Distribution Solutions Group Inc

This proposal asks stockholders to cast a non-binding advisory vote to approve the design and levels of pay awarded to the Company’s named executive officers as described in the Compensation Discussion and Analysis, compensation tables, and related narrative disclosures. Management frames the vote as a check on alignment — emphasizing that compensation is heavily weighted to performance-based and equity-based pay (including premium-priced, out-of-the-money options) and that the company has governance safeguards such as clawback provisions, anti-hedging policies, no tax gross-ups for CIC payments, and an independent compensation committee assisted by an independent consultant. The Board notes that the 2025 advisory vote received overwhelming support (99.84%), and it intends to consider the outcome of this advisory vote when setting future compensation, although the vote itself is not binding. For investors assessing the proposal, important context includes the company’s pay-for-performance philosophy, recent corporate actions (mergers and integration of Lawson, TestEquity, and Gexpro Services) and the large ownership stake of LKCM entities which may influence compensation design and governance. The company discloses specific performance metrics used for annual incentives (Adjusted EBITDA, Adjusted Net Sales, Working Capital, and DSG Equity Value) and emphasizes minimum vesting and anti-repricing protections for equity awards. The Board recommends a FOR vote citing alignment with stockholder interests and prior strong stockholder endorsement; however, because the vote is advisory, the Board retains discretion to adjust programs based on the results. Analysts should weigh the non-binding nature of the vote, the heavy reliance on equity upside (which dilutes if frequently granted), and the company’s recent operating results and integration-driven costs when evaluating whether the disclosed pay practices are likely to drive long-term shareholder value. Given the company’s substantial insider/affiliate ownership and the CEO’s decision to forgo compensation, governance dynamics around independent oversight of pay and potential related-party influences are relevant to the assessment. Overall, a FOR recommendation from the Board reflects confidence that the program incentivizes management appropriately while incorporating several governance safeguards, but sophisticated investors may still scrutinize plan dilution, realized pay versus target pay, and related-party influence when forming an independent view.

This management proposal requests stockholder approval of an amended and restated equity compensation plan that would add 3,000,000 shares to the pool available for grants and update plan mechanics and limits to reflect a prior 1:2 stock split and prevailing market practices. Management argues additional shares are necessary to meet anticipated hiring and equity award needs over the coming year while preserving governance protections; awards previously granted under prior plans remain unaffected. Key plan features explicitly intended to protect stockholders include a prohibition on repricing without stockholder approval, no automatic evergreen share increases, minimum vesting rules (with limited exceptions), restrictions on dividend equivalents for options, and protections for replacement awards in a change-in-control. The plan also aligns the Change in Control definition and adjusts individual grant caps and director limits while maintaining the ability to grant ISOs up to plan limits; the Compensation Committee retains broad discretion to administer awards within those constraints. For analysts and sophisticated investors, important considerations include prospective dilution from the 3,000,000 share increase relative to the company’s ~46.2 million shares outstanding, the degree to which grant practices will be disciplined by the stated governance features, and the potential beneficiaries (executive officers and non-employee directors are explicitly eligible). The filing discloses that executives and directors have an interest in the proposal because they are eligible for awards, and that management estimates the requested share increase to support roughly one year of expected grant activity based on hiring and forfeiture assumptions. The Board recommends FOR based on the stated need and the inclusion of governance safeguards; however, investors should evaluate the company’s historical burn rate, grant sizes (including heavy use of out-of-the-money options), and the substantial insider/affiliate ownership that may influence compensation outcomes. If approved, the plan becomes effective as of the Board approval date; if not approved, the company will continue to operate under the prior plan. Overall, the plan mixes standard investor protections with a sizeable share request that warrants careful scrutiny of dilution assumptions, grant practices, and the Compensation Committee’s future exercise of discretion.

This is a catch-all, procedural agenda item that authorizes the conduct of any other business properly presented at the annual meeting that is not otherwise described in the proxy materials; it does not represent a specific substantive proposal and typically provides the meeting chair and the holders of proxies discretion to vote on matters that arise. The item is standard practice in proxy notices to ensure that unexpected or late-arising proposals, ministerial actions, or ratifications can be addressed without requiring a reconvening of the meeting. For investors, this item carries no standalone substance but can be consequential if meaningful proposals are presented from the floor or if routine matters requiring shareholder approval are inadvertently omitted from the proxy card. Management offers no specific voting recommendation for unspecified other business and stockholders should rely on supplemental disclosures, meeting announcements, or the inspectors of election for details on any such matters. Contextually, the proxy also discloses a preliminary, non-binding take-private proposal from LKCM Headwater dated March 14, 2026, which the Board is reviewing and which is explicitly not being solicited for a vote at this meeting; while that transaction is not on the agenda, a take-private transaction would, if consummated, supersede future public-company governance and reporting considerations. Given the company’s concentrated ownership by LKCM affiliates, any ad hoc or supplemental matters presented at the meeting may reflect related-party interests, and sophisticated investors should be alert to related disclosures and whether the Board establishes independent special committees to review any controlling-stockholder proposals. Procedurally, if other business is presented, proxies typically confer discretion to vote in accordance with management’s judgment unless stockholders provide specific directions; stockholders who are concerned about late-arising matters should attend the virtual meeting to ask questions and vote in real time. Overall, this agenda item is routine but merits attention only if substantive additional proposals are disclosed or introduced prior to or during the meeting.