LENNAR CORPORATION Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Throughout 2022, we received feedback from extensive outreach to our
shareholders to obtain their suggestions for changes to our executive
compensation programs. We also consulted with an independent compensation
advisor to obtain additional input. Based on this feedback, on
SUMMARY
The Company expects to deliver record earnings in fiscal 2022. Notwithstanding these results, the Committee has established new 2022 compensation programs for Messrs. Miller, Beckwitt, and Jaffe as follows:
• Total compensation for each of the executive officers for fiscal 2022 is
expected to be reduced approximately 11-12% from total compensation
earned for fiscal 2021.
• Short-term cash incentives will be a lower percentage of total
compensation. Additionally, such incentives will be subject to a maximum
annual payout cap set as a dollar amount.
• Long-term equity incentives will be a higher percentage of total
compensation. Long-term equity incentives include both time-based shares
and performance shares. The mix between time-based shares and performance
shares will be weighted more heavily towards performance shares. The
time-based shares vest over three years and the performance shares are
based on three years of performance.
• The performance shares target will be increased, requiring even greater
performance relative to our peer group.
WHAT WE HEARD FROM CHANGES
OUR SHAREHOLDERS FOR FISCAL 2022
• Evaluate total executive compensation • Total compensation for our two
relative to peers. Co-CEOs for fiscal 2022 will be
reduced approximately 12% from total
compensation for fiscal 2021.
• Target total compensation for each
CEO is approximately $30 million
• Total Executive Chairman
compensation for fiscal 2022 will be
reduced approximately 11% from total
compensation for fiscal 2021.
• Target total compensation is
approximately $34 million • Short-term cash incentives should be a • The incentive pay mix will be lower percentage of total compensation, targeted at approximately 20% cash / and long-term equity incentives should 80% equity. be a higher percentage of total compensation. Suggested incentive pay • The increased equity percentage will mix: 30% cash / 70% equity.
provide even greater alignment with
shareholders.
• Short-term cash incentive bonuses • Short-term cash incentive bonus for
should be subject to a maximum annual each Co-CEO will be capped at
payout cap set as a dollar amount.
• Short-term cash incentive bonus for
our Executive Chairman will be capped
at $7 million .
• Long-term equity incentives should be • The total value of long-term equity more heavily weighted towards
incentives will be weighted with a
performance shares versus time-based target of approximately 35% in value shares. Suggested weighting: 40%
of time-based shares and 65% in value
time-based shares / 60% performance of performance shares to be
shares. accomplished by issuing additional
performance shares.
• The increase in the performance
share allocation will provide even
greater alignment with shareholders.
• Performance shares target award • Performance shares target award payouts should only be provided in payouts will be increased to the 60th connection with outperformance versus percentile. peers, which provides a stronger link between executive pay and Company • The increase in the performance performance. Target should be greater target goals (for gross profit than 50th percentile. Suggested target: percentage, return on tangible 55th percentile.
capital, and total shareholder
returns) to the 60th percentile
relative to those in our peer group
will further strengthen the alignment
between executive pay and Company
performance.
Earlier in the year, the Committee authorized the establishment of a bonus pool to be funded by reductions in executive cash bonuses that would provide additional compensation to Associates at the lower end of the Company's compensation levels. Based on the significant changes in cash bonus compensation described above that we are implementing in response to shareholder and independent compensation advisor feedback, combined with the recognition of challenging market conditions throughout fiscal 2022, the Company decided against establishing the bonus pool. Rather, the Company adjusted compensation upward throughout the year for certain Associates at the lower end of the Company's compensation levels to reward and ensure the retention of the Company's valued Associates. These adjustments provided more immediate benefits to the Associates in a highly inflationary period.
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The Amended and Restated 2022 Award Agreements under the Company's 2016
Incentive Compensation Plan, as amended and restated ("Incentive Plan"), and the
Form of the Amended and Restated 2022 Award Agreement under the Company's 2016
Equity Incentive Plan, as amended and restated ("Equity Plan"), are attached as
exhibits to this filing and are incorporated by reference herein. In addition,
the Form of the 2022 Award Agreement under the Equity Plan under which
Forward-Looking Statements. Some of the statements in this Form 8-K are
"forward-looking statements," as that term is defined in the Private Securities
Litigation Reform Act of 1995, including statements regarding the Company's
earnings in fiscal 2022. These forward-looking statements are subject to risks,
uncertainties and assumptions. Accordingly, these forward-looking statements
should be evaluated with consideration given to the many risks and uncertainties
that could cause actual results and events to differ materially from those in
the forward-looking statements. They include the risks detailed in the Company's
filings with the
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description of Document
10.1 Amended and Restated 2022 Award Agreements under the Incentive Plan
for Mr. Miller , Mr. Beckwitt and Mr. Jaffe .
10.2 Form of the Amended and Restated 2022 Award Agreement under the
Equity Plan for Mr. Miller , Mr. Beckwitt and Mr. Jaffe .
10.3 Form of the 2022 Award Agreement for Performance Shares granted
under the Equity Plan for Mr. Miller , Mr. Beckwitt and Mr. Jaffe .
104 Cover Page Interactive Data File--the cover page XBRL tags are
embedded within the Inline XBRL document.
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