Note 21. Share-Based Compensation

On May 24, 2022, the board of directors of Legato Merger Corp. II, a Delaware corporation, adopted Southland Holdings, Inc. 2022 Equity Incentive Plan (“2022 Plan”). A total of 2,220,392 shares of our Common Stock were reserved for issuance under the 2022 Plan of which 927,444 remained available as of December 31, 2025.

Restricted Stock Units (“RSUs”): RSUs are issued for compensatory purposes. RSU stock compensation cost is measured at our Common Stock’s fair value based on the market price at the date of grant. We recognize stock compensation cost only for RSUs that we estimate will ultimately vest. We estimate the number of shares that will ultimately vest at each grant date based on our historical experience and adjust stock compensation cost based on changes in those estimates over time.

A summary of the changes in our RSUs during the years ended December 31, 2025, December 31, 2024, and December 31, 2023, were as follows (shares in thousands):

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Compensation cost related to RSUs was $1.2 million, $2.0 million and $0.9 million for the years ended December 31, 2025, 2024 and 2023, respectively, which is included in selling, general and administrative expenses on the consolidated statements of operations.

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Performance Stock Units (“PSUs”): PSUs provide for the issuance of shares upon vesting, which occurs following

the end of the performance period based on achievement of certain metrics as established by the Board of Directors. The Company recognizes expense for PSUs based on the forecasted achievement of Company performance metrics, multiplied by the fair value of the total number of shares of common stock that the Company anticipates will be issued based on such achievement. For the years ended December 31, 2024 and 2025, we did not achieve the performance target criteria for 101,626 PSUs, respectively.  As such, these shares were returned to the 2022 Plan.

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A summary of the changes in our PSUs during the years ended December 31, 2025 and 2024, is as follows:

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For the years ended December 31, 2025, 2024 and 2023, there was no compensation cost related to PSUs.

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As of December 31, 2025, there was $3.1 million of unrecognized compensation cost which will be recognized over a remaining weighted-average period of 1.1 years.