We have one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, we have, in connection with our acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to us and provide incentives for them to remain with us. The number and frequency of share-based awards are based on competitive practices, our operating results, government regulations, and other factors.

The 2005 Plan provides for the granting of stock options, stock grants, stock units and stock appreciation rights (SARs), the vesting of which may be time-based or upon satisfaction of performance goals, or both, and/or other conditions. Time-based and performance-based RSUs generally vest over three years with certain awards containing retirement eligible provisions. Employees (including employee directors and executive officers) and consultants of Cisco and its subsidiaries and affiliates and non-employee directors of Cisco are eligible to participate in the 2005 Plan. The 2005 Plan may be terminated by our Board of Directors at any time and for any reason, and is currently set to terminate at the 2030 Annual Meeting unless re-adopted or extended by our stockholders prior to or on such date.

Under the 2005 Plan’s share reserve feature, a distinction is made between the number of shares in the reserve attributable to (i) stock options and SARs and (ii) “full value” awards (i.e., stock grants and stock units). Shares issued as stock grants, pursuant to stock units or pursuant to the settlement of dividend equivalents are counted against shares available for issuance under the 2005 Plan on a 1.5-to-1 ratio. For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. If awards issued under the 2005 Plan are forfeited or terminated for any reason before being exercised or settled, then the shares underlying such awards, plus the number of additional shares, if any, that counted against shares available for issuance under the 2005 Plan at the time of grant as a result of the application of the share ratio described above, will become available again for issuance under the 2005 Plan. As of July 27, 2024, 156 million shares were authorized for future grant under the 2005 Plan.

We have an Employee Stock Purchase Plan under which eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited amount of shares of our stock at a discount of up to 15% of the lesser of the fair market value at the beginning of the offering period or the end of each 6-month purchase period. The Employee Stock Purchase Plan is scheduled to terminate on the earlier of (i) January 3, 2030 and (ii) the date on which all shares available for issuance under the Employee Stock Purchase Plan are sold pursuant to exercised purchase rights. We issued 20 million, 19 million, and 18 million shares under the Employee Stock Purchase Plan in fiscal 2024, 2023, and 2022, respectively. As of July 27, 2024, 68 million shares were available for issuance under the Employee Stock Purchase Plan.

Share-based compensation expense consists of expenses for RSUs, stock purchase rights, and stock options, granted to employees or assumed from acquisitions. The following table summarizes share-based compensation expense (in millions):


Years Ended	July 27, 2024		July 29, 2023		July 30, 2022
Cost of sales—product	$	214	$	151	$	112
Cost of sales—services	300		245		199
Share-based compensation expense in cost of sales	514		396		311
Research and development	1,316		1,008		790
Sales and marketing	846		673		572
General and administrative	375		270		212
Restructuring and other charges	23		6		1
Share-based compensation expense in operating expenses	2,560		1,957		1,575
Total share-based compensation expense	$	3,074	$	2,353	$	1,886
Income tax benefit for share-based compensation	$	696	$	449	$	457


	Restricted Stock/ Stock Units	Weighted-Average Grant Date Fair Value per Share		Aggregate Fair Value
UNVESTED BALANCE AT JULY 31, 2021	94	$	42.93
Granted and assumed	52	50.06
Vested	(37)	42.27		$	1,979
Canceled/forfeited/other	(12)	45.63
UNVESTED BALANCE AT JULY 30, 2022	97	46.67
Granted and assumed	72	42.08
Vested	(39)	46.69		$	1,746
Canceled/forfeited/other	(8)	45.17
UNVESTED BALANCE AT JULY 29, 2023	122	44.04
Granted and assumed	63	48.97
Vested	(58)	43.46		$	2,906
Canceled/forfeited/other	(10)	45.65
UNVESTED BALANCE AT JULY 27, 2024	117	$	46.86

Time-based restricted stock units and PRSUs that are based on our financial performance metrics or non-financial operating goals are valued using the market value of our common stock on the date of grant, discounted for the present value of expected dividends. Starting in fiscal 2023, for PRSUs granted, we included a relative total shareholder return (TSR) modifier to determine the number of shares earned at the end of the performance period. The TSR modifier is determined using a Monte Carlo simulation model. For PRSUs granted in fiscal 2022, on the date of grant, we estimated the fair value of the TSR component of the PRSUs using a Monte Carlo simulation model. The PRSUs granted during the fiscal years presented are contingent on the achievement of our financial performance metrics, our comparative market-based returns, or the achievement of financial and non-financial operating goals.


	RESTRICTED STOCK UNITS
Years Ended	July 27, 2024			July 29, 2023			July 30, 2022
Number of shares granted (in millions)	60			70			50
Grant date fair value per share	$	48.71		$	42.13		$	49.68
Weighted-average assumptions/inputs:
Expected dividend yield	3.0		%	3.4		%	2.9		%
Range of risk-free interest rates	4.2% – 5.6%			3.7% – 5.7%			0.0% – 3.0%


	PERFORMANCE BASED RESTRICTED STOCK UNITS
Years Ended	July 27, 2024		July 29, 2023		July 30, 2022
Number of shares granted (in millions)	3		2		2
Grant date fair value per share	$	59.31	$	40.44	$	59.64
Weighted-average assumptions/inputs:
Expected dividend yield	N/A		N/A		0.4		%
Range of risk-free interest rates	N/A		N/A		0.0% – 0.7%


	EMPLOYEE STOCK PURCHASE RIGHTS
Years Ended	July 27, 2024			July 29, 2023			July 30, 2022
Weighted-average assumptions:
Expected volatility	28.3		%	28.7		%	27.9		%
Risk-free interest rate	2.9		%	2.8		%	0.1		%
Expected dividend	3.5		%	3.6		%	3.2		%
Expected life (in years)	1.2			1.2			1.2
Weighted-average estimated grant date fair value per share	$	11.59		$	12.40		$	12.90

We used the implied volatility for traded options (with contract terms corresponding to the expected life of the employee stock purchase rights) on our stock as the expected volatility assumption required in the Black-Scholes model. The implied volatility is more representative of future stock price trends than historical volatility. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock purchase rights. The dividend yield assumption is based on the history and expectation of dividend payouts at the grant date.

We sponsor the Cisco Systems, Inc. 401(k) Plan (the “Plan”) to provide retirement benefits for our employees. As allowed under Section 401(k) of the Internal Revenue Code, the Plan provides for tax-deferred salary contributions and after-tax contributions for eligible employees. The Plan allows employees to contribute up to 75% of their annual eligible earnings to the Plan on a pretax and after-tax basis, including Roth contributions. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. We match pretax and Roth employee contributions up to 100% of the first 4.5% of eligible earnings that are contributed by employees. Therefore, the maximum matching contribution that we may allocate to each participant’s account will not exceed $15,525 for the 2024 calendar year due to the $345,000 annual limit on eligible earnings imposed by the Internal Revenue Code. All matching contributions vest immediately. Our matching contributions to the Plan totaled $358 million, $342 million, and $306 million in fiscal 2024, 2023, and 2022, respectively.

The Plan allows employees who meet the age requirements and reach the Plan contribution limits to make catch-up contributions (pretax or Roth) not to exceed the lesser of 75% of their annual eligible earnings or the limit set forth in the Internal Revenue Code. Catch-up contributions are not eligible for matching contributions. In addition, the Plan provides for discretionary profit-sharing contributions as determined by the Board of Directors. Such contributions to the Plan are allocated among eligible participants in the proportion of their salaries to the total salaries of all participants. There were no discretionary profit-sharing contributions made in fiscal 2024, 2023, and 2022.

We also sponsor other 401(k) plans as a result of acquisitions of other companies. Our contributions to these plans were not material to Cisco on either an individual or aggregate basis for any of the fiscal years presented.