Entera Bio Ltd

Proposal Two requests shareholder ratification of targeted amendments to the Company’s non-executive director compensation framework: shifting the annual options grant date to the date of the annual general meeting (while keeping the vesting commencement date as January 1 for the applicable year) and adding full vesting acceleration on a Change in Control for future annual grants. Management argues the timing change aligns equity grants administratively with the shareholder-approved meeting cycle, simplifies administration and reporting, and makes director compensation consistent with governance events; acceleration is intended to protect directors and align incentives during potential transaction scenarios. Under Israeli Companies Law, approval requires not only a simple majority but also, for these compensation matters, a Special Majority metric (disinterested shareholder majority or <2% disapproval threshold) because the proposals relate to terms of Office Holders; the proxy clearly notifies shareholders to indicate any personal interest. The Compensation Committee and Board considered market practices and recent changes to non-executive compensation (quarterly share grants in lieu of cash) and concluded these amendments are within the approved compensation policy and promote retention. If shareholders do not approve the proposal, the prior January 1 grant timing and lack of acceleration will continue to govern annual grants. Investors should weigh the governance trade-offs: the acceleration feature is common and supports retention in M&A scenarios but could be dilutive and accelerate potential payouts; aligning grant dates to meetings can reduce timing arbitrage but maintains January 1 vesting commencement which preserves backward-looking service credit. The Board recommends FOR on the basis that these changes clarify administration, align incentives around shareholder events, and are consistent with the Company’s retention and governance objectives. Given the Special Majority requirement, materially interested shareholders must disclose any personal interest when voting.

Proposal Three seeks shareholder approval for two equity awards to newly appointed director Steven D. Rubin: a one-time grant of 33,368 options (ten-year term, 12 quarterly vesting installments beginning February 1, 2026) and a 2026 pro rata annual grant of 43,405 options (vesting in four quarterly installments in 2026). Management frames these awards as consistent with the Existing Director Compensation Framework and as necessary to align Mr. Rubin’s economic interests with those of shareholders and with peer director compensation, noting the grants were approved by the Compensation Committee and Board but require shareholder ratification under the Israeli Companies Law. The awards include standard Change in Control protection (full acceleration if Mr. Rubin remains in service at closing), which reduces retention risk in transaction scenarios but can accelerate dilution and potential payouts to insiders. Approval also depends on Special Majority rules because the awards concern terms of an Office Holder; shareholders must report any personal interest when voting. From an investor governance perspective, the grant sizes are modest relative to employee pools but represent a meaningful component of non-executive remuneration given the Company’s emphasis on equity over cash to conserve liquidity. The proposed exercise price equals $1.37 per share and the Company conditions the grants on Form S-8 registration for the underlying shares. The Board’s recommendation FOR is based on the Compensation Committee’s benchmarking and the objective of attracting experienced independent directors to the Board. Voters should consider the customary nature of such start-up-era director grants, the potential dilution, and the alignment benefits versus costs.

Proposal Four asks shareholders to approve equity compensation for the newly appointed Chairman Geno J. Germano: a one-time 50,000-option grant (12 quarterly vesting installments beginning February 4, 2026) and a pro rata 2026 grant of 43,014 options (vesting quarterly through year-end 2026). The Board and Compensation Committee justify the grants by citing Germano’s additional responsibilities as Chairman and the need to align his long-term incentives with shareholders while conserving cash via equity-based pay. As with other director awards, the grants carry Change in Control acceleration if Germano remains in service at closing, balancing retention incentives with potential transactional acceleration risk. Under the Israeli Companies Law, these related-party compensation items require shareholder approval by Special Majority metrics; the proxy instructs shareholders to disclose any personal interest. The proposals are conditioned on S-8 registration for the underlying shares and are consistent with the broader trend at the Company to substitute equity for cash for non-executive compensation. From a governance standpoint, the size of the Chairman’s one-time grant is larger than typical annual grants but not unusual for a Chair with significant industry pedigree; investors should weigh the strategic benefits of his experience against dilution. The Board recommends FOR, based on benchmarking and the objective of securing experienced leadership for board oversight and strategic execution.

Proposal Five requests shareholder approval for a one-time, fully vested option award of 40,000 options to long-serving director Sean Ellis, intended as recognition of his strategic introductions and support. The Compensation Committee and Board approved the grant as being within the ranges set by the Company’s compensation policy and consistent with prior one-time director awards; however, Israeli Companies Law requires shareholder ratification and potentially a Special Majority since it concerns an Office Holder’s compensation. The grant is conditioned on Ellis’s re-election and on Form S-8 being filed to register the underlying shares, ensuring technical compliance and availability of registered shares upon issuance. From a governance lens, one-time awards to long-tenured directors can be reasonable retention and recognition tools but must be balanced against dilution to shareholders and potential conflicts of interest given Mr. Ellis’s status as an early investor and significant holder; the proxy explicitly requests shareholders to disclose any personal interest when voting. The Board’s recommendation FOR reflects its view of Ellis’s material contributions and the need to maintain experienced directors during the Company’s clinical and strategic activities. Investors should review the size of the grant relative to outstanding option pools and consider potential signal about director alignment and shareholder-approved compensation practices.

Proposal Six seeks shareholder ratification of a multi-component, one-time compensation package for CEO Miranda Toledano: a 2026 option grant of 500,000 options (three-year vesting with standard quarterly schedule), a 2026 RSU grant of 347,567 RSUs in lieu of cash bonus vesting quarterly over one year, and 72,993 RSUs in lieu of $100,000 of salary (vesting quarterly over one year). Management explains these awards as performance recognition, retention incentives, and cash-conservation measures—shifting cash compensation into equity to preserve liquidity while aligning senior executive pay with long-term shareholder value. The awards include Change in Control acceleration protections if Ms. Toledano remains in service at closing, a common retention mechanism that carries the tradeoff of potentially accelerated P&L recognition and diluted shareowner interest in a transaction. Under Israeli Companies Law, approval requires shareholder ratification and may require the Special Majority tests given the CEO is an Office Holder; the proxy discloses these governance mechanics. The Board and Compensation Committee reference benchmarking analyses and prior ratifications of compensation policy as the basis for the grant sizes and structures; they characterize the grants as within policy ranges. For investors, the CEO package is large in absolute terms but appears intended to balance retention and incentive alignment during the Company’s clinical development and financing activities; voters should consider dilution, the company’s cash posture, and the CEO’s track record in relation to the proposed awards. The Board recommends FOR based on the view that the package supports long-term value creation and aligns management with shareholders.

Proposal Seven requests shareholder approval to amend the Company’s 2018 Equity Incentive Plan to add a one-time increase of 2,500,000 Ordinary Shares to the pool available for issuance. Management explains the need arises because the Company has granted more equity than typical during the year—largely substituting equity for cash to conserve liquidity—leaving only a small reserve under the current plan for the remainder of 2026. The Board evaluated historical grant rates, expected hiring and retention needs, and the strategic importance of equity compensation to align employee and director incentives with long-term shareholder value, concluding the increase is necessary for competitive grants. The Plan Amendment’s text (Appendix A) modifies the Plan’s Section 4(a) to record the one-time addition and preserves the annual evergreen adjustment; the amendment would only become effective upon shareholder approval. Investors should weigh the dilutionary impact of an incremental 2.5 million-share issuance against the operational need to attract and retain talent and conserve cash; the Company quantifies remaining availability and recent usage in the proxy. The Board recommends FOR, asserting the increase is prudent to maintain the Company’s ability to deliver market-competitive equity awards and to support its clinical development and strategic initiatives. Governance-conscious investors may seek guardrails—e.g., vintage-based burn-rate disclosures, limits on executive award sizes, or stricter repricing rules—to monitor future dilution from the enlarged pool.

Proposal Eight seeks shareholder approval to amend the Articles to expand authorized share capital from 140,010,000 to 350,000,000 Ordinary Shares, effectively creating a large reserve of unissued shares for future needs. Management frames this as a pre-emptive corporate housekeeping step to ensure the Company can promptly pursue financing alternatives (including ATM programs), strategic transactions, and equity-based compensation without the delay and expense of seeking further shareholder votes for additional authorized shares. The Company discloses current issued, reserved and unissued counts and explains that, absent the amendment, its remaining unreserved pool could constrain near-term strategic flexibility. From a governance perspective, large increases in authorized shares can enable management to act quickly but also raise takeover-defense and dilution concerns; however, the Board emphasizes no other changes to shareholder rights and that any future issuance would still be subject to applicable law and exchange rules. The Board recommends FOR on the basis that the amendment supports operational flexibility to finance clinical development and growth, while noting the potential dilutive effect that investors should monitor. Shareholders should weigh the strategic need for readily available issuance capacity against the risk of future dilution and request transparency on issuance intent and pre-emptive rights if concerned.

Proposal Nine is a standard non-binding 'say-on-pay' advisory vote asking shareholders to endorse the Company’s executive compensation as disclosed in the proxy. The Board emphasizes that compensation is designed to align pay with long-term performance, uses a heavy equity component to align executives with shareholders, and was set following benchmarking and Compensation Committee review. Although advisory and non-binding under U.S. rules, a negative vote would likely trigger a shareholder engagement process and potential adjustments to pay practices; the Board indicates it will consider voting outcomes in future compensation decisions. The proxy contains detailed disclosures on salary adjustments, RSU and option grants, and the Company’s compensation policy as required under Israeli and U.S. rules; investors should evaluate these disclosures in light of recent pay actions (notably large one-time grants to the CEO and director awards) and the Company’s financial performance and cash conservation rationale. The Board recommends FOR, noting the importance of retaining leadership during clinical development and strategic initiatives, but investors may weigh dilution and the scale of recent awards when deciding. Given the advisory nature, the vote will not change compensation directly but serves as a valuable feedback mechanism for the Compensation Committee.