Company: EHC
Filing Date: 2025-04-01
Form Type: DEF 14A
Source: 0000785161-25-000013
Chunk: 30

Company: Encompass Health Corp
Filing Date: 2025-04-01
Form: DEF 14A
Chunk 30
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 be made available pursuant to the award. All other materially adverse amendments or adjustments to awards may be made by the Committee with the consent of the affected participants.

Certain Federal Tax Effects. The federal income tax consequences related to the issuance of the different types of awards that may be awarded under the 2025 Plan are summarized below. Participants should consult their own tax advisors to determine the tax consequences based on their particular circumstances.

Nonqualified Stock Options . There typically will be no federal income tax consequences to the optionee or to the Company upon the grant of a nonqualified stock option under the 2025 Plan. When the optionee exercises a nonqualified option, however, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of the common stock received upon exercise of the option at the time of exercise over the exercise price, and the Company will be allowed a corresponding federal income tax deduction, subject to any applicable limitations of Section 162(m) of the Code (“162(m)”). Any gain that the optionee realizes when he or she later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.

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Incentive Stock Options . There typically will be no federal income tax consequences to the optionee or to the Company upon the grant of an incentive stock option. If the optionee holds the option shares for the required holding period of at least two years after the date the option was granted and one year after exercise, the difference between the exercise price and the amount realized upon sale or disposition of the option shares will be long-term capital gain or loss, and the Company will not be entitled to a federal income tax deduction. If the optionee disposes of the option shares in a sale, exchange, or other disqualifying disposition before the required holding period ends, he or she will recognize taxable ordinary income in an amount equal to the excess of the fair market value of the option shares at the time of exercise over the exercise price, and the Company will be allowed a federal income tax deduction equal to such amount, subject to any applicable limitations of Section 162(m). While the exercise of an incentive stock option does not result in current taxable income, the excess of the fair market value of the option shares at the time of exercise over the exercise price will be an item of adjustment for purposes of determining the optionee’s alternative minimum taxable income, which may, depending on particular factors relating to the option