DEF 14A of Meritage Homes CORP
Filed Apr 1, 2024 · FY20230000833079-24-000071
Election of Directors
Election of Directors Our Board currently has eleven members. The directors are divided into two classes serving staggered two-year terms. This year, our Class I directors are up for election. The Board, upon the recommendation of the ESNG Committee, has nominated for re-election Dana C. Bradford, Louis E. Caldera, Deb Henretta, Steven J. Hilton, and P. Kelly Mooney, all of whom are presently serving as Class I directors. Additionally, Dennis V. Arriola, a Class II director who was appointed to the Board in June 2023, is up for election. Raymond Oppel, a Class I director, is not standing for re-election due to his upcoming retirement, which will be effective at the end of his current term on May 16, 2024. Biographical information for each of our director nominees is set forth beginning on page 17. All nominees have consented to serve as directors. The Board of Directors has no reason to believe that any of the nominees will be unable to act as a director. However, should a nominee become unable to serve or should a vacancy on the Board occur before the Annual Meeting, the Board may either reduce its size or designate a substitute nominee. If a substitute nominee is named, your shares will be voted for the election of the substitute nominee designated by the Board. In the vote on the election of the director nominees, stockholders may vote FOR, AGAINST, or ABSTAIN for each director. Unless you elect to vote differently by so indicating on your signed proxy, your shares will be voted FOR the Board’s nominees. To be elected a director, a director nominee must receive the affirmative vote of the majority of the votes cast, meaning, that the number of votes cast "for" a director nominee must exceed the number of votes "against" that director nominee. Any nominee for director who is an incumbent director but who is not elected by a majority of the votes cast, and with respect to whom no successor has been elected, will promptly tender his or her offer to resign to the Board of Directors for its consideration. The ESNG Committee will recommend to the Board of Directors whether to accept or reject the resignation offer, or whether other action should be taken. Broker non-votes and abstentions will not count as either votes for or against the nominee. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE ABOVE-NAMED NOMINEES AS DIRECTORS.
Election of Directors
| PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Corporate Governance and Board Matters
| •director qualifications, | •director access to officers and employees, | | •independence criteria, | •our philosophy with respect to director compensation, | | •director responsibilities, | •Board evaluation process, | | •committee responsibilities and structure, | •confidentiality requirements, | | •officer and director stock ownership requirements, | •director orientation and continuing education, and | | •director resignation policy, | •our plans with respect to management succession. | | •evaluations of Executive Chairman and CEO, | |
Corporate Governance and Board Matters
Our Corporate Governance Principles and Practices are available on our website at investors.meritagehomes.com. These principles are reviewed regularly by the ESNG Committee and changes are made as the Board deems appropriate on recommendation of the ESNG Committee.
Corporate Governance and Board Matters
| Director Qualifications and Diversity |
Corporate Governance and Board Matters
Our Board is comprised of a group of individuals whose previous experience, financial and business acumen, personal ethics and dedication and commitment to our Company allow the Board to complete its key task as the overseer and governing body of the Company. The specific experience and qualifications of each of our Board members are set forth below. The Board is committed to a policy of inclusiveness and diversity. The Board believes members should be comprised of persons with diverse backgrounds, skills, expertise, and experiences, including the following: •management or board experience in a wide variety of enterprises and organizations, •banking and capital markets, •accounting and finance, •legal, compliance and regulatory, •real estate, including homebuilding, commercial and land development, •technology, cybersecurity and artificial intelligence ("AI"), •sales, marketing and branding, •environmental, social and governance ("ESG") •human capital, and •operations. The below matrix illustrates the key skills, expertise, and experience of each director:
Corporate Governance and Board Matters
| Capabilities | Steven J. Hilton | Phillippe Lord | Peter L. Ax | Raymond Oppel | Dana C. Bradford | Michael R. Odell | Deb Henretta | Joseph Keough | P. Kelly Mooney | Louis E. Caldera | Dennis V. Arriola | | Executive Management | X | X | X | X | X | X | X | X | X | X | X | | Cyber/IT/Technology/AI | | | X | | | | X | | | | | | ESG | | | | | | | X | | | X | X | | Financial | X | | X | | X | X | X | X | | X | X | | Home Building/Real Estate | X | X | | X | | | | X | | | | | Human Capital | | | | | | | | | X | X | X | | Legal, Regulatory & Compliance | | | X | | | | | | | X | X | | Manufacturing or Operations | X | X | | X | X | X | X | | | | X | | Marketing & Sales | X | | X | X | X | X | X | | X | | | | Private Board | X | | X | X | X | X | X | X | X | X | X | | Public Board | X | | X | X | X | X | X | X | X | X | X |
Corporate Governance and Board Matters
Our bylaws require a customary majority voting standard for the election of directors. In addition, our Corporate Governance Principles and Practices require that any nominee for director who is an incumbent director but who is not elected by the vote required in the bylaws, and with respect to whom no successor has been elected, promptly tender his or her offer to resign to the Board for its consideration. The ESNG Committee of the Board will recommend to the Board whether to accept or reject the resignation offer, or whether other action should be taken. In determining whether to recommend that the Board accept any resignation offer, the ESNG Committee will be entitled to consider all factors believed relevant by the ESNG Committee’s members. The Board will act on the ESNG Committee’s recommendation within 90 days following certification of the election results and will announce its determination and rationale in a Form 8-K. In deciding whether to accept the resignation offer, the Board will consider the factors considered by the ESNG Committee and any additional information and factors that the Board believes to be relevant. If the Board accepts a director’s resignation offer pursuant to its process, the ESNG Committee will recommend to the Board and the Board will thereafter determine what action, if any, will be taken with respect to any vacancy created by a resignation. Any director who tenders his or her resignation pursuant to this policy will not participate in the proceedings of either the ESNG Committee or the Board with respect to his or her own resignation. In case of a Board vacancy or if the Board elects to increase its size, determinations regarding the eligibility of director candidates are made by the ESNG Committee, which considers the candidate’s qualifications as to skills and experience in the context of the needs of the Board and our stockholders. When seeking new Board candidates, the ESNG Committee is committed to a policy of inclusiveness and will take reasonable steps to ensure that women and people of color are considered for the pool of candidates from which the Board nominees are chosen, and will endeavor to include qualified candidates from non-traditional venues. On January 2, 2024, Gerald Haddock, a long tenured director retired and on March 14, 2024, Raymond Oppel announced his retirement, which will be effective at the end of his current term on May 16, 2024. Accordingly, the Board has begun a search for a new female board member candidate. While the timing of the identification and appointment of a new board member cannot be guaranteed, we anticipate our search will conclude by the end of the fiscal year. The Board is also committed to search for a female director upon any subsequent board retirement, in a good faith effort to improve board gender diversity over a reasonable time period. The following charts and biographies provide summary information about the tenure, demographics and experience of our directors as of March 21, 2024: (a) Includes two females and two persons of color. The following table illustrates the voluntarily self-identified ethnic composition, as defined by NASDAQ, of our current Board and its Committees.
Corporate Governance and Board Matters
| Ethnicity | Board of Directors | Audit Committee | Compensation Committee | ESNG Committee | Land Committee | | African American or Black | | | | | | | Alaskan Native or Native American | | | | | | | Asian | | | | | | | Hispanic or Latino | 2 | | 1 | 1 | | | Native Hawaiian or Pacific Islander | | | | | | | White | 9 | 4 | 4 | 3 | 4 | | Two or More Races or Ethnicities | | | | | | | Total Number of Members | 11 | 4 | 5 | 4 | 4 |
Corporate Governance and Board Matters
Our Board is comprised of the following members:
Corporate Governance and Board Matters
| Class I Directors | | | Steven J. Hilton, 62 | Mr. Hilton is the Executive Chairman of Meritage Homes and has been a director since 1996. Mr. Hilton led Meritage Homes for 35 years as Chairman and CEO until his retirement as CEO effective January 1, 2021. In 1985, Mr. Hilton cofounded Arizona-based Monterey Homes, the predecessor company to Meritage Homes. Under Mr. Hilton’s leadership, Monterey became publicly traded in 1997. Mr. Hilton received a Bachelor’s degree in Accounting from the University of Arizona. He serves as a board member for Translational Genomics Research Institute (TGEN) Foundation and the Boys & Girls Clubs of Greater Scottsdale Foundation. He also previously served as Chairman of the Board for Banner Health Foundation from 2021 to 2023, and as a board member for Western Alliance Bancorporation, (NYSE: WAL) until June 2022. Mr. Hilton brings extensive and intimate knowledge of the Company to the Board as its co-founder and through over 35 years of experience in leading the Company. | | | | | Raymond Oppel, 67 | Mr. Oppel has been a director since December 1997 and is retiring on May 16, 2024. Mr. Oppel is a licensed real estate broker and currently is active as a private investor in real estate development. He was the co-founder, Chairman and CEO of The Oppel Jenkins Group, a regional homebuilder in Texas and New Mexico, which was purchased in 1995 by public homebuilder KB Home. Mr. Oppel has over 30 years of experience in the homebuilding business. Mr. Oppel possesses extensive knowledge about the real estate industry in general and the homebuilding industry in particular. | | | | | Dana C. Bradford, 59 | Mr. Bradford has been a director since August 2009. In 2012, Mr. Bradford cofounded and was appointed and currently serves as Chairman and CEO of C3 Brands, the parent company to a number of consumer brands. From 2005 to 2012, Mr. Bradford was the President and Managing Partner of McCarthy Capital Corporation, a private equity firm. He also serves as a director on the boards of Southwest Value Partners, a San Diego-based real estate company, and Customer Service Profiles, an Omaha-based provider of customer satisfaction data and analytics. Mr. Bradford formerly served as Chairman of the Board of Vornado Air, a Wichita-based consumer brands company, and formerly served as a director on the boards of McCarthy Groups, Ballantyne, NRG Media, Guild Mortgage and Gold Circle Films. Mr. Bradford earned a Bachelor's degree in Business Administration from the University of Arizona and an MBA from Creighton University. Mr. Bradford brings additional perspective to the Board relating to real estate and corporate finance matters. | | | | | Deb Henretta, 62 | Ms. Henretta has been a director since March 2016. Ms. Henretta retired from Procter & Gamble, Co. ("P&G") in 2015. Throughout her 30 years at P&G, she held various senior positions throughout several sectors, serving as President of Global e-Business while concurrently serving as President/Senior Executive Officer of Global Beauty; President of Global Baby Care; and Vice President of Fabric Conditioners and Bleach. She has been a director at Corning Incorporated. (NYSE: GLW) since 2013, at Nisource Inc. (NYSE: NI) since 2015, and at American Eagle Outfitters (NYSE:AEO) since 2019. Ms. Henretta is a Partner at Council Advisors (formerly G100 Companies) where she assisted in establishing a Board Excellence Program for Corporate Board Directors that includes director education on board oversight and governance, including digital transformation and cybersecurity. Ms. Henretta graduated summa cum laude from St. Bonaventure University with a Bachelor of Arts in Communication. She earned her Master of Arts in Advertising from Syracuse University Newhouse School of Public Communications and holds an honorary Doctorate of Humane Letters from St. Bonaventure University. Ms. Henretta brings additional perspective and expertise to the Board relating to technology, cybersecurity, climate and sustainability, and diversity and inclusion. | | | | | P. Kelly Mooney, 60 | Ms. Mooney has been a director since March 2020. Ms. Mooney is the Founder and CEO of Equipt Women, a public benefit corporation dedicated to connecting, empowering and upskilling young professional women. She was previously a co-owner of Resource/Ammirati, a digital marketing and customer experience innovation firm, and held various positions of leadership including CEO from January 2011 to September 2017; President from June 2001 to January 2011; and Chief Experience Officer and Director of Intelligence from March 1995 to May 2001. During that tenure, she advised dozens of Fortune 500 executives on customer growth strategy and digital transformation to increase shareholder value. In 2016, Resource/Ammirati was sold to IBM to become part of IBM iX, one of the world’s largest digital consultancies. Ms. Mooney joined IBM iX in September 2017 and served as Chief Experience Officer until June 2018. She advises consumer and technology-focused entrepreneurs on leadership, strategy and innovation. Ms. Mooney has also served as a board member of Sally Beauty Supply Holdings, Inc. (NYSE:SBH), an international specialty retailer and distributor of professional beauty supplies, and J.Jill Inc. (NYSE: JILL), an omnichannel women's apparel brand. She graduated with honors with a Bachelor of Science in Industrial Design from The Ohio State University. Ms. Mooney brings additional perspective on innovation, sustainability, diversity and inclusion. | | | |
Class I Directors (continued)
Class I Directors (continued)
Class I Directors (continued)
| Louis E. Caldera, 68 | Mr. Caldera has been a director since December 2021. Mr. Caldera is a private investor and corporate director. He has been serving as a director of DallasNews Corporation (NASDAQ: DALN), formerly Belo Corp, since 2001, where he also chairs the compensation and management development committee, and has been serving as a director of Granite Construction Incorporated (NYSE: GVA) since 2021. Mr. Caldera has been a Senior Lecturer at Harvard Business School since July 2023. Since March 2021, Mr. Caldera has served as a senior advisor to Belay Associates, LLC, a private equity firm, and its affiliate Everest Consolidator Acquisition Corporation (NYSE: MTNT.U). Mr. Caldera has held several leadership positions in education, including Distinguished Adjunct Professor of Law at American University Washington College of Law from September 2018 to June 2021, and Professor of Leadership and a Senior Fellow of the George Washington University Cisneros Hispanic Leadership Institute from 2016 to 2018. He has also served in government as Secretary of the Army in the Clinton Administration and as an Assistant to the President and Director of the White House Military Office in the Obama Administration. Mr. Caldera began his career as an army officer, corporate lawyer, and California state legislator. He is the co-founder and co-chair of the Presidents’ Alliance on Higher Education and Immigration, a nonprofit organization, and serves on the board of the Latino Corporate Directors Association. Mr. Caldera holds an MBA from Harvard Business School, a Juris Doctor from Harvard Law School and a Bachelor of Science from the United States Military Academy. He has significant knowledge and experience in the leadership of large organizations, corporate governance including environmental, social and sustainability governance, and in legal, regulatory and policy matters. | | | |
Class I Directors (continued)
| Class II Directors | | | Peter L. Ax, 64 | Mr. Ax has been a director since September 2000 and is the Company's lead independent director. In 2001, he joined UpscriptHealth, a telemedicine-based software platform which facilitates pharmaceutical manufacturers selling medications direct-to-consumers, where he currently serves as the CEO. He was also the Managing Partner of Phoenix Capital Management, an operationally focused venture capital firm, which became a subsidiary of UpscriptHealth in 2021. Mr. Ax was the Chairman and CEO of SpinCycle, Inc., a public reporting consolidator and developer of coin-operated laundromats. Previously, Mr. Ax served as head of the Private Equity Placement Division and Senior Vice President of Lehman Brothers in New York and has served in various operating roles for enterprises operated by Phoenix Capital Management. Mr. Ax also served on the board of directors of iGo, Inc. (formerly, NASDAQ: IGOI) from 2007 to January 2022. Mr. Ax holds an MBA from the Wharton School at the University of Pennsylvania, a Juris Doctorate from the University of Arizona, and a Bachelor of Science in Business Administration from the University of Arizona, and has been a Certified Public Accountant. Mr. Ax possesses extensive skills and experience relating to, among other things, capital markets and corporate finance. | | | | | Michael R. Odell, 60 | Mr. Odell has been a director since December 2011. Since 2017, he has been Board Member, President and CEO of Marubeni Automotive Aftermarket Holdings ("Marubeni"), a holding company for investments in the automotive aftermarket. He also currently serves as Board Member, President and CEO of Marubeni subsidiaries, XL Parts and The Parts House, both automotive parts distributors. From 2015 through 2016, he served as President of Eastern Auto Parts Warehouse, an automotive parts distributor. From 2008 through 2014, he served as President, CEO and board member of The Pep Boys - Manny, Moe & Jack, then a NYSE-listed company. Mr. Odell joined Pep Boys in 2007 as Chief Operating Officer. Previously, he served as Executive Vice President and General Manager of Sears Retail & Specialty Stores, a $26 billion division of Sears Holdings Corporation. Mr. Odell started his career as a CPA with Deloitte & Touche LLP. Mr. Odell holds an MBA from Northwestern University's Kellogg School of Management, and a Bachelor of Science in Accounting from the University of Denver's Daniels College of Business. Mr. Odell has deep service, retail and distribution experience, with a broad background in strategic planning, leadership, sales, operations and finance. | | | | | Joseph Keough, 54 | Mr. Keough has been a director since June 2019. He currently serves as Chairman and CEO of Wood Partners, one of the nation's largest multifamily real estate companies. Before joining Wood Partners, Mr. Keough was Chief Operating Officer of Fuqua Capital, the office for the Atlanta-based Fuqua family. Mr. Keough had also been a Senior Vice President in the office and multifamily division of Cousins Properties (NYSE: CUZ), as well as a Principal at The Boston Consulting Group. Mr. Keough is also on the board of directors of Interface, Inc. (NASDAQ: TILE). Mr. Keough earned his MBA from Harvard Business School and received his Bachelor degree in Finance and Economics from Babson College. Mr. Keough brings over 20 years of strong business leadership, deep understanding of real estate and first-hand experience driving organizational transformation. | | | | | Dennis V. Arriola, 63 | Mr. Arriola was appointed to the Board on June 14, 2023. Mr. Arriola is standing for election at the 2024 Annual Meeting. Mr. Arriola was initially recommended to serve as a director by a third-party search firm, which was followed by a collective determination by our Board to nominate him. He is currently an Operating Partner at Sandbrook Capital, a private equity firm focused on transforming energy infrastructure investments. Prior to joining Sandbrook Capital, he served as CEO and member of the Executive Committee of Avangrid, Inc. (NYSE: AGR) from July 2020 to May 2022, and was the Executive Vice President and Chief Sustainability Officer at Sempra Energy (NYSE: SRE) from January 2017 to June 2020. Mr. Arriola has been serving as a director of Commercial Metals Company (NYSE: CMC) since March 2024, and as a director and member of the Audit & Finance Committee and Human Resources & Compensation Committee of ConocoPhillips (NYSE: COP) since September 2022. In addition, Mr. Arriola has been a director of Automobile Club of Southern California (AAA) since May 2020, where he has served as a member of the public affairs committee since May 2020, the finance and investment committee since May 2023, and served as a member of the audit committee from May 2020 to May 2023. Mr. Arriola holds an MBA from Harvard Business School and a Bachelor of Arts in Economics from Stanford University. He has substantial knowledge and leadership experience in environmental, social and governance ("ESG"), operations and finance, and brings additional perspective to the Board in sustainability as well as regulatory, policy and legislative issues. | | | | | Phillippe Lord, 50 | Mr. Lord became the CEO of Meritage Homes on January 1, 2021 and was appointed to the Board at that time. He previously served as Chief Operating Officer of Meritage Homes from 2015 to 2020. From 2012 to 2015, Mr. Lord was President of the West Region at Meritage Homes. Mr. Lord began his Meritage Homes career in 2008 by creating the Company’s strategic operations and market research department, which analyzes land acquisitions, product and pricing. Prior to joining Meritage Homes, Mr. Lord held leadership positions with Acacia Capital, Centex Homes and Pinnacle West Capital. Mr. Lord received a Bachelor's degree in Economics and Business from Colorado State University and completed his master's coursework in Economics at the University of Arizona. As CEO of the Company, Mr. Lord is uniquely qualified to serve as a member on our Board. | | | |
Class I Directors (continued)
| Director Independence |
Class I Directors (continued)
The ESNG Committee evaluates and reports to the Board regarding the independence of each Board candidate. Consistent with the rules and regulations of the NYSE, at least a majority of the Board must be independent. No director will be deemed to be independent unless the Board affirmatively determines that the director has no material relationship with the Company, either directly or as an officer, stockholder, member, partner or trustee of an organization that has a relationship with the Company. The Board observes all criteria established by the NYSE and other governing laws and regulations. In its review of director independence, the Board considers all commercial, banking, consulting, legal, accounting, charitable, personal and other business relationships the director may have with the Company. As a result of its review, the Board has determined that all of our current Board members are independent directors, with the exception of Messrs. Hilton and Lord. In making this determination, the Board evaluated whether any relationships exist between these individuals and Meritage and determined that no relationship exists between Meritage and any independent director. Messrs. Hilton and Lord are not considered independent because they are executive officers of the Company. There are no familial relationships between members of the Board. The Board has determined that all committees of the Board should be comprised entirely of independent directors and therefore Messrs. Hilton and Lord do not serve on any Board committees. The Board limits its independent members from serving on more than three other public company boards, limits the Executive Chairman to serving on two additional public company boards, and limits the CEO to serving on one additional public company board.
Class I Directors (continued)
| Board Leadership Structure |
Class I Directors (continued)
Steven J. Hilton, the Company's co-founder, serves as the Executive Chairman of the Board. We believe Mr. Hilton’s unique industry experience and continuing involvement in the strategic operations of the Company make him highly qualified to serve as Executive Chairman. Mr. Hilton co-founded Meritage Homes and is thus intimately familiar with its history, culture and operations. Mr. Hilton possesses in-depth knowledge and expertise in the homebuilding industry as a whole and Meritage Homes in particular and is the Company’s largest non-institutional stockholder. The Board has concluded that this puts Mr. Hilton in a unique position and makes it compelling for him to serve as Executive Chairman of the Board to effectively represent the stockholders’ interest. Mr. Ax, our Audit Committee Chair, serves as the Board’s lead independent director. Mr. Ax has extensive knowledge of capital markets and corporate finance and has previously served as CEO of a publicly traded corporation. We believe that Mr. Ax’s role as our lead independent director serves as a counterbalance to and complements Mr. Hilton’s position as Executive Chairman and provides the appropriate level of independent director oversight. Additionally, our lead independent director collaborates with Mr. Hilton in establishing agendas for Board meetings, presides over all independent director meetings and can call special meetings of the independent directors as he deems necessary to address any matters the lead independent director feels should be addressed by the majority of our directors at any time. To more formalize the role, duties and qualifications of the lead independent director, the Board has adopted a Lead Director Charter. This Charter is available on our website at investors.meritagehomes.com.
Class I Directors (continued)
| CEO and Management Succession; Board Composition and Refreshment |
Class I Directors (continued)
Under the charter of the ESNG Committee, it is the role of the ESNG Committee to review and recommend to the Board changes as needed to the Company’s Corporate Governance Principles and Practices, including items such as management succession, policies and principles for CEO selection and performance review, policies regarding succession in the event of an emergency or departure of the CEO, and Board diversity, tenure and refreshment. Our Corporate Governance Principles and Practices provide, among other things, that our Lead Director is to conduct an annual review of the performance of the CEO. The Board is committed to good corporate governance and regularly solicits and receives feedback from investors, potential investors, and other participants in the investing community. As indicated above, the Board seeks to achieve a balance of Board director tenures in order to benefit from long-tenured directors’ institutional knowledge and newly elected directors’ fresh perspectives and, towards this goal, has added four new independent directors over the past five years. The Board believes an effective refreshment program must be continuous and ongoing. On January 2, 2024, Gerald Haddock, a long tenured director, retired, and on March 14, 2024 Raymond Oppel announced his retirement, which will be effective at the end of his current term on May 16, 2024. Accordingly, the Board has begun a search for a new female board member candidate. While the timing of the identification and appointment of a new board member cannot be guaranteed, we anticipate our search will conclude by the end of the fiscal year. The Board is also committed to search for a female director upon any subsequent board retirement, in a good faith effort to improve board gender diversity over a reasonable time period.
Class I Directors (continued)
| Risk Oversight |
Class I Directors (continued)
Our Board has overall responsibility for the oversight of risk management. As part of this oversight, on a regular basis, our Board receives reports from various members of management and is actively involved in monitoring our operations and approving key decisions relating to our strategy. Additionally, the management teams at our divisions must obtain approvals from our corporate executive team prior to engaging in certain activities or committing prescribed amounts of the Company’s financial and operational resources. As a result, senior management, who report directly to executive management, cannot authorize transactions that exceed prescribed thresholds that, while they may result in short-term benefits for their divisions, may expose the Company to unwarranted risks. Similarly, our executive management (including our NEOs) cannot engage in certain transactions without approval from our Board. For example, the Board must approve all debt and equity transactions. In addition, our legal department regularly reports to the Board information concerning ongoing litigation and possible legal, regulatory and other risks that might expose the Company to liability or loss. The Board also annually reviews the Company’s insurance programs. In addition to their formal risk assessment activities and oversight, the Board and committees of the Board are also involved in risk oversight on a more informal basis at regular Board and committee meetings. At each regular Board meeting, management provides the Board a status report with respect to the Company's budget and addresses any material variances. The Board also receives and reviews business updates from senior management, which involve detailed reports on trends and any business risks that the Company may be facing. The Board also provides oversight of risk through its standing committees. For example: •Our Audit Committee is responsible for reviewing and analyzing significant financial and operational risks and how management is managing and mitigating such risks through its internal controls and financial risk management processes. Our VP of Internal Audit reports directly to the Audit Committee and provides routine updates on the progress and findings of the department's ongoing internal audit reviews. Our external auditors also have at least quarterly discussions with our Audit Committee, and meet both with and without Company management present, to highlight what they perceive as our key financial risks. Our Audit Committee plays an important role in overseeing our internal controls monitoring and is regularly engaged in discussions with management regarding business risks, operational risks, transactional risks, cybersecurity, AI and financial risks. Cybersecurity and affiliated risks related to our information technology are a key component of our Board’s risk oversight, and our Chief Information Officer (CIO) provides a formal update to our Audit Committee at least twice per year, reviewing cybersecurity risks, trends, plans for future actions and measurements against recognized external cybersecurity frameworks and benchmarks. •Our Compensation Committee oversees risks relating to the compensation and incentives provided to our executive officers. The Compensation Committee negotiates and approves all of the employment agreements of our NEOs and the Compensation Committee approves all grants of equity awards to all of our eligible employees. The Compensation Committee has the sole authority to hire outside compensation advisors and consultants and to determine the terms, scope and fees of such engagements. •Our ESNG Committee is responsible to the Board and reports regularly to the Board and provides updates on the support, development, strategy, prioritization, integration and reporting of the Company's ongoing commitment to environmental, safety, corporate social responsibility, sustainability and other related trends, issues and concerns. The ESNG Committee regularly engages in discussions with management regarding our processes for identifying, assessing, monitoring and managing the principal environmental and social risks most relevant to our Company. •The Land Committee is responsible for reviewing and approving/denying land acquisition transactions recommended by management in excess of a predetermined monetary threshold. The executive team provides the Land Committee with a comprehensive package for each proposed deal, which includes detailed information about the financial, operational and legal risks associated with the acquisition.
Class I Directors (continued)
| The Board and Board Committees |
Class I Directors (continued)
We currently have eleven incumbent directors and the following committees: •Audit Committee •Compensation Committee •ESNG Committee •Land Committee Our Board typically meets on a quarterly basis, with additional meetings held as required. During 2023, the Board held four meetings. Throughout 2023, each of our current directors attended at least 75% of the aggregate of the Board and committee meetings of which he or she was a member. Our Land Committee does not have regularly scheduled meetings but rather is provided relevant materials for consideration and voting when land transactions require the Land Committee’s authorization. Directors are expected to attend our Annual Meetings of stockholders. All directors (except Mr. Arriola, who was appointed to the Board on June 14, 2023), including the five who are up for re-election at this year's meeting, attended our 2023 Annual Meeting held on May 18, 2023. The following table identifies the current members of our Board and Board Committees and the number of meetings held during 2023:
Class I Directors (continued)
| Board of Directors | Audit Committee | Compensation Committee | Nominating/ Governance Committee | Land Committee | Environmental, Social and Sustainability Committee (1) | | Steven J. Hilton* | | | | | | | Phillippe Lord | | | | | | | Peter L. Ax + | C | | ✓ | C | | | Raymond Oppel | | ✓ | | ✓ | ✓ | | Dana C. Bradford | ✓ | ✓ | | ✓ | | | Michael R. Odell | | C | | | | | Deb Henretta (2) | ✓ | | C | | C | | Joseph Keough (3) | ✓ | | | ✓ | ✓ | | P. Kelly Mooney | | ✓ | ✓ | | | | Louis E. Caldera | | ✓ | | | | | Dennis V. Arriola (4) | | | ✓ | | | | Number of Meetings | 7 | 8 | 4 | n/a | 4 |
Class I Directors (continued)
| * | = | Executive Chairman of the Board | | ✓ | = | Member | | C | = | Committee Chair | | + | = | Lead Independent Director |
Class I Directors (continued)
(1) The responsibilities of the Environmental, Social and Sustainability ("ES&S") Committee were consolidated with the Nominating/Governance Committee effective February 22, 2024. (2) Ms. Henretta was appointed as Chair of the ESNG Committee effective January 2, 2024, to replace Mr. Haddock, who retired from the Board effective January 2, 2024, and was appointed as a member of the Audit Committee effective February 22, 2024. (3) Mr. Keough was appointed as a member of the Land Committee effective February 22, 2024. (4) Mr. Arriola was appointed as a member of the ESNG Committee effective November 16, 2023. Audit Committee The Board has established an Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act, and the rules and regulations of the NYSE. The Audit Committee assists the Board in: •fulfilling its oversight of the integrity of our financial statements, •overseeing our compliance with legal and regulatory requirements, •determining our independent registered public accounting firm’s qualifications and independence, •evaluating our financial, operational, and information/cybersecurity/AI risks and overseeing our efforts to mitigate these risks, which include among other things, annual cyber and risk trainings for all employees, •evaluating the performance of our internal audit function and independent registered public accounting firm, and •reviewing and approving any related party transaction between the Company and senior executive officers or directors. The Audit Committee has the sole authority to appoint and replace our independent registered public accounting firm and approves all audit engagement fees and terms of all significant non-audit engagements with the independent registered public accounting firm in accordance with the pre-approval policies set forth in our Audit Committee charter. The Audit Committee has the authority to obtain advice and assistance from, and receives appropriate funding from us for, outside legal, accounting and other advisors as it deems necessary to carry out its duties. The Audit Committee also receives briefings from our executive management team at least quarterly, addressing audit, compliance, and information security matters, among other topics. The Audit Committee operates under a written charter established by the Board. The charter is available on our website at investors.meritagehomes.com. Each member of the Audit Committee meets the independence requirements of the NYSE and the Exchange Act, and is financially literate, knowledgeable and qualified to review our financial statements. In addition, each member of the Audit Committee has accounting or related financial management expertise. The Board has determined that Peter L. Ax, the Chair of our Audit Committee, and the other directors who serve as audit committee members meet the independence requirements of the NYSE’s listing standards and Rule 10A-3 under the Exchange Act, and each is an “audit committee financial expert” as such term is defined in SEC rules and regulations. Information about past business and educational experience of Mr. Ax and other members of the Audit Committee is included in their biographies in this proxy statement in the section “—Director Qualifications and Diversity”. The report of the Audit Committee is included in this proxy statement in the section “Report of the Audit Committee.” Compensation Committee The Board has established a Compensation Committee in accordance with the NYSE’s rules and regulations. The Compensation Committee regularly reports to the Board and its responsibilities include, but are not limited to: •reviewing and approving goals and objectives relative to the compensation of our NEOs, evaluating our NEOs’ performance in light of these goals and approving the compensation of our NEOs, •reviewing and considering input from stockholders with respect to compensation agreements with our NEOs, •overseeing and approving all grants of equity-based awards, including those for non-NEOs, •overseeing, monitoring, administrating and enforcing our Clawback Policy, and •producing a report on executive compensation to be included in our annual proxy statement. The Compensation Committee is currently comprised of five members of the Board, each of whom is independent under the independence standards of the NYSE and a “non-employee director” under Section 16 of the Exchange Act. Generally, the Compensation Committee Chair is in charge of setting the schedule for the Compensation Committee’s meetings as well as the agenda of each meeting. The Compensation Committee operates under a written charter, which is available on our website at investors.meritagehomes.com. The Compensation Committee has the sole authority to hire outside compensation advisors and consultants and to determine the terms, scope, fees and costs of such engagements. Since 2018, the Compensation Committee has engaged Pearl Meyer as its independent executive compensation consultant to provide an update on current compensation trends and to provide recommendations on the compensation packages of our NEOs. The Compensation Committee determines executive compensation with respect to our NEOs independent of management. The Compensation Committee approves all grants of equity-based awards. For the NEOs, the number and type of equity award grants are determined or based on an employment agreement between the Company and the NEO, which may be periodically re-negotiated and revised, as approved by the Compensation Committee. For non-NEOs, management is responsible for recommending to the Compensation Committee the persons to receive grants of equity based awards and the nature and size of the proposed awards. Because management is responsible for the day-to-day operation of the Company, the Compensation Committee believes that management is in the best position to make this recommendation. Compensation Committee Interlocks and Insider Participation None of the members of the Compensation Committee is, or has been, an employee of Meritage or any of its subsidiaries. There are no interlocking relationships between Meritage and other entities that might affect the determination of the compensation of Meritage’s executive officers. ESNG Committee The Board has established a ESNG Committee, which absorbed the responsibilities of the ES&S Committee in February 2024. The ESNG Committee reports directly to the Board and is responsible for: •developing director qualifications and determining whether newly elected directors or prospective director candidates meet those qualifications, •identifying individuals qualified to become Board members and recommending director nominees for the next Annual Meeting of stockholders, •considering recommendations for director nominations received from stockholders, •reviewing and recommending changes as needed to the Company’s Corporate Governance Principles and Practices and other corporate governance documents, •addressing such items as management succession, including policies and principles for our CEO selection and performance review and succession in the event of an emergency or departure of the CEO or Executive Chairman, •establishing and implementing director qualification standards, including policies regarding director tenure, retirement and succession, •reviewing the charters of the Compensation Committee, Audit Committee, ESNG Committee, and Land Committee, as well as the Lead Director Charter, •assessing and monitoring, with Board involvement, the Board’s performance and the contributions and performance of individual directors, •recommending nominees for the Compensation Committee, Audit Committee, ESNG Committee, and Land Committee, •monitoring compliance with our Corporate Governance Principles and Practices, including stock ownership requirements for directors and NEOs,
Class I Directors (continued)
•promoting adherence to a high standard of corporate governance, ethics, and Company values, •assisting in setting the Company's general strategy with respect to ESG matters, and considering and recommending policies, practices and disclosures that conform with the strategy, •reviewing the Company’s environmental, social, and governance reports and scores from relevant internal and external stakeholders, as available, and provide guidance on areas of opportunity with respect to ESG matters, •overseeing and approving annual updates to the Company's Human Rights Policy, Environmental Responsibility Policy, Responsible Marketing Policy and Vendor Code of Conduct, all of which can be found on our website at investors.meritagehomes.com; •overseeing the Company's policies to protect the health and safety of employees, contractors, customers and the public and, as applicable, the environment, and review with management the quality of the Company’s procedures for identifying, assessing, monitoring and managing the principal environmental and social risks to the Company, •overseeing the Company’s policies and practices promoting diversity and inclusion, •in consultation with the Compensation Committee, reviewing and advising the board on compensation targets related to ESG objectives and metrics, •monitoring environmental, social and political trends as well as major global legislative and regulatory developments or other public policy issues and making recommendations to the Board, as appropriate, on adjustment of Company policies and practices to address such trends and issues, •overseeing the accounting, reporting and disclosure with respect to ESG matters, such as climate change and greenhouse gas emissions, including data collection and compliance with any applicable laws, and •reviewing and approving the Company's annual ESG report, which includes Task Force on Climate-Related Financial Disclosures ("TCFD"), and other similar reports. The ESNG Committee has the sole authority to retain and terminate any search firm used to identify director candidates, including sole authority to approve the search firm’s fees and other retention terms. The ESNG Committee operates under a written charter, which is available on our website at investors.meritagehomes.com. Each member of the ESNG Committee meets the independence requirements of the NYSE. Land Committee The Board has established a Land Committee, which directly reports to the Board. The Land Committee is responsible for reviewing and approving/denying land acquisition transactions recommended by management in excess of a predetermined monetary threshold. The Committee is intended to function as an additional approval mechanism for executive management’s land acquisition approval policies and procedures. The Land Committee is transactional in nature; accordingly, the Land Committee does not have regularly scheduled meetings but rather are provided relevant materials for consideration and voting when land transactions require the Land Committee’s authorization. Currently, no compensation is paid to any director for service on the Land Committee. Peter L. Ax is the Chair of the Land Committee, and each member of the Land Committee meets the independence requirements of the NYSE. Director Nomination Process Director Qualifications. The ESNG Committee will evaluate prospective nominees using the standards and qualifications set forth in our Corporate Governance Principles and Practices and in our criteria for new directors. Prospective nominees must meet these qualification requirements and should have the highest professional and personal ethics and values, as well as broad experience at the policy-making level in business, government, education or public interest. Prospective nominees must be committed to enhancing stockholder value and must have sufficient time to devote to carrying out their duties and to provide insight based upon experience, talent, skill and expertise appropriate for the Board. Each prospective nominee must be willing and able to represent the interests of our stockholders. Identifying and Evaluating Nominees for Directors. The ESNG Committee utilizes a variety of methods for identifying and evaluating nominees to serve as directors. The ESNG Committee assesses the current composition of the Board, the balance of management and independent directors and the need for Audit Committee and other expertise in its evaluation of prospective nominees. In the event that vacancies are anticipated, or otherwise arise, the ESNG Committee may seek recommendations from current Board members, professional search firms, outside legal, accounting and other advisors, or stockholders in order to locate qualified nominees. When seeking new Board candidates, the ESNG Committee is committed to a policy of inclusiveness and will take reasonable steps to ensure that women and people of color are considered for the pool of candidates from which the Board nominees are chosen, and will endeavor to include qualified candidates from non-traditional backgrounds. After completing its evaluation, the ESNG Committee will make a recommendation to the full Board as to the persons who should be nominated by the Board, and the Board will determine the nominees after considering such recommendations. Stockholder Recommendations. The policy of the ESNG Committee is to consider properly-submitted stockholder recommendations for candidates for membership on the Board as described below. In evaluating such proposals, the ESNG Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership qualifications and criteria described above. Any stockholder recommendations proposed for consideration by the ESNG Committee must include the nominee’s name and qualifications for Board membership and should be submitted to: Meritage Homes Corporation 18655 North Claret Drive Suite 400 Scottsdale, Arizona 85255 Attn: Secretary The Secretary will forward all recommendations to the ESNG Committee. Stockholder Nominations. Our bylaws also permit stockholders to nominate directors for election at an annual stockholder meeting. For a description of the process for submitting such nominations for consideration at next year’s Annual Meeting, please see “Stockholder Proposals, Director Nominations and Other Items of Business” on page 60 of this proxy statement. Proxy Access. Our bylaws permit an eligible stockholder, or a group of up to 20 stockholders, that has continuously owned at least three percent of the Company’s outstanding shares of common stock for three years to include in the Company’s proxy materials director nominations of up to 20% (rounded to the nearest whole number) of the number of Directors constituting the class up for election at any Annual Meeting. For a description of the process and deadlines for submitting such nominations for consideration at next year’s Annual Meeting, please see “Stockholder Proposals, Director Nominations and Other Items of Business” on page 60 of this proxy statement. Director Orientation and Continuing Education It is the policy of the Board that all new directors should participate in an orientation program sponsored by the Company. This orientation is designed to familiarize new directors with the Company’s core values, strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Ethics, its principal officers, its internal audit function, and its independent registered public accounting firm. In addition, the Board encourages each director to attend prominent continuing education programs. The Company will pay for the director’s tuition and reasonable and customary travel expenses to attend continuing education programs. Executive Sessions of Independent Directors
Class I Directors (continued)
Our Corporate Governance Principles and Practices dictate that the non-management members of the Board will meet in executive session at least quarterly outside the presence of directors that are employees or officers of the Company. The non-management directors met in executive session four times during 2023. Peter L. Ax is our Lead Independent Director and presides over these executive session meetings.
Class I Directors (continued)
| Code of Ethics |
Class I Directors (continued)
We are committed to conducting business consistent with the highest ethical and legal standards. The Board has adopted a Code of Ethics, which is applicable to all employees, including our senior and executive management and our directors, and a Vendor Code of Conduct, which is applicable to all contractors, subcontractors, vendors and partners. Both the Code of Ethics and the Vendor Code of Conduct are available on our website at investors.meritagehomes.com. Meritage Stock Pledging Policy In 2013, the ESNG Committee approved a modification to the Company’s Securities Trading Policy prohibiting all future pledging of the Company’s equity securities by our employees, NEOs and directors. None of the Company's NEOs or directors currently have pledged any Company stock. Anti-Hedging Policy Our Securities Trading Policy sets forth guidelines and restrictions on transactions involving our stock, which are applicable to all employees, including our NEOs and directors, as well as former employees and directors with material non-public information. Among other things, our policy prohibits all types of hedging transactions, including, but not limited to, purchases of stock on margin, short sales, buying or selling puts or calls and similar transactions involving any derivative securities. If allowed, these types of transactions could enable employees to own Company stock without the full risks and rewards of ownership. When that occurs, employees may no longer have the same objectives as the Company’s other stockholders and therefore such transactions involving Meritage stock are prohibited.
Class I Directors (continued)
| Communications with the Board of Directors |
Class I Directors (continued)
Interested persons may communicate with the Board by writing to our Lead Independent Director at the address set forth on page 2. The Lead Independent Director will disseminate the information to the rest of the Board at his discretion.
Environmental, Social, and Sustainability Highlights
| Independent Compensation Consultant |
Environmental, Social, and Sustainability Highlights
| Employment Agreements in Effect for 2023 |
Environmental, Social, and Sustainability Highlights
| Adjusted EBITDA | Performance as % of Target | Payout as % of Target Payout (1) (2) | Number of Home Closings | Performance as % of Target | Payout as % of Target Payout (1) (2) | Customer Satisfaction Rating | Performance as % of Target | Payout as % of Target Payout (1) (2) | | Maximum | 120.0% | 250% | Maximum | 120.0% | 250% | Maximum | 102.9% | 250% | | Target | 100.0% | 100% | Target | 100.0% | 100% | Target | 100.0% | 100% | | Threshold | 80.0% | 50% | Threshold | 80.0% | 50% | Threshold | 97.1% | 50% | | Below Threshold | < 80.0% | 0% | Below Threshold | < 80.0% | 0% | Below Threshold | < 97.1% | 0% |
Environmental, Social, and Sustainability Highlights
| ROA | Performance as % of Target | Shares Awarded as % of Target Payout (1) | Relative TSR | Peer Group Percentile | Shares Awarded as % of Target Payout (1) | | Maximum | 150.0% | 200% | Maximum | 75.0 | 200% | | Target | 100.0% | 100% | Target | 50.0 | 100% | | Threshold | 50.0% | 50% | Threshold | 25.0 | 50% | | Below Threshold | < 50.0% | 0% | Below Threshold | < 25.0 | 0% |
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation The target annual cash incentive bonus and target value of equity compensation (non-cash) increased to the amounts noted below. Mr. Hilton's target cash and equity incentive did not change.
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
| Executive Officer | Revised Annual Target Cash Incentive Compensation | Revised Annual Target (non-cash) Equity Incentive Compensation (1) | | Phillippe Lord | $3,000,000 | $5,000,000 | | Hilla Sferruzza | $1,356,250 | $1,743,750 | | Clint Szubinski | $1,875,000 | $2,062,500 | | Malissia Clinton | $540,000 | $918,000 | | Javier Feliciano | $375,000 | $825,000 |
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
(1) 50% of the target award value is to be comprised of time-based restricted stock units and 50% of the target award value is to be comprised of performance-based awards.
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
| EXECUTIVE COMPENSATION COMMITTEE REPORT |
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
The following Executive Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference to any Company filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent the Company specifically incorporates this report.
Compensation of Officers and Directors
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($) (4) | Total ($) | | Phillippe Lord, | 2023 | 900,000 | — | 4,248,118 | 5,625,000 | 62,525 | 10,835,643 | | CEO | 2022 | 900,000 | — | 3,667,484 | 3,388,441 | 59,542 | 8,015,467 | | | 2021 | 850,000 | — | 2,956,519 | 4,048,816 | 60,268 | 7,915,603 | | Hilla Sferruzza, | 2023 | 725,000 | — | 1,520,797 | 3,171,875 | 56,784 | 5,474,456 | | EVP and CFO | 2022 | 725,000 | — | 1,477,117 | 1,364,789 | 49,850 | 3,616,756 | | | 2021 | 675,000 | — | 1,341,608 | 1,607,618 | 48,402 | 3,672,628 | | Steven J. Hilton, | 2023 | 1,000,000 | — | 1,048,777 | 1,000,000 | 31,412 | 3,080,189 | | Executive Chairman | 2022 | 1,000,000 | — | 1,018,757 | 1,000,000 | 30,349 | 3,049,106 | | | 2021 | 1,000,000 | — | 993,752 | 1,000,000 | 29,581 | 3,023,333 | | Clint Szubinski, | 2023 | 650,000 | — | 1,363,551 | 4,062,500 | 68,497 | 6,144,548 | | EVP and COO | 2022 | 650,000 | — | 1,324,263 | 1,957,766 | 69,978 | 4,002,007 | | | 2021 | 600,000 | — | 1,192,503 | 2,286,390 | 146,615 | 4,225,508 | | Malissia Clinton, | 2023 | 515,000 | — | 864,162 | 1,287,500 | 69,909 | 2,736,571 | | EVP, GC and Secretary (1) | 2022 | 364,752 | — | 589,748 | 548,216 | 170,973 | 1,673,689 | | Javier Feliciano, | 2023 | 430,000 | — | 676,353 | 806,250 | 52,424 | 1,965,027 | | EVP and CPO | 2022 | 430,000 | — | 547,542 | 485,676 | 54,399 | 1,517,617 | | | 2021 | 400,000 | — | 496,792 | 571,598 | 53,631 | 1,522,021 |
2023 STOCK AWARDS VESTED
| Nonqualified Deferred Compensation Plans |
2023 STOCK AWARDS VESTED
| Potential Payments upon Termination or Change of Control Summary |
2023 STOCK AWARDS VESTED
| Pay Ratio Disclosure |
2023 STOCK AWARDS VESTED
| Director Compensation |
2023 STOCK AWARDS VESTED
| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Total ($) | | Raymond Oppel | 70,000 | 232,638 | 302,638 | | Peter L. Ax | 122,500 | 232,638 | 355,138 | | Gerald Haddock (3) | 71,250 | 232,638 | 303,888 | | Dana C. Bradford | 70,000 | 232,638 | 302,638 | | Michael R. Odell | 72,500 | 232,638 | 305,138 | | Deb Henretta | 71,250 | 232,638 | 303,888 | | Joseph Keough | 70,000 | 232,638 | 302,638 | | P. Kelly Mooney | 70,000 | 232,638 | 302,638 | | Louis E. Caldera | 60,000 | 232,638 | 292,638 | | Dennis V. Arriola (4) | 25,000 | 270,774 | 295,774 |
Pay versus Performance
Pay versus Performance In August 2022, pursuant to a mandate of Dodd-Frank commonly referred to as "Pay versus Performance", the SEC adopted a rule ("the SEC rule") requiring registrants to provide a clear description of (1) the relationship between executive compensation actually paid ("CAP") to the Company's NEOs (including the principal executive officer or person acting in a similar capacity during the last completed fiscal year ("PEO")) and the cumulative TSR of the Company, and (2) the relationship between the Company's TSR and the TSR of a peer group chosen by the Company. The following table provides information regarding CAP to our PEO and non-PEO NEOs during each of the past four fiscal years, as well as total shareholder return, net earnings, and ROA. Our Compensation Committee did not rely on this analysis in its decision making process. See section “—Compensation Discussion and Analysis" for a comprehensive discussion of our executive compensation program and philosophy.
Pay versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for PEO (1) | CAP to PEO (1) (3) (4) | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average CAP to Non-PEO NEOs (2) (4) | Cumulative Total Shareholder Return (5) | Cumulative Peer Group Total Shareholder Return (5) | Net Earnings (in thousands) (6) | Company Selected Measure (ROA) (6) | | 2023 | $10,835,643 | $21,890,383 | $3,880,158 | $6,897,989 | $286.83 | $254.57 | $738,748 | 15.2% | | 2022 | $8,015,467 | $5,124,002 | $2,771,835 | $1,463,392 | $150.88 | $142.70 | $992,192 | 20.7% | | 2021 | $7,915,603 | $13,521,596 | $3,765,401 | $6,630,450 | $199.74 | $184.74 | $737,444 | 20.7% | | 2020 | $9,557,390 | $15,676,557 | $3,283,577 | $5,296,314 | $135.53 | $122.47 | $423,475 | 13.9% |
Pay versus Performance
(1) For the years 2021 through 2023, our PEO is Phillippe Lord and for 2020, our PEO was Steven J. Hilton, as they served as the Company's CEO during those respective years. (2) Non-PEO NEOs include: Hilla Sferruzza, Steven J. Hilton, Clint Szubinski, Malissia Clinton and Javier Feliciano in 2023 and 2022; Hilla Sferruzza, Steven J. Hilton, Clint Szubinski, C. Timothy White (our Former Executive Vice President, General Counsel and Secretary) and Javier Feliciano in 2021; and Phillippe Lord, Hilla Sferruzza, C. Timothy White and Javier Feliciano in 2020. (3) Adjustments to the Summary Compensation Table Total to arrive at CAP for PEO are shown below. No adjustments were necessary for defined benefit and pension plans, dividends or forfeitures.
Pay versus Performance
| Year | Summary Compensation Table Total for PEO | Less: Grant Date Fair Value of Equity Awards Granted in Fiscal Year | Plus: Increase/(Decrease) in Fair Value of Equity Vested during Fiscal Year | Plus: Increase/(Decrease) in Fair Value of Unvested Equity at Fiscal Year-End (Current Year Awards) | Plus: Increase/(Decrease) in Fair Value of Unvested Equity at Fiscal Year-End (Prior Year Awards) | CAP to PEO | | 2023 | $10,835,643 | $(4,248,118) | $530,043 | $7,473,949 | $7,298,866 | $21,890,383 | | 2022 | $8,015,467 | $(3,667,484) | $(1,235,030) | $3,642,886 | $(1,631,837) | $5,124,002 | | 2021 | $7,915,603 | $(2,956,519) | $97,238 | $4,562,638 | $3,902,636 | $13,521,596 | | 2020 | $9,557,390 | $(3,513,685) | $751,280 | $4,350,566 | $4,531,006 | $15,676,557 |
Pay versus Performance
(4) Adjustments to the Summary Compensation Table Total to arrive at CAP for Non-PEO NEOs are shown below. No adjustments were necessary for defined benefit and pension plans, dividends or forfeitures.
Pay versus Performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs | Less: Average Grant Date Fair Value of Equity Awards Granted in Fiscal Year | Plus: Average Increase/(Decrease) in Fair Value of Equity Vested during Fiscal Year | Plus: Average Increase/(Decrease) in Fair Value of Unvested Equity at Fiscal Year-End (Current Year Awards) | Plus: Average Increase/(Decrease) in Fair Value of Unvested Equity at Fiscal Year-End (Prior Year Awards) | Average CAP to Non-PEO NEOs | | 2023 | $3,880,158 | $(1,094,728) | $273,493 | $1,888,288 | $1,950,778 | $6,897,989 | | 2022 | $2,771,835 | $(991,485) | $(660,564) | $989,330 | $(645,724) | $1,463,392 | | 2021 | $3,765,401 | $(976,923) | $276,939 | $1,366,073 | $2,198,960 | $6,630,450 | | 2020 | $3,283,577 | $(1,167,705) | $309,118 | $1,445,912 | $1,425,412 | $5,296,314 |
Pay versus Performance
(5) We have elected to use the Dow Jones US Home Construction Index as our peer group. The graphs below illustrate the relationship between our cumulative TSR and peer group TSR, and the relationship between our CAP and the cumulative TSR for both the Company and our peer group. (6) The relationships between CAP and Net Earnings and CAP and ROA are illustrated in the following graphs. ROA is calculated as Net Earnings divided by the average of five trailing quarters Total Assets, less Cash and Cash Equivalents. Both Net Earnings and Total Assets are adjusted for specific and predetermined items. Our ROA as it relates to CAP is demonstrated below. Our most important metrics impacting CAP for the year ending December 31, 2023 are:
Pay versus Performance
| Metric | | Relative TSR | | ROA | | Adjusted EBITDA | | Number of Home Closings | | Customer Satisfaction Rating |
Pay versus Performance
| SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS |