DEF: DLH Holdings Corp. Sets 2026 Annual Meeting Agenda, Proposes Equity Plan Boost

DLH Holdings Corp. announces its 2026 Annual Meeting of Shareholders to address director elections, executive compensation, an amendment to its 2025 Equity Incentive Plan, and auditor ratification.

Summary

• The 2026 Annual Meeting of Shareholders will be held on Thursday, March 12, 2026, at 10:00 a.m. Eastern Time, as a hybrid meeting (in-person in New York, NY, and virtually via the Internet).
• The agenda includes the election of seven directors, a non-binding advisory vote on named executive officers' compensation, approval of an amendment to the 2025 Equity Incentive Plan, and ratification of WithumSmith+Brown, PC as the independent registered public accounting firm for fiscal year 2026.
• The proposed amendment to the 2025 Equity Incentive Plan seeks to increase the number of shares available for awards by 550,000, bringing the aggregate total to 1,781,554 shares.
• As of the Record Date (January 21, 2026), 14,493,035 shares of common stock were issued and outstanding, with 486,893 shares available for future awards under the 2025 Plan and 744,661 shares already granted.
• The company's burn rate for 2025, 2024, and 2023 was (5.14)%, (0.81)%, and 2.92% respectively, resulting in a three-year average annual burn rate of (1.01)%.
• For fiscal year 2025, Zachary C. Parker (CEO) received total compensation of $2,122,468, and Kathryn M. JohnBull (CFO) received $1,048,863.
• Fiscal 2025 cash bonuses were impacted by underperformance in Technology Solutions and Services Revenue (82.9% of target) and Bookings (7.1% of target), although Technology Solutions and Services EBITDA achieved 95.0% of target.
• Performance-based restricted stock units granted in fiscal 2023 to named executive officers did not vest, as neither the revenue growth target nor the stock price target was achieved by September 30, 2025.

Sentiment

Score: 4

Explanation: The filing outlines necessary corporate governance actions and an equity plan amendment, but also reveals significant underperformance in key financial metrics (revenue, bookings, net income, TSR) and the failure of performance-based equity awards to vest. The outlook for fiscal 2026 anticipates continued headwinds from government procurement changes, leading to lower financial targets. While governance is sound, the financial results and outlook are concerning.

Positives

• The company is holding a hybrid annual meeting, enhancing shareholder accessibility and participation.
• The Board of Directors maintains strong corporate governance practices, including a separated Chairman and CEO role, and all committees are comprised of independent directors.
• An independent compensation consultant (Korn Ferry) was engaged to review executive and director compensation, ensuring competitive and appropriately designed programs.
• The company has adopted robust governance policies, including a compensation recovery (Clawback) policy, insider trading policy, and anti-hedging/anti-pledging policies.
• All non-employee directors either meet the established stock ownership guidelines or are on track to do so within the specified timeframe.
• Fiscal 2025 Technology Solutions and Services EBITDA achieved 95.0% of its target, indicating solid operational performance in that segment despite overall revenue challenges.

Negatives

• Fiscal 2025 Technology Solutions and Services Revenue was significantly below target at 82.9% achievement.
• Fiscal 2025 Bookings were substantially below target at 7.1% achievement, indicating a significant shortfall in new business acquisition.
• Performance-based restricted stock units granted in fiscal 2023 to named executive officers did not vest due to unachieved revenue growth and stock price targets.
• Net income decreased by approximately $6.0 million between fiscal 2023 and fiscal 2025.
• Total shareholder return decreased by approximately 81.6% over the three-year period ended September 30, 2025.
• The company anticipates continued negative impact on revenues and EBITDA in fiscal 2026 due to the Department of Veterans Affairs' (VA) procurement process changes favoring small businesses.

Risks

• Significant dependence on government contracts, particularly with the Department of Veterans Affairs (VA), making the company vulnerable to changes in procurement processes, such as set-asides for service-disabled veteran-owned small businesses (SDVOSB).
• Exposure to cybersecurity and information technology risks as a government contractor handling highly sensitive information, requiring continuous safeguards and risk management.
• Potential for dilution of public stockholders' interests if the proposed increase in shares for the 2025 Equity Incentive Plan is approved and awards are granted.
• Challenges in attracting and retaining high-caliber personnel if the equity incentive plan is not adequately resourced or if compensation is not competitive.
• Impact of changes to budgetary priorities of Congress and the administration on federal government procurement processes, which could further affect the company's financial performance.

Future Outlook

The company anticipates continued negative impact on revenues and EBITDA in fiscal 2026 due to the Department of Veterans Affairs' (VA) procurement process changes, which increasingly favor service-disabled veteran-owned small businesses (SDVOSB). Financial performance targets for 2026 are set below actual 2025 results to account for these factors and potential changes in federal government budgetary priorities. The company aims to emphasize organic growth and debt reduction in fiscal 2026, with new performance targets introduced for these areas in the short-term bonus plan.

Management Comments

• "We are pleased to invite you to attend the 2026 Annual Meeting of Shareholders of DLH Holdings Corp." Frederick G. Wasserman, Chairman
• "We believe that this will facilitate shareholder attendance and participation while safeguarding the health and safety of our shareholders, directors and management team." Regarding the hybrid meeting format.
• "The Board believes that the 2025 Plan Amendment will benefit the Company and its shareholders by allowing the Company to continue to achieve the objectives of the 2025 Plan: (i) to increase the stake of directors, key employees and executives in the success of the Company; (ii) to align the interests of awardees under the 2025 Plan with the interests of the shareholders; and (iii) to aid the Company in its efforts to recruit and retain highly qualified individuals."
• "The Board believes that the grant of awards under the Plan will not result in an unacceptable level of dilution to the interests of public stockholders and that the Companys financial performance and the resulting performance of the Common Stock indicate that the benefits of the 2025 Plan could more than offset any such potential dilution."
• "Our success in this regard will be crucial to our ability to build and retain shareholder value." Regarding recruiting and retaining high quality personnel.
• "Management believes that assuming approval of this proposal, the ratio of the number of shares available for future awards under the 2025 Plan, as amended, in relation to the number of outstanding shares of Common Stock would be within the range of outstanding shares ratios for comparable companies."
• "Overall, we believe our compensation programs have the appropriate level of incentive-based compensation and are designed to deliver pay in line with shareholder interest."

Industry Context

The company operates within the U.S. government services market, with a significant portion of its business tied to contracts with federal agencies, particularly the Department of Veterans Affairs (VA). A key industry trend impacting the company is the federal government's increasing use of procurement set-asides for service-disabled veteran-owned small businesses (SDVOSB) and other small businesses. This trend has directly led to a negative impact on DLH's revenue and EBITDA from certain contracts and is expected to continue affecting its financial performance in fiscal 2026. The company also faces intense competition for attracting and retaining high-caliber personnel in this specialized market.

Comparison to Industry Standards

• The Compensation Committee periodically evaluates non-employee director compensation against general market data and a peer group of companies, aiming for levels at or near the market median.
• Executive compensation, including the mix of base salary, bonus, and equity, is evaluated against a peer group of companies in similar business lines or those competing for executive talent, with assistance from Korn Ferry.
• The peer group for fiscal 2025 included American Software, Inc., Carecloud, Inc., CRA International Inc., Fair Isaac Corp., Health Catalyst, Inc, Healthstream, Inc, Huron Consulting Group, Inc., Information Services Group, Inc., Mastech Digital, Inc., MISTRAS Group, Inc., RCM Technologies Inc., Resources Connection, Inc., SentinelOne, Inc, TruBridge, Inc. (formerly Computer Programs & Systems, Inc.), WidePoint Corp., and Willdan Group, Inc.
• Management believes that, if approved, the ratio of shares available for future awards under the amended 2025 Plan relative to outstanding common stock would be within the range of comparable companies.

Management Changes

Corporate Governance

Related Party Transactions

• Noah Wasserman, a non-executive employee, is the son of Frederick G. Wasserman, the current Chairman of the Board. During the 2025 fiscal year, his base salary and other compensation was approximately $155,000 per annum, and he participates in the company's other benefit programs on the same basis as other employees at his level.

Stakeholder Impact

• **Shareholders**: Directly impacted by the proposals to be voted on at the annual meeting, including director elections, executive compensation, and the equity plan amendment. The reported decline in total shareholder return, net income, and underperformance in key metrics are significant concerns. The proposed equity plan increase could lead to further dilution.
• **Employees/Executives**: Directly affected by executive compensation decisions, the structure of equity awards, and the proposed increase in shares for the equity incentive plan, which is designed to aid in recruitment and retention.
• **Customers (Government Agencies)**: The company's ability to secure and perform on government contracts, particularly with the VA, is critical. Changes in procurement processes favoring small businesses could impact service delivery and contract continuity.
• **Creditors**: The company's financial health, including efforts towards debt reduction (a new fiscal 2026 incentive target), directly impacts creditors' risk exposure and confidence.

Next Steps

• Shareholders are urged to vote on the election of directors, executive compensation, the equity plan amendment, and auditor ratification at the Annual Meeting on March 12, 2026.
• The company plans to register the securities issuable under the 2025 Plan Amendment pursuant to a registration statement on Form S-8 as soon as practicable following shareholder approval.
• The Compensation Committee will continue to regularly review, assess, and adjust the executive compensation program in response to stockholder feedback and market conditions.
• The company will post answers to any unanswered shareholder questions from the annual meeting on its investor relations website.
• The company will continue to hold annual advisory votes on executive compensation ('say-on-pay').

Key Dates

Recommendation

The company faces significant headwinds from government procurement changes, leading to a decline in revenue, net income, and total shareholder return over the past three years. The failure of performance-based equity awards to vest underscores these challenges. While the company is taking steps to address corporate governance and talent retention through its equity plan, the immediate financial outlook is negative, with anticipated continued adverse impacts on revenue and EBITDA in fiscal 2026. The proposed equity plan amendment, while necessary for talent, also carries dilution risk. Given the current financial performance and the anticipated challenges, a 'hold' recommendation is appropriate, suggesting investors monitor the company's ability to navigate the procurement landscape and demonstrate organic growth and debt reduction in the coming fiscal year before making further investment decisions.

Keywords

SEC filing, proxy statement, annual meeting, corporate governance, executive compensation, equity incentive plan, restricted stock units, government contracts, VA procurement, cybersecurity, financial performance, shareholder return, DLH Holdings Corp.