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Stock-based Compensation Expense | 9 Months Ended
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Oct. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-based Compensation Expense | Stock-based Compensation Expense Stock Plans As of October 31, 2014, Autodesk maintained two active stock plans for the purpose of granting equity awards to employees and to non-employee members of Autodesk’s Board of Directors: the 2012 Employee Stock Plan (“2012 Employee Plan”), which is available only to employees, and the Autodesk 2012 Outside Directors’ Plan (“2012 Directors' Plan”), which is available only to non-employee directors. Additionally, there are seven expired or terminated plans with options outstanding. The exercise price of all stock options granted under these plans was equal to the fair market value of the stock on the grant date. The 2012 Employee Plan was approved by Autodesk's stockholders and became effective on January 6, 2012. On January 14, 2014, Autodesk's stockholders approved amendments to the 2012 Employee Plan, which increased the number of shares reserved for issuance under the plan by 11.4 million shares and added additional performance goals to the plan. The 2012 Employee Plan replaced the 2008 Employee Stock Plan, as amended ("2008 Plan"), and no further equity awards may be granted under the 2008 Plan. The 2012 Employee Plan reserves up to 32.6 million shares which includes 26.6 million shares reserved under the 2012 Employee Plan, as well as up to 6.0 million shares forfeited under certain prior employee stock plans during the life of the 2012 Employee Plan. The 2012 Employee Plan permits the grant of stock options, restricted stock units and restricted stock awards. Each restricted stock unit or restricted stock award granted will be counted against the shares authorized for issuance under the 2012 Employee Plan as 1.79 shares. If a granted option, restricted stock unit or restricted stock award expires or becomes unexercisable for any reason, the unpurchased or forfeited shares that were granted may be returned to the 2012 Employee Plan and may become available for future grant under the 2012 Employee Plan. As of October 31, 2014, 20.5 million shares subject to options or restricted stock unit awards have been granted under the 2012 Employee Plan. Options and restricted stock units that were granted under the 2012 Employee Plan vest over periods ranging from immediately upon grant to over a three-year period and options expire 10 years from the date of grant. The 2012 Employee Plan will expire on June 30, 2022. At October 31, 2014, 13.9 million shares were available for future issuance under the 2012 Employee Plan. The 2012 Outside Directors' Plan ("2012 Directors' Plan") was approved by Autodesk's stockholders and became effective on January 6, 2012. The 2012 Directors' Plan replaced the 2010 Outside Directors' Stock Plan, as amended. The 2012 Directors' Plan permits the grant of stock options, restricted stock units and restricted stock awards to non-employee members of Autodesk’s Board of Directors. Each restricted stock unit or restricted stock award granted will be counted against the shares authorized for issuance under the 2012 Directors' Plan as 2.11 shares. As of October 31, 2014, 0.6 million shares subject to restricted stock units have been granted under the 2012 Directors' Plan. Restricted stock units that were granted under the 2012 Directors' Plan vest over one to three years from the date of grant. The 2012 Directors' Plan reserved 2.6 million shares of Autodesk common stock. The 2012 Directors' Plan will expire on June 30, 2022. At October 31, 2014, 2.0 million shares were available for future issuance under the 2012 Directors' Plan. The following sections summarize activity under Autodesk’s stock plans. Stock Options: A summary of stock option activity for the nine months ended October 31, 2014 is as follows:
| Number of Shares |  | Weighted average exercise price per share |  | Weighted average remaining contractual term |  | Aggregate Intrinsic Value (3)
| (in millions) |  |  |  | (in years) |  | (in millions)
Options outstanding at January 31, 2014 | 5.9 |  |  | $ | 33.54 |  |  |  |  |
Granted (1) | — |  |  | — |  |  |  |  |
Exercised | (2.7 | ) |  | 32.87 |  |  |  |  |
Canceled/Forfeited | — |  |  | — |  |  |  |  |
Options outstanding at October 31, 2014 | 3.2 |  |  | $ | 34.12 |  |  | 4.3 |  | $ | 74.6 |
Options vested and exercisable at October 31, 2014 | 2.9 |  |  | $ | 33.44 |  |  | 4.0 |  | $ | 69.4 |
Options vested as of October 31, 2014 and expected to vest thereafter (2) | 3.2 |  |  | $ | 34.12 |  |  | 4.3 |  | $ | 74.6 |
Options available for grant at October 31, 2014 | 15.9 |  |  |  |  |  |  |
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(1) | Autodesk did not grant stock options in the nine months ended October 31, 2014.
(2) | Options expected to vest reflect an estimated forfeiture rate.
(3) | Represents the total pre-tax intrinsic value, based on Autodesk’s closing stock price of $57.54 per share as of October 31, 2014, which would have been received by the option holders had all option holders exercised their options as of that date.
As of October 31, 2014, compensation cost of $1.6 million related to non-vested options is expected to be recognized over a weighted average period of 0.4 years. The following table summarizes information about the pre-tax intrinsic value of options exercised and the weighted average grant date fair value per share of options granted during the three and nine months ended October 31, 2014 and 2013:
| Three Months Ended |  | Nine Months Ended
| October 31, 2014 |  | October 31, 2013 |  | October 31, 2014 |  | October 31, 2013
Pre-tax intrinsic value of options exercised (1) | $ | 10.3 |  |  | $ | 37.4 |  |  | $ | 54.5 |  |  | $ | 80.2 |
Weighted average grant date fair value per share of stock options granted (2) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
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(1) | The intrinsic value of options exercised is calculated as the difference between the exercise price of the option and the market value of the stock on the date of exercise.
(2) | The weighted average grant date fair value per share of stock options granted is calculated, as of the stock option grant date, using the Black-Scholes Merton ("BSM") option pricing model. For the three and nine months ended October 31, 2014 and 2013, Autodesk did not grant stock options.
The following table summarizes information about options outstanding and exercisable at October 31, 2014:
| Options Vested and Exercisable |  | Options Outstanding
| Number of Shares (in millions) |  | Weighted average contractual life (in years) |  | Weighted average exercise price |  | Aggregate intrinsic value (1) (in millions) |  | Number of Shares (in millions) |  | Weighted average contractual life (in years) |  | Weighted average exercise price |  | Aggregate intrinsic value (1) (in millions)
Range of per-share exercise prices: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
$2.28 - $29.49 | 1.1 |  |  |  |  | $ | 23.74 |  |  |  |  | 1.1 |  |  |  |  | $ | 23.80 |  |  |
$29.50 - $41.62 | 1.4 |  |  |  |  | 38.39 |  |  |  |  | 1.6 |  |  |  |  | 38.41 |  |  |
$42.39 - $43.81 | 0.4 |  |  |  |  | 43.80 |  |  |  |  | 0.5 |  |  |  |  | 43.79 |  |  |
| 2.9 |  |  | 4.0 |  | $ | 33.44 |  |  | $ | 69.4 |  |  | 3.2 |  |  | 4.3 |  | $ | 34.12 |  |  | $ | 74.6 |
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(1) | Represents the total pre-tax intrinsic value, based on Autodesk’s closing stock price of $57.54 per share as of October 31, 2014, which would have been received by the option holders had all option holders exercised their options as of that date.
These options will expire if not exercised at specific dates ranging through September 2022. Restricted Stock Units: A summary of restricted stock unit activity for the nine months ended October 31, 2014 is as follows:
| Unvested Restricted Stock Units |  | Weighted average grant date fair value per share
| (in thousands) |  |
Unvested restricted stock units at January 31, 2014 | 6,515.6 |  |  | $ | 39.15 |
Granted | 3,572.0 |  |  | 52.89 |
Vested | (2,062.5 | ) |  | 38.10 |
Canceled/Forfeited | (380.7 | ) |  | 40.53 |
Performance Adjustment (1) | (74.7 | ) |  | 42.23 |
Unvested restricted stock units at October 31, 2014 | 7,569.7 |  |  | $ | 45.96 |
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(1) | Based on Autodesk's financial results for both the fiscal 2013 and 2014 performance period. The performance stock units were earned at 92.3% and 65.8% of the target award for granted in fiscal 2013 and fiscal 2014, respectively.
For the restricted stock units granted during the nine months ended October 31, 2014 and 2013, the weighted average grant date fair value was $52.89 and $40.64, respectively. The grant date fair value of the shares vested during the nine months ended October 31, 2014 and 2013 was $78.6 million and $49.0 million, respectively. During the nine months ended October 31, 2014, Autodesk granted 3.1 million restricted stock units. The restricted stock units vest over periods ranging from immediately upon grant to a pre-determined date that is typically within three years from the date of grant. Restricted stock units are not considered outstanding stock at the time of grant, as the holders of these units are not entitled to any of the rights of a stockholder, including voting rights. The fair value of the restricted stock units is primarily expensed ratably over the vesting period. Autodesk recorded stock-based compensation expense related to restricted stock units of $31.2 million and $82.1 million during the three and nine months ended October 31, 2014, respectively. Autodesk recorded stock-based compensation expense related to restricted stock units of $18.8 million and $52.4 million during the three and nine months ended October 31, 2013, respectively. As of October 31, 2014, total compensation cost not yet recognized of $236.2 million related to non-vested restricted stock units is expected to be recognized over a weighted average period of 1.9 years. At October 31, 2014, the number of restricted stock units granted but unvested was 6.7 million. During the nine months ended October 31, 2014, Autodesk granted 0.5 million performance restricted stock units (“PSUs”) for which the ultimate number of shares earned is determined based on the achievement of performance criteria at the end of the stated service and performance period. The performance criteria for these grants are based upon billings and subscriptions goals adopted by the Compensation and Human Resource Committee, as well as total stockholder return compared against the S&P Computer Software Select Index (“Relative TSR”). Each PSU covers a three year period:
• | Up to one third of the PSU may vest following year one depending upon the achievement of the billings and subscriptions goals for year one as well as 1 year Relative TSR (covering year one).
• | Up to one third of the PSU may vest following year two depending upon the achievement of the billings and subscriptions goals for year two as well as 2 year Relative TSR (covering years one and two).
• | Up to one third of the PSU may vest following year three depending upon the achievement of the billings and subscriptions goals for year three as well as 3 year Relative TSR (covering years one, two and three).
PSUs are not considered outstanding stock at the time of grant, as the holders of these units are not entitled to any of the rights of a stockholder, including voting rights. Autodesk has determined the grant-date fair value for these awards using a Monte Carlo simulation model since the awards are subject to a market condition. The fair value of the PSUs is expensed using the accelerated attribution over the vesting period. Autodesk recorded stock-based compensation expense related to PSUs of $4.9 million and $12.7 million for the three and nine months ended October 31, 2014, respectively. Autodesk recorded stock-based compensation expense related to PSUs of $2.1 million and $6.9 million during the three and nine months ended October 31, 2013, respectively. As of October 31, 2014, total compensation cost not yet recognized of $7.0 million related to non-vested performance restricted stock units, is expected to be recognized over a weighted average period of 1.0 year. At October 31, 2014, the number of PSUs granted but not vested was 0.9 million. 1998 Employee Qualified Stock Purchase Plan (“ESPP”) Under Autodesk’s ESPP, which was approved by stockholders in 1998, eligible employees may purchase shares of Autodesk’s common stock at their discretion using up to 15% of their eligible compensation subject to certain limitations, at no less than 85% of fair market value as defined in the ESPP. At October 31, 2014, a total of 36.0 million shares were available for future issuance. This amount automatically increases on the first trading day of each fiscal year by an amount equal to the lesser of 10.0 million shares or 2% of the total of (1) outstanding shares plus (2) any shares repurchased by Autodesk during the prior fiscal year. Under the ESPP, the Company issues shares on the first trading day following March 31 and September 30 of each fiscal year. The ESPP expires during fiscal 2018. Autodesk issued 1.0 million and 2.1 million shares under the ESPP during the three and nine months ended October 31, 2014, with an average price of $34.19 and $33.91 per share, respectively. During the three and nine months ended October 31, 2013, Autodesk issued 1.4 million and 2.9 million shares under the ESPP, at an average price of $22.95 and $22.61 per share, respectively. The weighted average grant date fair value of awards granted under the ESPP was $15.44 and $15.14 during the three and nine months ended October 31, 2014, respectively, calculated as of the award grant date using the BSM option pricing model. The weighted average grant date fair value of awards granted under the ESPP during both the three and nine months ended October 31, 2013, calculated as of the award grant date using the BSM option pricing model, was $11.80 per share. Stock-based Compensation Expense The following table summarizes stock-based compensation expense for the three and nine months ended October 31, 2014 and 2013, respectively, as follows:
| Three Months Ended October 31, 2014 |  | Three Months Ended October 31, 2013
Cost of license and other revenue | $ | 1.2 |  |  | $ | 0.9 |
Cost of subscription | 1.1 |  |  | 0.5 |
Marketing and sales | 19.4 |  |  | 14.5 |
Research and development | 14.7 |  |  | 10.2 |
General and administrative | 6.7 |  |  | 5.5 |
Stock-based compensation expense related to stock awards and ESPP purchases | 43.1 |  |  | 31.6 |
Tax benefit | (11.7 | ) |  | (9.6 | )
Stock-based compensation expense related to stock awards and ESPP purchases, net of tax | $ | 31.4 |  |  | $ | 22.0 |
| Nine Months Ended October 31, 2014 |  | Nine Months Ended October 31, 2013
Cost of license and other revenue | $ | 3.2 |  |  | $ | 2.7 |
Cost of subscription | 2.9 |  |  | 1.6 |
Marketing and sales | 51.0 |  |  | 42.5 |
Research and development | 39.3 |  |  | 31.3 |
General and administrative | 20.1 |  |  | 18.0 |
Stock-based compensation expense related to stock awards and ESPP purchases | 116.5 |  |  | 96.1 |
Tax benefit | (31.3 | ) |  | (27.0 | )
Stock-based compensation expense related to stock awards and ESPP purchases, net of tax | $ | 85.2 |  |  | $ | 69.1 |
Stock-based Compensation Expense Assumptions Autodesk determines the grant-date fair value of its share-based payment awards using a BSM option pricing model or the quoted stock price on the date of grant, unless the awards are subject to market conditions, in which case Autodesk uses a binomial-lattice model (e.g., Monte Carlo simulation model). The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. Autodesk uses the following assumptions to estimate the fair value of stock-based awards:
| Three Months Ended October 31, 2014 |  | Three Months Ended October 31, 2013
|  | Performance Stock Unit (1) |  | ESPP |  | Performance Stock Unit (1) |  | ESPP
Range of expected volatilities |  | N/A |  | 29 - 30% |  | N/A |  | 30 - 35%
Range of expected lives (in years) |  | N/A |  | 0.5 - 2.0 |  | N/A |  | 0.5 - 2.0
Expected dividends |  | N/A |  | —% |  | N/A |  | —%
Range of risk-free interest rates |  | N/A |  | 0.0 - 0.6% |  | N/A |  | 0.1 - 0.4%
| Nine Months Ended October 31, 2014 |  | Nine Months Ended October 31, 2013
|  | Performance Stock Unit |  | ESPP |  | Performance Stock Unit |  | ESPP
Range of expected volatilities |  | 30% |  | 29 - 33% |  | 34% |  | 27 - 36%
Range of expected lives (in years) |  | N/A |  | 0.5 - 2.0 |  | N/A |  | 0.5 - 2.0
Expected dividends |  | —% |  | —% |  | —% |  | —%
Range of risk-free interest rates |  | 0.1% |  | 0.0 - 0.6% |  | 0.1% |  | 0.1 - 0.4%
_______________
(1) | Autodesk did not grant PSUs in the three months ended October 31, 2014 and 2013 that were subject to market conditions.
Autodesk estimates expected volatility for stock-based awards based on the average of the following two measures. The first is a measure of historical volatility in the trading market for the Company’s common stock, and the second is the implied volatility of traded forward call options to purchase shares of the Company’s common stock. The expected volatility for PSUs subject to market conditions includes the expected volatility of Autodesk's peer companies within the S&P Computer Software Select Index. Autodesk estimates the expected life of stock-based awards using both exercise behavior and post-vesting termination behavior as well as consideration of outstanding options. Autodesk does not currently pay, and does not anticipate paying in the foreseeable future, any cash dividends. Consequently, an expected dividend yield of zero is used in the Black-Scholes-Merton option pricing model and the Monte Carlo simulation model. The risk-free interest rate used in the Black-Scholes-Merton option pricing model and the Monte Carlo simulation model for stock-based awards is the historical yield on U.S. Treasury securities with equivalent remaining lives. Autodesk recognizes expense only for the stock-based awards that are ultimately expected to vest. Therefore, Autodesk has developed an estimate of the number of awards expected to cancel prior to vesting (“forfeiture rate”). The forfeiture rate is estimated based on historical pre-vest cancellation experience and is applied to all stock-based awards. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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