Under various plans, the Company may grant stock options and other equity-based awards to executive, management, technology and creative personnel. The Company’s approach to long-term incentive compensation contemplates awards of stock options and restricted stock units (RSUs). Certain RSUs awarded to senior executives vest based upon the achievement of market or performance conditions (Performance RSUs).

Stock options are generally granted with a 10 year term at exercise prices equal to or exceeding the market price at the date of grant and become exercisable ratably over a three-year period from the grant date. At the discretion of the Compensation Committee of the Company’s Board of Directors, options can occasionally extend up to 15 years after date of grant. RSUs generally vest ratably over three years and Performance RSUs generally fully vest after three years, subject to achieving market or performance conditions. Equity-based award grants generally provide continued vesting, in the event of termination, for employees that reach age 60 or greater, have at least ten years of service and have held the award for at least one year.

Each share granted subject to a stock option award reduces the number of shares available under the Company’s stock incentive plans by one share while each share granted subject to a RSU award reduces the number of shares available by two shares. As of September 27, 2025, the maximum number of shares available for issuance under the Company’s stock incentive plans (assuming all the awards are in the form of stock options) was approximately 117 million shares and the number available

for issuance assuming all awards are in the form of RSUs was approximately 59 million shares. The Company satisfies stock option exercises and vesting of RSUs with newly issued shares. Stock options and RSUs are generally forfeited by employees who terminate prior to vesting.

Each year, generally during the first half of the year, the Company awards stock options and restricted stock units to a broad-based group of management, technology and creative personnel. The fair value of options is estimated based on the binomial valuation model. The binomial valuation model takes into account variables such as volatility, dividend yield and the risk-free interest rate. The binomial valuation model also considers the expected exercise multiple (the multiple of exercise price to grant price at which exercises are expected to occur on average) and the termination rate (the probability of a vested option being canceled due to the termination of the option holder) in computing the value of the option.


	2025	2024	2023
Risk-free interest rate	4.6%	4.0%	3.6%
Expected volatility	28%	27%	31%
Dividend yield	0.97%	0.66%	—%
Termination rate	6.1%	6.1%	5.9%
Exercise multiple	2.12	2.12	1.98

Although the initial fair value of stock options is not adjusted after the grant date, changes in the Company’s assumptions may change the value of, and therefore the expense related to, future stock option grants. The assumptions that cause the greatest variation in fair value in the binomial valuation model are the expected volatility and expected exercise multiple. Increases or decreases in either the expected volatility or expected exercise multiple will cause the binomial option value to increase or decrease, respectively. The volatility assumption considers both historical and implied volatility and may be impacted by the Company’s performance as well as changes in economic and market conditions.

Compensation expense for RSUs and stock options is recognized ratably over the service period of the award. Compensation expense for RSUs is based on the market price of the shares underlying the awards on the grant date. Compensation expense for Performance RSUs reflects the estimated probability that the market or performance conditions will be met.


	2025		2024		2023
Stock options	$	70	$	71	$	76
RSUs	1,293		1,295		1,067
Total equity-based compensation expense(1)	1,363		1,366		1,143
Tax impact	(275)		(285)		(260)
Reduction in net income	$	1,088	$	1,081	$	883
Equity-based compensation expense capitalized during the period	$	194	$	201	$	145

(1)Equity-based compensation expense is net of capitalized equity-based compensation and estimated forfeitures and excludes amortization of previously capitalized equity-based compensation costs.



	Shares	Weighted Average Exercise Price
Outstanding at beginning of year	19	$	118.37

Awards granted	2	108.30
Awards exercised	(2)	98.74
Awards expired/canceled	(1)	135.21
Outstanding at end of year	18	$	119.08
Exercisable at end of year	14	$	124.16


					Vested
Range of Exercise Prices					Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Years of Contractual Life
$	80	—	$	110	4	$	97.41	5.7
$	111	—	$	140	5	112.05		2.4
$	141	—	$	170	4	148.70		4.9

$	171	—	$	200	1	177.43		5.4
					14


					Expected to Vest
Range of Exercise Prices					Number of Options(1)	Weighted Average Exercise Price		Weighted Average Remaining Years of Contractual Life
$	50	—	$	100	2	$	91.92	8.1
$	101	—	$	150	2	109.50		9.3


					4



	Units	Weighted Average Grant-Date Fair Value
Unvested at beginning of year	26	$	109.25
Granted(1)	16	108.55
Vested	(15)	100.58
Forfeited	(2)	96.77

Unvested at end of year(2)	25	$	100.94

The weighted average grant-date fair values of options granted during fiscal 2025, 2024 and 2023 were $37.66, $32.09 and $33.18, respectively, and for RSUs were $108.52, $94.23 and $89.66, respectively. The total intrinsic value (market value on date of exercise less exercise price) of options exercised and RSUs vested during fiscal 2025, 2024 and 2023 totaled $1,700 million, $1,322 million and $829 million, respectively. The aggregate intrinsic values of stock options vested and expected to vest at September 27, 2025 were $74 million and $44 million, respectively.

As of September 27, 2025, unrecognized compensation cost related to unvested stock options and RSUs was $79 million and $1,845 million, respectively. That cost is expected to be recognized over a weighted-average period of 1.1 years for stock options and 1.1 years for RSUs.

Cash received from option exercises for fiscal 2025, 2024 and 2023 was $233 million, $88 million and $52 million, respectively. Tax benefits realized from tax deductions associated with option exercises and RSU vestings for fiscal 2025, 2024 and 2023 were approximately $344 million, $275 million and $190 million, respectively.