GENERAL INFORMATION This proxy statement is furnished to stockholders of Porch Group, Inc., a Delaware corporation (the “Company”), in connection with the solicitation of proxies by the board of directors of the Company (the “Board” or the “Board of Directors”) for use at our 20222023 Annual Meeting of Stockholders to be held on June 8, 20222023 (the “Annual Meeting”), and at any adjournment or postponement thereof. The Annual Meeting will be held at 9:00 a.m. Pacific Time as a virtual meeting held entirely over the Internet. The Company was formed upon the closing of the business combination (the “business combination”) of Porch.com, Inc. (“Legacy Porch”) with PropTech Acquisition Corporation (“PTAC”), a special purpose acquisition company, on December 23, 2020. In connection with such business combination, PTAC changed its name to “Porch Group, Inc.” and Porch Group, Inc.’s common stock commenced trading on the NASDAQNasdaq under the ticker “PRCH”. As permitted by the rules of the Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 (“Form 10-K”) available to our stockholders electronically via the Internet at www.proxyvote.com. On or about April 26, 2022,28, 2023, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (“Internet Notice”), containing instructions on how to access this proxy statement and vote over the Internet or by telephone. If you received an Internet Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request them pursuant to the instructions provided in the Internet Notice. The Internet Notice instructs you on how to access and review all of the important information contained in this proxy statement. The Annual Meeting will be held entirely over the Internet via live video webcast due to the public health impact of the COVID-19 pandemic and to support the health and wellness of our stockholders, directors, team members, and guests. The virtual Annual Meeting will also allow for greater participation by all of our stockholders, regardless of their geographic location. To attend the Annual Meeting, examine our list of stockholders, vote and submit your questions during the Annual Meeting, go to www.virtualshareholdermeeting.com/PRCH2022PRCH2023. Prior to the Annual Meeting, you will be able to vote at www.proxyvote.com and by the other methods described in this proxy statement. We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders. To be admitted to the Annual Meeting, please visit www.virtualshareholdermeeting.com/PRCH2022PRCH2023. You will log into the Annual Meeting by entering your unique 16-digit control number found on your proxy card or voting instruction form.card.
GLOSSARY OF TERMS | | Term | Definition | 10-K Event | Timely filing of the Form 10-K for the year ended December 31, 2022 | 10-Q Event | Timely filing of the Quarterly Report on Form 10-Q for the three months ended September 30, 2022 | 2012 Stock Plan | Porch.com, Inc. 2012 Equity Incentive Plan | 2020 Stock Plan | Porch Group, Inc. 2020 Stock Incentive Plan | 2022 Bonus Plan | Senior Level Performance Bonus Plan | Absolute Share Price | Absolute share price, based upon the closing price of a share of common stock of the Company being equal to or greater than certain specified prices (calculated based upon compound annual growth rates of the VWAP Common Stock Price) over any 20 trading days within any 30 consecutive trading-day period during the applicable Achievement Period | Achievement Period | Each year of the performance period for PRSU awards subject to two performance goals | Amended CFO Offer Letter | First amendment to the offer letter with Mr. Heimbigner, effective June 15, 2020 | Annual Meeting | 2023 Annual Meeting of Stockholders of Porch Group, inc. | Beneficial Ownership Date | March 31, 2023 | Board | Board of Directors of Porch Group, Inc. | business combination | Business combination of Porch.com with PropTech Acquisition Corporation | Bylaws | Amended and Restated Bylaws of Porch Group, Inc. | CAP | Compensation actually paid | CEO Employment Agreement | Employment agreement with Mr. Ehrlichman | CFO Employment Agreement | Employment agreement with Mr. Tabak | CFO New Hire Award | One-time award of RSUs to Mr. Tabak in connection with his appointment as Chief Financial Officer of the Company. | Change in Control Termination | Upon a termination of the Executive’s employment by the Company without Cause (and other than by reason of death or Disability), or the Executive’s resignation for Good Reason, in each case within 12 months following a Change in Control | COO Employment Agreement | Employment agreement with Mr. Neagle | Code | The Porch Group, Inc. Code of Business Conduct and Ethics adopted by the Board effective December 23, 2020, amended April 13, 2022 | Committees | Standing Committees (i.e., Audit, Compensation, Nomination and Corporate Governance, and Merger and Acquisition Committees) of the Board of Directors of Porch Group, Inc. | Company | Porch Group, Inc. |
Earnout Shares | The restricted shares received by Messrs. Ehrlichman and Neagle pursuant to the terms of the merger agreement in connection with the business combination and which were issued to Messrs. Ehrlichman and Neagle on the same terms as the Company’s other equity holders. The Earnout Shares will vest if the Company achieves certain earnout thresholds prior to the third anniversary of December 23, 2020, the closing date of the business combination. | ESG | Environmental, Social and Governance | Exchange Act | Securities Exchange Act of 1934, as amended | Executive | Each of Messrs. Ehrlichman, Neagle, and Tabak, for purposes of the Employment Agreements section of this proxy statement | EY | Ernst & Young LLP, the Company's independent registered public accounting firm | FASB ASC Topic 718 | Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation | February 2022 Grants | Equity awards granted to Mr. Ehrlichman on February 10, 2002, consisting of a TWW RSU award, a 2021 annual PRSU award and a 2021 annual RSU award, which were intendedto be part of the 2021 NEO compensation program | Form 10-K | Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as filed with the SEC | Former CFO Offer Letter | Second amendment to Mr. Heimbigner's offer letter, as amended on Februray 11, 2022 | GAAP | Generally accepted accounting principles in the United States | HIP | Home Inspector Pro Inc. and its affliates | Internet Notice | Notice of Internet Availability of Proxy Materials | IRS Code | Internal Revenue Code of 1986, as amended | Legacy Porch | Porch.com, Inc. | LTI | Long-term incentive | Nasdaq | The Nasdaq Stock Market | NEO | Named executive officer | Non-Change in Control Termination | Termination of the Executive's employment by the Company without Cause (and other than by reason of death or Disability), or his resignation for Good Reason | PCAOB | Public Company Accounting Oversight Board | Post-Vesting Holding Period | Minimum post-vesting holding period of three years from any applicable vesting date for PRSUs and RSUs | PRSU | Performance-based Restricted Stock Unit | RSU | Restricted Stock Unit | RWS | The acquired companies, collectively, RWS Inspector Services Group, LLC, Residential Warranty Home Protection, LLC, Residential Warranty Services of Canada, Inc., RWS Home Service Contracts LLC
RWS Inspector Services Group, LLC, RWS Insurance Services, LLC and RWS of America, LLC | Say on Pay | The opportunity for stockholders to vote (annually) on the Company’s NEO compensation program | SEC | U.S. Securities and Exchange Commission |
Severance Period | Period of 12 months | TTM Revenue Condition | Trailing twelve-month revenue | TWW | "Together We Win" program was a special equity award program for all Company employees that was designed to bridge the Company’s transition from a private company compensation model to a public company compensation model and address retention and incentive objectives critical to the Company. The eqiuty granted pursuant to this program is referred to as TWW RSU Awards | VWAP | Volume-weighted average price of a share of common stock of the Company | WTW | The Company's compensation consultant, formerly Willis Towers Watson |
Proxy Statement Summary This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider. Please read carefully the entire proxy statement and our 2021 Annual Report on Form 10-K before voting. About the Annual Meeting Date and Time | Place | Record Date | | | | 
| June 8, 2022,2023, at 9:00 a.m. Pacific Time | 
| Virtual Meeting Site:
www.virtualshareholdermeeting.com
/PRCH2022PRCH2023 | 
| You can vote if you were a stockholder of record as of the close of business on April 13, 202211, 2023 | | | | | | |
If you plan to attend the virtual meeting, please be sure to have available your 16-digit control number found on your proxy card or voter instruction form. For beneficial holders who do not have a control number, please contact your broker, bank, or other nominee as soon as possible, so that you can be provided with a control number and gain access to the meeting. If you lost your 16-digit control number or are not a stockholder, you will be able to attend the meeting by visiting www.virtualshareholdermeeting.com/PRCH2022PRCH2023 and registering as a guest. If you enter the meeting as a guest, you will not be able to vote your shares, examine oursubmit questions or access the list of stockholders or submit questionsas of the record date during the meeting. Proposals and Voting Matters and Board Recommendations | Board Vote
Recommendation | Page | PROPOSAL 1: ELECTION OF CLASS IIIII DIRECTORS Election of the two Class IIIII directors named in this proxy statement until the 2025 Annual Meeting2024 annual meeting of Stockholders (or until the 2024 Annual Meeting of Stockholders if Proposal 2 is approved and the Declassification Amendment is filed and becomes effective as described in this proxy statement)stockholders and until their successors are duly elected and qualified, subject to their earlier resignation, removal or death.other termination of service. | FOR
each Director
Nominee | 58
| PROPOSAL 2: AMENDMENT TO COMPANY CERTIFICATE OF INCORPORATION to declassify our BOARD Amendment to the Certificate of Incorporation to declassify our Board commencing with the 2024 Annual Meeting of Stockholders.
| FOR
| 9
| PROPOSAL 3: AMENDMENT TO COMPANY CERTIFICATE OF INCORPORATION to eliminate supermajority voting standard
Amendment to the Certificate of Incorporation to eliminate the Supermajority Voting Standard commencing with the 2024 Annual Meeting of Stockholders.
| FOR
| 11
| PROPOSAL 4: say on pay
Advisory vote to approve Named Executive Officer compensation.
| FOR
| 12
| PROPOSAL 5: SAY ON FREQUENCY OF PAY
Advisory vote on the frequency of future advisory votes on Named Executive Officer compensation.
| ONE YEAR
| 14
| PROPOSAL 6: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023. | FOR | 1526
| PROPOSAL 3: say on pay Advisory vote to approve named executive officer compensation. | FOR | 33 |
| | ir.porchgroup.com4
| 12023Proxy Statement
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Ways to Vote If you hold your shares in street name via a broker, bank or other nominee, you may direct your vote without attending the Annual Meeting by signing, dating and mailing your voting instruction card. Internet or telephonic voting may also be available. Please see your voting instruction card provided by your broker, bank or other nominee for further details. If you are a holder of record of shares of common stock of the Company, you may direct your vote without attending the Annual Meeting in one of the following ways: | | | | | | | | 
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| 
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| By Internet: Visit www.proxyvote.com with your proxy card in hand and follow the instructions on the web site. | At the Meeting: Go to www.virtualshareholdermeeting.com
/PRCH2022PRCH2023 and follow the voting instructions. | By Telephone: Call 1-800-690-6903 with your proxy card in hand and follow the instructions. | By Mail: Mark, sign and date your proxy card and return it in the postage-paid envelope provided or return it to: Vote Processing c/o Broadridge 51 Mercedes Way, Edgewood NY 11717. | | | | |
About Porch Group, Inc.
Porch Group, Inc. is a vertical software platform for the home, providing software and services to approximately 30,900 home services companies, such as home inspectors, mortgage companies and loan officers, title companies, moving companies, real estate agencies, utility companies, and warranty companies. Through these relationships and its multiple brands, The Company provides a moving concierge service to homebuyers, helping them save time and make better decisions on critical services, including insurance, warranty, moving, security, TV/internet, home repair and improvement, and more. We have two reportable segments: the Vertical Software segment and the Insurance segment.
Summary of Company Financial and Operating Performance
In 2022, we moved forward in our strategy and toward our near-term Adjusted EBITDA profitability target. We did this while dealing with impacts of inflation, challenging capital markets, unusual weather volatility, and a housing market that slowed substantially. We extended our market position and software products in key verticals, grew our insurance business with improved underwriting and an increase in policies, successfully integrated past acquisitions, matured our financial systems, and diversified the Board by adding strong new members. The Porch team achieved this while dealing with the impacts of inflation, challenging capital markets, unusual weather volatility, and a housing market which slowed substantially.
About Us
WE SIMPLIFY THE HOME JOURNEY
vision2022 FINANCIAL AND OPERATING PERFORMANCE HIGHLIGHTS
| ■ To be the partnerTotal Revenue of $275.9 million, an increase of 43% from total Revenue of $192.4 million for the home.2021
Mission
■ To makeGAAP net loss of $156.6 million, compared to a GAAP net loss of $106.6 million for 2021
■ Adjusted EBITDA loss1 of $(49.6) million or (18)% of total Revenue, compared to the home simple from movingAdjusted EBITDA loss of $(25.0) million or (12.5)% of total Revenue for the full year 2021 ■ Software and services to improving and everything in between.companies:
Our Shared Values
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o Average number of companies increased to 30,860 from 24,6012 in Q4 2021 o Average revenue per company per month of $693 in line with $776 in Q4 2021 ■ Monetized services for customers: o Number of monetized services was 212,992 in Q4 2022, a decrease from 267,6832 in Q4 2021 |
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| No Jerks/No Egos - The journey starts with who you bring along and the most important person is who you choose to be. Choose each day to set the example in your actions and your attitude. Keep an open mind to feedback and different perspectives. Show kindness and respect to others, especially in conflict.
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| Be Ambitious - Any journey worth taking will push you beyond your sights. Don’t let uncertainty keep you from believing in what is possible. Push yourself to think big, to make every day count and to be optimistic it will be worth it.
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| Solve Each Problem - Along the way, you will encounter challenges and opportunities and how you respond will forever mark your journey. Look at each as a problem to solve. Be thoughtful in your approach and let data drive your decisions. Learn and adapt as you go and persevere until you solve it.
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| Care Deeply - While the problems you solve set your path, the magic is in the everyday moments. Go above and beyond to make something right or show someone they matter. Invest in understanding and developing a connection with the people you serve. Take pride in the work you do and make sure it is done well.
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| Together We Win - At the end of the journey, you will think most about who stood beside you and who you did, or did not, help along the way. Fight to win, but fight harder to win together. Focus on the team before yourself. Take ownership and make everyone you bring along better for having been on the journey with you.
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Our Governance Highlights
o Average revenue per monetized service1 was $219, a 46% increase from $1502 in Q4 2021 ■ $307 million of cash and investments as of year-end
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Launched the Porch app to more consumers of home inspection companies, and expanded insurance embedded within Floify ■ Continued to invest in people, processes, and technology to continuously improve our risk management capabilities and to drive increased efficiencies 2023 ANNOUNCEMENTS ■ Filed an application with the Texas Department of Insurance (“TDI”) seeking its approval to form a Texas reciprocal insurance exchange (a “Reciprocal”). If approved by the TDI and fully implemented by the Company, the Company’s insurance underwriting business would be conducted exclusively through the Reciprocal. ■ Completed a private offering of $333 million 6.75% Senior Secured Convertible Notes due 2028 which repaid $200 million of the existing 0.75% Convertible Senior Notes due 2026 and further enhanced the liquidity position. | | |
(1) | See Appendix A of this proxy statement, entitled “Use of Non-GAAP Financial Measures,” for the reconciliation of Adjusted EBITDA (loss) to net income (loss), which is the most directly comparable measure under GAAP, and Adjusted EBITDA (loss) as a percentage of Revenue. See Appendix B of this proxy statement, entitled “Use of Non-GAAP Key Performance Measures,” for the reconciliation of Average Revenue per Monetized Service. |
(2) | Revised from originally reported numbers, see the Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 16, 2023 for further information. |
WE SIMPLIFY THE HOME JOURNEY | | Best Practices in6
| 2023Proxy Statement |
Our Compensation and Governance Highlights | 96% of the votes cast supported
our Say on Pay proposal at the 2022 Annual Meeting |
Our NEO Compensation Program, Practices and Policies | | ■ Stockholders have the opportunity to vote annually on the Company’s NEO compensation program (say-on-pay) ■ Engage independent compensation consultant ■ On-going review of our compensation strategy and our compensation-related risk profile ■ Change of control double-trigger equity awards generally ■ Hedging and pledging by executives is prohibited under the Company Insider Trading Policy | ■ Link incentive compensation to publicly available metrics to motivate strong performance ■ Utilize annual peer group benchmarking, including ongoing review of peer group composition ■ Stock ownership guidelines for directors and NEOs ■ Prohibit repricing or replacing stock options for NEOs ■ No guaranteed salary increases and do not provide gross-ups for severance payments |
| 99% of the votes cast supported the Company’s proposal to declassify the Board at the 2022 Annual Meeting |
99% of the votes cast supported the Company’s proposal to eliminate certain supermajority voting rights at the 2022 Annual Meeting |
Our Corporate Governance Practices and Policies | | ■ Our Board’s composition represents broad perspectives, experiences and knowledge relevant to our businesses, financial systems, risk management and operations, in addition to reflecting gender and ethnic diversity.Fully declassified Board structure effective at 2024 annual meeting of stockholders with annual director elections.
■ Established Lead Independent Director;Director with significant responsibilities; elected by Independent Directors.independent directors.
■ RegularOur independent directors meet at least quarterly in executive sessions comprised only of Independent Directors (at a minimum, follow quarterly Board meetings).session.
■ Commitment to continuous review and improvement in Board and committee governance, formally performed at least annually.
■
Enterprise risk assessment process designed to begin to identify and mitigate key risks, including those related to cybersecurity, information systems and data.
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Annual stockholder ratificationProactive achievement of the Company’s independent registered public accounting firm.
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Nominating and Corporate Governance Committee oversight and review of broader stakeholder perspective using Environmental, Social and Governance (ESG) lens; initiated ESG assessment process in 2022.
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Corporate governance guidelines set forthestablishing a diverse Board; Board nominee selection criteria that takes into account diversity and experience, among other criteria.
■ Engaged independent consultant and completed initial ESG materiality assessment with internal stakeholders. | ■ Our Board and Committees engage in annual self-evaluations; in 2022, supported by third party coach. ■ Director resignation policy, including for conflicts of interest, over-boarding policy and a “plurality-plus” voting standard in uncontested elections. ■ Proposal, unanimously approved by Board,Enterprise risk assessment process designed to declassify board structure.
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Proposal, unanimously approved by Board,identify and mitigate key risks, including those related to eliminate supermajority voting requirement to amend certain provisionsfinancial systems, SOX compliance, cybersecurity, information systems and data and operating an insurance carrier business during a period of Certificate of Incorporation.
■
Proposal, unanimously approved by Board, to hold an annual say-on-pay vote.high inflation.
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Our Compensation Highlights
| | WHAT WE DOir.porchgroup.com
| WHAT WE DO NOT DO
| ✓
Utilize peer group benchmarking
✓
Engage independent compensation consultant
✓
Stock ownership guidelines for Directors and NEOs
✓
On-going review of our compensation strategy, including a review of our compensation-related risk profile
✓
Change of control double-trigger equity awards generally
✓
Design compensation to align our executive compensation with long-term shareholder interests
✓
Link long-term incentive compensation to publicly available performance metrics to motivate strong performance
| ✘ Permit hedging and pledging by executives
✘ Offer material executive perquisites
✘ Reprice or replace stock options
✘ Provide defined benefit, supplemental executive retirement or nonqualified deferred compensation plans
✘ Provide gross-ups for severance payments
✘ Guarantee salary increases7
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PROPOSAL 1: ELECTION OF THE CLASS IIIII DIRECTORS NAMED IN THIS PROXY STATEMENT General OurAt the Annual Meeting, we are asking our stockholders to elect two individuals nominated for re-election to our Board as Class III directors. The Board currently consists of seveneight directors (seven independent), which are divided into three classes with staggered, three-year terms.classes. The Board will be fully declassified at the 2024 annual meeting of stockholders.
At the Annual Meeting, our stockholders will elect two Class IIIII directors, whose terms will expire at the Annual Meetingannual meeting of Stockholdersstockholders to be held in 2025.2024. Each of our other current directors, comprising Class I and Class II directors, also have terms that will expire at the annual meeting of stockholders to be held in 2024. Each director will continue to serve as a director until the election and qualification of his or her successor, or until his or her earlier death, resignation, removal or removal.other termination of service. Our
The Board of Directors nominated Alan PickerillMatthew Ehrlichman and Regi VengalilMaurice Tulloch for election to ourthe Board as Class IIIII directors at the Annual Meeting. Each of Messrs. PickerillEhrlichman and VengalilTulloch currently serves on ourthe Board and has consented to bebeing named in this proxy statement and agreed to serve, if elected, untilelected. Information regarding Messrs. Ehrlichman and Tulloch, including the 2025 Annual Meeting of Stockholders. Each of Messrs. Pickerillqualifications, attributes and Vengalil, if elected, will hold office until his successor has been duly elected and qualified or until his earlier resignation or removal. If Proposal 2 is approved, the Class II directors elected pursuant to this Proposal 1 will serve two-year terms expiring at the 2024 Annual Meeting of Stockholders. If Proposal 2 is not approved,skills that led our Board of Directors will remain classified and theto nominate each as a director, can be found below under “Board Nominees — Class II directors elected pursuant to this Proposal 1 will serve three-year terms expiring at the 2025 Annual Meeting of Stockholders.III Directors.”
There are no family relationships between or among any of our executive officers, director nominees, or continuing directors. Vote Required The director nominees who receive the greatest number of affirmative votes will be elected as Class III directors. Abstentions and broker non-votes will not affect the election of directors. Holders of proxies solicited by this proxy statement will vote the proxies received by them as directed on the proxy card or, if no direction is given, then FOR the election of the director nominees named in this proxy statement. Recommendation of The Board 
| THE BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE ELECTION OF THE CLASS III BOARD NOMINEES NAMED ABOVE. |
Our Board Nominees and Continuing Directors The following table sets forth information with respect to our director nominees for election at the Annual Meeting and continuing directors as of April 13, 2022:
Name
| Age
| | Director Since
| | Occupation
| Class II - Nominees for Election at this year’s Annual Meeting
| Alan Pickerill
Independent Director
| 55
| | December 2020
| | Former EVP, CFO, Expedia Group, Inc.
| Regi Vengalil
Independent Director
| 39
| | December 2020
| | CFO, Metromile, Inc.
| Class III - Nominees for Election at the 2023 Annual Meeting
| Matt Ehrlichman
Founder, CEO and Chairman
| 42
| | December 2020
| | Founder, Chairman and CEO
Porch Group, Inc.
| Asha Sharma
Independent Director
| 33
|
| December 2020
|
| COO, Maplebear Inc. (d/b/a Instacart)
| Maurice Tulloch
Independent Director
| 53
| | August 2021
| | Former Group CEO, Aviva plc
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Name
| Age
| | Director Since
| | Occupation
|
|---|
Class I - Nominees for Election at the 2024 Annual Meeting
| Sean Kell
Independent Director
| 53
| | March 2022
| | CEO, Blue Nile, Inc.
| Rachel Lam
Independent Director
| 54
| | August 2021
| | Co-Founder and Managing Partner
Imagination Capital
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Board Diversity
Board Diversity Matrix (as of April 13, 2022)
Total Number of Directors | 7 | | Female | | Male | | Non-Binary | | Did Not Disclose
Gender | | Part I: Gender Identity | Directors | | 2 | | 5 | | - | | - | | Part II: Demographic Background | African American or Black | | - | | - | | | | | | Alaskan Native or Native American | | - | | - | | | | | | Asian | | 2 | | 1 | | | | | | Hispanic or Latinx | | - | | - | | | | | | Native Hawaiian or Pacific Islander | | - | | - | | | | | | White | | - | | 4 | | | | | | Two or More Races or Ethnicities | | - | | - | | | | | | LGBTQ+ | | - | | - | | | | | | Did Not Disclose Demographic Background | | | | - | | | | | |
Additional biographical descriptions of the nominees and continuing directors are set forth in the text below. These descriptions include the experience, qualifications, qualities and skills that led to the conclusion that each director should serve as a member of our Board at this time.
Board Nominees — Class IIIII Directors | | | | Alan PickerillMatthew Ehrlichman
Age: 43
| Director since 2020 | | | Matthew Ehrlichman is the Founder, Chief Executive Officer and Chairman of the Company. Prior to founding Legacy Porch in 2011, Mr. Ehrlichman was Chief Strategy Officer at Active Network. Mr. Ehrlichman joined Active Network in 2007 and helped grow its revenues from $65 million in 2006 to $420 million and an IPO in 2011. Before joining Active Network, Mr. Ehrlichman was Co-Founder and Chief Executive Officer at Thriva, which was acquired by Active Network in March 2007 for approximately $60 million in cash and stock. Mr. Ehrlichman built Thriva out of his dorm room at Stanford University, where he received his B.S. in Entrepreneurial Engineering and M.S. in Management Science and Engineering. In 2014, Mr. Ehrlichman was named USA TODAY’s Inaugural Entrepreneur of the Year. Mr. Ehrlichman is currently the largest single owner of Porch Group, Inc. Mr. Ehrlichman is qualified to serve as a director due to his significant leadership since the founding of Legacy Porch in 2011 and throughout our journey as a new public company, as well as his ongoing contributions to our long-term strategy and criticality to our current and future business, and his extensive business experience in the home and technology industries. | |
| | | | Maurice Tulloch
Age: 54 | Director since 2021 | | | Maurice Tulloch has served as a director since August 2021. From March 2019 until his retirement in July 2020, Mr. Tulloch was Group Chief Executive Officer at Aviva plc, a leading multinational insurance company headquartered in London. He joined the Board of Aviva as an Executive Director in June 2017. In his role at Aviva, he oversaw global leadership, operations, strategy, risk management and governance. In addition, from 1992 until 2019, Mr. Tulloch held many executive and leadership roles at Aviva prior to serving as its Group Chief Executive Officer. On March 4, 2022, Mr. Tulloch joined the Public Sector Pension Investment Board (PSP). Mr. Tulloch has also served on several external boards including PoolRe and as Chair of ClimateWise. Mr. Tulloch received a B.A. in economics from the University of Waterloo in 1992, an M.B.A. from Heriot-Watt University in 2002, and is a Chartered Professional Accountant CPA, CMA since 1998. Mr. Tulloch is well qualified to serve as director due to his extensive operational, strategic, risk management and corporate governance experience, as well as executive leadership in the insurance industry. The Board also determined that Mr. Tulloch is an “Audit Committee financial expert” as defined by the applicable SEC rules. | |
Continuing Class I Directors | | | | Sean Kell
Age: 54 | Director since 2022 | | | Sean Kell was appointed as a director in March 2022 and was the Chief Executive Officer at Blue Nile, Inc., serving in that role from 2019 until March 2023. He was charged with driving the Blue Nile strategic vision and elevating the company’s modern approach to purchasing handcrafted diamond rings and exquisite jewelry online. From 2011 to 2019, Mr. Kell served as Chief Executive Officer of A Place for Mom, a senior living marketplace, where he was responsible for overall brand management and business expansion. Mr. Kell has a proven track record of building successful businesses in ecommerce, digital innovation and product management across leading online retail organizations including Expedia, Hotels.com and Starbucks. He has also previously held various roles at McKinsey and IBM. Mr. Kell holds a M.B.A. from the University of Chicago and a B.S. in Electrical Engineering from the University of Southern California. Mr. Kell is well qualified to serve as a director due to his significant experience working with companies that are implementing rapid technological changes, brand development and business expansion. | |
| | | | Rachel Lam
Age: 55 | Director since 2021 | |
Rachel Lam has served as a director since August 2021 and is the Co-Founder and Managing Partner of Imagination Capital, an early-stage venture capital firm founded in 2017. From 2003 to 2017, Ms. Lam served as Senior Vice President and Group Managing Director of the Time Warner Investments Group, the strategic investing arm of Time Warner Inc. She managed Time Warner's investments in numerous digital media companies and served on the board of privately held Maker Studios and Bluefin Labs prior to their sales to the Walt Disney Company and Twitter, respectively. Ms. Lam has previously served on 20 boards of directors over the years and currently serves on the board of Magnite (Nasdaq: MGNI), the leading, independent omni-channel sell-side software platform, empowering programmatic ad sales at a truly global scale, and Innovid Corp. (NYSE: CTV), an independent CTV advertising and measurement platform for the world’s largest brands. She also spent several years in investment banking within the M&A group at Morgan Stanley and the Media and Telecommunications group at Credit Suisse. Ms. Lam received a B.S. in industrial engineering and operations research from U.C. Berkeley in 1989 and an M.B.A. from Harvard Business School in 1994. Ms. Lam is well qualified to serve as a director due to her extensive experience serving on both private and public company boards, along with her financial, M&A and strategy experience. | | | | Amanda Reierson
Age: 46 | Director since 2022 | | | Amanda Reierson was appointed as a director in October 2022. She is a marketing veteran with over two decades of experience, including significant management experience in home services and property and casualty insurance. Ms. Reierson currently serves as Chief Marketing Officer at Avant, a financial technology company that provides access to innovative financial solutions, including personal loans and credit cards, and is focused on reaching consumers wherever they may be on their financial journey. Prior to joining Avant, Ms. Reierson served as Head of Marketing at Sequoia-backed Thumbtack, overseeing all branding/creative efforts, media, CRM, and product marketing. Ms. Reierson was also previously Chief Growth Officer at Farmers Insurance, where she led the company's digital marketing and product transformation. Throughout her career she has also served in a variety of B2C and B2B marketing roles at Yahoo, DIRECTV, and the Los Angeles Times. She received her B.A. in Political Science from the University of California, Los Angeles. | |
Continuing Class II Directors | | | | Alan Pickerill
Age: 56 | Director since 2020 | | | Alan Pickerill has served as a director since December 2020. Mr. Pickerill has served in a variety of finance and accounting roles, mainly for publicly tradedpublicly-traded technology companies. Most recently he served as Expedia Group’s Executive Vice President, Chief Financial Officer and Treasurer from September 2017 to December 2019 and had been with the Company since 2008. Mr. Pickerill oversaw Expedia Group’s accounting, financial reporting and analysis, investor relations, treasury, internal audit, tax and global real estate teams. Previously, he served as Expedia Group’s Senior Vice President of Investor Relations and Treasurer from July 2015 to September 2017. Mr. Pickerill was a director of Legacy Porch from September 2019 until the completion of the December 2020 business combination that created Porch Group, Inc. He currently serves as a director for Leafly Holdings, Inc. (NASDAQ:(Nasdaq: LFLY), for Manson Construction (a privately held marine construction company), for the YMCA of Greater Seattle and as adjunct faculty for the University of Washington Foster School Executive MBA program. Mr. Pickerill began his career as an accountant for seven (7) years at Deloitte and Touche before working at a variety of publicly tradedpublicly-traded technology and internet companies, including serving as CFOChief Financial Officer of INTERLINQ Software Corporation, a publicly tradedpublicly-traded technology provider, as well as roles at Microsoft and Getty Images. Mr. Pickerill was licensed as a certified public accountant in Washington in 1991. Mr. Pickerill holds a B.A. degree in Business and Accounting from the University of Washington’s Michael G. Foster School of Business. Mr. Pickerill is well qualified to serve as a director due to his extensive experience in finance-related leadership and governance roles in a publicpublic-held technology company. The Board also determined that Mr. Pickerill is an “Audit Committee financial expert” as defined by the applicable SEC rules. | |
| | | | Camilla Velasquez
Age: 41 | Director since 2022 | | | Camilla Velasquez was appointed as a director in October 2022. She is an accomplished senior product and growth leader who currently serves as the Senior Vice President and General Manager of New York Times Cooking. Prior, Ms. Velasquez worked as Senior Vice President of Product and Strategy at Justworks, the fastest growing HR and benefits technology company, which provides businesses and their employees with the SaaS tools and insurances they need to grow. Justworks also provides consumer facing products and services. Throughout her career, Ms. Velasquez also held roles including Director of Payment Products and Multichannel Sales at Etsy and Director of New Product Development at American Express. In addition to her corporate experience, Ms. Velasquez sits on the board of ioby, a group that mobilizes neighbors who have good ideas to become powerful citizen leaders who plan, fund, and make positive change in their neighborhoods, and serves as the board Chair for Young New Yorkers, an arts-based, youth diversion program focused on criminal justice reform. She holds a B.A. in Economics and in Spanish from Cornell University. Ms. Velasquez is well qualified to serve as director due to her significant, strategic and product development experience, as well as her growth and executive leadership. |
| | | | Regi Vengalil
Age: 40 | Director since 2020 | | | Regi Vengalil has served as a director since December 2020. Mr. Vengalil ishas been the Chief Financial Officer of Trax Retail, Inc, a private software company in the retail sector since August 2022. Prior to Trax, he was the Chief Financial Officer of Metromile, Inc. (NASDAQ:(Nasdaq: MILE, MILEW), a publicly-traded technology-driven auto insurer. He joined Metromile ininsurer from May 2021 after servinguntil the company’s sale to Lemonade in July 2022. Previously Mr. Vengalil served as Chief Financial Officer of Egencia, the corporate travel division of Expedia Group, from November 2019 to April 2021. Previously, Mr. Vengalil served as2021 and Global Head of Corporate Development & Strategy for Expedia Group from January 2017 to November 2019. Prior to that, Mr. Vengalil was an executive at Lending Club, an online lending marketplace, serving as Vice President, Strategy, M&A and Business Operations from May 2016 until January 2017. Previously Mr. Vengalil served as Vice President, Head of Strategy and Business Operations of Lending Club from November 2015 to May 2016 and Senior Director, Head of Corporate Strategy from October 2014 to November 2015. Mr. Vengalil holds a B.S. in Economics and an M.B.A., both earned with honors, from the Wharton School at the University of Pennsylvania. Mr. Vengalil is well qualified to serve as a director due to his extensive experience in M&A leadership at publicpublicly-traded technology companies and financial, M&A and strategy experience across regions, industries and functions, (includingincluding most recently with regard to insurance businesses). | businesses.
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Continuing Class III Directors
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| Matt Ehrlichman
| Director since 2020
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| Matt Ehrlichman is the Founder, Chief Executive Officer and Chairman of the Company. Prior to founding Legacy Porch in 2011, Mr. Ehrlichman was Chief Strategy Officer at Active Network, responsible for approximately 85% of the company’s P&L. Mr. Ehrlichman joined Active Network in 2007 and helped grow its revenues from $65 million in 2006 to $420 million and an IPO in 2011. Before joining Active Network, Mr. Ehrlichman was co-founder and Chief Executive Officer at Thriva, which was acquired by Active Network in March 2007 for approximately $60 million in cash and stock. Mr. Ehrlichman built Thriva out of his dorm room at Stanford University, where he received his B.S. in Entrepreneurial Engineering and M.S. in Management Science and Engineering. In 2014, Mr. Ehrlichman was named USA TODAY’s Inaugural Entrepreneur of the Year. Mr. Ehrlichman is qualified to serve as a director due to his extensive leadership and business experience in the home and technology industries.
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| | | | | | Our directors exhibit broad perspectives, experiences
and knowledge relevant to our businesses,
financial systems, risk management and long-term strategy | 
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| Leadership | Finance | Insurance | Innovation | Software | Public Company | | | | | | |
Board Diversity | | Age | Diversity | 
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Board Diversity Matrix (as of April 28, 2023) Total Number of Directors | 8 | | Female | | Male | | Non-Binary | | Did Not Disclose
Gender | | Part I: Gender Identity | Directors | | 3 | | 5 | | - | | - | | Part II: Demographic Background | African American or Black | | - | | - | | | | | | Alaskan Native or Native American | | - | | - | | | | | | Asian | | 1 | | 1 | | | | | | Hispanic or Latinx | | 1 | | - | | | | | | Native Hawaiian or Pacific Islander | | - | | - | | | | | | White | | 1 | | 4 | | | | | | Two or More Races or Ethnicities | | - | | - | | | | | | LGBTQ+ | | - | | - | | | | | | Did Not Disclose Demographic Background | | | | - | | | | | |
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| Asha Sharma
| Director since 2020
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| Asha Sharma has served as a director since December 2020. Ms. Sharma is a senior business executive and currently the Chief Operating Officer of Instacart, which is North America’s largest third-party provider of online grocery stores. In this role, Ms. Sharma oversees the Instacart Marketplace, which includes the Instacart app, and Instacart logistics, growth and marketing, as well as focuses on engaging new and current customers. Before joining Instacart in February 2021, Ms. Sharma was Vice President of Product for Messenger at Facebook Inc. (NASDAQ: FB) from August 2017 to February 2021, a service used globally by more than 1.3 billion people and over 40 million businesses in 190+ countries. As part of Ms. Sharma’s role, she was responsible for Messenger and Instagram Direct user engagement, revenue, privacy, and integrity. Prior to Messenger, Ms. Sharma led the Facebook Inc. Social Impact product teams including charitable giving, crisis response, health, AMBER alerts, and mentorship. As both an entrepreneur and executive, Ms. Sharma brings years of experience building, growing and transforming businesses, with deep focus in consumer product and online marketplaces. Before Facebook Inc., Ms. Sharma was the Chief Operating Officer and early team member of Legacy Porch. Ms. Sharma served as Chief Marketing officer of Legacy Porch from May 2013 to July 2015. Prior to that, Ms. Sharma started her career by founding two companies, one of which was recognized by the President of the United States in 2012. She graduated top of her class at University of Minnesota’s Carlson School of Management. Ms. Sharma is currently on the board of AppLovin Corporation (NASDAQ: APP) a leading marketing platform. Ms. Sharma is well qualified to serve as director due to her prior experience with the Company, her executive operations experience and product leadership.
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| Maurice Tulloch
| Director since 2021
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| Maurice Tulloch has served as a director since August 2021. From March 2019 until his retirement in July 2020, Mr. Tulloch was Group Chief Executive Officer at Aviva plc, a leading multinational insurance company headquartered in London. He joined the Board of Aviva as an Executive Director in June 2017. In his role at Aviva, he oversaw global leadership, operations, strategy, risk management and governance. In addition, from 1992 until 2019, Mr. Tulloch held many executive and leadership roles at Aviva prior to serving as its Group Chief Executive Officer. On March 4, 2022, Mr. Tulloch joined the board of the Public Sector Pension Investment Board (PSP). Mr. Tulloch has also served on several external boards including PoolRe and as Chair of ClimateWise. Mr. Tulloch received a B.A. in economics from University of Waterloo in 1992, an M.B.A. from Heriot-Watt University in 2002, and is a Chartered Professional Accountant CPA, CMA since 1998. Mr. Tulloch is well qualified to serve as director due to extensive operational, strategic, risk management and corporate governance experience, as well as executive leadership in the insurance industry.
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Continuing Class I Directors
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| Sean Kell
| Director since 2022
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| Sean Kell was appointed as a director in March 2022 and is the Chief Executive Officer at Blue Nile, Inc., serving in that role since 2019. He is charged with driving the Blue Nile strategic vision and elevating the company’s modern approach to purchasing handcrafted diamond rings and exquisite jewelry online. From 2011 to 2019, Mr. Kell served as Chief Executive Officer of A Place for Mom, a senior living marketplace, where he was responsible for overall brand management and business expansion. Mr. Kell has a proven track record of building successful businesses in ecommerce, digital innovation and product management across leading online retail organizations including Expedia, Hotels.com and Starbucks. He has also previously held various roles at McKinsey and IBM. Mr. Kell holds a Master of Business Administration from the University of Chicago and a Bachelor of Science in Electrical Engineering from the University of Southern California. Mr. Kell is well qualified to serve as a director due to his significant experience working with companies that are implementing rapid technological changes, brand development and business expansion.
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| 20222023 Proxy Statement
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| Rachel Lam
| Director since 2021
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| Rachel Lam has served as a director since August 2021 and is the Co-Founder and Managing Partner of Imagination Capital, an early-stage venture capital firm founded in 2017. From 2003 to 2017, Ms. Lam served as Senior Vice President and Group Managing Director of the Time Warner Investments Group, the strategic investing arm of Time Warner Inc. She managed Time Warner's investments in numerous digital media companies and served on the Board of privately held Maker Studios and Bluefin Labs prior to their sales to the Walt Disney Company and Twitter, respectively. Ms. Lam has previously served on 20 boards of directors over the years and currently serves on the board of Magnite (NASDAQ: MGNI), the leading, independent omni-channel sell-side software platform, empowering programmatic ad sales at a truly global scale, and Innovid Corp. (NYSE: CTV), an independent CTV advertising and measurement platform for the world’s largest brands. She also spent several years in investment banking within the M&A group at Morgan Stanley and the Media and Telecommunications group at Credit Suisse. Ms. Lam received a B.S. in industrial engineering and operations research from U.C. Berkeley in 1989 and an M.B.A. from Harvard Business School in 1994. Ms. Lam is well qualified to serve as a director due to her extensive experience serving on both private and public company boards, along with her financial, M&A and strategy experience.
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Vote Required
CORPORATE GOVERNANCE, structure and responsibility Declassified Board (fully declassified effective at 2024 annual meeting of stockholders) The nominees who receive the greatest number of affirmative votes will be elected as Class II directors, to hold office until the 2025 Annual Meeting of Stockholders (or until the 2024 Annual Meeting of Stockholders if Proposal 2 is approved and the Declassification Amendment is filed and becomes effective as described in this proxy statement) and until their successors have been elected and qualified, subject, however, to any such director’s earlier death, resignation, retirement, disqualification or removal. Abstentions and broker non-votes will not affect the election of directors.
Holders of proxies solicited by this proxy statement will vote the proxies received by them as directed on the proxy card or, if no direction is given, then FOR the election of the nominees named in this proxy statement.
Recommendation of Our Board
| OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE ELECTION OF THE CLASS II BOARD NOMINEES NAMED ABOVE.
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Proposal 2: PROPoSED Amendment to OUR Certificate of Incorporation to Declassify OUR Board
General
Our Certificate of Incorporation currently provides for a classified Board divided into three classes of directors, with each class elected for three-year terms.
As part of our Board’s ongoing evaluation of our corporate governance practices and review of current corporate governance trends, the Board considered the advantages and disadvantages of Board declassification. After careful consideration, andOn June 8, 2022, upon the recommendation of the Nominating and Corporate Governance Committee, our Board, has determined that it isstockholders overwhelmingly voted in the best interests of the Company and our stockholdersfavor to declassify ourthe Board. Our Board has unanimously approved, and recommends that our stockholders approve atAccordingly, the Annual Meeting, the amendment to our Certificate of Incorporation attached to this proxy statement as Appendix A, which would
declassify the Board and provide for the annual election of directors over a two-year period (the “Declassification Amendment”).
Proposed Declassification Amendment
The Declassification Amendment to our Certificate of Incorporation would eliminate the classification of the Board of Directors over a two-year period beginning at the Annual Meeting, with the Class II directors to be elected pursuant to Proposal 1 serving two-year terms and the current Class III directors, to beif elected, at the 2023 Annual Meeting of Stockholders servingwill each serve a one-year terms and provide for the annual election of all directors beginning atterm ending with the 2024 Annual Meetingannual meeting of Stockholders.stockholders. The three-year terms of the current Class I directors, who were elected at the 2021 Annual Meeting of Stockholders would not be affected by the proposed amendment. In addition, under the proposed amendment, at the 2024 Annual Meeting of Stockholders and at all future Annual Meetings of Stockholders thereafter, a director elected to fill a vacancy or chosen to fill a position resulting from an increase in the number of directors would be elected for a term expiring at the next annual meeting of stockholders. Our Certificate of Incorporation currently provides thatstockholders, are each serving a director elected to fill a vacancy or chosen to fill a position resulting from an increase inthree-year term, the number of directors shall be elected for the remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred. In all cases, each director would serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal.
The Declassification Amendment also would provide that beginning with the 2024 Annual Meeting of Stockholders, directors may be removed with or without cause upon the affirmative vote of stockholders holding at least a majority of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors. Our Certificate of Incorporation currently provides that directors may be removed only for cause upon the affirmative vote of stockholders holding at least a majority of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors.
This description of the Declassification Amendment is qualified by the full text of the proposed amendment to our Certificate of Incorporation attached as Appendix A to this proxy statement.
Effectiveness of the Declassification Amendment
If this Proposal 2 is approved, the Declassification Amendment would become effective upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, which the Company would file promptly following the Annual Meeting if our stockholders approve the amendment.
If our stockholders approve both this Proposal 2 and Proposal 3, the Company would file, promptly following the Annual Meeting of Stockholders, the Certificate of Amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware setting forth each of the proposed amendments to our Certificate of Incorporation from both this Proposal 2 and Proposal 3, which will become effective upon filing with the Secretary of State of the State of Delaware.
If this Proposal 2 is not approved, our Board of Directors will remain classified and the current Class II directors, who were elected pursuant to Proposal 1 will serve three-year terms expiring at the 2025 Annual Meeting of Stockholders.
Vote Required
Approval of the Declassification Amendment requires the affirmative vote of 66.7% in voting power of the outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class. As a result, abstentions and broker non-votes will have the same effect as a vote AGAINST this proposal.
Holders of proxies solicited by this proxy statement will vote the proxies received by them as directed on the proxy card or, if no direction is given, then FOR the approval of the Declassification Amendment.
This Proposal 2 is separate from, and is not conditioned upon, the approval of Proposal 3 (Proposed Amendment to our Certificate of Incorporation to Eliminate the Supermajority Voting Standard). Your vote on Proposal 2 does not affect your vote on Proposal 3 and vice versa.
Recommendation of Our Board
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| OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION OF THE COMPANY TO DECLASSIFY OUR BOARD.
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Proposal 3: PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTING STANDARD
General
Our Certificate of Incorporation currently provides that the affirmative vote of the holders of at least 66.7% of the voting power of all outstanding shares of capital stock of the Company entitled to vote generally in the election of directors, voting together as a single class (the “Supermajority Voting Standard”), shall be required to effect any amendment, alteration or repeal of Article V: Directors of our Certificate of Incorporation, which includes provisions related to the Board’s powers, size and vacancies and the election, term and removal of directors.
As part of our Board’s ongoing evaluation of our corporate governance practices and review of current corporate governance trends, the Board considered the advantages and disadvantages of eliminating the Supermajority Voting Standard. After careful consideration, and upon the recommendation of the Nominating and Corporate Governance Committee, our Board has determined that it is in the best interests of the Company and our stockholders to eliminate the Supermajority Voting Standard. Our Board has unanimously approved, and recommends that our stockholders approve at the Annual Meeting, the amendment to our Certificate of Incorporation attached to this proxy statement as Appendix B, which would eliminate the Supermajority Voting Standard and instead provide for a majority voting standard (the “Elimination of the Supermajority Voting Standard Amendment”).
Proposed Elimination of the Supermajority Voting Standard Amendment
The Elimination of the Supermajority Voting Standard Amendment to our Certificate of Incorporation would eliminate the Supermajority Voting Standard and provide that the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote generally in the election of directors, voting together as a single class, shall be required to effect any amendment, alteration or repeal of Article V: Directors of our Certificate of Incorporation, which includes provisions related to the Board’s powers, size and vacancies and the election, term and removal of directors.
This description of the Elimination of the Supermajority Voting Standard Amendment is qualified by the full text of the proposed amendment to our Certificate of Incorporation attached as Appendix B to this proxy statement.
Effectiveness of the Elimination of the Supermajority Voting Standard Amendment
If this Proposal 3 is approved, the Elimination of the Supermajority Voting Standard Amendment would become effective upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, which the Company would file promptly following the Annual Meeting if our stockholders approve the amendment.
If our stockholders approve both this Proposal 3 and Proposal 2, the Company would file, promptly following the Annual Meeting of Stockholders, the Certificate of Amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware setting forth each of the proposed amendments to our Certificate of Incorporation from both this Proposal 3 and Proposal 2, which will become effective upon filing with the Secretary of State of the State of Delaware.
If this Proposal 3 is not approved, the Supermajority Voting Standard in our Certificate of Incorporation will remain unchanged and in effect.
Vote Required
Approval of the Elimination of the Supermajority Voting Standard Amendment requires the affirmative vote of 66.7% in voting power of the outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class. As a result, abstentions and broker non-votes will have the same effect as a vote AGAINST this proposal.
Holders of proxies solicited by this proxy statement will vote the proxies received by them as directed on the proxy card or, if no direction is given, then FOR the approval of the Elimination of the Supermajority Voting Standard Amendment.
This Proposal 3 is separate from, and is not conditioned upon, the approval of Proposal 2 (Proposed Amendment to our Certificate of Incorporation to Declassify our Board). Your vote on Proposal 3 does not affect your vote on Proposal 2 and vice versa.
Recommendation of Our Board
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| OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY VOTING STANDARD.
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Proposal 4: APPROVAL OF, ON AN ADVISORY (NON-BINDING) BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
General
Our Board is committed to continuous review and improvement of governance. As part of this commitment, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and as required by Rule 14a-21 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our Board is providing our stockholders
with an opportunity to cast an advisory (non-binding) vote on a resolution to approve the compensation of our Named Executive Officers (defined below under “Compensation Discussion and Analysis - Overview”).
The principal objective of our compensation programs is to attract, retain and motivate key executives responsible for our success by rewarding performance, both individual and business, in a way that is aligned with the Company’s and stockholders’ short and long-term interests, providing incentives that reward achievement of performance goals that are designed to correlate with the enhancement of stockholder value and tying a portion of our executive officers’ compensation to increases in stockholder value. We believe our executive compensation program strikes an appropriate balance between the implementation of responsible, measured compensation practices and the effective provision of incentives for our Named Executive Officers to exert their best efforts for our success. We describe our compensation policies and programs in more detail below in this proxy statement, including in the Compensation Discussion and Analysis.
As required by Section 14A of the Exchange Act, we are asking for stockholder approval of the compensation of our Named Executive Officers. The Board recommends that stockholders approve such compensation by approving the following advisory resolution:
RESOLVED, that the stockholders of Porch Group, Inc. approve, on an advisory basis, the compensation of the Company’s Named Executive Officers identified in the Summary Compensation Table included in this proxy statement as such compensation is described pursuant to Item 402 of Regulation S-K in this proxy statement (which disclosure includes the Compensation Discussion and Analysis and the compensation tables and accompanying footnotes and narratives under the heading “Executive Compensation” in this proxy statement).
As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by stockholders. If there are a significant number of negative votes, we will seek to understand the concerns that influenced the vote, and will consider whether any actions are necessary to address those concerns. The Board has adopted a policy providing for an annual advisory vote to approve executive compensation. Unless the Board otherwise modifies this policy, the next advisory vote will be at the 2023 Annual Meeting of Stockholders.
Vote Required
The affirmative vote of a majority of the votes duly cast on this item is required to approve this proposal. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on this proposal.
Recommendation of Our Board
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| OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
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PROPOSAL 5: Approval oF, on an advisory (non-binding) basis, the Frequency of Future Advisory Votes on Executive Compensation
General
As described in Proposal 4 above, the Company’s stockholders are being asked to approve, on an advisory basis, the Company’s executive compensation program for its Named Executive Officers. Pursuant to Section 14A of the Exchange Act, this Proposal 5 asks stockholders to cast an advisory vote on how often we should include an advisory vote on executive compensation in proxy materials for future stockholder meetings where compensation disclosure is required. Under this Proposal 5, stockholders may vote to have such a vote every year, every two years or every three years.
The Board recommends a vote every year (annually). The Company’s executive officer compensation design is evolving to have a greater long-term focus. Accordingly, the Board believes that holding an annual advisory vote on executive compensation provides the Company with more direct and immediate feedback as it continues to structure its executive compensation program.
Stockholders should note that because the advisory vote on executive compensation will occur after the beginning of the compensation year, in many cases, it may not be appropriate or feasible to re-assess or change our executive compensation program in connection with a particular year’s advisory vote on executive compensation.
Vote Required
The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. Abstentions and broker non-votes will have no effect on this proposal. Although the advisory vote is non-binding, the Board will review the results of the vote and take them into account in making a determination concerning the frequency of advisory votes on executive compensation.
Recommendation of Our Board
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| OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS select “one year” for the frequency of future advisory votes on executive compensation.
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PROPOSAL 6: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022
General
Our Board is asking our stockholders to ratify the appointment by the Audit Committee of Ernst & Young LLP (“E&Y”), as the independent public accounting firm to conduct the audit of our financial statements for the fiscal year ending December 31, 2022. Stockholder ratification of such selection is not required by our Amended and Restated Bylaws (the “Bylaws”) or any other applicable legal requirement. However, our Board is submitting the selection of E&Y to our stockholders for ratification as a matter of good corporate governance.
In the event our stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to continue to retain E&Y for the fiscal year ending December 31, 2022. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change should be made.
E&Y has audited our financial statements since 2015. A representative of E&Y is expected to be present at the Annual Meeting and will have the opportunity to make a statement if he or she desires to do so and is expected to be available to respond to appropriate stockholder questions.
Principal Accountant Fees and Services
The following table sets forth aggregate fees for professional service rendered by E&Y for the years ended December 31, 2021 and 2020.
| | | | | | | | | Years Ended | | | December 31, | | | 2021 | | 2020 | Audit fees | | $ | 2,896,000 | | $ | 1,981,000 | Audit-related fees | | | 503,000 | | | 423,000 | Tax fees | | | 673,000 | | | 276,000 | All other fees | | | — | | | — | Total fees | | $ | 4,072,000 | | $ | 2,680,000 |
For 2021, audit fees above are professional services for the annual audits of our financial statements and internal control over financial reporting, reviews of interim financial statements, professional consultations with respect to accounting issues directly related to the financial statement audit, and services rendered in connection with the filing of our registration statements and security offerings. Audit-related fees include fees and expenses for due diligence in connection with acquisitions, and related accounting consultations. Tax fees generally include fees related to tax compliance, tax planning and advice and tax due diligence in connection with acquisitions. There were no other fees billed for the years ended December 31, 2021 and 2020.
Determination of Independence
In considering the nature of the services provided by our independent registered public accounting firm, the Audit Committee determined that such services are compatible with the provision of independent audit services. The
Audit Committee discussed these services with our independent registered public accounting firm and our management to determine that they are permitted under the rules and regulations concerning auditor independence.
Additional information concerning the Audit Committee and its activities can be found in the following sections of this proxy statement: “Board Committees” and “Report of the Audit Committee.”
Pre-Approval Policy
According to policies adopted by the Audit Committee and ratified by our Board, to ensure compliance with the SEC’s rules regarding auditor independence, all audit and non-audit services to be provided by our independent registered public accounting firm must be pre-approved by the Audit Committee. The Audit Committee has established a general pre-approval policy for certain audit and non-audit services, up to a specified amount for each identified service that may be provided by the independent auditors.
The Audit Committee approved all services provided by E&Y during the years ended December 31, 2021 and 2020. The Audit Committee has considered the nature and amount of the fees billed by E&Y and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining E&Y’s independence.
Vote Required
The affirmative vote of the majority of our shares of common stock present at the Annual Meeting or represented by proxy and entitled to vote at the Annual Meeting is required for the approval of Proposal 6. An abstention on Proposal 6 will have the same effect as a vote “AGAINST” Proposal 6. Brokers will have discretionary authority to vote on this proposal. Accordingly, there will not be any broker non-votes on Proposal 6.
Recommendation of Our Board and Audit Committee
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| OUR BOARD AND OUR AUDIT COMMITTEE UNANIMOUSLY RECOMMEND THAT OUR STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022.
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Report of the Audit Committee
The Audit Committee oversees our independent registered public accounting firm and assists our Board in fulfilling its oversight responsibilities on matters relating to the integrity of our financial statements, our compliance with legal and regulatory requirements and the independent registered public accounting firm’s qualifications and independence by meeting regularly with the independent registered public accounting firm and financial management personnel. Management is responsible for the preparation, presentation and integrity of our financial statements.
In fulfilling its oversight responsibilities, the Audit Committee:
| ■ | reviewed and discussed our financial statements as of and for the fiscal year ended December 31, 2021 with management and E&Y; |
| ■ | discussed with E&Y the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; |
| ■ | discussed the effectiveness of internal controls over financial reporting (ICFR), as well as other important financial accounting and reporting issues with management and E&Y; |
| ■ | received the written disclosures and the letter from E&Y required by the applicable requirements of the Public Company Accounting Oversight Board; and |
| ■ | discussed with E&Y their independence. |
Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to our Board, and our Board approved, that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the SEC. The Audit Committee also appointed E&Y as our independent registered public accounting firm for fiscal year ending December 31, 2022.
|
Javier Saade
Margaret Whelan
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| Submitted by the Audit Committee of the Board:
Alan Pickerill, Chair
Rachel Lam
Maurice Tulloch
|
CORPORATE GOVERNANCE
Classified Board (expected to sunset at 2024 Annual Meeting of Stockholders)
Our Board is divided into three classes of directors that serve staggered three-year terms. At each Annual Meeting of Stockholders, a class of directors will be elected for a three-year term to succeed the same class whose term is then expiring. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.are each serving a two-year term.
Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation, removal or removal.other termination of service. Our Certificate of Incorporation and Bylaws authorize only ourthe Board to fill vacancies on ourthe Board. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our Board may have the effect of delaying or preventing changes in control of our company. In this proxy statement, Proposal 2 is our proposal to change from this classification of our Board to one where all directors will be elected annually beginning at the 2024 Annual Meeting of Stockholders. The Board has unanimously approved the Declassification Amendment to our Certificate of Incorporation, subject to stockholder approval.
Director Independence Our common stock is listed on The Nasdaq Stock Market (“Nasdaq”).Nasdaq. Under the rules of Nasdaq, independent directors must comprise a majority of a listed company’s Board.board of directors. In addition, the rules of Nasdaq require that, subject to specified exceptions, each member of a listed company’s Audit, Compensationaudit, compensation, and Nominatingnominating and Corporate Governance Committeescorporate governance committees be independent. Under the rules of Nasdaq, a director will only qualify as an “independent director” if, in the opinion of that company’s Board,board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Additionally, Compensation CommitteeIn addition, compensation committee members must not have a relationship with usour Company that is material to the director’s ability to be independent from management in connection with the duties of a Compensation Committee member.
Audit Committeecommittee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an Audit Committeeaudit committee of a listed company may not, other than in his or her capacity as a member of the Audit Committee,audit committee, the Boardboard or any other board committee: accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries; or be an affiliated person of the listed company or any of its subsidiaries. OurThe Board has undertaken a review of the independence of each current director, as well as former Board members from 2022 (Javier Saade, Asha Sharma and Chris Terrill), and considered whether each director has a material relationship with usthe Company that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, ourthe Board determined that, with the exception of our Chief Executive Officer, MattMatthew Ehrlichman, each member of ourthe Board is or was an “independent director” as defined under the applicable rules and regulations of the SEC and the listing requirements and rules of Nasdaq. In addition, the Board has determined that each of the members of the Audit Committee and Compensation Committee qualify or qualified as independent in accordance with the additional independence rules established by the SEC and Nasdaq.
In making these determinations, ourthe Board reviewed and discussed information provided by the directors and by us with regard to each director’s business and personal activities and relationships as they may relate to usour Company and our management, including the beneficial ownership of our common stock by each non-employee director and the transactions involving them described in the section titled “Certain Relationships and Related Person Transactions.”
| | 18ir.porchgroup.com
| 2022Proxy Statement13
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Board Leadership Structure – Lead Independent Director Our corporate governance guidelines provide that the roles of Chairman of the Board and CEO may be separated or combined. OurThe Board has appointed MattMatthew Ehrlichman to serve as Chairman of the Board. As Chairman of the Board, Mr. Ehrlichman will preside at, and chair, boardBoard meetings and meetings of our stockholders, serve as liaison for stockholders who request direct communication with the board,Board, and perform such additional duties as ourthe Board may otherwise request. OnSince May 13, 2021, our Board adopted amendments to ourthe corporate governance guidelines to provide for a lead independent director.Lead Director. If the Board does not have an independent Chairman, the independent members of the Board will elect a director to serve as lead independent director (the “Lead Director”)the Lead Director to facilitate the Board’s fulfillment of its responsibilities and promote efficient and effective Board performance and functioning. The Lead Director will serve a term of at least one year and until his or her successor is appointed, subject to earlier termination at the sole discretion of a majority of the independent directors or such person’s earlier departure from the position or the Board.
In addition to presiding over meetings or sessions of the Board where the Chairman is not present, including but not limited to, regularly held executive sessions of the independent directors, and advising the Chairman of actions taken and material feedback provided, the Lead Director has clearly delineated and comprehensive duties, which include: | ■ | serving as the primary liaison between the Chairman and the independent directors; |
| ■ | previewing information to be provided to the Board; |
| ■ | consulting with the Chairman and CEO regarding meeting agendas for the Board; |
| ■ | assuring that there is sufficient time for discussion of meeting agenda items; |
| ■ | in collaboration with the Nominating and Corporate Governance Committee, being primarily responsible for and leading the Board's annual self-assessment (including of chairpersons); |
| ■ | having authority to call meetings of the independent directors; and |
| ■ | if requested by the Chairman and CEO and/or major stockholders, ensuring availability for consultation and direct communication. The Chairman and CEO is the main spokesperson of the Company, however, the Lead Director shall play a supporting role if requested by the Chairman or the Board. |
On March 17, 2022, Regi Vengalil31, 2023, Alan Pickerill was recommended as Lead Director by the Nominating and Corporate Governance Committee and was elected by a majority of the independent directors to serve as Lead Director. Prior to Mr. Pickerill, Regi Vengalil served as the Company’s Lead Director from March 2022. Prior to Mr. Vengalil, Javier Saade served as the Company’s first Lead Director since May 2021. Role of the Board in Risk Oversight The Board and its Committees have extensive involvement in overseeing the Company’s risk management through their activities, some of which are noted below. We believe that the leadership structure of our Board and Committees provides appropriate risk oversight. The Board has involvement in the oversight of risk management related to us and our business and accomplishes this oversight through (among other things) the regular reporting to the Board by the Audit Committee and other committees, from time to time by key advisors.external advisors with appropriate expertise. The Audit Committee represents the Board by periodically reviewing our accounting, reporting and financial policies and practices in an oversight capacity, including the integrity of our financial statements, the surveillanceeffectiveness of administrative and financial controls and our compliance with legal and regulatory requirements. Through its periodic meetings with management, including the finance, accounting, legal, human resources, and information technology (including cybersecurity)cybersecurity and data-security) functions, the Audit Committee reviews and discusses allmany significant areas of our business and our functions and summarizes for the Board allkey areas of risk, and the appropriate mitigating factors.factors and whether resourcing is sufficient in its view to meet appropriate maturity levels for a company of our size and stage. In addition, ourthe Board receives
periodic detailed operating performance reviews from management. Finally, the Audit Committee also meets at least quarterly in periodic executive sessionsessions with E&YEY. In August 2022, the Board mutually agreed with Covéa Coopérations S.A. to terminate the acquisition of CSE Insurance and external legalsimultaneously withdrew its application for approval to acquire CSE from the California Department of Insurance. Following the termination, the Board and other advisors.management determined that the change in the market and the increase in the cost of capital, provided opportunities to use the approximately $50 million in cash previously allocation for the purchase price of the transaction to create long-term value for the Company’s stockholders. The Board oversees the Company's risk management primarily through the following: | | FULL BOARD | ■ Board reviewReview and approval of management's annual business plan, and budget, and review of management's strategic and liquidity plans.strategy
■ Board review,Review, on at least a quarterly basis, of business developments, strategic plans and implementation, liquidity, and financial results. This includes (on a group by group basis) product, go to market, strategy, people and budget
■ Board leadership ofLeads CEO succession planning and oversight of management succession planning.planning
■ Board oversightOversight of capital spending and financings.financings
■ Board and committeeCommittee executive sessions consisting solely of independent directors.directors | LEAD DIRECTOR | ■ Review and provide feedback on Board meeting agendas and planning.planning, reflecting feedback of the Board ■ Primarily responsible for and lead the Board's annual self-assessment (including of chairpersons). ■ Regular sessions with CEO and other independent directors.directors, as well as external advisors | AUDIT COMMITTEE | ■ Audit Committee oversightOversight of the Company's significant financial risk exposures (including credit, liquidity, and legal,financings, regulatory and, other contingencies), accountingon a shared basis with the Board, ongoing litigation) and management’s risk management policies
■ Review of financial statements and SEC reports, including the adequacy of our internal control over financial reporting, disclosure controls and procedures, and any mitigating activities adopted in response to material weaknesses or significant control deficiencies ■ Oversight on insurance risk management in terms of risk based capital and internal control processes,capital need, reinsurance and use of our captive reinsurer; underwriting and pricing strategy; probable maximum loss; and use of a reciprocal exchange structure ■ Regular oversight and consultations with the internalindependent registered public accounting firm ■ Quarterly engagement and oversight over the subsidiary level audit function, andcommittee of our insurance carrier, including statutory financial statements ■ Regularly reviews reports from the Company'sCompany’s legal, human resources, regulatory and ethical compliance functions.functions, including ethics and whistleblower hotline ■ Oversight of key cybersecurity and information technology matters.matters |
COMPENSATION COMMITTEE | ■ Compensation Committee reviewReview of benchmarking data and approval of peer group composition
■ Review and approval regarding executive officer compensation and its alignment with the Company's business and strategic plans ■ Review whether any compensation programs encourage excessive risk taking, as well as risk mitigation policies and considerations ■ Review and approval of annual share usage under the review2020 Equity Plan, including performance-based awards to senior management ■ Review and approval of employment agreements ■ Review and approval of compensation plans generallypolicies applicable to executive officers and the related incentives, risks and risk mitigants.senior management | MERGERS AND ACQUISITIONS COMMITTEE | ■ Mergers and Acquisitions Committee oversightOversight of the Company’s acquisition and integration strategy, including review and analysis of potential acquisitions and investments as well as
■ Ongoing assessment of closed acquisitions and integration status, and general knowledge on how to create value with specific transactions.transactions | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | ■ Nominating and Corporate Governance Committee selectSelect Board director nominees and oversight of Board structure and governance policies, including supporting Lead Director with annual Board self-assessment.self-assessment
■ Succession planning for Board leadership ■ Develop, review and approve the Company’s policies and practices with respect to corporate compliance and governance ■ Oversight of directors’ and officers’ indemnification and insurance programs.programs ■ Oversight of ESG planning and program development.development |
Evaluations of the Board The Board evaluates its performance and the performance of its committeesCommittees and individual directors on an annual basis through an evaluation process administered by our Lead Director, working in partnership with ourthe Nominating
and Corporate Governance Committee.Committee and third-party coach with appropriate expertise in this area. The Board discusses each evaluation to determine what, if any, actions should be taken to improve the effectiveness of the Board or any committeeCommittee thereof or of the directors. Meetings of the Board During the year ended December 31, 2021, our2022, the Board held ninefour meetings. During 2021,2022, each person currently serving as a director attended at least 75% of the aggregate of the total number of meetings of the Board and each committeeCommittee of which he or she was a member. The CompanyCompany’s corporate governance guidelines state that all Directors are expected to make every effort to attend all meetings of the Board and all meetings of the committeesCommittees on which they serve. Each director is also encouraged and generally expected to attend the Company’s annual meeting of stockholders. All directors attended the Company’s 2022 annual meeting of stockholders. Board Committees OurThe Board has established an Audit Committee, a Compensation Committee, a Mergers and Acquisitions Committee, and a Nominating and Corporate Governance Committee. The composition and responsibilities of each of the committeesCommittees of ourthe Board are described below. Copies of the charters for each committeeCommittee are available on the investor relations page of our website at https://ir.porchgroup.com/. The information in or accessible through our website is not incorporated into, and is not considered part of, this proxy statement. Members serve on these committeesCommittees until their resignation or until otherwise determined by ourthe Board. OurThe Board may establish other committeesCommittees as it deems necessary or appropriate from time to time. The Board created one such special purpose
committee in 2022, the Special Transaction Committee, which is further described following the standing committees. 2022 Standing Committees of the Board. Our current Board standing committeesCommittees and membership isare as follows: | | | | | | | AUDIT | | COMPENSATION | | MERGERS &
ACQUISITION | | NOMINATING and
CORPORATE
GOVERNANCE | | | ■ Asha SharmaCamilla Velasquez
| | ■ Rachel LamAmanda Reierson
| | |
During 2022, service on each of the standing Committees included the following current and former Board members:
| ■ | Audit Committee: Rachel Lam (March to December); Alan Pickerill (full year); Maurice Tulloch (full year); and Javier Saade (January to March). |
| ■ | Compensation Committee: Sean Kell (March to December); Maurice Tulloch (full year); Camilla Velasquez (October to December); Asha Sharma (January to June); and Chris Terrill (January to March). |
| ■ | Nominating and Corporate Governance Committee: Rachel Lam (full year); Alan Pickerill (full year); Regi Vengalil (March to December); and Javier Saade (January to March). |
| ■ | Mergers and Acquisition Committee: Rachel Lam (full year); Amanda Reierson (October to December); Regi Vengalil (full year); Sean Kell (March to October); and Chris Terrill (January to March). |
| | | Audit Committee | Meetings in 2021: 82022: 10 | Alan Pickerill (Chair) | Rachel Lam | Maurice Tulloch |
OurThe Board determined that the members of ourthe Audit Committee are independent within the meaning of Rule 10A-3 under the Exchange Act. OurThe Board also determined that Messrs. Pickerill and Tulloch are “Audit Committee financial experts” as defined by the applicable SEC rules.
OurThe Audit Committee operates under a written charter that satisfies the applicable Nasdaq listing standards. The purpose of the Audit Committee, as set forth in its charter, is to prepare the Audit Committee report required by the SEC to be included in our proxy statement and to assist ourthe Board in overseeing and monitoring:
| ■ | the quality and integrity of our financial statements,statements; |
| ■ | our compliance with legal and regulatory requirements,requirements; |
| ■ | the qualifications and independence and the performance of our internal audit function,function; and |
| ■ | the performance of our independent registered public accounting firm. |
The Audit Committee is also responsible for the review of the Company’s information technology and cybersecurity controls with members of the senior management team, as well as for evaluating the adequacy of such programs, compliance and controls with members of the senior management team. In particular, the Audit Committee meets with the senior management team at least bi-annually for appropriate review, evaluation and discussion of such Company programs, and receives on a quarterly basis, read-outs ofupdates on key developments from senior management.
| | | Compensation Committee | Meetings in 2021: 42022: 10 | Maurice Tulloch (Chair) | Sean Kell | Asha SharmaCamilla Velasquez
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OurThe Board has determined that each member of ourthe Compensation Committee is independent under the Nasdaq listing standards and a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act.
OurThe Compensation Committee operates under a written charter that satisfies the applicable Nasdaq listing standards. The purpose of the Compensation Committee, as set forth in its charter, is to assist ourthe Board in discharging its responsibilities relating to:
| ■ | reviewreviewing our corporate goals and objectives relevant to CEO compensation, evaluateevaluating at least annually the CEO’s performance in light of those goals and objectives, and determinedetermining and approveapproving the CEO’s compensation,compensation; |
| ■ | setting our compensation program and compensation of our executive officers, senior management and directors,directors; |
| ■ | monitoring our incentive and equity-based compensation plans, andplans; |
| ■ | considering the results of the most recent advisory vote of the stockholders on NEO compensation in making compensation determinations and recommendations; and |
| ■ | preparing the Compensation Committee report required to be included in our proxy statement under the rules and regulations of the SEC. |
Our Compensation Committee may form and delegate authority to subcommittees, provided that the subcommittees are composed entirely of directors who satisfy the applicable independence requirements. Our Compensation Committee has the authority to retain counsel and other advisors to fulfill its responsibilities and duties. In connection with the engagement of such advisors generally, our Compensation Committee reviews the independence of such advisors, based on factors specified by Nasdaq and other factors it deems appropriate, and specifically with respect to any compensation consultant, any actual or potential conflicts of interest. Our Compensation Committee determined to re-engage WTW, its independent compensation consultant since May 2021. WTW performed de minimis other services for the Company for 2022, and our Compensation Committee determined there were no conflicts of interest raised by the work of WTW for 2022. Our Compensation Committee’s processes and procedures for the consideration and determination of NEO compensation, including the role of executive officers and the Compensation Committee’s independent consultant in determining or recommending the amount or form of compensation of our named executive officers, are discussed in the “Executive Compensation – Our 2022 NEO Compensation Program” section below. See “Executive Compensation – How Compensation is Determined” and “Executive Compensation - Competitive Positioning” for additional information on the activities of our Compensation Committee, WTW and management regarding the consideration and determination of the 2022 NEO compensation program. In 2022, the Compensation Committee and management conducted a new hire equity grant assessment to ensure that the value of the equity awards, over a four year period, for newly hired employees were aligned with the award value of annual grants to existing employees. The Compensation Committee approved a new hire equity grant design in which RSUs are granted in four equal grant installments. The initial installment representing 25% of the grant value is denominated in RSUs on the initial grant date using the 30-day VWAP for the Company’s common stock, and vests in full on the one-year anniversary of the grant date. Thereafter, each subsequent grant installment (i.e., years two through four) will be made on, and the calculation of the RSUs relating thereto will be as of the applicable anniversary of the initial grant date using the 30-day VWAP for the Company’s common stock preceding the applicable grant date, and will vest in approximately equal installments every quarter. This design maintains a competitive new hire RSU equity grant program, while managing the Company’s equity burn rate. Mergers and Acquisitions Committee | MeetingsMEETINGS in 2021: 52022: 1
| Regi Vengalil (Chair) | Sean KellRachel Lam
| Rachel LamAmanda Reierson
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The purpose of the Mergers and Acquisitions Committee, as set forth in its written charter, is to assist ourthe Board in discharging its responsibilities relating to | ■ | reviewing and evaluating the Company’s acquisition, investment and divestiture strategies,strategies; |
| ■ | evaluating acquisition, investment and divestiture opportunities, when and as appropriate,appropriate; |
| ■ | reviewreviewing the performance of completed transactions (in the aggregate and individually) with management, as the Committee deems necessary and appropriate,appropriate; |
| ■ | assessassessing integration of proposed and completed transactions and provideproviding strategy for integration planning,planning; |
| ■ | evaluateevaluating its performance on a periodic basis and developdeveloping criteria for such evaluation,evaluation; and |
| ■ | periodically recommend any proposed changes to the Board for approval. |
| | | Nominating and Corporate Governance Committee | Meetings in 2021:2022: 4 | Rachel Lam (Chair) | Alan Pickerill | Regi Vengalil |
OurThe Board has determined that each member of ourthe Nominating and Corporate Governance Committee is independent under the applicable Nasdaq listing standards.
OurThe Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable Nasdaq listing standards. The purpose of ourthe Nominating and Corporate Governance Committee, as set forth in its charter, is to assist ourthe Board in discharging its responsibilities relating to:
| ■ | identifying individuals qualified to become new members of the Board, of Directors, consistent with criteria approved by the Board, |
| ■ | reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection, and selecting, or recommending that the Board select, the director nominees for the next Annual Meetingannual meeting of Stockholders,stockholders, |
| ■ | identifying members of the Board of Directors qualified to fill vacancies on any Board committeeCommittee and recommending that the Board appoint the identified member or members to the applicable committee,Committee, |
| ■ | reviewing director independence and the financial literacy and expertise of Audit Committee members and director nominees who may be asked to serve on the Audit Committee, and make recommendations to the Board relating to such matters, |
| ■ | reviewing and recommending to the Board of Directors corporate governance principles applicable to us,the Company, |
| ■ | reviewing and making recommendations in connection with directors’ and officers’ indemnification and insurance matters, including directors’ and officers’ liability insurance coverage, |
| ■ | overseeing the evaluation of the Board of Directors and management, |
| ■ | overseeing the Company’s Environmental, Social and Governance (“ESG”)ESG efforts and progress, including the review of any ESG-related disclosures, and |
| ■ | handling such other matters that are specifically delegated to the committeeCommittee by the Board from time to time. |
InThe Board does not have specific requirements for eligibility to serve as a director of the processCompany beyond compliance with SEC and Nasdaq regulations. However, in evaluating candidates, regardless of identifying, screening and recommending director candidates tohow recommended, the full Board, our Nominating and Corporate Governance Committee takes into consideration the needs of the Board and the Company and the qualifications of the candidates, such as their general understanding of various business disciplines and the Company’s business environment, theireach individual’s educational and professional background, analytical ability, independence, diversity of experience and viewpoints, and their willingness to devote
adequate time to Board duties. The Board evaluates each individual in the context of the Board as a whole with the objective of retaining a group that is best equipped to help ensure that the long-term interests of the stockholders and the Company are served. When searching for new directors, the Nominating and Corporate Governance Committee may pay fees to third-party search firms to assist in identifying and evaluating potential nominees, although no such fees were paid in connection with nominations to be acted upon at the 2023 annual meeting. The Nominating and Corporate Governance Committee will actively seek out diverse candidates, including women and individuals from minority groups, and directs any search firm it engages to include qualified women and minority candidates with a diversity of race/ethnicity and gender in the initial pool from whichpresented to the Nominating and Corporate Governance Committee for consideration. After its evaluation of potential director nominees, the Nominating and Corporate Governance Committee submits and recommends its chosen director nominees to the full Board for the Board are chosen. approval. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders on the same basis that it evaluates other director nominees for director. Each nominee for election as director at the 2023 Annual Meeting is recommended by the Nominating and Corporate Governance Committee and is presently a director and stands for re-election by the stockholders. In 2022, due to vacancies on the Board, the Nominating and Corporate Governance Committee conducted searches for new board members that focused on independence and diversity as well as world-class skills and experiences. In March 2022, Mr. Kell joined the Board, and in October 2022, Mses. Reierson and Velasquez joined the Board. | | | | Special Transaction Committee | | | Meetings in 2022: 5 | Maurice Tulloch (Chair) | Alan Pickerill | Amanda Reierson | Regi Vengalil |
In 2022, the Board created one special committee. The Board determined the need for a special committee to review and consider the formation of a reciprocal exchange for our insurance business operations. In October, 2022, the Board approved the formation of the Special Transaction Committee and its charter that satisfies the applicable Nasdaq listing standards. The purpose of our Special Transaction Committee, as set forth in its charter, is to assist the Board in discharging its responsibilities relating to reviewing, evaluating, recommending and approving a potential restructuring of the insurance carrier (and related insurance) businesses into a reciprocal exchange or similar transaction or arrangement. In addition to formal meetings, the Special Transaction Committee conducted a significant number of informal meetings to review, and evaluate a reciprocal exchange structure, related capital requirements and opportunities, regulatory and rating agency dynamics, and identifying compelling customer (policyholder) value propositions. The formation of the reciprocal exchange is an initial step in the Company’s long-term strategy to reduce its exposure to earnings volatility from its Insurance segment by mitigating direct exposure to insurance claims and weather events. The reciprocal exchange may also help to reduce the impact of a challenging reinsurance market that has both less capacity and higher prices. The launch of the reciprocal exchange remains subject to review and approval by the Texas Department of Insurance and regulatory review in the context of broader capital and operating environment and the decision to proceed remains within the Company’s discretion. Corporate Governance Guidelines OurThe Board has adopted corporate governance guidelines, which provide the framework for our corporate governance along with our Certificate of Incorporation, Bylaws, committeeCommittee charters and other key governance practices and policies. Our corporate governance guidelines cover a wide range of subjects, including the conduct of boardBoard meetings, independence and selection of directors, existence and scope of Lead Director role, boardBoard membership criteria, conflicts of interest, and Committee composition.
No Director Over-boarding All of our directors are in compliance with the over-boarding restrictions in our Corporate Governance Guidelines, which provides that no director should serve on more than three other public company Boards; no member of our Audit Committee should serve on more than two other public company audit committees; and no director who is the Chief Executive Officer of another public company should serve on more than two other public company boards, aside from the board committee composition.of his or her own company. Plurality Plus Voting for Directors; Director Resignation Policy Pursuant to our Certificate of Incorporation and our Bylaws, directors are elected by a plurality of the votes cast by the stockholders present in person or represented by proxy and entitled to vote thereon at an Annual Meetingannual meeting of
Stockholders. stockholders. In April 2022, ourthe Board adopted an amendment to our corporate governance guidelinesCorporate Governance Guidelines to include a “plurality plus” voting standard for the election of directors, which provides that, in an uncontested election of directors, any director nominee who receives more “WITHHOLD” votes than “FOR” votes at a stockholder meeting at which he or she is elected shall tender his or her resignation to the Board promptly following certification of the stockholder vote. The Nominating and Corporate Governance Committee shall consider the tendered resignation and make a recommendation to the Board as to whether to accept or reject the resignation or whether other action should be taken. The Board shall act on the recommendation and publicly disclose its decision (by press release, SEC filing or any other public means of disclosure deemed appropriate) regarding the tendered resignation within 90 days following certification of the election results. The director who tenders his or her resignation shall not participate in the recommendation of the Nominating and Corporate Governance Committee or the decision of the Board with respect to his or her resignation.
In addition, pursuant to our corporate governance guidelines, each director is expected to promptly disclose to the Board any existing or proposed relationships or transactions that involve or could give rise to a conflict of interest. If a significant conflict of interest involving a director cannot be resolved (e.g., by recusing herself or himself from deliberation of a particular matter), the director should promptly tender a resignation to the Board. The Nominating and Corporate Governance Committee shall then review the appropriateness of that director’s continued service on the Board in light of the conflict and make a recommendation to the Board as to whether the resignation should be accepted.
Code of Business Conduct and Ethics We have adopted a code of business conduct and ethics that applies to all of our directors, employees, officers, consultants and independent contractors. The code of business conduct and ethicsCode codifies the business and ethical principles that govern all aspects of our business. A copy of the code of business conduct and ethicsCode has been filed with the SEC and will be provided without charge upon written request to our General Counsel and Secretary, in writing at 411 First1st Avenue South, Suite 501, Seattle, WA 98104. A copy of the code of business conduct and ethicsCode can also be found at https://ir.porchgroup.com/corporate-governance/governance-documents. The Company intends to disclose any amendments to or waivers of certain provisions of its code of business conduct and ethicsCode on our website.
Stock Ownership by Directors OurThe Board believes that an ownership stake in the Company strengthens the alignment of interests between directors and stockholders. Accordingly, each non-employee director is required to own common stock (or equivalents) having a value of at least three times the annual cash retainer fee, within five years of becoming a director. In the event that the annual retainer fee is increased, non-employee directors will have three years to meet the new ownership guidelines. OurThe Board will evaluate whether exceptions should be made for any director on whom these guidelines would impose a financial hardship.
Insider Trading and Rule 10b5-1 Trading Plan Policies We maintain an Insider Trading Policy that covers our directors, officers and employees, which sets forth restrictions and procedures related to trading in Porch Group’s securities, including prohibitions on trading on the basis of material nonpublic information. Our Insider Trading Policy also describes instances where certain persons, including our directors and executive officers, must obtain prior approval before engaging in a transaction in the Company’s securities. In addition, our Insider Trading Policy sets forth restrictions for regular and special trading blackout periods applicable to certain covered persons, as well as limited exceptions to such restrictions. The SEC recently promulgated a new rule related to the adoption and modification of Rule 10b5-1 trading plans by directors and officers of registrants, which became effective on February 27, 2023. In connection with its annual review of the Insider Trading Policy and in anticipation of the effectiveness of the new SEC rule, the Board and Nominating and Corporate Governance Committee reviewed potential changes to the Insider Trading Policy that would include guidelines for Rule 10b5-1 trading plans in accordance with the new SEC rule. On March 7, 2023, the Board amended the Company’s Insider Trading Policy to include the Rule 10b5-1 trading plan guidelines would apply to our directors and executive officers, which complies with the new SEC rule and requires, among other things, that any trades under a new or modified Rule 10b5-1 trading plan not be commenced before expiration of a waiting period and that directors and executive officers not use multiple overlapping Rule 10b5-1 trading plans except in limited circumstances. Prohibition on Hedging and Pledging of Company Securities The Company has a policy thatOur Insider Trading Policy also prohibits officers, directors and employees from engaging in hedging transactions, such as the purchase or sale of puts or calls, or the use of any other derivative instruments. Officers, directors and employees of the Company are also prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan. However, non-employee directors may pledge Company securities as collateral for a loan or other financing arrangement only with prior written approval of the General Counsel, after conferring with the Nominating and Corporate Governance Committee. If the pledging transaction is approved, any pledged Company stock shall not be counted towards the non-employee director’s stock ownership and retention requirements.
Stockholder Engagement and Annual Advisory Vote on NEO Compensation We offer our stockholders the opportunity to vote annually on the Company’s NEO compensation program (say-on-pay). At the 2022 annual meeting of stockholders, our stockholders demonstrated support for our 2021 NEO compensation program with approximately 96% of the votes cast in support of the “say-on-pay” proposal. Our stockholders’ views on corporate governance and NEO compensation are important to us and we value and use the feedback and insights that we receive from stockholders. Stockholders may contact the Board or the Compensation Committee at any time throughout the year to provide feedback on our NEO compensation. Stockholder Communications Any stockholder or other interested party who wishes to communicate with ourthe Board or any individual director may send written communications to ourthe Board or such director c/o General Counsel and Secretary, Porch Group, Inc.
411 First1st Avenue South, Suite 501, Seattle, WA 98104. The communication must include the stockholder’s full legal name (and, with respect to entity stockholders, the full legal names of such entity’s owners), address, email, phone number, and an indication that the person is our stockholder. The General Counsel and Secretary will review any communications received from stockholders and will forward such communications to the appropriate director or directors, or committee of our Board,Committee, based on the subject. Compensation Committee Interlocks and Insider Participation
During 2021, our Compensation Committee consisted of Chris Terrill (full year), Asha Sharma (September to December), Maurice Tulloch (September to December), Thomas D. Hennessy (January to August) and Margaret Whelan (January to August). Mr. Hennessy and Ms. Whelan each resigned from the Board on August 12, 2021, following the successful completion of the business combination. No member of the Compensation Committee was, during the last year, an officer or employee of the Company or its subsidiaries; however, Ms. Sharma previously served as Chief Operating Officer and Chief Marketing Officer of Legacy Porch. In addition, during 2021, there were no Compensation Committee interlocks required to be disclosed.
Environment, Social and Governance In 2022, we initiated a formal process to develop a tailored approach to ESG matters that aligns with our business strategy and balances the opportunities, risks, and values of our Company and our stakeholders. We engaged an independent third-party consultant that conducted detailed peer benchmarking, provided an overview of relevant disclosure frameworks, and led our initial materiality assessment with key internal stakeholders. Our materiality assessment focused on tailored ESG topics and included interviews of key board and senior leaders and a survey open to all employees. Responses were weighted and ranked based on a combination of their importance to our stakeholders and our business success. The materiality assessment results then were analyzed to create actionable steps that will guide us in building the initial pillars of our ESG journey, which will be overseen primarily by our Nominating and Corporate Governance Committee in partnership with our steering committee of employees from across our businesses. We intend to release our first ESG report in the next 12 months, including details regarding our strategic focus areas and ongoing initiatives that were informed by the feedback we received. This inaugural report will reflect our continuing commitment to be transparent with our stakeholders, and we are excited to share our journey with you. Use of Third Party Advisors Due to the Company’s acquisition strategy and highly regulated businesses, the Board has sought and retained the guidance from advisors with deep experience in risk management in the areas ranging from financial, regulatory and legal advisors relating to reciprocal exchanges, mergers and acquisition, reinsurance, warranty products, to D&O insurance. These advisors regularly attend Board or Committee meetings, including executive sessions attended by independent directors only. Recent SEC Rules – Clawback Policy On October 26, 2022, the SEC promulgated a new rule related to recoupment of incentive-based compensation. We intend to adopt a clawback policy as necessary to comply with this new rule when Nasdaq adopts final listing standards implementing such rule.
Director Compensation The Company’s director compensation program consists of cash and equity compensation. With respect to 2022, each non-employee director earned cash fees and received RSU awards in the Company’s non-employee director compensation program as set forth below. Employee directors are not compensated for their additional service provided to the Board and thus are not included. The Company also reimburses its directors for their reasonable out-of-pocket expenses incurred in attending Board and Committee meetings. The director compensation program was adopted in May 2021. | ■ | Annual Board Cash Retainer: $30,000 |
| ■ | Annual RSU Award: $80,000 |
| ■ | Annual Committee Member Retainers (paid in RSUs): |
| o | Audit Committee: $10,000 |
| o | Compensation Committee: $5,000 |
| o | Nominating and Corporate Governance Committee: $3,250 |
| ■ | Annual Additional Committee Chair Retainers (paid in RSUs): |
| o | Audit Committee: $20,000 |
| o | Compensation Committee: $10,000 |
| o | Nominating and Corporate Governance Committee: $7,500 |
| ■ | Annual Lead Independent Director: |
| o | Cash: $31,875 (paid in quarterly installments) |
The number of RSUs to be granted on the grant date, which occurs annually on the date of the Company’s annual meeting of stockholders, shall be the nearest whole number of shares as determined by dividing the dollar value of the RSU Award or non-cash Retainer by the closing market price of the Company’s common stock as listed on the Nasdaq on the grant date, and if the grant date does not fall on a Nasdaq trading day, then on the last trading day prior to the grant date. Under the non-employee director compensation program, the RSU awards will vest on the one year anniversary of the grant date, with the resale restrictions applicable to two-thirds of the RSUs expiring in equal increments on the first and second anniversaries of the vesting date. The RSUs will vest and the resale restrictions will lapse in the event the director ceases to serve on the Board due to disability, removal without cause or other termination of service. In addition, in the event of a change in control in which the awards are not effectively assumed, the RSUs will vest in full and the resale restrictions will lapse. Directors elected by the Board between annual meetings are paid a pro rata amount of any cash fee and receive a pro-rata grant of RSUs, based on the period of their service on the Board, and any Committee for which they may be appointed. 2022 Director Compensation Table The following table sets forth information for the year ended December 31, 2022 regarding the compensation awarded to or earned by certain of the Company’s non-employee directors. Mr. Ehrlichman, the Company’s Chief Executive Officer, does not receive any additional compensation for his service as a member of the Company’s Board. Please see the 2022 Summary Compensation Table for the compensation paid or awarded to Mr. Ehrlichman for 2022. | | | | | | | | | Fees Earned or
Paid in Cash | | Stock Awards | | Total | Name | | ($)(1) | | ($)(2) | | ($) | Sean Davis Kell(3) | | 30,000 | | 112,499 | | 142,499 | Rachel Lam(4) | | 30,000 | | 105,330 | | 135,330 | Alan Pickerill(5) | | 30,000 | | 103,248 | | 133,248 | Amanda Reierson(6) | | 7,500 | | 0 | | 7,500 | Maurice Tulloch(7) | | 30,000 | | 101,564 | | 131,564 | Camilla Velasquez(8) | | 7,500 | | 0 | | 7,500 | Regi Vengalil(9) | | 61,875 | | 133,905 | | 195,780 | Javier Saade(10) | | 15,469 | | 0 | | 15,469 | Asha Sharma(11) | | 15,000 | | 0 | | 15,000 | Chris Terrill(12) | | 7,500 | | 0 | | 7,500 |
(1) | This column reports the amount of cash compensation earned in 2022 for annual Board, and if applicable, Lead Independent Director service. |
(2) | Amounts shown reflect the aggregate grant date fair value of RSU awards granted during 2022, computed in accordance with FASB ASC Topic 718. The grant date fair value of RSUs is valued using the closing price of common stock of the Company on the grant date, which was $3.89 as of June 8, 2022. These amounts reflect the grant date fair value and may not correspond to the actual value that will be realized by the directors. Includes the grant date fair value for RSUs which were granted in 2022 but due to their resignations in 2022, the grants made to Messrs. Saade and Terrill and Ms. Sharma were subsequently forfeited. |
(3) | On June 8, 2022, Mr. Kell was granted 28,920 RSUs for Board and Committee service for the year 2022, of which 5,784 RSUs vested on the date of grant. Mr. Kell had 23,136 RSUs outstanding at December 31, 2022. |
(4) | On June 8, 2022, Ms. Lam was granted 27,077 RSUs for Board and Committee service for the year 2022, of which 727 RSUs vested on the date of grant. Ms. Lam had 26,350 RSUs outstanding at December 31, 2022. |
(5) | On June 8, 2022, Mr. Pickerill was granted 26,542 RSUs for Board and Committee service for the year 2022. Mr. Pickerill had 35,231 vested outstanding stock options, and 26,542 outstanding RSUs at December 31, 2022. |
(6) | Ms. Reierson was appointed to the Board on October 4, 2022, therefore, Ms. Reierson did not receive any RSU grants in 2022. |
(7) | On June 8, 2022, Mr. Tulloch was granted 26,109 RSUs for Board and Committee service for the year 2022, of which 402 RSUs vested on the date of grant. Mr. Tulloch had 25,707 RSUs outstanding at December 31, 2022. |
(8) | Ms. Velasquez was appointed to the Board on October 4, 2022, therefore, Ms. Velasquez did not receive any RSU grants in 2022. |
(9) | On June 8, 2022, Mr. Vengalil was granted 34,423 RSUs for Board and Committee service for the year 2022, of which 2,257 RSUs vested on the date of grant. Mr. Vengalil had 32,166 RSUs outstanding at December 31, 2022. |
(10) | On March 15, 2022, Mr. Saade resigned from the Board, therefore, Mr. Saade did not receive any RSU grants in 2022. |
(11) | On June 17, 2022, Ms. Sharma resigned from the Board, therefore, Ms. Sharma did not receive any RSU grants in 2022. |
(12) | On March 15, 2022, Mr. Terrill resigned from the Board, therefore, Mr. Terrill did not receive any RSU grants in 2022. |
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023 General The Board is asking our stockholders to ratify the appointment by the Audit Committee of Ernst & Young LLP, as the independent registered public accounting firm to conduct the audit of our financial statements for the fiscal year ending December 31, 2023. Stockholder ratification of such selection is not required by our Bylaws or any other applicable legal requirement. However, the Board is submitting the selection of EY to our stockholders for ratification as a matter of good corporate governance. In the event our stockholders fail to ratify the selection, the Audit Committee may reconsider whether or not to continue to retain EY for the fiscal year ending December 31, 2023 and future years. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change should be made. EY has audited our financial statements since 2015. A representative of EY is expected to be present at the Annual Meeting and will have the opportunity to make a statement if he or she desires to do so and is expected to be available to respond to appropriate stockholder questions. Vote Required The affirmative vote of the majority of our shares of common stock present at the Annual Meeting or represented by proxy and entitled to vote at the Annual Meeting is required for the approval of Proposal 2. An abstention on Proposal 2 will have the same effect as a vote “AGAINST” Proposal 2. Brokers will have discretionary authority to vote on this proposal. Accordingly, there will not be any broker non-votes on Proposal 2. Recommendation of The Board and Audit Committee | | 
| THE BOARD AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND THAT OUR STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023. |
Audit Fees and Audit Committee Report In this section of the proxy statement, we discuss the fees paid to our independent auditor and provide the report of the Audit Committee for the year ended December 31, 2022. Accountant Fees and Services The following table sets forth aggregate fees for professional service rendered by EY for the years ended December 31, 2022 and 2021. | | | | | | | Years Ended
December 31, | | | 2022 | | 2021 | | | ($) | | ($) | Audit fees(1) | | 5,178,000 | | 2,896,000 | Audit-related fees(2) | | — | | 503,000 | Tax fees(3) | | 403,000 | | 673,000 | All other fees | | — | | — | Total fees | | 5,581,000 | | 4,072,000 |
(1) | Audit fees above are professional services for the annual audits of our financial statements and internal control over financial reporting, reviews of interim financial statements, professional consultations with respect to accounting issues directly related to the financial statement audit, and services rendered in connection with the filing of our registration statements and security offerings. |
(2) | Audit-related fees include fees and expenses for due diligence in connection with acquisitions, and related accounting consultations. |
(3) | Tax fees generally include fees related to tax compliance, tax planning and advice and tax due diligence in connection with acquisitions. |
Determination of Independence In considering the nature of the services provided by our independent registered public accounting firm, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with our independent registered public accounting firm and our management to determine that they are permitted under the rules and regulations concerning auditor independence. Additional information concerning the Audit Committee and its activities can be found in the following sections of this proxy statement: “Board Committees” and “Report of the Audit Committee.” Pre-Approval Policy According to policies adopted by the Audit Committee and ratified by the Board, to ensure compliance with the SEC’s rules regarding auditor independence, all audit and non-audit services to be provided by our independent registered public accounting firm must be pre-approved by the Audit Committee. The Audit Committee has established a general pre-approval policy for certain audit and non-audit services, up to a specified amount for each identified service that may be provided by the independent auditors. The Audit Committee approved all services provided by EY during the years ended December 31, 2022 and 2021. The Audit Committee has considered the nature and amount of the fees billed by EY and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining EY’s independence. Report of the Audit Committee The Audit Committee oversees our independent registered public accounting firm and assists the Board in fulfilling its oversight responsibilities on matters relating to the integrity of our financial statements, our compliance with legal and regulatory requirements and the independent registered public accounting firm’s qualifications and independence by meeting regularly with the independent registered public accounting firm and financial management personnel. Management is responsible for the preparation, presentation and integrity of our financial statements. In fulfilling its oversight responsibilities, the Audit Committee: | ■ | reviewed and discussed our audited financial statements as of and for the fiscal year ended December 31, 2022 with management and EY; |
| ■ | discussed with EY the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; |
| ■ | discussed the effectiveness of internal controls over financial reporting (ICFR), as well as other important financial accounting and reporting issues with management and EY; |
| ■ | received the written disclosures and the letter from EY required by the applicable requirements of the Public Company Accounting Oversight Board; and |
| ■ | discussed with EY their independence. |
Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements be included in our Form 10-K for the fiscal year ended December 31, 2022, for filing with the SEC. The Audit Committee also appointed EY as our independent registered public accounting firm for the fiscal year ending December 31, 2023. |
Javier Saade
Margaret Whelan | | Submitted by the Audit Committee of the Board:
Alan Pickerill, Chair
Rachel Lam
Maurice Tulloch |
EXECUTIVE OFFICERS The following table sets forth information with respect to our executive officers as of April 13, 2022:11, 2023: | | | | | MattMatthew Ehrlichman
| | Marty HeimbignerShawn Tabak
| | Matthew Neagle | Chief Executive Officer and Chairman | | Chief Financial Officer | | Chief Operating Officer |
Additional biographical descriptions of the executive officers are set forth in the text below. A description of the business experience of MattMatthew Ehrlichman is provided above in “Proposal 11: Election of the Class III Directors Named in This Proxy Statement— Board Nominees — Continuing Class III Directors.” | | | | Marty HeimbignerShawn Tabak
| Age: 6343 | | Marty Heimbigner is Chief Financial Officer for the Company, a position he has held since June 2020. Before joining the Company, Mr. Heimbigner served asShawn Tabak was appointed Chief Financial Officer of WASH Multifamily Laundry Systems, LLC from December 2017 to May 2020. Before that, Mr. Heimbignerthe Company in November 2022. Most recently, he served as the Chief Financial Officer of TheMaven,Naked Wines, Plc (LSE: WINE), a leading direct-to-consumer wine business from 2020 to 2022. Previously, Mr. Tabak served as Vice President of Finance at Upwork, Inc. from March 20172020 to December 2017. Additionally, Mr. Heimbigner was a partner2020, Vice President of Investor Relations and Treasury at Pacific CFO Group,Shutterfly, LLC from November2016 to 2020 and as Chief Finance Officer and Senior Vice President of Finance at Clean Power Finance, Inc. from 2012 to June 2020, where he served as an advisor and senior finance and accounting executive at client companies of the firm. From November 2014 to May 2016, Mr. Heimbigner was Chief Financial Officer of BSQUARE Corporation. From January 2003 to November 2012 Mr. Heimbigner was a partner with Tatum LLC, where he similarly served in senior finance and accounting executive roles with client companies. From January 2009 to April 2010 Mr. Heimbigner was President, Chief Executive Officer and a director at City Bank, headquartered in Lynnwood, Washington.2016. He has held other senior partner or financial leadership positions earlier inbegan his career at companies including Demand Media, Intelligent Results (acquired by First Data), Airbiquity Inc., Washington Energy Company,KPMG LLP, where he earned his CPA and KPMG.advised clients across the technology and internet sectors on M&A and other finance transactions. Mr. HeimbignerTabak holds a B.A. from Washington State University and an Executive M.B.A. degreein Economics from the University of Washington. He is a Certified Public Accountant in the State of Washington.
On April 1, 2022, the Company announced it had mutually agreed with Mr. Heimbigner to begin a search for Mr. Heimbigner’s successor. In order to assist with an orderly transition of his responsibilities, Mr. Heimbigner is expected to remain as Chief Financial Officer for up to six months following the announcement.California, Santa Barbara.
| |
| | | | Matthew Neagle | Age: 4344 | | Matthew Neagle is Chief Operating Officer for the Company. As Chief Operating Officer, Mr. Neagle leads efforts to drive organic growth of the Company’sPorch's software and services platform and manages the day-to-day rhythms of the business. Previously, Mr. Neaglehe also served as Legacy Porch’sPorch's Chief Revenue Officer from March 2017 to July 2020, Legacy Porch’sPorch's Chief Customer Officer from January 2016 to March 2017 and Legacy Porch’sPorch's Vice President, Operations from July 2014 to January 2016. Prior to joining the Company, Mr. NeaglePorch, Matthew worked at Amazon, leading the expansion of Kindle into stores in China, India, and Japan and at Google, leading the teams to help small businesses to acquire and retain customers online through AdWords. Mr. NeagleMatthew is a long-time leader, alumnus and supporter of AIESEC, the world’sworld's largest student organization. Mr. NeagleHe holds a B.A., B.S.E. and M.B.A. from the University of Michigan. | |
CERTAIN RELATIONSHIPS AND RELATED Person TRANSACTIONS In addition to the executive officer and director compensation arrangements discussed in the sections titled “Director Compensation” and “Executive Compensation,” we describe below any transaction, arrangement or relationship, since January 1, 2022 to which we have been a party, in which the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year; the Company or any of its consolidated subsidiaries is or will be a participant; and in which any of our directors, nominees for director, executive officers or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest. Certain Relationships and Related Person Transactions Indemnification Agreements In connection with the December 2020 business combination of Legacy Porch and PTAC, theThe Company entered into indemnification agreements with its directors and executive officers. Those indemnification agreements and the Bylaws require the Company to indemnify all directors and officers to the fullest extent permitted by Delaware law against any and all expenses, judgments, liabilities, fines, penalties, and amounts paid in settlement of any claims. The indemnification agreements also provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to the Company if it is found that such indemnitee is not entitled to such indemnification under applicable law.
Grant of Restricted Stock to Ehrlichman Mr. Ehrlichman was granted a restricted stock award under the 2012 Stock Plan which was converted into an award of 1,000,000 restricted shares of the Company upon the closing of the business combination. The award will vest in one-third installments if certain stock price triggers are achieved within 36-months following the closing of the business combination as follows: (i) one-third (1/3) of the shares will vest if the closing price of a Company share of the Company’s common stock are is greater than or equal to $18.00 over any 20 trading days within any 30-consecutive trading day period; (ii) one-third (1/3) of the shares will vest if the closing price of a Company share of the Company’s common stock is greater than or equal to $20.00 over any 20 trading days within any 30-consecutive trading day period; and (iii) the remaining one-third (1/3) of the shares will vest if the closing price of a Company share of Company’s common stock is greater than or equal to $22.00 over any 20 trading days within any 30-consecutive trading day period. As of December 31, 2021,2022, only the shares described in clause (iii) of the prior sentence had not vested. If Mr. Ehrlichman’s employment with the Company or its affiliates is terminated prior to the award being fully vested, then the award will be terminated and cancelled, provided that if Mr. Ehrlichman’s employment is terminated by the Company or its affiliates without Cause or Mr. Ehrlichman resigns due to Good Reason (in each case, as defined in the award agreement), the award will remain outstanding and will vest to the extent the stock price triggers are achieved during the 36-month period. Procedures with Respect to Review and Approval of Related Person Transactions The Company’s Board adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions. A “Related Person Transaction” is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” means: | ■ | any person who is, or at any time during the applicable period was, one of the Company’s executive officers or a memberdirector of the Company’s Board;Company or a nominee for director of the Company; |
| ■ | any person who is known by the Company to be the beneficial owner of more than five percent (5%) of our voting stock; |
| ■ | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than five percent (5%) of our voting stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than five percent (5%) of our voting stock; and |
| ■ | any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10ten percent (10%) or greater beneficial ownership interest. |
The Company also adopted policies and procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to its Audit Committee charter, the Audit Committee will have the responsibility to review related person transactions.
transactions
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| 20222023 Proxy Statement
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Director CompensationIf a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a related person transaction, the related person must report the proposed related person transaction to our General Counsel or the Chair of the Audit Committee. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by the Audit Committee, (or, if so, determined by the Audit Committee, the disinterested members of the Board). Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the Audit Committee will review, and, in its discretion, may ratify the related person transaction if it deems ratification appropriate under the circumstances. The policy also permits the Chair of the Audit Committee to review and, if deemed appropriate, approve proposed related person transactions that arise between audit and finance committee meetings, subject to ratification by the Audit Committee at its next meeting. Any related person transactions that are ongoing in nature are reviewed annually.
The Company’s historical director compensation program has consistedA related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the Audit Committee (or, if so, determined by the Audit Committee, the disinterested members of cash and equity compensation. With respect to 2021, each non-employee director earned cash fees and received RSU (“RSU”) awardsthe Board) after full disclosure of the related person’s interest in the Company’s non-employee director compensation program as set forth below. Employee directors are not compensatedtransaction. As appropriate for their additional service provided to our Boardthe circumstances, the audit and thus are not included. The Company also reimburses its directors for their reasonable out-of-pocket expenses incurred in attending boardfinance committee will review and committee meetings.consider:
| ■ | Annual Board Cash Retainer: $30,000The size of the transaction and the amount payable to a related person and the transaction’s material terms; |
| ■ | Annual RSU Award: $80,000The nature of the interest of the related person in the transaction; |
| ■ | Annual Committee Member Retainers (paidWhether the transaction may involve a conflict of interest or would impair the ability of a director or executive officer to act in RSUs): |
| o | Audit Committee: $10,000the best interests of the Company; |
| o■ | Compensation Committee: $5,000Whether the transaction was undertaken in the ordinary course of our business; |
| o■ | Nominating and Corporate Governance Committee: $3,250The business rationale for the transaction; |
| o■ | M&A Committee: $5,000Whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to us as would be available in comparable transactions with or involving unaffiliated third parties; and |
| ■ | Annual Additional Committee Chair Retainers (paidAny other information regarding the related person transaction or the related person that would be material to investors in RSUs):light of the circumstances of the particular transaction. |
The Audit Committee may approve or ratify the transaction only if the Audit Committee determines that, under all of the circumstances, the transaction is consistent with our best interests. The audit and finance committee may impose any conditions on the related person transaction that it deems appropriate. In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, the Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy: | o■ | Audit Committee: $20,000Any indebtedness incurred for the purchase of goods and services subject to usual trade terms, for ordinary business travel and expense payments and for other transactions in the ordinary course of business; |
| o■ | Compensation Committee: $10,000Any transaction in which the rates or charges involved in connection therewith are determined by competitive bids; |
| o■ | NominatingAny transaction in which the interest of the related person arises solely from the ownership of a class of equity securities of the Company and Corporate Governance Committee: $7,500all holders of that class of equity securities of the Company receive the same benefit on a pro rata basis; |
| o■ | M&A Committee: $10,000Any transaction where the related person’s interest derives solely from his or her direct or indirect ownership (together with the ownership of any other related person) of less than a 10% equity interest in another entity’s (other than a partnership) outstanding equity which is a party to the transaction; |
| ■ | Annual Lead Independent Director: |
| o | Cash: $31,875 (paid in quarterly installments) |
The number of RSUs to be granted on the grant date shall be the nearest whole number of shares as determined by dividing the dollar value of the Award or Retainer by the closing market price of the Company’s common stock as listed on the NASDAQ on the grant date, and if the grant date does not fall on a NASDAQ trading day, then on the last trading day prior to the grant date
Under the non-employee director compensation program, the RSU awards will vest on the one (1) year anniversary of the grant date, with the resale restrictions applicable to two-thirds (2/3) of the RSUs expiring in equal increments on the first and second anniversaries of the vesting date. The RSUs will vest and the resale restrictions will lapse in the event the director ceases to serve on the board due to death, disability or removal without cause. In addition, in the event of a change in control in which the awards are not effectively assumed, the RSUs will vest in full and the resale restrictions will lapse. For RSU awards granted in 2021 for service between the closing of our business combination and our 2021 Annual Meeting of Stockholders, such RSUs awards vested on the date of the 2021 Annual Meeting of Stockholders.
2021 Director Compensation Table
The following table sets forth information for the year ended December 31, 2021 regarding the compensation awarded to or earned by certain of the Company’s non-employee directors. Mr. Ehrlichman, the Company’s Chief Executive Officer, does not receive any additional compensation for his service as a member of the Company’s Board. Please see the 2021 Summary Compensation Table for the compensation paid or awarded to Mr. Ehrlichman for 2021.
| | | | | | | | | | | | Paid in Cash | | | Stock Awards | | Total | | | ($)(1) | | ($)(2) | | ($) | Joseph Hanauer(3) | | $ | 52,500 | | $ | 0 | | $ | 52,500 | Thomas Hennessy(4) | | | 22,500 | | | 143,374 | | | 165,874 | Sean Davis Kell(5) | | | 0 | | | 0 | | | 0 | Rachel Lam(6) | | | 15,000 | | | 86,197 | | | 101,197 | Alan Pickerill(7) | | | 30,000 | | | 155,833 | | | 185,833 | Javier Saade(8) | | | 61,875 | | | 179,024 | | | 240,899 | Asha Sharma(9) | | | 30,000 | | | 126,970 | | | 156,970 | Chris Terrill(10) | | | 30,000 | | | 139,580 | | | 169,580 | Maurice Tulloch(11) | | | 15,000 | | | 91,263 | | | 106,263 | Regi Vengalil(12) | | | 30,000 | | | 135,833 | | | 165,833 | Margaret Whelan(13) | | | 22,500 | | | 143,374 | | | 165,874 |
(1)
| This column reports■
| Any transaction where the amountrelated person’s interest derives solely from his or her position as a limited partner in a partnership in which the related person and all other related persons have an interest of cash compensation earnedless than 10%, and the related person is not a general partner of and does not hold another position in 2021 for annual Board, and if applicable, Lead Independent Director or Shareholder Representative ($25,000), service.the partnership; |
(2)
| Amounts shown reflect■
| Any transaction where the aggregate grant date fair valuerelated person’s interest derives solely from his or her service as a director of RSU awards granted during 2021, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“FASB ASC Topic 718”). These amounts reflect an estimate of the grant date fair value and may not correspondanother corporation or organization that is a party to the actual value that will be realized by the directors. Includes an estimate of the grant date fair value for RSUs which were granted in 2021 but were subsequently forfeited due to resignation. Stock awards consist of RSUs valued using the closing price of Porch common stock on the NASDAQ on the grant date.transaction; |
(3)
| Mr. Hanauer resigned from■
| Any employment relationship or transaction (including equity awards) involving an executive officer if (a) the related compensation is reported pursuant to Item 402 of Regulation S-K or (b) the executive officer is not an immediate family member of another executive officer or director of the Company and the related compensation would have been reported under Item 402 of Regulation S-K if the executive officer was a “named executive officer” (as defined in Item 402 of Regulation S-K) and the Compensation Committee approved (or recommended that the Board f on March 12, 2021, and, as a result all RSUs outstanding on of the date of resignation were forfeited.approve) such compensation; |
(4)
| On March 23, 2021, Mr. Hennessy was granted an RSU award for Board and committee service for the period from December 20, 2020 through June 9, 2021, which RSU award vested in full on June 9, 2021. Mr. Hennessy,■
| Any compensation (including equity awards) paid to a director of the former special purpose acquisition corporation (SPAC), resigned fromCompany if the compensation is reported pursuant to Item 402 of Regulation S-K and the Compensation Committee of the Board on August 12, 2021, followingapproved (or recommended that the successful completion of the business combination and, as a result, 4,641 RSUs outstanding on of the date of resignation were forfeited.Board approve) such compensation; |
(5)
| Mr. Kell was appointed to■
| Any transaction with a related person involving the Board on March 17, 2022, and therefore had no 2021 compensation.rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; |
(6)
| Ms. Lam was appointed to the Board on August 12, 2021. Ms. Lam had 4,630 RSUs outstanding at December 31, 2021.
■ | Any transaction with a related person involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; |
(7)
| On March 23, 2021, Mr. Pickerill was granted an RSU award for Board■
| Any charitable contribution, grant, endowment or pledge by the Company to a charitable organization, foundation or university where the related person’s only relationship with that organization is as a director and committee service for the period from December 20, 2020 through June 9, 2021, which RSU award vested in full on June 9, 2021. Mr. Pickerill had 26,423 vested stock options, 8,808 unvested stock options, and 5,044 RSUs outstanding at December 31, 2021.aggregate amount involved does not exceed the lesser of $1,000,000 or 2% of the charitable organization’s total annual receipts; |
(8)
| On March 23, 2021, Mr. Saade■
| Any indemnification payments and advancement of expenses made pursuant to the Company’s certificate of incorporation or bylaws or pursuant to any agreement or instrument the form of which was granted an RSU award forpreviously approved by the Board andor a committee service for the period from December 20, 2020 through June 9, 2021, which RSU award vested in full on June 9, 2021. Mr. Saade had 6,320 RSUs outstanding at December 31, 2021. Mr. Saade served as Lead Independent Director in 2021.thereof; or |
(9)
| On March 23, 2021, Ms. Sharma was granted an RSU award for Board and committee service for■
| Any transaction pre-approved by the period from December 20, 2020 through June 9, 2021, which RSU award vestedAudit Committee in full on June 9, 2021. Ms. Sharma had 172,140 vested stock options, and 4,141 RSUs outstanding at December 31, 2021.accordance with the policy. |
(10)
| On March 23, 2021, Mr. Terrill was granted an RSU award for Board and committee service for the period from December 20, 2020 through June 9, 2021, which RSU award vested in full on June 9, 2021. Mr. Terrill had 4,607 RSUs outstanding at December 31, 2021.
|
(11)
| Mr. Tulloch was appointed to the Board on August 12, 2021. Mr. Tulloch had 4,914 RSUs outstanding at December 31, 2021.
|
| | 3032
| 20222023 Proxy Statement
|
Proposal 3: APPROVAL OF, ON AN ADVISORY (NON-BINDING) BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS General The Compensation Committee values the perspectives of stockholders regarding our NEO compensation philosophy and program through an annual “say on pay” advisory vote. At the 2022 annual meeting of stockholders, stockholders representing over 96% of the votes cast approved, on an advisory basis, the compensation paid by us to our NEOs. As part of the Board’s commitment to continuous review and improvement of governance, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and as required by Rule 14a-21 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Board is providing our stockholders with an opportunity to cast an advisory (non-binding) vote on a resolution to approve the compensation of our NEOs. The principal objective of our compensation programs is to attract, retain and motivate key executives responsible for our success by rewarding individual and Company performance in a way that is aligned with the Company’s and stockholders’ short and long-term interests. We do so by providing incentives that reward achievement of performance goals that are designed to correlate with the enhancement of stockholder value and tying a portion of our NEOs’ compensation to increases in stockholder value. We believe our NEO compensation program strikes an appropriate balance between the implementation of responsible, measured compensation practices and the effective provision of incentives for our NEOs to exert their best efforts for our success. We discuss our compensation philosophy and programs for the Company’s NEOs, the decisions made by the Compensation Committee under those programs, and the process utilized, and factors considered in making those decisions for our NEOs in 2022in more detail below in this proxy statement. For a discussion of how the timing of 2021 and 2022 compensation decisions significantly impacted the compensation for our CEO in 2022, as disclosed in this proxy statement, see “Executive Compensation – Key Impacts to 2022 Compensation Program” and “Executive Compensation – 2022 NEO Compensation Determinations.” As required by Section 14A of the Exchange Act, we are asking for stockholder approval of the compensation of our NEOs. The Board recommends that stockholders approve such compensation by approving the following advisory resolution: RESOLVED, that the stockholders of Porch Group, Inc. approve, on an advisory basis, the compensation of the Company’s NEOs identified in the 2022 Summary Compensation Table included in this proxy statement as such compensation is described pursuant to Item 402 of Regulation S-K in this proxy statement (which disclosure includes the Compensation Discussion and Analysis and the compensation tables and accompanying footnotes and narratives under the heading “Executive Compensation” in this proxy statement). As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s NEO compensation program, values the opinions expressed by stockholders. If there are a significant number of negative votes, we will seek to understand the concerns that influenced the vote, and will consider whether any actions are necessary to address those concerns. The Board has adopted a policy providing for an annual advisory vote to approve NEO compensation. Unless the Board otherwise modifies this policy, the next advisory vote will be at the 2024 annual meeting of stockholders. Vote Required The affirmative vote of a majority of the votes duly cast on this item is required to approve this proposal. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on this proposal. | | ir.porchgroup.com | On March 23, 2021, Mr. Vengalil was granted an RSU award for Board and committee service for the period from December 20, 2020 through June 9, 2021, which RSU award vested in full on June 9, 2021. Mr. Vengalil had 4,397 RSUs outstanding at December 31, 2021.
|
(13)
| On March 23, 2021, Ms. Whelan was granted an RSU award for Board and committee service for the period from December 20, 2020 through June 9, 2021, which RSU award vested in full on June 9, 2021. Ms. Whelan, a director of the former special purpose acquisition corporation (SPAC), resigned from the Board on August 12, 2021, following the successful completion of the business combination and, as a result, 4,641 RSUs outstanding on of the date of resignation were forfeited.33
|
Recommendation of The Board | |
| THE BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. |
EXECUTIVE COMPENSATION Compensation Discussion and Analysis Executive Summary
We are providing our initial CD&A inIn this section of the proxy statement, followingwe discuss our compensation philosophy and programs for our NEOs, the end ofdecisions made by the Compensation Committee under those programs, and the process utilized and factors considered in making those decisions for our emerging growth company status at year-end 2021. This CD&A describesNEOs in 2022.
For the philosophy, objectives, process and components of our 20212022 compensation program for our NEOs, the following namedCompensation Committee worked with its executive officers (collectively,compensation consultant to design a program that retained certain aspects of the “Named2021 executive compensation program, while incorporating objective performance measures to increase the focus on incentivizing our NEOs and other key employees to deliver value to our stockholders.We expect that the Company’s NEO compensation philosophy and programs will continue to evolve to reflect its status as a maturing publicly-traded company, while still supporting the Company’s overall business and compensation objectives. Our NEOs In accordance with SEC rules and regulations, our NEOs for 2022 include our Chief Executive Officers” or “NEOs”).Officer, Chief Financial Officer and Chief Operating Officer. Also, in accordance with SEC rules, Marty Heimbigner, our former Chief Financial Officer, is an NEO for 2022 based on his service as the Company’s Chief Financial Officer during the year. Mr. Heimbigner separated from the Company on December 15, 2022. MattMatthew Ehrlichman
| | Marty HeimbignerShawn Tabak
| | Matthew Neagle | Chief Executive Officer and Chairman ■ Porch Group ChairmanCEO and CEOChairman since December 2020 ■ Legacy Porch CEO since 2011 | | Chief Financial Officer ■ Legacy Porch and Porch Group CFO since June 2020
■
Announced separation on March 30,November 2022 with service as CFO to continue for up to six months
| | Chief Operating Officer ■ Legacy Porch and Porch Group COO since July 2020 ■ Legacy Porch Chief Revenue Officer from March 2017 to July 2020 ■ Legacy Porch employee since 2013 |
Key Impacts to 2022 Compensation Program Upon becoming a publicly-traded company, the Compensation Committee supported a flexible approach to executive compensation to guide the transition, in terms of purpose, objective and terms, enabling the Compensation Committee to make compensation decisions tailored to each NEO. Thereafter, in early 2022, the Compensation Committee, together with input from management and counsel from the Compensation Committee’s advisors, held a significant number for formal and informal meetings to review appropriate benchmarking, and took steps to design and implement programs reflective of a maturing publicly-traded company. The compensation disclosed for Messrs. Ehrlichman and Neagle in 2021 and 2022 were significantly impacted by the timing of the Compensation Committee’s approvals. Although the Board approved the “Together We expect thatWin” (“TWW”) program in September 2021 (a special, one-time equity award program for all Company employees on the payroll as of August 1, 2021, and having an equity award pool with a grant value of $25.1 million), the equity award pool did not include the Company’s executive officers, as the Compensation Committee intended to align such program with its annual equity awards to our NEOs. On February 10, 2022, the Compensation Committee granted Mr. Ehrlichman a TWW RSU award, along with a 2021 annual PRSU award and a 2021 annual RSU Award, collectively, the “February 2022 Grants.” For a detailed discussion of Mr. Ehrlichman’s February 2022 Grants, see “Equity Awards Granted in February 2022 relating to 2021 NEO Compensation – CEO.” Previously, on November 16, 2021, the Compensation Committee granted Mr. Neagle a TWW RSU award, along with a 2021 annual PRSU award and a 2021 annual RSU award. As a result of the foregoing timing of the February 2022 Grants, Mr. Ehrlichman’s reported compensation for 2022 includes multiple years of equity awards. Furthermore, in accordance with FASB ASC Topic 718, the design of the TWW RSU and annual equity awards result in the full grant date fair value of all such awards being recognized as of the grant date in February 2022. This is in contrast to the PRSUs granted in May 2022, which under FASB ASC Topic 718 results in the grant date fair value being recognized only for one-third of the PRSU award (and the maximum to be earned on the first tranche of target). Thus, the February 2022 Grants represent approximately 85% of Mr. Ehrlichman’s reported compensation in 2022. 2022 Realizable Pay – CEO The Compensation Committee considers every element of compensation, both potential and realized, when reviewing the effectiveness of the Company’s NEO compensation programs. Realizable Pay, as defined below, considers the intrinsic value of equity awards, providing a perspective on how changes in stock price and actual incentive award payouts impact the values of awards granted within a given period. The table below demonstrates the difference in Mr. Ehrlichman’s total compensation reported in the Summary Compensation Table versus Realizable Pay. For the period encompassing fiscal years 2020, 2021 and 2022, the three-year average reports Realizable Pay at only 28% of the totals reported in the Summary Compensation Table. 
Mr. Ehrlichman’s Realizable Pay as of December 31, 2022 is provided in the table below. | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($) | Bonus(1) ($) | Restricted Stock Awards (RSUs) ($) | Performance Share Awards (PRSUs)(2) ($) | Stock Option Awards ($) | All Other Compensation ($) | Total ($) | Matt Ehrlichman | | 2022 | | | 642,230 | - | 1,976,335 | 1,135,333 | - | 47,926 | 3,801,824 | Chief Executive Officer and Chairman | | 2021 | | 450,000 | 822,840 | - | - | - | 0 | 1,272,840 | | | 2020 | | | 361,872 | 1,500,000 | 38,801 | 1,880,000 | - | 3,322 | 3,783,995 | | | 3-Yr Avg | | 484,701 | 774,280 | 671,712 | 1,005,111 | - | 17,083 | 2,952,886 |
(1) | Mr. Ehrlichman was eligible for a non-equity incentive plan target of $600,000 in 2022, however the year-end performance threshold was not met and no payment was made. |
(2) | Values listed for PRSUs represent realizable values for equity awards granted in the year listed using the share price as of fiscal year end 2022. The 2020 PRSU value represents the award made on December 21, 2020 of 1,000,000 shares, of which two-thirds were earned as of December 31, 2022, and the remaining one-third is subject to a performance period still in progress, which expires in December 2023, and valued as the target number of shares. The 2022 PRSU value represents the sum of realizable values for two separate PRSU grants within the year: (1) grant on February 10, 2022 of 589,160 target shares, of which one-third did not meet the performance threshold for any payout and are valued at zero, and the remaining two-thirds which are subject to a performance period still in progress and are valued at the target number of shares; and (2) grant on May 20, 2022 of 211,127 target shares, of which all shares are subject to a performance period still in progress are valued at the target number of shares. |
The Company’s Summary Compensation Table is provided on page 51 which includes detail on the pay elements in total compensation. The Grants of Plan-Based Awards table is provided on page 52, which includes details on equity and non-equity incentive plan awards granted in 2022. Details for outstanding equity awards are included on page 53 in the table Outstanding Equity Awards at 2022 Fiscal Year-End. The Company’s Pay versus Performance disclosure is provided on page 61. The Pay versus Performance table includes details on "compensation actually paid” which differs from both Summary Compensation Table total compensation and realizable pay. “Compensation actually paid” as defined by the SEC focuses on the changes in value within the time period for all outstanding awards granted both prior to and within the measured time period. Realizable Pay is defined as the total of the following pay elements. The period end date for each year in the table above refers to December 31, 2022. | ■ | Salary: as reported in the Summary Compensation Table. |
| ■ | Bonus: sum of “Bonus” and “Non-Equity Incentive Plan Compensation” as reported in the Summary Compensation Table. |
| ■ | Restricted Stock Awards (RSUs): calculated as number of all shares granted during the period, valued at the share price at the period end date. |
| ■ | Performance Share Awards (PRSUs): calculated as number of all shares earned during the period (for completed performance periods) valued at the share price at the period end date. For performance award cycles that remain outstanding, the award is valued using the target number of shares at the period end date. The use of target shares for outstanding performance-based equity is customary in calculating Realizable Pay; however, it does not reflect the actual probability of performance achievement as of the end of the applicable period. |
| ■ | Stock options: calculated as number of options granted, valued at the spread between the strike price and share price at the period end date. Out-of-the-money options as of the period end date are valued at zero. |
| ■ | All Other Compensation: as reported in the Summary Compensation Table. |
Our 2022 NEO Compensation Program For the 2022 NEO compensation program, the Compensation Committee continued to transition the Company’s NEO compensation philosophy and program will continuepractices to evolve to reflect its status asbe reflective of a maturing publicly-tradedpublic company while still supportingof similar maturity, market and operations. In particular, the Company’s overall business and compensation objectives. The Compensation Committee is responsible for administeringworked with its executive compensation consultant to design a program that retained certain aspects of the Company’s executive2021 NEO compensation program, and has engaged with third party professional service firmsincorporated objective measures to help adviseincrease the focus on the Company’s executive compensation program.incentivizing our NEOs and other key employees to deliver value to our stockholders. Our Compensation Philosophy
key objectives OF OUR COMPENSATION philosophy: | ■ ProvideLink NEO compensation to Company performance through utilization of performance-based equity as a significant portion of total compensation opportunities that align
■ Attract and retain a highly qualified executive leadership team ■ Motivate our executive leadership team to the competitive marketexecute our long-term growth strategy ■ Allow for above-market total compensation based on performance, including through utilization of performance-based equity as a significant portion ofthat aligns to the equity grant valuecompetitive market ■ Include appropriate risk mitigants in incentive programs |
The Compensation Committee is committed to designing our incentive programs to align with our long-term strategy and further enhance pay-for-performance. In order to achieve the Company’s strategic vision of reinventing the homeownership journey, the Compensation Committee and Company are committed to providing a market-competitive total compensation program to attract and motivate a competent and highly-qualified workforce and to retain top-performing industry employees. Our compensation philosophy also intends to address the shared interests of many of the Company’s stakeholders. In
2021, the Compensation Committee utilized a preliminary, flexible philosophy to guide our transition as a new public company.
The Compensation Committee uses benchmarking for theour NEOs as a reference point to align with the competitive market. In 2021,2022, the Compensation Committee targeted the market median for base salary and target total cash compensation, and the 75th percentile of market for annual long-term equity awards (excludingawards; provided, however, the Together We Win Program described below, andCompensation Committee targeted above the 75th percentile in limited circumstances).for each of the February 2022 Grants to Mr. Ehrlichman due the significant focus on performance-based equity with very challenging performance goals. However, the Compensation Committee retains and utilizes significant discretion and flexibility to vary from benchmarking targets based on Company and individual performance, the person’s scope of role, skills, experience and criticality to the business, internal pay equity and similar factors. We provide our stockholders with the annual opportunity to cast an advisory vote on our NEO compensation through a Say on Pay proposal. At the 2022 annual meeting of stockholders, stockholders representing approximately 96% of the votes cast approved, on an advisory basis, the compensation paid by us to our NEOs. The Compensation Committee is committedconsidered stockholder support for our NEO compensation policies and practices based on these results, and although no material changes were made to designing our incentive programscompensation policies and practices in 2022 or 2023 as a result, the Compensation Committee will continue to align withassess the NEO compensation program in light of our long-term strategytransition to having a NEO compensation philosophy and further enhance pay-for-performance. 2021 Performance Highlights
Porch is a vertical software platform for the home, providing software and services to over 24,000 home services companies, such as home inspectors, mortgage companies and loan officers, title companies, moving companies, real estate agencies, utility companies, roofers, and others. Porch helps these service providers grow their business and improve their customer experience. Porch also makes the moving process easier for homebuyers by helping them save time and make better decisions about critical services, including insurance, warranty, moving, security, TV/Internet, home repair and improvement. For certain services such as insurance and warranty , Porch can provide its own product to consumers. Porch has two reportable segments: the Vertical Software segment and the Insurance segment.
In 2021, our first full year asrelated practices that are reflective of a public company we continuedof similar maturity, market and operations. The Compensation Committee will continue to growconsider the results of future Say on Pay votes, including results for the current year when available, when making future compensation decisions for our position in our key verticals such as home inspection, expanded into new software verticals such as mortgage and title, enhanced our insurance and warranty offerings via the acquisitions of Homeowners of America and American Home Protect, increased our insurance footprint into many new states, and raised capital to fund future growth.NEOs.
| | 2021 Key financial and operational highlights38
| 2023Proxy Statement |
| Summary of 2022 NEO compensation programS | ✓■
Total Revenue of $192.4 million, an increase of 166% from total Revenue of $72.3 millionAdopted a Senior Level Performance Bonus Plan for 2020
✓
GAAP net loss of $106.6 million, compared to a GAAP net loss of $54.0 million for 2020
✓
Adjusted EBITDA (loss)* for the full year 2021 totaled ($24.0) million or -12.5% of total Revenue, an improvement on a percentage basis from the Adjusted EBITDA (loss) of ($18.3) million or -25% of total Revenue for the full year 2020.
✓
Software and services to companies:
2022, which features: o Average numberUse of companies increasedkey, objective Company performance metrics (revenue and Adjusted EBITDA (loss) as a percentage of revenue) representing 85% of the target bonus, with payouts subject to 24,603 from 11,157 in Q4 2020
achievement based on a combined performance grid of both metrics o Average revenue per company per month increased 26%Compensation Committee discretion for 15% of the target bonus, as the Company transitions from a fully discretionary bonus program for NEOs in prior years to $699 from $556an objective, performance-based plan
o A Committee-approved adjustment policy for performance metrics that provides objective methodology for addressing extraordinary events o Fixed payout caps of 200% of the target bonus of each NEO o Compensation Committee’s annual discretion to pay earned bonus in Q4 2020cash or equity | ✓■
Monetized services for customers:
Approved Long-Term Incentive annual equity program, which features: o NumberMix of monetized services was 260,352 in Q4 2021, up from 169,949 in Q4 2020
RSUs and PRSUs, where PRSUs represent a significant portion of program o AverageUp to one-third of the target PRSUs may be earned each year if specified stock price hurdles and annual revenue per monetized service* was $132, a 35% increase from $98condition is satisfied, with up to 200% of the target PRSUs eligible to be earned in Q4 2020
the third performance year based on specified stock price hurdles and annual revenue condition; any earned PRSUs only vest at the end of the three-year performance period; fixed payout cap of 200% of target PRSUs ✓o
$325 million of cash as of year-end
RSUs subject to time-based vesting over approximately four years | | |
2021 insurance segment highlights
| ✓■
greater than 300,000 policyholders
Employment agreements with CEO, CFO and COO ✓
greater than a $400 million gross written premium run rate
✓
89% policyholder retention rate as of year end
✓
expanded into an additional six states for a total of 12 as of year end
|
2021 software segment highlights
| ✓o
expanded into mortgage and title verticals
✓
enhanced customer offerings
✓
began offering brands differentiated marketing to movers with the acquisition of V12
|
* See Appendix C of this Proxy Statement, entitled “Use of Non-GAAP Financial Measures,” for the reconciliation of Adjusted EBITDA (loss) to net income, which is the most directly comparable measure under generally accepted accounting principles in the United States (“GAAP”), and Adjusted EBITDA (loss) as a percentage of Revenue. See Appendix D of this Proxy Statement, entitled “Use of Non-GAAP Key Performance Measures,” for the reconciliation of Average Revenue per Monetized Service.
Public Company Transition and An Evolving NEO Compensation Program
The Compensation Committee reviews and approves, or from time to time may recommend to the independent directors of the Board to approve, the compensation for the NEOs and the design and implementation of the NEO compensation program. The Compensation Committee also is responsible for overseeing and evaluating related
policies. Our business combination in December 2020 had a significant impact on our NEO compensation program in 2021, and we continue to evolve our compensation practices as described in detail below.
| | | | | NEO Compensation
| | | 2021
|
| Considerations for 2022 and Beyond
| Compensation Philosophy
| | ■
Preliminary, flexible philosophy guiding transition for a new public company
■
Identify and create new peer group as a public company
|
| ■
An evolving compensation philosophy as we mature as a public company, including enhancing and balancing incentives that align with pay-for-performance
■
Assess comparable peers as we evolve and mature as a public company, reflecting changes in revenue and market capitalization, among other factors
| Short-term Incentive
| | ■
No guaranteed bonuses, subject to discretion for new hires
■
Discretionary bonus program, with fixed payout caps
■
Utilizing Company performance measures as the primary guideposts
■
Company discretion to pay in cash or equity awards, following the performance period
|
| ■
No guaranteed bonuses, subject to discretion for new hires
■
A pre-approved, objective bonus plan, with fixed payout caps, that is performance based
■
Consideration to lock-in payment of cash, equity or a ratio thereof when establishing the program for the specified year
| Long-term Incentive
| | ■
Equity grant programs tailored to each NEO with different purposes, objectives and terms
■
Use of stock options, RSUs and performance-based RSUs (PRSUs)
■
PRSUs representing significant portion of program, with stock price hurdles as performance measure
|
| ■
An annual equity program, generally with consistent terms
■
Establish annual grant timing within 30 days following fourth quarter earnings announcement
■
Use of RSUs and PRSUs, although equity vehicles may evolve over time
■
We expect PRSUs to represent a more significant portion of program over time
|
NEO Compensation
| | | 2021
|
| 2022 and Beyond
| Employment agreements and severance/change-in-control benefits
|
| ■
Offer letters for new hires; severance and change-in-control benefits primarily in equity award agreements
■
Double-trigger change-in control benefits, except limited new hire benefit for CFO in connection with Legacy Porch transaction
|
| ■
Entered into employment agreements and/or amended offer letters with the NEOs in February 2022, with specifiedSpecified severance and change-in-control benefits superseding equity award agreement treatment
■
Continuation of double-triggero
Double-trigger change-in control benefits | Equity-related policies
|
| ■
Prohibition on hedging and pledging of our securities
■
Recoupment provisions in certain equity award agreements
|
| ■
Prohibition on hedging and pledging of our securities
■
Recoupment policy applicable to the NEOs
■
Executive stock ownership guidelines
| Limited use of perquisites and benefits
|
| ■
No defined benefit, supplemental executive retirement or nonqualified deferred compensation plans
■
No tax gross-ups for severance payments
|
The timing of compensation determinations by the
2022 NEO Compensation Committee for the 2021 NEO compensation program—in particular, the PRSUs and RSUs granted to Mr. Ehrlichman in February 2022, which were considered part of 2021 compensation by the Compensation Committee—were impacted by the change of its independent compensation consultant in April 2021 and the change in Compensation Committee membership (including the Chair role) in August 2021 due to director resignations. The departing directors were part of the PTAC special purpose acquisition company, represented two of the three Compensation Committee members (including the Chair), and each determined to conclude his or her Board service after helping guide Porch through a successful public company transition. Two new directors were appointed to the Compensation Committee in September 2021, and a new Chair was concurrently appointed.Components Further, beginning in our proxy statement for our 2023 Annual Meeting of Stockholders, we will annually disclose our CEO pay ratio.
2021 Key Compensation Components
| | | | | | | Element | | Philosophy & Objective |
| Component
|
| Key Features
| Salary | | ■ Attracts talent in a competitive market ■ IncentivizesIncreases are not automatic or guaranteed, which incentivizes achievement of individual and Company performance goals
■ Provides stable income during downturns in our industry or economy |
|
|
| ■
Established initially based on benchmarking and internal pay equity, as well as expertise and experience
■
Annual review based on benchmarking, individual and Company performance, job responsibilities and internal pay equity
| Short-Term Incentive Awards | | ■ Although discretionary,Bonus Plan supports a “pay-for-performance” culture in practice due to a substantial portion of the payout based on two key, objective Company performance metrics
|
| ■ Cash, vested equity awards, or a combinationTarget bonuses based on benchmarking and individual performance assists in motivation of both, at discretion of Compensation Committee
■
Performance metrics are a combination of Revenue and Adjusted EBITDA (loss), with target performance goals aligned with Board-approved budget
|
| ■
Bonus target as percent of base salary (other than for Mr. Heimbigner)
■
Payout range from 0-200% for CEO and 0-175% for COOkey talent
| Long Term Incentive Equity Awards | | ■ Aligns with the long-term interests of stockholders ■ Reinforces long-term strategic business objectives ■ Multiple equity vehicles provide diverse incentives for NEOs – RSUs provide full value on grant to serveand retention, needs, and PRSUs are focused on upsideachievement of specific performance metrics and long-term value creation |
| ■
Grants of PRSUs and RSUs
|
| ■
Three tranches, each tranche earned based upon achievement of stock price hurdle within specified performance period
■
Post-vesting holding period for CEO awards
■
RSUs subject only to time-based vesting
|
2021
2022 NEO Compensation Determinations We compensateAlthough the NEOs throughCompany’s NEO compensation strategy continues to evolve, the Company’s compensation elements continue to consist of a combination of base salary, annual cash bonuses,incentive awards, long-term incentives and other benefits as described below.
BASE SALARY Base salaries are reviewed on at least an annual basis. For Mr. Ehrlichman and Mr. Neagle,Ehrlichman’s annual base salary increases inwas increased to $600,000 (previously $420,000) and his annual target bonus was established at 100% of base salary (with a 0% - 200% bonus payout opportunity determined for 2021). The foregoing changes were each effective October 1, 2021 wereto align with the compensation change timing for Mr. Neagle. In November 2022, Mr. Tabak joined the Company at the discretiona base salary of the Compensation Committee primarily based on benchmarking against our peer group, individual performance and retention factors. As discussed below, due to the change in compensation consultants, as well as our evolving compensation philosophy,$390,000. For 2022, Mr. Neagle’s base salary was reevaluated multiple times during 2021, which resulted in increases to Mr. Neagle’s salary. Accordingly, in March 2021, Mr. Neagle's base salary increased from $310,000 to $360,000remained unchanged at $400,000 per year and indue to his recent compensation change on October 2021 increased to $400,000 per year.1, 2021. In October 2021, Mr. Ehrlichman's base salary increased from $420,000 to $600,000 per year.April 2022, Mr. Heimbigner’s base salary was determined pursuantincreased from $350,000 to his offer letter and remained unchanged following an increase in December 2020 in connection$390,000 per year, effective October 1, 2021 to also align with the closing of our business combination. compensation change timing for Mr. Neagle.
The following table sets forth the base salaries in effect for theour NEOs at December 31, 2020 and 2021.2021and 2022, except for Mr. Heimbigner, who’s last day with the Company was December 15, 2022. | | | | | | | | Name | 2020
($) | 2021
($) | 2021
($) | 2022
($) | Matthew Ehrlichman | 420,000 | 600,000 | 420,000 | 600,000 | Shawn Tabak | | -- | 390,000 | Matthew Neagle | 310,000 | 400,000 | 400,000 | 400,000 | Martin Heimbigner | 300,000 | 350,000 | 350,000 | 390,000 |
2022 SHORT-TERM INCENTIVE AWARDS– SENIOR LEVEL Performance bonus plan Each ofIn May 2022, the NEOs received discretionaryCompensation Committee approved the Senior Level Performance Bonus Plan (the “2022 Bonus Plan”). Pursuant to the 2022 Bonus Plan, Messrs. Ehrlichman and Neagle were each eligible to receive bonuses with respect to 20212022 performance.
Pursuant to Mr. Tabak’s employment agreement, he did not participate in the 2022 Bonus Plan. Pursuant to the Former CFO Offer Letter, Mr. Heimbigner did not participate in the 2022 Bonus Plan; instead he was eligible for a short-term incentive program relating to his anticipated contributions during his transition from the Company. The Former CFO Offer Letter is more fully described below under “CFO Transition Cash Bonus Program.” CEO and COO Targets. For each of Messrs. Ehrlichman and Neagle, the bonus targets remained unchanged for 2022, and were set as a percentage of base salary (using the actual eligible paid salary in the applicable year). The establishment of theOn October 1, 2021, Mr. Neagle’s target bonus targets for the 2021 performance year for Mr. Ehrlichman and Mr. Neagle, and the subsequent increase for Mr. Neagle, were at the discretion of the Compensation Committee and primarily based on benchmarking against our peer group, individual performance and retention factors, and specifically, with respectwas changed from 40% to Mr. Neagle, this depth of experience and leadership was viewed as being critical to the continued growth of the company.100%. The following table sets forth the bonus targets in effect for Messrs. Ehrlichman and Neagle in 20202021 and 2021.2022. | | | Name | 2021 | 2022 | Matthew Ehrlichman | 100% | 100% | Matthew Neagle | 100% | 100% |
| | | Name | 2020 | 2021 | Matthew Ehrlichman | ― | 100% | Matthew Neagle | ― | 100% |
As noted above, in 2021,Messrs. Ehrlichman and Neagle’s bonuses under the NEO bonusesterms of the 2022 Bonus Plan were considered discretionary. Although no formal bonus plan was established by the Compensation Committee, the Compensation Committee was guided by and reliedbased on the samefollowing components:
| ■ | 85% of the target bonus was earned based upon the achievement of two objective Company performance metrics, Revenue and Adjusted EBTIDA (loss) as a percentage of Revenue (each as defined below), for the annual performance period of 2022. The performance goals to achieve a target bonus were based upon the Company’s 2022 budget, subject to adjustments approved by the Compensation Committee in accordance with its objective adjustment policy. This performance-based portion had a threshold and maximum bonus opportunity of 50% and 200% of the applicable target bonus based upon an combined performance grid for both metrics; and |
| ■ | 15% of the target bonus was earned in the Compensation Committee’s discretion. This discretionary portion had a maximum bonus opportunity of 200% of the applicable target bonus. |
The target performance measures utilized for the corporate bonus plan for key corporate employees that do not work directly for a business unitgoals – the achievement of a combination of Revenue and Adjusted EBITDA (loss) against the Company’s 2021 budget approved by the Board in January 2021. These performance metrics, which areas a percentage of Revenue – were shared publicly are also reviewedin 2022, as approved by the Audit Committee. TheThese performance goals established under the corporate bonus plan, further described below, were intended to be reasonably challenging and designed to appropriately incentivize and reward strong performance. Our The Compensation Committee determined that it was appropriate to use the performance metrics described above because they are viewed as key performance metrics aligned with profit and loss, and earnings performance and are viewed as supportingsupport overall stockholder value creation. Porch management uses theseWe use Adjusted EBITDA (loss) as a percentage of Revenue, a non-GAAP financial measuresmeasure, as a supplemental measuresmeasure of Porch’sthe Company’s financial performance, for internal budgeting and forecasting purposes, to evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs. Porch believesWe believe that the use of thesethis non-GAAP financial measuresmeasure provides investors with useful information to evaluate Porch’sthe Company’s operating and financial performance and trends and in comparing Porch’s financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, Porch's definitionsour definition and methodology in calculating thesethis non-GAAP measuresmeasure may not be comparable to those used by other companies. The corporate bonus plan2022 Bonus Plan utilizes the same definition of Revenue and Adjusted EBITDA (loss) as a percentage of Revenue as are used for purposes of the Company’s external reporting to stockholders with adjustments (if any) approved on an exception basis by the Compensation Committee as detailed below.
| ■ | Revenue is defined as GAAP total Revenue. |
| ■ | Adjusted EBITDA (loss) as a percentage of Revenue is defined as Adjusted EBITDA (loss) divided by GAAP total Revenue, where Adjusted EBITDA (loss) is defined as net income (loss) adjusted for interest expense, net, income taxes, other expenses, net depreciation and amortization, certain non-cash long-lived asset impairment charges, stock-based compensation expense and acquisition-related impacts, including compensation to the sellers that requires future service, amortization of intangible assets, gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, gain or loss on divestures and certain transaction costs. |
| ■ | Adjusted EBITDA (loss) as a percentage of Revenue is defined as Adjusted EBITDA (loss) divided by GAAP total Revenue. |
See Appendix CB of this Proxy Statement,proxy statement, entitled “Use of Non-GAAP Financial Measures,” for the reconciliation of Adjusted EBITDA (loss) to net income (loss), which is the most directly comparable measure under generally acceptedGAAP. In addition, the Compensation Committee pre-approved an adjustment policy for the 2022 Bonus Plan, which includes adjustments for accounting principles inchanges and acquisitions. Accounting adjustments will be made if material accounting treatment changes have occurred since the United States (“GAAP”), and Adjusted EBITDA (loss) as a percentage of Revenue. Given our significant acquisition strategy, the corporate bonus plan addressed acquisition impacts onCompany’s approved financial budget for the performance goals when established by management. The plan provided that certain named acquisitions be counted fully towards achievementperiod, regardless of such goals,whether the changes are favorable or unfavorable, and that correspondingdo not reflect underlying performance of the business. Acquisition adjustments to the performance goals wouldmay be made for a specifiedif the timing of an acquisition if it diddoes not close around the time such closing was forecasted. The plan also established that any newforecasted for purposes of budget, and acquisitions for consideration of at least $10 million would be added on a pro forma basis to the performance goals based on a mid-case plan,model approved at the time of the acquisition transaction, adjusting for the post-close period and any relevant seasonality, and the business results of the acquired company would be included in the actual performance. Whenperformance of the Committee evaluatedCompany from the NEO discretionary bonusesdate of acquisition. Any acquisition adjustment must be approved by Mergers and Acquisitions Committee. The purpose of these adjustments is to ensure the measurement of performance reflects factors that management can directly control and that payout levels are not artificially inflated or impaired by acquisition impacts.
Financial Performance Goal Setting. The chart below sets forth the threshold, target and maximum goals for Messrs. Ehrlichman and Neagle after year-end 2021, it utilized the corporate bonus planfinancial performance metrics reflecting such acquisition treatment. In 2021,of the 2022 Bonus Plan established by the Compensation Committee approved the following additional adjustments to such performance metrics as part of evaluating the discretionary bonuses for Messrs. Ehrlichman and Neagle:Committee:
| ■ | Neutralizing certain changes in accounting treatment since the Board-approved budget, including for certain intercompany matters |
| ■ | Neutralizing the impact of certain expenses that were accelerated into 2021 at the request of management |
The final value of the 2021 discretionary bonuses for Messrs. Ehrlichman and Neagle were determined by multiplying their applicable bonus targets by an earned multiplier based on satisfaction of the applicable performance metrics. The earned multiplier is 50% for the CEO and 30% for the COO for threshold performance for the combined metrics (each of which is weighted at 50%), 100% for target performance for the combined metrics and 200% for the CEO (or 175% for the COO) for maximum performance for the combined metrics. The actual performance for Revenue and Adjusted EBITDA (loss) was $192.4 million and -12.5%, respectively. The corporate bonus plan established by management further includes a detailed achievement table for various combinations of the two metrics, which the Compensation Committee also took into consideration when determining the NEO discretionary bonuses in 2021.
| Revenue ($) | Adjusted EBITDA (% of Revenue) | Threshold Performance | 170.0M$260M
| > (13.5%) | Target Performance | 174.0M$305M
| (10.5%) | Maximum Performance | 215.0M$355M
| < (7.5%(7%) | Earned Multiplier – CEO
| 137%
| Earned Multiplier – COO
| 120%
|
2022 Bonus Plan Results. For purposes of the 2022 Bonus Plan including the Permitted Adjustments, our Revenue was approximately $276 million, and Adjusted EBITDA (loss) as a percentage of Revenue was (18)%, which were below the threshold performance level on a combined basis. This performance achievement resulted in no bonus being earned with respect to the achievement of two objective Company performance goals. In addition, pursuantthe Compensation Committee concluded that no bonus was earned with respect to the discretionary portion. Accordingly, there were no payouts under the 2022 Bonus Plan for Messrs. Ehrlichman and Neagle. FORMER CFO transition CASH Bonus program Pursuant to the terms of his 2020 offer letter with the Company,Former CFO Offer Letter, Mr. Heimbigner received severance of $175,000 on April 8, 2022. Pursuant to the terms of the Former CFO Offer Letter, Mr. Heimbigner was eligible for a 2022 transition cash bonus program of $250,000 in the aggregate, with 40% earned upon timely filing of the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2022 (such timely filing, the “10-Q Event”) and, subject to receive,the Company electing to extend Mr. Heimbigner’s transition services thereafter, the remaining 60% earned upon timely filing of the Form 10-K (such timely filing, the “10-K Event”). To earn the bonus, in each case, Mr. Heimbigner was to remain continuously employed in good standing through the applicable milestone date. Mr. Heimbigner earned $100,000, as the 10-Q Event was achieved; which was paid on January 13, 2023. No bonus was earned or paid for 2021,the 10-K Event as Mr. Heimbigner separated from the Company on December 15, 2022. In addition, on account of Mr. Heimbigner’s contributions to the Company in 2022 as of August 2022, and those anticipated to occur thereafter, he was eligible for a discretionary cash bonus with a target bonus of $105,000 in$205,000 per 360-day period, subject to a maximum payout of $247,708. The Compensation Committee approved this discretionary cash or a restricted stock grant with a valuebonus of $200,000 with one-year vesting. Based$170,833, which was paid on the foregoing performance,January 13, 2023. 2022 Long-Term incentive program On May 20, 2022, the Compensation Committee approved such discretionary bonus and Mr. Heimbigner received a cash payment.
Accordingly, the following Short Term Incentive (discretionary) bonuses were earned in 2021.
| | | Name | Earned Bonus (% of Base Salary) | Earned Bonus ($) | Matthew Ehrlichman | 137 | 822,840 | Matthew Neagle | 120 | 433,876 | Martin Heimbigner | ― | 105,000 |
Subject to agreement otherwise, an employee must be employed on the date the Compensation Committee approves the bonus payment in order to be eligible to receive such bonus. The Compensation Committee elected to have the Company pay the NEO discretionary bonuses, as well as the corporate plan bonuses, in cash (60%) and immediately vested RSUs (40%). Accordingly, Mr. Ehrlichman received $493,704 in cash, and 46,743 RSUs, and Mr. Neagle received $260,326 in cash, and 24,647 RSUs. The 2021 bonuses, along with Mr. Heimbigner’s discretionary bonus described above, were paid on April 8, 2022.
ADDITIONAL CFO BONUS PROGRAMS
In addition to the discretionary bonus referenced above, Mr. Heimbigner’s offer letter, as amended, provided for certain additional bonus opportunities in 2021 as set forth below.
| ■ | If the Company had more than two times unrestricted cash or cash equivalents relative to debt before the end of 2021, Mr. Heimbigner was eligible earn an additional bonus, at his election, of $50,000 in cash or $100,000 in restricted stock subject to a one-year vesting period. Based on the Company’s performance, the Compensation Committee approved such discretionary bonus in full, which was paid in cash on April 8, 2022. |
| ■ | If the Company had M&A-related growth in EBITDA of $10 million or more in 2021, he was eligible earn an additional bonus, at his election, of $50,000 in cash or $100,000 in restricted stock subject to a one-year vesting period. Based on the Company’s performance, the Compensation Committee approved such discretionary bonus in full, which was paid in cash on April 8, 2022. |
| ■ | When Mr. Heimbigner’s offer letter was amended in February 2022 the amendment provided that he also was eligible for a special discretionary bonus of up to $100,000 related to the completion of the 2021 financial audit and related controls assessment process to the satisfaction of the Board. This special discretionary bonus was not approved. |
EQUITY AWARDS
The long-term incentive program for Messrs. Ehrlichman and Neagle. The 2022 long-term incentive program reflects the NEOs in 2021 reflected our transition to a new public company, with multiple equity grant programs with different purposes, objectivesCompany’s evolving compensation philosophy and terms. practices by utilizing both PRSUs and RSUs. Each of the equity awards was granted pursuant to the Porch Group, Inc. 2020 Stock Incentive Plan (the “2020 Stock Plan”).
2021 NEO Compensation Program Grants
The grant value of the annual equity awards for each NEO in 2021 that were considered by the Compensation Committee to be part of the 2021 NEO compensation program were as follows. As described below, the Together We Win Program will not be a continuing part of the Company’s annual compensation program.
| | | | Name | Together We Win RSU
($) | 2021 Annual PRSU
($) | 2021 Annual RSU
($) | Matthew Ehrlichman* | 6,000,000 | 3,750,000 | 1,250,000 | Matthew Neagle | 2,200,000 | 800,000 | 1,200,000 | Martin Heimbigner** | ― | ― | ― |
*
| This chart reflects certain PRSUs and RSUs which were granted to Mr. Ehrlichman in February 2022. and are not included in the 2021 Summary Compensation Table due to the timing of grant, although such awards were considered part of 2021 compensation by the Compensation Committee.
|
**
| See below for a description of Mr. Heimbigner’s new hire equity awards granted in 2020 and an additional equity award in 2021.
|
Each PRSU represents the right to receive, upon vesting and satisfaction of the performance conditions, one share of common stock of the Company. The PRSUs vest in one-third installments based on the achievement of specified stock price hurdles. Each such PRSU award vests ratably on a quarterly basis on the first day of each quarter, beginning January 1, 2022, over a 30-month vesting period, provided the applicable NEO continues to serve as an employee of the Company through the applicable vesting date (subject to specified exceptions).
The Compensation Committee determined to use PRSUs with specified stockbased on the key financial measures, in particular, (1) absolute share price achievement hurdles, because such award vehicle is transparent and directly aligned with stockholder value. Further,value, as well as being tied to the Compensation Committee believed it would be challenging to establish effective long-term, objective financial and operational performance goals due to the Company’s recent business combination and its significant growth strategy (including through numerous acquisitions and related integration activities). Each RSU represents the right to receive, upon vesting, one share of common stock of the Company. Each RSU award vests ratably on a quarterly basis on the first day of each quarter, beginning January 1, 2022, over the applicable vesting period (30 months with respect to the 2021 Annual RSU award, and 36 months with respect to the Together We Win Program award), provided the applicable NEO continues to serve as an employee of the Company through the applicable vesting date (subject to specified exceptions).and (2) a revenue component.
Together We Win Program. 2022 LTI Equity Awards – CEO and COOIn September 2021, the Board approved an equity award pool with a. The grant value of $25.1 million (targeting the 75th percentile of compensation survey data provided by Willis Towers Watson) for a special equity award program for all Company employees on the payroll as of August 1, 2021, referred to as the “Together We Win Program.” The $25.1 million equity award pool did not include the Company’s executive officers, as the Compensation Committee intended to align such program with its annualMay 2022 long-term incentive (“LTI”) equity awards tofor Messrs. Ehrlichman and Neagle, which constitute the NEOs. The Together We Win Program was designed to bridge the Company’s transition from a private company compensation model to a public company compensation model and address retention and incentive objectives critical to the Company, and will not be a continuingannualized grant as part of the Company’s annual2022 NEO compensation program. The Together We Win Program equity awards consisted of RSUs that vest ratably on a quarterly basis over a 36-month vesting period. Mr. Heimbigner did not participateprogram are listed in the Together We Win Program, as he received a new hire equity award, along with other bonus opportunities pursuant to his offer letter.
Recoupment Provisions. The annual equity awards and the Together We Win Program equity awards granted to the NEOs in 2021 provide for a forfeiture of such awards (and a clawback of specified proceeds to the extent such awards have vested) for any material breach of specified restrictive covenants related to company policies and additional restrictive covenants, including non-competition, non-solicitation, non-disparagement, assignment of proprietary rights and confidentiality. The award agreements contemplate the amendment of such provisions when the Company adopts a formal clawback policy applicable to the NEOs.
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| 20222023 Proxy Statement
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Name | 2022 Annual PRSU Award
($) | 2022 Annual RSU Award
($) | Matthew Ehrlichman(1) | $3,750,000 | 1,250,000 | Shawn Tabak(2) | ― | ― | Matthew Neagle | 1,250,000 | 1,250,000 | Martin Heimbigner(3) | ― | ― |
(1) | This chart does not reflect certain PRSUs and RSUs which were granted to Mr. Ehrlichman in February 2022 under the TWW Program, and the 2021 Annual RSU Award (CEO) and 2021 Annual PRSU Award (CEO), which are described below. These awards were intended to reflect grants under the 2021 NEO compensation program and are described below under “Equity Awards Granted in February 2022 relating to 2021 NEO Compensation – CEO.” Due to the timing of the grant, these awards are included in the “2022 Summary Compensation Table” and “2022 Grants of Plan-Based Awards.” |
(2) | See “New Hire Award – New CFO” below for a description of Mr. Tabak’s new hire equity award granted in December 2022. |
2021 Equity Awards – CEO.(3) See “Former CFO Transition Arrangement” below for a description of Mr. Heimbigner’s transition arrangement, including information relating to payments in lieu of severance, and payments pursuant to a short-term bonus opportunity and a non-equity incentive program.
| ■ | Understanding the Differences: Grant Date Fair Value of PRSUs in the 2022 Summary Compensation Table vs. Grant Value of PRSUs Approved by the Compensation Committee. As discussed below, the PRSUs awarded to Messrs. Ehrlichman and Neagle in May 2022 may be earned annually over a three-year period based on the attainment of performance goals that are set and measured in each year of the three-year period. This results in differences between the reported PRSU award grant date fair value in the Summary Compensation Table for 2022, which is based on FASB ASC 718, and the target PRSU award grant value that was approved by the Compensation Committee that is detailed in the table above. |
The equitygrant date fair value in the Summary Compensation Table for 2022 is determined under FASB ASC Topic 718, which stipulates that a grant date is established when the underlying terms of the award are fixed. Because the revenue condition for the PRSU awards granted in May 2022 are set on an annual basis, the grant date and associated award grant date fair value are established annually over the three-year performance period. In addition, the grant date fair value in 2022 and 2023 is impacted by the ability to Mr. Ehrlichmanearn only up to one-third of the target PRSU. However, in February2024, up to 200% of the target PRSU may be earned and therefore such grant date fair value may be significantly higher than in the first two years. On the other hand, the Compensation Committee reviewed and approved the PRSUs based on a grant value for the total award (in the amounts noted above), based on benchmarking against the peer group and related market data. | ■ | Grant Values. The grant values were denominated in RSU awards and PRSU awards (for the total target awards to Messrs. Ehrlichman and Neagle, of 633,446 PRSUs and 211,149 PRSUs, respectively) based on the 30-day VWAP of a share of common stock of the Company ending on April 29, 2022, which was also used for all Company employees who were granted annual equity awards in April 2022. |
| ■ | Annual Equity Award (PRSUs). Each of the PRSU awards are subject to two performance goals each year over a three-year performance period (each year, an “Achievement Period”): |
| ● | Absolute share price, based upon the closing price of a share of common stock of the Company being equal to or greater than the specified prices (which were calculated based upon compound annual growth rates of the VWAP Common Stock Price) set forth in the performance grid (see below) over any 20 trading days within any 30 consecutive trading-day period during the applicable Achievement Period (the “Absolute Share Price”), and |
| ● | Trailing twelve-month revenue (the “TTM Revenue Condition”), based upon the Company’s actual annual revenue achieving at least 80% of the revenue as set forth in the Board-approved Company budget for the fiscal year that ends on December 31 of the applicable Achievement Period; provided that, if the TTM Revenue Condition was not achieved in the prior Achievement Period, the TTM |
| | Revenue Condition set forth for the next fiscal year will be increased by the percentage difference between actual revenue and the TTM Revenue Condition for the prior Achievement Period prior to the application of the 80% calculation for the current Achievement Period. |
| Starting Share Price ($5.92)* | 2022
Achievement Period | 2023 Achievement Period | 2024 Achievement Period | Earned PRSUs
(% of Target) | | 15% | $6.81 | $7.83 | $9.00 | 50% of 1/3rd of
Target Award | | 20% | $7.10 | $8.52 | $10.23 | 100% of 1/3rd of
Target Award | | 25% | -- | -- | $11.56 | 150% of Full
Target Award | | 30% | -- | -- | $13.01 | 200% of Full
Target Award |
*The compound annual growth rate (CAGR) values were determined by using VWAP common stock price of the Company upon the grant date of the first tranche. For the 2022 were consideredAchievement Period, the TTM Revenue Condition was $305 million. For 2023 and 2024, the TTM Revenue Condition will be determined by the Compensation Committee as partset forth above. On May 20, 2022, Messrs. Ehrlichman and Neagle were each awarded one-third of histhe target PRSU award, or 211,149 RSUs, and 70,383 PRSUs, respectively, for the 2022 Achievement Period. The date of grant for the one-third of the PRSU award for the 2023 Achievement Period will occur when all the definitive terms for such award are known, i.e. the determination of the 2023 TTM Revenue Condition. Likewise, the date of grant for the final PRSU award for the 2024 Achievement Period will occur when all the definitive terms for such award are known, i.e. the determination of the 2024 TTM Revenue Condition. As such, under FASB Topic 718, the grant date fair value of the 2022 PRSUs approved in May 2022 related to only one-third of the target PRSUs, which could only be earned up to target. For the Achievement Periods in each of 2022, 2023 and 2024, the participant can earn 50% and 100% of one-third of the PRSUs (with straight-line interpolation between threshold and target) based upon the Absolute Share Price achieving threshold and target amounts, provided that the TTM Revenue Condition target is also met for the applicable Achievement Period. For the Achievement Period in 2024, the participant can also earn between 100% to 200% of the full target PRSU award if the Absolute Share Price exceeds target and maximum amounts and the TTM Revenue Condition target is met for 2024; provided, that the maximum payout of the PRSU award is 200% of the target PRSUs for all Achievement Periods. Any earned PRSUs will vest as of the Compensation Committee’s determination of actual performance following the Achievement Period in 2024, subject to the individual’s employment or service with the Company as contemplated in the PRSU Award Agreement as well as the terms of their employment agreements. No PRSUs were earned for the 2022 Achievement Period. In addition, the 2022 actual revenue was lower than the 2022 TTM Revenue Condition by 9.5%, and therefore the 2023 TTM Revenue Condition based on 80% of the budget will be increased by such amount. | ■ | Annual Equity Award (RSUs). Each RSU represents the right to receive, upon vesting, one share of common stock of the Company. On May 20, 2022, Messrs. Ehrlichman and Neagle were each granted 211,149 time-based RSUs. The RSU awards will vest 25% on April 1, 2023, then 1/6th of the remaining RSUs shall vest every 6 months for the next 36 months, subject to the individual’s employment or service with the Company as contemplated in the RSU Award Agreement as well as the terms of their employment agreements. |
| ■ | Recoupment Provisions. The 2022 LTI Equity Awards granted to Messrs. Ehrlichman and Neagle, and the New Hire Award granted to Mr. Tabak, provide for a forfeiture of such awards (and a clawback of specified proceeds to the extent such awards have vested) for any material breach of specified restrictive covenants related to Company policies and additional restrictive covenants, including non-competition, non-solicitation, non-disparagement, assignment of proprietary rights and confidentiality. The award agreements contemplate the amendment of such provisions when the Company adopts a formal clawback policy applicable to our NEOs. |
Equity Awards Granted in February 2022 relating to 2021 compensation. In approving the equity incentive awards to Mr. Ehrlichman for 2021 (including the annual equity grant value greater than the 75th percentile),NEO Compensation – CEO. On February 10, 2022, the Compensation Committee recognizedgranted the February 2022 Grants to Mr. Ehrlichman’s significant leadership sinceEhrlichman. These equity awards were intended to be part of the founding of Legacy Porch in 20112021 NEO compensation program. For detail on the purpose, objectives and throughout our journey as a new public company,decisions made by the Compensation Committee, as well as his ongoing contributionsthe delayed timing of these equity awards, refer to our long-term strategy and criticalitythe earlier discussion in the section called “Key Impacts to our current and future business.2022 Compensation Program.” The grant values for these equity awards were as follows. | | | | | Granted February 10, 2022 | Name | TWW RSU Award
relating to 2021 Compensation Program
($) | 2022 Annual PRSU Award relating to 2021 Compensation Program
($) | 2022 Annual RSU Award relating to 2021 Compensation Program
($) | Matthew Ehrlichman | 6,000,000 | 3,750,000 | 1,250,000 |
As a result of the foregoing timing, Mr. Ehrlichman’s reported compensation for 2022 includes multiple years of equity awards. Furthermore, in accordance with FASB ASC Topic 718, the design of the February 2022 Grants result in the full grant date fair value of all such awards being recognized as of the grant date in February 2022. This is in contrast to the PRSUs granted in May 2022, which under FASB ASC Topic 718 results in the grant date fair value being recognized only for one-third of the PRSU award (and the maximum to be earned on the first tranche of target). Thus, the February 2022 Grants represent approximately 85% of Mr. Ehrlichman’s reported compensation in the Summary Compensation Table for 2022. | ■ | Together We Win Program (RSUs)- TWW RSU Award (CEO)– In February 2022, the Compensation Committee granted a Together We WinTWW Program award with a grant value of $6.0 million.million, which consisted of RSUs that vestratablyon a quarterly basis on the first day of each quarter, beginning October 1, 2021, over a 36-month vesting period, provided he continues to serve as an employee of the Company through the applicable vesting date (subject to specified exceptions). |
| ■ | Annual Equity Award (PRSUs)- 2021 Annual PRSU Award (CEO) – In February 2022, the Compensation Committee granted PRSUs with a grant value of $3.75 million, representing 75% of the annual equity award. One-third of the PRSUs will be earned if, within 36 months following the grant date, the closing price of a share of the Company’s common stock is greater than or equal to $26.00, $28.00 and $30.00, respectively, over any 20 trading days within any 30-consecutive trading day period. period, provided he continues to serve as an employee of the Company through the applicable vesting date (subject to specified exceptions). |
| ■ | Annual Equity Award (RSUs)- 2021 Annual RSU Award (CEO) – In February 2022, the Compensation Committee granted RSUs with a grant value of $1.25 million.million, which consisted of RSUs that vests ratably on a quarterly basis on the first day of each quarter, beginning October 1, 2021, over a 30-month vesting period, provided he continues to serve as an employee of the Company through the applicable vesting date (subject to specified exceptions). |
| ■ | Post-Vesting Holding Period – The PRSUs and RSUs each have a minimum post-vesting holding period of three years from any applicable vesting date (the “Post-Vesting Holding Period”), which the Compensation Committee believes addresses long-term retention and supports alignment with long-term stockholder objectives. |
| ■ | Methodology to Calculate Equity Awards – Under applicable accounting rules,FASB ASC Topic 718, the grant date fair value of the PRSUs and RSUs reflect a discount for the Post-Vesting Holding Period. The $3.75 million grant value for the PRSUs was denominated in a number of PRSUs based on a Monte Carlo valuation (including the Post-Vesting Holding Period discount) in accordance with applicable accounting rules. The $1.25 million and $6.0 million grant values for the RSUs were denominated in a number of RSUs using the 30-trading day average closing price of the Company’s common stock on the business day prior to the grant date, |
| | which average closing price was then discounted for the Post-Vesting Holding Period (aligned with the discount used under applicable accounting rules). |
The resulting annual grants were 883,740 PRSUs and 144,844 RSUs, and the resulting Together We Win Program grant was 695,249 RSUs.
2021 Equity Awards – COO. In approving the equity incentive awards to Mr. Neagle in 2021 (including the annual equity grant value greater than the 75th percentile), the Compensation Committee recognized Mr. Neagle’s significant leadership since joining as an executive of Legacy Porch in 2014 and throughout our journey as a new public company, as well as his ongoing contributions to our long-term strategy and criticality to our current and future business.
| ■ | Together We Win Program (RSUs)– In November 2021, the Compensation Committee granted a Together We Win Program award with a grant value of $2.2 million. |
| ■ | Annual Equity Award (PRSUs)Recoupment Provisions – In November 2021, the Compensation CommitteeThe February 2022 Grants granted PRSUs with a grant value of $0.8 million, representing 40% of the annual equity award. One-third of the PRSUs will be earned if, within 36 months following the grant date, the closing price of a share of the Company’s common stock is greater than or equal to $24.00, $26.00 and $28.00, respectively, over any 20 trading days within any 30-consecutive trading day period. |
| ■ | Annual Equity Award (RSUs) – In November 2021, the Compensation Committee granted RSUs with a grant value of $1.2 million. |
| ■ | Methodology to Calculate Equity Awards – The PRSUs and RSUs awarded to Mr. Neagle do not haveEhrlichman in 2022 provide for a Post-Vesting Holding Period. The $0.8 million grant value for the PRSUs was denominated inforfeiture of such awards (and a numberclawback of PRSUs based on a Monte Carlo valuation in accordance with applicable accounting rules. The $1.2 million and $2.2 million grant values for the RSUs were denominated in a number of RSUs using the 30-trading day average closing price of the Company’s stock on the business day priorspecified proceeds to the grant date.extent such awards have vested) for any material breach of specified restrictive covenants related to Company policies and additional restrictive covenants, including non-competition, non-solicitation, non-disparagement, assignment of proprietary rights and confidentiality. The award agreements contemplate the amendment of such provisions when the Company adopts a formal clawback policy applicable to our NEOs. |
The resulting annual grants were 37,184 PRSUs and 61,542 RSUs and the resulting Together We Win Program grant was 112,826 RSUs.
Awards Granted in 2021 In Connection With 2020 Compensation Programs– COO. Mr. Neagle also received additional equity awards in 2021 related to 2020 compensation programs, includinghaving an aggregate grant value of 51,018 shares$900,000 (the “CFO New Hire Award”), which will be granted in four (4) equal grant installments, where 145,405 RSUs were granted for the initial grant installment (grant value of vested$225,000) and were calculated on the initial grant date of December 1, 2022 using the 30-day VWAP for the Company’s common stock, relating to the Legacy Porch transaction and cancellation of the Neagle Retention Agreement, as further described below, as well as options to purchase 12,643 shares of our common stock relating to a December 2020 milestone award program, scheduled towill vest 25% upon grant, 25%in full on the firstone-year anniversary of the grant datedate. Thereafter, each subsequent grant installment (i.e., years 2 through 4) will be made on, and 50% in 36 equal monthly installments thereafter.
Awards Granted in 2021 In Connection With Lowe’s Shares—COO. In July 2019, Mr. Neagle purchased 316,586 shares of Series A-1 preferred stock and 83,414 shares of Series A preferred stock (the "Lowe's Shares," as further described herein) from Mr. Ehrlichman for a purchase price of $0.25 per share, which was lower than the Company’s most recent valuation of fair market value, calculated in accordance with Section 409Acalculation of the Code. The shares purchased from Mr. Ehrlichman were subject to repurchase rights in favorRSUs relating thereto will be as of the Company, with the repurchase right lapsing upon continued service and the occurrence of a liquidity event in the form of an initial public offering or sale of the Company. The service-based repurchase right lapses with respect to 50% of the shares subject to the award on the secondapplicable anniversary of the initial grant date using the 30-day VWAP for the Company’s common stock preceding the applicable grant date, and will vest in 25% increments on the third and fourth anniversariesapproximately equal installments every six months. The vesting of the grant date. BecauseRSUs is subject to Mr. Tabak’s continued employment on each vesting date, and certain other terms of the purchase price was below fair market valueaward agreement and the 2020 Stock Plan.
employment agreements and arrangementS CEO, New CFO and COO Employment Agreements. In February 2022 (for Messrs. Ehrlichman and Neagle) and November 2022 (for Mr. Tabak), the Compensation Committee approved Company employment agreements. The Compensation Committee believes these agreements improve our ability to attract and retain qualified executives by establishing key terms of employment and providing severance benefits for long-term security. Certain of the provisions included in the employment agreements, including provisions regarding severance, were benchmarked against other companies in our peer group in order to provide reasonable, market-based terms. The employment agreements do not provide for guaranteed salary increases, earned bonuses or equity awards. Further, the employment agreements provide for double-trigger equity acceleration upon a change in control for qualifying terminations, except in limited circumstances if any equity awards are not assumed in the transaction. The Compensation Committee believes that double-trigger equity acceleration benefits are appropriate to mitigate the uncertainty that executive officers can experience while the possibility of a change in control exists and incentivize them to remain with the Company through the change in control event. The severance benefits in such agreements are subject to compliance with restrictive covenants, including non-competition, non-solicitation, assignment of proprietary rights and confidentiality. See "—Potential Payments Upon Termination or Change in Control" for a description of the material terms of the employment agreements, including specified payments in connection with certain termination events and upon a change in control. Former CFO Transition Arrangement. In March 2022, the Company began a search for Mr. Heimbigner’s successor, as the Company and Mr. Ehrlichman was deemed an “economic interest holder” under FASB ASC Topic 718 with respectHeimbigner mutually agreed to and entered into a transition arrangement. In August 2022, the Company approved a second amendment to Mr. Heimbigner’s offer letter, (as amended, the award“Former CFO Offer Letter”) in order to continue to facilitate an orderly transition to a new Chief Financial Officer. Mr. Heimbigner remained as the Company’s Chief Financial Officer until the new Chief Financial Officer was deemed granted byhired. Mr. Heimbigner separated from the Company under FASB ASC Topic 718, although there was no grant date fair value associated with the award because the performance-based vesting condition was not deemed probable at the time Mr. Neagle purchasedon December 15, 2022. The Company agreed to treat such shares. The liquidity event condition was satisfied upon the consummationseparation for purposes of the business combination. In early 2021,applicable provisions of the Board waived the Company’s repurchase right with respect to these shares. The waiver of this right was treatedFormer CFO Offer Letter as a material modification to these shares. As such, Mr. Neagle was also granted 24,404 RSUs that immediately vested to cover the tax consequence that resulted of the modification. The Lowe's shares are those shares of the Company Mr. Ehrlichman purchased from Lowe’s Companies, Inc. Awards Granted“without cause” separation event, as described further below in 2021 In Connection With 2020 Compensation Programs – CFO. On March 11, 2021, Mr. Heimbigner received 13,307 shares of restricted stock having a grant value of $200,000, related to 2020 compensation programs, which vested on the first anniversary of the business combination."—Potential Payments Upon Termination or Change in Control."
OTHER COMPENSATION PRACTICES AND POLICIES Stock Ownership We strongly encourage our executives and non-employee directors to hold an equity interest in our Company. In February 2023, the Compensation Committee amended our stock ownership guidelines to remove unexercised vested stock options from the holding calculation. Each of our executive officers and non-employee directors is required to build and maintain their share ownership to the levels listed below within a period of five years of the later of March 23, 2021 (the effective date of the guidelines) or date the person became an executive officer subject to Section 16 of the Exchange Act or a non-employee director who participates in the Company’s non-employee director compensation program. | ■ | CEO: 6x current base salary |
| ■ | Other NEOs: 2x current base salary |
| ■ | Non-employee directors: 3x annual cash retainer |
Shares owned outright (including shares from unvested time-based restricted-stock and RSUs) will count toward the ownership goals, while shares associated with performance-based restricted stock and PRSUs and unexercised stock options do not count toward compliance with the policy. Messrs. Ehrlichman and Neagle have met their respective ownership levels and it is anticipated that Mr. Tabak will be in compliance with the suggested ownership levels within the requisite time frame. We believe that the stock ownership policy will contribute to the retention of shares from vested RSUs and PRSUs by our executive officers and non-employee directors. In the event that the ownership goals are not achieved within the applicable five-year period, the executive officer would be required to hold 50% of net shares issued upon exercise of stock options or settlement of RSUs and PRSUs (in each case, after payment of any applicable withholding tax obligations) until the guidelines are met. The stock ownership policy is in addition to any holding period requirements that may be required under any equity award. Perquisites. The Company has agreed to reimburse Mr. Ehrlichman for personal legal expenses, not to exceed $60,000 annually, relating to Section 13 reporting to the SEC for his open market purchases of shares of the Company’s common stock. Otherwise, the Company does not currently provide any material perquisites to the named executive officers.our NEOs. 401(k) Plan. The Company maintains, and the named executive officersour NEOs may participate in, the Porch 401(k) Plan, a tax qualified 401(k) retirement savings plan. Each participant may contribute to the plan through payroll deductions, up to 90% of his or her salary and bonus limited to the maximum allowed by the Internal Revenue Service regulations (for 2021,2022, the limit was $19,500,$20,500, with a maximum catch-up contribution of $6,500 for individuals turning 50 years of age or older during 2021)2022). TheOur NEOs were not eligible for a Company does not provide matching contributions to any plan participants. Employment Arrangements. The Company entered into an offer letter with Mr. Heimbigner in connection with his appointment as CFO in June 2020. In February 2022, the Compensation Committee approved Company employment agreements with Mr. Ehrlichman and Mr. Neagle, as well as an amendment to Mr. Heimbigner’s offer letter. The Compensation Committee believes these arrangement improve our ability to attract and retain qualified executives by establishing key terms of employment and providing severance benefits for long-term security. Certain of the provisions included in the employment agreements, including provisions regarding severance, were benchmarked against other companies in our peer group in order to provide reasonable, market-based provisions.
The employment agreements and offer letter do not provide for guaranteed salary increases, earned bonuses or equity awards (except new hire awards in Mr. Heimbigner’s offer letter). Further, the employment agreements provide for double-trigger equity acceleration upon a change in control for qualifying terminations, except in limited circumstances if any equity awards are not assumed in the transaction. The Compensation Committee believes that double-trigger equity acceleration benefits are appropriate to mitigate the uncertainty that executive officers can experience while the possibility of a change in control exists and incentivize them to remain with the Company through the change in control event. Mr. Heimbigner’s offer letter had a limited single-trigger acceleration related tomatch.
the Legacy Porch transaction given his hiring within a short-time period of the planned transaction; the offer letter does not have any further single-trigger provisions. The severance benefits in such agreements are subject to compliance with restrictive covenants, including non-competition, non-solicitation, assignment of proprietary rights and confidentiality.
On April 1, 2022, the Company announced that it had mutually agreed with Mr. Heimbigner to begin a search for Mr. Heimbigner’s successor. In order to assist with an orderly transition of his responsibilities, Mr. Heimbigner is expected to remain as Chief Financial Officer for up to six months following the announcement. The Company will treat such separation for purposes of the applicable provisions of the Agreement as a “without cause” separation event, as described further below in "—Potential Payments Upon Termination or Change in Control." During such transition period, Mr. Heimbigner may be removed from his role at the Company only for “cause”.
See "Named Executive Officer Compensation Tables – Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table" and "—Potential Payments Upon Termination or Change in Control" for a description of the material terms of the employment agreements, including specified payments in connection with certain termination events and upon a change in control.
How Compensation is Determined | | Role of CEO & Management | In determining the compensation of named executive officersNEOs other than Mr. Ehrlichman, the Compensation Committee receives input from Mr. Ehrlichman and leadership in the human resources team.leadership. Mr. Ehrlichman, as founder and CEO of Porch, has the most involvement and knowledge of the Company’s business goals, strategies, performance, and overall effectiveness of the senior management team and each person’s individual contribution to the Company's performance. Other key leaders, most notably Mr. Neagle, as Porch’s COO, provide valuable context on the Company’s human capital management efforts as well as an understanding of peer and general market practices regarding compensation. Management also provides the Compensation Committee with information regarding the individual’s experience, current performance, potential for advancement and other subjective factors. No NEO participates in the final deliberations by the Committee with respect to such person’s own compensation. | Role of Compensation Committee | As detailed further above, the Committee establishes the compensation of our NEOs after reviewing their respective performance against pre-established annual goals, the performance of the Company and individual performance, internal pay equity, benchmarking market data and other factors it deems relevant. It also has used similar considerations to negotiate employment, transition and separation agreements with our NEOs. The Compensation Committee works with management to set the agenda for its regular Committee meetings. The Compensation Committee also has special meetings and informal meetings, and meets regularly in executive session to discuss compensation issues generally outside the presence of management, as well as to review the performance and determine the compensation of Mr. Ehrlichman. The Compensation Committee also regularly consults with outsideits external advisors, including its compensation consultant and legal counsel. | Role of Independent Consultants | WTW. The Compensation Committee engaged WTW (formerly Willis Towers Watson) as its independent compensation consultant beginning in May 2021.2021 and continues to engage WTW. Representatives of WTW are invited to attend various Compensation Committee meetings. Among other matters for the 20212022 NEO compensation program, WTW provided recommendations on an appropriate peer group peer group and other benchmarkingmatters regarding target annual compensation for all named executive officers, as well as detailed information on alternatives forNEOs and the design and implementation of the named executive officer compensation program.
Aon. In connectionvarious agreements with the business combination with Legacy Porch, the Compensation Committee engaged Aon as its independent compensation consultant for executive compensation matters and approved the terms of such engagement. Representatives of Aon were invited to attend various Compensation Committee and Board meetings. Aon advised on the 2020 NEO compensation program, some elements of which continued to be effective for 2021, including the bonus arrangements set forth in Mr. Heimbigner’s offer letter.
Aon advised on certain matters considered by, and in certain cases approved by, the Compensation Committee related to the 2021 NEO compensation program. Among other matters, Aon provided recommendations on an appropriate peer group, peer group and other benchmarking regarding target annual compensation for theour NEOs, as well as detailed information on alternatives for the design and implementation of the 2022 NEO compensation program. Aon’s engagement concluded in April 2021.
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Use of Peer group and Other Market DataCompetitive Positioning
Based on the advice of WTW and theconsideration by Compensation Committee members’ experience with compensation practices in other businesses,members of criteria relevant to peer group selection, the Compensation Committee determined in May 2021 that the following companies were comparable for purposes of evaluating the 2021 compensation program and the target annual compensation for named executive officers. The peer group consists of companies that are:officers: | ■ | U.S. publicly-traded companies on a major national securities exchange, with no bankruptcies or de-listings within the last three years |
| ■ | Within our relevant industries, including internet and direct marketing retail, enterprise software, online services and insurance brokers |
| ■ | Within one-third to three times our revenue and market capitalization |
| ■ | Projecting reasonable revenue growth |
| | | | 2021 and 2022 Peer Group* | | | ■ PROS Holdings,Model N, Inc.
| | | | ■ PubMatic,PROS Holdings, Inc.
| | | ■ Goosehead Insurance, Inc. | | | | ■ Liquidity Services, Inc. | | | | | ■ Quotient Technology Inc. | | | | | |
* QAD, Inc. was among the 2021 peer group, however, it was acquired in November 2021, thus it is no longer a publicly-traded company and therefore not considered among the 2022 peer group. The following criteria were assessed in determining the 2021 peer group: | ■ | Publicly-traded companies on a major national securities exchange, with no bankruptcies or de-listings within the last three years |
| ■ | Within our relevant industries |
| ■ | Within an appropriate revenue range |
| ■ | Projecting reasonable revenue growth |
No changes were made to the 2021 peer group for 2022. In addition to the 2022 peer group, the Compensation Committee also referenced general industry and high-tech survey data provided by WTW in its decisions. For 2023, the Compensation Committee determined the following changes were appropriate given the importance of including insurance companies with the identified revenue criteria to complement the application software/technology focused peer group. | | | | Removals for 2023 | Additions for 2023 | | | | | | | | | | | | | | | | |
| | | | 2023 Peer Group | | | ■ Liquidity Services, Inc. | | | ■ Goosehead Insurance, Inc. | | | | | | ■ Quotient Technology, Inc. | | | | | | | | | | | | |
In additionThe Compensation Committee believes that the adjustments made to our 2021-2022 Peer Group for 2023 are appropriate to better reflect the peer group,changes in our Company since going public, our growth strategy, and the recent change in our Global Industrial Classification System (GICS) Code from (25502020) Internet and Direct Marketing Retail, to (45103010) Application Software.
Compensation Policies and Practices Risk Assessment Consistent with SEC disclosure requirements, the Compensation Committee, also utilized general industrywith the assistance of WTW and high tech survey data provided by WTW in its benchmarking analysis. Formanagement, has assessed compensation policies and practices for Company employees and concluded that such policies and practices did not create inappropriate incentives or encourage behavior to take risks that are reasonably likely to have a material adverse effect on the Together We Win Program, the Compensation Committee further utilized WTW data regarding off-cycle, retention equity awards among companies in the S&P Small-Cap 600 Index.Company. Other Equity-Related Policies Timing Of Equity-Based Grants The Compensation Committee and the Board do not coordinate the timing of equity-based grants to theour NEOs with the release of material non-public information. However, equity-based grants in 2021 were sporadic dueHistorically, the timing of granting annual equity awards to our transition as a new public company, as well as due to the changesexecutive officers and other eligible employees was not predetermined. However, in the Company’s compensation consultant andfuture, the membership of the Compensation Committee described above. As part of the on-going design efforts for 2022, the Compensation Committee expectsCompany will seek to finalize an annual equity program for the NEOs, withmake such grants to be made within 30 days following the announcement of the fourth quarter earnings of each year during an open window period.period, unless circumstances arise that warrant establishing different dates. Off-cycle (non-annual) awards may be made if our CEO and the Compensation Committee deem it necessary for newly-promoted employees, strategic new hires, or in other special or unique circumstances. The award value may be determined by the CEO and the Compensation Committee, respectively, in advance of the actual effective date of the grant. The effective date for an off-cycle award is the first business day of the month following a newly hired/promoted eligible employee’s effective date of hire or promotion, as the case may be. We use the VWAP of a share of Company’s common stock when granting annual long term incentive awards to mitigate any volatility of the stock price. Tax Matters no excise tax gross-ups If a company makes “parachute payments,” Section 280G of the IRS Code prohibits the company from deducting the portion of the parachute payments constituting “excess parachute payments” and Section 4999 of the IRS Code imposes on the payee a 20% excise tax on the excess parachute payments. For this purpose, parachute payments generally are defined as payments to specified persons that are contingent upon a change in control in an amount equal to or greater than three times the person’s base amount (i.e., the five-year average Form W-2 compensation). The excess parachute payments, which are nondeductible and subject to a 20% excise tax, equal the portion of the parachute payments that exceeds one times the payee’s base amount. If a covered employee receives excess parachute payments in any year, the $1 million deduction limitation applicable to the covered employee for such year under Section 162(m) of the IRS Code is reduced (but not below zero) by the amount of the excess parachute payments. Mr. Heimbigner’s offer letter,The CEO, CFO and COO employment agreements, the Former CFO Offer Letter, and the Company’s equity incentive plans (including the award agreements), and the employment agreements with Mr. Ehrlichman and Mr. Neagle (beginning in February 2022) may entitle theour NEOs to receive payments in connection with a change in control that may result in excess parachute payments. However, the Company is not obligated to pay any tax gross-ups with respect to the excise tax imposed on any person who receives excess parachute payments.
COMPENSATION COMMITTEE REPORT
The followingThis report of the Board on executive compensationCompensation Committee does not constitute soliciting material and shall not be deemed to be “soliciting material” or to be “filed” with the SEC nor shall this information befiled, incorporated by reference into or a part of any other filing by the Company (including any future filing made withfilings) under the SEC, whether made beforeSecurities Act of 1933, as amended, or after the date hereof and irrespective of any general incorporation language inExchange Act, except to the extent the Company specifically incorporates such filing.report by reference therein.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our annual reportAnnual Report on Form 10-K for the year ended December 31, 2021.2022.
Submitted by the Compensation Committee of the Board* Board:
Maurice Tulloch, Chair Asha SharmaSean Kell
Camilla Velasquez
* On March 17, 2022, Mr. Tulloch was appointed Chair, Compensation Committee, and member of the Compensation Committee since September 20211. Mr. Kell joined the Compensation Committee and did not participate in the discussions or recommendations regarding the Compensation Discussion and Analysis.
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| 20222023 Proxy Statement
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20212022 Summary Compensation Table
The following table shows information regarding the compensation of the named executive officersour NEOs for services earned during the fiscal year ended December 31, 202,2022, and, to the extent required by SEC disclosure rules, the fiscal years ended December 31, 20202021 and 2019.2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock | | Option | | All Other | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary($)(1) | | Bonus($)(2) | | Awards($)(3)(4) | | Awards($)(3) | | Compensation | | Total | | | Year | | Salary
($)(1) | | Bonus
($)(2) | | Stock Awards
($)(3) | | Option Awards
($)(3) | | Non-Equity Incentive Plan Compensation
($)(4) | | All Other Compensation
($)(5) | | Total | | Matt Ehrlichman | | 2021 | | $ | 450,000 | | $ | 822,840 | | $ | — | | $ | — | | $ | — | | $ | 1,272,840 | | | 2022 | | 642,230 | | | | 12,893,066 | | | | | | 47,926 | | 13,583,222 | | Chief Executive Officer and Chairman | | 2020 | | | 361,872 | | | 1,500,000 | | | 14,964,212 | | | 40 | | | 3,322 | | | 16,829,446 | | | 2021 | | 450,000 | | 822,840 | | | | | | | | | | 1,272,840 | | | | 2019 | | | 1 | | | — | | | — | | | — | | | 2,665 | | | 2,666 | | | 2020 | | 361,872 | | 1,500,000 | | 14,964,212 | | 40 | | | | 3,322 | | 16,829,446 | | Marty Heimbigner | | 2021 | | | 350,000 | | | 205,000 | | | 251,103 | | | — | | | — | | | 806,103 | | | Shawn Tabak | | | 2022 | | 49,500 | | | | 324,253 | | | | | | | | 373,753 | | Chief Financial Officer | | 2020 | | | 161,887 | | | 100,000 | | | — | | | 837,136 | | | — | | | 1,099,023 | | | | | | | | | | | | | | | | | | | | | 2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | Matthew Neagle | | 2021 | | | 348,488 | | | 433,876 | | | 8,866,323 | | | 89,888 | | | — | | | 9,738,575 | | | 2022 | | 409,377 | | | | 1,069,807 | | | | | | | | 1,479,184 | | Chief Operating Officer | | 2020 | | | 232,610 | | | 500,000 | | | 275,888 | | | 72,110 | | | — | | | 1,080,608 | | | 2021 | | 348,488 | | 433,876 | | 8,866,323 | | 89,888 | | | | | | 9,738,575 | | | | 2019 | | | 295,577 | | | — | | | — | | | — | | | — | | | 295,577 | | | 2020 | | 232,610 | | 500,000 | | 275,888 | | 72,110 | | | | | | 1,080,608 | | Marty Heimbigner | | | 2022 | | 391,346 | | 170,833 | | | | | | 100,000 | | 175,000 | | 837,179 | | Former Chief Financial Officer | | | 2021 | | 350,000 | | 205,000 | | 251,103 | | | | | | | | 806,103 | | | | | 2020 | | 161,887 | | 100,000 | | | | 837,136 | | | | | | 1,099,023 | |
| (1) | Reflects base salary earned during the relevant fiscal year. In October 2021, Mr. Ehrlichman'sFor a discussion regarding changes in base salary, increased from $420,000 to $600,000 per year. In March 2021, Mr. Neagle's base salary increased from $310,000 to $360,000 per year, and in October 2021 increased to $400,000 per year. There were no changes to Mr. Heimbigner's base salary in 2021.see section above titled “Base Salary.” |
| (2) | Reflects the total value of Short Term Incentive Awards bonusesdiscretionary cash bonus that werewas paid to named executive officersMr. Heimbigner for performance in the relevant fiscal year (2021), which were paid in cash (40%) and immediately vested RSUs (60%)(2022). Mr. Ehrlichman received $493,704 in cash and 46,743 immediately vested RSUs with a grant value of $329,136; Mr. Neagle received $260,326 in cash and 24,647 immediately vested RSUs with a grant value of $173,550; and Mr. Heimbigner received $105,000. See the section above titled “Compensation Discussion and Analysis—2021 Compensation Determinations—Short Term Incentive Awards”“Former CFO Transition Cash Bonus Program” for a description of the 20212022 discretionary cash bonuses that werebonus paid in 2022. Also reflects total value of awards pursuant to Mr. Heimbigner’s Offer Letter. See the section above titled “Compensation Discussion and Analysis—2021 Compensation Determinations—Short Term Incentive Awards-Additional CFO Bonus Programs” for a description of the additional 2021 cash bonuses that were approved by the Board and paidHeimbigner in 2022 to Mr. Heimbigner.January 2023. |
| (3) | Includes aggregate grant date fair value of awards granted in the year indicated, computed in accordance with FASB ASC Topic 718. The grant date fair value of awards reflects an estimate as of the grant date and may not correspond to the actual value that will be realized by the named executive officers.our NEOs. Option Awards consist of stock options valued using a Black-Scholes model. Stock Awards consist of RSUs and PRSUs valued using the closing price of Porch common stock of the Company on the NASDAQ Stock MarketNasdaq on the grant date and, in the case of the PRSUs, based on the probable achievement of the underlying market condition or performance goals as of the date of grant. Under FASB ASC Topic 718, the vesting condition related to the PRSUs granted to Mr. Ehrlichman in February 2022, is considered a market condition, and not a performance condition. Thesuch PRSUs were valued using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition. Option Awards consist of stock optionsUnder FASB ASC Topic 718, the vesting condition related to the PRSUs granted to Messrs. Ehrlichman and Neagle in May 2022 are considered both a market and performance condition and such PRSUs were valued using a Black-Scholes model.Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the performance condition. For details regarding the assumptions used to calculate these amounts in 2021,2022, see footnote 4 to the table below entitled "2021"2022 Grants of Plan-Based Awards." In addition, see above section titled “Understanding the Differences: Grant Date Fair Value of PRSUs in the 2022 Summary Compensation Table vs. Grant Value of PRSUs Approved by the Compensation Committee.” for a discussion of the differences in the grant date fair values disclosed in the 2022 Summary Compensation Table and the grant value of the PRSU awards granted in May2022 that were approved by the Compensation Committee. |
| (4) | IncludedReflects payment to Mr. Heimbigner for the achievement of the Form10-Q Event bonus, paid in January 2023. See the section above titled “Former CFO Transition Cash Bonus Program” for a description of the 2022 cash bonuses that were paid to Mr. Heimbigner in January 2023. |
| (5) | In connection with SEC reporting and filings for Mr. Ehrlichman’s purchase of shares in the Stock Awards column for Mr. Neagle is $2,512,647 of incremental fair value associated withCompany, the vesting of Mr. Neagle’s Lowe’s Shares, as described below, in 2021. In July 2019, Mr. Neagle purchased 316,586 shares of Series A-1 preferred stock and 83,414 shares of Series A preferred stock (the "Lowe's Shares") fromCompany has agreed to reimburse Mr. Ehrlichman for a purchase price of $0.25 per share, which was lower thanhis personal legal expenses, not to exceed $60,000 annually. In 2022, the Company’s most recent valuation of fair market value, calculated in accordance with Section 409A of the Code. The shares purchased fromCompany reimbursed Mr. Ehrlichman were subject$47,926, for personal legal expenses relating to repurchase rights in favorlegal services for SEC reporting and filings that relate to his purchase of the Company, with the repurchase right lapsing upon continued service and the occurrence of a liquidity eventshares in the formCompany. Mr. Heimbigner received a severance payment of an initial public offering or sale$175,000, paid in April 2022, in connection with his transition arrangement. See the section above titled “Former CFO Transition Cash Bonus Program”” for a description of the Company. The service-based repurchase right lapses with respect to 50% of the shares subject to the award on the second anniversary of the grant date and in 25% increments on the third and fourth anniversaries of the grant date. Because the purchase price was below fair market value and Mr. Ehrlichman was deemed an “economic interest holder” under FASB ASC Topic 718 with respect to the Company, the award was deemed granted by the Company under FASB ASC Topic 718, although there was no grant date fair value associated with the award because the performance-based vesting condition was not deemed probable at the time Mr. Neagle purchased such shares. The liquidity event condition was satisfied upon the consummation of the business combination. In early 2021, the Board waived the Company’s repurchase right with respect to these shares. The Lowe's shares are those shares of the Company Mr. Ehrlichman purchased from Lowe’s Companies, Inc.Heimbigner’s transition arrangement. |
20212022 Grants of Plan-Based Awards
The table below includes information regarding grantsawards of 2022 Bonus Plan, RSUs PRSUs and stock optionsPRSUs to our Named Executive OfficersNEOs during the fiscal year ended December 31, 2021.2022. All equity awards in 2022 were granted pursuant to the 2020 Stock Plan. | | | | | | | | | | | | | | | | | | | | | Esitmated future payouts under equity incentive plan awards (1) | | All Other Stock Awards: Number of shares of stock or units (#)(2) | | All Other Option Awards: Number of securities underlying options (#)(3) | | Exercise or Base Price of option awards
($/Sh) | | Grant date fair value of stock and option awards
($)(4) | Name | | Grant Date | | | Threshold (#) | Target (#) | Maximum (#) | | | | | | | | | Matthew Ehrlichman | | — | | | | | | | — | | — | | — | | — | Matthew Neagle | | 3/11/21 | | | | | | | 26,614 | | | | | | 502,206 | | | 3/26/21 | | | | | | | 24,404 | | | | | | 408,767 | | | 3/26/21 | | | | | | | 187,905 | | | | | | 2,512,647 | | | 4/22/21 | | | | | | | | | 12,643 | | 13.23 | | 89,888 | | | 11/16/21 | | | 11,990 | 24,376 | 37,184 | | | | | | | | 968,420 | | | 11/16/21 | | | | | | | 61,542 | | | | | | 1,579,168 | | | 11/16/21 | | | | | | | 112,826 | | | | | | 2,895,115 | Martin Heimbigner | | 3/11/21 | | | | | | | 13,307 | | | | | | 251,103 |
| | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards
(1) | | Estimated Future Payouts
Under Equity Incentive Plan Awards | | | | | Name | Grant Date | Type of Award | | Threshold
($) | Target
($) | Maximum
($) | | Threshold
(#) | Target
(#) | Maximum
(#) | | All Other Stock Awards: Number of Shares of Stock or Units
(#)(3) | | Grant Date Fair Value of Stock Awards
($)(4) | Matt Ehrlichman | 2/10/22 | PRSU | | | | | | 294,580 | 589,160 | 883,740 | (2) | | | 3,750,003 | | 2/10/22 | RSU | | | | | | | | | | 144,844 | | 1,347,049 | | 2/10/22 | RSU | | | | | | | | | | 695,249 | | 6,465,816 | | | BP | | 255,000 | 600,000 | 1,200,000 | | | | | | | | | | 5/20/22 | PRSU | | | | | | — | 211,127 | 211,127 | (5) | | | 390,585 | | 5/20/22 | RSU | | | | | | | | | | 211,149 | | 939,613 | Shawn Tabak | 12/1/22 | RSU | | | | | | | | | | 145,405 | | 324,253 | Matthew Neagle | | BP | | 170,000 | 400,000 | 800,000 | | | | | | | | | | 5/20/22 | PRSU | | | | | | — | 70,375 | 70,375 | (5) | | | 130,194 | | 5/20/22 | RSU | | | | | | | | | | 211,149 | | 939,613 | Martin Heimbigner | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | AmountRepresents potential threshold, target and maximum payouts under the 2022 Bonus Plan for Messrs. Ehrlichman and Neagle. A portion representing 85% of the target bonus is based on achievement of Revenue and Adjusted EBTIDA (loss) goals for the 2022 annual performance period. This performance-based portion has a threshold and maximum bonus opportunity of 50% and 200% of the applicable target bonus based upon an approved performance grid; and the remaining portion representing 15% of the target bonus may be earned in the Compensation Committee’s discretion. This discretionary portion has a maximum bonus opportunity of 200% of the applicable target bonus. |
| (2) | For Mr. Ehrlichman’s PRSU grant on February 10, 2022, the amounts reported in this columnthese columns represent PRSUs granted to Mr. Neagle whichhim that will be earned if the Company achieves specified stock price hurdleslevels over a 36-month period beginning onfrom the date of grant.grant date. |
(2)(3) | Mr. Ehrlichman did not receive anyEhrlichman’s RSU grants in 2021. However, on February 10, 2022 he received a discretionary grant of 144,844 RSUsshares and 883,740 PRSUs, relating to 2021 performance. See the section above titled "Compensation Discussion and Analysis-Compensation Program Elements-Equity" for a description of the 2021 equity that was granted in 2022. Mr. Neagle received RSU grants under the 2020 Stock Plan on March 11, 2021 for 26,614695,249 shares (in exchange for cancellation of the Neagle Retention Agreement), and March 26, 2021 for 24,404 shares (supplement Lowe's Shares to cover the tax consequence relating to the lapse of the repurchase right with respect to these shares), respectively, both of which vested 100% on the date of grant, and on November 16, 2021, for 61,542 shares, which vests every quartervest quarterly over 30 months and 112,82636 months, respectively. Mr. Ehrlichman’s RSU grant on May 20, 2022 of 211,149 shares which vests every quarter25% on April 1, 2023 and thereafter semiannually in equal increments over the next 36 months. Mr. Heimbigner received a restricted stockTabak’s RSU grant on March 11, 2021, for 13,307, which vestedDecember 1, 2022 of 145,405 shares vests 100% on the first anniversary of the business combination. |
(3) | Messrs. Ehrlichman and Heimbigner did not receive any stock option awards in 2021. The stock options awarded to Mr. Neagle on April 22, 2021 have a ten-year term and vest 25% on the firstone-year anniversary of the grant datedate. Mr. Neagle’s RSU grant on May 20, 2022 of 211,149 shares vests 25% on April 1, 2023 and then monthlythereafter semiannually in equal installments commencing onincrements over the first anniversary of the grant date.next 36 months. |
| (4) | RepresentsEach amount reported in this column represents the aggregate grant date fair value of awards granted in 2021, computed in accordance withthe applicable award which was determined pursuant to FASB ASC Topic 718. The grant date fair value of awards reflects an estimate as of the grant date and may not correspond to the actual value that will be recognized by the named executive officers. RSUs granted during the year were valued based on the closing stock price on the date of grant, or in the casegrant. The calculations of the Lowe’s Shares,grant date fair value of the 187,905 RSUs were valuedPRSU awards discussed in footnotes (2) and (5) are based on a Monte Carlo simulation model. The actual amounts that will be received by our NEOs with respect to these market and/or performance-based awards will be determined at the closing stock price onend of the performance period based upon our actual performance, which may differ from the performance that was deemed probable at the date of the modification (March 26, 2022). Stock options awarded to Mr. Neagle on April 22, 2021 were valued using a Black-Scholes model. PRSUs granted to Mr. Neagle on November 16, 2021 were valued using a Monte Carlo model.grant. The Black-Scholes model incorporates various other assumptions including expected volatility, expected term and risk-free interest rates. For stock and option awards granted to Mr. Neagle during 2021, the Black-Scholes and Monte Carlo pricing model assumptions were as follows: |
| | | | | | | | | | | | | | Grant Date | Expected Term (years) | Risk-Free Interest Rate (%) | Expected Volatility (%) | Assumed Annual Dividend Rate (% of grant date closing price) | Matthew Neagle | 4/22/21 | 5.63 | 0.94 | 60.2 | 0 | | 11/16/21 | 3.00 | 0. | 65.0 | 0 |
| | | | | | | | | | | | | | Grant Date | Expected Term (years) | Risk-Free Interest Rate (%) | Expected Volatility (%) | Assumed Annual Dividend Rate (% of grant date closing price) | Matt Ehrlichman | 2/10/2022 | 3.00 | 0 | 65.0 | 0 | | 5/20/2022 | 0.6 | 1.6 | 75.0 | 0 | Matthew Neagle | 5/20/2022 | 0.6 | 1.6 | 75.0 | 0 |
| (5) | This amount includes the grant date fair value of the first tranche of the PRSU awards granted to Messrs. Ehrlichman and Neagle in May 2022 that may be earned and vested based on the degree to which the financial goals are attained. The lowest possible payout under the threshold number of PRSUs that may be earned is 0% of target, and the maximum number of PRSUs that may be earned is 200% of target. As discussed above in “Executive Compensation- 2022 Long-term Incentive Program – 2022 LTI Equity Awards – CEO and COO,” the performance metrics for the second and third tranches of the PRSU awards granted to Messrs. Ehrlichman |
| | 4852
| 20222023 Proxy Statement
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| and Neagle in May 2022 have not been established. As a result, there is no reportable grant date fair value under FASB ASC Topic 718 for such tranches, and they are not included in this table. The performance metrics for the first tranche were not achieved. |
Outstanding Equity Awards at 20212022 Fiscal Year-End The following table presents information regarding the outstanding stock options and stock awards held by each of the named executive officersour NEOs as of December 31, 2021.2022. The following table does not include Earnout Shares (as defined below) that Messrs. Ehrlichman and Neagle received pursuant to the terms of the merger agreement in connection with the business combination and which were issued to Messrs. Ehrlichman and Neagle on the same terms as the Company’s other equity holders. Earnout Shares beneficially owned by Messrs. Ehrlichman and Neagle are reflected in the section entitled “Security“Security Ownership of Certain Beneficial Owners and Management”Management” on pages 5967 through 6269 of this proxy statement. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | | | Option Awards | | Stock Awards | | | | | | | | | | | | | | | | | | | | | | | Equity | | | | | | | | | | | | | | | | | | | | | Equity | | | | | | | | | | | | | | | | | | | | | | | | Incentive | | | | | | | | | | | | | | | | | | | | | Incentive | | | | | | | | | | | | | | | | | | | | | | Equity | | Plan | | | | | | | | | | | | | | | | | | | Equity | | Plan | | | | | | | | | | | | | | | | | | | | | | Incentive | | Awards: | | | | | | | | | | | | | | | | | | | Incentive | | Awards: | | | | | | | | | | | | | | | | | | | | | | Plan | | Market | | | | | | | | | | | | | | | | | | | Plan | | Market | | | | | | | | | | | | Equity | | | | | | | | | | Awards: | | or Payout | | | | | | | | | | | | | | | | | | | Awards: | | or Payout | | | | | | | | | | | | Incentive | | | | | | | | | | Number of | | Value of | | | | | | | | | | | | | | | | | | | Number of | | Value of | | | | | | | | | | | | Plan | | | | | | Number | | Market | | Unearned | | Unearned | | | | | | | | | | | | | | | Number | | Market | | Unearned | | Unearned | | | | | | | | | | | | Awards: | | | | | | of | | Value of | | Shares, | | Shares, | | | | | | | | | | | | | | | of | | Value of | | Shares, | | Shares, | | | | | | | | Number of | | Number of | | Number of | | | | | | Shares or | | Shares or | | Units or | | Units or | | | | | | | Number of | | Number of | | | | | | Shares or | | Shares or | | Units or | | Units or | | | | | | | | Securities | | Securities | | Securities | | | | | | Units of | | Units of | | Other | | Other | | | | | | | Securities | | Securities | | | | | | Units of | | Units of | | Other | | Other | | | | | | | | Underlying | | Underlying | | Underlying | | | | | | Stock | | Stock | | Rights | | Rights | | | | | | | Underlying | | Underlying | | | | | | Stock | | Stock | | Rights | | Rights | | | | | | | | Unexercised | | Unexercised | | Unexercised | | Option | | | | That | | That | | That | | That | | | | | | | Unexercised | | Unexercised | | Option | | | | That | | That | | That | | That | | | | | | Vesting | | Options | | Options | | Unearned | | Exercise | | Option | | Have Not | | Have Not | | Have Not | | Have Not | | | | | Vesting | | Options | | Options | | Exercise | | Option | | Have Not | | Have Not | | Have Not | | Have Not | | | | Grant | | Commencement | | (#) | | (#) | | Options | | Price | | Expiration | | Vested | | Vested | | Vested | | Vested | | | Grant | | Commencement | | Exercisable | | Unexercisable | | Price | | Expiration | | Vested | | Vested | | Vested | | Vested | | Name | | Date | | Date | | Exercisable | | Unexercisable | | (#) | | ($) | | Date | | (#) | | ($) | | (#) | | ($) | | | Date | | Date | | (#) | | (#) | | ($) | | Date | | (#) | | ($) | | (#) | | ($) | | Matt | | 3/23/2017 | | 3/22/2017 | | 281,856 | (1)(2) | — | | — | | 1.92 | | 3/22/2027 | | — | | — | | — | | — | | | Ehrlichman | | 3/23/2017 | | 5/19/2017 | | 281,856 | (1)(2) | — | | — | | 1.92 | | 3/22/2027 | | — | | — | | — | | — | | | Matthew Ehrlichman | | | 3/23/2017 | | 3/22/2017 | | 281,856 | (1)(2) | — | | 1.92 | | 3/22/2027 | | — | | — | | — | | — | | | | 10/28/2018 | | 9/12/2018 | | 1,078,380 | (2)(3) | 249,088 | | — | | 2.73 | | 10/17/2028 | | — | | — | | — | | — | | | 3/23/2017 | | 5/19/2017 | | 281,856 | (1)(2) | — | | 1.92 | | 3/22/2027 | | — | | — | | — | | — | | | | 6/5/2020 | | 3/31/2020 | | 13 | (4) | 10 | (4) | — | | 3.30 | | 6/4/2030 | | — | | — | | — | | — | | | 10/18/2018 | | 9/12/2018 | | 1,328,468 | (2)(3) | — | | 2.73 | | 10/17/2028 | | — | | — | | — | | — | | | | 12/21/2020 | | — | | — | | — | | — | | — | | — | | — | | — | | 333,333 | (5) | 5,196,661 | (6) | | 6/5/2020 | | 3/31/2020 | | 17 | (4) | 6 | (4) | 3.30 | | 6/4/2030 | | — | | — | | — | | — | | Marty | | 7/29/2020 | | 6/15/2020 | | 88,080 | (1) | 146,800 | (1) | — | | 3.30 | | 7/28/2030 | | — | | — | | — | | — | | | Heimbigner | | 7/29/2020 | | 12/23/2020 | | 58,720 | (1) | 176,160 | (1) | — | | 3.30 | | 7/28/2030 | | — | | — | | — | | — | | | Matthew | | 2/21/2017 | | — | | 30,535 | (1) | — | (1) | — | | 1.92 | | 2/20/2027 | | — | | — | | — | | — | | | Neagle | | 5/15/2017 | | 4/1/2017 | | 770 | (1) | — | (1) | — | | 1.92 | | 5/14/2027 | | — | | — | | — | | — | | | | | | 2/10/2022 | | 10/1/2021 | | — | | — | | — | | — | | 86,907 | (7) | 163,385 | (11) | — | | — | | | | | 2/10/2022 | | 10/1/2021 | | — | | — | | — | | — | | 463,500 | (8) | 871,380 | (11) | — | | — | | | | | 5/20/2022 | | 4/1/2022 | | — | | — | | — | | — | | 211,149 | (9) | 396,960 | (11) | — | | — | | | | | 12/21/2020 | | 12/23/2020 | | — | | — | | — | | — | | — | | — | | 333,333 | (12) | 626,666 | (11) | | | | 2/10/2022 | | 10/1/2021 | | — | | — | | — | | — | | — | | — | | 883,740 | (13) | 1,661,431 | (11) | | | | 5/20/2022 | | 5/20/2022 | | — | | — | | — | | — | | — | | — | | 211,127 | (14) | 396,919 | (11) | Matthew Neagle | | | 6/6/2018 | | 4/1/2018 | | 291 | (1) | — | | 2.07 | | 6/5/2028 | | — | | — | | — | | — | | | | 8/19/2017 | | 7/1/2017 | | 219 | (1) | — | | — | | 1.92 | | 8/18/2027 | | — | | — | | — | | — | | | 6/6/2018 | | 4/1/2018 | | 264 | (1) | — | | 2.07 | | 6/5/2028 | | — | | — | | — | | — | | | | 6/6/2018 | | 4/1/2018 | | 2,599 | (1) | 1,162 | (1) | — | | 2.07 | | 6/5/2028 | | — | | — | | — | | — | | | 8/24/2018 | | 7/1/2018 | | 1,278 | (1) | — | | 2.73 | | 8/23/2028 | | — | | — | | — | | — | | | | 6/6/2018 | | 4/1/2018 | | 2,111 | (1) | 1,056 | (1) | — | | 2.07 | | 6/5/2028 | | — | | — | | — | | — | | | 6/5/2020 | | 3/1/2020 | | 2,201 | (5) | 3,668 | (5) | 3.30 | | 6/4/2030 | | — | | — | | — | | — | | | | 6/6/2018 | | 3/1/2018 | | 1,388 | (1) | 720 | (1) | — | | 2.07 | | 6/5/2028 | | — | | — | | — | | — | | | 6/5/2020 | | 3/1/2020 | | 2,818 | (4) | 4,227 | (4) | 3.30 | | 6/4/2030 | | — | | — | | — | | — | | | | 8/24/2018 | | 7/1/2018 | | 319 | (1) | 2,236 | (1) | — | | 2.73 | | 8/23/2028 | | — | | — | | — | | — | | | 4/22/2021 | | 12/31/2020 | | 8,488 | (6) | 4,155 | (6) | 13.23 | | 4/21/2031 | | — | | — | | — | | — | | | | 6/5/2020 | | 3/1/2020 | | — | (7) | 6,603 | (7) | — | | 3.30 | | 6/4/2030 | | — | | — | | — | | — | | | 11/16/2021 | | 10/1/2021 | | — | | — | | — | | — | | 36,926 | (7) | 69,421 | (11) | — | | — | | | | 6/5/2020 | | 3/1/2020 | | 282 | (4) | 7,609 | (4) | — | | 3.30 | | 6/4/2030 | | — | | — | | — | | — | | | 11/16/2021 | | 10/1/2021 | | — | | — | | — | | — | | 75,218 | (8) | 141,410 | (11) | — | | — | | | | 4/22/2021 | | 12/31/2020 | | 6,321 | (8) | 6,322 | (8) | — | | 13.23 | | 4/22/2031 | | — | | — | | — | | — | | | 5/20/2022 | | 4/1/2022 | | — | | — | | — | | — | | 211,149 | (9) | 396,960 | (11) | | | | | | | 11/16/2021 | | 10/1/2021 | | — | | — | | — | | — | | — | | 61,542 | (9) | 959,440 | (6) | — | | — | | | 11/16/2021 | | 10/1/2021 | | — | | — | | — | | — | | — | | — | | 37,184 | (15) | 69,906 | (11) | | | 11/16/2021 | | 10/1/2021 | | — | | — | | — | | — | | — | | 112,826 | (10) | 1,758,957 | (6) | — | | — | | | 5/20/2022 | | 5/20/2022 | | — | | — | | — | | — | | — | | — | | 70,375 | (14) | 132,305 | (11) | Shawn Tabak | | | 12/1/2022 | | 12/1/2022 | | — | | — | | — | | — | | 145,405 | (10) | 273,361 | (11) | — | | — | | Marty Heimbigner | | | 7/29/2020 | | 6/15/2020 | | 146,800 | (1) | — | | 3.30 | | 7/28/2030 | | — | | — | | — | | — | | | | 11/16/2021 | | 10/1/2021 | | — | | — | | — | | — | | — | | — | | — | | 37,184 | (11) | 968,420 | (6) | | 7/29/2020 | | 12/23/2020 | | 112,546 | (1) | — | | 3.30 | | 7/28/2030 | | — | | — | | — | | — | |
| (1) | This option vests 25% on the first anniversary of the vesting commencement date and in subsequent 1/48th increments for each subsequent month of continuous employment. Options held by Mr. Ehrlichman and the new hire grants awarded to Mr. Heimbigner will vest 50% upon a change in control, with the remaining options vesting in the event of a qualifying termination within 12 months after such change in control, while options held by Mr. Neagle will vest in full upon a change in control subject to Mr. Neagle’s continued employment through such date. The stock option awards that are vested and outstanding on each of September 30, 2022, and the 10-Q Event are exercisable for 2 years and 90 days following separation of employment from the Company. |
| (2) | Because these options may be early exercised for restricted stock, options are reported in this table as “Exercisable.” Please see footnote (1) to this table for the vesting schedule applicable to the option awards. |
| (3) | This option vests 25% on the first anniversary of the vesting commencement date and in subsequent 1/48th increments for each subsequent month of continuous employment. Of the then-unvested shares subject to the option, 50% will vest immediately upon a change in control, with the remaining unvested portion of the option vesting (i) in the event of a qualifying termination of employment within 12 months after such change in control, or (ii) in the event the acquiror does not assume the Company’s rights and obligations under the option. |
| (4) | This option vests 25% on the vesting commencement date and in subsequent 11/13th increments for each month of continuous employment. |
/13th| (5) | With respect to half of the shares subject to this option, 50% vests in one year, with six-month cliff and monthly thereafter and, with respect to the remaining half of the shares subject to this option, 50% vests on the one-year anniversary of the vesting commencement date and monthly thereafter for the following 36 months, subject to continuous employment. |
| (6) | This option vests 25% on the vesting commencement date, 25% on the first anniversary of the vesting commencement date and in 1/35th increments for each subsequent month of continuous employment. |
| (7) | This stock award vests in 1/10th increments every quarter over 30 months. |
(5)(8) | This stock award vests in 1/12th increments every quarter over 36 months. |
| (9) | This stock award vests in 25% increments on the first anniversary of the vesting commencement date and in subsequent 1/48th increments every six months. |
| (10) | This stock award vests 100% on the first anniversary of the grant date. |
| (11) | This value is calculated by multiplying the number of shares subject to this award by $1.88, the closing stock price of a share of Company’s common stock on December 30, 2022, the last trading date in 2022. |
| (12) | This stock award vests in one-third instalments if certain stock price triggers are achieved within 36-months following the closing of the merger as follows: (i) one-third (1/3) of the shares vested in 2021 as a result of the closing price of a share of Company common stock equaling or exceeding $18.00 over 20 trading days within a 30-consecutive trading day period; (ii) one-third (1/3) of the shares vested in 2021 as a result of the closing price of a share of Companythe Company’s common stock equaling or exceeding $20.00 over any 20 trading days within any 30-consecutive trading day period; and (iii) the remaining one-third (1/3) of the shares will vest if the closing price of a share of Companythe Company’s common stock is greater than or equal to $22.00 over any 20 trading days within any 30-consecutive trading day period. |
(6)(13) | This value is calculated by multiplyingstock award vests in one-third installments if certain stock price triggers are achieved within 36-months following the numbergrant as follows: (i) one-third (1/3) of the shares subject to this award by $15.59,will vest if the closing stock price of a share of Company common stock on December 31, 2021. |
(7) | With respectis greater than or equal to half$26.00 over 20 trading days within a 30-consecutive trading day period; (ii) one-third (1/3) of the shares subjectwill vest if the closing price of a share of the Company’s common stock is greater than or equal to this option, 50% vests in one year, with six-month cliff$28.00 over any 20 trading days within any 30-consecutive trading day period; and monthly thereafter and, with respect to(iii) the remaining halfone-third (1/3) of the shares subject to this option, 50% vests onwill vest if the one-year anniversaryclosing price of a share of the Vesting Commencement Date and monthly thereafter for the following 36 months, subjectCompany’s common stock is greater than or equal to continuous employment.$30.00 over any 20 trading days within any 30-consecutive trading day period. |
(8)(14) | This option vests 25% on the vesting commencement date, 25% on the first anniversary of the vesting commencement date and in subsequent 1/35th increments for each subsequent month of continuous employment. |
(9) | This stock award vests in 1/10th increments every quarter over 30 months.accordance with the Compensation Committee’s certification of achievement of the performance criteria and service condition. Up to an additional 50% or 100% of PRSUs may be received with 25% or 30% CAGR achievement respectively at the end of 2024. No vesting will occur prior to the end of 2024 regardless of the achievement. |
(10)(15) | This stock award vests in 1/12th increments every quarter over 36 months. |
(11) | This stock award vests in one-third installments if certain stock price triggers are achieved within 36-months following the grant as follows: (i) one-third (1/3) of the shares will vest if the closing price of a share of Company common stock is greater than or equal to $24.00 over 20 trading days within a 30-consecutive trading day period; (ii) one-third (1/3) of the shares will vest if the closing price of a share of Companythe Company’s common stock is greater than or equal to $26.00 over any 20 trading days within any 30-consecutive trading day period; and (iii) the remaining one-third (1/3) of the shares will vest if the closing price of a share of Companythe Company’s common stock is greater than or equal to $28.00 over any 20 trading days within any 30-consecutive trading day period. |
20212022 Options Exercised and Stock Vested
The following table reflects, for each of our named executive officers,NEOs, the number of option exercises and the number of RSUs and RSAs vestingvested during the fiscal year ended December 31, 2021.2022. The following table does not include Earnout Shares (as defined below) that Messrs. Ehrlichman and Neagle received pursuant to the terms of the merger agreement in connection with the business combination and which were issued to Messrs. Ehrlichman and Neagle on the same terms as the Company’s other equity holders. Earnout Shares beneficially owned by Messrs. Ehrlichman and Neagle are reflected in the section entitled “Security“Security Ownership of Certain Beneficial Owners and Management”Management” on pages 5967 through 6269 of this proxy statement. | | | | | | | | | | | | | | | | | | | | | | Option Awards | Stock Awards | | Option Awards | | Stock Awards | | | Number of Shares Acquired on Exercise | | Value Realized on Exercise | | Number of Shares Acquired on Vesting | | Value Realized on
Vesting | | Number of Shares Acquired on Exercise | | Value Realized on Exercise | | Number of Shares Acquired on Vesting | | Value Realized on
Vesting | Name | | (#)(1) | | ($)(2) | | (#)(3) | | ($)(4) | | (#)(1) | | ($)(2) | | (#)(3) | | ($)(4) | Matthew Ehrlichman | | | | | | | 20,639 | | $ | 393,999 | | | | | | | 336,429 | | 1,792,166 | Martin Heimbigner | | | | | | | 13,307 | | | 237,397 | | | Shawn Tabak | | | | | | | | | | Matthew Neagle | | 132,086 | | $ | 2,246,978 | | | | | | | | 42,862 | | 198,311 | | | | | | | | | | | | 120,468 | | | 2,251,291 | | | | | | | 86,871 | | 567,813 | | | | | | | | 187,904 | | | 3,147,395 | (5) | | Martin Heimbigner | | | | | | | | | |
| (1) | Represents the gross number of shares acquired upon the exercise of options without taking into account any shares that may be withheld to satisfy applicable tax obligations. |
| (2) | Represents the value of exercised options calculated by multiplying (i) the number of shares of Porch'sthe Company's common stock to which the exercise of the option related by (ii) the difference between the market price of Porch'sthe Company's common stock at exercise and the exercise price of the options. |
| (3) | Represents the gross number of shares acquired upon vesting of RSUs without taking into account any shares that may be withheld to satisfy applicable tax obligations. |
| (4) | Represents the value of vested RSUs calculated by multiplying the gross number of vested RSUs by the closing price of Porchthe Company’s common stock on the NASDAQNasdaq on the vesting date or if the vesting occurred on a day on which the NASDAQNasdaq was closed for trading, the next trading day. |
(5) | In July 2019, Mr. Neagle purchased the Lowe's Shares from Mr. Ehrlichman for a purchase price of $0.25 per share, which was lower than the Company’s most recent valuation of fair market value, calculated in accordance with Section 409A of the Code. The shares purchased from Mr. Ehrlichman were subject to repurchase rights in favor of the Company, with the repurchase right lapsing upon continued service and the occurrence of a liquidity event in the form of an initial public offering or sale of the Company. The service-based repurchase right lapses with respect to 50% of the shares subject to the award on the second anniversary of the grant date and in 25% increments on the third and fourth anniversaries of the grant date. Because the purchase price was below fair market value and Mr. Ehrlichman was deemed an “economic interest holder” under FASB ASC Topic 718 with respect to the Company, the award was deemed granted by the Company under FASB ASC Topic 718, although there was no grant date fair value associated with the award because the performance-based vesting condition was not deemed probable at the time Mr. Neagle purchased such shares. The liquidity event condition was satisfied upon the consummation of the business combination. |
| On March 26, 2021, the Board waived the Company’s repurchase right with respect to these shares and the amount reflected represents the number of Lowes’ shares that vested based on the stock price on the date on which the Board waived the repurchase right. The Lowe's shares are those shares of the Company Mr. Ehrlichman purchased from Lowe’s Companies, Inc. |
Pension Benefits The Company does not sponsor or maintain any defined benefit pension plan that provides for payments or other benefits at, following, or in connection with retirement of its employees, including the named executive officers.our NEOs. Nonqualified Deferred Compensation The Company does not sponsor or maintain any defined contribution or other plan for its employees, including the named executive officers,our NEOs, that provides for the deferral of compensation on a basis that is not tax-qualified. Potential Payments Upon TerminationEmployment Agreements
On February 11, 2022, the Company entered into new employment agreements with each of Mr. Ehrlichman (the “CEO Employment Agreement”) and Mr. Neagle (the “COO Employment Agreement”), and on November 2, 2022, upon the hire of Mr. Tabak as the new Chief Financial Officer, the Company entered into an employment agreement with Mr. Tabak (the “CFO Employment Agreement”) (each, for purposes of this subsection, an “Executive”). The Company did not enter into an employment agreement with Mr. Heimbigner. Mr. Heimbigner separated from the Company on December 15, 2022. See below under "Former CFO Offer Letter" for a discussion regarding Mr. Heimbigner’s transition arrangement. A summary of the material severance and change in control provisions of each of the CEO Employment Agreement, CFO Employment Agreement, COO Employment Agreement and Former CFO Offer Letter is set forth below. Term: Each agreement is for an initial term of 36 months and provides for automatic renewals for successive 12-month terms absent written notice from the Company or the Executive at least 60 days prior to the expiration of the then-current term. Each Executive is an at-will employee and either party may terminate Executive’s employment and the agreement at any time, with or without cause. Non Change in Control The following discussion describes the amounts and benefits that would have been owed to the Named Executive Officers in the event of (Termination). Upon a termination of the Executive’s employment by the Company without Cause (and other than by reason of death or Disability), or his resignation for Good Reason (each, as defined in the applicable employment agreement)(each, a change“Non-Change in control asControl Termination”), subject to the execution and non-revocation of December 30, 2021, under the Employment Agreements, the equity award agreements,a general release and other compensatory arrangementscompliance with the Namedrestrictive covenants described below, the Executive Officers.
Employment Arrangements with Named Executive Officers as of December 31, 2021
Each of the named executive officers was partywill be entitled to an employment agreement or offer letter as of December 31, 2021 that, in certain cases, provides for specified payments in connection with certain termination or change in control events, as set forth below. For additional information on the material terms of the employment agreements, see “--New Employment Agreements / Offer Letter Amendments” on pages 56 through 57 of this proxy statement.
Severance Payments. Upon any termination of employment, each of the named executive officers is entitled toaccrued obligations (i.e., payment of any earned but unpaid base salary, accrued but unused paid time off (if required by applicable law to be paid upon termination), vested benefits in accordance with the applicable employee benefit plan and unreimbursed business expenses. In addition, Mr. Heimbigner’s offer letter providesexpenses) and (i) cash severance equal to 12 months of the Executive’s then-current annual base salary and the Executive’s annual target bonus opportunity, payable in equal monthly installments over a period of 12 months (the “Severance Period”), subject to offset due to other employment, and (ii) during the Severance Period (but ceasing once equivalent employer-paid coverage is otherwise available to him or upon the earliest of certain other events, including violation of the restrictive covenants described below), the Executive will be entitled to monthly payments necessary to cover the premiums for continued coverage for him and his dependents under Porch’s health, dental and vision plans through COBRA.
Furthermore, upon a Non-Change in Control Termination, (i) any outstanding performance-based equity awards will remain outstanding and will vest in accordance with the specified vesting schedule (excluding any requirement for continued employment), (ii) any outstanding time-vesting equity awards that would have vested through the first anniversary of the termination date will vest on the termination date and any unvested awards remaining thereafter will be terminated and canceled by the Company, and (iii) for any stock options which were vested as of the termination date, such options may be exercised until the earlier of 12 months following the termination date and the expiration date and any unvested stock options remaining thereafter will be terminated and canceled by the Company. Upon termination due to death or Disability, any vested options may be exercised until the earlier of the one-year anniversary of the termination date and the expiration date of such options. Upon the Executive’s termination of employment which is not for Good Reason, any vested options may be exercised until the earlier of 90 days following the termination date and the expiration date. Equity Acceleration (Change of Control). Each of the CEO, CFO and COO Agreements also provide for single-trigger and double-trigger equity acceleration in the event of a Change in Control (as such term is defined in the applicable agreements). Upon a Change in Control, existing equity awards will continue based on specified terms, provided that (i) any unearned performance-based share awards options will be treated as RSUs or time-based options (respectively) and vest 12 months from the closing date and (ii) all outstanding equity awards will be accelerated in full and paid upon a Change in Control if such awards are not assumed or substituted by the surviving entity on a reasonably equivalent basis. Upon a termination of the Executive’s employment by the Company without Cause (and other than by reason of death or Disability), or the Executive’s resignation for Good Reason, in each case within 12 months following a Change in Control (each, a “Change in Control Termination”), (i) any outstanding equity awards will be fully earned and vested and (ii) any vested options may be exercised until the earlier of 12 months following the termination date and the expiration date. Also, following a change in control, (x) upon termination due to death or Disability, any vested options may be exercised until the earlier of 12 months following the termination date and the expiration date, and (y) upon any other termination except Cause, any vested options may be exercised until the earlier of 90 days following the termination date and the expiration date. Change of Control Benefits (Absent Termination). The CEO, CFO and COO Agreements provide that in the event of his terminationa “Change of Control” (as defined in such employment agreement), 50% of the total number of an unvested shares that have not vested as of such Change of Control shall be immediately vested, provided that the Executive has remained continuously employed as a full-time employee as of such time. Pursuant to action taken by the Compensation Committee in February 2020, outstanding options held by Mr. Neagle will vest upon the occurrence of a “change in control” of the Company, subject to Mr. Neagle’s continued employment through such date. Restrictive Covenants. Under the terms of their respective offers of employment, (except for terminationsour CEO, CFO and COO are subject to restrictive covenants relating to non-competition and non-solicitation of employees while employed by the Company for Cause18 months (in the case of Messrs. Ehrlichman and Heimbigner) and for 12 months (in the case of Mr. Neagle and Mr. Tabak) thereafter (subject to a longer period if due to breach). In addition, each executive officer has agreed not to use or resignationdisclose any confidential information of the Company, subject to customary exceptions, and to be bound by customary covenants relating to proprietary rights and the related assignment of such rights. Former CFO Offer Letter On February 11, 2022, the Company entered into the first amendment to the offer letter, effective June 15, 2020 (the “Amended CFO Offer Letter”) with Mr. Heimbigner. Then, on April 1, 2022, the Company announced that it had mutually agreed with Mr. Heimbigner without Good Reason) (each,to begin a search for Mr. Heimbigner’s successor. In order to assist with an orderly transition of his responsibilities, Mr. Heimbigner agreed to remain as defined inChief Financial Officer for up to six months following the announcement. The Company agreed to treat such separation for purposes of the applicable provisions of the arrangement as a “without cause” separation event. Thereafter, on August 9, 2022, the Company approved a second amendment to Mr. Heimbigner’s offer letter)letter, as amended on February 11, 2022 (the “Former CFO Offer Letter”). Base Salary. Pursuant to the Former CFO Offer Letter, Mr. Heimbigner’s annual base salary was increased to $390,000 (previously $350,000), he will be entitledeffective October 1, 2021, to receivealign with the timing of the base salary increase for Mr. Neagle. Transition Bonus (in lieu of Severance Payment at Termination).Pursuant to the Amended CFO Offer Letter, Mr. Heimbigner received a lump sum payment of $175,000, which was six (6) months’ severance at his then-currentcurrent base salary payable(in lieu of severance payment being paid over six months following separation from the Company in the form of salary continuation payments. In addition, in the event of such termination, (i) if Mr. Heimbigner experienced a termination of employment following the end of the performance period toaccordance with his offer letter), which his annual bonus applies, but prior to the payment ofwas paid on April 8, 2022. Short Term Incentive Bonus. The Former CFO Offer letter provided that annual bonus, such bonus will be paid in full, and (ii) if Mr. Heimbigner was employed for over one-half of the performance period but was not employed on the last day of the performance period and the Company was expected to achieve the underlying performance conditions, then Mr. Heimbigner willwould receive a pro-rated target payout for such year. Furthermore,In addition, on account of Mr. Heimbigner’s offer letter provides that if within 12 months following a Change of Control (as defined in such offer letter), Mr. Heimbigner is terminated bycontributions to the Company without Cause or Mr. Heimbigner resignsin 2022 as of August 2022, and those anticipated to occur thereafter, the Former CFO Offer Letter also provided that he was eligible for Good Reason, all then-unvested equity awards held by Mr. Heimbigner will vest.a discretionary cash bonus with a target bonus of $205,000 per 360-day period, subject to a maximum payout of $247,708. The Compensation Committee approved this discretionary cash bonus of $170,833, which was paid on January 13, 2023. Change of Control Benefits (Absent Termination). Pursuant to the terms of Mr. Heimbigner’s offer letter,the Former CFO Offer Letter, in the event of a “Change of Control” (as defined in such offer letter), 50% of the then-unvested equity awards held by Mr. Heimbigner will vest so long as his status as a full-time employee has not been terminated prior to such time. Similarly, Mr. Neagle’s employment agreement provides that in the event of a “Change of Control” (as defined in such employment agreement), 50% of the total number of an unvested shares that have not vested as of such Change of Control shall be immediately vested, provided that he has remained continuously employed as a full-time employee as of such time.
Non-Cash Incentive Plan Bonus. Pursuant to action taken by the Compensation Committee of the Company’s Board in February 2020, outstanding options held by Mr. Neagle will vest upon the occurrence of a “change in control” of the Company, subject to Mr. Neagle’s continued employment through such date. Restrictive Covenants. Under the terms of their respective offersthe Former CFO Offer Letter, Mr. Heimbigner was also eligible for a 2022 transition cash bonus program of $250,000 in the aggregate, with 40% earned upon the 10-Q Event and, subject to the Company electing to extend Mr. Heimbigner’s transition services thereafter, the remaining 60% earned upon 10-K Event. To earn the bonus, in each case, Mr. Heimbigner was to remain continuously employed in good standing through the applicable milestone date. Mr. Heimbigner earned $100,000, as the 10-Q Event was achieved; which was paid on January 13, 2023; no bonus was earned or paid for the 10-K Event as Mr. Heimbigner separated from the Company on December 15, 2022.
Stock Option Exercise Period Extensions. Pursuant to the Former CFO Offer Letter, Mr. Heimbigner’s nonqualified stock option awards that were vested and outstanding on each of September 30, 2022, the 10-Q Event and the 10-K Event would be exercisable, provided the milestone achieved, for between 1 year and 2 years and 90 days following separation of employment the named executive officers are subject to restrictive covenants relating to non-competition and non-solicitation of employees while employed byfrom the Company (previously, such period generally was 90 days following separation of employment), provided, in each case, Mr. Heimbigner remains continuously employed in good standing through the applicable milestone date as a condition to any extension of the option exercise period. The 10-Q Event was achieved, and Mr. Heimbigner separated from the Company on December 15, 2022. Accordingly, the exercise period for 18 months (invested stock option awards was extended by two years and 90 days following his separation of employment from the case of Messrs. Ehrlichman and Heimbigner) and for 12 months (in the case of Mr. Neagle) thereafter (subject to a longer period if due to breach). In addition, each executive officer has agreed not to useCompany, or disclose any confidential information of Porch, subject to customary exceptions, and to be bound by customary covenants relating to proprietary rights and the related assignment of such rights.until December 14, 2024. 2020 STOCK Plan The terms of the various award agreements granted under the Company’s 2020 Stock Plan provide for accelerated vesting upon the occurrence of certain events. As of December 31, 2021,2022, all NEOs, other than Mr. Neagle was the only NEO with anyHeimbigner, had unvested equity awards issued pursuant to the 2020 Stock Plan. Effect of a Change in Control or Certain Other Transactions under the 2020 Stock Plan. In the event of a Change in Control (as defined in the 2020 Stock Plan), the 2020 Stock Plan generally provides that the Company’s Board may determine to effect some combination of accelerated vesting, assumption, substitution or surrender of outstanding equity awards in exchange for cash, stock or other property in connection with such Change in Control. Clawback of Proceeds. The award agreements issued to the NEOsour Executives under the 2020 Stock Plan generally require the recipient of the applicable award to agree to restrictive covenants relating to confidentiality, non-disparagement and, for 12 months post-termination, non-solicitation of employees and business relations and non-competition and, to the extent such covenants (or any other agreement between the recipient and the Company) are breached by the recipient, to forfeit the award and remit a cash payment based on the number of earned and vested shares underlying the applicable equity award. Tax Matters. Pursuant to the award agreements under the 2020 Stock Plan, if any payments or benefits to which the recipient thereof would be entitled to receive pursuant to the terms of the applicable agreement or otherwise in connection with a change in the ownership or effective control of the Company would result in all or a portion of such payments or benefits being deemed "parachute payments" under Section 280G of the IRS Code and the excise tax imposed by Section 4999 of the IRS Code, such payments and benefits will be reduced to the minimum extent necessary so that they would not result in the imposition of an excise tax under Section 4999 of the IRS Code, provided that no reduction will be made if the named executive officerExecutive would receive a greater net after-tax amount absent such reduction. Accelerated Vesting – Execution of Release. As a condition to any accelerated vesting of underlying equity awards, the award agreements under the 2020 Stock Plan require the recipient of the applicable award to execute a release of claims in favor of the Company within 60 days of the applicable termination of employment. Accelerated Vesting of RSUs – Termination of Employment – Mr. Neagle. The RSU award agreements for Mr. Neagle generally provide that if histhe Executive’s employment with the Company is terminated by the Company without Cause or Mr. Neaglethe Executive resigns with Good Reason (in each case, as defined in the applicable award agreement) that, subject to the execution and irrevocability of the release discussed above, any unvested RSUs that would otherwise have vested within 12 months of such termination will become vested as of the 61st day following such termination or resignation.
Accelerated Vesting of PRSUs – Termination of Employment – Mr. Neagle(CEO and COO). The PRSU award agreements for Mr.Messrs. Ehrlichman and Neagle generally provide that if his employment with the Company is terminated by the Company without Cause or Mr. Neaglesuch Executive resigns with Good Reason that, subject to the execution and irrevocability of the release discussed above, the applicable award will remain outstanding and will vest when earned in accordance with the applicable vesting schedule without regard for any vesting condition relating to employment. Treatment of RSUs – Change in Control – Mr. Neagle(CEO and COO). The RSU award agreements for Mr.Messrs. Ehrlichman and Neagle generally provide that in the event of a Change in Control: | o | if the award is assumed or reasonably substituted on an equitable basis to Mr. Neagle,such Executive, the award will continue subject to the terms of the award agreement, except that if Mr. Neagle’ssuch Executive’s employment with the Company is terminated by the Company without Cause or Mr. Neaglesuch Executive resigns with Good Reason on or within 12 months following the consummation of such Change in Control, the award will fully vest as of the 61st day following such termination or resignation; or |
| o | if the award is not assumed or reasonably substituted on an equitable basis to Mr. Neagle,such Executive, the award will fully vest immediately prior to the consummation of the Change in Control. |
Treatment of PRSUs – Change in Control – Mr. Neagle(CEO and COO). The performance-based RSU award agreements for Mr.Messrs. Ehrlichman and Neagle generally provide that in the event of a Change in Control: | o | if the award is assumed or reasonably substituted on an equitable basis to Mr. Neagle,such Executive, any earned portion of the award will remain issued and outstanding as RSUs, subject to a vesting period commencing on the closing date of such Change in Control and ending on the earlier of (a) the one year anniversary thereof and (b) the 61st day following the date on which Mr. Neagle’sthe Executive’s employment is terminated by the Company without Cause or Mr. Neaglesuch Executive resigns for Good Reason; or |
| o | if the award is not assumed or reasonably substituted on an equitable basis to Mr. Neagle,such Executive, the award will fully vest immediately prior to the consummation of the Change in Control. |
Retention Agreement – Mr. Neagle. The Company and Mr. Neagle entered into a retention agreement in February 2018 (the “Neagle Retention Agreement”), which provided that if Mr. Neagle’s employment with the Company ended for any reason prior to April 21, 2027, the Company was required to offer to engage Mr. Neagle as an advisor or consultant on terms substantially similar to the Company’s existing board advisory relationships through April 21, 2027 and such engagement could only be terminated for “Cause,” which is generally defined as Mr. Neagle’s (i) willful embezzlement, misappropriation, or fraud which is, in each case, injurious to the Company, (ii) willful misconduct that actually results in material harm or loss to the Company or (iii) conviction of a crime that constitutes a felony, if such felony is related to his advisory role and results in material harm to the Company.
The Neagle Retention Agreement provided that Mr. Neagle would receive a restricted stock award upon a change in control of the Company if he remained employed with, or is still providing services to, the Company through such date. The number of shares subject to the restricted stock award was to be determined by dividing $400,000 by the change in control price, with such shares fully vested as of the date of the change in control. While the business combination did not constitute a change in control under the Neagle Retention Agreement, in lieu of any compensation under the Neagle Retention Agreement, Mr. Neagle received a grant of fully vested shares of Company common stock in early 2021 with a grant date fair value of $400,000 and the Neagle Retention Agreement was terminated.
2012 Equity Incentive Plan Prior to the closing of the business combination, each of Messrs. Ehrlichman, and Neagle and Heimbigner were granted equity awards pursuant to the Porch.com, Inc. 2012 Equity IncentiveStock Plan, (the "2012 Plan"), a portion of which remain unvested. Upon Mr. Heimbigner’s separation from the Company on December 15, 2022, all unvested equity awards were forfeited. Effect of a Change in Control or Certain Other Transactions under the 2012 Stock Plan. Under the terms of the 2012 Stock Plan, pursuant to which certain of the Company’s named executive officersNEOs hold outstanding stock options, in the event of a merger or “Change in Control” (as defined in the 2012 Stock Plan), the administrator of the 2012 Stock Plan may provide that (i) awards will be assumed or substituted, (ii) awards will terminate, (iii) awards will vest and become exercisable, realizable or payable, and/or (iv) participants will receive cash payments or replacement awards in exchange for their outstanding awards. The 2012 Stock Plan also provides that an award will vest in full if such award is not assumed or substituted by a successor. Options held by Mr. Neagle. Pursuant to action taken by the compensation committeeCommittee of the Company’s Board in February 2020, outstanding options held by Mr. Neagle will vest upon the occurrence of a “change in control” of the Company, subject to Mr. Neagle’s continued employment through such date. The business combination was not a “change in control” of the Company for purposes of his outstanding equity awards. Grant of Restricted Stock to Mr. Ehrlichman. Mr. Ehrlichman was granted a restricted stock award under the 2012 Stock Plan which was converted into an award of 1,000,000 restricted shares of the company upon the closing of the business combination. The award will vest in one-third installments if certain stock price triggers are achieved within 36-months following the closing of the business combination as follows: (i) one-third (1/3) of the shares will vest if the closing price of a Company share is greater than or equal to $18.00 over any 20 trading days within any 30-consecutive trading day period; (ii) one-third (1/3) of the shares will vest if the closing price of a Company share is greater than or equal to $20.00 over any 20 trading days within any 30-consecutive trading day period; and (iii) the remaining one-third (1/3) of the shares will vest if the closing price of a Company share is greater than or equal to $22.00 over any 20 trading days within any 30-consecutive trading day period. As of December 31, 2021, only the shares described in clause (iii) of the prior sentence had not vested. If Mr. Ehrlichman’s employment with the Company or its affiliates is terminated prior to the award being fully vested, then the award will be terminated and cancelled, provided that if Mr. Ehrlichman’s employment is terminated by the Company or its affiliates without Cause or Mr. Ehrlichman resigns due to Good Reason (in each case, as defined in the award agreement), the award will remain outstanding and will vest to the extent the stock price triggers are achieved during the 36-month period. Potential Payments Upon Termination or Change of Control/Severance Payment TableControl The following table estimates the potential payments and benefits to the named executive officersour NEOs upon termination of employment or a change of control, assuming such event occurs on December 31, 2021. These estimates do not reflect the actual amounts that would be paid to such persons, which would only be known at the time that they become eligible for payment and would only be payable if the specified event occurs. Items Not Reflected in Table. The table below does not include (1) accrued salary, accrued bonus and paid time off, (2) benefits (e.g., with respect to severance) which are generally available to all Company employees and do not discriminate in favor of our executive officers, and (3) amounts outstanding under the Company's 401(k) plan. Other Notes Applicable to Table. The 2012 Stock Plan and the 2020 Stock Plan each provide for the acceleration of vesting of equity awards under specified circumstances noted above. The table reflects (A) the intrinsic value of such acceleration, based on the
closing price of the common stock on NASDAQNasdaq on December 31, 202130, 2022 ($15.59)1.88) and (B) to the extent the applicable equity award is an option, the exercise price thereof. The table does not reflect the intrinsic value of vested equity awards, which is set forth in "Outstanding Equity Awards at December 31, 2021.2022." The Compensation Committee or Board has discretion to accelerate the vesting of equity awards under the 2012 Stock Plan or the 2020 Stock Plan to the extent not expressly set forth above. The table assumes that neither the Compensation Committee does notnor the Board utilize such discretion. For a termination following a change in control, the table below assumes the change in control event and the termination event each occur as of December 31, 2021.2022. | | | | Executive | Qualifying Termination of Employment (1) | Qualifying Termination within 12 Months Following a Change in Control(2) | Change in Control(3) | Matthew Ehrlichman | $4,221,630(4) | $6,140,359(5) | $6,140,359(5) | Shawn Tabak | $887,829 | $887,829 | $887,829 | Matthew Neagle | $1,530,170(6) | $1,896,197(7) | $1,896,197(7) | Marty Heimbigner | - (8) | - | - |
| | | | Executive | Qualifying Termination of Employment (1) | Qualifying Termination within 12 Months Following a Change in Control(2) | Change in Control(3) | Matt Ehrlichman | $7,333,326(4) | $7,333,326 | $3,203,395 | Matthew Neagle | $1,938,492(5) | $2,718,397(6) | $3,556,158(7) | Marty Heimbigner | $255,000(8) | $4,224,178(9) | $3,969,178 |
(1) | For purposes of this column, “qualifying termination of employment” refers to (i) in the case of Mr. Heimbigner’s cash severance benefits, to a termination of employment by the Company other than for cause or by Mr. Heimbigner for good reason, and (ii) in all other cases, to a termination of employment by the Company or any subsidiary without cause or a termination by the executive for good reason. |
(2) | For purposes of this column, the Company has assumed that the outstanding equity awards have been assumed or substituted by the successor or acquiror in connection with the change in control event. “Qualifying Termination of Employment” for purposes of this column refers to (i) in the case of Mr. Heimbigner’s performance-based restricted share award, a termination of employment by the Company other than for cause or by Mr. Heimbigner for good reason, and (ii) in all other cases, to a termination of employment by the Company or any subsidiary without cause or a termination by the executive for good reason. |
(3) | For purposes of this column, the Company has assumed that the outstanding equity awards were not assumed or substituted by the successor or acquiror in connection with the change in control event. |
(4) | Reflects the value of lapse of service-based vesting restrictions with respect to certain of Mr. Ehrlichman’s unvested performance-based restricted shares, assuming (for purposesPRSUs. For the purpose of this disclosure)disclosure, the Company has assumed that all performance goals applicable to the final performance goal isPRSU awards granted on May 20, 2022 are satisfied at target prior to the end of the performance period. The Company has assumed further that the first two tranches of the PRSUs granted on February 10, 2022 vest in accordance with the grant’s vesting schedule. The Company has assumed further, that the vesting requirements are not met for the third tranches of the PRSUs granted on February 10, 2022 and the PRSUs granted on December 21, 2020, respectively, due to each remaining performance period and assuming further thatthe current stock price. The assumed value of the vesting PRSUs is based upon the closing stock price of the Company on December 30, 2022, which was $1.88 per share. The Company has used this value due to the low probability of achievement. This year-end stock price is higher than the fair vale of these awards calculated at year-end for the Pay versus Performance disclosure, but significantly lower than the stock price hurdle. |
(5) | Reflects full accelerated vesting of each of Mr. Ehrlichman’s outstanding equity incentive awards as of December 31, 2022. For the purpose of this calculation, the Company has calculated the value of the accelerated vesting performance-based restricted shares is $22of Mr. Ehrlichman’s PRSUs based upon the closing stock price of the Company on December 30, 2022, which was $1.88 per share. |
(5)(6) | Reflects accelerated vesting of a portion of Mr. Neagle’s outstanding RSU awards under the 2020 Stock Plan as described above, as well as the lapse of service-based vesting restrictions with respect to Mr. Neagle’s outstanding PRSU awards underunvested performance-based restricted shares. For the 2020 Plan, assuming, for purposespurpose of this table,disclosure, the Company has assumed that all performance goals applicable to the PRSU awards granted on May 20, 2022 are satisfied at target prior to the conclusionend of the performance period, and assumingperiod. The Company has assumed further that the marketfirst two tranches of the PRSUs granted on November 16, 2021 vest in accordance with the grant’s vesting schedule. The Company has assumed further, that the vesting requirements are not met for the third tranche of the PRSUs granted on November 16, 2021 due to the remaining performance period and the current stock price. The assumed value of suchthe vesting PRSUs is equalbased upon the closing stock price of the Company on December 30, 2022, which was $1.88 per share. The Company has used this value due to the low probability of achievement. This year-end stock price is higher than the fair vale of these awards calculated at year-end for the Pay versus Performance disclosure, but significantly lower than the stock price threshold at which such PRSUs are eligible to become vested.hurdle. |
(6)(7) | Reflects full accelerated vesting of Mr. Neagle’s outstanding RSU awards under the 2020 Plan as of December 31, 2021. As none of the applicable performance goals applicable to Mr. Neagle’s PRSUs had been attained as of December 31, 2021, no value has been reflected with respect to those PRSUs. |
(7) | Reflects full accelerated vesting of each of Mr. Neagle’s outstanding equity incentive awards as of December 31, 2021.2022. For the purpose of this calculation, the Company has calculated the value of the accelerated vesting of Mr. Neagle’s PRSUs based upon the closing stock price of the Company on December 31, 2021,30, 2022, which was $15.59.$1.88 per share. |
(8) | IncludesMr. Heimbigner departed the value of Mr. Heimbigner’s earned but unpaid bonus for FY 2021 of $105,000, as well as a cash severance payment equal to $150,000. |
(9) | Reflects (i) the value of Mr. Heimbigner’s earned but unpaid bonus for FY 2021 of $105,000, (ii) a cash severance payment equal to $150,000, and (iii) the value of full accelerated vesting of Mr. Heimbigner’s outstanding unvested equity incentive awards under the 2012 Plan, based upon a closing stock price of $15.59Company on December 31, 2021.15, 2022. Upon separation from the Company, Mr. Heimbigner received a total of $445,833.33. |
CEO PAY RATIO Pursuant to applicable SEC rules, presented below is the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our employees (excluding our CEO). The ratio presented below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. This information is being provided for compliance purposes only. Neither the Compensation Committee nor management of the Company used the pay ratio in making compensation decisions for 2022. We selected the median employee from a group of 959 full-time and part-time employees who were active as of December 31, 2022. In identifying our median employee, we used the annual base salary of each employee for the twelve-month period that ended on December 31, 2022, plus any earned commissions and overtime, all of which was obtained from internal payroll and records. We did not include independent contractors or leased workers in our employee population for purposes of making our determination. We also excluded 94 employees who joined our Company as part of our acquisitions of RWS (52 employees) and HIP (42 employees), each of which closed during 2022. As disclosed in the Summary Compensation Table appearing on page 51, the 2022 annual total compensation as determined under Item 402 of Regulation S-K for our CEO was $13,583,222. The 2022 annual total compensation as determined under Item 402 of Regulation S-K for our median employee was $75,675. Based on the foregoing, our estimate of the ratio of our CEO’s annual total compensation to our median employee’s annual total compensation for 2022 is 179 to 1. In February 2022, Mr. Ehrlichman received equity awards relating to a special equity grant program for applicable employees in 2021 (TWW) and the newly developed 2021 NEO annual equity award program, which accounted for approximately 85% of his annual total compensation in 2022 (the “February 2022 Grants”). See section “Executive Compensation - Key Impacts to 2022 Compensation Program” for additional discussion regarding the delay in making these February 2022 grants. Mr. Ehrlichman also received annual equity awards in May 2022 in connection with the 2022 NEO annual equity award program. Excluding the aggregate grant date fair value of $11,562,868 relating to the February 2022 Grants, the ratio would have been 27:1. The actual and supplementary CEO pay ratios for 2022 may not be indicative of future values of the CEO pay ratio. Given the different methodologies, estimates, adjustments, and other assumptions that public companies utilize to determine an estimate of their pay ratios, the estimated ratio reported above should not be used as a basis for comparison between companies. PAY VERSUS PERFORMANCE The following table provides information about the relationship between executive compensation actually paid (“CAP”) and certain financial performance of the Company, in accordance with Item 402(v) of Regulation S-K. Please see “Executive Compensation” for a discussion of our compensation philosophy, objectives, process and components of our NEO compensation program, including how the Compensation Committee structures our NEO compensation program to motivate and reward the achievement of performance-based financial goals that align with our operational and strategic objectives. The SEC-defined CAP data set forth in the table below does not reflect amounts actually realized by our NEOs, and the Compensation Committee has not used or considered CAP previously in establishing the NEO compensation program. A significant portion of the CAP amounts shown relate to changes in values of unvested awards over the course of the reporting year. These unvested awards remain subject to significant risk from forfeiture conditions and possible future declines in value based on changes in our stock price. As described in detail in the “Executive Compensation” section above, the PRSUs are subject to multi-year performance conditions tied to objective performance metrics and all of the RSUs, PRSUs and stock options are subject to time vesting conditions or holding periods. The ultimate values actually realized by our NEOs from
New Employment Agreements / Offer Letter Amendments
On February 11, 2022,unvested equity awards, if any, will not be determined until the Company entered into new employment agreements with each of Mr. Ehrlichman (the “CEO Employment Agreement”) and Mr. Neagle (the “COO Employment Agreement”), and the first amendment (the “CFO Offer Letter Amendment”) to the offer letter, effective June 15, 2020 (the “CFO Offer Letter”) with Mr. Heimbigner (each, for purposes of this subsection, an “Executive”). A summary of the material severance and change in control provisions of each of the CEO Employment Agreement, COO Employment Agreement and CFO Offer Letter Amendment is set forth below, and each is qualified in its entirety by reference to such agreements, which have previously been filed with the SEC and are incorporated herein by reference.
CEO and COO Employment Agreements
Term: Each agreement is for an initial term of 36 months and provides for automatic renewals for successive 12-month terms absent written notice from Porch or the Executive at least 60 days prior to the expiration of the then-current term. Executive is an at-will employee and either party may terminate Executive’s employment and the agreement at any time, with or without cause.
Severance; Equity Acceleration: Upon a termination of Executive’s employment by Porch without Cause (and other than by reason of death or Disability), or his resignation for Good Reason (each, as definedawards fully vest (or thereafter upon exercise, in the applicable employment agreement)(each, a “Non-Change in Control Termination”), subject to the execution and non-revocationcase of a general release and compliance with the restrictive covenants described below, Executive will be entitled to accrued obligations and (i) cash severance equal to 12 months of the Executive’s then-current annual base salary and the Executive’s annual target bonus opportunity, payable in equal monthly installments over a period of 12 months (the “Severance Period”), subject to offset due to other employment, and (ii) during the Severance Period (but ceasing once equivalent employer-paid coverage is otherwise available to him or upon the earliest of certain other events, including violation of the restrictive covenants described below), Executive will be entitled to monthly payments necessary to cover the premiums for continued coverage for him and his dependents under Porch’s health, dental and vision plans through COBRA.outstanding stock options).
| | | | | | | | | | | | | | | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year
(1) | | Summary Compensation Table Total
for PEO
($)(2) | | Compensation Actually Paid to PEO
($)(3) | | Average Summary Compensation Table Total for Non-PEO NEOs
($)(2) | | Average Compensation Actually Paid to Non-PEO NEOs
($)(4) | | Company Total Shareholder Return
($)(5) | | Peer Group Total Shareholder Return
($)(6) | | Net Income (Loss)
(in thousands)
($)(7) | | Stock Price Performance
($)(8) | 2022 | | 13,583,222 | | (5,051,506) | | 896,705 | | (1,798,741) | | 19 | | 129 | | (156,559) | | 12.08 | 2021 | | 1,272,840 | | 12,645,437 | | 5,272,339 | | 3,812,619 | | 157 | | 182 | | (106,606) | | 23.31 | 2020 | | 16,829,446 | | 35,260,766 | | 1,089,816 | | 5,083,656 | | 144 | | 136 | | (71,316) | | 12.89 |
Upon a Non-Change in Control Termination, (i) any outstanding performance-based equity awards will remain outstanding and will vest in accordance with the specified vesting schedule (excluding any requirement for continued employment), (ii) any outstanding time-vesting equity awards that would have vested through the first anniversary of the termination date will vest on the termination date, and (iii) for any stock options which were vested as of the termination date, such options may be exercised until the earlier of 12 months following the termination date and the expiration date. Upon termination due to death or Disability, any vested options may be exercised until the earlier of the one-year anniversary of the termination date and the expiration date of such options. Upon the Executive’s termination of employment which is not for Good Reason, any vested options may be exercised until the earlier of 90 days following the termination date and the expiration date.
(1) | We have never sponsored or maintained any defined benefit or actuarial pension plans. Therefore no pension value adjustments were made to the compensation actually paid amounts set forth in the table above. The Company has not paid nor accrued any dividends on equity awards in any applicable year. |
(2) | The dollar amounts reported in the table are the amounts of total compensation reported for Mr. Ehrlichman and the average amounts of total compensation reported for the other NEOs as a group, respectively, for each corresponding year in the “Total” column of the Summary Compensation Table. See “Executive Compensation–2022 Summary Compensation Table.” |
(3) | The PEO reported in the table represents Mr. Ehrlichman for all three years shown. The dollar amounts reported represent the amount of CAP as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Ehrlichman during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following table provides the adjustments that were made to Mr. Ehrlichman’s total compensation for each year to determine the CAP. |
Each of the CEO Agreement and the COO Agreement also provide for single-trigger and double-trigger equity acceleration in the event of a Change in Control (as such term is defined in the applicable agreements). Upon a Change in Control, existing equity awards will continue based on specified terms, provided that (i) any unearned performance-based share awards options will be treated as RSUs or time-based options (respectively) and vest 12 months from the closing date and (ii) all outstanding equity awards will be accelerated in full and paid upon a Change in Control if such awards are not assumed or substituted by the surviving entity on a reasonably equivalent basis. Upon a termination of Executive’s employment by Porch without Cause (and other than by reason of death or Disability), or Executive’s resignation for Good Reason, in each case within 12 months following a Change in Control (each, a “Change in Control Termination”), (i) any outstanding equity awards will be fully earned and vested and (ii) any vested options may be exercised until the earlier of 12 months following the termination date and the expiration date. Also, following a change in control, (x) upon termination due to death or Disability, any vested options may be exercised until the
| | | | | | | | Year | Reported Summary Compensation Table Total for PEO | Less | Reported Value of Equity Awards | Plus | Equity Award Adjustments | Equals | CAP for PEO | | ($) | | ($)(a) | | ($)(b) | | ($) | 2022 | 13,583,222 | | 12,893,066 | | (5,741,662) | | (5,051,506) | 2021 | 1,272,840 | | — | | 11,372,597 | | 12,645,437 | 2020 | 16,829,446 | | 14,964,252 | | 33,395,572 | | 35,260,766 |
| | | | | | | | | | | | Equity Award Adjustments | Year | | Added Value of Outstanding and Unvested Awards Granted During the Year | | Added Change in Value of Outstanding and Unvested Awards Granted in Prior Years | | Added Value as of Vesting Date of Awards Granted and Vested During the Year | | Added Change in Value of Awards Granted in Prior Years and Vested During the Year | Total Equity Award Adjustments | | | ($) | | ($) | | ($) | | ($) | ($) | 2022 | | 1,520,099 | | (6,746,516) | | 1,520,122 | | (2,035,367) | (5,741,662) | 2021 | | — | | (1,078,059) | | — | | 12,450,656 | 11,372,597 | 2020 | | 24,873,237 | | 7,524,199 | | — | | 998,136 | 33,395,572 |
| (a) | The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. |
| (b) | The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards granted and vested in the same year for any applicable year, the amount equal to the fair value as of the vesting date; and (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior year) in fair value. There were no awards granted in prior years that failed to meet the applicable vesting conditions during the applicable year that cannot be earned in a future performance period. The fair values of RSUs and |
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earlier of 12 months followingPRSUs included in the termination dateCAP to our PEO and the expiration date, and (y) upon anyAverage CAP to our other termination except cause, any vested options may be exercised untilNEOs are calculated at the earlier of 90 days following the termination date and the expiration date.
Restrictive Covenants: During the term of employment and for 12 months (COO) or 18 months (CEO) thereafter (subject to a longer period if due to breach), Executive is bound by a covenant not to compete with Porch, a covenant not to solicit Porch’s employees, customers or business partners and a covenant not to hire Porch’s employees or induce them to terminate employment with Porch. In addition, Executive has agreed not to use or disclose any confidential information of Porch, subject to customary exceptions, and to be bound by customary covenants relating to proprietary rights and the related assignment of such rights.
CFO Offer Letter Amendment
Severance: The amendment provides that the base salary due as severance upon specified severance events will be paid in a lump sum (in lieu of being paid over six monthsrequired measurement dates in accordance with FASB ASC 718, consistent with the CFO Offer Letter).
Equity Acceleration: Upon any terminationapproach used to value the awards at the grant date as described in our Form 10-K. In accordance with Item 402(v) of Executive’s employment, subjectRegulation S-K, the fair values of unvested and outstanding equity awards were remeasured as of the end of each year, and as of each vesting date. The valuation assumptions used to a six-month transition periodcalculate fair values did not materially differ from those disclosed at Executive’s existing pay rate (or earlier death or long-term disability during such transition period) priorthe grant date. Any material changes to the effectiveness of such termination, Executive’s nonqualifiedRSU, PRSU and stock option awards that were issued pursuantfair values from the grant date (for current year grants) and from prior year-end (for prior year grants) are based on our updated stock price at the respective measurement dates, and for PRSUs, updated estimates for performance outcomes.
(4) | The Non-PEO NEOs reported in the table represent Messrs. Neagle and Heimbigner for years 2020 and 2021, and Messrs. Tabak, Neagle and Heimbigner for year 2022. To calculate CAP, the following average adjustments were made to the average total compensation number shown in the SCT. See footnote (3) above for information on footnotes (a) and (b) in the table below. |
| | | | | | | | Year | Average Reported Summary Compensation
Table Total for Non-PEO NEOs | Less | Average Reported Value of Equity Awards | Plus | Average Equity Award Adjustments | Equals | Average CAP for Non-PEO NEOs | | ($) | | ($)(a) | | ($)(b) | | ($) | 2022 | 896,705 | | 464,687 | | (2,230,759) | | (1,798,741) | 2021 | 5,272,339 | | 4,603,657 | | 3,143,937 | | 3,812,619 | 2020 | 1,089,816 | | 592,567 | | 4,586,407 | | 5,083,656 |
| | | | | | | | | | | | | | Equity Award Adjustments | Year | | Added Value of Outstanding and Unvested Awards Granted During the Year | | Added Change in Value of Outstanding and Unvested Awards Granted in Prior Years | | Added Value as of Vesting Date of Awards Granted and Vested During the Year | | Added Change in Value of Awards Granted in Prior Years and Vested During the Year | | Deducted Value of Forfeited Awards Granted in Prior Years | Total Equity Award Adjustments | | | ($) | | ($) | | ($) | | ($) | | ($) | ($) | 2022 | | 223,440 | | (765,032) | | — | | (635,944) | | (1,053,223) | (2,230,759) | 2021 | | 1,594,276 | | 197,963 | | 590,891 | | 760,807 | | — | 3,143,937 | 2020 | | 4,394,085 | | 124,552 | | 40,810 | | 26,960 | | — | 4,586,407 |
(5) | Assumes an investment of $100 was made in the Company's common stock on January 13, 2020, the first day of trading of the Company’s common stock on Nasdaq, and measures cumulative total shareholder return from that date through and including December 31 of the specified year. |
(6) | Assumes an investment of $100 was made in the S&P 500 IT Index on January 13, 2020 and measures cumulative total shareholder return from that date through and including December 31 of the specified year. |
(7) | Reflects the Company's net income as reported in our financial statements. |
(8) | Reflects the highest average 20-day closing share price within a 30-day period for the specified year, representing a performance condition associated with stock price compound annual growth targets for our PRSU awards. |
Pay versus Performance Description of Relationships The graphs below show the relationship of CAP for our PEO and other NEOs in 2022, 2021 and 2020 to: (1) Total Shareholder Return of both our Company and Peer Group; (2) Net Income; and (3) Stock Price Performance (reflecting the highest average 20-day closing share price within a 30-day period for the specified year). The Compensation Committee has not previously used or considered CAP, as computed in accordance with Item 402(v) of Regulation S-K, to set NEO target pay or align our NEO compensation to Company performance. See “Executive Compensation” for a discussion of how the CFO Offer Letter that are outstanding on the termination dateCompensation Committee designs our NEO compensation program and that would have vested through the six-month anniversary of the termination date (or an equivalent cash value if there are not sufficient unvested stock options) will vest upon such termination date and be exercisable for 90 days following vesting. As noted above, on April 1, 2022, the Company announced that it had mutually agreed with Mr. Heimbigner to begin a search for Mr. Heimbigner’s successor. In order to assist with an orderly transition of his responsibilities, Mr. Heimbigner is expected to remain as Chief Financial Officer for up to six months following the announcement. The Company will treat such separation for purposes of the applicable provisions of the Agreement as a “without cause” separation event. On April 8, 2022, he received a lump sum payment of $175,000, which is six (6) months’ severance at his current base salary. In addition, all outstanding nonqualified stock option awards held by Mr. Heimbigner that would have vested through the six-month anniversary of the termination date will vest upon such termination date and be exercisable for 90 days following vesting.
Compensation Policies and Practices Risk Assessment.
Consistent with SEC disclosure requirements, management has assessed compensation policies and practices for Company employees and has concluded that such policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
sets NEO target pay.
Compensation Actually Paid versus Total Shareholder Return 
Compensation Actually Paid versus Net Income 
Compensation Actually Paid versus Stock Price Performance Reflects the highest average 20-day closing share price within a 30-day period for the specified year, consistent with a performance condition of PRSU awards granted in 2022. 
Tabular List of Performance Measures In the Company’s assessment, the financial performance measures set forth in the table below represent the most important financial performance measures used by the Company for 2022 to link compensation actually paid to the Company’s NEOs to Company performance. Please refer to “Executive Compensation” for additional information. | | | Most Important Performance Measures to Determine 2022 Compensation Actually Paid | Stock Price Performance | Revenue | Adjusted EBITDA |
This pay versus performance section is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference into any of the Company's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this proxy statement and irrespective of any general incorporation language therein. EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 20212022 regarding the number of shares of ourthe Company’s common stock that may be issued under our equity compensation plans. | | | | | | | | | | | | | | | | | | A | | | B | | C | | | A | | | B | | C | | | | | | | | Number of | | | | | | | | Number of | | | | | | | | Securities | | | | | | | | Securities | | | | | | | | Remaining | | | | | | | | Remaining | | | | | | | | Available | | | | | | | | Available | | | Number of | | | | | for Future | | | Number of | | | | | for Future | | | Securities to | | | | | Issuance | | | Securities to | | | | | Issuance | | | be | | | | | Under Equity | | | be | | | | | Under Equity | | | Issued upon | | Weights Average | | Compensation | | | Issued upon | | Weighted Average | | Compensation | | | Exercise of | | Exercise Price of | | Plans | | | Exercise of | | Exercise Price of | | Plans | | | Outstanding | | Outstanding | | (Excluding | | | Outstanding | | Outstanding | | (Excluding | | | Options, | | Options, | | Securities | | | Options, | | Options, | | Securities | | | Warrants and | | Warrants and | | Reflected | | | Warrants and | | Warrants and | | Reflected | Plan Category | | Rights | | Rights | | in Column A) | | | Rights | | Rights | | in Column A) | Equity Compensation Plans Approved by Security Holders | | 7,540,146 | | $ | 3.63 | (2) | 8,126,263 | | | 10,093,083 | (1) | $ | 3.58 | (2) | 11,189,745 | Equity Compensation Plans Not Approved by Security Holders | | — | | | — | | — | | | — | | | — | | — | Total | | 7,540,146 | | $ | 3.63 | | 8,126,263 | | | 10,093,083 | | $ | 3.58 | | 11,189,745 |
| (1) | Includes 6,414,6113,862,918 shares issuable pursuant to outstanding stock options, and 2,415,1405,309,241 shares issuable pursuant to outstanding RSUs and 1,825,719 shares issuable pursuant to outstanding PRSUs under our 2020 Stock Plan and 2012 Stock Plan. The number included for PRSUs reflects only the target number of units awarded. Assuming maximum payout for PRSU grants that have not completed the required performance period, the number of securities to be issued would increase by 37,184. |
| (2) | Only option awards were used in computing the weighted-average exercise price. |
| (3) | The number of shares of the Company’s common stock available under the 2020 Stock Plan shall increase annually on the first day of each calendar year, beginning with the calendar year ending December 31, 2021, and continuing until (and including) the calendar year ending December 31, 2030, with such annual increase equal to the lesser of (i) 5% of the number of shares of common stock issued and outstanding on December 31 of the immediately preceding fiscal year and (ii) an amount determined by the Board. |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information relating to the beneficial ownership of ourthe Company’s common stock as of March 29, 2022,31, 2023, (the “Beneficial Ownership Date”) for the following: | ■ | each person, or group of affiliated persons, known by us to beneficially own 5% of the outstanding shares of ourthe Company’s common stock; |
| ■ | each of our non-employee directors;current directors and director nominees; |
| ■ | each of our current named executive officers;NEOs; and |
| ■ | all currentof the directors and named executive officersNEOs as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, common stock subject to options, or warrants or other convertible securities held by that person that are currently exercisable or exercisable within 60 days of the Beneficial Ownership Date are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Percentage of beneficial ownership is based on 98,297,09097,018,032 shares outstanding as of the Beneficial Ownership Date.
To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name. | | | | | | | Number of | | | | | Shares of | | | | | Common | | Percentage of | | | Stock | | Outstanding | | | Beneficially | | Common | | | Owned | | Stock | Name and Address of Beneficial Owners(1) | | (Sh) | | (%) | 5% Stockholders: | | | | | Matt Ehrlichman(2) | | 19,232,015 | | 19.31% | Granahan Investment Management, LLC(3)
404 Wyman Street
Massachusetts, MA 02451 | | 13,295,572 | | 13.70% | Park West Asset Management LLC(4)
900 Larkspur Landing Circle, Suite 165
Larkspur, CA 94939 | | 11,099,833 | | 11.44% | Park West Investors Master Fund, Limited(4)
900 Larkspur Landing Circle, Suite 165
Larkspur, CA 94939 | | 10,126,824 | | 10.44% | Goldman Sachs Group, Inc.(5)
200 West Street
New York, NY 10282 | | 9,125,077 | | 9.41% | Portolan Capital Management, LLC(6)
2 International Place, 26th Floor
Boston, MA 02110 | | 6,341,098 | | 6.54% | St. Denis J. Villere & Company, L.L.C.(7)
210 Baronne Street
New Orleans, LA 70112-1727 | | 5,696,811 | | 5.87% | BlackRock, Inc.(8)
55 East 52nd Street
New York, NY 10055 | | 5,452,197 | | 5.62% | Named Executive Officers | | | | | Matt Ehrlichman(2) | | 19,232,015 | | 19.31% | Shawn Tabak(9) | | 145,405 | | * |
| | | | | | | Number of | | | | | Shares of | | | | | Common | | Percentage of | | | Stock | | Outstanding | | | Beneficially | | Common | Name and Address of Beneficial Owners(1) | | Owned | | Stock | 5% Stockholders: | | | | | Matt Ehrlichman(2) | | 17,911,291 | | 17.74% | Vulcan Value Partners, LLC(3)
Three Protective Center
2801 Highway 280 South, Suite 300
Birmingham, AL 35223 | | 10,068,923 | | 10.27% | FMR LLC(4)
245 Summer Street
Boston, MA 02210 | | 7,353,707 | | 7.50% | Southpoint Master Fund, LP(5)
1114 Avenue of the Americas, 22nd Floor
New York, NY 10036 | | 7,000,000 | | 7.10% | Capital World Investors(6)
333 South Hope Street, 55th Floor
Los Angeles, CA 90071 | | 6,412,252 | | 6.50% | Park West Asset Management LLC(7)
900 Larkspur Landing Circle, Suite 165
Larkspur, CA 94939 | | 5,161,798 | | 5.30% | BlackRock, Inc.(8)
55 East 52nd Street
New York, NY 10055 | | 5,116,975 | | 5.20% | Park West Investors Master Fund, Limited(7)
900 Larkspur Landing Circle, Suite 165
Larkspur, CA 94939 | | 4,696,538 | | 4.80% | Named Executive Officers | | | | | Matt Ehrlichman(2) | | 17,911,291 | | 17.74% | Marty Heimbigner(9) | | 514,518 | | * | Matthew Neagle(10) | | 257,481 | | * | Directors and nominees for Director (excluding CEO) | | | | | Sean Davis Kell(11) | | — | | * | Rachel Lam(12) | | 4,630 | | * | Alan Pickerill(13) | | 47,085 | | * | Asha Sharma(14) | | 239,299 | | * | Maurice Tulloch(15) | | 4,914 | | * | Regi Vengalil(16) | | 7,151 | | * | All directors and executive officers as a group (9 individuals) | | 18,986,369 | | 18.64% |
Matthew Neagle(10) | | 1,094,018 | | * | Marty Heimbigner(11) (Former CFO) | | 259,346 | | * | Directors and nominees for Director (excluding CEO) | | | | | Sean Kell(12) | | 128,303 | | * | Rachel Lam(13) | | 46,707 | | * | Alan Pickerill(14) | | 73,627 | | * | Amanda Reierson (15) | | — | | * | Maurice Tulloch(16) | | 31,023 | | * | Camilla Velasquez(17) | | — | | * | Regi Vengalil(18) | | 41,574 | | * | All directors and executive officers as a group (9 individuals) | | 21,052,018 | | 20.95% |
* | Indicates beneficial ownership of less than 1% of the outstanding shares of ourthe Company’s common stock. |
| (1) | Unless otherwise noted, the business address of those listed in the table above is 411 First1st Avenue South, Suite 501, Seattle, Washington 98104. |
| (2) | This amount includes (i) 7,922,3789,321,641 shares of Common Stockcommon stock held directly by Mr. Ehrlichman, of which 28,350 vested immediately upon a 4/8/2022 RSU grant by the Company for the 2021 STI Award, (ii) 1,892,203 shares of Common Stockcommon stock that are obtainable upon exercise of options granted to Mr. Ehrlichman by the Company, of which options to acquire 1,726,1351,892,198 shares of Common Stockcommon stock are currently exercisable and optionsan option to acquire 55,353 sharesone share of Common Stock arecommon stock is exercisable within 60 days of March 29, 2022,31, 2023, (iii) 767,672689,133 shares of Common Stockcommon stock that are obtainable upon vesting and settlement of RSUs granted to Mr. Ehrlichman by the Company, of which 72,421125,208 RSUs vest within 60 days and excludes a grant of 582,825 RSUs to be granted April 7, 2023, (iv) 683,530 shares of Common Stockcommon stock which constitute unvested Earnout |
| Consideration held by Mr. Ehrlichman, (v) 6,416,712 shares of Common Stockcommon stock held by West Equities, LLC, over which Mr. Ehrlichman has sole voting and investment power, and (vi) 228,796 shares of Common Stockcommon stock which constitute unvested Earnout Consideration held by West Equities LLC. The 683,530 shares of Common Stockcommon stock which constitute Earnout Consideration held by Mr. Ehrlichman and the 228,796 shares of Common Stockcommon stock which constitute Earnout Consideration held by West Equities LLC all are currently unvested and will only vest if, at any time during the three years following the closing of the business combination, the volume-weighted average priceVWAP of Common Stockcommon stock is greater than or equal to $22.00 for any twenty20 trading days within any thirty-trading30-trading day period. However, Mr. Ehrlichman currently has voting power over the shares of Common Stockcommon stock which constitute Earnout Consideration held directly by each of Mr. Ehrlichman and West Equities LLC and, accordingly, these shares have been added to his beneficial ownership reported herein. |
| (3) | Based solely on the information contained itin its Schedule 13G/A13G filed (Amendment No. 1)2) filed with the SEC on February 10, 2022, Vulcan Value Partners,by Granahan Investment Management, LLC (“Vulcan”Granahan”) on December 31, 2022, Granahan is the beneficial owner of 10,068,92313,295,572 shares of our common stock. Vulcan has sole dispositive and voting power over 10,068,923 shares of our common stock. Various persons, including the investment companies and owners of the separate accounts to which Vulcan serves as investment adviser, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities that are the subject of this schedule. As of January 31, 2022, Vulcan Value Partners Small Cap Fund, an investment company advised by Vulcan, owned 6.06% of issuer’s common stock. |
(4) | Based solely on the information contained it its Schedule 13G/A (Amendment No. 1) filed with the SEC by FMR LLC (“FMR”) and Abigail P. Johnson on February 9, 2022, FMR and Ms. Johnson are the beneficial owners of 7,353,707 shares of our common stock. FMRGranahan has sole power to vote or direct the vote with respect to 152,71311,608,006 shares of common stock that it beneficially owns and sole dispositive power with respect to 13,295,572 shares of common stock. It has no shared voting or shared dispositive power. The shares are beneficially owned through the following entities: FIAM LLC; Fidelity Institutional Asset Management Trust Company; Fidelity Management & Research (Hong Kong) Limited; Fidelity Management & Research Company LLC; and Strategic Advisers LLC. Ms. Johnson is a director, the Chairman and the Chief Executive Officer of FMR. Ms. Johnson and other members of the Johnson family own directly or indirectly 49% of the voting power of FMR and they and all of the Series B stockholders have entered into a voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of such shares. They do not, however, have the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act ("Fidelity Funds") advised by Fidelity Management & Research Company LLC ("FMR Co. LLC"), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds' Boards of Trustees. FMR Co. LLC carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. |
(5) | (4) | Based solely on the information contained it its Schedule 13G/A (Amendment No. 1) filed with the SEC by Southpoint Capital Advisors, LP (“Southpoint”) and John S. Clark II on February 10, 2022, Southpoint and Mr. Clark are the beneficial owners of 7,000,000 shares of our common stock. Southpoint has shared voting and dispositive power that it beneficially owns. The shares are beneficially owned through the following entities: Southpoint Capital Advisors, LP; Southpoint Capital Advisors LLC; Southpoint GP, LP; Southpoint GP, LLC; and John S. Clark, II, individually. |
(6) | Based solely on the information contained it its Schedule 13G filed with the SEC by Capital World Investors (“Capital World”) on February 14, 2022, Capital World is the beneficial owner of 6,412,252 shares of our common stock. Capital World has sole voting power and dispositive power over 6,412,252 shares of our common stock. |
(7) | Based solely on information reported on a Schedule 13G/A (Amendment No. 2)5) jointly filed on February 14, 2022January 23, 2023 by (i) Park West Asset Management LLC (“PWAM”), (ii) Park West Investors Master Fund, Limited, (“PWIMF”) and (iii) Peter S. Park (“Mr. Park”). PWAM is the investment manager to PWIMF and Park West Partners International, Limited. Mr. Park, through one or more affiliated entities, is the controlling manager of PWAM. PWAM and Mr. Park have shared voting and dispositive power over 5,161,79811,099,833 shares of our common stock and PWIMF has shared voting and dispositive power over 4,696,53810,126,824 shares of our common stock. |
(8) | (5) | Based upon publicly available information provided to us by Nasdaq as of March 31, 2023, Goldman Sachs Group, Inc. is the beneficial owner of 9,125,077 shares of common stock. |
| (6) | Based soley on the information contained in its Schedule 13G (Amendment No. 1) filed with the SEC by Portolan Capital Management LLC (“Portolan”) on December 31, 2022, Portolan is the beneficial owner of 6,341,098 shares of common stock. Portolan has sole voting power and dispositive power over 6,341,098 shares of common stock. |
| (7) | Based solely on the information contained itin its Schedule 13G jointly filed with the SEC by St. Denis J. Villere & Company, L.L.C. (“Villere”) and its members George V. Young; St. Denis J. Villere II; St. Denis J. Villere III; and Lamar G. Villere on December 31, 2022, Villere is the beneficial owner of 5,696,811 shares of our common stock. Villere has sole voting power to vote 5,570,766 shares of common stok and sole dispositive power with respect to 5,584,931 shares of common stock. Villere has shared voting over 5,682,646 shares of common stock and dispositive power over 5,696,811 shares of common stock. |
| (8) | Based solely on the information contained in its Schedule 13G (Amendment No. 1) filed with the SEC by BlackRock, Inc. (“BlackRock”) on February 4, 2022,December 31, 2022. BlackRock is the beneficial owner of 5,116,9755,452,197 shares of our common stock. BlackRock has sole power to vote or direct the vote with respect to 5,056,0555,344,795 shares of common stock that it beneficially owns and sole dispositive power with respect to 5,116,975.5,452,197 shares of common stock. It has no shared voting or dispositive power. The shares are beneficially owned through the following entities: BlackRock Advisors, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada |
| | Limited; BlackRock (Netherlands) B.V.; BlackRock Fund Advisors; BlackRock Fund Advisors; BlackRock Asset Management Ireland Limited; BlackRock Institutional Trust Company, Nation Association; BlackRock Financial Management, Inc.; BlackRock Fund Managers Ltd; BlackRock Asset Management Schweiz AG; and BlackRock Investment Management, LLC. |
| (9) | This amount includes 145,405 shares of common stock that are obtainable upon vesting and settlement of RSUs granted to Mr. Tabak. |
| (10) | This amount includes (i) 44,758736,835 shares of Common Stockcommon stock held directly by Mr. Heimbigner, (ii) 469,760 shares of Common Stock that are obtainable upon exercise of options granted to Mr. Heimbigner by the Company, of which options to acquire 176,160 shares of Common Stock are currently exercisable and options to acquire 19,572 shares of Common Stock are exercisable within 60 days of March 29, 2022. The 16,290 shares of Common Stock which constitute Earnout Consideration held by Mr. Heimbigner all are currently unvested and will only vest if, at any time during the three years following the closing of the business combination, the volume-weighted average price of Common Stock is greater than or equal to $22.00 for any twenty trading days within any thirty-trading day period. However, Mr. Heimbigner currently has voting power over the shares of Common Stock which constitute Earnout Consideration held directly by Mr. Heimbigner and, accordingly, these shares have been added to his beneficial ownership reported herein. |
(10) | This amount includes (i) 71,279 shares of Common Stock held directly by Mr. Neagle of which 17,524 vested immediately upon a 4/8/2022 RSU grant by the Company for the 2021 STI Award;Neagle; (ii) 27,390 shares of Common Stockcommon stock that are obtainable upon exercise of options granted to Mr. Neagle by the Company of which options to acquire 6,68217,460 shares of Common Stockcommon stock are currently |
| exercisable and no options to acquire 2,607 shares of Common Stock are exercisable within 60 days of March 29, 2022;31, 2023, and (iii) 158,812307,736 shares of Common Stockcommon stock that are obtainable upon vesting and settlement of RSUs granted to Mr. Neagle by the Company.Company of which 68,344 vest within 60 days of March 31, 2023 and excludes a grant of 275,517 RSUs to be granted April 7, 2023. The 22,05622,057 shares of Common Stockcommon stock which constitute Earnout Consideration held by Mr. Neagle all are currently unvested and will only vest if, at any time during the three years following the closing of the business combination, the volume-weighted average priceVWAP of Common Stockcommon stock is greater than or equal to $22.00 for any twenty20 trading days within any thirty-trading30-trading day period. However, Mr. Neagle currently has voting power over the shares of Common Stockcommon stock which constitute Earnout Consideration held directly by Mr. Neagle and, accordingly, these shares have been added to his beneficial ownership reported herein. |
| (11) | This amount includes 259,346 shares of common stock that are obtainable upon exercise of options granted to Mr. Kell joinedHeimbigner by the Board in MarchCompany, of 2022 and will be eligiblewhich options to acquire 259,346 shares of common stock are currently exercisable. Due to Mr. Heimbigner’s separation from the Company, the cancellation date for his first grantoutstanding options is December 14, 2024. The 16,290 shares of equity followingcommon stock which constitute Earnout Consideration held by Mr. Heimbigner were forfeited upon termination from the 2022 Annual Meeting of Stockholders.Company. |
| (12) | This amount includes 4,630(i) 105,167 shares of Common Stockcommon stock held directly by Mr. Kell, and (ii) 23,136 shares of common stock that are obtainable upon vesting and settlement of RSUs granted to Mr. Kell. |
| (13) | This amount includes (i) 20,357 shares of common stock held directly by Ms. Lam, and (ii) 26,350 shares of common stock that are obtainable upon vesting and settlement of RSUs granted to Ms. Lam. |
(13) | (14) | This amount includes (i) 6,81010,633 shares of Common Stockcommon stock held directly by Mr. Pickerill, (ii) 35,231 shares of Common Stockcommon stock that are obtainable upon exercise of options granted to Mr. Pickerill by the Company, of which options to acquire 29,35835,231 shares of Common Stockcommon stock are currently exercisable, (iii) 5,04426,542 shares of Common Stockcommon stock that are obtainable upon vesting and settlement of RSUs granted to Mr. Pickerill by the Company. The 1,221 shares of Common Stockcommon stock which constitute Earnout Consideration held by Mr. Pickerill all are currently unvested and will only vest if, at any time during the three years following the closing of the business Combination,combination, the volume-weighted average priceVWAP of Common Stockcommon stock is greater than or equal to $22.00 for any twenty20 trading days within any thirty-trading30-trading day period. However, Mr. Pickerill currently has voting power over the shares of Common Stockcommon stock which constitute Earnout Consideration held directly by Mr. Pickerill and, accordingly, these shares have been added to his beneficial ownership reported herein. |
(14) | (15) | Ms. Reierson joined the Board in October of 2022 and will be eligible for her first grant of equity following the Annual Meeting. |
| (16) | This amount includes (i) 63,0185,316 shares of Common Stockcommon stock held directly by Ms. Sharma,Mr. Tulloch, and (ii) 172,14025,707 shares of Common Stock that are obtainable upon exercise of options granted to Ms. Sharma by the Company, of which options to acquire 172,140 shares of Common Stock are currently exercisable, (iii) 4,141 shares of Common Stock that are obtainable upon vesting and settlement of RSUs granted to Ms. Sharma. The 60,470 shares of Common Stock which constitute Earnout Consideration held by Ms. Sharma all are currently unvested and will only vest if, at any time during the three years following the closing of the business combination, the volume-weighted average price of Common Stock is greater than or equal to $22.00 for any twenty trading days within any thirty-trading day period. However, Ms. Sharma currently has voting power over the shares of Common Stock which constitute Earnout Consideration held directly by Ms. Sharma and, accordingly, these shares have been added to her beneficial ownership reported herein. |
(15) | This amount includes 4,914 shares of Common Stockcommon stock that are obtainable upon vesting and settlement of RSUs granted to Mr. Tulloch. |
(16) | (17) | Ms. Velasquez joined the Board in October of 2022 and will be eligible for her first grant of equity following the Annual Meeting. |
| (18) | This amount includes (i) 2,7549,408 shares of Common Stockcommon stock held directly by Mr. Vengalil, and (ii) 4,39732,166 shares of Common Stockcommon stock that are obtainable upon vesting and settlement of RSUs granted to Mr. Vengalil. |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires directors, executive officers, and 10% beneficial owners of the Company’s common stock to file reports concerning their ownership of and transactions in the Company’s common stock. Based on a review of the reports of changes in beneficial ownership of Company common stock and written representations made to the Company, the Company believes that its officers, directors and 10% beneficial owners complied with all filing requirements under Section 16(a) during 2021, except that, due to inadvertent oversights, Matthew Neagle, Chief Operating Officer, filed a late Form 4 reporting a transaction that took place on July 11, 2021 and was filed one day late.
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| 2022Proxy Statement69
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WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act, of 1934, as amended, and, in accordance therewith, file electronically with the SEC our annual, quarterly and current reports, proxy statements and other information. We make available on the investor relations page of our website at https://ir.porchgroup.com/, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is www.sec.gov. The information in or accessible through the websites referred to above are not incorporated into, and are not considered part of, this proxy statement. Further, our references to the URLs for these websites are intended to be inactive textual references only. You should rely on the information contained in this proxy statement to vote your shares at the Annual Meeting. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated April 26, 2022.28, 2023. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement to stockholders at any time after that date does not create an implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make such proxy solicitations in such jurisdiction.
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| 632023Proxy Statement
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FORM 10-K We will make available, on or about April 26, 2022,28, 2023, the proxy materials, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, at www.proxyvote.com. We will also make available, solely for your reference and by courtesy, our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 on the investor relations page of our website at https://ir.porchgroup.com/. We will also provide, free of charge, to each person, to any stockholder of record or beneficial owner of our common stock as of the record date, upon the written or oral request of any such persons, a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as filed with the SEC.10-K. Requests for such copies should be addressed to our General Counsel and Secretary at the address below: Porch Group, Inc.
411 First1st Avenue South, Suite 501
Seattle, WA 98104
Attention: General Counsel and Secretary
Telephone: (855) 767-2400 Please include your contact information with the request. The exhibits set forth on the exhibit index of the Form 10-K may be made available upon request at a reasonable charge.
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| 2022Proxy Statement71
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QUESTIONS AND ANSWERS Why am I receiving these materials? We are distributing our proxy materials because ourthe Board is soliciting your proxy to vote at the Annual Meeting. This proxy statement summarizes the information you need to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares. Pursuant to SEC rules, we are providing access to our proxy materials via the Internet. Accordingly, we are sending an Internet Notice to all of our stockholders as of the record date. All stockholders may access our proxy materials on the website referred to in the Internet Notice. You may also request to receive a printed set of the proxy materials. You can find instructions regarding how to access our proxy materials via the Internet and how to request a printed copy in the Internet Notice. Additionally, by following the instructions in the Internet Notice, you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We believe that these rules allow us to provide our stockholders with the information they need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. What proposals will be voted on at the Annual Meeting? Stockholders will vote on sixthree proposals at the Annual Meeting: | ■ | Election of two Class IIIII directors named in this proxy statement until the 2025 Annual Meeting2024 annual meeting of Stockholders (or until the 2024 Annual Meeting of Stockholders if Proposal 2 is approved and the Declassification Amendment (as defined in the enclosed proxy statement) is filed and becomes effective as described in the enclosed proxy statement)stockholders and until their successors are duly elected and qualified, subject to their earlier resignation, removal or death;other termination of service; |
| ■ | the approval of an amendment to our Second Amended and Restated Certificate of Incorporation of Porch Group, Inc. (the “Certificate of Incorporation”) to declassify our Board; |
| ■ | the approval of an amendment to our Certificate of Incorporation to eliminate the supermajority voting requirement therein; |
| ■ | the approval of, on an advisory (non-binding) basis, the compensation of our Named Executive Officers (as defined in the enclosed proxy statement); |
| ■ | the approval of, on an advisory (non-binding) basis, the frequency of future advisory votes to approve the compensation of our Named Executive Officers; and |
| ■ | to ratify the appointment of Ernst & Young LLPEY as our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023; and |
| ■ | the approval of, on an advisory (non-binding) basis, the compensation of our NEOs. |
We will also consider other business, if any, that properly comes before the Annual Meeting. What happens if other business not discussed in this proxy statement comes before the meeting? The Company does not know of any business to be presented at the Annual Meeting other than the proposals discussed in this proxy statement. If other business comes before the meeting and is proper under our Certificate of Incorporation, Amended and Restated Bylaws, (the “Bylaws”), and Delaware law, the Company’s Chief Executive Officer and Chairman and General Counsel and Secretary will use their discretion in casting all of the votes that they are entitled to cast.
How does the Board recommend that stockholders vote on the proposals? OurThe Board recommends that stockholders vote “FOR” the election of the Class IIIII directors, “FOR” the amendment to the Certificate of Incorporation to declassify our Board, “FOR” the amendment to the Certificate of Incorporation to eliminate the supermajority voting requirement therein, “FOR” the advisory resolution to approve executive compensation, “ONE YEAR” on the frequency of future advisory votes on executive compensation, and “FOR” the ratification of the appointment of Ernst & Young LLPEY as our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023, and “FOR” the advisory resolution to approve NEO compensation.
Who is entitled to vote? The record date for the Annual Meeting is the close of business on April 13, 2022.11, 2023. As of the record date, 99,013,76997,226,396 shares of common stock, par value $0.0001 per share, were outstanding. Only holders of record of ourthe Company’s common stock as of the record date will be entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. Each stockholder is entitled to one vote for each share of ourthe Company’s common stock held by such stockholder on the record date. What do I need for admission to the Annual Meeting? The Annual Meeting will be held entirely over the Internet via live video webcast due to the public health impact of the COVID-19 pandemic and to support the health and wellness of our stockholders, directors, team members, and guests. The virtual Annual Meeting will also allow for greater participation by all of our stockholders, regardless of their geographic location. If you are a registered stockholder or beneficial owner of common stock holding shares at the close of business on the record date, you may attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/PRCH2022PRCH2023 and logging in by entering the 16-digit control number found on your proxy card or voter instruction form. If you lost your 16-digit control number or are not a stockholder, you will be able to attend the meeting by visiting www.virtualshareholdermeeting.com/PRCH2022PRCH2023 and registering as a guest. If you enter the meeting as a guest, you will not be able to vote your shares, examine our list of stockholders or submit questions during the meeting. You may log into the virtual annual meeting beginning at 8:45 a.m. Pacific Time on June 8, 20222023 and the Annual Meeting will begin promptly at 9:00 a.m. Pacific Time. If you experience any technical difficulties during the meeting, a toll free number will be available on our virtual stockholder login site for assistance. How can I vote my shares without attending the Annual Meeting? If you are a holder of record of shares of common stock of the Company, you may direct your vote without attending the Annual Meeting by following the instructions on the Internet Notice or proxy card to vote by Internet or by telephone, or by signing, dating and mailing a proxy card. If you hold your shares in street name via a broker, bank or other nominee, you may direct your vote without attending the Annual Meeting by signing, dating and mailing your voting instruction card. Internet or telephonic voting may also be available. Please see your voting instruction card provided by your broker, bank or other nominee for further details. Can I change my vote or revoke my proxy? You may change your vote or revoke your proxy at any time before it is voted at the Annual Meeting. If you are a stockholder of record, you may change your vote or revoke your proxy by: | ■ | delivering to the attention of the General Counsel and Secretary at the address on the first page of this proxy statement a written notice of revocation of your proxy; |
| ■ | delivering to us an authorized proxy bearing a later date (including a proxy over the Internet or by telephone); or |
| ■ | attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, by itself, revoke a proxy. |
If your shares are held in the name of a bank, broker or other nominee, you may change your vote by submitting new voting instructions to your bank, broker or other nominee. Please note that if your shares are held of record by a bank, broker or other nominee, and you decide to attend and vote at the Annual Meeting, your vote in person at the Annual Meeting will not be effective unless you present a legal proxy, issued in your name from the record holder (your bank, broker or other nominee). What is a broker non-vote? Brokers, banks or other nominees holding shares on behalf of a beneficial owner may vote those shares in their discretion on certain “routine” matters even if they do not receive timely voting instructions from the beneficial owner. With respect to “non-routine” matters, the broker, bank or other nominee is not permitted to vote shares for a beneficial owner without timely received voting instructions. The only routine matter to be presented at the Annual Meeting is the proposal to ratify the appointment of Ernst & Young LLPEY as our independent registered public accounting firm for the fiscal year ending December 31, 20222023 (Proposal 6)2). The other proposals are non-routine matters. A broker non-vote occurs when a broker, bank or other nominee does not vote on a non-routine matter because the beneficial owner of such shares has not provided voting instructions with regard to such matter. If a broker, bank or other nominee exercise their discretionary voting authority on Proposal 6,2, such shares will be considered present at the Annual Meeting for quorum purposes and broker non-votes will occur as to Proposals 1 - 5,1and 3, or any other non-routine matters that are properly presented at the Annual Meeting. Broker non-votes will have no impact on the voting results. What constitutes a quorum? The presence at the Annual Meeting, either in person or by proxy, of holders of a majority of the aggregate number of shares of our issued and outstanding common stock entitled to vote thereat as of the record date shall constitute a quorum for the transaction of business at the Annual Meeting. Earnout Shares (as defined above) will be counted for the purpose of determining the presence of a quorum and holders thereof will be entitled to vote their Earnout Shares at the Annual Meeting. Abstentions and broker non-votes will be counted as present for the purpose of determining whether a quorum is present at the Annual Meeting. What vote is required to approve each matter to be considered at the Annual Meeting? Proposal 1: Election of the Class IIIII Directors Named in this Proxy Statement Our Bylaws provide for a plurality voting standard for the election of directors. This means that the director nominee with the most votes for a particular seat is elected for that seat. An abstention or a broker non-vote on Proposal 1 will not have any effect on the election of a director. PROPOSALProposal 2: APPROVERatification of the DECLASSIFication AMENDMENTAppointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2023
The Declassification Amendment must be approved by the affirmative vote of at least 66.7% in voting powerthe majority of the outstandingour shares of common stock of the Companypresent in person or represented by proxy and entitled to vote thereon, voting together as a single class. In determining whetherat the Annual Meeting is required for the approval of Proposal 2. An abstention on Proposal 2 has received the requisite number of votes, abstentions and broker non-votes will have the same effect as votes “against” a vote “AGAINST” Proposal 2. Brokers will have discretionary authority to vote on this proposal. Accordingly, there will not be any broker non-votes on Proposal 2.
PROPOSAL 3: APPROVE the Elimination of the Supermajority Voting Standard Amendment The Elimination of the Supermajority Voting Standard Amendment must be approved by the affirmative vote of at least 66.7% in voting power of the outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, in the election of Directors at the Annual Meeting is required to approve this proposal. In determining whether Proposal 3 has received the requisite number of votes, abstentions and broker non-votes will have the same effect as votes “against” Proposal 3.
PROPOSAL 4: ADVISORY VOTE ON “SAY ON PAY”SAY-ON-PAY”
The affirmative vote of a majority of the votes duly cast on this item is required to approve this proposal. Abstentions and broker non-votes are not treated as votes cast and, therefore, will have no effect on this proposal. PROPOSAL 5: ADVISORY VOTE ON “SAY ON FREQUENCY” OF PAY
The option of one year, two years, or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been recommended by stockholders. Abstentions and broker non-votes will have no effect on this proposal. Although the advisory vote is non-binding, we will review the results of the vote and take them into account in making a determination concerning the frequency of advisory votes on executive compensation.
Proposal 6: Ratification of the Appointment of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2022
The affirmative vote of the majority of our shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting is required for the approval of Proposal 6. An abstention on Proposal 6 will have the same effect as a vote “AGAINST” Proposal 6. Brokers will have discretionary authority to vote on this proposal. Accordingly, there will not be any broker non-votes on Proposal 6.
What is the deadline for submitting a proxy? To ensure that proxies are received in time to be counted prior to the Annual Meeting, proxies submitted by Internet or by telephone should be received by 11:59 p.m. Pacific Time on the day before the Annual Meeting, and proxies submitted by mail should be received by the close of business on the day prior to the date of the Annual Meeting. What does it mean if I receive more than one Internet Notice or proxy card? If you hold your shares in more than one account, you will receive an Internet Notice or proxy card for each account. To ensure that all of your shares are voted, please complete, sign, date and return a proxy card for each account or use the Internet Notice or proxy card for each account to vote by Internet or by telephone. To ensure that all of your shares are represented at the Annual Meeting, we recommend that you vote every Internet Notice or proxy card that you receive. How will my shares be voted if I return a blank proxy card or a blank voting instruction card? If you are a holder of record of ourthe Company’s common stock and you sign and return a proxy card or otherwise submit a proxy without giving specific voting instructions, your shares will be voted: | ■ | “FOR” the election of each director nominee. |
| ■ | “FOR” the approval of the amendment to our Certificate of Incorporation to declassify our Board. |
| ■ | “FOR” the approval of the amendment to our Certificate of Incorporation to eliminate the supermajority voting requirement therein.nominee; |
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| 20222023 Proxy Statement
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| ■ | “FOR” the approval of, on an advisory (non-binding) basis, the compensation of our Named Executive Officers; |
| ■ | The approval of, on an advisory (non-binding) basis, “ONE YEAR” for the frequency of future advisory votes to approve the compensation of our Named Executive Officers; |
| ■ | “FOR” the ratification of the appointment of Ernst & Young LLPEY as our independent registered public accounting firm for the fiscal year ending December 31, 2022.2023; and |
| ■ | “FOR” the approval of, on an advisory (non-binding) basis, the compensation of our NEOs. |
If you hold your shares in street name via a broker, bank or other nominee and do not provide the broker, bank or other nominee with voting instructions (including by signing and returning a blank voting instruction card), your shares: | ■ | will be counted as present for purposes of establishing a quorum; |
| ■ | will be voted in accordance with the broker’s, bank’s or other nominee’s discretion on “routine” matters, which includes only the proposal to ratify the appointment of Ernst & Young LLPEY as our independent registered public accounting firm for the fiscal year ending December 31, 20222023 (Proposal 6)2); and |
| ■ | will not be counted in connection with the election of the Class IIIII directors named in this proxy statement (Proposal 1), or any other non-routine matters (Proposals 2 – 5) that are properly presented at the Annual Meeting. For each of these proposals, your shares will be treated as “broker non-votes.” A broker non-vote will have no impact on voting results. |
OurThe Board knows of no matter to be presented at the Annual Meeting other than Proposals 1, 2 3, 4, 5 and 6.3. If any other matters properly come before the Annual Meeting upon which a vote properly may be taken, shares represented by all proxies received by us will be voted with respect thereto as permitted and in accordance with the judgment of the proxy holders.
Who is making this solicitation and who will pay the expenses? This proxy solicitation is being made on behalf of ourthe Board. All expenses of the solicitation, including the cost of preparing and mailing the Internet Notice or this proxy statement, will be borne by the Company. Will a stockholder list be available for inspection? A listThe names of stockholders of record entitled to vote at the Annual Meetingannual meeting will be available to such stockholders at the Annual Meeting and,annual meeting for 10 days priorany purpose reasonably relevant to the Annual Meeting, at Porch Group, Inc. 411 First Avenue South, Suite 501, Seattle, WA 98104 between the hours of 9:00 a.m. and 5:00 p.m. Pacific Time.meeting. The stockholder list will also be available to stockholders of record for examination during the Annual Meeting at www.virtualshareholdermeeting.com/PRCH2022PRCH2023. You will need the control number included on your Internet Notice, proxy card, or voting instruction form, or otherwise provided by your bank, broker or other nominee.
What is “householding” and how does it affect me? We have adopted a procedure approved by the SEC, called “householding.” Under this procedure, we send only one proxy statement and one annual report to eligible stockholders who share a single address, unless we have received instructions to the contrary from any stockholder at that address. This practice is designed to eliminate duplicate mailings, conserve natural resources and reduce our printing and mailing costs. Stockholders who participate in householding will continue to receive separate proxy cards. If you share an address with another stockholder and receive only one set of proxy materials but would like to request a separate copy of these materials to be received now or in the future, please contact our mailing agent, Broadridge Financial Solutions, Inc., by calling (866) 540-7095 or writing to Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717 and an additional copy of proxy materials will be promptly delivered to you. Similarly, if you receive multiple
copies of the proxy materials and would prefer to receive a single copy, in the future, you may also contact Broadridge Financial Solutions, Inc. at the above telephone number or address. If you own shares through a bank, broker, or other nominee, you should contact the nominee concerning householding procedures. How can I find out the results of the voting at the Annual Meeting? We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. Who is soliciting my vote, and who bears the expense? The Board is soliciting your proxy, as a holder of our common stock, for use at the Annual Meeting and any adjournment or postponement of such meeting. The Company will bear the entire cost of preparing, assembling, and mailing the proxy materials. The Company may supplement our solicitation of proxies by mail with telephone, e-mail or personal solicitation by our officers or other regular employees and no additional compensation will be made to any of our employees for such solicitation services. We have requested banks, brokers and other nominees to forward the proxy materials to, and to obtain proxies from, the beneficial owners and we will reimburse such record holders for their reasonable out-of-pocket expenses in doing so upon request. When are stockholder proposals due for next year’s annual meeting of the stockholders? Our stockholders are entitled to present proposals for action at a forthcoming meeting if they comply with the requirements of our Certificate of Incorporation, our Bylaws, and the rules established by the SEC. Under Rule 14a-8 under the Securities Exchange Act of 1934,SEC rules, if you wanta stockholder wants us to include a proposal in our proxy statement and form of proxy for presentation at our 2024 annual meeting of stockholders (pursuant to Rule 14a-8 of the proxy materials for our 2023 Annual Meeting of Stockholders,Exchange Act), we must receive the proposal at our principal executive offices at(Corporate Secretary, Porch Group, Inc. 411 First1st Avenue South, Suite 501, Seattle, WA 98104 no later than98104) by the close of busines on December 30, 2022.31, 2023. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included. Pursuant to our Bylaws, aAny stockholder director nomination or proposal of other business submitted outsideintended to be presented for consideration at the 2024 annual meeting of stockholders, but not intended to be considered for inclusion in our proxy statement and form of proxy relating to such meeting (i.e., not pursuant to Rule 14a-8 of the process established in Rule 14a-8 and nominations of directorsExchange Act), must be received no earlierby us at the address stated above not less than 90 days and not more than 120 days before the first anniversary of the date of the Annual Meeting. Therefore, such notice must be received between February 9, 2024 and the close of business on March 10, 2024 to be considered timely. However, if our 2024 Annual Meeting occurs more than 30 days before or 60 days after June 8, 2023 and2024, we must receive nominations or proposals (A) not later than March 10, 2023the close of business on the later of the 90th day prior to the date of the 2024 annual meeting of stockholders or the 10th day following the day on which public announcement is made of the date of the 2024 annual meeting of stockholders, and (B) not earlier than the 120th day prior to the 2024 annual meeting of stockholders.
The above-mentioned proposals must otherwisealso comply with our Bylaws and the proxy solicitation rules of the SEC and Nasdaq, including but not limited to the information requirements set forth in our Bylaws. Any proposal or nomination should be addressed to the attention of our General Counsel and Secretary, and we suggest that it be sent by certified mail, return receipt requested. In addition, to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than Porch Group’sthe Company’s nominees must provide notice that sets forthalso comply with the information required byadditional requirements of Rule 14a-19 under14a-19(b) of the Exchange Act, no later than April 9, 2023.to the extent applicable. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the foregoing and other applicable requirements. Whom can I contact for further information? If you would like additional copies, without charge, of this proxy statement or if you have questions about the Annual Meeting, the proposals, or the procedures for voting your shares, you should contact our General Counsel and Secretary at Porch Group, Inc. 411 First1st Avenue South, Suite 501, Seattle, WA 98104 or by telephone at (855) 767-2400.
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| 20222023 Proxy Statement
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OTHER MATTERS We have no knowledge of any other matters that may come before the Annual Meeting and do not intend to present any other matters. However, if any other matters shall properly come before the meeting or any adjournment, our representatives will have the discretion to vote as they see fit unless directed otherwise. If you do not plan to attend the Annual Meeting, in order that your shares may be represented and in order to assure the required quorum, please sign, date and return your proxy promptly. In the event you are able to attend the Annual Meeting, at your request, we will cancel your previously submitted proxy.
APPENDIX A
CERTIFICATE OF AMENDMENT TO THE SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF PORCH GROUP, INC.
* * * *
Adopted in accordance with the provisions
of §242 of the General Corporation Law
of the State of Delaware
* * * *
The undersigned, being an authorized officer of Porch Group, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:
FIRST: That the original Certificate of Incorporation of the Corporation was filed with the Delaware Secretary of State on July 31, 2019 under the name PropTech Acquisition Corporation.
SECOND: That an Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State on November 21, 2019. The Second Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State on December 23, 2020 (such certificate, as so amended and restated, the “Certificate of Incorporation”).
THIRD: That Article V of the Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
Section 5.1. Board Powers. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. In addition to the powers and authority expressly conferred upon the Board by statute, this Second Amended and Restated Certificate, as it may be further amended from time to time, or the Amended and Restated By-Laws of the Corporation (as amended from time to time in accordance with the provisions hereof and thereof, the “By-Laws”), the Board is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL and this Second Amended and Restated Certificate.
Section 5.2. Number, Election and Term.
(a) The number of directors of the Corporation, other than those who may be elected by the holders of one or more series of the Preferred Stock voting separately by class or series, shall be fixed from time to time in the manner provided in the By-laws.
(b) Subject to Section 5.5 hereof, until the 2024 annual meeting of the stockholders of the Corporation (the “2024 Annual Meeting”), the Board shall be divided into three classes, as nearly equal in number as possible and designated Class I, Class II and Class III. Following the effectiveness of this Certificate of Amendment to the Second Amended and Restated Certificate, (i) each director elected at the 2021 annual meeting of the stockholders of the Corporation shall continue to serve for a three-year term expiring at the 2024 Annual Meeting, (ii) each director elected at the 2022 annual meeting of the stockholders of the Corporation shall be elected for a two-year term expiring at the 2024 Annual Meeting and (iii) each director elected at the 2023 annual meeting of the stockholders of the Corporation shall be elected for a one-year term expiring at the 2024 Annual Meeting and, in each case, until the election and qualification of his or her respective successor in office, subject to such director’s earlier death, resignation or removal. Commencing at the 2024 Annual Meeting, and at each annual meeting of stockholders of the Corporation thereafter, the classification of the directors shall terminate and all directors shall be elected for a one-year term expiring at the next annual meeting of the stockholders and until the election and qualification of their respective successors in office, subject to their earlier death, resignation or removal. Subject to Section 5.5 hereof, if the number of directors that constitute the Board is changed prior to the 2024 Annual Meeting, any increase or decrease shall be apportioned by the Board among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors constituting the Board shorten the term of any incumbent director. Subject to the rights of the holders of one or more series of Preferred Stock, voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, the election of directors shall be determined by a plurality of the votes cast by
the stockholders present in person or represented by proxy at the meeting and entitled to vote thereon.
(c) Subject to Section 5.5 hereof, a director shall hold office (i) prior to the 2024 Annual Meeting, until the annual meeting for the year in which his or her term expires and (ii) from and after the 2024 Annual Meeting, until the annual meeting of the stockholders held in the year following the year of his or her election and, in each case, until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal. There shall be no limit on the number of terms a director may serve on the Board.
(d) Unless and except to the extent that the By-Laws shall so require, the election of directors need not be by written ballot. The holders of shares of Common Stock shall not have cumulative voting rights with regard to the election of directors.
Section 5.3. Newly Created Directorships and Vacancies. Subject to Section 5.5 hereof, newly created directorships resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal or other cause may be filled solely and exclusively by a majority vote of the remaining directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders), and any director so chosen shall hold office (i) prior to the 2024 Annual Meeting, for the remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred and (ii) from and after the 2024 Annual Meeting, until the next annual meeting of the stockholders and, in each case, until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.
Section 5.4. Removal. Subject to Section 5.5 hereof and except as otherwise required by law, (i) prior to the 2024 Annual Meeting, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, and (ii) from and after the 2024 Annual Meeting, any or all of the directors may be removed from office at any time with or without cause by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
Section 5.5. Preferred Stock - Directors. Notwithstanding any other provision of this Article V, and except as otherwise required by law, whenever the holders of one or more series of the Preferred Stock shall have the right, voting separately by class or series, to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships shall be governed by the terms of such series of the Preferred Stock as set forth in this Second Amended and Restated Certificate (including any Preferred Stock Designation).
FOURTH: That the terms and provisions of this Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation were duly adopted by the Board of Directors and the stockholders of the Corporation in accordance with Section 242 of the General Corporation Law of the State of Delaware.
* * * * *
IN WITNESS WHEREOF, the undersigned does hereby certify under penalties of perjury that this Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation is the act and deed of the undersigned and the facts stated herein are true and accordingly has hereunto set his or her hand this ___ day of _________, 2022.
Porch Group, Inc., a Delaware corporation
APPENDIX B CERTIFICATE OF AMENDMENT TO THE SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF PORCH GROUP, INC.
* * * *
Adopted in accordance with the provisions
of §242 of the General Corporation Law
of the State of Delaware
* * * *
The undersigned, being an authorized officer of Porch Group, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:
FIRST: That the original Certificate of Incorporation of the Corporation was filed with the Delaware Secretary of State on July 31, 2019 under the name PropTech Acquisition Corporation.
SECOND: That an Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State on November 21, 2019. The Second Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State on December 23, 2020 (such certificate, as so amended and restated, the “Certificate of Incorporation”).
THIRD: That Article X of the Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Second Amended and Restated Certificate (including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time in force that may be added or inserted, in the manner now or hereafter prescribed by this Second Amended and Restated Certificate and the DGCL; and, except as set forth in Article VIII, all rights, preferences and privileges of whatever nature herein conferred upon stockholders, directors or any other persons by and pursuant to this Second Amended and Restated Certificate in its present form or as hereafter amended are granted subject to the right reserved in this Article X. Notwithstanding any other provisions of this Second Amended and Restated Certificate or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Corporation required by law or by this Second Amended and Restated Certificate or any Preferred Stock Designation filed with respect to a series of Preferred Stock, (i) prior to the 2024 Annual Meeting, the affirmative vote of the stockholders holding at least 66.7% of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Article V and (ii) from and after the 2024 Annual Meeting, the affirmative vote of the stockholders holding at least a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Article V.
FOURTH: That the terms and provisions of this Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation were duly adopted by the Board of Directors and the stockholders of the Corporation in accordance with Section 242 of the General Corporation Law of the State of Delaware.
* * * * *
IN WITNESS WHEREOF, the undersigned does hereby certify under penalties of perjury that this Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation is the act and deed of the undersigned and the facts stated herein are true and accordingly has hereunto set his or her hand this ___ day of _________, 2022.
Porch Group, Inc., a Delaware corporation
APPENDIX C:A: USE OF NON-GAAP FINANCIAL MEASURES
PORCH GROUP, INC.Non-GAAP Financial Measures
Reconciliation ofPorch’s annual and quarterly reports includes non-GAAP financial measures, such as Adjusted EBITDA (Loss)(loss), Adjusted EBITDA (loss) as a percent of revenue, average revenue per monetized service and revenue less cost of revenue.
Porch defines Adjusted EBITDA (loss) as net income (loss) adjusted for interest expense, net, income taxes, other expenses, net, depreciation and amortization, impairment loss on intangible assets and goodwill, non-cash losses and impairment of property, equipment and software, stock-based compensation expense and acquisition-related impacts, amortization of intangible assets, gains (losses) recognized on changes in the value of contingent consideration arrangements, if any, gain or loss on divestures and certain transaction costs. Adjusted EBITDA (loss) as a percent of revenue is defined as Adjusted EBITDA (loss) divided by GAAP total revenue. Average revenue per monetized services in quarter is the average revenue generated per monetized service performed in a quarterly period. When calculating average revenue per monetized service in a quarter, average revenue is defined as total quarterly service transaction revenues generated from monetized services. Porch management uses these non-GAAP financial measures as supplemental measures of Porch’s operating and financial performance, for internal budgeting and forecasting purposes, to Net Income (Loss)evaluate financial and strategic planning matters, and to establish certain performance goals for incentive programs. Porch believes that the use of these non-GAAP financial measures provides investors with useful information to evaluate Porch’s operating and financial performance and trends and in comparing Porch’s financial results with competitors, other similar companies and companies across different industries, many of which present similar non-GAAP financial measures to investors. However, Porch’s definitions and methodology in calculating these non-GAAP measures may not be comparable to those used by other companies. In addition, Porch may modify the presentation of these non-GAAP financial measures in the future, and any such modification may be material. Year EndedYou should not consider these non-GAAP financial measures in isolation, as a substitute to or superior to financial performance measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude specified income and expenses, some of which may be significant or material, that are required by GAAP to be recorded in Porch’s consolidated financial statements. Porch may also incur future income or expenses similar to those excluded from these non-GAAP financial measures, and Porch’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures reflect the exercise of management judgment about which income and expense are included or excluded in determining these non-GAAP financial measures.
See the reconciliation tables below for more details regarding these non-GAAP financial measures, including the reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. Revenue Less Cost of Revenue The following table reconciles revenue less cost of revenue for the years ended December 31, 2022, 2021 (all numbers and 2020, respectively (dollar amounts in thousands):
| | | | | | | | | | | | | | | | Corporate | | Insurance | | Vertical
Software | | Consolidated | | Adjusted EBITDA (loss) | | $ | (53,760) | | $ | 9,007 | | $ | 20,733 | | $ | (24,020) | | Adjusted EBITDA (loss) as a percentage of revenue | | | N/A | | | 16.3 | % | | 15.1 | % | | (12.5) | % | Less: | | | | | | | | | | | | | | Interest expense | | | 4,739 | | | 508 | | | 510 | | | 5,757 | | Income tax benefit | | | (8,139) | | | (1,788) | | | (346) | | | (10,273) | | Depreciation and amortization | | | 2,915 | | | 3,432 | | | 10,039 | | | 16,386 | | Gain on extinguishment of debt | | | (5,099) | | | — | | | (11) | | | (5,110) | | Non-cash long-lived asset impairment charge | | | 252 | | | — | | | 298 | | | 550 | | Non-cash stock-based compensation expense | | | 33,179 | | | 876 | | | 4,537 | | | 38,592 | | Revaluation of contingent consideration | | | (2,807) | | | — | | | 563 | | | (2,244) | | Revaluation of earnout liability | | | 18,519 | | | — | | | — | | | 18,519 | | Revaluation of private warrant liability | | | 15,389 | | | — | | | — | | | 15,389 | | Acquisition and related expense | | | 5,331 | | | 29 | | | — | | | 5,360 | | Other income, net | | | (81) | | | — | | | (259) | | | (340) | | Net income (loss) | | $ | (117,958) | | $ | 5,950 | | $ | 5,402 | | $ | (106,606) | |
| | | | | | | | | | | | Year Ended December 31, | | | 2022 | | 2021 | | 2020 | Revenue | | $ | 275,948 | | $ | 192,433 | | $ | 72,299 | Less: Cost of revenue | | | (107,577) | | | (58,725) | | | (17,562) | Revenue less cost of revenue | | | 168,371 | | | 133,708 | | | 54,737 | Less: Selling and marketing costs | | | 113,848 | | | 84,273 | | | 41,665 | Less: Product and technology costs | | | 59,565 | | | 47,005 | | | 28,546 | Less: General and administrative costs | | | 110,619 | | | 85,795 | | | 28,199 | Less: Impairment loss on intangible assets and goodwill | | | 61,386 | | | — | | | — | Less: Gain on divestiture of businesses | | | — | | | — | | | (1,442) | Total operating expenses | | $ | 452,995 | | $ | 275,798 | | $ | 114,530 | Operating loss | | $ | (177,047) | | $ | (83,365) | | $ | (42,231) |
Adjusted EBITDA (loss)
The following table reconciles net loss to Adjusted EBITDA (loss) for the years ended December 31, 2022, 2021 and 2020, respectively (dollar amounts in thousands):
| | | | | | | | | | | | | Year Ended December 31, | | | 2022 | | 2021 | | 2020 | | Net loss | | $ | (156,559) | | $ | (106,606) | | $ | (54,032) | | Interest expense | | | 8,723 | | | 5,757 | | | 14,734 | | Income tax expense (benefit) | | | 842 | | | (10,273) | | | (1,689) | | Depreciation and amortization | | | 27,930 | | | 16,386 | | | 6,644 | | Gain on extinguishment of debt | | | — | | | (5,110) | | | (5,748) | | Other expense (income), net | | | (571) | | | (340) | | | 6,931 | | Impairment loss on intangible assets and goodwill | | | 61,386 | | | — | | | — | | Non-cash losses and impairment of property, equipment and software | | | 637 | | | 550 | | | 611 | | Non-cash stock-based compensation expense | | | 27,041 | | | 38,592 | | | 11,296 | | Revaluation of contingent consideration | | | 6,944 | | | (2,244) | | | 1,700 | | Revaluation of earnout liability | | | (13,822) | | | 18,519 | | | — | | Revaluation of private warrant liability | | | (14,486) | | | 15,389 | | | (2,427) | | Acquisition and other transaction costs | | | 2,334 | | | 5,360 | | | 311 | | SPAC transaction bonus | | | — | | | — | | | 3,350 | | Adjusted EBITDA (loss) | | $ | (49,601) | | $ | (24,020) | | $ | (18,319) | | Adjusted EBITDA (loss) as a percentage of revenue | | | (18) | % | | (12) | % | | (25) | % |
APPENDIX D:B: USE OF NON-GAAP KEY PERFORMANCE MEASURES PORCH GROUP, INC.
Key Performance Measures Years Ended December 31, 2021 and 2020
Operating Metrics
In the management of our businesses, we identify, measure and evaluate a variety of operating metrics. The key performance measures and operating metrics we use in managing our businesses are set forth below. These key performance measures and operating metrics are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), and may not be comparable to or calculated in the same way as other similarly titled measures and metrics used by other companies. The key performance measures presented have been adjusted for divested Porch businesses in 2020. | ● | Average Companies in Quarter — Porch provides software and services to home services companies and, through these relationships, gains unique and early access to homebuyers and homeowners, assists homebuyers and homeowners with critical services such as insurance, warranty and moving. Porch’sThe Company’s customers include home services companies, for whom Porchthe Company provides software and services and who provide introductions to homebuyers and homeowners. Porchhomeowners and tracks the average number of home services companies from which it generates revenue each quarter in order to measure ourthe ability to attract, retain and grow our relationships with home services companies. Porch management defines the average number of companies in a quarter as the straight-line average of the number of companies as of the end of period compared with the beginning of period across all of Porch’sthe Company’s home services verticals that (i) generate recurring revenue and (ii) generated revenue in the quarter. For new acquisitions, we determine the number of customerscompanies is determined in theirthe initial quarter based on the percentage of the quarter they werethe acquired business is a part of Porch.the Company. |
| ● | Average Revenue per Account per Month in Quarter — Management views Porch’sthe Company’s ability to increase revenue generated from existing customers as a key component of Porch’s growth strategy. Average Revenue per Account per Month in Quarter is defined as the average revenue per month generated across all our home services company customer accounts in a quarterly period. Average Revenue per Account per Month in Quarter is derived from all customers and total revenue; not only customers and revenues associated with Porch’s referral network.revenue. |
The following table summarizes our Average Companies in Quarter and Average Revenue per Account per Month in Quarter for each of the quarterly periods indicated: | | | | | | | | | | | | | | . | | 2022 | | 2022 | | 2022 | | 2022 | | | | Q1 | | Q2 | | Q3 | | Q4 | | Average Companies in Quarter | | | 25,545 | | | 28,773 | | | 30,951 | | | 30,860 | | Average Revenue per Account per Month in Quarter | | $ | 829 | | $ | 822 | | $ | 833 | | $ | 693 | | | | | | | | | | | | | | | | | | 2021 | | 2021 | | 2021 | | 2021 | | | | Q1 | | Q2 | | Q3 | | Q4 | | Average Companies in Quarter | | | 13,995 | | | 17,082 | (2) | | 20,419 | | | 24,601 | | Average Revenue per Account per Month in Quarter (adjusted) | | $ | 637 | | $ | 935 | (1)(2) | $ | 987 | | $ | 776 | | | | | | | | | | | | | | | | | | 2020 | | 2020 | | 2020 | | 2020 | | | | Q1 | | Q2 | | Q3 | | Q4 | | Average Companies in Quarter | | | 10,903 | | | 10,523 | | | 10,792 | | | 11,157 | | Average Revenue per Account per Month in Quarter | | $ | 484 | | $ | 556 | | $ | 664 | | $ | 556 | |
| | | | | | | | | | | | | | | 2021 | | 2021 | | 2021 | | 2021 | | | Q1 | | Q2 | | Q3 | | Q4 | Average Companies in Quarter | | | 13,995 | | | 17,120 | | | 20,472 | | | 24,603 | Average Revenue per Account per Month in Quarter | | $ | 637 | | $ | 1,000 | | $ | 1,022 | | $ | 699 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2020 | | 2020 | | 2020 | | 2020 | | | Q1 | | Q2 | | Q3 | | Q4 | Average Companies in Quarter | | | 10,903 | | | 10,523 | | | 10,792 | | | 11,157 | Average Revenue per Account per Month in Quarter | | $ | 484 | | $ | 556 | | $ | 664 | | $ | 556 |
| ● | Monetized Services in Quarter — Porch connects consumers with home services companies nationwide and offers a full range of products and services where homeowners can, among other things: (i)(1) compare and buy home insurance policies (along with auto, flood and umbrella policies) and warranties with competitive rates and coverage; (ii)(2) arrange for a variety of services in connection with their move, from labor to load or unload a truck to full-service, long-distance moving services; (iii)(3) discover and install home automation and security systems; (iv)(4) compare Internet and television options for their new home; (v)(5) book small handyman jobs at fixed, upfront prices with guaranteed quality; and (vi)(6) compare bids from home improvement professionals who can complete bigger jobs. PorchThe Company tracks the number of monetized services performed through its platform each quarter and the revenue generated per service performed in order to measure to measure market penetration with homebuyers and homeowners and Porch’sthe Company’s ability to deliver high-revenue services within those groups. Monetized services per quarterServices in Quarter is defined as the total number of unique services from which wethe Company generated revenue, including, but not limited to, new |
| | and renewing insurance and warranty customers, completed moving jobs, security installations, TV/Internet installations or other home projects, measured over a quarterly period. |
| ● | Average Revenue per Monetized Service in Quarter — Management believes that shifting the mix of services delivered to homebuyers and homeowners toward higher revenue services is a keyan important component of Porch’s growth strategy. Average revenueRevenue per monetized servicesMonetized Services in quarterQuarter is the average revenue generated per monetized service performed in a quarterly period. When calculating Average Revenue per Monetized Service in quarter, average revenue is defined as total quarterly service transaction revenues generated from monetized services. |
The following table summarizes our monetized services and average revenue per monetized service for each of the quarterly periods indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | 2021 | | 2021 | | 2021 | | 2022 | | 2022 | | 2022 | | 2022 | | | | Q1 | | Q2 | | Q3 | | Q4 | | Q1 | | Q2 | | Q3 | | Q4 | | Monetized Services in Quarter | | | 182,779 | | | 302,462 | | | 329,359 | | | 260,352 | | | 263,183 | | | 333,596 | | | 318,452 | | | 212,992 | | Average Revenue per Monetized Service in Quarter | | $ | 92 | | $ | 129 | | $ | 144 | | $ | 132 | | $ | 175 | | $ | 158 | | 185 | 185 | | $ | 219 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | 2021 | | 2021 | | 2021 | | | | | Q1 | | Q2 | | Q3 | | Q4 | | Monetized Services in Quarter | | | | 190,733 | | | 316,674 | | | 338,157 | | | 267,683 | | Average Revenue per Monetized Service in Quarter (adjusted) | | | $ | 88 | | $ | 113 | | $ | 133 | | $ | 150 | | | | | | | | | | | | | | | | | | | | 2020 | | 2020 | | 2020 | | 2020 | | | | | Q1 | | Q2 | | Q3 | | Q4 | | Monetized Services in Quarter | | | | 152,165 | | | 181,520 | | | 198,165 | | | 169,949 | | Average Revenue per Monetized Service in Quarter | | | $ | 93 | | $ | 86 | | $ | 97 | | $ | 98 | |
| | | | | | | | | | | | | | | 2020 | | 2020 | | 2020 | | 2020 | | | Q1 | | Q2 | | Q3 | | Q4 | Monetized Services in Quarter | | | 152,165 | | | 181,520 | | | 198,165 | | | 169,949 | Average Revenue per Monetized Service in Quarter | | $ | 93 | | $ | 86 | | $ | 97 | | $ | 98 |
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| VIEW MATERIALSSignature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. V16301-P87097 Nominees: 01) Matthew Ehrlichman 02) Maurice Tulloch 3. To approve of, on an advisory (non-binding) basis, the compensation of our Named Executive Officers (as defined in the enclosed proxy statement). The Board of Directors recommends you vote FOR proposals 2 and 3. 2. To ratify the appointment of Ernst & VOTE w SCAN TOYoung LLP as the independent registered public accounting firm for Porch Group, Inc. for the year ending December 31, 2023. NOTE: The proxies are authorized to vote at their discretion upon any other matter that may properly come before the meeting or any adjournment or postponement thereof. 1. To elect two Class III directors to serve until the 2024 ! ! ! Annual Meeting of Stockholders. For All Withhold All For All Except For Against Abstain ! ! ! ! ! ! Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer PORCH GROUP, INC. To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR the following: PORCH GROUP, INC. 411 FIRST1ST AVENUE SOUTH, SUITE 501 SEATTLE, WA 98104 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on June 7, 2022.2023. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/PRCH2022PRCH2023 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on June 7, 2022.2023. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SCAN TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D81876-P72588 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. PORCH GROUP, INC. The Board of Directors recommends you vote FOR the following: For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! ! ! 1. To elect two Class II directors to serve until the 2025 Annual Meeting of Stockholders. Nominees: 01) Alan Pickerill 02) Regi Vengalil For Against Abstain The Board of Directors recommends you vote FOR proposals 2, 3, 4 and 6 and EVERY YEAR for Proposal 5. ! ! ! Every ! ! ! Every ! ! ! Abstain 2. To approve an amendment to the Second Amended and Restated Certificate of Incorporation of Porch Group, Inc. (the “Certificate of Incorporation”) to declassify our board of directors. To approve an amendment to our Certificate of Incorporation to eliminate the Supermajority Voting Standard (as defined in the enclosed proxy statement). 3. 4. To approve of, on an advisory (non-binding) basis, the compensation of our Named Executive Officers (as defined in the enclosed proxy statement). Every Year 2 Years 3 Years ! ! ! ! 5. To approve of, on an advisory (non-binding) basis, the frequency of future advisory votes to approve the compensation of our Named Executive Officers. For Against Abstain ! ! ! 6. To ratify the appointment of ErnstVIEW MATERIALS & Young LLP as the independent registered public accounting firm for Porch Group, Inc. for the year ending December 31, 2022. NOTE: The proxies are authorized to vote at their discretion upon any other matter that may properly come before the meeting or any adjournment or postponement thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer Signature [PLEASE SIGN WITHIN BOX Date Signature (Joint Owners) DateVOTEw
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| Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K and Proxy Statement are available at www.proxyvote.com. D81877-P72588V16302-P87097 PORCH GROUP, INC. Annual Meeting of Stockholders June 8, 2022,2023, 9:00 AM PDT The stockholder(s)stockholders hereby appoint(s)appoint Matthew Ehrlichman and Matthew Cullen, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s)authorize them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of PORCH GROUP, INC. that the stockholder(s) is/stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM PDT on June 8, 2022,2023, at www.virtualshareholdermeeting.com/PRCH2022PRCH2023 and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side |
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