Note 9 – Benefit Plans

Stock Plans

The Company had 436.9 million shares reserved for future issuance under its stock plans as of December 27, 2014. RSUs granted generally vest over four years, based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one-for-one basis. Each share issued with respect to RSUs granted under the Company’s stock plans reduces the number of shares available for grant under the plan by two shares. RSUs cancelled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the plans utilizing a factor of two times the number of RSUs cancelled or shares withheld. Stock options count against the number of shares available for grant on a one-for-one basis.

Rule 10b5-1 Trading Plans

During the three months ended December 27, 2014, Section 16 officers Timothy D. Cook, Angela Ahrendts, Luca Maestri and Daniel Riccio had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s employee and director equity plans.

 

Restricted Stock Units

A summary of the Company’s RSU activity and related information for the three months ended December 27, 2014, is as follows:

 

		Number of RSUs (in thousands)				Weighted-Average Grant Date Fair Value				Aggregate Intrinsic Value (in millions)
Balance at September 27, 2014			103,822			$	70.98
RSUs granted			36,294			$	101.41
RSUs vested			(16,759	)		$	64.30
RSUs cancelled			(1,815	)		$	71.49
Balance at December 27, 2014			121,542			$	80.98			$	13,855

RSUs that vested during the three months ended December 27, 2014 and December 28, 2013 had a fair value of $1.7 billion and $1.1 billion, respectively, as of the vesting date.

Stock Options

The Company had 3.5 million stock options outstanding as of December 27, 2014, with a weighted average exercise price per share of $19.61 and weighted average remaining contractual term of 2.2 years, substantially all of which are exercisable. The aggregate intrinsic value of the stock options outstanding as of December 27, 2014 was $330 million, which represents the value of the Company’s closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options outstanding.

The total intrinsic value of options at the time of exercise was $248 million and $559 million for the three months ended December 27, 2014 and December 28, 2013, respectively.

Share-Based Compensation

The following table shows a summary of the share-based compensation expense included in the Condensed Consolidated Statements of Operations for the three months ended December 27, 2014 and December 28, 2013 (in millions):

 

		Three Months Ended
		December 27, 2014				December 28, 2013
Cost of sales		$	140			$	109
Research and development			374				289
Selling, general and administrative			374				283
Total share-based compensation expense		$	888			$	681

The income tax benefit related to share-based compensation expense was $351 million and $265 million for the three months ended December 27, 2014 and December 28, 2013, respectively. As of December 27, 2014, the total unrecognized compensation cost related to outstanding stock options and RSUs expected to vest was $8.8 billion, which the Company expects to recognize over a weighted-average period of 3.1 years.