Talphera Inc

This advisory proposal asks stockholders to express non-binding approval of the company’s named executive officer (NEO) compensation as disclosed in the proxy (a standard “say-on-pay” vote). Management frames the program as pay-for-performance, with a significant portion of NEO pay at risk through equity and performance-based components and a targeted positioning relative to peers (50th percentile for cash elements; long-term equity near the 75th percentile by percent-of-company). The Compensation Committee emphasizes use of an independent compensation consultant and highlighted program elements—mix of base salary, annual cash bonus tied to corporate and individual objectives, and long-term equity incentives—to attract and retain executive talent in a competitive biopharma market. The Board indicates the vote is advisory and will consider results in future compensation decisions, but it is not binding. Key governance features noted by management include no tax gross-ups, limited personal benefits, no single-trigger change-in-control cash benefits, and clawback policies consistent with SEC and Nasdaq rules. Stockholders should view this vote in light of recent company performance metrics, the Committee’s stated 2025 achievement level (50% of corporate objectives) and specific individual achievements that influenced actual payouts. Support would signal investor backing of current compensation philosophy and the Committee’s implementation; opposition would signal dissatisfaction and would likely prompt the Board and Compensation Committee to re-evaluate pay design, pay quantum, or disclosure practices. Given the Board’s recommendation and the stated alignment elements, management anticipates a FOR vote but emphasizes that shareholder feedback will inform future program adjustments.

Proposal 4 requests shareholder approval to increase the 2020 equity plan share reserve by 4,000,000 shares to preserve the Company’s ability to grant options, RSUs and other awards to employees, directors and consultants. Management argues the increase is necessary given a depressed stock price (which increases share usage on a percent-of-company basis), competition for talent in biopharma, and the Company’s broad-based grant practices. The Amended 2020 Plan maintains multiple governance protections — no evergreen provision, prohibition on discounted options and SARs, a 12‑month minimum vesting requirement (with a 5% carve-out), limits on non-employee director compensation, restrictions on dividend equivalents, and a non-liberal change-in-control definition — intended to limit dilution and protect stockholders. If approved, the Board and Compensation Committee would use the additional reserve to grant awards discretionary in size and type; if not approved, the existing 2020 Plan will remain in effect and available capacity will not be expanded. The Board frames the requested increase as reasonable given current outstanding awards, available reserve, and overhang metrics disclosed; it also commits to responsibly managing the share reserve and monitoring burn rate. From a governance and valuation perspective, shareholders should weigh the incremental dilution and overhang implications against the potential benefits of retaining talent and aligning incentives through equity — particularly in a company with ongoing clinical development and a need to preserve operational continuity. The Board recommends approval because it views equity awards as central to long-term value creation, while also highlighting plan features designed to mitigate shareholder concerns about dilution and abuse.

Proposal 5 asks shareholders to approve an amendment and restatement of the company’s employee stock purchase plan, increasing the share reserve to 545,000 shares to permit ongoing employee purchase offerings designed to encourage employee ownership and retention. The Amended 2011 ESPP is structured in accordance with Section 423 of the Code, using six-month offering periods, with a purchase price equal to 85% of the lesser of the fair market value at the offering or purchase date. Management points to historical participation, current outstanding and available shares, and the need to preserve the ability to offer tax-advantaged purchase rights to employees as the basis for the request. The affirmative vote of a majority of shares present and entitled to vote is required; if approved the increased reserve will be effective for offering periods commencing on or after September 1, 2026. From a governance perspective, the program is narrowly targeted (employee-only) and capped (per-participant and per-offering limits) to limit dilution while promoting retention and alignment. Investors should balance the modest dilution from the share increase against the benefits of broader employee ownership and morale in a small-headcount, development-stage company; approval supports management’s stated intent to continue broad-based employee participation in equity ownership programs.