UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.     )
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Filed by a Party other than the Registrant ¨
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ý Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant tounder §240.14a-12

TOLL BROTHERS, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
ý No fee required.
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  (1) Title of each class of securities to which transaction applies:
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tollogoa04.jpg
TOLL BROTHERS, INC.
250 Gibraltar Road
Horsham, Pennsylvania 19044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on Tuesday, March 10, 2015

14, 2017
The 20152017 Annual Meeting of Stockholders (the “Meeting”) of Toll Brothers, Inc. (the “Company”) will be held on Tuesday, March 10, 201514, 2017 at 12:00 noon EDT, at the offices of the Company, 250 Gibraltar Road, Horsham, Pennsylvania 19044, for the following purposes:
1.To elect the tennine directors nominated by the Board of Directors of the Company (the “Board” or "Board of Directors") and named in the proxy statement to hold office until the 20162018 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified.
2.To ratify, in a non-binding vote, the re-appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 20152017 fiscal year.
3.To approve, in an advisory and non-binding vote, the compensation of the Company’s named executive officers as disclosed in the proxy statement.
4.To recommend, in an advisory and non-binding vote, whether a non-binding stockholder vote to approve the Toll Brothers, Inc. Senior Officer Bonus Plan.compensation of the Company’s named executive officers should occur every one, two, or three years.
5.To approve the Toll Brothers, Inc. Employee Stock Purchase Plan (2017).
6.To transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.
The Board has fixed the close of business on January 15, 201520, 2017 as the record date for the Meeting (the "Record Date"). Only stockholders of record at that time are entitled to notice of and to vote at the Meeting and any adjournment or postponement thereof.
The enclosed proxy card is solicited by the Board. Reference is made to the attached proxy statement for further information with respect to the business to be transacted at the Meeting. This proxy statement, our annual report, and the enclosed proxy card are first being sent to stockholders on or about February 9, 2015.2017. The Board urges you to sign, date, and return the enclosed proxy card promptly, although you are cordially invited to attend the Meeting in person. The return of the enclosed proxy card will not affect your right to vote in person if you do attend the Meeting.
Please note the admission policy and procedures regarding attendance at the Meeting, which are set forth on the next page.below.
By Order of the Board of Directors,
MICHAEL I. SNYDER
Secretary
January 30, 201531, 2017





IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER STOCKHOLDER MEETING TO BE HELD ON MARCH 10, 201514, 2017
The proxy statement and 20142016 Annual Report of Toll Brothers, Inc. are available at:
https:http://materials.proxyvote.com/889478astproxyportal.com/ast/12483
ANNUAL MEETING INFORMATION
The Meeting will be held at the Company’s offices at 250 Gibraltar Road, Horsham, Pennsylvania 19044 and will begin promptly at 12:00 noon EDT. Directions to the Meeting are available under “Directions”"Corporate Address" at www.tollcareercenter.com. You must present a valid photo identification to be admitted to the Meeting. Cameras (including cellular phones or personal digital assistants, or “PDAs”, with photographic capabilities), recording devices and other electronic devices, and the use of cellular phones or PDAs, will not be permitted at the Meeting. Representatives will be at the entrance to the Meeting, and these representatives will have the authority, on the Company’s behalf, to determine whether the admission policy and procedures have been followed and whether you will be granted admission to the Meeting.
Attendance at the Meeting is limited to stockholders, who may own shares directly in their names (“record holders”), or in “street name” by banks, brokerages, or other intermediaries (“beneficial holders”). In addition to photo identification, you must present evidence of ownership as of the Record Date, such as a letter from the bank, broker, or other intermediary confirming ownership, or the relevant portion of a bank or brokerage firm account statement. If you are the authorized representative of an entity that is a beneficial holder, you must present a letter from the entity certifying the beneficial ownership of the entity and your status as an authorized representative.
FOR RECORD HOLDERS:FOR BENEFICIAL HOLDERS:
If you plan to vote by proxy but attend the Meeting in person
1. Indicate your votes on your proxy card;
2. Mark the box on your proxy card indicating your intention to attend;
3. Return the proxy card to the address indicated therein; and
4. Follow all admissions policies set forth above.
If you plan to vote by proxy but attend the Meeting in person:
1. Indicate your votes on the voting instruction card;
2. Mark the box on the voting instruction card indicating your intention to attend;
3. Return the card to the address indicated therein; and
4. Follow all admissions policies set forth above.
If you plan to attend and vote at the Meeting:
1. Bring your proxy card with you to the Meeting;
2. Send written notice* of your intention to attend
       the Meeting to the Company's headquarters by February 27, 2015 to the attention of
       Michael I. Snyder, Secretary; and
3. Follow all admissions policies set forth above.
If you plan to attend and vote at the Meeting:
1. Contact your bank or broker to obtain a written
       legal proxy form in order to vote your shares at the Meeting; failure to obtain a legal proxy form from
       your bank or broker will prevent you from voting
       your shares at the Meeting;
2. Send written notice* of your intention to attend
       the Meeting to the Company's headquarters by
       February 27, 2015 to the attention of
       Michael I. Snyder, Secretary; and
3.    Follow all admissions policies set forth above.
FOR RECORD HOLDERS:FOR BENEFICIAL HOLDERS:
If you plan to vote by proxy but attend the Meeting
in person:
If you plan to vote by proxy but attend the Meeting
in person:
1.Indicate your votes on your proxy card;1.Indicate your votes on the voting instruction card;
2.Mark the box on your proxy card indicating your intention to attend;2.
Mark the box on the voting instruction card
indicating your intention to attend;
3.Return the proxy card to the address indicated therein; and3.Return the voting instruction card to the address indicated therein; and
4.Follow all admissions policies set forth above.4.Follow all admissions policies set forth above.
    
If you plan to attend and vote at the Meeting:If you plan to attend and vote at the Meeting:
1.Bring your proxy card with you to the Meeting;1.
Contact your bank or broker to obtain a written
legal proxy form in order to vote your shares at
the Meeting; failure to obtain a legal proxy form
from your bank or broker will prevent you from
voting your shares at the Meeting;
2.
Send written notice* of your intention to attend
the Meeting to the Company's headquarters by February 27, 2017 to the attention of Michael I. Snyder, Secretary; and
2.
Send written notice* of your intention to attend
the Meeting to the Company's headquarters by February 27, 2017 to the attention of Michael I. Snyder, Secretary; and
3.Follow all admissions policies set forth above.3.Follow all admissions policies set forth above.
         
*Written notice should include: (1) your name, complete mailing address and phone number, (2) if you are a beneficial holder, evidence of your ownership, and (3) if you are a beneficial holder who is not a natural person and will be naming a representative to attend on your behalf, the name, complete mailing address and phone number of that individual. If you do not provide the requested information by February 27, 2015,2017, please be prepared to show it at the entrance to the Meeting in order to gain admission. Failure to provide such information either in advance or at the Meeting may result in non-admission to the Meeting.





TABLE OF CONTENTS
 Page
Proxy Summary
1
General Information
3
Voting Securities and Beneficial Ownership
34
Security Ownership of Principal Stockholders and Management
45
Proposal One—Election of Directors
67
Board Membership Criteria
67
Our Director Nominees
68
Proposal Two—Ratification of the Re-Appointment of Independent Registered Public Accounting Firm
1011
Proposal Three—Advisory and Non-Binding Vote on Executive Compensation (Say on Pay)
1112
Proposal Four—Advisory and Non-Binding Vote on Frequency of Vote Regarding Executive Compensation (Say on Pay Frequency)
13
Proposal Five—Approval of the Toll Brothers, Inc. Senior Officer BonusEmployee Stock Purchase Plan (2017)
1214
Equity Compensation Plan Information
1516
Corporate Governance
1617
Corporate Governance Guidelines and Practices
1617
Committees of the Board and Meetings
1819
Risk Oversight
2122
Director Compensation
2223
Executive Compensation
2527
Compensation Discussion and Analysis
2527
Elements of Compensation
3235
Compensation Committee Report
4149
Executive Compensation Tables
4250
Audit and Risk Committee Report
5262
Section 16(a) Beneficial Ownership Reporting Compliance
5363
Certain Relationships and Transactions
5363
Stockholder Proposals for the 20162018 Annual Meeting of Stockholders
5464
Procedures for Recommending Candidates for Nomination to the Board of Directors
5465
Householding Information
5566
Solicitation of Proxies
5566
Annual Report on Form 10-K
5566
Other Business
5566
Annex A
A-1







TOLL BROTHERS, INC.
PROXY STATEMENT
Annual Meeting of Stockholders
Wednesday,Tuesday, March 10, 201514, 2017
PROXY SUMMARY
Highlights of certain information in this proxy statement are provided below. Please review the complete proxy statement and 20142016 annual report for Toll Brothers, Inc. (the “Company,” “we,” “us” or “our”) before you vote.
2014 Fiscal2016Performance Highlights
In determining fiscal 20142016 compensation for our named executive officers ("NEOs"), the Executive Compensation Committee of our Board of Directors (the "Compensation Committee") recognized that fiscal 2014 was a yearconsidered the contributions of significant progress in growingeach of our revenuesexecutive officers to the Company’s strategy to diversify our geographic footprint and profits. Among other things, thebroaden our platform of residential product lines. The Compensation Committee also considered Company performance in fiscal 2016 and paid particular attention to the Company'snotable areas of our performance and our management’s achievements in fiscal 2016 in the following areas for the fiscal year ended October 31, 2014:areas:
Revenues: Our revenues in fiscal 20142016 of $3.91$5.17 billion and home building deliveries of 5,3976,098 units rose 46%24% in dollars and 29%10% in units compared to fiscal 20132015 and were the highest for any fiscal year since fiscal 2007.
Income: Our pre-tax income improved to $504.6$589.0 million in fiscal 2014,2016, compared to pre-tax income of $267.7$535.6 million in fiscal 2013.2015. Impacting FY 2016’s pre-tax income, reported in cost of sales, were $13.8 million of inventory impairments and $125.6 million of warranty charges primarily related to older stucco homes. Fiscal 2015’s pre-tax income included $35.7 million of inventory impairments and a comparable $14.7 million warranty charge. We reported net income of $340.0$382.1 million in fiscal 2016, or $1.84$2.18 per share diluted, compared to net income of $170.6$363.2 million in fiscal 2013,2015, or $0.97$1.97 per share diluted.
Gross Margin: Our gross margin for fiscal 2014 was 21.2%, compared to 20.2% for fiscal 2013.diluted, a 10.7% increase in diluted earnings per share.
Contracts. : Our net signed contracts signed in fiscal 20142016 of $3.90$5.65 billion and 6,719 units rose 7%14% in dollars and 14% in units compared to fiscal 2013 and were the highest for any fiscal year since fiscal 2006.2015.
Backlog: Our fiscal year end 2014year-end 2016 backlog was $2.72$3.98 billion, up 3%14% compared to fiscal 2013 and was the highest for any fiscal year since 2007.
Selling, General and Administrative Expenses (“SG&A”): Our SG&A as a percentage of revenue improved to 11.1% compared to 12.7% for fiscal 2013.
Operating Margin: Our operating margin improved to 10.2% for fiscal 2014 from 7.5% for fiscal 2013.
Joint Venture and Other Income: In fiscal 2014, we produced $107.3 million in pre-tax income from our joint ventures, ancillary operations, and other sources, compared to $66.6 million in fiscal 2013.year-end 2015.
The Compensation Committee recognized management’s efforts in achieving the performance outcomes set forth above. Our “Compensation Discussion and Analysis” is on pages 2527 to 40,49, the “Compensation Committee Report” is on page 41,49, and our Summary Compensation Table and the other compensation tables and narrative discussion are on pages 4250 to 51.61.
Meeting Agenda Items
Proposal One—Election of Directors. We are asking stockholders to elect ten directors, each of whom is standing for re-electionnine director nominees to hold office until the 20162018 Annual Meeting of Stockholders and until his or her respective successor has been duly elected and qualified. The Board has nominated the nine current directors for election at the Annual Meeting. All of our current directors attended over 75% or more of the meetings of the Board and Board Committees on which they served.


Set forth below is certain summary information concerning our director nominees. For more information regarding the experience and qualifications of our directors, see “Proposal One—Election of Directors” on page 6.7.

1


NameAge
Director
Since
Principal OccupationIndependentAge
Director
Since
Principal OccupationIndependent
  
Robert I. Toll741986Executive Chairman of the Board of Directors, Toll Brothers, Inc. 761986Executive Chairman of the Board of Directors, Toll Brothers, Inc. 
Bruce E. Toll711986Vice Chairman of the Board of Directors, Toll Brothers, Inc. Principal, BET Investments 
Douglas C. Yearley, Jr.542010Chief Executive Officer, Toll Brothers, Inc. 562010Chief Executive Officer, Toll Brothers, Inc. 
Robert S. Blank741986
Co-Chairman & Co-CEO, Whitney Communications Company
Senior Partner, Whitcom Partners
ü
Edward G. Boehne742000Retired President, Federal Reserve Bank of Philadelphiaü762000Retired President, Federal Reserve Bank of Philadelphiaü
Richard J. Braemer731986Senior Counsel, Ballard Spahr LLPü751986Senior Counsel, Ballard Spahr LLPü
Christine N. Garvey692009
Retired Global Head of Corporate Real Estate Services, Deutsche
   Bank AG
ü712009
Retired Global Head of Corporate Real Estate Services,
  Deutsche Bank AG
ü
Carl B. Marbach731991President, Greater Marbach Airlines, Inc.ü751991President, Greater Marbach Airlines, Inc.ü
John A. McLean472016
Chief Executive Officer and Distribution Principal, Hartford
  Funds Distributors
ü
Stephen A. Novick742003Senior Advisor, The Andrea and Charles Bronfman Philanthropiesü762003Senior Advisor, Chasbro Investmentsü
Paul E. Shapiro731993Chairman, Q Capital Holdings LLCü751993Chairman, Q Capital Holdings LLCü
The Board of Directors recommends that you vote “FOR” all Nominees
Proposal Two—Ratification of the Re-Appointment of Independent Registered Public Accounting Firm. We are asking stockholders to ratify, in a non-binding vote, the re-appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm (“independent auditors”) for the fiscal year ending October 31, 2015. As part of its oversight of the Company’s relationship with our independent auditors, the Audit and Risk Committee reviews annually our independent auditors’ qualifications, performance, and independence. Based on the results of this review, the Audit and Risk Committee re-appointed Ernst & Young LLP to serve as the Company’s independent auditors for fiscal 2015.
2017. For more information regarding our engagement of Ernst & Young LLP, including the fees earnedbilled for services rendered by Ernst & Young LLP in fiscal 2014,2016 and fiscal 2015, see “Proposal Two—Ratification of the Re-Appointment of Independent Registered Public Accounting Firm” on page 10.11.
The Board of Directors recommends that you vote “FOR” Proposal Two
Proposal Three—Advisory and Non-Binding Vote on Executive Compensation (Say on Pay). As described on page 1112 under “Proposal Three—Advisory and Non-Binding Vote on Executive Compensation (Say on Pay),”" we are asking stockholders to approve, on an advisory basis, the compensation of our NEOs. We hold this advisory vote on an annual basis.
The Board of Directors recommends that you vote “FOR” Proposal Three
Proposal Four—Advisory and Non-Binding Vote on Frequency of Vote Regarding Executive Compensation (Say on Pay Frequency). As described on page 13 under “Proposal Four—Advisory and Non-Binding Vote on Frequency of Vote Regarding Executive Compensation (Say on Pay Frequency)," we are asking stockholders to cast an advisory vote on how often we should include a Say on Pay proposal in our proxy materials for future stockholder meetings. Stockholders may vote to recommend having the Say on Pay vote every year, every two years, or every three years.
The Board of Directors recommends that you vote to hold Say on Pay votes every ONE YEAR


Proposal Five—Approval of the Toll Brothers, Inc. Senior BonusEmployee Stock Purchase Plan (2017). WeAs described on page 14 under “Proposal Five—Approval of the Toll Brothers, Inc. Employee Stock Purchase Plan (2017),” we are asking stockholders to approve the Toll Brothers, Inc. Senior Officer BonusCompany’s Employee Stock Purchase Plan, (the "Senior Officer Plan")which is intended to provide a tax-deductible bonus program for those officers designated as participantsconvenient and practical means by which employees may participate in the Senior Officer Plan by the Compensation Committee. If approved by stockholders, the Senior Officer Plan will continue to be the method of awarding tax-deductible bonus compensation to our executive officers. If the Senior Officer Plan is not approved by stockholders, we would not be able to deduct cash incentive compensation payments after fiscal 2014 to any of our “covered employees” under Section 162(m)stock ownership of the Internal Revenue Code of 1986, as amended (the "Code") to the extent that such amounts, together with other compensation that does not qualify as performance-based compensation for purposes of Section 162(m), exceeds $1 million.
Company. For more information regarding the Senior OfficerEmployee Stock Purchase Plan, see “Proposal Four—Five—Approval of the Toll Brothers, Inc. Senior Officer Bonus Plan”Employee Stock Purchase Plan (2017)" on pages 1214 to 20.16.
The Board of Directors recommends that you vote “FOR” Proposal FourFive

2


GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Toll Brothers, Inc., a Delaware corporation, for use at the Meeting, which will be held on the date, at the time and place, and for the purposes set forth in the foregoing notice, and any adjournment or postponement thereof. The Board does not intend to bring any matter before the Meeting except as specifically indicated in the notice and does not know of anyone else who intends to do so; however, if any other matters properly come before the Meeting, Messrs.Mr. Robert I. Toll and Mr. Douglas C. Yearley, Jr., or either of them, will vote or otherwise act thereon in accordance with his or their judgment on such matters, acting as proxies for stockholders who have returned an executed proxy to us.
If the enclosed proxy card is properly executed and returned to and received by us prior to voting at the Meeting, the shares represented thereby will be voted in accordance with the instructions marked thereon. If the enclosed proxy card is properly executed, returned, and received by us prior to voting at the Meeting without specific instructions, Messrs.Mr. Robert I. Toll and Mr. Douglas C. Yearley, Jr., or either of them, acting as your proxies, will vote your shares “FOR” all nominees under Proposal One, to hold Say on Pay votes every "1 YEAR," and “FOR” each of the other proposals. Any proxy card may be revoked at any time before its exercise by notifying the Secretary of the Company in writing, by delivering a duly executed proxy card bearing a later date, or by attending the Meeting and voting in person.


VOTING SECURITIES AND BENEFICIAL OWNERSHIP
The Record Date fixed by our Board for the determination of stockholders entitled to notice of and to vote at the Meeting is January 15, 2015.20, 2017. At the close of business on the Record Date, there were 175,465,694162,464,448 shares of our common stock outstanding and eligible to vote at the Meeting. We have no other class of voting securities outstanding. At the Meeting, stockholders will be entitled to one vote for each share of common stock owned at the close of business on the Record Date.
The presence at the Meeting, in person or by proxy, of persons entitled to cast the votes of a majority of such outstanding shares of common stock will constitute a quorum for the proposals expected to be voted on at the Meeting. Abstentions and broker non-votes represented by submitted proxies will be included in the calculation of the number of the shares present at the Meeting for the purposes of determining a quorum. “Broker non-votes” are shares held of record by a broker that are not voted on a matter because the broker has not received voting instructions from the beneficial owner of the shares and lacks the authority to vote the shares in its discretion.
Under the New York Stock Exchange (“NYSE”)(NYSE) rules, your brokerage firm or other nominee may not vote your shares with respect to Proposals One, Three, or Four, and Five without specific instructions from you as to how to vote, because each of these proposals is not considered a “routine” matter under the NYSE rules. Proposal Two is considered a “routine” matter and therefore brokerage firms and nominees that are members of the NYSE are permitted to vote their customers’ shares if the customers have not furnished voting instructions prior to the Meeting. To elect directors and adopt the other proposals, the following votes are required under our governing documents and Delaware law:required:
       Effect of Broker Non-Votes and Abstentions/Withhold Votes
Proposal Vote Required 
Broker
Discretionary
Voting Allowed
 
Broker Non-
Votes
  Abstentions/ Withhold Votes
          
1.Election of Directors PluralityMajority of the votes cast No No effect  No effect
2.Ratification of Independent Auditors Majority of votes cast Yes Not applicable  No effect
3.
Advisory Say on
Pay Vote to Approve Executive Compensation
 Majority of votes cast No No effect  No effect
4.Advisory Say on Pay Frequency VotePlurality of votes castNoNo effectNo effect
5.Approval of the Toll Brothers, Inc. Senior Officer BonusEmployee Stock Purchase Plan (2017) Majority of votes cast No No effect Against

3



Security Ownership of Principal Stockholders and Management
The following table sets forthforth beneficial ownership, as of the Record Date, of our common stock by: (1) each person known to us to be the beneficial owner of more than 5% of our common stock; (2) each of our directors (which includes nominees for director) and NEOs; and (3) all of our directors and executive officers as a group. To the best of our knowledge, each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated.
Name of Beneficial Owner 
Amount and Nature of
Beneficial Ownership(1)
 
Percent of
Common Stock
 
Amount and Nature of
Beneficial Ownership (1)
 
Percent of
Common Stock
        
BlackRock, Inc. (2) 14,993,902
 8.55% 15,855,736
 9.76%
40 East 52nd Street
New York, New York 10022
        
Goldman Sachs Asset Management (3) 12,040,221
 6.86%
200 West Street,
New York, NY 10282
    
The Vanguard Group (4) 9,487,538
 5.41%
The Vanguard Group (3) 11,107,211
 6.84%
100 Vanguard Blvd.
Malvern, PA 19355
        
Robert I. Toll (5) 12,864,599
 7.25%
Robert I. Toll (4) 12,057,459
 7.37%
250 Gibraltar Road
Horsham, Pennsylvania 19044
        
Bruce E. Toll (6) 3,776,437
 2.15%
Robert S. Blank 121,849
 *
Edward G. Boehne 164,632
 *
 142,148
 *
Richard J. Braemer 269,440
 *
 204,756
 *
Christine N. Garvey 64,833
 *
 31,627
 *
Carl B. Marbach (7) 239,092
 *
Carl B. Marbach (5) 206,228
 *
John A. McLean 100
 *
Stephen A. Novick 127,882
 *
 106,398
 *
Paul E. Shapiro 250,530
 *
 228,549
 *
Douglas C. Yearley, Jr. 683,883
 *
 1,049,182
 *
Richard T. Hartman 200,075
 *
 287,757
 *
Martin P. Connor 120,836
 *
 202,955
 *
All directors and executive officers as a group (12 persons) (1)(8) 18,884,088
 10.54%
All directors and executive officers as a group (11 persons) (1) 14,517,159
 8.78%
        
*    Less than 1%
(1)Shares issuable pursuant to restricted stock units (“RSUs”) vesting and options exercisable within 60 days after the Record Date are deemed to be beneficially owned. Accordingly, the information presented above includes the following numbers of shares of common stock underlying RSUs and options held by the following individuals, and all directors and executive officers as a group: Mr. Robert I. Toll, 1,868,237 shares; Mr. Bruce E. Toll, 112,210 shares; Mr. Blank, 120,0571,195,661 shares; Mr. Boehne, 127,48298,981 shares; Mr. Braemer, 112,21086,883 shares; Ms. Garvey, 64,63328,582 shares; Mr. Marbach, 126,90699,679 shares; Mr. Novick, 126,48298,981 shares; Mr. Shapiro, 122,73296,231 shares; Mr. Yearley, 596,574851,263 shares; Mr. Hartman, 173,160237,609 shares; Mr. Connor, 116,726170,119 shares; and all directors and executive officers as a group, 3,667,4092,963,989 shares.
(2)BlackRock, Inc. (“BlackRock”) filed a Schedule 13G/A on January 22, 201527, 2017, which states that BlackRock has sole voting power with respect to 14,040,88014,862,920 shares and sole dispositive power with respect to 14,993,90215,855,736 shares. According to the Schedule 13G/A filed by BlackRock, various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares, and no one person’s interest in our common stock was more than 5% of the total outstanding common stock, as of the date the Schedule 13G/A was filed.
(3)Goldman Sachs Asset Management L.P. and GS Investment Strategies, LLCThe Vanguard Group ("GSAM"Vanguard") filed a Schedule 13G on February 13, 201410, 2016, which states that GSAMVanguard has sole dispositive power with respect to 10,932,171 shares, sole voting power with respect to 163,597 shares, shared dispositive power with respect to 175,040 shares, and shared voting power with respect to 11,966,167 shares and shared dispositive power with respect to 12,040,22115,800 shares. According to the Schedule 13G filed by GSAM,Vanguard, various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares, and no one person’s interest in our common stock was more than 5% of the total outstanding common stock, as of the date the Schedule 13G was filed.


(4)The Vanguard Group ("Vanguard") filed a Schedule 13G on February 12, 2014, which states that Vanguard has sole dispositive power with respect to 9,360,344 shares, sole voting power with respect to 147,294 shares, and shared

4


dispositive power with respect to 127,194 shares. According to the Schedule 13G filed by Vanguard, various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares, and no one person’s interest in our common stock was more than 5% of the total outstanding common stock, as of the date the Schedule 13G was filed.
(5)Amount includes 133,155158,580 shares held by trusts for Mr. Robert I. Toll’s children and grandchildren, of which Mrs. Jane Toll, Mr. Robert I. Toll’s spouse, is a trustee with voting and dispositive power and as to which he disclaims beneficial ownership. Amount includes 4,950,316 shares pledged to financial institutions to secure personal obligations of Mr. Robert I. Toll.
(6)Amount includes 3,192,932 shares pledged to financial institutions to secure obligations of The Bruce E. Toll Revocable Trust (of which Mr. Bruce E. Toll is the sole trustee).
(7)(5)Amount includes an aggregate of 9,400 shares beneficially owned by individual retirement accounts (“IRAs”) for the benefit of Mr. Marbach and his wife. Mr. Marbach disclaims beneficial ownership of the 4,700 shares held by his wife’s IRA.
(8)The Board of Directors, after reviewing the functions of all of our officers, both in terms of designated functions and functions actually performed, has determined that only Messrs. Robert I. Toll, Douglas C. Yearley, Richard T. Hartman and Martin P. Connor are deemed to be executive officers of the Company for purposes of Item 403 of Regulation S-K of the Securities Exchange Commission ("SEC").

5



PROPOSAL ONE—ELECTION OF DIRECTORS
Board Membership Criteria
The Nominating and Corporate Governance Committee of the Board of Directors (the "Governance Committee") identifies individuals qualified to become members of the Board of Directors consistent with criteria approved by the Board of Directors. The Governance Committee, in selecting, or in recommending the selection of, nominees for directors, considers applicable statutory, regulatory, case law, and NYSE requirements, including when appropriate those applicable to membership on the Audit and Risk Committee and the Executive Compensation Committee, as well as other criteria it deems appropriate.
The Governance Committee requires that, at a minimum, candidates possess a background that includes a strong education, extensive business experience, and the requisite reputation, character, integrity, skills, judgment, and temperament, which, in the view of the Governance Committee, have prepared them for dealing with the multi-faceted financial, business, governance, and other issues that confront a Board of Directors of a corporation with the size, complexity, reputation, and success of the Company. Although the Governance Committee does not have a formalseparate policy regardingspecifically governing diversity, it values diversity of viewpoints, background, and experience in consideringevaluating candidates for Board membership.membership and will consider a candidate’s experience, education, skills, background, gender, race, ethnicity, and other qualities and attributes, including the contributions of these qualities and attributes to the Board as a whole.
Board Composition
The Governance Committee assesses annually the composition of the Board, including a review of Board size, the skills and qualifications represented on the Board, and director tenure. In its review of the skills and qualifications of each director, the Governance Committee considers the characteristics that it believes should be represented on the Board as well as each Committee of the Board.
The findings of the Governance Committee's annual review of Board composition are reported to and discussed with the full Board. Based on its evaluation, the Governance Committee may recommend an increase or decrease in the size of the Board or changes in the composition of the Board so as to best reflect the objectives and needs of the Company and the desired skill sets of the directors. Similarly, the Governance Committee may establish processes for developing candidates for Board membership and conducting searches for Board candidates.
In its review of the skills and qualifications of each director, the Governance Committee considers the characteristics that the Committee believes should be represented on the Board as a whole. The Governance Committee, also reviewswhich periodically evaluates potential director candidates, recommended that Mr. McLean be included as a director nominee for election at the composition2016 Annual Meeting of the Board, as well as the skills and qualifications represented on the boards of the Company's peer group.Stockholders.
As part of this annual review of Board composition, the Governance Committee reviewedconsiders director tenure, during fiscal 2014, which includedincluding a comparison of director tenure to the Company's peer group. In advance of thisTo assist in its review, the Chair of the Governance Committee conductedperiodically conducts individual meetings with the independent directors to discuss each director's evaluation of the Board composition and determine his or herwhether such director's future plans that may assist the Governance Committee in its consideration of the issue of director succession.tenure.
Our Lead Independent Director (who also is the Chair of the Governance Committee) also leads the annual Board self-evaluation procedure to review the Board's effectiveness and to identify any opportunities for improvement. As part of this process, the Lead Independent Director receives feedback from each director regarding Board and committee composition, Board practices, Board accountability, and director standards of conduct. The Lead Independent Director leads the discussion with the Board to review this information and to identify any areas for improvement.
The Board believes that, through thisits annual review of Board composition and nomination process, coupled with its annual self-evaluation procedure, the Board will continue to evolve to meet the needs of the Company.


Our Director Nominees
The Board currently consists of tennine directors. Each current director is standing for re-election to hold office until the 20162018 Annual Meeting of Stockholders and until his or her respective successor has been duly elected and qualified. Each nominee has indicated a willingness to continue to serve as a director. Should
During fiscal 2016, the Board adopted a majority voting standard for uncontested director elections. Under the new majority voting standard, in uncontested elections a nominee become unavailablefor director shall be elected to acceptthe Board if the votes cast for such nominee’s election as a director,exceed the persons namedvotes cast against such nominee’s election. Directors will continue to be elected by plurality vote in the enclosed proxy will vote the shares that such proxy represents for the electionevent of such other person as the Board may nominate on the recommendation of the Governance Committee. See page 2 for certain information regarding our director nominees.a contested election.

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Director Qualifications
The Governance Committee has reviewed the business experience and qualifications of each director nominee and has concluded that the directors possess business experience in the areas set forth below. The Governance Committee believes that the directors' business experience in these areas brings value to the Board and to the Company in light of our business strategy, structure, and direction.
This business experience, coupled with our directors' knowledge and understanding of the Company's operations, governance, personnel, and business ethic gained by them over time, have led the Governance Committee and the Board of Directors to the conclusion that each director provides the Company with unique perspective, insight, and skills that enable him or her to provide strong guidance and leadership during all phases of the cycle of the real estate market and in times of management transition, and therefore, that each should serve as a director of the Company.
The table below summarizes certain key qualifications and skills of each director nominee that were relevant to the decision to nominate him or her to serve on the Board. The lack of a mark does not mean the director does not possess that qualification or skill; rather, a mark indicates a specific area of focus or expertise on which the Board relies most heavily. Each director's biography below describes his or her qualifications and relevant experience in more detail.
Skills and Qualifications of our Board of DirectorsDirector Nominees
NameLeadershipIndustryOperating
Accounting
 and
Financial
Business Development and MarketingCorporate Governance and LawOther Board Experience
        
Robert I. Tollüüü üüü
Bruce E. Tollüüüüüü
Douglas C. Yearley, Jr.üüü üü 
Robert S. Blanküüüüü
Edward G. Boehneü  üüüü
Richard J. Braemerüü üüüü
Christine N. Garveyüüüü üü
Carl B. Marbachüüüü
John A. McLeanü üüü  
Stephen A. Novickü   üüü
Paul E. Shapiroü üüüüü
In addition to the skills and qualifications referenced above, we include below other information about the backgrounds and experience of our director nominees, including specific qualifications, experience, skills, and expertise considered by the Governance Committee as relevant to each of the nominee's candidacy as a director.


Robert I. Toll, with his brother Bruce E. Toll, founded our predecessor’s operations in 1967. He has been a member of our Board since our inception in May 1986. He served as our Chief Executive Officer and Chairman of the Board and Chief Executive Officer from our inception until June 2010, when he assumed the new position of Executive Chairman of the Board. He brings to the Board his dynamic entrepreneurial and leadership experience as a founder, Chairman of the Board, Chief Executive Officer and, currently, Executive Chairman of the Company, whichand has established the Company as the country’s leading luxury homebuilder.home builder.
Bruce E. Toll, with his brother Robert I. Toll, founded our predecessor’s operations in 1967. He been a member of our Board since our inception in May 1986 and served as our Chief Operating Officer until May 1998 and our President until November 1998. He is a member of the Public Debt and Equity Securities Committee. He is the founder and Principal of BET Investments, a commercial real estate company, and the owner of several automobile dealerships. From June 2006 through August 2009, he was the Chairman of Philadelphia Media Holdings, L.L.C., the parent company of the Philadelphia Inquirer and the Philadelphia Daily News, and from December 2007 through February 2009, he served on the board of directors of Fifth Street Finance Corp., a company that lends to and invests in small and mid-sized companies. He brings to the Board his knowledge and experience as a co-founder of the Company and his service in various executive, director and advisory positions

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with the Company since its formation in 1986; his ownership of several significant businesses has provided him with extensive managerial and leadership experience in the real estate industry and other fields, and his service on various public company boards of directors has been of added value to our Board.
Douglas C. Yearley, Jr. has been a member of our Board since June 2010. He joined us in 1990, specializing in land acquisitions from financial institutions. He has been an officer since 1994, holding the position of Senior Vice President from January 2002 until November 2005, and the position of Regional President from November 2005 until November 2009, when he was promoted to Executive Vice President. Since June 2010, he has been our Chief Executive Officer. Prior to joining us, Mr. Yearley practiced law in New Jersey as a commercial litigator. He brings to the Board a deep understanding of our industry and our business as a result of the significant operational roles in which he has served over the 2425 years he has been with the Company, his managerial and leadership experience, and his legal background.
Robert S. Blank has been a member of our Board since September 1986. He is a member of the Nominating and Corporate Governance Committee and the Public Debt and Equity Securities Committee. Since 2003, Mr. Blank has been Co-Chairman and Co-Chief Executive Officer of Whitney Communication Company (“WCC”) and Senior Partner of Whitcom Partners. Whitcom Partners and its two partners individually make investments in public and non-public companies. Mr. Blank brings to the Board the skills and experience gained in his executive leadership roles in a major company in the communications industry, as well as in the investment field.
Edward G. Boehne has been a member of our Board since July 2000 and our Lead Independent Director since March 2011. He is the Chair of the Nominating and Corporate Governance Committee and a member of the Audit and Risk Committee. From 1981 until his retirement in May 2000, Mr. Boehne was the President of the Federal Reserve Bank of Philadelphia. Mr. Boehne is a member of the board of directors of Beneficial Bancorp, Inc. and its subsidiary, Beneficial Bank, Penn Mutual Life Insurance Co. and AAA Mid-Atlantic, Inc. (including the related holding company, AAA Club Partners).Bank. Mr. Boehne is also a member of the board of directors of, and Senior Economic Advisor to, the Haverford Trust Company. He brings to the Board his reputation and accomplishments as a leader and expert in the Federal bank regulatory field, as well as his current service in various board and advisory positions with high profile companies in the banking and insurance industries.
Richard J. Braemer has been a member of our Board since September 1986. He is the Chair of the Public Debt and Equity Securities Committee. He is senior counsel at the law firm of Ballard Spahr LLP, where he was a partner from 1994 through 2008. Mr. Braemer is a director Chairman of the Compensation Committee and past Chairman of the Board of Directors of the Albert Einstein Healthcare Network, a Philadelphia-based, non-profit healthcare network. In addition to his professional skills as an attorney practicing primarily in the field of mergers and acquisitions, including real estate transactions, he brings to our Board the experience gained both as a former board member and audit committee chair of a public company and as an advisor to boards, board committees, and independent directors of publicly and privately held corporations.
Christine N. Garvey has been a member of our Board since September 2009. She is a member of the Audit and Risk Committee and the Public Debt and Equity Securities Committee. She was the Global Head of Corporate Real Estate Services at Deutsche Bank AG from 2001 to 2004. Prior to that, she served as Vice President of Worldwide Real Estate and Workplace Resources at Cisco Systems, Inc. and as Group Executive Vice President at Bank of America. She is alsoMs. Garvey has been a member of the board of directors of HCP, Inc. since 2007. She also has served as a member of the board of ProLogis since September 2005, when Catellus Development Corporation, of which she had been a member of the board since 1995, merged into a subsidiary of ProLogis. Ms. Garvey served on the board of directors of Hilton Hotels Corporation through October 2007. She brings to the Board her extensive knowledge of and background in real estate and banking and her experience in executive leadership positions and board memberships with various public entities in the national real estate market.


Carl B. Marbach has been a member of our Board since December 1991. He is the Chair of the Executive Compensation Committee and a member of the Audit and Risk Committee and the Public Debt and Equity Securities Committee. Since January 2004, Mr. Marbach has been President of Greater Marbach Airlines, Inc., a company that provides aviation and consulting services. From January 1995 to January 2004, Mr. Marbach was President of Internetwork Publishing Corp., an electronic publisher, which he founded. He brings to the Board his expertise in the field of information technology, as well as his entrepreneurial experiences in building businesses in that and other industries.

8John A. McLean has been a member of our Board since March 2016. He is a member of the Nominating and Corporate Governance Committee. Mr. McLean is the Chief Executive Officer and Distribution Principal for Hartford Funds Distributors, a subsidiary of Hartford Funds, a position he has held since January 2013. From April 2009 to May 2012, he was the Head of U.S. Retail and Offshore Sales at Eaton Vance Investment Managers. Prior to that time, Mr. McLean held positions of increasing responsibility at MFS Fund Distributors. He serves on the Board of Trustees of Gateway to Leadership. Mr. McLean brings to the Board his expertise in building and leading high performance sales and marketing organizations and his strategic and tactical leadership skills.


Stephen A. Novick has been a member of our Board since January 2003. He is a member of the Executive Compensation Committee and the Nominating and Corporate Governance Committee.Committees. Mr. Novick serves as Senior Advisor to The Andrea and Charles Bronfman Philanthropies, a private family foundation.Chasbro Investments. Until December 2006, Mr. Novick was a consultant to Grey Global Group, a marketing communications company. From 1990 until his retirement in December 2004, Mr. Novick was Chief Creative Officer-Worldwide, and from April 2000 to December 2004 was Vice Chairman, of Grey Global Group. Mr. Novick is also a member of the board of directors of Ark Restaurant Corp. In April 2015, he was elected to the Board of Trustees of The Julliard School. In addition to the experience gained in his roles in the corporate and non-profit sectors, he brings to our Board his creative skills, leadership, and expertise in the field of marketing communications.
Paul E. Shapiro has been a member of our Board since December 1993. He is the Chair of the Audit and Risk Committee and a member of the Executive Compensation Committee. Since June 2004, Mr. Shapiro has been Chairman of the Board of Q Capital Holdings LLC, and he is Chairman of the Board of its two operating companies that are in the life settlement business. From January 2004 to June 2004, Mr. Shapiro was Senior Vice President of MacAndrews & Forbes Holdings, Inc., a private holding company of operating businesses. From June 2001 to December 2003, Mr. Shapiro was Executive Vice President and Chief Administrative Officer of Revlon Inc. Prior thereto, Mr. Shapiro practiced corporate and securities law as a managing shareholder of the Palm Beach County office of Greenberg Traurig LLP (which acquired Shapiro and Bregman, a firm he co-founded) and was a partner in Wolf, Block, Schorr and Solis-Cohen. He brings to the Board his extensive business experience in executive positions with various nationally known companies, which he has served in a wide variety of capacities that have drawn upon his legal and entrepreneurial skills, including those in the areas of corporate governance and the regulatory corporate environment.
Required Vote
Director nominees are elected by a pluralitymajority of the votes cast at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL NOMINEES.


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PROPOSAL TWO—RATIFICATION OF THE RE-APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As part of its oversight of the Company’s relationship with our independent auditors, the Audit and Risk Committee (the "Audit Committee") reviews annually our independent auditors’ qualifications, performance, and independence. Based on the results of this review, the Audit Committee re-appointed Ernst & Young LLP to serve as the Company’s independent auditors for the fiscal year ending October 31, 2015.2017. Ratification is being sought at the Meeting in a non-binding vote of stockholders. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of Ernst & Young LLP to our shareholdersstockholders for ratification because we value our stockholders' views on the Company’s independent auditors. If our stockholders fail to ratify the selection, it will be considered notice to the Board and Audit Committee to consider the selection of a different firm.
RepresentativesA representative of Ernst & Young LLP areis expected to be present at the Meeting, will be afforded the opportunity to make a statement, if they desire, and areis expected to be available to respond to appropriate questions. We have been advised by Ernst & Young LLP that neither the firm, nor any member of the firm, has any financial interest, direct or indirect, in any capacity in us or our subsidiaries.
Audit and Non-Audit Fees
The following table sets forth the fees earned for services rendered by Ernst & Young LLP for professional services for the fiscal years ended October 31, 20142016 and 2013:2015:
 2014 2013 2016 2015
        
Audit Fees (1) $1,313,831
 $1,298,645
 $1,360,000
 $1,257,500
Audit-Related Fees (2) 40,485
 31,995
 1,995
 31,990
Tax Fees (3) 40,000
 23,398
 74,000
 51,343
All Other Fees —
 —
 —
 —
 $1,394,316
 $1,354,038
 $1,435,995
 $1,340,833
 
(1)“Audit Fees” include fees billed for (a) the audit of Toll Brothers, Inc. and its consolidated subsidiaries, (b) the audit of the Company’s internal control over financial reporting, (c) the review of quarterly financial information, and (d) the issuance of consents and comfort letters to underwriters in various filings with the SEC.Securities and Exchange Commission ("SEC").
(2)“Audit-Related Fees” include fees billed for audits of a certain joint venture in which we have an interest workpaper review of an acquired entity, and fees for the use of the independent auditors’ technical accounting research tool.
(3)“Tax Fees” include fees billed for consulting on tax planning matters and tax compliance matters.
The Audit Committee meets and agrees upon the annual audit fee directly with our independent auditors. The Audit Committee also establishes pre-approved limits for which our management may engage our independent auditors for specified services. Any work that exceeds these pre-approved limits for the specified services in a quarter requires the advance approval of the Audit Committee. Each quarter the Audit Committee reviews the matters worked on by the independent auditors during the previous quarter and establishes any pre-approved limits for the current quarter. All fees and services for fiscal 20142016 were approved by the Audit Committee. The Audit Committee also reviewed and approved the compatibility of non-audit services, including tax services, with Ernst & Young LLP’s independence. The Audit Committee reviewed and pre-approved the services provided by Ernst & Young LLP and approved the fees paid to Ernst & Young LLP for all services for fiscal 2014.2016.
Required Vote
To be approved, this proposal must receive an affirmative majority of the votes cast on the proposal at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL TWO.

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PROPOSAL THREE—ADVISORY AND NON-BINDING VOTE
ON EXECUTIVE COMPENSATION (SAY ON PAY)
Our stockholders voted in 2011, in a non-bindingan advisory vote, in favor of the annual submission of the Company’s compensation of its NEOs annually to our stockholders for approval on a non-binding basis, and our Board has adopted thatthis approach. In accordance with this outcome of that stockholder vote and regulations under Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are including in this proxy statement a separate resolution, subject to a non-binding stockholder vote, to approve the compensation of our NEOs as disclosed in this proxy statement. In considering their vote, weWe encourage stockholders to carefully review our compensation policies and decisions regarding our NEOs as presented in the “Compensation Discussion and Analysis” and the tabular (and accompanying narrative) disclosure on pages 2527 to 51.49.
Our Compensation Committee has developed and maintained a compensation program that is intended to reward performance and encourage actions that drive success in our short- and long-term business strategy.
Our executive compensation program received the support of 98%, 87%, 98%, 99%, 98%, and 99% of our stockholders who voted at our Annual Meeting of Stockholders in 2016, 2015, 2014, 2013, 2012, and 2011, respectively.
In December 2015, the Compensation Committee changed several components of our executive compensation program to strengthen the alignment between pay and performance. These changes, which were effective for fiscal 2016 compensation, reflect feedback from stockholders and proxy advisory firms, current market practice, input from the Compensation Committee’s independent compensation consultant, and the Compensation Committee’s consideration of the results of past Say on Pay advisory votes.
In determining fiscal 20142016 compensation for our NEOs, as described in the “Compensation Discussion and Analysis” starting on page 25,27, the Compensation Committee recognized that fiscal 2014 was a yearconsidered the contributions of significant progress in growingeach of our revenuesexecutive officers to the Company’s strategy to diversify our geographic footprint and profits.broaden our platform of residential product lines. The Compensation Committee also considered Company performance in fiscal 2016 and paid particular attention to the notable areas of our performance and our management’s achievements in fiscal 20142016 set forth under “Compensation Discussion and Analysis—2014Fiscal 2016 Company Performance” on pages 2527 to 26.28.
Accordingly, we are asking our stockholders to approve, in a non-binding vote, the following resolution in respect of this Proposal Three:
“RESOLVED, that the stockholders approve, in a non-binding vote, the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the “Compensation Discussion and Analysis” beginning on page 2527 of the proxy statement and the related compensation tables and narrative discussion.
Required Vote
To be approved, this proposal must receive an affirmative majority of the votes cast on the proposal at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL THREE.


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PROPOSAL FOUR—ADVISORY AND NON-BINDING VOTE ON FREQUENCY OF VOTE REGARDING EXECUTIVE COMPENSATION (SAY ON PAY FREQUENCY)

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders have the opportunity to cast an advisory vote on how often we should include a Say on Pay proposal in our proxy materials for future annual stockholder meetings (the “Say on Pay Frequency" proposal). Stockholders may vote to recommend having the Say on Pay vote every year, every two years, or every three years.
Our stockholders voted in 2011, in an advisory vote, in favor of the annual submission of the Company’s executive compensation to our stockholders for approval on a non-binding basis, and our Board adopted this approach. We continue to believe that Say on Pay votes should continue to be conducted every year so that our stockholders may annually express their views on our executive compensation program.
As an advisory vote, this proposal is not binding on the Company, the Board, or the Compensation Committee; however, the Compensation Committee and the Board value the opinions expressed by our stockholders in their votes on this proposal and will consider the outcome of the vote when making future decisions regarding the frequency of conducting a Say on Pay vote. It is expected that the next vote on a Say on Pay Frequency proposal will occur at the 2023 Annual Meeting of Stockholders.
Stockholders may cast their advisory vote to recommend holding future advisory votes on executive compensation every “1 Year,” “2 Years,” or “3 Years,” or to “Abstain.”
Required Vote
A plurality of the votes cast on this proposal will determine the stockholders’ preferred frequency for holding future advisory votes on executive compensation, which means that the option for holding an advisory vote every 1 year, 2 years, or 3 years receiving the greatest number of votes will be considered the preferred frequency of the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
TO HOLD SAY ON PAY VOTES EVERY 1 YEAR.










PROPOSAL FIVE—APPROVAL OF THE TOLL BROTHERS, INC.
SENIOR OFFICER BONUSEMPLOYEE STOCK PURCHASE PLAN (2017)
The Company’s Employee Stock Purchase Plan (2017) (the “ESPP”) is intended to provide a convenient and practical means by which employees may participate in stock ownership of the Company. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).
The Board of Directors has adopted, uponbelieves that the recommendationESPP promotes the interests of the Compensation CommitteeCompany and subjectits stockholders by encouraging employees of the Company to stockholder approval,become stockholders, and therefore promotes the Toll Brothers, Inc. Senior Officer Bonus Plan (“Senior Officer Plan”)Company’s growth and success. The Board also believes that the opportunity to acquire a proprietary interest in the success of the Company through the acquisition of shares of the Company's common stock pursuant to the ESPP is an important aspect of the Company’s ability to attract and retain highly qualified and motivated employees. The Board believes that it is desirable and in the best interests of the Company and its stockholders to continue to provide a tax-deductible bonus programemployees of the Company with benefits under the ESPP.
The Company is seeking approval of the ESPP since the current plan is scheduled to expire in December 2017. At October 31, 2016, there were 500,000 shares of common stock reserved for those officers designated as participants inissuance under the Senior Officer Plan byexpiring employee stock purchase plan. If the Compensation Committee. IfESPP is approved by stockholders, the Senior Officer Planremaining shares available for grant under the expiring plan will be cancelled, and the method of awarding tax-deductible bonus compensation to our executive officers. If the Senior Officer Plan is not approved by stockholders, we would not be able to deduct cash incentive compensation payments after fiscal 2014 to any of our “covered employees” under Section 162(m)ESPP will have 500,000 shares available for issuance.
A copy of the Code to the extent that such amounts, together with other compensation that does not qualifyESPP, as performance-based compensation for purposes of Section 162(m), exceeds $1 million.
Background
The Board of Directors believes that our executive officers should be compensated through a mix of salary, cash incentive bonus awards, long-term incentive compensation, and retirement benefits, and that this compensation should be tax-deductible by us to the largest extent practicable. The Board of Directors and the Compensation Committee developed the Senior Officer Planproposed to be sufficiently flexibleamended, is attached to allow the Compensation Committee to make awards in appropriate amounts and with appropriate performance periods and performance goals to whichever existing, new or recently promoted executive or other officers the Compensation Committee designatesthis proxy statement as plan participants.Annex A. The Board of Directors and the Compensation Committee believe the Senior Officer Plan will enable us to attract, retain, motivate, and reward the exceptional level of leadership to which we and our stockholders have become accustomed.
The Senior Officer Plan permits the Compensation Committee to award up to $8.5 million per year to each participant. The Compensation Committee has never awarded this maximum amount, but has used its discretion to award amounts that are significantly less than this maximum. Since the adoptionfollowing description of the Senior Officer Plan in fiscal 2010, the Committee has consistently granted cash incentive bonus awards that were less than the maximum allowable, and has never awarded an annual cash bonus of more than $2.3 million to any individual participant under the Senior Officer Plan.
Tax Deductibility
The Senior Officer Plan is being presented to stockholders for approval in order to preserve the tax deductibility of cash incentive bonus awards to executive officers under Section 162(m) (“Section 162(m)”) of the Code. Section 162(m) generally limits to $1 million per year the deductibility, for Federal income tax purposes, of cash compensation to "covered employees," which means any individual who, as of the end of the year, is the principal executive officer of a public company or one of the other three most highly compensated executive officers (other than the principal financial officer). This limitation does not apply to compensation that is deemed to be “qualified performance-based” within the meaning of Section 162(m). Therefore, if compensation qualifies as “qualified performance-based” for purposes of Section 162(m), we will be permitted to deduct it for federal income tax purposes.
The provisions of Section 162(m) require, among other things, that the material terms of compensation plans such as our Senior Officer Plan must be approved by a company’s stockholders every five years in order for compensation awarded under such plan to qualify as “qualified performance-based.” The material terms of the Senior Officer Plan were last approved by stockholders in 2010, and, accordingly, the Senior Officer Plan will need to be approved by stockholders in 2015 in order for bonuses to continue to qualify as “qualified performance-based compensation” under Section 162(m).
Material Provisions of Senior Officer Plan
The followingESPP is a brief summary of the materialcertain provisions of the Senior Officer Plan. Because it is only a summary, it may not contain all of the information about the Senior Officer Plan that may be important to you and is qualified in its entirety by the full textreference to Annex A.
Material Provisions of the Senior Officer Plan set forthESPP
Subject to shareholder approval, a maximum of 500,000 shares of common stock may be issued under the ESPP. The number of shares issued or reserved pursuant to the ESPP (or pursuant to outstanding awards) is subject to adjustment on account of stock splits and/or stock dividends. The shares may consist of shares purchased specifically for purposes of the ESPP, shares otherwise held in Annex A.
1. Participants.  The participants in the Senior Officer Plan are those officers designated as participantstreasury or shares originally issued by the Compensation CommitteeCompany for a given Performance Period (as defined in the Senior Officer Plan and described below).such purpose. If the Senior Officer PlanESPP is approved by stockholders,shareholders, it will become effective as of April 3, 2017, and no new offering periods will commence on or after that date under the Compensation Committee has designated that there will be four participants for fiscal 2015, who will be our current executive officers: Robert I. Toll, Douglas C. Yearley, Jr., Richard T. Hartman,Amended and Martin P. Connor. Restated Employee Stock Purchase Plan, dated January 1, 2008.

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2. AdministrationEffective Date; Term.  Subject to the approval of our stockholders, the Senior Officer Plan will be effective for our fiscal year ending October 31, 2010, and subsequent years unless and until terminated. The ESPP is administered by the Board of Directors.
3. Performance Periods.  The Compensation Committee hasDirectors (the “Board”) or by a committee of the discretion to establish Performance Periods for Awards (in each case, as defined in the Senior Officer Plan and described below) under the Senior Officer Plan. Performance Periods may be equal to one of our full fiscal years, or may be longer or shorter than a full fiscal year. Multiple Awards may be granted to any participant.
4. Awards.  Awards are payable to participants in the Senior Officer Plan based on the achievementBoard consisting of one or more pre-established performance goals. For each Award established undermembers designated by the Senior Officer Plan, prior toBoard (the Board or within the first 90 dayssuch a committee of the relevant Performance Period (or, ifBoard, the Performance Period is shorter than a full year, within“Administrator”). The Administrator has the first 25%authority to interpret the ESPP, to issue rules for administering the ESPP, to change, alter, amend or rescind such rules, and to make all other determinations necessary or appropriate for the administration of the Performance Period), in accordance withESPP. All determinations, interpretations and constructions made by the requirements of Section 162(m), the Compensation Committee will establish one or more performance goalsAdministrator with respect to such Performance Periodthe ESPP shall be final and an objective formula or method for computing the amount of the Award payable to each participant if the specified performance goals are achieved.conclusive.
The performance goals established by the Compensation Committee will be based upon objective business criteria that take into account one or more of the following for the Company as a whole or any of its subsidiaries, operating divisions or other operating units: share price, market share, gross revenue, net revenue, net income, pre-tax income, pre-tax pre-bonus income, operating income, cash flow, earnings per share, debt ratings, debt-to-capital ratio, generation of cash, issuance of new debt, establishment of new credit facilities, retirement of debt, return on equity, return on assets, return on capital, return on revenues, attraction of new capital, gross homebuilding margin, net margin, pre-tax margin, total shareholder return, acquisition or disposition of assets, acquisition or disposition of companies, creation of new performance and compensation criteria for key personnel, recruiting and retaining key personnel, customer satisfaction, employee morale, acquisition or disposition of other entities or businesses, acquisition or disposition of assets, hiring of strategic personnel, development and implementation of Company policies, strategies and initiatives, creation of new joint ventures, new contracts signed, increasing the Company’s public visibility and corporate reputation, development of corporate brand name, overhead cost reductions, unit deliveries, savings, productivity, or any combination of or variations on the preceding business criteria.
At or after the end of each Performance Period, the Compensation Committee will determine whether and to what extent the performance goals have been achieved and will calculate the amount of the Award to be paid to each participant, if any, based upon the levels of achievement of the relevant performance goals and the objective formula or method established with respect to such Performance Period. The establishment of performance goals and the granting of Awards under the Senior Officer Plan will, in all cases, be implemented in a manner that is consistent with the requirements of Section 162(m) and the Treasury Regulations promulgated thereunder.
5. Cap on Awards.  Section 162(m) requires that the maximum potential Award amount payable under the Senior Officer Plan be disclosed to, and approved by, our stockholders, in order for any Award, regardless of its amount, to be tax-deductible by us. In order to ensure tax deductibility of all Awards under the Senior Officer Plan, the Compensation Committee has established that no Award payable under the Senior Officer Plan can exceed $8.5 million (the “Award Cap”), and in no event will the maximum aggregate amount payable to any participant with respect to Awards that have Performance Periods that end in the same fiscal year exceed two times the Award Cap, regardless of the number of Awards that would otherwise be payable in that fiscal year (the “Annual Payment Cap”). Awards that are limited pursuant to the Annual Payment Cap may not be carried over and paid during a subsequent fiscal year. The Compensation Committee will have no discretion to increase the amount of any Awards beyond the Award Cap or the Annual Payment Cap, as applicable, but may, in its sole discretion, reduce the amount of an Award to any lesser amount, or set the Awards at any lesser amount, including as low as $0, based on such facts and circumstances as it deems relevant.
6. Payment of AwardsEligibility. Awards under the Senior Officer Plan may be paid in cash, equity, or a combinationEach of the two. The equity portion of any Award under the Senior Officer Plan may be paid in shares of restricted stock, shares of unrestricted stock, or restricted or unrestricted stock units, all of which will be issued from the Toll Brothers, Inc. Stock Incentive Plan for Employees (2014) or a successor plan. To the extent an Award is settled with equity, such equity will be valued as of the end of the Performance Period for the Award.
7. Amendment and Termination of the Senior Officer Plan.  The Senior Officer Plan may be terminated or revoked by action of the Compensation Committee or the Board of Directors at any time. The Senior Officer Plan may be amended from time to time by the Compensation Committee, provided that no amendment may be made to the class of individuals whoour (and our affiliates’) employees are eligible to participate in the Senior Officer Plan,ESPP, other than employees whose customary employment is for less than five months per calendar year or for less than 20 hours per week. Our employees who own stock possessing 5% or more of the business criteria specifiedtotal combined voting power or value of all classes of our stock will not be granted an option under the ESPP. As of the Record Date, approximately 4,550 employees of the Company and its affiliates, including four executive officers, were eligible to participate in the ESPP.

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Senior OfficerParticipation in the Plan. Eligible employees may participate in the ESPP by electing to participate in a given offering period in either the 15% discount purchase program (“15% Program”) or the maximum amount payable5% discount purchase program (“5% Program”) by submitting a subscription agreement for either program authorizing specified payroll deductions and specifying a date to commence such deductions. A


participant’s participation in the ESPP will continue until the participant makes a new election or withdraws from an offering period or the ESPP.
Payroll Deductions. Payroll deductions are made from the compensation paid to each participant for each offering period as elected by the participant; provided that no participant will be entitled to purchase, during any calendar year, shares exceeding an aggregate fair market value in excess of $25,000. A participant can increase, decrease or revoke the rate of payroll deductions during an offering period. In addition, payment for shares purchased under the Senior Officerplan may be made in cash.
Termination of Participation in the Plan. A participant’s participation in the ESPP will be terminated upon the termination of such participant’s employment for any reason. Upon a termination of a participant’s employment, no payroll deductions shall be taken thereafter, no purchase shall be permitted on any purchase date following the termination date, and the balance of such former participant’s plan account will be paid without disclosureinterest to the former participant or the former participant’s estate in the event of participant’s death.
Purchase of Shares. With respect to an offering period for both the 15% Program and the 5% Program, each participant will be granted an option to purchase a number of shares up to a maximum fair market value established by the Administrator (which maximum will be $6,250). On the last business day of each offering period (each, a “purchase date”), we will apply the funds in each participant’s account to purchase shares. The purchase price for shares under the (a) 15% Program is 85% of the fair market value of the shares on the purchase date and (b) 5% Program is 95% of the fair market value of the shares on the purchase date. As soon as practicable after each purchase date, the number of shares purchased by each participant will be deposited in an investment account established in such participant’s name. A participant will not be permitted to dispose of shares purchased pursuant to the 15% Program until the third anniversary of the applicable purchase date. Shares purchased under the 5% Program may be transferred by the employee at any time and there is no restriction on the disposition of such shares.
Amendment and Termination. The Administrator may amend the ESPP; provided, however, that no amendment will be made which, without shareholder approval, would increase the number of shares authorized for the ESPP, materially increase the benefits accruing to participants under the ESPP or modify the requirements as to eligibility for participation in the ESPP.
The ESPP will terminate upon the earliest of the termination of the ESPP by our stockholders, unless stockholder approvalBoard of Directors or December 31, 2027.
Withholding. We reserve the right to withhold from shares distributed to a participant any amounts which we are required by law to withhold.
Certain Federal Income Tax Consequences
The following discussion of the U.S. federal income tax consequences relating to the ESPP is based on present federal tax laws and regulations and is not required in order fora complete description of the Award paidfederal income tax laws. Participants may also be subject to certain state, local or non-U.S. taxes which are not described below.
Options to purchase shares of our common stock granted under the Senior Officer PlanESPP are intended to a coveredqualify for favorable federal income tax treatment associated with rights granted under an employee (as defined in Section 162(m)) to constitute qualified performance-based compensationstock purchase plan that qualifies under Section 162(m). The Senior Officer Plan may be amended by the Compensation Committee as it deems appropriate in order to comply with the provisions of Section 162(m).
New Plan Benefits
423(b) of the Code. Under these provisions, no income will be taxable to a participant until the shares of common stock purchased under the ESPP are sold or otherwise disposed of. If the shares of common stock are disposed of within two years from the first day of the offering period, a transaction referred to as a “disqualifying disposition,” the participant will realize ordinary income in the year of such disposition equal to the difference between the fair market value of the shares of common stock on the purchase date and the purchase price. The amount of such ordinary income will be added to the participant’s basis in the shares of common stock, and any Awardadditional gain or resulting loss recognized on the disposition of the shares of common stock after such basis adjustment


will be a capital gain or loss. A capital gain or loss will be long-term if the participant holds the shares of common stock for more than one year after the purchase date.
If the shares of our common stock purchased under the ESPP are sold (or otherwise disposed of) more than two years after the first day of the offering period, then the lesser of (a) the excess of the fair market value of the stock at the time of such disposition over the purchase price and (b) the excess of the fair market value of the stock as of the purchase date over the purchase price will be treated as ordinary income. The amount of such ordinary income will be added to the participant’s basis in the shares of our common stock, and any additional gain recognized on the disposition of the shares of common stock after such basis adjustment will be long-term capital gain. If the fair market value of the shares of common stock on the date of disposition is less than the purchase price, there will be no ordinary income and any loss recognized will be a capital loss.
The company will generally be entitled to a participantdeduction in the Senior Officer Plan depends onyear of a disqualifying disposition equal to the performance goals established for an Award for such participantamount of ordinary income realized in the United States by the Compensation Committee, the determination as to whether such performance goals were met, our overall performanceparticipant as a company,result of such disposition, subject to the participant’s individual performance, and the discretionsatisfaction of the Compensation Committee. The actual amount that will be received under the Senior Officer Plan (assuming stockholder approval of the Senior Officer Plan) for Awards that have already been established by the Compensation Committeeany tax-reporting obligations. In all other cases, no deduction is not currently determinable. The table below discloses, based on the assumptions contained in footnotes 1 and 2 thereto: (a) what each NEO for fiscal 2014 could potentially have received if the Senior Officer Plan, and the Awards made thereunder, had been in effect for fiscal 2014, and (b) what all of our current executive officers as a group could potentially have received if the Senior Officer Plan, and the Awards made thereunder, had been in effect for fiscal 2014, in each case assuming that the Senior Officer Plan is approved by stockholders. allowed.
New Plan Benefits—Toll Brothers, Inc. Senior Officer Bonus Plan
Name and Position
Robert I. Toll, Executive Chairman(1)
Douglas C. Yearley, Jr., Chief Executive Officer(1)
Richard T. Hartman, President and Chief Operating Officer(1)
Martin P. Connor, Chief Financial Officer(1)
Current Executive Officers as a Group(2)
Non-Executive Director Group(3)
Non-Executive Officer Employee Group(3)
(1)For the Awards already established by the Compensation Committee under the Senior Officer Plan, assuming stockholder approval of the Senior Officer Plan and assuming the same actual performance as in fiscal 2014, the Compensation Committee would have the ability to award up to the Award Cap of $8.5 million to each participant; however, the Compensation Committee has never awarded the maximum allowable amount to these participants under the existing Senior Officer Plan and has consistently awarded amounts that are far less than the maximum permissible. For example, in fiscal 2014, the Compensation Committee could have awarded up to $8.5 million to each of the NEOs under the terms of the Senior Officer Plan; however, the Compensation Committee, in its discretion, awarded bonuses of $1,500,000, $2,300,000, $800,000, and $800,000 to each of Mr. Robert I. Toll, Mr. Yearley, Mr. Hartman, and Mr. Connor, respectively, for fiscal 2014.
(2)There are four current executive officers who are currently eligible for the Senior Officer Plan in fiscal 2015: Mr. Robert I Toll, Mr. Yearley, Mr. Hartman, and Mr. Connor. If each executive officer was awarded the maximum potential Award, assuming the same actual performance as in fiscal 2014, the aggregate amount paid to such executive officers as a group could equal four times the Award Cap. However, as noted above, the Compensation Committee has never awarded the maximum allowable amount payable under the Senior Officer Plan and has consistently awarded amounts that are far less than the maximum permissible.
(3)There are no non-executive directors or non-executive officer employees who are participants in the Senior Officer Plan.
Required Vote
To be approved, this proposal must receive an affirmative majority of the votes cast on the proposal at the Meeting.     If the Senior Officer Plan is not approved by stockholders, we would not be able to deduct cash incentive compensation payments after fiscal 2014 to any of our “covered employees” under Section 162(m) to the extent that such amounts, together with other compensation that does not qualify as performance-based compensation for purposes of Section 162(m), exceeds $1 million.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL FOUR.FIVE.

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EQUITY COMPENSATION PLAN INFORMATIONEquity Compensation Plan Information
The following table provides information as of October 31, 20142016 with respect to compensation plans (including individual compensation arrangements) under which the Company’s equity securities are authorized for issuance. There are no plans that have not been approved by stockholders.
Plan Category 
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights(1)
 
Weighted-
Average
Exercise Price
of Outstanding
Options,
Warrants
and Rights(2)
 
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column(a))
 
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights(1)
 
Weighted-
Average
Exercise Price
of Outstanding
Options,
Warrants
and Rights(2)
 
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column(a))
            
 (a) (b) (c) (a) (b) (c)
 (In thousands)   (In thousands) (In thousands)   (In thousands)
Equity compensation plans approved by security holders 10,647
 $25.9396
 8,821
 10,349
 $26.3553
 6,771
Equity compensation plans not approved by security
holders
 —
   —
 —
   —
Total 10,647
 $25.9396
 8,821
 10,349
 $26.3553
 6,771
        
(1)Amount includes 9,358,0008,514,000 shares and 1,289,0001,835,000 shares of stock options and RSUs, respectively, outstanding as of October 31, 2014.2016. The amount of performance-based RSUs, which is included in the RSU amount, reflects the maximum number of shares that could be issued under the fiscal 20142016 award as further described under "Performance-Based"2016 Performance-Based RSUs" starting on page 36.41.
(2)The weighted-average exercise price does not take into account the 1,289,0001,835,000 shares of RSUs outstanding as of October 31, 2014.2016.

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CORPORATE GOVERNANCE
We are committed to operateoperating within a comprehensive plan of corporate governance for the purpose of defining and evaluating director independence, assigning Board committee responsibilities, setting high standards of professional and personal conduct, and assuring compliance with such responsibilities and standards. The Board and the Governance Committee regularly monitor developments in the area of corporate governance to ensure that our corporate governance practices continue to evolve as appropriate.
Corporate Governance Guidelines and Practices
The Board has adopted Corporate Governance Guidelines, which describe the Board’s views on a number of governance topics. The guidelines are posted on, and can be obtained free of charge from, our website at www.tollbrothers.com under “Investor Relations: Corporate Governance.”
Leadership Structure
In connection withfiscal 2010, the appointments ofBoard appointed Mr. Douglas C. Yearley, Jr. as CEOChief Executive Officer ("CEO") and Mr. Robert I. Toll, our co-founder and prior CEO, as Executive Chairman of the Board, each effective June 16, 2010, the Board separated the roles of Chairman and Chief Executive Officer. As our CEO,Board. Mr. Yearley is responsible for our day-to-day operations and for formulating and executing our long-term strategies in collaboration with Mr. Robert I. Toll Executive Chairman of the Board, and the Board. As Executive Chairman of the Board, Mr. Robert I. Toll continues to play a significant role and is actively involved in our business by chairing the Board, acting as advisor to the executive officers, and regularly engaging in the review of land transactions and in planning our long-term business strategy, particularly with respect to product and geographic expansion.transactions.
In the Board’s view, an appropriate leadership structure depends on the opportunities and challenges facing a company at a given time. The Board believes that the current leadership structure is appropriate for us at this time as it enables us and the Board to continue to benefit from Mr. Robert I. Toll’s vast experience, skills, expertise, and knowledge of the Company and the home building industry.
In fiscalSince March 2011, the Board designated Edward G. Boehne has served as the Lead Independent Director of the Board of Directors until his successor is duly designated and qualified. The Lead Independent DirectorDirectors. Mr. Boehne helps ensure that there is an appropriate balance between management and the independent directors and that the independent directors are fully informed and able to discuss and debate the issues that they deem important. The role of the Lead Independent Director includes:
presiding over all executive sessions and other meetings of the independent directors;
acting as principal liaison between the Executive Chairman of the Board, the CEO and the non-independent directors, on the one hand, and the independent directors, on the other hand;
serving as the director whom stockholders may contact;
leading the process for evaluating the Board of Directors and the committees of the Board of Directors;
participating in the communication of sensitive issues to the other directors; and
performing such other duties as the Board of Directors may deem necessary and appropriate from time to time.
Codes of Business Conduct and Ethics
Management has adoptedThe Governance Committee is responsible for reviewing proposed changes to the Company's governance instruments, including its codes of ethics. In December 2016, upon the recommendation of the Governance Committee, the Board approved a revised Code of Ethics and Business Conduct which applies to all employees, as well as a Code of Ethics for Principal Executive OfficerMembers of the Board of Directors. These codes of ethics supersede the prior versions for employees and Senior Financial Officers, violations of which must be reported tofor the Audit Committee or to our Chief Executive Officer or General Counsel. This codeprincipal executive officer and any waiver or amendment to the codesenior financial officers. They are available free of charge from our website at www.tollbrothers.com under “Investor Relations: Corporate Governance.”
We operate under a comprehensive Code of Ethics and Business Conduct that we review annually and that applies to all directors, officers, and employees and includes provisions ranging from conflicts of interest and acceptance of gifts to harassment, discrimination, and other employment-related matters. Upon employment with

16


us, all employees are required to affirm in writing their receipt and review of the code and their compliance with its provisions. Copies of this code can be obtained free of charge from our website at www.tollbrothers.com under “Investor Relations: Corporate Governance.”
Director Independence
Under the NYSE rules and the standards adopted by the Board, a director is not “independent” unless the Board affirmatively determines that the director has no direct or indirect material relationship with us. In addition, the director must meet the requirements for independence set forth by the NYSE rules.
The Board has established categorical standards of director independence to assist it in making independence determinations. These standards, which are described below, set forth certain relationships between us and the directors, and their immediate family members or entities with which they are affiliated, that the Board, in its judgment, has determined to be material or immaterial in assessing a director’s independence. The standards applied by the Board in affirmatively determining whether a director is “independent” provide that a director is not independent if:
(1) the director is, or has been within the last three years, our employee or an immediate family member (defined as including a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone, other than domestic employees, who shares such person’s home) of, or is, or has been within the last three years, one of our executive officers;
(2) the director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 per year in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
(3)(a) the director is a current partner or employee of a firm that is our internal or external auditor; (b) the director has an immediate family member who is a current partner of such a firm; (c) the director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (d) the director or an immediate family member was, within the last three years, a partner or employee of such a firm and personally worked on our audit within that time;
(4) the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee;
(5) the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to or received payments from us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or two percent of such other company’s consolidated gross revenues; and
(6) the director or an immediate family member is, or within the past three years has been, an affiliate of another company in which, in any of the last three years, any of our present executive officers directly or indirectly either:
(a) owned more than five percent of the total equity interests of such other company, or
(b) invested or committed to invest more than $900,000 in such other company.
(1)the director is, or has been within the last three years, our employee or an immediate family member (defined as including a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone, other than domestic employees, who shares such person’s home) of, or is, or has been within the last three years, one of our executive officers;
(2)the director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 per year in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
(3)(a) the director is a current partner or employee of a firm that is our internal or external auditor; (b) the director has an immediate family member who is a current partner of such a firm; (c) the director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (d) the director or an immediate family member was, within the last three years, a partner or employee of such a firm and personally worked on our audit within that time;
(4)the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee;
(5)the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to or received payments from us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or two percent of such other company’s consolidated gross revenues; or
(6)the director or an immediate family member is, or within the past three years has been, an affiliate of another company in which, in any of the last three years, any of our present executive officers directly or indirectly either: (a) owned more than five percent of the total equity interests of such other company, or (b) invested or committed to invest more than $900,000 in such other company.
The Board annually reviews the independence of all directors. The Board, in applying the above-referenced standards, has affirmatively determined that all of our directors are independent, other than Messrs.Mr. Robert I. Toll Bruce E. Toll and Douglas C. Yearley, Jr.Mr. Yearley. As part of the Board’s process in making such determination, the Board determined that all of the above-cited objective criteria for independence are satisfied, and that no independent director has any material relationship with us that could interfere with his or her ability to exercise independent judgment.

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Compensation Committee Interlocks and Insider Participation
None of the members ofwho served on the Compensation Committee during the fiscal year ended October 31, 20142016 has ever been an officer or employee of the Company or its subsidiaries. None of the members has any relationship required to be disclosed under this caption under the rules of the SEC.
Personal Loans to Executive Officers and Directors
We do not permit personal loans to or for the benefit of our directors or executive officers.
Communication with the Board
Any person who wishes to communicate with the Board or specific individual directors, including the Lead Independent Director or the independent directors as a group, may do so by directing a written request addressed to such directors or director in care of the General Counsel, Toll Brothers, Inc., at the address appearing on the cover page of this proxy statement. Communications directed to members of the Board who are management directors will be referred to the intended Board member(s) except to the extent that it is deemed unnecessary or inappropriate to do so pursuant to the procedures established by the independent directors. Communications directed to independent directors will be referred to the intended Board member(s).
Committees of the Board and Meetings
The Board currently has the following standing committees: Audit and Risk Committee; Executive Compensation Committee; Nominating and Corporate Governance Committee; and Public Debt and Equity Securities Committee. The following table lists our four Board committees, as well as the chairs and members of each committee, for our entire 2014 fiscal year and at present.committee.
NameIndependentAudit and Risk Committee
Executive Compensation
Committee
Nominating
& Corporate
Governance
Committee
Public Debt & Equity
Securities
Committee
      
Robert I. Toll     
Bruce E. TollM
Douglas C. Yearley, Jr.     
Robert S. BlanküMM
Edward G. BoehneüM C 
Richard J. Braemerü   C
Christine N. GarveyüM  M
John A. McLeanüM 
Carl B. MarbachüMC M
Stephen A. Novickü MM 
Paul E. ShapiroüCM  
        
C-Chair     M-Member
Audit and Risk Committee
The Audit Committee is, and for the entire 2016 fiscal year was, composed of Paul E. Shapiro (Chair), Edward G. Boehne, Christine N. Garvey, and Carl B. Marbach, each of whom was a member of the Audit Committee for our entire 2014 fiscal year. Each member of the Audit Committee has been determined by the Board to meet the standards of independence required of audit committee members by the NYSE and applicable SEC rules. For more information on the NYSE standards for independence, see “Director Independence” above. The Board has also determined that all members of the Audit Committee are financially literate, and that Edward G. Boehne possesses accounting and related financial management expertise within the meaning of the listing standards of the NYSE and is an “audit committee financial expert” within the meaning of the applicable SEC rules. For a description of Mr. Boehne’s relevant experience, see “Proposal One—Election of Directors.”Directors” starting on page 7.

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The duties and responsibilities of the Audit Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:
acting on behalf of our Board to discharge the Board’s responsibilities relating to the quality and integrity of our financial statements;
overseeing our compliance with legal and regulatory requirements;
overseeing risk oversight and assessment;
the appointment, qualifications, performance and independence of the independent registered public accounting firm;
pre-approval of all audit engagement fees and terms, all internal-control related services, and all permitted non-audit engagements (including the terms thereof) with the independent auditor; and
review of the performance of our internal audit function.function; and
management of the Company’s significant risks and exposures, including strategic, operational, compliance, and reporting risks.
The duties of the Audit Committee with respect to oversight of the Company’s financial reporting process are described more fully on page 5262 under “Report of the Audit Committee.“Audit and Risk Committee Report.” During fiscal 2014,2016, the Audit Committee held 10 regular11 meetings. All of its meetings were attended by representatives from Ernst & Young LLP, our independent registered public accounting firm. The Audit Committee meets regularly in executive session with management, the company’s Chief Audit Officer, and our independent registered public accounting firm.
Executive Compensation Committee
The Compensation Committee is, and for the entire 20142016 fiscal year was, composed of Carl B. Marbach (Chair), Stephen A. Novick, and Paul E. Shapiro, each of whom has been determined by the Board to meet the NYSE’s standards for independence required of compensation committee members. In addition, each committee member qualifies as a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act and as an “outside director” as defined for purposes of Section 162(m) of the Code.
The duties and responsibilities of the Compensation Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:
establishing our compensation philosophy and objectives;
overseeing the implementation and development of our compensation programs;
annually reviewing and approving corporate goals and objectives relevant to the compensation of the Executive Chairman of the Board and the CEO;
evaluating the performance of the Executive Chairman of the Board and the CEO in light of those goals and objectives and determining each of the Executive Chairman of the Board’s and CEO’s compensation level based on these evaluations;
reviewing and approving all elements and levels of compensation for our executive officers and any other officers recommended by the Board;
discussing the results of the stockholder advisory vote on Say on Pay;
making recommendations to the Board with respect to incentive compensation plans and equity-based plans;


administering (in some cases, along with the Board) all of our stock-based compensation plans, as well as the Company's Senior Officer Bonus Plan ("Senior Officer Plan) and the SERP;its Supplemental Executive Retirement Plan ("SERP");
reviewing and approving, or making recommendations to the full Board regarding, equity-based awards; and
reviewing our regulatory compliance with respect to compensation matters.
In fulfilling its responsibilities, the Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the committee. For a discussion concerning the process and procedures for determining executive

19


compensation and the role of executive officers and compensation consultants in determining or recommending the amount or form of compensation, see the “Compensation Discussion and Analysis” beginning on page 25.27. The Compensation Committee held two regularfive meetings and one special meeting during fiscal 2014.2016. During fiscal 2014,2016, the Compensation Committee's independent compensation consultant and its affiliates did not provide any services to the Company or its affiliates other than advising the Compensation Committee on executive officer compensation and advising the Governance Committee on director compensation.
Nominating and Corporate Governance Committee
The Governance Committee is and for the entire 2014 fiscal year was, composed of Edward G. Boehne (Chair), Robert S. Blank,John A. McLean, and Stephen A. Novick, each of whom has been determined by the Board to meet the NYSE’s standards for independence. Mr. McLean joined the Governance Committee in May 2016.
The duties and responsibilities of the Governance Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:
identifying individuals qualified to become members of the Board and recommending to the Board the nominees for election to the Board;
evaluating from time to time the appropriate size of the Board and recommending any changes in the composition of the Board so as to best reflect our objectives;
assessing annually the composition of the Board, including a review of Board size, the skills and qualifications represented on the Board, and director tenure;
evaluating and making recommendations to the Board with respect to the compensation of the non-management directors;
adopting and reviewing, at least annually, corporate governance guidelines consistent with the requirements of the NYSE;
establishing procedures for submission of recommendations or nominations of candidates to the Board by stockholders;
reviewing the Board’s committee structure;
reviewing proposed changes to our governance instruments;
reviewing and recommending director orientation and continuing orientation programs; and
reviewing and approving related person transactions; andtransactions.
The Governance Committee is responsible for evaluating and making recommendations to the Board with respect to compensation of our directors. The Governance Committee along with the Board, administers the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007) (the “Directors Plan”). The Governance Committee held three regular meetings and two specialfive meetings during fiscal 2014.2016.


Public Debt and Equity Securities Committee
The Public Debt and Equity Securities Committee is and for the entire 2014 fiscal year was, composed of Richard J. Braemer (Chair), Robert S. Blank,Christine N. Garvey, and Carl B. Marbach,Marbach. Ms. Garvey joined the Public Debt and Bruce E. Toll.Equity Securities Committee in June 2016.
The duties and responsibilities of the Public Debt and Equity Securities Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include reviewing and approving, pursuant to authority granted by the Board, certain transactions relating to our public debt and equity securities and those of our affiliates. The Public Debt and Equity Securities Committee held two meetingsone meeting during fiscal 2014.2016.

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Director Attendance
Attendance at Board Meetings
The Board held four regularsix meetings and one special meeting during our 2014 fiscal year.2016.
All directors attended over 75% or more of the meetings of the Board and Board Committees on which they served.
Our independent directors hold separate meetings. Edward G. Boehne, our Lead Independent Director, acts as chair at meetings of the independent directors. During our 2014 fiscal year,2016, the independent directors met four times.
Attendance at Annual Meetings of Stockholders
It is the policy of our Board that all directors attend annual meetings of stockholders except where the failure to attend is due to unavoidable circumstances or conflicts discussed in advance by the director with the Executive Chairman of the Board. All of our Directorsdirectors except Mr. Marbach attended our 20142016 Annual Meeting of Stockholders, except Christine N. Garvey was unable to attend the meeting.Stockholders.
Consideration and Selection of Nominees for the Board
The Governance Committee is authorized to consider candidates for Board membership suggested by its members and by other Board members, as well as by management and by stockholders. A stockholder who wishes to recommend a prospective candidate for membership on the Board should follow the procedures described in this proxy statement under the caption “Procedures for Recommending Candidates for Nomination to the Board of Directors.” Once a prospective candidate has been identified by, or presented to, the Governance Committee, background information is elicited about the candidate, and the candidate is investigated and evaluated by the Governance Committee and, if deemed appropriate, interviewed. Following this process, the Governance Committee reports to the Board and makes a recommendation regarding the prospective candidate. No distinctions are to be made as between internally-recommended candidates and those recommended by stockholders. For a discussion of criteria for membership on our Board of Directors, see "Board Membership Criteria" on page 6 of this proxy statement.
Risk Oversight
Our Audit Committee regularly receives reports from aan enterprise risk management committee comprisedcomposed of representatives from various business functions within the Company that are charged with risk assessment and business continuity planning. This committee meets regularly and performs an enterprise risk assessment to identify and assess risks to the Company based on a regular basisthe probability of occurrence and the financial impact to the Company, the results of which are presented to the Audit Committee.
The enterprise risk committee also selects topics related to specific risks and potential vulnerabilities related to particular business functions of the Company, which topics are then presented to the Audit Committee along with a summary of the measures we have taken or plan to take in order to define and mitigate such risks and prepare for and address such vulnerabilities. These presentations have included reports regarding risks and vulnerabilities relating to, among other things, operations, assets, land investments, competition, personnel, credit and debt covenant compliance, joint venture relationships, financial reporting, insurance, financing, mortgages, treasury, storm water compliance, safety, litigation exposure, and information technology.
In addition, our Compensation Committee oversees risks arising from our compensation practices, and our Governance Committee oversees succession risks. Each of these committees regularly reports to the full Board, which is ultimately responsible for overseeing risks at the enterprise level. In addition, our full Board oversees strategic risks through its focus on overall corporate strategy and execution. The Compensation Committee has reviewed the design and operation of our compensation structures and policies as they pertain to risk and has determined that our compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on us.


21


DIRECTOR COMPENSATION
Director Compensation Program
The Governance Committee is responsible for evaluating and recommending compensation for non-managementnon-executive directors to the Board. Our non-managementnon-executive directors are compensated in cash, stock options, and restricted stockRSUs for their service as directors. The equity portion of annual compensation is paid following the end of the fiscal year, so the equity grant for service in the fiscal year ended October 31, 20132015 was made inat the beginning of fiscal 2014.2016.
The compensation program in effect for fiscal 20132015 and 20142016 for non-managementnon-executive directors consisted of the following components:
Board Retainer. The principal form of compensation for non-managementnon-executive directors for their service as directors is an annual retainer, consisting of a combination of cash and equity, with an annual aggregate value of $160,000 as follows:
Cash. Each non-managementnon-executive director receives one-third of the annual retainer in cash.
Equity. The equity portion of the annual retainer for a non-managementnon-executive director consists of two components: (a) non-qualified stock options having a grant date fair value of one-third of the annual retainer and (b) RSUs having a grant date fair value of one-third of the annual retainer, except that fractional sharesshare options and optionsunits are not issued. These equityEquity grants aremade in fiscal 2016 were issued pursuant tounder the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors Plan(2007) for the non-employee directors and the Stock Incentive Plan for Employees (2014) for Mr. Bruce E. Toll.
Stock options are granted on a date within the last 15 days of December that is determined in advance by the Compensation CommitteeBoard for service during the immediately preceding fiscal year and are granted by the Board with an exercise price equal to the fair market valueclosing price of the underlying common stock on the date of grant. Each option grant made to a non-managementnon-executive director has a ten-year term and vests in equal annual installments over a two-year period, with a provision for automatic vesting upon a change of control of the Company. For directors with five or more years of service, options continue to vest and remain exercisable for the ten-year term in the event of the director's death, disability, or retirement.
RSUs are also granted on athe same equity award grant date within the last 15 days of December that is determined in advance by the Compensation Committee for service during the immediately preceding fiscal year.as stock options. RSUs granted as director compensation vest in equal annual installments over two years, and shares underlying RSUs are generally deliverable 30 days after the vesting of the second installment. Upon a change of control of the Company or upon the death, disability, or retirement of the director, RSUs granted as director compensation will vest immediately and will be deliverable 30 days after vesting.
Committee Retainer. Each member of the Audit Committee, the Governance Committee, and the Compensation Committee receives annually, for service on each such Committee, a combination of cash and equity with a grant date fair value of $20,000 as follows (except that fractional sharesshare options and optionsunits are not issued): (a) one-third of this amount in cash; (b) non-qualified stock options having a grant date fair value of one-third of this amount; and (c) RSUs having a grant date fair value of one-third of this amount, in each case with the same material terms described above under “Equity.” In addition, the Chair of each of these committees receives an additional annual cash retainer of $10,000.
Each member of the Public Debt and Equity Securities Committee receives annually infor any fiscal year in which the Committee meets or takes official actions, for service on such Committee, a combination of cash and equity with a grant date fair value of $10,000 as follows (except that fractional sharesshare options and optionsunits are not issued): (a) one-third of this amount in cash; (b) non-qualified stock options having a grant date fair value of one-third of this amount; and (c) RSUs


having a grant date fair value of one-third of this amount, in each case with the same features described above under “Equity.” In addition, the Chair of that Committee receives an additional cash retainer of $5,000 infor any fiscal year in which the Committee meets or takes official action.
Attendance at Board and Committee Meetings. Directors, Committee Chairs and Committee members do not receive any additional compensation for attendance at Board or Committee meetings.

22


Lead Independent Director. The Lead Independent Director, Mr. Edward G. Boehne, receives annually $10,000 in cash for his services in that capacity.
Fiscal 2017 Changes to Director Compensation Program
In fiscal 2016, the Board adopted changes to the non-executive director compensation program that will be effective for service starting in fiscal 2017. The Board increased the annual retainer to $210,000 and determined that the equity portion of each of the annual retainers for Board and Committee service would consist of RSUs having a grant date fair value of two-thirds of the annual retainer.
Other Director Compensation Arrangements
Mr. Bruce E. Toll entered into an Advisory and Non-Competition Agreement (the “Advisory Agreement”) with the Company as of November 1, 2010. The Advisory Agreement expireswas terminated on October 31, 2016. The purpose ofMarch 8, 2016, the Advisory Agreement is to provide us with the valuable and special knowledge, expertise, and services ofdate that Mr. Bruce E. Toll one of our co-founders andceased to be a director and an employee of the Company since our inception, on a continuing basis, as well as to provide that Mr. Toll does not engage in specified activities.Company. The Advisory Agreement provides,provided, among other things, that we willthe Company would retain Mr. Bruce E. Toll as an employee and Special Advisor to the Executive Chairman of the Board and the CEO until October 31,CEO. In fiscal 2016, at aMr. Bruce E. Toll received $114,808 as compensation rate of $675,000 for the first year of the term ofunder the Advisory Agreement, with suchwhich was a pro-rated payment of his annual compensation rate to be reduced by $75,000of $300,000 for his period of service in each of the remaining five years of the term of the Advisory Agreement. In fiscal 2014, he received compensation in the amount of $450,000 under the Advisory Agreement.2016 through March 8, 2016.
The Advisory Agreement providesprovided that during theits term, of the Advisory Agreement, Mr. Bruce E. Toll willwould be an employee and entitled to receive the health plan benefits provided to our NEOs, which in fiscal 20142016 were the same as those provided to all of our employees after 60 days of service with us. Mr. Bruce E. Toll iswas a participant in the Company’s 401(k) retirement plan. Duringplan during fiscal 2014,2016 through March 8, 2016, and we provided Mr. Bruce E. Toll with a contribution to the Company’s 401(k) retirement plan in the amount of $10,215.$6,562 during this period.
In addition, Mr. Bruce E. Toll is also a participant in the SERP, which provides an annual benefit to him of $230,000 for 20 years; however, no payments areyears. Mr. Bruce E. Toll became eligible to be madereceive his SERP benefits when he ceased to him underprovide services to the SERP until the expiration of the term (or termination) of the Advisory Agreement.Company on March 8, 2016. See “Executive Compensation Tables—Pension Benefits During Fiscal 2014—2016—Supplemental Executive Retirement Plan” on page 56 for a more detailed description of the SERP.



Director Compensation Table
The following table sets forth information concerning the fiscal 20142016 compensation awarded to or earned by our non-managementnon-executive directors. ManagementExecutive directors are not compensated for their service as directors. The compensation received by our managementexecutive directors for their services as employees is shown in the Summary Compensation Table on page 4250 of this proxy statement.
Director Compensation during Fiscal 20142016
Name 
Fees
Earned or
Paid in
Cash ($)
 
Stock
Awards
($)(1)(2)
 
Option
Awards
($)(3)(4)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
 
All Other
Compensation
($)(5)
 Total ($) 
Fees
Earned or
Paid in
Cash ($)
 
Stock
Awards
($)(1)(2)
 
Option
Awards
($)(3)(4)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)(5)
 
All Other
Compensation
($)(6)
 Total ($)
                        
Robert S. Blank(7) $63,336
 $63,323
 $64,534
 $—
 $—
 $191,193
 90,002
 63,335
 63,349
 —
 —
 216,686
Edward G. Boehne $86,670
 $66,663
 $67,933
 $—
 $—
 $221,266
 86,670
 66,653
 66,672
 —
 —
 219,995
Richard J. Braemer $61,668
 $56,678
 $57,737
 $—
 $—
 $176,083
 61,668
 56,666
 56,685
 —
 —
 175,019
Christine N. Garvey $60,002
 $59,983
 $61,135
 $—
 $—
 $181,120
 60,002
 59,984
 60,008
 —
 —
 179,994
Carl B. Marbach $80,004
 $70,004
 $71,331
 $—
 $—
 $221,339
 80,004
 70,003
 70,012
 —
 —
 220,019
John A. McLean (8) 38,890
 —
 —
 —
 —
 38,890
Stephen A. Novick $66,670
 $66,663
 $67,933
 $—
 $—
 $201,266
 66,670
 66,653
 66,672
 —
 —
 199,995
Paul E. Shapiro $76,670
 $66,663
 $67,933
 $—
 $—
 $211,266
 76,670
 66,653
 66,672
 —
 —
 209,995
Bruce E. Toll $56,668
 $56,678
 $57,737
 $—
 $460,215
 $631,298
Bruce E. Toll (9) 13,334
 56,666
 56,685
 333,444
 121,370
 581,499
        
(1)Annual RSU grants to non-managementnon-executive directors are made during the first quarter of each fiscal year for service on the Board and Board committees during the immediately preceding fiscal year; accordingly, the values reflected in the table above are values of grants for service in fiscal 2013.2015.
Each non-managementnon-executive director received RSUs for Board and Board Committee service having a value of $53,333 for Board service. In addition, non-managementnon-executive directors received RSUs having a value of $6,666 for service on each of the Audit Committee, the Governance Committee, and the Compensation Committee, and RSUs having a value of $3,333 for service on the Public Debt and Equity Securities Committee. For purposes of determining the number of RSUs that are awarded, the RSU grant date fair value per share is the closing price of our common stock on December 20, 2013,18, 2015, the grant date of the awards. Fractional RSUs for fractional shares are not granted.

23


(2)The non-managementnon-executive directors held the following amounts of outstanding unvested RSUs at October 31, 2014: Mr. Blank, 3,767 units;2016: Mr. Boehne, 3,9653,055 units; Mr. Braemer, 3,3712,597 units, Ms. Garvey, 3,5682,750 units; Mr. Marbach, 4,1643,208 units; Mr. Novick, 3,965 units; Mr. Shapiro, 3,9653,055 units; and Mr. Toll, 3,371Shapiro, 3,055 units. The non-executive directors held the following amounts of outstanding vested RSUs at October 31, 2016: Mr. Boehne, 1,026 units; Mr. Braemer, 872 units; Ms. Garvey, 923 units; Mr. Marbach, 1,077 units; Mr. Novick, 1,026 units; and Mr. Shapiro, 1,026 units.
(3)The annual stock option grants to non-managementnon-executive directors are made during the first quarter of each fiscal year for service on the Board and Board committees during the immediately preceding fiscal year; accordingly, the values reflected in the table above are values of grants for service in fiscal 2013.2015.
Each non-managementnon-executive director received options for Board and Board committee service having a value of $53,333 for Board service. In addition, non-managementnon-executive directors received options having a value of $6,666 for service on each of the Audit Committee, the Governance Committee, and the Compensation Committee; and options having a value of $3,333 for service on the Public Debt and Equity Securities Committee. Options for fractional optionsshares are not granted. The option grant values reflected in the table may vary from these amounts because the option grant date fair value per share is determined as follows:
For purposes of determining the number of shares that are subject to the options granted, the grant date fairassigned value per share of the options was determined by multiplying the closing price of our stock on December 20, 2013,18, 2015, the date of the awards, by the average of the “Fair Value Quotient” for the three immediately previous fiscal years of the Company. The “Fair Value Quotient” is the fraction in which (x) the denominator is the closing price of our common stock on the date of the awards for each of the three years immediately preceding the current year,relevant date, and (y) the numerator is the grant date fair value of the options granted in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation ("ASC 718"); assumptions used in the calculation


of thesethe ASC 718 amounts are included in Note 109 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014,2016, excluding the effect of estimated forfeitures.
(4)The non-managementnon-executive directors held unexercised stock options to acquire the following amounts of our common stock at October 31, 2014:2016 : Mr. Blank, 150,862Blank's estate, 110,129 shares; Mr. Boehne, 126,224116,873 shares; Mr. Braemer, 141,140102,642 shares; Ms. Garvey, 63,50129,385 shares; Mr. Marbach, 158,585117,116 shares; Mr. Novick, 158,224116,373 shares; Mr. Shapiro, 153,474113,123 shares; and Mr. Bruce E. Toll, 141,140102,642 shares.
(5)The amount in this column represents the increase in the actuarial present value of accumulated benefits under the SERP for Mr. Bruce E. Toll through October 31, 2016.
(6)“All Other Compensation” consists of the following annual compensation and benefits provided to Mr. Bruce E. Toll pursuant to the Advisory Agreement.Agreement through March 8, 2016, the date he ceased to be a director and the Agreement was terminated. See “Other Director Compensation Arrangements,” above.
Annual compensation under Advisory Agreement $450,000
Contribution to Company 401(k) plan 10,215
Total $460,215
Compensation under Advisory Agreement $114,808
Company contribution to 401(k) plan 6,562
Total $121,370

24
(7)Mr. Blank died on April 30, 2016. In fiscal 2016, his estate received a cash payment of $60,000, since the non-executive director compensation program provides that in the event of a non-executive director’s death, the heirs or legal representative of such director are entitled to a cash payment equal to two-thirds of the annual retainers for service as a director and Committee member (as applicable) in lieu of the equity portion of the annual retainers earned for such period, pro-rated through the date of death.
(8)Mr. McLean was elected as a director on March 8, 2016 at the 2016 Annual Meeting of Stockholders.
(9)Mr. Bruce E. Toll ceased to be a director on March 8, 2016.



EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis ("CD&A") focuses on how our NEOs wereare compensated for fiscal 2014 and how their 2014 compensation aligns with the Compensation Committee's objectives in setting compensation for our pay for performance philosophy.NEOs. In our CD&A, we will discuss:
 Page
  
2014Fiscal 2016 Company Performance2527
ExecutiveNew Developments for Fiscal 2016 Compensation Program Highlights2731
Compensation Philosophy and Objectives2732
Compensation Decision-MakingPerformance Assessment Process2933
Elements of Compensation3235
Cash Compensation Decisions3235
Long-Term Incentive Compensation Decisions3539
Compensation Decision-Making Process44
Benefits and Perquisites3745
Other Compensation Practices and Policies3946
2014 Fiscal2016Company Performance
In determining NEO compensation for the fiscal year ended October 31, 2014,2016, the Compensation Committee recognized that fiscal 2014 was a yearconsidered the contributions of significant progress in growingeach of our revenuesNEOs to the Company’s strategy to diversify our geographic footprint and profits.broaden our platform of residential product lines. The Compensation Committee also considered Company performance in fiscal 2016 and paid particular attention to the Company's performance in the areas of revenues, pre-tax income, contracts, and gross margin:
backlog:
Revenues: Our revenues in fiscal 20142016 of $3.91$5.17 billion and home building deliveries of 5,3976,098 units rose 46%24% in dollars and 29%10% in units compared to fiscal 20132015 and were the highest for any fiscal year since fiscal 2007.
Income: Our pre-tax income improved to $504.6$589.0 million in fiscal 2014,2016, compared to pre-tax income of $267.7$535.6 million in fiscal 2013.2015. Impacting FY 2016’s pre-tax income, reported in cost of sales, were $13.8 million of inventory impairments and $125.6 million of warranty charges primarily related to older stucco homes. Fiscal 2015’s pre-tax income included $35.7 million of inventory impairments and a comparable $14.7 million warranty charge. We reported net income of $340.0$382.1 million in fiscal 2016, or $1.84$2.18 per share diluted, compared to net income of $170.6$363.2 million in fiscal 2013,2015, or $0.97$1.97 per share diluted.diluted, a 10.7% increase in diluted earnings per share.
Gross MarginContracts: Our gross margin fornet signed contracts in fiscal 2014 was 21.2%,2016 of $5.65 billion and 6,719 units rose 14% in dollars and 14% in units compared to 20.2% for fiscal 2013.2015.

25Backlog: Our fiscal year-end 2016 backlog was $3.98 billion, up 14% compared to fiscal year-end 2015.


The Compensation Committee also considered the following results and achievements:
ContractsGross Margin: Our net contracts signed ingross margin as a percentage of revenues for fiscal 2014 of $3.90 billion rose 7%2016 was 19.8%, compared to 21.6% for fiscal 20132015. Impacting FY 2016’s gross margin, reported in cost of sales, were $13.8 million of inventory impairments and were the highest for any fiscal year since 2006.
Backlog: Our fiscal year end 2014 backlog was $2.72 billion, up 3% compared$125.6 million of warranty charges primarily related to fiscal 2013older stucco homes. Fiscal 2015’s gross margin included $35.7 million of inventory impairments and was the highest for any fiscal year since 2007.a comparable $14.7 million warranty charge.
Selling, General and Administrative Expenses (“SG&A”): Our SG&A as a percentage of revenue improved to 11.1%10.4% for fiscal 2016 compared to 12.7%10.9% for fiscal 2013.2015.


Operating Margin: Our operating margin improveddecreased to 10.2%9.5% for fiscal 20142016 from 7.5%10.7% for fiscal 2013.2015.
Joint Venture and Other Income:Income: In fiscal 2014,2016, we produced $107.3$99.0 million in pre-tax income from our joint ventures, our other ancillary operations, and other sources, compared to $66.6$88.7 million in fiscal 2013.2015.
Growth in a Recovering Economy: As the housing market progresses through the early stages of the recovery, we have made significant progress in growing our revenues and profits. Since the recent low point in fiscal 2011, our revenues and net income have increased at compound annual growth rates of 38% and 104%, respectively.
Integration of Shapell Acquisition. In fiscal 2014, we completed the integration of the Shapell Homes acquisition that closed in February 2014 and was the largest acquisition in the Company's history. With Shapell, at fiscal year-end, we were selling homes from 25 communities in California representing 9.5% of the Company’s total selling communities, compared to 9 communities representing 4.0% of our total a year before. In fiscal 2014, we also completed selective sales of Shapell land which were part of our strategy to reduce land concentration and outstanding borrowings following the closing of the acquisition.
Focus on Growth OpportunitiesHonors: In fiscal 2014,2016, we continuedwere named the Most Admired Home Building Company in Fortune magazine's survey of the World's Most Admired Companies for 2016. In addition, we ranked #6 among all 1,500 companies in the survey in the Quality of Products/Services category behind only Apple, Walt Disney, Amazon, Alphabet (Google), and Nordstrom.
Fiscal 2016 Pay for Performance
Fiscal 2016 LTIA Performance Targets. The Compensation Committee assesses alignment of our executive compensation program with our shareholders’ long-term interests as it determines the performance metrics for the Company’s long-term incentive awards (“LTIA”). Since fiscal 2012, the Compensation Committee has granted performance-based RSUs based on operational performance metrics ("Ops PRSUs"), specifically:
Pre-tax income, excluding specified gains and losses from litigation or claims, impairments, and other items in accordance with the Senior Officer Plan, as more fully described under "2016 Performance-Based RSU Awards—2016 Ops PRSUs" starting on page 41 ("PTI Metric");
Home building margin which is defined as home building cost of sales excluding interest expense, as a percentage of home building revenue, excluding specified gains and losses from litigation or claims, impairments, and other items in accordance with the Senior Officer Plan, as more fully described under "2016 Performance-Based RSU Awards—2016 Ops PRSUs" starting on page 41 ("Margin Metric"); and
Units delivered ("Units Metric").
In December 2015, the Compensation Committee established fiscal 2016 performance targets for the Ops PRSUs which in each case exceeded the targets for fiscal 2015. For the fiscal 2016 performance period:
The target level for the PTI Metric was set at 26.28% higher than the Company's actual performance for fiscal 2015, and the Company's fiscal 2016 performance rose 23.41% compared to strategically growfiscal 2015.
The target level for the Units Metric was set at 10.41% higher than the Company's actual performance for fiscal 2015, and the Company's fiscal 2016 performance rose 10.37% compared to fiscal 2015.
The target level for the Margin Metric was set to 26.10% compared to the Company's actual performance of 26.22% for fiscal 2015, and the Company's fiscal 2016 performance was 25.63%.
 Fiscal 2016 LTIA Performance Metrics Compared to Fiscal 2015
 Actual Target (100%) Payout (%)
20162015 20162015 20162015
PTI Metric$719,470,000$582,994,000 $736,176,000$531,443,000 97.73%109.70%
Margin Metric25.63%26.22% 26.10%25.79% 98.20%101.67%
Units Metric6,0985,525 6,1005,500 99.97%100.45%
The strength of the Company’s operations and profit margins in fiscal 2016 resulted in a payout in number of shares at 98.63% of target for the Ops PRSUs, as more fully described below and under "2016 Performance-Based RSU Awards—2016 Ops PRSUs" starting on page 41.


At the beginning of fiscal 2016, the Compensation Committee determined that it would add a fourth performance metric by awarding performance-based RSUs based on relative TSR ("TSR PRSUs") to further support the alignment between pay and performance. At that time, the Compensation Committee made an initial grant of TSR PRSU target awards, including a one-time grant of TSR PRSU target awards with performance periods of one and two years to phase in these awards, in addition to the regularly recurring grant with a three-year performance period.
Although the Company’s operational performance in fiscal 2016 was strong, total shareholder return lagged our land holdingspeer group. Due to the Company’s stock price performance in key markets, extendfiscal 2016:
Stock options granted to our product offerings across geographies, diversifyexecutive officers in fiscal 2016 had a realizable value of zero at the end of the fiscal year.
TSR PRSUs with a one-year performance period consisting of fiscal 2016 had a payout of zero.
Ops PRSUs based on operating metrics had a realizable value of 18% lower than targeted.
Realizable Value of 2016 Equity Compensation. The Compensation Committee believes that the substantial decrease in the realizable value of equity awards granted to our business lines, and strengthenCEO in fiscal 2016 compared to the grant date fair value of such awards in the Summary Compensation Table (“SCT”) on page 50 demonstrates the strong pay for performance alignment of our financial position.compensation program. The Compensation Committee particularly noted that the one-time grant to the CEO of TSR PRSUs with a one-year performance period consisting of fiscal 2016 has a grant date fair value of $1.08 million in the SCT but had a payout of zero.
Realizable Value of Equity Awards Granted in 2016 Compared to SCT Valuetol2017def14a_chart-05286.jpg        
◦(1)In California,The realizable value of equity awards means the $1.6 billion acquisition(a) the values of Shapell Homes gave us approximately 5,000 home sitesall performance-based RSUs granted in established coastal communitiesfiscal 2016 and (b) in the California markets surrounding Los Angeles and San Francisco, enabling us to significantly expand our California operations.case of stock options, the intrinsic value of all awards granted in fiscal 2016 calculated by subtracting the exercise price from the share price on the last day of the fiscal year. Performance-based RSUs with performance periods ended within fiscal 2016 were valued at the determined outcome multiplied by the share price on the last day of fiscal 2016; performance-based RSUs for performance periods that have not yet been completed were valued at target based on the share price on the last day of fiscal 2016.


The Compensation Committee recognizes that it is important for it to consider how compensation outcomes are influenced by Company performance. This perspective is particularly important because equity-based awards account for the most significant portion of the total compensation of our CEO and other executive officers. Accordingly, the Compensation Committee evaluated the decrease of approximately $4.6 million in the realizable value of the CEO’s equity awards granted in fiscal 2016 compared to the SCT value.
The Compensation Committee believes that the changes that it made to our executive compensation program in December 2015 to enhance pay for performance alignment were effective, as demonstrated by the correlation between LTIA performance metrics and the corresponding payouts for fiscal 2016 performance.
Impact of 2016 One-Time TSR PRSU Grants. In its year-end review of fiscal 2016 pay and performance, the Compensation Committee evaluated the impact of the changes to the executive compensation program for fiscal 2016 in the first year of their implementation.
As part of this deliberation, the Compensation Committee noted that the TSR PRSUs were phased in by making a one-time grant of awards with performance periods of one and two years, in addition to the regularly recurring grant with a three-year performance period. In reviewing SCT values for fiscal 2016, the Compensation Committee assessed the inflation in total compensation levels caused by these one-time awards and considered that, net of these one-time awards, SCT total compensation levels for fiscal 2016 were comparable to or less than fiscal 2015:
◦In Texas, we opened four large master planned communities, where we will build homes and sell lots to other builders, which will generate future additional income.
2016 Adjusted SCT Total Compensation (1)2015 SCT Total Compensation
◦Robert I. TollToll Brothers City Living, which is heavily concentrated in the urban metro New York City market, currently has 837 units in projects open or soon to be open for sale with another 1,203 units we control that are in the approval process.
$6.99 million$8.02 million
◦Douglas C. Yearley, Jr.Toll Brothers Apartment Living continues to expand our pipeline of urban and suburban for-rent projects. We currently have 1,441 units under management, 1,920 in construction, and nearly 3,000 in planning.$9.99 million$9.81 million
Richard T. Hartman$4.06 million$3.99 million
Martin P. Connor$3.68 million$3.46 million
Honors: We were named "Builder of the Year" by Builder magazine. In addition, the Company and several of our executives were recognized in Institutional Investor magazine's 2015 All-America Executive Team survey of the investment community.
◦(1)We were named Most Honored Company
2016 Adjusted SCT Total Compensation is the total compensation reported in the Home Building and Building Products sector amongSCT for fiscal 2016, less the 37 companies receiving nominations. We also ranked 8th overall among the approximately 2,000 companies receiving votes in this year's surveygrant date fair value of the buy-sideone-time grants of TSR PRSUs with performance periods of one and sell-side analyst community.two years made in December 2015 to phase in the grant of TSR PRSUs which regularly will have a performance period of three years.
The Compensation Committee will continue to monitor and assess the impact of the recent changes to the compensation program and the effectiveness of the program to align pay and performance.


New Developments for Fiscal 2016 Compensation
In December 2015, the Compensation Committee changed several components of our executive compensation program to further support the alignment between pay and performance. These changes took into account feedback from stockholders and proxy advisory firms, current market practice, input from the Compensation Committee’s independent compensation consultant, and the Compensation Committee’s consideration of the results of the Say on Pay advisory vote held in 2015.
Summary of Executive Compensation Program Changes
◦Prior ProgramOur CEONew Program
Annual incentive bonus based 100% on qualitative performance assessmentèPayout of 60% of annual incentive bonus based on pre-tax income targets, with qualitative performance assessment limited to 40%
Long-term incentive award performance metrics based on pre-tax income, home building margin, and CFO were namedunits deliveredè
Relative total shareholder return
added as LTIA performance metric
One-year performance period for all
performance-based RSUs
èThree-year performance period for TSR PRSUs (after phase-in of awards)
Mix of equity awards varied among NEOsè
Mix of 60% performance-based RSUs and 40% stock options awarded to all NEOs
other than the All-America Executive Team with each receiving recognition from both the buy-side and sell-side communities within the Homebuilders & Building Products sector.Chairman
No clawback policyèIncentive compensation, including stock-based compensation, is subject to a clawback policy

26


Executive Compensation Program Highlights
Our Compensation Committee has developed and maintained a compensation program thatIn addition, starting with grants made in December 2016, in no event will the payout for the TSR PRSUs be greater than 125% if the Company’s own TSR is intended to reward positivenegative for the performance retain talented personnel, and encourage actions that drive success in our business strategy. Ourperiod. Additional detail regarding these executive compensation program received the supportfeatures can be found under "Cash Compensation Decisions—Annual Incentive Bonus" starting on page 36, "Long-Term Incentive Compensation Decisions—Performance-Based RSUs" starting on page 40, and "Other Compensation Practices and Policies—Clawback Policy" on page 48.
Consideration of at least 98% ofSay on Pay Results
At our stockholders who voted at our2016 Annual Meeting of Stockholders, 98% of those stockholders voting on the Say on Pay proposal voted in eachsupport of the last four years.compensation of our NEOs. The results of our Say on Pay votes held to date are as follows:
Our
Annual Meeting Year 
Stockholder Support on
Say on Pay Vote
2016 98%
2015 87%
2014 98%
2013 99%
2012 98%
2011 99%
In response to the decrease in support in fiscal 2015, the Compensation Committee undertook a comprehensive review of the Company's executive compensation program featureswith the following attributes:
A balanced mixgoal of annual cash and longer-term equity incentives that reward our NEOsmaking changes in the program for current performance and align their interests with long-term performance and long-term stockholder value creation.
Long-term equity incentive grants with multi-year vesting periods and retirement benefits to encourage retentionfiscal 2016 compensation. As part of this review, we considered the assessments of our NEOs.program by the two major proxy advisory firms, and we held discussions with a number of our largest institutional stockholders and a proxy advisory firm regarding their views on the existing and proposed new components of the program.
No NEO employment agreements, severance plans, or agreements that provide “golden parachute” cash payouts

As a result of this review and the feedback received from stockholders, proxy advisory firms, and the Compensation Committee’s independent compensation consultant, the Compensation Committee made the changes summarized above to the executive compensation program effective for our NEOs conditioned upon a changefiscal 2016. The Compensation Committee viewed the results of control or excise tax gross-ups. Benefits conditioned upon a changethe 2016 Say on Pay vote as an affirmation of control are limitedthe changes made to vestingthe executive compensation program made in December 2015 and, potential payment of existing Supplemental Executive Retirement Plan ("SERP") benefits and vesting of previously granted equity compensation.
A structure for NEO incentive compensation that is designedaccordingly, did not implement further significant changes to comply with tax Code requirements for deductibility.the program during fiscal 2016.
Stock ownership requirements for our NEOs and policies restricting NEOs hedging and pledging of Company shares.
Compensation Philosophy and Objectives
We face intense competition for talent from a number of other home builders in each marketmarkets in which we operate. It is vital to our success and long-term viability that our business continues to be managed by highly experienced, focused, and capable executives who possess the experience and vision to anticipate and respond to market developments.
The Board and the Compensation Committee believe that our ability to retain and motivate NEOs who possess the skills, experience, and capabilities to succeed in our competitive industry has been essential to our long-term success and a significant factor in creating long-term value for our stockholders. Base salaries, annual incentive bonuses, long-term equity compensation, retirement benefits, and competitive employee benefits are the primary tools used to retain and motivate our NEOs to deliver superior performance and to enhance long-term value to our stockholders. The Compensation Committee believes it has developed a compensation program that rewards outstanding short-term and long-term performance and encourages actions that successfully deliver on our business strategy.
The Compensation Committee also believes that long-term incentives should be a significant factor in the determination of the actual compensation realized over time, particularly because the many actions and decisions that are required of our NEOs in the business of home building, including evaluating and purchasing land, planning the use of that land and the timing of that use, obtaining approvals, completing development, and generating revenues, require a long time horizon before we realize tangible financial benefits.
The Compensation Committee’s primary objectives in setting compensation for our NEOs are:
Set compensation levels that are sufficiently competitive to attract, motivate, and reward the highest quality individuals to contribute to our goals and overall financial success. By keeping compensation competitive during times of growth as well as contraction, the Compensation Committee attempts to achieve these objectives.retain executives through the phases of the cycle of the real estate market.
Retain executives and encourage continued serviceservice. . The Compensation Committee seeks not only to attract but also to maintain the continuity of our excellent management team. The Compensation Committee believes our stockholders have historically benefited from the continued employment of our NEOs over an extended period of time—the Executive Chairman, who co-founded our business in 1967; the CEO, who joined the Company in 1990 and served in various senior management positions during the 20 years

27


preceding his appointment as CEO; the President and COO, who joined the Company in 1980 and had served in various positions during the 31 years preceding his appointment as COO; and the CFO, who joined the Company in 2008. It is important that we concentrate on retaining and developing the capabilities of our current leaders and emerging leaders to ensure that we continue to have an appropriate depth of executive talent.
Incentivize executives to manage risks appropriately while attempting to improve our financial results, performance, and condition over both the short-term and the long-term. The Compensation Committee provides both short-term and long-term compensation for current performance, as well as to provide incentives to achieve short- and long-term goals. Because of the nature of our business and the way we operate our business and implement our strategies, we may not witness for several years the positive results of many decisions made or actions taken by our NEOs in any current fiscal year, including those in connection with land purchased and strategies implemented to manage risks and position us for growth. The Compensation Committee, by seeking a balance of short-term and long-term compensation, seeks to motivate and reward NEOs for decisions made today that may not produce immediate or short-term results, but are intended and expected to have a positive long-term effect.
Align executive and stockholder interests. The Compensation Committee believes that the use of equity compensation, including use of performance-based RSU grants as a key component of executive compensation, is a valuable tool for aligning the interests of our NEOs with those of our stockholders, including the use of such compensation to reward actions that demonstrate long-term vision. When management and stockholder interests are aligned, the Compensation Committee believes management’s focus on creating long-term growth and value is increased.
Consider tax deductibility for incentive compensation. The Compensation Committee believes that tax deductibility for the Company is a favorable feature for an executive incentive compensation program. Although the Compensation Committee may award compensation to NEOs that is not tax-deductible when it deems that such compensation is in the best interests of the Company, it generally attempts to structure compensation for NEOs to meet the Code requirements for deductibility, including deductibility of compensation awarded under performance-based compensation plans.

28Use pay practices that support good governance.
◦We do not enter into employment agreements with NEOs or agreements that provide “golden parachute" cash payouts or excise tax gross-ups for our NEOs.
◦Benefits conditioned upon a change of control are limited to vesting and potential payment of existing SERP benefits and vesting of previously granted equity awards.
◦Perquisites are limited, and we do not provide tax gross ups on perquisites.
◦We have a policy that restricts NEOs' hedging and pledging of Company shares.
◦Incentive compensation, including stock-based compensation, is subject to a clawback policy starting in fiscal 2016.



Compensation Decision-MakingPerformance Assessment Process
Compensation DecisionDecision-Making Timeline
The Compensation Committee reviews and determines base salary, annual incentive bonuses, and long-term incentive compensation, as well as benefits and perquisites, on an annual basis. For compensation relating to fiscal 2014,2016, the primary steps taken by the Compensation Committee to establish and award compensation to our NEOs were as follows:
  Compensation Committee Action Taken
   
December 20132015 
Set 2014 performance goals for fiscal 20142016 annual incentive bonus and performance-based RSU awards and fixed target number of 20142016 performance-based RSU awards for NEOs
Set 2014calendar year 2016 base salaries for the NEOs
   
June 20142016 
Reviewed the Say on Pay voting results from the 20142016 annual meeting of stockholders, as well as feedback received from stockholders and proxy advisory firms on our executive compensation program
Reviewed 2013fiscal 2015 NEO compensation compared to our Peer Group (defined on page 45)
Reviewed a market assessment prepared by the Compensation Committee's independent compensation consultant of 2013fiscal 2015 senior executive pay versus performance for the Company compared to the Peer Group
Reviewed Company financial results compared to the Peer Group for the prior fiscal year and the current fiscal year to date
Consulted with the independent compensation consultant regarding industry trends in executive compensation
   
November 20142016 
Reviewed Company projected fiscal 2014 financial results compared to the Peer Group
Reviewed market assessment prepared by the independent compensation consultant of 2013Company fiscal 2015 senior executive pay versus projected Company 2014fiscal 2016 performance compared to the Peer Group
Commenced discussions with our largest stockholders and proxy advisory firms to gain their input on our executive compensation program
Held preliminary discussions regarding NEO individual performance during fiscal 20142016
   
December 20142016 
Reviewed Company fiscal 2014 financial results compared to the Peer Group
Reviewed market assessment prepared by the independent compensation consultant of potential 2014fiscal 2015 Company senior executive pay versus actual Company fiscal 2016 performance for the Company compared to the Peer Group
Reviewed each NEO’s individual performance during fiscal 20142016
Reviewed fiscal 20142016 performance goals and certified the level of performance attained for annual incentive bonus eligibility and performance-based RSU payouts
Determined fiscal 20142016 annual incentive bonuses for the NEOs
Determined and granted equity awards for fiscal 20142016 performance


Review of Company Performance
Throughout the fiscal year, the full Board monitored our financial performance in relation to our recent historical performance and in relation to our Peer Group. The Compensation Committee also reviewed and considered our financial performance during the fiscal year which it considered when making final fiscal 20142016 compensation decisions.decisions at the beginning of fiscal 2017. See "2014"Fiscal 2016 Company Performance" above.starting on page 27.

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Review of Individual Performance
In making fiscal 2014 compensation determinations,As part of its evaluation of individual performance, the Compensation Committee particularly notedconsidered the contributions of each NEO to the Company’s achievements described under “2014“Fiscal 2016 Company Performance” above. The Compensation Committee also evaluated the contributions of each of our NEOs in fiscal 2016 to the following areas: the Company’s strategy to diversify our geographic footprint and broaden our platform of residential product lines; the Company's fiscal 2016 earnings per share and gross margin performance; and the Company's continuing growth, including its growth from approximately 3,900 full-time employees in fiscal 2015 to approximately 4,200 in fiscal 2016.
In making compensation decisions for fiscal 2016, the Compensation Committee further considered the following individual performance forspecific achievements of each NEO:of our NEOs in fiscal 2016:
Robert I.The contributions of Mr. Toll, served as our Chief Executive Officer and Chairman of the Board from our inception until June 2010 when he assumed the new position of Executive Chairman, ofas the Board. The Compensation Committee notedCompany's founder and his continuing guidance and oversight, in particular with respect to Company strategy, particularly with respectthe Company's land acquisition;
The contributions of Mr. Yearley, our CEO, and Mr. Hartman, our President and Chief Operating Officer, to land acquisition as well as productgrowth in backlog and geographic expansion.
the Company's realignment towards better-performing markets in fiscal 2016;
Douglas C. Yearley has been our Chief Executive Officer since June 2010. The Compensation Committee particularly noted his leadership in planningMr. Yearley's and guiding our growth and profitability, diversifying our business lines, and growing our land holdings in key markets, including through the successful integration of the Shapell acquisition. The Compensation Committee recognized his continuedMr. Hartman's efforts to further enhance ourthe Company’s brand, which were reflected in the Company being named "Builderindustry honors received in fiscal 2016;
The contributions of Year" by Builder magazine. The Compensation Committee also noted his ability to communicate with,Mr. Yearley and represent us before, the media, banking, and investor communities.
Richard T. Hartman has been our Chief Operating Officer since January 2012 and our President since January 2013. The Compensation Committee noted his significant contributions to the strong 2014 fiscal year experienced by the Company as the principal officer in charge of sales and home building activities, which included major strides in geographical and product expansion in addition to improvements in processes and margin. The Compensation Committee also recognized his oversight of the successful integration of the Shapell acquisition into the Company's operations.
Martin P.Mr. Connor, has been our Chief Financial Officer, since September 2010. The Compensation Committee recognized his ability to work productively with all divisionsthe Company's exploration of potential strategic transactions in fiscal 2016, including its acquisition of Coleman Homes at the start of fiscal 2017; and personnel
Mr. Connor's contributions in controlling our costs, preserving our cash, enhancing ourthe areas of new joint ventures formed; managing the Company’s balance sheet, and containing risk. The Compensation Committee also noted his successful executionincluding strategic repurchases of a cash generation strategy to reduce the Company's debt and net debt to capital ratio following the Shapell acquisition.
Participation by Management
The Compensation Committee worked with management to establish its meeting agendas and determine the participants. Throughout the year, the Compensation Committee requested information from managementstock and the Committee’s independent compensation consultant, including information aboutextension and expansion of the compensation practicesCompany's corporate loans; assessing and financial performancemanaging risk; and oversight of other companies in the home building industry and other industries. Our CEO and CFO were invited by the Compensation Committeeinitiatives to attend certain of its meetings in order to provide information and answer questions regardingimprove the Company’s strategic objectives and financial performance related to the Compensation Committee’s work. Our other NEOs were also available to Compensation Committee members and to attend its meetings upon request.
With regard to compensation decisions relating to the Executive Chairman, the Compensation Committee, in addition to its own observations of the Executive Chairman’s performance during the 2014 fiscal year, gained significant insight into the performance of the Executive Chairman during that same period from its many exchanges with the other NEOs, other Company officers, and the other directors. The Executive Chairman submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, and overall compensation levels for the CEO. Our CEO in conjunction with the Executive Chairman submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, and overall compensation levels for the President and COO and the CFO. The Compensation Committee, after consideration of all of these inputs, determined the actual awards to the Executive Chairman, the CEO, the President and COO, and the CFO.
Use of Independent Compensation Consultant
The Compensation Committee engaged Compensation Advisory Partners LLC (“CAP”) to serve as its independent compensation consultant for fiscal 2014. CAP received instructions from, and reported to, the Compensation Committee on an independent basis. CAP was also authorized by the Compensation Committee to share with and request and receive from management specified information in order to prepare for Compensationtechnology infrastructure.

30


Committee meetings. The Compensation Committee requested CAP’s advice on a variety of matters, including the amount and form of executive compensation, compensation strategy, market comparisons, pay and performance alignment versus industry peers, executive pay trends, compensation best practices, compensation-related legislative matters and related rulemaking, and potential compensation plan designs and modifications. The Compensation Committee met with CAP, both with and without management, on several occasions during fiscal 2014, and also in early fiscal 2015 with respect to compensation decisions for 2014 performance. During fiscal 2014, CAP and its affiliates did not provide any services to the Company or its affiliates other than advising the Compensation Committee on executive officer compensation.
The Compensation Committee conducts a formal evaluation of the independence of CAP annually in the first quarter of the fiscal year. Based on this review, the Compensation Committee did not identify any conflict of interest raised by the work CAP performed in fiscal 2014. When conducting this evaluation, the Compensation Committee took into consideration the factors set forth in Rule 10C-1 under the Exchange Act and the NYSE’s listing standards.
Market Comparisons
Although the Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on market comparisons or industry practices, it believes that information regarding pay practices at other companies is useful in three respects. First, marketplace information is one of many factors considered in assessing the reasonableness of compensation. Secondly, our compensation practices must be generally competitive for executive talent in the home building industry and in the overall market. Thirdly, marketplace information reflects emerging and changing components and forms of compensation. While the Compensation Committee considers peer compensation levels and practices when making its compensation decisions, it does not target compensation at any particular point within a range established by a comparison of the financial performance or compensation levels of our peer companies.
In 2014, the Compensation Committee, with guidance from its independent compensation consultant, reviewed our NEOs’ compensation against a peer group of publicly-traded home building companies (the “Peer Group”). The Peer Group consisted of the following companies with whom the Compensation Committee believes we primarily compete for talent and market share:
Beazer Homes USA, Inc.Lennar CorporationNVR, Inc.
D. R. Horton, Inc.M. D. C. Holdings, Inc.PulteGroup, Inc.
Hovnanian Enterprises, Inc.M/I Homes, Inc.The Ryland Group, Inc.
KB HomeMeritage Homes CorporationStandard Pacific Corp.
Taylor Morrison Home Corporation
Of the companies within our Peer Group, only D.R. Horton, Inc. has an executive chairman. The Compensation Committee considered the executive chairman compensation information for D.R. Horton in its review of Peer Group pay practices. Our independent compensation consultant also discussed compensation practices generally for executive chairmen in companies of similar size outside of the home building sector but noted that the role of executive chairman is highly individualized and therefore compensation for this role varies considerably.
Consideration of Say-on-Pay Results
At our last annual meeting of stockholders, 98% of those stockholders voting on the Say on Pay proposal voted in support of the compensation of our NEOs described in our proxy statement filed in 2014. The Compensation Committee viewed the results of the 2014 advisory vote as an affirmation of our current pay practices, and so it did not implement significant changes to our executive compensation program for fiscal 2014.



31


Elements of Compensation
Summary of Executive Compensation Program
ElementTime HorizonPerformance Measure
FixedBase Salary
Short
(1 year)
Individual Performance
At Risk
Annual Incentive Bonus (1)
Short
(1 year; paid semi-annually)
60% Quantitative Component;
PTI Metric
40% Qualitative Component; Individual/Company Performance
Performance-Based RSUs
Medium
(3-4 years) (2)
PTI Metric (25%)
Margin Metric (25%)
Units Metric (25%)
Relative TSR (25%)
Options
Long
(10 years)
Stock Price Performance
Fixed
Retirement Benefits (SERP)
Long
(payable following retirement)
Individual Performance
(1)Annual Incentive Bonus payments are subject to achievement of the consolidated revenues and PTI Metric performance goals under the Senior Officer Plan described under "Annual Incentive Bonus" starting on page 36.
(2)The regularly recurring grant will have a three-year performance period; the TSR PRSUs were phased in by making a one-time grant of awards with performance periods of one and two years, in addition to the regularly recurring grant with a three-year performance period.
The Compensation Committee recognizes changing economic and industry conditions and changing compensation trends in its choice of methods to achieve the objectives discussed above, using a variety of compensation elements to accomplish its goals.
ElementPurposeCharacteristics
Cash Compensation—Base SalaryProvide a fundamental level of compensation to the NEOs for performing their roles and assuming their levels of executive responsibility.Fixed cash component. Annually reviewed by the Compensation Committee and adjusted from time to time, based on our Peer Group and individual performance.
Cash Compensation—
     Annual Incentive Bonus
Promote improvement of our financial results, performance and condition; intended to be a short-term incentive to drive achievement of performance goals in a particular fiscal year, while discouraging inappropriate risk-taking and not deterring achievement of our long-term goals and initiatives.Annual incentive bonuses have been primarily paid in cash. Performance-based bonus opportunity for fiscal 2014 is based on the achievement of consolidated revenue and pre-tax income targets set by the Compensation Committee.
Equity Compensation—
     Long-Term Incentives
Promote the achievement of our long-term financial goals and stock price appreciation by aligning NEO and stockholder interests, promoting NEO retention and rewarding NEOs for superior performance over time.Equity awards granted annually by the Compensation Committee, pursuant to stockholder approved plans, with four-year vesting. For fiscal 2014 performance, long-term incentive compensation was in the form of stock options and performance-based RSUs. Performance-based RSU payout is contingent on achievements of performance targets set by the Compensation Committee in the areas of pre-tax income, home building margin, and units delivered.
Benefits and Perquisites, Including Retirement BenefitsProvide health and welfare benefits during employment and a program for income upon retirement. Designed to retain and reward NEOs by providing an overall benefits package competitive with those provided by comparable companies.Health and welfare benefits may vary based on employee elections. Perquisites and other benefits may vary from year to year. Retirement benefits, such as the SERP (see “Benefits and Perquisites” below), also vary based on compensation and years of service.
In December 2015, the Compensation Committee changed certain features of our annual incentive bonus and LTIA program to further strengthen the alignment between pay and performance, as described more fully under "New Developments for Fiscal 2016 Compensation" on page 31 and in the specific decisions discussed below.
Cash Compensation Decisions
Base Salary
Generally, when establishing annual base salaries, the Compensation Committee takes into account each NEO’s performance of his role and responsibilities over time and, to the extent useful, the range of compensation of comparable executives within our Peer Group. The Compensation Committee believes that its compensation objectives are more effectively met when most of an executive’s compensation package is composed of at-risk performance-based bonuses and long-term incentive compensation, rather than fixed compensation such as base salaries. The Compensation Committee also takes into account tax deductibility of base salaries under Section 162(m) of the Code.
Fiscal 2016 Salary. In December 2013, the Compensation Committee determined the following base salaries for our NEOs for calendar year 2014. The increases in the base salaries for Messrs. Hartman and Connor were based on a consideration of their performance in fiscal 2013, as well as the Committee’s 2013 review with the independent compensation consultant of our CFO's’ total compensation in 2013 compared to that of the chief financial officers in our Peer Group.

32


  Calendar 2014 Salary Calendar 2013 Salary
     
Robert I. Toll $1,000,000
 $1,000,000
Douglas C. Yearley, Jr. $1,000,000
 $1,000,000
Richard T. Hartman $1,000,000
 $950,000
Martin P. Connor $850,000
 $800,000
In December 2014,2015, the Compensation Committee determined that, for calendar year 2015,2016, the base salaries of Messrs.Mr. Toll, Mr. Yearley, and Mr. Hartman would remain at $1,000,000;$1,000,000, and the base salary of Mr. Connor would be increased to $950,000.$975,000. The increase in the base salary for Mr. Connor for calendar year 20152016 was based on a consideration of his performance in fiscal 20142016 and his increased tenure at the Committee's reviewCompany.


Fiscal 2017 Salary. In December 2016, the Compensation Committee determined that, for calendar year 2017, the base salaries of the NEOs would remain unchanged, with its independent compensation consultant of Mr. Connor's total compensation compared to chief financial officers in our Peer Group.Toll, Mr. Yearley, and Mr. Hartman remaining at $1,000,000, and Mr. Connor remaining at $975,000.
  Calendar 2017 Salary Calendar 2016 Salary Calendar 2015 Salary
       
Robert I. Toll $1,000,000
 $1,000,000
 $1,000,000
Douglas C. Yearley, Jr. $1,000,000
 $1,000,000
 $1,000,000
Richard T. Hartman $1,000,000
 $1,000,000
 $1,000,000
Martin P. Connor $975,000
 $975,000
 $950,000
Annual Incentive Bonus
Senior Officer Bonus Plan. The stockholder-approved Senior Officer Plan is designed to be sufficiently flexible to allow the Compensation Committee to make awards in appropriate amounts and with appropriate performance periods and performance goals to the plan participants designated by the Compensation Committee. All of our NEOs have been designated as participants in the Senior Officer Plan. The awardsAwards paid under the Senior Officer Plan are designed to be tax deductible “qualified performance-based compensation” under Section 162(m) of the Code.
The Senior Officer Plan is designed to permit us to pay participants incentive compensation based upon the achievement of one or more pre-established performance goals. At or after the end of each performance period, the Compensation Committee determines whether and to what extent the performance goals have been achieved and calculates the amount of the award that could be paid to each participant, if any, based upon the levels of achievement of the relevant performance goals and the objective formula or method established with respect to such performance period.
In order to maximize tax deductibility of awards under the Senior Officer Plan, the Compensation Committee has established that no award payable under the Senior Officer Plan can exceed the Award Capan award cap of $8.5 million. Additionally, in no event will the maximum aggregate amount payable to any participant with respect to awards that have performance periods that end in the same fiscal year exceed the Annual Payment Cap of two times the Award Cap, regardless of the number of awards that would otherwise be payable in that fiscal year. Awards that are limited under the Annual Payment Cap may not be carried over and paid during a subsequent fiscal year.million (the "Award Cap"). The Compensation Committee has no discretion to increase the amount of any awards beyond the Award Cap or the Annual Payment Cap, as applicable, but may, in its sole discretion, reduce or completely eliminate an award based on such facts and circumstances as it deems relevant.
Awards under theFiscal 2016 Senior Officer Plan may be paid in cash, equity or a combination of the two. The equity portion of any award under the Senior Officer Plan may be paid in shares of restricted stock, shares of unrestricted stock, or restricted or unrestricted stock units, all of which would be issued from the Stock Incentive Plan for Employees (2014) ("2014 SIP") or a successor plan. To the extent an award is paid with equity, the equity is valued as of the end of the performance period for the award. For a description of the material terms of the Senior Officer Bonus Plan, see "Proposal Four— Approval of Toll Brothers, Inc. Senior Officer Bonus Plan" on pages 12 to 14.
Fiscal 2014 Bonus Performance Goals. For fiscal 2014,2016, the Compensation Committee met in December 20132015 and established that eligibility for the full amount available to the NEOsaward amounts under the Senior Officer Plan waswould be conditioned upon our achievement of equally weighted consolidated revenue and pre-tax income targets. At such time, thePTI Metric target amounts. The Compensation Committee determined that it would replace operating income,chose to maintain an equal weighting of consolidated revenue, as a metric used for our fiscal 2013 annual incentive bonus, with pre-tax income (excluding impairmentsmeasure of growth, and other items considered non-recurring in nature in accordance with the Senior Officer Plan)PTI Metric, as onea measure of the two Senior Officer Plan performance metrics. In making this determination, the Committee considered that the inclusion of pre-tax income would provide a metric that would continue to measureboth operating profitability but also measureand the Company’s performance in its joint venturesventure and non-home building activities.

The consolidated revenue and PTI Metric targets are intended to meet the requirements for full tax deductibility of annual bonus payments to executive officers. Annual incentive bonus payments to the NEOs are subject to achievement of the consolidated revenue and PTI Metric target amounts under the Senior Officer Plan.
33


Bonus performance goals were set by the Compensation Committee based on forecasted results for the 2016 fiscal year and performance under the Senior Officer Plan in prior years. Eligibility for 50% of the amount available to the NEOs under the Senior Officer Plan was conditioned upon our achievement of at least 80% of those targets.these targets:
Performance Metric 100% Eligibility 50% Eligibility (80%) of Targets)Actual Company Performance
Consolidated Revenues 
≥ $3.417 $4.5 billion (50%)
 
≥ $2.7336$3.6 billion (25%)
Pre-tax Income (1) 
 ≥ $458,389,800 (50%)
5,169,508,000
PTI Metric 
≥ $366,711,840$662,558,400 (50%)
≥ $530,046,720 (25%)$719,470,000
(1)Excluding impairments and certain other items considered non-recurring in nature in accordance with the Senior Officer Plan. Additional information regarding the calculation of the pre-tax income performance metric can be found under "2014 Performance RSUs" on page 37.
2014 Cash Annual Incentive Bonuses. The Compensation Committee met in December 20142016 and determined that we had exceeded the consolidated revenues and pre-tax incomePTI Metric targets for 100% eligibility during fiscal 2014 and, therefore, the maximum amount was potentially available to each of the NEOs. Cash incentive bonuses under the Senior Officer Plan consider actual results against financial performance goals but allow the Compensation Committee to use judgment in considering quantitative and qualitative performance. In determining the actual cash bonus amounts to be paid, the Compensation Committee then made a subjective evaluation regarding the overall individual performance of each NEO and Company performance during fiscal 2014.
2016. For fiscal 20142016 performance, the Compensation Committee awarded cash annual incentive bonuses discussed below that were well below the maximum amounts allowable under the Senior Officer Plan, which has been true since adoption of the initial plan in 2010.


2016 Cash Annual Incentive Bonuses. In exercising its discretionDecember 2015, the Compensation Committee determined that, in calculating the annual incentive bonus amounts to determinebe paid for fiscal 2016 performance (subject to achievement of the actual cash2016 performance goals under the Senior Officer Plan), payout of 60% of the annual incentive bonus would be based on achievement of a PTI Metric performance target, as discussed in more detail under "Formulaic Bonus Component" below. Each NEO would be eligible to earn the remaining 40% of the target level bonus through the Compensation Committee's qualitative assessment of individual and Company performance in fiscal 2016.
Formulaic Bonus Component. As discussed above, in December 2015 the Compensation Committee determined that, in calculating the amounts of annual incentive bonuses actually to be paid out of the amounts for which the NEOs were eligible under the Senior Officer Plan, payout of 60% of the annual incentive bonus for performance in fiscal 2016 would be based on achievement of a PTI Metric target amount.
For fiscal 2016, the bonus payment based on PTI Metric performance could range between 80% and 120% of the target bonus amount to the extent that the Company’s PTI Metric performance for fiscal 2016 was between 80% and 120% of the PTI Metric target amount. No amounts would have been paid for PTI Metric performance if the Company’s actual PTI Metric performance for fiscal 2016 was less than 80% of the PTI Metric target amount. The bonus payment for PTI Metric performance would have been paid at the maximum level of 120% of the target bonus amount if the Company’s PTI Metric performance for fiscal 2016 was equal to or greater than 120% of the PTI Metric target amount.
The Compensation Committee met in December 2016 and determined that the percent achieved of the PTI Metric target amount set forth below was 97.73% for fiscal 2016 performance:
  2016 Annual Incentive Bonus Formulaic Bonus Component
  Minimum (80%) Target (100%) Maximum (120%) Fiscal 2016 Actual
         
PTI Metric $588,940,800 $736,176,000 $883,411,200 $719,470,000
At that time, the Compensation Committee determined that the formulaic component of the annual incentive bonus amounts for fiscal 2016 based on PTI Metric performance were as follows:
  Target Formulaic Bonus Component Amount Actual Formulaic Bonus Component Award
     
Robert I .Toll $900,000
 $879,570
Douglas C. Yearley, Jr. $1,560,000
 $1,524,588
Robert T. Hartman $577,500
 $564,391
Martin P. Connor $577,500
 $564,391
Qualitative Assessment Bonus Component. As discussed above, in December 2015 the Compensation Committee determined that in calculating the amounts of annual incentive bonuses actually to be paid toout of the amounts for which the NEOs were eligible under the Senior Officer Plan, each NEO would be eligible to earn the Committee did consider, however, thatremaining 40% of the target level bonus through a qualitative assessment of individual and Company performance.
In its qualitative evaluation of performance for fiscal 2014 revenues and pre-tax income exceeded2016, the threshold measures set forth above.
TheCompensation Committee further considered actual results as compared to performance targets for pre-tax income, home building margin, and units delivered, which were the metrics established by the Committeeset at the beginning of the fiscal year foryear. As part of this assessment, the 2014 performance-based RSUs. For a further discussion of these performance metrics and actual results, see “2014 Performance-Based RSUs” on page 37. TheCompensation Committee reviewedconsidered the Company’s fiscal 20142016 results in each of these areas boththe following areas:
Results as reported under U.S. generally accepted accounting principles (GAAP) on an absolute basis and relative to the prior fiscal year. The Compensation Committee also considered that 2014 performanceyear, particularly in the areas of revenues and pre-tax income, both of which exceeded fiscal 2015 results;


Actual fiscal 2016 results compared to performance targets for the PTI Metric, Margin Metric, and units delivered significantlyUnits Metric established by the Compensation Committee at the beginning of the fiscal year;
Total shareholder return during fiscal 2016, which was negative and was lower than the median of the Peer Group for one- and three-year periods, but exceeded 2013 results.the median of the Peer Group for a ten-year period; and
One-year growth compared to the Peer Group in reported revenues, net income, earnings before interest and taxes, backlog, new orders, and settlements, as well as gross margin and pre-tax margin performance in fiscal 2016 compared to the Peer Group.
In its evaluation of individual performance, the Compensation Committee considered each NEO’s contribution to the financial and other business achievements highlighted above, as well asin fiscal 2016. Additionally, the Company’s fiscal 2014 results in the areas of contracts, backlog, and SG&A. Additionally, theCompensation Committee recognized the NEOs’ efforts in management of growth in a recovering economy, integration of the Shapell acquisition, focus on growth opportunities, development and execution of strategy, and industry honors received. The Committee also considered the leadershipcontributions of each NEOof our NEOs to the Company’s strategy to diversify our geographic footprint and broaden our platform of residential product lines in the areas of Company strategy, brand management, investor and analyst relations, and balance sheet management.fiscal 2016. For further discussion of these considerations, see “2014“Fiscal 2016 Company Performance” on pages 2527 to 2628 and “Review of Individual Performance”"Performance Assessment Process” starting on page 30. The Committee did not establish any individual33.
Based on this qualitative assessment of Company performance, goals for the NEOs at the commencement of fiscal 2014.
The Compensation Committee believed that, by surpassingdecided to award the established fiscal 2014 Senior Officer Plan performance goals and by performing in an outstanding manner in fiscal 2014, Messrs. Toll, Yearley, Hartman, and Connor meritedqualitative assessment component of the cash annual incentive bonuses for fiscal 20142016 performance at 100% of $1,500,000, $2,300,000, $800,000, and $800,000, respectively.    target, as set forth below.
Fiscal 2015 Bonus Performance Goals. In December 2014, the Compensation Committee set the 2015 performance goals for the Senior Officer Plan. The Committee determined that it would retain consolidated revenues and pre-tax income as the 2015 performance metrics under the Senior Officer Plan.
  Target Qualitative Assessment Bonus Component Amount Actual Qualitative Assessment Bonus Component Award
     
Robert I .Toll $600,000
 $600,000
Douglas C. Yearley, Jr. $1,040,000
 $1,040,000
Robert T. Hartman $385,000
 $385,000
Martin P. Connor $385,000
 $385,000

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Total 2014Fiscal 2016 Cash Compensation
Total cash compensation (base salary and annual incentive bonus) paid to or earned by the NEOs for fiscal 20142016 is set forth below. Details on total compensation, measured and presented in the format required by the SEC, can be found in the Summary Compensation Table on page 4250 of this proxy statement.
 Base Salary 
Annual Incentive
Bonus
 
Total Fiscal 2014
Cash Compensation
 Base Salary 
Annual Incentive
Bonus
 Total Cash  Compensation
            
Robert I. Toll $1,000,000
 $1,500,000
 $2,500,000
 $1,000,000
 $1,479,570
 $2,479,570
Douglas C. Yearley, Jr. $1,000,000
 $2,300,000
 $3,300,000
 $1,000,000
 $2,564,588
 $3,564,588
Richard T. Hartman (1) $991,667
 $800,000
 $1,791,667
 $1,000,000
 $949,391
 $1,949,391
Martin P. Connor (1) $841,667
 $800,000
 $1,641,667
 $970,833
 $949,391
 $1,920,224
        
(1)Reflects base salary earned during fiscal 2014.2016. Base salary is paid on a calendar year basis; the 20142016 calendar year salariesannual salary for Mr. Hartman and Mr. Connor were $1,000,000 and $850,000, respectively.was $975,000.
Fiscal 2017 Bonus Performance Goals. In December 2016, the Compensation Committee set the fiscal 2017 performance goals for the Senior Officer Plan and determined that eligibility for award amounts under the Senior Officer Plan would continue to be conditioned upon achievement of equally weighted consolidated revenue and PTI Metric target amounts. The Compensation Committee also determined that the structure of the determination of the annual incentive bonus for fiscal 2017 performance would remain unchanged from fiscal 2016.


For fiscal 2017 performance, payout of 60% of the annual incentive bonus will continue to be based on achievement of a PTI Metric target amount, and 40% will be based on the Compensation Committee's qualitative assessment of individual and Company performance (subject in each case to achievement of the 2017 performance goals under the Senior Officer Plan). The bonus payment under the formulaic bonus component will continue to range between 80% and 120% of target. Eligibility goals under the Senior Officer Plan for fiscal 2017 were set by the Compensation Committee based on forecasted results for the fiscal year and performance in prior years.
Long-Term Incentive Compensation Decisions
For fiscal 2014, theThe Compensation Committee awardedawards equity compensation to our NEOs in the form of stock options and performance-based RSUs. These equity awards are based on itsthe Compensation Committee's assessment of the Company’s performance for a given fiscal year, as well as its determinations of the effectiveness of each NEO and the extent of his contributions to our success, and the economic climate in which we operate. The Compensation Committee’s primary purposes and objectives when granting equity compensation to our NEOs are to:
alignBeginning with awards granted in fiscal 2016, the interests of our NEOs with those of our stockholders;
balance long-term operating decisions with short-term objectives;
serve as a particular incentive for NEOs to devote themselves to our future success by providing NEOs with an opportunity to increase their proprietary interest in the Company;
motivate NEOs to achieve long-term financial results that may ultimately cause an increase in the market price of our stock;
balance overall NEO compensation between long-term and short-term compensation; and
retain NEOs in our employ.
Equity compensation for our NEOs may be either in the formamount of stock options and performance-based RSUs awarded to each NEO has been determined on a fixed dollar basis, and the mix of equity awards for the NEOs (other than Mr. Toll) has been fixed at approximately 60% performance-based RSUs and 40% stock appreciation rights, stock awards, or stock units (which may be restricted, unrestricted or performance-based), in accordance with the terms of our stockholder-approved 2014 SIP or a successor plan.options.
Stock Options
Stock options for all employees, including NEOs, are granted on a date within the last 15 days of December that is determinedset in advance by the Compensation Committee.Board. Because options are granted with exercise prices equal to the fair market valueclosing price of the underlying common stock on the date of the grant, any value that may ultimately be realized by an employee is based entirely upon our future stock price performance as perceived by investors who establish the market priceand return of our common stock.capital to stockholders, which supports alignment with stockholder interests.
Options granted to our NEOs have a term of ten years from the date of the grant, and these options vest in equal annual amounts over a four yearfour-year period, beginning on the first anniversary of the date of the grant. Options would continue to vest and be exercisable for the remainder of the ten-year term upon death or disability, or in most cases,qualified retirement following ten years of service, and would fully vest upon a change of control of the Company. In addition, all unexercised stock options, vested and unvested, granted to NEOs are subject to forfeiture in the event that, after the NEO retires or otherwise leaves our employ, the NEO competes with us. See “Potential Payments upon Termination or Change of Control” starting on page 4857 of this proxy statement.

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20142016 Options. At the beginning of fiscal 2014,2016, the Compensation Committee granted stock options to each of the NEOs, as set forth in the Grants of Plan-Based Awards During Fiscal 20142016 table on page 4452 of this proxy statement. These grants were awarded on December 20, 201318, 2015 in recognition of the respective NEO’s performance during fiscal 2013.2015.
20152017 Options. In December 2014,2016, the Compensation Committee granted stock options to each of the NEOs in recognition of their fiscal 20142016 performance in order to further the Compensation Committee’s objectives, as set forth above. These grants were awarded on December 19, 2014.
The following table sets forth the number of stock options granted on December 19, 2014, in recognition of the respective NEOs' performance in fiscal 2014. Such grants were made as of December 19, 2014 and have an exercise price of $32.49.$31.61, the closing price on the Company's stock on December 20, 2016. Because they were granted in fiscal 2015,2017, the grants below will be reflected in the executive compensation tables in next year’s proxy statement.


The following table sets forth the number of stock options granted on December 20, 2016, in recognition of the respective NEOs' performance in fiscal 2016.
 
 
Option Grant for
20142016 Performance (1)
  
Robert I. Toll100,000
166,653
Douglas C. Yearley, Jr.160,000
150,087
Richard T. Hartman43,000
45,573
Martin P. Connor34,000
37,673
(1)For purposes of determining the number of shares that are subject to the options granted, the assigned value per share of the options was determined by multiplying the closing price of our stock on December 20, 2016, the date of the awards, by the average of the “Fair Value Quotient” for the three immediately previous fiscal years of the Company. The “Fair Value Quotient” is the fraction in which (x) the denominator is the closing price of our common stock on the date of the awards for the relevant date, and (y) the numerator is the grant date fair value of the options granted in accordance with ASC 718; assumptions used in the calculation of these amounts are included in Note 9 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016, excluding the effect of estimated forfeitures.
Performance-Based RSUs
Starting in fiscal 2012, the Compensation Committee has awarded performance-based RSUs (“Performance RSUs”) to each of the NEOs in addition to granting stock options as described above. The Compensation Committee chose to award Performanceperformance-based RSUs based on the recommendation of the Committee’sits independent compensation consultant to utilizefurther encourage our growth and profitability through use of a medium-term equity award tied to pre-established performance metrics, in addition to option awards, to further encourage our growth and profitability.metrics.
For performance in fiscal 2014, the Compensation Committee retained home building margin and units delivered as performance metrics, but replaced operating income with pre-tax income (excluding impairments and other items considered non-recurring in nature to be weighted equally with the other two performance metrics. In making this determination, the Committee considered that the inclusion of pre-tax income would add a metric that would measure operating profitability as well as the Company’s performance in its joint venture and non-home building activities.Operational Performance-Based RSUs. The Compensation Committee selectedhas awarded Ops PRSUs since fiscal 2012 measuring the number of units delivered as one ofCompany's performance under the PTI Metric, the Margin Metric, and the Units Metric. The historical performance and payout levels for the three performance metrics because it is a measure of growth, and it selected home building margin because it measures profitability and efficiency.for the Ops PRSUs are set forth below.
 Historical Performance—Ops PRSU Performance Metrics
 PTI Metric Margin Metric Units Metric
2016 Ops PRSUs97.73% 98.20% 99.97%
2015 Ops PRSUs109.70% 101.67% 100.45%
2014 Ops PRSUs106.00% 97.78% 96.38%
2013 Ops PRSUs108.13% 101.66% 104.60%
2012 Ops PRSUs110.00% 110.00% 109.53%
Each performance metric has a minimum threshold level, which, if achieved, would earn 90% of the Performance RSUsOps PRSUs allocated to that metric; a target level, which, if achieved, would earn 100% of the Performance RSUsOps PRSUs allocated to that metric; and a maximum level, which, if achieved, would earn 110% of the Performance RSUsOps PRSUs allocated to that metric. To the extent that actual performance results fall between these levels, the Performance RSUsOps PRSUs earned would be determined proportionately between those levels. TheBecause the Compensation Committee views these three Ops PRSU performance metrics as being equally important, they are evenly weighted evenly in determining a blended average to calculate the payout for the Performance RSUs.Ops PRSUs. If the minimum threshold performance level of 90% is not achieved no award is made.
The payout for the 2014 Performance RSUs is set forth below under “2014 Performance-Based RSUs.” For fiscal 2013 performance, our NEOs earned 108.13%, 101.66%, and 104.60%any individual metric, none of the 2013 Performance RSUs allocated to achievement of income from operations (which preceded pre-tax income as a performance measure), home building margin, and units delivered, respectively. For fiscal 2012 performance, our NEOsOps PRSUs would be earned 110%, 110%, and 109.53% of the 2012 Performance RSUs allocated to achievement of income from operations, home building margin, and units delivered, respectively.for that metric.
If the minimum performance criteria have been met, each Performance RSUOps PRSU is subject to vesting in equal annual amounts over four years from the date of grant and the Performance RSUsOps PRSUs will not be delivered until the end of the four-year service vesting period, except that in the event of termination of service, the NEO


would be entitled to receive shares underlying vested Performance RSUs.Ops PRSUs. Shares subject to Performance RSUsOps PRSUs held by an NEO fully vest and all restrictions immediately lapse upon a NEO’s termination of his employment due to death or disability. In addition, all

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shares subject to Performance RSUsOps PRSUs fully vest and all restrictions lapse upon a change of control of the Company. See “Potential Payments upon Termination or Change of Control” starting on page 4857 of this proxy statement.
2014TSR Performance-Based RSUs. At the beginning of fiscal 2016, the Compensation Committee determined that it would add TSR as an additional performance metric for long-term incentive awards and award TSR PRSUs. The Compensation Committee determined that TSR would be weighted equally with the three performance metrics under the Ops PRSUs, so TSR PRSUs would account for one-fourth of the target value of performance-based RSUs awarded to any NEO, after the initial phase in of the TSR PRSUs grants.
The Compensation Committee determined that TSR PRSUs generally will have a three-year performance period, with vesting and settlement of the award to occur upon the conclusion of the performance period. Following the conclusion of the performance period, the Compensation Committee will determine the number of TSR PRSUs earned by multiplying the target award by the TSR multiplier. The TSR multiplier will be based on the TSR percentile ranking of the Company as follows:
Relative TSR Percentile RankTSR Multiplier (1)
Less than 25th Percentile0%
25th Percentile50% (threshold)
50th Percentile100% (target)
75th Percentile or Above200% (maximum)
(1)The Total Shareholder Return Multiplier will be determined by linear interpolation for any achievement of the Relative TSR Percentile Rank which falls between the target percentages above.
In addition, starting with grants made in December 2016, in no event will the payout for the TSR PRSUs be greater than 125% if the Company’s own TSR is negative for the performance period.
Shares subject to TSR PRSUs held by an NEO fully vest and all restrictions immediately lapse upon a NEO’s termination of his employment due to death or disability. In addition, all shares subject to TSR PRSUs fully vest and all restrictions lapse upon a change of control of the Company. See “Potential Payments upon Termination or Change of Control” starting on page 57 of this proxy statement.
2016 Performance-Based RSU Awards
2016 Ops PRSUs. To measure performance in fiscal 2016, the Compensation Committee determined that it would continue to use the PTI Metric, Margin Metric, and Units Metric as the Ops PRSU performance metrics. In making this determination at the beginning of fiscal 2016, the Compensation Committee considered that the inclusion of the PTI Metric would measure operating profitability as well as the Company’s performance in its joint venture and non-home building activities. The Compensation Committee selected the Units Metric because it is a measure of growth, and it selected the Margin Metric because it measures profitability and efficiency.
In December 2013,2015, the Compensation Committee granted 2014 Performance RSUs2016 Ops PRSUs relating to target levels of 133,66759,818 shares to Mr. Toll; 100,00081,049 shares to Mr. Yearley, 30,000Yearley; 24,429 shares to Mr. Hartman; and 25,00020,092 shares to Mr. Connor, respectively.respectively, based on the closing price of our common stock on the grant date. The 2014 Performance RSUs2016 Ops PRSUs were divided equally into three performance metrics: pre-tax income, home building margin,among the PTI Metric, Margin Metric, and units delivered.Units Metric.


The minimum, target, and maximum levelsperformance goals for the three 2014 Performance RSU2016 Ops PRSU metrics, as well as actual fiscal 20142016 performance, are set forth below.
2014 Performance Metric Minimum (90%) Target (100%) Maximum (110%) Fiscal 2014 Actual
         
Pre-tax Income (1) $458,389,800 $509,322,000 $560,254,200 $558,438,000
Home Building Margin (1)(2) 23.90% 26.56% 29.22% 25.97%
Units Delivered 5,040
 5,600
 6,160
 5,397
2016 Performance Metric Minimum (90%) Target (100%) Maximum (110%) Fiscal 2016 Actual
         
PTI Metric (1) $662,558,400 $736,176,000 $809,793,600 $719,470,000
Margin Metric (1) 23.49% 26.10% 28.71% 25.63%
Units Metric 5,490
 6,100
 6,710
 6,098
        
(1)The following items, to the extent disclosed in a press release or conference call, are excluded from these performance metrics:
Restructuring and severance costs pursuant to a plan approved by the Board, CEO and/or President and COOChief Operating Officer
Gains or losses from litigation or claims, natural disasters, terrorism, fraud, or fraud investigations
Effect of changes in laws, regulations, or accounting principles
The gain or loss from the sale or discontinuance of a business segment, division, or unit and the budgeted, unrealized earnings before interest, taxes, depreciation, and amortization (EBITDA) for this business segment, division, or unit
Extraordinary items as defined by generally accepted accounting principles or non-recurring items
In addition, the following items are also excluded from these performance metrics:
Write downWrite-down or impairment of assets or joint venture investments
Stock basedStock-based compensation overages or underages compared to budget
Out-of-period charges or credits
Expense of an acquisition
Gains or losses from derivative transactions
(2)Defined as home building cost of sales, excluding interest expense, as a percentage of home building revenue
Profits recognized by the Company from its share of income from the closings at Brooklyn Pier 1 Residential Investments, LP (due to ongoing litigation as of the date of grant)
In December 2014,2016, the Compensation Committee determined the level of the performance criteria that had been met for the 2014 Performance RSUs2016 Ops PRSUs awarded in December 2013. Because the 2014 Performance RSU pre-tax income performance metrics incorrectly included $17.5 million of expenses associated with the Shapell acquisition, the Compensation Committee exercised its negative discretion to reduce the payout under these awards to correspond to the amount that would have been earned if these expenses had not been included.2015. The Compensation Committee determined that the percentpercentages achieved for pre-tax income, home building margin,the PTI Metric, Margin Metric, and units delivered was 106.00%Units Metric were 97.73%, 97.78%98.20% and 96.38%99.97%, respectively, and the payout for the 2014 Performance RSUs,2016 Ops PRSUs, based on a blended average of the metrics, would be at 100.05%98.63% of target.
Based on this payout at 100.05%98.63% of target, our NEOs earned the following numbers of 2014 Performance RSUs: Mr. Toll – 133,736; Mr. Yearley – 100,051; Mr. Hartman – 30,015; and Mr. Connor – 25,012. 2016 Ops PRSUs:
Ops PRSUs for
2016 Performance
Robert I. Toll58,998
Douglas C. Yearley, Jr.79,938
Richard T. Hartman24,094
Martin P. Connor19,816
One-fourth of the 2014 Performance RSUs2016 Ops PRSUs vested on December 20, 2014,18, 2016, the first anniversary of the grant date and the remaining three-fourths of these RSUs remain subject to service-based vesting.


2016 TSR PRSUs. In December 2015, the Compensation Committee determined that it would phase in the TSR PRSU awards by making one-time grants of TSR PRSU target awards with performance periods of one and two years, in addition to the regularly recurring grant with a three-year performance period as follows:
  December 2015 TSR PRSU Target Awards
  
1-Year
Performance Period
(11/1/2015-10/31/2016)
 
2-Year
Performance Period
(11/1/2015-10/31/2017)
 
3-Year
Performance Period
(11/1/2015-10/31/2018)
       
Robert I. Toll 19,939 15,373 10,822
Douglas C. Yearley, Jr. 27,017 27,017 27,017
Richard T. Hartman 8,143 8,143 8,143
Martin P. Connor 6,697 6,697 6,697
For the NEOs other than Mr. Toll, the target dollar amount of TSR PRSUs with a three-year performance period, plus the target number of Ops PRSUs, approximates 60% of the dollar value of equity awards granted to the NEOs in fiscal 2016, with the three-year TSR PRSUs representing 25% of the target number of performance-based RSUs. The one-time grants of TSR PRSU target awards with performance periods of one and two years were fixed at the number of three-year TSR PRSUs for the NEOs other than Mr. Toll. For Mr. Toll, given his role as Executive Chairman, the target numbers of TSR PRSUs were adjusted to award fewer TSR PRSUs with longer performance periods.
In December 2016, the Compensation Committee determined that the TSR PRSUs with a one-year performance period consisting of fiscal 2016 had a payout of zero.
2017 Performance-Based RSUsRSU Awards
2017 Ops PRSUs. In December 2014,2016, the Compensation Committee approved the grant of Performance RSUsOps PRSU target awards for fiscal 2015 performance,2017, subject to achievement of the award performance metrics in fiscal 2015,2017, relating to the target levels of 133,66733,660 shares to Mr. Toll; 100,00087,788 shares to Mr. Yearley; 30,00026,573 shares to Mr. Hartman; and 25,00021,828 shares to Mr. Connor.Connor, based on the closing price of our common stock on the grant date. The Compensation Committee determined that it would retain pre-tax income, home building margin,the PTI Metric, the Margin Metric, and units deliveredthe Units Metric as thethree equally-weighted performance metrics for the 2015 Performance RSUs.2017 Ops PRSUs. The Compensation Committee also determined that Ops PRSUs would continue to account for three-fourths of the target value of performance-based RSUs awarded in fiscal 2017.
2017 TSR PRSUs.In December 2016, the Compensation Committee approved the grant of TSR PRSU target awards with a three-year performance period covering fiscal 2017 through fiscal 2019, subject to the Company’s relative TSR percentile rank at the conclusion of the performance period, relating to the target levels of 9,215 shares to Mr. Toll; 23,945 shares to Mr. Yearley; 7,248 shares to Mr. Hartman; and 5,953 shares to Mr. Connor, based on the grant date fair value calculated in accordance with ASC 718. The 2017 TSR PRSUs continue to account for one-fourth of the target value of performance-based RSUs awarded in fiscal 2017.


Compensation Decision-Making Process
Participation by Management
The Compensation Committee worked with management to establish its meeting agendas and determine meeting participants. Throughout the year, the Compensation Committee requested information from management and the Compensation Committee’s independent compensation consultant, including information about the compensation practices and financial performance of other companies in the home building industry and other industries. Our CEO and Chief Financial Officer were invited by the Compensation Committee to attend certain of its meetings in order to provide information and answer questions regarding the Company’s strategic objectives and financial performance. Our other NEOs were also available to Compensation Committee members and to attend its meetings upon request.
With regard to compensation decisions relating to the Executive Chairman, the Compensation Committee, in addition to its own assessment of the Executive Chairman’s performance during fiscal 2016, gained significant insight into the performance of the Executive Chairman during that same period from its many exchanges with the other NEOs, other Company officers, and the other directors. The Executive Chairman submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, and overall compensation levels for the CEO. Our CEO, in conjunction with the Executive Chairman, submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, and overall compensation levels for the President and Chief Operating Officer and the Chief Financial Officer. The Compensation Committee, after consideration of all of these inputs, determined the actual awards to the Executive Chairman, the CEO, the President and Chief Operating Officer, and the Chief Financial Officer.
Use of Independent Compensation Consultant
The Compensation Committee engaged Compensation Advisory Partners LLC (“CAP”) to serve as its independent compensation consultant for fiscal 2016. CAP received instructions from, and reported to, the Compensation Committee on an independent basis. CAP was also authorized by the Compensation Committee to share with and request and receive from management specified information in order to prepare for Compensation Committee meetings.
The Compensation Committee requested CAP’s advice on a variety of matters, including the amount and form of executive compensation, compensation strategy, market comparisons, pay and performance alignment versus industry peers, executive pay trends, compensation best practices, compensation-related legislative matters and related rulemaking, and potential compensation plan designs and modifications. The Compensation Committee met with CAP, both with and without management, on several occasions during fiscal 2016, and also in early fiscal 2017 with respect to compensation decisions for fiscal 2016 performance. During fiscal 2016, CAP did not provide any services to the Company or its affiliates, other than advising the Compensation Committee on executive officer compensation and advising the Governance Committee on director compensation.
The Compensation Committee conducts a formal evaluation of the independence of CAP annually in the first quarter of the fiscal year. Based on this review, the Compensation Committee did not identify any conflict of interest raised by the work CAP performed in fiscal 2016. When conducting this evaluation, the Compensation Committee took into consideration the factors set forth in Rule 10C-1 under the Exchange Act and the NYSE’s listing standards.
Market Comparisons
Although the Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on market comparisons or industry practices, it believes that information regarding pay practices at other companies is useful in three respects. First, marketplace information is one of many factors considered in assessing the reasonableness of compensation. Second, our compensation practices must be generally competitive for executive talent in the home


building industry and in the overall market. Third, marketplace information reflects emerging and changing components and forms of compensation. While the Compensation Committee considers peer compensation levels and practices when making its compensation decisions, it does not target compensation at any particular point within a range established by a comparison of the financial performance or compensation levels of our peer companies.
In 2016, the Compensation Committee, with guidance from CAP, reviewed our NEOs’ compensation against a peer group of publicly-traded home building companies (the “Peer Group”), which remained unchanged from the prior year. The Peer Group consisted of the following companies with whom the Compensation Committee believes we primarily compete for talent and market share:
Beazer Homes USA, Inc.KB HomeMeritage Homes Corporation
CalAtlantic Group, Inc.Lennar CorporationNVR, Inc.
D. R. Horton, Inc.M. D. C. Holdings, Inc.PulteGroup, Inc.
Hovnanian Enterprises, Inc.M/I Homes, Inc.Taylor Morrison Home Corporation
Tri Pointe Group, Inc.
Of the companies within our Peer Group, only CalAtlantic Group, Inc. and D.R. Horton, Inc. have an executive chairman. The Compensation Committee considered the executive chairman compensation information for these two companies in its review of Peer Group pay practices. CAP also discussed compensation practices generally for executive chairmen in companies of similar size outside of the home building sector but advised that the role of executive chairman is highly individualized among those companies that have one, and therefore compensation for this role varies considerably.
Benefits and Perquisites
We provide all of our employees (after 60 days of service with us), including our NEOs, with specified employee benefits programs. These include the opportunity to save for retirement through the Toll Brothers 401(k) Savings Plan (the “401(k) Plan”) and various health and welfare benefit programs, including medical, dental, life insurance, and long-term disability insurance.
The 401(k) Plan is a qualified retirement savings plan under the Code. Participants in the 401(k) Plan may contribute a portion of their compensation, subject to IRS regulations and specified limitations

37


applicable to “highly compensated employees,” as such term is defined in the Code. After a year of service, we may match a portion of each participant’s contribution and also may make an annual discretionary contribution to each active participant’s account. All of the NEOs were participants in the 401(k) Plan during fiscal 2014.2016. We share the cost of the above programs with our employees. Our NEOs participate in these programs on the same terms as our other employees. These programs are intended to promote the health and financial security of our employees and are provided at competitive market levels to attract, retain, and reward employees.
Supplemental Executive Retirement Plan
We also maintain a SERP, which provides retirement benefits to our NEOs. The Board’s intention when adopting the SERP was to provide competitive retirement benefits, to protect against reductions in retirement benefits due to tax law limitations on qualified plans, and to encourage continued employment or service with the Company. For a discussion of the material terms of the SERP, please see “Executive Compensation Tables—Pension Benefits During Fiscal 2014—2016—Supplemental Executive Retirement Plan.”Plan” on page 56.
During fiscal 2014, the Compensation Committee amended the SERP to eliminate the 20-year service requirement, except that a participant would have to be employed for five years in order to receive a death or disability benefit under the SERP. The Compensation Committee made such revision out of concern that the 20-year service requirement might compromise the Company’s ability to attract senior lateral hires. In December 2014, the Compensation Committee determined todid not increase the SERP annual benefit payablepayment amounts to Mr. Yearley to $200,000 from $175,000, and to increase the SERP annual benefit payable to Mr. Hartman and Mr. Connor to $145,000 from $125,000. The Compensation Committee took into consideration the use of the SERP to encourage retention of the Company’s NEOs.NEOs in fiscal 2016. The annual benefit amounts to our NEOs under the SERP as of the end of fiscal 20142016 are set forth in the table below under “Executive Compensation Tables—Pension Benefits During Fiscal 2014—2016—Supplemental Executive Retirement Plan.”Plan” on page 56.


Perquisites
Perquisites did not constitute a material portion of the compensation paid to our NEOs for fiscal 2014.2016, and we do not provide tax gross ups on perquisites. We provide our NEOs with limited perquisites and personal benefits that the Compensation Committee believes are consistent with our executive compensation philosophy and objectives. Each fiscal year, the Compensation Committee reviews and approves those perquisites that are to be provided to our NEOs.
The Compensation Committee believes the perquisites for fiscal 2014,2016, which included auto and gas allowances, insurance, and tax and financial statement preparation assistance, as more fully described in the footnotes to the Summary Compensation Table in this proxy statement,on page 50, are reasonable, consistent with our past practices, and consistent with general practices in our industry.
Deferred Compensation Plan
The Toll Bros., Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”) was designed to enable certain management and highly compensated employees, including our NEOs, to defer a portion of their cash compensation during any calendar year. In December 2014, the Company amended and restated the Deferred Compensation Plan (the "2015 Plan"), which had been frozen for compensation earned after December 31, 2011, to enable employees to defer a portion of their cash compensation starting in January 1, 2015. Any amountsMr. Hartman and Mr. Connor are participants in the 2015 Plan.
Amounts deferred prior to January 1, 2015, which are not re-deferred under the 2015 Plan, will continue to be governed by the terms of the Deferred Compensation Plan in effect prior to January 1, 2015. Mr. Hartman is the only NEO who participated in the Deferred Compensation Plan prior to January 1, 2015. We have the right under the Deferred Compensation2015 Plan to make discretionary contributions for the benefit of any participant in the plan.2015 Plan. We did not make any discretionary contributions to any NEO under the Deferred Compensation2015 Plan in fiscal 2014.2016.
Interest earned during fiscal 20142016 on NEO deferred compensation that is considered above-market interest under SEC rules is included under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the Summary Compensation Table in this proxy statement,on page 50, and further information about NEO deferred compensation is contained in the Nonqualified Deferred Compensation During Fiscal 20142016 table in this proxy statement.on page 57.

38


Other Compensation Practices and Policies
Employment Agreements, Change of Control Provisions and Severance Payments
None of our NEOs has an employment agreement with us. We do not have a severance plan for our NEOs. We have no change of control agreements relating to employment benefits or additional benefits that arise simply from a change of control or severance related thereto;severance; however, under our equity compensation plans and our SERP, awards and benefits are generally subject to special provisions upon a defined “change of control” transaction.
Upon a change of control, any outstanding options, RSUs, deferred cash, or other plan awards will generally immediately vest, and any restrictions will immediately lapse. Under the SERP, if there is a change of control of the Company, all participants in the SERP would be fully vested in their SERP benefits and potentially eligible for a lump sum payout. See “Potential Payments upon Termination or Change of Control” starting on page 4857 of this proxy statement.


Stock Ownership Guidelines
We maintain stock ownership guidelinesStock Ownership Guidelines ("Guidelines") pursuant to which our executive officers and non-management directors are expected to acquire a meaningful level of stock ownership in the Company so as to further align their interests with those of our stockholders. Under the guidelines,Guidelines, the executive officers and non-management directors are expected to own shares equivalent in value to a multiple of his or her base salary or annual cash retainer, as applicable, as set forth below:
Position  Multiple
   
Executive Chairman and CEO  3.0 x base salary
Other Executive Officers  1.0 x base salary
Directors  3.0 x annual cash retainer
Executive officers and directors are expected to achieve compliance with these levels of ownership within five years from the later of five years from adoption of the guidelinesGuidelines in December 2012 or the date he or she assumes the position of executive officer or director, and may not sell net shares of stock received upon the exercise of stock options (that is, shares other than those sold to pay withholding taxes, brokerage fees, and the exercise price) unless and until he or she has met these required levels of ownership.
On an annual basis, the Governance Committee reviews adherence to the stock ownership guidelines.Guidelines. For purposes of the guidelines,Guidelines, the following are included as “owned”:
shares of stock owned by the executive officer or director, including shares held in a trust controlled by the executive officer or director, by a spouse or by minor children that are deemed beneficially owned by the executive officer or director under Rule 13d-3 under the Exchange Act;
one-third of the shares underlying vested stock options that were “in the money” at the beginning of the fiscal year of review; and
shares of stock underlying vested performance stock units, RSUs, and restricted stock awards, regardless of provisions relating to delivery.
Specifically excluded from ownership under the guidelinesGuidelines as “owned” shares are any shares of stock or other equity-based awards which are pledged as collateral for a loan to a third party so long as such pledge remains in effect.
If an executive officer or director satisfies these guidelines,Guidelines, they are generally deemed satisfied for subsequent annual review periods, regardless of decreases in the Company’s stock price so long as the executive officer or director continues to hold the shares originally included in determining compliance. At the time of the Governance Committee's annual review of adherence to the stock ownership guidelinesGuidelines in December 2014,2016, the Committee determined that each NEO and director had achieved a stock ownership levelwas in excess ofcompliance with the applicable level set forth above.Guidelines.
Anti-Hedging Policy
We have an insider trading policy that sets forth guidelines and restrictions applicable to employees’ transactions involving our stock. Among other things, this policy prohibits our employees from engaging in puts, calls, or similar options on our stock or in any derivative equity securities of the Company, or selling our stock short. In addition, this policy prohibits directors and executive officers from entering into hedging arrangements with respect to our equity

39


securities that are designed to offset or reduce the risk of price fluctuations in the underlying security (such as covered calls, collars, or other transactions that sever the ultimate alignment with our stockholders’ interests).


Pledging Policy
In fiscal 2013, the Governance Committee adopted a policy that prohibits any pledging of the Company’s equity securities by executive officers and directors with limited exceptions. At the time it established this policy, the Governance Committee considered the particular circumstances of Mr. Robert I. Toll and Mr. Bruce E. Toll as co-founders of the Company with substantial ownership of the Company’s equity securities and included specific exceptions for the two co-founders.
Subsequent to the adoption of the policy, In December 2016, the Governance Committee andupdated this policy to reflect Mr. Bruce E. Toll have agreed that he will not increaseToll's departure from the aggregate number of shares of Company stock he has pledged, and the Governance Committee revised the Company’s pledging policy in January 2014 to reflect this agreement. Board.
With respect to Mr. Robert I. Toll, any increase in the aggregate number of shares of Company stock that he has pledged is prohibited under the policy except in situations, and on conditions, pre-approved by the Company’s General Counsel. Approvals will be based on the particular facts and circumstances of the request, including, but not limited to:
the percentage of the individual’s equity holdings that are currently pledged;
the percentage of the Company’s outstanding class of equity securities represented by the number of securities of that class being pledged;
the market value of the securities being pledged and the total market value of the Company’s outstanding equity securities;
the historical trading volume of the Company’s equity securities; and
any compelling needs of the individual justifying the pledge transaction under the circumstances.
The General Counsel’s decisions are reviewed by the Governance Committee.
As a result of this policy, no executive officer or director, other than Mr. Robert I. Toll, and Mr. Bruce E. Toll, has Company shares that are pledged as of the date of this proxy statement. The number of shares pledged by Mr. Robert I. Toll and Mr. Bruce E. Toll as of the Record Date represents 2.8% and 1.8%, respectively,3.0% of the Company’s outstanding stock. The Governance Committee continues to monitor and seek reductions in the shares pledged by Mr. Robert I. Toll.
Clawback Policy
In January 2016, the Company’s co-founders.Board adopted a policy regarding the recoupment of incentive compensation from executives in specified situations involving fraud or intentional misconduct. The policy provides that, subject to the discretion and approval of the Board, the Company will, to the extent permitted by governing law, in all appropriate cases as determined by the Board, require reimbursement and/or cancellation of any cash bonus or other incentive compensation subject to the policy, including vested and unvested stock-based compensation, awarded to an executive officer where all of the following factors are present: (a) the award was predicated upon the achievement of specified financial results that were subsequently the subject of a restatement, (b) in the Board’s view, the executive engaged in fraud or intentional misconduct that was a substantial contributing cause to the need for the restatement, and (c) a lower award would have been made to the executive based upon the restated financial results. Under this policy, the Board may seek to recover payments of incentive compensation if the financial results leading to the award of incentive compensation are subsequently the subject of a restatement. The Board may use its judgment in determining the amount to be recovered where the incentive compensation was awarded on a discretionary basis.
Tax and Accounting Implications
Tax Regulations. Section 162(m) of the Code generally disallows a tax deduction to a public company for compensation over $1 million paid to specified “covered employees” (its chief executive officer and to any of its three other most highly-compensated executive officers other than its chief financial officer). Performance-based compensation will not be subject to the deduction limitation if specified requirements set forth in the Code and applicable Treasury Regulations are met.


We intend to structure our compensation plans for our NEOs to comply with the performance-based compensation exemption requirements of Section 162(m) of the Code; however, since corporate objectives may not always be consistent with the requirements for full deductibility, the Board and the Compensation Committee may award non-deductible compensation to our NEOs as they deem appropriate. Our Senior Officer Plan, stock option grants, and Performanceperformance-based RSUs are currently designed to be tax deductible under Section 162(m).
Accounting Considerations. When making decisions about executive compensation, the Compensation Committee considers the accounting implications of the various elements of our compensation program, including the impact on our financial results and the dilutive impact to stockholders of various forms of compensation.
For equity compensation grants, ASC 718 requires us to recognize compensation expense for all share-based payment arrangements based upon the grant date fair value of those awards and period of vesting. The aggregate expense estimated to be recognized over the period of vesting is included in the Summary Compensation Table contained in this proxy statement as part of the NEOs’ total compensation in the fiscal year of the grant. This number, while required by the SEC rules and important for understanding the impact of granting equity on our financial statements, may not accurately represent the value received by the NEO.

40


COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with our management the Compensation Discussion and Analysis section of this proxy statement. Based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2014.2016.
Respectfully submitted by the members of the Compensation Committee of the Board of Directors.
Carl B. Marbach (Chair)
Stephen A. Novick
Paul E. Shapiro

41



EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
Name and Principal
Position
 Year 
Salary
($)
 
Stock
Awards
($)(1)
 
Option
Awards
($)(1)
 
Non-Equity
Incentive Plan
Compensation
($)(2)
 
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(3)
 
All Other
Compensation
($)(4)
 
Total
($)
 Year 
Salary
($)
 
Stock
Awards
($)(1)
 
Option
Awards
($)(1)
 
Non-Equity
Incentive Plan
Compensation
($)(2)
 
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(3)
 
All Other
Compensation
($)(4)
 
Total
($)
                                
Robert I. Toll 2014 1,000,000
 4,699,732
 1,302,000
 1,500,000
 368,131
 163,356
 9,033,219
 2016 1,000,000
 3,856,026
 1,474,706
 1,479,570
 501,063
 111,026
 8,422,391
Executive Chairman of the Board 2013 1,000,000
 5,049,939
 1,351,000
 1,500,000
 —
 124,045
 9,024,984
 2015 1,000,000
 4,342,841
 1,026,000
 1,500,000
 —
 148,601
 8,017,442
2012 1,057,692
 4,100,000
 878,000
 2,500,000
 816,478
 94,173
 9,446,343
2014 1,000,000
 4,699,732
 1,302,000
 1,500,000
 368,131
 163,356
 9,033,219
Douglas C. Yearley, Jr. 2014 1,000,000
 3,516,000
 3,016,230
 2,300,000
 198,902
 40,922
 10,072,054
 2016 1,000,000
 6,003,112
 2,305,908
 2,564,588
 272,999
 37,271
 12,183,878
Chief Executive Officer 2013 1,000,000
 3,778,000
 2,494,500
 2,200,000
 57,070
 33,744
 9,563,314
 2015 1,000,000
 3,249,000
 2,662,400
 2,500,000
 359,321
 39,166
 9,809,887
2012 1,000,000
 2,255,000
 1,281,600
 2,000,000
 334,339
 32,249
 6,903,188
2014 1,000,000
 3,516,000
 3,016,230
 2,300,000
 198,902
 40,922
 10,072,054
Richard T. Hartman 2014 991,667
 1,054,800
 796,740
 800,000
 163,969
 31,079
 3,838,255
 2016 1,000,000
 1,809,375
 702,898
 949,391
 233,180
 30,762
 4,725,606
President and Chief Operating Officer 2013 936,538
 1,133,400
 665,200
 550,000
 206,804
 30,707
 3,522,649
 2015 1,000,000
 974,700
 715,520
 875,000
 396,975
 30,726
 3,992,921
2012 866,154
 102,500
 320,400
 500,000
 245,482
 28,153
 2,062,689
 2014 991,667
 1,054,800
 796,740
 800,000
 163,969
 31,079
 3,838,255
Martin P. Connor 2014 841,667
 879,000
 626,010
 800,000
 142,288
 24,635
 3,313,600
 2016 970,833
 1,488,106
 580,868
 949,391
 208,558
 24,356
 4,222,112
Chief Financial Officer 2013 780,769
 944,500
 498,900
 500,000
 69,143
 23,765
 2,817,077
 2015 933,333
 812,250
 565,760
 875,000
 244,696
 24,410
 3,455,449
2012 690,385
 451,000
 213,600
 400,000
 229,476
 20,019
 2,004,480
2014 841,667
 879,000
 626,010
 800,000
 142,288
 24,635
 3,313,600
 
(1)These columns present the aggregate grant date fair value of RSUs and stock options, respectively, granted in the indicated fiscal year, calculated in accordance with ASC 718 utilizing the assumptions discussed in Note 109 in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended October 31, 2014,2016, excluding the effect of estimated forfeitures. The amounts shown in these columns do not reflect compensation actually received by the NEOs. The actual value, if any, that a NEO may realize from an award is contingent upon the satisfaction of the conditions to vesting in that award, including performance conditions in the case of Performanceperformance-based RSUs, and, for stock options, upon the excess of the share price over the exercise price, if any, on the date the options are exercised. Thus, there is no assurance that the value, if any, eventually realized by the NEOs will correspond to the amountamounts shown in the table.
With respect to the Performance RSUsOps PRSUs granted in fiscal 2014,2016, the estimate of the grant date fair value determined in accordance with ASC 718 assumes the vesting of 100% of the RSUs granted. Assuming the highest level of performance is achieved (which would result in the vesting of 110% of the RSUs granted), the aggregate grant date fair value of the RSUs set forth in the stock awards column above for fiscal 20142016 would be: Mr. Toll—$5,169,705;2,161,497; Mr. Yearley—$3,867,600;2,928,676; Mr. Hartman—$1,160,280;882,712; and Mr. Connor—$966,900.726,018. The actual performance achieved for fiscal 20142016 resulted in 100.05%98.63% of the Performance RSUsOps PRSUs granted being earned, subject to service-based vesting.
(2)The annual incentive bonuses for Messrs.Mr. Toll, Mr. Yearley, Mr. Hartman, and Mr. Connor for fiscal 20142016 were earned based uponon target bonus amounts established by the termsCompensation Committee for PTI Metric performance (60% of bonus amount) and its qualitative assessment of individual and Company performance (40% of bonus amount), subject to achievement of the 2016 performance goals under the Senior Officer Plan, as more fully described under "Annual Incentive Bonus" starting on pages 33 to 34 of this proxy statement.page 36.
(3)The amounts in this column represent the increase in the actuarial present value of accumulated benefits under the SERP for each NEO and the amount of above-market interest earned on their respective balances, if applicable, in the Deferred Compensation Plan. Messrs.Mr. Toll Yearley, and ConnorMr. Yearley did not participate in the Deferred Compensation Plan during the fiscal years indicated in the table above. The amounts attributed to the increase or decrease in actuarial present value of SERP benefits and above-market interest on deferred compensation are as follows (see also the Pension Benefits During Fiscal 20142016 table on page 4655 of this proxy statement):

42



Name 
Fiscal
Year
 
Increase (Decrease) in
Actuarial Present Value of
Accumulated
SERP Benefits ($)
 
Above-Market
Interest Earned on
Deferred
Compensation
 Total ($) 
Fiscal
Year
 
Increase (Decrease) in
Actuarial Present Value of
Accumulated
SERP Benefits ($)
 
Above-Market
Interest Earned on
Deferred
Compensation ($)
 Total ($)
Robert I. Toll 2014 368,131
 N/A
 368,131
 2016 501,063
 N/A
 501,063
 2013 (1,093,566) N/A
 (1,093,566) 2015 (8,614) N/A
 (8,614)
 2012 816,478
 N/A
 816,478
 2014 368,131
 N/A
 368,131
Douglas C. Yearley, Jr. 2014 198,902
 N/A
 198,902
 2016 272,999
 N/A
 272,999
 2013 57,070
 N/A
 57,070
 2015 359,321
 N/A
 359,321
 2012 334,339
 N/A
 334,339
 2014 198,902
 N/A
 198,902
Richard T. Hartman 2014 139,583
 24,386
 163,969
 2016 185,774
 47,406
 233,180
 2013 172,414
 34,390
 206,804
 2015 313,163
 83,812
 396,975
 2012 213,453
 32,029
 245,482
 2014 139,583
 24,386
 163,969
Martin P. Connor 2014 142,288
 N/A
 142,288
 2016 208,347
 211
 208,558
 2013 69,143
 N/A
 69,143
 2015 244,647
 49
 244,696
 2012 229,476
 N/A
 229,476
 2014 142,288
 N/A
 142,288
(4)Fiscal 20142016 “All Other Compensation” consists of:
 Fiscal 2014 Fiscal 2016
 
Robert I.
Toll
 
Douglas C.
Yearley, Jr.
 
Richard T.
Hartman
 
Martin P.
Connor
 
Robert I.
Toll
 
Douglas C.
Yearley, Jr.
 
Richard T.
Hartman
 
Martin P.
Connor
Payments for tax and financial statement preparation assistance $94,093
 $8,359
 $—
 $—
 $58,124
 $3,407
 $—
 $—
Contribution to 401(k) Plan 10,300
 10,300
 10,300
 10,342
Company contribution to 401(k) Plan 10,600
 10,600
 10,600
 10,600
Life and disability insurance premiums (5) 17,027
 3,723
 4,759
 4,010
 3,542
 3,569
 3,902
 3,856
Auto and gas allowance 19,500
 15,900
 15,900
 9,900
 19,500
 15,900
 15,900
 9,900
Non-business use of Company cars and drivers 22,436
 2,640
 120
 383
Non-business use of cars and drivers 19,260
 3,795
 360
 —
Total $163,356
 $40,922
 $31,079
 $24,635
 $111,026
 $37,271
 $30,762
 $24,356
 
(5)Includes annual premiums for:for annual life, accidental death and dismemberment, and long term disability insurance provided to all employees; supplemental long-term disability insurance provided to executives; and an executive life insurance policy for Mr. Toll for which the Company pays $13,400 for the term component.executives.

43



Grants of Plan-Based Awards During Fiscal 20142016
     
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
 
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
 
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
 
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)
 
Exer-
cise
or Base
Price of
Option
Awards
($/Sh)
 
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)(4)
     
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
 
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
 
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
 
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)
 
Exer-
cise
or Base
Price of
Option
Awards
($/Sh)
 
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)(4)
Name 
Grant
Date
 
Action
Date(1)
 
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
Name/
Award Type
 
Grant
Date
 
Action
Date(1)
 
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
 
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)
 
Exer-
cise
or Base
Price of
Option
Awards
($/Sh)
 
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)(4)
Robert I. Toll (5) (6) 8,500,000
             (5) (6) 8,500,000
       
 12/20/2013 12/5/2013   120,300
 133,667
 147,034
     4,699,732
 12/20/2013 12/5/2013         100,000
 35.16
 1,302,000
Ops PRSUs 12/18/2015 12/15/2015   53,836
 59,818
 65,800
     1,965,021
TSR PRSUs 12/18/2015 12/15/2015   9,970
 19,939
 39,878
     798,158
TSR PRSUs 12/18/2015 12/15/2015   7,687
 15,373
 30,746
     634,751
TSR PRSUs 12/18/2015 12/15/2015   5,411
 10,822
 21,644
     458,095
Stock Options 12/18/2015 12/15/2015         144,579
 32.85
 1,474,706
Douglas C. Yearley, Jr.Douglas C. Yearley, Jr. (5) (6) 8,500,000
            Douglas C. Yearley, Jr. (5) (6) 8,500,000
            
 12/20/2013 12/5/2013   90,000
 100,000
 110,000
     3,516,000
 12/20/2013 12/5/2013         159,000
 35.16
 3,016,230
Ops PRSUs 12/18/2015 12/10/2015   72,944
 81,049
 89,154
     2,662,460
TSR PRSUs 12/18/2015 12/10/2015   13,509
 27,017
 54,034
     1,081,491
TSR PRSUs 12/18/2015 12/10/2015   13,509
 27,017
 54,034
     1,115,532
TSR PRSUs 12/18/2015 12/10/2015   13,509
 27,017
 54,034
     1,143,630
Stock Options 12/18/2015 12/10/2015         137,584
 32.85
 2,305,908
Richard T. HartmanRichard T. Hartman (5) (6) 8,500,000
            Richard T. Hartman (5) (6) 8,500,000
            
 12/20/2013 12/5/2013   27,000
 30,000
 33,000
     1,054,800
 12/20/2013 12/5/2013         42,000
 35.16
 796,740
Ops PRSUs 12/18/2015 12/10/2015   21,986
 24,429
 26,872
     802,493
TSR PRSUs 12/18/2015 12/10/2015   4,072
 8,143
 16,286
     325,964
TSR PRSUs 12/18/2015 12/10/2015   4,072
 8,143
 16,286
     336,224
TSR PRSUs 12/18/2015 12/10/2015   4,072
 8,143
 16,286
     344,693
Stock Options 12/18/2015 12/10/2015         41,939
 32.85
 702,898
Martin P. ConnorMartin P. Connor (5) (6) 8,500,000
            Martin P. Connor (5) (6) 8,500,000
            
 12/20/2013 12/5/2013   22,500
 25,000
 27,500
     879,000
 12/20/2013 12/5/2013         33,000
 35.16
 626,010
Ops PRSUs 12/18/2015 12/10/2015   18,083
 20,092
 22,101
     660,022
TSR PRSUs 12/18/2015 12/10/2015   3,349
 6,697
 13,394
     268,081
TSR PRSUs 12/18/2015 12/10/2015   3,349
 6,697
 13,394
     276,519
TSR PRSUs 12/18/2015 12/10/2015   3,349
 6,697
 13,394
     283,484
Stock Options 12/18/2015 12/10/2015         34,658
 32.85
 580,868
        
(1)The Compensation Committee met on December 5, 201315, 2015 to make determinations for Mr. Toll, and madeon December 10, 2015 to make determinations regardingfor Mr. Yearley, Mr. Hartman, and Mr. Connor with respect to stock option grants for fiscal 2013 performance and Performance RSU2015 performance; Ops PRSU grants relating to performance to occur during fiscal 2014.2016; and TSR PRSU grants relating to performance over various periods. All grants of equity compensation were made on December 20, 2013,18, 2015, which is consistent with our practice of awarding equity compensation described under “Compensation Discussion and Analysis—Long-Term Incentive Compensation Decisions.”Decisions” starting on page 39.
(2)Reflects Performanceperformance-based RSUs the Compensation Committee awarded to our NEOs under the Toll Brothers, Inc. Amended and Restated2014 Stock Incentive Plan for Employees (2007) at its meeting on December 5, 2013.(the "2014 SIP"). See “Compensation Discussion and Analysis—Long-Term Incentive Compensation Decisions—Performance-Based RSUs” starting on page 40 for further information.
(3)See “Compensation Discussion and Analysis—Long-Term Incentive Compensation Decisions—Stock Options”Options" on page 39 for a discussion of these option grants.grants, which were awarded under the 2014 SIP. The exercise price of the options granted in fiscal 20142015 is the closing price of our common stock on the grant date.
(4)Amount represents the aggregate grant date fair value of RSUs and stock options, respectively, granted in fiscal 2014,2016, calculated in accordance with ASC 718 utilizing the assumptions discussed in Note 109 in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended October 31, 2014.2016. The calculation of these amounts disregards the estimate of forfeitures related to time-based vesting conditions. With respect to the Performanceperformance-based RSUs, the estimate of the grant date fair value determined in accordance with ASC 718 assumes the vesting of 100% of the RSUs awarded.
(5)Awards to Messrs.Mr. Toll, Mr. Yearley, Mr. Hartman, and Mr. Connor were made pursuant to the terms of the Senior Officer Plan. The plan does not include a threshold amount; awards in any fiscal year could be as low as $0.


(6)The Senior Officer Plan does not include a target amount and, whenamount. The annual incentive bonuses for fiscal 2016 were earned based on target bonus amounts established by the Compensation Committee met on December 5, 201315, 2015 for Mr. Toll and Mr. Yearley, and on December 10, 2015 for Mr. Hartman and Mr. Connor, for PTI Metric performance (60% of bonus amount) and its qualitative assessment of individual and Company performance (40% of bonus amount), subject to establishachievement of the fiscal 2016 performance goals for fiscal 2014 for each of Messrs. Toll, Yearley, Hartman, and Connor, it did not establish a target amount for their awards. For a detailed discussion ofunder the formula and criteria applied for such performance-based awards, see “Compensation Discussion and Analysis—Cash Compensation Decisions—AnnualSenior Officer Plan, as more fully described under “Annual Incentive Bonus” in this proxy statement.starting on page 36.
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Please see the “Compensation Discussion and Analysis” section of this proxy statement for a detailed description of the fiscal 20142016 salary, annual incentive bonus, and equity awards with respect to each NEO.

44



Outstanding Equity Awards at October 31, 20142016
 Option Awards Stock Awards Option Awards Stock Awards
Name 
Grant
Date
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(9)
 
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Number
of
Shares or
Units of
Stock
That
Have Not
Vested
(#)
  
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)(10)
 
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That
Have
Not
Vested
(#)
 
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
($)
 
Grant
Date
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(10)
 
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Number
of
Shares or
Units of
Stock
That
Have Not
Vested
(#)
  
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)(11)
 
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That
Have
Not
Vested
(#)
 
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
($)
Robert I. Toll 12/20/2004 500,000
   32.55
 12/20/2014      12/20/2006 550,000
   31.82
 12/20/2016      
 12/20/2005 250,000
   35.97
 12/20/2015      12/20/2007 550,000
   20.76
 12/20/2017      
 12/20/2006 550,000
   31.82
 12/20/2016      12/20/2010 100,000
   19.32
 12/20/2020      
 12/20/2007 550,000
   20.76
 12/20/2017      12/20/2011 100,000
   20.50
 12/20/2021      
 12/20/2010 75,000
 25,000
(1) 19.32
 12/20/2020      12/17/2012 75,000
 25,000
(1) 32.22
 12/17/2022 35,020
(5) 960,949
  
 12/20/2011 50,000
 50,000
(2) 20.50
 12/20/2021 109,843
(5) 3,509,484
  12/20/2013 50,000
 50,000
(2) 35.16
 12/20/2023 66,868
(6) 1,834,858
  
 12/17/2012 25,000
 75,000
(3) 32.22
 12/17/2022 105,060
(6) 3,356,667
  12/19/2014 25,000
 75,000
(3) 32.49
 12/19/2024 104,200
(7) 2,859,248
  
 12/20/2013   100,000
(4) 35.16
 12/20/2023 133,736
(7) 4,272,865
  12/18/2015 

 144,579
(4) 32.85
 12/18/2025 58,998
(8) 1,618,905
 26,195
(9)718,791
Douglas C. Yearley, Jr. 12/20/2007 16,250
   20.76
 12/20/2017      12/20/2007 16,250
   20.76
 12/20/2017      
 7/18/2008 18,692
   18.92
 12/20/2014     
 7/18/2008 9,007
   18.92
 12/20/2015      12/20/2008 17,500
   21.70
 12/20/2018      
 7/18/2008 14,162
   18.92
 12/20/2016      12/20/2009 46,875
   18.38
 12/20/2019      
 12/20/2008 17,500
   21.70
 12/20/2018      12/20/2010 120,000
   19.32
 12/20/2020      
 12/20/2009 46,875
   18.38
 12/20/2019      12/20/2011 120,000
   20.50
 12/20/2021      
 12/20/2010 90,000
 30,000
(1) 19.32
 12/20/2020      12/17/2012 112,500
 37,500
(1) 32.22
 12/17/2022 26,200
(5) 718,928
  
 12/20/2011 60,000
 60,000
(2) 20.50
 12/20/2021 60,414
(5) 1,930,227
  12/20/2013 79,500
 79,500
(2) 35.16
 12/20/2023 50,026
(6) 1,372,713
  
 12/17/2012 37,500
 112,500
(3) 32.22
 12/17/2022 78,598
(6) 2,511,206
  12/19/2014 40,000
 120,000
(3) 32.49
 12/19/2024 77,955
(7) 2,139,085
  
 12/20/2013   159,000
(4) 35.16
 12/20/2023 100,051
(7) 3,196,629
  12/18/2015 

 137,584
(4) 32.85
 12/18/2025 79,938
(8) 2,193,499
 54,034
(9)1,482,693
Richard T. Hartman 12/20/2007 20,000
   20.76
 12/20/2017      12/20/2007 20,000
   20.76
 12/20/2017      
 7/18/2008 11,176
   18.92
 12/20/2015      12/20/2008 20,000
   21.70
 12/20/2018      
 7/18/2008 18,310
   18.92
 12/20/2016      12/20/2009 10,000
   18.38
 12/20/2019      
 12/20/2008 20,000
   21.70
 12/20/2018      12/20/2010 10,000
   19.32
 12/20/2020      
 12/20/2009 10,000
   18.38
 12/20/2019      12/20/2011 30,000
   20.50
 12/20/2021      
 12/20/2010 7,500
 2,500
(1) 19.32
 12/20/2020 834
(8) 26,646
  12/17/2012 30,000
 10,000
(1) 32.22
 12/17/2022 7,860
(5) 215,678
  
 12/20/2011 15,000
 15,000
(2) 20.50
 12/20/2021 2,746
(5) 87,735
  12/20/2013 21,000
 21,000
(2) 35.16
 12/20/2023 15,008
(6) 411,820
  
 12/17/2012 10,000
 30,000
(3) 32.22
 12/17/2022 23,580
(6) 753,381
  12/19/2014 10,750
 32,250
(3) 32.49
 12/19/2024 23,387
(7) 641,739
  
 12/20/2013   42,000
(4) 35.16
 12/20/2023 30,015
(7) 958,979
  12/18/2015 

 41,939
(4) 32.85
 12/18/2025 24,094
(8) 661,139
 16,286
(9)446,888
Martin P. Connor 1/5/2009 10,000
   22.18
 1/5/2019      1/5/2009 2,000
   22.18
 1/5/2019      
 12/20/2009 11,000
   18.38
 12/20/2019      12/20/2009 11,000
   18.38
 12/20/2019      
 12/20/2010 15,000
 5,000
(1) 19.32
 12/20/2020      12/20/2010 20,000
   19.32
 12/20/2020      
 12/20/2011 10,000
 10,000
(2) 20.50
 12/20/2021 12,083
(5) 386,052
  12/20/2011 20,000
   20.50
 12/20/2021      
 12/17/2012 7,500
 22,500
(3) 32.22
 12/17/2022 19,650
(6) 627,818
  12/17/2012 22,500
 7,500
(1) 32.22
 12/17/2022 6,550
(5) 179,732
  
 12/20/2013   33,000
(4) 35.16
 12/20/2023 25,012
(7) 799,133
  12/20/2013 16,500
 16,500
(2) 35.16
 12/20/2023 12,506
(6) 343,165
  
 12/19/2014 8,500
 25,500
(3) 32.49
 12/19/2024 19,489
(7) 534,778
  
 12/18/2015 

 34,658
(4) 32.85
 12/18/2025 19,816
(8) 543,751
 13,394
(9)367,531
        
Generally, unvested equity awards are canceled upon termination of employment with the Company, and the right to exercise vested stock options terminates within a specified period of time after termination of employment; however, under specified circumstances, such as retirement, death, disability, or a change of control, special vesting rules apply, as described below under "Potential Payments upon Termination or Change of Control."
(1)100% of the options vest on December 20, 2014.17, 2016.
(2)50% of the options vest on each of December 20, 20142016 and 2015.2017.
(3)33.33% of the options vest on each of December 17, 2014, 2015,19, 2016, 2017, and 2016.2018.
(4)25% of the options vest on each of December 20, 2014, 2015,18, 2016, 2017, 2018, and 2017.2019.
(5)100% of the 2013 performance-based RSUs vest on December 17, 2016.
(6)50% of the 2012 Performance2014 performance-based RSUs vest on each of December 20, 2014,2016, and 2015.2017.


(6)(7)33.33% of the 2013 Performance2015 performance-based RSUs vest on each of December 17, 2014, 2015,19, 2016, 2017, and 2016.
(7)25% of the 2014 Performance RSUs vest on each of December 20, 2014, 2015, 2016, and 2017.2018.
(8)100%25% of the RSUs2016 Ops PRSUs vest on each of December 20, 2014.18, 2016, 2017, 2018, and 2019.

45


(9)67% and 33% of the 2016 TSR PRSUs with a 2-year performance period vest on October 31, 2017 and 2018, respectively. 100% of the 2016 TSR PRSUs with a 3-year performance period vest on October 31, 2018.
(10)The options that are reflected in the table above table as fully “exercisable” vested in equal installments on the first four anniversaries of the original grant date.
(10)(11)The market value was calculated based on the closing price of our common stock on the NYSE on October 31, 20142016 of $31.95$27.44 per share.
Option Exercises and Stock Vested During Fiscal 20142016
 Option Awards Stock Awards Option Awards Stock Awards
Name 
Number of
Shares Acquired
on Exercise
(#)
 
Value Realized
on Exercise
($)(1)
 
Number of
Shares Acquired
on Vesting (#)(2)
 
Value Realized
on Vesting ($)(3)
 
Number of
Shares Acquired
on Exercise
(#)
 
Value Realized
on Exercise
($)(1)
 
Number of
Shares Acquired
on Vesting (#)(2)
 
Value Realized
on Vesting ($)(3)
Robert I. Toll —
 —
 289,941
 10,132,692
 —
 —
 158,110
 5,229,984
Douglas C. Yearley, Jr. 16,306
 203,907
 156,406
 5,453,125
 —
 —
 107,404
 3,555,206
Richard T. Hartman 23,313
 480,015
 13,398
 457,242
 18,310
 225,762
 22,532
 813,972
Martin P. Connor —
 —
 18,591
 642,133
 —
 —
 25,341
 839,198
        
(1)“Value Realized on Exercise” equals the difference between the closing price of our common stock on the NYSE on the various dates of exercise and the exercise price, multiplied by the number of shares of our common stock acquired upon exercise of the stock options.
(2)"Number of Shares Acquired on Vesting" includes in addition to Performance RSU awards and, in the case of Mr. Hartman, time-based RSU awards that vested and were promptly delivered in fiscal 2014 (a) the portion of the 2012 Performance RSU awardsOps PRSUs for these NEOs that vested on December 20, 2013 but will not beand delivered untilon December 20, 2015, (b) the portion of the 2013 Performance RSU awardsOps PRSUs for these NEOs that vested on December 17, 20132015 but will not be delivered until December 17, 2016, and (c) in the caseportion of Mr. Hartman, time-based RSUsthe 2014 Ops PRSUs for these NEOs that vested on December 20, 20132015 but werewill not be delivered until JanuaryDecember 20, 2017, and (d) the portion of 2015 Ops PRSUs for these NEOs that vested on December 19, 2015.2015 but will not be delivered until December 19, 2018.
(3)“Value Realized on Vesting” is based on the number of shares of our common stock underlying the RSUs that vested during fiscal 20142016 multiplied by the closing price of our common stock on the NYSE on the vesting date.
Pension Benefits During Fiscal 20142016
The following table provides information regarding the pension benefits for our NEOs under the SERP.
Name Plan Name(1) 
Number of Years
of Credited
Services (#)(1)
 
Present Value of
Accumulated
Benefit ($)(2)
 
Payments During
Last Fiscal Year ($)
 Plan Name(1) 
Number of Years
of Credited
Services (#)(1)
 
Present Value of
Accumulated
Benefit ($)(2)
 
Payments During
Last Fiscal Year ($)
Robert I. Toll SERP 20.0
 9,054,608
 —
 SERP 20.0
 9,547,057
 —
Douglas C. Yearley, Jr. SERP 20.0
 1,979,689
 —
 SERP 20.0
 2,612,009
 —
Richard T. Hartman SERP 20.0
 1,569,162
 —
 SERP 20.0
 2,068,099
 —
Martin P. Connor SERP 5.8
 1,230,847
 —
 SERP 7.8
 1,683,841
 —
        
(1)In order to be vested in benefits under the SERP, participants generally must have reached age 62, except participants will be vested in SERP benefits in the event of death or disability prior to age 62 after five years of service.
(2)For a description of the assumptions used in the calculation of the present value of plan benefits, see Note 13,12, “Employee Retirement and Deferred Compensation Plans” in the notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014.2016. The change in the actuarial present value of accumulated benefits under the SERP reflected in the Summary Compensation Table on page 50 is due to a change in the discount rate used for actuarial purposes and the passage of time. We use the Citigroup yield curve as our discount rate for calculating the actuarial present value of accumulated SERP benefits. This rate was 3.04% for fiscal 2012, 3.97% for fiscal 2013, and 3.53% for fiscal 2014.2014, 3.54% for fiscal 2015, and 2.98% for fiscal 2016. When the discount rate decreases, as it did in fiscal 20122016 and fiscal 2014, the actuarial present value of accumulated SERP benefits increases. When the discount rate increases, as it did in fiscal 2013,2015, the actuarial present value of accumulated SERP benefits decreases.

46



Supplemental Executive Retirement Plan
The SERP, which is an unfunded plan, generally provides for an annual benefit, payable for 20 years following retirement, once a participant has reached “normal retirement age,” which is age 62 under the SERP. During fiscal 2014, the Compensation Committee amended the SERP to eliminate a 20-year service requirement, except that a participant would have to be employed for five years in order to receive a death or disability benefit under the SERP.
Beginning in fiscal 2008 and continuing through fiscal 2010, the SERP also provided for increases in annual retirement benefits to the NEOs for each year of service to the Company after age 62. Accordingly, for Mr. Toll, who had already reached retirement age under the SERP, on his birthday during fiscal 2008 through fiscal 2010, annual retirement benefits under the SERP increased by 10% of the applicable annual benefit amount (set forth below).amount. In order to have been eligible for the annual increase in any given year, the NEO must have be employed by us on his birthday during such year, have completed 20 years of service with us on or prior to his birthday during such year, and have reached normal retirement age on or prior to his birthday during such year. During fiscal 2010, the Company discontinued any 10% increases beyond fiscal 2010; except the annual benefit amount for Mr. Yearley, Mr. Hartman, and Mr. Connor will be subject to such increase for the first three years of service to the Company after they reach age 62.
The originalCompensation Committee did not increase the SERP annual benefit payment amounts andto the NEOs in fiscal 2016. The annual benefits to our NEOs under the SERP as of the end of fiscal 20142016 are set forth in the table below:
Participant Original Annual Benefit Amount Annual Benefit
Amount at
October 31, 2014		 Annual Benefit
Amount at
October 31, 2016
Robert I. Toll $500,000
 $650,000
 $650,000
Douglas C. Yearley, Jr. $150,000
 $175,000
 $200,000
Richard T. Hartman $100,000
 $125,000
 $145,000
Martin P. Connor $100,000
 $125,000
 $145,000
Mr. Toll has reached normal retirement age and is, therefore, fully vested in his SERP benefits. Mr. Yearley, Mr. Hartman, and Mr. Connor have not reached normal retirement age and are not vested in their respective SERP benefits. Benefits under the SERP will cease if any participant competes with us following retirement.
Nonqualified Deferred Compensation During Fiscal 20142016
Until January 1, 2015, no new contributions to the Deferred Compensation Plan by employees or NEOs arewere allowed for compensation earned after December 31, 2011. Under the Deferred Compensation Plan, NEOs couldcan elect, six months prior to the end of the calendar year for which any bonus may be earned, to defer a portion of their cash compensation. Compensation that is deferred under the Deferred Compensation Plan earns various rates of return, depending on the length of time of the deferral. Interest rates are established by the board of directors of a wholly owned subsidiary that administers the Deferred Compensation Plan and are reviewed and adjusted annually for new deferrals. When establishing interest rates, the directors of the subsidiary review the rates charged to us for borrowings, as well as interest rates generally available in the market. During fiscal 2014,2016, interest rates for amounts deferred under the Deferred Compensation Plan ranged from 4% to 8%7%, based upon when the compensation was deferred and the length of time it had been or was to be deferred. For more information on the Deferred Compensation Plan, see “Compensation Discussion and Analysis—Benefits and Perquisites—Deferred Compensation Plan” in this proxy statement.on page 46.

47



The table below provides information regarding contributions, earnings, and balances for our NEOs. Mr. Hartman isand Mr. Connor are the only NEONEOs who participatedparticipate in the Deferred Compensation Plan (DCP). The table below also includes RSUs and Performanceperformance-based RSUs granted to our NEOs that have vested, but the delivery of which has been deferred pursuant to the terms of the awards under the Company's Amended and Restated Stock Incentive Plan for Employees (2007) (SIP).
NamePlan 
Executive
Contributions
in Last
FY ($)
 
Registrant
Contributions
in Last
FY ($)(1)
 
Aggregate
Earnings
in Last
FY ($)(2)
 
Aggregate
Withdrawals/
Distributions ($)
 
Aggregate
Balance at
Last
FYE ($)(3)
Plan 
Executive
Contributions
in Last
FY ($)
 
Registrant
Contributions
in Last
FY ($)(1)
 
Aggregate
Earnings
in Last
FY ($)(2)
 
Aggregate
Withdrawals/
Distributions ($)
 
Aggregate
Balance at
Last
FYE ($)(3)
Robert I. TollSIP —
 3,100,692
 (278,154) —
 4,628,341
SIP —
 5,229,984
 (1,476,942) —
 5,670,778
Douglas C. Yearley, Jr.SIP —
 1,937,125
 (163,045) —
 2,767,253
SIP —
 3,555,206
 (1,104,928) —
 4,242,416
Richard T. HartmanSIP —
 340,054
 (21,303) —
 418,673
SIP —
 813,972
 (331,470) —
 1,272,695
DCP —
 —
 123,491
 —
 2,402,969
DCP 292,000
 —
 142,636
 —
 3,174,331
Martin P. ConnorSIP —
 431,173
 (34,509) —
 595,292
SIP —
 839,198
 (276,227) —
 1,060,583
DCP 19,404
 —
 1,012
 —
 36,000
        
(1)"Registrant Contributions in Last FY" column represents the value of (a) the portion of the 2012 Performance RSU awardsperformance-based RSUs for these NEOs that vested and were paid on December 20, 2013 but will not be delivered until December 20, 2015, (b) the portion of the 2013 Performance RSU awardsperformance-based RSUs for these NEOs that vested on December 17, 20132015 but will not be delivered until December 17, 2016, and (c) the portion of time-based2014 performance-based RSUs granted to Mr. Hartmanfor these NEOs that vested on December 20, 20132015 but werewill not delivered until JanuaryDecember 20, 2017, and (d) the portion of 2015 performance-based RSUs for these NEOs that vested on December 19, 2015 but will not delivered until December 19, 2018, in each case based on the closing price of our common stock on the applicable vesting date.
(2)“Aggregate Earnings in Last FY” column includes unrealized earnings/(losses) on (a) the 2012 Performance RSU awards2013 performance-based RSUs, the 2014 performance-based RSUs, and 2013 Performance RSU awardsthe 2015 performance-based RSUs for these NEOs that have vested but will not be delivered until December 17, 2016, December 20, 20152017, and December 17, 2016, respectively, and (b) time-based RSUs granted to Mr. Hartman that have vested but were not delivered until January 19, 2015.2018, respectively.
This column also includes unrealized earnings on Mr. Hartman's and Mr. Connor's account balancebalances in the Deferred Compensation Plan, of which $24,386$47,406 and $211, respectively, represents above-market earnings and was accordingly reported as compensation in fiscal 20142016 in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table on page 4250 for Mr. Hartman.Hartman and Mr. Connor.
(3)“Aggregate Balance at Last FYE” column includes the value, based on the closing price of our common stock on October 31, 2016, of the 2013 performance-based RSUs, 2014 of (a) the 2012 Performance RSU awardsperformance-based RSUs, and 2013 Performance RSU awards2015 performance-based RSUs for these NEOs that have vested but will not be delivered until December 17, 2016, December 20, 20152017, and December 17, 2016, respectively, and (b) time-based RSUs granted to Mr. Hartman that have vested but were not delivered until January 19, 2015.2018, respectively. The grant date fair value of these awards was reported in the "Stock Awards" column of the Summary Compensation Table in the fiscal year granted.
This column also includes the net balance of compensation that was earned and deferred by Mr. Hartman and Mr. Connor under the Deferred Compensation Plan in prior years and the interest accrued on such deferred amounts. In addition to the above-market earnings for fiscal 2014,2016, above-market earnings in fiscal 20132015 and 2014 in the amountamounts of $34,390$83,812 and $24,386, respectively, are reported as compensation paid to Mr. Hartman, and above-market earnings in fiscal 2015 in the amount of $49 are reported as compensation paid to Mr. Connor in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table.
Potential Payments upon Termination or Change of Control
None of our NEOs has an employment agreement with us, nor is any of them entitled to any sort of cash severance payment upon termination or separation from us. We do maintain equity compensation plans and retirement plans that provide for the continuation or acceleration of benefits in the event of specified separations from employment with us or a change of control of the Company.
The dollar amounts or dollar values of the potential payments or benefits to the NEOs in the event of a termination of employment or change of control of the Company are disclosed in the tables below. The amounts and values shown assume that such termination of employment or change of control occurred on October 31, 2014,2016, the last business day of our 2014 fiscal year ended October 31, 2016, and are based, as applicable, on a share price of $31.95,$27.44, the closing price of our common stock on the NYSE on October 31, 2014.2016. These amounts and values do not necessarily reflect the amounts and values that would be paid to the NEOs upon termination of employment or a change of control in the future. The actual amounts and values can only be determined at the time of such NEO’s separation or a change of control.


Below is a description of the assumptions that were used in creating the tables that follow. Unless otherwise noted, the descriptions of the payments below are applicable to all of the tables. In accordance with SEC regulations, we do not report in the tables below any amount to be provided to an NEO under any arrangement which does not discriminate in scope, terms or operation in favor of our NEOs and which is available generally to all salaried employees. We also do not report in the tables below any items disclosed in the Nonqualified Deferred Compensation During 20142016 table above, or any distributions of plan balances under our 401(k) Plan. See “Compensation Discussion and Analysis—Benefits and Perquisites” starting on page 45 for information about the 401(k) Plan.

48


Termination of Employment
Vesting of Long-Term Incentive Compensation Awards. Generally, unvested equity awards held by any of our employees, including the NEOs, are canceled upon termination of employment with the Company, and the right to exercise vested stock options terminates within a specified period of time (depending on the terms of the applicable grant documents and the manner of termination) after termination of employment; however, under specified circumstances, such as qualified retirement, death, disability, or a change of control, special vesting rules apply, as described below. All equity awards, whether vested or unvested, held by an NEO terminate immediately upon a termination of employment for cause.
Special Vesting upon Retirement. With respect to stock options, if Messrs.Mr. Toll, Mr. Yearley, or Mr. Hartman retireretires from service with us after reaching age 62, each is entitled to continued vesting and exercisability of any unvested and/or unexercised options. Options do not automatically vest upon retirement, but will continue to vest on their normal vesting schedule as if the NEO were still employed by us. In addition, the NEO will have the remainder of the option term to exercise the option, rather than being forced to exercise within a specified period of time following retirement. This continued vesting and exercisability is conditioned upon the NEO refraining from competing with us at any time. The tables below do not reflect an amount for unvested options with respect to retirement because vesting is not accelerated at retirement. There
For performance-based RSUs granted prior to December 2016, there is no accelerated vesting for shares subject to Performanceperformance-based RSUs upon retirement; all Performanceperformance-based RSUs that have not met the required vesting conditions are forfeited. Starting with grants made in December 2016, performance-based RSUs will continue to vest if Mr. Toll, Mr. Yearley, or Mr. Hartman retires from service with us after reaching age 62.
Special Vesting Upon Death or Disability. If an NEO’s employment with us terminates due to death or disability, he (or his estate) is entitled to continued vesting and exercisability of any unvested and/or unexercised options. Options do not immediately vest upon death or disability, but will continue to vest on their normal vesting schedule as if the NEO were still employed by us. In addition, the NEO (or his estate) will have the remainder of the option term to exercise the option, rather than being forced to exercise within a specified period of time following termination of employment. This continued vesting and exercisability are conditioned upon, in the event of the NEO’s disability, the NEO refraining from competing with us at any time. The tables below do not reflect an amount for unvested options with respect to termination due to death or disability because vesting is not accelerated upon these events.
Shares subject to Performanceperformance-based RSUs held by an NEO fully vest and all restrictions immediately lapse upon the NEO’s termination of his employment with us due to death or disability. The tables below include the value of previously unvested shares subject to performance-based RSUs that would vest and be delivered to the NEO if his employment with us terminated due to death or disability, based upon the closing price of our common stock on the NYSE on October 31, 2014.2016.
Vesting of SERP Benefits. Under the SERP, participants become 100% vested in their retirement benefits once they reach age 62. As of October 31, 2014,2016, Mr. Robert I. Toll had reached age 62 and, as a result, he was fully vested in his SERP benefits. The tables below do not include benefits payable to Mr. Toll under the SERP. If a participant has completed five years of service with us, upon his death or disability, he would become fully vested in his SERP benefits, and the benefits would be paid in bi-weekly installments over a 20-year period following the date on which he would have reached age 62. In addition, if a SERP participant is terminated by the Company without cause, he would become fully vested in his SERP benefits, and the benefits would be paid in bi-weekly installments over a 20-year period following the date on which he would have reached age 62. If a SERP participant is terminated for cause, all SERP benefits are subject to forfeiture, regardless of whether the participant is fully vested. See “Supplemental“Compensation Discussion and Analysis—Benefits and Perquisites—Supplemental Executive Retirement Plan” on page 45 and “Pension Benefits During Fiscal 2014” above.2016” on page 55.


Change of Control
Upon a change of control of the Company, all unvested outstanding stock options will fully vest and become exercisable. In addition, all shares subject to performance-based RSUs fully vest, based on target level performance if the change of control occurs during the performance period, and all restrictions lapse. Under the SERP, if there is a change of control of the Company, all participants in the SERP (that are not already fully vested) would become fully vested in their SERP benefits (if not already fully vested) and be potentially eligible for a lump sum payout equal to the actuarial equivalent present value of their benefits as of the payment date. The tables below reflect the amounts of previously unvested performance-based RSUs that would have vested if a change of control had occurred on October 31, 2014.2016. In addition, with respect to Messrs.Mr. Yearley, Mr. Hartman, and Mr. Connor, the tables below also reflect the benefits payable in a lump sum under the SERP as if a change of control had occurred on October 31, 2014.2016. Mr. Toll is already fully vested in his SERP benefits.

49


Tables
Robert I. Toll
. The following table describes the potential payments and benefits to Robert I. Toll upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2014.2016.
 Termination of Employment ($) Termination of Employment ($)
Payments and Benefits Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control
 Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control(2)
Accelerated vesting of unvested equity awards:                            
Stock options —
 —
 —
 —
 —
 —
 888,250
 —
 —
 —
 —
 —
 —
 —
RSU shares (2) —
 —
 —
 —
 11,139,016
 11,139,016
 11,139,016
Performance-based RSUs (3) —
 —
 —
 —
 7,992,751
 7,992,751
 7,992,751
Payment of SERP benefits (3)(4) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Total: —
 —
 —
 —
 11,139,016
 11,139,016
 12,027,266
 —
 —
 —
 —
 7,992,751
 7,992,751
 7,992,751
        
(1)For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company.
(2)As of October 31, 2016, the closing price per share of our common stock on the NYSE was of $27.44, which was below the exercise price for Mr. Toll's unvested options. Accordingly, had a change in control occurred on October 31, 2016, Mr. Toll's unvested options would have had no value.
(3)See footnotes 5, 6, 7, 8, and 79 to the Outstanding Equity Awards at October 31, 20142016 table in this proxy statement. Had Mr. Toll terminated his employment at October 31, 2014,2016, the value of his shares subject to performance-based RSUs, based upon the closing price of our common stock on the NYSE on October 31, 20142016 of $31.95,$27.44, would have been $11,139,016.$7,992,751.
(3)(4)The amount of Mr. Toll’s SERP benefits, in which he has already fully vested as described above, would be paid in bi-weekly installments over a 20-year period, except in the event of a change of control. Upon a change of control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Toll’s SERP benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits During Fiscal 2014”2016”).


Douglas C. Yearley, Jr.
Jr.The following table describes the potential payments and benefits to Douglas C. Yearley upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2014.2016.
 Termination of Employment ($) Termination of Employment ($)
Payments and Benefits Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control
 Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control(2)
Accelerated vesting of unvested equity awards:                            
Stock options —
 —
 —
 —
 —
 —
 1,065,900
 —
 —
 —
 —
 —
 —
 —
RSU shares (2) —
 —
 —
 —
 7,638,062
 7,638,062
 7,638,062
Performance-based RSUs (3) —
 —
 —
 —
 7,906,918
 7,906,918
 7,906,918
Payment of SERP benefits (3)(4) —
 —
 3,500,000
 —
 3,500,000
 3,500,000
 3,500,000
 —
 —
 4,000,000
 —
 4,000,000
 4,000,000
 4,000,000
Total: —
 —
 —
 —
 11,138,062
 11,138,062
 12,203,962
 —
 —
 4,000,000
 —
 11,906,918
 11,906,918
 11,906,918
        
(1)For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company.
(2)As of October 31, 2016, the closing price per share of our common stock on the NYSE was of $27.44, which was below the exercise price for Mr. Yearley's unvested options. Accordingly, had a change in control occurred on October 31, 2016, Mr. Yearley's unvested options would have had no value.
(3)See footnotes 5, 6, 7, 8, and 79 to the Outstanding Equity Awards at October 31, 20142016 table in this proxy statement. Had Mr. Yearley terminated his employment at October 31, 2014,2016, the value of his shares subject to performance-based RSUs, based upon the closing price of our common stock on the NYSE on October 31, 20142016 of $31.95,$27.44, would have been $7,638,062.$7,906,918.
(3)(4)The amount of the benefit shown would be paid in bi-weekly installments over a 20-year period, except in the event of a change of control. Upon a change of control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Yearley’s benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits During Fiscal 2014”2016”).

50


Richard T. Hartman
.The following table describes the potential payments and benefits to Richard T. Hartman upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2014.2016.
 Termination of Employment ($) Termination of Employment ($)
Payments and Benefits Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control
 Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control(2)
Accelerated vesting of unvested equity awards:                            
Stock options —
 —
 —
 —
 —
 —
 203,325
 —
 —
 —
 —
 —
 —
 —
RSU shares (2) —
 —
 —
 —
 1,826,741
 1,826,741
 1,826,741
Performance-based RSUs (3) —
 —
 —
 —
 2,377,264
 2,377,264
 2,377,264
Payment of SERP benefits (3)(4) —
 —
 2,500,000
 —
 2,500,000
 2,500,000
 2,500,000
 —
 —
 2,900,000
 —
 2,900,000
 2,900,000
 2,900,000
Total: —
 —
 —
 —
 4,326,741
 4,326,741
 4,530,066
 —
 —
 2,900,000
 —
 5,277,264
 5,277,264
 5,277,264
        
(1)For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company.
(2)As of October 31, 2016, the closing price per share of our common stock on the NYSE was of $27.44, which was below the exercise price for Mr. Hartman's unvested options. Accordingly, had a change in control occurred on October 31, 2016, Mr. Hartman's unvested options would have had no value.
(3)See footnotes 5, 6, 7, 8, and 89 to the Outstanding Equity Awards at October 31, 20142016 table in this proxy statement. Had Mr. Hartman terminated his employment at October 31, 2014,2016, the value of his shares subject to RSUs, based upon the closing price of our common stock on the NYSE on October 31, 20142016 of $31.95,$27.44, would have been $1,826,741.$2,377,264.
(3)(4)The amount of the benefit shown would be paid in bi-weekly installments over a 20-year period, except in the event of a change of control. Upon a change of control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Hartman’s benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits During Fiscal 2014”2016”).


Martin P. Connor
. The following table describes the potential payments and benefits to Martin P. Connor upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2014.2016.
 Termination of Employment ($) Termination of Employment ($)
Payments and Benefits Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control
 Voluntary(1) 
Normal
Retirement
 
Involuntary
Not for
Cause
 
Involuntary
For
Cause
 Death Disability 
Change of
Control(2)
Accelerated vesting of unvested equity awards:                            
Stock options —
 —
 —
 —
 —
 —
 177,650
 —
 —
 —
 —
 —
 —
 —
RSU shares (2) —
 —
 —
 —
 1,813,003
 1,813,003
 1,813,003
Performance-based RSUs (3) —
 —
 —
 —
 1,968,957
 1,968,957
 1,968,957
Payment of SERP benefits (3)(4) —
 —
 2,500,000
 —
 2,500,000
 2,500,000
 2,500,000
 —
 —
 2,900,000
 —
 2,900,000
 2,900,000
 2,900,000
Total: —
 —
 —
 —
 1,654,653
 1,654,653
 4,535,628
 —
 —
 2,900,000
 —
 4,868,957
 4,868,957
 4,868,957
        
(1)For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company.
(2)As of October 31, 2016, the closing price per share of our common stock on the NYSE was of $27.44, which was below the exercise price for Mr. Connor's unvested options. Accordingly, had a change in control occurred on October 31, 2016, Mr. Connor's unvested options would have had no value.
(3)See footnotes 5, 6, 7, 8, and 79 to the Outstanding Equity Awards at October 31, 20142016 table in this proxy statement. Had Mr. Connor terminated his employment at October 31, 2014,2016, the value of his shares subject to performance-based RSUs, based upon the closing price of our common stock on the NYSE on October 31, 20142016 of $31.95,$27.44, would have been $1,813,003.$1,968,957.
(3)(4)The amount of the benefit shown would be paid in bi-weekly installments over a 20-year period, except in the event of a change of control. Upon a change of control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Hartman’sConnor’s benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits During Fiscal 2014”2016”).

51



AUDIT AND RISK COMMITTEE REPORT
As described under “Corporate Governance—Committees of the Board and Meetings—Audit and Risk Committee,” the Audit and Risk Committee of the Board oversees the Company’s financial reporting process on behalf of, and reports to, the Board. Company management has primary responsibility for preparation of the financial statements and the overall reporting process, including the Company’s system of internal control.controls.
In fulfilling its oversight responsibilities, the Audit and Risk Committee reviewed and discussed the Company’s audited financial statements for the year ended October 31, 20142016 with management, including a discussion of the quality of financial reporting, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit and Risk Committee also discussed with Ernst & Young LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by Auditing Standard No. 16, as adopted by the Public Company Accounting Oversight Board, relating to communication with audit committees.
In addition, the Audit and Risk Committee received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit and Risk Committee concerning independence and discussed with Ernst & Young LLP its independence from the Company and the Company’s management.
Based on the reviews and discussions described in the preceding paragraphs, the Audit and Risk Committee recommended to the Board that the audited financial statements of the Company be included in the Annual Report on Form 10-K for the fiscal year ended October 31, 20142016 for filing with the SEC.
Respectfully submitted by the members of the Audit and Risk Committee of the Board of Directors.
Paul E. Shapiro (Chair)
Edward G. Boehne
Christine N. Garvey
Carl B. Marbach


52


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act and the regulations thereunder require certain of our officers, as well as our directors and persons who own more than 10% of a registered class of our equity securities (collectively, the “reporting persons”) to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of these reports. Based solely on our review of the copies of these reports and written representations we received from reporting persons, we believe that all filings required to be made by the reporting persons during or with respect to the period November 1, 20132015 through October 31, 20142016 were made on a timely basis. In November 2014, an inheritance of 778 shares received by Mr. Paul E. Shapiro in March 2003 was reported on a Form 5.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
We have a written Related Party Transaction Policy (“Policy”), which provides guidelines applicable to any transaction, arrangement, or relationship between us and a related person that is or may be required to be disclosed pursuant to Item 404 of the SEC’s Regulation S-K (each, a “related person transaction”). Under the Policy, the Governance Committee is responsible for reviewing and determining whether to approve or ratify any related person transaction. In making its determination to approve or ratify a related person transaction, the Governance Committee considers such factors as:
the extent of the related person’s interest in the transaction;
if applicable, the availability of other sources of comparable products or services;
whether the terms of the related person transaction are no less favorable than terms generally available in unaffiliated transactions under like circumstances;
the benefit to us and whether there are business reasons for us to enter into the transaction;
the aggregate value of the transaction; and
any other factors the Governance Committee deems relevant.
The Policy requires that all proposed or potential related person transactions be reported to our legal department prior to consummation. The legal department is required to evaluate each transaction to determine if it is in fact, a related person transaction and, if so, to report the transaction to the Governance Committee or its designee (the Chairperson or another member of the Governance Committee, or another committee of the Board) for review.Committee. The legal department maintains a list of all related persons and periodically distributes that list to our officers and employees to help facilitate compliance with the Policy and the proper reporting of proposed related person transactions. Under the Policy, all related person transactions that continue for more than one fiscal year are required to be reviewed and approved annually by the Governance Committee.
All transactions disclosed below were approved or ratified in accordance with the terms of the Policy.
During fiscal 2014,2016, Mr. Robert I. Toll, Executive Chairman of the Board, paid approximately $367,011$427,839 to us for personal services, including administrative, services, bookkeeping, services,and investment services, computer and related technology services, and associated office space.services. Such amounts were billed at competitive rates, and were paid throughout the year with monies deposited with us in advance by Mr. Robert I. Toll.
Mr. Bruce E. Toll was a member of our Board of Directors until March 8, 2016 and is the brother of Mr. Robert I. Toll, the Executive Chairman of the Board. We were party to an advisory and non-competition agreement with Mr. Bruce E. Toll which terminated on March 8, 2016. For information regarding this agreement, see “Director Compensation—Other Director Compensation Arrangements” on page 24. Effective from the termination date of this agreement, the Company agreed to provide Mr. Bruce E. Toll with office space and administrative support at Company headquarters, as well as health insurance coverage for him and his spouse. The value of these benefits (excluding amounts reimbursed by Mr.


Bruce E. Toll) for the period from March 8, 2016 through the end of fiscal 2016 was approximately $124,000.
In addition, Mr. Bruce E. Toll is a participant in the SERP, which provides an annual benefit to him of $230,000 for 20 years. Mr. Bruce E. Toll became eligible to receive his SERP benefits when he ceased to provide services to the Company on March 8, 2016. See “Executive Compensation Tables—Pension Benefits During Fiscal 2016—Supplemental Executive Retirement Plan” on page 56 for a more detailed description of the SERP.
On June 27, 2016, we entered into an agreement to purchase 115 lots of undeveloped land in Upper Dublin Township, Montgomery County, Pennsylvania from BT Dreshertown, LP for an aggregate purchase price of approximately $12.65 million. BT Dreshertown, LP is an affiliate of BET Investments, Inc., and Mr. Bruce E. Toll is the owner and principal of BET Investments, Inc. This transaction is expected to close in calendar year 2017, subject to seller's receipt of specified approvals and satisfaction of customary closing conditions. In accordance with the Policy, this transaction was reviewed and pre-approved by the Governance Committee, which considered, among other things, that this transaction was on terms no less favorable to us than the terms we would have agreed to with unrelated persons.
Toll Brothers Realty LP (“Toll Realty LP”) is a partnership which effectively owns or controls the commercial real estate that comprises the assets of Toll Brothers Realty Trust (the “Trust”). We formed the Trust in 1998 to take advantage of commercial real estate opportunities. Toll Realty LP is effectively owned one-third by the Company; one-third by Mr. Robert I. Toll, Executive Chairman of the Board, Mr. Bruce E. Toll Vice Chairman of the Board (and trusts established for the benefit of members of his family), a former director whose service ended in March 2016, Mr. Douglas C. Yearley, Jr., our Chief Executive Officer,CEO, and other current and former members of our senior management; and one-third by the Pennsylvania State Employees Retirement System. At October 31, 2014,2016, our investment, under the Generally Accepted Accounting Principles, in Toll Realty LP and the Trust was $2,555,820.zero as cumulative distributions received from the Trust have been in excess of the carrying amount of our net investment. We earned fees from Toll Realty LP and the Trust of $2,830,285$1,622,553 in fiscal 20142016 under the terms of various development, finance, and management services agreements. In performing these services, we also incurred costs. We believe that these transactions were on terms no less favorable than we would have agreed to with unrelated persons. Under such agreements, we also incur certain costs on behalf of Toll Realty LP and the Trust for which we

53


are reimbursed by Toll Realty LP and the Trust. These fees and reimbursements were paid to us throughout the year.
During fiscal 2014, Mr. Bruce E. Toll paid approximately $94,465From time to ustime, one of our executive officers, directors, or director nominees may be affiliated with companies with which the Company has entered into ordinary course business relationships for personal services, including administrative services, bookkeeping services, tax services, and computer andgoods or services. Occasionally, we may have employees who are related technology services. Such amounts were billed at competitive rates, and were paid throughout the yearto one of our executive officers, directors, or director nominees. We compensate these individuals in a manner consistent with monies deposited with us in advance by Mr. Toll.our practices that apply to all employees.
We are also party to an advisory and non-competition agreement with Mr. Bruce E. Toll. For information regarding this agreement, see “Director Compensation—Other Director Compensation Arrangements.”
STOCKHOLDER PROPOSALS FOR THE 2016
2018 ANNUAL MEETING OF STOCKHOLDERS
Stockholders interested in submitting a proposal to be considered for inclusion in our proxy statement and form of proxy for the 20162018 Annual Meeting of Stockholders may do so by following the procedures prescribed by Rule 14a-8 under the Exchange Act. To be eligible for inclusion, proposals must be submitted in writing and received by us at the address appearing on the cover page of this proxy statement on or before October 12, 2015.2017.
A stockholder may wish to have a proposal presented at the 20162018 Annual Meeting of Stockholders, but not to have the proposal included in our proxy statement and form of proxy relating to that meeting. Under Section 2-9 of our bylaws, no business may be brought before the annual meeting unless it is specified in the notice of meeting or is otherwise brought before the meeting at the direction of the Board, or by a stockholder entitled to vote who has delivered written notice to us (containingthe Secretary of the Company


(containing certain information specified in the bylaws about the stockholder and the proposed action) not less than 45 days or more than 75 days prior to the first anniversary of the date on which the Company first mailed its proxy materials for the preceding year’s annual meeting—that is, with respect to the 20162018 Annual Meeting of Stockholders, between November 26, 20152017 and December 26, 2015.2017.
Under Section 2-8 of our bylaws, any stockholder who wishes to submit a nomination for director to the Board must deliver written notice of the nomination within the time period set forth in the previous sentence and comply with the information requirements in the bylaws relating to stockholder nominations. These requirements are separate from and in addition to (a) the SEC requirements referenced above for inclusion of a stockholder proposal in our proxy statement and (b) the requirements set forth below for having our Governance Committee consider a person, who has been recommended by certain stockholders, for nomination as a director. If notice of any such proposal is not submitted in writing and received by us at the address appearing on the cover page of this proxy statement by the dates specified in our bylaws, then such proposal shall be deemed “untimely."untimely.
PROCEDURES FOR RECOMMENDING CANDIDATES FOR
NOMINATION TO THE BOARD OF DIRECTORS
In addition to the procedures outlined in Section 2-8 of our bylaws described above, the Governance Committee has adopted a policy permitting stockholders to recommend candidates for director under certain circumstances. The Governance Committee will only consider nominating a candidate for director who is recommended by a stockholder who has been a continuous record owner of at least 1% of our common stock for at least one year prior to submission of the candidate’s name and who provides a written statement that the holder intends to continue ownership of the shares through the annual meeting of stockholders. Notice must be given to the Governance Committee with respect to a stockholder nominee no more than 150 days and no less than 120 days prior to the anniversary date of this proxy statement.

Consideration and Selection of Nominees for the Board
54The Governance Committee is authorized to consider candidates for Board membership suggested by its members and by other Board members, as well as by management and by stockholders. A stockholder who wishes to recommend a prospective candidate for membership on the Board should follow the procedures described under “Procedures for Recommending Candidates for Nomination to the Board of Directors" above. Once a prospective candidate has been identified by, or presented to, the Governance Committee, background information is elicited about the candidate, and the candidate is evaluated by the Governance Committee and, if deemed appropriate, interviewed. Following this process, the Governance Committee reports to the Board and makes a recommendation regarding the prospective candidate. No distinctions are to be made as between internally-recommended candidates and those recommended by stockholders. For a discussion of criteria for membership on our Board of Directors, see "Board Membership Criteria" on page 7 of this proxy statement.



HOUSEHOLDING INFORMATION
The SEC permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report to those stockholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume of duplicate information stockholders receive and also reduce expenses for companies. While we do not utilize householding, some intermediaries may be householding our proxy materials and annual report. Once you have received notice from your broker or another intermediary that it will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent.
If you hold your shares through an intermediary that senthousehold received a single set of proxy materials, but you would prefer to receive a separate copy of this proxy statement and the annual report, to multiple stockholders in your household, we will promptly deliver a separate copy of each of these documents to you if you send a written request to the Director of Investor Relations at our address appearing on the cover page of this proxy statement or call the Director of Investor Relations at (215) 938-8000. IfYou may request or discontinue householding in the future by contacting the broker or other intermediary through which you hold your shares through an intermediary that is utilizing householding and you want to receive separate copies of our annual report and proxy statement in the future, or if you are receiving multiple copies of our proxy materials and annual report and wish to receive only one, you should contact your bank, broker, or other nominee record holder.shares.
SOLICITATION OF PROXIES
The enclosed form of proxy is being solicited by our Board. We will bear the cost of the solicitation of proxies for the Meeting, including the cost of preparing, assembling, and mailing proxy materials, the handling and tabulation of proxies received, and charges of brokerage houses and other institutions, nominees, and fiduciaries in forwarding such materials to beneficial owners. In addition to the mailing of the proxy materials, proxy solicitation may be made in person or by telephone, facsimile, or electronically by our directors, officers, or employees, or by a professional proxy solicitation firm that we engage. We have hired D.F. King & Co., Inc., 48 Wall Street, New York, NY 10005, to help us distribute and solicit proxies. We will pay them $12,500 plus expenses for these services.
ANNUAL REPORT ON FORM 10-K
We make available free of charge on our website, www.tollbrothers.com, our Annual Report on Form 10-K as filed with the SEC. We will provide without charge to each person whose proxy is being solicited by this proxy statement, upon written request, a copy of our Annual Report on Form 10-K as filed with the SEC for our most recent fiscal year. Such written requests should be directed to the Director of Investor Relations at our address appearing on the cover page of this proxy statement.
OTHER BUSINESS
The Board does not know of any other matters to be brought before the Meeting. If other matters are presented, the proxy holders have discretionary authority to vote all proxies in accordance with their best judgment.
By Order of the Board of Directors
Michael
MICHAEL I. SnyderSNYDER
Secretary
Horsham, Pennsylvania
January 30, 201531, 2017

55



Annex A

TOLL BROTHERS, INC.
SENIOR OFFICER BONUSEMPLOYEE STOCK PURCHASE PLAN (2017)

     1. Purpose.
     The purpose of the Toll Brothers, Inc. Employee Stock Purchase Plan (2017) (the “Plan”), is to provide performance-based bonusesassist Toll Brothers, Inc. a Delaware corporation (the “Company”), and those of its Affiliates as may be designated by the Committee from time to time in retaining the employment of employees by offering them a greater stake in the Company’s success and a closer identity with it, and to aid in obtaining the services of individuals whose employment would be helpful to the senior officersCompany and would contribute to its success. This is to be accomplished by providing employees a continuing opportunity to purchase shares of the Company (as defined herein).Company’s common stock, par value $0.01 (“Shares”) through periodic offerings.
     The Plan is intended to provide an incentive for superior work and to motivate participating senior officers toward even higher achievement and business results, and to enablepermit offerings of Shares in compliance with the Company to attract and retain highly qualified senior officers. The Plan is also intended to secure the full deductibility under the provisions of Section 423 of the Code (as defined herein) ofhereinafter defined). Except to the bonus compensation paidextent otherwise specifically provided herein or with respect to a particular offering under the Plan, toeach offering and the Company’s Covered Employees (as defined herein).Plan generally shall be administered, interpreted and construed consistent with the provisions of Code Section 423.
     2. Definitions. For purposes of the Plan:
(a) “Award”“Account” means the non-interest bearing account which the Company (or the Affiliate which employs the Participant) shall meanestablish for Participants, to which Participants’ payroll deductions pursuant to the amount payable toPlan shall be credited.
          (b) “Affiliate” means a Participant hereundercorporation which is a parent corporation or a subsidiary corporation with respect to any Performance Period.the Company within the meaning of Section 424(e) or (f) of the Code.
(b) “Board of Directors” shall mean          (c) “Agent” means the person or persons appointed by the Board in accordance with Paragraph  3(d).
          (d) “Board” means the Board of Directors of the Company.
(c) “Change          (e) “Code” means the Internal Revenue Code of Control”1986, as amended.
          (f) “Committee” means the committee described in Paragraph 3(a) or the Board acting in its capacity as administrator of the Plan in the absence of a separate committee established by the Board to act in such capacity.
          (g) “Company” means Toll Brothers, Inc.
          (h) “Eligible Employee” means an employee of the Company or Affiliate who is eligible to participate in the Plan in accordance with the requirements of Paragraph 4 hereof.
          (i) “Fair Market Value” of a Share shall be deemeddetermined, as of any relevant date, as follows: If the Shares are traded in on the New York Stock Exchange, then Fair Market Value shall be the closing price per share as reported. If not traded on the New York Stock Exchange, but on any other public market, then the Fair Market Value per Share shall be, if the Shares are listed on a national securities exchange, the last reported sale price thereof on the relevant date, or, if the Shares are not so listed or included, the mean between the last reported “bid” and “asked” prices thereof on the relevant date, as reported on NASDAQ or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines.
          (j) “Investment Account” means the account established for a Participant pursuant to have occurred uponParagraph 9(a) to hold Shares acquired for a Participant pursuant to the earliestPlan.


          (k) “NASDAQ” means the National Association of Security Dealers, Inc. Automated Quotations System.
          (l) “Offering Period” means each three month period commencing on January 1, April 1, July 1 and October 1 of each calendar year.
          (m) “Participant” means an Eligible Employee who makes an election to occurparticipate in the Plan in accordance with Paragraph 5 hereof.
          (n) “Plan” means the Toll Brothers, Inc. Employee Stock Purchase Plan (2017), as may be amended from time to time.
          (o) “Plan Year” means the calendar year.
          (p) “Purchase Date” means the last business day of each Offering Period.
          (q) “Purchase Price” means the purchase price as established under Paragraph 5 of the following events: (i)Plan.
          (r) “Share” or “Shares” means a share or shares of the consummation of a planCompany’s Common Stock, $0.01 par value.
          (s) “Subscription Agreement” means the agreement between the Participant and his or other arrangementher employer pursuant to which the Company willParticipant authorizes payroll deductions to the Account.
     3. Administration.
          (a) The Plan shall be dissolvedadministered by the Board of Directors or liquidated; (ii) the consummation ofby a sale or other disposition of all or substantially allcommittee of the assetsBoard consisting of one or more members designated by the Board. No member of the Company; (iii)Board of Directors who is eligible to participate in the consummation of a merger or consolidationPlan may vote on any matter affecting the administration of the Company with or into another corporation, other than, in either case,Plan. If a merger or consolidationCommittee is established, no member of the CompanyBoard of Directors who is also eligible to participate in which holders of sharesthe Plan may be a member of the Common Stock immediately priorCommittee. If, at any time, there are fewer than three members of the Committee eligible to serve in such capacity for purposes of administration of the mergerPlan, the Board of Directors shall appoint one or consolidation will holdmore members of the Board of Directors, who shall qualify hereunder, to serve as members of the Committee solely for purposes of administration. All Committee members shall serve, and may be removed, at leastthe pleasure of the Board of Directors.
          (b) For purposes of administration of the Plan, a majority of the ownershipmembers of commonthe Committee eligible to serve as such shall constitute a quorum, and any action taken by a majority of such members of the Committee present at any meeting at which a quorum is present, or acts approved in writing by all members of the Committee, shall be the acts of the Committee.
          (c) Subject to the express provisions of the Plan, the Committee shall have full discretionary authority to interpret the Plan, to issue rules for administering the Plan, to change, alter, amend or rescind such rules, and to make all other determinations necessary or appropriate for the administration of the Plan. All determinations, interpretations and constructions made by the Committee with respect to the Plan shall be final and conclusive. No member of the Board of Directors or the Committee shall be liable for any action, determination or omission taken or made in good faith with respect to the Plan or any right granted hereunder.
          (d) The Committee may engage an Agent to purchase Shares on each Purchase Date and to perform custodial and record keeping functions for the Plan, such as holding record title to Shares acquired by Participants under the Plan, maintaining an individual Investment Account for each such Participant and providing periodic account status reports to such Participants.
          (e) The Committee shall have full discretionary authority to delegate ministerial functions to management of the Company.



     4. Eligibility.
          (a) Eligibility to Participate. All employees of the Company, and of such of its Affiliates as may be designated for such purpose from time to time by the Committee, who are customarily employed by the Company or an Affiliate for both twenty (20) hours or more per week and more than five months in a calendar year shall be eligible to participate in the Plan for that Offering Period; provided, however, that no employee who owns stock possessing 5% or more of the total combined voting power or value of all classes of stock of the surviving corporation (and,Company or an Affiliate shall be eligible to participate in the Plan. In determining stock ownership for purposes of the preceding sentence, the rules of Section 424(d) of the Code shall apply and stock which the employee may purchase under outstanding options, including rights to purchase stock under the Plan, shall be treated as stock owned by the employee.
          (b) Commencement of Participation. Each employee who is eligible to participate in the Plan under the terms of this Paragraph 4(a) shall be eligible to commence contributions as of the first day of the calendar month starting after the employee has been employed for 60 days, such contributions to be used for purchases permitted under the terms of the Plan for the Offering Period first ending after the date of such contributions.
          (c) Employment. For purposes of this Paragraph 4, “employment” shall be interpreted in accordance with the provisions of Section 1.421-7(h) of the Treasury Regulations (or any successor regulations).
     5. Election to Participate.
     Each Eligible Employee shall be granted the right to purchase during an Offering Period a number of Shares in accordance with such employee’s method of election pursuant to this Paragraph 5 that shall not exceed a number equal to $6,250 divided by the fair market value of a single Share (determined as of the Purchase Date applicable with respect to such Offering Period). An Eligible Employee may elect to participate in the Plan in accordance with the purchase methods described below in this Paragraph 5:
          (a) 15% Discount Purchase Program.
               (i) Initial Subscription Agreements Using Payroll Deductions. Each Eligible Employee may become a Participant by filing a 15% Discount Subscription Agreement authorizing specified regular payroll deductions. A 15% Discount Subscription Agreement authorizing such payroll deductions must specify the date on which deduction is to commence, which may not be retroactive. All payroll deductions shall be recorded in the Accounts. All funds recorded in Accounts may be used by the Company and Affiliates for any corporate purpose, subject to the Participant’s right to withdraw at any time an amount equal to the balance accumulated in his or her Account as described in Paragraph 8 below. Funds credited to Accounts shall not be required to be segregated from the general funds of the Company or any Affiliate.
               (ii) Subsequent Subscription Agreements. Any Participant may file a 15% Discount Subscription Agreement subsequent to his or her filing an initial 15% Discount Subscription Agreement changing the terms of his or her participation in accordance with this Paragraph 5(a)(ii).
               (iii) Change in Contribution Rate. A Participant may at any time increase or decrease (or revoke) his or her payroll deduction rate by filing a new 15% Discount Subscription Agreement with the Committee during a calendar quarter which will supersede any prior 15% Discount Subscription Agreement effective as soon as practicable, but in no event more than thirty (30) days, after receipt of such new 15% Discount Subscription Agreement by the Committee. If a Participant does not file a new 15% Discount Subscription Agreement, the terms of the 15% Discount Subscription Agreement, if any, in effect with respect to the immediately preceding calendar quarter shall remain in effect for the new calendar quarter.


               (iv) Purchase Price. The Purchase Price per Share with respect to purchases made by means of participation in the Plan through the 15% Discount Purchase Program under this Paragraph 5(a) shall be equal to 85% of the Fair Market Value of a Share determined as of the Purchase Date.
               (v) Restrictions. Shares purchased by means of participation in the Plan through the 15% Discount Purchase Program under this Paragraph 5(a) shall not be transferable until the third anniversary of the Purchase Date on which such Shares were purchased. If an employee terminates employment with the Company or an Affiliate for any reason, such Shares shall continue to be subject to the restrictions on transfer imposed under this Paragraph 5(a)(v) until the third anniversary of the Purchase Date on which such Shares were purchased, and shall thereafter be transferable without such restrictions.
               (vi) Cash Purchases. In addition to purchases made through payroll deductions as described above in this Paragraph 5(a), any employee who is eligible to participate in the Plan shall be permitted to make purchases of Shares on any Purchase Date by means of a cash payment of the Purchase Price per Share under the 15% Discount Purchase Program, subject in all cases to the limitations and restrictions set forth in this Paragraph 5(a).
          (b) 5% Discount Purchase Program.
               (i) Initial Subscription Agreements Using Payroll Deductions. Each Eligible Employee may become a Participant by filing a 5% Discount Subscription Agreement authorizing specified regular payroll deductions. A 5% Discount Subscription Agreement authorizing such payroll deductions must specify the date on which deduction is to commence, which may not be retroactive. All payroll deductions shall be recorded in the Accounts. All funds recorded in Accounts may be used by the Company and Affiliates for any corporate purpose, subject to the Participant’s right to withdraw at any time an amount equal to the balance accumulated in his or her Account as described in Paragraph 8 below. Funds credited to Accounts shall not be required to be segregated from the general funds of the Company or any Affiliate.
               (ii) Subsequent Subscription Agreements. Any Participant may file a 5% Discount Subscription Agreement subsequent to his or her filing an initial 5% Discount Subscription Agreement changing the terms of his or her participation in accordance with this Paragraph 5(b)(ii).
               (iii) Change in Contribution Rate. A Participant may at any time increase or decrease (or revoke) his or her payroll deduction rate by filing a new 5% Discount Subscription Agreement with the Committee during a calendar quarter which will supersede any prior 5% Discount Subscription Agreement effective as soon as practicable, but in no event more than thirty (30) days, after receipt of such new 5% Discount Subscription Agreement by the Committee. If a Participant does not file a new 5% Discount Subscription Agreement, the terms of the 5% Discount Subscription Agreement, if any, in effect with respect to the immediately preceding calendar quarter shall remain in effect for the new calendar quarter.
               (iv) Purchase Price. The Purchase Price per Share with respect to purchases made by means of participation in the Plan through the 5% Discount Purchase Program under this Paragraph 5(b) shall be equal to 95% of the Fair Market Value of a Share determined as of the Purchase Date.
               (v) No Restrictions. No Shares purchased by means of participation in the Plan through the 5% Discount Purchase Program under this Paragraph 5(b) shall be subject to any restrictions. Shares acquired under the 5% Discount Purchase Program may be transferred by the employee (or, in the case of death, the employee’s representative) as soon as practicable following the receipt of such request, and there shall be no restrictions on the disposition of any such Shares.
               (vi) Cash Purchases. In addition to purchases made through payroll deductions as described above in this Paragraph 5(b), any employee who is eligible to participate in the Plan shall be permitted to make purchases of Shares on any Purchase Date by means of a cash payment of the Purchase Price per Share under the 5% Discount Purchase Program, subject in all cases to the limitations and restrictions set forth in this Paragraph 5(b).


          (c) Provisions Relating to Shares Subject to Restrictions on Transferability. Dividends, if any, paid with respect to Shares which are subject to restrictions on transfer under the terms of the Plan shall be paid over to the employee who purchased such Shares; provided, however, that any dividends in the nature of a stock dividend or stock split shall continue to be retained by the Company and shall be subject to the same restrictions, if any, as are applicable to the Shares with respect to which such distribution was made.
     6. Other Terms and Conditions. The Committee may, with respect to any Offering Period, establish other methods of purchase of Shares under the Plan and impose such terms and conditions on such purchases as it deems appropriate and may, in addition, modify at any time any administrative procedures applicable to the manner in which Eligible Employees participate in the Plan, at the discretion of the Committee, which modifications may include (but are not limited to) changes in the timing and manner in which payroll deductions may be elected by Eligible Employees, the manner in which such elections may be modified by participants from time to time, timing requirements or deadlines applicable to the submission of payments to be used to make cash purchases under the Plan and timing requirements or deadlines applicable to requests for withdrawal from participation in the Plan; provided that:
          (a) All purchase methods implemented under the Plan by the Committee shall be made available to all employees who are eligible to participate in the Plan with respect to that Offering Period;
          (b) The Purchase Date or Dates shall in all events occur during the Offering Period;
          (c) The Purchase Price with respect to any purchases made pursuant to any such purchase methods shall not be less than 85% of the Fair Market Value of a Share determined as of the Purchase Date; and
          (d) Any such additional methods by which Shares may be purchased under the Plan shall be consistent with the provision of the Plan which are intended to keep the Plan in compliance with the statutory requirements of Section 423 of the Code, including all limitations on the number of Shares which may be purchased under the Plan and the number of Shares which may be purchased by an Eligible Employee during any one classOffering Period.
          (e) Notwithstanding anything herein to the contrary, all rights of commona Participant in the Plan, and all terms and conditions regarding the purchase or transfer of Shares otherwise permitted under the Plan, shall be subject to such rules and regulations as are set out in the Company’s Insider Trading Policy, as that may be amended from time to time, and other Company policies regarding purchases, sales and/or dispositions of Shares, restrictions on transfers of Shares, and any other similar policies, rules, regulations or requirements as may be in effect from time to time.
     7. Calendar Year Limitation on Purchases of Shares.
          (a) No employee may be granted a right to purchase Shares under the Plan to the extent that, taking into account such grant, such employee would have rights to purchase equity securities under the Plan and under all other plans, if any, of the Company and Affiliates that are intended to meet the requirements of Section 423 of the Code, that accrue at a rate which exceeds $25,000 of Fair Market Value of Shares (determined at the time the rights are granted) for each calendar year in which such rights to purchase Shares are outstanding at any time. For purposes of this Paragraph 7:
               (i) The right to purchase Shares accrues when the right (or any portion thereof) first becomes exercisable during the calendar year;
               (ii) No Participant shall be permitted to carry over any rights to acquire Shares accrued with respect to an Offering Period to any subsequent Offering Period; and
               (iii) The limitations set forth in this Paragraph 7 shall be interpreted by the Committee in accordance with applicable rules and regulations issued under Section 423 of the Code so that the Plan remain qualified as a “stock purchase plan” as defined in that Code Section.


          (b) No employee may be granted a right to purchase Shares under the Plan if, immediately following such grant, such employee would own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or an Affiliate. In determining stock ownership for purposes of the preceding sentence, the rules of Section 424(d) of the Code shall apply and stock which the employee may purchase under outstanding options, including rights to purchase stock under the Plan, shall be treated as stock owned by the employee.
          (c) In interpreting the provisions of this Plan, each employee’s rights with respect to each Offering Period shall be treated as an option to acquire Shares under the terms of the Plan which is granted as of same date as the Purchase Date. As a consequence, the maximum number of shares that may be acquired under the Plan is fixed as of the Purchase Dates occurring during each calendar year.
          (d) In addition to any other limitations on the purchase of Shares under the Plan, the Committee may from time to time, at its discretion, establish such other limitations on the number of Shares that may be purchased during any Offering Period.
     8. Termination of Participation in Payroll Deduction Arrangements and Withdrawal of Funds. A Participant may at any time and for any reason, withdraw from participation in the Plan for an Offering Period by filing a notice of withdrawal form with the Committee prior to such deadline as is established for these purposes by the Committee, which shall be no later than the relevant Purchase Date. In the event a Participant timely files a withdrawal notice, the entire balance accumulated in his or her Account as a result of prior payroll deductions shall be paid to such Participant as soon as practicable thereafter and no further payroll deductions shall be made pursuant to the Plan. Partial withdrawals shall not be permitted. A Participant may recommence participation in the Plan by submitting a new Subscription Agreement to the Committee or by otherwise making a purchase under applicable provisions of the Plan regardless of any previous withdrawal from participation.
     9. Method of Purchase and Investment Accounts.
          (a) Exercise of Option for Shares. Each Participant having funds credited to an Account on a Purchase Date shall be deemed, without any further action, to have exercised on such Purchase Date, the option to purchase the number of whole Shares which the funds in such Account would purchase at the Purchase Price, subject to the limit:
               (i) on the aggregate number of Shares that may be made available for purchase to all Participants under the Plan for the term of the Plan, as set forth in Paragraph 10; and
               (ii) on the number of Shares that may be made available for purchase to any individual Participant, as set forth in Paragraphs 5 and 7.
Such option shall be deemed exercised if the Participant does not withdraw such funds before the Purchase Date. All Shares so purchased shall be credited to a separate Investment Account or Accounts for each Participant, established by the Agent, or by the Committee if no Agent has been appointed. The Agent shall hold in its name or the name of its nominee all Shares purchased until such Shares are withdrawn or transferred by a Participant consistent with applicable provisions of the Plan. Each Participant having Shares in an Investment Account shall receive a report at least annually as to the number of Shares held in his or her Investment Account.
          (b) Adjustment of Shares on Application of Aggregate Limits. If the total number of Shares that would be purchased pursuant to Paragraph 9(a) but for the limits described in Paragraph 9(a)(i) exceeds the number of Shares available for purchase under the Plan, then the number of available Shares shall be allocated among the Investment Accounts of Participants in the ratio that the amount credited to a Participant’s Account as of the Purchase Date bears to the total amount credited to all Participants’ Accounts as of the Purchase Date. The cash balance not applied to the purchase of Shares shall be held in Participants’ Accounts subject to the terms and conditions of the Plan.


     10. Shares Subject to Plan. The aggregate maximum number of Shares that may be issued pursuant to the Plan is five hundred thousand (500,000) (taking into account all Shares issued pursuant to the Plan since its original adoption and making such adjustments as are appropriate to reflect stock splits and/or stock dividends), subject to adjustment as provided in Paragraph 18 of the Plan. The Shares delivered pursuant to the Plan may, at the option of the Company, be Shares purchased specifically for purposes of the Plan, shares otherwise held in treasury or Shares originally issued by the Company for such purpose.
     11. Transfer of Shares. Except as otherwise specified with respect to purchases made under the 15% Discount Purchase Program, a Participant shall have the right at any time to transfer all or a portion of the Shares credited to his or her Investment Account by giving written notice to the Company or its Agent.
     12. Voting. The Committee or the Agent shall cause all Shares held in an Investment Account to be voted in accordance with the Participant’s instructions.
     13. Rights on Termination of Employment. In the event of a Participant’s termination of employment for any reason, or in the event that a Participant otherwise ceases to be an Eligible Employee, no payroll deductions shall be taken from any pay due and owing to the Participant thereafter, no purchase shall be permitted on any Purchase Date after such termination of employment, and the balance, if any, in the Participant’s Account shall be paid to the Participant or, in the event of the Participant’s death, to the Participant’s estate.
     14. Rights Not Transferable. The right to participate in the Plan is not transferable by a Participant and is exercisable during the employee’s lifetime only classby the employee.
     15. No Right to Continued Employment. Neither the Plan nor any right granted under the Plan shall confer upon any Participant any right to continuance of voting securities entitled to vote onemployment with the election of directorsCompany or any Affiliate, or interfere in any way with the right of the surviving corporation,Company or Affiliate to terminate the employment of such Participant.
     16. Application of Funds. All funds received or held by the Company under this Plan may be used for any corporate purpose.
     17. Adjustments in Case of Changes Affecting Shares. In the event of a subdivision of outstanding Shares, or the payment of a stock dividend, the Share limit set forth in Paragraph 10 shall be adjusted proportionately, and such other adjustments shall be made as may be deemed equitable by the Committee. In the event of any other change affecting Shares (including any event described in Section 424(a) of the Code), such adjustment, if any, shall be made as may be deemed equitable by the Committee to give proper effect to such event, subject to the limitations of Section 424 of the Code.
     18. Amendment of the Plan. The Board of Directors of the Company or the Committee may at any time, or from time to time, amend the Plan in such manner as it may deem advisable. Nevertheless, neither the Board of Directors of the Company nor the Committee may (i) increase the maximum number of shares that may be issued pursuant to the Plan (ii) materially increase the benefits accruing to Participants under the Plan, or (iii) modify the requirements as to eligibility for participation in the Plan, without obtaining approval, within twelve months before or after such action, by vote of a majority of the voting powervotes cast at a duly called meeting of the surviving corporation’sStockholders at which a quorum representing a majority of all outstanding voting securities) immediately afterstock of the mergerCompany is, either in person or consolidation, which common stock (and, if applicable,by proxy, present and voting securities) is to be heldon the matter.
     19. Termination of the Plan. The Plan and all rights of employees under any offering hereunder shall terminate on the earliest of:
          (a) any time at the discretion of the Board of Directors; or
          (b) December 31, 2027.


Upon termination of this Plan, all amounts in the same proportionAccounts of Participants shall be carried forward into the Participant’s Account under a successor plan, if any, or promptly refunded.
     20. Governmental Regulations.
          (a) Anything contained in this Plan to the contrary notwithstanding, the Company shall not be obligated to sell or deliver any Shares under this Plan unless and until the Company is satisfied that such sale or delivery complies with (i) all applicable requirements of the governing body of the principal market in which such Shares are traded, (ii) all applicable provisions of the Securities Act of 1933, as amended (the “Act”), and the rules and regulations thereunder and (iii) all other laws or regulations by which the Company is bound or to which the Company is subject.
          (b) The Company (or an Affiliate) may make such holders’ ownershipprovisions as it may deem appropriate for the withholding of Common Stock immediately beforeany taxes or payment of any taxes which it determines it may be required to withhold or pay in connection with any Shares. The obligation of the merger or consolidation; (iv)Company to deliver Shares under this Plan is conditioned upon the datesatisfaction of the provisions set forth in the preceding sentence.
     21. Section 16 Restrictions for Officers and Directors. Notwithstanding any entity, person or group, (withinother provision of the meaningPlan, each officer (for purposes of Section 13(d)(3) or Section 14(d)(2)16 of the Securities Exchange Act of 1934, as amended)amended (the “Exchange Act”)), (other than (A) the Company or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (B) any individual person who, on the date the Plan is effective, shall have been the beneficial owner of at least ten percent (10%) of the outstanding Common Stock), shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the outstanding shares of the Common Stock; or (v) the first day after the date this Plan is effective when directors are elected such that a majority of the Board of Directors shall have been members of the Board of Directors for less than twenty-four (24) months, unless the nomination for election of each newand director who was not a director at the beginning of such twenty-four (24) month period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period  
(d) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(e) “Committee” shall mean the Executive Compensation Committee of the Board of Directors or such other committee as may be established by the Board of Directors for these purposes which shall consist solely of two or more Outside Directors.  
(f) “Company” shall mean Toll Brothers, Inc., a Delaware corporation, and any successor thereto.  
(g) “Covered Employee” shall mean, with respect to any fiscal year of the Company eachshall be subject to such restrictions, if any, as are required so that transactions under the Plan by such officer whose compensationor director shall be exempt from Section 16(b) of the Exchange Act. Without limiting the generality of the foregoing, such restrictions may include restrictions on the ability of an officer or director making withdrawals from the Plan, ceasing participation in the Plan and holding the Shares received under the Plan for so long as such fiscal year isrestrictions are required to be disclosed or mayqualify for a Section 16 exemption.
     22. Repurchase of Shares. The Company shall not be required to be disclosed to stockholders in the proxy statement relating to the annual meeting of stockholders of the Company held during the next fiscal year pursuant to the executive compensation disclosure rules promulgated by the Securities and Exchange Commissionrepurchase from any Participant any Shares which such Participant acquires under the Securities Exchange Act of 1934, as amended.  Plan.
(h) “Outside Director” shall mean a member of the Board of Directors who (i) is not a current employee of the Company or any affiliate, (ii) is not a former employee of the Company or any affiliate who is receiving compensation for services (other than benefits under a tax-qualified retirement plan), (iii) was not an officer of the Company or any affiliate at any time, (iv) is not currently receiving compensation for services from the Company or any affiliate in any capacity other than as a member of the Board of Directors, (v) is a “Non-Employee Director” as


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that term is defined in Rule 16b-3 under the Securities Exchange Act of 1934, and (vi) is an “Outside Director” as that term is defined under Section 162(m) of the Code.  
(i) “Participant” shall mean, with respect to each Performance Period, each officer who has been designated by the Committee as a Participant in the Plan for such Performance Period.  
(j) “Performance Goal” shall mean, with respect to a Performance Period, an objective performance goal or goals that have been established by the Committee, consistent with the express terms of the Plan, which must be met in order for any Award to be payable to any Participant in the Plan with respect to such Performance Period.  
(k) “Performance Period” shall mean the Plan Year, or such other period which may be longer than or shorter than a single Plan Year, as may be established as a Performance Period by the Committee from time to time.  
(l) “Plan” shall mean the Toll Brothers, Inc. Senior Officer Bonus Plan, as set forth herein and as may be amended from time to time.  
(m) “Plan Year” shall mean the Company’s fiscal year, beginning on November 1 and ending on the next following October 31.  
3. Term of Plan.  Subject to approval of the Plan by the stockholders of the Company, the Plan shall be in effect for the Plan Year ending October 31, 2010 and shall continue in subsequent Plan Years until terminated by the Board of Directors.  
4. Eligibility and Participation.  Those senior officers of the Company who are designated as Participants in the Plan from time to time by the Committee shall be eligible to participate in the Plan. Prior to or at the time Performance Goals are established for a specified Performance Period, the Committee shall, at its sole discretion, designate in writing which senior officers are to be Participants in the Plan with respect to such Performance Period.  
5. Establishment of Awards.  In connection with the grant of each Award, the Committee shall establish the Performance Period and one or more Performance Goals applicable to such Award, in accordance with the provisions of Section 6, below. During any Plan Year, the Committee may establish multiple Awards for any Participant in the Plan.  
6. Performance Goals.  
(a) Prior to or within the first ninety (90) days of a Performance Period (or, if the Performance Period is shorter than one year, within the first 25 percent of the Performance Period) the Committee shall establish in writing the duration of such Performance Period and, with respect to such Performance Period, one or more specific Performance Goals and an objective formula or method for computing the amount of Award payable to each Participant with respect to such Performance Period if such specified Performance Goals are attained.  
(b) Performance Goals shall be based upon objective business criteria that take into account one or more of the following for the Company as a whole or any of its subsidiaries, operating divisions or other operating units: share price, market share, gross revenue, net revenue, net income, pre-tax income, pre-tax pre-bonus income, operating income, cash flow, earnings per share, debt ratings, debt-to-capital ratio, generation of cash, issuance of new debt, establishment of new credit facilities, retirement of debt, return on equity, return on assets, return on capital, return on revenues, attraction of new capital, gross homebuilding margin, net margin, pre-tax margin, total shareholder return, acquisition or disposition of assets, acquisition or disposition of companies, creation of new performance and compensation criteria for key personnel, recruiting and retaining key personnel, customer satisfaction, employee morale, acquisition or disposition of other entities or businesses, acquisition or disposition of assets, hiring of strategic personnel, development and implementation of Company policies, strategies and initiatives, creation of new joint ventures, new contracts signed, increasing the Company’s public visibility and corporate reputation, development of corporate brand name, overhead cost reductions, unit deliveries, savings, productivity, or any combination of or variations on the preceding business criteria. The Performance Goals established by the Committee based on the aforementioned business criteria may be measured, where the Committee deems appropriate, before or after any applicable unusual, unanticipated or non-reoccurring items, and may be measured in comparison to a budget approved by the Committee, a peer group established by the Committee or a stated target established by the Committee.  
(c) The Performance Goals may be modified at the discretion of the Committee to take into account significant items or events and may be adjusted to reflect the opening or expanding of new geographic regions and

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the development of new business lines, unless the exercise of such discretion would be inconsistent with the requirements of the qualified performance-based compensation exemption of Section 162(m) of the Code and Treasury Regulations promulgated thereunder. In addition, to the extent consistent with the goal of providing for deductibility under Section 162(m) of the Code, Performance Goals may be based upon a Participant’s attainment of business objectives with respect to any of the criteria set forth in Section 6(b), or implementing policies and plans, negotiating transactions, developing long-term business goals or exercising managerial responsibility. Measurements of the Company’s or a Participant’s performance against the Performance Goals established by the Committee shall be objectively determinable and, to the extent applicable, shall be determined according to generally accepted accounting principles as in existence on the date on which the Performance Goals are established and without regard to any changes in such principles after such date.  
(d) The establishment of Performance Goals under the Plan shall in all cases be implemented in a manner consistent with the requirements of the qualified performance-based compensation exemption of Section 162(m) of the Code and Treasury Regulations promulgated thereunder.  
7. Determination of Awards.  
(a) As soon as practicable following the end of a Performance Period, the Committee shall determine whether and to what extent the Performance Goal or Goals established for such Performance Period have been achieved, and shall certify such determination in writing, which certification may take the form of minutes of the Committee documenting such determination. In addition, the Committee shall calculate the amount of each Participant’s Award for such Performance Period based upon the levels of achievement of the relevant Performance Goals and the objective formula or formulae established for such purposes with respect to such Performance Period.  
(b) The Committee shall have no discretion to increase the amount of any Participant’s Award above the maximum amount established for such Award pursuant to the objective formula or method described in Section 6(a), but may, in it absolute and sole discretion until an Award is finally determined under Section 7(a), determine to reduce the amount of any Award or totally eliminate such Award, where the Committee determines, at any time, and after taking into account such facts and circumstances as it deems relevant, that such a reduction or elimination is appropriate.  
(c) The maximum amount payable with respect to any Participant with respect to any single Award shall not exceed $8.5 million (the “Award Cap”) and, in no event shall the maximum aggregate amount payable with respect to any Participant with respect to all of the Awards which have Performance Periods that end within any Plan Year exceed two times the Award Cap, regardless of the number of Awards established for such Participant which have Performance Periods that end within such Plan Year (the “Annual Payment Cap”). Any Award (or portion thereof) that is limited pursuant to the Annual Payment Cap shall not be paid. For purposes of determining whether Awards exceed the foregoing limits, in the event the Committee determines to pay any portion of an Award in shares of Company common stock, the value of such shares shall be determined as of the end of the Performance Period relating to the Award.  
(d) The Committee shall have the right to determine whether an Award shall be paid or forfeited in the event of termination of employment by the Participant, prior to the end of the relevant Performance Period or payment of such Award to the Participant, due to death, disability, Change of Control of the Company, retirement in accordance with the Company’s (or a subsidiary’s) retirement policies, resignation pursuant to mutual written agreement, voluntary or involuntary termination in the absence of a mutual written agreement, or some other event.  
8. Payment of Awards.  
(a) Any Award payable under this Plan may be paid to the Participant (or to his or her estate after the Participant’s death) in cash, shares of Company common stock, or a combination of both, at the discretion of the Committee. To the extent an Award is paid in whole or in part in shares, the number of shares the Participant shall receive shall be determined by dividing the dollar amount of the Award (or relevant portion thereof) by the closing price of the Company’s common stock on the New York Stock Exchange on the last business day of the Performance Period relating to such Award. Payment of shares shall be under the terms of the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Employees (2007), or any successor plan, and may be in the form of a restricted stock award, unrestricted stock award or stock units.  pxb124832001.jpg


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9. Other Terms and Conditions.  
(a) No Award shall be paid under the Plan unless and until the material terms (within the meaning of Section 162(m)(4)(C) of the Code) of the Plan are disclosed to and approved by the Company’s stockholders.  
(b) No person shall have any legal claim to be granted an award under the Plan and the Committee shall have no obligation to treat Participants uniformly. Except as may be otherwise required by law, any Award under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary. Any Award awarded under the Plan shall be payable from the general assets of the Company and no Participant shall have any claim with respect to any specific assets of the Company.  
(c) Neither the Plan nor any action taken under the Plan shall be construed as giving any employee the right to be retained in the employ of the Company or any subsidiary or to maintain any Participant’s compensation at any level.  
(d) The Company or any of its subsidiaries may deduct from any award any applicable withholding taxes or any amounts owed by the employee to the Company or any of its subsidiaries.  
10. Administration.  
(a) The Committee shall have full power and authority to administer and interpret the provisions of the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Committee deems necessary or advisable.  
(b) Except with respect to matters which under Section 162(m)(4)(C) of the Code are required to be determined in the sole and absolute discretion of the Committee, the Committee shall have full power to delegate to any officer or employee of the Company the authority to administer and interpret the procedural aspects of the Plan, subject to the Plan’s terms, including adopting and enforcing rules to decide procedural and administrative issues.  
(c) The Committee may rely on opinions, reports or statements of officers or employees of the Company or any subsidiary thereof and of Company counsel (inside or retained counsel), public accountants and other professional or expert persons.  
(d) The Board reserves the right to amend or terminate the Plan in whole or in part at any time. Unless otherwise prohibited by applicable law, any amendment required to conform the Plan to the requirements of Section 162(m) of the Code may be made by the Committee. No amendment may be made to the class of individuals who are eligible to participate in the Plan, the business criteria specified in Section 6(b) or to increase the maximum amount payable to any Participant as an Award Cap or Annual Payment Cap, as specified in Section 7(c), without stockholder approval unless stockholder approval is not required in order for the Award paid to a Covered Employee to constitute qualified performance-based compensation under Section 162(m) of the Code.  
(e) No member of the Committee shall be liable for any action taken or omitted to be taken or for any determination made by him or her in good faith with respect to the Plan, and the Company shall indemnify and hold harmless each member of the Committee against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any act or omission in connection with the administration or interpretation of the Plan, unless arising out of such person’s own fraud or bad faith.  
(f) The place of administration of the Plan shall be in the Commonwealth of Pennsylvania, and the validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the Commonwealth of Pennsylvania.


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