AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 19/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Manufacturing qualification requirements and achieved integration savings support a limited structural advantage. Comparative cost leadership and the extent of customer switching friction are unmeasured.
durability · 2/4 · Repeated major-customer demand and a multi-year purchase commitment support persistence beyond a single period. Non-exclusivity, alternative technologies and backward-integration risk limit confidence across technology cycles.
customer dependency · 2/4 · Qualification requirements and committed purchases indicate meaningful supplier relevance. Dependency remains mixed because concentrated customers retain bargaining power and the strategic agreement permits other suppliers.
erosion resilience · 2/4 · Achieved savings and subsequent yield and cycle-time improvements show adaptation. They do not demonstrate resilience through a sustained demand decline or major technology substitution; disclosed expansion risks remain prospective.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Pricing optimization contributed positively to realized Datacenter & Communications margins. The contribution is unquantified, while distributor price protection and large-customer bargaining power constrain broader pricing power.
retention · 2/4 · Indirect operating evidence shows a major customer contributing revenue across three years, supplemented by a multi-year purchase commitment and qualification friction. This supports repeat demand without establishing a retention rate, exclusive dependence or pricing-insensitive purchasing.
margin resilience · 2/4 · Quarterly and nine-month gross margins improved, supported by operational efficiencies and pricing optimization. Higher volume and divestitures also helped, leaving resilience under adverse demand conditions unproven.
contractual freedom · 1/4 · Disclosed distributor price-protection agreements limit pricing discretion, and large customers have considerable bargaining power over terms. The purchase commitment does not disclose unilateral repricing or cost-pass-through rights.
Predictability70
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 22.75
- Positive FCF years (%)
- 80.00
- FCF margin volatility (pp)
- 7.20
Financial strength—
Missing required inputs: netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 0.00
- interestCoverageGrade
- 0.00
- currentRatioGrade
- 100.00
- Current ratio (x)
- 2.43
- cashInterestPaid
- 189.26
- cashInterestCoverage
- 0.42
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- 8.94
- 3-year average SBC / revenue (%)
- 2.69
- cashConversionGrade
- 0.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Achieved synergies, divestiture proceeds, debt payments and cessation of preferred dividends are constructive. They coexist with impairments, inventory-driven cash-flow pressure, equity dilution and a substantial miss against the three-year cash-flow threshold. Future capacity commitments still require returns to be demonstrated.
incentive alignment · 2/4 · Actual fiscal 2026 grants use a 60% PSU and 40% RSU mix, with a three-year relative-TSR performance period. Certified zero earning of earlier cash-flow PSUs demonstrates an enforced performance condition. Alignment is mixed because current PSUs use relative TSR alone, and ownership and complete award economics are absent.
execution · 2/4 · Revenue growth, achieved synergies, manufacturing improvements and the net-income recovery demonstrate operating execution. The substantial cash-flow target miss and realized impairments temper that record. Results span different management tenures, and SEC compensation-actually-paid figures are not treated as cash received.
governance · 2/4 · An independent NCG committee, documented compensation oversight, annual evaluations and certified enforcement of PSU conditions support functioning governance processes. The classified board and preferred-stock issuance authority weaken shareholder control; effectiveness beyond the disclosed processes remains unproven.
Evidence
In addition, certain customers may require qualification of existing, new, relocated, or subcontractor manufacturing lines before they will purchase more than limited evaluation units or permit volume shipments.
Item 1A / customer qualification of manufacturing lines · Filed 14/08/2026
The following tables summarizes depreciation and amortization by segment ($000): 87 Table of Contents Year Ended June 30, Depreciation and amortization 2026 2025 2024 Datacenter & Communications $ 212,560 $ 209,293 $ 213,693 Industrial 304,960 339,377 340,601 Corporate and shared services 4,375 4,928 5,467 Total depreciation and amortization $ 521,895 $ 553,598 $ 559,761 Geographic information for revenues, by location of the customer’s headquarters, were as follows ($000): Revenues Year Ended June 30, 2026 2025 2024 North America $ 4,633,696 $ 3,564,846 $ 2,622,569 Europe 814,176 698,800 714,282 China 813,377 680,110 621,918 Japan 390,373 390,610 340,863 Rest of World 466,559 475,749 408,056 Total $ 7,118,181 $ 5,810,115 $ 4,707,688 Major Customers One major customer accounted for 20%, 10%, and 10% of consolidated revenue during fiscal 2026, 2025 and 2024, respectively.
Segment and geographic information / revenue history and major customer · Filed 14/08/2026
Agreements with NVIDIA On March 2, 2026, the Company entered into a multi-year strategic agreement with NVIDIA to advance the development of advanced optics technologies, including manufacturing capacity and research and development, to enable next-generation AI infrastructure.
MD&A / Agreements with NVIDIA · Filed 06/05/2026
The non-exclusive agreement includes a multi-billion-dollar purchase commitment with NVIDIA, as well as future access and capacity rights for advanced laser and optical networking products.
MD&A / non-exclusive purchase commitment and capacity rights · Filed 06/05/2026
We contract with a number of large end-user service providers and product companies that have considerable bargaining power, which may require us to agree to terms and conditions that could have an adverse effect on our business or ability to recognize revenues.
Item 1A / large-customer bargaining power · Filed 14/08/2026
18 Table of Contents We may encounter increased competition, and we may fail to accurately estimate our competitors’ or our customers’ willingness and capability to backward integrate into our competencies and thereby displace us.
Item 1A / potential competitor and customer backward integration · Filed 14/08/2026
A second major customer accounted for 12% of consolidated revenue during fiscal 2026.
Major Customers / second major customer's fiscal 2026 revenue share · Filed 14/08/2026
These relocations and other actions resulted in the Company achieving its previously announced $250 million synergy plan, which included savings from supply chain management, internal supply of enabling materials and components, operational efficiencies in all functions due to scale, global functional model efficiencies and consolidation of corporate costs.
Synergy and Site Consolidation Plan / achieved savings · Filed 14/08/2026
The improvement in gross margin percentage was primarily driven by higher revenue volume, cost reductions in product input costs and efficiency gains from improved cycle times in the manufacturing process and yield improvements within the Datacenter & Communications segment.
MD&A / realized manufacturing and input-cost improvements · Filed 06/05/2026
(“Coherent,” the “Company,” “we,” “us,” or “our”), is a vertically integrated manufacturing company that develops, manufactures, and markets lasers, transceivers, and other optical and optoelectronic devices, modules, and systems, as well as engineered materials, for use in the data center, communications and industrial markets.
Item 1 / vertically integrated manufacturing business · Filed 14/08/2026
We believe that our vertical integration, manufacturing facilities and equipment, experienced technical and manufacturing employees, and worldwide marketing and distribution channels provide us with competitive advantages.
Competition / management's asserted sources of advantage · Filed 14/08/2026
Some of our competitors may have financial, technical, marketing, or other capabilities that are more extensive than ours.
Item 1A / potential competitor resource advantages · Filed 14/08/2026
In addition to competitors who manufacture products similar to those we produce, there are other technologies and products available that may compete with our technologies and products.
Competition / alternative technologies and products · Filed 14/08/2026
In addition, these expansions involve several risks including the following: •inability to meet capital expenditure requirements, including during periods of relatively low free cash flow generation; •unavailability of necessary funding, which may include external sources; •inability to realize expected grants, investment tax credits, and other government incentives, including through the CHIPS Act and other national, international, state, and local grants; •potential changes in laws or provisions of grants, investment tax credits, and other government incentives, including the CHIPS Act; •delays and potential restrictions related to environmental and other government regulations or permits; •potential restrictions on expanding in certain geographies; •inability to complete construction as scheduled and within budget; •inability to attract, retain and motivate key talent; •inability to timely ramp production in a cost-effective manner; •increases to our cost structure until new production is ramped to adequate scale; and •insufficient customer demand to utilize our increased capacity.
Item 1A / capacity-expansion funding, ramp and utilization risks · Filed 14/08/2026
If we overestimate demand, if customers delay, reduce, or cancel anticipated orders, or if expected end markets develop more slowly than anticipated, we may be unable to optimize our manufacturing footprint and could incur excess or obsolete inventory, underutilized facilities, under-absorbed overhead, liabilities under supplier arrangements, noncancellable purchase obligations, or charges associated with unused allocated manufacturing capacity, any of which could increase our costs and reduce our margins.
Item 1A / potential costs of excess capacity and demand forecasting errors · Filed 14/08/2026
Gross margin also benefited from pricing optimization in the Datacenter & Communications segment, as well as the divestitures of our aerospace and defense business on September 2, 2025 and our Munich, Germany business on January 30, 2026.
MD&A / pricing optimization and divestiture contributions to gross margin · Filed 06/05/2026
We determine variable consideration, which primarily consists of product returns and distributor sales price reductions resulting from price protection agreements, by estimating the impact of such reductions based on historical analysis of such activity.
Revenue recognition / distributor price protection and returns · Filed 14/08/2026
Gross margin. Gross margin for the three months ended March 31, 2026 was $680 million, or 38% of revenues, compared to $528 million, or 35% of revenues, for the same period in the prior fiscal year, representing an increase of 243 basis points.
MD&A / quarterly gross-margin improvement · Filed 06/05/2026
Gross margin for the nine months ended March 31, 2026 was $1,882 million, or 37% of revenues, compared to $1,497 million, or 35% of revenues, for the same period in the prior year, representing an increase of 213 basis points.
MD&A / nine-month gross-margin improvement · Filed 06/05/2026
The decrease in cash flows provided by operating activities during the nine months ended March 31, 2026 compared to the same period in the prior fiscal year was primarily driven by a significant increase in inventories to support higher revenue levels, which resulted in increased working capital usage.
Liquidity and capital resources / inventory-related operating cash-flow decline · Filed 06/05/2026
The increase was primarily due to $825 million purchases of short-term investments and higher cash used to fund capital expenditures partially offset by $437 million cash received from the sale of businesses, net of fees, and cash received from the sale of an equity investment.
Investing activities / investments, capital expenditures and divestiture proceeds · Filed 06/05/2026
The increase was primarily due to the $2 billion in proceeds from the issuance of Common Stock to NVIDIA, net of fees, partially offset by higher payments, net of borrowings, on existing debt obligations.
Financing activities / equity issuance and debt payments · Filed 06/05/2026
During the quarter ended December 31, 2025, 75,000 shares and 140,000 shares of previously issued Series B-1 (“Series B-1 Preferred Stock”) and B-2 convertible preferred stock (“Series B-2 Preferred Stock” and, together with the Series B-1 Preferred Stock, the “Series B Preferred Stock”), no par value per share, respectively, were converted into an aggregate of 30.1 million shares of Common Stock.
Equity / completed preferred-stock conversion into common shares · Filed 06/05/2026
We also entered into a multi-year capacity agreement that may require incremental investments in equipment, labor, and working capital to support future production volumes through 2030.
Liquidity and capital resources / capacity agreement through 2030 · Filed 06/05/2026
While no material liability was recorded at quarter-end solely as a result of entering into the agreement, the arrangement may result in material future cash requirements and could affect revenue concentration, gross margin, and capital expenditures as volumes ramp.
Liquidity and capital resources / prospective cash and concentration implications · Filed 06/05/2026
Cash Flow from Operations Units Earned as a Percentage of Target Award If Coherent Consolidated Cash Flow from Operations is less than 79.99% of the Cash Flow Target 0% If Coherent Consolidated Cash Flow from Operations is greater than or equal to 80.00% and less than 100.00% of the Cash Flow Target 50.00% to 99.99% If Coherent Consolidated Cash Flow from Operations equals 100.00% of the Cash Flow Target 100% If Coherent Consolidated Cash Flow from Operations is greater than 100.00% and less than 140.00% of the Cash Flow Target 100.01% to 199.99%1 If Coherent Consolidated Cash Flow from Operations is greater than or equal to 140.00% of the Cash Flow Target 200%1 COHERENT PROXY STATEMENT 2026 | 51 Table of Contents Based on the three-year performance period ending with fiscal year 2026, Coherent’s cash flow from operations was $1,258.8 million, which was below the threshold performance $2,784.2 million.
CD&A / realized three-year operating cash flow versus PSU threshold · Filed 09/10/2026
In accordance with the payout scale described above, the Committee reviewed and certified that the consolidated cash flow from operations PSUs for the fiscal 2024-2026 performance period did not reach the required threshold and therefore were not earned.
CD&A / certified non-earning of cash-flow PSUs · Filed 09/10/2026
48 | COHERENT PROXY STATEMENT 2026 Table of Contents FISCAL YEAR 2026 GRANTS OF PSUS AND RSUS As described above, the Committee established the mix of equity vehicles for fiscal year 2026 as 60% PSUs / 40% RSUs for the NEOs.
CD&A / fiscal 2026 granted PSU and RSU mix · Filed 09/10/2026
The PSUs issued in fiscal year 2026 had a three-year performance period, beginning July 1, 2025 and ending June 30, 2028.
CD&A / issued PSU performance period · Filed 09/10/2026
The Committee approved relative Total Shareholder Return (TSR) as the performance metric for the fiscal year 2026-28 performance period, which measures Coherent’s TSR relative to companies in the S&P Composite 1500 — Electronic Equipment, Instruments & Components Index.
CD&A / approved relative-TSR performance metric · Filed 09/10/2026
KEY RESPONSIBILITIES • Annually reviews and approves all aspects of the CEO’s terms of employment, goals, objectives, and total compensation • Annually reviews and approves all aspects of the total compensation of the other executive officers under its purview • Annually reviews and recommends to the Board for approval the compensation package for non-employee directors • Administers compensation-related plans, including equity-based incentive compensation plans, employee stock purchase plans, and deferred compensation plans • Reviews with management the Company’s human capital management strategy and practices, which may include employee engagement programs and initiatives; employee safety; and succession planning • Reviews and discusses with management all executive compensation disclosures in the annual report and proxy statement, and produces the Compensation and Human Capital Committee’s report on executive officer compensation for the annual report or proxy statement NOMINATING AND CORPORATE GOVERNANCE COMMITTEE Meetings in FY 2026: 4 All members are independent CHAIR • Joseph Corasanti OTHER MEMBERS • Michael Dreyer • Patricia Hatter • Lisa Neal-Graves • Stephen Skaggs The Committee develops Coherent’s corporate governance policies, oversees matters of Board composition and refreshment, and provides guidance on sustainability goals.
Board committees / compensation oversight and independent NCG committee · Filed 09/10/2026
The Board is divided into three classes, each as nearly equal as possible in number of directors.
Board of Directors / classified board structure · Filed 09/10/2026
In addition, the NCG Committee facilitates annual self-evaluations of the Board, the Audit and Risk Committee, the Compensation and Human Capital Committee, and the NCG Committee in order to determine whether the Board and such Committees are functioning effectively.
Corporate governance / annual board and committee self-evaluations · Filed 09/10/2026
•Our Board of Directors can issue, without approval of the holders of our common stock, preferred stock with voting and conversion rights that could adversely affect the voting power of the holders of our common stock, the rights of holders of shares of our capital stock, or the market price of our capital stock.
Capital-stock risks / board authority to issue preferred stock · Filed 14/08/2026
As a result of classifying these entities as held-for-sale, we recorded non-cash impairment charges of $85 million within the Industrial segment.
Impairment of Assets Held-for-Sale / realized Industrial impairment · Filed 14/08/2026
Year Summary Compensation Table Total for PEO 11 ($) Compensation Actually Paid to PEO 11,2,3 ($) Average Summary Compensation Table Total for Non-PEO NEOs1 ($) Average Compensation Actually Paid to Non-PEO NEOs1,2,3 ($) Value of Initial Fixed $100 Investment based on:4 Net Income ($ Millions) Adjusted EBITDA5 ($ Millions) TSR ($) Peer Group TSR ($) 2026 28,349,672 713,540,125 6,279,618 57,397,501 543.42 315.48 787 1,744.7 2025 3,722,935 34,479,371 12,058,072 10,843,278 122.90 111.71 30 1,318.6 2024 101,497,009 108,396,274 2,455,433 5,025,954 99.82 94.96 (159) 1,001.2 2023 — — 5,304,906 6,787,965 70.23 89.84 (259) 1,238.7 2022 — — 2,670,549 (77,480) 70.19 76.48 235 864.8 1.
Pay versus performance / multi-year net income and compensation disclosures · Filed 09/10/2026
Due to the conversion of the Series B Preferred Stock to Common Stock in the quarter ended December 31, 2025, no dividends were declared or paid for the quarters ended December 31, 2025, March 31, 2026 or June 30, 2026.
Preferred stock / completed conversion and cessation of quarterly dividends · Filed 14/08/2026
Compensation actually paid, as determined under SEC requirements, does not reflect the actual amount of compensation earned by or paid to our executive officers during a covered year.
Pay versus performance / interpretation of SEC compensation-actually-paid measure · Filed 09/10/2026
