Form 4: VIAVI CEO Khaykin Reports Future Equity Transactions and Grants

VIAVI Solutions CEO Oleg Khaykin reported future equity transactions, including RSU vesting and new performance-based Market Stock Unit grants, effective August 28, 2025.

Summary

• Oleg Khaykin, President & CEO and Director of VIAVI Solutions Inc., reported future transactions effective August 28, 2025.
• Acquired a total of 322,671 shares of common stock (85,081, 110,606, and 126,984 shares) upon the vesting and conversion of Restricted Stock Units (RSUs).
• Disposed of a total of 138,266 shares of common stock (36,458, 47,395, and 54,413 shares) to cover tax withholding obligations related to RSU vesting, at a price of $11.27 per share.
• Received new grants of 315,582 Restricted Stock Units (RSUs) and 473,372 Market Stock Units (MSUs).
• Following these transactions, Khaykin will directly own 1,886,129 shares of common stock and indirectly own 118,914 shares through his spouse.
• The total direct ownership includes 656 shares purchased through the Employee Stock Purchase Plan (ESPP).
• The newly granted MSUs will vest based on the Company's Total Stockholder Return (TSR) relative to the NASDAQ Telecommunications Index over fiscal years 2026 through 2028.

Sentiment

Score: 6

Explanation: The filing is largely neutral as it reports routine future equity compensation transactions. The performance-based MSU grants are a positive for aligning management incentives with shareholder value, but it's a standard practice rather than an exceptional event.

Positives

• The grant of 315,582 Restricted Stock Units (RSUs) and 473,372 Market Stock Units (MSUs) aligns management's incentives with long-term shareholder value.
• The performance-based vesting of MSUs, tied to relative Total Stockholder Return (TSR) against the NASDAQ Telecommunications Index, encourages strong financial performance.
• The potential to earn up to 150% of target shares for superior performance (55th-100th percentile TSR) provides a significant incentive for outperformance.

Negatives

• The disposition of 138,266 shares to cover tax withholding obligations represents a reduction in direct beneficial ownership, though this is a standard practice for equity compensation.

Risks

• The vesting of Market Stock Units (MSUs) is contingent on VIAVI's Total Stockholder Return (TSR) performance relative to the NASDAQ Telecommunications Index, meaning the actual number of shares earned could range from 0% to 150% of the target amount.
• Failure to achieve at least the 25th percentile of the NASDAQ Telecom Index TSR for a given measurement period will result in 0% vesting for that tranche of MSUs.
• The performance period for MSUs spans fiscal years 2026 through 2028, introducing long-term market and operational risks that could impact TSR.

Future Outlook

The filing outlines future equity compensation for the CEO, specifically detailing the vesting schedule and performance criteria for Market Stock Units (MSUs) over fiscal years 2026 through 2028. These MSUs are tied to the company's Total Stockholder Return (TSR) relative to the NASDAQ Telecommunications Index, indicating a forward-looking incentive structure designed to drive long-term shareholder value.

Industry Context

The performance-based vesting of Market Stock Units (MSUs) is benchmarked against the NASDAQ Telecommunications Index, indicating that VIAVI Solutions operates within or is significantly influenced by the telecommunications sector. This aligns executive compensation directly with the company's performance relative to its industry peers, a common practice to incentivize competitive growth and shareholder returns within a specific market segment.

Comparison to Industry Standards

• The use of Total Stockholder Return (TSR) as a performance metric for executive compensation is a widely adopted industry standard, particularly for long-term incentive plans.
• Benchmarking TSR against a relevant industry index, such as the NASDAQ Telecommunications Index, is a best practice in corporate governance to ensure compensation reflects relative performance within the competitive landscape.
• The tiered vesting schedule (0% to 150% of target shares based on percentile performance) is a common structure designed to reward outperformance and penalize underperformance relative to peers. For example, achieving the 55th percentile for 100% vesting is a typical target for 'at-market' performance.

Corporate Governance

Stakeholder Impact

• Shareholders: The performance-based MSU grants could lead to increased shareholder value if the company outperforms its peers. However, the vesting of RSUs and MSUs will result in some share dilution.
• Employees: The equity compensation structure provides incentives for the CEO, which can indirectly motivate other employees through leadership and strategic direction.
• Management: The CEO's compensation is directly tied to the company's relative TSR performance, providing a strong incentive to achieve strategic goals and enhance shareholder returns.

Next Steps

• Annual vesting of Restricted Stock Units (RSUs) in three equal installments.
• Determination of actual shares earned from Market Stock Units (MSUs) by the Compensation Committee after the end of each measurement period (fiscal years 2026, 2027, and 2028).
• Conversion of earned MSUs into common stock on their respective vesting dates.

Key Dates

Keywords

VIAVI Solutions, Oleg Khaykin, SEC Form 4, Equity Compensation, Restricted Stock Units, Market Stock Units, TSR, NASDAQ Telecommunications Index, Executive Compensation, Stock Vesting, Insider Transactions, VIAV