Company: EHC
Filing Date: 2025-04-01
Form Type: DEF 14A
Source: 0000785161-25-000013
Chunk: 32

Company: Encompass Health Corp
Filing Date: 2025-04-01
Form: DEF 14A
Chunk 32
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 deduction, at the time performance awards are granted. When the participant receives or has the right to receive payment of cash or shares under the performance award, the cash amount or the fair market value of the shares of stock will be ordinary income to the participant, and the Company will be allowed a corresponding federal income tax deduction at that time, subject to any applicable limitations under Section 162(m).

Tax Withholding. Participants are responsible for all taxes required to be withheld in connection with any award. The Company shall retain from the payment under, or settlement of, an award the number of shares of stock or a portion of the value of the award to satisfy tax withholding obligations. At the Committee’s discretion, the participant may elect to satisfy the withholding requirement by other means.

Section 409A of the Code . If any award constitutes non-qualified deferred compensation under Section 409A of the Code, it will be necessary that the award be structured to comply with Section 409A to avoid the imposition of additional tax, penalties, and interest on the participant.

Tax Consequences of a Change in Control. If, in connection with a change in control of the Company, the exercisability, vesting, or payout of an award is accelerated, any excess on the date of the change in control of the fair market value of the shares or cash issued under accelerated awards over the purchase price of such shares, if any, may be characterized as “parachute payments” (within the meaning of Section 280G of the Code) if the sum of such amounts and any other such contingent payments received by certain employees exceeds an amount equal to three times the “base amount” for such employee. The base amount generally is the average of the annual

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compensation of the employee for the five years preceding such change in ownership or control. An “excess parachute payment,” with respect to any such employee, is the excess of the parachute payments to such person, in the aggregate, over and above such person’s base amount. If the amounts received by an employee in connection with a change in control are characterized as parachute payments, the employee will be subject to a 20% excise tax on the excess parachute payment and we will be denied any deduction with respect to such excess parachute payment.

The foregoing discussion summarizes the federal income tax consequences of awards that may be granted under the 2025 Plan based on current provisions of the Code, which are subject to change. This summary does not cover any foreign, state,