PRE 14A 1 d37545dpre14a.htm PRE 14A PRE 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.    )

 

Filed by the 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 §240.14a-12

 

     AMERICAN HOMES 4 RENT
     (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:

 

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   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.:

 

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   (4)   

Date Filed:

 


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 A Message from Our CEO

 

 

Dear American Homes 4 Rent shareholders:

“There’s no place like home.” At the end of the classic movie The Wizard of Oz, this is the realization that comes to Dorothy as she wakes up from her elaborate dream. For most of us, if there was ever a year in which Dorothy’s insight was true, it had to have been 2020. Homes became our schools, our offices, our vacation destinations, our escapes from long commutes and our safe havens. And we at American Homes 4 Rent were there to meet each of these needs, and others:

 

    Our country needs more homes as populations grow. We are building them.

 

    Our country needs more rental homes to meet our changing lifestyles—we no longer work at one job or live in one city all our lives and we increasingly value an ability to rent, lease, or borrow property of all types for just the periods of time for which we need it. Our homes are acquired or built specifically to rent.

 

    Our country needs more energy and water efficient homes made with more durable materials that generate less waste. These are what we build.

 

    The professions that are essential to society’s core functions—health care, education, technology, government service, and real estate—need housing without barriers to entry. Many of our renters come from these segments.

For many in the real estate sector, 2020 was a difficult year, but our business model set us apart:

 

    we carefully analyze the markets that we believe offer the best opportunity for long-term profitable growth and focus our acquisition and development efforts there;

 

    our diversification across 22 states limits exposure of any individual economically impacted area;

 

    our typical two-adult, one-child resident unit is more stable than other parts of the market;

 

    our conservative financial management and strong balance sheet help us move quickly and forcefully on opportunities in the market place;

 

    our relentless focus on resident satisfaction—backed by state-of-the-art digital feedback systems used from first rental day to exit interviews help enable us to respond to—and even anticipate—issues and enhance our resilience and market intelligence; and
    our focus on our own people—whether via our hire-locally practices or our proprietary training programs and our focus on individual development—creates a culture in which everyone can be themselves and give their best.

On behalf of the Board of Trustees, I am pleased to invite you to our 2021 Annual Meeting of Shareholders. The meeting will be held on Thursday, May 6, 2021, at 9:00 a.m., Pacific Time. Due to public health concerns regarding the COVID-19 pandemic, the Annual Meeting will be held in virtual-only format. You may attend the meeting virtually or by proxy. You will be able to attend and participate in the virtual Annual Meeting, vote your shares electronically and submit your questions during the meeting by visiting: www.virtualshareholdermeeting.com/AMH2021.

The matters to be considered at the meeting are described in detail in the attached notice of meeting and proxy statement. You are encouraged to review them before voting.

We ask for your voting support on the items we describe in this proxy statement so we can continue making the world a better place for our residents, our employees and you, our investors.

Your vote is important and we urge you to cast your vote as soon as possible. You may vote your shares over the Internet, by telephone, or by mail by following the instructions on the proxy card or voting instruction form by signing, dating and returning the enclosed proxy card. If you attend the virtual Annual Meeting, you may revoke your proxy at the meeting and vote your shares virtually. If you have any questions, please contact D.F. King & Co., Inc., our proxy solicitor assisting us in connection with the 2021 Annual Meeting. Shareholders in the U.S. and Canada may call toll-free at (877) 283-0321. Banks and brokers may call collect at (212) 269-5550.

We appreciate your continued trust and confidence as an investor in American Homes 4 Rent.

Sincerely,

 

 

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David P. Singelyn

Chief Executive Officer and Trustee

 


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 Notice of the 2021 Annual

 Meeting of Shareholders

 

 

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Date and Time

 

Thursday, May 6, 2021 at
9:00 a.m., Pacific Time

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Virtual Location

 

Visit:
www.virtualshareholdermeeting.com/AMH2021

 

 Items of Business

 

1  

  To elect as trustees the thirteen nominees named in the attached proxy statement to serve until the 2022 Annual Meeting of Shareholders;

2

  To approve the adoption of the American Homes 4 Rent 2021 Equity Incentive Plan (the “2021 Incentive Plan”);
3   To approve the adoption of the American Homes 4 Rent Employee Stock Purchase Plan (the “ESPP”);

4

  To ratify the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021;
5   To hold a non-binding, advisory vote to approve our named executive officer compensation;
6   To hold an advisory vote on the frequency of future advisory votes on executive compensation; and

7

  To consider and act upon any other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof.

Recommendations of the Board

The Board of Trustees (the “Board”) unanimously recommends that you vote “FOR” each of the trustee nominees named in the attached proxy statement, “FOR” approval of the adoption of the 2021 Incentive Plan, “FOR” approval of the adoption of the ESPP, “FOR” ratification of the appointment of Ernst & Young LLP, “FOR” approval, on an advisory basis, of our named executive officer compensation, and “ONE YEAR” with respect to the advisory vote on the frequency of future advisory votes on executive compensation. Detailed information concerning these proposals is included in the accompanying proxy statement.

Proxy Materials

The Notice of Meeting, Proxy Statement and Annual Report on Form 10-K are available free of charge at: www.ah4r.com/Investors/AnnualMeetingDocs2021.

Record Date

You are entitled to vote at the meeting if you were a shareholder of record at the close of business on March 9, 2021 of our Class A or Class B common shares of beneficial interest, par value $0.01 per share.

 

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Voting

Your vote is very important. To ensure that your shares are represented at the Annual Meeting, please vote over the Internet, by telephone, or by mail as instructed on the proxy card or voting instruction form you receive. You may revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the accompanying proxy statement.

By Order of the Board,

 

 

LOGO

Sara H. Vogt-Lowell

Chief Legal Officer and Secretary

[                    ], 2021

If you have questions about the matters described in this proxy statement, how to submit your proxy or if you need additional copies of this proxy statement, you should contact D.F. King, the company’s proxy solicitor, toll free at (877) 283-0321 (banks and brokers may call collect at (212) 269-5550).

Important Notice Regarding Availability of Proxy Materials for the 2021 Annual Meeting: This Proxy Statement and our 2020 Annual Report on Form 10-K are available on the company’s website www.americanhomes4rent.com under ”Investor Relations.”

 

American Homes 4 Rent

       


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2020 Business Highlights

  

 

1

 

Operating Sustainably

  

 

2

 

Environment — Build sustainably, operate efficiently

  

 

3

 

Social — Delight residents, engage employees, foster community

  

 

4

 

Governance — Lead with integrity and transparency

  

 

5

 

Annual Meeting Information

  

 

6

 

Proxy Materials

  

 

6

 

Meeting Information

  

 

6

 

How to Cast Your Vote

  

 

6

 

Unanimous Recommendations of the Board

  

 

7

 

Virtual Meeting Matters

  

 

8

 

Accessing the Meeting

  

 

8

 

Casting Your Vote

  

 

8

 

Live, Online Q&A

  

 

8

 

Technical Assistance

  

 

8

 

Proposal 1

  

 

9

 

Who We Are

  

 

11

 

Biographical Information About Our Trustee Nominees

  

 

13

 

Governance Framework

  

 

20

 

How We Are Selected, Elected, Evaluated, and Refreshed

  

 

20

 

How We Are Organized

  

 

24

 

How We Govern and Are Governed

  

 

26

 

How We Are Paid

  

 

29

 

How You Can Communicate With Us

  

 

31

 

Proposal 2

  

 

32

 

Summary of Material Provisions of the 2021 Incentive Plan

  

 

34

 

Summary of U.S. Federal Income Tax Consequences

  

 

38

 

Board Recommendation

  

 

40

 

Proposal 3

  

 

42

 

Key Features of the Employee Stock Purchase Plan

  

 

44

 

Summary of Material Provisions of the Employee Stock Purchase Plan

  

 

44

 

Proposal 4

  

 

48

 

Audit and Non-Audit Fees

  

 

50

 

Audit Committee Report

  

 

51

 

 

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Principal Shareholders

  

 

53

 

Share Ownership of 5% or Greater Beneficial Owners

  

 

53

 

Share Ownership of Trustees and Management

  

 

55

 

Executive Officer Ownership of Company Shares

  

 

56

 

Share Ownership Policy

  

 

56

 

Clawback Policy

  

 

56

 

Anti-Hedging Policy

  

 

56

 

Policy Regarding Pledging of Shares

  

 

56

 

Delinquent Section 16(a) Reports

  

 

56

 

Executive Officers

  

 

58

 

Our Executive Officers

  

 

58

 

Executive Compensation

  

 

60

 

Compensation Discussion and Analysis

  

 

60

 

Our Named Executive Officers

  

 

60

 

2020 Say-on-Pay Vote Results and Shareholder Engagement

  

 

60

 

2020 Compensation Overview

  

 

60

 

Compensation Philosophy, Objectives and Governance

  

 

61

 

Elements of Executive Officer Compensation

  

 

61

 

2020 Compensation Decisions

  

 

62

 

Committee Assessment of Achievement of 2020 Goals

  

 

64

 

2021 Compensation Outlook

  

 

67

 

Role of Management and Board in Determining the Compensation of Executive Officers

  

 

67

 

Role of Compensation Consultant

  

 

68

 

Equity Grant Practices

  

 

68

 

Benchmarking Peer Group

  

 

68

 

Clawback Policy

  

 

70

 

Tax and Accounting Considerations

  

 

70

 

Human Capital and Compensation Committee Report

  

 

70

 

Summary Compensation Table

  

 

71

 

Grants of Plan Based Awards

  

 

72

 

Outstanding Equity Awards at Fiscal Year End

  

 

73

 

Option Exercises and Stock Vested in 2020

  

 

74

 

Pension/Non-Qualified Deferred Compensation Plans

  

 

74

 

Potential Payments Upon Termination or Change of Control

  

 

74

 

Payments Upon Termination

  

 

74

 

Payments Upon Death or Disability

  

 

74

 

Payments Upon Retirement

  

 

74

 

Payments Upon a Change in Control

  

 

75

 

CEO Pay Ratio

  

 

76

 

Proposal 5

  

 

77

 

 

American Homes 4 Rent

       


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 2020 Business Highlights

 

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* Refer to the company’s 2020 Annual Report on Form 10-K for information regarding Core FFO (p. 41-43) and Core NOI (p. 31-33), which are non-GAAP performance measures.

 

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 Environment

  Build sustainably, operate efficiently

 

 

Because we build our homes to rent, we design them for long-term durability. This saves resources and lowers our total costs, including maintenance.

 

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HERS energy efficiency ratings:

In 2020 we began a program to track Home Energy Rating System (“HERS”) scores for our newly built homes to demonstrate the energy efficiency and resulting savings that residents enjoy while living in our properties.

   

Environmentally friendly construction:

We install flooring and other materials designed to last for decades, energy-efficient LED lighting and low-flow water fixtures in our newly constructed homes and incorporate these features in our renovations of existing homes. These long-lasting materials save on the use of additional materials, like carpet, that need to be replaced every 3 to 5 years and then sent to landfills.

 

   

Creating neighborhoods:

We seek to create a sense of community by including green, open spaces in our development plans and by building amenities that facilitate neighborhood gatherings.

 

 

 

Tracking HERS energy efficiency ratings for all of our newly built homes: In 2020, we began a program to track RESNET HERS scores for our newly built homes to demonstrate the energy efficiency and savings while living in our properties. A HERS rating is an assessment of energy performance: a lower score indicates it is more energy efficient. A home built to the 2006 International Energy Conservation Code receives a rating of 100 on the HERS Index, while the average American home scores 130, according to the U.S. Department of Energy.

 

American Homes 4 Rent’s average, median and mode HERS score was 57 among our 256 newly built homes in 2020 that we tracked in our pilot project markets of Arizona, Colorado and Nevada. Put another way, those houses use 43% less energy than a home built to the 2006 code and less than half the energy of a typical home in this country. Based on RESNET data, a score of 57 translates to an average annual savings of $1,316 versus the typical home and $777 compared to a new home.

 

For 2021, we intend to track the HERS scores for all our newly built homes to demonstrate the efficiency of our houses.

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 Social

  Delight residents, engage employees, foster community

 

 

Our success depends on our employees delighting residents with our houses that become their homes. This requires us to attract, retain and grow a skilled and diverse workforce to design and maintain high-quality homes.

 

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Responding to COVID-19:

We established protocols to keep our residents, employees and third-party contractors safe. We instituted contactless procedures for prospective residents, as well as maintenance processes that ensured safety for both residents and employees.

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Resident satisfaction:

We closely monitor resident satisfaction, including through setting Google review goals at the company and district levels for move-in, move-out and maintenance.

 

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Training and development:

We strive to ensure our employees have the business and technical skills they need to succeed in their roles and advance their careers in our company. In 2020, we provided approximately 71,900 hours of training to employees, an average of 50 hours per employee.

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Diversity, equity and inclusion:

We champion inclusion and diversity by declaring one of our core competencies as Valuing Differences. We provide training to promote diversity, including unconscious bias training, and closely track and publicly report on our diversity performance.

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Workplace safety:

Our OSHA Recordable Incident Rate improved from 3.90 to 1.56 for 2020, underscoring how health and safety is a top priority. This is almost half the rate of 3.0 for the Lessors of Residential Buildings and Dwellings sector, according to the latest available Bureau of Labor Statistics data for 2019.

 

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Highly engaged employees:

Our focus on engaging and motivating our employees is demonstrated by our Net Promoter Score (“NPS”) in the top 10% for our sector. We scored an NPS of 60, 38 points above the sector benchmark, according to the results of our Q1 2021 survey.

 

 

 

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| American Homes 4 Rent

  


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 Governance

  Lead with integrity and transparency

 

 

We maintain strong corporate governance practices that include transparency, communication and integrity. In addition to the below highlights, we describe our corporate governance practices in more detail beginning on page 20.

 

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Good governance foundation: We adopt good governance practices, including an independent chairperson, board diversity by race and gender, annual trustee elections, majority voting, majority voting standard for bylaw amendments and M&A, special meeting rights, no poison pill, clawback and anti-hedging provisions, and we opted out of certain Maryland provisions that can limit shareholder rights.

 

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Board refreshment: We added three new trustees in 2020 as part of our board refreshment process. The average tenure of our trustees is 4.9 years. More than 75% of our trustees are independent trustees.

 

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Board oversight of ESG: In 2020, we formalized board oversight for ESG as part of committee responsibilities.

 

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Human capital management: In 2020, the Board made important structural changes to the committee formerly known as the Compensation Committee, repositioned as the Human Capital and Compensation Committee, to expand the responsibilities of such committee to include oversight of talent, leadership and culture, including diversity and inclusion.

 

  
  
  

 

 

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 Annual Meeting Information

 

 

This proxy statement contains important information regarding the 2021 Annual Meeting of Shareholders (the “Annual Meeting”). Specifically, it identifies the proposals on which you are being asked to vote, provides information that you may find useful in determining how to vote, and describes voting procedures. This proxy statement is being sent or made available to you on or about [                     ], 2021.

Proxy Materials

The Notice of Meeting, Proxy Statement and Annual Report on Form 10-K are available free of charge at:

www.ah4r.com/Investors/AnnualMeetingDocs2021.

Meeting Information

 

Date and Time: Thursday, May 6, 2021, at 9:00 a.m., Pacific Time.

Virtual Location: www.virtualshareholdermeeting.com/AMH2021. To be admitted, you must enter the control number found on your proxy card or voting instruction form.

Record Date: You are entitled to vote at the Annual Meeting if you were a shareholder of record at the close of business on March 9, 2021 of our Class A or Class B common shares of beneficial interest, par value $0.01 per share.

 

Voting: Your vote is very important. To ensure your representation at the meeting, please vote over the Internet, by telephone, or by mail as instructed on the proxy card or voting instruction form you receive. You may revoke a proxy at any time prior to its exercise at the Annual Meeting by following the instructions in the accompanying proxy statement.

 

 

How to Cast Your Vote

 

   LOGO          VIRTUALLY             LOGO          INTERNET             LOGO          MAIL             LOGO          TELEPHONE

www.virtualshare

holdermeeting.com/

AMH2021

    www.proxyvote.com    

Return your proxy in

the postage-paid

envelope provided

    1-800-690-6903
You may vote your shares virtually at the Annual Meeting. Even if you plan to attend the Annual Meeting virtually, we recommend that you submit the accompanying proxy card or voting instruction form or vote via the Internet or by telephone by the applicable deadline so that your vote will be counted if you later decide not to attend the Annual Meeting.     You may vote your shares through the Internet by signing on to the website identified on the proxy card or voting instruction form and following the procedures described on the website. Internet voting is available 24 hours a day until 11:59 p.m. Eastern Time on the day before the Annual Meeting. If you vote through the Internet, you should not return any proxy card.     If you choose to vote by mail, simply complete the accompanying proxy card or voting instruction form, date and sign it, and return it in the pre-addressed postage-paid envelope provided.     You may vote your shares by telephone by following the voting instructions on the enclosed proxy card or voting instruction form, respectively. Telephone voting is available 24 hours a day until 11:59 p.m. Eastern Time on the day before the Annual Meeting.

 

| American Homes 4 Rent

  


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As summarized below, there are distinctions between shares held of record and those owned beneficially:

 

    Shareholder of Record—If your shares are registered directly in your name, you are considered the shareholder of record of those shares. As the shareholder of record, you can submit your voting instructions by Internet, telephone or mail as described on the enclosed proxy card.

 

    Beneficial Owner—If your common shares are held through a broker or bank in “street name” as of the close of business on the record date, you can either: (i) vote your common shares by delivering the enclosed
   

voting instruction form in the pre-addressed postage-paid envelope provided, or (ii) contact the person responsible for your account to ensure that a voting instruction form is submitted on your behalf. In most instances, you will be able to do this over the Internet, by telephone or by mail as indicated on your voting instruction form. It is critical that you promptly give instructions to your brokerage firm, bank or other nominee. You may vote your shares at the virtual meeting only if you obtain a legal proxy from your brokerage firm, bank or other nominee.

 

 

If you require assistance in changing, revoking or voting your proxy, please contact the company’s proxy solicitor:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokers Call Collect: (212) 269-5550

All Others Call Toll-Free: (877) 283-0321

Email: AMH@dfking.com

Unanimous Recommendations of the Board

 

    1    

  

Election of the Thirteen Trustee Nominees Named in this Proxy Statement

 

      

 

BOARD RECOMMENDATION

 

      

 

FOR

    2    

  

Approval of the Adoption of the 2021 Equity Incentive Plan (the “2021 Incentive Plan”)

     

BOARD RECOMMENDATION

     

FOR

    3    

  

Approval of the Adoption of the Employee Stock Purchase Plan (the “ESPP”)

     

BOARD RECOMMENDATION

     

FOR

    4    

  

Ratification of the Appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2021

 

    

 

BOARD RECOMMENDATION

     

FOR

    5    

  

Advisory Vote to Approve our Named Executive Officer Compensation

     

BOARD RECOMMENDATION

     

FOR

    6    

  

Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation

   

BOARD RECOMMENDATION

 

      

 

    ONE YEAR    

 

These proposals are discussed in more detail in this proxy statement and you should read the entire proxy statement carefully before voting. We will also consider any other matters properly brought before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

 

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 Virtual Meeting Matters

 

 

For the second consecutive year, due to public health concerns regarding the COVID-19 pandemic, the Annual Meeting will be held in virtual-only format. You will be able to attend and participate in the virtual Annual Meeting, vote your shares electronically and submit your questions during the meeting by visiting: www.virtualshareholdermeeting.com/AMH2021.

We believe this virtual format will enhance shareholder participation, as shareholders will be able to attend the Annual Meeting and engage in the live, online Q&A session from any convenient location. Conducting the meeting virtually will ensure shareholder access to management despite the ongoing uncertainty related to the COVID-19 pandemic.

The Annual Meeting will begin with a pre-recorded presentation, followed by a live webcast of the formal business of the Annual Meeting and a Q&A session.

Accessing the Meeting

To be admitted to the Annual Meeting, you must enter the control number found on your proxy card or voting instruction form. If your common shares are held through a broker or bank in “street name” as of the close of business on the record date, you may vote your shares at the virtual meeting only if you obtain a legal proxy from your brokerage firm, bank or other nominee.

Casting Your Vote

You may vote your shares virtually at the Annual Meeting. To vote at the virtual Annual Meeting, you must re-enter the control number found on your proxy card or voting instruction form. Even if you plan to attend the Annual

Meeting virtually, we recommend that you submit the accompanying proxy card or voting instruction form or vote via the Internet or by telephone by the applicable deadline so that your vote will be counted if you later decide not to attend the virtual Annual Meeting.

Live, Online Q&A

As part of the Annual Meeting, we will hold a live, online Q&A session, where shareholders of record of our Class A or Class B common shares at the close of business on the Record Date will be allowed to ask questions. You may submit questions in real time during the Annual Meeting. We intend to answer all questions submitted before or during the Annual Meeting which are pertinent to the company and the Annual Meeting matters, as time permits. Consistent with our prior virtual and in-person annual meetings, all questions submitted will be generally addressed in the order received and we limit each shareholder to one question in order to allow us to answer questions from as many shareholders as possible.

If there are matters raised of individual concern to a shareholder, or if a question posed was not otherwise answered, we provide an opportunity for shareholders to contact us separately after the Annual Meeting through the company’s website, www.americanhomes4rent.com under ”Investor Relations.”

Technical Assistance

If you encounter any difficulties accessing or participating in the virtual Annual Meeting, please call the technical support number that will be posted on the Annual Meeting Website log-in page.

 

 

| American Homes 4 Rent

  


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Who We Are

Our Board of Trustees (the “Board”) consists of thirteen members. Ten of the current trustees are considered “independent” and all members of our Audit Committee, Nominating and Corporate Governance Committee and Human Capital and Compensation Committee are independent.

Despite challenges faced during the COVID-19 pandemic, we continued to grow the Board to support the success of our long-term strategy. Since January 2020, we added three new independent trustees, all of whom bring extensive operational and executive experience to the Board and two of whom enhance the diversity of our Board. During 2020, the Board also formalized oversight responsibility with respect to important ESG matters,

engaged in deeper conversations on key strategic issues and worked closely with management to pursue the company’s key objectives.

Our Board believes its members collectively have the experience, qualifications, attributes and skills to continue to effectively oversee the management of the company, 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 appreciate the issues facing the company, a willingness to devote the necessary time to Board duties, a commitment to representing the best interest of the company and a dedication to enhancing shareholder value. The Board unanimously recommends a vote “FOR” each of the thirteen nominees proposed by the Board.

 

 

Nominee

   Age    Principal Occupation    Trustee
Since
   Committee Membership

Kenneth M. Woolley *

   74   

Chairperson of the Board, American Homes 4 Rent

 

Founder and Chairperson, Extra Space Storage, Inc.

   2012     

 

David P. Singelyn

   59    Chief Executive Officer, American Homes 4 Rent    2012     

 

Douglas N. Benham *

   64    President and Chief Executive Officer, DNB Advisors, LLC    2016   

•  Nominating and Corporate Governance (Chair)     

•  Human Capital and Compensation

Jack Corrigan

   60    Chief Investment Officer, American Homes 4 Rent    2012     

 

David Goldberg

   71    Retired Executive Vice President, American Homes 4 Rent    2019     

 

Tamara Hughes Gustavson *

   59   

Real Estate Investor

 

Philanthropist

   2016     

 

Matthew J. Hart *

   69    Retired President and Chief Operating Officer, Hilton Hotels
Corporation
   2012   

•  Human Capital and Compensation (Chair)

•  Nominating and Corporate Governance

Michelle C. Kerrick *

   58    Former West Region Market Leader and Managing Partner of
the Los Angeles office of Deloitte & Touche LLP
   2020   

•  Audit

•  Human Capital and Compensation

James H. Kropp *

   72    Retired Chief Investment Officer, SLKW Investments,
LLC and Microproperties LLC
   2012   

•  Audit (Chair)

Lynn C. Swann *

   69    Director for Athene Holding Ltd. and Evoqua Water Technologies    2020   

•  Audit

•  Nominating and Corporate Governance

 

    2021 Proxy Statement | 11  


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Nominee

   Age    Principal Occupation    Trustee
Since
   Committee Membership

Winifred M. Webb *

   63   

Chief Executive Officer, Kestrel Advisors

 

Former Senior Executive, Ticketmaster, and
The Walt Disney Company

   2019   

•  Human Capital and Compensation

•  Nominating and Corporate Governance     

Jay Willoughby *

   62    Chief Investment Officer, TIFF Investment Management    2019   

•  Audit

•  Nominating and Corporate Governance

Matthew R. Zaist *

   46    Former Chief Executive Officer and Director, William Lyon Homes    2020   

•  Audit

•  Human Capital and Compensation

* Denotes “independent” member of the Board.

 

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Biographical Information About Our Trustee Nominees

Set forth below is biographical information for each of the trustee nominees, including a list of the specific qualifications that were considered for membership on our Board. Each nominee has consented to be named in this proxy statement and to serve if elected.

 

LOGO     

Kenneth M. Woolley

 

Age: 74

 

Trustee since: 2012

(Chairperson since 2020)

 

 

Chairperson of the Board, American Homes 4 Rent

Founder and Chairperson, Extra Space Storage, Inc.

 

 

 

Background

 

•  Extra Space Storage, Inc. (NYSE: EXR), Chief Executive Officer

 

•  Nevada West Partners (multi-family residential real estate company), Owner

 

•  Gaia Real Estate, Partner

 

•  LDS Moscow Russia West Mission, President

 

•  Brigham Young University, Associate Professor and Adjunct Associate Professor of Business Administration

 

Public Directorships

 

•  Extra Space Storage, Inc. (NYSE: EXR), Founder and Chairperson (since 2004)

  

 

Education

 

•  B.A. in Physics, Brigham Young University

 

•  M.B.A. and Ph.D. in Business Administration, Stanford University

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Finance/Accounting/Auditing

 

•  Corporate Governance

 

•  Public Company Board

 

•  Consumer Experience

 

•  Risk Assessment & Management

 

•  Investor Relations

 

LOGO

David P.
Singelyn

 

Age: 59

 

Trustee since: 2012

 

Chief Executive Officer, American Homes 4 Rent

 

 

 

Background

 

•  American Homes 4 Rent, Chief Executive Officer (since 2012)

 

•  American Homes 4 Rent Advisor, LLC (our former manager), Co-Founder and Chief Executive Officer

 

•  Public Storage Canada, Chairperson and President

 

•  American Commercial Equities, President

 

•  Public Storage (NYSE: PSA), Senior Vice President and Treasurer

 

•  Arthur Young & Company

 

Private Directorships

 

•  Dean’s Advisory Council to the College of Business at California State Polytechnic University

 

•  Philanthropic Foundation at California State Polytechnic University

  

 

Education

 

•  B.S. in Accounting, California State Polytechnic University

 

•  B.S. in Computer Information Systems, California State Polytechnic University

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Finance/Accounting/Auditing

 

•  Corporate Governance

 

•  Public Company Board

 

•  Human Capital Management

 

•  Consumer Experience

 

•  Risk Assessment & Management

 

•  Investor Relations

 

•  Technology

 

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LOGO

Douglas N.
Benham

 

Age: 64

 

Trustee since: 2016

 

Committees

 

•  Nominating and Corporate Governance (Chair)

 

•  Human Capital and
Compensation

 

President and Chief Executive Officer, DNB Advisors, LLC

 

 

 

Background

 

•  DNB Advisors, LLC, President and Chief Executive Officer (since 2006)

 

•  Arby’s Restaurant Group, Inc., President and Chief Executive Officer

 

•  RTM Restaurant Group, Inc., Chief Financial Officer

 

Private Directorships

 

•  G&N Brands (Santiago, Chile)

 

•  United Pacific Oil Company

 

•  On the Border Mexican Grill & Cantina

  

 

Education

 

•  B.A. in Accounting, University of West Florida

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Finance/Accounting/Auditing

 

•  Consumer Experience

 

•  Human Capital Management

 

•  Corporate Governance

 

•  ESG

 

•  Risk Assessment & Management

 

•  Investor Relations

 

•  Public Company Board

    
    
    

 

LOGO

Jack Corrigan

 

Age: 60

 

Trustee since: 2012

 

Chief Investment Officer, American Homes 4 Rent

 

 

 

Background

 

•  American Homes 4 Rent, Chief Investment Officer (since 2012), Chief Operating Officer (2012-2019)

 

•  American Homes 4 Rent Advisor, LLC (our former manager), Chief Operating Officer

 

•  A&H Property and Investments, Chief Executive Officer

 

•  PS Business Parks Inc. (NYSE: PSB), Chief Financial Officer

 

•  LaRue, Corrigan & McCormick, Partner

 

•  Arthur Young & Company

  

 

Education

 

•  B.S. in Accounting, Loyola Marymount University

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Finance/Accounting/Auditing

 

•  Risk Assessment & Management

 

•  Investor Relations

 

 

 

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LOGO

David Goldberg

 

Age: 71

 

Trustee since: 2019

 

Retired Executive Vice President, American Homes 4 Rent

 

 

 

Background

 

•  American Homes 4 Rent, Executive Vice President (2012-2019)

 

•  American Commercial Equities, Executive Vice President (2011-2019)

 

•  Public Storage (NYSE: PSA), Senior Vice President and General Counsel

 

•  Law Firm of Sachs & Phelps, Partner

 

•  Law Firm of Agnew, Miller & Carlson, Associate and Partner

 

•  Law Firm of Hufstedler, Miller, Carlson & Beardsley, Partner

 

Private Directorships

 

•  William Lawrence & Blanche Hughes Foundation

  

 

Education

 

•  A.B. in History and Social Studies, Boston University

 

•  J.D., University of California, Berkeley

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Corporate Governance

 

•  Risk Assessment & Management

 

•  Legal Experience

 

LOGO

Tamara Hughes Gustavson

 

Age: 59

 

Trustee since: 2016

 

Real Estate Investor

Philanthropist

 

 

 

Background

 

•  American Commercial Equities, Member (since 2005)

 

•  Public Storage (NYSE: PSA), Senior Vice President-Administration

 

Public Directorships

 

•  Public Storage (NYSE: PSA) (since 2008)

 

Private Directorships

 

•  William Lawrence & Blanche Hughes Foundation

 

•  University of Southern California

  

 

Education

 

•  B.S. in Public Affairs, University of Southern California

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Human Capital Management

 

•  Philanthropic Activities

 

•  Diversity

 

•  Public Company Board

    
    
    
    

 

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LOGO

Matthew J. Hart

 

Age: 69

 

Trustee since: 2012

 

Committees

 

•  Human Capital and Compensation (Chair)

 

•  Nominating and Corporate Governance

 

Retired President and Chief Operating Officer, Hilton Hotels Corporation

 

 

 

Background

 

•  Hilton Hotels Corporation, President and Chief Operating Officer, Executive Vice President, Chief Financial Officer

 

•  Walt Disney Company (NYSE: DIS), Senior Vice President and Treasurer

 

•  Host Marriott Corp., Executive Vice President and Chief Financial Officer

 

•  Marriott Corporation, Senior Vice President and Treasurer

 

•  Bankers Trust Company, Vice President, Corporate Lending

 

Public Directorships

 

•  American Airlines (NASDAQ: AAL), Audit Committee (Chair) (since 2013)

 

•  Air Lease Corp. (NYSE: AL), Audit Committee (Chair), Nominating and Corporate Governance Committee (since 2010)

 

  

 

Private Directorships

 

•  Heal the Bay

 

Education

 

•  B.A. in Economics and Sociology, Vanderbilt University

 

•  M.B.A. in Finance and Marketing, Columbia University

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Finance/Accounting/Auditing

 

•  Consumer Experience

 

•  Human Capital Management

 

•  Corporate Governance

 

•  Risk Assessment & Management

 

•  Investor Relations

 

•  Public Company Board

 

LOGO

Michelle C.
Kerrick

 

Age: 58

 

Trustee since: 2020

 

Committees

 

•  Audit

 

•  Human Capital and Compensation

 

Former West Region Market Leader and Managing Partner of the Los Angeles office of Deloitte & Touche LLP

 

 

 

Background

 

•  Deloitte & Touche LLP, West Region Market Leader and Managing Partner of the Los Angeles office (2010-2020), other positions (1985-2010)

 

Private Directorships

 

•  The HydraFacial Company (IPO anticipated during the first half of 2021)

 

•  LDH Growth Corp I (IPO anticipated during the first half of 2021)

 

Education

 

•  B.S. in Accountancy, Northern Arizona University

  

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Finance/Accounting/Auditing

 

•  Human Capital Management

 

•  Consumer Experience

 

•  Risk Assessment & Management

 

•  Diversity

 

•  Technology

    
    
    
    

 

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LOGO

James H. Kropp

 

Age: 72

 

Trustee since: 2012

 

Committees

 

•  Audit (Chair)

 

Retired Chief Investment Officer, SLKW Investments, LLC and Microproperties LLC

 

 

 

Background

 

•  SLKW Investments, LLC, Chief Investment Officer (2009-2019)

 

•  U.S. Restaurant Properties (Microproperties LLC), Chief Financial Officer

 

•  TaxEase, LLC, Chief Financial Officer

 

•  Arthur Young & Company

 

Public Directorships

 

•  FS KKR Capital Corp. II (NYSE: FSKR), Valuation Committee (Chair), Audit Committee (since 2015)

 

•  FS KKR Capital Corp. (NYSE: FSK), Valuation Committee (Chair), Audit Committee (since 2011)

 

•  PS Business Parks Inc. (NYSE: PSB), Compensation Committee, Nominating and Corporate Governance Committee (since 1998; retiring effective April 2021)

 

  

 

Private Directorships

 

•  KREST

 

•  National Association of Corporate Directors

 

Education

 

•  B.B.A. in Finance, St. Francis College

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Finance/Accounting/Auditing

 

•  Risk Assessment & Management

 

•  Investor Relations

 

•  Corporate Governance

 

•  Public Company Board

 

LOGO

Lynn C. Swann

 

Age: 69

 

Trustee since: 2020

 

Committees

 

•  Audit

 

•  Nominating and Corporate Governance

 

Director for Athene Holding Ltd. and Evoqua Water Technologies

 

 

 

Background

 

•  Swann, Inc., President (since 1976)

 

Public Directorships

 

•  Athene Holding Ltd (NYSE: ATH) (since 2020)

 

•  Evoqua Water Technologies (NYSE: AQUA) (since 2018)

 

Education

 

•  B.A. in Public Relations, University of Southern California

  

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Human Capital Management

 

•  Corporate Governance

 

•  ESG

 

•  Diversity

 

•  Public Company Board

    
    
    
    
    
    

 

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LOGO

Winifred M.
Webb

 

Age: 63

 

Trustee since: 2019

 

Committees

 

•  Human Capital and Compensation

 

•  Nominating and Corporate Governance

 

Chief Executive Officer, Kestrel Advisors

Former Senior Executive, Ticketmaster, and The Walt Disney Company

 

 

 

Background

 

•  Kestrel Advisors, Chief Executive Officer (since 2013)

 

•  Tennenbaum Capital Partners, Managing Director

 

•  Ticketmaster Entertainment, Corporate Senior Vice President, Chief Communications & Investor Relations Officer

 

•  The Walt Disney Company, Corporate Senior Vice President of Investor Relations & Shareholder Services, Executive Director for The Walt Disney Company Foundation

 

Public Directorships

 

•  AppFolio (NASDAQ: APPF), Audit Committee (Chair), Nominating and Corporate Governance Committee, Risk Compliance Oversight (since 2019)

 

•  Wynn Resorts (NASDAQ: WYNN), Audit Committee (Chair) (since 2018)

 

•  ABM Industries (NYSE: ABM), Audit Committee, Stakeholder & Enterprise Risk Committee (Chair) (since 2014)

  

 

Private Directorships

 

•  Women Corporate Directors, Los Angeles/Orange County Chapter

 

Education

 

•  B.A., Smith College

 

•  M.B.A., Harvard University

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Finance/Accounting/Auditing

 

•  Consumer Experience

 

•  Human Capital Management

 

•  Corporate Governance

 

•  ESG

 

•  Risk Assessment & Management

 

•  Investor Relations

 

•  Technology

 

•  Public Company Board

 

•  Diversity

 

LOGO

Jay Willoughby

 

Age: 62

 

Trustee since: 2019

 

Committees

 

•  Audit

 

•  Nominating and Corporate Governance

 

Chief Investment Officer, TIFF Investment Management

 

 

 

Background

 

•  TIFF Investment Management, Chief Investment Officer (since 2015)

 

•  The Alaska Permanent Fund, Chief Investment Officer

 

•  Ironbound Capital Management, Co-Managing Partner

 

•  MLIM Equity Funds, Chief Investment Officer, Head of Research

 

•  Merrill Lynch Real Estate Fund, Senior Portfolio Manager

 

Private Directorships

 

•  Sustainability Accounting Standards (SASB) Foundation

  

 

Education

 

•  B.A., Pomona College

 

•  M.B.A. in Finance, Columbia University

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Finance/Accounting/Auditing

 

•  Corporate Governance

 

•  ESG

 

•  Risk Assessment & Management

 

•  Investor Relations

    
    

 

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LOGO

Matthew R. Zaist

 

Age: 46

 

Trustee since: 2020

 

Committees

 

•  Audit

 

•  Human Capital and Compensation

 

Former Chief Executive Officer and Director, William Lyon Homes

 

 

 

Background

 

•  William Lyon Homes (formerly NYSE: WLH), President and Chief Executive Officer and member of the Board (2016-2020), President and Chief Operating Officer

 

Public Directorships

 

•  William Lyon Homes (formerly NYSE: WLH) (2016-2020)

 

Private Directorships

 

•  University of Southern California’s Lusk Center for Real Estate Executive Committee

 

Education

 

•  B.S., Rensselaer Polytechnic Institute

  

 

Qualification Highlights:

 

•  Executive Leadership

 

•  Real Estate Experience

 

•  Treasury/Capital Allocation

 

•  Consumer Experience

 

•  Human Capital Management

 

•  Corporate Governance

 

•  Risk Assessment & Management

 

•  Investor Relations

 

•  Capital Markets

 

•  Finance/Accounting/Auditing

 

•  Public Company Board

    
    
    
    

 

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LOGO

 Governance Framework

 

 

How We Are Selected, Elected, Evaluated, and Refreshed

 

We believe that our trustees should satisfy a number of qualifications, including demonstrated integrity, a record of personal accomplishments, a commitment to participation in Board activities and other attributes. We also endeavor to have a board that represents a range of qualifications, skills and depth of experience in areas that are relevant to and contribute to the Board’s oversight of the company’s business.

The table below summarizes the key experience, qualifications and attributes for each trustee nominee and highlights the balanced mix of experience, qualifications and attributes of the Board as a whole. This high-level summary is not intended to be an exhaustive list of each trustee nominee’s skills or contributions to the Board. No individual experience, qualification or attribute is solely dispositive of becoming a member of the Board.

 

 

            

   Real
Estate
   Corporate
Governance
   Investor
Relations
   Public
Company
Board
   Human
Capital
Mgt
   Consumer
Experience
   ESG    Diversity      Tech  

Kenneth M. Woolley

   ·    ·    ·    ·     

 

   ·     

 

    

 

    

 

David P. Singelyn

   ·    ·    ·    ·    ·    ·     

 

    

 

   ·

Douglas N. Benham

   ·    ·    ·    ·    ·    ·    ·     

 

    

 

Jack Corrigan

   ·     

 

   ·     

 

    

 

    

 

    

 

    

 

    

 

David Goldberg

   ·    ·     

 

    

 

    

 

    

 

    

 

    

 

    

 

Tamara Hughes Gustavson

   ·     

 

    

 

   ·    ·     

 

    

 

   ·     

 

Matthew J. Hart

   ·    ·    ·    ·    ·    ·     

 

    

 

    

 

Michelle C. Kerrick

   ·     

 

    

 

    

 

   ·    ·     

 

   ·    ·

James H. Kropp

   ·    ·    ·    ·     

 

    

 

    

 

    

 

    

 

Lynn C. Swann

   ·    ·     

 

   ·    ·     

 

   ·    ·     

 

Winifred M. Webb

   ·    ·    ·    ·    ·    ·    ·    ·    ·

Jay Willoughby

   ·    ·    ·     

 

    

 

    

 

   ·     

 

    

 

Matthew R. Zaist

   ·    ·    ·       ·    ·     

 

    

 

    

 

 

   13    10    9    9    8    7    4    4    3

 

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Trustee Diversity. Diversity and inclusion are values embedded in our culture and fundamental to our business. We believe that a Board comprised of trustees with diverse backgrounds, experiences, perspectives and viewpoints improves the dialogue and decision-making in the board room and contributes to overall Board effectiveness.

The Board strives to achieve a wide range of perspectives by having a Board composed of diverse trustees. We look for each trustee to contribute to the Board’s overall diversity—diversity being broadly construed to mean a variety of identities, perspectives, personal and

professional experiences and backgrounds. This can be represented in both visible and non-visible characteristics that include but are not limited to race, ethnicity, national origin, gender and sexual orientation.

Although the Board does not establish specific goals with respect to diversity, the Board’s overall diversity is a significant consideration in the trustee nomination process. The Board assesses the effectiveness of its approach to Board diversity as part of the Board and committee evaluation process.

 

 

LOGO

   LOGO

 

LOGO

   LOGO

 

Board Composition. Our Board consists of thirteen members. Upon the recommendation of our Nominating and Corporate Governance Committee, our Board annually nominates trustees for election or re-election to the Board to serve for a one-year term beginning with the Annual Meeting, or until their successors, if any, are elected or appointed.

Led by our Nominating and Corporate Governance Committee, our Board continues to focus on facilitating a smooth transition when trustees retire or leave the Board, as well as ensuring that the composition of our Board is systematically refreshed to maintain the desired mix of skills, experience, independence and diversity to support our strategic direction and operating environment. Since

 

 

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the beginning of 2020, we have added three new trustees, all of whom qualify as independent under the rules of the New York Stock Exchange (“NYSE”) and bring extensive operational and executive experience to the Board, and two of whom are diverse.

Among other aspects of the succession planning and refreshment process, our Board:

 

    Identifies the collective mix of desired skills, experience, knowledge, diversity and independence of our Board taken as a whole, and identifies potential opportunities for enhancement in these areas;

 

    Considers each current trustee’s experience, skills, principal occupation, reputation, independence, committee membership and diversity (including age, tenure, geographic, gender and ethnicity);

 

    Engages in third-party search firms to assist with identifying and evaluating qualified candidates, as appropriate; and

 

    Considers the recommendations of Board members and third parties to identify and evaluate potential trustee candidates.

Additional information concerning the trustee nomination and selection process is provided below in “Identifying and Evaluating Nominees for Trustee.”

Trustee Independence. The Board evaluates the independence of each trustee annually based on information supplied by trustees and the company, and on the recommendations of the Nominating and Corporate Governance Committee. The company’s Corporate Governance Guidelines require that a majority of the trustees be independent in accordance with the requirements of the rules of the NYSE. Our Board continues to comply with that requirement, with approximately 77% of the current trustees meeting these independence standards. To promote open discussion among non-management trustees, our non-management and independent trustees devote a portion of each regularly scheduled Board meeting to executive sessions without members of management present. If the group of non-management trustees includes trustees who are not independent, at least one executive session convened per year includes only independent trustees.

No trustee qualifies as independent unless the Board affirmatively determines that the trustee has no material relationship with the company and its management, based on all relevant facts and circumstances, in accordance with NYSE rules. Material relationships may include commercial, industrial, consulting, legal, accounting, charitable, family and other business, professional and personal relationships.

Following its annual review of each trustee’s independence in February 2021, the Nominating and Corporate Governance Committee recommended to the Board and the Board determined that (1) each member of the Board, other than David P. Singelyn, Jack Corrigan and David Goldberg, and (2) each member of the Audit Committee, the Human Capital and Compensation Committee and the Nominating and Corporate Governance Committee is independent pursuant to the rules of the NYSE.

In determining Ms. Gustavson’s independence, the Board considered, among other things, (i) that loans payable to Ms. Gustavson by each of Messrs. Singelyn and Corrigan which were secured by company securities were repaid in 2019, and (ii) that Mr. Singelyn no longer serves as manager of HF Investments 2010, LLC, which comprises trusts established by B. Wayne Hughes for certain of his heirs, including the children of Ms. Gustavson.

In addition, the Board has determined that:

 

    Each member of the Audit Committee meets the additional independence requirements set forth in Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules of the Securities and Exchange Commission (“SEC”) thereunder; and

 

    Each member of the Human Capital and Compensation Committee meets the NYSE’s heightened independence requirements for compensation committee members.

Trustee Retirement Policy. To encourage refreshment of the Board, the Board has adopted a mandatory retirement age for trustees of 75. The policy provides in relevant part that no trustee will be nominated for election to the Board unless he or she will be 75 or younger on the first day of such Board term.

Board Orientation and Education. Each new trustee participates in an orientation program and receives materials and briefings concerning our business, industry, management and corporate governance policies and practices. We provide continuing education for all trustees through board materials and presentations, discussions with management and the opportunity to attend external board education programs. In addition, all Board members have the opportunity to become a member of the National Association of Corporate Directors and to access the many educational resources of that organization.

Shareholder Recommendations. The policy of the Nominating and Corporate Governance Committee to consider properly submitted shareholder recommendations for candidates for membership on the

 

 

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Board is described below under “Identifying and Evaluating Nominees for Trustee.” Under this policy, shareholder recommendations may only be submitted by a shareholder entitled to submit shareholder proposals under the SEC rules. Any shareholder recommendations proposed for consideration by the Nominating and Corporate Governance Committee should include the nominee’s name and qualifications for Board membership, including the information required under Regulation 14A under the Exchange Act, and should be addressed to the Secretary at our principal executive offices at American Homes 4 Rent, 23975 Park Sorrento, Suite 300, Calabasas, California 91302. Recommendations for consideration at the 2022 Annual Meeting of Shareholders should be submitted within the time frame described in this proxy statement under “Deadlines for receipt of shareholder proposals.”

Trustee Qualifications. Members of the Board shall have the highest personal and professional integrity, shall have demonstrated exceptional ability and judgment and shall be highly effective, in conjunction with the other nominees to the Board, in serving the long-term interests of the company and its shareholders. In general, the Board seeks to add trustees who meet the independence requirements of the NYSE rules. In addition, trustee candidates must submit a completed trustee questionnaire concerning matters related to independence determination, the determination of whether a candidate qualifies as an audit committee financial expert and other proxy disclosure matters and must satisfactorily complete a background investigation by a third-party firm.

The Board has delegated to the Nominating and Corporate Governance Committee responsibility for recommending to the Board new trustees for election and assessing the skills and characteristics required of Board members in the context of the current make-up of the Board. This assessment includes trustees’ qualifications as independent, and may include consideration of the following, all in the context of an assessment of the perceived needs of the Board at that time:

 

    diversity, background, skills and experience;

 

    personal qualities and characteristics, accomplishments and reputation in the business community;

 

    knowledge and contacts in the communities in which the company conducts business and in the company’s industry or other industries relevant to the company’s business;

 

    ability and willingness to devote sufficient time to serve on the Board and committees of the Board;
    knowledge and expertise in various areas deemed appropriate by the Board; and

 

    how the individual’s skills, experience and personality fit with those of other trustees in maintaining an effective, collegial and responsive Board.

We do not have a formal diversity policy and there are no other policies or guidelines that limit the selection of trustee candidates by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee and the Board have and exercise broad discretion to select trustee candidates who will best serve the Board, the company and its shareholders.

Identifying and Evaluating Nominees for Trustee. The Nominating and Corporate Governance Committee periodically assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Nominating and Corporate Governance Committee will consider various potential candidates for trustee.

Candidates may come to the attention of the Nominating and Corporate Governance Committee through current Board members, professional search firms, shareholders or other persons. These candidates will be evaluated at meetings of the Nominating and Corporate Governance Committee and may be considered at any point during the year.

The Nominating and Corporate Governance Committee will consider properly submitted shareholder nominations of candidates for the Board in the same manner as other candidates. Following verification of the shareholder status of persons proposing candidates, recommendations will be aggregated and considered by the Nominating and Corporate Governance Committee prior to the issuance of the proxy statement for the annual meeting. If any materials are provided by a shareholder in connection with the recommendation of a trustee candidate, such materials are forwarded to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may also review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a shareholder. In evaluating such nominations, the Nominating and Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board.

As discussed above in “Board Composition,” the Board has actively focused on refreshment with the addition of three new independent trustees since February 2020. As part of the ongoing process to identify trustee

 

 

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candidates, during late 2019 and 2020, the Nominating and Corporate Governance Committee reviewed various individual candidates proposed by various Board members, shareholders, investment bankers and a search firm, Ferguson Partners. The nominee selection process involved extensive interviews and five formal meetings of the full Nominating and Governance Committee. At the conclusion of the interview process, the Nominating and Corporate Governance Committee considered feedback from the interviews, discussed the proposed candidates and unanimously recommended that the Board elect Matthew R. Zaist, Lynn C. Swann and Michelle C. Kerrick as trustees. Each of Mr. Zaist, Mr. Swann and Ms. Kerrick were unanimously elected a trustee by the Board in February 2020, August 2020 and September 2020, respectively.

The Board and the Nominating and Corporate Governance Committee will continue to consider additional qualified board candidates.

How We Are Organized

Our Board is led by the Chairperson, Kenneth M. Woolley, an independent trustee. Currently, the Board believes that having a separate Chairperson and Chief Executive Officer serves the interests of the company and its shareholders well. Our Board believes that this structure encourages open dialogue and competing views, which promotes strong checks and balances. This structure also allows the Chief Executive Officer to focus more

specifically on overseeing the company’s day-to-day operations and long-term strategic planning.

Our Board has three standing committees: the Audit Committee, the Human Capital and Compensation Committee and the Nominating and Corporate Governance Committee. Each of these committees consists of at least three members, each of whom meets the independence standards of the NYSE. Matters put to a vote by any one of our three independent committees of our Board must be approved by a majority of the trustees on the committee who are present at a meeting, in person or as otherwise permitted by our bylaws, at which there is a quorum or by the unanimous written consent of the trustees serving on the committee. Additionally, our Board may from time to time establish other committees to facilitate the Board’s oversight of management of the business and affairs of the company.

Each of the standing committees operates pursuant to a written charter which is reviewed and reassessed annually and that can be viewed on our website at www.americanhomes4rent.com under “Investor Relations.” A copy of each may be obtained by sending a written request to the company’s Investor Relations Department at American Homes 4 Rent, 23975 Park Sorrento, Suite 300, Calabasas, California 91302, or submitting an information request under “Investor Relations” on the company’s website.

Our three standing committees are described below, and the committee members in 2020 and number of meetings held in 2020 are as follows:

 

 

Trustee

     Audit
Committee
     Human Capital
and Compensation
Committee
  

Nominating and
Corporate

Governance Committee

Douglas N. Benham

      

 

     Member    Chair

Matthew J. Hart

      

 

     Chair    Member

Michelle C. Kerrick (1)

     Member      Member     

 

James H. Kropp

     Chair       

 

    

 

Lynn C. Swann (1)

     Member       

 

   Member

Winifred M. Webb

      

 

     Member    Member

Jay Willoughby

     Member       

 

   Member

Matthew R. Zaist (1)

     Member      Member     

 

Number of meetings in 2020:

     4      5    6

(1) Mr. Zaist joined the Board in February 2020, Mr. Swann joined the Board in August 2020 and Ms. Kerrick joined the Board in September 2020.

 

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Audit Committee. Our Board has affirmatively determined that each of the Audit Committee members meets the definition of “independent trustee” for purposes of the NYSE rules and the independence requirements of Rule 10A-3 of the Exchange Act. Our Board has also determined that each member of our Audit Committee is financially literate and that three members, including James H. Kropp, Michelle C. Kerrick and Matthew R. Zaist, qualify as an “audit committee financial expert” under SEC rules and regulations. The Audit Committee’s principal functions consist of overseeing:

 

    the integrity of our consolidated financial statements and financial reporting process;

 

    our accounting and financial reporting processes;

 

    our systems of disclosure controls and procedures and internal control over financial reporting;

 

    our compliance with financial, legal and regulatory requirements;

 

    the evaluation of the qualifications, independence and performance of our independent registered public accounting firm;

 

    review of all related party transactions in accordance with our Related Party Transaction Policy;

 

    the performance of our internal audit functions; and

 

    our overall risk exposure and management, including with respect to the company’s risk assessment, risk management and risk mitigation policies and programs.

Human Capital and Compensation Committee. In 2020, the Board made important structural changes to the committee formerly known as the Compensation Committee, repositioned as the Human Capital and Compensation Committee, to expand the responsibilities of such committee to include oversight of the company’s human capital programs and policies, including with respect to diversity and inclusion.

The Human Capital and Compensation Committee’s principal functions consist of supporting the Board in fulfilling its oversight responsibilities relating to the following:

 

    reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives, and determining and approving the remuneration of our Chief Executive Officer based on such evaluation;

 

    reviewing and approving the compensation of our other executive officers;
    reviewing our executive compensation policies and plans, including the company’s clawback policies;

 

    implementing and administering our incentive and equity-based compensation plans;

 

    reviewing and discussing with management the Compensation Discussion and Analysis (“CD&A”) to be included in the proxy statement and to recommend to the Board the inclusion of the CD&A in the company’s Annual Report on Form 10-K and annual proxy statement;

 

    producing a report on executive compensation to be included in our annual proxy statement;

 

    together with management, reviewing management’s annual assessment of potential risks related to compensation policies and practices applicable to all employees;

 

    overseeing the advisory shareholder votes on the company’s executive compensation programs and policies and the frequency of such votes;

 

    reviewing, evaluating and recommending changes, if appropriate, to the remuneration for trustees;

 

    reviewing and reporting to the Board on the company’s programs and practices for talent development and maintaining the continuity of capable management, including but not limited to succession planning for the Chief Executive Officer and other senior executives; and

 

    overseeing the company’s human capital programs and policies, including with respect to pay fairness and employee well-being, employee retention and development and diversity and inclusion.

During 2020, the Human Capital and Compensation Committee made all compensation decisions for our executive officers, including the named executive officers, as set forth in the Summary Compensation Table below. In August 2020, the Human Capital and Compensation Committee retained Semler Brossy Consulting Group (“Semler Brossy”) to serve as its new independent, third-party compensation consultant. The Human Capital and Compensation Committee considered Semler Brossy’s advice on a range of compensation matters, including its consideration of possible COVID-19 related adjustments to the 2020 compensation program and its consideration of enhancements to the 2021 compensation program, in each case as discussed in more detail in “Executive Compensation” below.

Empowering diverse talent is a key priority for the company and the Board and the Human Capital and Compensation Committee is actively engaged in overseeing the company’s people and culture. We

 

 

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recognize employee engagement as a critical factor to our success and we are committed to creating and maintaining a great place to work with an inclusive culture, competitive benefits, and opportunities for training and growth. Moving forward, the Human Capital and Compensation Committee will periodically review and report to the Board on the company’s programs for attracting, developing and retaining key employees, including management development programs, technology and skills training programs, employee health and well-being programs, and diversity and inclusion initiatives.

Compensation Committee Interlocks and Insider Participation. None of our current Human Capital and Compensation Committee members is or was an officer or employee, or former officer or employee, of the company. None of our executive officers serve as a member of a board of directors, board of trustees or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our Board or our Human Capital and Compensation Committee.

Oversight of Compensation Risks. In January 2021, the Human Capital and Compensation Committee considered a report from management concerning its review of potential risks related to employee compensation policies and practices. During its review, the Human Capital and Compensation Committee discussed the report with senior management and discussed management’s conclusion that the company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the company.

To prepare the report for the Human Capital and Compensation Committee’s consideration, members of our senior management team, including our Chief Executive Officer, Chief Operating Officer, Chief Legal Officer and the Senior Vice President of Human Resources, reviewed each of the company’s compensation programs, focusing on employee incentive compensation plans. At the completion of the review, management and the Human Capital and Compensation Committee concluded that there is little motivation or opportunity for employees to take undue risks to earn incentive compensation awards and that the incentive compensation plans properly incentivize employees to achieve long-term goals and do not create undue risks for the company.

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee’s principal functions consist of:

 

    identifying, evaluating and recommending to the Board the trustee nominees for each annual shareholder meeting or to fill any vacancy on the Board;

 

    identifying individuals qualified to become members of the Board and ensuring that the Board has the requisite expertise;

 

    developing and recommending to the Board for its approval qualifications for trustee candidates and periodically reviewing these qualifications with the Board;

 

    reviewing the committee structure of the Board and recommending trustees to serve as members or chairs of each committee of the Board;

 

    developing and recommending to the Board a set of corporate governance guidelines for the Board and, at least annually, reviewing such guidelines and recommending changes to the Board for approval as necessary;

 

    considering and advising the Board on any other governance issues that may arise from time to time;

 

    overseeing the annual self-evaluations of the Board and management;

 

    overseeing our Board’s compliance with our Code of Business Conduct and Ethics; and

 

    overseeing management’s efforts and activities with respect to environmental sustainability.

How We Govern and Are Governed

Governance Highlights. We have structured our corporate governance in a manner we believe closely aligns our interests with those of our shareholders. Notable features of our corporate governance include:

 

    Annual Election of all Trustees

 

    Majority Voting for Trustees in Uncontested Elections

 

    Independent Chairperson

 

    Regular Executive Sessions of Non-Management Trustees

 

    Trustee Retirement Policy

 

    Anti-Hedging and Anti-Short Sale Policies

 

    Compensation Clawback Policy

 

    Double-Trigger Vesting for Time-Based Equity Awards

 

    Robust Stock Ownership Guidelines
 

 

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Governance Documents. The framework of our corporate governance is set forth in our charter and bylaws and in the following documents:

 

    Corporate Governance Guidelines that outline the Board’s overall governance practices

 

    Charters of the Audit, Human Capital and Compensation and Nominating and Corporate Governance Committees

 

    The Code of Business Conduct and Ethics applicable to trustees, officers and all employees

 

    Code of Ethics for Senior Financial Officers

The Corporate Governance Guidelines and the Code of Business Conduct and Ethics are reviewed at least annually by the Nominating and Corporate Governance Committee, which considers whether to recommend any changes to the Board. Each Board committee reviews its charter at least annually. The company’s Code of Business Conduct and Ethics, the Corporate Governance Guidelines and the Board committee charters are available on the company’s website, www.americanhomes4rent.com under “Investor Relations.” A copy of each may be obtained by sending a written request to the company’s Investor Relations Department at American Homes 4 Rent, 23975 Park Sorrento, Suite 300, Calabasas, California 91302, or submitting an information request under “Investor Relations” on the company’s website. Any amendments or waivers to the Code of Business Conduct and Ethics for trustees or executive officers may be made only by the Nominating and Corporate Governance Committee of our Board and will be disclosed on the company’s website or other appropriate means in accordance with applicable SEC and NYSE requirements.

Board Leadership. The Chairperson presides at meetings of all non-management trustees in executive session without the presence of management. These meetings are held on a regular basis, generally before or after each regularly scheduled Board meeting and at the request of any non-management trustee. In addition, the independent trustees meet separately at least once annually. These sessions are designed to encourage open Board discussion of any matter of interest without our Chief Executive Officer or any other members of management present.

The Chairperson: (1) reviews the agendas for each Board meeting and strategic planning session, (2) in conjunction with the Nominating and Corporate Governance Committee, assists in the recruitment and selection of new trustees, (3) evaluates, along with the members of the Human Capital and Compensation Committee, the performance of the Chief Executive Officer, (4) consults with the Chief Executive Officer as to hiring other

executive officers, as well as strategic planning and succession planning for the Chief Executive Officer, (5) is regularly apprised of material shareholder inquiries and is involved in responding to these inquiries as appropriate, and (6) when necessary or appropriate, communicates with other non-management and independent trustees and calls meetings of the non-management and independent trustees.

Board and Committee Meetings and Attendance. The Board meets at regularly scheduled intervals and may hold additional special meetings as necessary or desirable in furtherance of its oversight responsibilities. As described above, the non-management trustees generally meet in executive session without the presence of management as part of each regularly scheduled Board meeting. The sessions are intended to encourage open discussion of any matter of interest without the Chief Executive Officer or any member of management present.

During 2020, the Board held eleven meetings and the Board committees held fifteen meetings. During 2020, all trustees attended at least 75% of the meetings held by the Board and all committees of the Board on which each trustee served. All of the trustees serving at the time attended the virtual 2020 Annual Meeting of Shareholders. Trustees are encouraged, but not required, to attend the Annual Meeting.

Trustee Service on Other Boards. Although the company recognizes that there may be a benefit to the company as a result of trustees broadening their experience by serving on corporate boards, it is important that each trustee have the requisite time to devote to the oversight of the company’s business. Unless otherwise approved by the Board, a trustee who also serves as an executive officer may not serve on more than one public company board in addition to the company’s Board, and trustees that are not executive officers of the company may not serve on more than three boards of other public companies in addition to the company’s Board. In recognition of the enhanced time commitments associated with membership on a public company’s audit committee, no member of the Audit Committee may serve simultaneously on audit committees of more than two other public companies.

Board Responsibilities and Oversight of Risk Management. The Board is responsible for overseeing the company’s approach to major risks and policies for assessing and managing these risks. As part of its oversight function, the Board regularly receives presentations from management on areas of risk facing our business. The Board and management actively engage in discussions about these potential and perceived risks to the business.

 

 

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In addition, the Board is assisted in its oversight responsibilities by the standing Board committees, which have assigned areas of oversight responsibility for various matters as described in the Board committee charters and as provided in the NYSE rules. These oversight responsibilities are summarized below.

Board

 

   

Overall oversight of the risk management process

 

   

Development of business strategy and major resource allocation

 

   

Leadership of management succession planning

 

   

Business conduct and compliance oversight

 

   

Receipt of regular reports from Board committees on specific risk oversight responsibilities

Board Committees

 

  Audit Committee Oversight of Risk      Human Capital and Compensation
  Committee Oversight of Risk
     Nominating and Corporate
  Governance Committee Oversight of
  Risk

 

•   Oversight of enterprise risk management activities, including the company’s risk assessment, risk management and risk mitigation policies and programs

 

•   Oversight of accounting and financial reporting

 

•   Oversight of integrity of financial statements

 

•   Oversight of compliance with legal and regulatory requirements applicable to accounting and financial reporting processes

 

•   Oversight of the company’s policies and procedures with respect to cybersecurity risk management

 

•   Oversight of the performance of internal audit function

 

•   Oversight of the effectiveness of internal controls

 

•   Oversight of registered public accounting firm’s qualifications, performance and independence

 

•   Review of proposed swaps and equity and debt hedging transactions

  

 

•   Oversight of compensation related risks and overall philosophy

 

•   Oversight of regulatory compliance with respect to compensation matters

 

•   Oversight of the company’s human capital programs and policies, including with respect to pay fairness and employee well-being, employee retention and development, and diversity and inclusion

  

 

•   Oversight of overall corporate governance leadership

 

•   Provides recommendations regarding Board and committee composition

 

•   Oversight of Board succession planning

 

•   Oversight of regulatory compliance and environmental sustainability and corporate governance initiatives

 

•   Oversight of the evaluation of the Board and management

Management

 

   

Identify material risks

 

   

Implement appropriate risk management strategies

 

   

Integrate risk management into our decision-making process

 

   

Ensure that information with respect to material risks is transmitted to senior executives and the Board

 

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Risk Areas

 

LOGO      Strategic   LOGO       Operational   LOGO       Financial   LOGO       Legal, Regulatory
and Compliance

 

•   Reputation

 

•   Market Dynamics

 

•   Acquisitions and Dispositions

 

•   Development

 

 

•   Sales and Marketing

 

•   Service and Delivery

 

•   Information Systems and Cybersecurity

 

•   Infrastructure and Assets

 

•   Hazards and Weather

 

•   People

 

 

•   Financial Reporting and Internal Controls

 

•   Capital Structure

 

•   Market

 

•   Liquidity and Credit

 

•   Tax

 

•   Insurance

 

 

•   Compliance with Laws

 

•   Litigation

 

•   Environmental

 

•   Social

 

•   Governance

 

How We Are Paid

Our Board has established a compensation program for our non-management trustees that includes a mix of cash and equity compensation. The Human Capital and Compensation Committee annually evaluates the adequacy of the trustee compensation program.

Retainers. For 2020, each non-management trustee received the following cash compensation:

 

    an annual cash retainer of $75,000;

 

    an additional annual cash retainer of $25,000 for the Chairperson;

 

    an additional annual cash retainer of $20,000 to the chair of the Audit Committee;

 

    an additional annual cash retainer of $12,500 to the chair of the Human Capital and Compensation Committee; and

 

    an additional annual cash retainer of $12,500 to the chair of the Nominating and Corporate Governance Committee.

For 2021, the annual retainer for non-management trustees was set at $75,000. The annual retainer for the Chairperson was set at $50,000. The annual retainer for the chair of the Audit Committee was set at $20,000 and for the chairs of the Human Capital and Compensation Committee and the Nominating and Corporate Governance Committee was set at $12,500. The annual retainer for the members of the Audit Committee was set at $7,500 and for the members of the Human Capital and Compensation Committee and the Nominating and Corporate Governance Committee was set at $5,000.

The company also reimburses non-management trustees for reasonable out-of-pocket expenses incurred in the performance of their duties as trustees, including without limitation, travel expenses in connection with their attendance in-person at Board and committee meetings. Trustees who are employees do not receive any compensation for their services as trustees. We do not anticipate holding in-person Board or committee meetings in the first half of 2021. However, given the ongoing uncertainty of the COVID-19 pandemic and the vaccine rollout, we recognize that it may be safe to hold in-person meetings at some time before the end of 2021. If so, this policy will apply and the company will reimburse travel expenses in connection with trustees’ attendance at these meetings.

Equity Awards. For 2020, on the date of the Annual Meeting, each non-management trustee received an award of restricted share units with a value of $100,000 as determined by the closing price on the NYSE of the company’s Class A common shares on the date of grant. New trustees appointed during 2020 also received an award of restricted share units with a value of $100,000 as determined by the closing price on the NYSE of the company’s Class A common shares on the date of grant. The grant date for the award to new trustees is the date their service commences. Awards for new trustees and the annual grants to non-management trustees vest in full one year from the date of grant. For 2021, the value of the equity award was set at $125,000.

 

 

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Trustee Compensation Table. The following table presents information relating to the total compensation of our non-employee trustees for the fiscal year ended December 31, 2020. Mr. Zaist joined the Board in February 2020, Mr. Swann joined the Board in August 2020 and Ms. Kerrick joined the Board in September 2020.

 

Messrs. Singelyn and Corrigan did not receive any compensation for their services as trustees in 2020. Mr. Singelyn’s compensation as our Chief Executive Officer and Mr. Corrigan’s compensation as our Chief Investment Officer is described beginning on page 60.

 

 

Name

Paid in Cash ($) Stock Awards ($) (1)(2) Total ($)

Kenneth M. Woolley

$93,750 $100,000 $193,750

Douglas N. Benham

$87,500 $100,000 $187,500

David Goldberg

$75,000 $100,000 $175,000

Tamara Hughes Gustavson

$87,500 $100,000 $187,500

Matthew J. Hart

$93,750 $100,000 $193,750

Michelle C. Kerrick

$37,500 $100,000 $137,500

James H. Kropp

$95,000 $100,000 $195,000

Lynn C. Swann

$37,500 $100,000 $137,500

Winifred M. Webb

$75,000 $100,000 $175,000

Jay Willoughby

$75,000 $100,000 $175,000

Matthew R. Zaist

$75,000 $202,300 $277,300

(1) Restricted share unit awards valued at the closing share price on the NYSE of $25.28 per share for Class A common shares on May 7, 2020, which was the date of grant for all trustees but for Mr. Swann and Ms. Kerrick, which were valued at the closing share prices on August 5, 2020 ($29.05) and September 9, 2020 ($29.20), respectively. Mr. Zaist also received restricted share unit awards valued at the closing share price of $25.68 on February 27, 2020, which was the date of this additional grant.

(2) As of December 31, 2020, each non-management trustee had the following number of options outstanding: Messrs. Hart and Woolley each held a total of 60,000, of which 52,500 are fully vested and exercisable; Mr. Kropp held a total of 50,000, of which 42,500 are fully vested and exercisable; Ms. Gustavson and Mr. Benham each held a total of 30,000, of which 22,500 are fully vested and exercisable; Ms. Webb and Mr. Willoughby each held a total of 10,000, of which 2,500 are fully vested and exercisable. Mr. Singelyn held fully vested options to acquire 25,000 shares which were not awarded in connection with his service as a trustee. In addition, as of December 31, 2020, (i) Mses. Gustavson and Webb, and Messrs. Benham, Goldberg, Hart, Kropp, Willoughby, Woolley and Zaist held 3,956 restricted share units which vest in full on May 7, 2021, (ii) Ms. Kerrick held 3,425 restricted share units which vest in full on September 9, 2021, (iii) Mr. Swann held 3,443 restricted share units which vest in full on August 5, 2021, and (iv) Mr. Zaist also held 3,985 restricted share units which vest in full on February 27, 2021.

 

Trustee Share Ownership Policy. Our share ownership guidelines approved by the Board are intended to align the interests of the company’s executive officers and independent trustees with the interests of the company’s shareholders. The policy applies to the company’s Chief Executive Officer, other Section 16 officers and the independent members of the Board. Each independent trustee covered by the policy is expected to own Class A common shares and equivalents (including Class A partnership units that are convertible into Class A common shares and unvested restricted stock units (“RSUs”) that are only subject to time vesting) of the company with an aggregate market value of five times the previous year annual cash retainer (excluding any Board committee fees) for each independent trustee. For

information regarding requirements for executive officers, see “Executive Officer Ownership of Company Shares—Share Ownership Policy” below.

Securities that have been pledged and shares underlying vested or unvested options are not counted for purposes of the policy. Current independent trustees are expected to be in compliance by February 24, 2026, the fifth anniversary of the effective date of the policy. New trustees are expected to be in compliance within five years of their appointment.

The Human Capital and Compensation Committee of the Board has the authority to administer and interpret, to monitor compliance with, and to make all determinations regarding the share ownership policy.

 

 

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How You Can Communicate With Us

We value and actively solicit feedback from our shareholders. During fiscal year 2020, management met with over 420 institutional investors at virtual conferences, non-deal roadshows and industry calls.

We encourage all shareholders to contact our investor relations team with any questions or comments by:

 

LOGO     EMAIL    LOGO     WEBSITE    LOGO     MAIL    LOGO     TELEPHONE

Email

investors@ah4r.com

  

Visit

www.americanhomes4rent.com

under “Investor Relations”

  

 

Write to
American Homes 4 Rent

Attn: Investor Relations

23975 Park Sorrento,

Suite 300

Calabasas, CA 91302

  

Call

(855) 794-AH4R (2447)

 

The Board also welcomes feedback from shareholders and other interested parties. We receive a large volume of correspondence regarding a wide range of subjects each day, including correspondence relating to ordinary business operations. As a result, our individual trustees are often not able to respond to all communications directly. Therefore, the Board has established a process for managing communications to the Board and individual trustees. Any shareholder communication to

the Board should be addressed to: Board of Trustees, c/o Corporate Secretary, American Homes 4 Rent, 23975 Park Sorrento, Suite 300, Calabasas, California 91302. Communications that are intended for a specified individual trustee or group of trustees should be addressed to the trustee(s) c/o Corporate Secretary at the above address, and all such communications received will be forwarded to the designated trustee(s).

 

 

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LOGO


Table of Contents

LOGO


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We are asking our shareholders to approve adoption of the American Homes 4 Rent 2021 Equity Incentive Plan.

The Board approved the 2021 Incentive Plan on February 24, 2021, subject to shareholder approval. The Board believes that the adoption of the 2021 Incentive Plan is in the best interest of our shareholders and the company because equity-based awards help to attract, motivate, and retain talented employees, trustees and other service providers, align employee and shareholder interests, link employee compensation with performance, and maintain a culture based on employee share ownership. Equity has been and is expected to continue to be a significant component of the total compensation of our key executives.

The 2021 Incentive Plan is intended to replace the company’s existing equity compensation plan, the American Homes 4 Rent 2012 Equity Incentive Plan (as amended, the “2012 Incentive Plan”). If approved, the maximum number of common shares available for issuance under the 2021 Incentive Plan will be equal to the sum of (i) 8,500,000 common shares, (ii) the number of common shares available for future awards under the 2012 Incentive Plan as of the effective date of the 2021 Incentive Plan, and (iii) the number of common shares related to awards outstanding under the 2012 Incentive Plan as of the effective date that later terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such common shares and become available for issuance under the 2021 Incentive Plan.

If the 2021 Incentive Plan is not approved by our shareholders, the 2021 Incentive Plan will not become effective, the 2012 Incentive Plan will continue in effect, and we may continue to grant awards under the 2012 Incentive Plan to the extent of the common shares remaining available for issuance under that plan. As of the record date, there were 885,508 shares remaining available for issuance under the 2012 Incentive Plan (without giving effect to additional shares that may become available upon the future expiration, forfeiture or cancellation of outstanding awards).

Summary of Material Provisions of the 2021 Incentive Plan

A summary of the material terms of the 2021 Incentive Plan is set forth below. This summary is qualified in its entirety by the full text of the 2021 Incentive Plan, a copy of which is attached as Annex A to this proxy statement and which is incorporated by reference into this Proposal 2. We encourage shareholders to read and refer to the complete plan document in Annex A for a more complete description of the 2021 Incentive Plan.

General: The 2021 Incentive Plan permits the grant of awards of share options, share appreciation rights (“SARs”), restricted shares, restricted share units, deferred share units, unrestricted shares, dividend equivalent rights, performance shares and other performance-based awards, LTIP Units (as defined below), and other rights or interests that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to common shares, to any employee, officer, trustee or director of the company or an affiliate of the company, any other service provider currently providing direct services to the company or an affiliate of the company (including a consultant or advisor), or to any other person whose participation in the 2021 Incentive Plan is determined by the Human Capital and Compensation Committee to be in the best interest of the company. Each award granted under the 2021 Incentive Plan will be evidenced by an award agreement in such form or forms as may be determined by the Human Capital and Compensation Committee that sets forth the terms and conditions of the award.

Administration of the 2021 Incentive Plan: The 2021 Incentive Plan will be administered by the Human Capital and Compensation Committee, and the Human Capital and Compensation Committee will determine all terms of awards under the 2021 Incentive Plan. During any time when the company has a class of equity registered under Section 12 of the Exchange Act, each member of the Human Capital and Compensation Committee that administers the 2021 Incentive Plan will be (i) a “non-employee director” within the meaning of Rule 16b-3 of the Exchange Act, and (ii) for so long as the common shares are listed on the NYSE, an independent director in accordance with the requirements of the rules of the NYSE. The Human Capital and Compensation Committee will also determine who will receive awards under the 2021 Incentive Plan, the type of award and its terms and conditions and the number of common shares subject to the award, if the award is equity-based. The Human Capital and Compensation Committee will also interpret and construe the provisions of the 2021 Incentive Plan. During any period of time in which there is not a compensation committee, the 2021 Incentive Plan will be administered by the Board or another committee appointed by the Board. References below to the Human Capital and Compensation Committee include a reference to the Board or another committee appointed by the Board for those periods in which the Board or such other committee appointed by the Board is acting.

Eligibility: All employees and officers of the company and its subsidiaries and affiliates are eligible to receive awards under the 2021 Incentive Plan. In addition,

 

 

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non-employee trustees or directors of the company or any subsidiary or affiliate of the company, other service providers (who are natural persons) currently providing direct services to the company or a subsidiary or affiliate of the company, or any other person whose participation in the 2021 Incentive Plan is determined by the Human Capital and Compensation Committee to be in the best interest of the company may receive awards under the 2021 Incentive Plan. As of March 9, 2021, the company had approximately 1,434 employees and 11 non-employee trustees.

Share Authorization: The number of common shares that may be issued under the 2021 Incentive Plan is equal to the sum of (i) 8,500,000 common shares, (ii) the number of common shares available for future awards under the 2012 Incentive Plan as of the effective date of the 2021 Incentive Plan, and (iii) the number of common shares related to awards outstanding under the 2012 Incentive Plan as of the effective date that later terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such common shares and become available for issuance under the 2021 Incentive Plan. Any of the common shares available for issuance under the 2021 Incentive Plan may be used for any type of award under the 2021 Incentive Plan. In connection with share splits, distributions, recapitalizations, spin-offs, share dividends and certain other events, the Human Capital and Compensation Committee will make proportionate adjustments that it deems appropriate in the aggregate number and kind of shares that may be issued under the 2021 Incentive Plan and the number and kind of shares that are subject to outstanding awards. Any shares covered by an award that terminates by expiration, forfeiture, cancellation, or otherwise without the issuance of any shares subject to such award will again be available for purposes of the 2021 Incentive Plan. The number of common shares available for issuance under the 2021 Incentive Plan will not be increased by the number of common shares (i) tendered or withheld or subject to an award surrendered in connection with the purchase of shares upon exercise of an option, (ii) deducted or delivered from payment of an award of an option or SAR in connection with the company’s tax withholding obligations, or (iii) purchased by the company with proceeds from option exercises. The number of common shares available for issuance under the 2021 Incentive Plan will not be increased by the number of common shares tendered or withheld or subject to an award (other than an option or SAR) surrendered in connection with the purchase of shares or deducted or delivered from payment of an award (other than an option or SAR) in connection with the company’s tax withholding obligations.

No awards have been issued under the 2021 Incentive Plan.

Share Usage: Any common shares that are subject to awards will be counted against the 2021 Incentive Plan share limit as one common share for every one common share subject to the award. The maximum number of common shares issuable under a performance share grant will be counted against the 2021 Incentive Plan share limit as of the applicable grant date, but such number will be adjusted to equal the actual number of shares issued upon settlement of the performance share grant to the extent different from such maximum number of shares.

No Repricing: Except in connection with certain corporate transactions involving the company, the company may not, without shareholder approval, (i) amend an outstanding option or SAR to reduce the exercise price of the option or the strike price of the SAR, (ii) cancel outstanding options or SARs in exchange for options or SARs with an exercise price or strike price, as applicable, that is less than the exercise price or strike price, as applicable, of the original options or SARs, (iii) cancel outstanding options or SARs with an exercise price or strike price, as applicable, above the current share price in exchange for cash or other securities, or (iv) take any other action that is treated as a repricing under U.S. generally accepted accounting principles.

Options: The 2021 Incentive Plan provides for the grant of options to purchase one or more common shares. The term of an option cannot exceed ten years from the date of grant; provided that in the event the participant is a 10% shareholder, an option granted to such participant that is intended to be an “incentive share option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), will not be exercisable five years from the date of grant. The Human Capital and Compensation Committee determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options may become exercisable in installments. Except in the case of substitute awards (as defined in the 2021 Incentive Plan), the exercise price of each option granted under the 2021 Incentive Plan cannot be less than the fair market value of a common share on the grant date of such option; provided that in the event the participant is a 10% shareholder, an option granted to such participant that is intended to be an incentive share option cannot be less than 110% of the fair market value of a common share on the grant date of such option. All options granted under the 2021 Incentive Plan will be non-qualified share options or incentive share options.

 

 

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The exercise price for any option generally is payable (i) in cash or cash equivalents, (ii) to the extent the award agreement provides and subject to certain limitations set forth in the 2021 Incentive Plan, by the tender of common shares (or attestation of ownership of such common shares) with an aggregate fair market value on the date on which the option is exercised equal to the exercise or purchase price, (iii) to the extent the award agreement provides, by payment through a broker in accordance with procedures established by the company, or (iv) to the extent the award agreement provides and/or unless otherwise specified in an award agreement, any other form permissible by applicable laws, including net exercise or settlement.

Share Awards and Share Units: The 2021 Incentive Plan provides for the grant of share awards (which includes awards of unrestricted shares and awards of restricted shares), restricted share units and deferred share units. An award of restricted shares, restricted share units or deferred share units may be subject to such restrictions as the Human Capital and Compensation Committee may determine. The restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments or otherwise, as the Human Capital and Compensation Committee may determine. A participant who receives restricted shares will have all of the rights of a shareholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares, except that the Board may require any dividends to be reinvested in common shares, which may or may not be subject to the same vesting conditions and restrictions as applicable to such restricted shares. A participant who receives restricted share units or deferred share units will have no such rights, provided that the Human Capital and Compensation Committee may provide in an award agreement evidencing a grant of restricted share units or deferred share units that the participant will be entitled to receive dividend equivalent payments in respect of such restricted share units or deferred share units. Dividend equivalents paid on restricted share units or deferred share units which vest or are earned based upon the achievement of performance goals will not vest unless such performance goals are achieved. During the restricted period, if any, applicable to such restricted share awards, restricted share units or deferred share units, a participant is prohibited from selling, transferring, assigning, pledging or otherwise encumbering or disposing of his or her restricted share awards, restricted share units or deferred share units.

Share Appreciation Rights: The 2021 Incentive Plan provides for the grant of SARs, which provide the recipient with the right to receive, upon exercise of the

SAR, cash, common shares or a combination of the two. The amount that the recipient will receive upon exercise of the SARs generally will equal the excess of the fair market value of the common shares on the date of exercise over the per share strike price of the SAR as determined by the Human Capital and Compensation Committee. SARs will become exercisable in accordance with terms determined by the Human Capital and Compensation Committee. SARs may be granted in tandem with an option grant or independently from an option grant. The term of a SAR cannot exceed ten years from the date of grant.

Performance-Based Awards: The 2021 Incentive Plan provides for the grant of performance-based awards, which are awards of options, SARs, restricted shares, restricted share units, deferred share units, performance shares, other equity-based awards or cash made subject to the achievement of performance goals over a performance period specified by the Human Capital and Compensation Committee. The Human Capital and Compensation Committee will determine the applicable performance period, the performance goals and such other conditions that apply to the performance-based award. Performance goals may relate to financial performance, the participant’s performance or such other criteria determined by the Human Capital and Compensation Committee. If the performance goals are met, performance-based awards will be paid in cash, common shares, other awards or a combination thereof.

LTIP Units: The 2021 Incentive Plan provides for the grant of awards in the form of a unit of American Homes 4 Rent, L.P., our operating partnership (“LTIP Unit”). LTIP Units are intended to qualify as “profits interests” within the meaning of the Code. The Human Capital and Compensation Committee will determine the terms and conditions (including vesting conditions) applicable to any LTIP Units granted under the 2021 Incentive Plan; provided, however, that LTIP Units may be issued only to a participant for the performance of services to or for the benefit of our operating partnership (i) in the participant’s capacity as a partner of our operating partnership, (ii) in anticipation of the participant becoming a partner of our operating partnership, or (iii) as otherwise determined by the Human Capital and Compensation Committee. LTIP Units will be subject to the terms and conditions of the partnership agreement of our operating partnership and such other restrictions, including restrictions on transferability, as the Human Capital and Compensation Committee imposes.

Dividend Equivalent Rights: The 2021 Incentive Plan provides for the grant of dividend equivalent rights in connection with the grant of certain equity-based awards. Dividend equivalent rights may be paid currently or

 

 

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accrued as contingent cash obligations and may be payable in cash, common shares or a combination of the two. The Human Capital and Compensation Committee will determine the terms of any dividend equivalent rights. No dividend equivalent rights can be granted in tandem with an option or SAR.

Recoupment: Award agreements for awards granted pursuant to the 2021 Incentive Plan may provide that the award is subject to mandatory repayment by the recipient to the company of any gain realized by the recipient to the extent the recipient is in violation of or in conflict with certain agreements with the company (including but not limited to an employment or non-competition agreement) or any obligation to the company (including but not limited to a confidentiality obligation). Awards are also subject to mandatory repayment to the extent the grantee is or becomes subject to (i) the Company’s Executive Officer Performance-Based Compensation Recovery Policy, (ii) any other clawback or recoupment policy adopted to comply with the requirements of any applicable law, rule or regulation, or otherwise, or (iii) any law, rule or regulation which imposes mandatory recoupment.

Change in Control: Except as otherwise provided in the applicable award agreement, if the company experiences a Change in Control in which outstanding awards will be assumed or continued by the surviving entity, then such awards will continue in the manner and under the terms so provided to the extent that provision is made in writing in connection with such Change in Control for the assumption or continuation of such awards or the substitution for such awards of new awards relating to the equity of the successor entity, or a parent or subsidiary of such successor entity, with appropriate adjustments as to the number of shares and, if applicable, exercise prices. All incomplete performance periods in respect of each performance-based award will end on the date of the Change in Control and the performance goals applicable to such award will be deemed satisfied (i) based on the level of performance achieved as of the date of the Change in Control, if determinable, or (ii) at the target level, if not determinable. Each such performance-based award will become a time-based award and will otherwise vest in accordance with the applicable award agreement. In the event an award is assumed, continued or substituted upon the consummation of any Change in Control and the employment of the holder of such award is terminated without “cause” (as defined in the 2021 Incentive Plan) within two years following the consummation of such Change in Control, such award will be fully vested and may be exercised in full, to the extent applicable, beginning on the date of such termination and for the one-year period immediately following such termination or for such longer period as the Human

Capital and Compensation Committee will determine.

Except as otherwise provided in the applicable award agreement, if the company experiences a Change in Control (as defined below) in which outstanding awards will not be assumed or continued by the surviving entity: (i) all restricted shares, restricted share units, deferred share units and dividend equivalent rights will vest and the underlying common shares will be delivered immediately before the Change in Control, and (ii) (x) all options and SARs will become exercisable fifteen days before the Change in Control and terminate upon the consummation of the Change in Control, or (y) at the Human Capital and Compensation Committee’s discretion, any options, SARs, restricted shares, restricted share units, deferred share units and/or dividend equivalent rights may be cancelled and cashed out in connection with the Change in Control for an amount in cash or securities having a value, in the case of restricted shares, restricted share units, deferred share units and dividend equivalent rights, equal to the formula or fixed price per share paid to the shareholders pursuant to such Change in Control and, in the case of options or SARs, equal to the product of the number of common shares subject to such options or SARs multiplied by the amount, if any, by which the formula or fixed price per share paid to shareholders pursuant to such Change in Control exceeds the exercise price or strike price applicable to such options or SARs. In the event the option exercise price or SAR exercise price of an award exceeds the price per share paid to shareholders in the Change in Control, such options and SARs may be terminated for no consideration. In the case of performance-based awards, if less than half of the performance period has lapsed, such awards will be treated as though target performance has been achieved immediately prior to the occurrence of the Change in Control. If at least half the performance period has lapsed, actual performance to date will be determined as of a date reasonably proximal to the date of the consummation of the Change in Control as determined by the Human Capital and Compensation Committee, and such level of performance will be treated as achieved immediately prior to the occurrence of the Change in Control.

A “Change in Control” under the 2021 Incentive Plan means, unless provided otherwise in an award agreement, the occurrence of any of the following:

 

(a)

any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the company or any affiliate, any trustee or other fiduciary holding securities under any employee benefit plan of the company, or any company owned, directly or indirectly, by the shareholders of the company in substantially the same proportions as

 

 

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  their ownership of common shares), becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the company representing more than 50% of the combined voting power of the company’s then outstanding securities;

 

(b)

during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new trustee (other than a trustee designated by a person who has entered into an agreement with the company to effect a transaction described in clause (a), (c), or (d) or a trustee whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board) whose election by the Board or nomination for election by the company’s shareholders was approved by a vote of at least two-thirds of the trustees then still in office who either were trustees at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;

 

(c)

a merger or consolidation of the company with any other corporation, other than a merger or consolidation that would result in the voting securities of the company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of the company or such surviving entity outstanding immediately after such merger or consolidation; provided that, a merger or consolidation effected to implement a recapitalization of the company (or similar transaction) in which no person (other than those covered by the exceptions in clause (a)) acquires more than 50% of the combined voting power of the company’s then outstanding securities will not constitute a Change in Control; or

 

(d)

a complete liquidation or dissolution of the company or the consummation of a sale or disposition by the company of all or substantially all of the company’s assets other than the sale or disposition of all or substantially all of the assets of the company to a person or persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the company at the time of the sale.

Amendment or Termination: The Board may amend, suspend or terminate the 2021 Incentive Plan at any time; provided that no amendment, suspension or termination may impair rights or obligations under any outstanding award without the participant’s consent or violate the 2021 Incentive Plan’s prohibition on repricing. The shareholders must approve any amendment if such approval is required under applicable law or stock exchange requirements. The shareholders also must approve any amendment that changes the no-repricing provisions of the 2021 Incentive Plan. The 2021 Incentive Plan has a term of ten years, but may be terminated earlier by the Board at any time, as described above.

New Plan Benefits: As of March 9, 2021, no awards have been made under the 2021 Incentive Plan. Because benefits under the 2021 Incentive Plan are discretionary and will depend on the actions of the Human Capital and Compensation Committee, the performance of the company and the value of common shares, it is not possible to determine the benefits that will be received if shareholders approve the 2021 Incentive Plan.

Summary of U.S. Federal Income Tax Consequences

The federal income tax consequences of awards under the 2021 Incentive Plan for participants and the company will depend on the type of award granted. The following description of tax consequences is intended only for the general information of shareholders. A participant in the 2021 Incentive Plan should not rely on this description and instead should consult his or her own tax advisor.

Options: Under current law the grant of an option generally will have no federal income tax consequences for the participant or the company. Upon the exercise of an option, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of common shares on the exercise date over the exercise price. Generally, the company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m) of the Code.

Share Appreciation Rights: Under current law, the grant of a SAR generally will have no federal income tax consequences for the participant. Upon the exercise of a SAR, the participant will recognize ordinary income equal to the amount of cash paid and the fair market value of any common shares delivered to the participant. Generally, the company will be entitled to a deduction

 

 

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equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m) of the Code.

Restricted Shares: Under current law, the grant of restricted shares generally will have no federal income tax consequences to the participant or the company. The participant will generally recognize ordinary income on the date the award vests, in an amount equal to the value of the shares on the vesting date. Under Section 83(b) of the Code, a participant may elect to recognize income on the date of grant rather than the date of vesting in an amount equal to the fair market value of the shares on the date of grant (less the purchase price for such shares, if any). Pursuant to the 2021 Incentive Plan, participants may not file Section 83(b) elections with respect to restricted shares. Generally, the company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m) of the Code.

Restricted Share Units, Deferred Share Units and Performance-Based Awards: Under current law, the grant of a restricted share unit award, a deferred share unit award or a performance-based award generally will have no federal income tax consequences to the participant or the company. The participant generally will recognize ordinary income when payment is actually or constructively received by the participant in satisfaction of the restricted share unit award, deferred share unit award or performance-based award, in an amount equal to the amount of cash paid and the fair market value of any shares delivered to the participant. Generally, the company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m) of the Code.

Unrestricted Shares: Under current law, upon the grant of an award of unrestricted shares, a participant will be required to recognize ordinary income in an amount equal to the fair market value of the shares on the date of grant, reduced by the amount, if any, paid for such shares. Upon a participant’s disposition of such shares, any gain realized in excess of the amount reported as ordinary income will be reportable by the participant as a capital gain, and any loss will be reportable as a capital loss. Capital gain or loss will be long-term if the participant held the shares for more than one year

(otherwise, the capital gain or loss will be short-term). Generally, the company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m) of the Code.

LTIP Units: Under current law, the grant of an award of LTIP Units generally will have no federal income tax consequences to the participant or the company. If the LTIP Units are not vested as of the date of grant, the vesting of the LTIP Units generally will have no federal income tax consequences to the participant or the company. Taxable income of our operating partnership allocable to the LTIP Units prior to vesting is taxed as compensation income to the participant subject to withholding taxes unless the participant has made a timely election under Section 83(b) of the Code. Generally, the company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m) of the Code.

Dividend Equivalents: Under current law, the grant of dividend equivalents generally will have no federal income tax consequences for the participant. Generally, the participant will recognize ordinary income on the amount distributed to the participant pursuant to the award of dividend equivalent rights. Generally, the company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m) of the Code.

Certain payments made to employees and other service providers in connection with a Change in Control may constitute “parachute payments” subject to tax penalties imposed on both the company and the recipient under Sections 280G and 4999 of the Code. In general, when the value of parachute payments equals or exceeds three times the employee’s “base amount,” the employee is subject to a 20% nondeductible excise tax on the excess over the base amount and the company is denied a tax deduction for the payments. The “base amount” is generally defined as the employee’s average compensation for the five calendar years prior to the date of the Change in Control. The value of accelerated vesting of restricted shares, options, or other awards in connection with a Change in Control can constitute a

 

 

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parachute payment. The 2021 Incentive Plan contains a modified form of a “safe harbor cap,” which limits the amount of potential parachute payments that a recipient may receive to no more than 299% of the recipient’s base amount, but only if such cutback results in larger after-tax payments to the recipient.

Board Recommendation

Shareholder approval of the 2021 Incentive Plan is necessary in order for the company to meet the NYSE shareholder approval requirements.

In its determination to approve the 2021 Incentive Plan, the Board reviewed an analysis prepared by Semler Brossy, which included an analysis of certain burn rate, dilution and overhang metrics, the expected duration of the 2021 Incentive Plan, the cost of the 2021 Incentive Plan, as well as best market practices and trends.

Specifically, the Board considered:

Burn Rate: Our three-year average burn rate is 0.14% as shown in the table below.

 

 

 
Share Options Time-Based
RSUs
Earned
Performance
Awards
Unadjusted
Total
Adjusted
Total(1)
Weighted
Common
Shares
Outstanding
Unadjusted
Burn Rate
Adjusted
Burn
Rate

2020

  0   470,147   0   470,147   1,175,368   306,613,197   0.15 %   0.38%  

2019

  20,000   350,334   0   370,334   895,835   299,415,397   0.12 %   0.30%  

2018

  140,000   304,400   0   444,400   901,000   293,640,500   0.15 %   0.31%  

Three-year Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  0.14 %   0.33%  

(1) The adjusted total is derived by multiplying the number of time-based RSUs and earned performance awards by the Institutional Shareholder Services’ options-equivalent multiplier of 2.5 to provide more equivalent valuation between stock options and full value shares.

Overhang and Dilution: The estimated overhang, based on outstanding equity-based awards (1,741,837) and shares remaining available under the 2012 Incentive Plan (1,417,627), and the estimated dilution, based on outstanding equity-based awards plus the new requested shares (8,500,000), are approximately 1.0% and 3.7%, respectively, as of December 31, 2020. There are currently 1,090,300 options and 651,537 RSUs outstanding. The remaining common shares available for future awards under the 2012 Incentive Plan as of the effective date of the 2021 Incentive Plan and the number of common shares related to awards outstanding under the 2012 Incentive Plan as of the effective date that later terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such common shares and become available for issuance under the 2021 Incentive Plan will be available under the 2021 Incentive Plan as of its effective date. See the table below for the reconciliation of our outstanding equity-based awards, broken out by share options, RSUs and performance-based RSUs.

 

 

 
Share
Options

RSUs

Performance-Based
RSUs
Total

Balance as of December 31, 2019

  1,529,800   599,109   0   2,128,909

Granted in 2020

  0   470,147   0   470,147

Balance as of December 31, 2020

  1,090,300   651,537   0   1,741,837

 

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Plan Duration: If we continue to make equity grants consistent with our 2021 practices (which is not necessarily reflective of grants made per our three-year historical burn rate), we estimate that the 2021 Incentive Plan will last approximately 12 years.

Plan Cost: Based on generally accepted evaluation methodologies used by proxy advisory firms, we concluded that the number of shares under the 2021 Incentive Plan is well within generally accepted standards

as measured by an analysis of the 2021 Incentive Plan cost relative to industry standards.

In light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to our ability to continue to attract and retain employees in the competitive labor markets in which we compete, our Board believes the approval of the 2021 Incentive Plan is in the best interest of our shareholders and the company.

 

 

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We are asking our shareholders to approve adoption of the proposed American Homes 4 Rent 2021 Employee Stock Purchase Plan.

The Board believes that an employee stock purchase plan encourages the company’s employees to acquire our common shares, thereby fostering broad alignment of employees’ interests with the interests of our shareholders; fosters good employee relations; and provides the company an ability to recruit, retain, and reward employees in an extremely competitive employment environment.

Key Features of the Employee Stock Purchase Plan

As described further below, the ESPP generally:

 

    Reserves 3,000,000 common shares for issuance pursuant to the ESPP;

 

    Permits a participant to contribute up to 10% of his or her annual base salary each pay period through after-tax payroll deductions;

 

    Unless otherwise determined by the Administrator (as defined below), establishes six-month offering periods commencing in January and July of each calendar year;

 

    Permits participants to purchase common shares at a discount, which will be set by the Administrator, up to a maximum discount equal to the lesser of 85% of the closing price for the common shares on the first day or the last day of the applicable offering period;

 

    Limits the value of shares that a participant may purchase in a calendar year to the lesser of $25,000 and 10% of a participant’s annual base salary; and

 

    Will not qualify as an “employee stock purchase plan” as defined in Section 423 of the Code.

Summary of Material Provisions of the Employee Stock Purchase Plan

A summary of the material terms of the ESPP is set forth below. This summary is qualified in its entirety by the full text of the ESPP, a copy of which is attached as Annex B to this proxy statement and which is incorporated by reference into this Proposal 3. We encourage shareholders to read and refer to the complete plan document in Annex B for a more complete description of the ESPP.

Share Reserve: Subject to adjustment in connection with certain corporate transactions, the maximum number of common shares that may be purchased under the ESPP will be 3,000,000 shares. The common shares reserved for issuance under the ESPP may be authorized but unissued shares or shares purchased on the open market.

Administration: The ESPP will be administered, at the company’s expense, under the direction of the Board, the Human Capital and Compensation Committee of the Board, or any other committee of the Board designated by the Board from time to time (any such entity, the “Administrator”). The Administrator will initially be the Human Capital and Compensation Committee. The Administrator will have the authority to take any actions it deems necessary or advisable for the administration of the ESPP, including, without limitation, (i) interpreting and construing the ESPP and options granted thereunder, (ii) prescribing, adopting, amending, suspending, waiving, and rescinding rules and regulations it deems appropriate to administer and implement the ESPP, (iii) correcting any defect, supplying any omission or reconciling any inconsistency in the ESPP or options granted thereunder, (iv) making determinations about eligibility, (v) determining the purchase price, (vi) establishing the timing and length of offering periods and purchase periods, (vii) establishing minimum and maximum contribution rates, (viii) establishing new or changing existing limits on the number of common shares a participant may elect to purchase with respect to any offering period, if such limits are announced prior to the first offering period to be affected, (ix) delegating to one or more individuals such duties and functions related to the operation and administration of the ESPP as the Administrator so determines, except to the extent prohibited by applicable law, (x) permitting payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the processing of properly completed enrollment forms, and (xi) furnishing information to the custodian for the ESPP as the custodian may require. The Administrator’s decisions will be final, conclusive, and binding upon all persons.

Eligibility: Except as set forth below, generally, natural persons who have been full-time employees of the company or any subsidiary of the company for at least sixty days may be eligible to participate in the ESPP. In order for shares to be purchased on behalf of a participant under the ESPP, the participant must be an eligible employee on the first day of the applicable offering period. The following employees are ineligible to participate in the ESPP: (i) employees who, after exercising their options to purchase common shares under the ESPP, would own, directly or indirectly, common shares (including shares that may be acquired under any outstanding options under the ESPP) representing 5% or more of the total combined voting power of all classes of the company’s capital stock; (ii) employees who are citizens or residents of a foreign jurisdiction (without regard to whether such employees

 

 

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are also U.S. citizens or resident aliens), if the grant of an option under the ESPP or an offering period to such employee is prohibited under the laws of such foreign jurisdiction; and (iii) any of our executive officers or other employees who must file reports under Section 16 of the Exchange Act. The Administrator may, at any time in its sole discretion, if it deems advisable to do so, exclude the participation of the employees of a subsidiary from eligibility to participate in a future offering period. Special rules apply to employees who are considered “Restricted Persons” under our Policy on Inside Information and Insider Trading.

Notwithstanding the foregoing, the Administrator will have the authority to establish a different definition of “eligible employee” as it may deem advisable or necessary.

As of March 9, 2021, approximately 1,429 employees of the company and its subsidiaries may become eligible to participate in the ESPP.

Participation Election: An eligible employee may become a participant for an offering period under the ESPP by completing and submitting an enrollment form to the company or its designee. Such enrollment form will authorize the company to make after-tax payroll deductions in whole percentages up to 10% of the participant’s annual base salary on each pay day following enrollment in the offering period under the ESPP, subject to the $25,000 annual limit described below. The Administrator will credit the deductions or contributions to the participant’s account under the ESPP.

Subject to certain exceptions, a participant may cease his or her payroll deductions during an offering period by properly completing and timely submitting a new enrollment form to the company or its designee, at any time prior to the last day of such offering period. If a participant ceases his or her payroll deductions during an offering period, the participant will automatically be withdrawn by the company from the offering period and will be refunded his or her accumulated payroll deductions for such offering period, without interest. A participant may increase or decrease his or her payroll deductions to take effect on the first trading day of the next offering period, by properly completing and timely submitting a new enrollment form to the company or its designee.

Once an eligible employee becomes a participant in the ESPP, the participant will automatically participate in each successive offering period until such time as the participant ceases his or her payroll deductions or is no longer eligible to participate in the ESPP or a specific offering period under the ESPP.

All employee decisions related to the ESPP, including enrollment, withdrawal and changes in participation, are subject to our Policy on Inside Information and Insider Trading.

Offering Periods and Purchase Periods: The Administrator will determine the length and duration of the periods during which payroll deductions will accumulate to purchase common shares. Each of these periods is known as an “offering period.” The periods during which payroll deductions will accumulate for these purchases are referred to as “purchase periods.” While the Administrator has discretion to establish the offering periods and purchase periods under the ESPP, until otherwise determined by the Administrator, the ESPP will have six-month offering periods (with concurrent purchase periods) commencing on January 1st and July 1st of each calendar year and ending on June 30th and December 31st, respectively.

Purchase Price: The purchase price for each purchase period shall be determined by the Administrator, provided that the purchase price shall not be less than the lesser of 85% of the fair market value per common share (i) on the first trading day of the purchase period or (ii) on the last trading day of the purchase period.

The fair market value of a common share for purposes of the ESPP will generally be the closing price per share as reported on the NYSE. On March 9, 2021, the closing price of our common shares, as reported on the NYSE, was $30.21 per share.

Purchase of Shares: On the last trading day of the offering period, a participant is deemed to purchase the number of whole common shares determined by dividing the total amount of payroll deductions withheld from the participant’s paychecks during the offering period by the purchase price. Any cash not applied to the purchase of fractional shares will be refunded to the participant after the end of the offering period.

Purchase Limitations: No participant may purchase common shares in any calendar year under the ESPP and under all other “employee stock purchase plans” of the company and its subsidiaries having an aggregate fair market value in excess of the lesser of $25,000 and 10% of the participant’s annual base salary. In addition, the Administrator may impose a limit on the number of common shares a participant may purchase during the offering period.

If the Administrator determines that the total number of common shares of remaining available under the ESPP is insufficient to permit all participants to exercise their options to purchase shares, the Administrator will make a

 

 

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participation adjustment and proportionately reduce the number of shares purchasable by all participants.

Termination of Participation: A participant will automatically be withdrawn by the company from an offering period under the ESPP (i) upon a termination of employment with the company or its subsidiaries, (ii) in certain cases, following a leave of absence or a temporary period of ineligibility, and (iii) upon cessation of eligibility to participate in the ESPP for any reason. A participant may also voluntarily cease participating in the ESPP until the close of business on the third business day prior to the last day in a purchase period and withdraw the balance accumulated in such participant’s account. A participant who terminates participation in the ESPP may again commence participation in the ESPP no earlier than the second window period following the date of termination. Upon termination of participation, any accumulated amounts will be refunded to the participant without interest.

Shareholder Rights: A participant shall not be a shareholder or have any rights as a shareholder with respect to common shares subject to the participant’s options under the ESPP until the common shares are purchased pursuant to the options and such common shares are transferred into the participant’s name on the company’s books and records. Common shares purchased under the ESPP will be held by the custodian designated under the ESPP. Following purchase and transfer of common shares into the participant’s name on the company’s books and records, a participant will become a shareholder with respect to the common shares purchased and will thereupon have all dividend, voting, and other ownership rights incident thereto.

Notwithstanding the foregoing, the Administrator has the right to limit sales or other transfers of the common shares by imposing a holding period and to require that any sales of common shares during the holding period be performed through a licensed broker acceptable to the company. The Administrator will not initially impose a holding period.

Transferability: A participant’s options to purchase common shares under the ESPP may not be sold, pledged, assigned, or transferred in any manner, whether voluntarily, by operation of law, or otherwise. Any payment of cash or issuance of common shares under the ESPP may be made only to the participant (or, in the event of the participant’s death, to the participant’s estate or beneficiary). During a participant’s lifetime, only such participant may exercise his or her options to purchase common shares under the ESPP.

Corporate Transactions: If the number of outstanding common shares is increased or decreased or the

common shares are changed into or exchanged for a different number or kind of shares or other securities of the company by reason of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of shares, exchange of shares, stock dividend, or other distribution payable in capital stock, or other increase or decrease in common shares effected without receipt of consideration by the company, the number and kinds of common shares for which options may be made under the ESPP will be adjusted proportionately and accordingly by the Administrator. In addition, the number and kind of shares for which options are outstanding will be similarly adjusted so that the proportionate interest of a participant immediately following such event will, to the extent practicable, be the same as immediately prior to such event.

Upon a merger, consolidation, or reorganization of the company with one or more other corporations in which the company is not the surviving entity, or upon a Change in Control (as defined in the 2021 Incentive Plan), the ESPP and all options outstanding thereunder will terminate, except to the extent provision is made in writing in connection with such transaction for the continuation or assumption of the ESPP, or for the substitution of the options under the ESPP with new options covering the capital stock of the successor entity, with corresponding appropriate adjustments to the number and kinds of shares and purchase prices. With respect to any offering period that is ongoing between the time of the announcement of such merger, consolidation, or reorganization or Change in Control and the effectiveness of the transaction, at the discretion of the Administrator, either (i) the offering period will end on the last trading day prior to effectiveness of the transaction, and the options of each participant will automatically be exercised on such last trading day, or (ii) all outstanding purchase rights will be terminated and accumulated contributions will be refunded to each participant prior to effectiveness of the transaction.

Subject to the foregoing, if the company is the surviving corporation in any reorganization, merger, or consolidation of the company with one or more other corporations, all outstanding options under the ESPP will pertain to and apply to the securities to which a holder of the number of common shares subject to such options would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the purchase price per share so that the aggregate purchase price after such adjustment will be the same as the aggregate purchase price of the shares subject to such options immediately prior to such reorganization, merger or consolidation.

 

 

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Term: If approved by the shareholders at the Annual Meeting, the ESPP will become effective as of July 1, 2021. The ESPP will terminate on the earliest of (i) the day before the 10th anniversary of the effective date of the ESPP, (ii) the date on which all common shares reserved for issuance under the ESPP have been issued, (iii) the date the ESPP is terminated in connection with certain corporate transactions, and (iv) the date the Board terminates the ESPP.

Amendment, Suspension, or Termination: The Board or the Administrator may, at any time and from time to time, amend or suspend the ESPP or an offering period under the ESPP; provided, however, that no amendment or suspension will, without the consent of the participant, impair any vested rights of a participant. Any such amendment is subject to shareholder approval to the extent such approval is required under applicable law. The Board may terminate the ESPP at any time.

Summary of U.S. Federal Income Tax Consequences: The following summary of U.S. federal income tax consequences is intended only as a general guide, under current U.S. federal income tax law, of participation in the ESPP and does not attempt to describe all potential tax consequences. This discussion is intended for the information of our shareholders considering how to vote at the 2021 Annual Meeting and not as tax guidance to participants in the ESPP. The following summary is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Tax consequences are subject to change, and a taxpayer’s particular situation may be such that some variation in application of the described rules is applicable. Accordingly, participants are advised to consult their own tax advisors with respect to the tax consequences of participating in the ESPP.

Because we are structured as an UPREIT and substantially all of our employees are employed by a subsidiary of our operating partnership, the ESPP will not qualify as an “employee stock purchase plan” as defined in Section 423 of the Code. A general summary of the current federal income tax consequences regarding the ESPP is stated below.

Tax Treatment of ESPP Participants: The amount withheld from a participant’s pay under the ESPP will be taxable ordinary income to the participant and will be included in gross income for federal income and payroll tax purposes in the year in which such amount otherwise would have been paid to the participant.

Upon the purchase of shares under the ESPP (on the last trading day of a purchase period), a participant will recognize ordinary income, subject to withholding, in an amount equal to the excess of the fair market value of the shares on the date of purchase over his or her purchase price. The ordinary income recognized is added to the participant’s basis in the shares. Upon the participant’s sale or disposition of shares purchased under the ESPP, any gain realized will be taxed as capital gain and any loss realized will be a capital loss. Whether the capital gain or loss will be long-term or short-term will depend on how long the participant held the shares.

Tax Treatment of the Company: The company will be entitled, with respect to the purchase of the shares under the ESPP, to an income tax deduction in an amount equal to the ordinary income recognized by the participant in the same taxable year in which the participant recognizes such income.

 

 

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The Audit Committee is responsible for appointing the company’s independent registered public accounting firm. Ernst & Young LLP (“EY”) was first appointed as the company’s independent registered public accounting firm in August 2016. In February 2021, the Audit Committee re-appointed EY to serve as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2021, subject to ratification of the appointment by the company’s shareholders. The Board believes that the selection of EY is in the best interest of the company and its shareholders and recommends that shareholders ratify the Audit Committee’s appointment of EY as the independent registered public accounting firm.

Although we are not required to seek ratification of the appointment of EY, the Board believes that doing so is a matter of good corporate governance. Even if the appointment of EY is ratified by the shareholders, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that a change would be in the best interest of the company and its shareholders. If shareholders do not ratify the appointment of EY, the Audit Committee will reconsider its selection but may determine to confirm the appointment.

Representatives from EY will be in attendance at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

 

 

Audit and Non-Audit Fees

The following table shows the fees billed to the company by EY for audit and other services provided for fiscal years 2020 and 2019:

 

 

 
   2020      2019  

Audit fees (1)

   $ 1,439,366      $ 1,416,009  

Audit-related fees (2)

   $ 2,740      $ 1,995  

Tax fees

             

All other fees (3)

   $ 75,000         

Total

   $ 1,517,106      $ 1,418,004  

(1) Audit fees represent fees for professional services provided in connection with the integrated audit of the company’s annual financial statements and internal control over financial reporting, review of the quarterly financial statements included in the company’s quarterly reports on Form 10-Q and other professional services in connection with the company’s registration statements, securities offerings and audits of financial statements of certain acquired assets.

(2) Audit-related fees include fees for access to EY’s online accounting research tools.

(3) All other fees include fees for professional services provided in connection with a customer segmentation analysis in 2020.

 

Auditor Independence: The Audit Committee has determined that the provision of the non-audit services described above is compatible with maintaining the independence of the company’s independent registered public accounting firm.

Policy to Approve Services of Independent Registered Public Accounting Firm: The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy relating to services performed by the company’s independent registered public accounting firm. Pursuant to the Audit and Non-Audit Services Pre-Approval Policy, all audit and permissible non-audit services must be separately pre-approved by the Audit Committee. The Audit Committee has delegated authority to its Chairperson to specifically pre-approve engagements for the performance of audit and permissible non-audit services, for which the estimated cost for all such services shall not exceed $200,000 prior to reporting

such pre-approved engagements to the Audit Committee. The Chairperson must report all pre-approval decisions to the Audit Committee at its next scheduled meeting for review and provide a description of the terms of the engagement, including:

 

    the type of services covered by the engagement;

 

    the dates the engagement is scheduled to commence and terminate;

 

    the estimated fees payable by us pursuant to the engagement;

 

    other material terms of the engagement; and

 

    such other information as the Audit Committee may request.

Under this policy, the Audit Committee pre-approved all services performed by EY during 2020, including those listed in the previous table.

 

 

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 Audit Committee Report

 

 

The Audit Committee’s responsibilities include appointing the company’s independent registered public accounting firm, pre-approving audit and non-audit services provided by the firm and assisting the Board in providing oversight to the company’s financial reporting process. In fulfilling its oversight responsibilities, the Audit Committee meets with the company’s independent registered public accounting firm, internal auditors and management to review accounting, auditing, internal controls and financial reporting matters.

Management is responsible for the company’s financial statements, including the estimates and judgments on which they are based, for maintaining effective internal controls over financial reporting and for assessing the effectiveness of internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and for issuing a report thereon. It is not the Audit Committee’s responsibility to plan or conduct audits or to determine that the company’s financial statements and disclosures are complete, accurate and in accordance with U.S. generally accepted accounting principles and applicable laws, rules and regulations. The Audit Committee’s responsibility is to monitor and oversee these processes and the Audit Committee necessarily relies on the work and assurances of the company’s management and of the company’s independent registered public accounting firm.

As part of its oversight responsibilities related to the company’s financial statements included in the company’s Annual Report on Form 10-K, the Audit Committee met with management and EY, the company’s independent registered public accounting firm, and reviewed and discussed with them the audited consolidated financial statements. Management

represented to the Audit Committee that the company’s consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee discussed with EY the matters required to be discussed by the applicable requirements of the PCAOB. The Audit Committee also discussed with EY the overall scope and plans for the annual audit, the results of their examinations, their evaluation of the company’s internal controls and the overall quality of the company’s financial reporting.

The company’s independent registered public accounting firm also provided to the Audit Committee the written disclosures and the letter required by the applicable rules of the PCAOB, and the Audit Committee discussed with the independent registered public accounting firm that firm’s independence. In addition, the Audit Committee has considered whether the independent registered public accounting firm’s provision of non-audit services to the company and its affiliates is compatible with the firm’s independence.

The Audit Committee met with representatives of management, internal audit, legal counsel and the company’s independent registered public accounting firm on a regular basis throughout the year to discuss the progress of management’s testing and evaluation of the company’s system of internal control over financial reporting in response to the applicable requirements of the Sarbanes-Oxley Act of 2002 and related SEC regulations. At the conclusion of this process, the Audit Committee received from management its assessment and report on the effectiveness of the company’s internal controls over financial reporting. In addition, the Audit Committee received from EY its assessment of and opinion on the company’s internal control over financial reporting as of December 31, 2020. The Audit Committee reviewed and discussed the results of management’s assessment and EY’s audit.

 

 

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In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board has approved, that the audited consolidated financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the Securities and Exchange Commission. The Audit Committee also approved the appointment of EY as the company’s independent registered public accountants for the fiscal year ending December 31, 2021 and recommended that

the Board submit this appointment to the company’s

shareholders for ratification at the Annual Meeting.

THE AUDIT COMMITTEE

James H. Kropp, Chair

Michelle C. Kerrick

Lynn C. Swann

Jay Willoughby

Matthew R. Zaist

 

 

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 Principal Shareholders

 

 

Share Ownership of 5% or Greater Beneficial Owners

The following table sets forth information regarding the beneficial ownership of our common shares and common shares into which units in American Homes 4 Rent, L.P., our operating partnership (“OP units”), may be exchangeable by each person known by us to be the beneficial owner of 5% or more of our common shares and OP units as of December 31, 2020.

 

Name and Address

  

Number of Common

Shares Beneficially

Owned (1)

  

Number of Common

Shares and OP Units

Beneficially Owned (2)

  

Percentage of All

Common Shares
Beneficially Owned (1)

 

Percentage of All  
Common Shares and  
OP Units Beneficially  

Owned (2)  

The Vanguard Group
100 Vanguard Blvd.

Malvern, PA 19355 (3)

  

38,710,680

  

38,710,680

  

12.22%

 

10.51%

JPMorgan Chase & Co.

383 Madison Avenue

New York, NY 10017 (4)

  

22,612,805

  

22,612,805

  

7.14%

 

6.14%

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055 (5)

  

22,003,185

  

22,003,185

  

6.95%

 

5.97%

Tamara Hughes Gustavson

c/o Malibu Management

22917 Pacific Coast Highway, Suite 300 Malibu, CA 90265 (6)(7)

  

20,261,737

  

20,261,737

  

6.40%

 

5.50%

Principal Real Estate Investors, LLC

801 Grand Ave

Des Moines, IA 50392 (8)

  

19,451,957

  

19,451,957

  

6.14%

 

5.28%

B. Wayne Hughes

c/o Malibu Management
22917 Pacific Coast Highway, Suite 300

Malibu, CA 90265 (7)

  

18,409,565

  

18,409,565

  

5.81%

 

5.00%

HF Investments 2010, LLC

c/o Malibu Management
22917 Pacific Coast Highway, Suite 300

Malibu, CA 90265 (9)

  

6,645,581

  

54,765,472

  

2.10%

 

14.87%

(1) Assumes a total of 316,021,385 Class A and 635,075 Class B common shares are outstanding as of December 31, 2020. All Class B common shares are held by HF Investments 2010, LLC (“HF LLC”).

(2) Assumes a total of 316,656,460 common shares and 51,726,980 OP units (which OP units may be redeemed for cash or, at our option, exchanged for our Class A common shares) are outstanding as of December 31, 2020, excluding OP units held by the company.

(3) This information is as of December 31, 2020 and is based on a Schedule 13G/A filed on February 10, 2021 by The Vanguard Group as investment advisor to report that it has shared voting power with respect to 780,564 Class A common shares, sole dispositive power with respect to 37,706,283 Class A common shares and shared dispositive power with respect to 1,004,397 Class A common shares.

(4) This information is as of December 31, 2020 and is based on a Schedule 13G filed on January 8, 2021 by JPMorgan Chase & Co. to report that it has sole voting power with respect to 20,219,460 Class A common shares and sole dispositive power with respect to 22,612,805 Class A common shares.

(5) This information is as of December 31, 2020 and is based on a Schedule 13G/A filed on January 29, 2021 by BlackRock, Inc. to report that it has sole voting power with respect to 20,479,919 Class A common shares and sole dispositive power with respect to 22,003,185 Class A common shares.

 

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(6) Includes 27,500 shares underlying stock options granted under the 2012 Incentive Plan that have vested or will vest within 60 days of December 31, 2020. Does not include any shares held by HF LLC which is comprised of trusts established by B. Wayne Hughes, for certain of his heirs, including the children of Ms. Gustavson. Shares held by HF LLC are reported separately in this table. Mr. Singelyn was the sole manager of HF LLC.

(7) Mr. Hughes co-founded the company with Mr. Singelyn and was Chairperson of the Board until May 2019. Ms. Gustavson is his daughter. The information is based on information contained in Form 4s filed by Mr. Hughes on December 1, 2020 and by Ms. Gustavson on May 7, 2020. Mr. Hughes and Ms. Gustavson have filed a joint Schedule 13D, as amended most recently on March 12, 2020, to report their collective ownership of Class A common shares and may constitute a “group” within the meaning of section 13(d)(3) of the Exchange Act, although each of these persons disclaims beneficial ownership of the Class A common shares owned by the others.

(8) This information is as of December 31, 2020 and is based on a Schedule 13G filed on February 16, 2021 by Principal Real Estate Investors, LLC to report that it has shared voting power with respect to 19,451,957 Class A common shares and shared dispositive power with respect to 19,451,957 Class A common shares.

(9) HF Investments 2010, LLC is comprised of trusts established by Mr. Hughes for certain of his heirs. Mr. Singelyn was the sole manager of HF LLC as of December 31, 2020. Mr. Singelyn resigned as sole manager of HF LLC as of February 15, 2021. As the sole manager of HF LLC, Mr. Singelyn had voting and dispositive power over the 54,765,472 common shares and OP units directly owned by HF LLC and may have been deemed to have beneficial ownership over such securities. Mr. Singelyn disclaims beneficial ownership of all common shares and OP units owned by HF LLC during the time he served as sole manager. HF LLC ownership interests disclaimed by Mr. Singelyn include:

(i) 6,010,506 Class A common shares;

(ii) 635,075 Class B common shares (for voting purposes, each Class B common share entitles the holder to 50 votes on all matters on which the holders of Class A common shares are entitled to vote); and

(iii) 48,119,891 Class A units issued by our operating partnership (“Class A units”).

 

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Share Ownership of Trustees and Management

The following table sets forth information, as of March 1, 2021, regarding the beneficial ownership of our common shares and common shares into which OP units may be exchangeable by (1) each of our executive officers, (2) each of our trustees and (3) all of our executive officers and trustees as a group. Except as otherwise indicated, each trustee and executive officer has sole voting and investment power over his or her shares.

 

Name

Number of Common
Shares Beneficially
Owned (1)
Number of Common
Shares and OP Units
Beneficially Owned (2)
Percentage of All
Common Shares
Beneficially Owned (1)

Percentage of All  
Common Shares and  

OP Units Beneficially  
Owned (2)  

Kenneth M. Woolley (4)

  67,006   67,006   *   *

David P. Singelyn (3)(4)

  334,298   1,934,298   *   *

Douglas N. Benham (4)

  48,695   60,903   *   *

Jack Corrigan

  193,162   893,162   *   *

David Goldberg

  35,996   576,062   *   *

Tamara Hughes Gustavson (4)(5)

  20,261,737   20,261,737   6.39 %   5.50 %

Matthew J. Hart (4)

  78,173   78,173   *   *

Michelle C. Kerrick

       

James H. Kropp (4)

  71,983   71,983   *   *

Christopher C. Lau (4)

  47,632   47,632   *   *

Bryan Smith (4)

  287,771   287,771   *   *

Lynn C. Swann

  13,000   13,000   *   *

Sara H. Vogt-Lowell (4)

  66,512   66,512   *   *

Winifred M. Webb (4)

  8,173   8,173   *   *

Jay Willoughby (4)

  8,173   8,173   *   *

Matthew R. Zaist

  3,985   3,985    

All trustees and executive officers as a group (16 persons) (3)(4)

  21,526,296   24,378,570   6.79 %   6.61 %

* Represents less than 1.0%

(1) Includes shares of Class A and Class B common shares held of record or beneficially by members of the immediate family of executive officers of the company.

(2) Assumes 316,211,674 Class A common shares, 635,075 Class B common shares and 51,726,980 OP units (which OP units may be redeemed for cash or, at our option, exchanged for our Class A common shares) are outstanding as of March 1, 2021, excluding OP units held by the company.

(3) Mr. Singelyn has pledged 1,000,000 Class A partnership units and 175,000 Class A common shares.

(4) Includes the following vested share options granted under the 2012 Incentive Plan that have vested or will vest within 60 days of March 1, 2021: 25,000 for Mr. Singelyn, 267,500 for Mr. Smith, 7,500 for Mr. Lau, 40,000 for Ms. Vogt-Lowell, 57,500 for each of Messrs. Hart and Woolley, 47,500 for Mr. Kropp, 27,500 for Mr. Benham and Ms. Gustavson, and 5,000 for Ms. Webb and Mr. Willoughby.

(5) Includes 27,500 shares underlying stock options granted under the 2012 Incentive Plan that have vested or will vest within 60 days of March 1, 2021. Does not include any shares held by HF LLC, which is comprised of trusts established by B. Wayne Hughes for certain of his heirs, including the children of Ms. Gustavson. Ms. Gustavson disclaims any beneficial ownership of the shares and units held by HF LLC. HF LLC ownership interests include:

(i) 6,010,506 Class A common shares;

(ii) 635,075 Class B common shares issued (for voting purposes, each Class B common share entitles the holder to 50 votes on all matters on which the holders of Class A common shares are entitled to vote); and

(iii) 48,119,891 Class A units.

 

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 Executive Officer Ownership of

 Company Shares

 

 

Share Ownership Policy

Our share ownership guidelines approved by the Board are intended to align the interests of the company’s executive officers and trustees with the interests of the company’s shareholders. The policy applies to the company’s Chief Executive Officer, other Section 16 officers and the independent members of the Board. Each person covered by the policy is expected to own Class A common shares and equivalents (including Class A partnership units that are convertible into Class A common shares and unvested RSUs that are only subject to time vesting) of the company with an aggregate market value of:

 

    Six times the previous year annual base salary for the Chief Executive Officer;

 

    Three times the previous year annual base salary for the other executive officers; and

 

    Five times the previous year annual cash retainer (excluding any Board committee fees) for each independent trustee.

Securities that have been pledged and shares underlying vested or unvested options are not counted for purposes of the policy.

Our Chief Executive Officer was required to be in compliance with the policy on its effective date and is currently in compliance. All other covered persons subject to the policy are expected to be in compliance by February 24, 2026, the fifth anniversary of the effective date of the policy. Covered persons already subject to the policy that become subject to increased ownership requirements as a result of a promotion are expected to be in compliance with the increased threshold by the fifth anniversary of the promotion.

Clawback Policy

Pursuant to the company’s Executive Officer Performance-Based Compensation Recovery Policy, the Human Capital and Compensation Committee will recover from any current or former executive officer, regardless of fault, that portion of equity and cash performance-based compensation based on financial

information required to be reported under the securities laws that would not have been paid in the three completed fiscal years preceding the year in which an accounting restatement is required to be filed to correct a material error as a result of misconduct.

Anti-Hedging Policy

The anti-hedging provisions of our insider trading policy prohibits trustees, officers and employees from directly or indirectly engaging in hedging against future declines in the market value of any securities of the company. This would cover the purchase of financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities.

Waivers of these prohibitions are not permitted under the policy. The objective of this policy is to further enhance alignment between the interests of our trustees, officers and employees and those of our shareholders.

Policy Regarding Pledging of Shares

Our securities trading policy discourages, but does not prohibit, the pledging of common shares by insiders. In 2012, in connection with his acquisition of interests in the company’s former sponsor, AH LLC, Mr. Singelyn obtained loans that have been refinanced with a loan from a third-party lender that is secured by a pledge of a portion of his holdings of common shares and operating partnership units. Our Board recognizes that maintaining this pledge facilitates liquidity and financial flexibility for Mr. Singelyn.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the company’s trustees and executive officers and persons who own more than 10% of any registered class of the company’s equity securities to file reports of ownership and changes of ownership of those securities with the SEC and the NYSE. Executive officers, trustees and

 

 

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greater than 10% shareholders are required by SEC regulations to provide the company with a copy of all Section 16(a) forms that they file. Based on a review of the reports submitted to the company and of filings on the SEC’s EDGAR website and of written representations from executive officers and trustees, the company

believes that all trustees and officers filed timely reports during 2020; however, B. Wayne Hughes, a shareholder and our former Chairperson, filed an amended Form 4 to report holdings of 1,700 shares of the company that he inadvertently omitted from the original Form 4.

 

 

    2021 Proxy Statement | 57  


Table of Contents

LOGO

 Executive Officers

 

 

Our Executive Officers

Set forth below is certain information regarding each of our current executive officers, other than Messrs. Singelyn and Corrigan, whose biographical information is presented under “Biographical Information About Our Trustee Nominees.” Our executive officers are appointed annually by, and serve at the discretion of, the Board. There are no family relationships between any of the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected.

 

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LOGO     

 

Christopher C.
Lau

 

Age: 39

 

 

Chief Financial Officer

 

 

 

Background

 

•  American Homes 4 Rent, Chief Financial Officer (since 2018); Vice President, Senior Vice President and then Executive Vice President – Finance (2013-2018)

 

•  National Rental Home Council, Member and Chair of the Finance Committee (since 2018)

 

•  Deloitte & Touche LLP, Senior Manager, Real Estate M&A Advisory; Senior Manager, Real Estate Audit

  

 

Education

 

•  B.S. in Accounting, San Diego State University

 

•  Certified Public Accountant (inactive)

    
    
    
    

 

LOGO

 

Bryan Smith

 

Age: 47

 

 

Chief Operating Officer

 

 

 

Background

 

•  American Homes 4 Rent, Chief Operating Officer (since 2019); Executive Vice President and President of Property Management (2015-2019); Senior Vice President and Director of Property Management (2012-2015)

 

•  American Homes 4 Rent Advisor, LLC (our former manager), Senior Vice President of Acquisitions

 

•  Tax Review Group, Partner

 

•  Watermark Group, Partner and Chief Financial Officer

 

•  Deloitte & Touche LLP, Senior

  

 

Education

 

•  B.A. in Business Economics, University of California, Los Angeles

 

•  M.B.A., UCLA Anderson School of Management

 

•  Certified Public Accountant (inactive)

 

LOGO

 

Sara H. Vogt-Lowell

 

Age: 45

 

 

Chief Legal Officer

 

 

 

Background

 

•  American Homes 4 Rent, Chief Legal Officer (since 2012)

 

•  American Homes 4 Rent Advisor, LLC (our former manager), Chief Legal Officer

 

•  Public Storage Canada and American Commercial Equities, General Counsel

 

•  Latham & Watkins LLP, Member, Finance Department

  

 

Education

 

•  B.A. in Political Science, University of California, Los Angeles

 

•  J.D., University of California, Berkeley

 

•  Member of the California State Bar

    
    
    

 

    2021 Proxy Statement | 59  


Table of Contents

LOGO

 Executive Compensation

 

 

Compensation Discussion and Analysis

The Compensation Discussion and Analysis explains the objectives of our executive compensation programs, outlines the elements of executive officer compensation and describes the factors considered by the Human Capital and Compensation Committee (as used in this section, the “Committee”) to determine the amounts of compensation for our named executive officers for 2020 performance.

Our Named Executive Officers

For 2020 our named executive officers, also called NEOs, are: (i) David P. Singelyn, Chief Executive Officer and a trustee; (ii) Jack Corrigan, Chief Investment Officer and a trustee; (iii) Bryan Smith, Chief Operating Officer; (iv) Christopher C. Lau, Chief Financial Officer; (v) Sara H. Vogt-Lowell, Chief Legal Officer; and (vi) Stephanie G. Heim, our former Chief Governance Officer who resigned in July 2020.

2020 Say-on-Pay Vote Results and Shareholder Engagement

At our 2020 Annual Meeting of Shareholders, 98.7% of votes cast supported our say-on-pay proposal. Our Committee feels that this level of support is indicative of broad approval of our compensation program.

Over the course of 2020, the company maintained an ongoing dialogue with a broad set of shareholders on diverse topics including business operations and strategy, financial results, corporate governance, environmental and social priorities, and executive compensation. Members of management and, as appropriate, members of the Board participated in these meetings.

2020 Compensation Overview

The 2020 compensation program for NEOs consisted of three components: (i) an annual base salary; (ii) an annual cash incentive based substantially on the achievement of pre-determined performance criteria consisting of corporate metrics, business unit goals and personal goals; and (iii) long-term equity incentives designed to directly link executive compensation with shareholder outcomes.

Since the company commenced operations in 2012, it has historically paid certain of its executive officers, particularly the Chief Executive Officer, annual total compensation at levels well below its peers. In doing so the company considered the significant equity ownership such executives had as a result of their role in founding the firm and the retention protections inherent in the manner in which that equity ownership had been financed. Starting in 2019, the year Messrs. Singleyn and Corrigan repaid the loans payable to Ms. Gustavson that were secured by securities in the company to finance their equity investments in the company at its founding, the company, in order to address retention risks, began to transition NEO annual total compensation to levels more competitive with peer pay practices and more representative of the value and contributions of the management team. In 2020, the company continued this transition by modestly increasing NEO salaries, target bonuses and equity grant values.

As discussed below, the Committee, with the assistance of its new independent compensation consultant, has approved a number of enhancements to the compensation program for NEOs for 2021 to better align NEO compensation with performance, peer compensation practices and the interests of our shareholders.

 

 

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Compensation Philosophy, Objectives and Governance

The primary goal of our executive compensation program is to align the interests of our NEOs with those of our shareholders in a way that allows us to attract and retain the best executive talent. The Committee oversees the compensation of our NEOs, including setting base salaries, awarding annual cash incentives and granting equity awards. The following table highlights key features of our executive compensation program that demonstrate our ongoing commitment to promoting shareholder interests through sound compensation governance practices.

 

What We Do

   What We Don’t Do

 

   DO require “double trigger” change in control benefits

  

 

   NO compensation or incentives that encourage risk-taking reasonably likely to have a material adverse effect on the company

 

   DO seek to align pay and performance with a balanced mix of company and individual performance criteria tied to operational and strategic objectives (including diversity and inclusion and human capital management objectives) established at the beginning of the performance period by the Committee

  

 

   NO tax gross-ups for any executive officers

 

   DO award a significant percentage of NEO total compensation in the form of equity which, starting in 2021, will include awards subject to multi-year, performance-based vesting based on absolute Core FFO and relative TSR goals

  

 

   NO “single-trigger” change in control cash or equity payments

 

   DO have robust NEO stock ownership guidelines

  

 

   NO re-pricing or buyouts of underwater stock options

 

   DO have a compensation clawback policy for executive compensation covering both cash and equity incentives

  

 

   NO hedging transactions by employees or trustees involving our securities

 

   DO annually review a compensation risk assessment with the Committee

  

 

   NO guarantees of cash incentive compensation or of equity grants

 

   DO provide caps within annual and long-term incentive plan awards

  

 

   NO long-term employment contracts with executive officers

 

   DO engage an independent compensation consultant to advise the Committee

  

 

   NO excessive perquisites or special health and welfare plans to executives

Elements of Executive Officer Compensation

 

Component

   Form    Objective and Explanation

 

Salary

  

 

Cash

  

 

•  Base level compensation, rewards day-to-day performance and standard job duties

•  Reflects level of responsibilities and experience/tenure

 

Performance-Based Annual
Cash Incentive

  

 

Cash

  

 

•  Designed to reward the achievement of specific, pre-established annual financial and operational objectives

•  2020 performance objectives consisted of company, business unit and personal goals while 2021 performance objectives will only consist of company and personal goals

•  Committee has discretion to adjust performance criteria, including to address extraordinary events

 

Equity Awards

  

 

Service-based RSUs and performance-based RSUs

  

 

•  Provide alignment of interests with shareholders

•  Multi-year vesting periods aid in retention

•  Service-based RSUs further support retention as they retain some value and provide a retention incentive even during difficult market conditions, when we may need it most

•  Starting in 2021, performance-based RSUs will motivate executives to focus on sustained financial performance and long-term value creation

 

    2021 Proxy Statement | 61  


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2020 Compensation Decisions

Changes to Compensation of the CEO

As a founder and significant shareholder of the company, Mr. Singelyn historically agreed to accept a below-market salary and to forego any bonus or equity incentives during the company’s initial growth phase. Starting in 2019, the Committee began transitioning to market compensation for Mr. Singelyn. As part of this process, Mr. Singelyn’s base salary was increased by $20,000 in 2020 to $570,000, his performance-based cash incentive target was increased from 150% to 200% of base salary, and he was granted equity awards, as described below. The Committee intends to continue this transition over the next several years until the Committee determines that Mr. Singelyn is paid at a level competitive with CEOs in the company’s peer group. Mr. Singelyn’s pay is currently in the bottom 25% of the peer group.

 

Changes to Compensation of the other Named Executive Officers

Starting in 2019, the Committee, based on peer company compensation information, began transitioning NEO compensation to levels competitive with its peer group. As part of that transition process, and on consideration of the recommendation of Mr. Singelyn and the views of other Board members, the Committee increased 2020 base salaries for Mr. Corrigan to $570,000, for Mr. Smith to $450,000, for Mr. Lau to $450,000 and for Ms. Vogt-Lowell to $350,000 and increased the performance-based incentive bonus targets for Mr. Smith, Mr. Lau and Ms. Vogt-Lowell to 125% of base salary.

 

 

Performance-based Incentive Bonuses—2020 Performance Metrics and Targets

The 2020 incentive plan targets established by the Committee in February 2020 were:

 

NEO

Title Target % of base salary    

David P. Singelyn

Chief Executive Officer

200%

Jack Corrigan

Chief Investment Officer

125%

Bryan Smith

Chief Operating Officer

125%

Christopher C. Lau

Chief Financial Officer

125%

Sara H. Vogt-Lowell

Chief Legal Officer

125%

 

2020 performance-based incentive bonuses were based on corporate metrics, business unit and personal goals that were established for each NEO by the Committee in February 2020.

 

    Corporate Metrics: In February 2020, the Committee set the corporate metrics as growth in Core Funds from Operations, or Core FFO, and Same Home Core Net Operating Income after Capital Expenditures, or Same Home NOI. The Committee selected Core FFO as a corporate metric because it is a commonly used measure of REIT performance by investors. The Committee also selected Same Home NOI because the company uses it as its primary financial measure to
   

evaluate the operating performance and cash flow of its properties. The Same Home property pool provides a comparable means to measure the performance of NOI across performance periods. In addition, the Committee also set development and acquisition goals as corporate metrics for Mr. Corrigan, our Chief Investment Officer, given the importance of growth to the company’s strategy.

 

    Business Unit and Personal Goals: The 2020 business unit and personal goals set for each NEO are set forth below under “2020 Performance-based Cash Incentive Awards.”
 

 

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Growth in Core FFO

The target Core FFO goal for 2020 was $1.19 per common share, an 8.2% increase over the 2019 target. The threshold, target and maximum bonus payable at the targets set by the Committee is set forth below. In the event the result achieved was between target levels in the chart, the bonus paid is adjusted accordingly.

 

% of Bonus Paid

Core FFO Goal

0%

Less than $1.131 (less than 95%)

0-100% interpolated

$1.131-$1.190 (95%-100%)

100-150% interpolated

$1.190-$1.250 (100%-105%)

150%

Greater than $1.250 (105%)

Same Home NOI

The Committee set the target for 2020 Same Home NOI growth as 3.3%, an increase over the 2019 target of 3.1%. The threshold, target and maximum bonus payable at the targets set by the Committee is set forth below. In the event the result achieved was between target levels in the chart, the bonus paid is adjusted accordingly.

 

% of Bonus Paid

Same Home NOI Growth

0%

<2.8%

0-100% interpolated

= or >2.8% and = or <3.3%

100-150% interpolated

= or >3.3% and = or < 3.8%

150%

= or >3.8%

Investment Production—Development and Acquisition

The following tables identify the development and acquisition goals established for Mr. Corrigan and the corresponding percentage of bonus earned. In the event the result achieved was between target levels in the chart, the bonus paid is adjusted accordingly. Since Mr. Corrigan’s ability to achieve these goals was dependent on the availability of capital, the Committee retained the discretion to adjust the targets as appropriate if capital was not available to acquire, build and deliver these levels of homes.

 

% of Bonus Paid

Development—Homes Delivered

0%

Less than 1,538 (85%)

0-100% interpolated

Between 1,538 and 1,810 (100%)

100-150% interpolated

Between 1,810 and 2,082 (115%)

150%

Greater than 2,082

 

% of Bonus Paid

Homes Acquired

0%

Less than 2,941 (85%)

0-100% interpolated

Between 2,941 and 3,460 (100%)

100-150% interpolated

Between 3,460 and 3,979 (115%)

150%

Greater than 3,979

 

    2021 Proxy Statement | 63  


Table of Contents

Committee Assessment of Achievement of 2020 Goals

Although the company was not as significantly adversely impacted by the COVID-19 pandemic as many other companies, the pandemic did adversely impact the company’s 2020 Core FFO and Same Home NOI results due to:

 

    significantly increased levels of uncollectible rents and uncollectible resident utility reimbursements resulting from resident financial distress related to the pandemic, increased expenses for HVAC system replacements (given increased usage due to “stay-at-home” orders) and increased costs associated with enhanced cleaning and safety protocols, including acquisition of personal protective equipment;

 

    the impact of the company’s responsible pandemic-responsive decisions to waive late fees and month-to-month lease premiums, to halt evictions for nonpayment of rent, and to offer zero percent increases on newly signed renewals during part of 2020; and

 

    local and federal government eviction moratoriums that adversely impacted the company’s ability to address uncollectible rent issues and achieve target corporate metrics.

The COVID-19 pandemic also significantly impacted the company’s ability to achieve targeted development and acquisition production goals. In response to the significant adverse economic impact of the COVID-19 pandemic, the company elected to temporarily suspend its traditional acquisition channel and National Builder Program acquisitions given market uncertainties regarding future asset values and in order to preserve capital. In addition, compliance with state and local mandates related to COVID-19 impacted construction activity and the timing of deliveries. In May 2020 the company lowered its 2020 guidance on construction deliveries to between 1,000 and 1,200 homes from 1,200 to 1,500 homes.

In August 2020, the Committee discussed the impact of the pandemic on the company’s ability to achieve the corporate metric targets applicable to the annual cash incentive and discussed possible adjustments. In November 2020, the Committee discussed the matter further, including possible adjustments to the calculation of Core FFO and Same Home NOI for the extraordinary items attributable to the COVID-19 pandemic.

In January 2021, the Committee determined, after further deliberations and consultation with Semler Brossy, that it would adjust the calculation of Core FFO and Same Home NOI for purposes of the 2020 bonus for the extraordinary increases in uncollectible rents, uncollectible resident utility reimbursements and expenses for new cleaning and safety protocols, in each case by amounts that the Committee determined were attributable to the COVID-19 pandemic based on historical norms. The Committee also determined that, given the COVID-19 impediments to acquisitions and developments, it would award the portion of Mr. Corrigan’s bonus attributable to development and acquisition production at 95% of target. For 2020, development deliveries were 1,647 and homes acquired were 2,592. In making these decisions the Committee considered, among other things, that these pandemic-related impacts on the metrics were not considered when the goals were set in February 2020, that the company, under the leadership of the NEOs had outperformed the company’s average residential peer set in both Core FFO and Same Home NOI growth metrics, that the company had significantly exceeded its May 2020 revised development production guidance. The Committee also believes there are increased retention risks facing the company given the company’s outperformance and well-funded new entrants into the sector.

However, given these calculation adjustments and the Committee’s decision that NEOs not receive bonuses at levels above those paid to other employees, the Committee determined that 2020 payouts related to Core FFO and Same Home NOI results would be capped at 95% of target amounts.

 

 

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The following table reflects the adjustments made to the Core FFO and Same Home NOI growth goals and the related awards:

 

 

 
Result % of Target Earned Agreed Award % **

Core FFO *

$1.2068 114.04% 95%

Same Home NOI Growth *

3.86% 150% 95%

*As adjusted by the Committee. Reported 2020 results, which did not reflect any COVID-19 adjustments, were Core FFO of $1.1622 per share and Same Home NOI growth of 1.05%, and would have resulted in 52.94% and 0% earned, respectively.

** As discussed above, the Committee agreed to cap the amount of awards attributable to Core FFO and Same Home NOI growth at 95% of target. Also, due to the impact of COVID-19, the Committee exercised its discretion to award 95% for development deliveries and homes acquired.

The Committee determined that COVID-19 pandemic adjustments to business unit and personal goals were not necessary or appropriate, except that the operational efficiency computation was adjusted for COVID-19 expense impacts. After assessing 2020 NEO performance based on these business unit and personal goals, the Committee determined, taking into consideration the recommendation of Mr. Singelyn with respect to the other NEOs, that the NEOs had achieved target levels for their respective business unit and personal goals, except as noted in the table below.

2020 Performance-based Cash Incentive Awards

The following table details the target goal, the results described above, and corresponding cash incentive award for each NEO, as determined by the Committee:

 

Company Goals

     David P.
Singelyn
     Jack
Corrigan
     Bryan
Smith
     Christopher
C. Lau
     Sara H.
Vogt-
Lowell
   

 

 
    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

   

Core Funds from Operations

      

 

50

%

      

 

45

%

      

 

20

%

      

 

40

%

      

 

60

%

   

 

 

 

      

 

47.50

%

      

 

42.80

%

      

 

19

%

      

 

38

%

      

 

57

%

     

 

 

 

 

 

Same Home Core NOI after Capital Expenditures

      

 

25

%

      

 

      

 

40

%

      

 

20

%

      

 

   

 

 

 

      

 

23.75

%

      

 

      

 

38

%

      

 

19

%

      

 

     

 

 

 

 

 

Investment production-development

      

 

      

 

10

%

      

 

      

 

      

 

   

 

 

 

      

 

      

 

9.50

%

      

 

      

 

      

 

     

 

 

 

 

 

Investment production-total acquisition

      

 

      

 

10

%

      

 

      

 

      

 

   

 

 

 

      

 

      

 

9.50

%

      

 

      

 

      

 

     

 

 

 

 

 

 

    2021 Proxy Statement | 65  


Table of Contents

Company Goals

     David P.
Singelyn
     Jack
Corrigan
     Bryan
Smith
     Christopher
C. Lau
     Sara H.
Vogt-
Lowell
   

 

 
    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

    

 

Target %
Achieved

 

 

 

 

Business and Personal Goals

        

 

 

 

 

 

        

 

 

 

 

 

        

 

 

 

 

 

        

 

 

 

 

 

        

 

 

 

 

 

     

 

 

 

 

 

Strategic plan

      

 

10

%

      

 

      

 

      

 

      

 

   

 

 

 

      

 

10

%

      

 

      

 

      

 

      

 

     

 

 

 

 

 

Operational efficiency

      

 

      

 

10

%

      

 

10

%

      

 

      

 

   

 

 

 

      

 

      

 

10

%

      

 

9.91

%

      

 

      

 

     

 

 

 

 

 

Investment yields

      

 

      

 

10

%

      

 

      

 

      

 

   

 

 

 

      

 

      

 

10

%

      

 

      

 

      

 

     

 

 

 

 

 

New business lines

      

 

      

 

      

 

10

%

      

 

10

%

      

 

10

%

   

 

 

 

      

 

      

 

      

 

10

%

      

 

10

%

      

 

10

%

     

 

 

 

 

 

Succession planning

      

 

      

 

      

 

5

%

      

 

5

%

      

 

15

%

   

 

 

 

      

 

      

 

      

 

5

%

      

 

5

%

      

 

15

%

     

 

 

 

 

 

Balance sheet

      

 

      

 

      

 

      

 

10

%

      

 

   

 

 

 

      

 

      

 

      

 

      

 

10

%

      

 

     

 

 

 

 

 

ESG

      

 

10

%

      

 

10

%

      

 

10

%

      

 

10

%

      

 

10

%

   

 

 

 

      

 

10

%

      

 

10

%

      

 

10

%

      

 

10

%

      

 

10

%

     

 

 

 

 

 

Personal

      

 

5

%

      

 

5

%

      

 

5

%

      

 

5

%

      

 

5

%

   

 

 

 

      

 

5

%

      

 

5

%

      

 

5

%

      

 

5

%

      

 

5

%

     

 

 

 

 

 

Total

Target Award

      

 

100

%

      

 

100

%

      

 

100

%

      

 

100

%

      

 

100

%

   

 

 

 

      

$

1,140,000

      

$

712,500

      

$

562,500

      

$

562,500

      

$

437,500

   

 

 

 

% Achieved

Bonus Award

      

 

96.3

%

      

 

96.8

%

      

 

96.9

%

      

 

97.0

%

      

 

97.0

%

   

 

 

 

      

$

1,097,250

      

$

689,345

      

$

545,119

      

$

545,625

      

$

424,375

   

 

 

 

 

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2020 Equity Awards

The Committee believes equity awards help align management and shareholder interests by increasing the percentage of total compensation that consists of equity, supporting long-term value creation and promoting the retention and stability of our executive management team. In February 2020, the Committee granted 59,589 RSUs to Mr. Singelyn, 47,400 RSUs to Mr. Corrigan, 31,600 RSUs to Mr. Lau, 33,857 RSUs to Mr. Smith and 20,586 RSUs to Ms. Vogt-Lowell. The awards vest in equal annual installments over three years beginning one year from the date of grant. The Committee considered Mr. Singelyn’s recommendations in determining the grants to Messrs. Corrigan, Smith and Lau and Ms. Vogt-Lowell.

2021 Compensation Outlook

Although the company has consistently received strong support for its compensation programs (averaging almost 99% support on say-on-pay votes over the last three years), in August 2020 the Committee retained Semler Brossy as its compensation consultant to, among other things, provide an analysis of the competitiveness of the company’s executive pay practices and to provide advice on making enhancements to the 2021 compensation program.

In January 2021, in response to guidance from Semler Brossy, the Committee’s experience with the 2020 compensation program, the company’s continuing outperformance and shareholder feedback, the Committee made changes to all three components of the 2021 compensation program. These changes reflect, among other things, the Committee and Board’s view that the company’s position as a leader and pioneer in the single-family rental homes business, and its success as an innovator, particularly its market-leading develop-to-rent platform, support the company taking prudent and proactive measures to retain the management team.

Base salaries: The Committee reviewed base salaries for 2021 and considered, among other things, a market analysis performed by Semler Brossy and, with respect to the executives that report to him, the recommendations of Mr. Singelyn. Following this review, the Committee approved an increase in base salaries to $700,000 for Mr. Singelyn, $600,000 for Mr. Corrigan, $475,000 for Mr. Smith, $475,000 for Mr. Lau and $425,000 for Ms. Vogt-Lowell.

Performance-based cash incentive award: The 2021 cash incentive award for NEOs will depend 70% on the achievement of Core FFO goals and 30% on the

achievement of leadership goals that will be tailored to individual roles, but will generally include metrics related to business strategy, ESG, succession planning and diversity and inclusion. Target award levels as a percentage of base salary were not changed from 2020.

Long-term performance and time-based equity incentives: The 2021 equity awards will consist of a mix of performance-based RSUs and time-based RSUs, with 60% of Mr. Singelyn’s grants being performance-based and 40% of grants to the other NEOs being performance-based. The performance awards have a three-year performance period tied to the achievement of both relative total shareholder return and absolute Core FFO goals. Payouts on performance-based RSUs at achievement of threshold goals will be 50% of target and maximum achievement will be 200% of target. The time-based RSUs will vest ratably over three years. The Committee awarded the following grants of performance-based RSUs in January 2021: 34,121 to Mr. Singelyn; 18,956 to Mr. Corrigan; 14,965 to Mr. Lau; 14,965 to Mr. Smith and 9,312 to Ms. Vogt-Lowell. The Committee also awarded the following grants of time-based RSUs in January 2021: 22,747 to Mr. Singelyn; 28,434 to Mr. Corrigan; 22,448 to Mr. Lau; 22,448 to Mr. Smith and 13,968 to Ms. Vogt-Lowell.

Share ownership guidelines: Effective January 2021, the Committee strengthened and expanded its share ownership guidelines. The ownership requirement for the Chief Executive Officer was increased from three times annual base salary to six times annual base salary. The guidelines were expanded to cover trustees (five times the annual retainer) and other executive officers (three times annual base salary). See “Executive Officer Ownership of Company Shares—Share Ownership Policy” above.

Revisions to peer group: Upon the recommendation of Semler Brossy, the Committee revised the peer group the Committee considers when making compensation decisions to add 11 similarly sized REITs and remove three companies. The table set forth in the “Benchmarking Peer Group” section below identifies the changes.

Role of Management and Board in Determining the Compensation of Executive Officers

Mr. Singelyn attends most meetings of the Committee. He does not vote on items before the Committee and is not present during the Committee’s discussions and determination concerning his compensation. The Committee solicits his views on the performance of the executive officers reporting to him and consider his

 

 

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recommendations for their compensation. For 2021, the Committee set base salaries, bonus and equity compensation for our NEOs, other than Mr. Singelyn, after considering the views of other Board members and Mr. Singelyn’s recommendations.

Role of Compensation Consultant

In August 2020, the Committee retained Semler Brossy to serve as its new independent, third-party compensation consultant. The Committee considered Semler Brossy’s advice on a range of compensation matters, including its consideration of possible COVID-19 related adjustments to the 2020 compensation program, and benchmarking analysis of peer compensation practices and its consideration of enhancements to the 2021 compensation program, in each case as discussed in more detail throughout this CD&A.

Semler Brossy reports directly to the Committee and does not provide services to the company’s management that are not under the Committee’s purview. Since its engagement a representative of Semler Brossy has attended meetings of the Committee and will continue to do so upon request. Prior to retaining Semler Brossy, the Committee considered all factors relevant to Semler Brossy’s independence, as required by the Committee’s charter. Based on this review, the Committee determined that Semler Brossy is independent and free of conflicts of interest.

Equity Grant Practices

Equity grants to all of our executive officers, including the NEOs, must be approved by the Committee, which consists entirely of independent trustees. Grants occur only at meetings or upon written actions of the Board or the Committee and are made effective as of the date of the meeting or written action or a future date if

appropriate, such as in the case of a new hire. The Committee has delegated limited authority to Mr. Singelyn to approve equity awards to employees who are not executive officers.

Equity awards are not timed in coordination with the release of material non-public information. Awards are also subject to the terms of the 2012 Incentive Plan. All awards of stock options and RSUs granted to date to employees under the 2012 Incentive Plan vest over several years.

In general, the Committee considers equity awards for executive officers in connection with their annual performance review. In determining equity awards, our Committee considers, among other factors, input from other Board members, the company’s overall financial performance, operational achievements, including acquisitions, and the recommendations of our Chief Executive Officer for the named executive officers reporting to him.

Benchmarking Peer Group

The Committee monitors the effectiveness of our executive compensation programs at least annually. For the compensation programs to be effective, the Committee believes that the compensation practices of other public real estate companies with which we compete for talent is one tool in assessing and determining pay for our executive officers. Semler Brossy assists the Committee with these analyses. The Committee uses benchmarking for informational purposes only. The median (50th percentile) serves as a reference point and indicator of competitive market trends and the Committee uses it as the starting point when setting our executive compensation, but the Committee also considers a number of other factors, including skills, experience, performance, and future potential of each executive.

 

 

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The company’s peer group is based on similarities in industry sector, size (capitalization and assets) and underlying business fundamentals. As noted above, in the second half of 2020 the Committee, based on the recommendation of Semler Brossy, revised the companies in the peer group to better reflect similarly-sized REITs. The new additions and deletions are indicated below.

 

Name

   Property Focus    Headquarters

American Campus Communities, Inc. *

   Student Housing & Student Apartments    Austin, TX

Brixmor Property Group, Inc

   Open-air shopping centers    New York, NY

Camden Property Trust

   Multi-family    Houston, TX

Douglas Emmett, Inc. *

   Class-A office Buildings and Apartment    Santa Monica, CA

Duke Realty

   Industrial Properties    Indianapolis, IN

Essex Property Trust, Inc.

   Multi-family    San Mateo, CA

Extra Space Storage, Inc. *

   Self-Storage Properties    Salt Lake City, UT

Federal Realty Investment Trust *

   REIT—Shopping Centers    North Bethesda, MD    

Host Hotels & Resorts, Inc. *

   REIT—Hotels    Bethesda, MD

Hudson Pacific Properties, Inc. *

   REIT—Creative Office and Studio Properties    Los Angeles, CA

Invitation Homes

   Single-family rental    Dallas, TX

Kilroy Realty Corporation *

   REIT—Premier Office Submarkets    Los Angeles, CA

Kimco Realty Corporation

   Open-air shopping centers    Jericho, NY

MGM Growth Properties LLC *

   REIT—Large-Scale Destination Entertainment and Leisure Resorts    Las Vegas, NV

Mid-America Apartment Communities, Inc. *

   Multi-family    Germantown, TN

Park Hotels & Resorts, Inc. *

   REIT—Hotel Properties    Tysons, VA

Regency Centers Corporation

   Open-air shopping centers    Jacksonville, FL

Sun Communities, Inc. *

   REIT—Manufactured Home and RV Communities    Southfield, MI

UDR, Inc.

   Multi-family    Highlands Ranch, CO

* Indicates newly added similarly-sized REIT.

Note: Apartment Investment and Management Company, Avalon Bay Communities, Inc. and Equity Residential were removed from the peer group.

 

Term of Employment

Each of our NEOs serves at the pleasure of our Board. We have not entered into employment agreements with any of our NEOs.

Retirement Savings Opportunities

All full-time employees, including our NEOs, are able to participate in a 401(k) Retirement Savings Plan, or 401(k)

plan, after a prescribed period of employment. We provide this plan to help our employees save for retirement in a tax efficient manner. Under the 401(k) plan, participating employees are eligible to defer a portion of their salary beginning the January 1 or July 1 that first follows the completion of six months of employment, and we, at our discretion, may make a matching contribution and/or a profit sharing contribution commencing six months after they are eligible to begin contributing to the 401(k) plan.

 

 

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Health and Welfare Benefits

We provide to all full-time employees, including our named executive officers, a competitive benefits package, which includes health and welfare benefits, such as medical, dental, short- and long-term disability insurance, and life insurance benefits.

Clawback Policy

Pursuant to the company’s “Executive Officer Performance-Based Compensation Recovery Policy,” the Committee will recover from any current or former executive officer, regardless of fault, that portion of equity and cash performance-based compensation based on financial information required to be reported under the securities laws that would not have been paid in the three completed fiscal years preceding the year in which an accounting restatement is required to be filed to correct a material error as a result of misconduct.

Tax and Accounting Considerations

Section 162(m) of the Code, as amended by the tax reform legislation known as the Tax Cuts and Jobs Act on December 22, 2017, or the Tax Cuts and Jobs Act, imposes a $1,000,000 limit on the annual deduction that may be claimed for compensation paid to each of the chief executive officer, the chief financial officer and certain other executive officers of the company (collectively, the “covered employees”). Certain compensation awarded prior to enactment of the Tax Cuts and Jobs Act may be excluded from the deduction limit under certain transition relief. The Internal Revenue Service has issued proposed regulation under Section 162(m) of the Code that would cause Section 162(m) to apply to us and other REITs that utilize an UPREIT structure, which have previously taken the position that Section 162(m) does not apply. Pursuant to the final regulations, the annual deduction limit under Section 162(m) will apply to us with respect to compensation paid to our covered employees by our operating partnership after December 18, 2020, provided that certain compensation paid after that date may be

excluded from the deduction limit if it is paid pursuant to a written binding contract that is in effect on December 20, 2019 and that is not materially modified. As a result of the final regulations, the company is currently evaluating arrangements under which covered employees are compensated to determine the impact of these final regulations on our compensation arrangements and our resulting REIT taxable income (and required distributions to shareholders).

While the Committee considers the tax and accounting impact of various forms of incentive compensation and compensation elements on the company’s financial statements, tax and accounting treatment is generally not the basis underlying the decision to award a particular form of compensation if the Committee deems the award the most appropriate incentive to achieve the company’s compensation goals.

Human Capital and Compensation Committee Report

The Human Capital and Compensation Committee of the Board of Trustees of American Homes 4 Rent has reviewed and discussed with management the foregoing Compensation Discussion and Analysis. Based on this review and discussion, the Human Capital and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and in the Annual Report on Form 10-K of American Homes 4 Rent for the fiscal year ended December 31, 2020. This report is provided by the following independent trustees who comprise the Human Capital and Compensation Committee:

HUMAN CAPITAL AND COMPENSATION COMMITTEE

Matthew J. Hart, Chair

Douglas N. Benham

Michelle C. Kerrick

Winifred M. Webb

Matthew R. Zaist

 

 

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Summary Compensation Table

The following table provides compensation information for our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers who were employed on December 31, 2020 (collectively, the “NEOs”).

 

Name and Principal Position

Year Salary
($)
Bonus
($) (1)
Option
Awards
($) (2)
Stock
Awards
($) (3)
Non-Equity
Incentive Plan
Compensation
($) (1)
All Other
Compensation
($) (4)
Total ($)

David P. Singelyn

Chief Executive Officer

 

2020

 

570,000

 

 

 

1,650,000

 

1,097,250

 

24,400

 

3,341,650

 

2019

 

550,000

 

 

 

 

903,375

 

23,700

 

1,477,075

 

2018

 

450,000