MERITAGE HOMES CORPORATION ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
As previously reported, effectiveJanuary 1, 2021 ,Phillippe Lord was appointed as Chief Executive Officer ofMeritage Homes Corporation (the "Company") to succeedSteven J. Hilton ,Clinton Szubinski was appointed as Chief Operating Officer, andMr. Hilton will now serve as the Executive Chairman. OnJanuary 22, 2021 , in connection with his appointment as Chief Executive Officer, the Company andMr. Lord entered into a new employment agreement. Pursuant to this agreement,Mr. Lord will receive a base salary of$850,000 , an annual cash incentive bonus with target bonus of$2,125,000 (with a payout ranging from 0% to 200% contingent on the achievement of certain performance goals ), and an annual equity award grant with an aggregate award value equal to$2,975,000 , with 50% of the award value to be comprised of service-based restricted stock units and 50% of the award value to be comprised of performance shares. The performance share award will vest contingent upon the achievement of established performance targets over three years with a payout range between 0% and 150% of target. The above description ofMr. Lord's compensation arrangement is qualified in its entirety by the terms and conditions set forth in the employment agreement filed at Exhibit 10.1 to this Form 8-K, which is incorporated by reference herein. In connection with his appointment as Chief Operating Officer, onJanuary 22, 2021 the Company andMr. Szubinski entered into an employment agreement. Pursuant to this agreement,Mr. Szubinski will receive a base salary of$600,000 , an annual cash incentive bonus with target bonus of$1,200,000 (with a payout ranging from 0% to 200% contingent on the achievement of certain performance goals), and an annual equity award grant with an aggregate award value equal to$1,200,000 , with 50% of the award value to be comprised of service-based restricted stock units and 50% of the award value to be comprised of performance shares. The performance share award will vest based upon the achievement of established performance targets over three years with a payout range between 0% and 150% of target.
The above description of
In connection with his retirement from the position of Chief Executive Officer and continued service as Executive Chairman, onJanuary 22, 2021 the Company andMr. Hilton entered into a new employment agreement. Pursuant to this agreement,Mr. Hilton will receive an annual base salary of$1,000,000 , an annual cash incentive bonus with target bonus of$1,000,000 (with a payout ranging from 0% to 100% contingent on the achievement of certain performance goals), and an annual equity award grant with an aggregate award value of$1,000,000 with 50% of the award value to be comprised of service-based restricted stock units and 50% of the award value to be comprised of performance shares. The performance share award will vest based upon the achievement of established performance targets over three years with a payout range between 0% and 100% of target. The above description ofMr. Hilton's compensation arrangement is qualified in its entirety by the terms and conditions set forth in the employment letter agreement at Exhibit 10.3 to this Form 8-K, which is incorporated by reference herein. Also onJanuary 22, 2021 , the Company andHilla Sferruzza , Executive Vice President and Chief Financial Officer, entered into a new employment agreement. Pursuant to this agreement,Ms. Sferruzza will receive a base salary of$675,000 , an annual cash incentive bonus with target bonus of$843,750 (with a payout ranging from 0% to 200% contingent on the achievement of certain performance goals), and an annual equity award grant with an aggregate award value equal to$1,350,000 , with 50% of the award value to be comprised of service-based restricted stock units and 50% of the award value to be comprised of performance shares. The performance share award will vest contingent upon the achievement of established performance targets over three years with a payout range between 0% and 150% of target. The above description ofMs. Sferruzza's compensation arrangement is qualified in its entirety by the terms and conditions set forth in the employment letter agreement at Exhibit 10.4 to this Form 8-K, which is incorporated by reference herein. Also onJanuary 22, 2021 , the Company andJavier Feliciano , Executive Vice President andChief People Officer , entered into a new employment agreement. Pursuant to this agreement,Mr. Feliciano will receive a base salary of$400,000 , an annual cash incentive bonus with target bonus of$300,000 (with a payout ranging from 0% to 200% contingent on the achievement of certain performance goals ), and an annual equity award grant with an aggregate award value equal to$500,000 , with 50% of the award value to be comprised of service-based restricted stock units and 50% of the award value to be comprised of -------------------------------------------------------------------------------- performance shares. The performance share award will vest contingent upon the achievement of established performance targets over three years with a payout range between 0% and 150% of target. The above description ofMr. Feliciano's compensation arrangement is qualified in its entirety by the terms and conditions set forth in the employment letter agreement at Exhibit 10.6 to this Form 8-K, which is incorporated by reference herein. Also, onJanuary 22, 2021 ,C. Timothy White's previous employment agreement was supplemented with an exhibit containing administrative clarifications, with no compensation adjustments. Following is a summary of the current compensation for each of the Company's executive officers as ofJanuary 1, 2021 . Base Salary Compensation Executive Officer Base SalaryPhillippe Lord $850,000 Hilla Sferruzza $675,000 C. Timothy White $560,000 Clinton Szubinski $600,000 Javier Feliciano $400,000 Steven J. Hilton $1,000,000
Performance-Based Compensation
Annual Target (non-cash)
Annual Target Cash Equity Incentive Compensation
Executive Officer Incentive Compensation (1) (2)
Phillippe Lord $2,125,000 $2,975,000
Hilla Sferruzza $843,750 $1,350,000
C. Timothy White $610,909 $865,454
Clinton Szubinski $1,200,000 $1,200,000
Javier Feliciano $300,000 $500,000
Steven J. Hilton $1,000,000 $1,000,000 (1) Actual payout for cash incentive compensation can range from 0% to 200%
contingent upon the achievement of performance goals, with the exception of
(2) 50% of the award value is to be comprised of service-based restricted stock units and 50% of the award value is to be comprised of performance shares. The performance share awards will vest based upon the achievement of established performance targets over three years with a payout range between 0% and 150% of target, with the exception ofMr. Hilton whose payout range is between 0% and 100%.
-------------------------------------------------------------------------------- In addition, Messrs. Lord, Szubinski, Feliciano and Hilton andMs. Sferruzza also entered into a revised severance plan onJanuary 22, 2021 , with revised benefits outlined in the table below. Voluntary Voluntary Resignation by Resignation by Officer With Good Officer Without Good Reason or Reason or Termination by the Termination by the Company Without In Connection with Company With Cause Cause (1)
Death or Disability Retirement (2) Change In Control (6) Base salary and paid time off
X X X X X
through date of termination
Pro-rata annual cash incentive
bonus for period in which X X
termination occurs based on actual
performance achieved
Target annual cash incentive bonus
for the performance period in which X
the termination occurs
Pro-rata target annual cash
incentive bonus for the performance X
period in which the termination
occurs
Service based (time based) awards
and restricted stock units that are X X X
outstanding shall immediately vest
and become unrestricted
100% of performance share awards
(or restricted stock units) shall X
immediately vest and become
unrestricted (7)
Previously granted
performance-based shares (or
performance-based restricted stock
units) that have not vested will
immediately vest and become X X
unrestricted following the end of
the applicable performance period
based on actual performance
achieved
Any outstanding and vested stock
options will remain exercisable as X X X
provided by in the original equity
awards (3) (4)
Any outstanding and unvested stock
options will immediately vest and
will remain exercisable for the 12 X X X
months following the termination
date. (8)
Payment for health coverage equal
to 100% of monthly COBRA premium X X
for 24 months
Severance payment equal to a
multiplier based on the respective
role at time of termination times
the executive officer's base salary X X
plus a multiplier based on the
respective role at time of
termination times the target bonus
in the year of termination (5)
(1)If the executive whose employment is being terminated by the Company without
cause satisfies the service requirements for Retirement as described in Note (2)
below, the executive may elect to receive Retirement benefits.
(2)In order to qualify for the above retirement termination benefits, in
addition to any time restrictions as contemplated in each individual employment
agreement, executive must complete 15 cumulative years as an executive officer
(as defined by the Executive Severance Agreement) or member of the board.
Neither Ms. Sferruzza or Messrs. Lord, Szubinski or Feliciano have yet satisfied
the 15 year threshold.
(3)Upon termination for cause, any outstanding and vested stock options shall be
cancelled as of the termination date.
(4)In the event of death or disability, stock options will remain exercisable
until the 12 month anniversary of the termination date, provided, however, that
the post-termination exercise period for any individual stock option will not
extend beyond the earlier of its original maximum term or the tenth anniversary
of the original date of grant.
(5)Severance payments for Ms. Sferruzza and Mr. Feliciano in a non
change-in-control have minimum payments of $2,000,000 and $1,137,500 ,
respectively.
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(6)Voluntary resignation with good reason must take place within the time period
as defined in the severance plan with respect to a change-in- control.
(7)In the event the performance shares are to vest based on achievement of
future performance, vesting calculation is to assume target levels had been
achieved for the performance criteria.
(8)In the event of retirement, any outstanding and unvested stock options will
immediately vest and will remain exercisable for the remainder of the original
term, but not later than the tenth anniversary of original date of grant.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit Number Description
10.1 Phillippe Lord Employment Agreement Filed herewith
10.2 Clinton Szubinski Employment Agreement Filed herewith
10.3 Steven J. Hilton Employment Agreement Filed herewith
Hilla Sferruzza - Employm ent
10.4 Agreemen t Filed herewith
C. Timothy White - Revised
E xhibit A to Th ird Amended and
10.5 Restated Employ ment Agreement Filed herewith
Javier Feliciano - Employm ent
10.6 Agreement Filed herewith
Meritage Homes Corporation Executive Severance
10.7 Agreement Filed herewith
The cover page from this Current Report on Form
104 8-K, formatted in Inline XBRL.
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