| ¨ | Preliminary Proxy Statement | |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| Definitive Proxy Statement | ||
| ¨ | Definitive Additional Materials | |
| ¨ | Soliciting Material | |
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| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
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| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||||
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8, 2016
| 1. | To elect the |
| 2. | To ratify, in a non-binding vote, the re-appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the |
| 3. | To approve, in an advisory and non-binding vote, the compensation of the Company’s named executive officers as disclosed in the proxy statement. |
| 4. | To approve the Toll Brothers, Inc. Stock Incentive Plan for |
| 5. | To approve an amendment to the Company’s Second Restated Certificate of Incorporation, as amended, to provide that the Company’s stockholders may remove any director from office, with or without cause. |
| 6. | To transact such other business as may properly come before the Meeting or any adjournment or postponement thereof. |
below.
2, 2016
ANNUAL STOCKHOLDER MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 12, 2014
8, 2016
ATTENDANCE AT
MEETING INFORMATION
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| |
If you plan tovote by proxy but attend the Meeting in person: 1. Indicate your votes on your proxy card; 2. Mark the box on your proxy card indicating your intention to attend; 3. Return the proxy card to the address indicated therein; and 4. Follow all admissions policies set forth above. | If you plan tovote by proxy but attend the Meeting in person: 1. Indicate your votes on the voting instruction card; 2. Mark the box on the voting instruction card indicating your intention to attend; 3. Return the card to the address indicated therein; and 4. Follow all admissions policies set forth above. | |
If you plan toattend and vote at the Meeting: 1. Bring your proxy card with you to the Meeting; 2. Send written notice* of your intention to attend the Meeting to the Michael I. Snyder, Secretary; and 3. Follow all admissions policies set forth above. | If you plan toattend and vote at the Meeting: 1. Contact your bank or broker to obtain a written legal proxy form in order to vote your shares at the Meeting; failure to obtain a legal proxy form from your bank or broker will prevent you from voting your shares at the Meeting; 2. Send written notice* of your intention to attend the Meeting to the February Michael I. Snyder, Secretary; and 3. Follow all admissions policies set forth above. | |
| * | Written notice should include: (1) your name, complete mailing address and phone number, (2) if you are a beneficial holder, evidence of your ownership, and (3) if you are a beneficial holder who is not a natural person and will be naming a representative to attend on your behalf, the name, complete mailing address and phone number of that individual. If you do not provide the requested information by February |
TABLE OF CONTENTS Page Number471011122026273030364546565757585959595960A-1 B-1
Wednesday,
2013
In determining fiscal 2015 compensation for our named executive officers ("NEOs"), the |
Executive Compensation Program Highlights
Our Executive Compensation Committee of theour Board of Directors (the “Compensation Committee”"Compensation Committee") has developedconsidered the contributions of each of our executive officers to the Company’s strategy to improve earnings and maintained a compensation program that is intendedgrow and diversify its businesses, including growth in targeted markets, growth of our apartment business, and geographic broadening of our active-adult product. The Compensation Committee also considered Company performance in fiscal 2015 and paid particular attention to rewardthe notable areas of our performance and encourage actions that drive successour management’s achievements in fiscal 2015 in the following areas:
Our compensation program features the following attributes:
The Compensation Committee recognized that fiscal 2013 was a year of significant growth for our Company and noted management’s efforts in achieving the performance outcomes set forth above under “2013 Performance Highlights.”above. Our “Compensation Discussion and Analysis” is on pages 3032 to 45,51, the “Compensation Committee Report” is on page 45,51, and our Summary Compensation Table and the other compensation tables and narrative discussion are on pages 4652 to 55.
61.
Name | Age | Director Since | Principal Occupation | Independent | ||||||
Robert I. Toll | 73 | 1986 | Executive Chairman of the Board of Directors, Toll Brothers, Inc. | |||||||
Bruce E. Toll | 70 | 1986 | Vice Chairman of the Board of Directors, Toll Brothers, Inc. Principal, BET Investments | |||||||
Douglas C. Yearley, Jr. | 53 | 2010 | Chief Executive Officer, Toll Brothers, Inc. | |||||||
Robert S. Blank | 73 | 1986 | Co-Chairman & Co-CEO, Whitney Communications Company Senior Partner, Whitcom Partners | X | ||||||
Edward G. Boehne | 73 | 2000 | Retired President, Federal Reserve Bank of Philadelphia | X | ||||||
Richard J. Braemer | 72 | 1986 | Senior Counsel, Ballard Spahr LLP | X | ||||||
Christine N. Garvey | 68 | 2009 | Retired Global Head of Corporate Real Estate Services, Deutsche Bank AG | X | ||||||
Carl B. Marbach | 72 | 1991 | President, Greater Marbach Airlines, Inc. | X | ||||||
Stephen A. Novick | 73 | 2003 | Senior Advisor, The Andrea and Charles Bronfman Philanthropies | X | ||||||
Paul E. Shapiro | 72 | 1993 | Chairman, Q Capital Strategies, LLC | X | ||||||
| Name | Age | Director Since | Principal Occupation | Independent |
| Robert I. Toll | 75 | 1986 | Executive Chairman of the Board of Directors, Toll Brothers, Inc. | |
| Bruce E. Toll | 72 | 1986 | Vice Chairman of the Board of Directors, Toll Brothers, Inc., Principal, BET Investments | |
| Douglas C. Yearley, Jr. | 55 | 2010 | Chief Executive Officer, Toll Brothers, Inc. | |
| Robert S. Blank | 75 | 1986 | Co-Chairman & Co-CEO, Whitney Communications Company Senior Partner, Whitcom Partners | ü |
| Edward G. Boehne | 75 | 2000 | Retired President, Federal Reserve Bank of Philadelphia | ü |
| Richard J. Braemer | 74 | 1986 | Senior Counsel, Ballard Spahr LLP | ü |
| Christine N. Garvey | 70 | 2009 | Retired Global Head of Corporate Real Estate Services, Deutsche Bank AG | ü |
| Carl B. Marbach | 74 | 1991 | President, Greater Marbach Airlines, Inc. | ü |
| John A. McLean | 46 | n/a | Chief Executive Officer and Distribution Principal, Hartford Funds Distributors | ü |
| Stephen A. Novick | 75 | 2003 | Senior Advisor, The Andrea and Charles Bronfman Philanthropies | ü |
| Paul E. Shapiro | 74 | 1993 | Chairman, Q Capital Holdings LLC | ü |
2016.
12.
An aggregate maximum of 7,500,000 shares of the Company’s common stock may be issued under the 2014 SIP, of which no more than 3,000,000 shares shall be available for issuing incentive stock awards and restricted stock units under the 2014 SIP, subject to adjustment. Consistent with past practice, these amounts reflect our estimated share requirement under our employee compensation program for five years, as adjusted to account for additional personnel as a result of the Shapell acquisition. If the 2014 SIP is approved by stockholders, we will cancel the remaining shares available for grant under the 2007 SIP (approximately 1.8 million shares as of January 15, 2014, the record date for the Meeting).
18.
The Board does not intend to bring any matter before the Meeting except as specifically indicated in the notice and does not know of anyone else who intends to do so; however, if any other matters properly come before the Meeting, Messrs.Mr. Robert I. Toll and Mr. Douglas C. Yearley, Jr., or either of them, will vote or otherwise act thereon in accordance with his or their judgment on such matters, acting as proxies for stockholders who have returned an executed proxy to us.
|
| Effect of Broker Non-Votes and Abstentions/Withhold Votes | |||||||
| Proposal | Broker Discretionary Voting Allowed | Broker Non- Votes | Abstentions/ Withhold Votes | ||||||
| 1. | Election of Directors | Plurality of | No | No effect | No effect | ||||
| 2. | |||||||||
| Majority of votes cast | Yes | Not applicable | No effect | |||||
| 3. | |||||||||
Advisory Say on Pay Vote | Majority of votes cast | No | No effect | No effect | |||||
| 4. | |||||||||
| Majority of votes cast | No | No effect | Against | |||||
| 5. | Approval of Charter Amendment | 66 2/3% of shares outstanding | No | Against | Against | ||||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Common Stock | ||||||
BlackRock, Inc. (2). | 15,270,529 | 8.60 | % | |||||
Robert I. Toll (3) | 13,258,543 | 7.38 | % | |||||
Bruce E. Toll (4) | 3,801,681 | 2.14 | % | |||||
Robert S. Blank | 148,535 | * | ||||||
Edward G. Boehne | 193,037 | * | ||||||
Richard J. Braemer | 334,601 | * | ||||||
Christine N. Garvey | 59,798 | * | ||||||
Carl B. Marbach (5) | 276,487 | * | ||||||
Stephen A. Novick | 155,287 | * | ||||||
Paul E. Shapiro | 278,415 | * | ||||||
Douglas C. Yearley, Jr. | 483,907 | * | ||||||
Richard T. Hartman | 176,290 | * | ||||||
Martin P. Connor | 76,242 | * | ||||||
All directors and executive officers as a group (12 persons) (1)(6) | 19,242,823 | 10.61 | % | |||||
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Common Stock | ||||
| BlackRock, Inc. (2) | 18,711,374 | 10.97 | % | |||
40 East 52nd Street New York, New York 10022 | ||||||
| JPMorgan Chase & Co. (3) | 13,671,728 | 8.02 | % | |||
270 Park Ave. New York, NY 10017 | ||||||
| The Vanguard Group (4) | 10,048,290 | 5.89 | % | |||
| 100 Vanguard Blvd. Malvern, PA 19355 | ||||||
| Goldman Sachs Asset Management (5) | 8,958,394 | 5.25 | % | |||
200 West Street New York, NY 10282 | ||||||
| Robert I. Toll (6) | 12,567,205 | 7.30 | % | |||
250 Gibraltar Road Horsham, Pennsylvania 19044 | ||||||
| Bruce E. Toll (7) | 3,391,534 | 1.99 | % | |||
| Robert S. Blank | 111,217 | * | ||||
| Edward G. Boehne | 153,283 | * | ||||
| Richard J. Braemer | 214,243 | * | ||||
| Christine N. Garvey | 27,155 | * | ||||
| Carl B. Marbach (8) | 219,571 | * | ||||
| Stephen A. Novick | 117,033 | * | ||||
| Paul E. Shapiro | 238,999 | * | ||||
| Douglas C. Yearley, Jr. | 846,808 | * | ||||
| Richard T. Hartman | 248,774 | * | ||||
| Martin P. Connor | 156,714 | * | ||||
| All directors and executive officers as a group (12 persons) (1) | 18,292,536 | 10.51 | % | |||
| (1) | Shares issuable pursuant to restricted stock units (“RSUs”) |
| presented above includes the following numbers of shares of common stock underlying RSUs and options held by the following individuals, and all directors and executive officers as a group: Mr. Robert I. Toll, |
| (2) | BlackRock, Inc. (“BlackRock”) filed a Schedule 13G/A |
| (3) | JPMorgan Chase & Co. ("JPM Chase") filed a Schedule 13G on February 1, 2016, which states that JPM Chase has sole voting power with respect to 11,956,121 shares, shared voting power with respect to 61,514 shares, sole dispositive power with respect to 13,563,666 shares, and shared dispositive power with respect to 107,637 shares. According to the Schedule 13G filed by JPM Chase, various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares, and no one person’s interest in our common stock was more than 5% of the total outstanding common stock, as of the date the Schedule 13G was filed. |
| (4) | The |
| (5) | Goldman Sachs Asset Management L.P. and GS Investment Strategies, LLC ("GSAM") filed a Schedule 13G on February 13, 2015, which states that GSAM has shared voting power with respect to 8,773,728 shares and shared dispositive power with respect to 8,958,394 shares. According to the Schedule 13G filed by GSAM, various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares, and no one person’s interest in our common stock was more than 5% of the total outstanding common stock, as of the date the Schedule 13G was filed. |
| (6) | Amount includes |
| (7) | Amount includes |
| (8) | Amount includes an aggregate of 9,400 shares beneficially owned by individual retirement accounts (“IRAs”) for the benefit of Mr. Marbach and his wife. Mr. Marbach disclaims beneficial ownership of the 4,700 shares held by his wife’s IRA. |
ELECTION OF DIRECTORS nominee's candidacy as a director. home builder. and our President until November 1998. He is a member of the Public Debt and Equity Securities Committee. He is the founder and Principal of BET Investments, a commercial real estate company, and the owner of several automobile dealerships. From June 2006 through August 2009, he was the Chairman of Philadelphia Media Holdings, L.L.C., the parent company of the Philadelphia Inquirer and the Philadelphia Daily News, and from December 2007 through February 2009, he served on the board of directors of Fifth Street Finance Corp., a company that lends to and invests in small and mid-sized companies. He brings to the Board his knowledge and experience as a co-founder of the Company and his service in various executive, director, and advisory positions with the Company since its formation in 1986; his ownership of several significant businesses has provided him with extensive managerial and leadership experience in the real estate industry and other fields, and his service on various public company boards of directors has been of added value to our Board. legal background. Systems, Inc. and as Group Executive Vice President at Bank of America. RATIFICATION OF THE RE-APPOINTMENT OF Audit Fees (1) Audit-Related Fees (2) Tax Fees (3) 6PROPOSAL ONE—Board Membership CriteriaOne of the primary purposes of theThe Nominating and Corporate Governance Committee of the Board of Directors is to identify(the "Governance Committee") identifies individuals qualified to become members of the Board of Directors consistent with criteria approved by the Board of Directors. The Nominating and Corporate Governance Committee, in selecting, or in recommending the selection of, nominees for directors, considers applicable statutory, regulatory, case law, and NYSE requirements, including when appropriate those applicable to membership on the Audit and Risk Committee and the Executive Compensation Committee, as well as whatever other criteria it deems appropriate.The Nominating and Corporate Governance Committee requires that, at a minimum, candidates possess a background that includes a strong education, extensive business experience, and the requisite reputation, character, integrity, skills, judgment, and temperament, which, in the view of the Nominating and Corporate Governance Committee, have prepared him or herthem for dealing with the multi-faceted financial, business, governance, and other issues that confront a Board of Directors of a corporation with the size, complexity, reputation, and success of the Company.The Nominating and Corporate Although the Governance Committee reviewsdoes not have a formal policy regarding diversity, it values diversity of viewpoints, background, and evaluatesexperience in considering candidates for Board membership.Board CompositionThe Governance Committee assesses annually the size and composition of the Board, including a review of DirectorsBoard size, the skills and basedqualifications represented on the Board, and director tenure. The findings of the Governance Committee's annual review of Board composition are reported to and discussed with the full Board. Based on its evaluation, the Governance Committee may recommend an increase or decrease in the size of the Board or changes in the composition of the Board so as to best reflect the objectives and needs of the Company and the desired skill sets of the Board, ordirectors. Similarly, the Governance Committee may establish processes for developing candidates for Board membership and conducting searches for Board candidates.In its review of the skills and qualifications of each director, the Governance Committee considers the characteristics that the Committee believes should be represented on the Board as a whole. The Governance Committee also reviews the composition of the Board, as well as the skills and qualifications represented on the boards of the Company's peer group. As part of this annual review of Board composition, the Governance Committee also reviews director tenure, including a comparison of director tenure to the Company's peer group.Our Lead Independent Director (who also is the Chair of the Governance Committee) leads the annual Board self-evaluation procedure to review the Board's effectiveness and to identify any opportunities for improvement. As part of this process, the Lead Independent Director receives feedback from each director regarding Board and committee composition, Board practices, Board accountability, and director standards of conduct. The Lead Independent Director leads the discussion with the Board to review this information and to identify any areas for improvement.The Board believes that, through this evaluationannual review of Board composition and nomination process, it can ensure thatcoupled with its annual self-evaluation procedure, the Board continues to evolvewill continue to meet the needs of the Company.The In fiscal 2015, the Governance Committee addressed director succession and reviewed the qualifications of a number of potential director candidates. At the beginning of fiscal 2016, the Governance Committee recommended that the Board currently consists of ten directors. Each current director is standing for re-election to hold office until the 2015 Annual Meeting of Stockholders and until his or her respective successor has been duly elected and qualified. Each nominee has indicated a willingness to continue to serve as a director. Should a nominee become unavailable to accept electionnominate Mr. McLean as a director nominee for election at the persons named inAnnual Meeting and increase the enclosed proxy will vote the shares that such proxy represents for the electionsize of such other person as the Board may nominate onto 11 members.7Our Director NomineesUpon the recommendation of the NominatingGovernance Committee, the Board has nominated the ten current directors for re-election and Corporatehas nominated Mr. McLean, who is not currently a director, for election at the Annual Meeting. Mr. McLean was initially identified to the Governance Committee. See page 2 forCommittee as a summarycandidate by our Chief Executive Officer ("CEO"). The Governance Committee determined that Mr. McLean was qualified to become a Director based on the Board membership criteria set forth above. The Governance Committee considered Mr. McLean’s candidacy and evaluated his skills and qualifications in early fiscal 2016 as part of certain information regarding ourits annual review of Board composition.The Governance Committee specifically considered Mr. McLean's expertise in areas that were previously identified as the skills and qualifications that the Board believes should be represented on the Board. Based on its evaluation of the Board’s composition and Mr. McLean’s qualifications, the Governance Committee recommended that the Board increase the size of the Board to 11 directors and nominate Mr. McLean as a director, nominees.Set forth below is certain information concerningwhich the Board approved.Director QualificationsThe Governance Committee has reviewed the business experience and qualifications of each director nominee. nominee and has concluded that the directors possess business experience in the areas set forth below. The Governance Committee believes that the directors' business experience in these areas brings value to the Board and to the Company in light of our business strategy, structure, and direction.This business experience, and these qualifications, coupled with our directors’directors' knowledge and understanding of the Company’sCompany's operations, financial condition, governance, personnel, and business ethic gained by them over time, have led the Governance Committee and the Board of Directors to the conclusion that each director provides the Company with unique perspective, insight, and skills relativethat enable him or her to our business strategy, structure,provide strong guidance and direction,leadership during all phases of the cycle of the real estate market and in times of management transition, and, therefore, that each should serve as a director of the Company.The Nominatingtable below summarizes certain key qualifications and skills of each director nominee that were relevant to the decision to nominate him or her to serve on the Board. The lack of a mark does not mean the director does not possess that qualification or skill; rather, a mark indicates a specific area of focus or expertise on which the Board relies most heavily. Each director's biography below describes his or her qualifications and relevant experience in more detail.Skills and Qualifications of our Director NomineesName Leadership Industry Operating Accounting andFinancialBusiness Development and Marketing Corporate Governance and Law Other Board Experience Robert I. Toll ü ü ü ü ü ü Bruce E. Toll ü ü ü ü ü ü Douglas C. Yearley, Jr. ü ü ü ü ü Robert S. Blank ü ü ü ü ü Edward G. Boehne ü ü ü ü ü Richard J. Braemer ü ü ü ü ü ü Christine N. Garvey ü ü ü ü ü ü Carl B. Marbach ü ü ü ü John A. McLean ü ü ü ü Stephen A. Novick ü ü ü ü Paul E. Shapiro ü ü ü ü ü ü 8In addition to the skills and qualifications referenced above, we include below other information about the backgrounds and experience of our director nominees, including specific qualifications, experience, skills, and expertise considered by the Governance Committee places great value on the knowledge our directors have gained about our Company and the home building industry during their tenure, which enables themas relevant to provide strong guidance and leadership during all phaseseach of the real estate cycle and in times of management transition.Robert I. Toll, with his brother Bruce E. Toll, founded our predecessor’s operations in 1967. He has been a member of our Board since our inception in May 1986. He served as our Chief Executive Officer and Chairman of the Board from our inception until June 2010 when he assumed the new position of Executive Chairman of the Board. He brings to the Board his dynamic entrepreneurial and leadership experience as a founder, Chairman of the Board, Chief Executive Officer and, currently, Executive Chairman of the Company, whichand has given rise to the establishment ofestablished the Company as the country’s leading luxury homebuilder.Bruce E. Toll, with his brother Robert I. Toll, founded our predecessor’s operations in 1967. He been a member of our Board since our inception in May 1986 and served as our Chief Operating Officer until May 1998Douglas C. Yearley, Jr. has been a member of our Board since June 2010. He joined us in 1990, specializing in land acquisitions from financial institutions. He has been an officer since 1994, holding the position of Senior Vice President from January 2002 until November 2005, and the position of Regional President from November 2005 until November 2009, when he was promoted to Executive Vice President. Since June 2010, he has been our Chief Executive Officer. Prior to joining us, Mr. Yearley practiced law in New Jersey as a commercial litigator. He brings to the Board a deep understanding of our industry and our business as a result of the significant operational roles in which he has served over the 2325 years he has been with the Company;Company, his managerial and leadership experience, and his background as an attorney have been positive contributors to the Company.Robert S. Blank has been a member of our Board since September 1986. He is a member of the Nominating and Corporate Governance Committee and the Public Debt and Equity Securities Committee.Committees. Since 2003, Mr. Blank has been Co-Chairman and Co-Chief Executive Officer of Whitney Communication Company (“WCC”) and Senior Partner of Whitcom Partners. In recent years, WCC and Whitcom Partners have sold the companies they have owned—major market FM radio stations, network-affiliated TV stations, daily and non-daily newspapers in five states, and cable television systems in New England. Currently, Whitcom Partners and its two partners individually make investments in public and non-public companies. Mr. Blank brings to the Board the skills and experience gained in his executive leadership roles in a major company in the communications industry, as well as in the investment field.Edward G. Boehne has been a member of our Board since July 2000 and our Lead Independent Director since March 2011. He is the Chair of the Nominating and Corporate Governance Committee and a member of the Audit and Risk Committee. From 1981 until his retirement in May 2000, Mr. Boehne was the President of the Federal Reserve Bank of Philadelphia. Mr. Boehne is a member of the board of directors of Beneficial Mutual Bancorp, Inc., and its subsidiary, Beneficial Bank, and Penn Mutual Life Insurance Co. and AAA Mid-Atlantic, Inc. (including the related holding company, AAA Club Partners). Mr. Boehne is also a member of the board of directors of, and Senior Economic Advisor to, the Haverford Trust Company. He brings to the Board his reputation and accomplishments as a leader and expert in the Federal bank regulatory field, as well as his current service in various board and advisory positions with high profile companies in the banking and insurance industries.9Richard J. Braemer has been a member of our Board since September 1986. He is the Chair of the Public Debt and Equity Securities Committee. He is senior counsel at the law firm of Ballard Spahr LLP, where he was a partner from 1994 through 2008. Mr. Braemer is a director Chairman of the Compensation Committee and past Chairman of the Board of Directors of the Albert Einstein Healthcare Network, a Philadelphia-based, non-profit healthcare network. In addition to his professional skills as an attorney practicing primarily in the field of mergers and acquisitions, including transactions with a real estate element,transactions, he brings to our Board the experience gained both as a former board member and audit committee chair of a public company and as an advisor to boards, board committees, and independent directors of publicly and privately held corporations.Christine N. Garvey has been a member of our Board since September 2009. She is a member of the Audit and Risk Committee. She was the Global Head of Corporate Real Estate Services at Deutsche Bank AG from 2001 to 2004. Prior to that, she served as Vice President of Worldwide Real Estate and Workplace Resources at CiscoShe is alsoMs. Garvey has been a member of the board of directors of HCP, Inc. and Maguire Properties, Inc.since 2007. She also has served as a member of the board of ProLogis since September 2005, when Catellus Development Corporation, of which she had been a member of the board since 1995, merged into a subsidiary of ProLogis. Ms. Garvey served on the board of directors of Hilton Hotels Corporation through October 2007. She brings to the Board her extensive knowledge of and background in real estate and banking and her experience in executive leadership positions and board memberships with various public entities in the national real estate market.Carl B. Marbach has been a member of our Board since December 1991. He is the Chair of the Executive Compensation Committee and a member of the Audit and Risk Committee and the Public Debt and Equity Securities Committee. Since January 2004, Mr. Marbach has been President of Greater Marbach Airlines, Inc., a company that provides aviation and consulting services. From January 1995 to January 2004, Mr. Marbach was President of Internetwork Publishing Corp., an electronic publisher, which he founded. He brings to the Board his expertise in the field of information technology, as well as his entrepreneurial experiences in building businesses in that and other industries.John A. McLean is the Chief Executive Officer and Distribution Principal for Hartford Funds Distributors, a subsidiary of Hartford Funds, a position he has held since January 2013. From April 2009 to May 2012, he was the Head of U.S. Retail and Offshore Sales at Eaton Vance Investment Managers. Prior to that time, Mr. McLean held positions of increasing responsibility at MFS Fund Distributors. He serves on the Board of Trustees of Gateway to Leadership. Mr. McLean brings to the Board his expertise in building and leading high performance sales and marketing organizations and his strategic and tactical leadership skills.Stephen A. Novick has been a member of our Board since January 2003. He is a member of the Executive Compensation Committee and the Nominating and Corporate Governance Committee.Committees. Mr. Novick serves as Senior Advisor to The Andrea and Charles Bronfman Philanthropies, a private family foundation. Until December 2006, Mr. Novick was a consultant to Grey Global Group, a marketing communications company. From 1990 until his retirement in December 2004, Mr. Novick was Chief Creative Officer-Worldwide, and from April 2000 to December 2004 was Vice Chairman, of Grey Global Group. Mr. Novick is also a member of the board of directors of Ark Restaurant Corp. In April 2015, he was elected to the Board of Trustees of The Julliard School. In addition to the experience gained in his roles in the corporate and non-profit sectors, he brings to our Board his creative skills, leadership, and expertise in the field of marketing communications.10Paul E. Shapiro has been a member of our Board since December 1993. He is the Chair of the Audit and Risk Committee and a member of the Executive Compensation Committee. Since June 2004, Mr. Shapiro has been Chairman of the Board of Q Capital Strategies,Holdings LLC, aand he is Chairman of the Board of its two operating companies that are in the life settlement company.business. From January 2004 to June 2004, Mr. Shapiro was Senior Vice President of MacAndrews & Forbes Holdings, Inc., a private holding company of operating businesses. From June 2001 to December 2003, Mr. Shapiro was Executive Vice President and Chief Administrative Officer of Revlon Inc. Prior thereto, Mr. Shapiro practiced corporate and securities law as a managing shareholder of the Palm Beach County office of Greenberg Traurig LLP (which acquired Shapiro and Bregman, a firm he co-founded) and was a partner in Wolf, Block, Schorr and Solis-Cohen. He brings to the Board his extensive business experience in executive positions with various nationally known companies, which he has served in a wide variety of capacities that have drawn upon his legal and entrepreneurial skills, including those in the areas of corporate governance and the regulatory corporate environment.Required VoteDirector nominees are elected by a plurality of the votes cast at the Meeting. We have been advised that it is the intention of Messrs. Robert I. Toll and Bruce E. Toll to vote the shares of common stock they each own “FOR” the election of each of the nominees named above. See “Voting Securities and Beneficial Ownership—Security Ownership of Principal Stockholders and Management.”THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE“FOR” “FOR” ALL NOMINEES.11PROPOSAL TWO—INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMAs part of its oversight of the Company’s relationship with our independent auditors, the Audit and Risk Committee (the "Audit Committee") reviews annually our independent auditors’ qualifications, performance, and independence. Based on the results of this review, the Audit Committee re-appointed Ernst & Young LLP to serve as the Company’s independent auditors for the fiscal year ending October 31, 2014.2016. Ratification is being sought at the Meeting in a non-binding vote of stockholders. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of Ernst & Young LLP to our shareholdersstockholders for ratification because we value our stockholdersstockholders' views on the Company’s independent auditors. If our stockholders fail to ratify the selection, it will be considered notice to the Board and Audit Committee to consider the selection of a different firm.RepresentativesA representative of Ernst & Young LLP areis expected to be present at the Meeting, will be afforded the opportunity to make a statement, if they desire, and areis expected to be available to respond to appropriate questions. We have been advised by Ernst & Young LLP that neither the firm, nor any member of the firm, has any financial interest, direct or indirect, in any capacity in us or our subsidiaries.Audit and Non-Audit FeesThe following table sets forth the fees earned for services rendered by Ernst & Young LLP for professional services for the fiscal years ended October 31, 20132015 and 2012: 2013 2012 $ 1,298,645 $ 1,510,793 31,995 31,845 23,398 30,898 $ 1,354,038 $ 1,573,536 2015 2014 Audit Fees (1) $ 1,257,500 $ 1,313,831 Audit-Related Fees (2) 31,990 40,485 Tax Fees (3) 51,343 40,000 All Other Fees — — $ 1,340,833 $ 1,394,316 (1) “Audit Fees” include fees billed for (a) the audit of Toll Brothers, Inc. and its consolidated subsidiaries, (b) the audit of the Company’s internal control over financial reporting, (c) the review of quarterly financial information, and (d) the issuance of consents and comfort letters to underwriters in various filings with the SEC.Securities and Exchange Commission ("SEC").(2) “Audit-Related Fees” include fees billed for audits of a certain joint venture in which we have an interest, workpaper review of an acquired entity, and fees for the use of the independent auditors’ technical accounting research tool. (3) “Tax Fees” include fees billed for consulting on tax planning matters and tax compliance matters.
2015.
61.
34.
NON-EXECUTIVE DIRECTORS (2016)
The 2014 SIPDirector Plan is intended, by means of issuancegrants of Grants,Options and Stock Awards, to form a part of the Company’s overall compensation program for employees (including NEOs)Non-Executive Directors, and it is intended to align their interests with those of the Company and of its affiliates,our stockholders and to serve as a particular incentive for all such employeesincentivize the Non-Executive Directors to devote themselves to the future success of the Company. In
Director Plan are as follows:
Material Provisions of the 2014 SIP
The following is a brief summary of the material provisions of the 2014 SIP. Because this is only a summary, it may not contain all of the information about the 2014 SIP that may be important to you and is qualified in its entirety by the full text of the 2014 SIP set forth in Annex A.
1. Number of Shares.An aggregate maximum of seven million five hundred thousand (7,500,000) shares of the Company’s common stock may be issued under the 2014 SIP, of which no more than three million (3,000,000) shares shall be available for issuing Awards, RSUs, or performance-based Awards or RSUs under the 2014 SIP, subject to adjustment in the event there is a stock dividend, stock split, or other increase or decrease in the number of shares of common stock (insubject to grants made during a calendar year to any Non-Executive Director for service as a director, taken together with any cash fees paid to such event,Non-Executive Director for service as a director, during such calendar year, shall not exceed $1,000,000 in total value, calculating the Compensation Committee has the authority to determine what adjustments are appropriate).value of any such grants based on grant date fair value for financial reporting purposes.
2. Administration.The 2014 SIP is currentlyDirector Plan will be administered by the CompensationGovernance Committee, (withoutalong with the participation by any member of the Board on any matters pertaining to him or her).
Board.
Director Plan.
15, 2025.
issuance.
(f) A finding by the CompensationGovernance Committee, after full consideration of the facts presented on behalf of both the Company and employee,the Director, that the employeeDirector has breached the terms of his or her employment withfiduciary duty to the Company or an affiliate, or has been engaged in any sort of disloyalty to the Company or an affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his
or her employment or service or has disclosed trade secrets of the Company or an affiliate. In such event, the employeeDirector will also automatically forfeit all shares subject to OptionOptions or SAR issuancesSARs previously exercised that have not yet been delivered to the employeeDirector and the employeeDirector will receive a refund of any amounts paid for such shares.
Director Plan.
SAR shall be equal to the value of the shares of Common Stockcommon stock underlying the SAR as of the date the SAR is exercised, reduced by the deemed exercise price of the SAR applicable to the portion of the SAR being exercised. On exercise, the holder of the SAR shall be entitled to receive either cash or shares of Common Stock,common stock, having a value equal to the value of the SAR (or portion being exercised). Whether the recipient of an SAR is entitled to cash or shares of Common Stockcommon stock upon exercise may be specified in the SAR document. For all purposes of the 2014 SIP, SARs are to be treated as though each SAR constituted an issuance of a NQSO for a number of Option Shares equal to the number of shares of Common
11. Awards.Under the
409A.
In order to issue a performance-based Award or RSU, the Compensation Committee must establish one or more performance targets for the applicable performance period. In all cases, the performance target(s) established with respect to any performance period must be established within the first 90 days of the performance period or, if shorter, within the first twenty-five percent (25%) of the performance period, and at such time that the attainment of such performance targets is substantially uncertain. Performance targets may vary for different recipients. Performance targets established under the 2014 SIP must consist of one or more goals as to which an objective method or methods is available for determining if it has been achieved. Additionally, the Compensation Committee must establish an objective method for computing the portion of a particular performance-based Award or RSU that may be treated as vested as a result of attaining such performance target(s).
The performance target(s) may be established with reference to the Company as a whole, any of the Company’s subsidiaries, operating divisions, or other operating units, or any combination. Each performance target shall be based on one or more of the following business criteria: debt ratings, debt to capital ratio, generation of cash, issuance of new debt, establishment of new credit facilities, retirement of debt, return on assets, return on capital, return on equity, attraction of new capital, cash flow, earnings per share, net income, pre-tax income, pre-tax pre-bonus income, operating income, gross revenue, net revenue, gross homebuilding margin, net margin, pre-tax margin, share price, total stockholder return, acquisition of assets, acquisition of companies, creation of new performance and compensation criteria for key personnel, recruiting and retaining key personnel, customer satisfaction, employee morale, acquisition or disposition of other entities or businesses, acquisition or disposition of assets, hiring of strategic personnel, development and implementation of Company policies strategies and initiatives, creation of new joint ventures, new contracts signed, increasing the Company’s public visibility and corporate reputation, development of corporate brand name, overhead cost reductions, unit deliveries, or any combination of or variations on the foregoing. The performance targets based on these business criteria may be measured, where the Compensation Committee deems appropriate, before or after any applicable
write-offs, and may be measured in comparison to a budget approved by the Compensation Committee, a peer group established by the Compensation Committee or a stated goal established by the Compensation Committee. The performance targets may also be modified at the discretion of the Compensation Committee to take into account significant items or events, and may be adjusted to reflect the opening or expanding of new geographic regions or development of new business lines. In addition, to the extent consistent with requirements for characterizing compensation as “performance-based” under Section 162(m) of the Code and applicable regulations, performance targets may also be based upon the recipient’s attainment of business objectives with respect to any of the business criteria described above, or in the implementation of policies and plans, negotiating transactions, developing long-term business goals or exercising managerial responsibility.
In no event will any recipient of performance-based Awards or RSUs be eligible to receive more than 350,000 shares of the Company’s common stock as a performance-based Award, or the economic equivalent of such shares in the case of performance-based RSUs, during any one calendar year. Where a performance period is not equal to a calendar year, or where there are overlapping performance periods within a calendar year, this limitation will be applied by the Compensation Committee in any manner that is consistent with the limitation set forth herein and consistent with the provisions of Section 162(m) of the Code and applicable regulations. For these purposes, performance-based Awards and performance-based RSUs will be taken into account on an aggregated basis.
14.
Control.
15.
16.Recovery of Grants. Notwithstanding any other provision of the Plan to the contrary, any Grant made to an employee, any share of Common Stock delivered to an employee in respect of a Grant, or any gain realized by an employee in connection with a Grant, which is subject to clawback or other recovery under any law, government regulation, stock exchange listing requirement or Company policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement, will be subject to such forfeiture and clawback as required pursuant to such law, government regulation, stock exchange listing requirement or Company policy, as determined by the Committee in its sole discretion. If the Committee determines that any forfeiture and clawback is so required, then each affected employee shall forfeit and return, if previously paid or delivered, to the Company the applicable Grant, shares or gains, as determined by the Committee.
17.
Taxation of Incentive Stock Options. A recipient of an ISO will not recognize regular taxable income upon either the issuance or exercise of the ISO. The Optionee will recognize capital gain or loss on a disposition of the shares acquired upon exercise of an ISO, provided the Optionee does not dispose of those shares within two years from the date the ISO was issued or within one year after the shares were acquired by such Optionee. If the Optionee satisfies both of the foregoing holding periods, then the Company will not be allowed a deduction by reason of the issuance or exercise of an ISO. For regular federal income tax purposes, the rate of tax applicable to capital gains is generally dependent on whether the shares have been held for more or less than one year at the time of sale.
As a general rule, if the Optionee disposes of the shares acquired through the exercise of an ISO before satisfying both holding period requirements (a “disqualifying disposition”), the gain recognized by the Optionee on the disqualifying disposition will be taxed as ordinary income to the extent of the difference between (a) the lesser of the fair market value of the shares on the date of exercise or the amount received for the shares in the disqualifying disposition, and (b) the adjusted basis of the shares, and the Company will be entitled to a deduction in that amount. The gain (if any) in excess of the amount recognized as ordinary income on a disqualifying disposition will be treated as capital gain, with the maximum federal tax rate determined by reference to the length of time the Optionee held the shares prior to the disposition, as discussed above.
The amount by which the fair market value of a share at the time of exercise exceeds the Option exercise price will be included in the computation of such Optionee’s “alternative minimum taxable income” in the year the Optionee exercises the ISO. If an Optionee pays alternative minimum tax with respect to the exercise of an ISO, then the amount of such tax paid may be allowed as a credit against regular tax liability in subsequent years.
The Optionee’s basis in the shares for purposes of the alternative minimum tax will be adjusted when income from a disposition of the shares is included in alternative minimum taxable income.
Deductibility of Executive Compensation Under the Million Dollar Cap Provisionsobligation triggered by reason of the Internal Revenue Code. Section 162(m)compensation of the Code sets limits on the deductibility of compensation in excess of $1,000,000 paid by publicly held companies to certain employees (the “million dollar cap”). The IRS has also issued Treasury Regulations which provide rules for the application of the “million dollar cap” deduction limitation. Income which is treated as “performance-based compensation” under these rules will not be subject to the limitation on deductibility by the Company imposed by Code Section 162(m). In order for income that is recognized as ordinary compensation income on the exercise of a NQSO to be treated as “performance-based compensation” under these rules (i.e., not subject to the deduction limitations of the “million dollar cap”), the NQSO must be granted under a plan which complies in form with certain rules, the plan must be administered consistent with those rules, and the NQSO must meet certain requirements. The Company believes the 2014 SIP and the NQSO and SARs comply in form with the applicable “performance-based compensation” rules. It is the intention of the Board of Directors to continue to cause the 2014 SIP to be administered by “outside directors” consistent with the rules applicable to plan administration to the extent that is possible and to the extent other considerations do not cause the Board of Directors to conclude that such compliance with the administrative rules is not in the best interests of the Company. It is, therefore, anticipated that ordinary compensation income attributable to NQSO and SARs issued to certain employees under the 2014 SIP as amended generally will be treated as “performance-based compensation” exempt from the “million dollar cap” rules unless circumstances at the time of any such issuance causes the Board of Directors to determine that compliance with the applicable requirements is not in the best interest of the Company. The Board of Directors also anticipates that it will, in such event, take such
steps as it deems appropriate in order to avoid to the extent practicable any detrimental impact of the “million dollar cap.” In addition, the 2014 SIP, as amended, includes provisions that permit issuances to be made in the form of Awards and RSUs that may or may not be intended to qualify as “performance-based” compensation for purposes of Section 162(m). The issuances of performance-based Awards and performance-based RSUs are intended to result in compensation income to the recipients only if the performance targets established with respect to those Awards or RSUs are attained. Assuming the 2014 SIP Amendment is approved, and assuming that the performance-based Awards and RSUs are implemented as they are intended and consistent with the terms of the 2014 SIP Amendment, this income should qualify as “performance-based compensation” that is exempt from the “million dollar cap” rules.
Non-Executive Directors.
Upon approval by the stockholders of the 2014 SIP, the 2007 SIP shall be terminated with respect to granting additional options, RSUs, and any other awards of stock, no further grants will be made under the 2007 SIP, and the Toll Brothers, Inc. Stock Incentive Plan (1998) and the 2007 SIP will be continued solely for the purpose of administering grants previously made thereunder. If the 2014 SIP is not approved by stockholders, the 2007 SIP will continue in effect pursuant to its terms.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| (In thousands) | (In thousands) | |||||||||||
Equity compensation plans approved by security holders | 9,924 | $ | 24.513 | 2,993 | ||||||||
Equity compensation plans not approved by security holders | — | — | ||||||||||
|
|
|
| |||||||||
Total | 9,924 | $ | 24.513 | 2,993 | ||||||||
|
|
|
| |||||||||
There are no plans that have not been approved by stockholders.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | |||||||
| (a) | (b) | (c) | ||||||||
| (In thousands) | (In thousands) | |||||||||
| Equity compensation plans approved by security holders | 9,685 | $ | 25.7451 | 7,541 | ||||||
| Equity compensation plans not approved by security holders | — | — | ||||||||
| Total | 9,685 | $ | 25.7451 | 7,541 | ||||||
| (1) | Amount includes 8,025,000 shares and 1,660,000 shares of stock options and RSUs, respectively, outstanding as of October 31, 2015. The amount of performance-based RSUs, which is included in the RSU amount, reflects the maximum number of shares that could be issued under the fiscal 2015 award as further described under "2015 Performance-Based RSUs" on page 44. |
| (2) | The weighted-average exercise price does not take into account the 1,660,000 shares of RSUs outstanding as of October 31, 2015. |
Director Independence
Under the NYSE rules and the standards adopted by the Board, a director is not “independent” unless the Board affirmatively determines that the director has no direct or indirect material relationship with us. In addition, the director must meet the requirements for independence set forth by the NYSE rules.
The Board has established categorical standards of director independence to assist it in making independence determinations. These standards, which are described below, set forth certain relationships between us and the directors, and their immediate family members or entities with which they are affiliated, that the Board, in its judgment, has determined to be material or immaterial in assessing a director’s independence. The standards applied by the Board in affirmatively determining whether a director is “independent” provide that a director is not independent if:
(1) the director is, or has been within the last three years, our employee or an immediate family member (defined as including a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone, other than domestic employees, who shares such person’s home) of, or is, or has been within the last three years, one of our executive officers;
(2) the director has received, or has an immediate family member who has received, during any12-month period within the last three years, more than $120,000 per year in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
(3)(a) the director is a current partner or employee of a firm that is our internal or external auditor; (b) the director has an immediate family member who is a current partner of such a firm; (c) the director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (d) the director or an immediate family member was, within the last three years, a partner or employee of such a firm and personally worked on our audit within that time;
(4) the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee;
(5) the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to or received payments from us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or two percent of such other company’s consolidated gross revenues; and
(6) the director or an immediate family member is, or within the past three years has been, an affiliate of another company in which, in any of the last three years, any of our present executive officers directly or indirectly either:
(a) owned more than five percent of the total equity interests of such other company, or
(b) invested or committed to invest more than $900,000 in such other company.
The Board annually reviews the independence of all directors. The Board, in applying the above-referenced standards, has affirmatively determined that all of our directors are independent, other than Messrs. Robert I. Toll, Bruce E. Toll and Douglas C. Yearley, Jr. As part of the Board’s process in making such determination, the Board determined that all of the above-cited objective criteria for independence are satisfied, and that no independent director has any material relationship with us that could interfere with his or her ability to exercise independent judgment.
strategy, particularly with respect to product and geographic expansion.
Name Douglas C. Yearley, Jr. Robert S. Blank Edward G. Boehne Richard J. Braemer Christine N. Garvey Carl B. Marbach Stephen A. Novick During The Audit Committee meets regularly in executive session with management, the company’s Chief Audit Officer, and our independent registered public accounting firm. Compensation Committee's independent compensation consultant and its affiliates did not provide any services to the Company or its affiliates other than advising the Compensation Committee on executive officer compensation. compensation of our directors. The 2015. The Public Debt and Equity Securities Committee held one meeting during fiscal 2015. Stockholders. 2015. Each member Name Robert S. Blank Edward G. Boehne Richard J. Braemer Christine N. Garvey Carl B. Marbach Stephen A. Novick Paul E. Shapiro Bruce E. TollCodes of Business Conduct and EthicsManagement has adopted a Code of Ethics for Principal Executive Officer and Senior Financial Officers, violations of which must be reported to the Audit Committee or to our Chief Executive OfficerCEO or General Counsel. This code and any waiver or amendment to the code are available free of charge from our website atwww.tollbrothers.com under “Investor Relations: Corporate Governance.”21We operate under a comprehensive Code of Ethics and Business Conduct that we review annually and that applies to all directors, officers, and employees and includes provisions ranging from conflicts of interest and acceptance of gifts to harassment, discrimination, and other employment-related matters. Upon employment with us, all employees are required to affirm in writing their receipt and review of the code and their compliance with its provisions. Copies of thisThis code can be obtained free of charge from our website atwww.tollbrothers.com under “Investor Relations: Corporate Governance.”Director IndependenceUnder the NYSE rules and the standards adopted by the Board, a director is not “independent” unless the Board affirmatively determines that the director has no direct or indirect material relationship with us. In addition, the director must meet the requirements for independence set forth by the NYSE rules.The Board has established categorical standards of director independence to assist it in making independence determinations. These standards, which are described below, set forth certain relationships between us and the directors, and their immediate family members or entities with which they are affiliated, that the Board, in its judgment, has determined to be material in assessing a director’s independence. The standards applied by the Board in affirmatively determining whether a director is “independent” provide that a director is not independent if:(1) the director is, or has been within the last three years, our employee or an immediate family member (defined as including a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone, other than domestic employees, who shares such person’s home) of, or is, or has been within the last three years, one of our executive officers; (2) the director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 per year in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); (3) (a) the director is a current partner or employee of a firm that is our internal or external auditor; (b) the director has an immediate family member who is a current partner of such a firm; (c) the director has an immediate family member who is a current employee of such a firm and personally works on our audit; or (d) the director or an immediate family member was, within the last three years, a partner or employee of such a firm and personally worked on our audit within that time; (4) the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee; (5) the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to or received payments from us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or two percent of such other company’s consolidated gross revenues; and (6) the director or an immediate family member is, or within the past three years has been, an affiliate of another company in which, in any of the last three years, any of our present executive officers directly or indirectly either: (a) owned more than five percent of the total equity interests of such other company, or (b) invested or committed to invest more than $900,000 in such other company. 22The Board annually reviews the independence of all directors. The Board, in applying the above-referenced standards, has affirmatively determined that all of our directors are independent, other than Mr. Robert I. Toll, Mr. Bruce E. Toll, and Mr. Yearley. As part of the Board’s process in making such determination, the Board determined that all of the above-cited objective criteria for independence are satisfied, and that no independent director has any material relationship with us that could interfere with his or her ability to exercise independent judgment.Compensation Committee Interlocks and Insider ParticipationNone of the members ofwho served on the Compensation Committee during the fiscal year ended October 31, 20132015 has ever been an officer or employee of the Company or its subsidiaries. None of the members has any relationship required to be disclosed under this caption under the rules of the SEC.Personal Loans to Executive Officers and DirectorsWe do not permit personal loans from the Company to or for the benefit of our directors or executive officers.Communication with the BoardAny person who wishes to communicate with the Board or specific individual directors, including the Lead Independent Director or the independent directors as a group, may do so by directing a written request addressed to such directors or director in care of the General Counsel, Toll Brothers, Inc., at the address appearing on the cover page of this proxy statement. Communications directed to members of the Board who are management directors will be referred to the intended Board member(s) except to the extent that it is deemed unnecessary or inappropriate to do so pursuant to the procedures established by the independent directors. Communications directed to independent directors will be referred to the intended Board member(s).Director AttendanceAttendance at Board MeetingsThe Board held four regular meetings and one special meeting during our 2013 fiscal year.Each director during our 2013 fiscal year attended all of the meetings of the Board and of the committees of which he or she was a member, except one Audit Committee member was not present at two Audit Committee meetings held to review periodic reports.Our independent directors hold separate meetings. Edward G. Boehne, our Lead Independent Director, acts as chair at meetings of the independent directors. During our 2012 fiscal year, the independent directors met four times.Attendance at Annual Meetings of StockholdersIt is the policy of our Board that all directors attend annual meetings of stockholders except where the failure to attend is due to unavoidable circumstances or conflicts discussed in advance by the director with the Executive Chairman of the Board. All of our Directors attended our 2013 Annual Meeting of Stockholders.Committees of the Board and MeetingsThe Board currently has the following standing committees: Audit and Risk Committee; Executive Compensation Committee; Nominating and Corporate Governance Committee; and Public Debt and Equity Securities Committee. The following table lists our four Board committees, as well as the chairs and members of each committee, for our entire 20132015 fiscal year and at present.Independent Audit and Risk Committee Executive CompensationCommitteeCompensationNominating& CorporateGovernanceCommitteeNominating/CorporateGovernance CommitteePublic Debt/Debt & EquitySecuritiesCommitteeRobert I. Toll Bruce E.Robert I. Toll Bruce E. Toll M Mü M M ü M M C Mü C Mü M ü M MC M ü M M Paul E. Shapiro MüC M Paul E. ShapiroMCMC-Chair M-Member23Audit and Risk CommitteeThe Audit Committee is, comprisedand for the entire 2015 fiscal year was, composed of Paul E. Shapiro (Chair), Edward G. Boehne, Christine N. Garvey, and Carl B. Marbach, each of whom was a member of the Audit Committee for our entire 2013 fiscal year. Each member of the Audit Committee has been determined by the Board to meet the standards of independence required of audit committee members by the NYSE and applicable SEC rules. For more information on the NYSE standards for independence, see “Director Independence” above. The Board has also determined that all members of the Audit Committee are financially literate, and that Edward G. Boehne possesses accounting and related financial management expertise within the meaning of the listing standards of the NYSE and is an “audit committee financial expert” within the meaning of the applicable SEC rules. For a description of Mr. Boehne’s relevant experience, see “Proposal One—Election of Directors.”The duties and responsibilities of the Audit Committee are set forth in its charter, which may be found atwww.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:acting on behalf of our Board to discharge the Board’s responsibilities relating to the quality and integrity of our financial statements;overseeing our compliance with legal and regulatory requirements;overseeing risk oversight and assessment;the appointment, qualifications, performance and independence of the independent registered public accounting firm;pre-approval of all audit engagement fees and terms, all internal-control related services, and all permitted non-audit engagements (including the terms thereof) with the independent auditor; andreview of the performance of our internal audit function.function; andmanagement of the Company’s significant risks and exposures, including strategic, operational, compliance, and reporting risks.The duties of the Audit Committee with respect to oversight of the Company’s financial reporting process are described more fully on page 5662 under “Report of the Audit Committee.“Audit and Risk Committee Report.”the 2013 fiscal year,2015, the Audit Committee held 12 regular meetings, as well as one special meeting.11 meetings. All of its meetings were attended by representatives from Ernst & Young LLP, our independent registered public accounting firm.Executive Compensation CommitteeThe Compensation Committee is, and for the entire 20132015 fiscal year was, comprisedcomposed of Carl B. Marbach (Chair), Stephen A. Novick, and Paul E. Shapiro, each of whom has been determined by the Board to meet the NYSE’s standards for independence.independence required of compensation committee members. In addition, each committee member has been determined by the Board to qualifyqualifies as a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act and as an “outside director” as defined for purposes of Section 162(m) of the Code.The duties and responsibilities of the Compensation Committee are set forth in its charter, which may be found atwww.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:establishing our compensation philosophy and objectives;overseeing the implementation and development of our compensation programs;annually reviewing and approving corporate goals and objectives relevant to the compensation of the Executive Chairman of the Board and the CEO;24evaluating the performance of the Executive Chairman of the Board and the CEO in light of those goals and objectives and determining each of the Executive Chairman of the Board’s and CEO’s compensation level based on these evaluations;reviewing and approving all elements and levels of compensation for our executive officers and any other officers recommended by the Board;discussing the results of the stockholder advisory vote on “say-on pay;”Say on Pay;making recommendations to the Board with respect to incentive compensation plans and equity-based plans;administering (in some cases, along with the Board) all of our stock-based compensation plans, as well as the Toll Brothers, Inc. Senior Officer Bonus Plan and the SERP;Supplemental Executive Retirement Plan ("SERP");reviewing and approving, or making recommendations to the full Board regarding, equity-based awards; andreviewing our regulatory compliance with respect to compensation matters.In fulfilling its responsibilities, the Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the committee. For a discussion concerning the process and procedures for determining executive compensation and the role of executive officers and compensation consultants in determining or recommending the amount or form of compensation, see the “Compensation Discussion and Analysis” beginning on page 30.32. The Compensation Committee held four regular meetings and two specialsix meetings during fiscal 2015. During fiscal 2015, the 2013 fiscal year.Nominating and Corporate Governance CommitteeThe Nominating and Corporate Governance Committee is, and for the entire 20132015 fiscal year was, comprisedcomposed of Edward G. Boehne (Chair), Robert S. Blank, and Stephen A. Novick, each of whom has been determined by the Board to meet the NYSE’s standards for independence.The duties and responsibilities of the Nominating and Corporate Governance Committee are set forth in its charter, which may be found atwww.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:identifying individuals qualified to become members of the Board and recommending to the Board the nominees for election to the Board;evaluating from time to time the appropriate size of the Board and recommending any changes in the composition of the Board so as to best reflect our objectives;assessing annually the composition of the Board, including a review of Board size, the skills and qualifications represented on the Board, and director tenure;evaluating and making recommendations to the Board with respect to the compensation of the non-management directors;adopting and reviewing, at least annually, corporate governance guidelines consistent with the requirements of the NYSE;establishing procedures for submission of recommendations or nominations of candidates to the Board by stockholders;reviewing the Board’s committee structure;25reviewing proposed changes to our governance instruments;reviewing and recommending director orientation and continuing orientation programs; andreviewing and approving related person transactions;transactions.The Governance Committee is responsible for evaluating andacting on behalf of making recommendations to the Board with respect to certain administrative matters. Nominating and Corporate Governance Committee, along with the Board, administers the 2007 Director Plan and is expected to administer, along with the Board, the Director Plan once approved by stockholders. See "Proposal Four—Approval of the Toll Brothers, Inc. Amended and Restated Stock Incentive Plan for Non-EmployeeNon-Executive Directors (2007) (the “Directors Plan”).(2016)" on page 14 for a description of the Director Plan. The Nominating and Corporate Governance Committee held three regularfour meetings and one special meeting during the 2013 fiscal year.Public Debt and Equity Securities CommitteeThe Public Debt and Equity Securities Committee is, and for the entire 20132015 fiscal year was, composed of Richard J. Braemer (Chair), Robert S. Blank, Carl B. Marbach, and Bruce E. Toll.The duties and responsibilities of the Public Debt and Equity Securities Committee are set forth in its charter, which may be found atwww.tollbrothers.com under “Investor Relations: Corporate Governance,” and include reviewing and approving, pursuant to authority granted by the Board, certain transactions relating to our public debt and equity securities and those of our affiliates.Director AttendanceAttendance at Board MeetingsThe Board held four meetings during fiscal 2015.All directors attended over 75% or more of the 2013 fiscal year.Consideration and Selectionmeetings of Nominees for the BoardThe Nominating and Corporate Governance Committee is authorized to consider candidates for Board membership suggested by its members and by other Board members, as well as by management and by stockholders. A stockholder who wishes to recommend a prospective candidate for membership on the Board should follow the procedures described in this proxy statement under the caption “Procedures for Nominating Candidates or Recommending Candidates for Nomination to the Board of Directors.” Once a prospective candidate has been identified by, or presented to, the Nominating and Corporate Governance Committee, background information is elicited about the candidate, and the candidate is investigated and evaluated by the Nominating and Corporate Governance Committee and, if deemed appropriate, interviewed. Following this process, the Nominating and Corporate Governance Committee reports to the Board and makes a recommendation regardingBoard Committees on which they served.Our independent directors hold separate meetings. Edward G. Boehne, our Lead Independent Director, acts as chair at meetings of the prospective candidate. No distinctions areindependent directors. During fiscal 2015, the independent directors met four times.Attendance at Annual Meetings of StockholdersIt is the policy of our Board that all directors attend annual meetings of stockholders except where the failure to be made as between internally-recommended candidates and those recommendedattend is due to unavoidable circumstances or conflicts discussed in advance by stockholders.Eachthe director candidate should, at a minimum, possess a background that includes a strong education, extensive business experience, and the requisite reputation, character, integrity, skills, judgment, and temperament, which, in the Nominating and Corporate Governance Committee’s judgment, have prepared him or her for dealing with the multi-faceted financial, business, and other issues that confront a boardExecutive Chairman of directorsthe Board. All of a corporation with our size, complexity, reputation, and success. Although the Nominating and Corporate Governance Committee does not have a formal policy regarding diversity, the Nominating and Corporate Governance Committee takes into account diversityDirectors attended our 2015 Annual Meeting of viewpoints, background, experience, and temperament in considering candidates for Board membership.26Risk OversightOur Audit Committee regularly receives reports from a risk management committee comprised of representatives from various business functions within the Company that are charged with risk assessment and business continuity planning. This committee meets on a regular basis and selects topics related to specific risks and potential vulnerabilities related to particular business functions of the Company, which topics are then presented to the Audit Committee along with a summary of the measures we have taken or plan to take in order to define and mitigate such risks and prepare for and address such vulnerabilities. These presentations have included reports regarding risks and vulnerabilities relating to, among other things, operations, assets, land investments, competition, personnel, credit and debt covenant compliance, joint venture relationships, financial reporting, insurance, financing, mortgages, treasury, storm water compliance, safety, litigation exposure, and information technology.In addition, our Compensation Committee oversees risks arising from our compensation practices, and our Nominating and Corporate Governance Committee oversees succession risks. Each of these committees regularly reports to the full Board, which is ultimately responsible for overseeing risks at the enterprise level. In addition, our full Board oversees strategic risks through its focus on overall corporate strategy and execution. The Compensation Committee has reviewed the design and operation of our compensation structures and policies as they pertain to risk and has determined that our compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on us.27DIRECTOR COMPENSATIONThe Nominating and Corporate Governance Committee is responsible for evaluating and recommending compensation for non-management directorsNon-Executive Directors to the Board. Our non-management directorsNon-Executive Directors are compensated in cash, stock options, and restricted stockRSUs for their service as directors. The equity portion of annual compensation is paid following the end of the fiscal year, so the equity grant for service in 2012the fiscal year ended October 31, 2014 was made in fiscal 2013.The compensation program in effect for fiscal 20122014 and 20132015 for non-management directors consistsNon-Executive Directors consisted of the following components:•Board Retainer. The principal form of compensation for non-management directors for their service as directors is an annual retainer, consisting of a combination of cash and equity, with an annual aggregate value of $160,000 as follows:•Cash. Each non-management director receives one-third of the annual retainer in cash.•Equity. The equity portion of the annual retainer for a non-management director consists of two components issued pursuant to the Directors Plan: (a) non-qualified stock options having a grant date fair value of one-third of the annual retainer, and (b) RSUs having a grant date fair value of one-third of the annual retainer, provided that fractional shares are not issued.Board Retainer. The principal form of compensation for Non-Executive Directors for their service as directors is an annual retainer, consisting of a combination of cash and equity, with an annual aggregate value of $160,000 as follows:Cash. Each Non-Executive Director receives one-third of the annual retainer in cash.Equity. The equity portion of the annual retainer for a Non-Executive Director consists of two components: (a) non-qualified stock options having a grant date fair value of one-third of the annual retainer and (b) RSUs having a grant date fair value of one-third of the annual retainer, except that fractional share units and options are not issued. These equity grants are issued pursuant to the 2007 Director Plan for the non-employee directors and the Stock Incentive Plan for Employees (2014) for Mr. Bruce E. Toll.Stock options are granted and priced on a date within the last 15 days of December that is determined in advance by the Compensation Committee for service during the immediately preceding fiscal year.year and are granted by the Board with an exercise price equal to the fair market value of the underlying common stock on the date of grant. Each option grant made to a non-management directorNon-Executive Director has a ten-year term and vests in equal annual installments over a two-year period, with a provision for automatic vesting upon a change of control of the Company. For directors with five or more years of service, options continue to vest and remain exercisable for the ten-year term uponin the event of the director's death, disability, or retirement.RSUs are also granted on a date within the last 15 days of December that is determined in advance by the Compensation Committee for service during the immediately preceding fiscal year. RSUs granted as director compensation vest in equal annual installments over two years, but vest immediately uponand shares underlying RSUs are deliverable 30 days after the vesting of the second installment. Upon a change of control of the Company or upon the death, disability, or retirement of the director. Shares underlyingdirector, RSUs are notgranted as director compensation will vest immediately and will be deliverable until 30 days after final vesting.•Committee RetainerCommittee Retainer. Each member of the Audit Committee, the Nominating and Corporate Governance Committee, and the Compensation Committee receives annually, for service on each such Committee, a combination of cash and equity with a grant date fair value of $20,000 as follows: (a) one-third of this amount in cash; (b) non-qualified stock options having a grant date fair value of one-third of this amount, and (c) RSUs having a grant date fair value of one-third of this amount, in each case with the same material terms described above under “Equity.” In addition, the Chair of each of these committees receives an annual cash retainer of $10,000.(includingof the Chair)Audit Committee, the Governance Committee, and the Compensation Committee receives annually, for service on each such Committee, a combination of cash and equity with a grant date fair value of $20,000 as follows (except that fractional share units and options are not issued): (a) one-third of this amount in cash; (b) non-qualified stock options having a grant date fair value of one-third of this amount; and (c) RSUs having a grant date fair value of one-third of this amount, in each case with the same material terms described above under “Equity.” In addition, the Chair of each of these committees receives an additional annual cash retainer of $10,000.Each member of the Public Debt and Equity Securities Committee receives annually in any year in which the Committee meets or takes official actions, for service on such Committee, a combination of cash and equity with a grant date fair value of $10,000 as follows:follows (except that fractional share units and options are not issued): (a) one-third of this amount in cash,cash; (b) non-qualified stock options having a grant date fair value of one-third of this amount,amount; and (c) RSUs having a grant date fair value of one-third of this amount, in each case with the same features28described above under “Equity.” In addition, the Chair of that Committee receives aan additional cash retainer of $5,000 in any year in which the Committee meets or takes official action.•Attendance at Board and Committee Meetings. Directors, Committee Chairs and Committee members do not receive any additional compensation for attendance at Board or Committee meetings.•Lead Independent Director. The Lead Independent Director, Edward G. Boehne, receives annually $10,000 in cash for his services in that capacity.Attendance at Board and Committee Meetings. Directors, Committee Chairs and Committee members do not receive any additional compensation for attendance at Board or Committee meetings.Lead Independent Director. The Lead Independent Director, Mr. Edward G. Boehne, receives annually $10,000 in cash for his services in that capacity.Other Director Compensation ArrangementsMr. Bruce E. Toll entered into an Advisory and Non-Competition Agreement (the “Advisory Agreement”) with the Company as of November 1, 2010. The Advisory Agreement expires on October 31, 2016. The purpose of the Advisory Agreement is to provide us with the valuable and special knowledge, expertise, and services of Mr. Bruce E. Toll, one of our co-founders and a director of the Company since our inception, on a continuing basis, as well as to provide that Mr. Toll does not engage in specified activities. The Advisory Agreement provides, among other things, that we will retain Mr. Bruce E. Toll as Special Advisor to the Executive Chairman of the Board and the CEO until October 31, 2016, at a compensation rate of $675,000 for the first year of the term of the Advisory Agreement, with such compensation rate to be reduced by $75,000 in each of the remaining five years of the term of the Advisory Agreement. In fiscal 2013,2015, he received compensation in the amount of $525,000$375,000 under the Advisory Agreement.The Advisory Agreement provides that during the term of the Advisory Agreement, Mr. Bruce E. Toll will be an employee and entitled to receive the health plan benefits provided to our NEOs.NEOs, which in fiscal 2015 were the same as those provided to all of our employees after 60 days of service with us. Mr. Bruce E. Toll is a participant in the Company’s 401(k) retirement plan. During fiscal 2013,2015, we provided Mr. Bruce E. Toll with a contribution to the Company’s 401(k) retirement plan in the amount of $10,100.$10,477. Mr. Bruce E. Toll is also a participant in the SERP, which provides an annual benefit to him of $230,000 for 20 years; however, no payments are to be made to him under the SERP until the expiration of the term (or termination) of the Advisory Agreement. See “Executive Compensation Tables—Pension Benefits During Fiscal 2013—2015—Supplemental Executive Retirement Plan” for a more detailed description of the SERP.29Director Compensation TableThe following table sets forth information concerning the fiscal 20132015 compensation awarded to or earned by our non-management directors. ManagementNon-Executive Directors. Executive directors are not compensated for their service as directors. The compensation received by our managementexecutive directors for their services as employees is shown in the Summary Compensation Table on page 4652 of this proxy statement.Director Compensation during Fiscal 2013 Fees
Earned or
Paid in
Cash ($) Stock
Awards
($)(1)(2) Option
Awards
($)(3)(4) Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($) All Other
Compensation
($)(5) Total ($) 63,336 63,332 63,332 — — 190,000 86,670 66,665 66,665 — — 220,000 61,668 56,666 56,666 — — 175,000 60,002 59,999 59,999 — — 180,000 80,004 69,998 69,998 — — 220,000 66,670 66,665 66,665 — — 200,000 76,670 66,665 66,665 — — 210,000 56,668 56,666 56,666 — 535,100 705,100 Name FeesEarned orPaid inCash ($) StockAwards($)(1)(2) OptionAwards($)(3)(4) Change inPension ValueandNonqualifiedDeferredCompensationEarnings ($)(5) All OtherCompensation($)(6) Total ($) Robert S. Blank 63,336 63,350 63,323 — — 190,009 Edward G. Boehne 86,670 66,687 66,669 — — 220,026 Richard J. Braemer 61,668 56,676 56,663 — — 175,007 Christine N. Garvey 60,002 60,013 60,009 — — 180,024 Carl B. Marbach 80,004 70,007 69,983 — — 219,994 Stephen A. Novick 66,670 66,687 66,669 — — 200,026 Paul E. Shapiro 76,670 66,687 66,669 — — 210,026 Bruce E. Toll 56,668 56,676 56,663 106,195 385,477 661,679 (1) Annual RSU grants to non-management directorsNon-Executive Directors are made during the first quarter of each fiscal year for service on the Board and Board committees during the immediately preceding fiscal year; accordingly, the values reflected in the table above are values of awardsgrants for service in fiscal 2012.2014.
service on the Public Debt and Equity Securities Committee. For purposes of determining the number of RSUs that are awarded, the RSU grant date fair value per share is the closing price of our common stock on December 17, 2012,19, 2014, the grant date of the awards.
| (2) | The |
| (3) | The annual stock option grants to |
| (4) | The |
| (5) | The amount in this column represents the increase in the actuarial present value of accumulated benefits under the SERP for Mr. Bruce E. Toll. |
| (6) | “All Other Compensation” consists of the following annual compensation and benefits provided to Mr. Bruce E. Toll pursuant to the Advisory Agreement. See “Other Director Compensation Arrangements,” above. |
Annual compensation under Advisory Agreement | $ | 525,000 | ||
Contribution to Company 401(k) plan | 10,100 | |||
|
| |||
Total | $ | 535,100 |
Consideration of 27 markets. The Compensation Committee’s primary objectives in setting compensation for our NEOs are: Compensation Committee attempts to achieve these objectives. See "Fiscal 2015 Company Performance" above. Annual compensation under Advisory Agreement $ 375,000 Contribution to Company 401(k) plan 10,477 Total $ 385,477 31EXECUTIVE COMPENSATIONCOMPENSATION DISCUSSION AND ANALYSISExecutiveThis Compensation Program HighlightsOurDiscussion and Analysis ("CD&A") focuses on how our NEOs are compensated and how their compensation aligns with the Compensation Committee's objectives in setting compensation for our NEOs. We also highlight certain changes the Compensation Committee has developed and maintained amade for fiscal 2016. In our CD&A, we will discuss:Page New Developments for Fiscal 2016 32 Fiscal 2015 Company Performance 33 Compensation Philosophy and Objectives 34 Performance Assessment Process 36 Elements of Compensation 38 Cash Compensation Decisions 39 Long-Term Incentive Compensation Decisions 41 Compensation Decision-Making Process 46 Benefits and Perquisites 47 Other Compensation Practices and Policies 49 New Developments for Fiscal 2016In December 2015, the Compensation Committee changed several components of our executive compensation program that is intended to reward performance, retain talent,further support the linkage between pay and encourage actions that drive successperformance. These changes took into account feedback from stockholders and proxy advisory firms, current market practice, input from the Compensation Committee’s independent compensation consultant, and the Compensation Committee’s consideration of the results of the Say on Pay advisory vote held in our business strategy.Our2015.Summary of Executive Compensation Program Changes for Fiscal 2016 Prior Program New Program Annual incentive bonus based 100% on qualitative performance assessment, with cap subject to negative discretionè Payout of 60% of annual incentive bonus based on pre-tax income targets, with qualitative performance assessment limited to 40% Long-term incentive award performance metrics based on pre-tax income, home building margin, and units delivered è Addition of relative total shareholder return ("TSR") as long-term incentive award performance metric One-year performance period for allperformance-based RSUsè Three-year performance period for those performance-based RSUs based on relative TSR Mix of equity awards varies among NEOs è Mix of 60% performance-based RSUs and 40% stock options awarded to all NEOsother than the Executive ChairmanNo clawback policy è Incentive compensation, including stock-based compensation, is subject to a clawback policy Additional detail regarding these executive compensation program features the following attributes:A balanced mix of annual cashchanges can be found under "Cash Compensation Decisions—Annual Incentive Bonus—Fiscal 2016 Bonus Performance Goals" on page 41, "Long-Term Incentive Compensation Decisions—Performance-Based RSUs—2016 Restricted Stock Units (Performance-Based)" on page 44, and long-term equity incentives that reward our NEOs for current performance"Other Compensation Practices and align their interests with long-term performance and long-term stockholder value creation.Policies—Clawback Policy" on page 50.A structure for NEO incentive compensation that is designed to comply with Code requirements for tax deductibility.32Long-term equity incentive grants and awards with multi-year vesting periods to encourage retention of our NEOs.No NEO employment agreements or severance plans or agreements and no plans or agreements that provide “golden parachute” cash payouts for our NEOs conditioned upon a change of control or excise tax gross-ups. Benefits conditioned upon a change in control are limited to vesting and potential payment of SERP benefits and vesting of previously granted equity compensation.Stock ownership requirements for our directors and executive officers, and policies restricting hedging and pledging of Company shares.Say-on-PaySay on Pay ResultsAt our last annual meeting2015 Annual Meeting of stockholders, approximately 99%Stockholders, 87% of those stockholders voting on the “saySay on pay”Pay proposal voted in support of the compensation of our NEOs. In the prior four consecutive years, at least 98% of stockholders who voted at our Annual Meeting of Stockholders supported our Say on Pay vote. In response to this decrease in support last year, the Compensation Committee undertook a comprehensive review of the Company's executive compensation program.As part of this review, we held discussions with a number of our largest institutional stockholders, representing in the aggregate more than 20% of the Company's voting stock, regarding their views on the existing and proposed new components of the program. We also considered the assessments of our program by the two major proxy advisory firms. As a result of this review and the feedback received from stockholders, proxy advisory firms, and the Compensation Committee’s independent compensation consultant, the Compensation Committee made the changes summarized above to the executive compensation program effective for fiscal 2016.Fiscal2015Company PerformanceIn determining NEO compensation for fiscal 2015, the Compensation Committee considered the contributions of each of our NEOs describedto the Company’s strategy to improve earnings and grow and diversify its businesses, including growth in targeted markets, growth of our proxy statement filed in 2013.apartment business, and geographic broadening of our active-adult product. The Compensation Committee viewedalso considered Company performance in fiscal 2015 and paid particular attention to the Company's performance in the areas of revenues, pre-tax income, and contracts:Revenues: Our revenues in fiscal 2015 of $4.17 billion and home building deliveries of 5,525 units rose 7% in dollars and 2% in units compared to fiscal 2014 and were the highest for any fiscal year since fiscal 2007.Income: Our pre-tax income improved to $535.6 million in fiscal 2015, compared to pre-tax income of $504.6 million in fiscal 2014. We reported net income of $363.2 million in fiscal 2015, or $1.97 per share diluted, compared to net income of $340.0 million in fiscal 2014, or $1.84 per share diluted, a 7% increase in diluted earnings per share.Gross Margin: Our gross margin for fiscal 2015 was 21.6%, compared to 21.2% for fiscal 2014.Contracts: Our net contracts signed in fiscal 2015 of $4.96 billion rose 27% in dollars and 12% in units compared to fiscal 2014. The average price of net signed contracts in the fourth quarter of fiscal 2015, at $872,000, was the highest average price for any quarter in our history.The Compensation Committee also considered the following results and achievements:Backlog: Our fiscal year-end 2015 backlog was $3.50 billion, up 29% compared to fiscal 2014. The $862,000 average price of homes in backlog at fiscal year-end 2015 was the highest in our history.Selling, General and Administrative Expenses (“SG&A”): Our SG&A as a percentage of revenue improved to 10.9% for fiscal 2015 compared to 11.1% for fiscal 2014.Operating Margin: Our operating margin improved to 10.7% for fiscal 2015 from 10.2% for fiscal 2014.Joint Venture and Other Income: In fiscal 2015, we produced $88.7 million in pre-tax income from our joint ventures, ancillary operations, and other sources, compared to $107.3 million in fiscal 2014. The difference was due primarily to the fiscal 2014 benefit from the sale of substantially all of the 2013 advisory vote asassets of an affirmationunconsolidated entity.33Growth in an Improving Economy: On a compound average annual basis, our revenues, fiscal year-end backlog (in dollars) and contracts (in dollars) at fiscal year-end grew 30%, 33%, and 25%, respectively, since their recent respective lows in fiscal 2011, 2010 and 2009.Growth in Targeted Markets: We expanded our presence in high-growth affluent markets, including our growth in Texas, and our expansion in California and New York City.◦ In California, our contracts and backlog in dollars grew by 93% and 195% in fiscal 2015 compared to fiscal 2014, with our average price of homes in backlog reaching $1.5 million at the end of fiscal 2015. ◦ Toll Brothers City Living, which is heavily concentrated in the urban metro New York City market, was involved in nine existing projects totaling 918 units at fiscal year-end, with an attractive pipeline of future deals totaling 1,180 units in various stages of design and approval. Geographic Broadening of Our Active-Adult Product: We expanded our active-adult product lines to the West Coast in fiscal 2015 and are building active-adult homes in Colorado and Nevada.Growth of our current pay practices. We did not implement significant changesApartment Business: Toll Brothers Apartment Living continued to expand our executive compensation program inpipeline of urban and suburban for-rent projects. At fiscal year 2013.2013 Company PerformanceWe acquire land, procure entitlements, perform land development, and design, build, market, and arrange financing for detached and attached homes in luxury residential communities and urban infill markets. Over the past several years,year-end, we have acquired control of a number of land parcels as for-rent apartment projects, including two student housing sites. We operate our own land development, architectural, engineering, mortgage, title, landscaping, security monitoring, lumber distribution, house component assembly, and manufacturing operations. We also develop, own, and operate golf courses and country clubs, which generally are associated with several of our master planned communities. Our communities are generally located on land we have either acquired and developed or acquired fully-approved and, in some cases, improved.were:◦ Managing two stabilized communities totaling over 1,400 units; ◦ Leasing up four new communities totaling over 1,500 units; and ◦ In construction on three other rental communities totaling approximately 1,000 units, with nearly 3,500 additional units in our pipeline. Honors: In fiscal 2010,2015, we formed Gibraltar Capitalwere named by Fortune magazine as The Most Admired Company in the Homebuilding Sector in a survey of over 4,100 executives, directors and Asset Management LLC to investsecurity analysts. We were also named America’s Most Trusted Home Builder™ by Lifestory Research, based on a survey of 43,200 home shoppers in distressed real estate opportunities.Compensation Philosophy and ObjectivesWe face intense competition from a number of other home builders in each market in which we operate. It is vital to our success and long-term viability that our business continues to be managed by highly experienced, focused, and capable executives who possess the dedication to oversee our organizationexperience and have the vision to anticipate and respond to market developments.In determining fiscal 2013 compensation for our NEOs, the Compensation Committee recognized that fiscal 2013 was a year of significant growth for the Company. As a result, the Compensation Committee sought tocompensate our NEOs to appropriately recognize their individual experience, roles and skill sets, and their efforts on behalf of the Company during fiscal 2013, in a way that would be consistent with our overall business objectives and our stockholders’ best interests and to better enable us to retain our senior management team. The Compensation Committee paid particular attention to the following notable areas of our performance and our management’s achievements in fiscal 2013:•Contracts: Our net contracts signed in fiscal 2013 of $3.63 billion and 5,294 units rose 42% in dollars and 27% in units compared to fiscal 2012, and were the highest for any fiscal year since 2006. On a per-community basis, our net signed contracts in fiscal 2013 of 23.5 units per community were the highest for any fiscal year since fiscal year 2005.•Revenues: Our revenues of $2.67 billion and home building deliveries of 4,184 units rose 42% in dollars and 27% in units compared to fiscal 2012, and were the highest for any fiscal year since fiscal 2008.•Income: Our pre-tax income improved to $267.7 million in fiscal 2013, compared to pre-tax income of $112.9 million in fiscal 2012. We reported net income of $170.6 million, or $0.97 per share diluted, compared to net income of $487.1 million in fiscal 2012, or $2.86 per share diluted. Included in fiscal 2013’s full year net income was a deferred tax asset valuation allowance reversal of $4.6 million, compared to a deferred tax asset valuation allowance reversal of $394.7 million in fiscal 2012.•Backlog: Our fiscal year end 2013 backlog was $2.63 billion and 3,679 in units, up 57% in dollars and 43% in units compared to fiscal 2012, and was the highest for any fiscal year since 2007.•Selling, General and Administrative Expenses (“SG&A”): Our SG&A as a percentage of revenue improved to 12.7% compared to 15.3% for fiscal 2012.•Shapell Acquisition: In June 2013, we entered into a competitive bid process to acquire Shapell. In early November 2013, we announced the agreement to acquire Shapell for $1.60 billion. We will close the transaction in early calendar 2014. Shapell has a long and illustrious history as one of California’s largest and most successful land development and home building companies in the affluent coastal markets of Northern and Southern California. This acquisition provides us with California’s premier land portfolio consisting of approximately 5,200 entitled lots in affluent, high-barrier-to-entry markets: the San Francisco Bay area, metro Los Angeles, Orange County, and the Carlsbad market. Since this announcement at the start of fiscal 2014, we have raised $600 million of five- and ten-year debt in the public capital markets; issued $230 million of stock; and, at the end of fiscal 2013, secured a $500 million 364-day bank commitment to fund the Shapell acquisition and provide ample liquidity for future growth.•Growth in a Recovering Economy: We have shifted into growth mode after the recent dramatic housing recession. During fiscal 2013 and into the start of fiscal 2014, we raised over $3.2 billion via corporate and joint venture project financings while maintaining our current credit ratings, which were reaffirmed by the three agencies in early November after our announcement of the Shapell acquisition. This acquisition will be paid for using the proceeds from our stock issuance, our recent debt financings, available cash, and a planned future drawdown on our pre-existing $1.035 billion long-term line of credit. Upon completion of the transaction, we expect to have in excess of $1 billion of available liquidity for growth.•Diversification of Revenue: In fiscal 2013, we generated approximately $16 million in pre-tax profits from our wholly-owned subsidiary that invests in distressed real estate opportunities, and we produced approximately $37.5 million of pre-tax income from our other joint ventures and ancillary businesses and other items. During fiscal 2013, we also expanded our home building business with our first new condominium project in urban Washington D.C. and executed on expansion of our rental apartment development business by commencing construction on four projects comprising over 1,500 units, including our first urban rental project, a joint-ventured tower in the urban New York City market, and our first Washington, D.C. joint-ventured rental apartment building.•Honors: Our CEO and CFO each were ranked first place (sell side) and second place (buy side) in the 2014 All-America Executive Team rankings by Institutional Investor Magazine for the Homebuilding and Building Products Industry, which was based on polling performed in fiscal 2013. We also were named Most Honored Company in the Home Building and Building Products sector among the 34 companies receiving nominations and ranked 27th overall among all of the 1,902 companies in all industries receiving votes in the Institutional Investor Magazine survey across all industries.The Board and the Compensation Committee believe that our ability to retain and motivate NEOs who possess the skills, experience, and capabilities to succeed in our competitive industry has been essential to our long-term success during all phases of the cycle of the real estate market and a significant factor in creating long-term value for our stockholders. Base salaries, annual incentive bonuses, long-term equity compensation, retirement benefits, and competitive employee benefits are the primary tools used to retain and motivate our NEOs to deliver superior performance and to enhance long-term value to our stockholders. Our compensation philosophy recognizes the value of rewarding our NEOs for their performance and motivating them to continue to excel in the future. The Compensation Committee believes it has developed a compensation program that rewards outstanding short-term and long-term performance and encourages actions that successfully deliver on our business strategy.We are in an industry that has recently begun to emerge from a severe downturn that lasted several years. The compensation policies for our NEOs during this difficult period were based on the philosophy that compensation should reflect our financial and operational performance and the individual performance of each executive in light of the limitations imposed by the severe financial crisis and its impact on the housing market. As the housing industry recovery took hold in 2012 and continued to strengthen in 2013, the Compensation Committee has carefully considered the intent of the components of our executive compensation program to ensure they are appropriately aligned with corporate objectives.The Compensation Committee also believes that long-term incentives should be a significant factor in the determination of the actual compensation realized over time, particularly because the many actions and decisions that are required of our NEOs in the business of home building, including evaluating and purchasing land, planning the use of that land and the timing of that use, obtaining approvals, completing development, and generating revenues, require a long time horizon before we realize tangible financial benefits.•Set compensation levels that are sufficiently competitive to attract, motivate, and reward the highest quality individuals to contribute to our goals and overall financial success34Set compensation levels that are sufficiently competitive to attract, motivate, and reward the highest quality individuals to contribute to our goals and overall financial success. By keeping compensation competitive during times of growth as well as contraction, the Compensation Committee attempts to achieve these objectives.•Retain executives and encourage continued service. The Compensation Committee seeks not only to attract but also to maintain the continuity of our excellent management team. The Compensation Committee believes our stockholders have historically benefited from the continued employment of our NEOs over an extended period of time—the Executive Chairman, who co-founded our predecessor operations in 1967; the CEO, who joined the Company in 1990 and had served in various senior management positions during the 20 years preceding his appointment as CEO; and the President and COO, who joined the Company in 1980 and had served in various positions during the 31 years preceding his appointment as COO. It is important that we concentrate on retaining and developing the capabilities of our leaders and emerging leaders to ensure that we continue to have an appropriate depth of executive talent.•Incentivize executives to manage risks appropriately while attempting to improve our financial results, performance, and condition over both the short-term and the long-term. The Compensation Committeeattempts to provide both short-term and long-term compensation for current performance, as well as to provide incentives to achieve short- and long-term goals. Because of the nature of our business and the way we operate our business and implement our strategies, we may not witness for several years the positive results of many decisions made or actions taken by our NEOs in any current fiscal year, including those in connection with land purchased and strategies implemented to manage risks and position us for growth. The Compensation Committee, by seeking a balance of short-term and long-term compensation, seeks to motivate and reward NEOs for decisions made today that may not produce immediate or short-term results, but are intended and expected to have a positive long-term effect.•Align executive and stockholder interests. The Compensation Committee believes that the use of equity compensation, including increased use of RSU grants as a key component of executive compensation, is a valuable tool for aligning the interests of our NEOs with those of our stockholders, including the use of such compensation to reward actions that demonstrate long-term vision. When management and stockholder interests are aligned, the Compensation Committee believes management’s focus on creating long-term growth and value is increased.•Consider tax deductibility for incentive compensation. The Compensation Committee believes that tax deductibility for the Company is a favorable feature for an executive incentive compensation program. Although the Compensation Committee may award compensation to NEOs that is not tax-deductible when it deems that such compensation is in the best interests of the Company, it generally attempts to structure compensation for NEOs to meet the Code requirements for deductibility, including deductibility of compensation awarded under performance-based compensation plans.Decision-Making ProcessParticipation by ManagementRetain executives and encourage continued service. The Compensation Committee workedseeks not only to attract but also to maintain the continuity of our excellent management team. The Compensation Committee believes our stockholders have historically benefited from the continued employment of our NEOs over an extended period of time—the Executive Chairman, who co-founded our business in 1967 and has served as Executive Chairman since 2010; the CEO, who joined the Company in 1990 and served in various senior management positions during the 20 years preceding his appointment as CEO in 2010; the President and Chief Operating Officer ("COO"), who joined the Company in 1980 and had served in various positions during the 31 years preceding his appointment as COO in 2012 and as President in 2013; and the Chief Financial Officer ("CFO"), who joined the Company in 2008 and assumed the role of CFO in 2010. It is important that we concentrate on retaining and developing the capabilities of our current leaders and emerging leaders to ensure that we continue to have an appropriate depth of executive talent.Incentivize executives to manage risks appropriately while attempting to improve our financial results, performance, and condition over both the short-term and the long-term. The Compensation Committee provides both short-term and long-term compensation for current performance, as well as to provide incentives to achieve short- and long-term goals. Because of the nature of our business and the way we operate our business and implement our strategies, we may not witness for several years the positive results of many decisions made or actions taken by our NEOs in any current fiscal year, including those in connection with land purchased and strategies implemented to manage risks and position us for growth. The Compensation Committee, by seeking a balance of short-term and long-term compensation, seeks to motivate and reward NEOs for decisions made today that may not produce immediate or short-term results, but are intended to have a positive long-term effect. Align executive and stockholder interests. The Compensation Committee believes that the use of equity compensation, including use of performance-based RSU grants as a key component of executive compensation, is a valuable tool for aligning the interests of our NEOs with those of our stockholders, including the use of such compensation to reward actions that demonstrate long-term vision. Stock ownership requirements for our NEOs also support this alignment. The Compensation Committee believes that stock options further support this alignment over a long-term time horizon. When management to establish its meeting agendas and determine who should be invited to attend meetings. Throughout the year,stockholder interests are aligned, the Compensation Committee requested information from managementbelieves management’s focus on creating long-term growth and value is increased.Consider tax deductibility for incentive compensation. The Compensation Committee believes that tax deductibility for the Committee’s independentCompany is a favorable feature for an executive incentive compensation consultant, including information aboutprogram. Although the Compensation Committee may award compensation practices and financial performance of other companiesto NEOs that is not tax-deductible when it deems that such compensation is in the home building industrybest interests of the Company, it generally attempts to structure compensation for NEOs to meet the Code requirements for deductibility, including deductibility of compensation awarded under performance-based compensation plans.Use pay practices that support good governance. We do not enter into employment agreements with NEOs or agreements that provide “golden parachute" cash payouts or excise tax gross-ups for our NEOs. Benefits conditioned upon a change of control are limited to vesting and other industries. Our CFO was invitedpotential payment of existing SERP benefits and and vesting of previously granted equity awards. Perquisites are limited. We maintain policies restricting NEOs hedging and pledging of Company shares. Incentive compensation, including stock-based compensation, is subject to a clawback policy starting in fiscal 2016.35Performance Assessment ProcessCompensation Decision-Making TimelineThe Compensation Committee reviews and determines base salary, annual incentive bonuses, and long-term incentive compensation, as well as benefits and perquisites, on an annual basis. For compensation relating to fiscal 2015, the primary steps taken by the Compensation Committee to attend its meetings in orderestablish and award compensation to provide information and answer questions regarding the Company’s strategic objectives and financial performance related to the Compensation Committee’s work. Our otherour NEOs were also available to Compensation Committee members and to attend its meetings.With regard to compensation decisions relating to the Executive Chairman, the Compensation Committee, in addition to its own observations of the Executive Chairman’s performance during the 2013 fiscal year, gained significant insight into the performance of the Executive Chairman during that same period from its many exchanges with the NEOs, the General Counsel, and other Company employees during the fiscal year. The Executive Chairman submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, performance goals and overall compensation for the CEO; the Compensation Committee considered these recommendations in determining the CEO’s compensation. Our CEO submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, performance goals, and overall compensation levels for the President and COO and CFO. The Compensation Committee, after consideration of these recommendations, determined the actual awards to the President and COO and CFO.Use of Independent Compensation ConsultantThe Compensation Committee engaged Compensation Advisory Partners LLC (“CAP”) to serve as its independent compensation consultant in fiscal 2013. CAP received instructions from, and reported to, the Compensation Committee on an independent basis. CAP was also authorized by the Compensation Committee to share with and request and receive from management specified information in order to prepare for CompensationCommittee meetings. The Compensation Committee requested CAP’s advice on a variety of matters, including the amount for form of executive compensation, compensation strategy, market comparisons, pay and performance alignment versus industry peers, executive pay trends, compensation best practices, legislative matters and related rulemaking, and potential compensation plan designs and modifications. The Compensation Committee met with CAP, both with and without management, on several occasions during fiscal 2013, and also in early fiscal 2014 with respect to compensation decisions for 2013 performance. CAP did not provide any services to the Company other than advising the Compensation Committee on executive officer compensation.The Compensation Committee conducts a formal evaluation of the independence of CAP annually in the first quarter of the fiscal year. Based on this review, the Compensation Committee did not identify any conflict of interest raised by the work CAP performed in fiscal year 2013. When conducting this evaluation, the Compensation Committee took into consideration the factors set forth in Rule 10C-1 under the Exchange Act and the NYSE’s listing standards.Review Market ComparisonsAlthough the Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on market comparisons or industry practices, it believes that information regarding pay practices at other companies is useful in three respects. First, marketplace information is one of the many factors that the Compensation Committee considers in assessing the reasonableness of compensation. Second, it recognizes that our compensation practices must be generally competitive for executive talent in the home building industry and the market overall. Third, it recognizes that marketplace information reflects emerging and changing components and forms of compensation. While the Compensation Committee considers peer compensation levels and practices when making its compensation decisions, it does not target compensation at any particular point within a range established by a comparison of the financial performance or compensation levels of our peer companies.In 2013, the Compensation Committee, with guidance from our independent compensation consultant, reviewed our NEOs’ total 2012 compensation against a peer group of publicly-traded home building companies (“Peer Group”). The Peer Group consisted of the following companies with whom the Compensation Committee believes we primarily compete for talent and market share:Beazer Homes USA, Inc. Lennar CorporationCompensation Committee Action Taken NVR, Inc.D. R. Horton, Inc.December 2014 M. D. C. Holdings, Inc.Set 2015 performance goals for fiscal 2015 annual incentive bonus and performance-based RSU awards and fixed target number of 2015 performance-based RSU awards for NEOsSet 2015 base salaries for the NEOs Pulte Homes, Inc.Hovnanian Enterprises, Inc.June 2015 M/I Homes, Inc.Reviewed the Say on Pay voting results from the 2015 annual meeting of stockholders, as well as feedback received from stockholders and proxy advisory firms on our executive compensation programReviewed 2014 NEO compensation compared to our Peer Group (as defined on page 47)Reviewed a market assessment prepared by the Compensation Committee's independent compensation consultant of 2014 senior executive pay versus performance for the Company compared to the Peer GroupReviewed Company financial results compared to the Peer Group for the prior fiscal year and the current fiscal year to dateConsulted with the independent compensation consultant regarding industry trends in executive compensation The Ryland Group, Inc.KB HomeNovember 2015 Meritage Homes CorporationReviewed market assessment prepared by the independent compensation consultant of Company 2014 senior executive pay versus projected Company fiscal 2015 performance compared to the Peer GroupCommenced new discussions with our largest stockholders and proxy advisory firms to gain their input on our executive compensation programHeld preliminary discussions regarding NEO individual performance during fiscal 2015 Standard Pacific Corp.December 2015 Reviewed market assessment prepared by the independent compensation consultant of 2014 Company senior executive pay versus actual Company fiscal 2015 performance compared to the Peer GroupReviewed each NEO’s individual performance during fiscal 2015Reviewed fiscal 2015 performance goals and certified the level of performance attained for annual incentive bonus eligibility and performance-based RSU payoutsDetermined fiscal 2015 annual incentive bonuses for the NEOsDetermined and granted equity awards for fiscal 2015 performanceOf the companies within our Peer Group, only D.R. Horton, Inc. has an executive chairman. The Compensation Committee considered the executive chairman compensation information for D.R. Horton in its reviewReview of Peer Group pay practices. Our independent compensation consultant also discussed compensation practices generally for executive chairmen in companies of similar size outside of the home building sector but noted that the role of executive chairman is highly individualized and therefore compensation for this role varies considerably.Review Company PerformanceThroughout the fiscal year, the full Board monitored our financial performance in relation to our recent historical performance and in relation to our Peer Group. The Compensation Committee also reviewed our financial performance data during the fiscal year, which it considered when making final fiscal 20132015 compensation decisions.36The Compensation Committee also considered fiscal 2015 financial performance and TSR of the Company compared to peer home building companies:• Based on equally-weighted revenue growth, pre-tax profit margin, and fiscal 2015 TSR, overall performance was positioned between median and 75th percentile compared to the Peer Group.• Relative TSR performance over one-, three-, five-, seven-, and ten-year periods was generally positive and typically positioned between median and 75th percentile compared to the Peer Group.Review of Individual PerformanceIn making fiscal 20132015 compensation determinations, the Compensation Committee particularly notedconsidered the contributionsroles and responsibilities of each NEOour NEOs, in addition to the Company’s achievements described under “2013 Company Performance” above. The Compensation Committee also recognizedexpertise gained during their tenure at the continued shifting in responsibilities from Mr. Company:Robert I. Toll to Mr. Yearley in making its compensation decisions for fiscal 2013. In evaluating the performance of each NEO individually, the Compensation Committee considered the following for each NEO:Robert I. Toll served as our Chief Executive Officer and Chairman of the Board from our inception until June 2010 when he assumed the new position of Executive Chairman of the Board. The Compensation Committee noted his continuing guidance and oversight with respect to Company strategy, particularly with respect to the Shapell acquisition and land acquisition generally.as well as product and geographic expansion.Douglas C. Yearley has been our Chief Executive Officer since June 2010. The Compensation Committee particularly noted his leadership on a comprehensive Company-wide level, in planning and guiding our growth and profitability, in diversifying our revenue sources,business lines, growing our land holdings in continuing to enhance our brand,key markets, and inenhancing the Company's brand. The Compensation Committee also noted his ability to communicate with, and represent us before, the media, banking, and investor communities. The Compensation Committee also considered his active participation and leadership in the competitive bid process through which the Company reached an agreement to acquire Shapell.Richard T. Hartman has been our Chief Operating Officer since January 2012 and our President since January 2013. The Compensation Committee noted his significant contributions to the strong 2013 fiscal year experienced by the Companyleadership as the principal officer in charge of sales and home building activities, which included major strides inincluding geographical and product expansion, for our currentin addition to his ability to drive process and future benefit, including expansion arising from the Shapell acquisition.margin improvements.Martin P. Connor has been our Chief Financial Officer since September 2010. The Compensation Committee was influenced byrecognized his ability to work productively with all divisions and personnel in controlling our costs, preserving our cash, raising and deploying capital, enhancing our balance sheet, and containing risk,risk.The Compensation Committee particularly noting his creative abilitiesnoted the contributions of each NEO to the Company’s achievements described under “Fiscal 2015 Company Performance” above. In particular, the Compensation Committee considered:The contributions of each of our NEOs to the Company’s strategy to improve earnings and grow and diversify its businesses in achieving significant resultsfiscal 2015, including growth in targeted markets, growth of its apartment business, and expansion of our active-adult product in the West region;The contributions of Mr. Toll, Mr. Yearley, and Mr. Hartman to the Company’s land acquisition, backlog growth, and exit from under-performing markets in fiscal 2015;The contributions of each of our NEOs to fiscal 2015 earnings per share growth and gross margin improvement;Mr. Yearley's and Mr. Hartman's efforts to enhance the Company’s brand, which was reflected in industry honors received in fiscal 2015;The contributions of Mr. Yearley and Mr. Connor to the Company's exploration of potential strategic transactions in fiscal 2015; and37Mr. Connor's contributions in the areas of financing activities that were integral to our success duringnew joint ventures formed; managing the Company’s balance sheet, including strategic and opportunistic repurchases of the Company's stock and the Company's public debt offering in fiscal 20132015; and will benefitguidance toward improving the Company in the future. Company’s information technology infrastructure.Elements of CompensationPerformance-Based CompensationThe Compensation Committee also noted his contributions to the Shapell acquisition, including his role in securing acquisition financing while maintaining our current credit ratings.Compensation Decision TimelineThe Compensation Committee reviews and determines base salary, incentive bonuses, and long-term incentive compensation, as well as benefits and perquisites, on an annual basis. For compensation relating to fiscal 2013, the significant steps taken by the Compensation Committee to establish and award compensation to our NEOs were as follows:October—December 2012• Set 2013 base salaries• Determined and granted annual incentive bonuses and equity compensation awards for fiscal 2012 serviceJanuary 2013• Set 2013 performance goals for fiscal 2013 annual incentive bonus and performance-based long term incentive compensationMay 2013• Reviewed executive compensation at peer companies for the preceding year• Monitored Company performance and individual performance of NEOs• Reviewed Company interim financial resultsSeptember 2013• Reviewed executive compensation benchmarking analysis for the preceding year prepared by the independent compensation consultant• Consulted with independent compensation consultant regarding industry trends in executive compensationNovember—December 2013• Reviewed fiscal 2013 performance goals and certified the level of performance goals attained under our bonus plan• Reviewed overall Company performance relative to industry peers• Reviewed each NEO’s individual performance during fiscal 2013• Determined fiscal 2013 NEO annual incentive bonuses• Determined and granted equity awards for fiscal 2013 service• Set 2014 base salariesThe Compensation Committee seeks to be creative, as well as to be aware ofrecognizes changing economic and industry conditions and changing compensation trends in its choice of methods to achieve thesethe objectives discussed above, using a variety of compensation elements to accomplish its goals. In December 2015, the Compensation Committee changed certain features of our annual incentive bonus and long term incentive awards to further strengthen the linkage between pay and performance, as described more fully under "New Developments for Fiscal 2016" on page 32 and in the specific decisions discussed below.Element Purpose CharacteristicsCash Compensation—Base Salary ProvideForm ofFiscal 2015 CompensationCash Bonus(Senior Officer Bonus Plan)Performance-Based RSUsStock OptionsBoth subject to 4-year vestingFiscal 2015Performance MetricsConsolidated Revenues (50%)Pre-tax Income (50%) (1)Performance-Based RSUs:Pre-tax Income (1/3)Home Building Margin (1/3)Units Delivered (1/3)Fiscal 2015Performance TargetsRevenues ≥ $3.550 billionPre-tax Income ≥ $478,298,700Performance-Based RSUs:Pre-tax Income: $531,443,000Home Building Margin: 25.79%Units Delivered: 5,500Fiscal 2015ResultsRevenues: $4.17 billionPre-tax Income: $582,994,000Performance-Based RSUs:103.94% average payoutPre-tax Income: $582,994,000 (109.70%)Home Building Margin: 26.22% (101.67%)Units Delivered: 5,525 (100.45%)Fiscal 2016 Performance Metrics 60% Formulaic ComponentPre-tax Income40% Discretionary Component(Senior Officer Bonus Plan)Consolidated Revenues (50%)Pre-tax Income (50%)New Performance-Based RSU Measure:Pre-tax Income (1/4)Home Building Margin (1/4)Units Delivered (1/4)Relative TSR (1/4) over 3-year period (2)Mix defined as 60% Performance-Based RSUs and 40% Stock Options (2)(1) Pre-tax income in the table above excludes impairments and certain other items considered non-recurring in nature in accordance with the Senior Officer Plan. Additional information regarding the calculation of the pre-tax income performance metric can be found under "Long-Term Incentive Compensation Decisions—Performance-Based RSUs—2015 Performance-Based RSUs" on page 44. (2) The performance-based RSU awards based on relative TSR were phased in by making a fundamental levelone-time grant of compensationawards with performance periods of one and two years, in addition to the regularly recurring grant with a three-year performance period. For the NEOs other than Mr. Toll, the target dollar amount of performance-based RSUs based on relative TSR with a three-year performance period, plus the target number of performance-based RSUs based on the other three performance metrics, approximates 60% of the dollar value of equity awards granted to the NEOs for performing their roles and assuming their levels of executive responsibility.Fixed cash component. Annually reviewed by the Compensation Committee and adjusted upwards or downwards, from time to time based on our Peer Group and individual performance.Cash Compensation—Annual Incentive BonusesPromote improvement of our financial results, performance and condition; intended to be a short-term incentive to drive achievement of performance goals in a particular fiscal year, while discouraging inappropriate risk-taking and not deterring achievement of our long-term goals and initiatives.Annual incentive bonuses have been primarily paid in cash. Performance-based bonus opportunity for fiscal 2013 is based on the achievement of consolidated revenue and operating income targets set by the Compensation Committee.Long-Term Incentive CompensationPromote the achievement of our long-term financial goals and stock price appreciation by aligning NEO and stockholder interests, promoting NEO retention and rewarding NEOs for superior performance over time.Equity awards granted annually by the Compensation Committee pursuant to stockholder approved plans with four-year vesting. For fiscal 2013 performance, long-term incentive compensation was in the form of stock options and performance-based RSUs. Performance-based RSU payout is based on the achievements of targets set by the Compensation Committee in the areas of operating income, home building margin, and units delivered.2015.
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| Calendar 2013 Salary | Calendar 2012 Salary | |||||||
Robert I. Toll | $ | 1,000,000 | $ | 1,000,000 | ||||
Douglas C. Yearley, Jr. | $ | 1,000,000 | $ | 1,000,000 | ||||
Richard T. Hartman | $ | 950,000 | $ | 880,000 | ||||
Martin P. Connor | $ | 800,000 | $ | 700,000 | ||||
In December 2013,2014, the Compensation Committee determined that, for calendar year 2014,2015, the base salaries of Messrs. Robert I.Mr. Toll, Mr. Yearley, and YearleyMr. Hartman would remain at $1,000,000; the base salary of Mr. Hartman would be increased to $1,000,000; and the base salary of Mr. Connor would be increased to $850,000.$950,000. The increasesincrease in the base salariessalary for Messrs. Hartman andMr. Connor for calendar year 2014 were2015 was based on a consideration of theirhis performance in fiscal 20132014 and his increased tenure at the Company.
base salary of Mr. Connor would be increased to $975,000. The increase in the base salary for Mr. Connor for calendar year 2016 was based on a consideration of his performance in fiscal 2015 and his increased tenure at the Company.
| Calendar 2016 Salary | Calendar 2015 Salary | Calendar 2014 Salary | ||||||||||
| Robert I. Toll | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | ||||||
| Douglas C. Yearley, Jr. | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | ||||||
| Richard T. Hartman | $ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | ||||||
| Martin P. Connor | $ | 975,000 | $ | 950,000 | $ | 850,000 | ||||||
Description of
The Senior Officer Bonus Plan is designed to permit us to pay participants incentive compensation based upon the achievement of one or more pre-established performance goals. At or after the end of each performance period, the Compensation Committee determines whether and to what extent the performance goals have been achieved and calculates the amount of the award that could be paid to each participant, if any, based upon the
levels of achievement of the relevant performance goals and the objective formula or method established with respect to such performance period.
Awards under the Senior Officer Bonus Plan may be paid in cash, equity or a combination of the two. The equity portion of any award under the Senior Officer Bonus Plan may be paid in shares of restricted stock, shares of unrestricted stock, or restricted or unrestricted stock units, all of which would be issued from the 2007 SIP or a successor plan. To the extent an award is settled with equity, the equity is valued as of the end of the performance period for the award.
Performance Metric | 100% Eligibility | 50% Eligibility (80%) | ||
| ||||
| Consolidated Revenues | ≥ $3.550 billion (50%) | ≥ $2.840 billion (25%) | ||
| ≥ $478,298,700 (50%) | ≥ $382,638,960 (25%) | ||
| (1) | Excluding impairments and certain other items considered non-recurring in nature in accordance with the Senior Officer |
In recent years and for fiscal 20132015 performance, the Compensation Committee has awarded cash annual incentive bonuses that were well below the maximum amounts allowable under the Senior Officer Bonus Plan. Plan, which has been true since adoption of the initial plan in 2010. In exercising its discretion to determine the actual cash incentive bonus amount to be paid to each NEO, the Compensation Committee did consider, however, that fiscal 2015 revenues and pre-tax income exceeded the eligibility goals set forth above.
other business achievements highlighted above, as well as the Company’s fiscal 2015 results in the areas of contracts, backlog, and SG&A. Additionally, the Compensation Committee recognized the contributions of each of our NEOs to the Company’s strategy to improve earnings and grow and diversify its businesses in fiscal 2015, including growth in targeted markets, growth of its apartment business, and expansion of its active-adult product in the West region. For further discussion of these considerations, see “Fiscal 2015 Company Performance” on pages 33 to 34 and "Performance Assessment Process” starting on page 36. The Compensation Committee did not establish any individual performance goals for the NEOs at the commencement of fiscal 2015.
performance metrics. In making this determination, the Committee considered that the inclusiona target level of pre-tax income would add a metric(excluding impairments and other items considered non-recurring in nature).
Company performance and subject to achievement of the 2016 performance goals under the Senior Officer Plan.
| Base Salary(1) | Annual Incentive Bonus | Total Fiscal 2013 Cash Compensation | ||||||||||
Robert I. Toll | $ | 1,000,000 | $ | 1,500,000 | $ | 2,500,000 | ||||||
Douglas C. Yearley, Jr. | $ | 1,000,000 | $ | 2,200,000 | $ | 3,200,000 | ||||||
Richard T. Hartman | $ | 936,538 | $ | 550,000 | $ | 1,486,538 | ||||||
Martin P. Connor | $ | 780,769 | $ | 500,000 | $ | 1,280,769 | ||||||
| Base Salary | Annual Incentive Bonus | Total Fiscal 2015 Cash Compensation | ||||||||||
| Robert I. Toll | $ | 1,000,000 | $ | 1,500,000 | $ | 2,500,000 | ||||||
| Douglas C. Yearley, Jr. | $ | 1,000,000 | $ | 2,500,000 | $ | 3,500,000 | ||||||
| Richard T. Hartman | $ | 1,000,000 | $ | 875,000 | $ | 1,875,000 | ||||||
| Martin P. Connor (1) | $ | 933,333 | $ | 875,000 | $ | 1,808,333 | ||||||
| (1) | Reflects base salary earned during fiscal |
Equity compensation for our NEOs may be either in the form of stock options, SARs, stock awards or stock units (which may be restricted, unrestricted or performance-based), in accordance with the terms of our stockholder-approved 2007 SIP or a successor plan, such as the 2014 SIP.
Stock Options
2013 Options. At the beginning of fiscal 2013, the Compensation Committee granted stock options to each of the NEOs, as set forth in the Grants of Plan-Based Awards During Fiscal 2013 table on page 47 of this proxy statement. These grants were awarded at the beginning of fiscal 2013 in recognition of the respective NEO’s service during fiscal 2012. Such grants were made as of December 17, 2012, have an exercise price of $32.22, and vest in equal amounts over a four year period.
2014 Options. In December 2013, the Compensation Committee determined to grant stock options to each of the NEOs in order to further the Compensation Committee’s objectives, as set forth above.
all employees, including NEOs, are granted and priced on a date within the last 15 days of December that is determinedset in advance by the Compensation Committee. Because options are granted with exercise prices equal to the fair market value of the underlying common stock on the date of the grant, any value that may ultimately accrues to the granteebe realized by an employee is based entirely upon our future stock price performance as perceived by investors who establish the market priceand return of capital to stockholders, which supports alignment with stockholder interests.
TheNEOs have a term of these options is ten years from the date of the grant, and thethese options vest in equal annual amounts over a four yearfour-year period, beginning on the first anniversary of the date of the grant. Options would continue to vest and be exercisable for the remainder of the ten-year term upon death, disability, or, in most cases, qualified retirement, and would fully vest upon a change of control of the Company. In addition, all unexercised stock options, vested and unvested, granted to NEOs are subject to forfeiture in the event that, after the NEO retires or otherwise leaves our employ, the NEO competes with us. See “Potential Payments upon Termination or Change of Control” starting on page 5158 of this proxy statement.
In December 2013,
Option Grant for 2015 Performance (1) | ||||
Robert I. Toll | 144,579 | |||
Douglas C. Yearley, Jr. | 137,584 | |||
Richard T. Hartman | 41,939 | |||
Martin P. Connor | 34,658 | |||
| (1) | For purposes of determining the number of shares that are subject to the options granted, the assigned value per share of the options was determined by multiplying the closing price of our stock on December 18, 2015, the date of the awards, by the average of the “Fair Value Quotient” for the three immediately previous fiscal years of the Company. The “Fair Value Quotient” is the fraction in which (x) the denominator is the closing price of our common stock on the date of the awards for each of the three years immediately preceding the current year, and (y) the numerator is the grant date fair value of the options granted in accordance with ASC 718; assumptions used in the calculation of these amounts are included in Note 10 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015, excluding the effect of estimated forfeitures. |
Provided thatdelivered, respectively.
receive shares underlying vested Performance RSUs.PRSUs. Shares subject to Performance RSUsPRSUs held by an NEO fully vest and all restrictions immediately lapse upon a NEO’s termination of his employment due to death or disability. In addition, all shares subject to Performance RSUsPRSUs fully vest and all restrictions lapse upon a change of control of the Company. See “Potential Payments upon Termination or Change of Control” starting on page 5158 of this proxy statement.
2013
The minimum, target, and maximum levelsperformance goals for the three 2013 Performance RSU2015 PRSU metrics, which were established by the Compensation Committee in January 2013, as well as actual fiscal 20132015 performance, are set forth below.
2013 Performance Metric | Minimum (90%) | Target (100%) | Maximum (110%) | Fiscal 2013 Actual | % Achievement | |||||
Operating Income (1) | $142,250,000 | $177,850,000 | $213,400,000 | $206,744,000 | 108.13% | |||||
Home Building Margin (2) | 20.40% | 24.00% | 27.60% | 24.60% | 101.66% | |||||
Units Delivered | 3,600 | 4,000 | 4,400 | 4,184 | 104.60% | |||||
| Blended Average: | 104.80% | |||||||||
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| 2015 Performance Metric | Minimum (90%) | Target (100%) | Maximum (110%) | Fiscal 2015 Actual | ||||||||
| Pre-tax Income (1) | $478,298,700 | $531,443,000 | $584,587,300 | $582,994,000 | ||||||||
| Home Building Margin (1)(2) | 23.21 | % | 25.79 | % | 28.37 | % | 26.22 | % | ||||
| Units Delivered | 4,950 | 5,500 | 6,050 | 5,525 | ||||||||
| (1) |
2014 Performance-Based
The Compensation Committee determined that, generally, PRSUs would account for three-fourths of RSUs (performance-based) awarded to any NEO for the target level of shares for fiscal 2016 performance for the reasons stated below. The Compensation Committee determined that it would retain pre-tax income, home building margin, and units delivered as three equally-weighted performance metrics for the 2016 PRSUs.
| Relative TSR Percentile Rank | TSR Multiplier (1) | |
| Less than 25th Percentile | 0% | |
| 25th Percentile | 50% (threshold) | |
| 50th Percentile | 100% (target) | |
| 75th Percentile or Above | 200% (maximum) | |
| (1) | The Total Shareholder Return Multiplier will be determined by linear interpolation for any achievement of the Relative TSR Percentile Rank which falls between the target percentages above. |
| December 2015 TSR PRSU Target Awards | |||||||||
1-Year Performance Period (11/1/2015-10/31/2016) | 2-Year Performance Period (11/1/2015-10/31/2017) | 3-Year Performance Period (11/1/2015-10/31/2018) | |||||||
| Robert I. Toll | 19,939 | 15,373 | 10,822 | ||||||
| Douglas C. Yearley, Jr. | 27,017 | 27,017 | 27,017 | ||||||
| Richard T. Hartman | 8,143 | 8,143 | 8,143 | ||||||
| Martin P. Connor | 6,697 | 6,697 | 6,697 | ||||||
| Beazer Homes USA, Inc. | KB Home | Meritage Homes Corporation | ||
| CalAtlantic Group, Inc. (1) | Lennar Corporation | NVR, Inc. | ||
| D. R. Horton, Inc. | M. D. C. Holdings, Inc. | PulteGroup, Inc. | ||
| Hovnanian Enterprises, Inc. | M/I Homes, Inc. | Taylor Morrison Home Corporation | ||
| Tri Pointe Group, Inc. (2) | ||||
| (1) | CalAtlantic Group, Inc. was formed in the merger between The Ryland Group, Inc. and Standard Pacific Corp., both of which were in the Peer Group prior to the merger. |
| (2) | Tri Pointe Group, Inc, was added to the Peer Group in December 2015. |
compensation earned after December 31, 2011.2011, to enable employees to defer a portion of their cash compensation starting in January 1, 2015. Mr. Hartman and Mr. Connor are participants in the 2015 Plan. Any amounts deferred prior to January 1, 2015, which are not re-deferred under the 2015 Plan, will continue to be governed by the terms of the Deferred Compensation Plan in effect prior to January 1, 2015. Mr. Hartman is the only NEO who participated in the Deferred Compensation Plan prior to January 1, 2015. We have the right under the Deferred Compensation2015 Plan to make discretionary contributions for the benefit of any participant in the plan.2015 Plan. We did not make any discretionary contributions to any NEO under the Deferred Compensation2015 Plan for any NEO in fiscal 2013. Mr. Hartman is the only NEO who currently participates in the Deferred Compensation Plan.
2015.
Change of Control Provisions
We have no change of control agreements relating to employment benefits or discreteadditional benefits that arise simply from a change of control or severance related thereto; however, under our equity compensation plans and our SERP, awards and benefits are generally subject to special provisions upon a defined “change of control” transaction. Upon a change of control, any outstanding options, restricted stock units,RSUs, deferred cash, or other plan awards will generally immediately vest, and any restrictions will immediately lapse. Under the SERP, if there is a change of control of the Company, all participants in the SERP would be fully vested in their SERP benefits and potentially eligible for a lump sum payout. See “Potential Payments upon Termination or Change of Control” starting on page 5158 of this proxy statement.
Position | Multiple | |
| Executive Chairman and CEO | 3.0 x base salary | |
Other Executive Officers | 1.0 x base salary | |
Directors | 3.0 x annual cash retainer | |
As a result of this policy and
Further, the Nominating and Corporate Governance Committee and Mr. Bruce E. Toll have agreed that he will not increase the aggregate number of shares of Company stock he has pledged, and the Nominating and Corporate Governance Committee revised the Company’s pledging policy in January 2014 to reflect this agreement. The Committee has also askedIn fiscal 2015, Mr. Bruce E. Toll to reduce hisreduced the aggregate number of pledged shares in fiscal 2014, the progress of which will be monitored by the Committee throughout the year. Company stock he has pledged.
Committee continues to monitor and seek reductions in the shares pledged by the Company’s co-founders.
2015.
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
Robert I. Toll | 2013 | 1,000,000 | 5,049,939 | 1,351,000 | 1,500,000 | 0 | 124,045 | 9,024,984 | ||||||||||||||||||||||||
Executive Chairman of the Board | 2012 | 1,057,692 | 4,100,000 | 878,000 | 2,500,000 | 816,478 | 94,173 | 9,446,343 | ||||||||||||||||||||||||
| 2011 | 1,300,000 | 3,264,000 | 805,000 | 1,250,000 | 656,435 | 92,913 | 7,368,348 | |||||||||||||||||||||||||
Douglas C. Yearley, Jr. | 2013 | 1,000,000 | 3,778,000 | 2,494,500 | 2,200,000 | 57,070 | 33,744 | 9,563,314 | ||||||||||||||||||||||||
Chief Executive | 2012 | 1,000,000 | 2,255,000 | 1,281,600 | 2,000,000 | 334,339 | 32,249 | 6,903,188 | ||||||||||||||||||||||||
| 2011 | 1,000,000 | 1,632,000 | 1,279,200 | 1,250,000 | 267,355 | 26,937 | 5,455,492 | |||||||||||||||||||||||||
Richard T. Hartman | 2013 | 936,538 | 1,133,400 | 665,200 | 550,000 | 206,804 | 30,707 | 3,522,649 | ||||||||||||||||||||||||
President and Chief Operating Officer | 2012 | 866,154 | 102,500 | 320,400 | 500,000 | 245,482 | 28,153 | 2,062,689 | ||||||||||||||||||||||||
Martin P. Connor | 2013 | 780,769 | 944,500 | 498,900 | 500,000 | 69,143 | 23,765 | 2,817,077 | ||||||||||||||||||||||||
Chief Financial | 2012 | 690,385 | 451,000 | 213,600 | 400,000 | 229,476 | 20,019 | 2,004,480 | ||||||||||||||||||||||||
| 2011 | 650,000 | 97,920 | 206,400 | 225,000 | 257,985 | 14,209 | 1,451,514 | |||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||
| Robert I. Toll | 2015 | 1,000,000 | 4,342,841 | 1,026,000 | 1,500,000 | — | 148,601 | 8,017,442 | |||||||||||||||
| Executive Chairman of the Board | 2014 | 1,000,000 | 4,699,732 | 1,302,000 | 1,500,000 | 368,131 | 163,356 | 9,033,219 | |||||||||||||||
| 2013 | 1,000,000 | 5,049,939 | 1,351,000 | 1,500,000 | — | 124,045 | 9,024,984 | ||||||||||||||||
| Douglas C. Yearley, Jr. | 2015 | 1,000,000 | 3,249,000 | 2,662,400 | 2,500,000 | 359,321 | 39,166 | 9,809,887 | |||||||||||||||
| Chief Executive Officer | 2014 | 1,000,000 | 3,516,000 | 3,016,230 | 2,300,000 | 198,902 | 40,922 | 10,072,054 | |||||||||||||||
| 2013 | 1,000,000 | 3,778,000 | 2,494,500 | 2,200,000 | 57,070 | 33,744 | 9,563,314 | ||||||||||||||||
| Richard T. Hartman | 2015 | 1,000,000 | 974,700 | 715,520 | 875,000 | 396,975 | 30,726 | 3,992,921 | |||||||||||||||
| President and Chief Operating Officer | 2014 | 991,667 | 1,054,800 | 796,740 | 800,000 | 163,969 | 31,079 | 3,838,255 | |||||||||||||||
| 2013 | 936,538 | 1,133,400 | 665,200 | 550,000 | 206,804 | 30,707 | 3,522,649 | ||||||||||||||||
| Martin P. Connor | 2015 | 933,333 | 812,250 | 565,760 | 875,000 | 244,696 | 24,410 | 3,455,449 | |||||||||||||||
| Chief Financial Officer | 2014 | 841,667 | 879,000 | 626,010 | 800,000 | 142,288 | 24,635 | 3,313,600 | |||||||||||||||
| 2013 | 780,769 | 944,500 | 498,900 | 500,000 | 69,143 | 23,765 | 2,817,077 | ||||||||||||||||
| (1) | These columns present the aggregate grant date fair value of RSUs and stock options, respectively, granted in the indicated fiscal year, calculated in accordance with |
| (2) | The annual incentive bonuses for |
| (3) | The amounts in this column represent the increase in the actuarial present value of accumulated benefits under the SERP for each NEO and the amount of above-market interest earned on their respective balances, if applicable, in the Deferred Compensation Plan. |
Name | Fiscal Year | Increase (Decrease) in Actuarial Present Value of Accumulated SERP Benefits ($) | Above-Market Interest Earned on Deferred Compensation | Total ($) | ||||||||||||
Robert I. Toll | 2013 | (1,093,566 | ) | N/A | (1,093,566 | ) | ||||||||||
| 2012 | 816,478 | N/A | 816,478 | |||||||||||||
| 2011 | 656,435 | N/A | 656,435 | |||||||||||||
Douglas C. Yearley, Jr. | 2013 | 57,070 | N/A | 57,070 | ||||||||||||
| 2012 | 334,339 | N/A | 334,339 | |||||||||||||
| 2011 | 267,355 | N/A | 267,355 | |||||||||||||
Richard T. Hartman | 2013 | 172,414 | 34,390 | 206,804 | ||||||||||||
| 2012 | 213,453 | 32,029 | 245,482 | |||||||||||||
Martin P. Connor | 2013 | 69,143 | N/A | 69,143 | ||||||||||||
| 2012 | 229,476 | N/A | 229,476 | |||||||||||||
| 2011 | 257,985 | N/A | 257,985 | |||||||||||||
| Name | Fiscal Year | Increase (Decrease) in Actuarial Present Value of Accumulated SERP Benefits ($) | Above-Market Interest Earned on Deferred Compensation ($) | Total ($) | |||||||
| Robert I. Toll | 2015 | (8,614 | ) | N/A | (8,614 | ) | |||||
| 2014 | 368,131 | N/A | 368,131 | ||||||||
| 2013 | (1,093,556 | ) | N/A | (1,093,556 | ) | ||||||
| Douglas C. Yearley, Jr. | 2015 | 359,321 | N/A | 359,321 | |||||||
| 2014 | 198,902 | N/A | 198,902 | ||||||||
| 2013 | 57,070 | N/A | 57,070 | ||||||||
| Richard T. Hartman | 2015 | 313,163 | 83,812 | 396,975 | |||||||
| 2014 | 139,583 | 24,386 | 163,969 | ||||||||
| 2013 | 172,414 | 34,390 | 206,804 | ||||||||
| Martin P. Connor | 2015 | 244,647 | 49 | 244,696 | |||||||
| 2014 | 142,288 | N/A | 142,288 | ||||||||
| 2013 | 69,143 | N/A | 69,143 | ||||||||
| (4) | Fiscal |
| Fiscal 2013 | ||||||||||||||||
| Robert I. Toll | Douglas C. Yearley, Jr. | Richard T. Hartman | Martin P. Connor | |||||||||||||
Payments for tax and financial statement preparation assistance | $ | 67,138 | $ | 1,454 | $ | — | $ | — | ||||||||
Contribution to 401(k) Plan | 10,100 | 10,100 | 10,115 | 10,115 | ||||||||||||
Life and disability insurance premiums (5) | 15,074 | 3,567 | 4,602 | 3,854 | ||||||||||||
Auto and gas allowance | 19,500 | 15,900 | 15,900 | 9,796 | ||||||||||||
Non-business use of Company cars and drivers | 12,233 | 2,723 | 90 | 0 | ||||||||||||
|
|
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|
|
|
|
| |||||||||
Total | $ | 124,045 | $ | 33,744 | $ | 30,707 | $ | 23,765 | ||||||||
|
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|
|
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|
| |||||||||
| Fiscal 2015 | ||||||||||||||||
Robert I. Toll | Douglas C. Yearley, Jr. | Richard T. Hartman | Martin P. Connor | |||||||||||||
| Payments for tax and financial statement preparation assistance | $ | 90,266 | $ | 7,843 | $ | — | $ | — | ||||||||
| Contribution to 401(k) Plan | 10,500 | 10,500 | 10,500 | 10,500 | ||||||||||||
| Life and disability insurance premiums (5) | 3,660 | 3,723 | 4,056 | 4,010 | ||||||||||||
| Auto and gas allowance | 19,500 | 15,900 | 15,900 | 9,900 | ||||||||||||
| Non-business use of cars and drivers | 24,675 | 1,200 | 270 | — | ||||||||||||
| Total | $ | 148,601 | $ | 39,166 | $ | 30,726 | $ | 24,410 | ||||||||
| (5) | Includes annual premiums |
| Estimated Future Payouts UnderNon-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | |||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Action Date(1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||
Robert I. Toll | (5 | ) | (6 | ) | 8,500,000 | |||||||||||||||||||||||||||||||||||||||||
| 12/17/2012 | 12/12/2012 | 120,300 | 133,667 | 147,034 | 37.78 | 5,049,939 | ||||||||||||||||||||||||||||||||||||||||
| 12/17/2012 | 12/12/2012 | 100,000 | 32.22 | 1,351,000 | ||||||||||||||||||||||||||||||||||||||||||
Douglas C. Yearley, Jr. | (5 | ) | (6 | ) | 8,500,000 | |||||||||||||||||||||||||||||||||||||||||
| 12/17/2012 | 12/12/2012 | 90,000 | 100,000 | 110,000 | 37.78 | 3,778,000 | ||||||||||||||||||||||||||||||||||||||||
| 12/17/2011 | 12/12/2012 | 150,000 | 32.22 | 2,494,500 | ||||||||||||||||||||||||||||||||||||||||||
Richard T. Hartman | (5 | ) | (6 | ) | 8,500,000 | |||||||||||||||||||||||||||||||||||||||||
| 12/17/2012 | 12/12/2012 | 27,000 | 30,000 | 33,000 | 37.78 | 1,133,400 | ||||||||||||||||||||||||||||||||||||||||
| 12/17/2012 | 12/12/2012 | 40,000 | 32.22 | 665,200 | ||||||||||||||||||||||||||||||||||||||||||
Martin P. Connor | (5 | ) | (6 | ) | 8,500,000 | |||||||||||||||||||||||||||||||||||||||||
| 12/17/2012 | 12/12/2012 | 22,500 | 25,000 | 27,500 | 37.78 | 944,500 | ||||||||||||||||||||||||||||||||||||||||
| 12/17/2012 | 12/12/2012 | 30,000 | 32.22 | 498,900 | ||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exer- cise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||||||||||||||||||
| Name | Grant Date | Action Date(1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||
| Robert I. Toll | (5) | (6) | 8,500,000 | ||||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 120,300 | 133,667 | 147,034 | 4,342,841 | ||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 100,000 | 32.49 | 1,026,000 | |||||||||||||||||||||||||||
| Douglas C. Yearley, Jr. | (5) | (6) | 8,500,000 | ||||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 90,000 | 100,000 | 110,000 | 3,249,000 | ||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 160,000 | 32.49 | 2,662,400 | |||||||||||||||||||||||||||
| Richard T. Hartman | (5) | (6) | 8,500,000 | ||||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 27,000 | 30,000 | 33,000 | 974,700 | ||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 43,000 | 32.49 | 715,520 | |||||||||||||||||||||||||||
| Martin P. Connor | (5) | (6) | 8,500,000 | ||||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 22,500 | 25,000 | 27,500 | 812,250 | ||||||||||||||||||||||||||
| 12/19/2014 | 12/4/2014 | 34,000 | 32.49 | 565,760 | |||||||||||||||||||||||||||
| (1) | The Compensation Committee met on December |
| (2) | Reflects |
| (3) | See “Compensation Discussion and Analysis—Long-Term Incentive Compensation Decisions—Stock Options” for a discussion of these option |
| (4) | Amount represents the aggregate grant date fair value of RSUs and stock options, respectively, granted in fiscal |
| (5) | Awards to |
| (6) | The Senior Officer |
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable (10) | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(11) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||
Robert I. Toll | 12/20/2004 | 500,000 | 32.550 | 12/20/2014 | ||||||||||||||||||||||||||||
| 12/20/2005 | 250,000 | 35.970 | 12/20/2015 | |||||||||||||||||||||||||||||
| 12/20/2006 | 550,000 | 31.820 | 12/20/2016 | |||||||||||||||||||||||||||||
| 12/20/2007 | 550,000 | 20.760 | 12/20/2017 | |||||||||||||||||||||||||||||
| 12/20/2010 | 50,000 | 50,000 | (4) | 19.320 | 12/20/2020 | 200,000 | (5) | 6,576,000 | ||||||||||||||||||||||||
| 12/20/2011 | 25,000 | 75,000 | (1) | 20.500 | 12/20/2021 | 164,765 | (6) | 5,417,473 | ||||||||||||||||||||||||
| 12/17/2012 | 100,000 | (3) | 32.220 | 12/17/2022 | 140,079 | (7) | 4,605,798 | |||||||||||||||||||||||||
Douglas C. Yearley, Jr. | 12/20/2003 | 16,306 | 20.135 | 12/20/2013 | ||||||||||||||||||||||||||||
| 12/20/2007 | 16,250 | 20.760 | 12/20/2017 | |||||||||||||||||||||||||||||
| 07/18/2008 | 18,692 | 18.920 | 12/20/2014 | |||||||||||||||||||||||||||||
| 07/18/2008 | 9,007 | 18.920 | 12/20/2015 | |||||||||||||||||||||||||||||
| 07/18/2008 | 14,162 | 18.920 | 12/20/2016 | |||||||||||||||||||||||||||||
| 12/20/2008 | 17,500 | 21.700 | 12/20/2018 | |||||||||||||||||||||||||||||
| 12/20/2009 | 34,375 | 12,500 | (2) | 18.380 | 12/20/2019 | |||||||||||||||||||||||||||
| 12/20/2010 | 60,000 | 60,000 | (4) | 19.320 | 12/20/2020 | 100,000 | (5) | 3,288,000 | ||||||||||||||||||||||||
| 12/20/2011 | 30,000 | 90,000 | (1) | 20.500 | 12/20/2021 | 90,621 | (6) | 2,979,618 | ||||||||||||||||||||||||
| 12/17/2012 | 150,000 | (3) | 32.220 | 12/17/2022 | 104,797 | (7) | 3,445,725 | |||||||||||||||||||||||||
Richard T. Hartman | 12/20/2007 | 20,000 | 20.760 | 12/20/2017 | ||||||||||||||||||||||||||||
| 7/18/2008 | 23,313 | 18.920 | 12/20/2014 | |||||||||||||||||||||||||||||
| 7/18/2008 | 11,176 | 18.920 | 12/20/2015 | |||||||||||||||||||||||||||||
| 7/18/2008 | 18,310 | 18.920 | 12/20/2016 | |||||||||||||||||||||||||||||
| 12/20/2008 | 20,000 | 21.700 | 12/20/2018 | |||||||||||||||||||||||||||||
| 12/20/2009 | 7,500 | 2,500 | (2) | 18.380 | 12/20/2019 | |||||||||||||||||||||||||||
| 12/21/2009 | 834 | (8) | 27,422 | |||||||||||||||||||||||||||||
| 12/20/2010 | 5,000 | 5,000 | (4) | 19.320 | 12/20/2020 | 1,667 | (9) | 54,811 | ||||||||||||||||||||||||
| 12/20/2011 | 7,500 | 22,500 | (1) | 20.500 | 12/20/2021 | 4,119 | (6) | 135,433 | ||||||||||||||||||||||||
| 12/17/2012 | 40,000 | (3) | 32.220 | 12/17/2022 | 31,439 | (7) | 1,033,714 | |||||||||||||||||||||||||
Martin P. Connor | 01/05/2009 | 10,000 | 22.180 | 01/05/2019 | ||||||||||||||||||||||||||||
| 12/20/2009 | 8,250 | 2,750 | (2) | 18.380 | 12/20/2019 | |||||||||||||||||||||||||||
| 12/20/2010 | 10,000 | 10,000 | (4) | 19.320 | 12/20/2020 | 6,000 | (5) | 197,280 | ||||||||||||||||||||||||
| 12/20/2011 | 5,000 | 15,000 | (1) | 20.500 | 12/20/2021 | 18,125 | (6) | 595,950 | ||||||||||||||||||||||||
| 12/17/2012 | 30,000 | (3) | 32.220 | 12/17/2022 | 26,199 | (7) | 861,423 | |||||||||||||||||||||||||
| Option Awards | Stock Awards | ||||||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable (9) | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(10) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||
| Robert I. Toll | 12/20/2006 | 550,000 | 31.82 | 12/20/2016 | |||||||||||||||||||||
| 12/20/2007 | 550,000 | 20.76 | 12/20/2017 | ||||||||||||||||||||||
| 12/20/2010 | 100,000 | 19.32 | 12/20/2020 | ||||||||||||||||||||||
| 12/20/2011 | 75,000 | 25,000 | (1) | 20.50 | 12/20/2021 | 54,922 | (5) | 1,975,544 | |||||||||||||||||
| 12/17/2012 | 50,000 | 50,000 | (2) | 32.22 | 12/17/2022 | 70,040 | (6) | 2,519,339 | |||||||||||||||||
| 12/20/2013 | 25,000 | 75,000 | (3) | 35.16 | 12/20/2023 | 100,302 | (7) | 3,607,863 | |||||||||||||||||
| 12/19/2014 | 100,000 | (4) | 32.49 | 12/19/2024 | 138,933 | (8) | 4,997,420 | ||||||||||||||||||
| Douglas C. Yearley, Jr. | 12/20/2007 | 16,250 | 20.76 | 12/20/2017 | |||||||||||||||||||||
| 12/20/2008 | 17,500 | 21.70 | 12/20/2018 | ||||||||||||||||||||||
| 12/20/2009 | 46,875 | 18.38 | 12/20/2019 | ||||||||||||||||||||||
| 12/20/2010 | 120,000 | 19.32 | 12/20/2020 | ||||||||||||||||||||||
| 12/20/2011 | 90,000 | 30,000 | (1) | 20.50 | 12/20/2021 | 30,207 | (5) | 1,086,546 | |||||||||||||||||
| 12/17/2012 | 75,000 | 75,000 | (2) | 32.22 | 12/17/2022 | 52,399 | (6) | 1,884,792 | |||||||||||||||||
| 12/20/2013 | 39,750 | 119,250 | (3) | 35.16 | 12/20/2023 | 75,039 | (7) | 2,699,153 | |||||||||||||||||
| 12/19/2014 | 160,000 | (4) | 32.49 | 12/19/2024 | 103,940 | (8) | 3,738,722 | ||||||||||||||||||
| Richard T. Hartman | 12/20/2007 | 20,000 | 20.76 | 12/20/2017 | |||||||||||||||||||||
| 7/18/2008 | 18,310 | 18.92 | 12/20/2016 | ||||||||||||||||||||||
| 12/20/2008 | 20,000 | 21.70 | 12/20/2018 | ||||||||||||||||||||||
| 12/20/2009 | 10,000 | 18.38 | 12/20/2019 | ||||||||||||||||||||||
| 12/20/2010 | 10,000 | 19.32 | 12/20/2020 | ||||||||||||||||||||||
| 12/20/2011 | 22,500 | 7,500 | (1) | 20.50 | 12/20/2021 | 1,373 | (5) | 49,387 | |||||||||||||||||
| 12/17/2012 | 20,000 | 20,000 | (2) | 32.22 | 12/17/2022 | 15,720 | (6) | 565,448 | |||||||||||||||||
| 12/20/2013 | 10,500 | 31,500 | (3) | 35.16 | 12/20/2023 | 22,512 | (7) | 809,757 | |||||||||||||||||
| 12/19/2014 | 43,000 | (4) | 32.49 | 12/19/2024 | 31,182 | (8) | 1,121,617 | ||||||||||||||||||
| Martin P. Connor | 1/5/2009 | 2,000 | 22.18 | 1/5/2019 | |||||||||||||||||||||
| 12/20/2009 | 11,000 | 18.38 | 12/20/2019 | ||||||||||||||||||||||
| 12/20/2010 | 20,000 | 19.32 | 12/20/2020 | ||||||||||||||||||||||
| 12/20/2011 | 15,000 | 5,000 | (1) | 20.50 | 12/20/2021 | 6,042 | (5) | 217,331 | |||||||||||||||||
| 12/17/2012 | 15,000 | 15,000 | (2) | 32.22 | 12/17/2022 | 13,100 | (6) | 471,207 | |||||||||||||||||
| 12/20/2013 | 8,250 | 24,750 | (3) | 35.16 | 12/20/2023 | 18,759 | (7) | 674,761 | |||||||||||||||||
| 12/19/2014 | 34,000 | (4) | 32.49 | 12/18/2024 | 25,985 | (8) | 934,680 | ||||||||||||||||||
| (1) | 100% of the options vest on December 20, 2015. |
| (2) | 50% of the options vest on each of December 17, 2015 and 2016. |
| (3) | 33.33% of the options vest on each of December 20, |
| 25% of the options vest on each of December |
| (5) | 100% of the 2012 PRSUs vest on December 20, 2015. |
| (6) | 50% of the 2013 |
| (7) | 33.33% of the |
|
| 25% of the |
| (9) |
| The options that are reflected in the table above |
| (10) | The market value |
| Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||
Robert I. Toll | 500,000 | 6,067,500 | 205,991 | 6,563,976 | ||||||||||||
Douglas C. Yearley, Jr. | 15,000 | 191,575 | 1,153 | 41,566 | ||||||||||||
Richard T. Hartman | 36,500 | 392,983 | 1,360 | 49,028 | ||||||||||||
Martin P. Connor | — | — | — | — | ||||||||||||
| Option Awards | Stock Awards | |||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | ||||||||
| Robert I. Toll | 250,000 | 768,863 | 123,376 | 3,986,424 | ||||||||
| Douglas C. Yearley, Jr. | 41,861 | 692,011 | 81,418 | 2,628,765 | ||||||||
| Richard T. Hartman | 11,176 | 223,211 | 17,570 | 565,898 | ||||||||
| Martin P. Connor | 8,000 | 142,220 | 18,844 | 608,115 | ||||||||
| (1) | “Value Realized on Exercise” equals the difference between the closing price of our common stock on the NYSE on the various dates of exercise and the exercise price, multiplied by the number of shares of our common stock acquired upon exercise of the stock options. |
| (2) | "Number of Shares Acquired on Vesting" includes (a) the portion of the 2012 PRSUs for these NEOs that vested on December 20, 2014 but will not be delivered until December 20, 2015, (b) the portion of the 2013 PRSUs for these NEOs that vested on December 17, 2014 but will not be delivered until December 17, 2016, (c) the portion of the 2014 PRSUs for these NEOs that vested on December 20, 2014 but will not be delivered until December 20, 2017, and (d) the portion of time-based RSUs granted to Mr. Hartman that vested on December 20, 2014 and were delivered on January 19, 2015. |
| (3) | “Value Realized on Vesting” is based on the number of shares of our common stock underlying the RSUs that vested during fiscal |
2015
Name | Plan Name(1) | Number of Years of Credited Services (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | ||||||||||
Robert I. Toll | SERP | 20.0 | 8,686,477 | — | ||||||||||
Douglas C. Yearley, Jr. | SERP | 20.0 | 1,780,787 | — | ||||||||||
Richard T. Hartman | SERP | 20.0 | 1,429,579 | — | ||||||||||
Martin P. Connor | SERP | 4.8 | 1,088,559 | — | ||||||||||
| Name | Plan Name(1) | Number of Years of Credited Services (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | |||||||
| Robert I. Toll | SERP | 20.0 | 9,045,994 | — | |||||||
| Douglas C. Yearley, Jr. | SERP | 20.0 | 2,339,010 | — | |||||||
| Richard T. Hartman | SERP | 20.0 | 1,882,325 | — | |||||||
| Martin P. Connor | SERP | 6.8 | 1,475,494 | — | |||||||
| (1) | In order to be vested in benefits under the SERP, participants generally must have |
| (2) | For a description of the assumptions used in the calculation of the present value of plan benefits, see Note 13, “Employee Retirement and Deferred Compensation Plans” in the notes to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended October 31, |
| discount rate |
In order to In December Participant Robert I. Toll Douglas C. Yearley, Jr. Richard T. Hartman Martin P. Connor below: compensation. Compensation that is deferred under the Deferred Compensation Plan earns various rates of return, depending on the length of time of the deferral. Interest rates are established by the board of directors of a wholly owned subsidiary that administers the Deferred Compensation Plan and are reviewed and adjusted annually for new deferrals. When establishing interest rates, the directors of the subsidiary review the rates charged to us for borrowings, as well as interest rates generally available in the market. During fiscal Name Richard T. Hartman56Supplemental Executive Retirement PlanThe SERP, which is an unfunded plan, generally provides for an annual benefit, payable for 20 years following retirement, once a participant has completed 20 years of service with us and has reached “normal retirement age,” which is age 62 under the SERP. During fiscal 2014, the Compensation Committee amended the SERP to eliminate a 20-year service requirement, except that a participant would have to be employed for five years in order to receive a death or disability benefit under the SERP.Beginning in fiscal 2008 and continuing through fiscal 2010, the SERP also provided for increases in annual retirement benefits to the NEOs for each year of service to the Company after age 62. Accordingly, for each NEOMr. Toll, who hashad already reached retirement age under the SERP, on his birthday during fiscal 2008 through fiscal 2010, annual retirement benefits under the SERP increased by 10% of the applicable original annual benefit amount (set forth below).behave been eligible for the annual increase in any given year, the NEO must have be employed by us on his birthday during such year, have completed 20 years of service with us on or prior to his birthday during such year, and have reached normal retirement age on or prior to his birthday during such year. During fiscal 2010, the Company discontinued any 10% increases beyond fiscal 2010; except that Mr. Yearley’sthe annual benefit amount for Mr. Yearley, Mr. Hartman, and Mr. Connor will be subject to such increase for the first three years of service to the Company after he reachesthey reach age 62.2012,2014, the Compensation Committee determined that it would include Mr. Hartman as a participant in the SERP in recognition of his role as COO and promotion to President of the Company with an annual benefit amount payable of $125,000. Prior to such time, Mr. Hartman was a participant in the Company’s Senior Management Supplemental Retirement Plan with an annual benefit of $100,000. The Committee also determined to increase the SERP annual benefit amount payable to Mr. Yearley to $175,000$200,000 from $150,000,$175,000 and to increase the SERP annual benefit amountamounts payable to Mr. Hartman and Mr. Connor to $125,000$145,000 from $100,000.$125,000. In making such determination, the Compensation Committee considered the use of the SERP to encourage retention of the Company’sCompany's NEOs, particularly since none of the Company’sCompany's NEOs has an employment agreement with the Company.The original annual benefit amounts, the fiscal 2015 increase, and the annual benefits to our NEOs under the SERP as of the end of fiscal 20132015 are set forth in the table below. Original Annual
Benefit Amount Fiscal 2013
Increase Annual Benefit
Amount at
October 31, 2013 $ 500,000 — $ 650,000 $ 150,000 25,000 $ 175,000 $ 100,000 25,000 $ 125,000 $ 100,000 25,000 $ 125,000 Participant Original Annual Benefit Amount Fiscal 2015 Increase Annual Benefit
Amount at
October 31, 2015Robert I. Toll $ 500,000 $ — $ 650,000 Douglas C. Yearley, Jr. $ 150,000 $ 25,000 $ 200,000 Richard T. Hartman $ 100,000 $ 20,000 $ 145,000 Martin P. Connor $ 100,000 $ 20,000 $ 145,000 Mr. Toll has completed the requisite 20 years of service with us and has reached normal retirement age and is, therefore, fully vested in his SERP benefits. Messrs.Mr. Yearley, Mr. Hartman, and Hartman have completed the requisite 20 years of service with us, butMr. Connor have not reached normal retirement age and are not vested in their respective SERP benefits. Mr. Connor has not completed the requisite 17 years of service with us, nor has he reached normal retirement age and is, therefore, not vested in his SERP benefits. Benefits under the SERP will cease if any participant competes with us following retirement.Nonqualified Deferred Compensation During Fiscal 2013No2015Until January 1, 2015, no new contributions to the Deferred Compensation Plan by employees or NEOs arewere allowed for compensation earned after December 31, 2011. Under the Deferred Compensation Plan, NEOs could elect, six months prior to the end of the calendar year for which any bonus may be earned, to defer a portion of their cash2013,2015, interest rates for amounts deferred under the Deferred Compensation Plan ranged from 4% to 8%, based upon when the compensation was deferred and the length of time it had been or was to be deferred. For more information on the Deferred Compensation Plan, see “Compensation Discussion and Analysis—Benefits and Perquisites—Deferred Compensation Plan” in this proxy statement.57The table below provides information regarding contributions, earnings, and balances for our NEOs. Mr. Hartman who isand Mr. Connor are the only NEONEOs who participatedparticipate in the Deferred Compensation Plan. Executive
Contributions
in Last
FY ($) Registrant
Contributions
in Last
FY ($) Aggregate
Earnings
in Last
FY ($)(1) Aggregate
Withdrawals/
Distributions ($) Aggregate
Balance at
Last
FYE ($)(2) — — 129,650 — 2,280,269 Name Plan ExecutiveContributionsin LastFY ($) RegistrantContributionsin LastFY ($)(1) AggregateEarningsin LastFY ($)(2) AggregateWithdrawals/Distributions ($) AggregateBalance atLastFYE ($)(3)Robert I. Toll SIP — 3,986,424 1,033,756 — 9,648,485 Douglas C. Yearley, Jr. SIP — 2,628,765 648,020 — 6,044,039 Richard T. Hartman SIP — 538,801 105,825 — 983,456 DCP 168,000 — 168,726 — 2,739,695 Martin P. Connor SIP — 608,115 144,604 — 1,348,012 DCP 15,346 — 238 — 15,584 (1) "Registrant Contributions in Last FY" column represents the value of (a) the portion of the 2012 PRSUs for these NEOs that vested on December 20, 2014 but will not be delivered until December 20, 2015, (b) the portion of the 2013 PRSUs for these NEOs that vested on December 17, 2014 but will not be delivered until December 17, 2016, and (c) the portion of 2014 PRSUs for these NEOs that vested on December 20, 2014 but will not delivered on December 20, 2017, in each case based on the closing price of our common stock on the applicable vesting date. (2) “Aggregate Earnings in Last FY” column represents theincludes unrealized earningsearnings/(losses) on the NEO’s account balance in2012 PRSUs, the Deferred Compensation Plan as described below. $34,390 of2013 PRSUs, and the amount shown under this column represents above-market earnings2014 PRSUs for these NEOs that have vested but will not be delivered until December 20, 2015, December 17, 2016, and was accordingly reported as compensation in fiscal 2013 in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table on page 46.December 20, 2017, respectively.This column also includes unrealized earnings on Mr. Hartman's and Mr. Connor's account balances in the Deferred Compensation Plan, of which $83,812 and $49, respectively, represents above-market earnings and was accordingly reported as compensation in fiscal 2015 in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table on page 52 for Mr. Hartman and Mr. Connor. The above-market earnings for Mr. Hartman include a corrective credit of $35,582 applied in fiscal 2015 to reflect interest earned in prior years.(2)(3) “Aggregate Balance at Last FYE” column representsincludes the net balancevalue, based on the closing price of compensation that was earned and deferred in prior years and the interest accruedour common stock on such deferred amounts. Above-market earnings in fiscal 2012 in the amount of $32,029 were reported as compensation in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” columnOctober 30, 2015, of the Summary Compensation Table in the Company’s2012 PRSUs, 2013 proxy statement.PRSUs, and 2014 PRSUs for these NEOs that have vested but will not be delivered until December 20, 2015, December 17, 2016, and December 20, 2017, respectively.
Plan.
30, 2015.
See “Compensation Discussion and Analysis—Benefits and Perquisites—Supplemental Executive Retirement Plan” and “Pension Benefits During Fiscal 2015” above.
below reflect the amounts of previously unvested performance-based RSUs that would have vested if a change of control had occurred on October 31, 2013.30, 2015. In addition, with respect to Messrs.Mr. Yearley, Mr. Hartman, and Mr. Connor, the tables below also reflect the benefits payable in a lump sum under the SERP as if a change of control had occurred on October 31, 2013.
30, 2015. Mr. Toll is already fully vested in his SERP benefits.
| Termination of Employment ($) | ||||||||||||||||||||||||||||
Payments and Benefits | Voluntary(1) | Normal Retirement | Involuntary Not for Cause | Involuntary For Cause | Death | Disability | Change in Control | |||||||||||||||||||||
Accelerated vesting of unvested equity awards: | ||||||||||||||||||||||||||||
Stock options | — | — | — | — | — | — | 1,672,500 | |||||||||||||||||||||
RSU shares (2) | — | — | — | — | 16,599,271 | 16,599,271 | 16,599,271 | |||||||||||||||||||||
Payment of SERP benefits (3) | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total: | — | — | — | — | 16,599,271 | 16,599,271 | 18,271,771 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
| Termination of Employment ($) | |||||||||||||||||||||
| Payments and Benefits | Voluntary(1) | Normal Retirement | Involuntary Not for Cause | Involuntary For Cause | Death | Disability | Change of Control | ||||||||||||||
| Accelerated vesting of unvested equity awards: | |||||||||||||||||||||
| Stock options | — | — | — | — | — | — | 983,000 | ||||||||||||||
| PRSU shares (2) | — | — | — | — | 13,100,166 | 13,100,166 | 13,100,166 | ||||||||||||||
| Payment of SERP benefits (3) | — | — | — | — | — | — | — | ||||||||||||||
| Total: | — | — | — | — | 13,100,166 | 13,100,166 | 14,083,166 | ||||||||||||||
| (1) | For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company. |
| (2) | See footnotes 5, 6, 7, and |
| (3) | The amount of Mr. Toll’s SERP benefits, in which he has already fully vested as described above, would be paid in bi-weekly installments over a 20-year period, except in the event of a change |
Payments and Benefits Accelerated vesting of unvested equity awards: Stock options RSU shares (2) Payment of SERP benefits (3) Total: Douglas C. Yearley, Jr.The following table describes the potential payments and benefits to Douglas C. Yearley upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2013. Termination of Employment ($) Voluntary(1) Normal
Retirement Involuntary
Not for
Cause Involuntary
For
Cause Death Disability Change in
Control — — — — — — 2,208,050 — — — — 9,713,344 9,713,344 9,713,344 — — — — 3,500,000 3,500,000 3,500,000 — — — — 13,213,344 13,213,344 15,421,394 Termination of Employment ($) Payments and Benefits Voluntary(1) NormalRetirement InvoluntaryNot forCause InvoluntaryForCause Death Disability Change ofControlAccelerated vesting of unvested equity awards: Stock options — — — — — — 1,398,743 PRSU shares (2) — — — — 9,409,213 9,409,213 9,409,213 Payment of SERP benefits (3) — — 4,000,000 — 4,000,000 4,000,000 4,000,000 Total: — — 4,000,000 — 13,409,213 13,409,213 14,807,956 (1) For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company. (2) See footnotes 5, 6, 7, and 78 to the Outstanding Equity Awards at October 31, 20132015 table in this proxy statement. Had Mr. Yearley terminated his employment at October 31, 2013,30, 2015, the value of his shares subject to performance-based RSUs, based upon the closing price of our common stock on the NYSE on October 31, 201330, 2015 of $32.88,$35.97, would have been $9,713,344.$9,409,213.60(3) The amount of the benefit shown would be paid in bi-weekly installments over a 20-year period, except in the event of a change inof control. Upon a change inof control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Yearley’s benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits During Fiscal 2013”2015”).
Payments and Benefits Accelerated vesting of unvested equity awards: Stock options RSU shares (2) Payment of SERP benefits (3) Total: Richard T. HartmanThe following table describes the potential payments and benefits to Richard T. Hartman upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2013. Termination of Employment ($) Voluntary(1) Normal
Retirement Involuntary
Not for
Cause Involuntary
For
Cause Death Disability Change in
Control — — — — — — 409,000 — — — — 1,251,380 1,251,380 1,251,380 — — — — 2,500,000 2,500,000 2,500,000 — — — — 3,751,380 3,751,380 4,160,380 Termination of Employment ($) Payments and Benefits Voluntary(1) NormalRetirement InvoluntaryNot forCause InvoluntaryForCause Death Disability Change ofControlAccelerated vesting of unvested equity awards: Stock options — — — — — — 366,180 RSU shares (2) — — — — 2,546,209 2,546,209 2,546,209 Payment of SERP benefits (3) — — 2,900,000 — 2,900,000 2,900,000 2,900,000 Total: — — 2,900,000 — 5,446,209 5,446,209 5,812,389 (1) For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company. (2) See footnotes 5, 6, 7, 8, and 98 to the Outstanding Equity Awards at October 31, 20132015 table in this proxy statement. Had Mr. Hartman terminated his employment at October 31, 2013,30, 2015, the value of his shares subject to RSUs, based upon the closing price of our common stock on the NYSE on October 31, 201330, 2015 of $32.88,$35.97, would have been $1,251,380.$2,546,209.
| (3) | The amount of the benefit shown would be paid in bi-weekly installments over a 20-year period, except in the event of a change |
Payments and Benefits Accelerated vesting of unvested equity awards: Stock options RSU shares (2) Payment of SERP benefits (3) Total: Martin P. ConnorThe following table describes the potential payments and benefits to Martin P. Connor upon termination of his employment or a change of control of the Company had such termination or change of control occurred on October 31, 2013. Termination of Employment ($) Voluntary(1) Normal
Retirement Involuntary
Not for
Cause Involuntary
For
Cause Death Disability Change in
Control — — — — — — 380,975 — — — — 1,654,653 1,654,653 1,654,653 — — — — — — 2,500,000 — — — — 1,654,653 1,654,653 4,535,628 Termination of Employment ($) Payments and Benefits Voluntary(1) NormalRetirement InvoluntaryNot forCause InvoluntaryForCause Death Disability Change ofControlAccelerated vesting of unvested equity awards: Stock options — — — — — — 271,968 PRSU shares (2) — — — — 2,297,979 2,297,979 2,297,979 Payment of SERP benefits (3) — — 2,900,000 — 2,900,000 2,900,000 2,900,000 Total: — — 2,900,000 — 5,197,979 5,197,979 5,469,947 (1) For purposes of this table, “Voluntary” means a termination of employment that is not in accordance with our normal retirement policy, which includes an agreement not to compete with the Company. (2) See footnotes 5, 6, 7, and 78 to the Outstanding Equity Awards at October 31, 20132015 table in this proxy statement. Had Mr. Connor terminated his employment at October 31, 2013,30, 2015, the value of his shares subject to performance-based RSUs, based upon the closing price of our common stock on the NYSE on October 31, 201330, 2015 of $32.88,$35.97, would have been $1,654,653.$2,297,979.(3) The amount of the benefit shown would be paid in bi-weekly installments over a 20-year period, except in the event of a change of control. Upon a change inof control, the amount of the benefit shown would be paid in a single lump sum, equal to the actuarial equivalent present value of Mr. Connor’s benefits as of the date of payment, unless prohibited by applicable tax regulations (see “Pension Benefits During Fiscal 2013”2015”).
REPORT timely basis.61REPORT OF THE AUDIT AND RISK COMMITTEEAs described under “Corporate Governance—Committees of the Board and Meetings—Audit and Risk Committee,” the Audit and Risk Committee of the Board oversees the Company’s financial reporting process on behalf of, and reports to, the Board. Company management has primary responsibility for preparation of the financial statements and the overall reporting process, including the Company’s system of internal control.In fulfilling its oversight responsibilities, the Audit and Risk Committee reviewed and discussed the Company’s audited financial statements for the year ended October 31, 20132015 with management, including a discussion of the quality not just the acceptability, of accounting principles,financial reporting, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit and Risk Committee also discussed with Ernst & Young LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by Auditing Standard No. 16, as adopted by the Public Company Accounting Oversight Board, relating to communication with audit committees.In addition, the Audit and Risk Committee received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit and Risk Committee concerning independence and discussed with Ernst & Young LLP its independence from the Company and the Company’s management.Based on the reviews and discussions described in the preceding paragraphs, the Audit and Risk Committee recommended to the Board that the audited financial statements of the Company be included in the Annual Report on Form 10-K for the fiscal year ended October 31, 20132015 for filing with the SEC.Respectfully submitted by the members of the Audit and Risk Committee of the Board of Directors.Paul E. Shapiro (Chair)Edward G. BoehneChristine N. GarveyCarl B. MarbachSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Exchange Act and the regulations thereunder require certain of our officers, as well as our directors and persons who own more than 10% of a registered class of our equity securities (collectively, the “reporting persons”) to file reports of ownership and changes in ownership with the SEC and to furnish us with copies of these reports. Based solely on our review of the copies of these reports and written representations we received from the reporting persons, we believe that all filings required to be made by the reporting persons during or with respect to the period November 1, 20122014 through October 31, 20132015 were made on a timely basis. In December 2013,basis, except that Mr. Marbach, a gift of shares wasdirector, filed a Form 4 in January 2016 that reported three gifts that he had failed to have been made by Robert I. Toll in December 2011 that was previously reflected asreport on a change in the form of beneficial ownership, but since the shares were transferred to a charitable foundation, these gifts should have been reported as a disposition of beneficial ownership.62CERTAIN RELATIONSHIPS AND TRANSACTIONSWe have a written Related Party Transaction Policy (“Policy”), which provides guidelines applicable to any transaction, arrangement, or relationship between us and a related person that is or may be required to be disclosed pursuant to Item 404 of the SEC’s Regulation S-K (each, a “related person transaction”). Under the Policy, the Nominating and Corporate Governance Committee of the Board is responsible for reviewing and determining whether to approve or ratify any related person transaction. In making its determination to approve or ratify a related person transaction, the Nominating and Corporate Governance Committee considers such factors as:the extent of the related person’s interest in the transaction;
by the Company; one-third by Mr. Robert I. Toll, Executive Chairman of the Board, Mr. Bruce E. Toll, Vice Chairman of the Board (and trusts established for the benefit of members of his family), Mr. Douglas C. Yearley, Jr., our Chief Executive Officer, and other current and former members of our senior management; and one-third by the Pennsylvania State Employees Retirement System. At October 31, 2013,2015, our negative investment, under the Generally Accepted Accounting Principles, in Toll Realty LP and the Trust was $888,333.zero as cumulative distributions received from the Trust have been in excess of the carrying amount of our net investment. We earned fees from Toll Realty LP and the Trust of $4,256,241$2,190,706 in fiscal 20132015 under the terms of various development, finance, and management services agreements. In performing these services, we also incurred costs. We believe that these transactions were on terms no less favorable than we would have agreed to with unrelated persons. Under such agreements, we also incur certain costs on behalf of Toll Realty LP and the Trust for which we are reimbursed by Toll Realty LP and the Trust. These fees and reimbursements were paid to us throughout the year.
12, 2016.
26, 2016.
If notice of any such proposal is not submitted in writing and received by us at the address appearing on the cover page of this proxy statement by December 25, 2014,the dates specified in our bylaws, then such proposal shall be deemed “untimely” for
purposes of Rule 14a-4 promulgated under the Exchange Act and, therefore, the persons appointed by our Board as its proxies will have the right to exercise discretionary voting authority with respect to such proposal.
“untimely."
We have hired Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902, to help us distribute and solicit proxies. We will pay them $7,500 plus expenses for these services.
Michael
SNYDER
2, 2016
STOCK INCENTIVE PLAN
(2014)
| 1) | Purpose. The Toll Brothers, Inc. Stock Incentive Plan for |
| 2) | Administration. The Plan shall be administered by the Board of Directors. However, the Board of Directors may designate a committee or committees composed of two or more of its members to operate and administer the Plan in its stead. Any such committee and the Board of Directors in its administrative capacity with respect to the Plan is referred to herein as the “Committee.” |
| 3) | Eligibility. All |
| 4) | Shares Under the |
| 5) | Term of |
| 6) | Terms and Conditions of |
| (a) | Number of Option |
| (b) | Option |
| (c) | Medium of Payment. An Optionee shall pay for Option Shares: |
| (i) | in cash; |
| (ii) | by certified check payable to the order of the Company; or |
| (iii) | by such other mode of payment as the Committee may approve, including, but not limited to, (x) payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, or (y) a deemed payment by means of a net issuance of shares. If a net issuance of shares is permitted under the terms of an Option Document, the exercise of the Option shall be treated in the following manner: upon notice of exercise, the Optionee shall be deemed, as of the date of exercise, to have received all of the shares of Common Stock subject to the Option (or such portion of such shares as corresponds to the portion of the Option being exercised), and shall simultaneously be deemed to have delivered back to the Company that number of such shares as have a fair market value (determined as of the date of exercise) equal to the Option Price required to be paid on exercise of the Option (or portion being exercised) and any additional amounts required to be paid by the Optionee in connection with the exercise of the Option. The intent of this provision is to permit the Optionee to pay the Option Price and other required amounts by relinquishing back to the Company shares of Common Stock otherwise issuable pursuant to the exercise of the Option, so that the Optionee will be entitled to receive only a net issuance of shares of Common Stock having a value equal to the economic benefit of exercising the Option (or portion of the Option being exercised). |
Shares with respect to which such Option is to be exercised, accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by such certificates. In the event that certificates for shares of the
| (d) | Termination of |
| (i) | Expiration of the Option term specified in the Option Document. With respect to |
| (ii) | Expiration of three months (or such shorter period as the Committee may select) from the date the Optionee’s |
| (iii) | Expiration of one year from the date the Optionee’s |
| (iv) | The date, if any, set by the Committee as an accelerated expiration date in the event of a “Change of Control” (as defined in Subsection 6(e) below) provided an Optionee who holds an Option is given written notice at least 30 days before the date so fixed; |
| (v) | A finding by the Committee, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has breached his |
| (e) |
Change of |
| (f) | Transfers.No Option granted under the Plan may be transferred, except by will or by the laws of descent and distribution. During the lifetime of the person to whom an Option is granted, such Option may be exercised only by him. |
published by the Securities and Exchange Commission (“Form S-8”); provided, however, that no transfer shall be treated as a Family Transfer if the transfer would be treated as a transfer for value for purposes of Form S-8. Form S-8 defines “family member” as including any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employees’Non-Executive Director’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the employee)Non-Executive Director) control management of assets, and any
| (g) | Other |
| (h) | Amendment. Subject to the provisions of the Plan, the Committee shall have the right to amend Option Documents issued to an Optionee, subject to the Optionee’s consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made under Subsection 6(e). |
| (i) | Stock Appreciation Rights. The Committee may, pursuant to this Section 6, make grants of SARs to any person who is eligible under the terms of the Plan to receive a Non-Qualified Stock Option. Each SAR granted under the Plan shall convey to the recipient rights that are in all respects the economic equivalent of a Non-Qualified Stock Option granted under the terms of the Plan, and shall include in the grant document all of the material terms and conditions that would be included in a corresponding Option Document, including the number of shares of Common Stock deemed to be subject to the SAR, the Option Price (which cannot be less than the fair market value per share of the underlying shares of Common Stock determined as of the date the SAR is granted), the time or times at which the SAR may be exercised, and an expiration date. The economic benefit to the recipient of an SAR shall be equal to the value of the shares of Common Stock underlying the SAR as of the date the SAR is exercised, reduced by the deemed Option Price of the SAR applicable to the portion of the SAR being exercised. On exercise, the holder of the SAR shall be entitled to receive a payment of either cash or a distribution of shares of Common Stock, having a value equal to the value of the SAR (or portion being exercised) as described in the preceding sentence. Whether the recipient of an SAR is entitled to cash or to a distribution of shares of Common Stock upon exercise may be specified in the grant document. |
| 7) |
Exercise. No Option shall be deemed to have been exercised prior to the receipt by the Company of written notice of such exercise and of payment in full of the Option Price for the Option Shares to be purchased. Each such notice shall specify the number of Option Shares to be purchased and shall (unless the Option Shares are covered by a then current registration statement or a Notification under Regulation A under the Securities Act of 1933 (the “Act”)), contain the Optionee’s acknowledgment in form and substance satisfactory to the Company that (a) such Option Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Act), (b) the Optionee has been advised and understands that (i) the Option Shares may not have been registered under the Act and are “restricted securities” within the meaning of Rule 144 under the Act and are subject to restrictions on transfer and (ii) the Company is under no obligation to register the Option Shares under the Act or to take any action which would make available to the Optionee any exemption from such registration, (c) such Option Shares may not be transferred without compliance with all applicable federal and state securities |
| laws, and (d) an appropriate legend referring to the foregoing restrictions on transfer and any other restrictions imposed under the Option Documents may be endorsed on the certificates. Notwithstanding the above, should the Company be advised by counsel that issuance of shares should be delayed pending (A) registration under federal or state securities laws (B) the receipt of an opinion that an appropriate exemption therefrom is available, (C) the listing or inclusion of the shares on any securities exchange or in an automated quotation system or (D) the consent or approval of any governmental regulatory body whose consent or approval is necessary in connection with the issuance of such Option Shares, the Company may defer exercise of any Option granted hereunder until event A, B, C, or D has occurred. |
| 8) |
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| Option or SAR and the Option Price per share shall be appropriately adjusted in the event of a stock dividend, stock split, merger, consolidation, spin-off, extraordinary distribution or other increase or decrease in the number of issued and outstanding shares of Common Stock resulting from a subdivision or consolidation of the Common Stock or other capital adjustment (not including the issuance of Common Stock on the conversion of other securities of the Company which are convertible into Common Stock) effected without receipt of consideration by the Company. The Committee shall have authority to determine the adjustments to be made under this Section and any such determination by the Committee shall be final, binding and |
| 9) | Amendment of the |
| 10) | Continued |
| 11) | Withholding of |
| 12) | Terms and Conditions of |
| (a) | Number of Shares. Each Award Agreement shall state the number of shares of Common Stock to which it pertains. |
| (b) | Purchase Price. Each Award Agreement shall specify the purchase price, if any, which applies to the Stock Award. If the Committee specifies a purchase price, the Awardee shall be required to make payment on or before the date specified in the Award Agreement. An Awardee shall pay for such shares of Common Stock (i) in cash, (ii) by certified check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve. |
| (c) | Transfer of Shares. In the case of a Stock Award which provides for a transfer of shares of Common Stock without any payment by the Awardee, the transfer shall take place on the date specified in the Award Agreement. In the case of a Stock Award which provides for a payment, the transfer shall take place on the date the initial payment is delivered to the Company, unless the Committee or the Award Agreement otherwise specifies. Stock certificates evidencing shares of Common Stock transferred pursuant to a Stock Award shall be issued in the sole name of the Awardee. Notwithstanding the foregoing, as a precondition to a transfer, the Company may require an acknowledgment by the Awardee as required with respect to Options under Section 7 and may further require that the Awardee satisfy any of the Company’s withholding obligations attributable to any federal, state or local law as a result of such transfer. |
| (d) | Forfeiture Conditions. The Committee may specify in an Award Agreement any conditions under which the Awardee shall be required to convey to the Company the shares of Common Stock covered by the Stock Award. Upon the occurrence of any such specified condition, the Awardee shall forthwith surrender and deliver to the Company the certificates evidencing such shares as well as completely executed instruments of conveyance. The Committee, in its discretion, may provide that certificates for shares of Common Stock transferred pursuant to a Stock Award be held in escrow by the Company’s Treasurer or an appropriate officer of the Company, together with an undated stock power executed by the Awardee, until such time as each and every condition that may result in a forfeiture has lapsed, and that the Awardee be required, as a condition of the transfer, to deliver to such escrow agent stock powers covering the transferred shares of Common Stock duly endorsed by the Awardee. Stock certificates evidencing shares of Common Stock subject to forfeiture shall bear a legend to the effect that the Common Stock evidenced thereby is subject to repurchase or conveyance to the Company in accordance with a Stock Award made under the Plan and that the shares of Common Stock may not be sold or otherwise transferred. |
| (e) | Lapse of Conditions. Upon termination or lapse of each and every forfeiture condition, the Company shall cause certificates without the legend referring to the Company’s repurchase right (but with any other |
| (f) | Rights as Stockholder. Upon payment of the purchase price, if any, |
| (g) | Lapse of Restrictions. Upon the expiration or termination of the restrictions applicable under the terms of a Stock Award, and the satisfaction of any other conditions set forth in an |
| (h) | Section 83(b) Elections. An Awardee who files an |
| (i) | Forfeiture for Breach of Duty to |
| (j) | Amendment. Subject to the provisions of the Plan, the Committee shall have the right to amend Stock Awards issued to an Awardee, subject to the Awardee’s consent if such amendment is not favorable to the Awardee, except that the consent of the Awardee shall not be required for any amendment made pursuant to Section 9 of the Plan. |
| (k) | Change of Control. In the event of a Change of Control (as defined in Section 6(e) above), the Committee may take whatever action with respect to Stock Awards that have been granted under the Plan that it deems necessary or desirable. In addition to the foregoing, the restrictions applicable to shares of Common Stock issued pursuant to Stock Awards under the Plan shall lapse immediately prior to a Change of Control. |
| (l) | Restricted Stock Units. In addition to grants of Stock Awards under this Section 12, the Committee may grant RSUs to any person eligible to receive a Stock Award under this Section 12 and the provisions of this Section 12 applicable to Stock Awards shall apply on a corresponding basis to any RSU grants. To the extent an applicable grant document provides that settlement of the recipient’s rights under an RSU is to be by means of a payment of cash or delivery of shares of the Common Stock at a time later than the date the recipient vests in such RSU, the time and manner of payment or delivery shall be specified in the grant document either as a date certain, or by reference to the recipient’s separation from service or a change in the ownership or effective control of the Company (as these terms are used for purposes of Code Section 409A) and shall include, to the extent required under Code Section 409A(a)(2)(B)(i), a delay in payment or delivery of six months where payment or delivery is by reason of the recipient’s separation from service. |
| 13) | Interpretation. The Plan is intended to enable transactions under the Plan with respect to directors and officers (within the meaning of Section 16(a) under the Securities Exchange Act of 1934, as amended) to satisfy the conditions of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended; any provision of the Plan which would cause a conflict with such conditions shall be deemed null and void to the extent permitted by applicable law and in the discretion of the Board of Directors. |
| 14) | Special Provisions Related to Code Section |
| 15) | Effective Date. The Plan was effective upon approval by the Company’s stockholders on March |
PROXY
PROXY SOLICITED BY THE BOARD
Annual Meeting of StockholdersINCORPORATION, AS AMENDED
The undersigned stockholder of Toll Brothers, Inc. (the “Company”), revoking all previous proxies, hereby appoints ROBERT I. TOLL and DOUGLAS C. YEARLEY, JR., and each of them individually, as the attorney and proxyArticle Five, Part IV of the undersigned,Company’s Second Restated Certificate of Incorporation, as amended. Addition of new text is indicated by underlining and deletion of existing text is indicated by a strike-through.
This proxy is solicited on behalf of the Board of Directors.This proxy, when properly executed, returned and received by us prior to voting at the Meeting, will be votedgenerally in the manner directed herein by the undersigned.If this proxy is properly executed, returned and received by us prior toelection of Directors, voting at the Meeting without specific instructions, this proxy will be voted“FOR” all nominees under Proposal One, and “FOR” Proposals Two, Three and Four.This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the Meeting or any adjournment or postponement thereof.
If you plan to attend the Meeting in person, please refer to the admission policy and procedures set forth in the proxy statement.
(Continued and to be signed on the reverse side.)
ANNUAL MEETING OF STOCKHOLDERS OF
TOLL BROTHERS, INC.
March 12, 2014
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS:
The Company’s proxy materials are available online at: https://materials.proxyvote.com/889478
Please sign, date and mail your proxy card in the envelope providedtogether as soon as possible.
ia single class. Please detach along perforated line and mail in the envelope provided. i
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