Our Board of Directors has authorized two classes of common stock, Class A and Class B. As of June 26, 2026, we had authorized 500,000,000 Class A shares and 500,000,000 Class B shares. As of June 26, 2026, we had 59,393,554 shares of Class A common stock and 34,251,901 shares of Class B common stock issued and outstanding. Holders of our Class A and Class B common stock have identical rights, except that holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to ten votes per share. Shares of Class B common stock can be converted to shares of Class A common stock at any time at the option of the stockholder and automatically convert upon sale or transfer, except for certain transfers specified in our amended and restated certificate of incorporation.

Our 2020 Stock Plan originally was adopted by our Board of Directors and shareholders in 2005 (when the 2020 Stock Plan was called the 2005 Stock Plan). Our stockholders last approved amendments to the 2020 Stock Plan at our 2023 annual meeting of stockholders. Our 2020 Stock Plan, as amended and restated, provides for the ability to grant incentive stock options, non-qualified stock options, restricted stock, RSUs, stock appreciation rights, deferred stock units, performance units, performance bonus awards, and performance shares. A total of 64.0 million shares of our Class A common stock have been authorized for issuance under the 2020 Stock Plan in total since inception of the plan. Any shares subject to an award with a per share price less than the fair market value of our Class A common stock on the date of grant and any shares subject to an outstanding RSU award will be counted against the authorized share reserve as 1.6 shares for every one share subject to the award, and if returned to the 2020 Stock Plan, such shares will be counted as 1.6 shares for every one share returned.

Stock Options. Stock options are granted at fair market value on the date of grant. Options generally vest over four years, with 25% of the options becoming exercisable on the one-year anniversary of the date of grant and the balance of the shares vesting in equal monthly installments over the following 36 months. These options expire on the earlier of ten years after the date of grant or three months after termination of service. All options granted vest over the requisite service period and upon the exercise of stock options, we issue new shares of Class A common stock under the 2020 Stock Plan. Our 2020 Stock Plan also allows us to grant stock awards which vest based on the satisfaction of specific performance criteria.

Performance-Based Stock Options. From fiscal 2016 through fiscal 2019, we granted PSOs to certain officers with shares of our Class A common stock underlying such options. The contractual term for the PSOs was seven years, with vesting contingent upon market-based performance conditions, representing the achievement of specified Dolby annualized TSR targets at the end of a three-year measurement period following the date of grant. Anywhere from 0% to 125% of the shares subject to a PSO vested based on achievement of the performance conditions at the end of the three-year performance period.

In valuing the PSOs, which are recognized as compensation cost, we used a Monte Carlo valuation model. Aside from the use of an expected term for the PSOs commensurate with their shorter contractual term, the nature of the valuation inputs used in the Monte Carlo valuation model were consistent with those used to value our non-performance based options granted under the 2020 Stock Plan. Compensation cost was amortized on a straight-line basis over the requisite service period.

The following table summarizes information about stock options, including PSOs, issued under our 2020 Stock Plan:


	Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value (1)
	(in thousands)			(in years)	(in thousands)
Options outstanding as of September 26, 2025	3,259	$	72.71
Grants	504	66.62
Exercises	(168)	52.32
Forfeitures and cancellations	(24)	68.40
Options outstanding as of June 26, 2026	3,571	72.84		5.30	$	509
Options vested and expected to vest as of June 26, 2026	3,404	72.94		5.19	509
Options exercisable as of June 26, 2026	2,626	73.05		4.13	509

Restricted Stock Units. In fiscal 2008, we began granting RSUs to certain directors, officers, and employees. RSU awards granted to employees and officers generally vest over four years, with annual cliff-vesting. Awards granted to ongoing non-employee directors generally vest over approximately one year. Awards granted to new non-employee directors from fiscal 2014 onward vest on the earlier of the first anniversary of the award’s date of grant, or the day immediately preceding the date of the next annual meeting of stockholders that occurs after the award’s date of grant. At each vesting date, the holder of the award is issued shares of our Class A common stock. Compensation expense from these awards is equal to the adjusted fair market value of our Class A common stock on the date of grant, discounted to account for dividend payments forgone during the vesting period, and is recognized on a straight-line basis over the requisite service period. Certain grants may have other vesting conditions or other award terms as approved by the Compensation Committee of our Board of Directors. Our 2020 Stock Plan also allows us to grant RSUs that vest based on the satisfaction of specific performance criteria.

Performance-Based Restricted Stock Units. In fiscal 2020, we began granting PSUs to certain officers with shares of our Class A common stock underlying such awards. The terms of the PSU Agreement adopted in the first quarter fiscal 2020 provide for the grant of PSUs to certain officers contingent on Dolby's achievement of annualized TSR targets measured against a comparator index over a three-year performance period following the date of grant. Anywhere from 0% to 200% of eligible restricted stock units may vest based on achievement of the performance conditions at the end of the three-year performance period. The value of the PSUs, which is recognized as compensation cost, is calculated using a Monte Carlo valuation model. Compensation cost is being amortized on a straight-line basis over the requisite service period. Certain grants may have other vesting conditions or other award terms as approved by the Compensation Committee of our Board of Directors.

On December 15, 2021, we granted PSUs to our executive officers for an aggregate of 60,301 shares, which vested in December 2024 at 70% of the target award amount. On December 15, 2022, we granted PSUs to our executive officers for an aggregate of 90,613 shares, which vested in December 2025 at 65% of the target award amount. As of June 26, 2026, PSUs that would vest for an aggregate of 284,657 shares at the target award amount (569,314 shares at 200% of the target award amount) were outstanding.

The following table summarizes information about RSUs, including PSUs, issued under our 2020 Stock Plan:


	Shares	Weighted-Average Grant Date Fair Value
	(in thousands)
Non-vested as of September 26, 2025	4,130	$	77.07
Granted	2,024	62.91
Vested	(1,423)	78.08
Forfeitures	(219)	73.66
Non-vested as of June 26, 2026	4,512	$	70.57

Employee Stock Purchase Plan. Our ESPP originally was adopted by our Board of Directors and shareholders in 2005. Our stockholders last approved amendments to the ESPP at our 2023 annual meeting of stockholders. The ESPP allows eligible employees to have up to 10 percent of their eligible compensation withheld and used to purchase Class A common stock, subject to a maximum of $25,000 worth of stock purchased in a calendar year or no more than 1,000 shares in an offering period, whichever is less. An offering period consists of successive six-month purchase periods, with a look back feature to our stock price at the commencement of a one-year offering period. The plan provides for a discount equal to 15 percent of the lower of the closing price of our Class A common stock on the NYSE on the first day of the offering period and the last day of the purchase period. The plan also includes an automatic reset feature that provides for an offering period to be reset and recommenced to a new lower-priced offering if the offering price of a new offering period is less than that of the immediately preceding offering period. A total of 5.5 million shares of our Class A common stock have been authorized for issuance under the ESPP since inception of the plan.

We use the Black-Scholes option pricing model to determine the estimated fair value of employee stock options at the date of the grant. The Black-Scholes model includes inputs that require us to make certain estimates and assumptions regarding the expected term of the award, as well as the future risk-free interest rate, and the volatility of our stock price over the expected term of the award.

Expected Term. The expected term of an award represents the estimated period of time that options granted will remain outstanding, and is measured from the grant date to the date at which the option is either exercised or canceled. Our determination of the expected term involves an evaluation of historical terms and other factors such as the exercise and termination patterns of our employees who hold options to acquire our Class A common stock, and is based on certain assumptions made regarding the future exercise and termination behavior.

Risk-Free Interest Rate. The risk-free interest rate is based on the yield curve of U.S. Treasury instruments in effect on the date of grant. In determining an estimate for the risk-free interest rate, we use average interest rates based on these instruments’ constant maturities with a term that approximates and corresponds with the expected term of our awards.

Expected Stock Price Volatility. The expected volatility represents the estimated volatility in the price of our Class A common stock over a time period that approximates the expected term of the awards. The expected volatility has historically been determined using a blended combination of historical and implied volatility, but is currently being determined using historical volatility only. Historical volatility is representative of the historical trends in our stock price for periods preceding the measurement date for a period that is commensurate with the expected term. Implied volatility is based upon externally traded option contracts of our Class A common stock.

Dividend Yield. The dividend yield is based on our anticipated dividend payout over the expected term of our option awards. Dividend declarations and the establishment of future record and payment dates are subject to the Board of Directors’ continuing determination that the dividend policy is in the best interests of our stockholders. The dividend policy may be changed or canceled at the discretion of the Board of Directors at any time.

The weighted-average assumptions used in the determination of the fair value of our stock options were as follows:


	Fiscal Year-To-Date Ended
	June 26, 2026		June 27, 2025
Expected term (in years)	4.96		4.89
Risk-free interest rate	3.7	%	4.3	%
Expected stock price volatility	24.6	%	29.5	%
Dividend yield	2.1	%	1.7	%

Stock-based compensation expense for equity awards granted to employees is determined by estimating their fair value on the date of grant, and recognizing that value as an expense on a straight-line basis over the requisite service period in which our employees earn the awards. Compensation expense related to these equity awards is recognized net of estimated forfeitures, which reduce the expense recorded in the unaudited interim condensed consolidated statements of operations. The selection of applicable estimated forfeiture rates is based on an evaluation of trends in our historical forfeiture data with consideration for other potential driving factors. If in subsequent periods actual forfeitures significantly differ from our initial estimates, we will revise such estimates accordingly.


	Fiscal Quarter Ended				Fiscal Year-To-Date Ended
	June 26, 2026		June 27, 2025		June 26, 2026		June 27, 2025
Compensation expense
Stock options	$	1,732	$	1,690	$	5,348	$	5,108
Restricted stock units (1) (2)	27,916		28,201		90,320		89,028
Employee stock purchase plan	1,316		837		3,215		3,326
Total stock-based compensation	30,964		30,728		98,883		97,462
Estimated benefit from income taxes	(4,362)		(4,822)		(13,931)		(15,406)
Total stock-based compensation, net of tax	$	26,602	$	25,906	$	84,952	$	82,056

(2)Excludes $0.2 million and $0.1 million of capitalized stock-based compensation related to internal-use software in the third quarter of fiscal 2026 and in the third quarter of fiscal 2025, respectively, and excludes $0.4 million and $0.2 million in the fiscal year-to-date periods ended June 26, 2026 and June 27, 2025, respectively.


	Fiscal Quarter Ended				Fiscal Year-To-Date Ended
	June 26, 2026		June 27, 2025		June 26, 2026		June 27, 2025
Compensation expense
Cost of products and services	$	440	$	420	$	1,394	$	1,321
Research and development	9,695		9,189		31,070		29,216
Sales and marketing	10,293		10,589		33,214		33,874
General and administrative	10,536		10,530		33,205		33,051
Total stock-based compensation	30,964		30,728		98,883		97,462
Estimated benefit from income taxes	(4,362)		(4,822)		(13,931)		(15,406)
Total stock-based compensation, net of tax	$	26,602	$	25,906	$	84,952	$	82,056

The tax benefit that we recognize from shares issued under our ESPP is excluded from the tables above. The tax benefit recognized was not material in the third quarters of fiscal 2026 and fiscal 2025, or in the fiscal year-to-date periods ended June 26, 2026 and June 27, 2025.

Unrecognized Compensation Expense. As of June 26, 2026, total unrecognized compensation expense associated with employee stock options expected to vest was approximately $13.1 million, which is expected to be recognized over a weighted-average period of 2.8 years. As of June 26, 2026, total unrecognized compensation expense associated with RSUs expected to vest was approximately $221.3 million, which is expected to be recognized over a weighted-average period of 2.5 years.

In November 2009, we announced a stock repurchase program, providing for the repurchase of our Class A common stock. The following table summarizes the initial amount of authorized repurchases as well as additional repurchases approved by our Board of Directors as of June 26, 2026 (in thousands):


Date of Authorization	Authorization Amount
Fiscal 2010: November 2009	$	250,000
Fiscal 2010: July 2010	300,000
Fiscal 2011: July 2011	250,000
Fiscal 2012: February 2012	100,000
Fiscal 2015: October 2014	200,000
Fiscal 2017: January 2017	200,000
Fiscal 2018: July 2018	350,000
Fiscal 2019: July 2019	350,000
Fiscal 2021: July 2021	350,000
Fiscal 2022: February 2022	250,000
Fiscal 2022: August 2022	350,000
Fiscal 2024: August 2024	350,000
Total	$	3,300,000

Stock repurchases under the program may be made through open market transactions, negotiated purchases, or otherwise, at times and in amounts that we consider appropriate. The timing of repurchases and the number of shares repurchased depend upon a variety of factors, including price, regulatory requirements, the rate of dilution from our equity compensation plans, and other market conditions. The program does not have a specified expiration date, and can be limited, suspended, or terminated at our discretion at any time without prior notice. Shares repurchased under the program will be retired and returned to the status of authorized but unissued shares of Class A common stock. As of June 26, 2026, the remaining authorization to purchase additional shares was $76.6 million.

The following table provides information regarding share repurchase activity under the program during fiscal 2026:


Quarterly Repurchase Activity	Shares Repurchased	Cost (1)		Average Price Paid Per Share (2)
		(in thousands)
Q1 - Quarter ended December 26, 2025	1,044,838	$	70,005	$	67.00
Q2 - Quarter ended March 27, 2026	1,010,900	64,999		64.30
Q3 - Quarter ended June 26, 2026	1,176,036	64,997		55.27

Total	3,231,774	$	200,001

The following table summarizes dividends declared under the program during fiscal 2026:

Fiscal Period

Announcement Date

Record Date

Payment Date

Cash Dividend Per Common Share

Dividend Payment

Q1 - Quarter ended December 26, 2025

November 18, 2025

December 2, 2025

December 10, 2025

0.36

$34.3 million

Q2 - Quarter ended March 27, 2026

January 29, 2026

February 10, 2026

February 18, 2026

0.36

$34.3 million

Q3 - Quarter ended June 26, 2026

April 30, 2026

May 12, 2026

May 20, 2026

0.36

$34.0 million