Stock-based CompensationThe Company maintains a stock-based compensation plan, which authorizes the granting of various equity-based incentives, including restricted stock units (“RSUs”) and performance stock units (“PSUs”). Stock compensation expense is amortized on a straight line basis over the service period, which is generally the vesting period. The fair value of the Company’s RSU and PSU awards is measured at the market price of the Company’s common stock on the grant date. PSUs are earned based on the achievement of certain performance metrics in relation to a set target, and stock compensation expense may fluctuate based on the forecasted achievement prior to vesting or actual achievement of these target metrics upon vesting.
RSU grants to employees generally vest ratably on an annual basis over a three-year period following the grant date, although some awards may vest ratably on an annual basis over two years or cliff vest at the end of a shorter time period.
RSU grants to non-employee directors typically vest at the end of a one-year period. PSU grants generally cliff vest at the end of a three-year period following the grant date. Forfeitures are recorded as they occur.
Stock compensation expense totaled approximately $8.1 million, $2.2 million and $1.9 million for the fiscal years ended December 28, 2025, December 29, 2024 and December 31, 2023, respectively.
The table below summarizes activity related to the Company’s stock-based compensation plans during the fiscal year of 2025. This table excludes RSUs and PSUs of Southwest Gas Holdings stock that were granted to certain employees of the Company prior to the Centuri IPO and fully vested during fiscal year 2025. The fair value of these outstanding Southwest Gas Holdings awards was not material as of December 29, 2024.
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| RSUs | | PSUs |
| Shares | | | | Weighted Average Grant Date Fair Value (Per Unit) | | Shares | | | | Weighted Average Grant Date Fair Value (Per Unit) |
| As of December 29, 2024 | 342,679 | | | | | $ | 20.40 | | | — | | | | | N/A |
| Granted | 736,975 | | | | | $ | 18.05 | | | 118,612 | | | | | $ | 17.73 | |
| Vested | (160,830) | | | | | $ | 24.33 | | | — | | | | | N/A |
| Forfeited | (54,437) | | | | | $ | 17.15 | | | (8,320) | | | | | $ | 18.10 | |
| As of December 28, 2025 | 864,387 | | | | | $ | 17.87 | | | 110,292 | | | | | $ | 17.71 | |
As of December 28, 2025, total unearned compensation related to Centuri stock RSUs and PSUs was approximately $9.7 million and $1.4 million, respectively, and these amounts are expected to be recognized over a weighted average period of approximately 1.4 years and 2.2 years, respectively.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.