Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Stockholders' Equity Note [Abstract]

Stockholders' Equity

N. Stockholders’ Equity

VMware Stock Repurchase Programs

In February 2012, VMware’s Board of Directors authorized the repurchase of up to $600.0 million of VMware’s Class A common stock through the end of 2013. In February 2011, a committee of VMware’s Board of Directors authorized the repurchase of up to $550.0 million of VMware’s Class A common stock, which was completed in the second quarter of 2012.

From time to time, stock repurchases may be made pursuant to the February 2012 authorization in open market transactions or privately negotiated transactions as permitted by securities laws and other legal requirements. VMware is not obligated to purchase any shares under its stock repurchase programs. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including VMware’s stock price, cash requirements for operations and business combinations, corporate and regulatory requirements and other market and economic conditions. Purchases can be discontinued at any time that VMware feels additional purchases are not warranted.

In both the three and six months ended June 30, 2012, VMware repurchased and retired 1.8 million shares of its Class A common stock at a weighted-average price of $96.50 per share for an aggregate purchase price of $178.2 million, including commissions. In the three and six months ended June 30, 2011, VMware repurchased and retired 1.4 million shares and 3.2 million shares, respectively, of its Class A common stock at a weighted-average price of $91.60 per share and $88.50 per share, respectively, for an aggregate purchase price of $132.7 million and $280.4 million, respectively, including commissions. The amount of repurchased shares was classified as a reduction to additional paid-in capital. As of June 30, 2012, the authorized amount remaining for repurchase was $507.1 million.

VMware Employee Stock Purchase Plan

The following table summarizes Employee Stock Purchase Plan (the “ESPP”) activity in the three and six months ended June 30, 2012 and 2011 (table in thousands, except per share amounts):

	Purchase Period Ended
	January 31,
	2012		2011
Cash proceeds	$	32,861	$	26,813
Class A common shares purchased	424		407
Weighted-average price per share	$	77.58	$	65.90

As of June 30, 2012, $34.6 million of ESPP withholdings were recorded as a liability on the consolidated balance sheet for the next purchase in July 2012.

VMware Restricted Stock

VMware restricted stock units primarily consist 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.

In the first half of 2012, VMware granted performance stock unit (“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 a ratio ranging from 0.5 to 3.0 shares for each 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. As of June 30, 2012, 0.4 million PSUs were outstanding and are included in the table below.

The following table summarizes restricted stock activity since January 1, 2012 (stock units in thousands):

	Number of Stock Units		Weighted- Average Grant Date Fair Value (per stock unit)
Outstanding, January 1, 2012	9,540		$	72.74
Granted	5,052		106.17
Vested	(2,148	)	66.85
Forfeited	(748	)	74.39
Outstanding, June 30, 2012	11,696		88.61

The total fair value of VMware stock units that vested in the six months endedJune 30, 2012 was $199.9 million. As of June 30, 2012, stock units representing 11.7 million shares of VMware were outstanding, with an aggregate intrinsic value of $1,064.8 million based on VMware’s closing price as of June 30, 2012. These stock units are scheduled to vest through 2016.

VMware Shares Repurchased for Tax Withholdings

In both the three months ended June 30, 2012 and 2011, VMware repurchased or withheld and retired 0.6 million shares of Class A common stock, for $57.5 million and $52.3 million, respectively, to cover tax withholding obligations. In both the six months ended June 30, 2012 and 2011, VMware repurchased or withheld and retired 0.8 million shares of Class A common stock, for $72.0 million and $73.5 million, respectively, to cover tax withholding obligations. These amounts differ from the amounts of cash remitted for tax withholding obligations on the consolidated statement 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.