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Stock-Based Compensation | 12 Months Ended
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Nov. 29, 2024
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Our stock-based compensation programs are long-term retention programs that are intended to attract, retain and provide incentives for employees, officers and directors, and to align stockholder and employee interests. We have the following stock-based compensation plans and programs: Restricted Stock Units and Performance Share Programs We grant restricted stock units and performance share awards to eligible employees under our 2019 Equity Incentive Plan (“2019 Plan”). Restricted stock units generally vest over four years. Certain grants have other vesting periods approved by the Executive Compensation Committee of our Board of Directors (the “ECC”). As of November 29, 2024, we had reserved 69.0 million shares of our common stock for issuance under our 2019 Plan and had 34.3 million shares available for grant. Our Performance Share Programs aim to help focus key employees on building stockholder value, provide significant award potential for achieving outstanding company performance and enhance our ability to attract and retain highly talented and competent individuals. The ECC approves the terms of each of our Performance Share Programs, including the award calculation methodology. In January 2024, the ECC approved the 2024 Performance Share Program. Shares outstanding under our 2024, 2023 and 2022 Performance Share Programs may be earned based on the achievement of (i) an objective relative total stockholder return measured over a three-year performance period, as well as (ii) revenue-based financial metrics measured over three one-year performance periods. Each type of performance goal is weighted 50% and achievement of each performance goal is determined independently of the other. Shares associated with each performance goal are not awarded until the corresponding performance targets are defined. Performance share awards in each of our 2024, 2023 and 2022 Performance Share Programs will cliff-vest upon the later of (i) the three-year anniversary of the earliest vesting commencement date in the respective Performance Share Program, or (ii) the ECC's certification of the level of achievement of the final performance period in the respective Performance Share Program, contingent upon the participant’s continued service. Participants can earn between 0% and 200% of the target number of performance shares. As of November 29, 2024, the shares awarded under our 2024, 2023 and 2022 Performance Share Programs remained outstanding and unvested. Employee Stock Purchase Plan Our Employee Stock Purchase Plan (“ESPP”) allows eligible employee participants to purchase shares of our common stock at a discount through payroll deductions. The ESPP consists of twenty-four-month offering periods with four six-month purchase periods in each offering period. Employees purchase shares in each purchase period at 85% of the market value of our common stock at either the beginning of the offering period or the end of the purchase period, whichever price is lower. If the market value of our common stock at the end of a purchase period is lower than the market value at the beginning of the offering period, participants are rolled over into the subsequent offering, resulting in a reset of the offering price and the twenty-four month offering period. The ESPP will continue until the earlier of termination by the Board of Directors or the date on which all of the shares available for issuance under the plan have been issued. As of November 29, 2024, we had reserved 103.0 million shares of our common stock for issuance under the ESPP and approximately 8.4 million shares remain available for future issuance. Issuance of Shares Upon vesting of restricted stock units and performance shares or purchase of shares under the ESPP, we will issue treasury stock. If treasury stock is not available, common stock will be issued. In order to minimize the impact of ongoing dilution from issuance of shares, we instituted a stock repurchase program. See Note 14 for information regarding our stock repurchase programs. Valuation of Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award. Our restricted stock units are valued based on the fair market value of the award on the grant date. Our performance share awards which are contingent upon achievement of relative total stockholder return are valued using a Monte Carlo Simulation model. Our performance share awards which are contingent upon achievement of revenue-based financial metrics are valued based on the fair market value of the award on the grant date. We use the Black-Scholes option pricing model to determine the fair value of ESPP purchase rights. The determination of the grant date fair value of our ESPP purchase rights is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, a risk-free interest rate and any expected dividends. Summary of Restricted Stock Units Restricted stock unit activity for fiscal 2024 was as follows:
| Number of Shares (in millions) |  | Weighted Average Grant Date Fair Value |  | Aggregate Fair Value (1) (in millions) |  | Weighted Average Remaining Contractual Life (years)
Beginning outstanding balance | 7.8 |  |  | $ | 418.63 |  |  |  |  |
Awarded | 3.2 |  |  | $ | 579.87 |  |  |  |  |
Released | (3.5) |  |  | $ | 451.27 |  |  |  |  |
Forfeited | (0.5) |  |  | $ | 451.39 |  |  |  |  |
Ending outstanding balance | 7.0 |  |  | $ | 473.28 |  |  | $ | 3,591 |  |  | 1.25
Expected to vest | 6.5 |  |  | $ | 472.01 |  |  | $ | 3,331 |  |  | 1.20
_________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of November 29, 2024 of $515.93. The weighted average grant date fair values of restricted stock units granted during fiscal 2024, 2023 and 2022 were $579.87, $376.83 and $457.96, respectively. The total fair value of restricted stock units vested during fiscal 2024, 2023 and 2022 was $1.87 billion, $1.71 billion and $1.30 billion, respectively. Summary of Performance Shares Performance share activity for fiscal 2024 was as follows:
| Number of Shares (in millions) |  | Weighted Average Grant Date Fair Value |  | Aggregate Fair Value (1) (in millions) |  | Weighted Average Remaining Contractual Life (years)
Beginning outstanding balance | 0.5 |  |  | $ | 465.71 |  |  |  |  |
Awarded | 0.2 |  |  | $ | 645.40 |  |  |  |  |
Released | (0.1) |  |  | $ | 455.65 |  |  |  |  |
Forfeited | (0.1) |  |  | $ | 505.61 |  |  |  |  |
Ending outstanding balance | 0.5 |  |  | $ | 537.00 |  |  | $ | 256 |  |  | 1.11
Expected to vest | 0.5 |  |  | $ | 534.75 |  |  | $ | 239 |  |  | 1.18
_________________________________________ (1) The aggregate fair value is calculated using the closing stock price as of November 29, 2024 of $515.93. Shares released during fiscal 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 weighted average grant date fair values of performance share awards granted during fiscal 2024, 2023 and 2022 were $645.40, $437.58 and $402.24, respectively. The total fair value of performance share awards vested during fiscal 2024, 2023 and 2022 was $63 million, $39 million and $192 million, respectively. Summary of Employee Stock Purchase Plan Shares Employees purchased 1.2 million shares at an average price of $298.53, 1.1 million shares at an average price of $286.31, and 0.8 million shares at an average price of $333.92 for fiscal 2024, 2023 and 2022, respectively. The intrinsic value of shares purchased during fiscal 2024, 2023 and 2022 was $324 million, $185 million and $73 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 We recognize the estimated compensation costs of restricted stock units, net of estimated forfeitures, on a straight-line basis over the requisite service period of the entire award, which is generally the vesting period. The estimated compensation cost is based on the fair value of our common stock on the date of grant. Compensation costs for our performance share awards which are contingent upon achievement of relative total stockholder return are recognized, net of estimated forfeitures, on a straight-line basis over the requisite performance period or service period of the entire award, whichever is longer. Compensation costs for our performance share awards which are contingent upon achievement of revenue-based financial metrics are recognized, net of estimated forfeitures, based upon the expected levels of achievement, which are assessed periodically until certification by the ECC. We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate forfeitures and record stock-based compensation expense only for those awards that are expected to vest. As of November 29, 2024, there was $2.93 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 2.19 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. Total stock-based compensation costs included in our Consolidated Statements of Income for fiscal 2024, 2023 and 2022 were as follows:
(in millions) |  | 2024 |  | 2023 |  | 2022
Cost of revenue | $ | 117 |  |  | $ | 115 |  |  | $ | 97 |
Research and development | 932 |  |  | 874 |  |  | 726 |
Sales and marketing | 535 |  |  | 495 |  |  | 417 |
General and administrative | 249 |  |  | 234 |  |  | 200 |
Total (1) | $ | 1,833 |  |  | $ | 1,718 |  |  | $ | 1,440 |
_________________________________________ (1)During fiscal 2024, 2023 and 2022, we recorded tax benefits related to stock-based compensation costs of $372 million, $299 million and $291 million, respectively.

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