DEF 14A of Meritage Homes CORP
Filed Apr 8, 2025 · FY20240000833079-25-000081
Election of Directors
Election of Directors Our Board currently has twelve members. The directors are divided into two classes serving staggered two-year terms. This year, our Class II directors are up for election. The Board, upon the recommendation of the NGS Committee, has nominated for re-election Dennis V. Arriola, Peter L. Ax, Joseph Keough, Phillippe Lord, and Michael R. Odell, all of whom are presently serving as Class II directors. Additionally, Erin Lantz, who was appointed to the Board in October 2024 is up for election as a Class II director, and Geisha Williams, who was initially appointed to the Board as a Class II director in January 2025, is up for election as a Class I director. Biographical information for each of our director nominees is set forth beginning on page 20. 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, you will be able to vote for the election of the substitute nominee designated by the Board at the Annual Meeting. 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 NGS 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 NGS Committee and changes are made as the Board deems appropriate on recommendation of the NGS 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 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 and land development, •technology, cybersecurity and artificial intelligence ("AI"), •sales, marketing and branding, •sustainability, •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 | Dana C. Bradford | Michael R. Odell | Deb Henretta | Joseph Keough | P. Kelly Mooney | Louis E. Caldera | Dennis V. Arriola | Erin Lantz | Geisha Williams | | Executive Management | X | X | X | X | X | X | X | X | X | X | X | X | | Cyber/IT/Technology/AI | | | X | | | X | | | | | X | | | Sustainability | | | | | | X | | X | X | X | | | | Financial | X | | 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 | X | X | | Manufacturing or Operations | X | X | | X | X | X | | | | X | | X | | Marketing & Sales | X | | 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 | 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 NGS 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 NGS Committee will be entitled to consider all factors believed relevant by the NGS Committee’s members. The Board will act on the NGS 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 NGS 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 NGS 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 NGS 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 NGS Committee, which considers the candidate’s qualifications as to skills and experience in the context of the needs of the Board and our stockholders. The following charts and biographies provide summary information about the tenure, demographics and experience of our directors as of March 27, 2025: (a) Inclusive of both gender and ethnic composition. 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 | NGS Committee | AMC | | African American or Black | | | | | | | Alaskan Native or Native American | | | | | | | Asian | | | | | | | Hispanic or Latino | 2 | | 1 | 1 | | | Native Hawaiian or Pacific Islander | | | | | | | White | 9 | 4 | 3 | 3 | 2 | | Two or More Races or Ethnicities | 1 | | | | 1 | | Total Number of Members | 12 | 4 | 4 | 4 | 3 |
Corporate Governance and Board Matters
Our Board is comprised of the following members:
Corporate Governance and Board Matters
| Class I Directors | | | Steven J. Hilton, 63 | 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) from 2004 to 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. | | | | | Dana C. Bradford, 60 | Mr. Bradford has been a director since August 2009. In 2012, Mr. Bradford began acquiring consumer brands and currently serves as Chairman and CEO of C3 Brands, the parent company to a number of consumer brands. From 1995 to 2011, Mr. Bradford was with McCarthy Capital Corporation, a private equity firm, serving as President and Managing Partner from 2004 to 2011. 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, Southwest Value Partners, 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, 63 | 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 product commercialization, digital technology, sustainability and inclusion. | | | | | P. Kelly Mooney, 61 | Ms. Mooney has been a director since March 2020. Ms. Mooney is the Founder and CEO of Equipt Women, a public benefit corporation providing leadership development to top companies. 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, belonging and inclusion. | | | | | Louis E. Caldera, 69 | Mr. Caldera has been a director since December 2021. Mr. Caldera is a Senior Lecturer at Harvard Business School where he has taught in the MBA program since July 2023. 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. 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. 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 served on the board of the Latino Corporate Directors Association from 2021 to 2024. 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. | | | |
Corporate Governance and Board Matters
| Class II Directors | | | Peter L. Ax, 65 | Mr. Ax has been a director since September 2000 and is the Company's lead independent director. Since 2001, he has owned and operated UpScript Health, the first company to receive regulatory approval to write prescriptions on the internet, allowing pharmaceutical manufacturers to sell medications direct-to-patient, a precursor to the telemedicine industry. He previously served as the Managing Partner of Phoenix Capital Management, an operationally focused venture capital firm, which became a subsidiary of Upscript Health in 2021. Mr. Ax was the Chairman and CEO of SpinCycle, Inc., a public reporting consolidator and developer of coin-operated laundromats. Prior to that, Mr. Ax served as head of the Private Equity Placement Division and Senior Vice President of Lehman Brothers in New York. 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, 61 | Mr. Odell has been a director since December 2011. Since 2017, he has been President, CEO and Board Member of Marubeni Automotive Aftermarket Holdings ("Marubeni"), a holding company for investments in the automotive aftermarket, as well as CEO and Board Member of Marubeni subsidiaries, XL Parts and The Parts House, both automotive parts distributors. From 2017 - 2024, he also served as President of XL Parts and The Parts House. 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, 55 | 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, 64 | Mr. Arriola was appointed to the Board on June 14, 2023. 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, the Southern California affiliate of the American Automobile Association (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, 51 | 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. | | | |
Corporate Governance and Board Matters
| Class II Directors (continued) | | | Erin Lantz, 45 | Ms. Lantz was appointed to the Board on October 14, 2024. Ms. Lantz is standing for election at the 2025 Annual Meeting. Ms. Lantz 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 her. Ms. Lantz has served as the Chief Revenue Officer of Ethos, a fintech company specializing in life insurance since April 2020. She previously served as Vice President and General Manager of Mortgages at Zillow Group, Inc., an online real estate database company, from July 2010 through October 2019. Since January 2023, she has served on the board of Blend (NYSE: BLND), a cloud-based financial services software company, where she chairs the Compensation Committee and serves on the Audit Committee. She previously served on the board of TrueCar (NASDAQ: TRUE) a leading digital automotive marketplace, from November 2016 until May 2024, and on the board of directors of Washington Federal, Inc. (NASDAQ: WAFD) a bank holding company, from September 2016 until August 2018. Ms. Lantz holds a B.A. in Political Science, Philosophy and Economics from the University of Pennsylvania and an M.B.A. from Harvard Business School. Ms. Lantz brings over 20 years of leadership experience and extensive knowledge in finance, banking, technology, sales and marketing, and regulatory, governmental and legal matters. | | | | | Geisha Williams, 63 | Ms. Williams was appointed to the Board as a Class II director on January 6, 2025. Ms. William is standing for election as a Class I director at the 2025 Annual Meeting. Ms. Williams 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 her. Ms. Williams served as the President and Chief Executive Officer at PG&E Corporation, a public company focused on natural gas and electric energy, from 2017 to 2019. Ms. Williams currently serves as a director for Siemens Energy AG (XTRA: ENR), an energy technology company, where she is a member of the Supervisory Board and serves on the Sustainability and Finance and Nomination Committees. Ms. Williams previously served as a member of the Global Advisory Board for Salesforce (NYSE: CRM), a customer relationship management services company, from 2022 to 2024. Her private board experience currently includes Artera Services, an integrated infrastructure services provider for the natural gas and electric industries, as well as Osmose Utilities Services, an electric utilities and telecommunications grid asset management and infrastructure support services company, where she has been the Chairperson since 2021. Ms. Williams holds an MBA from Nova Southeastern University and received a bachelor’s degree in Industrial Engineering from the University of Miami. She brings over three decades of operational leadership experience and a deep knowledge of energy and infrastructure. | | | |
Corporate Governance and Board Matters
| Director Independence |
Corporate Governance and Board Matters
The NGS 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.
Corporate Governance and Board Matters
| Board Leadership Structure |
Corporate Governance and Board Matters
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’ interests. 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 Independent Director Charter. This Charter is available on our website at investors.meritagehomes.com.
Corporate Governance and Board Matters
| CEO and Management Succession; Board Composition and Refreshment |
Corporate Governance and Board Matters
Under the charter of the NGS Committee, it is the role of the NGS 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 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 five new independent directors over the past five years. The Board believes an effective refreshment program must be continuous and ongoing.
Corporate Governance and Board Matters
| Risk Oversight |
Corporate Governance and Board Matters
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 capital market transactions above pre-determined thresholds. 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 material 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 Vice President of Internal Audit/Compliance 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 data privacy risks related to our information technology are a key component of our Board’s risk oversight. The Audit Committee assists the Board in evaluating our cybersecurity and data privacy risks and overseeing our efforts to mitigate these risks, 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 and our Vice President of Internal Audit/Compliance conducts an annual Enterprise Risk Management survey, which includes cybersecurity risk, and provides the findings to the Board. •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 (except with respect to the Chief Executive Officer, which is approved by the Board) and the Compensation Committee approves all employee equity award grants (except with respect to the Chief Executive Officer, whose equity grants are approved by the Board). 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 NGS Committee oversees the development, strategy, prioritization, integration and reporting of the Company's ongoing commitment to safety, corporate social responsibility, sustainability and other related trends, issues and concerns. The NGS 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 NGS Committee is also responsible for establishing and implementing director qualifications, overseeing director and executive management succession, and promoting adherence to a high standard of corporate governance, ethics, and Company values. •The AMC is responsible for reviewing and approving/denying land acquisition, joint venture, land banking, asset/equity acquisitions of private homebuilders and similar transactions recommended by management in excess of a predetermined monetary threshold. The executive team provides the AMC with a comprehensive package for each proposed deal, which includes detailed information about the financial, operational and legal risks associated with the proposed deal.
Corporate Governance and Board Matters
| The Board and Board Committees |
Corporate Governance and Board Matters
We currently have twelve incumbent directors and the following committees: •Audit Committee •Compensation Committee •NGS Committee •AMC Our Board typically meets on a quarterly basis, with additional meetings held as required. During 2024, the Board held six meetings. Throughout 2024, 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 AMC does not have regularly scheduled meetings but rather is provided relevant materials for consideration and voting when land acquisition, joint venture, land banking, asset/equity acquisitions of private homebuilders or similar transactions require the AMC’s authorization. Directors are expected to attend our Annual Meetings of stockholders. All directors (except Mss. Lantz and Williams, who were appointed in October 2024 and January 2025, respectively) attended our 2024 Annual Meeting held on May 16, 2024. The following table identifies the current members of our Board and Board Committees and the number of meetings held during 2024:
Corporate Governance and Board Matters
| Board of Directors | Audit Committee | Compensation Committee | Nominating, Governance and Sustainability Committee | Asset Management Committee | | Steven J. Hilton* | | | | | | Phillippe Lord | | | | | | Peter L. Ax + (1) | C | | ✓ | | | Dana C. Bradford (1) | ✓ | ✓ | | C | | Michael R. Odell | | C | | | | Deb Henretta (2) | | | C | | | Joseph Keough | ✓ | | | ✓ | | P. Kelly Mooney | | ✓ | ✓ | | | Louis E. Caldera | | ✓ | | | | Dennis V. Arriola | | | ✓ | | | Erin Lantz (2) | ✓ | | | | | Geisha Williams (3) | | | | ✓ | | Number of Meetings | 7 | 6 | 4 | n/a |
Corporate Governance and Board Matters
| * | = | Executive Chairman of the Board | | ✓ | = | Member | | C | = | Committee Chair | | + | = | Lead Independent Director |
Corporate Governance and Board Matters
(1) Mr. Bradford was appointed as the Chair of the AMC effective February 20, 2025, replacing Mr. Ax. (2) Ms. Lantz was appointed as a member of the Audit Committee effective November 21, 2024, replacing Ms. Henretta. (3) Ms. Williams was appointed as a member of the AMC effective February 20, 2025. 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, technological, operational, cybersecurity, data privacy and 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 executive officers other than the Chief Executive Officer and Executive Chairman, evaluating their performance in light of these goals, and approving the compensation of our executive officers other than the Chief Executive Officer and Executive Chairman, •reviewing and approving goals and objectives relative to the Chief Executive Officer's and the Executive Chairman's compensation, evaluating their performance in light of these goals and objectives, and recommending to the Board the compensation of our Chief Executive Officer and Executive Chairman, •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 four 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. NGS Committee The Board has established an NGS Committee (formerly known as the Environmental, Social, Nominating and Governance Committee), which 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, NGS Committee, and AMC, and the Lead Independent 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, NGS Committee, and AMC,
Corporate Governance and Board Matters
•monitoring compliance with our Corporate Governance Principles and Practices, including stock ownership requirements for directors and NEOs, •promoting adherence to a high standard of corporate governance, ethics, and Company values, •assisting in setting the Company's general strategy with respect to sustainability 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 sustainability matters, •overseeing and approving annual updates to the Company's Human Rights Policy, Environmental Responsibility Policy, Responsible Marketing Policy, Vendor Code of Conduct and Political Activities and Contributions Policy, 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 concerning belonging and inclusion, •in consultation with the Compensation Committee, reviewing and advising the board on compensation targets related to sustainability 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 sustainability 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 sustainability report, which includes Task Force on Climate-Related Financial Disclosures ("TCFD"), and other similar reports. The NGS 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 NGS Committee operates under a written charter, which is available on our website at investors.meritagehomes.com. Each member of the NGS Committee meets the independence requirements of the NYSE. Asset Management Committee The Board has established an AMC (formerly known as the Land Committee), which directly reports to the Board. The AMC is responsible for reviewing and approving/denying land acquisition, joint venture, land banking, asset/equity acquisitions of private homebuilders and similar 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, joint venture, land banking, asset/equity acquisitions of private homebuilders and similar transaction approval policies and procedures. The AMC is transactional in nature; accordingly, the AMC does not have regularly scheduled meetings but rather is provided relevant materials for consideration and voting when land acquisition, joint venture, land banking, asset/equity acquisitions of private homebuilders or similar transactions require the AMC’s authorization. Currently, no compensation is paid to any director for service on the AMC. Dana Bradford is the Chair of the AMC, and each member of the AMC meets the independence requirements of the NYSE. Director Nomination Process Director Qualifications. The NGS 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 NGS Committee utilizes a variety of methods for identifying and evaluating nominees to serve as directors. The NGS 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 NGS 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. After completing its evaluation, the NGS Committee will make a recommendation to the full Board as to the person(s) who should be nominated by the Board, and the Board will determine the nominee(s) after considering such recommendations. Stockholder Recommendations. The policy of the NGS Committee is to consider properly-submitted stockholder recommendations for candidates for membership on the Board as described below. In evaluating such proposals, the NGS 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 NGS 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 NGS 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 63 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 63 of this proxy statement. Director Orientation and Continuing Education
Corporate Governance and Board Matters
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 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 2024. Peter L. Ax is our Lead Independent Director and presides over these executive session meetings.
Corporate Governance and Board Matters
| Code of Ethics |
Corporate Governance and Board Matters
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. Any amendment or waiver of a provision of the Code of Ethics requiring disclosure under the rules of the either the SEC or the NYSE will be posted on the Company's website within four business days of such amendment or waiver. Meritage Securities Trading Policy The Board has adopted a Securities Trading Policy that 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. While the Securities Trading Policy does not apply to the Company directly, it is the Company's practice to follow the same guidelines and restrictions on transactions involving our stock that apply to our employees, NEOs and directors. The Securities Trading Policy establishes policies and procedures that are reasonably designed to promote compliance with the insider trading laws, rules, regulations and listing standards applicable to the Company. A copy of the Securities Trading Policy is filed as Exhibit 19 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Annual Report"). Meritage Stock Pledging Policy Our Securities Trading Policy prohibits 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 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. We believe that 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. Option Award Practices Our current executive compensation program does not include the award of options. While we do not have a formal policy in place with regard to the timing of awards of options, stock appreciation rights or similar instruments in relation to the disclosure of material nonpublic information, if in the future we anticipate granting options, stock appreciation rights or similar instruments, we may determine to establish a policy regarding how the Board determines when to grant such awards and how the Board or the Compensation Committee will take material nonpublic information into account when determining the timing and terms of such awards.
Corporate Governance and Board Matters
| Communications with the Board of Directors |
Corporate Governance and Board Matters
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.
Financial and Operational Highlights
Our executive compensation program is designed to drive and reward superior corporate performance both annually and over the long-term while simultaneously striving to be externally competitive amongst our peer group. We continually review our executive compensation program to ensure it reflects good governance practices and is in the best interests of stockholders. Since 2018, the Compensation Committee has engaged Pearl Meyer as its independent external compensation consultant. Pearl Meyer evaluates and makes recommendations regarding the terms of our NEO and Board compensation programs as they relate to creating stockholder value as well as remaining competitive in the marketplace with the changing trends and levels in NEO compensation, while meeting the below core objectives. We do not engage Pearl Meyer for any other advisory services. Pay for Performance A substantial portion of the total potential compensation for our NEO's is intended to be variable/at risk on a pay-for-performance basis. The terms of the performance-based compensation contemplated in each respective NEO's employment agreement was based upon an assessment performed by Pearl Meyer of external market data to ensure that the compensation formula is competitive relative to the compensation paid by companies with which we compete for executive talent and the tenure of our executives. This compensation is based on (i) the performance of the Company as a whole, as measured against our peer group and (ii) the NEO's role in the attainment of the Company’s performance goals. In 2024, more than two thirds of the compensation program for our NEOs were based on various performance metrics that are tied to the Company’s financial and operational goals. The following graph illustrates CEO compensation as it relates to Earnings Before Income Taxes over the last three years. (1) Before deduction of CEO total compensation (as reflected in the Summary Compensation Table). Stock Ownership We are committed to utilizing our compensation program to increase executive stock ownership over time. We believe that equity ownership directly aligns the interests of our NEOs with those of our stockholders and helps to focus our executives on long-term stockholder value creation. We award restricted stock units and performance share awards to our NEOs, as we believe such awards provide our NEOs with an incentive to continue to increase long-term stockholder value, even during periods of declining stock prices. We believe the granting of equity awards is an important retention tool and is widely used in our industry. Recruiting and Retention Due to the competitive nature of our industry, we are committed to providing total compensation opportunities that are competitive with, though not identical to, the practices of other public homebuilders within our peer group. We intend for our compensation program to be sufficiently aligned with industry practices so that we can continue to attract and retain outstanding executives who are motivated to help us achieve our mission. Compensation Peer Group As a member of the homebuilding industry, we predominantly compete for executive talent and have historically compared ourselves to other companies in our industry. Therefore, the Compensation Committee, with the assistance of Pearl Meyer, has established a peer group of comparably sized companies selected from the homebuilding industry, with organizational structures similar to ours such as being a publicly traded company, operations limited to the United States, and building single family housing as their core business. The peer group companies that were used in 2024 for executive compensation benchmarking and performance benchmarking are set forth below. We believe that this peer group provides an appropriate benchmark comparison for our Company.
Financial and Operational Highlights
(1) M.D.C. Holdings, Inc. was used for 2024 executive compensation benchmarking but was not used for the total shareholder return portion of performance-based long-term incentive awards due to its being acquired and de-listed in the later part of 2024. M.D.C. Holdings, Inc. will not be part of our peer group in 2025 and onward. In addition to the peer group listed above being used for executive compensation benchmarking, the Compensation Committee also used this same peer group for the total shareholder return ("TSR") portion of performance-based long-term incentive awards in 2024; however, any peer that is acquired or de-listed during the applicable measurement period will be removed from the peer group. While market data is an important factor utilized by the Compensation Committee when setting compensation, it is only one of multiple factors considered, and the amount paid to each NEO may be more or less than the composite market value based on the performance of the Company and the NEO, the roles, experience level and responsibilities of the NEO, internal equity and other factors that the Compensation Committee deems important.
Financial and Operational Highlights
| WE DO | | WE DO NOT | | | • | Pay for performance by requiring a significant portion of the total compensation of our NEOs be determined based on performance tied to strategic objectives. | • | Provide perquisites for our NEOs other than those limited to auto allowance, reimbursement of certain insurance premiums and other limited benefits. | | • | Have executive stock ownership requirements in place set at a multiplier of base salary. | • | Reprice or replace stock options and other equity awards. | | • | Have a clawback policy for our NEOs requiring the recoupment of erroneously awarded compensation in compliance with applicable NYSE standards. | • | Allow hedging. | | • | Engage an independent compensation consultant that reports directly to the Compensation Committee to provide an update on current compensation trends and to provide recommendations on our NEOs’ current compensation packages. | • | Allow pledging. | | • | Have double trigger cash severance based upon a change of control of the Company. | • | Provide tax gross-ups for change of control and severance payments. |
Financial and Operational Highlights
| Independent Compensation Consultant |
Financial and Operational Highlights
In accordance with its charter, the Compensation Committee has the sole authority to retain and obtain advice and assistance from consultants, legal counsel, accounting and other advisers as appropriate, and to determine and approve the terms, costs and fees for such engagements. Since 2018, the Compensation Committee has engaged Pearl Meyer to serve as its independent compensation consultant. When engaging a compensation consultant, the Compensation Committee takes into consideration the independence of and other factors pertaining to the consultant as required by the NYSE, SEC and other applicable rules and regulations. Upon consideration of these factors, the Compensation Committee has concluded that the engagement of Pearl Meyer does not present any conflicts of interest. Pearl Meyer is a leader in the executive compensation consulting industry and provides information and advice regarding compensation philosophy and strategy; recommends peer group selection criteria as well as potential peer companies; and consults with the Compensation Committee on both long-term and short-term incentive compensation.
Financial and Operational Highlights
The key components of our executive compensation program are base salary, annual incentive cash compensation and long-term equity incentive compensation. In addition, our NEOs have the opportunity to participate in our company-wide 401(k) plan, a non-qualified deferred compensation plan, and to receive limited certain personal benefits, as described below under "Other Compensation". The employment agreements of our CEO and other NEOs are further described in this proxy statement under the section “—Employment Agreements in Effect for 2024.” Our executive compensation program is designed based on the following strategic principles: •Alignment with key outcomes of our business strategies; •Appropriate balance of short- and long-term incentive award opportunity; •Market-competitive total compensation opportunity within our peer group; •Appropriate alignment with our stockholders by delivering a significant percentage of total compensation opportunity through equity and including goals that are measured by total shareholder return; •Setting a total compensation package where a significant percentage of total compensation is at risk; •Transparency in the communication of plan design and performance goals to enhance understanding; and •Adherence to sound governance practices, including the prudent management of compensation risk. Based on the results of the analysis, the components of our NEO compensation program are as outlined below. Base Salary The purpose of the base salary is to provide a fixed amount of cash compensation that is not variable and is competitive with market practices. Consistent with industry practice and our pay-for-performance objective, the base salary for each of our NEOs is designed to account for only a portion of their overall total target compensation. We target our NEO base salaries to be competitive with our compensation peer group. We believe the NEO base salaries are appropriate based on the officers’ roles, responsibilities, experience and contributions to the Company, as well as compared to market data. Annual Cash Incentive Compensation ("Non-Equity Incentive Plan") We believe our Non-Equity Incentive Plan focuses our NEOs on the most important short-term measures of our business, establishes a clear connection between performance and earned compensation, and provides transparency to our stockholders as to the operation of our Non-Equity Incentive Plan. Each goal represents a fixed percentage of total potential cash incentive compensation with each goal assessed separately from the others. The specific details of each NEO’s 2024 annual cash incentive compensation are further described under the section “—Employment Agreements in Effect for 2024”. Discretionary Bonuses Discretionary bonuses may be awarded based on specific achievements of an individual beyond those of the performance measurements included in the Non-Equity Incentive Plan calculations, subject to approval by the Compensation Committee. Although contemplated within the compensation program for our NEOs, the use of discretionary bonuses has been and is expected to continue to be very limited. There were no discretionary bonuses paid in 2024. Long-Term Equity Incentive Awards Long-term equity incentive awards are intended to provide compensation opportunities based on the creation of stockholder value and an increase in our stock price. The employment agreements in effect for 2024 for our NEOs allow for grants of performance-based restricted stock units ("performance share awards") and time-based restricted stock units, both of which have a three-year cliff vesting schedule. In connection with our equity awards, we have also adopted stock ownership requirements as further discussed below in the section “—Security Ownership Requirements.” The Compensation Committee believes that equity awards provide a strong long-term incentive for our NEOs (and other officers and employees) that, along with their stock ownership, helps to align the interests of management with our stockholders. The Compensation Committee believes that these equity-based awards provide the opportunity for our NEOs to benefit from strong stock performance and, particularly in the case of the restricted stock unit awards, the NEOs focus on balancing stability and preservation of stock value against being incentivized to potentially take on an imprudent level of additional risk to drive stock appreciation which could occur with more contingent equity awards such as stock options. The Company and the Compensation Committee also believe that an appropriate mix of cash compensation and non-cash compensation in the form of equity awards is necessary and appropriate because, among other reasons, equity-based awards do not require the use of our working capital. The Compensation Committee is mindful of the fact that equity awards represent an expense under generally accepted accounting principles and a cost to the Company and its stockholders in the form of dilution. Accordingly, the Company seeks to achieve an appropriate balance between cash and non-cash compensation such that the NEOs are appropriately incentivized, our working capital and financial results are minimally affected, and our stockholders do not experience undue dilution. Other Compensation The Compensation Committee does not believe in the extensive use of perquisites as a component of executive compensation. The Compensation Committee believes that the perquisites provided to our NEOs (above those received by all employees or officers in general) are limited but help maintain the competitiveness of our compensation package as compared to our peer group companies. The types of perquisites we provide to our NEOs generally consist of car allowances, enhanced life and disability or long-term care insurance, and limited healthcare benefits such as routine physical examinations.
Financial and Operational Highlights
We maintain security ownership requirements for our directors and NEOs. The Board believes that these guidelines align the interests of our directors and executive officers with those of stockholders. Our directors and executive officers are required to comply with ownership guidelines. The requirements for our directors and NEOs are outlined below: •Directors, five times the annual board retainer fee (exclusive of committee, committee chair or lead director fees); •Executive Chairman and CEO, six times base salary; •COO and CFO, three times base salary; and •GC and CPO, two times base salary. In the case of the appointment of a new executive officer or director, the new officer or director shall not be required to purchase stock in the open market in order to become compliant. Until such compliance is achieved, they may not sell or otherwise transfer any stock or stock equivalents related to equity awarded by the Company; provided, however, they may sell stock as necessary to pay any required income tax withholdings in connection with the vesting of any equity grants. Once their income tax withholdings are fulfilled, they may not sell more than 50% of the remaining equity grants or awards that vest in a fiscal year and must hold the balance of their shares until their ownership requirements are met. In order to enable our directors and executive officers to prudently manage their personal financial affairs, our policy provides that once compliance is obtained, subsequent changes in stock price will not affect their compliance with the guidelines provided the officer or director continues to hold at least the number of shares that were necessary to comply with the stock ownership requirements but for a decrease in stock price. For purposes of the stock ownership requirements, stock is deemed “owned” for both directors and officers in the case of (a) shares owned outright and (b) beneficially-owned shares. As of December 31, 2024, all officers and directors were in compliance with their respective security ownership requirements or transitional requirements. We also prohibit our officers and directors from 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, as discussed in “Corporate Governance and Board Matters — Code of Ethics” on page 28.
Financial and Operational Highlights
Meritage has traditionally granted equity-based awards to board members, executive officers and other key employees to provide a means for incentive compensation and to align the interests of management with the interest of Meritage’s stockholders. Since 2009, all equity awards to employees and directors have been comprised of restricted stock or restricted stock units, and in limited instances, performance share awards, and for NEOs have been comprised of a combination of restricted stock units and performance share awards as a means of providing sufficient long-term incentive compensation to align with market competitiveness. We have comprehensive policies relating to the granting of equity-based awards. Following is a summary of key aspects of our policies: •All equity-based awards must be approved at formal meetings (including telephonic) of the Compensation Committee. •The grant date of such awards will be the date of the meeting (or a specified date shortly after the meeting). •The customary annual equity-based grant shall be approved at a regularly scheduled meeting of the Compensation Committee during the first part of the year, but generally after the annual earnings release. We believe that coordinating the main annual award grant after our annual earnings release will generally result in this grant being made at a time when the public is in possession of all material information about us. •The Company shall not intentionally grant equity-based awards before the anticipated announcement of materially favorable news, or delay the grant of equity-based awards until after the announcement of materially unfavorable news. •The Compensation Committee will approve equity-based grants only for persons specifically identified at the meeting by management.
Financial and Operational Highlights
| Employment Agreements in Effect for 2024 |
Financial and Operational Highlights
Non-Equity Incentive Plan In 2024, our NEOs were each entitled to an annual cash incentive bonus based upon the achievement of certain performance goals established by the Compensation Committee. The amount of the target bonus and payout ranges for each NEO is set forth below. The amount of the bonus to be paid is contingent upon the achievement of the performance criteria established by the Compensation Committee. Where the actual performance falls below the threshold level, no incentive bonus will be paid with respect to that performance goal, unless the Compensation Committee approves a discretionary amount. The Non-Equity Incentive Plan has three performance measures, weighted 60%, 30% and 10%, respectively: 1.Earnings before interest expense and interest amortized to cost of sales, income taxes, depreciation and amortization (“EBITDA"), adjusted for specific and predetermined items ("Adjusted EBITDA"); 2.Number of home closings; and 3.Customer satisfaction rating as determined by a third-party rating agency. The Compensation Committee believes these metrics focus our NEOs on the most important short-term measures of our business, establish a clear connection between the Company's strategy, performance and the NEO's earned compensation, and provide transparency to our stockholders as to the operation of our Non-Equity Incentive Plan. Each goal represents a fixed percentage of total potential compensation with each goal assessed separately from the others. For each of the three performance measures noted above, our Compensation Committee has specified: •A threshold level of achievement below which no incentives will be paid; •A target range level of achievement (e.g., between the threshold and maximum) associated with a market-competitive incentive award; and •A maximum level of achievement above which incentives paid will not increase. The relationship between the level of performance and associated payout with each level for each of the performance metrics is reflected in the following tables. Where actual results fell between the performance levels set forth above, payments were calculated based on linear interpolation.
Financial and Operational 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 | 123.6% | 250% | Maximum | 110.0% | 250% | Maximum | 103.4% | 250% | | Target | 100.0% | 100% | Target | 100.0% | 100% | Target | 100.0% | 100% | | Threshold | 88.2% | 50% | Threshold | 90.0% | 50% | Threshold | 96.6% | 50% | | Below Threshold | < 88.2% | 0% | Below Threshold | < 90.0% | 0% | Below Threshold | < 96.6% | 0% |
Financial and Operational Highlights
| Adjusted 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% |
Financial and Operational Highlights
| | | Named Executive Officer | | | | | | | Actual Results | | Phillippe Lord | Hilla Sferruzza | Steven J. Hilton (1) | Clint Szubinski | Malissia Clinton | Javier Feliciano | | Adjusted EBITDA (60%) | | | | | | | | | Actual Results (in thousands) | | $1,114,494 | $1,114,494 | $1,114,494 | $1,114,494 | $1,114,494 | $1,114,494 | | Target Performance Level (2) (in thousands) | ≥ | $950,000 | $950,000 | $950,000 | $950,000 | $950,000 | $950,000 | | Target Bonus $ | | $1,800,000 | $813,750 | $600,000 | $1,125,000 | $324,000 | $225,000 | | NEO Payout % (3) | | 210.2% | 210.2% | 100.0% | 210.2% | 210.2% | 210.2% | | NEO Payout $ | | $3,782,739 | $1,710,113 | $600,000 | $2,364,212 | $680,893 | $472,842 | | Number of Home Closings (30%) | | | | | | | | | Actual Results | | 15,611 | 15,611 | 15,611 | 15,611 | 15,611 | 15,611 | | Target Performance Level (2) | ≥ | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | | Target Bonus $ | | $900,000 | $406,875 | $300,000 | $562,500 | $162,000 | $112,500 | | NEO Payout % (3) | | 161.1% | 161.1% | 100.0% | 161.1% | 161.1% | 161.1% | | NEO Payout $ | | $1,449,900 | $655,476 | $300,000 | $906,188 | $260,982 | $181,238 | | Customer Satisfaction Rating (10%) | | | | | | | | | Actual Results | | 95.0% | 95.0% | 95.0% | 95.0% | 95.0% | 95.0% | | Target Performance Level (2) | ≥ | 89.0% | 89.0% | 89.0% | 89.0% | 89.0% | 89.0% | | Target Bonus $ | | $300,000 | $135,625 | $100,000 | $187,500 | $54,000 | $37,500 | | NEO Payout % (3) | | 250.0% | 250.0% | 100.0% | 250.0% | 250.0% | 250.0% | | NEO Payout $ | | $750,000 | $339,062 | $100,000 | $468,750 | $135,000 | $93,750 | | Total NEO Payout $ | | $5,982,639 | $2,704,651 | $1,000,000 | $3,739,150 | $1,076,875 | $747,830 |
Financial and Operational Highlights
| Name | Approximate Award Fair Value (at Target level) ($) | Below Threshold (Shares) (#) | Threshold (Shares) (#) | Target (Shares) (#) (1) (2) | Maximum (Shares) (#) | | Phillippe Lord | $2,500,000 | — | 16,321 | 32,642 | 65,284 | | Hilla Sferruzza | $871,875 | — | 5,692 | 11,384 | 22,768 | | Steven J. Hilton | $500,000 | — | 3,264 | 6,528 | 6,528 | | Clint Szubinski | $1,031,250 | — | 6,732 | 13,464 | 26,928 | | Malissia Clinton | $459,000 | — | 2,996 | 5,992 | 11,984 | | Javier Feliciano | $412,500 | — | 2,693 | 5,386 | 10,772 |
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 | $3,250,000 | $5,500,000 | | Hilla Sferruzza | $1,400,000 | $1,800,000 | | Clinton Szubinski | $2,000,000 | $2,200,000 | | Malissia Clinton | $560,000 | $952,000 | | Javier Feliciano | $386,250 | $849,750 |
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
(1) Approximately 50% of the award value is to be comprised of time-based restricted stock units and approximately 50% of the award value is to be comprised of performance-based share awards.
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
| EXECUTIVE COMPENSATION COMMITTEE REPORT |
Performance-Based Cash Incentive and Equity (Non-Cash) Compensation
The following Executive Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference to any Company filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent the Company specifically incorporates this report.
Compensation of Officers and Directors
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($) (4) | Total ($) | | Phillippe Lord, | 2024 | 1,000,000 | — | 4,927,978 | 5,982,639 | 63,517 | 11,974,134 | | CEO | 2023 | 900,000 | — | 4,248,118 | 5,625,000 | 62,525 | 10,835,643 | | | 2022 | 900,000 | — | 3,667,484 | 3,388,441 | 59,542 | 8,015,467 | | Hilla Sferruzza, | 2024 | 775,000 | — | 1,718,540 | 2,704,651 | 47,189 | 5,245,380 | | EVP and CFO | 2023 | 725,000 | — | 1,520,797 | 3,171,875 | 56,784 | 5,474,456 | | | 2022 | 725,000 | — | 1,477,117 | 1,364,789 | 49,850 | 3,616,756 | | Steven J. Hilton, | 2024 | 1,000,000 | — | 985,568 | 1,000,000 | 32,380 | 3,017,948 | | Executive Chairman | 2023 | 1,000,000 | — | 1,048,777 | 1,000,000 | 31,412 | 3,080,189 | | | 2022 | 1,000,000 | — | 1,018,757 | 1,000,000 | 30,349 | 3,049,106 | | Clint Szubinski, | 2024 | 750,000 | — | 2,032,722 | 3,739,150 | 69,466 | 6,591,338 | | EVP and COO | 2023 | 650,000 | — | 1,363,551 | 4,062,500 | 68,497 | 6,144,548 | | | 2022 | 650,000 | — | 1,324,263 | 1,957,766 | 69,978 | 4,002,007 | | Malissia Clinton, | 2024 | 540,000 | — | 904,639 | 1,076,875 | 45,574 | 2,567,088 | | EVP, GC and Secretary (1) | 2023 | 515,000 | — | 864,162 | 1,287,500 | 69,909 | 2,736,571 | | | 2022 | 364,752 | — | 589,748 | 548,216 | 170,973 | 1,673,689 | | Javier Feliciano, | 2024 | 500,000 | — | 812,997 | 747,830 | 56,623 | 2,117,450 | | EVP and CPO | 2023 | 430,000 | — | 676,353 | 806,250 | 52,424 | 1,965,027 | | | 2022 | 430,000 | — | 547,542 | 485,676 | 54,399 | 1,517,617 |
2024 STOCK AWARDS VESTED
| Nonqualified Deferred Compensation Plans |
2024 STOCK AWARDS VESTED
| Potential Payments upon Termination or Change of Control Summary |
2024 STOCK AWARDS VESTED
| Pay Ratio Disclosure |
2024 STOCK AWARDS VESTED
| Director Compensation |
2024 STOCK AWARDS VESTED
| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Total ($) | | Peter L. Ax | 130,000 | 229,770 | 359,770 | | Dana C. Bradford | 70,000 | 229,770 | 299,770 | | Michael R. Odell | 80,000 | 229,770 | 309,770 | | Deb Henretta | 82,500 | 229,770 | 312,270 | | Joseph Keough | 60,000 | 229,770 | 289,770 | | P. Kelly Mooney | 70,000 | 229,770 | 299,770 | | Louis E. Caldera | 60,000 | 229,770 | 289,770 | | Dennis V. Arriola | 60,000 | 229,770 | 289,770 | | Erin Lantz (3) | 12,500 | 66,630 | 79,130 | | Geisha Williams (4) | — | — | — |
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 certain financial performance 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 five fiscal years, as well as total shareholder return, net earnings, and Adjusted ROA. Our Compensation Committee did not rely on this analysis in its decision making process. See “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 (Adjusted ROA) (6) | | 2024 | $11,974,134 | $10,220,556 | $3,907,841 | $3,387,106 | $256.62 | $252.18 | $786,186 | 13.8% | | 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 2024, 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 2024, 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 | | 2024 | $11,974,134 | $(4,927,978) | $(612,858) | $5,382,084 | $(1,594,826) | $10,220,556 | | 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 | | 2024 | $3,907,841 | $(1,290,893) | $(164,892) | $1,392,235 | $(457,185) | $3,387,106 | | 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 Adjusted ROA are illustrated in the following graphs. Adjusted ROA is calculated as Net Earnings divided by the average of five trailing quarters Total Assets, less Cash and Cash Equivalents. Net Earnings is adjusted for specific and predetermined items, including the add back of NEO compensation. Our Adjusted ROA as it relates to CAP is demonstrated below. Our most important metrics impacting CAP for the year ending December 31, 2024 are:
Pay versus Performance
| Metric | | rTSR | | Adjusted ROA | | Adjusted EBITDA | | Number of Home Closings | | Customer Satisfaction Rating |
Pay versus Performance
| SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS |