| | Independence The Board reviewed the background, experience and independence of the Governance & Sustainability Committee members and based on this review, the Board determined that each member of the Governance & Sustainability Committee meets the independence requirements of the Nasdaq Listing Standards, including the heightened independence requirements specific to Compensation Committee members.NYSE’s listing standards. | | | Governance and Nominating Committee |
Number of Meetings: 4
Responsibilities. The Governance and Nominating Committee operates under a written charter adopted by the Board. In accordance with its charter, the Governance and Nominating Committee has responsibility for, among other things:
•recommending to the Board proposed nominees for election to the Board by the stockholders at annual meetings, including an annual review as to the re-nominations of incumbents and proposed nominees for election by the Board to fill vacancies that occur between stockholder meetings;
•reviewing and approving or ratifying related party transactions under our Related Party Policy;
•making recommendations to the Board regarding corporate governance matters and practices; and
•assisting the Board and its other committees that oversee specific risk-related issues and serving as a resource to management by overseeing our enterprise risk management functions, including risks related to information technology security.
Consideration of Director Nominees. The Governance and Nominating Committee considers possible candidates for nominees for directors from many sources, including management and stockholders. The Governance and Nominating Committee evaluates the suitability of potential candidates nominated by stockholders in the same manner as other candidates recommended to the Governance and Nominating Committee. Although there are no minimum qualifications for nominees, the charter of the Governance and Nominating Committee requires that the Governance and Nominating Committee select nominees to become directors based on an assessment of the fulfillment of necessary independence requirements for the composition of the Board; the highest ethical standards and integrity; a willingness to act on and be accountable for Board decisions; an ability to provide wise, informed and thoughtful counsel to top management on a range of issues; and individual backgrounds that provide a diverse portfolio of experience and knowledge commensurate with the Board’s needs. Although no formal policy currently exists, the Governance and Nominating Committee seeks to promote through the nomination process an appropriate diversity of experience, expertise, education, perspective, age, gender and ethnicity, and includes such diversity considerations when appropriate in connection with potential nominees.
The Governance and Nominating Committee identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board does not wish to continue in service or if the Governance and Nominating Committee or the Board decides not to re-nominate a member for re-election, the Governance and Nominating Committee identifies the desired skills and experience of a new nominee.
Stockholder Nominations of Director Candidates. Stockholders can suggest qualified candidates for director by giving written notice to our Secretary at Green Brick Partners, Inc., 2805 Dallas Parkway, Suite 400, Plano, TX 75093. The notice should include the name and qualifications of the candidate and any supporting material the stockholder feels is appropriate. In considering any candidate proposed by a stockholder, the Governance and Nominating Committee will reach a conclusion based on the Board’s established criteria. The Governance and Nominating Committee may seek additional information regarding the candidate. After full consideration, the stockholder proponent will be notified of the decision of the Governance and Nominating Committee.
A stockholder who wishes to nominate a person for the election of directors must ensure that the nomination complies with our Bylaw provisions on making stockholder nominations at an annual meeting of stockholders. For information regarding stockholder proposals for our 2022 Annual Meeting of Stockholders, see the section entitled “Other Matters — Stockholder Proposals for the 2022 Annual Meeting” in this proxy statement.
Board Leadership Structure The positions of Chairman and CEO are held by two different individuals. David Einhorn serves as Green Brick’s Chairman and James R. Brickman serves as Green Brick’s CEO. Separating these positions allows our CEO to focus on our day-to-day business and operations, while allowing our Chairman to lead the Board in its fundamental role of providing advice to and oversight of management. The Chairman provides leadership to our Board and works with the Board to define its structure and activities in the fulfillment of its responsibilities. The Chairman sets the board agendas, in consultation with our CEO and the other officers and directors, facilitates communications among and information flow to directors, has the power to call special meetings of our Board and stockholders, and presides at meetings of our Board and stockholders. The Chairman also advises and counsels our CEO and other officers. Pursuant to our Corporate Governance Guidelines, the non-employee directors and independent directors meet in executive session, without management present, at each of the regularly scheduled meetings of the Board, and at such other times as may be determined by a majority of the independent directors. In addition, at least once a year, only independent, non-employee directors shall meet in executive session. Green Brick does not currently have a lead independent director. Meetings During 2021, the Board met 5 times. Each director attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by each of the Board committees on which he or she served. Director attendance is not required at annual meetings of stockholders. Three members of the Board attended the 2021 Annual Meeting of Stockholders.
All our independent directors meet in executive session (without management present) during each quarterly scheduled Board meeting and at other times as they may deem necessary. Director Independence Our Corporate Governance Guidelines require that a majority of our directors meet the standards for independence required by the listing standards of the NYSE. In addition, members of our Audit Committee must meet the independence standards for audit committee members adopted by the SEC. Members of the Audit Committee must also have no relationship with us that interferes with their exercise of independent judgment. Members of our Compensation Committee must meet the definition of “non-employee director” contained in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and meet the independence requirements under the NYSE listing standards. Our Board makes a formal determination each year as to which of our directors and director nominees are independent. The Board has determined that the following directors or director nominees are independent within the meaning of the NYSE: Harry Brandler, Elizabeth K. Blake, John R. Farris, Lila Manassa Murphy, Kathleen Olsen and Richard S. Press. In making its determination regarding the independence of Mr. Brandler, Ms. Olsen and Mr. Press, the Board considered that each of these individuals has invested in limited partnership interests in funds managed by Greenlight Capital, Inc. or its affiliates. We refer to these funds as the “Greenlight Funds”. However, because none of these investments are material, none of the directors have any rights with respect to the management of the Greenlight Funds and none of the directors has received any compensation from the Greenlight Funds, the Board has determined that such interests would not interfere with the exercise of independent judgment in carrying out the responsibilities of such directors. Annual Board and Committee Self-Evaluations Each year, our Board and its committees conduct self-evaluations to ensure they are performing effectively and to identify opportunities to improve overall Board, individual, and committee performance. The Governance & Sustainability Committee annually reviews the format and scope of our Board’s evaluation process considering general corporate governance developments and best practices and recommends changes it believes are appropriate. Once the format and content of the evaluation is approved, a Board and committee self-assessment is conducted under the oversight of the Governance & Sustainability Committee. The feedback received from the evaluations is discussed during a review session led by the Governance & Sustainability Committee and the individual committees, as appropriate. In addition to these annual self-assessments, the Board evaluates and modifies its oversight of our business operations on an ongoing basis. During their executive sessions, the independent directors consider agenda topics that they believe deserve additional focus and raise new topics to be addressed in future meetings. Stock Ownership Guidelines We recognize the importance of aligning our directors and management’s interests with those of our stockholders. As a result, the Board has established stock ownership guidelines for all of our directors and officers. Under these guidelines, directors and executive officers are expected to accumulate over a designated period, share of common stock having a fair market value equal to the multiple of their annual cash retainer, in the case of directors, or base salary, in the case of executive officers, as shown in the table below.
| | | | | | | | | | Name | | Required Multiple | | Chief Executive Officer | | 3 times | | All Other NEOs | | 2 times | | Directors | | 5 times |
For purposes of calculating the stock ownership, we include all shares owned directly or indirectly, either because the individual has an economic interest in the shares or because the individual has the right to vote such shares, including (i) shares held by immediate family members residing in the individual's household, (ii) shares beneficially owned in a trust or family limited partnership or similar estate planning vehicle, by immediate family members residing in the individual's household, and (iii) any other shares that are beneficially owned that would be reportable for purposes of the stock ownership table in the Company’s proxy statement (excluding shares subject to a right to acquire such as unvested options, unvested restricted stock units or other unvested or unearned derivatives) or on Table 1 of Forms 3, 4 or 5 (as then promulgated pursuant to Section 16 of the Securities Exchange Act of 1934, as amended). Until an executive or a director meets his or her required ownership, such executive or director shall retain one hundred percent (100%) of all net shares received from the settlement of restricted stock or restricted stock units granted on or after the Effective Date under a Company incentive plan.
Risk Management Board’s Role in Risk Oversight Board Oversight of Strategy. One of the Board’s primary responsibilities is overseeing management’s establishment and execution of the Company’s strategy and the associated risks. The full Board oversees strategy and strategic risk through robust and constructive engagement with management, taking into consideration our key priorities, global trends impacting our business, regulatory developments, and disruptors in our businesses. The Board’s oversight of our strategy primarily occurs through deep-dive annual reviews of the Company’s long-term strategic plans. During these reviews, management provides the Board with its view of the key commercial and strategic risks faced by the Company, and the Board provides management with feedback on whether management has identified the key risks and is taking appropriate actions to mitigate risk. In addition to the annual deep-dive strategic review, because the Company’s strategic initiatives are subject to rapidly evolving business dynamics, the Board regularly receives updates on key strategic initiatives throughout the year
to ensure progress is being made against goals, understand where adjustments or refinements to strategy may be appropriate and stay current on issues impacting the business. Cybersecurity Risks. Cybersecurity is an integral part of our risk management. Our full Board is responsible for the oversight of cybersecurity risks, and receives a cybersecurity report from management at least quarterly, and more often as needed. The report includes information regarding the nature of threats, defense and detection capabilities, cyber-insurance policies, incident response plans, and associated training activities. In the last three years, we have not had a significant cybersecurity breach or attack that had a material impact on our business or results of operations.
Additional Corporate Governance Policies
Code of Business Conduct and Ethics. All of our employees, officers (including our principal executive, financial and accounting officers) and directors are held accountable for adherence to our Code of Conduct. Our Code of Conduct is designed to help us meet our responsibility of conducting our business in compliance with laws and good ethical practice. Our Code of Conduct is available on our website at https://greenbrickpartners.com/, by clicking on ESG and then Governance Documents. Any waivers of, or amendments to, our Code of Business Conduct and Ethics will be posted on our website and reported as required by the SEC. Vendor Code of Conduct. We have adopted a Vendor Code of Conduct outlining our standards and expectations of our suppliers and other business partners, which can also be found at https://greenbrickpartners.com/, by clicking on ESG and then Governance Documents. The Vendor Code of Conduct outlines our expectation that our business partners, suppliers, vendors, and contractors demonstrate the highest standards of business conduct, integrity and adherence to the law. We also expect our Vendors to follow best industry practices so that our homes are built in a manner that meets or exceeds the expectations of Green Brick and our customers. The Vendor Code of Conduct provides specific guidance regarding vendor’s responsibility to comply with all applicable laws and regulations and to have policies ensuring such compliance, their duty to escalate concerns, handle information properly and maintain accurate records, address potential conflicts of interest, and operate responsibly and in compliance with all anti-corruption, environmental, health and safety, social and human rights, child-labor, anti-slavery and other relevant laws. Related Person Transaction Approval Policy. Green Brick has adopted a written policy for the review, approval and ratification of transactions with related persons. The policy covers related party transactions between us and any of our senior managers and directors or their respective affiliates, director nominees, 5% or greater security holders or family members of any of the foregoing. Related party transactions covered by this policy are reviewed by our Governance & Sustainability Committee to determine whether the transaction is in our best interests and the best interests of our stockholders. As a result, approval of related party business will be denied if, among other factors, it is determined that the proposed transaction is not fair and reasonable and on terms no less favorable to Green Brick than could be obtained in a comparable arms-length transaction with an unrelated third party. All directors must recuse themselves from any discussion or decision affecting their personal, business or professional interests. All related person transactions will be disclosed in our applicable SEC filings as required under SEC rules. Transactions with Related Persons. During 2021, Green Brick held a ninety percent membership interest and a ninety percent voting interest in CLH20, LLC (“CLH20”), the owner of Centre Living Homes, LLC (“Centre Living”), a builder that focuses on single family residences and townhomes in the Dallas metroplex market. The remaining ten percent or membership interests and voting interests in CLH20 is held by Trevor Brickman, son of our CEO Jim Brickman. Insider Trading and Anti-Hedging Policy. Our Insider Trading Policy prohibits all directors, officers and employees from engaging in transactions in our common stock while in possession of material non-public information and restricts directors, officers and other "designated insiders" from engaging in most
transactions involving our common stock during periods, that we have determined, that those individuals are most likely to be aware of material, non-public information. Our Insider Trading Policy also prohibits any officer or director from entering into any transaction which has the effect of hedging or locking in the value of his or her stock holdings, such as zero-cost collars and forward sale contracts. Additionally, our Insider Trading Policy prohibits any officer, director or employee from, directly or indirectly, engaging in “short sales” of our common stock. Other | | | Sustainability and Corporate Governance MattersCorporate Governance Guidelines. The Board has voluntarily adopted Corporate Governance Guidelines. Our Corporate Governance Guidelines describe our corporate governance practices and policies and provide a framework for our Board governance. Corporate Governance Guidelines are available in the Investors & Governance section of our website at www.greenbrickpartners.com.
Code of Business Conduct and Ethics. We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees. This Code of Business Conduct and Ethics is posted on our website at www.greenbrickpartners.com. Any waivers of, or amendments to, our Code of Business Conduct and Ethics will be posted on our website and reported as required by the SEC.
Related Person Transaction Approval Policy
The Board has adopted a written policy for the review, approval and ratification of transactions with related persons. The policy covers related party transactions between us and any of our senior managers and directors or their respective affiliates, director nominees, 5% or greater security holders or family members of any of the foregoing. Related party transactions covered by this policy are reviewed by our Governance and Nominating Committee to determine whether the transaction is in our best interests and the best interests of our stockholders. As a result, approval of related party business will be denied if, among other factors, it is determined that the proposed transaction is not fair and reasonable and on terms no less favorable to us than could be obtained in a comparable arms-length transaction with an unrelated third party.
Transactions with Related Persons
During 2020, we held a ninety-percent membership interest and a ninety percent voting interest in CLH20, LLC (“CLH20”), the owner of Centre Living Homes, LLC (“Centre Living”), a builder that focuses on luxury townhomes in the Dallas, Texas market. The remaining ten percent of membership interestsResponsibility
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Management and Board Oversight As we have progressed in our approach to sustainability and corporate responsibility, our governance and oversight structure has also evolved. At the Board level, in 2021 we expanded the responsibilities and oversight of our Governance Committee, creating the Governance & Sustainability Committee. The Governance & Sustainability Committee has been assigned by the Board to provide oversight of our policies and programs related to corporate governance, environmental and social matters. This committee is also responsible for reviewing with management strategies, policies, programs, and practices relating to sustainability strategy and performance, including material environmental, social, and governance trends and related long and short-term Company impacts, as well as Green Brick's public reporting on these topics in furtherance of Green Brick’s business, strategy, values, and purpose and provide recommendations to the Board as appropriate. With an understanding and drive to improve value-based approaches to sustainability, in 2022 we expanded our Board to include Ms. Lila Manassa Murphy who brings with her a wealth of expertise in the areas of Environmental, Social and Governance (ESG) issues. Commitments to Sustainability As one of the fastest growing public companies in the country, we take very seriously our responsibility to grow in a sustainable way that minimizes our impact on the environment. In 2021, we debuted our inaugural environmental impact report and defined our three keys to building a better home including: Responsible Land Development From site selection to design and development, our land strategy is rooted in responsibility. We conduct rigorous environmental impact studies and develop each neighborhood with sustainability in mind. This includes implementing stormwater management measures, earthwork strategies to minimize slope and soil disturbance, and making all efforts to rehome wildlife and protect the natural landscape. Sustainable Homeownership We strive to continuously improve the energy performance of our homes as we believe it is the most significant way that we can contribute to reducing carbon emissions. In 2021, we made significant progress in having many of our homes benchmarked against the Home Energy Rating System (HERS) Index. We believe doing so will empower our purchasing and construction teams with the knowledge required to exceed expectations. In 2022, we intend to continue expanding on this commitment and growing our library of HERS-rated homes. Our homebuilders partner with some of the most reputable manufacturers of cutting-edge, energy-efficient products to give our homebuyers a quality home that will not only stand the test of time, but deliver significant savings for years to come. For example, we are pleased to note that 100% of our homes now utilize LED lighting which uses approximately 75% less energy and lasts up to 25 times longer than incandescent lighting.
voting interests in CLH20 is held by Trevor Brickman, son of our CEO James R. Brickman. During the year ended December 31, 2020, Trevor Brickman made cash contributions to Centre Living of $400,000.
In November 2020, Greenlight Capital, Inc, on behalf of itself and certain affiliates (collectively, “Greenlight”), exercised its registration rights pursuant to the Registration Rights Agreement, dated October 27, 2014, by and between us, certain affiliates of Greenlight Capital, Inc, James R. Brickman and certain family members of and trusts affiliated with James R. Brickman (the “Registration Rights Agreement”). The Registration Rights Agreement had been entered into in connection with our acquisition of JBGL Capital Companies and JBGL Builder Finance LLC and its consolidated subsidiaries. In connection with such rights, we filed a registration statement on Form S-3 and paid registration fees to the SEC on behalf of Greenlight of approximately $60,000.
Other areas of sustainable building practices we have focused on this past year include a streamlined construction approach utilized prefabricated trusses and pre-cut lumber, high-efficiency construction using spray foam insulation, low flow fixtures, and double pane insulated windows, and providing energy star rated appliances in our homes. Waste Reduction In 2021, we sought to implement strategies that would increase our operational efficiencies and minimize waste and our impact on the environment. Our teams are consistently challenged to optimize our plan library and identify the most efficient ways to build our homes. Our People Our commitment to attracting and retaining the top talent across all departments begins and ends with creating a work environment that fosters inclusivity and empowers each of our team members to reach their full potential. A robust system of programs aimed at ensuring the health, well-being, and personal and professional development of our team coupled with community engagement and philanthropy ensures that we remain focused on what matters most – our employees and serving the communities where we build. In addition to a comprehensive medical, vision, and dental benefits package, employees are eligible to participate in our 401K program and have access to a generous fitness and tuition reimbursement policies. Health and Safety Green Brick is committed to providing all employees and others who are on Company property with a safe and secure environment. Accordingly, all personnel will comply with all health and safety laws and regulations as well as Company policies governing health and safety. All personnel are responsible for immediately reporting accidents, injuries and unsafe equipment, practices or conditions to a supervisor or Company officer. The possession, sale, purchase, delivery, use or transfer of illegal drugs on Company property or at Company functions will not be tolerated. Diversity and Inclusion We respect the value that diverse life experiences bring to our team, from part time associates all the way to our Board of Directors, of which 50% of our independent directors are women and one is Hispanic. Investing in our employees is a top priority and we continually strive to provide an environment that promotes learning, growth, and development to maximize our people's potential. We always seek to attract, develop and retain the most qualified people for all our positions while focusing on embedding diversity inclusion to build a unique blend of cultures, backgrounds, skills and beliefs that mirror the world in which we live. Governance Our values of HOME – Honesty, Objectivity, Maturity, and Efficiency – are intimately linked to our outlook on operating responsibly. We believe that through our values we can maintain policies and procedures that support ethical business practices, sound governance, and adherence to all regulatory requirements that result in promoting our stockholder, employee, and community interests. We are committed to operating our Company with integrity and the highest ethical standards, including comprehensive governance structures and practices that meet or exceed the requirements of applicable laws, regulations, and rules, including the NYSE’s listing standards.
DIRECTOR COMPENSATION
Annual Retainer 2020 Compensation – Board FeesOur 2020. For 2021, our independent director compensation program consisteddirectors, other than our Chairman, received annual fees for their service on our Board of (1) an annual cash retainer of $80,000$100,000 that is paid quarterly in arrears and (2) an annual equity grantaward of $90,000 in shares of restricted Common Stock. OurStock equal to $110,000. For 2021, our Chairman’s compensation package consisted of an annual cash retainer equal to $50,000 in 2020$125,000 but did not include an equity grant.award. Each director has the option to elect to receive all or a portion of his or her cash retainer in the form of shares of restricted Common Stock. Restricted stock awards, including equity received in lieu of cash, vest on the earlier of the anniversary of the grant date or the date of our next annual meeting of stockholders, provided that the director is then serving on the Board.
DuringPursuant to this policy, each of Messrs. Brandler, Farris, and Press and Ms. Olsen received an award of 4,616 shares of Common Stock on June 2, 2021 that will vest on the second quarterearlier of 2020, in light(i) the first anniversary of the uncertainty resulting fromgrant date, or (ii) the onset of the COVID-19 pandemic at the time, eachdate of our directors voluntarily agreed2022 Annual Meeting. Ms. Blake elected to reduce theirreceive all of her cash retainers by 30% for the remainder of the year.
2021 Compensation – The compensation of our independent directors was last amended in March 2019. Effective January 1, 2021, the Board approved an increase in the cash portion of non-employee independent directors’ annual retainer to $100,000, to be paid quarterly in arrears, and an increase in the annual equity grant to $110,000 in shares of restricted Common Stock effective upon reelection toand therefore received an award of 9,232 shares of Common Stock. Each of these restricted stock awards will vest on the Board with the same vesting schedule. The Board also approvedearlier of (i) the first increase in the compensationanniversary of the Board’s Chairman since October 2016, to an annual cash retainergrant date, or (ii) the date of $125,000, effective January 1, 2021.our 2022 Annual Meeting.
Board Committee Fees
. For 2020 and 2021, each of the Board standing committee chairs are entitled to an additional annualcommittee chair retainer of $20,000, $10,000 and $10,000 for the Audit Committee,Compensation Committee and Governance and NominatingSustainability Committee, respectively, payablequarterly in arrears. In connection with the creation of the Insurance Committee, the Board approved an annual retainer for the chair of the Insurance Committee of $20,000, payablequarterly in arrears.
2020Our independent directors are also reimbursed by us for their travel, food, lodging and related expenses incurred in connection with attending Board, committee and stockholder meetings, as well as continuing education programs.
2021 Director Compensation Table The following table sets forth information regarding the compensation of our non-employee directors for 2020.2021. Ms. Manassa Murphy is omitted from the table as she was appointed in 2022. Mr. Brickman, our Chief Executive Officer, is omitted from the table as he does not receive any additional compensation for his services as a director. For more information on Mr. Brickman’s compensation, see “Executive Compensation Information” beginning on page 20.34. | | Name | Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | Total ($) | | Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2)(3) | | Total ($) | | David Einhorn | David Einhorn | | 50,000 | | | — | | | 50,000 | | | David Einhorn | | 125,000 | | - | | 125,000 | Elizabeth K. Blake(3)(4) | Elizabeth K. Blake(3)(4) | | 6 | | | 172,188 | | | 172,194 | | Elizabeth K. Blake(3)(4) | | — | | 214,275 | | 214,275 | | Harry Brandler | Harry Brandler | | 62,007 | | | 95,656 | | | 157,663 | | Harry Brandler | | 100,000 | | 107,137 | | 207,137 | | John R. Farris | John R. Farris | | 62,007 | | | 95,656 | | | 157,663 | | John R. Farris | | 100,000 | | 107,137 | | 207,137 | Kathleen Olsen(4)(5) | Kathleen Olsen(4)(5) | | 82,007 | | | 95,656 | | | 177,663 | | Kathleen Olsen(4)(5) | | 120,000 | | 107,137 | | 227,137 | Richard S. Press(5)(6) | Richard S. Press(5)(6) | | 72,007 | | | 95,656 | | | 167,663 | | Richard S. Press(5)(6) | | 118,333 | | 107,137 | | 225,470 |
(1)Amount reflects the amount of annual retainer paid in cash and the cash received in lieu of partial shares for the equity portion of the annual retainer. As discussed above, directors may elect to receive shares of restricted Common Stock in lieu of the cash portion of the annual retainer. (2)On June 23, 2020,2, 2021, each of our non-employeeindependent directors, other than Mr. Einhorn, was awarded shares of restricted Common Stock to pursuant to the 2014 Equity Plan. The restricted stock awards become fully vestedwill vest on the earlier of (i) the first anniversary of the grant date, or (ii) the date of our 20212022 Annual Meeting. If the director’s service terminates prior to the vesting date due to death, the shares of
restricted Common Stock will become fully vested on the date of the director’s death. The grant date fair value of the restricted stock awards is included in the table in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions regarding the restricted stock unit awards and the option awards, refer to Note 9 to our financial statements for the year ended December 31, 2020, which are included in our Annual Report on Form 10-K for the year ended December 31, 20202021 filed with the SEC. As (3)The following table sets forth the aggregate number of restricted stock units outstanding at December 31, 2020,2021 for each of our non-employee directors. As discussed above, these wererestricted stock units vest on the only outstanding equity awardsearlier of (i) the first anniversary of the grant date, or (ii) the date of our 2022 Annual Meeting. Please see Beneficial Ownership Table for the total number of shares held by our non-employee directors. | | | | | | | | | | Name | | Restricted Stock Units (a) | | David Einhorn | | — | | Elizabeth K. Blake | | 9,232 | | Harry Brandler | | 4,616 | | John R. Farris | | 4,616 | | Kathleen Olsen | | 4,616 | | Richard S. Press | | 4,616 |
(3)
(4)Ms. Blake elected to receive the cash portion of her annual retainer in shares. Fees paid in cash reflect the value of fractional shares. Includes $10,000 for her service as Chair of the Governance and Nominating& Sustainability Committee. (4)(5)Includes $20,000 for her service as Chair of the Audit Committee.
(5)(6)Includes $10,000 for his service as Chair of the Compensation Committee.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021
The Audit Committee is directly responsibleand $8,333 for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The Audithis service as chair Insurance Committee of our Board has appointed RSM to continue to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2021.
RSM has served as our independent registered public accounting firm since August 2016. The Audit Committee considers RSM to be well qualified and believes that the continued retention of RSM is in the best interests of us and our stockholders. We are asking our stockholders to ratify the selection of RSM as our independent registered public accounting firm for 2021. Although stockholder ratification(pro-rata from creation of the selection of RSM is not required by our Bylaws or otherwise,Insurance Committee through the Board is submitting the appointment of RSM to our stockholders for ratification as a matter of good corporate practice. In the event our stockholders do not ratify the selection of RSM, the Audit Committee may in its discretion reconsider the selection of RSM. Ratificationend of the selection of RSM will not limit the Audit Committee’s authority to terminate the engagement of RSM or direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders.
We expect a representative of RSM to be present at the Annual Meeting with the opportunity to make a statement if he or she desires and will also be available to respond to appropriate questions.
year).
Independent Registered Public Accounting Firm Fees
Fees for professional services provided by RSM for the fiscal years ended 2020 and 2019, including related expenses, are as follows:
| | | | | | | | | | | | | | | | | 2020 | | 2019 | Audit fees (1) | | $ | 653,886 | | | $ | 759,839 | | Audit-related fees (2) | | 65,000 | | | — | | Tax fees | | — | | — | | All other fees | | — | | — | | Total fees | | $ | 718,886 | | | $ | 759,839 | | | | | | |
(1)Audit fees for 2020 and 2019 include fees for professional services rendered by RSM for the audit of our consolidated financial statements included in our Annual Report on Form 10-K, review of our condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q, and audit of our internal control over financial reporting.
(2)Audit-related fees for 2020 include fees related to consents and a comfort letter related to our secondary offering.
Audit Committee Approval of Audit and Non-Audit Services
The Audit Committee pre-approves all audit, audit-related and permitted non-audit services provided by the independent registered public accounting firm, including the fees and terms for those services. The Audit Committee has adopted a policy and procedures governing the pre-approval process for audit, audit-related and permitted non-audit services. The Audit Committee pre-approves audit and audit-related services in accordance with its review and approval of the engagement letter and annual service plan with the independent registered public accounting firm. Any tax consultation or other consulting services proposed to be provided by RSM are considered for approval by the Audit Committee on a project-by-project basis. Non-audit and other services provided by the independent registered public accounting
firm will be considered by the Audit Committee for pre-approval based on business purpose, reasonableness of estimated fees and the potential impact on the firm’s independence.
Board Voting Recommendation
The Board recommends that stockholders vote “FOR” ratification of the appointment of RSM as our independent registered public accounting firm for the fiscal year ending December 31, 2021.
AUDIT COMMITTEE REPORT
The Audit Committee selects, evaluates and, where deemed appropriate, replaces Green Brick’s independent registered public accounting firm. The Audit Committee also pre-approves all audit services, engagement fees and terms and all permitted non-audit services.
The Audit Committee also oversees the accounting and financial reporting processes of Green Brick on behalf of the Board. Management is primarily responsible for Green Brick’s internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of Green Brick’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), evaluating and reporting upon the effectiveness of internal controls and issuing a report on Green Brick’s consolidated financial statements.
In fulfilling its responsibilities, the Audit Committee reviewed Green Brick’s audited financial statements for fiscal 2020 and held discussions with management and the Company’s independent registered public accounting firm, RSM US LLP (“RSM”) regarding the quality of the accounting principles reflected in the financial statements. In the discussions related to Green Brick’s consolidated financial statements for fiscal year 2020, management represented to the Audit Committee, and RSM concurred, that Green Brick’s consolidated financial statements for fiscal year 2020 were prepared in accordance with U.S. generally accepted accounting principles, and the Audit Committee discussed the consolidated financial statements with RSM.
The Audit Committee discussed with RSM matters required to be discussed by PCAOB Auditing Standard No. 1301, “Communications with Audit Committees”. RSM also provided to the Audit Committee the written disclosures and letter required by applicable requirements of the PCAOB’s Independence Standards Board Standard No. 1 regarding RSM’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with RSM the accounting firm’s independence.
Based upon the Audit Committee’s review and discussions with management and the independent auditors, the Audit Committee recommended to the Board that the audited consolidated financial statements for the fiscal year ended December 31, 2020 be included in Green Brick’s annual report for filing with the SEC.
The Audit Committee:
Kathleen Olsen, Chair
John R. Farris
Richard S. Press
April 19, 2021
EXECUTIVE COMPENSATION INFORMATIONOFFICERS
Our namedSet forth below is certain information relating to our current executive officers (“NEOs”) for 2020 are:
•James R. Brickman, Chief Executive Officer;
•Richard A. Costello, Chief Financial Officer; and
•Jed Dolson, Chief Operating Officer.
key employees. Biographical information with respect to Mr. Brickman is a NEO based on his position as our Chief Executive Officer. Messrs. Dolson and Costello are NEOs by reasonset forth above under “Proposal 1 – Election of being our two most highly compensated executive officers other than its Chief Executive Officer who were serving as executive officers as of December 31, 2020.Directors.” | | | | | | | | | | | | | | | | Name | | Age | | Position | | James R. Brickman | | 70 | | Chief Executive Officer | | Richard A. Costello | | 63 | | Chief Financial Officer | | Jed Dolson | | 44 | | Chief Operating Officer and Executive Vice President |
James R. Brickman – Mr. Brickman’s biographical information is set forth in “Proposal 1: Election of Directors” in this proxy statement.
Richard A. Costello – Mr. Costello age 62, has been our Chief Financial Officer since April 2015. From January 2015 until his appointment as Chief Financial Officer, Mr. Costello served as our Vice President of Finance. Mr. Costello has over 25 years of financial and operational experience in all aspects of real estate management, includingmanagement. Since 2007, Mr. Costello has been a private investor. Previously, he worked for 16 years at GL Homes of Florida, one of the largest private developers and homebuilders in Florida. There he served as Chief Financial Officer and Chief Operating Officer as well as in other senior financial management roles. Prior to joining GL Homes, Mr. Costello worked for six years as AVP-Finance of Paragon Group, a regional commercial real estate developer, and for four years as an auditor for KPMG LLP. Mr. Costello received a B.S. in Accounting from the University of Central Florida and his M.B.A. from Kellogg School of Northwestern University.
Jed Dolson – Mr. Dolson age 43, has been our Chief Operating Officer and Executive Vice President since September 2020. Prior to that time, he was ourHe previously served from October 2017 as the President of Texas Region of the Texas region since 2017.Company. Prior to that time, he was Head of Land Acquisition and Development from September 2013. From March 2010 to September 2013, Mr. Dolson served as a managing member of Pecos One LLC, a consulting firm that provided services to JBGL. Previously,Prior to joining the Company, Mr. Dolson worked for three years at Jones & Boyd Engineering and later he served five years as Director of Development for a local private residential developer, and prior to that he worked for three years at Jones & Boyd Engineering.developer. Mr. Dolson received a B.S. degree in Civil Engineering from Texas A&M University and a M.S. in Civil Engineering from Stanford University.
COMPENSATION DISCUSSION AND ANALYSIS Our named executive officers are those executive officers listed below: | | | | | | | James R. Brickman | Chief Executive Officer | | Richard A. Costello | Chief Financial Officer | | Jed Dolson | Chief Operating Officer |
Compensation Philosophy and Objectives The Compensation Committee believes that the caliber, motivation and alignment of all of our employees with shareholders, and especially our executive leadership, are essential to Green Brick’s performance. The Compensation Committee believes our management compensation programs contribute to our ability to differentiate our performance from others in the marketplace and thereby deliver stockholders superior value. Moreover, we believe that Green Brick’s overall executive compensation philosophy and programs are market competitive, performance-based and stockholder aligned. The three principles of our compensation philosophy are as follows: | | | | | | | Principles | Implementation | | Total direct compensation levels should be sufficiently competitive to attract, motivate and retain the highest quality executives | The Compensation Committee seeks to establish target total direct compensation (salary plus annual incentive), providing our executives the opportunity to be competitively rewarded for our financial and operational growth. Total direct compensation opportunity (i.e., maximum achievable compensation) should increase with position and responsibility. | | Performance-based and “at-risk” incentive compensation should constitute a substantial portion of total compensation | We seek to foster a pay-for-performance culture, with a significant portion of total direct compensation being performance-based and/or “at risk.” Accordingly, such portion should be tied to, and vary with, our financial, and operational performance, as well as individual performance. Executives with greater responsibilities and the ability to directly impact our strategic and operational goals and long-term results should bear a greater proportion of the risk if these goals and results are not achieved. Therefore, the more senior the executive, the greater the percentage of total compensation is in the form of performance-based compensation. | | Compensation programs should align executives’ interests with our stockholders’ interests to further the creation of long-term stockholder value | By awarding a portion of each year’s annual incentive payout in the form of stock, we encourage executives to focus on our long-term growth and prospects and incentivize executives to manage our company from the perspective of owners with a meaningful stake, and encourage them to remain with us for long and productive careers. Equity-based compensation also subjects our executives to market risk, a risk also borne by our stockholders. |
The overall level of total compensation for our named executive officers as described herein is intended to be reasonable and competitive, taking into account factors such as the individual’s experience, performance, duties and scope of responsibilities, prior contributions and future potential contributions to our business. With these principles in mind, we structured our compensation program to offer competitive total pay packages that we believe enable us to retain and motivate executives with the requisite skill and knowledge and ensure the stability of our management team, which is vital to the success of our business.
Compensation Discussion and Analysis
Our Financial and Operational Metrics are Aligned with Long-Term Growth We believe our compensation program provides an appropriate balance between operational metrics that all team members can impact and that are aligned with successfully implementing our long-term growth strategy and financial metrics, rewarding executives upon the achievement of annual results. We measure our operational and financial metrics, on a relative basis, to ensure that our compensation program rewards performance that is above that of our peers. | | | | | | | 2021 Metric | Why It Contributes to Alignment with Stockholder Value | Unit Growth
| Unit Growth is a metric most analysts and investors use to determine how effectively a builder is operating relative to peers. | | Home Closings Revenue Growth | Revenue Growth is a metric most analysts and investors use to determine how effectively a builder is operating relative to peers. | Pre-Tax Income Growth
| Pre-Tax Income Growth is a metric most analysts and investors use to determine how effectively a builder is operating relative to peers. | Return on Assets
| Return on Assets is a metric most analysts and investors use to determine how effectively a builder is operating relative to peers. |
Compensation Setting Process Pay for Performance Compensation Philosophy Our compensation philosophy is rooted in our values of ownership and meritocracy and aims to foster long-term value creation for our stockholders by: › attracting and retaining top talent; › connecting executive outcomes to company performance; › tying wealth creation to significant, long-term equity ownership; and › mitigating compensation-related retention risk. As described in further detail below, consistent with these goals, our compensation program is designed to provide a clear link between what we pay our NEOs and Green Brick’s performance. Our NEO’s compensation package for 2021 reflects this commitment. For 2021, 71% of our CEO’s total direct compensation and an average of 75% of our other NEOs’ total direct compensation was performance-based or equity-based. Based on his current holdings of over 1.5 million shares of our common stock, additional shares owned by family members not controlled by Mr. Brickman or reported to the SEC, the Compensation Committee believes that Mr. Brickman is already materially aligned with our stockholders, consequently, additional compensation, above his 2021 payout on his annual incentive compensation plan was paid in cash rather than 50% in stock.
Compensation Discussion and Analysis Oversight of Executive Compensation Programs Role of Compensation Committee The Compensation Committee is responsible for establishing and overseeing our compensation philosophy and setting our executive compensation and benefits policies and programs generally. The Compensation Committee has not traditionally benchmarked its executive compensation design or the level of base salary or bonus opportunity to a particular group of companies. However, in connection with its approval of total compensation at the end of 2021, the Compensation Committee evaluated total compensation of each of its NEOs against the 2018 total cash compensation and total direct compensation for the named executive officers at three public homebuilders, Beazer Homes, Century Communities and M/I Homes that had similar book value or revenues in 2018 as Green Brick had in 2021. Consideration of Stockholder Advisory Vote As part of its compensation setting process, the Compensation Committee also reviews the results of the prior stockholder advisory vote on NEO compensation. In accordance with our stockholder say-on-frequency vote, we hold our stockholder advisory vote every three years. Our last stockholder advisory vote was held at the 2020 annual meeting of stockholders. In evaluating our executive compensation program our Compensation Committee took into consideration that 98.3% of the votes cast were voted in favor of Green Brick’s executive compensation at the 2020 annual meeting. The Compensation Committee intends to review the results of each advisory vote and will consider this feedback as well as the feedback obtained from stockholder engagement as it completes its annual review of each pay element and the total compensation packages of our NEOs. Role of Executives in Establishing Compensation Annually, the CEO proposes the financial metrics and threshold, target and maximum performance levels for the Annual Bonus Program, subject to approval by the Compensation Committee. The CEO also proposes the strategic objectives that will determine Individual Achievement under our Annual Bonus Program. These individual strategic objectives are then approved by the Compensation Committee for all NEOs. At the end of each year, the CEO provides an evaluation of each NEO’s performance, including himself, and recommends the extent to which each other NEO (other than himself) has met their strategic objectives. The Compensation Committee then evaluates the performance of the CEO and each other NEO and determines the CEO’s and each other NEO’s final Individual Achievement and the bonus payout for each NEO. Our bonus opportunities are set in each NEO’s employment agreement, however, in connection with the renewal of each NEO employment agreement (other than his own), the CEO provides the Compensation Committee with recommendations regarding base salary and annual bonus opportunity for the employment agreement.
Compensation Discussion and Analysis Executive Compensation Components To achieve its compensation philosophy and objectives, the Compensation Committee uses (1) base salary and (2) an annual incentive award plan pursuant to which performance is evaluated against three criteria (a) absolute pre-tax income growth, (b) operational and financial performance relative to peers and (c) strategic objectives which are established at the beginning of the year based on the respective NEO’s responsibilities. As discussed further below, each element of our 2021 compensation program is intended to encourage and foster the following results and behaviors. | | | | | | | | | | | | | | | | | | | | | | | |
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| Objectives/Structures | | Behavioral Focus | | 2021 Total Direct Compensation | Fixed Component | | Base Salary | | •Provides competitive level of fixed compensation that reflects the talent, skills and competencies of the individual. | • | •Rewards core competence relative to level of responsibility, experience and contribution. | | | | | | | | | Annual Performance-Based Compensation | | Pre-Tax Income | | •At-risk variable compensation •Tied to annual profitability •Based on absolute growth. •Up to 50%, at option of Committee, may be paid in equity. | • | •Provides incentive to deliver annual profitability that drives stockholder value. | | | | | | | | Out Performance of Peers
| | •At-risk variable compensation •Tied to operational and financial performance •Based on relative performance to peers •Up to 50%, at option of Committee, may be paid in equity. | • | • Provides incentive to maximize performance even in strong real estate cycles | | | | | | | | Strategic Objectives | | •At-risk variable compensation •Tied to position and responsibility •Based on strategic objectives •Up to 50%, at option of Committee, may be paid in equity. | • | •Rewards operational and initiatives that drive long-term growth. |
We designed our compensation program to provide executives the appropriate incentives to pursue quality long-term growth without encouraging inappropriate risk taking. As discussed below, under our program, our Annual Bonus Plan is capped for each of our NEOs at their target opportunity. Any performance which exceeds target is rewarded through additional bonuses, which are based on the level of performance.
2021 Compensation Design and Decisions
Base Salaries Why we pay base salaries. The Compensation Committee believes that payment of competitive base salaries is an important element for attracting, retaining and motivating our executives. In addition, the Compensation Committee believes that having a certain level of fixed compensation allows our executives to dedicate their full-time business attention to our company. Each executive’s base salary is designed to provide the executive with a fixed amount of annual compensation that is competitive with the marketplace.
Compensation Discussion and Analysis How base salaries are determined. In connection with the negotiation and execution of each NEO’s employment agreement, the Compensation Committee reviews and sets the base salaries for the three-year term of the employment agreement. In setting the base salaries for the NEOs, a number of factors will be considered, including the position’s complexity and level of responsibility, the position’s importance in relation to other executive positions, and the assessment of the executive’s performance and other circumstances, including, for example, time in position. In addition, the Compensation Committee takes into consideration evaluations of each individual NEO, market changes and the economic and business conditions affecting Green Brick at the time of the evaluation. 2021 Base Salaries. Based on the respective NEO’s employment agreements, the 2021 base salaries for each of our NEOs was as follows:
| | | | | | | | | | Name | 2021 Base Salary | | James R. Brickman | $ | 1,500,000 | | | Richard A. Costello | $ | 450,000 | | | Jed Dolson | $ | 600,000 | |
(1) Mr. Costello’s base salary was increased from $400,000 to $450,000 effective January 16, 2021, in connection with his new employment agreement.
Annual Incentive Compensation Plan Why we pay annual incentive compensation.Our Annual Incentive Compensation Plan is the key component of our executive compensation program. Our Annual Incentive Compensation Plan seeks to incentivize and reward our NEOs for annual financial and operational performance on those metrics and strategic objectives that the Compensation Committee believes will drive short-term and long-term stockholder value. How annual incentive compensation bonus opportunities are determined. In connection with the negotiation and execution of each NEO’s employment agreement, the Compensation Committee reviews and sets the bonus opportunity for each of the three years of the employment agreement term. In setting the bonus opportunity for the NEOs, a number of factors will be considered, including the position’s complexity and level of responsibility, the position’s importance in relation to other executive positions, and the assessment of the executive’s performance and other circumstances, including, for example, time in position. In addition, the Compensation Committee takes into consideration evaluations of each individual NEO, market changes and the economic and business conditions affecting Green Brick at the time of the evaluation. Based on the respective NEO’s employment agreements, the 2021 bonus opportunities for each of our NEOs was as follows:
| | | | | | | | | | Name | 2021 Bonus Opportunity | | James R. Brickman | $ | 2,700,000 | | | Richard A. Costello | $ | 550,000 | | | Jed Dolson | $ | 1,506,000 | |
In accordance with the terms of each NEOs respective employment agreement, the Compensation Committee may elect to pay up to 50% of any annual incentive compensation payout in shares of common stock. Our annual incentive compensation plan bonus is capped at the bonus opportunity, and does not contemplate the opportunity to earn more than the bonus opportunity – even for exceptional growth. Consequently, our Compensation Committee uses additional performance bonuses to award for exceptional financial and operational performance.
Compensation Discussion and Analysis How annual incentive compensation performance is evaluated. Our Compensation Committee annually reviews and revises, if necessary, the appropriateness of each of the performance metrics, their correlation to Green Brick’s overall growth strategy and the impact of such performance metrics on long-term stockholder value. As discussed above, for 2021, there were three components of our Annual Incentive Compensation Program and each component had a component opportunity calculated as a % of the respective NEO’s bonus opportunity: •Absolute Pre-Tax Income, with a component opportunity equal to 25% of the bonus opportunity; •Operational and Financial Performance Relative To Peers, with a component opportunity equal to 25% of the bonus opportunity; and •Strategic Objectivesestablished at the beginning of the year based on the respective NEO’s responsibilities, with a component opportunity equal to 50% of the bonus opportunity. 2021 Annual Incentive Plan Metrics and Performance
Absolute Pre-Tax Income Growth.For 2021, up to 25% of each NEO’s bonus opportunity could be earned based on Green Brick’s pre-tax income for the year. The Compensation Committee set performance levels of (1) threshold, at which there was a payout of 33.333% of the component opportunity, (2) mid-point, at which there was a payout of 66.666% of the component opportunity, and (3) target, at which there was payout of 100% of the of the component opportunity. Below the threshold performance level, no payout is earned. The threshold was set at approximately 18% above our 2020 actual pre-tax income, while target was set at 65% above our 2020 actual pre-tax income. For amounts earned between each performance level, the payout is calculated on a linear basis.
| | | | | | | | | | Pre-Tax Income | Earned % | | Threshold | $168 million | 33.333% | | Mid-Point | $201 million | 66.666% | | Target | $235 million | 100% | ACTUAL | $257 million | 100% |
2021 Results. Based on our exceptional performance, we materially exceeded the target and each NEO earned 100% of his respective component opportunity.
Operational and Financial Performance Relative To Peers. For 2021, the Compensation Committee initially selected eight homebuilding peers against which our relative performance would be evaluated. If we meet or exceed the peer growth in 25% of the cells, the payout would equal 50% of the component opportunity and if we meet or exceed the peer growth in 50% of the cells, the payout would equal 100% of the component opportunity.
| | | | | | | | | | | | | | | | | | | Builder | | Unit Growth % | Home Closings Revenue Growth % | Pre-Tax Income Growth % | Return on Assets (Annualized) | | Green Brick Partners | | 28% | 41% | 80% | 15.8% | | | | | | | | Beazer Homes | | (5)% | 1% | 101% | 7.2% | | Century Communities | | 14% | 33% | 137% | 15.7% | | Lennar | | 13% | 22% | 86% | 14.0% | | M/I Homes | | 12% | 23% | 64% | 13.5% | | New Home | | Excluded due to acquisition(1) | | PulteGroup | | 17% | 26% | 45% | 15.2% | | Toll Brothers | | 18% | 22% | 87% | 7.4% | | Tri Point Homes | | 21% | 22% | 68% | 11.2% |
(1) New Home was acquired by Apollo in September 2021, therefore these four cells were excluded from the analysis.
Compensation Discussion and Analysis
2021 Results. Based on our performance, we met or exceeded the growth of our peers in 85.7% of the cells (or 24 of the 28 cells) and each of the NEOs earned 100% of his respective component opportunity.
Strategic Objectives.The individual strategic objectives component of our Annual Incentive Compensation Plan is intended to reward managerial decision-making, behavioral interaction, and overall contribution. At the beginning of the year, the Compensation Committee approves for each NEO multiple quantitative and qualitative strategic objectives. These strategic objectives correspond to relevant business goals depending on the role. None of the individual strategic objectives is material to understanding the Annual Incentive Compensation Plan nor how the payout under our Annual Incentive Compensation Plan was determined in 2021. At the end of each year, the Compensation Committee, with recommendations from the CEO, evaluates the individual performance of each NEO against his respective strategic objectives. As discussed above, for each of our NEOs, achievement of the strategic objectives represented 50% of each NEO’s respective bonus opportunity. In evaluating, the performance of each NEO, the Compensation Committee considered the following achievements for each NEO: | | | | | | | | | | NEO | | Key Performance Highlights | James R. Brickman
Chief Executive Officer | | •Developed a superior long-range capital allocation strategy for prudent growth of the business •Was transparent with the board •Built management bench strength and successorship planning •Effectively managed our land and operational risk | Richard A. Costello
Chief Financial Officer | | •Arranged and closed a second tranche of $100 million 3.25% 8 year debt •Added four new banks to the company’s $300 million unsecured revolving credit facility •Coordinated our investment grade credit rating by Egan Jones •Supervised the improvement of our financial reporting and operating systems | Jed Dolson
Chief Operating Officer | | •Supervised the successful expansion of Trophy Signature Homes •Supervised the expansion of our Dallas based builders to be one of the three largest builders in DFW - the largest new homebuilding market in the country •Supervised the expansion of the company into the Austin market •Supervised the profitable expansion of our Title operations •Supervised the profitable expansion of our mortgage joint ventures |
2021 Results.Based on each NEO’s performance, each NEO earned 100% of his respective component opportunity for strategic objectives.
2021 Annual Incentive Compensation Plan Payouts. In early 2022, the Compensation Committee reviewed each of the components of the Annual Incentive Compensation Plan and the performance levels achieved as discussed above and determined that each of the NEOs had earned 100% of his respective bonus opportunity. Consistent with past year, the Compensation Committee elected to pay 50% of the Annual Incentive Compensation Plan payout in shares of common stock.
Compensation Discussion and Analysis
Additional Performance Bonuses and Total Compensation Decisions As discussed above, based on the fact that our Annual Incentive Compensation Plan is capped at 100% of the NEO’s respective bonus opportunity, the Compensation Committee has used additional performance bonuses to pay for exceptional growth and performance and to ensure that total compensation for our NEOs was competitive. In 2021, the Compensation Committee recognized that our performance had exceeded the pre-set targets materially and we had delivered material financial growth, increased our pipeline while maintaining the lowest leverage of our homebuilding peers. Specifically, the Compensation Committee noted that in 2021, •Green Brick’s gross margin of 26.4% was materially above the peer average; •Green Brick’s growth rate for lots owned and controlled, a key driver of future revenue and stockholder value, was 98% as compared to the peer average of 28% and far exceeded all other public homebuilders; •Despite the significant investment in land and lots, Green Brick’s debt to capital ratio of 28% was materially lower than the peer average of 40% and was tied with one other public homebuilder with the lowest debt to capital ratio of peer public homebuilders. The Compensation Committee then reviewed the compensation packages of peers that it believes were similar, based on book value (BV) and revenue. As Green Brick is much smaller than many other homebuilders, it evaluated the compensation of the respective named executive officers at Beazer, M/I Homes and Century Communities for 2018 when their book values and revenues were similar to Green Brick’s for 2021. No adjustments to the compensation levels at those three peers were made for the impact of compensation increases or inflation since 2018 or the fact that Green Brick’s pre-tax income and other financial metrics in 2021 was far better than peers in 2018. While none of these three companies had a Chief Operating Officer, the Compensation Committee evaluated the compensation of our COO as being between the CEO and the CFO. Based on this review, the Compensation Committee awarded additional performance bonuses to each NEO, resulting in total compensation of our CEO at approximately the same as the lowest of the three companies in 2018. While none of the peers had COO compensation; however our CFO was below the total compensation of the CFO at each of these three companies in 2018.
Employee Benefits and Perquisites We provide a number of benefit plans to all eligible employees, including our named executive officers. These benefits include programs such as medical, dental, life insurance, short- and long-term disability coverage and a 401(k) defined contribution plan. We also provide a gym membership for our executive officers and provide our Chief Operating Officer, similar to other senior employees whose responsibilities are primarily in the field, a car and cell phone allowance. While perquisites help to provide our named executive officers a benefit with a high perceived value at a relatively low cost, we do not generally view perquisites as a material component of our executive compensation program. Other Compensation Practices Prohibition on Hedging.Officers, directors and employees and their respective family members are not permitted to enter into hedging arrangements with respect to shares of our common stock that they beneficially own. Tax Deductibility of Compensation Code Sections 280G and 4999. Sections 280G and 4999 of the Code limit a public company’s ability to take a tax deduction for certain “excess parachute payments” and impose excise taxes on these payments in connection with a change in control. The Compensation Committee considers, as one of many factors, the adverse tax liabilities imposed by Sections 280G and 4999, among other competitive factors, when it structures certain post-termination compensation payable to our NEOs. However, the potential adverse tax consequences to our company and/or the executive, however, are not necessarily determinative factors in such decisions.
COMPENSATION COMMITTEE REPORT Compensation Committee Report on 2021 Executive Compensation The Committee is responsible for establishing and administering the executive compensation programs of Green Brick. The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement on Schedule 14A.
Richard Press (Chair) Kathleen Olsen Elizabeth K. Blake April 25, 2022
EXECUTIVE COMPENSATION
Summary Compensation Table The following table summarizes the total compensation awarded to, earned by, or paid to each“total compensation” of our NEOs duringfor the fiscal years ended December 31, 2021, 2020, and 2019 and December 31, 2020.according to the rules promulgated by the SEC. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($)(4) | | Non-Equity Incentive Plan Compensation ($)(5) | | All Other Compensation ($)(6) | | Total ($) | | James R. Brickman, Chief Executive Officer | | 2020 | | 1,500,000 | | | 225,000 | | (2) | 750,137 | | (3) | 1,000,000 | | | 8,550 | | | 3,483,687 | | | 2019 | | 1,416,667 | | — | | 700,000 | | 750,137 | | 10,400 | | 2,877,204 | | | Richard A. Costello, Chief Financial Officer | | 2020 | | 400,000 | | 62,500 | | (2) | 200,000 | | (3) | 200,000 | | | 4,205 | | | 866,705 | | | 2019 | | 400,000 | | — | | 160,000 | | 200,000 | | 9,400 | | 769,400 | | | Jed Dolson, Chief Operating Officer | | 2020 | | 559,103 | | (1) | 150,000 | (2) | 650,000 | (3) | 586,151 | | 20,718 | | 1,965,972 | | 2019 | | 550,000 | | 100,000 | | | 550,000 | | 550,000 | | 20,600 | | 1,770,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | Salary ($) | Bonus ($)(2) | Stock Awards ($)(3)(4) | Non-Equity Incentive Plan Compensation ($)(5) | All Other Compensation ($)(6) | | Total ($) | | James R. Brickman, Chief Executive Officer | | 2021 | 1,500,000 | 1,000,000 | 1,225,000 | 1,350,000 | | 12,182 | | 5,087,182 | | 2020 | 1,500,000 | 225,000 | 750,137 | 1,000,000 | | 8,550 | | 3,483,687 | | 2019 | 1,416,667 | — | 700,000 | 750,137 | | 10,400 | | 2,877,204 | | | | | | | | | | | | | Richard A. Costello, Chief Financial Officer | | 2021 | 447,900(1) | 125,000 | 262,500 | 275,000 | | 8,700 | | 1,119,100 | | 2020 | 400,000 | 62,500 | 200,000 | 200,000 | | 4,205 | | 866,705 | | 2019 | 400,000 | — | 160,000 | 200,000 | | 9,400 | | 769,400 | | | | | | | | | | | | Jed Dolson, Chief Operating Officer, EVP | | 2021 | 600,000 | 400,000 | 736,150 | 753,000 | | 21,094 | | 2,510,244 | | 2020 | 559,103 | 150,000 | 650,000 | 586,151 | | 20,718 | | 1,965,972 | | 2019 | 550,000 | 100,000 | 550,000 | 550,000 | | 20,600 | | 1,770,660 | | | | | | | | | | | |
(1) In connection with his new employment agreement, Mr. Dolson’sCostello’s annual base salary was increased, effective October 27, 2020,January 16, 2021, from $550,000$400,000 to $600,000.$450,000. (2) ReflectsWith respect to Mr. Costello and Mr. Dolson, reflects the 50% cash component of the additional bonusesAdditional Performance Bonuses awarded to the NEOs by the Compensation Committee with respect to theirhis performance in 2020.2021. The 50% stock component of each of the additional bonuses is included in the Stock Awards column in the year in which the stock was awarded. Mr. Brickman received the full amount of his discretionary additional bonus for 2021 in cash. See note 5 below for the full amount of the additional bonuses.
(3) Reflects theThis amount includes 50% of the annual incentive bonusAnnual Incentive Bonus and additional bonuses, if any,50% of the Additional Performance Bonus awarded in the form of Common Stock to the following NEOs in March 20202021 with respect to their performance during the year ended December 31, 2019.2020: Mr. Brickman: $1,000,000 and $225,000, respectively; Mr. Costello: $200,000 and $62,500, respectively; and Mr. Dolson: $586,100 and $150,000, respectively. (4) The amounts in this column represent the aggregate grant date fair value of the Common Stock issued to Messrs. Brickman, Costello and Dolson in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions regarding the restricted stock unit awards and the option awards, refer to Note 9 to our financial statements for the year ended December 31, 2020, which are included in our Annual Report on Form 10-K for the year ended December 31, 20202021 filed with the SEC. (5) On March 10, 2021,4, 2022, the Compensation Committee approved the following annual incentive bonusesAnnual Incentive Bonuses and additional bonusesAdditional Performance Bonuses to the NEOs for 20202021 performance. The Compensation Committee elected to pay 50% of the Annual Incentive Bonus to each of the NEOs and 50% of the Additional Bonus to Mr. Costello and Mr. Dolson in shares of our Common Stock.common stock. | | | | | | | | | | | | | | | | | | | | | | 2020 Performance Based Compensation | | Annual Incentive Bonus | | Additional Bonus | | | Name | Cash ($) | Stock ($) | | Cash ($) | Stock ($) | Total ($) | | James R. Brickman | 1,000,000 | | 1,000,000 | | | 225,000 | | 225,000 | | 2,450,000 | | | Richard A. Costello | 200,000 | | 200,000 | | | 62,500 | | 62,500 | | 525,000 | | | Jed Dolson | 586,151 | | 586,151 | | | 150,000 | | 150,000 | | 1,472,302 | |
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| 2021 Performance Based Compensation |
| Annual Incentive Bonus |
| Additional Performance Bonus | Total($) |
| Cash($) | Stock($) |
| Cash($) | Stock($) |
| | James R. Brickman | 1,350,000 | 1,350,000 |
| 1,000,000 | - | 3,700,000 | | Richard A. Costello | 275,000 | 275,000 |
| 125,000 | 125,000 | 800,000 | | Jed Dolson | 753,000 | 753,000 |
| 400,000 | 400,000 | 2,306,000 |
In accordance with the SEC rules, (i) the cash component of the annual incentive bonusAnnual Incentive Bonus is reflected in the “Non-Equity Incentive Plan Compensation” column in the year for which compensation was awarded, and (ii) the cash component of the additional bonusAdditional Performance Bonus is reflected in the “Bonus” column in the year for which compensation was awarded. The stock component of the annual incentive bonusAnnual Incentive Bonus and the additional bonusAdditional Performance Bonus is reflected in the “Stock Awards” column in the year in which the stock was awarded (i.e. the amounts set forth in the table above will be included in the 2021 summary compensation table). (6) The table below includes items of All Other Compensation paid to the NEOs in 2020
| | | | | | | | | | | | | | | | | | | All Other Compensation | | | Name | 401(k) Employer Match ($) | Car and Cell Phone Allowance ($) | Gym Membership ($) | Total ($) | | | James R. Brickman | 8,550 | | — | | — | | 8,550 | | | | Richard A. Costello | 4,205 | | — | | — | | 4,205 | | | | Jed Dolson | 8,550 | | 10,200 | | 1,968 | | 20,718 | | |
Narrative Accompanying Summary Compensation Table
Employment Agreements
We have entered into an employment agreement with each of our NEOs, as described below.
James R. Brickman
On July 22, 2019, we entered into a new employment with Mr. Brickman for a term of an additional five years (the “Brickman Employment Agreement”) which was effective upon expiration of his prior employment agreement. The Brickman Employment Agreement is materially consistent with Mr. Brickman’s prior employment agreement, with the exception that (i) it increased Mr. Brickman’s base salary to $1,500,000 as of November 1, 2019, (ii) increased his annual bonus targets and (iii) provided a new change of control payment provision (see discussion under “Potential Payments Upon Termination of Employment or Change in Control” below). The annual bonus target award will equal (i) 133% of Mr. Brickman’s base for 2020, (ii) 180% of his base salary for 2021, (iii) 206.7% of his base salary for 2022, (iv)
220% of his base salary for 2023 and (v) 233% of his base salary for 2024 for the period prior to expiration, which will be earned based on performance metrics set by the Compensation Committee annually. If Mr. Brickman’s Employment Agreement is not renewed at the end of the employment period, Mr. Brickman will be entitled to a prorated bonus for 2024 based on the actual performance results for that year payable at the same time all other bonuses are paid. The annual bonus may be payable partially in cash and partially in equity, as determined by the Board. During the employment period, Mr. Brickman is also eligible to participate in all our retirement, compensation and employee benefit plans, practices, policies and programs to the extent applicable generally to senior executives (other than severance plans, policies, practices or programs).
Richard A. Costello
On October 26, 2020, prior to the expiration of Mr. Costello’s 2018 employment agreement, which expired on January 15, 2021, we renewed our employment agreement with Mr. Costello (the “Costello Employment Agreement”) extending the term of his employment as Chief Financial Officer for an additional three years. The Costello Employment Agreement (i) increased Mr. Costello’s annual base salary to $450,000, commencing January 15, 2021, and (ii) increased his target bonus to $550,000 for the fiscal years ending December 31, 2021, 2022 and 2023, which will be earned based on performance metrics set by the Compensation Committee annually. If Mr. Costello’s Employment Agreement is not renewed at the end of the employment period, Mr. Costello will be entitled to a prorated bonus for 2023 for the period prior to expiration, based on the actual performance results for that year payable at the same time all other bonuses are paid. Any annual bonus may be payable partially in cash and partially in equity, as determined by the Compensation Committee. During the employment period, Mr. Costello is also eligible to participate in all our retirement, compensation and employee benefit plans, practices, policies and programs to the extent applicable generally to senior executives (other than severance plans, policies, practices or programs).
Jed Dolson
On September 10, 2020, in connection with Mr. Dolson’s promotion to Chief Operating Officer and the expiration of his prior employment agreement, we entered into a new employment agreement with Mr. Dolson (the “Dolson Employment Agreement”), extending the term of his employment for an additional three years. The Dolson Employment Agreement (i) increased Mr. Dolson’s annual base salary to $600,000 and (ii) increased his target bonus to $1,506,000 for the fiscal year ending December 31, 2021, $1,700,000 for 2022 and $1,800,000 for 2023 which will be earned based on performance metrics set by the Compensation Committee annually. If Mr. Dolson's Employment Agreement is not renewed at the end of the employment period, Mr. Dolson will be entitled to a prorated bonus for 2023 for the period prior to expiration, based on the actual performance results for that year payable at the same time all other bonuses are paid. The annual bonus may be payable partially in cash and partially in equity, as determined by the Compensation Committee. Under the Dolson Employment Agreement, Mr. Dolson may also become eligible for a special bonus in connection with his performance, payable partially in cash and partially in equity, or a combination thereof, as determined by the Compensation Committee. Mr. Dolson is also eligible to participate in all our retirement, compensation and employee benefit plans, practices, policies and programs to the extent applicable generally to senior executives (other than severance plans, policies, practices or programs). Mr. Dolson also continues to be eligible to receive a car, cell phone and toll road allowance.
Annual Incentive Bonus
Target Annual Bonus Awards – For 2020, our NEOs had the following target annual bonus awards as set forth in their respective employment agreements:
| | | | | | Executive | Target Bonus for 2020 | James R. Brickman | $ | 2,000,000 | | Richard A. Costello | $ | 400,000 | | Jed Dolson(1) | $ | 1,172,302 2022 Proxy Statement 34 |
(6) Amounts for 2021 include a 401(k) match of $8,700 for each NEO, gym memberships, and, for Mr. Dolson a car and cell phone allowance of $10,200.
| | | | Grants of Plan Based Awards Table |
(1) In connection with his promotion
The following table provides additional information about stock awards and equity and non-equity incentive plan awards granted to Chief Operating Officer and his renewal of his employment agreement, Mr. Dolson’s bonus potential was increased to $1,506,000 for
our NEOs during the year ended December 31, 20212021.
| | | | | | | | | | | | | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1) |
| Grant Date | Threshold ($) | Target($) | | James R. Brickman | 03/10/2021 | 0 | 2,700,000 | | Richard A. Costello | 03/10/2021 | 0 | 550,000 | | Jed Dolson | 03/10/2021 | 0 | 1,506,000 |
Performance Metrics –(1) As discussed earlier in the Compensation Discussion and Analysis, our Annual Incentive Plan establishes a threshold, at which there is no payout, a 33.33% payout level, a 66.66% payout level and target, at which there is a 100% payout. The Compensation Committee retains the discretion to pay out up to 50% of the Annual Incentive Plan payout in shares of common stock. For 2020,2021, each NEO earned 100% of his target. If the annual incentive bonus award for eachCompensation Committee decides to pay a portion of our NEOs wasthe Annual Incentive Plan in share of common stock, the number of shares is determined based on the following:
•25%fair market value of a share of common stock as set forth in our 2014 Omnibus Plan. For the target bonus was based upon pre-tax income;
•25% of the target bonus was based upon outperforming peers on operational and financial metrics; and
•50% was based on the individual achieving pre-approved qualitative metrics.
With respect to each of the quantitative metrics,2021 Annual Incentive Plan, the Compensation Committee set three performance levels: (i) a minimum performance level, below which no portiondecided to pay 50% of the quantitative bonus would be earned, (ii) a second performance level, which would earn 33% of the portion of the quantitative bonus and (iii) a target performance level, above which 100% of the quantitative bonus would be earned. The target performance level was set at a challenging level that was reasonably attainable if we met our performance objectives.
In March 2021, the Compensation Committee reviewed our performance and, based on the audited financial statements filed with our Form 10-K, determined that (1) our Pre-Tax Income for 2020 significantly exceeded the target performance level set at the beginning of the year, (2) we met our peer comparison metrics at 91.67% and (3) each of our NEOs met or exceeded their qualitative metrics. Based on these three evaluations, the Compensation Committee awarded each of Messrs. Brickman, Costello and Dolson 100% of his respective target award, payable 50%payout in cash and 50% in shares ofcommon stock. The portion that was payable in stock was granted as an “Other Stock-Based Award” under the 2014 Equity Plan, calculated at the Fair Market Value (as defined in the 2014 Equity Plan) of stock as of the award date and the shares were fully vested upon grant.
Additional Bonuses
Despite the COVID-19 pandemic, 2020 was a watershed year for our company and we produced record financial and operational results led by our strong management team that was prepared to capitalize on opportunities that presented themselves in the market. In mid-March when the COVID-19 pandemic first hit, our management team took swift and effective steps to address the health and safety of our employees and customers, reduce expenses to align with economic conditions and preserve liquidity. Once housing market demand resurged, our management team managed the increased demand and volatile supply chain to deliver record results and position us to deliver strong growth into 2021. Specifically, we achieved:
•Total revenues of $976.0 million, which represented a 23.3% increase as compared to the prior year;
•Net income attributable to Green Brick Partners of $113.7 million, which represented a 94% increase as compared to the prior year;
•An increase of 26.1% in new home deliveries in the second half of 2020 and an increase of 62.9% of net new home orders in the second half of 2020 as compared to the prior year period;
•A year-end backlog of $686.9 million, up 98% for the prior year-end; and
•Lots owned and controlled reached a record 14,468 lots as of year-end, up 58% from June 30, 2020, providing us significant inventory for growth.
To properly compensate and retain the best leadership, the Compensation Committee exercised its discretion to reward the NEOs with additional bonuses for delivering outstanding results. Specifically, the Compensation Committee approved additional bonuses of $450,000 for Mr. Brickman, $125,000 for Mr. Costello and $300,000 for Mr. Dolson. The bonuses were paid 50% in cash and 50% in shares of our Common Stock.
| | | | Outstanding Equity Awards at Fiscal Year End |
The following table sets forth the outstanding equity awards for ourthe Company’s NEOs as of December 31, 2020.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Named Executive Officers | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($/Share) | | Option Expiration Date | | Exercisable (#) | | Unexercisable (#) | | James R. Brickman | 500,000(1) | | — | | | $7.4861 | | | 10/27/2024 | | Richard A. Costello | — | | | — | | | — | | | — | | | Jed Dolson | — | | | — | | | — | | | — | |
(1)These options are fully vested.
Options Exercised and Stock Vested During the year ended December 31, 2022, no options were exercised by any of the NEOs. In addition, as the only equity awards received by our NEOs are shares of common stock in lieu of a portion of their Annual Incentive Plan, none of the NEOs had stock that vested during the year.
Potential Payments Upon Termination of Employment or Change in Control Our employment agreements with Messrs. Brickman, Costello and Dolson provide for payments upon termination or, with respect to Mr. Brickman and Mr. Costello, a Change in Control under certain circumstances. The material terms of these payment provisions for the employment agreements in effect as of December 31, 2020 are as follows.
Termination Without Cause or for Good Reason
Pursuant to their respective employment agreements, each of Messrs. Brickman, Costello and Dolson are entitled to receive a severance payment if he is terminated by us without Cause or if he resigns for Good Reason, in each case, subject to the executive’s (i) execution of a release of claims in a form reasonably acceptable to us and (ii) compliance with the material terms of his employment agreement or any other agreement between us and the executive.
Termination With Cause, Without Good Reason or Due to Death or Disability
Brickman -In the event that Mr. Brickman’saccordance with their respective employment is terminatedagreements, upon a termination by us for Cause, by the NEO without Cause, other thanGood Reason or upon death or Disability, each of Messrs. Brickman, Costello and Dolson will only be entitled to receive any previously accrued obligations.
Impact of Change of Control Upon Severance Payments None of our NEOs are entitled to a payment solely due to death or disability, or Mr. Brickman resigns for Good Reason, we will provide Mr. Brickman with severance in an amount equal to two times the sum of his base salary and his target bonus for the year of termination. Consequently, if Mr. Brickman’s employment had been terminated without Cause, or if he had resigned for Good Reason, on December 31, 2020, Mr. Brickman would have been eligible to receive a cash
severance payment equal to $7,000,000, calculated as two times the sum of (i) base salary ($1,500,000) plus (ii) target bonus for year of termination ($2,000,000).
Costello – In the event that Mr. Costello’s employment is terminated by us without Cause, other than due to death or disability, or Mr. Costello resigns for Good Reason, we will provide Mr. Costello with severance in an amount equal to the sum of his base salary and his target bonus for the year of termination. Consequently, if Mr. Costello’s employment had been terminated without Cause, or if he had resigned for Good Reason, on December 31, 2020, Mr. Costello would have been eligible to receive a cash severance payment equal to $800,000, calculated as the sum of (i) base salary ($400,000) plus (ii) target bonus for year of termination ($400,000).
Dolson – In the event that Mr. Dolson’s employment is terminated by us without Cause, other than due to death or disability, or Mr. Dolson resigns for Good Reason, we will provide Mr. Dolson with severance in an amount equal to one and one half times the sum of (x) his base salary and (y) his annual bonus in respect of the year preceding the year of termination. Consequently, if Mr. Dolson’s employment had been terminated without Cause, or if he had resigned for Good Reason, on December 31, 2020, Mr. Dolson would have been eligible to receive a cash severance payment equal to $1,725,000, calculated as one and one-half times the sum of (i) base salary ($600,000) plus (ii) bonus amount in year prior to termination ($550,000).
Relevant Definitions. For purposes of the severance payments discussed above, the relevant definitions are as follows:
•“Cause,” shall mean the executive’s: (i) commission of a felony or a crime of moral turpitude, (ii) engaging in conduct that constitutes fraud or embezzlement, (iii) engaging in conduct that constitutes gross negligence or willful misconduct that results or could reasonably be expected to result in harm to our business or reputation, (iv) breaching any material terms of the executive’s employment or (v) continued willful failure to substantially perform executive’s duties.
•“Good Reason,” means any of the following actions taken by us without the executive’s written consent: (i) any material failure by us to fulfill our obligations under the respective employment agreement, (ii) a material and adverse change to, or a material reduction of, the executive’s duties and responsibilities or, following a Change in Control, a change in the executive’s reporting position such that the executive no longer reports directly to the board of directors of the parent corporation in a group of controlled corporations and other entities, (iii) a material reduction in executive’s then current Annual Base Salary (not including any broader compensation reductions by the Board that are not limited to the executive specifically and do not reduce the executive’s salary by more than 10% in the aggregate) or (iv) the relocation of executive’s primary office to a location more than fifty (50) miles from the prior location, which materially increases executive’s commute to work.
Change in Control
Control. In accordance with hisMr. Brickman’s employment agreement, to the extent that Mr. Brickmanhe is terminated without Cause, other than due to death or disability, or resigns for Good Reason within 24 months following a Change in Control, his severance amount will be increased from two times (2x) to three times (3x) the sum of his base salary and his target bonus for the year of termination. Consequently, hadIn accordance with Mr. Brickman beenCostello’s employment agreement, to the extent that he is terminated without Cause, other than due to death or resigneddisability, or resigns for Good Reason as of December 31, 2020 and such termination had occurred within 24 months offollowing a Change in Control, his severance amount will be increased by two hundred and fifty thousand dollars ($250,000). Mr. Brickman would have been eligible toDolson does not receive a cash severance payment equal to $10,500,000, calculated as three times the sum of (i) base salary ($1,500,000) plus (ii) target bonus for year ofany additional amounts if his termination ($2,000,000). In accordance with his employment agreement, uponoccurs following a Change of Control, Mr. Costello is entitled to receive a lump sum payment of $250,000.in Control. For purposes of the potential payments to both Mr. Brickman andor Mr. Costello, a “Change in Control” will be deemed to have occurred when: (i) any person is or becomes the beneficial owner, directly or indirectly, of our securities representing 50% or more of the combined voting power of our then-outstanding securities; (ii) a majority of our Board is not constituted of (A) individuals who were on our Board as of the date of the respective employment agreement and (B) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest) whose
appointment or election by our Board or nomination for election by our stockholders was approved or recommended by a vote of at least two-thirds of the incumbent directors; (iii) a merger or consolidation of our company is consummated, other than (A) a merger or consolidation which would result in our voting securities outstanding immediately prior to such merger or consolidation continuing to represent at least 50% of the combined voting power of the surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of our company (or similar transaction) in which no person is or becomes the beneficial owner, directly or indirectly, of our securities representing 50% or more of the combined voting power of our then outstanding securities; or (iv) a liquidation or dissolution of our company. Termination for Cause or Upon Death or Disability
In accordance with their respective employment agreements, upon a termination for Cause or upon death or Disability, each of Messrs. Brickman, Costello and Dolson will only be entitled to receive any previously accrued obligations.
General Provisions Clawback Provision.Provision. Pursuant to the employment agreement for each NEO, we may claw back from the NEO any bonus and equity-based compensation received in a prior year if we are required to restate financial results due to material non-compliance with applicable financial reporting requirements. Restrictive Covenants. Covenants. Each employment agreement provides for a (i) 12-month post-termination non-competition covenant relating to our competitors, (ii) 12-month post-termination non-solicitation covenant in respect of our employees, consultants, vendors, customers and similar business relationships and (iii) perpetual confidentiality and non-disparagement covenants.
Excise Tax.Tax. Pursuant to the employment agreements of Mr. Costello and Mr. Dolson, in the event that any payments made in connection with a termination of employment would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, then, subject to limitations, the payments would be reduced to the minimum extent necessary to ensure no portion of such payment is subject to the excise tax. Mr. Brickman’s employment agreement requires a “best net” approach, under which payments and benefits will be reduced to avoid triggering excise tax if the reduction would result in a greater after-tax amount for Mr. Brickman compared to the amount he would receive net of the excise tax if no reduction were made.
EQUITY COMPENSATION PLAN INFORMATIONPotential Payments Upon Termination Table
The following table provides information about our Common Stock that may be issuedAssuming a termination of employment (including due to expiration of the term) occurred as of December 31, 20202021, each of Messrs. Brickman, Costello and Dolson would be entitled to receive the payment and benefits set forth in the following table. As discussed above, if either Mr. Brickman, Costello or Dolson was terminated by us for Cause, if such NEO terminated without Good Reason, or if their employment was terminated due to death or Disability, such NEO would only be entitled to accrued obligations.
| | | | | | | | | | | | | | | | | | | James R. Brickman | | Richard A. Costello | | Jed Dolson | | Termination by the Company without Cause/Resignation by Executive for Good Reason | • A cash severance payment equal to $8,400,000, calculated as two times (2x) the sum of (i) base salary ($1,500,000) plus (ii) target bonus for year of termination ($2,700,000).
| | • A cash severance payment equal to $1,000,000, calculated as the sum of (i) base salary ($450,000) plus (ii) target bonus for year of termination ($550,000). | | • A cash severance payment equal to $2,658,450, calculated as one and one-half times (1.5x) the sum (i) base salary ($600,000) plus (ii) bonus in respect of prior year ($1,172,300). | | Termination by the Company without Cause/Resignation by Executive for Good Reason following a Change in Control | • A cash severance payment equal to $12,600,000, calculated as three times (3x) the sum (i) base salary $1,500,000 plus (ii) target bonus for year of termination ($2,700,000).
| | A cash severance payment equal to $1,250,000, calculated as the sum of (i) base salary ($450,000) plus (ii) target bonus for year of termination ($550,000), plus (iii) $250,000. | | Same as above |
For purposes of the severance payments discussed above, the relevant definitions are as follows: • “Cause,” shall mean the executive’s: (i) commission of a felony or a crime of moral turpitude, (ii) engaging in conduct that constitutes fraud or embezzlement, (iii) engaging in conduct that constitutes gross negligence or willful misconduct that results or could reasonably be expected to result in harm to our business or reputation, (iv) breaching any material terms of the executive’s employment or (v) continued willful failure to substantially perform executive’s duties. • “Good Reason,” means any of the following actions taken by us without the executive’s written consent: (i) any material failure by us to fulfill our obligations under the 2014 Equity Plan,respective employment agreement, (ii) a material and adverse change to, or a material reduction of, the executive’s duties and responsibilities or, following a Change in Control, a change in the executive’s reporting position such that the executive no longer reports directly to the board of directors of the parent corporation in a group of controlled corporations and other entities, (iii) a material reduction in executive’s then current Annual Base Salary (not including any broader compensation reductions by the Board that are not limited to the executive specifically and do not reduce the executive’s salary by more than 10% in the aggregate) or (iv) the relocation of executive’s primary office to a location more than fifty (50) miles from the prior location, which ismaterially increases executive’s commute to work.
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of our only existing equityemployees and the annual total compensation plan.of our Chief Executive Officer, James R. Brickman. | | | | | | | | | | | | | | | | | | | | | | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | Equity compensation plans approved by security holders | | 500,000 | | | $ | 7.4861 | | | 1,482,794 | | | Equity compensation plans not approved by security holders | | — | | | — | | | — | | | Total | | 500,000 | | | $ | 7.4861 | | | 1,482,794 | |
In 2021, we identified the median employee by calculating the amount of annual total cash compensation (salary plus bonus, commissions) paid to all of our employees (other than our CEO). We did not make any cost-of-living or other adjustments in identifying the median employee. Based on this methodology, the median employee in 2021 was a full-time, salaried employee. Once we identified our 2021 median employee, we then calculated the 2021 annual total compensation for such employee in accordance with the requirements of the executive compensation rules for the Summary Compensation Table (Item 402(c)(2)(x) of Regulation S-K). Under this calculation, the median employee’s annual total compensation in 2021 was $80,699. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of the Summary Compensation Table included in this proxy statement. The resulting ratio of the annual total compensation of our CEO to the annual total compensation of the median employee was 63 to 1.
| | | PROPOSAL NO. 2 RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANT | The Audit Committee appoints, compensates, retains and oversees our auditors. The Committee engages in an annual evaluation of the independent registered certified public accounting firm, or “independent auditor,” qualifications, performance and independence and considers the advisability and potential impact of selecting a different independent registered certified public accounting firm. The Audit Committee has selected RSM US LLP to serve as our independent auditor for 2022. RSM has served as our independent registered public accounting firm since August 2016. | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF RSM AS GREEN BRICK’S INDEPENDENT PUBLIC ACCOUNTANT |
Background The Audit Committee has selected RSM US LLP to serve as our independent auditor for 2022. In accordance with SEC rules and RSM policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to us. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of our lead audit partner pursuant to this rotation policy includes meetings between the Chairman and the members of the Audit Committee and the candidates for the role, as well as discussion by the full committee with input from management. The Audit Committee and the Board believe that the continued retention of RSM as our independent auditor is in our best interests and those of our stockholders, and we are asking our stockholders to ratify the selection of RSM as our independent auditor for 2022. Although the Board is submitting the selection of RSM to our stockholders for ratification, the Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal. If our stockholders do not ratify the selection of RSM as our independent registered certified public accounting firm, other independent registered certified public accounting firms will be considered by our Audit Committee, but the Audit Committee may nonetheless choose to engage RSM. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered certified public accounting firm at any time during the year if it determines that such a change would be in the best interest of us and our stockholders. Representatives of RSM are expected to be present at the Annual Meeting and they will have an opportunity to make a statement if desired and will be available to respond to questions.
Proposal 2 - Ratification of Independent Public Accountant Fees and Services of RSM US LLP Fees for professional services provided by RSM for the fiscal years ended 2021 and 2020, including related expenses, are as follows: | | | | | | | | | | Services Provided | 2021 | 2020 | Audit Fees(1) | $728,463 | $653,886 | Audit-Related Fees(2) | 46,800 | 65,000 | | Tax Fees | — | — | All Other Fees(3) | 7,620 | — | | Total | $782,883 | $718,886 |
(1)Includes fees for professional services rendered by RSM for the audit of the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K, review of the Company’s condensed consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit of the Company’s internal control over financial reporting. (2)Include fees related to consents and comfort letters related to offerings of our common stock and preferred stock in 2020 and 2021. (3)Includes fees related to an unclaimed property audit.
Audit Committee Pre-Approval Policy Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (“PCAOB”) regarding auditor independence, the Audit Committee (i) appoints, (ii) negotiates and sets the compensation of and (iii) oversees the performance of the independent registered public accounting firm. The Audit Committee pre-approves all audit, audit-related and permitted non-audit services provided by the independent registered public accounting firm, including the fees and terms for those services. The Audit Committee has adopted a policy and procedures governing the pre-approval process for audit, audit-related and permitted non-audit services. The Audit Committee pre-approves audit and audit-related services in accordance with its review and approval of the engagement letter and annual service plan with the independent registered public accounting firm. Any tax consultation or other consulting services proposed to be provided by RSM are considered for approval by the Audit Committee on a project-by-project basis. Non-audit and other services provided by the independent registered public accounting firm will be considered by the Audit Committee for pre-approval based on business purpose, reasonableness of estimated fees and the potential impact on the firm’s independence.
AUDIT COMMITTEE REPORT Report of the Audit Committee The Audit Committee has reviewed and discussed with management and with the independent registered certified public accounting firm the audited consolidated financial statements for the 2021 fiscal year. The Audit Committee has also performed the other reviews and duties set forth in its charter. The Audit Committee discussed with the independent registered certified public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communication with Audit Committees, as adopted by the PCAOB. Additionally, the Audit Committee has: (i) received the written disclosures and the letter from the independent registered certified public accounting firm required by the applicable requirements of the PCAOB regarding the independent registered certified public accounting firm’s communications with the Audit Committee concerning independence; (ii) considered whether the provision of tax and accounting research and other non-audit services by our independent registered certified public accounting firm is compatible with maintaining their independence; and (iii) discussed with the independent registered certified public accounting firm their independence from us and our management. In reliance on the foregoing reviews and discussions, the Audit Committee recommended to the Board that the audited consolidated financial statements referred to above be included in our Annual Report on Form 10-K for the 2021 fiscal year for filing with the SEC. In determining whether to reappoint RSM as our independent registered certified public accounting firm for 2022, the Audit Committee considered the qualifications, performance and independence of the firm and the audit engagement team, together with the following factors: • RSM’s capabilities to handle the breadth and complexity of our operations; • RSM’s familiarity with our industry, accounting policies, financial reporting process, and internal control over financial reporting; • the quality and candor of RSM’s communications with the Audit Committee and management; • external data on the firm’s audit quality and performance, including recent PCAOB reports on RSM and its peer firms; • the performance of the lead engagement partner and the other professionals on our account; and • the appropriateness of RSM’s fees based on the scope of activities. In light of the Audit Committee’s views on the performance of RSM, it is the Audit Committee’s belief that continuing to retain RSM is in our best interest and those of our stockholders. Consequently, the Audit Committee has appointed RSM as our independent registered certified public accounting firm for fiscal year 2022 and recommends that stockholders ratify the appointment at the Annual Meeting. Kathleen Olsen (Chair) John R. Farris Lila Manassa Murphy Richard Press
April 22, 2022
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information with respect to the beneficial ownership of our Common Stockcommon stock, as of April 14, 2021, by: •each of our named executive officers;
•each of our directors and director nominees;
•all current directors and executive officers as a group; and
•13, 2022, by (i) each person known to us to be beneficially own more than 5% or moreof our outstanding common stock; (ii) our named executive officers for the fiscal year ended December 31, 2021; (iii) each director and nominee for director and (iv) all of the outstandingexecutive officers and directors as a group. As of April 13, 2022, we had 49,227,597 shares of Common Stock.common stock outstanding.
For purposes | | | | | | | | | | | | | | | | Name of Beneficial Owner | | Number of Shares of
Common Stock
Beneficially Owned(2) | | Percent(2) | | Holders of more than 5% | | | | | Greenlight Capital Inc. and its affiliates(2). | | 17,041,811 | | 34.6% | BlackRock, Inc.(3). | | 3,677,214 | | 7.5% | | Named Executive Officers and Directors: | | | | | James R. Brickman(4) | | 2,056,072 | | 4.1% | | Richard A. Costello | | 87,670 | | * | | Jed Dolson | | 239,384 | | * | David Einhorn(2)(5) | | 17,427,590 | | 35.4% | | Elizabeth K. Blake | | 181,364 | | * | Harry Brandler(6) | | 121,450 | | * | | John R. Farris | | 145,444 | | * | | Lila Manassa Murphy | | - | | * | | Kathleen Olsen | | 79,238 | | * | | Richard S. Press | | 90,897 | | * | All Executive Officers and Directors as a group (10 persons)(7) | | 20,429,109 | | 41.5% |
* Less than one percent. Unless otherwise indicated, the address of this table,each of our directors and officers identified is c/o 2805 Dallas Parkway, Suite 400, Plano, TX 75093. (1) In determining the number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 underby each person, shares that may be acquired by such person within 60 days after April 13, 2022 are deemed outstanding for purposes of determining the Securities Exchange Acttotal number of 1934.outstanding shares for such person and are not deemed outstanding for such purpose for all other shareholders. To our knowledge, except as otherwise indicated, in the footnotes below, the reporting person hasbeneficial ownership includes sole voting and dispositive power with respect to all shares beneficially owned. As of April 14, 2021, there were 50,732,276 shares outstanding.
| | | | | | | | | | | | | | | | | | | Beneficial Owner | | Total Number of Shares Beneficially Owned | | Percentage of Common Stock Outstanding | | James R. Brickman (1) | | 2,019,317 | | | 3.9 | % | | Richard A. Costello | | 76,779 | | | | * | | Jed Dolson | | 207,992 | | | | * | David Einhorn (2) | | 17,427,590 | | | 34.4 | % | | Elizabeth K. Blake | | 172,132 | | | * | Harry Brandler (3) | | 66,834 | | | * | | John R. Farris | | 136,628 | | | * | | Kathleen Olsen | | 64,922 | | | * | | Richard S. Press | | 96,281 | | | * | All Directors and Executive Officers as a group, 9 persons (4) | | 20,268,475 | | | 39.6 | % | Greenlight Capital Inc. and its affiliates (2) | | 17,427,590 | | | 34.4 | | % | BlackRock, Inc. (5) | | 3,120,097 | | | 6.2 | | % |
* Less than 1% of outstanding shares.
Unless otherwise indicated, the address for all beneficial owners is c/o Green Brick Partners, Inc., 2805 Dallas Parkway, Suite 400, Plano, TX 75093.
(1)Includes 500,000 shares issuable upon exercise of vested stock options.
(2)The shares owned Based on Amendment 16 to the Schedule 13D filed by David Einhorn and Greenlight Capital, Inc. et al. is based solely on the Schedule 13D (Amendment No. 16) filed with the SEC on February 10, 2021 byand the Form 4 filed on January 4, 2022, Mr. Einhorn is the president of Greenlight Capital, Inc. Greenlight Capital, Inc. (“("Greenlight Inc.”") isand the investment advisor for Greenlight Capital Offshore Partners, Ltd., and as such has voting and dispositive power over 8,592,845 sharessenior manager of common stock held by Greenlight Capital Offshore Partners, Ltd. DME Advisors, LP (“DME Advisors”) is the investment advisor for Solasglas Investments, LP, and as such has voting and dispositive power over 2,740,190 shares of common stock held by Solasglas Investments, LP. DME Capital Management, LP (“DME Management”) (i) is the investment manager for Greenlight Capital Offshore Master, Ltd., and as such has voting and dispositive power over 5,235,633 shares of common stock held by Greenlight Capital Offshore Master, Ltd., and (ii) manages a portfolio for a private investment fund, and as such has voting and dispositive power over 850,000 shares of common stock held by such private investment fund. DME Advisors GP, LLC (“("DME GP”GP"). DME GP is the general partner of DME Advisors, LP ("DME") and DME Capital Management, and as such hasLP ("DME CM"). Greenlight Inc. controls the voting and dispositive power over 8,825,823disposition of 8,480,328 shares of common stock. David Einhorn, oneCommon Stock held for the account of our directors, isGCOP, Ltd. of which Greenlight Inc. acts as investment advisor. DME CM controls the principalvoting and disposition of 4,971,293 shares of Common Stock held for the account of GCOM, of which DME CM acts as investment advisor. DME controls the voting and disposition of 2,740,190 shares of Common Stock held for the account of Solasglas Investments, LP ("SILP") and a private investment fund for which DME CM manages a portfolio (the "Sub-Account") and serves as DME serves as investment advisor. By virtue of his roles at Greenlight Inc., DME Advisors, DME Management and DME GP, and as such hasMr. Einhorn may be deemed to have voting and dispositive power over 17,418,66817,041,811 shares of common stock held by these affiliates of Greenlight, Inc. The 17,418,66817,041,811 shares includes 8,476,863 shares of common stock which are pledged or held in one or more margin accounts. Each of Mr. Einhorn, Greenlight Inc., DME Advisors, DME Management and DME GP disclaims beneficial ownership of these shares of common stock, except to the extent of any pecuniary interest therein. The principal business
Proposal 2 - Ratification of Independent Public Accountant address of Greenlight Capital, Inc. is 2 Grand Central Tower, 140 East 45th Street, 24th Floor, New York, NY 10017. (3) According to the Schedule 13G filed on February 3, 2022, by BlackRock, Inc. (“BlackRock”), of the 3,677,214 shares beneficially owned, BlackRock has (i) sole voting power with respect to 3,525,094 shares, and (ii) sole investment power with respect to all 3,677,214 shares. The principal business address of BlackRock is 55 East 52nd Street, New York, NY 10055. (4)Includes 49,176500,000 shares issuable upon exercise of vested stock options. (5) In addition to the amounts held by Greenlight Capital, et al, Mr. Einhorn owns 385,779 shares of Common Stock directly. (6) Includes 74,176 shares held by Brandler LLC, of which Mr. Brandler is a manager. Mr. Brandler disclaims beneficial ownership of the shares of Green Brick Partnerscommon stock directly held by Brandler LLC, except to the extent of his pecuniary interest therein. (4)(7)Includes (i) 500,000 shares issuable upon exercise of vested stock options held by Mr. Brickman and (ii) 17,418,66817,041,811 shares held by Greenlight Capital, Inc., and its affiliates described in Note 2, for which one of our directors, David Einhorn may be deemed to beneficially own due to his indirect voting and dispositive power over such shares.
(5)According to the Schedule 13G filed on February 2, 2021, by BlackRock, Inc. (“BlackRock”), of the 3,120,097 shares beneficially owned, BlackRock has (i) sole voting power with respect to 3,032,529 shares, and (ii) sole investment power with respect to all 3,120,097 shares. The principal business address of BlackRock is 55 East 52nd Street, New York, NY 10055.
QUESTIONS AND ANSWERS ABOUT VOTING | | | | QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING |
Q:What is the date, time and place of the Annual Meeting?
Due to the COVID-19 pandemic, our Annual Meeting will be held in a virtual format only, on Tuesday June 7, 2022, at 10:00 a.m. Central Time. As a stockholder, you can attend, vote and submit questions at our Annual Meeting by accessing www.virtualshareholdermeeting.com/GRBK2022 using the 16-digit control number on your proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials. What am I being asked to vote on and what is the Board recommendation? At the Annual Meeting you will be asked to vote on the following four proposals. Our Board recommendation for each of these proposals is set forth below: | | | | | | | | | | Proposal | | Board Recommendation | | To elect eight directors each for a term expiring at the next annual meeting or until his or her successor has been duly elected and qualified. | | FOR each Director Nominee | To ratify the appointment of RSM US LLP (“RSM US” or “independent auditors”) as our independent registered certified public accounting firm for the 2022 fiscal year. | | FOR |
You will also be asked to consider and act upon such other business as may properly come before the Annual Meeting. Who mayis entitled to vote at the Annual Meeting?
A: You may vote allOnly holders of the sharesrecord of our Commoncommon stock that you owned at the close of business on April 14, 2021, the record date. On13, 2022, the record date there were 50,732,276 shares of our Common Stock outstanding andfor the Annual Meeting, are entitled to be votednotice of, and to attend and vote at the meeting. You may cast one vote for each shareAnnual Meeting, or any postponements or adjournments of our Common Stock held by you on all matters presented at the meeting.
Q: What constitutes a quorum, and why is a quorum required?
A: We are required to have a quorum At the close of stockholders present to conduct business at the meeting. The presence at the meeting, by virtual attendance accessing www.virtualshareholdermeeting.com/GRBK2021 or by proxy, of the holders of a majority of the shares entitled to vote on the record date, will constitute a quorum, permitting us to conduct the business49,227,597 shares of the meeting. Proxies received but marked as abstentions, if any, will be included in the calculation of the number of shares considered to be present at the meeting for quorum purposes. If we do not have a quorum, we will be forced to reconvene the Annual Meeting at a later date.our common stock were outstanding.
Q: What is the difference between a stockholder of record and a beneficial owner?
A: If your shares are registered directly in your name with our transfer agent, Broadridge Corporate Issuer Solutions, Inc., you are considered, the “stockholder of record” with respect to those shares. shares, the “stockholder of record.”
If your shares are held by a brokerage firm, bank, trustee, or other agent (“nominee”),or record holder, each sometimes referred to as a “nominee,” you are considered the “beneficial owner” of shares held in street“street name.” The Notice of Internet Availability of Proxy Materials (“Notice”) has been forwarded to you by your nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your nominee on how to vote your shares by following their instructions for voting by telephone or on the Internetinternet or, if you specifically request a copy of the printed materials, you may use the voting instruction card included in such materials.
What are the voting rights of our stockholders?
Q: How do I vote?
A: If you are a stockholderOur stockholders have one vote per share of record, you may vote:
 Via Internet
 By telephone
 By mail, if you have received a paper copy of the proxy materials
 At the virtual meeting
Detailed instructions for Internet and telephone voting are set forthour common stock owned on the Notice, which contains instructions on how to access our proxy statement and annual report online. You may also vote by electronic ballotrecord date for each matter properly presented at the Annual Meeting.
If you are a beneficial stockholder, you must follow the voting procedures of your nominee included with your proxy materials. If your shares are held by a nominee and you intend to vote at the meeting, you will need the 16-digit control number representing such shares.
Q: What am I voting on?
A: At the Annual Meeting you will be asked to vote on the following two proposals. Our Board recommendation for each of these proposals is set forth below.
| | | | | | | | | | Proposal | Board Recommendations | Proposal 1: | Election of Directors | FOR each director nominee | Proposal 2: | Ratification of RSM US LLP as our independent registered public accounting firm | FOR2022 Proxy Statement 44 |
We will also consider other business that properly comes before the meeting in accordance with Delaware lawQuestions and our Bylaws.Answers About Our Annual Meeting
Q: What happens if additional matters are presentedconstitutes a quorum?
A quorum will be present at the Annual Meeting?
A: Other thanMeeting if holders of a majority of outstanding shares of our common stock on the items of business described in this proxy statement, werecord date are not aware of any other business to be acted uponrepresented at the Annual Meeting.Meeting by virtual attendance or by proxy. If you grant a proxy, the persons named as proxy holders, James R. Brickman and Richard A. Costello, will have the discretion to vote your shares on any additional matters properly presented for a votequorum is not present at the meeting in accordance with Delaware lawAnnual Meeting, we expect to postpone or adjourn the Annual Meeting to solicit additional proxies. Abstentions and our Bylaws.
Q: What if I abstain on a proposal?
A: If you sign and return your proxy marked “abstain” on any proposal, your shares will not be voted on that proposal. However, your sharesbroker non-votes (as described below) will be counted for purposes of determining whether a quorum is present.
Q:What is the required vote for approval of each of the proposalsas shares present and what is the impact of abstentions?
A:
| | | | | | | | | | | | | Proposal | Vote Required for Approval | Abstentions | Proposal 1: | Election of Directors | Majority of votes cast | No impact | Proposal 2: | Ratification of RSM US LLP as our independent registered public accounting firm | Majority of votes cast | No impact |
A proposal has received a majority of the votes cast if there was a majority of the votes cast by the stockholders entitled to vote thereon who are present personallyfor the purpose of determining the presence or represented by proxy. Consequently, abstentions will have no impact on the results, as they are not counted as votes cast.
Q: What if I sign and return my proxy without making any selections?
A: If you sign and return your proxy without making any selections, your shares will be voted “FOR” Proposals 1 and 2. If other matters properly come before the meeting, James R. Brickman and Richard A. Costello will have the authority to vote on those matters for you at their discretion. As of the date of this proxy, we are not aware of any matters that will come before the meeting other than those disclosed in this proxy statement.
Q: What if I am a beneficial stockholder and I do not give the nominee voting instructions?
A: If you are a beneficial stockholder and your shares are held in the nameabsence of a broker, the broker is bound by the rules of the New York Stock Exchange regarding whether or not it can exercise discretionary voting power for any particular proposal if the broker has not received voting instructions from you. Brokers have the authority to vote shares for which their customers do not provide voting instructions on certain “routine” matters. quorum.
What are “broker non-votes” and how are they treated? A broker non-vote“broker non-vote” occurs when a nominee who holdsbank, broker, trustee, agent or other holder of record holding shares for another does nota beneficial owner withholds its vote on a particular itemproposal because the nomineethat holder does not have discretionary voting authoritypower for that itemsuch proposal and has not received instructions from the ownerbeneficial owner. If your broker is the stockholder of record, your broker is required to vote your shares in accordance with your instructions. If you do not give instructions to your broker, the rules of the shares. Broker non-votes are included inNYSE, allow brokers the calculation of the number of votes considereddiscretionary authority to be present at the meeting for purposes of determining the presence of a quorum but are not counted as votes castvote your shares with respect to a matter on which the nominee has expressly“routine” matters but not voted.
“non-routine” matters.
The table below sets forth, for each proposal on the ballot, whether a broker can exercise discretion and vote your shares absent your instructions and if not, the impact ofinstructions. If they cannot, such broker non-vote will not be counted as a vote cast and will therefore have no impact on the approval of the proposal. | | | | | | | Proposal | Can Brokers Vote
Absent Instructions? | | Election of Directors | No | | Ratification of Independent Registered Certified Public Accounting Firm | Yes |
If other matters are properly brought before the Annual Meeting and they are not considered routine under the applicable NYSE rules, shares held by a bank, broker or other holder of record holding shares for a beneficial owner will not be voted on such non-routine matters by that holder unless that holder has received voting instructions. As stated above, broker non-votes are counted as present for the purpose of determining whether a quorum is present. How are abstentions treated? Abstentions will not be counted as votes cast in the final tally of votes with regard to either proposal. Therefore, abstentions will have no effect on the outcome of these proposals. Will my shares be voted if I do not provide my proxy? If your shares are held in the name of a bank, broker or other holder of record, they may be voted by the bank, broker or other holder of record with respect to “routine” matters (as described above under the caption “What are “broker non-votes” and how are they treated?”) even if you do not give the bank, broker or other holder of record specific voting instructions. If you are a stockholder of record and hold your shares directly in your own name, your shares will not be voted unless you provide a proxy or vote at the Annual Meeting. How do I vote?
To Vote by Internet, Telephone or Mail:
You can vote by proxy whether or not you attend the Annual Meeting. To vote by proxy, you have a choice of voting over the Internet, by telephone or by using a traditional proxy card. | | | | | | | | | | | | | Proposal | Can Brokers Vote Absent Instructions? | Impact of Broker Non-Vote | Proposal 1: | Election of Directors | No | None | Proposal 2: | Ratification of RSM US LLP as our independent registered public accounting firm | Yes | Not Applicable2022 Proxy Statement 45 |
Questions and Answers About Our Annual Meeting
Q: Can I change my• To vote after I have delivered my proxy?
A: Yes.by Internet, go to www.proxyvote.com and follow the instructions there. You may revokewill need the 16-digit control number included on your proxy card, voter instruction form or Notice.
• To vote by telephone, dial the number listed on your proxy card, your voter instruction form or Notice. You will need the 16-digit control number included on your proxy card, voter instruction form or Notice. • If you received a Notice and wish to vote by traditional proxy card, you can request a full set of materials at any time before its exercise. You may change yourno charge through one of the following methods: 1) By Internet: by visiting www.proxyvote.com 2) By phone: by using the phone number listed on the Notice To reduce our administrative and postage costs, we ask that you vote through the Internet or by telephone, both of which are available 24 hours a day prior to the Annual Meeting by:Meeting. To ensure that your vote is counted, please remember to submit your vote by 11:59 p.m. Central Time on June 6, 2022.
•Delivering a new signed proxy via mail toTo Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717;
•By voting again via telephone or internet prior to the Annual Meeting; or
•You may also revoke your proxy by voting by electronic ballot at the Annual Meeting.Meeting
:
If youyour shares are a beneficial stockholder,registered in your name, you must contact your nominee to change your vote or obtain a proxy to vote your shares if you wish to cast your vote at the meeting.
Q: Who can attend the Annual Meeting?
A: You are entitled to virtually attend the Annual Meeting if you were a stockholder of record as of the close of business on April 14, 2021, the record date, or you were a beneficial holder on the record date and you register in advance and hold a legal proxy for the Annual Meeting provided by your bank, broker, or nominee. You will be able to virtually attend the Annual Meeting via the internet by accessing www.virtualshareholdermeeting.com/GRBK2021 and enteringuse the 16-digit control number on theyour proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials in order to log in and complete your ballot electronically when prompted during the Annual Meeting.
If you previously received.hold your shares in “street name,” you will need to obtain the 16-digit control number assigned to your holdings with your bank, broker or other nominee and enter it when prompted by the website hosting the Annual Meeting to vote the shares that are held for your benefit.
Q: If I plan to virtually attend the Annual Meeting, should I still vote by proxy?
A:Yes. Casting your vote in advance does not affect your right to virtually attend the Annual Meeting.
If you vote in advance and also virtually attend the meeting,Annual Meeting, you do not need to vote again duringat the meetingAnnual Meeting unless you want to change your vote. Electronic ballots What vote is required for the proposals? | | | | | | | Proposal | Description of Votes Needed | | Election of Directors | The eight nominees for election as directors will be elected by a majority of the votes cast at the Annual Meeting. | | Ratification of Independent Registered Certified Public Accounting Firm | The affirmative vote of a majority of the votes cast on the proposal is required for the ratification of the appointment of RSM US as our independent auditor for the 2022 fiscal year. |
How will my proxy holder vote? The enclosed proxy designates James R. Brickman and Richard A. Costello to hold your proxy and vote your shares. James R. Brickman and Richard A. Costello will vote all shares of our common stock represented by properly executed proxies received in time for the Annual Meeting in the manner specified by the holders of those shares. James R. Brickman and Richard A. Costello intend to vote all shares of our common stock represented by proxies that are properly executed by the record holder but that otherwise do not contain voting instructions as follows: | | | | | | | | | | Proposal | | Board Recommendation | | Election of Directors | | FOR each Director Nominee | | Ratification of Independent Registered Certified Public Accounting Firm | | FOR |
Questions and Answers About Our Annual Meeting What happens if additional matters are presented at the Annual Meeting? Other than the items of business described above, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy to the proxy holders named in the attached proxy card, such persons will vote in accordance with the recommendation of our Board, “FOR” or “AGAINST” such other matters. Can I change my vote after I have voted? Voting by telephone, over the Internet or by mailing a proxy card does not preclude a stockholder from voting during the Annual Meeting. A stockholder may revoke a proxy, whether submitted via telephone, the Internet or mail, at any time prior to its exercise by (i) filing a duly executed revocation of proxy with our Corporate Secretary, (ii) properly submitting, either by telephone, mail or Internet, a proxy to our Corporate Secretary bearing a later date or (iii) attending the Annual Meeting and voting when prompted during the meeting. Attendance at the virtual meeting will not itself constitute revocation of a proxy. How do I virtually attend the Annual Meeting? In consideration of the public health concerns relating to COVID-19, the Annual Meeting will be availableheld virtually and you will not be able to attend the Annual Meeting in person. To attend the Annual Meeting virtually, please log in to www.virtualshareholdermeeting.com/GRBK2022 using the control number on your proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials and follow the instruction prompts on the virtual meeting platform.site.
Q: Where can I find voting results of the Annual Meeting?
A: We will announce the results for the proposals voted upon at the Annual Meeting and publish final detailed voting results in a Form 8-K filed with the SEC within four business days after the Annual Meeting.
Q: Who should I call with other questions?
A:If you have additional questions about this proxy statement or the meetingAnnual Meeting or would like additional copies of this proxy statement or our annual report, please contact:
Green Brick Partners, Inc., 2805 Dallas Parkway, Suite 400 Plano, TX 75093. 75093, Attention: Richard A. Costello, Chief Financial Officer, Treasurer and Secretary, or by calling (469) 573-6755.
OTHER MATTERS
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors and certain officers, and persons who own more than 10% of our common stock, to file with the SEC reports of ownership and changes in ownership of our common stock and other equity securities. Based on a review of our records and certain written representations received from our executive officers and directors, we believe that all required filings during the year ended December 1, 2021 were made on a timely basis, except that a Form 4 for Mr. Press that reported one purchase transaction made during 2021 was not timely filed due to an administrative error.
Stockholder Proposals and Director Nominations
Proposals for Inclusion in the 2022 Annual Meeting In order toProxy Statement. The date by which stockholder proposals must be consideredreceived by us for inclusion in our proxy statement formaterials relating to the 20222023 annual meeting of stockholders, or the “2023 Annual Meeting, of Stockholders, the deadline for submission of stockholder proposals,” is February 22, 2023, pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, is the close of business on December 27, 2021.amended. Eligible stockholders who seek to submit a proposal for inclusion in our proxy statement must comply with all applicable Bylaws and SEC regulations regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Upon receipt of any such proposal, we will determine whether or not to include such proposal in the proxy materials in accordance with SEC regulations governing the solicitation of proxies.
Additionally, pursuant to
Proposals not Included in the Proxy Statement and Nominations for Director. Stockholder proposals not included in our proxy statement and stockholder nominations for director may be brought before an annual meeting of stockholders in accordance with the advance notice provisionprocedures described in our Bylaws,Bylaws. In general, notice must be received by the Corporate Secretary not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting (i.e., February 22, 2023) and must contain specified information concerning the matters to be brought before such meeting and concerning the stockholder proposing such matters. For the 2023 Annual Meeting, the Corporate Secretary must receive notice of any stockholderthe proposal on or nomination for election as director to be submitted atafter the 2022 Annual Meetingclose of Stockholders, but not required to be included in our proxy statement, no earlier thanbusiness on February 2, 202222, 2023 and no later than the close of business on March 4, 2022.24, 2023. Stockholder proposals must be in proper written form and must meet the detailed disclosure requirements set forth in our Bylaws, including a description of the proposal, the name of the stockholder and beneficial owner, if any, and such parties’ stock holdings and derivative positions in our securities, if any. If we hold the 2023 Annual Meeting more than 30 days earlier or more than 60 days later than such anniversary date, we must receive your notice not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Our Bylaws also require that stockholder proposals concerning nomination of directors provide additional disclosure, including information we deem appropriate to ascertain the nominee’s qualifications to serve on the Board, disclosure of compensation arrangements between the nominee, the nominating stockholder and the underlying beneficial owner, if any, and other information required to comply with the proxy rules and applicable law. The specific requirements of these advance notice provisions are set forth in Sections 2.07 and 3.041.13 of our Bylaws, set forth the information thata copy of which is required in any written notice of a stockholder proposal or director nomination. The persons named in the proxies solicited by management may exercise discretionary voting authority with respect to such stockholder proposals. available upon request. All stockholder proposals and director nominations pursuant
to the advance notice provision or proxy access provision in our Bylaws should be sent to the Secretary at 2805 Dallas Parkway, Suite 400, Plano, TX 75093.
Communications withList of Stockholders Entitled to Vote at the BoardAnnual Meeting
Stockholders or other interested parties may communicate with one or more membersThe names of stockholders of record entitled to vote at the Board by writingAnnual Meeting will be available at our corporate office for a period of 10 days prior to the Board or a specific director at: Board of Directors (or specific director)
Green Brick Partners, Inc.
2805 Dallas Parkway, Suite 400
Plano, TX 75093
Communications addressed to individual Board members will be forwarded byAnnual Meeting and continuing through the Secretary to the individual addressee. Any communications addressed to the Board will be forwarded by the Secretary to the Chairman of the Board.Annual Meeting.
Costs ofExpenses Relating to this Proxy Solicitation
The costs of solicitation, if any, will be borne by Green Brick. Proxies may be solicited on our behalf by directors, officers or employees, in person or by telephone, electronic transmission and facsimile transmission. No additional compensation will be paid to such persons for such solicitation. Green Brick will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to beneficial owners of shares.
Communication with Green Brick’s Board of Directors Stockholders or other interested parties may communicate with one or more members of the Board by writing to the Board or a specific director at: Board of Directors (or specific director) Green Brick Partners, Inc. 2805 Dallas Parkway, Suite 400 Plano, TX 75093
Communications addressed to individual Board members will be forwarded by the Corporate Secretary to the individual addressee. Any communications addressed to the Board will be forwarded by the Corporate Secretary to the Chairman of the Board.
Available Information We will furnish without charge to each person whose proxy is being solicited, upon request of any such person, a copy of the 2021 Form 10-K as filed with the SEC, including the financial statements and schedules thereto, but not the exhibits. In addition, such report is available, free of charge, on the Internet at www.greenbrickpartners.com. Stockholders who wish to obtain a paper copy of our 2021 Form 10-K may do so without charge by writing to Green Brick Partners, Inc., 2805 Dallas Parkway, Suite 400, Plano, TX 75093, Attention: Investor Relations. A copy of any exhibit to the 2021 Form 10-K will be forwarded following receipt of a written request with respect thereto addressed to Investor Relations.
Electronic Delivery This year we have elected to take advantage of the SEC's rule that allows us to furnish proxy materials to you online. We believe electronic delivery will expedite stockholders' receipt of materials, while lowering costs and reducing the environmental impact of our Annual Meeting by reducing printing and mailing of full sets of materials. If you would like to receive a paper copy of the proxy materials, the Notice of Internet Availability of Proxy Materials contains instructions on how to receive a paper copy.
Householding We utilize a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name will receive only one copy of the Notice, unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces duplicative printing costs and postage fees. If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of the Notice, or if you hold shares of our Common Stock in more than one account, and in either case you wish to receive only a single copy of the Notice for your household, please contact Broadridge Householding Department by phone at 1-800-542-1061 or by mail to Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717. If you participate in householding and wish to receive a separate copy of the Notice, or if you do not wish to participate in householding and prefer to receive separate copies of the Notice in the future, please contact Broadridge as indicated above.
Available Information
We will furnish without charge to each person whose proxy is being solicited, upon request of any such person, a copy of the 2020 Form 10-K as filed with the SEC, including the financial statements and schedules thereto, but not the exhibits. In addition, such report is available, free of charge, on the Internet at www.greenbrickpartners.com. Stockholders who wish to obtain a paper copy of our 2020 Form 10-K may do so without charge by writing to Green Brick Partners, Inc., 2805 Dallas Parkway, Suite 400, Plano, TX 75093, Attention: Investor Relations. A copy of any exhibit to the 2020 Form 10-K will be forwarded following receipt of a written request with respect thereto addressed to Investor Relations.
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Annual election of directors
100% independent Board committees
Regular Stockholder engagement, including first Investor Day in 2021
