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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2016
Share-Based Compensation |
Share-Based Compensation | 10. Share-Based Compensation CRA recorded approximately $6.7 million, $5.8 million, and $5.3 million of compensation expense for fiscal 2016, fiscal 2015, and fiscal 2014, respectively, for share-based awards consisting of stock options, 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 acceleration method. In addition, CRA recorded $146,000, $11,000, and $271,000 of share-based compensation expense during fiscal 2016, fiscal 2015, and fiscal 2014, respectively, for share-based awards consisting of stock options and shares of restricted stock issued to non-employees (other than directors). Share-based Compensation Plans. As of December 31, 2016, CRA's active equity-based compensation plans consist of its Amended and Restated 2006 Equity Incentive Plan, as amended (the "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. During fiscal 2009, CRA also implemented a long-term incentive program, or "LTIP," 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 in each fiscal year since 2009, except 2012. In December 2016, CRA's Board of Directors amended CRA's Cash Incentive Plan to facilitate the grant to LTIP participants of service-based and performance-based cash awards as new components of the LTIP. 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 independent contractors, including stock options, shares of restricted stock, restricted stock units, and other equity awards. The 2006 Equity Plan has used standard "fungibility ratios" to count grants of full-share awards (such as shares of restricted stock and restricted stock units) against the maximum number shares issuable under the plan. The current fungibility ratio, applicable to grants made on or after April 30, 2010, is 1.83. The fungibility ratio does not apply to grants of stock options. The maximum number of shares issuable under the 2006 Equity Plan is 4,874,000, consisting of (1) 500,000 shares initially reserved for issuance under the 2006 Equity Plan, (2) 1,000,000 shares that either remained for future awards under our 1998 Incentive and Nonqualified Stock Option Plan (the "1998 Option Plan") on April 21, 2006, the date CRA's shareholders initially approved the 2006 Equity Plan, or were subject to stock options issued under the 1998 Option Plan that were forfeited or terminated after April 21, 2006, (3) 210,000 shares approved by CRA's shareholders in 2008, (4) 1,464,000 shares approved by CRA's shareholders in 2010, and (5) the 2,500,000 shares approved by CRA's shareholders in 2012 reduced by the 800,000 shares cancelled by CRA's Board of Directors on April 22, 2016, as reported in the current report on Form 8-K that CRA filed on April 27, 2016. The shares available for grant under the 2006 Equity Plan as of December 31, 2016 was 60,221. 1998 Option Plan. With the adoption of the 2006 Equity Incentive Plan in 2006, CRA stopped granting awards under the 1998 Option Plan, and, as of December 31, 2016, there were no awards outstanding under the 1998 Option Plan. 2009 Nonqualified Inducement Stock Option Plan. CRA adopted its 2009 Nonqualified Inducement Stock Option Plan in 2009 (the "2009 Option Plan"). As of December 31, 2016, there were no shares available for grant, and no outstanding awards, under the 2009 Option Plan. Stock Options. A summary of option activity during fiscal 2016 from the 2006 Equity Plan, the 2009 Option Plan and the 1998 Option Plan is as follows. The awards granted under the 2009 Option Plan and 1998 Option Plan that were outstanding at any point during fiscal 2016 all expired prior to December 31, 2016 and, as noted above, no awards were granted under the 2009 Option Plan or the 1998 Option Plan during fiscal 2016. Accordingly, all of the stock options outstanding as of December 31, 2016 were granted under the 2006 Equity Plan.
|  | Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value |
|  |  |  |  |  |  |  | (in thousands) |
Outstanding at January 2, 2016 |  |  | 1,206,778 |  | $ | 26.36 |  |  |  |  |  |  |
Fiscal 2016: |  |  |  |  |  |  |  |  |  |  |  |  |
Granted |  |  | 32,000 |  |  | 30.96 |  |  |  |  |  |  |
Exercised |  |  | (124,931 | ) |  | 22.83 |  |  |  |  | $ | 729 |
Expired |  |  | (168,764 | ) |  | 48.95 |  |  |  |  |  |  |
Forfeited |  |  | — |  |  | — |  |  |  |  |  |  |
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Outstanding at December 31, 2016 |  |  | 945,083 |  |  | 22.95 |  |  | 4.09 |  | $ | 12,904 |
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Options exercisable at December 31, 2016 |  |  | 577,963 |  | $ | 22.18 |  |  | 3.26 |  | $ | 8,337 |
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Vested or expected to vest at December 31, 2016 |  |  | 939,630 |  | $ | 22.94 |  |  | 4.08 |  | $ | 12,835 |
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The weighted average fair market value using the Black-Scholes option-pricing model of the stock options granted under the 2006 Equity Incentive Plan in fiscal 2016, fiscal 2015 and fiscal 2014 was $9.93, $7.37 and $12.24, respectively. The fair market value of the stock options at the date of grant was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:
|  | 2016 |  | 2015 |  | 2014 |
Risk-free interest rate |  |  | 1.3 | % |  | 1.4 | % |  | 1.6 | %
Expected volatility |  |  | 36 | % |  | 39 | % |  | 43 | %
Expected dividend yield |  |  | 1.5 | % |  | — |  |  | — |
Forfeiture rate |  |  | 0.5 | % |  | 1.1 | % |  | 4.0 | %
Weighted average expected life (in years) |  |  | 4.58 |  |  | 4.50 |  |  | 5.00 |
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 was determined based on our annualized dividend rate per share, as a percentage of average market price of the common stock, on each dividend payment date. The forfeiture rate used was based upon historical experience. CRA believes its historical experience is an appropriate indicator of future forfeitures. The aggregate intrinsic value of stock options exercised in fiscal 2016, fiscal 2015, and fiscal 2014 was approximately $0.7 million, $0.1 million, and $0.1 million, respectively. The following table summarizes stock options outstanding and stock options exercisable under the 2006 Equity Plan as of December 31, 2016:
|  | Options Outstanding |  | Options Exercisable |
Range of Exercise Prices |  | Number Outstanding at December 31, 2016 |  | Weighted- Average Remaining Contractual Life (years) |  | Weighted- Average Exercise Price |  | Number Exercisable at December 31, 2016 |  | Weighted- Average Remaining Contractual Life (years) |  | Weighted- Average Exercise Price |
$16.12 - 21.48 |  |  | 324,259 |  |  | 3.14 |  | $ | 19.20 |  |  | 263,086 |  |  | 2.97 |  | $ | 19.36 |
$21.49 - 26.86 |  |  | 408,809 |  |  | 4.26 |  |  | 21.75 |  |  | 224,890 |  |  | 2.94 |  |  | 21.94 |
$26.87 - 32.23 |  |  | 212,015 |  |  | 5.20 |  |  | 30.98 |  |  | 89,987 |  |  | 4.89 |  |  | 30.98 |
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Total |  |  | 945,083 |  |  | 4.09 |  | $ | 22.95 |  |  | 577,963 |  |  | 3.26 |  | $ | 22.18 |
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The following table provides a roll-forward of the outstanding stock options under the 2006 Equity Incentive Plan over fiscal 2016:
|  | Options |
|  | Number of Shares |  | Weighted-Average Fair Value |
Non-vested at January 2, 2016 |  |  | 505,264 |  | $ | 8.75 |
Granted |  |  | 32,000 |  |  | 9.93 |
Vested |  |  | (170,144 | ) |  | 8.74 |
Forfeited |  |  | — |  |  | — |
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Non-vested at December 31, 2016 |  |  | 367,120 |  | $ | 8.86 |
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The total fair value of stock options that vested during fiscal 2016, fiscal 2015, and fiscal 2014 was $1.5 million, $1.5 million, and $1.4 million, respectively. As of December 31, 2016, there was $3.0 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock options granted. That cost is expected to be recognized over a weighted-average period of 2.4 years. 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 December 31, 2016 was $1.0 million, which is expected to be recognized over a weighted-average period of 2.6 years. The forfeiture rate of 1.2% 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 2016:
|  | Shares of Restricted Stock |
|  | Number of Shares |  | Weighted-Average Fair Value |
Non-vested at January 2, 2016 |  |  | 68,741 |  | $ | 22.47 |
Granted |  |  | 21,231 |  |  | 24.73 |
Vested |  |  | (27,850 | ) |  | 21.58 |
Forfeited |  |  | — |  |  | — |
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Non-vested at December 31, 2016 |  |  | 62,122 |  | $ | 23.64 |
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The total fair value of shares of restricted stock that vested during fiscal 2016, fiscal 2015, and fiscal 2014 was $0.6 million, $0.6 million, and $0.6 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 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 December 31, 2016 was $4.1 million, which is expected to be recognized over a weighted-average period of 2.4 years. The forfeiture rate of 1.2% 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 2016:
|  | Time-Vesting Restricted Stock Units |
|  | Number of Units |  | Weighted-Average Fair Value |
Non-vested at January 2, 2016 |  |  | 252,321 |  | $ | 23.36 |
Granted |  |  | 16,000 |  |  | 30.96 |
Vested |  |  | (83,570 | ) |  | 22.99 |
Forfeited |  |  | — |  |  | — |
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Non-vested at December 31, 2016 |  |  | 184,751 |  | $ | 24.18 |
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The total fair value of time-vesting restricted stock units that vested during fiscal 2016, fiscal 2015, and fiscal 2014 was $1.9 million, $1.8 million, and $1.5 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. The number of units determined based on the achievement of a PRSUs performance measures generally ranges from 50% to 125% of the PRSU's target number of units. In accordance with ASC Topic 718, 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 acceleration method. The following table provides a roll-forward of the performance-vesting restricted stock units under the 2006 Equity Incentive Plan over fiscal 2014, fiscal 2015 and fiscal 2016. 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, for all periods presented, equaled 125% of the PRSU's target number of units.
|  | Performance- Vesting Restricted Stock Units |
|  | Number of Units |
Non-vested at December 28, 2013 |  |  | 245,200 |
Granted |  |  | 153,518 |
Vested |  |  | (25,336 | )
Forfeited |  |  | (7,914 | )
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Non-vested at January 3, 2015 |  |  | 365,468 |
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Granted |  |  | 204,315 |
Vested |  |  | — |
Forfeited |  |  | (11,624 | )
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Non-vested at January 2, 2016 |  |  | 558,159 |
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Granted |  |  | 26,666 |
Vested |  |  | (90,485 | )
Forfeited |  |  | (83,187 | )
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Non-vested at December 31, 2016 |  |  | 411,153 |
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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 2016, fiscal 2015, and fiscal 2014, there were no offering periods under this plan and no shares were issued. As of December 31, 2016, 211,777 shares are available for grant under the 1998 ESPP. Other Equity Matters. During fiscal 2016, CRA modified an award through an acceleration of the vesting schedule for a director in connection with his retirement. The modification resulted in total additional compensation cost of $0.1 million.

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