EMC 2009 Annual Report Download - page 84

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2009, the weighted-average remaining contractual term was 4.4 years and the aggregate intrinsic value was $625.3 million. These aggregate intrinsic values
represent the total pre-tax intrinsic values based on VMware's closing stock price of $42.38 as of December 31, 2009, which would have been received by the
option holders had all in-the-money options been exercised as of that date.
Cash proceeds from the exercise of VMware stock options for the years ended December 31, 2009, 2008 and 2007 were $209.4 million, $143.2 million
and $2.8 million, respectively. The options exercised in 2009 and 2008 had a pre-tax intrinsic value of $132.6 million and $219.6 million, respectively, and
income tax benefits realized from the exercise of stock options of $47.1 million and $71.4 million, respectively. There was no pre-tax intrinsic value to the
options exercised or related income tax benefits realized in 2007.
In August 2009, VMware granted its President and Chief Executive Officer a stock option for the purchase of approximately 1.4 million shares of
VMware's Class A common stock in exchange for a stock option he held for the purchase of shares of common stock of EMC Corporation. The exercise price
of his new VMware grant was $31.59 per share, the closing trading price of VMware Class A common stock on the grant date of August 12, 2009. The option
expires six years from the grant date. The new VMware grant preserves the 13 months of vesting that had been earned while serving as VMware's President
and CEO since July 2008 and accordingly was vested with respect to 0.3 million of the shares on the date of grant. The remaining 1.1 million shares will vest
ratably each month through March 2013 subject to his continued service to VMware. There is no incremental stock-based compensation expense as a result of
modifying this award, and the original grant date fair value continues to be recognized over the requisite service period of the award.
VMware Restricted Stock
VMware restricted stock includes restricted stock awards, restricted stock units and other restricted stock. Other restricted stock includes shares issued
to certain employees of SpringSource who agreed to accept shares of VMware Class A common stock subject to vesting restrictions in lieu of a portion of
their cash merger proceeds. In addition, other restricted stock includes options exercised prior to vesting by non-employee directors. The exercise of those
options prior to vesting resulted in the outstanding shares being subject to repurchase and hence restricted until such time as the respective options vest.
In September 2008, VMware awarded 5.3 million restricted stock units to certain employees, including a portion for international employees who were
not eligible to participate in the 2008 Exchange Offer and a portion for retention purposes. These awards generally will vest over a three-year or four-year
period. These awards resulted in stock-based compensation expense of $164.5 million to be recognized over the three-year or four-year vesting term.
The following table summarizes restricted stock activity since January 1, 2007 for VMware restricted stock (shares in thousands):
Number of
Shares
Weighted Average
Grant Date
Fair Value
Restricted stock at January 1, 2007 — $ —
Granted 596 39.99
Exchanged from EMC restricted stock 2,872 21.48
Exercised stock options, subject to repurchase 120 23.00
Vested (5) 20.24
Forfeited (18) 20.19
Outstanding, December 31, 2007 3,565 24.64
Granted 6,619 35.14
Vested (2,153) 22.58
Forfeited (405) 61.90
Outstanding, December 31, 2008 7,626 32.35
Granted 5,200 33.63
Vested (2,881) 31.31
Forfeited (734) 34.81
Outstanding, December 31, 2009 9,211 $ 33.21
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