Steven J. Hilton
Meritage HomesAbout Steven J. Hilton
Steven J. Hilton, age 63, is Meritage Homes’ co‑founder and Executive Chairman, serving on the Board since 1996 and leading the company for 35 years as Chairman and CEO until retiring as CEO effective January 1, 2021; he holds a Bachelor’s in Accounting from the University of Arizona . Company performance under current leadership shows 2024 home closing revenue of $6,341,546 thousand (+4.7% YoY) with earnings before income taxes of $1,002,870 thousand (+5.6% YoY) and diluted EPS of $10.72 (+7.6% YoY), while book value per share rose 12.9% and ROA was 13.2% . Pay‑versus‑performance disclosures show cumulative TSR value of a $100 initial investment at $256.62 in 2024 and Adjusted ROA of 13.8% (company’s selected measure), evidencing sustained capital efficiency and shareholder returns .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Meritage Homes (Monterey Homes predecessor) | Co‑founder | 1985 | Built Arizona-based Monterey Homes; took it public in 1997 |
| Meritage Homes | Chairman & CEO | ~1985–2020 | Led for 35 years; scaled national operations and public-market presence |
| Meritage Homes | Executive Chairman | 2021–Present | Strategic oversight; largest non‑institutional stockholder; governance leadership |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Western Alliance Bancorporation (NYSE: WAL) | Director | 2004–2022 | Financial oversight at regional bank; governance experience |
| Banner Health Foundation | Chairman of the Board | 2021–2023 | Led philanthropy and community impact initiatives |
| Translational Genomics Research Institute (TGEN) Foundation | Board Member | Current | Life-sciences philanthropy and community engagement |
| Boys & Girls Clubs of Greater Scottsdale Foundation | Board Member | Current | Youth development and local philanthropy |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 1,000,000 | 1,000,000 | 1,000,000 |
| Stock Awards ($, grant-date fair value) | 1,018,757 | 1,048,777 | 985,568 |
| Non‑Equity Incentive Plan ($) | 1,000,000 | 1,000,000 | 1,000,000 |
| All Other Compensation ($) | 30,349 | 31,412 | 32,380 |
| Total ($) | 3,049,106 | 3,080,189 | 3,017,948 |
Key notes:
- Base salary: $1,000,000 (2024) .
- Target annual cash incentive opportunity: $1,000,000; Hilton’s payouts are capped at 100% of target across metrics per agreement .
- Perquisites are limited (life/disability premiums, 401(k) match); Hilton received $22,030 in health/insurance premiums and $10,350 401(k) match in 2024 .
Performance Compensation
Annual Incentive (2024)
| Metric | Weight | Target | Actual | Payout % | Payout $ |
|---|---|---|---|---|---|
| Adjusted EBITDA | 60% | ≥ $950,000k | $1,114,494k | 100.0% (capped) | $600,000 |
| Home Closings (Units) | 30% | ≥ 15,000 | 15,611 | 100.0% (capped) | $300,000 |
| Customer Satisfaction Rating | 10% | ≥ 89.0% | 95.0% | 100.0% (capped) | $100,000 |
| Total | 100% | — | — | — | $1,000,000 (paid Feb 2025) |
Program design: weights are 60% Adjusted EBITDA, 30% closings, 10% customer satisfaction; threshold/target/maximum payouts scale linearly, but Hilton’s payout cannot exceed target 100% .
Long‑Term Incentives (2024 grants)
| Award Type | Grant Date | Measure | Weight | Target Shares | Threshold | Max | Vesting |
|---|---|---|---|---|---|---|---|
| PSUs | Feb 22, 2024 | Adjusted ROA | 70% | 6,528 | 3,264 | 6,528 (cap) | Cliff vest at 3 years; annual ROA measured; payout capped at 100% |
| PSUs | Feb 22, 2024 | 3‑yr rTSR vs peer group | 30% | 6,528 | 3,264 | 6,528 (cap) | Cliff vest at 3 years; 3-year cumulative TSR; payout capped at 100% |
| RSUs | Feb 22, 2024 | Time‑based | — | 6,528 | — | — | Cliff vest at 3 years (2027) |
Design highlights:
- PSU weighting: Adjusted ROA 70%, rTSR 30%; both have threshold/target/maximum curves, but Hilton is ineligible for >100% payout .
- Peer group used for TSR and compensation benchmarking includes D.R. Horton, Lennar, Pulte, Toll Brothers, NVR and others; MDC excluded from TSR due to de‑listing .
Performance history benchmarks used for vesting of prior awards:
| Metric | Period | Target | Actual | Payout % |
|---|---|---|---|---|
| rTSR percentile | 2022–2024 | 50.0 | 46.1 | 92.2% |
| Adjusted ROA | 2024 | 10.0% | 13.8% | 137.6% |
| Adjusted ROA | 2023 | 10.0% | 15.2% | 150.0% |
| Adjusted ROA | 2022 | 10.0% | 20.7% | 150.0% |
Equity Ownership & Alignment
- Total beneficial ownership: 831,243 shares; of these, 751,243 held by family trusts (with 26,850 shares disclaimed) and 80,000 by a charitable foundation (disclaimed); ownership equals 1.2% of shares outstanding (71,830,262 as of Mar 27, 2025) .
- Stock ownership guidelines: Executive Chairman must hold 6x base salary; all officers and directors were in compliance or transitional compliance as of Dec 31, 2024 .
- Hedging and pledging: Prohibited by policy; none of the NEOs or directors have pledged company stock .
- Option awards: Not currently part of the executive compensation program .
Vesting pipeline (near‑term supply):
| Category | Vest Date | Shares |
|---|---|---|
| RSUs (time‑based) | Feb 2025 | 10,144 |
| RSUs (time‑based) | Feb 2026 | 9,270 |
| RSUs (time‑based) | Feb 2027 | 6,528 |
| PSUs (earned, not yet vested) | Feb 2025 | 9,907 |
| PSUs (earned, not yet vested) | Feb 2026 | 4,328 |
| PSUs (earned, not yet vested) | Feb 2027 | 1,524 |
| PSUs (unearned, target level) | Feb 2026 | 4,942 |
| PSUs (unearned, target level) | Feb 2027 | 5,004 |
Reference price for valuation: $76.91 closing price on the last business day of 2024 (applies to all vesting valuations if used); counts shown are split‑adjusted .
Employment Terms
- Employment agreement: New agreement effective January 2024; executive agreements auto‑renew annually unless notice is provided 60 days before year‑end .
- Annual cash incentive design (2024): 60% Adjusted EBITDA, 30% closings, 10% customer satisfaction; Hilton’s payout capped at target (100%) per agreement .
- Severance plan: Double‑trigger cash severance upon change‑in‑control; equity awards generally accelerate (single‑trigger) upon change‑in‑control (performance awards assume target if future performance applies) .
Change‑in‑control and termination economics (as of 12/31/2024):
| Scenario | Total Benefits ($) |
|---|---|
| Voluntary resignation w/o good reason or termination with cause | — |
| Termination w/o cause or resignation with good reason | $3,035,360 |
| Death or Disability | $4,972,171 |
| Retirement | $4,972,171 |
| In connection with Change‑in‑Control | $11,007,531 |
Multipliers: In non‑CoC events, Hilton’s severance multiplier is 0%; in CoC, multiplier is 300% of base salary and target bonus (cash), with COBRA premiums paid for 24 months; time‑based equity vests; performance equity vests at target if future period applies .
Policies:
- Clawback: Recovery of erroneously awarded incentive compensation in event of accounting restatement per NYSE rule; policy publicly available .
- No tax gross‑ups: Company policy prohibits gross‑ups on change‑in‑control/severance payments .
Board Governance
- Board service: Class I Director; Executive Chairman; Director since 1996 .
- Independence: Not independent due to executive officer status; independent directors comprise all committees; Hilton serves on no Board committees .
- Board leadership: Lead Independent Director is Peter L. Ax; collaborates on agendas, presides over independent director meetings, can call executive sessions; formal charter adopted .
- Meetings and attendance: Board held six meetings in 2024; each director attended ≥75% of aggregate Board and committee meetings; independent directors held four executive sessions in 2024 .
- Director compensation: Hilton receives no additional compensation for Board duties beyond NEO compensation .
- Governance evolution: Company seeking to declassify the Board starting 2026, fully annual elections by 2027 (subject to shareholder approval) .
Compensation Structure Analysis
- Mix stability: Hilton’s compensation has been highly consistent 2022–2024 with $1.0M salary, $1.0M capped annual incentive, and ~$1.0M equity grants each year, indicating moderate risk and strong alignment through equity without option leverage .
- Pay‑for‑performance: Annual incentive structure links 100% of variable cash to Adjusted EBITDA, closings and customer satisfaction; long‑term PSUs tie to Adjusted ROA (efficiency) and peer‑relative TSR, aligning with stockholder value creation; Hilton’s PSU upside capped at target level per agreement .
- Peer benchmarking: Pearl Meyer advises Compensation Committee; peer group includes major public builders; MDC removed from TSR peer set post de‑listing; no consultant conflicts disclosed .
- Shareholder support: 2024 Say‑on‑Pay approval ~94% of votes cast; annual say‑on‑pay cadence preferred by shareholders .
Investment Implications
- Alignment: Hilton’s 1.2% ownership, ownership guidelines compliance, and anti‑hedge/anti‑pledge policies support long‑term alignment; near‑term vesting cadence is measured (RSUs and PSUs), reducing mechanical selling pressure risk, though 2025–2027 cliff vests merit monitoring around windows .
- Retention risk: Minimal in standard non‑CoC separations given 0% severance multiplier, but significant CoC protection (300% cash and equity acceleration) could incentivize neutrality in strategic transactions; cash severance requires double‑trigger, while equity is single‑trigger under CoC, which can be shareholder‑sensitive .
- Pay rigor: Caps on Hilton’s variable payouts suggest conservative incentive risk; strong performance metrics (Adjusted ROA outperformance; robust closings) support pay‑for‑performance credibility; continued high Say‑on‑Pay approval indicates low governance overhang .
- Governance: Executive‑Chair plus Lead Independent Director model provides counterbalance; ongoing declassification efforts (2026–2027) should enhance accountability and responsiveness to shareholders .