STOCK-BASED COMPENSATION

3 Months Ended

Mar. 28, 2026

Share-Based Payment Arrangement [Abstract]

12. STOCK-BASED COMPENSATION

On April 12, 2021, the Company’s stockholders approved the Latham Group, Inc. 2021 Omnibus Equity Incentive Plan (the “2021 Omnibus Equity Plan”), which became effective on April 22, 2021, and was further amended on May 2, 2023 to, among other things, increase the maximum aggregate number of shares reserved for issuance under the 2021 Omnibus Equity Plan to 21,170,212 shares. The 2021 Omnibus Equity Plan provides for the issuance of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock units and other stock-based and cash-based awards.

The following table summarizes the Company’s stock-based compensation expense (in thousands):


	Fiscal Quarter Ended
	March 28, 2026		March 29, 2025
Selling, general, and administrative	$	1,104	$	1,971

As of March 28, 2026, total unrecognized stock-based compensation expense related to all unvested stock-based awards was $14.1 million, which is expected to be recognized over a weighted-average period of 1.8 years.

Restricted Stock Units

The following table represents the Company’s restricted stock units activity during the fiscal quarter ended March 28, 2026:


	Shares	Weighted- Average Grant- Date Fair Value
Outstanding at January 1, 2026	3,335,594	$	4.22
Granted	737,053	6.30
Vested	(1,005,086)	4.34
Forfeited	(279,273)	4.18
Outstanding at March 28, 2026	2,788,288	$	4.74

Stock Options

The following table represents the Company’s stock options activity during the fiscal quarter ended March 28, 2026:


	Shares	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contract Term	Aggregate Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2026	1,150,712	$	14.84
Granted	—	—
Exercised	—	—
Forfeited	—	—
Expired	—	—
Outstanding at March 28, 2026	1,150,712	$	14.84	4.34	$	9
Vested and expected to vest at March 28, 2026	1,150,712	$	14.84	4.34	$	9
Options exercisable at March 28, 2026	1,091,290	$	15.28	4.24	$	7

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

Stock Appreciation Rights

The following table represents the Company’s stock appreciation rights activity during the fiscal quarter ended March 28, 2026:


	Shares	Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contract Term	Aggregate Intrinsic Value
				(in years)	(in thousands)
Outstanding at January 1, 2026	514,503	$	3.12
Granted	907,591	6.44
Exercised	—	—
Forfeited	—	—
Outstanding at March 28, 2026	1,422,094	$	5.24	7.89	$	1,115
Vested and expected to vest at March 28, 2026	1,422,094	$	5.24	7.89	$	1,115
Stock appreciation rights exercisable at March 28, 2026	359,679	$	3.16	4.46	$	768

The aggregate intrinsic value of stock appreciation rights is calculated as the difference between the strike price of the stock appreciation rights and the fair value of the Company’s common stock for those stock appreciation rights that had strike prices lower than the fair value of the Company’s common stock.

Performance Stock Units

During the year ended December 31, 2025, the Compensation Committee of the Board approved the grant of performance stock units (“PSUs”) as a portion of the annual equity award to the Company’s senior management. The 2025 PSU program includes three equal tranches of grants. Each tranche has an annual performance period, with performance goals established for the first tranche of PSUs granted in 2025 in dollars, and second and third tranches of PSUs granted or to be granted in 2026 and 2027, respectively, as a percentage of growth from actual performance in the prior year. Any earned PSUs cliff vest on the third anniversary of the grant date for the first tranche. Thirty-three percent of the target number of PSUs awarded on each grant date will be earned at 0% to 200% of the target number of PSUs based on the Company’s achievement of the applicable Adjusted EBITDA performance goal (with 100% of PSUs being earned at target performance, and linear interpolation between threshold and target and maximum performance) as defined in the award agreement, for each year of the three-year performance period beginning on January 1, 2025 and ending December 31, 2027. The first and second tranches of PSUs under the 2025 PSU program were granted in March 2025 and 2026, respectively.

During the quarter ended March 28, 2026, an additional round of PSU grants were approved. The 2026 PSU program includes three equal tranches of grants. Each tranche has an annual performance period, with performance goals established for the first tranche of PSUs granted in 2026 in dollars, and second and third tranches of PSUs to be granted in 2027 and 2028 as a percentage of growth from actual performance in the prior year. Any earned PSUs cliff vest on the third anniversary of the grant date for the first tranche. Thirty-three percent of the target number of PSUs awarded on each grant date will be earned at 0% to 200% of the target number of PSUs based on the Company’s achievement of the applicable Adjusted EBITDA performance goal (with 100% of PSUs being earned at target performance, and linear interpolation between threshold and target and maximum performance) as defined in the award agreement, for each year of the three-year performance period beginning on January 1, 2026 and ending December 31, 2028. The first tranche of PSUs under the 2026 PSU program were granted in March 2026.

Adjusted EBITDA is considered a performance condition and the grant date fair value corresponds with management’s expectation of the probable outcome of the performance condition as of the grant date. The grant date fair value was determined based on the fair market value of the Company’s stock at market close on the grant date multiplied by the target number of shares subject to the award and adjusted for management’s expectation of the probable outcome of the performance condition. The probability of achieving the performance criteria is assessed quarterly during the performance period. Compensation expense related to unvested PSUs is recognized ratably over the performance period.

The following table represents the Company’s PSU activity during the fiscal quarter ended March 28, 2026:


	Shares	Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2026	941,803	$	5.23
Granted	314,026	6.30
Adjustment for performance achievement (1)	—	—
Forfeited	(99,397)	7.20
Outstanding at March 28, 2026 ⁽²⁾	1,156,432	$	5.35

(1)Represents the adjustment to previously granted PSUs based on the Company’s performance expectations as of the end of each respective fiscal year.

(2)An additional 409,883 PSUs could potentially be included if the maximum performance level of 200% is earned for all PSUs granted on or after January 1, 2025 and outstanding as of March 28, 2026.