CRA INTERNATIONAL, INC.CRAI
CRA INTERNATIONAL, INC. Stock Compensation Disclosure
Share-Based Compensation
CRA recorded approximately $5.9 million, $5.3 million, and $4.4 million of compensation expense for fiscal 2025, fiscal 2024, and fiscal 2023, respectively, for share-based awards consisting of, shares of restricted stock, time-vesting restricted stock units, and performance-vesting restricted stock units issued to employees and directors, based on their respective estimated grant date fair values. Performance-vesting restricted stock units are expensed using the graded attribution method.
Share-based Compensation Plans. As of January 3, 2026, CRA's active equity-based compensation plans consist of its 2006 Equity Plan, and its 1998 Employee Stock Purchase Plan (the "1998 ESPP"), a tax-qualified plan under Section 423 of the Internal Revenue Code. CRA has a long-term incentive program, or "LTIP," which is used as a framework for grants made under the 2006 Equity Plan to its senior corporate leaders, practice leaders and key revenue generators. Under the LTIP, participants have received a mixture of stock options, time-vesting restricted stock units, and performance-vesting restricted stock units. The LTIP is designed to reward CRA's senior corporate leaders, practice leaders and key revenue generators and provide them with the opportunity to share in the long-term growth of CRA.
2006 Equity Plan: Maximum and Available Shares. The 2006 Equity Plan authorizes the grant of a variety of incentive and performance awards to CRA's directors, employees and non-employee experts, including stock options, shares of restricted stock, restricted stock units, and other equity awards. The shares available for grant under the 2006 Equity Plan as of January 3, 2026 was 548,322.
Stock Options. A summary of option activity during fiscal 2025 from the 2006 Equity Plan is as follows:
| Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Outstanding at December 28, 2024 | 45,200 | $ | 46.15 | $ | 6,359 | ||||||||||||||||||
| Fiscal 2025: | |||||||||||||||||||||||
| Granted | — | $ | — | ||||||||||||||||||||
| Exercised | — | $ | — | $ | — | ||||||||||||||||||
| Expired | — | $ | — | ||||||||||||||||||||
| Forfeited | — | $ | — | $ | — | ||||||||||||||||||
| Outstanding at January 3, 2026 | 45,200 | $ | 46.15 | 2.44 | $ | 6,977 | |||||||||||||||||
| Option exercisable at January 3, 2026 | 45,200 | $ | 46.15 | 2.44 | $ | 6,977 | |||||||||||||||||
| Vested or expected to vest at January 3, 2026 | 45,200 | $ | 46.15 | 2.44 | $ | 6,977 | |||||||||||||||||
There were no stock options granted in fiscal 2025, fiscal 2024, and fiscal 2023. CRA determines the weighted average fair market value for stock options granted using the Black-Scholes option-pricing model. Generally, the risk-free interest rate is based on U.S. Treasury interest rates with corresponding terms consistent with the expected life of the stock options. Expected volatility and expected life are based on CRA's historical experience. Expected dividend yield is determined based on CRA's annualized dividend rate per share, as a percentage of average market price of the common stock, on each dividend payment date. The forfeiture rate is based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures.
No stock options were exercised in fiscal 2025 and fiscal 2024. The aggregate intrinsic value of stock options exercised in fiscal 2023 was approximately $1.5 million.
There were no stock options that vested during fiscal 2025, fiscal 2024, and fiscal 2023. As of January 3, 2026, there was no unrecognized compensation cost, net of expected forfeitures, related to non-vested stock options granted. Options granted during or prior to fiscal 2016 expire on the seventh anniversary of the date of grant. Options granted during or after fiscal 2017 expire on the tenth anniversary of the date of grant.
Restricted Stock. CRA grants shares of restricted stock, which are subject to the execution of a restricted stock agreement, under its 2006 Equity Incentive Plan. Generally, shares of restricted stock vest in four equal annual installments beginning on the first anniversary of the date of grant. Total unrecognized compensation cost, net of expected forfeitures, related to shares of restricted stock as of January 3, 2026 was $1.7 million, which is expected to be recognized over a weighted-average period of 2.7 years. The forfeiture rate of 0.9% used for shares of restricted stock was based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures.
The following table provides a roll-forward of the shares of restricted stock under the 2006 Equity Incentive Plan over fiscal 2025:
| Shares of Restricted Stock | |||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Non-vested at December 28, 2024 | 17,909 | $ | 119.30 | ||||||||
| Granted | 4,872 | $ | 179.51 | ||||||||
| Vested | (7,926) | $ | 107.56 | ||||||||
| Forfeited | — | $ | — | ||||||||
| Non-vested at January 3, 2026 | 14,855 | $ | 145.31 | ||||||||
The total fair value of shares of restricted stock that vested during fiscal 2025, fiscal 2024, and fiscal 2023 was $0.9 million, $0.8 million, and $0.7 million, respectively.
Time-Vesting RSUs. CRA grants time-vesting restricted stock units, which are subject to the execution of a restricted stock unit agreement, under its 2006 Equity Incentive Plan. Generally, time-vesting restricted stock units vest in four or five equal annual installments beginning on the first anniversary of the date of grant. Total unrecognized compensation cost, net of expected forfeitures, related to time-vesting restricted stock units as of January 3, 2026 was $2.1 million, which is expected to be recognized over a weighted-average period of 2.5 years. The forfeiture rate of 3.2% used for time-vesting restricted stock units was based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures.
The following table provides a roll-forward of the time-vesting restricted stock units under the 2006 Equity Incentive Plan over fiscal 2025:
| Time-Vesting Restricted Stock Units | |||||||||||
| Number of Units | Weighted-Average Grant Date Fair Value | ||||||||||
| Non-vested at December 28, 2024 | 48,392 | $ | 102.97 | ||||||||
| Granted | 11,074 | $ | 187.86 | ||||||||
| Vested | (19,456) | $ | 88.66 | ||||||||
| Forfeited | (3,681) | $ | 137.61 | ||||||||
| Non-vested at January 3, 2026 | 36,329 | $ | 133.01 | ||||||||
The total fair value of time-vesting restricted stock units that vested during fiscal 2025, fiscal 2024, and fiscal 2023 was $1.7 million, $1.8 million, and $1.6 million, respectively.
Performance-Vesting RSUs. CRA grants performance-vesting restricted stock units ("PRSUs"), which are subject to the execution of a restricted stock unit agreement, under its 2006 Equity Incentive Plan. Generally, achievement of performance measures for PRSUs are based on a two-year performance period, after which the units determined based on this achievement will vest three-fourths in the first year following the performance period and one-fourth on the fourth anniversary of the date of grant. Beginning with the 2023 grant, fifty percent will vest in the first year following the performance period and one-fourth on the fourth and fifth anniversaries of the date of the grant. Performance periods and vesting schedules may vary based on the terms of individuals grants. The number of units determined based on the achievement of a PRSUs performance measures generally ranges from 50% to 150% of the PRSUs' target number of units, though achievement ranges may vary by grant.
For PRSUs awarded to employees, CRA estimates share-based compensation cost at the grant date based on the fair value of the award and recognizes the cost over the requisite service period using the graded attribution method.
The following table provides a roll-forward of the performance-vesting restricted stock units under the 2006 Equity Incentive Plan over fiscal 2025. For purposes of this table, granted PRSUs are counted based on the maximum number of units that could vest upon achievement of the PRSUs' performance conditions which equaled 150% of the PRSU's target number of units beginning with 2022 grants and 125% of the PRSUs' target number of units for all grants issued prior to 2022.
| Performance-Vesting Restricted Stock Units | |||||||||||
| Number of Units | Weighted-Average Grant Date Fair Value | ||||||||||
| Non-vested at December 28, 2024 | 68,548 | $ | 118.95 | ||||||||
| Granted | 17,069 | $ | 188.52 | ||||||||
| Vested | (19,560) | $ | 89.56 | ||||||||
| Forfeited | (9,277) | $ | 115.91 | ||||||||
| Non-vested at January 3, 2026 | 56,780 | $ | 150.48 | ||||||||
1998 ESPP. In fiscal 1998, CRA adopted the 1998 ESPP, a tax-qualified plan under Section 423 of the Internal Revenue Code. The 1998 ESPP authorizes the issuance of up to an aggregate of 243,000 shares of common stock to participating employees at a purchase price equal to 85% of fair market value on either the first or the last day of the one-year offering period under the plan. In fiscal 2025, fiscal 2024, and fiscal 2023, there were no offering periods under this plan and no shares were issued. As of January 3, 2026, there were 211,777 shares available for grant under the 1998 ESPP.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.