Sprouts Farmers Market, Inc.SFM
Sprouts Farmers Market, Inc. Stock Compensation Disclosure
Share-Based Compensation
2022 Incentive Plan
In March 2022, the Company’s board of directors adopted the Sprouts Farmers Market, Inc. 2022 Omnibus Incentive Compensation Plan (the “2022 Incentive Plan”), which became effective May 25, 2022, upon approval by the Company’s stockholders. The 2022 Incentive Plan provides team members of the Company, certain consultants and advisors who perform services for the Company, and non-employee members of the Company's board of directors with the opportunity to receive grants of equity awards, including stock options, RSUs, PSAs, and other stock-based awards. The 2022 Incentive Plan replaced the 2013 Incentive Plan (as described below).
Awards Granted under the 2022 Incentive Plan
The Company granted the following awards during 2025 and 2024 under the 2022 Incentive Plan:
| Grant Date | RSUs | PSAs | Options | |||||||||||||||||
| March 18, 2025 | 185,228 | 58,805 | 61,079 | |||||||||||||||||
| June 3, 2025 | 333 | — | — | |||||||||||||||||
| November 10, 2025 | 8,087 | — | — | |||||||||||||||||
| Total | 193,648 | 58,805 | 61,079 | |||||||||||||||||
| Weighted-average grant date fair value | $ | 135.42 | $ | 137.81 | $ | 51.46 | ||||||||||||||
| Weighted-average exercise price | — | — | $ | 137.81 | ||||||||||||||||
| Grant Date | RSUs | PSAs | Options | |||||||||||||||||
| March 19, 2024 | 272,855 | 103,584 | 135,783 | |||||||||||||||||
| June 4, 2024 | 1,538 | — | — | |||||||||||||||||
| September 4, 2024 | 15,024 | — | — | |||||||||||||||||
| Total | 289,417 | 103,584 | 135,783 | |||||||||||||||||
| Weighted-average grant date fair value | $ | 63.14 | $ | 61.15 | $ | 23.50 | ||||||||||||||
| Weighted-average exercise price | — | — | $ | 61.15 | ||||||||||||||||
The aggregate number of shares of common stock that may be issued to team members and directors under the 2022 Incentive Plan may not exceed 6,600,000, subject to the following adjustments. If any awards granted under the 2022 Incentive Plan, terminate, expire, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested or paid in shares, the shares will again be available for purposes of the 2022 Incentive Plan. In addition, the number of shares subject to outstanding awards under the Sprouts Farmers Market, Inc. 2013 Incentive Plan (the “2013 Incentive Plan”) that terminate, expire, are paid in cash, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested, or paid in shares under the 2013 Incentive Plan after the effective date of the 2022 Incentive Plan will be available for issuance under the 2022 Incentive Plan. As of December 28, 2025, there were 1,094,114 stock awards outstanding and 5,300,371 shares remaining available for issuance under the 2022 Incentive Plan.
2013 Incentive Plan
Prior to the adoption of the 2022 Incentive Plan, the 2013 Incentive Plan served as the umbrella plan for the Company’s share-based and cash-based incentive compensation programs for its directors, officers and other team members. Upon stockholder approval of the 2022 Incentive Plan on May 25, 2022, no further awards were granted under the 2013 Incentive Plan, but awards outstanding under the 2013 Incentive Plan will remain outstanding in accordance with their terms and the terms of the 2013 Incentive Plan.
The RSUs generally vest either one-third each year for three years or one-half each year for two years for team members. RSUs granted to independent members of the Company’s board of directors cliff vest in one year. The options expire seven years from grant date. The PSAs are described below.
Stock Options
Outstanding options only become immediately vested in the event of a change in control (as defined in the applicable team member award agreement) if the grants are not continued or assumed by the acquirer on a substantially equivalent basis. If the options and awards continue or are assumed on a substantially equivalent basis, but employment is terminated by the Company or an acquirer without cause or by the team member for good reason (as such terms are defined in the applicable team member award agreement) within 24 months following the change in control, such options or awards will become immediately vested upon such termination. Under all other scenarios, the awards continue to vest per the schedule outlined in the applicable award agreement.
Shares issued for option exercises are newly issued shares.
The estimated weighted average fair values of options granted during 2025, 2024 and 2023 were $51.46, $23.50 and $12.63, respectively, and were calculated using the following assumptions in the table below:
| 2025 | 2024 | 2023 | |||||||||||||||
| Dividend yield | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||
| Expected volatility | 37.60 | % | 38.41 | % | 39.48 | % | |||||||||||
| Risk free interest rate | 4.07 | % | 4.31 | % | 3.78 | % | |||||||||||
| Expected term, in years | 4.50 | 4.50 | 4.50 | ||||||||||||||
The grant date weighted average fair value of the 0.2 million options issued but not vested as of December 28, 2025 was $28.38. The grant date weighted average fair value of the 0.3 million options issued
but not vested as of December 29, 2024 was $16.90. The grant date weighted average fair value of the 0.4 million options issued but not vested as of December 31, 2023 was $10.84.
The following table summarizes grant date weighted average fair value of options granted and options forfeited:
| Year Ended | |||||||||||||||||
| December 28, 2025 | December 29, 2024 | December 31, 2023 | |||||||||||||||
| Grant date weighted average fair value of options granted | $ | 51.46 | $ | 23.50 | $ | 12.63 | |||||||||||
| Grant date weighted average fair value of options forfeited | $ | — | $ | 11.87 | $ | 10.98 | |||||||||||
Expected volatility for option grants and modifications are calculated based upon the Company’s historical volatility data over a time frame consistent with the expected life of the awards. The expected term is estimated based on the expected period that the options are anticipated to be outstanding after initial grant until exercise or expiration based upon various factors including the contractual terms of the awards and vesting schedules. The expected risk-free rate is based on the U.S. Treasury yield curve rates in effect at the time of the grant using the term most consistent with the expected life of the award. Dividend yield was estimated at zero as the Company does not anticipate making regular future distributions to stockholders. The total intrinsic value of options exercised was $10.9 million for fiscal 2025 and $12.2 million for each of fiscal 2024 and 2023.
The following table summarizes option activity during 2025:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding at December 29, 2024 | 763,786 | $ | 32.54 | ||||||||||||||||||||
| Granted | 61,079 | 137.81 | |||||||||||||||||||||
| Forfeited | — | — | |||||||||||||||||||||
| Exercised | (96,939) | 26.88 | $ | 10,869 | |||||||||||||||||||
| Outstanding at December 28, 2025 | 727,926 | 42.12 | 3.51 | $ | 30,835 | ||||||||||||||||||
| Exercisable—December 28, 2025 | 514,941 | 28.52 | 2.81 | $ | 26,301 | ||||||||||||||||||
| Vested/Expected to vest—December 28, 2025 | 727,926 | $ | 42.12 | 3.51 | $ | 30,835 | |||||||||||||||||
RSUs
Outstanding RSUs only become immediately vested in the event of a change in control (as defined in the applicable team member award agreement) if the awards are not continued or assumed by the acquirer on a substantially equivalent basis. If the awards continue or are assumed on a substantially equivalent basis, but employment is terminated by the Company or an acquirer without cause or by the team member for good reason (as such terms are defined in the applicable team member award agreement) within 24 months following the change in control, such awards will become immediately vested upon such termination. Under all other scenarios, the awards continue to vest per the schedule outlined in the applicable award agreement.
Shares issued for RSU vesting are newly issued shares.
The fair value for restricted stock units is calculated based on the closing stock price on the date of grant. The total grant date fair value of RSUs vested during 2025, 2024 and 2023 was $14.6 million, $15.2 million and $13.3 million, respectively.
The following table summarizes the weighted average grant date fair value of RSUs awarded during 2025, 2024 and 2023:
| Year Ended | |||||||||||||||||
| December 28, 2025 | December 29, 2024 | December 31, 2023 | |||||||||||||||
| RSUs awarded | $ | 135.42 | $ | 63.14 | $ | 33.21 | |||||||||||
The following table summarizes RSU activity during 2025:
| Number of RSUs | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding at December 29, 2024 | 610,415 | $ | 46.33 | ||||||||
| Awarded | 193,648 | 135.42 | |||||||||
| Vested | (346,813) | 42.06 | |||||||||
| Forfeited | (24,125) | 72.74 | |||||||||
| Outstanding at December 28, 2025 | 433,125 | $ | 88.11 | ||||||||
PSAs
PSAs granted in 2021 are subject to the Company achieving certain EBIT performance targets for the 2023 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. The performance conditions with respect to fiscal year 2023 EBIT were deemed not to have been met. Accordingly, no performance shares vested on the third anniversary of the grant date (March 2024). There were no outstanding 2021 PSAs as of December 28, 2025.
PSAs granted in 2022 are subject to the Company achieving certain EBIT performance targets for the 2024 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. The performance conditions with respect to fiscal year 2024 EBIT were deemed to have been met, and PSAs vested at 148% payout level on the third anniversary of the grant date (March 2025). During the year ended December 28, 2025, 182,560 of the 2022 PSAs vested. There were no outstanding 2022 PSAs as of December 28, 2025.
PSAs granted in 2023 are subject to the Company achieving certain EBIT performance targets for the 2025 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. Subsequent to December 28, 2025, the performance conditions with respect to fiscal year 2025 EBIT were deemed to have been met, and PSAs will vest at 200% payout level on the third anniversary of the grant date (March 2026).
PSAs granted in 2024 are subject to the Company achieving certain EBIT performance targets for the 2026 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2027).
PSAs granted in 2025 are subject to the Company achieving certain EBIT performance targets for the 2027 fiscal year. The criteria is based on a range of performance targets in which grantees may earn 0% to 200% of the base number of awards granted. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2028).
The PSAs only become immediately vested in the event of a change in control (as defined in the applicable team member award agreement) if the awards are not continued or assumed by the acquirer on a substantially equivalent basis. If the awards continue or are assumed on a substantially equivalent basis, but employment is terminated by the Company or an acquirer without cause or by the team member for good reason (as such terms are defined in the applicable team member award agreement) within 24 months following
the change in control, such awards will become immediately vested upon such termination. Under all other scenarios, the awards continue to vest per the schedule outlined in the applicable team member award agreement.
Shares issued for PSA vesting are newly issued shares.
The fair value for PSAs is calculated based on the closing stock price on the date of grant.
The total grant date fair value of PSAs granted during 2025 was $8.1 million. The total grant date fair value of PSAs vested during 2025 was $5.8 million. No PSAs were forfeited during 2025. The total grant date fair value of the 0.3 million PSAs issued but not released as of December 28, 2025 was $19.2 million.
The total grant date fair value of PSAs granted during 2024 was $6.3 million. No PSAs vested during 2024. The total grant date fair value of performance shares forfeited and not earned during 2024 was $4.2 million. The total grant date fair value of the 0.4 million PSAs issued but not released as of December 29, 2024 was $14.9 million.
The total grant date fair value of PSAs granted during 2023 was $5.7 million. The total grant date fair value of PSAs vested during 2023 was $4.5 million. The total grant date fair value of performance shares forfeited or not earned during 2023 was $1.1 million. The total grant date fair value of the 0.4 million PSAs issued but not released as of December 31, 2023 was $12.9 million.
The following table summarizes PSA activity during 2025:
| Number of PSAs | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding at December 29, 2024 | 370,278 | $ | 40.37 | ||||||||
| Awarded | 58,805 | 137.81 | |||||||||
| Vested | (182,560) | 31.54 | |||||||||
| Forfeited | — | — | |||||||||
| PSAs earned | 59,206 | 31.49 | |||||||||
| Outstanding at December 28, 2025 | 305,729 | $ | 62.67 | ||||||||
Share-Based Compensation Expense
The Company presents share-based compensation expense in Selling, general and administrative expenses on the Company’s consolidated statements of income. The amount recognized was as follows:
| Year Ended | |||||||||||||||||
| December 28, 2025 | December 29, 2024 | December 31, 2023 | |||||||||||||||
| Share-based compensation expense | $ | 31,103 | $ | 28,417 | $ | 18,898 | |||||||||||
| Income tax benefit | (3,581) | (3,647) | (3,007) | ||||||||||||||
| Net share-based compensation expense | $ | 27,522 | $ | 24,770 | $ | 15,891 | |||||||||||
As of December 28, 2025, total unrecognized compensation expense and remaining weighted average recognition period related to outstanding share-based awards were as follows:
| Unrecognized compensation expense | Remaining weighted average recognition period | ||||||||||
| Options | $ | 3,786 | 1.8 | ||||||||
| RSUs | 24,761 | 2.0 | |||||||||
| PSAs | 16,289 | 1.9 | |||||||||
| Total unrecognized compensation expense at December 28, 2025 | $ | 44,836 | |||||||||
During 2025, 2024 and 2023, the Company received $2.6 million, $4.9 million and $11.5 million in cash proceeds from the exercise of options, respectively.
The Company recorded tax benefits of $16.1 million, $7.0 million and $5.0 million during 2025, 2024 and 2023, respectively, resulting from share-based awards.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
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.