Company: EHC
Filing Date: 2025-04-01
Form Type: DEF 14A
Source: 0000785161-25-000013
Chunk: 63

Company: Encompass Health Corp
Filing Date: 2025-04-01
Form: DEF 14A
Chunk 63
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     | Weight |     | Weighted Metric Achievement |
| EPS       |     |  $6.56 |     |   $8.11 |     | 194.5%                    |     | 60%    |     | 116.7 %                     |
| ROIC      |     |  9.39% |     |  11.03% |     | 200.0%                    |     | 40%    |     | 80.0 %                      |
| Combined  |     |        |     |         |     |                           |     | 100%   |     | 196.7 %                     |

The 2023 PSU awards held by our NEOs remain subject to the three-year relative TSR modifier. These achievement levels will be adjusted as described above based on that modifier as of December 31, 2025.

4 For purposes of 2024 PSUs, normalized EPS is calculated on a weighted-average diluted shares outstanding basis by adjusting net income from continuing operations attributable to Encompass Health for the normalization of income tax expense, fair value adjustments to the value of marketable securities, and certain unusual or nonrecurring unbudgeted items. The Committee has established in advance the following five categories for these unusual or nonrecurring unbudgeted items for Committee consideration: acquisitions and divestitures, changes in capital structure, litigation expenses and settlements, material legislative changes, and public health emergencies. The Committee believes these pre-approved categories, along with the application of the same GAAP standards to the calculation of a metric during the life of the award, help the metric to more accurately reflect items within management’s control while also minimizing unintended incentives or disincentives associated with the accounting treatment for unbudgeted, discretionary transactions. For the 2023 EPS performance period ended December 31, 2024, those unbudgeted items included divestitures (Eau Claire, WI and Augusta, GA), net debt redemptions, a real estate lease buyout, and CON accelerated amortization, for which the net adjustment to normalize EPS was an increase of $0.05/share. The diluted share count for LTIP purposes includes, as is the case in our 2024 Form 10-K, the shares associated with restricted stock awards, performance share units, restricted stock units, and dilutive stock options but does not include the impact of stock repurchases, if any. The calculation of normalized earnings per share differs from that of basic and diluted earnings per share and adjusted