VMware 2013 Annual Report Download - page 88

Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
not elect to exchange their EMC options for options to purchase VMware Class A common stock continue to have their existing grants governed under
EMC’s stock plans. Additionally, if an employee transferred from EMC to VMware had outstanding EMC options at the date of transfer, the employee
typically retains their EMC award which also continues to be governed under the EMC stock plan. Similarly, if an employee transferred from VMware to
EMC had outstanding VMware options at the date of transfer, the employee typically retains their VMware award which continues to be governed under the
VMware stock plan.
The following table summarizes option activity since January 1, 2011 for VMware and EMC stock options (shares in millions):
The above table includes stock options granted in conjunction with unvested stock options assumed in business combinations. As a result, the weighted-
average exercise price per share may vary from the VMware stock price at time of grant.
As of December 31, 2013 , for the VMware stock options, the weighted-average remaining contractual term was 1.8 years and the aggregate intrinsic
value was $209 million for the 4 million exercisable shares. For the 6 million options vested and expected to vest at December 31, 2013 , the weighted-
average remaining contractual term was 3.2 years and the aggregate intrinsic value was $261 million . These aggregate intrinsic values represent the total pre-
tax intrinsic values based on VMware’s closing stock price of $89.71 as of December 31, 2013 , which would have been received by the option holders had
all in-the-money options been exercised as of that date.
As of December 31, 2013 , for the EMC stock options, the weighted-average remaining contractual term was 4.3 years and the aggregate intrinsic value
was $15 million for the 1 million exercisable shares. For the 2 million shares vested and expected to vest at December 31, 2013, the weighted-average
remaining contractual term was 4.5 years and the aggregate intrinsic value was $16 million . These aggregate intrinsic values represent the total pre-tax
intrinsic values based on EMC’s adjusted closing stock price of $25.05 as of December 31, 2013
, which would have been received by the option holders had
all in-the-money options been exercised as of that date.
The options exercised in the years ended December 31, 2013 , 2012 and 2011 had a pre-tax intrinsic value of $256 million , $443 million and $648
million , respectively.
Cash proceeds from the exercise of EMC stock options paid to EMC were $11 million , $9 million and $12 million for the years ended December 31,
2013 , 2012 and 2011 , respectively. The pre-
tax intrinsic value of EMC stock options held by VMware employees that were exercised during the years ended
December 31, 2013 , 2012 and 2011 were $8 million , $11 million and $12 million , respectively.
85
VMware Stock Options
EMC Stock Options
Number of
Shares
Weighted-
Average
Exercise Price
(per share)
Number of
Shares
Weighted-
Average
Exercise Price
(per share)
Outstanding, January 1, 2011
27
$
33.54
3
$
13.93
Options relating to employees transferred to/from EMC, net
—
—
2
13.53
Forfeited
(1
)
40.98
—
—
Exercised
(10
)
28.64
(1
)
13.58
Outstanding, December 31, 2011
16
35.27
4
13.16
Granted
1
4.67
—
—
Forfeited
(1
)
42.07
—
—
Exercised
(6
)
30.44
(1
)
12.35
Outstanding, December 31, 2012
10
34.36
3
15.12
Granted
1
71.53
—
—
Exercised
(5
)
28.12
(1
)
15.39
Outstanding, December 31, 2013
6
44.12
2
15.53
Exercisable, December 31, 2013
4
36.45
1
15.12
Vested and expected to vest, December 31, 2013
6
42.84
2
15.51