Century Communities Inc
For the period ended May 8, 2024. Filed Mar 27, 2024.
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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 8, 2024 · Filed Mar 27, 2024
Contents
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 2023 Annual Report to Stockholders before voting.
2024 ANNUAL MEETING OF STOCKHOLDERS
DATE AND TIME Wednesday, May 8, 2024 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 11, 2024 are entitled to notice of, to attend, and to vote at the 2024 Annual Meeting of Stockholders or any continuation, postponement, or adjournment thereof.
VOTING ITEMS
| Proposal | Board’s Vote Recommendation | Page |
|---|---|---|
| Proposal No. 1: Election of directors | FOR | 35 |
| Proposal No. 2: Ratification of appointment of independent registered public accounting firm | FOR | 41 |
| Proposal No. 3: Advisory vote on executive compensation | FOR | 44 |
| 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 8, 2024 This proxy statement and our 2023 Annual Report of Stockholders are available on the Internet, free of charge, at www.proxyvote.com commencing on or about March 27, 2024. On this website, you will be able to access this proxy statement, our 2023 Annual Report, and any amendments or supplements to these materials that are required to be furnished to stockholders. We encourage you to access and review all of the important information contained in the proxy materials before voting. 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 2024 Annual Meeting of Stockholders.
| Century Communities, Inc. – 2024 Proxy Statement | 6 |
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WHO WE ARE
Century Communities, Inc. is a leading 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, 2023, we operated in the 18 states and over 45 markets depicted below. We also offer title, insurance, and lending services in select markets.
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 revenues, net income, and total stockholders’ equity.
| Century Communities, Inc. – 2024 Proxy Statement | 7 |
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2023 BUSINESS HIGHLIGHTS
Highlights of our achievements for 2023, include:
FINANCIAL
| $3.6 billion | Home Sales Revenues Achieved $3.6 billion in home sales revenues, exceeding our guidance for the year |
|---|---|
| 22.4 percent | Net Homebuilding Debt to Net Capital* Net homebuilding debt to net capital decreased to 22.4% as of December 31, 2023, our lowest year end level in our history as a public company |
| $91.14 share | 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 |
| $75.12 share | 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 |
| $0.92 share | Cash Dividend Increased quarterly cash dividend to $0.23 per share in March 2023 from $0.20 per share, a 15% increase, to a total of $0.92 per share for the year ended December 31, 2023 |
OPERATIONAL
| 251 | Selling Communities Year-end selling communities of 251 increased 21% year-over-year |
| 9,568 | Home Deliveries Delivered 9,568 homes, exceeding guidance as we continued to benefit from improved cycle times and increased levels of home starts |
| 73,720 | Lots Owned We have continued to strategically manage our lot pipeline, resulting in 73,720 lots owned and controlled at December 31, 2023, a 38.8% increase as compared to December 31, 2022 |
| 92% | Entry-Level Homes Of the 9,568 homes delivered during 2023, approximately 92% of our deliveries were made to entry-level homebuyers that were below Federal Housing Administration-insured mortgage limits |
STRATEGIC
Properly Incentivized Homes with Near-Term Completions to Turn Inventories Given the volatility of interest rates in 2023, we prioritized our sales efforts on properly incentivizing homes with near-term completions to turn inventories
Increased Spec Builds 99% of total home deliveries were spec builds compared to 96% of total deliveries in 2022
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 Appendix A for a reconciliation of non-GAAP financial measures to most comparable measures under U.S. GAAP.
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CORPORATE GOVERNANCE HIGHLIGHTS
| Annual election of all directors | Annual say-on-pay vote |
| 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 | Clawback policy |
| Independent presiding director | No poison pill |
| Board oversight of cybersecurity, ESG and other risks | Single class of stock |
| Robust Board and committee evaluations | Updated insider trading policy |
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 2023, our executives held approximately 200 meetings with 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 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 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. – 2024 Proxy Statement | 9 |
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| 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 2023 constituted 53% of our Co-Chief Executive Officer (Co-CEOs) target total direct compensation and 47% for our former Chief Financial Officer (CFO), and comprised of 100% performance share unit (PSU) awards, which have a three-year performance period and then a one-year holding period on the shares issued in settlement thereof. |
| Emphasize performance-based compensation elements. | 90% of our Co-CEO target compensation and 85% of our former CFO target compensation for 2023 is performance-based. |
| 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 resulting from 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. |
BOARD COMPOSITION AND KEY QUALIFICATIONS
The following describes the current diversity, age and tenure of our Board of Directors:
| Century Communities, Inc. – 2024 Proxy Statement | 10 |
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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) | 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 serve as Century’s Co-Chief Executive Officers. |
| Century Communities, Inc. – 2024 Proxy Statement | 11 |
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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 clawback policy | No pledging of Century securities | |
| Hold an annual say-on-pay vote | No repricing of stock options |
2023 EXECUTIVE COMPENSATION ACTIONS
For 2023, our only named executive officers were our Co-Chief Executive Officers and former Chief Financial Officer. Our CFO voluntarily resigned effective March 22, 2024. 2023 compensation actions and incentive plan outcomes based on performance are summarized below:
| Pay Element | 2023 Actions |
|---|---|
| Base Salary | ● No base salary increases for our Co-CEOs or former CFO occurred during 2023. |
| 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 former CFO. ● Actual performance exceeded maximum for all three performance metrics. |
| 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 2023 long-term incentive program consisted of 100% performance share unit awards, which may vest and be paid out in shares of our common stock dependent upon the achievement of a cumulative adjusted pre-tax income goal for the years 2023-2025. All net shares issued in settlement of these PSU awards are subject to a one-year mandatory holding period. |
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| Pay Element | 2023 Actions |
|---|---|
| ● Our 2021 PSU awards were paid out at the maximum payout level, based on our 2021-2023 cumulative adjusted pre-tax income. | |
| Other Compensation Related Actions | ● Approximately 93% of votes cast at our 2023 Annual Meeting of Stockholders were in favor of our annual say-on-pay vote. |
2025 ANNUAL MEETING OF STOCKHOLDERS
We anticipate that our 2025 Annual Meeting of Stockholders will be held on Wednesday, May 7, 2025. The following are important dates in connection with our 2025 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 12, 2024 |
| Nomination of a Candidate Pursuant to our Bylaws | Between January 8, 2025 and February 7, 2025 |
| Proposal of Other Business for Consideration Pursuant to our Bylaws | Between January 8, 2025 and February 7, 2025 |
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