Company: HOVVB
Filing Date: 2025-02-07
Form Type: DEF 14A
Source: 0001140361-25-003579
Chunk: 40

Company: HOVNANIAN ENTERPRISES INC
Filing Date: 2025-02-07
Form: DEF 14A
Chunk 40
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. 79 3.FISCAL 2024 COMPENSATION ELEMENTS &COMPENSATION MIX COMPENSATION ELEMENTS AT A GLANCE There are five main compensation elements that support
the Company’s compensation objectives, each of which
is discussed in detail below. Base salaries; Annual bonuses; Stock grants (for example, stock option, PSU and RSU awards); LTIPs (described below) (payable in cash, stock and/or phantom shares); and Other employee benefits, including limited perquisites. 80 COMPENSATION MIX HOVNANIAN CEO PAY MIX 81 Fixed vs. Variable Compensation A significant portion of executives’ “Total Direct Compensation” (which includes base salary, annual bonuses, stock grants and LTIP awards) opportunity consists of variable compensation – that is, the compensation ultimately realized is dependent on either Company or individual performance. Of the elements of Total Direct Compensation, base salary is fixed compensation, while annual bonuses, stock grants and LTIP awards are variable compensation. An important part of each NEO’s compensation package consists of equity awards, the ultimate realizable value of which is tied to the Company’s stock performance. These variable elements are intended to align the executives’ performance and interests with Company performance and long-term shareholder value. The Committee intends for variable compensation to represent a significant percentage of the Total Direct Compensation opportunity for all NEOs consistent with its pay-for-performance philosophy. For example, variable compensation represented 91% and 87% of the CEO’s Total Direct Compensation opportunity in fiscal 2024 and fiscal 2023, respectively. In addition, the Committee intends for Total Direct Compensation to be competitive with the Peer Group. As further described below under “Details of Compensation Elements—Stock Grants,” for fiscal 2024, the Committee granted PSUs to the NEOs. The Committee also determined that the PSUs would be tied to financial performance conditions. Long-Term vs. Short-Term Compensation An important portion of each NEO’s Total Direct Compensation is long-term compensation, which may include stock options, PSUs, RSUs and/or LTIP awards. Short-term compensation consists of base salary and the cash portion of annual bonus amounts. Long-term compensation is intended to foster long-term commitment by the executive, employee-shareholder alignment and improved long-term shareholder value. In fiscal 2024, the Committee adopted a LTIP for the NEOs and other key senior executives of the Company, as discussed below. 82 4 . DETAILS ofCOMPENSATION ELEMENTS BASE SALARIES Base salaries are