Annual report pursuant to Section 13 and 15(d)

Employee Equity Incentive Plans

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Employee Equity Incentive Plans
 12 Months Ended
Dec. 30, 2023
Employee Benefit and Share-Based Payment Arrangement, Noncash Expense [Abstract]  
Employee Equity Incentive Plans [Text Block]
Note 18 : Employee Equity Incentive Plans
Our equity incentive plans are broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests. Our plans include our 2006 Plan and our 2006 ESPP.
Under the 2006 Plan, 1.1 billion shares of common stock have been authorized for issuance as equity awards to employees and non-employee directors through June 2026. As of December 30, 2023, 194 million shares of common stock remained available for future grants.
Under the 2006 Plan, we may grant RSUs and stock options. We grant RSUs with a service condition as well as RSUs with a market condition, performance condition, and a service condition, which we call PSUs. PSUs are granted to a group of senior officers and employees. For PSUs granted in 2023 and 2022, the number of shares of our common stock to be received at vesting at the end of the three-year performance period will range from 0% to 200% of the target grant amount. The PSU payout will be determined based on our performance (i) relative to annual targets for each year in the performance period with respect to a revenue growth metric, weighted 60%, and a cash flow from operations metric, weighted 40%, which results are then averaged at the end of the three-year performance period; and (ii) as may be adjusted by two equally weighted modifiers: the TSR of our common stock measured against the benchmark TSR of above median of the S&P 500 Index over a three-year period and revenue CAGR for the three-year performance period. TSR is a measure of stock price appreciation plus any dividends paid in this performance period. For 2023 PSUs, overall payout will be capped at target grant amount if our absolute TSR is negative. As of December 30, 2023, 16 million PSUs were outstanding. PSUs vest three years and one month following the start of the performance period. Other RSU awards and option awards generally vest over four years from the grant date.
Share-Based Compensation
Share-based compensation recognized in 2023 was $3.2 billion ($3.1 billion in 2022 and $2.0 billion in 2021). During 2023, the tax benefit that we realized for the tax deduction from share-based awards totaled $571 million ($478 million in 2022 and $377 million in 2021).
We estimate the fair value of RSUs and PSUs with a service condition or performance condition using the value of our common stock on the date of grant, reduced by the present value of dividends expected to be paid on our shares of common stock prior to vesting. We estimate the fair value of PSUs with a market condition using a Monte Carlo simulation model as of the date of grant using historical volatility. 
Restricted Stock Units and Performance Stock Units
Weighted average assumptions used in estimating grant values were as follows:
Dec 30, 2023 Dec 31, 2022 Dec 25, 2021
Estimated values $ 28.92  $ 41.12  $ 50.82 
Risk-free interest rate 4.7  % 2.2  % 0.2  %
Dividend yield 1.6  % 3.4  % 2.6  %
Volatility 36  % 40  % 37  %
Summary of activities:
Number of Stock Units Outstanding (In Millions)
 Weighted Average Grant-Date Fair Value
December 31, 2022 $ 158.7  $ 45.56 
Granted $ 98.2  $ 28.92 
Vested $ (63.6) $ 43.22 
Forfeited $ (20.4) $ 44.87 
December 30, 2023 $ 172.9  $ 37.05 
Expected to vest $ 153.9  $ 37.45 
The aggregate fair value of awards that vested in 2023 was $2.2 billion ($2.0 billion in 2022 and $1.7 billion in 2021), which represents the market value of our common stock on the date that the RSUs vested. The grant-date fair value of awards that vested in 2023 was $2.7 billion ($2.5 billion in 2022 and $1.4 billion in 2021). The number of RSUs vested includes shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. RSUs that are expected to vest are net of estimated future forfeitures.
As of December 30, 2023, unrecognized compensation costs related to RSUs granted under our equity incentive plans were $4.0 billion. We expect to recognize those costs over a weighted average period of 1.3 years.
Stock Purchase Plan
The 2006 ESPP allows eligible employees to purchase shares of our common stock at 85% of the value of our common stock on specific dates. Under the 2006 ESPP, 523 million shares of common stock are authorized for issuance through August 2026. As of December 30, 2023, 157 million shares of common stock remained available for issuance.
Employees purchased 43 million shares of common stock in 2023 for $1.0 billion under the 2006 ESPP (27 million shares of common stock for $931 million in 2022 and 22 million shares of common stock for $925 million in 2021). As of December 30, 2023, unrecognized share-based compensation costs related to rights to acquire shares of common stock under the 2006 ESPP totaled $57 million. We expect to recognize those costs over a period of approximately two months.