Capstone Holding Corp

This proposal seeks shareholder approval to amend the Certificate of Incorporation to permit a reverse stock split at a variable ratio between 1-for-5 and 1-for-50, with the Board authorized to select the precise ratio and timing within 12 months of approval. Management advances the proposal primarily to address a Nasdaq notification that the Company’s per-share trading price is below the $1.00 minimum bid requirement, and the Board believes a reverse split may be necessary to restore compliance and preserve the Company’s Nasdaq listing. The Board retains discretion not to implement the split if market conditions or other factors make it inadvisable prior to filing the amendment, and the proposal expressly contemplates proportional adjustments to options, warrants and convertible securities while not reducing authorized shares. The proposal treats fractional shares by providing cash-in-lieu or aggregating fractional interests as specified in the attached Certificate of Amendment form, reducing administrative complexity for the Company’s transfer agent. While a reverse split can increase the per-share price, it does not change stockholders’ proportional ownership (aside from fractional-share treatment) and may negatively affect liquidity and marketability by reducing the float and potentially discouraging smaller investors. The Company frames the split as a defensive, compliance-driven action rather than a value-enhancing transaction; thus, shareholders should weigh the benefits of maintaining Nasdaq listing status against potential adverse effects on trading dynamics and perception. The Board recommends a FOR vote on the grounds that maintaining Nasdaq listing status is important to the Company’s access to capital markets, visibility, and liquidity, and because the Board retains implementation discretion to choose an optimal ratio or decline to proceed if conditions are unfavorable. Stockholders should also consider how the split would affect future issuance, including option repricings and dilution mechanics, and whether alternative measures (e.g., operational improvements) might be preferable but are less certain or timely for addressing Nasdaq compliance.

This management proposal asks stockholders to approve a material increase in the 2025 Stock Incentive Plan’s share pool from 21.5% to 35% of outstanding common shares on a quarterly basis, which requires shareholder approval because it changes the maximum aggregate number of shares available for awards. Management argues the larger pool is necessary for the Company—recently public and operating two segments—to attract and retain executive and director talent and to make multi-year equity grants that align management incentives with long-term stockholder value; the Board supports this by pointing to the March 30, 2026 grant of 1,995,000 restricted stock awards as evidence of near-term capacity needs. From a governance and dilution perspective, the proposed expansion is significant and will increase potential dilution to existing stockholders; analysts should model the incremental dilution and its timing based on assumed grant pacing and vesting schedules. The compensation committee will administer the plan and can issue restricted stock, options, and RSUs; management emphasizes multi-year vesting (three-year cliff for management awards) to tie retention to performance, which partially mitigates but does not eliminate dilution concerns. The Board’s recommendation for a FOR vote is premised on the competitive need to offer equity incentives in the market for talent and on the view that insufficient capacity could hinder execution of the Company’s growth strategy. Institutional investors will weigh the tradeoff between potential long-term performance benefits from aligned management incentives and near-term EPS/share dilution and ownership percentage erosion for existing holders. The approval threshold aggregates common and Series B Preferred shares voting together, indicating related-party preferred holders may influence the outcome; investors should factor related-party holdings when assessing governance risk. If approved, the Company’s recent grants and future issuance pacing will be important to monitor for dilution impact and to evaluate whether the increased pool is used conservatively and tied to performance outcomes.

This proposal authorizes the Board to adjourn the Annual Meeting, if a quorum is present but the votes are insufficient to approve other proposals, in order to solicit additional proxies. Management presents this as a routine procedural authority to permit additional solicitation time, enabling the Board to pursue approval without immediately losing the opportunity to obtain shareholder consent; the request is framed as pragmatic, particularly when close vote margins or broker non-votes might otherwise cause defeat. From a corporate governance perspective, granting adjournment authority is standard but can raise concerns about delaying shareholder decisions or enabling management to seek more favorable outcomes through extended solicitation; stockholders should consider the potential for strategic delay versus the practical benefit of obtaining sufficient votes on matters deemed important by the Board. The proposal requires a majority vote of those present and voting, and the Board recommends a FOR vote to preserve flexibility. Investors may want to consider whether approval could materially change the timing of decisive votes and whether any independent safeguards (such as clear disclosure of subsequent solicitation efforts) will be followed during an adjournment period. The authority does not in itself change the substance of other proposals but can materially affect when and how they are resolved, particularly for contentious or closely contested items.