DEF 14A of Legalzoom.com, Inc.
Filed Apr 24, 2024 · FY20230001193125-24-110114
Proxy Voting
| Mission Statement & Operating Values | 15 | | Social Impact & Human Capital Management | 16 | | Director Compensation | 18 | | Executive Officers | 21 | | Compensation Discussion & Analysis | 22 | | Executive Compensation Tables | 32 | | CEO Pay Ratio | 40 | | Pay-Versus-Performance | 41 | | Equity Compensation Plan Information | 44 | | Proposal 2 — Ratification of Appointment of Independent Registered Public Accounting Firm | 45 | | Audit Committee Report | 46 | | Proposal 3 — Advisory Vote on Named Executive Officer Compensation | 47 | | Certain Relationships and Related Party Transactions | 48 | | Beneficial Ownership of Securities | 49 | | Questions & Answers About the Annual Meeting | 51 | | Virtual Annual Meeting | 54 | | Submission of Stockholder Proposals and Nominations of Directors and Other Business | 55 | | Important Additional Information | 56 | | Appendix A – Non-GAAP Reconciliations | A-1 |
Election of Directors
Election of Directors Our Board currently consists of seven directors. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws (“Bylaws”) classify our Board of Directors into three classes of directors, serving staggered three-year terms of office, as follows:
Election of Directors
| Class I directors with terms expiring at the 2025 annual meeting of stockholders | Class II directors with terms expiring at the 2026 annual meeting of stockholders | Class III directors with terms expiring at the Annual Meeting | | Neil Tolaney Christine Wang | Sivan Whiteley | Elizabeth Hamren John Murphy Jeffrey Stibel Dan Wernikoff |
Election of Directors
The directors designated as Class III directors have terms expiring at the Annual Meeting. On the recommendation of the Nominating and Corporate Governance Committee (the “Nominating Committee”) of our Board, our Board selected Ms. Elizabeth Hamren, Mr. John Murphy, Mr. Jeffrey Stibel and Mr. Dan Wernikoff as nominees for election to our Board at the Annual Meeting as Class III directors to serve for a term of three years until our 2027 annual meeting of stockholders and until their respective successors have been duly elected and qualified, or until his or her earlier death, resignation, removal, retirement or disqualification. Each of the director nominees is standing for election to our Board for the first time. Each of Ms. Hamren and Mr. Murphy joined our Board in 2021 and was initially identified as a director candidate by Russell Reynolds, a third-party search firm. Mr. Stibel joined our Board in 2014 and was initially identified as a director candidate by Brian Liu, one of our co-founders. Mr. Wernikoff joined our Board in 2019 in connection with his appointment as our Chief Executive Officer. Each of Ms. Hamren and Messrs. Murphy, Stibel and Wernikoff has consented to being named in this Proxy Statement and to serve as a director if elected. We have no reason to believe that Ms. Hamren or Messrs. Murphy, Stibel or Wernikoff will be unable for any reason or unwilling for good cause to serve if elected. In the event any of Ms. Hamren or Messrs. Murphy, Stibel or Wernikoff is unable for any reason or unwilling for good cause to serve at the time of the Annual Meeting, the persons who are designated as proxy holders may exercise discretionary authority to vote for a substitute nominee selected by our Board or our Board may reduce the number of directors on the Board.
Director Independence
Director Independence Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has affirmatively determined that each of Elizabeth Hamren, John Murphy, Jeffrey Stibel, Neil Tolaney, Christine Wang and Sivan Whiteley is an independent director in accordance with applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”). Mr. Wernikoff is not an independent director due to his service as our Chief Executive Officer. In addition, the Board previously affirmatively determined that each of Dipanjan Deb, Brian Ruder and Dipan Patel were independent during the periods in 2023 during which they served on the Board. Neither Mr. Deb nor Mr. Ruder stood for re-election at our 2023 annual meeting of stockholders held in June 2023. Mr. Patel resigned from the Board on November 13, 2023. In making the foregoing independence determinations, our Board considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of shares of our common stock by each non-employee director.
Director Independence
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 3 |
Board Composition
Board Composition While the Nominating Committee does not prescribe a diversity policy or standard, as a matter of practice, the Company believes that a diverse Board is an effective Board. This diversity – across gender, tenure, age, race/ethnicity, and experience – brings with it a diversity of ideas and perspectives that support the Board’s role in overseeing the Company’s ongoing strategic objectives. The information below is as of the date of this Proxy Statement.
Board Composition
| Age Distribution | Gender Diversity | Racial / Ethnic Diversity | LGBTQ+ | Tenure | | 47 Average Age Age Range: 37 - 55 | 43% women | 29% racially / ethnically diverse | 1 director identifies as LGBTQ+ | 4 years Average Tenure |
Class III Director Nominees
Class III Director Nominees
Class III Director Nominees
| Age Director Since 52 2021 Committees: Compensation Committee | Elizabeth Hamren Elizabeth (Liz) Hamren has served as Chief Executive Officer of Ring, Inc., the smart doorbell and home security technology company acquired by Amazon, Inc., since March 2023. Previously, Ms. Hamren served as Chief Operating Officer of Discord Inc., a private company providing voice, video and text communication services, from December 2021 to March 2023. Prior to joining Discord, Ms. Hamren was Corporate Vice President for Gaming Experience & Platforms at Microsoft Corp., a multinational technology corporation, from May 2018 to December 2021, where she ran product and engineering for Xbox’s consumer products and services including Game Pass, all Xbox hardware and platform software, and PC experience, and as Corporate Vice President, Devices at Microsoft from March 2017 to April 2018. Prior to joining Microsoft, Ms. Hamren was Head of Global Marketing and Sales for Oculus at Meta Platforms, Inc. (formerly Facebook, Inc.) from August 2015 to March 2017, and was Vice President of Marketing at Dropcam, Inc. from November 2012 to October 2014. She has previously held executive roles at Plantronics, Jawbone, and OQO, Inc. Ms. Hamren serves on the board of directors and as a member of the compensation committee and the cybersecurity and data privacy committee of Hasbro, Inc. Ms. Hamren holds a B.S.E in civil engineering and operations research from Princeton University and an M.B.A. from Harvard Business School. Qualifications Ms. Hamren’s executive leadership experience in digital products and marketing, along with her knowledge of the technology industry and the small business segment, qualifies her to serve on our Board of Directors. Other Current Public Company Directorships Hasbro, Inc. (Nasdaq: HAS) |
Class III Director Nominees
| 4 | 2024 PROXY STATEMENT LegalZoom.com, Inc. |
Class III Director Nominees
| Age Director Since 55 2021 Committees: Audit Committee Nominating Committee | John Murphy John Murphy served as the Executive Vice President and Chief Financial Officer of Adobe Inc., a multinational computer software company, from April 2018 until October 2021, and served as Adobe’s Senior Vice President, Chief Accounting Officer and Corporate Controller from March 2017 until April 2018. Prior to joining Adobe, Mr. Murphy served as Senior Vice President, Chief Accounting Officer and Corporate Controller of Qualcomm Incorporated from September 2014 to March 2017. He previously served as Senior Vice President, Controller and Chief Accounting Officer of DIRECTV Inc. from November 2007 to August 2014, and Vice President and General Auditor of DIRECTV from October 2004 to November 2007. Prior to joining DIRECTV, he worked at several global companies, including Experian, Nestle, and Atlantic Richfield (ARCO), in a variety of finance and accounting roles. Mr. Murphy currently serves on the board of directors and as chair of the audit committee of Pure Storage, Inc., and on the board of directors of Roper Technologies, Inc. He served as Director of DirecTV Holdings LLC from November 2007 until August 2014. He holds an M.B.A. from the Marshall School of Business at the University of Southern California, and a B.S. in Accounting from Fordham University. Qualifications Mr. Murphy’s extensive experience in finance and accounting, as well as his background in the technology sector, qualifies him to serve on our Board of Directors. Other Current Public Company Directorships Pure Storage, Inc. (NYSE: PSTG) Roper Technologies, Inc. (Nasdaq: ROP) |
Class III Director Nominees
| Chair of the Board Age Director Since 50 2014 Committees: Nominating Committee | Jeffrey Stibel Jeffrey Stibel has served as Chair of our Board since October 2018 and has served on the board of directors since October 2014. Mr. Stibel has been a partner of Bryant Stibel & Company, an investment and strategic advisory platform, since January 2013. Mr. Stibel also serves as a member of the board of directors of a number of privately held companies and non-profit entities. He was previously a USA Today columnist and author of The New York Times bestseller Breakpoint (Macmillan: 2013) and Wired for Thought (Harvard Business Press: 2009). Mr. Stibel served as the President, Chief Executive Officer and Chairman of the Dun & Bradstreet Credibility Corporation from July 2010 to July 2015, and as Vice Chairman of Dun & Bradstreet Corporation (NYSE) from July 2015 to March 2018. Prior to that, Mr. Stibel was President and Chief Executive Officer of Web.com, Inc. (Nasdaq). From December 2006 to January 2019, Mr. Stibel served as a member of the board of directors of AutoWeb, Inc. (Nasdaq). He holds a B.S. in psychology, philosophy, and cognitive science from Tufts University and an M.Sc. in cognitive science from Brown University, where he was the recipient of a Brain and Behavior Fellowship while studying for a Ph.D. Mr. Stibel also received an honorary doctorate of business from Pepperdine University. Qualifications Mr. Stibel’s experience as an executive officer of various online technology companies combined with his experience serving on the boards of directors of multiple public companies qualifies him to serve on our Board of Directors. Other Current Public Company Directorships None |
Class III Director Nominees
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 5 |
Class III Director Nominees
| Chief Executive Officer Age Director Since 52 2019 Committees: None | Dan Wernikoff Dan Wernikoff has served as our Chief Executive Officer since October 2019. From March 2019 to August 2019, Mr. Wernikoff served as a Venture Partner at TCV. From 2003 to October 2018, Mr. Wernikoff held various general manager roles at Intuit Inc., an American business software company that specializes in financial software, most recently serving as Executive Vice President and General Manager of Intuit’s Consumer Tax Group from May 2016 to May 2018. Before that role he was the General Manager of the Small Business Group from May 2014 to May 2016. He also served as the General Manager of QuickBooks from August 2010 to May 2014. Prior to his various general manager roles, Mr. Wernikoff held various product and marketing leadership positions while at Intuit. Mr. Wernikoff holds a B.S. in Finance from Miami University, and an M.B.A. from the Katz Graduate School of Business at the University of Pittsburgh. Qualifications Mr. Wernikoff’s extensive knowledge of our Company as Chief Executive Officer, his management background and experience in the online technology industry qualifies him to serve on our Board of Directors. Other Current Public Company Directorships None |
Class III Director Nominees
| 6 | 2024 PROXY STATEMENT LegalZoom.com, Inc. |
Continuing Directors
Continuing Directors
Continuing Directors
| Age Director Since 41 2022 Committees: Audit Committee | Neil Tolaney Neil Tolaney is a General Partner at Technology Crossover Ventures (“TCV”), a growth equity firm focused on investments in public and private technology companies. Mr. Tolaney first joined TCV in 2011 and served as Vice President, Growth Equity from 2011 to 2013 and rejoined in March 2020. Prior to rejoining TCV in 2020, Mr. Tolaney was a Deal Partner at Francisco Partners from 2016 to 2020 and Managing Director at PersonalizationMall.com from 2013 to 2016. Mr. Tolaney holds a B.A. in Economics and Political Science, magna cum laude, from Yale University and an M.B.A. from Harvard Business School. Qualifications Mr. Tolaney’s private equity expertise and his investing and operating experience in the consumer internet space qualifies him to serve on our Board of Directors. Other Current Public Company Directorships None |
Continuing Directors
| Age Director Since 37 2019 Committees: Audit Committee Compensation Committee | Christine Wang Christine Wang serves as a partner at Francisco Partners Management, L.P. (“Francisco Partners”), a global investment firm specializing in partnering with technology and technology-enabled businesses, and has been with Francisco Partners since August 2015. Prior to joining Francisco Partners, Ms. Wang was an associate at Advent International where she evaluated investments in the business services, financial services, and technology sectors. Earlier in her career, she was an investment banker in the Financial Institutions Group at J.P. Morgan. Ms. Wang also serves on the board of directors of a number of privately held technology companies. Ms. Wang holds a B.A. in economics and East Asian languages and cultures from Columbia University and an M.B.A. from the Stanford Graduate School of Business. Qualifications Ms. Wang’s private equity expertise combined with her experience serving on the boards of directors of privately held companies qualifies her to serve on our Board of Directors. Other Current Public Company Directorships None |
Continuing Directors
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 7 |
Continuing Directors
| Age Director Since 47 2022 Committees: Nominating Committee Compensation Committee | Sivan Whiteley Sivan Whiteley previously served as Chief Legal Officer and Corporate Secretary of Block, Inc. (formerly Square, Inc.), a global technology company with a focus on financial services, from December 2021 to February 2023, where she oversaw a worldwide team responsible for the company’s legal, regulatory, public policy & communications, compliance, and security operations. Ms. Whiteley first joined Block, Inc. in December 2013 and previously served as Block, Inc.’s legal Director, then Block’s Associate General Counsel, as well as its General Counsel and Corporate Secretary from March 2018 to November 2021. Prior to joining Block, Inc., Ms. Whiteley served as Associate General Counsel at Better Place, Inc., as Commercial and Product Counsel at eBay Inc., and was a litigator at Bingham McCutchen LLC. Ms. Whiteley holds a B.A., magna cum laude, in Political Science from the University of California, San Diego, and a J.D., cum laude, from Harvard Law School. Qualifications Ms. Whiteley’s experience with legal, regulatory and compliance and her work with small business providers, as well as her experience with governance in her former role as Chief Legal Officer at Block, Inc. qualifies her to serve on our Board of Directors. Other Current Public Company Directorships None |
Continuing Directors
Director nominees are elected by a plurality of the votes present in person, by remote communication, if applicable, or represented by proxy at the Annual Meeting and entitled to vote generally on the election of directors, which means that the four nominees who receive the highest number of votes cast “For” such nominees will be elected as directors. Stockholders may vote “For” or “Withhold” their vote from one or more of the director nominees. Any shares voted “Withhold” and broker non-votes are not considered votes cast for the foregoing purpose and will have no effect on the outcome of the election of directors.
Continuing Directors
| | Our Board unanimously recommends a vote “FOR” the election to the Board of Directors of each of the Class III director nominees. |
Continuing Directors
| 8 | 2024 PROXY STATEMENT LegalZoom.com, Inc. |
Director Compensation
Director Compensation
Eligible Director Compensation Policy
Eligible Director Compensation Policy We provide cash and stock compensation to certain non-employee directors for their services as directors or members of committees of the Board of Directors. Our Eligible Director Compensation Policy (the “Policy”) provides each member of our Board of Directors who is not also serving as our employee or as an employee of any of our subsidiaries and is not associated with or nominated by a private equity fund, venture capital fund or other entity that owned shares of our capital stock prior to the effective date of the registration statement filed in connection with our IPO (each, an “Eligible Director”) with fixed annual cash retainer fees as well as long-term equity compensation awards for their service on our Board of Directors. Additional fixed annual cash retainer fees are paid to Eligible Directors for committee membership and chairperson service. The Eligible Directors eligible to participate in the Policy are Liz Hamren, John Murphy and Sivan Whiteley. Certain principal features of the compensation provided under the Policy are described in more detail below. The summary is qualified in its entirety by reference to the complete text of the Policy.
2023 Non-Employee Director Compensation Table
2023 Non-Employee Director Compensation Table The following table sets forth information regarding the compensation earned for service on our Board of Directors by our non-employee directors during 2023. Mr. Wernikoff also served on our Board of Directors but did not receive any additional compensation for his service as a director and therefore is not included in the table below. The compensation for Mr. Wernikoff as an executive officer is set forth below under “Executive Compensation Tables—Summary Compensation Table.”
2023 Non-Employee Director Compensation Table
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | | Jeffrey Stibel | — | — | — | — | | Dipanjan Deb(3) | — | — | — | — | | Elizabeth Hamren | 42,500 | 252,126 | — | 294,626 | | John Murphy | 60,000 | 252,126 | — | 312,126 | | Dipan Patel(3) | — | — | — | — | | Brian Ruder(3) | — | — | — | — | | Neil Tolaney | — | — | — | — | | Sivan Whiteley | 41,360 | 252,126 | — | 293,486 | | Christine Wang | — | — | — | — |
2023 Non-Employee Director Compensation Table
| (1) The amount shown for each director is composed of his or her annual Board service fees, committee service fees and any additional committee chair fees, as applicable. |
2023 Non-Employee Director Compensation Table
| (2) Amounts reflect the aggregate grant date fair value of time-vested RSUs granted to the directors during the year, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Codification Standard Topic No. 718, Compensation—Stock Compensation (“ASC 718”). These amounts may not correspond to the actual value eventually realized by each director because the value depends on the market value of our common stock at the time the award vests. The following table provides information regarding the number of shares of common stock underlying stock options and RSUs granted to our non-employee directors that were outstanding as of December 31, 2023: |
2023 Non-Employee Director Compensation Table
| Name | Option Awards Outstanding at Year End(#) | Stock Awards Outstanding at Year End(#) | | Jeffrey Stibel | 75,696(a) | — | | Dipanjan Deb | — | — | | Elizabeth Hamren | — | 21,793 | | John Murphy | — | 22,392 | | Dipan Patel | — | — | | Brian Ruder | — | — | | Neil Tolaney | — | — | | Sivan Whiteley | — | 28,905 | | Christine Wang | — | — | | (a) Includes an option to purchase 13,584 shares of common stock held by Bryant Stibel Fund I, LLC. | | |
2023 Non-Employee Director Compensation Table
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 19 |
2023 Non-Employee Director Compensation Table
| (3) Mr. Deb and Mr. Ruder did not stand for re-election at our 2023 annual meeting of stockholders and ceased to be directors on June 6, 2023. Mr. Patel resigned from the Board on November 13, 2023. |
Executive Compensation Philosophy and Objectives
| • | Align executive compensation with the Company’s corporate strategies, performance against business objectives and goals and the creation of long-term value for our stockholders; and |
Executive Compensation Philosophy and Objectives
| • | Utilize performance metrics aligned with the Company’ business objectives and our stockholder interests in the short-, mid- and long-term to drive accountability, recognize performance, drive engagement and retention, and manage risks associated with underperformance. |
Role of the Compensation Consultant
Role of the Compensation Consultant Pursuant to its charter, the Compensation Committee is authorized to retain or obtain the advice of compensation consultants and outside service providers and advisors to advise the Compensation Committee with respect to amounts or forms of executive compensation or in carrying out its other responsibilities. Frederic W. Cook & Co., Inc. (“FW Cook”) served as our independent compensation consultant through June 2023. As the then-incumbent compensation consultant, FW Cook reviewed and advised on all principal aspects of our executive compensation program for 2023, including the specific compensation recommendations for our executive officers and our 2023 peer group. In June 2023, the Compensation Committee appointed Exequity LLP (“Exequity”) as its independent compensation consultant, replacing FW Cook in such capacity. Exequity reviewed and advised on our executive compensation program after its appointment as compensation consultant. The Compensation Committee was directly responsible for the appointment, compensation and oversight of the work of both FW Cook and Exequity. The Compensation Committee assessed the independence of each of FW Cook and Exequity pursuant to applicable SEC and Nasdaq rules and concluded that no conflict of interest existed with respect to the services to the Compensation Committee of either FW Cook or Exequity. Neither FW Cook nor Exequity performed any services for us, except for compensation-related services on behalf of, and as instructed by, the Compensation Committee.
Peer Group
Peer Group The Compensation Committee periodically selects a peer group of companies in our industry to assist the committee in making its compensation decisions. Although the Compensation Committee reviews and discusses the peer company compensation data provided by its compensation consultant to help inform its decision-making process, the Compensation Committee does not set compensation levels at any specific level or percentile against the peer group data. The peer company data is only one point of information taken into account by the Compensation Committee in making compensation decisions.
Peer Group
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 23 |
Peer Group
In August 2022, the Compensation Committee, with assistance from FW Cook, reviewed the list of peer group companies originally selected in connection with our IPO, and re-calibrated the peer companies to reflect our business expectations with respect to market capitalization, headcount, and projected revenue into 2023. As a result, our peer group for 2023 consisted of the following companies:
Peer Group
| 8x8 Inc. | Chegg, Inc. | Nutanix, Inc. | | Alteryx, Inc. | Dropbox, Inc. | Smartsheet Inc. | | Angi Inc. | Elastic N.V. | Sprout Social, Inc. | | AppFolio Inc. | Five9, Inc. | Upwork Inc. | | Avalara, Inc. | Fiverr International Ltd. | Wix.com Ltd. | | BigCommerce Holdings, Inc. | Guidewire Software, Inc. | Yelp Inc. | | BlackLine, Inc. | LiveRamp Holdings, Inc. | Zuora Inc. | | Box, Inc. | Momentive Global Inc. | | | CarGurus, Inc. | New Relic, Inc. | |
Peer Group
In preparation for the 2024 executive compensation review and the decisions that the Compensation Committee has made and will make with respect to 2024 executive compensation, the Compensation Committee reviewed, with assistance from Exequity, the peer group companies listed above. The Compensation Committee determined it was appropriate to make certain changes to the companies comprising the peer group for 2024 pay and performance comparisons. Specifically, Avalara, Inc. and Momentive Global Inc. were each removed from the 2024 peer group because they were taken private in August 2022 and March 2023, respectively. The Compensation Committee also removed Dropbox, Inc., Nutanix, Inc. and CarGurus, Inc. because each of those companies is no longer sufficiently comparable to the Company in terms of size, financial performance and/or business fit. In addition, Squarespace, Inc., Zeta Global Holdings Corp., PagerDuty, Inc. and Intapp, Inc. were each added to the 2024 peer group because they are more closely aligned with the Company than certain members of our 2023 peer group across multiple metrics, including revenue and market capitalization, and had a relevant business model fit.
Material Elements of Compensation
Annual Bonus Plan Our named executive officers are eligible to receive an annual incentive bonus under our annual bonus plan, which is administered by our Compensation Committee. Based on input from FW Cook, the Compensation Committee designed the structure of the annual bonus plan for 2023 to ensure the specific performance measures used were tied to both the Company’s short-term 2023 annual goals and the Company’s longer term strategic priorities, or North Star goals. For 2023, the target annual bonus plan payout amount for each named executive officer was as follows:
Material Elements of Compensation
| Named Executive Officer | 2023 Earnings ($) | Annual Bonus Target (% of Earnings) | Target Payout ($) | | Dan Wernikoff | 538,462 | 100% | 538,462 | | Noel Watson | 465,385 | 75% | 349,039 | | Rich Preece | 438,462 | 75% | 328,846 | | Shrisha Radhakrishna | 438,462 | 75% | 328,846 | | Nicole Miller | 411,539 | 50% | 205,769 |
Material Elements of Compensation
| 1. | Pre-established Annual Corporate Performance Goals (75%). For 2023, the bonus payout under our annual bonus plan was based on the achievement of three pre-established corporate performance goals: (i) combined net bookings and partner and other revenue (weighted 30%), (ii) CEBITDA (defined as Adjusted EBITDA + change in deferred revenue) (weighted 40%), and (iii) subscription bookings (weighted 30%). The Compensation Committee chose net bookings and partner and other revenue because it believes this metric reflects the Company’s overall business on both a transactional and subscription basis, and it chose CEBITDA to align with the Company’s focus on profitability combined with its strategy to drive subscriptions bookings versus in-period revenue recognition. The Compensation Committee chose subscription bookings to align with the Company’s strategic goal of providing long-term value to customers beyond business formations. |
Material Elements of Compensation
| Performance Measure | Weight | 2023 Performance Goals(1) | | | FY23 Actual | Achievement (as a % of Target) | Payout(1) | Weighted Bonus Funding | | | | Threshold 0% payout | Target 100% payout | Maximum 150% payout | | | | | | Net Bookings + Partner & Other Revenue | 30% | $639.8M | $703.1M | $731.2M | $695.9M | 99% | 90% | 27.0% | | CEBITDA (Adjusted EBITDA + change in deferred revenue)(2) | 40% | $107.0M | $125.9M | $144.8M | $122.0M | 97% | 94% | 37.6% | | Subscription Bookings | 30% | $389.9M | $428.5M | $445.6M | $407.7M | 95% | 42% | 12.6% | | Resulting Bonus Funding % (before adjustments for achievements vs. North Star goals): | | | | | | | | 77.2% | | (1) The payout for each performance goal assumes proration of achievement between tiers. If the achievement of any goal was below the 0% payout tier, the payout for that specific measure would be zero. In addition, the Compensation Committee set a CEBITDA floor such that if the Company achieved less than 80% of its CEBITDA target for 2023, the payout across all three pre-established corporate performance goals would be zero. (2) For purposes of our annual bonus plan, Adjusted EBITDA is defined as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 29, 2024. Adjusted EBITDA is then further adjusted for the change in transaction and subscription deferred revenue for the period, which was $3.35 million for the year ended December 31, 2023, to arrive at CEBITDA. | | | | | | | | |
Material Elements of Compensation
The foregoing achievement of each pre-established corporate performance goal resulted in a bonus funding of 77.2%, before applying the North Star factor adjustment for achievement against long-term priorities as discussed below. The 77.2% bonus funding is equal to the sum of the weight of each performance measure (expressed as a percentage) multiplied by the percentage payout for each performance measure. The 2023 bonus plan also included a 30% upwards or downwards adjustment to the resulting bonus funding payout percentage, which was determined by the Compensation Committee based upon achievement of pre-defined long-term strategic priorities, referred to as the Company’s North Star goals. For 2023, the North Star goals included the following: (i) operationalize new products and partnerships; (ii) drive successful new business growth; (iii) improve the customer, attorney and partner experience; (iv) drive efficiencies to scale internal operations; and (v) drive employee engagement. Based upon the Company’s achievements against the foregoing North Star goals, the Compensation Committee made a 12.8% upwards adjustment to the bonus funding percentage for named executive officers in recognition of the following: launch of LegalZoom’s new freemium product lineup; significant progress scaling the Company’s costs to serve formations SMB customers; progress made in new product innovation with the launch of LZ Books, Business Licenses, Doc Assist, Forms, eSignature, and the Beneficial Ownership Information Report; the reimagination of myLZ (the Company’s customer portal) to drive increased customer engagement; the launch of new platforms for scaled tax expert services; the implementation of technology to scale internal operations; and a material year-over-year increase in employee overall satisfaction and employee net promoter score. As a result of the foregoing, the bonus pool funding for named executive officers was increased to 90% and the Company performance payout portion of each named executive officer’s 2023 annual bonus plan award was calculated as follows:
Material Elements of Compensation
| Named Executive Officer | Target Payout ($)X | Company Bonus Funding Multiplier | = | Eligible Bonus ($)X | Company Performance Weighting | = | Company Performance Payout ($) | | Dan Wernikoff | 538,462 | 90% | | 484,615 | 75% | | 363,462 | | Noel Watson | 349,039 | 90% | | 314,135 | 75% | | 235,601 | | Rich Preece | 328,846 | 90% | | 295,962 | 75% | | 221,971 | | Shrisha Radhakrishna | 328,846 | 90% | | 295,962 | 75% | | 221,971 | | Nicole Miller | 205,769 | 90% | | 185,192 | 75% | | 138,894 |
Material Elements of Compensation
| Named Executive Officer | Eligible Bonus ($)X | Individual Performance MultiplierX | Individual Performance Weighting | = | Individual Performance Payout ($) | | Dan Wernikoff | 484,615 | 100% | 25% | | 121,184 | | Noel Watson | 314,135 | 115% | 25% | | 90,314 | | Rich Preece | 295,962 | 75% | 25% | | 55,493 | | Shrisha Radhakrishna | 295,962 | 150% | 25% | | 110,986 | | Nicole Miller | 185,192 | 150% | 25% | | 69,447 |
Material Elements of Compensation
| Named Executive Officer | Target Payout ($) | Performance Payouts ($) | | | Total Payout ($) | | | | Company Performance | + | Individual Performance | | | Dan Wernikoff | 538,462 | 363,462 | | 121,184 | 484,615 | | Noel Watson | 349,039 | 235,601 | | 90,314 | 325,915 | | Rich Preece | 328,846 | 221,971 | | 55,493 | 277,464 | | Shrisha Radhakrishna | 328,846 | 221,971 | | 110,986 | 332,957 | | Nicole Miller | 205,769 | 138,894 | | 69,447 | 208,341 |
Material Elements of Compensation
Equity Based Incentive Awards Our equity-based incentive awards are designed to align our interests and those of our stockholders with those of our directors and employees, including our named executive officers. We have historically used a combination of RSU awards and stock options to diversify the equity compensation we use to incentivize and deliver value to our named executive officers. The RSUs align with long-term stockholders and require both continued service and stock price value maintenance to deliver intended values. The RSUs offer value to our named executive officers even in the absence of stock price appreciation (thereby promoting retention), but also provide incentives to our executive team that are aligned with our stockholders, as the value of an RSU increases with an increase in the value of the underlying stock. We use stock options as an incentive to increase our stock price after grant. As the stock options were granted with an exercise price set to the closing price of our common stock on the date of grant, the stock options will not deliver any economic value unless our stock price increases. Both the RSUs and stock options provide an incentive to our executive team to continue to drive business performance by scaling the business and executing on the Company’s strategic pillars. The Compensation Committee believes that the mix of stock options and RSUs granted in 2023 represented an appropriate balance between risk and reward that would both motivate and retain our executive team and align the interests of our executives with those of our stockholders. In addition, in March 2023, the Compensation Committee added performance-based RSUs (“PSUs”) to the compensation program as part of the evolution of our compensation program from pre-IPO conventions over the first couple of years after becoming publicly traded and to align with market trends, retain talent and further link compensation to Company performance. In early 2023, a significant majority of the RSUs previously granted to our named executive officers had fully vested and their 2021 and 2022 stock option grants were underwater due to challenging macroeconomic conditions that drove stock price declines among the Company, its peers and the broader market as a whole. As a result, the remaining value of unvested equity held by our named executive officer fell well below the median of the Company’s peer group. Accordingly, the Compensation Committee believed that the addition of these PSUs would continue to retain and incentivize our executive team. Further, as part of the Compensation Committee’s commitment to aligning executive compensation with long-term stockholder value, the Compensation Committee approved the removal of stock options as a form of long-term equity incentive and a switch to RSUs and PSUs as a replacement beginning in 2024. See “2024 Compensation Decisions” below for information regarding the changes to our executive compensation program for 2024. Our Compensation Committee generally grants equity awards following our annual review process in the spring, or as the Compensation Committee otherwise deems appropriate.
Annual 2023 Equity Grants
Annual 2023 Equity Grants Based on input from FW Cook, including the use of peer group data, the Compensation Committee determined that named executive officers would receive 50% of the target grant value of their annual equity grants in the form of stock options to reflect the portion at risk
Annual 2023 Equity Grants
| 28 | 2024 PROXY STATEMENT LegalZoom.com, Inc. |
Annual 2023 Equity Grants
for performance in the form of stock price increase and 50% of the target grant value of their annual equity grants in the form of RSUs. The following stock options and RSUs were granted to each named executive officer in March 2023:
Annual 2023 Equity Grants
| Name | Stock Options Granted (#) | RSUs Granted (#) | Total Annual Grant Value ($)(1) | | Dan Wernikoff | 1,376,987 | 550,795 | 10,569,086 | | Noel Watson | 611,995 | 244,798 | 4,697,377 | | Rich Preece | 573,745 | 229,498 | 4,403,788 | | Shrisha Radhakrishna | 688,492 | 275,397 | 5,284,532 | | Nicole Miller | 305,997 | 122,399 | 2,348,686 | | (1) Amounts reported represent the aggregate grant-date fair value of RSU and stock option awards granted to our named executive officers during 2023 computed in accordance with ASC 718. The assumptions used in calculating the grant-date fair value of the RSU and stock option awards reported in this column are set forth in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. | | | |
Annual 2023 Equity Grants
The number of RSUs granted to our named executive officers in March 2023 was determined by dividing the target grant value of the award by our closing stock price on the fourth day following the release of our 2022 earnings in March 2023. The number of stock options granted to our named executive officers was determined by multiplying the number of RSUs granted to each named executive officer by 2.5 to reflect a reasonable tradeoff between options and RSUs (assumed 40% Black Scholes fair value). The stock options and RSUs reflected in the table above vest over four years to provide an additional retention incentive.
Performance Stock Units
Performance Stock Units As discussed above, in the first quarter of 2023, our Compensation Committee added PSUs to our executive compensation program. These special 2023 PSUs will vest, if at all, at the end of an eighteen-month performance period ending June 30, 2024 based on the Company’s market share growth at the end of such performance period. The Compensation Committee chose market share as the primary performance metric to align with the Company’s strategic pillar to scale the business and grow the top of our customer funnel in order to expand our customer base. Specifically, the PSUs will be eligible to be earned at the target payout level disclosed in the table below if the Company’s trailing twelve-month market share at the end of the performance period is 11.30%. For purposes of the PSUs, market share is defined as the number of limited liability company, incorporation, not-for-profit and ‘doing business as’ orders placed on the Company’s platform (excluding any orders from the Company’s former operations in the U.K.), divided by total U.S. business formations as reported by the U.S. Census. The number of PSUs eligible to be earned is also subject to adjustment based on a CEBITDA floor and a revenue floor. Specifically, no PSUs will be eligible to be earned if the Company’s CEBITDA for the eighteen-month period ending June 30, 2024 is less than $175.1 million. Further, unless the Company’s revenue for the twelve-month period ending June 30, 2024 is above $619.85 million, the number of PSUs that can be earned will be capped at 100% of the target for each named executive officer. The threshold, target and maximum number of PSUs that may be eligible to be earned by each named executive officer is set forth below:
Performance Stock Units
| Name | Threshold (#) | Target (#) | Maximum (#) | | Dan Wernikoff | 244,798 | 489,596 | 734,394 | | Noel Watson | 91,799 | 183,598 | 275,397 | | Rich Preece | 91,799 | 183,598 | 275,397 | | Shrisha Radhakrishna | 107,099 | 214,198 | 321,297 | | Nicole Miller | 61,199 | 122,399 | 183,598 |
Performance Stock Units
Subsequent to June 30, 2024, the Compensation Committee will determine the extent to which the PSU metrics described above have been achieved. The number of PSUs that the Compensation Committee determines are eligible to be earned, if any, will vest as follows: (a) 75% of such PSUs will vest immediately on the date the Compensation Committee certifies achievement of the performance measures (the “Certification Date”), and (b) 25% of such PSUs shall vest on the one-year anniversary of the Certification Date. This time-based feature for one-year post-certification serves as an additional retention tool within a performance-based equity award.
Performance Stock Units
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 29 |
Performance Stock Units
Consistent with our commitment to pay and performance, the Compensation Committee commits to declining to adjust the original performance goals or to exercising any discretion in determining the payouts of these outstanding PSUs. Employee Benefits and Perquisites We have generally not offered special benefits to our named executive officers. We provide 401(k) matching contributions as discussed under “Health and Welfare and Retirement Benefits” below. Our named executive officers are eligible to participate in the 401(k) plan on the same basis as our other employees. We also maintain an employee stock purchase plan in order to enable eligible employees, including our eligible named executive officers, to purchase shares of our common stock at a discount.
Pension Benefits and Nonqualified Deferred Compensation
Pension Benefits and Nonqualified Deferred Compensation Our named executive officers do not participate in any defined benefit pension plans or nonqualified deferred compensation plans.
2024 Compensation Decisions
2024 Compensation Decisions As part of the Compensation Committee’s commitment to aligning executive compensation with long-term stockholder value, the Compensation Committee engaged its independent compensation consultant, Exequity, to evaluate the design of our executive compensation program and, specifically, our long-term equity incentives. This review led to the Compensation Committee’s decision to enhance the alignment of our long-term incentives design with stockholder interests and our pay-for-performance philosophy. Specifically, in November 2023, the Compensation Committee decided to remove stock options as a form of long-term equity incentive and replace them with PSUs beginning in 2024. RSUs will continue to ensure linkage to the stock price performance of our common stock and promote executive retention over a multi-year time-based vesting period. This switch to PSUs is intended to better align the interests of our executives with our long-term success, while also providing a performance-driven framework for executive compensation. Replacing stock options with PSUs establishes a direct connection between executive incentives and the achievement of strategic and financial goals while maintaining a strong tie to stockholder value creation. In addition, PSUs have a less dilutive effect than stock options and this switch aligns with the Company’s broader strategy of managing the impact of dilution under the Company’s equity plans. The 2024 PSUs are tied to predetermined performance metrics to ensure that executives are rewarded based on their ability to drive sustainable growth and deliver value to our stockholders. Specifically, the 2024 PSUs will be earned, if at all, subject to the Company’s achievement of Adjusted EBITDA relative to predetermined targets and will include a total stockholder return (TSR) modifier for the Company’s relative performance against those companies in the Nasdaq Composite Index. Based on recommendations that the Compensation Committee received from Exequity to better align our long-term equity incentive design with current market practices, our 2024 long-term equity incentive design for executive officers consisted of 50% of RSUs and 50% of PSUs for all executive officers besides our Chief Executive Officer. The 2024 long-term equity incentive design for our Chief Executive Officer consisted of 40% RSUs and 60% PSUs. This change represents an increase in at-risk, performance-based compensation for our executives from 2023 when our long-term equity incentive design consisted of 50% of RSUs and 50% of stock options, which were 100% time-vested.
Summary Compensation Table
Summary Compensation Table The following table describes the 2023, 2022 and 2021 compensation provided to our named executive officers:
Summary Compensation Table
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | | Dan Wernikoff Chief Executive Officer and Director | 2023 | 538,462 | — | 8,968,783 | 5,947,916 | 484,615 | 13,200 | 15,952,976 | | | 2022 | 500,000 | — | 4,394,410 | 5,131,984 | 360,000 | 12,200 | 10,398,594 | | | 2021 | 649,616 | — | 3,249,988 | 14,773,725 | 187,500 | — | 18,860,829 | | Noel Watson Chief Financial Officer | 2023 | 465,385 | — | 3,684,205 | 2,643,522 | 325,915 | 13,200 | 7,132,227 | | | 2022 | 450,000 | — | 3,105,282 | 2,565,982 | 230,400 | 12,200 | 6,363,864 | | | 2021 | 451,731 | — | 14,228,700 | 14,484,101 | 275,000 | 6,670 | 29,446,202 | | Rich Preece Chief Operating Officer(6) | 2023 | 438,462 | — | 3,555,838 | 2,478,300 | 277,464 | 11,785 | 6,761,849 | | | 2022 | 384,616 | — | 3,105,282 | 2,565,982 | 185,000 | 12,200 | 6,253,080 | | | 2021 | 301,154 | — | 6,517,233 | 24,378,652 | 300,000 | 6,577 | 31,503,616 | | Shrisha Radhakrishna Chief Technology Officer and Chief Product Officer | 2023 | 438,462 | — | 4,212,659 | 2,973,952 | 332,957 | 13,200 | 7,971,230 | | | 2022 | 400,000 | — | 3,105,282 | 2,565,982 | 255,600 | 12,200 | 6,339,064 | | | 2021 | 401,539 | — | 11,641,594 | 14,479,334 | 250,000 | — | 26,772,827 | | Nicole Miller | 2023 | 411,539 | — | 2,113,831 | 1,321,759 | 208,341 | — | 4,055,470 | | Chief Legal Officer and Secretary | 2022 | 400,000 | — | 1,600,259 | 1,603,731 | 144,000 | 1,231 | 3,749,221 |
Summary Compensation Table
| (1) Salary amounts represent actual amounts earned. See the section titled “Compensation Discussion and Analysis—Material Elements of Compensation—Annual Base Salary” above. |
Summary Compensation Table
| (2) Amounts reported represent the aggregate grant-date fair value of RSU and PSU awards granted to our named executive officers under our 2021 Plan and our 2016 Stock Incentive Plan (the “2016 Plan”), as applicable. For the grant date fair value of each equity award granted to a named executive officer in 2023, see the “Grants of Plan-Based Awards in 2023” table below. These amounts were computed in accordance with ASC 718, and the assumptions and methodologies used in calculating the grant-date fair value of these awards are set forth in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. PSUs are included in this column at their target value because target was determined to be the probable outcome for the applicable performance period at the time of grant of each award, consistent with the accounting treatment under GAAP. The maximum grant date value of the PSUs granted in 2023, assuming the highest level of performance achieved, is as follows: Mr. Wernikoff, $6,521,419; Mr. Watson, $2,445,525; Mr. Preece, $2,445,525; Mr. Radhakrishna, $2,853,117; Ms. Miller, $1,630,355. Amounts reported in 2021 also include the incremental fair value related to modifications of stock awards granted in prior years. See “2021 Equity Award Modifications” below. The grant-date fair values of the RSU awards granted in 2021, excluding any incremental fair value related to modifications of RSU awards granted in prior years, to Messrs. Wernikoff, Watson, Preece and Radhakrishna were $3,249,988, $1,244,992, $1,999,984 and $1,254,988, respectively. The amounts in this column do not reflect the actual economic value that may be realized by the named executive officer. |
Summary Compensation Table
| (3) The amounts in this column do not reflect the actual economic value that may be realized by the named executive officer. Amounts reported represent the aggregate grant-date fair value of stock option awards granted to our named executive officers under our 2021 Plan and our 2016 Plan, as applicable, computed in accordance with ASC 718. The assumptions and methodologies used in calculating the grant-date fair value of the stock options reported in this column are set forth in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. Amounts reported also include the incremental fair value related to modifications of stock option awards granted in prior years. See “2021 Equity Award Modifications” below. The grant-date fair values of the stock options granted in 2021, excluding any incremental fair value related to modifications of stock option awards granted in prior years, to Messrs. Wernikoff, Watson, Preece and Radhakrishna were $3,418,285, $1,309,465, $2,103,555 and $1,319,973, respectively. |
Summary Compensation Table
| (4) The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent the cash bonus amounts paid to our named executive officers for the years indicated pursuant to our annual bonus plan. |
Summary Compensation Table
| (5) Reflects the value of 401(k) contributions made by the Company. |
Summary Compensation Table
| (6) Mr. Preece ceased to serve as an executive officer of the Company as of March 31, 2024. |
Grants of Plan-Based Awards in 2023
Grants of Plan-Based Awards in 2023 The following table includes information regarding RSUs, PSUs and stock options granted to our named executive officers under our 2021 Plan during the year ended December 31, 2023:
Grants of Plan-Based Awards in 2023
| Name | Award Type | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/ Sh) | Grant Date Fair Value of Stock and Option Awards ($)(2) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Dan Wernikoff | RSU | 3/18/2023 | — | — | — | — | — | — | 550,795 | — | — | 4,621,170 | | | Option | 3/18/2023 | — | — | — | — | — | — | — | 1,376,987 | $8.39 | 5,947,916 | | | PSU | 3/28/2023 | — | — | — | 244,798 | 489,596 | 734,394 | — | — | — | 4,347,612 | | | Annual Incentive | — | — | $538,462 | — | — | — | — | — | — | — | — | | Noel Watson | RSU | 3/18/2023 | — | — | — | — | — | — | 244,798 | — | — | 2,053,855 | | | Option | 3/18/2023 | — | — | — | — | — | — | — | 611,995 | $8.39 | 2,643,522 | | | PSU | 3/28/2023 | — | — | — | 91,799 | 183,598 | 275,397 | — | — | — | 1,630,350 | | | Annual Incentive | — | — | $349,039 | — | — | — | — | — | — | — | — | | Rich Preece | RSU | 3/18/2023 | — | — | — | — | — | — | 229,498 | — | — | 1,925,488 | | | Option | 3/18/2023 | — | — | — | — | — | — | — | 573,745 | $8.39 | 2,478,300 | | | PSU | 3/28/2023 | — | — | — | 91,799 | 183,598 | 275,397 | — | — | — | 1,630,350 | | | Annual Incentive | — | — | $328,846 | — | — | — | — | — | — | — | — | | Shrisha Radhakrishna | RSU | 3/18/2023 | — | — | — | — | — | — | 275,397 | — | — | 2,310,581 | | | Option | 3/18/2023 | — | — | — | — | — | — | — | 688,492 | $8.39 | 2,973,952 | | | PSU | 3/28/2023 | — | — | — | 107,099 | 214,198 | 321,297 | — | — | — | 1,902,078 | | | Annual Incentive | — | — | $328,846 | — | — | — | — | — | — | — | — | | Nicole Miller | RSU | 3/18/2023 | — | — | — | — | — | — | 122,399 | — | — | 1,026,928 | | | Option | 3/18/2023 | — | — | — | — | — | — | — | 305,997 | $8.39 | 1,321,759 | | | PSU | 3/28/2023 | — | — | — | 61,199 | 122,399 | 183,599 | — | — | — | 1,086,903 | | | Annual Incentive | — | — | $205,769 | — | — | — | — | — | — | — | — |
Grants of Plan-Based Awards in 2023
| (1) Reflects the threshold, target, and maximum potential share payout levels for the PSUs discussed in the titled “Compensation Discussion and Analysis—Material Elements of Compensation—Performance Stock Units” above. Threshold payout for PSUs is 50% of target and requires achieving an established minimum performance requirement (there is no payout if performance doesn’t meet the threshold requirement). Maximum payout is 150% of target. |
Grants of Plan-Based Awards in 2023
| (2) Amounts reported represent the grant-date fair value of RSUs, PSUs and stock option awards granted to our named executive officers during 2023 computed in accordance with ASC 718. The assumptions and methodologies used in calculating the grant-date fair value of the RSU, PSU and stock option awards reported in this column are set forth in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. |
Grants of Plan-Based Awards in 2023
| 34 | 2024 PROXY STATEMENT LegalZoom.com, Inc. |
Outstanding Equity Awards as of December 31, 2023
Outstanding Equity Awards as of December 31, 2023 The following table reflects information regarding outstanding unvested equity held by our named executive officers as of December 31, 2023:
Outstanding Equity Awards as of December 31, 2023
| Name | Option Awards | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | Dan Wernikoff | 3,627,936 | — | 9.82(3) | 9/19/2029 | — | — | — | — | | | 3,627,936 | — | 9.82(3) | 9/19/2029 | — | — | — | — | | | 163,224 | 126,953(4) | 28.00 | 6/28/2031 | — | — | — | — | | | 339,673 | 436,724(5) | 14.15 | 3/26/2032 | — | — | — | — | | | — | 1,376,987(6) | 8.39 | 3/18/2033 | — | — | — | — | | | — | — | — | — | 50,782(4) | 573,837 | — | — | | | — | — | — | — | 174,690(5) | 1,973,997 | — | — | | | — | — | — | — | 550,795(6) | 6,223,984 | — | — | | | — | — | — | — | — | — | 489,596 | 5,532,435 | | Noel Watson | 588,721 | 175,026(7) | 9.82 | 11/18/2030 | — | — | — | — | | | 62,527 | 48,633(4) | 28.00 | 6/28/2031 | — | — | — | — | | | 169,836 | 218,361(5) | 14.15 | 3/26/2032 | — | — | — | — | | | — | 611,995(6) | 8.39 | 3/18/2033 | — | — | — | — | | | — | — | — | — | 127,292(8) | 1,438,400 | — | — | | | — | — | — | — | 19,453(4) | 219,819 | — | — | | | — | — | — | — | 87,345(5) | 986,999 | — | — | | | — | — | — | — | 54,006(9) | 610,268 | — | — | | | — | — | — | — | 244,798(6) | 2,766,217 | — | — | | | — | — | — | — | — | — | 183,598 | 2,074,657 | | Rich Preece | 943,140 | — | 9.82(3) | 1/6/2030 | — | — | — | — | | | 1,320,397 | — | 9.82(3) | 1/6/2030 | — | — | — | — | | | 100,445 | 78,125(4) | 28.00 | 6/28/2031 | — | — | — | — | | | 169,836 | 218,361(5) | 14.15 | 3/26/2032 | — | — | — | — | | | — | 573,745(6) | 8.39 | 3/18/2033 | — | — | — | — | | | — | — | — | — | 31,250(4) | 353,125 | — | — | | | — | — | — | — | 87,345(5) | 986,999 | — | — | | | — | — | — | — | 54,006(9) | 610,268 | — | — | | | — | — | — | — | 229,498(6) | 2,593,327 | — | — | | | — | — | — | — | — | — | 183,598 | 2,074,657 | | Shrisha Radhakrishna | 636,455 | 127,292(7) | 9.82(3) | 10/26/2030 | — | — | — | — | | | 63,029 | 49,023(4) | 28.00 | 6/28/2031 | — | — | — | — | | | 169,836 | 218,361(5) | 14.15 | 3/26/2032 | — | — | — | — | | | — | 688,492(6) | 8.39 | 3/18/2033 | — | — | — | — | | | — | — | — | — | 76,375(8) | 863,038 | — | — | | | — | — | — | — | 19,610(4) | 221,593 | — | — | | | — | — | — | — | 87,345(5) | 986,999 | — | — | | | — | — | — | — | 54,006(9) | 610,268 | — | — | | | — | — | — | — | 275,397(6) | 3,111,986 | — | — | | | — | — | — | — | — | — | 214,198 | 2,420,437 | | Nicole Miller | 334,139 | 47,735(10) | 9.82(3) | 9/23/2030 | — | — | — | — | | | 684,190 | 79,557(7) | 9.82(3) | 9/23/2030 | — | — | — | — | | | 75,333 | 58,594(4) | 28.00 | 6/28/2031 | — | — | — | — | | | 106,147 | 136,475(5) | 14.15 | 3/26/2032 | — | — | — | — | | | — | 305,997(6) | 8.39 | 3/18/2033 | — | — | — | — | | | — | — | — | — | 19,094(8) | 215,762 | — | — | | | — | — | — | — | 23,438(4) | 264,849 | — | — | | | — | — | — | — | 54,591(5) | 616,878 | — | — | | | — | — | — | — | 13,502(9) | 152,573 | — | — | | | — | — | — | — | 122,399(6) | 1,383,109 | — | — | | | — | — | — | — | — | — | 122,399(6) | 1,383,109 |
Outstanding Equity Awards as of December 31, 2023
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 35 |
Outstanding Equity Awards as of December 31, 2023
| (1) This amount reflects the fair market value of our common stock of $11.30 per share as of December 31, 2023. |
Outstanding Equity Awards as of December 31, 2023
| (2) This column reflects unearned PSUs granted to named executive officers in 2023 as discussed under “Compensation Discussion and Analysis—Material Elements of Compensation—Performance Stock Units” above and for which the performance achievement was not yet known at fiscal year-end. The PSUs will vest, if at all, upon completion of the 18-month performance period following the Compensation Committee’s certification of the performance goals. The share amount is reported at target payout level. |
Outstanding Equity Awards as of December 31, 2023
| (3) On September 23, 2020, this option award was repriced and the strike price was modified to the strike price consummate with the then-current per-share fair market value. |
Outstanding Equity Awards as of December 31, 2023
| (4) These stock options and RSUs vested as to 25% on August 15, 2022 and the remainder of the applicable award vests in 12 equal quarterly installments thereafter, in each case subject to continued service through each applicable vesting date. |
Outstanding Equity Awards as of December 31, 2023
| (5) These stock options and RSUs vested as to 25% on February 15, 2023 and the remainder of the applicable award vests in 12 equal quarterly installments thereafter, in each case subject to continued service through each applicable vesting date. |
Outstanding Equity Awards as of December 31, 2023
| (6) These stock options and RSUs vested as to 25% on February 15, 2024 and the remainder of the applicable award vests in 12 equal quarterly installments thereafter, in each case subject to continued service through each applicable vesting date. |
Outstanding Equity Awards as of December 31, 2023
| (7) 1/48th of the total shares of common stock underlying this option vest each month following the vesting commencement date subject to continued service through each applicable vesting date. The vesting commencement date for the option is November 15, 2020 for Mr. Watson, August 15, 2020 for Mr. Radhakrishna and May 15, 2020 for Ms. Miller. |
Outstanding Equity Awards as of December 31, 2023
| (8) These RSUs vested as to 25% on November 15, 2021 (for Mr. Watson) and 25% on August 15, 2021 (for Mr. Radhakrishna and Ms. Miller) and the remainder of the applicable award vests in 12 equal quarterly installments thereafter, in each case subject to continued service through each applicable vesting date. |
Outstanding Equity Awards as of December 31, 2023
| (9) These RSUs vested as to 25% on August 15, 2023 and the remainder of the award vests in 12 equal quarterly installments thereafter, in each case subject to continued service through each applicable vesting date. |
Outstanding Equity Awards as of December 31, 2023
| (10) 25% of the total shares of common stock underlying this option vested on June 15, 2021, and the remaining 75% vests in equal quarterly installments over the three years following such date, subject to continued service through each applicable vesting date. |
Option Exercises and Stock Vested in 2023
Option Exercises and Stock Vested in 2023 The following table shows the stock options that were exercised and RSUs that vested during the year ended December 31, 2023 for each of our named executive officers. The values shown below are before payment of any applicable withholding tax and/or broker commissions.
Option Exercises and Stock Vested in 2023
| | Option Awards | | Stock Awards | | | Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($)(1) | | Dan Wernikoff | — | — | 164,886 | 1,666,542 | | Noel Watson | — | — | 230,889 | 2,472,829 | | Rich Preece | — | — | 154,626 | 1,648,432 | | Shrisha Radhakrishna | — | — | 205,520 | 2,198,594 | | Nicole Miller | — | — | 100,174 | 1,055,384 |
Option Exercises and Stock Vested in 2023
| (1) The value realized on vesting is determined by multiplying the number of RSUs that vested by the per-share closing price of our common stock on the vesting date. The values reported do not represent the actual cash value realized by the named individual upon the vesting of shares to the extent such individual did not immediately sell the shares upon vesting. |
Potential Payments and Benefits Upon Termination or Change of Control
Potential Payments and Benefits Upon Termination or Change of Control Regardless of the manner in which a named executive officer’s employment with us terminates, the named executive officer is entitled to receive amounts earned during his or her term of service, including salary or other cash compensation and accrued unused vacation pay, if applicable. Our named executive officers are also eligible for the following severance benefits subject to their timely execution and non-revocation of a release of claims in our favor.
Potential Payments and Benefits Upon Termination or Change of Control
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 37 |
Benefits Payable Upon Termination or Change in Control Occurring on December 31, 2023
Benefits Payable Upon Termination or Change in Control Occurring on December 31, 2023 The following table provides information concerning the potential termination or change in control payments that would have been made to each named executive officer under the circumstances described above. As prescribed by the SEC’s disclosure rules, in calculating the amount of any potential payments to the named executive officers, we have assumed that the applicable triggering event (i.e., termination of employment and/or change in control) occurred on December 31, 2023. In the following table, we use the term “qualifying termination” to refer to termination by us without cause or by the executive for good reason.
Benefits Payable Upon Termination or Change in Control Occurring on December 31, 2023
| | Cash Severance ($) | Equity Acceleration Value ($)(1) | Health Benefits ($) | Total ($) | | Dan Wernikoff | | | | | | Qualifying Termination(2) | 1,100,000 | — | 34,260 | 1,134,260 | | Qualifying Termination in Connection with Change in Control(3) | 1,650,000 | 12,778,849 | 51,391 | 14,480,240 | | Death or Disability | — | 12,778,849 | — | 12,778,849 | | Noel Watson | | | | | | Qualifying Termination(2) | 470,000 | 259,038 | 34,101 | 763,139 | | Qualifying Termination in Connection with Change in Control(3) | 822,500 | 6,623,247 | 51,152 | 7,496,899 | | Death or Disability | — | 6,623,247 | — | 6,623,247 | | Rich Preece | | | | | | Qualifying Termination(2) | 450,000 | — | 32,479 | 482,479 | | Qualifying Termination in Connection with Change in Control(3) | 787,500 | 6,213,317 | 48,718 | 7,049,535 | | Death or Disability | — | 6,213,317 | — | 6,213,317 | | Shrisha Radhakrishna | | | | | | Qualifying Termination(2) | 450,000 | 188,392 | 34,260 | 672,652 | | Qualifying Termination in Connection with Change in Control(3) | 787,500 | 7,122,749 | 51,391 | 7,961,640 | | Death or Disability | — | 7,122,749 | — | 7,122,749 | | Nicole Miller | | | | | | Qualifying Termination(2) | 415,000 | 188,392 | — | 603,392 | | Qualifying Termination in Connection with Change in Control(3) | 615,000 | 3,496,252 | — | 4,111,252 | | Death or Disability | — | 3,496,252 | — | 3,496,252 |
Benefits Payable Upon Termination or Change in Control Occurring on December 31, 2023
| (1) The equity acceleration value for each named executive officer is based upon the closing price of our common stock of $11.30 on December 29, 2023, which was the last trading day in 2023. For RSUs, the amounts included in equity acceleration value were determined by multiplying $11.30 by the number of unvested RSUs that would accelerate. For options, the amounts included in equity acceleration value were based on the difference between $11.30 and the exercise price of such options (or zero if the difference is negative) multiplied by the number of unvested stock options that would accelerate. |
Benefits Payable Upon Termination or Change in Control Occurring on December 31, 2023
| (2) For Mr. Wernikoff, represents 12 months of base salary plus Mr. Wernikoff’s annual incentive bonus for 2023 assuming performance at the target level ($550,000). For Messrs. Watson, Preece and Radhakrishna and Ms. Miller, represents 12 months of base salary. |
Benefits Payable Upon Termination or Change in Control Occurring on December 31, 2023
| (3) For Mr. Wernikoff, represents 18 months of base salary plus 150% of Mr. Wernikoff’s annual incentive bonus for 2023 assuming performance at the target level ($550,000). For Messrs. Watson, Preece and Radhakrishna and Ms. Miller represents 12 months of base salary plus the annual incentive bonus for 2023 assuming performance at the target level ($352,500 for Mr. Watson, $337,500 for Mr. Preece and Mr. Radhakrishna and $207,500 for Ms. Miller). |
Benefits Payable Upon Termination or Change in Control Occurring on December 31, 2023
| LegalZoom.com, Inc. 2024 PROXY STATEMENT | 39 |
CEO Pay Ratio
CEO Pay Ratio Our CEO to median employee pay ratio for 2023 is 163:1. The total 2023 compensation of our CEO was $15,952,976. The total 2023 compensation of our median employee was $97,799. In selecting the median employee under SEC rules, reporting companies are permitted to use reasonable estimates, assumptions, and methodologies based on their own facts and circumstances. As a result, the disclosure regarding the compensation of our median employee and our CEO to median employee pay ratio may not be directly comparable to similar disclosure by other reporting companies.
Methodology Used to Identify Median Employee
| Year | Summary Compensation Table Total for PEO ($) (1) | Compensation Actually Paid to PEO ($) (2) | Average Summary Compensation Table Total For Non-PEO Named Executive Officers ($) (1) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($) (2) | Value of Initial Fixed $100 Investment Based On: | | Net Income (Loss) ($) (4) | CEBITDA ($) (5) | | | | | | | Total Shareholder Return ($) (3) | Peer Group Total Shareholder Return ($) (3) | | | | 2023 | 15,952,976 | 20,239,579 | 6,480,194 | 8,875,106 | 29.85 | 71.27 | 13,953,160 | 122,040,629 | | 2022 | 10,398,594 | (10,419,083) | 5,676,307 | (2,068,778) | 20.45 | 44.15 | (48,733,016) | 80,878,805 | | 2021 | 18,860,829(6) | 34,286,052 | 30,474,909(6) | 9,876,874 | 42.46 | 84.20 | (108,663,739) | 65,544,984 |
Methodology Used to Identify Median Employee
| (2) The following table reflects the adjustments used to calculate compensation actually paid from the summary compensation table amounts for 2023. The summary compensation table amounts and the compensation actually paid amounts do not reflect the actual amount of compensation earned by or paid to our executive officers during the applicable year, but rather are amounts determined in accordance with Item 402 of Regulation S-K under the Exchange Act. For information regarding the decisions made by our Compensation Committee in regards to our executive officers’ compensation for 2023, see the “ Compensation Discussion and Analysis ” section above. |