KBR, INC.KBR
KBR, INC. Stock Compensation Disclosure
Share-based Compensation and Incentive Plans
KBR Stock Plan
In November 2006, KBR established the KBR Stock Plan, which provides for the grant of any or all of the following types of share-based compensation listed below:
•stock options, including incentive stock options and nonqualified stock options;
•stock appreciation rights, in tandem with stock options or freestanding;
•restricted stock;
•restricted stock units;
•cash performance awards; and
•stock value equivalent awards.
In May 2012, the KBR Stock Plan was amended to add 2 million shares of our common stock available for issuance under the KBR Stock Plan and increase certain sub-limits and in May 2016, the KBR Stock Plan was further amended to add 4.4 million shares of our common stock available for issuance under the KBR Stock Plan.
In May 2021, the KBR Stock Plan was amended to add 7.0 million shares of our common stock available for issuance under the KBR Stock Plan. Additionally, this amendment increased the sublimit under the Stock Plan in the form of restricted stock awards, restricted stock unit awards, stock value equivalent awards or pursuant to performance awards denominated in common stock by 7.0 million. Under the terms of the KBR Stock Plan, 23.4 million shares of common stock have been reserved for issuance to employees and non-employee directors. The plan specifies that no more than 16.9 million shares can be awarded as restricted stock, restricted stock units, stock value equivalents or pursuant to performance awards denominated in common stock.
At January 2, 2026, approximately 9.9 million shares were available for future grants under the KBR Stock Plan, of which approximately 6.5 million shares remained available for restricted stock awards or restricted stock unit awards.
KBR Stock Options
Under the KBR Stock Plan, stock options are granted with an exercise price not less than the fair market value of the common stock on the date of the grant and a term no greater than 10 years. The fair value of options at the date of grant were estimated using the Black-Scholes-Merton option pricing model. The expected volatility of KBR options granted in each year is based upon a blended rate that uses the historical and implied volatility of common stock for KBR. The expected term of KBR options granted was based on KBR's historical experience. The estimated dividend yield was based upon KBR’s annualized dividend rate divided by the market price of KBR’s stock on the option grant date. The risk-free interest rate was based upon the yield of U.S. government issued treasury bills or notes on the option grant date. We amortize the fair value of the stock options over the vesting period on a straight-line basis. Options are granted from shares authorized by our Board of Directors. There were no stock options granted in fiscal 2025, fiscal 2024 or fiscal 2023.
As of January 2, 2026, there were no options outstanding and exercisable. During fiscal 2025, 28,298 options were exercised with a weighted average exercise price of $16.05. As of January 2, 2026, there was no unrecognized compensation cost, net of estimated forfeitures, related to non-vested KBR stock options. There was no stock option compensation expense in fiscal 2025, fiscal 2024 and fiscal 2023.
KBR Restricted stock
Restricted shares issued under the KBR Stock Plan are restricted as to sale or disposition. These restrictions lapse periodically over a period of time not exceeding 10 years. Restrictions may also lapse for early retirement and other conditions in accordance with our established policies. Upon termination of employment, shares on which restrictions have not lapsed must be returned to us, resulting in restricted stock forfeitures. The fair market value of the stock on the date of grant is amortized and ratably charged to income over the period during which the restrictions lapse on a straight-line basis.
The following table presents the restricted stock awards and restricted stock units granted, vested and forfeited during fiscal 2025 under the KBR Stock Plan.
| Restricted stock activity summary | Number of Shares | Weighted Average Grant-Date Fair Value per Share | |||||||||
| Nonvested shares at January 3, 2025 | 527,729 | $ | 54.46 | ||||||||
| Granted | 528,046 | 47.65 | |||||||||
| Vested | (275,948) | 50.19 | |||||||||
| Forfeited | (68,147) | 53.14 | |||||||||
| Nonvested shares at January 2, 2026 | 711,680 | $ | 51.29 | ||||||||
The weighted average grant-date fair value per share of restricted KBR shares granted to employees during fiscal 2025, 2024 and 2023 was $47.65, $59.78 and $56.09, respectively. Restricted stock compensation expense was $16 million in fiscal 2025 and $15 million in each of fiscal 2024 and 2023. Total income tax benefit recognized in net income for share-based compensation arrangements during each of fiscal 2025, 2024 and 2023 was $3 million. As of January 2, 2026, there was $23 million of unrecognized compensation cost, net of estimated forfeitures, related to KBR’s non-vested restricted stock and restricted stock units, which is expected to be recognized over a weighted average period of 1.72 years. The total fair value of restricted shares vested was $13 million in fiscal 2025, $23 million in fiscal 2024 and $21 million in fiscal 2023 based on the weighted-average fair value on the vesting date. The total fair value of shares vested was $14 million in fiscal 2025, $16 million in fiscal 2024 and $14 million in fiscal 2023 based on the weighted-average fair value on the date of grant.
Performance-Based Stock Awards
Under the KBR Stock Plan, a portion of the Long-term Performance Cash and Stock Awards is settled in KBR shares. These awards vest and shares are issued at the end of a three-year period. The ultimate number of shares issued could range from 0% to 200% of the original shares granted depending upon KBR's performance in relation to the Total Shareholder Return ("TSR") performance objective. Stock compensation expense for these awards was $5 million in fiscal 2025 and $6 million in each of fiscal 2024 and fiscal 2023, respectively. In fiscal 2025, 118,273 shares vested related to our performance-based stock awards. As of January 2, 2026, there was $5 million of unrecognized compensation cost related to KBR's non-vested performance-based stock awards.
KBR Cash Performance Based Award Units ("Cash Performance Awards")
Under the KBR Stock Plan, for Cash Performance Awards granted in fiscal 2025, 2024 and 2023, performance is based 50% on average TSR, as compared to the average TSR of KBR’s peers, and 50% on KBR’s Book-to-Bill for fiscal 2025, 2024 and 2023. In accordance with the provisions of ASC 718, the TSR portion for the performance award units are classified as liability awards and remeasured at the end of each reporting period at fair value until settlement. The fair value approach uses the Monte Carlo valuation method which analyzes the companies comprising KBR’s peer group, considering volatility, interest rate, stock beta and TSR through the grant date. The Book-to-Bill calculation for fiscal 2025, 2024 and 2023 is based on the Company's Book-to-Bill earned at a target level averaged over a three year period. The Book-to-Bill portion of the Cash
Performance Award is also classified as a liability award and remeasured at the end of each reporting period based on our estimate of the amount to be paid at the end of the vesting period. The cash performance award units may only be paid in cash.
Under the KBR Stock Plan, in fiscal 2025, we granted 20 million performance based award units ("Cash Performance Awards") with a three-year performance period from January 1, 2025 to December 31, 2027. In fiscal 2024, we granted 20 million Cash Performance Awards with a three-year performance period from January 1, 2024 to December 31, 2026. In fiscal 2023, we granted 19 million Cash Performance Awards with a three-year performance period from January 1, 2023 to December 31, 2025. Cash Performance Awards forfeited, net of previous plan payout, totaled 7 million units, 7 million units and 5 million units during fiscal 2025, fiscal 2024 and fiscal 2023, respectively. At January 2, 2026, the outstanding balance for Cash Performance Awards is 45 million units. Cash Performance Awards are not considered earned until required performance conditions are met. Additionally, approval by the Compensation Committee of the Board of Directors is required before earned Cash Performance Awards are paid.
Cost for the Cash Performance Awards is accrued over the requisite service period. For fiscal 2025, fiscal 2024 and fiscal 2023, we recognized $9 million, $16 million and $21 million, respectively, in expense for Cash Performance Awards. The expense associated with these Cash Performance Awards is included in cost of revenues and selling, general and administrative expense in our consolidated statements of operations. The liability for Cash Performance Awards includes $12 million recorded within accrued salaries, wages and benefits and $11 million recorded within employee compensation and benefits on our consolidated balance sheets as of January 2, 2026. The liability for Cash Performance Awards includes $17 million recorded within accrued salaries, wages and benefits and $16 million recorded within employee compensation and benefits on our consolidated balance sheets as of January 3, 2025.
KBR Employee Stock Purchase Plan ("ESPP")
Under the ESPP, eligible employees may withhold up to 10% of their earnings, subject to some limitations, to purchase shares of KBR’s common stock. Unless KBR’s Board of Directors determines otherwise, each six-month offering period commences at the beginning of February and August of each year. In fiscal 2025, employees who participated in the ESPP received a 7% discount on the stock price at the end of each period. During fiscal 2025 and fiscal 2024, our employees purchased approximately 246,000 and 156,000 shares, respectively, through the ESPP. These shares were issued from our treasury share account. Effective February 1, 2026, we suspended new share purchases under the ESPP in connection with the Planned Spin‑Off of our Mission Technology Solutions business.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Feb 26, 2026 | Showing above |
| 2025 | Feb 25, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
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.