Nike (NKE)

APPROVAL OF EXTENSION OF AND AMENDMENTS TO THE NIKE, INC. LONG-TERM INCENTIVE PLAN

In 1997, the Board of Directors adopted, and the shareholders approved, our Long-Term Incentive Plan (the “Plan”). Historically, we had relied exclusively on stock options to provide long-term incentives to officers and employees. To provide more competitive compensation arrangements, particularly for officers and senior managers, the Board of Directors believes that we should have the flexibility to make long-term incentive awards payable in cash subject to such terms and restrictions as may be determined at the time of the awards. The Plan gives us broad authority to make such awards and to qualify such awards as “performance-based compensation” as defined under Section 162(m) of the Internal Revenue Code of 1986 (the “Code”), thereby permitting full deductibility of any amounts paid under the Plan to the Named Executive Officers.

The Code requires that the Plan be re-approved by shareholders every five years in order for awards under the Plan to continue to qualify as performance-based compensation. See “Certain Tax Consequences.” The shareholders re-approved the Plan in 2002. Unless the shareholders again re-approve the Plan as requested in this proposal, the Plan will terminate at the Annual Meeting. If the shareholders re-approve the Plan, the Plan will be extended for an additional five years until the first shareholder meeting in 2012.

The Plan as originally adopted authorized us to grant awards payable in either Class B Stock or in cash. Since 2002, our awards have allowed participants to elect either cash or stock for their payouts, and nearly all have elected cash. The awards granted in June 2007 are payable solely in cash, and we expect all future awards under the Plan to be payable solely in cash. Accordingly, the Board of Directors has adopted amendments to the Plan, subject to shareholder approval, to eliminate our ability to issue stock under the Plan.

The Board of Directors has also adopted an amendment to the Plan, subject to shareholder approval, to increase the maximum amount payable to any participant under the Plan for performance periods ending in any year from $1,000,000 to $4,000,000. The current $1,000,000 limit has been unchanged since the Plan was originally adopted in 1997, and the Board of Directors believes that the increased limit recognizes changes in executive compensation practices since then and provides flexibility to offer higher rewards for higher levels of performance. In June 2007, awards were made to Mr. Parker and Mr. Denson for the 2008-2010 performance period under which the maximums payable are $3,000,000 and $2,000,000, respectively, and all amounts payable under those awards over the current $1,000,000 maximum are subject to shareholder approval of Proposal 2.

The complete text of the Plan, marked to show the proposed amendments, is attached to this proxy statement as Exhibit A. The following description of the proposed amended Plan is a summary of certain provisions and is qualified in its entirety by reference to Exhibit A.

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