Heron Therapeutics Inc

This non-binding advisory proposal asks stockholders to approve the Company’s Named Executive Officer compensation disclosures for fiscal 2025, as presented in the Compensation Discussion and Analysis and related tables. Management seeks shareholder endorsement to validate its pay-for-performance philosophy, which the Compensation Committee used to design pay elements tied to revenue, EBITDA, cash and specific product milestones. The board notes prior strong support for Say-on-Pay and intends to consider the vote outcome in future compensation decisions, using it as feedback rather than a binding mandate. The proposal is routine in that it is advisory, but it serves as an important governance signal regarding alignment between pay and Company performance, especially given recent changes to severance and change-in-control benefits described in the proxy. Key issues for investors include the size and structure of equity awards, performance metrics and whether compensation policies reasonably balance retention, incentives, and shareholder dilution. The Company reports robust attainment of 2025 corporate goals and associated payouts at target, which management cites as justification for the program. A vote FOR signals acceptance of the Compensation Committee’s design and execution; a vote AGAINST would signal investor concern and likely trigger engagement or changes to program design. Given the Company’s explanations, management recommends FOR to maintain continuity of the current compensation framework while remaining responsive to shareholder feedback.

This management proposal requests shareholder approval to amend and restate the Company’s long-standing 2007 Equity Incentive Plan to add 16,560,000 shares and extend the plan termination through June 11, 2036, along with administrative and technical updates. Management frames the increase as essential to preserving the Company’s ability to grant equity to attract, retain, and motivate employees, consultants and directors in a competitive biotech labor market; the Compensation Committee and Board view equity as central to aligning employee interests with long-term shareholder value. The proxy discloses historical grant volumes and remaining shares available as of December 31, 2025, and presents metrics (burn rate and overhang) showing recent dilution and how the increase would affect overhang. The proposal also preserves customary protections (minimum vesting, limits on director compensation, anti-dilution adjustments, and change-in-control treatment) while allowing limited carve-outs for substitute awards in M&A transactions. From a governance perspective, shareholders should weigh the incremental dilution (approximately 8.8% of outstanding shares at 12/31/2025 per the proxy) versus the operational necessity to issue equity for hires and retention; the company argues that failure to approve would materially weaken recruitment and retention. The Board recommends FOR, concluding the requested size is appropriate relative to peer practice and current burn rates. Investors assessing the proposal should consider grant pacing, use of performance-based awards, potential dilution overhang, and whether adequate disclosure and guardrails exist to mitigate excessive dilution while enabling competitive compensation.

Management seeks shareholder approval to add 10,000,000 shares to the company’s employee stock purchase plan, arguing it will preserve a long-running benefit that encourages employee ownership and retention by enabling purchases at an 85% discount to the lower of offering or purchase-date price. The proposal is framed as routine for maintaining an all-employee equity participation program and the board suggests the requested increase provides capacity for approximately 14 years of purchases at current participation rates. Investors should consider the modest dilutive impact (about 5.3% potential dilution at year-end 2025) relative to the program’s retention and alignment benefits, and whether limits (annual $25,000 FMV per participant) and other plan safeguards appropriately constrain dilution. The proxy discloses the current outstanding ESPP usage and the small remaining reserve absent approval, which could otherwise curtail employee access to the program and hamper retention. Given the program’s broad-based nature, the company notes that awards are not individually discretionary and participation is employee-elected, reducing governance risk compared to manager-directed equity grants. The Board recommends FOR on the grounds that the plan aligns employees with shareholders and is consistent with peer practice; shareholders evaluating this amendment should weigh the long-term cultural and retention benefits against incremental dilution.

The Tax Benefits Preservation Plan is a rights plan adopted by the Board to help preserve approximately $2.1 billion of federal and state NOL carryforwards by deterring ownership changes that could trigger Section 382 limitations. Management argues that the NOLs are valuable assets central to the economic returns of recent financing transactions and future operations and that an ownership-change deterrent will protect those assets pending further Board review. The plan issues “Rights” that become exercisable if a person or group acquires beneficial ownership of 4.99% or more of the Company (subject to carve-outs for existing holders and customary exceptions), allowing non-acquirers to purchase severely leveraged preferred shares that would dilute an acquirer. The Rights expire on August 14, 2026 absent extension or earlier termination, and the Board retains discretion to grant exemptions and to redeem or amend the plan. From a governance standpoint, the plan is tailored to preserve tax attributes rather than to block all takeovers, but it has typical anti-takeover mechanics which could influence control transactions and negotiation dynamics; management emphasizes an exemption process and that the plan is not intended to prevent value-maximizing offers. Investors should weigh the preservation of tax assets against potential frictions imposed on capital markets transactions and consider the nonbinding nature of the ratification vote; a negative advisory vote would signal investor discomfort but would not by itself terminate the plan. The Board requests stockholder input via this advisory vote as it evaluates whether to maintain, amend or terminate the plan prior to its expiration.