x	No fee required.

¨	Fee computed below per Exchange Act Rules 14a-6(i)(1) and 0-11.

¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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1.	To elect two members nominated by us to the Board of Directors to serve as Class II, Group I directors to be elected by our sole Class B common stockholder for a three-year term expiring at the 2015 Annual Meeting of Stockholders.

2.	To vote, on an advisory basis, to approve named executive officer compensation.

3.	To ratify the selection by the Audit Committee of our Board of Directors of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending December 31, 2012.

4.	To transact any and all other business that may properly come before the meeting or any adjournments thereof.

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•	Our Proxy Statement for the Annual Meeting; and

•	Our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which includes our audited consolidated financial statements.

•	election of two members nominated by us to the Board of Directors to serve as Class II, Group I directors, for election by our sole Class B common stockholder for a three-year term expiring at the 2015 Annual Meeting of Stockholders;

•	an advisory vote to approve named executive officer compensation; and

•	ratification of the selection by the Audit Committee of our Board of Directors of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending December 31, 2012.

•	FOR the Class II, Group I nominees, as listed under “Election of Directors,” to serve until their successors are elected and qualified (Proposal 1) (only EMC Corporation ("EMC"), our Class B common stockholder, can cast votes for the Class II, Group I directors);

•	FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and disclosures contained in this proxy statement (Proposal 2); and

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•	FOR ratification of the selection by the Audit Committee of our Board of Directors of PricewaterhouseCoopers LLP as VMware’s independent auditors for the fiscal year ending December 31, 2012 (Proposal 3).

•	View our proxy materials for the Annual Meeting on the Internet; and

•	Instruct us to send our future proxy materials to you electronically by e-mail.

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•	via the Internet at www.proxyvote.com (please see your proxy card or Notice Regarding the Availability of Proxy Materials for instructions); or

•	by phone (please see your proxy card for instructions); or

•	by requesting, completing and mailing in a paper proxy card, as outlined in the Notice Regarding the Availability of Proxy Materials.

•	Indicate when voting on the Internet or by telephone that you wish to vote as recommended by our Board of Directors; or

•	Sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by our Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the meeting.

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•	attending the Annual Meeting and voting in person;

•	sending to the Secretary; Legal Department of VMware, Inc. at 3401 Hillview Avenue, Palo Alto, California 94304 a signed written notice of revocation bearing a later date than the date of the proxy and stating that the proxy is revoked; or

•	signing and delivering a new proxy relating to the same shares and bearing a later date than the original proxy.

•	As necessary to meet applicable legal requirements;

•	To allow for the tabulation and certification of votes; and

•	To facilitate a successful proxy solicitation.

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•	a majority of independent directors on our Board of Directors; and

•	a corporate governance committee and a compensation committee that are each composed entirely of independent directors and each have a charter addressing the committee’s purpose and responsibilities.

•	Our Board of Directors believes that board membership requires a significant time commitment. As a result, directors may generally not serve on the board of directors of more than three public companies. Our Compensation and Corporate Governance Committee will consider the number of other public company boards on which a director or prospective director is a member.

•

Any time a director changes his or her job responsibility outside VMware, he or she must promptly inform the Compensation and Corporate Governance Committee. The Compensation and Corporate Governance Committee then assesses the appropriateness of the director remaining on the Board of Directors and recommends to the Board of Directors whether to request that the director tender his or her resignation. If so requested, the director is expected to promptly tender his or her resignation from the Board of Directors and all committees thereof.

•

We have adopted a majority voting policy for the election of directors. The policy, which is incorporated in our Corporate Governance Guidelines and our bylaws, requires any director who receives more votes cast “against” than “for” his or her election in an uncontested election to promptly offer to tender his or her resignation from the Board of Directors and all committees thereof following certification of the stockholder vote. The policy provides that the Compensation and Corporate Governance Committee will assess the appropriateness of such director continuing to serve and recommend to the Board of Directors the action to be taken with respect to such resignation. The Board of Directors will act on the Compensation and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of certification of the stockholder vote.

•

Our Corporate Governance Guidelines require the Compensation and Corporate Governance Committee to review committee assignments annually and, in conjunction with the Chairman of the Board of Directors, make recommendations to the Board of Directors regarding such assignments. The Board of Directors reviews those recommendations and annually appoints the members and chair of each committee. Our current committee membership is set forth in this proxy statement under the heading “Board of Directors Independence and Committees — Committees of the Board of Directors.”

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•	The Compensation and Corporate Governance Committee oversees an annual evaluation process of the Board of Directors and each committee of the Board of Directors as follows:

▪	each director annually evaluates the Board of Directors as a whole;

▪	each member of the Audit Committee, Compensation and Corporate Governance Committee, and Mergers and Acquisitions Committee annually evaluates the committees on which he or she serves;

▪	each director annually prepares an individual self-evaluation; and

▪	the Compensation and Corporate Governance Committee reports on, and make recommendations to the Board of Directors, with respect to the evaluations.

•	To enable open communications with stockholders and other interested parties, we provide various means to contact the non-management directors and the Audit Committee (see “Communications with the Board of Directors”). Our Board of Directors strives to provide clear, candid and timely responses to any substantive communication from such persons.

•	In addition to the communications above, it is our Board of Directors’ policy pursuant to our Corporate Governance Guidelines to provide a response to any stockholder proposal that receives a majority vote.

•	Our Board of Directors believes that director education is integral to board and committee performance and effectiveness. Directors are also expected to participate in continuing educational programs in order to maintain the necessary level of expertise to perform their responsibilities as directors.

•

Our non-management directors meet in executive session without management at least twice each year. The Chairman acts as presiding director for such executive sessions of the non-management directors. Independent directors meet in executive session at least once each year. The Chair of the Compensation and Corporate Governance Committee acts as the presiding director for executive sessions of the independent directors.

•

Our Board of Directors believes that our non-employee directors should have a meaningful financial stake in VMware. Accordingly, we include equity awards as a component of the compensation we provide to our non-employee directors and the Compensation and Corporate Governance Committee has established stock ownership guidelines for such directors that require the directors to own at least 5,000 shares of our Class A common stock and hold at least 50% of the net shares acquired from us in compensation for their Board of Directors service until they reach such ownership level. Non-employee directors who do not receive compensation for their service on our Board of Directors are exempt from our stock ownership guidelines.

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•	Mr. Brown is a non-management director of EMC, our parent and controlling stockholder, and as of March 1, 2012 is deemed to beneficially own 100,000 shares of EMC’s common stock (of which 50,000 shares are subject to options exercisable within 60 days) representing less than 1% of EMC’s common stock.

•

Ms. James is Senior Vice President and General Manager, Software and Solutions Group of Intel, a company with which we do business on a regular arm’s length basis. Ms. James was initially elected to our Board as Intel’s designee on our Board of Directors, appointed under the terms of a stock purchase agreement between us and Intel Capital Corp., an affiliate of Intel and, following the expiration of such agreement, Ms. James was subsequently re-elected to our Board of Directors by our Class A and Class B stockholders in 2011 for a 3-year term. During 2011, Intel ordered products and services from us that constituted less than 1% of Intel’s annual revenue.

•

Mr. Powell was proposed by Cisco as a potential director following Cisco’s purchase of 6,000,000 shares of our Class A common stock from EMC in August 2007. At the time of his appointment to our Board of Directors, Mr. Powell was Executive Vice President and Chief Financial Officer of Cisco, a position from which he retired in February 2008, but remained as Executive Advisor. In September 2010, Mr. Powell retired from his position as Executive Advisor to Cisco. In October 2008, Cisco purchased an additional 500,000 shares of our Class A common stock from Intel Capital. The shares held by Cisco represent approximately 5.18% of the outstanding shares of our Class A Common Stock, and less than 1% of total voting power as of March 1, 2012. During 2011, both we and Cisco engaged in purchases of products and services from each other and paid each other royalties for integration of each other’s technology in product sales to third party end users. Revenue from these transactions, in the aggregate, constituted less than 1% of the annual revenues of Cisco. Further discussion of these transactions can be found under “Transactions With Related Persons — Other Transactions With Related Persons.”

•	Mr. Strohm is a non-management director of EMC, our parent and controlling stockholder, and as of March 1, 2012, is deemed to beneficially own 360,001 shares of EMC’s common stock (of which 90,000 shares are subject to options exercisable within 60 days) representing less than 1% of EMC’s common stock.

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•	Michael W. Brown - Class II, Group I director - (elected by Class B common only)

•	Dennis D. Powell – Class II, Group I director - (elected by Class B common only)

•	to motivate our executives to achieve our strategic, operational and financial goals;

•	to reward superior performance;

•	to attract and retain exceptional executives; and

•	to reward behaviors that result in long-term increased stockholder value.

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(1)	Includes fees in connection with the audit of our financial statements and internal control over financial reporting, review of interim financial statements included in our quarterly reports on Form 10-Q and other professional services provided in connection with statutory and regulatory filings or engagements.

(2)	Includes fees in connection with acquisition-related support and other technical, financial reporting and compliance services.

(3)	Includes fees in connection with tax compliance and tax consulting services.

(4)	Includes fees principally for subscriptions to PWC's web-based research program, training courses and conferences, and pricing consulting service.

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(1)	Represents 16,054,308 shares to be issued upon exercise of outstanding options and 9,738,543 shares of Class A common stock subject to outstanding restricted stock units under our 2007 Plan.

•	the B-Hive Networks, Inc. 2006 Israeli Stock Option Plan (the “B-Hive 102 Plan”), the B-Hive Networks, Inc. 2006 Israeli 3(i) Stock Option Plan (the “B-Hive 3(i) Plan”) and the B-Hive Networks, Inc. 2007 Stock Option and Incentive Plan (the “B-Hive US Plan”) in connection with our acquisition of B-Hive Networks, Inc. (“B-Hive”) in July 2008;

•	the SpringSource Global, Inc. 2007 Equity Incentive Plan (the “SpringSource US Plan”) in connection with our acquisition of SpringSource Global, Inc. (“SpringSource”) on September 15, 2009; and

•	the Integrien Corporation 2002 Equity Incentive Plan (the “Integrien Plan”) in connection with our acquisition of Integrien Corporation (“Integrien”) in September 2010.

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(2)

Includes 174,116 outstanding options and restricted stock units under our 2007 Plan that were granted in substitution for outstanding grants of companies that we have acquired (the “Substitution Grants”). The 2007 Plan provides that upon approval by the Compensation and Corporate Governance Committee of our Board of Directors, the number of shares reserved for issuance under the 2007 Plan will be increased by the corresponding number of outstanding equity grants assumed or substituted for in connection with mergers and similar transactions. Substitution Grants typically remain subject to the terms that governed the grants when initially awarded by the acquired companies. When VMware makes Substitution Grants, VMware does not assume the stock plans of such acquired companies and does not make additional grants under such plans.

(3)	Represents the weighted-average exercise price of outstanding options under our 2007 Plan and is calculated without taking into account the 9,738,543 shares of Class A common stock subject to outstanding restricted stock units that become issuable as those units vest, without any cash consideration or other payment required for such shares.

(4)	Represents the number of securities remaining available for issuance under our 2007 Plan and our 2007 Employee Stock Purchase Plan.

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(1)

All amounts shown in this column include shares obtainable upon exercise of stock options currently exercisable or exercisable within 60 days of the date of this table and shares underlying restricted stock units vesting within 60 days of this table. In addition to the amounts shown, each share of Class B common stock may be converted to one share of Class A common stock upon election of the holder.

(2)

Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class, calculated on the basis of 10 votes per share of Class B common stock and one vote per share of Class A common stock. Each holder of Class B common stock is entitled to 10 votes per share of Class B common stock, and each holder of Class A common stock is entitled to one vote per share of Class A common stock on all matters submitted to our stockholders for a vote, with the exception of the election of Group II directors, in which Class A and Class B shares are each entitled to one vote per share. Additionally, following a Distribution, (i) Class B stockholders are entitled to only one vote per share on any proposal to require the conversion of all then-outstanding shares of Class B common stock to Class A common stock; and (ii) they may not vote in elections for our Board of Directors without obtaining the prior consent of our Board of Directors if they have acquired 10% or more of the then-outstanding shares of Class B common stock other than through the Distribution and do not also hold an equivalent percentage of shares of our then-outstanding Class A common stock, in each case as further set forth in our certificate of incorporation.

(3)	Does not include 300,000,000 shares of Class A common stock issuable upon conversion of the shares of Class B common stock held by EMC listed in the above table. Such shares of Class B common stock are convertible into Class A common stock at the election of EMC.

(4)

Based solely upon a Schedule 13G/A filed with the SEC on February 14, 2012 by Prudential Financial, Inc. Prudential Financial, Inc. may be deemed the beneficial owner of securities beneficially owned by The Prudential Insurance Company of America, Jennison Associates LLC, Prudential Investment Management, Inc. and Quantitative Management Associates LLC and may have direct or indirect voting and/or investment discretion over 9,249,703 shares which are held for its own benefit or for the benefit of its clients by its separate accounts, externally managed accounts, registered investment companies, subsidiaries and/or other affiliates. In the Schedule 13G/A filing, Prudential Financial, Inc. stated that it is reporting the combined holdings of these entities for the purpose of administrative convenience. Prudential Financial, Inc. stated that these shares were acquired in the ordinary course of business, and not with the purpose or effect of changing or influencing control

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(5)

Based solely upon a Schedule 13G filed with the SEC on February 14, 2012 by FMR LLC (“FMR”). Fidelity Management & Research Company ("Fidelity"), a wholly-owned subsidiary of FMR and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 6,436,848 shares of the Company as a result of acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. Edward C. Johnson 3d and FMR, through its control of Fidelity, and the funds each has sole power to dispose of the 6,436,848 shares owned by the Fidelity Funds. Members of the family of Edward C. Johnson 3d, Chairman of FMR, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR. Neither FMR nor Edward C. Johnson 3d, Chairman of FMR, has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees. Strategic Advisers, Inc., a wholly-owned subsidiary of FMR and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, provides investment advisory services to individuals. As such, FMR LLC's beneficial ownership includes 752 shares of the Company beneficially owned through Strategic Advisers, Inc. Pyramis Global Advisors, LLC ("PGALLC"), an indirect wholly-owned subsidiary of FMR and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 337,120 shares as a result of its serving as investment adviser to institutional accounts, non-U.S. mutual funds, or investment companies registered under Section 8 of the Investment Company Act of 1940 owning such shares. Edward C. Johnson 3d and FMR LLC, through its control of PGALLC, each has sole dispositive power over 337,120 shares and sole power to vote or to direct the voting of 140,130 shares of Class A Common Stock owned by the institutional accounts or funds advised by PGALLC as reported above. Pyramis Global Advisors Trust Company ("PGATC"), an indirect wholly-owned subsidiary of FMR LLC and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of 424,312 shares of the Company as a result of its serving as investment manager of institutional accounts owning such shares. Edward C. Johnson 3d and FMR LLC, through its control of Pyramis Global Advisors Trust Company, each has sole dispositive power over 424,312 shares and sole power to vote or to direct the voting of 384,912 shares of Class A Common Stock owned by the institutional accounts managed by PGATC as reported above.

(6)

Based solely upon a Schedule 13 D/A filed November 29, 2007 with the SEC, Cisco Systems International B.V. is the holder of record and beneficial owner of 6,000,0000 shares of our Class A common stock as of November 7, 2007. Cisco Systems International B.V. is a direct wholly owned subsidiary of Cisco Systems Netherlands Holdings B.V. and an indirect wholly owned subsidiary of the following entities: Cisco Systems Luxembourg S.a.r.l., Cisco Systems Luxembourg International S.a.r.l., Cisco Systems International S.a.r.l., Cisco Systems (Bermuda) Limited, Cisco Systems International Holdings Limited, Cisco Technology, Inc. and Cisco Systems, Inc. Other than the holder of record, each of the above entities disclaims beneficial ownership of the shares. In addition, in October 2008, according to a Schedule 13D/A filed with the SEC by Intel Capital Corp. on November 3, 2008, Cisco purchased an additional 500,000 shares of our Class A common stock from Intel Capital.

(7)	Includes 18,000 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012. Excludes 100,000 shares of EMC common stock beneficially owned by such individual of which 50,000 shares are subject to options exercisable within 60 days of March 1, 2012.

(8)	Includes 18,000 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012. Excludes 1,529,209 shares of EMC common stock beneficially owned by such individual of which 130,000 shares are subject to options exercisable within 60 days of March 1, 2012.

(9)	Includes 2,083 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012.

(10)	Excludes 1,296,017 shares of EMC common stock beneficially owned by such individual of which 1,080,334 shares are subject to options exercisable within 60 days of March 1, 2012.

(11)	Includes 2,047,279 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012.

(12)	Includes 7,344 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012 and 58,750 shares of Class A common stock underlying restricted stock units vesting within 60 days of March 1, 2012.

(13)	Includes 75,013 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012.

(14)	Includes 70,833 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012.

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(15)	Includes 1,500 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012.

(16)	Includes 9,375 shares of Class A common stock subject to options exercisable within 60 days of March 1, 2012.

(17)	Excludes 360,001 shares of EMC common stock beneficially owned by such individual of which 90,000 shares are subject to options exercisable within 60 days of March 1, 2012.

(18)	Excludes 2,568,179 shares of EMC common stock beneficially owned by such individual of which 1,554,502 shares are subject to options exercisable within 60 days of March 1, 2012.

(19)	Includes 2,247,291 shares of Class A common stock beneficially owned by all executive officers and directors as a group by virtue of options to purchase these shares within 60 days of March 1, 2012. Also, excludes 5,853,406 shares of EMC common stock beneficially owned by such individuals, of which 2,904,836 shares are subject to options exercisable within 60 days of March 1, 2012.

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•	Paul A. Maritz, Chief Executive Officer;

•	Mark S. Peek, Chief Financial Officer and Co-President, Business Operations;

•	Carl M. Eschenbach, Co-President, Customer Operations;

•	T. Tod Nielsen, Co-President, Applications Platform;

•	S. Dawn Smith, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary; and

•	Richard J. McAniff, who served as Co-President, Products and Chief Development Officer until his transition in July 2011, to a nonexecutive position as a strategic advisor to our CEO.

•	motivate our executives to achieve our strategic, operational and financial goals;

•	reward superior performance;

•	attract and retain exceptional executives; and

•	reward behaviors that result in long-term increased stockholder value.

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•

Above-Target Cash Bonuses Reflected Strong 2011 Performance. Our performance-based cash bonus program constitutes a majority of the potential annual cash compensation payable to our Named Executive Officers. Bonus payouts to our Named Executive Officers reflected our strong performance with payouts equal to 110% and 107%, respectively, of targeted amounts for the first and second halves of 2011. For more information, see “Annual Performance-Based Bonuses.”

•

Total Executive Compensation Stable during 2011. Consistent with the focus of our compensation philosophy on performance-based metrics and long-term retention of our senior management, we directed our executive compensation efforts during 2011 toward the development of an appropriate long-term performance-based equity award strategy for our Named Executive Officers. Accordingly, during 2011, due to the ongoing development of the new performance-based program, we held compensation steady. We did not include our Named Executive Officers in our broad-based annual equity grant program for our employees and did not make any changes to compensation for our Named Executive Officers, other than with respect to Mr. Eschenbach. For more information, see “Cash Compensation” and “Long-Term Incentives.”

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Introduction of Long-Term Performance-Based Equity Award Program. We completed our review of long-term performance-based equity award strategies in February 2012 when our Compensation and Corporate Governance Committee approved a new long-term equity-based performance award program under our 2007 Equity and Incentive Plan. We selected the achievement of revenue growth rates over the three-year period through the end of 2014 as the performance objective for the performance stock unit awards. We believe that maintaining significant revenue growth rates over the next three years during a period of transformation and increasing competition in the information technology markets will be a key metric for measuring our performance and determining future stockholder returns. Accordingly, the value that can be realized pursuant to the awards under the new program depends upon the level of revenue growth we achieve. For more information, see “Long-Term Incentives.”

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•	the program’s effectiveness in supporting our executive compensation program objectives and business strategy;

•	the program’s relative reasonableness compared to competitive practice for companies in related business of similar size and market value; and

•	the changing business and regulatory environment, including corporate governance considerations.

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•	base salaries, which serve as the primary fixed compensation portion of our Named Executive Officer compensation packages;

•	annual cash bonuses that are based on our semi-annual strategic, operational and financial performance measured against specific pre-established goals;

•	long-term equity incentive compensation in the form of restricted stock units that are tied to stock price appreciation and enhance retention and long-term focus; and

•	commencing in 2012, long-term performance based equity incentive compensation, in the form of performance stock units that are tied to stock price appreciation and long-term performance objectives important to our company.

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*	As adjusted to exclude the impact of acquisitions and foreign currency exchange rate fluctuations not accounted for in our operating plans.

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(1)	In 2009, we ceased accruing paid-time-off (“PTO”) for Company officers and paid out existing PTO accruals to our Named Executive Officers in July 2009. The amount of PTO accrual payoffs are included in the amount of salary earned in 2009.

(2)

Amounts shown represent the grant date fair values of awards of stock options and stock awards granted in the fiscal year indicated which were computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Options (“ASC Topic 718”). The amounts disclosed may never be realized. Assumptions used in calculating these amounts are included in the note entitled “Stockholders’ Equity” of our audited financial statements included in our Annual Report on Form 10-K for the applicable year.

(3)	Amounts consist of cash incentive compensation earned for services rendered in the respective fiscal years under our annual cash incentive bonus plan. For more details on the annual cash incentive bonus plan, see “Compensation Discussion and Analysis — Annual Performance-Based Bonus” and “Grants of Plan-Based Awards.”

(4)	Amount consists of matching contributions to the executive’s 401(k) account.

(5)	In April 2012, Mr. Peek resigned his position of Chief Financial Officer and Co-President, Business Operations, effective May 11, 2012. Mr. Peek will stay with VMware in a transitional role until June 1, 2012.

(6)	Mr. Eschenbach served as the Company's Co-President, Customer Operations from January 2011 until his appointment as Chief Operating Officer and President in April 2012.

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(7)	Amount consists of $4,000 of matching contributions to Mr. Eschenbach’s 401(k) account and $10,589 for spousal travel and attendance at a Company sales organization event.

(8)	Mr. McAniff served as Co-President, Products and Chief Development Officer until his transition to Strategic Advisor to the CEO, a non-executive position, in July 2011.

(9)	Mr. McAniff received a bonus payment for the second half of 2011 equal to 100% of his base salary for the period, in accordance with the target bonus percentage set forth in his employment offer letter dated March 19, 2009.

(1)	“H1 Bonus” in the above table refers to grants under the 2011 Executive Bonus Program for performance between January 1, 2011 and June 30, 2011. “H2 Bonus” in the above table refers to grants under the 2011 Executive Bonus Program for performance between July 1, 2011 and December 31, 2011.

(2)

Amounts shown are possible payouts for 2011 under the 2011 Executive Bonus Program. These amounts were based on the individual’s 2011 base salary and position. The 2011 program included corporate and individual performance goals with 75% of each Named Executive Officer’s target amount tied to corporate performance goals. Threshold payments were set at 80% of the target amounts and were tied to achievement of corporate financial goals. Accordingly, threshold bonus amounts were 60% of the target amounts for our Named Executive Officers. Maximum payments were set at 200% of the target amounts. For more information on the 2011 Executive Bonus Program, see “Compensation Discussion and Analysis - Annual Performance-Based Bonus.”

(3)

This column reflects the grant date fair values of the restricted stock unit grants shown in this table computed in accordance with ASC Topic 718. The fair market value of these awards has been determined based on assumptions set forth in Note J to our audited financial statements for the fiscal year ended December 31, 2011 included in our Annual Report on Form 10-K filed with the SEC on February 24, 2012.

(4)	Mr. McAniff did not participate in the Executive Bonus Program for second half of 2011 due to his transition to a nonexecutive position in July 2011. Following the transition, he remained eligible for, and received, a bonus of 100% of his second half 2011 salary in accordance with the target bonus percentage set forth in his employment offer letter with VMware.

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(1)	Award indicated is for an option to purchase 1,000,000 shares. One-quarter of the option shares vested on September 10, 2009, and the remaining shares vest ratably each month thereafter until fully vested on September 10, 2012, subject to continued employment.

(2)	Award indicated is for an option to purchase 1,440,006 shares. 312,001 of the option shares vested upon grant, and the remaining shares vest ratably each month thereafter until fully vested on March 12, 2013, subject to continued employment.

(3)	Award indicated is for 49,103 restricted stock units. One-quarter of the restricted stock units vested on November 15, 2011, and the remaining restricted stock units vest ratably every six months thereafter until fully vested on November 15, 2014, subject to continued employment.

(4)	Award indicated is for an option to purchase 100,000 shares. One-quarter of the option shares vested on June 1, 2010, and the remaining shares vest ratably each month thereafter until fully vested on June 1, 2013, subject to continued employment.

(5)	Award indicated is for an option to purchase 50,000 shares. One-quarter of the option shares vested on June 1, 2010, and the remaining shares vest ratably each month thereafter until fully vested on June 1, 2013, subject to continued employment.

(6)	Award indicated is for 100,000 restricted stock units. One-quarter of the restricted stock units vested on September 1, 2009, and the remaining restricted stock units vest ratably every year thereafter until fully vested on September 1, 2012, subject to continued employment.

(7)	Award indicated is for 52,617 restricted stock units. One-quarter of the restricted stock units vest on September 1, 2012, and the remaining restricted stock units vest ratably every six months thereafter until fully vested on September 1, 2015, subject to continued employment.

(8)	Award indicated is for an option to purchase 400,000 shares. One-quarter of the option shares vested on February 13, 2010, and the remaining shares vest ratably each month thereafter until fully vested on February 13, 2013, subject to continued employment.

(9)	Award indicated is for 200,000 restricted stock units. One-quarter of the restricted stock units vest on February 13, 2010, and the remaining restricted stock units vest ratably every year thereafter until fully vested on February 13, 2013, subject to continued employment.

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(10)	Award indicated is for an option to purchase 90,000 shares. Under the initial vesting schedule, one-quarter of the option shares vested on October 14, 2010, and the remaining shares were to vest ratably each month thereafter until fully vested on October 14, 2013, subject to continued employment.

(11)	Award indicated is for 35,000 restricted stock units. One-quarter of the restricted stock units vested on October 14, 2010, and the remaining restricted stock units vest ratably every year thereafter until fully vested on October 14, 2013, subject to continued employment.

(12)	Award indicated is for 18,413 restricted stock units. One-quarter of the restricted stock units vest on November 15, 2011, and the remaining restricted stock units vest ratably every six months thereafter until fully vested on November 15, 2014, subject to continued employment.

(13)

Award indicated is for an option to purchase 235,000 shares. One-quarter of the option shares vested on April 14, 2010, and the remaining shares vest ratably each month thereafter until fully vested on April 14, 2013. In accordance with the July 2011 amendment to Mr. McAniff’s employment offer letter, the option accelerated with respect to 51,406 shares which became vested on July 18, 2011. The remaining shares vest ratably each month thereafter until fully vested on April 14, 2013, subject to continued employment.

(14)	Award indicated is for 235,000 restricted stock units. One-quarter of the restricted stock units vested on April 14, 2010, and the remaining restricted stock units vest ratably every year thereafter until fully vested on April 14, 2013, subject to continued employment.

(1)	Amounts represent the difference between the exercise price and the fair market value of the VMware common stock on the date of exercise for each option multiplied by the number of options exercised on each such date. Fair market value has been determined based on the closing price of VMware’s common stock on the NYSE on the exercise date.

(2)

Amounts represent the fair market value of VMware common stock, on the applicable vesting date, multiplied by the number of shares of restricted stock units vested on each such date. Fair market value has been determined based on the closing price of VMware’s common stock on the NYSE on the vesting date, if the vesting date falls on a trading day, or if the vesting date does not fall on a trading day, the first trading day immediately preceding the vesting date. Amounts shown do not represent proceeds from sales of shares acquired on vesting of stock awards and do not indicate that shares were actually sold.

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(1)	Represents the aggregate value of the acceleration of vesting of the executive’s unvested stock options, based on the spread between the closing price of our common stock ($83.19) on the NYSE on December 30, 2011 and the stock option exercise prices.

(2)	Represents the aggregate value of the acceleration of vesting of the executive’s unvested restricted stock units, based on the closing price of our common stock ($83.19) on the NYSE on December 30, 2011.

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•	an annual retainer fee of $50,000;

•	additional annual compensation of $25,000 for committee chairs (which with respect to the Compensation and Corporate Governance Committee and the Mergers and Acquisitions Committee chairs was increased from $20,000 as of our 2011 Annual Meeting on May 25, 2011);

•	additional annual compensation of $20,000 for committee vice chairs (compensation that was introduced as of our 2011 Annual Meeting on May 25, 2011); and

•	additional annual compensation of $15,000 for other committee members (increased from $12,500 with respect to Audit Committee members and $10,000 with respect to members of other committees as of our 2011 Annual Meeting on May 25, 2011).

•	an annual restricted stock unit grant equal to a grant value of $250,000, calculated using a 45-day trailing average, vesting in quarterly installments over one year.

(1)	Includes annual retainer for service on our Board of Directors and additional amounts, as applicable, for committee membership and service as committee chair.

(2)

Amounts shown represent the grant date fair values computed in accordance with ASC Topic 718 of the restricted stock unit grants in this table, rather than an amount paid to or realized by the director. The fair market value of these awards have been determined based on assumptions set forth in the note entitled “Stockholders’ Equity” to our audited financial statements for the fiscal year ended December 31, 2011, included in our Annual Report on Form 10-K filed with the SEC on February 24, 2012.

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(3)	On May 25, 2011, each of Messrs. Brown, Egan, Powell and Strohm and Ms. James was granted an award of 2,976 restricted stock units, with a grant date fair value of $288,553, in each case, computed in accordance with ASC Topic 718, as described in footnote (2) to this table.

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•	EMC is our controlling stockholder and, as such, has certain rights under our charter documents.

•	A master transaction agreement entered into with EMC in conjunction with our IPO, together with ancillary agreements, governs many aspects of our post-IPO business relationship with EMC.

•	We contract for certain services from EMC subsidiaries in geographic regions where we do not have legal entities established.

•	We transact ongoing business with EMC pursuant to certain ordinary course agreements.

•	From time to time we engage in transactions with EMC to effect the sale or transfer of business assets and we have also invested alongside EMC in certain joint ventures.

•

In April 2011, we acquired certain assets relating to EMC’s Mozy cloud-based data storage and data services, including certain data center assets and a license to certain intellectual property, for approximately $8.0 million. We also entered into an operational support agreement with EMC pursuant to which we took over responsibility to operate the Mozy service on behalf of EMC (the "Mozy Support Agreement"). We hired more than 300 Mozy employees and, pursuant to the support agreement, costs incurred by us to support EMC’s Mozy services, plus a mark-up intended to approximate third-party costs, are reimbursed by EMC. On the consolidated statements of income, such amounts were approximately $39.0 million in 2011, including a markup of $2.8 million, and were recorded as a reduction to the costs we incurred. EMC retained ownership of the Mozy business and its remaining assets. EMC continues to be responsible to Mozy customers for Mozy products and services, and continues to recognize revenue from such products and services.

•	During 2011, we paid $14.4 million of contingent amounts to EMC to complete all contingent payments that remained outstanding pursuant to our April 2010 acquisition of certain software product technology and expertise from EMC’s Ionix IT management.

•	During 2011, we incurred expenses of $82.6 million for costs incurred by EMC for our direct benefit, such as rent, salaries and benefits. These costs include an estimated arm’s-length mark-up.

•

We paid income taxes to EMC of $12.1 million for our portion of EMC’s consolidated federal income taxes, pursuant to our tax sharing agreement with EMC, described further below. Under the same tax sharing agreement, EMC paid us $314.5 million in 2011 relating to periods where we had a stand-alone federal taxable loss. The difference between income taxes calculated on a separate return basis and income taxes calculated within EMC’s consolidated, combined and unitary returns is presented as a component of our stockholders’ equity. The amount presented as a component of our stockholders’ equity from the tax sharing arrangement was recorded as an increase in stockholders’ equity of $7.8 million. Additionally, as of December 31, 2011, VMware had $3.3 million of net income taxes payable due to EMC.

•	We recognized professional service revenue of $66.2 million for services that we provided to EMC customers.

•	We recognized revenue from server and desktop products and services purchased by EMC for its internal use of $3.2 million.

•	We purchased $24.3 million of storage systems and software and consulting services from EMC.

•	Pursuant to a reseller arrangement with EMC, EMC bundles our products and services with EMC’s hardware and sells them to end users. In 2011, we recognized revenues of $72.0 million from products and services sold pursuant to our reseller arrangement with EMC.

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•	Cash proceeds from the exercise of EMC options held by VMware employees paid to EMC were $12.2 million.

•	In the first quarter of 2011, we loaned $6.5 million to our joint venture with EMC and Cisco by means of a convertible promissory note. We have a minority ownership interest in the joint venture. In 2012, we amended the note to extend its maturity to the first quarter of 2013. For more information, see “Investment in Joint Venture with EMC and Cisco” below.

•	consolidate or merge with any other entity;

•	acquire the stock or assets of another entity in excess of $100 million;

•	issue any stock or securities except to our subsidiaries or pursuant to our employee benefit plans;

•	establish the aggregate annual amount of shares we may issue in equity awards;

•	dissolve, liquidate or wind us up;

•	declare dividends on our stock;

•	enter into any exclusive or exclusionary arrangement with a third party involving, in whole or in part, products or services that are similar to EMC’s; or

•	amend, terminate or adopt any provision inconsistent with certain provisions of our certificate of incorporation or bylaws.

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•	engaging in the same or similar business activities or lines of business as us;

•	doing business with any of our clients or customers; or

•	employing or otherwise engaging any of our officers or employees.

•	where an opportunity is offered to a VMware director (but not an officer) who is also a director or officer of EMC, VMware will be entitled to pursue such opportunity only when expressly offered to such individual solely in his or her capacity as a VMware director;

•	where an opportunity is offered to a VMware officer who is also an EMC officer, VMware will be entitled to pursue such opportunity only when expressly offered to such individual solely in his or her capacity as a VMware officer;

•	where an opportunity is offered to a VMware officer who is also a director (but not an officer) of EMC, VMware will be entitled to pursue such opportunity unless expressly offered to the individual solely in his or her capacity as an EMC director; and

•

where one of our officers or directors, who also serves as a director or officer of EMC, learns of a potential transaction or matter that may be a corporate opportunity for both us and EMC in any manner not addressed in the foregoing descriptions, such director or officer will have no duty to communicate or present that corporate opportunity to us and will not be liable to us or our stockholders for breach of fiduciary duty by reason of the fact that EMC pursues or acquires that corporate opportunity for itself.

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•	a master transaction agreement;

•	an administrative services agreement;

•	a tax sharing agreement;

•	an insurance matters agreement;

•	an employee benefits agreement;

•	an intellectual property agreement; and

•	real estate agreements.

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(1)	For the year ended December 31, 2011, we capitalized $86.4 million (including $12.4 million of stock-based compensation) of costs incurred for the development of software products. Amortization expense from capitalized amounts was $84.7 million for the year ended December 31, 2011.

(2)	VMware realized a gain of $56.0 million on the sale of its investment in Terremark Worldwide, Inc.

(3)

Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

(4)	Calculated based upon 421,188 basic weighted-average shares for Class A and Class B.

(5)	Calculated based upon 431,750 diluted weighted-average shares for Class A and Class B.

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(1)	For the year ended December 31 2010, we capitalized $71.7 million (including $10.9 million of stock-based compensation) of costs incurred for the development of software products. Amortization expense from capitalized amounts was $99.5 million for the year ended December 31, 2010.

(2)

Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenues and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

(3)	Calculated based upon 409,805 basic weighted-average shares for Class A and Class B.

(4)	Calculated based upon 423,446 diluted weighted-average shares for Class A and Class B.

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