Avanos Medical Inc

This proposal asks shareholders for a non-binding advisory approval of the compensation paid to the Company’s named executive officers as disclosed in the proxy. Management seeks endorsement of its 2025 compensation design — a mix of base salary, annual cash incentives tied to adjusted net sales, adjusted EBITDA and strategic initiatives, and long-term equity awards (50% PRSUs, 25% TRSUs, 25% options) — arguing that prior investor engagement and consultant advice resulted in a pay-for-performance structure aligned to stockholder interests. The Compensation Committee emphasizes multi-year performance metrics, clawback provisions, stock ownership guidelines and caps on incentives to mitigate excessive risk. A vote FOR supports management’s approach and signals shareholder acceptance of the program; a vote AGAINST or significant opposition would ordinarily trigger further engagement and potential plan revisions. Contextually, the company returned to options in 2025 to reinforce alignment and used free cash flow and ROIC in PRSUs; 2025 actual results produced above-target payouts on several measures, informing the Committee’s view that the program is functioning. The recommendation is FOR because the Board believes the program appropriately balances retention, pay-for-performance and alignment with long-term value creation, while retaining governance safeguards such as an independent compensation consultant, policies limiting repricing and clawbacks. The proposal is advisory and not binding, but the Board and Compensation Committee will consider voting results in future program design.

This management proposal requests shareholder approval to amend the Company’s existing 2021 Long Term Incentive Plan so that outside (non-employee) directors are eligible to receive equity awards under the 2021 Plan. Management explains the operational rationale: the separate Outside Directors’ Compensation Plan has only ~14,181 shares remaining, insufficient for normal 2026 grants; rather than increase the older plan’s share reserve, the Company proposes to use the existing 2021 Plan’s share pool (4.5 million shares authorized) without increasing the overall reserve, thereby avoiding additional dilution. The amendment would not change award terms, vesting, or governance; rather, it only expands eligible participants to include outside directors. The Board unanimously recommends FOR, noting continuity of director cash compensation and equivalence of award terms. For governance analysts, key considerations include that the change centralizes equity grants into the main incentive plan — potentially improving administrative efficiency — but could reduce transparency if director awards are less clearly segregated; however, the Company confirms no incremental share reserve expansion and that terms remain consistent (e.g., RSUs settling after retirement or service termination, minimum vesting rules, and shareholder protections such as anti-repricing and adjustment provisions). The proposal appears targeted and limited in scope: it addresses a logistical need while preserving shareholder dilution protections and existing plan governance safeguards (Committee administration, potential clawback policy application, and minimum vesting exceptions). Analysts should note the Board’s stated intent to continue paying cash components under the Outside Director Compensation Plan and to make the 2026 annual director equity grants under the 2021 Plan only if the amendment is approved. Overall, the proposal is a narrowly scoped governance housekeeping measure, favorable from a dilution and oversight perspective, but investors may scrutinize future director award levels, grant timing changes, and whether this centralization materially affects director compensation benchmarking or oversight.