Phillippe Lord

About Phillippe Lord

Phillippe Lord (age 51) is Chief Executive Officer of Meritage Homes (MTH) and a Class II director, appointed CEO and to the Board effective January 1, 2021; he previously served as COO (2015–2020), West Region President (2012–2015), and founded the company’s strategic operations and market research function in 2008. He holds a B.S. in Economics and Business from Colorado State University and completed master’s coursework in Economics at the University of Arizona . Under his leadership in 2024, MTH delivered record home closings (15,611; +11.7% YoY), home closing revenue of $6.34B (+4.7% YoY), and diluted EPS of $10.72 (+7.6% YoY) . Cumulative TSR based on a $100 investment stood at $256.62 in 2024 versus peer group $252.18, with CAP/TSPV disclosures showing strong pay-performance linkage anchored in Adjusted ROA (13.8% in 2024) and relative TSR structures .

Past Roles

External Roles

Fixed Compensation

Notes:

• For 2025, the Board held CEO base salary flat; the Compensation Committee increased CEO target annual cash incentive to $3.25M and annual equity target to $5.5M (50% RSUs/50% PSUs)* . *Reflects program design and targets approved effective January 1, 2025.

Performance Compensation

2024 Annual Cash Incentive (Non-Equity Incentive Plan)

• Structure: 60% Adjusted EBITDA; 30% Home Closings; 10% Customer Satisfaction; linear interpolation; threshold–target–max schedule .
• CEO Target Bonus: $3,000,000 (derived target ≈ 300% of $1,000,000 base) .
• Actual 2024 Payouts (paid Feb 2025): $5,982,639 total .

Design safeguards:

• Clawback policy aligned with SEC/NYSE restatement rules .
• No discretionary bonuses paid in 2024 .

2024 Long-Term Incentives (granted Feb 22, 2024; 3-year cliff vest)

• Mix: 50% time-based RSUs; 50% performance share awards (PSUs) .
• PSU metrics: 70% Adjusted ROA (annual measurement; 3-year cliff vest); 30% 3-yr relative TSR vs peer group; 0–200% payout curves .

Prior-cycle performance highlights informing realized equity:

• 2022–2024 PSU (2022 grant) earned based on ROA: 2022 20.7% (150%), 2023 15.2% (150%), 2024 13.8% (137.6%); rTSR 46.1st percentile (92.2%) .
• Shares vested in 2024 for CEO: 84,068; value realized $6,709,047 (split-adjusted) .

Equity Ownership & Alignment

• Stock ownership guidelines: CEO must hold 6x base salary; sales restricted until compliance; all officers were in compliance or in transition as of Dec 31, 2024 .
• Hedging/pledging: Prohibited; no pledges by NEOs or directors .

Beneficial Ownership (as of March 27, 2025)

Unvested/Upcoming Vesting (as of Dec 31, 2024; stock split-adjusted)

Insider selling pressure considerations:

• Significant vesting cadence (2025–2027) could create periodic tax-withholding sales; policy allows sale only to cover taxes pre-guideline compliance and then limits further sales until guidelines are met .

Employment Terms

• Agreement form: Employment agreements auto-renew annually (originals executed Jan 2021) .
• Core benefits: COBRA premium coverage for 24 months under severance scenarios; non-compete/NDAs referenced in severance valuation; 409A-compliant .

Severance and Change-in-Control (CIC) economics:

• Without Cause / Good Reason: 200% of base salary plus 200% of target bonus for CEO; time-based equity vests; performance awards vest after performance period based on actual results; 24 months COBRA .
• CIC: 300% of base salary plus 300% of target bonus for CEO; 100% of PSUs vest at target (equity acceleration) and time-based awards vest (equity appears single-trigger; cash severance requires qualifying termination) .
• No tax gross-ups; double-trigger approach for cash severance; clawback policy in place .

Potential CEO payouts (valuation as of Dec 31, 2024, at $76.91 share price):

Board Governance

• Role: Director (Class II) since 2021; not independent; does not serve on Board committees (committees are all-independent) .
• Board structure: Executive Chairman (Steven J. Hilton); Lead Independent Director (Peter L. Ax) with formal charter and authority to set agendas and lead executive sessions .
• Board and committees held 6 Board meetings and respective committee meetings in 2024; all directors attended ≥75%; independent directors met in executive session 4 times in 2024 .
• Declassification: Board seeking stockholder approval to phase declassify beginning 2026; all directors elected annually starting 2027 .
• Director pay: Executive directors receive no additional compensation for Board service .

Director Service Details (Lord)

Compensation Structure Diagnostics

• Mix and at-risk orientation: A substantial portion of CEO pay is performance-based (short-term cash metrics and long-term equity with ROA/rTSR metrics), consistent with stated pay-for-performance philosophy .
• 2024 payout drivers: Above-target Adjusted EBITDA and closings plus max customer satisfaction generated a 2024 bonus near 200% of target on key components; total cash incentive $5.98M .
• LTI rigor: PSU curves (50–200%), ROA thresholds benchmarked to peers, rTSR relative to peer set; cliff vesting supports retention and alignment .
• Governance best practices: No option grants in program; anti-hedging/pledging; clawback policy; independent comp consultant (Pearl Meyer) since 2018; no tax gross-ups for severance/CIC .
• Shareholder voice: 2024 Say-on-Pay support ~94% of votes cast .

Performance & Track Record

Strategic execution highlights: Continued 100% spec strategy; later-in-cycle selling to better compete with resale; normalized cycle times (~120 days exit 2024); expanded financing incentives to address rate volatility; entered new markets; capital returns via buybacks and dividend increase .

Equity Ownership & Alignment (Additional Policies)

• Stock ownership guidelines: Directors 5x cash retainer; CEO 6x salary; CFO/COO 3x; GC/CPO 2x; once compliant, subsequent price declines do not force additional purchase .
• Sales discipline: Prior to meeting guidelines, executives may sell only for tax withholding, then at most 50% of vested shares in a fiscal year; balance must be held .

Employment Terms (Additional Details)

• Plan design: Non-Equity Incentive Plan targets set early each year considering margins, incentives, and macro conditions; target-setting context disclosed .
• Severance valuation methodology and caps: Potential payment values assume Dec 31, 2024 termination and $76.91 share price; actual outcomes could differ materially .

Investment Implications

• Pay–performance alignment is strong: a majority of CEO compensation is tied to specific KPIs (Adjusted EBITDA, closings, customer satisfaction) and rigorous multi-year equity metrics (Adjusted ROA, rTSR), with 2024 results driving above-target cash payouts and sustained PSU earning rates—supportive of operational execution and TSR durability .
• Retention risk appears contained: large unvested equity over 2025–2027, ownership guideline restrictions on selling, and competitive 2025 target increases (cash and equity) incentivize continuity through the strategic cycle .
• Potential supply overhang: equity vesting may lead to periodic tax sales, but policy constraints limit broader disposals until guideline compliance; no pledging (reduced forced-sale risk) .
• CIC risk and M&A optics: cash severance is double-trigger (mitigates entrenchment), but equity acceleration on CIC appears single-trigger (target payout) which can be shareholder-unfriendly in certain transactions; headline CEO CIC value ~$33.9M (2024 basis) should be considered in deal modeling .
• Governance: separation of CEO and Executive Chairman with a strong Lead Independent Director, all-independent committees, and planned declassification enhance accountability; Say-on-Pay support (~94%) reduces near-term governance risk premium .

Overall, Lord’s package provides high at-risk alignment to efficiency (ROA), growth (closings), and relative value creation (rTSR). The vesting runway and ownership discipline reduce near-term churn risk, while CIC equity acceleration merits attention in transaction scenarios .