Share-Based Compensation

9 Months Ended

Sep. 27, 2026

Share-Based Payment Arrangement [Abstract]

2022 Incentive Plan

In March 2022, the Board 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 Board 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 defined below).

Awards Granted under the 2022 Incentive Plan

During the thirty-nine weeks ended September 27, 2026, the Company granted the following share-based compensation awards under the 2022 Incentive Plan:


Grant Date	RSUs		PSAs		Options
March 12, 2026	335,408		119,012		112,765
April 30, 2026	7,395		2,125		2,798
June 4, 2026	9,469		—		—
August 5, 2026	1,267		—		—
August 28, 2026	5,078		—		—
September 10, 2026	11,791		874		1,206
Total	370,408		122,011		116,769
Weighted average grant date fair value	$	78.78	$	78.84	$	30.32
Weighted average exercise price	$	—	$	—	$	78.84

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. 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 September 27, 2026, there were 1,058,845 stock awards outstanding and 4,710,754 shares of common stock 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 will be 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.

Stock Options

The Company uses the Black-Scholes option pricing model to estimate the fair value of options at grant date. Options vest in accordance with the terms set forth in the grant letter.

Time-based options vest annually over a period of three years.

RSUs

The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. RSUs generally vest annually over a period of two or three years from the grant date.

PSAs

Our PSAs are awarded subject to the Company achieving certain earnings before interest and taxes (“EBIT”) performance targets for the fiscal year two years subsequent to the year of issuance. In accordance with ASC 718 Compensation-Stock Compensation, the Company evaluates the probability of achieving the EBIT performance targets (and increments of the range thereof) at issuance and at each subsequent reporting period, based on the Company’s then-current forecast of EBIT for the relevant performance year, and the

cumulative expense is recorded over the three-year service period according to the amount expected to be realized.

PSAs granted in 2023 are subject to the Company achieving certain EBIT performance targets for the 2025 fiscal year. The criteria was 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 2025 EBIT were deemed to have been met, and the PSAs vested at the maximum payout level on the third anniversary of the grant date (March 2026). There were no outstanding 2023 PSAs as of September 27, 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).

PSAs granted in 2026 are subject to the Company achieving certain EBIT performance targets for the 2028 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 2029).

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:


	Thirteen weeks ended				Thirty-nine weeks ended
	September 27, 2026		September 28, 2025		September 27, 2026		September 28, 2025
Share-based compensation expense	$	3,798	$	7,642	$	19,465	$	22,045

The following share-based awards were outstanding under the 2022 Incentive Plan and the 2013 Incentive Plan as of September 27, 2026 and September 28, 2025:


	As of
	September 27, 2026	September 28, 2025

	(in thousands)
Options
Vested	532	544
Unvested	194	213
RSUs	518	430
PSAs	260	306

As of September 27, 2026, 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	$	4,749	2.0
RSUs	34,592		2.1
PSAs	10,855		2.0
Total unrecognized compensation expense at September 27, 2026	$	50,196

During the thirty-nine weeks ended September 27, 2026 and September 28, 2025, the Company received $2.3 million and $1.7 million, respectively, in cash proceeds from the exercise of options.