Stockholders’ Equity

Completion of the Redomiciliation Transaction

For the period prior to the Redomiciliation Transaction, our stockholders’ equity reflected Broadcom-Singapore’s outstanding ordinary shares, all of which were publicly traded on The Nasdaq Global Select Market. After the close of market trading on April 4, 2018, all Broadcom-Singapore outstanding ordinary shares were exchanged on a one-for-one basis for newly issued shares of Broadcom common stock, and Broadcom-Singapore became an indirect wholly-owned subsidiary of Broadcom.

In conjunction with the Redomiciliation Transaction and pursuant to the Mandatory Exchange, all outstanding LP Units held by the limited partners were mandatorily exchanged for approximately 22 million newly issued shares of Broadcom common stock on a one-for-one basis. As a result, all limited partners of the Partnership became common stockholders of Broadcom. In addition, all related outstanding special preference shares of Broadcom-Singapore were automatically redeemed upon the Mandatory Exchange.

Singapore Statutory Scheme of Arrangement

For the period prior to the Broadcom Acquisition Date, our stockholders’ equity reflected outstanding ordinary shares of Avago. Pursuant to a Singapore statutory scheme of arrangement, Broadcom-Singapore issued 278 million shares to holders of Avago ordinary shares and issued 112 million shares to former BRCM stockholders pursuant to the Broadcom Merger. Consequently, the number of shares outstanding increased from 278 million ordinary shares on January 31, 2016 to 390 million shares on February 1, 2016. Both Avago and BRCM became indirect subsidiaries of Broadcom-Singapore and the Partnership, where Broadcom-Singapore was the sole General Partner of the Partnership. In connection with the Broadcom Merger, Broadcom-Singapore also issued 23 million special preference shares.

Noncontrolling Interest

As of October 29, 2017 and immediately prior to the Redomiciliation Transaction, the limited partners held a noncontrolling interest of approximately 5% in the Partnership through their ownership of LP Units. Accordingly, net income (loss) attributable to our common stock in our consolidated statements of operations excluded the noncontrolling interest’s proportionate share of the results for periods prior to the Redomiciliation Transaction. In addition, we presented the proportionate share of equity attributable to the noncontrolling interest as a separate component of total equity within our consolidated balance sheet as of October 29, 2017 and consolidated statements of equity for the periods prior to the Redomiciliation Transaction.

Dividends and Distributions



	Fiscal Year
	2018		2017		2016

	(In millions, except per share data)
Cash dividends and distributions declared and paid per share/unit	$	7.00	$	4.08	$	1.94
Cash dividends paid to stockholders	$	2,921	$	1,653	$	716
Cash distributions paid to limited partners	$	77	$	92	$	34

Stock Repurchase Program

In April 2018, our Board of Directors authorized the repurchase of up to $12 billion of our common stock from time to time on or prior to November 3, 2019, the end of our fiscal year 2019. During fiscal year 2018, we repurchased and retired approximately 32 million shares of our common stock for $7,258 million at a weighted average price of $227.60 under this stock repurchase program. As of November 4, 2018, $4,742 million of the current authorization remained available under our stock repurchase program.

Repurchases under our stock repurchase program may be effected through a variety of methods, including open market or privately negotiated purchases. The timing and number of shares of common stock repurchased will depend on a variety of factors, including price, general business and market conditions and alternative investment opportunities. We are not obligated to repurchase any specific number of shares of common stock, and we may suspend or discontinue our stock repurchase program at any time.

Equity Incentive Award Plans

Stock-based incentive awards are provided to employees and directors under the terms of various Broadcom equity incentive plans.

2009 Plan

In July 2009, our Board of Directors adopted, and our stockholders approved, the Avago Technologies Limited 2009 Equity Incentive Award Plan, or the 2009 Plan, to authorize the grant of options, stock appreciation rights, RSUs, dividend equivalents, performance awards, and other stock-based awards. A total of 20 million shares of common stock were initially reserved for issuance under the 2009 Plan, subject to annual increases starting in fiscal year 2012. The amount of the annual increase is equal to the least of (a) 6 million shares, (b) 3% of the common stock outstanding on the last day of the immediately preceding fiscal year and (c) such smaller number of common stock as determined by our Board. However, no more than 90 million shares of common stock may be issued upon the exercise of equity awards issued under the 2009 Plan. The 2009 Plan became effective on July 27, 2009.

Options issued to employees under the 2009 Plan prior to March 2011 generally expire ten years following the date of grant. Since March 2011, options issued to employees under the 2009 Plan generally expire seven years after the date of grant. Options awarded to non-employees under this plan generally expire after five years. Options issued to both employees and non-employees under the 2009 Plan generally vest over a four-year period from the date of grant and are granted with an exercise price equal to the fair market value on the date of grant. Any stock options cancelled or forfeited after July 27, 2009 under the equity incentive plans adopted prior to the 2009 Plan become available for issuance under the 2009 Plan.

RSU awards granted to employees under the 2009 Plan generally vest in equal annual installments over four years. An RSU is an equity award that is granted with an exercise price equal to zero and which represents the right to receive one share of our common stock immediately upon vesting.

As of November 4, 2018, 24 million shares remained available for issuance under the 2009 Plan.

2003 Plan

In connection with the acquisition of LSI Corporation, or LSI, we assumed the LSI 2003 Equity Incentive Plan, or the 2003 Plan, and outstanding unvested stock options and RSUs originally granted by LSI under the 2003 Plan that were held by continuing employees. At the time of the acquisition, these awards were converted to Broadcom stock options and RSUs, with adjustments made to the exercise price of stock options and the number of shares subject to stock options and RSU awards so that the intrinsic value of each award was approximately the same immediately before and immediately after the adjustment. These unvested options and RSUs vest in accordance with their original terms, generally vesting in equal annual installments over a four-year period from the original grant date. Options expire seven years after the grant date. Under the 2003 Plan, we may grant to former employees of LSI and other employees who were not employees of Broadcom at the time of the acquisition restricted stock awards, RSUs, stock options and stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant. No participant may be granted stock options covering more than four million shares or more than an aggregate of one million shares of restricted stock and RSUs in any fiscal year. Equity awards granted under the 2003 Plan following the LSI acquisition are expected to be on similar terms and consistent with similar grants made pursuant to the 2009 Plan. As of November 4, 2018, three million shares remained available for issuance under the 2003 Plan.

2012 Plan

In connection with the Broadcom Merger, we assumed the BRCM 2012 Stock Incentive Plan, or the 2012 Plan, and outstanding unvested RSUs originally granted by BRCM under the 2012 Plan that were held by continuing employees. At the time of the acquisition, these awards were converted to Broadcom RSUs, with adjustments made to the number of shares subject to RSU awards so that the intrinsic value of each award was approximately the same immediately before and immediately after the adjustment. These unvested RSUs vest in accordance with their original terms, generally vesting in equal quarterly installments over a four-year period from the original grant date. Under the 2012 Plan, we may grant to former employees of BRCM and other employees who were not employees of Broadcom at the time of the acquisition restricted stock awards, RSUs, stock options and stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant. No participant may be granted stock options, restricted stock or RSUs, covering more than an aggregate of four million shares in any fiscal year. Equity awards granted under the 2012 Plan following the Broadcom Merger are expected to be on similar terms and consistent with similar grants made pursuant to the 2009 Plan. As of November 4, 2018, 90 million shares remained available for issuance under the 2012 Plan. The number of shares available for issuance under the 2012 Plan is subject to an annual increase of 12 million shares.

We also grant market-based RSUs with both a service condition and a market condition as part of our equity compensation programs under the 2009 Plan and 2012 Plan. The market-based RSUs generally vest over four years, subject to satisfaction of market conditions. During fiscal years 2018 and 2017, we granted market-based RSUs under which grantees may receive the number of shares ranging from 0% to 450% of the original grant at vesting based upon the total stockholder return, or TSR, on our common stock as compared to the TSR of an index group of companies.

Employee Stock Purchase Plan

The ESPP provides eligible employees with the opportunity to acquire an ownership interest in us through periodic payroll deductions, based on a 6-month look-back period, at a price equal to the lesser of 85% of the fair market value of our common stock at either the beginning or ending of the relevant offering period. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986. However, the ESPP is not intended to be a qualified pension, profit sharing or stock bonus plan under Section 401(a) of the Internal Revenue Code of 1986 and is not subject to the provisions of Employee Retirement Income Security Act of 1974. The ESPP will terminate on July 27, 2019 unless sooner terminated.

Stock-Based Compensation Expense



	Fiscal Year
	2018		2017		2016

	(In millions)
Cost of products sold	$	86	$	64	$	48
Research and development	855		636		430
Selling, general and administrative	286		220		186
Total stock-based compensation expense ^(a)	$	1,227	$	920	$	664

Income tax benefits for stock-based compensation	$	181	$	273	$	89

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(a)	Does not include stock-based compensation related to discontinued operations recognized during fiscal years 2017 and 2016, which was included in loss from discontinued operations, net of income taxes in our consolidated statements of operations.

We have assumed an annualized forfeiture rate for RSUs of 5%. We will recognize additional expense if actual forfeitures are lower than we estimated, and will recognize a benefit if actual forfeitures are higher than we estimated.

As of November 4, 2018, the total unrecognized compensation cost related to unvested stock-based awards was $2,479 million, which is expected to be recognized over the remaining weighted-average service period of 2.7 years.

The following table summarizes the weighted-average assumptions utilized to calculate the fair value of market-based awards granted in the periods presented:



	Market-Based Awards
	Fiscal Year
	2018		2017		2016
Risk-free interest rate	2.4	%	1.7	%	1.2	%
Dividend yield	2.6	%	1.8	%	1.3	%
Volatility	32.5	%	32.3	%	35.0	%
Expected term (in years)	4.0		4.0		3.8

The risk-free interest rate was derived from the average U.S. Treasury Strips rate, which approximated the rate in effect appropriate for the term at the time of grant.

The dividend yield was based on the historical and expected dividend payouts as of the respective award grant dates.

The volatility was based on our own historical stock price volatility over the period commensurate with the expected life of the awards and the implied volatility of a 180-day call option on our own common stock measured at a specific date.

The expected term was commensurate with the awards’ contractual terms.

Restricted Stock Unit Awards

A summary of time- and market-based RSU activity is as follows:



	Number of RSUs Outstanding		Weighted-Average Grant Date Fair Value Per Share

	(In millions, except per share data)
Balance as of November 1, 2015	5		$	95.17
Assumed in Broadcom Merger	6		$	135.58
Granted	12		$	138.45
Vested	(4	)	$	114.49
Forfeited	(2	)	$	130.30
Balance as of October 30, 2016	17		$	130.71
Granted	8		$	199.33
Vested	(5	)	$	126.81
Forfeited	(2	)	$	142.78
Balance as of October 29, 2017	18		$	163.42
Granted	7		$	239.48
Vested	(6	)	$	155.78
Forfeited	(1	)	$	175.46
Balance as of November 4, 2018	18		$	195.50

The aggregate fair value of time- and market-based RSUs that vested in fiscal years 2018, 2017 and 2016 was $1,516 million, $1,172 million and $590 million, respectively, which represents the market value of our common stock on the date that the RSUs vested. The number of RSUs vested included shares of common stock that we withheld for settlement of employees’ tax withholding obligations due upon the vesting of RSUs.

Stock Option Awards

A summary of time- and market-based stock option activity is as follows:



	Number of Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (In years)	Aggregate Intrinsic Value

	(In millions, except years and per share data)
Balance as of November 1, 2015	21			$	47.92
Exercised	(5	)		$	44.35		$	579
Cancelled	(1	)		$	53.56
Balance as of October 30, 2016	15			$	48.77
Exercised	(4	)		$	45.48		$	682
Cancelled	(1	)		$	66.08
Balance as of October 29, 2017	10			$	49.54
Exercised	(2	)		$	47.41		$	534
Cancelled	—		*	$	72.37
Balance as of November 4, 2018	8			$	50.14	1.96	$	1,316
Fully vested as of November 4, 2018	8			$	49.97	1.95	$	1,313
Fully vested and expected to vest as of November 4, 2018	8			$	50.14	1.96	$	1,316

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* Represents fewer than 0.5 million shares.