Hayward Holdings, Inc.HAYW
Hayward Holdings, Inc. Stock Compensation Disclosure
Note 17. Stock-based Compensation
Stock-based compensation expense recorded in the consolidated statements of operations for equity-classified stock-based awards was $13.4 million, $10.6 million, and $9.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company has established two equity incentive plans as described below.
2021 Equity Incentive Plan
In March 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). Under the 2021 Plan, up to 13,737,500 shares of Common Stock may be granted to employees, directors and consultants in the form of stock options, restricted stock units and other stock-based awards. The terms of awards granted under the 2021 Plan are determined by the Compensation Committee of the Board of Directors, subject to the provisions of the 2021 Plan. As of December 31, 2025, there were 9,455,556 shares available for future issuance under the 2021 Plan.
Options granted under the 2021 Plan expire no later than 10 years from the date of grant. The vesting period of stock options and restricted stock units granted under the 2021 Plan is generally three years from the date of grant.
Performance-Based Restricted Stock Units
The Company utilizes performance-based restricted stock units (“PSUs”) as part of its equity awards program for certain senior management and executive officers. The vesting of the PSUs granted during 2025 is tied to net revenue growth, adjusted EBITDA margin and return on gross invested capital, with relative weightings of 50%, 30% and 20%, respectively, subject to a modifier of up to plus or minus 15% based on the Company's total shareholder return over a three year performance period. The vesting of the PSUs granted during 2024 is tied to adjusted EBITDA margin, gross profit margin and return on gross invested capital in 2024, with relative weightings of 40%, 40% and 20%, respectively, subject to a modifier of up to plus or minus 15% based on the Company’s absolute total shareholder return over a three year performance period. The vesting of the PSUs granted during 2023 is tied to return on gross invested capital and adjusted EBITDA margin with a relative weighting of 50% each.
The PSUs are generally measured over three year performance periods with a minimum of 50% of the target awarded PSUs to be earned for threshold performance and a maximum of 200% of the target awarded PSUs to be earned for maximum performance. The Company reassesses at each reporting date whether achievement of the performance condition is probable and accrues compensation expense if and when achievement of the performance condition is probable.
The following table summarizes activity for PSUs under the 2021 Plan:
| Number of Shares | Weighted- average grant date fair value | ||||||||||
| Outstanding as of December 31, 2024 | 517,992 | $ | 13.94 | ||||||||
| Granted | 277,534 | 15.32 | |||||||||
| Forfeited | (30,852) | 14.54 | |||||||||
| Vested and converted to common | — | ||||||||||
| Outstanding as of December 31, 2025 | 764,674 | 14.70 | |||||||||
At December 31, 2025 total unrecognized compensation cost related to the performance based stock units granted under the 2021 plan is estimated to be $6.5 million, to be recognized over a weighted-average period of 1.79 years.
The Company determined the fair value of the 2025 and 2024 PSUs, which included a modifier based on total shareholder return, at the date of grant using a Monte Carlo simulation.
The following table sets forth fair value per share information, including related weighted-average assumptions, used to determine compensation cost:
Years Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Weighted-average fair value per share of PSUs granted during the year | $ | 15.32 | $ | 14.20 | $ | 11.81 | |||||
| Assumptions: | |||||||||||
| Risk-free interest rate | 3.95 | % | 4.38 | % | n/a | ||||||
| Expected dividend yield | — | % | — | % | n/a | ||||||
| Expected volatility | 42.84 | % | 46.19 | % | n/a | ||||||
The simulation term used was the time period from the date of grant to the end of the performance period for the award. The risk-free interest rate was based on the U.S. Treasury yield curve at date of grant over the simulation term. The expected volatility was based upon the Company's stock price with a look-back period equal to the simulation term. The dividend yield is zero as the Company does not issue a dividend.
Time-based Stock Options
The following table summarizes activity for stock options under the 2021 Plan (aggregate intrinsic value in thousands):
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding as of December 31, 2024 | 2,465,800 | $ | 15.60 | 6.84 | $ | 2,554 | |||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | (16,803) | 11.74 | 60 | ||||||||||||||||||||
| Forfeited | (55,435) | 15.31 | |||||||||||||||||||||
Outstanding as of December 31, 2025 | 2,393,562 | 15.62 | 5.79 | 2,551 | |||||||||||||||||||
Options exercisable as of December 31, 2025 | 2,187,412 | 15.98 | 5.76 | 1,800 | |||||||||||||||||||
Options expected to vest as of December 31, 2025 | 206,150 | 11.81 | 6.17 | 750 | |||||||||||||||||||
The Company determined the fair value of these time-based stock options at the date of grant using the Black-Scholes option-pricing model. The following table sets forth fair value per share information, including related weighted-average assumptions, used to determine compensation cost:
Years Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Weighted-average fair value per share of options granted during the year | $ | — | $ | — | $ | 4.73 | |||||
| Assumptions: | |||||||||||
| Risk-free interest rate | n/a | n/a | 4.26 | % | |||||||
| Expected life (years) | n/a | n/a | 6 | ||||||||
| Expected dividend yield | n/a | n/a | — | % | |||||||
| Expected volatility | n/a | n/a | 32.3 | % | |||||||
The risk-free interest rate was based on the U.S. Treasury yield curve at date of grant over the expected term of these stock options. The expected volatility was based upon comparable public company historical volatility. The expected life was based on the average of the weighted-average vesting period and the contractual term of the stock option awards by utilizing the “simplified method,” as prescribed in SEC’s Staff Accounting Bulletin (SAB) No. 107, as the Company does not have sufficient available historical data to estimate the expected term of these stock option awards.
At December 31, 2025, the total unrecognized compensation cost related to the stock options granted under the 2021 Plan was $0.2 million, to be recognized over a weighted-average period of 0.25 years.
The following table presents the aggregate intrinsic value of options exercised during the year (in thousands):
Years Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Aggregate intrinsic value of options exercised during the year | $ | 60 | $ | 15 | $ | 3 | |||||
Time-based Restricted Stock Units
The following table summarizes activity for time-based restricted stock units under the 2021 Plan:
| Number of Shares | Weighted- Average Grant- Date Fair Value | ||||||||||
Outstanding as of December 31, 2024 | 1,197,660 | $ | 13.52 | ||||||||
| Granted | 689,737 | 14.65 | |||||||||
| Forfeited | (60,985) | 13.67 | |||||||||
| Vested and converted to common | (452,976) | 13.52 | |||||||||
Outstanding as of December 31, 2025 | 1,373,436 | 14.09 | |||||||||
At December 31, 2025, the total unrecognized compensation cost related to restricted stock units granted under the 2021 Plan was $12.2 million, to be recognized over a weighted-average period of 2.2 years.
The total fair value of restricted stock awards vested was $6.1 million and $4.0 million in the years ended 2025 and 2024, respectively.
The following table presents the weighted-average fair value of time-based restricted stock units granted during the year:
Years Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Weighted-average fair value per share of time-based restricted stock units granted during the year | $ | 14.65 | $ | 14.17 | $ | 11.62 | |||||
2017 Equity Incentive Plan
In August 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan”), which provided for the issuance of stock options, restricted stock and restricted stock awards to officers, directors and employees. The stock options granted under the 2017 Plan generally have a maximum term of up to 10 years. Restricted stock, restricted stock awards, and stock options granted under the 2017 Plan generally are eligible to vest based on continued service, generally over five years, or upon an initial public offering and post-initial public offering stock price performance. Due to the Company’s IPO on March 12, 2021 and subsequent stock price performance, all performance-vesting conditions were satisfied on March 26, 2021.
For presentation purposes in this document the Company has recast all figures to reflect the 195-for-1 stock split in the Common Stock that occurred on March 2, 2021.
As of December 31, 2025, there were 4,650,126 outstanding options under the 2017 Plan. No future awards will be made under the 2017 Plan following the Company’s IPO. Shares underlying awards under the 2017 Plan that expire or become unexercisable without delivery of shares, are forfeited to, or repurchased for cash by, the Company, are settled in cash, or otherwise become available again for grant as available for future awards under the 2021 Plan (as described above).
Time-Based Stock Options
The following table summarizes activity for time-based stock options under the 2017 Plan (aggregate intrinsic value in thousands):
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding as of December 31, 2024 | 2,550,392 | $ | 1.24 | 4.47 | $ | 35,829 | |||||||||||||||||
| Exercised | (1,089,255) | 1.22 | 15,154 | ||||||||||||||||||||
| Forfeited | — | — | |||||||||||||||||||||
Outstanding as of December 31, 2025 | 1,461,137 | 1.25 | 1.25 | 20,745 | |||||||||||||||||||
Options exercisable as of December 31, 2025 | 1,461,137 | 1.25 | 1.25 | 20,745 | |||||||||||||||||||
Options expected to vest as of December 31, 2025 | — | — | — | — | |||||||||||||||||||
The total intrinsic value of options exercised was $15.2 million, $13.6 million and $14.3 million in the years ended 2025, 2024 and 2023, respectively. As of December 31, 2025, there is no remaining unrecognized compensation cost related to time-based stock options.
No stock options under the 2017 Plan were granted during the years ended December 31, 2025, December 31, 2024 and December 31, 2023.
The following table presents the aggregate intrinsic value of options exercised during the year (in thousands):
Years Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Aggregate intrinsic value of options exercised during the year | $ | 15,154 | $ | 13,553 | $ | 14,259 | |||||
Stock Options with Market and Performance Conditions
The following table summarizes activity for stock options with market and performance conditions under the 2017 Plan (aggregate intrinsic value in thousands):
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding as of December 31, 2024 | 3,443,416 | $ | 1.24 | 4.54 | $ | 48,368 | |||||||||||||||||
| Exercised | (254,427) | 0.65 | 4,033 | ||||||||||||||||||||
| Forfeited | — | — | |||||||||||||||||||||
Outstanding as of December 31, 2025 | 3,188,989 | 1.29 | 3.69 | 45,152 | |||||||||||||||||||
Options exercisable as of December 31, 2025 | 3,188,989 | 1.29 | 3.69 | 45,152 | |||||||||||||||||||
Options expected to vest as of December 31, 2025 | — | — | — | — | |||||||||||||||||||
The performance criteria for these awards was met on March 26, 2021 upon the completion of the Company’s initial public offering. As such, all performance-based stock options vested in 2021 and the Company recognized the related stock-based compensation expense in the year ended 2021. As of December 31, 2025, there is no remaining unrecognized compensation cost related to performance-based stock options.
No stock options under the 2017 Plan were granted during the year ended December 31, 2025, December 31, 2024 and December 31, 2023.
The following table presents the aggregate intrinsic value of options exercised during the year (in thousands):
Years Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Aggregate intrinsic value of options exercised during the year | $ | 4,033 | $ | 3,023 | $ | 11,340 | |||||
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.