VMware 2012 Annual Report Download - page 96

Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited history
with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by
the Company under these agreements have not had a material effect on the Company’s consolidated results of operations, financial position, or
cash flows.
M. Stockholders’ Equity
VMware Class B Common Stock Conversion Rights
Each share of Class B common stock is convertible while held by EMC or its successor-in-interest at the option of EMC or its successor-in-
interest into one share of Class A common stock. If VMware’s Class B common stock is distributed to security holders of EMC in a transaction
(including any distribution in exchange for shares of EMC’s or its successor-in-interest’s common stock or other securities) intended to qualify
as a distribution under Section 355 of the Internal Revenue Code, or any corresponding provision of any successor statute, shares of VMware’s
Class B common stock will no longer be convertible into shares of Class A common stock. Prior to any such distribution, all shares of Class B
common stock will automatically be converted into shares of Class A common stock upon the transfer of such shares of Class B common stock
by EMC other than to any of EMC’
s successors or any of its subsidiaries (excluding VMware). If such a distribution has not occurred, each share
of Class B common stock will also automatically convert at such time as the number of shares of common stock owned by EMC or its successor-
in-interest falls below 20% of the outstanding shares of VMware’s common stock. Following any such distribution, VMware may submit to its
stockholders a proposal to convert all outstanding shares of Class B common stock into shares of Class A common stock, provided that VMware
has received a favorable private letter ruling from the Internal Revenue Service satisfactory to EMC to the effect that the conversion will not
affect the intended tax treatment of the distribution. In a meeting of VMware stockholders called for this purpose, the holders of VMware
Class A common stock and VMware Class B common stock will be entitled to one vote per share and, subject to applicable law, will vote
together as a single class, and neither class of common stock will be entitled to a separate class vote. All conversions will be effected on a share-
for-share basis.
VMware Equity Plan
In June 2007, VMware adopted its 2007 Equity and Incentive Plan (the “2007 Plan”). In May 2009, VMware amended its 2007 Plan to
increase the number of shares available for issuance by 20.0 million shares for total shares available for issuance of 100.0 million . The number
of shares underlying outstanding equity awards that VMware assumes in the course of business acquisitions are also added to the 2007 Plan
reserve on an as-converted basis. VMware has assumed 2.1 million
shares, which accordingly have been added to the 2007 Plan reserve. Awards
under the 2007 Plan may be in the form of stock options or other stock-based awards, including awards of restricted stock units. The exercise
price for a stock option awarded under the 2007 Plan shall not be less than 100% of the fair market value of VMware Class A common stock on
the date of grant. Most options granted under the 2007 Plan vest 25% after the first year and then monthly thereafter over the following three
years and expire between
six and seven years from the date of grant. Since 2009, VMware has not issued new stock options outside of those
assumed in acquisitions. Most restricted stock grants made under the 2007 Plan have a three -year to four -year period over which they vest.
VMware’s Compensation and Corporate Governance Committee determines the vesting schedule for all equity awards. VMware utilizes both
authorized and unissued shares to satisfy all shares issued under the 2007 Plan. At December 31, 2012 , there were an aggregate of 16.5 million
shares of common stock available for issuance pursuant to future grants under the 2007 Plan.
VMware Stock Repurchase Programs
The following table summarizes stock repurchase authorizations in the years ended December 31, 2012 , 2011 and 2010
(amounts in table in
thousands):
Purchases under the February 2011 authorization were completed in the second quarter of 2012. Purchases under the March 2010
authorization were completed in the first quarter of 2011.
90
Month Authorized
Amount Authorized Expiration Date
November 2012 $250,000 End of 2014
February 2012
600,000 End of 2013
February 2011 550,000 End of 2012
March 2010
400,000 End of 2011