Company: EHC
Filing Date: 2025-04-01
Form Type: DEF 14A
Source: 0000785161-25-000013
Chunk: 23

Company: Encompass Health Corp
Filing Date: 2025-04-01
Form: DEF 14A
Chunk 23
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 are mindful of our responsibility to our stockholders to exercise judgment in granting equity awards. The Committee, with the assistance of its independent consultant, annually reviews the Company’s overhang, or the total of outstanding equity awards and shares available for future equity awards under the compensation plans as a percentage of fully diluted shares outstanding, the fair value transfer, or the accounting value of awards granted as a percentage of market capitalization, and the burn rate, or the shares granted as a percentage of the equity award and shares outstanding, relative to a peer group of comparable companies. In our 2024 review of our overhang (factoring in required fungibility ratios), fair value transfer, and burn rate prepared by the independent compensation consultant, we were below the median of the peer group for each metric.

Although our future burn rate will depend upon and be influenced by a number of factors, such as the number of plan participants, the price per share of our common stock and the methodology used to establish the equity award mix, we estimate the shares of common stock reserved for issuance in the 2025 Plan would enable us to continue to utilize equity awards as an important component of our overall compensation program and help meet our objectives to attract, retain and motivate talented employees for the term of the 2025 Plan. In determining the share reserve, we considered an analysis of our overhang percentage and burn rate relative to a peer group of healthcare companies. The results of the analysis performed by the Committee’s independent consultant indicated our overhang at December 31, 2024 was 6.7% and annual average burn rate for the three-year period ending December 31, 2024 was 0.6%, each of which was less than the median number for the peer group.

#### Good Governance Provisions of the Plan
The 2025 Plan includes a number of provisions that our board of directors believes are consistent with the interest of stockholders and sound corporate governance, including:

Supports pay and performance linkage and encourages stock ownership : Our cash and equity incentive programs are performance-based in large part, and the Committee’s intent is to continue this design for annual awards. The intent is to provide an incentive for our senior management to enhance stockholder value. In addition, equity-based awards further align the interests of participants with our stockholders and provide a vehicle to assist executives in achieving our stock ownership guidelines. See “Equity Ownership Guidelines for Management” on page 52for additional discussion.

No repricings : The 2025 Plan prohibits the repricing of stock