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Equity
 6 Months Ended
Dec. 27, 2025
Equity [Abstract]  
Equity
Note 13. Equity
Description of Lumentum Stock-Based Compensation Plans
Equity Incentive Plans
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. Initially, 8.5 million shares of our common stock were authorized for issuance under the 2015 Plan. We amended and restated the 2015 Plan to (among other changes) increase the number of shares authorize for issuance, including increases approved by our stockholders of 3.0 million shares in 2016, 3.0 million shares in 2021 and 0.9 million shares in 2022, and most recently, on November 17, 2023, our stockholders approved amendments to the 2015 Plan to increase the number of shares of common stock reserved for issuance by an additional 3.0 million shares. On November 20, 2024, our stockholders approved an amendment to the 2015 Plan to extend the expiration date of the 2015 Plan by one year until June 23, 2026. 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 nonstatutory 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.
On November 28, 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 and we have reserved a total of 1.5 million shares of common stock for issuance thereunder. 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.
On November 19, 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 December 27, 2025, we had 3.6 million shares subject to stock options, RSUs, RSAs, and PSUs issued and outstanding under the Equity Incentive Plans. RSUs and PSUs are performance-based, market-based and time-based or any combination thereof and are expected to vest within four years. As of December 27, 2025, 3.4 million shares of common stock under the Equity Incentive Plans were available for grant.
Stock Options
The Company granted certain employees with stock options, the vesting of which is based on the requisite service requirement and expected to vest within three years. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model, which requires the Company 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
RSUs under the Equity Incentive Plans are grants of shares of our common stock, the vesting of which is based on the requisite service requirement. The fair value of these grants is based on the closing market price of our common stock on the date of grant. Generally, our RSUs are subject to forfeiture and are expected to vest within four years. For annual grants to existing employees, RSUs generally vest ratably on an annual basis, or combination of annual and quarterly basis, over three years.
During the six months ended December 27, 2025, our board of directors approved grants of 1.0 million RSUs, 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 grant date.
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 the six months ended December 27, 2025, our board of directors granted 0.1 million PSUs with an aggregate grant date fair value of $13.7 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 $33.0 million to certain executive officers and senior management. These PSUs will vest subject to the achievement of the Company’s 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. The Company 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 the Company’s 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
Our ESPP 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 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. We estimate the fair value of the ESPP shares on the date of grant using the Black-Scholes option-pricing model. Of the 3.0 million shares authorized under the ESPP, 0.3 million shares remained available for issuance as of December 27, 2025.
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 EndedSix Months Ended
December 27, 2025December 28, 2024December 27, 2025December 28, 2024
Cost of sales$12.9 $9.2 $21.5 $18.9 
Research and development9.3 11.4 19.6 20.7 
Selling, general and administrative23.2 18.2 46.7 34.8 
Total stock-based compensation$45.4 $38.8 $87.8 $74.4 
Our stock-based compensation by equity awards for the periods presented were as follows (in millions):
Three Months EndedSix Months Ended
December 27, 2025December 28, 2024December 27, 2025December 28, 2024
RSUs$27.0 $24.8 $52.6 $48.8 
   AIP PSUs— 9.4 4.8 13.5 
   TSR PSUs4.6 0.5 7.5 0.7 
   Other PSUs5.5 2.3 15.4 5.3 
Total PSUs10.1 12.2 27.7 19.5 
Options1.0 1.3 2.6 2.6 
ESPP1.2 1.0 2.8 2.2 
Sub-total39.3 39.3 85.7 73.1 
Change in stock-based compensation capitalized to inventory6.1 (0.5)2.1 1.3 
Total stock-based compensation$45.4 $38.8 $87.8 $74.4 
During the three and six months ended December 27, 2025, we recorded $10.1 million and $27.7 million of stock-based compensation related to PSUs, respectively. During the three and six months ended December 28, 2024, we recorded $12.2 million and $19.5 million of stock-based compensation related to PSUs, respectively. 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.
Total income tax benefit associated with stock-based compensation recognized in our condensed consolidated statements of operations during the periods presented was as follows (in millions):
Three Months EndedSix Months Ended
December 27, 2025December 28, 2024December 27, 2025December 28, 2024
Income tax benefit associated with stock-based compensation$2.3 $4.7 $10.3 $6.1 
Approximately $12.4 million and $14.6 million of stock-based compensation was capitalized to inventory as of December 27, 2025 and June 28, 2025, respectively.
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 December 27, 2025:
Unrecognized stock-based compensation (in millions)
Weighted-average period
(in years)
RSUs$181.0 2.0
PSUs95.9 2.4
Stock options3.3 0.9
ESPP2.2 0.4
Stock Award Activity
The following table summarizes our award activities for the six months ended December 27, 2025 (in millions):
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 June 28, 20250.6 $8.1 2.6 $59.9 1.6 $61.0 
Granted— — 1.0 125.9 0.2 120.9 
Vested/Exercised(0.3)7.9 (1.0)61.1 (0.9)57.1 
Canceled/Forfeited— — (0.1)64.9 (0.1)85.9 
Balance as of December 27, 20250.3 $8.1 2.5 $86.2 0.8 $82.0 
A summary of awards available for grant is as follows (in millions):
Awards Available for Grant
Balance as of June 28, 20252.6 
Authorized3.2 
Removed(1.4)
Granted(1.2)
Canceled/Forfeited0.2 
Balance as of December 27, 20253.4 
Employee Stock Purchase Plan Activity
The ESPP expense for the three and six months ended December 27, 2025 was $1.2 million and $2.8 million, respectively. The expense related to the ESPP is recorded on a straight-line basis over the relevant subscription period.
During the three and six months ended December 28, 2024, there were $1.0 million and $2.2 million shares issued to employees through the ESPP