EQUITY-BASED COMPENSATION PLANS

9 Months Ended

Mar. 29, 2020

Share-based Payment Arrangement [Abstract]

The Lam Research Corporation 2015 Stock Incentive Plan, as amended (the “2015 Plan”), provides for the grant of non-qualified equity-based awards of the Company’s Common Stock to eligible employees and non-employee directors, including stock options, restricted stock units (“RSUs”), and market-based performance RSUs (“market-based PRSUs”). An option is a right to purchase Common Stock at a set price. An RSU award is an agreement to issue a set number of shares of Common Stock at the time of vesting. The Company’s market-based PRSUs contain both a market condition and a service condition. The Company’s options, RSU, and market-based PRSU awards typically vest over a period of three years. The Company also has an employee stock purchase plan that allows employees to purchase its Common Stock at a discount through payroll deductions.

The Company recognized the following equity-based compensation expense (including expense related to the employee stock purchase plan) and related income tax benefit in the Condensed Consolidated Statements of Operations:



	Three Months Ended				Nine Months Ended
	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019
	(in thousands)
Equity-based compensation expense	$	47,414	$	53,240	$	136,044	$	142,389
Income tax benefit recognized related to equity-based compensation expense	$	24,457	$	28,337	$	38,736	$	42,204

Restricted Stock

During the nine months ended March 29, 2020, the Company issued both service-based RSUs and market-based performance RSUs (“PRSUs”). The fair value of the Company’s service-based RSUs was calculated based on the fair market value of the Company’s stock at the grant date, discounted for dividends. The fair value of the Company’s market-based PRSUs was calculated using a Monte Carlo simulation model at the date of the grant. Market-based PRSUs generally vest three years from the grant date if certain performance criteria are achieved and require continued employment. Based upon the terms of such awards, the number of shares that can be earned over the performance periods is based on the Company’s Common Stock price performance compared to the market price performance of the Philadelphia Semiconductor Sector Total Return Index (“XSOX”), ranging from 0% to 150% of target. The stock price performance or market price performance is measured using the closing price for the 50-trading days prior to the dates the performance period begins and ends. The target number of shares represented by the market-based PRSUs is increased by 2% of target for each 1% that Common Stock price performance, as adjusted for the reinvestment of dividends on Common Stock on the ex-dividend date, exceeds the market price performance of the XSOX index. The result of the vesting formula is rounded down to the nearest whole number.

The following table summarizes restricted stock activity:



	Service-based RSUs Outstanding				Market-based PRSUs Outstanding
	Number of Shares		Weighted- Average Grant Date Fair Value		Number of Shares		Weighted- Average Grant Date Fair Value
June 30, 2019	1,796,885		$	159.36	434,774		$	144.57
Granted	579,220		281.72		171,526		320.69
Vested	(879,402	)	151.23		(257,787	)	111.75
Expired or Forfeited	(76,783	)	169.03		(28,008	)	159.04
March 29, 2020	1,419,920		$	213.75	320,505		$	207.95

Stock Options

The fair value of the Company’s stock options granted during the nine months ended March 29, 2020 was estimated using a Black-Scholes options valuation model, which requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each award.

The following table summarizes stock option activity:



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price
June 30, 2019	494,883		$	115.96
Granted	34,236		300.33
Exercised	(93,225	)	66.65
Expired or forfeited	(4,948	)	179.39
March 29, 2020	430,946		$	140.54