Galmed Pharmaceuticals Ltd.

Background

Under the Companies Law, the board of directors of an Israeli public company is required to appoint a remuneration committee and to establish a compensation policy regarding the terms of engagement of office holders. The term “office holders,” as defined in the Companies Law, includes directors and most executive officers. Under the Companies Law, the compensation policy must be reviewed by the Remuneration Committee of the Board, and by the Board, from time to time. In addition, the Remuneration Committee, followed by the Board (based on the recommendation of the Remuneration Committee), and the shareholders are each required to approve and adopt the compensation policy once every three years. The compensation policy sets forth a framework for the terms of office and employment of the office holders, including with respect to the grant of any benefit, other payment, or undertaking to provide payment, such as salary, bonus, equity awards, severance, and other compensation (including in connection with termination of services or a change of control over the Company), as well as exemption from liability, insurance, or indemnification.

The previous compensation policy was adopted by the Board on May 30, 2023, and remained in effect for a period of three years, or until May 30, 2026. The compensation policy was approved in accordance with the mechanism set forth in the Companies Law, which allows the Board to approve the Compensation Policy, notwithstanding the resolution of the general meeting on May 11, 2023, provided that the Remuneration Committee and thereafter the Board have concluded, following further and detailed discussion of the matter and for specified reasons, that such approval is in the Company’s best interests.

Under the Companies Law, the adoption of the proposed compensation policy requires the approval of the Company’s Remuneration Committee, the Board, and the shareholders, in that order. The shareholders’ approval is further subject to the fulfillment of special voting requirements, as detailed under ‘Vote Required for Approval of Each of the Proposals’ above.

Following a review of the previous compensation policy by the Remuneration Committee and Board, the Remuneration Committee and Board approved, and recommended that the shareholders approve, an amended compensation policy in the form attached hereto as Annex A (the “Compensation Policy”). The proposed Compensation Policy is based on the previous compensation policy, with certain adjustments and updates that the Remuneration Committee and Board determined are appropriate in light of the Company’s current circumstances and objectives.

The Compensation Policy is designed to promote the objectives, business plan and long-term strategy, to create appropriate incentives for the office holders while taking into consideration the size and nature of operations of the Company as well as the competitive environment in which we operate. As such, the Compensation Policy is intended to incentivize superior individual excellence and to align the interests of the Company’s office holders with its long-term performance, and as a result, with those of the Company’s shareholders. To that end, a portion of an office holder compensation package is targeted to reflect both the Company’s short- and long-term goals, the office holder’s individual performance, as well as measures designed to reduce office holder’s incentive to take excessive risks that may harm the Company in the long-term.

The principal adjustments made in the Compensation Policy, as compared to the previous compensation policy on which it is based, are as follows:

(a) the clarification that benefits provided to the Company’s officers may include, among others, vacation days, sick leave, convalescence pay, study fund, contributions, pension or managers’ insurance contributions, disability insurance, car allowance or Company car, phone, insurance and medical benefits;

(b) the replacement of discretionary annual cash bonuses for Executive Officers other than the Chief Executive Officer with bonuses based on an overall performance evaluation using quantitative and qualitative criteria;

(c) the increase of the total annual and special cash bonuses granted to the Chief Executive Officer, from 200% to 275% of the Chief Executive Officer’s base salary on an annual basis;

(d) the update of the clawback provisions to align with the Company’s clawback policy, applicable law and stock exchange rules;

(e) the revision of vesting of equity awards granted to officers and directors, from a period of at least three years, to a period of between two to four years from the date of grant for officers, and one to four years from the date of grant for directors;

(f) the revision of the maximum annual equity-based awards granted to the Company’s officers, such that annual equity awards shall not exceed the higher of (a) 200% of the officer’s annual base salary or 0.5% of the Company’s fair market value at the time of approval of the grant by the Board;

(g) the inclusion of change of control arrangements, which include acceleration of vesting of equity-based awards, extension of exercise period of equity-based awards for a period of up to one year following the date of termination of employment, provision of up to six months of continued base salary and benefits following termination, and cash bonus with a limit of 200% of an officer’s annual base salary and 250% in the case of the Chief Executive Officer; and

(h) the increase of the limit of liability under insurance, from the greater of $35 million or 50% of the Company’s shareholders’ equity, to the greater of $50 million or 50% of the Company’s shareholders’ equity, and the increase of the limit of liability under a “run-off” insurance policy, from the greater of $45 million or 50% of the Company’s shareholders’ equity, to the greater of $50 million or 50% of the Company’s shareholders’ equity.

When considering the proposed revisions to the previous compensation policy, the Remuneration Committee and the Board have considered numerous factors, including, inter alia, the Company’s objectives and interests, its business plan and long-term strategy, the Company’s risk management policy, the size and nature of its operations, as well as the experience and qualifications of each of the Company’s officers and directors.

The Compensation Policy will be reviewed from time to time by the Remuneration Committee and the Board in order to ensure its adequacy and its fitness to, among others, the Company’s financial position and results of operation and its retention objectives.

The brief overview above is qualified in its entirety by reference to the full text of the proposed compensation policy, as reflected in Annex A attached hereto.

In the event the Compensation Policy is not approved by the shareholders by the required majority, the Board may nonetheless approve the Compensation Policy, provided that the Remuneration Committee and thereafter the Board have concluded, following further discussion of the matter and for specified reasons, that such approval is in the Company’s best interests.

“RESOLVED, to approve the compensation policy for the Company’s directors and officers, as detailed in the Proxy Statement, dated July 22, 2026.”

PROPOSAL 4