Xerox Holdings Corp

This advisory proposal asks shareholders to approve, on a non-binding basis, the Company’s 2025 executive compensation program as disclosed in the Proxy Statement. Management seeks this advisory vote to affirm shareholder support for the Compensation and Human Capital Committee’s pay design following the Lexmark acquisition and leadership transitions, and to reinforce the Committee’s approach to aligning pay with performance during the Company’s Reinvention. The 2025 program emphasizes a high proportion of at‑risk pay (approximately 93% for the CEO and 83% for other NEOs), a mix of time‑based RSUs and performance PSUs, and clawback and ownership guidelines intended to align executives with long‑term shareholder outcomes. The Committee engaged with large institutional holders (contacting holders representing ~57% of shares and holding calls representing ~34%), incorporated feedback, and notes prior strong say‑on‑pay support (94.3% in 2025). Company performance context is complex: the Lexmark acquisition materially changed the company’s scale and integration priorities; the 2025 MIP paid out 0% (Adjusted EBITDA below threshold) while CSR metrics were partially met; 2023 LTIP PSUs paid at ~34.3% of target, and the company faced notable goodwill and valuation adjustments. The non‑binding vote therefore serves as a governance signal; a favorable vote would validate the Board’s compensation framework and recent changes (including increased use of performance-based LTI and revised vesting schedules), while a negative vote would signal shareholder dissatisfaction and likely trigger additional engagement and potential program revisions. Management recommends a “FOR” vote, noting that the program is intended to preserve retention and incentivize execution during integration while incorporating safeguards on dilution, disclosure, and recoupment.

This management proposal requests shareholder approval to add 15,000,000 shares to the Xerox 2024 Equity and Performance Incentive Plan to replenish a depleted share reserve and enable future equity grants to employees and non‑employee directors. Management argues the increase is temporary and directly tied to retention and incentive needs during a defined Reinvention and Lexmark integration period, where low market price dynamics have increased share usage per grant and the leadership team’s continuity is critical. The Compensation Committee relied on peer benchmarking, historical and projected burn rates, shareholder outreach, and consultant analysis in setting the requested amount and describes governance guardrails (no liberal recycling, no repricing without shareholder approval, double-trigger CIC vesting, clawbacks, and post‑termination holding/ownership requirements). The Company discloses that approving the amendment would raise potential overhang to about 21.3% and acknowledges meaningful dilution risk, but contends that alternative reliance on cash awards would impair deleveraging and capital allocation priorities. From an analytical perspective, investors should weigh the near‑term retention and performance imperatives against the dilution and potential proxy advisor scrutiny associated with a material share request; the Board’s engagement with large holders and explicit limits (fixed allocation versus evergreen, prohibition on option repricing, and specific contingent grants disclosed) mitigate some governance concerns but do not eliminate dilution economics. The proposal’s operational rationale — ensuring competitive equity grant capacity while pursuing integration synergies — is credible, but its ultimate shareholder impact depends on future equity plan governance, disclosed burn‑rate discipline, and transparent post‑grant reporting of realized dilution and performance outcomes. Management recommends a “FOR” vote, but sophisticated investors will want post‑approval monitoring and potentially tighter disclosure on future grant pacing, dilution thresholds, and measured use of cash alternatives.