First American Financial Corp
For the period ended May 13, 2025. Filed Mar 31, 2025.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
May 13, 2025 · Filed Mar 31, 2025
Contents
Compensation Decision Process
| COMPENSATION COMMITTEE | Composed entirely ofindependent directors |
|---|---|
| GENERALThe Committee is comprised entirely of independent members of the Board. The Committee reviews and approves the base salaries of the executive officers of our Company, their annual incentive bonus programs, their long-term incentive compensation and other incentive and executive benefit plans. It also reviews and makes recommendations to the Board regarding director compensation. The Committee, in consultation with the independent compensation consultant that it retains, analyzes the reasonableness of the compensation paid to the executive officers. In discharging its functions, as described in more detail above, the Committee reviews compensation data from comparable companies and from relevant surveys, which it utilizes to assess the reasonableness of compensation for our Company’s executive officers. | |
| COMPENSATION COMMITTEE CHARTERThe Committee’s function is more fully described in its charter, which is regularly reviewed and has been approved by our Company’s Board. The charter is available in the corporate governance section of our Company’s website at www.firstam.com. | |
| SETTING AIP METRICSThe Committee sets the AIP metrics, such as pretax margin and return on equity, based on our Company’s financial plan for the applicable year, which is reviewed and approved by our Board. | |
| ANNUAL INCENTIVE METRICS AIP metrics set based on rigorous financial planning process that includes third-party forecasts and that recognized the cyclical nature of our business | Our financial plan is developed following a rigorous financial planning process that contemplates difficult to forecast levels of real estate activity, mortgage originations and interest rates, expenses, capital and liquidity needs, tax rates and investment needs. Our Board also considers industry data and forecasts, risks and challenges associated with achievement of the financial plan and other key budgeting assumptions before approving our financial plan, from which the annual incentive targets are determined.The third-party forecasts of real estate and mortgage activity used by our Board as part of this process, while helpful to our planning efforts, are often inaccurate and sometimes materially inaccurate. |
| Due to the cyclical nature of our business, our financial plan and, consequently, the metrics utilized for our AIP, are not tied to the prior year’s actual results. The Committee believes that setting rigorous performance metrics in light of the expected business climate—as opposed to the business climate in earlier periods—incentivizes performance and, thereby, maximizes value to our stockholders and to do otherwise would demotivate our employees. | |
INDEPENDENT COMPENSATION CONSULTANT
In making its determinations with respect to executive officer compensation, the Committee engages the services of Semler Brossy Consulting Group, LLC to assist with its review of the compensation package of the chief executive officer and other executive officers. In addition, the compensation consultant has assisted the Committee with related projects, such as evaluating non-employee director pay levels, advice with respect to the design of executive compensation programs, review of annual management incentive bonus plans, preparation or review of certain of our Company’s compensation-related disclosures and related tasks.
Compensation Discussion and Analysis
The Committee retains its compensation consultant directly, although in carrying out assignments, the compensation consultant also interacts with Company management to the extent necessary and appropriate. The compensation consultant performs no services for management, however, at the direction of the Committee, it does assist in the preparation or review of certain of our Company’s compensation-related disclosures, including this Compensation Disclosure and Analysis, and related projects. The Committee has assessed the independence of the consultant and has concluded that no conflict of interests exist that would prevent the consultant from serving as independent consultant to the Committee.
MANAGEMENT
Our Company’s chief executive officer and, as appropriate, certain other executive officers, may attend the portion of the Committee’s meetings where individual executive officer performance is discussed. Directors other than Committee members also may attend Committee meetings, including the portion where executive officer performance is discussed. While the Committee may meet with our Company’s chief executive officer to present the chief executive officer’s own compensation package and the chief executive officer’s recommendations with respect to the other executive officers, all ultimate decisions regarding executive compensation are made solely by the Committee, with input from its compensation consultant.
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