UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to §240.14a-12 |
Century Communities, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
PRELIMINARY PROXY MATERIAL – SUBJECT TO COMPLETION
8390 East Crescent Parkway, Suite 650
Greenwood Village, Colorado 80111
(303) 770-8300
FROM OUR CHAIRMAN OF THE BOARD AND CO-CHIEF EXECUTIVE OFFICERS
March 27, 2024
Dear Fellow Stockholder:Stockholders:
2022We are extremely pleased with the performance and resilience demonstrated by the Century Communities team throughout 2023, which was another stronga difficult yet rewarding year for our Company. We generatedThe year began with home sales revenues of $4.4 billion, a Company record, and delivered 10,594 homes,buyers sitting on the sidelines still trying to adjust to the rapidly rising mortgage rates that began in the second half of 2022 and continued into 2023. As interest rates began to stabilize, homebuyers returned to the market, highlighting the strong underlying demand for new homes driven by positive demographics and lack of existing home inventory.
As demand for new homes improved, we quickly increased the number of homes under production, ramped up our land acquisition efforts and focused incentives to monetize homes with near term deliveries. As the result of these initiatives, we saw our deliveries and profitability improve in the second half of 2023 over levels in the first half of the year, with fourth quarter 2023 deliveries rising to the highest quarterly level in our history, resulting in record net income of $525 million. 2022 marked the 20history.
Our goal as a Company is to provide our homebuyer with A Home for Every Dreamth® anniversaryand we accomplish this by offering our customers some of the founding of Century Communities and was alsomost affordable homes in our 20industry. Our focus on this goal enabled us to overcome the challenges encountered in 2023. As a result, we achieved our 21thst consecutive year of consecutive profitability. The Company produced a return on equity of 27%profitability and grew stockholders’ equity by 22% to a record $2.2 billion. Our book value per share increased to $67.67 per share, also a Company record, as of December 31, 2022.
During 2022, we continued to return cash to our shareholders while maintaining a strong balance sheet. Our quarterly dividend was increased to $0.20 per diluted share in the first quarter of 2022 and further increased to $0.23 per diluted share in the first quarter of 2023. For the full year, we invested $120.6 million in repurchasing approximately 2.3 million shares of common stock at an average price of $52.32 per share, a 23% discount to ending book value, reducing our share count by approximately 7%. We ended the year with a homebuilding debt to capital ratiothe strongest balance sheet, lowest leverage and highest share price of 32.0%, $1.2 billion of total liquidity, including $353 million of cash, andany year end in our first senior debt maturity not due until 2027.entire history.
Together with the Board of Directors and the management team at Century Communities, I amwe are pleased to invite you to our 20232024 Annual Meeting of Stockholders, which will be held at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237, at 1:00 p.m. local time, on Wednesday, May 3, 2023.8, 2024.
In connection withAt the Annual Meeting, stockholders will be asked to consider and vote upon the following proposals: (1) to elect sixseven directors to serve for the ensuing year as members of the Board of Directors of Century; (2) to approve an amendment to our Certificate of Incorporation to eliminate or limit the personal liability of officers to the extent permitted by recent amendments to Delaware law; (3) to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023;2024; (3) to approve, on an advisory basis, our executive compensation; (4) to approve, on an advisory basis, ourthe frequency of future advisory votes on executive compensation; and (5) to transact such other business as may properly come before the Annual Meeting or at any continuation, postponement, or adjournment thereof. The accompanying Notice of 20232024 Annual Meeting of Stockholders and proxy statement describe these matters in more detail. We urge you to read this information carefully.
The Board of Directors recommends a vote: FOR each of the sixseven nominees for director named in the proxy statementstatement; for a frequency of every ONE YEAR for future advisory votes on executive compensation; and FOR the approval of the other proposals being submitted to a vote of stockholders.
Voting your shares of Century common stock is easily achieved without the need to attend the Annual Meeting in person. Regardless of the number of shares of Century common stock that you own, it is important that your shares be represented and voted at the Annual Meeting. Therefore, Iwe urge you to vote your shares of Century common stock via the Internet, by telephone, or by promptly marking, dating, signing, and returning the proxy card. Voting over the Internet, by telephone, or by written proxy will ensure that your shares are represented at the Annual Meeting.
On behalf of the Board of Directors, we thank you for your participation, investment and continued support.
Sincerely,
Robert J. Francescon Co-Chief Executive Officer and President Dale Francescon Chairman of the Board and Co-Chief Executive Officer
|
Century Communities, Inc. – | 2 |
NOTICE OF 20232024 ANNUAL MEETING OF STOCKHOLDERS
The 20232024 Annual Meeting of Stockholders of Century Communities, Inc., a Delaware corporation, will be held on Wednesday, May 3, 2023,8, 2024, at 1:00 p.m. local time at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237, for the following purposes:
1. | To elect |
2. |
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, |
To approve, on an advisory basis, our executive compensation; |
4. | To approve, on an advisory basis, the frequency of future advisory votes on executive compensation; and |
5. | To transact such other business as may properly come before the Annual Meeting or at any continuation, postponement, or adjournment thereof. |
The proxy statement accompanying this Notice describes each of these items of business in detail. Only holders of record of our common stock at the close of business on March 9, 202311, 2024 are entitled to notice of, to attend, and to vote at the Annual Meeting or any continuation, postponement, or adjournment thereof. A list of such stockholders will be available for inspection, for any purpose germane to the Annual Meeting, at our principal executive offices during regular business hours for a period of no less than 10 days prior to the Annual Meeting.
To ensure your representation at the Annual Meeting, you are urged to vote your shares of Century common stock via the Internet, by telephone, or by promptly marking, dating, signing, and returning the proxy card. If your shares of Century common stock are held by a bank, broker, or other agent, please follow the instructions from your bank, broker, or other agent to have your shares voted.
BY ORDER OF THE BOARD OF DIRECTORS | |
Dale Francescon
|
Greenwood Village, Colorado
March 22, 202327, 2024
Century Communities, Inc. – | 3 |
CONTENTS
(This page left blank intentionally)
Century Communities, Inc. – 2024 Proxy Statement | 4 |
TABLE OF CONTENTS
References in this proxy statement to:
“Century,” “we,” “us,” “our,” or the “Company” refer to Century Communities, Inc.; |
“Board” refer to the Board of Directors of Century; |
“Annual Meeting” or “meeting” refer to our |
“ |
Information on our website and any other website referenced herein is not incorporated by reference into, and does not constitute a part of, this proxy statement.
™ and ® denote trademarks and registered trademarks of Century Communities, Inc. or our affiliates, registered as indicated in the United States. All other trademarks and trade names referred to in this proxy statement are the property of their respective owners.
We intend to make this proxy statement and our 2022 Annual Report available on the Internet and to commence mailing of the notice to all stockholders entitled to vote at the Annual Meeting beginning on or about March 22, 2023. We will mail paper copies of these materials, together with a proxy card, within three business days of a request properly made by a stockholder entitled to vote at the 2023 Annual Meeting of Stockholders.
Century Communities, Inc. – | 5 |
PROXY STATEMENT SUMMARY
This executive summary provides an overview of the information included in this proxy statement. We recommend that you review the entire proxy statement and our |
20232024 ANNUAL MEETING OF STOCKHOLDERS
DATE AND TIME
Wednesday, May 1:00 p.m. (Mountain Time)
LOCATION
Hyatt Regency Denver Tech Center 7800 East Tufts Avenue Denver, CO 80237
RECORD DATE
Holders of record of our common stock at the close of business on March |
VOTING ITEMS
Proposal | Board’s Vote Recommendation | Page |
Proposal No. 1: Election of directors | FOR | |
Proposal No. 2:
| ||
Ratification of appointment of independent registered public accounting firm | FOR | 41 |
Proposal No. Advisory vote on executive compensation | FOR | |
Proposal No. 4: Advisory vote on frequency of future advisory votes on executive compensation | ONE YEAR | 47 |
_____________________
___________________
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on Wednesday, May
This proxy statement and our |
Century Communities, Inc. – | 6 |
PRELIMINARY PROXY MATERIAL – SUBJECT TO COMPLETION
WHO WE ARE
Century Communities, Inc. is a top 10leading national U.S. homebuilder. We are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 18 states across the United States. We market and sell homes under both the Century Communities and Century Complete brands. As of December 31, 2022,2023, we operated in the 18 states and over 45 markets depicted below. We also offer title, insurance, and lending services in select markets.
Over the last six years,Since 2018, positive macro-economic conditions, along with our operating efficiencies, business strategy and geographic expansion through the acquisition of other homebuilders and organic entrances into new markets has resulted in significant increases in home sale deliveries, total revenue,revenues, net income, earnings per diluted share, and total stockholders’ equity.
Century Communities, Inc. – | 7 |
20222023 BUSINESS HIGHLIGHTS
Highlights of our achievements for 2022,2023, include:
FINANCIAL
$ |
Achieved |
Net
| |
$ | Stock Price per Share Stock price per share increased by over 82% on a year-over-year basis to a year end record of $91.14 as of December 31, 2023 |
| Book Value per Share Book value per share increased by 11% on a year-over-year basis to a record of $75.12 as of December 31, 2023 |
$ |
Increased quarterly cash dividend to |
OPERATIONAL
Selling Communities Year-end selling communities of | |
Home Deliveries
| |
| |
Entry-Level Homes
| |
STRATEGIC
Properly Incentivized Homes with Near-Term Completions to Turn Inventories
| |
| |
Continued Focus on Entry Level and Move-in-Ready/Spec Home Construction Our focus on spec homes allowed us to more easily monetize land, produce homes more efficiently and turn inventories more quickly, while allowing buyers to purchase quick-move-in homes and lock in mortgage rates |
*See |
Century Communities, Inc. – | 8 |
CORPORATE GOVERNANCE HIGHLIGHTS
Annual election of all directors | |||
Majority vote standard for uncontested director elections, with a director resignation policy | Meaningful stock ownership and retention requirements | ||
Over 70% of directors are independent | Hedging, pledging, and stock option repricing prohibitions | ||
Recent Board refreshment efforts | Double trigger change in control arrangements | ||
Emphasis on gender and racial/ethnic diversity in Board refreshment efforts | |||
Independent presiding director | |||
Board oversight of cybersecurity, ESG | |||
Robust Board and committee evaluations |
STOCKHOLDER ENGAGEMENT
We are committed to a robust and proactive stockholder engagement program. The Board of Directors values the perspectives of our stockholders, and feedback from stockholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for Board discussions throughout the year.
During 2022,2023, our executives held approximately 175200 meetings with stockholders, including all of our top 10 stockholders that are actively managed funds.stockholders. Stockholder feedback is thoughtfully considered and has led to modifications in our executive compensation program, governance practices and disclosures. Some of the actions we have taken in response to feedback over the last several years are described below.
What We Heard: | What We Did: |
Increase stockholder influence over director elections. | We adopted a majority vote standard for uncontested director elections, with a director resignation policy, instead of a plurality vote standard. |
Increase Board gender diversity. | We added Elisa Zúñiga Ramírez and Patricia L. Arvielo to the Board of Directors in |
Increase Board racial/ethnic diversity. | We considered racial/ethnic diversity in our |
Align the interest of directors and executive officers with those of stockholders. | We adopted stock ownership and retention guidelines applicable to our directors and executives to ensure that their interests would be closely aligned with those of our stockholders. All of our directors and executives are in compliance with our stock ownership guidelines. We also adopted an anti-hedging/pledging policy.
|
Century Communities, Inc. – | 9 |
What We Heard: | What We Did: |
Dale Francescon and Robert J. Francescon beneficially own 6.1% and 5.2%, respectively, of our outstanding common stock, and together beneficially own 11.3% of our outstanding common stock. | |
Emphasize long-term incentives. | Our long-term incentive (LTI) program provides for significant LTI opportunities for our executives, which for |
Emphasize performance-based compensation elements. | |
Increase disclosure on corporate governance and executive compensation. | Each year, we have increased and improved our corporate governance and executive compensation disclosures, with an eye towards transparency and readability. |
Ensure the recovery of incentive compensation based on incorrect calculations |
BOARD COMPOSITION AND KEY QUALIFICATIONS
The following describes the current diversity, age and tenure of our Board of Directors:
Century Communities, Inc. – | 10 |
The following are some of the key qualifications, skills, and experiences of our Board of Directors:
Director | CEO/Senior Officer Experience | Financial/ Accounting/ Finance Experience | Homebuilding/Real Estate Industry Experience | Sales/ Marketing Experience | Corporate Governance | ESG Experience | ||
Dale Francescon | ● | ● | ● | ● | ● | ● | ||
Robert J. Francescon | ● | ● | ● | ● | ● | ● | ||
Patricia L. Arvielo | ● | ● | ● | ● | ||||
John P. Box | ● | ● | ● | ● | ● | |||
Keith R. Guericke | ● | ● | ● | ● | ● | |||
James M. Lippman | ● | ● | ● | ● | ● | |||
Elisa Zúñiga Ramírez | ● | ● | ● | ● | ● |
The lack of a mark for a particular item does not mean that the director does not possess that qualification, characteristic, skill, or experience. We look to each director to be knowledgeable in these areas; however, the mark indicates that the item is a particularly prominent qualification, characteristic, skill, or experience that the director brings to the Board.
BOARD NOMINEES
Below are the directors nominated for election by stockholders at the Annual Meeting for a one-year term. The Board of Directors recommends a vote “FOR” each of these nominees.
Director | Age | Serving Since | Independent | Committees | Other Public Boards |
Dale Francescon(1) | 70 | 2013 | No(2) | N/A | 0 |
Robert J. Francescon | 65 | 2013 | No(2) | N/A | 0 |
Patricia L. Arvielo | 58 | 2021 | Yes | Audit, Compensation, Nominating and Corporate Governance | 1 |
John P. Box | 76 | 2014 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
Keith R. Guericke(1) | 74 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 1 |
James M. Lippman | 65 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
Director | Age | Serving Since | Independent | Committees | Other Public Boards |
Dale Francescon(1) | 71 | 2013 | No(2) | N/A | 0 |
Robert J. Francescon | 66 | 2013 | No(2) | N/A | 0 |
Patricia L. Arvielo | 59 | 2021 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
John P. Box | 77 | 2014 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
Keith R. Guericke(1) | 75 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 1 |
James M. Lippman | 66 | 2013 | Yes | Audit, Compensation, Nominating and Corporate Governance | 0 |
Elisa Zúñiga Ramírez | 55 | 2023 | Yes | Audit | 2 |
(1) | Dale Francescon serves as Chairman of the Board of Directors. Because the Board endorses the concept of an independent, non-employee director being in a position of leadership, Keith R. Guericke serves as the presiding independent director. |
(2) | Dale Francescon and Robert J. Francescon are not independent because they |
Century Communities, Inc. – | 11 |
EXECUTIVE COMPENSATION BEST PRACTICES
Our compensation practices include many best practices that support our executive compensation objectives and principles and benefit our stockholders.
What We Do | What We Don’t Do | |||
Structure our executive officer compensation so it is competitive and a significant portion of pay is at risk | No guaranteed salary increases | |||
Emphasize long-term performance in our equity-based incentive awards | No guaranteed bonuses | |||
Use a mix of performance measures and caps on payouts | No excessive perquisites | |||
Require minimum vesting periods on equity awards | No current payment of dividends on unvested awards | |||
Require a double-trigger for equity acceleration upon a change of control | No excise or other tax gross-ups | |||
Have robust stock ownership guidelines and retention requirements for executive officers | No short sales or derivative transactions in Century stock, including hedges | |||
Maintain a | No pledging of Century securities | |||
Hold an annual say-on-pay vote | No repricing of stock options |
20222023 EXECUTIVE COMPENSATION ACTIONS
For 2022,2023, our only named executive officers were our Co-Chief Executive Officers and former Chief Financial Officer. 2022Our CFO voluntarily resigned effective March 22, 2024. 2023 compensation actions and incentive plan outcomes based on performance are summarized below:
Pay Element | |
Base Salary | ● |
Short-Term Incentive | ● The threshold, target and maximum short-term incentive award opportunities for 2023 were the same as in 2022 and were 175%, 350% and 700% of base salary, respectively, for our Co-CEOs and 125%, 250% and 500% of base salary, respectively, for our former CFO. ● Performance metrics were revenue (20%), EBITDA, as adjusted (60%), and closings (20%) for our Co-CEOs and ● Actual performance |
Long-Term Incentives | ● The target long-term incentive award opportunities for 2023 were the same as in 2022 and were 500% of base salary for our Co-CEOs and 313% of base salary for our former CFO. ● Our |
Century Communities, Inc. – | 12 |
Pay Element | |
● Our | |
Other Compensation Related Actions | ● Approximately |
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ELIMINATE OR LIMIT THE PERSONAL LIABILITY OF OFFICERS
The State of Delaware, which is Century’s state of incorporation, recently amended Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”) to permit a corporation to eliminate or limit the personal liability of certain officers to the corporation or its stockholders for breaches of the fiduciary duty of care as an officer in certain limited circumstances. We sometimes refer to this elimination or limitation of personal liability as “exculpation” in this proxy statement. Prior to amended DGCL Section 102(b)(7), Delaware law authorized such exculpation for directors but not for officers. As with directors, the exculpation protection does not apply to an officer’s breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Unlike director exculpation, however, the protection for officers only permits officer exculpation for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate an officer’s monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by stockholders in the name of the corporation. To gain the added protection for officers, Century must amend its Certificate of Incorporation, as amended (“Certificate of Incorporation”), to add an officer exculpation provision.
The Board of Directors believes it is important to provide not only its directors but also its officers protection from certain liabilities and expenses that may discourage prospective or current officers from serving as officers of Century. Accordingly, on February 8, 2023, the Board of Directors, upon recommendation of the Nominating and Corporate Governance Committee, approved, subject to stockholder approval, a proposed amendment to our Certificate of Incorporation to eliminate or limit the personal liability of Century’s officers to the extent permitted by recent amendments to Delaware law.
The Board of Directors recommends a vote “FOR” the proposal to approve an amendment to our Certificate of Incorporation to eliminate or limit the personal liability of officers to the extent permitted by recent amendments to Delaware law.
20242025 ANNUAL MEETING OF STOCKHOLDERS
We anticipate that our 20242025 Annual Meeting of Stockholders will be held on Wednesday, May 8, 2024.7, 2025. The following are important dates in connection with our 20242025 Annual Meeting of Stockholders.
Stockholder Action | Submission Deadline |
Proposal Pursuant to Rule 14a-8 of the Securities Exchange Act of 1934 | No later than November |
Nomination of a Candidate Pursuant to our Bylaws | Between January |
Proposal of Other Business for Consideration Pursuant to our Bylaws | Between January |
Century Communities, Inc. – | 13 |
OUR COMMITMENT TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRINCIPLES
ESG Approach AND MISSION
Century’s Board and management are committed to buildingconsider environmental sustainability, social responsibility and effective corporate governance throughout our business. Our ESG reporting is centered on the industry-specific reporting standards as advised byaligned with the Sustainability Accounting Standards Board (SASB). These industry-specific reporting standards were launched in November 2018 and were created based on financially material ESG factors SASB has deemed most relevant to investors. SASBas well as the Global Reporting Initiative (GRI) sustainability reporting is also aligned with the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations.standards.
Our mission is to create thriving, enduring neighborhoods by building new homes with lasting livability. We believe our commitment to pursuing environmental, social and governance initiatives can be achieved in parallel with and in furtherance of the interests of our homeowners as well as the long-term interests of our stockholders. The integration of sustainable business practices creates lasting results that benefit all our stakeholders, including our customers, employees, stockholders, investors, and the communities in which we live and operate.
esg INITIATIVES
As a leading top-10 national home builder, we believe we can play an important role in building a sustainable future for our employees, our homeowners, our environment and the communities in which we live and build while we operate in an ethical, environmentally and socially responsible manner. Specific to our industry, we are focused on the following opportunities related to climate change, sustainability and social responsibility:
Building | |
Seeking to understand not only the carbon footprint of the homes that we build, but also their embodied carbon footprint – the climate impact associated with the materials that go into our homes; | |
Completing a GHG inventory to better contextualize the trend in our environmental impact over time and evaluate our efforts to date in incorporating efficient and waste reducing practices into our homebuilding operations; | |
Giving back to the communities in which we | |
Complying with all relevant and applicable local, state and federal environmental laws, policies and regulations; | |
Maintaining work environments conducive to the health and safety of our employees, our trade partners, the public and our valued | |
Creating a culture that fosters diversity, inclusivity, dignity and respect with equal employment opportunity hiring practices and policies with competitive |
Demonstrating our emphasis on environmental impact reduction, historically over 85% of the homes we built were certified for meeting or exceeding the enhanced standards established by the Federal government pursuant to the Energy Efficient Home Tax Credit.
Century Communities, Inc. – 2024 Proxy Statement | 14 |
Ensuring Board oversight on ESG matters, including general compliance with laws, applicable laws, including SEC and those affecting ESG issues, as well as risk management and climate-related and sustainability risks. |
Specific examples of environmentally sensitive products that we incorporate into many of our homes include:
100% low Volatile Organic Compound (VOC) paints; | |
Efficient LED lighting; | |
Solar power, heat pumps and fully electric communities in select markets. |
esg COMMITMENTS
ENVIRONMENTAL COMMITMENTS: We are committed to operating in an environmentally responsible manner to reduce our impact on climate change, conserve natural resources and operate in compliance with environmental regulations.
SOCIAL COMMITMENTS:We are committed to being a socially responsible employer by fostering an environment of diversity and inclusion across our business, operating ethically and supporting our local communities.
GOVERNANCE COMMITMENTS: We are committed to building a culture dedicated to ethical business behavior and responsible corporate activity. This extends to our business partners’ vendor agreements which share our commitment to employee health & safety, human rights, and environmental stewardship. We believe strong corporate governance through Board and management teams that are engaged on ESG topics is the foundation to delivering on our commitments.
esg DISCLOSURES
The Board of Directors believes environmental stewardship and social responsibility are important elements in driving long-term, organizational success. Century’s ESG initiatives and disclosures to the market include our inaugural ESG Sustainability Report and ESG & Sustainability Report Supplemental DataReports published in 2021 which we intend to update later this year, the ESG Policy Statement,and 2023, the Human Rights Policy Statement, our Commitment to Training and Professional Development, the Labor Rights Policy, our Commitment to Diversity and Inclusion and our Vendor Code of Conduct, as well as the “Investors-ESG” section of our website located at www.centurycommunities.com. In 2023 we further updated our Labor Rights Policy, our Commitment to Diversity and Inclusion and our Vendor Code of Conduct.
In our 2021 report, we published our first corporate greenhouse gas (GHG) emissions inventory for 2020 and, in2020. In our 2023 report we will provideprovided the results of our GHG emissions inventory for both2022, 2021, and 2019. In 2022, we also completed our first TCFD-aligned climate risk and opportunity assessment to provide more detailed insights on the risks and opportunities of a changing climate.
Century Communities, Inc. – |
CORPORATE GOVERNANCE
Governance best PRACTICES
We maintain several corporate governance best practices, which are designed to promote actions that benefit our stockholders and create a framework for our decision-making.
Annual election of all directors | All directors are elected annually for a one-year term. | |
Majority vote standard for uncontested director elections, with a director resignation policy | We have a majority voting standard for uncontested director elections, and directors who do not receive more votes | |
Two-thirds of our directors are independent | ||
Annual Board and committee evaluations | It is our policy to conduct annual Board and committees performance self-evaluations. | |
Overboarding policy | We limit the number of public company boards on which our directors may serve. | |
No poison pill | We believe that not having a poison pill benefits our stockholders by not discouraging takeover attempts that may increase value for our stockholders. | |
Board oversight of ESG initiatives | While the Nominating and Corporate Governance Committee has been delegated oversight authority of our ESG initiatives, the Audit Committee is responsible for climate-related and sustainability risks. | |
Emphasis on gender and racial/ethnic diversity in Board refreshment efforts | The Board recently added | |
Robust stockholder outreach program | Each year, our executives hold numerous meetings to seek stockholder input and strive to take actions that reflect the input received. | |
Annual say-on-pay vote | Our Board recommended, and our stockholders voted in favor of, an annual advisory stockholder vote on executive compensation. | |
Officer and director stock ownership requirements | We have robust stock ownership guidelines for our directors and officers that require maintenance of a specified level of ownership based on compensation. | |
Hedging and pledging prohibitions | We prohibit certain employees, including our NEOs, from engaging in any hedging transactions, short sales, transactions in publicly traded options, such as puts, calls and other derivatives, or short-term trading. | |
Require a double trigger for cash severance and accelerated vesting of equity upon a change in control | The double trigger feature incentivizes executives to accept or continue employment with Century in the event of a change in control event. | |
In 2023, we strengthened our clawback policy | ||
Updated insider trading policy | In 2023, we updated our insider trading policy. | |
Single class of stock | We have a single class of stock, so our stockholders all have equal voting rights. |
Century Communities, Inc. – |
CORPORATE GOVERNANCE GUIDELINESrole of The board
The Board has adopted Corporate Governance Guidelines covering, amongof Directors is elected by the stockholders to oversee their interests in the long-term health, financial strength, and overall success of our business. The Board serves as the ultimate decision-making body of our Company, except for those matters reserved for or shared with our stockholders. The Board oversees our governance practices, the proper safeguarding of our assets, the maintenance of appropriate financial and other things,internal controls, and our compliance with applicable laws and regulations. The Board selects our Chief Executive Officers and oversees the duties and responsibilitiesmembers of and independence standards applicable to,senior management, who are charged by the Board with conducting the business of our directors and Board committee structures and responsibilities. Among the topics addressed in our Corporate Governance Guidelines are:Company.
| ||||||
The Board oversees and
| The Board oversees risk management. | The Board oversees management succession planning. | ||||
Business strategy is a key focus at the Board level and
|
| Board committees,
| The Compensation Committee, which meets regularly and reports back to the full Board, has primary responsibility for developing succession plans for the CEO position and other key positions. | |||
Company management
| Company management is charged with managing risk through robust internal processes and effective internal controls. | The Co-CEOs are charged with preparing, and reviewing with the Compensation Committee, talent development plans for senior executives and their potential successors. |
Fromboard Oversight OF BUSINESS STRATEGY
The Board of Directors oversees our strategic direction and business activities. Throughout the year, the Board and management discuss our short and long-term business strategy. As part of our long-term strategy, management typically formulates three-year financial targets against which performance is reviewed by the Board.
With respect to our short-term strategy, at the beginning of each year, our management presents to the Board a proposed annual business plan for the year and receives input from the Board and a final annual business plan is approved by the Board. At each subsequent regular Board meeting, the Board reviews our operating and financial performance relative to the annual business plan.
Century Communities, Inc. – 2024 Proxy Statement | 17 |
board role in Risk Oversight
Risk is inherent with every business. We face a number of risks, including financial (accounting, credit, interest rate, liquidity, and tax), operational, political, strategic, regulatory, compliance, legal, cybersecurity, competitive, and reputational risks.
Our management is responsible for the day-to-day management of risks faced by us, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board ensures that the risk management processes designed and implemented by management are adequate and functioning as designed. The Board oversees risks through the establishment of policies and procedures that are designed to guide daily operations in a manner consistent with applicable laws, regulations, and risks acceptable to us. Our Co-Chief Executive Officers, as members of the Board, attend the Board meetings and discuss with the full Board the strategies and risks facing our Company.
One of the key functions of the Board is informed oversight of our risk management process. The Board administers this oversight function directly, with support from its three standing committees (the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee), each of which addresses risks specific to its respective areas of oversight. In addition, with respect to other risks that arise from time to time, the Board upon recommendationoversees those as well.
SELECTED AREAS OF BOARD RISK OVERSIGHT
CYBERSECURITY: Our Audit Committee, comprised fully of independent directors, is responsible for oversight of our (i) information security policies, including periodic assessment of risk of information security breach, training program, significant threat changes and vulnerabilities and monitoring metrics and (ii) effectiveness of information security policy implementation. Members of management meet with the Audit Committee on a regular basis to review and discuss risk exposure related to our IT systems and data privacy. The purpose of these management updates is to inform the Audit Committee of potential risks related to our IT systems and data privacy, as well as any relevant mitigation or remediation tactics being implemented.
Since September 2022, we have engaged a seasoned cyber consultant from the global cybersecurity risk firm, Kroll, LLC, to provide CISO-level advisory services to assist our technology teams, business leadership and Board of Directors with guidance and direction as we continue to strengthen our security systems and improve our cyber readiness, as well as to provide insight and intelligence on existing and emerging threat landscapes. The scope of service includes reviewing our current information security policies, past and current security reports, cybersecurity program, and staffing models to assess our ability to prevent and respond to cyberattack incidents and mitigate any impacts they may have. In addition, we have retained special data security legal counsel at a leading U.S. law firm whose practice focuses on data breach response and security compliance issues. This legal counsel is specialized in investigating and responding to an event compromising information and systems security, working closely with client resources, third-party forensic consulting experts and law enforcement to identify the nature and scope of a compromise. We also have retained special data privacy legal counsel to assist us in our compliance with the data privacy laws in the various jurisdictions in which we operate our business.
Century Communities, Inc. – 2024 Proxy Statement | 18 |
In the past three years, we have not experienced any material computer data security breaches as a result of a compromise of our information systems and we are not aware and have not had a significant cybersecurity breach or attack that had a material impact on our business or operating results to date. Maintaining a robust information security system is an ongoing priority for us and we plan to continue to identify and evaluate new, emerging risks to data protection and cybersecurity both within our Company and through our engagement of third-party service providers like Kroll.
HUMAN CAPITAL AND CULTURE:The Board is actively engaged in overseeing our people and culture strategy. The Compensation Committee reviews and reports back to the Board on a broad range of human capital management topics, including talent management; leadership development; retention; culture; employee engagement; employee education and training; diversity, equity and inclusion; and equality and fairness.
ESG:The Board is ultimately responsible for oversight of our ESG initiatives. The Nominating and Corporate Governance Committee has been delegated responsibility for ESG oversight and approves our ESG related policy statements and our ESG report. In 2023, we published an updated ESG report and intend to do so again in 2024. The Compensation Committee has oversight of human capital management, as well as our diversity, equity and inclusion initiatives. The Audit Committee has oversight over general compliance with laws, applicable laws, including SEC and those affecting ESG issues, as well as risk management and climate-related and sustainability risks. In carrying out its responsibilities for ESG oversight, the Nominating and Corporate Governance Committee reviewscoordinates with the Compensation Committee and updates the Audit Committee on ESG-related subjects.
MANAGEMENT SUCCESSION PLAnning and development
The Board of Directors recognizes that one of its most important responsibilities is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of members of our senior management team. This responsibility is reflected in our Corporate Governance Guidelines, which provide for a review of CEO succession planning and management development, and the charter of the Compensation Committee, which requires the Compensation Committee to assist the Board in developing and evaluating potential candidates for executive officer positions and overseeing the development of executive succession plans, which includes transitional leadership in the event of an unplanned vacancy.
In furtherance of the foregoing, the Co-Chief Executive Officers provide an annual succession planning report to the Compensation Committee, which summarizes the overall composition of our senior leadership team, including their professional qualifications, tenure, and work experience. The report also identifies internal members of the management team who are viewed as it deems necessarypotential successors to a variety of senior leadership roles. Succession planning is also regularly discussed in executive sessions of the Board of Directors. Our directors become familiar with internal potential successors for key leadership positions through various means, including the annual succession planning report and appropriate.Board of Directors and committee meetings, and less formal interactions throughout the course of the year.
Century Communities, Inc. – 2024 Proxy Statement | 19 |
Board Leadership Structure
Our governance framework provides the Board with the flexibility to select the appropriate leadership structure for the Company. Our current leadership structure is comprised of a combined Chairman of the Board and Co-CEO, a presiding independent director, Board committees led by independent directors, and active engagement by all directors. The Board believes that this structure provides an effective balance between strong Company leadership and appropriate safeguards and oversight by our independent directors. In making determinations about the leadership structure, the Board considers many factors, including the specific needs of the business, what is in the best interests of our stockholders and feedback from our stockholder engagement efforts.
Current Board Leadership Structure | |||
Combined Chairman of the Board and Co-CEO | Independent Presiding Independent Director | ||
Independent Committee Chairs | |||
Audit | Compensation | Nominating and Corporate Governance | |
Active Engagement by all Directors | |||
Our Corporate Governance Guidelines are availabledo not require the separation of the offices of the Chairman of the Board and the Chief Executive Officers. While Dale Francescon serves as Chairman of the Board and Co-Chief Executive Officer, the Board endorses the concept of an independent director being in a position of leadership and, thus, Keith R. Guericke serves as our presiding independent director. The Board has determined that this current leadership structure is appropriate and in the “Discover Century—Investors—Corporate Governance—Governance Documents” sectionbest interests of the Company’s website locatedCompany and its stockholders at www.centurycommunities.com.this time for several reasons, including:
● | both Dale Francescon’s and Robert J. Francescon’s extensive knowledge of our Company, business, and industry, obtained through founding the Company, over 20 years of service to our Company, and over 30 years of experience in the homebuilding industry, which benefit Board leadership and the Board’s decision-making process through their active roles as Co-Chief Executive Officers, and in the case of Dale Francescon, Chairman of the Board; |
Century Communities, Inc. – 2024 Proxy Statement | 20 |
● | unification of Board leadership and strategic direction as implemented by our management; and |
● | appropriate balance of risks relating to concentration of authority through the oversight of our independent and engaged presiding independent director and Board. |
All Board members play an active role in overseeing our business both at the Board and committee levels. As part of each regularly scheduled Board and committee meetings, the independent directors have an opportunity to meet in executive session without the Co-CEOs present, which executive sessions are chaired by the presiding independent director or committee chair. These meetings allow our independent directors to discuss issues of importance to the Company, including the business and affairs of the Company, as well as matters concerning management, without any members of management present.
Director Independence
Under the listing standards and rules of the New York Stock Exchange (NYSE), independent directors must comprise a majority of a listed company’s board of directors. Under the NYSE rules, a director will only qualify as an “independent director” if the company’s board of directors affirmatively determines that the director has no material relationship with the company, either directly or indirectly, that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
NYSE rules also require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. Audit committee members must also satisfy heightened independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934 (Exchange Act), and compensation committee members must satisfy heightened independence criteria set forth in the NYSE rules.
The Board has undertaken a review of its composition, the composition of its Board committees, and the independence of each director. Based upon information requested from and provided by each of our directors concerning his or her background, employment, and affiliations, including family relationships with us, our senior management, and our independent registered public accounting firm, the Board has determined that all but two of our directors, Dale Francescon and Robert J. Francescon, are independent directors under the standards established by the Securities and Exchange Commission (SEC)SEC and the NYSE. In making this determination, the Board considered the current and prior relationships that each non-employee director has with Century and all other facts and circumstances the Board deemed relevant in determining their independence.
Overboarding policy
Recognizing the substantial time commitments attendant to directorship, our Corporate Governance Guidelines provide for an overboarding policy which limits the number of public company boards on which our directors may serve. The overboarding limit depends upon whether a director is an executive officer of a public company. In addition, service on other boards and/or committees must be consistent with our conflict of interest policy.
Board Leadership Structure
Our Corporate Governance Guidelines provide that the Board does not require the separation of the offices of the Chairman of the Board and the Chief Executive Officers, and that the Board is free to choose its Chairman of the Board in any way that it deems best for the Company at any given point in time. Dale Francescon serves as Chairman of the Board and Co-Chief Executive Officer. However, the Board endorses the concept of an independent director being in a position of leadership and, thus, as mentioned above, Keith R. Guericke serves as our presiding independent director.
The Board has determined that this current leadership structure is appropriate and in the best interests of the Company and its stockholders at this time for several reasons, including: (i) Both Dale Francescon’s and Robert J. Francescon’s extensive knowledge of our Company, business, and industry, obtained through nearly 20 years of service to our Company and over 30 years of experience in the homebuilding industry, which benefit Board leadership and the Board’s decision-making process through their active roles as Co-Chief Executive Officers, and in the case of Dale Francescon, Chairman of the Board; (ii) unification of Board leadership and strategic direction as implemented by our management; and (iii) appropriate balance of risks relating to concentration of authority through the oversight of our independent and engaged presiding independent director and Board.
Century Communities, Inc. – |
Executive Sessions
Our non-management independent directors meet in executive sessions without management to consider such matters as they deem appropriate, such as reviewing the performance of management. Executive sessions of our independent directors are typically held in conjunction with regularly scheduled Board and committee meetings.
Our independent directors have appointed an independent director (referred to as the “presiding director”) to preside over the executive sessions of the independent directors. Keith R. Guericke serves as our presiding director. The main duties of the presiding director are to (i) preside at regularly scheduled executive sessions or other meetings of the independent directors; (ii) serve as liaison between the Chairman of the Board and the Co-Chief Executive Officers, on the one hand, and the independent directors, on the other hand, by means of consulting with the Chairman of the Board and the Co-Chief Executive Officers as to agenda items for Board and committee meetings and advising them of the outcome of such meetings, as necessary; and (iii) coordinate with Board committee chairs in the development and recommendations of Board and Board committee meeting agendas.
Committees of the Board of Directors
We currently have three standing committees of the Board: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The Board may establish other Board committees as it deems necessary or appropriate from time to time.
Each Board committee has a formal written charter, which, among other things, authorizes the committee to retain independent advisors as it deems necessary to carry out its responsibilities. Each Board committee reviews and evaluates, at least annually, the performance of the committee, including compliance with its charter.
Below are our directors and their current committee memberships.
Director | Board | Audit | Compensation | Nominating and Corporate Governance |
Dale Francescon | ● | |||
Robert J. Francescon | ● | |||
Patricia L. Arvielo | ● | ● | ● | ● |
John P. Box | ● | ● | ● | Chair |
Keith R. Guericke | ● | Chair | ● | ● |
James M. Lippman | ● | ● | Chair | ● |
Elisa Zúñiga Ramírez | ● | ● |
Board and Board Committee Meetings; Attendance
The Board held five meetings during 2023. All directors attended at least 75% of the combined total of (i) all Board meetings during which the director was a director and (ii) all meetings of committees of the Board of which the director was a member during 2023. We expect all of our directors to attend our annual meeting of stockholders, and we customarily schedule a regular Board meeting on the same day as our annual meeting. All directors serving at the time of our 2023 Annual Meeting of Stockholders held on May 3, 2023 attended the meeting.
Century Communities, Inc. – |
Audit Committee
Audit Committee
Key Responsibilities and Activities ● Oversees (i) our financial reporting, auditing, and internal control activities; (ii) the integrity and audits of our financial statements; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditors; (v) the performance of our internal audit function and independent auditors; and (vi) our overall risk exposure and management; ● Responsible for the appointment, retention, and termination of our independent auditors, and determines the compensation of our independent auditors; ● Reviews with the independent auditors the plans and results of the audit engagement; ● Evaluates the qualifications, performance, and independence of our independent auditors; ● Has sole authority to approve in advance all audit and non-audit services by our independent auditors, the scope and terms thereof, and the fees therefor; ● Reviews the adequacy of policies that govern risk exposure involving cybersecurity, data privacy, information technology, financial, legal, business continuity, regulatory, climate and sustainability risks; ● Reviews the adequacy of our internal accounting controls and oversees financial reporting activities; ● Reviews our cybersecurity efforts and cyber related risks; and ● Meets at least quarterly with our executive officers, internal audit staff, and our independent auditors in separate executive sessions. | Chair Keith R. Guericke
Other Members Patricia L. Arvielo John P. Box James M. Lippman Elisa Zúñiga Ramírez
2023 Meetings
Heightened Independence The Board has determined that each Audit Committee member satisfies the heightened independence criteria for audit committee members under the NYSE rules. Financial Literacy and Experts The Board has determined that all Audit Committee members are financially literate and that |
Century Communities, Inc. – |
Compensation Committee
Key Responsibilities and Activities ● Assists the Board in developing and evaluating potential candidates for executive officer positions and overseeing succession plans; ● Reviews, approves, and makes recommendations regarding compensation plans and administers all plans, including, the grant of equity-based awards to executive officers and employees; ● Reviews and approves corporate goals and objectives with respect to compensation for executive officers and, at least annually, evaluates each executive officer’s performance in light of such goals and objectives to set his or her annual compensation, including salary, bonus, and equity and non-equity incentive compensation; ● Reviews and approves executive employment, severance, change in control, retention, retirement, deferred compensation, perquisite, or similar compensatory agreements, plans, programs, or arrangements; ● Provides oversight of management’s decisions regarding the performance, evaluation, and compensation of other officers; ● Reviews incentive compensation arrangements to confirm that incentive pay does not encourage unnecessary risk-taking, and reviews and discusses, at least annually, the relationship between risk management policies and practices, business strategy, and our executive officers’ compensation; ● Oversees and reviews our culture and policies and strategies related to human capital management, including with respect to diversity and inclusion initiatives, pay equity, talent, recruitment and development, performance management and employee engagement; and ● Reviews and makes recommendations to the Board regarding all executive compensation related proposals and reviews the results of advisory stockholder votes on executive compensation and considers whether to recommend adjustments to our executive compensation policies and practices as a result of such votes and other stockholder input on executive compensation matters. Compensation Consultant The Compensation Committee has retained WealthPoint, LLC (WealthPoint) as its external compensation consultant. WealthPoint does not provide any services to the Company unrelated to executive or director compensation. | Chair James M. Lippman
Other Members Patricia L. Arvielo John P. Box Keith R. Guericke
Heightened Independence The Board has determined that each Compensation Committee member satisfies the heightened independence criteria for compensation committee members under the NYSE rules. In addition, each Compensation Committee member is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act. |
Century Communities, Inc. – |
Nominating and Corporate Governance Committee
Key Responsibilities and Activities ●Identifies individuals qualified to become members of the Board and reviews with the Board on an annual basis the Board’s composition as a whole to ensure that it has the requisite and desired expertise, experience, qualifications, attributes and skills and that its membership consists of persons with sufficiently diverse and independent backgrounds, including female and racially/ethnically diverse candidates; ●Develops and recommends to the Board for its approval qualifications for director candidates and periodically reviews these qualifications with the Board; ●Makes recommendations to the Board regarding director diversity (which may include diversity of age, gender, race, ethnicity, education, skills, professional experience, knowledge, backgrounds and viewpoints), retirement age, tenure and refreshment policies; ●Reviews the committee structure of the Board and recommends directors to serve as members or chairs of each Board committee; ●Reviews and recommends Board committee slates annually and recommends committee members to fill vacancies; ●Develops and recommends to the Board a set of corporate governance guidelines and, at least annually, reviews such guidelines and recommends changes to the Board for approval as necessary; ●Considers and oversees corporate governance issues as they arise from time to time and develops appropriate recommendations for the Board; ●Reviews and monitors evolving corporate governance best practices and trends for consideration and incorporation into our governing documents, policies, and procedures; ●Reviews and recommends to the Board any responses to proposals submitted by stockholders; ●Reviews and approves our policies and practices pertaining to ESG issues and monitors our performance against relevant ESG indices; and ●Oversees the annual self-evaluations of the Board and each Board committee. | Chair John P. Box
Other Members Patricia L. Arvielo Keith R. Guericke James M. Lippman
5 |
Century Communities, Inc. – |
CORPORATE GOVERNANCE GUIDELINES
The Board has adopted Corporate Governance Guidelines covering, among other things, the duties and responsibilities of, and independence standards applicable to, our directors and Board committee structures and responsibilities. Among the topics addressed in our Corporate Governance Guidelines are:
●Role of directors ●Selection of the Chairman of the Board ●Selection of new directors ●Director qualifications ●Care and avoidance of conflicts ●Confidentiality ●Limits on other directorships or “overboarding” ●Director independence ●Directors who change their present job responsibility ●Retirement and resignation policy ●Director tenure ●Board compensation ●Separate sessions of independent directors ●Board and Board committee self-evaluations ●Strategic direction of the Company ●Board access to management ●Director resignation policy | ●Board materials ●Board interaction with institutional investors, analysts, press, and customers ●Board orientation and continuing education ●Director attendance at annual meetings of stockholders ●Frequency of meetings ●Selection of agenda items for Board meetings ●Number and names of Board committees ●Independence of Board committees ●Assignment and rotation of committee members ●Evaluation of executive officers ●Succession planning ●Management development ●Risk management ●Prohibited loans ●Communications with directors |
From time to time, the Board, upon recommendation of the Nominating and Corporate Governance Committee, Meetings; Attendancereviews and updates the Corporate Governance Guidelines as it deems necessary and appropriate. The Corporate Governance Guidelines are available in the “Discover Century—Investors— Governance—Governance Documents – Corporate Governance Policy” section of the Company’s website located at www.centurycommunities.com.
Director Nominations Process
1 | 2 | 3 | 4 | 5 |
Sources for director candidate pool ● Directors ● Management ● Stockholders ● Independent search firm ● Other director resources ● Self-nominated | Interviews and in-depth review by Nominating and Corporate Governance Committee and other interested directors ● Screen qualifications ● Examine overall Board composition and balance ● Review independence and potential conflicts ● Consider diversity | Recommend slate of director nominees by Nominating and Corporate Governance Committee | Full Board review and nomination | Election by stockholders |
RESULT: We have nominated two new highly qualified, ethnically diverse, female directors in the past three years |
Century Communities, Inc. – 2024 Proxy Statement | 26 |
The Board held 6 meetings during 2022. All directors attendedof Directors, including in particular the Nominating and Corporate Governance Committee, oversees board composition and succession. To this end, at least 75%once a year, in connection with the annual director nomination process, the Nominating and Corporate Governance Committee evaluates each director’s performance, relative strengths and weaknesses, and future plans, including any personal retirement objectives. As part of that evaluation, the combined totalNominating and Corporate Governance Committee also identifies areas of (i) all Board meetingsoverall strength and (ii) all meetings of committees ofweakness with respect to its composition and considers whether the Board of whichDirectors as a whole possesses core competencies in the director was a member during 2022. We expect allareas of our directors to attend our annual meeting of stockholders,accounting and we customarily schedule a regular Board meeting on the same day as our annual meeting. All directors serving at the time of our 2022 Annual Meeting of Stockholders held on May 4, 2022 attended the meeting.
Director QUALIFICATIONSfinance, industry knowledge, management experience, sales and Nominations Processmarketing, strategic vision, executive compensation, and corporate governance, among others.
The Board seeks to ensure that the Board is composed of members whose particular expertise, experience, qualifications, attributes, and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively. New directors are approved by the Board after recommendation by the Nominating and Corporate Governance Committee. In identifying candidates for director, the Nominating and Corporate Governance Committee and the Board take into account the following:
● | the comments and recommendations of Board members regarding the qualifications and effectiveness of the existing Board, or additional qualifications that may be required when selecting new Board members; |
● | the requisite expertise and sufficiently diverse backgrounds (which may include diversity of age, gender, race, ethnicity, education, skills, professional experience, knowledge, backgrounds and viewpoints) of the Board’s overall membership composition; |
● | the independence of outside directors and other possible conflicts of interest of existing and potential members of the Board; and |
● | any other factors they consider appropriate. |
As provided inThe Board elected Ms. Zúñiga Ramírez to the Board, effective October 16, 2023, upon the recommendation of the Nominating and Corporate Governance Committee. In its charter,search for a new director, the Nominating and Corporate Governance Committee is committed to includingrelied in its initial list of director candidates female and racially/ethnically diverse candidates and will require any third-party search consultants to includepart on assistance from the Women’s Leadership Foundation, which was instrumental in their initial list of director candidates female and racially/ethnically diverse candidates. When considering whether directors and nominees have the expertise, experience, qualifications, attributes, and skills, takenintroducing Ms. Zúñiga Ramírez as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Nominating and Corporate Governance Committee and the Board focuses primarily on the information discussed in each of the directors’ individual biographies.director candidate.
The Nominating and Corporate Governance Committee will consider director candidates recommended to it by our stockholders. Those candidates must be qualified and exhibit the experience and expertise required of the Board’s own pool of candidates, as well as have an interest in our business, and demonstrate the ability to attend and prepare for Board, committee, and stockholder meetings. Any candidate must state in advance his or her willingness and interest in serving on the Board. Candidates should represent the interests of all stockholders and not those of a special interest group. The Nominating and Corporate Governance Committee will evaluate candidates recommended by stockholders using the same criteria it uses to evaluate candidates recommended by others as described above. A stockholder that desires to nominate a person for election to the Board at a meeting of stockholders must follow the specified advance notice requirements contained in, and provide the specific information required by, our Bylaws, as described under “Other Matters—Stockholder Proposals and Director Nominations for 20242025 Annual Meeting of Stockholders” later in this proxy statement.
BOARD DIVERSITY
BOARD REFRESHMENT AND BOARD DIVERSITY
The Board of Directors, including in particular the Nominating and Corporate Governance Committee, overseesas provided in its charter, is committed to a policy of inclusiveness, and seeks members with diverse backgrounds, an understanding of our business and a reputation for integrity. We believe that board succession. Todiversity – gender, race, age, insight, background and professional experience – is a necessity that improves the quality of decision-making and strategic vision and represents the kind of company we aspire to be. Our two most recent director appointments to the Board in 2021 and 2023 embody this end, at least once a year, in connection withcommitment to diverse gender and ethnic backgrounds. In addition, we also recognize the annual director nomination process,value of other diverse attributes that directors may bring to our Board, including veterans of the U.S. military. Of our seven current directors, two are military veterans. The Nominating and Corporate Governance Committee evaluates each director’s performance, relative strengths and weaknesses, and future plans, including any personal retirement objectives andbelieves that the potential applicabilitydiverse nature of our director retirement policy. As part of that evaluation, the Nominating and Corporate Governance Committee also identifies areas of overall strength and weakness with respectcurrent Board reflects our commitment to its composition and considers whether the Board of Directors as a whole possesses core competencies in the areas of accounting and finance, industry knowledge, management experience, sales and marketing, strategic vision, executive compensation, and corporate governance, among others.
The Board understands the importance of adding diverse, experienced talent to the Board in order to establish an array of experience and strategic views. In 2021, Board added a female first-generation Latina director when Patricia L. Arvielo was appointed. TheFurther, the Nominating and Corporate Governance Committee is committed to further diversifying the Board and as provided in its charter will include in its initial list of director candidates female and racially/ethnically diverse candidates and will require any third-party search consultants to include in their initial list of director candidates female and racially/ethnically diverse candidates. The Nominating and Corporate Governance Committee is committedmaintains an ongoing commitment to refreshment efforts to ensure that the composition of the Board and each of its committees encompasses a wide range of perspectives and knowledge in order to promote the success of our business and represent stockholder interests. In addition to gender, racial/ethnic and demographic diversity, we also recognize the value of other diverse attributes that directors may bring to our Board, including veterans of the U.S. military. Of our six current directors, two are military veterans.
Century Communities, Inc. – |
Century’s Support of Nominating and Corporate Governance Committee Chair Despite Lack of 30% Gender Diversity
Of our seven directors, two are female, resulting in our Board being 29% gender diverse. The proxy voting guideline for one of the major proxy advisory firms is to recommend against the chair of the nominating committee of all boards of directors of Russell 3000 index companies that are not comprised of at least 30% gender diverse directors. This rigid guideline applies regardless of the size of a company’s board of directors or the qualifications of the chair. We disagree with this one-size fits-all guideline. Our Board is currently comprised of only seven directors, two of whom are female and both of whom joined the Board within the last three years, resulting in 29% of our directors being gender diverse. To comply with a 30% gender diverse guideline, while at the same time retaining our current seven directors, we would be required to add an additional gender diverse director. While diversity is an important consideration in our director nomination process and our Board believes that individuals of broad diversity can contribute different perspectives while collaborating to further Century’s strategy and mission, the Board viewed it as not a strategic imperative to add an additional gender diverse director to our Board concurrent with the 2024 Annual Meeting of Stockholders. This is especially true since the Board just added a new female director in October 2023 and added two female directors within the last three years and the fact that the Board is only 1% shy of the 30% gender diversity requirement. We disagree with an approach to blindly apply an arbitrary numerical gender diverse requirement on all boards of directors regardless of size.
Century Communities, Inc. – 2024 Proxy Statement | 28 |
Our Board has nominated John P. Box, the Chair of our Nominating and Corporate Governance Committee, as a director again this year. See Proposal No. 1. Election of Directors. We encourage our stockholders to vote “FOR” the re-election of Mr. Box. Drawing on his extensive leadership within the real estate industry, his relationships with many executives at real estate companies, and his proven ability to successfully grow and diversify a real estate business, Mr. Box is a key member and contributor to our Board. He has been a director of Century and Chair of the Nominating and Corporate Governance Committee since 2014. In his position as Chair of the Nominating and Corporate Governance Committee, he has contributed substantially towards initiatives of the Board to improve the governance function at the Company and improve the diversity of the Board, specifically with regard to his oversight of the recent addition of two gender and ethnically diverse directors within the last three years. Historically, prior to this gender proxy voting guideline, our stockholders have shown strong support for Mr. Box. Our view is that his absence from our Board at this time, especially in light of our small size, would be detrimental to our Board and our Company.
MANAGEMENT SUCCESSION PLAnning and developmentOverboarding policy
The Board of Directors recognizes that one of its most important responsibilities isRecognizing the substantial time commitments attendant to ensure excellence and continuity indirectorship, our senior leadership by overseeing the development of executive talent and planning for the effective succession of our Co-Chief Executive Officers and the other members of our management team. This responsibility is reflected in the Company’s Corporate Governance Guidelines which provide for an overboarding policy which limits the number of public company boards on which our directors may serve. The overboarding limit depends upon whether a reviewdirector is an executive officer of CEO succession planninga public company. In addition, service on other boards and/or committees must be consistent with our conflict of interest policy.
Type of Director | Overboarding Limit |
Board Member who is an Executive Officer of a Public Company | 2 |
Board Member who is not an Executive Officer of a Public Company | 4 |
The following table lists the other public company boards of directors, if any, on which our directors serve:
Director | Number of Other Public Company or Registered Investment Company Boards | Name of Other Public Company or Registered Investment Company Boards |
Dale Francescon | 0 | |
Robert J. Francescon | 0 | |
Patricia L. Arvielo | 0 | |
John P. Box | 0 | |
Keith R. Guericke | 1 | Essex Property Trust, Inc. |
James Lippman | 0 | |
Elisa Zúñiga Ramírez | 2 | Peoples Financial Services Corporation Trust for Professional Managers |
Century Communities, Inc. – 2024 Proxy Statement | 29 |
STOCKHOLDER ENGAGEMENT
We are committed to a robust and proactive stockholder engagement program. The Board values the perspectives of our stockholders, and feedback from stockholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for Board discussions throughout the year.
During 2023, our management development,team held approximately 200 meetings with stockholders. Stockholder feedback is thoughtfully considered and the charterhas led to modifications in our executive compensation program, governance practices and disclosures.
Some of the Compensation Committee, which requiresactions we have taken in response to feedback over the Compensation Committee to assist the Board in developing and evaluating potential candidates for executive officer positions and overseeing the development of executive succession plans, which includes transitional leadership in the event of an unplanned vacancy.
In furtherance of the foregoing, the Co-Chief Executive Officers provide an annual succession planning report to the Compensation Committee, which summarizes the overall composition of our senior leadership team, including their professional qualifications, tenure, and work experience. The report also identifies internal members of the management team wholast several years are viewed as potential successors to the Co-Chief Executive Officers. Succession planning is also regularly discussed in executive sessions of the Board of Directors. Our directors become familiar with internal potential successors for key leadership positions through various means, including the annual succession planning report and Board of Directors and committee meetings, and less formal interactions throughout the course of the year.described below.
What We Heard | What We Did |
Increase stockholder influence over director elections. | We adopted a majority vote standard for uncontested director elections, with a director resignation policy, instead of a plurality vote standard. |
Increase Board gender diversity. | We added Elisa Zúñiga Ramírez and Patricia L. Arvielo to the Board of Directors in 2023 and 2021, respectively, and remain committed to including female candidates in our initial list of director candidates in future searches. |
Increase Board racial/ethnic diversity. | We considered racial/ethnic diversity in our recent searches for new directors and remain committed to including racially/ethnically diverse candidates in our initial list of director candidates in future searches. Elisa Zúñiga Ramírez and Patricia L. Arvielo are both Hispanic. |
Align the interest of directors and executive officers with those of stockholders. | We adopted stock ownership and retention guidelines applicable to our directors and NEOs to ensure that their interests would be closely aligned with those of our stockholders. All of our directors and NEOs are in compliance with our stock ownership guidelines. We also adopted an anti-hedging/pledging policy. Dale Francescon and Robert J. Francescon beneficially own 6.1% and 5.2%, respectively, of our outstanding common stock, and together beneficially own 11.3% of our outstanding common stock. |
Emphasize long-term incentives. | Our long-term incentive program provides for significant LTI opportunities for our executives, which for 2023 constituted 53% of our Co-Chief Executive Officer target total direct compensation and 47% for our former Chief Financial Officer, and comprised of 100% performance share unit awards, which have a three-year performance period and then a one-year holding period on the shares issued in settlement of the PSU awards. |
Emphasize performance-based compensation elements. | 90% of our Co-CEO target compensation and 85% of our former CFO target compensation for 2023 is performance-based. |
Century Communities, Inc. – 2024 Proxy Statement | 30 |
What We Heard | What We Did |
Increase disclosure on corporate governance and executive compensation. | Each year, we have increased and improved our corporate governance and executive compensation disclosure, with an eye towards transparency and readability. |
Ensure the recovery of incentive compensation based on incorrect calculations that resulted in a financial restatement. | In 2023, we strengthened our clawback policy to provide for a mandatory clawback of incentive compensation paid to current and former executives under certain circumstances. |
ANNUAL BOARD AND COMMITTEE SELF-EVALUATIONS
The Board recognizes that a thorough evaluation process is an important element of corporate governance and enhances the effectiveness of the full Board and each committee. Therefore, it is our policy to conduct annual Board and committee self-evaluations. Each year, the Nominating and Corporate Governance Committee oversees the evaluation process to ensure that the full Board and each committee conduct an assessment of their performance and solicit feedback for areas of improvement. Evaluations include a variety of survey questions to which directors assign a score. Additional feedback from directors is sought as well. The evaluation results are then aggregated and shared with and discussed by the full Board and each committee.
board Oversight OF BUSINESS STRATEGY
The Board of Directors oversees our strategic direction and business activities. Throughout the year, the Board and management discuss our short and long-term business strategy. As part of our long-term strategy, management typically formulates three-year financial targets against which performance is reviewed by the Board.
With respect to our short-term strategy, at the beginning of each year, our management presents to the Board a proposed annual business plan for the year and receives input from the Board and a final annual business plan is approved by the Board. At each subsequent regular board meeting, the Board reviews our operating and financial performance relative to the annual business plan.
board role in Risk Oversight
Risk is inherent with every business. We face a number of risks, including financial (accounting, credit, interest rate, liquidity, and tax), operational, political, strategic, regulatory, compliance, legal, cybersecurity, competitive, and reputational risks.
Our management is responsible for the day-to-day management of risks faced by us, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board ensures that the risk management processes designed and implemented by management are adequate and functioning as designed. The Board oversees risks through the establishment of policies and procedures that are designed to guide daily operations in a manner consistent with applicable laws, regulations, and risks acceptable to us. Our Co-Chief Executive Officers are members of the Board and regularly attend Board meetings and discussCommunications with the Board the strategies and risks facing our Company.of Directors
One of the key functions of the Board is informed oversight of our risk management process. The Board administers this oversight function directly, with support from its three standing committees (the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee), each of which addresses risks specific to its respective areas of oversight. In addition, with respect to other risks that arise from time to time, the Board oversees those as well.
board role in cybersecurity risk Oversight
Information security isThe Board maintains a process for stockholders and interested parties to communicate with the responsibility ofBoard. Stockholders and interested parties may contact our Information Security team, overseen by our Chief Information Security Officer. We leverage the National Institute of Standards and Technology (NIST) Cybersecurity Framework to measure our security posture, deliver risk management and provide effective security controls.
Our information security practices include development, implementation, and improvement of policies and procedures to safeguard information and ensure availability of critical data and systems. Our Information Security team conducts annual information security awareness training for employees involved in our systems and processes that handle customer data and audits of our systems and enhanced training for specialized personnel. Our program further includes review and assessment by external, independent third-parties, who assess and report on our internal incident response preparedness and help identify areas for continued focus and improvement.
As set forth in its charter, our Audit Committee, comprised fully of independent directors, is responsible for oversight of risk, including cybersecurity and information security risk. At least semi-annually, the Audit Committee is responsible for reviewing and discussing with management our risk exposures related to our IT systems and data privacy. These management updates are designed to inform the Audit Committee of any potential risks related to our IT systems and data privacy,Board as well as any relevant mitigation or remediation tactics being implement. During 2022, the Audit Committee engaged a third party service provider to provide a seasoned CISO-level advisor to assist our technology teams and business leadership with strengthening our security systems and improve our cyber readiness, as well as on existing and emerging threat landscapes.provided below:
Management will initially receive and process communications before forwarding them to the addressee(s). We generally will not forward to the directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information about the Company.
Code of Business Conduct and Ethics The Board has adopted a Code of Business Conduct and Ethics that applies to our officers, directors, and employees. Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote the following:
Any waiver of our Code of Business Conduct and Ethics may be made only by the Nominating and Corporate Governance Committee and will be promptly disclosed as required by law and NYSE rules. We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K and applicable NYSE rules regarding amendments to or waivers from any provision of our Code of Business Conduct and Ethics by posting such information in the “Discover Century—Investors—
Complaint Procedures We maintain procedures to receive, retain, and treat complaints regarding accounting, internal accounting controls, or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. A 24-hour, toll-free, confidential ethics hotline and a confidential web-based reporting tool are available for the submission of concerns regarding these and other matters by any employee. Concerns and questions received through these methods relating to accounting, internal accounting controls, or auditing matters are promptly brought to the attention of the Chair of the Audit Committee and are handled in accordance with procedures established by the Audit Committee. Complete information regarding our complaint procedures is contained within our Code of Business Conduct and Ethics, which is described above and may be accessed on our website as noted above.
CommITTEE CHARTERS AND OTHER INFORMATION The charters of all three of our standing Board committees, Corporate Governance Guidelines,
EXECUTIVE OFFICERS We have three executive officers: Dale Francescon, Robert J. Francescon, and J. Scott Dixon, who was elected as our Interim Chief Financial Officer effective March 22, 2024 to succeed David L. Century has been jointly led by our Co-Chief Executive Officers since our founding in 2002. The Board of Directors views this executive structure as optimal for our Company and not a temporary, transitional or duplicative arrangement. Our Co-Chief Executive Officers were the two founders of Century and share an aligned vision for the tone, direction and growth of the Company.
2023-2025 LTI Award Performance Goals: The threshold, target, above target, and maximum adjusted pre-tax income goals for the 2023-2025 LTI awards that were established by the Committee at the time of grant are maintained by us as proprietary and confidential. The Committee believes that disclosure of these specific performance goals would represent competitive harm to us as such goals are not publicly disclosed and are competitively sensitive. Long Term Incentives –
For the
For the
Accordingly, our Co-CEOs each received
The table below outlines the performance goal, as well as threshold, target, above target, and maximum adjusted pre-tax income goals that were established by the Committee at the time of grant, along with actual performance, for the
The performance levels above correspond to the share amounts listed in the table below.
Other Benefits
In
We provide our NEOs with modest perquisites to attract and retain them and to allow them to more efficiently utilize their time and to support them in effectively contributing to the success of our Company. The perquisites provided to our NEOs during
Employment Agreements, SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS, and POST-TERMINATION RESTRICTIONS
The compensation paid to our NEOs is governed, in part, by written employment agreements with them, which are described below under “Executive Compensation—Employment and Other Agreements.” The purpose of these agreements is to define the essential terms of these executives’ employment relationships in a manner that will protect our business and other interests and the interests of the executive, including in the event his employment is terminated upon certain events. The severance provisions in the agreement are intended to induce these executives to continue employment with our Company and to retain them and provide consideration to them for certain restrictive covenants that apply following a termination of employment. Additionally, we entered into these agreements because they provide us valuable protection by subjecting these executives to restrictive covenants that prohibit the disclosure of confidential information during and following their employment and limit their ability to engage in competition with us or otherwise interfere with our business relationships following a termination of their employment. The receipt of any severance by these executives is conditioned upon his execution of a release of claims.
To encourage continuity, stability, and retention when considering the potential disruptive impact of an actual or potential corporate transaction, we have established change in control arrangements, including provisions in our employment agreements with our NEOs. These provisions provide our NEOs certain payments and benefits in the event of a termination of their employment in connection with a change in control. These additional payments and benefits will not be triggered just by a change in control, but require a termination event not within the control of the executive, and thus are known as “double trigger” change in control arrangements. These “double trigger” change in control protections are intended to induce executives to accept or continue employment with our Company, provide consideration to executives for certain restrictive covenants that apply following termination of employment, and provide continuity of management in connection with a threatened or actual change in control transaction. If the employment of one of our NEOs is terminated by Century without cause or by him for good reason within 24 months following or in the case of our Co-CEOs, within six months preceding, a change in control, the executive will be entitled to receive a severance payment and certain benefits. The receipt of any severance is conditioned upon the executive’s execution of a release of claims.
We believe these change in control arrangements with our NEOs are an important part of our executive compensation program in part because they mitigate some of the risk for executives working in a smaller public company where there is a meaningful likelihood that the company may be acquired. Change in control benefits are intended to attract and retain qualified executives who, absent these arrangements and in anticipation of a possible change in control of our Company, might consider seeking employment alternatives to be less risky than remaining with our Company through the transaction. We believe that relative to our Company’s overall value, our potential change in control benefits are relatively small and are aligned with current peer company practices.
Risk Assessment
As a result of our assessment on risk in our compensation programs, we concluded that our compensation policies, practices, and programs and related compensation governance structure work together in a manner so as to encourage our executives (and other employees) to pursue growth strategies that emphasize stockholder value creation, but not to take unnecessary or excessive risks that could threaten the value of our Company. For more information on this assessment, see the discussions under “Executive Compensation—Compensation Risk Assessment.”
Clawback Policy
ANTI-HEDGING AND ANTI-PLEDGING Policy
Tax CONSIDERATIONS Code Section 162(m) imposes an annual deduction limit of $1 million on the amount of compensation paid to each “covered employee,” which includes our named executives. Compensation paid to our named executive officers over this limit is nondeductible. While the Compensation Committee considers tax deductibility as one of many factors in determining executive compensation, we will continue to structure our executive compensation program so that a significant portion of total executive compensation is linked to the performance of our Company even though amounts in excess of the Code Section 162(m) limit are not deductible.
Competitive Considerations and Use of Market Data
We strive to compensate our executive officers competitively relative to industry peers. To ensure reasonableness and competitiveness of our executive compensation packages relative to the industry, the Compensation Committee
All of the peer group companies are public companies in the homebuilding or manufactured housing industries and that have annual revenues and a price to earnings ratio generally within a range of our annual revenues and price to earnings ratio. We potentially compete with these peers for employees, land, customers and trade partners in various markets. Even though some of the peers may be larger than we are nationally, we are larger than some or all of the peers in certain markets.
How We Make Compensation Decisions
There are several elements to our executive compensation decision-making, which we believe allow us to most effectively implement our compensation philosophy. The Compensation Committee, its independent external compensation consultant, and management all have a role in decision-making for executive compensation. The following table summarizes their roles and responsibilities.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing “Compensation Discussion and Analysis” with our management. Based on this review and these discussions, the Compensation Committee has recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31,
EXECUTIVE COMPENSATION
Summary Compensation Table
The table set forth below summarizes the compensation information for each of the individuals who served as a “principal executive officer” or “principal financial officer” during
Employment and Other Agreements
Co-CEO Employment Agreements
We are party to an employment agreement with each of our Co-CEOs, Dale Francescon and Robert J.
Former CFO Employment Agreement
We
Other Agreements
In connection with his departure, we entered into a three-month consulting agreement with our former CFO, David L. Messenger, to assist with the transition of his duties and responsibilities. Either party may terminate this agreement prior to its expiration at any time and for whatever reason.
GRANTS OF PLAN-BASED AWARDS DURING
The table below provides information concerning grants of plan-based awards to each of our NEOs during the year ended December 31,
Outstanding Equity Awards as of December 31,
The
Option Exercises and Stock Vested During
The table below provides information regarding stock awards (in the form of RSU awards and PSU awards) that vested for each of our NEOs during the year ended December 31,
pay versus performance Pay Versus Performance Table
As required by Section 953(a) of the Dodd-Frank Act and Item 402(v) of SEC Regulation S-K, we are providing the following information about the relationship between “compensation actually paid” to our NEOs, within the meaning of such rules, and certain financial performance measures of our Company. The table below provides information regarding compensation actually paid to our Co-CEOs, our two co-principal executive officers (“PEOs”), and our former CFO, our only other non-PEO named executive officer, during each of the past
Since we do not have a pension plan, all of the foregoing adjustments are equity award adjustments for each applicable year and include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of such applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year; (iii) for equity awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for equity awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for equity awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for such applicable year. Adjustments as provided in clauses (iii) and (v) are inapplicable for all of the years presented in the table.
The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The value of RSU awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on the closing sale price of our common stock, as reported by the NYSE. The value of PSU awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on the same methodology as used in our consolidated financial statements included in our most recent annual report on Form 10-K for the year ended December 31,
Since we do not have a pension plan, all of the foregoing adjustments are equity award adjustments for each applicable year and include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of such applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year; (iii) for equity awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for equity awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for equity awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for such applicable year. Adjustments as provided in clauses (iii) and (v) are inapplicable for all of the years presented in the table.
The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The value of RSU awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on the closing sale price of our common stock, as reported by the NYSE. The value of PSU awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on the same methodology as used in our consolidated financial statements included in our most recent annual report on Form 10-K for the year ended December 31,
Financial Performance Measures
We used the following financial performance measures during
Pay Versus Performance Relationship
In accordance with Item 402(v) of SEC Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table above.
Century TSR,
The
The former peer group
Compensation Actually Paid and Net Income and Adjusted Pre-Tax Income As demonstrated by the following two graphs, the amount of compensation actually paid to our NEOs is not necessarily aligned with our net income and our adjusted pre-tax income
CEO Pay Ratio Disclosure
Under Section 953(b) of the Dodd-Frank Act and Item 402(u) of SEC Regulation S-K, we are required to provide the ratio of the annual total compensation of each of Dale Francescon, our Co-CEO, and Robert J. Francescon, our Co-CEO, to the median of the annual total compensation of all employees of our company (other than our Co-CEOs). This ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the “median employee” and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported by us, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their pay ratios.
For
To identify our median employee and to calculate the annual total compensation of our median employee and that of our co-CEOs, we used the following methodology, assumptions, and estimates:
POTENTIAL pOST-tERMINATION AND CHANGE IN CONTROL PAYMENTS
Employment Agreements
The employment agreements with our NEOs contain severance provisions, including in connection with a change in control, intended to induce these executives to continue employment with our Company and to retain them and provide consideration to them for certain restrictive covenants that apply following a termination of employment. The receipt of any severance by these executives is conditioned upon the officer’s execution of a release of claims.
Under the employment agreements with our Co-CEOs, no severance benefits are payable if we terminate the executive’s employment for cause or if he resigns voluntarily and without good reason and other than by reason of retirement. If the executive’s employment is terminated due to disability, death or retirement, he or his estate will be entitled to receive (i) a prorated amount of his annual incentive bonus for the fiscal year in which employment terminated based on actual performance; (ii) in the event of termination due to death or disability, the immediate vesting of performance-based equity awards for the fiscal year or performance period in which employment terminated based on target performance, unless actual performance exceeds target based on proration of the performance goals, but without proration based on the executive’s actual period of service, or, in the event of termination due to retirement, the performance-based equity awards for the fiscal year or performance period in which employment terminated will vest based on actual performance for the full performance period and as if he had not terminated employment; (iii) the immediate vesting of all equity awards granted to him not then based on performance; and (iv) our payment for up to 18 months of that portion of his COBRA premiums that exceeds what he would have paid if he were an active employee. For purposes of the agreements, “retirement” means the executive’s voluntary termination of his employment, provided the executive: (a) has reached (or will reach on or before the termination date) the age of 60 along with at least
Under the employment agreement with Mr. Messenger, no severance benefits
To the extent that any change in control payment or benefit would be subject to the “golden parachute” excise tax under Code Section 4999, the payments will be reduced to an amount that will not subject the executive to the excise tax if the reduction results in him receiving a greater amount on a net after tax basis than would be received if he received the payment and benefits and paid the excise tax.
Other Change in Control Arrangements
The Century Communities, Inc. 2022 Omnibus Incentive Plan and the Century Communities, Inc. Amended and Restated 2017
Potential Payments to Named Executive Officers
The table below shows potential payments to our NEOs, not otherwise earned, under various scenarios involving a termination of employment, including in connection with a change in control, and upon a change in control without a termination of employment, assuming a December 31,
In the case of a termination without cause or for good reason in connection with a change in control, represents the value of the number of shares of our common stock the executive would have been entitled to receive as payout of the PSU awards for the
COMPENSATION Risk Assessment
As a result of our annual assessment on risk in our compensation programs, we concluded that our compensation policies, practices, and programs and related compensation governance structure work together in a manner so as to encourage our employees, including our NEOs, to pursue growth strategies that emphasize stockholder value creation, but not to take unnecessary or excessive risks that could threaten the value of our company. As part of our assessment, we noted in particular the following:
As a matter of best practice, we will continue to monitor our compensation policies, practices, and programs to ensure that they continue to align the interests of our employees, including in particular our executive officers, with those of our long-term stockholders while avoiding unnecessary or excessive risk.
ANTI-HEDGING
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee has or had any relationship requiring disclosure under Item 404 of SEC Regulation S-K or has ever been an officer or employee of Century or any of our subsidiaries. None of our executive officers serves, or in the past has served, as a member of the Compensation Committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of the Board or the Compensation Committee.
DIRECTOR COMPENSATION
Overview
Our non-employee director compensation program generally is designed to attract and retain experienced and knowledgeable directors and to provide equity-based compensation to align the interests of our directors with those of our stockholders. In
DIRECTOR COMPENSATION
The Board of Directors has delegated to the Compensation Committee the responsibility, among other things, to review and recommend to the Board any proposed changes in non-employee director compensation. In connection with such review, the Compensation Committee is assisted in performing its duties by our Human Resources Department and also engages an independent external compensation consultant to provide analysis regarding non-employee director compensation.
During
Director Compensation Program
The following table sets forth our non-employee director compensation program for
Annual cash retainers are typically paid in
We
Under the terms of the Century Communities, Inc. 2022 Omnibus Incentive Plan, the sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with FASB ASC Topic 718, or any successor thereto) of awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year may not exceed $1 million (increased to $1.5 million with respect to any non-employee director serving as Chair of the Board or Lead Independent Director or in the fiscal year of a non-employee director’s initial service as a non-employee director). Any compensation that is deferred counts towards this limit for the year in which the compensation is first earned, and not a later year of settlement. NON-EMPLOYEE Director Compensation HIGHLIGHTS
Some of the highlights of our non-employee director compensation are:
Summary Director Compensation Table for
The following table sets forth information concerning the compensation of our non-employee directors during the year ended December 31,
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies and Procedures for Review and Approval of Related Party Transactions
Our Code of Business Conduct and Ethics outlines the principles, policies, and values that govern the activities of Century, including with respect to conflicts of interest. It is specifically required by our Code of Business Conduct and Ethics that any transaction involving a conflict of interest be approved by a vote of a majority of Century’s disinterested and independent directors. Our Chief Financial Officer is generally responsible for overseeing and monitoring compliance with respect to transactions involving conflicts of interest. On any new related party transactions, if the party involved in the transaction is a member of the Board of Directors, such member of the Board is required to recuse or abstain from involvement in the decision. In addition, the charter of our Audit Committee requires the Audit Committee to approve or ratify all related party transactions. On a quarterly basis, the Audit Committee reviews all existing related party transactions and any new transactions that are brought to the attention of either management or the Board.
Transactions with Related Persons
For the period beginning on January 1,
Employment and Other Agreements with Named Executive Officers
We have entered into an employment agreement and aircraft time sharing agreements with each of our Co-Chief Executive Officers, Dale Francescon and Robert J. Francescon, and our former Chief Financial Officer, David L. Messenger.
Indemnification Agreements
We have entered into an indemnification agreement with each of our directors, Co-Chief Executive Officers, Interim Chief Financial Officer, and former Chief Financial Officer. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We believe
Other Related Party Transactions
James Francescon, the son of Robert J. Francescon, our Co-Chief Executive Officer, serves as our Executive Vice President, The son of David L. Messenger, our former Chief Financial Officer, purchased a home from Century for approximately $650,000 at a closing held during 2023 and in connection with such purchase obtained a mortgage of approximately $552,500 from Inspire Home Loans. Both the home purchase and mortgage were made in the ordinary course of Century’s business, on the same terms available to the general public, and did not involve more than normal risk of collectability or present other unfavorable features.
STOCK OWNERSHIP
Significant Beneficial Owners The table below sets forth information as to entities that have reported to the SEC or have otherwise advised us that they are a beneficial owner, as defined by the SEC’s rules and regulations, of more than 5% of our outstanding common stock.
Security Ownership by Management
The table below sets forth information known to us regarding the beneficial ownership of our common stock as of March
To our knowledge, each person named in the table has sole voting and investment power with respect to all of the securities shown as beneficially owned by such person, except as otherwise set forth in the notes to the table and subject to community property laws, where applicable. The number of shares beneficially owned represents the number of shares the person “beneficially owns,” as determined by the rules of the SEC. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (i) the vesting of restricted stock units or the exercise of any option, warrant, or right; (ii) the conversion of a security; (iii) the power to revoke a trust, discretionary account, or similar arrangement; or (iv) the automatic termination of a trust, discretionary account, or similar arrangement.
Stock Ownership Guidelines
We have established stock ownership guidelines that are intended to further align the interests of our directors and named executive officers with those of our stockholders. The stock ownership guidelines for our non-employee directors and named executive officers are as follows:
While shares of common stock underlying unvested time-based restricted stock or restricted stock units are included in determining compliance with the guideline, unvested performance-based awards and any stock options do not count towards compliance with the guideline. Each director and named executive officer has five years from the date of appointment or hire or, if the ownership multiple has increased during his tenure, five years from the date established in connection with such increase to reach his stock ownership targets. Until the applicable stock ownership target is achieved, each director and Co-Chief Executive Officer subject to the guidelines is required to retain an amount equal to 100% of the net shares received as a result of the vesting of restricted stock awards or restricted stock unit awards, and other named executive officers are required to retain an amount equal to 60% of the net shares received as a result of the vesting of restricted stock awards or restricted stock unit awards. All of our directors and named executive officers are in compliance with our stock ownership guidelines, taking into account the five-year compliance deadline and other exceptions.
Securities Authorized for Issuance Under Equity Compensation Plans The table below provides information about our common stock that may be issued under our equity compensation plan as of December 31,
INFORMATION ABOUT THE
The Board of Directors is using this proxy statement to solicit your proxy for use at our
We have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending an Important Notice of Availability of Proxy Materials for the Annual Meeting (which we refer to as the “Internet Notice”) to most of our stockholders of record and paper or electronic copies of the proxy materials to our remaining stockholders of record. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice. All stockholders may request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Internet Notice and on the website referred to in the Internet Notice, including an option to request paper copies on an ongoing basis.
When and where will the Annual Meeting be held?
The Annual Meeting will be held on Wednesday, May
Directions to attend the Annual Meeting may be obtained by calling Investor Relations at (303) 268-8398.
WhAT ARE THE PURPOSES OF THE Annual Meeting?
The purposes of the Annual Meeting are to vote on the following items described in this proxy statement:
There are no rights of appraisal or similar rights of dissenters arising from matters to be acted on at the meeting.
are there any matters to be voted on at the annual meeting that are not included in this proxy statement?
We currently are not aware of any business that will be presented at the Annual Meeting other than as described in this proxy statement. If, however, any other matter is properly brought at the Annual Meeting, or any continuation, postponement, or adjournment thereof, your proxy includes discretionary authority on the part of the individuals appointed to vote your shares or act on those matters in accordance with their best judgment.
WhO CAN ATTEND the Annual Meeting? All of our stockholders entitled to vote at the Annual Meeting may attend the Annual Meeting. If your shares are held in street name, however, you may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from the record holder of your shares. Stockholders who wish to attend the Annual Meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will be required to present a valid, government-issued picture identification, such as a driver’s license or passport, to gain admittance to the Annual Meeting. No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting.
WhO IS ENTITLED TO VOTE AT the Annual Meeting?
Holders of record of shares of our common stock as of the close of business on March
hOW MANY SHARES MUST BE PRESENT?
A quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, in person or by proxy, of the holders of a majority in voting power of our capital stock issued and outstanding and entitled to vote on the record date will constitute a quorum. Your shares will be counted toward the quorum if you submit a proxy or vote at the Annual Meeting. Shares represented by proxies marked “abstain” and “broker non-votes” also are counted in determining whether a quorum is present.
WhAT IF A QUORUM IS NOT PRESENT?
If a quorum is not present or represented at the scheduled time of the Annual Meeting, (i) the chairperson of the Annual Meeting or (ii) a majority in voting power of the stockholders entitled to vote at the Annual Meeting, present in person or represented by proxy, may adjourn the Annual Meeting until a quorum is present or represented.
hOW DO I VOTE?
We recommend stockholders vote by proxy even if they attend the Annual Meeting. If your shares are registered in your name, you may vote your shares by one of the five following methods:
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Daylight Savings Time, on May
If your shares are held in the name of a bank, broker, or other holder of record, you will receive instructions on how to vote from the bank, broker, or holder of record. You must follow the instructions of such bank, broker, or holder of record in order for your shares to be voted. Telephone and Internet voting also may be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you would like to vote your shares in person at the Annual Meeting, you should contact your bank, broker, or agent to obtain a legal proxy or the bank’s or broker’s proxy card and bring it to the Annual Meeting in order to vote.
WhAT IS THE DIFFERENCE BETWEEN BEING A “RECORD HOLDER” AND HOLDING SHARES IN “STREET NAME”?
A record holder holds shares in his or her name. Shares held in “street name” are held in the name of a bank or broker on a person’s behalf.
CAN i VOTE IF MY SHARES ARE HELD IN “STREET NAME”?
Yes. If your shares are held by a bank or a brokerage firm, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials are being forwarded to you by your bank or brokerage firm along with a voting instruction card. As the beneficial owner, you have the right to direct your bank or brokerage firm how to vote your shares, and your bank or brokerage firm is required to vote your shares in accordance with your instructions.
WhAT ARE BROKER NON-VOTES?
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting power to vote those shares.
A broker is entitled to vote shares held for a beneficial owner on routine matters. The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm in Proposal No.
Broker non-votes count for purposes of determining whether a quorum is present.
The Board recommends that you vote:
If you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of common stock will be voted on your behalf as you direct. If not otherwise specified, the shares of common stock represented by the proxies will be voted in accordance with the Board’s recommendations.
WHAT IS THE REQUIRED VOTE FOR EACH PROPOSAL?
WhAT IF I DON’T SPECIFY HOW MY SHARES ARE TO BE VOTED?
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board, as described above.
It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Internet Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating, and returning the enclosed proxy card in the enclosed envelope.
CAN I REVOKE OR CHANGE MY VOTE?
Yes. If you are a registered stockholder, you may revoke your proxy or change your vote at any time before your shares are voted by one of the following methods:
Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to:
Century Communities, Inc. 8390 East Crescent Parkway, Suite 650 Greenwood Village, Colorado 80111 Attention: Corporate Secretary
Your most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to our Corporate Secretary before your proxy is voted or you vote in person at the Annual Meeting.
If your shares are held in street name, you may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you may vote in person at the Annual Meeting by obtaining a legal proxy from your bank or broker and submitting the legal proxy along with your ballot.
Who will count the votes?
Broadridge Financial Solutions, Inc. has been engaged to tabulate stockholder votes. An agent of Broadridge Financial Solutions, Inc. will act as our independent inspector of elections for the Annual Meeting.
We plan to announce preliminary voting results at the Annual Meeting and will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC within four business days after the Annual Meeting.
CAN I GET A PRINTED COPY OF THE PROXY MATERIALS?
Yes. We will mail this proxy statement and our
Stockholder Proposals and Director Nominations for 2025 Annual Meeting OF STOCKHOLDERS
Date of
We anticipate that our
Proposals Pursuant to Rule 14a-8
Pursuant to Rule 14a-8 under the Exchange Act, our stockholders may present proper proposals for inclusion in the proxy statement and for consideration at our next annual meeting of stockholders. To be eligible for inclusion in the 2024 Annual Meeting proxy statement, a proposal must be received by us no later than November
Nominations and Proposals Pursuant to Our Bylaws
Under our Bylaws, a stockholder wishing to nominate a candidate for election to the Board, or propose other business for consideration, at the
We encourage stockholders who wish to submit a proposal or nomination to seek independent counsel. Century will not consider any proposal or nomination that is not timely or otherwise does not meet the Bylaw and SEC requirements. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
The Board of Directors is soliciting proxies for the Annual Meeting from our stockholders. We will bear the entire cost of soliciting proxies from our stockholders. In addition to the solicitation of proxies by delivery of the Internet Notice or this proxy statement by mail, we will request that brokers, banks, and other nominees that hold shares of our common stock, which are beneficially owned by our stockholders, send Internet Notices, proxies, and proxy materials to those beneficial owners and secure those beneficial owners’ voting instructions. We will reimburse those record holders for their reasonable expenses. Although we currently do not intend to hire a proxy solicitor to assist in the solicitation of proxies, we reserve the right to do so if we believe it would be in the best interests of Century and our stockholders. If we engage a proxy solicitor, we expect the fees to be approximately $5,000 plus out-of-pocket expenses. We may use several of our regular employees, who will not be specially compensated, to solicit proxies from our stockholders, either personally or by Internet, telephone, facsimile, or special delivery letter.
The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. A number of banks and brokers with account holders who are our stockholders will be householding our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your bank or broker, direct your written request to Century Communities, Inc., 8390 East Crescent Parkway, Suite 650, Greenwood Village, Colorado 80111, Attention: Investor Relations, or contact Investor Relations by telephone at (303) 268-8398. Upon written request, we will promptly deliver a separate copy of the proxy statement and annual report to such shareholder. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their bank or broker.
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act, which might incorporate future filings made by us under those statutes, the Audit Committee Report under “Proposal No.
Copies of 2023 Annual Report
Our
Your vote is important. Please promptly vote your shares of Century common stock by following the instructions for voting on the Notice Regarding the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating, and returning your proxy card or by Internet or telephone voting as described on your proxy card.
Greenwood Village, Colorado March
APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In this proxy statement, we use the term
The following table presents
(dollars in thousands)
(This page left blank intentionally) 0001576940 ccs:DaleMessengerMember 4 2023-01-01 2023-12-31 |