REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS		Offerpad Solutions Inc. 2022 Proxy  Statement				17

 

 

The Audit Committee has reviewed the audited consolidated financial statements of Offerpad Solutions Inc., a Delaware corporation (the “Company”), for the fiscal year ended December 31, 2021 and has discussed these financial statements with management and the Company’s independent registered public accounting firm. The Audit Committee has also received from, and discussed with, the Company’s independent registered public accounting firm various communications that such independent registered public accounting firm is required to provide to the Audit Committee, including the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission.

The Company’s independent registered public accounting firm also provided the Audit Committee with a formal written statement required by PCAOB Rule 3526 (Communications with Audit Committees Concerning Independence) describing all relationships between the independent registered public accounting firm and the Company, including the disclosures required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. In addition, the Audit Committee discussed with the independent registered public accounting firm its independence from the Company.

Based on its discussions with management and the independent registered public accounting firm, and its review of the representations and information provided by management and the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Sheryl Palmer (Chair)

Alexander Klabin

Katie Curnutte

 

18				Offerpad Solutions Inc. 2022 Proxy Statement		INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER MATTERS

 

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER MATTERS

The following table summarizes the fees of Deloitte & Touche LLP, our independent registered public accounting firm, billed to us for each of the last two fiscal years for audit services and billed to us for each of the last two fiscal years for other services:

 

Fee Category		2021		2020
Audit Fees		$803,000		$265,000
Audit Related Fees		909,000		–
Tax Fees		185,000		82,000
All Other Fees		–		–
Total Fees		$1,897,000		$347,000

Audit Fees

Audit fees consist of fees for professional services rendered in connection with the annual audit of our consolidated financial statements and consultations on accounting matters directly related to the audit.

Audit Related Fees

Audit related fees consist of fees for professional services rendered in connection with financial statements incorporated into SEC filings relating to the Business Combination, including audit procedures relating to the fiscal years ended December 31, 2019 and December 31, 2018.

Tax Fees

Tax fees consist of fees for professional services for tax compliance, tax advice and tax planning.

Audit Committee Pre-Approval Policy and Procedures

The Audit Committee has adopted a policy (the “Pre-Approval Policy”) that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by the independent auditor may be pre-approved. The Pre-Approval Policy generally provides that we will not engage Deloitte & Touche LLP to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the Pre-Approval Policy (“general pre-approval”). Unless a type of service to be provided by Deloitte & Touche LLP has received general pre-approval under the Pre-Approval Policy, it requires specific pre-approval by the Audit Committee or by a designated member of the Audit Committee to whom the committee has delegated the authority to grant pre-approvals. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval. For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee will also consider whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Company’s business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Company’s ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor should necessarily be determinative. The Audit Committee may, on a periodic basis, review and generally pre-approve the services (and related fee levels or budgeted amounts) that may be provided by Deloitte & Touche LLP without first obtaining specific pre-approval from the Audit Committee. The Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. The Audit Committee pre-approved all services performed since the pre-approval policy was adopted.

 

EXECUTIVE OFFICERS		Offerpad Solutions Inc. 2022 Proxy  Statement				19

 

EXECUTIVE OFFICERS

The following table identifies our current executive officers:

 

Name		Age		Position
Brian Bair(1)		45		Chief Executive Officer and Chairman of the Board
Michael Burnett		54		Chief Financial Officer
Stephen Johnson		51		Chief Operating Officer
Benjamin Aronovitch		43		Chief Legal Officer and Secretary

(1) For Brian Bair, see biography on page 11 of this proxy statement.

 

 

Age: 54				Michael Burnett   Chief Financial Officer   Mr. Burnett has served as Offerpad’s Chief Financial Officer since October 2019. Previously, Mr. Burnett served as Executive Vice President and Chief Financial Officer at AV Homes, Inc., a national homebuilder and developer, from October 2013 to October 2018. Prior to this, Mr. Burnett served as Group Vice President, Finance, Treasury and Investor Relations for JDA Software Group, Inc., a leading global software provider offering supply chain management solutions, from November 2009 to October 2013. Mr. Burnett holds a B.S. in Accounting from Miami University.
Age: 51				Stephen Johnson   Chief Operating Officer   Mr. Johnson has served as Offerpad’s Chief Operating Officer since August 2020. Before joining Offerpad, Mr. Johnson provided consultation services to multiple private equity-owned growth companies, delivering strategic and general management support from June 2019 to August 2020. Previously, Mr. Johnson held various roles at MSCI, Inc., a finance company, and its subsidiaries. He was Managing Director of Innovation Transformation at MSCI, Inc. from March 2018 to June 2019 and served as both President of InvestorForce, Inc., a provider of reporting solutions to institutional investors, and Managing Director at MSCI from March 2017 to October 2018. Prior to these positions, Mr. Johnson was the Chief Operating Officer and Managing Director at MSCI Analytics from March 2015 to March 2017, after having been Chief Operating Officer at InvestorForce, Inc. and Executive Director at MSCI from May 2010 to March 2015. Mr. Johnson holds a B.A. in Economics and History from Yale University and an M.B.A. from Harvard Business School.
Age: 43				Benjamin Aronovitch   Chief Legal Officer and Secretary   Mr. Aronovitch has served as Offerpad’s Chief Legal Officer since October 2020. Previously, Mr. Aronovitch was Vice President and Deputy General Counsel at Taylor Morrison from September 2013 to October 2020. Prior to Taylor Morrison, Mr. Aronovitch was a corporate attorney at Paul, Weiss, Rifkind, Wharton & Garrison LLP from May 2010 to September 2013 and Cravath, Swaine & Moore LLP from October 2006 to May 2010. Mr. Aronovitch holds a B.A. in Political Science and Economics from McGill University and law degrees from McGill and Oxford University. He is a member of the New York Bar and is admitted to practice in Arizona.

 

 

20				Offerpad Solutions Inc. 2022 Proxy  Statement		CORPORATE GOVERNANCE

 

 

CORPORATE GOVERNANCE

General

Our Board has adopted Corporate Governance Guidelines, a Code of Business Conduct and Ethics, and charters for our Nominating and Corporate Governance Committee, Audit Committee and Compensation Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of the Company. You can access our current committee charters, our Corporate Governance Guidelines, and our Code of Business Conduct and Ethics in the “Corporate Governance” section of the “Investors Relations” page of our website located at investor.offerpad.com, or by writing to our Secretary at our offices at 2150 E. Germann Road, Suite 1, Chandler, Arizona 85286.

Board Composition

Our Board currently consists of seven members: Brian Bair, Katie Curnutte, Kenneth DeGiorgio, Ryan O’Hara, Alexander Klabin, Sheryl Palmer and Roberto Sella. Our Third Restated Certificate of Incorporation and Bylaws provide that the authorized number of directors may be changed only by resolution of the Board of Directors. Prior to the Sunset Date, directors may be removed with or without cause only by the affirmative vote of the holders of at least a majority of our common stock. After the Sunset Date, directors may be removed only for cause by the affirmative vote of the holders of at least a majority of Offerpad’s Common Stock.

Director Independence

Our Board has determined that each of Katie Curnutte, Kenneth DeGiorgio, Alexander Klabin, Ryan O’Hara and Sheryl Palmer qualifies as “independent” in accordance with the listing requirements of the New York Stock Exchange (“NYSE”). In making these determinations, our Board reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.

Executive Sessions

Our non-management directors meet in executive session without management directors or other members of management present on a regularly scheduled basis. We also hold an executive session including only independent directors at least once per year. Each executive session of the non-management or the independent directors is presided over by Kenneth DeGiorgio, our Lead Director.

Director Candidates

The Nominating and Corporate Governance Committee is primarily responsible for searching for qualified director candidates for election to the Board and filling vacancies on the Board. To facilitate the search process, the Nominating and Corporate Governance Committee may solicit current directors and executives of the Company for the names of potentially qualified candidates or ask directors and executives to pursue their own business contacts for the names of potentially qualified candidates. The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates, or consider director candidates recommended by our stockholders. Once potential candidates are identified, the Nominating and Corporate Governance Committee reviews the backgrounds of those candidates, evaluates candidates’ independence from the Company and potential conflicts of interest and determines if candidates meet the qualifications desired by the Nominating and Corporate Governance Committee for candidates for election as a director. Kenneth DeGiorgio and Roberto Sella were initially recommended to serve on our Board by management and the board of directors of Old Offerpad in consultation with certain stockholders.

In evaluating the suitability of individual candidates (both new candidates and current Board members), the Nominating and Corporate Governance Committee, in recommending candidates for election, and the Board, in approving (and, in the case of vacancies, appointing) such candidates, may take into account many factors,

 

CORPORATE GOVERNANCE		Offerpad Solutions Inc. 2022 Proxy  Statement				21

 

including: personal and professional integrity, strong ethics and values; experience in corporate management, such as serving as an officer or former officer of a publicly held company; experience as a board member or executive officer of another publicly held company; professional and academic experience relevant to the Company’s industry; leadership skills; experience in finance and accounting and/or executive compensation practices; whether the candidate has the time required for preparation, participation and attendance at Board meetings and committee meetings, if applicable; and geographic background, gender, age and ethnicity. The Nominating and Corporate Governance Committee and the Board are committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which new Board candidates are chosen. The Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the Company’s business. In addition, the Board will consider whether there are potential conflicts of interest with the candidate’s other personal and professional pursuits.

Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to the Nominating and Corporate Governance Committee, c/o Secretary, Offerpad Solutions Inc., 2150 E. Germann Road, Suite 1, Chandler, Arizona 85286. In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating and Corporate Governance Committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.

Communications from Interested Parties

We believe that regular, transparent communication with our stockholders and other stakeholders is essential to our long-term success. We regularly seek to engage with our stockholders through financial conferences, meetings with analysts and investors, and by timely responding to inquiries. The Board receives regular updates regarding our engagement efforts.

The Board welcomes your input and will give appropriate attention and, if applicable a response, to written communications that are submitted by interested parties. Our Secretary is primarily responsible for monitoring communications from interested parties and for providing copies or summaries to the directors as he considers appropriate.

Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that our Secretary and Chairman of the Board consider to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we tend to receive repetitive or duplicative communications. Interested parties who wish to send communications on any topic to the Chairman of the Board, the Lead Director, the independent or non-management directors, or the Board as a whole, should address such communications to the applicable party or parties in writing: c/o Secretary, Offerpad Solutions Inc., 2150 E. Germann Road, Suite 1, Chandler, Arizona 85286.

Corporate Responsibility and ESG Oversight

Our commitment to engage in environmentally and socially responsible strategies is a shared objective across our organization and integrated into our governance processes.

We published a summary of our ESG commitments, achievements and focus areas on our investor relations website. You can find this information at investors.offerpad.com by clicking the ESG tab. Our disclosure is formatted as web based content to ensure we are able to provide the most relevant and up to date information as we build upon our foundation. The information contained on or accessible through the Offerpad website, including the Company’s ESG information, is not considered part of this proxy statement.

 

22				Offerpad Solutions Inc. 2022 Proxy  Statement		CORPORATE GOVERNANCE

 

 

The Chairman and CEO leads our executive team’s ESG efforts and governance. In addition, the Enterprise Risk Management Committee of our senior management team is responsible for identifying mitigation opportunities for our top enterprise-wide risks. The Nominating and Corporate Governance Committee has primary responsibility for ESG-related Board oversight. It oversees activities and reporting of ESG matters, along with oversight of key policies such as the Code of Business Conduct.

Board Leadership Structure

Our Bylaws and Corporate Governance Guidelines provide our Board with flexibility to combine or separate the positions of Chairman of the Board and Chief Executive Officer in accordance with its determination that utilizing one or the other structure would be in the best interests of our Company.

The Company’s current Board leadership structure comprises a combined Chairman of the Board and Chief Executive Officer, an independent director serving as the Lead Director, and highly qualified, active independent directors. Our Board exercises its judgment in combining or separating the roles of Chairman of the Board and Chief Executive Officer as it deems appropriate in light of prevailing circumstances. The Board will continue to exercise its judgment on an ongoing basis to determine the optimal Board leadership structure that the Board believes will provide effective leadership, oversight and direction, while optimizing the functioning of both the Board and management and facilitating effective communication between the two. The Board has concluded that the current structure provides a well-functioning and effective balance between strong Company leadership and appropriate safeguards and oversight by independent directors.

Kenneth DeGiorgio currently serves as our Lead Director. The Lead Director’s responsibilities include, but are not be limited to, presiding over all meetings of the Board at which the Chairman of the Board is not present, including any executive sessions of the non-management directors or independent directors, approving the Board’s meeting schedules and agendas, and acting as liaison between the independent directors of the Board and the Chief Executive Officer and the Chairman of the Board.

Board Role in Risk Overnight

Risk assessment and oversight are an integral part of our governance and management processes. Our Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the Board at regular Board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks. The Company has an enterprise risk management (“ERM”) committee of senior management who work to identify, monitor and evaluate the Company’s risks and develop an approach to address and mitigate each identified risk. Each quarter, and more frequently, if necessary, the ERM committee reports its findings and recommendations to the Audit Committee, which then reports to the Board.

Our Board is responsible for overseeing our risk management process. Our Board focuses on our general risk management strategy, the most significant risks facing us, and oversees the implementation of risk mitigation strategies by management and for overseeing management of regulatory risks. Our Audit Committee is responsible for discussing our policies with respect to risk assessment and risk management, including guidelines and policies to govern the process by which our exposure to risk is handled, and for overseeing financial and cybersecurity risks. Our Nominating and Corporate Governance Committee manages risks associated with the independence of our Board of Directors and potential conflicts of interest. Our Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive compensation plans and arrangements. The Board does not believe that its role in the oversight of our risks affects the Board’s leadership structure.

 

CORPORATE GOVERNANCE		Offerpad Solutions Inc. 2022 Proxy  Statement				23

 

Code of Business Conduct and Ethics

We have a written Code of Business Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the Code of Business Conduct and Ethics on our website, investor.offerpad.com, in the “Governance Documents” section under “Corporate Governance.” In addition, we intend to post on our website all disclosures that are required by law or the rules of the NYSE concerning any amendments to, or waivers from, any provision of the Code of Business Conduct and Ethics.

Anti-Hedging Policy

Our Board of Directors has adopted an Insider Trading Compliance Policy that applies to all of our directors, officers and employees. The policy prohibits our directors, officers and employees and any entities they control from purchasing financial instruments such as prepaid variable forward contracts, equity swaps, collars, and exchange funds, or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s equity securities.

Attendance by Members of the Board of Directors at Meetings

Given the timing of the Closing of our Business Combination, there were two meetings of the Board of Directors during the fiscal year ended December 31, 2021. During the fiscal year ended December 31, 2021, each director attended at least 75% of the aggregate of (i) all meetings of the Board and (ii) all meetings of the committees on which the director served during the period in which he or she served as a director.

Under our Corporate Governance Guidelines, which are available on our website at investor.offerpad.com, a director is expected to spend the time and effort necessary to properly discharge his or her responsibilities. Accordingly, a director is expected to regularly prepare for and attend meetings of the Board and all committees on which the director sits (including separate meetings of the independent directors), with the understanding that, on occasion, a director may be unable to attend a meeting. A director who is unable to attend a meeting of the Board or a committee of the Board is expected to notify the Chairman of the Board or the Chair of the appropriate committee in advance of such meeting, and, whenever possible, participate in such meeting via teleconference in the case of an in-person meeting. We do not maintain a formal policy regarding director attendance at the Annual Meeting; however, it is expected that absent compelling circumstances directors will attend.

 

24				Offerpad Solutions Inc. 2022 Proxy  Statement		COMMITTEES OF THE BOARD

 

 

COMMITTEES OF THE BOARD

Our Board has established three standing committees—Audit, Compensation and Nominating and Corporate Governance—each of which operates under a written charter that has been approved by our Board.

The members of each of the Board committees and committee Chairs are set forth in the following chart.

 

Name		Audit		Compensation		Nominating and Corporate Governance
Kenneth DeGiorgio						Chair
Katie Curnutte
Alexander Klabin
Ryan O’Hara				Chair
Sheryl Palmer		Chair

Audit Committee

Our Audit Committee’s responsibilities include:

 

●

appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm;

 

●

discussing with our independent registered public accounting firm their independence from management;

 

●

reviewing with our independent registered public accounting firm the scope and results of their audit;

 

●

pre-approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;

 

●

overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual financial statements that we file with the SEC;

 

●

overseeing our financial and accounting controls and compliance with legal and regulatory requirements;

 

●

reviewing our policies on risk assessment and risk management;

 

●

reviewing related person transactions; and

 

●

establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls, or auditing matters.

The Audit Committee charter is available on our website at investor.offerpad.com. The members of the Audit Committee are Katie Curnutte, Alexander Klabin and Sheryl Palmer. Sheryl Palmer serves as Chair of the committee. Our Board has affirmatively determined that each of Katie Curnutte, Alexander Klabin and Sheryl Palmer is independent for purposes of serving on an audit committee under Rule 10A-3 promulgated under the Exchange Act and the NYSE Rules, including those related to Audit Committee membership.

The members of our Audit Committee meet the requirements for financial literacy under the applicable NYSE rules. In addition, our Board has determined that each of Sheryl Palmer and Alexander Klabin qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. No Audit Committee member currently serves on the audit committee of more than three public companies.

The Audit Committee met twice in 2021.

 

COMMITTEES OF THE BOARD		Offerpad Solutions Inc. 2022 Proxy  Statement				25

 

Compensation Committee

Our Compensation Committee is responsible for assisting the Board in the discharge of its responsibilities relating to the compensation of our executive officers. In fulfilling its purpose, our Compensation Committee has the following principal duties:

 

●

reviewing and approving the corporate goals and objectives, evaluating the performance of and reviewing and approving (either alone, or if directed by the Board, in connection with a majority of the independent members of the Board of Directors) the compensation of our Chief Executive Officer;

 

●

reviewing and setting or making recommendations to our Board regarding the compensation of our other executive officers;

 

●

reviewing and approving or making recommendations to our Board regarding our incentive compensation and equity-based plans and arrangements;

 

●

making recommendations to our Board regarding the compensation of our directors; and

 

●

appointing and overseeing any compensation consultants.

The Compensation Committee generally considers the Chief Executive Officer’s recommendations when making decisions regarding the compensation of non-employee directors and executive officers (other than as the Chief Executive Officer). Pursuant to the Compensation Committee’s charter, which is available on our website at investor.offerpad.com, the Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. In 2021, the Compensation Committee engaged the compensation consulting firm Pay Governance to assist in making decisions regarding the amount and types of compensation to provide our executive officers and non-employee directors. Pay Governance reports directly to the Compensation Committee. The Compensation Committee has considered the adviser independence factors required under SEC rules as they relate to Pay Governance and has determined that Pay Governance’s work does not raise a conflict of interest.

The Compensation Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The Compensation Committee may also delegate to an executive officer the authority to grant equity awards to certain employees and consultants, as further described in its charter and subject to the terms of our equity plans.

The members of our Compensation Committee are Kenneth DeGiorgio, Alexander Klabin and Ryan O’Hara. Mr. O’Hara serves as Chair of the Compensation Committee. Each member of the Compensation Committee qualifies as an independent director under NYSE’s independence standards for members of a compensation committee and as a “non-employee director” as defined in Rule 16b-3 of the Exchange Act.

The Compensation Committee met twice in 2021.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee’s responsibilities include:

 

●

identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board of Directors;

 

●

recommending to our Board of Directors the nominees for election to our Board at annual meetings of our stockholders;

 

●

overseeing an annual evaluation of our Board of Directors and its committees; and

 

●

developing and recommending to our Board of Directors a set of corporate governance guidelines.

The Nominating and Corporate Governance Committee charter is available on our website at investor.offerpad.com. The members of our Nominating and Corporate Governance Committee are Kenneth DeGiorgio, Ryan O’Hara and Sheryl Palmer. Mr. DeGiorgio serves as Chair of the Nominating and Corporate Governance Committee. Our Board of Directors has affirmatively determined that each of Kenneth DeGiorgio, Ryan O’Hara and Sheryl Palmer meets the definition of “independent director” under the NYSE rules. The Nominating and Corporate Governance Committee has the authority to consult with outside advisors or retain search firms to assist in the search for qualified candidates, or consider director candidates recommended by our stockholders.

The Nominating and Corporate Governance Committee met once in 2021.

 

26				Offerpad Solutions Inc. 2022 Proxy Statement		EXECUTIVE AND DIRECTOR COMPENSATION  /  Compensation  Discussion and Analysis

 

 

EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

General

In this Compensation Discussion and Analysis (“CD&A”), we provide an overview and analysis of the compensation awarded to or earned by our named executive officers identified in the Summary Compensation Table below (each, an “NEO”) during fiscal 2021, including the elements of our compensation program for NEOs, material compensation decisions made under that program for fiscal 2021 and the material factors considered in making those decisions. Our NEOs for the year ended December 31, 2021, which consist of our principal executive officer, our principal financial officer and other two executive officers for fiscal year 2021 are:

 

Brian Bair, Chief Executive Officer;

 

Michael Burnett, Chief Financial Officer;

 

Benjamin Aronovitch, Chief Legal Officer and Secretary; and

 

Stephen Johnson, Chief Operating Officer.

Executive Summary

2021 Highlights

On September 1, 2021, the Business Combination closed and we transitioned to being a new public company. In 2021, we delivered on our financial and operational goals and exceeded expectations.

 

Financial Results		-   Exceeded our full-year 2021 expectations
		-   Nearly doubled our revenue year-over-year
		-   Completed our first full year with positive Net Income
Customer Experience		-   Achieved customer satisfaction rating of 93%*
		-   Introduced Bundle Rewards, offering customers additional opportunities to save
Employee Engagement		-   Launched an Employee Volunteer Program
		-   Enhanced our Offerpad University onboarding training program
Growth		-   Added seven new markets
		-   Increased the number of homes purchased by 156% year over year
		-   Completed a record 8,000 renovations projects

* Based on surveys from over 3,600 customers in 2021.

In connection with the Business Combination, we engaged Pay Governance as our independent compensation consultant to help structure a competitive executive compensation program from a public company perspective, position executive compensation by relevant market data, and make individual compensation decisions factoring in comparable positions at companies with which we compete for talent. We intend to implement these decisions as part of our 2022 executive compensation program.

As a general matter, our executive compensation program consists of annual base salary, target annual cash incentive opportunities and equity-based long-term incentives. This CD&A provides a description of each of these elements for fiscal year ending 2021. We will continue to evaluate, develop and evolve our executive compensation program as we progress as a newly public company.

 

EXECUTIVE AND DIRECTOR COMPENSATION  /  Compensation Discussion and Analysis		Offerpad Solutions Inc. 2022 Proxy  Statement				27

 

Compensation Governance and Best Practices

We are committed to having strong governance standards with respect to our compensation programs, procedures and practices. Our key compensation practices include the following:

 

What We Do		What We Do Not Do
✓ Emphasize performance-based, at-risk compensation.		X  Do not guarantee annual salary increases.
✓ Emphasize the use of equity compensation to promote executive retention and reward long-term value creation.		X  Do not grant uncapped annual cash incentives or guaranteed equity compensation.
✓ Weight the overall pay mix towards incentive compensation for senior executives.		X  Do not provide significant or excessive perquisites.
✓ Engage an independent compensation consultant to directly advise our Compensation Committee.		X  Do not provide any compensation-related tax gross-ups.

Stockholder Advisory Vote on Executive Compensation

We expect to ask our stockholders to vote, at our 2023 annual meeting of stockholders, on a non-binding, advisory vote to approve the compensation of our NEOs (the “Say-on-Pay Vote”). We are not required to hold a Say-on-Pay Vote in 2022; however, at our 2022 annual meeting of stockholders, we expect to ask our stockholders to vote in a non-binding, advisory vote regarding the frequency of our Say-on-Pay Votes.

Executive Compensation Objectives and Philosophy

The key objectives of our executive compensation program are to attract, motivate, and reward leaders who create an inclusive and diverse environment and have the skills and experience necessary to successfully execute on our strategic plan to maximize stockholder value. Our executive compensation program is designed to:

 

●

Attract and retain talented and experienced executives in a competitive and dynamic market;

 

●

Motivate our NEOs to help our Company achieve the best possible financial and operational results;

 

●

Provide reward opportunities consistent with our performance on both a short-term and long-term basis that are industry competitive, flexible, fiscally responsible and linked to our overall business objectives; and

 

●

Align the long-term interests of our NEOs with those of our stockholders.

We strive to provide a competitive total compensation opportunity to executives while balancing other important factors. Executives may be compensated above or below levels of compensation for similar positions found in the external market based on factors such as experience, performance, scope of position and the competitive demand for proven executive talent, as described further below under “—Determination of Executive Compensation.”

Determination of Executive Compensation

Role of Compensation Committee and Executive Officers

The Compensation Committee is responsible for establishing and overseeing our executive compensation programs and we expect that the Compensation Committee will annually review and determine the compensation to be provided to our NEOs, including with respect to our Chief Executive Officer.

In setting executive compensation, the Compensation Committee will consider a number of factors, including the recommendations of our Chief Executive Officer (other than with respect to the Chief Executive Officer’s own compensation) and members of our human resources team, current and past total compensation, competitive market data and analysis provided by the Compensation Committee’s independent compensation consultant, Company performance and each executive’s impact on performance, each executive’s relative scope of responsibility and potential, each executive’s individual performance and demonstrated leadership, and internal equity pay considerations. Our Chief Executive Officer’s recommendations are based on his evaluation of each other NEO’s individual performance and contributions, of which our Chief Executive Officer has direct knowledge.

 

28				Offerpad Solutions Inc. 2022 Proxy Statement		EXECUTIVE AND DIRECTOR COMPENSATION  /  Compensation  Discussion and Analysis

 

 

Role of Compensation Consultant

In order to design a competitive executive compensation program that will continue to attract top executive talent and reflect our compensation philosophy, our Compensation Committee has retained Pay Governance as an independent compensation consultant to provide executive compensation advisory services, help evaluate our compensation philosophy and objectives and provide guidance in designing, maintaining and administering our executive compensation program. The Compensation Committee has evaluated Pay Governance’s independence pursuant to the requirements of NYSE and SEC rules and has determined that Pay Governance does not have any conflicts of interest in advising the Compensation Committee.

We are in the process of developing a peer group with Pay Governance and we expect to refer to this peer group in structuring our executive compensation program for fiscal year 2022. Our Compensation Committee may also refer to compensation survey data.

Elements of Compensation

Overview

The primary elements of our NEOs’ compensation and the main objectives of each are:

 

●

Base Salary. Base salary attracts and retains talented executives in a competitive market, recognizes individual roles and level of responsibilities, and provides stable income;

 

●

Annual Performance-Based Incentive Compensation. Annual cash incentives promote and reinforce the attainment of short-term performance objectives and reward executives for their contributions toward achieving those objectives; and

 

●

Equity Based Long-Term Incentive Compensation. Equity compensation, which we have historically provided in the form of stock options to purchase shares of our common stock (each, an “Offerpad Option”), aligns executives’ interests with our stockholders’ interests, emphasizes long-term financial and operational performance, and helps retain executive talent. In 2021, we did not grant any equity or equity-based compensation to our NEOs.

In addition, our NEOs are eligible to participate in our health and welfare programs and our 401(k) plan on the same basis as our other employees. We have also entered into employment agreements with certain of our NEOs, which include severance benefits, among other things. Such arrangements aid in attracting and retaining executive talent and help executives to remain focused and dedicated during potential transition periods due to a change in control. Each of these elements of compensation for 2021 is described further below.

Base Salary

The base salaries of our named executive officers are an important part of their total compensation package, and are intended to reflect their respective positions, duties and responsibilities. Base salaries provide our NEOs with a reasonable degree of financial certainty and stability. Our Compensation Committee intends to annually review and determine the base salaries of our executives and evaluate the base salaries of new hires at the time of hire. In 2021, we approved incremental base salary increases for our named executive officers in light of cost of living considerations. Our NEOs’ base salaries were as set forth below for 2021:

 

Named Executive Officer		2021 Annualized Base Salary
Brian Bair		$		450,000
Michael Burnett		$		332,413
Benjamin Aronovitch		$		328,473
Stephen Johnson		$		327,281

 

EXECUTIVE AND DIRECTOR COMPENSATION  /  Compensation Discussion and Analysis		Offerpad Solutions Inc. 2022 Proxy  Statement				29

 

Cash Incentive Compensation

2021 Annual Cash Incentive Program

We consider annual cash incentives to be an important component of our total compensation program by providing incentives necessary to retain and motivate executive officers to achieve important financial and strategic performance objectives. The Company currently maintains an annual cash incentive program in which certain eligible employees at the director level and above, including our named executive officers, participate. Each NEO is eligible to receive an annual performance-based cash incentive based on a specified target award amount, expressed as a percentage of the named NEO’s base salary. In fiscal 2021, our NEOs participated in our annual cash incentive program at the following target percentages of base salary:

 

Named Executive Officer		Target Annual Incentive Opportunity as a Percentage of Base Salary
Brian Bair		60%
Michael Burnett		50%
Benjamin Aronovitch		50%
Stephen Johnson		50%

The target annual cash incentive opportunities for each of our named executive officers in 2021 were not increased or changed from fiscal year 2020.

Under the 2021 program, the annual cash incentives were earned based upon the achievement of pre-determined Company performance for 2021 for the following performance measures: home sales, closing goals, pre-tax net income (“PTNI”) goals and return on investment, each of which comprised 25% of the participant’s annual incentive opportunity for 2021.

The target goals with respect to each performance measure under our 2021 annual cash incentive program are set forth in the following table:

 

Performance Measure		Target Performance Goal
Home Sales		5,861
Closing Goals		1,995
PTNI Goals(1)		($55,200,000)
Return on Investment		3.5%

 

(1)	PTNI generally is calculated as income/loss before income taxes, calculated in accordance with GAAP.

Under the 2021 incentive program, participants were eligible to receive a percentage of the participant’s target annual cash incentive opportunity, ranging from 0% to 150%, based on the level at which each of the performance goals was achieved, as set forth in the following table:

 

Performance Level		% Payout(1)
Below Threshold		0%
Threshold		50%
Target		100%
Stretch 1		125%
Stretch 2		150%

 

(1)

For each performance goal, if actual performance falls between the “threshold” and “target” levels specified above, the “threshold” level will apply. In addition, if actual performance falls between the “target” and “Stretch 1” levels specified above or between the “Stretch 1” and “Stretch 2” levels specified above, the percentage of such performance goal that is earned will be determined by using linear interpolation as between the applicable levels.

 

 

30				Offerpad Solutions Inc. 2022 Proxy Statement		EXECUTIVE AND DIRECTOR COMPENSATION  /  Compensation  Discussion and Analysis

 

 

The actual results that we achieved with respect to each performance goal under our 2021 annual cash incentive program are set forth in the following table:

 

Performance Measure		2021 Actual Achievement		% of Target Goal Achieved
Home Sales		6,373		110%
Closing Goals		1,667		50%
PTNI Goals		$6,800,000		150%
Return on Investment		7.6%		150%

The NEOs’ actual 2021 annual cash incentive awards are set forth in the column titled “Non-Equity Incentive Plan Compensation” in the “Summary Compensation Table” below.

Other Cash Compensation

In addition, our Compensation Committee awarded to each of Messrs. Burnett and Aronovitch (the Chief Financial Officer and Chief Legal Officer, respectively) a discretionary performance bonus in the amount of $200,000 related to their exceptional contributions during 2021, including in connection with the Business Combination.

Equity-Based Long-Term Incentive Awards

We view equity-based compensation as a critical component of our balanced total compensation program. Equity-based compensation creates an ownership culture among our employees that provides an incentive to contribute to the continued growth and development of our business and aligns the interests of our executives with our stockholders.

In 2021, prior to the Closing of the Business Combination, we maintained the 2016 Stock Option and Grant Plan, which was terminated in connection with the Closing (the “2016 Plan”). Under the 2016 Plan, we offered awards of Offerpad Options to eligible service providers, including our NEOs. In connection with the completion of the Business Combination and the adoption of the 2021 Incentive Award Plan (the “2021 Plan”), no further awards will be granted under the 2016 Plan. However, any outstanding awards granted under the 2016 Plan will remain outstanding, subject to the terms of the 2016 Plan and applicable award agreement.

In 2021, we did not grant any equity or equity-based compensation to our NEOs.

Actual Performance of 2017 CEO Stock Options

In 2017, we granted to Mr. Bair stock option awards that were scheduled to vest based on stock price performance goals. In connection with the Closing of the Business Combination, the Board determined that each of the Company performance goals applicable to each of the Offerpad Options then-held by Mr. Bair were satisfied. Accordingly, all of Mr. Bair’s then-unvested Offerpad Options vested and became exercisable as of immediately prior to the Closing. For additional information on Mr. Bair’s Offerpad Options, see the section titled, “—Outstanding Equity Awards at Fiscal Year-End” below.

Employee Benefits and Perquisites

Retirement Savings, Health and Welfare Benefits

We maintain a 401(k) retirement savings plan for our employees, including our NEOs, who satisfy certain eligibility requirements; in 2021, each of our NEOs participated in the 401(k) plan. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. In 2021, the Company did not make matching contributions under the 401(k) plan. We believe that providing a vehicle for tax-deferred retirement savings though our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our NEOs, in accordance with our compensation policies.

 

EXECUTIVE AND DIRECTOR COMPENSATION  /  Compensation Discussion and Analysis		Offerpad Solutions Inc. 2022 Proxy  Statement				31

 

Health and Welfare Plans

All of our full-time employees, including our NEOs, are eligible to participate in our health and welfare plans, including medical, dental and vision benefits, medical and dependent care flexible spending accounts, short-term and long-term disability insurance, and life insurance.

We believe the benefits described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.

Perquisites; No Tax Gross-Ups

All of our employees, including our named executive officers, are eligible to participate in the Company’s FLEX agent listing services program on substantially the same arms-length terms as those prevailing at the time for comparable transactions with non-related parties; however, under the program, we offer a 1% discount on commission payments to all of our employees, including our named executive officers (the “FLEX Employee Discount”). In December 2021, in connection with the sale of his personal residence, Mr. Bair participated in the FLEX Employee Discount. The actual amount of such savings are set forth in the column titled “All Other Compensation” in the “Summary Compensation Table” below. No other named executive officer received a FLEX Employee Discount in 2021.

Other than as noted above, we do not currently provide perquisites to our NEOs, and we do not view perquisites or other personal benefits as a significant component of our executive compensation program. In the future, we may provide additional perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive officer in the performance of the executive’s duties, to make our executive officers more efficient and effective, and for recruitment, motivation, or retention purposes. All future practices with respect to perquisites or other personal benefits will be approved by the Board or Compensation Committee.

In addition, we do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our Company.

Severance and Change in Control Arrangements

We are currently party to Employment Agreements (as defined below) with each of our NEOs. In 2021, only the Employment Agreements with each of Messrs. Burnett, Aronovitch and Johnson provided for severance benefits and payments upon certain qualifying terminations of employment, including in connection with a “change in control” of the Company. We believe that these types of arrangements are necessary to attract and retain executive talent and are a customary component of executive compensation. In particular, such arrangements can enhance alignment with stockholders by encouraging management to pursue transactions that create value for stockholders irrespective of the potential for job loss or diminution of duties and can encourage retention through the conclusion of the transaction. The payments and benefits provided under the Employment Agreements are designed to be competitive with market practices. A description of these arrangements, as well as information on the estimated payments and benefits that our NEOs would have been eligible to receive as of December 31, 2021, are set forth in “—Potential Payments Upon Termination or Change in Control” below.

Other Policies and Considerations

Insider Trading Compliance Policy.

A description of our Insider Trading Compliance Policy is set forth in the section titled “—Corporate Governance” above.

Section 409A

The Compensation Committee takes into account whether components of the compensation for our executive officers will be adversely impacted by the penalty tax imposed by Section 409A of the Internal Revenue Code, and aims to structure these components to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences.

 

32				Offerpad Solutions Inc. 2022 Proxy Statement		EXECUTIVE AND DIRECTOR COMPENSATION  /  Compensation  Discussion and Analysis

 

 

“Golden Parachute” Payments

Sections 280G and 4999 of the Internal Revenue Code provide that certain executive officers and other service providers who are highly compensated or hold significant equity interests may be subject to an excise tax if they receive payments or benefits in connection with a change in control of the Company that exceeds certain prescribed limits, and that we, or a successor, may forfeit a tax deduction on the amounts subject to this additional tax. While the Compensation Committee may take the potential forfeiture of such tax deduction into account when making compensation decisions, it will award compensation that it determines to be consistent with the goals of our executive compensation program even if such compensation is not deductible by us. We do not provide any tax gross-ups to cover excise taxes under Section 4999 in connection with a change in control.

Accounting for Stock-Based Compensation

We follow Financial Accounting Standard Board Accounting Standards Codification Topic 718, (“ASC Topic 718”), for our share-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and restricted stock units, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our NEOs may never realize any value from their awards.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis above with our management. Based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in its proxy statement for the 2022 Annual Meeting of Stockholders.

Ryan O’Hara (Chair)

Kenneth DeGiorgio

Alexander Klabin

 

EXECUTIVE COMPENSATION TABLES		Offerpad Solutions Inc. 2022 Proxy  Statement				33

 

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

The following table contains information about the compensation earned by each of our NEOs during our fiscal years ended December 31, 2021 and December 31, 2020:

 

Name and Principal Position				Year								Salary ($)								Bonus ($)								Option Awards ($)(1)								Non-Equity Incentive Plan Compensation ($)(2)								All Other Compensation ($)(3)								Total ($)
Brian Bair					2021								450,000								–								–								310,689								23,000								783,689
Chief Executive Officer					2020								269,330								–								–								190,328								–								459,658
Michael Burnett					2021								332,125								200,000	(4)							–								191,246								–								723,371
Chief Financial Officer					2020								318,125								–								–								162,500								–								480,625
Benjamin Aronovitch					2021								328,338								200,000	(4)							–								188,983								–								717,321
Chief Legal Officer					2020								62,500	(5)							200,000								649,513								–								–								912,013
Stephen Johnson					2021								327,192								–								–								188,299								–								515,491
Chief Operating Officer					2020								118,750	(5)							–								668,430								63,934								–								851,114

(1)

Amounts reflect the full grant-date fair value of Offerpad Options granted to the named individual, computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all Offerpad Options made to our NEOs in Note 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

 

(2)

Amounts for fiscal years 2020 and 2021 represent payments earned by our NEOs based upon the achievement of pre-established performance objectives for fiscal years 2020 and 2021 and which were paid in cash in 2021 and 2022, respectively. Please see the description of the 2021 annual cash incentive program under “Cash Incentive Compensation” in the CD&A above.

 

(3)	Amount reflects the aggregate FLEX Employee Discount realized by Mr. Bair in connection with the sale of his personal residence in December 2021. Please see the description of the FLEX Employee Discount under “Retirement Savings, Health and Welfare Benefits” in the CD&A above.

 

(4)	Amounts reflect payment of a one-time discretionary bonus to each of Messrs. Burnett and Aronovitch.

 

(5)	Messrs. Aronovitch and Johnson commenced employment with the Company on October 12, 2020 and August 10, 2020, respectively. Each of their respective salaries was prorated for the portion of the 2020 fiscal year during which he was employed.

Grants of Plan-Based Awards in Fiscal 2021

The following table provides supplemental information relating to grants of plan-based awards made during fiscal 2021 to help explain information provided above in our Summary Compensation Table. This table presents information regarding all grants of plan-based awards made during fiscal year 2021.

 

				Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)
Name				Threshold ($)				Target ($)				Maximum ($)
Brian Bair				135,000				270,000				405,000
Michael Burnett				83,103				166,207				249,310
Benjamin Aronovitch				82,118				164,237				246,355
Stephen Johnson				81,820				163,641				245,461

 

(1)	Amounts reflect potential payouts under our 2021 annual cash incentive program at threshold, target and maximum (or “Stretch 2”) amounts based on 2021 base salaries. Please see the description of the annual cash incentive program under “Cash Incentive Compensation” in the CD&A above.

Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table

Named Executive Officer Employment Agreements

We have entered into offers of employment letters or employment agreements (collectively, the “Employment Agreements”) with each of our named executive officers. The material terms of the Employment Agreements are described below.

 

34				Offerpad Solutions Inc. 2022 Proxy  Statement		EXECUTIVE COMPENSATION TABLES

 

 

Brian Bair

On August 6, 2016, we entered into an offer of employment letter with Mr. Bair, pursuant to which he serves as our Chief Executive Officer. Mr. Bair’s offer letter provides for at-will employment, an annual base salary, a 60% target bonus opportunity and eligibility to participate in the benefit plans and programs maintained for the benefit of our executive employees. In addition, Mr. Bair’s offer letter contains customary confidentiality and assignment of inventions provisions, as well as standard non-compete and employee non-solicitation restrictions effective during employment and for 12 months thereafter.

In March 2022, we entered into a new employment agreement with Mr. Bair, which supersedes this offer letter.

Michael Burnett; Benjamin Aronovitch; Stephen Johnson

The Employment Agreements with each of Messrs. Burnett, Aronovitch and Johnson are dated October 21, 2019, September 24, 2020 and August 10, 2020, respectively. The term of employment under these Employment Agreements is for one year; the term will automatically renew for successive one-year periods, unless either party provides at least 45 days of advance written notice of the party’s intention not to renew the then-current term. Pursuant to their respective Employment Agreements, Messrs. Burnett, Aronovitch and Johnson are entitled to receive an annual base salary of $325,000 per year, pro-rated for partial years of employment. In addition, the executives are eligible to participate in the health and welfare benefit plans and programs maintained by us for the benefit of our employees, as well as the paid-time-off programs maintained by us for the benefit of our executives generally.

Each of Messrs. Burnett, Aronovitch and Johnson is eligible to earn annual performance-based cash incentive award, based on the achievement of specified performance goals established by our Board and targeted at 50% of the executive’s annual base salary. The payment of any annual cash incentive, to the extent any such bonus becomes payable, will be made within 90 days following the end of the applicable calendar year in a form mutually agreed upon by the Board and the applicable executive; any such payment will be contingent upon the executive’s continued employment through the last day of the applicable calendar year.

In addition, in connection with the commencement of his employment with us in 2020, Mr. Aronovitch was paid a cash sign-on bonus of $100,000.

In addition, the Employment Agreements with Messrs. Burnett, Aronovitch and Johnson each contain customary confidentiality and assignment of inventions provisions, as well as (i) standard non-compete and employee non-solicitation restrictions effective during employment and for 18 months thereafter and (ii) non-disparagement provisions, effective during employment and for 24 months thereafter.

The severance benefits and payments payable to Messrs. Burnett, Aronovitch and Johnson upon certain qualifying terminations of their employment are summarized below under the section titled, “—Potential Payments Upon Termination or Change in Control”.

 

EXECUTIVE COMPENSATION TABLES		Offerpad Solutions Inc. 2022 Proxy  Statement				35

 

Outstanding Equity Awards at Fiscal Year-End Table

The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for our named executive officers as of December 31, 2021. None of our NEOs held any restricted stock or restricted stock unit awards as of December 31, 2021.

 

OPTION AWARDS

Name

Grant Date

Vesting Commencement Date

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Option Exercise Price ($)

Option Expiration Date

Brian Bair

2/10/2017

(1)

968,418

–

0.73

2/9/2027

2/10/2017

(1)

1,792,809

–

0.69

2/9/2027

7/11/2017

(1)

95,191

–

0.69

7/10/2027

7/11/2017

(1)

29,272

–

0.69

7/10/2027

Michael Burnett

10/17/2019

10/21/2019(2)

564,956

564,956

1.24

10/16/2029

Benjamin Aronovitch

10/27/2020

10/12/2020(2)

273,062

819,186

1.23

10/26/2030

Stephen Johnson

10/27/2020

8/10/2020(2)

353,097

776,815

1.23

10/26/2030

 

(1)

Each of these Offerpad Options were eligible to vest and become exercisable with respect to one-third of the shares underlying the Offerpad Option upon our Board’s good faith determination that the per share value of Offerpad’s common stock (on a fully-diluted basis) equals or exceeds three times (3x), four times (4x) and/or five times (5x), in each case, of the exercise price applicable to the Offerpad Option. On February 5, 2019, one-third (1/3) of the shares subject to these Offerpad Options vested in connection with Offerpad’s attainment of the initial stock price goal, as determined by our Board. In addition, in connection with the Closing of the Business Combination, the Board determined that each of the Company performance goals applicable to the Offerpad Options held by Mr. Bair were satisfied. Accordingly, all of Mr. Bair’s then-unvested Offerpad Options vested and became exercisable upon the Closing.

 

(2)

Each of these Offerpad Options vests and becomes exercisable over a four-year period, subject to the executive’s continued employment with the Company or its affiliates through the applicable vesting date, as follows: (i) 25% of the shares underlying the Offerpad Option on the first annual anniversary of the vesting commencement date and (ii) 75% of the shares underlying the Offerpad Option in 12 substantially equal installments on each quarterly anniversary of the vesting commencement date thereafter. In addition, upon the occurrence of a “sale event” (as defined in the 2016 Plan), the Offerpad Option will accelerate and become fully vested and exercisable.

Option Exercises and Stock Vested in Fiscal 2021

During the year ended December 31, 2021, none of our NEOs exercised any portion of their respective Offerpad Options.

 

				OPTION AWARDS
Name				Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)
Brian Bair				–				–
Michael Burnett				–				–
Benjamin Aronovitch				–				–
Stephen Johnson				–				–

 

36				Offerpad Solutions Inc. 2022 Proxy  Statement		EXECUTIVE COMPENSATION TABLES

 

 

Potential Payments Upon Termination or Change in Control

Executive Employment Agreements

As noted above, we are party to Employment Agreements with each of our named executive officers. The Employment Agreements provide severance benefits and payments to certain of our named executive officers upon qualifying terminations of their employment, as summarized below.

Brian Bair

Mr. Bair’s employment offer letter, as in effect as of December 31, 2021, did not provide for any severance benefits or payments upon qualifying terminations of employment, including in connection with a “change in control” of the Company.

Michael Burnett; Benjamin Aronovitch; Stephen Johnson

Under the Employment Agreements with each of Messrs. Burnett, Aronovitch and Johnson, on a termination of employment by the Company without “cause,” by the executive for “good reason” (each, as defined in the applicable Employment Agreement) or, with respect to Mr. Aronovitch, due to the Company’s non-renewal of the employment term, in any case, the applicable executive is eligible to receive the following severance payments and benefits:

 

(i)

in the case of Mr. Burnett, an amount equal to 12 months of his then-current base salary, payable in equal installments in accordance with the Company’s normal payroll policies; provided that if such termination occurs in contemplation of, or within 12 months following, a Sale Event (as defined in the 2016 Plan), Mr. Burnett is entitled to an amount equal to 12 months of his then-current base salary, payable in a single lump sum;

 

(ii)

in the case of Mr. Aronovitch, an amount equal to six months of his then-current base salary, payable in equal installments in accordance with the Company’s normal payroll policies; provided that if such termination occurs in contemplation of or within 12 months following a Sale Event, Mr. Aronovitch is entitled to an amount equal to six months of his then-current base salary, payable in a single lump sum;

 

(iii)

in the case of Mr. Johnson, an amount equal to six months of his then-current base salary, payable in equal installments in accordance with the Company’s normal payroll policies; provided that if such termination occurs in contemplation of or within 12 months following a Sale Event, such severance amount will be paid in a single lump sum; and

 

(iv)

each of Messrs. Burnett, Aronovitch and Johnson is also eligible to receive (A) payment of any annual cash incentive that the executive has earned in respect of the calendar year ending on or prior to the applicable date of termination; and (B) Company-subsidized healthcare coverage at the same levels as in effect on the date of termination for up to 12 months (for Mr. Burnett) and up to six months (for Messrs. Aronovitch and Johnson) following the applicable date of termination.

Each of the executives’ eligibility to receive such severance payments and benefits upon certain qualifying terminations of employment, as described above, is subject to the executive’s (i) timely execution and non-revocation of a general release of claims in favor of the Company and (ii) continued compliance with the restrictive covenant obligations described above under “—Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table—Named Executive Officer Employment Agreements.”

In addition, in connection with entering into their respective Employment Agreements, the Offerpad Options granted to Messrs. Burnett, Aronovitch and Johnson (i) will accelerate and become fully vested and exercisable upon a “sale event” of the Company (as defined in the 2016 Plan) and (ii) may be exercised for a period of up to one year following a termination of service with the Company for any reason. Additional information on the executives’ outstanding option awards can be found under the section titled “—Outstanding Equity Awards at Fiscal Year-End” above.

 

EXECUTIVE COMPENSATION TABLES		Offerpad Solutions Inc. 2022 Proxy  Statement				37

 

Estimated Potential Payments

The following table summarizes the payments that would be made to our NEOs upon the occurrence of certain qualifying terminations of employment or a “change in control”, in any case, occurring on December 31, 2021. Amounts shown do not include (i) accrued but unpaid base salary through the date of termination or (ii) other benefits earned or accrued by the NEO during his employment that are available to all salaried employees.

 

Name		Payment or Benefit		Termination Without Cause, for Good Reasonor due to Non-Renewal (no Change in Control) ($)(1)		Change in Control (no Termination) ($)		Termination Without Cause, for Good Reasonor due to Non-Renewal in Connection with a Change in Control ($)
Brian Bair		Cash		–		–		–
		Equity Acceleration(2)		–		–		–
		Continued Healthcare		–		–		–
		Total(3)		–		–		–
Michael Burnett		Cash		523,659		–		523,659
		Equity Acceleration(2)		–		2,915,173		2,915,173
		Continued Healthcare		16,337		–		16,337
		Total(3)		539,996		2,915,173		3,455,169
Benjamin Aronovitch		Cash		353,220		–		353,220
		Equity Acceleration(2)		–		4,235,192		4,235,192
		Continued Healthcare		8,675		–		8,675
		Total(3)		361,895		4,235,192		4,597,087
Stephen Johnson		Cash		351,940		–		351,940
		Equity Acceleration(2)		–		4,016,134		4,016,134
		Continued Healthcare		8,169		–		8,169
		Total(3)		360,109		4,016,134		4,376,243

 

(1)

Amounts reflect the payments that would be made to our NEOs on a termination of employment by the Company without “cause,” by the executive for “good reason” (each, as defined in the applicable Employment Agreement) or, with respect to Mr. Aronovitch, due to the Company’s non-renewal of the employment term.

 

(2)	With respect to Offerpad Options, amounts reflected were calculated by (i) multiplying the number of accelerated shares of common stock underlying the options by $6.40, the closing trading price of our common stock on December 31, 2021 and (ii) subtracting the exercise price for the options.

 

(3)	Amounts shown are the maximum potential payment the NEO would have received as of December 31, 2021.

 

38				Offerpad Solutions Inc. 2022 Proxy  Statement		2021 DIRECTOR COMPENSATION

 

 

2021 DIRECTOR COMPENSATION

Director Compensation Program

In 2021, prior to the effectiveness of the Director Compensation Program (as defined below), one non-employee director, James Satloff, received an annual cash fee of $60,000 for services on our Board. None of our other non-employee directors received compensation from the Company for their services on our Board prior to the Closing.

Effective as of September 1, 2021, our Board adopted a non-employee director compensation program (the “Director Compensation Program”). The Director Compensation Program provides for annual cash retainer fees and long-term equity awards for each of our non-employee directors, other than Roberto Sella (each, an “Eligible Director”). The Director Compensation Program consists of the following components:

Cash Compensation:

 

•

Annual Retainer: $50,000

 

•

Annual Committee Chair Retainer:

 

•

Audit: $20,000

 

•

Compensation: $20,000

 

•

Nominating and Governance: $10,000

 

•

Annual Committee Member (Non-Chair) Retainer:

 

•

Audit: $10,000

 

•

Compensation: $10,000

 

•

Nominating and Governance: $5,000

 

•

Lead Independent Director: $25,000

The annual cash retainers will be paid in quarterly installments in arrears. Annual cash retainers will be pro-rated for any partial calendar quarter of service.

Equity Compensation:

 

•

Initial Grant: Each Eligible Director who is initially elected or appointed to serve on our Board after the Closing will be granted, automatically on the date on which such Eligible Director is appointed or elected to serve on the Board, an award of restricted stock units covering shares of our common stock (“RSUs”) with an aggregate value of $300,000.

Each Initial Grant will vest with respect to one-third of the RSUs on each of the first three anniversaries of the grant date, subject to continued service

 

•

Annual Grant: An Eligible Director who is serving on our Board as of the date of an annual meeting of stockholders (beginning with calendar year 2022) automatically will be granted, on the date of such annual meeting, an award of RSUs with an aggregate value of $150,000.

Each Annual Grant will vest in full on the earlier to occur of the first anniversary of the grant date and the date of the next annual meeting following the grant date, subject to continued service.

 

•

Award Terms:

The number of RSUs subject to an Initial Grant and/or Annual Grant will be determined by dividing the value of the award by the average closing price of the Company’s common stock for the 30 consecutive calendar days prior to (and including) the date immediately preceding the applicable grant date.

In addition, each equity award granted to an Eligible Director under the Director Compensation Program will vest in full immediately prior to the occurrence of a “change in control” (as defined in the 2021 Plan), to the extent the Eligible Director will not become, as of immediately following such change in control, a board member of the Company or its ultimate parent company.

In connection with the Closing of the Business Combination, we granted each Eligible Director an award of RSUs under the 2021 Plan with an aggregate value of $300,000. These RSU awards represent the Initial Grants for Eligible Directors, and are eligible to vest with respect to one-third of the RSUs subject thereto on each of the first three anniversaries of the Closing date (i.e., September 1, 2021), subject to continued service.

 

2021 DIRECTOR COMPENSATION		Offerpad Solutions Inc. 2022 Proxy  Statement				39

 

Compensation under the Director Compensation Program is subject to the annual limits on non-employee director compensation set forth in the 2021 Plan.

Director Deferred Compensation Plan

Effective as of September 1, 2021, our Board adopted the Offerpad Solutions, Inc. Deferred Compensation Plan for Directors (the “Deferred Compensation Plan”). The Deferred Compensation Plan permits our non-employee directors to (i) receive all or a portion of their annual cash retainers (including any cash retainers for service on a committee) earned under the Director Compensation Program in the form of fully vested RSUs and (ii) defer the settlement of all or a portion of any RSU awards granted under the Director Compensation Program.

With respect to 2021, Kenneth DeGiorgio, Alexander Klabin, Ryan O’Hara and Sheryl Palmer each elected to defer 100% of their annual cash retainers and RSU awards earned or granted under the Director Compensation Program.

Director Compensation Table

The following table sets forth compensation paid to or earned by our non-employee directors during the year ended December 31, 2021.

 

Name(1)		Fees Earned or Paid in Cash ($)				Stock Awards ($)(2)				Total ($)
Vaughn Bair(3)(4)			–				–				–
Katie Curnutte			20,000				300,000				320,000
Kenneth DeGiorgio			23,333	(5)			300,000				323,333
Alexander Klabin			23,333	(5)			300,000				323,333
James Morrissey(3)			–				–				–
Shivraj Mundy(3)			–				–				–
Ryan O’Hara			25,000	(5)			300,000				325,000
Sheryl Palmer			25,000	(5)			300,000				325,000
James Satloff(3)			55,000				–				55,000
Roberto Sella			–				–				–

 

(1)

Brian Bair, our Chief Executive Officer, did not receive any compensation for his services as a member of our Board in 2021; the compensation paid to Mr. Bair for the services he provided to our Company during 2021 is reflected in the section titled, “Executive Compensation Tables—Summary Compensation Table.”

 

(2)

Amounts reflect the full grant-date fair value of RSU awards granted during 2021 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all such awards made to our directors in Note 12 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

 

(3)	The services of each of Messrs. Vaughn Bair, Morrissey, Mundy and Satloff on our Board ended upon the Closing of the Business Combination.

 

(4)

In addition to serving on our Board during 2021, Mr. Vaughn Bair was employed as a non-executive employee of the Company pursuant to an offer letter by and between the Company and Mr. Vaughn Bair, dated as of August 5, 2016. This offer letter generally provides for at-will employment, an annual base salary of $150,000, a 60% target bonus opportunity under our annual bonus program, participation in our health and welfare plans and customary restrictive covenants. In 2021, Mr. Vaughn Bair received an annual base salary of $313,000; Mr. Bair did not receive additional compensation for his services on our Board during 2021.

 

(5)

Amounts include the full value of the named individual’s annual cash retainer (including any cash retainers for service on a committee), including any portion thereof that was paid in the form of fully vested RSUs, pursuant to the named individual’s election under the Deferred Compensation Plan. The number of RSUs granted is determined by dividing the value of the aggregate amount of cash fees earned by the closing price of the Company’s common stock on the applicable date the cash fees would have otherwise been paid.

 

40				Offerpad Solutions Inc. 2022 Proxy  Statement		2021 DIRECTOR COMPENSATION

 

 

The following table shows the aggregate numbers of Offerpad Options (exercisable and unexercisable) and outstanding RSU awards held as of December 31, 2021 by each non-employee director.

 

Name

Option Awards Outstanding at 2021 Fiscal Year End (#)

RSU Awards Outstanding at 2021 Fiscal Year End (#)(A)

Vaughn Bair

1,747,100

–

Katie Curnutte

–

37,617

Kenneth DeGiorgio

–

41,122

Alexander Klabin

–

41,122

James Morrissey

–

–

Shivraj Mundy

–

–

Ryan O’Hara

–

41,372

Sheryl Palmer

–

41,372

James Satloff(B)

167,129

–

Roberto Sella

–

–

 

(A)	Amounts include RSUs which have vested, but have not yet been settled in shares of our common stock, pursuant to the named individual’s election to defer settlement thereof under the Deferred Compensation Plan, as set forth in the following table:

 

Name		Vested and Unsettled RSU Awards Outstanding at 2021 Fiscal Year End (#)
Kenneth DeGiorgio		3,505
Alexander Klabin		3,505
Ryan O’Hara		3,755
Sheryl Palmer		3,755

 

(B)

Upon Mr. Satloff’s departure from our Board, in connection with the Closing of the Business Combination, we accelerated the vesting of a portion of Mr. Satloff’s unvested Offerpad Option to reflect his partial service between his last occurring vesting date and departure date. Following such departure, Mr. Satloff will have one year from the Closing to exercise any vested Offerpad Options held by him.