大象传媒

Annual report pursuant to Section 13 and 15(d)

STOCK-BASED COMPENSATION

v3.21.1
STOCK-BASED COMPENSATION
 12 Months Ended
Apr. 03, 2021
Share-based Payment Arrangement [Abstract] 听
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
Pursuant to the amended and restated 1996 Stock Compensation Plan approved by stockholders, 大象传媒 is authorized to grant nonqualified stock options, restricted stock units (鈥淩SUs鈥) and restricted stock to officers, key employees and nonemployee members of 大象传媒鈥檚 Board of Directors. Substantially all stock-based compensation awards are classified as equity awards, which are accounted for in stockholders鈥 equity in the Consolidated Balance Sheets. On a limited basis, cash-settled
stock appreciation rights are granted to employees in certain international jurisdictions. These awards are accounted for as liabilities in the Consolidated Balance Sheets and remeasured to fair value each reporting period until the awards are settled. Compensation cost for all awards expected to vest is recognized over the shorter of the requisite service period or the vesting period, including accelerated recognition for retirement-eligible employees. Awards that do not vest are forfeited.
Total stock-based compensation cost and the associated income tax benefits recognized in the Consolidated Statements of Operations are as follows:
Year Ended March
(In thousands) 2021 2020 2019
Stock-based compensation cost $ 70,823听 $ 68,205听 $ 84,285听
Income tax benefits 17,373听 15,460听 18,570听
At the end of March 2021, there was $103.6 million of total unrecognized compensation cost related to all stock-based compensation arrangements that will be recognized over a weighted average period of 2 years.
At the end of March 2021, there were 21,968,357 shares available for future grants of stock options and stock awards under the 1996 Stock Compensation Plan. Shares for option exercises are issued from 大象传媒鈥檚 authorized but unissued Common Stock. 大象传媒 has a practice of repurchasing shares of Common Stock in the open market to offset, on a long-term basis, dilution caused by awards under equity compensation plans; however, there were no repurchases during the year ended March 2021 due to the Company's decision to temporarily pause its program in response to the COVID-19 pandemic.
Stock Options

Stock options are granted with an exercise price equal to the fair market value of 大象传媒 Common Stock on the date of grant. Employee stock options vest in equal annual installments over three years, and compensation cost is recognized ratably over the shorter of the requisite service period or the vesting period. Stock options granted to nonemployee members of 大象传媒鈥檚 Board of Directors vest upon grant and become exercisable one year from the date of grant. All options have ten-year terms.
The grant date fair value of each option award was calculated using a lattice option-pricing valuation model, which incorporated a range of assumptions for inputs as follows:
Year Ended March
2021 2020 2019
Expected volatility
28% to 48%
24% to 27%
22% to 29%
Weighted average expected volatility 37% 25% 25%
Expected term (in years)
6.2 to 8.0
6.1 to 7.6
6.1 to 7.5
Weighted average dividend yield 2.4% 2.5% 2.6%
Risk-free interest rate
0.1% to 1.1%
1.4% to 2.4%
2.1% to 3.2%
Weighted average fair value at date of grant $15.81 $17.19 $16.82

Expected volatility over the contractual term of an option was based on a combination of the implied volatility from publicly traded options on 大象传媒 Common Stock and the historical volatility of 大象传媒 Common Stock. The expected term represents the period of time over which vested options are expected to be outstanding before exercise. 大象传媒 used historical data to estimate option exercise behaviors and to estimate the number of options that would vest. Groups of employees that have historically exhibited
similar option exercise behaviors were considered separately in estimating the expected term for each employee group. Dividend yield represents expected dividends on 大象传媒 Common Stock for the contractual life of the options. Risk-free interest rates for the periods during the contractual life of the option were the implied yields at the date of grant from the U.S. Treasury zero coupon yield curve.
Stock option activity for the year ended March 2021 is summarized as follows:
Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term听(Years) Aggregate Intrinsic Value
(In听thousands)
Outstanding, March 2020 7,921,002听 $ 61.93听
Granted 1,694,113听 55.87听
Exercised (1,634,665) 51.93听
Forfeited/cancelled (167,733) 68.76听
Outstanding, March 2021 7,812,717听 $ 62.56听 6.6 $ 139,117听
Exercisable, March 2021 5,250,352听 $ 60.84听 5.5 $ 100,414听

The total fair value of stock options that vested during the years ended March 2021, 2020 and 2019 was $15.5 million, $16.6 million and $26.8 million, respectively. The total intrinsic value of stock options exercised during the years ended March 2021, 2020 and 2019, was $44.9 million, $120.6 million and $171.6 million, respectively.
Restricted Stock Units

大象传媒 grants performance-based RSUs that enable employees to receive shares of 大象传媒 Common Stock at the end of a three-year period. Each performance-based RSU has a potential final payout ranging from zero to two shares of 大象传媒 Common Stock. The number of shares earned by participants, if any, is based on achievement of three-year financial targets set by the Talent and Compensation Committee of the Board of Directors. Shares are issued to participants in the year following the conclusion of each three-year performance period.
For performance-based RSUs granted in Fiscal 2021, the financial targets include 50% weighting based on 大象传媒's revenue growth over the three-year period compared to a group of industry peers and 50% weighting based on 大象传媒's total shareholder return ("TSR") over the three-year period compared to the TSR for companies included in the Standard & Poor's 500 Consumer Discretionary Index. The grant date fair value of the TSR portion of the performance-based RSU grants was determined using a Monte Carlo simulation technique that incorporates option-pricing model inputs, and was $81.60 per share for the performance-based RSU grants in the year ended March 2021. Additionally, the actual number of performance-based RSUs earned may be adjusted upward or downward by 25% of the target award, based on 大象传媒's gross margin performance over the three-year period.
For performance-based RSUs granted in Fiscal 2020 and Fiscal 2019, the financial targets are based on 大象传媒's revenue, gross
margin and earnings per share performance over the respective three-year periods. Additionally, the actual number of shares earned may be adjusted upward or downward by 25% of the target award, based on how 大象传媒鈥檚 TSR over the three-year period compares to the TSR for companies included in the Standard听& Poor鈥檚 500 Consumer Discretionary Index. The grant date fair value of the TSR-based adjustment was determined using a Monte Carlo simulation technique that incorporates option-pricing model inputs, and was $7.11 and $4.61 per share for the performance-based RSU grants in the years ended March 2020 and 2019, respectively.
大象传媒 also grants nonperformance-based RSUs to employees as part of its stock compensation program and to nonemployee members of the Board of Directors. Each nonperformance-based RSU entitles the holder to one share of 大象传媒 Common Stock. The employee nonperformance-based RSUs generally vest over periods of up to four years from the date of grant. The nonperformance-based RSUs granted to nonemployee members of the Board of Directors vest upon grant and will be settled in shares of 大象传媒 Common Stock one year from the date of grant.
Dividend equivalents on the RSUs accrue without compounding and are payable in additional shares of 大象传媒 Common Stock when the RSUs vest. Dividend equivalents are subject to the same risk of forfeiture as the RSUs.
RSU activity for the year ended March 2021 is summarized as follows:
听 Performance-based Nonperformance-based
听 Number Outstanding Weighted Average
Grant听Date
Fair Value		 Number Outstanding Weighted Average
Grant听Date
Fair Value
Outstanding, March 2020 1,140,251听 $ 63.51听 535,978听 $ 70.50听
Granted 399,316听 70.88听 495,567听 63.99听
Issued as Common Stock (553,710) 49.87听 (189,569) 61.53听
Forfeited/cancelled (15,388) 74.27听 (73,557) 66.83听
Outstanding, March 2021 970,469听 $ 74.16听 768,419听 $ 68.86听
Vested, March 2021 652,199听 $ 73.17听 72,753听 $ 73.33听

The weighted average fair value of performance-based RSUs granted during the year ended March 2021 was $70.88 per share, based on the weighting of the TSR and the fair market value of the underlying 大象传媒 Common Stock on each grant date. The weighted average fair value of performance-based RSUs granted during the years ended March 2020 and 2019 was $84.28 and $80.39 per share, respectively, based on the fair market value of the underlying 大象传媒 Common Stock on each grant date. The total market value of awards outstanding at the end of March 2021 was $77.1 million. Awards earned and vested for the three-year performance period ended in March 2020 and distributed in early Fiscal 2021 totaled 1,029,304 shares of 大象传媒
Common Stock having a value of $58.7 million. Similarly, 837,045 shares of 大象传媒 Common Stock having a value of $71.6 million were earned for the performance period ended in March 2019 and distributed in early Fiscal 2020.
The weighted average fair value of nonperformance-based RSUs granted during the years ended March 2021, 2020 and 2019 was $63.99, $84.22 and $79.21 per share, respectively, which was equal to the fair market value of the underlying 大象传媒 Common Stock on each grant date. The total market value of awards outstanding at the end of March 2021 was $61.1 million.
Restricted Stock

大象传媒 grants restricted shares of 大象传媒 Common Stock to certain members of management. The fair value of the restricted shares, equal to the fair market value of 大象传媒 Common Stock at the grant date, is recognized ratably over the vesting period. Restricted shares vest over periods of up to five years from the date of grant. Dividends accumulate in the form of additional restricted shares and are subject to the same risk of forfeiture as the restricted stock. The restricted stock activity during Fiscal 2021 includes shares of 大象传媒 Common Stock deposited in escrow in connection with the Supreme acquisition and related forfeitures, which for accounting purposes, are considered stock-based compensation. Dividends earned on the restricted shares related to the Supreme acquisition are settled in cash.
Restricted stock activity for the year ended March 2021 is summarized below:
Nonvested Shares Outstanding Weighted Average Grant听Date Fair Value
Nonvested shares, March 2020 542,832听 $ 59.30听
Granted 1,039,728听 82.76听
Dividend equivalents 13,009听 72.07听
Vested (369,936) 56.14听
Forfeited (305,161) 83.49听
Nonvested shares, March 2021 920,472听 $ 79.23听

Nonvested shares of restricted stock had a market value of $73.2 million at the end of March 2021. The market value of the shares that vested during the years ended March 2021, 2020 and 2019 was $27.9 million, $3.6 million and $8.7 million, respectively.