STOCK-BASED COMPENSATION

6 Months Ended

Aug. 02, 2019

Share-based Payment Arrangement [Abstract]

NOTE 16 — STOCK-BASED COMPENSATION

Dell Technologies Inc. 2013 Stock Incentive Plan (As Amended and Restated as of July, 9, 2019) — During the three months ended August 2, 2019, the Company’s stockholders approved an amendment to the Dell Technologies Inc. 2013 Stock Incentive Plan (the “Plan”) to authorize an additional 35 million shares of Class C Common Stock for issuance pursuant to the Plan. Upon effectiveness of the amendment, a total of 110.5 million shares of Class C Common Stock are authorized for issuance. As of August 2, 2019, there were 54 million shares of Class C Common Stock available for future grants under the Plan.

Restricted Stock Units — During the six months ended August 2, 2019, the Company granted long-term incentive awards in the form of 10.0 million service-based restricted stock units (“RSUs”) and 1.9 million performance-based RSUs in order to align critical talent retention programs with the interests of holders of the Class C Common Stock.

The service-based RSUs have a fair value based on the closing price of the Class C Common Stock price as reported on the New York Stock Exchange (“NYSE”) on the grant date. Most of such RSUs vest ratably over a three-year period. Each service-based RSU represents the right to acquire one share of Class C Common Stock upon vesting.

The performance-based RSUs are reflected at target units while the actual number of units that ultimately vest will range from 0% to 200% of target, based on the level of achievement of the performance goals and continued employment with the Company over a performance period ending March 14, 2022. Approximately 0.9 million of the performance-based RSUs are subject to achievement of market-based performance goals based on relative total shareholder return. For the non-market performance-based RSUs, the fair values will be based on the closing price of the Class C Common Stock as reported on the NYSE on the accounting grant date. For the six months ended August 2, 2019, approximately one-third of the non-market performance awards have been valued and are considered outstanding for accounting purposes. Market-based performance awards utilized a Monte Carlo valuation model to simulate the probabilities of achievement of relative total shareholder return in order to determine the awards’ fair value.

The following table presents the assumptions utilized in the valuation model for the period indicated:



	Six Months Ended
	August 2, 2019
Weighted-average grant date fair value	$	87.17
Expected term (in years)	3.0
Risk-free rate (U.S. Government Treasury Note)	2.4		%
Expected volatility	45		%
Expected dividend yield	—		%

As of August 2, 2019, 15 million RSUs were outstanding, of which 5 million RSUs were subject to performance conditions. The awards outstanding have a weighted-average grant date fair value of $49.80 per share and an aggregate intrinsic value of $812 million based on the closing price of the Class C Common Stock as reported on the NYSE on August 2, 2019. As of August 2, 2019, there was $512 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to these awards expected to be recognized over a weighted-average period of approximately 2.6 years.

Stock Options - Of the 42 million stock options outstanding as of February 1, 2019, 5 million were exercised under the Plan during the six months ended August 2, 2019 with a weighted-average exercise price of $16.74. Cash proceeds were $88 million and the pre-tax intrinsic value of the options exercised was $189 million during the six months ended August 2, 2019.