Virnetx Holding Corp

This advisory proposal asks stockholders to express a non-binding opinion on the Company’s executive pay program as disclosed in the proxy statement. Management seeks this vote to gauge investor support for its compensation philosophy and to inform future decisions by the compensation committee; the company explicitly treats the result as advisory but will consider the outcome. The proxy discloses that the 2025 program included base salary increases set in November 2024, annual incentive targets (75% for CEO, 50% for other NEOs), and stock option grants (e.g., 50,000 options to the CEO, 30,000 to the CFO) with multi-year vesting. The compensation committee sets bonuses after reviewing both company-level and individual contributions and retains discretion in determining payments, emphasizing long-term equity incentives to align executives with stockholder value while limiting short-term risk. Governance context includes the CEO serving as Chairman, which concentrates leadership but the board notes independent directors oversee audit, compensation, and nominating functions; this structure may be a focal point for investors evaluating pay and oversight. Because the vote is non-binding, a significant negative vote would likely trigger outreach and potential changes to program design (e.g., mix of cash vs. equity, performance metrics, or greater disclosure). The company highlights that pay is weighted toward long-term equity and that the compensation committee considers tax and accounting consequences, but investors may weigh dilution (overhang ~27.7% as of March 31, 2026) and the magnitude of option grants when forming a view. For voting strategy, investors seeking stronger performance alignment might press for more performance-based vesting or clearer metrics; those confident in management’s licensing and product roadmap may support the recommendation. Overall, the Board recommends FOR this advisory approval on the basis that the program aligns management incentives with long-term stockholder value, while acknowledging the advisory nature of the vote and the Board’s willingness to consider stockholder feedback.

This proposal asks shareholders to approve a 1,000,000-share increase to the company’s equity incentive plan reserve, raising the maximum available to 2,175,000 shares. Management frames the request as necessary to support recruiting, retention and incentive objectives, citing historical grant practices (1,237,050 shares granted 2023–2025, averaging ~412,350 per year) and forecasting that the additional shares would cover expected needs for roughly two years. The filing quantifies the potential dilution — the requested increase represents approximately 23.9% of outstanding shares as of March 31, 2026 — and shows a material overhang (approx. 27.7%) from outstanding awards, which investors should weigh against the benefits of equity incentives. The Board emphasizes that equity is a preferred, cash-conserving tool to align employees with long-term stockholder value and that alternative would require materially higher cash compensation. The Amended Plan contains limits on annual grants per individual, change-in-control acceleration provisions for vesting, and administrator discretion over grant terms, which both mitigate and concentrate decision-making risk. From a governance perspective, investors will evaluate whether the plan’s size and award practices are consistent with company performance, dilution tolerance, and pay-for-performance linkages; the filing discloses grant history and projections but does not add new performance-based metrics tied specifically to this share increase. A vote FOR reflects acceptance of management’s case that additional equity is operationally necessary and that the plan’s controls are sufficient; a vote AGAINST would signal shareholder concern about dilution or insufficient performance alignment. The Board recommends FOR the amendment, arguing the Additional Shares are essential for continued talent incentives and company success.