Item 5.02.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Senior Level Performance Bonus Plan
On April 7, 2023, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of Porch Group, Inc. (the “Company”) approved the 2023 bonus program under the Senior Level Performance Bonus Plan for the Company’s executive officers (Matthew Ehrlichman, Chief Executive Officer, Shawn Tabak, Chief Financial Officer and Matthew Neagle, Chief Operating Officer) (“2023 Bonus Plan”). For Messrs. Ehrlichman and Neagle, the target bonus is 100% of their respective 2023 base salaries. For Mr. Tabak, the target bonus is 50% of his 2023 base salary. The bonus opportunity under the 2023 Bonus Plan can be earned based upon a performance grid specifying the combined achievement levels of two objective Company performance goals, revenue and Adjusted EBTIDA (loss) as a percentage of revenue. The performance goals at target are based upon the Company’s 2023 budget, subject to an approved adjustment policy by the Compensation Committee. This performance-based 2023 bonus program has a threshold and maximum bonus opportunity of 50% and 200% of the applicable target bonus, with a maximum payout of 200% of the target bonus. The 2023 Bonus Plan does not have a distinct discretionary weighted component, which differs from the approved bonus plan for 2022. The Committee does, however, retain negative discretion to reduce the bonus for any reason.
2023 Long-Term Incentive Program
On April 7, 2023, the Compensation Committee approved the 2023 long-term incentive program for Messrs. Ehrlichman, Tabak and Neagle. As of such date, the Compensation Committee granted 2023 annual equity awards to:
| ● | Mr. Ehrlichman with an aggregate grant value of $5.5 million, consisting of 1,748,474 performance-based restricted stock units (“PRSUs”) with a grant value of $4.125 million and 582,825 restricted stock units (“RSUs”) with a grant value of $1.375 million. |
| ● | Mr. Tabak with an aggregate grant value of $390 thousand, consisting of 123,983 PRSUs with a grant value of $292.5 thousand and 41,328 RSUs with a grant value of $97.5 thousand. |
| ● | Mr. Neagle with an aggregate grant value of $2.6 million, consisting of 826,551 PRSUs with a grant value of $1.95 million and 275,517 RSUs with a grant value of $650 thousand. |
The grant values were denominated in PRSUs and RSUs based on the 60-trading day volume-weighted average price of a share of common stock of the Company (the “Common Stock”) ending on April 4, 2023 (the “VWAP Common Stock Price”), which methodology aligned with the annual equity awards for other Company employees. The PRSU and RSU awards were granted subject to the PRSU and RSU award agreements previously approved by the Compensation Committee (the “PRSU Award Agreement,” and “RSU Award Agreement,” respectively), and the 2020 Stock Plan. Each PRSU and RSU represents the right to receive, upon vesting and satisfaction of any performance conditions, one share of Common Stock.
2023 PRSU Awards
The PRSU awards are subject to following three distinct performance goals:
| ● | Absolute Share Price (50% weighting): The share price goal is based upon the closing price of a share of Common Stock being equal to or greater than specified prices (which were calculated based upon compound growth rates of the VWAP Common Stock Price) over any 90-day average within the first 18 months or 30-day average within the last 18 months of the three-year performance period ending April 5, 2026. |
| ● | Profit – Adjusted EBITDA (25% weighting): The financial profitability goal is measured by the Company’s achievement of Adjusted EBITDA in 2025. |