DEF 14A of Goosehead Insurance, Inc.
Filed Mar 28, 2024 · FY20230001726978-24-000036
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS As set forth above, our certificate of incorporation provides that our Board of Directors be divided into three classes, as nearly equal in number as possible, designated Class I, Class II, and Class III. Directors are nominated for re-election for staggered three-year terms according to class designation. At each annual meeting of shareholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting of shareholders following election. The Board of Directors previously designated Mark K. Miller and James Reid as Class I Directors; Robyn Jones and Thomas McConnon as Class II Directors; and Mark E. Jones, Waded Cruzado, and Peter Lane as Class III Directors. The Class I Directors were elected at the 2022 annual meeting of shareholder to serve until the 2025 annual meeting of shareholders, the Class II Directors were elected at the 2023 annual meeting of shareholders to serve until the 2026 annual meeting of shareholders, and the Class III Directors were appointed to serve until the Annual Meeting. As the Class III Directors' term expires at the Annual Meeting, the Board of Directors recommends the election of Mark E. Jones, Waded Cruzado, and Peter Lane as Class III directors for a term ending at the annual meeting of shareholders to be held in 2027. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the Class III Director nominees at the Annual Meeting. If any nominee should be unavailable for election as a result of an unexpected occurrence, those shares will be voted for the election of such substitute nominees as the Board of Directors may propose. Each person nominated for election has agreed to serve if elected, and management has no reason to believe that any nominee will be unable to serve. Directors are elected by a plurality of the votes of the shares cast at the meeting (excluding “Withheld” and broker non-votes, which will not affect the outcome of the vote). The following table sets forth information with respect to each director’s position and office held with the Company and each director’s age as of March 27, 2024:
ELECTION OF DIRECTORS
| Name | Age | Position/Office Held with the Company | Director Since | | Mark E. Jones(1)(2) | 62 | Chairman, Director and Chief Executive Officer | 2018 | | Robyn Jones(3) | 61 | Vice Chairman, Director | 2018 | | Mark K. Miller(2)(4) | 59 | President and Chief Operating Officer, Director | 2018 | | Peter Lane(1)(5)(6)(7) | 59 | Director | 2018 | | James Reid(4)(5)(6)(7) | 61 | Director | 2018 | | Thomas McConnon(3)(5) | 49 | Director | 2022 | | Waded Cruzado(1)(6)(7) | 64 | Director | 2022 |
ELECTION OF DIRECTORS
(1) Member of Class III of the Board of Directors nominated for election at the Annual Meeting to serve until the 2027 annual meeting of shareholders. (2) Effective July 1, 2024, Mark E. Jones will step down from his position as the Company's CEO and assume the position of Executive Chairman. Mr. Jones will be succeeded as CEO by Mark K. Miller. See "Additional Corporate Governance Matters — Management Succession Planning and CEO Transition" above. (3) Member of Class II of the Board of Directors elected to serve until the 2026 annual meeting of shareholders. (4) Member of Class I of the Board of Directors elected to serve until the 2025 annual meeting of shareholders. (5) Member of the Audit Committee. (6) Member of the Compensation Committee. (7) Member of Nominating and Governance Committee.
Board of Directors Qualifications and Experience
Board of Directors Qualifications and Experience Set forth below is biographical information for the nominees and each person whose term of office as a director will continue after the Annual Meeting. The following includes certain information regarding our directors’ individual experience, qualifications, attributes, and skills that led the Board of Directors to conclude that they should serve as directors and, with respect to Class III Directors, that they should be elected at the Annual Meeting.
Class III Directors
Class III Directors Mark E. Jones has served as CEO since co-founding the Company in 2003 and Chairman of the Board of Directors since the Board of Directors was established. As discussed above, starting July 1, 2024, Mr. Jones will serve as Goosehead's Executive Chairman. Mr. Jones has led the strategic development and execution of all aspects of our business since inception. Prior to leading Goosehead, he worked at the global consulting firm Bain & Company from 1991 to 2004, most recently as a senior partner and director. Mr. Jones began his professional career at Ernst & Young in Calgary, Canada from 1985 to 1989. He earned a Bachelor of Commerce degree from the University of Alberta and an MBA from Harvard Business School. Mr. Jones was selected to our Board of Directors because of his role as a co-founder of the Company, the Jones family’s position as our largest shareholder, and because of his expertise in strategy development and execution, leadership, and finance. Peter Lane has served as a member of our Board of Directors since March 2018. Mr. Lane previously served as chief executive officer of Axip Energy Services LP, formerly known as Valerus, an oilfield services company headquartered in Houston, Texas, from 2010 to 2016. Prior to joining Axip, Mr. Lane was an operating partner with TPG Global, LLC from 2009 to 2011. Before TPG, Mr. Lane spent 12 years at Bain & Company, where he led the Dallas and Mexico City offices as well as the oil and gas practice. He became a partner at Bain in 2003. Mr. Lane has served on the boards of Taylor Morrison Homes since 2012, The Bayou Companies since 2018 (where he is Executive Chairman) and has been a senior advisor to Altamont Capital Partners since 2017. Mr. Lane holds a BS in physics from the University of Birmingham in the United Kingdom and an MBA from the Wharton School. Mr. Lane was selected to our Board of Directors because of his extensive experience in business operations, finance, and corporate governance. Waded Cruzado has served as a member of our Board of Directors since February 2022. Ms. Cruzado has served as President of Montana State University since 2010, during which Montana State University set new student enrollment records and became the fastest growing and the largest university in the state. President Cruzado was honored as the 2011 Michael P. Malone Educator of the Year from the Montana Ambassadors for demonstrating outstanding accomplishment, excellence, and leadership in the field of education. In 2012, President Barack Obama appointed President Cruzado to the Board for International Food and Agricultural Development. She was reappointed in 2017 and served on the board until 2020. In 2013, President Cruzado began serving on Montana’s Gov. Steve Bullock’s Equal Pay for Equal Work Task Force. Ms. Cruzado currently serves on several educational boards and was a former member of the Board of Directors of PayneWest Insurance before it was acquired by Marsh & McLennan Agency in April 2021. Ms. Cruzado holds a bachelor’s degree from the University of Puerto Rico and masters and doctoral degrees from the University of Texas at Arlington. Ms. Cruzado was selected to our Board of Directors because of her extensive board experience and for her extensive experience in leadership and strategy.
Class II Directors
Class II Directors Robyn Jones is the co-founder of Goosehead and has served as a director and Vice Chairman of the Board of Directors since March 2018. Prior to her retirement in 2020, Ms. Jones managed our physical facilities, was actively involved in our recruiting program and led our Women’s Initiative Network (previously the Women's Professional Development Program). She was selected to our Board of Directors because of her role in founding the Company, the Jones family’s position as our largest shareholder and her unique role in establishing and fostering our company culture. Thomas McConnon has served as a member of our Board of Directors since February 2022. Mr. McConnon is Managing Director — Head of Public Equities and Chief Economist at Wildcat Capital Management, LLC ("Wildcat"). At Wildcat, which he joined in October 2018, Mr. McConnon leads the firm’s public equities investment team. Before Wildcat, Mr. McConnon was a founding investment partner at Indaba Capital Management, from 2010 to 2018. Prior to Indaba, Mr. McConnon was a principal at TPG Capital from 2004 to 2010, where he focused on large-scale private equity investing and sat on the boards of Sabre Holdings and Creative Artists Agency (CAA), and was an advisor to the board of Mammoth Mountain Ski Area. Before that, Mr. McConnon worked at Bain Capital and The Boston Consulting Group (BCG). Mr. McConnon holds an AB magna cum laude from Harvard University and an MBA from Stanford University where he was an Arjay Miller Scholar. Mr. McConnon was selected to our Board of Directors because he brings extensive experience in finance, business operations, and accounting.
Class I Directors
Class I Directors Mark K. Miller was appointed as President and Chief Operating Officer ("COO") of the Company in May 2022, and has served as a member of our Board of Directors since March 2018. Starting July 1, 2024, Mr. Miller will serve as Goosehead's CEO. Prior to joining Goosehead, Mr. Miller has worked for some of the largest private equity firms in the world helping drive large scale financial and operational transformations and served as the chief financial officer of Pluralsight, Inc. (a Vista Equity Partners company) from June 2021 until appointed President and COO of the Company in May 2022. Prior to Pluralsight, Mr. Miller was the chief financial officer for three other Vista Equity Partners portfolio companies: Finastra (London, UK), Marketo (San Mateo, CA), and Active Network (Dallas, TX). At Finastra, Mr. Miller led the company’s finance, accounting, and tax departments, as well as the company’s procurement and facilities functions from June 2018 to June 2019. Prior to Finastra, Mr. Miller was the chief financial officer of Marketo. He joined Marketo in April 2017 after the company was taken private by Vista Equity Partners. Mr. Miller resigned from Marketo in April 2019 after successfully selling the company to Adobe for $4.75 billion in October 2018. Prior to Marketo, Mr. Miller was the chief financial officer of Active Network from 2014 to 2016 and the chief financial officer of L.H.P. Hospital Group from 2013 to 2014. Mr. Miller spent 18 years with Sabre Holdings where he held multiple operating and finance positions and was instrumental in the company’s IPO and its subsequent $5 billion privatization transaction. He was Sabre’s chief financial officer from 2010 to 2013. Early in his career, Mr. Miller worked for Ernst and Young, LTV Corporation, and Hertz Corporation. Mr. Miller has an Accounting degree from Texas Tech University and an MBA in Finance from Rice University. He is a licensed Certified Public Accountant in the state of Texas. Mr. Miller was selected to our Board of Directors because he brings extensive experience in business operations, finance, and accounting. James Reid has served as a member of our Board of Directors since March 2018. Mr. Reid was named president and Chief Executive Officer of Higginbotham in 1989 at the age of 27. At that time, he implemented the firm’s defining “single source” service model whereby customers can obtain all their insurance and financial services under one roof. He also had the foresight to establish Higginbotham’s employee ownership structure, aligning all employees’ interests in the success of the firm. Under Mr. Reid’s leadership, Higginbotham has grown to become the nation’s 21st largest independent insurance brokerage firm and Texas’s largest—one with full property/casualty, financial and HR service capabilities through offices coast to coast. After receiving a bachelor's degree in business administration/insurance from the University of North Texas, Mr. Reid began his insurance carrier in 1983 as an assistant to the principals of Ramey, King, & Minnis Insurance Agency. He moved on to American General Fire & Casualty Company as a territorial marketing manager before joining Higginbotham as its 12th employee in 1986. Mr. Reid was selected to our Board of Directors because of his extensive experience in business operations and in the insurance industry.
Compensation Philosophy and Objectives
Compensation Philosophy and Objectives At Goosehead, our overarching executive compensation philosophy is to incentivize creating and sustaining long-term value for all stakeholders, including shareholders, business partners, and employees, through a compensation program designed to attract, motivate, reward, and retain the management talent required to achieve our corporate objectives. The compensation of our NEOs is designed by the Compensation Committee to reward financial and operating performance and encourage long-term, consistent leadership at Goosehead by linking compensation with both short-term and long-term financial and operating performance, such that executive compensation varies depending on the Company's performance as a whole and each individual NEO's contributions to that performance. As discussed in more detail below, both Mr. Miller, who will be our CEO starting July 1, 2024, and Mr. Jones, Jr., our CFO, have 50% of their potential bonus payment tied to the Company achieving specific financial metrics. Mr. Jones, our CEO, has historically not received a bonus. A large portion of executive compensation is provided through awards of long-term equity incentives, in the form of stock options, designed to further align our NEO's interests with those of our shareholders. These NEO equity awards are priced at a 10% premium over market price of our Class A common stock on the grant date and vest ratably over a three-year period (i.e., one-third of the shares vest on each of the one-year, two-year, and three-year anniversaries of the grant date), such that the awards only provide value to our NEOs if our stock appreciates at least 10% in value and retains that appreciated value over the vesting schedule, and are subject to the NEO's continued employment with the Company. We believe that our executive compensation program, as described more fully herein, promotes Goosehead's continued success and increases our overall value.
Elements of Executive Compensation
Elements of Executive Compensation We have three key elements of executive compensation: long-term equity incentives in the form of incrementally vesting stock options, market driven annual base salary, and annual bonuses. Long-term equity incentives are structured to align the interests of our NEOs with those of our shareholders by directly linking compensation to stock price appreciation and to retain key members of our management team. Goosehead stock must appreciate at least 10% and the NEO must remain with the Company during the vesting period to realize any value from the award. Annual base salary is designed to attract and retain talented executive officers and reward them for annual achievements and is awarded in consideration of market standards. Annual bonuses are intended to motivate our NEOs to achieve superior performance on a near-term basis and in part require the achievement of specific financial metrics. Long-Term Equity Incentives Aligning executive compensation with long-term shareholder value creation is the central pillar of our compensation model. Our Omnibus Incentive Plan (as amended and restated in 2019, the “Omnibus Plan”), described in more detail below, provides our Compensation Committee with various equity-related mechanisms to motivate our NEOs to perform at the highest level, contribute significantly to the success of Goosehead, and to reward them for that success, including through grants of stock options, stock appreciation rights, restricted stock, RSUs, and other stock-based awards. Our Compensation Committee affirmatively determined that long-term equity awards, in the form of stock options, are the best tool to motivate our NEOs to achieve and sustain peak performance and contribute significantly to our long-term success, thereby furthering the best interests of our shareholders. As such, the Compensation Committee provides our NEOs with stock option awards every year pursuant to our Equity Award Grant Policy. To further align our NEO's interests with those of our shareholders, these stock option awards vest ratably over a three-year period, subject to the NEO's continued service with Goosehead. Of note, the Compensation Committee imposes an exercise price for price of stock options granted to our NEOs that is at a 10% premium over the market price of our Class A common stock on the date of the grant. Accordingly, our NEOs will realize no value in their option awards if our stock does not appreciate in value by at least 10% and remain appreciated over the three-year vesting period. Moreover, the value received by our NEOs pursuant to these equity awards directly increases in tandem with the value realized by our shareholders. The Compensation Committee believes that granting annual stock option awards in this manner not only aligns the interests of our NEOs with those of our shareholders, but also rewards sustained performance and promotes retention of our key members of management. See below "Compensation Discussion and Analysis — Equity Compensation Plans and Policies" for more information on how our Compensation Committee determines long-term equity incentives for our NEOs. Annual Base Salary Base salaries play the crucial role of attracting and retaining the management talent necessary to operate our business successfully. A competitive annual base salary is an important component of executive compensation, as it provides an incentive to deliver results on behalf of our shareholders and to remain committed to the long-term success of Goosehead. Individual annual base salary amounts for our NEOs are not determined by a formula, but instead reflect the Compensation Committee's recommendation after considering the factors listed above, including the NEO's scope of duties and responsibilities, track record of performance both short-term and long-term performance, and consideration of the appropriate market salary levels. Annual Bonuses The bonus structure for our President and COO and our CFO is structured such that half or more of their annual cash bonus potential is contingent on the Company meeting minimum Core Revenue and Adjusted EBITDA targets: 25% is based on Goosehead’s budgeted Core Revenue and 25% is based on meeting Goosehead’s budgeted Adjusted EBITDA. The Company believes that Core Revenue is a key metric to evaluate NEO performance, as it is the most predictable revenue stream for Goosehead and is the portion of revenue most within management's control. The remaining 50% of these officers’ annual cash bonus potential remains fully discretionary based on accomplishing strategic priorities identified by the Compensation Committee and the Board of Directors, including the retention of key employees, improving sales productivity, the achievement of budgeted headcount and producer numbers, effectively managing organizational cost structure, and achievement of other various strategic initiatives. Historically, our CEO has not received an annual bonus. Starting July 1, 2024, our CEO will also be subject to this metric-bonus structure. This bonus structure allows our Compensation Committee to award performance-based bonuses annually to our NEOs based on each officer's individual contributions to Goosehead's strategic initiatives and operational success during the year. These bonuses are designed to motivate our NEOs to achieve results that exceed management's expectations and provide long-term value to Goosehead's shareholders.
Equity Compensation Plans and Policies
Equity Compensation Plans and Policies Goosehead Insurance, Inc. Amended and Restated Omnibus Incentive Plan In 2018, in connection with our initial public offering ("IPO"), we adopted, and obtained shareholder approval for, the Company’s Omnibus Plan. The purpose of the Omnibus Plan is to motivate and reward employees, including our NEOs, and directors to perform at the highest level and contribute significantly to our success, thereby furthering the best interests of our shareholders. Because equity awards align our NEOs' and directors' interests with those of our shareholders, we anticipate that we will continue to use equity awards, in the form of incrementally vesting stock options, as an integral part of our executive compensation program. Equity Award Grant Policy Our Compensation Committee administers our Omnibus Plan pursuant to our Equity Award Grant Policy. Our Equity Award Grant Policy permits that only the Compensation Committee may approve on-cycle grants of stock-based awards to directors, NEOs, and other officers of the Company for purposes of Section 16 of the Exchange Act. The Committee may delegate authority to the CEO to grant stock-based awards to non-executive officers, off-cycle awards, and awards to newly hired or promoted employees under the policy. As an important measure to ensure the integrity of the award granting process, the Equity Award Grant Policy further provides that the Compensation Committee determine fixed grant dates in advance, such that all terms and conditions of each stock-based award shall be approved on or prior to the grant date. If special circumstances warrant, and subject to black-out periods and other trading restrictions, the Compensation Committee may also grant off-cycle awards outside of this schedule to select individuals. Goosehead Insurance, Inc. Employee Stock Purchase Plan In 2018, in connection with our IPO, we adopted, and received shareholder approval for, the Company’s Employee Stock Purchase Plan (the “ESPP”). The ESPP permits participating employees to purchase shares of our common stock through payroll deductions in an amount equal to at least 1%, but not more than 5%, of the employee’s compensation. The purchase price of the shares of our common stock will be not less than 95% (or such greater percentage as designated by our Board of Directors, or a committee designated by our Board of Directors) of the fair market value of our common stock on the date of purchase. Our NEOs are not permitted to participate in our ESPP. Equity Compensation Plan Information The following table sets forth information as of December 31, 2023, with respect to Company's Omnibus Plan and ESPP, both of which received shareholder approval and are the only compensation plans under which equity securities of the Company are authorized for issuance.
Equity Compensation Plans and Policies
| Plan Category | Number of Class A Voting Shares to be Issued Upon Exercise of Outstanding Options(1)(2) | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Outstanding Options)(3) | | Equity compensation plans approved by shareholders | 2,946,293 | $61.87 | 18,304 | | Equity compensation plans not approved by shareholders | — | — | — | | Total | 2,946,293 | $61.87 | 18,304 |
Equity Compensation Plans and Policies
(1) Reflects shares subject to outstanding and unexercised options granted under the Omnibus Plan. (2) The number of shares that may be issued under the ESPP and the weighted-average exercise price of such shares, are uncertain and consequently not reflected. The number of shares to be purchased will depend on the number of employees participating in our ESPP, their respective salaries and the market price of the Company's Class A voting shares when scheduled purchases are made. (3) Represents only those Class A voting shares available for future purchases under the ESPP.
Executive Compensation in 2023
Executive Compensation in 2023 The following provides additional details around the 2023 compensation of our NEOs during our fiscal year ended December 31, 2023, which included a total of the five individuals listed below, as our Chief Legal Officer ("CLO") resigned during 2023 and was succeeded by our General Counsel and Corporate Secretary. See below "Related Person Transactions — Special Advisor Agreement" for additional detail on Mr. P. Ryan Langston's resignation as CLO and subsequent appointment as Special Advisor to the Board of Directors. •Mark E. Jones — Chairman, Director, and CEO •Mark K. Miller — President, COO, and Director •Mark E. Jones, Jr. — CFO •John T. O'Connor — General Counsel and Corporate Secretary (succeeding P. Ryan Langston) •P. Ryan Langston — former CLO and Corporate Secretary The Compensation Committee determined base salaries, bonuses, and long-term equity incentives for each of our NEOs after considering the following factors: •scope and responsibility of the NEO’s position; •achievement of Goosehead’s strategic and operational business goals; •performance, experience, knowledge, skills, and personal contributions of each NEO; •Goosehead's performance and growth, including performance of key financial measurements; •comparative compensation data from market data; •long-term potential to maintain and enhance value for our shareholders; and •recommendations from the CEO for the other NEOs based in part on each of the aforementioned factors. Base Salary In 2023, our CEO, President and COO, CFO, and CLO received salary increases due to expansion in Goosehead’s Adjusted EBITDA margin in 2023. Adjusted EBITDA margin is a non-GAAP financial measure. See the section entitled "Item 7. Management's discussion and analysis of financial condition and results of operations" in our Annual Report for a discussion of this financial measure. The specific salary dynamics for the NEOs were as follows: •CEO Mark E. Jones: an 11% increase to reflect his commitment to executive leadership and Goosehead’s growth and strategic direction. •President and COO Mark K. Miller: a 10% increase to reflect his executive leadership and management of Goosehead’s operations, including sales, franchise sales, service, back office, and recruiting. •CFO Mark E. Jones, Jr.: a 23% increase to reflect his leadership and contribution toward Goosehead’s growth, oversight and continued buildout of Goosehead’s finance, investor relations, and internal audit departments, and the achievement of individual and collective strategic and operational business goals. •General Counsel John T. O'Connor: a starting salary of a $346,500 to reflect his proven track record of managing legal operations and the scaling and efficiency of Goosehead's legal, corporate compliance, and human capital departments, the effective management of all material risks to Goosehead, and the achievement of individual and collective strategic and operational business goals. •Former CLO P. Ryan Langston: a 10% increase to reflect his leadership and contribution toward Goosehead’s legal operations as CLO. Annual Bonus •CEO Mark E. Jones: Mr. Jones has not historically received a bonus and did not receive a bonus for his service in 2023. •President and COO Mark K. Miller: Mr. Miller received a bonus of $618,719 to reflect individual contributions to Goosehead’s operational success and accomplishment of its strategic initiatives during the prior year and to motivate Mr. Miller to continue to achieve results that exceed management's expectations and provide long term value to Goosehead’s shareholders. Approximately 50% of Mr. Miller's bonus was earned as a result of Goosehead reaching predetermined Adjusted EBITDA and Core Revenue targets. •CFO Mark E. Jones, Jr.: Mr. Jones received a bonus of $196,865 to reflect individual contributions to Goosehead’s strategic initiatives during the prior year related to finance, capital markets, internal audit, and corporate partnerships and to motivate Mr. Jones to continue to achieve results that exceed management's expectations and provide long term value to Goosehead's shareholders. Approximately 50% of Mr. Jones's bonus was earned as a result of Goosehead reaching predetermined Adjusted EBITDA and Core Revenue targets. •General Counsel John T. O'Connor: Mr. O'Connor received a discretionary bonus of $50,000 to reflect individual contributions to Goosehead’s legal, compliance, and human capital departments, and accomplishment of Goosehead’s strategic initiatives during the prior year and to motivate Mr. O'Connor to continue to achieve results that exceed management's expectations and provide long term value to Goosehead's shareholders. •Former CLO P. Ryan Langston received a discretionary bonus of $93,333 to reflect individual contributions to legal operations while serving as Goosehead’s CLO during 2023. Long-Term Equity Incentives Each NEO was awarded incrementally vesting stock options based on the individual NEO’s scope of responsibilities and to encourage such NEO to perform at the highest level and contribute significantly to the long-term success of Goosehead, thereby furthering the best interests of our shareholders. The following awards were made to our NEOs in 2023 pursuant to the Equity Award Grant Policy: •Mark E. Jones: 200,000 stock options. •Mark K. Miller: 40,000 stock options. •Mark E. Jones, Jr.: 35,000 stock options. •John T. O'Connor: 20,000 stock options, granted prior to becoming an NEO. •P. Ryan Langston: 15,000 stock options, granted after ceasing to be an NEO. For each of Mark E. Jones, Mark K. Miller, and Mark E. Jones, Jr., the awards were granted with a 10% premium strike price over the market price of our Class A common stock on the grant date. John T. O'Connor, in relation to his performance as General Counsel of the Company and prior to succeeding P. Ryan Langston and becoming an NEO, and P. Ryan Langston, in connection with his role as Special Advisor to Goosehead's Board of Directors and not as an NEO, each received awards granted at fair market value. For purposes of this Proxy Statement, we value our NEO stock option awards based on the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”). The values set forth in the tables below reflect our accounting for these stock options awards and do not necessarily correspond to the actual values that may be realized by our NEOs, as actual value realized is dependent on factors such as continued service through the applicable vesting periods and the stock price at the time of exercise. The assumptions used in the valuation of these options are set forth in Note 13 to our financial statements, which are included in our Annual Report for the year ended December 31, 2023.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table sets forth information concerning the compensation paid to or earned by our NEOs during our fiscal year ended December 31, 2023. All numbers are rounded to the nearest dollar.
2023 Summary Compensation Table
| Name and Principal position | Year | Salary ($) | Bonus ($)(1) | Option Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | | Mark E. Jones, Chief Executive Officer and Chairman | | | | | | | | | 2023 | 2,100,000 | — | 3,514,000 | 16,110 | 5,630,110 | | | 2022 | 1,900,000 | — | 7,858,500 | 15,174 | 9,773,674 | | | 2021 | 1,900,000 | — | — | 14,140 | 1,914,440 | | Mark K. Miller, President and Chief Operating Officer(4) | | | | | | | | | 2023 | 550,000 | 618,719 | 702,800 | 6,646 | 1,878,165 | | | 2022 | 276,515 | 291,667 | 4,429,800 | 6,500 | 5,004,482 | | | 2021 | — | — | — | — | — | | Mark E. Jones, Jr., Chief Financial Officer(5) | | | | | | | | | 2023 | 325,000 | 196,865 | 614,950 | 16,546 | 1,153,361 | | | 2022 | 234,153 | 85,217 | 3,745,915 | 15,029 | 4,080,314 | | | 2021 | — | — | — | — | — | | John T. O'Connor, General Counsel and Corporate Secretary(6) | | | | | | | | | 2023 | 346,500 | 50,000 | 368,800 | 10,046 | 775,346 | | | 2022 | — | — | — | — | — | | | 2021 | — | — | — | — | — | | P. Ryan Langston, former Chief Legal Officer and Corporate Secretary(7) | | | | | | | | | 2023 | 201,515 | 93,333 | 412,200 | 9,973 | 717,022 | | | 2022 | 430,000 | 200,000 | 2,619,500 | 15,399 | 3,264,899 | | | 2021 | 370,000 | 130,020 | — | 13,700 | 513,720 |
2023 Summary Compensation Table
(1) The amounts shown for 2023 reflect bonuses paid for services completed in 2023, the amounts shown for 2022 reflect bonuses paid for services completed in 2022, and the amounts shown for 2021 reflect bonuses paid for services completed in 2021. (2) The amounts shown in this column reflect the aggregate grant date fair value of options granted under the Omnibus Plan to purchase our common stock, computed in accordance with FASB ASC Topic 718. Any estimated forfeitures are excluded from the values reported in this table. The assumptions used in the valuation of these options are set forth in Note 13 to our financial statements, which are included in our Annual Report for the year ended December 31, 2023. (3) For 2023, the amounts shown include (i) 401(k) Plan matching contributions for Mark E. Jones ($9,900), Mark E. Jones, Jr. ($9,900), John T. O'Connor ($9,900) and P. Ryan Langston ($9,900) by the plan sponsor, Texas Wasatch Insurance Services, L.P., (ii) healthcare benefits for Mark E. Jones ($6,064), Mark K. Miller ($6,500), and Mark E. Jones, Jr. ($6,500), and (iii) long-term disability benefits of $146 for each of Mark E. Jones, Mark E. Jones, Jr., and John T. O'Connor, and $73 for P. Ryan Langston. (4) Mark K. Miller was not an NEO for 2021. Accordingly, this table excludes his 2021 compensation information. (5) Mark E. Jones, Jr. was not an NEO for 2021. Accordingly, this table excludes his 2021 compensation information. (6) John T. O'Connor was not an NEO for 2021 and 2022. Accordingly, this table excludes his 2021 and 2022 compensation information. (7) P. Ryan Langston resigned as an NEO effective June 2, 2023 and is no longer employed by the Company but was appointed by the Board of Directors as Special Advisor to the Board of Directors. The option award included for Mr. Langston in 2023 reflects his award by the Compensation Committee in connection with his role as Special Advisor to the Board of Directors and not as an NEO.
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following plan-based awards were made to our NEOs during the fiscal year ended December 31, 2023.
2023 Grants of Plan-Based Awards
| Name | Grant Date | All Other Stock Option Awards: Number of Securities Underlying Options (#)(1) | Exercise Price of Stock Option Awards ($)(2) | Grant Date Fair Value of Stock Option Awards ($)(3) | | Mark E. Jones | 1/3/2023 | 200,000 | 38.78 | $3,514,000 | | Mark K. Miller | 1/3/2023 | 40,000 | 38.78 | $702,800 | | Mark E. Jones, Jr. | 1/3/2023 | 35,000 | 38.78 | $614,950 | | John T. O'Connor(4) | 1/3/2023 | 20,000 | 35.25 | $368,800 | | P. Ryan Langston(5) | 5/2/2023 | 15,000 | 58.00 | $412,200 |
2023 Grants of Plan-Based Awards
(1) The amounts in this column reflect the number of stock options granted, as discussed in “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Equity Incentives.” (2) The exercise price for the stock options was set based on the closing price of underlying Class A common stock on the date of the grant. The exercise price of stock options granted to our NEOs, other than the stock options granted to John T. O'Connor and P. Ryan Langston were granted at a 10% premium over the market price of our Class A common stock on the date of the grant. John T. O'Connor and P. Ryan Langston received stock options granted at fair market value as of the date of the grant (see footnotes 4 and 5, respectively). (3) The amounts shown in this column reflect the aggregate grant date fair value of options granted under the Omnibus Plan to purchase our common stock, computed in accordance with FASB ASC Topic 718. Any estimated forfeitures are excluded from the values reported in this table. The assumptions used in the valuation of these options are set forth in Note 13 to our financial statements, which are included in our Annual Report for the year ended December 31, 2023. (4) The stock options granted to John T. O'Connor on January 3, 2023 relate to his performance as General Counsel of the Company, prior to succeeding P. Ryan Langston and becoming an NEO. (5) The stock options granted to P. Ryan Langston on May 2, 2023 reflect his award by the Compensation Committee in connection with his role as Special Advisor to the Board of Directors.
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table sets forth all outstanding equity awards held by our NEOs as of December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year-End
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | | Mark E. Jones | 45,324 | - | 10.00 | 4/26/2028 | | | 156,000 | 78,000 | 40.88 | 4/1/2030 | | | 50,000 | 100,000 | 143.24 | 1/3/2032 | | | - | 200,000 | 38.78 | 1/3/2033 | | Mark K. Miller | 61,622 | - | 10.00 | 4/26/2028 | | | 17,416 | 1,584 | 131.87 | 1/4/2031 | | | 60,000 | 120,000 | 48.15 | 5/13/2032 | | | - | 40,000 | 38.78 | 1/3/2033 | | Mark E. Jones, Jr. | 23,334 | 11,666 | 44.14 | 1/2/2030 | | | 11,667 | 23,333 | 130.22 | 1/3/2032 | | | 5,000 | 10,000 | 48.15 | 5/13/2032 | | | 21,667 | 43,333 | 41.51 | 10/31/2032 | | | - | 35,000 | 38.78 | 1/3/2033 | | John T. O'Connor | 6,667 | 13,333 | 57.49 | 5/2/2032 | | | - | 20,000 | 35.25 | 1/3/2033 | | P. Ryan Langston | 54,000 | 27,000 | 40.88 | 4/1/2030 | | | 16,667 | 33,333 | 143.24 | 1/3/2032 | | | 2,500 | 12,500 | 58.00 | 5/2/2033 |
2023 Option Exercises
2023 Option Exercises The following table sets forth the number of shares acquired and the value realized upon exercise of stock options during the fiscal year ended December 31, 2023 by each of our NEOs. The value realized on exercise of stock options is calculated based on the difference between the market price of our Class A common stock upon exercise and the exercise price of the stock option.
2023 Option Exercises
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | | Mark E. Jones | 87,148 | 4,695,800 | | Mark K. Miller | - | - | | Mark E. Jones, Jr. | - | - | | John T. O'Connor | - | - | | P. Ryan Langston | 30,000 | 1,446,781 |
Pension Benefits and Nonqualified Deferred Compensation
Pension Benefits and Nonqualified Deferred Compensation We do not provide a pension plan for our employees, and none of our NEOs participated in a nonqualified deferred compensation plan in 2023.
Pay versus Performance
Pay versus Performance The below Pay-versus-Performance Table describes the relationship between the “Compensation Actually Paid” or "CAP" to our NEOs for 2023, 2022, 2021, and 2020 (each, a “Covered Year”), and the Company’s Total Shareholder Return (TSR), Net Income, and Core Revenue, a financial performance metric which Goosehead believes is our most important financial performance measure. Pay versus Performance Table
Pay versus Performance
| Year (a) | Summary Comp. Table Total for CEO ($)(1) (b) | CAP to CEO (loss) ($)(2)(3) (c) | Average Summary Comp. Table Total for other NEOs ($)(1) (d) | Average CAP to Other NEOs (loss) ($)(2)(3) (e) | Value of Initial Fixed $100 Investment Based on:(4) | | Net Income ($)(5) (h) | Core Revenue ($) (i) | | | | | | | Total Shareholder Return ($) (f) | Russell 2000 Total Shareholder Return ($) (g) | | | | 2023 | 5,630,110 | 9,265,590 | 1,130,974 | 2,811,575 | 533 | 142 | $23,696,000 | $233,007,000 | | 2022 | 9,773,674 | (36,439,939) | 3,565,666 | (9,725,102) | 83 | 110 | 2,630,000 | 188,171,000 | | 2021 | 1,914,440 | 856,633 | 600,200 | 127,092 | 314 | 138 | 8,296,000 | 133,420,000 | | 2020 | 5,430,680 | 35,276,080 | 2,134,478 | 14,390,511 | 297 | 120 | 18,755,000 | 95,068,000 |
Pay versus Performance
(1) Compensation for our CEO reflects the amounts reported in the “Summary Compensation Table” for the respective years. Average compensation for other NEOs includes the following NEOs: (a) for 2023: Messrs. Miller, Jones Jr., O'Connor, and Langston; and (b) for 2022: Messrs. Miller and Jones Jr. (and their respective predecessors) and Langston, and (c) for 2021 and 2020: the then-serving COO, the then-serving CFO, and Mr. Langston. (2) CAP for our CEO and average CAP for our other NEOs in Covered Years reflect the respective amounts set forth in columns (c) and (e), adjusted as follows in the table below, as determined in accordance with SEC rules. These amounts do not reflect the actual amount of compensation earned by or paid to our CEO and other NEOs during the applicable year and may be higher or lower than the amounts, if any, that are ultimately realized by such individuals. Fair values in the table above are computed in accordance with FASB ASC 718 as of the end of the respective fiscal year, other than fair values of awards that vest in the covered year, which are valued as of the applicable vesting date. (3) Improvements in our methodology supporting the calculations used to derive compensation actually paid resulted in differences in the amounts shown for 2020 – 2022. (4) The columns “Total Shareholder Return” and “Russell 2000 Total Shareholder Return” are calculated based on an initial fixed investment of $100 in the Company and the Russell 2000 Index, respectively, from the beginning of the earliest year in the table (2020) through the end of each applicable year in the table, assuming reinvestment of dividends, as calculated in accordance with Item 201(e) of Regulation S-K. (5) Net Income is prepared in accordance with GAAP. CAP is a prescribed metric which adjusts total NEO compensation from the Summary Compensation Table above to reflect changes in (i) the fair value of NEO's 2023 vested options as of their vesting date, by (ii) the fair value of unvested NEO options as of December 31, 2023, (iii) the fair value of awards that are determined to fail to meet the applicable vesting conditions as of December 31, 2023, and (iv) pension adjustments, dividends or other compensation not otherwise included in the Summary Compensation Table. The amounts deducted or added in calculating these equity award adjustments for 2023 are as follows:
Pay versus Performance
| | CEO 2023 | CEO 2022 | CEO 2021 | CEO 2020 | Other NEOs 2023 | Other NEOs 2022 | Other NEOs 2021 | Other NEOs 2020 | | Summary Compensation Table Total | $5,630,110 | $9,773,674 | $1,914,440 | $5,430,680 | $1,130,974 | $3,565,666 | $600,200 | $2,134,478 | | Less Stock Award Value Reported in Summary Compensation Table for the Covered Year | $3,514,000 | $7,858,500 | $— | $3,816,540 | $524,688 | $3,154,960 | $— | $1,516,830 | | Plus Fair Value for Unvested Awards Granted in the Covered Year | $3,356,000 | $(14,406,000) | $— | $13,153,140 | $368,375 | $(3,260,710) | $— | $5,227,530 | | Change in Fair Value of Outstanding Unvested Awards from Prior Years | $3,793,480 | $(23,949,113) | $(1,057,807) | $20,508,800 | $1,836,913 | $(6,133,459) | $(473,108) | $8,545,333 | | Plus Fair Value of Awards Granted in the Covered Year that Vested in the Covered Year | $— | $— | $— | $— | $— | $— | $— | $— | | Less Fair Value of Awards Forfeited during the Covered Year | $— | $— | $— | $— | $— | $(741,638) | $— | $— | | Plus Fair Value of Incremental Dividends or Earnings Paid on Stock Awards | $— | $— | $— | $— | $— | $— | $— | $— | | Less Aggregate Change in Actuarial Present Value of Accumulated Benefit Under Pension Plans | $— | $— | $— | $— | $— | $— | $— | $— | | Plus Aggregate Service Cost and Prior Service Cost for Pension Plans | $— | $— | $— | $— | $— | $— | $— | $— | | Compensation Actually Paid | $9,265,590 | $(36,439,939) | $856,633 | $35,276,080 | $2,811,575 | $(9,725,102) | $127,092 | $14,390,511 |
Pay versus Performance
CAP Relationships The following graphs describe the relationship between CAP to the CEO (and the average CAP to the other NEOs) with Goosehead’s Core Revenue, Net Income, and TSR. Also presented is a line graph representing the relationship between Goosehead’s TSR and the TSR of the Russel 2000. Most Important Performance Measures While Goosehead uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Core Revenue is the most important performance measure used to link CAP to the Company’s NEOs to Company performance for the most recently completed fiscal year. This is because Core Revenue is the most predictable revenue stream for Goosehead and is the portion of revenue most within management’s control. Core Revenue is a non-GAAP financial measure that consists of Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees (each as defined and further described in our Annual Report in the section entitled “Item 7. Management’s discussion and analysis of financial condition and results of operations”). For a discussion of Core Revenue, including how Core Revenue is calculated from Goosehead’s audited financial statements, see our Annual Report in the section entitled “Item 7. Management's discussion and analysis of financial condition and results of operations — Non-GAAP Financial Measures.” The Compensation Committee considers the following unranked list to represent the two most important financial and key performance measures that it uses to link executive CAP during the prior fiscal year to the Company’s performance in the prior fiscal year. •Core Revenue: Core Revenue is a non-GAAP financial measure that consists of Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees. For a discussion of Core Revenue, including how Core Revenue is calculated from the Company's audited financial statements, see our Annual Report in the section entitled “Item 7. Management’s discussion and analysis of financial condition and results of operations — Non-GAAP Financial Measures." •Adjusted EBITDA: Adjusted EBITDA is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation, and amortization, adjusted to exclude equity-based compensation and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses. For a discussion of Adjusted EBITDA, including how Adjusted EBITDA is calculated from Goosehead’s audited financial statements, see our Annual Report in the section entitled “Item 7. Management's discussion and analysis of financial condition and results of operations — Non-GAAP Financial Measures.”
Pay Ratio
Pay Ratio In accordance with the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (which we collectively refer to as the “Pay Ratio Rule”), we provide the following estimated information for 2023: •The median of the annual total compensation of all our employees (except our CEO) was $52,441.81; •The annual total compensation of our CEO was $5,630,110; and •The ratio of these two amounts was 107 to 1. The above ratio is a reasonable estimate calculated in a manner consistent with the requirements of the Pay Ratio Rule. To determine our median employee, we first identified our total employee population from which we determined our “median employee”. We determined that, as of December 31, 2023, our employee population consisted of approximately 1,415 individuals (as reported in "Item 1. Business" in our Annual Report). To identify our “median employee” from our employee population, we compared the amount of base salary as reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2023. We then conducted an analysis of our entire employee population and annualized the compensation of all full-time employees who were hired in 2023 but did not work for us for the entire fiscal year. We identified our “median employee” using this compensation measure, which was consistently applied to all our employees included in the calculation. Using the methodology described above, we determined that our “median employee” was a service agent with total compensation of $52,441.81 for the 12-month period ending December 31, 2023. This employee’s annual total compensation for 2023 was determined using the same methodology we used for purposes of determining the annual total compensation of our NEOs for 2023 (as set forth in the "Summary Compensation Table" above).
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Our non-employee directors are compensated in the form of stock option grants made pursuant to our Equity Award Grant Policy and Omnibus Plan, with such options vesting in 12 equal quarterly installments over the three-year period following the grant date, subject to the director’s continued service through each applicable vesting date. Members of our Board of Directors are also eligible for reimbursement for reasonable travel and other out-of-pocket expenses. We do not provide directors who are our employees with additional compensation for their service as directors. The following table sets forth the compensation paid to or accrued by our then-serving non-employee directors for the year ended December 31, 2023.
DIRECTOR COMPENSATION
| Name of Director | Option Awards ($)(1) | Total ($) | | Peter Lane | 412,200 | 412,200 | | James Reid | 412,200 | 412,200 | | Robyn Jones | 412,200 | 412,200 | | Thomas McConnon | 412,200 | 412,200 | | Waded Cruzado | 412,200 | 412,200 |
DIRECTOR COMPENSATION
(1) The amounts shown in this column reflect the aggregate grant date fair value of the option grants described above, computed in accordance with FASB ASC Topic 718. The assumptions used in the valuation of these options are set forth in Note 13 to our financial statements, which are included in our Annual Report for the year ended December 31, 2023. As of December 31, 2023, Mr. Lane had a total of 115,622 options outstanding (2018 Options – 71,622; 2021 Options – 19,000; 2022 Options – 10,000; and 2023 Options– 15,000); Mr. Reid had a total of 104,000 options outstanding (2018 Options – 60,000; 2021 Options – 19,000; 2022 Options – 10,000; and 2023 Options – 15,000); Ms. Jones had a total of 44,000 options outstanding (Ms. Jones was not granted 2018 Options; 2021 Options – 19,000; 2022 Options – 10,000; 2023 Options – 15,000); Mr. McConnon had a total of 37,667 options outstanding (Appointment Options – 12,667; 2022 Options – 10,000; and 2023 Options – 15,000); and Ms. Cruzado had a total of 37,667 options outstanding (Appointment Options – 12,667; 2022 Options – 10,000; and 2023 Options – 15,000).