The EMC Corporation Amended and Restated 2003 Stock Plan (the “2003 Plan”) provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units. The exercise price for a stock option shall not be less than 100% of the fair market value of our common stock on the date of grant. Options generally become exercisable in annual installments over a period of three to five years after the date of grant and expire ten years after the date of grant. Incentive stock options will expire no later than ten years after the date of grant. Restricted stock is common stock that is subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Restricted stock units represent the right to receive shares of common stock in the future, with the right to future delivery of the shares subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Grants of restricted stock awards or restricted stock units that vest only by the passage of time will not vest fully in less than three years after the date of grant, except for grants to non-employee Directors that are not subject to this minimum three-year vesting requirement. The 2003 Plan allows us to grant up to 360.0 million shares of common stock. We recognize restricted stock awards and restricted stock units against the 2003 Plan share reserve as two shares for every one share issued in connection with such awards.

In addition to the 2003 Plan, we have four other stock option plans (the “1985 Plan,” the “1993 Plan,” the “2001 Plan” and the “1992 Directors Plan”). In May 2007, these four plans were consolidated into the 2003 Plan such that all future grants will be granted under the 2003 Plan and shares that are not issued as a result of cancellations, expirations or forfeitures, will become available for grant under the 2003 Plan.

A total of 922.4 million shares of common stock have been reserved for issuance under the above five plans. At December 31, 2011, there were an aggregate of 84.2 million shares of common stock available for issuance pursuant to future grants under the 2003 Plan.

We have, in connection with the acquisition of various companies, assumed the stock option plans of these companies. We do not intend to make future grants under any of such plans.

Under our Amended and Restated 1989 Employee Stock Purchase Plan (the “1989 Plan”), eligible employees may purchase shares of common stock through payroll deductions at 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly, on January 1 and July 1, and are exercisable on the succeeding June 30 or December 31. A total of 153.0 million shares of common stock have been reserved for issuance under the 1989 Plan. The following table summarizes the 1989 Plan activity in the years ended December 31, 2011, 2010 and 2009 (table in thousands, except per share amounts):

The following table summarizes our option activity under all equity plans since January 1, 2009 (shares in thousands):

	Number of	Weighted Average Exercise Price
	Shares	(per share)
Outstanding, January 1, 2009	250,119	$	19.14
Options granted relating to business acquisitions	24,089		5.68
Granted	14,243		15.20
Forfeited	(10,178)		14.64
Expired	(14,953)		29.35
Exercised	(28,402)		8.85
Outstanding, December 31, 2009	234,918		18.31
Options granted relating to business acquisitions	12,595		5.57
Granted	3,286		20.07
Forfeited	(6,632)		14.36
Expired	(14,970)		70.59
Exercised	(56,781)		11.63
Outstanding, December 31, 2010	172,416		15.23
Options granted relating to business acquisitions	141		3.24
Granted	1,665		25.31
Forfeited	(4,159)		13.00
Expired	(13,866)		40.05
Exercised	(44,659)		11.91
Outstanding, December 31, 2011	111,538		13.69
Exercisable, December 31, 2011	78,845		13.33
Vested and expected to vest, December 31, 2011	109,546	$	13.68

At December 31, 2011, the weighted-average remaining contractual term was 4.3 years and the aggregate intrinsic value was $649.5 million for the 78.8 million exercisable shares. For the 109.5 million shares vested and expected to vest at December 31, 2011, the weighted-average remaining contractual term was 5.1 years and the aggregate intrinsic value was $868.9 million. The intrinsic value is based on our closing stock price of $21.54 as of December 31, 2011, which would have been received by the option holders had all in-the-money options been exercised as of that date. The total pre-tax intrinsic values of options exercised in 2011, 2010 and 2009 were $619.2 million, $470.2 million and $191.6 million, respectively. Cash proceeds from the exercise of stock options were $532.4 million, $660.0 million and $251.1 million in 2011, 2010 and 2009, respectively. Income tax benefits realized from the exercise of stock options in 2011, 2010 and 2009 were $126.7 million, $75.3 million and $30.9 million, respectively.

Our restricted stock awards are valued based on our stock price on the grant date. Our restricted stock awards have various vesting terms from the date of grant, including pro rata vesting over three or four years, cliff vesting at the end of three or five years with acceleration for achieving specified performance criteria and vesting on various dates contingent on achieving specified performance criteria. For awards with performance conditions, management evaluates the criteria in each grant to determine the probability that the performance condition will be achieved.

The following table summarizes our restricted stock and restricted stock unit activity since January 1, 2009 (shares in thousands):

	Number of Shares	Weighted Average Grant Date Fair Value
Restricted stock and restricted stock units at January 1, 2009	28,902	$	15.49
Granted	21,431		14.58
Vested	(10,951)		14.83
Forfeited	(2,019)		15.56
Outstanding, December 31, 2009	37,363		15.01
Granted	19,261		20.31
Vested	(11,062)		15.09
Forfeited	(2,185)		15.82
Outstanding, December 31, 2010	43,377		17.20
Granted	20,945		25.12
Vested	(14,832)		16.44
Forfeited	(3,959)		20.56
Restricted stock and restricted stock units at December 31, 2011	45,531	$	21.10

The total intrinsic values of restricted stock and restricted stock units that vested in 2011, 2010 and 2009 were $371.1 million, $203.7 million and $138.4 million, respectively. As of December 31, 2011, restricted stock and restricted stock units representing 45.5 million shares were outstanding and unvested, with an aggregate intrinsic value of $980.7 million. These shares and units are scheduled to vest through 2016. Of the total shares of restricted stock and restricted stock units outstanding, 40.2 million shares and units will vest upon fulfilling service conditions, of which vesting for 10.3 million shares and units will accelerate upon achieving performance conditions. The remaining 5.3 million shares and units will vest only if certain performance conditions are achieved.

In June 2007, VMware adopted its 2007 Equity and Incentive Plan (the “2007 Plan”). In May 2009, VMware amended its 2007 Plan to increase the number of shares available for issuance by 20.0 million shares for total shares available for issuance of 100.0 million. Awards under the 2007 Plan may be in the form of stock options or other stock-based awards, including awards of restricted stock units. The exercise price for a stock option awarded under the 2007 Plan shall not be less than 100% of the fair market value of VMware Class A common stock on the date of grant. Most options granted under the 2007 Plan vest 25% after the first year and then monthly thereafter over the following three years. All options granted pursuant to the 2007 Plan expire between six and seven years from the date of grant. Most restricted stock unit awards granted under the 2007 Plan have a three-year to four-year period over which they vest. VMware's Compensation and Corporate Governance Committee determines the vesting schedule for all equity awards. VMware utilizes both authorized and unissued shares to satisfy all shares issued under the 2007 Plan.

In March 2010, VMware's Board of Directors approved a stock repurchase program, authorizing the purchase of up to $400.0 million of its Class A common stock through the end of 2011. Purchases under the March 2010 authorization were completed in March 2011. In February 2011, a committee of VMware's Board of Directors authorized the repurchase of up to an additional $550.0 million of VMware's Class A common stock through the end of 2012.

From time to time, subject to market conditions, stock was purchased pursuant to these programs in the open market or through private transactions as permitted by securities laws and other legal requirements. In the year ended December 31, 2011, VMware repurchased and retired 6.0 million shares of its Class A common stock at a weighted-average price of $88.37 per share for an aggregate purchase price of $526.2 million, including commissions. In the year ended December 31, 2010, VMware repurchased and retired 4.9 million shares of its Class A common stock at a weighted-average price of $68.96 per share for an aggregate purchase price of $338.5 million, including commissions. The amounts of repurchased shares were classified as a reduction to additional paid-in capital. 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, 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. As of December 31, 2011, the authorized amount remaining for repurchase was $85.3 million.

In June 2007, VMware adopted its 2007 Employee Stock Purchase Plan (the “ESPP”), which is intended to be qualified under Section 423 of the Internal Revenue Code. A total of 6.4 million shares of VMware Class A common stock were reserved for future issuance. Under the ESPP, eligible VMware employees are granted options to purchase shares at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares are generally granted twice yearly on February 1 and August 1 and exercisable on the succeeding July 31 and January 31, respectively, of each year. The following table summarizes ESPP activity in the years ended December 31, 2011, 2010 and 2009 (table in thousands, except per share amounts):

As of December 31, 2011, $31.5 million of ESPP withholdings were recorded as a liability on the consolidated balance sheet for the next purchase in January 2012. As of December 31, 2010, $24.8 million of ESPP withholdings were recorded as a liability on the consolidated balance sheet for the purchase in January 2011.

The following table summarizes activity since January 1, 2009 for VMware employees in VMware stock options (shares in thousands):

	Number of	Weighted Average Exercise Price
	Shares	(per share)
Outstanding, January 1, 2009	42,436	$	26.54
Granted	12,500		29.86
Forfeited	(3,736)		28.11
Expired	(177)		45.24
Exercised	(9,516)		22.01
Outstanding, December 31, 2009	41,507		28.34
Granted	3,362		57.60
Forfeited	(2,220)		30.78
Expired	(151)		83.86
Exercised	(15,574)		24.79
Outstanding, December 31, 2010	26,924		33.54
Granted	171		5.68
Forfeited	(1,011)		40.98
Expired	(112)		101.66
Exercised	(9,798)		28.64
Outstanding, December 31, 2011	16,174		35.27
Exercisable, December 31, 2011	9,863		32.75
Vested and expected to vest	15,808	$	35.05

As of December 31, 2011, for the VMware stock options, the weighted-average remaining contractual term was 2.5 years and the aggregate intrinsic value was $508.5 million for the 9.9 million exercisable shares. For the 15.8 million options vested and expected to vest at December 31, 2011, the weighted-average remaining contractual term was 3.0 years and the aggregate intrinsic value was $772.3 million. These aggregate intrinsic values represent the total pre-tax intrinsic values based on VMware's closing stock price of $83.19 as of December 31, 2011, which would have been received by the option holders had all in-the-money options been exercised as of that date.

Cash proceeds from the exercise of VMware stock options for the years ended December 31, 2011, 2010 and 2009 were $280.6 million, $386.1 million and $209.4 million, respectively. The options exercised in 2011, 2010 and 2009 had a pre-tax intrinsic value of $647.8 million, $678.8 million and $132.6 million, respectively.

VMware restricted stock primarily consists of restricted stock units granted to employees and also includes restricted stock awards and other restricted stock. Other restricted stock primarily includes shares issued in 2009 to certain employees of SpringSource who agreed to accept shares of VMware Class A common stock subject to vesting restrictions in lieu of a portion of their cash merger proceeds.

The following table summarizes restricted stock activity since January 1, 2009 for VMware restricted stock (shares in thousands):

	Number of Shares	Weighted Average Grant Date Fair Value
Restricted stock at January 1, 2009	7,626	$	32.35
Granted	5,200		33.63
Vested	(2,881)		31.31
Forfeited	(734)		34.81
Outstanding, December 31, 2009	9,211		33.21
Granted	4,933		74.87
Vested	(3,688)		32.38
Forfeited	(704)		39.05
Outstanding, December 31, 2010	9,752		54.17
Granted	4,548		91.51
Vested	(3,853)		35.00
Forfeited	(907)		64.70
Outstanding, December 31, 2011	9,540	$	72.74

The total intrinsic value of VMware restricted stock-based awards that vested in the years ended December 31, 2011, 2010 and 2009 was $356.1 million, $258.0 million and $88.8 million, respectively. As of December 31, 2011, restricted stock unit awards and other restricted stock representing 9.5 million shares of VMware were outstanding, with an aggregate intrinsic value of $793.6 million based on VMware's closing share price as of December 31, 2011. These shares are scheduled to vest through 2015.

The VMware restricted stock unit awards are valued based on the VMware stock price on the date of grant. Shares underlying restricted stock unit awards are not issued until the restricted stock units vest. The majority of VMware's restricted stock unit awards have pro rata vesting over three or four years.

The following tables summarize the components of total stock-based compensation expense included in our consolidated income statements in 2011, 2010 and 2009 (in thousands):

	Year Ended
	December 31, 2011
	Stock Options		Restricted Stock		Total Stock-Based Compensation
Cost of product sales	$	29,504	$	31,194	$	60,698
Cost of services		25,221		37,758		62,979
Research and development		106,556		192,699		299,255
Selling, general and administrative		164,760		248,479		413,239
Stock-based compensation expense before income taxes		326,041		510,130		836,171
Income tax benefit		73,293		119,850		193,143
Total stock-based compensation, net of tax	$	252,748	$	390,280	$	643,028

	Year Ended
	December 31, 2010
	Stock Options		Restricted Stock		Total Stock-Based Compensation
Cost of product sales	$	29,586	$	20,646	$	50,232
Cost of services		29,493		28,928		58,421
Research and development		112,484		146,262		258,746
Selling, general and administrative		156,059		161,595		317,654
Stock-based compensation expense before income taxes		327,622		357,431		685,053
Income tax benefit		75,771		89,902		165,673
Total stock-based compensation, net of tax	$	251,851	$	267,529	$	519,380

	Year Ended
	December 31, 2009
	Stock Options		Restricted Stock		Total Stock-Based Compensation
Cost of product sales	$	33,423	$	15,836	$	49,259
Cost of services		35,004		15,130		50,134
Research and development		118,875		95,679		214,554
Selling, general and administrative		189,154		102,605		291,759
Restructuring charges		(1,015)		(306)		(1,321)
Stock-based compensation expense before income taxes		375,441		228,944		604,385
Income tax benefit		78,517		56,326		134,843
Total stock-based compensation, net of tax	$	296,924	$	172,618	$	469,542

Stock-based compensation expense includes $43.6 million, $34.9 million and $46.9 million of expense associated with our employee stock purchase plans for 2011, 2010 and 2009, respectively.

The table below presents the net change in amounts capitalized or accrued in 2011 and 2010 for the following items (in thousands):

As of December 31, 2011, the total unrecognized after-tax compensation cost for stock options, restricted stock and restricted stock units was $1,059.2 million. This non-cash expense will be recognized through 2016 with a weighted-average remaining period of 1.5 years.

The fair value of each option granted during the years ended December 31, 2011, 2010 and 2009 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	For the Year Ended December 31,
EMC Stock Options	2011		2010		2009
Dividend yield		None		None		None
Expected volatility		33.3%		32.9%		35.4%
Risk-free interest rate		1.6%		1.8%		2.4%
Expected term (in years)		4.9		4.8		4.5
Weighted-average fair value at grant date	$	8.00	$	6.25	$	5.04

	For the Year Ended December 31,
EMC Employee Stock Purchase Plan	2011		2010		2009
Dividend yield		—		—		None
Expected volatility		—		—		58.1%
Risk-free interest rate		—		—		0.4%
Expected term (in years)		—		—		0.5
Weighted-average fair value at grant date	$	—	$	—	$	3.16

For all equity awards granted in 2011, 2010 and 2009, volatility was based on an analysis of historical stock prices and implied volatilities from traded options in our stock. We use EMC historical data to estimate the expected term of options granted within the valuation model. For all periods presented, EMC's expected dividend yield input was zero as it has not historically paid, nor expects in the future to pay, cash dividends on its common stock. The risk-free interest rate was based on a U.S. Treasury instrument whose term is consistent with the expected term of the stock options.

The assumptions for 2009 for the EMC 1989 Plan include only the January 1, 2009 grant due to the elimination of the look-back feature as of July 1, 2009. Accordingly, there are no assumptions for the 1989 Plan for 2010 and 2011.

The fair value of each option to acquire VMware Class A common stock granted during the years ended December 31, 2011, 2010 and 2009 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	For the Year Ended December 31,
VMware Stock Options	2011			2010			2009
Dividend yield		None			None			None
Expected volatility		37.7	%		38.0	%		36.1	%
Risk-free interest rate		1.0	%		1.5	%		1.9	%
Expected term (in years)		3.0			3.5			3.7
Weighted-average fair value at grant date	$	88.40		$	18.05		$	12.18

	For the Year Ended December 31,
VMware Employee Stock Purchase Plan	2011			2010			2009
Dividend yield		None			None			None
Expected volatility		34.9	%		33.1	%		50.9	%
Risk-free interest rate		0.2	%		0.2	%		0.3	%
Expected term (in years)		0.5			0.5			0.5
Weighted-average fair value at grant date	$	23.69		$	15.18		$	7.79

The weighted-average grant date fair value of VMware stock options in 2011 was higher than in prior periods primarily due to higher valued options assumed through business combinations with exercise prices lower than the fair market value of VMware's stock on the date of grant.

For all equity awards granted in 2011, 2010 and 2009, volatility was based on an analysis of historical stock prices and implied volatilities of publicly-traded companies with similar characteristics, including industry, stage of life cycle, size, financial leverage, as well as the implied volatilities of VMware's Class A common stock. The expected term was calculated based upon an analysis of the expected term of similar grants of comparable publicly-traded companies, the term of the purchase period for grants made under the ESPP, or the weighted-average remaining term for options assumed in acquisitions.

For all periods presented, VMware's expected dividend yield input was zero as it has not historically paid, nor expects in the future to pay, cash dividends on its common stock. The risk-free interest rate was based on a U.S. Treasury instrument whose term is consistent with the expected term of the stock options.