Cummins Inc

This advisory proposal asks shareholders to approve, on a non-binding basis, the compensation of the named executive officers as described in the CD&A and compensation tables. Management seeks shareholder approval to confirm that its pay programs — comprising base salary, annual bonuses tied to EBITDA and operating cash flow, and long-term incentives tied primarily to ROIC and EBITDA — are appropriately aligned with company strategy and shareholder interests. The Board cites its view that compensation is market‑competitive, heavily at-risk, and designed to retain and motivate leaders during a period of strategic transformation. Shareholders should consider that the vote is advisory only and does not change pay arrangements directly, but it provides crucial feedback to the Talent Management and Compensation Committee, which uses voting results to inform future design. The company notes prior robust shareholder support (over 91% in 2025), which management interprets as endorsement of program design and execution. The proposal’s outcome can influence future changes to performance metrics, weighting between short‑ and long‑term incentives, and special awards policies. Potential shareholder concerns include the quantum of realized pay and timing of one‑time or special equity awards; management responds by emphasizing strong pay‑for‑performance features, clawback policies, stock ownership guidelines and discretionary oversight by an independent compensation committee. In evaluating the proposal, investors should weigh (a) the company’s recent financial performance and the committee’s stated rationale for awards; (b) the alignment between realized pay and multi‑year financial results (including adjusted measures used for incentive calculations); and (c) governance safeguards (independent committee, consultant engagement, clawbacks, anti‑hedging and anti‑pledging rules). The Board recommends a vote FOR the proposal as an affirmation of its compensation approach and to continue the company’s pay‑for‑performance strategy.

The proposal requests shareholder approval of the Cummins Inc. 2026 Omnibus Incentive Plan to provide up to 4.6 million newly reserved shares (plus certain shares rolled from the Prior Plan) for equity and cash incentive awards to executives, employees, directors and consultants. Management seeks approval to preserve its ability to grant performance shares, performance cash, restricted stock units, stock options and other awards that it argues are critical to attract and retain talent across a global industrial business and to align management incentives with long‑term shareholder value. The proxy describes several governance protections: a fixed share reserve (no evergreen), a one‑year minimum vesting (with limited exceptions and a 5% carve‑out), prohibition on repricing options/SARs, dividend protection (no dividends on unvested awards), double‑trigger vesting on change of control, limits on director award value, and clawback/recoupment provisions. The Board supports the 2026 Plan citing a moderate historical burn rate, estimated maximum dilution consistent with market practice (~5% potential dilution using the requested reserve and outstanding shares), and detailed compensation‑governance provisions. Material considerations include potential dilution, the plan’s share recycling rules (limited prohibited recycling for option proceeds and share‑withholding), and the flexibility the Committee retains around award types, performance measures and recipients. Investors should weigh the company’s historical use of awards, the stated 3‑year average burn‑rate (≈0.27%), and the plan design features aimed at limiting excessive dilution and aligning pay with performance. The Board recommends a FOR vote to ensure continuity of equity programs, noting that without approval the company may face limited share availability to make future grants and could need to revise compensation programs.