Stem Inc

This management proposal asks stockholders to approve a Board-adopted amendment and restatement to the Company’s Amended and Restated 2024 Equity Incentive Plan that would add 425,000 shares to the plan reserve and extend the plan term through the tenth anniversary of the effective date. Management frames the request as necessary to maintain an adequate equity pool to grant competitive awards across employees, officers, directors and consultants — noting high participation (approximately 64.6% of employees held awards as of March 31, 2026) and historical grant rates — and to support retention and recruitment during the Company’s transition toward a software-centric strategy. The filing provides quantitative context: approximately 1,090,009 shares were outstanding under the plan and only ~169,941 shares remained available as of March 31, 2026; the three-year average burn rate is ~7.2%; and fully-diluted overhang would rise from 12.8% to 16.4% if approved (or to 14.9% excluding certain PSUs tied to a $30 VWAP goal). Management and its compensation consultant considered market benchmarks and argue the resulting overhang remains below peer medians. The restatement contains governance protections (limits on repricing, minimum one-year vesting, no evergreen provision, director compensation caps, clawback/recoupment provisions, and restrictions on dividend equivalents for option/SARs) intended to mitigate misuse and to align awards with long-term shareholder value. Approval requires a majority of votes cast at the meeting; the Board recommends FOR, citing the need to preserve share flexibility to execute the Company’s compensation and retention plan and to avoid inability to make competitive grants if the request is not approved. Key risks for shareholders include incremental dilution (the requested shares increase potential dilution) and the assumptions behind the Company’s burn-rate and hiring plans; the Company argues dilution remains within peer benchmarks. For an analyst, the decision turns on whether the Company’s stated hiring and retention needs, burn-rate trajectory, and governance protections justify the additional dilution in light of current capitalization and strategic execution risks.

This advisory (non-binding) proposal asks stockholders to approve the Company’s named executive officer compensation as disclosed in the proxy. Management seeks endorsement to validate its pay-for-performance design, which in 2025 combined base salary, an annual cash incentive plan tied to rigorous financial metrics (adjusted EBITDA, free cash flow, and revenue, with business-unit adjustments for BU presidents), and a long‑term incentive mix (options, RSUs and newly introduced PSUs tied to multi-year VWAP hurdles). The Compensation Committee emphasizes objective metrics, retention and recruitment needs, and market benchmarking (with an updated peer group reflecting the Company’s software-focused strategy) as rationales for the program. Management notes governance controls (clawback policy, stock ownership guidelines, limits on director awards, and minimum vesting) intended to align pay with long-term shareholder value. Although the vote is non-binding, the Board states it will consider the outcome when setting future compensation; a negative vote could trigger further investor engagement and potential design changes. Key tradeoffs for investors include the increased use of performance stock units and potential dilution from equity awards versus management’s argument that equity is necessary to retain talent and align incentives during a strategic transition. Analysts should weigh actual performance outcomes (e.g., 2025 achievement levels and PSU hurdles) against realized pay and the Company’s trajectory to assess alignment between pay and shareholder value.