UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Century Communities, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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☐ | Fee computed on table | |
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PRELIMINARY PROXY MATERIAL – SUBJECT TO COMPLETION
8390 East Crescent Parkway, Suite 650
Greenwood Village, Colorado 80111
(303) 770-8300
FROM OUR CHAIRMAN OF THE BOARD
Dear Fellow Stockholder:
You are cordially invited2022 was another strong year for our Company. We generated home sales revenues of $4.4 billion, a Company record, and delivered 10,594 homes, the second highest level in our history, resulting in record net income of $525 million. 2022 marked the 20th anniversary of the founding of Century Communities and was also our 20th year of consecutive profitability. The Company produced a return on equity of 27% and grew stockholders’ equity by 22% to attenda record $2.2 billion. Our book value per share increased to $67.67 per share, also a Company record, as of December 31, 2022.
During 2022, we continued to return cash to our shareholders while maintaining a strong balance sheet. Our quarterly dividend was increased to $0.20 per diluted share in the 2020first quarter of 2022 and further increased to $0.23 per diluted share in the first quarter of 2023. For the full year, we invested $120.6 million in repurchasing approximately 2.3 million shares of common stock at an average price of $52.32 per share, a 23% discount to ending book value, reducing our share count by approximately 7%. We ended the year with a homebuilding debt to capital ratio of 32.0%, $1.2 billion of total liquidity, including $353 million of cash, and our first senior debt maturity not due until 2027.
Together with the Board of Directors and the management team at Century Communities, I am pleased to invite you to our 2023 Annual Meeting of Stockholders, of Century Communities, Inc., a Delaware corporation, towhich will be held at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237, at 1:00 p.m. local time, on Wednesday, May 6, 2020.3, 2023.
AtIn connection with the Annual Meeting, youstockholders will be asked to consider and vote upon the following proposals: (1) to elect fivesix directors to serve for the ensuing year as members of the Board of Directors of Century; (2) to approve an amendment to our Certificate of Incorporation to eliminate or limit the personal liability of officers to the extent permitted by recent amendments to Delaware law; (3) to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; (3)2023; (4) to approve, on an advisory basis, our executive compensation; and (4)(5) to transact such other business as may properly come before the Annual Meeting or at any continuation, postponement, or adjournment thereof. The accompanying Notice of 20202023 Annual Meeting of Stockholders and proxy statement describe these matters in more detail. We urge you to read this information carefully.
The Board of Directors recommends a vote: FOR each of the fivesix nominees for director named in the proxy statement and FOR the approval of the other proposals being submitted to a vote of stockholders.
Whether or not youVoting your shares of Century common stock is easily achieved without the need to attend the Annual Meeting in person, and regardlessperson. Regardless of the number of shares of Century common stock that you own, it is important that your shares be represented and voted at the Annual Meeting. Therefore, I urge you to vote your shares of Century common stock via the Internet, by telephone, or by promptly marking, dating, signing, and returning the proxy card. Voting over the Internet, by telephone, or by written proxy will ensure that your shares are represented at the Annual Meeting.
On behalf of the Board of Directors, and management of Century, we thank you for your participation, investment and continued support.
Sincerely, | |
Dale Francescon Chairman of the Board and Co-Chief Executive Officer | |
March |
You can help us make a difference by eliminating paper proxy materials. With your consent, we will provide all future proxy materials electronically. Instructions for consenting to electronic delivery can be found on your proxy card or at www.proxyvote.com. Your consent to receive stockholder materials electronically will remain in effect until canceled. |
Century Communities, Inc. – 2023 Proxy Statement | 2 |
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NOTICE OF 20202023 ANNUAL MEETING OF STOCKHOLDERS
The 20202023 Annual Meeting of Stockholders of Century Communities, Inc., a Delaware corporation, will be held on Wednesday, May 6, 2020,3, 2023, at 1:00 p.m. local time at the Hyatt Regency Denver Tech Center*Center located at 7800 East Tufts Avenue, Denver, Colorado 80237, for the following purposes:
1. | To elect |
2. | To approve an amendment to our Certificate of Incorporation to eliminate or limit the personal liability of officers to the extent permitted by recent amendments to Delaware law; |
3. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, |
To approve, on an advisory basis, our executive compensation; and |
To transact such other business as may properly come before the Annual Meeting or at any continuation, postponement, or adjournment thereof. |
The proxy statement accompanying this Notice describes each of these items of business in detail. Only holders of record of our common stock at the close of business on March 13, 20209, 2023 are entitled to notice of, to attend, and to vote at the Annual Meeting or any continuation, postponement, or adjournment thereof. A list of such stockholders will be available for inspection, for any purpose germane to the Annual Meeting, at our principal executive offices during regular business hours for a period of no less than 10 days prior to the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in person. To ensure your representation at the Annual Meeting, you are urged to vote your shares of Century common stock via the Internet, by telephone, or by promptly marking, dating, signing, and returning the proxy card. If your shares of Century common stock are held by a bank, broker, or other agent, please follow the instructions from your bank, broker, or other agent to have your shares voted.
BY ORDER OF THE BOARD OF DIRECTORS | |
David L. Messenger Chief Financial Officer and Secretary |
Greenwood Village, Colorado
March 24, 202022, 2023
Century Communities, Inc. – 2023 Proxy Statement |
TABLE OF CONTENTS
Page
References in this proxy statement to:
“Century,” “we,” “us,” “our,” or the “Company” refer to Century Communities, Inc.; |
“Board” refer to the Board of Directors of Century; |
“Annual Meeting” refer to our |
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Information on our website and any other website referenced herein is not incorporated by reference into, and does not constitute a part of, this proxy statement.
™ and ® denote trademarks and registered trademarks of Century Communities, Inc. or our affiliates, registered as indicated in the United States. All other trademarks and trade names referred to in this proxy statement are the property of their respective owners.
We intend to make this proxy statement and our 20192022 Annual Report available on the Internet and to commence mailing of the notice to all stockholders entitled to vote at the Annual Meeting beginning on or about March 24, 2020.22, 2023. We will mail paper copies of these materials, together with a proxy card, within three business days of a request properly made by a stockholder entitled to vote at the 20202023 Annual Meeting of Stockholders.
Century Communities, Inc. – 2023 Proxy Statement | 5 |
PROXY STATEMENT SUMMARY
This executive summary provides an overview of the information included in this proxy statement. We recommend that you review the entire proxy statement and our 2019
This executive summary provides an overview of the information included in this proxy statement. We recommend that you review the entire proxy statement and our 2022 Annual Report to Stockholders before voting. |
20202023 ANNUAL MEETING OF STOCKHOLDERS
DATE AND TIME Wednesday, May 1:00 p.m. (Mountain Time)
Hyatt Regency Denver Tech Center 7800 East Tufts Avenue Denver, CO 80237
RECORD DATE Holders of record of our common stock at the close of business on March |
PROPOSALSVOTING ITEMS
Proposal | Board’s Vote Recommendation | |
Proposal No. 1: Election of directors | FOR | |
Proposal No. 2: Approval of amendment to our Certificate of Incorporation to eliminate or limit the personal liability of officers | FOR | 38 |
Proposal No. 3: Ratification of appointment of independent registered public accounting firm | FOR | |
Proposal No. Advisory vote on executive compensation | FOR |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on Wednesday, May This proxy statement and our |
Century Communities, Inc. – |
PRELIMINARY PROXY MATERIAL – SUBJECT TO COMPLETION
2019 BUSINESS HIGHLIGHTSWHO WE ARE
2019 proved to be another milestone year for Century in which we closed a record 8,000 homes, grew home sales revenues to a record $2.5 billion and generated $113 million of net income, achieving our 17th consecutive year of profitability. We also continued to execute on our strategy of dynamic growth by broadening our national footprint to 17 states, adding deliveries in Iowa, Indiana, Michigan and Ohio, not only expanding our scale and scope but strengthening our competitive position across high-potential markets, including the attractive, lower-priced home category previously marketed under Wade Jurney Homes but recently branded as Century Complete. Additionally, we improved our selling, general and administrative (SG&A) leverage demonstrating our success in maintaining tight financial discipline and driving operational efficiencies within the business. Highlights of our financial, operational and strategic achievements for 2019, which drove our 2019 executive pay decisions, are below.
FINANCIALCentury Communities, Inc. is a top 10 national U.S. homebuilder. We are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 18 states across the United States. We market and sell homes under both the Century Communities and Century Complete brands. As of December 31, 2022, we operated in the 18 states and over 45 markets depicted below. We also offer title, insurance, and lending services in select markets.
Over the last six years, positive macro-economic conditions, along with our operating efficiencies, business strategy and geographic expansion through the acquisition of other homebuilders and organic entrances into new markets has resulted in significant increases in total revenue, net income, earnings per diluted share, and total stockholders’ equity.
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Century Communities, Inc. – |
2022 BUSINESS HIGHLIGHTS
Highlights of our achievements for 2022, include:
FINANCIAL
Total Revenues Achieved a record$4.5 billion in total revenues, a 7% year-over-year, with home sales revenues seeing a 9% year-over year | |
$525 million | Net Income Achieved a recordnet income of $525 million, a 5% year-over-year, or a record$15.92 per diluted share, a 10% year-over-year |
$753 million | Adjusted EBITDA* Achieved a recordadjusted EBITDA of $753 million, a 3% year-over-year |
$0.20 share | Quarterly Cash Dividend Increased quarterly cash dividend to $0.20 per share in March 2022 from $0.15 per share, a 33% year-over-year |
OPERATIONAL
208 | Selling Communities Year-end selling communities of 208 increased 3% year-over-year |
10,594 | Home Deliveries Achieved home deliveries of 10,594, the second highest in our history |
96% | Spec Builds 96% of total home deliveries were spec builds compared to 86% of total deliveries in 2021 |
77% | Entry-Level Homes Approximately 77% of our home deliveries qualified for Federal Housing Administration-insured (“FHA”) mortgages compared to approximately 75% in 2021 |
STRATEGIC
Properly Incentivized Homes with Near-Term Completions to Turn Inventories As the homebuilding industry started to slow in the latter half of 2022, we prioritized our sales efforts on properly incentivizing homes with near-term completions to turn inventories and generated $382 million of net operating cash flow in the fourth quarter | |
Reduced Controlled Lot Inventory and Land Spend Commitments Used low-risk, land-light business strategy to reduce our land pipeline by a total of 27,000 lots and acquisition commitments by over $650 million for a minimal cost of approximately $12 million | |
Continued Focus on Entry Level and Move-in-Ready/Spec Home Construction Our focus on spec homes allowed us to more easily monetize land, produce homes more efficiently and turn inventories more quickly, while allowing buyers to purchase quick-move-in homes and lock in mortgage rates |
HIGHLIGHTS
*See Annex I for a reconciliation of non-GAAP financial measures to most comparable measures under U.S. GAAP. |
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CORPORATE GOVERNANCE HIGHLIGHTS
Two-thirds of directors are independent | Annual say-on-pay vote | ||
Annual election of all directors | |||
Officer and director stock ownership requirements | |||
Majority vote standard for uncontested director elections, with a director resignation policy | Hedging, pledging, and stock option repricing prohibitions | ||
Double trigger change in control arrangements | |||
Independent presiding director | Robust clawback policy | ||
Board oversight of ESG policies | No poison pill | ||
Robust Board and | Single class of stock |
STOCKHOLDER ENGAGEMENT
We are committed to a robust and proactive stockholder engagement program. The Board of Directors values the perspectives of our stockholders, and feedback from stockholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for Board discussions throughout the year.
During 2019,2022, our executives held more than 200approximately 175 meetings with stockholders, including 9all of our top 10 stockholders that are actively managed funds. Stockholder feedback is thoughtfully considered and has led to modifications in our executive compensation program, governance practices and disclosures. Some of the actions we have taken in response to feedback over the last several years are described below.
BOARD ENGAGEMENT
The Board of Directors maintains a process for stockholders and interested parties to communicate with the Board. Stockholders and interested parties may contact the Board of Directors as provided below:
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| We added Patricia L. Arvielo to the Board of Directors in the beginning of 2021 and have committed to including female candidates in our initial list of director candidates in future searches. | ||
Increase Board racial/ethnic diversity. | We considered racial/ethnic diversity in our 2021 search for a new director and have committed to including racially/ethnically diverse candidates in our initial list of director candidates in future searches. Patricia L. Arvielo is a first-generation Latina. | ||
Align the interest of directors and executive officers with those of stockholders. |
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Century Communities, Inc. – |
What We Did: | |
Emphasize long-term incentives. | Our long-term incentive (LTI) program provides for significant LTI opportunities for our executives, which for 2022 constituted 53% of our Co-Chief Executive Officer (Co-CEOs) target total direct compensation and 47% for our Chief Financial Officer (CFO), and comprised of 100% performance share unit (PSU) awards, which have a three-year performance period and then a one-year holding period on the shares issued in settlement thereof. |
Emphasize performance-based compensation elements. | 89% of our Co-CEO target compensation and 85% of our CFO target compensation for 2022 is performance-based compensation. |
Increase disclosure on corporate governance and executive compensation. | Each year, we have increased and improved our corporate governance and executive compensation disclosures, with an eye towards transparency and readability. |
Ensure the recovery of incentive compensation based on incorrect calculations that resulted in a financial restatement. | We adopted a robust clawback policy covering cash and equity incentive compensation applicable to current and former executives. |
BOARD COMPOSITION AND KEY QUALIFICATIONS
The following describes the current diversity, age and tenure of our Board of Directors understands the importance of adding diverse, experienced talent to the Board in order to establish an array of experience and strategic views. The Nominating and Corporate Governance Committee is committed to refreshment efforts to ensure that the composition of the Board and each of its committees encompasses a wide range of perspectives and knowledge. Additionally, though the Board currently has no female directors, the Board and Nominating and Corporate Governance Committee have formally committed to add at least one female director to the Board before or at Century’s 2021 Annual Meeting of Stockholders.Directors:
Below are the directors nominated for election by stockholders at the Annual Meeting for a one-year term. The Board recommends a vote “FOR” each of these nominees.
All director nominees listed below served during the fiscal year ended December 31, 2019, and attended at least 90% of the sum of all Board meetings and committee meetings, as applicable, with all but one director attending 100% of such meetings.
Director | Age | Serving Since | Independent | Committees | Other Public Boards |
Dale Francescon(1) | 67 | 2013 | No(2) | N/A | 0 |
Robert J. Francescon | 62 | 2013 | No(2) | N/A | 0 |
John P. Box | 73 | 2014 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
Keith R. Guericke(1) | 71 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 1 |
James M. Lippman | 62 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
Century Communities, Inc. – |
The Board of Directors has an Audit Committee, Compensation Committee, and a Nominating and Corporate Governance Committee. Below are our directors, their committee memberships, and their 2019 attendance rates for Board and committee meetings.
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The following are some of the key qualifications, skills, and experiences of our Board.Board of Directors:
Director | CEO/Senior Officer Experience | Financial/ Finance Experience | Industry Experience | Sales/ Marketing Experience | Corporate Governance | ESG Experience |
Dale Francescon | ● | ● | ● | ● | ● | ● |
Robert J. Francescon | ● | ● | ● | ● | ● | ● |
Patricia L. Arvielo | ● | ● | ● | ● | ||
John P. Box | ● | ● | ● | ● | ● | |
Keith R. Guericke | ● | ● | ● | ● | ● | |
James M. Lippman | ● | ● | ● | ● | ● |
The lack of a mark for a particular item does not mean that the director does not possess that qualification, characteristic, skill, or experience. We look to each director to be knowledgeable in these areas; however, the mark indicates that the item is a particularly prominent qualification, characteristic, skill, or experience that the director brings to the Board.
BOARD NOMINEES
Below are the directors nominated for election by stockholders at the Annual Meeting for a one-year term. The Board of Directors recommends a vote “FOR” each of these nominees.
Director | Age | Serving Since | Independent | Committees | Other Public Boards |
Dale Francescon(1) | 70 | 2013 | No(2) | N/A | 0 |
Robert J. Francescon | 65 | 2013 | No(2) | N/A | 0 |
Patricia L. Arvielo | 58 | 2021 | Yes | Audit, Compensation, Nominating and Corporate Governance | 1 |
John P. Box | 76 | 2014 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
Keith R. Guericke(1) | 74 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 1 |
James M. Lippman | 65 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
(1) | Dale Francescon serves as Chairman of the Board of Directors. Because the Board endorses the concept of an independent, non-employee director being in a position of leadership, Keith R. Guericke serves as the presiding independent director. |
(2) | Dale Francescon and Robert J. Francescon are not independent because they also serve as Century’s Co-Chief Executive Officers. |
Century Communities, Inc. – |
Our executive compensation program is generally designed to attract, retain, motivate, and reward highly qualified and talented executive officers that will enable us to drive long-term stockholder value.
The core principles of our executive compensation program include:EXECUTIVE COMPENSATION BEST PRACTICES
Our compensation practices include many best practices that support our executive compensation objectives and principles and benefit our stockholders.
What We Do | What We Don’t Do | |||
Structure our executive officer compensation so | No guaranteed salary increases | |||
Emphasize long-term performance in our equity-based incentive awards | No | |||
Use a mix of performance measures and caps on payouts | No | |||
Require minimum vesting periods on equity awards | No | |||
Require a double-trigger for equity acceleration upon a change of control | No excise or other tax gross-ups | |||
Have robust stock ownership guidelines and | ||||
No short sales or derivative transactions in Century stock, including hedges | ||||
Maintain a robust clawback policy | No pledging of Century securities | |||
Hold an annual say-on-pay vote | No |
2022 EXECUTIVE COMPENSATION ACTIONS
OurFor 2022, our only named executive compensation program consists of the following principal elements:
2019officers were our Co-Chief Executive Officers and Chief Financial Officer. 2022 compensation actions and incentive plan outcomes based on performance are summarized below:
Pay Element | |
Base Salary | ● Our Co-CEOs received
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Short-Term Incentive | ● The threshold, target and maximum short-term incentive award opportunities ● Performance metrics were revenue ● |
Long-Term Incentives | ● The ● Our
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Century Communities, Inc. – 2023 Proxy Statement | 12 |
Pay Element | 2022 Actions |
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Other Compensation Related Actions | ● |
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ELIMINATE OR LIMIT THE PERSONAL LIABILITY OF OFFICERS
The State of Delaware, which is Century’s state of incorporation, recently amended Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”) to permit a corporation to eliminate or limit the personal liability of certain officers to the corporation or its stockholders for breaches of the fiduciary duty of care as an officer in certain limited circumstances. We sometimes refer to this elimination or limitation of personal liability as “exculpation” in this proxy statement. Prior to amended DGCL Section 102(b)(7), Delaware law authorized such exculpation for directors but not for officers. As with directors, the exculpation protection does not apply to an officer’s breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Unlike director exculpation, however, the protection for officers only permits officer exculpation for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate an officer’s monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation. To gain the added protection for officers, Century must amend its Certificate of Incorporation, as amended (“Certificate of Incorporation”), to add an officer exculpation provision.
The Board of Directors believes it is important to provide not only its directors but also its officers protection from certain liabilities and expenses that may discourage prospective or current officers from serving as officers of Century. Accordingly, on February 8, 2023, the Board of Directors, upon recommendation of the Nominating and Corporate Governance Committee, approved, subject to stockholder approval, a proposed amendment to our Certificate of Incorporation to eliminate or limit the personal liability of Century’s officers to the extent permitted by recent amendments to Delaware law.
The Board of Directors recommends a vote “FOR” the proposal to approve an amendment to our Certificate of Incorporation to eliminate or limit the personal liability of officers to the extent permitted by recent amendments to Delaware law.
2024 ANNUAL MEETING OF STOCKHOLDERS
We anticipate that our 2024 Annual Meeting of Stockholders will be held on Wednesday, May 8, 2024. The following are important dates in connection with our 2024 Annual Meeting of Stockholders.
Stockholder Action | Submission Deadline |
Proposal Pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 | No later than November 23, 2023 |
Nomination of a Candidate Pursuant to our Bylaws | Between January 4, 2024 and February 3, 2024 |
Proposal of Other Business for Consideration Pursuant to our Bylaws | Between January 4, 2024 and February 3, 2024 |
Century Communities, Inc. – |
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Although stockholder ratification is not required, the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal 2020 is being submitted for ratification at the Annual Meeting because the Board believes doing so is a good corporate governance practice. The Board recommends a vote “FOR” the ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm.
OUR COMMITMENT TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRINCIPLES
The
ESG Approach AND MISSION
Century’s Board and management are committed to building environmental sustainability, social responsibility and effective corporate governance into all aspects ofthroughout our business. Our approach to corporate sustainabilityESG reporting is centered on the industry-specific reporting standards as advised by the Sustainability Accounting Standards Board (SASB). These standards were launched in November 2018 and were created based on financially material ESG factors SASB has deemed most relevant to investors. SASB reporting is also aligned with the U.N. Sustainable Development Goals and our commitment to achieving a more sustainable future.Task Force on Climate-related Financial Disclosures (TCFD) Recommendations.
Our mission is to create thriving, enduring neighborhoods by building new homes with lasting livability. We believe our commitment to pursuing environmental, social and governance (ESG) initiatives can be achieved in parallel with buildingand in furtherance of the interests of our homeowners as well as the long-term interests of our stockholders. The integration of sustainable business practices creates lasting results that benefit all our stakeholders, including our customers, employees, stockholders, investors, and the communities in which we live and operate.
esg INITIATIVES
As a leading, top-10 national home builder, we believe we can play an important role in building a sustainable future for our employees, our homeowners, our environment and the communities in which we live and build while we operate in an ethical, environmentally and socially responsible manner. Specific to our industry, we are focused on the following opportunities related to climate change, sustainability and social responsibility:
Building sustainable homes that allow homeowners to reduce their carbon footprint by utilizing smart home technology to reduce energy consumption and conserve water; | |
Seeking to understand not only the carbon footprint of the homes that we build, but also their embodied carbon footprint – the climate impact associated with the materials that go into our homes; | |
Analyzing product-specific manufacturer embodied carbon data, developing a green building material procurement strategy, and exploring opportunities to pursue additional green building certifications; | |
Completing a GHG inventory to better contextualize the trend in our environmental impact over time and evaluate our efforts to date in incorporating efficient and waste reducing practices into our homebuilding operations; | |
Seeking opportunities to strengthen our rigorous environmental due diligence criteria through the development of a holistic biodiversity conservation and responsible land use policy; |
Century Communities, Inc. – 2023 Proxy Statement | 14 |
Offering sustainable, affordably priced homes to homebuyers; | |
Helping create happy, healthy communities in part by educating homebuyers, employees, business partners and other stakeholders on environmentally sustainable practices; | |
Giving back to the communities in which we operate; in 2021 the Company established the Century Communities Foundation to support our local teams at the corporate level with their initiatives and to make contributions at a more national level; | |
Complying with all relevant and applicable local, state and federal environmental laws, policies and regulations; | |
Maintaining work environments conducive to the health and safety of our employees, our trade partners, the public and our valued | |
Creating a culture that fosters diversity, inclusivity, dignity and respect with equal employment opportunity hiring practices and policies with competitive compensation and benefit |
OurDemonstrating our emphasis on environmental emphasis is such thatimpact reduction, historically over 50%85% of the homes we build meetbuilt were certified for meeting or exceedexceeding the enhanced standards established by the Federal government pursuant to the Energy Efficient Home Tax Credit.
Specific examples of environmentally sensitive products that we incorporate into many of our homes include:
EnergyStar® appliances; | |
EnergyStar® Certified smart thermostats; | |
100% low Volatile Organic Compound (VOC) paints; | |
Low-E windows that reduce the demand on HVAC systems as well as energy-efficient HVAC units with whole home air purification systems; | |
Efficient LED lighting; | |
Reduced water flow plumbing systems that do not compromise performance; and | |
esg COMMITMENTS
ENVIRONMENTAL SUSTAINABILITY:COMMITMENTS:We are committed to operating in an environmentally responsible manner to reduce our impact on climate change, conserve natural resources and operate in compliance with environmental regulations.
SOCIAL RESPONSIBILITY: COMMITMENTS:We are committed to being a socially responsible employer by fostering an environment of diversity and inclusion across our business, with a focus on empowering women and minorities, operating ethically and supporting our local communities.
CORPORATE GOVERNANCE:GOVERNANCE COMMITMENTS:We are committed to building a culture dedicated to ethical business behavior and responsible corporate activity. This extends to our business partners’ vendor agreements which share our commitment to employee health & safety, human rights, and environmental stewardship. We believe strong corporate governance through Board and management teams that are engaged on ESG topics is the foundation to delivering on our commitments.
Century Communities, Inc. – 2023 Proxy Statement | 15 |
For more information on
esg DISCLOSURES
The Board of Directors believes environmental stewardship and social responsibility are important elements in driving long-term, organizational success. Century’s ESG initiatives and disclosures to the market include our inaugural ESG policies, please seeSustainability Report and ESG & Sustainability Report Supplemental Data published in 2021, which we intend to update later this year, the “Investors-Corporate Social Responsibility”ESG Policy Statement, the Human Rights Policy Statement, our Commitment to Training and Professional Development, the Labor Rights Policy, our Commitment to Diversity and Inclusion and our Vendor Code of Conduct, as well as the “Investors-ESG” section atof our website located at www.centurycommunities.com.
2021 ANNUAL MEETING OF STOCKHOLDERS
Date of 2021 Annual Meeting of Stockholders
We anticipate that In our 2021 Annual Meeting of Stockholdersreport, we published our first corporate greenhouse gas (GHG) emissions inventory for 2020 and, in our 2023 report, we will be held on Wednesday, May 5, 2021.
Important Datesprovide the results for Stockholder Submissions
The following are important dates in connection with ourboth 2021 Annual Meeting of Stockholders.and 2019.
INFORMATION ABOUT THE ANNUAL MEETING
The Board of Directors of Century Communities, Inc. is using this proxy statement to solicit your proxy for use at our 2020 Annual Meeting of Stockholders. The Board is soliciting proxies to give all stockholders of record an opportunity to vote on matters properly presented at the Annual Meeting.
We have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending an Important Notice of Availability of Proxy Materials for the Annual Meeting (which we refer to as the “Internet Notice”) to most of our stockholders of record and paper or electronic copies of the proxy materials to our remaining stockholders of record. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice. All stockholders may request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Internet Notice and on the website referred to in the Internet Notice, including an option to request paper copies on an ongoing basis. We will mail this proxy statement and our 2019 Annual Report, together with a proxy card, to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of such request.
When and where will the Annual Meeting be held?
The Annual Meeting will be held on Wednesday, May 6, 2020, at 1:00 p.m. local time, at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237.
As part of our precautions regarding the coronavirus or COVID-19, we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be available at https://www.centurycommunities.com/proxy.
Directions to attend the Annual Meeting may be obtained by calling Investor Relations at (303) 268-8398.
WhAT ARE THE PURPOSES OF THE Annual Meeting?
The purposes of the Annual Meeting are to vote on the following items described in this proxy statement:
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There are no rights of appraisal or similar rights of dissenters arising from matters to be acted on at the meeting.
are there any matters to be voted on at the annual meeting that are not included in this proxy statement?
We currently are not aware of any business that will be presented at the Annual Meeting other than as described in this proxy statement. If, however, any other matter is properly brought at the Annual Meeting, or any continuation, postponement, or adjournment thereof, your proxy includes discretionary authority on the part of the individuals appointed to vote your shares or act on those matters in accordance with their best judgment.
WhO CAN ATTEND the Annual Meeting?
All of our stockholders entitled to vote at the Annual Meeting may attend the Annual Meeting. If your shares are held in street name, however, you may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from the record holder of your shares.
Stockholders who wish to attend the Annual Meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will be required to present a valid, government-issued picture identification, such as a driver’s license or passport, to gain admittance to the Annual Meeting. No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting.
WhO IS ENTITLED TO VOTE AT the Annual Meeting?
Holders of record of shares of our common stock, $0.01 par value, as of the close of business on March 13, 2020, the record date, will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement, or adjournment thereof. At the close of business on the record date, there were 33,312,442 shares of our common stock issued and outstanding and entitled to vote. Each share of our common stock is entitled to one vote on any matter presented to stockholders at the Annual Meeting.
hOW MANY SHARES MUST BE PRESENT?
A quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, in person or by proxy, of the holders of a majority in voting power of our capital stock issued and outstanding and entitled to vote on the record date will constitute a quorum. Your shares will be counted toward the quorum if you submit a proxy or vote at the Annual Meeting. Shares represented by proxies marked “abstain” and “broker non-votes” also are counted in determining whether a quorum is present.
WhAT IF A QUORUM IS NOT PRESENT?
If a quorum is not present or represented at the scheduled time of the Annual Meeting, (i) the chairperson of the Annual Meeting or (ii) a majority in voting power of the stockholders entitled to vote at the Annual Meeting, present in person or represented by proxy, may adjourn the Annual Meeting until a quorum is present or represented.
hOW DO I VOTE?
We recommend that stockholders vote by proxy even if they plan to attend the Annual Meeting and vote in person.
If you are a stockholder of record, there are three ways to vote by proxy:
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Daylight Savings Time, on May 5, 2020. If you vote through the Internet, you should be aware that you may incur costs to access the Internet, such as usage charges from telephone companies or Internet service providers, and that these costs must be borne by you.
If your shares are held in the name of a bank, broker, or other holder of record, you will receive instructions on how to vote from the bank, broker, or holder of record. You must follow the instructions of such bank, broker, or holder of record in order for your shares to be voted. Telephone and Internet voting also may be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you would like to vote your shares in person at the Annual Meeting, you should contact your bank, broker, or agent to obtain a legal proxy or the bank’s or broker’s proxy card and bring it to the Annual Meeting in order to vote.
WhAT IS THE DIFFERENCE BETWEEN BEING A “RECORD HOLDER” AND HOLDING SHARES IN “STREET NAME”?
A record holder holds shares in his or her name. Shares held in “street name” are held in the name of a bank or broker on a person’s behalf.
CAN i VOTE IF MY SHARES ARE HELD IN “STREET NAME”?
Yes. If your shares are held by a bank or a brokerage firm, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials are being forwarded to you by your bank or brokerage firm along with a voting instruction card. As the beneficial owner, you have the right to direct your bank or brokerage firm how to vote your shares, and your bank or brokerage firm is required to vote your shares in accordance with your instructions.
WhAT ARE BROKER NON-VOTES?
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting power to vote those shares.
A broker is entitled to vote shares held for a beneficial owner on routine matters. The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm in Proposal No. 2 is a routine matter; and accordingly, a broker is entitled to vote shares held for a beneficial owner on that proposal without instructions from such beneficial owner. On the other hand, absent instructions from a beneficial owner, a broker is not entitled to vote shares held for such beneficial owner on non-routine matters. We believe, based on the rules of the New York Stock Exchange (NYSE), that the election of directors in Proposal No. 1 and the advisory vote on executive compensation in Proposal No. 3 are non-routine matters; and accordingly, brokers do not have authority to vote on such matters absent instructions from beneficial owners. Whether a voting proposal is ultimately determined routine or non-routine is determined by the NYSE. Accordingly, if beneficial owners desire not to have their shares voted by a broker in a certain manner, they should give instructions to their brokers as to how to vote their shares.
Broker non-votes count for purposes of determining whether a quorum is present.
The Board recommends that you vote:
If you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of common stock will be voted on your behalf as you direct. If not otherwise specified, the shares of common stock represented by the proxies will be voted in accordance with the Board’s recommendations.
WHAT IS THE REQUIRED VOTE FOR EACH PROPOSAL?
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WhAT IF I DON’T SPECIFY HOW MY SHARES ARE TO BE VOTED?
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board, as described above.
WhAT DOES IT MEAN IF I RECEIVE MORE THAN ONE INTERNET NOTICE OR SET OF PROXY MATERIALS?
It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Internet Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating, and returning the enclosed proxy card in the enclosed envelope.
CAN I REVOKE OR CHANGE MY VOTE?
Yes. If you are a registered stockholder, you may revoke your proxy or change your vote at any time before your shares are voted by one of the following methods:
Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to:
Century Communities, Inc.
8390 East Crescent Parkway, Suite 650
Greenwood Village, Colorado 80111
Attention: Corporate Secretary
Your most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote in person at the Annual Meeting.
If your shares are held in street name, you may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you may vote in person at the Annual Meeting by obtaining a legal proxy from your bank or broker and submitting the legal proxy along with your ballot.
Who will count the votes?
Broadridge Financial Solutions, Inc. has been engaged to tabulate stockholder votes. An agent of Broadridge Financial Solutions, Inc. will act as our independent inspector of elections for the Annual Meeting.
WheRE CAN I FIND THE VOTING RESULTS?
We plan to announce preliminary voting results at the Annual Meeting and will report the final results in a Current Report on Form 8-K, which we intend to file with the Securities and Exchange Commission (SEC) within four business days after the Annual Meeting.
CAN I GET A PRINTED COPY OF THE PROXY MATERIALS?
Yes. We will mail this proxy statement and our 2019 Annual Report, together with a proxy card, to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of our receipt of such request.
CORPORATE GOVERNANCE
Governance best PRACTICES |
We have adoptedmaintain several corporate governance best practices.practices, which are designed to promote actions that benefit our stockholders and create a framework for our decision-making.
Annual election of all directors | ||||
Majority vote standard for uncontested director elections, with a director resignation policy | ||||
Two-thirds of our directors are independent | Four of the six directors on our Board are independent. | |||
Annual Board and committee evaluations | It is our policy to conduct annual Board and committees performance self-evaluations. | |||
Overboarding policy | We limit the number of public company boards on which our directors may serve. | |||
No poison pill | We believe that not having a poison pill benefits our stockholders by not discouraging takeover attempts that may increase value for our stockholders. | |||
Board oversight of ESG initiatives | While the Nominating and Corporate Governance Committee has been delegated oversight authority of our ESG initiatives, the Audit Committee is responsible for climate-related and sustainability risks. | |||
Robust stockholder outreach program | ||||
Annual say-on-pay vote | Our Board recommended, and our stockholders voted in favor of, an annual advisory stockholder vote on executive compensation. | |||
Officer and director stock ownership requirements | ||||
Hedging and pledging prohibitions | ||||
Require a double trigger for cash severance and accelerated vesting of equity upon a change in control | The double trigger feature incentivizes executives to accept or continue employment with Century in the event of a change in control event. | |||
Robust clawback policy | We maintain a robust clawback policy pursuant to which we may recover cash and equity incentive compensation | |||
Single class of stock | We have a single class of stock, so our stockholders all have equal voting rights. |
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CORPORATE GOVERNANCE GUIDELINES
The Board has adopted Corporate Governance Guidelines covering, among other things, the duties and responsibilities of, and independence standards applicable to, our directors and Board committee structures and responsibilities. Among the topics addressed in our Corporate Governance Guidelines are:
● Role of directors ● Selection of the Chairman of the Board ● Selection of new directors ● Director qualifications ● Care and avoidance of conflicts ● Confidentiality ● ● Director independence ● Directors who change their present job responsibility ● Retirement and resignation policy ● Director tenure ● Board compensation ● Separate sessions of independent directors ● Board and Board committee self-evaluations ● Strategic direction of the Company ● Board access to management ● Director resignation policy | ● Board materials ● Board interaction with institutional investors, analysts, press, and customers ● Board orientation and continuing education ● Director attendance ● Frequency of meetings ● Selection of agenda items for Board meetings ● Number and names of Board committees ● Independence of Board committees ● Assignment and rotation of committee members ● Evaluation of executive officers ● Succession planning ● Management development ● Risk management ● Prohibited loans ● Communications with directors |
From time to time, the Board, upon recommendation of the Nominating and Corporate Governance Committee, reviews and updates the Corporate Governance Guidelines as it deems necessary and appropriate. The Corporate Governance Guidelines are available in the “Discover Century—Investors—Corporate Governance—Governance Documents” section of the Company’s website located at www.centurycommunities.com.
Director Independence
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Under the listing standards and rules of the NYSE,New York Stock Exchange (NYSE), independent directors must comprise a majority of a listed company’s board of directors. In addition, NYSE rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. Audit committee members must also satisfy heightened independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, and compensation committee members must satisfy heightened independence criteria set forth in the NYSE rules. Under the NYSE rules, a director will only qualify as an “independent director” if the company’s board of directors affirmatively determines that the director has no material relationship with the company, either directly or indirectly, that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
NYSE rules also require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. Audit committee members must also satisfy heightened independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934 (Exchange Act), and compensation committee members must satisfy heightened independence criteria set forth in the NYSE rules.
Century Communities, Inc. – 2023 Proxy Statement | 18 |
The Board has undertaken a review of its composition, the composition of its Board committees, and the independence of each director. Based upon information requested from and provided by each of our directors concerning his or her background, employment, and affiliations, including family relationships with us, our senior management, and our independent registered public accounting firm, the Board has determined that all but two of our directors, Dale Francescon and Robert J. Francescon, are independent directors under the standards established by the SECSecurities and Exchange Commission (SEC) and the NYSE. In making this determination, the Board considered the current and prior relationships that each non-employee director has with Century and all other facts and circumstances the Board deemed relevant in determining their independence.
Overboarding policy
Recognizing the substantial time commitments attendant to directorship, our Corporate Governance Guidelines provide for an overboarding policy which limits the number of public company boards on which our directors may serve. The overboarding limit depends upon whether a director is an executive officer of a public company. In addition, service on other boards and/or committees must be consistent with our conflict of interest policy.
| Overboarding Limit |
Board Member who is an Executive Officer of a Public Company | 2 |
Board Member who is not an Executive Officer of a Public Company | 4 |
Board Leadership Structure
Our Corporate Governance Guidelines provide that the Board does not require the separation of the offices of the Chairman of the Board and the Chief Executive Officers, and that the Board is free to choose its Chairman of the Board in any way that it deems best for the Company at any given point in time. Dale Francescon serves as Chairman of the Board and Co-Chief Executive Officer, and Robert J. Francescon serves as Co-Chief Executive Officer and President.Officer. However, the Board endorses the concept of an independent director being in a position of leadership and, thus, as mentioned above, Keith R. Guericke serves as our presiding independent director.
The Board has determined that this current leadership structure is appropriate and in the best interests of the Company and its stockholders at this time for several reasons, including: (i) Both Dale Francescon’s and Robert J. Francescon’s extensive knowledge of our Company, business, and industry, obtained through over 15nearly 20 years of service to our Company and over 2530 years of experience in the homebuilding industry, which benefit Board leadership and the Board’s decision-making process through their active roles as Co-Chief Executive Officers, and in the case of Dale Francescon, Chairman of the Board; (ii) unification of Board leadership and strategic direction as implemented by our management; and (iii) appropriate balance of risks relating to concentration of authority through the oversight of our independent and engaged presiding independent director and Board.
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Executive Sessions
Our non-management independent directors have the opportunity to meet in executive sessions without management to consider such matters as they deem appropriate, such as reviewing the performance of management. Executive sessions of our independent directors are typically held in conjunction with regularly scheduled Board and committee meetings.
Our independent directors have appointed an independent director (referred to as the “presiding director”) to preside over the executive sessions of the independent directors. Keith R. Guericke serves as our presiding director. The main duties of the presiding director are to (i) preside at regularly scheduled executive sessions or other meetings of the independent directors; (ii) serve as liaison between the Chairman of the Board and the Co-Chief Executive Officers, on the one hand, and the independent directors, on the other hand, by means of consulting with the Chairman of the Board and the Co-Chief Executive Officers as to agenda items for Board and committee meetings and advising them of the outcome of such meetings, as necessary; and (iii) coordinate with Board committee chairs in the development and recommendations of Board and Board committee meeting agendas.
Committees of the Board of Directors
Keith R. Guericke serves as our presiding director.
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We currently have three standing committees of the Board: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The Board may establish other Board committees as it deems necessary or appropriate from time to time.
Each Board committee charter authorizes the committee to retain independent advisors as it deems necessary to carry out its responsibilities. Each Board committee reviews and evaluates, at least annually, the performance of the committee, including compliance with its charter.
Below are our directors their committee memberships and their 2019 attendance rates for Board andcurrent committee meetings.memberships.
Director | Board | Audit | Compensation | Nominating and Corporate Governance |
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Dale Francescon | ● | ||||
Robert J. Francescon | ● | ||||
Patricia L. Arvielo | ● | ● | ● | ● | |
John P. Box | ● | ● | ● |
Chair | |
Keith R. Guericke | ● |
Chair | ● | ● | |
James M. Lippman | ● | ● |
Chair | ● |
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The
Audit Committee is comprised of our three independent directors, John P. Box, Keith R. Guericke, and James M. Lippman, each of whom the Board has determined is “financially literate” under the rules of the NYSE and satisfies the heightened independence criteria for audit committee members set forth in Rule 10A-3 under the Securities Exchange Act of 1934 (Exchange Act). Mr. Guericke serves as Chair of the Audit Committee. Mr. Guericke has been designated by the Board as our “audit committee financial expert,” as that term is defined in the rules of the SEC.
The Audit Committee, pursuant to its written charter, among other matters, oversees
Key Responsibilities and Activities ● Oversees (i) our financial reporting, auditing, and internal control activities; (ii) the integrity and audits of our financial statements; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditors; (v)
our internal audit function and independent auditors; and (vi) our overall risk exposure and management;
oversees financial reporting activities;
Compensation Committee
compensation;
arrangements;
backgrounds, including female and racially/ethnically diverse candidates;
vacancies;
monitors evolving corporate governance best practices and trends for consideration and incorporation into our governing documents, policies, and procedures;
Board and Board Committee Meetings; Attendance The Board held 2022. We expect all of our directors to attend our annual meeting of stockholders, and we customarily schedule a regular Board meeting on the same day as our annual meeting. All directors serving at the time of our
The Board seeks to ensure that the Board is composed of members whose particular expertise, experience, qualifications, attributes, and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively. New directors are approved by the Board after recommendation by the Nominating and Corporate Governance Committee. In identifying candidates for director, the Nominating and Corporate Governance Committee and the Board take into account the following:
As provided in its charter, the Nominating and Corporate Governance Committee is committed to including in its initial list of director candidates female and racially/ethnically diverse candidates and will require any third-party search consultants to include in their initial list of director candidates female and racially/ethnically diverse candidates. When considering whether directors and nominees have the expertise, experience, qualifications, attributes, and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Nominating and Corporate Governance Committee and the Board The Nominating and Corporate Governance Committee will consider director candidates recommended to it by our stockholders. Those candidates must be qualified and exhibit the experience and expertise required of the Board’s own pool of candidates, as well as have an interest in our business, and demonstrate the ability to attend and prepare for Board, committee, and stockholder meetings. Any candidate must state in advance his or her willingness and interest in serving on the Board. Candidates should represent the interests of all stockholders and not those of a special interest group. The Nominating and Corporate Governance Committee will evaluate candidates recommended by stockholders using the same criteria it uses to evaluate candidates recommended by others as described above. A stockholder that desires to nominate a person for election to the Board at a meeting of stockholders must follow the specified advance notice requirements contained in, and provide the specific information required by, our Bylaws, as described under “Other Matters—Stockholder Proposals and Director Nominations for
BOARD REFRESHMENT AND BOARD DIVERSITY The Board of Directors, The Board understands the importance of adding diverse, experienced talent to the Board in order to establish an array of experience and strategic views. In 2021, Board added a female first-generation Latina director when Patricia L. Arvielo was appointed. The Nominating and Corporate Governance Committee
MANAGEMENT SUCCESSION PLAnning and development The Board of Directors recognizes that one of its most important responsibilities is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of our Co-Chief Executive Officers and the other members of our management team. This responsibility is reflected in the Company’s Corporate Governance Guidelines, which provide for a review of CEO succession planning and management development, and the charter of the Compensation Committee, which requires the Compensation Committee to assist the Board in developing and evaluating potential candidates for executive officer positions and overseeing the development of executive succession plans, which includes transitional leadership in the event of an unplanned vacancy. In furtherance of the foregoing, the Co-Chief Executive Officers provide an annual succession planning report to the Compensation Committee, which summarizes the overall composition of our senior leadership team, including their professional qualifications, tenure, and work experience. The report also identifies internal members of the management team who are viewed as potential successors to the Co-Chief Executive Officers. Succession planning is also regularly discussed in executive sessions of the Board of Directors. Our directors become familiar with internal potential successors for key leadership positions through various means, including the annual succession planning report and Board of Directors and committee meetings, and less formal interactions throughout the course of the year. ANNUAL BOARD AND COMMITTEE SELF-EVALUATIONS The Board recognizes that a thorough evaluation process is an important element of corporate governance and enhances the effectiveness of the full Board and each committee. Therefore, it is our policy to conduct annual Board and committee self-evaluations. Each year, the Nominating and Corporate Governance Committee oversees the evaluation process to ensure that the full Board and each committee conduct an assessment of their performance and solicit feedback for areas of improvement. Evaluations include a variety of survey questions to which directors assign a score. Additional feedback from directors is sought as well. The evaluation results are then aggregated and shared with and discussed by the full Board and each committee. board Oversight OF BUSINESS STRATEGY The Board of Directors oversees our strategic direction and business activities. Throughout the year, the Board and management discuss our short and long-term business strategy. As part of our long-term strategy, management typically formulates three-year financial targets against which performance is reviewed by the Board. With respect to our short-term strategy, at the beginning of each year, our management presents to the Board
board role in Risk Oversight
Risk is inherent with every business. We face a number of risks, including financial (accounting, credit, interest rate, liquidity, and tax), operational, political, strategic, regulatory, compliance, legal, cybersecurity, competitive, and reputational risks. Our management is responsible for the day-to-day management of risks faced by us, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board ensures that the risk management processes designed and implemented by management are adequate and functioning as designed. The Board oversees risks through the establishment of policies and procedures that are designed to guide daily operations in a manner consistent with applicable laws, regulations, and risks acceptable to us. Our Co-Chief Executive Officers are members of the Board and regularly attend Board meetings and discuss with the Board the strategies and risks facing our Company. One of the key functions of the Board is informed oversight of our risk management process. The Board administers this oversight function directly, with support from its three standing committees (the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee), each of which addresses risks specific to its respective areas of oversight. In addition, with respect to other risks that arise from time to time, the Board oversees those as well.
board role in cybersecurity risk Oversight Information security is the responsibility of our Information Security team, overseen by our Chief Information Security Officer. We leverage the National Institute of Standards and Technology (NIST) Cybersecurity Framework to measure our security posture, deliver risk management and provide effective security controls. Our information security practices include development, implementation, and improvement of policies and procedures to safeguard information and ensure availability of critical data and systems. Our Information Security team conducts annual information security awareness training for employees involved in our systems and processes that handle customer data and audits of our systems and enhanced training for specialized personnel. Our program further includes review and assessment by external, independent third-parties, who assess and report on our internal incident response preparedness and help identify areas for continued focus and improvement. As set forth in its charter, our Audit Committee, comprised fully of independent directors, is responsible for oversight of risk, including cybersecurity and information security risk. At least semi-annually, the Audit Committee is responsible for reviewing and discussing with management our risk exposures related to our IT systems and data privacy. These management updates are designed to inform the Audit Committee of any potential risks related to our IT systems and data privacy, as well as any relevant mitigation or remediation tactics being implement. During 2022, the Audit Committee engaged a third party service provider to provide a seasoned CISO-level advisor to assist our technology teams and business leadership with strengthening our security systems and improve our cyber readiness, as well as on existing and emerging threat landscapes.
In addition to managing our internal information security risk programs, we maintain cyber risk insurance as part of our risk mitigation efforts. Our insurance covers situations arising from, among other things, cyber related breaches and interruptions in the business continuity of our computing environment as well as certain coverage for under-insured third parties with whom we may be engaged. These policies are annually reviewed by industry underwriters at which time our security practices, programs, processes, and procedures are thoroughly disclosed, reviewed and evaluated for purposes of determining our insurability. We have not experienced any computer data security breaches in the past three years as a result of a compromise of our information systems. board role in ESG and Climate risk Oversight The Board
Code of Business Conduct and Ethics
The Board has adopted a Code of Business Conduct and Ethics that applies to our officers, directors, and employees. Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote the following:
Any waiver of our Code of Business Conduct and Ethics may be made only by the Nominating and Corporate Governance Committee and will be promptly disclosed as required by law and NYSE rules. We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K and applicable NYSE rules regarding amendments to or waivers from any provision of our Code of Business Conduct and Ethics by posting such information in the
Complaint Procedures
We maintain procedures to receive, retain, and treat complaints regarding accounting, internal accounting controls, or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. A 24-hour, toll-free, confidential ethics hotline and a confidential web-based reporting tool are available for the submission of concerns regarding these and other matters by any employee. Concerns and questions received through these methods relating to accounting, internal accounting controls, or auditing matters are promptly brought to the attention of the Chair of the Audit Committee and are handled in accordance with procedures established by the Audit Committee. Complete information regarding our complaint procedures is contained within our Code of Business Conduct and Ethics, which is described above and may be accessed on our website as noted above.
STOCKHOLDER ENGAGEMENT We are committed to a robust and proactive stockholder engagement program. The Board values the perspectives of our stockholders, and feedback from stockholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for Board discussions throughout the year. During Stockholder feedback is thoughtfully considered and has led to modifications in our executive compensation program, governance practices and disclosures. Some of the actions we have taken in response to feedback over the last several years
our directors and NEOs are in compliance with our stock ownership guidelines.
Communications with the Board of Directors The Board maintains a process for stockholders and interested parties to communicate with the Board. Stockholders and interested parties may contact our Board as provided below:
Management will initially receive and process communications before forwarding them to the addressee(s). We generally will not forward to the directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information about the Company. CommITTEE CHARTERS AND OTHER INFORMATION
The charters of all three of our standing Board committees, Corporate Governance Guidelines and Code of Business Conduct and Ethics are available in the
We have three executive officers: Dale Francescon, Robert J. Francescon, and David L. Messenger. Below is information regarding our executive officers as of March Century has been jointly led by our Co-Chief Executive Officers since our founding in 2002. The Board of Directors views this executive structure as optimal for our Company and not a temporary, transitional or duplicative arrangement. Our Co-Chief Executive Officers were the two founders of Century and share an aligned vision for the tone, direction and growth of the Company.
Board Size and Structure Our Bylaws provide that the Board of Directors shall consist of one or more members, with the number to be determined from time to time by the Board. The Board has fixed the number of directors at Each director holds office for a term of one year or until his or her successor is duly elected and qualified, subject to his or her earlier death, resignation, disqualification, or removal. Current Directors and Board Nominees The Board currently consists of the following
Based upon the recommendation of the Nominating and Corporate Governance Committee, the Board nominated each of our current
Each director elected at the Annual Meeting will serve a one-year term until Century’s next annual meeting of stockholders and until his or her successor is duly elected and qualified or until his or her earlier death, resignation, disqualification, or removal. Unless otherwise instructed, the proxy-holders will vote the proxies received by them for the If any nominee should become unavailable for election prior to the Annual Meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board. Each nominee has agreed to serve if elected, and the Board has no reason to believe that any nominee will be unable to serve. Information about Director Nominees Set forth below are the names, ages, and positions of our current directors and director nominees as of March
MAJORITY VOTE STANDARD AND RESIGNATION POLICY Our Bylaws provide for a majority vote standard for uncontested director elections. Director nominees will be elected by a majority of the votes cast. A “majority of the votes cast” means that the number of votes cast “for” a director nominee exceeds the number of votes cast “against” such director nominee, with “abstentions” and Pursuant to Board Recommendation The Board of Directors unanimously recommends that our stockholders vote “FOR” the election of Dale Francescon, Robert J. Francescon, Patricia L. Arvielo, John P. Box, Keith R. Guericke, and James M. Lippman to serve as members of the Board until the next annual meeting of stockholders and until their successors are duly elected and qualified.
PROPOSAL NO. 2: background The State of Delaware, which is Century’s state of incorporation, recently amended Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”) to permit a corporation to eliminate or limit the personal liability of certain officers to the corporation or its stockholders for breaches of the fiduciary duty of care as an officer in certain limited circumstances. We sometimes refer to this elimination or limitation of personal liability as “exculpation” in this proxy statement. Prior to amended DGCL Section 102(b)(7), Delaware law authorized such exculpation for directors but not for officers. As with directors, the exculpation protection does not apply to an officer’s breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Unlike director exculpation, however, the protection for officers under amended DGCL Section 102(b)(7) only permits officer exculpation for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate an officer’s monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation. To gain the added protection for officers, Century must amend its Certificate of Incorporation, as amended (“Certificate of Incorporation”), to add an officer exculpation provision. An exculpation provision is one of three tools, in addition to indemnification and directors’ and officers’ (D&O) liability insurance, that can be used by directors and officers to protect themselves from personal liability incurred as a result of serving as a director or officer of a corporation. In general, exculpation provisions seek to prevent liability attaching to directors or officers in the first instance, while indemnification and D&O insurance seek to compensate and hold directors and officers harmless when they have incurred liability or are faced with defending liability claims. The Board of Directors believes it is important to provide not only its directors but also its officers protection from certain liabilities and expenses that may discourage prospective or current officers from serving as officers of Century. Accordingly, on February 8, 2023, the Board of Directors, upon recommendation of the Nominating and Corporate Governance Committee, approved, subject to stockholder approval, a proposed amendment to our Certificate of Incorporation to eliminate or limit the personal liability of Century’s officers, as provided below. We sometimes refer to this proposed amendment to our Certificate of Incorporation as the “Charter Amendment” in this proxy statement. In the absence of such protection, the Board of Directors believes qualified officers might be deterred from serving as officers of Century due to potential exposure to personal liability and the risk that substantial expense could be incurred in defending lawsuits, regardless of merit. In approving the proposed Charter Amendment, the Board of Directors took into account several factors, such as the narrow class and type of claims that such officers would be exculpated from liability pursuant to amended DGCL Section 102(b)(7), the limited number of our officers who would be impacted, and the benefits the Board of Directors believes would accrue to Century by providing officer exculpation in accordance with DGCL Section 102(b)(7), including, without limitation, the ability to attract and retain key officers and the potential to reduce litigation costs associated with frivolous lawsuits. The Board of Directors balanced these considerations with our corporate governance practices and determined that it is advisable and in the best interests of Century and our stockholders to amend our Certificate of Incorporation to add an officer exculpation provision to eliminate or limit the personal liability of certain officers, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended.
Text of Proposed Charter Amendment Our Certificate of Incorporation currently provides for the exculpation of directors, but does not include a provision that allows for the exculpation of officers. To ensure Century is able to attract and retain key officers and in an effort to reduce litigation costs associated with frivolous lawsuits, we propose to add a new Article THIRTEENTH to our Certification of Incorporation, which would state in its entirety as follows: “THIRTEENTH. An officer of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as an officer, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of an officer of the corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.” The proposed Certificate of Amendment to our Certificate of Incorporation (referred to in this Proposal No. 2 as the “Certificate of Amendment”) reflecting the foregoing Charter Amendment is attached as Appendix B to this proxy statement. Reasons for the Proposed Charter Amendment The Board of Directors believes it is appropriate for public corporations incorporated in states that allow for the limitation of liability of directors and officers to have such a provision in their charters. The nature of the role of directors and officers often requires them to make decisions on crucial matters. Frequently, directors and officers must make decisions in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests. We expect our peers and other companies with whom we compete for officer talent to adopt exculpation clauses that limit the personal liability of officers in their charters, and we believe failing to adopt the proposed Charter Amendment could impact our recruitment and retention of exceptional officer candidates that conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of Century. For the reasons stated above, on February 8, 2023, the Board of Directors determined that the proposed Charter Amendment is advisable and in the best interest of our Company and our stockholders and authorized and approved, subject to stockholder approval, the proposed Charter Amendment and directed that it be considered for approval by our stockholders at the Annual Meeting. The Board of Directors believes the proposed Charter Amendment would better position Century to attract top officer candidates and retain our current officers and enable our officers to exercise their business judgment in furtherance of the interests of our stockholders without the potential for distraction posed by the risk of personal liability. Additionally, it would align the protections for our officers with those protections currently afforded to our directors, although it would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation. The proposed Charter Amendment is not being proposed in response to any specific resignation, threat of resignation or refusal to serve by any officer.
Timing and Effect of the Charter Amendment If the proposed Charter Amendment is approved by our stockholders, it would become effective immediately upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, which we would expect to file promptly after the Annual Meeting. Other than the addition of the proposed new THIRTEENTH provision as provided above, the remainder of our Certificate of Incorporation would remain unchanged after effectiveness of the Charter Amendment. After effectiveness of the Charter Amendment, the new officer exculpation provision would apply only with respect to acts or omissions by our officers occurring after the date of the Charter Amendment. If the proposed Charter Amendment is not approved by our stockholders, our Certificate of Incorporation would remain unchanged. In accordance with the DGCL, the Board of Directors may elect to abandon the proposed Charter Amendment without further action by our stockholders at any time prior to the effectiveness of the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, notwithstanding stockholder approval of the proposed Charter Amendment at the Annual Meeting. Board Recommendation The Board of Directors unanimously recommends that our stockholders vote “FOR” approval of the proposed Charter Amendment, which would amend our Certificate of Incorporation to eliminate or limit the personal liability officers to the extent permitted by recent amendments to Delaware law.
PROPOSAL NO. Appointment The Audit Committee appoints our independent registered public accounting firm, or independent auditor. In this regard, the Audit Committee evaluates the qualifications, performance, and independence of our independent auditor and determines whether to re-engage the current auditor. As part of its evaluation, the Audit Committee considers, among other factors, the quality and efficiency of the services provided by the independent auditor, including the performance, technical expertise, and industry knowledge of the lead audit partner and the audit team assigned to our account; the overall strength and reputation of the audit firm; the auditor’s national capabilities relative to our business; the auditor’s knowledge of our operations; and the auditor’s fees. Upon consideration of these and other factors, the Audit Committee has appointed Ernst & Young LLP (E&Y) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Stockholder ratification of the selection of E&Y as our independent registered public accounting firm is not required by our Bylaws or otherwise. However, the Board is submitting the appointment of E&Y to the stockholders for ratification as a matter of corporate practice. If our stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain E&Y. Even if the selection is ratified by our stockholders, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Century and our stockholders. A representative of E&Y is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions. Audit, Audit-Related, Tax, and Other Fees The fees billed for professional services provided by E&Y in
In the above table, in accordance with the definitions of the SEC, “Audit Fees” consisted of fees for the audit of our consolidated financial statements included in our literature in 2021 and work on the employee retention credit related to the CARES Act for both years.
Pre-Approval Policies and Procedures The Audit Committee is responsible for selecting, appointing, evaluating, compensating, retaining, and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established policies and procedures in its charter regarding pre-approval of any audit and non-audit service provided to Century by our independent registered public accounting firm and the fees and terms thereof. Briefly, any audit or non-audit service provided to us by our independent registered public accounting firm must be pre-approved by the Audit Committee or the Chair of the Audit Committee. The Audit Committee considered the compatibility of the provision of other services provided by E&Y with the maintenance of its independence. The Audit Committee approved all audit and non-audit services provided by E&Y in Audit Committee Report The Audit Committee issued the following report for inclusion in this proxy statement and our
Board Recommendation The Board of Directors unanimously recommends that our stockholders vote “FOR” ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31,
Background The Board is providing our stockholders with an advisory vote on our executive compensation pursuant to the Dodd-Frank Wall Street Consumer Protection Act (Dodd-Frank Act) and Section 14A of the Exchange Act. This advisory vote, commonly known as a say-on-pay vote, is a non-binding vote on the compensation paid to our named executive officers as set forth in this proxy statement. Why You Should Vote in Our Pay Philosophy Our executive compensation program is generally designed to attract, retain, motivate, and reward highly qualified and talented executive officers that will enable us to drive long-term stockholder value. The underlying core principles of our executive compensation program include:
We believe this balance allows us to attract and retain the necessary executive talent while motivating and rewarding the accomplishment of annual and long-term financial performance goals and maintaining an appropriate cost structure. Engagement and Responsiveness We regularly seek stockholder input on our executive compensation program and then incorporate that feedback to further enhance the program. Some of the compensation related actions we have taken in response to stockholder feedback over the last several years are described in the “Compensation Discussion and Analysis.”
Best Practices Our compensation practices include many best pay practices that support our executive compensation objectives and principles and benefit our stockholders.
We encourage our stockholders to read the “Compensation Discussion and Analysis,” We believe that our executive compensation program is competitive, focused on pay for performance, and strongly aligned with the long-term interests of our stockholders. The Compensation Committee believes that executive compensation for PROPOSED RESOLUTION The Board recommends that our stockholders vote in favor of the say-on-pay vote as set forth in the following resolution: RESOLVED, that our stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including in the “Compensation Discussion and Analysis,” the accompanying compensation tables and the corresponding narrative discussion and footnotes, and any related material disclosed in this proxy statement. Stockholders are not voting to approve or disapprove the Board’s recommendation. As this is an advisory vote, the outcome of the vote is not binding on us with respect to future executive compensation decisions, including those relating to our named executive officers, or otherwise. The Compensation Committee and Board expect to take into account the outcome of the vote when considering future executive compensation decisions.
NEXT SAY-ON-PAY VOTE Consistent with the results Board Recommendation The Board of Directors unanimously recommends that our stockholders vote “FOR” approval, on an advisory basis, of our executive compensation, or say-on-pay vote.
COMPENSATION DISCUSSION AND ANALYSIS
This
We sometimes refer to these individuals collectively This CD&A should be read together with the related tables and disclosures that follow.
Executive Summary Who We Are
Century Communities, Inc. is a top 10 national U.S. homebuilder. We are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in
Over the last six years, positive macro-economic conditions, along with our operating efficiencies, business strategy and geographic expansion through the acquisition of other homebuilders and organic entrances into new markets has resulted in significant increases in total revenue, net income, earnings per diluted share, and total stockholders’ equity.
2022 Business Highlights
FINANCIAL
OPERATIONAL
STRATEGIC
One of our key executive compensation objectives is to link pay to performance by aligning the financial interests of our executives with those of our stockholders and by emphasizing pay for performance in our compensation programs.
Compensation Philosophy Given the small size of Century’s executive team, each executive has assumed responsibilities beyond what is generally found for similar executives in comparable companies. Many of these additional responsibilities directly As such, the Compensation Committee has determined that fixed compensation (i.e., base salary) should be targeted at the market median, with performance-based incentive compensation opportunities resulting in total direct compensation that ranges from median.Say-on-Pay Vote At our OUR ENGAGEMENT AND RESPONSIVENESS We regularly seek stockholder input on our executive compensation program and
Compensation Highlights and Best Practices Our compensation practices include many best pay practices that support our executive compensation
NEO Stock Ownership Guidelines We have established stock ownership guidelines that are intended to further align the interests of our NEOs with those of our stockholders. A stock ownership target for each of our NEOs has been set at that number of shares of our Century common stock with a value equal to a multiple of the NEO’s annual base salary. Not only are all of our NEOs in compliance with our stock ownership guidelines, but each of them beneficially own a significant amount of our outstanding common stock, as indicated in the table below, which is as of December 31, 2022.
Elements of Our Executive Compensation Program During
We describe each key element of our executive compensation program in more detail in the following pages, along with the compensation decisions made in 2022.
Pay for Performance and Pay Mix We seek to motivate management to achieve improved financial performance of our Company through incentive plans that reward higher performance with increased incentive payouts and hold management accountable for financial performance that falls below targeted levels by paying reduced or no incentive payouts. Accordingly, in general, our executive compensation program emphasizes variable, at-risk, pay elements as a significant portion of each NEO’s total compensation package. The breakdown of variable, at-risk, pay (broken out between target annual short-term incentives and long-term incentives) compared to fixed pay (i.e., base salary) Named Executive Officer Compensation Century has been jointly led by our Co-CEOs since our founding in 2002. The Board views this executive structure as optimal for our Company and not a temporary, transitional or duplicative arrangement. Our Co-CEOs were the two founders of Century and share an aligned vision for the tone, direction and growth of the Company. Given the trust and confidence that has been developed between our Co-CEOs over the extended period this structure has been in place, these roles are not duplicative, but rather allow each individual to focus his efforts in areas of specific expertise. Further, we have a small number of executive officers, and, due to the absence of other positions typically found on leadership teams, such as a Chief Operating Officer or an Executive Chairman, our Co-CEOs take on additional responsibilities and perform tasks that would normally not be required of a CEO. As such, when determining compensation for our two Co-CEOs, the Compensation Committee takes into account the individual value that each Co-CEO brings to the Company, the broad range of responsibilities and duties that are shared between them, and the demonstrated track record of success that has resulted from this structure.
Purpose : Base salary is designed to compensate our NEOs at a fixed level of compensation that provides some financial certainty and security for our NEOs, and also serves as a retention tool throughout the executive’s career.Competitive Positioning : In setting base salaries, the Compensation Committee considers many factors, including each executive’s roles and responsibilities, unique skills, future potential with Century, salary levels for similar positions in our market and internal pay equity.Our goal is to target the market median 2022 Review : The Compensation Committee
CFO to move them closer to our target positioning.
Short-Term Incentive – Annual Cash Bonus Purpose : Our short-term incentive, or annual cash bonus program, is designed to reward the achievement of specific annual financial and operational objectives. Annual cash bonuses are designed to incentivize our NEOs at a variable level of compensation based on Century’s performance, as well as, in the case of our CFO, individual performance.Competitive Positioning : Our strategy is to target the market median for short-term incentives for performance that meets expected levels and to target total cash compensation (base salary plus target STI) at the market median, with potential to exceed the market median for above target performance. We have established a range of possible payouts under the plan so that our competitive position could be above or below our stated strategy based on performance outcomes.2022 STI Awards : Forfollows, which represent increases over last year:
These increases were intended to move target total cash compensation for our NEOs closer to our target positioning. As a result of significant revenue growth in recent years, our peer group was adjusted accordingly to incorporate peers which more closely align with the size of Century. The resulting peer group includes homebuilders of a larger size than those previously included in our peer group. The increased target opportunities under the STI program for 2022 were set to appropriately align the opportunities of our NEOs with comparable executives in our new peer group. Given the superior financial and stock price performance of Century in recent years, these increases to the 2022 target opportunities of our NEOs were seen as appropriate. Despite these increased target STI award opportunities, the 2022 target STI opportunity for each of our NEOs remained at the median of the 2021 actual STI awards of comparable executives of companies in our new peer group. The performance metrics that applied for the
In considering the performance metrics that should apply in calculating our Co-CEOs’ STI awards, the Compensation Committee determined that the performance metrics should be based on overall Company performance as opposed to individual performance. The Compensation Committee furthermore determined that the most important measures of Company success, which should form the basis of our Co-CEOs’ STI awards, goals, which were management of corporate purchasing, construction services and land development group and improvement in financial and operating metrics in financial services. Actual performance was between target and maximum for revenue, exceeded maximum for EBITDA, as adjusted, and was between threshold and target for closings.In determining the 2022 goals for each STI performance metric, the Compensation Committee set the target performance goal at the same level as our 2022 annual business plan and set threshold and maximum performance goals at 10% below target and 10% above target, respectively. In establishing the 2022 annual business plan, the Board of Directors considered a variety of factors, including the Company’s record results for the recently completed full year 2021, the then current homebuilding environment and the expected difference between the two years. The By setting the performance goals consistent with the annual business plan, the Compensation Committee believes executives are appropriately challenged and aligned with the Company’s goals. In approving the target for the EBITDA, as adjusted, performance metric for 2022, the Compensation Committee recognized that although the target EBITDA, as adjusted, performance metric for 2022 was below 2021’s actual EBITDA, as adjusted, performance, the Compensation Committee believed it was nonetheless sufficiently challenging and rigorous given the analysis undertaken by the Board of Directors in establishing the 2022 business plan. It is the view of the Compensation Committee that it is appropriate to tie annual performance targets for a year to the annual business plan for that year and therefore only exceed prior year performance if the annual business plan reflects a targeted growth over the prior year. As in past years, if the threshold level for a performance metric was not achieved, then no payout would be made with respect to that metric. The performance metrics, and the performance levels attached to each, as well as actual performance, are reflected in the following table.
The table below shows the various levels of payout and the actual level of payout for STI cash awards made in February
Long-Term Incentives – Purpose: Our long-term incentive program is designed to reward NEOs for the achievement of specific financial objectives, recognize their efforts on our behalf over an extended period of years, and provide an additional incentive and retention element to their overall compensation package. Our LTI program is also intended to align the interests of our executives with our stockholders. Competitive Positioning: We target the market median for our target LTI program and may pay above the median if performance exceeds target. LTI Awards and Plan Mechanics:
For the 2020 to 2022 performance period, we achieved adjusted pre-tax income of $1,519.8 million, far exceeding all goals, including maximum. This was due to our unprecedented record performance across nearly all metrics in each year during the performance period and the strong rebound experienced by the U.S. housing market. Based on this result, the 2020 to 2022 payout was at the maximum performance level. Accordingly, our Co-CEOs each received 107,913 shares and our CFO received 49,332 shares under the 2020 LTI program The table below outlines the performance
The performance levels above correspond to the share amounts listed in the table below.
Other Benefits In We provide our NEOs with modest perquisites to attract and retain them and to allow them to more efficiently utilize their time and to support them in effectively contributing to the success of our Company. The perquisites provided to our NEOs during
Employment Agreements, SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS, and POST-TERMINATION RESTRICTIONS
To encourage continuity, stability, and retention when considering the potential disruptive impact of an actual or potential corporate transaction, we have established change in control arrangements, including provisions in our employment agreements with our NEOs. These provisions provide our NEOs certain payments and benefits in the event of a termination of their employment in connection with a change in control. These additional payments and benefits will not be triggered just by a change in control, but require a termination event not within the control of the executive, and thus are known as “double trigger” change in control arrangements. These “double trigger” change in control protections are intended to induce executives to accept or continue employment with our Company, provide consideration to executives for certain restrictive covenants that apply following termination of employment, and provide continuity of management in connection with a threatened or actual change in control transaction. If the employment of one of our NEOs is terminated by Century without cause or by him for good reason within 24 months following or in the case of our Co-CEOs, within six months preceding, a change in control, the executive will be entitled to receive a severance payment and certain benefits. The receipt of any severance is conditioned upon the executive’s execution of a release of claims.
We believe these change in control arrangements with our NEOs are an important part of our executive compensation program in part because they mitigate some of the risk for executives working in a smaller public company where there is a meaningful likelihood that the company may be acquired. Change in control benefits are intended to attract and retain qualified executives who, absent these arrangements and in anticipation of a possible change in control of our Company, might consider seeking employment alternatives to be less risky than remaining with our Company through the transaction. We believe that relative to our Company’s overall value, our potential change in control benefits are relatively small and are aligned with current peer company practices.
Risk Assessment As a result of our assessment on risk in our compensation programs, we concluded that our compensation policies, practices, and programs and related compensation governance structure work together in a manner so as to encourage our executives (and other employees) to pursue growth strategies that emphasize stockholder value creation, but not to take unnecessary or excessive risks that could threaten the value of our Company. For more information on this assessment, see the discussions under “Executive Compensation—Compensation Risk Assessment.” Clawback Policy
ANTI-HEDGING AND ANTI-PLEDGING Policy
Century considers it improper and inappropriate for those employed by the Company to engage in short-term or speculative transactions in our securities or in other transactions in our securities that may lead to inadvertent violations of the insider trading laws. Accordingly, our insider trading policy prohibits certain of our employees, including our NEOs, from engaging in any hedging transactions, short sales, transactions in publicly traded options, such as puts, calls and other derivatives, or short-term trading. Our insider trading policy also prohibits certain of our employees, including our NEOs from pledging our common stock. Our anti-hedging and pledging policy is described later in this proxy statement under “Executive Compensation—Anti-Hedging and Pledging Policy.” Tax CONSIDERATIONS Code Section 162(m) imposes an annual deduction limit of $1 million on the amount of compensation paid to each “covered employee,” which includes our named executives. Compensation paid to our named executive officers over this limit is nondeductible. While the Compensation Committee considers tax deductibility as one of many factors in determining executive compensation, we will continue to structure our executive compensation program so that a significant portion of total executive compensation is linked to the performance of our Company even though amounts in excess of the Code Section 162(m) limit are not deductible. Competitive Considerations and Use of Market Data We strive to compensate our executive officers competitively relative to industry peers. To ensure reasonableness and competitiveness of our executive compensation packages relative to the industry, the Compensation Committee regularly evaluates our peer group with the aid of our independent external compensation consultant and with input from management. Data from our peer group, therefore, is considered in the compensation benchmarking process as one input in helping to determine appropriate pay levels.
In establishing compatibility between Century and the members of our peer group, the following three factors were considered:
This peer group is an expansion of the peer group from the prior year. The Compensation Committee expanded the peer group by six additional companies based on a belief that a larger peer group is more useful, in All of the peer group companies are public companies in the homebuilding or manufactured housing industries and that have annual revenues and a price to earnings ratio generally within a range of our annual revenues and price to earnings ratio. We potentially compete with these peers for employees, land, customers and trade partners in various markets. Even though some of the peers may be How We Make Compensation Decisions There are several elements to our executive compensation decision-making, which we believe allow us to most effectively implement our compensation philosophy. The Compensation Committee, its independent external compensation consultant, and management all have a role in decision-making for executive compensation. The following table summarizes their roles and responsibilities.
COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the foregoing “Compensation Discussion and Analysis” with our management. Based on this review and these discussions, the Compensation Committee has recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement and
EXECUTIVE COMPENSATION Summary Compensation Table The table set forth below summarizes the compensation information for each of the individuals who served as a “principal executive officer” or “principal financial officer” during
Amounts reported in the Life Insurance Premiums column for the Co-CEOs include $30,000 term life insurance premium reimbursement pursuant to the terms of their respective employment agreements and an additional amount imputed to them as income as a result of the Company’s employee group term life insurance program.
Employment and Other Agreements Co-CEO Employment Agreements
CFO Employment Agreement
This agreement provides for
Other Agreements In January 2018, we entered into aircraft time sharing agreements with Dale Francescon, Robert J. Francescon, and David L. Messenger, which govern their personal use of the Company’s aircraft during their employment and their reimbursement of the Company for the costs of any such use. The lease rate payable by the executives thereunder equals the aggregate incremental per hour cost of each flight, as such cost is described in the agreements. Use of the aircraft by the executives is subject to prior approval of the Co-Chief Executive Officers, and is at all times subordinate to use by the Company. Each of the agreements has an initial term of one year and provides for automatic one-year extensions thereafter, unless (i) either party provides the other with at least 30 days’ prior written notice of non-renewal, or (ii) the agreement is terminated on shorter notice as provided therein.
GRANTS OF PLAN-BASED AWARDS DURING 2022 The table below provides information concerning grants of plan-based awards to each of our NEOs during the year ended December 31,
Outstanding Equity Awards as of December 31, 2022 The following table sets forth information with respect to all outstanding, unvested RSU awards and PSU awards held by our NEOs as of December 31,
Option Exercises and Stock Vested During 2022 The table below provides information regarding stock awards (in the form of RSU awards and PSU awards) that vested for each of our NEOs during the year ended December 31,
Pay Versus Performance Table As required by Section 953(a) of the Dodd-Frank Act and Item 402(v) of SEC Regulation S-K, we are providing the following information about the relationship between “compensation actually paid” to our NEOs, within the meaning of such rules, and certain financial performance measures of our Company. The table below provides information regarding compensation actually paid to our Co-CEOs, our two co-principal executive officers (“PEOs”), and our CFO, our only other non-PEO named executive officer, during each of the past three fiscal years, as well as total stockholder return, net income and adjusted pre-tax income information for each of the past three fiscal years. For further information regarding our pay for performance philosophy and how we align executive compensation with our performance, see “Compensation Discussion and Analysis.”
Since we do not have a pension plan, all of the foregoing adjustments are equity award adjustments for each applicable year and include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of such applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year; (iii) for equity awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for equity awards granted in prior years that vest in the applicable year, the amount equal to
The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The value of RSU awards is based on the fair value as of the end of the covered year or change in
Since we do not have a pension plan, all of the foregoing adjustments are equity award adjustments for each applicable year and include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of such applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year; (iii) for equity awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for equity awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for equity awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for such applicable year. Adjustments as provided in clauses (iii) and (v) are inapplicable for all of the years presented in the table. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The value of RSU awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on the closing sale price of our common stock, as reported by the NYSE. The value of PSU awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on the same methodology as used in our consolidated financial statements included in our most recent annual report on Form 10-K for the year ended December 31, 2022.
Financial Performance Measures We used the following financial performance measures during 2022 to link compensation actually paid to our named executive officers to company performance:
Pay Versus Performance Relationship In accordance with Item 402(v) of SEC Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table above. The graphs below illustrate the high correlation between compensation actually paid to our NEOs and our cumulative total stockholder return (TSR) and the high correlation between compensation actually paid to our NEOs during 2020 and 2021 and substantial increases in our net income and adjusted pre-tax income during those years. Despite another significant increase in our net income and adjusted pre-tax income during 2022 as compared to 2021, compensation actually paid to our NEOs during 2022 decreased significantly primarily as a result of nearly 40% decrease in our common stock price during 2022. Century TSR and Peer Group TSR. The following graph compares the cumulative total stockholder return (assuming reinvestment of dividends) on $100 invested in each of our common stock and an industry peer group for the three-year period from December 31, 2019 to December 31, 2022. The industry peer group is the same peer group that we use for purposes of our stock performance graph in our most annual report on Form 10-K for the year ended December 31, 2022 and consists of the following companies: Beazer Homes USA, Inc., Hovnanian Enterprises, Inc., KB Home, LGI Homes, Inc., M.D.C. Holdings, Inc., M/I Homes, Inc., Meritage Home Corporation, Taylor Morrison Home Corporation, and Tri Pointe Homes, Inc. Our cumulative TSR consistently outperformed the industry peer group’s cumulative TSR during the three years presented in the table.
Compensation Actually Paid and Company TSR. As demonstrated by the following graph, the amount of compensation actually paid to our NEOs is aligned with our cumulative TSR over the three years presented in the table. The alignment of compensation actually paid with our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to our NEOs is comprised of equity awards, the value of which is driven by our stock price. As described in more detail under “Compensation Discussion and Analysis,” approximately 53% of total target compensation awarded to our Co-CEOs and 47% of total target compensation awarded to our CFO was comprised of equity awards for 2022, which consisted solely of performance stock units. For 2021 and 2020, 55% and 47%, respectively, of total target compensation awarded to our Co-CEOs and 48% and 52%, respectively, of total target compensation awarded to our CFO was comprised of equity awards, which consisted of a mix of performance stock units and time-based restricted stock units. Compensation Actually Paid and Net Income and Adjusted Pre-Tax Income. As demonstrated by the following two graphs, the amount of compensation actually paid to our NEOs is aligned with our net income and our adjusted pre-tax income over the three years presented in the table. While we do not use net income as a performance measure in our overall executive compensation program, the performance measure of net income is correlated with the performance measures of adjusted EBITDA and adjusted pre-tax income, which performance measures we use when setting goals for our short-term incentive program and long-term incentive program, respectively. As described in more detail under “Compensation Discussion and Analysis,” we emphasize performance-based compensation elements, with superior performance resulting in above-market pay, and underwhelming performance resulting in below-market pay. For 2022, 89% of total target compensation awarded to our Co-CEOs and 85% of total target compensation awarded to our CFO was comprised of performance-based compensation. For 2021 and 2020, 84% and 81%, respectively, of total target compensation awarded to our Co-CEOs and 77% and 76%, respectively, of total target compensation awarded to our CFO was comprised of performance-based compensation.
CEO Pay Ratio Disclosure Under Section 953(b) of the Dodd-Frank Act and Item 402(u) of SEC Regulation S-K, we are required to provide the ratio of the annual total compensation of each of Dale Francescon, our Co-CEO, and Robert J. Francescon, our Co-CEO, to the median of the annual total compensation of all employees of our company (other than our Co-CEOs). This ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the “median employee” and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported by us, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their pay ratios. For
To identify our median employee and to calculate the annual total compensation of our median employee and that of our co-CEOs, we used the following methodology, assumptions, and estimates:
POTENTIAL pOST-tERMINATION AND CHANGE IN CONTROL PAYMENTS Employment Agreements The employment agreements with our NEOs contain severance provisions, including in connection with a change in control, intended to induce these executives to continue employment with our Company and to retain them and provide consideration to them for certain restrictive covenants that apply following a termination of employment. The receipt of any severance by these executives is conditioned upon the officer’s execution of a release of claims. Under the employment agreements with our Co-CEOs, no severance benefits are payable if we terminate the executive’s employment for cause or if he resigns voluntarily and without good reason and other than by reason of retirement. If the executive’s employment is terminated due to disability, death or retirement, he or his estate will be entitled to receive (i) a prorated amount of his annual incentive bonus for the fiscal year in which employment terminated based on actual performance; (ii) in the event of termination due to death or disability, the immediate vesting of performance-based equity awards for the fiscal year or performance period in which employment terminated based on target performance, unless actual performance exceeds target based on proration of the performance goals, but without proration based on the executive’s actual period of service, or, in the event of termination due to retirement, the performance-based equity awards for the fiscal year or performance period in which employment terminated will vest based on actual performance for the full performance period and as if he had not terminated employment; (iii) the immediate vesting of all equity awards granted to him not then based on performance; and (iv) our payment for up to 18 months of that portion of his COBRA premiums that exceeds what he would have paid if he were an active employee. For purposes of the agreements, “retirement” means the executive’s voluntary termination of his employment, provided the executive: (a) has reached (or will reach on or before the termination date) the age of 60 along with at least 23 years of employment with us (measured from November 1, 2000); and (b) provides us with notice of his intent to retire at least 90 days in advance of the termination date. If we terminate the executive’s employment without cause or if he terminates his employment for good reason, he will be entitled to (i) a lump sum cash severance payment equal to two times his annual base salary; (ii) a lump sum cash payment equal to the greater of either two times his average annual bonus for the three preceding fiscal years or two times his potential target bonus for the year in which the termination date occurs; (iii) a prorated amount of his annual incentive bonus for the fiscal year in which employment terminated calculated based on actual performance; (iv) the immediate vesting of the equity awards for the fiscal year or performance period in which employment terminated based on target performance, unless actual performance exceeds target based on proration of the performance goals, but without proration based on the executive’s actual period of service; (v) the immediate vesting of all equity awards granted to him not then based on performance and (vi) our payment for up to 18 months of that portion of his COBRA premiums that exceeds the amount he would have paid as an active employee. If we terminate the executive’s employment without cause or if he terminates his employment for good reason, within six months preceding or within 24 months following a “change in control” (as defined in the agreements), in addition to the other payments described above (but in lieu of the payment in clauses (i) and (ii) above), the executive will receive a lump sum cash severance payment equal to three times his base salary and a lump sum cash payment equal to the greater of: (a) three times his potential target bonus for the year in which the termination date occurs; or (b) three times his average annual bonus for the three completed fiscal years immediately preceding the termination date.
Under the employment agreement with Mr. Messenger, no severance benefits are payable if we terminate Mr. Messenger’s employment for cause or if he resigns voluntarily and without good reason. In addition, any outstanding equity awards granted to him will be paid in accordance with their terms. If Mr. Messenger’s employment is terminated due to disability or death, he or his estate will be entitled to receive (i) a prorated amount of his annual incentive bonus for the fiscal year in which employment terminated based on actual performance; (ii) the immediate vesting of a prorated amount of the performance-based equity awards he would have received for the fiscal year his employment terminated, calculated based on target performance; (iii) the immediate vesting of all equity awards granted to him not then based on performance; and (iv) our payment for up to 18 months of that portion of the executive’s COBRA premiums that exceeds what he would have paid as an active employee. If we terminate Mr. Messenger’s employment without cause or if he terminates his employment for good reason, he will be entitled to (i) a cash severance payment equal to his annual base salary payable as salary continuation over 12 months; (ii) the prorated amount of his annual incentive bonus for the fiscal year his employment terminated calculated based on actual performance; (iii) the immediate vesting of a prorated amount of the performance-based equity awards for the fiscal year his employment terminated, based on target performance; (iv) the immediate vesting of all equity awards granted to him not then based on performance; and (v) our payment for up to 18 months of that portion of his COBRA premiums that exceeds what he would have paid if he were an active employee. If we terminate Mr. Messenger’s employment without cause or if he terminates his employment for good reason within 24 months following a “change in control” (as defined in the agreement), in addition to the other payments described above (but in lieu of the cash severance and prorated annual bonus payments), Mr. Messenger will receive a lump sum amount equal to two times his annual base salary plus two times the greater of his target annual bonus for the year in which termination occurs or the average of his annual bonuses paid to him for the three completed fiscal years immediately preceding the termination date. Additionally, in lieu of the immediate vesting of only a prorated amount of his performance-based equity awards based on target performance, Mr. Messenger will receive the immediate vesting of his performance-based equity awards for the fiscal year or performance period in which his employment terminated based on target performance, unless actual performance exceeds target based on proration of the performance goals through the last day of the calendar quarter preceding the termination date, but in each case without proration based on his actual period of service. To the extent that any change in control payment or benefit would be subject to the “golden parachute” excise tax under Code Section 4999, the payments will be reduced to an amount that will not subject the executive to the excise tax if the reduction results in him receiving a greater amount on a net after tax basis than would be received if he received the payment and benefits and paid the excise tax. Other Change in Control Arrangements The Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan and the recently adopted Century Communities, Inc. 2022 Omnibus Incentive Plan under which awards have been granted to our NEOs contains “change in control” provisions. Under the plans, without limiting the authority of the Compensation Committee to adjust awards, if a “change in control” of Century (as defined in the applicable plan) occurs, then, unless otherwise provided in the award or other agreement, if an award is continued, assumed, or substituted by the successor entity, the award will not vest or lapse solely as a result of the change of control but will instead remain outstanding under the terms pursuant to which it has been continued, assumed, or substituted and will continue to vest or lapse pursuant to such terms. Unless otherwise provided in an agreement, if the award is continued, assumed, or substituted by the successor entity and within two years following the change in control the executive is either terminated by the successor entity without “cause” or, if under the older plan, if the executive is an executive officer of Century, resigns for “good reason,” each as defined in the applicable plan, or if outstanding awards are not continued, assumed, or substituted with equivalent awards by the successor entity in connection with the change in control, then:
Potential Payments to Named Executive Officers The table below shows potential payments to our NEOs, not otherwise earned, under various scenarios involving a termination of employment, including in connection with a change in control, and upon a change in control without a termination of employment, assuming a December 31, 2022 termination date. All equity awards are valued at the closing price of our common stock on the last trading day of 2022, December 30, 2022 ($50.01), as reported by the NYSE.
In the case of a termination without cause or for good reason in connection with a change in control, represents the value of the number of shares of our common stock the executive would have been entitled to receive as payout of the PSU awards for the 2021 to 2023 performance period and the 2022 to 2024 performance period. In the event of a termination without cause or for good reason in connection with a change in control, the value is based on the greater of (a) the number of PSU award shares at target and (b) the number of PSU award shares based on actual performance and performance goals prorated to the last day of the calendar preceding the executive’s termination, and in each case without any proration based on the executive’s actual period of employment during the performance period. Since actual performance exceeded target performance, the table reflects the value of the number of PSU award shares based on actual performance. The value of the number of PSU award shares based on target performance is $2,532,256, including dividend equivalent rights.
COMPENSATION Risk Assessment As a result of our annual assessment on risk in our compensation programs, we concluded that our compensation policies, practices, and programs and related compensation governance structure work together in a manner so as to encourage our employees, including our NEOs, to pursue growth strategies that emphasize stockholder value creation, but not to take unnecessary or excessive risks that could threaten the value of our company. As part of our assessment, we noted in particular the following:
As a matter of best practice, we will continue to monitor our compensation policies, practices, and programs to ensure that they continue to align the interests of our employees, including in particular our executive officers, with those of our long-term stockholders while avoiding unnecessary or excessive risk. ANTI-HEDGING AND ANTI-PLEDGING POLICY Century considers it improper and inappropriate for those employed by or associated with the Company to engage in short-term or speculative transactions in our securities or in other transactions in our securities that may lead to inadvertent violations of the insider trading laws. Accordingly, trading in our securities is subject to the following
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None of the members of the Compensation Committee has or had any relationship requiring disclosure under Item 404 of SEC Regulation S-K or has ever been an officer or employee of Century or any of our subsidiaries. None of our executive officers serves, or in the past has served, as a member of the Compensation Committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of the Board or the Compensation Committee.
DIRECTOR COMPENSATION Overview Our non-employee director compensation program generally is designed to attract and retain experienced and knowledgeable directors and to provide equity-based compensation to align the interests of our directors with those of our stockholders. In Dale Francescon and Robert J. Francescon, as employee directors, do not receive any additional compensation for their service as directors. DIRECTOR COMPENSATION PROCESS The Board of Directors has delegated to the Compensation Committee the responsibility, among other things, to review and recommend to the Board any proposed changes in non-employee director compensation. In connection with such review, the Compensation Committee is assisted in performing its duties by our Human Resources Department and also engages an independent external compensation consultant to provide analysis regarding non-employee director compensation. During Director Compensation Program The following table sets forth our non-employee director compensation program for
Annual cash retainers are paid in advance. The annual
We also reimburse our non-employee directors for reasonable out-of-pocket expenses incurred in connection with the performance of their duties as directors, including, without limitation, travel expenses in connection with their attendance in-person at Board and Board committee meetings. NON-EMPLOYEE Director Compensation HIGHLIGHTS Some of the highlights of our non-employee director compensation are:
Summary Director Compensation Table for 2022 The following table sets forth information concerning the compensation of our non-employee directors during the year ended December 31,
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Policies and Procedures for Review and Approval of Related Party Transactions Our Code of Business Conduct and Ethics outlines the principles, policies, and values that govern the activities of Century, including with respect to conflicts of interest. It is specifically required by our Code of Business Conduct and Ethics that any transaction involving a conflict of interest be approved by a vote of a majority of Century’s disinterested and independent directors. Our Chief Financial Officer is generally responsible for overseeing and monitoring compliance with respect to transactions involving conflicts of interest. On any new related party transactions, if the party involved in the transaction is a member of the Board of Directors, such member of the Board is required to recuse or abstain from involvement in the decision. In addition, the charter of our Audit Committee requires the Audit Committee to approve or ratify all related party transactions. On a quarterly basis, the Transactions with Related Persons For the period beginning on January 1, Employment and Other Agreements with Named Executive Officers We have entered into an employment agreement with each of our Co-Chief Executive Officers, Dale Francescon and Robert J. Francescon, and our Chief Financial Officer, David L. Messenger. These agreements were entered into with these individuals in connection with their capacities as officers and provide for salary, bonus, and other benefits, including the grant of equity awards, and severance upon a termination of employment under certain Indemnification Agreements We have entered into an indemnification agreement with each of our directors, Co-Chief Executive Officers, and Chief Financial Officer. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We believe that the current limitation of director liability provision in our charter, the proposed charter amendment adding a limitation of officer liability provision as described in Proposal No. 2 and the indemnification agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. Other Related Party Transactions
STOCK OWNERSHIP
Significant Beneficial Owners The table below sets forth information as to entities that have reported to the SEC or have otherwise advised us that they are a beneficial owner, as defined by the SEC’s rules and regulations, of more than
The table below sets forth information known to us regarding the beneficial ownership of our common stock as of March
To our knowledge, each person named in the table has sole voting and investment power with respect to all of the securities shown as beneficially owned by such person, except as otherwise set forth in the notes to the table and subject to community property laws, where applicable. The number of shares beneficially owned represents the number of shares the person “beneficially owns,” as determined by the rules of the SEC. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (i) the vesting of restricted stock units or the exercise of any option, warrant, or right; (ii) the conversion of a security; (iii) the power to revoke a trust, discretionary account, or similar arrangement; or (iv) the automatic termination of a trust, discretionary account, or similar arrangement.
Stock Ownership Guidelines We have established stock ownership guidelines that are intended to further align the interests of our directors and named executive officers with those of our stockholders. The stock ownership guidelines for our non-employee directors and named executive officers are as follows:
Each director and named executive officer has five years from the date of appointment or hire or, if the ownership multiple has increased during his tenure, five years from the date established in connection with such increase to reach his stock ownership targets. Until the applicable stock ownership target is achieved, each director and Co-Chief Executive Officer subject to the guidelines is required to retain an amount equal to 100% of the net shares received as a result of the vesting of restricted stock awards or restricted stock unit awards, and other named executive officers are required to retain an amount equal to 60% of the net shares received as a result of the vesting of restricted stock awards or restricted stock unit awards. All of our directors and named executive officers are in compliance with our stock ownership
The table below provides information about our common stock that may be issued under our equity compensation
INFORMATION ABOUT THE 2023 ANNUAL MEETING The Board of Directors is using this proxy statement to solicit your proxy for use at our 2023 Annual Meeting of Stockholders. The Board is soliciting proxies to give all stockholders of record an opportunity to vote on matters properly presented at the Annual Meeting. We have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending an Important Notice of Availability of Proxy Materials for the Annual Meeting (which we refer to as the “Internet Notice”) to most of our stockholders of record and paper or electronic copies of the proxy materials to our remaining stockholders of record. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice. All stockholders may request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Internet Notice and on the website referred to in the Internet Notice, including an option to request paper copies on an ongoing basis. When and where will the Annual Meeting be held? The Annual Meeting will be held on Wednesday, May 3, 2023, at 1:00 p.m. local time, at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237. Directions to attend the Annual Meeting may be obtained by calling Investor Relations at (303) 268-8398. WhAT ARE THE PURPOSES OF THE Annual Meeting? The purposes of the Annual Meeting are to vote on the following items described in this proxy statement:
There are no rights of appraisal or similar rights of dissenters arising from matters to be acted on at the meeting. are there any matters to be voted on at the annual meeting that are not included in this proxy statement? We currently are not aware of any business that will be presented at the Annual Meeting other than as described in this proxy statement. If, however, any other matter is properly brought at the Annual Meeting, or any continuation, postponement, or adjournment thereof, your proxy includes discretionary authority on the part of the individuals appointed to vote your shares or act on those matters in accordance with their best judgment.
WhO CAN ATTEND the Annual Meeting? All of our stockholders entitled to vote at the Annual Meeting may attend the Annual Meeting. If your shares are held in street name, however, you may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from the record holder of your shares. Stockholders who wish to attend the Annual Meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will be required to present a valid, government-issued picture identification, such as a driver’s license or passport, to gain admittance to the Annual Meeting. No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting. WhO IS ENTITLED TO VOTE AT the Annual Meeting? Holders of record of shares of our common stock as of the close of business on March 9, 2023, the record date, will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement, or adjournment thereof. At the close of business on the record date, there were 32,017,086 shares of our common stock issued and outstanding and entitled to vote. Each share of our common stock is entitled to one vote on any matter presented to stockholders at the Annual Meeting. hOW MANY SHARES MUST BE PRESENT? A quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, in person or by proxy, of the holders of a majority in voting power of our capital stock issued and outstanding and entitled to vote on the record date will constitute a quorum. Your shares will be counted toward the quorum if you submit a proxy or vote at the Annual Meeting. Shares represented by proxies marked “abstain” and “broker non-votes” also are counted in determining whether a quorum is present. WhAT IF A QUORUM IS NOT PRESENT? If a quorum is not present or represented at the scheduled time of the Annual Meeting, (i) the chairperson of the Annual Meeting or (ii) a majority in voting power of the stockholders entitled to vote at the Annual Meeting, present in person or represented by proxy, may adjourn the Annual Meeting until a quorum is present or represented. hOW DO I VOTE? We recommend stockholders vote by proxy even if they attend the Annual Meeting. If your shares are registered in your name, you may vote your shares by one of the five following methods:
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Daylight Savings Time, on May 2, 2023. If you vote through the Internet, you should be aware that you may incur costs to access the Internet, such as usage charges from telephone companies or Internet service providers, and that these costs must be borne by you. If your shares are held in the name of a bank, broker, or other holder of record, you will receive instructions on how to vote from the bank, broker, or holder of record. You must follow the instructions of such bank, broker, or holder of record in order for your shares to be voted. Telephone and Internet voting also may be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you would like to vote your shares in person at the Annual Meeting, you should contact your bank, broker, or agent to obtain a legal proxy or the bank’s or broker’s proxy card and bring it to the Annual Meeting in order to vote. WhAT IS THE DIFFERENCE BETWEEN BEING A “RECORD HOLDER” AND HOLDING SHARES IN “STREET NAME”? A record holder holds shares in his or her name. Shares held in “street name” are held in the name of a bank or broker on a person’s behalf. CAN i VOTE IF MY SHARES ARE HELD IN “STREET NAME”? Yes. If your shares are held by a bank or a brokerage firm, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials are being forwarded to you by your bank or brokerage firm along with a voting instruction card. As the beneficial owner, you have the right to direct your bank or brokerage firm how to vote your shares, and your bank or brokerage firm is required to vote your shares in accordance with your instructions. WhAT ARE BROKER NON-VOTES? Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting power to vote those shares. A broker is entitled to vote shares held for a beneficial owner on routine matters. The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm in Proposal No. 3 is a routine matter; and accordingly, a broker is entitled to vote shares held for a beneficial owner on that proposal without instructions from such beneficial owner. On the other hand, absent instructions from a beneficial owner, a broker is not entitled to vote shares held for such beneficial owner on non-routine matters. We believe, based on the rules of the NYSE, that the election of directors in Proposal No. 1, the approval of the amendment to our Certificate of Incorporation to eliminate or limit the personal liability of officers in Proposal No. 2, and the advisory vote on executive compensation in Proposal No. 4 are non-routine matters; and accordingly, brokers do not have authority to vote on such matters absent instructions from beneficial owners. Whether a voting proposal is ultimately determined routine or non-routine is determined by the NYSE. Accordingly, if beneficial owners desire not to have their shares voted by a broker in a certain manner, they should give instructions to their brokers as to how to vote their shares. Broker non-votes count for purposes of determining whether a quorum is present.
The Board recommends that you vote:
If you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of common stock will be voted on your behalf as you direct. If not otherwise specified, the shares of common stock represented by the proxies will be voted in accordance with the Board’s recommendations. WHAT IS THE REQUIRED VOTE FOR EACH PROPOSAL?
WHAT IF I DON’T SPECIFY HOW MY SHARES ARE TO BE VOTED? If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board, as described above. WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE INTERNET NOTICE OR SET OF PROXY MATERIALS? It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Internet Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating, and returning the enclosed proxy card in the enclosed envelope. CAN I REVOKE OR CHANGE MY VOTE? Yes. If you are a registered stockholder, you may revoke your proxy or change your vote at any time before your shares are voted by one of the following methods:
Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to: Century Communities, Inc. 8390 East Crescent Parkway, Suite 650 Greenwood Village, Colorado 80111 Attention: Corporate Secretary Your most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to our Corporate Secretary before your proxy is voted or you vote in person at the Annual Meeting. If your shares are held in street name, you may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you may vote in person at the Annual Meeting by obtaining a legal proxy from your bank or broker and submitting the legal proxy along with your ballot. WHO WILL COUNT THE VOTES? Broadridge Financial Solutions, Inc. has been engaged to tabulate stockholder votes. An agent of Broadridge Financial Solutions, Inc. will act as our independent inspector of elections for the Annual Meeting.
WHERE CAN I FIND THE VOTING RESULTS? We plan to announce preliminary voting results at the Annual Meeting and will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC within four business days after the Annual Meeting. CAN I GET A PRINTED COPY OF THE PROXY MATERIALS? Yes. We will mail this proxy statement and our 2022 Annual Report, together with a proxy card, to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of our receipt of such request.
OTHER MATTERS
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2024 ANNUAL MEETING OF STOCKHOLDERS Date of We anticipate that our Proposals Pursuant to Rule 14a-8 Pursuant to Rule 14a-8 under the Exchange Act, our stockholders may present proper proposals for inclusion in the proxy statement and for consideration at our next annual meeting of stockholders. To be eligible for inclusion in the Nominations and Proposals Pursuant to Our Bylaws Under our Bylaws, a stockholder wishing to nominate a candidate for election to the Board, or propose other business for consideration, at the We encourage stockholders who wish to submit a proposal or nomination to seek independent counsel. Century will not consider any proposal or nomination that is not timely or otherwise does not meet the Bylaw and SEC requirements. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
The Board of Directors is soliciting proxies for the Annual Meeting from our stockholders. We will bear the entire cost of soliciting proxies from our stockholders. In addition to the solicitation of proxies by delivery of the Internet Notice or this proxy statement by mail, we will request that brokers, banks, and other nominees that hold shares of our common stock, which are beneficially owned by our stockholders, send Internet Notices, proxies, and proxy materials to those beneficial owners and secure those beneficial owners’ voting instructions. We will reimburse those record holders for their reasonable expenses. Although we currently do not intend to hire a proxy solicitor to assist in the solicitation of proxies, we reserve the right to do so if we believe it would be in the best interests of Century and our stockholders. If we engage a proxy solicitor, we expect the fees to be approximately $5,000 plus out-of-pocket expenses. We may use several of our regular employees, who will not be specially compensated, to solicit proxies from our stockholders, either personally or by Internet, telephone, facsimile, or special delivery letter. HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the 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 addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. A number of banks and brokers with account holders who are our stockholders will be householding our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your bank or broker, direct your written request to Century Communities, Inc., 8390 East Crescent Parkway, Suite 650, Greenwood Village, Colorado 80111, Attention: Investor Relations, or contact Investor Relations by telephone at (303) 268-8398. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their bank or broker.
INCORPORATION BY REFERENCE Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act, which might incorporate future filings made by us under those statutes, the Audit Committee Report under “Proposal No.
COPIES OF 2022 ANNUAL REPORT Our ________________ Your vote is important. Please promptly vote your shares of Century common stock by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating, and returning your proxy card or by Internet or telephone voting as described on your proxy card.
Greenwood Village, Colorado March 22, 2023
APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES In this proxy statement, we use the term Adjusted EBITDA, which is a non-GAAP financial measure. This non-GAAP financial measure is presented to provide stockholders additional information to facilitate the comparison of our past and present operations. We believe non-GAAP financial measures provide useful information to investors because they are used to evaluate our performance on a comparable year-over-year basis. Non-GAAP financial measures are not in accordance with, or an alternative for, measures calculated in accordance with U.S. generally accepted accounting principles (GAAP) and may be different from non-GAAP financial measures used by other companies. In addition, non-GAAP financial measures are not based on any comprehensive or standard set of accounting rules or principles. Accordingly, the calculation of our non-GAAP financial measures may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with our financial results as determined in accordance with GAAP. These measures should only be used to evaluate our financial results in conjunction with the corresponding GAAP measures. Accordingly, we qualify our use of non-GAAP financial information in a statement when non-GAAP financial information is presented. ADJUSTED EBITDA The following table presents EBITDA and Adjusted EBITDA for the years ended December 31, 2022 and 2021. Adjusted EBITDA is a non-GAAP financial measure we use as a supplemental measure in evaluating operating performance. We define Adjusted EBITDA as consolidated net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense or income, (iv) depreciation and amortization expense, (v) loss on debt extinguishment, and (vi) inventory impairment and other. We believe Adjusted EBITDA provides an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, and items considered to be non-recurring. Accordingly, our management believes that this measurement is useful for comparing general operating performance from period to period. Adjusted EBITDA should be considered in addition to, and not as a substitute for, consolidated net income in accordance with GAAP as a measure of performance. Our presentation of Adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our Adjusted EBITDA is limited as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. (dollars in thousands)
APPENDIX B – PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ELIMINATE OR LIMIT THE PERSONAL LIABILITY OF OFFICERS CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF CENTURY COMMUNITIES, INC. Pursuant to Section 242 of the General Corporation Law of the State of Delaware Century Communities, Inc. (hereinafter called the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows: 1. The certificate of incorporation of the Corporation is hereby amended by adding the following Article THIRTEENTH immediately following the text of current Article TWELFTH of the certificate of incorporation of the Corporation: “THIRTEENTH. An officer of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as an officer, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of an officer of the corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.” 2. The foregoing amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to Certificate of Incorporation to be executed this __ day of _________, 2023, in its name and on its behalf by its Chief Financial Officer and Corporate Secretary, pursuant to Section 103 of the General Corporation Law of the State of Delaware.
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