Petmed Express Inc

This non-binding advisory proposal asks shareholders to approve the overall compensation paid to the Company’s named executive officers as disclosed in the proxy, including the Compensation Discussion and Analysis and the Fiscal Year 2026 Summary Compensation Table. Management seeks an affirmative advisory vote to validate its pay-for-performance philosophy and to obtain shareholder feedback that the Compensation and Human Capital Committee will consider when setting future pay policies. The proxy notes recent governance practices such as annual say-on-pay votes and references that the 2025 say-on-pay received approximately 82% support, which management interprets as general shareholder endorsement of its approach. Key elements of the executive program include base salary, an annual incentive plan linked to revenue and adjusted EBITDA, and equity-based long-term incentives (restricted stock and performance share units) intended to align management and shareholder interests. Because the vote is advisory, it does not bind the Board, but a negative or weak outcome would prompt the Committee to review and potentially change compensation design and disclosure. The Board recommends a "FOR" vote citing alignment of pay with company performance, retention needs during a pivotal period, and the Committee’s use of market benchmarking and an independent consultant. Investors should weigh the advisory nature of the vote, the company’s recent governance and compensation changes (including separation of roles and new incentive programs for FY2027), and the historical shareholder support when evaluating this proposal. In assessing risk, the Committee states it has considered compensation-related risks and continues to employ features such as minimum vesting periods, prohibition on repricing, double-trigger change-in-control provisions, and clawback policies to mitigate misaligned incentives.

This management proposal seeks shareholder approval to add 1,800,000 shares to the reserve under the Company’s 2024 Omnibus Incentive Plan, increasing the pool available for stock options, restricted stock, RSUs and performance awards and raising the limit on incentive stock options by the same amount. Management frames the request as necessary to preserve the Company’s ability to attract and retain senior management and key employees through equity-based compensation, which the Board views as integral to aligning management and shareholder interests and driving future performance. The Board and Compensation and Human Capital Committee considered dilution — estimating the incremental potential dilution at approximately 8% based on outstanding shares as of the record date — and evaluated projected annual burn-rate and overhang in determining the appropriate number of additional shares. The proposed amended plan includes several investor-friendly features highlighted by management, including a one-year minimum vesting requirement (with limited exceptions), prohibition on repricing and backdating, no tax gross-ups for change-in-control excise taxes, double-trigger vesting on change-in-control, limits on non-employee director awards and prohibition on dividends on unvested awards. Approving the amendment does not commit the Company to specific future grants, and management notes the Administrator will continue to grant awards subject to committee oversight and governance. If shareholders do not approve the amendment, the Company warns there may be insufficient shares to make annual awards and grants to new hires, potentially forcing the Compensation and Human Capital Committee to revise its compensation philosophy or adopt alternative (likely cash-based) programs that could affect liquidity and retention. The Board recommends a "FOR" vote emphasizing the strategic need for a replenished equity pool while disclosing its analysis of dilution, plan design safeguards, and the role of equity in talent retention and incentive alignment.