Ciena has outstanding equity awards issued under its 2017 Omnibus Incentive Plan (the “2017 Plan”), and certain legacy equity plans and equity plans assumed as a result of previous acquisitions. Ciena also makes shares of its common stock available for purchase under the ESPP. Each of the 2017 Plan and the ESPP is described below.

The 2017 Plan has a ten-year term and authorizes the issuance of awards, including stock options, restricted stock units (RSUs), restricted stock, unrestricted stock, stock appreciation rights (SARs), and other equity and/or cash performance incentive awards to employees, directors and consultants of Ciena. Subject to certain restrictions, the Compensation Committee of the Board of Directors has broad discretion to establish the terms and conditions for awards under the 2017 Plan, including the number of shares, vesting conditions, and the required service or performance criteria. Options and SARs have a maximum term of ten years, and their exercise price may not be less than 100% of fair market value on the date of grant. Repricing of stock options and SARs is prohibited without stockholder approval. Certain change in control transactions may cause awards granted under the 2017 Plan to vest, unless the awards are continued or substituted for in connection with the transaction.

The 2017 Plan authorizes and reserves 21.1 million shares for issuance. The number of shares available under the 2017 Plan is also increased from time to time by: (i) the number of shares subject to outstanding awards granted under Ciena’s prior equity compensation plans that are forfeited, expire or are canceled without delivery of common stock following the effective date of the 2017 Plan, and (ii) the number of shares subject to awards assumed or substituted in connection with the acquisition of another company. As of November 1, 2025, the total number of shares authorized for issuance under the 2017 Plan was 21.1 million and approximately 8.5 million shares remained available for issuance thereunder.

A restricted stock unit is a stock award that entitles the holder to receive shares of Ciena common stock as the unit vests. Ciena’s outstanding restricted stock unit awards are subject to service-based vesting conditions and/or performance-based vesting conditions. Awards subject to service-based conditions typically vest in increments over a three or four-year period. However, the 2017 Plan permits Ciena to grant service-based stock awards with a minimum one-year vesting period. Awards with performance-based vesting conditions (i) require the achievement of certain operational, financial or other performance criteria or targets or (ii) vest based on Ciena’s total stockholder return as compared to an index of peer companies, in whole or in part.

During fiscal 2023, Ciena introduced a benefit pursuant to which, upon completion of ten years of service and reaching age 60, executive officers who are residents of the United States, the United Kingdom, or Canada, and who provide 12 months’ notice of their retirement, will receive continued vesting of all of their granted but unvested restricted stock unit (“RSU”) awards and a pro-rated amount of their performance stock unit awards and market stock unit awards. Other employees in these and certain other countries will be subject to the same eligibility and notice requirements, but will receive acceleration of their unvested RSU awards upon retirement. This program results in the acceleration of share-based compensation expense.

Ciena recognizes the estimated fair value of restricted stock units subject only to service-based vesting conditions by multiplying the number of shares underlying the award by the closing price per share of Ciena common stock on the grant date. Share-based expense for service-based restricted stock unit awards is recognized ratably over the vesting period on a straight-line basis.

Ciena recognizes the estimated fair value of restricted stock units subject to performance-based vesting conditions other than total stockholder return, by assuming the satisfaction of any performance-based objectives at the “target” level and multiplying the corresponding number of shares earned based upon such achievement by the closing price per share of Ciena common stock on the grant date. Share-based compensation expense is recognized over the performance period, using graded vesting, which considers each performance period or tranche separately, based on Ciena’s determination of whether it is probable that the performance targets will be achieved. Each reporting period, Ciena assesses the probability of achieving the performance targets and the performance period required to meet those targets. The estimation of whether the performance targets will be achieved involves judgment. Revisions are reflected in the period in which the estimate is changed. If any performance goals are not met, no compensation cost is ultimately recognized against that goal and, to the extent previously recognized, compensation expense is reversed.

Share-based compensation expense for restricted stock units subject only to service-based vesting conditions and restricted stock units subject to performance-based vesting conditions other than total stockholder return, is recognized only for those awards that ultimately vest. In the event of a forfeiture of an award, the expense related to the unvested portion of that award is reversed. Reversal of share-based compensation expense based on forfeitures can materially affect the measurement of estimated fair value of Ciena’s share-based compensation.

Ciena estimates the fair value of performance based awards subject to total stockholder return as compared to an index of peer companies using a Monte Carlo simulation model. Ciena reverses share-based compensation expense on performance based awards subject to total stockholder return only when the requisite service period is not reached. Assumptions for awards granted during fiscal 2025, fiscal 2024 and fiscal 2023 included the following:


	Year Ended
	November 1, 2025	November 2, 2024	October 28, 2023
Expected volatility of Ciena common stock, which is a weighted average of implied volatility and historical volatility	41.89%	36.00%	40.37%
Historical volatility of Ciena common stock	39.90%	36.74%	43.11%
Volatility of S&P Networking Index(1)	47.99%	44.94%	30.93%
Correlation coefficient	0.3039	0.3665	0.7781
Expected life in years	2.87	2.89	2.89
Risk-free interest rate	4.18%	4.41%	3.95%
Expected dividend yield	0.0%	0.0%	0.0%

(1) For fiscal 2023, reflects the volatility of the S&P Networking Index as a whole. For fiscal 2024 and fiscal 2025, reflects the volatility of the median company within the S&P Networking Index as of the date of the award, measured as of the last day of the prior fiscal year.

The following table is a summary of Ciena’s restricted stock unit activity for the period indicated, with the aggregate fair value of the balance outstanding at the end of each period, based on Ciena’s closing stock price on the last trading day of the relevant period (shares and aggregate fair value in thousands):


	Restricted Stock Units Outstanding	Weighted Average Grant Date Fair Value Per Share		Aggregate Fair Value
Balance at November 2, 2024	6,112	$	48.41	$	390,995
Granted	2,341

Vested	(2,578)
Canceled or forfeited	(373)
Balance at November 1, 2025	5,502	$	62.76	$	1,044,895

As of both November 1, 2025 and November 2, 2024, 0.3 million of the total restricted stock units outstanding are performance based awards subject to total stockholder return. The total fair value of restricted stock units that vested and were converted into common stock during fiscal 2025, fiscal 2024 and fiscal 2023 was $224.4 million, $116.9 million and $98.2 million, respectively. The weighted average fair value of each restricted stock unit granted by Ciena during fiscal 2025, fiscal 2024 and fiscal 2023 was $91.84, $44.57 and $50.48, respectively.

Ciena makes shares of its common stock available for purchase under the ESPP, under which eligible employees may enroll in a twelve-month offer period that begins in December and June of each year. Each offer period includes two six-month purchase periods. Employees may purchase a limited number of shares of Ciena common stock at 85% of the fair market value on either the day immediately preceding the offer date or the purchase date, whichever is lower. The ESPP is considered compensatory for purposes of share-based compensation expense. Unless earlier terminated, the ESPP will terminate on April 1, 2031.

During fiscal 2025, Ciena issued 0.8 million shares and during fiscal 2024 and fiscal 2023, Ciena issued 0.9 million and 0.8 million shares, respectively, under the ESPP. At November 1, 2025, 9.6 million shares remained available for issuance under the ESPP.


	Year Ended
	November 1, 2025		November 2, 2024		October 28, 2023
Products	$	7,774	$	6,474	$	4,518
Services	15,184		12,743		10,470
Share-based compensation expense included in cost of goods sold	22,958		19,217		14,988
Research and development	64,281		54,129		42,331
Sales and marketing	52,066		42,954		35,136
General and administrative	45,424		40,053		37,587

Share-based compensation expense included in operating expense	161,771		137,136		115,054
Share-based compensation expense capitalized in inventory, net	(204)		51		413
Total share-based compensation	$	184,525	$	156,404	$	130,455