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Equity-based Compensation Plans | 12 Months Ended
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Jun. 28, 2020
Share-based Payment Arrangement [Abstract] |
Equity-based Compensation Plans | Equity-based Compensation Plans The Company has stock plans that provide for grants of equity-based awards to eligible participants, including stock options and restricted stock units, of the Company’s Common Stock. 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 options and RSU awards typically vest over a period of three years or less. The Company also has an employee stock purchase plan that allows employees to purchase its Common Stock at a discount through payroll deductions. The Lam Research Corporation 2007 Stock Incentive Plan, as amended and restated, 2011 Stock Incentive Plan, as amended and restated, and the 2015 Stock Incentive Plan (collectively the “Stock Plans”), provide for the grant of non-qualified equity-based awards to eligible employees, consultants and advisors, and non-employee directors of the Company and its subsidiaries. The 2015 Stock Incentive Plan was approved by shareholders authorizing up to 18,000,000 shares available for issuance under the plan. Additionally, 1,232,068 shares that remained available for grants under the Company’s 2007 Stock Incentive Plan were added to the shares available for issuance under the 2015 Stock Incentive Plan. As of June 28, 2020, there were a total of 8,909,055 shares available for future issuance under the Stock Plans. New shares are issued from the Company’s balance of authorized Common Stock from the 2015 Stock Incentive Plan to satisfy stock option exercises and vesting of awards. The Company recognized the following equity-based compensation expense and benefits in the Consolidated Statements of Operations:
| Year Ended
June 28, 2020 |  | June 30, 2019 |  | June 24, 2018
| (in thousands)
Equity-based compensation expense | $ | 189,197 |  |  | $ | 187,234 |  |  | $ | 172,216 |
Income tax benefit recognized related to equity-based compensation | $ | 36,135 |  |  | $ | 47,396 |  |  | $ | 87,505 |
Income tax benefit realized from the exercise and vesting of options and RSUs | $ | 67,060 |  |  | $ | 49,242 |  |  | $ | 90,297 |
The estimated fair value of the Company’s equity-based awards, less expected forfeitures, is amortized over the awards’ vesting terms on a straight-line basis. Restricted Stock Units During the fiscal years 2020, 2019, and 2018, the Company issued both service-based RSUs and market-based performance RSUs (“PRSUs”). 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 a designated benchmark index, ranging from 0% to 150% of target. The designated benchmark index was the Philadelphia Semiconductor Total Return Index (“XSOX”) for market-based PRSUs issued in 2020 and the Philadelphia Semiconductor Sector Index (“SOX”) for market-based PRSUs issued in 2019 and 2018. 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 exceeds the market price performance of the designated benchmark index. Market-based PRSUs issued in 2020 utilized the XSOX, as adjusted for the reinvestment of dividends on Common Stock on the ex-dividend date, whereas market-based PRSUs issued in 2019 and 2018 utilized the SOX which excluded the impact of dividends. The result of the vesting formula is rounded down to the nearest whole number. Total stockholder return is a measure of stock price appreciation in this performance period. The following table summarizes restricted stock activity:
| Service-based RSUs Outstanding |  | Market-based RSUs Outstanding
Number of Shares |  | Weighted-Average Grant Date Fair Value |  | Number of Shares |  | Weighted-Average Grant Date Fair Value
June 25, 2017 | 2,687,606 |  |  | $ | 92.01 |  |  | 862,455 |  |  | $ | 83.83 |
Granted | 964,391 |  |  | 183.97 |  |  | 285,866 |  |  | 125.56 |
Vested | (1,362,369 | ) |  | 87.80 |  |  | (407,024 | ) |  | 76.88 |
Forfeited or canceled | (96,540 | ) |  | 108.67 |  |  | (47,571 | ) |  | 91.36 |
June 24, 2018 | 2,193,088 |  |  | $ | 134.34 |  |  | 693,726 |  |  | $ | 104.59 |
Granted | 893,622 |  |  | 161.64 |  |  | 163,529 |  |  | 148.50 |
Vested | (1,135,284 | ) |  | 115.23 |  |  | (301,622 | ) |  | 70.58 |
Forfeited or canceled | (154,541 | ) |  | 141.38 |  |  | (120,859 | ) |  | 104.73 |
June 30, 2019 | 1,796,885 |  |  | $ | 159.36 |  |  | 434,774 |  |  | $ | 144.57 |
Granted | 616,353 |  |  | 280.08 |  |  | 171,526 |  |  | 216.04 |
Vested | (912,409 | ) |  | 151.53 |  |  | (257,787 | ) |  | 111.75 |
Forfeited or canceled | (94,265 | ) |  | 176.30 |  |  | (33,403 | ) |  | 160.83 |
June 28, 2020 | 1,406,564 |  |  | $ | 216.34 |  |  | 315,110 |  |  | $ | 208.60 |
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 date of grant, discounted for dividends. Shares granted for market-based PRSUs includes both shares newly granted during the fiscal year, as well as adjustments to previous grants resulting from actual market price performance; total approximate number of shares newly granted were as follows for fiscal years ended June 28, 2020, June 30, 2019 and June 24, 2018; 86,000, 134,000, and 149,000, respectively. The fair value of the Company’s market-based PRSUs granted during fiscal years 2020, 2019, and 2018 was calculated using a Monte Carlo simulation model at the date of the grant. This model requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each award:
| Year Ended
June 28, 2020 |  | June 30, 2019 |  | June 24, 2018
Assumptions: |  |  |  |  |
Expected volatility | 35.81 | % |  | 32.65 | % |  | 34.07 | %
Risk-free interest rate | 0.85 | % |  | 2.52 | % |  | 2.35 | %
Expected term (years) | 2.92 |  |  | 2.92 |  |  | 2.92 |
Dividend yield | 1.53 | % |  | 2.49 | % |  | 1.05 | %
Resulting grant date fair value: | $ | 320.69 |  |  | $ | 165.78 |  |  | $ | 170.15 |
As of June 28, 2020, the Company had $293.2 million of total unrecognized compensation expense related to all unvested RSUs granted which is expected to be recognized over a weighted-average remaining period of 2.2 years. Stock Options The following table summarizes stock option activity:
| Options Outstanding
Number of Shares |  | Weighted-Average Exercise Price
June 25, 2017 | 594,059 |  |  | $ | 66.69 |
Granted | 63,980 |  |  | 190.07 |
Exercised | (166,481 | ) |  | 55.62 |
Forfeited or expired | (8,630 | ) |  | 84.44 |
June 24, 2018 | 482,928 |  |  | $ | 86.53 |
Granted | 181,450 |  |  | 164.54 |
Exercised | (110,427 | ) |  | 61.69 |
Forfeited or expired | (59,068 | ) |  | 126.05 |
June 30, 2019 | 494,883 |  |  | $ | 115.96 |
Granted | 34,236 |  |  | 300.33 |
Exercised | (118,334 | ) |  | 68.31 |
Forfeited or expired | (4,948 | ) |  | 179.39 |
June 28, 2020 | 405,837 |  |  | $ | 144.63 |
As of June 28, 2020 the options outstanding had a weighted-average remaining life of 4.2 years and a weighted-average exercise price of $144.63. As of June 28, 2020, the Company had 243,541 exercisable options outstanding with a weighted-average remaining life of 3.2 years and a weighted-average exercise price of $110.77. The fair value of the Company’s stock options granted during fiscal years 2020, 2019, and 2018 was estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions, including expected stock price volatility and the estimated life of each award:
| Year Ended
June 28, 2020 |  | June 30, 2019 |  | June 24, 2018
Expected volatility | 33.89 | % |  | 32.23 | % |  | 34.66 | %
Risk-free interest rate | 0.88 | % |  | 2.62 | % |  | 2.53 | %
Expected term (years) | 4.63 |  |  | 4.70 |  |  | 4.74 |
Dividend yield | 1.53 | % |  | 2.70 | % |  | 1.05 | %
The year-end intrinsic value relating to stock options for fiscal years 2020, 2019, and 2018 is presented below:
| Year Ended
June 28, 2020 |  | June 30, 2019 |  | June 24, 2018
| (in thousands)
Intrinsic value - options outstanding | $ | 64,077 |  |  | $ | 35,674 |  |  | $ | 43,563 |
Intrinsic value - options exercisable | $ | 46,698 |  |  | $ | 30,139 |  |  | $ | 34,661 |
Intrinsic value - options exercised | $ | 21,137 |  |  | $ | 12,750 |  |  | $ | 23,925 |
As of June 28, 2020, the Company had $6.8 million of total unrecognized compensation expense related to unvested stock options granted and outstanding which is expected to be recognized over a weighted-average remaining period of 2.2 years. ESPP The Company has an employee stock purchase plan (the “ESPP”) which allows employees to designate a portion of their base compensation to be deducted and used to purchase the Company’s Common Stock at a purchase price per share of the lower of 85% of the fair market value of the Company’s Common Stock on the first or last day of the applicable purchase period. Typically, each offering period lasts twelve months and comprises one interim purchase date. During fiscal year 2020, approximately 512 thousand shares of the Company’s Common Stock were sold to employees under the ESPP. At June 28, 2020, approximately 6.4 million shares were available for purchase under the ESPP, and the Company had $30.0 million of total unrecognized compensation cost related to the ESPP which is expected to be recognized over a remaining period of ten months.

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