DEF 14A of Exponent Inc, Apr 22, 2024

DEF 14A of Exponent Inc

Filed Apr 22, 2024 · FY20230000950170-24-046483

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  2. Compensation of Directors

    Compensation of Directors Members of our Board of Directors who are employees of the Company do not receive additional compensation for their services as directors of the Company. Non-employee members of the Board of Directors receive: • An annual cash retainer of $80,000; • An annual restricted stock unit grant valued at $145,000 that cliff vests on the day prior to the Company’s next annual stockholder meeting following the grant date; • $75,000 for serving as Chairman of the Board of Directors; • $12,000 for serving on the Audit Committee; • $30,000 for serving as Lead Independent Director; • $25,000 for serving as Chairperson of the Audit Committee; • $15,000 for serving as Chairperson of the Nominating and Governance Committee; and • $25,000 for serving as Chairperson of the Human Resources Committee. Effective June 1, 2023, the value of the annual restricted stock unit grant increased from $135,000 to $145,000, the annual cash compensation for serving as Chairman of the Board of Directors increased from $50,000 to $75,000, the annual cash compensation for serving Chairperson of the Audit Committee increased from $20,000 to $25,000, the annual cash compensation for serving as Chairperson of the Nominating and Governance Committee increased from $10,000 to $15,000, and the annual cash compensation for serving as Chairperson of the Human Resources Committee increased from $20,000 to $25,000. These increases reflected a level that the Board concluded was appropriate based upon the Board’s performance and the market for Director compensation.

  3. DIRECTOR COMPENSATION IN FISCAL 2023

    DIRECTOR COMPENSATION IN FISCAL 2023 The following table sets forth information regarding outside director compensation during fiscal 2023:

  4. DIRECTOR COMPENSATION IN FISCAL 2023

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards (1)(2)($) | Total ($) | | George H. Brown | 114,917 | 145,013 | 259,930 | | Paul R. Johnston, Ph.D. | 144,583 | 145,013 | 289,596 | | Carol Lindstrom | 104,917 | 145,013 | 249,930 | | Karen A. Richardson | 94,167 | 178,763 | 272,930 | | John B. Shoven, Ph.D. | 38,333 | — | 38,333 | | Debra L. Zumwalt | 114,917 | 145,013 | 259,930 |

  5. DIRECTOR COMPENSATION IN FISCAL 2023

    (1) The amounts shown in this column represent the value of unvested restricted stock unit awards granted during fiscal 2023 in accordance with Accounting Standards Codification (“ASC”) 718. All equity-based awards have dividend equivalent rights (“DER”), which entitle the holder of the award to the same dividend value per share as holders of common stock. DER are subject to the same vesting and other terms and conditions as the corresponding stock award. DER are accumulated and paid when the underlying stock awards vest and are forfeited if the underlying stock awards are forfeited. See Note 9 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2023, regarding assumptions underlying the valuation of equity awards. George H. Brown, Paul R. Johnston, Ph.D., Carol Lindstrom, Karen A. Richardson and Debra L. Zumwalt were granted 1,506 restricted stock units on June 8, 2023, with a grant date fair value of $145,000. Karen A. Richardson was granted 315 restricted stock units on February 15, 2023 in connection with her appointment as a Director. The following unvested restricted stock unit awards were outstanding as of December 29, 2023: Mr. Brown – 1,506, Dr. Johnston – 1,506, Ms. Lindstrom – 1,506, Ms. Richardson – 1,821, and Ms. Zumwalt – 1,506.

  6. COMPENSATION DISCUSSION AND ANALYSIS

    COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis explains our compensation philosophy, objectives, policies and practices with respect to our President and Chief Executive Officer, our Executive Vice President and Chief Financial Officer and our other three most highly-compensated executive officers, as determined in accordance with applicable SEC rules and as set forth below: 1. Catherine Ford Corrigan, Ph.D. – President and Chief Executive Officer 2. Richard L. Schlenker – Executive Vice President, Chief Financial Officer and Corporate Secretary 3. Eric Guyer, Ph.D. – Group Vice President 4. Joseph Rakow, Ph.D. – Group Vice President 5. Maureen Reitman, Sc.D. – Group Vice President We refer to these five individuals collectively as our “named executive officers.” General Philosophy. Our fundamental compensation philosophy is to align management’s incentives with the long-term interests of our stockholders, create a sense of partnership and provide a retention vehicle. We strive to compensate our named executive officers competitively with executives and consulting professionals throughout the industry and geographies in which we operate. Executive officer compensation is based on the performance of the Company, individual achievements and the competitive environment. Individual performance assessments are based on appraisals of financial performance, professional accomplishments and leadership that meet the level of excellence demanded. We use a total compensation approach for our named executive officers, in which each element of compensation is reviewed individually and considered collectively with the other elements of our compensation program to ensure that it is consistent with the objectives of both that particular element of compensation and our overall compensation program. Our compensation program consists of the following elements: base salary, bonus, equity compensation and other benefits. Say on Pay. During our Board and committee meetings on September 7, 2023, we considered the results of the “say on pay” proposal from our 2023 proxy, on which approximately 94.3% of votes cast by our stockholders were in support of our executive compensation policies and decisions for fiscal 2022. Our approach for fiscal 2023 on compensation policies and decisions remained consistent with our 2022 approach and no substantial changes were made during fiscal 2023 as a result of the "say on pay" vote. Board Process. The responsibility for determining the compensation of our named executive officers has been delegated by the Board of Directors to the Human Resources Committee (which is hereinafter referred to as the “Committee”). As described in more detail below, the Committee’s responsibilities include establishing the general compensation policies for all employees and overseeing the specific compensation for officers of the Company. The Committee regularly reviews these compensation programs and makes adjustments as appropriate to accomplish its objectives. The Committee met five times during fiscal 2023. In the case of the Chief Executive Officer, the Committee reviews the Chief Executive Officer’s written assessment of her performance, evaluates the performance of the Chief Executive Officer relative to her objectives and determines the appropriate compensation. For the other executive officers, the Chief Executive Officer evaluates their performance and presents her evaluation and compensation recommendations to the Committee for review and approval. The Committee also approves all equity compensation grants. The Charter of the Committee is available on our website at: https://investors.exponent.com/investors/corporate-governance/default.aspx. The Charter of the Committee provides for the Committee to retain, and terminate as necessary, a compensation consultant. During 2022, the Committee engaged Compensia, an executive compensation consulting firm, to provide recommendations regarding the framework for performance objectives, as discussed below, and a group of publicly-traded professional service companies with revenue, operating income and business focus comparable to Exponent that will be used to develop competitive compensation data for our Chief Executive Officer and our Executive Vice President and Chief Financial Officer. For fiscal 2023, the Committee reviewed competitive compensation data for the chief executive officer and chief financial officer of eight publicly-traded professional service companies recommended by Compensia with revenue, operating income, market capitalization, and business focus comparable to Exponent. Those companies included CRA International, FTI Consulting, Heidrick and Struggles International, Huron Consulting Group, ICF International, Korn/Ferry International, Resources Connection, and The Hackett Group. There were no changes to this group of companies as compared to fiscal 2022. During 2023, the Committee also reviewed executive compensation survey data compiled by Radford, a compensation survey provider, for chief executive officers and chief financial officers of publicly-traded companies in Northern California with annual revenues in the $200 million to $999 million range. The Committee does not target compensation against a specific percentile or range of percentiles within any peer group because there are no comparable companies that offer the same technical capability and breadth of services as Exponent. We use the data for a general understanding of the marketplace. The competitive compensation data for base salary, total cash compensation and long-term incentives and the executive compensation survey data provided by Radford were reviewed by the Committee to ensure that the Chief Executive Officer and the Executive Vice President and Chief Financial Officer’s compensation are not outliers relative to the peer group reviewed.

  7. Elements of Compensation Program

    Elements of Compensation Program Base Salary. We believe that competitive base salaries are necessary to attract and retain management talent critical to achieving our business objectives. We strive to provide base salaries commensurate with comparable executives at professional service organizations with similar revenue, operating income, market capitalization, business focus and location and with consulting professionals of similar background and experience working for both professional service organizations and in private practice. Base salaries are reviewed annually and adjusted to realign salaries with market levels after taking into account our performance, as well as the individual’s responsibilities, experience and performance. The level of total compensation relative to our other executive officers, senior scientific and engineering consultants that we hire and those that have left to compete with us are also considered when determining executive officer base salaries. Effective April 1, 2023, the annual base salary for Dr. Corrigan, President and Chief Executive Officer, increased 6% from $850,000 to $900,000. Dr. Corrigan’s increased annual base salary reflected a level that the Committee concluded was appropriate based upon Dr. Corrigan’s performance and the competitive compensation data. Effective April 1, 2023, the annual base salary for Mr. Schlenker, Executive Vice President and Chief Financial Officer, increased 7% from $570,000 to $610,000. Mr. Schlenker’s increased annual base salary reflected a level that the Committee concluded was appropriate based upon Mr. Schlenker’s performance and the competitive compensation data. Effective April 1, 2023, the annual base salary for Dr. Guyer, Group Vice President, increased 15% from $500,000 to $575,000. Dr. Guyer’s increased annual base salary reflected a level that the Committee concluded was appropriate based upon Dr. Guyer’s performance. Effective April 1, 2023, the annual base salary for Dr. Rakow, Group Vice President, increased 20% from $500,000 to $600,000. Dr. Rakow’s increased annual base salary reflected a level that the Committee concluded was appropriate based upon Dr. Rakow’s performance. Effective April 1, 2023, the annual base salary for Dr. Reitman, Group Vice President, increased 9% from $535,000 to $585,000. Dr. Reitman’s increased annual base salary reflected a level that the Committee concluded was appropriate based upon Dr. Reitman’s performance. Effective December 23, 2023, Dr. Reitman’s base salary increased an additional 4% from $585,000 to $610,000. This additional increase reflected a level that the Committee concluded was appropriate based upon Dr. Reitman’s performance and added responsibilities. Bonus. Annual bonuses are designed to create an incentive and to reward named executive officers for their contributions to our performance by making a significant portion of their total compensation variable. Our bonus plan covers all employees, including all named executive officers, and the bonus pool is equal to 33% of our pre-tax income before bonuses, stock-based compensation, realized gain/loss on foreign exchange and interest income. Our bonus pool has historically been 33% and the Committee determined that this amount was competitive for fiscal 2023. The total amount available in the bonus pool for fiscal 2023 was $68,415,000. Generally, 40% of each named executive officer’s annual bonus is settled with fully vested restricted stock unit awards, rather than cash, to provide a longer term incentive, under which each executive officer has the right to receive shares of our common stock four years from the date of grant (or earlier upon certain qualifying settlement events). The remainder of each executive officer’s annual bonus is paid in cash. Where a named executive officer has responsibilities for both providing direct consulting services to clients and managing a business unit, his or her performance is generally weighted toward the direct consulting activities. For a named executive officer who has broader corporate responsibilities, such as our Executive Vice President and Chief Financial Officer, his or her performance is based on that officer’s overall contribution to the Company. For fiscal 2023, the Chief Executive Officer’s performance was evaluated using a process previously developed with the help of Compensia, based on performance objectives in three categories: revenue, profitability, and leadership, and in the form of a Performance Award and a Qualitative Bonus, as further described below. CEO Performance Award. Our 2008 Equity Incentive Plan authorizes the grant of performance awards to our executive officers. Performance awards are payable only to the extent certain performance targets, based on objective business criteria specified by the Committee, are achieved in the relevant measurement period. Performance awards are payable in cash or restricted stock units, at the discretion of the Committee. At the beginning of each year, the Committee determines the performance goals and the achievement necessary for the bonus payout. After the conclusion of the performance period, the Committee certifies (1) the extent to which each executive officer has achieved the applicable prior fiscal year’s performance targets, and (2) the appropriate amount, if any, to be paid with respect to such performance-based annual incentive award. Even if the performance targets are achieved, the Committee may reduce the amount of an award through “negative discretion” and thereby reduce the payment made under a performance award, but the Committee cannot increase the amount of such award. On February 15, 2023, the Committee determined the performance award opportunity to be granted to Dr. Corrigan for fiscal 2023. In doing so, the Committee established the performance targets, the performance required to achieve payout under the award and maximum amounts payable under this award. The Committee set the target bonus level and maximum payout at amounts they believe are competitive. Dr. Corrigan’s target award was set at $375,000 (5/12 of Dr. Corrigan’s base salary for 2023) with the maximum amount payable set at twice the target. Performance between the applicable targets would be paid on a straight-line basis. In establishing the target for Dr. Corrigan’s 2023 performance award, the Committee decided that 60% of the award, to the extent earned, would be payable in cash and 40% of the award would be payable in fully vested restricted stock units under which Dr. Corrigan has the right to receive shares of our common stock four years from the date of grant. Two performance targets were established. The revenue performance target was a 12.1% increase in revenues before reimbursements. This target is measured on a scale of 0 to 2 with 0 being equal to 2.1% revenue growth, 1 being equal to 12.1% revenue growth, and 2 being equal to 22.1% revenue growth. Performance between the targets is prorated on a straight-line basis. We did not meet this quantitative target with actual revenues before reimbursements increasing 7.2%. This resulted in a quantitative performance factor for this objective of 0.51 on a scale of 0 to 2.

  8. Elements of Compensation Program

    As described above, 40% of each named executive officer’s annual bonus is generally settled with fully vested restricted stock unit awards. The percentage of each named executive officer’s annual bonus settled with vested restricted stock unit awards may be less than 40% when called for by the terms of an employment agreement or when other equity grants made were deemed adequate to align named executive officers and stockholders’ interests. Under these restricted stock unit awards, each executive officer has the right to receive shares of our common stock four years from the date of grant. Each named executive officer who received a fully vested restricted stock unit award is also granted a matching number of unvested restricted stock unit awards. These unvested restricted stock unit awards cliff vest four years from the date of grant provided the holder has met certain employment conditions. In the case of retirement at 59 ½ years or older, all unvested restricted stock unit awards will continue to vest, provided that the named executive officer does all consulting work through the Company and does not become an employee for a past or present client (direct or indirect) or competitor of the Company. Our practice is to determine each named executive officer’s bonus and the dollar amount of vested and unvested restricted stock unit awards following the availability of financial results for the prior year. With the exception of significant promotions and new hires, we generally grant restricted stock unit awards once a year during the allocation of our bonus pool. For restricted stock unit awards our 2008 Equity Incentive Plan defines the fair market value of the restricted stock unit awards as the closing price of our stock on the date of grant. During the annual review process in February 2023, the Committee granted a stock option to purchase 18,000 shares of our common stock to Dr. Corrigan and a stock option to purchase 12,000 shares of our common stock to Mr. Schlenker. These stock option grants reflect levels that the Committee concluded were generally appropriate based upon past practices within the Company, each individual’s total stock ownership and the amount needed to remain competitive. For stock option awards the exercise price is equal to the closing price of our stock on the date of grant. Our option awards vest ratably over a four-year period beginning on the grant date, subject to continued employment. All stock option awards continue to vest in the case of retirement at 59 ½ years or older, provided that the named executive officer does all consulting work through the Company and does not become an employee for a past or present client (direct or indirect) or competitor of the Company. Unvested restricted stock unit awards and stock options are occasionally granted for select new hires and promotions. There were no new hire awards granted to any named executive officers in 2023. Executive Stock Ownership Guidelines. We believe that the financial interests of our executive officers should be aligned with those of our stockholders. Our stock ownership guidelines are determined as a multiple of the named executive officer’s annual base salary. Individual guidelines are three times for the President and Chief Executive Officer, two times for the Executive Vice President and Chief Financial Officer and one time for the other named executive officers. Stock that counts towards satisfaction of our stock ownership guidelines includes shares owned outright by the named executive officer or his or her immediate family members residing in the same household or in trust and restricted stock units, whether or not vested. The value of shares owned outright is the prior 365-day average closing price for the Company’s common stock. The value of restricted stock units is the grant date fair value. The calculation is done at the beginning of each year. Named executive officers are required to achieve their stock ownership guideline within five years of the date the guidelines were adopted. If a person’s stock ownership guideline increases, that person has a five-year period to achieve the new guideline. Until the guideline is achieved, the person is required to retain at least 50% of the net shares delivered in respect of restricted stock units or upon the exercise of stock options. Net shares refer to those that remain after shares are sold or netted to pay the exercise price of stock options and withholding taxes. As of April 10, 2024, all the named executive officers met the stock ownership guidelines or are expected to meet the applicable ownership guidelines within the specified time period. Hedging and Pledging. Our insider trading policy prohibits directors, officers, and employees from selling short or otherwise engaging in hedging or offsetting transactions involving the Company’s securities, including the trading of those securities on margin. Our policies do not permit any director or officer, including our named executive officers, to pledge Exponent securities as collateral. Clawback Policy. We have a “clawback” policy for the recovery of excessive incentive-based compensation. In the event that we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the U.S. federal securities laws, under the policy adopted by the Company to comply with the final clawback rules issued by the SEC in 2022 and corresponding listing standards adopted by Nasdaq in 2023, certain incentive-based compensation awarded to covered executive officers is subject to mandatory recovery, subject to certain limited exceptions. The recovery of such incentive-based compensation applies regardless of whether the covered executive officer engaged in misconduct or otherwise caused an accounting restatement requirement. Under this policy, the Board will reasonably promptly recoup excess incentive-based compensation received by current or former executive officers within a lookback period of three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement. Excess incentive-based compensation for these purposes generally means the amount of incentive-based compensation received (on or after October 2, 2023) by such executive officer that exceeds the amount of incentive-based compensation that would have been received by such executive officer had it been determined based on the restated amounts and computed without regard to any taxes paid. Incentive-based compensation potentially subject to recovery under this policy is generally limited to any compensation granted, earned, or vested based wholly or in part on the attainment of one or more financial reporting measures. The Company may not indemnify any such executive officer against the loss of such recovered compensation in the event of a mandatory accounting restatement. The Company will disclose in its Proxy Statement any actions to recover compensation under this policy. The Clawback Policy is available for review at: https://investors.exponent.com/investors/corporate-governance/default.aspx. No Compensation Consultant Conflicts of Interest. We are not aware of any conflict of interest that has been raised by the work performed in 2022 by Compensia. During 2022 the Human Resources Committee reviewed the six independence factors enumerated by the SEC and determined that Compensia was independent.

  9. Compensation Accounting Matters

    Compensation Accounting Matters The Committee also considers the accounting and cash flow implications of various forms of executive compensation. In our financial statements, we record salaries and bonuses as expenses in the amount paid, or to be paid, to the named executive officers. Accounting rules also require us to record an expense in our financial statements for equity awards, even though equity awards are not paid as cash to employees. The Committee believes, however, that the many advantages of equity compensation more than compensate for the non-cash accounting expense associated with these types of awards. We currently amortize compensation expense associated with equity awards over an award’s requisite service period and establish fair value of equity awards in accordance with applicable accounting standards. Based upon the structure of our employee stock purchase plan program we are not required to record compensation expenses for financial statement purposes in connection with employees’ rights to purchase our stock granted under this program.

  10. SUMMARY COMPENSATION TABLE

    SUMMARY COMPENSATION TABLE The following table summarizes information regarding compensation earned by our named executive officers during fiscal 2023 and, as applicable, fiscal 2022 and 2021.

  11. SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary ($) (1) | Bonus ($) (2) | Stock Awards ($) (3) (5) | Option Awards ($) (4) (5) | All Other Compensation ($) (6) | Total ($) | | Catherine Ford Corrigan, Ph.D. | 2023 | 887,500 | 720,000 | 1,200,040 | 689,299 | 62,125 | 3,558,964 | | President and Chief Executive | 2022 | 831,250 | 900,000 | 1,200,136 | 599,488 | 58,188 | 3,589,062 | | Officer | 2021 | 762,500 | 900,000 | 800,102 | 506,440 | 53,375 | 3,022,417 | | Richard L. Schlenker | 2023 | 600,000 | 450,000 | 720,144 | 459,533 | 42,000 | 2,271,677 | | Executive Vice President, Chief Financial | 2022 | 562,500 | 540,000 | 720,120 | 399,659 | 39,375 | 2,261,654 | | Officer and Corporate Secretary | 2021 | 535,000 | 540,000 | 576,192 | 337,618 | 37,450 | 2,026,260 | | Eric Guyer, Ph.D. | 2023 | 556,250 | 480,000 | 540,108 | — | 38,938 | 1,615,296 | | Group Vice President | | | | | | | | | Joseph Rakow, Ph.D. | 2023 | 575,000 | 690,000 | 760,152 | — | 40,250 | 2,065,402 | | Group Vice President | | | | | | | | | Maureen Reitman, Sc.D. | 2023 | 572,981 | 495,000 | 480,096 | — | 40,109 | 1,588,186 | | Group Vice President | 2022 | 532,500 | 360,000 | 520,034 | — | 37,275 | 1,449,809 | | | 2021 | 518,750 | 390,000 | 380,172 | — | 36,313 | 1,325,235 |

  12. SUMMARY COMPENSATION TABLE

    (1) The base salaries for our Named Executive Officers took effect for 2023, 2022 and 2021 on April 1, 2023, April 2, 2022 and April 3, 2021, respectively. As such, the amounts in this column reflect three months at their prior year base salaries and nine months at their current year base salaries. Fiscal 2023, 2022 and 2021 included 52 weeks of activity. (2) The amounts shown in this column represent the value of cash bonuses earned during the year indicated and paid in the first quarter of the subsequent year, excluding the portion settled with vested restricted stock unit awards. (3) The amounts shown in this column represent the values of vested and unvested restricted stock unit awards granted during the year indicated, regardless of when earned. The value of restricted stock units granted during the first quarter of 2024 to settle a portion of each named executive officer’s fiscal 2023 bonus are not included in this column. (4) The amounts shown in this column represent the Black-Scholes value calculated for stock options granted during the year indicated, regardless of when earned. (5) The values of equity-based awards for these columns represent the aggregate grant date fair value of the awards in accordance with ASC 718. All equity-based awards have DER, which entitle the holder of the award to the same dividend value per share as holders of common stock. DER are subject to the same vesting and other terms and conditions as the corresponding stock award or option award. DER are accumulated and paid when the underlying stock awards or option awards vest and are forfeited if the underlying stock awards or option awards are forfeited. See Note 9 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2023, regarding assumptions underlying the valuation of equity awards. The amounts shown in this column represent the value of Company contributions to each named executive officer’s defined contribution retirement account earned during the year indicated. The Company provides a defined contribution retirement plan for all of its employees whereby the Company contributes to each eligible employee’s account 7% of the employee’s eligible base salary plus overtime. These contributions are made to the 401(k) plan up to the statutory maximum. Any portion of the 7% contribution in excess of the statutory maximum is made to the Company’s nonqualified deferred compensation plan.

  13. GRANTS OF PLAN-BASED AWARDS IN FISCAL 2023

    GRANTS OF PLAN-BASED AWARDS IN FISCAL 2023 The following table sets forth information regarding grants of plan-based awards to our named executive officers during fiscal 2023:

  14. GRANTS OF PLAN-BASED AWARDS IN FISCAL 2023

    | Name | Grant Date | Human Resource Committee Approval Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) (5) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($) (6)(7) | | Dr. Corrigan | 3/10/2023 | 2/15/2023 | 4,239(1) | | | 423,985 | | | 3/10/2023 | 2/15/2023 | 1,760(2) | | | 176,035 | | | 3/10/2023 | 2/15/2023 | 4,239(3) | | | 423,985 | | | 3/10/2023 | 2/15/2023 | 1,760(4) | | | 176,035 | | | 2/15/2023 | 2/15/2023 | | 18,000 | 107.31 | 689,299 | | Mr. Schlenker | 3/10/2023 | 2/15/2023 | 3,600(1) | | | 360,072 | | | 3/10/2023 | 2/15/2023 | 3,600(3) | | | 360,072 | | | 2/15/2023 | 2/15/2023 | | 12,000 | 107.31 | 459,533 | | Dr. Guyer | 3/10/2023 | 2/27/2023 | 2,700(1) | | | 270,054 | | | 3/10/2023 | 2/27/2023 | 2,700(3) | | | 270,054 | | Dr. Rakow | 3/10/2023 | 2/27/2023 | 3,800(1) | | | 380,076 | | | 3/10/2023 | 2/27/2023 | 3,800(3) | | | 380,076 | | Dr. Reitman | 3/10/2023 | 2/27/2023 | 2,400(1) | | | 240,048 | | | 3/10/2023 | 2/27/2023 | 2,400(3) | | | 240,048 |

  15. GRANTS OF PLAN-BASED AWARDS IN FISCAL 2023

    (1) Amounts represent the number of fully vested restricted stock units granted under our 2008 Equity Incentive Plan. (2) Our 2008 Equity Incentive Plan authorizes the grant of performance awards to our executive officers. Performance awards are payable only to the extent certain performance targets, based on objective business criteria specified by the Human Resources Committee, are achieved in the relevant measurement period. Performance awards are payable in cash or restricted stock units, at the discretion of the Human Resources Committee. Amounts represent the number of fully vested restricted stock units granted by the Human Resources Committee to settle the equity component of Dr. Corrigan’s 2022 performance award. (3) Amounts represent the number of unvested restricted stock units granted under our 2008 Equity Incentive Plan. These awards cliff vest four years from the date of grant. All unvested restricted stock units will continue to vest in the case of retirement at 59 ½ years or older, provided that the named executive officer does all consulting work through the Company and does not become an employee for a past or present client (direct or indirect) or competitor of the Company. (4) Our 2008 Equity Incentive Plan authorizes the grant of performance awards to our executive officers. Performance awards are payable only to the extent certain performance targets, based on objective business criteria specified by the Human Resources Committee, are achieved in the relevant measurement period. Performance awards are payable in cash or restricted stock units, at the discretion of the Human Resources Committee. Amounts represent the number of unvested restricted stock units granted by the Human Resources Committee to settle the equity component of Dr. Corrigan’s 2022 performance award. These awards cliff vest four years from the date of grant. All unvested restricted stock units will continue to vest in the case of retirement at 59 ½ years or older, provided that the named executive officer does all consulting work through the Company and does not become an employee for a past or present client (direct or indirect) or competitor of the Company. (5) Amounts represent options granted under our 2008 Equity Incentive Plan. These options become exercisable over a period of four years at a rate of 25% per year, subject to continued employment, and expire 10 years from the date of grant. All stock options will continue to vest in the case of retirement at 59 ½ years or older, provided that the named executive officer does all consulting work through the Company and does not become an employee for a past or present client (direct or indirect) or competitor of the Company. (6) The amounts shown in this column represent the Black-Scholes value calculated for stock options granted. (7) The values of equity-based awards for this column represent the grant date fair value of the awards in accordance with ASC 718. All equity-based awards have DER, which entitle the holder of the award to the same dividend value per share as holders of common stock. DER are subject to the same vesting and other terms and conditions as the corresponding stock award or option award. DER are accumulated and paid when the underlying stock awards or option awards vest and are forfeited if the underlying stock awards or option awards are forfeited. See Note 9 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 29, 2023, regarding assumptions underlying the valuation of equity awards. Restricted Stock Unit Awards. Each of the named executive officers were awarded the number of vested and unvested restricted stock unit awards as shown in the table above. The number of fully vested restricted stock unit awards granted was determined by dividing the portion of each named executive officer’s 2022 bonus designated for settlement in fully vested restricted stock units by the closing price of our common stock on the day of the grant. An equal number of matching unvested restricted stock unit awards were also granted to each named executive officer. For financial statement reporting purposes the value of these awards is amortized over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59 ½. Stock Options. Certain of the named executive officers were awarded stock options as shown in the table above. The exercise price of these stock options was equal to the closing price of our common stock on the date of grant.

  16. OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR-END

    OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR-END The following table sets forth information regarding each named executive officer’s outstanding equity awards as of December 29, 2023:

  17. OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR-END

    | | Option Awards | | | | Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) | | Dr. Corrigan | | 18,000(2) | 107.31 | 2/15/2033 | 5,999(6) | 528,152 | | | 5,625 | 16,875(3) | 87.90 | 2/17/2032 | 6,358(7) | 559,758 | | | 10,000 | 10,000(4) | 94.20 | 2/11/2031 | 4,045(8) | 356,122 | | | 18,000 | 6,000(5) | 79.43 | 2/13/2030 | 6,205(9) | 546,288 | | | 30,000 | | 54.95 | 2/14/2029 | | | | | 28,000 | | 37.45 | 2/15/2028 | | | | | 32,000 | | 29.05 | 2/16/2027 | | | | | 48,000 | | 25.41 | 7/29/2026 | | | | Mr. Schlenker | | 12,000(2) | 107.31 | 2/15/2033 | 3,600(6) | 316,944 | | | 3,750 | 11,250(3) | 87.90 | 2/17/2032 | 3,815(7) | 335,873 | | | 6,667 | 6,666(4) | 94.20 | 2/11/2031 | 2,913(8) | 256,461 | | | 12,000 | 4,000(5) | 79.43 | 2/13/2030 | 4,432(9) | 390,193 | | | 20,000 | | 54.95 | 2/14/2029 | | | | | 28,000 | | 37.45 | 2/15/2028 | | | | | 32,000 | | 29.05 | 2/16/2027 | | | | | 4,230 | | 23.63 | 2/12/2026 | | | | | 4,524 | | 22.10 | 2/13/2025 | | | | | 5,648 | | 17.70 | 2/7/2024 | | | | Dr. Guyer | — | — | N/A | N/A | 2,700(6) | 237,708 | | | | | | | 3,179(7) | 279,879 | | | | | | | 2,528(8) | 222,565 | | | | | | | 3,103(9) | 273,188 | | Dr. Rakow | — | — | N/A | N/A | 3,800(6) | 334,552 | | | | | | | 2,649(7) | 233,218 | | | | | | | 1,366(8) | 120,263 | | | | | | | 1,773(9) | 156,095 | | Dr. Reitman | — | — | N/A | N/A | 2,400(6) | 211,296 | | | | | | | 2,755(7) | 242,550 | | | | | | | 1,922(8) | 169,213 | | | | | | | 3,103(9) | 273,188 |

  18. OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR-END

    (1) Value is determined based on the closing price of our common stock on December 29, 2023 of $88.04 per share. (2) Four-year vesting at a rate of 25% per year, subject to continued employment. Options fully vest on February 15, 2027. (3) Four-year vesting at a rate of 25% per year, subject to continued employment. Options fully vest on February 17, 2026. (4) Four-year vesting at a rate of 25% per year, subject to continued employment. Options fully vest on February 11, 2025. (5) Four-year vesting at a rate of 25% per year, subject to continued employment. Options fully vest on February 13, 2024. (6) Stock awards cliff vest on March 10, 2027. (7) Stock awards cliff vest on March 11, 2026. (8) Stock awards cliff vest on March 12, 2025.

  19. OPTION EXERCISES AND STOCK VESTED IN FISCAL 2023

    OPTION EXERCISES AND STOCK VESTED IN FISCAL 2023 The following table sets forth information for each named executive officer regarding options exercised and restricted stock units vested during fiscal 2023:

  20. OPTION EXERCISES AND STOCK VESTED IN FISCAL 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Dr. Corrigan | — | — | 5,999(1) | 600,020 | | | — | — | 7,018(2) | 725,731 | | Mr. Schlenker | 7,992 | 742,397 | 3,600(1) | 360,072 | | | — | — | 4,913(2) | 508,053 | | Dr. Guyer | — | — | 2,700(1) | 270,054 | | | — | — | 2,369(2) | 244,978 | | Dr. Rakow | — | — | 3,800(1) | 380,076 | | | — | — | 1,185(2) | 122,541 | | Dr. Reitman | — | — | 2,400(1) | 240,048 | | | — | — | 2,983(2) | 308,472 |

  21. OPTION EXERCISES AND STOCK VESTED IN FISCAL 2023

    (1) The amounts shown represent fully vested restricted stock units granted on March 10, 2023 to settle a portion of each named executive officer's 2022 bonus. The amounts shown represent unvested restricted stock unit awards granted on March 15, 2019 that vested and were settled on March 15, 2023.

  22. NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2023

    NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2023 We maintain nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Under these plans, participants may elect to defer up to 100% of their compensation. Company assets that are earmarked to pay benefits under the plans are held in a rabbi trust and are subject to the claims of our creditors. The following table sets forth information regarding activity in our nonqualified deferred compensation plans for each named executive officer during fiscal 2023:

  23. NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2023

    | Name | Executive Contributions in 2023 ($) | Registrant Contributions in 2023 ($) (1) | Aggregate Earnings in 2023 ($) (2) | Aggregate Withdrawals/ Distributions in 2023 ($) | Aggregate Balance at December 29, 2023 ($) (3) | | Dr. Corrigan | 100,000(4) | 45,500 | 471,776 | — | 3,824,692 | | Mr. Schlenker | — | 17,985 | 25,561 | — | 212,130 | | Dr. Guyer | — | 12,708 | 132,738 | (161,052) | 936,429 | | Dr. Rakow | — | 8,588 | 200,403 | — | 1,167,561 | | Dr. Reitman | — | 15,912 | 26,759 | (165,686) | 131,280 |

  24. NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2023

    (1) The Company provides a defined contribution retirement plan for all of it employees, whereby the Company contributes to each eligible employee’s account 7% of the employee’s eligible base salary plus overtime. These contributions are made to the 401(k) plan up to the statutory maximum. Any portion of the 7% contribution in excess of the statutory maximum is made to the Company’s nonqualified deferred compensation plan. Amounts represent Company contributions to the nonqualified deferred compensation plan associated with the defined contribution retirement plan. These amounts are included in the 2023 Summary Compensation Table above in the "All Other Compensation" column. (2) Earnings reported in this column are not above-market or preferential and therefore are not reported in the Summary Compensation Table for fiscal 2023. (3) The aggregate balance at December 29, 2023 was fully vested for all named executive officers. Each named executive officer who participates in the nonqualified deferred compensation plan chooses from a number of investment vehicles available under the plan. Earnings are credited based on earnings of the investment options selected by the participant. Of the aggregate balance for each NEO in the table above, the following amounts were previously reported as compensation in prior years' summary compensation tables: Dr. Corrigan $2,087,077, Mr. Schlenker $212,130, Dr. Guyer $12,708, Dr. Rakow $8,588 and Dr. Reitman $58,162. (4) Amount represents the portion of Dr. Corrigan’s 2023 salary, disclosed in the Summary Compensation Table, that the employee elected to contribute to the deferred compensation plan.

  25. Potential Payments upon Termination or Change-in-Control

    Potential Payments upon Termination or Change-in-Control Our restricted stock unit award agreements state that in the event of a change in control of the Company, the successor shall assume or substitute equivalent awards on the same terms and conditions. If the award holder is involuntarily terminated within a two-year period beginning on the date of the change of control for any reason other than the award holder’s failure to substantially perform the duties of the award holder’s position, all awards are vested and settled on the date of termination. Assuming a change in control and involuntary termination of employment, the value of restricted stock unit awards that would have vested based on the closing price of our common stock on the last business day of fiscal 2023, December 29, 2023, of $88.04 for each named executive officer was as follows: Dr. Corrigan $1,990,000, Mr. Schlenker $1,299,000, Dr. Guyer $1,013,000, Dr. Rakow $844,000 and Dr. Reitman $896,000. We do not have any other contracts, agreements (including employment agreements), plans or arrangements, whether written or unwritten, providing for payments to a named executive officer at, following, or in connection with any termination of a named executive officer or a change in control or a change in a named executive officer’s responsibilities.

  26. CEO Pay Ratio

    CEO Pay Ratio Our compensation and benefits philosophy and the overall structure of our compensation and benefit programs are broadly similar across the organization to encourage and reward all employees who contribute to our success. Under rules adopted pursuant to the Dodd-Frank Act, we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our Chief Executive Officer. Under the relevant rules, we are required to identify the median employee by use of a consistently applied compensation measure. We identified the median employee by looking at annual base pay, overtime pay, cash bonuses, and our company contributions to our defined contribution retirement plans. We did not perform adjustments to the compensation paid to part-time employees to calculate what they would have been paid on a full-time basis. We identified the median employee for our the 2023 pay ratio disclosure using our world-wide employee population on December 29, 2023, other than the President and Chief Executive Officer. For the pay ratio disclosure, we calculated the median employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table. Our median employee compensation as calculated using Summary Compensation Table requirements was $152,990 for 2023. Our Chief Executive Officer’s compensation as reported in the Summary Compensation Table was $3,558,964. Therefore, our Chief Executive Officer to median employee pay ratio is 23:1. This information is being provided for compliance purposes. Neither the Human Resources Committee nor management of the Company used the pay ratio measure in making compensation decisions.

  27. PAY VERSUS PERFORMANCE DISCLOSURE

    PAY VERSUS PERFORMANCE DISCLOSURE The following table provides information on compensation for the principal executive officer (“PEO”), the average compensation for the other Named Executive Officers (“Non-PEO NEOs”) and certain measures of the Company’s financial performance for the last three fiscal years ended December 29, 2023:

  28. PAY VERSUS PERFORMANCE DISCLOSURE

    | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(1)(2) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(1) | Average Compensation Actually Paid to Non-PEO NEOs ($)(1)(2) | Total Shareholder Return (3) | Peer Group Total Shareholder Return (4) | Net Income ($ '000) (5) | EBITDA ($ '000) (6) | | 2023 | 3,558,964 | 2,829,817 | 1,885,140 | 1,683,408 | 130 | 144 | 100,339 | 137,662 | | 2022 | 3,589,062 | 2,322,702 | 1,626,994 | 1,245,805 | 145 | 124 | 102,330 | 137,217 | | 2021 | 3,022,417 | 5,151,590 | 1,500,913 | 2,165,705 | 169 | 142 | 101,202 | 132,258 | | 2020 | 2,674,793 | 4,300,765 | 1,362,236 | 1,938,548 | 129 | 114 | 82,552 | 102,102 |

  29. PAY VERSUS PERFORMANCE DISCLOSURE

    (1) Dr. Corrigan was the PEO in 2023, 2022 and 2021. Mr. Schlenker, Dr. Guyer, Dr. Rakow and Dr. Reitman were the non-PEO NEOs in 2023. Mr. Schlenker, Dr. Murray, Dr. Reitman and Dr. Pye were the non-PEO NEOs in 2022. Mr. Schlenker, Dr. Murray, Dr. Reitman and Dr. Doyle were the non-PEO NEOs in 2021. Mr. Schlenker, Dr. Murray, Dr. Reitman and Dr. James were the non-PEO NEOs in 2020.The value of the “compensation actually paid” to our PEO and Non-PEO NEOs reflect the following adjustments from the Summary Compensation Table: (2) Amounts represent the cumulative Total Shareholder Return ("TSR") for Exponent calculated and presented as the dollar value of an investment of $100 made on January 3, 2020, assuming dividend reinvestment. (3) Amounts represent the cumulative TSR for the S&P 400 Mid Cap Index as "Peer Group" calculated and presented as the dollar value of an investment of $100 made on January 3, 2020, assuming dividend reinvestment. (4) Net Income is calculated in accordance with generally accepted accounting principles. (5) EBITDA is our company-selected measure and is defined as net income before income taxes, interest income, depreciation and amortization.

  30. PAY VERSUS PERFORMANCE DISCLOSURE

    | Compensation Actually Paid Adjustment Summary | Principal Executive Officer ($)(PEO) | NON PEO Named Executive Officers ($)(NEO) (average) | | | 2023 | 2023 | | Summary Compensation Table (SCT) Total | 3,558,964 | 1,885,140 | | Stock and option award values reported in the SCT | (1,889,339) | (740,008) | | The year-end fair value of any outstanding and unvested stock awards granted during the year | 528,152 | 275,125 | | The year-end fair value of any outstanding and unvested option awards granted during the year | 392,673 | 65,445 | | The change in fair value as of the vesting date (from the end of the prior year) of any stock awards that vest during the year | 30,318 | 12,366 | | The change in fair value as of the vesting date (from the end of the prior year) of any option awards that vest during the year | 161,226 | 26,871 | | The change in year-end fair value (from the end of the prior year) of any outstanding and unvested stock awards granted in prior years | (183,518) | (92,649) | | The change in year-end fair value (from the end of the prior year) of any outstanding and unvested option awards granted in prior years | (368,678) | (61,445) | | 'The dollar value of stock awards that were both granted and vested during the year | 600,019 | 312,563 | | The dollar value of any dividends or other earnings paid on stock or option awards during the year (prior to vesting) that are not otherwise reflected | — | — | | Compensation Actually Paid | 2,829,817 | 1,683,408 |

  31. PAY VERSUS PERFORMANCE DISCLOSURE

    Pay Versus Performance Relationship. The following graphs provide information on the relationship between compensation actually paid ("CAP") for the PEO, the average CAP for the Non-PEO NEOs and the measures in the Pay Versus Performance Table for the last four fiscal years ended December 29, 2023: Relationship Between CAP and Company TSR and Peer Group TSR Compensation Actually Paid ($) 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2019 2020 2021 2022180 160 140 120 100 80 60 40 20 - Total Shareholder Return PEO Actual Pay Company TSR Ave. Non-PEO Actual Pay Peer Group TSR Relationship Between CAP and Company Net Income Compensation Actually Paid ($) 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2020 2021 2022 120 100 80 60 40 20 - Net Income (dollars in millions) PEO Actual Pay Ave. Non-PEO Actual Pay Net Income Relationship Between CAP and Company EBITDA Compensation Actually Paid ($) 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2020 2021 2022 160 140 120 100 80 60 40 20- EBITDA (dollars in millions) PEO Actual Pay Ave. Non-PEO Actual Pay EBITDA Performance Measures. The following table lists the most important financial performance measures used to link CAP to the PEO and Non-PEO NEOs for the fiscal year ended December 29, 2023:

  32. PAY VERSUS PERFORMANCE DISCLOSURE

    | EBITDA | | Revenues before reimbursement growth | | EBITDA margin |