Aware Inc

This advisory proposal asks shareholders to approve, on a non-binding basis, the compensation paid to the company’s named executive officers as disclosed in the Executive Compensation section of the proxy. Management is seeking this approval as an annual check on investor sentiment around pay philosophy, mix of pay (salary, equity, incentives), and performance alignment; the company has elected to hold say-on-pay votes every year following the 2023 stockholder preference. The board frames the vote as a governance best practice that provides the compensation committee with shareholder feedback to consider in future compensation decisions. The proxy explains that compensation was structured to align management and stockholder interests and to support long-term value creation, emphasizing equity-based awards and performance-linked bonus metrics. Because the vote is advisory, it does not change contractual payments or grant awards directly, but an adverse result could prompt the compensation committee and board to revise pay programs, target levels, or disclosures. The board recommends a vote FOR, stating confidence that the program design and disclosures are appropriate while committing to consider investor views. In assessing the merits, an analyst should weigh the program’s demonstrated link between pay and performance (noting that 2025 bonuses were not paid due to missed thresholds), the extent of equity dilution from recent grants, and the CEO’s compensation changes following a leadership transition. The advisory nature and the company’s explicit willingness to consider the vote make it a useful signal to investors about governance responsiveness and potential future adjustments by the compensation committee.

This management proposal asks shareholders to approve an amendment to the company’s 2023 Equity and Incentive Plan to increase the share reserve by 1,000,000 shares to enable future equity grants. Management and the compensation committee argue the increase is necessary because, as of December 31, 2025, only 631,194 shares remained available against 1,495,089 shares already subject to outstanding awards, and typical annual usage (including approximately 250,000 shares for non-employee director compensation) would exhaust the reserve in the near term. If approved, the amendment would bring total available shares to 1,631,194, which management estimates would support roughly three to four years of normal grant activity after accounting for a one-time CEO new-hire grant in 2025. The requested increase is approximately 4.6% of outstanding common stock as of the record date, a dilutionary impact that shareholders should weigh against the operational need to make competitive grants to attract, retain and motivate employees and directors. The plan contains standard features such as anti-repricing without shareholder approval, limitations on non-employee director compensation, and provisions for share recycling from forfeitures and certain substituted awards. The board recommends FOR, stating that insufficient shares could impair recruiting and retention and that the additional pool is intended to support long-term alignment of employee interests with stockholders through equity-based incentives. An analyst assessing the proposal should consider the company’s historical grant pace, the size and terms of recent large grants (including grants tied to a CEO transition), potential dilution over the estimated multi-year runway, and whether governance safeguards (repricing limits, clawback policy and shareholder approval requirement for certain amendments) mitigate dilution risks. The recommendation balances the immediate dilution against the practical need to preserve flexibility in the compensation program; denial of the proposal could constrain compensation programs or force cash alternatives that may be less aligned with shareholder interests.