CORVEL CORP Stock Compensation Disclosure

Note 3 — Stock Options and Stock-Based Compensation

Under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (“the Plan”) as in effect at March 31, 2025, options exercisable for up to 61,845,000 shares of the Company’s common stock may be granted over the life of the Plan to key employees, non-employee directors, and consultants at exercise prices not less than the fair market value of the common stock on the date of grant. Options granted under the Plan are non-statutory stock options and generally vest 25% one year from the date of grant, with the remaining 75% vesting ratably each month for the next 36 months. The options granted to employees and the Company’s Board of Directors expire at the end of five years and ten years from date of grant, respectively. All options granted in fiscal 2025 and 2024 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date.

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses historical data, among other factors, to estimate the expected volatility, the expected dividend yield, and the expected option life. The Company accounts for forfeitures as they occur, rather than estimate expected forfeitures. The risk-free rate is based on the interest rate paid on a U.S. Treasury issue with a term similar to the estimated life of the option.

The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were used for the fiscal years ended March 31, 2025, 2024 and 2023:

For the fiscal years ended March 31, 2025, 2024 and 2023, the Company recorded share-based compensation expense of $5,714,000, $4,982,000, and $5,559,000, respectively. The table below shows the amounts recognized in the financial statements for the fiscal years ended March 31, 2025, 2024 and 2023.

The weighted average fair value of options granted during fiscal 2025, 2024 and 2023 was $33.64, $25.16, and $18.78, respectively. The total intrinsic value of options exercised during fiscal years 2025, 2024 and 2023 was $24,182,000, $29,230,000, and $21,094,000 respectively.

Included in the above-noted stock option grants and stock compensation expense are performance-based stock options which vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors. These options were valued in the same manner as the time-based options. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options. During the fiscal years ended March 31, 2025, 2024 and 2023, the Company recognized stock compensation expense for performance-based options in the amount of $1,715,000, $1,199,000, and $1,961,000, respectively.

The Company received $10,317,000, $9,266,000, and $10,856,000 of cash receipts from the exercise of stock options during fiscal 2025, 2024 and 2023, respectively. As of March 31, 2025, $6,765,000 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted average period of 3 years.