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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Meritage Homes Corp | NYSE:MTH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
6.32 | 3.48% | 188.13 | 189.96 | 185.34 | 186.03 | 481,863 | 01:00:00 |
UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
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Proxy Statement Pursuant to Section 14(a) of the
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Securities Exchange Act of 1934
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(Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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¨
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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¨
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Soliciting Material Pursuant to §240.14a-12
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Meritage Homes Corporation
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(Name of Registrant as Specified In Its Charter)
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N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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ý
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No fee required.
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¨
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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¨
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Fee paid previously with preliminary materials:
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¨
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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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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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1
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Election of four Class II directors, each to hold office until our
2019
annual meeting,
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2
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Ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the
2017
fiscal year,
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3
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Advisory vote to approve compensation of our Named Executive Officers ("Say on Pay"),
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4
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Advisory vote on the frequency of future advisory votes on Say on Pay, and
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5
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The conduct of any other business that may properly come before the meeting or any adjournment or postponement thereof.
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By Order of the Board of Directors
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C. Timothy White, Secretary
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TABLE OF CONTENTS
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Advisory Vote on the Frequency of Future Advisory Votes on Say on Pay (Proposal No. 4)
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10
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Security Ownership by Management and Principal Stockholders
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Compensation Discussion and Analysis
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2016 Environment
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Independent Compensation Consultant
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Equity-Based Awards
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Discussion of NEO Compensation
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2017 Developments
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Certain Relationships and Related Transactions
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Report of the Audit Committee
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Stockholder Proposals
, Director Nominations and Other Items of Business
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PROXY SUMMARY
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General Information
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PROXY SUMMARY
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The Proposals
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Name
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Age
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Director Since
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Independent
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AC
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CC
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NGC
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LC
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Peter L. Ax
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57
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2000
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Yes
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û
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û
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Robert G. Sarver
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55
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1996
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No
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Gerald Haddock
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69
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2005
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Yes
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û
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Michael R. Odell
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53
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2011
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Yes
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û
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=
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Chair
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AC
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Audit Committee
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NGC
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Nominating/Governance Committee
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û
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=
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Member
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CC
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Executive Compensation Committee
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LC
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Land Committee
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PROXY SUMMARY
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Summary of Fees
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||||||
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2016
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2015
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Audit fees
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$
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1,151,500
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$
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1,140,700
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Audit-related fees
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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
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—
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—
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Total fees
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$
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1,151,500
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$
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1,140,700
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Type
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Form
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Terms
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Cash
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Base Salary
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Competitively market-based
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Cash
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Annual Incentive Compensation
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Based on achievement of performance goals
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Cash
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Discretionary Bonuses
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Based on specific individual achievements beyond those of the performance goals included in the annual incentive compensation calculations, subject to approval by Executive Compensation Committee
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Equity
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Long-term Incentive Awards
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Equity awards typically have a three-year service period and performance goals that span over a three year cumulative period or three one-year periods. Beginning in 2017, all equity awards are subject to achievement of at least one performance goal
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Other
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Limited Perquisites
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Primarily auto allowance and the reimbursement of certain life and disability (or equivalent) policies for the benefit of NEOs and their families
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PROPOSAL 4
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Advisory Vote on the Frequency of Future Advisory Votes on Say on Pay
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PROXY SUMMARY
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Other Matters
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Corporate Governance
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—
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Audit Committee
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—
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Executive Compensation Committee
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—
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Nominating/Governance Committee
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—
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Land Committee
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PROPOSAL 1: ELECTION OF DIRECTORS
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PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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PROPOSAL 3: ADVISORY VOTE TO APPROVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
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Background on Proposal
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2016
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2015
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% Change
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||||
Home Closing Units
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7,355
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6,522
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12.8%
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Home Closing Revenue
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$
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3,003,426
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$
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2,531,556
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18.6%
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Home Order Units
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7,290
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7,100
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2.7%
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Home Order Value
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$
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3,001,503
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$
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2,822,785
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6.3%
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Backlog Units
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2,627
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2,692
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(2.4)%
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Backlog Value
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$
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1,135,758
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$
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1,137,681
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(0.2)%
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Pre-Tax Income
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$
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218,060
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$
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189,464
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15.1%
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Diluted Earnings per Share
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$
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3.55
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$
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3.09
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14.9%
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•
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A substantial portion of compensation is incentive based and is "at-risk", as discussed beginning on page 28.
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•
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Incentive compensation is balanced between cash and equity awards, as discussed beginning on page 28.
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•
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The employment agreements for our CEO and our NEOs include a provision for the clawback (or offset) of incentive bonuses to the extent any financial results are misstated as the result of the NEO’s willful misconduct or gross negligence.
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•
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NEOs must comply with security ownership requirements, as discussed on page 29.
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PROPOSAL 3: ADVISORY VOTE TO APPROVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
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•
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Perquisites are limited to auto allowances and reimbursement of certain life and disability or long-term care insurance premiums, and limited other benefits as discussed on page 29.
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Effects of Advisory Vote
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PROPOSAL 4: ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON SAY ON PAY
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•
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every year
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•
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every two (2) years; or
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•
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every three (3) years.
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Background on Proposal
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Effects of Advisory Vote
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SECURITY OWNERSHIP BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
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•
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each Meritage director and nominee for director;
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•
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each executive officer named in the summary compensation table; and
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•
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all Meritage directors and executive officers as a group.
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Name Of
Beneficial Owner
(1)
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Position With The
Company
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Number
Of Shares
Owned
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Right To
Acquire By
May 14,
2017
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Total Shares
Beneficially
Owned
(2)
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Percent Of
Outstanding
Shares
(3)
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Steven J. Hilton
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Director, Chairman and CEO
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1,599,219
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(4)
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—
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1,599,219
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4.0
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%
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Robert G. Sarver
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Director
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208,659
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(5)
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—
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208,659
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*
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Raymond Oppel
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Director
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61,000
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—
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61,000
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*
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Peter L. Ax
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Director
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51,000
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—
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51,000
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*
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Richard T. Burke, Sr.
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Director
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63,500
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—
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63,500
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*
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Gerald Haddock
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Director
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60,500
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(6)
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—
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60,500
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*
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Dana Bradford
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Director
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49,000
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—
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49,000
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*
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Michael R. Odell
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Director
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30,000
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—
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30,000
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*
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Deb Henretta
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Director
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4,167
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—
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4,167
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*
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Hilla Sferruzza
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Executive Vice President and
Chief Financial Officer
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13,757
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—
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13,757
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*
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C. Timothy White
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Executive Vice President,
General Counsel and Secretary
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49,978
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(7)
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—
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49,978
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*
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Phillippe Lord
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Executive Vice President and Chief Operating Officer
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4,714
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—
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4,714
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*
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Javier Feliciano
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Executive Vice President and Chief Human Resources Officer
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2,325
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—
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2,325
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*
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Larry W. Seay
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Former Executive Vice President and Chief Financial Officer
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76,367
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—
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76,367
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|
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*
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All current directors and executive officers as a group (14 persons)
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2,274,186
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—
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2,274,186
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5.6
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%
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(1)
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The address for our directors and executive officers is c/o Meritage Homes Corporation, 8800 East Raintree Drive, Suite 300, Scottsdale, Arizona 85260.
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(2)
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The amounts shown include the shares of common stock actually owned as of March 23,
2017
, and the shares that the person or group had the right to acquire within 60 days of that date. The number of shares includes shares of common stock owned by other related individuals and entities over whose shares of common stock such person has custody, voting control or the power of disposition. As of March 23, 2017, there were no outstanding options for any of our NEOs or Board members as we no longer award stock options as part of equity compensation program.
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(3)
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Based on
40,313,842
shares outstanding as of
March 23, 2017
.
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(4)
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Shares are held by family trusts. As of March 23,
2017
, Mr. Hilton had 900,000 shares pledged to a third-party lending institution, 350,000 of which are securing loans. Our pledging policy is discussed on page 22 of this proxy statement.
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(5)
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Shares are held by family trusts (6,000 shares Penny Sarver—wife; 2,000 shares Penny Sarver FBO Max Sarver—minor son; 8,170 shares Robert Sarver—trustee of Eva Lauren Hilton Trust; 8,170 shares Robert Sarver—trustee of Shari Rachel Hilton Trust; 184,319 shares Robert Sarver—trustee of Robert Sarver Trust). Mr. Sarver has expressly disclaimed any beneficial ownership of the shares held by the trusts for the benefit of Mr. Hilton’s children (Eva Lauren Hilton Trust and Shari Rachel Hilton trust). Mr. Sarver had 119,819 shares pledged to a third party lending institution as of March 23,
2017
. None of these shares secured loans in 2016. Our pledging policy is discussed on page 22 of this proxy statement.
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(6)
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Includes 15,000 shares held by charities on which Mr. Haddock serves as a board member and has authority to make investment decisions on behalf of. These holdings are with The Haddock Center (10,000 shares), and the Haddock Foundation (5,000 shares). Mr. Haddock has expressly disclaimed beneficial ownership of these shares.
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(7)
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11,500 shares are held by a family trust.
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SECURITY OWNERSHIP BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
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Shares Beneficially Owned
|
||||
Name of Other Beneficial Owners
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Address Of Beneficial Owner
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Number
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Percent
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FMR, LLC
(1)
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245 Summer Street, Boston, MA 02210
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6,003,680
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15.0
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%
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BlackRock, Inc.
(2)
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55 East 52
nd
Street, New York, NY 10055
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4,974,270
|
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12.4
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%
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Sanders Capital, LLC
(3)
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390 Park Avenue, 17th Floor, New York, NY 10022
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3,646,119
|
|
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9.2
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%
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Dimensional Fund Advisors, LP
(4)
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6300 Bee Cave Road, Austin, TX 78746
|
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3,381,923
|
|
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8.4
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%
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The Vanguard Group
(5)
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100 Vanguard Boulevard, Malvern, PA 19355
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3,131,675
|
|
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7.8
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%
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(1)
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Based solely on a Schedule 13G/A filed with the SEC on February 14, 2017, FMR, LLC has sole dispositive power with respect to 6,003,680 shares.
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(2)
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Based solely on a Schedule 13G/A filed with the SEC on January 12, 2017, BlackRock, Inc. and certain affiliated entities have sole voting power with respect to 4,889,497 shares and sole dispositive power with respect to 4,974,270 shares.
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(3)
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Based solely on a Schedule 13G filed with the SEC on February 1, 2017, Sanders Capital, LLC has sole voting power with respect to 1,513,011 shares and sole dispositive power with respect to 3,646,119 shares.
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(4)
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Based solely on a Schedule 13G filed with the SEC on February 9, 2017, Dimensional Fund Advisors, LP has sole voting power with respect to 3,276,134 shares and sole dispositive power with respect to 3,381,923 shares.
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(5)
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Based solely on a Schedule 13G/A filed with the SEC on February 10, 2017, The Vanguard Group has sole voting power with respect to 47,531 shares, shared voting power with respect to 4,872 shares, sole dispositive power with respect to 3,081,268 shares and shared dispositive power with respect to 50,407 shares.
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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
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Role of the Board of Directors
|
Corporate Governance Principles and Practices
|
•
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director qualifications,
|
•
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independence criteria,
|
•
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director responsibilities,
|
•
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committee responsibilities and structure,
|
•
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officer and director stock ownership requirements,
|
•
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director resignation policy,
|
•
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director access to officers and employees,
|
•
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our philosophy with respect to director compensation,
|
•
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Board evaluation process,
|
•
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confidentiality requirements,
|
•
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director orientation and continuing education, and
|
•
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our plans with respect to management succession.
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Director Qualifications and Diversity
|
•
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management or board experience in a wide variety of enterprises and organizations,
|
•
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banking and capital markets and finance,
|
•
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accounting,
|
•
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legal and regulatory,
|
•
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real estate, including homebuilding, commercial and land development,
|
•
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sales and marketing, and
|
•
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operations.
|
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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
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Steven J. Hilton, 55
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Mr. Hilton has been the Company’s chairman and chief executive officer since May 2006. Mr. Hilton was the co-chairman and co-chief executive officer of Meritage Homes Corporation from 1996 to May 2006. In 1985, Mr. Hilton co-founded Arizona-based Monterey Homes, the predecessor company to Meritage Homes Corporation. Under Mr. Hilton’s leadership, Monterey became publicly traded in 1996. Mr. Hilton received his Bachelor of Science degree in accounting from the University of Arizona and is a director of Western Alliance Bancorporation (a NYSE listed company), a leading bank holding company based in Phoenix, Arizona.
Mr. Hilton has more than 30 years of real estate experience and is considered an expert and innovator in the homebuilding industry. He is a frequent participant in panels and interviews regarding the industry.
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Raymond Oppel, 60
|
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Mr. Oppel has been a director since December 1997. Mr. Oppel is a licensed real estate broker and currently is active as a private investor in real estate development. He was the co-founder, chairman and chief executive officer of The Oppel Jenkins Group, a regional homebuilder in Texas and New Mexico, which was purchased in 1995 by public homebuilder KB Home.
Mr. Oppel has almost 30 years of experience in the homebuilding business. Mr. Oppel possesses extensive knowledge about the real estate industry in general and the homebuilding industry in particular.
|
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Richard T. Burke, Sr., 74
|
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Mr. Burke has been a director since September 2004. Mr. Burke is currently the Chairman of the Board of Directors of UnitedHealth Group, which he founded, took public in 1984 and served as chief executive officer as well. From 1995 until 2001, Mr. Burke was the owner and chief executive officer of the Phoenix Coyotes, a National Hockey League team and has served as a director for a number of other companies, both public and private. Mr. Burke previously served as a director for First Cash Financial Services, Inc., a position from which he resigned within the past five years.
Mr. Burke is a business and civic leader in Phoenix, Arizona, and his experience as the chairman and CEO of a multi-billion dollar public company provides the Board with outstanding corporate governance and financial insight.
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Dana C. Bradford, 52
|
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Mr. Bradford has been a director since August 2009. Mr. Bradford is Executive Chairman of Waitt Brands, a diversified consumer brands company. From 2005 to 2012, Mr. Bradford was the president and managing partner of McCarthy Capital Corporation, a private equity firm. He also serves as a director on the boards of Southwest Value Partners, a San Diego-based real estate company and Customer Service Profiles, an Omaha-based provider of customer satisfaction data and analytics. Mr. Bradford formerly served as chairman of the board of SAFE Boats International, a Seattle-based manufacturer of defense and emergency response boats and Vornado Air, a Wichita-based consumer brands company and formerly served as a director on the boards of Ballantyne, NRG Media, Guild Mortgage and Gold Circle Films.
Mr. Bradford earned a bachelor’s degree in business administration from the University of Arizona and an MBA from Creighton University. Mr. Bradford brings additional perspective to the Board relating to real estate and corporate finance matters.
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Deb Henretta, 55
|
|
Ms. Henretta was appointed as a director in March 2016.
Ms. Henretta retired from the Proctor & Gamble, Co. ("P&G") in 2015. Throughout her 30 years at P&G, she held various senior positions throughout several sectors, serving as Group President of Global e-Commerce, which included serving as Head of Global Beauty Care; Division President of Global Baby/Toddler & Adult Care; and Division Vice President of Fabric Conditioners and Bleach. She has been a director at Corning, Inc. since 2013, at Nisource Inc. since 2015 and at Staples,Inc. since 2016.
Ms. Henretta graduated summa cum laude from St. Bonaventure University with a BA in communications in 1983. She earned her MA in advertising research and teaching assistantship from Syracuse University Newhouse School of Public Communications in 1985.
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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
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Peter L. Ax, 57
|
|
Mr. Ax has been a director since September 2000 and is the Company's lead director. He is the managing partner of Phoenix Capital Management, an operationally focused venture capital firm. Mr. Ax is the former chairman and chief executive officer of SpinCycle, Inc., a public reporting consolidator and developer of coin-operated laundromats. Previously, Mr. Ax served as head of the Private Equity Division and senior vice president of Lehman Brothers in New York and has served in various operating roles for enterprises operated by Phoenix Capital Management. Mr. Ax is also on the board of directors of iGo, Inc. (formerly, NASDAQ: IGOI) and serves on the Advisory Board of Directors of Cascadia Capital, a Seattle-based investment banking and merchant banking firm, and also serves annually as a judge in the Wharton Entrepreneurship Business Plan Competition.
Mr. Ax holds an MBA from the Wharton School at the University of Pennsylvania, a J.D. from the University of Arizona, and a B.S.B.A. from the University of Arizona, and has been a certified public accountant. Mr. Ax possesses extensive skills and experience relating to, among other things, capital markets and corporate finance.
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Robert G. Sarver, 55
|
|
Mr. Sarver has been a director since December 1996. He is the chairman and chief executive officer of Western Alliance Bancorporation and the managing partner of the Phoenix Suns NBA basketball team. From 1995 to 1998, he served as chairman of Grossmont Bank. He was the chairman and chief executive officer of California Bank & Trust from 1998 to 2001. Mr. Sarver earned a bachelor’s degree in business administration from the University of Arizona and has been a certified public accountant.
Mr. Sarver has been active in the real estate industry for more than 30 years and is known nationwide as a leader and expert in banking. He has extensive experience in a wide spectrum of successful real-estate activities, including commercial, residential and development projects.
|
|
||
Gerald Haddock, 69
|
|
Mr. Haddock has been a director since January 2005. Mr. Haddock is the founder of Haddock Enterprises, LLC and formerly served as president and Chief Executive Officer of Crescent Real Estate Equities, a diversified real estate investment trust. He is currently a director of ENSCO International, Plc., a leading global offshore oil and gas drilling service company. As a director for ENSCO, he has served as its co-lead director and Chairperson of the Audit Committee and is also a member of the Nominating & Governance Committee. From December 2004 to October 2008, Mr. Haddock served as a Board Member of Cano Petroleum, Inc. He also serves on the board of trustees and is a member of various committees for the Baylor College of Medicine (2011 to 2015), the Executive Investment Committee at Baylor University, the M.D. Anderson Proton Therapy Education and Research Foundation, and the CEELI Institute.
Mr. Haddock received his Bachelor of business administration and Juris Doctorate degrees from Baylor University. He also received a Masters of Law in Taxation degree from New York University and an MBA degree from Dallas Baptist University.
|
|
||
Michael R. Odell, 53
|
|
Mr. Odell has been a director since December 2011. He is president and Chief Executive Officer of MAIHO III LLC, a holding company for investments in the automotive aftermarket. In 2015 and 2016, he served as president of Eastern Auto Parts Warehouse, an automotive parts distributor. From 2008 through 2014, he served as president, Chief Executive Officer and board member of The Pep Boys - Manny, Moe & Jack, a NYSE-listed
Fortune 1000
company and the nation’s leading automotive aftermarket service and retail chain. Mr. Odell joined Pep Boys in 2007 as Chief Operating Officer. Previously, he served as executive vice president and general manager of Sears Retail & Specialty Stores, a $26 billion division of Sears Holdings Corporation.
Mr. Odell started his career as a CPA with Deloitte & Touche LLP. Mr. Odell holds an M.B.A. from Northwestern University's Kellogg School of Management, and a B.S. in Accounting from the University of Denver's Daniels College of Business. Mr. Odell has deep service, retail and distribution experience, with a broad background in strategic planning, leadership, operations and finance.
|
|
|
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
|
Director Independence
|
Board Leadership Structure
|
CEO and Management Succession
|
|
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
|
Risk Oversight
|
•
|
Our Audit Committee is responsible for reviewing and analyzing significant financial and operational risks and how management is managing and mitigating such risks through its internal controls and risk management processes. Our VP of Internal Audit reports directly to the Audit Committee and provides routine updates on the progress and findings of the department's on-going internal audit reviews. Our external auditors also have at least quarterly discussions with our Audit Committee, and meet both with and without Company management present, to highlight what they perceive as our key financial risks. Our Audit Committee plays an important role in approving our internal controls monitoring and is regularly engaged in discussions with management regarding business risks, operational risks, transactional risks and financial risks.
|
•
|
Our Executive Compensation Committee oversees risks relating to the compensation and incentives provided to our senior executive officers. The Executive Compensation Committee negotiates and approves all of the employment agreements of our NEOs and the Committee approves all grants of equity awards to all of our eligible employees.
|
•
|
Only Independent Directors sit on our governance Committees to provide greater Director participation in key policy decisions. Although it is not a requirement that members of our Land Committee are independent, currently all members are independent directors.
|
The Board and Board Committees
|
•
|
Audit Committee
|
•
|
Executive Compensation Committee
|
•
|
Nominating/Governance Committee
|
•
|
Land Committee
|
|
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
|
Board of Directors
|
|
Audit Committee
|
|
Executive
Compensation
Committee
|
|
Nominating/
Governance
Committee
|
|
Land
Committee
|
Steven J. Hilton*
|
|
|
|
|
|
|
|
|
Peter L. Ax +
|
|
|
|
|
|
×
|
|
×
|
Raymond Oppel
|
|
|
|
|
|
|
|
×
|
Richard T. Burke, Sr.
|
|
×
|
|
|
|
|
|
|
Gerald Haddock
|
|
|
|
|
|
|
|
×
|
Dana Bradford
|
|
×
|
|
×
|
|
|
|
×
|
Michael R. Odell
|
|
|
|
×
|
|
|
|
|
Robert G. Sarver
|
|
|
|
|
|
|
|
|
Deb Henretta
|
|
|
|
|
|
×
|
|
|
Number of Meetings
|
|
7
|
|
5
|
|
4
|
|
19
|
*
|
=
|
Chairman of the Board
|
×
|
=
|
Member
|
|
=
|
Committee Chair
|
+
|
=
|
Lead Independent Director
|
•
|
fulfilling its oversight of the integrity of our financial statements,
|
•
|
overseeing our compliance with legal and regulatory requirements,
|
•
|
determining our independent registered public accounting firm’s qualifications and independence,
|
•
|
evaluating the performance of our internal audit function and independent registered public accounting firm, and
|
•
|
reviewing and approving any related party transaction between the Company and senior executive officers and directors.
|
•
|
reviewing and approving goals and objectives relative to the compensation of our NEOs, evaluating our NEOs’ performance in light of these goals and approving the compensation of our NEOs,
|
•
|
reviewing and incorporating stockholder preferences with respect to compensation agreements with our NEOs,
|
|
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
|
•
|
overseeing all equity-based award grants,
|
•
|
making recommendations to the Board of Directors with regard to non-NEO compensation and equity-based awards, and
|
•
|
producing a report on executive compensation to be included in our annual proxy statement.
|
•
|
developing director qualifications and determining whether newly elected directors or prospective director candidates meet those qualifications,
|
•
|
identifying individuals qualified to become Board members and recommending director nominees for the next annual meeting of stockholders,
|
•
|
considering recommendations for director nominations received from stockholders,
|
•
|
reviewing and recommending changes as needed to the Company’s Corporate Governance Principles and Practices,
|
•
|
addressing such items as management succession, including policies and principles for our CEO selection and performance review and succession in the event of an emergency or departure of the CEO,
|
•
|
reviewing the charters of the Compensation Committee, Audit Committee and Nominating/Governance Committee and any other committees,
|
•
|
assessing and monitoring, with Board involvement, the Board’s performance,
|
•
|
recommending nominees for the Compensation Committee, Audit Committee, Nominating/Governance Committee, and Land Committee, and
|
•
|
promoting adherence to a high standard of corporate governance and Company values.
|
|
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
|
|
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
|
Code of Ethics
|
Communications with the Board of Directors
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
•
|
Steven J. Hilton, Chairman and Chief Executive Officer
|
•
|
Hilla Sferruzza, Executive Vice President, Chief Financial Officer *
|
•
|
C. Timothy White, Executive Vice President, General Counsel and Secretary
|
•
|
Phillippe Lord, Executive Vice President, Chief Operating Officer
|
•
|
Javier Feliciano, Executive Vice President, Chief Human Resources Officer
|
•
|
Larry W. Seay, former Executive Vice President, Chief Financial Officer *
|
*
|
Mr. Seay retired on March 31, 2016, and Ms. Sferruzza was appointed Executive Vice President, Chief Financial Officer on April 1, 2016.
|
2016 Environment
|
Executive Summary
|
•
|
Grew total home closing revenue to $3.0 billion in
2016
, up 19% over 2015.
|
•
|
Generated 15% year-over-year diluted EPS growth with full year 2016 diluted EPS of $3.55.
|
•
|
Successfully opened our first LiVE.NOW. communities targeted to the growing number of first-time buyers looking for affordable home ownership that offers a product beyond the typical entry-level home.
|
•
|
Surpassed a historic milestone with the closing of our 100,000th home.
|
•
|
Increased our lots under control by 7% to 29,815 lots at December 31, 2016 from prior year.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
•
|
Maintained our net debt-to-capital ratio within our target of the low-to-mid 40% range, reporting 41.2% at December 31, 2016.
|
*
|
Before deduction of CEO total compensation (as reflected in the Summary Compensation Table).
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Compensation Philosophy and Objectives
|
•
|
0.4 times to 2.5 times our revenues, and
|
•
|
0.25 times to 4.0 times our market capitalization.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
l
|
|
Beazer Homes USA
|
|
l
|
|
M.D.C. Holdings
|
l
|
|
CalAtlantic Group
|
|
l
|
|
Taylor Morrison Home
|
l
|
|
Hovnanian Enterprises
|
|
l
|
|
Toll Brothers
|
l
|
|
KB Home
|
|
l
|
|
TRI Pointe
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Compensation Best Practices
|
WE DO
|
|
WE DO NOT
|
||||
a
|
|
Pay for performance by requiring
a significant portion of the total compensation of our NEOs be determined based on performance tied to strategic objectives.
|
|
r
|
|
Provide perquisites for our NEOs other than those limited to auto allowance, reimbursement of certain insurance premiums and other limited benefits.
|
a
|
|
Have executive Stock Ownership Requirements in place set at a multiplier of base salary.
|
|
r
|
|
Reprice or replace stock options and other equity awards.
|
a
|
|
Have a clawback policy for our NEOs requiring the recoupment of incentive bonuses in the event of a restatement of financial results resulting from willful misconduct or gross negligence of the applicable NEO.
|
|
r
|
|
Allow hedging.
|
a
|
|
Engage a compensation consultant to provide an update on current compensation trends and to provide recommendations on our NEOs’ current compensation packages.
|
|
r
|
|
Allow pledging, subject to certain limited grandfather provisions.
|
a
|
|
Double trigger cash severance based upon a change-in-control of the Company.
|
|
r
|
|
Provide tax gross-ups applicable to change-in-control and severance payments.
|
*
|
Represents average for current NEOs other than the CEO.
|
**
|
Includes fair value of performance share awards (at target level) and actual non-equity incentive plan compensation.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Independent Compensation Consultant
|
Compensation Program
|
•
|
Alignment with key outcomes of our business strategies;
|
•
|
Appropriate balance of short- and long-term incentive award opportunity;
|
•
|
Provision of market-competitive total compensation opportunity within our industry and peer group;
|
•
|
Appropriate alignment with our stockholders by delivering a significant percentage of total compensation opportunity through equity;
|
•
|
Setting total compensation package where a significant percentage of total compensation is at risk;
|
•
|
Transparency in the communication of plan design and performance goals to enhance understanding; and
|
•
|
Adherence to sound governance practices, including the prudent management of compensation risk.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Security Ownership Requirements
|
•
|
Directors, three times annual director fees (exclusive of committee or lead director fees),
|
•
|
CEO, ten times base salary, and
|
•
|
COO, CFO, CHRO and General Counsel, two times base salary.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Equity-Based Awards
|
•
|
All equity-based awards must be approved by the Compensation Committee.
|
•
|
All equity-based grants will be approved at formal meetings (including telephonic) of the Compensation Committee.
|
•
|
The grant date of such awards will be the date of the meeting (or a specified date shortly after the meeting).
|
•
|
The customary annual equity-based grant shall be approved at a regularly scheduled meeting of the Compensation Committee during the first part of the year, but generally after the annual earnings release. We believe that coordinating the main annual award grant after our annual earnings release will generally result in this grant being made at a time when the public is in possession of all material information about us.
|
•
|
The customary annual grant (including performance-based grants) to executive officers and directors shall generally occur approximately at the same time as the customary annual grant to other employees.
|
•
|
The Company shall not intentionally grant equity-based awards before the anticipated announcement of materially favorable news or delay the grant of equity-based awards until after the announcement of materially unfavorable news.
|
•
|
The Compensation Committee will approve equity-based grants only for persons specifically identified at the meeting by management.
|
Employment Agreements in Effect for 2016
|
|
|
Named Executive Officer
|
||||||||||||||||||||||
|
|
Steven J. Hilton
|
|
Hilla Sferruzza
(1)
|
|
C. TImothy White
|
|
Phillippe Lord
(2)
|
|
Javier Feliciano
|
|
Larry W. Seay
(3)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Base Salary
|
|
$
|
1,000,000
|
|
|
$
|
425,000
|
|
|
$
|
525,000
|
|
|
$
|
550,000
|
|
|
$
|
320,000
|
|
|
$
|
600,000
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
1.
|
EBITDA as adjusted for specific and pre-determined items (adjusted EBITDA);
|
2.
|
Number of home closings; and
|
3.
|
Customer satisfaction rating as determined by our third party rating agency.
|
•
|
A threshold level of achievement below which no incentives will paid;
|
•
|
A target range level of achievement (e.g. between the threshold and maximum) associated with a market-competitive incentive award; and
|
•
|
A maximum level of achievement above which incentives will not increase (payout ceiling).
|
|
|
Below
Threshold
|
|
Threshold
|
|
Intermediate (Goal)
|
|
Target
(1)
|
|
Maximum
|
|
|||||
Adjusted EBITDA and Number of Home Closings
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Performance (as % of Goal)
|
|
<90%
|
|
|
90
|
%
|
|
100
|
%
|
|
110
|
%
|
|
115
|
%
|
|
Payout as % of Target
|
|
—
|
%
|
|
25
|
%
|
|
50
|
%
|
|
100
|
%
|
|
200
|
%
|
(2) (3)
|
|
|
Below
Threshold
|
|
Threshold
|
|
Intermediate
|
|
Target
(Goal)
(1)
|
|
Maximum
|
|
|||||
Customer Satisfaction Rating
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Performance (as % of Goal)
|
|
<88%
|
|
|
88
|
%
|
|
94
|
%
|
|
100
|
%
|
|
113
|
%
|
|
Payout as % of Target
|
|
—
|
%
|
|
25
|
%
|
|
50
|
%
|
|
100
|
%
|
|
200
|
%
|
(2) (3)
|
(3)
|
The target 2016 payout for Mr. Seay was 25% of his target annual bonus of $600,000 reflecting a prorated portion based on his March 31, 2016 retirement date.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
1.
|
Achievement of a targeted earnings per share (“EPS”) goal;
|
2.
|
Three-year total shareholder return (“TSR”) relative to our TSR peer group (as defined under the caption "—Compensation Philosophies and Objectives — Compensation Peer Group "); and
|
3.
|
Achievement of a targeted return on asset (“ROA”) goal.
|
•
|
A threshold level of achievement below which no incentives will paid;
|
•
|
A target range level of achievement (e.g. between the threshold and maximum) associated with a market-competitive incentive award; and
|
•
|
A maximum level of achievement above which incentives will not increase (payout ceiling).
|
|
|
Below
Threshold
|
|
Threshold
|
|
Target
(1)
(Goal)
|
|
High Target
|
|
Maximum
|
||||
EPS (40%)
|
|
|
|
|
|
|
|
|
|
|
||||
Performance as % of Goal
|
|
<90%
|
|
|
90
|
%
|
|
100
|
%
|
|
110
|
%
|
|
115% or Greater
|
Shares Awarded as % of Target
|
|
—
|
|
|
50
|
%
|
|
100
|
%
|
|
125
|
%
|
|
150%
|
ROA (30%)
|
|
|
|
|
|
|
|
|
|
|
||||
Performance as % of Goal
|
|
<90%
|
|
|
90
|
%
|
|
100
|
%
|
|
110
|
%
|
|
115% or Greater
|
Shares Awarded as % of Target
|
|
—
|
|
|
50
|
%
|
|
100
|
%
|
|
125
|
%
|
|
150%
|
Relative TSR (30%)
|
|
|
|
|
|
|
|
|
|
|
||||
Peer Group Percentile
|
|
<40%
|
|
|
40
|
%
|
|
50
|
%
|
|
65
|
%
|
|
80% or Greater
|
Shares Awarded as % of Target
|
|
—
|
%
|
|
50
|
%
|
|
100
|
%
|
|
125
|
%
|
|
150%
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Discussion of NEO Compensation
|
|
|
Named Executive Officer
|
||||||||||||||||||||||
|
|
Steven J. Hilton
|
|
Hilla Sferruzza
(1)
|
|
C. Timothy White
|
|
Phillippe Lord
|
|
Javier Feliciano
|
|
Larry W. Seay
(1)
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Base Salary
|
|
$
|
1,000,000
|
|
|
$
|
425,000
|
|
|
$
|
525,000
|
|
|
$
|
550,000
|
|
|
$
|
320,000
|
|
|
$
|
600,000
|
|
(1)
|
Mr. Seay retired on March 31, 2016 and Ms. Sferruzza was appointed as CFO on April 1, 2016. Amounts in the table above represent their annual salary per their respective employment agreements.
|
Name and Principal Position
|
|
Approximate Award Fair Value
(at Target level) ($)
|
|
Threshold
(Shares) (#)
|
|
Target
(Shares) (#)
(1)
|
|
Maximum
(Shares) (#)
|
|||||
Steven J. Hilton, Chairman and CEO
|
|
$
|
1,000,000
|
|
|
14,539
|
|
|
29,078
|
|
|
43,617
|
|
Hilla Sferruzza, EVP and CFO
|
|
$
|
318,750
|
|
|
4,635
|
|
|
9,269
|
|
|
13,904
|
|
C. Timothy White, EVP, General Counsel and Secretary
|
|
$
|
425,000
|
|
|
6,179
|
|
|
12,358
|
|
|
18,537
|
|
Phillippe Lord, EVP and COO
|
|
$
|
550,000
|
|
|
7,997
|
|
|
15,993
|
|
|
23,990
|
|
(1)
|
Number of shares based on a grant price of $34.39, the closing stock price on the date of grant for Mr. Hilton, Ms. Sferruzza and Messrs. White and Lord.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
Named Executive Officer
|
|
||||||||||||||
Actual Results
|
|
Steven J. Hilton
|
|
Hilla Sferruzza
|
|
C. Timothy White
|
|
Phillippe Lord
|
|
Larry W. Seay
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA (in millions) (60%)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Actual Results
|
|
$298,069
|
|
$298,069
|
|
$298,069
|
|
$298,069
|
|
$298,069
|
|
||||||
Goal
|
≥
|
$264,453
|
|
$264,453
|
|
$264,453
|
|
$264,453
|
|
$264,453
|
|
||||||
Target Bonus $
|
|
$1,500,000
|
|
$191,250
|
(2)
|
|
$360,000
|
|
$600,000
|
|
$90,000
|
(3)
|
|||||
NEO Payout %
(1)
|
|
154.2
|
%
|
|
154.2
|
%
|
|
154.2
|
%
|
|
135.2
|
%
|
|
154.2
|
%
|
|
|
NEO Payout $
|
|
$2,313,457
|
|
$294,965
|
|
$555,230
|
|
$811,499
|
|
$138,807
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Number of Home Closings (30%)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Actual Results
|
|
7,355
|
|
|
7,355
|
|
|
7,355
|
|
|
7,355
|
|
|
7,355
|
|
|
|
Goal
|
≥
|
6,359
|
|
|
6,359
|
|
|
6,359
|
|
|
6,359
|
|
|
6,359
|
|
|
|
Target Bonus $
|
|
$750,000
|
|
$95,625
|
(2)
|
|
$180,000
|
|
$300,000
|
|
$45,000
|
(3)
|
|||||
NEO Payout %
(1)
|
|
200.0
|
%
|
|
200.0
|
%
|
|
200.0
|
%
|
|
165.0
|
%
|
|
200.0
|
%
|
|
|
NEO Payout $
|
|
$1,500,000
|
|
$191,250
|
|
$360,000
|
|
$495,000
|
|
$90,000
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Customer Satisfaction Rating (10%)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Actual Results
|
|
88.9
|
|
|
88.9
|
|
|
88.9
|
|
|
88.9
|
|
|
88.9
|
|
|
|
Target
|
≥
|
80.0
|
|
|
80.0
|
|
|
80.0
|
|
|
80.0
|
|
|
80.0
|
|
|
|
Target Bonus $
|
|
$250,000
|
|
$31,875
|
(2)
|
|
$60,000
|
|
$100,000
|
|
$15,000
|
(3)
|
|||||
NEO Payout %
(1)
|
|
189.0
|
%
|
|
189.0
|
%
|
|
189.0
|
%
|
|
157.9
|
%
|
|
189.0
|
%
|
|
|
NEO Payout $
|
|
$472,500
|
|
$60,244
|
|
$113,400
|
|
$157,850
|
|
$28,350
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total NEO Payout $
|
|
$4,285,957
|
|
$546,459
|
(4
|
)
|
$1,028,630
|
|
$1,464,349
|
|
$257,157
|
|
(1)
|
See the table provided on page 31 of this proxy statement for additional information related to the payout percentages as they relate to the targets.
|
(2)
|
Amount reflects a prorated 75% of the target bonus for each metric related to Ms. Sferruzza's promotion to CFO effective April 1, 2016.
|
(3)
|
Amount reflects a prorated 25% of the target bonus for each metric related to Mr. Seay's retirement as CFO effective March 31, 2016.
|
(4)
|
This amount reflects Ms. Sferruzza's incentive compensation as it related to her position as CFO. In addition to this, Ms. Sferruzza received a discretionary bonus as described below.
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
2017 Developments
|
Executive Officer
|
|
Base Salary
|
|
Target Annual Cash Incentive Bonus
|
|
Payout Range as % of Target Bonus
|
Hilla Sferruzza
|
|
$525,000
|
|
$525,000
|
|
0% - 200%
|
Phillippe Lord
|
|
$550,000
|
|
$1,100,000
|
|
0% - 150%
|
Javier Feliciano
|
|
$320,000
|
|
$200,000
|
|
0% - 133%
|
Executive Officer
|
|
Target Dollar Value of Performance-Based Restricted Stock Unit Award
|
|
Target Dollar Value of Performance Share Award
(1)
|
Hilla Sferruzza
|
|
$393,750
|
|
$393,750
|
Phillippe Lord
|
|
$625,000
|
|
$625,000
|
Javier Feliciano
|
|
$184,000
|
|
$184,000
|
(1)
|
The number of shares payable will be an amount ranging from 0% - 150% of the target number of shares awarded, depending on the level of achievement of each of the specified performance goals.
|
|
|
Below
Threshold
|
|
Threshold
|
|
Intermediate (Goal)
|
|
Target
|
|
Stretch Target (Maximum)
|
|||||
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|||||
Performance (as % of Goal)
|
|
<90%
|
|
|
90
|
%
|
|
100
|
%
|
|
107.7
|
%
|
|
114.9
|
%
|
Payout as % of Target
|
|
—
|
%
|
|
25
|
%
|
|
50
|
%
|
|
100
|
%
|
|
(1)
|
|
Number of Home Closings
|
|
|
|
|
|
|
|
|
|
|
|||||
Performance (as % of Goal)
|
|
<90%
|
|
|
90
|
%
|
|
100
|
%
|
|
107.7
|
%
|
|
112.8
|
%
|
Payout as % of Target
|
|
—
|
%
|
|
25
|
%
|
|
50
|
%
|
|
100
|
%
|
|
(1)
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
Below
Threshold
|
|
Threshold
|
|
Intermediate
(Goal)
|
|
Target
|
|
Stretch Target (Maximum)
|
||||
EPS
|
|
|
|
|
|
|
|
|
|
|
||||
Performance as % of Goal
|
|
<90%
|
|
|
90
|
%
|
|
100
|
%
|
|
107.7
|
%
|
|
114.9% or Greater
|
Shares Awarded as % of Target
|
|
—
|
%
|
|
50
|
%
|
|
100
|
%
|
|
125
|
%
|
|
150%
|
ROA
|
|
|
|
|
|
|
|
|
|
|
||||
Performance as % of Goal
|
|
<90%
|
|
|
90
|
%
|
|
100
|
%
|
|
107.7
|
%
|
|
112.8% or Greater
|
Shares Awarded as % of Target
|
|
—
|
%
|
|
50
|
%
|
|
100
|
%
|
|
125
|
%
|
|
150%
|
Relative TSR
|
|
|
|
|
|
|
|
|
|
|
||||
Peer Group Percentile
|
|
<40%
|
|
|
40
|
%
|
|
50
|
%
|
|
65
|
%
|
|
80% or Greater
|
Shares Awarded as % of Target
|
|
—
|
%
|
|
50
|
%
|
|
100
|
%
|
|
125
|
%
|
|
150%
|
|
|
|
|
|
|
|
EXECUTIVE COMPENSATION COMMITTEE REPORT
|
|
THE EXECUTIVE COMPENSATION COMMITTEE
|
|
Raymond Oppel—Chair
Dana Bradford
Michael R. Odell
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($
) (2)
|
|
Stock
Awards
($)
(3)
|
|
Non-Equity
Incentive Plan
Compensation
($)
(4)
|
|
All
Other
Compensation
($)
(5)
|
|
Total
($)
|
||||||
Steven J. Hilton,
|
|
2016
|
|
1,000,000
|
|
|
—
|
|
|
2,034,964
|
|
|
4,285,957
|
|
|
36,814
|
|
|
7,357,735
|
|
Chairman and CEO
(1)
|
|
2015
|
|
1,000,000
|
|
|
—
|
|
|
2,026,861
|
|
|
2,470,185
|
|
|
34,072
|
|
|
5,531,118
|
|
|
|
2014
|
|
1,000,000
|
|
|
—
|
|
|
2,026,507
|
|
|
4,477,378
|
|
|
36,687
|
|
|
7,540,572
|
|
Hilla Sferruzza, *
|
|
2016
|
|
389,562
|
|
|
74,375
|
|
|
648,674
|
|
|
546,459
|
|
|
43,808
|
|
|
1,702,878
|
|
EVP and CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
C. Timothy White,
|
|
2016
|
|
525,000
|
|
|
—
|
|
|
864,848
|
|
|
1,028,630
|
|
|
55,753
|
|
|
2,474,231
|
|
EVP, General Counsel
|
|
2015
|
|
525,000
|
|
|
—
|
|
|
861,371
|
|
|
592,844
|
|
|
52,409
|
|
|
2,031,624
|
|
and Secretary
|
|
2014
|
|
525,000
|
|
|
—
|
|
|
861,243
|
|
|
1,074,571
|
|
|
53,985
|
|
|
2,514,799
|
|
Phillippe Lord, **
|
|
2016
|
|
550,000
|
|
|
—
|
|
|
1,119,239
|
|
|
1,464,349
|
|
|
54,894
|
|
|
3,188,482
|
|
EVP and COO
|
|
2015
|
|
437,500
|
|
|
100,000
|
|
|
683,680
|
|
|
789,604
|
|
|
46,807
|
|
|
2,057,591
|
|
Javier Feliciano, **
|
|
2016
|
|
320,000
|
|
|
160,000
|
|
|
—
|
|
|
—
|
|
|
24,364
|
|
|
504,364
|
|
EVP and CHRO
|
|
2015
|
|
46,667
|
|
(6)
|
75,000
|
|
|
353,300
|
|
|
—
|
|
|
1,219
|
|
|
476,186
|
|
Larry W. Seay,
|
|
2016
|
|
150,000
|
|
(7)
|
—
|
|
|
—
|
|
|
257,157
|
|
|
110,301
|
|
|
517,458
|
|
Former EVP and CFO
|
|
2015
|
|
600,000
|
|
|
—
|
|
|
912,044
|
|
|
592,844
|
|
|
54,041
|
|
|
2,158,929
|
|
|
|
2014
|
|
600,000
|
|
|
—
|
|
|
911,885
|
|
|
1,074,571
|
|
|
62,248
|
|
|
2,648,704
|
|
*
|
Ms. Sferruzza was not an NEO in 2015 or 2014.
|
**
|
Mr. Lord and Mr. Feliciano were not NEOs in 2014.
|
(1)
|
All compensation is for Mr. Hilton’s services in his capacity as the Chairman and Chief Executive Officer of the Company. Mr. Hilton did not receive any separate compensation for his services as a director.
|
(2)
|
Amounts represent discretionary bonuses awarded to the respective executive officers.
|
(3)
|
The non-vested share (restricted stock and restricted stock unit) grants have a fair value equal to the closing price of our stock on the date of the grant, in accordance with the requirements of Accounting Standards Codification Subtopic (“ASC”) 718. For the TSR portion of performance-based shares, fair value is equal to the valuation from the third party Monte Carlo analysis prepared in conjunction with the grants. Balance includes all restricted stock and restricted stock units awards granted in the year to our NEOs and not the prorated share of all unvested grants in prior years that vested in the current year. See Note 10 “Stock Based and Deferred Compensation” of our Consolidated Financial Statements included in our
2016
Annual Report on Form 10-K for discussion of assumptions used for computing the fair value of awards granted. For the performance-based share award components included in this column, the amounts represent the grant-date fair value assuming all three performance measures are achieved at the target level of performance (i.e., total shareholder return, targeted cumulative EPS, and targeted average return on assets). The grant date fair value at the maximum performance level for the performance share awards in 2016 is $1,552,459, $494,867, $659,787 and $853,859 for Mr. Hilton, Ms. Sferruzza and Messrs. White and Lord, respectively. Additional detail is also provided in the “Grant of Plan-Based Awards” table.
|
(4)
|
Non-equity plan compensation earned in 2014, 2015 and
2016
was paid subsequent to each respective year-end. For Mr. Lord, included in the 2015 amount is $112,500 in performance related incentive compensation associated with his previous role as Region President. Also for Mr. Lord, excluded from the 2015 and 2016 amounts is $205,126 for deferred incentive compensation from an incentive bonus earned by Mr. Lord in his role as Region President in 2014 that was paid in equal amounts in 2015 and 2016.
|
(5)
|
See the following table for more detail.
|
(6)
|
Reflects partial year payments as Mr. Feliciano's employment with the Company commenced in November 2015.
|
(7)
|
Reflects base salary paid through date of retirement, March 31, 2016.
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
Name
|
|
Health and
Insurance
Premiums
($)
(1)
|
|
401(k)
Match
($)
|
|
Car
Allowance
($)
|
|
Other
($)
(2)
|
|
Total All Other
Compensation
($)
|
|||||
Steven J. Hilton
|
|
30,454
|
|
|
6,360
|
|
|
—
|
|
|
—
|
|
|
36,814
|
|
Hilla Sferruzza
|
|
36,441
|
|
|
5,325
|
|
|
—
|
|
|
2,042
|
|
|
43,808
|
|
C. Timothy White
|
|
33,160
|
|
|
6,360
|
|
|
14,400
|
|
|
1,833
|
|
|
55,753
|
|
Phillippe Lord
|
|
31,871
|
|
|
6,360
|
|
|
14,400
|
|
|
2,263
|
|
|
54,894
|
|
Javier Feliciano
|
|
16,774
|
|
|
5,120
|
|
|
—
|
|
|
2,470
|
|
|
24,364
|
|
Larry W. Seay
|
|
3,422
|
|
|
6,360
|
|
|
3,600
|
|
|
96,919
|
|
|
110,301
|
|
(1)
|
Includes: (i) employer portion of benefits provided to all employees and (ii) life and disability insurance premiums as contemplated in each NEO’s employment agreement if such elections were made.
|
(2)
|
Other represents the income gross-up to reflect tax consequences of spousal travel for Ms. Sferruzza and Messrs. White, Lord and Feliciano and paid time off payout for Mr. Seay resulting from his retirement.
|
|
Grant Date
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(1)
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
(3)
|
All Other
Stock
Awards:
Number of
Shares of
Stock or Units
(#)
(3)
|
Grant Date
Fair Value
of Stock and
Option Awards
($)
(4)
|
||||||||||||
Name
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|||||||||||
Steven J Hilton, Chairman and CEO
|
3/4/2016
|
|
|
|
—
|
|
—
|
|
—
|
|
29,078
|
|
999,992
|
|
|||
3/4/2016
|
|
|
|
14,539
|
|
29,078
|
|
43,617
|
|
—
|
|
1,034,972
|
|
||||
|
625,000
|
|
2,500,000
|
|
5,000,000
|
|
|
|
|
|
|
||||||
Hilla Sferruzza,
EVP and CFO
(2)
|
3/4/2016
|
|
|
|
—
|
|
—
|
|
—
|
|
9,269
|
|
318,761
|
|
|||
3/4/2016
|
|
|
|
4,635
|
|
9,269
|
|
13,904
|
|
—
|
|
329,913
|
|
||||
|
79,688
|
|
318,750
|
|
637,500
|
|
|
|
|
|
|
||||||
C. Timothy White, EVP, General Counsel and Secretary
|
3/4/2016
|
|
|
|
—
|
|
—
|
|
—
|
|
12,358
|
|
424,992
|
|
|||
3/4/2016
|
|
|
|
6,179
|
|
12,358
|
|
18,537
|
|
—
|
|
439,856
|
|
||||
|
150,000
|
|
600,000
|
|
1,200,000
|
|
|
|
|
|
|
||||||
Phillippe Lord, EVP and COO
|
3/4/2016
|
|
|
|
—
|
|
—
|
|
—
|
|
15,993
|
|
549,999
|
|
|||
3/4/2016
|
|
|
|
7,997
|
|
15,993
|
|
23,990
|
|
—
|
|
569,240
|
|
||||
|
250,000
|
|
1,000,000
|
|
1,650,000
|
|
|
|
|
|
|
||||||
Larry W. Seay,
Former EVP and CFO
(5)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
37,500
|
|
150,000
|
|
300,000
|
|
|
|
|
|
|
(1)
|
Actual non-equity incentive plan payouts for 2016 are discussed in the section under the caption —"Discussion of NEO Compensation".
|
(2)
|
Ms. Sferruzza's non-equity incentive plan award in 2016 was pro-rated 75% in connection with her effective date of April 1, 2016 as an executive officer.
|
(3)
|
Equity awards granted in 2016 have a three-year cliff vest, subject in the case of performance share awards, to achievement of established performance metrics.
|
(4)
|
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 all three performance measures are achieved at the target level of performance. Grant date fair value for the TSR portion of awards is based on a Monte-Carlo model to assess fair value as of the date of grant. Grant date fair value for the EPS and ROA awards is calculated as of the closing stock price on the date of grant.
|
(5)
|
Mr. Seay's non-equity incentive plan award in 2016 was pro-rated 25% in connection with his retirement effective March 31, 2016.
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
|
|
Stock Awards
|
||||||||||||
|
|
|
|
|
|
Equity Incentive Plan Awards
|
||||||||
Name
|
|
Number
of Shares
or Units
of Stock
that Have
Not
Vested
|
|
Market
Value of
Shares of
Units of
Stock
that
Have Not
Vested
(9)
|
|
Number of
Unearned
Shares, Units or
Other Rights
that Have Not
Vested
(#)
(7) (8)
|
|
Market or
Payout Value
of Unearned
Shares, Units or
Other Rights
that Have
Not
Vested
($)
(9)
|
||||||
Steven J Hilton, Chairman and CEO
|
|
93,759
|
|
(1) (4)
|
$
|
3,262,813
|
|
|
47,132
|
|
|
$
|
1,640,194
|
|
Hilla Sferruzza, EVP and CFO
|
|
23,045
|
|
(2) (4)
|
$
|
801,966
|
|
|
7,106
|
|
|
$
|
247,289
|
|
C. Timothy White,
EVP, General Counsel and Secretary
|
|
39,847
|
|
(3) (4)
|
$
|
1,386,676
|
|
|
20,030
|
|
|
$
|
697,044
|
|
Phillippe Lord, EVP and COO
|
|
35,824
|
|
(4) (5)
|
$
|
1,246,675
|
|
|
19,458
|
|
|
$
|
677,138
|
|
Javier Feliciano, EVP and CHRO
|
|
6,666
|
|
(6)
|
$
|
231,977
|
|
|
—
|
|
|
$
|
—
|
|
Larry W. Seay, Former EVP and CFO
|
|
3,858
|
|
(4)
|
$
|
134,258
|
|
|
11,177
|
|
|
$
|
388,960
|
|
(1)
|
Remaining unvested shares vest: 21,930 in February 2017, 24,839 in February 2018 and 29,078 in March 2019. See also Note (4) below.
|
(2)
|
Remaining unvested shares vest: 4,320 in February 2017, 3,120 in February 2018, 2,160 in February 2019, 9,269 in March 2019, and 1,200 in February 2020.
|
(3)
|
Remaining unvested shares vest: 9,320 in February 2017, 10,556 in February 2018 and 12,358 in March 2019. See also Note (4) below.
|
(4)
|
Includes performance-based shares that satisfied performance criteria as of December 31, 2016 and vested in February 2017. These shares include 8,575 for Mr. Hilton, and 3,645 and 3,858 each for Messrs. White and Seay, respectively. Includes performance-based shares that satisfied performance criteria as of December 31, 2016 and will vest in March 2019. These shares include 9,337 for Mr. Hilton, 2,976 for Ms. Sferruzza and 3,968 and 5,135 for Messrs. White and Lord, respectively.
|
(5)
|
Remaining unvested shares vest: 3,900 in February 2017, 2,400 in February 2018, 7,196 in March 2018, 1,200 in February 2019 and 15,993 in March 2019.
|
(6)
|
Unvested shares for Mr. Feliciano vest in equal annual installments over two years in November 2017 and November 2018.
|
(7)
|
Represents performance-based shares that vest 24,839 in February 2018 and 22,293 in March 2019 for Mr. Hilton. For Ms. Sferruzza, represents performance-based shares that vest as follows: 7,106 in March 2019. For Mr. White, represents performance-based shares that vest as follows: 10,556 in February 2018 and 9,474 in March 2019. For Mr. Lord, amount includes 7,196 performance-based shares that vest in March 2018 and 12,262 that vest in March 2019. For Mr. Seay, represents performance-based shares that vest as follows: 11,177 in February 2018. The vesting of all shares is subject first to the satisfaction of specific performance criteria. See additional discussion regarding these performance share awards in footnotes 3 and 4 in the 2016 Grants of Plan-Based Awards table included in this proxy statement.
|
(8)
|
Excludes performance-based shares scheduled to vest in February 2017 that were forfeited as of December 31, 2016 due to failure to meet performance criteria. Forfeited shares include 13,355 for Mr. Hilton and 5,675 and 6,010 each for Messrs. White and Seay, respectively.
|
(9)
|
Computed as the number of shares or units of stock that have not yet vested multiplied by the closing price of the Company’s stock on
December 30, 2016
of $34.80.
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
|
|
Stock Awards
|
|||||
Name
|
|
Number of Shares Acquired on Vesting (#)
(4)
|
|
Value Realized on Vesting ($)
|
|||
Steven J Hilton, Chairman and CEO
|
|
41,666
|
|
|
$
|
1,292,479
|
|
Hilla Sferruzza, EVP and CFO
(1)
|
|
5,520
|
|
|
$
|
163,908
|
|
C. Timothy White, EVP, General Counsel and Secretary
|
|
20,833
|
|
|
$
|
646,240
|
|
Phillippe Lord, EVP and COO
(2)
|
|
5,100
|
|
|
$
|
153,363
|
|
Javier Felicano, EVP and CHRO
|
|
3,334
|
|
|
$
|
118,357
|
|
Larry W. Seay, Former EVP and CFO
(3)
|
|
41,878
|
|
|
$
|
1,413,540
|
|
(1)
|
Shares vested represent those granted to Ms. Sferruzza prior to her appointment as Chief Financial Officer
|
(2)
|
Shares vested represent those granted to Mr. Lord prior to his appointment as Chief Operating Officer.
|
(3)
|
Mr. Seay retired on March 31, 2016. The number of shares vested includes the accelerated vesting of 21,045 shares as outlined in his employment agreement.
|
(4)
|
In connection with the grant of their 2013 grants of restricted stock 25,000 restricted shares for Mr. Hilton and 12,500 shares each for Messrs. Seay and White vested in February 2016. In addition, performance shares vested in February 2016 as a result of exceeding the adjusted general and administrative expenses and customer satisfaction rating performance targets for awards granted in 2013, summarized as follows:
|
|
|
Named Executive Officer
|
|||||||||||
Actual Results (dollars in thousands)
|
|
Steven J. Hilton
|
|
C. Timothy White
|
|
Larry W. Seay
|
|
||||||
|
|
|
|
|
|
|
|
||||||
Adjusted Pre-Tax Income
|
|
|
|
|
|
|
|
||||||
Actuals
|
|
$
|
243,391
|
|
|
$
|
243,391
|
|
|
$
|
243,391
|
|
|
Target
|
≥
|
$
|
252,598
|
|
|
$
|
252,598
|
|
|
$
|
252,598
|
|
|
Shares Vested
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
Adjusted General & Administrative Expenses
|
|
|
|
|
|
|
|
||||||
Actuals
|
|
$
|
301,267
|
|
|
$
|
301,267
|
|
|
$
|
301,267
|
|
|
Target
|
≤
|
$
|
379,733
|
|
|
$
|
379,733
|
|
|
$
|
379,733
|
|
|
Shares Vested
|
|
8,333
|
|
|
4,167
|
|
|
4,167
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
Customer Satisfaction Rating
|
|
|
|
|
|
|
|
||||||
Actuals
|
|
89.50
|
|
|
89.50
|
|
|
89.50
|
|
|
|||
Target
|
≥
|
80.00
|
|
|
80.00
|
|
|
80.00
|
|
|
|||
Shares Vested
|
|
8,333
|
|
|
4,166
|
|
|
4,166
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
Total Shares Vested
(2)
|
|
16,666
|
|
|
8,333
|
|
|
8,333
|
|
|
(1)
|
The performance target for adjusted pre-tax income was not met, therefore no shares were awarded for this metric.
|
(2)
|
Ms. Sferruzza and Messrs. Lord and Feliciano had no performance-related shares vest in 2016.
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
Nonqualified Deferred Compensation Plans
|
Executive Officer
|
|
Executive Contributions in Last Fiscal Year ($)
(1)
|
|
Registrant Contributions in Last Fiscal Year ($)
(2)
|
|
Aggregate Earnings in Last Fiscal Year ($)
(3)
|
|
Aggregate Withdrawals/ Distributions ($)
|
|
Aggregate Balance at Last Fiscal Year End ($)
|
||||||||||
C. Timothy White, EVP, General Counsel and Secretary
|
|
$
|
296,422
|
|
|
$
|
—
|
|
|
$
|
71,872
|
|
|
$
|
—
|
|
|
$
|
893,242
|
|
Phillippe Lord, EVP and COO
(4)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
205,126
|
|
|
$
|
205,126
|
|
(1)
|
These amounts reflect compensation the NEOs earned in our 2015 and
2016
fiscal years that they have voluntarily deferred. For each identified NEO, all amounts reported as contributions in the last fiscal year are included as compensation earned in the Summary Compensation Table for 2015 and 2016. In addition, all of the amounts, exclusive of cumulative earnings/losses, reported in the aggregate balance at fiscal year were reported as compensation to the NEO in our Summary Compensation Table in 2016 and prior years.
|
(2)
|
Meritage does not provide matching contributions.
|
(3)
|
These amounts do not include any above-market or preferential earnings. Accordingly, these amounts are not reported in the Summary Compensation Table.
|
(4)
|
Mr. Lord is not a participant in the non-qualified deferred compensation plan. Amounts reflected in the table for Mr. Lord reflect deferred incentive compensation from an incentive bonus earned by Mr. Lord in his role as Region President in 2014, prior to being promoted to Executive Vice President and Chief Operating Officer. The balance at December 31, 2016 was paid out in full to Mr. Lord in February 2017.
|
Potential Payments upon Termination or Change of Control Summary
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
Employment Agreements
—
Severance Benefits
|
|
Voluntary Resignation by Officer Without Good Reason
|
Voluntary Resignation by Officer With Good Reason
(1) (4)
|
Termination by the Company Without Cause
(1) (4)
|
Termination by the Company With Cause
|
Death or Disability
|
Retirement
(1) (2)
|
Base salary and paid time off through date of termination
|
X
|
X
|
X
|
X
|
X
|
X
|
Annual cash incentive awards, performance share awards and restricted stock unit awards earned in a previous year but not yet paid
|
X
|
X
|
X
|
X
|
X
|
X
|
Pro-rata annual cash incentive bonus for period in which termination occurs
|
|
X
|
X
|
|
|
X
|
Target bonus for the performance period in which the termination occurs
|
|
|
|
|
X
|
|
Certain previously granted time based awards and restricted stock units that are outstanding shall immediately vest and become unrestricted
|
|
X
|
X
|
|
X
|
X
|
Performance shares awarded shall be delivered and shall continue to vest subject to achievement of specified performance goals
|
|
X
|
X
|
|
|
X
|
Previously granted performance share awards that have not vested will immediately vest and become unrestricted following the end of the applicable performance period based on actual performance achieved
|
|
X
|
X
|
|
|
X
|
Target number of previously granted performance share awards that have not vested will immediately vest and become unrestricted
|
|
|
|
|
X
|
|
Any outstanding stock options shall vest and remain exercisable for the remainder of the original term
|
|
X
|
X
|
|
X
|
X
|
Payment for health coverage equal to 150% of monthly COBRA premium
|
|
X
|
X
|
|
X
|
|
Severance payment equal to the sum of (A) two times the executive officer’s base salary on the date of termination and (B) two times the higher of (x) the average of the bonus compensation paid to the executive officer for the two years prior to his termination of employment or (y) the annual bonus paid to the executive officer for the year preceding the date of termination
(3) (5)
|
|
X
|
X
|
|
|
|
(1)
|
Mr. Hilton shall render reasonable consulting services during the 24-month period following termination. Mr. White shall render reasonable consulting services during the 12-month period following termination.
|
(2)
|
In order to qualify for the above retirement termination benefits, in addition to any time restrictions as contemplated in each individual employment agreement, the executive must have completed 15 cumulative years as a named executive officer or member of the board. Messrs. Hilton and White have each satisfied the 15-year threshold.
|
(3)
|
In the case for Mr. White for termination without cause, the severance payment has a multiple of one in the calculation.
|
(4)
|
Mr. Hilton's severance payment may not be less than $5 million and may not exceed $10 million. Mr. White's severance payments may not exceed $2 million.
|
(5)
|
Bonus compensation is determined as the greater of (a) the actual bonus paid to executive or (b) the fair value on the date of grant of the shares of restricted stock, stock options and other equity-based awards that become vested in such year of termination.
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
|
Voluntary Resignation by Officer Without Good Reason
|
Voluntary Resignation by Officer With Good Reason
|
Termination by the Company Without Cause
(1)
|
Termination by the Company With Cause
|
Death or Disability
|
Base salary and paid time off through date of termination
|
X
|
X
|
X
|
X
|
X
|
Payment for health coverage equal to 150% of monthly COBRA premium
|
|
|
X
|
|
|
Severance payment equal to the sum of (a) executive's annual salary and (b) the higher of (x) the average of the bonus compensation paid to the executive officer for the two years prior to his or her termination of employment or (y) the annual bonus paid to the executive officer for the year preceding the date of termination
|
|
|
X
|
|
|
(1)
|
In no event shall the sum of the total amount due exceed $2,000,000.
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
Change of Control Agreements
—
Severance Benefits
|
•
|
For Mr. Hilton, the severance payment is equal to the sum of (i) three times the higher of (x) Mr. Hilton’s annual base salary on the date of termination or (y) his base salary on the date preceding the Change of Control and (ii) three times the highest of (x) Mr. Hilton’s average annual incentive compensation* for the two years prior to termination of employment or (y) his annual incentive compensation* for the year preceding the year in which the Change of Control occurred. The severance payment for Mr. Hilton in the event of a Change of Control may not exceed $15 million.
|
•
|
For Mr. White, the severance payment is equal to the sum of (i) two times the higher of (x) the executive’s annual base salary on the date of termination or (y) the executive’ base salary on the date preceding the Change of Control and (ii) two times the highest of (x) the executive’s average annual incentive compensation* for the two years prior to termination of employment or (y) the executive’s annual incentive compensation* for the year preceding the year in which the Change of Control occurred. The severance payments for Mr. White in the event of a Change of Control may not exceed $6 million.
|
•
|
For Mr. Lord and Ms. Sferruzza, the payment is equal to the sum of: (a) annual base salary through the date of termination; (b) the higher of (x) average annual cash incentive bonus paid for the two years prior to termination of employment or (y) his or her annual cash incentive bonus paid in the year preceding termination and (c) 150% of the monthly COBRA premium payable for coverage in effect on date of termination under the Company’s health plan for 18 months. In no event shall the sum of the above amount due exceed $2 million with respect to each officer.
|
•
|
For Messrs. Hilton and White, any restricted stock, options and other equity-based awards shall become immediately accelerated and fully vested and exercisable and all restrictions on restricted stock awards shall immediately lapse.
|
*
|
Incentive compensation is determined as the sum of (a) the actual incentive compensation paid to executive and (b) the fair value on the date of grant of the shares of restricted stock, stock options and other equity-based awards that become vested in such year of termination.
|
Other Matters Regarding the Employment Agreements and Change of Control Agreements
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
Executive Officer
(1)
|
|
Voluntary Termination by Executive Without Good Reason
(2)
|
|
Voluntary Termination by Executive With Good Reason
(1)(2)(3)
|
|
Termination By Company Without Cause
(1)(2)(3)
|
|
Death or Disability
(1)(2)
|
|
Retirement
(2)
|
|
Change of Control
(1)(2)
|
||||||||||||
Steven J. Hilton
|
|
$
|
—
|
|
|
$
|
18,174,866
|
|
|
$
|
18,174,866
|
|
|
$
|
7,441,346
|
|
|
$
|
9,188,964
|
|
|
$
|
19,983,866
|
|
Hilla Sferruzza
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
668,072
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
668,072
|
|
C. Timothy White
|
|
$
|
—
|
|
|
$
|
5,151,246
|
|
|
$
|
4,509,953
|
|
|
$
|
2,722,616
|
|
|
$
|
3,112,350
|
|
|
$
|
6,197,918
|
|
Phillippe Lord
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,685,028
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,685,028
|
|
Larry W. Seay
(4)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,781,521
|
|
|
$
|
—
|
|
(1)
|
Mr. Feliciano's employment arrangement in effect for 2016 does not provide for severance or change-in-control benefits.
|
(2)
|
The actual expense that would be recognized by the Company in the event of a severance event may differ materially from the numbers presented in the table above as a result of the required computation in accordance with generally accepted accounting principles for stock compensation expense.
|
(3)
|
The amounts presented include cash bonuses earned for fiscal 2016, but not paid as of
December 31, 2016
. In addition to the table above, the amount of bonuses earned and not paid are presented separately as 2016 compensation in the Summary Compensation table on page 39.
|
(4)
|
Mr. Seay retired effective March 31, 2016. Pursuant to Mr. Seay’s employment agreement, he was eligible to receive the following payments and benefits in connection with his retirement: (i) pro-rata annual cash incentive bonus for 2016 earned through the date of termination and paid in February 2017, (ii) accelerated vesting of time-based restricted stock units (iii) continued vesting, subject to the achievement of defined performance targets, of outstanding performance share awards and (iv) the payment of any accrued paid time off balance. The amount shown above reflects $864,220 of actual benefits paid on his retirement date associated with accelerated vesting of 21,045 shares of time-based restricted stock units valued as of the closing price of the Company's common stock on March 31, 2016 and the payment of his accrued paid time off balance. The amount also includes $917,301 of future performance-based payments comprised of 1) $150,000 related to his pro-rated annual cash incentive bonus for 2016 (at target level) and the estimated vesting of 21,045 shares of outstanding performance share awards (at target level) valued at the closing price of the Company's common stock on March 31, 2016. Of the 21,045 shares, 3,858 shares vested on 2/12/17 and 6,010 shares were forfeited as a result of the Company not achieving certain performance targets. The remaining 11,177 shares reflect the target number of shares that are scheduled to vest in February 2018, subject to the achievement of defined performance targets. The actual pro-rata annual cash incentive bonus paid to Mr. Seay is included in the Summary Compensation Table for Mr. Seay in the column titled “Non-Equity Incentive Plan Compensation” and the payment of his paid time off balance is included in the column titled “Other Compensation.” The restricted stock units and performance share awards were reported as compensation to Mr. Seay in the Summary Compensation Table in prior periods.
|
Director Compensation
|
Name
|
|
Fees Earned or Paid in Cash ($)
(1)
|
|
Stock Awards ($)
(2)
|
|
Total ($)
|
|||
Robert G. Sarver
|
|
50,000
|
|
|
155,100
|
|
|
205,100
|
|
Raymond Oppel
|
|
80,000
|
|
|
155,100
|
|
|
235,100
|
|
Peter L. Ax
|
|
125,000
|
|
|
155,100
|
|
|
280,100
|
|
Richard T. Burke, Sr.
|
|
70,000
|
|
|
155,100
|
|
|
225,100
|
|
Gerald Haddock
|
|
80,000
|
|
|
155,100
|
|
|
235,100
|
|
Dana Bradford
|
|
75,000
|
|
|
155,100
|
|
|
230,100
|
|
Michael R. Odell
|
|
70,000
|
|
|
155,100
|
|
|
225,100
|
|
Deb Henretta
(3)
|
|
45,000
|
|
|
141,678
|
|
|
186,678
|
|
(1)
|
Committee and chair fees are paid to directors on a quarterly basis.
|
(2)
|
See Note 10 “Stock Based and Deferred Compensation” of our Consolidated Financial Statements included in our 2016 Annual Report on Form 10-K for discussion of the assumptions used for computing the fair value of awards granted. As required, the calculation is equal to the fair value of the award multiplied by the total number of awards granted in
2016
, not the proportionate share of all existing unvested awards that vested in the current year.
|
|
COMPENSATION OF OFFICERS AND DIRECTORS
|
(3)
|
Ms. Henretta was appointed to the Board of Directors on March 7, 2016 and accordingly received a prorated amount of $45,000 in retainer and committee fees during 2016. Ms. Henretta also received a prorated stock award valued at $141,678 in 2016, which vested on March 10, 2017.
|
(4)
|
We reimburse directors for out-of-pocket expenses incurred in attending Board and committee meetings and we also reimburse certain directors for charter aircraft service or other travel and lodging-related expenses.
During
2016
, we made reimbursements of approximately $6,000, $4,000, $4,000, $3,000, $2,000 and $1,000 to Messrs. Oppel, Bradford, Ms. Henretta, Messrs. Odell, Ax and Haddock, respectively.
|
(5)
|
The following represents the total number of unvested shares of restricted stock at December 31, 2016 for each non-employee director: 15,000 for Messrs. Sarver, Oppel, Ax, Burke, Haddock, Bradford and Odell and 4,167 for Ms. Henretta.
|
|
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
|
Plan Category
|
|
(a)
Number of Shares to
be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(1)
|
|
(b)
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(2)
|
|
(c)
Number of Securities Remaining
Available for Future Issuance
under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
(3)
|
||
Equity compensation plans approved by stockholders
|
|
1,147,271
|
|
|
N/A
|
|
1,752,775
|
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
N/A
|
|
—
|
|
Total
|
|
1,147,271
|
|
|
N/A
|
|
1,752,775
|
|
(1)
|
Balance includes 962,303 time-based restricted stock awards and units, and 184,968 performance share awards (at target level).
|
(2)
|
The outstanding equity awards are time based restricted stock awards and units and performance share awards which don't have an exercise price.
|
(3)
|
The number of securities remaining available for issuance is comprised of shares under our Plan as defined in our annual report on Form 10-K. In addition to stock options, stock appreciation rights and performance share awards, the Plan allows for the grant of restricted stock shares and restricted stock units. Under the Plan, awards other than stock options and stock appreciation rights are counted against the shares available for grant as 1.38 shares for every one share issued in connection with such awards.
|
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Air Charter Services
|
|
$
|
754
|
|
|
$
|
695
|
|
|
$
|
598
|
|
|
|
As of December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
ICS
|
|
$
|
—
|
|
|
$
|
100,100
|
|
|
$
|
1
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Interest Earned
|
|
$
|
48
|
|
|
$
|
137
|
|
|
$
|
430
|
|
|
INDEPENDENT AUDITORS
|
|
|
2016
|
|
2015
|
||||
Audit fees
(1)
|
|
$
|
1,151,500
|
|
|
$
|
1,140,700
|
|
Audit-related fees
|
|
—
|
|
|
—
|
|
||
Audit and audit-related fees
|
|
$
|
1,151,500
|
|
|
$
|
1,140,700
|
|
Tax fees
|
|
—
|
|
|
—
|
|
||
All other fees
|
|
—
|
|
|
—
|
|
||
Total fees
|
|
$
|
1,151,500
|
|
|
$
|
1,140,700
|
|
(1)
|
Audit fees consisted principally of fees for audit and review services, and approximately $26
,500 a
nd $51,000 in 2016 and 2015, respectively, for services related to various SEC comfort letters provided in connection with securities offerings, expert consents provided in connection with SEC filings and other transactions.
|
|
REPORT OF THE AUDIT COMMITTEE
|
|
|
|
THE AUDIT COMMITTEE
|
|
|
|
Peter L. Ax—Chair
Richard T. Burke Sr.
Dana Bradford
|
|
STOCKHOLDER PROPOSALS, DIRECTOR NOMINATIONS AND OTHER ITEMS OF BUSINESS
|
|
FORWARD-LOOKING STATEMENTS
|
|
ANNUAL REPORT ON FORM 10-K AND OTHER MATTERS
|
|
|
|
|
|||||||||||||||||||||||
|
NOTE: The conduct of any other business that may properly come before the meeting or any adjournment or postponement thereof.
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
I plan to attend the meeting
|
¨
|
|
||||||||||||||||
|
|
||||||||||||||||||||||
|
Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee, guardian, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
|
||||||||||||||||||||||
|
|||||||||||||||||||||||
|
Date:
|
|
|||||||||||||||||||||
|
|||||||||||||||||||||||
Signature
|
|||||||||||||||||||||||
|
|||||||||||||||||||||||
Signature (if held jointly)
|
|||||||||||||||||||||||
|
CONTROL NUMBER
|
|
|||||||||||||||||||||
|
|
CONTROL NUMBER
|
||||
|
||||
|
|
|
||
|
||||
PROXY VOTING INSTRUCTIONS
|
||||
|
||||
Please have your 11 digit control number ready when voting by Internet or Telephone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTERNET
|
|
|
|
TELEPHONE
|
|
|
|
MAIL
|
|
Vote Your Proxy on the Internet:
|
|
|
|
Vote Your Proxy by Phone:
|
|
|
|
Vote Your Proxy by Mail:
|
|
Go to
www.AALvote.com/MTH
|
|
|
|
Call 1 (866) 804-9616
|
|
|
|
|
|
Have your proxy card available
|
|
|
|
Use any touch-tone telephone to
|
|
|
|
Mark, sign, and date your proxy
|
|
when you access the above
|
|
|
|
vote your proxy. Have your proxy
|
|
|
|
card, then detach it, and return it
|
|
website. Follow the prompts to
|
|
|
|
card available when you call.
|
|
|
|
in the postage-paid envelope
|
|
vote your shares.
|
|
|
|
Follow the voting instructions to
|
|
|
|
provided.
|
|
|
|
|
|
vote your shares.
|
|
|
|
|
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