Stockholders' Equity

12 Months Ended

Oct. 30, 2022

Stockholders’ Equity

Mandatory Convertible Preferred Stock

On September 30, 2019, we completed an offering of approximately 4 million shares of 8.00% Mandatory Convertible Preferred Stock, Series A, $0.001 par value per share (“Mandatory Convertible Preferred Stock”), which generated net proceeds of approximately $3,679 million and would automatically convert into shares of our common stock on September 30, 2022. At any time prior to September 30, 2022, holders could elect to convert each share of Mandatory Convertible Preferred Stock at the then minimum conversion rate. The conversion rates were subject to anti-dilution adjustments.

The holders of Mandatory Convertible Preferred Stock were entitled to receive, when, as and if declared by our Board of Directors, or an authorized committee thereof, out of funds legally available for payment, cumulative dividends at the annual rate of 8.00% of the liquidation preference of $1,000 per share (equivalent to $80 annually per share), payable in cash or, subject to certain limitations, by delivery of shares of our common stock or any combination of cash and shares of our common stock, at our election; provided, however, that any undeclared and unpaid dividends will continue to accumulate.

Subject to limited exceptions, no dividends may be declared or paid on shares of our common stock, unless all accumulated dividends have been paid or set aside for payment on all outstanding shares of our Mandatory Convertible Preferred Stock for all past completed dividend periods. In the event of our voluntary or involuntary liquidation, dissolution or winding-up, no distribution of our assets may be made to holders of our common stock until we have paid to holders of our Mandatory Convertible Preferred Stock a liquidation preference equal to $1,000 per share plus accumulated and unpaid dividends.

During fiscal year 2022, outstanding shares of our Mandatory Convertible Preferred Stock converted into an aggregate of approximately 12 million shares of our common stock at conversion rates ranging between 3.0894 and 3.1149 common shares per share of Mandatory Convertible Preferred Stock. We paid cash in lieu of fractional shares of common stock upon conversion.

As of October 31, 2021, we recognized $27 million of accrued preferred stock dividends, which was presented as temporary equity on our consolidated balance sheet.

Cash Dividends Declared and Paid


	Fiscal Year
	2022		2021		2020

	(In millions, except per share data)
Dividends per share to common stockholders	$	16.40	$	14.40	$	13.00
Dividends to common stockholders	$	6,733	$	5,913	$	5,235
Dividends per share to preferred stockholders	$	80.00	$	80.00	$	80.00
Dividends to preferred stockholders	$	299	$	299	$	299

Stock Repurchase Program

In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to time on or prior to December 31, 2022. During fiscal year 2022, we repurchased and retired approximately 12 million shares of our common stock for $7 billion under this stock repurchase program.

In May 2022, our Board of Directors authorized another stock repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023.

Repurchases under our stock repurchase programs may be effected through a variety of methods, including open market or privately negotiated purchases. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase programs may be suspended or terminated at any time.

Equity Incentive Award Plan

2012 Plan

In connection with the acquisition of BRCM, we assumed the BRCM 2012 Stock Incentive Plan (the “Original 2012 Plan”) and outstanding unvested RSUs originally granted by BRCM under the Original 2012 Plan that were held by continuing employees. During the second quarter of fiscal year 2021, our stockholders approved the amendment and restatement of the Original 2012 Plan, now called Broadcom Inc. 2012 Stock Incentive Plan (the “Amended 2012 Plan”). Under the Amended 2012 Plan, we may grant to employees stock options and stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant, restricted stock awards and RSUs. No participant may be granted such awards for more than an aggregate of 4 million shares in any fiscal year. Equity awards granted under the Amended 2012 Plan generally vest over four years. The Amended 2012 Plan reduced the number of shares available for new equity award grants to 20 million shares and removed the annual share replenishment provision provided under the Original 2012 Plan. Awards cancelled or forfeited and shares withheld to satisfy tax withholding obligations become available for future issuance. As of October 30, 2022, 21 million shares remained available for issuance under the Amended 2012 Plan.

We may grant market-based RSUs with both a service condition and a market condition as part of our equity compensation programs. The market-based RSUs generally vest over four years, subject to satisfaction of market conditions. During fiscal years 2022, 2021 and 2020, we granted market-based RSUs under which grantees may receive the number of shares ranging from 0% to 300% of the original grant at vesting based upon the total stockholder return (“TSR”) on our common stock on an absolute basis and 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 the end 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 the Employee Retirement Income Security Act of 1974.

Stock-Based Compensation Expense


	Fiscal Year
	2022		2021		2020

	(In millions)
Cost of products sold	$	65	$	78	$	109
Cost of subscriptions and services	82		65		50
Research and development	1,048		1,199		1,419
Selling, general and administrative	338		362		398
Total stock-based compensation expense	$	1,533	$	1,704	$	1,976

Estimated income tax benefits for stock-based compensation	$	255	$	283	$	345
Excess income tax benefits for stock-based awards exercised or released	$	375	$	310	$	147

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.

During the first quarter of fiscal year 2019, the Compensation Committee of our Board of Directors approved a broad-based program of multi-year equity grants of time- and market-based RSUs (the “Multi-Year Equity Awards”) in lieu of our annual employee equity awards historically granted on March 15 of each year. Each Multi-Year Equity Award vests on the same basis as four annual grants made March 15 of each year, beginning in fiscal year 2019, with successive four-year vesting periods. Stock-based compensation expense related to the Multi-Year Equity Awards was $794 million, $816 million and $902 million for fiscal years 2022, 2021 and 2020, respectively.

As of October 30, 2022, the total unrecognized compensation cost related to unvested stock-based awards was $2,704 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:



	Fiscal Year
	2022		2021		2020
Risk-free interest rate	1.4	%	0.3	%	1.2	%
Dividend yield	2.7	%	3.0	%	4.7	%
Volatility	37.1	%	39.0	%	31.2	%
Expected term (in years)	3.4		3.4		4.0

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 3, 2019	40	$	188.52
Granted	3	$	252.36
Vested	(8)	$	210.84
Forfeited	(3)	$	198.17
Balance as of November 1, 2020	32	$	188.35
Granted	2	$	408.69
Vested	(8)	$	214.15
Forfeited	(3)	$	189.84
Balance as of October 31, 2021	23	$	200.38
Granted	3	$	527.69
Vested	(7)	$	225.52
Forfeited	(1)	$	242.82
Balance as of October 30, 2022	18	$	238.49

The aggregate fair value of time- and market-based RSUs that vested in fiscal years 2022, 2021 and 2020 was $4,207 million, $3,715 million, and $2,254 million, respectively, which represented 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 obligations due upon the vesting of RSUs.

Stock Option Awards

As of October 30, 2022, our stock options outstanding were not material. The aggregate intrinsic value of stock options exercised in fiscal years 2022, 2021 and 2020 was $3 million, $339 million, and $917 million, respectively.