VMware 2014 Annual Report Download - page 50

Table of Contents
Sales and Marketing Expenses
Our sales and marketing expenses include personnel costs, sales commissions and related overhead associated with the sale and marketing
of our license and services offerings, as well as the cost of product launches. Sales commissions are generally earned and expensed when a firm
order is received from the customer. Sales and marketing expenses also include the net impact from the expenses incurred and fees generated by
certain marketing initiatives, such as our annual VMworld U.S. and VMworld Europe conferences.
Sales and marketing expenses increased in 2014 compared to 2013 primarily driven by growth in cash-based employee-related expenses of
$240 and an increase in stock-based compensation expense of $29 due to incremental growth in headcount, both organic and through
acquisitions. Costs incurred for travel and marketing programs also increased by $48 in 2014 compared 2013. The increase in expenses in 2014
was partially offset by a decrease of $10 in sales and marketing expenses related to Pivotal.
Sales and marketing expenses increased in 2013 compared to 2012 primarily due to growth in cash-based employee-related expenses of
$174, including, incremental growth in headcount and by higher commission expense due to increased sales volumes. To a lesser extent, costs
incurred for marketing programs also contributed to the increase of expense in 2013, compared to prior year. The increases in expenses in 2013
were partially offset by a decrease of $44 of sales and marketing expenses related to Pivotal.
General and Administrative Expenses
Our general and administrative expenses include personnel and related overhead costs to support the overall business. These expenses
include the costs associated with our finance, human resources, IT infrastructure and legal, as well as expenses related to corporate costs and
initiatives.
General and administrative expenses increased in 2014 compared to 2013. We have made and will continue to make installment payments to
certain key employees of AirWatch subject to the achievement of specified future employment conditions. We recognized compensation expense
of $141 in 2014 relating to these installment payments. Other cash-based employee-related expenses increased by $52 in 2014 due to
incremental growth in headcount, both organic and through acquisitions. Costs of $11 related to certain litigation and other contingencies, and
amounts for IT development costs and stock-based compensation expense further contributed to the increase in expenses in 2014 compared to
2013.
General and administrative expenses increased in 2013 compared to 2012 due to incremental growth in headcount resulting in an increase of
$19 in cash-based employee-related expenses. The increase in 2013 compared to 2012 was also due to an increase in charitable donations, stock-
based compensation expense and contractor expenses.
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For the Year Ended December 31, 2014 vs. 2013 2013 vs. 2012
2014 2013 2012 $ Change % Change $ Change % Change
Sales and marketing
$
1,969
$
1,671
$
1,495
$
298
18
%
$
177
12
%
Stock-based compensation
172
144
150
29
20
(7
)
(5
)
Total expenses
$
2,141
$
1,815
$
1,645
$
327
18
$
170
10
% of Total revenues
35
%
35
%
36
%
For the Year Ended December 31, 2014 vs. 2013 2013 vs. 2012
2014 2013 2012 $ Change % Change $ Change % Change
General and administrative
$
626
$
363
$
320
$
263
72
%
$
43
14
%
Stock-based compensation
69
56
48
12
22
9
18
Total expenses
$
695
$
419
$
368
$
276
66
$
52
14
% of Total revenues
12
%
8
%
8
%