant as an estimate of fair value for time-based nonvested stock units, and we utilize Monte Carlo simulation models to estimate the fair value of certain market-based nonvested stock units. Share-based compensation expense is shown in the operating activities section in the consolidated statements of cash flows.

We estimate potential forfeitures of share-based awards at the time of grant and record compensation expense for those awards expected to vest. The estimate of forfeitures is reassessed over the requisite service period and, to the extent that actual forfeitures differ, or are expected to differ, from such estimates, compensation expense is adjusted through a cumulative catch-up adjustment in the period of change and the remaining unrecognized share-based compensation expense is recorded over the remaining requisite service period. There were no significant changes in estimated forfeitures in fiscal 2012, 2011 and 2010 as compared to estimates when the related expenses were originally recorded.

We estimate the volatility of our stock price using a combination of both historical volatility and implied volatility derived from market traded options on our common stock, as we believe that the combined volatility is more representative of future stock price volatility than either historical or implied volatility alone. We estimate the risk-free interest rate based on zero-coupon yields implied from United States Treasury issues with maturities similar to the expected term of the awards. We estimate the expected term of options granted using the simplified method allowed by relevant accounting standards, due to changes in vesting terms and contractual lives of our current options compared to our historical grants. We have never paid cash dividends and do not currently intend to pay cash dividends, and therefore we assume an expected dividend yield of zero.

The fair value of share-based payments that were estimated using the Black-Scholes option-pricing model and the Monte Carlo simulation model incorporated the following weighted-average assumptions:

	Year Ended March 31,
	2012			2011			2010
Expected volatility		33	%		35	%		35	%
Risk-free interest rate %		0.5	%		0.6	%		2.0	%
Expected term (in years)		3			3			4
Dividend yield		—			—			—

A summary of our share-based compensation activity for fiscal 2012 follows:

Stock Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In millions)					(In years)		(In millions)
Outstanding at March 31, 2011		7.2		$	30		3	$	144.9
Granted		—		$	—
Exercised		(1.5	)	$	26
Cancelled or expired		(0.2	)	$	34
Outstanding at March 31, 2012		5.5		$	30		2	$	57.1
Vested at March 31, 2012 and expected to vest		5.5		$	30		2	$	57.0
Exercisable at March 31, 2012		5.3		$	30		2	$	55.9

Nonvested Stock Units	Shares			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Vesting Term
	(In millions)					(In years)
Outstanding at March 31, 2011		6.3		$	39		1
Granted		4.6		$	42
Vested		(2.7	)	$	38
Cancelled or expired		(0.8	)	$	41
Outstanding at March 31, 2012		7.4		$	41		1

Included in the table above are 0.5 million market-based nonvested stock units outstanding at March 31, 2012 granted to selected executives and other key employees.

The following table summarizes weighted average grant date fair value and additional intrinsic value and vesting information:

		xxxxxx		xxxxxx		xxxxxx
	Year Ended March 31,
	2012		2011		2010
Weighted Average Fair Value
Per grant of stock options	$	—	$	—	$	10
Per grant of nonvested stock units	$	42	$	42	$	37
Share-Based Payment and Stock Option Values
Intrinsic value of stock options exercised (millions)	$	32.1	$	75.5	$	63.0
Fair value of nonvested stock units that vested (millions)	$	118.7	$	79.7	$	38.9
Weighted average grant date fair value of nonvested stock units that vested	$	38	$	35	$	32

Our outstanding options at March 31, 2012 were (shares in millions):

	Outstanding Options						Exercisable Options
Range of Exercise Prices	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Shares		Weighted- Average Exercise Price
$0.00 – 17.40		0.9	$	16		2		0.9	$	16
$17.41 – 19.93		0.5	$	19		3		0.5	$	19
$19.94 – 25.41		0.2	$	22		2		0.2	$	22
$25.42 – 31.69		0.5	$	28		4		0.4	$	28
$31.70 – 32.15		1.1	$	32		1		1.1	$	32
$32.16 – 36.84		0.4	$	36		2		0.4	$	36
$36.85 – 39.30		1.9	$	39		2		1.8	$	39

We had approximately $234.9 million of total unrecognized compensation costs related to stock options and nonvested stock units at March 31, 2012 that is expected to be recognized over a weighted-average period of 2 years.

We received cash of $39.1 million, $119.6 million and $79.1 million for the exercise of stock options during fiscal 2012, 2011 and 2010, respectively. Cash was not used to settle any equity instruments previously granted. We issue shares from treasury stock upon the exercise of stock options and upon the vesting of nonvested stock units.

Share-based compensation expense as recorded in our consolidated statements of comprehensive income is summarized as follows:

	Year Ended March 31,
	2012			2011			2010
	(In millions)
Cost of license revenue	$	4.7		$	3.4		$	2.5
Cost of maintenance revenue		15.2			9.8			7.9
Cost of professional services revenue		5.3			5.1			3.9
Selling and marketing expenses		39.7			35.1			31.6
Research and development expenses		13.3			10.5			10.1
General and administrative expenses		49.0			42.6			32.9
Total share-based compensation expense		127.2			106.5			88.9
Income tax benefit		(37.2	)		(27.3	)		(27.2	)
Total share-based compensation expense after taxes	$	90.0		$	79.2		$	61.7