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Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In July 2007, a grant of 85,000 restricted stock units was made to an executive officer. These restricted stock units vest in 2009 only if
goals established by the Compensation and Corporate Governance Committee are met. As these goals had not been established as of
December 31, 2007, these restricted stock units were not considered granted as of December 31, 2007 for accounting purposes. Therefore, they
are not included as grants in the table shown above.
The total fair value of restricted stock that vested in 2007 was $0.6 million. As of December 31, 2007, 3.6 million shares of VMware
restricted stock were outstanding and unvested with an aggregate intrinsic value of $300.1 million. These shares are scheduled to vest through
2011.
The restricted stock awards are valued based on the VMware stock price on the award date. The restricted stock have various vesting
terms, including pro rata vesting over three or four years, and cliff vesting at the end of three or five years from the date of grant with
acceleration for achieving specified performance criteria. For awards with performance conditions, management evaluates the criteria in each
grant to determine the probability that the performance condition will be achieved.
EMC Stock Options
The following table summarizes option activity for VMware employees in EMC stock options in 2007, 2006, and 2005 (shares in
thousands):
The total pre-tax intrinsic value of EMC options held by VMware employees that were exercised during the years ended December 31,
2007, 2006 and 2005 were $12.3 million, $13.2 million and $13.6 million,
respectively. Cash proceeds from the exercise of these stock options paid to EMC were $8.5 million, $3.0 million and $4.5 million for the years
ended December 31, 2007, 2006 and 2005.
81
Number
of
Shares
Weighted
Average
Exercise Price
Outstanding, January 1, 2005
9,375
$
6.95
Options relating to employees transferred from EMC
128
22.04
Granted
3,442
13.84
Forfeited
(1,021
)
9.26
Expired
(11
)
9.42
Exercised
(1,328
)
3.41
Outstanding, December 31, 2005
10,585
9.59
Options relating to employees transferred from EMC
293
23.59
Options exchanged in a business acquisition
265
0.40
Granted
4,941
12.51
Forfeited
(847
)
12.22
Expired
(114
)
14.80
Exercised
(1,298
)
2.35
Outstanding, December 31, 2006
13,825
11.23
Options relating to employees transferred from EMC
678
21.21
Granted
879
13.91
Exchanged to VMware stock options
(11,009
)
12.19
Forfeited
(410
)
12.65
Expired
(24
)
12.66
Exercised
(1,184
)
7.16
Outstanding, December 31, 2007
2,755
12.22