Burn rate is equal to total awards granted divided by the basic weighted average shares outstanding. The Company’s three-year average burn rate for fiscal 2014 through fiscal 2016 was 1.5%:

2008 Plan Highlights

The 2008 Plan includes provisions designed to serve stockholders’ interests and promote effective corporate governance, including the following:

The following is a summary of the material terms of the 2008 Plan, as amended. It is qualified by reference to the full text of the Plan, as amended. A copy of the 2008 Plan, as amended, is filed as an exhibit to our Form 10-K for the fiscal year-ended December 30, 2016. A copy of the proposed amendment and the 2008 Plan, as amended, is attached as Appendix A to this proxy statement. Stockholders are encouraged to review the 2008 Plan and proposed amendment carefully.

Types of Awards.The Plan permits the Company to issue stock options (both incentive stock options designed to comply with Section 422 of the Internal Revenue Code (the Code) and nonstatutory stock options which will not so comply), stock awards (including stock appreciation rights, stock units, stock grants and other similar equity awards), and cash awards.

Stock Subject to the Plan. As of April 4, 2017, we have granted restricted stock units and stock options covering 4,417,708 shares of our common stock. As a result, we have 410,442 shares of common stock remaining available for grant under the 2008 Plan. If this proposal is approved, an additional 1,100,000 shares of our common stock will be available for issuance under the 2008 Plan.

Administration.The Company anticipates that the Plan will be administered by the Human Resources Committee of its Board (generally referred to as the “Administrator” of the Plan); however, with respect to grants to certain non-officer employees, the Administrator may from time to time delegate its authority to one or more officers of the Company. In any event, the Company will administer the Plan in accordance with applicable law including with applicable NASDAQ listing standards.

Eligibility.Awards may be granted under the Plan to Exponent (and its affiliates’) employees (including officers), independent contractors and members of the Company’s Board of Directors (including non-employee or outside board members). Incentive stock options may be granted only to employees of Exponent or its subsidiaries. The Administrator, in its discretion, selects the employees to whom stock options and other stock awards, as well as cash awards, may be granted, the time or times at which such awards are granted, and the terms of such awards.

As of April 4, 2017, approximately ten officers (as defined in Rule 16a-1(f) under the Exchange Act), six non-employee directors, and 1,013 employees of the Company would have been eligible to receive grants under the 2008 Plan had the Plan amendment been effective as of such date. The Company has historically not granted equity awards to independent contractors. As of April 4, 2017, approximately 155 employees participate in the 2008 Plan.

Because benefits under the Plan will depend on the Administrator’s actions and the fair market value of common stock at various future dates, it is not possible to determine the benefits that will be received by employees, officers (including named executive officers), directors, and independent contractors if the amendment is approved by the stockholders. No grants have been made and no shares issued, with regard to the share increase for which stockholder approval is sought under the Plan. Additional information about our equity award grants during fiscal 2016 to our named executive officers is set forth in the Grant of Plan-Based Awards table.

For certain additional information concerning securities authorized for issuance under the Company’s equity compensation plans as of December 30, 2016, see “Equity Compensation Plan Information” elsewhere in this proxy statement.

Section 162(m) Limitations.Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to the company's Chief Executive Officer or any of the three other most highly compensated officers. Certain performance-based compensation is specifically exempt from this deduction limit if it otherwise meets the requirements of Section 162(m). Stock options and other equity awards pursuant to which the recipient's compensation is based solely on the appreciation of the value of the underlying shares from the date of grant (i.e. with the exercise prices equal to the fair market value at grant) until the date of the income recognition event may qualify as performance-based compensation if the company satisfies certain requirements in connection with the Plan under which the awards are granted. Specifically, the Plan must be stockholder-approved and must contain a limit on the number of shares that may be granted to any one individual under the Plan during a specified period. Accordingly, the Plan has provided that no employee may be granted options and other stock awards covering more than 400,000 shares in any calendar year, except that an employee may be granted equity awards covering up to an additional 800,000 shares during the year in which the employee’s service to Exponent commences.

The Plan also provides that Exponent may grant cash awards designed to qualify as performance-based compensation and specifies that the maximum amount payable under a cash award to any employee during a single calendar year is $1,000,000.

Additional requirements apply to certain forms of compensation, such as stock units and cash awards, in order for them to qualify as performance-based compensation, including a requirement that payment of the value of such awards be contingent upon achievement of performance goals that are established in a manner specified under Section 162(m) of the Code. The Plan permits Exponent to issue awards incorporating such performance objectives and provides that these performance objectives ("Qualifying Performance Criteria") may be based upon either achievement in terms of absolute targets or increase (or in appropriate cases, decrease) in: cash flow; earnings (including gross margin, earnings before interest, taxes, depreciation, amortization and stock-based compensation, earnings before taxes, and net earnings); earnings per share; stock price; return on equity or average stockholders’ equity; total stockholder return; return on assets or net assets; return on investment; revenue before reimbursements; income or net income; operating income or net operating income, in aggregate or per share; operating profit or net operating profit; operating margin; return on operating revenue; contract awards or backlog; overhead or other expense reduction; growth in stockholder value relative to the moving average of the S&P 500 Index or S&P SmallCap 600 Index; objective strategic plan development and implementation (including individual objective performance goals that relate to achievement of the Company’s or any business unit’s strategic plan). The Human Resources Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (A) asset write-downs; (B) litigation or claim judgments or settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; and (E) any gains or losses classified as extraordinary or as discontinued operations in the Company’s financial statements.

To the extent that the Administrator determines that an award will be granted subject to Qualifying Performance Criteria, such criteria will be specified with respect to a particular award by the Board's Human Resources Committee or the independent members of the Board in a manner designed to comply with Section 162(m). These criteria may be applied to Exponent as a whole or to a business unit, affiliate or business segment, either individually, alternatively or in any combination, and may be measured either annually or cumulatively over a period of years, on an absolute basis, or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Administrator in the award agreement.

The Company will be required under Section 162(m) to generally seek stockholder approval of the Plan’s Qualifying Performance Criteria at least every five years. The Plan also allows the Board or Human Resources Committee to grant Plan awards that do not comply with the Section 162(m) requirements at any time, as well as to grant awards outside of the Plan (to the extent otherwise permitted under applicable law).

Plan Characterization.The Plan is not subject to the provisions of the Employment Retirement Income Security Act of 1974, as amended, and is not qualified under Section 401(a) of the Code.

Adjustments upon Changes in Capitalization, Merger or Sale of Assets.Subject to any required action by Exponent’s stockholders, (1) the number of shares covered by each outstanding award, (2) the price per share subject to each outstanding award and (3) the share limitations as set forth in the Plan (including those established under Section 162(m)), will each be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of Exponent’s stock, payment of dividend or distribution in a form other than stock (excepting normal cash dividends) that has a material effect on the fair market value of the shares of common stock or any other increase or decrease in the number of issued shares of Exponent’s stock effected without receipt of consideration by Exponent.

In the event of a liquidation or dissolution and unless otherwise determined by the Administrator, any unexercised options or other stock awards pursuant to which shares have not yet been issued will terminate.

In the event of a change in control of Exponent, as defined in the Plan and determined by the Administrator, and under the proposal upon the consummation of such event, the Administrator, in its discretion, may provide for the assumption, substitution or adjustment of each outstanding award, accelerate the vesting of options and terminate any restrictions on stock awards or cash awards, or cancel awards including for a cash payment to the awardee.

Nontransferability of Awards. Unless otherwise determined by the Administrator, awards granted under the Plan are not transferable other than by will or the laws of descent and distribution, and options may be exercised during the optionee’s lifetime only by the optionee. The Administrator will have the sole discretion to permit the transfer of an award to family members and other persons and entities permitted under the rules applicable to the Form S-8 registration statement (as now or hereafter in effect, or to any successor form); however, the transferability of incentive stock options is restricted under the Code.

Amendment and Termination of the Stock Plan. The Board may amend, alter or suspend the Plan, or any part thereof, at any time and for any reason. However, Exponent will obtain stockholder approval for any amendment to the Plan to the extent required by applicable laws or stock exchange rules. In addition, unless approved by Exponent stockholders, no such amendment will be made that would: (1) increase the maximum number of shares for which awards may be granted under the Plan, other than an increase pursuant to a change in capitalization, dissolution or change in control, (2) increase the share or cash limit described above, (3) reprice or otherwise reduce the exercise price of outstanding options other than an adjustment pursuant to a change in capitalization, dissolution or change in control, or (4) expand the class of persons eligible to receive awards under the Plan. No such action by the Board or stockholders may alter or impair any award previously granted under the Plan without the written consent of the participant (except for certain changes specified in the Plan). Unless terminated earlier, the Plan will terminate ten years from the date of its last approval by the stockholders to add shares under the Plan.

Summary of Options, Stock Awards and Cash Awards

Options. Each option is evidenced by a stock option agreement between Exponent and the optionee and is subject to the following additional terms and conditions. The Plan allows the Administrator broad discretion to determine the terms of individual options.

Exercise Price.The Administrator determines the exercise price of options at the time the options are granted. The exercise price of options granted under the Plan may not be less than 100% of the fair market value of the common stock on the date such option is granted (incentive stock options granted to employees who are also 10% stockholders must have an exercise price equal to 110% of the fair market value of the stock on the date of grant). Exponent may grant options with exercise prices equal to less than 100% of the fair market value of the underlying option shares on the date of grant in connection with an acquisition by Exponent of another company. The fair market value means, as of any date, the value of a share of Common Stock or other property as determined by the Administrator, in its discretion, or by the Company, subject to the Plan’s requirement that if the Company’s common stock is trading on a national or regional securities exchange or market system, the fair market value will generally be the closing price for that day as quoted on that exchange or system.

As of April 4, 2017, the closing price of our common stock was $58.25 per share. No option may be repriced to reduce the exercise price of such option without stockholder approval (except in connection with a change in Exponent’s capitalization, such as a stock split or a recapitalization).

Exercise of Option; Form of Consideration. The Administrator determines when options become vested and exercisable, and in its discretion may accelerate the vesting and/or exercisability of any outstanding option. Exponent’s standard employee option vesting schedule is twenty-five percent per year. The means of payment for shares issued upon exercise of an option are specified in each option agreement. The Plan permits payment to be made by cash, check, wire transfer, other shares of common stock of Exponent (with some restrictions), broker assisted same-day sales, cashless net-exercise arrangements, any other form of consideration permitted by applicable law, or any combination of these methods.

Term of Option.The term of an option may be no more than ten years from the date of grant (or up to ten and one-half years in certain jurisdictions outside of the United States). No option may be exercised after the expiration of its term.

Termination of Employment. If an optionee’s employment terminates for any reason (other than as described below), then all options held by the optionee under the Plan generally will be exercisable until the earlier of three months following the optionee’s termination or the expiration of the term of the option; provided that the Administrator may in the stock option agreement specify a period of time (but not beyond the expiration date of the option) following the optionee’s termination during which the optionee may exercise the option as to shares that were vested and exercisable as of the optionee’s termination date. The term of an option may also be extended automatically for specified periods following termination of the optionee’s employment under certain circumstances.

Death or Disability.Generally, if an optionee’s employment terminates as a result of optionee’s death or disability, then all options that are vested and exercisable as of the date of termination may be exercised for one year following the date of termination due to optionee’s death or disability, provided that no option may be exercised after the expiration of its term.

Other Provisions.The stock option agreement may contain other terms, provisions and conditions not inconsistent with the Plan, as may be determined by the Administrator.

Stock Awards.Each stock award is evidenced by an award agreement between Exponent and the participant. The Plan allows the Administrator broad discretion to determine the terms of individual stock awards.

General Terms.Each stock award agreement will contain provisions regarding (1) the number of shares subject to such stock award or a formula for determining such number, (2) the purchase price of the shares, if any, and the means of payment for the shares, (3) the performance criteria (including the Qualifying Performance Criteria), if any, and level of achievement versus these criteria that will determine the number of shares granted, issued, retainable and vested, as applicable, (4) such terms and conditions on the grant, issuance, vesting and forfeiture of the shares, as applicable, as may be determined from time to time by the Administrator, (5) restrictions on the transferability of the stock award, and (6) such further terms and conditions, in each case not inconsistent with the Plan, as may be determined from time to time by the Administrator.

Vesting.The vesting of a stock award may (but need not) be subject to performance criteria (including Qualifying Performance Criteria), continued service of the participant, other market conditions or a combination of these conditions. The Administrator has the authority to accelerate vesting of an outstanding stock award. Exponent’s restricted stock unit grant program is discussed in more detail below.

Termination of Employment.In the case of stock awards, including stock units, unless the Administrator determines otherwise, the award agreement will generally provide that the unvested stock or stock units will be forfeited upon the participant's termination of employment. Unvested stock or stock units will continue to vest in the case of retirement at 59 ½ years or older, provided that the award holder does all consulting work through the Company and does not become an employee for a past or previous client (direct or indirect) or competitor of the Company.

Cash Awards.Cash awards granted under the Plan will generally be made to individuals who are, or who the Company anticipates may be, among its most highly compensated officers (such individuals being those employees whose compensation may not be fully deductible by Exponent under Code Section 162(m) if it exceeds with respect to a given year the limits imposed by that section). Each cash award granted under the Plan will be subject to Qualifying Performance Criteria and will be reflected in an agreement containing provisions regarding (1) the target and maximum amount payable to the participant as a cash award, (2) the Qualifying Performance Criteria and level of achievement versus the criteria that will determine the amount of such payment, (3) the period as to which performance will be measured for establishing the amount of any payment, (4) the timing of any payment earned by virtue of performance, (5) restrictions on the alienation or transfer of the cash award prior to actual payment, (6) forfeiture provisions, and (7) such further terms and conditions, in each case not inconsistent with the Plan, as may be determined from time to time by the Administrator. The maximum amount payable as a cash award that is settled for cash may be a multiple of the target amount payable. The maximum amount payable pursuant to a cash award granted under the Plan for any fiscal year may not exceed U.S. $1,000,000. Nothing in the Plan prevents the Company from granting cash awards outside of the Plan to any individual.

Federal Income Tax Consequences of Options, Stock Awards and Cash Awards under the Plan

The following is only a summary of the effect of U.S. federal income taxation upon awardees and Exponent with respect to the grant, vesting and exercise of awards under the Plan. It does not purport to be complete and does not discuss the tax consequences arising in the context of the employee’s death or the income tax laws of any municipality, state or foreign country in which the employee’s income or gain may be taxable.

Incentive Stock Options.An optionee who is granted an incentive stock option does not recognize taxable income at the time the option is granted or upon its exercise, although the exercise is an adjustment item for alternative minimum tax purposes and may subject the optionee to the alternative minimum tax. Alternative minimum tax is an alternative method of calculating the income tax you must pay each year, which includes certain additional items of income and tax preferences and disallows or limits certain deductions otherwise allowable for regular tax purposes. Alternative minimum tax is payable only to the extent that alternative minimum tax income exceeds “regular” federal income tax for the year (computed without regard to certain credits and special taxes).

Upon a disposition of the shares acquired on exercise of an incentive stock option more than two years after grant of the option and one year after exercise of the option, the optionee will recognize long-term capital gain or loss equal to the difference between the sale price and the exercise price. If the holding periods are not satisfied, then: (1) if the sale price exceeds the exercise price, the optionee will recognize capital gain equal to the excess, if any, of the sale price over the fair market value of the shares on the date of exercise and will recognize ordinary income equal to the difference, if any, between the lesser of the sale price or the fair market value of the shares on the exercise date and the exercise price; or (2) if the sale price is less than the exercise price, the optionee will recognize a capital loss equal to the difference between the exercise price and the sale price. Unless limited by Section 162(m) of the Code, Exponent is entitled to a deduction in the same amount as and at the time the optionee recognizes ordinary income.

Nonstatutory Stock Options.An optionee does not recognize any taxable income at the time a nonstatutory stock option is granted. Upon exercise of vested shares, the optionee recognizes taxable income generally measured by the excess of the then fair market value of the shares over the exercise price. Any taxable income recognized in connection with an option exercise by an employee of Exponent is subject to tax withholding by Exponent. Unless limited by Section 162(m) of the Code, Exponent is generally entitled to a deduction in the same amount as and at the time the optionee recognizes ordinary income. Upon a disposition of such shares by the optionee, any difference between the sale price and the exercise price, to the extent not recognized as taxable income as provided above, is treated as long-term or short-term capital gain or loss, depending on the length of the holding period.

Stock Awards.Stock awards will generally be taxed in the same manner as nonstatutory stock options, meaning that the employee will generally recognize income in an amount equal to the excess of the fair market value of the shares (typically measured as of the vesting date) over any amount the employee paid for the shares. Except with respect to Restricted Stock Units, an employee who receives unvested shares of stock under a stock award may generally make an election at the time of grant to recognize income based upon the fair market value of the stock on the grant date. Certain of the Company’s restricted stock unit awards incorporate income recognition deferral features, which delay the date on which the employee recognizes income for certain purposes. Ordinary income recognized by an employee with respect to a stock award will be subject to tax withholding by Exponent. Unless limited by Section 162(m) of the Code, Exponent is generally entitled to a deduction in the same amount as and at the time the employee recognizes ordinary income.

Cash Awards.Upon receipt of cash, the recipient will have taxable ordinary income, in the year of receipt, equal to the amount of cash received. Any cash received will be subject to tax withholding by Exponent. Unless limited by Section 162(m) of the Code, Exponent will be entitled to a tax deduction in the amount and at the time the recipient recognizes compensation income.

Accounting Treatment

Exponent will recognize compensation expense in connection with awards granted under the Plan as required under applicable accounting standards. Exponent currently amortizes compensation expense associated with equity awards over an award’s requisite service period and establishes fair value of equity awards in accordance with applicable accounting standards.

New 2008 Plan Benefits

No awards have been granted, and no shares of common stock have been issued, on the basis of the proposed 1,100,000 share increase under the Plan amendment. It is not possible to determine the specific amounts and types of awards that may be awarded in the future under the Plan amendment because the grant and actual pay-out of awards under the 2008 Plan are subject to the discretion of the Administrator.

Aggregate Past Grants Under the 2008 Plan

In accordance with SEC rules, the following table sets forth summary information with respect to the number of shares of our common stock subject to stock options made under the 2008 Plan to our named executive officers, all current executive officers as a group, directors, associates of such executive officer, directors and nominees, each other person who received or is to receive 5% of such options, warrants or rights and all employees (other than executive officers) as a group as of April 4, 2017. This table does not include restricted stock units.

Registration with the SEC

We intend to file a Registration Statement on Form S-8 relating to the issuance of shares of common stock under the Plan amendment with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the Plan amendment by our stockholders.

In considering the recommendation of our Board of Directors with respect to the approval of the amendment and the material terms of the 2008 Plan, as amended, stockholders should be aware that the members of our Board of Directors have certain interests, which may present them with conflicts of interest in connection with this proposal. As discussed above, directors are eligible to receive awards under the 2008 Plan. For more information about equity grants to our directors, see“Compensation of Directors”above. Our Board of Directors recognizes that approval of this proposal may benefit our directors and their successors.

Required Vote

Approval of the amendment of the Amended and Restated 2008 Equity Incentive Plan will require the affirmative vote of a majority of shares present in person or represented by proxy at the Annual Meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF AMENDMENT OF THE AMENDED AND RESTATED 2008 EQUITY INCENTIVE PLAN.

PROPOSAL NO. 6

APPROVAL OF AMENDMENT OF THE 2008 EMPLOYEE STOCK PURCHASE PLAN

In 2008, we adopted the 2008 Employee Stock Purchase Plan (ESPP), which replaced our prior Employee Stock Purchase Plan established in 1992. The ESPP was approved by stockholders on May 29, 2008 and currently has 38,056 shares of our common stock authorized for issuance. On April 3, 2017, the Board of Directors adopted an amendment to the ESPP to increase the number of shares authorized for issuance by 200,000 shares (bringing the remaining total number of shares currently available for issuance under the ESPP to 238,056 and the aggregate number of shares under the ESPP to 600,000), subject to stockholder approval of the amendment. Based on our current plans and growth expectations, we believe that the shares requested in this proposal will be sufficient for the Company’s needs for the next six years.

The ESPP is designed to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. It allows employees to purchase stock through regular payroll deductions at a 5% discount to the market value of Exponent common stock on the last date of each offering period (Purchase Date). Management and the Board of Directors believe that it is important for employees to have the ability to participate in ownership of the Company. This benefit is an integral, long-standing, and valued aspect of the Company’s benefit plan; to lose this benefit would be a loss both to the Company and its employees.

Exponent expects that, based upon the structure of theESPP, the Company will not be required to record compensation expenses for financial statement purposes in connection with the rights to purchase stock granted to employees underthe ESPP.

The following is a summary of the material terms of the ESPP. It is qualified by reference to the full text of the plan, which is attached as Appendix B to this proxy statement. Stockholders are encouraged to review the ESPP carefully.

Administration.The ESPP may be administered by the Board or by a committee appointed by the Board (the Administrator). Currently, the ESPP is being administered by the Human Resources Committee of the Board. In any event, Exponent will administer the ESPP in accordance with applicable law including with applicable Nasdaq listing standards.

Eligibility.    Any person who is customarily employed by Exponent (or any of its majority-owned subsidiaries designated by the Board of Directors) for at least 20 hours per week and more than five months in any calendar year and is not deemed to own stock or options to purchase stock constituting 5% or more of the total voting power of stock of Exponent is eligible to participate in the ESPP, provided that the employee is employed prior to the commencement of an Offering Period (as defined below) and is not an individual providing services to Exponent or its subsidiaries as an independent contractor and is reclassified as a common law employee for any reason except federal income and employment tax purposes.

As of April 4,2017, approximately ten officers (as defined in Rule 16a-1(f) under the Exchange Act), and 1,013 employees of the Company would have been eligible to participate in the ESPP had the Plan amendment been effective as of such date. As of April 4, 2017, approximately 164 employees participate in the ESPP.

Plan Characterization.    The ESPP is not subject to the provisions of the Employment Retirement Income Security Act of 1974, as amended, and is not qualified under Section 401(a) of the Code.

Adjustments upon Changes in Capitalization, Merger or Sale of Assets.    Subject to any required action by Exponent’s stockholders, (1) the number of shares covered by each outstanding option, (2) the price per share subject to each outstanding option and (3) the maximum number of shares that may be purchased by a participant on any purchase date will each be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a stock split or the payment of stock dividend or any other increase or decrease in the number of issued shares of Exponent’s stock effected without receipt of consideration by Exponent.

In the event of a dissolution or liquidation of Exponent, each Offering Period under the ESPP then in progress will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Administrator.

In the event of a change in control transaction of Exponent, each outstanding right to purchase shares under the ESPP will be assumed or an equivalent right will be substituted by Exponent’s successor corporation or a parent or subsidiary of such successor corporation unless Exponent’s Board determines in lieu of such assumption or substitution that a participant will have the right to exercise the option as to all the optioned stock. Each Offering Period then in progress will be shortened and a new Purchase Date will be set (the “New Purchase Date”), as of which date any Offering Period then in progress will terminate. The New Purchase Date will be on or before the date of consummation of the change in control and the Administrator will notify each participant in writing prior to the New Purchase Date, that the Purchase Date for his or her purchase right has been changed to the New Purchase Date and that his or her purchase right will be fully exercisable on the New Purchase Date, unless prior to such date he or she has withdrawn from the Offering Period.

Nontransferability of Awards.    Unless otherwise determined by the Administrator, purchase rights granted under the ESPP are not transferable other than by will or the laws of descent and distribution.

Offering Dates.    The ESPP currently consists of a series of three-month offering periods (“Offering Periods”) commencing on the first business day of each fiscal quarter of each year and ending on the last business day of the fiscal quarter, with the last day of each Offering Period being designated a “Purchase Date.” The Company has the ability to change the timing, duration and structure of the Offering Periods without seeking stockholder approval.

Purchase Price.    The purchase price per share at which shares are sold under the ESPP is ninety-five per cent (95%) of the fair market value of the common stock on the applicable Purchase Date. The fair market value on a given date will be the closing price on the Purchase Date of a share of Exponent’s common stock (or, in the event that the common stock is not traded on such date, on the immediately preceding trading date). The Board may not provide for a discount greater than 5% from the Purchase Date fair market value. As of April 4, 2017, the closing price of our common stock was $58.25 per share.

Participation in the ESPP; Payment of Purchase Price.    Eligible employees may participate in the ESPP by completing a subscription agreement in the form provided by Exponent and filing it with Exponent on a date prescribed by the Administrator prior to the first business day of the applicable Offering Period. The subscription agreement currently authorizes payroll deductions of up to fifteen per cent of the participant’s eligible compensation. The purchase price of the shares is accumulated by payroll deductions during the applicable Offering Period. Eligible compensation is defined in the ESPP to include base salary, wages, commissions, overtime, and paid time off but exclusive of payments for shift premiums, incentive compensation, inventive payments, bonuses, equity compensation amounts and other compensation. A participant may discontinue his or her participation in the ESPP at any time during the Offering Period prior to a Purchase Date, and may decrease the rate of his or her payroll deductions to zero percent once during an ongoing Offering Period by completing and filing a new subscription agreement. Payroll deductions will commence on the first payroll following the Offering Date and will end on the last payroll paid on or prior to the Purchase Date of the Offering Period. No interest accrues on the payroll deductions of a participant in the ESPP.

Purchase of Stock; Exercise of Option.    By executing a subscription agreement to participate in the ESPP, the participant accepts the grant of an ESPP option to purchase shares during an Offering Period. The number of shares purchased by a participant will be determined by dividing the amount of the participant’s total payroll deductions for such offering accumulated prior to the Purchase Date by the purchase price applicable for the Offering Period. Unless the participant’s participation is discontinued, each participant’s option for the purchase of shares will be exercised automatically on each Purchase Date at the applicable price. Notwithstanding the foregoing, no participant will be permitted to purchase shares under the ESPP which (with all rights to purchase stock under all similar stock plans of Exponent or of a parent or of any of Exponent’s subsidiaries) exceed $25,000 in fair market value, determined as of the Offering Date of the Offering Period in which the participant is participating during each calendar year in which an option to purchase stock under the ESPP is outstanding. In addition, no participant will be permitted to purchase more than a specified number of shares on any Purchase Date. The maximum number is currently set at 5,000 shares although the Company can change this limit at its discretion and the per-period share limit will adjust upon a stock split or similar transaction. Furthermore, if the number of shares which would otherwise be placed under option at the beginning of an Offering Period exceeds the number of shares then available under the ESPP, a pro rata allocation of the available shares will be made in as equitable a manner as is practicable.

Withdrawal.    A participant’s interest may be terminated in whole, but not in part, by signing and delivering to Exponent a notice of withdrawal from the ESPP. Such withdrawal may be elected prior to a Purchase Date under the ESPP under procedures established by the Company.

Any withdrawal by the participant of accumulated payroll deductions for a given Offering Period automatically terminates the participant’s interest in that Offering Period. All of the participant’s contributions credited to his or her account will be paid to him or her promptly after receipt of his or her notice of withdrawal. A participant’s withdrawal from an Offering Period does not have an effect upon such participant’s eligibility to participate in subsequent Offering Periods under the ESPP; however, the participant may not re-enroll in the same Offering Period after withdrawal.

Termination of Employment.    Upon termination of the participant’s continuous status as an employee prior to a Purchase Date of an Offering Period for any reason, including retirement or death, the contributions credited to his or her account will be returned to him or her, without interest, or, in the case of his or her death, to the person or persons entitled thereto, and his or her option will be automatically terminated.

Amendment and Termination of the ESPP. The Plan shall continue until the earlier to occur of termination by the Board, issuance of all of the shares of common stock reserved for issuance under the Plan, or June 1, 2027. The Administrator may amend, alter or discontinue the ESPP, but Exponent will obtain stockholder approval for any amendment to the ESPP to the extent required by applicable laws or stock exchange rules. In addition, unless approved by the stockholders of the Company, no such amendment will be made that would increase the maximum number of shares for which a purchase right may be granted under the ESPP or expand the class of persons eligible to receive purchase rights under the ESPP. No such action by the Administrator or the stockholders may impair any option without the written consent of the participant except as described below.

An Offering Period, or the ESPP, may be terminated by the Administrator on a Purchase Date or by the Administrator’s setting a new Purchase Date with respect to an Offering Period then in progress if the Administrator determines that termination of the ESPP and/or the Offering Period is in the best interests of Exponent and its stockholders, or if continuation of the ESPP and/or the Offering Period would cause Exponent to incur accounting charges in connection with the ESPP that the Administrator determines to be contrary to the best interests of the Company and its stockholders. Without stockholder consent and without regard to whether any participant rights may be considered to have been adversely affected, the Administrator or a committee may change the Offering Periods, limit the frequency and/or number of changes in the amount of contributions withheld from a participant’s compensation during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in Exponent’s processing of properly completed withholding elections, change the amount of the discount from the fair market value of a share for purposes of establishing the purchase price for a future Offering Period, (but subject to the limitation described above) establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of common stock for each participant properly correspond with amounts withheld from the participant’s compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the ESPP.

Federal Income Tax Consequences of the ESPP.

The ESPP, and the right of participants to make purchases thereunder, is intended to qualify for the federal income tax treatment provided to employee stock purchase plans and their participants under the provisions of Sections 421 and 423 of the Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the ESPP are sold or otherwise disposed of. Upon sale or other disposition of the shares, the participant will generally be subject to tax in a manner that depends upon the holding period of the shares. If the shares are sold or otherwise disposed of (including by gift) more than two years from the grant date for (typically the first day of the offering period) and more than one year from the date the shares are purchased, the participant will recognize ordinary income measured as the lesser of (a) the excess of the fair market value of the shares at the time of such sale or disposition over the purchase price, or (b) an amount equal to five percent (5%) of the fair market value of the shares as of the first day of the Offering Period. Any additional gain or loss will be treated as long-term capital gain or loss. If the shares are sold or otherwise disposed of (including by gift) before the expiration of either of these holding periods, the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the purchase price. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on whether or not the disposition occurs more than one year after the date the shares are purchased. Exponent is not entitled to a deduction for amounts taxed as ordinary income or capital gain to a participant except to the extent of ordinary income recognized by a participant upon a sale or disposition of shares prior to the expiration of the holding periods described above.

New ESPP Benefits

The benefits that will be received by or allocated to eligible employees under the ESPP cannot be determined at this time because the amount of contributions set aside to purchase the Shares under the ESPP (subject to the limitations discussed above) is entirely within the discretion of each participant. If the proposed amendment of the ESPP had been in effect for the prior fiscal year, the Company does not expect that the number of shares purchased by participants in the ESPP during that year would have been materially different that the number of shares purchased as set forth in the table below.

Aggregate Past Grants Under the ESPP

In accordance with SEC rules, the following table sets forth summary information with respect to the number of shares of our common stock purchased under the ESPP by our named executive officers, all current executive officers as a group, directors, associates of such executive officer, directors and nominees, each other person who received or is to receive 5% of such options, warrants or rights and all employees (other than executive officers) as a group as of March 31, 2017for the most recent completed offering period ended March 31, 2017and under the ESPP for all completed offering periods.

Registration with the SEC

We intend to file a Registration Statement on Form S-8 relating to the issuance of shares of common stock under the ESPP amendment with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the Plan amendment by our stockholders.

Required Vote

Approval of the amendment of the 2008 Employee Stock Purchase Plan will require the affirmative vote of a majority of shares present in person or represented by proxy at the Annual Meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE AMENDMENT OF THE 2008 EMPLOYEE STOCK PURCHASE PLAN.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table indicates beneficial ownership of the Company’s common stock as of April 4, 2017.3, 2018. It includes stockholders known by the Company to beneficially own more than 5% of the Company’s common stock, the Company’s directors, the executive officers of the Company named in the Summary Compensation Table, and the directors and executive officers of the Company as a group. A total of 25,871,15726,004,501 shares of the Company’s common stock were issued and outstanding as of April 4, 2017.3, 2018.

Section 16(a) Beneficial Ownership Reporting Compliance

The Company believes that during fiscal 2016,2017, all filings with the SEC, by its executive officers, directors and 10% stockholders complied with requirements for reporting ownership or changes in ownership of Company common stock pursuant to Section 16(a) of the Securities Exchange Act of 1934.1934, except for the following: A failure to file a Form 4, Statement of Changes in Beneficial Ownership, on a timely basis for Stephen C. Riggins with regards to the sale of 1,500 shares of Company stock on February 6, 2017. The form 4 for this sale was filed on February 14, 2017.

Compensation Committee Interlocks and Insider Participation

During fiscal 2016,2017, Ms. Lindstrom, Mr. Riggins, Ms. Richardson, Dr. Shoven, and Ms. Zumwalt served as members of the Human Resources Committee. No member of the Human Resources Committee is or was formerly an officer or an employee of the Company or any of its subsidiaries.

No interlocking relationship exists between the Company’s Board of Directors or Human Resources Committee and the Boardboard of Directorsdirectors or Compensation Committeecompensation committee of any other company, nor has any such interlocking relationship existed in the past.

EXECUTIVE OFFICER COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis explains our compensation philosophy, objectives, policies and practices with respect to our 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 out in the “Summary Compensation Table”.Table.” We collectively refer to these five individuals 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 to 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. During our Board and Committee Meetingscommittee meetings on September 29, 2016,14, 2017, we considered the results of the “say on pay” proposal from our 20162017 proxy, on which 98.1%97.5% of votes cast by our stockholders were in support of our executive compensation policies and decisions for fiscal 2015.2016. Our approach for fiscal 20162017 on compensation policies and decisions remained consistent with our 20152016 approach and no substantial changes were made during fiscal 2016.2017. Our compensation program consists of the following elements: base salary, bonus, equity compensation and other benefits.

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 2016.2017.

In the case of the Chief Executive Officer, the Committee reviews the Chief Executive Officer’s written assessment of his performance, evaluates the performance of the Chief Executive Officer relative to his objectives and determines the appropriate compensation. For the other executive officers, the Chief Executive Officer evaluates their performance and presents his 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: http://www.exponent.com/corporate-governance/.

The Charter of the Committee provides for the Committee to retain, and terminate as necessary, a compensation consultant. During 2016, 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 2016,2017, the Committee reviewed competitive compensation data for the chief executive officer and chief financial officer of nine publicly-traded professional service companies recommended by Compensia with revenue, operating income, market capitalization, and business focus comparable to Exponent. Those companies included The Advisory Board, The Corporate Executive Board, CRA International, Heidrick and Struggles, Huron Consulting Group, ICF International, Korn/Ferry International, Navigant Consulting, and Resources Connection. There were no changes in comparable companies from 2015.2016. During 2016,2017, 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.

Compensation and Risk Management

The Committee does not believe that our executive compensation program encourages excessive or unnecessary risk-taking. By dividing our executives’ compensation into three key elements, the Committee believes it has properly weighted the performance compensation eligible to be earned by our executives appropriately between short-term and long-term goals. Additionally, the annual bonus for all executive officers is capped at two times their target bonus and 40% of each executive officer’s annual bonus is settled with fully vested restricted stock units that are not delivered for four years. These provisions add protection against disproportionately large short-term incentives. The primary component of our equity compensation program is restricted stock units, which cliff vest four years from the date of grant. The delayed vesting encourages our executives’ sustained focus on the long-term performance of the Company and encourages retention. The Committee believes our executive compensation program promotes proper alignment of our executives’ interests with those of the Company’s stockholders.

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. On July 29, 2016, Exponent’s Board of Directors appointed Dr. Catherine Corrigan as its President. Dr. Paul Johnston continues to serve as the Company’s Chief Executive Officer. Upon her appointment as President, Dr. Corrigan’s base salary was set at $550,000. On October 1, 2016, the Committee appointed Dr. Harri Kytomaa as a Group Vice President. Upon his appointment as a Group Vice President, Dr. Kytomaa’s base salary was set at $415,000. Both salaries reflected a level that the Committee concluded was appropriate based on their experience and comparable compensation data.

Effective April 1, 2017, the annualThe base salary for Dr. Johnston, Chief Executive Officer, was not increased 4% from $675,000in 2018 as Dr. Johnston is expected to $700,000.transition to the role of Executive Chairman on May 31, 2018. As Executive Chairman, Dr. Johnston’s increased annual base salary reflectedwill be reduced by 50% as he will be in a level that the Committee concluded was appropriate based upon Dr. Johnston’s performance and the competitive compensation data.half-time role. Effective April 1, 2017,March 31, 2018, the annual base salary for Mr. Schlenker, Executive Vice President and Chief Financial Officer, increased 5%4% from $440,000$460,000 to $460,000.$480,000. 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, 2017,May 31, 2018, in connection with her expected promotion to Chief Executive Officer, the annual base salary for Dr. Corrigan, President, increased 5%will increase 9% from $550,000$575,000 to $575,000. Dr. Corrigan’s increased annual base salary reflected a level that the Committee concluded was appropriate based upon Dr. Corrigan’s performance during fiscal 2016.$625,000. Effective April 1, 2017,March 31, 2018, the annual base salary for Dr. Murray, Group Vice President, increased 7%10% from $375,000$400,000 to $400,000.$440,000. Dr. Murray’s increased annual base salary reflected a level that the Committee concluded was appropriate based upon Dr. Murray’s performance during fiscal 2016.2017. For fiscal 2016,2018, the Committee concluded that the annual salary for Dr. Kytomaa, Group Vice President of $415,000 was competitive and would not be increased.

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 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. An additional amount of up to the amount of the Chief Executive Officer’s target bonus may be added to the bonus pool if the Chief Executive Officer’s targets for revenue and profit are exceeded, as discussed below. Our bonus pool has historically been 33% and the Committee determined that this amount was competitive for fiscal 2016.2017. The total amount available in the bonus pool for fiscal 20162017 was $37,120,000.$44,752,000. 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. 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 performance is based on that officer’s overall contribution to the Company.

On February 29, 201616, 2017 the Committee adopted a performance threshold which,that, if met or exceeded, willwas structured to allow bonuses and all restricted stock unit awards to qualify as performance based compensation eligible for deductibility under Section 162(m). The 20162017 performance threshold was $45$44 million of EBITDAS(EBITDAS is a non-GAAP financial measure defined as net income before income taxes, interest income, depreciation and amortization and stock-based compensation), which must be exceeded prior to the payout of any bonus under this plan and the grant of any restricted stock units under this plan to our current executive officers. If the $45$44 million of EBITDAS is exceeded, the Committee can approve a payout of up to 200% of the 20162017 target bonus for each executive officer. The 20162017 target bonus for the Chief Executive Officer and the Executive Vice President and Chief Financial Officer was their current base salary plus an additional 40% for matching restricted stock units. The 20162017 target bonus for all of the remaining executive officers was 80% of their current base salary plus an additional 40% for matching restricted stock units. Actual EBITDAS for fiscal 20162017 was $87,903,000,$103,655,000, which exceeded the performance threshold and thus all executive officer bonuses and all restricted stock unit awards granted to executive officers qualify as performance based compensation eligible for deductibility under Section 162(m).threshold.

For fiscal 2016,2017, the Chief Executive Officer’s performance was evaluated using a process developed with the help of Compensia, based on performance objectives in three categories: revenue, profitability, and leadership.

Performance Awards. 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 must determine 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 29, 2016,16, 2017, the Committee determined the performance award opportunity to be granted to Dr. Johnston, Chief Executive Officer, for fiscal 2016.2017. 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. Johnston’s target award was set at $225,000$233,333 (one-third of Dr. Johnston’s base salary) 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. Johnston’s 20162017 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. Johnston 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 5%3.5% increase in revenues before reimbursements. This target is measured on a scale of 0 to 2 with 0 being equal to 5%6.5% revenue decline, 1 being equal to 5%3.5% revenue growth, and 2 being equal to 15%13.5% revenue growth. Performance between the targets is prorated on a straight-line basis. We did not meetexceeded this quantitative goal with actual revenues before reimbursements growth of 1.18%10.18%. This resulted in a quantitative performance factor for this objective of 0.621.67 on a scale of 0 to 2.

The profit performance target was to meet the adjusted EBITDAS target margin. The adjusted EBITDAS margin is the calculated margin (EBITDAS/revenues before reimbursements) excluding the realized gain/loss on foreign exchange. The EBITDAS target margin for fiscal 20162017 was 29.83%29.14% increased or decreased by five basis points for each 1% of revenue before reimbursements growth above or below 5%. This is also measured on a scale of 0 to 2 with 0 being equal to 200 basis points below the EBITDAS target margin, 1 being equal to the EBITDAS target margin, and 2 being equal to 200 basis points above the EBITDAS target margin. We did not meetexceeded this quantitative goal and fell short ofexceeded the EBITDAS target margin by 33205 basis points. This resulted in a quantitative performance factor for this objective of 0.842.0 on a scale of 0 to 2.

On February 16, 2017,15, 2018, the Committee certified and determined the amount payable to Dr. Johnston with respect to the cash and equity components of his performance award for fiscal 2016.2017. Both of the performance targets were weighted equally. This resulted in a composite performance factor of 0.731.835 on a scale of 0 to 2. Accordingly, the formula amount payable for the performance award was $164,000$428,000 (target of $225,000$233,333 multiplied by the composite performance factor of 0.73)1.835).

Qualitative Bonuses. The target for Dr. Johnston’s qualitative bonus was set at $450,000$466,667 (two-thirds of Dr. Johnston’s base salary) for fiscal 20162017 with the maximum payout set at twice the target. The Committee set the target bonus level and maximum payout at amounts they believe are competitive. Performance was evaluated based on objectives in three categories: revenue, profitability and leadership. The performance objectives for revenue and profit are weighted 25% each and the performance objective for leadership is weighted 50%. The Committee may reduce the qualitative bonus from the target amount at their discretion.

With respect to the revenue objective, the determination was based on the judgment of the Committee, taking into consideration factors such as how well we accomplished strategic growth initiatives and added top talent. For the profit objective, the determination was based on the judgment of the Committee, taking into consideration factors such as how we were able to control expenses and manage headcount growth. The leadership objective was based on the judgment of the Committee taking into consideration factors such as management of enterprise risk and our overall strategic direction.

In determining the appropriate qualitative bonus, the Committee considered Dr. Johnston’s contributions to achieving each of the three objectives. In making a qualitative assessment of the revenue objective the Committee determined that this objective was not met. Efforts were made in this area including a focus onexceeded due to the business development efforts associated with our strategic growth initiatives and drivingthe strong hiring year for talent. We made organizational progress in our marketingindustry initiatives and business development processes to become more industry focused. However, we did not achieve our anticipated growth.further established Exponent as a provider of user experience studies providing clients with data on how products interact with people. In making a qualitative assessment of the profit objective the Committee determined that this objective was exceeded. Following the downturn in our business during the second quarter of 2016 we reduced the size of our consulting staffexceeded due to how expenses were managed, infrastructure was leveraged and slowed our recruiting efforts to protect our profitability. We successfully maintained our utilization above 70%, which we have done every year since 2010.headcount was managed. Utilization for 2017 was exceptionally strong. With respect to the leadership objective, the Committee recognized that this objective was significantly exceeded due to the management of enterprise risk, the strategic direction provided, the retention of key Principalsemployees and succession planning at the level of President and the Operating Committee.Chief Executive Officer. Based on the Committee’s qualitative evaluation, the composite performance factor was 1.301.66 on a scale of 0 to 2. Accordingly, the amount payable for the qualitative bonus was $586,000$772,000 (target of $450,000$466,667 multiplied by the composite performance factor of 1.30)1.66). The Committee decided that 60% of the qualitative bonus will be paid in cash and 40% of the qualitative bonus will be settled with fully vested restricted stock units under which Dr. Johnston has the right to receive shares of our common stock four years from the date of grant.

The bonuses for the other named executive officers were determined on a total compensation basis based on their relative contribution to our overall performance. 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. The size of our bonus pool was also considered when determining the annual bonuses for our other named executive officers.

Equity Compensation. Our equity compensation program is designed to align the named executive officers and stockholders’ interests, create a sense of partnership and long-term incentives, provide a mechanism for retention and provide a competitive total compensation package. We use a combination of restricted stock units and stock options to achieve these objectives.

Generally 40% of each named executive officer’s annual bonus is 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 day of grant.

During the annual review process in February 2016,2017, the Committee granted a stock option to purchase 24,000 shares of our common stock to Dr. Johnston, Chief Executive Officer, and a stock option to purchase 16,000 shares of our common stock to Mr. Schlenker, Executive Vice President and Chief Financial Officer.Officer, and a stock option to purchase 16,000 shares of our common stock to Dr. Corrigan, President. 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. On July 29, 2016, Exponent’s Board of Directors appointed Dr. Catherine Corrigan as its President. Dr. Paul Johnston continuesThere were no new hire awards granted to serve as the Company’s Chief Executive Officer. Upon her appointment as President, Dr. Corrigan received a stock option grant for 24,000 shares. This option grant reflects a level that the Committee concluded was appropriate based upon past practices within the Company, Dr. Corrigan’s total stock ownership and the amount needed to remain competitive.any named executive officers.

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 Chief Executive Officer, two times for theExecutive Vice President andChief 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 Exponent’s prior 365-day average closing common stock price. 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 through our Restricted Stock Unit Program or 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 4, 2017,3, 2018, 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 Exponent 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, we will use reasonable efforts to recover from any current or former officer of the Company who was paid or granted incentive based compensation and whom the Board has determined has willfully committed an act of fraud, dishonesty or recklessness in the performance of his or her duties as an officer that contributed to the noncompliance that resulted in the Company’s obligation to prepare the accounting restatement, all excessive incentive-based compensation. Incentive-based compensation includes the amount of the culpable employee’s annual incentive awards paid under our cash incentive program, stock options and performance-based equity or equity-based awards (or any amount attributable to such awards) paid or granted to the culpable employee under our long-term incentive equity program, and any other incentive-based compensation paid or granted in respect of Company and/or individual performance to a culpable employee pursuant to an “incentive plan” as such term is defined in Item 402(a)(6)(iii) of Regulation S-K under the Exchange Act. The policy applies to financial statements filed in a rolling three-year, lookback period. This clawback policy is in addition to any policies or recovery rights that are required under applicable laws, including the Sarbanes Oxley Act and the Dodd Frank Act.

No Compensation Consultant Conflicts of Interest. We are not aware of any conflict of interest that has been raised by the work performed in 2016 by Compensia. During 2016 the Human Resources Committee reviewed the six independence factors enumerated by the Securities and Exchange Commission and determined that Compensia was independent. We did not engage Compensia during 2017.

Nonqualified Deferred Compensation. To attract and retain high performing executive officers and consultants we have a nonqualified deferred compensation plan under which we provide certain highly compensated employees, including the named executive officers, the opportunity to elect to defer the receipt of compensation. Participants in the plan may elect to defer up to 100% of their compensation including base salary and bonus. We also retain the discretion to make company contributions for any participant. For additional information, please refer to the Nonqualified Deferred Compensation table.

Other Benefits. Executive officers participate in our other benefit plans on the same terms as other employees. These plans include medical and dental insurance, life insurance, an employee stock purchase plan and company contributions to each employee’s defined contribution retirement account. We also provide paid vacation and other paid holidays to all eligible employees, including named executive officers.

Tax Deductibility of Pay

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally places a limit of $1,000,000 on the amount of annual compensation that we may deduct in any one year with respect to certain executive officers unless the compensation is qualifying performance-based compensation where certain requirements are met. It is the intent of the Committee to have bonuses and equity compensation qualify for full deductibility to the extent feasible and consistent with our overall compensation objectives. Our 2008 Equity Incentive Plan is designed to enable compensation recognized in connection with bonuses, including performance awards and qualitative bonuses, and equity compensation, including the exercise of stock options and the settlement of restricted stock units to qualify as performance-based compensation eligible for deductibility under Section 162(m). Base salary does not qualify as an exception to the deduction limit under Section 162(m).

For fiscalThe Tax Cuts and Jobs Act (the “Tax Legislation”) was enacted on December 22, 2017. Under the Tax Legislation, the exclusion for performance-based compensation will not be available with respect to taxable years beginning after December 31, 2017 unless the Committee establishedcompensation is pursuant to a performance thresholdwritten binding contract which if metwas in effect on November 2, 2017 and is not modified in any material respect on or exceeded, will allow qualitative bonuses and all restricted stock unit awards to qualify as performance based compensation eligible for deductibility under Section 162(m). The 2017 performance threshold is $44 million of EBITDAS, which must be exceeded priorafter such date. Pursuant to the payoutTax Legislation, for the taxable year beginning after December 31, 2017, Section 162(m) of the Code was expanded to cover additional executive officers, including the chief financial officer, so that the compensation of the chief executive officer and chief financial officer (at any time during the fiscal year), and the three other most highly compensated executive officers (as of the end of any bonusfiscal year) will be subject to Section 162(m) limitation under this plan and the grant of any restricted stock units under this planCode. Any executive officer whose compensation is subject to our current executive officers. If the $44 million of EBITDAS is exceeded, the Committee can approve a payout of up to 200%Section 162(m) of the 2017 target bonus for each executive officer. The 2017 target bonus forCode in taxable years beginning after December 31, 2016 will have compensation subject to Section 162(m) of the Chief Executive Officer and the Executive Vice President and Chief Financial Officer is their current base salary plus an additional 40% for matching restricted stock units. The 2017 target bonusCode for all offuture years, including years after the remaining executive officers is 80% of their current base salary plus an additional 40% for matching restricted stock units.terminates employment or dies.

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.

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 December 30, 201629, 2017 of $60.30$71.10 for each named executive officer was as follows: Dr. Johnston $2,256,487,$2,124,183, Mr. Schlenker $1,417,050,$1,330,851, Dr. Corrigan $1,201,357,$1,285,986, Dr. Murray $836,120,$957,931, and Dr. Kytomaa $772,503.$789,281.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.

REPORT OF THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS

The following report of the Human Resources Committee of the Board of Directors does not constitute soliciting material and should not be considered filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.

The Human Resources Committee of the Board of Directors oversees the general compensation policies for all employees and the specific compensation plans for officers of the Company, including the Chief Executive Officer. The Committee is composed of four independent non-employee directors. No executive officers of the Company are included on the Human Resources Committee.

The Committee has reviewed and discussed with management the Compensation Discussion and Analysis, and based on the review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy statement.

SUMMARY COMPENSATION TABLE

The following table summarizes information regarding compensation earned by our named executive officers during fiscal 2016:2017:

In connection with the relocation, we purchased Dr. Corrigan’s primary residence in Pennsylvania for an appraised value of $1.25 million, which we intended to resell. The house was not sold as of December 30, 2016. On March 13, 2017 we sold the house. The difference between the amount that we paid for the house and the proceeds from the sale of the house, less selling costs, of $370,000 will be reported as other compensation for Dr. Corrigan in our 2017 summary compensation table.

GRANTS OF PLAN-BASED AWARDS IN FISCAL 20162017

The following table sets forth information regarding grants of plan-based awards to our named executive officers during fiscal 2016:2017:

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 20152016 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.

OUTSTANDING EQUITY AWARDS AT FISCAL 20162017 YEAR-END

The following table sets forth information regarding each named executive officer’s outstanding equity awards as of December 30, 2016:29, 2017: