Company: LGIH
Filing Date: 2025-03-14
Form Type: DEF 14A
Source: 0001580670-25-000028
Chunk: 63

Company: LGI Homes, Inc.
Filing Date: 2025-03-14
Form: DEF 14A
Chunk 63
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 the program components encourage or otherwise promote the taking of inappropriate or unacceptable risks that could threaten the Company’s long-term value. Based on this review, the Compensation Committee believes that many of the Company’s systems and processes are designed to effectively promote the creation of long-term value,

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discourage behavior that leads to excessive risk, and mitigate the material risks associated with executive and other compensation programs.

These practices with respect to 2024 included the following:

1. Our executive compensation program is designed to include a mix of elements so that the compensation mix is not overly focused on either short-term or long-term incentives.

2. Our executive annual incentive award program is based on financial metrics that are objective and drive long-term stockholder value (including pretax operating income performance and home closings). Moreover, the Compensation Committee attempts to set ranges for these measures that encourage success without encouraging excessive risk taking to achieve short-term results. The Compensation Committee has the absolute discretion to remove any and all participants from the annual incentive award program prior to the end of the year to which the annual incentive award relates and may reduce the amount of the annual incentive award payment, in its discretion, at any time prior to year-end.

3. Our incentive compensation programs do not allow for unlimited payments, and annual incentive award caps limit the extent that employees could potentially profit by taking on excessive risk.

4. Selection of two different types of long-term incentives (time-based RSUs and PSUs) for executives helps to minimize the risk that they will take actions that could cause harm to the Company and our stockholders. The value of the RSUs is primarily based on stock price appreciation, which is determined by how the market values our common stock, and the value of the PSUs is based on cumulative Basic EPS which is objective and drives long-term stockholder value.

5. Longer performance periods encourage executives to attain sustained performance over several years, rather than performance in a single period. PSUs are based on a three-year performance period. Time-based RSUs have a three-year cliff vesting.

6. The stock ownership guidelines described under “Stock Ownership Guidelines” above align the interests of our executive officers with the long-term interests of our stockholders and encourage our executives to execute our strategies for growth in a prudent manner.

7. The Company has a clawback policy applicable to executive officers that requires recovery of incentive-based compensation if the Company is later required to prepare an accounting restatement, as described under “Policy for the Recovery of Erroneously Awarded Compensation