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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________________________________________
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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BLUCORA, INC.
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https://cdn.kscope.io/40192f8bedc2f632acb54d0bf00fc5fb-blucorargblogoa09.jpg
6333 North State Highway 161, 4th Floor
Irving, Texas 75038

Dear Fellow Stockholder:

At Blucora, a strong culture and sound corporate governance are the foundations of our financial and operational performance, based upon our vision of providing tax-smart financial solutions that empower people’s goals. This year’s proxy statement reflects our continued focus on performance and growth, an engaged and effective Board, and the culture upon which we continue to build.
Over the last year, the Board’s efforts have included overseeing the following:
Smooth transitions in our senior management, including the appointment of Christopher W. Walters as our President and CEO in January 2020. The Board selected Chris for this role given his extensive knowledge of our business from his service on our Board, along with his technological and marketing expertise and demonstrated leadership experience. We are confident Chris will drive the successful achievement of Blucora’s strategy.

Continued refreshment of the Board following an extensive search to identify qualified and diverse candidates, resulting in the appointment of two new independent and highly qualified directors, Mark A. Ernst and Jana R. Schreuder, each of whom has previously served as a director on a public company board and has decades of relevant industry experience.

Blucora's diversity and inclusion efforts, as reflected by the diverse composition of our Board, with four of our eight directors being female (with three of these four serving in leadership roles), and across our executive leadership team and the rest of our business, with overall workforce diversity increasing to 38% in 2019.

The acquisition and integration of 1st Global, further enhancing our tax-focused wealth management platform and enabling our advisors to minimize taxes and enable better long-term outcomes for their clients.

On behalf of our Board, I want to thank you for your ongoing support of both our Board and the Company. We are cognizant of the challenges and uncertainty posed by the spread of coronavirus (or COVID-19) for the Company, our people, our stockholders, our advisors, and other stakeholders, and our Board remains diligent and focused on its work. In light of the emerging public health impact of the COVID-19 outbreak and taking into account the recent federal, state and local guidance that has been issued, we have determined that the 2020 Annual Meeting will be held in a virtual meeting format with no physical in-person meeting. We look forward to your attendance virtually via the Internet, or by proxy, at our 2020 Annual Meeting.

We encourage you to read more about your Board, our strong corporate governance practices, and our executive compensation programs in this Proxy Statement. We are grateful for your support of our Company and our Board and thank you in advance for voting promptly.
 
 
Sincerely,
 
 
https://cdn.kscope.io/40192f8bedc2f632acb54d0bf00fc5fb-gcpsignature.jpg
 
 
 
 
Georganne C. Proctor
 
 
Chair of the Board of Directors
 
 










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6333 North State Highway 161, 4th Floor
Irving, Texas 75038

To My Fellow Stockholders:

As I write this, our country is working through a turbulent time. An unprecedented pandemic has necessitated remote working, social distancing and other measures to ensure we’re keeping ourselves, our families and our colleagues safe and healthy. I want to express my thanks to the entire Blucora team for their swift actions to help us manage the business through this time and I want to thank all of you for your patience as we sort out the “new normal.”

These are not the circumstances under which I expected to write my first shareholder letter to you in my new role as President and CEO of Blucora. I’ve had the pleasure of being a part of Blucora since 2014, having served on the Board of Directors. I also had the opportunity to play a leadership role in overseeing our current strategy, including driving our tax-centric vision and championing our acquisitions of HD Vest and 1st Global. From my position on the Board, I’ve also had the benefit of gaining deep insights into the business, its successes, growth opportunities, challenges and how we’ve been able to position Blucora well for the future.

It’s for these reasons, along with the dedicated employees, that I jumped at the opportunity to expand my role with the Company and assume the CEO position. I believe we have the potential to accelerate organic growth with a cash engine that can be a great enabler. I’m also genuinely excited about the purpose of the Company, including maximizing value for consumers and enabling them to live better financial lives. In short, even with all of the challenges in the world and economy, I couldn’t be more pleased to be here today and spearhead the next phase of our growth.

2019 In Review

2019 was a year filled with significant accomplishments at Blucora. Our team delivered solid results while positioning the Company for strong future growth. A few things in particular stood out to me:

Growing total revenue by 28%, including an increase in wealth management revenue of 36%, reflecting the addition of 1st Global in May 2019, which added significant scale, complementary capabilities and high recurring revenue;
Generating Net Income Attributable to Blucora, Inc. of $48 million, a (5)% change from 2018, and increased non-GAAP Adjusted EBITDA to $137 million, up 15% from 2018;*
Increasing Increased net income per diluted share attributable to Blucora, Inc. ("Diluted EPS") by 9% to $0.98 and non-GAAP earnings by 11%, crossing the $2.00 mark at $2.11 non-GAAP EPS;*
Achieving record net flows including approximately $1 billion into advisory;
Achieving $6.5 million in synergies related to 1st Global, which was more than double our original estimate at the time of acquisition;
Achieving our 22nd consecutive year of revenue growth at TaxAct, growing 12% and maintaining the stability in our monetized units;
Completed $28.3 million of a $100.0 million share repurchase program, supported by strong cash flow generation; and
Last, but not least, bringing great new talent into the organization.

Wealth Management

Our wealth management business seeks to build long-term value by driving increased total client assets and increased monetization of those assets through the adoption of advisory services and maximizing the capture of the economics of client cash. Our approach is straightforward: adopt best practices, provide the best tools and services that enable advisors to maximize their productivity, deliver on our value proposition around the creation of tax alpha and expand our advisor base. In 2019, we made solid progress in advancing our goals and positioning ourselves for future growth.






Acquisition of 1st Global. Perhaps the biggest news of the year in wealth management, was completing the acquisition of 1st Global. The acquisition added significant scale to our business, increasing total client assets by 50% and our nationwide community of tax-focused financial advisors by 25%. The increased scale has positioned us to drive substantial revenue and cost synergies, and by the end of 2019 we were able to announce that we had already achieved $6.5 million in synergies from the acquisition.
In addition to scale, the acquisitions complementary nature enhanced our business with a strong position in large accounting firms, a large proportion of advisory assets and strong capabilities in key areas such as onboarding, advisor development and in-house portfolio management. In the end, it expanded our established tax-optimized investing footprint by creating the largest and most capable tax-focused wealth manager, positioned to provide better service and capabilities to our advisors, and ultimately better outcomes for their clients.
Introducing Avantax. A major step for us in 2019-and another change-was unifying our wealth management businesses (HD Vest and 1st Global, the #1 and #2 tax-focused independent broker-dealers in the industry) under a new brand name-Avantax Wealth Management. The combination of 'avant', which means original and innovative, with 'tax' reflects our unique position in the industry. With the launch of Avantax Wealth Management we have created a powerful brand for our business as we work diligently to redefine what tax-smart wealth management means and provide superior results for our clients.
Recruiting. In 2019 we recruited close to $500 million in total new client assets. This included about 80 tax professionals that we trained as new wealth managers and about 90 that transitioned over as established advisors.
Advisory Growth. We achieved record net flows into advisory of approximately $1 billion. This, along with the 1st Global acquisition, helped advisory assets as a percentage of total client assets end the year at a new record high of 39%, as compared to about 30% in 2018. This higher proportion of advisory is important, as advisory, along with trailing commissions and sweep revenue, are more dependable recurring revenue streams that further reduce our dependence on transactions.
Tax Smart Innovation. Finally, we officially launched our proprietary tax-smart investing software platform, or TSI, which helps advisors systematically capture tax-alpha for clients. In a world where investors give up one to two percentage points of performance each year due to taxes, the potential of this software is incredible. We began beta testing in 2018, officially launched in June to very strong demand, and we ended 2019 with about 900 advisors on the platform, which was nearly double our goal of 500. We now have our first three TSI modules in the market with advisors:
Tax-Loss Harvester™ – quickly identifies securities with unrealized losses for potential harvesting opportunities, potentially helping to turn losses into a client’s tax advantage.
Capital Gains Analyzer™ quickly collects, organizes and calculates available mutual fund capital gain distribution estimates as well as their potential tax impact before year end. This efficiency further enables our financial professionals to focus on planning and tax-optimized decisions as opposed to data gathering.
Social Security Plannershows a client a comprehensive analysis of their Social Security benefit claiming options, enabling them to make an informed decision that supports their retirement goals.

With these three modules, we have now commercialized what could truly be considered disruptive technology that will help further fuel our growth. We are creating a far more useful set of capabilities than are currently available anywhere else in the marketplace, differentiating our advisors and giving them an incredible edge in driving incremental value for clients.

While we had a number of positives in 2019, there are also areas where we could have performed better. While we were able to capture cost synergies related to the acquisition, we still have work to do on harmonizing processes and technology. We also fell a bit short in terms of service to our advisors as we worked through the integration. Our advisors have trust-based relationships with their clients and we have a trust-based relationship with them. We need to truly delight our advisors with service quality, and enable them with technology so that they can not only give their clients a world-class service experience, but also enable them to grow their practices. I’ll touch more on this a bit later in my letter.

Summarizing the year for wealth management, we performed well in many areas and had a number of successes, while also having clear areas of opportunity. I’m pleased with our results and the hard work that everyone in this business put in was evident. Net flows have been good, the shift to advisory continues and we continued to put elements in place to drive future growth, including our next-generation tax-smart tools to maximize after-tax client returns.






Tax Preparation

In Tax preparation, we seek to provide simple, delightful (tax filing) experiences that unlock every tax advantage for our customers. We increasingly look to do this with a balanced growth profile across units and pricing, with competitive SKUs at a normalized, smaller discount to our largest competitor, and with a differentiated position in the marketplace.

In 2019, we reported a strong tax season in the early part of the calendar year (tax year 2018) and quickly got to work on product improvements for tax year 2019. A few of these highlights included:

Tax Year 2018 Performance. For tax year 2018, we made improvements to make the tax filing experience easier and more rewarding for customers. We introduced an upgraded mobile experience as well as innovations like 10-minute taxes-a streamlined process to guide certain filers with simple returns to complete their returns in just ten minutes or less. We also introduced refund marketplace which rewarded filers with a bonus amount on a gift card, when they allocated a portion of their refund to gift cards from an assortment of national retailers. And we updated our proprietary BluPrint analysis, which analyzes a tax return and uncovers real savings opportunities for our customers. Importantly, for the full year, TaxAct revenue grew 12%, achieving its 22nd consecutive year of revenue growth.
Preparing for Tax Year 2019. The moment one tax season ends we are hard at work preparing for the next. This off season the primary focus of the team has been the client experience. The team spent countless hours scouring every page and every word on the customer journey, making it much easier and more enjoyable while removing friction points for filers at every level of complexity. We believe this is reflected in a significantly improved customer experience for Tax Year 2019, which we believe will continue to drive increases in conversion in-season, with less leakage in the customer funnel, as well as better retention in subsequent seasons.
We have also prepared new or improved branded product features, which we believe will have strong appeal and differentiation. These include:
My Tax Plan - this new feature creates a custom plan for TaxAct filers, to save more on taxes next year. Our technology personalizes each plan to the customer's unique tax situation, provides specific savings amounts, and includes a downloadable "checklist" of actions to save. We believe this feature will be a real and differentiated benefit to customers and help bring them back next year;
Pro Tips - is a visually enticing way to reveal lesser-known tax advantages, customized for the individual filer, that help customers get a bigger refund this year and for years to come. This feature is expanded and greatly enhanced for this season; and
Popular Features - we also brought back some more of our most popular features, including an enhanced and personalized Deduction Maximizer, which helps customers uncover additional deductions that in our experience are commonly overlooked, as well as our $100,000 accuracy guarantee.
We believe we’re the only online tax software company that offers this level of personalized insight and guidance into the financial health of our customers. This delivers a significant value to our customers who can save real money now and for years to come.
Additionally, for tax year 2019 we are also expanding our testing of an assisted offering, where tax pros offer live tax help. Our goal is to exit this season with a fully vetted plan to launch a more fulsome offering, profitably and at scale next season should our testing prove a viable economic model.
Similar to wealth management, while we had successes in 2019 in tax preparation, we also have areas for improvement. First, while we have done very well improving our consumer product recently, we have not kept pace in making similar marketing improvements, ensuring that we have the best tools, technology, data and partnerships in place to maximize cost effective customer acquisition and retention. Having marketing and product working in concert will be powerful, and can be improved for next season. Also, while we have been gaining share in our TaxAct Pro product, and have been making some upgrades, we have not kept pace making the product improvements there as fast as we could. We have also leaned heavily in to pricing in recent seasons, and had a product SKU that fell out of line with the market in terms of our Basic SKU. Both of these issues have put us in a more challenging position in the near-term.
Overall, the improvements we made to our product and capabilities in the off season were some of the largest we have made in many years. While we still have areas to improve, Curtis has done a great job in his first full off-season at the helm and the improvements are already showing results with higher conversion rates.





Looking Ahead
Our efforts in 2019 have certainly advanced the ball in terms of positioning us for future growth. We generated solid results with record performance in a number of categories, made a smart acquisition and invested in the business to drive returns. That said, and while I’ve only just begun my tenure as CEO, I already see a number of ways we could significantly further optimize to spur higher organic growth rates, and I’m excited to be getting those initiatives moving in 2020.
Wealth Management. As we navigate the currently unsteady markets, in wealth management we have made several strategic moves that have positioned us well. Over the past two years, the vast majority of this organization has been focused on the clearing conversion, and simultaneous roll-out of a new technology stack for advisors, as well as the subsequent acquisition and combination of the two firms. These moves will certainly serve us well as we move ahead, but have come at the cost of delaying our focus on spurring organic growth, which is a very large opportunity. In fact, you may have heard my predecessor say that we could theoretically grow to 7-8 times our current size without our advisors having to introduce themselves to a single person they don’t already do business with, and without us having to bring on a single new advisor. This is true, and this will be our top priority moving forward.
We are actively engaged to: (1) improve our service and operational performance to delight advisors and reduce bottlenecks to opening accounts or servicing clients, (2) align systems, processes and technology to improve efficiency and scalability, and (3) maximize advisor performance by providing tools and support to deliver increased value to clients, to efficiently prospect and process and to ultimately increase client penetration and wallet share.
This business has never had more potential; and the stage is now set to turn our attention to organic growth. We have a great deal of opportunity to accelerate growth, and an execution-focused team in place to start capturing it.
Tax Preparation. Having stabilized monetized units over the past two seasons while raising prices, going forward we are looking for more balanced growth across units and pricing, with competitive SKUs at a normalized, smaller discount and a differentiated position in the marketplace.
While we have made a giant leap in our product quality, we will continue to push it further and I believe the significant improvements we witnessed in customer enjoyment year over year, will continue. We will continue to make improvements in the experience, including differentiated features, to drive further gains in customer conversion. As impressive as the year-over-year gains have been in product quality, I believe we have an opportunity to make a similar leap in our marketing approach, utilizing innovative, data driven and cost-effective strategies to drive customer acquisition and retention. When we can come into next tax season with product and marketing both optimized and working in concert, it will be a powerful combination. And, as we attract these new customers and delight them with our improved product experience which is saving them money and identifying ways to improve their financial situation, we also have an opportunity to drive customer engagement beyond tax season to improve retention.
While we’re currently facing various challenges and opportunities in light of the extension to the federal tax filing deadline (from April 15 to July 15) due to the coronavirus outbreak, our team is working diligently to ensure that we continue to provide a seamless experience for our customers.
I see a great deal of opportunity for the business over the medium to long-term, and that’s perhaps one of the things that has been most exciting to me in terms of my initial observations. The product improvements will drive higher retention rates going forward and when combined with improved marketing efforts and additional engagement, we’ll be in stronger position to grow units in coming years.
Cross-Business Synergies. In addition to the opportunities within each business, which will be our core focus, we will explore a few opportunities across our businesses that haven’t really been thoroughly tested to-date. A couple examples I’d highlight include:

Prospecting within our TaxAct Pro user base to convert to Avantax advisors. We currently have more than 20,000 TaxAct Pro users and about 4,000 Avantax advisors. Even if only 5% were interested in converting, it would represent a 25% increase in our advisor base.
Leverage TaxAct Marketing Resources to Help Avantax Growth. Another example is in applying our marketing resources in TaxAct to help our Avantax advisors grow their businesses. Most advisor practices have limited marketing resources and experience, so if we can leverage the significant marketing capabilities within our organization to help them either drive new customer acquisition or increased wallet share, it could make a material impact.





Conclusion

As a company, we occupy an amazing position as we have the opportunity to support millions of Americans, every year in the pursuit of their financial goals. As a CEO, I feel incredibly fortunate to have two strong businesses that have significant potential and are well positioned to capture that upside.

I would like to thank all of our employees across the company for their hard work and dedication. 2019 brought a number of changes throughout Blucora and you rose to the challenge of each one.

I want all our shareholders to know that we are focused on realizing the full potential for Blucora. We will invest in the capabilities and talent we need to continue to create value for you - and all our stakeholders. Thank you for the trust and confidence you place in us.

And finally, thank you also to our advisors, customers, and clients. Whether you’re an old hand with us or new to Blucora, you play a major role in our success and we couldn’t be more pleased to be able to play a role in yours.

 
 
Sincerely,
 
 
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Christopher W. Walters
 
 
President, Chief Executive Officer and Director
 
 
























* Non-GAAP Financial Measures and Forward-Looking Statements

This letter includes references to certain non-GAAP financial measures. For reconciliations between our non-GAAP measures and the nearest GAAP measures, please refer to Appendix A. As non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures, you should carefully read the Form 10-K included in our 2019 Annual Report, which includes our consolidated financial statements prepared in accordance with GAAP. Additionally, this letter includes statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of federal securities laws, and are based on Blucora’s current expectations and assumptions. For a discussion identifying important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see Blucora’s filings with the Securities and Exchange Commission including, but not limited to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Form 10-K portion of our 2019 Annual Report.




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6333 North State Highway 161, 4th Floor
Irving, Texas 75038

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 21, 2020
TO THE STOCKHOLDERS:
Notice is hereby given that the 2020 annual meeting of stockholders (the "2020 Annual Meeting") of Blucora, Inc., a Delaware corporation, on May 21, 2020 at 9:00 AM Central Daylight Time can be accessed virtually at www.proxydocs.com/BCOR for the following purposes:
1.
To elect the eight directors named in this Proxy Statement and nominated by the Board to serve on the Board until the 2021 annual meeting of stockholders (the "2021 Annual Meeting");
2.
To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2020;
3.
To approve, on a non-binding advisory basis, the compensation of our named executive officers ("Named Executive Officers" or "NEOs"), as disclosed in this Proxy Statement;
4.
To approve an amendment to the Blucora, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan”) to, among other things, increase the number of shares available for issuance to plan participants;
5.
To approve an amendment to the Blucora, Inc. 2016 Employee Stock Purchase Plan (the "ESPP") to increase the number of shares available for issuance to plan participants; and
6.
To transact such other business as may properly come before the 2020 Annual Meeting or any adjournment, postponement or recess thereof.
The Board of Directors has fixed the close of business on March 23, 2020 as the record date (the "Record Date") for the determination of stockholders entitled to notice of and the right to vote at the 2020 Annual Meeting.
We have elected to deliver a Notice of Internet Availability of Proxy Materials, rather than sending a full set of proxy materials in the mail, which we believe reduces the environmental impact of our annual meeting. The Notice of Internet Availability was first sent to stockholders on or about April 9, 2020, and the proxy materials were made available on www.proxydocs.com/BCOR on the same day. For specific instructions regarding voting online, by telephone, or by mail, please see the instructions in this Proxy Statement and on the Notice of Internet Availability of Proxy Materials. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the 2020 Annual Meeting. Please read it carefully.
By Order of the Board of Directors,
 
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Ann J. Bruder
Chief Legal Officer and Secretary
April 9, 2020

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO VIRTUALLY ATTEND THIS MEETING, PLEASE VOTE ONLINE, BY TELEPHONE, OR SIGN, DATE, AND RETURN YOUR PROXY CARD (IF YOU RECEIVED ONE), OR VOTE IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH ON YOUR VOTING INSTRUCTION CARD.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21, 2020: THIS NOTICE OF ANNUAL MEETING AND PROXY STATEMENT, THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS AND THE 2019 ANNUAL REPORT ARE AVAILABLE AT WWW.PROXYDOCS.COM/BCOR.





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PROXY STATEMENT
for
2020 ANNUAL MEETING OF STOCKHOLDERS OF BLUCORA, INC.
May 21, 2020

PROXY STATEMENT SUMMARY

This summary is included to provide an introduction and overview of the information contained in this Proxy Statement. This is a summary only and does not contain all of the information we have included in this Proxy Statement. You should refer to the full Proxy Statement for more information about us and the proposals you are being asked to consider. For more complete information regarding our 2019 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission (the "SEC") on February 28, 2020.
 
 
 
 
 
Information About the Annual Meeting of Stockholders

The Board of Directors (the "Board" or "Board of Directors") of Blucora, Inc. (referred to throughout this Proxy Statement as “Blucora," the “Company, "we," "us" or "our") is soliciting proxies for the 2020 Annual Meeting and any adjournment, postponement or recess of such meeting. The Notice of Internet Availability was first sent to stockholders on or about April 9, 2020, and the proxy materials were made available on www.proxydocs.com/BCOR on the same day.
Time and Date
9:00 AM, Central Daylight Time, on May 21, 2020
Access*
Our 2020 Annual Meeting can be accessed virtually at: www.proxydocs.com/BCOR
Record Date
March 23, 2020
Voting
Each share of Common Stock is entitled to one vote at the 2020 Annual Meeting
* In light of the coronavirus (or COVID-19) outbreak, for the safety of all of our people, including our stockholders, and taking into account the recent federal, state and local guidance that has been issued, we have determined that the 2020 Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. If you plan to participate in the virtual meeting, please see "Questions and Answers Regarding Voting Procedures." Stockholders will be able to attend, vote and submit questions (both before, and for a portion of, the meeting) from any location via the Internet.
 
 
 
 
 
Proposals Included in this Proxy Statement and Recommendations for Voting
Management Proposals:
Board Recommendation:
For more detail, see page:
Proposal 1 - Election of Directors
"FOR" EACH NOMINEE
Proposal 2 - Ratification of Appointment of Independent Registered Public Accounting Firm for 2020
FOR
Proposal 3 - Advisory Vote to Approve the Compensation of the Company's Named Executive Officers
FOR
Proposal 4 - Amendment to Blucora, Inc. 2018 Long-Term Incentive Plan
FOR
Proposal 5 - Amendment to Blucora, Inc. 2016 Employee Stock Purchase Plan
FOR


Blucora, Inc. | 2020 Proxy Statement 1





Financial and Business Information

We are a leading provider of technology-enabled, tax-smart financial solutions to consumers, small business owners, tax professionals, financial advisors, and certified public accounting firms. We help people manage their financial lives and optimize their taxes through two primary businesses: (i) our wealth management business, which consists of Avantax Wealth Management, Inc. and its subsidiaries (collectively, “Avantax"), which operated under the HD Vest and 1st Global brands prior to the rebranding in September 2019, and (ii) our tax preparation business, TaxAct.
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2019 Financial and Business Highlights
For the 2019 fiscal year we achieved growth in several key metrics we use to measure our financial performance and achieved several strategic milestones. In 2019, we:
Increased total revenue by 28% from 2018, including an increase in wealth management revenue of 36%; (1)(4)
Completed the acquisition of 1st Global (the "1st Global Acquisition"), adding significant scale and complementary capabilities to our Wealth Management business;
Generated Net Income Attributable to Blucora, Inc. of $48 million, a (5)% change from 2018, and increased non-GAAP Adjusted EBITDA to $137 million, up 15% from 2018; (3)(4)
Increased net income per diluted share attributable to Blucora, Inc. ("Diluted EPS") by 9% from 2018;
Increased non-GAAP EPS by 11% from 2018; (3)(5)
Achieved record advisory net flows of $1.0 billion in our Wealth Management business;
Recorded our 22nd consecutive year of revenue growth at TaxAct, growing 12% compared to 2018;
Completed $28.3 million of a $100.0 million share repurchase program, supported by strong cash flow generation; and
Achieved $6.5 million in synergies related to the 1st Global Acquisition, more than double our original estimate.


Blucora, Inc. | 2020 Proxy Statement 2



(1)
On May 6, 2019, we acquired 1st Global, a tax-focused wealth management company. The operations of 1st Global are included in our operating results as part of the Wealth Management segment from the date of the 1st Global Acquisition.
(2)
Represents the compound annual growth rate (“CAGR”) for each financial metric.
(3)
See Appendix A—Non-GAAP Reconciliation for a description of each non-GAAP financial measure and a reconciliation of each measure to the most directly comparable GAAP financial measure.
(4)
Financial measures used in our annual bonus plan. See “Annual Short-Term Incentive Plan/Bonus Payments" beginning on page 63 for additional information.
(5)
Financial measure used for our 2019 PRSUs. See “Long-Term Equity Grants" beginning on page 66 for additional information.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information presented herein includes forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that are presented herein, that address activities, events or developments that may occur in the future (often, but not always, through the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “predict,” “project,” “forecast,” “target,” “potential,” “goal,” “objective,” and “outlook”) are forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. Any such forward-looking statement involves uncertainties and risks that could cause results to differ materially from those projected in or implied by any such forward-looking statement, including those additional risks and factors discussed in reports filed with the SEC by the Company from time to time, including the uncertainties and risks discussed in the sections entitled “Risk Factors” and “Forward-Looking Statements” in our most recent annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q. Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, the Company will not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events.

REFERENCES TO BLUCORA, COMMON STOCK, AND OUR SUBSIDIARIES

Unless otherwise indicated, references to “Blucora,” the “Company,” “we,” “our,” and “us” in the biographical and compensation information for directors and executive officers below refers to Board membership, employment and compensation with respect to Blucora, Inc.

Unless otherwise indicated, references to "Common Stock" refers to our common stock, par value $0.0001.

Unless otherwise indicated, references to:
"Wealth Management" or "Wealth Management business" consists of the operations of Avantax Wealth Management, which formerly operated under the HD Vest and 1st Global brands prior to the Rebranding;
"Rebranding" refers to the rebranding of our Wealth Management business in 2019 as "Avantax Wealth Management," which operated under the HD Vest and 1st Global brands prior to the Rebranding, by which HD Vest and 1st Global were renamed and converted;
“HD Vest” refers to H.D. Vest, Inc. and its subsidiaries;
“1st Global” refers to 1st Global, Inc. and its subsidiaries;
"Tax Preparation" or the "Tax Preparation business" consists of the operations of TaxAct; and
"TaxAct" refers to TaxAct, Inc.

INCORPORATION BY REFERENCE

To the extent that this Proxy Statement is incorporated by reference into any other filing by us under the Securities Act of 1933 (as amended, the “Securities Act”), or the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), the sections of this Proxy Statement entitled “Compensation Committee Report” and “Audit Committee Report” will not be deemed incorporated unless specifically provided otherwise in such filing, to the extent permitted by the rules of the SEC. Information contained on or connected to our web site is not incorporated by reference into this Proxy Statement and should not be considered part of this Proxy Statement or any other filing that we make with the SEC.


 
 
 
 



Blucora, Inc. | 2020 Proxy Statement 3




Proposal 1 - Election of Directors

We are asking you to elect a total of eight directors to each hold office for a one-year term expiring at the 2021 Annual Meeting: Steven Aldrich, Mark A. Ernst, E. Carol Hayles, John MacIlwaine, Georganne C. Proctor, Jana R. Schreuder, Christopher W. Walters, and Mary Zappone (collectively, the “Director Nominees”).

Information regarding our Director Nominees is set forth below. For additional information concerning this proposal and our Director Nominees, see “Proposal One—Election of Directors” on page 24, and for additional information regarding our directors, see "Information Regarding the Board of Directors" on page 11.
 
 
 
 
Board Committees
Name (1)
Age
Director Since
Employment Description
Audit
Compensation
Nominating and
Governance
Georganne C. Proctor
Chair of the Board
63
2017
Former CFO of TIAA-CREF
 
 
x

Steven Aldrich
50
2017
Former Chief Product Officer, GoDaddy Inc.
 
x

Chair
Mark A. Ernst
61
2020
Managing Partner of Bellevue Capital
x
 
 
E. Carol Hayles
59
2018
Former CFO of CIT Group Inc.
x
Chair
 
John MacIlwaine
50
2018
Former VP, General Manager at Braintree
x

 
 
Jana R. Schreuder
61
2020
Former EVP and COO of Northern Trust
 
x

 
Christopher W. Walters
46
2014
President and CEO of Blucora
 
 
 
Mary S. Zappone
55
2015
CEO of Brace Industrial Group
Chair
 
x

(1)
All directors are independent in accordance with NASDAQ listing rules except Christopher W. Walters, the President and CEO of the Company.

 
 
 
 

Proposal 2 - Auditor Ratification

We are asking you to ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2020. Although a stockholder vote for this appointment is not required by law and is not binding on us, our Audit Committee will take your vote on this proposal into consideration when appointing or making changes to the Company's independent registered public accounting firm in the future.

For additional information concerning this proposal, see “Proposal Two—Ratification of Appointment of Independent Registered Public Accounting Firm for 2020” on page 30, and for information concerning the fees we paid to Ernst & Young LLP during 2019 and 2018, see “Fees Paid to Independent Registered Public Accounting Firm for 2019 and 2018” on page 47.

 
 
 
 

Blucora, Inc. | 2020 Proxy Statement 4



Proposal 3 - Advisory Vote on Executive Compensation
We are asking you to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers (NEOs) for 2019 as disclosed in “Compensation Discussion and Analysis” and the accompanying compensation tables and related narrative discussion beginning on page 53. We believe that our NEO compensation program described throughout our “Compensation Discussion and Analysis” reflects an overall pay-for-performance culture that aligns the interests of our executives with those of our stockholders. Our compensation programs are designed to provide a competitive level of compensation to attract, motivate and retain talented and experienced executives and to reward our NEOs for the achievement of short- and long-term strategic and operational goals and increased total stockholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. In addition, we have implemented a number of executive compensation best practices and policies over the last few years that we believe reflect sound governance and promote the long-term interests of our stockholders.
For additional information concerning this proposal, see “Proposal Three—Advisory Vote to Approve the Compensation of the Company's Named Executive Officers” beginning on page 31. In addition, please see the information set forth in "Compensation Discussion and Analysis” and the accompanying compensation tables and related narrative discussion beginning on page 53, including the highlights of our 2019 executive compensation information included under “Executive Summary.”

 
 
 
 

Proposal 4 - Approval of an Amendment to Our 2018 Long-Term Incentive Plan

We are asking you to approve an amendment (the “Plan Amendment”) to the Blucora, Inc. 2018 Long-Term Incentive Plan (as amended, restated, amended and restated, supplemented or otherwise modified and in effect prior to the Plan Amendment, the “2018 Plan”), which was recommended by the Compensation Committee and approved by the Board on March 31, 2020, subject to and effective upon stockholder approval at the 2020 Annual Meeting. To allow for the 2018 Plan to continue to be a significant part of our overall compensation strategy, the Board proposes that the 2018 Plan be amended to (i) increase the number of shares authorized thereunder by an additional 1,692,000 shares of Common Stock and (ii) convert to a non-fungible share pool, such that all equity awards count on a 1:1 basis against the number of shares authorized for issuance under the 2018 Plan.

The Company uses the 2018 Plan to grant equity awards to a substantial portion of eligible participants. Eligible participants currently include our approximately 680 employees, approximately 4,000+ advisors who use our wealth management platform, and our outside directors. The Board and Compensation Committee believe that the number of shares of Common Stock currently available under the 2018 Plan is insufficient to meet the Company’s future equity compensation needs. Further, the Board and the Compensation Committee believe that to enhance long-term stockholder value, the Company needs to maintain competitive employee compensation, incentive, and retention programs. Providing employees and other key contributors an equity stake in the Company’s success is a vital component of these programs. The purpose of the 2018 Plan is to attract and retain the services of key employees, key contractors, and outside directors of the Company and its related companies and to provide such persons with a proprietary interest in the Company through the granting of equity awards that will increase the interest of such persons in the Company’s welfare, furnish an incentive to such persons to continue their services for the Company or its related companies and provide a means through which the Company may attract and retain highly qualified persons as employees, contractors, and outside directors. In setting the number of shares authorized proposed for issuance under the Plan Amendment, the Compensation Committee and the Board considered the number of eligible plan participants, the number of outstanding equity awards and shares currently available for grant under the 2018 Plan, the Company’s historical granting practices and burn rate, the certain market and economic conditions that have impacted, and may continue to impact, the value of the Common Stock, and the level of potential dilution that will result from adoption of the Plan Amendment.

For a discussion of awards under the 2018 Plan as components of the Company’s executive compensation program, please refer to the “Compensation Discussion and Analysis” section beginning on page 53.

For additional information concerning this proposal, see “Proposal Four—Approval of an Amendment to the Blucora, Inc. 2018 Long-Term Incentive Plan” beginning on page 32. The complete text of the 2018 Plan and the Plan Amendment are each attached to this Proxy Statement as Appendix B.

 
 
 
 

Blucora, Inc. | 2020 Proxy Statement 5




Proposal 5 - Approval of an Amendment to Our 2016 Employee Stock Purchase Plan

We are asking you to approve an amendment (the “ESPP Amendment”) to the Blucora, Inc. 2016 Employee Stock Purchase Plan (as amended, restated, amended and restated, supplemented or otherwise modified and in effect prior to the Amendment, the “ESPP”), which was recommended by the Compensation Committee and approved by the Board on March 31, 2020, subject to and effective upon stockholder approval at the 2020 Annual Meeting. The Board proposes that the ESPP be amended to increase the number of shares authorized thereunder by an additional 350,000 shares of Common Stock.

The Board recommends approval of the ESPP Amendment so the Company can continue to offer its eligible employees with an opportunity to increase their proprietary interest in the Company and participate in the success of the Company by purchasing shares of Common Stock through payroll deductions on favorable terms. The Board believes that the ESPP promotes the interests of the Company and our stockholders by encouraging employees of the Company to become stockholders, therefore aligning employee interest with our growth and success. The Board also believes that the opportunity to acquire a proprietary interest in the Company through the acquisition of shares of Common Stock pursuant to the ESPP is an important aspect of our ability to attract and retain highly qualified and motivated employees.

For additional information concerning this proposal, see “Proposal Five—Approval of an Amendment to the Blucora, Inc. 2016 Employee Stock Purchase Plan” beginning on page 41. The complete text of the ESPP and the ESPP Amendment are each attached to this Proxy Statement as Appendix C.

 
 
 
 



Blucora, Inc. | 2020 Proxy Statement 6



Board and Corporate Governance Highlights
We are committed to sound corporate governance in order to promote the long-term interests of our stockholders, strengthen Board and management accountability and build public trust in our Company. Our governance framework is described throughout this Proxy Statement and includes the following highlights:
Board and Corporate Governance Highlights
7 of 8 Directors are Independent
Independent Directors on All Board Committees
Annual Director Elections
Risk Oversight by Full Board and Committees
50% Gender Diversity on Board
Three Female Directors in Board Leadership Positions
Majority Voting for Directors in Uncontested Elections With Resignation Policy
Stockholders can Call Special Meetings
Regular Board and Committee Meetings, Including Regularly Scheduled Executive Sessions
Rigorous Stock Ownership Requirements for Directors and Executive Officers
Regular Board and Committee Self-Evaluations
Disclosure of Board Skills Matrix
Separate Chair and Chief Executive Officer, with Independent Chair
Hedging and Pledging Prohibitions
Restrictive Insider Trading Policy
Code of Conduct Administered by the Board of Directors
In addition, we believe that many of our compensation practices reflect sound corporate governance. See “Executive Compensation Best Practices” on page 57 for additional information.
Board Skills, Background and Core Competencies
Our Nominating and Governance Committee regularly evaluates the skills, qualifications, and competencies identified as important for directors to provide effective oversight to our Company. The matrix below shows the areas of experience and expertise that our Nominating and Governance Committee have identified that our directors bring to the Board.
https://cdn.kscope.io/40192f8bedc2f632acb54d0bf00fc5fb-directorskillmatrix.jpg

Blucora, Inc. | 2020 Proxy Statement 7




Board Diversity and Inclusion
The Company is committed to fostering an environment of diversity and inclusion, including among its Board members. Therefore, in considering director nominees, the Nominating and Governance Committee considers candidates who represent a mix of backgrounds and a diversity of race, ethnicity, gender, age, skills and professional experiences that enhance the quality of the deliberations and decisions of the Board, in the context of the perceived needs of the structure of the Board at that point in time. Currently, four of our eight Board members are women, and the age of our Board members ranges from 46 to 63. Notably, three of our Board leadership positions, including the Chair of the Board, are currently held by female directors.

https://cdn.kscope.io/40192f8bedc2f632acb54d0bf00fc5fb-directoragea01.jpg https://cdn.kscope.io/40192f8bedc2f632acb54d0bf00fc5fb-diversitychart.jpg
        https://cdn.kscope.io/40192f8bedc2f632acb54d0bf00fc5fb-directortenure.jpg

Blucora, Inc. | 2020 Proxy Statement 8



Social and Environmental Responsibility
At Blucora, our mission is to provide products and services to help consumers manage their financial lives in a tax-smart manner. We also believe that we have a responsibility to the communities and the environment in which we operate, and we believe that operating our company in an environmentally and socially responsible manner will help drive the long-term growth of our business. Our social and environmental initiatives are an integral part of how we operate and are intended to foster a culture where our employees are proud of the company for which they work. We attempt to fulfill our social and environmental responsibilities in many ways, including by adhering to the beliefs set forth below.
Focus Area
What We Believe
Business
Demonstrating that we are a responsible and ethical business partner by conducting our business based on our Code of Ethics and Conduct, which emphasizes conducting all business relationships with honesty, integrity and respect.

People
Fostering an inclusive and diverse work environment that enables all of our employees to achieve and contribute. This is reflected in the composition of our board and executive leadership team, which each reflect diversity of race and/or gender. Notably, as of March 2020, women constituted 41% of our workforce and 35% of our senior leadership roles, while overall diversity of our employees increased to 38%.

For Avantax Wealth Management, we are launching a Women's and Diversity Initiative for our advisors to focus on recruitment and development of our female advisors. Additionally, members of our executive leadership team sponsor and participate in a women's senior leadership networking group.

Ensuring our employees have the opportunity to participate in an array of professional development opportunities and that our hiring and labor practices are fair. We are continuously evaluating ways to minimize human biases in all of our talent programs and processes.

We recognize the value and importance of an effective culture, and strive to provide an inclusive and open workplace, where opinions of all are welcomed and encouraged. Employee engagement has continued to climb, as reflected through the regular gathering of company culture and employee engagement surveys.
Community
Strengthening our communities by providing all employees with paid time off to volunteer at charitable organizations of their choosing and by matching certain charitable donations by employees. We are particularly proud of our efforts to help families dealing with the crisis of food insecurity, and we and our employees have participated in programs and food drives, including through partnerships with the North Texas Food Bank, to ensure families in need have access to meals during the holidays.

During 2019, we donated copies of our TaxAct software to lower income taxpayers through our participation in the Internal Revenue Service’s Free File Alliance. We also formed an alliance with Credible.com in 2018 to help educate millennial TaxAct customers about student loan repayments and assist them in exploring refinancing options to improve their financial lives. We also raised funds to help our advisors in areas impacted by hurricanes and other natural disasters in 2017, 2018 and 2019.
Environment
Minimizing our environmental impact and carbon emissions through minimizing the waste we send to landfills, purchasing environmentally responsible office products and encouraging our colleagues to adopt environmentally responsible habits such as reducing internal copy paper usage and document printing.

We have adopted eSignature capabilities across certain aspects of our business, including our Wealth Management segment, to allow our clients and employees to electronically review and sign documents and we have been furnishing our proxy statements to our stockholders electronically since 2017 in order to reduce the environmental impact of our annual meeting. In addition, all of the 3.7 million consumer tax returns and 1.8 million professionally prepared tax returns that our Tax Preparation segment filed in 2018 were completed electronically, eliminating the need to print and submit hard copies of lengthy tax returns to the Internal Revenue Service.
We take our social and environmental responsibilities seriously, and we are continuously exploring ways to strengthen our culture and corporate responsibility framework.

Blucora, Inc. | 2020 Proxy Statement 9





Our commitment to the safety and health of our workforce also guides us as we address the unprecedented challenges of the global pandemic we are all now facing. Our focus from the outset has been to protect our people, and we have proactively implemented a company-wide work-from-home policy in all possible instances, while taking all necessary measures to protect our employees and ensuring that our employees have the necessary tools, resources and guidance to continue working effectively and efficiently in a remote capacity. Throughout the process, management has provided regular updates to the Board regarding the various business and personnel impacts of the COVID-19 outbreak, including the efforts and successes of the policies and processes implemented in response to this ongoing health situation. We believe our efforts have positioned the business to remain strong and healthy in this difficult time.




Blucora, Inc. | 2020 Proxy Statement 10



INFORMATION REGARDING THE BOARD OF DIRECTORS
Director Information
Our Board of Directors is currently comprised of eight members, including seven independent directors and one executive director. The Board's committee structure currently consists of three principal committees that are all comprised of independent directors: the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. The Board may also convene other ad hoc or sub-committees, the composition, number and membership of which the Board of Directors may revise from time to time, as appropriate.

The following table lists each of our current directors and sets forth the information about each of the committees of the Board of Directors:

Directors and Board Committees as of April 9, 2020
(M = Committee Member; C = Committee Chair)
Director Name
  
Audit
Committee
  
Compensation
Committee
  
Nominating
and
Governance
Committee
Independent Directors
Georganne C. Proctor, Chair of the Board (1)
  
 
  
 
  
M
Steven Aldrich (2)
 
 
 
M
 
C
Mark Ernst (3)
 
M
 
 
 
 
E. Carol Hayles (4)
 
M
 
C
 
 
John MacIlwaine
 
M
 
 
 
 
Jana R. Schreuder (5)
 
 
 
M
 
 
Mary S. Zappone (6)
 
C
 
 
 
M
Executive Directors
Christopher W. Walters (7)
 
 
 
 
 
 
(1)
In June 2019, Ms. Proctor was appointed as the Chair of the Board following the retirement of William L. Atwell. In connection with her appointment as Chair of the Board, Ms. Proctor resigned as a member and Chair of the Audit Committee and member of the Compensation Committee. Additionally, since June 2019, Ms. Proctor has served as a member of the Nominating and Governance Committee. On January 30, 2020, in connection with his appointment as President and CEO, Mr. Walters resigned as a member and Chair of the Compensation Committee given his non-independent status. In connection with Mr. Walter's resignation from the Compensation Committee on January 30, 2020, Ms. Proctor was appointed as a member of the Compensation Committee, where she served until March 1, 2020.
(2)
Mr. Aldrich has served as a member of the Nominating and Governance Committee during 2019 and as Chair of the Nominating and Governance Committee since September 2019. He has also served as a member of the Compensation Committee since June 2019.
(3)
Mr. Ernst was appointed as a member of the Board and as a member of the Audit Committee, effective March 1, 2020.
(4)
Ms. Hayles has served as a member of the Compensation Committee and Audit Committee during 2019. On January 30, 2020, following the resignation of Mr. Walters as member and as Chair of the Compensation Committee, Ms. Hayles was appointed as the Chair of the Compensation Committee.
(5)
Ms. Schreuder was appointed as a member of the Board and as a member of the Compensation Committee, effective March 1, 2020.
(6)
Ms. Zappone currently serves as Chair of the Audit Committee, a role she has held since Ms. Proctor's appointment as Chair of the Board and related resignation as member and Chair of the Audit Committee, in June 2019. Ms. Zappone also currently serves as a member of the Nominating and Governance Committee. Ms. Zappone also served as a member of the Compensation Committee until June 2019.
(7)
Mr. Walters served as the Chair of the Compensation Committee during 2019. On January 30, 2020, Mr. Walters resigned as Chair and member of the Compensation Committee as a result of his appointment as President and CEO of the Company. Mr. Walters continues to serve as an executive director.

Board Skills, Background and Core Competencies
Our Nominating and Governance Committee regularly evaluates the skills, qualifications, and competencies identified as important for directors to provide effective oversight to our Company. See the section "Proxy Statement Summary—Board Skills, Background and Core Competencies" on page 7 for additional information.



Blucora, Inc. | 2020 Proxy Statement 11




Board Diversity and Inclusion
The Company is committed to fostering an environment of diversity and inclusion, including among its Board members. See the section "Proxy Statement Summary—Board Diversity and Inclusion" on page 8 for additional information.
Board Oversight

Our Board is responsible for ensuring that our overall business strategy is designed to create long-term, sustainable value and growth for our stockholders. Our Board recognizes that we operate within industries that are highly competitive and rapidly evolving and that our business must be capable of quickly adapting to meet the needs of our customers and clients. As a result, the Board maintains an active oversight role in helping management formulate, plan and implement Blucora’s strategy. While our Board is not responsible for the day-to-day management of the Company, our Board recognizes the importance of ongoing engagement, and accordingly our Board regularly reviews the alignment of our performance with our strategy. See the section "Information Regarding the Board of Directors—Independence, Committee and Other Board Information—Risk Management" on page 16 for additional information.

Ongoing Board Refreshment

We believe that the Company benefits when there is a mix of experienced directors with a deep understanding of our businesses and directors with a fresh perspective. To this end, the Board maintains an ongoing refreshment program to seek out highly qualified candidates, particularly with diverse backgrounds, skills and experiences that align with our long-term strategy.

In April 2019, Lance G. Dunn announced his plans to retire from the Board effective as of the 2019 annual meeting of stockholders, and since the 2019 annual meeting two independent directors left the Board, including William L. Atwell and H. MacIntyre Gardner. In addition, John S. Clendening departed his role as President, CEO and director in January 2020.

On March 1, 2020, our Board appointed Mark A. Ernst and Jana R. Schreuder as independent directors. The Board determined that appointing Mr. Ernst and Ms. Schreuder would enhance the Board’s oversight function and assist the Board in complying with sound governance practices. Mr. Ernst and Ms. Schreuder’s industry experience enhance the Board's collective ability to provide valuable insight and strategic oversight. Mr. Ernst was appointed as a member of the Audit Committee and Ms. Schreuder was appointed as a member of the Compensation Committee.

The Board has determined a board of eight directors is appropriate for the Company at this time, providing for an appropriate and diverse mix of skills and experiences and a balance of new and experienced perspectives.

Leadership Changes

Effective January 30, 2020, the Board appointed Christopher W. Walters, who has served on the Company's Board since 2014, as President and CEO, with Mr. Walters continuing as an executive director.

Mr. Walters's knowledge of the Company and experience playing a key role in supporting the development of the Company's growth strategy since 2014, including the Company's divestiture of various non-core businesses and the completed acquisitions of HD Vest and 1st Global, will help drive the next phase of the Company's growth, while creating stockholder value and fostering a strong culture and work environment for our employees.



Blucora, Inc. | 2020 Proxy Statement 12



Independence, Committee and Other Board Information
Independence
NASDAQ rules require that a majority of the members of the Board of Directors be independent directors. The Board of Directors recently undertook its annual review of director independence in accordance with the applicable NASDAQ rules. The independence rules include a series of objective tests, including that the director is not employed by the Company and has not engaged in various types of business dealings with the Company. In addition, the Board of Directors is required to make a subjective determination as to each independent director that no relationships exist that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making such determinations, the Board of Directors considered transactions and relationships between each non-employee director and the Company, if any, that would require disclosure pursuant to Item 404 of Regulation S-K under the Securities Act. The Board of Directors also considered other transactions or relationships, if any, that do not rise to the level of requiring disclosure.
The Board of Directors has affirmatively determined that each of our directors, excluding Mr. Walters, is independent under NASDAQ rules. Mr. Walters is not considered independent because he is an employee of the Company, although prior to his appointment as President and CEO on January 30, 2020, Mr. Walters was considered independent for the duration of his prior Board and committee service under NASDAQ rules.
Each of the members of the Audit Committee, Compensation Committee, and Nominating and Governance Committee is independent under NASDAQ rules. The Board of Directors has also affirmatively determined that each of the members of the Audit Committee qualifies as independent under the audit committee independence rules established by the SEC and meets NASDAQ's financial knowledge requirements set forth in the NASDAQ rules. In addition, each member of the Compensation Committee qualifies as a “non-employee director” under SEC rules.
There are no family relationships between any of our directors, Director Nominees or executive officers.
Meeting Attendance and Executive Sessions
In 2019, each director attended at least 75% of the aggregate number of meetings of the Board of Directors and committees thereof, if any, on which such director served during the period for which he or she was a director or committee member. During 2019, the Board held 22 meetings, and the independent members of the Board met regularly in executive session with the Chair of the Board, or the respective chair of such committee, presiding over these executive sessions. For additional information about the number of meetings held by each committee in 2019, see "Committees of the Board."
The Board has not adopted a formal policy regarding directors’ attendance at the annual meetings of stockholders. In 2019, all of the Company's Board members attended the 2019 annual meeting of stockholders.
Committees of the Board
The Board’s committee structure currently consists of three principal committees: the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. Our Board has adopted a written charter for each of its committees, and a brief description of the composition, the primary responsibilities of our committees is set forth in the following sections.

Blucora, Inc. | 2020 Proxy Statement 13




Audit
Committee
Duties and Responsibilities Meetings in 2019: 10
Mary S. Zappone (Chair)
Mark A. Ernst *
E. Carol Hayles
John MacIlwaine
Providing independent and objective oversight and review of the Company's auditing, accounting and financial reporting processes;
Reviewing and approving the appointment, compensation, oversight, and retention of the independent registered public accounting firm;
 
Selecting, overseeing, evaluating, funding (including pre-approval of all services, whether audit and non-audit), and promoting the continuing independence of independent registered public accounting firm;
Monitoring the adequacy and effectiveness of accounting and financial controls, including internal control over financial reporting;
Reviewing the audited financial statements and quarterly unaudited financial information and discussing them with management and the independent registered public accounting firm;
 
Overseeing policies and processes relating to compliance, legal and regulatory risks that could have a significant impact on the Company's financial statements;
* Mr. Ernst was appointed as a director and as a member of the Audit Committee, in each case effective as of March 1, 2020.
Establishing procedures for receiving and reviewing accounting-related complaints and concerns by whistle blowers;
Reviewing and monitoring compliance with risk management and investment policies;
Reviewing and pre-approving related person transactions; and
Reviewing and monitoring compliance with the Code of Conduct and recommending changes to the Code of Conduct to the Board as appropriate.
The Board of Directors has determined that each Audit Committee member has the necessary level of financial literacy required to enable him or her to serve effectively on the Audit Committee. The Board of Directors has further determined that Ms. Zappone, Ms. Hayles and Mr. Ernst each qualifies as an “audit committee financial expert” in accordance with SEC rules and satisfies the professional experience requirements under NASDAQ rules. The designation of an “audit committee financial expert” does not impose upon such person any duties, obligations, or liabilities that are greater than those that are generally imposed on him or her as a member of the Audit Committee and the Board of Directors, and such designation does not affect the duties, obligations, or liability of any other member of the Audit Committee or the Board of Directors. None of the members of the Audit Committee currently serve on the audit committees of more than two other public companies.
Under our Audit Committee Charter, the Audit Committee is authorized to engage independent advisors, at the Company’s expense, to advise the Audit Committee on any matters within the scope of the Audit Committee’s duties. The Audit Committee may also form subcommittees and delegate its authority to those subcommittees as it deems appropriate.
Compensation Committee
Duties and Responsibilities Meetings in 2019: 13
E. Carol Hayles (Chair)
Steven Aldrich
Jana R. Schreuder *


Reviewing and overseeing the Company's overall compensation philosophy;
Overseeing the development and implementation of our compensation programs, policies, and practices aligned with the Company's business strategy;
 
Overseeing and making recommendations to the Board with respect to the adoption, amendment or termination of incentive compensation, equity-based and other executive and director compensation and benefit plans, policies and practices;
 
Evaluating the performance of, and reviewing and approving (or recommending to the Board) the compensation of, our CEO and other executive officers;
 
Reviewing and making recommendations to management regarding general compensation goals and guidelines for employees and criteria by which employee bonuses are determined;

 
Monitoring compensation trends and best practices;
Selecting, overseeing, evaluating, funding and promoting the continuing independence of independent compensation consultant;
 
Reviewing the Company’s compensation policies and practices for all employees;
 
Reviewing and approving proposals regarding the advisory votes on executive compensation and the frequency of such votes to be included in the Company’s annual proxy statement;

* Ms. Schreuder was appointed as a director and as a member of the Compensation Committee, in each case effective as of March 1, 2020.

Reviewing the Company’s incentive compensation arrangements to determine whether they encourage excessive risk-taking and reviewing and discussing the relationship between risk management policies and practices and compensation; and
Acting as administrator of our stock and cash incentive plans.

Blucora, Inc. | 2020 Proxy Statement 14



Under the terms of the Compensation Committee Charter, the Compensation Committee is authorized to engage independent advisors, at the Company’s expense, to advise the Compensation Committee on any matters within the scope of the Committee’s duties. The Compensation Committee may also form subcommittees and delegate its authority to those subcommittees as it deems appropriate. A description of the considerations and determinations of the Compensation Committee regarding the compensation of our Named Executive Officers is contained in “Compensation Discussion and Analysis” below.
Nominating and Governance Committee
Duties and Responsibilities Meetings in 2019: 5
Steven Aldrich (Chair)
Georganne C. Proctor
Mary S. Zappone

Assisting the Board of Directors by identifying prospective director nominees to fill vacancies and recommending to the Board the director nominees for the next annual meeting of stockholders;
Reviewing, and recommending to the Board, any appropriate changes to the Company's Corporate Governance Guidelines and Director Nomination Policy;
 
Reviewing proposed changes to the Company’s Certificate of Incorporation and Bylaws and making recommendations for any such changes to the Board;
 
Evaluating the performance and effectiveness of the committees and the Board;
 
Evaluating Board and committee structure and recommending changes to the Board;
 
Recommending to the Board any changes to non-employee director compensation;
 
Administering and applying the stock ownership guidelines adopted by the Board that are applicable to all non-employee directors;
 
Overseeing director orientation and education;
 
Monitoring compliance with independence standards by the directors;
 
Overseeing succession planning for the Board, the CEO and other senior management;
 
Monitoring, and periodically reporting to the Board, any significant developments in the law and practice of corporate governance; and
 
Considering stockholder nominees for election to the Board as described below under “Director Nomination Process and Qualification Overview of Directors.”
Under the terms of the Nominating and Governance Committee Charter, the Nominating and Governance Committee is authorized to engage independent advisors, at the Company’s expense, to advise the Committee on any matters within the scope of the Nominating and Governance Committee’s duties. The Nominating and Governance Committee may also form subcommittees and delegate its authority to those subcommittees as it deems appropriate.
Leadership Structure  
The leadership structure of the Board consists of the independent Chair, Georganne C. Proctor, and the chairs of each of the principal committees of the Board. The Company’s Amended and Restated Bylaws require that the Chair position be held by an independent director. The Board of Directors believes that the current leadership structure is appropriate for the Company because it balances the operational and day-to-day management leadership of the Chief Executive Officer with the independent oversight provided by the independent Chair of the Board, who coordinates closely with the independent chairs of each of the principal committees. This structure ensures that oversight of risk management and the Company’s management is distributed among multiple independent directors. The Board of Directors currently believes that this distribution of oversight is the best method of ensuring optimal Company performance and risk management.

Board Evaluation Process

The Board recognizes that a rigorous evaluation process is an essential component of strong corporate governance practices and promoting ongoing Board effectiveness. Consistent with best practice, the Company’s Corporate Governance Guidelines and each of the committees’ charters, the Nominating and Governance Committee oversees the annual evaluation of the performance of the Board and the committees, with the independent Chair maintaining a substantial role in facilitating discussion among the Board and the committees.

As part of the Board evaluation process, the Board reviews the following:
Performance of the Board, including areas where the Board feels it functions effectively and areas where the Board believes it can improve;
Overall composition of the Board, including director tenure, board leadership, diversity and individual skill sets;

Blucora, Inc. | 2020 Proxy Statement 15




General board best practices, including oversight responsibilities;
Culture to promote candid discussion within the Board and with senior management;
Focus on risk management and strategic matters, including evaluation of transactions, emerging technologies and challengers, regulatory and legal developments, market factors, and other risks facing the Company; and
Ability to ensure the Company is positioned for future success and serves the best interests of our stockholders.

Additionally, the Board reviews its meeting schedule, the quality and depth of information presented at each meeting, and the composition, organization and operation of the Board and the committees. The committees are evaluated on their effectiveness in fulfilling delegated responsibilities, the appropriateness of committee materials, and the sufficiency of time to deliberate and for robust discussion. The Board and committee evaluation framework and process is conducted and reviewed annually, and provides valuable insight as the Board and Nominating and Governance Committee evaluate the director selection process and succession planning, including the identification and optimization of current directors' (or potential directors') skills and experiences that would enable the Board to enhance its effectiveness.

As part of the two-part annual evaluation process involving the full Board evaluation and committee evaluations, the Board responds to a comprehensive written questionnaire designed to provide a holistic evaluation of the performance of the Board and each committee in light of the current needs of the Board and the Company. To protect anonymity and the integrity of the evaluation process, responses to the Board and committee surveys are collected through a third-party platform on an anonymous basis, and the third-party platform compiles each completed evaluation into a report, which is then provided to the Chair of the Board and each committee chair. Each report, including evaluation results and specific areas of focus for each committee and the Board itself, is then presented to each committee, and then to the full Board, in executive session to encourage candid discussion and feedback, and specific areas are discussed where the Board and each committee would like to focus to enhance its effectiveness. After receiving feedback from the Chair on any action items resulting from the Board discussion, the Chair of the Board and the Nominating and Governance Committee utilize the results of the evaluations and discussions when developing workplans, formulating succession plans, and preparing board candidate evaluations for the upcoming year and thereafter.

In connection with its 2019 evaluation, the Board conducted an assessment of whether the Board had an appropriate committee composition and appropriate delegation to fulfill responsibilities efficiently, as well as an evaluation of the Board's interactions with and succession plans for certain executives. The 2019 evaluation process further informed the Board regarding succession planning and Board and committee composition, including enhancement of director skills, experience and qualifications through director education and Board and committee appointments to meet the current and anticipated needs of the business.
Communication with the Board of Directors    
Stockholders who wish to communicate with the Board of Directors, or with any individual member of the Board of Directors, may do so by sending such communication in writing to the attention of the Corporate Secretary at the address of our principal executive office with a request to forward the communication to the intended recipient. The Corporate Secretary will generally forward such communication to the Board of Directors or the specific Board member. However, the Corporate Secretary reserves the right to not forward any material that is inappropriate. In addition, employees may communicate with the Board through, among other processes, the Company’s internal whistleblower hotline process administered under the Code of Conduct.
Risk Management   
Our Board, directly and through its various committees, has oversight responsibility for managing risk and management is responsible for the Company's day-to-day enterprise risk management activities. The Board regularly receives reports from senior management on areas of our material risk, including our credit, liquidity, operational, cybersecurity, compliance and legal and regulatory risks, and regularly devotes time during its meetings to review and discuss our most significant risks, management’s responses to those risks and the mitigation of those risks. On a periodic basis, the status of various enterprise risks, along with their associated mitigation plans, is presented to the Board and/or Audit Committee. Recent risks that the Company have focused on include market impacts and other risks driven by the COVID-19 outbreak.
In fulfilling its oversight role, the Board generally focuses on the adequacy of the Company's risk management and mitigation processes. The Board engages with the Company's Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer, along other members of management, to determine the Company's risk tolerance and endeavors to ensure that management identifies, evaluates, and properly manages and mitigates the overall risk profile of the Company.

Blucora, Inc. | 2020 Proxy Statement 16



In addition to the discussion and oversight of risk at the Board level, the Board's standing committees also focus on risk exposure as part of their ongoing responsibilities:
Committee of the Board
Areas of Risk Oversight
Audit Committee
Oversees and discusses with management our policies and practices with respect to risk assessment and risk management, including management's process for the identification, evaluation and mitigation of enterprise risks.
Responsible for the oversight of the Company's policies and processes relating to compliance, legal and regulatory risks.
Reviews major financial risk exposures and the steps management has taken to monitor and control such exposures.
Compensation Committee
Oversees the management of risks relating to our executive and non-executive compensation plans and arrangements, including assessments of the relationship among the Company's risk management policies and practices, corporate strategy and compensation policies and practices.
Conducts an annual risk assessment related to our compensation programs.
Nominating and Governance Committee
Responsible for reviewing the Company's corporate governance policies and practices and making recommendations to the Board that take into account the management of governance-related risk.
Oversees the director nomination process, succession planning, and the Board and committee self-evaluation process.
While each committee oversees certain risks and the management of such risks, the entire Board of Directors is regularly informed through management reports about such risks as well as through committee reports, which include activities of the applicable committee, the significant issues it has discussed, and the actions taken by that committee. In addition, the Board believes that each of our Chair and Chief Executive Officer, respectively, provide the appropriate leadership to help ensure effective risk oversight along with the Board and its committees.
Complaint and Reporting Procedures for Accounting and Auditing Matters

Each of our Financial Information Integrity Policy (the "Financial Information Policy") and our Code of Ethics and Conduct ("Code of Conduct") provides for (1) the receipt, retention and treatment of complaints, reports and concerns regarding accounting and auditing matters, and (2) the confidential, anonymous submission of complaints, reports and concerns by employees regarding questionable accounting or auditing matters, in each case relating to the Company and its subsidiaries. Complaints may be made through the Company's internal whistleblower hotline or whistleblower website, each operated by an independent third party. Complaints received are logged and communicated to the Audit Committee, and then, under the direction and oversight of our Audit Committee, the review and investigation may be delegated to members of management, including the Chief Legal Officer, as appropriate. In accordance with applicable law, the Financial Information Policy, Code of Conduct and other procedures we use to address complaints prohibit us from taking adverse action against any person submitting a good faith complaint, report or concern. A copy of our Code of Conduct is available on the Company’s website at www.blucora.com/governance.
Corporate Website    
The Company’s corporate website, located at www.blucora.com, contains information regarding the Company, including information regarding directors, executive officers, and corporate governance documents, such as our Restated Certificate of Incorporation, Amended and Restated Bylaws, Committee Charters, Director Nomination Policy, Code of Conduct (which is applicable to all employees, executive officers, and members of the Board of Directors), and Corporate Governance Guidelines. The Company uses the corporate website to provide current information to investors, including information on recent developments and upcoming events. You may also request copies of these documents and other corporate governance documents available on the website from the Company’s investor relations department at (972) 870-6400.

Blucora, Inc. | 2020 Proxy Statement 17




Director Nomination Process and Qualification Overview of Directors
The Nominating and Governance Committee is responsible for reviewing and recommending nominees to the Board for election at each annual meeting of stockholders and for reviewing and recommending director appointments to fill any vacancies on the Board. The Nominating and Governance Committee’s objective, pursuant to its charter, is to ensure that the Board is properly constituted to meet its fiduciary obligations to the Company and its stockholders.

Director Qualifications

In addition to each director’s individual qualifications, including his or her knowledge, skills and experience mentioned below, the Company believes that each of our directors possesses high ethical standards, acts with integrity, and exercises careful judgment. Collectively, our directors are knowledgeable and experienced in business, governmental, and civic endeavors, further qualifying them for service as members of the Board. Each director nominee is evaluated in accordance with the qualifications set forth in our Corporate Governance Guidelines, Director Nomination Policy and the other characteristics that we value as part of our corporate culture. We require that directors possess integrity and values and be committed to representing the long-term interests of our stockholders at large. They must also have an inquisitive and objective perspective, practical wisdom, mature judgment and sufficient personal resources such that any director compensation to be received from the Company would not be sufficiently meaningful to impact their judgment in reviewing matters coming before the Board. Finally, they must be able to work compatibly with the other members of the Board and otherwise have the experience and skills necessary to enable them to serve as productive members of the Board. Directors also must be willing to devote sufficient time to carrying out their fiduciary duties and other responsibilities effectively and should be committed to serve on the Board for an extended period of time.

In considering director candidates, the Nominating and Governance Committee seeks the following minimum qualifications, as set forth in the Company’s Corporate Governance Guidelines and Director Nomination Policy:
Commitment to our business success while maintaining the highest standards of responsibility and ethics;
Representation of the best interests of all of our stockholders and not any particular constituency;
Conscientious preparation for, attendance at, and participation in Board and applicable committee meetings;
No personal or professional commitments that would interfere or conflict with a director’s obligations to the Company and its stockholders;
An established record of professional accomplishment in the director’s chosen field; and
No material personal, financial, or professional interest in any of our competitors that would interfere or conflict with the director’s obligations to the Company and its stockholders.

In connection with the director nominations for the 2020 Annual Meeting, the Nominating and Governance Committee also considered, among other things, each director nominee's: (i) knowledge of corporate governance issues coupled with an appreciation of their practical application; (ii) service as a director or executive of a publicly traded company and other board experience; (iii) experience in the financial services or technology sectors; (iv) finance and accounting expertise, including audit, internal controls, risk management and cybersecurity experience; (v) experience in and knowledge of risk assessment and management; (vi) knowledge in the areas of laws and regulations related to regulatory and other key industry issues; (vii) strategic planning skills; and (viii) experience in transactional, strategic, financial or corporate matters.

We believe that each Director Nominee brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including market expertise, marketing, technology, risk management, strategic planning, legal, corporate governance and board service, executive management, regulatory and policy development, accounting and finance, and operations. For information concerning each Director Nominee's various qualifications, attributes, skills and experience considered important by the Board in determining that such Director Nominee should serve as a director, as well as each Director Nominee’s principal occupation, directorships and additional biographical information, please read “Proposal 1—Election of Directors—Director Nominee Information and Qualifications” beginning on page 24.

Identification of Candidates and Diversity

The Nominating and Governance Committee annually reviews the composition of the Board as a whole and recommends, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge,

Blucora, Inc. | 2020 Proxy Statement 18



experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations. The Nominating and Governance Committee identifies director nominees in various ways. In identifying and evaluating director nominees, the Nominating and Governance Committee actively seeks individuals who satisfy its criteria for membership on the Board, and the Nominating and Governance Committee may solicit ideas regarding possible Board candidates from and consult with members of the Board, Company management, stockholders consultants, and other individuals likely to possess an understanding of the Company’s business and knowledge of suitable candidates, including through personal or professional relationships. The Nominating and Governance Committee also has the authority to retain a search firm, at the Company’s expense, to identify or evaluate director candidates at its discretion.

In making its recommendations, the Nominating and Governance Committee assesses the requisite skills and qualifications of director nominees and the composition of the Board as a whole in the context of the Board’s criteria and needs. Such assessments will be consistent with the Board’s criteria for membership, including: (i) not less than a majority of directors shall satisfy the NASDAQ independence requirements; (ii) all directors shall possess strong judgment, character, expertise, skills and knowledge useful to the oversight of the Company; (iii) business, governmental, civic or other relevant experience; and (iv) consideration will be given to the extent to which the interplay of the director nominee’s qualifications and diversity of cultural background, gender, experience and viewpoints with those of other Board members will build a Board that is effective, in light of the Company’s business and structure. The Nominating and Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all Board members. In accordance with the Director Nomination Policy, the Nominating and Governance Committee will consider diversity criteria in the context of the perceived needs of the Board as a whole and seek to achieve a diversity of backgrounds and perspectives on the Board, with diversity being broadly construed to mean a variety of personal and professional experiences, education, opinion, perspectives and background.

The Nominating and Governance Committee is committed to fostering an environment of diversity and inclusion, including among its Board members, and is asked to assess whether the Board is appropriately diverse as part of the annual evaluation of the Board. See the section "Board Skills, Background and Core Competencies" for additional information. In addition to the range of personal and professional experiences, education, opinion, perspectives and background currently represented on the Board, 50% of the Director Nominees at the 2020 Annual Meeting are female, with three of these four female nominees currently serving in a Board leadership position, including as Chair of the Board, which we believe evidences the Nominating and Governing Committee’s continued commitment to diversity.

Director Selection Process
The Nominating and Governance Committee generally re-nominates incumbent directors who continue to satisfy the Nominating and Governance Committee’s criteria for membership on the Board, continue to make important contributions to the Board, and consent to continue their service on the Board. However, the Nominating and Governance Committee regularly considers the needs of the Company and the Board with respect to directors, and if appropriate, the Committee will nominate new directors that best fit those needs.
Any stockholder may nominate candidates for election as directors by following the procedures set forth in our Amended and Restated Bylaws and Director Nomination Policy, including the applicable notice, information, and consent provisions. For further information regarding these procedures, see “Deadline for Receipt of Stockholder Proposals and Director Nominations”. Copies of our Amended and Restated Bylaws and Director Nomination Policy are available on our corporate website at www.blucora.com.
In addition, pursuant to our Director Nomination Policy, any single stockholder, or group of stockholders, that has beneficially owned more than 5% of our outstanding Common Stock for at least one year may propose a director candidate for evaluation by the Nominating and Governance Committee by delivering a written notice to the Nominating and Governance Committee that satisfies the notice, information, and consent requirements of our Amended and Restated Bylaws and the Director Nomination Policy. The Committee will evaluate such recommended nominees using the same criteria that it uses to evaluate other nominees. Any such Board candidate must be independent of the stockholder in all respects and must also qualify as an independent director under applicable NASDAQ rules. The notice must be received by the Nominating and Governance Committee no later than the date that is 120 calendar days before the anniversary of the date that our Proxy Statement was released to stockholders in connection with the previous year’s annual meeting. The notice must include, among other things, proof of the required stock ownership,

Blucora, Inc. | 2020 Proxy Statement 19




proof of identification of the stockholder(s) submitting the proposal, and information regarding the proposed Board candidate. The notice should be sent to the following address:
Chair, Nominating and Governance Committee
Blucora, Inc.
c/o Corporate Secretary
6333 North State Highway 161
Irving, Texas 75038
The Nominating and Governance Committee did not receive any recommendations for director candidates for the 2020 Annual Meeting from any non-management stockholder or group of stockholders that beneficially owns more than 5% of our Common Stock.

Blucora, Inc. | 2020 Proxy Statement 20



Non-Employee Director Compensation

Non-employee director compensation is overseen by the Nominating and Governance Committee, and consists of equity grants and annual cash retainers for Board, committee and chair service. The combination of cash and equity compensation is intended to provide incentives for non-employee directors to continue to serve on the Board of Directors, to align the interests of the Board of Directors and stockholders, and to attract new non-employee directors with outstanding qualifications.
2019 Non-Employee Director Compensation

Our Nominating and Governance Committee has periodically engaged the Compensation Committee's independent compensation consultant, Meridian Compensation Partners, LLC ("Meridian"), to review director compensation. In December 2018, Meridian conducted a benchmarking analysis of Blucora’s non-employee director compensation program versus the same compensation peer group used for executive compensation. As a result of this benchmarking analysis, the annual cash retainers paid to our non-employee directors were revised in order to better align the Board's total compensation with the median of its peers. These changes became effective at the 2019 annual meeting of stockholders. The value of the annual equity grant made to the independent Chair of the Board was also increased as a result of this review.

The following table sets forth the annual cash retainers in effect during 2019:
Groups
 
Annual Retainer 
Paid to All 
Non-Employee Directors (including Chair)

 
Annual Chair Retainer
 
Prior to May 23, 2019
 
On/After May 23, 2019
 
Prior to May 23, 2019
 
On/After May 23, 2019
Board of Directors
 
$
40,000

 
$
50,000

 
$
15,000

 
$
50,000

Audit Committee
 
$
10,000

 
$
10,000

 
$
22,500

 
$
25,000

Compensation Committee
 
$
7,500

 
$
7,500

 
$
15,000

 
$
15,000

Nominating and Governance Committee
 
$
4,000

 
$
5,000

 
$
8,000

 
$
12,250


In 2019, we granted the following equity awards to our directors: (i) an initial grant of time-based RSUs to all newly elected or appointed non-employee directors, if applicable, (ii) an annual grant of time-based RSUs to all non-employee directors, including all newly elected or appointed directors and (iii) an additional annual grant of time-based RSUs to the Chair of the Board. The number of RSUs granted was based on a set dollar amount, with the specific number of RSUs granted based on the price of our Common Stock on the date of the grant.
The following table sets forth the equity grants made to directors during 2019 (in dollars):
Initial and Annual Equity Awards
$ Value of Award
Initial equity grants to all newly elected or appointed non-employee directors (1)
$
150,000

Annual equity grants to all non-employee directors, including newly elected or appointed directors (2)
$
125,000

Additional annual equity grant to Chair of the Board (2)(3)
$
50,000

(1)
Initial equity grants vest in three equal annual installments beginning on the first anniversary of the applicable election or appointment date.
(2)
Annual grants are made on the date of the annual meeting of stockholders and vest in full on the earlier of the first anniversary of the grant date or the date of the Company's next annual meeting of stockholders provided that the grantee continues to be a member of the Board on such date. In the case of a newly appointed director who is not appointed on the date of the annual meeting of stockholders, a pro rata portion of the annual grant amount will be awarded based on the date of appointment.
(3)
As part of the benchmarking analysis, the additional annual equity grant to the Chair of the Board was increased to $50,000 effective on the date of the 2019 annual meeting of stockholders, up from $35,000 in 2018.
The Company reimburses all directors for expenses incurred in connection with attending meetings or performing their duties as directors. The Company does not provide any perquisites to directors.

Blucora, Inc. | 2020 Proxy Statement 21




The following table sets forth information concerning the fiscal year 2019 compensation paid or awarded to each non-employee director that served during any part of 2019 pursuant to the director compensation program described above. Because John Clendening served as our CEO during 2019, he did not receive additional compensation for his services as a director during 2019. See “Compensation of our Named Executive Officers—Summary Compensation Table” beginning on page 74 for information concerning the compensation paid to Mr. Clendening during 2019.
Current Directors (1)
 
Annual Retainer Fees
(Earned or Paid in Cash)
Stock Awards (2)(3)

Total
Steven Aldrich
 
$
57,173

$
125,000

$
182,173

E. Carol Hayles
 
$
63,571

$
125,000

$
188,571

John Macllwaine
 
$
56,071

$
125,000

$
181,071

Georganne C. Proctor
 
$
88,839

$
170,190

$
259,029

Christopher W. Walters (4)
 
$
61,071

$
125,000

$
186,071

Mary S. Zappone
 
$
64,429

$
125,000

$
189,429

 
 
 
 
 
Former Directors
 
 
 
 
William L. Atwell
 
$
32,321

$

$
32,321

Lance G. Dunn
 
$
19,643

$

$
19,643

H. McIntyre Gardner
 
$
43,589

$
125,000

$
168,589

(1)
Certain directors elected to defer all or a portion of their retainer fees and stock awards for 2019. See "Deferral of Board Annual Retainers" and "Equity Awards" below.
(2)
The dollar amount for stock awards (which consist of RSUs) is the grant date fair value computed in accordance with Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation ("ASC 718"), excluding the effect of any estimated forfeitures. These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be realized by the director. Assumptions used in the valuation of stock awards granted in 2019 are discussed in "Note 13: Stock-Based Compensation of the Notes to Consolidated Financial Statements (Part II, Item 8) in our Annual Report on Form 10-K for the year ended December 31, 2019.
(3)
The vesting for initial RSU grants and annual RSU grants is described above.
(4)
Effective January 30, 2020, Mr. Walters was appointed as our President and CEO, while continuing as a member of the Board as an employee director. Upon such appointment, Mr. Walters resigned from his positions as a member and Chair of the Compensation Committee in accordance with NASDAQ rules. Effective upon his appointment as President and CEO, Mr. Walters no longer receives compensation for his services as a director.

All director equity grants that were made in 2019 were awarded under the 2018 Plan. Stock awards consist of RSUs, with each RSU representing the right to receive one share of our Common Stock upon vesting. The following table sets forth information concerning the aggregate number of equity awards outstanding for each of our non-employee directors as of December 31, 2019.
Current Directors (1)
 
Aggregate 
Number of Unvested RSUs
 
Aggregate Number of Options (2)
 
Unvested      
Vested and Unexercised
Steven Aldrich
 
6,393
 


E. Carol Hayles
 
6,510
 


John MacIlwaine
 
6,510
 


Georganne C. Proctor
 
7,881
 


Christopher W. Walters (3)
 
3,972
 

42,388

Mary S. Zappone
 
3,972
 

28,822

(1)
Each former non-employee director (i.e., Mr. Atwell, Mr. Dunn and Mr. Gardner) who departed in 2019 forfeited any unvested equity at the time of their departure from the Board and, therefore, did not have any outstanding equity awards as of December 31, 2019.
(2)
Prior to May 2017, equity grants made to non-employee directors consisted of options and RSUs.
(3)
Effective January 30, 2020, Mr. Walters was appointed as our President and CEO, while continuing as a member of the Board as an employee director. Upon such appointment, Mr. Walters resigned from his positions as a member and Chair of the Compensation Committee in accordance with NASDAQ rules.


Blucora, Inc. | 2020 Proxy Statement 22



Director Stock Ownership Guidelines
The Board has adopted stock ownership guidelines that are applicable to all non-employee directors, and the Nominating and Governance Committee is responsible for administering and applying these guidelines. In February 2019, our Board amended our stock ownership guidelines for non-employee directors (the “Revised Stock Ownership Guidelines”) to require that all non-employee directors acquire and hold shares of the Company’s Common Stock equal in market value to at least five times (5X) the value of the annual retainer paid to non-employee directors (excluding the additional retainers for the Chair of the Board and the chairs of the Board's committees). The Revised Stock Ownership Guidelines became effective at the 2019 Annual Meeting. As described above, the amount of this retainer was $50,000 for 2019, and accordingly, non-employee directors were expected to hold shares with a market value of at least $250,000.
Under the Revised Stock Ownership Guidelines, the non-employee directors who were members of the Board on January 1, 2018 are expected to attain the minimum ownership amount by no later than June 1, 2020. Non-employee directors who joined the Board after January 1, 2018 are expected to attain the minimum ownership amount within five years after the date of their initial appointment or election to the Board. As of December 31, 2019, all of our non-employee directors were in compliance with the applicable ownership guidelines or otherwise expected to achieve the requisite ownership levels within the requisite timeframe. However, subsequent declines in our stock price, including as a result of general economic conditions and other market factors, may result in a lower aggregate value of equity held by such non-employee director and thereby alter the expected timeframe of such non-employee director to achieve the requisite ownership levels.

Deferral of Board Annual Retainers and Equity Awards

On January 1, 2019, the Company implemented the Blucora Director Tax-Smart Deferral Plan (as amended and restated, the "Director Deferral Plan"). The Director Deferral Plan is a non-qualified deferred compensation arrangement that allows each of the Company's non-employee directors to defer a portion of their annual retainers and annual equity awards. Participants may elect to defer at least 5%, and up to 100%, of their annual retainers and at least 20% (rounded to the nearest whole share of Common Stock), and up to 100%, of their annual equity grants, respectively, to the Director Deferral Plan. Participants direct the investment of their accounts, at market rates, among the available investment options, which are selected the Board (or a committee thereof) in its sole discretion. The Director Deferral Plan offers automatic lump sum distributions upon death or disability. Each participant may elect to receive lump sum or installment distributions upon separation from service or on such other dates certain that a participant may elect. Such elections are made at the time such participant elects to defer compensation for a specific year. Participant distributions payable upon separation from service will be delayed for six months. The assets of the Director Deferral Plan are held in a rabbi trust. In 2019, four of our non-employee directors elected to participate in the Director Deferral Plan. The following table reflects information regarding each participating director in the Director Deferral Plan for 2019.
 
ANNUAL CASH RETAINER
EQUITY
Name
Director Contributions in Last Fiscal Year
 ($) (1)
Registrant Contributions in Last Fiscal Year
 ($)
Aggregate Earnings in Last Fiscal Year
($)
Aggregate Withdrawals/Distributions in Last Fiscal Year ($)
Aggregate Balance at Last Fiscal Year-End
($)
RSUs (#)
Steven Aldrich





3,972
E. Carol Hayles
$
63,571


$
4,384


$
67,955

3,972
Georganne C. Proctor





5,460
Christopher W. Walters





3,972

Retirement Benefits from Blucora

The non-employee directors of the Board are not provided health, retirement or pension benefits.




Blucora, Inc. | 2020 Proxy Statement 23




PROPOSAL ONE
ELECTION OF DIRECTORS

General
As part of the Company's ongoing focus to enhance our robust governance initiatives, at our 2017 annual meeting of stockholders, we proposed, and our stockholders voted to approve, the declassification of our Board of Directors over a three-year period. As a result of such declassification, each member of the Board is up for election at each annual meeting of stockholders and, if elected, will hold office for a one-year term expiring at the next annual meeting. Directors hold office until their successor is duly elected and qualified or until their earlier death, resignation or removal. If a director retires, resigns or is otherwise unable to serve before the end of his or her one-year term, the Board may appoint a director to fill the remainder of such term, reduce the size of the Board, or leave the position vacant.
Director Nominee Information and Qualifications
The eight directors set forth below have been nominated by the Board of Directors, at the recommendation of the Nominating and Governance Committee, for election at the 2020 Annual Meeting to serve for a one-year term ending at the 2021 Annual Meeting. The Board of Directors has affirmatively determined that each Director Nominee, excluding Mr. Walters who also serves as our President and Chief Executive Officer ("CEO" or "Chief Executive Officer"), qualifies as an independent director under NASDAQ listing rules. No Director Nominee is being elected pursuant to any arrangement or understanding between the Director Nominee and any other person or persons. For further information on the process of director nominations and criteria for selection of Director Nominees, see “Information Regarding the Board of Directors—Director Nomination Process and Qualification Overview of Directors" beginning on page 18.
Name of Director Nominee
 
Age
 
Position(s) with Blucora
 
Director
Since
Georganne C. Proctor
 
63
 
Chair of the Board
 
2017
Steven Aldrich
 
50
 
Director
 
2017
Mark A. Ernst
 
61
 
Director
 
2020
E. Carol Hayles
 
59
 
Director
 
2018
John Macllwaine
 
50
 
Director
 
2018
Jana R. Schreuder
 
61
 
Director
 
2020
Christopher W. Walters
 
46
 
Director, President and CEO
 
2014
Mary S. Zappone
 
55
 
Director
 
2015




Blucora, Inc. | 2020 Proxy Statement 24



Georganne C. Proctor
 
Former CFO of TIAA-CREF

Director Since: 2017

Age: 63

Independent: Yes
 Chair of the Board

Standing Board Committees:
Nominating and Governance Committee

Outside Public Company Directorships:
Sculptor Capital Management, Inc. (2011–Present)
Redwood Trust, Inc. (2006–Present)
SunEdison, Inc. (2013–2017)
Bechtel Group, Inc. (1999–2002)
Executive Experience:
Ms. Proctor has served as a director since 2017 and as Chair since July 2019. Ms. Proctor is the former Chief Financial Officer of TIAA-CREF, a national financial services organization, a position she held from 2006 to 2010. From 2003 to 2005, Ms. Proctor was Executive Vice President, Finance of Golden West Financial Corporation. She served as Chief Financial Officer of Bechtel Group, Inc. from 1997 to 2002 and as a director of Bechtel from 1999 to 2002. Since 2006, Ms. Proctor has been a director of Redwood Trust, Inc., a NYSE listed company, where she currently is chair of the compensation committee and a member of the audit committee. From 2013 until 2017, she was a director of SunEdison, Inc., a NYSE listed company. Since 2011, Ms. Proctor has also served on the board of directors of Sculptor Capital Management Inc. (formerly named Och-Ziff Capital Management Group), a NYSE listed company, where she is the chair of the audit committee. Ms. Proctor holds a B.S. in Business Management from the University of South Dakota and an M.B.A. from California State University at Hayward.
 
 
 
Relevant Skills and Qualifications:
Ms. Proctor has significant financial and accounting experience and has worked closely with boards and board committees throughout her career, including as the chief financial officer of large financial institutions. This experience provides her with a thorough understanding of public company reporting obligations, Sarbanes-Oxley compliance and planning, and treasury and liquidity management. Furthermore, her service on the audit and compensation committees of other public companies gives her a strong background in the oversight of financial and corporate governance matters. Ms. Proctor's extensive experience, particularly as an executive and board member within the financial sector, allows her to provide valuable guidance and knowledge to the Board and enable her to lead effectively in her capacity as Chair.

 
Steven Aldrich
 
 
 
Former Chief Product Officer, GoDaddy Inc.

Director Since: 2017

Age: 50

Independent: Yes
Standing Board Committees:
Nominating and Governance Committee (Chair)
Compensation Committee

Outside Public Company Directorships:
None

 
 
Executive Experience:
 
Mr. Aldrich has served as the Chair at Oakland Roots Sports Club since August 2018. Mr. Aldrich previously served as the Chief Product Officer at GoDaddy, Inc. from January 2016 through February 2019 and as Senior Vice President, Business Applications beginning in July 2012. Before joining GoDaddy in 2012, Mr. Aldrich served in various senior management roles at Intuit, Inc., a business and financial software company, from 1996 through 2008, including Vice President of Strategy and Innovation for the small business division. Mr. Aldrich also served as Chief Executive Officer of Outright Inc., a bookkeeping and accounting service, from 2011 to 2012, when it was acquired by GoDaddy, and as Chief Executive Officer of Posit Science Corporation, a software and services company, from 2008 to 2011. Mr. Aldrich holds a Bachelor of Arts in Physics from the University of North Carolina and an M.B.A. from Stanford University.
 
 
 
 
 
Relevant Skills and Qualifications:
 
Mr. Aldrich brings extensive product management experience from his years of serving in executive management positions that provides him with unique experience in operations, strategy, company growth and management. He has significant experience with consumer and small business software-as-a-service businesses. Mr. Aldrich also brings to the Board substantive knowledge about a variety of issues related to the Company’s business and currently serves as the Chair of the Nominating and Governance Committee and as a member of Compensation Committee, where he contributes significantly to the oversight responsibilities on matters relating to board and corporate governance and compensation strategy.


Blucora, Inc. | 2020 Proxy Statement 25




Mark A. Ernst
 
 
Managing Partner at Bellevue Capital LLC.

Director Since: 2020

Age: 61

Independent: Yes
Standing Board Committees:
Audit Committee

Outside Public Company Directorships:
Great Plains Energy Incorporated ( 2000–2008)
Knight Ridder, Inc. (2004–2006)
SAIA, Inc. (2001–2004)

Executive Experience:
Mr. Ernst currently serves as the Managing Partner at Bellevue Capital LLC, a private investment firm, a role he has held since May 2018. Prior to joining Bellevue, Mr. Ernst served as Executive Vice President and Chief Operating Officer of Fiserv, Inc. from January 2011 to April 2018, where he had oversight responsibility for the major operating businesses and support organizations of the enterprise, with a focus on enterprise-wide quality improvement and product management efforts. Mr. Ernst previously served as Deputy Commissioner for operations support for the Internal Revenue Service from January 2009 to November 2010. From 2008 to 2009, Mr. Ernst served as CEO of Bellevue. Mr. Ernst served in various executive roles at H&R Block, Inc., including as Chairman, President and CEO from 2001 to 2007, and as Chief Operating Officer from 1998 until 2000. Prior to joining H&R Block, Mr. Ernst served in various executive roles at American Express Company. Mr. Ernst currently serves as the Chairman of the Board of Directors of the Financial Health Network, a consumer-focused financial services advocacy organization, and previously served as a public company director on the boards of Great Plains Energy Incorporated, Knight Ridder Inc., and SAIA, Inc. Mr. Ernst received Bachelor's degrees in finance and accounting from Drake University, where he is a member of the Board of Trustees, and an M.B.A. in finance and economics from the University of Chicago Booth School of Business, where he has served on its Advisory Board.
 
 
 
Relevant Skills and Qualifications:
Mr. Ernst brings extensive relevant industry and executive leadership experience and knowledge to the Board, having spent over 30 years in the financial services industry, as well operational, investment and strategic experience. Mr. Ernst also has extensive experience overseeing financial and accounting matters, including his service as the audit committee chair of a public company board, which qualifies him as an "audit committee financial expert." Mr. Ernst's extensive familiarity with the wealth management and technology sectors, coupled with his experience serving on various public company boards, allow him to provide valuable insight and experience to bolster the Board's and the Audit Committee's oversight of the audit and risk management functions.
E. Carol Hayles
 
 
Former CFO, CIT Group, Inc.

Director Since: 2018

Age: 59

Independent: Yes
Standing Board Committees:
Compensation Committee (Chair)
Audit Committee

Outside Public Company Directorships:
Webster Financial Corporation (2018–Present)
Executive Experience:
Ms. Hayles is the former Chief Financial Officer of CIT Group Inc., a U.S. bank and global lending and leasing business, a position she held from November 2015 to May 2017. From July 2010 to November 2015, Ms. Hayles was the Controller and Principal Accounting Officer of CIT Group Inc. and was responsible for all financial and regulatory reporting. Prior to joining CIT Group Inc., Ms. Hayles worked at Citigroup Inc. for 24 years in various financial roles, most recently as Deputy Controller, and began her career at PricewaterhouseCoopers in Toronto, Canada. Ms. Hayles has been a director of Webster Financial Corporation, a NYSE listed company, since 2018. She was a Canadian Chartered Accountant from 1985 to 2009, and she received her BBA from York University in Toronto.
 
 
 
Relevant Skills and Qualifications:
As a former executive in the financial services industry, Ms. Hayles has significant executive leadership experience, as well as experience in the areas of operations and strategy. Ms. Hayles also has extensive financial and accounting experience, including as the chief financial officer of a large financial institution, which qualifies her as an "audit committee financial expert." Ms. Hayles currently serves as the Chair of the Compensation Committee, where she contributes significantly to the compensation strategy of the Company, and as a member of the Audit Committee, where she contributes extensively to the oversight and integrity of our financial statements, internal controls, risk management, and ethics and compliance functions.
 


Blucora, Inc. | 2020 Proxy Statement 26



John Macllwaine
 
 
Former VP, General Manager of Braintree

Director Since: 2018

Age: 50

Independent: Yes
Standing Board Committees:
Audit Committee

Outside Public Company Directorships:
None
Executive Experience:
Mr. MaclIwaine served as VP, General Manager at Braintree, a subsidiary of PayPal, Inc. until April 2020. Prior to joining Braintree, he served as Chief Technology Officer of Lending Club Corporation, a lending company, from August 2012 to January 2017. From December 2011 to July 2012, Mr. MacIlwaine served as the Chief Information Officer at Green Dot Corporation, a provider of prepaid financial services. From April 2007 to November 2011, Mr. MacIlwaine served as head of global development at Visa, Inc., a credit card processing company, where he led program management and information services, including web application development, data warehousing, business intelligence and mobile development. Mr. MacIlwaine holds a B.S.E. in computer engineering from the University of Michigan.
 
 
 
Relevant Skills and Qualifications:
Mr. MaclIwaine has extensive information technology experience from his years of serving in executive management positions that provides him with unique experience in information technology, cybersecurity, operations, strategy, company growth, and management. He also has significant experience with financial organizations. Mr. MacIlwaine currently serves as a member of the Audit Committee, where he contributes significantly to the review and evaluation of our enterprise risk assessment and risk management goals, particularly in the areas of information technology and cybersecurity.
Jana R. Schreuder
 
 
Former EVP and COO of Northern Trust, Inc.

Director Since: 2020

Age: 61

Independent: Yes
Standing Board Committees:
Compensation Committee

Outside Public Company Directorships:
LifePoint Health (2016-2018)
Executive Experience:
Ms. Schreuder is the former Executive Vice President and Chief Operating Officer of Northern Trust Corporation, a position that she held from 2014 to 2018. Ms. Schreuder joined Northern Trust in 1980 and during her tenure held multiple roles as a member of the management team, including service as the President of Wealth Management from 2011 to 2014, as President of Operations & Technology from 2006 to 2011, and as Chief Risk Officer from 2005 to 2006. Since 2008, Ms. Schreuder has served as a member of the board, including her current service as chair of the compensation committee, of Entrust Datacard Group, a privately held hardware and software information security company. From 2016 to 2018, Ms. Schreuder was a member of the board of directors of LifePoint Health, a rural U.S. healthcare provider which was acquired by affiliates of Apollo Global Management in 2018. Ms. Schreuder also currently serves on the Global Strategy Committee of Women Corporate Directors and is a member in the New York City Chapter. Ms. Schreuder received her Bachelor of Arts degree from Southern Methodist University and an M.B.A. from the Northwestern University Kellogg Graduate School of Management.
 
 
 
Relevant Skills and Qualifications:
Ms. Schreuder has extensive operations and wealth management experience from her years of serving in executive management positions that provides her with unique experience in technology, product development, operations, strategy, company growth, and management. Ms. Schreuder also has significant experience with wealth management and financial products. Ms. Schreuder currently serves as a member of the Compensation Committee, where her extensive experience and industry familiarity provides valuable contributions on matters relating to executive compensation and compensation strategy.







Blucora, Inc. | 2020 Proxy Statement 27




Christopher W. Walters
President, CEO and Director of Blucora, Inc.

Director Since: 2014

Age: 46

Independent: No
Standing Board Committees:
None

Outside Public Company Directorships:
None
Executive Experience:
Mr. Walters has served as our President and Chief Executive Officer since January 30, 2020 and as a member of our Board since 2014. Prior to being appointed President and Chief Executive Officer, Mr. Walters served as a Senior Partner at Activate, which is a next generation strategy consulting firm serving technology, internet, media, entertainment and sports businesses that he joined in 2019. From 2015 through 2018, Mr. Walters served as the Chief Executive Officer of Encompass Digital Media, a global technology services business supporting hundreds of leading media companies. Previously, Mr. Walters served as the Chief Operating Officer of The Weather Company, a weather focused media information services company, from March 2012 to December 2014. Prior to joining The Weather Company, he served in a variety of leadership roles at Bloomberg L.P. between 2008 and 2012, most recently as the Chief Operating Officer of the Bloomberg Industry Verticals Group, responsible for operations, strategy, business development, and expansion of the premium web-based subscription businesses. Previously, Mr. Walters was a partner at McKinsey & Co., advising media, entertainment, technology, information services and sport businesses as well as investors in these sectors. Mr. Walters holds a Bachelor of Science from the University of Vermont and an M.B.A from the University of Chicago.
 
 
 
Relevant Skills and Qualifications:
Mr. Walters has extensive operational and executive management experience from his work as an executive and an advisor to a variety of companies where he has provided leadership or advice in areas of strategy, operations, technology and marketing, including work with technology businesses that are highly relevant to the Company’s current operations. The Board believes Mr. Walters's experience and knowledge, coupled with his familiarity and oversight of the Company's historical strategic initiatives, provides valuable guidance to the Board and the Company as a technology-enabled, tax-smart financial solutions company while it seeks to meet its strategic growth initiatives.
Mary S. Zappone
CEO, Brace Industrial Group

Director Since: 2015

Age: 55

Independent: Yes
Standing Board Committees:
Audit Committee (Chair)
Nominating and Governance Committee

Outside Public Company Directorships:
None


Executive Experience:
Ms. Zappone has extensive experience as an executive, including her current tenure as Chief Executive Officer of Brace Industrial Group, an industrial services company. Prior to joining Brace in October 2017, she served as President and Chief Executive Officer of Service Champ, a specialty distributor of consumable automotive aftermarket maintenance parts and accessories, from November 2015 to September 2017. Prior to joining Service Champ, she served as President and Chief Executive Officer of RecoverCare, a supplier of healthcare equipment, from May 2011 to February 2015. Ms. Zappone worked at Alcoa, Inc. from 2006 to 2011, serving in a variety of roles, most recently as President of the Alcoa Oil & Gas Group, where she was responsible for operations, strategy, business development, and expansion of the aluminum alloy product systems business. During her career, she has also held other senior-level positions at Tyco International, General Electric, and Exxon, and worked at McKinsey & Co., where she advised companies in improving operating performance, capital investment, and merger and acquisition strategies. Ms. Zappone also serves as a director of Alsco Inc. (formerly known as Steiner). She received a Bachelor of Science in Chemical Engineering from Johns Hopkins University and an M.B.A. in Finance at Columbia Business School.
 
 
 
Relevant Skills and Qualifications:
Ms. Zappone has significant executive leadership experience, including in the areas of operations, strategy, people management, business development and company growth and expansion, as a result of her career as an executive and advisor, including high-level roles at companies that are renowned for their operational excellence. Additionally, Ms. Zappone has significant knowledge of accounting, capital structures, finance, financial reporting, strategic planning and forecasting and her extensive financial and accounting experience qualifies her as an “audit committee financial expert.” Ms. Zappone currently serves as the Chair of the Audit Committee, where she contributes significantly to the oversight of the integrity of our financial statements, internal controls, risk management and ethics and compliance functions.


Blucora, Inc. | 2020 Proxy Statement 28




Additional Information
Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” the Director Nominees listed in this Proxy Statement. The Director Nominees have consented to be named in this Proxy Statement and agreed to serve as directors if elected by the stockholders. In the event that any Director Nominee is unable or declines to serve as a director at the time of the 2020 Annual Meeting, the proxies will be voted for a nominee who may be designated by the present Board of Directors to fill the vacancy. Alternatively, the Board of Directors may reduce the size of the Board or maintain such vacancy. It is not expected that any of the Director Nominees will be unable or will decline to serve as a director.

Pursuant to our Corporate Governance Guidelines, each of the Director Nominees has tendered an irrevocable resignation that becomes effective if such Director Nominee fails to receive the required vote at the 2020 Annual Meeting. The Nominating and Governance Committee must consider the resignation and recommend to the Board the action to be taken with respect to the resignation. The director whose resignation is under consideration shall not participate in the Nominating and Governance Committee’s recommendation or the deliberations of the Board with respect to such resignation. The Board of Directors is required to consider and act on the recommendation within ninety (90) days following certification of the election results and will publicly disclose its decision whether to accept the resignation offer. A copy of our Corporate Governance Guidelines is available on our website at www.blucora.com/governance.

Vote Required
A Director Nominee will be elected to the Board of Directors if the votes cast "FOR" such Director Nominee’s election exceed the votes cast "AGAINST" such Director Nominee’s election (with abstentions and broker non-votes not counted as a vote cast either “FOR” or “AGAINST” such Director Nominee’s election).

 THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE DIRECTOR NOMINEES

Blucora, Inc. | 2020 Proxy Statement 29




PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC 
ACCOUNTING FIRM FOR 2020
The Audit Committee of the Board of Directors has appointed Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020 and recommends that stockholders vote “FOR” the ratification of this appointment. Although stockholder approval of this selection is not required by law and is not binding on the Company, the Audit Committee will take your vote on this proposal into consideration when selecting the independent registered public accounting firm in the future. Even if you ratify the appointment of Ernst & Young LLP, the Audit Committee may, in its sole discretion, terminate such engagement and direct the appointment of another independent registered public accounting firm at any time during the year.
The Audit Committee initially appointed Ernst & Young LLP as the Company's independent registered public accounting firm in March 2012. Representatives of Ernst & Young LLP are expected to be present at the meeting, with the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions.

Vote Required

The proposal to ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2020 requires the affirmative vote of the holders of a majority of the shares of Common Stock present, in person or by proxy, and entitled to vote on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSAL TWO

Blucora, Inc. | 2020 Proxy Statement 30



PROPOSAL THREE
ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE
COMPANY’S NAMED EXECUTIVE OFFICERS

What You Are Being Asked to Approve
We hold non-binding advisory votes on the compensation of our Named Executive Officers, which are commonly referred to as “say-on-pay” votes, at every annual meeting of stockholders. Our Board of Directors values the opinions of our stockholders and believes an annual advisory vote allows our stockholders to provide us with their input on our executive compensation program. We conducted an advisory vote on the frequency of the advisory say-on-pay vote at our 2017 annual meeting of stockholders. Following the recommendation of our stockholders, we will continue to hold our advisory say-on-pay vote on an annual basis. We received very strong approval of our say-on-pay vote at our 2019 annual meeting of stockholders, with 96.9% of our stockholders who voted at the meeting voting "FOR" approval of our compensation framework for our Named Executive Officers.

Pursuant to Section 14A(a)(1) of the Exchange Act, we are asking you to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers for 2019, as disclosed in the “Compensation Discussion and Analysis” section beginning on page 53 and the accompanying compensation tables and related narrative discussion . This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the compensation philosophy, policies and practices described in this Proxy Statement. The next stockholder advisory vote to approve executive compensation will be held at the 2021 Annual Meeting.
Our Compensation Program
We believe that our Named Executive Officer compensation program described throughout the “Compensation Discussion and Analysis” section of this Proxy Statement aligns the interests of our executives with those of our stockholders. Our compensation programs are designed to provide a competitive level of compensation to attract, motivate and retain talented and experienced executives and reward our Named Executive Officers for the achievement of short- and long-term strategic and operational goals and increased total stockholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. In addition, we have implemented a number of executive compensation best practices and policies over the last few years that we believe reflect sound governance and promote the long-term interests of our stockholders.
Resolution for Advisory Vote to Approve Executive Compensation
The Board of Directors and its committees value the opinions of our stockholders and will carefully consider the outcome of the advisory vote to approve executive compensation. Because this vote is advisory, it is not binding on the Board of Directors and/or its committees. We ask our stockholders to vote FOR the following resolution at the 2020 Annual Meeting:
“RESOLVED, that the compensation of our Named Executive Officers, as disclosed in the proxy statement for our 2020 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion, is hereby APPROVED on an advisory basis.”
Vote Required

The proposal to approve, on a non-binding basis, the compensation of our Named Executive Officers requires the affirmative vote of the holders of a majority of the shares of common stock present, in person or by proxy, and entitled to vote on the proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” PROPOSAL THREE

Blucora, Inc. | 2020 Proxy Statement 31




PROPOSAL FOUR
APPROVAL OF AN AMENDMENT TO THE BLUCORA, INC.
2018 LONG-TERM INCENTIVE PLAN

Proposed Amendment to 2018 Plan
    
We are asking stockholders to approve an amendment (the “Plan Amendment”) to the Blucora, Inc. 2018 Long-Term Incentive Plan (as amended, restated, amended and restated, supplemented or otherwise modified and in effect prior to the Plan Amendment, the “2018 Plan”), which was recommended by the Compensation Committee and approved by the Board on March 31, 2020, subject to and effective upon stockholder approval at the 2020 Annual Meeting (the "Amendment Effective Date"). The 2018 Plan was adopted by the Board on April 6, 2018, and subsequently approved by our stockholders on June 7, 2018 (the “2018 Plan Effective Date").

The 2018 Plan (after giving effect to the Plan Amendment, the “Amended 2018 Plan”) is summarized below. The Plan Amendment would (i) increase the number of shares of the Company’s Common Stock available for grant under the 2018 Plan by 1,692,000 shares and (ii) convert to a non-fungible share pool, such that all equity awards count on a 1:1 basis against the number of shares authorized for issuance under the Amended 2018 Plan.

Except for the proposed removal of the fungible share ratio in connection with the Plan Amendment, the Amended 2018 Plan would retain all of the features that were included in the 2018 Plan, which we believe are consistent with the interests of the Company’s stockholders and sound corporate governance practices, including the following:
Ÿ
No recycling of shares or “liberal share counting” practices. Shares tendered to the Company or retained by the Company in the exercise or settlement of an award or for tax withholding may not become available again for issuance under the Amended 2018 Plan.
Ÿ
Minimum Vesting Requirements. No Award will vest prior to one-year from its date of grant (subject to a 5% carve-out as described below for “Exempt Shares” and subject to an exception for shares granted to directors that vest at the Company’s subsequent annual meeting as described below).
Ÿ
No automatic share replenishment or “evergreen” provision. There is no evergreen feature pursuant to which the shares authorized for issuance under the Amended 2018 Plan can be automatically replenished.
Ÿ
No liberal change in control definition. Change in control is triggered only by the occurrence, rather than stockholder approval, of a merger or other change in control event.
Ÿ
No discounted stock options or SARs. All stock options and stock appreciation rights ("SARs") must be issued with an exercise or grant price at fair market value or above.
Ÿ
No repricing of stock options or SARs. Repricing or other exchanges or buyouts of stock options and SARs are prohibited.
Ÿ
Awards subject to clawback. Awards under the Amended 2018 Plan are subject to recoupment as provided in the Company’s Clawback Policy.
Ÿ
No dividends on stock options, SARs or unvested awards. No dividends or dividend equivalents accrue or are payable on stock options or SARs. Dividends and dividend equivalent rights accrue and are payable only when the underlying awards become vested.
Ÿ
Limit on outside director awards. The Amended 2018 Plan establishes a maximum amount of shares (by dollar value) that may be granted to any outside director in any calendar year.
Ÿ
No tax gross ups. The Amended 2018 Plan does not provide for the gross-up of any excise tax liability on awards.
Ÿ
No reload options. The Amended 2018 Plan does not provide for the grant of reload stock options.

Reasons for the Proposal

The Board and Compensation Committee believe that the number of shares of Common Stock currently available under the 2018 Plan is insufficient to meet the Company’s future equity compensation needs. Stockholder approval of the Plan Amendment is intended to ensure that the Company has sufficient shares available to attract and retain key employees, key contractors, and outside directors, and to further the Company’s growth and development. For a discussion of awards under the 2018 Plan as components of the Company’s executive compensation program, please refer to the “Compensation Discussion and Analysis” section beginning on page 53.

Plan Information

The following table sets forth information regarding our outstanding equity awards under the 2018 Plan and the Blucora, Inc. 2016 Inducement Plan (the "Inducement Plan"), respectively, as of the Record Date:

Blucora, Inc. | 2020 Proxy Statement 32




 
2018 Plan
 Inducement Plan
Total
Shares available for future awards
3,347,488

1,331,898

4,679,386

Options outstanding (1)
1,588,103

79,023

1,667,126

Total number of full-value awards outstanding (2)
1,377,840


1,377,840

Weighted average exercise price of outstanding options
$19.13
Weighted average remaining term of outstanding options
3.28 Years
Total common shares outstanding
47,842,896
(1)
No stock options outstanding as of the Record Date were entitled to receive dividend equivalents. No stock appreciation rights were outstanding as of the Record Date.
(2)
Reflects 1,160,013 shares of time-based restricted stock units ("RSUs") outstanding and 217,827 share of performance-based restricted stock units ("PRSUs") outstanding (at target) under the 2018 Plan.

Background for Requested Share Authorization

The Plan Amendment would authorize the issuance of an additional 1,692,000 shares under the 2018 Plan. If the Plan Amendment is approved, the number of shares of Common Stock authorized for grant under the Amended 2018 Plan is set forth in the table below.
 
2018 Plan
Previously Authorized under
2018 Plan (1)(2)
To Be Authorized under Plan Amendment
Shares Authorized for Issuance under 2018 Plan (2)
Shares authorized for issuance
5,563,134
1,692,000
7,255,134
(1)
Reflects the number of shares authorized for issuance under the 2018 Plan, as approved by stockholders on the 2018 Plan Effective Date. Since the 2018 Plan was previously approved by stockholders on the 2018 Plan Effective Date, the 2015 Plan has been terminated and no further awards have been made under the 2015 Plan.
(2)
Does not include (i) the number of shares subject to awards granted under the Blucora, Inc. 2015 Long-Term Incentive Plan (the "2015 Plan") and the Company’s Restated 1996 Flexible Stock Incentive Plan (the "1996 Plan") as of the 2018 Plan Effective Date (collectively, the “Prior Plans”) that were outstanding as of the 2018 Plan Effective Date, and that on or after such date, are forfeited, expire or are canceled; and (ii) the number of shares subject to awards relating to Common Stock under the Prior Plans that, on or after the 2018 Plan Effective Date, are settled in cash (with (i) and (ii) collectively, the “Prior Plan Awards”). Any Prior Plan Awards that are so forfeited, expired, canceled or settled in cash would be eligible for issuance to applicable participants under the 2018 Plan.

In setting the number of shares authorized for issuance under the Amended 2018 Plan, the Compensation Committee and the Board considered the number of eligible plan participants, including all employees, contractors and outside directors of the Company (which, in the aggregate, currently is approximately 4,700 eligible participants), the number of outstanding equity awards and shares available for grant under the 2018 Plan, the Company’s historical granting practices and burn rate, the certain market and economic conditions that have impacted, and may continue to impact, the value of the Common Stock, and the level of potential dilution that will result from adoption of the Plan Amendment.

In connection with the proposed Plan Amendment, including the removal of the fungible share ratio, in March 2020, the Board approved an amendment to the Inducement Plan (the "Inducement Plan Amendment") to remove the fungible share ratio under the Inducement Plan, with the Inducement Plan Amendment intended to be entered into on or about the date of the 2020 Annual Meeting.

The Company has granted or settled equity awards representing a total of 1,847,795 shares in 2017, 905,108 shares in 2018, and 1,335,401 shares in 2019, as further detailed in the table below:
 
2017
2018 (1)
2019
Stock options granted
1,474,266
322,823
280,135
RSUs granted / PRSUs earned
373,529
582,285
1,055,206
Weighted-average Common Stock outstanding during the year
44,370,000
47,394,000
48,264,000
Gross burn rate (unadjusted)
4.2%
1.9%
2.8%
(1)
Includes grants made under the Inducement Plan, which was adopted by our Board on January 29, 2016 and did not require stockholder approval. Shares issued as RSUs and other full-value awards count as two shares against the number of shares authorized for issuance under the Inducement Plan.
 

Blucora, Inc. | 2020 Proxy Statement 33




The Company’s three-year average annual gross burn rate for the period from January 1, 2017 through December 31, 2019 was 2.97% on an unadjusted basis. As of the Record Date, the number of shares subject to outstanding equity awards plus the number of the shares available for grant under the 2018 Plan, represent 13.9% of the Company’s outstanding Common Stock on a fully diluted basis, which was 47,842,896 shares outstanding as of the Record Date. If the Plan Amendment is approved, the potential basic dilution will be 19.68% based on the shares outstanding as of the Record Date. We believe our three-year average annual burn rate and level of potential dilution, assuming the Amended 2018 Plan is approved by stockholders, compare favorably to the Company’s industry peers and are lower than the industry thresholds established by certain major proxy advisory firms.
 
The Company’s future burn rate will depend on a number of factors, including the number of participants in the 2018 Plan, the price per share of our Common Stock, any changes to our compensation strategy, changes in business practices or industry standards, changes in the compensation practices of our competitors, or changes in compensation practices in the market generally, and the methodology used to establish the equity award mix.

Description of the Amended 2018 Plan

The following is a brief description of the Amended 2018 Plan. The complete text of the 2018 Plan and the Plan Amendment are each attached to this Proxy Statement as Appendix B. The following description of the Amended 2018 Plan is a summary of certain provisions of the Amended 2018 Plan and is qualified in its entirety by reference to the full text of the 2018 Plan and the Plan Amendment.

Effective Date and Expiration. The 2018 Plan was originally adopted by the Board of Directors on April 6, 2018, with the effectiveness thereof subject to and conditioned upon stockholder approval of the 2018 Plan. The Company's stockholders approved the 2018 Plan at the Company's 2018 annual meeting of stockholders held on June 7, 2018. Unless sooner terminated by action of the Board, the 2018 Plan will terminate and expire on June 7, 2028, the tenth anniversary of the 2018 Plan Effective Date, but awards granted prior to that date will continue to be effective in accordance with their terms and conditions.

Share Authorization. The Plan Amendment increases the number of shares authorized and reserved under the 2018 Plan by 1,692,000 shares. Subject to certain adjustments, the maximum number of shares of Common Stock that may be delivered pursuant to awards granted under the Amended 2018 Plan is equal to the sum of (i) 7,255,134 shares of Common Stock, plus (ii) the number of shares subject to the Prior Plan Awards. Of the shares of Common Stock reserved under the Amended 2018 Plan, up to 5,000,000 shares may be delivered pursuant to incentive stock options qualifying under Section 422 of the Internal Revenue Code of 1986, as amended (the “IRC”). Shares to be issued may be made available from authorized but unissued shares of Common Stock, shares of Common Stock held by the Company in its treasury, or shares of Common Stock purchased by the Company on the open market or otherwise. During the term of the Amended 2018 Plan, the Company will at all times reserve and keep available the number of shares of Common Stock that shall be sufficient to satisfy the requirements of the Amended 2018 Plan. The Amended 2018 Plan also provides that no more than 5% of the shares of Common Stock that may be issued pursuant to an award under the Amended 2018 Plan may be designated as “Exempt Shares.” Exempt Shares are shares subject to awards that are granted with more favorable vesting provisions than the minimum vesting provisions otherwise required by the Amended 2018 Plan (as described below).

Share Counting. If an award under the Amended 2018 Plan (or a Prior Plan Award) is canceled, forfeited, or expires, in whole or in part, the shares subject to such forfeited, expired, or canceled award may again be awarded under the Amended 2018 Plan. Awards that may be satisfied either by the issuance of shares of Common Stock or by cash or other consideration will be counted against the maximum number of shares of Common Stock that may be issued under the Amended 2018 Plan only during the period that the award is outstanding or to the extent the award is ultimately satisfied by the issuance of shares of Common Stock. Shares of Common Stock otherwise deliverable pursuant to an award that are withheld upon exercise or vesting of an award for purposes of paying the exercise price or tax withholdings (including, without limitation, any shares withheld in connection with the exercise of stock-settled SARs) will be treated as delivered to the participant and will be counted against the maximum number of shares of Common Stock that may be issued under the Amended 2018 Plan. However, such awards will not reduce the number of shares of Common Stock that may be issued if the settlement of the award will not require the issuance of shares, as, for example, a SAR that can be satisfied only by the payment of cash. Only shares forfeited back to the Company or shares canceled on account of termination, expiration or lapse of an award will again be available for grant of incentive stock options under the Amended 2018 Plan, but will not increase the maximum number of shares described above as the maximum number of shares of Common Stock that may be delivered pursuant to incentive stock options.

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All shares subject to awards, regardless the type of award, will count against the Amended 2018 Plan's reserve on a 1:1 basis for each share subject to the award. Any shares of Common Stock that again become available for issuance under the Amended 2018 Plan will be added back to the Amended 2018 Plan on the same 1:1 basis.

Director Award Limits. No outside director may be granted any award or awards which would permit the aggregate fair market value (determined on the date of grant) of awards granted to the outside director during any calendar year to exceed $700,000 plus an additional $700,000 in fair market value (determined on the date of grant) for one-time awards to a newly appointed or elected director. This limit does not apply to any award made pursuant to deferred compensation arrangements in lieu of all or a portion of cash retainers.

Administration. The Amended 2018 Plan will be administered by the Board or such committee of the Board of Directors as is designated by the Board of Directors (the “Committee”). The Committee shall consist of not fewer than two persons. Any member of the Committee may be removed at any time, with or without cause, by resolution of the Board of Directors. Any vacancy occurring in the membership of the Committee may be filled by appointment by the Board of Directors. Membership on the Committee shall be limited to those members of the Board who are “non-employee directors” as defined in Rule 16b-3 promulgated under the Exchange Act. As of the 2018 Plan Effective Date, the Compensation Committee was designated by the Board to administer the Plan. The Board intends for the Compensation Committee to continue administering the Amended 2018 Plan.

The Board or the Committee may delegate certain duties to one or more officers of the Company as provided in the Amended 2018 Plan. The Committee will interpret the Amended 2018 Plan and award agreements, prescribe, amend, and rescind any rules and regulations, as necessary or appropriate for the administration of the Amended 2018 Plan, establish performance goals for an award and certify the extent of their achievement, and make such other determinations or certifications and take such other action as it deems necessary or advisable in the administration of the Amended 2018 Plan. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding, and conclusive on all interested parties.

Eligibility. Employees (including any employee who is also a director or an officer), contractors, and outside directors of the Company or its related companies whose judgment, initiative and efforts contributed to or may be expected to contribute to the successful performance of the Company and its related companies are eligible to participate in the Amended 2018 Plan. As of the Record Date, the Company and its related companies had approximately 680 employees, 4,500 contractors (including advisors), and 7 outside directors. The Committee is empowered, in its sole discretion, to select the employees, contractors or advisors, and directors who will participate in the Amended 2018 Plan.

Financial Effect of Awards. The Company will receive no monetary consideration for the granting of awards under the Amended 2018 Plan, unless otherwise provided when granting restricted stock or RSUs. The Company will receive no monetary consideration other than the option price for shares of Common Stock issued to participants upon the exercise of their stock options and the Company will receive no monetary consideration upon the exercise of stock appreciation rights.

Stock Options. The Committee may grant either incentive stock options qualifying under IRC Section 422 or non-qualified stock options, provided that only employees of the Company and its subsidiaries (excluding subsidiaries that are not corporations) are eligible to receive incentive stock options. Stock options may not be granted with an option price less than 100% of the fair market value of a share of Common Stock on the date the stock option is granted. If an incentive stock option is granted to an employee who owns or is deemed to own more than 10% of the combined voting power of all classes of stock of the Company (or any parent or subsidiary), the option price must be at least 110% of the fair market value of a share of Common Stock on the date of grant. The Committee will determine the terms of each stock option at the time of grant, including, without limitation, the methods by or forms in which shares will be delivered to participants. The maximum term of each option, the times at which each option will be exercisable, and provisions requiring forfeiture of unexercised options at or following termination of employment or service generally are fixed by the Committee, except that the Committee may not grant stock options with a term exceeding 10 years or, in the case of an incentive stock option granted to an employee who owns or is deemed to own more than 10% of the combined voting power of all classes of stock of the Company (or any parent or subsidiary), five years. In addition, no dividends or dividend equivalent rights may be paid or granted with respect to any stock options granted under the Amended 2018 Plan.

Recipients of stock options may pay the option exercise price (i) in cash; (ii) by wire transfer or check acceptable to the Company; (iii) if permitted by the Committee, having the Company withhold shares of Common Stock that would

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otherwise be issued on exercise of the stock option that have an aggregate fair market value equal to the aggregate option price of the shares being purchased; (iv) if permitted by the Committee, tendering (either actually or, so long as the shares are registered under Section 12(b) or 12(g) of the Exchange Act, by attestation) shares of Common Stock owned by the participant that have an aggregate fair market value equal to the aggregate option price of the shares being purchased; (v) unless the Committee determines otherwise and so long as the shares are registered under Section 12(b) or 12(g) of the Exchange Act, and to the extent permitted by law, by delivery of irrevocable instructions to a brokerage firm designated or approved by the Company to sell certain of the shares of Common Stock purchased upon the exercise of the option and to promptly deliver to the Company the amount of proceeds to pay the aggregate option price of the shares being purchased; or (vi) such other consideration as the Committee may permit, in its sole discretion.

Stock Appreciation Rights. The Committee is authorized to grant SARs as a stand-alone award, or freestanding SARs, or in conjunction with stock options granted under the Amended 2018 Plan, or tandem SARs. A SAR is the right to receive an amount equal to the excess of the fair market value of a share of Common Stock on the date of exercise over the exercise price. The exercise price may be equal to or greater than the fair market value of a share of Common Stock on the date of grant. The Committee, in its sole discretion, may place a ceiling on the amount payable on the exercise of a SAR, but any such limitation shall be specified at the time the SAR is granted. A SAR granted in tandem with a stock option will require the holder, upon exercise, to surrender the related stock option with respect to the number of shares as to which the SAR is exercised. The Committee will determine the terms of each SAR at the time of the grant, including, without limitation, the methods by or forms in which the value will be delivered to participants (whether made in shares of Common Stock, in cash or in a combination of both). The maximum term of each SAR, the times at which each SAR will be exercisable, and provisions requiring forfeiture of unexercised SARs at or following termination of employment or service generally are fixed by the Committee, except that no freestanding SAR may have a term exceeding 10 years and no tandem SAR may have a term exceeding the term of the option granted in conjunction with the tandem SAR. In addition, no dividends or dividend equivalent rights may be paid or granted with respect to any SARs granted under the Amended 2018 Plan.

Restricted Stock and RSUs. The Committee is authorized to grant restricted stock and RSUs. Restricted stock consists of shares that are transferred or sold by the Company to a participant, but are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the participant. RSUs are the right to receive shares of Common Stock at a future date in accordance with the terms of such grant upon the attainment of certain conditions specified by the Committee, which include substantial risk of forfeiture and restrictions on their sale or other transfer by the participant. The Committee determines the eligible participants to whom, and the time or times at which, grants of restricted stock or restricted stock units will be made, the number of shares or units to be granted, the price to be paid, if any, the time or times within which the shares covered by such grants will be subject to forfeiture, the time or times at which the restrictions will terminate, and all other terms and conditions of the grants. Restrictions or conditions could include, but are not limited to, the attainment of performance goals (as described below), continuous service with the Company, the passage of time or other restrictions or conditions; provided that, if the right to receive dividends is awarded, then (A) any cash dividends and stock dividends with respect to a restricted stock award shall be withheld by the Company for the participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Committee; and (B) such cash dividends or stock dividends so withheld by the Company and attributable to any particular share of restricted stock (and earnings thereon, if applicable) shall be distributed to such participant in cash or, at the discretion of the Committee, in shares of Common Stock having a fair market value equal to the amount of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the participant shall will also forfeit the right to dividends attributable to such forfeited share. The value of the RSUs may be paid in shares of Common Stock, cash, or a combination of both, as determined by the Committee.

Performance Awards. The Committee may grant performance awards payable in cash, shares of Common Stock, or a combination thereof at the end of a specified performance period. Payment will be contingent upon achieving pre-established performance goals (as discussed below) by the end of the performance period. The Committee will determine the length of the performance period, the maximum payment value of an award, and the minimum performance goals required before payment will be made, so long as such provisions are not inconsistent with the terms of the Amended 2018 Plan, and to the extent an award is subject to IRC Section 409A, are in compliance with the applicable requirements of IRC Section 409A and any applicable regulations or guidance. If the Committee determines in its sole discretion that the established performance measures or objectives are no longer suitable because of a change in the Company’s business, operations, corporate structure, or for other reasons that the Committee deems satisfactory, the Committee may modify the performance measures or objectives and/or the

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performance period. Subject to Committee discretion, a performance award will terminate for all purposes if the participant is not continuously employed by the Company at all times during the applicable performance period.

Other Awards. The Committee may grant other forms of awards payable in cash or shares of Common Stock if the Committee determines that another form of award is consistent with the purpose and restrictions of the Amended 2018 Plan. The terms and conditions of such other form of award will be specified by the grant. Such other awards may be granted for no cash consideration, for such minimum consideration as may be required by applicable law or for such other consideration as may be specified by the grant.

Dividend Equivalent Rights. The Committee may grant a dividend equivalent right either as a component of another award (to the extent permitted under the Amended 2018 Plan) or as a separate award. The terms and conditions of the dividend equivalent right will be specified by the grant and, when granted as a component of another award, may have terms and conditions different from such other award; provided, however, that (i) any dividend equivalent rights with respect to such other award will be withheld by the Company for a participant’s account until such other award is vested, subject to such terms as determined by the Committee; and (ii) such dividend equivalent rights so withheld and attributable to another award will be distributed to such participant in cash or, at the discretion of the Committee, in shares of Common Stock having a fair market value equal to the amount of such dividend equivalent rights, if applicable, upon vesting of the other award and, if such other award is forfeited, the right to dividend equivalent rights attributable to such forfeited award will also be forfeited. No dividend equivalent right may be paid or granted with respect to any stock option or SAR. Dividend equivalents granted as a separate award may also be paid currently or may be deemed to be reinvested in additional shares of Common Stock. Any such reinvestment will be at the fair market value at the time thereof. Dividend equivalent rights may be settled in cash or shares of Common Stock.

Performance Goals. Awards of restricted stock, RSUs, performance awards, and other awards (whether relating to cash or shares of Common Stock) under the Amended 2018 Plan may be made subject to the attainment of performance goals relating to one or more business criteria which, where applicable, may consist of one or more or any combination of the following criteria: cash flow (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); cost; working capital; earnings (and any variations thereon, including, without limitation, earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings before interest, taxes, depreciation, amortization, and stock-based compensation or other similar expenses; operating earnings); earnings per share; book value per share; share price; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); revenues (and any variations thereon, including, without limitation, gross revenues; net revenues; revenues from products); expenses (and any variations thereon); assets under management; fees based on assets under management; monetized units or products; sales (and any variations thereon); operating margins; gross margins; return on assets; return on equity; debt; debt plus equity; credit quality or debt ratings; profit (and any variations thereon) market or economic value added; stock price appreciation; total stockholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; capital expenditures; operational improvements; or customer satisfaction, employee satisfaction, services performance, subscriber, cash management or asset management metrics; the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions; inventory levels, inventory turn or shrinkage; or total return to stockholders (“Performance Criteria”). Any Performance Criteria may include or exclude (i) events that are of an unusual nature or indicate infrequency of occurrence; (ii) gains or losses acquisitions or divestitures, (iii) asset write-downs; (iv) litigation or claim judgments or settlements; (v) foreign exchange gains and losses; (vi) impairments; (vi) changes in tax or accounting regulations or laws, (vii) the effect of a merger or acquisition, any reorganization or restructuring programs; or (viii) other similar occurrences. In all other respects, Performance Criteria are to be calculated in accordance with the Company’s financial statements, under generally accepted accounting principles, or under a methodology established by the Committee prior to the issuance of an award which is consistently applied and identified in the audited financial statements, including footnotes, or the Compensation Discussion and Analysis section of the Company’s proxy statement as incorporated by reference to the Company’s Annual Report on Form 10-K.

Vesting of Awards; Forfeiture; Assignment. Except as otherwise provided below, the Committee, in its sole discretion, may determine that an award will be immediately vested in whole or in part, or that all or any portion may not be vested until a date, or dates, subsequent to its date of grant, or until the occurrence of one or more specified events, subject in any case to the terms of the Amended 2018 Plan. Except to the extent an award is for Exempt Shares, no awards granted by the Committee nor any portion of an award (even on a pro rata basis) may vest earlier than one (1) year after the date of grant; provided, however, with respect to grants of awards made on the date of an annual stockholders meeting to outside directors, such one (1) year vesting period shall be deemed satisfied if such awards vest on the earlier of the first anniversary of the date of grant of such award or the first annual stockholders meeting following the

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date of grant. The Committee may not accelerate the date on which all or any portion of an award may be vested or waive the period an award is restricted on a full value award except upon the participant’s death, “total and permanent disability,” retirement, or a “change in control” (as such terms are defined in the Amended 2018 Plan). Notwithstanding the foregoing, the Committee may, in its sole discretion, grant awards with more favorable vesting provisions at any time, provided that the shares of Common Stock subject to such awards will be designated as Exempt Shares. As discussed above, only 5% of the shares of Common Stock that may be issued pursuant to an award under the Amended 2018 Plan may be designated as Exempt Shares.

The Committee may impose on any award, at the time of grant or thereafter, such additional terms and conditions as the Committee determines, including terms requiring forfeiture of awards in the event of a participant’s termination of service. The Committee will specify the circumstances under which performance awards may be forfeited in the event of a termination of service by a participant prior to the end of a performance period or settlement of awards. Except as otherwise determined by the Committee, restricted stock will be forfeited upon a participant’s termination of service during the applicable restriction period.

Awards granted under the Amended 2018 Plan generally are not assignable or transferable except by will or by the laws of descent and distribution, except that the Committee may, in its discretion and pursuant to the terms of an award agreement, permit certain transfers of nonqualified stock options or SARs to: (i) the spouse (or former spouse), children, or grandchildren of the participant (“Immediate Family Members”); (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members; (iii) a partnership in which the only partners are (1) such Immediate Family Members and/or (2) entities which are controlled by Immediate Family Members; (iv) an entity exempt from federal income tax pursuant to IRC Section 501(c)(3) or any successor provision; or (v) a split interest trust or pooled income fund described in IRC Section 2522(c)(2) or any successor provision, provided that (x) there is no consideration for any such transfer, (y) the applicable award agreement pursuant to which such award is granted must be approved by the Committee and must expressly provide for such transferability, and (z) subsequent transfers of transferred awards will be prohibited except those by will or the laws of descent and distribution.

Adjustments Upon Changes in Capitalization. In the event that any dividend or other distribution, recapitalization, stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination, subdivision, repurchase, or exchange of the shares of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase shares of Common Stock or other securities of the Company, or other similar corporate transaction or event affects the fair value of an award, then the Committee will adjust any or all of the following so that the fair value of the award immediately after the transaction or event is equal to the fair value of the award immediately prior to the transaction or event (i) the number of shares and type of Common Stock (or the securities or property) which thereafter may be made the subject of awards, (ii) the number of shares and type of shares of Common Stock (or other securities or property) subject to outstanding awards, (iii) the option price of each outstanding award, (iv) the amount, if any, the Company pays for forfeited shares of Common Stock in accordance with the terms of the Amended 2018 Plan, and (v) the number of or exercise price of shares of Common Stock then subject to outstanding SARs previously granted and unexercised under the Amended 2018 Plan, to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock in each instance will remain subject to exercise at the same aggregate exercise price; provided however, that the number of shares of Common Stock (or other securities or property) subject to any award will always be a whole number. Notwithstanding the foregoing, no such adjustment will be made or authorized to the extent that such adjustment would cause the Amended 2018 Plan or any stock option to violate IRC Section 422 or IRC Section 409A. All such adjustments must be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is subject.

Amendment or Discontinuance of the Amended 2018 Plan. The Board may, at any time and from time to time, without the consent of the participants, alter, amend, revise, suspend, or discontinue the Amended 2018 Plan in whole or in part; provided, however, that (i) no amendment that requires stockholder approval in order for the Amended 2018 Plan and any awards under the Amended 2018 Plan to continue to comply with IRC Sections 421 and 422 (including any successors to such sections, or other applicable law) or any applicable requirements of any securities exchange or inter-dealer quotation system on which the Company’s stock is listed or traded, will be effective unless such amendment is approved by the requisite vote of the Company’s stockholders entitled to vote on the amendment; and (ii) unless required by law, no action by the Board regarding amendment or discontinuance of the Amended 2018 Plan may adversely affect any rights of any participants or obligations of the Company to any participants with respect to any outstanding award under the Amended 2018 Plan without the consent of the affected participant.

No Repricing of Stock Options or SARs. The Committee may not “reprice” any stock option or SAR. For purposes of the Amended 2018 Plan, “reprice” means any of the following or any other action that has the same effect: (i) amending

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a stock option or SAR to reduce its exercise price or base price, (ii) canceling a stock option or SAR at a time when its exercise price or base price exceeds the fair market value of a share of Common Stock in exchange for cash or a stock option, SAR, award of restricted stock or other equity award, or (iii) taking any other action that is treated as a repricing under generally accepted accounting principles, provided that nothing will prevent the Committee from (x) making adjustments to awards upon changes in capitalization, (y) exchanging or cancelling awards upon a merger, consolidation, or recapitalization, or (z) substituting awards for awards granted by other entities, to the extent permitted by the Amended 2018 Plan.

Recoupment for Restatements. The Committee may recoup all or any portion of any shares or cash paid to a participant in connection with an award, as set forth in the Company’s Clawback Policy, approved by the Board from time to time.

Federal Income Tax Consequences

The following is a brief summary of certain federal income tax consequences relating to the transactions described under the Amended 2018 Plan as set forth below. This summary does not purport to address all aspects of federal income taxation and does not describe state, local, or foreign tax consequences. This discussion is based upon provisions of the IRC and the treasury regulations issued thereunder, and judicial and administrative interpretations under the IRC and treasury regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation. This summary is general in nature and does not purport to be legal or tax advice.

Law Affecting Deferred Compensation. If the requirements of IRC Section 409A are not satisfied, deferred compensation and earnings thereon will be subject to tax as they vest, plus an interest charge at the underpayment rate plus 1% and a 20% penalty tax. Certain performance awards, stock options, stock appreciation rights, RSUs, and certain types of restricted stock are subject to IRC Section 409A. The Company intends that awards granted under the Amended 2018 Plan comply with, or otherwise be exempt from, IRC Section 409A, but makes no representation or warranty to that effect.

Incentive Stock Options. A participant will not recognize income at the time an incentive stock option is granted. When a participant exercises an incentive stock option, a participant also generally will not be required to recognize income (either as ordinary income or capital gain). However, to the extent that the fair market value (determined as of the date of grant) of the shares of Common Stock with respect to which the participant’s incentive stock options are exercisable for the first time during any year exceeds $100,000, the incentive stock options for the shares of Common Stock over $100,000 will be treated as non-qualified stock options, and not incentive stock options, for federal tax purposes, and the participant will recognize income as if the incentive stock options were non-qualified stock options. In addition to the foregoing, if the fair market value of the shares of Common Stock received upon exercise of an incentive stock option exceeds the exercise price, then the excess may be deemed a tax preference adjustment for purposes of the federal alternative minimum tax calculation. The federal alternative minimum tax may produce significant tax repercussions depending upon the participant’s particular tax status. Any gain or loss that the participant realizes when he or she later sells or disposes of the shares will be short-term or long-term capital gain or loss, depending on how long the shares were held. If the participant disposes of shares of Common Stock acquired by exercise of an incentive stock option in a “disqualifying disposition,” the participant may recognize ordinary income for the tax year in which the disqualifying disposition occurs.

Non-qualified Stock Options. A participant generally will not recognize income at the time a non-qualified stock option is granted. When a participant exercises a non-qualified stock option, the difference between the option price and any higher market value of the shares of Common Stock on the date of exercise will be treated as compensation taxable as ordinary income to the participant. The participant’s tax basis for shares of Common Stock acquired under a non-qualified stock option will be equal to the option price paid for such shares of Common Stock, plus any amounts included in the participant’s income as compensation. When a participant disposes of shares of Common Stock acquired by exercise of a non-qualified stock option, any amount received in excess of the participant’s tax basis for such shares will be treated as short-term or long-term capital gain, depending upon how long the participant has held the shares of Common Stock. If the amount received is less than the participant’s tax basis for such shares, the loss will be treated as short-term or long-term capital loss, depending upon how long the participant has held the shares.

Restricted Stock. A participant who receives restricted stock generally will recognize as ordinary income the excess, if any, of the fair market value of the shares of Common Stock granted as restricted stock at such time as the shares are no longer subject to forfeiture or restrictions, over the amount paid, if any, by the participant for such shares.

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However, a participant who receives restricted stock may make an election under IRC Section 83(b) within 30 days of the date of transfer of the shares of Common Stock to recognize ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard to the restrictions on such shares) over the purchase price, if any, of such shares. If a participant does not make an election under IRC Section 83(b), then the participant will recognize as ordinary income any dividends received with respect to such shares. At the time of sale of such shares, any gain or loss realized by the participant will be treated as either short-term or long-term capital gain (or loss) depending on the holding period. For purposes of determining any gain or loss realized, the participant’s tax basis will be the amount previously taxable as ordinary income, plus the purchase price paid by the participant, if any, for such shares.

Other Awards. In the case of an award of RSUs, performance awards, dividend equivalent rights or other stock or cash awards, the recipient will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment or delivery, provided that the award is exempt from or complies with IRC Section 409A. In that taxable year, the Company will receive a federal income tax deduction in an amount equal to the ordinary income which the participant has recognized.

Federal Tax Withholding. Any ordinary income realized by a participant upon the exercise of an award under the Amended 2018 Plan is subject to withholding of federal, state, and local income tax and to withholding of the participant’s share of tax to satisfy federal income tax withholding requirements. The Company and its related companies will have the right to require that, as a condition to the issuance of any shares of Common Stock, the participant remit to the Company an amount sufficient to satisfy the withholding requirements. Alternatively, the Company may withhold a portion of the shares of Common Stock (valued at fair market value) that otherwise would be issued to the participant to satisfy all or part of the withholding tax obligations or may, if the Company consents, accept delivery of shares of Common Stock with an aggregate fair market value that equals or exceeds the required tax withholding payment.

Tax Consequences to the Company. To the extent that a participant recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of IRC Section 280G and is not disallowed by the $1,000,000 limitation on certain executive compensation under IRC Section 162(m).

Interest of Directors and Executive Officers

All members of the Board and all executive officers of the Company are eligible for awards under the Amended 2018 Plan and thus, have a personal interest in the approval of the Plan Amendment.

New Plan Benefits

All awards to employees, officers, contractors and outside directors under the Amended 2018 Plan are made at the discretion of the Committee. Therefore, the future benefits and amounts that will be received or allocated to such individuals under the Amended 2018 Plan are not determinable at this time. No awards may be made under the Amended 2018 Plan with respect to the new shares authorized by the Plan Amendment until on or after the Amendment Effective Date.    

The closing sale price of the Company’s Common Stock on the NASDAQ Global Select Market on the Record Date was $9.29 per share.
Vote Required

The proposal to approve the Plan Amendment requires the affirmative vote, in person or by proxy, of the majority of votes cast on the proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” PROPOSAL FOUR


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PROPOSAL FIVE
APPROVAL OF AN AMENDMENT TO THE BLUCORA, INC.
2016 EMPLOYEE STOCK PURCHASE PLAN

Proposed Amendment to Plan
    
We are asking stockholders to approve an amendment (the “ESPP Amendment”) to the Blucora, Inc. 2016 Employee Stock Purchase Plan (as amended, restated, amended and restated, supplemented or otherwise modified and in effect prior to the ESPP Amendment, the “ESPP”), which was recommended by the Compensation Committee and approved by the Board on March 31, 2020, subject to and effective upon stockholder approval at the 2020 Annual Meeting.

Background and Reasons for the Proposal

The ESPP was adopted by the Board on April 18, 2016 upon the recommendation of the Compensation Committee, and upon the subsequent approval by the stockholders, the ESPP became effective as of May 24, 2016. As of the Record Date, of the 1,000,000 shares of the Company’s Common Stock originally reserved for issuance under the ESPP, 652,109 remained. The Board proposes that the ESPP be amended to increase the shares authorized under the ESPP by an additional 350,000 shares of Common Stock (the ESPP after giving effect to the ESPP Amendment, the "Amended ESPP").

The Board recommends approval of the ESPP Amendment so the Company can continue to offer its eligible employees with an opportunity to increase their proprietary interest in the Company and participate in the success of the Company by purchasing shares of Common Stock through payroll deductions on favorable terms. The Board believes that the ESPP promotes the interests of the Company and our stockholders by encouraging employees of the Company to become stockholders, therefore aligning employee interest with our growth and success. The Board also believes that the opportunity to acquire a proprietary interest in the Company through the acquisition of shares of Common Stock pursuant to the ESPP is an important aspect of our ability to attract and retain highly qualified and motivated employees.

The ESPP is intended to qualify under IRC Section 423, and permits eligible employees of Blucora and its designated subsidiaries to purchase our Common Stock at a discount using payroll deductions, subject to limits set by the IRC. Stockholder approval of the ESPP would entitle employees to receive special tax treatment provided by the IRC.

Description of the ESPP

The following is a brief description of the Amended ESPP. The complete text of the ESPP and the ESPP Amendment are each attached to this Proxy Statement as Appendix C. The following description of the Amended ESPP is a summary of certain provisions of the Amended ESPP and is qualified in its entirety by reference to the full text of the ESPP and ESPP Amendment.

Purpose. The purposes of the ESPP are to (a) assist our employees and employees of designated subsidiaries in acquiring a stock ownership interest in the Company pursuant to a plan that is intended to qualify for favorable tax treatment under IRC Section 423, and (b) encourage employees to remain with the Company and its subsidiaries.
 
Administration. The ESPP will be administered by the Board, the Compensation Committee or any Company group or executive officer designated by the Board or the Compensation Committee as responsible for administering all or a portion of the ESPP, except for those items expressly reserved to the Board or the Compensation Committee (as applicable, the “Plan Administrator”). Subject to the provisions of the ESPP, the administrator of the ESPP has the authority and discretion to interpret the ESPP and adopt rules and regulations as it deems necessary to administer the ESPP, and its decisions are conclusive and binding.
 
Eligibility. Employees are eligible to participate in the ESPP if they meet the following criteria:
The employee is employed by the Company, one of its domestic subsidiaries, or any other subsidiary designated by the Board or the Compensation Committee, on the first day of an offering period;
The employee does not, immediately after purchasing Common Stock pursuant to the ESPP, own stock constituting 5% or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary; and

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The employee’s customary employment is for more than 20 hours per week, except that the Plan Administrator has the authority to decrease this minimum requirement or impose additional eligibility requirements for future offerings consistent with IRC Section 423.
 
Number of Shares; Participation. The ESPP Amendment increases the number of shares reserved for issuance pursuant to the ESPP by 350,000 shares. Subject to adjustment as provided in the ESPP, the total number of shares of Common Stock reserved for issuance under the Amended ESPP is 1,350,000 shares (reflecting the 350,000 shares reserved under the ESPP Amendment, plus the 1,000,000 shares originally reserved under the ESPP). If an option issued pursuant to the ESPP expires or is canceled without having been exercised, the shares subject to the canceled option will again be available for issuance under the ESPP. As of the Record Date, there were approximately 680 employees who would be eligible to participate in the ESPP.
 
Terms and Conditions of Offerings. Participation in the ESPP is subject to the following terms and conditions:
Offering Periods.  The ESPP provides for separate six-month offering periods that begin on each of May 15 and November 15. The Plan Administrator may establish different offering periods for future offerings within the limits set by the ESPP and IRC Section 423.
Purchase Price.  The purchase price at which Common Stock may be acquired under the ESPP in any offering period is 85% of the lesser of (i) the fair market value of our Common Stock on the first day of the offering period and (ii) the fair market value of our Common Stock on the last day of the offering period. The fair market value of the Common Stock on any date is the closing price for the Common Stock as reported for such day on NASDAQ. If no sales of the Common Stock were made on NASDAQ on such day, the fair market value is the closing price for the Common Stock as reported for the next preceding day on which sales of the Common Stock were made on NASDAQ.
Limitations.  The right to acquire shares of Common Stock by an employee pursuant to an option under the ESPP (or any other plan intended to meet the requirements of IRC Section 423) during any calendar year may not accrue at a rate that exceeds $25,000 (or such other limit as may be imposed by the IRC) in aggregate fair market value per calendar year, determined as of the offering date of such option. In addition, the aggregate fair market value (determined at the offering date) of all shares purchased by an employee pursuant to the ESPP during any offering period may not exceed $25,000. The Board or the Compensation Committee may establish for future offering periods an aggregate limit on the number of shares that may be purchased by all employees with respect to an offering period.
Payroll Deductions.  An employee must authorize a payroll deduction before the start of an offering in order to participate in that offering. On the last business day of the offering, the employee will be deemed to have exercised an option to purchase as many shares as the employee’s payroll deduction will allow at the option purchase price. The amount of payroll withholding for any eligible employee during any pay period must be at least 1% but may not exceed 15% of the employee’s regular cash compensation for such pay period. Amounts may be withheld in whole percentages only.
Termination of Employment.  Termination of employment for any reason will result in immediate termination of that employee’s participation in the ESPP. Payroll deductions credited to the employee’s account since the beginning of the current offering period will be returned to the employee as soon as practical, without interest.

Adjustment of Shares. If there is any change in the Common Stock subject to the ESPP or outstanding awards through a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to stockholders other than a normal cash dividend, or other change in the capital structure of the Company that results in outstanding securities being exchanged for a different number or class of securities, or if new, different or additional securities of the Company or another corporation are received, then the Board or the Compensation Committee, in its sole discretion, will make appropriate equitable adjustments, including adjustments to the maximum number and kind of shares subject to the ESPP, any maximum number and kind of shares that may be issued with respect to an offering, and the number and kind of shares subject to outstanding options under the ESPP and the purchase price.

Merger, Acquisition, Liquidation or Dissolution of the Company.  In the event of the merger or consolidation of the Company into another corporation, the acquisition by another corporation of all or substantially all of the Company’s assets, or the liquidation or dissolution of the Company, the last day of the current offering period shall be the business day immediately preceding the effective date of such merger, consolidation, acquisition, liquidation or dissolution unless the Board or the Compensation Committee, in its sole discretion, provides for the assumption or substitution of outstanding awards in a manner complying with IRC Section 424(a).

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Amendment and Termination of the ESPP. The Board or the Compensation Committee may at any time amend, suspend or terminate the ESPP as it deems advisable, except that no such amendment, suspension or termination may, without the consent of the affected individual, alter or impair any rights or obligations under any outstanding rights, and any amendment that would increase the number of shares available under the ESPP, modify the class of employees eligible to participate in the ESPP or otherwise require stockholder approval must be approved by our stockholders.
 
Term of the ESPP. The ESPP will continue in effect until May 24, 2026, unless sooner terminated by the Board or the Compensation Committee.
 
Federal Income Tax Consequences
 
The following is a general summary of the U.S. federal income tax consequences that generally will apply to us and participating employees in the United States in connection with the ESPP. The summary is based on the IRC, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local, or foreign tax laws. We intend, and this summary assumes, that the ESPP will qualify as an “employee stock purchase plan” under IRC Section 423.
 
The amounts deducted from a participating employee’s compensation through payroll deductions pursuant to the ESPP will be included in the employee’s compensation and will be subject to federal income and employment tax. No additional income will be recognized by the employee either at the beginning of the offering period or when the employee purchases shares of our Common Stock pursuant to the ESPP.
 
Qualifying Disposition of Shares. The required holding period for favorable federal income tax treatment upon disposition of Common Stock acquired under the ESPP is the later of (i) two years after the first day of the offering period to which the shares of Common Stock relate, and (ii) one year after the shares of Common Stock were acquired under the ESPP. When the Common Stock is disposed of after the requisite period, or after the employee’s death if the employee dies while holding the Common Stock (a “qualifying disposition”), the employee (or in the case of death, the employee’s estate) recognizes ordinary income to the extent of the lesser of (a) the excess of the fair market value of the shares of Common Stock on the first trading day of the offering period over the purchase price of the share of Common Stock, or (b) the excess of fair market value of the shares of Common Stock at the time of such disposition over the purchase price of the shares of Common Stock. The purchase price is generally equal to 85% of the lesser of the fair market value of our Common Stock on the first day of the offering period and the fair market value of our Common Stock on the last day of the offering period. Any further gain recognized on a qualifying disposition will be long-term capital gain. If the sale price is less than the purchase price, then the employee will not recognize ordinary income, and any loss recognized by the employee generally will be a long-term capital loss.
 
Disqualifying Disposition of Shares.  When an employee sells or disposes of the Common Stock acquired under the ESPP (including by way of most gifts) before the expiration of the required holding period (a “disqualifying disposition”), the employee will recognize ordinary income to the extent of the difference between the purchase price for the Common Stock and the fair market value of the Common Stock on the last day of an offering period regardless of the price at which the Common Stock is sold. Any additional gain recognized upon the disqualifying disposition will be capital gain. The capital gain will be long-term if the employee held the shares more than one year. If the sale price is less than the fair market value of the Common Stock at the date of exercise, then the employee will recognize a capital loss equal to such difference.
 
Tax Deduction by the Company.  Even though an employee must treat part of his or her gain on a qualifying disposition of Common Stock acquired under the ESPP as ordinary income, the Company may not take a deduction for this amount. However, if an employee makes a disqualifying disposition of Common Stock acquired under the ESPP, the amount of ordinary income recognized by the employee generally qualifies as a deduction for the Company, subject to any limitations imposed under the IRC. At any time, the Company may, but will not be obligated to, withhold from the employee’s compensation the amount necessary to meet applicable withholding obligations.



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New Plan Benefits

Participation in the ESPP is entirely within the discretion of the eligible employees. Because we cannot presently determine the participation levels by employees, the rate of contributions by employees and the eventual purchase price under the ESPP, it is not possible to determine the value of benefits that may be obtained by executive officers and other employees under the ESPP.
Vote Required

The proposal to approve the ESPP Amendment requires the affirmative vote, in person or by proxy, of the majority of votes cast on the proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” PROPOSAL FIVE

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AUDIT COMMITTEE REPORT
The following Report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC, and the information in this report shall not be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing.
Audit Committee Members

Each member who serves on the Audit Committee is an independent director as defined in the NASDAQ rules, meets the independence criteria in the applicable SEC rules and meets the NASDAQ’s financial knowledge requirements set forth in the NASDAQ rules. Our Board of Directors has determined that Ms. Zappone, Mr. Ernst and Ms. Hayles are “audit committee financial experts” under SEC rules and meet the financial sophistication and professional experience requirements set forth in the NASDAQ rules. The Audit Committee has directed the preparation of this report and has approved its content and submission to the stockholders.

Principal Purposes and Responsibilities of the Audit Committee

The principal purposes of the Audit Committee are to (i) monitor and oversee (a) the quality and integrity of the financial statements of Blucora, (b) Blucora’s financial reporting processes and financial statement audits, (c) the appointment of the independent registered public accountant, assessment of their qualifications and independence, and negotiations regarding compensation and fees paid to the independent registered public accountant, (d) the performance of Blucora’s internal audit function and independent registered public accountant, and (e) Blucora’s system, and annual audit, of internal controls over financial reporting, accounting, legal compliance and ethics, including the effectiveness of disclosure controls and controls over processes that could have a significant impact on Blucora’s financial statements; (ii) foster open communications among the independent registered public accountant, financial and senior management, internal audit and the Board; and (iii) encourage continuous improvement and foster adherence to the Company’s policies, procedures and practices at all levels. The role and responsibilities of the Audit Committee are fully set forth in the Audit Committee’s written charter which was approved by the Board and is available on the Company’s website at www.blucora.com/governance.

Management is responsible for Blucora’s internal control over financial reporting, preparation of financial statements, and the financial reporting process. The Company’s independent registered public accounting firm, which for 2019 was Ernst & Young LLP, is responsible for performing an independent audit of Blucora’s consolidated financial statements and internal control over financial reporting in accordance with standards set by the Public Company Accounting Oversight Board (“PCAOB”), and to issue reports thereon. The Audit Committee monitors and oversees these processes. Audit Committee members rely, without independent verification, on the information provided to them, and on the representations made to them, by management and the independent registered public accounting firm.

In this context, during 2019, the Audit Committee:
Discussed the overall scope and plans for audits with Ernst & Young LLP;
Met and held discussions with Ernst & Young LLP, both with and without management present, to discuss the results of the audits, management’s evaluation of Blucora’s internal control over financial reporting, and Ernst & Young LLP’s opinion thereof, and the overall quality of Blucora’s financial reporting;
Reviewed and discussed the quarterly and annual financial results prior to the publication of those results and the filing of those results;
Discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the PCAOB;
Reviewed and discussed the unaudited and audited financial statements with management and Ernst & Young LLP, including Ernst & Young LLP’s opinion on the audited financial statements; and
Received the written disclosures and letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and discussed with Ernst & Young LLP its independence. The Audit Committee has received reports from Ernst & Young LLP and Company management relating to services provided by Ernst & Young LLP and associated fees. In this regard, the Audit Committee has considered whether or not the provision of non-audit services by Ernst & Young LLP for the year 2019 is compatible with maintaining the independence of the firm.

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In connection with the evaluation, appointment and retention of the independent registered public accounting firm, each year the Audit Committee reviews and evaluates the qualifications, performance and independence of the independent registered public accounting firm and lead partner, including consideration of input from management. In doing so, the Audit Committee considers various factors including, but not limited to: quality of services provided; technical expertise and knowledge of the industry and Blucora’s business and operations; effective communication; objectivity; independence; and the potential impact of changing independent registered public accounting firms. Based on this evaluation, the Audit Committee has retained Ernst & Young LLP as our independent registered public accounting firm for 2020. The Audit Committee and Board believe that it is in the best interests of the Company and our stockholders to continue retention of Ernst & Young LLP to serve as our independent registered public accounting firm. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, the Audit Committee will continue to recommend that the Board request that the stockholders ratify the appointment of the independent registered public accounting firm each year.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC.
            
Audit Committee of the Board of Directors *
Mary S. Zappone, Chair
E. Carol Hayles
John Macllwaine
 
* Effective as of March 1, 2020, Mark A. Ernst was appointed as a member of our Board of Directors and as a member of the Audit Committee. Mr. Ernst did not participate in the review and discussions concerning, or the recommendation to include, the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

                

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FEES PAID TO INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2019 AND 2018
Professional Accountant Fees
The aggregate fees billed by the Company’s current independent registered public accounting firm, Ernst & Young LLP, to the Company and its subsidiaries during 2019 and 2018 were as follows:
 
2019 (1)
 
2018
Audit Fees. Fees for professional services necessary to perform the annual audit of the Company's consolidated financial statements, review of interim financial statements, review of internal control over financial reporting, review SEC filings, fulfill statutory and other attestation service requirements, and provide comfort letters and consents
$
2,759,015

 
$
1,937,063

Tax Fees. Fees for professional services rendered for tax compliance, tax planning, and tax advice related to mergers and acquisitions, divestitures, and communications with and requests for rulings from taxing authorities
24,452

 

Audit-Related Fees. Fees for assurance and related services, including due diligence related to mergers, acquisitions and divestitures, accounting consultations and audits in connection with acquisitions, internal control reviews, attestation services that are not required by statute or regulation, and consultation concerning financial accounting and reporting standards

 

All other fees. Annual license fees for accounting research software products
6,019

 
3,355

TOTAL
$
2,789,486

 
$
1,940,418

(1)
The fees and services described above for fiscal 2019 reflect certain increased amounts billed to the Company by Ernst & Young LLP for additional audit work related to (i) the 1st Global Acquisition (inclusive of purchase accounting and enhanced scale and complexity of combined company), (ii) HD Vest trade name impairment and (iii) enhanced scope of initial audit to review certain critical accounting matters.
Pre-approval Policy
The Audit Committee pre-approves all audit and non-audit services to be performed by our independent registered public accounting firm. As part of its pre-approval procedures, the Audit Committee considers whether the provision of any proposed non-audit services is consistent with the SEC’s rules on the independence of registered public accounting firms. The Audit Committee has considered whether the provision by Ernst & Young LLP of the non-audit services described above is compatible with Ernst & Young LLP’s independence. After consideration, the Audit Committee has determined that Ernst & Young LLP's independence as a registered public accounting firm has not been compromised by its provision of these services. All audit and non-audit services provided by Ernst & Young LLP in 2018 and 2019 were pre-approved by the Audit Committee in accordance with the foregoing policy and the applicable SEC rules and regulations.

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TRANSACTIONS WITH RELATED PERSONS
Policies and Procedures   
As set forth in the Corporate Governance Guidelines, the Audit Committee has adopted a written policy relating to the approval of transactions with related parties (such policy, the "Related Party Transaction Policy"). Under our Related Party Transaction Policy, proposed related person transactions (which generally include any transactions by the Company or any subsidiary with an employee or director of the Company, a relative of an employee or director, or any entity with which an employee or director has a material interest) must be disclosed to our Chief Financial Officer. If the Chief Financial Officer determines that the transaction is material, or otherwise is of such a nature that it should be reviewed and approved by the Audit Committee under the guidance provided in our Related Party Transaction Policy, the Audit Committee must review and approve such related person transactions in advance.
In determining whether to approve a related person transaction, the Audit Committee considers whether the terms of the related person transaction are fair to the Company at the time of authorization; the business reasons for the Company to enter into the related person transaction; whether other comparable transactions with non-related parties were considered, and if so, the terms of such transactions and the reason for the selection of the related person transaction; the value of the transaction to the Company and to the related person; whether the related person transaction would impair the independence of a previously independent director; and any other factors that are relevant to a determination of whether the terms of the transaction, and the process that led to it, are fair to the Company.
Related Person Transactions

Since January 1, 2019, there have not been any transactions, nor are there any currently proposed transactions, in which the Company was or is to be a participant, where the amount involved exceeded $120,000, and in which any related person had or will have a direct or indirect material interest. A copy of the Corporate Governance Guidelines, including the applicable provision relating to our Related Party Transaction Policy, is available on the Company’s website at www.blucora.com/governance.

Charitable Contributions

During 2019, we did not make any contributions to any charitable organization in which an independent director served as an executive officer in 2019.


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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Each of the following directors served on the Compensation Committee for all or a portion of 2019:
Compensation Committee Service in 2019
Steven Aldrich
E. Carol Hayles (1)
Georganne C. Proctor (2)
Christopher W. Walters (3)
Mary S. Zappone (4)

(1)
Ms. Hayles served as a member of the Committee during 2019 and was appointed as Chair of the Compensation Committee, effective January 30, 2020.
(2)
Ms. Proctor served on the Compensation Committee beginning on January 1, 2019 until June 27, 2019 and again from January 30, 2020 and ending on March 1, 2020.
(3)
Mr. Walters served as the Chair of the Compensation Committee during 2019 and resigned as a member and Chairman of the Committee upon his appointment as President and CEO of the Company, effective January 30, 2020.
(4)
Ms. Zappone served on the Compensation Committee until her appointment as the Chair of the Audit Committee, effective June 28, 2019.

None of Blucora’s directors who currently serve, or during the past year have served, as members of the Compensation Committee is, or has, at any time, been one of Blucora’s officers or employees, except Christopher W. Walters, who was appointed on January 30, 2020 as our President and CEO, whereupon Mr. Walters resigned as a member and Chair of the Compensation Committee in accordance with NASDAQ rules. None of Blucora's executive officers currently serves, or has served during the last completed fiscal year, as a member of the board of directors or compensation committee (or a committee performing similar functions) of any other company that had one or more executive officers serving on our Board or our Compensation Committee.


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INFORMATION REGARDING EXECUTIVE OFFICERS
Executive Officers

Executive officers are elected annually by the Board to serve at the Board’s discretion until their successor is duly elected and qualified or until their earlier death, resignation, or removal. The following table and biographies set forth information as of April 9, 2020 regarding our current executive officers:
Name
 
Age
 
Diversity (1)
Position
Christopher W. Walters
 
46
 
 
President, CEO and Director
Curtis A. Campbell
 
47
 
X
President, TaxAct
Enrique M. Vasquez
 
55
 
X
President, Avantax Wealth Management
Todd C. Mackay
 
46
 
 
Chief Business Operations & Development Officer
Ann J. Bruder
 
54
 
X
Chief Legal Officer & Secretary
Mimi Carsley (2)
 
50
 
X
Interim Chief Financial Officer
(1)
Reflects gender, racial and/or ethnic diversity.
(2)
See "Changes to Interim Principal Financial Officer" below for information regarding the appointment of Ms. Carsley as our Interim Principal Financial Officer.
Christopher W. Walters
President and CEO
Mr. Walters was appointed to serve as the Company's President and CEO effective January 30, 2020, and he has served as a member of the Board since 2014. See "Proposal One—Election of Directors" beginning on page 24 for a discussion of his experience and qualifications.

Curtis A. Campbell
President, TaxAct
Mr. Campbell was appointed as President of TaxAct in November 2018. Prior to joining TaxAct, Mr. Campbell served as the Managing Vice President for Capital One’s Consumer Auto business division from 2017 through 2018, where he was responsible for setting the business’s vision and strategy. Prior to Capital One, Mr. Campbell served in a variety of executive roles at Intuit from 2014 through 2017, including leading Product, Innovation, Strategy and Analytics. Prior to Intuit, Mr. Campbell served as a General Manager at Amazon Web Services from 2012 through 2014, where he led the product and technology teams. Mr. Campbell held several positions of increasing responsibility at Dell and Hewlett Packard Enterprise prior to his time at Amazon Web Services. Mr. Campbell holds a Bachelor of Science degree in Business from The Citadel and a Masters of International Business Studies from the University of South Carolina Darla Moore School of Business.
Enrique M. Vasquez
President, Avantax Wealth Management
Mr. Vasquez was appointed as President of Avantax Wealth Management in June 2019. Prior to joining Avantax Wealth Management, Mr. Vasquez served as President and CEO of Cetera Financial Specialists and a member of the executive leadership team of Cetera Financial Group, a role that he also held with its two predecessor firms in aggregate from 2004 to 2016. Prior to this he was Vice President, Business Development at GE Financial Assurance from 2000 to 2004. Earlier in his career, Mr. Vasquez served in multiple leadership roles at GE Capital, General Electric, Co. and Societe Generale. Most recently, Mr. Vasquez served as the President, Owner and Area Developer of CareBuilders at Home of Illinois, an organization that provides personalized caregiving services to the senior population across the Chicago area from 2016 through 2019. Mr. Vasquez also previously served on the Advisory Board for Schwab Advisor Services, Year Up Chicago and as an appointed trustee of the Illinois Teachers Retirement System, and he currently serves as an independent trustee and the governance chair for the Morningstar Mutual Fund Trust. He received a B.S. in Accounting from Kean College of New Jersey and an M.B.A. from the Fordham Graduate School of Business.

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Todd C. Mackay
Chief Business Operations and Development Officer
Mr. Mackay was appointed as Chief Business Operations and Development Officer in June 2019. From December 2018 to June 2019, Mr. Mackay served as Executive Vice President of Corporate Development and Interim CEO of HD Vest. Prior to that, Mr. Mackay served as the Executive Vice President and Interim General Manager of TaxAct from May 2018 until December 2018. Mr. Mackay also served as the Company's Executive Vice President of Corporate Development since 2015, and prior to that, Mr. Mackay served as an advisor to the Company’s executive team focusing on strategy and mergers and acquisitions from 2014 to 2015. Mr. Mackay was a co-founder of P2B Investor, a crowd funding business providing working capital loans to small- and medium-sized businesses, where he served on the executive team from 2013 to 2014. In addition, Mr. Mackay served as Executive Vice President in charge of Finance and Corporate Development for Emerge Digital Group, a privately held digital media company, from 2011 to 2012. Mr. Mackay served in various executive positions at E*Trade from 1999 to 2010, where he served as the Executive Vice President in charge of Global Corporate Development and Corporate Treasury and Executive Vice President in charge of E*Trade’s Asian broker-dealer business. Mr. Mackay has also held various positions with Telebanc Financial Corp., Robertson Stephens and Alex Brown focusing on financial institutions and financial technologies. He has also served on the board of directors of both private and public broker dealers outside of the United States. Mr. Mackay received an A.B. from Princeton University in Economics with an emphasis on Mathematics.
Ann J. Bruder
Chief Legal Officer and Secretary
Ms. Bruder was appointed as Chief Legal Officer and Secretary in June 2017. Prior to joining the Company, from 2015 through 2017, Ms. Bruder served as the Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary at Airlines Reporting Corporation, which is a leading provider of data, products and services to the travel industry. From 2014 through 2015, Ms. Bruder served as the President of Global Strategic Services, LLC, a boutique strategic advisory firm. Prior to that, Mr. Bruder served as Commercial Metals Company's Senior Vice President of Law, Government Affairs and Global Compliance, General Counsel and Corporate Secretary from mid-2009 through 2014 and the Deputy General Counsel from 2007 through mid-2009. Earlier in her career, Ms. Bruder served as Chief Legal and Compliance Officer at CARBO Ceramics Inc., as well as various senior legal roles at American Airlines, Inc. and Continental Airlines, Inc. Ms. Bruder began her career at the law firm of Thompson Coburn LLP. Ms. Bruder has a Juris Doctorate degree from Washington University, Order of the Barristers, and Bachelor of Arts degree in Journalism and Public Relations with a minor in Economics from the University of Wyoming.

Changes to Interim Principal Financial Officer

Effective January 31, 2020, Stacy Murray, the Company's Chief Accounting Officer (and Principal Accounting Officer), began serving as the Company’s Principal Financial Officer, in an interim capacity, upon the resignation of our prior Chief Financial Officer, Davinder S. Athwal. During her service as Interim Principal Financial Officer, Ms. Murray continued to serve as the Company's Principal Accounting Officer. Effective March 13, 2020, Mimi Carsley was appointed as the Company's Interim Chief Financial Officer and Interim Principal Financial Officer, while the Company continues its process to identify and select a permanent Chief Financial Officer candidate. In connection with her appointment, Ms. Carsley was designated as an “executive officer” within the meaning of Rule 3b-7 under the Exchange Act. Prior to Ms. Murray's appointment as Interim Principal Financial Officer, Ms. Murray was not otherwise, and following Ms. Carsley's appointment, is not currently designated, as an “executive officer” within the meaning of Rule 3b-7 under the Exchange Act. The biographies of Ms. Carsley and Ms. Murray, respectively, are included below.

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Mimi Carsley
Interim Chief Financial Officer
Ms. Carsley was appointed as the Company's Interim Chief Financial Officer (and Interim Principal Financial Officer), effective March 13, 2020. Ms. Carsley has served as a consultant and held various leadership roles at the Company since June 2018, including as Vice President, Financial Planning & Analysis, as Chief Financial Officer for Avantax, as Vice President of Corporate Development and Integration Management Office, where she assisted with the successful acquisition and integration of 1st Global, and as Head of Data Analytics and Data Strategy. Prior to joining the Company, Ms. Carsley served in various leadership roles at LPL Financial Holdings, Inc. from March 2014 to October 2017, including as Executive Vice President of Corporate Development and Treasurer and as Senior Vice President and Chief of Staff. Previously, Ms. Carsley was Chief Financial Officer and Chief Operating Officer at Bluewater Global Ltd. between 2010 and 2014, a boutique investment firm focused on private equity, hedge funds and operating business. Prior to that, Ms. Carsley served in a variety of leadership roles at Microsoft Corporation from 1995 until 2010, including as the Chief Financial Officer for the Specialized Devices and Applications business group, Director of Corporate Development and Strategy, Director of Strategic Corporate Finance, and Director of Portfolio Management. Ms. Carsley has also served on the board of directors of Robertson Stevens Asset Management, as a member of the board of directors and audit committee of The Private Trust Company, as a member of the board of directors of the LPL Foundation, and as a member of the LPL Retirement Committee. Ms. Carsley received a Bachelor of Arts in Economics from Skidmore College and holds a Series 27 certification.
Stacy Murray
Chief Accounting Officer
Ms. Murray was appointed as the Company’s Principal Accounting Officer, Vice President–Accounting and Chief Accounting officer in June 2019. Prior to joining the Company, Ms. Murray served as the Principal Accounting Officer and Vice President, Accounting and Controller of Fogo de Chao, Inc. from 2016 to 2019. Prior to that, Ms. Murray served in a variety of corporate positions, including Chief Accounting Officer of Azure Midstream Holding LLC and Azure Midstream Partners, LP from 2013 to 2016, Controller of TGGT Holdings LLC (the predecessor company to Azure Midstream) from 2011 to 2013 and Senior Finance Manager for Lineage Power Holdings from 2009 to 2011. Ms. Murray has an M.S. and B.A. in Accounting from Texas A&M University and is a Certified Public Accountant in the state of Texas.



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COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The purpose of this Compensation Discussion and Analysis (“CD&A”) is to provide our stockholders with a clear understanding of our compensation philosophy and objectives, compensation-setting process, and 2019 compensation programs and decisions for our NEOs. The compensation that we paid to our NEOs in 2019 and the compensation decisions that we made in early 2020 predated the recent global outbreak of COVID-19. As a result, these compensatory decisions did not take into account the potential impact of the outbreak of COVID-19 on our business or our future results of operations. While we cannot predict the ultimate extent of the impact that COVID-19 will have on us, our Compensation Committee is continuously evaluating the situation and may exercise its discretion in amending or adjusting the compensation of our executive officers and employees in light of recent developments.
Executive Summary

Our executive compensation program is generally designed to attract, motivate and retain highly skilled and motivated executives with significant business and management experience. Our executive team and our Compensation Committee believe that a well-structured executive compensation program is necessary for achieving our long-term business objectives to operate and grow our Wealth Management and Tax Preparation businesses that operate under Avantax Wealth Management and TaxAct, respectively.

Our Named Executive Officers

Our Named Executive Officers for 2019 are set forth below. Additional information regarding our current executive officers is set forth on page 50 under "Information Regarding Executive Officers."
Name
 
Title
 
Employment Dates
John S. Clendening
 
Former President, CEO and Director
 
April 2016 – January 2020
Davinder S. Athwal
 
Former Chief Financial Officer and Treasurer
 
February 2018 – January 2020
Todd C. Mackay
 
Chief Business Operations and Development Officer
 
May 2015 – Present
Curtis A. Campbell
 
President, TaxAct
 
November 2018 – Present
Ann J. Bruder
 
Chief Legal Officer and Secretary
 
June 2017 – Present

Mr. Mackay served in the following capacities in 2019: (i) Executive Vice President of Business Development ("Base Role"); (ii) Interim CEO of HD Vest ("Interim Role"); and (iii) Chief Business Operations and Development Officer ("Current Role"). Mr. Mackay became an executive officer when he assumed the Interim Role. Effective January 10, 2020, Mr. Clendening departed from his positions as President, CEO and Director. Effective January 30, 2020, the Company appointed Christopher W. Walters as President, CEO and Director. This CD&A includes compensation paid to and earned by Messrs. Clendening and Athwal in 2019, respectively.

Financial and Business Information

We are a leading provider of technology-enabled, tax-smart financial solutions to consumers, small business owners, tax professionals, financial advisors, and certified public accounting firms. We help people manage their financial lives and optimize their taxes through two primary businesses: (i) our wealth management business, which consists of Avantax Wealth Management, Inc. and its subsidiaries (collectively, “Avantax"), which operated under the HD Vest and 1st Global brands prior to the rebranding in September 2019, and (ii) our tax preparation business, TaxAct.

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2019 Financial and Business Highlights
For the 2019 fiscal year we achieved growth in several key metrics we use to measure our financial performance and achieved several strategic milestones. In 2019, we:
Increased total revenue by 28% from 2018, including an increase in wealth management revenue of 36%; (1)(4)
Completed the 1st Global Acquisition, adding significant scale and complementary capabilities to our Wealth Management business;
Generated Net Income Attributable to Blucora, Inc. of $48 million, a (5)% change from 2018, and increased non-GAAP Adjusted EBITDA to $137 million, up 15% from 2018; (3)(4)
Increased Diluted EPS by 9% from 2018;
Increased non-GAAP EPS by 11% from 2018; (3)(5)
Achieved record advisory net flows of $1.0 billion in our Wealth Management business;
Recorded our 22nd consecutive year of revenue growth at TaxAct, growing 12% compared to 2018;
Completed $28.3 million of a $100.0 million share repurchase program, supported by strong cash flow generation; and
Achieved $6.5 million in synergies related to the 1st Global Acquisition, more than double our original estimate.
(1)
On May 6, 2019, we acquired 1st Global, a tax-focused wealth management company. The operations of 1st Global are included in our operating results as part of the Wealth Management segment from the date of the 1st Global Acquisition.
(2)
Represents the compound annual growth rate (“CAGR”) for each financial metric.
(3)
See Appendix A—Non-GAAP Reconciliation for a description of each non-GAAP financial measure and a reconciliation of each measure to the most directly comparable GAAP financial measure.
(4)
Financial measures used in our annual bonus plan. See “Annual Short-Term Incentive Plan/Bonus Payments" beginning on page 63 for additional information.
(5)
Financial measure used for our 2019 PRSUs. See “Long-Term Equity Grants" beginning on page 66 for additional information.
2019 Executive Compensation
Below is a summary of executive compensation highlights for our 2019 program:

Blucora, Inc. | 2020 Proxy Statement 54



2019 Executive Compensation Highlights
ü
Pay for Performance Philosophy: Our Compensation Committee utilizes a rigorous, market-based compensation program and a compensation philosophy tied to performance and aligned with the interests of stockholders. Our executive compensation program is designed to be competitive, aligned, balanced and sound.
ü
Performance-Based 2019 Annual Bonus Plan: Our annual bonus plan for 2019 was tied to certain financial performance metrics as well as certain short-term incentive modifiers that enabled the Compensation Committee to recognize and reward the performance and efforts of high-performing executives and employees. In light of our goal to operate as "One Blucora," we believe our performance-based bonus structure incentivizes our management to increase its focus on operational objectives that are key to the Company's growth strategy, including the identification and achievement of cross-business synergies and growth opportunities.
ü
2019 Equity Grants Included Performance-Based RSUs: Our 2019 annual equity grants for our executive officers were comprised of 35% performance-based RSUs ("PRSUs") based upon pre-established financial performance metrics, 40% time-based RSUs ("time-based RSUs") and 25% stock options in order to further align the performance of executives with the interests of stockholders.
ü
Executive Stock Ownership Guidelines: We have rigorous stock ownership guidelines requiring our CEO to own an amount of our equity with a value equal to five times (5X) base salary and three times (3X) base salary for all NEOs.
ü
Competitive Pay Practices: We believe our executive compensation program allows us to be competitive with companies with whom we compete for talent and reflects market expectations for "at-risk" and performance-based compensation. Our peer group for 2019 reflects the market and industry in which we currently compete for talent.
ü
Compensation Risk Assessment: An annual risk assessment was conducted to ensure that the structure and design of our incentive compensation programs are not reasonably likely to result in excessive risk-taking that could have a material adverse impact on the Company.

ü
Independent Compensation Consultant: Our independent compensation consultant reports directly to the Compensation Committee, providing benchmarking and best practices to support and supplement our compensation philosophy, practices and peer group.

2019 Executive Compensation Elements at a Glance
Base Salary
 
Annual Bonus Plan
 
Stock Options
 
Performance-Based RSUs
 
Time-Based RSUs
Short-Term Element
 
Long-Term Element
Not at risk
 
Performance-Based (at risk)
 
Value Based on Stock Price (at risk)

2019 Mix of Pay: 91% and 76% of the 2019 target compensation for our former CEO and the average of the NEOs* (other than our former CEO), respectively, was at risk and based either on the performance of our Company or our stock price.

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* Average NEO pay mix reflects the total compensation for Mr. Mackay's Current Role on an annualized basis.
Additional detail regarding the 2019 compensation of our NEOs is provided in the Summary Compensation Table and throughout this CD&A.
Say-on-Pay Vote
We hold advisory votes on the compensation of our NEOs (a “say-on-pay vote”) at every annual meeting of stockholders. Our Board of Directors values the opinions of our stockholders and believes an annual advisory vote allows our stockholders to provide us with their input on our executive compensation program. We conducted an advisory vote on the frequency of the advisory say-on-pay vote at our 2017 Annual Meeting. Following the recommendation of our stockholders, we will continue to hold our advisory say-on-pay vote on an annual basis.
In 2019, our stockholders voiced strong support for our compensation practices, with 96.9% of those who cast votes voting for approval of the compensation of our NEOs. The Compensation Committee monitors and considers the results of say-on-pay votes and will continue to consider results from future advisory votes as appropriate when making compensation decisions.  
Compensation of our New CEO

In connection with Mr. Walters's appointment as President and Chief Executive Officer, the Company entered into an employment agreement with Mr. Walters, effective January 30, 2020 (the “Walters Employment Agreement”). Under the Walters Employment Agreement, Mr. Walters is entitled to, among other things: (i) an annual base salary of $780,000; (ii) an annual target bonus of 150% of base salary; and (iii) an equity award for fiscal year 2020 with a total aggregate target value of $5,000,000, which consists of a mix of time-based RSUs, Stock Options, and PRSUs, in each case that vest over a three-year period. Mr. Walters is also entitled to a one-time signing bonus of $250,000 and a temporary monthly living allowance of $20,000 for up to 12 months following the effective date of Mr. Walters’s employment, subject to certain exceptions, and reimbursement for relocation and other related expenses payable in accordance with the Company’s standard relocation policy. We believe this compensation for Mr. Walters is consistent with our compensation strategy and the pay mix for our NEOs, further reflecting our pay-for-performance philosophy.
2020 Performance Criteria

Prior to the impact of the coronavirus (COVID-19) outbreak, the performance criteria for annual and long-term incentives to be granted in 2020 were expected to be generally consistent with the criteria used in 2019 (see "Compensation Decisions Made in 2019" beginning on page 62). However, as of the date of this Proxy Statement, considerable uncertainty remains relating to the length and severity of the ongoing pandemic and the ultimate impact it may have on our business and the economy as a whole. As a result, the Compensation Committee is continuously evaluating our executive compensation practices and expects to determine the performance criteria for 2020 awards before or at the time such awards are granted, in light of the business environment during the year.

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Executive Compensation Best Practices
What we do:
 
What we don't do:
+
Pay for Performance: A significant portion of our NEO compensation is at-risk, performance-based compensation that utilizes a diverse set of performance metrics ensuring that no single factor can inappropriately impact compensation. In addition, a portion of our performance-based compensation is subject to multi-year vesting schedules that require sustained performance over time. This aligns the interests of our executive officers with those of our stockholders.
 
x
Tax Gross-up Provisions for Change-In-Control: We do not have tax gross-up provisions in our executive employment agreements or in our equity award agreements that would allow for a gross-up payment for excise and other taxes that could become payable as a result of payments made in connection with a change-in-control.
+
Pay Determinations: We engage in a rigorous process to establish total direct compensation and its components, including reviewing market and survey data sourced from our peer group of companies and our industry. We also utilize an independent compensation consultant hired by and reporting to our Compensation Committee.
 
x
Excessive Perquisites and Personal Benefits: We do not provide significant perquisites and personal benefits that are not generally available to all other employees.
+
Listen to Stockholders: We hold an advisory vote on executive compensation annually and take the results of such vote into account when setting and reviewing our compensation practices and policies. We have had very positive results from our advisory vote on executive compensation each year the vote has been held.
 
x
Pledging or Hedging: Our Insider Trading Policy does not permit margining, pledging, hedging, short sales of or trading options related to our stock by any director, officer or employee.
+
Comprehensive Clawback Policy: We have a clawback policy that would allow us to recoup certain compensation and awards paid to our NEOs in certain circumstances in the event that there is a restatement of our financial results.
 
x
Dividends on Stock Options or Stock Appreciation Rights ("SAR") or Unearned awards: No dividends or dividend equivalents accrue on stock options or SARs or are paid on unearned awards.
+
Stock Ownership Guidelines: We have stock ownership guidelines that require stock ownership with a value equal to five times (5X) the annual base salary for our CEO, three times (3X) the annual base salaries for our other executive officers and five times (5X) the annual retainer for our directors.
 
x
Repricing or Granting of Discounted Stock Options or SARs: Our 2018 Plan prohibits the repricing of stock options and SARs without stockholder approval and the granting of stock options or SARs with exercise prices below fair market value. Our 2018 Plan also prohibits buying out underwater appreciation awards.
+
Minimum Vesting Requirements: Our 2018 Plan has minimum vesting requirements for awards, with no awards permitted to vest prior to one-year from the date of grant, subject to certain limited exceptions.
 
x
Liberal Share Recycling or Share Counting: Our 2018 Plan does not permit liberal share recycling or liberal share counting.
+
Risk Management: We perform regular risk management assessments for our compensation and benefit programs related to executive and non-executive compensation practices in order to ensure that our compensation policies and practices are not reasonably likely to have a material adverse effect on our Company and do not encourage excessive risk taking.
 
x
Evergreen Features: Our 2018 Plan does not allow for share reserve replenishment on set basis.
+
Change in Control: Under our 2018 Plan and NEO employment agreements, change in control benefits are subject to "double trigger" payment provisions requiring that an NEO be terminated in connection with a change in control to receive change in control benefits.
 
 
 


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Compensation Philosophy and Practices
Executive Compensation Philosophy

Blucora's compensation program is intended to attract and motivate top-talent executive talent as leaders and compensate executive officers appropriately for their contribution to the attainment of our financial, operational and strategic objectives. In addition, we believe it is important to retain our top-tier talent within the financial and technology industries and strongly align their interests with our stockholders’ interests by emphasizing incentive-based compensation.

To achieve our goal of paying for performance and aligning the interests of our executive officers with those of our stockholders, the Compensation Committee utilizes the following executive compensation philosophy and principles:
 
 
Philosophy
 
Principles
 
 
 
 
 
Competitive
 
Enable us to attract, motivate and retain high-caliber individuals who will maximize the potential of the business over time.
 
Engage high-performing executive talent through competitive compensation opportunities.
 
 
 
 
 
Aligned
 
Establish clear alignment of executive compensation to the short-term and long-term financial outcomes and value-drivers of the business.
 
Align executive compensation to the financial outcomes with a particular emphasis over the next three years on growth and the achievement of synergies between our Wealth Management and our Tax Preparation businesses.
 
 
 
 
 
Balanced
 
Foster sustained growth and alignment through a balanced approach to compensation design.
 
Allow for appropriate flexibility, differentiation and discretion within a consistent, well-structured compensation program.
 
 
 
 
 
Sound
 
Encourage achievement of the Company's strategy and goals through policies ethics and values.
 
Cultivate ownership of Blucora's vision and strategic direction through sound compensation policies and structure that reinforce desired behaviors that are in line with Blucora's ethics and values.

Our Compensation Committee has adopted an executive compensation program for 2019 that it believes allows Blucora to be competitive with our compensation peer group and with the companies with whom we compete for talent while also focusing on internal pay parity. Our compensation program is also intended to reflect market expectations for at-risk compensation so that we are able to retain our executive officers and attract additional executive officers when necessary. We also believe that the executive compensation program in place for 2019 assists us in achieving our strategy of operating as "One Company."

Our Compensation Committee is tasked with the implementation of our executive compensation philosophy and the core of that philosophy is straightforward: we pay our NEOs based on performance. We believe that our compensation program is designed to (i) motivate, reward, and retain our leaders, (ii) support our strategic objectives, including long-term, sustainable growth and increasing stockholder value and (iii) encourage strong financial performance on an annual and long-term basis, in each case without encouraging excessive or inappropriate risk taking.
2019 Compensation Mix

The 2019 compensation mix was comprised of the components discussed below, with a significant portion continuing to be performance-based and "at-risk" (the former CEO had 91% of total target direct compensation "at-risk" for 2019).
Base Salary

Our Compensation Committee believes that base salary should consider the scope and complexity of an executive officer’s position and the level of responsibility required to perform his or her job. It also believes that a competitive level of base salary is required to attract, motivate and retain qualified talent. Our Compensation Committee wants to ensure our cash compensation is competitive and sufficient to incentivize executive officers to remain with Blucora,

Blucora, Inc. | 2020 Proxy Statement 58



recognizing our high-performance expectations across a broad set of operational, financial, customer service and community-oriented goals and objectives.

Our Compensation Committee regularly reviews base salaries and annually engages our independent compensation consultant to conduct compensation surveys to ensure the base salaries are market-competitive, while also serving as an effective retention tool. Our Compensation Committee may also review an executive officer’s base salary from time to time during a year, including if the executive officer is given a promotion or if his or her responsibilities are significantly modified. Base salaries for each of Messrs. Clendening, Athwal, Mackay and Campbell and Ms. Bruder were initially set by their respective employment agreements (the "Employment Agreements"), and since that time have changed based upon annual base salary evaluations, as determined based on market data, role and responsibilities. Subject to the Employment Agreements, which are described under “Employment Agreements” beginning on page 69, the Compensation Committee may increase the base salaries for all of the Named Executive Officers at any time based on updated market data, updated roles and responsibilities and the CEO’s recommendation. Board or Compensation Committee approval was required to change the base salary for the former CEO and all other NEOs.

In 2019, our Compensation Committee determined to increase our NEOs’ base salaries as a result of our review of our compensation peer group and of the market and industries in which we compete for talent, as well as updated roles and responsibilities, particularly in the case of Mr. Mackay in connection with the assumption of his Current Role. For further discussion regarding base salaries, see "Annual Base Salary" beginning on page 62.
Bonus
In 2019, a substantial portion of our NEOs’ compensation was paid pursuant to our short-term bonus plan, which is tied to the achievement of operational and financial goals over a single year, as well as specific individual performance goals, and assists in retaining, attracting, and motivating employees in the near-term. The operational and financial metrics selected by the Compensation Committee for the 2019 annual bonus plan reflect the responsibilities of each NEO, such that they are tied to our overall Company performance or certain metrics related to the different businesses that an NEO oversees or in which an NEO is involved. Our 2019 bonus plan also included certain short-term, performance-based incentive modifiers that enabled the Compensation Committee to recognize and reward the performance and efforts of certain high-performing executives and employees. For further discussion regarding bonus payments, see "Annual Short-Term Incentive Plan/Bonus Payments" beginning on page 63.
Equity
For 2019, we further refined the mix of annual equity grants made to our NEOs to be comprised of fewer time-based RSUs (RSUs) and, as a result, increased the allocation percentage of PRSUs, resulting in the following equity mix (as a percentage of total grant value):
35% PRSUs (up from 25% in 2018) that are eligible to vest on January 1, 2022, subject to the Company achieving a certain level of non-GAAP earnings per share during 2021;
25% stock options that vest equally each year over a three-year period; and
40% time-based RSUs (down from 50% in 2018) that vest equally each year over a three-year period.
This change in equity mix was made in order for our executive compensation to be competitive with peers and to better reflect market expectations for "at-risk" and performance-based compensation. We have shifted from time-based RSUs toward PRSUs, which are based on Company performance metrics that the Compensation Committee believes are in line with our long-term strategy and better align management with long-term stockholder value. It is the Compensation Committee's goal to continue to evolve to a higher mix of PRSUs and to reduce the award of stock options, which we believe is competitive with our peers and in line with our compensation philosophy. For further discussion regarding equity grants, see "Long-Term Equity Grants" beginning on page 66.
In connection with the 1st Global Acquisition, certain NEOs were also awarded a one-time equity award in the form of PRSUs, which we refer to as "T&I PRSUs", in order to incentivize execution and performance relating to the achievement of various transaction-based integration and synergy targets. For further discussion regarding this one-time equity award, see "2019 Transaction and Integration Award" beginning on page 68 .


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Compensation Process
The Compensation Committee solicits and receives input from a number of sources, including management, its independent compensation consultant (as further discussed below) and our stockholders when making executive compensation decisions. Although the Compensation Committee considers these sources of information, it uses its own discretion, based on the experience, knowledge, and diligence of its own members, to determine the compensation elements used in the compensation program and the mix of each element for each of the executives. This discretion is, by its nature, subjective. There is no set formula for how the Compensation Committee determines exactly how much value it places on any one element, or how any one element will compare to another element. The Board has selected the Compensation Committee members for their experience and abilities in determining compensation, and the Compensation Committee feels that a subjective determination by its members, after consideration of objective sources, is the most appropriate way for it to exercise its duties to the Board, to the Company and to stockholders.
The Compensation Committee's Role in Establishing Compensation
Our Compensation Committee is composed entirely of independent directors and administers our executive officer compensation program. In 2019, the Compensation Committee consulted regularly with its independent compensation consultant and management regarding the design and implementation of the 2019 executive compensation program.
Management's Role in Establishing Compensation
The Compensation Committee believes it is appropriate to consult with management on executive compensation matters because each member of management has significant involvement in and knowledge of the Company’s business goals, strategies, and performance and can provide input and valuable feedback. During 2019, the former CEO provided recommendations with respect to the other executive officers' compensation, but did not participate in decisions regarding his own compensation. The Compensation Committee considers management's recommendations but retains full discretion in determining executive compensation.
Management was regularly invited to attend Compensation Committee meetings during 2019. The Compensation Committee generally meets in executive session outside the presence of the CEO and other management. In carrying out its oversight responsibilities, the Compensation Committee regularly reports to the Board on the actions it has taken, as well as confers with the Board on compensation matters, as necessary.
The Company’s legal advisors, human resources department, and corporate accounting department also support the Compensation Committee in developing and administering the Company’s compensation plans and programs.
Role of Compensation Consultant
The Compensation Committee's independent compensation consultant regularly attended Compensation Committee meetings during 2019. For 2019, the Compensation Committee engaged Meridian as its independent compensation consultant to provide advice with respect to executive officer compensation matters.
During 2019, Meridian assisted the Compensation Committee with review and assessments of the peer group for the Company, advice and recommendations regarding proposed changes to the Company’s compensation philosophy and strategies for 2019 executive compensation matters, advice on executive compensation levels and practices, guidance on the design of our executive compensation plans for 2019, determination of performance metrics for 2019 executive compensation, recommendations regarding our long-term incentive plans, and periodic reports to the Compensation Committee on market and industry compensation trends and regulatory developments.
Other than services provided by Meridian to the Nominating and Governance Committee in connection with the review of non-employee director compensation, the Compensation Committee approved all engagement fees and other retention terms for Meridian and determined Meridian's responsibilities for the period for which it served as the independent compensation consultant. The Compensation Committee assessed the independence of Meridian pursuant to applicable SEC and NASDAQ rules and concluded that their work for the Compensation Committee does not raise any conflict of interest.




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Use of Market Data

The Compensation Committee establishes target compensation levels that are consistent with market practice and internal equity considerations (including position, responsibility and contribution) relative to base salaries, annual incentives and long-term incentives, as well as with the Compensation Committee’s assessment of the appropriate pay mix for a particular position. In order to gauge the competitiveness of our compensation programs, the Compensation Committee reviews compensation practices and pay opportunities from the financial and technology sectors, as well as general industry survey data, along with a selection of publicly traded peer companies. The Compensation Committee attempts to position the Company to attract and retain qualified executives in the face of competitive pressures in its relevant labor markets.
Benchmarking Against Peers

In determining appropriate 2019 compensation, the Compensation Committee also utilized a compensation peer group as an additional reference point when determining executive compensation. This peer group consisted of a select group of companies that the Compensation Committee believes are representative of the talent market in which Blucora competes. Blucora's compensation peer group for 2019 consisted of the following companies, which are in the asset management and custody banks, investment banking and brokerage and internet software and services industries, with a similar revenue range and market capitalization of the Company.
2019 Peer Group
AllianceBernstein Holding L.P.
J2 Global, Inc.
Artisan Partners Asset Management, Inc.
Ladenburg Thalmann Financial Services, Inc.
Benefitfocus, Inc.
LendingClub Corp.
Eaton Vance Corp.
Moelis & Company
Envestnet, Inc.
NIC Inc.
Evercore, Inc.
Virtu Financial, Inc.
Federated Investors, Inc. (n/k/a Federated Hermes, Inc.)
Virtus Investment Partners, Inc.
Financial Engines, Inc.
Waddell & Reed Financial, Inc.
Investment Technology Group, Inc.
WisdomTree Investments, Inc.
Meridian provided peer group comparison data for the Company’s executive officers with respect to salary, annual cash incentive bonus, and equity grants, and the Compensation Committee used this data for background and context when setting the amounts of the various compensation elements for executive officers for 2019, but did not tie any compensation decisions directly to this data or set compensation to fall within a certain percentile of our peers.
In determining executive compensation, the Compensation Committee does not solely rely on comparative data from or target any particular level of total compensation or individual component of compensation against the peer group. Such comparative data provides helpful market information about our compensation peer group, but the Compensation Committee believes in utilizing a number of resources, such as published compensation surveys and other available proxy and compensation data, to ensure that our executive compensation is competitive in the market in which we compete for talent. The Compensation Committee also considers pay for performance, individual capability, potential to create value, experience, and internal parity objectives in setting compensation. All applicable information is reviewed and considered in the aggregate, and the Compensation Committee does not place any particular weight on any one factor.

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Compensation Decisions Made in 2019

Overview of 2019 Executive Compensation Components

In 2019, the key elements of our executive compensation program for the NEOs consisted of:
base salary;
a target annual cash incentive bonus; and
long-term equity incentive awards comprised of stock options, time-based RSUs and PRSUs.
Annual Base Salary
General
Each executive receives an annual base salary that provides a minimum fixed level of cash compensation that is intended to provide security and preserve an employee’s commitment during downturns in the relevant industries and/or equity markets. The Compensation Committee considers a competitive base salary to be an important factor in retaining and attracting key employees in a competitive marketplace, but it also balances executives' base salaries with variable, performance-based compensation elements to ensure that our executives' incentives are aligned with the objectives of the Company and our stockholders and are appropriately “at-risk.” Base salaries are initially established by the Compensation Committee pursuant to employment or other agreements with the executives and are set at a level that the Compensation Committee believes is competitive in the marketplace. Any annual increases thereafter may be based on an evaluation of many factors, such as our performance and annual cash compensation budget, each executive’s individual performance, criticality of the role, experience of the executive, comparative market data and internal pay equity.

2019 Annual Base Salaries
    
In 2019, the base salaries for our NEOs were increased to better reflect the practices of the market and industries in which we compete for talent following a comprehensive review and to better align internal pay. The Compensation Committee determined the salary increases for the NEOs as set forth below:
:
Name
 
2018
 
2019
 
% Change
John S. Clendening
Former CEO
 
$600,000
 
$625,000
 
4.2%
Davinder S. Athwal
Former CFO
 
$400,000
 
$416,000
 
4.0%
Todd C. Mackay
 
$366,500
 
$408,973
 
11.6%
Curtis A. Campbell
 
$380,000
 
$380,000
 
—%
Ann J. Bruder
 
$375,000
 
$400,000
 
6.7%

Mackay Base Salary: Mr. Mackay's 2018 salary reflects (i) an annual base salary associated with Mr. Mackay's Base Role of $319,300 and (ii) an additional monthly stipend of $5,900 for each month he served an interim capacity as Executive Vice President and General Manager of TaxAct. Mr. Mackay's 2019 salary reflects the time that he spent in each of his following roles: (i) an annual base salary associated with Mr. Mackay's Base Role of $319,300, (ii) an additional monthly stipend of $5,900 for each month that he served in the Interim Role and (iii) his annual base pay associated with his Current Role of $375,000.

All Other NEOs: The base salary increases for our other NEOs were made to more closely align with the updated benchmarks for our compensation peer group in the market and industries in which we compete for talent and to better align internal pay. Each executive officer's performance was also considered in determining 2019 base salaries.



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Annual Short-Term Incentive Plan/Bonus Payments
General    

We generally provide our executives with the opportunity to earn an annual performance-based cash incentive bonus. This bonus provides incentive for the achievement of our operational and financial goals, as well as individual goals, and assists in retaining, attracting, and motivating executives in the near-term. Because the bonus is cash-based, we believe it also provides a balance to the volatility of short-term equity prices and the related impact on the value of an executive’s equity holdings. Target annual bonuses, as a percentage of salary, are generally established upon commencement of an executive’s employment and are reviewed each year and updated when the Compensation Committee deems it appropriate.

In 2019, a substantial portion of our NEOs’ compensation was paid pursuant to the Company's short-term bonus plan, which is tied to the achievement of our operational and financial goals as well as specific individual goals. Similar to 2018, the operational and financial metrics selected by the Compensation Committee for the 2019 annual bonus plan reflect the responsibilities of each NEO, such that they are tied to our overall Company performance or certain metrics related to the different businesses that an NEO oversees or in which an NEO is involved.

2019 Short-Term Incentive Program

In February 2019, our Compensation Committee approved our 2019 Executive Bonus Program (the "2019 Executive Bonus Program"), which allows potential bonus payments to be made to each of our executive officers based on the achievement of specified financial metric targets, as well as the STI Modifier metrics, applicable to each executive officer as described further below.

Target Bonus and Metrics: The target bonus for each NEO under the 2019 Executive Bonus Program was based on a percentage of annual base pay. The bonus target for each NEO was reviewed in 2019 in light of our updated benchmarks for our compensation peer group in the market and industries in which we compete for talent. With the exception of Mr. Mackay, who began service in his Current Role in June 2019, the result of our annual review resulted in no changes to the bonus targets for each of our NEOs for 2019.

For each of the NEOs, their preliminary bonus was based upon such NEO's applicable target annual incentive bonus for 2019 (i.e., base salary times annual target bonus percentage), which was then multiplied by such NEO's achievement relative to the financial metrics set forth in the 2019 Executive Bonus Program (such aggregate amount as calculated, the "Preliminary Bonus"), with the actual earned annual bonus for each NEO for 2019 being subsequently adjusted to reflect the application of the STI Modifier to such NEO's Preliminary Bonus. The specific weighting of the financial, strategic or operational performance metrics varied by NEO based on responsibilities that were specific to the business unit for which the individual NEO was responsible or for which the NEO was assigned. The payout percentage for each performance metric was determined based on the actual performance of the Company versus the performance targets established by our Compensation Committee. The maximum payout percentages for each metric were based on a sliding scale between designated levels of threshold, target and maximum achievement, subject to the STI Modifier as described below.

STI Modifier: As a result of our Compensation Committee's ongoing evaluation of appropriate measurable factors and metrics to be considered as part of our compensation program, and in furtherance of our "One Blucora" philosophy, in 2019 a more significant portion of the bonuses paid to the NEOs within each of our operating segments (i.e., Wealth Management and Tax Preparation, respectively) was tied to enterprise-wide financial and operational performance metrics and results. Furthermore, in 2019, our Compensation Committee adopted a performance modifier component to our 2019 Executive Bonus Program. Consistent with prior years, the target bonus for each executive was measured and determined based on the attainment of the specified financial and operational metrics and results. For 2019, after determining the target bonus achievement level, we subjected the Preliminary Bonus amount to an upward or downward adjustment (not to exceed 20%) based on the NEO's personal performance as measured against certain specified short-term bonus plan modifiers that were approved by the Compensation Committee. These modifiers were based upon and measured against: (i) performance in areas relating to talent development and leadership impact, primarily relating to the Company's continued emphasis on culture, enhancement of the value of our human capital, and driving retention and leadership satisfaction and (ii) targets relating to the identification and execution of profitable growth measures that further enhance shareholder value (collectively, the "STI Modifier").


Blucora, Inc. | 2020 Proxy Statement 63




Bonus Payout: Shortly following the end of the year, when the Company's results were known, the Compensation Committee evaluated the Company's performance against our financial performance objectives and the metrics in the STI Modifier and determined the actual payout to each NEO based on the following formula:

https://cdn.kscope.io/40192f8bedc2f632acb54d0bf00fc5fb-bonuspayout.jpg

Accordingly, the maximum payout for the 2019 Executive Bonus Program was 240% of target, comprised of (i) achievement of financial performance metrics of up to 200% of target and (ii) a positive STI Modifier multiplier of 20% on the amount determined in clause (i).

The target bonus percentage, the financial and/or operational performance metrics used, and the weighting of each metric under the 2019 Executive Bonus Program are reflected in the table below for each NEO:
 
 
 
 
 
Bonus Performance Metrics (% of Preliminary Bonus Calculation) (1)
Name
 

Base
Salary
Target Bonus Percentage
(% of Base Salary)
 
Blucora
Revenue
 
Blucora Adjusted EBITDA
 
Segment Revenue
 
Segment Income
John S. Clendening
Former CEO
 
$625,000
200%
 
50%

50%

 
Davinder S. Athwal
Former CFO
 
$416,000
125%
 
50%

50%

 
Todd C. Mackay (2)
 
 
 
 
 
 
 
 
 
 
 
Base Role
(January 1, 2019 - June 13, 2019)
 
$319,300
55%
 
50%
 
50%
 
 
Interim Role
(January 1, 2019 - June 13, 2019)
 
$390,100
70%
 
40%
 
40%
 
10%
 
10%
Current Role
(June 14, 2019 - December 31, 2019)
 
$375,000
90%
 
50%
 
50%
 
 
Curtis A. Campbell
 
$380,000
125%
 
40%

40%

10%

10%
Ann J. Bruder
 
$400,000
80%
 
50%

50%

 
(1)
The financial and operational metrics selected by the Compensation Committee for the 2019 Executive Bonus Program reflect the responsibilities of each NEO. For Messrs. Clendening and Athwal and Ms. Bruder, the financial metrics were tied to overall Company performance. For Mr. Campbell, a portion of the financial metrics were tied to overall Company performance and a portion were tied to metrics related to the performance of the Tax Preparation business.
(2)
As a function of the various roles that Mr. Mackay held during 2019, his aggregate 2019 bonus was calculated using the above-described targets and financial metrics, in each case prorated for the period of Mr. Mackay's service in such role. For his Base Role and Current Role, the financial metrics were tied to overall company performance. In the case of his Interim Role, a portion of the financial metrics were tied to overall Company performance and a portion were tied to metrics related to the performance of the Wealth Management business.

Blucora, Inc. | 2020 Proxy Statement 64




2019 Bonus Performance and Payout Scale: Pursuant to the 2019 Executive Bonus Program, the payout percentages for each performance metric were calculated using the scale below, with a maximum payout of 200% of the target amount (subject to the STI Modifier described above). The target payment amounts were intentionally set to be challenging and to require significant effort by our NEOs.
Metrics
 
Range of Financial Performance in Bonus Payout Scale
(% of financial target)
 
Range of Bonus Payout
(% of target bonus) (1)
Blucora Revenue
Threshold of 80% to Maximum of 120%
50% at Threshold to Cap of 200%
Blucora Adjusted EBITDA
Segment Revenue
Segment Income
(1)
Under the 2019 Executive Bonus Program, the maximum payout percentage for each financial performance metric was 200% of target. However, if the maximum financial performance was attained and the Compensation Committee approved the maximum STI Modifier (i.e., 20% of 200%) based on successful achievement of the specified goals and targets, the maximum bonus allowed would be 240% of target.
2019 Financial Performance Targets vs. Actual Results: The specific Company financial targets for 2019 for each metric used in calculating the NEO preliminary bonus payouts are set forth in the table below along with the Company’s actual performance for each of those metrics.
Performance Goal
 
Target
 
Actual
 
Achievement % (1)
Blucora Revenue (2)
 
$
338,429,274

 
$
340,198,225

 
101%
Blucora Adjusted EBITDA (3)
 
$
126,499,150

 
$
132,499,235

 
105%
Wealth Management Segment Net Revenue (4)
 
$
130,528,350

 
$
130,232,434

 
100%
Wealth Management Segment Income (6)
 
$
61,674,470

 
$
62,603,086

 
102%
Tax Preparation Segment Revenue (5)
 
$
207,900,924

 
$
209,965,791

 
101%
Tax Preparation Segment Income (6)
 
$
92,964,390

 
$
96,255,673

 
104%
(1)
Per the terms of the 2019 Executive Bonus Program, the achievement percent is rounded up to the nearest whole percentage point.
(2)
Blucora Revenue is comprised of our Tax Preparation Segment Revenue and Wealth Management Segment Net Revenue (as described further in footnote 4 below).
(3)
Reflects consolidated externally reported Adjusted EBITDA, adjusted for bonus accruals and other non-operational items. The Compensation Committee uses Adjusted EBITDA (subject to certain adjustments) because it believes it is an important measure of our operating performance. See Appendix A—Non-GAAP Reconciliation for a reconciliation of Adjusted EBITDA to Net Income and for additional information regarding this non-GAAP measure.
(4)
Reflects externally reported revenue for our Wealth Management segment, less amounts paid to advisors and tax professionals utilizing the wealth management platform and normalized for non-operational items.
(5)
Reflects externally reported revenue for our Tax Preparation Segment.
(6)
Reflects externally reported income for the Tax Preparation or Wealth Management Segment and normalized for non-operational items.

2019 Target Bonus and Performance Achievement: The following table sets forth, for each of the NEOs, the Preliminary Bonus based on the financial metrics set forth in the 2019 Executive Bonus Program (in dollars and as a percentage of target), and the earned annual bonus for 2019 reflecting the application of the STI Modifier (in dollars and as a percentage of the target annual bonus):
Name
 
Target Annual Bonus