EMC 2009 Annual Report Download - page 83

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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") that 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 first granted under the ESPP on August 13, 2007, the date on which VMware's S-1 Registration Statement was declared
effective by the SEC, and became exercisable on December 31, 2007. Options to purchase shares are generally granted twice yearly.
In 2009, 0.9 million shares of Class A common stock were purchased under the ESPP at a purchase price per share of $20.14. The total cash proceeds
from the purchase of these shares under the ESPP were $18.3 million. 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 purchase price per share of $24.65. The purchase of
0.6 million shares related to the December 31, 2007 purchase, which was completed in January 2008. The total cash proceeds from the December 31, 2007
purchase under the ESPP were $15.7 million. In 2007, no shares were purchased under the ESPP. In 2009, the timing of the participants' option to purchase
shares under the ESPP was amended, and as a result of the amendment, the first option to purchase shares under the ESPP following the end of 2009 occurred
in January 2010. As of December 31, 2009, $21.6 million of payroll withholdings were accrued for purposes of the next option to purchase shares under the
ESPP in January 2010.
VMware Stock Options
The following table summarizes activity since January 1, 2007 for VMware employees in VMware stock options (shares in thousands):
Number of
Shares
Weighted Average
Exercise Price
(per share)
Outstanding, January 1, 2007 — $ —
Granted 39,271 27.88
Exchanged from EMC stock options 6,732 19.94
Forfeited (539) 24.50
Expired (5) 24.64
Exercised (120) 23.00
Outstanding, December 31, 2007 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
Exercisable, December 31, 2009 13,398 26.85
Vested and expected to vest 39,994 $ 27.98
(1) Includes options for 4,017 shares exchanged in the 2008 VMware Exchange Offer.
As of December 31, 2009, the weighted-average remaining contractual term was 3.9 years and the aggregate intrinsic value was $237.7 million for the
13.4 million exercisable shares. For the 40.0 million shares vested and expect to vest at December 31,
81