Affirming Our Commitment
Our corporate governance policies and practices are the foundation of our business.
We are committed to operating within a strong corporate governance framework that includes a majority of independent directors on our Board, a strong Lead Independent Director, and highly effective Board committees with clearly defined responsibilities. We seek to ensure that our Board members possess the relevant and complementary mix of skills and qualifications for effective Board oversight and adhere to high standards of professional and personal conduct.
toll brothers corporate headquarters | fort washington, paToll Brothers Board of Directors
Douglas C. Yearley, JR.Executive Chairman of the Board
Karl K. MistryChief Executive Officer
Seth J. RingPresident and Chief Operating Officer
Scott D. StowellLead Independent DirectorPresident and CEO,Capital Thirteen LLC
Stephen F. EastChair Public Debt and Equity CommitteeRetired Managing Director,Senior Consumer Analystsand Head of Homebuilding andBuilding Products Research,Wells Fargo & Company
Karen H. GrimesChair Audit and Risk CommitteeRetired Partner, Senior Managing Director,and Equity Portfolio Manager,Wellington Management Company
Derek T. KanSenior Advisor, Shopify Inc.
John A. McleanChair Compensation CommitteeRetired Senior Managing Director,New York Life Investment Management
Wendell E. PritchettChair Governance CommitteeRiepe Presidential Professor ofLaw and Education, University of Pennsylvania
Judith A. ReinsdorfRetired ExecutiveVice President and General Counsel,Johnson Controls International
Katherine M. SandstromRetired Senior Managing Director,Heitman LLCStrong Independent Leadership
A majority of our directors must be independent. Currently, all of our directors other than Douglas C. Yearley, Jr. (Executive Chairman), Karl K. Mistry (Chief Executive Officer), and Seth J. Ring (Chief Operating Officer) are independent, and all of our committees consist exclusively of independent directors.
We have a strong and empowered Lead Independent Director position with specific responsibilities to provide independent oversight of management. Both the Lead Independent Director and the Chair of the Board are elected annually.
Thoughtful Board Composition
The Nominating and Corporate Governance Committee of our Board continually assess the composition of the Board, including a review of Board size, diversity, skills, and qualifications, as well as director tenure.
Our Board views diversity more broadly than just racial, ethnic, or gender diversity and takes into consideration factors such as tenure, experience levels, and types of experience, including both industry and subject matter expertise. Although we do not have a separate policy specifically governing diversity, when considering Board candidates, the Governance Committee takes into account whether an individual would bring a diverse viewpoint to the Board.
Recognizing the importance of continued Board refreshment, since March 2018, more than half our Board membership has turned over deepening the diversity of composition, thought, and experience with fresh perspectives. The Governance Committee intends to continue considering the broad array of factors that contribute to diversity in viewpoints when nominating future candidates to serve on our Board.
Shareholder and Stakeholder Engagement
Our Board and management team invest time in ongoing active dialogue with our stockholders to ensure a diversity of perspectives on a broad range of issues including strategy, business performance, corporate governance, risk, compensation practices, and other environmental, social, and governance concerns. We conduct annual outreach to our largest stockholders and proxy advisory firms to receive feedback regarding these matters. In addition to direct shareholder engagement, our Board and management team regularly engage with representatives of our key stakeholders.
Accountability to Shareholders
The Board and its committees regularly evaluate their performance and composition. These evaluations are led by the Nominating and Corporate Governance Committee and include assessments of the skills, qualifications, and diversity of our Board. In evaluating our Board's effectiveness, the Nominating and Corporate Governance Committee take into account the company's business strategy, operations, risks, and the anticipated makeup of the Board following potential director retirements to identify the desired skillsets of future Board members.
All directors are elected annually, and each director is elected by a majority of votes cast in uncontested director elections. To be elected, each director must receive more votes for his or her election than votes against.
Millcreek | Toll Brothers at Jordanelle Ridge | Heber, UTManagement Development and Succession Planning
Our Board regularly reviews management development and succession planning, in particular with respect to the CEO role. It also devotes significant time and effort to understanding and reviewing enterprise risks. This includes oversight of risks relating to our company's strategy and reputation as well as a review of risks related to financial reporting and cybersecurity, which our Audit and Risk Committee reviews at least quarterly.
Sustainability Oversight
Our full Board generally oversees business sustainability risks and objectives, and supports the implementation of the company's priorities. Specific topics are overseen by the Board committee generally responsible for the subject matter. For example, the Board's Governance Committee has oversight responsibility for the corporate governance-related matters, and the Audit and Risk Committee generally oversees regulatory compliance matters, including with respect to environmental issues, cybersecurity, and compliance with the company's Code of Business Conduct and Ethics. The Board currently believes that it is the appropriate body to oversee the development and implementation of the company's sustainability efforts, which focus on the Company's efforts to positively impact both people and planet.
Execution of the company's Sustainability strategy is overseen by the company's senior management team. Management is responsible for setting direction and driving accountability as we address important issues, work with key stakeholders, and measure and report our progress. For more information regarding climate related risks and governance, as well as greenhouse gas emissions data, please see our Task Force on Climate-Related Financial Disclosure Report.
Compensation Governance
The majority of our CEO pay is long-term and at-risk with no guaranteed bonuses or salary increases. The Executive Compensation Committee of the Board has identified performance goals that underpin our strategy and has incorporated those goals into executive compensation plans to serve as drivers of incentive awards.
Stock ownership guidelines align executive and director interests with those of our shareholders. These guidelines to require our CEO to retain qualifying equity equal to six times his annual base salary (three times for other executive officers), and for our Board members to retain equity in the amount of five times their annual base cash retainer.
We prohibit all hedging, pledging, and transactions in derivatives related to Toll Brothers securities for all directors and executives.
We have a compensation clawback policy that complies with SEC rules and NYSE listing standards. The policy requires the Company to recoup incentive-based compensation from certain executive officers in the event the Company issues a restatement of its financial statements, to the extent such incentive-based compensation received by the individual exceeds the amount the individual would have received based on the restated financial statements. Compensation may also be recouped from certain other employees of the Company under these circumstances under the policy if deemed appropriate by the Executive Compensation Committee.
We do not pay tax gross-ups on payments to executives.
Additional information about our corporate governance practices can be found on our Investor Relations website.