VMware 2012 Annual Report Download - page 99

Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Cash proceeds from the exercise of EMC stock options paid to EMC were $9.4 million , $12.2 million and $12.4 million
for the years ended
December 31, 2012 , 2011 and 2010 , respectively. The pre-tax intrinsic value of these options held by VMware employees that were exercised
during the years ended December 31, 2012 , 2011 and 2010 were $11.3 million , $12.0 million and $10.8 million , respectively.
VMware Restricted Stock
VMware restricted stock primarily consists of restricted stock unit (“RSU”) awards granted to employees. RSUs are valued based on the
VMware stock price on the date of grant, and shares underlying RSU awards are not issued until the restricted stock units vest. Upon vesting,
each RSU converts into one share of VMware Class A common stock.
VMware restricted stock also included PSUs. In 2012
, VMware granted PSU awards to certain of its executives and employees. The awards
will vest through the first quarter of 2015 if certain employee specific or VMware designated performance targets are achieved. If minimum
performance thresholds are achieved, each PSU award will convert into VMware’s Class A common stock at ratios ranging from 0.5 to 3.0
shares per PSU, depending upon the degree of achievement of the performance target designated by each individual award. If minimum
performance thresholds are not achieved, then no shares will be issued under that PSU award.
The following table summarizes restricted stock activity since January 1, 2010 (units in thousands):
As of December 31, 2012 , 12.2 million of units outstanding included 11.1 million of RSUs, 0.6 million of restricted stock and 0.5 million
of
PSUs. Such PSUs are convertible into a maximum aggregate of 1.2 million shares. Shares underlying RSUs and PSUs are not issued until the
RSUs and PSUs vest.
The total fair value of VMware restricted stock, including restricted stock and restricted stock units, that vested in the years ended
December 31, 2012 , 2011 and 2010 was $346.9 million , $356.1 million and $258.0 million , respectively. As of December 31, 2012 , restricted
stock representing 12.2 million shares of VMware’s Class A common stock were outstanding, with an aggregate intrinsic value of $1,145.7
million based on VMware’s closing price as of December 31, 2012 . These awards are scheduled to vest through 2016 .
VMware Shares Repurchased for Tax Withholdings
In the years ended December 31, 2012 , 2011 and 2010 VMware repurchased and retired or withheld 1.7 million , 1.3 million and 1.3
million shares, respectively, of Class A common stock, for $135.6 million , $121.9 million and $87.1 million , respectively, to cover tax
withholding obligations. These amounts 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 repurchased or 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
repurchased or withheld shares, including restricted stock units, was classified as a reduction to additional paid-in capital.
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Number
of
Units
Weighted-
Average Grant
Date Fair
Value
(per unit)
Outstanding, January 1, 2010
9,211
$
33.21
Granted
4,933
74.87
Vested
(3,688
)
32.38
Forfeited
(704
)
39.05
Outstanding, December 31, 2010
9,752
54.17
Granted
4,548
91.51
Vested
(3,853
)
48.47
Forfeited
(907
)
64.70
Outstanding, December 31, 2011
9,540
72.74
Granted
7,832
101.73
Vested
(3,751
)
69.01
Forfeited
(1,451
)
81.53
Outstanding, December 31, 2012
12,170
91.93