Annual report [Section 13 and 15(d), not S-K Item 405]

Employee Equity Incentive Plans

v3.25.4
Employee Equity Incentive Plans
 12 Months Ended
Dec. 27, 2025
Share-Based Payment Arrangement [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, 1.2 billion shares of common stock have been authorized for issuance as equity awards to employees and non-employee directors through June 2027. As of December 27, 2025, 253 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 2025, 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 the relative TSR compared to the S&P 500 index over a three-year performance period. The payout will be capped at the target grant amount if our absolute TSR is negative. TSR is a measure of stock price appreciation plus any dividends paid during the performance period.

For PSUs granted in 2024 and 2023, 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 during the performance period. For 2024 PSUs, overall payout will be capped at the target grant amount if our absolute TSR is negative; additionally, the combined modifiers applied to the payout are capped at +/-25%.
As of December 27, 2025, 8 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 2025 was $2.4 billion ($3.4 billion in 2024 and $3.2 billion in 2023). During 2025, the actual tax benefit that we realized for the tax deduction from share-based awards totaled $479 million ($684 million in 2024 and $571 million in 2023). We recognized a related tax expense of $141 million in 2025 ($139 million in 2024 and $110 million in 2023) for share-based awards as a result of the shortfall between the tax deduction being less than the associated deferred tax asset for the awards.
Restricted Stock Units and Performance Stock Units
Weighted average assumptions used in estimating grant values were as follows:
Years Ended Dec 27, 2025 Dec 28, 2024 Dec 30, 2023
Estimated values $ 23.73  $ 39.51  $ 28.92 
Risk-free interest rate 3.9  % 4.7  % 4.7  %
Dividend yield —  % 1.2  % 1.6  %
Volatility 47  % 36  % 36  %
Summary of activities:
Number of Stock Units Outstanding (In Millions) Weighted Average Grant-Date Fair Value
Balance as of December 28, 2024 117.4  $ 36.52 
Granted 104.5  $ 23.73 
Vested (65.9) $ 35.08 
Forfeited (38.5) $ 29.89 
Balance as of December 27, 2025 117.5  $ 28.12 
Expected to vest 102.3  $ 28.25 
The aggregate fair value of awards that vested in 2025 was $1.7 billion ($2.4 billion in 2024 and $2.2 billion in 2023), 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 2025 was $2.3 billion ($3.4 billion in 2024 and $2.7 billion in 2023). 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 27, 2025, unrecognized compensation costs related to RSUs granted under our equity incentive plans were $2.2 billion. We expect to recognize those costs over a weighted average period of 1.2 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 27, 2025, 83 million shares of common stock remained available for issuance.
Employees purchased 34 million shares of common stock in 2025 for $757 million under the 2006 ESPP (39 million shares of common stock for $972 million in 2024 and 43 million shares of common stock for $1.0 billion in 2023). As of December 27, 2025, unrecognized share-based compensation costs related to rights to acquire shares of common stock under the 2006 ESPP totaled $31 million. We expect to recognize those costs over a period of approximately two months.