DEF 14A of Hovnanian Enterprises Inc
Filed Feb 9, 2026 · FY20250001140361-26-004409
PROXY STATEMENT
PROXY STATEMENT
PROXY STATEMENT
| HOVNANIAN ENTERPRISES, INC. 90 MATAWAN ROAD FIFTH FLOOR MATAWAN, N.J. 07747 | The accompanying proxy is solicited on behalf of the Board of Directors (the “Board“) of Hovnanian Enterprises, Inc. (the “Company“, “we“, “us“ or “our“) for use at the 2026 Annual Meeting of Shareholders (the “2026 Annual Meeting“) referred to in the foregoing Notice and at any adjournment thereof. Shares represented by properly executed proxies that are received or executed in time and not revoked will be voted in accordance with the specifications provided thereon. If no specifications are made in an executed proxy, the persons named in the accompanying proxy card(s) will vote the shares represented by such proxies (1) for the Board of Directors’ slate of directors, (2) for the ratification of the selection of Deloitte & Touche LLP, an independent registered public accounting firm, to examine the financial statements of the Company for the fiscal year ending October 31, 2026, (3) for the approval of the Fourth Amended and Restated Hovnanian Enterprises, Inc. Stock Incentive Plan, (4) for the approval, in a non-binding, advisory vote, of the compensation of the Company’s named executive officers, and (5) on any other matters as recommended by the Board of Directors, unless contrary instructions are given. Any person may revoke a previously designated proxy before it is exercised. If you voted by Internet, telephone or mail and are a shareholder of record, you may change your vote and revoke your proxy by (1) delivering written notice of revocation to Elizabeth Tice, Secretary, Hovnanian Enterprises, Inc., 90 Matawan Road, Fifth Floor, Matawan, N.J. 07747, provided such notice of revocation is received no later than March 30, 2026, (2) voting again by Internet or telephone at a later time before the closing of voting facilities at 11:59 p.m. (Eastern Time) on March 30, 2026, (3) submitting a properly signed proxy card with a later date that is received no later than March 31, 2026 prior to voting at the meeting or (4) revoking your proxy and voting in person at the 2026 Annual Meeting. If you hold your shares in street name, you may submit new voting instructions by contacting your bank, broker or other nominee. You may also change your vote or revoke your proxy in person at the 2026 Annual Meeting if you obtain a signed proxy from the record holder (bank, broker or other nominee) giving you the right to vote the applicable shares. Please note that attendance at the 2026 Annual Meeting will not by itself revoke a proxy. |
PROXY STATEMENT
| We will bear the costs of soliciting proxies from the holders of our Class A Common Stock and Class B Common Stock (collectively, the “Common Stock“). We are initially soliciting these proxies by mail and electronic mail, but solicitation may be made by our directors, officers and selected other employees telephonically, electronically or by other means of communication. Directors, officers and employees who help us in the solicitation will not be specially compensated for those services, but they may be reimbursed for their out-of-pocket expenses incurred in connection with the solicitation. Brokerage houses, nominees, fiduciaries and other custodians will be requested to forward soliciting materials to beneficial owners and will be reimbursed for their reasonable out-of-pocket expenses incurred in sending proxy materials to beneficial owners. |
PROXY STATEMENT
VOTING RIGHTS & SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS & MANAGEMENT The Board of Directors has set January 30, 2026 as the record date for the 2026 Annual Meeting. As of the close of business on the record date, the outstanding voting securities of the Company consisted of 5,153,325 shares of Class A Common Stock, each share entitling the holder thereof to one vote, and 784,718 shares of Class B Common Stock, each share entitling the holder thereof to ten votes if certification of specified ownership criteria have been timely met. Other than as set forth in the table below, there are no persons known to the Company to be the beneficial owners of shares representing more than 5% of either the Company’s Class A Common Stock or Class B Common Stock, which represent the classes of the Company’s voting stock. The following table sets forth, as of January 30, 2026, (1) the Class A Common Stock and Class B Common Stock of the Company beneficially owned by holders of more than 5% of either the Class A Common Stock or the Class B Common Stock of the Company and (2) the Class A Common Stock, Class B Common Stock and Depositary Shares of the Company beneficially owned by each Director, each nominee for Director, each executive officer named in the tables set forth under “Executive Compensation” beginning on page 130 (the “named executive officers”) and all Directors and executive officers as a group. Currently none of the Directors and executive officers own any shares of 7.625% Series A Preferred Stock.
PROXY STATEMENT
| | Class A Common Stock (1) | | Class B Common Stock (1) | | | | Amount and Nature of Beneficial Ownership | Percent of Class (2) | Amount and Nature of Beneficial Ownership | Percent of Class (2) | | Directors, Nominees for Director, Named Executive Officers & Directors and Executive Officers as a Group | | | | | | Ara K. Hovnanian (3) | 24,583 | 0.48% | 194,256 | 23.27% | | Alexander A. Hovnanian (4) | 14,780 | 0.29% | 100,175 | 12.71% | | Robert B. Coutts | 34,159 | 0.66% | — | — | | Miriam Hernandez-Kakol | 1,358 | 0.03% | — | — | | Edward A. Kangas | 1,092 | 0.02% | — | — | | Joseph A. Marengi | 26,011 | 0.50% | — | — | | Brad G. O’Connor | 18,762 | 0.36% | — | — | | Vincent Pagano Jr. | 22,456 | 0.44% | — | — | | Robin Stone Sellers | 13,915 | 0.27% | — | — | | J. Larry Sorsby (5) | 210,875 | 4.05% | — | — | | Michael P. Wyatt | 9,861 | 0.19% | — | — | | All Directors and executive officers as a group (11 persons) | 557,289 | 10.69% | 788,378 | 94.04% | | Holders of More Than 5% | | | | | | Kevork S. Hovnanian Family Limited Partnership (6) | — | — | 193,353 | 24.64% | | Hovnanian Family 2012 L.L.C. (7) | 1 | 0.00% | 126,407 | 16.11% | | Trusts for Kevork S. Hovnanian’s Family (8) | 179,436 | 3.48% | 174,187 | 22.20% | | BlackRock, Inc. (9) | 399,397 | 7.75% | — | — | | The Vanguard Group (10) | 331,451 | 6.43% | — | — |
PROXY STATEMENT
(1) The figures in the table with respect to Class A Common Stock do not include the shares of Class B Common Stock beneficially owned by the specified persons. Shares of Class B Common Stock are convertible at any time on a share-for-share basis to Class A Common Stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (the “SEC”), which generally attribute ownership to persons who have or share voting or investment power with respect to the relevant securities. Shares of Common Stock that may be acquired within 60 days upon exercise of outstanding stock options are deemed to be beneficially owned. Securities not outstanding but included in the beneficial ownership of each such person, are deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person. Except as indicated in these footnotes, and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all securities shown as beneficially owned by them. Shares of Class A Common Stock subject to options currently exercisable or exercisable within 60 days of January 30, 2026, whether or not in-the-money, include the following: B. O’Connor (5,700), V. Pagano (2,014), J. Sorsby (50,000), M. Wyatt (2,250) and all Directors and executive officers as a group (59,964). Shares of Class B Common Stock subject to options currently exercisable or exercisable within 60 days of January 30, 2026, whether or not in-the-money, include the following: Ara Hovnanian (50,000), Alexander Hovnanian (3,600) and all Directors and executive officers as a group (53,600). On July 29, 2008, the Company’s Board of Directors declared a dividend of one Preferred Stock Purchase Right for each outstanding share of Class A Common Stock and Class B Common Stock (which ratio of rights to shares is subject to adjustment in accordance with the Company’s Rights Agreement with Computershare Trust Company, N.A. (as amended, the “Amended Stockholder Rights Plan”)). The dividend was paid to stockholders of record on August 15, 2008. Subject to the terms, provisions and conditions of the Company’s Amended Stockholder Rights Plan, if the Preferred Stock Purchase Rights become exercisable, each Preferred Stock Purchase Right would initially represent the right to purchase from the Company 1/10,000th of a share of Series B Junior Preferred Stock for a per share purchase price as specified in the Amended Stockholder Rights Plan. However, prior to exercise, a Preferred Stock Purchase Right does not give its holder any rights as a stockholder, including without limitation, any dividend, voting or liquidation rights. (2) Based upon the number of shares outstanding plus options currently exercisable or exercisable within 60 days of January 30, 2026, held by the applicable Director, nominee for Director, named executive officer, group or other holder. (3) Includes 11,035 shares of Class A Common Stock and 10,976 shares of Class B Common Stock held in family-related trusts as to which Ara Hovnanian has shared voting power and shared investment power and 668 shares of Class A Common Stock and 812 shares of Class B Common Stock held by Mr. Hovnanian’s wife. (4) Includes 14,272 shares of Class A Common Stock and 82,404 shares of Class B Common Stock held by family-related trusts, of which Mr. Alexander Hovnanian is the investment trustee with dispositive power and voting power. The business address of the trusts is 90 Matawan Road, Fifth Floor, Matawan, New Jersey 07747. (5) Includes 7,256 shares of Class A Common Stock held through a revocable trust for the benefit of Mr. Sorsby's wife, of which Mr. Sorsby and his wife are trustees. Also includes the 50,000 stock options described above that are held through a spousal lifetime access trust, of which Mr. Sorsby’s wife is the trustee. (6) Represents 193,353 shares of Class B Common Stock held by the Kevork S. Hovnanian Family Limited Partnership, a Connecticut limited partnership (the “Limited Partnership”). Ara Hovnanian is the managing general partner of the Limited Partnership, and accordingly, the shares held by the Limited Partnership are included in “All Directors and executive officers as a group,” but such shares are not also included in Mr. Hovnanian’s separate figure of beneficial ownership. The business address of the Family Limited Partnership is 90 Matawan Road, Fifth Floor, Matawan, N.J. 07747. (7) Represents 1 share of Class A Common Stock and 126,407 shares of Class B Common Stock held by the Hovnanian Family 2012 L.L.C. (the “2012 LLC”). Ara Hovnanian is the special purpose manager with respect to investments in the Company, and accordingly, the shares held by the 2012 LLC are included in “All Directors and executive officers as a group,” but such shares are not also included in Mr. Hovnanian’s separate figure of beneficial ownership. The business address of the 2012 LLC is 90 Matawan Road, Fifth Floor, Matawan, New Jersey 07747. (8) Represents 179,436 shares of Class A Common Stock and 174,187 shares of Class B Common Stock held by the various trusts for the benefit of members of the family of Kevork S. Hovnanian. Ara Hovnanian is the special purpose trustee with respect to investments in the Company and, accordingly, the shares held by these trusts are included in “All Directors and executive officers as a group,” but such shares are not also included in Mr. Hovnanian’s separate figure of beneficial ownership. The business address of the trusts is 90 Matawan Road, Fifth Floor, Matawan, New Jersey 07747. (9) Information shown is based on information reported by the filer on Schedule 13G/A filed with the SEC on January 21, 2026, in which BlackRock, Inc. reported sole dispositive power over 399,397 shares of Class A Common Stock and sole voting power over 391,424 shares of Class A Common Stock (the percentage of Class A Common Stock is based on 5,153,325 shares of Class A Common Stock outstanding on January 30, 2026, the record date). The address for BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. This ownership is permitted under Article Eighth of the Restated Certificate of Incorporation and under the Rights Agreement, dated as of August 14, 2008, as amended by Amendment No. 1 to the Rights Agreement, effective January 11, 2018, by Amendment No. 2 to the Rights Agreement, effective January 18, 2021, and Amendment No. 3 to the Rights Agreement, effective January 11, 2024, between Hovnanian Enterprises, Inc. and Computershare Trust Company, N.A. (as successor to National City Bank), as Rights Agent. (10) Information shown is based on information reported by the filer on Schedule 13G filed with the SEC on November 12, 2024, in which The Vanguard Group reported sole dispositive power over 323,154 shares of Class A Common Stock, shared dispositive power over 8,297 shares of Class A Common Stock, sole voting power over 0 shares of Class A Common Stock and shared voting power of 3,925 shares of Class A Common Stock (the percentage of Class A Common Stock is based on 5,153,325 shares of Class A Common Stock outstanding on January 30, 2026, the record date). The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. This ownership is permitted under Article Eighth of the Restated Certificate of Incorporation and under the Rights Agreement, dated as of August 14, 2008, as amended by Amendment No. 1 to the Rights Agreement, effective January 11, 2018, by Amendment No. 2 to the Rights Agreement, effective January 18, 2021, and Amendment No. 3 to the Rights Agreement, effective January 11, 2024, between Hovnanian Enterprises, Inc. and Computershare Trust Company, N.A. (as successor to National City Bank), as Rights Agent.
PROXY STATEMENT
DELINQUENT SECTION 16(A) REPORTS Section 16(a) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), requires our officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. These officers, directors and 10% stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) reports they file. Based solely on a review of copies of Forms 3, 4 or 5 filed by the Company on behalf of its directors and officers or otherwise provided to the Company, the Company believes that during and with respect to the year ended October 31, 2025, its officers, directors and greater than 10% stockholders complied with all applicable Section 16(a) filing requirements, except that one Form 4 to report three transactions for J. Larry Sorsby was incorrectly filed due to administrative error and required subsequent amendment.
PROXY STATEMENT
| PROPOSAL I | | | | —Election of Directors |
PROXY STATEMENT
ELECTION of DIRECTORS The Company’s Amended and Restated By-laws (the “Restated By-laws”) provide that the Board of Directors shall consist of up to eleven Directors who shall be elected annually by the shareholders. The Company’s Restated Certificate of Incorporation (the “Restated Certificate of Incorporation”) requires that, at any time when any shares of Class B Common Stock are outstanding, one-third of the Directors shall be independent, as defined therein. The Board of Directors has determined that a Board of Directors consisting of the eight nominees listed below is the best composition in order to satisfy both the independence requirements of the Restated Certificate of Incorporation as well as the rules of the New York Stock Exchange (the “NYSE”). The Board of Directors has also determined that Mr. Coutts, Ms. Hernandez-Kakol, Mr. Kangas, Mr. Marengi, Mr. Pagano and Ms. Sellers are independent as defined under the Restated Certificate of Incorporation and the NYSE rules. The Restated Certificate of Incorporation may be found on the Company’s website at www.khov.com under “Investor Relations,” “Corporate Governance,” “Highlights.” The following individuals have been recommended to the Board of Directors by the Corporate Governance and Nominating Committee and approved by the Board of Directors to serve as Directors of the Company to hold office until the next Annual Meeting of Shareholders and until their respective successors have been duly elected and qualified. In the event that any of the nominees for Director should become unavailable to serve as a Director, it is intended that the shares represented by proxies will be voted for such substitute nominees as may be nominated by the Board of Directors, unless the number of Directors constituting a full Board of Directors is reduced. The Company has no reason to believe, however, that any of the nominees is, or will be, unavailable to serve as a Director. Proxies cannot be voted for a greater number of persons than the number of nominees shown below.
PROXY STATEMENT
| BOARD of DIRECTORS | |
PROXY STATEMENT
| Name | Age | Company Affiliation | Year First Became a Director | | Ara K. Hovnanian | 68 | Chief Executive Officer, Chairman of the Board & Director | 1981 | | Robert B. Coutts | 75 | Independent Director | 2006 | | Miriam Hernandez-Kakol | 72 | Independent Director | 2022 | | Edward A. Kangas | 81 | Lead Independent Director | 2002 | | Joseph A. Marengi | 72 | Independent Director | 2006 | | Vincent Pagano Jr. | 75 | Independent Director | 2013 | | Robin Stone Sellers | 73 | Independent Director | 2018 | | J. Larry Sorsby | 70 | Director | 1997 |
PROXY STATEMENT
The Board of Directors seeks to ensure that the Board of Directors is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board of Directors to satisfy its oversight responsibilities effectively. As discussed below under “Corporate Governance and Nominating Committee” beginning on page 40, a slate of Directors to be nominated for election at the annual shareholders’ meeting each year is approved by the Board of Directors after recommendation by the Corporate Governance and Nominating Committee. In the case of a vacancy on the Board of Directors (other than one resulting from removal by shareholders), the Corporate Governance and Nominating Committee will identify individuals believed to be qualified candidates to serve on the Board of Directors and shall review the candidates who have met those qualifications with the Company’s Chairman, who will determine if the candidate is eligible for recommendation by the Corporate Governance and Nominating Committee to the full Board of Directors. If recommended, the Board of Directors will then approve a director nominee to fill the vacancy on the Board of Directors. In identifying candidates for Director, the Corporate Governance and Nominating Committee, the Chairman and the Board of Directors take into account (1) the comments and recommendations of members of the Board of Directors regarding the qualifications and effectiveness of the existing Board of Directors or additional qualifications that may be required when selecting new board members that may be identified in connection with the self-assessments described below under “Corporate Governance and Nominating Committee” beginning on page 40, (2) the requisite expertise and diverse backgrounds of the Board of Directors’ overall membership composition, (3) the independence of non-employee Directors and possible conflicts of interest of existing and potential members of the Board of Directors and (4) all other factors such bodies and persons consider appropriate. Although the Company has no formal policy regarding diversity, the Corporate Governance and Nominating Committee and the Board of Directors include diversity as one of several criteria that they consider in connection with selecting candidates for the Board of Directors. The Board of Directors seeks to ensure that it is composed of members whose background, expertise, qualifications, attributes and skills, when taken together, allow the Board of Directors to satisfy its oversight responsibilities effectively. Our current Board of Directors includes two individuals who identify as female and one who identifies as a racial minority. When considering whether directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Corporate Governance and Nominating Committee and the Board of Directors focused primarily on the information discussed in each of the Directors’ individual biographies set forth below on pages 33 to 37. In particular, the Corporate Governance and Nominating Committee and the Board of Directors considered, with regard to the following: Mr. Coutts contributes a strong background in the manufacturing sector, along with extensive experience in technology and program management. His work with a large multinational corporation that manufactures complex products, as well as his leadership in significant Defense and National Interest cyber and systems programs, provides invaluable insight for evaluating the multiple integrated processes of the homebuilding business. The expertise is also valuable in performance management and other aspects of the Company’s operations. Ms. Hernandez-Kakol brings significant experience, expertise and background in growing enterprises and developing and executing strategy. She has a broad perspective and proven track record of successfully transforming organizations and introducing new solutions to market to drive growth and performance improvement. Mr. Kangas has significant experience, expertise and background in accounting matters, including the broad perspective brought by his experience in advising clients in many diverse industries. Mr. Marengi’s strong background in the technology sector is valuable, as expertise in evaluating new technologies, conducting cost-benefit analyses, and maintaining vigilance in cybersecurity and data protection are important to the Company’s success. Mr. Pagano has significant experience, expertise and background in legal and capital markets matters, including the broad perspective brought by his experience in advising clients in the homebuilding industry and many other diverse industries. Ms. Sellers possesses a strong background working in the real estate and home sales industries, complemented by a broad perspective brought by experience in advising clients in real estate and other industries, both as a consultant in the real estate area and as an attorney specializing in real estate. Her extensive experience managing and advising worldwide residential marketing, branding and sales businesses further enhances her ability to deliver valuable insights and strategic leadership. Mr. Hovnanian, our Chief Executive Officer and Chairman of the Board, has more than forty-five years of experience with the Company. Mr. Sorsby, our former Chief Financial Officer, has more than thirty-five years of experience with the Company.
PROXY STATEMENT
| Board of Directors' Experience Matrix | Ara K. Hovnanian** | Robert B. Coutts | Miriam Hernandez- Kakol | Edward A. Kangas* | Joseph A. Marengi | Vincent Pagano Jr. | Robin Stone Sellers | J. Larry Sorsby** | | Enterprise Leadership Experience as a senior executive of a large commercial organization. | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Homebuilding/Real Estate Professional experience in acquiring, managing or selling of residential real estate. | ✔ | | | | | ✔ | ✔ | ✔ | | Financial Professional experience in preparing, auditing or evaluating financial statements or in the management of commercial investments. | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Technology/Cyber Risk Experience in technology applications and/or cyber risk. | | ✔ | ✔ | | ✔ | | ✔ | | | Public Company Experience serving as a director of another public company. | | ✔ | | ✔ | ✔ | ✔ | | | | Risk Management Experience with the implementation of strategic risk plans and/or the management of the associated risks. | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Human Capital Experience in attracting, developing and retaining of talent and/or succession planning. | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Sales & Marketing Experience in the operation and management of sales and marketing strategies, branding and consumer trends. | ✔ | | ✔ | ✔ | ✔ | | ✔ | ✔ | | Corporate Governance Experience in corporate governance for a public company. | ✔ | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ |
PROXY STATEMENT
*Lead Independent Director **Non-Independent Director
PROXY STATEMENT
| BOARD of DIRECTORS | |
PROXY STATEMENT
| ARA K. HOVNANIAN | | Chief Executive Officer, Chairman of the Board & Director |
PROXY STATEMENT
Mr. Hovnanian has been Chief Executive Officer since July 1997 and served as President from 1988 through October 2025. Mr. Hovnanian joined the Company in 1979, was appointed Executive Vice President in 1983, has been a Director of the Company since 1981 and was Vice Chairman from 1998 through November 2009. In November 2009, he was elected Chairman of the Board following the death of Kevork S. Hovnanian, the chairman and founder of the Company and the father of Mr. Hovnanian. Mr. Hovnanian is Chairman of the Company’s Strategy Committee.
PROXY STATEMENT
| ROBERT B. COUTTS | Mr. Coutts retired from the position of Executive Vice President of Lockheed Martin Corporation (NYSE), which he held from 2000 to 2008. Previously, Mr. Coutts was President and Chief Operating Officer of the former Electronics Sector of Lockheed Martin from 1998 to 2000. He was elected an officer by the Board of Directors of Lockheed Martin in December 1996. Mr. Coutts held management positions with General Electric Corporation (NYSE) from 1972 to 1993 and was with GE Aerospace when it became part of Lockheed Martin in 1993. Mr. Coutts is the retired Chairman of Sandia Corporation, a subsidiary of Lockheed Martin Corporation, served on the Board of Directors, Compensation Committee and Corporate Governance Committee of Stanley Black and Decker (NYSE) and currently serves on the Board of Directors of Siemens Government Technologies, Inc., where he is Chairman of the Compensation Committee. Mr. Coutts is a member of the Board of the Baltimore Symphony Orchestra and on the investment committee of Wesley Theological Seminary. He was elected as a Director of Hovnanian Enterprises, Inc. in March 2006 and is a member of the Company’s Audit Committee and Compensation Committee. | | Independent Director | | | MIRIAM HERNANDEZ-KAKOL | Ms. Hernandez-Kakol retired from the position of Senior Partner and Global Head of Management Consulting Practice of KPMG LLP, which she held from May 2019 to October 2021. She has served on the Toyota Financial Services Bank (TFSB) Board since September 2022 and is a member of TFSB’s Audit, Risk and Community Reconstruction Act committees. In January 2023 she was elected to the LPGA Foundation Board. In January of 2025, Miriam joined the Core.X Board of Directors as an Independent Director. Ms. Hernandez-Kakol is NACD Directorship Certified®. Previously, she led the Global Customer and Operations practice at KPMG from 2015 to 2019. Prior to KPMG, Ms. Hernandez-Kakol was at BearingPoint from 2003 to 2008 as Managing Director and Senior Vice President. She rejoined KPMG in 2008, holding various partner roles. She also held various positions at Telcordia Technologies from 1988 to 1999. Ms. Hernandez-Kakol has served on the board of Junior Achievement of NJ, the Hispanic Information Technology Executive Council (HITEC), KPMG’s Women’s Advisory Board and the STEM Committee of the National Academy Foundation. Ms. Hernandez-Kakol was elected as a Director of Hovnanian Enterprises, Inc. in January 2022 and is a member of the Company’s Audit Committee and a member of the Compensation Committee. | | Independent Director | |
PROXY STATEMENT
| EDWARD A. KANGAS | Mr. Kangas was the Global Chairman and Chief Executive Officer of Deloitte from December 1989 to May 2000, when he retired. He served as the Chairman of the Board of Deutsche Bank USA Corporation from 2015 to 2022. He served as Lead Director at United Technologies from 2010 to 2018. He was on the Board of Directors of IntelSat (NYSE) from 2012 to 2022, Tenet Healthcare Corporation (NYSE) from 2003 to 2019, Intuit from 2007 to 2016, AllScripts, Inc. (Nasdaq) from 2008 to 2012 and Vivus Inc. (Nasdaq) from 2018 to 2020. Mr. Kangas is a former Chairman of the Board of the National Multiple Sclerosis Society. Mr. Kangas was elected as a Director of Hovnanian Enterprises, Inc. in September 2002, is Lead Independent Director of the Company’s Board of Directors, Chairman of the Company’s Audit Committee and a member of the Company’s Compensation Committee and Corporate Governance and Nominating Committee. In addition, by virtue of his position as the Company’s Lead Independent Director, Mr. Kangas also serves as an ex officio member of the Strategy Committee. | | Lead Independent Director | |
PROXY STATEMENT
| JOSEPH A. MARENGI | Mr. Marengi, from July 2007 to March 2012, served as a Venture Partner for Austin Ventures. Prior to that, Mr. Marengi served as senior vice president for the Commercial Business Group of Dell Inc. (Nasdaq). In this role, Mr. Marengi was responsible for the Dell units serving medium business, large corporate, government, education and healthcare customers in the United States. Mr. Marengi joined Dell in July 1997 from Novell Inc. (Nasdaq), where he was president and chief operating officer. Mr. Marengi also served on the Boards of Directors of Quantum Corporation (NYSE) from 2008 to 2013 and Entorian Technologies, Inc. (formerly, the OTC Markets) from 2008 to 2012. Mr. Marengi was elected to the Board of Directors of Hovnanian Enterprises, Inc. in March 2006 and is the Chairman of the Company’s Compensation Committee and a member of the Company’s Audit Committee and Corporate Governance and Nominating Committee. | | Independent Director | |
PROXY STATEMENT
| VINCENT PAGANO JR. | Mr. Pagano was a partner at the law firm of Simpson Thacher & Bartlett LLP until his retirement at the end of 2012. He was the head of the firm’s capital markets practice from 1999 to 2012 and, before that, administrative partner of the firm from 1996 to 1999. He was a member of the firm’s executive committee during nearly all of the 1996 - 2012 period. He serves on the Board of Directors of Cheniere Energy Partners GP, LLC, the general partner of Cheniere Energy Partners (NYSE MKT), where he is chairman of the Conflicts Committee and a member of the Audit Committee, and also served on the Board of Directors of L3 Technologies, Inc. (NYSE) from 2013 until L3’s merger with Harris Corporation in 2019, where he was chairman of the Nominating and Corporate Governance Committee and a member of the Audit Committee. Mr. Pagano was elected to the Board of Directors of Hovnanian Enterprises, Inc. in March 2013, is the Chairman of the Company’s Corporate Governance and Nominating Committee and is a member of the Company’s Audit Committee. | | Independent Director | |
PROXY STATEMENT
| ROBIN STONE SELLERS | Ms. Sellers served as Chief Executive Officer of Christie’s International Real Estate from 2012 through 2014. As CEO of Christie’s, Ms. Sellers was responsible for all aspects of the company’s business, including its global sales, marketing and branding strategy, new development projects and finance groups. Ms. Sellers was CEO of Crossroads Property Strategies from 2008 to 2012 and head of real estate and a partner at McKinsey & Company from 1989 through 2007. From 1978 through 1989, Ms. Sellers practiced law in the real estate departments of two major New York City law firms. Ms. Sellers is a member of the Board of Advisors of the Weitzman School of Design at the University of Pennsylvania, a member of the Advisory Board of the McHarg Center for Urbanism and Ecology at the University of Pennsylvania and was a member of the Board of Directors of Forbes Global Properties, a private real estate marketing firm, until 2024 and Chair of the Board from 2019 through 2023. She is also the founder of First Chance, an organization that pays bail for indigent women in Palm Beach County, Florida. Ms. Sellers was appointed to the Board of Directors of Hovnanian Enterprises, Inc. in June 2018 and is a member of the Company’s Audit Committee and Corporate Governance and Nominating Committee, and is Chair of the Cybersecurity Subcommittee. | | Independent Director | |
PROXY STATEMENT
| J. LARRY SORSBY | Mr. Sorsby retired in October 2023 from the positions of Chief Financial Officer of Hovnanian Enterprises, Inc. which he held since 1996 and Executive Vice President which he held since November 2000. Previously, Mr. Sorsby was also Senior Vice President from March 1991 to November 2000. From 2013 through 2023, he served as Chairman of the Board of Visitors for Urology at The Children’s Hospital of Philadelphia (“CHOP”) and also served on the Foundation Board of Advisors at CHOP from 2015 through 2023. Mr. Sorsby was elected as a Director of Hovnanian Enterprises, Inc. in 1997, and is a member of the Company’s Strategy Committee. | | Director | |
PROXY STATEMENT
| MEETINGS of the BOARD of DIRECTORS & COMMITTEES of the BOARD OF DIRECTORS | |
The Committee’s actions and procedures are discussed in more detail next and further below under “Compensation Discussion and Analysis.”
The Committee’s actions and procedures are discussed in more detail next and further below under “Compensation Discussion and Analysis.” COMPENSATION REVIEW PROCESS FOR THE NAMED EXECUTIVE OFFICERS The Committee, in conjunction with the Board of Directors and with management’s input, is responsible for making decisions related to the overall compensation of the NEOs, excluding the CEO, whose compensation is determined solely by the Compensation Committee and the Board of Directors. At least annually, the Committee establishes objective financial measures for determining bonus awards to the NEOs. The Committee also considers salary, employee benefits and discretionary bonus awards, if any, for the NEOs. In determining overall compensation for the NEOs, the Committee may consult with other members of the Board of Directors, including the CEO, rather than relying solely on the Company’s financial performance measures in determining their compensation. The CEO often provides the Committee with insight on the individual performance of executives (other than with respect to himself). The CEO is not present for the Committee’s evaluation of his individual performance. The Committee also reviews and analyzes the compensation of the named executive officers of the Company’s peer group of nine publicly-traded homebuilding companies (the “Peer Group”), discussed further below. The Committee may engage outside compensation consultants in relation to various compensation issues. The Committee may also instruct a compensation consultant to provide assistance in fostering an overall compensation program that aligns with its compensation philosophy to guide, motivate, retain and reward its executives for the achievement of the Company’s financial performance, strategic initiatives and individual goals, including increased long-term shareholder value during a challenging business environment. Notwithstanding any input from compensation consultants and management, the Committee, or any subcommittee of the Committee to which the Committee has delegated its responsibilities, has the sole discretion to make all final decisions related to NEO compensation. OUTSIDE COMPENSATION CONSULTANT For fiscal 2025, the Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”) as the Committee’s outside compensation consultant to provide certain services related to executive and non-employee Director compensation. In fiscal 2025, FW Cook assisted the Committee with its review of the Company’s annual bonus, long-term incentive and equity compensation plans for the CEO and other NEOs as well as its review of the compensation program for the non-employee Directors and the Compensation Committee’s compensation risk assessment. FW Cook does not provide any other services to the Company unless approved by the Committee, and no such other services were provided in fiscal 2025. After considering the relevant factors, the Company determined that no conflicts of interest have been raised in connection with the services FW Cook performed for the Committee in fiscal 2025. The Committee’s primary objective in engaging FW Cook has been to obtain advice and feedback related to maintaining programs that provide competitive compensation opportunities for executives compared to the Peer Group. FW Cook also provided assistance to the Committee in fostering an overall compensation program as discussed above. The Committee weighs the advice and feedback from its compensation consultant and the members of the Board of Directors, as well as the views of, and information gathered by, the members of management it has consulted in conjunction with its review of other information the Committee considers relevant, when making decisions or making recommendations to the full Board of Directors regarding executive compensation. BOARD COMMUNICATION The Company’s Board of Directors is updated at least quarterly on any compensation decisions or recommendations made by the Committee, and the Committee requests feedback from the Board of Directors regarding specific compensation issues as it deems necessary. COMPENSATION COMMITTEE INTERLOCKS & INSIDER PARTICIPATION During the fiscal year ended October 31, 2025, the members of the Committee were Mr. Marengi, Mr. Coutts, Ms. Hernandez-Kakol and Mr. Kangas, none of whom at any time has been an officer or employee of the Company or any of its subsidiaries or have any relationships requiring disclosure under Item 404(a) of Regulation S-K in this Proxy Statement. None of our executive officers served on the board of directors or compensation committee of any other entity that has or had one or more executive officers who served on our Board of Directors or our Compensation Committee during fiscal 2025. COMPENSATION COMMITTEE REPORT The Committee has reviewed and discussed the Compensation Discussion and Analysis provided below with the Company’s management. Based on this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2025. COMPENSATION COMMITTEE Joseph A. Marengi, Chair Robert B. Coutts Miriam Hernandez-Kakol Edward A. Kangas
The Committee’s actions and procedures are discussed in more detail next and further below under “Compensation Discussion and Analysis.”
1. EXECUTIVE SUMMARY BACKGROUND In recent years, the Committee has determined to weight the Company’s variable compensation programs toward rigorous performance conditions with metrics such as pretax profit, liquidity, shareholder value preservation, debt reduction, alternative capital raises, EBIT Return on Investment, gross margin and new communities opened. As context for basing the Company’s compensation programs on these metrics, the Committee considered that, at the point at which housing starts were at the lowest levels during the great housing recession in 2009, the Company had written off over $2.5 billion of asset value and, as a result, was significantly overleveraged. During this period, many homebuilders declared bankruptcy and certain others significantly diluted shareholders via new equity issuances or by selling their companies at extremely low valuations. Hovnanian’s management chose to preserve shareholder value by managing the Company for growth and taking creative steps to refinance and pay down its heavy debt load. From the beginning of 2009 through fiscal 2025, the Company has reduced its public debt by about $1.6 billion, including a $636 million debt reduction since October 31, 2020. Despite this reduction, the Company remains overleveraged, with interest rates on debt instruments significantly above its lower leveraged peers. Accordingly, the Company continues to have a large interest expense burden which causes profitability to be more challenging to achieve and makes it difficult to compare the Company with its peers on profitability alone. Notwithstanding the large interest expense burden, when measuring pure operating performance by the ratio of adjusted EBIT to investment, the Company has performed in the top half of its Peer Group for each of the six years ending with fiscal 2025. In addition, the Company continues to rank highest among its Peer Group in inventory turns. COMPANY PERFORMANCE IN FISCAL 2025 The demand for new and existing homes is dependent on a variety of demographic and economic factors, including job and wage growth, household formation, consumer confidence, mortgage financing, interest rates, inflation and overall housing affordability. From January 2022 to October 2023, 30-year mortgage rates more than doubled. The sharp increase in interest rates, persistently high levels of inflation and doubt about the stability of the economy negatively impacted housing demand beginning in the second half of fiscal 2022 and into fiscal 2023. During the first quarter of fiscal 2024, mortgage rates declined, which had a positive effect on our sales pace. Rates fluctuated for the remainder of fiscal 2024 and throughout fiscal 2025 but still remain persistently high. As a result, affordability generally remains challenging for homebuyers. We have stayed aggressive in our pricing, incentives and concessions in order to align with the current market. We continue to use our increased inventory of quick-move-in homes (“QMI homes”) to help meet buyers’ needs for more affordable housing in the existing uncertain interest rate environment. The time between contract signing and closing is shorter with a QMI home as compared to a to be built home, which provides customers with more certainty on their mortgage pricing. The availability of QMI homes also allows us to offer mortgage interest rate buydown assistance, which is a tool we offer through our wholly-owned mortgage banking subsidiary ("K. Hovnanian Mortgage"), to help ease the impact of higher monthly payments from rising interest rates. We pay the cost of interest rate buydowns for customers that qualify through K. Hovnanian Mortgage and decide to use the program. The level of interest rate-based incentives utilized differs across our markets and is one of several available options we use to drive sales and close homes. Although the long-term fundamentals of the new home market remain favorable, during fiscal 2025, volatility in the broader economy and affordability constraints caused many consumers to delay purchasing a new home. As a result of this more difficult sales environment, we experienced a decrease in net contracts compared to fiscal 2024. Even as mortgage rates increased and we focused on increasing sales pace versus price, we were still able to raise net prices in approximately 36% of our communities during the fourth quarter of fiscal 2025. There remains a great degree of uncertainty due to inflation, tariffs, the continued possibility of an economic recession, employment risk and the potential for further mortgage rate increases. While we continue to experience certain supply chain issues, we remain focused on continuing to shorten our construction cycle times and building on our national initiatives to drive down costs with our material providers and trade partners. The changing conditions in the housing market, and in the general economy, make it difficult to predict how strongly our business will be impacted by these external factors over fiscal 2026 and beyond. Our cash position allowed us to spend $859.4 million on land purchases and land development for long-term growth during fiscal 2025 and still have total liquidity of $404.1 million, including $272.8 million of homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility as of October 31, 2025. In addition, our September 2025 issuance of $900.0 million in aggregate amount of senior unsecured notes to refinance all of our senior secured notes and secured term loan facility contributed to our ongoing efforts to manage and simplify the Company’s capital structure and strengthen its financial position. Additional information on our results for the year ended October 31, 2025 were as follows: For the year ended October 31, 2025, sale of homes revenues decreased 0.8% as compared to the prior year, due to a 3.5% decrease in average sales prices, partially offset by a 2.8% increase in homes delivered. The increase in deliveries in fiscal 2025 was primarily the result of a 7.7% increase in community count as well as an increase in QMI contracts. Homebuilding gross margin percentage decreased from 18.7% for the year ended October 31, 2024 to 12.7% for the year ended October 31, 2025, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, decreased from 22.0% for the year ended October 31, 2024 to 17.2% for the year ended October 31, 2025. The decreases were primarily due to the increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable. In the current homebuilding environment, we remain focused on driving financial performance by increasing our sales pace versus achieving a higher gross margin. Homebuilding gross margin percentage, before cost of sales interest expense and land charges, is a non-GAAP measure. See page 33 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2025 for a reconciliation of this measure to homebuilding gross margin percentage, the most directly comparable GAAP measure. Selling, general and administrative expenses (including corporate general and administrative) increased $7.6 million for the year ended October 31, 2025 as compared to the prior year; however, as a percentage of total revenue, such costs were relatively flat at 11.7% for the year ended October 31, 2025 compared to 11.4% for the year ended October 31, 2024. The increase was primarily due to an increase in advertising expenses and compensation expense, mainly related to increased headcount and annual merit increases, as well as fees incurred on unused builder forward commitments. The increase in headcount was in preparation for expected growth in community count and deliveries in fiscal 2025 and fiscal 2026.
Pay-for-Performance
Pay-for-Performance The Compensation Committee ties increases or decreases in overall compensation to the achievement of key performance factors the Board of Directors believes are critical to the Company’s success during that period. The Committee seeks to motivate management to achieve improved financial performance of the Company through bonus plans that reward higher performance with increased bonuses and hold management accountable for financial performance that falls below targeted levels by paying reduced bonuses. In addition, the periodic LTIPs adopted by the Company have conditioned payouts on the achievement of certain targets for increasing profitability and EBIT Return on Investment, and lowering or refinancing debt, reducing interest expense and achieving strategic initiatives over multi-year performance periods. Moreover, in recent years, the NEOs have received PSUs which are tied to financial performance conditions (for fiscal year 2025, consistent with fiscal year 2024, absolute EBIT and absolute EBIT Return on Investment levels). The rigor of the performance conditions related to the LTIPs is demonstrated by the fact that, on average for LTIP awards granted during fiscal years 2018 through 2022, we have set the three-year cumulative pre-tax profit targets for the LTIPs at 252% of what was achieved for the most recently completed three-year periods at the time the LTIP awards were granted. In addition, LTIP awards granted during fiscal years 2023 through 2025 require Relative EBIT Return on Investment to be in the top quintile compared to our Peer Group to earn the maximum potential award for that metric. Moreover, our fiscal year 2025 LTIP requires a 1,527 and 2,860 basis point improvement in net debt to capital at target and maximum performance, respectively, compared to the average net debt to capital level on the last day of the three most recently completed fiscal years at the time the award was granted. Because the Summary Compensation Table uses accounting constructs to estimate values of long-term equity incentive awards at the time of grant, the Committee does not believe that it adequately measures CEO compensation for the purpose of assessing pay-for-performance alignment. These estimated values can differ significantly from the actual value that is ultimately earned from these awards. For this reason, the Committee also considers realizable pay, which captures the impact of the Company’s current share price performance on previously granted long-term incentive awards and helps the Committee assess the alignment of the Company’s compensation programs with the interests of its shareholders.
Emphasis on Long-Term Value Creation and Retention
Emphasis on Long-Term Value Creation and Retention The Committee seeks to align the interests of management with the long-term interests of the Company’s shareholders by granting a significant portion of their total compensation in the form of equity awards that increase or decrease in value as the Company’s financial performance and stock price improve or decline. The Committee also seeks to retain management by using compensation methods that require executives to be employed through various performance periods in order to receive financial benefits of certain equity grants.
Maintaining an Appropriate Peer Group
Maintaining an Appropriate Peer Group To retain and attract executive talent with industry-specific knowledge, in constructing the Peer Group, the Committee selects those companies that compete directly with the Company in the homebuilding industry, are of comparable complexity in operations to the Company and are generally in the markets in which the Company competes. The Committee believes that it is important to compare the Company to others in the homebuilding industry, even if certain of these peers have different financial profiles, because the Company competes with homebuilding industry peers for executive talent with industry-specific knowledge and experience. Further, the Company competes directly in all of its markets with most of the Peer Group companies for customers, land and trade partners. In some markets, the Company is larger than some of the Peer Group companies even though it may be smaller nationally. The Committee reviews the composition of the Peer Group on an annual basis and makes adjustments, if needed. In fiscal year 2025, the Committee did not make any changes to the Peer Group used in the prior fiscal year. The Committee reviews the executive compensation of the Peer Group companies and seeks to award competitive target total direct compensation opportunities (the sum of base salary, annual bonus/incentive awards and target long-term incentive awards) for our NEOs compared to the Peer Group.
No Employment Agreements with NEOs other than CFO
No Employment Agreements with NEOs other than CFO Other than with respect to the Chief Financial Officer (the “CFO”), the Company does not maintain employment or other agreements for our NEOs that provide contractual rights upon termination of employment (other than upon death or disability) except for the vesting of long-term incentive and equity-based awards in the case of retirement or in connection with a qualifying termination in the case of a change in control. The Company does have a change in control severance agreement with Mr. O’Connor, as discussed in footnote (6) to the Potential Payments Upon Termination or Change-in-Control Table. No Tax Gross-Ups or Defined Benefit Pension Plans for Any NEO.
Investor Engagement
Investor Engagement During fiscal 2025, the Company conducted proactive investor outreach programs, including having its executives attend four investor conferences as well as other meetings with the investment community and meeting by teleconference or in person with more than 185 investors either one-on-one or in small groups. As a result, the Company’s executives met with institutional holders representing approximately 64% of shares held by our top ten shareholders that are actively managed funds. From time to time, Mr. Ara Hovnanian, who is also a member of the Board of Directors, and/or Mr. O’Connor participated in these investor outreach programs and reported their findings from the investor feedback to the Board of Directors. During such meetings, none of the investors with whom the Company engaged during fiscal 2025 raised concerns about the Company’s compensation practices, including the design and payouts under the Company’s annual bonus programs. In fact, in the numerous investor meetings we have held over the years, compensation has rarely if ever been raised by investors as an issue to be discussed. COMPENSATION DECISIONS FOR FISCAL 2025 The Committee’s compensation decisions for fiscal 2025 reflected a conservative approach to fixed pay elements (base salary), the achievement of pre-established goals (annual bonuses) and long-term awards.
Regular Annual Bonuses
Regular Annual Bonuses Consistent with the achievement of specified financial objectives, fiscal 2025 annual bonuses were paid to all NEOs. The Committee considered investor support for prior annual bonus programs, their design and payouts when determining pay opportunities and setting performance metrics for fiscal 2025. Additional details are described under “Details of Compensation Elements—Annual Bonuses—Regular Bonuses” below.
Discretionary Bonuses
Discretionary Bonuses The Committee did not award discretionary bonuses to any NEO for fiscal 2025.
Long-Term Awards, including PSUs and participation in the Long-Term Incentive Program
Long-Term Awards, including PSUs and participation in the Long-Term Incentive Program As further described under “Details of Compensation Elements – Stock Grants,” for fiscal 2025, the Committee granted PSUs to the NEOs. The PSUs are tied to the specific financial performance conditions described below under “Details of Compensation Elements – Stock Grants.” The Committee also granted LTIP awards to the NEOs in fiscal 2025 as further described below under “Details of Compensation Elements – Long-Term Incentive Programs.” The LTIP awards are tied to the achievement of specified financial performance conditions over a three-year performance period and are fully vested at the end of the performance period. The PSUs granted in fiscal 2025 are subject to time-based vesting conditions that extend beyond the performance period. The share portions of PSUs and LTIP awards are further subject to a mandatory two-year post-vesting delayed delivery. PSUs payable in cash-settled phantom shares are distributed following the vesting date.
Long-Term Awards, including PSUs and participation in the Long-Term Incentive Program
| 2. COMPENSATION PHILOSOPHY & OBJECTIVES | |
Long-Term Awards, including PSUs and participation in the Long-Term Incentive Program
The Committee, in conjunction with the Board of Directors and with senior management, has been instrumental in shaping the Company’s compensation philosophy and objectives because of its responsibilities and oversight of the Company’s various policies and procedures concerning executive compensation. As context for setting the Company’s compensation programs, the Committee considered the Company’s strategic goals. As such, the Committee has weighted the Company’s variable compensation programs toward rigorous performance conditions with metrics such as pretax profit, liquidity, shareholder value preservation, debt reduction, alternative capital raises, EBIT Return on Investment, gross margin and new communities opened. As context for basing the Company’s compensation programs on these metrics, the Committee considered that, at the point at which housing starts were at the lowest levels during the great housing recession in 2009, the Company had written off over $2.5 billion of asset value and, as a result, was significantly overleveraged. During this period, many homebuilders declared bankruptcy and certain others significantly diluted shareholders via new equity issuances or by selling their companies at extremely low valuations. Hovnanian’s management chose to preserve shareholder value by managing the Company for growth and taking creative steps to refinance and pay down its heavy debt load. From the beginning of 2009 through fiscal 2025, the Company has reduced its public debt by about $1.6 billion, including a $636 million debt reduction since October 31, 2020. Despite this reduction, the Company remains overleveraged, with interest rates on debt instruments significantly above its lower leveraged peers. Accordingly, the Company continues to have a large interest expense burden which causes profitability to be more challenging to achieve and makes it difficult to compare the Company with its peers on profitability alone. Notwithstanding the large interest expense burden, when measuring pure operating performance by the ratio of adjusted EBIT to investment, the Company has performed in the top half of its Peer Group for each of the six years ending with fiscal 2025. In addition, the Company continues to rank highest among its Peer Group in inventory turns. The six primary objectives that the Committee considers in making compensation decisions are discussed below, as are our other philosophies and mechanisms for determining compensation. In making compensation-related decisions, the Committee also considered its role in promoting good corporate governance practices. PRIMARY OBJECTIVES FOR THE COMPENSATION PROGRAM The Company’s primary objectives for compensating its executives are as follows: To offer compensation that guides, motivates, retains and rewards its executives for the achievement of the Company’s financial performance, strategic initiatives and individual goals (as applicable); To fairly compensate its executives in a manner that is appropriate with respect to their individual performance, level of responsibilities, abilities and skills; To align the executives’ interests with the interests of our shareholders; To maintain competitive pay opportunities for its executives so that it retains its talent pool and, at the same time, has the ability to attract new and highly-qualified individuals to join the organization as it grows or in the event of succession or replacement of an executive;
To appropriately design the reward system in the context of a challenging business environment; and
| Annual bonuses; |
To appropriately design the reward system in the context of a challenging business environment; and
| Stock grants (for example, PSUs (payable in stock and/or phantom shares) and RSUs); |
Long-Term vs. Short-Term Compensation
Long-Term vs. Short-Term Compensation An important portion of each NEO’s Total Direct Compensation is long-term compensation, which may include stock options, PSUs, RSUs and/or LTIP awards. Short-term compensation consists of base salary and the cash portion of annual bonus amounts. Long-term compensation is intended to foster long-term commitment by the executive, employee-shareholder alignment and improved long-term shareholder value. In fiscal 2025, the Committee adopted a LTIP for the NEOs and other key senior executives of the Company, as discussed below. 4. DETAILS of COMPENSATION ELEMENTS BASE SALARIES Base salaries are intended to reward executives for their day-to-day contributions to the Company. The Committee believes that base salaries within the competitive range are necessary to retain the Company’s executive talent pool, and it set the fiscal 2025 base salaries of the NEOs at a level it believed to be necessary to retain such executive officers’ services. Base salaries of all the NEOs are reviewed annually by the Committee and are subject to adjustment based on factors that may include individual performance, change in responsibilities, average salary increases or decreases in the industry, compensation for similar positions in the Company’s Peer Group or broad-based compensation survey data if comparable data were unavailable from the Peer Group companies, as well as other factors, such as cost of living increases and internal pay relationships with other executives. For fiscal 2025, the Committee approved a 4.00% base salary increase, effective December 21, 2024, for each of Messrs. O’Connor and Alexander Hovnanian and a 3.96% base salary increase, effective December 21, 2024, for Mr. Wyatt, which such increases are in line with the Company’s ordinary course merit-based salary and cost of living increase practices. Upon his recommendation, the Committee determined not to increase Mr. Ara Hovnanian’s base salary for fiscal 2025. Based on discussions with FW Cook and Peer Group market data gathered by management, the Committee determined that, including these adjustments, the base salaries for the NEOs are within the competitive range necessary to retain the executive officers’ services. ANNUAL BONUSES
Regular Bonuses
Regular Bonuses The Company provides each of the NEOs with an opportunity to earn annual bonuses, which are intended to reward executives for the attainment of short-term financial objectives and for which the relevant metrics and formula are assessed annually. When setting bonus formulas applicable to all NEOs other than Mr. Wyatt in December 2024, the Committee determined to continue to emphasize the importance of maintaining appropriate levels of liquidity, including the use of alternative capital raises, by retaining the metrics used for the fiscal 2024 bonus program in the NEOs’ bonus programs for fiscal 2025. With respect to these metrics, the Committee increased the goals associated with fiscal 2025 alternative capital raises to further enhance our liquidity through innovative sources of additional capital in order to grow the Company in light of our challenges accessing the capital markets. Otherwise, the Committee determined to maintain the liquidity goal of $200 million used for the fiscal 2024 bonus program for the fiscal 2025 bonus program because it continues to align with the target liquidity range publicly disclosed by the Company, which also remained unchanged. In addition, the Committee determined to maintain the rigorous ROAE goals used in fiscal 2024 for purposes of the fiscal 2025 bonus program which required the achievement of a 20% ROAE in order for the NEOs to earn their respective maximum ROAE bonuses (for reference, the average return on equity for the S&P 500 over the last 25 years was 15.98%). Separately, the Committee determined to increase the ROAE bonus potential under the fiscal 2025 bonus program for Messrs. O’Connor and Alexander Hovnanian. In the case of Mr. O’Connor, the Committee determined to increase the ROAE bonus potential to make his total direct compensation more competitive with other chief financial officer positions within the Company’s Peer Group. In the case of Mr. Alexander Hovnanian, the Committee determined to increase the ROAE bonus potential in light of his increasing responsibilities and his leadership of key strategic initiatives. The Committee has discretion to reduce or eliminate the amount of any bonus amounts payable to any participant based on performance or any other factors the Committee deems appropriate. Bonus opportunities are intended to be competitive with industry-wide practices in order to retain and attract executive talent. The following description provides detail as to the components used to determine the fiscal 2025 annual bonuses for Mr. Ara Hovnanian, Mr. O’Connor and Mr. Alexander Hovnanian, namely (1) ROAE, (2) Pre-tax Profit, (3) Liquidity Balances and (4) Alternative Capital Raises, each as defined below. For additional context as to the Committee’s approach to setting the Company’s compensation programs, see also the above discussion under “Compensation Philosophy and Objectives.” Due to the large percentage of long-term compensation paid in the form of stock pursuant to PSUs and the LTIP programs, all bonuses for fiscal 2025 were paid 100% in cash. ROAE is defined as net income available to common shareholders divided by average equity (total equity at the beginning of the fiscal year and at the end of each fiscal quarter during the year divided by five). Net income used in calculating ROAE excludes: (1) expense/income recorded during the performance period from any phantom share based awards related to changes in the stock price above or below the stock price at the date of grant; (2) the impact of any items deemed by the Committee to be unusual or nonrecurring items; and (3) losses from land impairments and gains or losses from debt repurchases/debt retirement such as call premiums and related issuance costs. “Pre-tax Profit” is defined as income (loss) before income tax expense and before income (loss) from unconsolidated joint ventures as reflected on the Company’s audited financial statements plus income (loss) before income tax expense for the Company’s unconsolidated joint ventures as reflected on their respective financial statements for the twelve months ended October 31, 2025, excluding: (1) expense/income recorded during the performance period from any phantom share based awards related to changes in the stock price above or below the stock price at the date of grant; (2) the impact of any items deemed by the Committee to be unusual or nonrecurring items and excluding losses from land impairments; and (3) gains or losses from debt repurchases/debt retirement such as call premiums and related issuance costs. The Liquidity Balances component of the NEOs’ bonus formulas was based on the number of fiscal 2025 quarter-ends in which Liquidity Balances were at or above $200 million. “Liquidity Balances” are defined as homebuilding cash and cash equivalents plus restricted cash that collateralizes letters of credit plus the available borrowing capacity under the Company’s revolving credit facility. This element of the bonus calculation directly correlates with the Company’s strategic goal of enhancing our liquidity in order to grow the Company in light of our challenges accessing the capital markets. The Alternative Capital Raises component of the NEOs’ bonus formulas measured amounts raised by the Company or its unconsolidated joint ventures from alternative capital sources as determined by the Committee (including, but not limited to, financing by joint ventures, land banking transactions and non-recourse debt, but excluding SEC registered and 144A debt financing transactions) that were closed during fiscal 2025. This element of the bonus calculation directly correlates with the Company’s strategic goal of enhancing our liquidity through innovative sources of additional capital in order to grow the Company in light of our challenges accessing the capital markets. The bonus formulas for Mr. Ara Hovnanian,
Mr. O’Connor and Mr. Alexander Hovnanian
| ROAE | Mr. Ara Hovnanian Bonus* Percentage of Pre-tax Profit | Mr. O’Connor Bonus** Percentage of Base Salary | Mr. Alexander Hovnanian Bonus** Percentage of Base Salary | | 0.00% or less | 0.00% | 0.00% | 0.00% | | 5.00% | 1.00% | 70.00% | 70.00% | | 10.00% | 1.25% | 90.00% | 90.00% | | 15.00% | 1.50% | 130.00% | 130.00% | | 20.00% or more | 2.00% | 150.00% | 150.00% |
Mr. O’Connor and Mr. Alexander Hovnanian
| Number of Fiscal 2025 Quarter-Ends with Liquidity Balances at or Above $200 million | Mr. Ara Hovnanian Bonus* thousands | Mr. O’Connor Bonus** thousands | Mr. Alexander Hovnanian Bonus** thousands | | 1 | $0.0 | $0.0 | $0.0 | | 2 | $700.0 | $125.0 | $125.0 | | 3 | $1,050.0 | $175.0 | $175.0 | | 4 | $1,400.0 | $225.0 | $225.0 |
Mr. O’Connor and Mr. Alexander Hovnanian
| Alternative Capital Raises Closed During Fiscal 2025 millions | Mr. Ara Hovnanian Bonus* thousands | Mr. O’Connor Bonus** thousands | Mr. Alexander Hovnanian Bonus** thousands | | $200.0 or less | $0.0 | $0.0 | $0.0 | | $300.0 | $700.0 | $125.0 | $125.0 | | $400.0 | $1,050.0 | $175.0 | $175.0 | | $500.0 or more | $1,400.0 | $225.0 | $225.0 |
Mr. O’Connor and Mr. Alexander Hovnanian
| *Mr. Ara Hovnanian’s bonus is interpolated on a linear basis between the points shown in the table and subject to an overall cap of $7 million. |
Mr. O’Connor and Mr. Alexander Hovnanian
| **The bonuses for Mr. O’Connor and Mr. Alexander Hovnanian are interpolated on a linear basis between the points shown in the table. |
Mr. O’Connor and Mr. Alexander Hovnanian
For fiscal 2025, ROAE was between the target and maximum performance levels, while Liquidity Balances and Alternative Capital Raises reached the maximum performance levels. Specifically, fiscal 2025 ROAE, Pre-tax Profit and Alternative Capital Raises as defined under the bonus formulas for the NEOs were 13.1%, $148.5 million and $896.8 million, respectively, and Liquidity Balances were above $200 million for all four fiscal quarter-ends. Based on the above bonus formulas, Mr. Ara Hovnanian, Mr. O’Connor and Mr. Alexander Hovnanian earned cash bonuses equal to $4,885,147, $1,165,810 and $1,165,810, respectively. Mr. Ara Hovnanian’s bonus payout was 30.2% lower than his bonus cap. Mr. O’Connor and Mr. Alexander Hovnanian’s bonus payouts were 15.9% lower than their respective maximum bonus potential. The following description provides detail as to the components used to determine the fiscal 2025 annual bonus for Mr. Wyatt who served as President of the East Group, a division of the Company which operated in Delaware, Florida, Georgia, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Virginia and West Virginia. Mr. Wyatt’s bonus was based on the financial results of the East Group, since he was directly responsible for growing and maximizing the profits of the East Group. Mr. Wyatt’s bonus formula for fiscal 2025 provided for a bonus award equal to a percentage of (1) East Group Pre-Tax Profit based on achieving targeted levels of East Group Return on Inventory plus (2) a percentage of his base salary based on achieving targeted levels of East Group Customer Satisfaction plus (3) a percentage of his base salary based on achieving targeted levels of East Group Mortgage Capture, as illustrated by the table below. Return on Inventory is defined as Pre-Tax Profit divided by the average inventory balance of the East Group. Pre-Tax Profit for this purpose is defined as the profit for the East Group reflecting joint ventures as wholly-owned after profit sharing accrual and the allocation of all applicable business unit overhead(s), plus, if applicable, the allocable portion of title profits for the East Group after profit sharing accrual and all applicable overheads of the title company and $1,500 per home closed through K. Hovnanian Mortgage. In addition, for Fiscal Year 2025, Pre-tax Profit included $600 for each home that closed in the East Group and generated the $1,000 Department of Energy (“DOE”) Zero Energy Ready Home (ZERH) Multi-Family tax credit, $1,500 for each home that closed in the East Group and generated the $2,500 ENERGY STAR tax credit and $3,000 for each home that closed in the East Group and generated the $5,000 ZERH Single Family tax credit. Average Inventory Balance for this purpose is calculated as the average balance in the inventory accounts utilizing the last day ending balances of these accounts for each of the five consecutive fiscal quarters ending with the last quarter of the fiscal year. Customer Satisfaction is based on the average score for the "How likely would you be to recommend K. Hovnanian Homes to family and friends" question on the move-in survey. It is evaluated quarterly based on the higher of the previous quarter’s results or the available cumulative results beginning August 1st of the previous fiscal year. Mortgage Capture is calculated based on all closings net of cash sales and Mt. Laurel obligations. In addition, certain denied or specialty loans that K. Hovnanian Mortgage cannot offer may be excluded from the capture rate provided that K. Hovnanian Mortgage’s conditions for backing out denied/specialty loans are met. The bonus formula for Mr. Wyatt is illustrated by the following tables.
Mr. Wyatt*
| East Group Return on Inventory | Mr. Wyatt Bonus | | 0.00 – 10.00% | 1.25% of East Group Pre-tax Profit | | 15.00% | 1.50% of East Group Pre-tax Profit | | 20.00% | 1.75% of East Group Pre-tax Profit | | 25.00% or more | 2.00% of East Group Pre-tax Profit |
Mr. Wyatt*
| East Group Customer Satisfaction | Mr. Wyatt Bonus | | 85.00% | 10.00% of base salary | | 88.00% | 20.00% of base salary | | 91.00% or more | 30.00% of base salary |
Mr. Wyatt*
| East Group Mortgage Capture | Mr. Wyatt Bonus | | 80.00% | 5.00% of base salary | | 82.50% | 10.00% of base salary | | 85.00% or more | 15.00% of base salary |
Mr. Wyatt*
| *The bonus is interpolated on a linear basis between the points shown in the tables, provided that if East Group Return on Inventory is zero or lower, the portion of the bonus award for Customer Satisfaction and Mortgage Capture will be reduced to 50% of the bonus amounts for those categories listed above. |
Discretionary Bonuses
Discretionary Bonuses The Committee has the authority to make discretionary bonus awards, which it considers under special circumstances, including exceptional contributions not reflected in the regular bonus measures, new hire sign-on bonuses and retention rewards. No discretionary bonus awards were granted to the NEOs in fiscal 2025. Stock Grants The Committee may make grants of stock options, stock appreciation rights, MSUs, PSUs, restricted stock and RSUs, unrestricted shares of stock or stock-based awards settled in cash. In fiscal 2025, the Committee awarded PSUs to the NEOs. Equity awards are intended to establish a strong commitment to maintain employment with the Company and to focus on creating long-term shareholder value. Because the ultimate value received by equity award recipients is directly tied to the Company’s stock price, such awards serve to link the interests of management and shareholders and to motivate executive officers to make decisions that will increase the long-term total return to shareholders. Certain of the equity awards also include financial performance conditions, which are intended to incentivize recipients to direct the Company to achieve specified financial performance goals. Additionally, grants under the Existing Plan include vesting and termination provisions that the Committee believes will encourage equity award recipients to remain long-term employees of the Company. The Committee ultimately approves the size of the grants taking into account the recommendations of the CEO (other than for his own grant) and other criteria as determined by the Committee. The Committee considers the grant date value of awards as well as the number of shares to ensure that a significant portion of NEO compensation is tied to the Company’s stock price performance and shareholder value creation. The Committee will continue to determine the appropriate mix of equity and other award types based on the objectives of the compensation program, the Company’s business needs, the potential dilution impact and the pool of shares remaining available for grant under the Company’s shareholder-approved incentive plans.
Fiscal 2025 Equity Awards
Fiscal 2025 Equity Awards In determining the fiscal 2025 equity awards for the NEOs, the Committee considered, without giving specific weight to any one factor, then-available information on Peer Group equity awards for the NEOs, the anticipated changes in equity award values across industries, the Company’s available share pool and the potential impact on shareholder dilution, the Company’s stock performance, the historical equity awards provided to each NEO, the desire to retain the employment of each NEO and the desire to continue to link a substantial portion of each NEO’s compensation with future Company performance. As previously discussed, the Committee’s outside compensation consultant, FW Cook, also assisted the Committee with respect to its review of the Company’s compensation program for the CEO and other NEOs, including its equity awards. All equity awards granted to NEOs in fiscal 2025 were made in the form of rights to receive shares of Class A Common Stock or cash-settled phantom shares, except for the awards to Mr. Ara Hovnanian and Mr. Alexander Hovnanian, each of whom received equity awards in the form of rights to receive shares of Class B Common Stock or cash-settled phantom shares. In making such determination for Messrs. Hovnanian, the Committee discussed the various reasons for making awards in Class B Common Stock and considered and evaluated the feedback gathered over time and reported to the Committee by senior human resources personnel about the diligence review thereof, which included discussions with the Company’s senior management and other associates and external parties, such as significant capital providers and joint venture partners and important suppliers and contractors with whom the Company continues to have significant business relationships. Such parties expressed that Hovnanian generational family ownership and control has high value in that it fosters strong engagement and it continues to be important to the Company’s business dealings and relationships and to attracting and retaining current and prospective employees. The Committee also reviewed an independent analysis and valuation of what premium or discount, if any, a share of Class B Common Stock would have relative to a share of Class A Common Stock, taking into account selected transactions and companies offering dual-class stock. Such analysis found, on average, no premium associated with high voting stock even when such stock retained its high vote status upon a sale, which is in contrast to Class B Common Stock which must be converted to Class A Common Stock upon a sale. After such discussion and review and analysis thereof, the Committee determined that the value to Messrs. Hovnanian of receiving Class B Common Stock was equal to the value if they had received Class A Common Stock and that making their equity awards in the form of rights to receive shares of Class B Common Stock best served the Company’s and its shareholders’ interests by promoting continuity of direction and management and stability in the Company’s business and employee relationships through Hovnanian generational family ownership and control, which has been and continues to be critical to the growth and success of the Company. There was a less than 3.9% and 0.3% change in the percentage of Hovnanian shareholder votes controlled by Mr. Ara Hovnanian and Mr. Alexander Hovnanian, respectively, caused by the later of vesting or delivery, in fiscal 2025, of Class B Hovnanian Common Stock awards. The Committee decided to award PSUs to the NEOs in fiscal 2025 because it believes PSUs provide a clear linkage to shareholder value creation and balance retention and performance objectives. Of the PSUs awarded to the NEOs in fiscal 2025, half of the PSUs were tied to absolute EBIT levels, and the other half of the PSUs were tied to absolute EBIT Return on Investment levels as further discussed below. The absolute EBIT metric was chosen because the Committee determined that it supports the Company’s strategic goal of improving profitability and interest coverage. The absolute EBIT Return on Investment metric was chosen because the Committee determined that it measures pure operating performance. Because the cyclical nature of the homebuilding industry makes it difficult to project long-term performance, the Committee set a shorter performance period for the PSU awards than it did for the 2025 LTIP awards to balance the programs. In light of this, the PSU awards are subject to a three-year vesting period and, for the PSUs payable in shares, a mandatory two-year post-vesting delayed delivery period. Specifically, if the performance conditions are met, the earned PSUs vest on the third anniversary of the grant date. The earned PSUs payable in shares are further subject to a mandatory two-year post-vesting delayed delivery such that the share portion of the PSU awards will not be completely distributed until five years following the grant date, or June 13, 2030. The earned PSUs payable in cash-settled phantom shares will be distributed following the vesting date, or June 13, 2028. Mr. Ara Hovnanian: In fiscal 2025, Mr. Ara Hovnanian received 33,712 target PSUs payable in shares and 27,274 target PSUs payable in cash-settled phantom shares with a combined grant date fair value of $5,081,109 compared to 19,086 target PSUs payable in shares in fiscal 2024 with a grant date fair value of $2,274,096. Mr. O’Connor: In fiscal 2025, Mr. O’Connor received 4,644 target PSUs payable in shares and 3,758 target PSUs payable in cash-settled phantom shares with a combined grant date fair value of $700,030 compared to 4,616 target PSUs payable in shares in fiscal 2024 with a grant date fair value of $549,996. Mr. Wyatt: In fiscal 2025, Mr. Wyatt received 930 target PSUs payable in shares and 752 target PSUs payable in cash-settled phantom shares with a combined grant date fair value of $140,134 compared to 1,176 target PSUs payable in shares in fiscal 2024 with a grant date fair value of $140,120. Mr. Alexander Hovnanian: In fiscal 2025, Mr. Alexander Hovnanian received 4,644 target PSUs payable in shares and 3,758 target PSUs payable in cash-settled phantom shares with a combined grant date fair value of $700,030 compared to 4,616 target PSUs payable in shares in fiscal 2024 with a grant date fair value of $549,996. The number of PSUs tied to absolute EBIT levels which become earned PSUs shall equal the product of the target number of PSUs multiplied by the applicable Performance Multiplier set forth below. For this purpose, “EBIT” shall mean (1) income (loss) before interest and income tax expense during the performance period as reflected on the Company’s financial statements for such performance period; (2) minus the Company’s share of unconsolidated joint venture income (loss) as reflected on the Company’s financial statements; and (3) plus income (loss) before interest and income tax expense for the Company’s unconsolidated joint ventures as reflected on their respective financial statements for the twelve months ending April 30, 2026, excluding: (a) expense/income recorded during the performance period from any phantom share based awards related to changes in the stock price above or below the stock price at the date of grant; (b) the impact of any items deemed by the Committee to be unusual or nonrecurring items; and (c) losses from land impairments and gains or losses from debt repurchases/debt retirement such as call premiums and related issuance costs.
Fiscal 2025 Equity Awards
| EBIT for the 4 Quarters Ending April 30, 2026 | Performance Multiplier* | | More than 21.4% below target | 50% | | Target | 100% | | 14.3% or more above target | 200% |
Fiscal 2025 Equity Awards
The number of PSUs tied to absolute EBIT Return on Investment which become earned PSUs shall equal the product of the target number of PSUs multiplied by the applicable Performance Multiplier as set forth below. “EBIT Return on Investment” shall mean the quotient resulting from dividing EBIT by Average Investment. “EBIT” shall mean income (loss) before interest and income tax expense during the performance period as reflected on the Company’s financial statements for such performance period, excluding: (1) expense/income recorded during the performance period from any phantom share based awards related to changes in the stock price above or below the stock price at the date of grant; (2) the impact of any items deemed by the Committee to be unusual or nonrecurring items; and (3) losses from land impairments and gains or losses from debt repurchases/debt retirement such as call premiums and related issuance costs. “Average Investment” shall mean the average of the sum of the ending inventory, investment in unconsolidated joint ventures, investment in build for rent assets, definite life intangibles and goodwill balances from the Company’s balance sheet, excluding capitalized interest and the impact of consolidated inventory not owned, for each of the five consecutive fiscal quarters ending April 30, 2026.
Fiscal 2025 Equity Awards
| EBIT Return on Investment for the 4 Quarters Ending April 30, 2026 | Performance Multiplier* | | More than 33.3% below target | 50% | | Target | 100% | | 33.3% or more above target | 200% |
Achievement under the 2024 PSUs
Achievement under the 2024 PSUs In fiscal 2024, the Committee granted PSUs to the NEOs because it believes PSUs provide a clear linkage to shareholder value creation and balance retention and performance objectives. Half of the fiscal 2024 PSUs were tied to absolute EBIT levels and half of the PSUs were tied to absolute EBIT Return on Investment, each as further discussed below. The absolute EBIT metric was chosen because the Committee determined that it supports the Company’s strategic goal of improving profitability and interest coverage. The absolute EBIT Return on Investment metric was chosen because the Committee determined that it measures pure operating performance on a leverage neutral basis. Earned PSUs vest on the third anniversary of the grant date and are further subject to a mandatory two-year post-vesting delayed delivery such that the PSU awards will not be completely distributed until five years following the grant date, or June 14, 2029.
Achievement under the 2024 PSUs
| | Target 2024 PSUs Tied to Absolute EBIT Levels | Target 2024 PSUs Tied to Absolute EBIT Return on Investment Levels | | Mr. Ara K. Hovnanian | 9,543 | 9,543 | | Mr. Brad G. O’Connor | 2,308 | 2,308 | | Mr. Michael P. Wyatt | 588 | 588 | | Mr. Alexander A. Hovnanian | 2,308 | 2,308 |
Achievement under the 2024 PSUs
The number of PSUs tied to absolute EBIT levels which become earned PSUs shall equal the product of the target number of PSUs multiplied by the applicable Performance Multiplier set forth below. For a definition of “EBIT” used in relation to our 2024 PSUs please see our proxy statement relating to our 2025 annual shareholder meeting filed with the SEC on February 7, 2025.
Achievement under the 2024 PSUs
| EBIT for the 4 Quarters Ending April 30, 2025 | Performance Multiplier* | | $350 million or less (Threshold) | 50% | | $375 million (Target) | 100% | | $425 million or more (Maximum) | 200% |
Achievement under the 2024 PSUs
The Company’s EBIT for the four quarters ending April 30, 2025 was $442.6 million, resulting in a payout of 200% of the target award. The earned PSUs vest on the third anniversary of the grant date and are further subject to a mandatory two-year post-vesting delayed delivery such that the PSU awards will not be completely distributed until five years following the grant date, or June 14, 2029. The number of PSUs tied to absolute EBIT Return on Investment levels which become earned PSUs shall equal the product of the target number of PSUs multiplied by the applicable Performance Multiplier as set forth below. For a definition of “EBIT Return on Investment” used in relation to our 2024 PSUs please see our proxy statement relating to our 2025 annual shareholder meeting filed with the SEC on February 7, 2025.
Achievement under the 2024 PSUs
| EBIT Return on Investment for the 4 Quarters Ending April 30, 2025 | Performance Multiplier* | | 15% or less (Threshold) | 50% | | 20% (Target) | 100% | | 25% or more (Maximum) | 200% |
Achievement under the 2024 PSUs
Our absolute EBIT Return on Investment for the four quarters ending April 30, 2025 was 25.9%, resulting in a payout of 200% of the target award. The earned PSUs vest on the third anniversary of the grant date and are further subject to a mandatory two-year post-vesting delayed delivery such that the PSU awards will not be completely distributed until five years following the grant date, or June 14, 2029. Long-Term Incentive Programs
2025 Long-Term Incentive Program
2025 Long-Term Incentive Program The 2025 Long-Term Incentive Program (the “2025 LTIP”) is entirely performance-based and is intended to incentivize achievement of specified relative EBIT Return on Investment goals as of October 31, 2027 and specified levels of net debt to capital at October 31, 2027. The Committee chose these metrics to align and incentivize the NEOs to focus on attaining operating efficiencies and improving our bottom line and our balance sheet. Each of the NEOs is a participant in the 2025 LTIP. Award payouts, if any, will be determined based on actual performance for the full 36-month performance period and will be subject to holding requirements, as described below. This performance period commenced on November 1, 2024 (the beginning of fiscal 2025) and will end on October 31, 2027 (that is, the performance period covers fiscal 2025, 2026 and 2027). After the performance period, the LTIP awards remain subject to a mandatory two-year post-vesting delayed delivery such that the awards will not be completely distributed until five years after the beginning of the performance period, or November 1, 2029. Like PSU and other LTIP awards, in accordance with the Committee’s intentions, the payout under the 2025 LTIP will be determined based on the Company’s performance. Award payouts, if any, will be based on a specific target multiple of each participant’s base salary in effect on January 1, 2025. The following describes the target multiple of base salary and form of payout for each NEO:
2025 Long-Term Incentive Program
| | Target Multiple of Base Salary | Payout Method | | Mr. Ara K. Hovnanian | 1.75 | 100% shares | | Mr. Brad G. O’Connor | 1.00 | 100% shares | | Mr. Michael P. Wyatt | 0.675 | 100% shares | | Mr. Alexander A. Hovnanian | 1.00 | 100% shares |
2025 Long-Term Incentive Program
The Awards are reflected in the Summary Compensation Table as “Stock Awards” in fiscal 2025 even though they remain subject to mandatory delayed delivery restrictions through fiscal 2029, as discussed above. Potential award payouts range from 0% to 250% of the target award depending on performance against two metrics: (1) EBIT Return on Investment relative to the Peer Group for the four most recently completed fiscal quarters as of October 31, 2027; and (2) specified levels of net debt to capital as of October 31, 2027. For purposes of the LTIP, “EBIT Return on Investment” shall mean the quotient resulting from dividing EBIT by Average Investment. For purposes of the LTIP, “EBIT” shall mean income (loss) before interest and income tax expense during the performance period as reflected on each company’s audited financial statements for such performance period, excluding losses from land impairments and gains or losses from debt repurchases/debt retirement such as call premiums and related issuance costs and, for Hovnanian Enterprises, Inc., excluding: (1) expense/income recorded during the Performance Period from any phantom share based awards related to changes in the stock price above or below the stock price at the date of grant and (2) the impact of any items deemed by the Committee to be unusual or nonrecurring items. “Average Investment” shall mean the average for each of the five most recently completed consecutive fiscal quarters as of October 31, 2027 of the sum of the ending inventory, investment in unconsolidated joint ventures, investment in build-for-rent assets, definite life intangibles and goodwill balances from each company’s audited balance sheet, excluding capitalized interest and the impact of consolidated inventory not owned. “Net debt to capital” shall mean the quotient resulting from (A) the result of (1) Homebuilding Debt minus (2) cash divided by (B) the result of (1) Homebuilding Debt minus (2) cash plus (3) equity from the Company’s audited financial statements as of October 31, 2027. “Homebuilding Debt” is defined as public debt plus non-recourse financing from the Company’s audited financial statements as of October 31, 2027.
Achievement under the 2023 Long-Term Incentive Program
Achievement under the 2023 Long-Term Incentive Program In fiscal 2023, the Company adopted a Long-Term Incentive Program (the “2023 LTIP”) under the Existing Plan to further aid the Company in retaining key employees and to motivate them to exert their best efforts on behalf of the Company. Specifically, the 2023 LTIP was entirely performance-based and was intended to incentivize achievement of specified relative EBIT Return on Investment goals as of October 31, 2025, specified levels of new community openings (including domestic joint ventures) in fiscal year 2025 with national portfolio plans that include Looks, which are plans that are used across our markets and include curated packages for customers to select, rather than a large number of a la carte options, and specified levels of public debt refinanced or reduced by October 31, 2025. The Committee chose these metrics to align and incentivize the NEOs to focus on attaining operating efficiencies, improving our bottom line and achieving our strategic goals. In particular, refinancing or reducing public debt as a financial measure incentivizes management to work towards improvement of our balance sheet. Each of the NEOs was a participant in the 2023 LTIP, and their award payouts were determined based on actual performance for the full 36-month performance period and are subject to holding requirements, as described below. This performance period commenced on November 1, 2022 (the beginning of fiscal 2023) and ended on October 31, 2025 (that is, the performance period covered fiscal 2023, 2024 and 2025). After the performance period, the LTIP share portion of the awards remain subject to a mandatory two-year post-vesting delayed delivery such that the awards will not be completely distributed until five years after the beginning of the performance period, or October 31, 2027. The LTIP phantom share portion of the awards were distributed in cash following the end of the performance period. Like PSU and other LTIP awards, in accordance with the Committee’s intentions, the payout under the 2023 LTIP was determined based on the Company’s performance. Award payouts were based on a specific target multiple of the NEO’s base salary in effect on January 1, 2023. The following describes the target multiple of base salary and form of payout for each NEO:
Achievement under the 2023 Long-Term Incentive Program
| | Target Multiple of Base Salary | Payout Method | | Mr. Ara K. Hovnanian | 1.35 | 50% shares/50% phantom shares | | Mr. Brad G. O’Connor | 0.75 | 50% shares/50% phantom shares | | Mr. Michael P. Wyatt | 0.675 | 50% shares/50% phantom shares | | Mr. Alexander A. Hovnanian | 0.75 | 50% shares/50% phantom shares |
Achievement under the 2023 Long-Term Incentive Program
The Awards were reflected in the Summary Compensation Table as “Stock Awards” in fiscal 2023 for Mr. Ara Hovnanian and Mr. O’Connor even though the LTIP share portion remains subject to mandatory delayed delivery restrictions through fiscal 2027, as discussed above. The cash-settled phantom share portion of the LTIP award was distributed at the end of the performance period. For purposes of the 2023 LTIP, “Peers” shall mean Beazer Homes USA, Inc., Century Communities, Inc., KB Home, LGI Homes, Inc., M.D.C. Holdings, Inc., M/I Homes, Inc., Meritage Homes Corporation, Taylor Morrison Home Corp. and Tri Pointe Homes, Inc. “EBIT ROI” shall mean the quotient resulting from dividing EBIT by Average Investment. “EBIT” shall mean income (loss) before interest and income tax expense during the Performance Period as reflected on each company’s audited financial statements for such Performance Period, excluding losses from land impairments and gains or losses from debt repurchases/debt retirement such as call premiums and related issuance costs and, for Hovnanian Enterprises, Inc., excluding: (1) expense/income recorded during the Performance Period from any phantom share based awards related to changes in the stock price above or below the stock price at the date of grant and (2) the impact of any items deemed by the Committee to be unusual or nonrecurring items. “Average Investment” shall mean the average for each of the five most recently completed consecutive fiscal quarters as of October 31, 2025 of the sum of the ending inventory, definite life intangibles and goodwill balances from each company’s audited balance sheet, excluding capitalized interest and the impact of consolidated inventory not owned. The following table illustrates the percentage of the target award that would have been achieved at each performance level. Awards were interpolated on a linear basis between performance levels but were not extrapolated above the maximum performance levels listed below. An additional 83.3% of target would have been achieved if the Company refinanced or reduced public bonds by $600 million or more by October 31, 2025.
Achievement under the 2023 Long-Term Incentive Program
| Relative to Peer Group: EBIT Return on Investment for 4 Most Recently Completed Fiscal Quarters as of 10/31/25 | Percent of New Community Openings (Including Domestic Joint Ventures) in Fiscal 2025 with National Portfolio Plans that include Looks | | | | | | | | millions | 70.0% or less | 73.3% | 76.7% | 80.0% | 83.3% | 86.7% | 90.0% or more | | Top Quintile (Rank 1 or 2) | 66.7% of target award | 83.3% of target award | 100.0% of target award | 116.7% of target award | 133.3% of target award | 150% of target award | 166.7% of target award | | Fourth Quintile (Rank 3 or 4) | 50.0% of target award | 66.7% of target award | 83.3% of target award | 100.0% of target award | 116.7% of target award | 133.3% of target award | 150.0% of target award | | Third Quintile (Rank 5 or 6) | 33.3% of target award | 50.0% of target award | 66.7% of target award | 83.3% of target award | 100.0% of target award | 116.7% of target award | 133.3% of target award | | Second Quintile (Rank 7 or 8) | 0.0% of target award | 10.0% of target award | 20.0% of target award | 30.0% of target award | 40.0% of target award | 50.0% of target award | 60.0% of target award | | Bottom Quintile (Rank 9 or 10) | 0.0% of target award | 0.0% of target award | 0.0% of target award | 0.0% of target award | 0.0% of target award | 0.0% of target award | 0.0% of target award |
Achievement under the 2023 Long-Term Incentive Program
For the period from fiscal 2023 through fiscal 2025, our relative EBIT Return on Investment rank compared to our Peers for each company’s four most recently completed fiscal quarters as of October 31, 2025 was second highest and our percent of new community openings (including domestic joint ventures) in fiscal 2025 with national portfolio plans that include Looks was 98%, resulting in a payout of 166.7% of target. In addition, we refinanced or reduced public bonds by $1.9 billion by October 31, 2025 which resulted in an additional payout of 83.3% of target. Therefore, the total payout was 250% of the target award. Other Employee Benefits The Company provides additional employee benefits that the Committee believes enhance executive safety, efficiency and time that the executive is able to devote to Company affairs. We do not believe that special perquisites or other personal benefits should play a major role in our executive compensation program. However, some NEOs are provided one or more of the following items:
Achievement under the 2023 Long-Term Incentive Program
| Auto allowance, including car maintenance and fuel expense; |
Achievement under the 2023 Long-Term Incentive Program
| Personal use of the Company’s automobiles and of the Company’s fractional aircraft share (limited to Messrs. Hovnanian); |
Achievement under the 2023 Long-Term Incentive Program
| Executive term life insurance; |
Achievement under the 2023 Long-Term Incentive Program
| Golf membership or country club fee reimbursement for personal use (limited to the CEO); and |
Achievement under the 2023 Long-Term Incentive Program
| Personal income tax preparation services (limited to the CEO). |
Achievement under the 2023 Long-Term Incentive Program
There are no tax gross-ups on any of the executive perquisites. The Committee annually reviews the elements and level of executive perquisites for the NEOs. In particular, in evaluating the appropriateness of these benefits for the CEO, the Committee takes into consideration the CEO’s security, health and safety and the degree to which he is required to travel to various Company locations and business functions on a daily basis. Based on its review, the Committee has requested that the CEO use Company-provided transportation to enhance his security and the efficient use of his time. The Company makes a matching contribution to all participants, including the NEOs, in the Company’s 401(k) plans of up to 6% of eligible employee compensation, based on tenure. The Company also makes contributions to the executive deferred compensation plan (“EDCP”) for the participating NEOs and certain other members of senior leadership of the Company to provide up to 6% of earnings, excluding equity and other long-term compensation, above the annual 401(k) limit for the calendar year, based on tenure. Specific benefits and the incremental costs of such benefits are described in detail in the footnotes to the Summary Compensation Table. The Company does not offer any defined benefit pension plans to its employees. 5. ACTIONS for FISCAL 2026 In connection with their promotions to Chief Operating Officer and President, the Committee approved a base salary increase to $750,000, effective November 1, 2025, for each of Mr. Wyatt and Mr. Alexander Hovnanian, respectively. The Committee approved a 4.17% base salary increase, effective December 20, 2025, for Mr. O’Connor, in line with the Company’s ordinary course merit-based salary and cost of living increase practices. Upon his recommendation, the Committee determined not to increase Mr. Ara Hovnanian’s base salary for fiscal 2026. The Committee increased the alternative capital raises goals in the NEOs’ fiscal 2026 bonus plans to further enhance our liquidity in order to grow the Company. In addition, the Committee increased the fiscal 2026 bonus potential for Messrs. O’Connor, Wyatt and Alexander Hovnanian. The Committee also adopted a new Long-Term Incentive Program (the “2026 LTIP”). Each of the NEOs will be a participant in the 2026 LTIP, and their award payouts will be determined based on the Company’s achievement of specified levels of (1) EBIT Return on Investment relative to the Peer Group for the four most recently completed fiscal quarters as of October 31, 2028 and (2) net debt to capital at October 31, 2028. At the end of the performance period, 50% of the awards, if any, which would be payable in cash-settled phantom shares will be distributed and the remaining 50% of the awards, if any, which would be payable in shares of Company stock, are further subject to a mandatory two-year post-vesting delayed delivery such that the awards will not be completely distributed until November 1, 2030. The performance period for the 2026 LTIP commenced on November 1, 2025 and will end on October 31, 2028. In addition, in light of their promotions, the Committee increased the target multiple of base salary for Messrs. Wyatt and Alexander Hovnanian to 1.25 times their respective base salaries in effect on January 1, 2026. 6. TAX DEDUCTIBILITY & ACCOUNTING IMPLICATIONS As a general matter, the Committee takes into account the various tax and accounting implications of compensation. When determining amounts of equity grants to executives and employees, the Committee also examines the accounting cost associated with the grants. 7. POLICY & PRACTICES ON GRANTING EQUITY AWARDS In conjunction with promoting high ethical standards for the distribution of equity-based incentives, the Committee has an established practice of granting PSUs, RSUs and options for all employees on a predetermined schedule, specifically the second Friday in June (other than in limited circumstances such as newly hired or promoted employees). The Committee’s practice of setting equity award grant dates on a predetermined schedule is designed to avoid the possibility that the Company could grant stock awards prior to the release of material, non-public information that is likely to result in an increase in its stock price or delay the grant of stock awards until after the release of material, non-public information that is likely to result in a decrease in the Company’s stock price. Exercise prices of stock options, when granted, are generally set at, and cannot be lower than, the closing price per share of the Company’s Class A Common Stock on the NYSE on the day of grant. The Committee does not otherwise take into account material, non-public information when determining the terms of stock awards, and the Company does not time the disclosure of material, non-public information for the purposes of affecting the value of executive compensation. During the fiscal year ended October 31, 2025, the Company did not grant stock options (or similar awards) to any NEO. 8. STOCK OWNERSHIP GUIDELINES & DELAYED DELIVERY PERIODS STOCK OWNERSHIP GUIDELINES The Board of Directors has adopted stock ownership guidelines, which set forth recommended minimum amounts of stock ownership, directly or beneficially, for the NEOs and non-employee Directors. The Corporate Governance and Nominating Committee reviews adherence to the Company’s stock ownership guidelines on an annual basis, which guidelines are incorporated into the Company’s Governance Guidelines. The Company believes these guidelines further enhance the Company’s commitment to aligning the interests of our non-employee Directors and senior management with those of our shareholders. Under the terms of the ownership guidelines, once the stock ownership guidelines are met, they are deemed satisfied for subsequent annual review periods, regardless of decreases in the Company’s stock price on the NYSE. We do not include unearned performance awards and unexercised options towards the achievement of the ownership guidelines. SENIOR EXECUTIVE OFFICERS The guidelines provide that the following senior executive officers of the Company are requested to achieve and maintain minimum stock ownership amounts as follows within five years after they become subject to the guidelines:
President: 3 times current base salary
President: 3 times current base salary As of October 31, 2025, these senior executive officers were in compliance with the guidelines. See “Non-Employee Director Compensation” for information on the stock ownership guidelines for non-employee Directors. MANDATORY DELAYED DELIVERY PERIOD The Compensation Committee of the Board of Directors of the Company has adopted a policy whereby equity awards granted to the Company’s executive officers are subject to a mandatory two-year post-vesting delayed delivery period such that, even after vesting conditions for the applicable award are satisfied and the award is fully vested, delivery of the underlying shares is delayed until the second anniversary of the vesting date, other than equity awards that vest in connection with a qualified termination of employment occurring within two years following a change of control, as governed by the terms of the applicable award agreement. INSIDER TRADING, ANTI-HEDGING AND PLEDGING POLICIES We have adopted a securities trading policy that sets forth guidelines and restrictions governing the purchase, sale or other transactions to acquire, transfer or dispose of our securities by the Company, our directors, officers, employees, family members of our directors, officers and employees and trusts, corporations and other entities controlled by such persons, that are reasonably designed to promote compliance with insider trading laws, rules and regulations and the NYSE listing standards. Among other things, this policy prohibits our employees and directors from engaging in short-term or speculative transactions involving our stock, including purchasing our stock on margin, short sales of our stock (that is, selling stock that is not owned and borrowing shares to make delivery), buying or selling puts, calls or other derivatives related to our stock and arbitrage trading or day trading of our stock. In addition, our employees and directors are not allowed to pledge Company stock without the consent of the Company. EXECUTIVE COMPENSATION 1. SUMMARY COMPENSATION TABLE The following table summarizes the compensation for the fiscal years ended October 31, 2025, October 31, 2024 and October 31, 2023 of Mr. Ara K. Hovnanian and Mr. Brad G. O’Connor (the Company’s NEOs for such years), and the compensation for the fiscal years ended October 31, 2025 and October 31, 2024 for Mr. Michael P. Wyatt and Mr. Alexander A. Hovnanian. These four individuals compose our named executive officers (“NEOs”).
President: 3 times current base salary
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | | | | ($) (1) | ($) | ($) (2) | ($) (3) | ($) (4) | ($) (5) | ($) (6) | ($) (7) | | Ara K. Hovnanian Chief Executive Officer and Chairman of the Board (8) | 2025 | 1,154,423 | — | 7,093,554 | — | 4,885,147 | 65,409 | 456,223 | 13,654,756 | | | 2024 | 1,150,442 | — | 4,286,655 | — | 7,000,000 | 76,349 | 683,004 | 13,196,450 | | | 2023 | 1,116,385 | — | 3,826,502 | — | 3,800,000 | 71,083 | 668,428 | 9,482,398 | | Brad G. O’Connor Chief Financial Officer | 2025 | 623,077 | — | 1,323,998 | — | 1,165,810 | 31,329 | 97,481 | 3,241,695 | | | 2024 | 604,615 | — | 1,000,008 | — | 1,050,000 | 25,395 | 85,409 | 2,765,427 | | | 2023 | 488,037 | — | 589,626 | — | 500,000 | 22,791 | 185,029 | 1,785,483 | | Michael P. Wyatt Chief Operating Officer (9) | 2025 | 624,319 | — | 561,351 | — | 3,419,317 | — | 24,372 | 4,629,359 | | | 2024 | 588,412 | — | 545,121 | — | 5,676,461 | — | 19,007 | 6,829,001 | | Alexander A. Hovnanian President (10) | 2025 | 624,288 | — | 1,323,998 | — | 1,165,810 | 1,604 | 118,383 | 3,324,083 | | | 2024 | 604,615 | — | 1,000,008 | — | 1,050,000 | — | 38,978 | 2,693,601 |
Narrative to the Nonqualified Deferred Compensation for Fiscal 2025 Table
Narrative to the Nonqualified Deferred Compensation for Fiscal 2025 Table The EDCP’s total account balance is equal to the “Company Contribution Account” balance. The “Company Contribution Account” balance consists of the annual Company “make-whole” contribution amounts under the plan. During calendar years 2024 and 2025, amounts in the “Company Contribution Account” balances were credited with earnings based on the weighted average yield on the Company’s then outstanding senior secured and unsecured notes as of the preceding December 1st, or 10.0% for calendar year 2024 and 10.3% for calendar year 2025. Following a termination of employment, a participant’s account balance in the EDCP will be paid in a lump sum or in annual installments of between two to 15 years, as further set forth in the EDCP and pursuant to the terms of the participant’s elections. 6. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL The following table summarizes payments and benefits that would be payable to each of the NEOs in the event of his termination of employment or upon the occurrence of a change-in-control (each a “triggering event”). For purposes of this table, the effective date of the triggering event is assumed to be October 31, 2025, the last day of fiscal 2025. The table does not include any payments that are described in the “Nonqualified Deferred Compensation for Fiscal 2025” table above.
Narrative to the Nonqualified Deferred Compensation for Fiscal 2025 Table
| | Voluntary Termination | | Involuntary Termination | | | Change in Control | | | Named Executive Officer | With or Without Good Reason | Qualified Retirement | Without Cause | With Cause | Death or Disability | Without Termination | With Involuntary Termination Other Than for Cause or Termination with Good Reason | | Form of Compensation | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Ara K. Hovnanian | | | | | | | | | Accelerated vesting of annual bonus awards (1) | — | — | — | — | — | — | — | | Accelerated vesting of equity awards (2) | — | — | — | — | — | — | 7,332,347 | | Accelerated vesting of LTIP awards (3) | — | — | — | — | — | — | 3,489,195 | | Contractual disability/death payment (4) | — | — | — | — | 10,000,000 | — | — | | Cash severance payment | — | — | — | — | — | — | — | | Accrued and unpaid vacation (5) | — | — | — | — | — | — | — | | TOTAL | — | — | — | — | 10,000,000 | — | 10,821,542 |
Narrative to the Nonqualified Deferred Compensation for Fiscal 2025 Table
| | Voluntary Termination | | Involuntary Termination | | | Change in Control | | | Named Executive Officer | With or Without Good Reason | Qualified Retirement | Without Cause | With Cause | Death or Disability | Without Termination | With Involuntary Termination Other Than for Cause or Termination with Good Reason | | Form of Compensation | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Brad G. O’Connor | | | | | | | | | Accelerated vesting of annual bonus awards (1) | — | — | — | — | — | — | — | | Accelerated vesting of equity awards (2) (6) | — | — | — | — | 1,802,969 | — | 2,813,142 | | Accelerated vesting of LTIP awards (3) (6) | — | — | — | — | — | — | 935,870 | | Contractual disability/death payment | — | — | — | — | — | — | — | | Cash severance payment (6) | — | — | — | — | — | — | 1,529,270 | | Accrued and unpaid vacation (5) | 74,508 | 74,508 | 74,508 | 74,508 | 74,508 | — | 74,508 | | TOTAL | 74,508 | 74,508 | 74,508 | 74,508 | 1,877,477 | — | 5,352,790 |
Narrative to the Nonqualified Deferred Compensation for Fiscal 2025 Table
| | Voluntary Termination | | Involuntary Termination | | | Change in Control | | | Named Executive Officer | With or Without Good Reason | Qualified Retirement | Without Cause | With Cause | Death or Disability | Without Termination | With Involuntary Termination Other Than for Cause or Termination with Good Reason | | Form of Compensation | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Michael P. Wyatt | | | | | | | | | Accelerated vesting of annual bonus awards (1) | — | — | — | — | — | — | — | | Accelerated vesting of equity awards (2) | — | — | — | — | 744,945 | — | 947,172 | | Accelerated vesting of LTIP awards (3) | — | — | — | — | — | — | 716,691 | | Contractual disability/death payment | — | — | — | — | — | — | — | | Cash severance payment | — | — | — | — | — | — | — | | Accrued and unpaid vacation (5) | 72,864 | 96,864 | 96,864 | 72,864 | 72,864 | — | 72,864 | | TOTAL | 72,864 | 96,864 | 96,864 | 72,864 | 817,809 | — | 1,736,727 |
Narrative to the Nonqualified Deferred Compensation for Fiscal 2025 Table
| | Voluntary Termination | | Involuntary Termination | | | Change in Control | | | Named Executive Officer | With or Without Good Reason | Qualified Retirement | Without Cause | With Cause | Death or Disability | Without Termination | With Involuntary Termination Other Than for Cause or Termination with Good Reason | | Form of Compensation | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Alexander A. Hovnanian | | | | | | | | | Accelerated vesting of annual bonus awards (1) | — | — | — | — | — | — | — | | Accelerated vesting of equity awards (2) | — | — | — | — | 2,594,563 | — | 3,604,736 | | Accelerated vesting of LTIP awards (3) | — | — | — | — | — | — | 935,870 | | Contractual disability/death payment | — | — | — | — | — | — | — | | Cash severance payment | — | — | — | — | — | — | — | | Accrued and unpaid vacation (5) | — | — | — | — | — | — | — | | TOTAL | — | — | — | — | 2,594,563 | — | 4,540,606 |
Narrative to the Nonqualified Deferred Compensation for Fiscal 2025 Table
For purposes of this table presentation, consideration of the forms of compensation or additional payments or benefits to an NEO in the event of a triggering event includes: Accelerated vesting of annual bonus awards. According to the Company’s bonus program’s policies and procedures, the fiscal 2025 regular bonus award is considered earned only if an NEO is on the payroll and employed by the Company on the date that it is scheduled to be paid. However, if an NEO’s termination were due to retirement on or after age 58, a reduction in force, position elimination, death or disability, the NEO would be eligible for a prorated payment through his termination date, less any amounts previously paid. Because Mr. Ara Hovnanian has reached age 58, any voluntary termination of his employment would be considered a qualified retirement. Any such prorated payments would be paid on the date the bonuses are regularly scheduled to be paid. All bonus amounts payable with respect to fiscal 2025 are reflected in the Summary Compensation Table and are not also included in the table above. (2) Accelerated vesting of equity awards. The values in this table are calculated at the closing trading price of the Company’s Class A Common Stock on October 31, 2025 ($120.23). PSUs: Under circumstances other than death, disability, qualified retirement or in connection with a qualifying termination in the case of a change in control, any unvested PSUs are canceled upon termination. PSUs accelerate in connection with a qualifying termination in the case of a change in control. In the event of death, disability or qualified retirement before the end of the performance period, PSUs remain outstanding until actual performance is determined following the end of the performance period and then any earned PSUs shall become vested and deliverable within 60 days after the delivery date. In the event of death, disability or qualified retirement after the end of the performance period, any previously unvested earned PSUs shall become vested and deliverable within 60 days after the delivery date. The delivery date is the date that is the earlier of (1) the second anniversary of the vesting date or (2) the second anniversary of the date of the participant’s qualified termination. Because the effective date of the triggering event is assumed to be October 31, 2025 which is before the end of the PSU performance period for the 2025 PSUs, no 2025 PSU values are included under the “Death or Disability” and “Qualified Retirement” columns and the 2025 PSU values in the “Change in Control – With Involuntary Termination Other Than for Cause or Termination with Good Reason” column are based on target performance. Accelerated vesting of LTIP awards. 2025 LTIP: Except in the case of death, disability, a qualified retirement or a qualifying termination in the case of a change in control, 2025 LTIP participants who terminate prior to the end of the performance period (October 31, 2027) forfeit all of their 2025 LTIP awards. In the case of death, disability or a qualified retirement following a period of employment covering at least one-third of the performance period, the participant is eligible to receive a prorated portion of their share award payable in November 2029, respectively. In the event the participant is involuntarily terminated without cause or the participant terminates employment for good reason, in either case, within two years following a change in control, the remaining portion of the participant’s earned award shall become fully vested and immediately payable. Because the effective date of the triggering event is assumed to be October 31, 2025 which is before the end of the performance period, the values in the “Change in Control – With Involuntary Termination Other Than for Cause or Termination with Good Reason” column are based on target performance. 2024 LTIP: Except in the case of death, disability, a qualified retirement or a qualifying termination in the case of a change in control, 2024 LTIP participants who terminate prior to the end of the performance period (October 31, 2026) forfeit all of their 2024 LTIP awards. In the case of death, disability or a qualified retirement following a period of employment covering at least one-third of the performance period, the participant is eligible to receive a prorated portion of their phantom share award and share award payable in October 2026 and October 2028, respectively. In the event the participant is involuntarily terminated without cause or the participant terminates employment for good reason, in either case, within two years following a change in control, the remaining portion of the participant’s earned award shall become fully vested and immediately payable. Because the effective date of the triggering event is assumed to be October 31, 2025 which is before the end of the performance period, the values in the “Change in Control – With Involuntary Termination Other Than for Cause or Termination with Good Reason” column are based on target performance. (4) Contractual disability and death payment. The Company has an agreement with Mr. Ara Hovnanian which provides that in the event of his disability or death during his employment with the Company he (or his designated beneficiary, estate or legal representative) will be entitled to receive a lump sum payment of $10 million. (5) Accrued and unpaid vacation. Represents accrued but unpaid vacation payable upon termination. Messrs. Hovnanian do not accrue vacation. Change in control severance payment. The Company has entered into a change in control agreement with Mr. O’Connor. Such agreement provides that if, within two years of the occurrence of a change in control, Mr. O’Connor is involuntarily terminated other than for cause or Mr. O’Connor terminates for good reason (a material reduction in duties, title or responsibilities or any reduction in base salary), Mr. O’Connor, upon execution of the Company’s standard release, would receive a lump sum cash payment equal to one year’s annual base salary plus the average of the last three years’ bonuses and become 100% vested in all outstanding stock options, RSUs and deferred shares granted prior to the change in control, to the extent not previously vested. In addition, if the change in control occurs following the end of a LTIP performance period, the unpaid cash and stock portions of the LTIP award will continue to be paid to Mr. O’Connor on the scheduled payout dates. The amounts in the table reflect the additional payments that Mr. O’Connor would have received had a change in control occurred and his employment was terminated involuntarily other than for cause or for good reason on the last day of the fiscal year. This agreement does not provide for excise tax gross-ups. 7. PAY RATIO DISCLOSURE As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K under the Securities Exchange Act of 1934, we are providing the following disclosure about the relationship of the median of the annual total compensation of our employees to the annual total compensation of Mr. Ara Hovnanian, our Chief Executive Officer and Chairman of the Board. For fiscal year 2025, The median of the annual total compensation of all of our employees, other than Mr. Hovnanian, was $157,927;
Identification of Median Employee
| Fiscal Year (1) | SCT Total Compensation for CEO | Compensation Actually Paid (2) to CEO | Average SCT Total Compensation for Other NEOs | Average Compensation Actually Paid (2) to Other NEOs | Cumulative TSR | Cumulative Peer Group TSR (3) | Net Income | Relative EBIT Return on Investment Rank vs. Peer Group (4) | | 2025 | $13,654,756 | $9,378,644 | $3,701,712 | $3,834,977 | $378.56 | $181.40 | $63,900,000 | Rank 2 of 10 | | 2024 | $13,196,450 | $48,275,823 | $4,096,010 | $8,113,013 | $554.28 | $238.31 | $242,000,000 | Rank 1 of 10 | | 2023 | $9,482,398 | $25,775,449 | $3,698,952 | $7,602,823 | $218.77 | $147.84 | $205,900,000 | Rank 1 of 10 | | 2022 | $16,509,497 | $6,487,161 | $4,951,393 | $1,554,549 | $126.98 | $98.87 | $225,500,000 | Rank 1 of 10 | | 2021 | $12,478,182 | $38,816,881 | $3,891,574 | $11,054,990 | $265.30 | $138.49 | $607,800,000 (5) | Rank 4 of 10 |
Compensation Actually Paid and TSR
Compensation Actually Paid and TSR
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income
Compensation Actually Paid and EBIT ROI Rank
Compensation Actually Paid and EBIT ROI Rank COMPANY’S MOST IMPORTANT FINANCIAL PERFORMANCE MEASURES The following are the most important financial performance measures (shown in alphabetical order), as determined by the Company, that link compensation actually paid to our CEO and other NEOs to the Company’s performance for the most recently completed fiscal year.
The following table summarizes the compensation of the Company’s
| Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | | | ($) (1) | ($) (2) | ($) | ($) | ($) | ($) (3) | ($) | | Robert B. Coutts | 181,000 | 104,976 | — | — | — | 15,000 | 300,976 | | Miriam Hernandez-Kakol | 176,500 | 104,976 | — | — | — | 15,000 | 296,476 | | Edward A. Kangas | 271,500 | 119,973 | — | — | — | 15,000 | 406,473 | | Joseph A. Marengi | 223,500 | 119,973 | — | — | — | 15,000 | 358,473 | | Vincent Pagano | 176,000 | 104,976 | — | — | — | 15,000 | 295,976 | | Robin Stone Sellers | 176,000 | 104,976 | — | — | — | 15,000 | 295,976 | | J. Larry Sorsby | 173,500 | 89,980 | — | — | — | 15,000 | 278,480 |