Smart Sand Inc

This advisory Proposal No. 3 asks shareholders to approve, on a non-binding basis, the Company’s compensation for its named executive officers as disclosed in the proxy statement. Management frames the program as pay-for-performance, combining base salary, annual cash incentives tied to net free cash flow, and long-term equity awards (restricted shares with service-based and performance-based vesting) to align executives’ interests with stockholder value. The compensation committee uses a mix of comparative benchmarking and independent consultant advice (Meridian) to set pay and administer the plan; the board emphasizes retention and alignment given the Company’s operational goals. A ‘for’ vote signals shareholder support for management’s compensation philosophy and preserves the status quo; a ‘against’ or significant negative vote would likely prompt the compensation committee to re-evaluate target metrics, pay mix, disclosure clarity, and possibly future program structure. Because the vote is advisory, the board retains discretion but commits to consider the outcome when making future decisions, which is standard practice and a governance mitigant. The Company’s emphasis on multi-year performance measures (return on invested capital and multi-year net free cash flow targets for performance-based restricted shares) suggests a long-term orientation in executive incentives, reducing short-term risk-taking incentives. Potential risks for investors include perceived outsized pay relative to performance if metrics are poorly calibrated, or complexity in measuring ‘‘net free cash flow’’ adjustments that could dilute accountability; proponents would argue the adjustments ensure metrics reflect underlying business performance. Overall, the proposal is a standard Say-on-Pay asking for endorsement of an existing, performance-oriented compensation framework; institutional investors and proxy advisors will weigh program design, realized pay versus performance, and disclosure quality in forming recommendations.

Proposal No. 4 requests shareholder approval for a new equity plan (the 2026 Plan) designed to replace the 2016 Plan and provide the company with a share reserve (2.4 million shares plus carryover mechanics) to grant options, SARs, restricted stock, RSUs, performance awards and other equity-based incentives. Management justifies the plan as necessary to recruit and retain talent, align employee and stockholder interests, and to continue using equity as a long-term incentive vehicle tied to performance; the plan also enables potential incentive stock option treatment under Section 422 and satisfies Nasdaq approval requirements. The board highlights governance features intended to mitigate dilution and governance concerns: no evergreen replenishment, no repricing without stockholder approval, no discounted options or reloads, director compensation caps, clawback provisions, and anti-liberal share recycling. From a shareholder perspective the key issues are dilution/overhang (the filing projects potential overhang around mid-teens percent assuming full usage), the planned burn rate based on recent grant activity (approximate three-year average ~4.5%), and whether the performance metrics and award mix will meaningfully link pay to sustained operational results. The plan’s treatment of carryover shares from the 2016 Plan and the counting rules for SARs and net exercises are material to dilution modeling and should be scrutinized by governance teams and index funds. Institutional investors and proxy advisors will evaluate the plan against market norms (plan size relative to market cap and historical usage), governance protections, and the quality of disclosure around goal-setting and grant practices; strong protections reduce the risk of recommended votes against. If approved, the company will maintain its ability to grant competitive equity packages; if rejected, the company says the 2016 Plan remains in place only until its scheduled termination, which could constrain near-term grant flexibility. Overall, the proposal is a standard move to refresh the equity reserve with explicit governance guardrails, but its appropriateness depends on the company’s dilution profile, historical grant practices and the clarity of performance-metric design.

Proposal No. 5 seeks shareholder approval for a new employee stock purchase plan that would reserve 3,000,000 shares for purchase by eligible employees through payroll deductions, with standard six-month offering periods and an 85% lookback pricing formula (the lower of enrollment or exercise date at an 85% discount). Management argues the ESPP is a broad-based benefit that fosters ownership, helps recruitment and retention, and aligns employee interests with long-term shareholder value; approval is also required for Section 423 qualification and Nasdaq compliance. Key investor considerations include the plan size relative to float, the per-offering share cap and anti-dilution adjustments, and whether eligibility and purchase limits are consistent with market practice and Section 423 constraints (e.g., $25,000 annual purchase value limit). From a governance and accounting perspective the ESPP is low-risk compensation with limited dilution impact per individual participant, but cumulative overhang depends on participation and the company’s overall equity-award practices. Proxy advisors typically view well-structured ESPPs favorably when they include standard protections and do not have overly generous discounts or look-back mechanics that materially favor insiders; this ESPP’s 85% lookback is competitive but should be assessed in the context of overall dilution. If shareholders do not approve, the existing 2016 ESPP remains in effect only until its scheduled termination, potentially disrupting the company’s ability to offer the benefit long-term. Overall, this is a routine request for an ESPP refresh that is likely to receive broad support provided investors are comfortable with the aggregate share reserve and customary plan features.