Share-based Awards

3 Months Ended

Apr. 04, 2026

Share-Based Payment Arrangement [Abstract]

For a discussion of our share-based incentive plans, refer to Note 8 to the consolidated financial statements in our 2025 Form 10-K.

Share-based Award Activity

During the first quarter of fiscal 2026, we granted market-based restricted stock units ("MSUs"), which vest in a single installment following a three-year performance period subject to continued service and the achievement of specified stock price targets based on the Company's common stock during the final 30 consecutive trading days of the performance period. In addition, we granted time-based restricted stock units ("RSUs") during the first quarter of fiscal 2026 with vesting periods ranging from one to three years.

The grant-date fair value of MSUs is estimated using a Monte Carlo simulation model. The significant assumptions used in the valuation model are as follows:

•Expected term — Represents the period from the grant date to the end of the three-year performance period.

•Expected volatility — Based on the historical volatility of our common stock over a period commensurate with the expected term of the award.

•Risk-free interest rate — Based on the U.S. Treasury yield curve in effect at the grant date, with maturities approximating the expected term of the award.

•Dividend yield — Assumed to be zero, as we have not historically paid, and do not expect to pay, cash dividends on our common stock.

The grant date fair value of MSUs awarded during the 13 weeks ended April 4, 2026 was estimated using the Monte Carlo valuation model with the following weighted-average assumptions:


	13 Weeks Ended
	April 4, 2026

Expected volatility	55.9		%
Risk-free interest rate	3.7		%
Dividend yield	—		%
Expected term (in years)	2.80
Grant date fair value (per share unit)	$	4.18

The following table summarizes stock option activity under all equity incentive plans during the first quarter of fiscal 2026 (amounts in thousands, except option, per option and term data):



	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Time-Based Stock Options
Options outstanding as of January 3, 2026	1,716,759	$	14.79
Granted	—	—
Exercised	—	—
Forfeited	(117,431)	13.90
Options outstanding as of April 4, 2026	1,599,328	$	14.86	6.1 years	$	—
Options vested and expected to vest as of April 4, 2026	1,599,328	$	14.86	6.1 years	$	—
Options exercisable as of April 4, 2026	920,127	$	16.71	4.0 years	$	—
Market-Based and Performance-Based Stock Options
Options outstanding as of January 3, 2026	240,396	$	11.86
Granted	—	—
Exercised	—	—
Forfeited	—	—
Options outstanding as of April 4, 2026	240,396	$	11.86	6.6 years	$	13
Options vested and expected to vest as of April 4, 2026	240,396	$	11.86	6.6 years	$	13
Options exercisable as of April 4, 2026	73,729	$	11.85	1.3 years	$	13

The following table summarizes RSU activity under all equity incentive plans during the first quarter of fiscal 2026:


	Number of Shares	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Term
Unvested balance as of January 3, 2026	1,521,255	$	15.20
Granted	2,008,630	6.08
Vested	(632,057)	16.19
Forfeited	(66,061)	15.59
Unvested balance as of April 4, 2026	2,831,767	$	8.50	2.3 years

RSUs that vested during the first quarter of fiscal 2026 had grant date fair values totaling $10.0 million.

The following table summarizes MSU and performance-based restricted stock unit ("PSU") activity under the Grocery Outlet Holding Corp. 2019 Incentive Plan during the first quarter of fiscal 2026:


	Number of Shares	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Term
Unvested balance as of January 3, 2026	151,400	$	27.29
Granted (1)	1,387,941	4.18
Adjustment for expected performance achievement (2)	111	—
Vested	(151,135)	27.29
Forfeited	(376)	27.29
Unvested balance as of April 4, 2026 (3)	1,387,941	$	4.18	1.7 years

_______________________

(1)Represents initial grant based on performance target level achievement of 100%.

(2)Represents the year-to-date adjustment to previously granted awards based on performance expectations as of April 4, 2026.

(3)Up to an additional 3,418,163 MSUs and PSUs could potentially be included if the actual performance level achieved exceeds the current expected performance level (with 200% being the maximum performance level achievement).

PSUs vested during the first quarter of fiscal 2026 had grant date fair values totaling $4.1 million. No MSUs vested during the first quarter of fiscal 2026.

Share-based Compensation Expense

We recognize compensation expense for share-based awards by amortizing the grant date fair value on a straight-line basis over the expected vesting period to the extent we determine the achievement of the grant's service and/or performance vesting requirements is probable. We recognize share-based award forfeitures in the period such forfeitures occur.

Share-based compensation expense consisted of the following (amounts in thousands):


	13 Weeks Ended
	April 4, 2026		March 29, 2025
Time-based and market-based stock options	$	776	$	211

RSUs	2,856		2,923
MSUs and PSUs	123		2,324

Share-based compensation expense	$	3,755	$	5,458