Rocky Mountain Chocolate Factory Inc

This proposal is a non-binding advisory vote (say-on-pay) asking stockholders to approve the Company’s disclosed compensation for its named executive officers. Management and the Compensation Committee seek this annual advisory endorsement to validate their compensation philosophy, which emphasizes performance-based pay, a mix of short- and long-term incentives, equity ownership guidelines, and clawback protections. The Committee argues that the structure aligns executive incentives with stockholder value by tying significant compensation to company performance and multi-year vesting of equity awards; it also notes use of market benchmarking and engagement with stockholders. Importantly, the vote is advisory and not binding on the Board, but management will consider the outcome when designing future pay programs. The Company discloses that certain discretionary incentives were suspended in fiscal 2026 and that a majority of LTIP awards are performance-based, signaling an attempt to calibrate incentives to recent business conditions. For governance-minded investors, key considerations include the non-binding nature of the vote, the details of performance metrics and vesting, potential dilution from equity awards, and the presence of safeguards such as clawback and anti-repricing provisions. The Board’s unanimous recommendation FOR the proposal reflects its view that the program is appropriately balanced to attract and retain executives while protecting stockholder interests; however, investors should weigh disclosure detail, historic pay-for-performance alignment, and the Company’s recent engagement and responsiveness to stockholder feedback when evaluating the merits of supporting the proposal.

This is a non-binding advisory proposal asking stockholders to choose the preferred interval—one, two, or three years—for future say-on-pay votes. Management’s case for an annual vote is that it provides timely, direct feedback on compensation policies disclosed each year, aligns with past practice since 2013, and improves the Board’s ability to interpret and respond to stockholder sentiment. The Board emphasizes that annual voting reduces ambiguity about whether a negative vote pertains to current-year disclosure or prior practices and that stockholders previously endorsed an annual frequency in 2020. The outcome is advisory; the option receiving the most votes will be deemed the stockholder preference, but the Board and Compensation Committee are not legally bound to adopt it. For investors, the key tradeoffs are between responsiveness (annual votes allow frequent engagement and quicker course corrections) and governance efficiency (less frequent votes reduce administrative load and may encourage longer-term perspective). The Board’s public rationale highlights investor engagement and transparency as primary drivers for recommending one year. Given the Company’s active outreach on compensation matters and recent governance updates (clawback policy, anti-repricing), an annual vote may be consistent with its intent to remain responsive to stockholders. However, some long-term investors prefer multi-year cycles to evaluate pay-for-performance over longer periods; such viewpoints are relevant when interpreting the advisory outcome and management’s intended responsiveness.

This management proposal requests stockholder approval to amend the 2024 Omnibus Incentive Compensation Plan by increasing the shares authorized for issuance by 530,000 shares (raising the total from 683,949 to 1,213,949). Management and the Compensation Committee argue the increase is necessary to support anticipated equity grant activity over the next two to three years for retention, recruitment, and incentive alignment as the Company pursues growth and franchising objectives. The amendment would represent approximately 12.86% of outstanding shares as of the record date, so investors should weigh the dilutive effect against the benefits of aligning employee and executive interests with long-term stockholder value. The 2024 Plan includes governance protections described in the filing — minimum vesting periods, performance-based award requirements, anti-repricing without shareholder approval, and clawback provisions — which management cites to limit misuse and protect stockholders. The Board also notes that Nasdaq rules require shareholder-approved plans for equity compensation, so approval is necessary for ongoing equity grant flexibility. For investors evaluating the proposal, key considerations include the size of the requested increase relative to current run-rate of grants, historical usage of plan shares, expected dilution, and whether the design of future awards will be clearly disclosed with performance metrics that align pay to multi-year outcomes. Management’s unanimous recommendation FOR the amendment reflects its view that the additional capacity to grant equity is important to retain and attract talent in a competitive market while using awards selectively and with multi-year vesting to promote long-term value creation. If approved, Annex A becomes operative, updating Section 4.1 to reflect the increased share reserve and preserving the remainder of the plan terms.