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Stock-Based Compensation
9 Months Ended
Aug. 28, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION
Summary of Restricted Stock Units
Restricted stock unit activity for the nine months ended August 28, 2015 and the fiscal year ended November 28, 2014 was as follows (in thousands):
 
2015
 
2014
Beginning outstanding balance
13,564

 
17,948

Awarded
3,670

 
4,413

Released
(6,242
)
 
(7,502
)
Forfeited
(704
)
 
(1,295
)
Ending outstanding balance
10,288

 
13,564


Information regarding restricted stock units outstanding at August 28, 2015 and August 29, 2014 is summarized below:
 
Number of
Shares
(thousands)
 
Weighted
Average
Remaining
Contractual
Life
(years)
 
Aggregate
Intrinsic
Value(*)
(millions)
2015
 
 
 
 
 
Restricted stock units outstanding
10,288

 
1.10
 
$
816.9

Restricted stock units vested and expected to vest
9,320

 
1.03
 
$
730.3

2014
 

 
 
 
 

Restricted stock units outstanding
13,845

 
1.12
 
$
995.5

Restricted stock units vested and expected to vest
12,367

 
1.05
 
$
882.4


_________________________________________ 
(*) 
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 28, 2015 and August 29, 2014 were $79.40 and $71.90, respectively. 
Summary of Performance Shares 
On January 26, 2015, our Executive Compensation Committee approved the 2015 Performance Share Program, including the award calculation methodology, under the terms of our 2003 Equity Incentive Plan. Under our 2015 Performance Share Program (“2015 Program”), shares may be earned based on the achievement of an objective relative total stockholder return measured over a three-year performance period. The purpose of the 2015 Program is to help focus key employees on building stockholder value, provide significant award potential for achieving outstanding Company performance and enhance the ability of the Company to attract and retain highly talented and competent individuals. 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, 2018. Participants in the 2015 Program generally have the ability to receive up to 200% of the target number of shares originally granted.
On January 24, 2014, our Executive Compensation Committee approved the 2014 Performance Share Program, including the award calculation methodology, under the terms of our 2003 Equity Incentive Plan. Under our 2014 Performance Share Program (“2014 Program”), shares may be earned based on the achievement of an objective relative total stockholder return measured over a three-year performance period. The purpose of the 2014 Program is to help focus key employees on building stockholder value, provide significant award potential for achieving outstanding company performance and enhance the ability of the Company to attract and retain highly talented and competent individuals. 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, 2017. Participants in the 2014 Program generally have the ability to receive up to 200% of the target number of shares originally granted.
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 relative total stockholder return measured over a three-year performance period. Performance awards were granted under the 2013 Performance Share Program (“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.
As of August 28, 2015, the shares awarded under our 2015, 2014, and 2013 Performance Share Programs are yet to be achieved. The following table sets forth the summary of performance share activity under our 2015, 2014, and 2013 Performance Share Programs for the nine months ended August 28, 2015 and the fiscal year ended November 28, 2014 (in thousands): 
 
2015
 
2014
 
Shares
Granted
 
Maximum
Shares Eligible
to Receive
 
Shares
Granted
 
Maximum
Shares Eligible
to Receive
Beginning outstanding balance
1,517

 
3,034

 
854

 
1,707

Awarded
671

 
1,342

 
709

 
1,417

Forfeited
(101
)
 
(201
)
 
(46
)
 
(90
)
Ending outstanding balance
2,087

 
4,175

 
1,517

 
3,034


The following table sets forth the summary of performance share activity under our performance share programs prior to fiscal 2013, based upon share awards actually achieved, for the nine months ended August 28, 2015 and the fiscal year ended November 28, 2014 (in thousands):
 
2015
 
2014
Beginning outstanding balance
354

 
861

Released
(354
)
 
(486
)
Forfeited

 
(21
)
Ending outstanding balance

 
354


 
Information regarding performance shares outstanding at August 29, 2014 is summarized below: 
 
Number of
Shares
(thousands)
 
Weighted
Average
Remaining
Contractual
Life
(years)
 
Aggregate
Intrinsic
Value(*)
(millions)
2014
 
 
 
 
 
Performance shares outstanding
354

 
0.41
 
$
25.4

Performance shares vested and expected to vest
339

 
0.41
 
$
24.2

_________________________________________ 
(*) 
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 value as of August 29, 2014 was $71.90.     
Summary of Stock Options 
There were no option grants during the nine months ended August 28, 2015 and the nine months ended August 29, 2014. Option activity for the nine months ended August 28, 2015 and the fiscal year ended November 28, 2014 was as follows (in thousands):
 
2015
 
2014
Beginning outstanding balance
3,173

 
7,359

Exercised
(1,557
)
 
(4,055
)
Cancelled
(32
)
 
(153
)
Increase due to acquisition
88

 
22

Ending outstanding balance
1,672

 
3,173


 
Information regarding stock options outstanding at August 28, 2015 and August 29, 2014 is summarized below:
 
Number of
Shares
(thousands)
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
(years)
 
Aggregate
Intrinsic
Value(*)
(millions)
2015
 
 
 
 
 
 
 
Options outstanding
1,672

 
$
28.14

 
2.72
 
$
85.7

Options vested and expected to vest
1,659

 
$
28.26

 
2.70
 
$
84.9

Options exercisable
1,539

 
$
29.64

 
2.44
 
$
76.6

2014
 

 
 

 
 
 
 

Options outstanding
3,640

 
$
28.98

 
3.33
 
$
156.2

Options vested and expected to vest
3,610

 
$
29.08

 
3.31
 
$
154.5

Options exercisable
3,056

 
$
30.26

 
2.99
 
$
127.3

_________________________________________ 
(*) 
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 28, 2015 and August 29, 2014 were $79.40 and $71.90, respectively.
Summary of Employee Stock Purchase Plan Shares
The expected life of the 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 nine months ended August 28, 2015 and August 29, 2014 were as follows:
 
Three Months
 
Nine Months
 
2015
 
2014
 
2015
 
2014
Expected life (in years)
0.5 - 2.0
 
0.5 - 2.0
 
0.5 - 2.0
 
0.5 - 2.0
Volatility
 26 - 27%
 
 26 - 27%
 
 26 - 30%
 
 26 - 28%
Risk free interest rate
 0.11 - 0.64%
 
 0.06 - 0.47%
 
 0.11 - 0.67%
 
 0.06 - 0.47%
 

Employees purchased 2.1 million shares at an average price of $52.37 and 2.9 million shares at an average price of $34.76 for the nine months ended August 28, 2015 and August 29, 2014, respectively. The intrinsic value of shares purchased during the nine months ended August 28, 2015 and August 29, 2014 was $54.0 million and $93.4 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 28, 2015, there was $464.3 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 1.7 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.
Total stock-based compensation costs included in our Condensed Consolidated Statements of Income for the three months ended August 28, 2015 and August 29, 2014 were as follows (in thousands):
 
 
2015
 
2014
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
$
258

 
$
1,637

 
$
458

 
$
1,451

Cost of revenue—services and support
1,277

 
1,425

 
1,064

 
1,666

Research and development
3,468

 
26,378

 
4,151

 
26,100

Sales and marketing
4,540

 
29,146

 
4,492

 
25,447

General and administrative
1,056

 
16,792

 
1,682

 
16,502

Total
$
10,599

 
$
75,378

 
$
11,847

 
$
71,166

Total stock-based compensation costs included in our Condensed Consolidated Statements of Income for the nine months ended August 28, 2015 and August 29, 2014 were as follows (in thousands):
 
 
2015
 
2014
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
$
1,070

 
$
4,946

 
$
1,424

 
$
4,261

Cost of revenue—services and support
3,897

 
4,711

 
2,759

 
4,886

Research and development
11,162

 
78,375

 
12,397

 
78,567

Sales and marketing
13,768

 
84,686

 
13,571

 
76,541

General and administrative
3,652

 
50,744

 
4,962

 
49,443

Total
$
33,549

 
$
223,462

 
$
35,113

 
$
213,698