KLA Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

EQUITY, LONG-TERM INCENTIVE COMPENSATION PLANS AND NON-CONTROLLING INTEREST (Tables)

EQUITY, LONG-TERM INCENTIVE COMPENSATION PLANS AND NON-CONTROLLING INTEREST (Tables)

12 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Combined Activity Under Equity Incentive Plans

The following table summarizes the combined activity under our equity incentive plans:


(In thousands)			Available For Grant⁽¹⁾⁽⁵⁾
Balances as of June 30, 2017			4,710
Restricted stock units granted⁽²⁾			(1,132)
Restricted stock units granted adjustment(4)			33
Restricted stock units canceled			69


Balances as of June 30, 2018			3,680

Plan shares increased			12,000
Restricted stock units granted⁽²⁾⁽³⁾			(2,463)
Restricted stock units granted adjustment⁽⁴⁾			5
Restricted stock units canceled			51
Plan shares expired (1998 Director Plan)			(1,660)
Balances as of June 30, 2019			11,613

Restricted stock units granted⁽²⁾			(1,174)
Restricted stock units granted adjustment⁽⁴⁾			103
Restricted stock units canceled			218

Balances as of June 30, 2020			10,760

__________________

(1)The number of RSUs reflects the application of the award multiplier of 2.0x as described above.

(2)Includes RSUs granted to senior management with performance-based vesting criteria (in addition to service-based vesting criteria for any of such RSUs that are deemed to have been earned) (“performance-based RSUs”). As of June 30, 2020, it had not yet been determined the extent to which (if at all) the performance-based vesting criteria had been satisfied. Therefore, this line item includes all such performance-based RSUs granted during the fiscal year, reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied (0.4 million shares, 0.7 million shares and 0.3 million shares for the fiscal years ended June 30, 2020, 2019 and 2018, respectively, reflects the application of the 2.0x multiplier described above).

(3)Includes RSUs granted to executive management during the fiscal year ended June 30, 2019 with both a market condition and a service condition (“market-based RSUs”). Under the award agreements, the vesting of the market-based RSUs is contingent on achieving total stockholder return (including stock price appreciation and cash dividends) objectives on a per share basis of equal to or greater than 150%, 175% and 200% multiplied by the measurement price of $116.39 during the five-year period ending March 20, 2024. The awards are split into three tranches and, to the extent that total stockholder return targets have been met, one-third of the maximum number of shares available under these awards will vest on each of the third, fourth, and fifth anniversaries of the grant date. This line item includes all such market-based RSUs granted during the third quarter of the fiscal year ended June 30, 2019 reported at the maximum possible number of shares that may ultimately be issuable if all applicable market-based criteria are met at their maximum levels and all applicable service-based criteria are fully satisfied (0.8 million shares for the year ended June 30, 2019 reflects the application of the multiplier described above).

(4)Represents the portion of RSUs granted with performance-based vesting criteria and reported at the actual number of shares issued upon achievement of the performance vesting criteria during the fiscal years ended June 30, 2020, 2019, and 2018.

(5)No additional stock options, RSUs or other awards will be granted under the Assumed Equity Plans.

Schedule of Stock-based Compensation Expense

The following table shows stock-based compensation expense for the indicated periods:


	Year ended June 30,
(In thousands)	2020		2019⁽¹⁾		2018
Stock-based compensation expense by:
Costs of revenues	$	14,680	$	10,384	$	8,062
Research and development	23,530		16,225		11,249
Selling, general and administrative	73,171		67,585		43,473
Total stock-based compensation expense	$	111,381	$	94,194	$	62,784

__________________

(1)Includes $10.9 million of stock-based compensation expense acceleration for certain equity awards for Orbotech employees.

Schedule of Stock-based Compensation Capitalized as Inventory

The following table shows stock-based compensation capitalized as inventory as of the dates indicated below:


(In thousands)	As of June 30,
			2020			2019
Inventory	$	6,752		$	4,819

Schedule of Restricted Stock Activity

The following table shows the activity and weighted-average grant date fair value for RSUs during the fiscal year ended June 30, 2020:


	Shares (In thousands) ⁽¹⁾	Weighted-Average Grant Date Fair Value
Outstanding restricted stock units as of June 30, 2019⁽²⁾	2,902	$	91.84
Granted⁽²⁾	587	$	146.94
Granted adjustments⁽³⁾	(52)	$	111.41
Vested and released	(738)	$	87.30
Withheld for taxes	(313)	$	87.30
Forfeited	(133)	$	101.10
Outstanding restricted stock units as of June 30, 2020⁽²⁾	2,253	$	107.33

__________________

(1)Share numbers reflect actual shares subject to awarded RSUs. Under the terms of the 2004 Plan, the number of shares subject to each award reflected in this number is multiplied by 2.0x to calculate the impact of the award on the share reserve under the 2004 Plan.

(2)Includes performance-based RSUs. As of June 30, 2020, it had not yet been determined the extent to which (if at all) the performance-based criteria had been satisfied. Therefore, this line item includes all such RSUs, reported at the maximum possible number of shares (i.e., 0.2 million shares for the fiscal year ended June 30, 2020) that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum.

(3)Represents the portion of RSUs granted with performance-based vesting criteria and reported at the actual number of shares issued upon achievement of the performance vesting criteria during the fiscal year ended June 30, 2020.

Schedule of Grant Date Fair Value, Weighted Average Grant Date Fair Value, and Tax Benefits for Restricted Stock Units

The following table shows the weighted-average grant date fair value per unit for the RSUs granted, vested, and tax benefits realized by us in connection with vested and released RSUs for the indicated periods:


(In thousands, except for weighted-average grant date fair value)	Year ended June 30,
			2020			2019			2018
Weighted-average grant date fair value per unit	$	146.94		$	99.53		$	95.95
Weighted-average fair value per unit assumed upon Orbotech Acquisition	$	—		$	104.49		$	—
Grant date fair value of vested restricted stock units	$	91,812		$	60,749		$	49,606
Tax benefits realized by us in connection with vested and released restricted stock units	$	21,960		$	15,053		$	16,615

Employee Stock Purchase Rights Valuation

The fair value of each purchase right under the ESPP was estimated on the date of grant using the Black-Scholes model and the straight-line attribution approach with the following weighted-average assumptions:


	Year ended June 30,
	2020		2019		2018
Stock purchase plan:
Expected stock price volatility	34.3	%	33.2	%	28.7	%
Risk-free interest rate	2.1	%	2.1	%	1.1	%
Dividend yield	2.2	%	3.1	%	2.5	%
Expected life (in years)	0.50		0.50		0.50

Schedule of Tax Benefits Realized and Weighted-average fair value for the ESPP

The following table shows total cash received from employees for the issuance of shares under the ESPP, the number of shares purchased by employees through the ESPP, the tax benefits realized by us in connection with the disqualifying dispositions of shares purchased under the ESPP and the weighted-average fair value per share for the indicated periods:


(In thousands, except for weighted-average fair value per share)	Year ended June 30,
			2020			2019			2018
Total cash received from employees for the issuance of shares under the ESPP	$	74,849		$	64,828		$	61,452
Number of shares purchased by employees through the ESPP	561			843			733
Tax benefits realized by us in connection with the disqualifying dispositions of shares purchased under the ESPP	$	3,237		$	1,133		$	1,664
Weighted-average fair value per share based on Black-Scholes model	$	36.61		$	21.72		$	21.95