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
(Amendment No. )
Filed by the Registrantþ
Filed by a Party other than the Registranto¨
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| Preliminary Proxy Statement | ||||
| Confidential, for Use of the Commission Only (as permitted by Rule | ||||
| þ | Definitive Proxy Statement | |||
| Definitive Additional Materials | ||||
| ¨ | Soliciting Material Pursuant to §240.14a-12 | |||
TOLL BROTHERS, INC. | ||||
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250 Gibraltar Road
Horsham, Pennsylvania 19044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on Wednesday, March 16, 201114, 2012
The 20112012 Annual Meeting of Stockholders (the “Meeting”) of Toll Brothers, Inc. (the “Company”) will be held on Wednesday, March 16, 201114, 2012 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 threefour directors nominated by the Board of Directors of the Company (the “Board”) and named in the proxy statement to hold office until the 20142013 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified. (The terms of office of the other directors do not expire until 2012 or 2013.)
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 20112012 fiscal year.
3. To approve an amendment to the Company’s Second Restated Certificate of Incorporation, as amended, to provide for the annual election of all directors.
4. 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 18, 201117, 2012 as the record date for the Meeting. 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 and the enclosed proxy card are first being mailed to stockholders on or about February 3, 2012. 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.
By Order of the Board of Directors,
MICHAEL I. SNYDER
Secretary
February 1, 2011
3, 2012
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 16, 201114, 2012
The proxy statement and 20102011 Annual Report of Toll Brothers, Inc. are available at:
https://materials.proxyvote.com/889478
ATTENDANCE AT ANNUAL MEETING — ADMISSION POLICY AND PROCEDURES
The Meeting will be held at our offices at 250 Gibraltar Road, Horsham, Pennsylvania 19044 and will begin promptly at 12:00 noon EDT. Directions to the Meeting are available at: www.tollcareercenter.com/directions. All attendees must present a valid photo identification to be admitted to the Meeting. Cameras (including cellular phones 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.
Admission Policy and Procedures
Attendance at the Meeting is limited to (A) stockholders who own shares directly with the Companyin their names (“record holders”); (B) stockholders whose shares are held for them by banks, brokerages or other intermediaries (“beneficial holders”); and (C) authorized representatives of entities who are beneficial holders. Beneficial holders must present evidence of their ownership, 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. In addition to any evidence required under (B),of beneficial holders, above, authorized representatives must present (1) a letter from the record holder certifying to the beneficial ownership of the entity they represent and (2) a letter from the entity certifying to their status as an authorized representative.
Record Holders | Beneficial Holders | |
If you plan tovote by proxy but attend the Meeting in person, please: | If you plan tovote by proxy but attend the Meeting in person, please: | |
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. | 1. Indicate your votes on the voting instruction card and return the card to the address indicated therein; 2. Send written notice* of your intention to attend the Meeting to the address below** by 3. Follow all admissions policies set forth above. | |
| If you plan toattend and vote at the Meeting, please: | If you plan toattend and vote at the Meeting, please: | |
1. Bring your proxy card with you to the Meeting; 2 Send written notice* of your intention to attend the Meeting to the address below** by 3. Follow all admissions policies set forth above. | 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 address below** by 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 | |
| ** | Toll Brothers, Inc., 250 Gibraltar Road, Horsham, PA 19044, Attention: Michael I. Snyder, Secretary |
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250 Gibraltar Road
Horsham, Pennsylvania 19044
PROXY STATEMENT
For
Annual Meeting of Stockholders
Wednesday, March 16, 201114, 2012
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Toll Brothers, Inc., a Delaware corporation, for use at the Toll Brothers, Inc. 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. Robert I. Toll and Douglas C. Yearley, Jr., or either of them, acting as your designated proxies, will vote or otherwise act thereon in accordance with his or their judgment on such matters. 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. Robert I. Toll and Douglas C. Yearley, Jr., or either of them, acting as your proxies, will vote your shares “FOR” all nominees under Proposal One 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.GENERAL INFORMATION20112012 Annual Meeting of Stockholders (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. Any reference to “Toll Brothers” or any use of the terms “Company,” “we,” “us” or “our” in this proxy statement refers to Toll Brothers, Inc. This proxy statement the foregoing notice and the enclosed proxy card are first being sent to our stockholders on or about February 1, 2011.3, 2012.vote “THREE YEARS” with respect to Proposal Five and “FOR” each of the other proposals.
Shares Entitled To Vote, Quorum and Required Vote The record date fixed by our Board for the determination of stockholders entitled to notice of and to vote at the Meeting is January Proposal One: Directors are elected by a plurality of the votes cast at the Meeting director, because the election of directors is not considered a “routine” matter under the NYSE rules. AbstentionsVOTING SECURITIES AND SECURITY OWNERSHIP18, 201117, 2012 (the “Record Date”). At the close of business on the Record Date, there were 166,735,842166,623,070 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 consideration of the matters 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” means 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.on this proposal andwhich means that the threefour nominees who receive the most votes will be elected. Under the New York Stock Exchange (“NYSE”) rules, your brokerage firm or other nominee is not permitted to vote your shares with respect to Proposal One without specific instructions from you as to how to vote with respect to the election of each of the threefour nominees for
Proposal Two: To be approved, this proposal requires an affirmative vote of a majority of the votes cast. This means that the votes that our stockholders cast “FOR” this proposal must exceed the votes that our stockholders cast “AGAINST” this proposal at the Meeting. However, yourYour vote will not be binding on the Board or the Company. Proposal Two is considered a “routine” matter under the NYSE rules and, therefore, brokerage firms and nominees that are members of the NYSE have the authority under those rules to vote their customers’ shares on Proposal Two if the customers have not furnished voting instructions within a specified period of time prior to the Meeting. Abstentions will not be taken into account in determining the outcome of this proposal.
Proposal Three: To be approved, this proposal requires an affirmative vote of the holders of at least 662/3% of the combined voting power of all shares of the Company entitled to vote generally in the election of directors, voting together as a single class. This means that the votes that our stockholders cast “FOR” this proposal must equal at least 662/3% of our outstanding shares of common stock. Proposal Three is considered a “routine” matter under the NYSE rules and, therefore, brokerage firms and nominees that are members of the NYSE have the authority under those rules to vote their customers’ shares on Proposal Three if the customers have not furnished voting instructions within a specified period of time prior to the Meeting. Abstentions will have the effect of a negative vote on this proposal.
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The following table sets forth 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, nominees for director and named executive officers; 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.
| Percent of | ||||||||
| Amount and Nature of | Common | |||||||
Name of Beneficial Owner | Beneficial Ownership(1) | Stock | ||||||
| Robert I. Toll (2) | 17,875,966 | 10.49 | ||||||
| Bruce E. Toll (3) | 5,141,727 | 3.08 | ||||||
| FMR LLC (4) | 24,100,450 | 14.45 | ||||||
| Wellington Management Company, LLP (5) | 11,814,400 | 7.09 | ||||||
| BlackRock, Inc. (6) | 8,913,964 | 5.35 | ||||||
| Zvi Barzilay | 1,981,041 | 1.18 | ||||||
| Robert S. Blank | 241,692 | * | ||||||
| Edward G. Boehne | 241,900 | * | ||||||
| Richard J. Braemer | 465,647 | * | ||||||
| Christine N. Garvey | 12,600 | * | ||||||
| Carl B. Marbach (7) | 339,511 | * | ||||||
| Stephen A. Novick | 160,700 | * | ||||||
| Estate of Joel H. Rassman | 1,105,262 | * | ||||||
| Paul E. Shapiro | 370,826 | * | ||||||
| Douglas C. Yearley, Jr. (8) | 313,585 | * | ||||||
| Martin P. Connor | 7,750 | * | ||||||
| All directors and executive officers as a group (12 persons) (9) | 27,152,945 | 15.62 | ||||||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Common Stock | ||||||
FMR LLC(2) | 24,928,420 | 15.0 | % | |||||
BlackRock, Inc.(3) | 10,415,179 | 6.26 | ||||||
Robert I. Toll(4) | 15,919,912 | 9.39 | ||||||
Bruce E. Toll(5) | 5,156,727 | 3.09 | ||||||
Zvi Barzilay | 1,545,805 | * | ||||||
Robert S. Blank | 185,792 | * | ||||||
Edward G. Boehne | 212,900 | * | ||||||
Richard J. Braemer | 174,700 | * | ||||||
Christine N. Garvey | 33,100 | * | ||||||
Carl B. Marbach(6) | 294,277 | * | ||||||
Stephen A. Novick | 177,900 | * | ||||||
Paul E. Shapiro | 351,459 | * | ||||||
Douglas C. Yearley, Jr.(7) | 304,131 | * | ||||||
Martin P. Connor | 18,000 | * | ||||||
All directors and executive officers as a group (12 persons)(1)(8)(9) | 23,019,722 | 13.45 | ||||||
| * | Less than 1% | |
| (1) | Shares issuable pursuant to restricted stock units (“RSUs”), restricted stock awards 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, restricted stock awards and options held by the following individuals, and all directors and executive officers as a group: Mr. Robert I. Toll, | |
| (2) | FMR LLC filed a Schedule 13G with the Securities and Exchange Commission (the “SEC”) on February |
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| vote with respect to |
| (3) | BlackRock, Inc. (“BlackRock”) filed a Schedule 13G with the SEC on |
| (4) | The address for Mr. Robert I. Toll is c/o Toll Brothers, Inc., 250 Gibraltar Road, Horsham, Pennsylvania 19044. Amount includes 251,375 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 6,820,316 shares pledged to financial institutions to secure personal obligations of Mr. Robert I. Toll. |
| Amount includes 4,442,932 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). |
| (6) | 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. |
| (7) | Amount includes 24,500 shares pledged to a financial institution to secure personal obligations of Mr. Yearley. |
| (8) | The Board of Directors, after reviewing the functions of all of our officers, both in terms of designated |
| (9) | Includes 190,824 shares beneficially owned by Richard T. Hartman, our new Chief Operating Officer effective January 1, 2012. |
ELECTION OF DIRECTORS At the The Board currently consists of 10 directors divided into three classes. As previously disclosed, Zvi Barzilay retired from our Company and the Board, effective December 31, 2011. The Board determined to decrease the Board size from 11 members to 10 members following Mr. Barzilay’s retirement. The directors whose terms of office expire at the Meeting are Messrs. Douglas C. Yearley, Jr., Robert S. Blank, Stephen A. Novick and Paul E. Shapiro. Accordingly, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated Messrs. Douglas C. Yearley, Jr., Robert Set forth below is certain information concerning each current director, each nominee for election as a director at the Meeting and each director whose current term of office will continue after the Meeting. Our directors’ experience PROPOSAL ONEMeeting, our stockholders will elect three directors to hold office until the 20142011 Annual Meeting of Stockholders, and until their respective successors have been duly elected and qualified. The directors whose terms of office expire at the Meeting are Messrs. Robert I. Toll, Bruce E. Toll and Ms. Christine N. Garvey. Mr. Joel H. Rassman, a director since 1996 whose term of office was also due to expire at the Meeting, passed away in September 2010 after an extended illness; the Board has reduced the class of directors to serve until 2014 to three.Our Board is currently divided into three classes serving staggered three-year terms, with the term of one class of directors expiring each year. As more fully described in Proposal Three, the Board has recommended that stockholders approveapproved an amendment to the Company’s Second Restated Certificate of Incorporation, as amended, to provide for the annual election of directors beginning with the class of directors up for re-election at the 2012 Annual Meeting of Stockholders, continuing with the class of directors up for re-election at the 2013 Annual Meeting of Stockholders and culminating with the full Board up for re-election, for the first time as a group, at the 2014 Annual Meeting of Stockholders.I. Toll, BruceS. Blank, Stephen A. Novick and Paul E. TollShapiro, and Ms. Christine N. Garveyour stockholders will be asked to serve again aselect these four directors, to hold office until the 20142013 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified. Each nominee has indicated a willingness to continue to serve as a director. Should a nominee become unavailable to accept election as a director, the persons named in the enclosed proxy will vote the shares that such proxy represents for the election of such other person as the Board may nominate on the recommendation of the Nominating and Corporate Governance Committee.and tenure as accomplished business leaders, and their qualifications described below and the knowledge and understanding of the Company’s operations, financial condition, governance, personnel and business ethic gained by them over a lengthy period of time (ten of our eleven directors have been serving the Company for over eleven years) have led to the4
| Director | Term | |||||||||||||
Name | Age | Since | Expires | Position(s) with the Company | ||||||||||
| Robert I. Toll | 70 | 1986 | 2011 | Executive Chairman of the Board | ||||||||||
| Bruce E. Toll | 67 | 1986 | 2011 | Vice Chairman of the Board | ||||||||||
| Douglas C. Yearley, Jr. | 50 | 2010 | 2012 | Chief Executive Officer | ||||||||||
| Zvi Barzilay | 64 | 1994 | 2013 | President, Chief Operating Officer and Director | ||||||||||
| Robert S. Blank | 70 | 1986 | 2012 | Director | ||||||||||
| Edward G. Boehne | 70 | 2000 | 2013 | Director | ||||||||||
| Richard J. Braemer | 69 | 1986 | 2013 | Director | ||||||||||
| Christine N. Garvey | 65 | 2009 | 2011 | Director | ||||||||||
| Carl B. Marbach | 69 | 1991 | 2013 | Director | ||||||||||
| Stephen A. Novick | 70 | 2003 | 2012 | Director | ||||||||||
| Paul E. Shapiro | 69 | 1993 | 2012 | Director | ||||||||||
Name | Age | Director Since | Current Term Expires | Position(s) with the Company | ||||||||
Robert I. Toll | 71 | 1986 | 2014 | Executive Chairman of the Board | ||||||||
Bruce E. Toll | 68 | 1986 | 2014 | Vice Chairman of the Board | ||||||||
Douglas C. Yearley, Jr. | 51 | 2010 | 2012 | Chief Executive Officer and Director | ||||||||
Robert S. Blank | 71 | 1986 | 2012 | Director | ||||||||
Edward G. Boehne | 71 | 2000 | 2013 | Director | ||||||||
Richard J. Braemer | 70 | 1986 | 2013 | Director | ||||||||
Christine N. Garvey | 66 | 2009 | 2014 | Director | ||||||||
Carl B. Marbach | 70 | 1991 | 2013 | Director | ||||||||
Stephen A. Novick | 71 | 2003 | 2012 | Director | ||||||||
Paul E. Shapiro | 70 | 1993 | 2012 | 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 from our inception until June 2010 when he assumed the new position of Executive Chairman of the Board.
Bruce E. Toll, the brother of Robert I. Toll, has 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. Mr. Toll is the founder and president of BET Investments, a commercial real estate company, and the owner of several automobile dealerships. From June 2006 through August 2009, Mr. Toll 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 NYSE-listed company that lends to and invests in small and mid-sized companies. From 2000 until July 2006, Mr. Toll wasHe brings to the Board his knowledge and experience as a memberco-founder of the boardCompany and his service in various executive, director and advisory positions 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 UbiquiTel, Inc.
Douglas C. Yearley, Jr.has been a member of our Board since June 2010. He joined us in 1990 as a direct report to the Chief Executive Officer 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.
Robert S. Blankhas 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. For more than the past five years, Mr. Blank has been Co-Chairman and Co-Chief Executive Officer of Whitney Communication Company and Senior Partner of Whitcom Partners. Whitney Communications Company and Whitcom Partners make investments in public and non-public companies. From August 2001 until June 2007, Mr. Blank was a member of the board of directors of Advanta Corp.
Edward G. Boehnehas been a member of our Board since July 2000.2000 and the Company’s Lead Independent Director since March 2011. He is the Chair of the Nominating and Corporate Governance Committee and a member of the Audit 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 Mutual Bancorp, Inc., Penn Mutual Life Insurance Co. and AAA Mid-Atlantic,
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Richard J. Braemerhas been a member of our Board since September 1986. He is the Chair of the Public Debt and Equity Securities Committee. Mr. BraemerHe is senior counsel at the law firm of Ballard, Spahr, Andrews & Ingersoll, LLP, where he was a partner from 1994 through 2008.
Christine N. Garveyhas been a member of our Board since September 2009. She is a member of the Audit 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 also a member of the board of directors of HCP, Inc. and Maguire Properties, Inc. She has served as a member of the board of trustees of ProLogis since September 2005, when Catellus Development Corporation, where 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.
Carl B. Marbachhas been a member of our Board since December 1991. He is the Chair of the Executive Compensation Committee and a member of the Audit Committee and the Public Debt and Equity Securities Committee. Since January 2004, Mr. Marbach has been President of Greater Marbach Airlines, Inc. and Florida Professional Aviation, Inc., companies that provide aviation and consulting services. From January 1995 to January 2004, Mr. Marbach was President of Internetwork Publishing Corp., an electronic publisher, which he founded.
Stephen A. Novickhas 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. Mr. Novick serves as Senior Advisor to The Andrea and Charles Bronfman Philanthropies, a private family foundation. 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.
Paul E. Shapirohas been a member of our Board since December 1993. He is the Chair of the Audit Committee and effective as of December 15, 2010, a member of the Executive Compensation Committee. Since June 30, 2004, Mr. Shapiro has been Chairman of the Board of Q Capital Strategies, LLC, a life settlement company. From January 1, 2004 to June 30, 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.
Required Vote
Director nominees are elected by a plurality of the votes cast at the Meeting. We have been advised that it is the intention of Mr.Messrs. Robert I. Toll and Mr. Bruce E. Toll to vote the shares of common stock they each own “FOR” the election of each of the nominees named above. See “Voting Securities and Security Ownership — Security Ownership of Principal Stockholders and Management.”
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF
DOUGLAS C. YEARLEY, JR., ROBERT I. TOLL, BRUCES. BLANK, STEPHEN A. NOVICK AND PAUL E. TOLL AND CHRISTINE N. GARVEY.SHAPIRO.
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RATIFICATION OF THE RE-APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee re-appointed Ernst & Young LLP to serve as the Company’s independent registered public accounting firm (“independent auditors”) for the fiscal year ending October 31, 2011.
Ernst & Young LLP has audited our consolidated financial statements since 1984. Representatives of Ernst & Young LLP are expected to be present at the Meeting, will be afforded the opportunity to make a statement if they desire and are 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 paid to Ernst & Young LLP for professional services for the fiscal years ended October 31, 20102011 and 2009:
| 2010 | 2009 | |||||||
| Audit Fees(1) | $ | 834,000 | $ | 877,235 | ||||
| Audit-Related Fees(2) | 30,000 | 49,500 | ||||||
| Tax Fees(3) | 69,398 | 266,181 | ||||||
| $ | 933,398 | $ | 1,192,916 | |||||
| 2011 | 2010 | |||||||
Audit Fees(1) | $ | 856,283 | $ | 834,000 | ||||
Audit-Related Fees(2) | 30,000 | 30,000 | ||||||
Tax Fees(3) | 85,536 | 69,398 | ||||||
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| $ | 971,819 | $ | 933,398 | |||||
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| (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, | |
| (2) | “Audit-Related Fees” include fees billed for audits of | |
| (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 specific services. Any work that exceeds these pre-approved limits 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 20102011 were approved by the Audit Committee. The Audit Committee also reviewed and approved the compatibility of non-audit services, including tax services, with the independent registered public accounting firm’s independence. The Audit Committee reviewed the services provided by Ernst & Young LLP and approved the fees paid to Ernst & Young LLP for all services for fiscal 2010.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL TWO.
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ADVISORY AND NON-BINDING VOTE ON EXECUTIVE COMPENSATION
Our stockholders voted in 2011, in a non-binding vote, in favor of the submission of the Company’s executive compensation annually to our stockholders on a non-binding basis, and our Board has adopted that approach. In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934 (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act and the related rules of the SEC), we are including in this proxy statement a separate resolution, subject to a non-binding stockholder vote, to approve in a non-binding vote, the compensation of our named executive officers (“NEOs”) as disclosed on pages 18 to 42.
Our Executive Compensation Committee (the “Compensation Committee”) has developed and maintained a compensation program that is intended to reward performance and encourage actions that drive success in our business strategy. Our executive compensation program received the support of 99% of our stockholders who voted at our 2011 Stockholders Meeting in a non-binding vote. In determining fiscal 20102011 compensation for our NEOs, and as described in “Compensation Discussion and Analysis — Compensation Decision Making Process,” the Compensation Committee took note of the difficult conditions that continued to challenge the economy and the home building industry while also considering the significant transition that we experiencedcontinued to experience at the senior management level. The following notablesignificant areas of achievement in fiscal
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| • | Income: We reported net | ||
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| • | Community Count: We increased our | ||
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Expansion of our Business: |
Shortly after the close of fiscal 2011, we completed the acquisition of substantially all of the assets of CamWest Development LLC, marking our expansion into the Seattle market.
| • | The continued expansion of the | ||
Gibraltar Capital and Asset Management LLC (“Gibraltar Capital”), our wholly owned subsidiary formed in 2010 to pursue a broad range of distressed real estate opportunities, executed four acquisition transactions during fiscal 2011, representing $70.1 million in capital invested and generated net income of $6.9 million.
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| • | Financial Strength: We continue to have one of the strongest balance sheets in the industry. We maintain significant liquidity and strong land positions and believe we are well positioned for the ultimate recovery in the housing markets. |
We believe that our Compensation Committee has developed NEO compensation that is incentivizing outstanding performance and achievements in light of the current economic condition of our industry and the economy as a whole.
Accordingly, we are asking our stockholders to approve, in a non-binding vote, the following resolution in respect of this Proposal Four:
“RESOLVED, that the stockholders approve, in a non-binding vote, the compensation of the Company’s named executive officers as disclosed on pages 1819 to 4232 in the Proxy Statement relating to the Company’s Annual Meeting of Stockholders to be held on March 16, 2011.14, 2012.”
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL FOUR.THREE.
PROPOSAL FIVEADVISORY AND NON-BINDING VOTE ON FREQUENCY OF VOTE REGARDINGEXECUTIVE COMPENSATIONIn accordance with the requirements of Section 14A of the Securities Exchange Act of 1934 (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act and the related rules of the SEC), we are including in this proxy statement a separate resolution to request our stockholders to recommend, in a non-binding vote, whether a non-binding stockholder vote to approve the compensation of our NEOs (that is, a vote similar to the non-binding vote in Proposal Four on pages 8 and 9) should occur every one, two or three years.In considering their vote, stockholders may wish to carefully review the information presented in connection with Proposal Four on pages 8 and 9 and the information regarding our compensation policies and decisions regarding our NEOs presented in Compensation Discussion and Analysis on pages 18 to 31.We believe a three-year frequency is most consistent with our approach to compensation. Our reasons include our beliefs that:• an effective compensation program should incentivize performance over the short- and long-term — for example, some of our performance-based awards are tied directly to significant long-term share price growth over a sustained period;• long-term incentives should be a significant component of executive compensation, particularly because the business of home building, including evaluating and purchasing land, planning the use of that land, obtaining9
We continue to operate within a comprehensive plan of corporate governance for the purpose of defining independence, assigning Board committee responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards. We regularly monitor developments in the area of 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 the Company 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” generally 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- andfathers-in-law, sons- anddaughters-in-law, brothers- andsisters-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 any12-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 who 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;
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(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.
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. Robert I. Toll, Bruce E. Toll and Douglas C. Yearley, and Barzilay.Jr. As part of the Board’s process in making such determination, each such director provided written assurances that (a) all of the above-cited objective criteria for independence are satisfied, and (b) he or she has no other “material relationship” with us that could interfere with his or her ability to exercise independent judgment.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines, which describe the Board’s views on a number of governance topics. The guidelines can be obtained free of charge from our website atwww.tollbrothers.comunder “Investor Relations: Corporate Governance.”
Board Meetings
The Board held four meetings during our 2011 fiscal year.
Each director during our 2011 fiscal year attended at least 75% of the meetings of the Board and of the committees of which he or she was a member.
Our independent directors hold separate meetings. Edward G. Boehne, the Company’s Lead Independent Director, acts as chair at meetings of the independent directors. During our 2011 fiscal year, the independent directors met four times.
Committees of the Board and Meetings
The Board currently has the following standing committees: Audit Committee; Executive Compensation Committee; Nominating and Corporate Governance Committee and Public Debt and Equity Securities Committee.
Audit Committee
The Audit Committee is currently comprised 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 2011 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.
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; our compliance with legal and regulatory requirements; risk oversight and assessment; the appointment, qualifications, performance and independence of the independent
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The Audit Committee also has the responsibility and authority for the appointment, compensation, retention, evaluation, termination and oversight of the independent registered public accounting firm, and pre-approval of audit and permissible non-audit services provided by the independent registered public accounting firm.
The Audit Committee held four regular meetings during the 2011 fiscal year. All of its meetings were attended by representatives from Ernst & Young LLP, our independent registered public accounting firm, to consider, among other things, the scope of the annual audit and issues of accounting policy and internal control. In addition, the Audit Committee had four meetings with our management and representatives from Ernst & Young LLP during the 2011 fiscal year, prior to each public release of our quarterly and annual financial information.
Executive Compensation Committee
The Executive Compensation Committee (the “Compensation Committee”) was, for the entire 2011 fiscal year, comprised of Carl B. Marbach (Chair) and Stephen A. Novick and, since December 15, 2010, Paul E. Shapiro, each of whom has been determined by the Board to meet the NYSE’s standards for independence. In addition, each committee member has been determined by the Board to qualify as a “Non-Employee Director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as an “outside director” as defined for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (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 Chief Executive Officer; evaluating the performance of the Executive Chairman of the Board and Chief Executive Officer in light of those goals and objectives and determining each of the Executive Chairman of the Board’s and Chief Executive Officer’s compensation level based on these evaluations; annually 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 shareholder 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 Toll Brothers, Inc. Cash Bonus Plan (the “Cash Bonus Plan”), the Toll Brothers, Inc. Senior Officer Bonus Plan (the “Senior Officer Plan”), and the Toll Brothers, Inc. Supplemental Executive Retirement Plan (the “SERP”); reviewing and approving, or making recommendations to the full Board, regarding equity-based awards; and reviewing the Company’s regulatory compliance with respect to compensation matters.
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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 compensation and the role of executive officers and compensation consultants in determining or recommending the amount or form of compensation, see “Compensation Discussion and Analysis” beginning on page 19.
The Compensation Committee held three meetings during the 2011 fiscal year, one of which took place over multiple sessions.
The Nominating and Corporate Governance Committee is, and for the entire 2011 fiscal year was, comprised of Edward G. Boehne (Chair), Robert S. Blank and Stephen A. Novick, each of whom has been determined by the Board to meet the NYSE’s standards for independence.
The duties and responsibilities of the Nominating and Corporate 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 the objectives of the Company and the Board; evaluating and making recommendations to the Board with respect to the compensation of the non-employee 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 shareholders; reviewing the Board’s committee structure; reviewing proposed changes to the Company’s governance instruments; reviewing and recommending director orientation and continuing orientation programs; reviewing and approving related party transactions; and acting on behalf of the Board with respect to certain administrative matters.
The Nominating and Corporate Governance Committee, along with the Board, administers the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-Employee Directors (2007).
The Nominating and Corporate Governance Committee held four meetings during the 2011 fiscal year.
Public Debt and Equity Securities Committee
The Public Debt and Equity Securities Committee is, and for the entire 2011 fiscal year was, comprised of Richard J. Braemer (Chair), Robert S. Blank, Carl B. Marbach and Bruce E. Toll.
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The duties and responsibilities of the Public Debt and Equity Securities Committee are set forth in its charter, which may be found atwww.tollbrothers.com under | ||
The Committee did not hold a formal meeting during the 2011 fiscal year.
Consideration and Selection of Nominees for the Board
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Our Audit Committee regularly receives reports from a risk management committee comprised of representatives from various Company business functions that are charged with risk assessment and business continuity planning. This committee meets on a regular basis and 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 the Company has taken or plans to take in order to define and mitigate such risks and prepare for and address such vulnerabilities. These presentations include reports regarding risks and vulnerabilities relating to, among other things, operations, assets, land investments, competition, personnel, credit and debt covenant compliance, joint venture relationships, litigation and information technology. In addition, our Compensation Committee oversees risks arising from executive officer compensation practices, and our Nominating and Corporate Governance Committee oversees succession risks. Each of the standing 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 also reviewed the design and operation of the Company’s compensation structures and policies as they pertain to risk and has determined that the Company’s compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company.
Codes of Business Conduct and Ethics
Management has adopted a Code of Ethics for Principal Executive Officer and Senior Financial Officers, violations of which may be reported to the Audit Committee. Copies of this code and any waiver or amendment to such code can be obtained free of charge from our website atwww.tollbrothers.com under “Investor Relations: Corporate Governance.”
We operate under a comprehensive Code of Ethics and Business Conduct that we review annually and which 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 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 atwww.tollbrothers.com under “Investor Relations: Corporate Governance.”
Leadership Structure
In connection with the appointments of Douglas C. Yearley, Jr. as Chief Executive Officer and Robert I. Toll as Executive Chairman of the Board, each effective June 16, 2010, the Board separated the roles of chairman and chief executive officer and chairman.officer. As our Chief Executive Officer, Mr. Yearley is responsible for ourday-to-day operations and for formulating and executing our long-term strategies in collaboration with the Board and Mr. Toll, as Executive Chairman of the Board. As Executive Chairman of the Board, Mr. Toll continues to play a key role and be actively involved in our business. He continues to chair the Board, act as a mentor and advisor to Mr. Yearleythe executive officers, actively engage in the review of land transactions, and be involvedplay a major role in the planning of our long-term business strategy. 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 the Company at this time as it enables us and the Board to continue to benefit from Mr. Toll’s vast experience, skills, expertise and knowledge of the Company.
In fiscal 2011, the Board designated Edward G. Boehne as the Lead Independent Director of the Board of Directors until his successor is duly designated and qualified. The Lead Independent Director helps ensure that there is an appropriate balance between management and 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: (i) presiding over all executive sessions and other meetings of the independent directors; (ii) acting as principal liaison between the Executive Chairman of the Board and the independent directors; (iii) serving as the director whom stockholders may contact; (iv) leading the process for evaluating the
Board of Directors and the committees of the Board of Directors; (v) 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.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee during the fiscal year ended October 31, 20102011 has ever been an officer or employee of the Company or its subsidiaries.
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We do not permit personal loans to or for the benefit of our directors or executive officers.
Director 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 members of the Board who were serving or standing for re-election, other than Bruce E. Toll, attended our 20102011 Annual Meeting of Stockholders.
Communication with the Board
Any person who wishes to communicate with the Board or specific individual directors, including the chair of the independent directors meetings 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 Office of the General Counsel, Toll Brothers, Inc., at the address appearing on the first 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 a majority of the independent directors. Communications directed to independent directors will be referred to the intended Board member(s) except to the extent that doing so would be contrary to the instructions of such independent directors. Any communication so withheld will nevertheless be made available to any independent director who wishes to review it.
Director Compensation
The Nominating and Corporate Governance Committee is responsible for evaluating and recommending compensation for non-management directors to the Board.
Elements of Director Compensation During Fiscal Year 2011
Non-management directors arehave been compensated in cash, stock options and restricted stock for their services as directors.
| • | Cash. Directors |
| Each full day Board meeting | $ | 5,000 | ||
| Each half day Board meeting | $ | 2,500 | ||
| Each telephonic Board meeting | $ | 1,750 | ||
| Each Board committee meeting | $ | 1,750 |
Each full day Board meeting | $ | 5,000 | ||
Each telephonic Board meeting | $ | 1,750 | ||
Each Board committee meeting | $ | 1,750 |
| • | Equity Compensation. All non-management directors |
non-management directors also provide for continued vesting upon death, disability or retirement of the director. In addition, non-management directors also |
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| immediately lapse upon a change of control of the Company or upon the death or disability of the director. In order to receive equity compensation for Board committee service, the relevant Board committee |
Equity compensation grants under the Director Plan to non-management directors during fiscal 20102011 for services rendered during fiscal 20092010 were made on December 21, 2009 (in the case of restricted stock) and on December 20, 2009 (in the case of stock options)2010 and were as follows:
Service on the Board | Option to acquire 15,000 shares | |
Chair of the Audit Committee | Option to acquire 1,250 250 shares of restricted stock | |
Member of the Audit Committee | Option to acquire 1,000 100 shares of restricted stock | |
Chair of the Nominating and Corporate Governance Committee | Option to acquire 1,000 200 shares of restricted stock | |
Member of the Nominating and Corporate Governance Committee | Option to acquire 1,000 100 shares of restricted stock | |
Chair of the Compensation Committee | Option to acquire 1,000 200 shares of restricted stock | |
Member of the Compensation Committee | Option to acquire 1,000 100 shares of restricted stock | |
| • | Perquisites and Benefits. Our non-management directors did not receive perquisites or other benefits from the Company during fiscal |
Elements of Director Compensation Beginning in Fiscal Year 2012
Beginning in fiscal year 2012, the compensation program for non-management directors is as follows:
| • | Board Retainer. The principal form of compensation for non-management 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-management director receives $53,334 as the cash portion of the annual retainer. |
| • | Equity. The equity portion of the annual retainer for a non-management director consists of two components issued pursuant to the Company’s Director Plan: (a) non-qualified stock options having an aggregate grant date fair value of $53,333 and (b) restricted stock units (“RSUs”) having an aggregate grant date fair value of $53,333. Stock options are granted and priced on a date in the last two weeks of December that is determined in advance by the Compensation Committee for service during the immediately preceding fiscal year. Each option grant made to a non-management director has a 10-year term and vests in equal installments over a two-year period, with a provision for automatic vesting upon a change of control of the Company. RSUs are also granted on a date in the last two weeks of December that is determined in advance by the Compensation Committee for service during the immediately preceding fiscal year. Restrictions on shares of RSUs granted as director compensation lapse in equal installments over two years, although all restrictions would immediately lapse upon a change of control of the Company or upon the death or disability of the director. |
| • | Committee Retainer. Each member of the Audit Committee, the Nominating and Corporate Governance Committee and the Executive Compensation Committee receives annually, for service on each such Committee: (a) $6,668 in cash; (b) non-qualified stock options having an aggregate grant date fair value of $6,666, and (c) RSUs having an aggregate grant date fair value of $6,666, in each case with the same features described above under “Equity.” In addition, the Chair of each of the above Committees receives an annual cash retainer of $10,000. No fees (in cash or equity) are paid on a per meeting basis. |
Each member (including the Chair) of the Public Debt and Equity Securities Committee receives annually in any year in which the Committee meets or takes official actions: (a) $3,334 in cash, (b) non-qualified stock options having an aggregate grant date fair value of $3,333, and (c) RSUs having an aggregate grant date fair value of $3,333, in each case with the same features described above under “Equity.” In addition, the Chair of that Committee receives a cash retainer of $5,000 in any 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. |
| • | Lead Independent Director. The Lead Independent Director receives annually $10,000 in cash for his services in that capacity. |
Other Director Compensation Arrangements
A new Advisory and Non-Competition Agreement (the “Advisory Agreement”) was entered into as of November 1, 2010 between the Company and Mr. Bruce E. Toll. The Advisory Agreement currently expires on October 31, 2016. The purpose of the Advisory Agreement is to provide us with the valuable and special knowledge, expertise and services of Mr. Bruce E. Toll, one of our co-founders and a director of the Company since our inception, on a continuing basis, as well as to provide that Mr. Toll does not engage in specified activities. The Advisory Agreement provides, among other things, that (a) we will retain Mr. Bruce E. Toll as Special Advisor to the Executive Chairman of the Board and the Chief Executive Officer until October 31, 2016, at a compensation rate of $675,000 for the first year of the term of the Advisory Agreement, with such compensation rate to be reduced by $75,000 in each of the remaining five years of the term of the Advisory Agreement, and (b) during the term of the Advisory Agreement, Mr. Bruce E. Toll will be entitled to receive the health plan benefits provided to our NEOs. Mr. Bruce E. Toll is a participant in the Company’s 401(k) retirement plan. Mr. Bruce E. Toll is also a participant in the SERP, which provides an annual benefit of $230,000 for 20 years,years; however, no payments are to be made to him under the SERP until the expiration of the term (or termination) of the Advisory Agreement. See “Executive Compensation Tables — Pension Benefits at October 31, 20102011 — Supplemental Executive Retirement Plan” for a more detailed description of the SERP. During fiscal 2010,2011, we provided Mr. Bruce E. Toll with other benefits having an estimated value of $7,404,$2,746, which are described in greater detail under “Director Compensation Table”during Fiscal 2011” table, below. These benefits were reviewed by the Compensation Committee as part of its review of benefits and perquisites paid to our NEOs and were found to be reasonable and consistent with past practices.
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The following table sets forth information concerning the fiscal 20102011 compensation awarded to or earned by our non-management directors. Management directors are not compensated for their service as directors. The compensation received by our management directors for their services as employees is shown in the Summary Compensation Table on page 32 of this proxy statement.
Director Compensation during Fiscal 20102011
| Change in | ||||||||||||||||||||||||
| Pension | ||||||||||||||||||||||||
| Value and | ||||||||||||||||||||||||
| Fees | Nonqualified | |||||||||||||||||||||||
| Earned or | Stock | Option | Deferred | All Other | ||||||||||||||||||||
| Paid in Cash | Awards | Awards | Compensation | Compensation | ||||||||||||||||||||
Name | ($) | ($)(1)(2)(3) | ($)(4)(5)(6) | Earnings ($) | ($) | Total ($) | ||||||||||||||||||
| Robert S. Blank | 23,000 | 1,838 | 170,560 | — | — | 195,398 | ||||||||||||||||||
| Edward G. Boehne | 30,000 | 5,514 | 181,220 | — | — | 216,734 | ||||||||||||||||||
| Richard J. Braemer | 16,000 | — | 159,900 | — | — | 175,900 | ||||||||||||||||||
| Christine N. Garvey | 23,000 | — | 159,900 | — | — | 182,900 | ||||||||||||||||||
| Carl B. Marbach | 35,250 | 5,514 | 181,220 | — | — | 221,984 | ||||||||||||||||||
| Stephen A. Novick | 33,500 | 3,676 | 181,220 | — | — | 218,336 | ||||||||||||||||||
| Paul E. Shapiro | 30,000 | 4,595 | 173,225 | — | — | 207,820 | ||||||||||||||||||
| Bruce E. Toll | — | — | 159,900 | — | (7) | 682,404 | (8) | 842,304 | ||||||||||||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | Option Awards ($)(4)(5)(6) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
Robert S. Blank | 19,500 | 1,932 | 173,760 | — | — | 195,192 | ||||||||||||||||||
Edward G. Boehne | 33,500 | 5,796 | 184,620 | — | — | 223,916 | ||||||||||||||||||
Richard J. Braemer | 12,500 | — | 162,900 | — | — | 175,400 | ||||||||||||||||||
Christine N. Garvey | 24,750 | 1,932 | 173,760 | — | — | 200,442 | ||||||||||||||||||
Carl B. Marbach | 31,750 | 5,796 | 184,620 | — | — | 222,166 | ||||||||||||||||||
Stephen A. Novick | 24,750 | 3,864 | 184,620 | — | — | 213,234 | ||||||||||||||||||
Paul E. Shapiro | 30,000 | 4,830 | 176,475 | — | — | 211,305 | ||||||||||||||||||
Bruce E. Toll | — | — | 162,900 | 404,704 | (7) | 677,746 | (8) | 1,245,350 | ||||||||||||||||
| (1) | Annual restricted stock award grants to non-management directors | |
| (2) | The amounts reported in this column represent the grant date fair value of the restricted stock awards, in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718 “Compensation-Stock Compensation” (“ASC 718”). | |
| (3) | The non-management directors held the following amounts of unvested restricted stock awards at October 31, | |
| (4) | The annual stock option grants to non-management 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. The amounts reported in this column represent the grant date fair value of stock option awards 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 onForm 10-K for the fiscal year ended October 31, | |
| (5) | Each non-management director received a stock option grant during fiscal year | |
| (6) | The non-management directors held unexercised stock options to acquire the following amounts of our common stock at October 31, |
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| (7) | Due to a change in | |
| (8) | “All Other Compensation” consists of the following annual compensation and benefits provided to Mr. Bruce E. Toll pursuant to the Advisory Agreement. See “Other Director Compensation Arrangements” above. |
| Annual compensation | $ | 675,000 | ||
| Tax and financial statement preparation assistance | 4,147 | |||
| Auto expenses | 3,257 | |||
| Total perquisites and other personal benefits | $ | 7,404 | ||
| Total | $ | 682,404 | ||
Annual compensation | $ | 675,000 | ||
Contribution to 401(k) Plan | 2,746 | |||
|
| |||
Total | $ | 677,746 | ||
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Executive Summary This compensation discussion and analysis (“CD&A”) describes in detail each element of compensation that we pay or award to, or that is earned by, our named executive officers (“NEOs”). This CD&A includes a description of the principles underlying our executive compensation policies and our most important executive compensation decisions during our We are the nation’s leading builder of luxury single-family detached and attached home communities; master planned luxury residential, resort-style golf communities; and urban low-, mid- and high-rise communities, principally on land we develop and approve. We operate our own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security, and landscape subsidiaries. We face intense competition from a number of other home builders in each market in which we operate. It is imperative to our success and long-term viability that our business continues to be managed by highly experienced, focused and capable executivesCOMPENSATION DISCUSSION AND ANALYSIS20102011 fiscal year and provides our analysis of these policies and decisions. It is also intended to provide a context for the data we present in the compensation tables and related footnotes below, as well as the narratives that accompany the compensation tables.Our 2010 fiscal year was notable for significant changes in several of our key leadership roles — changes that, in each instance, benefited from succession planning by the Board and our management. Our 2010 fiscal year NEOs were as follows:Robert I. Toll, Executive Chairman of the Board (“Executive Chairman”)Mr. Toll served as our Chairman and Chief Executive Officer since our founding in 1967 until the appointment of Douglas C. Yearley, Jr. as Chief Executive Officer in June 2010, at which time he was appointed Executive Chairman, with the expectation that he will, among other things, maintain an active role in the strategic management of the Company;Douglas C. Yearley, Jr., Chief Executive Officer (“CEO”)Mr. Yearley joined us in 1990 and served as Executive Vice President from November 2009 until June 2010, at which time he was appointed CEO;Zvi Barzilay, President and Chief Operating Officer (“COO”)Mr. Barzilay joined us in 1980 and served in various senior management positions from 1983 to 1998, at which time he was appointed President and COO;Martin P. Connor, Senior Vice President, Chief Financial Officer and Treasurer (“CFO”)Mr. Connor joined us in 2008, was appointed a Senior Vice President in December 2009 and from that time until his appointment as CFO and Treasurer in September 2010, he served as Senior Vice President and Assistant Chief Financial Officer; andJoel H. Rassman, our former Executive Vice President, Chief Financial Officer and Treasurer Mr. Rassman passed away in September 2010 after more than 25 years of outstanding contributions and dedicated service to the Company.18
Our 2011 fiscal year was the first full fiscal year after the occurrence of significant changes in several of our key leadership roles — changes that, in each instance, resulted from succession planning by the Board and our management. Our 2011 fiscal year NEOs were as follows:
Robert I. Toll, Executive Chairman of the Board (“Executive Chairman”)Mr. Toll served as our Chairman and Chief Executive Officer since our founding in 1967 until the appointment of Douglas C. Yearley, Jr. as Chief Executive Officer in June 2010, at which time he was appointed Executive Chairman, with the expectation that he will, among other things, maintain an active role in the strategic management of the Company;
Douglas C. Yearley, Jr., Chief Executive Officer (“CEO”) Mr. Yearley joined us in 1990, served as a Regional President from November 2005 until November 2009 and served as Executive Vice President from November 2009 until June 2010, at which time he was appointed CEO;
Zvi Barzilay, President and Chief Operating Officer (“COO”)Mr. Barzilay joined us in 1980 and served in various senior management positions from 1983 to 1998, at which time he was appointed President and COO. He retired from the Company effective December 31, 2011;
Martin P. Connor, Senior Vice President, Chief Financial Officer and Treasurer (“CFO”)Mr. Connor joined us in 2008, was appointed a Senior Vice President in December 2009 and continued in that position from that time until his appointment as CFO and Treasurer in September 2010.
In determining fiscal 20102011 compensation for our senior executives, the Executive Compensation Committee of the Board (the “Compensation Committee”) took note of the difficult conditions that continued to challenge the economy and home building industry, while also considering the transition that we experiencedcontinued to experience at
the senior management level. In particular, with respect to our Executive Chairman, the Compensation Committee considered his continuing role in strategic and day-to-day business activities during fiscal 2011. As a result, the Compensation Committee sought to compensate our NEOs in a way that would enable us to retain them as our senior management team, through the current downturn, appropriately recognize their individual experience, roles and skill sets and their efforts on behalf of the Company during fiscal 20102011 and in a way that would be consistent with our overall business objectives and our stockholders’ best interests. The Compensation Committee paid particular attention to the following notable areas of achievement in fiscal 20102011 in light of the current economic condition of our industry and the economy as a whole:
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| • | Income: We reported net | ||
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Gross Margin: Our pre-impairment home building gross margin improved nearly 2.5% in fiscal 2011 compared to fiscal 2010. |
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Shortly after the close of fiscal 2011, we completed the acquisition of substantially all of the assets of CamWest Development LLC, marking our expansion into the Seattle market.
| • | The continued expansion of the “Toll Brothers City Living®” brand name with the opening for sale of three | ||
Gibraltar Capital, our wholly owned subsidiary formed in 2010 to pursue a broad range of distressed real estate opportunities, executed four acquisition transactions during fiscal 2011, representing $70.1 million in capital invested, and generated net income of $6.9 million.
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| • | Financial Strength: The Company continues to have one of the strongest balance sheets in the industry. We maintain significant liquidity and strong land positions and believe that we are well positioned for the ultimate recovery in the housing markets. |
Consistent with our historical compensation practices, our fiscal 20102011 compensation program, which is discussed in detail in this CD&A, once again featured the following attributes:
A balanced mix of annual cash and long-term equity incentives that reward our NEOs for current performance and align their compensation with long-term performance and long-term stockholder value creation; and
A structure for NEO incentive compensation that complies with Internal Revenue Code (“Code”) requirements for tax deductibility.
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In addition, our program does not feature any NEO employment agreements or severance plans or agreements; nor do we have any plans or agreements that provide “golden parachute” cash payouts for our NEOs conditioned upon a change of control, except with respect to vesting and potential payment of SERP benefits and vesting of equity compensation awards and grants.
Consideration of Say-on-Pay Results
The Compensation Committee considered the results of the 2011 advisory, non-binding “say-on-pay” proposal in connection with the discharge of its responsibilities. Because 99% of our shareholders voting on the “say on pay” proposal approved the compensation of our NEOs described in our proxy statement in 2011, the Compensation Committee did not implement significant changes to our executive compensation program as a result of the shareholder advisory vote.In this CD&A, you will find details on, and discussion of, the following topics:
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Role of Executive Officers
The Compensation Committee worked with management to establish its meeting agendas and determine who should have beenbe invited to attend meetings. Throughout the year, the Compensation Committee requested various types of information from management and its independent compensation consultant, including information about other home building companies and other companies in the home building industry. At various times during fiscal 2010, our chief financial officerOur CFO was invited by the Compensation Committee to attend relevant portions of the Compensation Committee meetings in order to provide information and answer questions regarding the Company’s strategic objectives and financial performance related to the Compensation Committee’s functions.work. Our Executive Chairman, CEO and COO were also all available to members and meetings of the Compensation Committee. Our CEO submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, performance goals and overall compensation levels for the COO and chief financial officer.CFO. The Compensation Committee, then exercised its discretion in determiningafter consideration of these recommendations, determined the actual awards to the COO and chief financial officer.CFO. The Executive Chairman submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, performance goals and overall compensation for the CEO; the Compensation Committee then acted independentlyconsidered these recommendations in determining CEOthe CEO’s compensation.
Use of Compensation Consultants
During fiscal 2010,2011, the Compensation Committee engaged Compensation Advisory Partners LLC (“CAP”) to serve as its independent compensation consultant. CAP received instructions from, and reported to, the Compensation Committee on an independent basis. The Compensation Committee periodically obtains confirmation from CAP with regard to CAP’s independence. CAP was also authorized by the Compensation Committee to share with and request and receive from management specified information in order to prepare for meetings. The Compensation Committee requested CAP’s advice on a variety of issues, including compensation strategy, market comparisons, pay and performance alignment versus industry peers, executive pay trends, compensation best practices and potential compensation plan designs and modifications. The Compensation Committee met with CAP, both with and without one or more members of our management, on several occasions during fiscal 20102011 and thereafter.
The Board and the Compensation Committee believe that our ability to retain and motivate NEOs who possess the skills, experience and capacity to succeed in our competitive industry has been essential to the long-term success
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We are in an industry that has suffered a severe downturn during the past several years. The compensation policies for our NEOs during this difficult period are based on the philosophy that compensation should reflect both our Company’s financial and operational performance and the individual performance of the executive.each executive in dealing with a challenging economic and housing environment. The Compensation Committee also believes that long-term incentives should be a significant factor in the determination of compensation, particularly because the business of home building, including evaluating and purchasing land, planning the use of that land, obtaining approvals, and completing development, generating revenues and many of the other actions and decisions of our NEOs, requirerequires a long time horizon before we realize a tangible financial benefit.
The Compensation Committee’s primary objectives when setting compensation for our NEOs are:
| • | Set compensation levels that are sufficiently competitive | ||
| • | Retain executives and encourage continued service. The Compensation Committee seeks to attract and maintain the continuity of excellent management. The Compensation Committee believes our stockholders have | ||
| • | 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 attempts to provide both short-term and long-term compensation for current performance, as well as to provide incentives to achieve short- and long-term goals. Short-term compensation is typically in the form of base salary and annual incentive cash bonuses under stockholder-approved plans, and long-term compensation is typically in the form of equity awards. Because of the current condition of the economy, the nature of our business and the way we operate our business and implement our strategies, we may not witness for several years | ||
| • | Align executive and stockholder interests. The Compensation Committee believes that the use of equity compensation as a key component of executive compensation is a valuable tool for aligning the interests of our NEOs with those of our stockholders; this would include the use of such compensation to reward |
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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. |
| • | Obtain tax deductibility |
The Compensation Committee seeks to be creative, as well as cognizant of changing economic and industry conditions and changing compensation trends, in its choice of methods to achieve these objectives, using a variety of compensation elements described below.
Element | Purpose | Characteristics | ||||
Base Salary | Provide a basic 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 upwards or downwards, from time to time. | ||||
Annual Incentive Bonuses | Promote improvement of our financial results, performance and condition; intended to be ashort-term incentive to drive achievement of performance goals in a particular fiscal year, without incentivizing inappropriate risk-taking or deterring achievement of our long-term goals and initiatives. | Annual incentive bonuses have been primarily paid in cash. Performance-based bonus opportunity based on the achievement of specified goals, which may be Company performance goals, individual performance goals or a combination of the two, pursuant to stockholder-approved plans. Where applicable, goals are typically established annually, and bonus amounts awarded vary based on performance. | ||||
Long-Term Incentive Compensation | 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. Long-term incentive compensation may be in the form of stock options, stock appreciation rights, and stock awards and units, which may be restricted, unrestricted or performance-based. Benefits ultimately realized by each NEO will vary and will depend on our stock | ||||
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Element | Purpose | Characteristics | ||
Benefits and Perquisites, Including Retirement Benefits | Provide health and welfare benefits during employment and | Health and welfare benefits |
The Compensation Committee reviews and determines base salary, incentive bonuses and long-term incentive compensation, as well as benefits and perquisites, on an annual basis. For compensation relating to fiscal 2010,2011, the significant steps taken by the Compensation Committee to establish and award compensation to our NEOs were as follows:
October — December 2010 | ||
• Set fiscal | ||
• Determined and granted equity compensation awards for fiscal | ||
June 2011 | ||
• Reviewed executive compensation at peer companies for the preceding year • Monitored Company performance and individual performance of NEOs | ||
September 2011 | ||
• Reviewed executive compensation | ||
November — December 2011 | ||
• Reviewed fiscal | ||
| under each of our bonus plans • Reviewed overall Company performance relative to industry peers • Reviewed each NEO’s individual performance during fiscal 2011 • Determined fiscal 2011 NEO bonuses • Determined and granted equity awards for fiscal 2011 service • Consulted with independent compensation consultant regarding industry trends in executive compensation • Further revised RSU program in response to emerging practices | ||
Portions of the compensation decision-making process are more fully described below.
Establish Performance Goals
The Compensation Committee, when setting performance goals, reviews the Company’s financial condition, current industry and national economic factors, compensation practices and trends at other companies within our industry, and our market capitalization, and attempts to set goals that will effectively motivate the NEOs to achieve the Company’s most important business objectives, while limiting risk. The establishmentachievement of performance goals does not automatically entitle any NEO to a bonus or require that the Compensation Committee award a bonus if the relevant performance goals are met.bonus. Rather, the establishment of performance goals permits the Compensation Committee, in its discretion, to determine toand award bonuses to our NEOs that will be tax-deductible by usthe Company if the performance goals are met. The Compensation Committee has historically awarded bonuses that were well below the maximum range of amounts payable under the related plans. The Compensation Committee reserves the
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At the beginning of fiscal 2010,2011, the Compensation Committee, mindfulin the context of the severe downturn of the housing industry, was continuing to experience, believed that the achievement of revenues was once again an important goal that each of our NEOs should focus on during fiscal 2010. At the same time, the2011. The Compensation Committee, which had determined, in fiscal 2010, that Messrs. Yearley, Barzilay and RassmanConnor would be participants in a newthe Senior Officer Plan for fiscal 2010, subject to stockholder approval at the 2010 annual meeting, and determinedapproved by our stockholders that year, decided that potential bonuses for fiscal 20102011 under the new Senior Officer Plan would be conditioned upon our achievement of a specified level of net revenues in fiscal 2010.2011. The Compensation Committee also determined that the total bonus payable to any participant for fiscal 2010 under the Senior Officer Plan would be subject to an $8.5 million cap. The Committee then established that eligibility for the full bonus available under the Senior Officer Plan and under the Plan Year Performance Bonus component of the Cash Bonus Plan would be conditioned upon our achievement of at least $900 million$1.1 billion in consolidated revenues in fiscal 2010,2011, and eligibility for 80% of the full bonus available under the Senior Officer Plan and under the Plan Year Performance Bonus component of the Cash Bonus Plan would be conditioned upon our achievement of at least $720$880 million in consolidated revenues in fiscal 2010.2011. The Compensation Committee established $900 million in revenues as the $1.1 billon goal after reviewing, among other things, market conditions, our backlog (homes under contract but not yet delivered) at the end of fiscal 2009,2010, the average sales price of those homes,revenue associated with the number of homes in backlog which were projected to be delivered during fiscal 2010,2011, other projected results, and trends in cancellation rates and delivery delays that we were experiencing at that time and in the time.
Review 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 twothree respects. First, marketplace information is one of the many factors that the Compensation Committee considers in assessing the reasonableness of compensation. Second, it recognizes that our compensation practices must be generally competitive for executive talent in the home building industry and the market overall. Additionally, the Compensation CommitteeThird, it recognizes that mostmarketplace information reflects emerging and changing components and forms of our NEOs have more tenure with our Company and more combined years of experience than most other executive teams in our industry.compensation. While the Compensation Committee factorsconsiders peer compensation levels and practices intowhen 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.
When setting fiscal 20102011 salaries, performance goals and ultimate bonus amounts, and equity compensation awards, the Compensation Committee, with assistanceguidance from our independent compensation consultant, compared our NEOs’ total compensation in 2010 against a peer group of publicly-traded home building companies. Based on these comparisons, which included the use of tally sheets, the Compensation Committee noted that, on a three-year basis,for the fiscal year 2010, except for our executive chairman position (there being only one comparable position in the peer group), our compensation for theeach of our chief executive officer and chief operatingfinancial officer positions was significantly below andthe median for the chief financial officer position (when occupied by Mr. Rassman), was above, the Company’s relative performance level against the homebuilding peer group for fiscal 2010 (“Peer Group”)., reflecting each one’s partial year in such position, and our compensation for our chief operating officer position was slightly below the median for 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. D. R. Horton, Inc. Hovnanian Enterprises, Inc. KB Home | Lennar Corporation M. D. C. Holdings, Inc. M/I Homes, Inc. Meritage Homes Corporation | NVR, Inc. Pulte Homes, Inc. The Ryland Group, Inc. Standard Pacific Corp. |
Our independent compensation consultant also provided the Compensation Committee with compensation data for companies of similar size outside of the home building sector for the Compensation Committee’s consideration.
Review Company Performance
Throughout the fiscal year, the full Board monitored our financial performance in relation to our recent historical performance and, to the extent reliable data was available, in relation to our peers.Peer Group. The Compensation Committee
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Total Cash Compensation
Total cash compensation (base salary and annual incentive bonus) paid to or earned by each of our NEOs for fiscal 20102011 is set forth below. Details on total compensation, presented in the format required by the SEC, can be found in the Summary Compensation Table on page 32 of this proxy statement.
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| Base Salary | Bonus | Cash Compensation | ||||||||||
| Robert I. Toll | $ | 1,300,000 | $ | 1,000,000 | $ | 2,300,000 | ||||||
| Douglas C. Yearley, Jr. | $ | 1,000,000 | $ | 1,000,000 | $ | 2,000,000 | ||||||
| Zvi Barzilay | $ | 1,000,000 | $ | 1,500,000 | $ | 2,500,000 | ||||||
| Martin P. Connor | $ | 509,808 | $ | 200,000 | $ | 709,808 | ||||||
| Joel H. Rassman | $ | 1,017,307 | $ | 1,000,000 | $ | 2,017,307 | ||||||
| Base Salary | Annual Incentive Bonus | Total Fiscal 2011 Cash Compensation | ||||||||||
Robert I. Toll | $ | 1,300,000 | $ | 1,250,000 | $ | 2,550,000 | ||||||
Douglas C. Yearley, Jr. | $ | 1,000,000 | $ | 1,250,000 | $ | 2,250,000 | ||||||
Zvi Barzilay | $ | 1,000,000 | $ | 1,250,000 | $ | 2,250,000 | ||||||
Martin P. Connor | $ | 650,000 | $ | 225,000 | $ | 875,000 | ||||||
Base Salary
Generally, when establishing annual base salaries, the Compensation Committee takes into account each NEO’s performance of his role and responsibilities and the compensation of comparable executives within our Peer Group. The Compensation Committee believes that its compensation objectives are more effectively met when the majority of an executive’s compensation package is comprised of performance-based bonuses and long-term incentive compensation, rather than fixed compensation such as base salaries. Except with respect to the restoration of Mr. Toll’s salary in fiscalIn October 2010, the Compensation Committee has not raised Mr. Toll’s (as chief executive officer) base salary since fiscal 2004, Mr. Barzilay’s (as COO) since fiscal 2003 and Mr. Rassman’s (as chief financial officer) since fiscal 2005. In connection with the appointments in June 2010 of Messrs. Toll and Yearley to Executive Chairman and CEO, respectively, the Compensation Committee determined not to recommend any changes to Mr. Toll’s or Mr. Yearley’s base salaries, citing the Compensation Committee’s belief that Mr. Toll’s duties as Executive Chairman would require him to remain fully engaged in ourday-to-day affairs and assume a mentoring and oversight role. In September 2010, upon the appointment of Mr. Connor to CFO, the Compensation Committee determined that an appropriateour named executive officers would not receive base salary increases for him would be $650,000.
Annual Incentive Bonus — Robert I. Toll
An annual incentive bonus is payable to Mr. Toll if and when earned under the terms of the stockholder-approved Cash Bonus Plan. Amounts payable under the Cash Bonus Plan are designed to be “performance-based” compensation and, therefore, exempt from the limitations on tax deductibility under Section 162(m) of the Code, as discussed below under “Tax and Accounting Implications.”
Description of the Cash Bonus Plan. The Cash Bonus Plan was approved by our stockholders at the 2008 annual meeting. The purpose of the Cash Bonus Plan is to provide a tax-deductible, performance-based bonus for Mr. Toll, paid partly in accordance with a formula that is based on our financial success and partly on the basis of one or more performance goals, all as part of an integrated compensation program which is intended to assist us in motivating and retaining the leadership of our co-founder, Robert I. Toll.
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The Plan Year Performance Bonus under the Cash Bonus Plan is determined on an annual basisannually by the Compensation Committee, based on the achievement of one or more performance goals established by the Compensation Committee at the beginning of each fiscal year based uponusing various business criteria as set forth in the Cash Bonus Plan. In no event can the total amount of the Plan Year Performance Bonus exceed the greater of $5.2 million or 1/10 of 1% of our gross revenues for the applicable fiscal year. The Compensation Committee, in its sole discretion, has the power to reduce or completely eliminate, but not increase, the Plan Year Performance Bonus.
Bonuses under the Cash Bonus Plan may be paid in cash, in shares of our common stock or both; the method of payment is determined by the Compensation Committee. In addition, in no event may the sum of the
Company Performance Bonus and the Plan Year Performance Bonus (cash and fair market value of stock) exceed $8.5 million in any fiscal year.
Fiscal 20102011 Company Performance Bonus Determination. In fiscal 2010,2011, we did not have pre-tax income; therefore, Mr. Toll was not entitled to a Company Performance Bonus under the terms of the Cash Bonus Plan.
Fiscal 20102011 Plan Year Performance Bonus Determination. At the beginning of fiscal 2010,2011, the Compensation Committee established that eligibility for the full amount available to Mr. Toll under the Plan Year Performance Bonus was conditioned upon our achievement of at least $900 millionmore than $1.1 billion in consolidated revenues in fiscal 2010,2011, and eligibility for 80% of the amount available to Mr. Toll under the Plan Year Performance Bonus was conditioned upon our achievement of at least $720$880 million in consolidated revenues in fiscal 2010.2011. The Compensation Committee met in October 20102011 and determined that we had achieved at least $900 millionmore than $1.1 billion in consolidated revenues (our actual fiscal 20102011 consolidated revenues were $1.49$1.48 billion) during fiscal 20102011 and, therefore, the maximum amount ($5.2 million) was available for the Plan Year Performance Bonus. The Compensation Committee then made a subjective evaluation of Mr. Toll’s overall performance during fiscal 2010, in light of the difficult industry conditions during this period,2011, considering his overall leadership, and concluded that he had performed exceptionally well in not only continuingmade remarkable contributions to steerthe outstanding management and performance of the Company, through the worst downturn our industry has ever experienced, but also in effectively managing the transition of the role of chief executive officerboth with respect to Mr. Yearley while remaining active in the Company’s strategic initiativesplanning and its day-to-day affairs. Specific Company performance factors noted by issues, during the Compensation Committee were:continued downturn in the increase in our net contracts during fiscal 2010, as compared to fiscal 2009; the decrease of our net loss from $775.8 million in fiscal 2009 to $3.4 million in fiscal 2010; the formation of Gibraltar Capital followed by its prompt consummation of a multi-billion dollar structured transaction; the maintenance of our strong balance sheeteconomy and significant liquidity; our increased land buying activities; the replacement of our expiring credit line with an $885 million bank credit facility unique to our industry; his selection to the 2010 All-Executive Team for the homebuilding industry byInstitutional Investormagazine; and the Company’s recognition as the most admired homebuilding company byFortunemagazine.industry. The Compensation Committee also determined that Mr. Toll’s performance in fiscal 20102011 merited long-term incentive compensation awards, which were granted in December 20102011 and are further described below under “Looking Ahead — Fiscal 20112012 Compensation.”
Annual Incentive Bonus — Messrs. Yearley, Barzilay Connor and RassmanConnor
Description of Senior Officer Plan. At the beginning of our 2010 fiscal year, the Board and the Compensation Committee developed the Senior Officer Plan as a replacement for the Executive Officer Bonus Plan. In doing so, they determined that the Senior Officer Plan should be sufficiently flexible to allow the Compensation Committee to make awards in appropriate amounts and with appropriate performance periods and performance goals to whichever officers the Compensation Committee designates as plan participants. The Senior Officer Plan, subsequently approved by our stockholders at the 2010 annual meeting, was in effect during fiscal 2010.2011. The awards paid under the Senior Officer Plan are designed to be “qualified performance-based compensation” under Section 162(m) of the Code for participants.
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. AtThe Compensation Committee has designated the timeCEO, COO and CFO as participants in the Senior Officer Plan was adopted, the
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Fiscal 20102011 Performance Goal. For fiscal 2010,2011, the Compensation Committee established that eligibility for the full amount available to each of Messrs. Yearley, Barzilay, Connor and RassmanConnor under the Senior Officer Plan was conditioned upon our achievement of at least $900 million$1.1 billion in consolidated revenues in fiscal 20102011 and eligibility for 80% of the amount available to each of Messrs. Yearley Barzilay and RassmanBarzilay under the Senior Officer Plan was conditioned upon our achievement of at least $720$880 million in consolidated revenues in fiscal 2010.2011. The Compensation Committee met in October 2010December 2011 and determined that we had achievedexceeded the requisite consolidated revenues (our actual fiscal 2010 consolidated revenues were $1.49 billion) during fiscal 20102011 and, therefore, the maximum amount was potentially available to each of Messrs. Yearley, and Barzilay and on a pro-rata basis, to Mr. Connor and the Estate of Joel H. Rassman, taking into consideration, in the cases of Messrs. Rassman and Connor, the period in fiscal 2010 during which each served in his respective office.Connor. In determining the actual bonus amounts to be paid, the Compensation Committee then made a subjective evaluation regarding the overall individual performance of each of Messrs. Yearley, Barzilay Connor and RassmanConnor during fiscal 2010,2011, in light of the current difficult industry conditions, and noted that each executive had performed exceptionally well in fiscal 2010.
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The Compensation Committee believed that, by surpassing the established minimum financial performance goal and by individually performing in an outstanding manner in fiscal 2010,2011, Messrs. Yearley, Barzilay Connor and RassmanConnor merited bonuses for fiscal 20102011 performance of $1,000,000, $1,500,000, $200,000$1,250,000, $1,250,000, and $1,000,000,$225,000, respectively. The Committee also determined that such amounts were reasonable in light of current economic conditions and comparisons within our industry.industry and in establishing improved parity among the bonuses of the Executive Chairman, CEO and COO. The Compensation Committee particularly noted, with respect to Mr. Yearley, his leadership in his first full year as the CEO and his ranking as the second-best chief executive officer in the Homebuilders & Building Products sector by the buy-side community in Institutional Investor magazine’s 2012 annual survey and, with respect to Mr. Connor, his leadership in the first full year as the CFO and his ranking as the best chief financial officer in the Homebuilders & Building Products sector by the buy-side community in Institutional Investor magazine’s 2012 annual survey. In addition, the Compensation Committee believed the individual performances of Messrs. Yearley, Barzilay and Connor in fiscal 20102011 merited long-term incentive compensation awards, which were granted in December 20102011 and are further described below under “Elements of NEO Compensation for“Looking Ahead — Fiscal Year 2011.2012 Compensation.”
Long-Term Incentive Compensation
The Compensation Committee does not use constant criteria from year to year in the granting of equity compensation. The Compensation Committee takes into consideration the Company’s performance and makes a subjective determinationdeterminations of the effectiveness of each NEO and the extent of his contributions to our success and, based on that determination, awards equity compensation.
Equity compensation to any of our employees, including our NEOs, may be either in the form of stock options, 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 Employee Plan.
The Compensation Committee’s primary purposes and objectives when granting equity compensation to our NEOs under the Employee Plan are to:
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 | ||
motivate NEOs to achieve long-term financial results, — such as improved financial or other performance, that may ultimately cause an increase in the market price of our stock.
give overall NEO compensation an appropriate balance between long-term and short-term compensation;
retain NEOs in our employ; and
protect us by providing for forfeiture of unexercised stock options in the event that the NEO retires, or otherwise leaves our employ, and competes with us.
Stock Options. During fiscal 2011, the Compensation Committee granted stock options to each of the NEOs, as set forth in the “Grants of Plan-Based Awards during Fiscal 2011” table on page 34 in this proxy statement. These grants were awarded at the beginning of fiscal 2011 in recognition of the respective NEO’s service during fiscal 2010. The Compensation Committee chose to grant these options to each of the NEOs in order to further the Compensation Committee’s objectives, as set forth above. Because the options were granted with exercise prices equal to the fair market value of the underlying common stock on the date of the grant, any value that ultimately accrues to the
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The term of these options is 10 years from the date of the grant and the options vest in equal amounts over a four 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 the10-year term upon death, disability or, (except in the case of Mr. Connor)most cases, retirement, and would fully vest upon a change of control of the Company. Mr. Rassman’s options continue to vest pursuant to their normal vesting schedule under the terms of the Employee Plan. 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.
Performance-Based Restricted Stock Unit. During early fiscal 2010,2011, the Compensation Committee, in recognition of emerging practices in the area of equity compensation, awarded Mr.Messrs. Toll, Yearley and Connor performance-based Restricted Stock Units (“RSUs”) relating to 200,000, 100,000 and 6,000 shares, respectively, of our common stock in lieu ofaddition to granting stock options to him.options. The award wasawards were valued based on the closing price of our common stock on the NYSE on December 21, 2009.20, 2010. The RSU isRSUs are performance-based and will only vest if (1) the average closing price of our common stock on the NYSE, measured over any 20 consecutive trading days ending on or prior to December 21, 2014,20, 2015, increases 30% or more over the closing price of our common stock on the NYSE on December 21, 200920, 2010 and (2) Mr. Tollthe executive continues to be employed by us or serve as a member of our Board until December 21, 2012.20, 2013. The performance-based RSUs will also vest if Mr. Tollthe executive dies or becomes disabled, or we experience a change of control prior to satisfaction of the aforementioned performance criteria. The Compensation Committee chose to award these performance-based RSUs and selected the increase in stock price and continued service as its vesting criteria in an effort to retain Mr. Toll tothe executives and motivate himthem to continue to lead us in such a manner that will cause a sustained increase in our stock price and to further align histheir financial interests with those of our stockholders. As of the date of this proxy statement, none of the vesting criteria havehas been satisfied.
Benefits and Perquisites
We provide all of our employees (after 60 days of service with us), including our NEOs, with specified employee benefits.benefits programs. These include the opportunity to save for retirement through the Toll Brothers 401(k) Savings Plan (the “401(k) Plan”), which is more fully described below, and various health and welfare benefit programs, including medical, dental, life and long-term disability insurance. We share the cost of the above benefit 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.
401(k) Savings Plan. All employees, including our NEOs, after 60 days of service with us, are eligible to participate in the 401(k) Plan. The 401(k) Plan is a qualified retirement savings plan under Section 401(k) of the Code. Participants in the 401(k) Plan may contribute a portion of their compensation, subject to Internal Revenue Service (“IRS”) regulations and specified limitations 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 arewere participants in the 401(k) Plan. In January 2009, as an additional cash-conservation measure, we suspended the matching 401(k) contribution for all employees, including the NEOs.
Supplemental Executive Retirement Plan (“SERP”). 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 us. For a discussion of the material terms of the SERP, please see “Executive Compensation Tables — Pension Benefits at October 31, 20102011 — Supplemental Executive Retirement Plan.”
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Deferred Compensation Plan. Our NEOs may elect to defer receipt of all or part of their cash compensation pursuant to the Toll Bros., Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is open to certain management and highly compensated employees; all NEOs are eligible to participate in the Deferred Compensation Plan. Under the Deferred Compensation Plan, NEOs may elect, prior to the beginning of the year, to defer a portion of their cash compensation during any calendar year. They may select a fixed payment date or dates for payment of the deferred amounts, or elect to have such amounts paid upon termination of employment. We have the right under the Deferred Compensation Plan to make discretionary contributions for the benefit of any participant in the plan. We did not make any discretionary contributions under the Deferred Compensation Plan for any NEO in fiscal 2010.
Interest earned during fiscal 20102011 on any NEO deferred compensation is included under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the Summary Compensation Table in this proxy statement, and further information about NEO deferred compensation is contained in the Nonqualified Deferred Compensation at October 31, 20102011 table in this proxy statement.
None of our NEOs has an employment agreement with us. We do not have a severance plan for our NEOs. Our equity compensation plans and our SERP provide for the acceleration of specified benefits in the event we experience a change of control.
Agreement with Joel H. Rassman
We have no change of control agreements relating to employment benefits or discrete benefits that arise simply from the change of control or severance related thereto; 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, restricted stock, 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 shall be fully vested in their SERP benefits and potentially eligible for a lump sum payout.
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 certain requirements set forth in the Code and applicable Treasury Regulations are met. We generally 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.
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Base Salaries. In October 2010,December 2011, the Compensation Committee determined that, our NEOs would not receivefor fiscal 2012, the base salary increases. Accordingly, our NEOs will receiveof Mr. Toll would be reduced to $1 million, the same base salaries in fiscal 2011 as they had received in fiscal 2010.
Annual Incentive Bonuses. Pursuant to the terms of the Cash Bonus Plan, Mr. Toll will be entitled to a Company Performance Bonus under the Cash Bonus Plan for fiscal 20112012 equal to 2.0% of our fiscal 20112012 income before taxes and will be eligible to receive a Plan Year Performance Bonus, which will be determined by evaluating Mr. Toll’s performance in light of one or more performance goals established by the Compensation Committee in a manner consistent with prior periods. Similarly, pursuant to the terms of the Senior Officer Plan, Messrs. Yearley Barzilay and Connor will be eligible to receive annual incentive bonuses for fiscal 20112012 based upon our achievement of one or more performance goals established by the Compensation Committee in a manner consistent with prior periods.
Long-Term Incentive Compensation. The Compensation Committee met in December 20102011 and decided to grant options to acquire 100,000 shares of common stock to Mr. Toll, options to acquire 120,000 shares of common stock to each of Messrs.Mr. Yearley, and Barzilay, and options to acquire 20,000 shares of common stock to Mr. Connor. Such grants were made as of December 20, 2010,2011, have an exercise price equal to the closing price of our common stock on the NYSE on December 20, 2010$20.50 and will vest in equal installments over four years. The Compensation Committee also determined to award performance-based RSUs to some of our NEOs relating to 200,000 shares to Mr. Toll, 100,000110,000 shares to Mr. Yearley, and 6,00022,000 shares to Mr. Connor, respectively. The RSUs were valued based on the closing price of our common stock on the NYSE on December 20, 2010. Each RSU will only vest if2011. The RSUs granted to each NEO are divided equally into three performance metrics, such that one-third of the average closing priceshares relating to the RSUs granted to the NEO are allocated to each performance metric, which has various levels of our common stock on the NYSE, measured over any 20 consecutive trading days ending on or prior to December 20, 2015, increases 30% or more over the closing price of our common stock on the NYSE on December 20, 2010, and provided Mr. Toll, Mr. Yearley and Mr. Connor, as applicable, continues to be employed by us, or,achievement in the casefiscal 2012 performance period. In the event the threshold level of Messrs. Toll and Yearley, serve asachievement is not achieved for a member of our Board until December 20, 2013. Each RSU would also vest upon death or disabilityperformance metric, none of the grantee, or if we experience aRSUs would be earned for that metric. Satisfaction of the various levels of achievement would earn between 90% and 110% of the RSUs allocated to that metric. In addition, each such RSU is subject to service vesting in equal amounts over four years from the date of grant and the RSUs will not be delivered until the end of the four year service vesting period, except as otherwise provided in the event of death, disability and change of control prior to satisfaction of the performance criteria.
31control.
The Executive 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 Executive 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 onForm 10-K for the fiscal year ended October 31, 2010.
Respectfully submitted by the members of the Executive Compensation Committee of the Board of Directors.
Carl B. Marbach (Chair)
Stephen A. Novick
Paul E. Shapiro
Summary Compensation TableEXECUTIVE COMPENSATION TABLES Change in Pension Value and Nonqualified Non-Equity Deferred Stock Option Incentive Plan Compensation All Other Name and Principal Fiscal Salary Awards Awards Compensation Earnings Compensation Total Position Year ($) ($)(1) ($)(1) ($)(2) ($)(3) ($)(4) ($) Robert I. Toll, 2010 1,300,000 3,160,000 — 1,000,000 825,670 90,668 6,376,338 Executive Chairman 2009 1,170,000 3,772,000 — — 1,545,585 95,910 6,583,495 of the Board 2008 1,300,000 — 6,000,500 — 36,000 108,139 7,444,639 Douglas C. Yearley, Jr. 2010 1,000,000 — 413,500 1,000,000 115,588 19,083 2,548,171 Chief Executive Officer Zvi Barzilay, 2010 1,000,000 — 1,052,760 1,500,000 483,692 36,874 4,073,326 Chief Operating 2009 1,000,000 152,000 1,173,600 1,520,000 845,088 49,308 4,739,996 Officer and President 2008 1,000,000 — 1,314,000 1,368,000 47,507 49,599 3,779,106 Martin P. Connor 2010 509,808 — 90,970 200,000 102,764 7,971 911,513 Chief Financial Officer and Treasurer Joel H. Rassman, 2010 1,017,307 (5) — 562,100 1,000,000 458,527 199,004 3,236,938 Former Executive 2009 1,000,000 122,000 617,760 1,220,000 810,938 50,192 3,820,890 Vice President, Chief Financial Officer and Treasurer 2008 1,000,000 — 683,760 1,098,000 46,921 49,065 2,877,746
Name and Principal Position | Fiscal 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, | 2011 | 1,300,000 | 3,264,000 | 805,000 | 1,250,000 | 656,435 | 92,913 | 7,368,348 | ||||||||||||||||||||||||
Executive Chairman | 2010 | 1,300,000 | 3,160,000 | — | 1,000,000 | 825,670 | 90,668 | 6,376,338 | ||||||||||||||||||||||||
| 2009 | 1,170,000 | 3,772,000 | — | — | 1,545,585 | 95,910 | 6,583,495 | |||||||||||||||||||||||||
Douglas C. Yearley, Jr. | 2011 | 1,000,000 | 1,632,000 | 1,279,200 | 1,250,000 | 267,355 | 26,437 | 5,455,492 | ||||||||||||||||||||||||
Chief Executive Officer | 2010 | 1,000,000 | — | 413,500 | 1,000,000 | 115,588 | 19,083 | 2,548,171 | ||||||||||||||||||||||||
Zvi Barzilay(5), | 2011 | 1,000,000 | — | 944,400 | 1,250,000 | 410,588 | 47,117 | 3,652,105 | ||||||||||||||||||||||||
Former Chief Operating Officer | 2010 | 1,000,000 | — | 1,052,760 | 1,500,000 | 483,692 | 36,874 | 4,073,326 | ||||||||||||||||||||||||
| 2009 | 1,000,000 | 152,000 | 1,173,600 | 1,520,000 | 845,088 | 49,308 | 4,739,996 | |||||||||||||||||||||||||
Martin P. Connor | 2011 | 650,000 | 97,920 | 206,400 | 225,000 | 257,985 | 14,209 | 1,451,014 | ||||||||||||||||||||||||
Chief Financial Officer and Treasurer | 2010 | 509,808 | — | 90,970 | 200,000 | 102,764 | 7,971 | 911,513 | ||||||||||||||||||||||||
| (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 9 in the Notes to Consolidated Financial Statements in our Annual Report onForm 10-K for the year ended October 31, | |
| (2) | The award to Mr. Toll for fiscal 2011 and 2010 represents a Plan Year Performance Bonus determined by the Compensation Committee under the terms of the Cash Bonus Plan, as described on pages |
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| proxy statement. Mr. Toll did not earn an award for fiscal 2009 | ||
| (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. Toll, Yearley and Connor did not participate in the Deferred Compensation Plan during the fiscal years indicated in the table above. The exact amounts attributed to the increase in actuarial present value of SERP benefits and above-market interest on deferred compensation are as |
| Increase in | ||||||||||||||||
| Actuarial Present | Above-Market | |||||||||||||||
| Value of | Interest Earned on | |||||||||||||||
| Accumulated | Deferred | |||||||||||||||
Name | Fiscal Year | SERP Benefits | Compensation | Total | ||||||||||||
| Robert I. Toll | 2010 | 825,670 | N/A | 825,670 | ||||||||||||
| 2009 | 1,545,585 | N/A | 1,545,585 | |||||||||||||
| 2008 | 36,000 | N/A | 36,000 | |||||||||||||
| Douglas C. Yearley, Jr. | 2010 | 115,588 | N/A | 115,588 | ||||||||||||
| Zvi Barzilay | 2010 | 429,349 | 54,343 | 483,692 | ||||||||||||
| 2009 | 803,704 | 41,384 | 845,088 | |||||||||||||
| 2008 | 19,000 | 28,507 | 47,507 | |||||||||||||
| Martin P. Connor | 2010 | 102,764 | N/A | 102,764 | ||||||||||||
| Joel H. Rassman | 2010 | 412,835 | 45,692 | 458,527 | ||||||||||||
| 2009 | 772,792 | 38,146 | 810,938 | |||||||||||||
| 2008 | 18,000 | 28,921 | 46,921 | |||||||||||||
Name | Fiscal Year | Increase in Actuarial Present Value of Accumulated SERP Benefits) ($) | Above-Market Interest Earned on Deferred Compensation | Total) ($) | ||||||||||||
Robert I. Toll | 2011 | 656,435 | N/A | 656,435 | ||||||||||||
| 2010 | 825,670 | N/A | 825,670 | |||||||||||||
| 2009 | 1,545,585 | N/A | 1,545,585 | |||||||||||||
Douglas C. Yearley, Jr. | 2011 | 267,355 | N/A | 267,355 | ||||||||||||
| 2010 | 115,588 | N/A | 115,588 | |||||||||||||
Zvi Barzilay | 2011 | 341,346 | 69,242 | 410,588 | ||||||||||||
| 2010 | 429,349 | 54,343 | 483,692 | |||||||||||||
| 2009 | 803,704 | 41,384 | 845,088 | |||||||||||||
Martin P. Connor | 2011 | 257,985 | N/A | 257,985 | ||||||||||||
| 2010 | 102,764 | N/A | 102,764 | |||||||||||||
| (4) | Fiscal |
| Fiscal 2010 | ||||||||||||||||||||
| Robert I. | Douglas C. | Zvi | Martin P. | Joel H. | ||||||||||||||||
| Toll | Yearley, Jr. | Barzilay | Connor | Rassman | ||||||||||||||||
| Payments for tax and financial statement preparation assistance | $ | 56,577 | $ | — | $ | 13,072 | $ | — | $ | 11,142 | ||||||||||
| Life and disability premiums | 10,600 | 3,183 | 7,482 | 771 | 6,610 | |||||||||||||||
| Auto and gas expense | 23,491 | 15,900 | 16,320 | 7,200 | 14,585 | |||||||||||||||
| Payment under employment agreement | N/A | N/A | N/A | N/A | 166,667 | |||||||||||||||
| TOTAL: | $ | 90,668 | $ | 19,083 | $ | 36,874 | $ | 7,971 | $ | 199,004 | ||||||||||
| Fiscal 2011 | ||||||||||||||||
| Robert I. Toll | Douglas C. Yearley, Jr. | Zvi Barzilay | Martin P. Connor | |||||||||||||
Payments for tax and financial statement preparation assistance | $ | 45,876 | $ | 3,970 | $ | 11,433 | $ | 0 | ||||||||
Contribution to 401(k) Plan | 2,450 | 2,450 | 2,450 | 2,888 | ||||||||||||
Life and disability premiums | 22,174 | 3,567 | 17,152 | 3,621 | ||||||||||||
Auto and gas expense | 22,413 | 16,450 | 16,082 | 7,200 | ||||||||||||
Cellular telephone allowance | 500 | |||||||||||||||
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TOTAL: | $ | 92,913 | $ | 26,437 | $ | 47,117 | $ | 14,209 | ||||||||
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| (5) |
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| Estimated | ||||||||||||||||||||||||||||||||||||||||
| Future | All Other | All Other | Grant | |||||||||||||||||||||||||||||||||||||
| Payouts | Stock | Option | Date | |||||||||||||||||||||||||||||||||||||
| Under | Awards: | Awards: | Exercise | Fair | ||||||||||||||||||||||||||||||||||||
| Equity | Number of | Number of | or Base | Value of | ||||||||||||||||||||||||||||||||||||
| Estimated Future Payouts Under | Incentive | Shares of | Securities | Price of | Stock and | |||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Awards | Plan Awards | Stock or | Underlying | Option | Option | |||||||||||||||||||||||||||||||||||
| Grant | Action | Threshold | Target | Maximum | Target | Units | Options | Awards | Awards | |||||||||||||||||||||||||||||||
Name | Date | Date(1) | ($) | ($) | ($) | (#)(4) | (#) | (#)(5) | ($/Sh) | ($)(5) | ||||||||||||||||||||||||||||||
| Robert I. Toll | 12/07/2009 | 12/07/2009 | (2 | ) | (3 | ) | 25,000,000 | (2) | ||||||||||||||||||||||||||||||||
| 12/21/2009 | 12/07/2009 | 200,000 | 3,160,000 | |||||||||||||||||||||||||||||||||||||
| Douglas C. Yearley, Jr. | 12/20/2009 | 12/07/2009 | 50,000 | 18.38 | 413,500 | |||||||||||||||||||||||||||||||||||
| Zvi Barzilay | 12/20/2009 | 12/07/2009 | (6 | ) | (7 | ) | 8,500,000 | 124,000 | 18.38 | 1,052,760 | ||||||||||||||||||||||||||||||
| Martin P. Connor | 12/20/2009 | 12/07/2009 | (6 | ) | 11,000 | 18.38 | 90,970 | |||||||||||||||||||||||||||||||||
| Joel H. Rassman | 12/20/2009 | 12/07/2009 | (6 | ) | (7 | ) | 8,500,000 | 70,000 | 18.38 | 562,100 | ||||||||||||||||||||||||||||||
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of | |||||||||||||||||||||||||||||||||
| Grant | Action | Threshold | Target | Maximum | Target | Units | Options | Awards | Awards | |||||||||||||||||||||||||||||
Name | Date | Date(1) | ($) | ($) | ($) | (#)(4) | (#) | (#)(5) | ($/Sh) | ($)(5) | ||||||||||||||||||||||||||||
Robert I. Toll | 12/20/2010 | 12/15/2010 | (2 | ) | (3 | ) | 8,500,000 | 200,000 | 100,000 | 19.32 | 4,069,000 | |||||||||||||||||||||||||||
Douglas C. Yearley, Jr. | 12/20/2010 | 12/15/2010 | (6 | ) | (7 | ) | 8,500,000 | 100,000 | 120,000 | 19.32 | 2,911,200 | |||||||||||||||||||||||||||
Zvi Barzilay | 12/20/2010 | 12/15/2010 | (6 | ) | (7 | ) | 8,500,000 | 120,000 | 19.32 | 944,400 | ||||||||||||||||||||||||||||
Martin P. Connor | 12/20/2010 | 12/15/2010 | (6 | ) | (7 | ) | 8,500,000 | 6,000 | 20,000 | 19.32 | 304,320 | |||||||||||||||||||||||||||
| (1) | The Executive Compensation Committee met on December | |
| (2) | Awards to Mr. Toll are made pursuant to the terms of the Cash Bonus Plan. The Cash Bonus Plan does not include a threshold amount; awards in any fiscal year, whether pursuant to the formula contained in the Cash Bonus Plan or pursuant to the Plan Year Performance Bonus (as described in the Cash Bonus Plan) could be as low as $0. | |
| (3) | The Cash Bonus Plan does not include a target amount. When the Executive Compensation Committee met on December | |
| (4) | ||
| (5) | See “Compensation Discussion and Analysis — Fiscal | |
| (6) | Awards to Messrs. Yearley, Barzilay | |
| (7) | The Senior Officer Plan does not include a target amount and, when the Executive Compensation Committee met on December |
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Please see the “Compensation Discussion and Analysis” section of this proxy statement for a detailed description of the fiscal 20102011 equity and bonus awards and the amounts of salary and bonus in proportion to total compensation with respect to each NEO.
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| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||||||
| Incentive | ||||||||||||||||||||||||||||||||||||
| Plan Awards: | ||||||||||||||||||||||||||||||||||||
| Equity | Market | |||||||||||||||||||||||||||||||||||
| Incentive | or Payout | |||||||||||||||||||||||||||||||||||
| Plan Awards: | Value of | |||||||||||||||||||||||||||||||||||
| Number | Unearned | |||||||||||||||||||||||||||||||||||
| Number of | Number of | Number of | Market Value | of Unearned | Shares, | |||||||||||||||||||||||||||||||
| Securities | Securities | Shares or | of Shares | Shares, | Units or | |||||||||||||||||||||||||||||||
| Underlying | Underlying | Units of | or Units of | Units or | Rights | |||||||||||||||||||||||||||||||
| Unexercised | Unexercised | Option | Option | Stock That | Stock That | Rights | That Have | |||||||||||||||||||||||||||||
| Options (#) | Options (#) | Exercise | Expiration | Have Not | Have Not | That Have Not | Not | |||||||||||||||||||||||||||||
Name | Grant Date | Exercisable | Unexercisable | Price ($) | Date | Vested (#) | Vested ($) | Vested (#) | Vested ($) | |||||||||||||||||||||||||||
| Robert I. Toll | 12/20/2001 | 1,000,000 | 10.8800 | 12/20/2011 | ||||||||||||||||||||||||||||||||
| 12/20/2002 | 500,000 | 10.5250 | 12/20/2012 | |||||||||||||||||||||||||||||||||
| 12/20/2003 | 500,000 | 20.1350 | 12/20/2013 | |||||||||||||||||||||||||||||||||
| 12/20/2004 | 500,000 | 32.5500 | 12/20/2014 | |||||||||||||||||||||||||||||||||
| 12/20/2005 | 250,000 | 35.9700 | 12/20/2015 | |||||||||||||||||||||||||||||||||
| 12/20/2006 | 412,500 | 137,500 | (1) | 31.8200 | 12/20/2016 | |||||||||||||||||||||||||||||||
| 12/20/2007 | 275,000 | 275,000 | (2) | 20.7600 | 12/20/2017 | |||||||||||||||||||||||||||||||
| 12/19/2008 | 200,000 | (5) | 3,588,000 | (7) | ||||||||||||||||||||||||||||||||
| 12/21/2009 | 200,000 | (6) | 3,588,000 | (7) | ||||||||||||||||||||||||||||||||
| Douglas C. Yearley, Jr. | 12/20/2001 | 56,297 | 10.8800 | 12/20/2011 | ||||||||||||||||||||||||||||||||
| 12/20/2002 | 29,250 | 10.5250 | 12/20/2012 | |||||||||||||||||||||||||||||||||
| 12/20/2003 | 31,306 | 20.1350 | 12/20/2013 | |||||||||||||||||||||||||||||||||
| 12/20/2007 | 7,500 | 10,000 | (2) | 20.7600 | 12/20/2017 | |||||||||||||||||||||||||||||||
| 07/18/2008 | 18,692 | 18.9200 | 12/20/2014 | |||||||||||||||||||||||||||||||||
| 07/18/2008 | 9,007 | 18.9200 | 12/20/2015 | |||||||||||||||||||||||||||||||||
| 07/18/2008 | 1,584 | 2,113 | (2) | 18.9200 | 12/20/2016 | |||||||||||||||||||||||||||||||
| 07/18/2008 | 8,253 | 3,301 | (1) | 18.9200 | 12/20/2016 | |||||||||||||||||||||||||||||||
| 12/20/2008 | 3,750 | 15,000 | (3) | 21.7000 | 12/20/2018 | |||||||||||||||||||||||||||||||
| 12/20/2009 | 50,000 | (4) | 18.3800 | 12/20/2019 | ||||||||||||||||||||||||||||||||
| Zvi Barzilay | 12/20/2000 | 30,066 | 9.6563 | 12/20/2010 | ||||||||||||||||||||||||||||||||
| 12/20/2001 | 480,000 | 10.8800 | 12/20/2011 | |||||||||||||||||||||||||||||||||
| 12/20/2002 | 250,000 | 10.5250 | 12/20/2012 | |||||||||||||||||||||||||||||||||
| 12/20/2003 | 254,000 | 20.1350 | 12/20/2013 | |||||||||||||||||||||||||||||||||
| 12/20/2004 | 240,000 | 32.5500 | 12/20/2014 | |||||||||||||||||||||||||||||||||
| 12/20/2005 | 120,000 | 35.9700 | 12/20/2015 | |||||||||||||||||||||||||||||||||
| 12/20/2006 | 90,000 | 30,000 | (1) | 31.8200 | 12/20/2016 | |||||||||||||||||||||||||||||||
| 12/20/2006 | 15,000 | 15,000 | (2) | 31.8200 | 12/20/2016 | |||||||||||||||||||||||||||||||
| 12/20/2007 | 60,000 | 60,000 | (2) | 20.7600 | 12/20/2017 | |||||||||||||||||||||||||||||||
| 12/20/2008 | 30,000 | 90,000 | (3) | 21.7000 | 12/20/2018 | |||||||||||||||||||||||||||||||
| 12/20/2009 | 124,000 | (4) | 18.3800 | 12/20/2009 | ||||||||||||||||||||||||||||||||
| Martin P. Connor | 01/05/2009 | 2,500 | 7,500 | (8) | 22.1800 | 01/05/2019 | ||||||||||||||||||||||||||||||
| 12/20/2009 | 11,000 | (4) | 18.3800 | 12/20/2019 | ||||||||||||||||||||||||||||||||
| Joel H. Rassman | 12/20/2000 | 10,352 | 9.6563 | 12/20/2010 | ||||||||||||||||||||||||||||||||
| 12/20/2001 | 200,000 | 10.8800 | 12/20/2011 | |||||||||||||||||||||||||||||||||
| 12/20/2002 | 110,000 | 10.5250 | 12/20/2012 | |||||||||||||||||||||||||||||||||
| 12/20/2003 | 114,000 | 20.1350 | 12/20/2013 | |||||||||||||||||||||||||||||||||
| 12/20/2004 | 116,000 | 32.5500 | 12/20/2014 | |||||||||||||||||||||||||||||||||
| 12/20/2005 | 60,000 | 35.9700 | 12/20/2015 | |||||||||||||||||||||||||||||||||
| 12/20/2006 | 45,000 | 15,000 | (1) | 31.8200 | 12/20/2016 | �� | ||||||||||||||||||||||||||||||
| 12/20/2006 | 15,000 | 15,000 | (2) | 31.8200 | 12/20/2016 | |||||||||||||||||||||||||||||||
| 12/20/2007 | 33,000 | 33,000 | (2) | 20.7600 | 12/20/2017 | |||||||||||||||||||||||||||||||
| 12/20/2008 | 16,500 | 49,500 | (3) | 21.7000 | 12/19/2018 | |||||||||||||||||||||||||||||||
| 12/20/2009 | 70,000 | (4) | 18.3800 | 12/20/2019 | ||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Rights That Have Not Vested ($) | |||||||||||||||||||||||
Robert I. Toll | 12/20/2002 | 500,000 | 10.5250 | 12/20/2012 | ||||||||||||||||||||||||||||
| 12/20/2003 | 500,000 | 20.1350 | 12/20/2013 | |||||||||||||||||||||||||||||
| 12/20/2004 | 500,000 | 32.5500 | 12/20/2014 | |||||||||||||||||||||||||||||
| 12/20/2005 | 250,000 | 35.9700 | 12/20/2015 | |||||||||||||||||||||||||||||
| 12/20/2006 | 550,000 | 31.8200 | 12/20/2016 | |||||||||||||||||||||||||||||
| 12/20/2007 | 412,500 | 137,500 | (1) | 20.7600 | 12/20/2017 | |||||||||||||||||||||||||||
| 12/19/2008 | 200,000 | (5) | 3,488,000 | (8) | ||||||||||||||||||||||||||||
| 12/21/2009 | 200,000 | (6) | 3,488,000 | (8) | ||||||||||||||||||||||||||||
| 12/20/2010 | 100,000 | (4) | 19.3200 | 12/20/2020 | 200,000 | (7) | 3,488,000 | (8) | ||||||||||||||||||||||||
Douglas C. Yearley, Jr. | 12/20/2001 | 31,297 | 10.8800 | 12/20/2011 | ||||||||||||||||||||||||||||
| 12/20/2002 | 29,250 | 10.5250 | 12/20/2012 | |||||||||||||||||||||||||||||
| 12/20/2003 | 31,306 | 20.1350 | 12/20/2013 | |||||||||||||||||||||||||||||
| 12/20/2007 | 11,250 | 5,000 | (1) | 20.7600 | 12/20/2017 | |||||||||||||||||||||||||||
| 07/18/2008 | 18,692 | 18.9200 | 12/20/2014 | |||||||||||||||||||||||||||||
| 07/18/2008 | 9,007 | 18.9200 | 12/20/2015 | |||||||||||||||||||||||||||||
| 07/18/2008 | 2,376 | 1,057 | (1) | 18.9200 | 12/20/2016 | |||||||||||||||||||||||||||
| 07/18/2008 | 10,729 | 18.9200 | 12/20/2016 | |||||||||||||||||||||||||||||
| 12/20/2008 | 7,500 | 10,000 | (2) | 21.7000 | 12/20/2018 | |||||||||||||||||||||||||||
| 12/20/2009 | 9,375 | 37,500 | (3) | 18.3800 | 12/20/2019 | |||||||||||||||||||||||||||
| 12/20/2010 | 120,000 | (4) | 19.3200 | 12/20/2020 | 100,000 | (7) | 1,744,000 | (8) | ||||||||||||||||||||||||
Zvi Barzilay | 12/20/2001 | 9,190 | 10.8800 | 12/20/2011 | ||||||||||||||||||||||||||||
| 12/20/2002 | 250,000 | 10.5250 | 12/20/2012 | |||||||||||||||||||||||||||||
| 12/20/2003 | 254,000 | 20.1350 | 12/20/2013 | |||||||||||||||||||||||||||||
| 12/20/2004 | 240,000 | 32.5500 | 12/20/2014 | |||||||||||||||||||||||||||||
| 12/20/2005 | 120,000 | 35.9700 | 12/20/2015 | |||||||||||||||||||||||||||||
| 12/20/2006 | 120,000 | 31.8200 | 12/20/2016 | |||||||||||||||||||||||||||||
| 12/20/2006 | 22,500 | 7,500 | (1) | 31.8200 | 12/20/2016 | |||||||||||||||||||||||||||
| 12/20/2007 | 90,000 | 30,000 | (1) | 20.7600 | 12/20/2017 | |||||||||||||||||||||||||||
| 12/20/2008 | 60,000 | 60,000 | (2) | 21.7000 | 12/20/2018 | |||||||||||||||||||||||||||
| 12/20/2009 | 31,000 | 93,000 | (3) | 18.3800 | 12/20/2009 | |||||||||||||||||||||||||||
| 12/20/2010 | 120,000 | (4) | ||||||||||||||||||||||||||||||
Martin P. Connor | 01/05/2009 | 5,000 | 5,000 | (9) | 22.1800 | 01/05/2019 | ||||||||||||||||||||||||||
| 12/20/2009 | 2,750 | 8,250 | (3) | 18.3800 | 12/20/2019 | |||||||||||||||||||||||||||
| 12/20/2010 | 20,000 | (4) | 19.3200 | 12/20/2020 | 6,000 | (7) | 104,640 | (8) | ||||||||||||||||||||||||
The options that are reflected in the above table as “exercisable” vested in equal installments on the first four anniversaries of the original grant date.
| (1) | 100% of the options vest on December 20, | |
| (2) | 50% of the options vest on each of December 20, | |
| (3) | 33.33% of the options vest on each of December 20, | |
| (4) | 25% of the options vest on each of December 20, | |
| (5) | 200,000 performance-based RSUs were awarded to Mr. Toll on December 18, 2008. These RSUs will only vest if the average closing price of our common stock on the NYSE, measured over any 20 consecutive trading |
35
| days ending on or prior to December 19, 2013, increases 30% or more over $21.70, the closing price of our common stock on the NYSE on December 19, | ||
| (6) | 200,000 performance-based RSUs were awarded to Mr. Toll on December 21, 2009. | |
| (7) | On December 20, 2010, 200,000 performance-based RSUs were awarded to Mr. Toll, 100,000 performance-based RSUs were awarded to Mr. Yearley and 6,000 performance-based RSUs were awarded to Mr. Connor. These RSUs will only vest if the average closing price of our common stock on the NYSE, measured over any 20 consecutive trading days ending on or prior to December 20, 2015, increases 30% or more over $19.32, the closing price of our common stock on the NYSE on December 20, 2010, and provided the executive continues to be employed by us or serve as a member of our Board until December 20, 2013. These RSUs will also vest if the executive dies or becomes disabled, or if we experience a change of control prior to satisfaction of the aforementioned performance criteria. |
| (8) | The value of performance-based RSUs was calculated based on the closing price of the NYSE on October |
Option Exercises and Stock Vested During Fiscal 20102011
| Option Awards | ||||||||
| Number of | ||||||||
| Shares Acquired | Value Realized | |||||||
Name | on Exercise (#)(1) | on Exercise ($)(2) | ||||||
| Robert I. Toll | 1,000,000 | 8,176,200 | ||||||
| Douglas C. Yearley, Jr | 58,246 | 743,445 | ||||||
| Zvi Barzilay | 279,750 | 3,187,859 | ||||||
| Martin P. Connor | — | — | ||||||
| Joel H. Rassman | 194,849 | 2,797,835 | ||||||
| Option Awards | ||||||||
Name | Number of Shares Acquired on Exercise (#)(1) | Value Realized on Exercise ($)(2) | ||||||
Robert I. Toll | 1,000,000 | 10,563,563 | ||||||
Douglas C. Yearley, Jr | 25,000 | 171,775 | ||||||
Zvi Barzilay | 500,876 | 5,354,615 | ||||||
Martin P. Connor | — | — | ||||||
| (1) | Messrs. Toll, Yearley | |
| (2) | “Value Realized on Exercise” equals the difference between the closing price of our common stock on the NYSE on the various dates of exercise and the exercise price, multiplied by the number of shares of our common stock acquired upon exercise of the stock options. |
Pension Benefits at October 31, 20102011
The following table provides information regarding the pension benefits for our NEOs under the SERP.
| Number of Years | Present Value of | Payments During | |||||||||||||||
| of Credited | Accumulated | Last Fiscal | |||||||||||||||
Name | Plan Name(1) | Service (#)(1) | Benefit ($)(2) | Year ($) | |||||||||||||
| Robert I. Toll | SERP | 20 | 8,307,130 | — | |||||||||||||
| Douglas C. Yearley, Jr | SERP | 20 | 1,122,023 | — | |||||||||||||
| Zvi Barzilay | SERP | 20 | 4,319,708 | — | |||||||||||||
| Martin P. Connor | SERP | 1 | .8 | 531,955 | — | ||||||||||||
| Joel H. Rassman | SERP | 20 | 4,153,565 | — | |||||||||||||
Name | Plan Name(1) | Number of Years of Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | ||||||||||||
Robert I. Toll | SERP | 20.0 | 8,963,565 | — | ||||||||||||
Douglas C. Yearley, Jr | SERP | 20.0 | 1,389,378 | — | ||||||||||||
Zvi Barzilay | SERP | 20.0 | 4,661,054 | — | ||||||||||||
Martin P. Connor | SERP | 2.8 | 789,940 | — | ||||||||||||
| (1) | In order to be vested in benefits under the SERP, participants must have 20 years of service with us. The SERP does not provide for partial benefits for less than 20 years of service or increased benefits based solely upon the completion of more than 20 years of service. In the case of Martin Connor, who joined the Company at age 45, his benefits under the SERP will vest after 17 years of service. | |
| (2) | For a description of the SERP and the assumptions used in the calculation of the present value of plan benefits, see Note 12, “Employee Retirement and Deferred Compensation Plans” in the notes to the Consolidated |
36
| Financial Statements contained in our Annual Report onForm 10-K for the fiscal year ended October 31, |
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 completed 20 years of service with us and has reached “normal retirement age,” which is age 62 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 each NEO who has already reached retirement age under the SERP, on his birthday during fiscal 2010, annual retirement benefits under the SERP increased by 10% of the applicable original annual benefit amount (set forth below). In order to be eligible for the annual increase in any given year, the NEO must 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 that Mr. Yearley’s annual benefit amount will be subject to such increase for the first three years of service to the Company after he reaches age 62. Accordingly, there were no annual increases during fiscal 2011. The original annual benefit amounts the fiscal 2010 increase and the annual benefits to our NEOs under the SERP as of the end of fiscal 20102011 are set forth in the table below.
| Annual Benefit | ||||||||||||
| Original Annual | Fiscal 2010 | Amount at | ||||||||||
Participant | Benefit Amount | Increase | October 31, 2010 | |||||||||
| Robert I. Toll | $ | 500,000 | $ | 50,000 | $ | 650,000 | ||||||
| Douglas C. Yearley, Jr. | $ | 150,000 | — | $ | 150,000 | |||||||
| Zvi Barzilay | $ | 260,000 | $ | 26,000 | $ | 338,000 | ||||||
| Martin P. Connor | $ | 100,000 | — | $ | 100,000 | |||||||
| Joel H. Rassman | $ | 250,000 | $ | 25,000 | $ | 325,000 | ||||||
Participant | Original Annual Benefit Amount | Fiscal 2011 Increase | Annual Benefit Amount at October 31, 2011 | |||||||||
Robert I. Toll | $ | 500,000 | — | $ | 650,000 | |||||||
Douglas C. Yearley, Jr. | $ | 150,000 | — | $ | 150,000 | |||||||
Zvi Barzilay | $ | 260,000 | — | $ | 338,000 | |||||||
Martin P. Connor | $ | 100,000 | — | $ | 100,000 | |||||||
Mr. Toll and Barzilay havehas completed the requisite 20 years of service with us and havehas reached normal retirement age and are,is, therefore, fully vested in theirhis SERP benefits. Mr. Yearley has completed the requisite 20 years of service with
us, but has not reached normal retirement age and is not fully vested in his SERP benefits. Mr. Connor has not completed the requisite 2017 years of service with us, nor has he reached normal retirement age and is, therefore, not fully vested in his SERP benefits. Mr. RassmanBarzilay had completed the requisite 20 years of service with us and had reached normal retirement age and, was therefore, fully vested in his SERP benefits at the time of his death in September 2010.retirement on December 31, 2011. Benefits under the SERP will cease if any participant competes with us following retirement.
Nonqualified Deferred Compensation at October 31, 20102011
37
| Executive | Registrant | Aggregate | Aggregate | |||||||||||||||||
| Contributions | Contributions | Earnings | Aggregate | Balance | ||||||||||||||||
| in Last | in Last | in Last | Withdrawals/ | at Last | ||||||||||||||||
Name | FY ($)(1) | FY ($) | FY ($)(2) | Distributions ($) | FYE ($)(3) | |||||||||||||||
| Robert I. Toll | — | — | — | — | — | |||||||||||||||
| Douglas C. Yearley, Jr. | — | — | — | — | — | |||||||||||||||
| Zvi Barzilay | 304,000 | — | 171,873 | — | 2,541,083 | |||||||||||||||
| Martin P. Connor | — | — | — | — | — | |||||||||||||||
| Joel H. Rassman | — | — | 140,748 | — | 1,928,021 | |||||||||||||||
38
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2) | |||||||||||||||
Zvi Barzilay | — | 198,019 | 198,019 | — | 2,739,102 | |||||||||||||||
| (1) | “Aggregate Earnings in Last FY” column represents the unrealized earnings on the NEO’s account balance in the Deferred Compensation Plan as described below. $69,242 of the amount shown under this column represents above-market earnings and were accordingly reported as compensation in 2011 in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table on page 32. |
| (2) | “Aggregate Balance at Last FYE” column represents the net balance of compensation that was earned and deferred in prior years and the interest accrued on such deferred amounts. Of the amount shown, $69,242, $54,343 and $41,384 of above-market interest was included in Mr. Barzilay’s fiscal 2011, 2010 and 2009 compensation, respectively, in the Summary Compensation Table. |
Certain Restricted Stock Awards
On December 19, 2008, each of the NEOs employed at the time was granted RSUs corresponding to a reduction in base salary or incentive bonus of the NEO, as applicable, as follows: Mr. Toll (5,991 RSUs; $130,000 grant date value); Mr. Yearley (1,153 RSUs; $25,000 grant date value); and Mr. Barzilay (7,005 RSUs; $152,000 grant date value). These RSUs were considered to have vested upon grant but the underlying shares of common stock had not been delivered at October 31, 2011. Accordingly, the deferred receipt of the underlying shares is considered deferred compensation. The RSUs will be delivered at the four-year anniversary of the grant date, or earlier in the event of death, disability, retirement or change of control of the Company. At October 31, 2011, the values of the RSUs for Messrs. Toll, Yearley and Barzilay were $104,483, $20,108 and $122,167, respectively. As a result of Mr. Barzilay’s retirement on December 31, 2011, he will receive all of the shares underlying his RSUs.
Potential Payments upon Termination or Change of Control
None of our NEOs has an employment agreement with us, nor are any of them entitled to any sort of cash severance payment upon termination or separation from us, other than under the Rassman Agreement which provides for specified payments and benefits upon a termination or separation, as further described herein.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 following tables. Except with respect to Mr. Rassman, thetables below. The amounts and values shown assume that such termination of employment or change of control occurred on October 29, 2010,31, 2011, the last business day of our 20102011 fiscal year, and are based, as applicable, on a share price of $17.94,$17.44, the closing price of our common stock on the NYSE on October 29, 2010.31, 2011. These amounts and values do not necessarily reflect the actual amounts and values that would be paid to the NEOs upon an actual 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. For Mr. Rassman, the amounts reflect amounts of payment or values of benefits triggered by his death on September 14, 2010.
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 distributions of plan balances under our 401(k) plan and the Deferred Compensation Plan, including the value of shares underlying RSUs that had been considered vested in a prior fiscal year. See the Compensation“Compensation Discussion & Analysisand Analysis” for information about the Company’s 401(k) plan and the “Executive Compensation Tables — Nonqualified Deferred Compensation Plan at October 31, 2010.2011.”
Termination of Employment
Vesting of Equity Compensation Plan Awards. Generally, unvested equity awards held by any of our employees, including the NEOs, are cancelled 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,employment; however, under specified circumstances, such as 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 granted on or after December 20, 2001,2000, if an NEO retiresMessrs. Toll, Yearley or Barzilay retire from service with us after reaching age 62, he is entitled to continued vesting and exercisability of any unvestedand/or unexercised options (stock options granted to Messrs.Mr. Yearley and Connor to date will expire prior to the respective NEO’shis attainment of the retirement age of 62). 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.
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 unvestedand/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 (and 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.
39
Vesting of SERP Benefits. Under the SERP, participants become 100% vested in their retirement benefits once they complete 20 years of service with us and reach age 62.62 (except for Mr. Connor as previously discussed herein). As of October 31, 2010,2011, Messrs. Robert I. Toll and Zvi Barzilay had reached age 62 and had completed 20 years of service with us; as a result, they were all fully vested in their SERP benefits. The tables below do not include benefits payable to Messrs. Toll and Barzilay under the SERP. See “Supplemental Executive Retirement Plan” and “Pension Benefits at October 31, 2010.2011.” If a SERP participant is terminated for cause, all SERP benefits are subject to forfeiture, regardless of whether the participant is fully vested.
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 and all restrictions lapse. Under the SERP, if there is a change of control of the Company, all participants in the SERP would become fully vested in their SERP benefits (if not already fully vested) and be potentially eligible for a lump sum payout. The tables below reflect the amounts that would have been recognized by each NEO (other than Mr. Rassman) if a change of control had occurred on October 29, 2010, and he had exercised and sold all of his previously unvestedin-the-money stock options, and with respect to Mr. Toll, the table below reflects the amount of previously unvested performance-based RSUs that would have vested if a change of control had occurred on October 29, 2010.31, 2011. In addition, with respect to Messrs. Yearley and 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 29, 2010.
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 29, 2010.
| Change in | ||||||||||||||||||||||||||||
| Termination of Employment ($) | Control ($) | |||||||||||||||||||||||||||
| Involuntary | Involuntary | |||||||||||||||||||||||||||
| Normal | Not for | For | ||||||||||||||||||||||||||
Payments and Benefits | Voluntary(1) | Retirement | Cause | Cause | Death | Disability | ||||||||||||||||||||||
| Accelerated vesting of unvested equity awards: | ||||||||||||||||||||||||||||
| Stock option(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
| RSU shares(3) | — | — | — | — | 7,176,000 | 7,176,000 | 7,176,000 | |||||||||||||||||||||
| Payment of SERP Benefits(4) | — | — | — | — | — | — | — | |||||||||||||||||||||
| Total: | — | — | — | — | 7,176,000 | 7,176,000 | 7,176,000 | |||||||||||||||||||||
| Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Payments and Benefits | Voluntary(1) | Normal Retirement | Involuntary Not for Cause | Involuntary For Cause | Death | Disability | ||||||||||||||||||||||
Accelerated vesting of unvested equity awards: | ||||||||||||||||||||||||||||
Stock option(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
RSU shares(3) | — | — | — | — | 10,464,000 | 10,464,000 | 10,464,000 | |||||||||||||||||||||
Payment of SERP Benefits(4) | — | — | — | — | — | — | — | |||||||||||||||||||||
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|
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Total: | — | — | — | — | 10,464,000 | 10,464,000 | 10,464,000 | |||||||||||||||||||||
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| (1) | For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company. | |
| (2) | Mr. Toll did not have anyin-the-money options that were unvested at October | |
| (3) | See footnotes 5, 6 and |
40
| (4) | The amount of Mr. Toll’s SERP benefits, in which he has already fully vested as described above, would be paid inbi-weekly installments over a20-year period, except in the event of a change in control. Upon a change in control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Toll’s SERP benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits at October 31, |
Douglas C. Yearley, Jr.
The following table describes the potential payments and benefits to Douglas C. Yearley upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 29, 2010.
| Change in | ||||||||||||||||||||||||||||
| Termination of Employment ($) | Control ($) | |||||||||||||||||||||||||||
| Involuntary | ||||||||||||||||||||||||||||
| Normal | Not for | Involuntary | ||||||||||||||||||||||||||
Payments and Benefits | Voluntary(1) | Retirement | Cause | For Cause | Death | Disability | ||||||||||||||||||||||
| Accelerated vesting of unvested equity awards | ||||||||||||||||||||||||||||
| Stock option(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
| RSU shares | — | — | — | — | — | — | — | |||||||||||||||||||||
| Payment of SERP Benefits(3) | — | — | — | — | 3,000,000 | 3,000,000 | 3,000,000 | |||||||||||||||||||||
| Total: | — | — | — | — | 3,000,000 | 3,000,000 | 3,000,000 | |||||||||||||||||||||
| Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Payments and Benefits | Voluntary(1) | Normal Retirement | Involuntary Not for Cause | Involuntary For Cause | Death | Disability | ||||||||||||||||||||||
Accelerated vesting of unvested equity awards | ||||||||||||||||||||||||||||
Stock option(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
RSU shares(3) | — | — | — | — | 1,744,000 | 1,744,000 | 1,744,000 | |||||||||||||||||||||
Payment of SERP Benefits(4) | — | — | — | — | 3,000,000 | 3,000,000 | 3,000,000 | |||||||||||||||||||||
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Total: | — | — | — | — | 4,744,000 | 4,744,000 | 4,744,000 | |||||||||||||||||||||
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| (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) | Mr. Yearley did not have anyin-the-money options that were unvested at October | |
| (3) | See footnote 7 to the Outstanding Equity Awards at October 31, 2011 table in this proxy statement. Had Mr. Yearley terminated his employment at October 31, 2011, 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, 2011, would have been $1,744,000. |
| (4) | The amount of the benefit shown would be paid in bi-weekly installments over a20-year period, except in the event of a change in control. Upon a change in control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Yearley’s benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits at October 31, |
Martin P. Connor
The following table describes the potential payments and benefits to Martin P. Connor upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2011.
| Termination of Employment ($) | Change in Control ($) | |||||||||||||||||||||||||||
Payments and Benefits | Voluntary(1) | Normal Retirement | Involuntary Not for Cause | Involuntary For Cause | Death | Disability | ||||||||||||||||||||||
Accelerated vesting of unvested equity awards | ||||||||||||||||||||||||||||
Stock option(2) | — | — | — | — | — | — | — | |||||||||||||||||||||
RSU shares(3) | — | — | — | — | 104,640 | 104,640 | 104,640 | |||||||||||||||||||||
Payment of SERP Benefits(4) | — | — | — | — | — | — | 2,000,000 | |||||||||||||||||||||
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Total: | — | — | — | — | 104,640 | 104,640 | 2,104,640 | |||||||||||||||||||||
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| (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) | Mr. Connor did not have any in-the-money options that were unvested at October 31, 2011. |
| (3) | See footnotes 7 to the Outstanding Equity Awards at October 31, 2011 table in this proxy statement. Had Mr. Connor terminated his employment at October 31, 2011, 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, 2011, would have been $104,640. |
| (4) | Upon a change in control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Connor’s benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits at October 31, 2011”). |
Zvi Barzilay
Upon termination of Zvi Barzilay’s employment or a change of control of the Company, had such termination or change of control occurred on October 29, 2010,31, 2011, Mr. Barzilay would have been entitled to the payment of benefits under the SERP, in which, as described above, he haswas already fully vested and which would be paid in bi-weekly installments over a 20-year period, except in the event of a change of control. In the event of a change of control, the amount of SERP benefit would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Barzilay’s SERP benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits at October 31, 2010”2011”). Mr. Barzilay did not have any in-the-money options that were unvested at October 29, 2010.
41
42aggregate.
As described under “Corporate Governance and Board Matters — Committees of the Board and Meetings — Audit Committee,” the Audit 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.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the Company’s audited financial statements for the year ended October 31, 20102011 with management, including a discussion of the quality, not just the acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also discussed with Ernst & Young LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by the Statement on Auditing Standards No. 114,61, as amended (AICPA,Professional Standards, Vo1.Vol.1. AU section 380), as adopted by the Public Company Accounting Oversight Board.
In addition, the Audit 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 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 Committee recommended to the Board that the audited financial statements of the Company be included in the Annual Report onForm 10-K for the fiscal year ended October 31, 20102011 for filing with the SEC.
Respectfully submitted by the members of the Audit Committee of the Board of Directors.
Paul E. Shapiro (Chair)
Edward G. Boehne
Christine N. Garvey
Carl B. Marbach
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 within a prescribed period of time and written representations we received from the reporting persons, SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEwith the exception noted in the following sentence, we believe that all other filings required to be made by the reporting persons during or with respect to the period November 1, 20092010 through October 31, 20102011 (“Reporting Period”) were made on a timely basis. Onebasis except that one Form 5 filing to report a single transaction that occurred during the Reporting Period and which related solely to a charitable gift of shares from Mr. Robert I. Toll to an educational institution was not filed on a timely basis.
We have a written Related Party Transaction Policy (“Policy”), which provides guidelines applicable to any transaction, arrangement or relationship between us and a related party that is or may be required to be disclosed pursuant to Item 404 of the SEC’sRegulation S-K (each, a “related party transaction”). Under the Policy, the Nominating and Corporate Governance Committee (the “Governance Committee”) of the Board is responsible for reviewing and determining whether to approve or ratify any related party transaction. In making its determination to approve or ratify a related party transaction, the Governance Committee considers such factors as (1) the extent of the related party’s interest in the transaction, (2) if applicable, the availability of other sources of comparable products or services, (3) whether the terms of the related party transaction are no less favorable than terms generallyCERTAIN TRANSACTIONS43
All transactions disclosed below were approved or ratified in accordance with the terms of the Policy.
During fiscal 2010,2011, Robert I. Toll, Executive Chairman of the Board, paid approximately $263,036$288,427 to us for personal services, including legalinvestment and investmentlegal services, car service, office space for personal use and home improvement services. These services were provided by us or our employees, and such amounts were billed at competitive rates or rates based on the relevant employee’s compensation or the cost to the Company, as applicable, and were paid throughout the year with monies deposited with us in advance by Mr. Toll.
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 us,the Company, one-third by Robert I. Toll, Executive Chairman of the Board, Bruce E. Toll, Vice Chairman of the Board (and trusts established for the benefit of members of his family), Zvi Barzilay, our recently retired President and Chief Operating Officer (and trusts established for the benefit of members of his family), the Estate of Joel H. Rassman, our former Chief Financial Officer, Douglas C. Yearley, Jr., our Chief Executive Officer, and other current and former members of our senior management, and one-third by the Pennsylvania State Employees Retirement System. At October 31, 2010,2011, our investment in Toll Realty LP and the Trust was $182,355.$382,021. We earned fees from Toll Realty LP and the Trust of $3,268,000$3,197,389 in fiscal 20102011 under the terms of various development, finance and management services agreements. We believe that these transactions were on terms no less favorable than we would have agreed to with unrelated parties. Under such agreements, we also incur certain costs on behalf of Toll Realty LP and the Trust for which we are reimbursed by Toll Realty LP and the Trust. These fees and reimbursements were paid to us throughout the year.
Adam Barzilay, the son of Zvi Barzilay, is employed on a full-time basis by the Company as a Land Acquisition Manager in California. During fiscal 2010, Adam Barzilay2011, he received $204,737$237,530 in total compensation (salary, benefits, bonus and options to acquire shares of the Company’s common stock). The, which the Company believes that the compensation paid to Adam Barzilay during his employment with the Company was consistent with the compensation it would have paid to an unrelated individual in a similar position with the Company.
In addition, in fiscal 2010,2011, BET Investments, a company owned and operated by Bruce E. Toll, usedretained our engineering and integrated systems departmentsdepartment to provide services in connection with the construction of various commercial real estate properties. The total amountsamount paid by Bruce E. Toll and BET Investments for these materials and services provided during fiscal 2010 were $79,832 and $166,500, respectively.2011 was $168,495. The rates charged to Bruce E. Toll and BET Investments are comparable to what we would have charged to an unrelated third party, and it is expected that Bruce E. Toll and BET Investments may continue to purchase additional materials and services from us in fiscal 2011.
We are also party to an advisory and non-competition agreement with Bruce E. Toll. For information regarding this agreement, see “Corporate Governance and Board Matters — Director Compensation.”
44
Stockholders interested in submitting a proposal to be considered for inclusion in our proxy statement and form of proxy for the 20122013 Annual Meeting of Stockholders may do so by following the procedures prescribed byRule 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 first page of this proxy statement on or before October 4, 2011.
A stockholder may wish to have a proposal presented at the 20122013 Annual Meeting of Stockholders, but not to have the proposal included in our proxy statement and form of proxy relating to that meeting. Under our bylaws, except as otherwise prescribed by the presiding officer, 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, by the presiding officer, or by a stockholder entitled to vote who has delivered written notice to us (containing certain information specified in the bylaws about the stockholder and the proposed action) not less than 45 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 20122013 Annual Meeting of Stockholders, between November 18, 2011,20, 2012, and December 18, 2011.
A stockholder who wishes to submit a nomination for director to the Board (other than a nomination brought pursuant to and in accordance with any proxy access rules adopted by the SEC subsequent to the date of this proxy statement and effective for the 20122013 Annual Meeting of Stockholders) 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, (b) any requirements adopted by the SEC subsequent to the date of this proxy statement and effective for the 2012 Annual Meeting of Stockholders relating to the inclusion of a stockholder nominee for director in our proxy statement and (c) the requirements set forth below for having our Nominating and Corporate 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 first page of this proxy statement by December 18, 2011,20, 2012, then such proposal shall be deemed “untimely” for purposes ofRule 14a-4 promulgated under the Exchange Act and, therefore, the persons appointed by our Board as its proxies will have the right to exercise discretionary voting authority with respect to such proposal.
NOMINATION TO THE BOARD OF DIRECTORS Any stockholder may submit a nomination for director by following the procedures outlined inSection 2-8 of our bylaws. In addition, the Nominating and Corporate Governance Committee has adopted a policy permitting stockholders to recommend candidates for director under certain circumstances. The Nominating and Corporate 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 Nominating and Corporate 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.PROCEDURES FOR NOMINATING CANDIDATES OR RECOMMENDING CANDIDATES FOR
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 areHOUSEHOLDING INFORMATION45
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,e-mail, telegraph or telecopy by our directors, officers or employees, or by a professional proxy solicitation firm that we engage.SOLICITATION OF PROXIES
We make available free of charge on our website, www.tollbrothers.com, our Annual Report onForm 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 onForm 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.ANNUAL REPORT ONFORM 10-K
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 judgement. By Order of the Board of Directors Michael I. Snyder Secretary Horsham, Pennsylvania February OTHER BUSINESS3, 20121, 2011
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