Stock Based Compensation

3 Months Ended

May. 01, 2016

Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Our stock-based compensation expense is associated with stock options, restricted stock units, or RSUs, performance stock units that are based on our corporate financial performance targets, or PSUs, performance stock units that are based on market conditions, or market-based PSUs, and our employee stock purchase plan, or ESPP.

Our Condensed Consolidated Statements of Income include stock-based compensation expense, net of amounts capitalized as inventory, as follows:

	Three Months Ended
	May 1, 2016		April 26, 2015
	(In millions)
Cost of revenue	$	4	$	2
Research and development	29		27
Sales, general and administrative	20		16
Total	$	53	$	45

Equity Award Activity

The following is a summary of our equity award transactions under our equity incentive plans:

	RSUs, PSUs and Market-based PSUs Outstanding				Options Outstanding
	Number of Shares		Weighted Average Grant-Date Fair Value Per Share		Number of Shares		Weighted Average Exercise Price Per Share
	(In millions, except per share data)
Balances, January 31, 2016	26		$	19.12	13		$	14.49
Granted (1) (2)	3		$	32.01	—		$	—
Exercised	—		$	—	(2	)	$14.05
Vested restricted stock	(3	)	$	16.63	—		—
Canceled and forfeited	—		$	—	—		$	—
Balances, May 1, 2016	26		$	21.29	11		$	14.57

(1) Represents PSUs that will be issued and eligible to vest if the corporate financial performance maximum target level for fiscal year 2017 is achieved. Depending on the actual level of achievement of the corporate performance target at the end of fiscal year 2017, the PSUs issued could range from 0 to 2 million shares.

(2) Represents market-based PSUs that will be issued and eligible to vest if the maximum target for total shareholder return, or TSR, over the 3-year measurement period is achieved. Depending on the ranking of our TSR compared to the respective TSRs of the companies comprising the Standard & Poor’s 500 Index during a 3-year measurement period, the market-based PSUs issued could range from 0 to 0.3 million shares.

Of the total fair value of equity awards granted during the three months ended May 1, 2016 and April 26, 2015, the stock-based compensation expense related to equity awards that are not expected to vest was $10 million and $5 million, respectively.

The following summarizes the aggregate unearned stock-based compensation expense and estimated weighted average amortization period as of May 1, 2016 and January 31, 2016:

	May 1,		January 31,
	2016		2016
	(In millions)
Aggregate unearned stock-based compensation expense	$	401	$	381
Estimated weighted average amortization period	(In years)
Stock options	1.0		1.1
RSUs, PSUs and market-based PSUs	2.8		2.7
ESPP	0.6		0.7