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Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
−Removed: Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
+Added: Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the U.S.
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
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Changes in Internal Control over Financial Reporting
−Removed: As previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2022 (the “preceding Form 10-K”), management concluded that there was a material weakness in internal controls over financial reporting related to monitoring and the control environment, including the circumvention of control activities, that contributed to the fraud perpetrated by a former senior marketing employee, and aggregated to a material weakness.
−Removed: Specifically, the material weakness related to inadequate hiring practices for employees in senior leadership positions whose roles and responsibilities include the initiation of transactions with third parties, and ineffective control and monitoring activities, including the circumvention of certain control activities, related to the review, authorization and approval of third-party vendors, and associated contracts for services, and approval of third-party vendor payments.
−Removed: We have taken the following steps to remediate the material weakness described above:
−Removed: • Enhanced our policy to require more comprehensive hiring practices for individuals in senior leadership positions, which includes more robust background checks than we require for all other employees.
−Removed: • Improved the design of internal vendor management processes and controls, including hiring dedicated procurement resources to ensure contracts, including amendments, are appropriately reviewed, authorized in accordance with our delegation of authority policies, and approved.
−Removed: • Clarified the design of vendor payment controls to prescribe the criteria an approver must review, in addition to invoice requests, to adequately support payments to vendors.
−Removed: • Implemented more stringent monitoring controls to ensure compliance with contract reviews, approval authority limits and vendor payment policies.
−Removed: As of December 31, 2023, testing of both the design and operating effectiveness of the new controls was completed, and management concluded that the material weakness in internal controls over financial reporting related to this matter has been remediated.
−Removed: Except as noted in the preceding paragraphs, there has been no change in our internal control over financial reporting that occurred during the most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
+Added: There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rule 13a-15(d) or 15d-15(d) of the Exchange Act during the fiscal period ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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Other Information
−Removed: None of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934) adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408 of Regulation S-K) during the Company’s fiscal quarter ended December 31, 2023.
−Removed: On February 19, 2024, Matt Bonakdarpour, 37, was appointed President and Chief Technology Officer of the Company.
−Removed: Bonakdarpour has been the Chief Technology Officer of the Company since February 23, 2022.
−Removed: Bonakdarpour will continue to receive compensation and benefits materially similar to those described in the Company’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on April 27, 2023 (the “2023 Proxy Statement”), except that Mr.
−Removed: Bonakdarpour’s target annual incentive opportunity was increased to 100% of annual base salary under the Company’s annual short-term incentive program, and in the Company’s Current Report on Form 8-K, as filed with the SEC on August 11, 2023.
−Removed: The biographical information and business experience of Mr.
−Removed: Bonakdarpour is also included in the 2023 Proxy Statement, and those descriptions are incorporated herein by reference.
+Added: Rule 10b5-1 Trading Arrangements
+Added: On December 13, 2024 , Alexander Timm , the Company’s Chairman of the Board and Chief Executive Officer , entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (a “10b5-1 Plan”).
+Added: Timm’s 10b5-1 Plan provides for the potential sale of up to 147,652 shares of Class A common stock and terminates no later than March 13, 2026 .
+Added: On December 13, 2024 , Mahtiyar Bonakdarpour , the Company’s President and Chief Technology Officer , entered into a 10b5-1 Plan.
+Added: Bonakdarpour’s 10b5-1 Plan provides for the potential sale of up to 61,211 shares of Class A common stock and terminates no later than March 13, 2026 .
+Added: On December 13, 2024 , Douglas Ulman , a member of the Company’s Board of Directors , entered into a 10b5-1 Plan.
+Added: Ulman’s 10b5-1 Plan provides for the potential sale of up to 7,000 shares of Class A common stock and terminates no later than March 13, 2026 .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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We will provide disclosure of delinquent Section 16(a) reports, if any, in our Proxy Statement in a section entitled “Delinquent Section 16(a) Reports,” and such disclosure, if any, is incorporated herein by reference.
+Added: We have adopted the Amended and Restated Insider Trading Policy governing the purchase or sale of our securities by our officers, employees and members of the Board of Directors, as well as designated consultants, and have implemented procedures that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and the listing standards of The Nasdaq Stock Market.
+Added: A copy of the Amended and Restated Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Executive Compensation
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The information required by this Item is incorporated by reference in the 2025 Proxy Statement.
−Removed: Certain Relationships and Related Party Transactions, and Director Independence
+Added: Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference in the 2025 Proxy Statement.
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Exhibits and Financial Statement Schedules
−Removed: (a) Exhibits.
+Added: (a) Financial Statements and Schedules.
+Added: See Index to the Consolidated Financial Statements and Schedules on page 87 .
+Added: (b) Exhibits.
Number Description of Exhibit Form SEC File Number Exhibit Filing Date Filed Herewith
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4.2 Description of Securities
+Added: 10-K 001-39658 4.2 February 21, 2024
4.3 Common Stock Purchase Warrants, dated as of October 1, 2021, by and between Root, Inc.
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8-K 001-39658 4.1 January 27, 2022
−Removed: 4.5 Form of Common Stock Purchase Warrant (Tranche 2)
−Removed: 8-K 001-39658 4.2 January 27, 2022
+Added: 4.5 First Amendment to Form of Common Stock Purchase Warrant (Tranche 1), dated October 29, 2024
+Added: 10-Q 001-39658 4.5 October 30, 2024
10.1# Root, Inc.
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10-K 001-39658 10.16 March 4, 2021
−Removed: 10.8# Amended and Restated Offer Letter by and between Root, Inc.
−Removed: and Daniel Rosenthal, dated February 24, 2021.
−Removed: 10-K 001-39658 10.17 March 4, 2021
−Removed: 10.9# First Amendment to Amended and Restated Offer Letter by and between Root, Inc.
−Removed: and Daniel Rosenthal, dated February 23, 2022
−Removed: 001-39658 10.27 February 23, 2022
First Amendment to Offer Letter by and between Root, Inc.
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001-39658 10.26 February 23, 2022
−Removed: 10.11# Executive Employment Agreement with Robert Bateman
−Removed: 8-K 001-39658 10.1 March 23, 2022
Executive Employment Agreement with Matt Bonakdarpour
10-Q 001-39658 10.2 August 8, 2022
−Removed: 10.13# Form of Executive Retention Award
−Removed: 10-K 001-39658 10.3 February 23, 2022
−Removed: 10.14# Root Inc, Non-Employee Director Compensation Policy adopted February 17, 2022
−Removed: 10-K 001-39658 10.4 February 23, 2022
Form of Stock Option Agreement under the Amended and Restated 2015 Equity Incentive Plan.
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10-Q 001-39658 10.3 August 8, 2022
−Removed: 10.24# Root, Inc.
−Removed: Executive Compensation Agreement
−Removed: 10-K 001-39658 10.30 February 23, 2022
−Removed: 10.25# Form of Root, Inc.
−Removed: Cash Incentive Agreement
−Removed: 10-Q 001-39658 10.9 May 4, 2022
10.19 Investment Agreement, dated as of August 11, 2021, by and between Root, Inc.
10 unchanged sentences
10-K 001-39658 10.5 February 23, 2022
−Removed: 10.30 Board Observation Side Letter, dated January 26, 2022, by and between the Company and GCO II Aggregator 2 L.P.
−Removed: 001-39658 10.2 January 27, 2022
10.23 Registration Rights Agreement, dated January 26, 2022, by and between the Company and the other parties thereto.
001-39658 10.3 January 27, 2022
−Removed: 10.32*# Separation and Transition Agreement dated February 20, 2023, between Daniel Rosenthal and Root, Inc.
−Removed: 10-K 001-39658 10.34 February 22, 2023
Executive Employment Agreement with Megan Binkley
8-K 001-39658 10.1 March 1, 2023
−Removed: 10.34# Retention Bonus Agreement between Megan Binkley and Root, Inc.
−Removed: 10-Q 001-39658 10.3 May 3, 2023
−Removed: 10.35# Non-Employee Director Compensation Policy
−Removed: 10-Q 001-39658 10.1 August 2, 2023
Executive Retention Agreement between Matt Bonakdarpour and Root, Inc.
3 unchanged sentences
10-Q 001-39658 10.2 November 1, 2023
−Removed: 10.38# Root, Inc.
Non-Employee Director Compensation Policy adopted October 23, 2023
8-K 001-39658 10.1 October 26, 2023
+Added: 2024 Short-Term Incentive Plan
+Added: 10.29 First Amendment to Term Loan Agreement, dated September 17, 2024, by and among the Company, Caret Holdings, Inc., as borrower, the loan parties party thereto and Acquiom Agency Services LLC, as the administrative agent for the lenders party thereto
+Added: 10-Q 001-39658 10.1 October 30, 2024
+Added: Second Amendment to Term Loan Agreement, dated October 29, 2024, by and among the Company, Caret Holdings, Inc., as borrower, the loan parties party thereto and Acquiom Agency Services LLC, as the administrative agent for the lenders party thereto
+Added: 10-Q 001-39658 10.2 October 30, 2024
+Added: 10.31 Amended and restated Board Observation Side Letter
+Added: 10-Q 001-39658 10.3 October 30, 2024
+Added: Form of Root, Inc.
+Added: 2020 Equity Incentive Plan Performance-Based RSU Award Grant Notice and Agreement (2024 Grant)
+Added: 8-K 001-39658 10.1 November 15, 2024
+Added: Form of Root, Inc.
+Added: 2020 Equity Incentive Plan Performance-Based RSU Award Grant Notice and Agreement Retirement-Eligible (2024 Grant)
+Added: 8-K 001-39658 10.2 November 15, 2024
+Added: Executive Employment Agreement with Jon Allison
+Added: 19.1 Amended and Restated Ins ider Trading Policy
21.1 List of subsidiaries of Root, Inc.
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Form 10-K Summary
−Removed: Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized .
+Added: Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized .
February 26, 2025
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POWER OF ATTORNEY
−Removed: KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alexander Timm and Megan Binkley, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the U.S.
+Added: KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alexander Timm, Megan Binkley and Ryan Forish, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the U.S.
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and either of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
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/s/ Megan Binkley Chief Financial Officer
−Removed: ( Principal Financial Officer and Principal Accounting Officer )
+Added: ( Principal Financial Officer )
February 26, 2025
Megan Binkley
+Added: /s/ Ryan Forish Chief Accounting Officer
+Added: ( Principal Accounting Officer )
+Added: February 26, 2025
/s/ Doug Ulman Director February 26, 2025
9 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.