Share-based Payments

Share-based Compensation Expense

The following table summarizes share-based compensation expense included in our condensed consolidated statements of income:



	For the Three Months Ended March 31,
(In millions)	2018			2017
Research and development	$	21.9		$	18.7
Selling, general and administrative	28.5			29.4
Subtotal	50.4			48.1
Capitalized share-based compensation costs	(3.4		)	(2.7		)
Share-based compensation expense included in total cost and expenses	47.0			45.4
Income tax effect	(7.6		)	(12.4		)
Share-based compensation expense included in net income attributable to Biogen Inc.	$	39.4		$	33.0

The following table summarizes share-based compensation expense associated with each of our share-based compensation programs:



	For the Three Months Ended March 31,
(In millions)	2018			2017
Market stock units	$	6.1		$	9.6
Time-vested restricted stock units	36.1			26.9
Cash settled performance units	4.3			3.5
Performance units	(0.8		)	4.5
Performance stock units settled in stock	0.7			—
Performance stock units settled in cash	0.1			—
Employee stock purchase plan	3.9			3.6
Subtotal	50.4			48.1
Capitalized share-based compensation costs	(3.4		)	(2.7		)
Share-based compensation expense included in total cost and expenses	$	47.0		$	45.4

We estimate the fair value of our obligations associated with our performance units, cash settled performance units and performance stock units settled in cash at the end of each reporting period through expected settlement. Cumulative adjustments to these obligations are recognized each quarter to reflect changes in the stock price and estimated outcome of the performance-related conditions.

Performance Stock Units (PSUs)

PSUs Settled in Stock

During the first quarter of 2018, we began granting awards for performance-vested restricted stock units that will settle in stock. PSUs awarded to employees have a three-year performance period and vest on the third anniversary of the grant date. The vesting of these awards is subject to the respective employee’s continued employment. The number of PSUs granted represents the target number of units that are eligible to be earned based on the attainment of certain performance measures established at the beginning of the performance period, which ends on December 31 of the third year of the performance period.

During the three months ended March 31, 2018, 66,000 PSUs that will settle in stock were granted at a weighted average grant date fair value of $317.58.

PSUs Settled in Cash

During the first quarter of 2018, we began granting awards for performance-vested restricted stock units that will settle in cash. PSUs awarded to employees have three performance periods and vest on the third anniversary of the grant date. The vesting of these awards is subject to the respective employee’s continued employment. The number of PSUs granted represents the target number of units that are eligible to be earned based on the attainment of certain performance measures established when the performance objectives are defined, which will be at the beginning of each year and will end on December 31 of such year.

Participants may ultimately earn between 0% and 200% of the target number of units granted based on the degree of the actual performance metric achievement. Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the number of units earned. PSUs will be settled in cash based on the 30 calendar day average closing stock price through the vesting date, once the actual vested and earned number of units is determined. Since no shares are issued, these awards do not dilute equity. Compensation expense, including the effect of forfeitures, is recognized over the applicable service period.

During the three months ended March 31, 2018, 44,000 PSUs that will settle in cash were granted.