Leidos Holdings Inc

This advisory (nonbinding) proposal asks stockholders to endorse the Company’s 2025 executive compensation disclosures and overall pay program, as described in the Compensation Discussion and Analysis and related tables. Management seeks this endorsement to reaffirm its pay-for-performance approach — a program that materially weights long-term equity, ties annual cash incentives to objective financial metrics (adjusted EBITDA margin, operating cash flow, revenue) with a +/-20% behavioral modifier, and balances relative TSR and cumulative adjusted EBITDA for long-term incentives. The Board highlights recent governance features such as clawback policies, enhanced negative TSR caps, stock ownership requirements and elimination of perceived problematic mechanics (e.g., removal of certain RSU performance hurdles and elimination of stock options in the 2026 design) to demonstrate alignment with stockholder interests. The proposal is advisory, so while it does not compel action, a strong vote in favor signals investor support for the Committee’s philosophy and limits potential reputational or governance risk; conversely, a significant vote against would prompt heightened Board and Committee engagement with investors and potential program changes. For institutional investors assessing the proposal, key considerations include the Company’s demonstrated operating and TSR performance (strong 2025 results and historically high say-on-pay support), the mix and vesting structure of awards, and the Committee’s responsiveness to investor feedback. The Board recommends a FOR vote and points to independent compensation consultant support and robust disclosure of targets and outcomes (including recent payouts, recoupment policies, and modifier usage) as rationale. In evaluating governance risk, investors should weigh the nonbinding nature of the vote against management’s recent actions to rebalance incentives and enhance operational alignment in the 2026 program. Overall, the proposal asks stockholders to ratify current executive pay design and disclosure; management argues the design aligns management behavior with durable shareholder value creation while retaining necessary retention and market competitiveness features.

This management proposal asks stockholders to approve a replacement equity compensation plan (the 2026 Omnibus Incentive Plan) with an initial share reserve (6,000,000 less certain recently granted Predecessor Plan shares) to authorize future stock options, RSUs, performance awards and related equity awards. Management contends the Plan is necessary to attract, retain and motivate executives, employees, non-employee directors and consultants and to align their interests with long-term stockholder value. The Plan includes features intended to be stockholder-friendly: limits on option/SAR terms, prohibition on repricing without stockholder approval, no liberal recycling, clawback provisions, double-trigger change-in-control vesting, minimum one‑year vesting (with limited exceptions), and director compensation caps. The committee additionally highlights mechanisms that preserve Section 422 tax-advantaged treatment where applicable and contains standard anti-dilution and adjustment mechanics for corporate actions. From a governance standpoint, critical investor considerations include the size of the share reserve relative to outstanding shares and historical usage, the share recycling and counting rules, discretion afforded to the Committee in granting awards, and the existence of meaningful safeguards (minimum vesting, no repricing, clawbacks, and double-trigger CIC protections). The Board frames the Plan as an essential tool for executing NorthStar 2030 and retaining talent in a competitive labor market while maintaining customary safeguards; however, investors should assess dilution (share usage rate noted in the filing), burn-rate trends, and the Committee’s historical granting patterns when deciding whether to support. A FOR vote supports management’s view that renewed headroom and updated plan terms are required to sustain compensation programs that link pay to company performance and retention objectives.

This proposal seeks shareholder approval for an employee purchase plan designed to let eligible employees buy shares through payroll deductions at up to a 15% discount, with offering and purchase periods set by the Committee. Management seeks Section 423 qualification to provide favorable U.S. federal tax treatment to participants and also includes a non‑423 component to permit participation by international employees where local tax or legal constraints make a Section 423 plan impractical. The plan’s economics, including discount rate, lookback mechanics and offering cadence (three‑month default offering periods), are standard and intended to encourage employee ownership and retention, thereby aligning employee interests with stockholders. From an investor perspective, supporting an ESPP typically signals support for broad‑based ownership and can aid talent retention at low incremental dilution relative to long‑term equity programs; key due diligence points include the 5,000,000 share reserve size, the plan’s anti‑dilution and adjustment provisions, and the mechanics for oversubscription and allocation. The Committee retains discretion over plan design specifics (e.g., maximum contribution percentages, purchase price formula and local sub‑plans), which is sensible to accommodate global operations but warrants scrutiny for potential future generosity. The Board’s recommendation to approve the plan is based on fostering employee ownership and providing a market‑competitive benefit; investors should weigh modest dilution against cultural and retention benefits when voting. Overall, the ESPP is a conventional employee participation vehicle with tax‑qualified and non‑qualified components to serve domestic and international employees while limiting immediate dilution through standard controls.