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).

During the twenty-six weeks ended July 3, 2022, the Company granted the following share-based compensation awards under the 2022 Incentive Plan:


Grant Date	RSUs		PSAs		Options
June 7, 2022		58,057		—		—
Total		58,057		—		—
Weighted-average grant date fair value	$	27.01	$	—	$	—
Weighted-average exercise price		—		—		—

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 July 3, 2022, there were 58,057 stock awards outstanding and 6,621,093 shares remaining available for issuance under the 2022 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 adoption 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.

During the twenty-six weeks ended July 3, 2022, the Company granted the following share-based compensation awards under the 2013 Incentive Plan:


Grant Date	RSUs		PSAs		Options
March 15, 2022		370,177		147,846		211,352
March 21, 2022		104,913		14,260		20,270
Total		475,090		162,106		231,622
Weighted-average grant date fair value	$	31.60	$	31.52	$	10.58
Weighted-average exercise price		—		—	$	31.52

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.

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 granted in 2018 were subject to the Company achieving certain earnings before interest and taxes (“EBIT”) performance targets for the 2020 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 2020 EBIT were deemed to have been met, and the PSAs vested at the maximum pay out level on the third anniversary of the grant date (March 2021). There were no outstanding 2018 PSAs as of July 3, 2022.

PSAs granted in 2019 are subject to the Company achieving certain EBIT performance targets for the 2021 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 2021 EBIT were deemed to have been met, and the PSAs vested at the maximum pay out level on the third anniversary of the grant date (March 2022). During the twenty-six weeks ended July 3, 2022, 208,172 of the 2019 PSAs vested. There were no outstanding 2019 PSAs as of July 3, 2022.

PSAs granted in 2020 are subject to the Company achieving certain earnings before taxes (“EBT”) performance targets for the 2022 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 2023).

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. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2024).

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. If performance conditions are met, the applicable number of performance shares will vest on the third anniversary of the grant date (March 2025).

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				Twenty-six weeks ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Share-based compensation expense	$	3,464	$	4,238	$	7,920	$	7,851

The following share-based awards were outstanding as of July 3, 2022 and July 4, 2021:


	As of
	July 3, 2022		July 4, 2021
	(in thousands)
Options
Vested		370		281
Unvested		1,053		1,273
RSUs		993		840
PSAs		460		471

As of July 3, 2022, total unrecognized compensation expense and remaining weighted average recognition period related to outstanding share-based awards was as follows:


	Unrecognized compensation expense		Remaining weighted average recognition period
Options	$	4,548		1.3
RSUs		22,084		1.9
PSAs		5,601		1.7
Total unrecognized compensation expense at July 3, 2022	$	32,233

During the twenty-six weeks ended July 3, 2022 and July 4, 2021, the Company received $2.7 million and $1.2 million, respectively, in cash proceeds from the exercise of options.