2014 Annual Report to Stockholders

2014 ANNUAL REPORT TO STOCKHOLDERS NOTICE OF ANNUAL MEETING PROXY STATEMENT ANNUAL REPORT ON FORM 10-K To Our Shareholders: 2014 was a busy year for Blucora. While we faced a number of challenges, we made important progress in our businesses and remain confident in our ability to drive long-term value for shareholders. Consolidated Blucora results were below our expectations, primarily due to declines in our Search and Content segment, where Infospace struggled in the face of changing dynamics in the search marketplace. Our Tax Preparation segment performed well in the year. TaxACT continued to expand across consumer and assisted preparation product lines and drove accelerated growth in revenue and segment income. In E-Commerce, Monoprice delivered solid profitability but top line momentum slowed following execution delays and insufficient new product innovation. While results at TaxACT last year were impressive, our model requires all of our businesses to perform well in order to meet our expectations, and we are dedicated to ensuring that performance. To that end, we appointed new Presidents at Monoprice and Infospace in the second half of 2014. I have charged both executives with revitalizing their teams, evolving core offerings, and improving execution to keep pace with market and customer demands. The outlook for each of these businesses under new leadership is encouraging. The transformation underway at Blucora is unmistakable. In 2010, we set out to diversify our Company through a focused acquisition strategy, accelerate growth through investment and effective operations, and manage at the parent- level with discipline and cost-mindedness. To begin, we were a single business with undue dependency on one customer. Today we operate three business segments in growing digital markets under strong senior leadership. We diversified through the acquisition of quality businesses in TaxACT and Monoprice and meaningfully reduced our customer dependency in the process. Our performance during this transition has been strong. As a result of our efforts, Blucora is significantly more diversified and better positioned for growth, stability, and profitability going forward: Performance Scorecard (at December 31; $ millions except per share amounts) 2010 2014 CAGR Adjusted EBITDA* ........................................ $32.5 $102.9 33% Non-GAAP Net Income per Share* ........................... $1.11 $ 1.92 15% Price Per Share ........................................... $8.30 $13.85 14% An important part of the Blucora value-creation formula involves leveraging the tax efficiency afforded by our outsized net operating loss tax asset (the “NOL”). Since 2010 we have unlocked approximately $75 million of value in this asset through cash tax savings. Further opportunity exists, with the remaining NOL balance at approximately $570 million. I joined the Blucora management team in November 2010 with a passionate belief we could drive a transformation of our Company and, in so doing, generate sustainable long-term value for our shareholders, delight our customers, and create meaningful career opportunities for our employees. Our journey may not be linear year-to-year, but the progress is clear and the benefits over time are compelling. It is a distinct privilege to work at Blucora during this important period of transformation and value-creation. As always I welcome your feedback and thoughts as we continue to execute against our vision. Sincerely, Bill Ruckelshaus President and CEO Blucora, Inc. * Adjusted EBITDA and Non-GAAP Net Income per Share are both non-GAAP financial measures. For specific information on how these non-GAAP figures are calculated, and for reconciliation of them to GAAP figures, please see “Management’s Discussion and Analysis” in our 2014 Form 10-K, a copy of which is included in this annual report to stockholders. Reconciliation of the 2010 figures can be found in our 2012 Form 10-K, which is available on our website at www.blucora.com and is on file with the SEC and available at www.sec.gov. BLUCORA, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To be held on May 28, 2015 TO THE STOCKHOLDERS: Notice is hereby given that the annual meeting of stockholders of Blucora, Inc. (“Company”), a Delaware Proxy corporation, will be held on May 28, 2015, at 2:00 p.m. The meeting will be held in the large conference room on the 2nd floor of the Plaza Center Building, located at 10900 NE 8th Street, Bellevue, Washington 98004, for the following purposes: 1. To elect the three Class I directors nominated by the Board of Directors of the Company; 2. To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for 2015; 3. To approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this Proxy Statement; 4. To approve the Blucora, Inc. 2015 Incentive Plan; and 5. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The foregoing items of business are more fully described in the Proxy Statement accompanying this notice. The Board of Directors has fixed the close of business on March 30, 2015 as the record date for the determination of stockholders entitled to notice of this meeting and the right to vote. All stockholders are cordially invited to attend the meeting in person. However, to save the expense of additional solicitation, you are urged to vote online, by telephone, or by signing, dating, and returning the enclosed proxy card or voting instruction card as promptly as possible. For specific instructions regarding voting online, by telephone, or by mail, please see the enclosed proxy card or voting instruction card. Any stockholder attending the meeting may vote in person even if the stockholder has previously returned a proxy. Please see “Information Concerning Proxy Solicitation and Voting – Questions and Answers” in the Proxy Statement for more details on voting in person at the meeting. By Order of the Board of Directors, Nathan Garnett General Counsel and Secretary Bellevue, Washington April 28, 2015 YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE VOTE ONLINE, BY TELEPHONE, OR SIGN, DATE, AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE, OR VOTE IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH ON THE ENCLOSED VOTING INSTRUCTION CARD. INFORMATION CONCERNING PROXY SOLICITATION AND VOTING ......................... 1 PROPOSAL ONE – ELECTION OF DIRECTORS .............................................. 6 PROPOSAL TWO – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM .................................................................. 7 PROPOSAL THREE – ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS ............................................ 7 PROPOSAL FOUR – APPROVAL OF THE BLUCORA, INC. 2015 INCENTIVE PLAN .............. 8 EQUITY COMPENSATION PLAN INFORMATION ........................................... 18 INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES ................ 19 Director Nominees ................................................................... 19 Continuing Directors .................................................................. 20 Board of Directors and Committee Information ............................................. 22 Proxy Director Nomination Process ........................................................... 27 Director Compensation ................................................................ 28 AUDIT COMMITTEE REPORT ............................................................ 30 FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2014 AND 2013 . 32 TRANSACTIONS WITH RELATED PERSONS ............................................... 32 COMPENSATION COMMITTEE REPORT ................................................... 33 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION ................. 33 INFORMATION REGARDING EXECUTIVE OFFICERS ....................................... 34 COMPENSATION DISCUSSION AND ANALYSIS ............................................ 35 Introduction ......................................................................... 36 Elements of Compensation for 2014 ...................................................... 37 Compensation Decisions Made in 2014 ................................................... 38 2014 Performance and Targets .......................................................... 41 Compensation Process and Policies ...................................................... 43 COMPENSATION OF NAMED EXECUTIVE OFFICERS ....................................... 47 Summary Compensation Table .......................................................... 47 Grants of Plan-Based Awards in 2014 .................................................... 48 Outstanding Equity Awards at December 31, 2014 .......................................... 49 Option Exercises and Stock Vested in 2014 ................................................ 50 Potential Payments Upon Termination of Employment ....................................... 50 BENEFICIAL OWNERSHIP ............................................................... 52 Section 16(a) Beneficial Ownership Reporting Compliance ................................... 52 Security Ownership of Certain Beneficial Owners and Management ............................ 52 Ownership Limitations ...............................................................

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