v3.26.1
Equity
 12 Months Ended
Jun. 27, 2026
Equity [Abstract]  
Equity
Note 14. Equity
Series A Convertible Preferred Stock
On March 2, 2026, we completed the issuance and sale of approximately 2.9 million shares of our Series A Convertible Preferred Stock, par value $0.001 per share (the “Preferred Stock”) to NVIDIA Corporation (“NVIDIA”), in a private placement pursuant to a Securities Purchase Agreement. The shares of Preferred Stock were sold at a price of $695.31 per share for an aggregate purchase price of $2.0 billion in cash. The Preferred Stock has the following terms which are set forth in the Certificate of Designation filed with the Secretary of State of the State of Delaware (the “Certificate of Designation”):
Conversion. The Preferred Stock will convert on a one-for-one basis into shares of our common stock (i) at the option of the holder, provided, that, no holder may exercise this conversion right until the expiration or termination of the applicable waiting period (or any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder or (ii) automatically immediately before the closing of a qualified sale. A qualified sale is defined as the bona fide sale of the Preferred Stock to the Company or a non-affiliate of the holder.
Dividends. Each holder of Preferred Stock will be entitled to receive dividends in the same manner as holders of our common stock, as determined on an as-converted basis, assuming all outstanding shares of Preferred Stock have converted pursuant to the terms of the Certificate of Designation as of immediately prior to the record date of the applicable dividend.
Voting Rights. Other than with respect to the election of directors, for which the Preferred Stock will not be entitled to vote, holders of Preferred Stock will vote together with holders of our common stock on an as-converted basis. We may not alter or change adversely the powers, preferences or rights of the Preferred Stock or alter or amend the Certificate of Designation without the affirmative vote or consent of a majority of the outstanding shares of Preferred Stock.
Dissolution, Liquidation or Winding Up. In connection with a dissolution, liquidation or winding up of the Company, distributions to our stockholders shall be made among the holders of Preferred Stock and our common stock pro rata in proportion to number of shares held by each such holder. All shares of Preferred Stock shall be treated as if they had been converted to our common stock pursuant to the terms of the Certificate of Designation immediately prior to such event.
No Preemptive or Redemption Rights. The holders of Preferred Stock have no preemptive or redemption rights.
Description of Lumentum Stock-Based Benefit Plans
Equity Incentive Plan
We adopted the 2015 Equity Incentive Plan (the “2015 Plan”) in connection with our separation from JDS Uniphase Corporation (“JDSU” and now, Viavi Solutions Inc.) in July 2015. The 2015 Plan provided for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any parent and subsidiary corporations’ employees, and for the grant of non-statutory stock options (“stock options”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), stock appreciation rights (“SARs”), performance units (“PSUs”) and performance shares to our employees, directors and consultants and any parent or subsidiary corporations’ employees and consultants.
In November 2023, we adopted and assumed the Amended and Restated Share Option Scheme of Cloud Light Optoelectronics Limited (the “Cloud Light Scheme” and together with the 2015 Plan, the “Prior Plans”) in connection with the Cloud Light acquisition. The Cloud Light Scheme provides for the grant of stock options, RSAs, RSUs, SARs, and performance shares to eligible employees and other service providers.
In February 2025, our board of directors approved the 2025 Inducement Equity Incentive Plan (the “Inducement Plan”) in accordance with Listing Rule 5635(c)(4) of the corporate governance rules of the Nasdaq Stock Market, which became effective in February 2025. The Inducement Plan has substantially the same terms and conditions as the 2015 Plan, however, the Inducement Plan may only be used for grants to new employees and not for existing employees, executives, directors or consultants. The Inducement Plan provides for the grant of stock options, RSAs, RSUs, SARs, PSUs and performance shares to eligible employees and other service providers.
In November 2025, our stockholders approved the 2025 Equity Incentive Plan (the “2025 Plan”), under which the number of shares of common stock reserved for issuance was 3.2 million shares plus up to 3.9 million shares subject to awards granted under Prior Plans that, after the effective date of the 2025 Plan: (x) are forfeited, canceled or expire (whether voluntarily or involuntarily) or settled in cash, or (y) issued under the Prior Plans pursuant to an award that is forfeited, or repurchased by us as unvested, for an amount not greater than the original purchase price. The 2025 Plan became effective upon receiving stockholder approval. Upon the effective date of the 2025 Plan, the 2015 Plan and the Cloud Light Scheme terminated and no further grants will be made thereunder, but such plans continue to govern the terms of outstanding awards previously granted under such plans. The 2025 Plan has substantially the same terms and conditions as the 2015 Plan. The 2015 Plan, the Inducement Plan, the Cloud Light Scheme and the 2025 Plan are collectively referred to as the “Equity Incentive Plans.”
As of June 27, 2026, we had 3.0 million shares subject to stock options, restricted stock units, and performance stock units issued and outstanding under the Equity Incentive Plans. Restricted stock units and performance stock units have vesting that is performance-based, market-based and time-based or any combination thereof, and are expected to vest within four years. The exercise price for stock options is equal to the fair value of the underlying stock at the date of grant. We issue new shares of common stock upon exercise of stock options. Options generally have a vesting period of three years. As of June 27, 2026, 3.4 million shares of common stock under the Equity Incentive Plans were available for grant.
Stock Options
We granted certain employees with stock options, the vesting of which is based on the requisite service requirement and expected to vest within three years. We calculate the fair value of stock options using the Black-Scholes option-pricing model, which requires us to make estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, and forfeiture rates. We issue new shares of common stock upon exercise of stock options.
Restricted Stock Units
Restricted stock units (“RSUs”) are grants of shares of our common stock, the vesting of which is based on the requisite service requirement. Generally, our RSUs are subject to forfeiture and are expected to vest within four years. For annual refresh grants, RSUs generally vest ratably on an annual, or combination of annual and quarterly, basis over three years.
During fiscal year 2026, our board of directors approved grants of 1.1 million shares, which primarily vest over three years. The fair value of these grants is based on the closing market price of our common stock on the date of grant.
Performance Stock Units
PSUs under the Equity Incentive Plans are grants of shares of our common stock that vest upon the achievement of certain performance and service conditions. For PSUs with performance-based conditions, the fair value of these grants is based on the closing market price of our common stock on the date of grant, and we begin recognizing compensation expense when we conclude that it is probable that the performance conditions will be achieved. We reassess the probability of vesting at each reporting period and adjust our compensation cost based on this probability assessment. For PSUs with market-based conditions, the fair value of these grants is estimated using a Monte-Carlo simulation model, and the compensation expense is recognized ratably over the requisite service period regardless of whether or not the market condition is satisfied, provided the requisite service is rendered. Our PSUs are subject to risk of forfeiture until performance and service conditions are satisfied and generally vest within three years.
During fiscal year 2026, our board of directors granted 0.1 million PSUs with an aggregate grant date fair value of $15.3 million to certain executive officers and senior management. These PSUs will vest subject to the achievement of earnings per share targets, as well as service conditions, over three years. The number of shares may be increased or decreased based on the results of these measurement targets ranging between 0% and 200% in accordance with the terms established at the date of grant. In addition, the board of directors also approved a grant of 0.1 million PSUs with an aggregate grant date fair value of $36.6 million to certain executive officers and senior management. These PSUs will vest subject to the achievement of our total shareholder return (or “TSR”) relative to specified peer group, as well as service conditions, over three years. The number of shares that ultimately vest may be increased or decreased based on the results of these measurement targets ranging between 0% and 200% in accordance with the terms established at the date of grant. We estimated the grant date fair value of these PSU awards using a Monte-Carlo simulation model, which was calculated at $282.85 per share.
Stock-based compensation expense related to PSUs are categorized as AIP PSUs, TSR PSUs and Other PSUs. AIP PSUs relates to the shares granted to executive and non-executive employees as part of our Annual Incentive Plan (“AIP PSUs”) during fiscal year 2025, which were subject to performance targets and service conditions and vested in August 2025. TSR PSUs relate to shares granted to certain executive officers and senior management, which will vest subject to the achievement of our TSR relative to specified peer group while Other PSUs relate to shares granted to certain executive officers and senior management, which are subject to financial performance targets (such as revenue and EPS) and service conditions. Refer to the table below for a presentation of stock-based compensation expense by equity awards for more details.
Employee Stock Purchase Plan
The ESPP provides eligible employees with the opportunity to acquire an ownership interest in us through periodic payroll deductions and provides a 15% purchase price discount as well as a 6-month look-back period. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. The ESPP will terminate upon the date on which all shares available for issuance have been sold. Of the 3.0 million shares authorized under the 2015 Purchase Plan, 0.3 million shares remained available for issuance as of June 27, 2026.
Stock-Based Compensation
The impact on our results of operations of recording stock-based compensation by function during the periods presented was as follows (in millions):
Years Ended
June 27, 2026June 28, 2025June 29, 2024
Cost of sales$39.5 $36.9 $31.7 
Research and development38.8 43.3 38.1 
Selling, general and administrative91.9 97.0 59.0 
Total stock-based compensation$170.2 $177.2 $128.8 
Our stock-based compensation by equity awards for the periods presented were as follows (in millions):
Years Ended
June 27, 2026June 28, 2025June 29, 2024
RSUs$106.5 $101.8 $114.3 
   AIP PSUs4.8 29.8 0.8 
   TSR PSUs17.1 3.2 — 
   Other PSUs26.1 31.6 5.8 
Total PSUs48.0 64.6 6.6 
Options4.6 6.1 3.3 
ESPP6.1 4.9 4.7 
Sub-total165.2 177.4 128.9 
Change in stock-based compensation capitalized to inventory5.0 (0.2)(0.1)
Total stock-based compensation$170.2 $177.2 $128.8 
Stock-based compensation for fiscal years 2026, 2025 and 2024 includes $48.0 million, $64.6 million and $6.6 million, respectively, of expenses related to PSUs. The amount of stock-based compensation expense recognized in any one period related to PSUs with performance-based conditions can vary based on the achievement or anticipated achievement of the performance conditions. If the performance conditions are not met or not expected to be met, no compensation expense would be recognized on the underlying PSUs, and any previously recognized compensation expense related to those PSUs would be reversed.
During the year ended June 28, 2025, the total PSU expense of $64.6 million includes $18.2 million of additional stock-compensation expense resulting from modifications. On February 2, 2025, we and our former President and Chief Executive Officer mutually agreed to modify the terms of previously granted equity awards by changing the level of remaining service condition required for vesting. In accordance with ASC 718, Compensation - Stock Compensation, we accounted for the change as a modification as we determined the remaining service conditions were non-substantive.
Approximately $9.6 million and $14.6 million of stock-based compensation was capitalized to inventory as of June 27, 2026 and June 28, 2025, respectively.
Total income tax benefit associated with stock-based compensation recognized in our consolidated statements of operations during the years presented was as follows (in millions):
Years Ended
June 27, 2026June 28, 2025June 29, 2024
Income tax benefit associated with stock-based compensation$72.1 $2.5 $7.5 
The table below summarizes the unrecognized stock-based compensation cost related to unvested shares and the weighted-average period over which it is expected to be recognized as of June 27, 2026:
Unrecognized stock-based compensation (in millions)
Weighted-average period
(in years)
RSUs$167.7 1.7
PSUs72.8 2.0
Stock options1.4 0.4
ESPP4.0 0.4
Stock Award Activity
The following table summarizes our awards activity in fiscal years 2026, 2025 and 2024 (in millions, except per share amounts):
Stock OptionsRestricted Stock UnitsPerformance Stock Units
Number of SharesWeighted-Average Exercise Price per ShareNumber of SharesWeighted-Average Grant Date Fair Value per ShareNumber of SharesWeighted-Average Grant Date Fair Value per Share
Balance as of July 1, 2023— $— 2.6 $85.0 0.6 $89.1 
Replacement Awards Issued1.1 $8.0 — — — — 
Granted— — 2.0 52.2 0.7 52.8 
Vested/Exercised— 8.2 (1.3)85.7 (0.1)87.7 
Canceled/Forfeited— — (0.6)68.7 (0.3)78.7 
Balance as of June 29, 20241.1 $8.0 2.7 $62.5 0.9 $65.5 
Granted— — 2.0 60.2 1.3 60.5 
Vested/Exercised(0.5)7.8 (1.7)64.4 (0.1)83.5 
Canceled/Forfeited— — (0.4)60.3 (0.5)61.4 
Balance as of June 28, 20250.6 $8.1 2.6 $59.9 1.6 $61.0 
Granted— $— 1.1 160.9 0.2 122.4 
Vested/Exercised(0.4)$8.2 (1.5)61.9 (0.9)57.2 
Canceled/Forfeited— $— (0.2)71.6 (0.1)82.2 
Balance as of June 27, 20260.2 $8.1 2.0 $114.6 0.8 $84.0 
A summary of awards available for grant for fiscal years 2026, 2025 and 2024 is as follows (in millions):
Awards Available for Grant
Balance as of July 1, 20232.7 
Authorized in connection with Cloud Light acquisition1.5 
Replacement options in connection with Cloud Light acquisition(1.1)
Authorized3.0 
Granted(2.7)
Canceled/Forfeited0.9 
Balance as of June 29, 20244.3 
Authorized0.7 
Granted(3.3)
Canceled/Forfeited0.9 
Balance as of June 28, 20252.6 
Authorized3.2 
Removed(1.4)
Granted(1.3)
Canceled/Forfeited0.3 
Balance as of June 27, 20263.4 
Employee Stock Purchase Plan Activity
The ESPP expense for fiscal years 2026, 2025 and 2024 was $6.1 million, $4.9 million, and $4.7 million, respectively. The expense related to the ESPP is recorded on a straight-line basis over the relevant subscription period. There were 0.1 million, 0.3 million, and 0.4 million shares issued to employees through the ESPP during fiscal years 2026, 2025 and 2024, respectively.
We estimate the fair value of the ESPP shares on the date of grant using the Black-Scholes option-pricing model. The assumptions used to estimate the fair value of the ESPP shares during the periods presented were as follows:
June 27, 2026June 28, 2025
Expected term (years)0.50.5
Expected volatility69.4 %69.8 %
Risk-free interest rate3.67 %4.22 %
Dividend yield— %— %