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Stock-Based Compensation | 6 Months Ended
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May 31, 2024
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Restricted Stock Units Restricted stock unit activity for the six months ended May 31, 2024 was as follows:
| Number of Shares (in millions) |  | Weighted Average Grant Date Fair Value |  | Aggregate Fair Value (1) (in millions)
Beginning outstanding balance | 7.8 |  |  | $ | 418.63 |  |  |
Awarded | 2.6 |  |  | $ | 590.97 |  |  |
Released | (1.8) |  |  | $ | 431.10 |  |  |
Forfeited | (0.2) |  |  | $ | 442.98 |  |  |
Ending outstanding balance | 8.4 |  |  | $ | 468.88 |  |  | $ | 3,734 |
Expected to vest | 7.7 |  |  | $ | 467.98 |  |  | $ | 3,435 |
_________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of May 31, 2024 of $444.76. The total fair value of restricted stock units vested during the six months ended May 31, 2024 was $953 million. Performance Shares In the first quarter of fiscal 2024, the Executive Compensation Committee of our Board of Directors (the “ECC”) approved the 2024 Performance Share Program, the terms of which are similar to the 2023 Performance Share Program that is still outstanding. For information regarding our outstanding Performance Share Programs, including the terms, see “Note 12. Stock-Based Compensation” of our Annual Report on Form 10-K for the fiscal year ended December 1, 2023. As of May 31, 2024, the performance shares awarded under our 2024, 2023 and 2022 Performance Share Programs remained outstanding and unvested. Performance share activity for the six months ended May 31, 2024 was as follows:
| Number of Shares (in millions) |  | Weighted Average Grant Date Fair Value |  | Aggregate Fair Value (1) (in millions)
Beginning outstanding balance | 0.5 |  |  | $ | 465.71 |  |  |
Awarded | 0.2 |  |  | $ | 645.40 |  |  |
Released | (0.1) |  |  | $ | 455.65 |  |  |
Forfeited | (0.1) |  |  | $ | 474.70 |  |  |
Ending outstanding balance | 0.5 |  |  | $ | 536.56 |  |  | $ | 238 |
Expected to vest | 0.5 |  |  | $ | 534.33 |  |  | $ | 215 |
_________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of May 31, 2024 of $444.76. Under our Performance Share Programs, participants generally have the ability to receive up to 200% of the target number of shares originally granted. Shares released during the six months ended May 31, 2024 resulted from 83% achievement of target for the 2021 Performance Share Program, as certified by the ECC in the first quarter of fiscal 2024. The total fair value of performance shares vested during the six months ended May 31, 2024 was $63 million. Employee Stock Purchase Plan Shares Employees purchased 0.3 million shares at an average price of $299.89 and 0.2 million shares at an average price of $286.05 for the six months ended May 31, 2024 and June 2, 2023, respectively. The intrinsic value of shares purchased during the six months ended May 31, 2024 and June 2, 2023 was $96 million and $12 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. Compensation Costs As of May 31, 2024, there was $3.56 billion of unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock-based awards and purchase rights which will be recognized over a weighted average period of 2.31 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. Total stock-based compensation costs included in our condensed consolidated statements of income for the three and six months ended May 31, 2024 and June 2, 2023 were as follows:
| Three Months |  | Six Months
(in millions) | 2024 |  | 2023 |  | 2024 |  | 2023
Cost of revenue | $ | 31 |  |  | $ | 29 |  |  | $ | 60 |  |  | $ | 58 |
Research and development | 234 |  |  | 224 |  |  | 463 |  |  | 433 |
Sales and marketing | 134 |  |  | 123 |  |  | 263 |  |  | 245 |
General and administrative | 68 |  |  | 57 |  |  | 132 |  |  | 113 |
Total | $ | 467 |  |  | $ | 433 |  |  | $ | 918 |  |  | $ | 849 |

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