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Share Name | Share Symbol | Market | Type |
---|---|---|---|
LGI Homes Inc | NASDAQ:LGIH | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-1.67 | -1.60% | 102.81 | 99.25 | 147.62 | 105.48 | 102.56 | 104.90 | 90,692 | 22:30:00 |
Filed by the Registrant
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x
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Filed by a Party other than the Registrant
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o
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Preliminary Proxy Statement
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o
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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o
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Definitive Additional Materials
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o
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Soliciting Material under §240.14a-12
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x
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No fee required.
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o
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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o
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Fee paid previously with preliminary materials.
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o
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1.
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To elect the nominees named in the accompanying proxy statement to the Company’s Board of Directors;
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2.
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To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2018
;
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3.
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To conduct an advisory vote to approve the compensation paid to the Company’s named executive officers for 2017, as disclosed in this proxy statement;
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4.
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To conduct an advisory vote to approve the frequency of future stockholder advisory votes on executive compensation; and
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5.
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To transact such other business as may properly come before the Annual Meeting, or any adjournment thereof.
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BY ORDER OF THE BOARD OF DIRECTORS
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Margaret Britton
Chief Administrative Officer and Secretary
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Table of Contents
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Proposal 3: Non-Binding, Advisory Vote on the Compensation Paid to NEOs
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Voting Matters
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Board Recommendations
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Election of Director Nominees (page 6)
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FOR Each Director Nominee
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Ratification of Independent Public Accounting Firm (page 10)
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FOR
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Advisory Vote on Executive Compensation (page 12)
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FOR
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Advisory Vote on Say on Pay Vote Frequency (page 13)
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N/A
(1)
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During 2017, we realized a 50.1% increase in home sales revenues and 40.4% increase in home closings, which we believe is a testament to the strength of our systems and process-oriented business model, as well as the commitment of our team to achieve record-breaking results. Our momentum and improved operating leverage over the four years since our initial public offering generated pre-tax income as a percent of revenues of more than 13% in both 2016 and 2017.
|
•
|
Home sales revenues increased
50.1%
to
$1.3 billion
from
$838.3 million
.
|
•
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Homes closed increased
40.4%
to
5,845
homes from
4,163
homes.
|
•
|
Average sales price of our homes increased
$13,846
to $
215,220
from
$201,374
.
|
•
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Gross margin as a percentage of home sales revenues was
25.5%
.
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•
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Our adjusted gross margin (non-GAAP) as a percentage of home sales revenues was
26.9%
.
(1)
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•
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Our pre-tax net income as a percent of revenues remained consistent at 13.6%.
|
•
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Net income before income taxes increased
50.8%
to
$171.4 million
from
$113.7 million
.
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•
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We had
78
active communities at the end of
2017
, a
23.8%
increase since the end of
2016
.
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(1)
|
Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. Please see “Non-GAAP Measures-Adjusted Gross Margin” included as
ANNEX A
to this Proxy Statement for a reconciliation of adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.
|
•
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The short-term cash bonus incentive (“STI”) opportunity for each participating NEO was based (i) 75% on the pretax income during 2017 as compared to target and (ii) 25% on the number of home closing during 2017 as compared to the target. The payouts could range from 0% to 200% of the target annual bonus amount.
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•
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The restricted stock unit (“RSU”) grant agreements provide for three-year cliff vesting.
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•
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The 2017 performance-based restricted stock unit (“PSU”) awards cliff vest on the determination date and provide the opportunity for participants to receive shares of our common stock based on the attainment of pre-established financial performance targets based on our cumulative basic earnings per share (“Basic EPS”) amount over the three-year performance period from January 1, 2017 to December 31, 2019. The ultimate number of shares of our common stock to be earned with respect to a participant’s PSUs will be determined at the end of the performance period depending on actual results as compared to the target performance metrics and payouts could range from 0% to 200% of the target number of PSUs.
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Proposal 1:
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To elect Ryan Edone, Duncan Gage, Eric Lipar, Bryan Sansbury, Steven Smith, and Robert Vahradian to the Board until our next annual meeting of stockholders, until his successor is elected or appointed, or until his earlier death, resignation or removal (see page 6);
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Proposal 2:
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To ratify the appointment of Ernst & Young LLP (“Ernst & Young”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018 (see page 10);
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Proposal 3:
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To conduct a non-binding advisory vote on the compensation paid to our named executive officers (“NEOs”) for 2017, as disclosed in this Proxy Statement (such vote, a “Say-on-Pay vote”) (see page 12);
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Proposal 4:
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To conduct a non-binding advisory vote on the frequency of future Say-On Pay votes (see page 13); and
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•
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FOR
the election of each of the nominees for director named in Proposal 1;
|
•
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FOR
the ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2018
in Proposal 2; and
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•
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FOR
the approval of the compensation paid to the NEOs for 2017 in Proposal 3.
|
•
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FOR
the election of each of the nominees for director named in Proposal 1;
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•
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FOR
the ratification of the appointment of Ernst & Young as the Company’s independent registered public accountants for the fiscal year ending
December 31, 2018
in Proposal 2;
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•
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FOR
the approval of the compensation paid to the NEOs for 2017 in Proposal 3; and
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•
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FOR
the frequency of three years for the Company’s Say-On-Pay vote in Proposal 4.
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•
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Election of Directors.
Proposal 1 regarding the election of directors requires the approval of a plurality of the votes cast. This means that the six nominees receiving the highest number of affirmative
FOR
votes will be elected as directors.
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•
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Ratification of Appointment of Independent Registered Public Accounting Firm
.
Proposal 2 regarding the ratification of the appointment of Ernst & Young as the Company’s independent registered public accounting firm requires the approval of a majority of the shares of our common stock entitled to vote at the Annual Meeting which are present in person or by proxy at the Annual Meeting.
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•
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Non-binding, Advisory Vote on the Compensation Paid to the NEOs.
Generally, the Company's Bylaws (our “Bylaws”) provide that approval of any matter presented to our stockholders be decided by the vote of the holders of our stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such question which are present in person or by proxy at the meeting. Thus, approval of the compensation of the NEOs, as described in Proposal 3, requires the approval of a majority of the votes cast at the Annual Meeting. This vote, however, is merely advisory and is not binding on the Company, the Board or its Compensation Committee. Despite the fact that the vote is non-binding, the Board and the Compensation Committee will take the results of the vote under advisement when making future decisions regarding the Company's executive compensation program.
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•
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Non-binding, Advisory Vote on the Frequency of Say-on-Pay Votes.
Generally, our Bylaws provide that approval of any matter presented to our stockholders be decided by the vote of the holders of our stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such question which are present in person or by proxy at the meeting. However, the outcome of this
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•
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vote in person—we will provide a ballot to stockholders who attend the Annual Meeting and wish to vote in person;
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•
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vote by mail—if you request a paper proxy card, simply complete, sign and date the proxy card, then follow the instructions on the proxy card; or
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•
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vote via the Internet or via telephone—follow the instructions on the Notice of Internet Availability or proxy card and have the Notice of Internet Availability or proxy card available when you access the internet website or place your telephone call.
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•
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View the Company’s proxy materials for the Annual Meeting; and
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•
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Instruct the Company to send future proxy materials to you by email.
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Ryan Edone
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Director
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Duncan Gage
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Director
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Eric Lipar
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Chief Executive Officer, Director
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Bryan Sansbury
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Director
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Steven Smith
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Director
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Robert Vahradian
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Director
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2017
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2016
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||||
Audit Fees
(1)
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$
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1,504,550
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$
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954,000
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Audit-Related Fees
- aggregate fees for audit-related services
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—
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—
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||
Tax Fees
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—
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—
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All Other Fees
- aggregate fees for all other services
|
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—
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—
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||
Total
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$
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1,504,550
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$
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954,000
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(1)
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Audit Fees include the annual audit and services related to the review of quarterly financial information and the issuance of consents and comfort letters to underwriters and other purchasers of our securities in connection with various securities offerings and filings with the SEC.
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Ryan Edone (Chair)
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Duncan Gage
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Steven Smith
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•
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Experience in corporate management, such as serving as an executive officer or other leadership role for a publicly held company;
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•
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Experience as a director of another publicly held company;
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•
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Real estate industry expertise, including homebuilding, land development, sales, marketing and operations;
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•
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Experience in accounting, finance, capital markets transactions and/or technology; and
|
•
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Legal, regulatory and/or risk management expertise.
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•
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High personal and professional ethical standards, integrity and values;
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•
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Strong leadership skills and solid business judgment;
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•
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Commitment to representing the long-term interests of our stockholders; and
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•
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The time required for preparation, participation and attendance at Board meetings and committee meetings, as applicable.
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Director Name:
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Board of Directors
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Audit
Committee |
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Compensation
Committee |
|
Nominating and
Corporate Governance Committee |
Ryan Edone*
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X
|
|
Chair
|
|
|
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Duncan Gage*
|
|
X
|
|
X
|
|
X
|
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Eric Lipar**
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Chair
|
|
|
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Bryan Sansbury***
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X
|
|
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Chair
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X
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Steven Smith
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X
|
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X
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Chair
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Robert Vahradian
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X
|
|
|
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X
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Number of 2017 meetings
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5
|
|
5
|
|
6
|
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4
|
•
|
assist the Board in fulfilling its oversight responsibilities relating to the:
|
◦
|
integrity of the Company’s financial statements;
|
◦
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Company’s compliance with legal and regulatory requirements;
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◦
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qualifications and independence of the Company’s independent registered public accounting firm;
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◦
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performance of the Company’s independent registered public accounting firm; and
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◦
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reviewing and approving related-person transactions.
|
•
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prepare an Audit Committee report to be included in the Company’s annual proxy statement.
|
•
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establishing the Company’s compensation programs and compensation of the Company’s executive officers;
|
•
|
monitoring incentive and equity-based compensation plans;
|
•
|
reviewing and approving director compensation; and
|
•
|
monitor director and executive officer compliance with the stock ownership guidelines.
|
•
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identifying individuals qualified to become directors consistent with criteria approved by the Board and recommending to the Board the qualified candidates for directorships to be filled by the Board or by our stockholders;
|
•
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overseeing the organization of the Board to discharge the Board’s duties and responsibilities properly and efficiently;
|
•
|
developing and recommending to the Board a set of corporate governance guidelines and principles;
|
•
|
overseeing the evaluation of the Board and its committees; and
|
•
|
reviewing the disclosure regarding corporate governance and the operation of the committee included in our proxy statements.
|
•
|
$60,000 annual cash retainer, payable quarterly;
|
•
|
$10,000 additional annual cash payment of for the Lead Independent Director and each committee chair, payable quarterly;
|
•
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$60,000 grant of restricted stock units (“RSUs”); and
|
•
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reimbursement for reasonable out-of-pocket expenses incurred for travel in connection with attendance in-person at Board or committee meetings.
|
Name
|
|
Fees Earned or
Paid in Cash
|
|
Stock Awards
(1)(2)(3)
|
|
All other
Compensation
|
|
Total
|
||||||||
Ryan Edone
|
|
$
|
70,000
|
|
|
$
|
60,018
|
|
|
$
|
—
|
|
|
$
|
130,018
|
|
Duncan Gage
|
|
$
|
60,000
|
|
|
$
|
60,018
|
|
|
$
|
—
|
|
|
$
|
120,018
|
|
Bryan Sansbury
|
|
$
|
80,000
|
|
|
$
|
60,018
|
|
|
$
|
—
|
|
|
$
|
140,018
|
|
Steven Smith
|
|
$
|
70,000
|
|
|
$
|
60,018
|
|
|
$
|
—
|
|
|
$
|
130,018
|
|
Robert Vahradian
|
|
$
|
60,000
|
|
|
$
|
60,018
|
|
|
$
|
—
|
|
|
$
|
120,018
|
|
(1)
|
The amounts shown reflect the grant date fair value of RSUs granted for director services for
2017
, determined in accordance with FASB ASC Topic 718. See Note 9 to our consolidated financial statements included in our
2017
Annual Report, regarding assumptions underlying valuations of equity awards
.
|
(2)
|
On December 15, 2016, each non-employee director was granted 2,071 RSUs, valued at approximately $60,000 on the date of grant, for director services for 2017. On December 15, 2017, each non-employee director was granted 1,378 RSUs, valued at approximately $100,000 on the date of grant, for director services for 2018. The grants vest in three equal annual installments and automatically become fully vested upon the earlier of (i) the director’s disability; (ii) the director’s death; and (iii) immediately prior to the closing of a change in control of the Company, as defined in the Amended and Restated LGI Homes, Inc. 2013 Equity Incentive Plan.
|
(3)
|
As of
December 31, 2017
, Messrs. Edone, Gage, Sansbury, Smith and Vahradian each had 3,564 unvested RSUs.
|
•
|
Maintain the annual cash retainer at $60,000;
|
•
|
Increase the annual Lead Director cash retainer to $20,000;
|
•
|
Increase the annual Audit Committee and Compensation Committee Chair cash retainers to $15,000;
|
•
|
Maintain the annual Nominating and Corporate Governance Committee Chair cash retainer at $10,000; and
|
•
|
Increase the annual equity grant award to $100,000.
|
•
|
the size of the transaction and the amount payable to a Related Person;
|
•
|
the nature of the interest of the Related Person in the transaction;
|
•
|
whether the transaction may involve a conflict of interest; and
|
•
|
whether the transaction involves the purchase or sale of assets or the provision of goods or services to the Company that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to the Company as would be available in comparable transactions with or involving unaffiliated third parties.
|
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Shares Beneficially
|
|
|
||
Name and Address of Beneficial Owner
(1)
|
|
Owned
|
|
Percent
|
||
5% Stockholders:
|
|
|
|
|
||
BlackRock, Inc.
(2)
|
|
2,568,244
|
|
|
11.5
|
%
|
Gilder, Gagnon, Howe & Co. LLC
(3)
|
|
1,713,918
|
|
|
7.7
|
%
|
FMR LLC
(4)
|
|
1,300,710
|
|
|
5.8
|
%
|
Frontier Capital Management Co., LLC
(5)
|
|
1,390,911
|
|
|
6.2
|
%
|
Thomas Lipar
(6)
|
|
1,200,000
|
|
|
5.4
|
%
|
|
|
|
|
|
||
Directors and Executive Officers
(7)
:
|
|
|
|
|
||
Eric Lipar
(8)
|
|
2,255,432
|
|
|
10.1
|
%
|
Michael Snider
(9)
|
|
212,106
|
|
|
1.0
|
%
|
Charles Merdian
(10)
|
|
92,944
|
|
|
*
|
|
Jack Lipar
(11)
|
|
72,934
|
|
|
*
|
|
Rachel Eaton
(12)
|
|
45,345
|
|
|
*
|
|
Margaret Britton
(13)
|
|
54,181
|
|
|
*
|
|
Bryan Sansbury
(14)
|
|
157,965
|
|
|
*
|
|
Ryan Edone
(15)
|
|
26,918
|
|
|
*
|
|
Duncan Gage
(16)
|
|
56,068
|
|
|
*
|
|
Steven Smith
|
|
36,176
|
|
|
*
|
|
Robert Vahradian
|
|
22,449
|
|
|
*
|
|
All executive officers and directors as a group
|
|
|
|
|
||
(11 persons)
|
|
3,032,518
|
|
|
13.6
|
%
|
*
|
Represents less than 1% of the number of shares of our common stock outstanding.
|
(1)
|
Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 22,332,259 shares of our common stock outstanding as of February 28, 2018.
|
(2)
|
Based solely on Schedule 13G/A filed with the SEC on January 23, 2018 by Blackrock Inc. (“Blackrock”) reflecting beneficial ownership as of December 31, 2017. Blackrock reported sole voting power for 2,530,963 shares of our common stock and sole dispositive power for 2,568,244 shares of our common stock, and of these shares, no shared voting power and no shared dispositive power. The address of Blackrock’s principal business office is 55 East 52nd Street, New York, New York 10055.
|
(3)
|
Based solely on Schedule 13G/A filed with the SEC on February 14, 2018, by Gilder, Gagnon, Howe & Co. LLC (“Gilder Gagnon”). Gilder Gagnon reported sole voting and dispositive power for 28,063 shares of our common stock and shared power to dispose or direct the dispositive of 1,713,918 shares of our common stock. The shares reported include 1,400,891 shares held in customer accounts of Gilder Gagnon over which partners and/or employees of Gilder Gagnon have discretionary authority to dispose of or direct the disposition of the shares, 28,603 shares held in the account of the profit sharing plan of Gilder Gagnon, and 313,027 shares held in accounts owned by the partners of Gilder Gagnon and their families. The address of Gilder Gagnon’s principal business office is 475 10th Avenue, New York, New York 10018.
|
(4)
|
Based solely on Schedule 13G filed with the SEC on February 13, 2018, by FMR LLC (“Fidelity”). Fidelity reported sole voting power for 2,230 shares of our common stock and sole dispositive power for 1,300,710 shares of our common stock. The address of Fidelity’s principal business office is 245 Summer Street, Boston, Massachusetts 02210.
|
(5)
|
Based solely on Schedule 13G/A filed with the SEC on February 7, 2018 by Frontier Capital Management Co., LLC. (“Frontier”) reflecting beneficial ownership as of December 31, 2017. Frontier reported sole voting power for 649,708 shares of our common stock and sole dispositive power for 1,390,911 shares of our common stock, and of these shares, no shared voting power and no shared dispositive power. The address of Frontier’s principal business office is 99 Summer Street, Boston, Massachusetts 02110.
|
(6)
|
Based solely on Schedule 13G/A filed with the SEC on February 14, 2018, by Thomas Lipar. Mr. Lipar reported sole voting power for 1,200,000 shares of our common stock, sole dispositive power for 1,000,000 shares of our common stock, shared voting power for 0 shares of our common stock, and shared dispositive power for 200,000 shares of our common stock. The shares of our common stock reported include 1,200,000 shares owned by Lipar Holdings, Ltd., which may be deemed to be beneficially owned by Mr. Lipar through his ownership interests in the partnership’s sole general partner and its limited partners. The amount reported also includes 200,000 shares owned by Lipar Holdings, Ltd., which are subject to a pledge agreement pursuant to which Lipar Holdings, Ltd. may exercise shared dispositive power with respect to such shares. Mr. Lipar may be deemed a beneficial owner of such 200,000 shares held by Lipar Holdings, Ltd. through his ownership interests in the partnership’s sole general partner and its limited partners. Mr. Thomas Lipar’s principal business office address is 11085 S. Hidden Oaks, Conroe, Texas 77384.
|
(7)
|
The RSUs and PSUs held by the directors and executive officers that are outstanding and vest within 60 days of February 28, 2018, are deemed outstanding for the purposes of computing the percentage of shares of our common stock owned by such person or group, but are not deemed to be outstanding for the purpose of computing the percentage of shares of our common stock owned by any other person or group.
|
(8)
|
Includes 1,663,007 shares held by EDSS Holdings, LP, whose general partner is an entity wholly-owned by Mr. Eric Lipar; 23,244 shares and 175 shares held by LGI Fund II GP, LLC and LGI Fund III GP, LLC, respectively, whose sole owner is Mr. Lipar; and 3,333 shares and 97,452 shares of our common stock to be issued in connection with outstanding RSUs and the settlement of the PSUs, respectively, which will vest on March 15, 2018, within 60 days of February 28, 2018. Also includes 17,326 shares owned by Mr. Eric Lipar’s spouse. Mr. Lipar has pledged 420,857 shares in connection with a line of credit with a financial institution which had approximately $633,000 outstanding as of February 28, 2018.
|
(9)
|
Includes 2,281 shares and 49,896 shares of our common stock to be issued in connection with outstanding RSUs and the settlement of the PSUs, respectively, which will vest on March 15, 2018, within 60 days of February 28, 2018. Also includes 4,227 shares owned by Mr. Snider’s spouse. Does not include shares to be acquired in connection with the ESPP quarterly purchase period ending March 31, 2018.
|
(10)
|
Includes 1,191 shares and 32,744 shares of our common stock to be issued in connection with outstanding RSUs and the settlement of the PSUs, respectively, which will vest on March 15, 2018, within 60 days of February 28, 2018. Does not include shares to be acquired in connection with the ESPP quarterly purchase period ending March 31, 2018.
|
(11)
|
Includes 952 shares and 15,594 shares of our common stock to be issued in connection with outstanding RSUs and the settlement of the PSUs, respectively, which will vest on March 15, 2018, within 60 days of February 28, 2018. Does not include shares to be acquired in connection with the ESPP quarterly purchase period ending March 31, 2018.
|
(12)
|
Includes 238 shares and 5,998 shares of our common stock to be issued in connection with outstanding RSUs and the settlement of the PSUs, respectively, which will vest on March 15, 2018, within 60 days of February 28, 2018. Also includes 13,636 shares owned by Ms. Eaton’s spouse. Does not include shares to be acquired in connection with the ESPP quarterly purchase period ending March 31, 2018.
|
(13)
|
Includes 714 shares and 14,334 shares of our common stock to be issued in connection with outstanding RSUs and the settlement of the PSUs, respectively, which will vest on March 15, 2018, within 60 days of February 28, 2018. Also includes 3,409 shares owned by a trust for the benefit of Ms. Britton’s mother and 3,570 shares owned by Ms. Britton’s mother, of which Ms. Britton disclaims beneficial ownership. Does not include shares to be acquired in connection with the ESPP quarterly purchase period ending March 31, 2018.
|
(14)
|
Includes 600 shares owned by trusts on behalf of his children.
|
(15)
|
Includes 7,500 shares of our common stock owned by the James Larry Cook Children’s Trust, of which Mr. Edone disclaims beneficial ownership.
|
(16)
|
Includes 1,483 shares of our common stock owned by Mr. Gage’s spouse.
|
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans
|
||||||
Amended and Restated 2013 Equity Incentive Plan
|
|
494,711
|
|
|
|
$
|
—
|
|
|
|
2,170,377
|
|
Employee Stock Purchase Plan
|
|
—
|
|
|
|
$
|
—
|
|
|
|
446,715
|
|
Name
|
|
Age
|
|
Position
|
Eric Lipar
|
|
47
|
|
Chief Executive Officer and Chairman of the Board
|
Michael Snider
|
|
46
|
|
President and Chief Operating Officer
|
Charles Merdian
|
|
48
|
|
Chief Financial Officer and Treasurer
|
Jack Lipar
|
|
49
|
|
Executive Vice President of Acquisitions
|
Rachel Eaton
|
|
36
|
|
Chief Marketing Officer
|
Margaret Britton
|
|
55
|
|
Chief Administrative Officer and Secretary
|
•
|
Eric Lipar, Chief Executive Officer and Chairman of the Board
|
•
|
Michael Snider, President and Chief Operating Officer
|
•
|
Charles Merdian, Chief Financial Officer and Treasurer
|
•
|
Jack Lipar, Executive Vice President of Acquisitions
|
•
|
Rachel Eaton, Chief Marketing Officer
|
•
|
Home sales revenues increased
50.1%
from
$838.3 million
to
$1.3 billion
.
|
•
|
Homes closed increased
40.4%
to
5,845
homes.
|
•
|
Average homes sales prices increased $13,846 from
$201,374
to $
215,220
.
|
•
|
Gross margin as a percentage of home sales revenues was
25.5%
, within our target range.
|
•
|
Our adjusted gross margin (non-GAAP) as a percentage of home sales revenues was
26.9%
.
(1)
|
•
|
Our pre-tax income as a percentage of revenues remained consistent at 13.6%
|
•
|
Net income before income taxes, or pre-tax income, increased
50.8%
to
$171.4 million
.
|
•
|
We had
78
active communities at the end of
2017
, a
23.8%
increase since the end of
2016
.
|
•
|
Total owned and controlled lots increased
34.8%
during
2017
to
39,709
lots at
December 31, 2017
.
|
|
|
As of and for the Year Ended December 31,
|
||||
Key Results
|
|
2017
|
|
2016
|
|
2015
|
(dollars in thousands, except per share data)
|
||||||
Homes Closed
|
|
5,845
|
|
4,163
|
|
3,404
|
Revenues
|
|
$1,257,960
|
|
$838,320
|
|
$630,236
|
Gross Margin as a % of Revenues
|
|
25.5%
|
|
26.4%
|
|
26.5%
|
Adjusted Gross Margin as a % of Revenues
(1)
|
|
26.9%
|
|
27.8%
|
|
27.8%
|
Pre-Tax Income
|
|
$171,402
|
|
$113,672
|
|
$80,280
|
Pre-Tax Income as % of Revenues
|
|
13.6%
|
|
13.6%
|
|
12.7%
|
SG&A Expense as % of Revenues
|
|
12.0%
|
|
13.1%
|
|
13.8%
|
Stockholders’ Equity
|
|
$489,846
|
|
$355,201
|
|
$247,389
|
Basic earnings per share
(2)
|
|
$5.24
|
|
$3.61
|
|
$2.65
|
Diluted earnings per share
(2)
|
|
$4.73
|
|
$3.41
|
|
$2.44
|
Common Stock Price
|
|
$75.03
|
|
$28.73
|
|
$24.33
|
(1)
|
Adjusted gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. Please see “Non-GAAP Measures-Adjusted Gross Margin” included as
ANNEX A
to this Proxy Statement for a reconciliation of adjusted gross margin to gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.
|
(2)
|
See
Note 8 “Equity” to our consolidated financial statements included in our 2017 Annual Report for calculation of earnings per share
.
|
Our industry leading performance during 2017 reflects our continued strong operating momentum since our initial public offering in November 2013. The charts demonstrate the significant growth and strong results generated by the Company during the period 2013 - 2017, reflecting average annual growth in homes closed of more than 40% over the past five (5) years.
|
What We Do
|
|
|
Pay for Performance
- We align annual and long-term incentive opportunities with our annual operating plan, three-year strategic plan, and stockholder interests.
|
|
Mitigate Undue Risk
- We utilize a mix of elements with multiple performance targets, cap potential payments, provide for statutory clawbacks, generally provide a three-year vesting period for restricted stock awards, and conduct an annual compensation risk assessment analysis each year to validate our belief that our compensation programs will not have a material adverse effect on LGI.
|
|
Align Total Compensation with Our Peers
- We position the target total direct compensation levels for our NEOs within the range of the median for our peers, using a combination of lower base salaries and an emphasis on pay for performance.
|
|
Evaluate Total Compensation
- We utilize tally sheets to evaluate our NEOs total compensation program, including short term incentives and long-term compensation opportunity and to evaluate alignment with our NEO retention objectives.
|
|
Independent Compensation Consulting Firm
- The Compensation Committee retains an independent compensation consulting firm to provide advisory services.
|
|
Reasonable Change in Control Provisions for Equity Awards
- We believe we have reasonable change in control provisions that generally apply to directors and executive officers in the same manner as the applicable broader employee population and we do not provide for separate cash severance payments (other than for the CEO) if an executive is terminated following a change in control.
|
|
Stock Ownership Guidelines
- We have adopted stock ownership guidelines for our directors and executive officers.
|
|
Modest Perquisites
- Perquisites are modest and limited to those that have sound benefit to LGI’s business and generally offered to all salaried employees.
|
|
Regular review of Share Utilization
-
We evaluate share utilization by reviewing overhang levels (dilutive impact of equity compensation on our stockholders) and annual run rates (the aggregate shares awarded as a percentage of total shares outstanding).
|
What We Don’t Do
|
|
|
No Hedging. Our insider trading policy prohibits directors and employees from using strategies or products (such as derivative securities or short-selling techniques) to hedge against the potential decrease of our common stock.
|
|
No employment contracts or guaranteed severance for NEOs other than our CEO
|
|
No tax gross-ups
|
|
No share recycling, stock option reloading or evergreen provisions in our equity plan
|
|
No repricing of underwater stock options
|
|
No loans
|
|
No pension plan
|
•
|
Pay for Performance
: Provide base salaries that reflect each NEO’s background, experience, and performance, combined with variable incentive compensation that rewards executives when superior performance is achieved, while subpar performance results in compensation below that of peer companies;
|
•
|
Competitiveness and Retention:
Provide competitive pay opportunities that attract and retain the highest quality professionals and rewards loyalty;
|
•
|
Accountability for Short- and Long-term Performance:
Strike an appropriate balance between achieving both short-term and long-term business objectives through compensations awards; and
|
•
|
Alignment of Stockholders’ Interests
: Link the interests of our executive officers with those of our stockholders through significant equity-based compensation.
|
|
Component
|
Objective of Element
|
Description
|
Annual Cash Compensation
|
Base Salary
|
To provide an appropriate base salary mitigating inappropriate risk-taking by providing a fixed and certain level of income, paid bi-weekly.
|
Base salaries are set at market competitive levels, subject to adjustment for a number of other factors such as merit increases, unique job responsibilities, experience, individual contributions and number of years in the position.
|
Annual Cash Bonus - Short-term Incentive (“STI”) Compensation
|
To incentivize and reward performance on key metrics that support the Company’s annual operating plan.
Promote Pay for Performance in a competitive way.
Generally targeted at or above the median annual incentive ranges among companies in our peer group based upon achieving specified performance goals.
|
Designed to offer opportunities for cash compensation directly tied to Company performance relative to established performance targets that the Compensation Committee ultimately believes create stockholder value. Annual cash bonus payouts may range from 0% to 200% of the target bonus, based on performance relative to the designated targets. (See “
What We Paid and Why
” below.) We pay the annual cash bonus during the first quarter for performance during the prior fiscal year.
|
|
Component
|
Objective of Element
|
Description
|
Long-term Incentive (“LTI”)
Compensation
|
Performance-based Restricted Stock Units (PSUs)
|
To strengthen alignment with stockholders’ interests, 80% of the LTI is performance-based.
|
The compensation opportunity under the PSUs has a performance period of three years based on the Company’s cumulative basic earnings per share (“Basic EPS”) over that period compared to the pre-established targets. The PSU payout may range from 0% to 200% of the target amount based on actual results as compared to the target and absolute total stockholder return over the performance period. (See “
2017 LTI Program”
below for a description of the PSU program.)
|
Restricted Stock Units (RSUs)
|
To encourage retention of the management team.
Focus executives on multi-year activities that increase stockholder value.
|
This component was first added in 2016 to provide an additional fixed level of long-term compensation to balance out the incentive-based compensation. The RSUs vest on the third anniversary of the grant date.
|
|
Retirement and other Perquisites
|
|
To provide competitive benefits to protect the employees and their covered dependents’ health and welfare, to facilitate strong performance on the job, and enhance productivity.
|
Executive officers, including NEOs, are eligible to participate in the same benefit programs that are offered to other salaried employees, including the 401k Plan match, participating in the Company’s Employee Stock Purchase Plan (“ESPP”), auto allowances for positions requiring frequent travel, long-term disability coverage, and participation in health and welfare plans. Other limited prerequisites are provided to the NEOs; see the Summary Executive Compensation Table below.
|
Name
|
Base Salary
|
STI
|
LTI- PSUs
|
LTI- RSUs
|
Total
|
||||||||||
Eric Lipar
|
$
|
770,000
|
|
$
|
924,000
|
|
$
|
930,001
|
|
$
|
346,500
|
|
$
|
2,970,501
|
|
Michael Snider
|
$
|
500,000
|
|
$
|
500,000
|
|
$
|
469,693
|
|
$
|
175,000
|
|
$
|
1,644,693
|
|
Charles Merdian
|
$
|
410,000
|
|
$
|
307,500
|
|
$
|
275,120
|
|
$
|
102,500
|
|
$
|
1,095,120
|
|
Jack Lipar
|
$
|
280,000
|
|
$
|
140,000
|
|
$
|
90,185
|
|
$
|
33,600
|
|
$
|
543,785
|
|
Rachel Eaton
|
$
|
280,000
|
|
$
|
140,000
|
|
$
|
90,185
|
|
$
|
33,600
|
|
$
|
543,785
|
|
Named Executive Officer
|
2017
Base Salary
|
2016
Base Salary
|
Percentage Increase
|
|||||
E. Lipar
|
$
|
770,000
|
|
$
|
700,000
|
|
10
|
%
|
M. Snider
|
$
|
500,000
|
|
$
|
430,000
|
|
16
|
%
|
C. Merdian
|
$
|
410,000
|
|
$
|
375,000
|
|
9
|
%
|
J. Lipar
|
$
|
280,000
|
|
$
|
250,000
|
|
12
|
%
|
R. Eaton
|
$
|
280,000
|
|
$
|
235,000
|
|
19
|
%
|
2017 Performance Metric (weighting)
|
Threshold
|
|
Target
|
|
Maximum
|
|
Fiscal 2017 Actual
|
||||||||
Pre-tax income (75%)
|
$
|
119,015
|
|
|
$
|
138,247
|
|
|
$
|
167,262
|
|
|
$
|
171,402
|
|
Homes closed (25%)
|
4,400
|
|
|
4,704
|
|
|
5,300
|
|
|
5,845
|
|
||||
Annual bonus payout rate
|
50
|
%
|
|
100
|
%
|
|
200
|
%
|
|
200
|
%
|
Stock Ownership Guidelines
|
|
Chief Executive Officer
|
5X Base Salary
|
Chief Operating Officer and Chief Financial Officer
|
3X Base Salary
|
Other Executive Officers
|
1X Base Salary
|
Name
|
Base Salary
|
STI
|
LTI- PSUs
|
LTI- RSUs
|
Total
|
||||||||||
Eric Lipar
|
$
|
825,000
|
|
$
|
990,000
|
|
$
|
1,551,000
|
|
$
|
388,000
|
|
$
|
3,754,000
|
|
Michael Snider
|
$
|
550,000
|
|
$
|
550,000
|
|
$
|
770,000
|
|
$
|
193,000
|
|
$
|
2,063,000
|
|
Charles Merdian
|
$
|
430,000
|
|
$
|
323,000
|
|
$
|
447,000
|
|
$
|
112,000
|
|
$
|
1,312,000
|
|
Jack Lipar
|
$
|
300,000
|
|
$
|
150,000
|
|
$
|
180,000
|
|
$
|
45,000
|
|
$
|
675,000
|
|
Rachel Eaton
|
$
|
300,000
|
|
$
|
150,000
|
|
$
|
180,000
|
|
$
|
45,000
|
|
$
|
675,000
|
|
1.
|
Our executive compensation program is designed to include a mix of elements so that the compensation mix is not overly focused on either short-term or long-term incentives.
|
2.
|
Our executive annual incentive award program is based on financial metrics that are objective and drive long-term stockholder value (including pretax operating income performance and home closings). Moreover, the Compensation Committee attempts to set ranges for these measures that encourage success without encouraging excessive risk taking to achieve short-term results. The Compensation Committee has the absolute discretion to remove any and all participants from the annual incentive award program prior to the end of the year to which the annual incentive award relates and may reduce the amount of the annual incentive award payment, in its discretion, at any time prior to year-end.
|
3.
|
Our incentive compensation programs do not allow for unlimited payments, and annual incentive award caps limit the extent that employees could potentially profit by taking on excessive risk.
|
4.
|
Selection of two different types of long-term incentives (time-based RSUs and PSUs) for executives helps to minimize the risk that they will take actions that could cause harm to the Company and our stockholders. The value of the RSUs is primarily based on stock price appreciation, which is determined by how the market values our common stock, and the value of the PSUs is based on cumulative Basic EPS which is objective and drives long-term stockholder value.
|
5.
|
Longer performance periods encourage executives to attain sustained performance over several years, rather than performance in a single period. PSUs are based on a three-year performance period. Time-based RSUs have a three-year cliff vesting.
|
6.
|
The stock ownership guidelines described under “Stock Ownership Guidelines” above align the interests of our executive officers with the long-term interests of ourstockholders and encourage our executives to execute our strategies for growth in a prudent manner.
|
|
|
Bryan Sansbury (Chair)
|
|
|
Duncan Gage
|
Name and Principal Position
|
Year
|
Salary
|
|
Bonus
(1)
|
|
Stock Awards
|
All Other Compensation
|
Total
|
||||||||||||
Eric Lipar,
CEO and Chairman of the Board |
2017
|
$
|
770,000
|
|
|
$
|
1,848,000
|
|
|
$
|
1,276,500
|
|
(2)
|
$
|
45,053
|
|
(5)
|
$
|
3,939,553
|
|
2016
|
$
|
700,000
|
|
|
$
|
1,561,280
|
|
|
$
|
980,005
|
|
(3)
|
$
|
37,090
|
|
(6)
|
$
|
3,278,375
|
|
|
2015
|
$
|
520,000
|
|
|
$
|
1,040,000
|
|
|
$
|
650,005
|
|
(4)
|
$
|
35,945
|
|
(7)
|
$
|
2,245,950
|
|
|
Michael Snider,
President and Chief Operating Officer |
2017
|
$
|
500,000
|
|
|
$
|
1,000,000
|
|
|
$
|
644,700
|
|
(2)
|
$
|
33,794
|
|
(8)
|
$
|
2,178,494
|
|
2016
|
$
|
430,000
|
|
|
$
|
799,227
|
|
|
$
|
537,516
|
|
(3)
|
$
|
21,516
|
|
(9)
|
$
|
1,788,259
|
|
|
2015
|
$
|
416,000
|
|
|
$
|
582,400
|
|
|
$
|
332,806
|
|
(4)
|
$
|
21,616
|
|
(10)
|
$
|
1,352,822
|
|
|
Charles Merdian,
Chief Financial Officer and Treasurer |
2017
|
$
|
410,000
|
|
|
$
|
615,000
|
|
|
$
|
377,600
|
|
(2)
|
$
|
15,777
|
|
(11)
|
$
|
1,418,377
|
|
2016
|
$
|
375,000
|
|
|
$
|
522,750
|
|
|
$
|
281,265
|
|
(3)
|
$
|
4,759
|
|
(12)
|
$
|
1,183,774
|
|
|
2015
|
$
|
312,000
|
|
|
$
|
374,400
|
|
|
$
|
218,402
|
|
(4)
|
$
|
3,616
|
|
(13)
|
$
|
908,418
|
|
|
Jack Lipar, *
Executive Vice President of Acquisitions |
2017
|
$
|
280,000
|
|
|
$
|
280,000
|
|
|
$
|
123,800
|
|
(2)
|
$
|
29,352
|
|
(14)
|
$
|
713,152
|
|
Rachel Eaton, *
Chief Marketing Officer |
2017
|
$
|
280,000
|
|
|
$
|
280,000
|
|
|
$
|
123,800
|
|
(2)
|
$
|
15,778
|
|
(15)
|
$
|
699,578
|
|
(1)
|
The amounts shown constitute the annual cash bonus program at payouts further discussed in the section —"Target Compensation Mix 2017".
|
(2)
|
The amounts shown include the grant date fair value of the target number of PSUs of 43,806 ($930,001), 22,124 ($469,693), 12,959 ($275,120), 4,248 ($90,185), and 4,248 ($90,185) awarded on March 15, 2017, to Messrs. E. Lipar, Snider, Merdian, and J. Lipar and Ms. Eaton, respectively, that provide for shares of our common stock to be issued based on the attainment of the performance metric of the Company over the three-year period, January 1, 2017 to December 31, 2019. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0% to 200% of the target amount depending on actual results as compared to the target performance metric. The terms of the PSUs provide that the payouts will be capped at 100% of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The amounts shown reflect the grant date fair value of each such PSU of $21.23 per share, determined in accordance with FASB ASC Topic 718. See Note 9 to our consolidated financial statements included in our 2017 Annual Report, regarding assumptions underlying valuations of equity awards for 2017. Details regarding equity awards that are still outstanding can be found in the “Outstanding Equity Awards at December 31, 2017” table below.
|
(3)
|
The amounts shown include the grant date fair value of the target number of PSUs of 35,980 ($784,004), 19,734 ($430,004), and 10,326 ($225,004) awarded on February 1, 2016, to Messrs. Lipar, Snider and Merdian, respectively, that provide for shares of our common stock to be issued based on the attainment of the performance metric of the Company over the three-year period, January 1, 2016 to December 31, 2018. The terms of the PSUs provide that the payouts will be capped at 100% of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0% to 200% of the target amount depending on actual results as compared to the target performance metric. The amounts shown reflect the grant date fair value of each such PSU of $21.79 per share, determined in accordance with FASB ASC Topic 718. See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Annual Report”), regarding assumptions underlying valuations of equity awards for 2016. Details regarding equity awards that are still outstanding can be found in the “Outstanding Equity Awards at December 31, 2017” table below.
|
(4)
|
The amounts shown include the grant date fair value of the target number of PSUs of 48,726 ($650,005), 24,948 ($332,806), and 16,372 ($218,402) awarded on February 2, 2015, to Messrs. Lipar, Snider and Merdian, respectively, that provide for shares of our common stock to be issued based on the attainment of the performance metric of the Company over the three-year period, January 1, 2015 to December 31, 2017. The 2015 grants will be settled at 200% of the target amount resulting in the issuance of 97,452, 49,896, 32,744, 15,594, and 5,998 shares of our common stock to Messrs. Lipar, Snider, Merdian and J. Lipar and Ms. Eaton, respectively, in settlement of the 2015 grants.The amounts shown reflect the grant date fair value of each such PSU of $13.34 per share, determined in accordance with FASB ASC Topic 718.
|
(5)
|
Includes: (i) Company matching contributions of $10,800 per year pursuant to the 401k Plan, (ii) a car allowance of $18,000, (iii) long-term disability insurance premiums of $552, and (iv) club dues paid by us in the amount of $15,701.
|
(6)
|
Includes: (i) Company matching contributions of $3,000 per year pursuant to the 401k Plan, (ii) a car allowance of $18,000, (iii) long-term disability insurance premiums of $516, and (iv) club dues paid by us in the amount of $15,574.
|
(7)
|
Includes: (i) Company matching contributions of $3,000 per year pursuant to the 401k Plan, (ii) a car allowance of $18,000, (iii) long-term disability insurance premiums of $616, and (iv) club dues paid by us in the amount of $14,329.
|
(8)
|
Includes (i) Company matching contributions of $10,800 per year pursuant to the 401k Plan, (ii) a car allowance of $18,000, (iii) Employee Stock Purchase Program discount of $ 4,442 and (iv) long-term disability insurance premiums of $552.
|
(9)
|
Includes (i) Company matching contributions of $3,000 per year pursuant to the 401k Plan, (ii) a car allowance of $18,000, and (iii) long-term disability insurance premiums of $516.
|
(10)
|
Includes (i) Company matching contributions of $3,000 per year pursuant to the 401k Plan, (ii) a car allowance of $18,000, and (iii) long-term disability insurance premiums of $616.
|
(11)
|
Includes (i) Company matching contributions of $10,800 per year pursuant to the 401k Plan, (ii) Employee Stock Purchase Program discount of $4,425, and (iii) long-term disability insurance premiums of $552.
|
(12)
|
Includes (i) Company matching contributions of $3,000 per year pursuant to the 401k Plan, (ii) Employee Stock Purchase Program discount of $1,243, and (iii) long-term disability insurance premiums of $516.
|
(13)
|
Includes (i) Company matching contributions of $3,000 per year pursuant to the 401k Plan and (ii) long-term disability insurance premiums of $616.
|
(14)
|
Includes (i) Company matching contributions of $10,800 per year pursuant to the 401k Plan, (ii) a car allowance of $18,000, and (iii) long-term disability insurance premiums of $552.
|
(15)
|
Includes (i) Company matching contributions of $10,800 per year pursuant to the 401k Plan, (ii) Employee Stock Purchase Program discount of $4,426, and (iii) long-term disability insurance premiums of $552.
|
|
|
|
Estimated future payouts under
non-equity incentive plan awards (1)
|
Estimated future payouts under
equity incentive plan awards (2)(3)
|
All other stock
awards: Number
of shares of stock or units (#) (2)
|
All other option
awards: Number of
securities underlying
options (#)
|
Exercise or base price of
option awards
($/Sh)
|
Grant date fair value of stock
and option
awards (3)(4)
|
||||||||
|
Grant Date
|
Type of Award
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
||||||||
E. Lipar
|
3/15/2017
|
STI
|
$462,000
|
$924,000
|
$1,848,000
|
|
|
|
|
|
|
|
||||
|
|
PSU
|
|
|
|
21,903
|
|
43,806
|
|
87,612
|
|
|
|
|
$930,001
|
|
|
|
RSU
|
|
|
|
|
|
|
10,952
|
|
|
|
$346,521
|
|||
M. Snider
|
3/15/2017
|
STI
|
$250,000
|
$500,000
|
$1,000,000
|
|
|
|
|
|
|
|
||||
|
|
PSU
|
|
|
|
11,062
|
|
22,124
|
|
44,248
|
|
|
|
|
$469,693
|
|
|
|
RSU
|
|
|
|
|
|
|
5,531
|
|
|
|
$175,001
|
|||
C. Merdian
|
3/15/2017
|
STI
|
$153,750
|
$307,500
|
$615,000
|
|
|
|
|
|
|
|
||||
|
|
PSU
|
|
|
|
6,480
|
|
12,959
|
|
25,918
|
|
|
|
|
$275,120
|
|
|
|
RSU
|
|
|
|
|
|
|
3,240
|
|
|
|
$102,514
|
|||
J. Lipar
|
3/15/2017
|
STI
|
$70,000
|
$140,000
|
$280,000
|
|
|
|
|
|
|
|
||||
|
|
PSU
|
|
|
|
2,124
|
|
4,248
|
|
8,496
|
|
|
|
|
$90,185
|
|
|
|
RSU
|
|
|
|
|
|
|
1,062
|
|
|
|
$33,602
|
|||
R. Eaton
|
3/15/2017
|
STI
|
$70,000
|
$140,000
|
$280,000
|
|
|
|
|
|
|
|
||||
|
|
PSU
|
|
|
|
2,124
|
|
4,248
|
|
8,496
|
|
|
|
|
$90,185
|
|
|
|
RSU
|
|
|
|
|
|
|
1,062
|
|
|
|
$33,602
|
(1)
|
Actual non-equity incentive plan payouts for 2017 are discussed in the section —"Target Compensation Mix 2017".
|
(2)
|
Equity awards granted in 2017 have a three-year cliff vest, subject in the case of PSU awards, to achievement of established performance metrics.
|
(3)
|
Restricted stock units have a fair value equal to the closing price of our stock on the date of grant in accordance with the requirements of ASC 718. The grant-date fair value amounts relating to the performance share awards represent the grant-date fair value assuming the attainment of the earnings per share (“EPS”) performance metric over the applicable three-year period. The terms of the PSUs provide that the payouts will be capped at 100% of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The compensation expense associated with the grants of PSU is determined using the derived grant date fair value of $21.23, based on a third-party valuation analysis provided by Meridian, and expensed over the applicable period.
|
(4)
|
Grant date fair value for the RSU awards are calculated using the $31.64 closing stock price on the date of grant.
|
Name
|
RSUs Grant Date
|
Number of RSUs
That Have Not Vested
|
|
Market Value of RSUs That Have Not Vested
(4)
|
PSUs Grant Date
|
Number of PSUs That Have Not Vested
|
Market Value of PSUs That Have Not Vested
(4)
|
||
Target
(5)
|
Maximum
(6)
|
Target
(5)
|
Maximum
(6)
|
||||||
Eric Lipar
|
3/15/2017
|
10,952
|
(1)
|
$821,729
|
3/15/2017
|
43,806
|
87,612
|
$3,286,764
|
$6,573,528
|
2/1/2016
|
8,995
|
(2)
|
$674,895
|
2/1/2016
|
35,980
|
71,960
|
$2,699,579
|
$5,399,159
|
|
3/15/2015
|
3,333
|
(3)
|
$250,075
|
2/2/2015
|
48,726
|
97,452
|
$3,655,912
|
$7,311,824
|
|
Michael Snider
|
3/15/2017
|
5,531
|
(1)
|
$414,991
|
3/15/2017
|
22,124
|
44,248
|
$1,659,964
|
$3,319,927
|
2/1/2016
|
4,934
|
(2)
|
$370,198
|
2/1/2016
|
19,734
|
39,468
|
$1,480,642
|
$2,961,284
|
|
3/15/2015
|
2,281
|
(3)
|
$171,143
|
2/2/2015
|
24,948
|
49,896
|
$1,871,848
|
$3,743,697
|
|
Charles Merdian
|
3/15/2017
|
3,240
|
(1)
|
$243,097
|
3/15/2017
|
12,959
|
25,918
|
$972,314
|
$1,944,628
|
2/1/2016
|
2,582
|
(2)
|
$193,727
|
2/1/2016
|
10,326
|
20,652
|
$774,760
|
$1,549,520
|
|
3/15/2015
|
1,191
|
(3)
|
$89,361
|
2/2/2015
|
16,372
|
32,744
|
$1,228,391
|
$2,456,782
|
|
Jack Lipar
|
3/15/2017
|
1,062
|
(1)
|
$79,682
|
3/15/2017
|
4,248
|
8,496
|
$318,727
|
$637,455
|
2/1/2016
|
1,148
|
(2)
|
$86,134
|
2/1/2016
|
4,590
|
9,180
|
$344,388
|
$688,775
|
|
3/15/2015
|
952
|
(3)
|
$71,429
|
2/2/2015
|
7,797
|
15,594
|
$585,009
|
$1,170,018
|
|
Rachel Eaton
|
3/15/2017
|
1,062
|
(1)
|
$79,682
|
3/15/2017
|
4,248
|
8,496
|
$318,727
|
$637,455
|
2/1/2016
|
755
|
(2)
|
$56,648
|
2/1/2016
|
3,020
|
6,040
|
$226,591
|
$453,181
|
|
3/15/2015
|
238
|
(3)
|
$17,857
|
2/2/2015
|
2,999
|
5,998
|
$225,015
|
$450,030
|
(1)
|
On March 15, 2017, 10,952, 5,531, 3,240, 1,062 and 1,062 RSUs were granted to Messrs. E. Lipar, Snider, Merdian, and J. Lipar and Ms. Eaton respectively, representing a portion of the 2017 LTI Program. The RSUs vest on the third anniversary date of the grant and will be settled in shares of our common stock.
|
(2)
|
On February 1, 2016, 8,995, 4,934, 2,582, 1,148 and 755 RSUs were granted to Messrs. E. Lipar, Snider, Merdian and J. Lipar and Ms. Eaton, respectively, representing a portion of the 2016 LTI Program. The RSUs vest on the third anniversary date of the grant and will be settled in shares of our common stock.
|
(3)
|
On March 15, 2015, 10,000, 6,843, 3,572, 2,857 and 715 RSUs were granted to Messrs. E. Lipar, Snider, Merdian, and J. Lipar, and Ms. Eaton, respectively, representing a portion of the 2014 bonus payable under the Annual Bonus Plan. The RSUs vest ratably over three years, on the anniversary date of the grant and will be settled in shares of our common stock.
|
(4)
|
The market value of RSUs and PSUs that have not vested is based on the closing stock price of $75.03 per share of our common stock on The NASDAQ Global Select Market on December 29, 2017, the last trading day of 2017.
|
(5)
|
The Compensation Committee approved target PSUs awards that provide for shares of our common stock to be issued based on the attainment of the performance metric of the Company over the applicable three-year performance period. The PSUs vest upon the determination date for the actual results at the end of the three-year period and require the recipients continue to be employed by the Company through the determination date. The PSUs will be settled in shares of our common stock. The performance period for the 2017 awards is January 1, 2017 to December 31, 2019. The performance period for the 2016 awards is January 1, 2016 to December 31, 2018. The performance period for the 2015 awards is January 1, 2015 to December 31, 2017. The 2015 grants will be settled at 200% of the target amount resulting in the issuance of 97,452, 49,896, 32,744, 15,594, and 5,998 shares of our common stock to Messrs. Lipar, Snider, Merdian and J. Lipar and Ms. Eaton, respectively, in settlement of the 2015 grants.
|
(6)
|
The number and market value of shares of our common stock that may be issued to the recipients for the PSUs range from 0% to 200% of the target amount depending on actual results as compared to the target performance metric, and the amounts shown in the table represent the maximum payout, or 200% of the target amount.
|
2015 LTI Program Results
|
Threshold
|
|
Target
|
|
Maximum
|
|
2015 - 2017 Actual
|
||||||||
2015-2017 Cumulative Basic EPS criteria
|
$
|
5.04
|
|
|
$
|
7.20
|
|
|
$
|
9.36
|
|
|
$
|
11.50
|
|
PSU payout rate
|
50
|
%
|
|
100
|
%
|
|
200
|
%
|
|
200%
|
|
|
|
RSU Awards
|
|
PSU Awards
|
||||||||||
Name
|
|
Number of Shares Acquired
on Vesting
|
|
Value Realized
on Vesting
(1)
|
|
Number of Shares Acquired
on Vesting |
|
Value Realized
on Vesting (1) |
||||||
Eric Lipar
|
|
3,334
|
|
|
$
|
105,488
|
|
|
40,960
|
|
|
$
|
1,295,974
|
|
Michael Snider
|
|
2,281
|
|
|
$
|
72,171
|
|
|
26,332
|
|
|
$
|
833,144
|
|
Charles Merdian
|
|
1,190
|
|
|
$
|
37,652
|
|
|
14,630
|
|
|
$
|
462,893
|
|
Jack Lipar
|
|
953
|
|
|
$
|
30,153
|
|
|
11,704
|
|
|
$
|
370,315
|
|
Rachel Eaton
|
|
239
|
|
|
$
|
7,562
|
|
|
2,926
|
|
|
$
|
92,579
|
|
(1)
|
The amounts reflect the number of Awards vested at March 15, 2017, valued at $31.64, the closing price per share of our common stock on that date.
|
•
|
Base Salary
|
•
|
Commissions and/or unit bonuses
|
•
|
Annual Cash bonus- Short Term Incentive (“STI”) Compensation earned in 2017
|
•
|
PSUs granted
|
•
|
RSUs granted
|
•
|
401K employer match
|
•
|
ESPP discount
|
•
|
Company allowances and perquisites
|
Eric Lipar
|
Bonus/
Cash Severance
(1)(2)
|
Acceleration from Unvested PSUs (3)(4)
|
Acceleration from Unvested RSUs (3)(4)
|
Total
|
||||||||
Termination Scenario
|
||||||||||||
Retirement
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Death
|
$
|
1,848,000
|
|
$
|
9,642,255
|
|
$
|
1,746,698
|
|
$
|
13,236,954
|
|
Disability
|
$
|
1,848,000
|
|
$
|
9,642,255
|
|
$
|
1,746,698
|
|
$
|
13,236,954
|
|
Voluntary Resignation
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
—
|
|
|
Termination for Cause
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Involuntary Termination w/o Cause, or Resignation for Good Reason
|
$
|
1,540,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,540,000
|
|
Change in Control (5)
|
$
|
—
|
|
9,642,255
|
|
1,746,698
|
|
$
|
11,388,954
|
|
||
Termination after Change in Control (5)
|
$
|
3,418,000
|
|
$
|
9,642,255
|
|
$
|
1,746,698
|
|
$
|
14,806,954
|
|
Michael Snider
|
Bonus (1)
|
Acceleration from Unvested PSUs (3)(4)
|
Acceleration from Unvested RSUs (3)(4)
|
Total
|
||||||||
Termination Scenario
|
||||||||||||
Retirement
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Death
|
$
|
1,000,000
|
|
$
|
5,012,454
|
|
$
|
956,332
|
|
$
|
6,968,786
|
|
Disability
|
$
|
—
|
|
$
|
5,012,454
|
|
$
|
956,332
|
|
$
|
5,968,786
|
|
Resignation
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Termination
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Change in Control (5)
|
$
|
—
|
|
$
|
5,012,454
|
|
$
|
956,332
|
|
$
|
5,968,786
|
|
Charles Merdian
|
Bonus (1)
|
Acceleration from Unvested PSUs (3)(4)
|
Acceleration from Unvested RSUs (3)(4)
|
Total
|
||||||||
Termination Scenario
|
||||||||||||
Retirement
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Death
|
$
|
615,000
|
|
$
|
2,975,465
|
|
$
|
526,185
|
|
$
|
4,116,650
|
|
Disability
|
$
|
—
|
|
$
|
2,975,465
|
|
$
|
526,185
|
|
$
|
3,501,650
|
|
Resignation
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Termination
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Change in Control (5)
|
$
|
—
|
|
$
|
2,975,465
|
|
$
|
526,185
|
|
$
|
3,501,650
|
|
Jack Lipar
|
Bonus (1)
|
Acceleration from Unvested PSUs (3)(4)
|
Acceleration from Unvested RSUs (3)(4)
|
Total
|
||||||||
Termination Scenario
|
||||||||||||
Retirement
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Death
|
$
|
280,000
|
|
$
|
1,248,124
|
|
$
|
237,245
|
|
$
|
1,765,369
|
|
Disability
|
$
|
—
|
|
$
|
1,248,124
|
|
$
|
237,245
|
|
$
|
1,485,369
|
|
Resignation
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Termination
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Change in Control (5)
|
$
|
—
|
|
$
|
1,248,124
|
|
$
|
237,245
|
|
$
|
1,485,369
|
|
Rachel Eaton
|
Bonus (1)
|
Acceleration from Unvested PSUs (3)(4)
|
Acceleration from Unvested RSUs (3)(4)
|
Total
|
||||||||
Termination Scenario
|
||||||||||||
Retirement
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Death
|
$
|
280,000
|
|
$
|
770,333
|
|
$
|
154,187
|
|
$
|
1,204,520
|
|
Disability
|
$
|
—
|
|
$
|
770,333
|
|
$
|
154,187
|
|
$
|
924,520
|
|
Resignation
|
$
|
—
|
|
—
|
|
—
|
|
$
|
—
|
|
||
Termination
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Change in Control (5)
|
$
|
—
|
|
$
|
770,333
|
|
$
|
154,187
|
|
$
|
924,520
|
|
(1)
|
The Annual Bonus Plan provides annual cash bonuses earned before the event are subject to being paid at the Board’s discretion and are not reported here.
|
(2)
|
Severance payments for Mr. Eric Lipar include the following amounts based on the terms of the Lipar Employment Agreement, payable in a lump sum within 45 days of termination, if all conditions are met (see “CEO Employment Agreement” below for more details):
|
(i)
|
Payment equal to two years’ base salary if the Board terminates his employment for any reason other than Cause or if he resigns for Good Reason;
|
(ii)
|
Payment equal to two years’ base salary and two times the dollar amount of his full target bonus percentage in effect for the twelve-month period immediately prior to termination plus $30,000 for health benefits if termination after Change in Control (see “CEO Employment Agreement” below for more details).
|
(3)
|
RSUs and PSUs are fully vested upon participant’s disability, death, or immediately prior to a change in control. Equity plans include a clawback provision to the extent required by applicable law.
|
(4)
|
The amounts shown include the value of unvested accelerated (i) RSUs and (ii) PSUs at target, as indicated. valued at the closing stock price of our common stock on the NASDAQ Global Select Market of $75.03 on December 31, 2017, the last business day of our 2017 fiscal year. See “Outstanding Equity Awards at Year-End” for disclosure of the events causing an acceleration of outstanding unvested PSUs and RSUs. For each termination scenario, assumes accelerated vesting of all unvested RSUs and PSUs that are subject to accelerated vesting based on such scenario.
|
(5)
|
Change in Control defined in the Plan is deemed to occur if:
|
(i)
|
Any person acquires securities of the Company representing 50% or more of the total voting power of the Company;
|
(ii)
|
A change in the composition of the Board occurring within a one-year period as a result of which fewer than a majority of the directors are Incumbent Directors; provided, that any individual whose election or nomination for election by the stockholders was approved by a majority of the then Incumbent Directors shall be considered an Incumbent Director, with certain exceptions; or
|
(iii)
|
The stockholders of the Company approve any merger, consolidation or recapitalization of the Company or any sale of substantially all of its assets where (a) the stockholders of the Company prior to the transaction do not, immediately thereafter, own at least 51% of both the equity and voting power of the surviving entity or (b) the Incumbent Directors at the time of the approval of the transaction would not immediately thereafter constitute a majority of the Board of the surviving entity.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Home sales revenues
|
|
$
|
1,257,960
|
|
|
$
|
838,320
|
|
|
$
|
630,236
|
|
Cost of sales
|
|
937,540
|
|
|
616,707
|
|
|
463,304
|
|
|||
Gross margin
|
|
320,420
|
|
|
221,613
|
|
|
166,932
|
|
|||
Capitalized interest charged to cost of sales
|
|
17,400
|
|
|
10,680
|
|
|
6,057
|
|
|||
Purchase accounting adjustments
(a)
|
|
246
|
|
|
485
|
|
|
2,131
|
|
|||
Adjusted gross margin
|
|
$
|
338,066
|
|
|
$
|
232,778
|
|
|
$
|
175,120
|
|
Gross margin %
(b)
|
|
25.5
|
%
|
|
26.4
|
%
|
|
26.5
|
%
|
|||
Adjusted gross margin %
(b)
|
|
26.9
|
%
|
|
27.8
|
%
|
|
27.8
|
%
|
(a)
|
Adjustments result from the application of purchase accounting for acquisitions and represent the amount of the fair value step-up adjustments included in cost of sales for real estate inventory sold after the acquisition dates.
|
(b)
|
Calculated as a percentage of home sales revenues.
|
1 Year LGI Homes Chart |
1 Month LGI Homes Chart |
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