Avantax, Inc. · GETTEX:3EV
Avantax — Blucora — Proxy Contest (March 2021)
106 slides from Avantax's proxy contest presentation, Mar 31, 2021
Slide 1: Key highlights from the investor presentation
The investor presentation also provides information on the extensive work performed by the Blucora Board and its financial advisors over the course of the last year in assessing Blucora’s strategy and business configuration. Key highlights from the presentation include: 1. The Blucora Board took dec
Slide 2: Building Long-Term Value for Shareholders
BUILDING LONG - TERM VALUE FOR SHAREHOLDERS March 2021 Privileged and Confidential Prepared at the Direction of Counsel Contains Input From Counsel for Purposes of Providing Legal Advice VoteBlucora.com DRAFT Subject to Completion
Slide 3: Important Information
Important Information 2 Forward - Looking Statements T his presentation contains forward - looking statements within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended , including statements with respect to the
Slide 4: Why We Are Here: Ancora's Campaign For Four Board Seats
Why We Are Here: Ancora’s Campaign For Four Board Seats ▪ In November 2020, Ancora bought its first shares in Blucora ▪ Approximately 45 days later, the CEO of Ancora , Fred DiSanto, contacted Blucora requesting a call with the CEO “before potentially nominating directors” ▪ In late January 2021, An
Slide 5: What Is Ancora's Proxy Contest About?
What Is Ancora’s Proxy Contest About? This proxy contest is about whether a new ~3% shareholder should handpick close associates to fill nearly half the independent director seats on Blucora’s Board under the false premises that the incumbent Board has not taken decisive steps to fix the businesses
Slide 6: Table of Contents
Table of Contents I Executive Summary 6 II Overview of Blucora’s Businesses 15 III The Board Became Increasingly Concerned About the Company’s Performance in 2019 23 IV The Board Made Decisive Changes to Management and Board Composition and Oversaw a Refinement in Strategy 27 V Blucora Has the Right
Slide 7: Executive Summary
BLUCORA Executive Summary
Slide 8: Executive Summary
Executive Summary By mid - 2019, it was evident to the Blucora Board that the Company was not pursuing a sustainable strategy ▪ Blucora was formed through a series of acquisitions and dispositions beginning in 2012 ▪ The acquisitions created two business units, each focused on helping American consu
Slide 9: Executive Summary, Continued
Executive Summary, Continued The Blucora Board has been active in reviewing all strategic alternatives for the business ▪ The Board met numerous times throughout 2020 and 2021 to refine the Company’s strategy and address challenges related to the COVID - 19 pandemic ▪ The Board has confidence in the
Slide 10: Overview of Blucora
TAX - ADVANTAGED WEALTH MANAGEMENT Avantax Wealth Management provides financial professionals, CPAs and tax professionals with support, training and tools that enable them to offer tax - advantaged investing and wealth management services to their clients. DO - IT - YOURSELF TAX FILING TaxAct is a l
Slide 11: Blucora's New Team and Strategy Have Led to Outperformance
Blucora’s New Team and Strategy Have Led to Outperformance We believe that our improved relative Total Shareholder Return (“TSR”) performance over the recent past reflects the progress we have made under our refreshed Board, rebuilt management team and refined strategy Source: FactSet. Data as of Ma
Slide 12: TaxAct Has Strong Growth and Good Margins
11% 11% 1% - 8% -10% -5% 0% 5% 10% 15% INTU BCOR HRB FRG TaxAct Has Strong Growth and Good Margins 11 REVENUE CAGR 2016 - 2020 LTM SEGMENT OPERATING MARGINS¹ 24% 19% 12% 8% 0% 5% 10% 15% 20% 25% BCOR FRG INTU HRB Corporate overhead Source: Company filings. Intuit revenue/margin reflects contribution
Slide 13: Avantax Has Grown Assets and Net Revenue
Organic asset inflows continued to shift toward more profitable advisory platforms LONG - TERM ASSET GROWTH CONTINUED STRONG FINANCIAL RESULTS SHIFT TO MORE DURABLE ADVISORY PLATFORMS Strong growth in total client assets 4Q 2020 segment net revenue is our highest ever despite a challenging interest
Slide 14: Overview of Ancora and TSR During Tenure on Public Boards
TSR During Tenure of Ancora Principals on Public Boards vs. Russell 3000 ³ Overview of Ancora ▪ Ancora is a wealth management company that operates a registered investment adviser and a broker - dealer, like Blucora ▪ In addition, Ancora is an activist investor, having launched over a dozen proxy co
Slide 15: Shareholders Should Support Blucora's Nominees
Shareholders Should Support Blucora’s Nominees THE BOARD HAS DRIVEN CHANGE ▪ Beginning in early 2020, the Blucora Board has proactively changed the CEO and CFO and refreshed the Board ▪ The Blucora Board has supported the new CEO as he rebuilt the senior management team and has overseen the developm
Slide 16: Overview of Blucora's Businesses
Overview of Blucora’s Businesses
Slide 17: Blucora's Tax-Focused Solutions Empower Financial Wellness
Blucora’s Tax - Focused Solutions Empower Financial Wellness 16 The Solution Americans spend more on taxes than on their mortgage, groceries and clothing, combined Blucora empowers people to improve their financial wellness with data - and technology - enabled tax software and wealth management solu
Slide 18: Blucora's Business
Blucora’s Business 17 ▪ Leading online tax preparation software solution for consumers and professionals ▪ Focused on delivering a premium experience at a reasonable price point ▪ Tiered offerings target a range of customers, from consumers to professionals ▪ #1 Tax - Focused Independent Broker Deal
Slide 19: Blucora Has Evolved Significantly Over the Last Decade
Blucora Has Evolved Significantly Over the Last Decade In January 2012, we acquired TaxAct. TaxAct was a recognized brand and strong performer; revenue has grown every year since its acquisition (excluding the sale of Simple Tax)¹. In May 2019, we acquired 1 st Global , a tax - focused wealth manage
Slide 20: Tech-Enabled Tax Preparation Solutions
Tech - Enabled Tax Preparation Solutions 19 The Tax Preparation Opportunity TaxAct’s Differentiated Solution ▪ Taxes are one of the most significant annual expenses for most Americans ▪ We focus on do - it - yourself, small tax offices and solo practitioners that represent a significant market oppor
Slide 21: Tax-Smart Wealth Management
Tax - Smart Wealth Management 20 ~45M Households Blucora’s Focus ▪ The captive Registered Investment Advisor (RIA) and Independent Broker Dealer (IBD) markets are large and growing ▪ We offer sophisticated, tax - focused approaches used by high - net worth wealth managers to our focused markets ▪ Ou
Slide 22: Our Wealth Management Acquisitions Have Created Value
Our wealth management business is significantly more valuable today than the aggregate acquisition cost Our Wealth Management Acquisitions Have Created Value 21 Acquisitions Goodwill The combination of our larger wealth management acquisitions has created our Avantax business – a tax - focused Broke
Slide 23: Blucora Has Significant Cross-Over Opportunities
Blucora Has Significant Cross - Over Opportunities The majority of our Wealth Management financial professionals offer multiple services lines (tax prep and wealth management) and need easy to use tools to minimize time invested to execute their business ▪ Leverage product/software development leade
Slide 24: The Board Became Increasingly Concerned About the Company's Performance in 2019
The Board Became Increasingly Concerned About the Company’s Performance in 2019
Slide 25: Blucora's Strategy in 2019 Was Unsustainable
Blucora’s Strategy in 2019 Was Unsustainable CONSUMER USER REVENUE ($M) CONSUMER USER E - FILES (IN MILLIONS) $105 $195 2015 2019 5.7 3.2 2015 2019 ▪ From 2015 to 2019, TaxAct drove revenue growth primarily through price increases, which led to a decline in users ▪ In 2018 and 2019, TaxAct underinve
Slide 26: The Board Acted Within Six Months of the Valuation Premium Reversal
The Board Acted Within Six Months of the Valuation Premium Reversal EV / NTM EBITDA DURING 2019 TSR DURING 2019 It became clear to the Board that concerted action was needed to turn the Company around and restore shareholder value Source: FactSet, including for estimated NTM (next twelve months) EBI
Slide 27: Board's Aggressive Reset Has Put Blucora on the Right Track
Board’s Aggressive Reset Has Put Blucora on the Right Track Source: FactSet. Data as of March 18, 2021. 1 2 3 4 2016 to September 2019 Growth fueled by unsustainable pricing/M&A September 2019 to January 2020 Board acts January 2020 to September 2020 Turbulence during pandemic September 2020 to Pres
Slide 28: The Board Made Decisive Changes to Management and Board Composition
The Board Made Decisive Changes to Management and Board Composition and Oversaw a Refinement in Strategy
Slide 29: The Board Reacted Swiftly to Address 2019 Performance
The Board Reacted Swiftly to Address 2019 Performance 28 2020 2021 1 3 2 April 2020 – Present Ongoing Strategy Evaluation with New Management and Board January 2020 – Present Ongoing Board Refreshment January 2020 – April 2020 Management Rebuild 1 2 3 Actions Results Management Rebuild The Board rep
Slide 30: Blucora Has a Rebuilt Management Team
Blucora Has a Rebuilt Management Team DECEMBER 2019 John Clendening CEO Davinder Athwal CFO Ann Bruder Chief Legal Officer & Secretary Todd Mackay Chief Business Operations and Development Officer Mike Hogan Chief Marketing Officer Enrique Vazquez President of Wealth Management Curtis Campbell Presi
Slide 31: Why Christopher Walters is the Right CEO to Lead Blucora Now
Why Christopher Walters is the Right CEO to Lead Blucora Now 1 30 Christopher Walters President & CEO Since January 30, 2020 Board Member since 2014 ▪ Understanding of the Board’s concerns and his familiarity with the businesses positioned him to make rapid progress on a turnaround ▪ As a leading cr
Slide 32: Blucora Has Also Reconstituted Its Board of Directors
APRIL 2016 MARCH 2021 David Chung Christopher Walters Steven Hooper Elizabeth Huebner Andrew Snyder Mary Zappone John Cunningham Lance Dunn John Clendening x 8 of 10 New Directors x Increased Diversity x Critical Skills x Relevant Experience x Institutional Knowledge Source: Company filings. Blucora
Slide 33: Directors Added Since 2020
DIRECTORS ADDED SINCE 2020 ENHANCED SKILL SETS Wealth Management Tax Digital / Technology / Software Strategy / Turnaround Audit / Finance / Risk Sales / Marketing Human Capital Public Company Board Executive Leadership ▪ Former EVP and COO of Fiserv , a financial services technology company, Deputy
Slide 34: Extracted from the Board of Directors' Strategy Meetings
Extracted from the Board of Directors’ Strategy Meetings ▪ In March 2020 , the Board considered the Company’s strategy and, in particular, which businesses were critical to the Company’s portfolio ▪ In May and June 2020, at the direction of the Board, the Company undertook an in - depth review of th
Slide 35: Continuing the Progress of the Turnaround
▪ Invest in product enhancements that drive retention and conversion by providing a simple, ease to use experience and differentiated features ▪ Drive customer acquisition through innovative and cost - effective marketing strategies ▪ Embrace value positioning by providing compelling features at att
Slide 36: Our Strategy and Operating Plan Are Working
-10% 10% 30% 50% 70% 90% 9/18/2020 10/18/2020 11/18/2020 12/18/2020 1/18/2021 2/18/2021 3/18/2021 Our Strategy and Operating Plan Are Working ▪ Optimized and rationalized marketing approach ▪ Enhanced the core product offering to drive conversion of paid customers ▪ Launched a new hybrid - assisted
Slide 37: Tangible Improvements in the Tax Preparation Business
Tangible Improvements in the Tax Preparation Business 19.8 24.7 2019 2020 39% 42% 2019 2020 Source: Company data 1.5 1.6 2019 2020 61% 66% 2019 2020 Despite a challenging 2020 tax season, our performance indicators showed improvement Customer retention rate and conversation rate were up year - over
Slide 38: Tangible Progress in the Wealth Management Business
Tangible Progress in the Wealth Management Business Source: Company data. ¹ Home office assets increased due to acquisition of HKFS in July 2020. 2 Segment Operating Margin (ex Cash Sweep) calculated as Segment Operating Income less cash sweep revenue divided by Net Revenu e less cash sweep revenue.
Slide 39: We Retain a High Level of Financial Professionals and Revenues
We Retain a High - Level of Financial Professionals and Revenues Source: Company data 1 Reflects retention of commission and advisory revenues of independent Financial Professionals (“FPs”), calculated by deductin g t he prior year production of the annualized year - to - year attrition rate, over t
Slide 40: Pricing Models Position Avantax For Future Growth
Pricing Models Position Avantax For Future Growth Source: Company data 39 OUR PRICING MODEL AIMS TO: ▪ Incentivize the shift to a more durable fee model, which is the future direction of the industry and allows for greater compliance oversight — Create potential for financial professionals to operat
Slide 41: Our Financial Professionals Are Supportive of Our Progress
We have spent a considerable amount of time with the current Avantax leadership team. They listen to us, and are always interested in our feedback. Though change is never easy, we have all the confidence in the world that this group is the right group to lead us into the future.” Our Financial Profe
Slide 42: COVID Has Temporarily Impacted Our Business
COVID - 19 Has Temporarily Impacted Our Business Source: Company data. 1 Asset - based revenue primarily includes fees from financial product manufacturer sponsorship programs, cash sweep programs, and other asset - based revenues. Asset - based revenue excludes commission and advisory fee revenues.
Slide 43: COVID Impact to Our Overall Business in 2020
COVID - 19 Impact to Our Overall Business in 2020 42 BLUCORA ADJUSTED EBITDA ¹ ² ($M) 2019 Business Improvement EBITDA Growth Increased marketing required due to extended tax season Increased costs due to incremental investment in March to address weak performance in first six weeks of the tax seaso
Slide 44: Blucora Has Carefully Considered and Managed Expenses
Blucora Has Carefully Considered and Managed Expenses Source: FactSet and Company filings. Data as of March 8, 2021. 3.8% 3.5% 2019 2020 4.3% 3.6% 2019 2020 17.6% 23.5% 2019 2020 Blucora is driving to an improved cost structure An extended 2020 tax season necessitated an increased marketing spend, b
Slide 45: Third-Party Views of Blucora
We think management outlined a much more cohesive strategy …” We think it may have gone unnoticed how quickly the team acted to replace, reorganize and strengthen the bench , and while we are always hesitant to discuss “culture” improvements, the quality of the team seems to have filtered down the r
Slide 46: Our Employees Are Supportive of Our Leadership Team and Culture
Our Employees Are Supportive of Our Leadership Team and Culture “The leadership at TaxAct takes action. Culture is easy to talk about but hard to implement. The leadership at TaxAct implements culture like no other company I have ever worked for. Everyone I have worked with across the company has be
Slide 47: Blucora has the Right Board and Governance to Drive Change and Growth
Blucora has the Right Board and Governance to Drive Change and Growth
Slide 48: Blucora's Board Has the Skills Needed to Drive Change
Blucora’s Board Has the Skills Needed to Drive Change Tenure (Years) Industry Strategic Leadership Wealth Management Tax Digital, Technology, Software Strategy, Turnaround Audit, Finance, Risk Sales, Marketing Legal, Regulatory Human Capital Public Company Board Executive Leadership Steven Aldrich 4
Slide 49: Blucora's Reconstituted Board Brings Broad Perspectives & Experience
Blucora’s Reconstituted Board Brings Broad Perspectives & Experience Industry Experience Fresh Perspectives Strategy & Transformation Expertise Human Capital Expertise Executive Leadership More than half of our directors have experience in senior leadership roles at other wealth management or tax -
Slide 50: Blucora Now Has a Balanced, Diverse Board of Directors
Blucora Now Has a Balanced, Diverse Board of Directors ▪ Former CFO of TIAA - CREF ▪ Extensive experience, particularly as an executive and board member within the financial sector Georganne Proctor Independent Chair Director Since 2017 ▪ Former CFO of CIT Group ▪ Current board member of eBay and We
Slide 51: Blucora Has Continued to Refresh the Board With Relevant Skills
Karthik Rao Director Since 2020 Tina Perry Director Since 2021 Blucora Has Continued to Refresh the Board With Relevant Skills 2.9 Years Average Tenure 4 4 2 1 Year or Less 2 to 4 Years 5 to 10 Years 60 % of Board members are diverse ▪ Managing Partner of Bellevue Capital ▪ Former Chairman, Presiden
Slide 52: Blucora Has Best-in-Class Governance Practices
Blucora Has Best - in - Class Governance Practices Board Accountability, Leadership ▪ Annual director elections ▪ Majority vote standard for uncontested director elections ▪ Majority vote standard for charter and bylaw amendments ▪ Separate CEO and Chair Shareholder Rights ▪ Shareholders can call sp
Slide 53: Compensation Decisions Are Aligned With Our Long-Term Plan
Compensation Decisions Are Aligned With Our Long - Term Plan CEO TRANSITION ▪ New CEO’s compensation is 89% at risk and rewards the creation of long - term shareholder value, with a mix of time - based RSUs, PRSUs and stock options ▪ Initial compensation aligns incentives with shareholders ▪ Compens
Slide 54: Blucora's Compensation Is Designed to Align Pay with Performance
Blucora’s Compensation Is Designed to Align Pay with Performance ▪ CEO compensation is 89% at risk and is structured to reward management for achieving specific, measurable financial and strategic goals ▪ Short - term incentive metrics (revenue and adjusted EBITDA) are aligned with our goal of profi
Slide 55: Blucora Is Committed to Environmental & Social Issues
Blucora Is Committed to Environmental & Social Issues Our People Our Community Our Environment We foster an inclusive and diverse work environment: x Women make up 41% of our workforce and hold 35% of our senior leadership roles x 38% of our employees are diverse x Launched Women's and Diversity ini
Slide 56: Our Response to COVID
Our Response to COVID - 19 ▪ Implemented a Company - wide work - from - home policy well before state and local officials mandated it ▪ Implemented hazard pay for our essential employees ▪ Increased pace and depth of communication across the employee base ▪ Designed safety protocols for client - fac
Slide 57: Ancora's Campaign is an Overreach; Its Nominees Are Not Additive
Ancora’s Campaign is an Overreach; Its Nominees Are Not Additive
Slide 58: Ancora Made Little Effort to Engage with Blucora Before Nominating
Ancora Made Little Effort to Engage with Blucora Before Nominating December 31 January 7 January 17 January 26 February 3 February 10 ~45 days after Ancora purchased its first share of Blucora stock, Fred DiSanto contacts Blucora directly for the first time , requesting to speak with the Company’s C
Slide 59: Ancora Made Little Effort to Avoid a Proxy Contest
Ancora Made Little Effort to Avoid a Proxy Contest Ancora and its candidates refused to cooperate in reaching an amicable resolution ▪ Ancora refused to allow the Blucora Board to interview Ancora’s candidates until after Blucora agreed to add Mr. DiSanto and at least one other Ancora candidate to t
Slide 60: Ancora's Focus Is on the Immediate Sale of TaxAct
Ancora’s Focus Is on the Immediate Sale of TaxAct ▪ Beginning long before Ancora acquired a single share of Blucora stock, the Board and management team have been diligently examining the Company’s business configuration with independent financial professionals ▪ Now is not the right time to sell Ta
Slide 61: The Board Regularly Examines All Avenues for Value Creation
The Board Regularly Examines All Avenues for Value Creation 60 We believe that Ancora’s top priority to sell TaxAct would destroy value: ✗ Now is not the optimal time to sell the TaxAct business ✗ The 2020 and 2021 tax seasons have been (and continue to be) anomalous and have been materially impacte
Slide 62: Now Is Not the Time to Sell TaxAct
Now Is Not the Time to Sell TaxAct The COVID - 19 pandemic and the associated extension of the tax season had a significant negative impact on TaxAct ▪ The extension resulted in approximately $20 million in incremental costs, including increased marketing spend, extended call center staffing and oth
Slide 63: An Immediate Sale of TaxAct Presents Capital Deployment Challenges
Ancora Recommendation: Implement a Large - Scale Share Repurchase Ancora Recommendation: Acquire Wealth Management/RIA Businesses An Immediate Sale of TaxAct Presents Capital Deployment Challenges Repurchase of stock would leave Blucora a very small - cap company with limited liquidity Attractively
Slide 64: Replacing Directors with Ancora's Candidates is Disadvantageous
Replacing Directors with Ancora’s Candidates is Disadvantageous Ancora’s Nominees Directors Targeted by Ancora Qualifications & Experience Fred DiSanto Cindy Schulze Flynn Robert MacKinlay Kimberly Smith Spacek Steve Aldrich Georganne Proctor (Chair) John MacIlwaine Mary Zappone Wealth Management ض
Slide 65: Mr. DiSanto's Other Commitments and Board Performance Raise Concerns
Mr. DiSanto’s Other Commitments and Board Performance Raise Concerns ▪ CEO, Ancora Holdings (three RIAs and broker - dealer) ▪ CEO, Regional Brands (OTC: RGBD) Mr. DiSanto has many other roles: ▪ Director, Regional Brands (OTC: RGBD) ▪ Director, Alithya Group (NASDAQ: ALYA) ▪ Director, The Eastern C
Slide 66: Mr. DiSanto's Election Would Raise Serious Antitrust Concerns
Mr. DiSanto’s Election Would Raise Serious Antitrust Concerns ▪ If the jurisdiction requirements are met (as is the case here), the director interlock is per se unlawful and cannot be waived by the board of directors; recusal from certain discussions is not a remedy; the only remedy is removal of th
Slide 67: Ancora and Mr. DiSanto Violated Federal Law
Ancora and Mr. DiSanto Violated Federal Law and Tried to Minimize It Publicly 66 In December 2018, the SEC censured Ancora Advisors and ordered it to pay a $100,000 fine for violating federal “pay - to - play” rules ¹ ¹ SEC order censuring Ancora Advisors December 18, 2018 ² See, e.g., https://docqu
Slide 68: Mr. DiSanto's Recent Track Record as a Board Member Is Poor
Mr. DiSanto’s Recent Track Record as a Board Member Is Poor TSR DURING TENURE AT THE EASTERN COMPANY TSR DURING TENURE AT REGIONAL BRANDS TSR DURING TENURE AT ALITHYA GROUP Source: FactSet and Company filings. Data as of March 18, 2021. 67 Mr. DiSanto has underperformed each of the major indices dur
Slide 69: Mr. DiSanto's Recent Public Company Election Results Are Concerning
Mr. DiSanto’s Recent Public Company Election Results Are Concerning Mr. DiSanto has received the lowest number of director votes at Eastern Company in 2019 and 2020 2020 Nominee % Withheld Peggy B. Scott 2.1 Michael A. McManus Jr 2.1 August M. Vlak 3.1 James A. Mitarotonda 3.4 John W. Everets 3.7 Ch
Slide 70: Ancora's Other Nominees Lack Relevant Experience
Ancora’s Other Nominees Lack Relevant Experience QUALIFICATIONS AND EXPERIENCE Robert MacKinlay Kimberly Smith Spacek Cindy Schulze Flynn Primary Occupation CFO of a regional HVAC company with three locations Head of IR and Marketing at a hedge fund Head of Marketing and Communications at a private
Slide 71: Three of Ancora's Four Nominees Are Colleagues From Cleveland
Three of Ancora’s nominees live within 30 minutes of each other Board Member Board Member Board Member Nominee Robert MacKinlay Nominee Cindy Flynn Nominee Fred DiSanto Chairman & CEO Trustee Ancora Trust Since 2019 Former Partner Auditor Board Member ¹ CFO Gardiner ¹Gardiner has been the main spons
Slide 72: Ms. Flynn's Role as a Trustee for Ancora Mutual Funds is a Conflict
Ms. Flynn’s Role as a Trustee for Ancora Mutual Funds is a Conflict ▪ As an independent trustee, Ms. Flynn should be independently overseeing Ancora’s services as an investment manager for the Ancora family of mutual funds (including the amounts paid to Ancora for performing those services) ▪ Over t
Slide 73: Ancora's Mutual Funds Are Underperforming
Ancora fails to meet industry - standard stewardship qualities , culminating in a Low Parent Pillar rating. Fees are a weakness , contributing negatively to the rating and creating a larger performance hurdle. On average, Ancora charges fees in the most expensive quintile of similarly distributed fu
Slide 74: Replacing Directors with Ancora's Candidates Will Not Add Value
Replacing Directors with Ancora’s Candidates Will Not Add Value Recruited by Ancora Background Background Targeted by Ancora Fred DiSanto ▪ Chairman and CEO of Ancora Holdings ▪ CEO and Director of Regional Brands (OTC: RGBD), which sells doors and windows in New York State ▪ Chair of Blucora’s Boar
Slide 75: Ancora's Mischaracterizations Seem Intended to Deceive Shareholders
Ancora’s Mischaracterizations Seem Intended to Deceive Shareholders “We also question whether [Ms. Proctor] has the capacity to serve as Chairwoman…when also serving as a director of [three other public companies] … Ms. Proctor has no stated experience in the RIA, wealth management and tax advisory
Slide 76: Ancora's Mischaracterizations, Continued
Ancora’s Mischaracterizations, Continued “[Mr. MacIlwaine’s ] background in the digital technology and software industries is not relevant…” “We… have concerns about [Mary Zappone’s ] role as Chair of the Audit Committee given her prior association with scandal - plagued Tyco International.” THE FAC
Slide 77: Ancora's False Statements About Blucora's Directors Are Outrageous
Ancora’s False Statements About Blucora’s Directors Are Outrageous 76 Extracted from Ancora’s March 29, 2021 shareholder presentation ▪ MR. ERNST is the former Chairman and CEO of H&R Block, which operated both a tax preparation business and in the wealth management sector . He also served as Deputy
Slide 78: Ancora's Claims About Blucora's Other Directors Are Also False
77 Ancora’s Claims About Blucora’s Other Directors Are Also False MR. MACILWAINE was the CTO of Morgan Stanley Dean Witter, one of the largest wealth managers in the country. He was also the senior executive of several leading online payments and financial companies Slide Extracted from Ancora’s Mar
Slide 79: Ancora's Additional Misleading Claims, Continued
Ancora’s Additional Misleading Claims, Continued ANCORA’S MISLEADING CLAIM BLUCORA’S RESPONSE “[T]he TaxAct and Avantax businesses remain illogically paired because of the Board’s unwillingness to acknowledge that its strategic vision is misguided.” “[A] reconstituted Board should assess selling the
Slide 80: Ancora's Additional Misleading Claims, Continued
Ancora’s Additional Misleading Claims, Continued ANCORA’S MISLEADING CLAIM BLUCORA’S RESPONSE “Based on the goodwill impairment charge recorded in 2020, it seems clear that Blucora overpaid for both HD Vest and 1 st Global. To make matters worse, we believe the Company did not properly integrate the
Slide 81: Ancora's Additional Misleading Claims, Continued
Ancora’s Additional Misleading Claims, Continued ANCORA’S MISLEADING CLAIM BLUCORA’S RESPONSE “A Sale of the TaxAct business would allow Blucora to maximize the value of $250 million in NOLs that are set to expire soon” ▪ Our NOLs are a valuable asset. Some of our NOLs expire this year and if we com
Slide 82: Ancora's Additional Misleading Claims, Continued
Ancora’s Additional Misleading Claims, Continued ANCORA’S MISLEADING CLAIM BLUCORA’S RESPONSE “[T]here has been an alarming turnover rate among management at both the highest level and across the business segments. This suggests to us that at a minimum, there are cultural issues at the Company.” ▪ W
Slide 83: Ancora's Additional Misleading Claims, Continued
Ancora’s Additional Misleading Claims, Continued Source: Ancora’s February 25, 2021 letter to Blucora shareholders 82 ANCORA’S MISLEADING CLAIM BLUCORA’S RESPONSE “The Company has also attempted to invalidate Ancora’s nomination by demanding that Ancora deliver highly confidential and proprietary in
Slide 84: Ancora's Additional Misleading Claims, Continued
Ancora’s Additional Misleading Claims, Continued Source: Ancora’s investor presentation filed on March 29, 2021. 83 ANCORA’S MISLEADING CLAIM BLUCORA’S RESPONSE Blucora owns a plane and “records lead us to believe that it is being consistently enjoyed by leadership” ▪ The plane was owned by HKFS, wh
Slide 85: Ancora's Claim that Blucora's Board Refused to Engage is False
Ancora’s Claim that Blucora’s Board Refused to Engage is False 84 “No independent member of the Board even joined in the discussions and no good faith resolution was ever proposed.” Extracted from Ancora’s Letter to Blucora’s Shareholders March 26, 2021 ▪ Blucora’s independent directors sought to ar
Slide 86: Ancora Has Damaged Blucora's Business
Ancora Has Damaged Blucora’s Business 85 In its campaign, Ancora sent letters and emails targeting Blucora’s Financial Professionals The communications were riddled with false and misleading claims about dissatisfied financial professionals ▪ Avantax Financial Professionals are broadly satisfied , a
Slide 87: Ancora's Hand-Picked Peer Group Shows CEO Pay Is In-Line
$0.8 $1.2 $5.0 $0.8 $1.6 $6.1 CEO Salary Annual Incentive Value Equity Value Blucora Ancora Peer Group Average Ancora’s (New) Hand - Picked Peer Group Shows CEO Pay Is In - Line 86 BLUCORA CEO TARGET COMPENSATION VS. ANCORA PEER GROUP AVERAGE ($M) Our CEO’s base salary, target annual incentive value
Slide 88: Ancora's Hand-Picked Peer Group Also Shows Director Pay Is In-Line
Ancora’s Hand - Picked Peer Group Also Shows Director Pay Is In - Line 87 AVERAGE NON - EMPLOYEE DIRECTOR COMPENSATION ($ IN THOUSANDS) Source: Company filings. ” Ancora Peer Group” is taken from Ancora’s investor presentation filed on March 29, 2021 and includes BrightSphere Investment Group, Enves
Slide 89: Ancora Has Repeatedly Made Basic Errors, Impairing Its Credibility
Ancora Has Repeatedly Made Basic Errors, Impairing Its Credibility 88 Ancora’s Letter to Shareholders (3/10/21) Ancora’s Preliminary Proxy (2/26/21) Ancora’s Revised Preliminary Proxy (3/8/21) Same data in each chart, but different time periods Arbitrary “custom” peer group LendingClub included twic
Slide 90: Conclusion
BLUCORA Conclusion
Slide 91: What Is Ancora's Proxy Contest About?
What Is Ancora’s Proxy Contest About? This proxy contest is about whether a new ~3% shareholder should handpick close associates to fill nearly half the independent director seats on Blucora’s Board under the false premises that the incumbent Board has not taken decisive steps to fix the businesses
Slide 92: What Is Ancora's Proxy Contest About?
What Is Ancora’s Proxy Contest About? ANCORA’S PROPOSITION / CLAIM KEY FACTS Who? Ancora , a ~3% shareholder Ancora bought its first shares of Blucora stock in November 2020 Four highly qualified nominees ▪ Three of Ancora’s nominees are close associates and live within 30 minutes of each other outs
Slide 93: Blucora is Making Considerable Progress
Blucora is Making Considerable Progress Blucora has refreshed its Board and leadership team with individuals that have the right skills and experiences for the business 92 The Board has been evaluating the Company’s strategy and business configuration since long before Ancora acquired its first shar
Slide 94: Shareholders Should Reject Ancora's Spreadsheet Activism
Shareholders Should Reject Ancora’s Spreadsheet Activism Shareholders should support Blucora’s transformation by voting FOR the Board’s nominees on the BLUE proxy card 93 ✗ ✗ ✗ ✗ Ancora’s primary plan is to sell Blucora’s TaxAct business now Even if it were the right time to sell TaxAct, Ancora’s si
Slide 95: Contact Information
Contact Information Brokers and Banks: (212) 269 - 5550 All Others Call Toll - Free: (866) 388 - 7535 Email: BCOR@dfking.com 94
Slide 96: Appendix
BLUCORA APPENDIX
Slide 97: Director Biographies
Director Biographies CHRISTOPHER WALTERS President and Chief Executive Officer Experience ▪ Extensive operational and executive management experience from his work as an executive and an advisor to a variety of compan ies ▪ Former Senior Partner at Activate, Inc., a next generation strategy consulti
Slide 98: Director Biographies
Director Biographies MARK ERNST Experience ▪ Extensive relevant industry and executive leadership experience and knowledge, having spent over 30 years in the financial se rvi ces industry, most recently as Executive Vice President and Chief Operating Officer of Fiserv, Inc., a financial services tec
Slide 99: Director Biographies
Director Biographies TINA PERRY Experience ▪ Experience driving strategic transformations of large, complex organizations, currently serving as President of the Oprah Win fre y Network (“OWN”), an adult lifestyle and entertainment company, having been the driving force behind OWN’s evolution and tra
Slide 100: Director Biographies
Director Biographies JANA SCHREUDER Experience ▪ Extensive and relevant operations and wealth management experience from her years of serving in executive management position s a t Northern Trust Corporation, most recently as Chief Operating Officer, which provides her with unique experience in tech
Slide 101: Blucora Now Has the Right Leadership Team
Blucora Now Has the Right Leadership Team ▪ Former Senior Partner at Activate ▪ Highly relevant operational and executive management experience in areas of strategy, operations, technology and digital marketing Christopher Walters President and CEO ▪ Former Chief Information Officer at Optiv ▪ Previ
Slide 102: Reconciliation of Adjusted EBITDA, Non-GAAP Net Income and EPS
Reconciliation of Adjusted EBITDA, Non - GAAP Net Income and Non - GAAP Net Income Per Share 101 2019 2020 FY 12/31 FY 12/31 Adjusted EBITDA (1) Net income (loss) attributable to Blucora, Inc. (2) $ 48,148 $ (342,755) Stock-based compensation 16,300 10,066 Depreciation and amortization of acquired i
Slide 103: Reconciliation of Operating Income, Excluding Corporate-Level Activity
Reconciliation of Operating Income, Excluding Corporate - Level Activity 102 (In thousands) For the year ended December 31, 2020 Operating income (loss) by segment: Wealth Management $ 72,195 Tax Preparation 49,621 Corporate-level activity (390,936) Total operating income (loss) (2) (269,120) Less:
Slide 104: Reconciliation of Wealth Management Segment
Reconciliation of Wealth Management Segment 103 Reconciliation of Wealth Management Net Revenue, Net Revenue (Excluding Cash Sweep Revenue), Segment Income (Excluding Cash S wee p Revenue) and Segment Income (Excluding Cash Sweep Revenue) as a Percentage of Segment Net Revenue (Excluding Cash Sweep
Slide 105: Reconciliation of Tax Preparation Consumer Revenue, Excluding SimpleTax
Reconciliation of Wealth Management Segment 104 Reconciliation of Tax Preparation Consumer Revenue, Excluding SimpleTax (in thousands) FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Tax Preparation services revenue (2) $ 139,365 $ 160,937 $ 187,282 $ 209,966 $ 208,763 Less: Tax Preparation professional rev
Slide 106: Notes to Reconciliations of Non-GAAP Financial Measures
Notes to Reconciliations of Non - GAAP Financial Measures to the Nearest Comparable GAAP Measures 1) We define Adjusted EBITDA as net income (loss) attributable to Blucora , Inc . , determined in accordance with GAAP, excluding the effects of stock - based compensation, depreciation and amortization