Xencor Inc

This management proposal asks shareholders to approve an amendment to the Company’s Amended and Restated 2023 Equity Incentive Plan to add 4,000,000 shares to the plan’s existing share reserve. Management and the Human Capital Management & Compensation Committee state the increase is intended to provide sufficient shares to support approximately one year of routine equity grant activity and to remain competitive for talent in the biotechnology sector. The proposal is transaction-agnostic and does not change other substantive plan terms; it only increases the fixed share reserve (the Amended 2023 Plan retains anti-repricing protections, no evergreen feature, limits on director compensation, and other governance-oriented features). The Board frames the request as necessary because, based on current grant practices and historical burn rate (~4.97% average for 2023–2025), the existing reserve would likely be insufficient by the next planned annual grant date. Management discloses current outstanding awards and the remaining available shares and quantifies resulting overhang and dilution metrics, which were considered in sizing the increase. The Board’s recommendation is driven by retention and recruitment considerations and by an assessment of cash runway ($610.8M at year-end 2025) that it believes supports continued grant activity; the Board also highlights procedural protections such as requiring shareholder approval for repricings. Key governance implications for shareholders include additional future dilution and the need to monitor burn rate and grant practices; institutional investors will also weigh plan size versus peer practice and company stage. A sophisticated reviewer should evaluate the requested increase relative to the company’s hiring plans, expected grant sizes, historical usage, overhang, and the company’s stated compensation philosophy, and consider whether the company’s stated safeguards (no evergreen, no repricing without approval) and disclosed limits are sufficient to mitigate dilution concerns.

This advisory (non-binding) proposal asks shareholders to approve the Company’s disclosed executive compensation policies and outcomes for its named executive officers (NEOs). Management describes its program as pay-for-performance with a large portion of CEO and other NEO compensation variable and at risk (annual bonus and long-term equity), and discloses metrics such as target award mix, peer benchmarking, burn rate, and governance practices (clawback policy, no repricings without shareholder approval, no single-trigger CIC cash payments or excise tax gross-ups). The Board recommends a vote FOR, citing a history of strong shareholder support (97.9% in 2025) and the view that the program aligns incentives with long-term shareholder value. For investors the vote is advisory; however, the HCMCC commits to consider the outcome when setting future compensation. Relevant considerations include the mix of options versus RSUs (60/40 in 2025), the reliance on equity-driven incentives to conserve cash, the company’s operating milestones and cash runway, and the degree to which corporate goals and performance metrics are transparent and linked to pay. Risk-mitigation features are in place (independent compensation consultant, clawback policy, anti-hedging, and anti-pledging), but sophisticated reviewers should evaluate whether performance goals were sufficiently stretching and whether realized pay is aligned with long-term TSR and company performance. Given the non-binding nature, a FOR vote supports management’s current approach while a significant negative vote would likely prompt the HCMCC to reevaluate plan design and disclosure.