Stock-Based Compensation

Stock incentive plans

2004 and 2013 Equity Incentive Plans

Under both the 2004 Equity Incentive Plan (“2004 Plan”) and the 2013 Equity Incentive Plan (“2013 Plan”) (collectively “the Equity Plans”), we have granted incentive and nonqualified stock options, stock appreciation rights, RSUs, restricted stock awards, and performance-based awards to employees, officers, directors, consultants, independent contractors, and advisors to us. These may also be granted to any parent, subsidiary, or affiliate of ours. The purpose of the Equity Plans has been to attract, retain, and motivate eligible persons whose present and potential contributions are important to our success by offering them an opportunity to participate in our future performance through equity awards. RSUs granted prior to November 2014 generally vest over a four-year period, whereas RSUs granted thereafter generally vest over a three-year period.

Upon adoption, our stockholders approved and reserved 45 million shares of common stock for issuance under the 2013 Plan. As of March 31, 2017, 28 million shares remained available for future grant.

2008 Employee Stock Purchase Plan

Beginning August 16, 2016, eligible employees are offered shares through a 12-month offering period, which consists of two consecutive 6-month purchase periods. Employees may annually contribute up to 10% of their gross compensation, subject to certain limitations, to purchase shares of our common stock at 85% of the lower of either its fair market value on the purchase date or the fair market value at the beginning of the offering period. Prior to August 16, 2016, employees were able to purchase shares of common stock at a price per share equal to 85% of the fair market value on the purchase date at the end of each six month purchase period. As of March 31, 2017, 31 million shares have been issued under this plan and 39 million shares remained available for future issuance.

Acquired plans

Blue Coat acquisition

In connection with the Blue Coat acquisition, we assumed the outstanding equity awards under two of Blue Coat’s equity incentive plans (the Blue Coat, Inc. 2016 Equity Incentive Plan and the Batman Holdings, Inc. 2015 Amended and Restated Equity Incentive Plan (collectively, the “Blue Coat Plans”)), including 7.5 million vested and 12.5 million unvested stock options, 4.8 million unvested RSUs, and 3.0 million unvested PRUs. The total fair value of options assumed was $265 million and the total fair value of RSUs and PRUs assumed was $162 million, before adjusting for estimated forfeitures. Upon vesting, these assumed options will be exercisable into, and these assumed RSUs and PRUs will settle into shares of our common stock. The assumed RSUs and PRUs generally retained the terms and conditions under which they were originally granted. We will not grant additional options or shares under the Blue Coat Plans. Future equity awards by Symantec will be made under our 2013 Plan, as amended. See Note 6 for more information on the Blue Coat acquisition.

Included in the aforementioned assumed Blue Coat equity awards were RSUs and PRUs granted to Gregory S. Clark, former Blue Coat CEO and our current CEO, in connection with the closing of the Blue Coat acquisition. These equity awards were assumed by Symantec on the close date for an equivalent of 1.3 million Symantec RSUs and 1.0 million PRUs. The RSUs vest at various times over 3-years and PRUs are subject to 2-year vesting and the achievement of certain performance metrics during the applicable performance period. These awards had a combined fair value of $46 million, before adjusting for estimated forfeitures, on the close date of the Blue Coat acquisition. In addition, Blue Coat had previously granted Mr. Clark stock options which were assumed by Symantec. Upon assumption of these options, Mr. Clark held 3.9 million unvested options to purchase our common stock with a fair value of $53 million on August 1, 2016, of which $50 million is being recognized as stock-based compensation expense over the 2-year vesting period and the remainder was included as part of the consideration transferred for the acquisition.

LifeLock acquisition

In connection with the LifeLock acquisition, we assumed the outstanding equity awards under LifeLock’s equity incentive plan (the LifeLock, Inc. 2012 Incentive Compensation Plan (the “LifeLock Plan”)), including 4.1 million unvested stock options and 3.1 million unvested RSUs. The total fair value of options assumed was $61 million and the total fair value of RSUs assumed was $91 million, before adjusting for estimated forfeitures. Upon vesting, these assumed options will be exercisable into, and these assumed RSUs will settle into shares of our common stock. The assumed RSUs generally retained the terms and conditions under which they were originally granted. We will not grant additional options or shares under the LifeLock Plan. Future equity awards by Symantec will be made under our 2013 Plan, as amended. See Note 6 for more information on the LifeLock acquisition.

Shares reserved

We reserved the following shares of authorized but unissued common stock:



(In millions)	March 31, 2017
Stock purchase plans	39
Stock award plans	76
Total	115

Stock-based compensation expense

The following table sets forth the total stock-based compensation expense recognized in our Consolidated Statements of Operations.



	Year Ended
(Dollars in millions)	March 31, 2017			April 1, 2016			April 3, 2015
Cost of revenue	$	21		$	10		$	15
Sales and marketing	107			53			46
Research and development	110			56			39
General and administrative	202			42			31
Total stock-based compensation expense from continuing operations	440			161			131
Tax benefit associated with stock-based compensation expense	(149		)	(50		)	(37		)
Net stock-based compensation expense from continuing operations	291			111			94
Net stock-based compensation expense from discontinued operations	—			56			46
Net stock-based compensation expense	$	291		$	167		$	140

Restricted stock units



(In millions, except per share and year data)	Number of Shares		Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Years	Aggregate Intrinsic Value
Outstanding at April 1, 2016	17		$	22.72
Granted and assumed	18		$	20.56
Vested and released	(8	)	$	22.54
Forfeited	(4	)	$	21.45
Outstanding and unvested at March 31, 2017	23		$	21.26	1.1	$	692
Expected to vest at March 31, 2017	19				1.0	$	573

The weighted-average grant date fair value per share of RSUs granted during fiscal 2017, 2016, and 2015, including assumed RSUs was $20.56, $23.20, and $22.66, respectively. The total fair value of RSUs that vested and was released in fiscal 2017, 2016, and 2015 was $181 million, $250 million and $133 million, respectively.

As of March 31, 2017, total unrecognized compensation cost related to RSUs was $278 million, net of estimated forfeitures, which is expected to be recognized over the remaining weighted-average vesting period of 1.8 years.

Performance-based restricted stock units



(In millions, except per share and year data)	Number of Shares		Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Years	Aggregate Intrinsic Value
Outstanding at April 1, 2016	2		$	27.13
Granted and assumed	5		$	19.99
Vested and released	(1	)	$	28.76
Outstanding and unvested at March 31, 2017	6		$	21.05	1.0	$	181
Expected to vest at March 31, 2017	5				1.0	$	166

The weighted-average grant date fair value per share of performance-based restricted stock granted during fiscal 2017, 2016, and 2015, including assumed performance-based restricted stock was $19.99, $27.10, and $26.30, respectively. The total fair value of restricted stock that vested and was released in fiscal 2017, 2016, and 2015 was $14 million, $9 million, and $23 million, respectively.

As of March 31, 2017, total unrecognized compensation cost related to PRUs was $172 million, net of estimated forfeitures, which is expected to be recognized over the remaining weighted-average vesting period of 1.0 years.

Stock options



(In millions, except per share and year data)	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Years	Aggregate Intrinsic Value
Outstanding at April 1, 2016	—		$	—
Assumed	24		$	8.77
Exercised	(4	)	$	7.93
Outstanding and unvested at March 31, 2017	20		$	8.94
Exercisable at March 31, 2017	7				8.3 years	$	164
Vested and expected to vest at March 31, 2017	18				8.4 years	$	392

The total intrinsic value of options exercised during fiscal 2017 was $78 million. As of March 31, 2017, total unrecognized compensation cost adjusted for estimated forfeitures related to unvested stock options was $147 million, net of estimated forfeitures, which is expected to be recognized over the remaining weighted-average vesting period of 1.7 years.

Valuation of stock options

The following assumptions were used to estimate the fair value of stock options assumed in the Blue Coat and LifeLock acquisitions during fiscal 2017:



Expected life	5.0 years
Weighted-average expected volatility	26.25	%
Weighted-average risk-free interest	1.22	%
Expected dividend yield	1.39	%