Michael E. Hurlston
Lumentum HoldingsAbout Michael E. Hurlston
Michael E. Hurlston, 58, became President and CEO of Lumentum effective February 7, 2025 and was appointed to the Board the same day . He holds B.S. and M.S. degrees in Electrical Engineering and an MBA from UC Davis . Fiscal 2025 annual incentive metrics were 60% adjusted organic operating income and 40% consolidated organic revenue; actual outcomes were $160.1M and $1,645M, respectively, with an overall AIP payout of 132.19% after a 27.2% negative discretion, evidencing strong operational execution against targets . The company’s fiscal years 2023–2025 LTIP PSUs earned at 24%, reflecting sector dynamics; forward program changes increase financial accountability and rTSR alignment under Mr. Hurlston’s leadership .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Synaptics, Inc. | President & CEO, Director | Aug 2019 – Feb 2025 | Led a global IoT and AI-focused semiconductor/human interface company . |
| Finisar Corporation | CEO, Director | Jan 2018 – Aug 2019 | Oversaw agreement to be acquired by II-VI (now Coherent) . |
| Broadcom Ltd. and predecessor | SVP & GM Mobile Connectivity/Wireless; EVP Sales; senior leadership | Nov 2001 – Oct 2017 | Senior roles across sales, marketing, and general management in connectivity businesses . |
| Oren Semi; Avasem; Integrated Circuit Systems; Micro Power Systems; Exar; IC Works | Senior marketing/engineering roles | 1991 – 2001 | Product/engineering leadership across multiple semiconductor firms . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Flex Ltd. | Director | Since Sep 2020 | Electronics manufacturing services leader . |
| Astera Labs, Inc. | Director | Since Sep 2022 | Connectivity solutions for rack-scale AI . |
| UC Davis Foundation | Board of Executive Trustees | Ongoing | Also serves on Dean’s Executive Committee (Engineering) and Dean’s Advisory Council (GSM) . |
Fixed Compensation
| Year | Base Salary Earned ($) | Base Salary Rate ($) | Target Bonus (%) | Actual AIP Bonus Paid ($) | Sign-on Cash ($) |
|---|---|---|---|---|---|
| FY2025 | 315,000 | 900,000 | 130% | 603,353 | 2,000,000; repay up to 50% if depart before Feb 7, 2027 |
Notes
- FY2025 base salary reflects prorated service from Feb 7, 2025 .
- AIP target increased vs. prior CEO (130% vs. 120%) with lower base pay, shifting more to performance-based cash .
Performance Compensation
FY2025 Annual Incentive Plan (AIP)
| Metric | Weighting | Threshold (50% payout) | Target (100%) | Maximum (200%) | FY2025 Actual | Payout % | Discretionary/Quality Modifier | Total Payout |
|---|---|---|---|---|---|---|---|---|
| Adjusted Organic Operating Income | 60% | $72.6M | $121.0M | $151.3M | $160.1M | 120.00% | (27.2)% | 132.19% |
| Consolidated Organic Revenue | 40% | $1,249M | $1,561M | $1,717M | $1,645M | 61.51% | (27.2)% | 132.19% |
Additional AIP design details:
- 100% of target AIP was granted as PSUs; amounts over 100% paid in cash; FY2026 AIP will pay entirely in cash .
- Quality modifier allowed ±20% adjustments, implemented for FY2025; removed for FY2026 AIP .
FY2025 Long-Term Incentives (LTI) and New-Hire Awards
| Grant Date | Award Type | Shares/Units | Grant-Date Fair Value ($) | Vesting Terms |
|---|---|---|---|---|
| Feb 7, 2025 | Time-based RSUs (Initial) | 103,684 | 8,906,456 | 1/3 on 1-year anniversary, remaining 2/3 quarterly over next 8 quarters (three-year schedule) . |
| Feb 7, 2025 | PSUs – rTSR vs S&P 500 Info Tech Sector | Threshold 80,644; Target 161,287; Max 322,574 | 13,854,553 | 4-year performance period; payout multiple: 50% at +5% rTSR, 100% at +25%, 200% at +40% with positive absolute TSR required for >100% . |
| Feb 7, 2025 | RSUs and PSUs (FY2025–2027 program) | RSUs 11,520; PSUs Target 11,520; Threshold 5,760; Max 23,040 | 989,568 (each RSU and PSU line) | RSUs vest 1/3 at 1-year and quarterly thereafter; PSUs tied to FY2027 total revenue (67%) and FY2025–FY2027 rTSR (33%); no banking prior to FY2027 close . |
FY2026 forward-looking design changes:
- CEO equity mix increases to 66% PSU / 34% RSU; PSUs split 50% 3-year rTSR, 50% FY2026 EPS with 3-year cliff vesting; all metrics 100% financial and rTSR; strategic objectives removed .
Summary Compensation (FY2025)
| Component | Amount ($) |
|---|---|
| Salary | 315,000 |
| Bonus (Sign-on) | 2,000,000 |
| Stock Awards (FASB ASC 718 grant-date value) | 24,740,145 |
| Non-Equity Incentive Plan Compensation (AIP cash) | 603,353 |
| All Other Compensation (401k match $9,692; life insurance imputed $1,885) | 11,578 |
| Total | 27,670,076 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | Listed with “–” and <1% of outstanding shares; company had 70,843,924 shares outstanding as of Aug 29, 2025 . |
| Ownership guidelines (CEO) | 5x base salary; all continuing executives and directors in compliance or on track as of FY2025 year-end . |
| Hedging/pledging | Strictly prohibited; no hedging, pledging, margin accounts, or derivative transactions in Lumentum securities . |
| Option awards | Company has not granted stock options in recent years and has no plans currently; options were only issued in connection with Cloud Light acquisition conversions . |
Implications: Large multi-year RSU and PSU grants imply scheduled quarterly vesting over 2026–2027 and potential PSU settlements tied to multi-year revenue and rTSR outcomes, creating periodic vesting events; pledging/hedging prohibitions reduce misalignment risks .
Employment Terms
- At-will employment under California law; onboarding includes Confidentiality, Code of Conduct, and Insider Trading Policy acknowledgements .
- Offer letter: base salary $900,000; AIP target 130% of salary; sign-on cash $2,000,000 with up to 50% clawback if departure or termination for Cause prior to Feb 7, 2027; eligible for annual LTI with $10,000,000 target beginning FY2026 .
- Severance (non-CIC): 200% of annual salary and target bonus; full vesting of Initial Time-Based RSU; 12 months of additional vesting on other time-based awards; performance-based award vesting prorated for service; up to 18 months COBRA premiums .
- Change-in-control: Participates in Lumentum’s Amended CIC Plan; enhancements provide 200% of salary and target bonus, full equity vesting (except as designated), and up to 18 months COBRA upon qualifying termination; “Good Reason” includes successor’s failure to provide enhanced severance terms .
- Clawback: Company-wide clawback policy for incentive compensation linked to financial reporting measures, compliant with SEC/NYSE requirements and effective for compensation received after Oct 2, 2023 .
Board Service, Governance, and Dual-role Considerations
- Director since February 2025; committee memberships: none .
- Independence: Board determined eight of nine directors are independent; Mr. Hurlston, as CEO, is not independent; Board leadership separates Chair and CEO (independent Chair Penelope Herscher) to reinforce oversight and objectivity .
- Board committees: Audit (8 meetings) and Compensation (10) and Governance (4) are fully independent; continuing directors attended 100% of board and committee meetings in FY2025 .
- Dual-role implications: Separation of Chair/CEO mitigates potential governance concerns; CEO participation on Board may influence strategy setting while independent committees oversee compensation and governance with an independent consultant (Semler Brossy) engaged by the Compensation Committee and determined independent with no conflicts .
Performance & Track Record
- FY2025 AIP payouts more than 100% of target after negative discretion, aligned with positive stockholder returns over the last year; prior three years underachieved AIP targets; FY2023 LTIP PSUs earned at 24% .
- CEO transition arrangements facilitated continuity and helped secure a significant Nvidia relationship supporting AI/datacenter growth tailwinds, with the Board citing strong financial and stock performance during the transition period .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay approval: 94.8% in November 2024, up from 48.5% in prior year, following program modifications including peer group, AIP, and LTIP changes .
Compensation Structure Analysis
- Increased performance orientation: AIP target up to 130% with lower base vs. prior CEO; FY2026 AIP and PSUs fully financial/rTSR focused; CEO equity mix shifts more to PSUs (66%) .
- One-time recruiting awards: RSUs ($9M) and rTSR PSUs ($14M) plus $2M cash intended to offset forfeited compensation and motivate performance; future annual LTI target resets to $10M aligned with peers .
- Discretionary outcomes: FY2025 AIP reduced by 27.2% to reflect product quality and execution vs. outlook; quality modifier retired for FY2026 .
Risk Indicators & Red Flags
- Hedging/pledging strictly prohibited; mitigates misalignment risk .
- No option repricing; option grants generally not used recently .
- Clawback policy active and compliant .
- Governance safeguards: independent Chair; fully independent committees; majority voting and annual elections .
Equity Ownership & Vesting Schedules (Detail)
| Award | Vesting Schedule | Upcoming Vesting Cadence (Illustrative) |
|---|---|---|
| Initial RSUs ($9M) | 1/3 at 12 months, then quarterly over 8 quarters | Quarterly vesting through years 2–3 post grant (subject to service) . |
| FY2025–2027 RSUs | 1/3 at 12 months, then quarterly thereafter | Quarterly vesting over three years . |
| FY2025–2027 PSUs | 67% FY2027 total revenue; 33% rTSR; 3-year cycle, no banking | Earn/settle post FY2027 based on certified results . |
| rTSR PSUs (4-year) | rTSR vs S&P 500 IT Sector over four years; thresholds per table | Earn over four-year period contingent on outperformance and positive TSR . |
Employment Contracts, Severance, and Change-of-Control Economics
| Provision | Terms |
|---|---|
| Non-CIC Severance | 200% of base salary and target bonus; full vesting of Initial Time-based RSU; 12 months of additional vesting for other time-based equity; prorated vesting for performance awards based on service; up to 18 months COBRA premiums . |
| CIC Severance | 200% of base salary and target bonus; full vesting of equity awards (except as designated); up to 18 months COBRA premiums under CIC Plan with offer-letter enhancements . |
| Good Reason (enhancement) | Includes failure by successor to provide enhanced severance provisions from offer letter . |
| At-Will | Employment is at-will under California law; policy acknowledgements required . |
| Clawback | Company-wide clawback for incentive comp tied to financial reporting measures . |
Investment Implications
- Alignment: Elevated PSU mix, stringent rTSR hurdles, and FY2026 financial-only metrics increase performance leverage; ownership guidelines and anti-hedging/pledging policies further align incentives .
- Retention and selling pressure: Significant time-based RSUs vest quarterly after the one-year cliff and through year three, creating periodic vesting events; PSU outcomes hinge on multi-year revenue, EPS, and rTSR achievements—execution against AI/datacenter programs will be pivotal .
- Downsides mitigated by governance: Independent Chair, fully independent committees, majority voting, and strong shareholder engagement (94.8% Say-on-Pay) reduce governance risk amid CEO/director dual-role .
- Pay-for-performance: FY2025 AIP negative discretion and removal of quality modifier for FY2026 indicate a tightening linkage to financials; investors should track FY2026 EPS targets and rTSR rank outcomes for PSU realizations and potential stock supply from vesting .