Company: LEN
Filing Date: 2025-02-28
Form Type: DEF 14A
Source: 0001193125-25-040938
Chunk: 54

Company: LENNAR CORP /NEW/
Filing Date: 2025-02-28
Form: DEF 14A
Chunk 54
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 Discussion and Analysis” section, (1) the performance-based award target payouts for Messrs. Miller and Jaffe are at the 65th percentile; and (2) the payout level at threshold performance achievement is 30% of target for Messrs. Miller and Jaffe, strengthening the link between executive compensation and Company performance.

Gross profit percentageis an industry standard that research analysts and investors use to gauge the strength of businesses like ours because it shows whether costs are being managed effectively. A high gross profit percentage target incentivizes our executives to maximize our sales prices, control sales incentives, and minimize costs of sales, which include the costs of land, labor, materials, and products used in building our homes. A relativegross profit percentage metric indicates whether Lennar is managing costs and sale prices more effectively than our peers.

Return on tangible capitalencourages our executives to focus on our returns and the efficient use of our assets and resources, while also driving earnings. A relativereturn on tangible capital metric indicates whether Lennar is using assets and resources more efficiently than our peers. Return on tangible capital is calculated by dividing the Company’s net operating profit after tax by its tangible capital. Net operating profit after tax is calculated by taking the Company’s net income and adding back any after-taxinterest expense and adjusting for tax items or other adjustments to the extent approved by the Compensation Committee. Tangible capital is defined as stockholders’ equity less intangible assets plus homebuilding debt.

Debt/EBITDA multipleencourages our executives to maximize cash flow and reduce our leverage. Debt is calculated as the Company’s consolidated debt balance for the applicable period, divided by the Company’s EBITDA for such period. EBITDA is earnings before interest, taxes, depreciation and amortization.

Total stockholder returnis a measure that captures stock price appreciation plus dividends paid over a defined period, reflecting the total return to stockholders during that time. A relative total stockholder return metric indicates whether an investment in Lennar was better for our stockholders than an investment in our Peer Group would have been.

The threshold performance levels outlined above are designed to be reasonably achievable, yet uncertain under expected market and business conditions at the time of grant. Target performance levels are designed to require significant management effort to achieve, and maximum performance levels are designed to be measurably more difficult to achieve than target performance levels.

Grants of service-based restricted stock

In January 2024, the Compensation Committee also approved a grant to Mr. Sustana