DEF 14A of Dream Finders Homes, Inc., Apr 18, 2024

DEF 14A of Dream Finders Homes, Inc.

Filed Apr 18, 2024 · FY20230001825088-24-000024

Open on EDGAR

  1. PROPOSAL 1-ELECTION OF DIRECTORS

    PROPOSAL 1-ELECTION OF DIRECTORS Our Amended and Restated Certificate of Incorporation (our “Certificate of Incorporation”) provides that the number of directors on the Board will be no less than three, as established from time to time by resolution of the Board. The Board currently has set the size of the Board at six members, and following the 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”), the Board size will be set at six members. Each person listed below has been nominated to be re-elected to hold office as a director for a one-year term ending at the Company’s 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”) and until his or her successor is duly elected or appointed and qualified or, if earlier, such nominee’s death, resignation or removal. Each nominee listed below currently serves on the Board, has consented to being named as a nominee for election and has indicated an intention to continue to serve on the Board if re-elected. The Board does not anticipate that any nominee will be unable to serve as a director, but, in the event that any such nominee is unable to serve as a director or should otherwise become unavailable, the Board may either elect to reduce the size of the Board or propose an alternate nominee, in which case the proxies will be voted for the alternate nominee unless directed to withhold from voting. There are no familial relationships among our directors and executive officers.

  2. Director Nominees

    Director Nominees The Board of Directors believes that it is necessary for its members to possess qualities, attributes and skills that contribute to a diverse range of views and perspectives among the directors and enhance the overall effectiveness of the Board. As prescribed in its committee charter and described further under “Corporate Governance and Director Independence—Selection and Evaluation of Director Candidates,” our Nominating and Governance Committee (the “Nominating and Governance Committee”) considers all factors it deems relevant when evaluating prospective candidates or current board members for nomination to the Board of Directors. The Board is comprised of highly qualified individuals with unique and special skills that assist in effective management of the Company for the benefit of our stockholders. Each of our directors possesses certain experience, qualifications, attributes and skills, as further described below, that led to our conclusion that he or she should serve as a member of the Board.

  3. Directors’ Experience and Skills

    Directors’ Experience and Skills

  4. Directors’ Biographies

    Directors’ Biographies

  5. Directors’ Biographies

    | Patrick O. Zalupski | President, Chief Executive Officer, and Chairman of the Board of Directors |

  6. Directors’ Biographies

    Mr. Zalupski, age 43, is our President and Chief Executive Officer and has served as Chairman of the Board of Directors since January 2021. He has served as the Chief Executive Officer of our primary operating subsidiary, Dream Finders Homes LLC, a Florida limited liability company (“DFH LLC”), since forming the company in December 2008, and as the Chief Executive Officer and a member of the board of managers of DFH LLC since its formation in 2014. He is responsible for our overall operations and management and is heavily involved in the origination, underwriting and structuring of all land investment activities. Under Mr. Zalupski’s leadership, we have grown from closing 27 homes in Jacksonville, Florida during our inaugural year in 2009 to establishing operations in markets across the Southeast, Mid-West and Mid-Atlantic regions of the United States, and have closed over 29,500 homes since our inception through the end of 2023. Prior to founding DFH LLC, Mr. Zalupski was a Financial Auditor for FedEx Corporation’s Internal Audit Department in Memphis, Tennessee and worked in the real estate sales and construction industry as Managing Partner of Bay Street Condominiums, LLC from 2006 to 2008. He has served on the investment committee of DF Capital Management, LLC, a Florida limited liability company, an investment manager focused on investments in land banks and land development joint ventures to deliver finished lots to us and other homebuilders for the construction of new homes, since April 2018 and on the board of directors for our mortgage banking joint venture, Jet HomeLoans LP, a Florida limited partnership, since December 2017. Mr. Zalupski holds an inactive Florida Real Estate License. Mr. Zalupski brings extensive leadership, along with industry and operational experience, to the Board of Directors. Through his experience, his knowledge of our operations and our markets and his professional relationships within the homebuilding industry, Mr. Zalupski is highly qualified to identify important matters for review and deliberation by the Board of Directors and is instrumental in determining our corporate strategy. In addition, by serving as both the Chairman of the Board and our Chief Executive Officer, Mr. Zalupski serves as an invaluable bridge between our management and the Board of Directors and ensures that both parties act with a common purpose. Mr. Zalupski’s financial acumen, extensive industry experience and demonstrated leadership capabilities throughout our growth as a Company make him highly qualified to continue to serve as our Chairman of the Board.

  7. Directors’ Biographies

    | W. Radford Lovett II | Director |

  8. Directors’ Biographies

    Mr. Lovett, age 64, has served as a member of the Board of Directors since January 2021. He has also served on the board of managers of DFH LLC from December 2014 to January 2021. Mr. Lovett was the founder, chairman and chief executive officer of two highly successful growth companies: TowerCom, Ltd, an owner and developer of broadcast communication towers that he founded in 1994, and TowerCom Development, LP, a developer of wireless communications infrastructure that he founded in 1997. TowerCom, Ltd and TowerCom Development, LP have each generated over 90% compounded annual rates of return for their investors. In 2007, he founded TowerCom, LLC and has since served as its chairman and chief executive officer. Mr. Lovett also co-founded Lovett Miller & Co. in 1997, a venture capital firm that focuses in technology-enhanced services and healthcare companies. Prior to co-founding Lovett Miller & Co., he served as the president of Southcoast Capital Corporation, a family holding company that invests in private equities, public equities and real estate. Prior to serving as president of Southcoast Capital Corporation, Mr. Lovett worked for the Lincoln Property Company and in the corporate finance department of Merrill Lynch. Mr. Lovett has made venture capital investments in the following companies: RxStrategies, Inc., EverBank Financial Corporation, Healthcare Solutions, Inc. (formerly Cypress Care, Inc.), CareAnywhere, Inc., K&G Men’s Centers, Inc., Sigma International Medical Apparatus, Go Software, Inc., Main Bank Corporation, PowerTel, Inc. and Southcoast Boca Associates. He currently serves on the board of directors of TowerCom, LLC. Mr. Lovett also currently serves on the board of directors for Florida Prepaid College Board. Mr. Lovett previously served on the board of trustees and was co-chairman of the Capital Campaign for the University of North Florida. Mr. Lovett also previously served on the board of directors of EverBank Financial Corporation (formerly a publicly traded company), and was the chairman of the Youth Crisis Center and the Jacksonville Jaguars Honor Rows Program. Mr. Lovett’s extensive experience serving on boards of directors and 25 years of executive leadership experience and management experience make him qualified to continue to serve on the Board of Directors. Mr. Lovett is the Chair of our Compensation Committee and a member of our Nominating and Governance Committee.

  9. Directors’ Biographies

    | Megha H. Parekh | Director |

  10. Directors’ Biographies

    Ms. Parekh, age 39, has served as a member of the Board of Directors since January 2021. In 2013, Ms. Parekh joined the Jacksonville Jaguars, a professional football franchise based in Jacksonville, Florida, as vice president and general counsel and, in 2016, was promoted to her current position as senior vice president and chief legal officer. Ms. Parekh manages the legal, technology, security, capital improvements and people development teams at the Jacksonville Jaguars. Since joining the Jacksonville Jaguars, Ms. Parekh has also worked on a number of other acquisitions and business ventures for Shad Khan, the Jacksonville Jaguars’ owner, including serving as chief legal officer for Iguana Investments Florida, LLC and chief legal officer for All Elite Wrestling, LLC. Prior to joining the Jacksonville Jaguars, Ms. Parekh worked in the New York office of the international law firm Proskauer Rose LLP where she practiced corporate law and worked on public and private acquisitions, and financings and securities offerings. Ms. Parekh currently serves on the board of directors of the Jacksonville Jaguars Foundation, Inc. and the Florida Sports Foundation, Inc., and on the board of managers of the Black News Channel, an American broadcast television news channel based in Tallahassee, Florida targeting the African American demographic. Ms. Parekh’s 13 years of experience in acquisitions and business ventures and her legal expertise make her qualified to continue to serve on the Board of Directors. Ms. Parekh is the Chair of our Nominating and Governance Committee.

  11. Directors’ Biographies

    | Justin W. Udelhofen | Director |

  12. Directors’ Biographies

    Mr. Udelhofen, age 44, has served as a member of the Board of Directors since January 2021. He also served on the board of managers of DFH LLC from December 2014 to January 2021. Mr. Udelhofen has been a private investor since July 2020. He previously founded Durant Partners LLC in October 2016, an investment fund that focuses on small-to-mid-capitalization equities, and served as Principal until June 2020. He also previously served on the board of managers of Durant Partners LLC. Prior to founding Durant Partners LLC, Mr. Udelhofen worked from 2006 to April 2016 at Water Street Capital, a multi-billion-dollar private investment firm in Jacksonville, Florida. Prior to joining Water Street Capital, Mr. Udelhofen researched businesses at growth-oriented mutual fund, Fred Alger Management. Prior to his services at Fred Alger Management, Mr. Udelhofen worked at Needham & Company, where he provided strategic insights to publicly traded companies, several initial public offerings and secondary offerings. Mr. Udelhofen’s extensive leadership experience, his investment expertise, his background of providing strategic insights to publicly traded companies and his involvement with initial public offerings and secondary offerings make him qualified to continue to serve on the Board of Directors. Mr. Udelhofen is a member of our Audit Committee, Nominating and Governance Committee and Compensation Committee.

  13. Directors’ Biographies

    | Leonard M. Sturm | Director |

  14. Directors’ Biographies

    Mr. Sturm, age 69, has served as a member of the Board of Directors since September 30, 2022. Mr. Sturm retired at the end of 2014 as an audit partner in the New York office of KPMG LLP (“KPMG”) after a 37 year career conducting financial statement audits of primarily public companies and audits of internal controls under Section 404 of the Sarbanes-Oxley Act. He was a member of the New York audit leadership team for a number of years through 2012, and subsequently joined KPMG’s department of professional practice, assuming certain national responsibilities for KPMG’s quality review process until his retirement. Mr. Sturm also served as a member of KPMG’s audit committee for three years. During his tenure at KPMG, Mr. Sturm authored the annual “Metropolitan New York Regional Software Industry Outlook”, which provided comprehensive industry analysis and benchmarking data. Mr. Sturm was also a founder and treasurer on the board of directors of LISTnet, was the chairman of the board of directors for the Long Island Software and Technology Incubator, served as the treasurer on the board of directors of Gold Coast Villas Association, served as a member on the board of directors of the Huntington Chamber of Commerce, and currently serves on the board of directors of Esplanade Lake Club Homeowners Association, Inc. He also served as president of the New York Chapter of the Association of Government Accountants, was a member on the defense contractor committee of the American Institute of CPA's and co-authored the “Government Contractors Industry Audit and Accounting Guide.” Mr. Sturm currently serves as a member of the board of directors and chairman of the audit committee of Jolley Holding Aruba, which consists of numerous companies that primarily operate in commercial real estate, car dealership, car rental, retail and wholesale businesses. In that capacity, Mr. Sturm assists in board oversight of the integrity of the financial statements, the monitoring and management of financial risks, the effectiveness of internal financial controls, compliance with regulatory requirements and the work of the independent auditors and the internal audit function. Mr. Sturm's extensive leadership experience, his audit experience and his experience as a member of, or advisor to, boards, makes him qualified to continue to serve on the Board of Directors. Mr. Sturm is the Chair of our Audit Committee and a member of our Nominating and Governance Committee and Compensation Committee. The Board of Directors has determined that Mr. Sturm qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d) of Regulation S-K.

  15. Directors’ Biographies

    | William W. Weatherford | Director |

  16. Directors’ Biographies

    Mr. Weatherford, age 44, brings more than two decades of governance, financial and risk management expertise to the Company’s Board. He is currently managing partner of Weatherford Capital, which he co-founded in 2015 to build and invest in businesses that positively impact the world. In 2012, prior to the founding of Weatherford Capital, Mr. Weatherford made history as the 84th Speaker of the Florida House of Representatives, becoming the youngest presiding officer of any state legislative chamber in the United States at the time. Mr. Weatherford served in the Florida Legislature from 2006 until 2014 and used his position as Speaker to advocate for social mobility through free enterprise and education reform and focused his tenure on breaking the cycle of generational poverty. Mr. Weatherford currently serves as chairman of the University of South Florida’s board of trustees. Mr. Weatherford also served as co-chairman of the host committee for Super Bowl LV in Tampa, Florida. In addition to chairing the board at the University of South Florida, Mr. Weatherford currently serves on the boards of Kitson & Partners, PayIt, Utility, Inc., The American Enterprise Institute. Mr. Weatherford also has previous public company board experience from his directorships with Sunshine Bancorp, Inc. from 2015 to 2018 and Mallard Acquisition Corp. from 2020 to 2022. Mr. Weatherford’s extensive political, investment and management expertise and his previous experience of serving on public boards make him qualified to continue to serve on the Board of Directors. Mr. Weatherford is a member of our Audit Committee. The proposal regarding the election of directors requires the approval of a plurality of the shares of our common stock entitled to vote at the Annual Meeting that are present in person, by remote communication or by proxy at the Annual Meeting that are voted on this proposal. This means that the six nominees receiving the highest number of affirmative FOR votes will be elected as directors of the Company. Broker non-votes will have no effect on the outcome of the vote on this proposal. If you own shares of our common stock through a broker, bank or other nominee, you must instruct your broker, bank or other nominee how to vote in order for such broker, bank or other nominee to vote your shares so that your vote can be counted on this proposal. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE NOMINATED DIRECTORS.

  17. Election of Directors

    Election of Directors In accordance with our Bylaws, the election of directors requires the approval of a plurality of the shares of our common stock entitled to vote at the Annual Meeting that are present in person, by remote communication or by proxy at the Annual Meeting that are voted on the election of directors. This means that the six nominees receiving the highest number of affirmative FOR votes at the Annual Meeting will be elected as directors.

  18. NON-EMPLOYEE DIRECTOR COMPENSATION

    NON-EMPLOYEE DIRECTOR COMPENSATION Our Compensation Committee is responsible for evaluating and approving compensation for our non-employee directors. For 2023, our Compensation Committee approved the following compensation for our non-employee directors: • an annual cash retainer of $50,000; and • an annual restricted stock award valued at $75,000 on the approval date, vesting over three years In addition, annual cash retainers for Board committee service were paid to the non-employee directors as applicable, equal to $25,000 for our Audit Committee Chair, $15,000 for each of our other committee chairs, and $10,000 for non-Chair service on all committees. We also reimburse our directors for reasonable out-of-pocket expenses such as those incurred for travel in connection with attendance in-person at Board or committee meetings. Based on consideration of the market and the responsibilities of the directors, for 2024, our Compensation Committee approved an increase of the annual restricted stock grant to an aggregate fair market value of $100,000, which vests over one year, and an increase of the cash retainer for the Audit Committee Chair to $35,000. Otherwise, we expect non-employee director compensation to remain the same in 2024.

  19. Director Compensation

    Director Compensation The following table provides information regarding compensation earned by our directors for services rendered during the year ended December 31, 2023. Mr. Zalupski, our President, Chief Executive Officer and Chairman of the Board, received no additional compensation for serving on the Board, and his 2023 compensation is disclosed under “Executive Compensation.”

  20. Director Compensation

    | Name | Fees earned or paid in cash ($)(1) | Stock awards ($)(2) | Total ($) | | W. Radford Lovett II | 75,000 | 92,457 | 167,457 | | Megha H. Parekh | 70,000 | 92,457 | 162,457 | | Justin. W. Udelhofen | 80,000 | 92,457 | 172,457 | | Leonard M. Sturm | 92,500 | 92,457 | 184,957 | | William W. Weatherford | 57,500 | 92,457 | 149,957 | | William H. Walton III(3) | 19,315 | 92,457 | 111,772 |

  21. Director Compensation

    (1)Represents annual retainers which directors received in cash. (2)Based on grant date fair value of restricted stock units granted during 2023 and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10 to our consolidated financial statements for the fiscal year ended December 31, 2023. (3)William H. Walton III is a former director who, as of May 22, 2023, the date of the 2023 Annual Meeting of Stockholders, no longer serves on our Board of Directors.

  22. Philosophy and Context of Our Executive Compensation Program

    Philosophy and Context of Our Executive Compensation Program Our executive compensation program is designed to motivate, reward, attract and retain the talent necessary to ensure our continued success as the Company evolves. The program seeks to align executive compensation with our short- and long-term objectives, business strategy, financial performance and long-term value creation for our stockholders. As part of our executive pay strategy: •We pay base salaries that reflect competitive market levels, individual merit and internal parity considerations; •We pay a portion of incentives in the form of equity awards that contain a multi-year time-based vesting schedule as a retention mechanism; and •We maintain an incentive structure that considers achievement of Company-specific performance factors.

  23. Compensation Governance Practices

    | What We Do | | | ✔ | Annual Compensation Review. The Compensation Committee conducts an annual review of compensation for our NEOs and a review of compensation-related risks. | | ✔ | Compensation At-Risk and Performance-based. A significant portion of our NEOs compensation is subject to variable pay arrangements that are determined by the Compensation Committee in connection with our performance. | | ✔ | Multi-Year Vesting Requirements. Time-based restricted stock units granted to our NEOs generally vest over three or five years. | | ✔ | Share Ownership Guidelines. We have established minimum share ownership requirements of 5x base salary for our Chief Executive Officer and 3x base salary for our other NEOs. | | What We Don’t Do | | | ✘ | No Tax Reimbursements. No tax reimbursements on any tax liability that our NEOs might owe. | | ✘ | No Hedging. We have a policy that restricts employees from hedging our securities. |

  24. Role of Compensation Consultant

    Role of Compensation Consultant The Compensation Committee retained an independent compensation consultant, Compensation Advisory Partners (“CAP”), to provide information, analysis and other advice relating to our executive compensation program. CAP provided the following advisory services in 2023: • consulting with the Chairman of the Compensation Committee between board meetings; • providing competitive market data for our NEO positions; • assisting with the evaluation of the effectiveness of our overall executive compensation program; and • attending select Compensation Committee meetings at the Chair’s request. CAP did not provide any services to us other than the consulting services to the Compensation Committee.

  25. Annual Short-Term Cash Incentives

    Annual Short-Term Cash Incentives Annual short-term compensation is designed to incentivize our NEOs at a variable level of compensation based on the Company’s performance as well as the individual’s performance. For 2023, our Compensation Committee established the following annual cash incentive targets for our NEOs, which represents 50% of the total incentive target for each executive:

  26. Annual Short-Term Cash Incentives

    | Name | 2023 Incentive Target ($) | | Patrick O. Zalupski | 3,750,000 | | J. Douglas Moran | 3,750,000 | | L. Anabel Fernandez | 500,000 |

  27. Annual Short-Term Cash Incentives

    In 2023, the Compensation Committee established a process to evaluate performance for short-term incentives that includes a comprehensive review of Company performance, with a focus on adjusted pre-tax income for NEOs other than the CFO, as explained below, and individual NEO performance. For our CEO and COO, the Compensation Committee set a 2023 adjusted pre-tax income target of $300 million as the primary measure when determining their annual incentives. When determining actual adjusted pre-tax income, the Committee may decide to exclude one-time items, including merger/acquisition costs, litigation expense, restructuring costs, changes in accounting, extraordinary income, etc. The Committee established a threshold level of performance at 80% of the adjusted pre-tax income target (i.e., $240 million of adjusted pre-tax income) and a maximum level of performance at 125% of the adjusted pre-tax income target (i.e., $375 million of adjusted pre-tax income) that would result in a payout at 50% and 140% of the incentive target, respectively. Performance below 80% of the adjusted pre-tax income target would result in a 0% payout. Once the threshold is met, the annual incentive payout is then determined based on the scale below:

  28. Annual Short-Term Cash Incentives

    | 2023 Adjusted Pre-Tax Income Ranges (in millions) | Adjusted Pre-Tax Income Achievement (As a % of adjusted pre-tax income target) | Annual Incentive Payout Opportunity (As a % of incentive target) | | >$375 | 125% | 140% | | $318 - $375 | 106% - 125% | 110% - 140% | | $288 - $318 | 96% - 106% | 90% - 110% | | $240 - $288 | 80% - 96% | 50% - 90% | | <$240 | <80% | 0% |

  29. Annual Short-Term Cash Incentives

    Once the Committee determines the adjusted pre-tax income achievement range, the Committee evaluates performance based on three other performance metrics, including, return on participating equity, home closings and net debt to capitalization ratio to determine the final payout within the range. When adjusted pre-tax income falls between 80% and 125% of the adjusted pre-tax income target, an incremental third of the payout range is achieved by meeting or exceeding the targets for each metric detailed below:

  30. Annual Short-Term Cash Incentives

    | Other Performance Metrics | 2023 Other Performance Metrics Targets | Performance Hurdle | | Return on participating equity | 25% | Minimum | | Home closings | 6,700 | Minimum | | Net debt to capitalization ratio(1) | 45% | Maximum |

  31. Annual Short-Term Cash Incentives

    (1)Net debt to capitalization ratio as defined in the credit agreement for our senior unsecured revolving credit facility. For 2023, the Company achieved an adjusted pre-tax income of $404 million, which reflects 135% of adjusted pre-tax income target performance, and based on the formulaically-driven incentive payout range, the CEO and COO were each awarded the maximum incentive payment of 140% of the incentive target. Our CFO’s bonus was determined based on an evaluation of discretionary, qualitative measures in the areas of internal control, compliance, reporting, balance sheet management, functional oversight and integration as well as a maximum quantitative metric of net debt to capitalization ratio of 45%. The Compensation Committee reasoned that the CFO’s incentive compensation should not be solely dependent on the financial performance of the Company. To assess the CFO’s accomplishments in terms of qualitative metrics, the Compensation Committee collaborates with the CEO and the COO. In 2023, the CFO successfully fulfilled the qualitative goals and the Company achieved a net debt to capitalization ratio of 25.3%. As a result, the CFO was awarded a short-term bonus payment of 100% of target. Based on the Committee’s review of Company and NEO performance, Messrs. Zalupski and Moran received short-term incentive compensation equal to $5.3 million and $5.3 million, respectively, and Ms. Fernandez received an annual cash bonus of $0.5 million for 2023.

  32. Long-Term Incentive—Equity Awards

    Long-Term Incentive—Equity Awards In 2023, annual equity awards were a component of our compensation structure for executives in order to more effectively align the interests of executive officers and our stockholders and increase retention through ensuring long-term incentive arrangements remain in place. The long-term incentive awards in 2023 consisted of three-year vesting restricted stock units for our CEO and COO, and an equal amount of three-year and five-year vesting restricted stock units for our CFO. The long-term incentive equity award values for the CEO, COO and CFO were $4.6 million, $4.6 million and $1.0 million, respectively.

  33. Executive Employment Agreements

    Executive Employment Agreements On November 1, 2023, we entered into an amended and restated employment agreement with each of our NEOs, as described below: Patrick Zalupski. The amended and restated employment agreement with Mr. Zalupski is the same as his prior employment agreement except that the amended and restated employment agreement: (i) removes legacy IPO and bonus information; (ii) provides for a base salary of $1,150,000; (iii) provides that he is entitled to use aircrafts chartered by the Company for business and personal travel (subject to compliance with the Company’s personal use policy established by the Compensation Committee); (iv) provides that his entitlement to any perquisites shall be governed by the Company’s policies in effect from time to time; (v) includes an acknowledgement that any compensation payable after the effective date will be subject to the Company’s Compensation Recovery Policy and (vi) includes other non-substantive changes. Douglas Moran. The amended and restated employment agreement with Mr. Moran is the same as his prior employment agreement except that the amended and restated employment agreement: (i) removes legacy IPO and bonus information; (ii) provides for a base salary of $750,000; (iii) provides that any unvested restricted stock units owned upon death, disability or a Change in Control (as defined in the employment agreement) in which Patrick Zalupski does not retain control of the acquiror or successor will immediately become fully vested; (iv) provides that any unvested restricted stock units owned following a Change in Control (as defined in the employment agreement) in which Patrick Zalupski does retain control of the acquiror or successor will immediately become fully vested if the executive is terminated without Cause (as defined in the employment agreement) during the 24 months following such Change in Control; (v) provides that his entitlement to any perquisites shall be governed by the Company’s policies in effect from time to time; (vi) includes an acknowledgement that any compensation payable after the effective date will be subject to the Company’s Compensation Recovery Policy and (vii) includes other non-substantive changes. L. Anabel Fernandez. The amended and restated employment agreement with Ms. Fernandez is the same as her prior employment agreement except that the amended and restated employment agreement: (i) removes legacy IPO and bonus information; (ii) provides for a base salary of $650,000; (iii) provides for one year of base salary and reimbursement of COBRA coverage payable over 12 months as severance in the event she is terminated without Cause (as defined therein), increasing to two years of base salary and reimbursement of COBRA coverage payable over 24 months if such termination occurs within 24 months of a Change in Control (as defined in the employment agreement); (iv) provides that any unvested restricted stock units owned upon death, disability or a Change in Control (as defined in the employment agreement) in which Patrick Zalupski does not retain control of the acquiror or successor will immediately become fully vested; (v) provides that any unvested restricted stock units owned following a Change in Control (as defined in the employment agreement) in which Patrick Zalupski does retain control of the acquiror or successor will immediately become fully vested if the executive is terminated without Cause (as defined in the employment agreement) during the 24 months following such Change in Control; (vi) provides that her entitlement to any perquisites shall be governed by the Company’s policies in effect from time to time; (vii) includes an acknowledgement that any compensation payable after the effective date will be subject to the Company’s Compensation Recovery Policy and (vii) includes other non-substantive changes.

  34. Severance and Change in Control Benefits

    Severance and Change in Control Benefits Mr. Zalupski’s executive employment agreement provides for the payment of three months’ worth of Company-paid Consolidated Omnibus Budget Reconciliation Act (“COBRA”) premiums as severance benefits in the event of an involuntary termination by us without cause. Ms. Fernandez and Mr. Moran employment agreements provide that if we terminate Ms. Fernandez or Mr. Moran employment involuntarily without cause, Ms. Fernandez or Mr. Moran would be entitled to receive severance payments equal to 12 months’ worth of their then-current base salary as in effect at the time of such termination, plus 12 months’ worth of Company-paid COBRA premiums. If we terminate Ms. Fernandez or Mr. Moran employment involuntarily without cause within the 24-month period following a change in control of the Company, Ms. Fernandez or Mr. Moran would be entitled to receive severance payments equal to 24 months’ worth of their then-current base salary as in effect at the time of such termination, plus 24 months’ worth of Company-paid COBRA premiums. Following death, disability, or a change in control in which Mr. Zalupski does not retain control of the acquiror or successor, any unvested restricted stock units owned by Ms. Fernandez or Mr. Moran will immediately become fully vested. Further, following a change in control in which Mr. Zalupski does retain control of the acquiror or successor, if Ms. Fernandez or Mr. Moran are terminated without cause during the 24 months following such change in control, any unvested restricted stock units owned by Ms. Fernandez or Mr. Moran will immediately become fully vested. All severance and change in control benefits are subject to execution by the executive officer of an effective general release of claims in our favor, and continued compliance with certain non-competition and other restrictive covenants.

  35. Summary Compensation Table

    Summary Compensation Table The following table provides information concerning compensation of NEOs as of December 31, 2023. Because we only have three “executive officers” as such term is defined in Rule 3b-7 of the Exchange Act, we only have three “named executive officers,” and the compensation for each is disclosed in the following table. The amounts shown below are discussed further under “Compensation Discussion and Analysis—2023 Executive Compensation Program in Detail.”

  36. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-equity Incentive Plan Compensation ($) | All Other Compensation ($)(2) | Total ($) | | Patrick O. Zalupski | 2023 | 1,122,308 | — | 4,622,282 | 5,250,000 | 372,912 | 11,367,502 | | President, Chief Executive Officer | 2022 | 1,057,692 | 5,250,000 | 1,812,500 | — | 167,296 | 8,287,488 | | and Chairman of the Board | 2021 | 1,220,389 | 2,465,625 | 10,684,605 | — | 21,045 | 14,391,664 | | J. Douglas Moran | 2023 | 737,692 | — | 4,622,282 | 5,250,000 | 26,109 | 10,636,083 | | Senior Vice President | 2022 | 650,000 | 5,250,000 | 1,812,500 | — | 10,675 | 7,723,175 | | and Chief Operating Officer | 2021 | 627,507 | 2,265,625 | 1,669,462 | — | 10,150 | 4,572,744 | | L. Anabel Fernandez | 2023 | 631,538 | 500,000 | 1,047,730 | — | 22,770 | 2,202,038 | | Senior Vice President | 2022 | 469,231 | 350,000 | 700,000 | — | 9,692 | 1,528,923 | | and Chief Financial Officer | 2021 | 240,923 | 200,000 | 222,587 | — | 10,150 | 673,660 |

  37. Summary Compensation Table

    (1) Based on the grant date fair value of such awards and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10, Fair Value Disclosures to our consolidated financial statements reported in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023. (2) Amounts reflected within the “All Other Compensation” column for the fiscal year ended December 31, 2023 are comprised of the following amounts:

  38. Summary Compensation Table

    | Name and Principal Position | Employer Contributions to 401(k) Plan ($) | Perquisites ($)(1) | Total ($) | | Patrick O. Zalupski | 11,550 | 361,362 | 372,912 | | J. Douglas Moran | 11,550 | 14,559 | 26,109 | | L. Anabel Fernandez | 8,104 | 14,666 | 22,770 |

  39. Summary Compensation Table

    (1)Represents the personal benefit derived by the NEOs from company-paid travel, golf memberships, and a company-paid participation fee for annual executive health exams, and, in the case of Mr. Zalupski, also represents the personal benefit derived from expenses related to use of leased property. The amount for Mr. Zalupski includes $264,774 of costs associated with the use of Company-chartered aircrafts, and $84,088 of costs related to the use of leased property. The amount for each NEO includes $12,500 of costs associated with a golf membership.

  40. Pay Ratio

    Pay Ratio We have estimated the ratio between our 2023 CEO’s total compensation and the median annual total compensation of all employees (except the chief executive officer). In searching for the median employee, we considered taxable compensation totals in 2023. We identified the “Median Employee” based on the taxable compensation of all full-time, part-time, and temporary employees employed by us on December 31, 2023. Then we calculated the Median Employee’s compensation under the Summary Compensation Table rules. Our Chief Executive Officer in 2023 had annual total compensation of $11,367,502, and our Median Employee had annual total compensation of $93,060. Therefore, we estimate that our Chief Executive Officer’s annual total compensation in 2023 is 122 times that of the median of the annual total compensation of all of our employees.

  41. Pay Versus Performance

    Pay Versus Performance The table below includes information regarding the Company’s performance and the compensation actually paid (“CAP”) to our Principal Executive Officer (“PEO”) and non-PEO NEOs for the corresponding fiscal year, as calculated in accordance with the requirements of Regulation S-K.

  42. Pay Versus Performance

    | | | | | | Value of Initial Fixed $100 Investment Based On:(4) | | | | | Fiscal Year Ended December 31,(1) | Summary Compensation Table (SCT) Total for PEO ($)(2) | CAP to PEO ($)(3) | Average SCT Total for Non-PEO NEOs ($)(2) | Average CAP to Non-PEO NEOs ($)(3) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(5) | Net Income (in thousands) ($)(6) | Adjusted Pre-Tax Income (in thousands) ($)(7) | | 2023 | 11,367,502 | 26,361,566 | 6,419,061 | 12,617,078 | 170 | 151 | 307,942 | 404,425 | | 2022 | 8,287,488 | 3,789,895 | 4,626,049 | 3,687,962 | 42 | 106 | 274,297 | 345,172 | | 2021 | 14,391,664 | 12,683,973 | 2,210,117 | 2,077,460 | 93 | 136 | 134,594 | 168,998 | | 2020 | 4,546,813 | 4,546,813 | 1,131,157 | 1,131,157 | * | * | * | * | | *As the Company was privately held during this period, such data has not been included. | | | | | | | | |

  43. Pay Versus Performance

    (1)Mr. Zalupski has served as the PEO for the entirety of 2023, 2022, 2021 and 2020 and our non-PEO NEOs for the applicable years were as follows: 2023: J. Douglas Moran, L. Anabel Fernandez 2022: J. Douglas Moran, L. Anabel Fernandez 2021: J. Douglas Moran, Rick A. Moyer (Former Senior Vice President and Chief Financial Officer through September 30, 2021), L. Anabel Fernandez (effective October 6, 2021) 2020: J. Douglas Moran, Rick A. Moyer (2)Amounts reported in these columns represent the total compensation reported in the Summary Compensation Table (“SCT”) for the corresponding year in the case of the PEO, and the average total compensation reported in the SCT for the non-PEO NEOs for the corresponding year. (3)To calculate CAP, adjustments were made to the amounts reported in the SCT for the corresponding year. A reconciliation of the adjustments for the PEO and for the non-PEO NEOs is set forth below. (4)Assumes $100 invested on January 21, 2021, the date of our initial public offering, in our Class A common stock. Historic performance of the stock price of our Class A common stock is not necessarily indicative of future performance. (5)The Total Shareholder Return (“TSR”) Peer Group consists of the Standard and Poor’s Homebuilders Select Industry Index, an independently prepared index that includes companies in the homebuilding industry. (6)The Company’s net income calculated in accordance with U.S. generally accepted accounting principles for each year indicated. (7)When determining actual adjusted pre-tax income, the Committee may decide to exclude one-time items including merger/acquisition costs, litigation expense, restructuring costs, changes in accounting, extraordinary income, etc. The Compensation Committee determined that adjusted pre-tax income continues to be a prominent metric of the Company’s performance and, as discussed in the Compensation Discussion and Analysis (“CD&A”), for 2023, was a component of the Company’s annual incentive guidance. Although we utilize numerous financial and other performance measures to link Company performance with compensation actually paid to our NEOs, at present, we believe that adjusted pre-tax income represents the most important performance measure used to link Company performance to compensation actually paid to our NEOs. Reconciliation of CAP Adjustments

  44. Pay Versus Performance

    | Year | Summary Compensation Table Total ($)(1) | Less, Grant Date Fair Value of Stock Awards Granted During Year ($)(2) | Plus, Year-End Fair Value of Outstanding and Unvested Stock Awards Granted During Year ($)(3) | Plus/(Minus), Change in Fair Value of Prior Year Stock Awards Outstanding And Unvested ($)(4) | Plus, Vest Date Fair Value of Stock Awards Granted and Vested in Year ($)(5) | Plus/(Minus), Change in Fair Value of Prior Year Stock Awards that Vested During Year ($)(6) | Less, Prior Year Fair Value of Prior Year Stock Awards that Failed to Vest During Year ($)(7) | Equals CAP ($) | | PEO | | | | | | | | | | 2023 | 11,367,502 | (4,622,282) | 13,096,465 | 6,035,889 | — | 483,992 | — | 26,361,566 | | 2022 | 8,287,488 | (1,812,500) | 919,519 | (3,319,997) | — | (284,615) | — | 3,789,895 | | 2021 | 14,391,664 | (10,684,605) | 8,976,914 | — | — | — | — | 12,683,973 | | 2020 | 4,546,813 | — | — | — | — | — | — | 4,546,813 | | Average of Non-PEO NEOs | | | | | | | | | | 2023 | 6,419,061 | (2,835,006) | 8,032,516 | 868,405 | — | 132,102 | — | 12,617,078 | | 2022 | 4,626,049 | (1,256,250) | 637,320 | (293,957) | — | (25,200) | — | 3,687,962 | | 2021 | 2,210,117 | (927,481) | 794,824 | — | — | — | — | 2,077,460 | | 2020 | 1,131,157 | — | — | — | — | — | — | 1,131,157 |

  45. Pay Versus Performance

    (1) Total compensation included in the Summary Compensation Table for the corresponding year. With respect to the other NEOs, amounts shown represent averages. (2) Grant date fair value of the stock awards granted during the corresponding year. (3) Fair value as of the corresponding year-end of the outstanding and unvested stock awards granted during such year. (4) Change in fair value during the corresponding year of each stock award that was granted in a prior year and that remained outstanding and unvested as of the last day of the corresponding year, and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the year. (5) Fair value at vesting of the stock awards that were granted and vested during the corresponding year. (6) Change in fair value, measured from the prior year-end to the vesting date, of each stock award that was granted in a prior year and which vested during the corresponding year. (7) Fair value as of the last day of the prior year of the stock awards that were granted in a prior year and which failed to meet the applicable vesting conditions in the corresponding year. (8) Mr. Zalupski has served as the PEO for the entirety of 2023, 2022, 2021 and 2020 and our non-PEO NEOs for the applicable years were as follows: 2023: J. Douglas Moran, L. Anabel Fernandez 2022: J. Douglas Moran, L. Anabel Fernandez 2021: J. Douglas Moran, Rick A. Moyer (Former Senior Vice President and Chief Financial Officer through September 30, 2021), L. Anabel Fernandez (effective October 6, 2021) 2020: J. Douglas Moran, Rick A. Moyer Relationship Between Pay and Performance For the average of the Non-PEO NEOs (“Average NEOs”), we believe CAP in each of the years analyzed and over the cumulative period are indicative of the Compensation Committee’s focus on the alignment of pay and performance. Average NEOs CAP increased from 2021 to 2022, primarily due to the increase in adjusted pre-tax income. Adjusted pre-tax income is a key factor in determining short-term incentive compensation, as explained in the CD&A above. The upward trend of PEO CAP and average NEOs CAP from 2022 to 2023 is primarily due to an increase in the year-end stock price of $26.87 per share when comparing the two years. The downward trend of PEO CAP from 2021 to 2022 is primarily due to a one time special bonus awarded in 2021 to the PEO in consideration of the substantial contribution leading to the successful completion of the Company’s initial public offering and, to a lesser extent, a decrease in the stock price of $10.79. The following graphs illustrate the relationship between CAP to our PEO (in thousands) and Average NEOs (in thousands) and our TSR, net income (in thousands) and adjusted pre-tax income (in thousands), respectively, as well as our TSR versus the TSR of the TSR Peer Group. For the relationship between Company TSR versus TSR of the Peer Group, January 21, 2021 has been used as the beginning period, the date of the Company’s initial public offering. Performance Measures Used to Link Company Performance and Compensation Actually Paid to the CEO and COO The financial and other performance measures listed below are the metrics the Compensation Committee deems as the most important measures used by the Company to determine compensation. Refer to the CD&A for a further explanation of the Company’s executive compensation program: •Adjusted pre-tax income •Return on participating equity •Home closings •Net debt to capitalization ratio(1) (1) Net debt to capitalization ratio as defined in the credit agreement for our senior unsecured revolving credit facility.

  46. Grants of Plan-Based Awards During 2023

    Grants of Plan-Based Awards During 2023 The following table sets forth information with respect to plan-based awards made to NEOs during the year ended December 31, 2023:

  47. Grants of Plan-Based Awards During 2023

    | Name | Type | Grant Date | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) | | | All Other Stock Awards (#)(2) | Grant Date Fair Value of Stock Awards ($)(3) | | | | | Threshold ($) | Target ($) | Maximum ($) | | | | Patrick O. Zalupski | Short-Term Incentive | — | 1,875,000 | 3,750,000 | 5,250,000 | — | — | | | Restricted stock units | 3/8/2023 | — | — | — | 368,603 | 4,622,282 | | J. Douglas Moran | Short-Term Incentive | — | 1,875,000 | 3,750,000 | 5,250,000 | — | — | | | Restricted stock units | 3/8/2023 | — | — | — | 368,603 | 4,622,282 | | L. Anabel Fernandez | Restricted stock units | 3/8/2023 | — | — | — | 83,551 | 1,047,730 |

  48. Grants of Plan-Based Awards During 2023

    (1)Amounts reported represent potential future payouts under our short-term incentive plan. Actual payouts under this plan are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. (2)The restricted stock units vest equally over three years for Mr. Zalupski and Mr. Moran, with the first vesting on March 8, 2024. For Ms. Fernandez, 34,403 of the restricted stock units vest equally over three years, and 49,148 of the restricted stock units vest equally over five years, with the first vesting for all restricted stock units on March 8, 2024. (3)Based on the grant date fair value of restricted stock units and calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10, Fair Value Disclosures to our consolidated financial statements reported in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

  49. Outstanding Equity Awards

    Outstanding Equity Awards

  50. Outstanding Equity Awards

    | | Stock Awards | | | Name | Number of shares that have not vested (#)(1) | Value of shares that have not vested ($)(2) | | Patrick O. Zalupski | 593,236 | 21,077,675 | | J. Douglas Moran | 463,429 | 16,465,632 | | L. Anabel Fernandez | 118,000 | 4,192,540 |

  51. Outstanding Equity Awards

    (1) Restricted stock units as of December 31, 2023, which were granted under the 2021 Equity Incentive Plan. (2) Market value of unvested restricted stock units is based on a closing price of $35.53 for a share of our common stock on the New York Stock Exchange on December 29, 2023.

  52. Option Exercises and Stock Vested in 2023

    Option Exercises and Stock Vested in 2023 The following table sets forth information about restricted stock vesting for our NEOs in 2023. Our NEOs do not have any options outstanding and did not exercise any options in 2023, as the Company has not awarded stock options to date.

  53. Option Exercises and Stock Vested in 2023

    | | Stock Awards | | | Name | Number of shares acquired on vesting (#)(1) | Value of shares realized on vesting ($)(2) | | Patrick O. Zalupski | 189,239 | 2,122,802 | | J. Douglas Moran | 59,431 | 727,366 | | L. Anabel Fernandez | 12,968 | 163,814 |

  54. Option Exercises and Stock Vested in 2023

    (1) Includes shares withheld for payment of taxes associated with the vesting. (2) The amounts in this column represent the aggregate market value of the shares of common stock acquired upon vesting based on the closing price on the applicable vesting date or, if the market was closed on the vesting date, the last trading day that immediately preceded the vesting date.

  55. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control The following table quantifies the amount of cash payments and the value of any equity acceleration and other benefits NEOs would have received in connection with certain terminations of employment, or in connection with a change in control of DFH, Inc. as if such event had occurred on December 31, 2023. Additional information regarding the prior and current employment agreements for NEOs and our 2021 Equity Incentive Plan is contained in our CD&A section under the headings “Executive Employment Agreements” and “Long-Term Incentive—Equity Awards.” The actual amounts that would be paid to any NEO can only be determined at the time of an actual termination of employment and would vary from those listed below. Generally, in the event of a termination for “cause” or a resignation for any reason, NEOs are entitled only to earned but unpaid salary, vested benefits under applicable benefit plans and reimbursement of business expenses. The amounts shown in the table below assume that all applicable contingencies, such as execution of a release of claims and continuing compliance with any restrictive covenants, as applicable, will be satisfied.

  56. Potential Payments Upon Termination or Change in Control

    | Name | Event | Salary ($) | Health/Welfare Benefits ($) | Equity Acceleration ($) | Total ($) | | Patrick O. Zalupski | Involuntary Termination(1) | — | 3,742 | — | 3,742 | | J. Douglas Moran | Involuntary Termination(2) | 750,000 | 22,980 | — | 772,980 | | | Change in Control(3) | — | — | 16,465,632 | 16,465,632 | | | Change in Control with Involuntary Termination(4) | 1,500,000 | 45,961 | 16,465,632 | 18,011,593 | | | Death or Disability(5) | — | — | 16,465,632 | 16,465,632 | | L. Anabel Fernandez | Involuntary Termination(2) | 650,000 | 10,734 | — | 660,734 | | | Change in Control(3) | — | — | 4,192,540 | 4,192,540 | | | Change in Control with Involuntary Termination(4) | 1,300,000 | 21,467 | 4,192,540 | 5,514,007 | | | Death or Disability(5) | — | — | 4,192,540 | 4,192,540 |

  57. Potential Payments Upon Termination or Change in Control

    (1)Mr. Zalupski’s employment agreement provides that if the Company terminates Mr. Zalupski without cause, he would be entitled to receive severance payments equal to three months’ worth of company-paid Consolidated Omnibus Budget Reconciliation Act (“COBRA”) premiums. (2)In the event either Ms. Fernandez or Mr. Moran is terminated by the Company without cause (as defined in their respective employment agreements), they would be entitled to receive severance payments equal to 12 months’ worth of their then-current base salary as in effect at the time of such termination, plus company-paid COBRA premiums for a period of 12 months. (3)Following a change in control in which Mr. Zalupski does not retain control of the acquiror or successor, any unvested restricted stock units owned by Ms. Fernandez or Mr. Moran will immediately become fully vested. (4)If the Company terminates Ms. Fernandez or Mr. Moran employment involuntarily without cause within the 24-month period following a change in control of the Company, Ms. Fernandez or Mr. Moran would be entitled to receive severance payments equal to two years’ of their then-current base salary as in effect at the time of such termination, plus Company-paid COBRA premiums for a period of 24 months. Further, following a change in control in which Mr. Zalupski does retain control of the acquiror or successor, if Ms. Fernandez or Mr. Moran are terminated without cause during the 24 months following such change in control, any unvested restricted stock units owned by Ms. Fernandez or Mr. Moran will immediately become fully vested. (5)Following death or disability, any unvested restricted stock units owned by Ms. Fernandez or Mr. Moran will immediately become fully vested.