Company: EHC
Filing Date: 2025-04-01
Form Type: DEF 14A
Source: 0000785161-25-000013
Chunk: 62

Company: Encompass Health Corp
Filing Date: 2025-04-01
Form: DEF 14A
Chunk 62
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 awards, the number of shares earned will be determined at the end of a three-year performance period. Dividends accrue and are only paid on shares issued after completion of the measurement period.

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PSUs are earned and vest based on the level of achievement of Normalized Earnings Per Share 4 (“EPS”) and Return on Invested Capital 5 (“ROIC”). The weighting of these metrics are outlined above. The Committee chose these metrics because the Committee believes they directly align with our stockholders’ interests.

The 2024 PSU awards to senior vice presidents and above (including all NEOs) have a three-year relative total shareholder return (“TSR”) modifier applied to both the EPS and ROIC performance metrics. For this modifier, our TSR is ranked within a group of companies that are included in both the S&P Health Care Services Select Industry Index and the S&P 1500 Index. If our TSR is at the 75th percentile or above of the TSRs of the companies in that group, the number of shares earned from the achievement of the financial metrics will be multiplied by 1.25, not to exceed the existing 200% of target achievement cap. Conversely, if our TSR is at the 25th percentile or lower of the TSRs of the companies in that group, the number of shares earned from the achievement of the financial metrics will be multiplied by 0.75. If the Company’s TSR is at the 50th percentile, there is no change in the number of shares earned. Other TSRs falling between the 25th and 75th percentiles will result in an interpolated modifier.

It is important to note:

• Management provides a report to the Committee that sets out the calculations of the actual results and engages an accounting firm to produce a report on the accuracy of the calculations;

• if results attained are less than the threshold, then no restricted shares are earned for that performance measure in that performance period; and

• as results increase above the threshold, a corresponding percentage of target equity value will be awarded. In other words, levels are on a continuum, and straight-line interpolation is used to determine the payout multiple between two payout levels.

Summary of 2023 PSU Award Results

The 2023 PSU awards completed their EPS and ROIC performance period on December 31, 2024. The EPS and ROIC objectives had the following achievement levels:

| Objective |     | Target |     | Result6 |     | Target Metric Achievement |