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Section 1: DEF 14A (DEF 14A)


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A INFORMATION
 
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Filed by Registrant
Filed by a Party other than the Registrant
 
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Under Rule 14a-12
 
CENTURY COMMUNITIES, INC.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
No fee required.
   
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1)
Title of each class of securities to which transaction applies:
 
 
 
 
(2)
Aggregate number of securities to which transaction applies:
 
 
 
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
 
 
(4)
Proposed maximum aggregate value of transaction:
 
 
 
 
(5)
Total fee paid:
 
 
 
   
Fee paid previously with preliminary materials:
   
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1)
Amount Previously Paid:
 
 
 
 
(2)
Form, Schedule or Registration Statement No:
 
 
 
 
(3)
Filing Party:
 
 
 
 
(4)
Date Filed:
 
 
 



 

 
 
2019 ANNUAL MEETING OF
STOCKHOLDERS
 
PROXY STATEMENT
 



 
 
8390 East Crescent Parkway, Suite 650
Greenwood Village, Colorado 80111
(303) 770-8300

FROM OUR CHAIRMAN OF THE BOARD
 
Dear Fellow Stockholder:
 
You are cordially invited to attend the 2019 Annual Meeting of Stockholders of Century Communities, Inc., a Delaware corporation, to be held at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237, at 1:00 p.m. local time, on Wednesday, May 8, 2019.
 
At the Annual Meeting, you will be asked to consider and vote upon the following proposals: (1) to elect five directors to serve for the ensuing year as members of the Board of Directors of Century; (2) to approve the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan; (3) to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019; (4) to approve, on an advisory basis, our executive compensation; and (5) to transact such other business as may properly come before the Annual Meeting or at any continuation, postponement, or adjournment thereof.  The accompanying Notice of 2019 Annual Meeting of Stockholders and proxy statement describe these matters in more detail.  We urge you to read this information carefully.
 
The Board of Directors recommends a vote: FOR each of the five nominees for director named in the proxy statement and FOR the approval of the other proposals being submitted to a vote of stockholders.
 
Whether or not you attend the Annual Meeting in person, and regardless of the number of shares of Century common stock that you own, it is important that your shares be represented and voted at the Annual Meeting.  Therefore, I urge you to vote your shares of Century common stock via the Internet, by telephone, or by promptly marking, dating, signing, and returning the proxy card. Voting over the Internet, by telephone, or by written proxy will ensure that your shares are represented at the Annual Meeting.
 
On behalf of the Board of Directors and management of Century, we thank you for your participation and continued support.
 
 
 
Sincerely,
 
   
 
Dale Francescon
 
Chairman of the Board and
 
Co-Chief Executive Officer
   
 
March 27, 2019


 
 
You can help us make a difference by eliminating paper proxy materials.  With your consent, we will provide all future proxy materials electronically.  Instructions for consenting to electronic delivery can be found on your proxy card or at www.proxyvote.com. Your consent to receive stockholder materials electronically will remain in effect until canceled.
 


 
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
 
The 2019 Annual Meeting of Stockholders of Century Communities, Inc., a Delaware corporation, will be held on Wednesday, May 8, 2019, at 1:00 p.m. local time at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237, for the following purposes:
 
1.
To elect five directors to serve as members of the Board of Directors of Century until the next annual meeting of stockholders and until their successors are duly elected and qualified.  The director nominees named in the proxy statement for election to the Board of Directors are: Dale Francescon, Robert J. Francescon, John P. Box, Keith R. Guericke, and James M. Lippman;
 
2.
To approve the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan;
 
3.
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2019;
 
4.
To approve, on an advisory basis, our executive compensation; and
 
5.
To transact such other business as may properly come before the Annual Meeting or at any continuation, postponement, or adjournment thereof.
 
The proxy statement accompanying this Notice describes each of these items of business in detail.  Only holders of record of our common stock at the close of business on March 14, 2019 are entitled to notice of, to attend, and to vote at the Annual Meeting or any continuation, postponement, or adjournment thereof.  A list of such stockholders will be available for inspection, for any purpose germane to the Annual Meeting, at our principal executive offices during regular business hours for a period of no less than 10 days prior to the Annual Meeting.
 
All stockholders are cordially invited to attend the Annual Meeting in person.  To ensure your representation at the Annual Meeting, you are urged to vote your shares of Century common stock via the Internet, by telephone, or by promptly marking, dating, signing, and returning the proxy card.  If your shares of Century common stock are held by a bank, broker, or other agent, please follow the instructions from your bank, broker, or other agent to have your shares voted.
 
 
 
 BY ORDER OF THE BOARD OF DIRECTORS
   
   
   
 
 David L. Messenger
 
 Chief Financial Officer and Secretary
 
 
Greenwood Village, Colorado
 
March 27, 2019  


 
TABLE OF CONTENTS
 
Page
   
1
   
14
   
23
   
24
   
27
   
44
   
46
   
49
   
66
   
66
   
78
   
80
   
81
   
86
   
I-1


References in this proxy statement to:
 
“Century,” “we,” “us,” “our,” or the “Company” refer to Century Communities, Inc.;
“Board” refer to the Board of Directors of Century;
“Annual Meeting” refer to our 2019 Annual Meeting of Stockholders; and
“2018 Annual Report” or “2018 Annual Report to Stockholders” refer to our Annual Report on Form 10-K for the year ended December 31, 2018, being made available together with this proxy statement.
 
Information on our website and any other website referenced herein is not incorporated by reference into, and does not constitute a part of, this proxy statement.
 
We intend to make this proxy statement and our 2018 Annual Report available on the Internet and to commence mailing of the notice to all stockholders entitled to vote at the Annual Meeting beginning on or about March 27, 2019.  We will mail paper copies of these materials, together with a proxy card, within three business days of a request properly made by a stockholder entitled to vote at the 2019 Annual Meeting of Stockholders.


 
PROXY STATEMENT SUMMARY
 
This executive summary provides an overview of the information included in this proxy statement.  We recommend that you review the entire proxy statement and our 2018 Annual Report to Stockholders before voting.

2019 ANNUAL MEETING OF STOCKHOLDERS
 
DATE AND TIME
PROPOSALS
 
Wednesday, May 8, 2019
1:00 p.m. (Mountain Time)
 
LOCATION
 
Hyatt Regency
Denver Tech Center
7800 East Tufts Avenue
Denver, CO 80237
 
RECORD DATE
 
Holders of record of our common stock at the close of business on March 14, 2019, are entitled to notice of, to attend, and to vote at the 2019 Annual Meeting of Stockholders or any continuation, postponement, or adjournment thereof.
Proposal
Board’s Vote
Recommendation
Page
Proposal No. 1: Election of director
FOR
24
Proposal No. 2:
Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan
FOR
27
Proposal No. 3:
Ratification of appointment of independent registered public accounting firm
FOR
44
    Proposal No. 4:
Advisory vote on executive compensation
FOR
46
 





   
 


 
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on Wednesday, May 8, 2019
 
This proxy statement and our 2018 Annual Report of Stockholders are available on the Internet, free of charge, at www.proxyvote.com.  On this website, you will be able to access this proxy statement, our 2018 Annual Report, and any amendments or supplements to these materials that are required to be furnished to stockholders.  We encourage you to access and review all of the important information contained in the proxy materials before voting.
 
 
 
Century Communities, Inc. – 2019 Proxy Statement          1

2018 BUSINESS HIGHLIGHTS
 
2018 was another year of strong revenue growth and earnings acceleration for Century, leading to our 16th consecutive year of profitability. In 2018, we also continued to execute on our strategy of dynamic growth by expanding our geographic footprint into a variety of new and attractive U.S. markets through the acquisition of the remaining ownership interest of Wade Jurney Homes.  Highlights of our financial, operational and strategic achievements for 2018, which drove our 2018 executive pay decisions, are below.

FINANCIAL
 
$2.1 billion
Revenue
Achieved $2.1 billion in home sales revenues, a 51% é year-over-year
 
$119.9 million
Adjusted Net Income
Achieved a record $119.9 million, or $3.94 per share, a 69% é year-over-year
 
$227.9 million
Adjusted EBITDA
Achieved a record $227.9 million, a 51% é year-over-year
 
$387.5 million
Credit Facility Availability
Strengthened balance sheet and created flexibility with increased availability
 
 
 
OPERATIONAL
6,099
Home Deliveries
Achieved 6,099 home deliveries, a 68% é year-over-year
 
5,657
Net New Home Contracts
Achieved 5,657 net new home contracts, a 48% é year-over-year
 
2,181 homes
$669.5 million
Backlog
Backlog é 65%  to 2,181 homes, with value of $669.5 million,
a 17% é  over end of prior year
37,919
Lots Owned and Controlled
Ended the year with 37,919 owned and controlled lots, a 23% é over the end of the prior year
 
   
STRATEGIC
Increased Focus on Entry Level Price Point
Reduced average sales price of homes delivered and in backlog to $345,968 and $306,981, respectively
 
Completed Acquisition of Wade Jurney Homes
Bolstered our offering of homes for first time buyers, strengthened our presence in the Southeast United States, and moved into the ranks of the Top 10 U.S. homebuilders based on combined closings
 
Completed Integration of UCP, Inc.
Accelerated Financial Services Business
Achieved revenue of $31.7 million and pre-tax income of $8.8 million, compared to $9.8 million and $1.2 million, respectively, in prior year
 

Please see Annex I for a reconciliation of non-GAAP financial measures to most comparable measures under U.S. generally accepted accounting principles.
 
Century Communities, Inc. – 2019 Proxy Statement          2

 
CORPORATE GOVERNANCE
 
HIGHLIGHTS

Annual election of all directors
Robust Board and committee evaluations
       
Majority of independent directors
No poison pill
       
Independent presiding director
Annual say-on-pay vote
       
Officer and director stock ownership requirements
Double triggers for cash severance and accelerated vesting of equity upon a change in control
       
Hedging, pledging, and stock option repricing prohibitions
Robust clawback policy covering cash and equity incentive compensation paid to current and former executives
 
STOCKHOLDER ENGAGEMENT
 
We are committed to a robust and proactive stockholder engagement program.  The Board of Directors values the perspectives of our stockholders, and feedback from stockholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for Board discussions throughout the year.

During 2018, our executives held more than 200 meetings with stockholders representing over 70 percent of shares outstanding, in total, including all of our top 10 shareholders that are actively managed funds.

BOARD ENGAGEMENT
 
The Board of Directors maintains a process for stockholders and interested parties to communicate with the Board. Stockholders and interested parties may contact the Board of Directors as provided below:
 
 
 
WRITE
CALL
EMAIL
ATTEND
Corporate Secretary
Century Communities, Inc.
8390 E. Crescent Pkwy.
Suite 650
Greenwood Village, CO 80111
Investor Relations
303-268-8398
investorrelations@
centurycommunities.com
Annual Meeting of Stockholders
Wednesday, May 8, 2019
Hyatt Regency Denver Tech Center


Century Communities, Inc. – 2019 Proxy Statement          3

 
 
BOARD DIVERSITY        
 
The Board of Directors understands the importance of adding diverse, experienced talent to the Board in order to establish an array of experience and strategic views.  The Nominating and Corporate Governance Committee is committed to refreshment efforts to ensure that the composition of the Board and each of its committees encompasses a wide range of perspectives and knowledge.

BOARD NOMINEES
 
Below are the directors nominated for election by stockholders at the Annual Meeting for a one-year term. The Board recommends a vote “FOR” each of these nominees.

All director nominees listed below served during the fiscal year ended December 31, 2018, and attended at least 75% of the sum of all Board meetings and committee meetings, as applicable.

Director
Age
Serving Since
Independent
Committees
Dale Francescon(1)
66
2013
No(2)
N/A
Robert J. Francescon
61
2013
No(2)
N/A
John P. Box
72
2014
Yes
Audit, Compensation, Nominating and Corporate Governance
Keith R. Guericke(1)
70
2013
Yes
Audit, Compensation, Nominating and Corporate Governance
James M. Lippman
61
2013
Yes
Audit, Compensation, Nominating and Corporate Governance

(1)
Dale Francescon serves as Chairman of the Board of Directors. Because the Board endorses the concept of an independent, non-employee director being in a position of leadership, Keith R. Guericke serves as the presiding independent director.

(2)
Dale Francescon and Robert J. Francescon are not independent because they also serve as Century’s Co-Chief Executive Officers.


Century Communities, Inc. – 2019 Proxy Statement          4

 
BOARD AND COMMITTEE COMPOSITION
 
The Board of Directors has an Audit Committee, Compensation Committee, and a Nominating and Corporate Governance Committee.  Below are our directors, their committee memberships, and their 2018 attendance rates for Board and committee meetings.

 
Director
 
Board
 
Audit
 
Compensation
Nominating and
Corporate
Governance
Attendance
Rate
Dale Francescon
     
100%
Robert J. Francescon
     
100%
John P. Box
Chair
96%
Keith R. Guericke
Chair
100%
James M. Lippman
Chair
83%
 
KEY QUALIFICATIONS
 
The following are some of the key qualifications, skills, and experiences of our Board.

 
Director
CEO/Senior
Officer
Experience
Financial/Finance
Experience
Industry
Experience
Sales/Marketing
Experience
Corporate
Governance
Dale Francescon
Robert J. Francescon
John P. Box
 
Keith R. Guericke
James M. Lippman

The lack of a mark for a particular item does not mean that the director does not possess that qualification, characteristic, skill, or experience.  We look to each director to be knowledgeable in these areas; however, the mark indicates that the item is a particularly prominent qualification, characteristic, skill, or experience that the director brings to the Board.
Century Communities, Inc. – 2019 Proxy Statement          5

 

 
EXECUTIVE COMPENSATION PHILOSOPHY
 
Our executive compensation program is generally designed to attract, retain, motivate, and reward highly qualified and talented executive officers that will enable us to drive long-term stockholder value.

The core principles of our executive compensation program include:

Aligning the interests of our executives with those of our stockholders and linking pay to performance by providing compensation opportunities that are tied directly to the achievement of financial performance goals and long-term stock price performance;
   
Targeting fixed compensation at the market median; and
   
Targeting performance-based award levels at the market median and setting maximum award levels, if earned, at or above the market 75th percentile, thereby emphasizing performance-based compensation elements, with superior performance resulting in above-market pay, and underwhelming performance resulting in below-market pay.

EXECUTIVE COMPENSATION BEST PRACTICES
 
Our compensation practices include many best practices that support our executive compensation objectives and principles and benefit our stockholders.
 
What We Do
What We Don’t Do
Structure our executive officer compensation so that a significant portion of pay is at risk
No guaranteed salary increases or bonuses
       
Emphasize long-term performance in our equity-based incentive awards
No excessive perquisites
       
Use a mix of performance measures and caps on payouts
No repricing of stock options unless approved by stockholders
       
Require minimum vesting periods on equity awards
No discretionary bonuses
       
Require double-trigger for equity acceleration upon a change of control
No tax gross-ups
       
Maintain a competitive compensation package
No excise tax gross-ups
       
Have robust stock ownership guidelines and stock retention requirements for executive officers
No current payment of dividends on unvested awards
       
Maintain a robust clawback policy covering cash and equity incentive compensation paid to current and former executives
No short sales or derivative transactions in Century stock, including hedges
       
Hold an annual say-on-pay vote
No pledging of Century securities

 
Century Communities, Inc. – 2019 Proxy Statement          6

 
HOW WE PAY
 
Our executive compensation program consists of the following principal elements:
 
Base salary
   
Short-term cash incentive compensation, based on performance
   
Long-term equity incentive compensation, in the form of performance share and restricted stock unit awards
 
2018 EXECUTIVE COMPENSATION ACTIONS
 
2018 compensation actions and incentive plan outcomes based on performance are summarized below:
 
Pay Element
2018 Actions
Base Salary
·  Our Co-CEOs received no base salary increases.
 
·  Our CFO received a base salary increase of 15.8% to align to our target positioning in our peer group.
Short-Term Incentive
·  The target short-term incentive award opportunity for each of our Co-CEOs was increased from 150% to 175% of base salary to align with our target positioning and remained at 100% of base salary for our CFO.
 
·  Performance metrics were revenue (40%), EBITDA, as adjusted (40%), and closings (20%), in each case adjusted to exclude acquisitions, for our Co-CEOs, and revenue (30%), EBITDA as adjusted (30%), closings (15%), and individual goals (25%) for our CFO.
 
·  Payouts were between the target and maximum payout level, based on fiscal 2018 performance.
Long-Term Incentives
·  The target long-term incentive award opportunity for 2018 for each of our Co-CEOs was 250% of base salary and 220% of base salary for our CFO.
 
·  Our LTI program consisted of 60% performance share unit awards and 40% time-vested restricted stock unit awards.
 
·  The PSU awards vest and are paid out in shares of our common stock upon the achievement of a threshold three-year cumulative adjusted pre-tax income goal and will be subject to a one-year mandatory holding period.
 
·  The RSU awards vest in three equal annual installments.
Other Compensation Related Actions
·  Over 92% of votes cast at our 2018 Annual Meeting of Stockholders were in favor of our annual say-on-pay vote.
 
·  In October 2018, we entered into amended and restated employment agreements with our Co-CEOs.
 
·  In November 2018, we adopted a robust clawback policy covering cash and equity incentive compensation applicable to current and former executives.

Century Communities, Inc. – 2019 Proxy Statement          7

 
CENTURY COMMUNITIES AMENDED AND RESTATED 2017 OMNIBUS INCENTIVE PLAN
 
The Board has approved the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan (which we refer to as the “amended 2017 plan”).  The amended 2017 plan incorporates an amendment to the number of shares of Century common stock available for issuance under the plan by an additional 1.631 million shares.  Our continuing ability to offer equity incentive awards under the 2017 plan is critical to our ability to attract, motivate and retain qualified personnel, particularly as we grow and in light of the highly competitive markets for employee talent in which we operate.
 
In addition, the amended 2017 plan reflects certain changes in light of the Tax Cuts and Jobs Act and its impact on Section 162(m) of the Internal Revenue Code of 1986, as amended.  We retained, however, the annual award limits and performance measures as part of good corporate governance.  The amended 2017 plan also incorporates a more stringent limit on non-employee director awards limiting overall non-employee director compensation to $400,000 per year or $600,000 in the case of a non-employee chairman of the board or lead director.  Finally, the amended 2017 plan increases the limit on incentive stock options commensurate with the overall share increase and expands the exceptions to the minimum vesting provision to allow for shares delivered in lieu of fully vested cash awards and vesting on director awards tied to the timing of the next annual meeting of stockholders which may be less than one year from the date of grant so long as the annual meeting is more than 50 weeks after the preceding year’s annual meeting.
 
The Board recommends a vote “FOR” the approval of the amended 2017 plan.
 
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Although stockholder ratification is not required, the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal 2019 is being submitted for ratification at the Annual Meeting because the Board believes doing so is a good corporate governance practice.  The Board recommends a vote “FOR” the ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm.
 
2020 ANNUAL MEETING OF STOCKHOLDERS
 
Date of 2020 Annual Meeting of Stockholders
 
We anticipate that our 2020 Annual Meeting of Stockholders will be held on Wednesday, May 6, 2020.
 
Important Dates for Stockholder Submissions
 
The following are important dates in connection with our 2020 Annual Meeting of Stockholders.
 
Stockholder Action
Submission Deadline
Proposal Pursuant to Rule 14a-8 of the Securities Exchange Act of 1934
No later than November 26, 2019
Nomination of a Candidate Pursuant to our Bylaws
Between January 8, 2020, and February 7, 2020
Proposal of Other Business for Consideration Pursuant to our Bylaws
Between January 8, 2020, and February 7, 2020
 
Century Communities, Inc. – 2019 Proxy Statement          8

 
INFORMATION ABOUT THE ANNUAL MEETING
 
The Board of Directors of Century Communities, Inc. is using this proxy statement to solicit your proxy for use at our 2019 Annual Meeting of Stockholders.  The Board is soliciting proxies to give all stockholders of record an opportunity to vote on matters properly presented at the Annual Meeting.
 
We have elected to provide access to our proxy materials on the Internet.  Accordingly, we are sending an Important Notice of Availability of Proxy Materials for the Annual Meeting (which we refer to as the “Internet Notice”) to most of our stockholders of record and paper or electronic copies of the proxy materials to our remaining stockholders of record.  Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice.  All stockholders may request to receive a printed set of the proxy materials.  Instructions on how to request a printed copy by mail or electronically may be found on the Internet Notice and on the website referred to in the Internet Notice, including an option to request paper copies on an ongoing basis.  We will mail this proxy statement and 2018 Annual Report, together with a proxy card, to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of such request.
 
WHEN AND WHERE WILL THE ANNUAL MEETING BE HELD?
 
The Annual Meeting will be held on Wednesday, May 8, 2019, at 1:00 p.m. local time, at the Hyatt Regency Denver Tech Center located at 7800 East Tufts Avenue, Denver, Colorado 80237.
 
Directions to attend the Annual Meeting may be obtained by calling Investor Relations at (303) 268-8398.
 
WHAT ARE THE PURPOSES OF THE ANNUAL MEETING?
 
The purposes of the Annual Meeting are to vote on the following items described in this proxy statement:
 
Proposal
Item of Business
Proposal No. 1
Election of Directors
Proposal No. 2
Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan
Proposal No. 3
Ratification of Appointment of Independent Registered Public Accounting Firm
Proposal No. 4
Advisory Vote on Executive Compensation
 
There are no rights of appraisal or similar rights of dissenters arising from matters to be acted on at the meeting.

ARE THERE ANY MATTERS TO BE VOTED ON AT THE ANNUAL MEETING THAT ARE NOT INCLUDED IN THIS PROXY STATEMENT?
 
We currently are not aware of any business that will be presented at the Annual Meeting other than as described in this proxy statement.  If, however, any other matter is properly brought at the Annual Meeting, or any continuation, postponement, or adjournment thereof, your proxy includes discretionary authority on the part of the individuals appointed to vote your shares or act on those matters in accordance with their best judgment.
 
WHO CAN ATTEND THE ANNUAL MEETING?          
 
All of our stockholders entitled to vote at the Annual Meeting may attend the Annual Meeting.  If your shares are held in street name, however, you may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from the record holder of your shares.
 
Century Communities, Inc. – 2019 Proxy Statement          9

 
Stockholders who wish to attend the Annual Meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will be required to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the Annual Meeting.  No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the Annual Meeting.
 
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?          
 
Holders of record of shares of our common stock, $0.01 par value, as of the close of business on March 14, 2019, the record date, will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement, or adjournment thereof.  At the close of business on the record date, there were 30,297,398 shares of our common stock issued and outstanding and entitled to vote.  Each share of our common stock is entitled to one vote on any matter presented to stockholders at the Annual Meeting.
 
HOW MANY SHARES MUST BE PRESENT?          
 
A quorum must be present at the Annual Meeting for any business to be conducted.  The presence at the Annual Meeting, in person or by proxy, of the holders of a majority in voting power of our capital stock issued and outstanding and entitled to vote on the record date will constitute a quorum.  Your shares will be counted toward the quorum if you submit a proxy or vote at the Annual Meeting.  Shares represented by proxies marked “abstain” and “broker non-votes” also are counted in determining whether a quorum is present.
 
WHAT IF A QUORUM IS NOT PRESENT?          
 
If a quorum is not present or represented at the scheduled time of the Annual Meeting, (i) the chairperson of the Annual Meeting or (ii) a majority in voting power of the stockholders entitled to vote at the Annual Meeting, present in person or represented by proxy, may adjourn the Annual Meeting until a quorum is present or represented.
 
HOW DO I VOTE?          
 
We recommend that stockholders vote by proxy even if they plan to attend the Annual Meeting and vote in person.  If you are a stockholder of record, there are three ways to vote by proxy:
 
·
by Telephone—You can vote by telephone by calling 1-800-690-6903 and following the instructions on the proxy card;
 
·
by Internet—You can vote over the Internet at www.proxyvote.com by following the instructions on the Internet Notice or proxy card; or
 
·
by Mail—You can vote by mail by signing, dating, and mailing the proxy card, which you may have received by mail.
 
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Daylight Savings Time, on May 7, 2019.  If you vote through the Internet, you should be aware that you may incur costs to access the Internet, such as usage charges from telephone companies or Internet service providers, and that these costs must be borne by you.
 
If your shares are held in the name of a bank, broker, or other holder of record, you will receive instructions on how to vote from the bank, broker, or holder of record.  You must follow the instructions of such bank, broker, or holder of record in order for your shares to be voted.  Telephone and Internet voting also may be offered to stockholders owning shares through certain banks and brokers.  If your shares are not registered in your own name and you would like to vote your shares in person at the Annual Meeting, you should contact your bank, broker, or agent to obtain a legal proxy or the bank’s or broker’s proxy card and bring it to the Annual Meeting in order to vote.
 
Century Communities, Inc. – 2019 Proxy Statement          10

 
WHAT IS THE DIFFERENCE BETWEEN BEING A “RECORD HOLDER” AND HOLDING SHARES IN “STREET NAME”?          
 
A record holder holds shares in his or her name.  Shares held in “street name” means that shares are held in the name of a bank or broker on a person’s behalf.
 
CAN I VOTE IF MY SHARES ARE HELD IN “STREET NAME”?          
 
Yes.  If your shares are held by a bank or a brokerage firm, you are considered the “beneficial owner” of those shares held in “street name.”  If your shares are held in street name, these proxy materials are being forwarded to you by your bank or brokerage firm along with a voting instruction card.  As the beneficial owner, you have the right to direct your bank or brokerage firm how to vote your shares, and your bank or brokerage firm is required to vote your shares in accordance with your instructions.
 
WHAT ARE BROKER NON-VOTES?          
 
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting power to vote those shares.
 
A broker is entitled to vote shares held for a beneficial owner on routine matters.  The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm in Proposal No. 2 is a routine matter; and accordingly, a broker is entitled to vote shares held for a beneficial owner on that proposal, without instructions from such beneficial owner.  On the other hand, absent instructions from a beneficial owner, a broker is not entitled to vote shares held for such beneficial owner on non-routine matters.  We believe, based on the rules of the New York Stock Exchange (NYSE), that the election of directors in Proposal No. 1, the amendment to the Century Communities, Inc. 2017 Omnibus Incentive Plan in Proposal No. 2 and the advisory vote on executive compensation in Proposal No. 4 are non-routine matters; and accordingly, brokers do not have authority to vote on such matters absent instructions from beneficial owners.  Whether a voting proposal is ultimately determined routine or non-routine is determined by the NYSE.  Accordingly, if beneficial owners desire not to have their shares voted by a broker in a certain manner, they should give instructions to their brokers as to how to vote their shares.
 
Broker non-votes count for purposes of determining whether a quorum is present.
 
HOW DOES THE BOARD RECOMMEND I VOTE?          
 
The Board recommends that you vote:
 
·
FOR the election of Dale Francescon, Robert J. Francescon, John P. Box, Keith R. Guericke, and James M. Lippman to serve as members of the Board until the next annual meeting of stockholders and until their successors are duly elected and qualified;
 
·
FOR the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan;
 
·
FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019; and
 
·
FOR the approval of the advisory vote on our executive compensation.
 
Century Communities, Inc. – 2019 Proxy Statement          11

 
If you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of common stock will be voted on your behalf as you direct.  If not otherwise specified, the shares of common stock represented by the proxies will be voted in accordance with the Board’s recommendations.
 
WHAT IS THE REQUIRED VOTE FOR EACH PROPOSAL?   
 
Proposal
Votes Required
Effect of Votes
Withheld /
Abstentions
Effect of
Broker Non-
Votes
Proposal No. 1:  Election of Directors
Plurality of votes cast.  This means that the five nominees receiving the highest number of affirmative “FOR” votes will be elected as directors.
 
Votes withheld will have no effect.
Broker non-votes will have no effect.
Proposal No. 2:  Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan
Affirmative vote of a majority of votes cast on the proposal.
 
Abstentions will have the effect of a vote against the proposal.
Broker non-votes will have no effect.
Proposal No. 3:  Ratification of Appointment of Independent Registered Public Accounting Firm
Affirmative vote of the holders of a majority in voting power of the shares of common stock present in person or by proxy and entitled to vote thereon.
 
Abstentions will have the effect of a vote against the proposal.
We do not expect any broker non-votes on this proposal.
Proposal No. 4:  Advisory Vote on Executive Compensation
Affirmative vote of the holders of a majority in voting power of the shares of common stock present in person or by proxy and entitled to vote thereon.
Abstentions will have the effect of a vote against the proposal.
 
Broker non-votes will have no effect.
 
 
WHAT IF I DON’T SPECIFY HOW MY SHARES ARE TO BE VOTED?          
 
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board, as described above.
 
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE INTERNET NOTICE OR SET OF PROXY MATERIALS?          
 
It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers.  Please vote all of your shares.  To ensure that all of your shares are voted, for each Internet Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating, and returning the enclosed proxy card in the enclosed envelope.
 

Century Communities, Inc. – 2019 Proxy Statement          12

 
CAN I REVOKE OR CHANGE MY VOTE?
 
Yes.  If you are a registered stockholder, you may revoke your proxy or change your vote at any time before your shares are voted by one of the following methods:
 
·
by submitting a duly executed proxy bearing a later date;
 
·
by granting a subsequent proxy through the Internet or telephone;
 
·
by giving written notice of such revocation to our Secretary; or
 
·
by voting in person at the Annual Meeting.
 
Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to:
 
Century Communities, Inc.
8390 East Crescent Parkway, Suite 650
Greenwood Village, Colorado 80111
Attention: Corporate Secretary
 
Your most recent proxy card or telephone or Internet proxy is the one that is counted.  Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote in person at the Annual Meeting.
 
If your shares are held in street name, you may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you may vote in person at the Annual Meeting by obtaining a legal proxy from your bank or broker and submitting the legal proxy along with your ballot.
 
WHERE CAN I FIND THE VOTING RESULTS?          
 
We plan to announce preliminary voting results at the Annual Meeting and will report the final results in a Current Report on Form 8-K, which we intend to file with the Securities and Exchange Commission (SEC) within four business days after the Annual Meeting.
 
CAN I GET A PRINTED COPY OF THE PROXY MATERIALS?          
 
Yes.  We will mail this proxy statement and 2018 Annual Report, together with a proxy card, to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of such request.
 
Century Communities, Inc. – 2019 Proxy Statement          13



CORPORATE GOVERNANCE
 
BEST PRACTICES          
 
We have adopted several corporate governance best practices.
 
Annual election of all directors
Robust Board and committee evaluations
       
Majority of independent directors
No poison pill
       
Independent presiding director
Annual say-on-pay vote
       
Officer and director stock ownership requirements
Double triggers for cash severance and accelerated vesting of equity upon a change in control
       
Hedging, pledging and stock option repricing prohibitions
Robust clawback policy covering cash and equity incentive compensation paid to current and former executives
 
GUIDELINES
 
The Board of Directors has adopted Corporate Governance Guidelines covering, among other things, the duties and responsibilities of, and independence standards applicable to, our directors and Board committee structures and responsibilities.  Among the topics addressed in our Corporate Governance Guidelines are:
 
·      Role of directors
·      Selection of the Chairman of the Board
·      Selection of new directors
·      Director qualifications
·      Care and avoidance of conflicts
·      Confidentiality
·      Other directorships
·      Director independence
·      Directors who change their present job responsibility
·      Retirement and resignation policy
·      Director tenure
·      Board compensation
·      Separate sessions of independent directors
·      Board and Board committee self-evaluations
·      Strategic direction of the Company
·      Board access to management
·      Board materials
·      Board interaction with institutional investors, analysts, press, and customers
·      Board orientation and continuing education
·      Director attendance of annual meetings of stockholders
·      Frequency of meetings
·      Selection of agenda items for Board meetings
·      Number and names of Board committees
·      Independence of Board committees
·      Assignment and rotation of committee members
·      Evaluation of executive officers
·      Succession planning
·      Management development
·      Risk management
·      Prohibited loans
·      Communications with directors
 
 
From time to time, the Board, upon recommendation of the Nominating and Corporate Governance Committee, reviews and updates the Corporate Governance Guidelines as it deems necessary and appropriate.
 
Century Communities, Inc. – 2019 Proxy Statement          14


 
DIRECTOR INDEPENDENCE
 
Under the listing standards and rules of the NYSE, independent directors must comprise a majority of a listed company’s board of directors.  In addition, NYSE rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent.  Audit committee members must also satisfy heightened independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, and compensation committee members must satisfy heightened independence criteria set forth in the NYSE rules.  Under the NYSE rules, a director will only qualify as an “independent director” if the company’s board of directors affirmatively determines that the director has no material relationship with the company, either directly or indirectly, that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
 
The Board has undertaken a review of its composition, the composition of its Board committees, and the independence of each director.  Based upon information requested from and provided by each of our directors concerning his background, employment, and affiliations, including family relationships with us, our senior management, and our independent registered public accounting firm, the Board has determined that all but two of our directors, Dale Francescon and Robert J. Francescon, are independent directors under the standards established by the SEC and the NYSE.  In making this determination, the Board considered the current and prior relationships that each non-employee director has with Century and all other facts and circumstances the Board deemed relevant in determining their independence.
 
BOARD LEADERSHIP STRUCTURE          
 
Our Corporate Governance Guidelines provide that the Board does not require the separation of the offices of the Chairman of the Board and the Chief Executive Officers, and that the Board is free to choose its Chairman of the Board in any way that it deems best for the Company at any given point in time.  Dale Francescon serves as Chairman of the Board and Co-Chief Executive Officer, and Robert J. Francescon serves as Co-Chief Executive Officer and President.  However, the Board endorses the concept of an independent director being in a position of leadership and, thus, as mentioned above, Keith R. Guericke serves as our presiding director.
 
The Board has determined that this current leadership structure is appropriate and in the best interests of the Company and its stockholders at this time for several reasons, including: (i) Both Dale Francescon’s and Robert J. Francescon’s extensive knowledge of our Company, business, and industry, obtained through their 15 years of service to our Company and over 25 years of experience in the homebuilding industry, which benefit Board leadership and the Board’s decision-making process through their active roles as Co-Chief Executive Officers, and in the case of Dale Francescon, Chairman of the Board; (ii) unification of Board leadership and strategic direction as implemented by our management; and (iii) appropriate balance of risks relating to concentration of authority through the oversight of our independent and engaged presiding independent director and Board.
 
EXECUTIVE SESSIONS          
 
Our non-management independent directors have the opportunity to meet in executive sessions without management to consider such matters as they deem appropriate, such as reviewing the performance of management.  Executive sessions of our independent directors are typically held in conjunction with regularly scheduled Board meetings.
 
Our independent directors have appointed an independent director (referred to as the “presiding director”) to preside over the executive sessions of the independent directors.  The main duties of the presiding director are to (i) preside at regularly scheduled executive sessions or other meetings of the independent directors; (ii) serve as liaison between the Chairman of the Board and the Co-Chief Executive Officers, on the one hand, and the independent directors, on the other hand, by means of consulting with the Chairman of the Board and the Co-Chief Executive Officers as to agenda items for Board and committee meetings and advising them of the outcome of such meetings, as necessary; and (iii) coordinate with Board committee chairs in the development and recommendations of Board and Board committee meeting agendas.
 
Century Communities, Inc. – 2019 Proxy Statement          15

 
Keith R. Guericke serves as our presiding director.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
We currently have three standing committees of the Board: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The Board may establish other Board committees as it deems necessary or appropriate from time to time.
 
Below are our directors, their committee memberships and their 2018 attendance rates for Board and committee meetings.
 
Director
Board
Audit
Compensation
Nominating and
Corporate Governance
Attendance
Rate
Dale Francescon
     
100%
Robert J. Francescon
     
100%
John P. Box
Chair
96%
Keith R. Guericke
Chair
100%
James M. Lippman
Chair
83%
 
AUDIT COMMITTEE          
 
The Audit Committee is comprised of our three independent directors, John P. Box, Keith R. Guericke, and James M. Lippman, each of whom the Board has determined is “financially literate” under the rules of the NYSE and satisfies the heightened independence criteria for audit committee members set forth in Rule 10A-3 under the Securities Exchange Act of 1934 (Exchange Act).  Mr. Guericke serves as Chair of the Audit Committee.  Mr. Guericke has been designated by the Board as our “audit committee financial expert,” as that term is defined in the rules of the SEC.
 
The Audit Committee, pursuant to its written charter, among other matters, oversees (i) our financial reporting, auditing, and internal control activities; (ii) the integrity and audits of our financial statements; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our independent auditors; (v) the performance of our internal audit function and independent auditors; and (vi) our overall risk exposure and management.
 
Duties of the Audit Committee also include:
 
·
annually review and assess the adequacy of the Audit Committee charter and the performance of the Audit Committee;
 
·
be responsible for the appointment, retention, and termination of our independent auditors, and determine the compensation of our independent auditors;
 
Century Communities, Inc. – 2019 Proxy Statement          16

 
·
review with the independent auditors the plans and results of the audit engagement;
 
·
evaluate the qualifications, performance, and independence of our independent auditors;
 
·
have sole authority to approve in advance all audit and non-audit services by our independent auditors, the scope and terms thereof, and the fees therefor;
 
·
review the adequacy of our internal accounting controls; and
 
·
meet at least quarterly with our executive officers, internal audit staff, and our independent auditors in separate executive sessions.
 
The Audit Committee charter authorizes the Audit Committee to retain independent legal, accounting, and other advisors as it deems necessary to carry out its responsibilities.  The Audit Committee reviews and evaluates, at least annually, the performance of the Audit Committee, including compliance with its charter.
 
COMPENSATION COMMITTEE          
 
The Compensation Committee is comprised of our three independent directors, John P. Box, Keith R. Guericke, and James M. Lippman, each of whom the Board has determined satisfies the heightened independence criteria for compensation committee members under the NYSE rules.  In addition, each of the Compensation Committee members is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and a an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended (Code).  Mr. Lippman serves as Chair of the Compensation Committee.
 
The Compensation Committee, pursuant to its written charter, among other matters:
 
·
assists the Board in developing and evaluating potential candidates for executive officer positions and overseeing the development of executive succession plans;
 
·
administers, reviews, and makes recommendations to the Board regarding our compensation plans, including the Century Communities, Inc. 2017 Omnibus Incentive Plan, and administers or oversees all such plans and discharges any responsibilities imposed on the Compensation Committee by such plans, including, without limitation, the grant of equity-based awards to officers and employees;
 
·
annually reviews and approves our corporate goals and objectives with respect to compensation for executive officers and, at least annually, evaluates each executive officer’s performance in light of such goals and objectives to set his or her annual compensation, including salary, bonus, and equity and non-equity incentive compensation, subject to approval by the Board;
 
·
reviews and approves any employment, severance, change in control, retention, retirement, deferred compensation, perquisite, or similar compensatory agreements, plans, programs, or arrangements with executive officers;
 
·
provides oversight of management’s decisions regarding the performance, evaluation, and compensation of other officers; and
 
·
reviews our incentive compensation arrangements to confirm that incentive pay does not encourage unnecessary risk-taking, and reviews and discusses, at least annually, the relationship between risk management policies and practices, business strategy, and our executive officers’ compensation.
 
Century Communities, Inc. – 2019 Proxy Statement          17

 
The Compensation Committee charter authorizes the Compensation Committee to retain a compensation consultant, independent legal counsel, and other advisors as it deems necessary or appropriate to carry out its responsibilities.  During 2018, the Compensation Committee retained Frederic W. Cook & Co., Inc. (FW Cook) as its external compensation consultant to provide certain services related to executive and non-employee director compensation.
 
The Compensation Committee considers analysis and advice from FW Cook when making compensation decisions and when making decisions on plan design.  Specifically, the Compensation Committee relies on FW Cook for, among other things:
 
·
reviewing total compensation strategy and pay levels for our executives;
 
·
examining our executive compensation program to ensure that it supports our business strategy;
 
·
performing competitive analyses of non-employee director compensation; and
 
·
providing advice with respect to our equity-based compensation plans.
 
The Compensation Committee may request information or advice directly from FW Cook and may direct our management to provide or solicit information.  A representative of FW Cook regularly interacts with our management and from time to time attends Compensation Committee meetings.
 
During 2018, FW Cook did not provide any services to the Company unrelated to executive or director compensation.  After considering the relevant factors, the Compensation Committee determined that no conflicts of interest have been raised in connection with the services FW Cook performed for the Compensation Committee in 2018.
 
The Compensation Committee reviews and evaluates, at least annually, the performance of the Compensation Committee, including compliance with its charter.
 
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE          
 
The Nominating and Corporate Governance Committee is comprised of our three independent directors, John P. Box, Keith R. Guericke, and James M. Lippman.  Mr. Box serves as Chair of the Nominating and Corporate Governance Committee.
 
The Nominating and Corporate Governance Committee, pursuant to its written charter, among other matters:
 
·
identifies individuals qualified to become members of the Board and ensures that the Board has the requisite expertise and its membership consists of persons with sufficiently diverse and independent backgrounds;
 
·
develops and recommends to the Board for its approval qualifications for director candidates and periodically reviews these qualifications with the Board;
 
·
reviews the committee structure of the Board and recommends directors to serve as members or chairs of each Board committee;
 
·
reviews and recommends Board committee slates annually and recommends additional Board committee members to fill vacancies as needed;
 
Century Communities, Inc. – 2019 Proxy Statement          18

 
·
develops and recommends to the Board a set of corporate governance guidelines and, at least annually, reviews such guidelines and recommends changes to the Board for approval as necessary;
 
·
considers and oversees corporate governance issues as they arise from time to time and develops appropriate recommendations for the Board; and
 
·
oversees the annual self-evaluations of the Board, each Board committee, and management.
 
The Nominating and Corporate Governance Committee charter authorizes the Nominating and Corporate Governance Committee to retain a search firm or other consultants to assist in the identification and evaluation of director candidates, including the sole authority to approve the search firm’s or other consultants’ fees and other retention terms.  The Nominating and Corporate Governance Committee also has authority to obtain advice and assistance from any outside legal expert or other advisors as it deems necessary or appropriate to carry out its responsibilities.
 
The Nominating and Corporate Governance Committee reviews and evaluates, at least annually, the performance of the Nominating and Corporate Governance Committee, including compliance with its charter.
 
BOARD AND BOARD COMMITTEE MEETINGS; ATTENDANCE          
 
The Board held 6 meetings during 2018.  The Audit Committee held 8 meetings, the Compensation Committee held 6 meetings, and the Nominating and Corporate Governance Committee held 4 meetings during 2018.  All directors attended at least 75% of the combined total of (i) all Board meetings and (ii) all meetings of committees of the Board of which the director was a member during 2018.
 
We expect all of our directors to attend our annual meeting of stockholders and we customarily schedule a regular Board meeting on the same day as our annual meeting.  All directors serving at the time of our 2018 Annual Meeting of Stockholders held on May 9, 2018 were in attendance.
 
BOARD DIVERSITY          
 
The Board of Directors understands the importance of adding diverse, experienced talent to the Board in order to establish an array of experience and strategic views. The Nominating and Corporate Governance Committee is committed to refreshment efforts to ensure that the composition of the Board and each of its committees encompasses a wide range of perspectives and knowledge.
 
DIRECTOR QUALIFICATIONS AND NOMINATIONS PROCESS          
 
The Board seeks to ensure that the Board is composed of members whose particular experience, qualifications, attributes, and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively.  New directors are approved by the Board after recommendation by the Nominating and Corporate Governance Committee.  In identifying candidates for director, the Nominating and Corporate Governance Committee and the Board take into account the following: (i) the comments and recommendations of Board members regarding the qualifications and effectiveness of the existing Board, or additional qualifications that may be required when selecting new Board members; (ii) the requisite expertise and sufficiently diverse backgrounds of the Board’s overall membership composition; (iii) the independence of outside directors and other possible conflicts of interest of existing and potential members of the Board; and (iv) any other factors they consider appropriate.  When considering whether directors and nominees have the experience, qualifications, attributes, and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Nominating and Corporate Governance Committee and the Board focused primarily on the information discussed in each of the directors’ individual biographies.
 
Century Communities, Inc. – 2019 Proxy Statement          19

 
The Nominating and Corporate Governance Committee will consider director candidates recommended to it by our stockholders.  Those candidates must be qualified and exhibit the experience and expertise required of the Board’s own pool of candidates, as well as have an interest in our business, and demonstrate the ability to attend and prepare for Board, committee, and stockholder meetings.  Any candidate must state in advance his or her willingness and interest in serving on the Board. Candidates should represent the interests of all stockholders and not those of a special interest group.  The Nominating and Corporate Governance Committee will evaluate candidates recommended by stockholders using the same criteria it uses to evaluate candidates recommended by others as described above.  A stockholder that desires to nominate a person for election to the Board at a meeting of stockholders must follow the specified advance notice requirements contained in, and provide the specific information required by, our Bylaws, as described under “Other Matters—Stockholder Proposals and Director Nominations for 2020 Annual Meeting of Stockholders” later in this proxy statement.  During the fourth quarter of 2018, we made no material changes to the procedures by which stockholders may recommend nominees to the Board as described in last year’s proxy statement.
 
BOARD ROLE IN RISK OVERSIGHT          
 
Risk is inherent with every business.  We face a number of risks, including financial (accounting, credit, interest rate, liquidity, and tax), operational, political, strategic, regulatory, compliance, legal, competitive, and reputational risks.  Our management is responsible for the day-to-day management of risks faced by us, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management.  In its risk oversight role, the Board ensures that the risk management processes designed and implemented by management are adequate and functioning as designed.  The Board oversees risks through the establishment of policies and procedures that are designed to guide daily operations in a manner consistent with applicable laws, regulations, and risks acceptable to us.  Our Co-Chief Executive Officers are members of the Board and regularly attend Board meetings and discuss with the Board the strategies and risks facing our Company.
 
One of the key functions of the Board is informed oversight of our risk management process.  The Board administers this oversight function directly, with support from its three standing committees (the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee), each of which addresses risks specific to its respective areas of oversight.  In particular, the Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management takes to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken.  The Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight of the performance of our internal audit function.  The Compensation Committee assesses and monitors whether any of our compensation policies and programs have the potential to encourage excessive risk-taking.  The Nominating and Corporate Governance Committee provides risk oversight with respect to corporate governance matters.
 
CODE OF BUSINESS CONDUCT AND ETHICS          
 
The Board has adopted a Code of Business Conduct and Ethics that applies to our officers, directors, and any employees.  Among other matters, our Code of Business Conduct and Ethics is designed to deter wrongdoing and to promote the following:
 
·
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;
 
·
full, fair, accurate, timely, and understandable disclosure in our communications with and reports to our stockholders, including reports filed with the SEC, and other public communications;
 
·
compliance with applicable governmental laws, rules, and regulations;
 
·
prompt internal reporting of violations of the code to appropriate persons identified in the code; and
Century Communities, Inc. – 2019 Proxy Statement          20

 
 
·
accountability for adherence to our Code of Business Conduct and Ethics.
 
In November 2018, we amended and restated the Code of Business Conduct and Ethics to update, clarify and strengthen its provisions.
 
Any waiver of our Code of Business Conduct and Ethics for our executive officers, directors, or any employees may be made only by the Nominating and Corporate Governance Committee and will be promptly disclosed as required by law and NYSE rules.  We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K and applicable NYSE rules regarding amendments to or waivers from any provision of our Code of Business Conduct and Ethics by posting such information in the “Investors—Corporate Governance—Governance Documents” section of our website located at www.centurycommunities.com.
 
COMPLAINT PROCEDURES          
 
We maintain procedures to receive, retain, and treat complaints regarding accounting, internal accounting controls, or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters.  A 24-hour, toll-free, confidential ethics hotline and a confidential web-based reporting tool are available for the submission of concerns regarding these and other matters by any employee.  Concerns and questions received through these methods relating to accounting, internal accounting controls, or auditing matters are promptly brought to the attention of the Chair of the Audit Committee and are handled in accordance with procedures established by the Audit Committee.  Complete information regarding our complaint procedures is contained within our Code of Business Conduct and Ethics, which is described above and may be accessed on our website as noted above.
 
STOCKHOLDER ENGAGEMENT          
 
We are committed to a robust and proactive stockholder engagement program.  The Board values the perspectives of our stockholders, and feedback from stockholders on our business, corporate governance, executive compensation, and sustainability practices are important considerations for Board discussions throughout the year.  During 2018, our executives held more than 200 meetings with stockholders representing over 70 percent of shares outstanding, in total, including all of our top 10 shareholders that are actively managed funds.

COMMUNICATIONS WITH THE BOARD OF DIRECTORS          
 
The Board maintains a process for stockholders and interested parties to communicate with the Board. Stockholders and interested parties may contact our Board as provided below:

 
 
 
 
WRITE
CALL
EMAIL
ATTEND
Corporate Secretary
Century Communities, Inc.
8390 E. Crescent Pkwy.
Suite 650
Greenwood Village, CO 80111
Investor Relations
303-268-8398
investorrelations@
centurycommunities.com
Annual Meeting of Stockholders
Wednesday, May 8, 2019
Hyatt Regency Denver Tech Center

Management will initially receive and process communications before forwarding them to the addressee(s).  We generally will not forward to the directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information about the Company.
 
Century Communities, Inc. – 2019 Proxy Statement          21

 
BOARD AND COMMITTEE SELF-EVALUATIONS          
 
The Board recognizes that a thorough evaluation process is an important element of corporate governance and enhances the effectiveness of the full Board and each committee.  Therefore, each year, the Nominating and Corporate Governance Committee oversees the evaluation process to ensure that the full Board and each committee conduct an assessment of their performance and solicit feedback for areas of improvement.

SUCCESSION PLANNING          
 
The Board of Directors recognizes that one of its most important responsibilities is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of our Co-Chief Executive Officers and the other members of our management team.  This responsibility is reflected in the Company’s Corporate Governance Guidelines, which provide for a review of CEO succession planning and management development, and the charter of the Compensation Committee, which requires the Compensation Committee to assist the Board in developing and evaluating potential candidates for executive officer positions and overseeing the development of executive succession plans, which will include transitional leadership in the event of an unplanned vacancy.

In furtherance of the foregoing, the Co-Chief Executive Officers provide an annual succession planning report to the Compensation Committee, which summarizes the overall composition of our senior leadership team, including their professional qualifications, tenure, and work experience.  The report also identifies internal members of the management team who are viewed as potential successors to the Co-Chief Executive Officers.  Succession planning is also regularly discussed in executive sessions of the Board of Directors.  Our directors become familiar with internal potential successors for key leadership positions through various means, including the annual succession planning report and Board of Directors and committee meetings, and less formal interactions throughout the course of the year.

Additionally, the Board of Directors, with support and recommendations from the Nominating and Corporate Governance Committee, oversees the succession of its members.  To this end, at least once a year, in connection with the annual director nomination and re-nomination process, the Nominating and Corporate Governance Committee evaluates each director’s performance, relative strengths and weaknesses, and future plans, including any personal retirement objectives and the potential applicability of the Company’s retirement policy for directors (which is set forth in the Company’s Corporate Governance Guidelines).  As part of that evaluation, the Nominating and Corporate Governance Committee also identifies areas of overall strength and weakness with respect to its composition and considers whether the Board of Directors as a whole possesses core competencies in the areas of accounting and finance, industry knowledge, management experience, sales and marketing, strategic vision, compensation, and corporate governance, among others.

COMMITTEE CHARTERS AND OTHER INFORMATION          
 
The charters of all three of our standing Board committees, Corporate Governance Guidelines and Code of Business Conduct and Ethics are available in the “Investors—Corporate Governance—Governance Documents” section of our website located at www.centurycommunities.com.  Printed copies of any of these are available upon written request to Century Communities, Inc., 8390 East Crescent Parkway, Suite 650, Greenwood Village, Colorado 80111, Attention: Corporate Secretary.

Century Communities, Inc. – 2019 Proxy Statement          22


 
EXECUTIVE OFFICERS
 
We have three executive officers: Dale Francescon, Robert J. Francescon, and David L. Messenger.  Below is information regarding our executive officers as of March 14, 2019.  There are no family relationships among any of our executive officers or directors, except for Dale Francescon and Robert J. Francescon, who are brothers.
 
Name
 
Age
 
Position with Century
Dale Francescon
 
66
 
Chairman of the Board and Co-Chief Executive Officer
Robert J. Francescon
 
61
 
Co-Chief Executive Officer, President, and Director
David L Messenger
 
48
 
Chief Financial Officer and Secretary

Dale Francescon.  Mr. Dale Francescon has served as our Co-Chief Executive Officer since August 2002 and as the Chairman of our Board of Directors since April 2013.  Mr. Dale Francescon possesses a broad background in all facets of operating a real estate company and has had direct responsibility for the acquisition, financing, development, construction, sale, and management of various residential projects, including land development, single-family homes, townhomes, condominiums, and apartments.  Mr. Dale Francescon has successfully managed the Company, through successive profitable years, in various economic cycles, from inception in August 2002 to the present.  Mr. Dale Francescon is licensed in the state of Colorado as a real estate broker (inactive) and in the state of California as an attorney (inactive) and as a certified public accountant (inactive).  Mr. Dale Francescon received his B.S. in Business Administration from the University of Southern California and a J.D. from Loyola University School of Law.
 
Robert J. Francescon.  Mr. Robert Francescon has served as our Co-Chief Executive Officer since August 2002, as President since April 2013, and as a member of our Board of Directors since April 2013.  Mr. Robert Francescon possesses a broad background in all facets of operating a real estate company and has had direct responsibility for the acquisition, financing, development, architecture, construction, sale, and management of various residential projects, including land development, single-family homes, townhomes, condominiums, and apartments.  Mr. Robert Francescon has successfully managed the Company, through successive profitable years, in various economic cycles, from inception in August 2002 to the present.  Mr. Robert Francescon also has management experience working in a variety of financial institutions, including thrifts and the Federal Home Loan Mortgage Corporation.  Mr. Robert Francescon received his B.S. in Business Administration from the University of Southern California.
 
David L. Messenger.  Mr. Messenger has served as our Chief Financial Officer since June 2013.  Mr. Messenger has extensive experience in finance and accounting for real estate companies.  His direct responsibilities are overseeing all accounting, finance, capital markets, risk management, and financial planning and analysis.  Prior to his tenure at Century, Mr. Messenger was at UDR, Inc., a publicly traded multifamily real estate investment trust, from August 2002 to May 2012, most recently as Chief Financial Officer.  From June 2012 to February 2013, Mr. Messenger served as an independent consultant for UDR, Inc.  Mr. Messenger is licensed in the State of Virginia as a Certified Public Accountant (inactive) and is a member of the American Institute of Certified Public Accountants and the Virginia Society of Certified Public Accountants.  Mr. Messenger received a B.B.A. and M.A. in Accounting from the University of Iowa.
 
Century Communities, Inc. – 2019 Proxy Statement          23

 
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
 
BOARD SIZE AND STRUCTURE          
 
Our Bylaws provide that the Board shall consist of one or more members, with the number to be determined from time to time by the Board.  The Board has fixed the number of directors at five, and we currently have five directors serving on the Board.  Each director holds office for a term of one year or until his or her successor is duly elected and qualified, subject to his or her earlier death, resignation, disqualification, or removal.
 
CURRENT DIRECTORS AND BOARD NOMINEES          
 
The Board currently consists of the following five members:
 
Dale Francescon
John P. Box
James M. Lippman
Robert J. Francescon
Keith R. Guericke
 

Based upon the recommendation of the Nominating and Corporate Governance Committee of the Board, the Board nominated each of our current five directors named above for re-election at the Annual Meeting.  The Board and the Nominating and Corporate Governance Committee believe that our current five directors collectively have the experience, qualifications, attributes, and skills to effectively oversee the management of Century, including a high degree of personal and professional integrity, an ability to exercise sound business judgment on a broad range of issues, sufficient experience and background to have an appreciation of the issues facing Century, a willingness to devote the necessary time to Board duties, a commitment to representing the best interests of Century and our stockholders, and a dedication to enhancing stockholder value.  Three of our five directors are independent within our director independence standards, which satisfy the listing standards for independence of the New York Stock Exchange and Rule 10A-3 under the Exchange Act.
 
Each director elected at the Annual Meeting will serve a one-year term until Century’s next annual meeting and until his or her successor is duly elected and qualified or until his or her earlier death, resignation, disqualification, or removal.  Unless otherwise instructed, the proxy-holders will vote the proxies received by them for the five nominees.  If any nominee should become unavailable for election prior to the Annual Meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board.  Each nominee has agreed to serve if elected, and the Board has no reason to believe that any nominee will be unable to serve.
 
INFORMATION ABOUT DIRECTOR NOMINEES          
 
Set forth below are the names, ages, and positions of our current directors and director nominees as of March 14, 2019, and biographical information for each nominee.  Also below is a summary of the specific qualifications, attributes, skills, and experiences that led the Board to conclude that each nominee should serve on the Board at this time.  There are no family relationships among any of our directors or executive officers, except for Dale Francescon and Robert J. Francescon, who are brothers.
 
Name
Age
Position with the Company
Dale Francescon
66
Chairman of the Board and Co-Chief Executive Officer
Robert J. Francescon
61
Co-Chief Executive Officer, President, and Director
John P. Box
72
Independent Director
Keith R. Guericke
70
Independent Director
James M. Lippman
61
Independent Director
 
Century Communities, Inc. – 2019 Proxy Statement          24

 
 
Dale Francescon.  Mr. Dale Francescon has served as our Co-Chief Executive Officer since August 2002 and as the Chairman of our Board of Directors since April 2013.  Mr. Dale Francescon possesses a broad background in all facets of operating a real estate company and has had direct responsibility for the acquisition, financing, development, construction, sale, and management of various residential projects, including land development, single-family homes, townhomes, condominiums, and apartments.  Mr. Dale Francescon has successfully managed the Company, through successive profitable years, in various economic cycles, from inception in August 2002 to the present.  Mr. Dale Francescon is licensed in the state of Colorado as a real estate broker (inactive) and in the state of California as an attorney (inactive) and as a certified public accountant (inactive).  Mr. Dale Francescon received his B.S. in Business Administration from the University of Southern California and a J.D. from Loyola University School of Law.  Mr. Dale Francescon, as a co-founder of Century, is qualified to serve as a director due to his familiarity with our history and day-to-day operations, his expertise in the homebuilding industry, and his more than 25 years of experience operating real estate companies.  In addition, as a result of his dual role as Chairman and Co-Chief Executive Officer, Mr. Dale Francescon provides unique insight into our future strategies, opportunities, and challenges and serves as a unifying element between the Board and our management.
 
Robert J. Francescon.  Mr. Robert Francescon has served as our Co-Chief Executive Officer since August 2002, as President since April 2013, and as a member of our Board of Directors since April 2013.  Mr. Robert Francescon possesses a broad background in all facets of operating a real estate company and has had direct responsibility for the acquisition, financing, development, architecture, construction, sale, and management of various residential projects, including land development, single-family homes, townhomes, condominiums, and apartments.  Mr. Robert Francescon has successfully managed the Company, through successive profitable years, in various economic cycles, from inception in August 2002 to the present.  Mr. Robert Francescon also has management experience working in a variety of financial institutions, including thrifts and the Federal Home Loan Mortgage Corporation.  Mr. Robert Francescon received his B.S. in Business Administration from the University of Southern California.  Mr. Robert Francescon, as a co-founder of Century, is qualified to serve as a director due to his familiarity with our history and day-to-day operations, his management experience in various business enterprises, and his more than 25 years of experience as a senior executive within the homebuilding industry.  In addition, as a result of his dual role as director and Co-Chief Executive Officer, Mr. Robert Francescon provides unique insight into our future strategies, opportunities, and challenges and serves as a unifying element between the Board and our management.
 
John P. Box. Mr. Box is a director and has served on the Board of Directors since May 2014. Mr. Box is a commercial real estate practitioner who has served as regional chairman of Newmark Knight Frank since 2013.  Prior to his current role, from 1988 through 2012, Mr. Box was President and Chief Executive Officer and owner of the Frederick Ross Company, the largest locally-owned commercial real estate service business in Colorado.  Under his watch, the Frederick Ross Company diversified into several independent operating divisions and was active in commercial brokerage, consulting, and property management. In addition, Mr. Box was Chief Executive Officer and principal owner of ARA (Apartment Realty Advisors) from 2002 through 2014, Denver’s largest apartment building and multifamily land brokerage company.  Mr. Box was recognized as honorary dean for 2002 by the University of Denver Franklin L. Burns School of Real Estate and Construction Management, and in 2001, he was awarded the 2000 NAIOP President’s Award for contributions to the real estate community.  Earlier in his career, Mr. Box was recognized four times by the Denver Board of REALTORS® as the recipient of the top commercial sales award for achieving the highest personal sales volume in the Denver area.  Mr. Box served as Board Chair from 2004-2010 for Regis University, where he currently serves as a life trustee, and as former board chair of ONCOR International, a worldwide affiliation of real estate companies.  Mr. Box is qualified to serve as a director because of his extensive leadership within the real estate industry, his relationships with many executives at real estate companies through the United States, and his proven ability to successfully grow and diversify a real estate business.
 
Century Communities, Inc. – 2019 Proxy Statement          25

 
 
Keith R. Guericke.  Mr. Guericke is a director and has served on the Board of Directors since May 2013. Mr. Guericke has served as a director of the board of Essex Property Trust, Inc. (Essex) since June 1994.  In 2002, Mr. Guericke was elected to the position of vice chairman of the board of Essex, a position he still holds.  He held the position of President and Chief Executive Officer of Essex from 1988 through 2010.  Effective January 2011, Mr. Guericke retired from his position as an executive officer.  Mr. Guericke joined Essex’s predecessor, Essex Property Corporation, in 1977 to focus on investment strategies and portfolio expansion. Mr. Guericke prepared Essex for its initial public offering in 1994, and since then has overseen the significant growth of the Essex multifamily portfolio in supply-constrained markets along the West Coast.  Prior to joining Essex, Mr. Guericke began his career with Kenneth Leventhal & Company, a certified public accounting firm noted for its real estate expertise.  Mr. Guericke is a member of NAREIT, the National Multifamily Housing Council, and several local apartment industry groups.  Mr. Guericke received his B.S. in Accounting from Southern Oregon College in 1971.  Mr. Guericke is qualified to serve as a director because of his extensive leadership experience at a publicly traded company, his expansive knowledge of the real estate industry, his strong relationships with many executives at real estate companies throughout the United States, and his expertise in accounting and finance.
 
James M. Lippman.  Mr. Lippman is a director and has served on the Board of Directors since May 2013.  Mr. Lippman founded JRK Property Holdings (JRK) in 1991 and currently serves as its Chairman and Chief Executive Officer.  From an initial purchase of five multifamily properties, JRK has grown to a national leader in the commercial real estate sector.  In 2011, JRK was featured as the 25th largest Multifamily Owner and Manager in the U.S. by the National Multifamily Housing Council and ranked 27th in the nation by Multifamily Executive Magazine. Mr. Lippman is actively involved with Cedar-Sinai Medical Center, where he serves on its board of directors, chairs its audit committee, and is a member of its executive committee, resource development committee, and executive compensation committee.  In addition, Mr. Lippman currently serves on the board of trustees of Union College.  Mr. Lippman also worked on Wall Street for many years, where he traded equities, options, and commodities for proprietary investment accounts.  Mr. Lippman earned a B.A. in Economics and Political Science from Union College.  Mr. Lippman is qualified to serve as a director because of his extensive leadership experience within the real estate industry, his financial management expertise, and his extensive contacts with senior real estate executives throughout the United States.
 
BOARD RECOMMENDATION 
 
The Board of Directors unanimously recommends that our stockholders vote “FOR” the election of Dale Francescon, Robert J. Francescon, John P. Box, Keith R. Guericke, and James M. Lippman to serve as members of the Board until the next annual meeting of stockholders and until their successors are duly elected and qualified.
 
The Board Recommends a Vote FOR Each Nominee for Director
 
Century Communities, Inc. – 2019 Proxy Statement          26

 
 
 
PROPOSAL NO. 2:
CENTURY COMMUNITIES, INC. AMENDED AND RESTATED 2017 OMNIBUS INCENTIVE PLAN
 
BACKGROUND AND PROPOSED AMENDMENTS
 
On March 12, 2019, the Board of Directors, upon recommendation of the Compensation Committee, approved, subject to approval by our stockholders, the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan (which we refer to as the “amended 2017 plan”).  The amended 2017 plan incorporates an amendment to the number of shares of Century common stock available for issuance under the plan by an additional 1.631 million shares.  Our continuing ability to offer equity incentive awards under the 2017 plan is critical to our ability to attract, motivate and retain qualified personnel, particularly as we grow and in light of the highly competitive markets for employee talent in which we operate.
 
In addition, the amended 2017 plan reflects certain changes in light of the Tax Cuts and Jobs Act and its impact on Section 162(m) of the Internal Revenue Code of 1986, as amended (which we refer to as “Section 162(m)”).  These changes essentially eliminate language in the 2017 plan that was included to allow us to qualify certain compensation as “performance-based compensation” under Section 162(m).  We have retained, however, the annual award limits and performance measures as part of good corporate governance.
 
The amended 2017 plan also incorporates a more stringent limit on non-employee director awards.  The proposed amended 2017 plan contains an overall non-employee director compensation limit of $400,000 per year or $600,000 in the case of a non-employee chairman of the board or lead director.
 
Finally, the amended 2017 plan increases the limit on incentive stock options commensurate with the overall share increase and expands the exceptions to the minimum vesting provision to allow for shares delivered in lieu of fully vested cash awards and vesting on director awards tied to the timing of the next annual meeting of stockholders which may be less than one year from the date of grant so long as the annual meeting is more than 50 weeks after the preceding year’s annual meeting.
 
If our stockholders approve the amended 2017 plan, the amended 2017 plan will become effective as of the date of stockholder approval.  If our stockholders do not approve the amended 2017 plan, the 2017 plan, as currently in effect, will remain in effect until it terminates in accordance with its terms.
 
REASONS WHY YOU SHOULD VOTE IN FAVOR OF THE AMENDED 2017 PLAN
 
The Board recommends a vote “FOR” approval of the amended 2017 plan because the Board believes the proposed amended 2017 plan is in the best interests of Century and our stockholders for the following reasons:
 
·
Attracts and retains talent.  Talented, motivated and effective employees, non-employee directors and consultants are essential to executing our business strategies.  Stock-based and annual cash incentive compensation has been an important component of total compensation for our executive officers and key employees for many years because such compensation enables us to effectively recruit and retain qualified individuals while encouraging them to think and act like owners of Century.  If our stockholders approve the amended 2017 plan, we believe we will maintain our ability to offer competitive compensation packages to both attract new talent and retain our best performers.
 
Century Communities, Inc. – 2019 Proxy Statement          27

 
·
Consistent with our pay-for-performance compensation philosophy to increase stockholder value.  We believe that stock-based compensation, by its very nature, is performance-based compensation.  Over time, the most significant component of total compensation for our executives is incentive compensation in the form of both stock-based and cash-based incentives that are tied to the achievement of business results.  We use incentive compensation both to reinforce desired business results for our key employees and to motivate them to achieve those results.
 
·
Aligns director, employee and stockholder interests.  We currently provide long-term incentives primarily in the form of restricted stock unit awards to our non-employee directors, executives and certain key employees and annual cash incentives to our executives and certain key employees.  We believe our stock-based compensation programs, along with our stock ownership guidelines for our non-employee directors and executives, and our annual cash incentive programs for employees, help align the interests of our non-employee directors and employees with those of our stockholders.  We believe our long-term stock-based incentives help promote long-term retention of our employees and encourage significant ownership of our common stock.  We believe our annual cash incentives reinforce achievement of our business performance goals by linking a significant portion of participants’ compensation to the achievement of these performance goals.  If the amended 2017 plan is approved, we will be able to maintain these important means of aligning the interests of our non-employee directors and employees with those of our stockholders.
 
·
Protects stockholder interests and embraces sound equity-based compensation practices.  As described in more detail below under the heading “—Summary of Sound Governance Features of the Amended 2017 Plan,” the amended 2017 plan includes a number of features that are consistent with protecting the interests of our stockholders and sound corporate governance practices.
 
SUMMARY OF SOUND GOVERNANCE FEATURES OF AMENDED 2017 PLAN
 
The Board and Compensation Committee believe that the amended 2017 plan contains several features that are consistent with protecting the interests of our stockholders and sound corporate governance practices, including the following:
 
No evergreen provision
No liberal share counting
       
Not excessively dilutive
No discounted or reload stock options or SARs
       
Minimum vesting and performance period requirements
No liberal change in control definition
       
Holding period requirements
“Double-trigger” acceleration of vesting upon a change in control
       
No dividend payments on unvested awards
No tax gross-ups
       
No re-pricing of “underwater” stock options or SARs, without stockholder approval
Robust clawback policy covering cash and equity incentive compensation paid to current and former executives
       
Limits on non-employee director awards
   
Century Communities, Inc. – 2019 Proxy Statement          28


BACKGROUND FOR SHARES AUTHORIZED FOR ISSUANCE
 
If the amended 2017 plan is approved, the maximum number of shares of common stock available for issuance under the amended 2017 plan will be equal to the sum of 2,481,000 shares, plus (i) 575,984 shares of our common stock that were available for issuance under the Century Communities, Inc. First Amended & Restated 2013 Long-Term Incentive Plan (referred to as our “2013 plan”) as of the date of stockholder approval of the 2017 plan, but not subject to outstanding awards and (ii) up to 690,182 shares that were subject to awards outstanding under the 2013 plan as of the date of stockholder approval of the 2017 plan that are subsequently forfeited or cancelled or expire or otherwise terminate without the issuance of such shares.  As of March 14, 2019, 959,381 shares of our common stock were subject to outstanding awards under the 2017 plan, assuming target performance under our PSU awards, 395,361 shares of our common stock remained available for issuance under the 2017 plan, assuming target performance under our PSU awards, and 45,204 shares of our common stock remained subject to outstanding awards under the 2013 plan.
 
In setting the number of shares of common stock available for issuance under the amended 2017 plan, the Board and Compensation Committee considered a number of factors, which are discussed further below, including:
 
·
Shares available under the 2017 plan and total outstanding equity-based awards and how long the shares available are expected to last;
 
·
Historical equity award granting practices, including our three-year average share usage rate (commonly referred to as “burn rate”); and
 
·
Potential dilution and overhang.
 
Shares Available and Outstanding Equity Awards
 
While the use of long-term incentives, in the form of equity awards, is an important part of our compensation program, we are mindful of our responsibility to our stockholders to exercise judgment in the granting of equity awards.  In setting the number of shares available for issuance under the amended 2017 plan, the Board and Compensation Committee also considered shares available under the current 2017 plan and total outstanding equity awards and how long the shares available under the 2017 plan are expected to last.  To facilitate the approval of the amended 2017 plan, set forth below is certain information about our shares of common stock that may be issued under our equity compensation plans as of March 14, 2019.
 
As of March 14, 2019, we had 30,297,398 shares of common stock issued and outstanding.  The market value of one share of common stock on March 14, 2019, as determined by reference to the closing price as reported on the NYSE, was $23.50.
 
As described in more detail in the table below, as of March 14, 2019:
 
·
395,361 shares remained available for issuance under the 2017 plan, assuming target performance under our PSU awards; and
 
·
No stock options and 1,004,585 shares underlying full value awards (such as restricted stock unit and performance share unit awards) were outstanding under the 2017 plan and our prior 2013 plan.
 

Century Communities, Inc. – 2019 Proxy Statement          29

 
Historical Equity Award Granting Practices
 
In setting the number of shares authorized for issuance under the amended 2017 plan, the Board and Compensation Committee also considered the historical number of equity awards granted under the 2017 plan and 2013 plan in the past three full fiscal years.  The following table sets forth information regarding awards granted and earned, and the annual burn rate for each of the last three fiscal years.
 
 
2018
 
2017
 
2016
Stock options granted
0
 
0
 
0
Restricted stock awarded
0
 
0
 
0
Restricted stock units awarded
335,063
 
459,873
 
514,200
Performance share units awarded, assuming target performance
107,463
 
0
 
0
Weighted average basic common shares outstanding during fiscal year
30,084,913
 
24,280,871
 
20,679,189
Burn rate
1.47%
 
1.89%
 
2.49%

The Board and Compensation Committee also considered our three-year average burn rate (2016 to 2018) of approximately 1.95%, which is lower than the industry thresholds established by certain major proxy advisory firms.  Based on historical granting practices and the recent trading price of our common stock, we expect the amended 2017 plan to cover awards for approximately three years.  However, we cannot predict our future equity grant practices, the future price of our shares or future hiring activity with any degree of certainty at this time, and the share reserve under the amended 2017 plan could last for a shorter or longer time.
 
Potential Dilution and Overhang
 
In setting the number of shares authorized for issuance under the amended 2017 plan, the Board and Compensation Committee also considered the potential dilution and overhang that would result by approval of the amended 2017 plan, including the policies of certain institutional investors and major proxy advisory firms.
 
Potential dilution is calculated as shown below:

Potential dilution
=
Total outstanding award shares divided by total number of
outstanding shares + total outstanding award shares

Total outstanding award shares include shares to be issued on exercise or settlement of outstanding equity awards, assuming target performance.
 
Potential overhang is calculated as shown below:

Potential overhang
=
Total potential award shares divided by total number of
outstanding shares + total outstanding award shares
 
Total potential award shares include shares underlying equity awards that may be made under the amended 2017 plan plus total outstanding award shares, assuming target performance.
 
As of March 14, 2019, potential dilution was 3.2% and potential overhang was 4.5%.  If the amended 2017 plan is approved, potential dilution will be 3.2% and potential overhang will be 9.7%.
 
Century Communities, Inc. – 2019 Proxy Statement          30

 

SUMMARY OF THE AMENDED 2017 PLAN FEATURES
 
The major features of the amended 2017 plan are summarized below.  The amended 2017 plan is substantially similar to the 2017 plan except for the amendments as previously described.  The summary is qualified in its entirety by reference to the full text of the amended 2017 plan, a copy of which may be obtained upon request to our Corporate Secretary at 8390 East Crescent Parkway, Suite 650, Greenwood Village, Colorado 80111, by telephone at (303) 770-8300, or by e-mail at InvestorRelations@CenturyCommunities.com.  A copy of the amended 2017 plan also has been filed electronically with the SEC as an appendix to this proxy statement and is available through the SEC’s website at www.sec.gov.
 
Purpose
The purpose of the amended 2017 plan is to advance the interests of Century and our stockholders by enabling Century and our subsidiaries to attract and retain qualified individuals to perform services, provide incentive compensation for such individuals in a form that is linked to the growth and profitability of Century and increases in stockholder value, and provide opportunities for equity participation that align the interests of recipients with those of our stockholders.
 
Administration
The Compensation Committee administers the amended 2017 plan.  All members of the Compensation Committee are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and “independent” under the NYSE rules.
 
Delegation
To the extent permitted by applicable law, the Compensation Committee may delegate to one or more of its members or to one or more officers of Century such administrative duties or powers, as it may deem advisable, including the grant of certain awards to employees, other than Section 16 officers, non-employee directors, or 10% stockholders of Century.
 
No-Repricing
The Compensation Committee may not, except as described below under “—Adjustments,” without prior approval of our stockholders, seek to effect any re-pricing of any previously granted “underwater” option or SAR by: (i) amending or modifying the terms of the option or SAR to lower the exercise price or grant price; (ii) canceling the underwater option or SAR in exchange for (A) cash; (B) replacement options or SARs having a lower exercise price or grant price; or (C) other awards; or (iii) repurchasing the underwater options or SARs and granting new awards under the amended 2017 plan.  An option or SAR will be deemed to be “underwater” at any time when the fair market value of the common stock is less than the exercise price of the option or the grant price of the SAR.
 
Shares Authorized
Subject to adjustment (as described below), the maximum number of shares of our common stock available for issuance under the amended 2017 plan is 2,481,000 shares, plus (i) 575,984 shares of our common stock that were available for issuance under our prior 2013 plan as of the date of stockholder approval of the 2017 plan, but not subject to outstanding awards and (ii) up to 690,182 shares that were subject to awards outstanding under the 2013 plan as of the date of stockholder approval of the 2017 plan that are subsequently forfeited or cancelled or expire or otherwise terminate without the issuance of such shares.
 
No more than 2,481,000 shares may be granted as incentive stock options.
 
 
Century Communities, Inc. – 2019 Proxy Statement          31

 
Share Counting
Shares that are issued under the amended 2017 plan or that are subject to outstanding awards are applied to reduce the maximum number of shares remaining available for issuance to the extent they are used; provided, however, that the full number of shares subject to a stock-settled SAR or other stock-based award are counted against the shares authorized for issuance, regardless of the number of shares actually issued.  Furthermore, any shares withheld to satisfy tax withholding obligations on awards issued under the amended 2017 plan, any shares withheld to pay the exercise price or grant price of awards under the amended 2017 plan and any shares not issued or delivered as a result of the “net exercise” of an outstanding option or settlement of a SAR in shares are counted against the shares authorized for issuance under the amended 2017 plan and are not available again for grant under the amended 2017 plan.  Any shares subject to awards settled in cash will again be available for issuance under the amended 2017 plan.  Any shares repurchased by Century on the open market using the proceeds from the exercise of an award will not increase the number of shares available for future grant of awards.  Any shares related to awards granted under the amended 2017 plan, and shares related to awards granted under the 2017 plan and 2013 plan, that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the shares, will be available again for grant under the amended 2017 plan and correspondingly increase the total number of shares available for issuance under the amended 2017 plan.  To the extent permitted by applicable law, shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by Century or a subsidiary or otherwise will not be counted against shares available for issuance pursuant to the amended 2017 plan.  The shares available for issuance under the amended 2017 plan may be authorized and unissued shares or treasury shares.
 
Annual Award Limits
The following limits are per participant per fiscal year.
 
·          500,000 shares subject to stock options and SARs;
 
·          500,000 shares subject to restricted stock awards, restricted stock units and deferred stock units;
 
·          $15,000,000 in performance awards denominated in cash or 750,000 shares of common stock for performance awards denominated in shares;
 
·          $15,000,000 in annual performance cash awards;
 
·          $15,000,000 in other cash-based awards; and
 
·          500,000 shares granted under other stock-based awards.
 
Non-Employee Director Limits
The sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year may not exceed $400,000 (increased to $600,000 with respect to any non-employee director serving as Chairman of the Board or Lead Independent Director or in the fiscal year of a non-employee director's initial service as a non-employee director). Any compensation that is deferred counts towards this limit for the year in which the compensation is first earned, and not a later year of settlement.
 
 
Century Communities, Inc. – 2019 Proxy Statement          32

 
Adjustments
In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin off) or other similar change in the corporate structure or shares of common stock of Century, the Compensation Committee will make the appropriate adjustment or substitution.  These adjustments or substitutions may be to the number and kind of securities and property that may be available for issuance under the amended 2017 plan.  In order to prevent dilution or enlargement of the rights of participants, the Compensation Committee may also adjust the number, kind, and exercise price of securities or other property subject to outstanding awards.
 
Minimum Vesting Requirements
The amended 2017 plan provides that no awards will vest earlier than one year from the grant date and any awards that vest upon the attainment of performance goals will have a minimum performance period of one year.
 
There is an exception with respect to shares of common stock that do not exceed 5% of the total number of shares of common stock authorized for awards under the amended 2017 plan. There is also an exception for shares delivered in lieu of fully vested cash awards and awards to non-employee directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting.
 
Holding Period
Any net shares of common stock received by an executive officer participant in connection with the vesting or settlement of an award under the amended 2017 plan must be held by such participant for at least 12 months after such vesting or settlement, or if earlier, termination of employment or satisfaction of Century’s stock ownership guidelines, if applicable and as in effect from time to time.
 
In addition, the Committee may in its discretion impose a more restrictive holding period on an award in an individual award agreement similar to the one-year mandatory holding period that commences after the vesting of certain PSU awards granted to executives in April 2018, which one-year mandatory holding period supersedes and replaces the holding period provided in the plan.  This holding period lapses only upon a termination due to death or disability or in connection with a change in control.
 
Eligible Participants
Awards may be granted to employees, non-employee directors and consultants of Century or any of its subsidiaries.  A “consultant” is one who renders services that are not in connection with the offer and sale of our securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for our securities.  As of March 14, 2019, 1,334 employees, three non-employee directors and approximately 200 independent consultants would have been eligible to participate in the amended 2017 plan had it been approved by our stockholders at such time.
 
Types of Awards
The amended 2017 plan will permit us to grant non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, annual performance cash awards, non-employee director awards, other cash-based awards and other stock based awards.  Awards may be granted either alone or in addition to or in tandem with any other type of award.
 
 
Century Communities, Inc. – 2019 Proxy Statement          33

 
Stock Options
Stock options entitle the holder to purchase a specified number of shares of our common stock at a specified price, which is called the exercise price, subject to the terms and conditions of the stock option grant.  The amended 2017 plan permits the grant of both non-statutory and incentive stock options.  Incentive stock options may be granted solely to eligible employees of Century or its subsidiary.  Each stock option granted under the amended 2017 plan must be evidenced by an award agreement that specifies the exercise price, the term, the number of shares underlying the stock option, the vesting and any other conditions.  The exercise price of each stock option granted under the amended 2017 plan must be at least 100% of the fair market value of a share of our common stock as of the date the award is granted to a participant. Fair market value is the closing price of our common stock, as reported on the NYSE.  The closing price of our common stock, as reported on the NYSE, on March 14, 2019, was $23.50 per share.  The Compensation Committee will fix the terms and conditions of each stock option, subject to certain restrictions, such as a ten-year maximum term.
 
Stock Appreciation Rights
A stock appreciation right, or SAR, is a right granted to receive payment of cash, stock or a combination of both, equal to the difference between the fair market value of shares of our common stock and the grant price of such shares.  Each SAR granted must be evidenced by an award agreement that specifies the grant price, the term, and such other provisions as the Compensation Committee may determine.  The grant price of a SAR must be at least 100% of the fair market value of our common stock on the date of grant.  The Compensation Committee will fix the term of each SAR, but SARs granted under the amended 2017 plan will not be exercisable more than 10 years after the date the SAR is granted.
 
Restricted Stock Awards, Restricted Stock Units and Deferred Stock Units
Restricted stock awards, restricted stock units, or RSUs, and/or deferred stock units may be granted under the amended 2017 plan.  A restricted stock award is an award of common stock that is subject to restrictions on transfer and risk of forfeiture upon certain events, typically including termination of service.  RSUs or deferred stock units are similar to restricted stock awards except that no shares are actually awarded to the participant on the grant date.  Deferred stock units permit the holder to receive shares of common stock or the equivalent value in cash or other property at a future time as determined by the Compensation Committee.  The Compensation Committee will determine, and set forth in an award agreement, the period of restriction, the number of shares of restricted stock awards or the number of RSUs or deferred stock units granted, the time of payment for deferred stock units and other such conditions or restrictions.
 
Performance Awards
Performance awards, in the form of cash, shares of common stock, other awards or a combination of both, may be granted under the amended 2017 plan in such amounts and upon such terms as the Compensation Committee may determine.  The Compensation Committee shall determine, and set forth in an award agreement, the amount of cash and/or number of shares or other awards, the performance goals, the performance periods and other terms and conditions.  The extent to which the participant achieves his or her performance goals during the applicable performance period will determine the amount of cash and/or number of shares or other awards earned by the participant.  At any time during a performance period of more than one fiscal year, the Compensation Committee may, in its discretion, cancel a portion of, or scale back, unvested performance awards under certain circumstances set forth in the amended 2017 plan, including that the performance goals for the performance period cannot be achieved at the maximum levels established at the time of grant.
 
 
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Annual Performance Cash Awards
Annual performance cash awards may be granted under the amended 2017 plan in such amounts and upon such terms as the Compensation Committee may determine, based on the achievement of specified performance goals for annual periods or other time periods as determined by the Compensation Committee.  The Compensation Committee will determine the target amount that may be paid with respect to an annual performance award, which will be based on a percentage of a participant’s actual annual base compensation at the time of grant.  The Compensation Committee may establish a maximum potential payout amount with respect to an annual performance award in the event performance goals are exceeded by an amount established by the Compensation Committee at the time performance goals are established.  The Compensation Committee may establish measurements for prorating the amount of payouts for achievement of performance goals at less than or greater than the target payout but less than the maximum payout.
 
Non-Employee Director Awards
The Compensation Committee at any time and from time to time may approve resolutions providing for the automatic grant to non-employee directors of non-statutory stock options, SARs or full value awards.  The Compensation Committee may also at any time and from time to time grant on a discretionary basis to non-employee directors non-statutory stock options, SARs or full value awards.  In either case, any such awards may be granted singly, in combination, or in tandem, and may be granted pursuant to such terms, conditions and limitations as the Compensation Committee may establish in its sole discretion consistent with the provisions of the amended 2017 plan.  The Compensation Committee may permit non-employee directors to elect to receive all or any portion of their annual retainers, meeting fees or other fees in restricted stock, RSUs, deferred stock units or other stock-based awards in lieu of cash.  Any awards granted to non-employee directors under the amended 2017 plan must be made by a committee consisting solely of directors who are “independent directors” under the NYSE rules and will not be subject to management’s discretion.
 
Other Cash-Based Awards and Other Stock-Based Awards
Consistent with the terms of the 2017 plan, other cash-based awards that are not annual performance cash awards and other stock-based awards may be granted to participants in such amounts and upon such terms as the Compensation Committee may determine.
 
Performance Measures
The performance goals selected by the Compensation Committee may be based on any one or more performance measures, including those listed in the amended 2017 plan. Any of the performance measures can be used in an algebraic formula (e.g., averaged over a period), combined into a ratio, compared to a budget or standard, compared to previous periods or other formulaic combinations. Any of the performance measures specified in the amended 2017 plan may be used to measure the performance of Century or any subsidiary, as a whole, or any division or business unit, product or product group, region or territory, or any combination thereof, as the Compensation Committee deems appropriate.  Performance measures may be compared to the performance of a peer group or a published or special index that the Compensation Committee deems appropriate or, with respect to share price, various stock market indices.  The Compensation Committee also may provide for accelerated vesting of any award based on the achievement of performance goals.
 
The Compensation Committee may amend or modify the vesting criteria (including any performance goals, performance measures or performance periods) of any outstanding awards based in whole or in part on the financial performance of Century (or any subsidiary or division, business unit or other sub-unit thereof) in recognition of unusual or nonrecurring events affecting Century or the financial statements of Century or of changes in applicable laws, regulations or accounting principles, whenever the Compensation Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the amended 2017 plan.
 
 
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Dividend Equivalents
With the exception of stock options and SARs, awards under the amended 2017 plan may, in the Compensation Committee’s discretion, earn dividend equivalents with respect to the cash or stock dividends or other distributions that would have been paid on the shares of our common stock covered by such award had such shares been issued and outstanding on the dividend payment date. However, no dividends may be paid on unvested awards. Such dividend equivalents will be converted to cash or additional shares of our common stock by such formula and at such time and subject to such limitations as determined by the Compensation Committee.
 
Termination of Employment or Other Service
The amended 2017 plan provides for certain default rules in the event of a termination of a participant’s employment or other service. These default rules may be modified in an award agreement.  If a participant’s employment or other service with Century is terminated for cause, then all outstanding awards held by such participant will be terminated and forfeited. In the event a participant’s employment or other service with Century is terminated by reason of death, disability or retirement, then:
 
·          All outstanding stock options (excluding non-employee director options in the case of retirement) and SARs held by the participant will, to the extent exercisable, remain exercisable for a period of one year after such termination, but not later than the date the stock options or SARs expires;
 
·          All outstanding stock options and SARs that are not exercisable will be terminated and forfeited;
 
·          All outstanding but unvested restricted stock awards, RSUs, performance awards, other cash-based awards and other stock-based awards held by the participant will terminate and be forfeited.  However, with respect to any awards that vest based on the achievement of performance goals, if a participant’s employment or other service with Century or any subsidiary is terminated prior to the end of the performance period of such award, but after the conclusion of a portion of the performance period (but in no event less than one year), the Compensation Committee may, in its sole discretion, cause shares to be delivered or payment made with respect to the participant’s award, but only if otherwise earned for the entire performance period and only with respect to the portion of the applicable performance period completed at the date of such event, with proration based on the number of months or years that the participant was employed or performed services during the performance period; and
 
·          If the effective date of such termination is before the end of the time period to which an annual performance cash award relates, then any such annual performance cash award held by a participant will terminate and be forfeited, but if the effective date of such termination is on or after the end of the time period to which an annual performance cash award relates, then any such annual performance cash award held by a participant will be paid to the participant in accordance with the payment terms of such award.
 
 
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In the event a participant’s employment or other service with Century is terminated by reason other than for cause, death, disability or retirement, then:
 
·          All outstanding stock options (including non-employee director options) and SARs held by the participant that then are exercisable will remain exercisable for three months after the date of such termination, but will not be exercisable later than the date the stock options or SARs expires; and
 
·          All outstanding unvested restricted stock awards, performance awards, annual performance cash awards, other cash-based awards and other stock-based awards will be terminated and forfeited. However, with respect to any awards that vest based on the achievement of performance goals, if a participant’s employment or other service with Century or any subsidiary is terminated prior to the end of the performance period of such award, but after the conclusion of a portion of the performance period (but in no event less than one year), the Compensation Committee may, in its sole discretion, cause shares to be delivered or payment made with respect to the participant’s award, but only if otherwise earned for the entire performance period and only with respect to the portion of the applicable performance period completed at the date of such event, with proration based on the number of months or years that the participant was employed or performed services during the performance period.
 
Modification of Rights upon Termination
Upon a participant’s termination of employment or other service with Century or any subsidiary, the Compensation Committee may, in its sole discretion (which may be exercised at any time on or after the grant date, including following such termination) cause stock options or SARs (or any part thereof) held by such participant as of the effective date of such termination to terminate, become or continue to become exercisable or remain exercisable following such termination of employment or service, and restricted stock, RSUs, performance awards, annual performance cash awards, non-employee director awards, other cash-based awards and other stock-based awards held by such participant as of the effective date of such termination to terminate, vest or become free of restrictions and conditions to payment, as the case may be, following such termination of employment or service, in each case in the manner determined by the Compensation Committee; provided, however, that (a) no stock option or SAR may remain exercisable beyond its expiration date; and (b) any such action by the Compensation Committee adversely affecting any outstanding award will not be effective without the consent of the affected participant, except to the extent the Compensation Committee is authorized by the amended 2017 plan to take such action.
 
Forfeiture and Recoupment
If a participant is determined by the Compensation Committee to have taken any action while providing services to Century or after termination of such services, that would constitute “cause” or an “adverse action,” as such terms are defined in the amended 2017 plan, all rights of the participant under the amended 2017 plan and any agreements evidencing an award then held by the participant will terminate and be forfeited.  The Compensation Committee has the authority to rescind the exercise, vesting, issuance or payment in respect of any awards of the participant that were exercised, vested, issued or paid, and require the participant to pay to Century, within 10 days of receipt of notice, any amount received or the amount gained as a result of any such rescinded exercise, vesting, issuance or payment.  Century may defer the exercise of any stock option or SAR for up to six months after receipt of notice of exercise in order for the Compensation Committee to determine whether “cause” or “adverse action” exists.  Century is entitled to withhold and deduct future wages to collect any amount due.
 
 
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In addition, if Century is required to prepare an accounting restatement due to material noncompliance, as a result of misconduct, with any financial reporting requirement under the securities laws, then any participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 will reimburse Century for the amount of any award received by such individual under the amended 2017 plan during the 12 month period following the first public issuance or filing with the Securities and Exchange Commission, as the case may be, of the financial document embodying such financial reporting requirement.  Century also may seek to recover any award made as required by the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other clawback, forfeiture or recoupment provision required by applicable law or under the requirements of any stock exchange or market upon which Century’s common stock is then listed or traded or any policy adopted by Century, including the Clawback and Forfeiture Policy adopted by Century in 2018.
 
Effect of Change in Control; Double Trigger Acceleration of Vesting
Generally, a change in control will mean:
 
·          The acquisition, other than from Century, by any individual, entity or group of beneficial ownership of 50% or more of the then outstanding shares of common stock;
 
·          The consummation of a reorganization, merger or consolidation of Century with respect to which all or substantially all of the individuals or entities who were the beneficial owners of common stock immediately prior to the transaction do not, following the transaction, beneficially own more than 50% of the outstanding shares of common stock of the corporation resulting from the transaction; or
 
·          A complete liquidation or dissolution of Century or the sale or other disposition of all or substantially all of the assets of Century.
 
Without limiting the authority of the Compensation Committee to adjust awards as discussed under “—Plan Administration” and “—Adjustments,” if a change in control of Century occurs, then, unless otherwise provided in the award or other agreement, if an award is continued, assumed or substituted by the successor entity, the award will not vest or lapse solely as a result of the change of control but will instead remain outstanding under the terms pursuant to which it has been continued, assumed or substituted and will continue to vest or lapse pursuant to such terms.
 
If the award is continued, assumed or substituted by the successor entity and within two years following the change in control the participant is either terminated by the successor entity without “cause” or, if the participant is an executive officer of Century, resigns for “good reason,” each as defined in the amended 2017 plan, then:
 
·          All outstanding stock options and SARs held by such participant will vest and become immediately exercisable and will remain exercisable until the earlier of the expiration of its full specified term or the first anniversary of the date of termination or resignation;
 
·          All restrictions imposed on restricted stock, RSUs or deferred units that are not performance-based held by such participant will lapse;
 
 
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·          All vested and earned awards that are performance-based held by such participant for which the performance period has been completed as of the date of such termination or resignation but have not yet been paid will be paid in cash or shares and at such time as provided in the award agreement; and
 
·          All performance-based awards for which the performance period has not been completed as of the date of such termination or resignation held by such participant will immediately vest and be earned in full and paid out with respect to each performance goal based on actual performance achieved through the date of termination or resignation with the manner of payment to be made in cash or shares as provided in the award agreement within 30 days following the date of termination or resignation.
 
If a change in control of Century occurs, any outstanding awards that are not continued, assumed or substituted with equivalent awards by the successor entity will be subject to the following rules:
 
·          All outstanding stock options and SARs will vest and become immediately exercisable and the Compensation Committee will either (i) give a participant a reasonable opportunity to exercise the stock option or SAR before the resulting change in control or (ii) pay the participant the difference between the exercise price for the stock option or grant price for the SAR and the consideration provided to other similarly situated stockholders in the change in control, provided that if the exercise or grant price exceeds the consideration in the change in control, the stock option or SAR will be canceled and terminated without payment;
 
·          All restrictions imposed on restricted stock, RSUs or deferred units that are not performance-based will lapse;
 
·          All vested and earned awards that are performance-based for which the performance period has been completed as of the date of the change in control but have not yet been paid will be paid in cash or shares and at such time as provided in the award agreement; and
 
·          All performance-based awards for which the performance period has not been completed as of the date of the change in control will immediately vest and be earned in full and paid out with respect to each performance goal based on actual performance achieved through the date of the change in control with the manner of payment to be made in cash or shares as provided in the award agreement within 30 days following the date of the change in control, but if payment is made in shares, the Compensation Committee may in its discretion provide the holder the consideration provided to other similarly situated stockholders in the change in control.
 
The amended 2017 plan also provides the Compensation Committee authority and flexibility to convert performance-based awards into time-based awards in connection with a change in control.
 
 
Century Communities, Inc. – 2019 Proxy Statement          39

 
Term, Termination and Amendment
Unless sooner terminated by the Board, the amended 2017 plan will terminate at midnight on May 7, 2029.  No award will be granted after termination of the amended 2017 plan, but awards outstanding upon termination of the amended 2017 plan will remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of the amended 2017 plan.
 
Subject to certain exceptions, the Board has the authority to terminate and the Compensation Committee has the authority to amend the amended 2017 plan or any outstanding award agreement at any time and from time to time.  No amendments to the amended 2017 plan will be effective without approval of Century’s stockholders if: (a) stockholder approval of the amendment is then required pursuant to Section 422 of the Code, the rules of the primary stock exchange on which the common stock is then traded, applicable U.S. state and federal laws or regulations and the applicable laws of any foreign country or jurisdiction where awards are, or will be, granted under the amended 2017 plan; or (b) such amendment would: (i) modify the restrictions on re-pricing; (ii) materially increase benefits accruing to participants; (iii) increase the aggregate number of shares of common stock issued or issuable under the amended 2017 plan; (iv) increase any limitation set forth in the amended 2017 plan on the number of shares of common stock which may be issued or the aggregate value of awards which may be made, with respect to any type of award to any single participant during any specified period; (v) modify the eligibility requirements for participants in the amended 2017 plan; or (vi) reduce the minimum exercise price or any option or grant price of any SAR. No termination or amendment of the amended 2017 plan or an award agreement shall adversely affect in any material way any award previously granted under the amended 2017 plan without the written consent of the participant holding such award.
 

FEDERAL INCOME TAX INFORMATION
 
The following is a general summary, as of the date of this proxy statement, of the federal income tax consequences to participants and Century of transactions under the amended 2017 plan.  This summary is intended for the information of stockholders considering how to vote at the annual meeting and not as tax guidance to participants in the amended 2017 plan, as the consequences may vary with the types of grants made, the identity of the participant and the method of payment or settlement.  This summary does not address the effects of other federal taxes or taxes imposed under state, local or foreign tax laws.  Participants are encouraged to seek the advice of a qualified tax advisor regarding the tax consequences of participation in the amended 2017 plan.
 
Incentive Stock Options.  With respect to incentive stock options, generally, the stock option holder is not taxed, and we are not entitled to a deduction, on either the grant or the exercise of an incentive stock option so long as the requirements of Section 422 of the Code continue to be met.  If the stock option holder meets the employment requirements and does not dispose of the shares of our common stock acquired upon exercise of an incentive stock option until at least one year after date of the exercise of the stock option and at least two years after the date the stock option was granted, gain or loss realized on sale of the shares will be treated as long-term capital gain or loss.  If the shares of our common stock are disposed of before those periods expire, which is called a disqualifying disposition, the stock option holder will be required to recognize ordinary income in an amount equal to the lesser of (i) the excess, if any, of the fair market value of our common stock on the date of exercise over the exercise price, or (ii) if the disposition is a taxable sale or exchange, the amount of gain realized.  Upon a disqualifying disposition, we will generally be entitled, in the same tax year, to a deduction equal to the amount of ordinary income recognized by the stock option holder, assuming that a deduction is allowed under Section 162(m) of the Code.
 

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Non-Statutory Stock Options.  The grant of a stock option that does not qualify for treatment as an incentive stock option, which is generally referred to as a non-statutory stock option, is generally not a taxable event for the stock option holder.  Upon exercise of the stock option, the stock option holder will generally be required to recognize ordinary income in an amount equal to the excess of the fair market value of our common stock acquired upon exercise (determined as of the date of exercise) over the exercise price of the stock option, and we will be entitled to a deduction in an equal amount in the same tax year, assuming that a deduction is allowed under Section 162(m) of the Code.  At the time of a subsequent sale or disposition of shares obtained upon exercise of a non-statutory stock option, any gain or loss will be a capital gain or loss, which will be either a long-term or short-term capital gain or loss, depending on how long the shares have been held.
 
SARs.  The grant of an SAR will not cause the participant to recognize ordinary income or entitle us to a deduction for federal income tax purposes.  Upon the exercise of an SAR, the participant will recognize ordinary income in the amount of the cash or the value of shares payable to the participant (before reduction for any withholding taxes), and we will receive a corresponding deduction in an amount equal to the ordinary income recognized by the participant, assuming that a deduction is allowed under Section 162(m) of the Code.
 
Restricted Stock, RSUs, Deferred Stock Units and Other Stock-Based Awards.  The federal income tax consequences with respect to restricted stock, RSUs, deferred stock units, performance shares and performance stock units, and other stock unit and stock-based awards depend on the facts and circumstances of each award, including, in particular, the nature of any restrictions imposed with respect to the awards.  In general, if an award of stock granted to the participant is subject to a “substantial risk of forfeiture” (e.g., the award is conditioned upon the future performance of substantial services by the participant) and is nontransferable, a taxable event occurs when the risk of forfeiture ceases or the awards become transferable, whichever first occurs.  At such time, the participant will recognize ordinary income to the extent of the excess of the fair market value of the stock on such date over the participant’s cost for such stock (if any), and the same amount is deductible by us, assuming that a deduction is allowed under Section 162(m) of the Code.  Under certain circumstances, the participant, by making an election under Section 83(b) of the Code, can accelerate federal income tax recognition with respect to an award of stock that is subject to a substantial risk of forfeiture and transferability restrictions, in which event the ordinary income amount and our deduction will be measured and timed as of the grant date of the award.  If the stock award granted to the participant is not subject to a substantial risk of forfeiture or transferability restrictions, the participant will recognize ordinary income with respect to the award to the extent of the excess of the fair market value of the stock at the time of grant over the participant’s cost, if any, and the same amount is deductible by us, assuming that a deduction is allowed under Section 162(m) of the Code.  If a stock unit award or other stock-based award is granted but no stock is actually issued to the participant at the time the award is granted, the participant will recognize ordinary income at the time the participant receives the stock free of any substantial risk of forfeiture (or receives cash in lieu of such stock) and the amount of such income will be equal to the fair market value of the stock at such time over the participant’s cost, if any, and the same amount is then deductible by us, assuming that a deduction is allowed under Section 162(m) of the Code.
 
Annual Performance Cash Awards and Other Cash-Based Awards.  Annual performance cash awards and other cash-based awards will be taxable as ordinary income to the participant in the amount of the cash received by the participant (before reduction for any withholding taxes), and we will receive a corresponding deduction in an amount equal to the ordinary income recognized by the participant, assuming that a deduction is allowed under Section 162(m) of the Code.
 
Withholding Obligations.  We are entitled to withhold and deduct from future wages of the participant, to make other arrangements for the collection of, or to require the recipient to pay to us, an amount necessary for us to satisfy the recipient’s federal, state or local tax withholding obligations with respect to awards granted under the 2017 plan.  Withholding for taxes may be calculated based on the maximum applicable tax rate for the participant’s jurisdiction or such other rate that will not trigger a negative accounting impact on Century.  The Compensation Committee may permit a participant to satisfy a tax withholding obligation by withholding shares of common stock underlying an award, tendering previously acquired shares, delivery of a broker exercise notice or a combination of these methods.
 
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Code Section 409A.  A grant may be subject to a 20% penalty tax, in addition to ordinary income tax, at the time the grant becomes vested, plus an interest penalty tax, if the grant constitutes deferred compensation under Section 409A of the Code and the requirements of Section 409A of the Code are not satisfied.
 
Code Section 162(m).  Pursuant to Section 162(m) of the Code, the annual compensation paid to an individual who is a “covered employee” is not deductible to the extent it exceeds $1 million.  The Tax Cut and Jobs Act, signed into law on December 22, 2017 (the Tax Act), amended Section 162(m), effective for tax years beginning after December 31, 2017, (i) to expand the definition of a “covered employee” to include any person who was the Chief Executive Officer or the Chief Financial Officer at any time during the year and the three most highly compensated officers (other than the Chief Executive Officer or the Chief Financial Officer) who were employed at any time during the year whether or not the compensation is reported in the Summary Compensation Table included in our proxy statement for our Annual Meeting of Stockholders; (ii) to treat any individual who is considered a covered employee at any time during a tax year beginning after December 31, 2106, as remaining a covered employee permanently; and (iii) to eliminate the performance-based compensation exception to the $1 million deduction limit (with a transition provision continuing the performance-based exception for certain compensation covered by a written binding contract in existence on November 2, 2017).
 
Excise Tax on Parachute Payments.  Unless otherwise provided in a separate agreement between a participant and Century, if, with respect to a participant, the acceleration of the vesting of an award or the payment of cash in exchange for all or part of an award, together with any other payments that such participant has the right to receive from Century, would constitute a “parachute payment” then the payments to such participant will be reduced to the largest amount as will result in no portion of such payments being subject to the excise tax imposed by Section 4999 of the Code.  Such reduction, however, will only be made if the aggregate amount of the payments after such reduction exceeds the difference between the amount of such payments absent such reduction minus the aggregate amount of the excise tax imposed under Section 4999 of the Code attributable to any such excess parachute payments.  If such provisions are applicable and if an employee will be subject to a 20% excise tax on any “excess parachute payment” pursuant to Section 4999 of the Code, we will be denied a deduction with respect to such excess parachute payment pursuant to Section 280G of the Code.
 
NEW PLAN BENEFITS
 
It is not presently possible to determine the benefits or amounts that will be received by or allocated to participants under the amended 2017 plan or would have been received by or allocated to participants for the last completed fiscal year if the amended 2017 plan had then been in effect because awards under the amended 2017 plan will be made at the discretion of the Compensation Committee.  Further, since any automatic awards to our non-employee directors will depend on the non-employee directors’ continued service and the Board’s discretion to vary the type and terms of those awards in the future, it is not possible to determine the exact number of shares of our common stock that will be subject to such awards.  However, under the policy currently in effect, each person serving as a non-employee director on the date of each annual meeting of stockholders will receive RSUs valued at $120,000.
 
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AWARDS PREVIOUSLY GRANTED UNDER 2017 PLAN          
 
As of March 14, 2019, we had granted restricted stock unit and performance share unit awards, assuming target performance, under the 2017 plan as follows:
 
Name and Position
Number of Shares
Underlying
Restricted Stock
Units
 
 
Number of Shares
Underlying
Performance Share
Units
Dale Francescon          
  Chairman and Co-Chief Executive Officer
254,939
   
94,095
Robert J. Francescon          
  President and Co-Chief Executive Officer
254,939
   
94,095
David L. Messenger          
  Chief Financial Officer and Secretary
107,923
   
53,768
Executive Group          
617,801
   
241,958
Non-Employee Director Group          
23,340
   
0
All Other Employee Group          
500,180
   
0
Total          
1,141,321
   
241,958

BOARD RECOMMENDATION          
 
The Board of Directors unanimously recommends that our stockholders vote “FOR” approval of the Century Communities, Inc. Amended and Restated 2017 Omnibus Incentive Plan.
 
The Board Recommends a Vote FOR Proposal No. 2
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(GRAPHIC)
 
PROPOSAL NO. 3:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
APPOINTMENT
 
The Audit Committee appoints our independent registered public accounting firm, or independent auditor. In this regard, the Audit Committee evaluates the qualifications, performance, and independence of our independent auditor and determines whether to re-engage the current auditor.  As part of its evaluation, the Audit Committee considers, among other factors, the quality and efficiency of the services provided by the independent auditor, including the performance, technical expertise, and industry knowledge of the lead audit partner and the audit team assigned to our account; the overall strength and reputation of the audit firm; the auditor’s national capabilities relative to our business; the auditor’s knowledge of our operations; and the auditor’s fees.  Upon consideration of these and other factors, the Audit Committee has appointed Ernst & Young LLP (E&Y) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2019.
 
Stockholder ratification of the selection of E&Y as our independent registered public accounting firm is not required by our Bylaws or otherwise.  However, the Board is submitting the appointment of E&Y to the stockholders for ratification as a matter of corporate practice.  If our stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain E&Y.  Even if the selection is ratified by our stockholders, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Century and our stockholders.
 
A representative of E&Y is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.
 
AUDIT, AUDIT-RELATED, TAX, AND OTHER FEES          
 
The fees billed for professional services provided by E&Y in 2018 and 2017 were:
 
Type of Fees
 
2018
 
2017
 
Audit Fees
 
$
1,370,000
 
$
1,684,790
 
Audit-Related Fees
   
0
   
0
 
Tax Fees
   
0
   
0
 
All Other Fees
   
2,130
   
2,130
 
Total Fees
 
$
1,372,130
 
$
1,686,920
 
               
 
In the above table, in accordance with the definitions of the SEC, “Audit Fees” consisted of fees for the audit of our consolidated financial statements included in our 2018 Annual Report, reviews of the unaudited financial statements included in our Quarterly Reports on Form 10-Q, and consultation concerning financial accounting and reporting standards, as well as services normally provided in connection with statutory and regulatory filings or engagements, comfort letters, consents, and assistance with documents filed with the SEC.  Audit Fees also included fees for the audit of the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act.  For 2017, Audit Fees also included fees associated with our senior note and equity offerings and our merger with UCP. “Audit-Related Fees” consisted of fees for assurance and related services, including fees for services performed related to due diligence on acquisitions.  “Tax Fees” consisted of fees billed for permissible tax consulting, planning, and compliance services.  “All Other Fees” consisted of subscription fees for Internet-based professional literature.
Century Communities, Inc. – 2019 Proxy Statement           44

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PRE-APPROVAL POLICIES AND PROCEDURES          
 
The Audit Committee is responsible for selecting, appointing, evaluating, compensating, retaining, and overseeing the work of our independent registered public accounting firm.  In recognition of this responsibility, the Audit Committee has established policies and procedures in its charter regarding pre-approval of any audit and non-audit service provided to Century by our independent registered public accounting firm and the fees and terms thereof. Briefly, any audit or non-audit service provided to us by our independent registered public accounting firm must be pre-approved by the Audit Committee or the Chair of the Audit Committee.
 
The Audit Committee considered the compatibility of the provision of other services provided by E&Y with the maintenance of its independence.  The Audit Committee approved all audit and non-audit services provided by E&Y in 2018 and 2017.
 
AUDIT COMMITTEE REPORT          
 
The Audit Committee issued the following report for inclusion in this proxy statement and our 2018 Annual Report:
 
1.
The Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2018, with management of Century Communities, Inc., and with Century Communities, Inc.’s independent registered public accounting firm, Ernst & Young LLP.
 
2.
The Audit Committee has discussed with Ernst & Young LLP those matters required by Public Company Accounting Oversight Board (PCAOB) Auditing Standard 1301 (Communications with Audit Committees).
 
3.
The Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee concerning the accountant’s independence and has discussed with Ernst & Young LLP its independence from Century Communities, Inc., and its management.
 
4.
Based on the review and discussions referenced to in paragraphs 1 through 3 above, the Audit Committee recommended to the Board that the audited consolidated financial statements for the year ended December 31, 2018, be included in the Annual Report on Form 10-K for that year for filing with the SEC.
 
AUDIT COMMITTEE
Keith R. Guericke, Chair
John P. Box
James M. Lippman
 
BOARD RECOMMENDATION          
 
The Board of Directors unanimously recommends that our stockholders vote “FOR” ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.
 
The Board Recommends a Vote FOR Proposal No. 3
Century Communities, Inc. – 2019 Proxy Statement           45

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PROPOSAL NO. 4:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
 
BACKGROUND          
 
The Board is providing our stockholders with an advisory vote on our executive compensation pursuant to the Dodd-Frank Wall Street Consumer Protection Act (Dodd-Frank Act) and Section 14A of the Exchange Act.  This advisory vote, commonly known as a say-on-pay vote, is a non-binding vote on the compensation paid to our named executive officers as set forth in this proxy statement.
 
At our 2018 Annual Meeting of Stockholders, our stockholders had the opportunity to vote on an advisory say-on-pay proposal and a say-on-frequency proposal. Over 92% of the votes cast were in favor of our say-on-pay proposal and our stockholders voted overwhelmingly in favor of an annual say-on-pay vote.
 
In designing the compensation program for 2018, the Compensation Committee considered the results of the 2018 say-on-pay vote, our ongoing dialogue with stockholders, internal considerations such as consistency from year to year, and an evaluation of peer practices. After consideration, the Compensation Committee concluded that, for 2018, it was appropriate to maintain the existing compensation mix for our executives. Our 2018 compensation program continued to tie the majority of our executives’ compensation to performance metrics that support the Company’s growth strategy.
 
WHY YOU SHOULD VOTE IN FAVOR OF OUR SAY-ON-PAY VOTE          
 
Our executive compensation program is generally designed to attract, retain, motivate, and reward highly qualified and talented executive officers that will enable us to drive long-term stockholder value.  The underlying core principles of our executive compensation program include:
 
·
aligning the interests of our executives with those of our stockholders and linking pay to performance by providing compensation opportunities that are tied directly to the achievement of financial performance goals and long-term stock price performance;
 
·
targeting fixed compensation between the market 25th percentile and the market median; and
 
·
targeting performance-based award levels between the 25th percentile and the market median and setting maximum award levels at or above the market 75th percentile, thereby emphasizing performance-based compensation elements, with superior performance resulting in above-market pay, and underwhelming performance resulting in below-market pay.
 
We believe this balance allows us to attract and retain the necessary executive talent while motivating and rewarding the accomplishment of annual and long-term financial performance goals and maintaining an appropriate cost structure.
Century Communities, Inc. – 2019 Proxy Statement           46

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Our compensation practices include many best pay practices that support our executive compensation objectives and principles and benefit our stockholders.
 
What We Do
What We Don’t Do
Structure our executive officer compensation so that a significant portion of pay is at risk
No guaranteed salary increases or bonuses
       
Emphasize long-term performance in our equity-based incentive awards
No excessive perquisites
       
Use a mix of performance measures and caps on payouts
No repricing of stock options unless approved by stockholders
       
Require minimum vesting periods on equity awards
No discretionary bonuses
       
Require double-trigger for equity acceleration upon a change of control
No tax gross-ups
       
Maintain a competitive compensation package
No excise tax gross-ups
       
Have robust stock ownership guidelines and stock retention requirements for executive officers
No current payment of dividends on unvested awards
       
Maintain a robust clawback policy covering cash and equity incentive compensation paid to current and former executives
No short sales or derivative transactions in Century stock, including hedges
       
Hold an annual say-on-pay vote
No pledging of Century securities

We encourage our stockholders to read the “Compensation Discussion and Analysis,” beginning on page 49, which describes in detail our executive compensation program and the executive compensation decisions made by the Compensation Committee in 2018, as well as the accompanying executive compensation tables and narratives that provide detailed information on the compensation of our named executive officers.
 
We believe that our executive compensation program is competitive, focused on pay for performance, and strongly aligned with the long-term interests of our stockholders.  The Compensation Committee believes that executive compensation for 2018 was reasonable, appropriate, and justified by the performance of the Company and the result of a carefully considered approach.
 
PROPOSED RESOLUTION          
 
The Board recommends that our stockholders vote in favor of the say-on-pay vote as set forth in the following resolution:
 
RESOLVED, that our stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including in the “Compensation Discussion and Analysis,” the accompanying compensation tables and the corresponding narrative discussion and footnotes, and any related material disclosed in this proxy statement.
 
Stockholders are not voting to approve or disapprove the Board’s recommendation.  As this is an advisory vote, the outcome of the vote is not binding on us with respect to future executive compensation decisions, including those relating to our named executive officers, or otherwise.  The Compensation Committee and Board expect to take into account the outcome of the vote when considering future executive compensation decisions.
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NEXT SAY-ON-PAY VOTE          
 
Consistent with the results from last year’s advisory vote on the frequency of the say-on-pay vote, the Board determined that we will conduct a say-on-pay vote on an annual basis. Accordingly, the next say-on-pay vote will occur at our 2020 Annual Meeting of Stockholders.
 
BOARD RECOMMENDATION          
 
The Board of Directors unanimously recommends that our stockholders vote “FOR” approval, on an advisory basis, of our executive compensation, or say-on-pay vote.
 
The Board Recommends a Vote FOR Proposal No. 4

Century Communities, Inc. – 2019 Proxy Statement           48

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COMPENSATION DISCUSSION AND ANALYSIS
 
INTRODUCTION          
 
This Compensation Discussion and Analysis (CD&A) addresses the principles underlying our policies and decisions with respect to the compensation of our executive officers who are named in the “Summary Compensation Table” and material factors relevant to these policies and decisions.  This CD&A should be read together with the related tables and disclosures that follow.
 
Our named executive officers for the year ended December 31, 2018 are set forth below. We sometimes refer to these individuals collectively are our named executive officers or “NEOs,” our Co-Chief Executive Officers collectively as our “Co-CEOs” and individually as our “Co-CEO” and our Chief Financial Officer as our “CFO.”
 
Named Executive Officer
Title
Dale Francescon
Chairman of the Board and Co-Chief Executive Officer
Robert J. Francescon
Co-Chief Executive Officer and President
David L. Messenger
Chief Financial Officer and Secretary

EXECUTIVE SUMMARY          
 
Who We Are
 
Century Communities, Inc. is a top 10 national U.S. homebuilder.  We are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 15 states across the West, Mountain, Texas and Southeast U.S. regions.  We market and sell homes under both the Century Communities and Wade Jurney Homes brands.  We also offer title, insurance, and lending services in select markets.
 
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Century Communities, Inc. – 2019 Proxy Statement           49

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Fiscal 2018 Business Highlights
 
Highlights of our financial, operational and strategic achievements for 2018, which drove our 2018 executive pay decisions, are set forth below. Some of these highlights include non-GAAP financial measures, the calculation of which are described in Annex I to this proxy statement.

FINANCIAL
$2.1 billion
Revenue
Achieved $2.1 billion in home sales revenues, a 51% é year-over-year, and exceeded targeted revenue, excluding acquisitions, by over 19%
$119.9 million
Adjusted Net Income
Achieved a record $119.9 million, or $3.94 per share, a 69% é year-over-year
$227.9 million
Adjusted EBITDA
Achieved $227.9 million in adjusted EBITDA, a 51% é year-over-year, and exceeded targeted adjusted EBITDA, excluding incremental EBITDA as a result of acquisitions, transaction expenses and bonuses, by over 12%
$387.5 million
Credit Facility Availability
Strengthened balance sheet and created flexibility with increased availability
   
OPERATIONAL
6,099
Home Deliveries
Achieved 6,099 home deliveries, a 68% é year-over-year, and exceeded targeted home deliveries, excluding acquisitions, by over 34%
5,657
Net New Home Contracts
Achieved 5,657 net new home contracts, a 48% é year-over-year
2,181 homes
$669.5 million
Backlog
Backlog é65% to 2,181 homes, with value of $669.5 million, a 17% é over end of prior year
37,919
Lots Owned and Controlled
Ended the year with 37,919 owned and controlled lots, a 23% é over the end of the prior year
   
STRATEGIC
Increased Focus on Entry Level Price Point
Reduced average sales price of homes delivered and in backlog to $345,968 and $306,981, respectively
Completed Acquisition of Wade Jurney Homes
Bolstered our offering of homes for first time buyers, strengthened our presence in the Southeast United States, and moved into the ranks of the Top 10 U.S. homebuilders based on combined closings
Completed Integration of UCP, Inc.
Accelerated Financial Services Business
Achieved revenue of $41.7 million and pre-tax income of $8.8 million, compared to $9.8 million and $1.2 million, respectively, in prior year
 
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Fiscal 2018 Compensation Actions and Outcomes
 
One of our key executive compensation objectives is to link pay to performance by aligning the financial interests of our executives with those of our stockholders and by emphasizing pay for performance in our compensation programs.  2018 compensation actions and incentive plan outcomes based on the performance described above are summarized below:
 
Pay Element
2018 Actions
Base Salary
·  Our Co-CEOs received no base salary increases.
 
·  Our CFO received a base salary increase of 15.8% to align to our target positioning in our peer group.
Short-Term Incentive
·  The target short-term incentive (STI) award opportunity for each of our Co-CEOs was increased from 150% to 175% of base salary to align with our target positioning and remained at 100% of base salary for our CFO.
 
·  Performance metrics were revenue (40%), EBITDA, as adjusted (40%), and closings (20%), in each case adjusted to exclude acquisitions, for our Co-CEOs, and revenue (30%), EBITDA as adjusted (30%), closings (15%), and individual goals (25%) for our CFO.
 
·  Payouts were between the target and maximum payout level, based on fiscal 2018 performance:
 
 
Metric*
 
Target
 
Maximum
 
Actual*
 
Revenue
 
$1.81 bil.
 
$1.99 bil.
 
$             1.91 bil.
 
EBITDA, as adjusted
 
$172.4 mil.
 
$189.6 mil.
 
$          193.4 mil.
 
Closings
 
4,556
 
5,012
 
4,722
 
*Adjusted to exclude acquisitions
Long-Term Incentives
· The target long-term incentive (LTI) award opportunity for 2018 for each of our Co-CEOs was 250% of base salary and 220% of base salary for our CFO.
 
·  The 2018 LTI program consisted of 60% performance share unit (PSU) awards and 40% time-vested restricted stock unit (RSU) awards. The PSU awards vest and are paid out in shares of our common stock upon the achievement of a threshold three-year (2018-2020) cumulative adjusted pre-tax income goal and will be subject to a one-year mandatory holding period. The RSU awards vest in three equal annual installments.
 
·  Our NEOs also received an RSU award in February 2018 as a payout under a prior year LTI program based primarily on the achievement of a previously established adjusted multi-year pre-tax income performance goal.  Because the structure of our programs changed, the grant of these awards was deemed to occur in 2018 (not at the earlier time when the performance metric was set), which resulted in a substantial increase in reported equity-based compensation for our NEOs in 2018 compared to 2017, even though the NEOs’ actual year-over-year compensation did not materially increase.
 
·  The February 2018 RSU award grant was based on the achievement, at maximum with kicker payout level, of an adjusted pre-tax income goal for the two-year period ended December 31 2017.
 
Metric
 
 
Target
 
 
Maximum
 
Maximum with Kicker
 
 
Actual
 
Adjusted pre-tax income
 
$142.8 mil.
 
$159.9 mil.
 
$178.5 mil.
 
$196.1 mil.
 
Century Communities, Inc. – 2019 Proxy Statement           51

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Pay Element
2018 Actions
 
·  Similarly, in February 2019, our NEOs received an RSU award as a payout under a prior year LTI program based primarily on the achievement, at maximum with kicker payout level, of an adjusted pre-tax income goal for the three-year period ended December 31, 2018.

 
Metric
 
 
Target
 
 
Maximum
 
Maximum with Kicker
 
 
Actual
 
Adjusted pre-tax income
 
 
$225.1 mil.
 
$247.6 mil.
 
$281.4 mil.
 
$369.1 mil.
 
Other Compensation Related Actions
·  Over 92% of votes cast at our 2018 Annual Meeting of Stockholders were in favor of our annual say-on-pay vote.
 
·  In October 2018, we entered into amended and restated employment agreements with our Co-CEOs.
 
·  In November 2018, we adopted a robust clawback policy covering cash and equity incentive compensation paid to current and former executives.
 
COMPENSATION HIGHLIGHTS AND BEST PRACTICES          
 
Our compensation practices include many best pay practices that support our executive compensation objectives and principles, and benefit our stockholders.
 
 
What We Do
 
What We Don’t Do
Structure our executive officer compensation so that a significant portion of pay is at risk
 
No guaranteed salary increases or bonuses
Emphasize long-term performance in our equity-based incentive awards
 
No excessive perquisites
✓ 
Use a mix of performance measures and caps on payouts
 
No repricing of stock options unless approved by stockholders
Maintain a robust clawback policy covering cash and equity incentive compensation paid to current and former executives
 
No discretionary bonuses
✓ 
Require double-trigger for equity acceleration upon a change of control
 
No tax gross-ups
✓ 
Maintain a competitive compensation package
 
No excise tax gross-ups
✓ 
Have robust stock ownership guidelines and stock retention requirements for executive officers
 
No pledging of Century securities
✓ 
Require minimum vesting periods on equity awards
 
No short sales or derivative transactions in Century stock, including hedges
✓ 
Hold an annual say-on-pay vote
 
No current payment of dividends on unvested awards
 
Century Communities, Inc. – 2019 Proxy Statement           52

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COMPENSATION PHILOSOPHY          
 
Given the small size of Century’s executive team, each executive has assumed responsibilities beyond what is generally found for similar executives in comparable companies.  Many of these additional responsibilities directly impact the growth of Century.  Further, Century emphasizes performance-based compensation elements, with superior performance resulting in above-market pay, and underwhelming performance resulting in below-market pay.
 
As such, the Compensation Committee has determined that fixed compensation (i.e., base salary) should be targeted at the market median, with performance-based incentive compensation opportunities resulting in total direct compensation that ranges from well below the market median to the top quartile of the market (based on performance).  The Compensation Committee has determined that target award levels will align total direct compensation at the market median, and maximum award levels, if earned, will align total direct compensation at or above the market 75th percentile.
 
COMPETITIVE CONSIDERATIONS AND USE OF MARKET DATA          
 
We strive to compensate our executive officers competitively relative to industry peers.  To ensure reasonableness and competitiveness of our executive compensation packages relative to the industry, the Compensation Committee regularly evaluates our peer group with the aid of our independent external compensation consultant and with input from management.  Data from our peer group, therefore, is considered in the compensation benchmarking process as one input in helping to determine appropriate pay levels.
 
In establishing compatibility between Century and the members of our peer group, the following three factors are considered:
 
Industry
Revenue
Market Capitalization
 
Based on these considerations, the following 11 companies in the “homebuilding” industry were selected as members of our peer group for purposes of analyzing the market competitiveness of our 2018 executive compensation program.
 
AV Homes Inc.
LGI Homes, Inc.
Taylor Morrison Home Corporation
Beazer Homes USA, Inc.
M.D.C. Holdings, Inc.
TRI Pointe Group, Inc.
Hovnanian Enterprises, Inc.
M/I Homes, Inc.
William Lyon Homes
KB Home
Meritage Homes Corporation
 

All of these companies are public companies in the homebuilding industry whose business model involves development, design, construction of homes and/or development of land and that have annual revenues and a market capitalization generally within a range of our annual revenues and market capitalization.  We rank at the 42nd percentile of our peer group for revenue, 47th percentile for projected 2019 revenue and 31st percentile for market capitalization.  In constructing this peer group, the Compensation Committee also considered whether companies disclosed Century as a peer, companies that appear in the peer groups of our peer companies and companies of which Institutional Shareholder Services (ISS) considers a peer of ours in its latest voting recommendations report.
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SAY-ON-PAY VOTE          
 
At our 2018 Annual Meeting of Stockholders, our stockholders had the opportunity to vote on an advisory say-on-pay proposal and a say-on-frequency proposal. Over 92% of the votes cast were in favor of our say-on-pay proposal and our stockholders were overwhelmingly in favor of an annual say-on-pay vote.
 
In designing the compensation program for 2018, the Compensation Committee considered the results of the 2018 say-on-pay vote, our ongoing dialogue with stockholders and investors, internal considerations such as consistency from year to year and an evaluation of peer practices.  After consideration, the Compensation Committee concluded that, for 2018, it was appropriate to maintain the existing compensation mix for our NEOs.  Our 2018 compensation program continued to tie the majority of our NEOs’ compensation to performance metrics that support the Company’s growth strategy.
 
STOCKHOLDER ENGAGEMENT          
 
While the Board is encouraged by the results of our 2018 say-on-pay vote where the vast majority of our stockholders supported our compensation program design, the Board nonetheless continued to seek stockholder feedback throughout 2018.  Over the course of the year, our executives held more than 200 meetings with stockholders representing over 70 percent of shares outstanding, in total, including all of our top 10 shareholders that are actively managed funds.  Members of management participated in each meeting.  One of the objectives of these engagement sessions was to solicit feedback on aspects of our executive compensation program.  Stockholder feedback was relayed directly to the Compensation Committee and full Board, which considered that feedback while evaluating opportunities to further enhance our executive compensation programs.
 
ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM          
 
During 2018, our executive compensation program consisted of several key elements as described in the table below, as well as key characteristics of, and purpose for, each element.  The following table also describes any key 2018 changes to each of these elements.
 
Element
Key Characteristics
Purpose
Key 2018 Changes
Base Salary
 
(Fixed, Cash)
A fixed amount, paid in cash periodically throughout the year and reviewed annually and, if appropriate, adjusted.
Provides a source of fixed income that is market competitive and reflects scope and responsibility of the position held.
No base salary increases for our Co-CEOs.
 
Base salary increase of 15.8% for our CFO to align with our target positioning.
 
Short-Term Incentive (STI)
 
(Variable, Cash)
A variable, short-term element of compensation that is payable in cash based on achievement of key pre-established annual corporate financial goals, and for our CFO, individual goals.
 
Motivates and rewards our executives for achievement of annual financial and other goals intended to achieve our annual business plan objectives.
The target STI award opportunity for each of our Co-CEOs was increased from 150% to 175% of base salary to align with our target positioning and remained at 100% for our CFO.
 
2018 performance metrics for our Co-CEOs were the same as 2017 and the same for our CFO. Our CFO also had individual performance metrics.
 
Payouts were between the target and maximum payout levels, based on fiscal 2018 performance.
 
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Element
Key Characteristics
Purpose
Key 2018 Changes
Long-Term Incentives (LTI)
 
(Variable, Restricted Stock Unit and Performance Share Unit Awards)
A variable, long-term element of compensation that is provided 60% in the form of PSU awards and 40% in the form of time-vested RSU awards.
 
Aligns the interests of our executives with our stockholders; encourages our executives to focus on long-term company financial performance measures that are deemed strategically and operationally important to our Company; promotes retention of our executives; and encourages significant ownership of our common stock.
The target LTI award opportunity for each of our Co-CEOs was 250% of base salary (up from 150% last year) and 220% of base salary (up from 100% last year) for our CFO.
 
We changed our LTI program in 2018 to consist of 60% PSU awards and 40% time-vested RSU awards. The PSU awards vest and are paid out in shares of our common stock upon the achievement of a threshold three-year (2018-2020) cumulative adjusted pre-tax income goal and will be subject to a one-year mandatory holding period. The RSU awards vest in three equal annual installments.
 
The use of PSU awards led to a change in the accounting for our LTI program in 2018, resulting in a substantial increase in reported equity-based compensation for our NEOs in 2018 compared to 2017, even though the NEOs’ actual year-over-year compensation did not materially increase. Due to the accounting change, our reported numbers in 2018 reflect grants for two years, and payouts in RSUs related to 2016 LTI grants.
 
Perquisites
Includes an automobile and cell phone allowance, term life insurance, and aircraft time sharing arrangements.
Assists in allowing our executives to more efficiently utilize their time and support them in effectively contributing to our Company success.
No significant changes, except entered into aircraft time sharing agreements with our NEOs.
Retirement Benefits
Includes a defined contribution retirement plan with a discretionary Company match.
Provides an opportunity for employees to save and prepare financially for retirement.
No significant changes.
 
We describe each key element of our executive compensation program in more detail in the following pages, along with the compensation decisions made in 2018.  The compensation paid to our NEOs is governed, in part, by written employment agreements with them, which are described below under “Executive Compensation—Employment and Other Agreements.
Century Communities, Inc. – 2019 Proxy Statement           55

 
 
PAY FOR PERFORMANCE AND PAY MIX
 
We seek to motivate management to achieve improved financial performance of our Company through incentive plans that reward higher performance with increased incentive payouts and hold management accountable for financial performance that falls below targeted levels by paying reduced or no incentive payouts.  Accordingly, in general, our executive compensation program emphasizes variable, at-risk, pay elements as a significant portion of each NEO’s total compensation package.
 
 
The breakdown of variable, at-risk, pay (broken out between target annual short-term incentives and long-term incentives) compared to fixed pay (i.e., base salary) reported for 2018 in the Summary Compensation Table for our Co-CEOs and CFO is as follows:
 
NAMED EXECUTIVE OFFICER COMPENSATION          
 
Base Salary
 
Purpose:  Base salary is designed to compensate our NEOs at a fixed level of compensation that provides some financial certainty and security for our NEOs, and also serves as a retention tool throughout the executive’s career.
 
Competitive Positioning:  In setting base salaries, the Compensation Committee considers many factors, including each executive’s roles and responsibilities, unique skills, future potential with Century, salary levels for similar positions in our market and internal pay equity.  While a Co-CEO executive structure is not commonly found in the marketplace, we believe our leadership structure is appropriate in light of our historical growth and expected future development.  Further, the small number of executive officers at Century and the absence of other leadership positions within Century’s executive team, such as a Chief Operating Officer, that are otherwise generally found on the leadership teams of other companies, requires our executives to perform multiple roles and take on additional responsibilities that would otherwise not be required of CEOs and CFOs.  As such, when determining compensation amounts for the year, the Compensation Committee takes into account these factors and the fact that Century has two Co-CEOs who each perform a broad range of duties which would generally be spread over a number of executive positions as described above.
 
Century Communities, Inc. – 2019 Proxy Statement           56

 
Our goal is to target the market median as our strategic target for base salary.  We review each executive’s base salary and performance every year to determine whether base salary should be adjusted.  Along with individual performance, we also consider movement of salary in the market, as well as our financial results from the prior year to determine appropriate salary adjustments.  Under their employment agreements, the base salaries of our Co-CEOs may not be adjusted downward.
 
While the Compensation Committee applies general compensation concepts when determining the competitiveness of our executives’ salaries, the Compensation Committee generally considers base salaries as being competitive when they are within approximately 10% of the stated market target.
 
2018 Review:  The Compensation Committee reevaluated NEO compensation relative to the market data in early 2018 and determined to maintain the base salaries of our Co-CEOs, but increase the base salary of our CFO to bring his salary closer to the market median.  The CFOs salary increase was effective in April 2018.
 
Named Executive Officer
2017 Base Salary ($)
2018 Base Salary ($)
Change (%)
Dale Francescon
850,000
850,000
0.0%
Robert J. Francescon
850,000
850,000
0.0%
David L. Messenger
475,000
550,000
15.8%
 
Short-Term Incentive – Annual Cash Bonus
 
Purpose:  Our short-term incentive, or annual cash bonus program, is designed to reward the achievement of specific annual financial and operational objectives.  Annual cash bonuses are designed to incentivize our NEOs at a variable level of compensation based on Century’s performance, as well as, in the case of our CFO, individual performance.
 
Competitive Positioning:  Our strategy is to target between the market 25th percentile and market median for short-term incentives for performance that meets expected levels and to target total cash compensation (base salary plus target STI) between the market 25th percentile and market median.  We have established a range of possible payouts under the plan so that our competitive position could be above or below our stated strategy based on performance outcomes.
 
2018 STI Awards: For 2018, the threshold, target and maximum STI opportunities for our NEOs were as follows:
 
Named Executive
Officer
 
Threshold
Target
Maximum
Dale Francescon
50% of target
175% of base salary
200% of target
Robert J. Francescon
 
50% of target
175% of base salary
200% of target
David L. Messenger
50% of target
100% of base salary
200% of target
 
The Compensation Committee determined to increase the target STI award opportunity for each of our Co-CEOs from 150% to 175% of base salary to align with our target positioning.  The target STI award opportunity for our CFO remained at 100% of base salary.
 
Century Communities, Inc. – 2019 Proxy Statement          57

 
The performance metrics that applied for the 2018 STI plan are described in the table below and are adjusted to exclude acquisitions.
 
Named Executive Officer
2018 Performance Metrics
Co-CEOs
40% revenue
40% EBITDA, as adjusted
20% closings
CFO
30% revenue
30% EBITDA, as adjusted
15% closings
25% individual performance goals: development and management of financial services earnings and management of audit and internal audit processes
 
In considering the performance metrics that should apply in calculating our Co-CEOs’ STI awards, the Compensation Committee determined that the performance metrics should be based on overall Company performance as opposed to individual performance.  The Compensation Committee furthermore determined that the most important measures of Company success, which should form the basis of our Co-CEOs’ STI awards, were revenue, EBITDA, as adjusted, and number of closings.  In considering the performance metrics that should apply in calculating our CFO’s STI award, the Compensation Committee determined that his STI award should be based, in part, on the same Company performance metrics as our Co-CEOs to align the entire executive team, as well as individual performance goals. In 2017, our CFO’s performance metrics were revenue and individual performance goals.
 
The Company financial performance metrics, and the performance levels attached to each, as well as actual performance, are reflected in the following table.
 
Company
Performance
Metric*
 
Threshold
   
Target
   
Maximum
   
Actual*
 
Revenue
 
$
 1.63 billion    
$
 1.81 billion    
$
 1.99 billion    
$
 1.91 billion  
EBITDA, as adjusted(1)
 
$
 155.2 million    
$
 172.4 million    
$
 189.6 million    
$
 193.4 million  
Closings
   
4,100
     
4,556
     
5,012
     
4,722
 
 

*
Adjusted to exclude acquisitions
 
(1)
This is a non-GAAP financial measure. EBITDA, as adjusted is calculated by excluding interest expense, income tax expense, depreciation and amortization from net income and also excluding incremental EBITDA as a result of the Wade Jurney Homes acquisition, transaction expenses and executive bonuses for 2018.
 
In determining the threshold, target and maximum goals for each performance metric, the Compensation Committee set the target for each metric using Century’s projected business plan for 2018 (i.e., as the amount in the target business plan approved by the Board).  Threshold was set at 90% of target, and maximum was set at 110% of target. If the threshold level was not achieved with respect to a given performance metric, then no payout was made with respect to that metric.
 
For 2018, our NEOs earned cash bonuses based on maximum performance for adjusted EBITDA and closings and revenue between target and maximum performance, and our CFO earned a cash bonus based on these same corporate metrics as well as individual goals, which were between target and maximum performance.  This resulted in an STI award payout for each of our NEOs between the target and maximum payouts.

 
Century Communities, Inc. – 2019 Proxy Statement           58

 
 
The table below shows the various levels of payout and the actual level of payout for STI cash awards made in February 2019 for each of our NEOs for 2018 performance.
 
Named Executive
Officer
Threshold Payout
($)
Target Payout
($)
Maximum Payout
($)
Actual Payout
($)
Dale Francescon
743,750
1,487,500
2,975,000
2,506,812
Robert J. Francescon
743,750
1,487,500
2,975,000
2,506,812
David L. Messenger
275,000
  550,000
1,100,000
   951,686
 
Long-Term Incentives – 2018 Program
 
Purpose:  Our long-term incentive program is designed to reward NEOs for the achievement of specific financial objectives, recognize their efforts on our behalf, and provide an additional incentive and retention element to their overall compensation package.  Our LTI program is also intended to align the interests of our executives with our stockholders.
 
Competitive Positioning:  We target between the market median with our target LTI program and at or above market 75th percentile for above-target performance.
 
LTI Awards and Plan Mechanics:  The target LTI award opportunity for each of our Co-CEOs was 250% of base salary and approximately 220% of base salary for our CFO for 2018.  Our LTI program for 2018 consisted of a mix of PSU and RSU awards. The PSU and RSU awards were granted under the Century Communities, Inc. 2017 Omnibus Incentive Plan and represent the right to receive Century common stock upon vesting.  The PSU awards will vest and be paid out in shares of our common stock upon the achievement of cumulative adjusted pre-tax income goals over three years and the RSU awards will vest and be paid out in shares of our common stock in three equal annual installments.  Once paid out, the shares underlying the PSU awards will be subject to a mandatory one-year holding period.
 
2018 LTI Award Opportunity:  For the 2018 LTI awards, the Compensation Committee first determined a target LTI value for each executive based on a percentage of base salary and then delivered 60% of this value in PSU awards and 40% in time-based RSU awards.
 
 
Performance-based (60%)
 
Time-based (40%)
 
Named Executive
Officer
Threshold
(50%)
Target
(100%)
Above
Target
(200% for
 Co-CEOs
 and 150%
 for CFO)
Maximum
(250% for Co-
CEOs and
200% for
CFO)
 
Number of
RSUs
Total
Target
LTI Value
Dale Francescon
20,895 shares
($630,000)
41,791 shares
($1,260,000)
83,582 shares
($2,520,000)
104,477 shares
($3,150,000)
 
27,860 shares
($840,000)
$2,100,000
Robert J. Francescon
20,895 shares
($630,000)
41,791 shares
($1,260,000)
83,582 shares
($2,520,000)
104,477 shares
($3,150,000)
 
27,860 shares
($840,000)
$2,100,000
 
David L. Messenger
11,940 shares
($360,000)
23,880 shares
($720,000)
35,820 shares ($1,080,000)
47,761 shares
($1,440,000)
 
15,920 shares
($480,000)
$1,200,000
 
 
Consistent with prior years, the performance metric for the PSU awards is cumulative adjusted pre-tax income for the three-year period ending December 31, 2021.  The RSU awards will vest and be paid out in shares of our common stock in three equal annual installments.  Once paid out, the shares underlying the PSU awards will be subject to a mandatory one-year holding period.
 
Century Communities, Inc. – 2019 Proxy Statement          59

 
Long-Term Incentives – Payouts from 2016 Grants
 
Background:  As described above, under our 2018 LTI program, our NEOs received a mix of PSU awards and time-vested RSU awards.  The use of PSU awards led to a change in the accounting for our LTI program, resulting in a substantial increase in reported equity-based compensation for our NEOs in 2018 compared to 2017, even though the NEOs’ actual year-over-year compensation did not materially increase.  As a result of the accounting treatment for the PSU and time-vested RSU awards, the entire grant date fair values of these awards are included in the “Stock Awards” column of the Summary Compensation Table, amounting to approximately $2.1 million for each of our Co-CEOs and $1.2 million for our CFO. Under our prior accounting treatment, the PSU awards would have been reported in a future year. Each of our NEOs also received an RSU award in February 2018 as a payout from our 2016 LTI program based primarily on the achievement of a previously established adjusted multi-year pre-tax income performance goal for the two years ended December 31, 2017.  Under the accounting rules, the payout of the 2016 LTI grant in RSU awards was deemed to occur in 2018 (not at the earlier time when the performance metric was set), which resulted in an additional $2.0 million in grant date fair value included in the “Stock Awards” column of the Summary Compensation Table for each of our Co-CEOs and $800,000 for our CFO. Due to this transition in how we account for our LTI program, the reported equity compensation component of our NEOs’ total compensation increased substantially in 2018 compared to prior years, even though the NEOs’ year-over-year actual compensation did not materially increase.  Because of the three-year performance period of our prior LTI program, the grant of time-based RSU awards in February as payouts of prior LTI programs will continue through 2020, resulting in inflated equity compensation numbers each year through 2020, with normalization occurring in 2021.
 
2018 LTI Award as Payout from 2016 LTI Award.  As part of our prior LTI program, in February 2018, the Compensation Committee granted RSU awards as payouts under our prior LTI program. For the these RSU awards, the Compensation Committee had established the following threshold, target, maximum and maximum with kicker LTI award opportunities for our Co-CEOs and CFO:
 
Named Executive
Officer
Threshold
Target
Maximum
Maximum with
Kicker
Dale Francescon
50% of target
100% of base salary
200% of target
250% of target
Robert J. Francescon
50% of target
100% of base salary
200% of target
250% of target
David L. Messenger
50% of target
66.6% of base salary
200% of target
250% of target
 
The performance-based metric used for the February 2018 RSU award grants was adjusted pre-tax income.  However, as part of our plan to transition to three-year performance periods, the performance period was over two years and was cumulative adjusted pre-tax income for the two years ended December 31, 2017.  In February 2018, the Compensation Committee granted RSU awards to our NEOs based on our achieved two-year cumulative adjusted pre-tax income for 2016 and 2017 in comparison to the following pre-established performance levels:
 
Performance Metric
Threshold ($)
Target ($)
Maximum ($)
Maximum with Kicker ($)
Actual ($)
Adjusted pre-tax income(1)
128.5 million
142.8 million
159.9 million
178.5 million
196.1 million
 ________________________

(1)
This is a non-GAAP financial measure. Adjusted pre-tax income is calculated by excluding bonus expense, acquisition expense, purchase accounting adjustment and impairments.
 
Because our achieved two-year cumulative adjusted pre-tax income exceeded the pre-established maximum with kicker performance level, our NEOs received an actual LTI award based on maximum with kicker performance.  While the Compensation Committee has discretion in the grant of these awards and reserved the right to factor in additional performance criteria, this discretion was not exercised and no additional adjustments were made to these RSU award grants.  The table below shows the various levels of LTI award opportunities and the actual LTI award value and number of RSUs earned by each of our NEOs in February 2018.
 
Century Communities, Inc. – 2019 Proxy Statement           60

 
Named Executive
Officer
Threshold
LTI
Award
Value ($)
Target LTI
Award
Value ($)
Maximum
LTI Award
Value ($)
Maximum
with Kicker
LTI Award
Value ($)
Actual
LTI
Award
Value ($)
Number
of RSUs
(#)
Dale Francescon
400,000
800,000
1,600,000
2,000,000
2,000,007
65,574
Robert J. Francescon
400,000
800,000
1,600,000
2,000,000
2,000,007
65,574
David L. Messenger
150,000
300,000
  600,000
 750,000
   749,995
24,590
 
These RSU awards vested on the one-year anniversary of the grant date.
 
2019 LTI Award as Payout from 2016 LTI Award.  As part of our prior LTI program, in February 2019, the Compensation Committee granted RSU awards as payouts under our prior LTI program.  For these RSU awards, the Compensation Committee had established the following threshold, target, maximum and maximum with kicker LTI award opportunities for our Co-CEOs and CFO:
 
Named Executive Officer
Threshold
Target
Maximum
Maximum with
Kicker
Dale Francescon
50% of target
150% of base salary
200% of target
250% of target
Robert J. Francescon
50% of target
150% of base salary
200% of target
250% of target
David L. Messenger
50% of target
100% of base salary
200% of target
250% of target
 
The performance-based metric used for the February 2019 RSU award grants was cumulative adjusted pre-tax income for the three years ended December 31, 2018 in comparison to the following pre-established performance levels:
 
Performance Metric
Threshold ($)
Target ($)
Maximum ($)
Maximum with
Kicker ($)
Actual ($)
Adjusted pre-tax income(1)
202.6 million
225.1 million
247.6 million
281.4 million
369.1 million
 ________________________

(1)
This is a non-GAAP financial measure.  Adjusted pre-tax income is calculated by excluding bonus expense, acquisition expense, purchase accounting adjustment and impairments.
 
Because our achieved three-year cumulative adjusted pre-tax income exceeded the pre-established maximum with kicker performance level, our NEOs received an actual LTI award based on maximum with kicker performance.  While the Compensation Committee has discretion in the grant of these awards and reserved the right to factor in additional performance criteria, this discretion was not exercised and no additional adjustments were made to these RSU award grants.  The table below shows the various levels of LTI award opportunities and the actual LTI award value and number of RSUs earned by each of our NEOs in February 2019.
 
Named Executive Officer
Threshold
LTI
Award
Value ($)
Target LTI
Award
Value ($)
Maximum
LTI Award
Value ($)
Maximum
 with Kicker
LTI Award
Value ($)
Actual
LTI
Award
Value ($)
Number
of RSUs
(#)
Dale Francescon
600,000
1,200,000
2,400,000
3,000,000
3,000,000
126,636
Robert J. Francescon
600,000
1,200,000
2,400,000
3,000,000
3,000,000
126,636
David L. Messenger
225,000
  450,000
  900,000
1,125,000
1,125,000
  47,488
 
These RSU awards will vest on the one-year anniversary of the grant date.
 
Century Communities, Inc. – 2019 Proxy Statement           61

 
Long-Term Incentives – Supplemental Adjusted Summary Compensation Table
 
As previously discussed, due to the transition in how we account for our LTI program, the reported equity compensation component of our NEOs’ total compensation increased substantially in 2018 compared to prior years, even though the NEOs’ year-over-year actual compensation did not materially increase.  The following is summary compensation information for our NEOs, assuming the grant date fair values of their February 2018 RSU award payouts under our prior LTI program were not included in the “Stock Awards” column. Given this adjustment, the information presented in the table below does not meet SEC requirements for the Summary Compensation Table. This information is supplemental to, and not a substitute for, the compensation information reported in the Summary Compensation Table.  Stockholders are advised to read this Adjusted Summary Compensation Table in conjunction with the Summary Compensation Table, beginning on page 66 of this proxy statement.
 
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
 Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
All Other
Compensation
($)
Total
($)
Dale Francescon
2018
850,000
0
2,099,978
2,506,812
81,558
5,538,348
Chairman of the Board and Co-Chief Executive Officer
2017
2016
839,453
789,583
0
0
1,275,006
2,400,000
2,550,000
2,318,868
61,396
78,000
4,725,855
5,586,451
 
             
Robert J. Francescon
2018
850,000
0
2,099,978
2,506,812
81,420
5,538,210
Co-Chief Executive
2017
839,453
0
1,275,006
2,550,000
61,258
4,725,717
Officer and President
2016
789,583
0
2,400,000
2,318,868
78,000
5,586,451
 
             
David L. Messenger
2018
525,000
0
1,149,965
  951,686
  7,002
2,633,653
Chief Financial Officer and Secretary
2017
2016
469,727
444,792
0
0
474,992
900,000
  950,000
  900,000
13,570
24,000
1,908,289
2,268,792
 
 
Other Benefits
 
In 2018, our NEOs had the opportunity to participate in a qualified defined contribution retirement plan on the same basis as our other employees.  We believe this plan provides an opportunity for our executives to plan for and meet their retirement savings needs.  We do not provide any pension arrangements, nonqualified defined contribution or other deferred compensation plans.
 
We provide our NEOs with modest perquisites to attract and retain them and to allow them to more efficiently utilize their time and to support them in effectively contributing to the success of our Company.  The perquisites provided to our NEOs during 2018 included an automobile and cellular telephone allowance and, in the case of our Co-CEOs, reimbursements for term life insurance.  When it is not being used for Company purposes, the NEOs may use the corporate aircraft for non-Company purposes.  In the event of such use, the NEOs are required to reimburse the Company at a lease rate equal to the aggregate incremental per hour cost of each flight pursuant to the terms of their aircraft time sharing agreements.  We believe these benefits are an important part of our overall compensation program and help us accomplish our goal of attracting, retaining, and rewarding top executive talent.
 

Century Communities, Inc. – 2019 Proxy Statement           62

 
EMPLOYMENT AGREEMENTS, SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS, AND POST-TERMINATION RESTRICTIONS          
 
We have entered into employment agreements with each of our NEOs.  These employment agreements are described under “Executive Compensation —Employment and Other Agreements.”  The purpose of these agreements is to define the essential terms of these executives’ employment relationships in a manner that will protect our business and other interests and the interests of the executive, including in the event his employment is terminated upon certain events. The severance provisions in the agreement are intended to induce these executives to continue employment with our Company and to retain them and provide consideration to them for certain restrictive covenants that apply following a termination of employment.  Additionally, we entered into these agreements because they provide us valuable protection by subjecting these executives to restrictive covenants that prohibit the disclosure of confidential information during and following their employment and limit their ability to engage in competition with us or otherwise interfere with our business relationships following a termination of their employment. The receipt of any severance by these executives is conditioned upon his execution of a release of claims.
 
In October 2018, we amended and restated the employment agreements with our Co-CEOs, the primary purpose of which was to modify the definition of “retirement” to extend by two years (to November 1, 2020) the earliest date after which the executive may terminate employment for retirement and receive certain benefits in connection therewith so as to avoid a requirement to recognize immediately the full stock-based accounting expense associated with equity awards held by such executives.  We also made certain other changes to these agreements, including extending the term by two years by imposing a new five-year term; reflecting their current base salaries and annual bonus opportunities and revising their cash severance provisions.
 
To encourage continuity, stability and retention when considering the potential disruptive impact of an actual or potential corporate transaction, we have established change in control arrangements, including provisions in our employment agreements with our NEOs.  These provisions provide our NEOs certain payments and benefits in the event of a termination of their employment in connection with a change in control.  These additional payments and benefits will not be triggered just by a change in control, but require a termination event not within the control of the executive, and thus are known as “double trigger” change in control arrangements.  These “double trigger” change in control protections are intended to induce executives to accept or continue employment with our Company, provide consideration to executives for certain restrictive covenants that apply following termination of employment, and provide continuity of management in connection with a threatened or actual change in control transaction.  If the employment of one of our NEOs is terminated by Century without cause or by him for good reason 24 months following or in the case of our Co-CEOs, within six months preceding, a change in control, the executive will be entitled to receive a severance payment and certain benefits.  The receipt of any severance is conditioned upon the executive’s execution of a release of claims.
 
We believe these change in control arrangements with our NEOs are an important part of our executive compensation program in part because they mitigate some of the risk for executives working in a smaller public company where there is a meaningful likelihood that the company may be acquired.  Change in control benefits are intended to attract and retain qualified executives who, absent these arrangements and in anticipation of a possible change in control of our Company, might consider seeking employment alternatives to be less risky than remaining with our Company through the transaction.  We believe that relative to our Company’s overall value, our potential change in control benefits are relatively small and are aligned with current peer company practices.
 

Century Communities, Inc. – 2019 Proxy Statement           63

 
RISK ASSESSMENT          
 
As a result of our assessment on risk in our compensation programs, we concluded that our compensation policies, practices, and programs and related compensation governance structure, work together in a manner so as to encourage our executives (and other employees) to pursue growth strategies that emphasize stockholder value creation, but not to take unnecessary or excessive risks that could threaten the value of our Company.  For more information on this assessment, see the discussions under “Executive CompensationRisk Assessment of Compensation Policies, Practices and Programs.”
 
CLAWBACK POLICY          
 
In November 2018, we adopted a new robust clawback policy pursuant to which we may recover cash and equity incentive compensation from current or former officers in the event a financial metric used to determine the vesting or payment of incentive compensation to an executive was calculated incorrectly and resulted in a financial restatement.
 
EXECUTIVE STOCK OWNERSHIP GUIDELINES          
 
We have established stock ownership guidelines that are intended to further align the interests of our NEOs with those of our stockholders.  A stock ownership target for each of our NEOs has been set at that number of shares of our Century common stock with a value equal to a multiple of the NEO’s annual base salary.  All of our NEOs are in compliance with our stock ownership guidelines.
 
Named Executive Officer
Stock Ownership Target
as a Multiple of Base Salary
In Compliance?
Dale Francescon
6x
Yes
Robert J. Francescon
6x
Yes
David L. Messenger
3x
Yes
 
TAX CONSIDERATIONS          
 
Prior to the enactment of the Tax Cuts and Jobs Act (Tax Act), in designing our executive compensation program, we considered the deductibility of executive compensation under Code Section 162(m).  The Tax Act, among other things, repealed the exemption from Code Section 162(m)’s deduction limit for “performance-based” compensation for taxable years beginning after December 31, 2017.  Some of our compensation plans were designed with the intention of satisfying the requirements for “performance-based” compensation as defined in Code Section 162(m) prior to the effective date of the Tax Act so that such awards would be exempt from the Code Section 162(m) deduction limitation.  While we designed these plans to operate in this manner, the Compensation Committee may administer the plans in a manner that does not satisfy such requirements in order to achieve a result that the Compensation Committee determines to be appropriate, including by revising performance goals and/or adjustment events as needed to ensure our pay practices continue to align with performance.  In addition, despite the Compensation Committee’s efforts to structure performance-based compensation in a manner intended to be exempt from the Code Section 162(m) deduction limit, no assurance can be given that compensation intended to satisfy the requirements for exemption from Code Section 162(m) in fact will.  Regardless of the changes to Section 162(m) as a result of the Tax Act, consistent with our executive compensation philosophy of linking pay to performance and aligning executive interests with those of our stockholders, we currently expect that we will continue to structure our executive compensation program so that a significant portion of total executive compensation is linked to the performance of our Company.
 
Century Communities, Inc. – 2019 Proxy Statement           64

 

HOW WE MAKE COMPENSATION DECISIONS
 
There are several elements to our executive compensation decision-making, which we believe allow us to most effectively implement our compensation philosophy.  The Compensation Committee, its independent external compensation consultant and management all have a role in decision-making for executive compensation.
 
The following table summarizes their roles and responsibilities:
 
Responsible Party
Roles and Responsibilities
 
Compensation Committee
 
(Comprised solely of independent directors and reports to the Board of Directors)
·  Oversees all aspects of our executive compensation program.
·  Annually reviews and approves our corporate goals and objectives relevant to Co-CEO compensation.
·  Evaluates each Co-CEO’s performance in light of such goals and objectives, and determines and approves his compensation based on this evaluation.
·  Determines and approves all executive officer compensation, including salary, bonus and equity and non-equity incentive compensation.
·  Administers our equity and incentive compensation plans and reviews and approves all equity awards and executive incentive payouts.
·  Reviews our incentive compensation arrangements to confirm that incentive pay does not encourage unnecessary risk-taking.
·  Evaluates market competitiveness of each executive’s compensation.
·  Evaluates proposed changes to our executive compensation program.
·  Assists the Board in developing and evaluating potential candidates for executive officer positions and overseeing the development of executive succession plans.
·  Has sole authority to hire consultants, approve their fees and determine the nature and scope of their work.
 
Independent External Compensation Consultant
 
(Frederic W. Cook & Co., Inc.)
 
(Independent under NYSE listing standards and reports to the Compensation Committee)
·  Provides advice and guidance on the appropriateness and competitiveness of our executive compensation program relative to our performance and market practice.
·  Reviews total compensation strategy and pay levels for executives.
·  Examines our executive compensation program to ensure that each element supports our business strategy.
·  Assists in selection of peer companies and gathering competitive market data.
·  Provides advice with respect to our equity-based compensation plans.
 
Co-Chief Executive Officers
 
(With the support of other members of the management team)
·  Review performance of other executive officers and make recommendations with respect to their compensation.
·  Confer with the Compensation Committee and compensation consultant concerning design and development of compensation and benefit plans.
·  Provide no input or recommendations with respect to their own compensation.
 


Century Communities, Inc. – 2019 Proxy Statement           65

 
COMPENSATION COMMITTEE REPORT
 
The Compensation Committee has reviewed and discussed the foregoing “Compensation Discussion and Analysis” with our management.  Based on this review and these discussions, the Compensation Committee has recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement and in our Annual Report on Form 10-K for the year ended December 31, 2018.
 
 
COMPENSATION COMMITTEE
James M. Lippman, Chair
John P. Box
Keith R. Guericke
 
EXECUTIVE COMPENSATION
 
SUMMARY COMPENSATION TABLE          
 
The table set forth below summarizes the compensation information for each of the individuals who served as a “principal executive officer” or “principal financial officer” during 2018.  Our Co-CEOs and CFO are our only executive officers.
 
Name and Principal Position
Year
Salary
($)
Bonus
($)(1)
Stock
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation ($)(3)
All Other
Compensation
($)(4)
Total
($)
Dale Francescon
2018
850,000
0
4,099,985
2,506,812
81,558
7,538,355
Chairman of the Board and Co-Chief Executive Officer
2017
2016
839,453
789,583
0
0
1,182,500
2,249,998
2,550,000
2,318,868
61,396
78,000
4,633,349
5,436,449
 
             
Robert J. Francescon
2018
850,000
0
4,099,985
2,506,812
81,420
7,538,217
Co-Chief Executive
2017
839,453
0
1,182,500
2,550,000
61,258
4,633,211
Officer and President
2016
789,583
0
2,249,998
2,318,868
78,000
5,436,449
 
             
David L. Messenger
2018
525,000
0
1,949,965
  951,686
  7,002
3,433,653
Chief Financial Officer and Secretary
2017
2016
469,727
444,792
0
0
  442,496
   850,002
  950,000
  900,000
13,570
24,000
1,875,793
2,218,794
 
 

(1)
We did not pay any discretionary bonuses or bonuses that are subjectively determined to any NEOs in any of the years presented. Annual cash bonuses, reported in the “Non-Equity Incentive Plan Compensation” column, are based on performance, which is measured against pre-established performance goals.
 
(2)
Amounts reported for 2018 represent the grant date fair value of RSU and PSU awards granted to our NEOs, computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. These are not amounts paid to or realized by the NEOs. We caution that the amounts reported in the table for stock awards and, therefore, total compensation, may not represent the amounts that each NEO will actually realize from the awards. Whether, and to what extent, an NEO realizes value will depend on a number of factors, including Company performance and stock price. The grant date fair value of the PSU awards assumes target levels of performance.  The grant date fair value of the PSU awards assuming maximum levels of performance are as follows: Mr. Dale Francescon ($3,149,982); Mr. Robert Francescon ($3,149,982) and Mr. Messenger ($1,439,994).
 
Each of our NEOs also received an RSU award in February 2018 as a payout under our 2016 LTI program based primarily on the achievement of a previously established adjusted multi-year pre-tax income performance goal for the two years ended December 31, 2017.  Under the accounting rules, the grant of the February 2018 RSU awards was deemed to occur in 2018 (not at the earlier time when the performance metric was set), which resulted in an additional $2.0 million in grant date fair value included in the “Stock Awards” column for each of our Co-CEOs and $800,000 for our CFO.
 
Century Communities, Inc. – 2019 Proxy Statement           66

 
 
Name
2016 LTIP
Payout ($)
2018 LTI
Award ($)
Total ($)
Dale Francescon
2,000,007
2,099,978
4,099,985
Robert J. Francescon
2,000,007
2,099,978
4,099,985
David L. Messenger
   749,995
1,199,971
1,949,965
 
(3)
Amounts reported represent payouts under our short-term incentive plan and for each year reflect the amounts earned for that year but paid during the following year.  See “Compensation Discussion and Analysis—Named Executive Officer Compensation—Short-Term Incentive—Annual Cash Bonus” for a description of our short-term incentive plan.
 
(4)
Amounts reported in this column for 2018 include:
 
Name
Company
Match
Contributions
401(k) ($)
Auto and Cell
Phone
Allowance
($)
Life Insurance
Premiums
($)
Other(1)
 ($)
Total Other
Compensation ($)
Dale Francescon
   500
30,000
30,396
20,662
81,558
Robert J. Francescon
   500
30,000
30,258
20,662
81,420
David L. Messenger
1,002
6,000
  7,002

The “Other” column consists of legal fees paid by Century in connection with the negotiation of the Co-CEOs’ amended and restated employment agreements.
 
EMPLOYMENT AND OTHER AGREEMENTS          
 
Co-CEO Employment Agreements
 
In October 2018, we entered into an amended and restated employment agreement with each of our Co-Chief Executive Officers, Dale Francescon and Robert J. Francescon, which has an initial five-year term and provides for automatic one-year extensions thereafter. These agreements contain customary confidentiality provisions as well as non-competition and non-solicitation provisions.
 
These agreements provide for an initial annual base salary of $850,000; an annual cash performance bonus opportunity at threshold equal to 87.5% of annual base salary, at target equal to 175% of annual base salary, and at maximum equal to 350% of annual base salary; participation in our equity incentive plans; reimbursement of up to $2,500 per month for term life insurance premiums; and a $2,500 per month automobile and cell phone allowance.
 
No severance benefits are payable if we terminate the executive’s employment for cause or if he resigns voluntarily and without good reason and other than by reason of retirement.  If we terminate the executive’s employment due to his disability, or his employment terminates due to his death or retirement, he or his estate will be entitled to receive (i) a pro rata amount of his annual incentive bonus for the fiscal year in which employment terminated calculated based on actual performance; (ii) a pro rata amount of the equity awards for the fiscal year or performance period in which employment terminated based on target performance, unless actual performance exceeds target based on proration of the performance goals through the last day of the calendar quarter preceding the termination date; (iii) the immediate vesting of all equity awards granted to him not then based on performance; and (iv) our payment for up to 18 months of that portion of his COBRA premiums that exceeds what he would have paid if he were an active employee.  For purposes of the agreements, “retirement” means the executive’s voluntary termination of his employment provided the executive: (a) has reached (or will reach on or after the termination date) the age of 60 along with at least 20 years of employment with us (for purposes of the agreements, each executive’s employment with us is deemed to have commenced on November 1, 2000); and (b) provides us with notice of his intent to retire at least 90 days in advance of the termination date.  If we terminate the executive’s employment without cause or if he terminates his employment for good reason, he will be entitled to (i) a lump sum cash severance payment equal to two times his annual base salary; (ii) a lump sum cash payment equal to the greater of either two times his average annual bonus for the three preceding fiscal years or two times his potential target bonus for the year in which the termination date occurs; (iii) the immediate vesting of all equity awards, including grants for the year of termination based on target performance, and for other performance-based equity awards, determined at the greater of target or actual performance achieved against a proration of the original performance goals through the last day of the calendar quarter preceding the termination date; and (iv) our payment for up to 18 months of that portion of his COBRA premiums that exceeds the amount he would have paid as an active employee. If we terminate the executive’s employment without cause or if he terminates his employment for good reason, within six months preceding or within 24 months following a “change in control” (as defined in the agreements), in addition to the other payments described above (but in lieu of the payment in clauses (i) and (ii) above), the executive will receive a lump sum cash severance payment equal to three times his base salary and a lump sum cash payment equal to the greater of:  (A) three times his potential target bonus for the year in which the termination date occurs; or (B) three times his average annual bonus for the three completed fiscal years immediately preceding the termination date.  To the extent that any change in control payment or benefit would be subject to the “golden parachute” excise tax under Code Section 4999, the payments will be reduced to an amount that will not subject the executive to the excise tax if the reduction results in him receiving a greater amount on a net after tax basis than would be received if he received the payment and benefits and paid the excise tax.  The severance payments and benefits provided for above are conditioned upon our receipt of a release of claims from the executive.
 
Century Communities, Inc. – 2019 Proxy Statement           67

 
CFO Employment Agreement
 
In November 2017, we entered into an employment agreement with our CFO, David L. Messenger.  This agreement has an initial term of three years and provides for automatic one-year extensions thereafter.  Mr. Messenger’s agreement contains customary confidentiality provisions as well as non-competition and non-solicitation provisions.
 
This agreement provides for an initial annual base salary of $475,000 (which was subsequently raised to $550,000 for 2018); an annual cash performance bonus opportunity at threshold equal to 50% of annual base salary, at target equal to 100% of annual base salary, and at maximum equal to 200% of annual base salary; participation in our equity incentive plans; and a $500 per month automobile and cell phone allowance.
 
No severance benefits are payable if we terminate Mr. Messenger’s employment for cause or if he resigns voluntarily and without good reason.  In addition, any outstanding equity awards granted to him will be paid in accordance with their terms. If we terminate Mr. Messenger’s employment due to his disability or if his employment terminates due to his death, he or his estate will be entitled to receive (i) the prorated amount of the annual incentive bonus for the fiscal year his employment terminated based on actual performance for that year, provided he was employed for at least 50% of the year; (ii) the prorated amount of the equity awards he would have received for the fiscal year his employment terminated calculated based on target performance, provided he was employed for at least 50% of the performance period; (iii) the immediate vesting of all unvested equity awards granted to him that vest based on the passage of time; and (iv) our payment for up to 18 months of that portion of the executive’s COBRA premiums that exceeds what he would have paid as an active employee.  If we terminate Mr. Messenger’s employment without cause or if he terminates his employment for good reason, he will be entitled to (i) a cash severance payment equal to his annual base salary payable as salary continuation over 12 months; (ii) the prorated amount of his annual incentive bonus for the fiscal year his employment terminated calculated based on actual performance; (iii) the prorated amount of the equity awards for the fiscal year his employment terminated, based on target; (iv) the immediate vesting of all equity awards granted to him that vest based on the passage of time; and (v) our payment for up to 18 months of that portion of his COBRA premiums that exceeds what he would have paid if he were an active employee.  If we terminate Mr. Messenger’s employment without cause or if he terminates his employment for good reason within 24 months following a “change in control” (as defined in the agreement), in addition to the other payments described above (but in lieu of the cash severance and prorated annual bonus payments), Mr. Messenger will receive an amount equal to two times his annual base salary plus two times the greater of his target annual bonus for the year in which termination occurs or the average of his annual bonuses paid to him for the three completed fiscal years immediately preceding the termination date.  To the extent that any change in control payment or benefit would be subject to the “golden parachute” excise tax under Code Section 4999, the payments will be reduced to an amount that will not subject him to the excise tax if the reduction results in him receiving a greater amount on a net after tax basis than would be received if he received the payment and benefits and paid the excise tax.  The severance payments and benefits provided for above are conditioned upon our receipt of a release of claims from Mr. Messenger.
 
Century Communities, Inc. – 2019 Proxy Statement           68

 
Other Agreements
 
In January 2018, we entered into aircraft time sharing agreements with Dale Francescon, Robert J. Francescon, and David L. Messenger, which govern their personal use of the Company’s aircraft during their employment and their reimbursement of the Company for the costs of any such use.  The lease rate payable by the executives thereunder equals the aggregate incremental per hour cost of each flight, as such cost is described in the agreements.  Use of the aircraft by the executives is subject to prior approval of the Co-Chief Executive Officers, and is at all times subordinate to use by the Company.  Each of the agreements has an initial term of one year, and provides for automatic one-year extensions thereafter, unless (i) either party provides the other with at least 30 days’ prior written notice of non-renewal, or (ii) the agreement is terminated on shorter notice as provided therein.

 
Century Communities, Inc. – 2019 Proxy Statement           69

 
 
GRANTS OF PLAN-BASED AWARDS DURING 2018          
 
The table below provides information concerning grants of plan-based awards to each of our NEOs during the year ended December 31, 2018.  Non-equity incentive plan awards were granted to our NEOs under our annual short-term incentive plan, the material terms of which are described under “Compensation Discussion and Analysis—Named Executive Officer Compensation—Short-Term Incentive-Annual Cash Bonus.”  Stock awards (in the form of RSU and PSU awards) were granted under our stockholder-approved plan, the Century Communities, Inc. 2017 Omnibus Incentive Plan.  The material terms of these awards are described under “Compensation Discussion and Analysis—Named Executive Officer Compensation—Long-Term Incentives” and in the notes to the table below.
 
 
     
Estimated Future Payouts under
Non-Equity Incentive Plan Awards(1)
 
Estimated Future Payouts under
Equity Incentive Plan Awards(2)
 
All Other
Stock
 
 
Grant
 
Name
 
 
Grant
Date
 
 
Threshold
($)
 
 
Target
($)
 
 
Maximum
($)
 
 
Threshold
(#)
 
 
Target
(#)
 
 
Maximum
(#)
 
Awards:
Number of
Shares of
Stock or
Units(3)
(#)
 
Date Fair
Value
Stock and
Option
Awards(4)
($)
Dale Francescon
                                   
Cash award
 
 
743,750
 
1,487,500
 
2,975,000
                   
RSU award
 
02/07/18
                         
65,574
 
2,000,007
RSU award
 
04/19/18
                         
27,860
 
839,979
PSU award
 
04/19/18
             
20,895
 
41,791
 
104,477
     
1,259,999
Robert J. Francescon
                                   
Cash award
 
 
743,750
 
1,487,500
 
2,975,000
                   
RSU award
 
02/07/18
                         
65,574
 
2,000,007
RSU award
 
04/19/18
                         
27,860
 
839,979
PSU award
 
04/19/18
             
20,895
 
41,791
 
104,477
     
1,259,999
David L. Messenger
                                   
Cash award
 
 
275,000
 
550,000
 
1,100,000
                   
RSU award
 
02/07/18
                         
24,590
 
749,995
RSU award
 
04/19/18
                         
15,920
 
479,988
PSU award
 
04/19/18
             
11,940
 
23,880
 
47,761
     
719,982
 ______________________

(1)
Amounts reported represent potential future payouts under our short-term incentive plan. Actual payouts under this plan are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
 
(2)
Amounts reported represent the range of PSU award payouts for the 2018 to 2020 performance period.  The range includes an “above target” payout which would result in the following payouts: Dale Francescon (83,582); Robert J. Francescon (83,582); and David L. Messenger (35,820). Information regarding the PSU awards is set forth under “Compensation Discussion and Analysis—Named Executive Officer Compensation—Long-Term Incentives.”
 
(3)
Amounts reported represent RSU awards. The RSU awards granted on February 7, 2018 were payouts under our prior LTI program upon the achievement of a performance metric that was established in March 2016 and will vest and become issuable on the one-year anniversary of the grant date, subject to the executive’s continued employment with us.  The RSU awards granted on April 19, 2018 are part of our 2018 LTI program and will vest and become issuable in equal installments on the first, second, and third year anniversaries of the grant date, subject to the executive’s continued employment with us.
 
(4)
Amounts reported represent the grant date fair value of the RSU and PSU awards granted to our NEOs, computed in accordance with FASB ASC Topic 718, based on the closing price of our common stock on the grant dates of February 7, 2018 ($30.50), and April 19, 2018 ($30.15), as reported by the NYSE, and assuming target levels of performance for the PSU awards. The RSU and PSU awards will vest upon certain terminations of employment and upon a change in control if the award is not continued, assumed, or substituted with equivalent awards by the successor entity.
 
As previously discussed, the use of PSU awards led to a change in the accounting for our LTI program, resulting in a substantial increase in reported equity-based compensation for our NEOs in 2018 compared to 2017, even though the NEOs’ actual year-over-year compensation did not materially increase.
 
Century Communities, Inc. – 2019 Proxy Statement           70

 
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2018          
 
The following table sets forth information with respect to all outstanding unvested RSU awards and PSU awards held by our NEOs as of December 31, 2018.  No other equity awards were held by our NEOs as of December 31, 2018.
 
 
 
Stock Awards as of December 31, 2018
Name
 
Number of Shares or
Units of Stock That
Have Not Vested
(#)
 
Market Value of Shares
or Units of Stock that
Have Not Vested(1)
($)
 
Equity Incentive Plan
Awards:

Number of  Unearned
Shares, Units, or Other
Rights That Have Not
Vested(2)
(#)
 
Equity Incentive Plan
Awards:

Market or Payout Value
of Unearned Shares,
Units, or Other Rights
That Have Not Vested(3)

($)
Dale Francescon
               
RSU awards(4)
 
156,422
 
2,699,844
       
PSU award
         
20,895
 
360,648
Robert J. Francescon
               
RSU awards(4)
 
156,422
 
2,699,844
       
PSU award
         
20,895
 
360,648
David L. Messenger
               
RSU awards(5)
 
 64,252
 
1,108,990
       
PSU award
         
11,940
 
206,084
 ______________________

(1)
Amounts reported represent the value of RSU awards based on the number of shares of Century common stock underlying the RSU awards that have not vested multiplied by the closing price of our common stock on December 31, 2018 ($17.26), as reported by the NYSE.
 
(2)
Amounts reported represent the number of PSU awards that were in progress based on actual levels of performance for 2018 and threshold levels of performance for 2019 and 2020.  The 2018 to 2020 PSU awards will vest, if at all, solely based on the accomplishment of the performance goal established for the three-year performance period, which will end on December 31, 2020. In addition, the PSU awards will vest upon certain terminations of employment and upon a change in control if the award is not continued, assumed, or substituted with equivalent awards by the successor entity.
 
(3)
Amounts reported represent the value of PSU awards that were in progress based on the closing price of our common stock on December 31, 2018 ($17.26), as reported by the NYSE.
 
(4)
Comprised of 27,860 unvested shares underlying an RSU award granted on April 19, 2018, 65,574 unvested shares underlying an RSU award granted on February 7, 2018, 10,059 unvested shares underlying an RSU award granted on March 17, 2017, and 52,929 unvested shares underlying an RSU award granted on February 10, 2016.  Each of these awards vests in equal installments on the first, second, and third year anniversaries of the respective grant dates, subject to the executive’s continued employment with us, except the RSU award granted on February 7, 2018 vests one year from the anniversary of the grant date.  The RSU awards will vest upon certain terminations of employment and upon a change in control if the award is not continued, assumed, or substituted with equivalent awards by the successor entity.
 
(5)
Comprised of 15,920 unvested shares underlying an RSU award granted on April 19, 2018, 24,590 unvested shares underlying an RSU award granted on February 7, 2018, 3,747 unvested shares underlying an RSU award granted on March 17, 2017, and 19,995 unvested shares underlying an RSU award granted on February 10, 2016.  Each of these awards vests in equal installments on the first, second, and third year anniversaries of the respective grant dates, subject to the executive’s continued employment with us, except the RSU award granted on February 7, 2018 vests one year from the anniversary of the grant date.  The RSU awards will vest upon certain terminations of employment and upon a change in control if the award is not continued, assumed, or substituted with equivalent awards by the successor entity.
 
Century Communities, Inc. – 2019 Proxy Statement           71

 
OPTION EXERCISES AND STOCK VESTED DURING 2018          
 
The table below provides information regarding stock awards (in the form of RSU awards and restricted stock awards) that vested for each of our NEOs during the year ended December 31, 2018.  No PSU awards held by our NEOs vested and no option awards were exercised or outstanding during the year ended December 31, 2018.
 
 
 
Stock Awards
Name
 
Number of
Shares Acquired
on Vesting(1)
(#)
 
Value Realized on Vesting(2)
($)
Dale Francescon
       
RSU awards
 
93,672
   
2,689,859
Restricted stock awards
 
43,988
   
1,429,610
Robert J. Francescon
       
RSU awards
 
93,672
   
2,689,859
Restricted stock awards
 
43,988
   
1,429,610
David L. Messenger
       
RSU awards
 
35,263
   
1,012,565
Restricted stock awards
 
11,730
   
381,225
 ______________________

(1)
The number of shares acquired upon vesting reflects the gross number of shares acquired or becoming non-forfeitable absent netting of any shares surrendered or sold to satisfy tax withholding requirements.
 
(2)
The value realized on vesting represents the gross number of shares acquired or that became non-forfeitable multiplied by the closing sale price of our common stock on the vesting date or the last trading day prior to the vesting date if the vesting date was not a trading day, as reported by the NYSE.
 

Century Communities, Inc. – 2019 Proxy Statement           72

 
 
 
POTENTIAL POST-TERMINATION AND CHANGE IN CONTROL PAYMENTS
 
Employment Agreements
 
As previously described, the employment agreements with each of our NEOs contains severance provisions, including in connection with a change in control, intended to induce these executives to continue employment with our Company and to retain them and provide consideration to them for certain restrictive covenants that apply following a termination of employment.  The receipt of any severance by these executives is conditioned upon his execution of a release of claims.  These employment agreements are described under “Executive Compensation —Employment and Other Agreements.”
 
Other Change in Control Arrangements
 
The Century Communities, Inc. 2017 Omnibus Incentive Plan under which awards have been granted to our NEOs contains “change in control” provisions.  Under the plan, without limiting the authority of the Compensation Committee to adjust awards, if a “change in control” of Century (as defined in the plan) occurs, then, unless otherwise provided in the award or other agreement, if an award is continued, assumed, or substituted by the successor entity, the award will not vest or lapse solely as a result of the change of control but will instead remain outstanding under the terms pursuant to which it has been continued, assumed, or substituted and will continue to vest or lapse pursuant to such terms.  If the award is continued, assumed, or substituted by the successor entity and within two years following the change in control the executive is either terminated by the successor entity without “cause” or, if the executive is an executive officer of Century, resigns for “good reason,” each as defined in the plan, or if outstanding awards that are not continued, assumed, or substituted with equivalent awards by the successor entity in connection with the change in control, then:
 
·
all restrictions imposed on restricted stock, RSU awards, or deferred units that are not performance-based held by such participant will lapse;
 
·
all vested and earned awards that are performance-based held by such participant for which the performance period has been completed as of the date of such termination, resignation or change in control, as applicable, but have not yet been paid, will be paid in cash or shares and at such time as provided in the award agreement; and
 
·
all performance-based awards for which the performance period has not been completed as of the date of such termination, resignation or change in control, as applicable, held by such participant will immediately vest and be earned in full and paid out with respect to each performance goal based on actual performance achieved through the date of termination, resignation or change in control, as applicable, with the manner of payment to be made in cash or shares, as provided in the award agreement, within 30 days following the date of termination, resignation or change in control, as applicable, and provided that if payment in the change in control transaction is made in shares, the Compensation Committee may in its discretion provide the holder the consideration provided to other similarly situated stockholders in the change in control.
 
Century Communities, Inc. – 2019 Proxy Statement             73

 

Potential Payments to Named Executive Officers
 
The table below shows potential payments to our NEOs, not otherwise earned, under various scenarios involving a termination of employment, including in connection with a change in control, and upon a change in control without a termination of employment, assuming a December 31, 2018 termination date.  All equity awards are valued at the closing price of our common stock on as of December 31, 2018 ($17.26), as reported by the NYSE.
 
Name
 
Benefit
 
Termination
without
Cause or for
Good Reason
Outside a
Change in
Control
($)
 
Termination
without
Cause or for
Good Reason
in Connection
with a
Change in
Control
($)
 
Voluntary
Termination/
Retirement(1)
($)
 
Death or
Disability
($)
 
Change in
Control(2)
($)
Dale Francescon
 
Severance Pay(3)
 
 1,700,000
 
2,550,000
 
 
 
—    
   
Incentive Pay(4)
 
4,245,912
 
6,368,868
 
 
 
—    
   
RSU Award Vesting
 
2,699,844
 
2,699,844
 
 
2,699,844
 
—    
   
PSU Award Vesting(5)
 
721,313
 
721,313
 
 
240,432
 
—    
   
LTI Award Vesting(6)
 
3,892,500
 
3,892,500
 
 
3,595,000
 
—    
   
Other Benefits(7)
 
31,997
 
31,997
 
 
31,997
 
—    
                         
Robert J. Francescon
 
Severance Pay(3)
 
 1,700,000
 
2,550,000
 
 
 
—    
   
Incentive Pay(4)
 
4,245,912
 
6,368,868
 
 
 
—    
   
RSU Award Vesting
 
2,699,844
 
2,699,844
 
 
2,699,844
 
—