Charles Merdian
LGI HomesAbout Charles Merdian
Charles Merdian, age 55, is LGI Homes’ Chief Financial Officer and Treasurer. He has served as CFO and Treasurer since 2013; the proxy also notes he became CFO in 2010 and was LGI’s Controller from 2004–2010, after roles at The Woodlands Operating Company, Williamson‑Dickie Manufacturing Co., and Coopers & Lybrand. He is a CPA, a member of the Texas Society of CPAs, and serves on the Montgomery County Habitat for Humanity Board of Directors . Company performance over the last three years: revenues of $2,304.5M (2022), $2,358.6M (2023), $2,202.6M (2024); pre‑tax net income of $418.1M (2022), $261.8M (2023), $258.9M (2024); diluted EPS of $13.76 (2022), $8.42 (2023), $8.30 (2024), and 2024 TSR value of a $100 investment at $126.54 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| LGI Homes | Controller | 2004–2010 | Built finance infrastructure during nationwide expansion; oversight of accounting and analysis |
| LGI Homes | Chief Financial Officer | At least 2010; CFO & Treasurer since 2013 | Led capital allocation, liquidity, and growth financing through cycles |
| The Woodlands Operating Company | Accounting and Finance Manager | Not disclosed | Real estate venture analysis for residential/commercial developments |
| Williamson‑Dickie Manufacturing Co. | Accounting Manager | Not disclosed | Corporate accounting leadership |
| Coopers & Lybrand LLP | Senior Auditor | Not disclosed | Audit rigor and controls foundation |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Texas Society of CPAs | Member | Not disclosed | Professional standards and continuing education |
| Montgomery County Habitat for Humanity | Board of Directors | Not disclosed | Community engagement; governance oversight |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $600,000 | $600,000 | $624,000 |
| All Other Compensation ($) | $15,493 | $15,383 | $16,657 |
| Total Compensation ($) | $2,077,119 | $2,444,105 | $2,837,911 |
Notes:
- NEO annual base salaries are set with market benchmarking; Merdian’s base rose 4% in 2024 vs. 2023 .
- Perquisites include 401(k) match and ESPP discount participation; 2024 perquisites totaled $16,657 .
Performance Compensation
| Component | Metric | Weighting | Threshold | Target | Maximum | 2024 Actual | Payout |
|---|---|---|---|---|---|---|---|
| Short‑Term Incentive (STI) | Pre‑Tax Net Income ($000s) | 75% | $154,055 | $290,250 | $437,614 | $258,913 | 80% overall rate |
| Short‑Term Incentive (STI) | Homes Closed | 25% | 6,000 | 7,500 | 9,000 | 6,131 | 80% overall rate |
| STI Target | % of Base Salary | — | — | 90% | — | — | — |
| STI Actual (CFO) | Bonus Paid ($) | — | — | — | — | — | $449,074 |
Long‑Term Incentive (LTI) design:
- Mix: 80% PSUs and 20% RSUs; RSUs have 3‑year cliff vest; PSUs have 3‑year performance period (cumulative Basic EPS) with payout range 0–200% and a cap at 100% if absolute TSR is negative .
- 2024 grant values (target, CFO): PSUs $998,000; RSUs $250,000 .
2024 Grants (CFO):
| Award Type | Grant Date | Quantity | Grant‑Date Fair Value |
|---|---|---|---|
| PSUs (target) | 3/8/2024 | 8,920 | $998,505 |
| RSUs | 3/8/2024 | 2,230 | $249,626 |
| RSUs (discretionary) | 12/15/2024 | 5,008 | $500,049 |
Vesting and results:
- RSUs: cliff vest on the 3rd anniversary of grant (e.g., 3/8/2027; 12/15/2027) .
- PSUs: performance period 2024–2026; vest and settle at determination date (March 2027) subject to employment .
- 2022 PSU cycle (2022–2024) paid at 0% (no shares issued on 3/8/2025) as cumulative Basic EPS of $30.71 was below the $42.84 threshold .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 143,346 shares; <1% of outstanding (23,397,074 as of 2/28/2025) |
| Unvested RSUs (12/31/2024) | 2,021 (3/15/2022), 2,300 (3/8/2023), 2,230 (3/8/2024), 5,008 (12/15/2024); market value per award shown in proxy ($89.40 close) |
| Unvested PSUs (target) | 8,081 (3/15/2022), 9,199 (3/8/2023), 8,920 (3/8/2024) |
| Vested in 2024 | 1,341 RSUs ($150,112) and 5,020 PSUs ($561,939) valued at $111.94 on 3/8/2024 |
| Stock Ownership Guidelines | CFO must hold 3× base salary; all executive officers in compliance as of 12/31/2024 |
| Hedging/Pledging Policy | Hedging prohibited; pledging permitted only with pre‑clearance; policy filed as exhibit to 2024 10‑K |
| Pledging Status | No pledging disclosed for Merdian; pledging disclosed for CEO (605,206 shares) |
| ESPP Participation | 3,043 shares purchased under ESPP since inception through 2/28/2025 |
Employment Terms
- Agreements: No individual employment or severance agreement for NEOs other than CEO; executive equity governed by the 2013 Incentive Plan .
- Change‑in‑Control: Equity awards have “reasonable” change‑in‑control provisions generally consistent with broader employee population; no separate cash severance for executives other than CEO .
- Clawback: 2023 policy requires recovery of incentive‑based compensation for three prior fiscal years upon a required accounting restatement (including error corrections) per NASDAQ listing standards .
- Insider Trading Policy: Prohibits hedging; pledging allowed with pre‑clearance .
- Ownership Guidelines: CFO must maintain 3× salary in company stock; compliance confirmed as of 12/31/2024 .
- Note on Insider Transactions: Attempted retrieval of Form 4 filings for “Charles Merdian” from 1/1/2024–11/19/2025 returned an authorization error; analysis relies on proxy‑disclosed vesting and ownership data pending Form 4 access (tool attempt logged).
Performance & Track Record
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Homes Closed | 6,621 | 6,729 | 6,131 (incl. 103 SFR bulk sale) |
| Revenues ($000s) | $2,304,455 | $2,358,580 | $2,202,598 |
| Gross Margin (%) | 28.1% | 23.0% | 24.2% |
| Pre‑Tax Net Income ($000s) | $418,116 | $261,754 | $258,913 |
| Diluted EPS ($) | $13.76 | $8.42 | $8.30 |
| TSR ($100 Investment) | $131.07 | $188.48 | $126.54 |
Highlights:
- 2024 STI paid at 80% reflects results below target on both pre‑tax net income and closings .
- 2022–2024 PSU cycle paid zero, demonstrating pay‑for‑performance discipline when long‑term EPS targets are missed .
- LTI cap: negative absolute TSR caps PSU payout at 100%, reinforcing downside risk control .
Compensation Structure Analysis
- Cash vs. Equity Mix: CFO target 2024 compensation mix emphasizes variable and equity (PSUs $998k; RSUs $250k vs. salary $624k; STI target $562k), consistent with alignment to long‑term performance .
- Metric Stability: STI metrics (pre‑tax net income 75%; closings 25%) used consistently since 2014, supporting comparability over time .
- Discretionary Grants: Additional RSUs granted on 12/15/2024 (5,008 units) suggest retention focus amid industry volatility .
- No Options: LGI does not use stock options for NEOs; awards are RSUs/PSUs only .
- Peer Benchmarking: Compensation benchmarked to general industry and a homebuilder peer group (11 companies) via Meridian; targets positioned around median with greater emphasis on incentive pay .
Risk Indicators & Red Flags
- Hedging Prohibited; Pledging Allowed with Pre‑Clearance: Policy permits pledging; Merdian has no pledge disclosures, but CEO pledging is a governance watch‑item .
- Clawback in Place: Restatement‑based recovery over prior three fiscal years lowers misreporting risk .
- Related Party Transactions: None disclosed in 2023–2024; routine captive insurance participation noted; no CFO‑specific conflicts disclosed .
- Say‑on‑Pay Support: 2023 vote received >95% support; suggests shareholder alignment with pay practices .
Compensation Peer Group (Benchmarking)
Beazer Homes USA; Century Communities; Dream Finders Homes; Green Brick Partners; Hovnanian Enterprises; KB Home; M/I Homes; MDC Holdings; Meritage Homes; Taylor Morrison Home; Tri Pointe Group .
Say‑on‑Pay & Shareholder Feedback
- Frequency: Annual Say‑on‑Pay through at least 2030 given 2024 frequency vote outcome .
- Support: 2023 Say‑on‑Pay received over 95% approval; Compensation Committee maintained approach accordingly .
Investment Implications
- Pay‑for‑Performance Discipline: Zero payout on 2022–2024 PSUs and an 80% STI payout underscore tight linkage to EPS and profitability; expect 2024–2026 PSU outcomes to be sensitive to EPS trajectory and absolute TSR into March 2027 .
- Retention and Selling Pressure: RSUs cliff vest on 3/8/2025–2027 and 12/15/2027; vesting typically coincides with Form 4 activity for tax withholding. Monitor March and December vesting windows for potential insider flows; Form 4 feed access is required for precise signals .
- Alignment: CFO beneficial ownership of 143,346 shares and compliance with 3× salary ownership guideline reduce misalignment risk; ESPP participation adds incremental accumulation at a 15% discount .
- Governance: Anti‑hedging and clawback policies are strong; pledging allowed with controls—no CFO pledge disclosed, but ongoing monitoring is prudent .
- Macro Sensitivity: STI and PSU metrics (closings, pre‑tax net income, EPS) are cyclical; valuation and execution risks tied to absorption pace, lot development, and wholesale mix, all highlighted in 2024 business discussion .