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TableofContents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
VMware Shares Repurchased for Tax Withholdings
DuringtheyearsendedDecember31,2015,2014and2013,VMwarerepurchasedandretiredorwithheld2.6million,1.8millionand1.9millionshares,
respectively,ofClassAcommonstock,for$173million,$162millionand$126million,respectively,tocovertaxwithholdingobligations.Theseamountsmay
differfromtheamountsofcashremittedfortaxwithholdingobligationsontheconsolidatedstatementsofcashflowsduetothetimingofpayments.Pursuantto
therespectiveawardagreements,theseshareswerewithheldinconjunctionwiththenetsharesettlementuponthevestingofrestrictedstockandrestrictedstock
unitsduringtheperiod.Thevalueofthewithheldshares,includingrestrictedstockunits,wasclassifiedasareductiontoadditionalpaid-incapital.
Stock-Based Compensation
Thefollowingtablesummarizesthecomponentsoftotalstock-basedcompensationincludedinVMware’sconsolidatedstatementsofincomefortheyears
endedDecember31,2015,2014and2013(tableinmillions):
For the Year Ended December 31,
2015
2014
2013
Costoflicenserevenues $ 2
$ 2
$ 2
Costofservicesrevenues 44
42
29
Researchanddevelopment 226
244
227
Salesandmarketing 168
172
144
Generalandadministrative 64
69
56
Realignment —
—
6
Stock-basedcompensation 504
529
464
Incometaxbenefit (144)
(157)
(136)
Totalstock-basedcompensation,netoftax $ 360
$ 372
$ 328
Fromtimetotime,VMwareissuesequityawardsthathaveaguaranteedamountofvalueandareclassifiedasliabilityawardsonVMware’sconsolidated
balancesheets.Uponvesting,thesegrantswillbesettledinsharesbaseduponthestockpriceoratrailingaveragestockpriceonadatedeterminedbythetermsof
eachindividualaward.AsofDecember31,2015and2014,therewerenooutstandingliability-classifiedawards.Assuch,noliability-classifiedawardswere
reclassifiedtoadditionalpaid-incapitalduringtheyearendedDecember31,2015.DuringtheyearsendedDecember31,2014and2013,$21millionand
$25million,respectively,ofliability-classifiedawardswerereclassifiedtoadditionalpaid-incapitaluponvesting.
AsofDecember31,2015,thetotalunrecognizedcompensationcostforstockoptionsandrestrictedstockwas$1,117millionandwillberecognizedthrough
2019withaweighted-averageremainingperiodof1.4years.Stock-basedcompensationrelatedtobothVMwareandEMCequityawardsheldbyVMware
employeesisrecognizedonVMware’sconsolidatedstatementsofincomeovertheawards’requisiteserviceperiods.
Fair Value of VMware Options
ThefairvalueofeachoptiontoacquireVMwareClassAcommonstockgrantedduringtheyearsendedDecember31,2015,2014and2013wasestimatedon
thedateofgrantusingtheBlack-Scholesoption-pricingmodelwiththefollowingweighted-averageassumptions:
For the Year Ended December 31,
VMware Stock Options 2015
2014
2013
Dividendyield None
None
None
Expectedvolatility 32.0%
36.2%
38.5%
Risk-freeinterestrate 1.1%
0.9%
0.9%
Expectedterm(inyears) 3.3
3.2
3.6
Weighted-averagefairvalueatgrantdate $ 27.16
$ 48.47
$ 29.47
85