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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6—Shareholders’ Equity (Continued)
Restricted Stock Units
The Company’s Board of Directors has granted RSUs to members of the Company’s executive management team, excluding its Chief Executive
Officer (“CEO”), as well as various employees within the Company. Outstanding RSU balances were not included in the outstanding options
balances in the preceding table. A summary of the Company’s RSU activity and related information for the three fiscal years ended
September 27, 2008, is as follows (in thousands, except per share amounts):
Upon vesting, the RSUs are generally net share-settled to cover the required withholding tax and the remaining amount is converted into an
equivalent number of shares of common stock. The majority of RSUs vested in 2008, 2007 and 2006, were net-share settled such that the
Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other
employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 857,000, 20,000,
and 986,000 for 2008, 2007, and 2006, respectively, which was based on the value of the RSUs on their vesting date as determined by the
Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities were $124 million, $3 million, and
$59 million in 2008, 2007, and 2006, respectively, and are reflected as a financing activity within the Consolidated Statements of Cash
Flows. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the number of shares that
would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.
The Company recognized $516 million, $242 million and $163 million of stock-based compensation expense in 2008, 2007 and 2006,
respectively. Stock-based compensation expense capitalized as software development costs was not significant as of September 27, 2008 or
September 29, 2007. The income tax benefit related to stock-
based compensation expense was $169 million, $81 million, and $39 million for the
years ended September 27, 2008, September 29, 2007, and September 30, 2006, respectively. The total unrecognized compensation cost related
to stock options and RSUs expected to vest was $1.4 billion and $631 million as of September 27, 2008 and September 29, 2007, respectively.
The total unrecognized compensation cost as of September 27, 2008, is expected to be recognized over a weighted-average period of 2.92 years.
78
Number of
Shares
Weighted
-
Average
Grant Date
Fair Value
Aggregate
Intrinsic Value
Balance at September 24, 2005
5,030
$
14.21
Restricted stock units granted
1,475
$
70.92
Restricted stock units vested
(2,470
)
$
13.37
Restricted stock units cancelled
(625
)
$
12.75
Balance at September 30, 2006
3,410
$
39.62
Restricted stock units granted
1,320
$
88.51
Restricted stock units vested
(45
)
$
46.57
Restricted stock units cancelled
(10
)
$
86.14
Balance at September 29, 2007
4,675
$
52.98
Restricted stock units granted
4,917
$
162.61
Restricted stock units vested
(2,195
)
$
25.63
Restricted stock units cancelled
(357
)
$
119.12
Balance at September 27, 2008
7,040
$
134.91
$
902,749