STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Oct. 28, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes stock option activity during the nine months ended October 28, 2016:

	Number of Options		Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in millions)		(per share)		(in years)	(in millions)
Options outstanding, January 29, 2016	54		$	14.30
Granted	2		28.04
Exercised	(1	)	14.22
Forfeited	(2	)	17.97
Canceled/expired	—		—
Options outstanding, October 28, 2016 (a)	53		$	14.79	7.0	$	682
Options vested and expected to vest (net of estimated forfeitures), October 28, 2016	50		$	14.79	7.0	$	635
Options exercisable, October 28, 2016	11		$	14.14	6.9	$	143

____________________

(a) Of the 53 million stock options outstanding on October 28, 2016, 23 million related to performance-based awards and 30 million related to service-based awards.

The following table summarizes stock option activity for VMware employees in VMware stock options:

	Number of Options	Weighted-Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in millions)	(per share)		(in years)	(in millions)
Options outstanding, September 7, 2016	2	$	65.01
Granted	—	—
Exercised	—	—
Forfeited	—	—
Canceled/Expired	—	—
Options outstanding, October 28, 2016 (a)	2	$	65.80	4.6	$	44
Options vested and expected to vest (net of estimated forfeitures), October 28, 2016	2	$	65.44	4.6	$	44
Options exercisable, October 28, 2016	1	$	64.95	4.5	$	29

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The assumptions utilized in this model as well as the weighted-average grant date fair value of stock options granted are presented below:

	Nine Months Ended
	October 28, 2016			October 30, 2015
Weighted-average grant date fair value of stock options granted per option	$	8.83		$	10.85
Expected term (in years)	—			—
Risk-free rate (U.S. Government Treasury Note)	1.7		%	2.0		%
Expected volatility	44		%	50		%
Expected dividend yield	—		%	—		%
Forfeiture Rate	6.1		%	6.1		%

The assumptions utilized in this model as well as the weighted-average grant date fair value of stock options granted are presented below:

	Nine Months Ended
	October 28, 2016			October 30, 2015
Weighted-average grant date fair value of stock options granted per option	$	10.39		$	10.05
Expected term (in years)	3.3			5.1
Risk-free rate (U.S. Government Treasury Note)	1.0		%	1.5		%
Expected volatility	52		%	46		%
Expected dividend yield	—		%	—		%
Forfeiture Rate	6.1		%	6.1		%

Nonvested Restricted Stock Shares Activity

— The following table summarizes VMware's restricted stock activity since September 7, 2016:

	Number of Shares	Weighted- Average Grant Date Fair Value
	(in millions)	(per share)
Non-vested restricted stock unit balance, September 7, 2016	22	$	67.01
Granted	—	—
Vested	—	—
Forfeited	—	—
Non-vested restricted stock unit balance, October 28, 2016	22	$	66.92

Schedule of Nonvested Restricted Stock Units Activity

The following table summarizes non-vested restricted stock and restricted stock units activity during the nine months ended October 28, 2016:

	Number of Shares	Weighted- Average Grant Date Fair Value
	(in millions)	(per share)
Non-vested restricted stock unit balance, January 29, 2016	—	$	—
Granted	11	19.58
Vested	—	—
Forfeited	—	—
Non-vested restricted stock unit balance, October 28, 2016 (a)	11	$	19.58

_________________

(a) Of the 11 million non-vested restricted stock units, 6 million related to performance-based awards and 5 million related to service-based awards.

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

— Stock-based compensation expense for the Company was allocated as follows for the respective periods:

	Three Months Ended						Nine Months Ended
	October 28, 2016			October 30, 2015			October 28, 2016			October 30, 2015
				(in millions)
Stock-based compensation expense (a) (b):
Cost of net revenue	$	13		$	3		$	17		$	7
Operating expenses	137			16			166			46
Stock-based compensation expense before taxes	150			19			183			53
Income tax benefit	(47		)	(7		)	(59		)	(19		)
Stock-based compensation expense, net of income taxes	$	103		$	12		$	124		$	34

____________________

(a) As a result of the EMC merger transaction, stock-based compensation expense for the three and nine months ended October 28, 2016 includes $108 million related to VMware plans for the period from September 7, 2016 through October 28, 2016.

(b) Stock-based compensation expense for the three and nine months ended October 28, 2016 does not include $807 million of post-merger stock compensation expense and related taxes resulting from the EMC merger transaction. See Note 3 of the Notes to the Unaudited Condensed Consolidated Financial Statements for more information on the EMC merger transaction.