SHARE-BASED COMPENSATION

12 Months Ended

Nov. 02, 2025

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

22. SHARE-BASED COMPENSATION

We grant restricted stock units (RSU) and stock options (collectively, equity incentive awards) to certain employees. RSUs are also granted to nonemployee directors for their services as directors. RSUs consist of service-based, performance/service-based, and market/service-based awards.

The Long-Term Incentive Cash granted to certain employees is accounted for as share-based compensation. This incentive includes a performance metric based, in part, on the price of our shares.

We are authorized to grant shares for equity incentive awards. The outstanding shares authorized were 13.7 million at November 2, 2025. We currently use shares that have been repurchased through our stock repurchase program to satisfy share option exercises and RSU conversions. The stock awards vesting periods and the dividend equivalents earned during the vesting period follow:

	Vesting	Dividend
	Period	Equivalents
Stock options	1-3 years	Not included
Service-based RSUs	1-3 years	Included
Performance/service-based RSUs	3 years	Not included
Market/service-based RSUs	3 years	Not included

Stock options expire ten years from the grant date. Performance/service-based awards are subject to a performance metric based on our compound annual revenue growth rate, compared to a benchmark group of companies. Market/service-based awards are subject to a market related metric based on total shareholder return, compared to a benchmark group of companies. The performance/service-based units and market/service-based units award common stock in a range of zero to 200% for each unit granted based on the level of the metric achieved.

The fair value of stock options and RSUs is determined using our closing price on the grant date. The fair value of the

market/service-based RSUs is determined using a Monte Carlo model. Awards are expensed over the shorter of the award vesting period or the employee’s retirement eligibility period. The performance/service-based units’ expense is adjusted quarterly for the probable number of shares to be awarded. We recognize the effect of award forfeitures as an adjustment to compensation expense in the period the forfeiture occurs.

The assumptions used in determining the fair value of the market/service-based RSUs granted in 2025 and 2024 using the Monte Carlo valuation model follow:

	2025	2024
Expected volatility of the Company's stock	28.22%	27.93%
Risk-free interest rate	4.05%	4.17%

The total share-based compensation expense, recognized income tax benefits, and total grant-date fair values of stock options and restricted stock units vested consisted of the following:

	2025		2024		2023
Share-based compensation expense	$	151	$	208	$	130
Income tax benefits		34		34		21
Stock options and restricted stock units vested		174		110		84

At November 2, 2025, there was $89 of total unrecognized compensation cost from share-based compensation arrangements. This compensation is expected to be recognized over a weighted-average period of approximately 1.75 years.

Stock Options

The fair value of each stock option award was estimated on the date of grant using a binomial lattice option valuation model. The assumptions used for the binomial lattice model to determine the fair value of options follow:

	2025	2024	2023
Risk-free interest rate*	4.09%	3.96%	2.68%
Expected dividends	1.4%	1.6%	1.1%
Volatility*	26.0%	27.0%	33.0%
Expected term (in years)*	5.2	5.1	5.1

*    Weighted-averages

The risk-free interest rates are based on U.S. Treasury security yields at the time of grant. Expected volatilities are based on implied volatilities from traded call options on our stock. We use historical data to estimate option exercise behavior representing the weighted-average period that options granted are expected to be outstanding.

The activity for outstanding stock options at November 2, 2025, and changes during 2025 follow:

				Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price*		Term	Value
	(thousands)	(per share)		(years)	(millions)
Outstanding at beginning of year	1,476	$	242.41
Granted	169		448.18
Exercised	(530)		145.40
Forfeited	(3)		428.60
Outstanding at end of year	1,112		319.44	5.75	$	158.1
Exercisable at end of year	789		277.80	4.50		145.1

*    Weighted-averages

The amounts related to stock options were as follows in millions of U.S. dollars unless otherwise noted:

	2025		2024		2023
Weighted-average grant date fair value (per share)	$	116.35	$	98.04	$	136.46
Intrinsic value of options exercised		165		125		153
Cash received from exercises		77		44		60
Tax benefit from exercises		35		27		34

Restricted Stock Units

The weighted-average grant date fair values were as follows:

	2025		2024		2023
Service-based	$	448.69	$	377.72	$	428.35
Performance/service-based		429.77		360.53		424.93
Market/service-based		591.13		370.87

Our nonvested RSUs at November 2, 2025, and changes during 2025 follow:

		Grant-Date
	Shares (thousands)	Fair Value* (per share)
Service-based:
Nonvested at beginning of year	471	$	378.39
Granted	308		448.69
Vested	(351)		389.61
Forfeited	(15)		418.74
Nonvested at end of year	413		419.87
Performance/service-based:
Nonvested at beginning of year	126		373.35
Granted	40		429.77
Vested	(26)		331.47
Performance change	(9)		331.47
Forfeited	(1)		401.55
Nonvested at end of year	130		401.48
Market/service-based:
Nonvested at beginning of year	51		370.87
Granted	40		591.13
Forfeited	(1)		501.36
Nonvested at end of year	90		467.46

*    Weighted-averages