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Stock-Based Compensation | 12 Months Ended
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Nov. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Our stock-based compensation programs are long-term retention programs that are intended to attract, retain and provide incentives for employees, officers and directors, and to align stockholder and employee interests. We have the following stock-based compensation plans and programs: Restricted Stock Units We grant restricted stock units to eligible employees under our 2003 Equity Incentive Plan, as amended (“2003 Plan”). Restricted stock units granted as part of our annual review process or for promotions vest annually over three years. Restricted stock units granted to new hires generally vest over four years. Certain grants have other vesting periods approved by our Board of Directors or an authorized committee. We grant performance awards to officers and key employees under our 2003 Plan which cliff-vest after three years. As of November 30, 2018, we had reserved 124.5 million shares of common stock for issuance under our 2003 Plan and had 54.1 million shares available for grant. Employee Stock Purchase Plan Our 1997 Employee Stock Purchase Plan (“ESPP”) allows eligible employee participants to purchase shares of our common stock at a discount through payroll deductions. The ESPP consists of a twenty-four-month offering period with four six-month purchase periods in each offering period. Employees purchase shares in each purchase period at 85% of the market value of our common stock at either the beginning of the offering period or the end of the purchase period, whichever price is lower. The ESPP will continue until the earlier of (i) termination by the Board or (ii) the date on which all of the shares available for issuance under the plan have been issued. As of November 30, 2018, we had reserved 93.0 million shares of our common stock for issuance under the ESPP and approximately 5.3 million shares remain available for future issuance. Stock Options The 2003 Plan allows us to grant options to all employees, including executive officers, outside consultants and non-employee directors. This plan will continue until the earlier of (i) termination by the Board or (ii) the date on which all of the shares available for issuance under the plan have been issued and restrictions on issued shares have lapsed. Option vesting periods used in the past were generally four years and expire seven years from the effective date of grant. We eliminated the use of stock option grants for all employees and non-employee directors but may choose to issue stock options in the future. Performance Share Programs Our 2018, 2017 and 2016 Performance Share Programs aim 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. The Executive Compensation Committee of our Board of Directors approves the terms of each of our Performance Share Programs, including the award calculation methodology, under the terms of our 2003 Plan. Shares may be earned based on the achievement of an objective relative total stockholder return measured over a three-year performance period. Performance share awards will be awarded and fully vest upon the later of the Executive Compensation Committee's certification of the level of achievement or the three-year anniversary of each grant. Program participants generally have the ability to receive up to 200% of the target number of shares originally granted. On January 24, 2018, the Executive Compensation Committee approved the 2018 Performance Share Program, the terms of which are similar to prior year performance share programs as discussed above. As of November 30, 2018, the shares awarded under our 2018, 2017 and 2016 Performance Share Programs are yet to be achieved. Issuance of Shares Upon exercise of stock options, vesting of restricted stock units and performance shares, and purchases of shares under the ESPP, we will issue treasury stock. If treasury stock is not available, common stock will be issued. In order to minimize the impact of on-going dilution from exercises of stock options and vesting of restricted stock units and performance shares, we instituted a stock repurchase program. See Note 12 for information regarding our stock repurchase programs. Valuation of Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award. Our performance share awards are valued using a Monte Carlo Simulation model. The fair value of the awards are fixed at grant date and amortized over the longer of the remaining performance or service period. We use the Black-Scholes option pricing model to determine the fair value of ESPP shares. The determination of the fair value of stock-based payment awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, a risk-free interest rate and any expected dividends. The expected term of ESPP shares is the average of the remaining purchase periods under each offering period. The assumptions used to value employee stock purchase rights were as follows:
| 2018 |  | 2017 |  | 2016
Expected life (in years) | 0.5 - 2.0 |  | 0.5 - 2.0 |  | 0.5 - 2.0
Volatility | 26% - 29% |  | 22% - 27% |  | 26 - 29%
Risk free interest rate | 1.54% - 2.52% |  | 0.62% - 1.41% |  | 0.37 - 1.06%
Summary of Restricted Stock Units Restricted stock unit activity for fiscal 2018, 2017 and 2016 was as follows (in thousands):
| 2018 |  | 2017 |  | 2016
Beginning outstanding balance | 9,304 |  |  | 8,316 |  |  | 10,069 |
Awarded | 4,012 |  |  | 5,018 |  |  | 4,440 |
Released | (3,988 | ) |  | (3,859 | ) |  | (5,471 | )
Forfeited | (660 | ) |  | (766 | ) |  | (722 | )
Increase due to acquisition | — |  |  | 595 |  |  | — |
Ending outstanding balance | 8,668 |  |  | 9,304 |  |  | 8,316 |
The weighted average grant date fair values of restricted stock units granted during fiscal 2018, 2017 and 2016 were $208.73, $120.33 and $89.87, respectively. The total fair value of restricted stock units vested during fiscal 2018, 2017 and 2016 was $837.3 million, $472.0 million and $499.8 million, respectively. Information regarding restricted stock units outstanding at November 30, 2018, December 1, 2017 and December 2, 2016 is summarized below:
| Number of Shares (thousands) |  | Weighted Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value(*) (millions)
2018 |  |  |  |  |
Restricted stock units outstanding | 8,668 |  |  | 1.06 |  | $ | 2,174.7 |
Restricted stock units vested and expected to vest | 8,049 |  |  | 1.01 |  | $ | 2,019.5 |
2017 |  |  |  |  |  |  |
Restricted stock units outstanding | 9,304 |  |  | 1.11 |  | $ | 1,670.2 |
Restricted stock units vested and expected to vest | 8,608 |  |  | 1.05 |  | $ | 1,545.3 |
2016 |  |  |  |  |
Restricted stock units outstanding | 8,316 |  |  | 1.11 |  | $ | 829.4 |
Restricted stock units vested and expected to vest | 7,613 |  |  | 1.04 |  | $ | 759.3 |
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(*) | 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 November 30, 2018, December 1, 2017 and December 2, 2016 were $250.89, $179.52 and $99.73, respectively.
Summary of Performance Shares In the first quarter of fiscal 2018, the Executive Compensation Committee certified the actual performance achievement of participants in the 2015 Performance Share Program. Actual performance resulted in participants achieving 200% of target or approximately 0.5 million additional shares. The shares granted and achieved under the 2015 Performance Share Program fully vested on the three-year anniversary of the grant on January 24, 2018, if not forfeited. In the first quarter of fiscal 2017, the Executive Compensation Committee certified the actual performance achievement of participants in the 2014 Performance Share Program. Actual performance resulted in participants achieving 198% of target or approximately 0.6 million additional shares. The shares granted and achieved under the 2014 Performance Share Program fully vested on the three-year anniversary of the grant on January 24, 2017, if not forfeited. In the first quarter of fiscal 2016, the Executive Compensation Committee certified the actual performance achievement of participants in the 2013 Performance Share Program. Actual performance resulted in participants achieving 198% of target or approximately 0.7 million additional shares. The shares granted and achieved under the 2013 Performance Share Program fully vested on the three-year anniversary of the grant on January 24, 2016, if not forfeited. Performance share activity for fiscal 2018, 2017 and 2016 was as follows (in thousands):
| 2018 |  | 2017 |  | 2016
| Shares Granted |  | Maximum Shares Eligible to Receive |  | Shares Granted |  | Maximum Shares Eligible to Receive |  | Shares Granted |  | Maximum Shares Eligible to Receive
Beginning outstanding balance | 1,534 |  |  | 3,068 |  |  | 1,630 |  |  | 3,261 |  |  | 1,940 |  |  | 3,881 |
Awarded | 837 |  | (1) | 628 |  |  | 1,082 |  | (2) | 1,040 |  |  | 1,206 |  | (3) | 1,053 |
Achieved | (1,050 | ) | (4) | (1,053 | ) |  | (1,135 | ) | (5) | (1,147 | ) |  | (1,373 | ) | (5) | (1,387 | )
Forfeited | (173 | ) |  | (347 | ) |  | (43 | ) |  | (86 | ) |  | (143 | ) |  | (286 | )
Ending outstanding balance | 1,148 |  |  | 2,296 |  |  | 1,534 |  |  | 3,068 |  |  | 1,630 |  |  | 3,261 |
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(1) | Included in the 0.8 million shares awarded during fiscal 2018 were 0.5 million additional shares awarded for the final achievement of the 2015 Performance Share program. The remaining awarded shares were for the 2018 Performance Share Program.
(2) | Included in the 1.1 million shares awarded during fiscal 2017 were 0.6 million additional shares awarded for the final achievement of the 2014 Performance Share program. The remaining awarded shares were for the 2017 Performance Share Program.
(3) | Included in the 1.2 million shares awarded during fiscal 2016 were 0.7 million additional shares awarded for the final achievement of the 2013 Performance Share program. The remaining awarded shares were for the 2016 Performance Share Program.
(4) | Shares achieved under our 2015, Performance Share program which resulted from 200% achievement of target.
(5) | Shares achieved under our 2014 and 2013 Performance Share programs which resulted from 198% achievement of target for both programs.
The total fair value of performance awards vested during fiscal 2018, 2017 and 2016 was $208.2 million, $127.4 million and $123.1 million, respectively. Summary of Employee Stock Purchase Plan Shares The weighted average subscription date fair value of shares under the ESPP during fiscal 2018, 2017 and 2016 were $53.12, $29.86 and $24.84, respectively. Employees purchased 1.8 million shares at an average price of $104.94, 1.9 million shares at an average price of $77.63, and 1.9 million shares at an average price of $66.13, respectively, for fiscal 2018, 2017 and 2016. The intrinsic value of shares purchased during fiscal 2018, 2017 and 2016 was $198.9 million, $97.7 million and $54.3 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. Summary of Stock Options As of November 30, 2018 and December 1, 2017, we had 0.3 million stock options outstanding. Grants to Executive Officers All equity awards granted to executive officers are made after a review by and with the approval of the Executive Compensation Committee of the Board of Directors. Grants to Non-Employee Directors Although the 2003 Plan provides for the granting of non-qualified stock options and restricted stock units to non-employee directors, restricted stock units are the primary form of our grants to non-employee directors. The initial equity grant to a new non-employee director is a restricted stock unit award having an aggregate value of $0.3 million based on the average stock price over the 30 calendar days ending on the day before the date of grant and vest 100% on the day preceding the next annual meeting. The actual target grant value will be prorated based on the number of days remaining before the next annual meeting or the date of the first anniversary of our last annual meeting if the next annual meeting is not yet scheduled. Annual equity grants to non-employee directors in the form of restricted stock units shall have an aggregate value of $0.3 million as based on the average stock price over the 30 calendar days ending on the day before the date of grant and vest 100% on the day preceding the next annual meeting. Restricted stock units granted to directors for fiscal 2018, 2017 and 2016 were as follows (in thousands):
| 2018 |  | 2017 |  | 2016
Restricted stock units granted to existing directors | 11 |  |  | 18 |  |  | 25 |
Restricted stock units granted to new directors | 1 |  |  | — |  |  | — |
Compensation Costs We recognize the estimated compensation cost of restricted stock units, net of estimated forfeitures, on a straight-line basis over the requisite service period of the entire award, which is generally the vesting period. The estimated compensation cost is based on the fair value of our common stock on the date of grant. We recognize the estimated compensation cost of performance shares, net of estimated forfeitures, on a straight-line basis over the requisite service period of the entire award. Our performance share awards are earned upon achievement of an objective total stockholder return measure at the end of the three-year performance period, as described above. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate forfeitures and record stock-based compensation expense only for those awards that are expected to vest. As of November 30, 2018, there was $978.2 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 that have been included in our Consolidated Statements of Income for fiscal 2018, 2017 and 2016 were as follows (in thousands):
| Income Statement Classifications
| Cost of Revenue– Subscription |  | Cost of Revenue– Services and Support |  | Research and Development |  | Sales and Marketing |  | General and Administrative |  | Total(1)
Stock Purchase Rights and Option Grants |  |  |  |  |  |  |  |  |  |  |
2018 | $ | 4,102 |  |  | $ | 8,286 |  |  | $ | 23,918 |  |  | $ | 27,252 |  |  | $ | 7,290 |  |  | $ | 70,848 |
2017 | $ | 180 |  |  | $ | 6,661 |  |  | $ | 20,126 |  |  | $ | 18,592 |  |  | $ | 4,973 |  |  | $ | 50,532 |
2016 | $ | 1,474 |  |  | $ | 5,514 |  |  | $ | 13,932 |  |  | $ | 16,534 |  |  | $ | 4,371 |  |  | $ | 41,825 |
Restricted Stock Units and Performance Share Awards |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2018 | $ | 17,515 |  |  | $ | 12,111 |  |  | $ | 253,078 |  |  | $ | 178,548 |  |  | $ | 77,462 |  |  | $ | 538,714 |
2017 | $ | 16,792 |  |  | $ | 9,602 |  |  | $ | 161,366 |  |  | $ | 139,047 |  |  | $ | 77,133 |  |  | $ | 403,940 |
2016 | $ | 6,632 |  |  | $ | 7,522 |  |  | $ | 109,249 |  |  | $ | 113,757 |  |  | $ | 70,312 |  |  | $ | 307,472 |
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(1) | During fiscal 2018, 2017 and 2016, we recorded tax benefits of $222.4 million, $153.2 million and $71.7 million, respectively.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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