Hillman Solutions Corp.HLMN
Hillman Solutions Corp. Stock Compensation Disclosure
The Company is no longer granting new awards under the 2014 Equity Incentive Plan. Awards previously granted under the 2014 Equity Incentive Plan include options, restricted stock, and other stock-based awards for up to an aggregate of 14,523,510 shares of its common stock.
The following table summarizes the key assumptions used in the valuation model for valuing the Company's stock compensation awards under the 2014 Equity Incentive Plan:
| Dividend yield | 0% | |||||||||||||
| Risk free interest rate | 0.40 | % | - | 1.81 | % | |||||||||
| Expected volatility | 31.50% | |||||||||||||
| Expected terms | 6.25 years | |||||||||||||
Stock Options
The fair value of stock options is determined at the grant date using the Black-Scholes option pricing model. The time-based stock option awards generally vest evenly over four years from the grant date and performance-based options vest based on specified targets such as Company performance and Company stock price hurdles.
A summary of the stock option activity under the 2014 Equity Inventive Plan for the year ended December 27, 2025 is presented below (share amounts in thousands):
| Number of Shares | Weighted Avg. Exercise Price per Share (in whole dollars) | Weighted Avg. Remaining Contractual Term | ||||||||||||||||||
Outstanding at December 28, 2024 | 10,162 | $ | 8.27 | 4.49 years | ||||||||||||||||
| Granted | — | |||||||||||||||||||
| Exercised | (161) | |||||||||||||||||||
| Forfeited or expired | (243) | |||||||||||||||||||
Outstanding at December 27, 2025 | 9,758 | $ | 8.33 | 3.47 years | ||||||||||||||||
Exercisable at December 27, 2025 | 8,774 | $ | 8.49 | 3.62 years | ||||||||||||||||
In fiscal years ended December 27, 2025, December 28, 2024 and December 30, 2023, 161, 1,284, and 77 options were exercised, respectively.
Stock option compensation expense of $73, $1,546, and $3,504 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the years ended December 27, 2025, December 28, 2024, and December 30, 2023, respectively. For the year ended, December 27, 2025, there was no unrecognized compensation expense for stock options, as all compensation related to the Prior Plan was fully expensed in 2025.
The total intrinsic value of share options exercised during the years ended 2025, 2024, and 2023 was $390, $3,409, and $162, respectively.
Restricted Stock Awards
The Company granted restricted stock at the grant date fair value of the underlying common stock securities. The restrictions lapse in one quarter increments on each of the three anniversaries of the award date, and one quarter on the completion of the relocation of the recipient to the Cincinnati area or earlier in the event of a change in control. The associated expense is recognized over the service period.
There were no restricted stock award activity under the 2014 Equity Incentive Plan for the years ended December 27, 2025, December 28, 2024 or December 30, 2023.
Restricted Stock Units
The Restricted Stock Units ("RSUs") granted to employees for service generally vest after three years, subject to continued employment.
There were no RSU activity under the 2014 Equity Incentive Plan for the year ended December 27, 2025.
Restricted stock unit compensation expense of $55 and $582 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.
2021 Equity Incentive Plan
Effective July 14, 2021, the Company established the 2021 Equity Incentive Plan. On June 7, 2024, the 2021 Equity Incentive Plan was amended to increase the share reserve by 2,000,000 shares of common stock (the 2021 Equity Incentive Plan as amended is referred to as the “2021 Plan”). On June 3, 2025, the 2021 Equity Incentive Plan was amended to increase the share reserve by 1,800,000 shares of common stock (the 2021 Equity Incentive Plan as amended is referred to as the “2021 Plan”). Under the 2021 Plan, the maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan as of the Effective Date is (i) 10,950,814 shares, plus (ii) the number of shares of Stock underlying awards under the 2014 Equity Incentive Plan that on or after the Effective Date expire or become unexercisable, or are forfeited, cancelled or otherwise terminated, in each case, without delivery of shares or cash therefore, and would have become available again for grant under the Prior Plan in accordance with its terms (not to exceed 14,523,510 shares of Stock in the aggregate) (the “Share Pool”).
The following table summarizes the key assumptions used in the valuation model for valuing the Company's stock compensation awards under the 2021 Equity Incentive Plan:
| Dividend yield | 0% | |||||||||||||
| Risk free interest rate | 1.71 | % | - | 4.15 | % | |||||||||
| Expected volatility | 30.00 | % | - | 40.00 | % | |||||||||
| Expected terms | 6.25 years | |||||||||||||
Stock Options
The fair value of stock options is determined at the grant date using the Black-Scholes option pricing model. The time-based stock option awards generally vest evenly over four years from the grant date and performance-based options vest based on specified targets such as Company performance and Company stock price hurdles.
A summary of the stock option activity under the 2021 Equity Inventive Plan for the year ended December 27, 2025 is presented below (share amounts in thousands):
| Number of Shares | Weighted Avg. Exercise Price per Share (in whole dollars) | Weighted Avg. Remaining Contractual Term | ||||||||||||||||||
Outstanding at December 28, 2024 | 1,859 | $ | 9.51 | 7.75 years | ||||||||||||||||
| Granted | — | |||||||||||||||||||
| Exercised | (13) | |||||||||||||||||||
| Forfeited or expired | (59) | |||||||||||||||||||
Outstanding at December 27, 2025 | 1,787 | $ | 9.50 | 6.47 years | ||||||||||||||||
Exercisable at December 27, 2025 | 885 | $ | 9.54 | 6.28 years | ||||||||||||||||
In the fiscal year ended December 27, 2025, 13 options were exercised and in the fiscal year ended December 28, 2024, 48 options were exercised.
Stock option compensation expense of $1,539, $1,701 and $1,124 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the years ended December 27, 2025, December 28, 2024 and December 30, 2023, respectively. As of December 27, 2025, there was $2,003 of unrecognized compensation expense for unvested common options. The expense will be recognized as a charge to earnings over a weighted average period of approximately 0.94 years.
The total intrinsic value of share options exercised during the years ended December 27, 2025 and December 28, 2024 was $10 and $46, respectively.
Restricted Stock Units
The RSUs granted to employees for service generally vest (i) after three years for RSUs granted prior to 2025; and (ii) in equal annual installments over three years for RSUs granted in 2025 and thereafter, subject in each case to continued employment. The RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date or the date of the annual meeting following the grant date, whichever is earlier.
A summary of the restricted stock unit activity under the 2021 Equity Incentive Plan for the year ended December 27, 2025 is presented below (share amounts in thousands):
| Number of Shares | Weighted Avg. Grant Date Fair Value (in whole dollars) | |||||||||||||
Outstanding at December 28, 2024 | 3,529 | 9.30 | ||||||||||||
| Granted | 1,633 | 9.30 | ||||||||||||
| Vested | (1,016) | |||||||||||||
| Forfeited or expired | (95) | |||||||||||||
Outstanding at December 27, 2025 | 4,051 | 9.17 | ||||||||||||
Restricted stock unit compensation expense of $11,556, $9,785 and $6,440 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended December 27, 2025, December 28, 2024 and December 30, 2023, respectively. As of December 27, 2025, there was $17,227 of unrecognized compensation expense for unvested common stock options. The expense will be recognized as a charge to earnings over a weighted average period of approximately 1.07 years.
Performance Stock Units
Beginning in the first quarter of 2025, the Company determined to grant Performance Stock Units ("PSUs"), using return on invested capital as the performance metric, instead of granting stock options. The PSUs granted to employees for service generally vest after three years, subject to continued employment.
A summary of the performance stock unit activity under the 2021 Equity Inventive Plan for the year ended December 27, 2025 is presented below (share amounts in thousands):
| Number of Shares | Weighted Avg. Grant Date Fair Value (in whole dollars) | |||||||||||||
Outstanding at December 28, 2024 | — | — | ||||||||||||
| Granted | 288 | 9.55 | ||||||||||||
| Vested | — | |||||||||||||
| Forfeited or expired | (21) | |||||||||||||
Outstanding at December 27, 2025 | 267 | 9.55 | ||||||||||||
PSU compensation expense of $686 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the fiscal year ended December 27, 2025. As of December 27, 2025, there was $1,864 of unrecognized compensation expense for unvested PSUs. The expense will be recognized as a charge to earnings over a weighted average period of approximately 1.14 years.
2021 Employee Stock Purchase Plan
Our Employee Stock Purchase Plan ("ESPP") became effective on July 14, 2021, in which 1,140,754 shares of common stock were available for issuance under the ESPP. On June 3, 2025, the ESPP plan was amended to increase the share reserve by 1,000,000 shares of common stock, for a total of 2,140,754 shares available for issuance. Under the ESPP, eligible employees are granted options to purchase shares of common stock at 85% of the fair market value at the time of exercise. The option period commences on the first payroll date in January, April, July, and October of each year and ends approximately three months later on the last business day in March, June, September or December. No employee may be granted an option under the Plan if, immediately after the option is granted, the employee would own stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company.
Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. For the years ended December 27, 2025, December 28, 2024, and December 30, 2023, there was approximately $392, $376, and $355 of compensation expense related to the ESPP, 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.