EMC 2010 Annual Report Download - page 85

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
from participating in the 2008 Exchange Offer. Options for an aggregate of 4.1 million shares of VMware's Class A common stock were exchanged with a
weighted-average exercise price per share of $71.60. Options granted pursuant to the 2008 Exchange Offer have an exercise price of $33.95 per share, vest
pro rata over four years beginning September 10, 2008 with no credit for past vesting and have a new six-year option term. The 2008 Exchange Offer resulted
in incremental stock-based compensation expense of $18.0 million to be recognized over the four-year vesting term.
VMware Employee Stock Purchase Plan
In June 2007, VMware adopted its 2007 Employee Stock Purchase Plan (the "ESPP"), which is intended to be qualified under Section 423 of the Code.
A total of 6.4 million shares of VMware Class A common stock were reserved for future issuance. Under the ESPP, eligible VMware employees are granted
options to purchase shares at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise.
Options to purchase shares were generally granted twice yearly on January 1 and July 1 and exercisable on the succeeding June 30 and December 31 of each
year until the timing of the purchase plan was amended in 2009; as a result since then, options to purchase shares are generally granted on February 1 and
August 1 and exercisable on the succeeding July 31 and January 31, respectively, of each year.
In 2010, 1.5 million shares of Class A common stock were purchased under the ESPP at a weighted-average purchase price per share of $29.90. The
total cash proceeds from the purchase of these shares under the ESPP were $45.2 million. As of December 31, 2010, $24.8 million of ESPP withholdings
were recorded as a liability on the consolidated balance sheet for the next purchase in January 2011.
In 2009, 0.9 million shares of Class A common stock were purchased under the ESPP at a weighted-average purchase price per share of $20.14. The
total cash proceeds from the purchase of these shares under the ESPP were $18.3 million. As of December 31, 2009, $21.6 million of ESPP withholdings
were recorded as a liability on the consolidated balance sheet for the subsequent purchase in January 2010. In 2008, 1.7 million shares of Class A common
stock were purchased under the ESPP at a weighted-average purchase price per share of $28.05. The total cash proceeds from the purchase of these shares
under the ESPP were $46.9 million. As part of the 1.7 million shares purchased in 2008, employees purchased 0.6 million shares under the ESPP at a
weighted-average purchase price per share of $24.65 related to the December 31, 2007 purchase, which was completed in January 2008.
VMware Stock Options
The following table summarizes activity since January 1, 2008 for VMware employees in VMware stock options (shares in thousands):
Number of
Shares
Weighted Average
Exercise Price
(per share)
Outstanding, January 1, 2008 45,339 $ 26.76
Granted(1) 11,741 40.48
Forfeited(1) (8,033) 51.74
Expired (37) 24.26
Exercised (6,574) 21.64
Outstanding, December 31, 2008 42,436 26.54
Granted 12,500 29.86
Forfeited (3,736) 28.11
Expired (177) 45.24
Exercised (9,516) 22.01
Outstanding, December 31, 2009 41,507 28.34
Granted 3,362 57.60
Forfeited (2,220) 30.78
Expired (151) 83.86
Exercised (15,574) 24.79
Outstanding, December 31, 2010 26,924 33.54
Exercisable, December 31, 2010 10,706 29.75
Vested and expected to vest 25,639 $ 33.27
(1) Includes options for 4,017 shares exchanged in the 2008 VMware Exchange Offer
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