XML 78 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Stock-Based Compensation (Notes)
9 Months Ended
Aug. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
STOCK-BASED COMPENSATION
Summary of Restricted Stock Units
Restricted stock unit activity for the nine months ended August 30, 2013 and the fiscal year ended November 30, 2012 was as follows (in thousands):
 
2013
 
2012
Beginning outstanding balance
18,415

 
16,871

Awarded
6,826

 
9,431

Released
(5,837
)
 
(5,854
)
Forfeited
(1,241
)
 
(2,147
)
Increase due to acquisition

 
114

Ending outstanding balance
18,163

 
18,415



 Information regarding restricted stock units outstanding at August 30, 2013 and August 31, 2012 is summarized below:
 
Number of
Shares
(thousands)
 
Weighted
Average
Remaining
Contractual
Life
(years)
 
Aggregate
Intrinsic
Value(*)
(millions)
2013
 
 
 
 
 
Restricted stock units outstanding
18,163

 
1.29
 
$
831.0

Restricted stock units vested and expected to vest
16,159

 
1.22
 
$
736.8

2012
 

 
 
 
 

Restricted stock units outstanding
18,877

 
1.55
 
$
590.3

Restricted stock units vested and expected to vest
16,403

 
1.45
 
$
512.1


_________________________________________ 
(*) 
The intrinsic value is calculated as the market value as of the end of the fiscal period. As reported by the NASDAQ Global Select Market, the market values as of August 30, 2013 and August 31, 2012 were $45.75 and $31.27, respectively. 
Summary of Performance Shares 
The following table sets forth the summary of performance share activity under our Performance Share Program for fiscal 2013 (the “2013 Program”) for the nine months ended August 30, 2013 (in thousands): 
 
Shares
Granted
 
Maximum
Shares Eligible
to Receive
Beginning outstanding balance

 

Awarded
946

 
1,891

Forfeited
(84
)
 
(168
)
Ending outstanding balance
862

 
1,723


Effective January 24, 2013, our Executive Compensation Committee modified our Performance Share Program by eliminating the use of qualitative performance objectives, with 100% of shares to be earned based on the achievement of an objective total stockholder return measure over a three-year performance period. Performance awards will be granted under the 2013 Program pursuant to the terms of our 2003 Equity Incentive Plan. The purpose of the 2013 Program is to align key management and senior leadership with stockholders’ interests over the long term and to retain key employees. Performance share awards will be awarded and fully vest upon the Executive Compensation Committee's certification of the level of achievement following the three-year anniversary of the grant date on January 24, 2016. Participants in the 2013 Program generally have the ability to receive up to 200% of the target number of shares originally granted.
In the first quarter of fiscal 2013, the Executive Compensation Committee certified the actual performance achievement of participants in the 2012 Performance Share Program (the “2012 Program”). Based upon the achievement of specific and/or market-based performance goals outlined in the 2012 Program, participants had the ability to receive up to 150% of the target number of shares originally granted. Actual performance resulted in participants achieving 116% of target or approximately 1.3 million shares for the 2012 Program. One third of the shares under the 2012 Program vested in the first quarter of fiscal 2013 and the remaining two thirds vest evenly on the following two anniversaries of the grant, contingent upon the recipient's continued service to Adobe.
In the first quarter of fiscal 2012, the Executive Compensation Committee certified the actual performance achievement of participants in the 2011 Performance Share Program (the “2011 Program”). Based upon the achievement of goals outlined in the 2011 Program, participants had the ability to receive up to 150% of the target number of shares originally granted. Actual performance resulted in participants achieving 130% of target or approximately 0.5 million shares for the 2011 Program. One third of the shares under the 2011 Program vested in the first quarter of fiscal 2012 and the remaining two thirds vest evenly on the following two anniversaries of the grant, contingent upon the recipient's continued service to Adobe.
The following table sets forth the summary of performance share activity under our 2010, 2011 and 2012 programs, based upon share awards actually achieved, for the nine months ended August 30, 2013 and the fiscal year ended November 30, 2012 (in thousands):
 
2013
 
2012
Beginning outstanding balance
388

 
405

Achieved
1,279

 
492

Released
(665
)
 
(464
)
Forfeited
(134
)
 
(45
)
Ending outstanding balance
868

 
388


 
Information regarding performance shares outstanding at August 30, 2013 and August 31, 2012 is summarized below: 
 
Number of
Shares
(thousands)
 
Weighted
Average
Remaining
Contractual
Life
(years)
 
Aggregate
Intrinsic
Value(*)
(millions)
2013
 
 
 
 
 
Performance shares outstanding
868

 
0.83
 
$
39.7

Performance shares vested and expected to vest
804

 
0.81
 
$
36.7

2012
 

 
 
 
 

Performance shares outstanding
431

 
0.79
 
$
13.5

Performance shares vested and expected to vest
401

 
0.76
 
$
12.5

_________________________________________ 
(*) 
The intrinsic value is calculated as the market value as of the end of the fiscal period. As reported by the NASDAQ Global Select Market, the market values as of August 30, 2013 and August 31, 2012 were $45.75 and $31.27, respectively.     
Summary of Stock Options 
There were no option grants during the three months ended August 30, 2013 and August 31, 2012. The assumptions used to value option grants during the nine months ended August 30, 2013 and August 31, 2012 were as follows: 
 
 
Nine Months
 
 
2013
 
2012
Expected life (in years)
 
3.2

 
3.9 - 4.2
Volatility
 
27
%
 
31 - 34%
Risk free interest rate
 
0.36
%
 
0.54 - 0.71%


The expected life of the employee stock purchase plan (“ESPP”) shares is the average of the remaining purchase periods under each offering period. The assumptions used to value employee stock purchase rights during the three and nine months ended August 30, 2013 and August 31, 2012 were as follows:
 
Three Months
 
Nine Months
 
2013
 
2012
 
2013
 
2012
Expected life (in years)
0.5 - 2.0
 
0.5 - 2.0
 
0.5 - 2.0
 
0.5 - 2.0
Volatility
 27 - 29%
 
30 - 31%
 
26 - 30%
 
 30 - 36%
Risk free interest rate
 0.09 - 0.34%
 
0.15 - 0.30%
 
 0.09 - 0.34%
 
0.06 - 0.30%
 

Option activity for the nine months ended August 30, 2013 and the fiscal year ended November 30, 2012 was as follows (in thousands):
 
2013
 
2012
Beginning outstanding balance
24,517

 
34,802

Granted
25

 
57

Exercised
(13,744
)
 
(6,754
)
Cancelled
(1,546
)
 
(4,692
)
Increase due to acquisition
273

 
1,104

Ending outstanding balance
9,525

 
24,517


 
Information regarding stock options outstanding at August 30, 2013 and August 31, 2012 is summarized below:
 
Number of
Shares
(thousands)
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(years)
 
Aggregate
Intrinsic
Value(*)
(millions)
2013
 
 
 
 
 
 
 
Options outstanding
9,525

 
$
30.80

 
3.10
 
$
142.6

Options vested and expected to vest
9,359

 
$
30.93

 
3.05
 
$
138.9

Options exercisable
7,489

 
$
32.23

 
2.49
 
$
101.5

2012
 

 
 

 
 
 
 

Options outstanding
26,210

 
$
31.67

 
3.01
 
$
85.8

Options vested and expected to vest
25,724

 
$
31.75

 
2.95
 
$
83.1

Options exercisable
21,312

 
$
32.91

 
2.46
 
$
52.7

_________________________________________ 
(*) 
The intrinsic value is calculated as the difference between the market value as of the end of the fiscal period and the exercise price of the shares. As reported by the NASDAQ Global Select Market, the market values as of August 30, 2013 and August 31, 2012 were $45.75 and $31.27, respectively.
Summary of Employee Stock Purchase Plan Shares
Employees purchased 3.4 million shares at an average price of $25.71 and 3.2 million shares at an average price of $23.81 for the nine months ended August 30, 2013 and August 31, 2012, respectively. The intrinsic value of shares purchased during the nine months ended August 30, 2013 and August 31, 2012 was $58.5 million and $22.8 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of purchase and the purchase price of the shares.
Compensation Costs
As of August 30, 2013, there was $479.7 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based awards which will be recognized over a weighted average period of 2.0 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.
Total stock-based compensation costs that have been included in our Condensed Consolidated Statements of Income for the three months ended August 30, 2013 and August 31, 2012 were as follows (in thousands):
 
 
2013
 
2012
Income Statement Classifications
 
Option
Grants
and Stock
Purchase
Rights
 
Restricted
Stock and
Performance
Share
Awards
 
Option
Grants
and Stock
Purchase
Rights
 
Restricted
Stock and
Performance
Share
Awards 
Cost of revenue—subscription
$
380

 
$
1,245

 
$
769

 
$
837

Cost of revenue—services and support
878

 
2,609

 
1,147

 
2,167

Research and development
4,786

 
25,736

 
7,340

 
22,536

Sales and marketing
4,617

 
24,309

 
8,639

 
20,194

General and administrative
1,858

 
14,606

 
4,001

 
12,039

Total
$
12,519

 
$
68,505

 
$
21,896

 
$
57,773


Total stock-based compensation costs that have been included in our Condensed Consolidated Statements of Income for the nine months ended August 30, 2013 and August 31, 2012 were as follows (in thousands):
 
 
2013
 
2012
Income Statement Classifications
 
Option
Grants
and Stock
Purchase
Rights
 
Restricted
Stock and
Performance
Share
Awards
 
Option
Grants
and Stock
Purchase
Rights
 
Restricted
Stock and
Performance
Share
Awards
Cost of revenue—subscription
$
1,463

 
$
3,489

 
$
2,212

 
$
2,154

Cost of revenue—services and support
2,559

 
7,419

 
2,965

 
6,610

Research and development
15,340

 
74,677

 
18,756

 
60,905

Sales and marketing
16,177

 
72,087

 
23,806

 
56,483

General and administrative
6,518

 
44,361

 
12,491

 
36,267

Total
$
42,057

 
$
202,033

 
$
60,230

 
$
162,419