15. Stock Benefit Plans and Stock-Based Compensation

Stock Benefit Plans

2008 Equity Incentive Plan (the "2008 Plan"). On August 1, 2008, the 2008 Plan replaced the 1996 Stock Option Plan and the 1998 Director Option Plan. As of November 30, 2011, there were 6.1 million shares available for grant under the 2008 Plan and 8.9 million shares underlying stock options and awards outstanding under the 2008 Plan. During each of fiscal year 2011 and fiscal year 2010, certain of our employees, including our Chief Executive Officer, Chief Financial Officer and other named executive officers, received PRSUs. These PRSUs are subject to the terms and conditions set forth in the PRSU Agreement and granted under our 2008 Plan as recently amended and restated. As of November 30, 2011, approximately 4.3 million PRSUs were outstanding.

Under the terms of the PRSUs granted in fiscal year 2010, these PRSUs will be eligible to start vesting as of the end of our fiscal year 2012 if we achieve non-GAAP EPS of $1.00 or greater for our fiscal year 2012 and a cumulative non-GAAP EPS of $2.40 or greater over the three fiscal years 2010, 2011 and 2012. If the performance goals are not met as measured at the end of fiscal year 2012, then the PRSUs still may become eligible to vest if, in fiscal year 2013, we achieve a non-GAAP EPS of $1.00 or greater and a cumulative non-GAAP EPS of $3.00 or greater over the four fiscal years 2010, 2011, 2012 and 2013. Upon attainment of the requisite performance goals, the PRSUs will be scheduled to vest in two equal installments over the subsequent two years, subject to the award recipient's continued employment. Further, even if the performance and time-based vesting requirements are met, 20% of the awards will be forfeited if, in the first fiscal year following achievement of the applicable performance goals, our non-GAAP EPS falls by 10% or more as compared to the non-GAAP EPS achieved for the year that the performance goals were achieved. Also, all or a certain portion of these PRSUs generally will become eligible to vest upon a change of control occurring in 2011, 2012 or 2013, provided that the Company achieves a certain minimum cumulative non-GAAP EPS applicable to the year in which the change of control occurs, or the PRSUs that became eligible to vest but have not yet vested will accelerate vesting as to 100% of the award upon the award holder's involuntary termination without cause within 12 months after a change of control.

In fiscal year 2011, we granted 0.3 million PRSUs which are subject to performance criteria based on non-GAAP EPS for fiscal year 2011.

1996 Stock Option Plan (the "1996 Plan"). On August 1, 2008, the 1996 Plan was retired and replaced with the 2008 Plan. As of November 30, 2011, there were no shares available for grant and 10.7 million underlying stock options and awards outstanding under the 1996 Plan.

Stock options granted under the 2008 and 1996 Plans may be either incentive stock options or nonqualified stock options. Incentive stock options may be granted only to employees (including officers and directors who are employees). Nonqualified stock options may be granted to our employees and consultants. Stock options are generally granted at fair market value on the date of grant and generally vest over four years. Stock options granted from the 1996 Plan prior to December 1, 2005 generally have a contractual term of ten years from the date of grant, and stock options granted from the 1996 Plan on or after December 1, 2005 and stock options granted from the 2008 Plan, have a contractual term of seven years from the date of grant.

In addition to stock options, we issue restricted stock or restricted stock units to our employees (including officers and directors who are employees). Shares of restricted stock are issued at the time of grant, but held in escrow until they are vested. The recipient of restricted stock becomes the owner of record of the stock immediately upon grant, subject to certain restrictions. The balance of unvested restricted stock will be forfeited and automatically transferred back to us at no cost upon the termination of the recipient's employment. Upon vesting of restricted stock, the recipient has the option to settle minimum withholding taxes by electing to have us withhold otherwise deliverable shares having a fair market value equal to the required tax obligations ("net-settlement"). The net-settlement shares are then immediately cancelled and retired. As vesting of restricted stock units occur, common stock is issued. The recipient of restricted stock units does not acquire any rights as a stockholder until the restricted stock units are settled upon vesting and the recipient actually receives shares of our common stock.

Our stock option agreements and stock award agreements generally provide for partial accelerated vesting if there is a change in control of us. We have entered into an employment agreement with our CEO that provides for varying levels of accelerated vesting upon the occurrence of certain events. In addition, we have a change in control and severance plan that provides certain of our employees with partial accelerated vesting in the event that their employment is terminated within twelve months of a change in control of TIBCO.

1998 Director Option Plan (the "Director Plan"). In February 1998, we adopted the Director Plan. On August 1, 2008, the Director Plan was retired and replaced by the 2008 Plan. As of November 30, 2010, no shares were available for grant and approximately 1.0 million shares underlying stock options were outstanding under the Director Plan.

2008 Employee Stock Purchase Plan (the "2008 ESPP"). On August 1, 2008, we adopted the 2008 ESPP replacing the previous Employee Stock Purchase Program (the "ESPP") pursuant to the 1996 Plan. As of November 30, 2011, approximately 8.8 million shares were reserved for future issuance under the 2008 ESPP and we had issued approximately 0.3 million shares under the 2008 ESPP.

Employees are generally eligible to participate in the 2008 ESPP if they are employed by us for more than 20 hours per week and more than five months in a calendar year and are not (and would not become as a result of being granted an option under the 2008 ESPP) 5% stockholders of the Company.Certain of our international employees are also eligible to participate. Under the 2008 ESPP, eligible employees may select a rate of payroll deduction from 1% to 10% of their eligible compensation subject to certain maximum purchase limitations. Under the 2008 ESPP, participants are entitled to purchase shares at 85% of the lesser of the fair market value of our common stock on either the first or last trading day of each six-month offering period. Participants may contribute a maximum amount of $2,500 per offering period and no contribution percentage changes are allowed during an offering period.

We issued approximately 0.3 million shares, 0.4 million shares and 0.5 million shares for $3.9 million, $3.0 million and $2.4 million, respectively, in employee contributions for the fiscal years ended 2011, 2010 and 2009, respectively, under the employee stock purchase plans.

2009 Deferred Compensation Plan (the "2009 DCP"). On February 20, 2009, we adopted the 2009 DCP. Pursuant to the 2009 DCP, eligible participants may elect to defer certain cash compensation into restricted stock units in accordance with the terms of the 2009 DCP. The restricted stock units will be settled in shares of our common stock at the end of the elected deferral period except in certain situations as provided in the 2009 DCP. As of November 30, 2011, approximately 985,000 shares of our common stock remained available for issuance under the 2009 DCP.

Stock Option Activity

The summary of stock option activity in fiscal year 2011 is presented below (in thousands, except per share data):


Stock Options	Number of Shares Underlying Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (year)		Aggregate Intrinsic Value
Outstanding at November 30, 2010		22,173		$	8.36
Granted		2,211			27.12
Exercised		(8,018	)		9.55
Forfeited or expired		(402	)		16.25

Outstanding at November 30, 2011		15,964		$	10.16		3.21	$	277,938

Vested and expected to vest at November 30, 2011		15,431		$	9.75		3.11	$	274,693

Exercisable at November 30, 2011		12,573		$	7.68		2.55	$	248,256

The intrinsic value of exercised stock options is calculated based on the difference between the exercise price and the quoted market price of our common stock as of the close of the exercise date. The total intrinsic value of stock options exercised in fiscal years 2011, 2010 and 2009 was $136.8 million, $67.3 million and $10.5 million, respectively. Upon the exercise of stock options, we issue common stock from our authorized shares. As of November 30, 2011, total unamortized stock-based compensation cost related to unvested stock options was $19.3 million, with a weighted-average remaining recognition period of 2.61 years. Total fair value of stock options vested and expensed in fiscal year 2011, 2010 and 2009 was $32.2 million, $21.5 million and $16.2 million, respectively, net of taxes.

The total realized tax benefits attributable to stock options exercised and vesting of stock awards were $8.6 million, $30.6 million and $21.6 million in fiscal year 2011, 2010 and 2009 respectively. The gross excess tax benefits from stock-based compensation were $41.9 million, $21.5 million and $17.0 million in the fiscal years 2011, 2010, and 2009, respectively, as reported on the Consolidated Statements of Cash Flows in financing activities. The excess tax benefits represent the reduction in income taxes otherwise payable during the period which are attributable to the actual gross tax benefits in excess of the expected tax benefits for stock options exercised in current and prior periods.

Stock Awards Activities

Our nonvested stock awards are comprised of restricted stock, restricted stock units and PRSUs. A summary of the status for nonvested stock awards as of November 30, 2011, and activities during fiscal year 2011 is presented as follows (in thousands, except per share data):


Nonvested Stock Awards	Restricted Stock			Restricted Stock Units			Performance- based Restricted Stock Units			Total Number of Shares Underlying Stock Awards			Weighted- Average Grant Date Fair Value
Nonvested at November 30, 2010		4,314			1,659			4,092			10,065		$	9.47
Granted		1,184			360			274			1,818			26.51
Vested		(1,687	)		(495	)		—			(2,182	)		8.68
Forfeited		(368	)		(101	)		(20	)		(489	)		13.51

Nonvested at November 30, 2011		3,443			1,423			4,346			9,212			12.71

We granted nonvested stock awards at no cost to recipients during fiscal years 2011, 2010 and 2009. As of November 30, 2011, there was $48.9 million of total unrecognized compensation cost related to nonvested restricted stock and restricted stock units. That cost is expected to be recognized generally on a straight-line basis over a weighted-average remaining recognition period of 2.15 years. The total fair value of shares vested pursuant to stock awards during fiscal year 2011, 2010 and 2009 were $18.9 million, $2.1 million and $4.5 million, respectively.

As of November 30, 2011, there was $28.3 million of total unrecognized compensation cost related to PRSUs. That cost is expected to be recognized using the graded vesting attribution method over a weighted-average remaining recognition period of 2.60 years.

Stock-Based Compensation

Stock-based compensation cost in fiscal year 2011, 2010 and 2009 was $48.9 million, $32.2 million, and $23.5 million, respectively, which consisted primarily of stock-based compensation expense related to employee stock options recognized. The deferred tax benefit on employee stock-based compensation expenses in fiscal years 2011, 2010 and 2009 was $16.5 million, $10.7 million and $7.4 million, respectively. We did not capitalize any stock-based compensation in any of the fiscal periods reported.

We recognize the fair value of service-based stock awards generally on a straight-line basis over the requisite service period of three to four years, net of estimated forfeitures. Employee stock-based compensation cost related to grants of service-based stock awards in fiscal years 2011, 2010 and 2009 was $23.6 million, $17.6 million and $12.8 million, respectively.

We recognize the fair value of employee stock options on a straight-line basis over the requisite service period of three to four years, net of estimated forfeitures. Employee stock-based compensation cost related to employee stock options in fiscal years 2011, 2010 and 2009 was $9.8 million, $8.7 million and $9.8 million, respectively.

We recognize compensation cost related to the PRSUs, net of estimated forfeitures, over the requisite service period of four to six years, using the graded vesting attribution method. Compensation cost related to all PRSUs for fiscal years 2011 and 2010 were $14.1 million and $5.0 million, respectively.

We recognize the stock-based compensation costs for PRSUs when we believe it is probable that we will achieve the performance criteria as defined in the PRSUs agreement. We then estimate the most probable period in which the performance criteria will be met, if at all. Under the terms of the PRSUs granted in fiscal year 2010, 20% of the PRSUs will be forfeited if, in the fiscal year following achievement of the applicable performance goals, our non-GAAP EPS falls by 10% or more as compared to the non-GAAP EPS achieved for the year that the performance goals were achieved. Therefore, we also assess the probability of this forfeiture when analyzing our stock-based compensation costs for PRSUs. On a quarterly basis management calculates, based on these estimates, the appropriate compensation expense over the requisite service period by using the graded vesting attribution method and then book an adjustment to compensation cost in that reporting period. As of November 30, 2011, management estimates that it is probable that the performance criteria will be met in first quarter of 2013 and it is not probable that 20% of the PRSUs will be forfeited prior to vesting, and for the PRSUs granted in fiscal year 2011 that the performance criteria will be met in fiscal year 2011.

We recognized stock-based compensation cost associated with our employee stock purchase programs on a straight-line basis over each six-month offering period. Employee stock-based compensation associated with our employee stock purchase programs for the fiscal year 2011, 2010 and 2009 was approximately $1.4 million, $1.0 million, and $1.0 million, respectively.

Assumptions for Estimating Fair Value of Stock-Based Awards

We selected the Black-Scholes option pricing model as the most appropriate model for determining the estimated fair value for stock-based awards including stock options and employee stock purchase plans. The use of the Black-Scholes model requires the use of extensive actual employee exercise behavior data and the use of a number of complex assumptions including expected volatility, risk-free interest rate and expected dividends. The following table summarizes the assumptions used to value options granted in the respective periods:


	Year Ended November 30,
	2011			2010			2009
Stock Option grants:
Expected term of stock options (years)		4.8 – 5.1			4.8 – 5.1			4.7 – 5.1
Risk-free interest rate		0.9 – 2.1	%		1.3 – 2.4	%		1.7 – 2.6	%
Volatility		42 – 47	%		42 – 44	%		48 –56	%
Weighted-average grant-date fair value (per share)	$	10.70		$	4.99		$	3.42
Employee stock purchase plans:
Expected term of ESPP (years)		0.5			0.5			0.5
Risk-free interest rate		0.2	%		0.2	%		0.3 – 0.4	%
Volatility		38 – 39	%		35 – 39	%		51 – 71	%
Weighted-average grant-date fair value (per share)	$	6.56		$	2.87		$	2.12

We estimated the volatility of our stock using historical volatility, as well as the implied volatility in market-traded options on our common stock. We determined that a blend of implied volatility and historical volatility is more reflective of market conditions and a better indicator of expected volatility than using purely historical volatility. We will continue to monitor these and other relevant factors used to measure expected volatility for future stock option grants.

The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. We derived the expected term assumption based on our historical settlement experience, while giving consideration to stock options that have life cycles less than the contractual terms and vesting schedules.

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of our employee stock options. The dividend yield assumption is based on our history and expectation of dividend payouts. We have never declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

As stock-based compensation expense recognized in our Consolidated Statement of Operations is based on awards ultimately expected to vest, the amount has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on our historical experience.

The fair value of restricted stock and restricted stock units is the grant date closing price of our common stock. We expense the cost of the restricted stock and restricted stock units ratably over the period during which the restrictions lapse, and adjust for estimated forfeitures.