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Equity
 9 Months Ended
Apr. 02, 2022
Equity [Abstract]  
Equity
Note 13. Equity
Description of Lumentum Stock-Based Benefit Plans
Equity Incentive Plan
On November 19, 2021, our stockholders approved amendments to the Amended and Restated 2015 Equity Incentive Plan (the “2015 Plan”) to (i) increase the number of shares reserved for issuance under the 2015 Plan by an additional 3.0 million shares and (ii) make certain other changes to reflect changes in the law and/or good corporate governance practices.
As of April 2, 2022, we had 2.5 million shares subject to restricted stock units and performance stock units issued and outstanding under the 2015 Plan. Restricted stock units and performance stock units are performance-based, time-based or a combination of both. The fair value of these grants is based on the closing market price of our common stock on the date of award.
As of April 2, 2022, 3.9 million shares of common stock under the 2015 Plan were available for grant.
Restricted Stock Units
Restricted stock units (“RSUs”) under the 2015 Plan 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 over one to four years. For annual refresh grants, RSUs generally vest ratably on an annual basis, or combination of annual and quarterly basis, over three years.
During the nine months ended April 2, 2022, our board of directors approved grants of 1.4 million shares which primarily vest over three years.
Performance Stock Units
Performance stock units (“PSUs”) under the 2015 Plan are grants of shares of our common stock that vest upon the achievement of certain performance and service conditions. 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. Our PSUs are subject to risk of forfeiture until performance and service conditions are satisfied and generally vest over three years.
During the nine months ended April 2, 2022, our board of directors approved a grant of 0.2 million PSUs with an aggregate grant date fair value of $16.7 million to certain executive officers and senior management. These PSUs will vest subject to the achievement of 3-year revenue targets and certain non-financial performance measurement, as well as service conditions.
Employee Stock Purchase Plan
Our 2015 Employee Stock Purchase Plan (the “2015 Purchase Plan”) provides eligible employees with the opportunity to acquire an ownership interest in the Company through periodic payroll deductions and provides a 15% purchase price discount as well as a 6-month look-back period. The 2015 Purchase Plan is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. The 2015 Purchase Plan 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, 1.5 million shares remained available for issuance as of April 2, 2022.
Stock-Based Compensation
The impact on our results of operations of recording stock-based compensation by function for the periods presented was as follows (in millions):
Three Months EndedNine Months Ended
April 2, 2022April 3, 2021April 2, 2022April 3, 2021
Cost of sales$5.4 $5.3 $15.2 $13.8 
Research and development5.4 5.3 15.8 14.8 
Selling, general and administrative12.5 14.5 44.4 40.1 
Total stock-based compensation$23.3 $25.1 $75.4 $68.7 
Included in stock-based compensation for the three and nine months ended April 2, 2022, is $2.2 million and $11.5 million, respectively, of stock-based compensation costs related to PSUs. Included in stock-based compensation for the three and nine months ended April 3, 2021, is $4.7 million and $11.9 million, respectively, of stock-based compensation costs related to PSUs. The amount of stock-based compensation expense recognized in any one period related to PSUs 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 cost would be recognized on the underlying PSUs, and any previously recognized compensation expense related to those PSUs would be reversed.
Total income tax benefit associated with stock-based compensation recognized in our condensed consolidated statements of operations during the years presented was as follows (in millions):
Three Months EndedNine Months Ended
April 2, 2022April 3, 2021April 2, 2022April 3, 2021
Income tax benefit associated with stock-based compensation$2.7 $3.4 $10.9 $12.2 
Approximately $5.6 million and $4.6 million of stock-based compensation was capitalized to inventory as of April 2, 2022 and July 3, 2021, respectively.
Stock Award Activity
The following table summarizes our award activity for the nine months ended April 2, 2022 (in millions, except per share amounts):
Restricted Stock UnitsPerformance Stock Units
Number of SharesWeighted-Average Grant Date Fair Value per ShareNumber of SharesWeighted-Average Grant Date Fair Value per Share
Balance as of July 3, 20211.8 $76.02 0.3 $75.68 
Granted1.4 87.92 0.2 85.72 
Vested(0.9)73.71 (0.1)76.43 
Canceled(0.2)78.65 — 58.65 
Balance as of April 2, 20222.1 $84.70 0.4 $81.27 
As of April 2, 2022, $151.9 million of stock-based compensation cost related to RSU awards granted to our employees remains to be amortized. That cost is expected to be recognized over an estimated amortization period of 2.0 years.
A summary of awards available for grant is as follows (in millions):
Awards Available for Grant
Balance as of July 3, 20212.3 
   Authorized3.0 
Granted(1.6)
Canceled0.2 
Balance as of April 2, 20223.9 
Employee Stock Purchase Plan Activity
The 2015 Purchase Plan expense for the three and nine months ended April 2, 2022 was $1.0 million and $3.1 million, respectively. The 2015 Purchase Plan expense for the three and nine months ended April 3, 2021 was $1.2 million and $3.5 million, respectively. The expense related to the 2015 Purchase Plan is recorded on a straight-line basis over the relevant subscription period. During the nine months ended April 2, 2022, there were 0.1 million shares issued to employees through the 2015 Purchase Plan. During the nine months ended April 3, 2021, there were 0.1 million shares issued to employees through the 2015 Purchase Plan.
Repurchase and Retirement of Common Stock
Repurchase Made in Connection with Convertible Note Offering
In the third quarter of fiscal year 2022, concurrent with the issuance of the 2028 Notes, we repurchased 2.0 million shares of our common stock in privately negotiated transactions at an average price of $99.0 per share for an aggregate purchase price of $200.0 million. We recorded the $200.0 million aggregate purchase price as a reduction of retained earnings within our condensed consolidated balance sheet. These shares were retired immediately.
Share Buyback Program
On May 7, 2021, our board of directors approved the 2021 share buyback program, which authorizes us to use up to $700.0 million to purchase our own shares of common stock. The 2021 share buyback program was authorized for 2 years. On March 3, 2022, our board of directors approved an increase in our share buyback program, which authorizes us to use up to an aggregate amount of $1.0 billion (an increase from $700.0 million) to purchase our own shares of common stock through May 2024, but may be suspended or terminated by the board of directors at any time.
During the nine months ended April 2, 2022, we repurchased 2.7 million shares of our common stock at an average price of $89.80 per share for an aggregate purchase price of $245.5 million.
Since the share buyback program was approved by the board of directors, we have repurchased 5.8 million shares in aggregate at an average price of $83.45 per share for a total purchase price of $486.5 million. We recorded the $486.5 million aggregate purchase price as a reduction of retained earnings within our condensed consolidated balance sheet. All repurchased shares were retired immediately.
The price, timing, amount, and method of such repurchases will be determined based on the valuation of market conditions and other factors, at prices determined to be attractive and in the best interests of both Lumentum and our stockholders.