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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 and Exchange Act of 1934
Filed by the Registrant þ
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))
þ Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material under § 240.14a-12
Anywhere Real Estate Inc.
(Name of Registrant as Specified In Its Charter)
___________________________
Payment of Filing Fee (Check all boxes that apply):
þ No fee required
¨ Fee paid previously with preliminary materials.
¨ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
_________________________________________________________________________________________________________________________________________________________
NOTICE OF 2023 ANNUAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
A Letter from our Chief Executive Officer
Dear Stockholders:
Amidst the backdrop of one of the most turbulent real estate markets in history, Anywhere Real Estate Inc. seized the opportunity to accelerate our transformation while navigating the changing industry landscape. Throughout 2022, we responded with agility to further reimagine how we operate and strengthen our balance sheet as we continued to make strategic progress and invest for growth.
While we believe 2023 may hold similar challenges for housing, we are confident that Anywhere, with our unique advantages, leading position, and track record of delivery, can continue to simplify the real estate transaction and win in the market.
Strategic Vision
Anywhere stands out in the industry with an integrated business model across leading franchise brands, national brokerage, title, and mortgage businesses, extensive agent network, deep technology and data scale, and strong talent and culture. In May, we laid out a bold strategy to harness the power of these strengths, including our luxury leadership, to deliver a more attractive transaction experience, reduce our costs of delivery, and unlock new growth. With the first chapter of our transformation journey complete, we also unveiled our new Anywhere name and brand identity as we embark on this next phase of growth and innovation.
Even with the fast-changing real estate environment in 2022, we remained focused on executing our priorities. We believe we are creating further competitive differentiation, positioning Anywhere for even greater success as the market improves.
Strengthening Our Balance Sheet
Last year, we capitalized on market conditions to reduce our cost of capital, redeem high interest notes, extend maturities to allow for flexibility, and strengthen our balance sheet. In January, we raised $1.0 billion of 5.25% senior notes, using net proceeds (together with cash on hand) to redeem higher interest notes with nearer term maturities. In July, we refinanced and lengthened our revolving credit facility to provide for a $1.1 billion facility. In November, we redeemed in full our 4.875% senior notes.
March 17, 2023
We entered 2022 with a publicly disclosed $70 million cost savings target, and as the housing market worsened, we aggressively identified more opportunities, realizing a total $150 million in cost savings for the year.
People and Culture
Anywhere continued to be recognized as a home for top talent, earning designation as one of Forbes’ 2022 World’s Best Employers and 2022 World’s Top Female Friendly Companies, one of LinkedIn’s 2022 Top Companies in the U.S., and as a Great Place to Work® for the fifth consecutive year. Year after year, Anywhere has been honored for our culture of integrity as one of Ethisphere’s World’s Most Ethical Companies®.
We are inspired every day by excellence, doing what’s right, and helping people achieve their dreams. Those commitments, along with the incredible opportunity to transform one of life’s most meaningful events, helped us recruit great talent and new skills to Anywhere last year. We also continued to stretch and expand the roles of our leaders to simplify how we work, and we kept a relentless focus on providing more ways for our people to develop and grow. We believe our strong talent focus is not only great for careers but also helps us to strategically move faster, drive growth, and ultimately, deliver a better experience for affiliated agents and consumers.
Moving to What’s Next
I believe our powerful strengths and transformation progress will enable us to successfully navigate the current market while still propelling our strategy forward. Anywhere has substantial advantages, and with continued diligence and innovation, I am confident we will lead the way to empower everyone’s next move.
On behalf of our Board of Directors, my senior leadership team, and our employees, thank you for your continued support of and investment in Anywhere.
Sincerely,
Ryan M. Schneider
Chief Executive Officer and President
A Letter from our Independent Chairman of the Board March 17, 2023
To Our Stockholders:
In 2022, Anywhere Real Estate Inc. accelerated its strategic vision during a very dynamic and evolving year for the real estate industry. We remain focused on navigating the company through this challenging housing market, while we advance our long-term strategy of simplifying the home buying and selling experience for the consumer. The Board believes Anywhere is well-positioned to lead through the current environment and into the future under the exceptional leadership of our CEO, Ryan Schneider, and the talented team he has put in place.
The Board continued to focus on several key areas to complement the strategic goals of the management team, including Board Governance, Strategy, Investor Outreach, and Corporate Social Responsibility. I’d like to update you on each of these areas.
Board Governance
We take pride in our commitment to strong board governance, reinforced by our Nominating & Corporate Governance Committee. The Anywhere Board comprises 12 directors, 11 of whom are independent for purposes of New York Stock Exchange listing standards. Consistent with best practices, we continue to be a leader in Board diversity: 33% of Board members are leaders of color and 33% are women.
We recently welcomed Egbert L. J. Perry, Chairman and CEO of The Integral Group LLC, a leading real estate and community development and investment management firm, to our Board of Directors. With decades of experience, including previous service as chairman of the board of directors at Fannie Mae, Egbert brings extensive knowledge of the real estate and mortgage markets, a passion for housing and homeownership, and a shared commitment to strong corporate governance.
Strategy
The Board continues to be closely involved in the oversight of the Anywhere strategy, particularly as we navigate near-term shifts in the housing market. We are acutely focused on proactively responding to changing dynamics while still driving forward the long-term vision for Anywhere: simplifying the transaction experience for the consumer.
With oversight from the Board, Anywhere executed several Executive Committee level talent moves in support of these strategic goals, adding world-class product and technology leaders to drive digital innovation and stretching seasoned industry leaders to support stronger alignment across the Company’s brands and integrated services businesses. With a new lens on digital transformation and a more streamlined operational structure, we are confident in the Company’s path forward.
We also believe Anywhere is competitively well-positioned, even in a challenging market. The Company seized opportunities in 2022 to further improve its debt profile by extending maturities and lowering its cost of capital. Looking forward, the Board continues to thoughtfully consider investment priorities and the best use of capital to support the Anywhere strategy with a focus on driving long-term value through technology innovation and operating efficiency.
Investor Outreach
The Board continues to prioritize direct engagement with our investors and maintains a proactive investor outreach program. For the fifth year running, the Board engaged directly with stockholders through our 2022 Investor Outreach Program, covering key topics such as strategy, leadership, governance and compensation. We greatly value investor feedback, which has helped inspire meaningful change to both our governance and executive compensation programs. We remain committed to building upon our governance best practices and continuing to gather and implement feedback from investors.
Corporate Social Responsibility
Anywhere remains committed to enhancing our ongoing environmental, social, and governance practices. In 2022, the Company earned repeated honors from Forbes as one of the Best Employers for Diversity and Top Female Friendly Companies, as well as continued recognition for excellence in ethics and integrity as one of the World’s Most Ethical Companies.
The Board and I remain fully supportive of the Anywhere strategy and believe the Company is in a favorable competitive position to weather near-term housing market challenges and continue executing on its bold vision for the future of real estate. We stand behind Ryan and his leadership team, and we are confident they will deliver long-term value to our shareholders.
On behalf of your Board of Directors, thank you for your continued investment in Anywhere. We appreciate the opportunity to serve the Company on your behalf.
Michael J. Williams
Independent Chairman of the Board
c/o Corporate Secretary
Anywhere Real Estate Inc.
175 Park Avenue
Madison, NJ 07940
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NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS | |
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| Date: | Wednesday, May 3, 2023 | | Who may attend the meeting Only stockholders, persons holding proxies from stockholders, invited representatives of the financial community and other guests of Anywhere may attend the Annual Meeting. See Frequently Asked Questions—How do I attend the Annual Meeting on page 87. We intend to hold the Annual Meeting as a virtual-only meeting. Accordingly, there will not be a physical meeting location. You will be able to attend the meeting online, examine a list of our stockholders of record, submit your questions and vote your shares electronically by visiting www.virtualshareholdermeeting.com/HOUS2023. Your vote is important. Please vote your proxy promptly so your shares can be represented, even if you plan to attend the Annual Meeting. You can vote by Internet before the Annual Meeting, by telephone, by requesting a printed copy of the proxy materials and using the enclosed proxy card or by Internet during the Annual Meeting. By order of the Board of Directors, Marilyn J. Wasser Corporate Secretary
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| Time: | 9:00 a.m., Eastern Daylight Time | |
| Place: | www.virtualshareholdermeeting.com/HOUS2023 |
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Record Date Owners of Anywhere Real Estate Inc.* common stock as of March 8, 2023 are entitled to notice of, and to vote at, the 2023 Annual Meeting of Stockholders (and any adjournments or postponements of the meeting) (the "Annual Meeting"). | |
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Purposes of the meeting | |
| 1. | to elect twelve Directors for a term expiring at the 2024 Annual Meeting of Stockholders | |
| 2. | to vote on an advisory resolution to approve executive compensation | |
| 3. | to vote on a proposal to ratify the appointment of PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for fiscal year 2023 | |
| 4. | to vote on a proposal to approve the Second Amended and Restated 2018 Long-Term Incentive Plan | |
| 5. | to vote on a proposal to amend our Amended and Restated Certificate of Incorporation (our "Certificate of Incorporation") to limit the liability of certain officers of the Company | |
| 6. | to transact any other business that may be properly brought before the meeting or any adjournment or postponement of the meeting | |
| The matters specified for voting above are more fully described in the attached proxy statement. | |
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| Important Notice Regarding Availability of Proxy Materials for the 2023 Annual Meeting of Stockholders: Our Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended December 31, 2022 are available at on the Investors section of our website at www.anywhere.re | |
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| * Except as otherwise indicated or unless the context otherwise requires, references in this proxy statement to "we," "us," "our," "the Company," "Anywhere" and "Anywhere Real Estate" refer to Anywhere Real Estate Inc. and our consolidated subsidiaries, including but not limited to Anywhere Real Estate Group LLC. References in this proxy statement to "Anywhere Group" mean Anywhere Real Estate Group LLC. | | Website addresses given in this proxy statement are provided as inactive textual references. The contents of these websites are not incorporated by reference herein or otherwise a part of this proxy statement. |
This proxy statement is issued in connection with the solicitation of proxies by the Board of Directors of Anywhere Real Estate Inc. for use at the Annual Meeting. On or about March 17, 2023, we will begin distributing print or electronic materials regarding the Annual Meeting to each stockholder entitled to vote at the meeting. Shares represented by a properly executed proxy will be voted in accordance with instructions provided by the stockholder.
Forward Looking Statements. This proxy statement contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words “intends”, "believes", "expects", "forecasted", "projects", "estimates" and "plans" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.
The Company wishes to caution each participant to consider carefully the specific factors discussed with each forward-looking statement in this proxy statement and other factors contained in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2022, under the captions “Forward-Looking Statements”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as such factors in some cases have affected, and in the future (together with other factors) could affect, the ability of the Company to implement its business strategy and may cause actual results to differ materially from those contemplated by the statements expressed herein. The Company assumes no obligation to update the information or the forward-looking statements contained herein, whether as a result of new information or otherwise.
Non-GAAP Financial Measures. This proxy statement includes certain supplemental measures of the Company’s performance that are not Generally Accepted Accounting Principles (“GAAP”) measures, including Operating EBITDA (and Plan Operating EBITDA) and Cumulative Free Cash Flow. Definitions of these non-GAAP terms and reconciliations to their most comparable GAAP terms are included as Annex A to this proxy statement.
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement before voting.
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| PROPOSALS TO BE PRESENTED AT THE 2023 ANNUAL MEETING |
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| Proposal 1 | | | | The Board recommends a vote FOR all director nominees |
| Election of twelve Director Nominees | | | Our Nominating and Corporate Governance Committee and our Board have determined that each director nominee possesses the skills and experience to oversee Anywhere's business strategy and that the mix of backgrounds and qualifications represented by our Directors strengthen our Board's effectiveness. |
Go to page 23 for additional information on Proposal 1 |
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| Proposal 2 | | | | The Board recommends a vote FOR this proposal |
| Advisory Vote on Executive Compensation Program | | | Our executive compensation program is designed by our independent Compensation Committee to align executive compensation with the interests of our stockholders by linking a significant portion of the target direct compensation opportunity of our senior leadership team to short- and long-term strategic and business goals as measured by our performance against absolute and relative metrics and each executive's contribution to our strategic initiatives. |
Go to our Compensation Discussion and Analysis on page 34 and Proposal 2 on page 71 for additional information on our executive compensation program |
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| Proposal 3 | | | | The Board recommends a vote FOR this proposal |
| Ratification of the Appointment of the Independent Registered Public Accounting Firm | | | As a matter of good corporate governance, the Board is asking stockholders to vote on a proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2023. |
Go to page 72 for additional information on Proposal 3 |
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| Proposal 4 | | | | The Board recommends a vote FOR this proposal |
| Approve the Second Amended and Restated 2018 Long-Term Incentive Plan (the "2018 Plan") | | | The 2018 Plan is an important part of the Company’s overall compensation program. It allows us to make annual and long-term incentive awards to the Company’s current and prospective officers, employees, directors and consultants and gives us a competitive advantage in attracting, retaining and motivating our team by providing incentives that are directly linked to stockholder value. |
Go to page 76 for additional information on Proposal 4 |
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| Proposal 5 | | | | The Board recommends a vote FOR this proposal |
| Approve Amendment of the Certificate of Incorporation to Limit the Liability of Certain Officers of the Company | | | The proposed amendment of the Company's Certificate of Incorporation is consistent with recent revisions to the Delaware General Corporation Law and would allow for the exculpation of certain officers only in connection with the types of claims described in Proposal 5. |
Go to page 85 for additional information on Proposal 5 |
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| 2022 INVESTOR OUTREACH PROGRAM |
Our Board maintains a proactive and robust investor outreach program, offering meetings to a substantial majority of shares each year since 2018. We believe offering our stockholders an opportunity for regular communication with our Board is critical to our Board's ability to ensure thoughtful and informed consideration of evolving corporate governance and executive compensation best practices. Investor feedback received during this outreach has served as a catalyst for substantive changes to both our governance and executive compensation programs. | | | | | | | | | | | | | | |
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| | Investors holding an aggregate of ~75% of our outstanding shares participated in the 2022 Board Investor Outreach Program* | | Mr. Williams, Independent Chairman of the Board, attended all meetings and was joined by the Chair of the Compensation Committee during substantially all of the meetings. |
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Key topics discussed during these sessions include:
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■ strategy ■ capital allocation | | ■ executive compensation ■ corporate governance | | ■ environmental, social and governance (ESG) ■ leadership |
The strength of the Board's governance profile was noted with approval by many investors. Stockholders noted the Board's diversity of membership from multiple perspectives, including the scope of experience represented as well as the gender, ethnic, and racial diversity among its members. In response to investor interest during the 2022 Investor Outreach Program, we have provided additional information concerning the individual diversity, skills and experience of our Directors on pages 23 to 26. Many of our stockholders noted their support for our executive compensation program. Responsive action to specific investor feedback relating to our executive compensation program is noted below. See the Compensation Discussion and Analysis (page 34) section of this proxy statement for more information. | | | | | | | | | |
| Topic | Stockholder Feedback | Board Action |
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| Overall Executive Compensation Philosophy | A significant number of our investors noted their support for our executive compensation program design as articulated in the 2022 proxy statement | The Compensation Committee reaffirmed its commitment to a pay-for-performance compensation program that aligns the interests of our executive officers with our stockholders through an emphasis on the use of rigorous pre-established goals and long-term equity awards |
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| Annual Cash Incentive Payout Volatility / Award Metrics | Certain investors noted the volatility in award payouts under the annual cash incentive plan and suggested design and/or metric considerations, including those that might moderate extreme variations, such as metrics that take into account key Company objectives, including cost reductions | The 2023 annual cash incentive plan has been designed to reduce payout volatility by: ▪ funding 30% of the plan based on the achievement of strategic and business objectives related to operational excellence (including cost savings), consumer experience and talent ▪ funding the remaining 70% of the plan based on achievement of a budget-aligned Plan Operating EBITDA target ▪ requiring a higher multiple of Plan Operating EBITDA to achieve maximum funding and a lower multiple to obtain threshold funding, while remaining in line with the Company's peers ▪ reducing Compensation Committee discretion with respect to individual payouts to +/-25% of the amount funded under the plan ▪ retaining the requirement that total payouts under the plan may not exceed aggregate plan funding |
* 2022 Board Investor Outreach Program included spring and fall sessions; investor holdings based on estimates at the time of outreach.
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| BOARD COMPOSITION HIGHLIGHTS |
Our Board is comprised of highly-qualified individuals who are committed to our Company.
See full biographies of each Director nominee beginning on page 27. | | | | | | | | | | | | | | | | | | | | | | | |
Name and Age | Director Since | Current or Key Business Experience | Independent | Committee Membership* |
AC | CC | NGC | PTC |
Fiona P. Dias, 57 | 2013 | Principal Digital Partner, Ryan Retail Consulting (since 2015) | ● | | ● | | ● |
Matthew J. Espe, 64 | 2016 | Former President and CEO, Armstrong World Industries, Inc. (2010-2015) | ● | | ● | ● | |
V. Ann Hailey, 72 | 2008 | Former CFO, L Brands, Inc. (formerly, Limited Brands, Inc.) (1997-2006) | ● | ● | | ● | |
Bryson R. Koehler, 47 | 2019 | Chief Technology Officer, Equifax Inc. (since 2018) | ● | ● | | | ● |
Duncan L. Niederauer, 63 | 2016 | Former CEO, NYSE Euronext (2007-2013) | ● | |
| ● | ● |
| Egbert L.J. Perry, 67 | 2023 | Chairman and Chief Executive Officer, The Integral Group LLC | ● | |
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Ryan M. Schneider, 53 | 2017 | President and CEO, Anywhere Real Estate Inc. (since 2018) | | | | | |
Enrique Silva, 57 | 2018 | CEO, Culver Franchising System, LLC (2021) | ● |
| C | | |
Sherry M. Smith, 61 | 2014 | Former CFO, SuperValu, Inc. (2010-2013) | ● | ● | ● |
| |
Christopher S. Terrill, 55 | 2016 | Former CEO of ANGI Homeservices (2017-2018) | ● | | | ● | C |
| Felicia Williams, 57 | 2021 | Macy's Fellow for CEO Action for Racial Equity | ● | C | | | |
Michael J. Williams, 65 (Independent Chairman) | 2012 | Former President and CEO, Fannie Mae (2009-2012) | ● | ● | | C | |
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| * | C = Chair | | AC = Audit Committee | | CC = Compensation Committee | | NGC = Nominating &
Corporate Governance
Committee | | PTC = Product & Technology Committee |
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| EXECUTIVE COMPENSATION HIGHLIGHTS |
Emphasis on At-Risk & Performance-Based Compensation
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90% of 2022 CEO Target Direct Compensation* is "At-Risk" and 61% is tied to Performance Metrics |
| At-Risk | Compensation Element | Why We Pay It | CEO Target Direct Compensation (%) | Performance-Based |
| Equity (Long-Term Incentive) | | Total: 71% | |
| ● | Performance-Based PSUs | Long-term value creation | 42% | ● |
| ● | Time-Based RSUs | Align with stockholder interests | 29% | |
| Cash (Short-Term Incentive) | | Total: 29% | |
| ● | Annual Incentive | Drive short-term performance | 19% | ● |
| Base Salary | Attract and retain talent | 10% | |
| * Target direct compensation includes base salary, annual incentive at target and the value assigned by the Compensation Committee to long-term incentive (equity) awards including, performance share units (PSUs) at target and restricted stock units (RSUs). Target direct compensation does not include the one-time Market Share Performance and Retention Awards granted in November 2020 due to the special one-time nature of the awards, which for the CEO were 75% performance-based and 25% time-based. |
Performance Metrics Align with Business Strategy
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Annual Cash
Incentive Metric | | Three-Year Performance Share Unit (PSU) Metrics |
| Plan Operating EBITDA | | Relative Total
Stockholder Return | Cumulative Free Cash Flow |
Key metric for evaluating overall performance of our operating business | | Measures our stockholder returns relative to the S&P MidCap 400 | Leveraged to advance key strategic imperatives and capital allocation priorities |
Pay Aligned with Performance—Performance Metrics Working as Designed
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Achievement against Performance Goals for Compensation Periods ended December 31, 2022 |
Plan Operating EBITDA
(Annual Cash Incentive - 2022) | Relative Total Stockholder Return
(PSUs - 2020 to 2022 Cycle) | Cumulative Free Cash Flow
(PSUs - 2020 to 2022 Cycle) |
| Achievement: $449 million | Achievement: Below Threshold | Achievement: $1.254 billion |
| Target Goal: $810 million | Target Goal: Equal to Index | Target Goal: $738 million |
| Funding Achievement: 0% | Payout Achievement: 0% | Payout Achievement: 200% |
| Realized Value: 0% | Aggregate Realized Value of PSU Awards†: 71% |
See page 40 for full summary | See page 44 for full summary | See page 46 for full summary |
Realized Value: 0% under one-time Market Share Performance Award for the two-year period ended September 30, 2022 (see page 49 for full summary) |
† Aggregate realized value of PSU awards is determined by comparing (i) the product of (A) the aggregate number of shares or units earned by the NEOs times (B) the stock price or unit value on the last day of the performance cycle vs. (ii) the target value of the awards approved by the Compensation Committee.
The table below summarizes historical and forecasted payouts under PSU awards as of December 31, 2022.
The aggregate realized value of PSU awards was 71% for award cycles ended in 2022, and three of the four PSU awards outstanding at the end of 2022 were tracking below target as of December 31, 2022.
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PSU Award Cycle
and Metric | Years in Performance Share Unit Performance Period |
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
2018-2020 PSU Award† | Completed in 2020 (Aggregate Realized Value: 21%) | | | | |
| RTSR | No Payout | | | | |
| CFCF | Below Target Payout (72% of shares) | | | | |
2019-2021 PSU Award† | | Completed in 2021 (Aggregate Realized Value: 139%) | | | |
| RTSR | | No Payout | | | |
| CFCF | | Above Target Payout (200% of shares) | | | |
2020-2022 PSU Award† | | | Completed in 2022 (Aggregate Realized Value: 71%) | | |
| RTSR | | | No Payout | | |
| CFCF | | | Above Target Payout (200% of shares) | | |
| 2021-2023 PSU Award* | | | | 66% Completed | |
| RTSR | | | | Tracking Below Threshold | |
| CFCF | | | | Tracking Above Target | |
| 2022-2024 PSU Award* | | | | | 33% Completed |
| RTSR | | | | | Tracking Below Threshold |
| CFCF | | | | | Tracking Below Target |
† Aggregate realized value of PSU awards is determined by comparing (i) the product of (A) the aggregate number of shares or units earned by the NEOs times (B) the stock price or unit value on the last day of the performance cycle vs. (ii) the target value of the awards approved by the Compensation Committee.
* Actual results to be determined based upon results under the applicable metric at the conclusion of the applicable 3-year cycle.
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| ANYWHERE'S EXECUTIVE COMMITTEE |
Our Board and the Compensation Committee oversee the talent management and compensation of the executive officer members of our Executive Committee, which is comprised of the Chief Executive Officer and the most senior leaders in the Company.
From left to right:
Top Row: Ryan Schneider, Chief Executive Officer & President; Charlotte Simonelli, EVP, Chief Financial Officer; Susan Yannaccone, President & CEO, Anywhere Brands & Anywhere Advisors; Melissa McSherry, EVP, Chief Operating Officer; and Marilyn Wasser, EVP, General Counsel.
Second Row: Don Casey, President & CEO, Anywhere Integrated Services; Tanya Reu-Narvaez, EVP, Chief People Officer; Eric Chesin, Chief Strategy Officer; Tony Kueh, EVP, Chief Product Officer; and Trey Sarten, SVP, Communications and Corporate Affairs.
GOVERNANCE OF THE COMPANY
Board Investor Outreach Program
Our Board considers the feedback received from our stockholders via its investor outreach program to be a critical component of its executive compensation, corporate governance and strategic oversight functions.
Our Board prioritized investor outreach in 2022 so that the Board could hear directly from our investors. We held meetings with investors holding an aggregate of approximately 75% of outstanding shares.
For additional information on our 2022 Investor Outreach Program, go to page 2. Management Outreach
Anywhere management—including our CEO, CFO and IR team—also maintains an active stockholder engagement program designed to reach current and prospective investors through earnings calls, investor conferences, individual and group meetings and other communication channels.
In 2022, we hosted an Investor Day featuring presentations by our CEO, CFO and COO. Management also attended meetings and conferences and participated in panel discussions and podcasts to reach current and potential investors.
We consider investor feedback from both the Board Investor Outreach and management outreach programs, and may incorporate consistent key themes into our business. In 2022, informed in part by our investors, we continued to focus on strategic initiatives—including those designed to bring us closer to the consumer, like our ancillary title and mortgage services and technology.
BOARD GOVERNANCE HIGHLIGHTS
Strong corporate governance is an integral part of our core values and practices.
To promote the long-term interests of stockholders, we consistently seek ways we can strengthen our Board and our corporate governance practices, including:
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| Independent Chairman of the Board | | |
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| 92% Independent Directors | |
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| Annual Election of Directors | |
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| Majority Voting for Directors | |
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| Board Investor Outreach Program | |
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| Strong Stock Ownership Guidelines | |
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| Annual Say-on-Pay Vote | |
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| Proxy Access Bylaws | |
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| Strong Enterprise Risk Management Oversight | |
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| Culture and Talent Focus | |
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| Annual Corporate Social Responsibility Report | |
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| Annual Two-Day Meeting Focused Exclusively on Strategy (with quarterly updates) |
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| Board Structure Lends Itself to Consistent Communications between CEO, Chairman and Directors |
Strategic Planning & Business Execution
Our Board spends a substantial amount of time working with management to refine Anywhere's mid- and long-term strategy and also pays significant attention to near-term objectives, such as efforts focused on navigating the current industry downturn, improving operating efficiencies, enhancing agent, franchisee and consumer value propositions, market position growth and debt reduction.
The Board receives updates on our strategy at its meetings throughout the year and holds an additional annual two-day meeting focused exclusively on strategy. These strategic meetings focus on core aspects of our business, including initiatives to advance our business strategy, capital allocation matters and our competitive position in light of emerging and existing competitive trends.
During these meetings, the Board considers whether business strategies are appropriately aligned to mitigate the risks identified in the Company's enterprise risk management process (described under "Oversight of Risk Management"), as well as the pursuit of initiatives intended to advance the Company's strategy, enhance consumer and agent value, and keep the Company well-positioned for the future.
The Board oversaw the Company's execution against multiple key strategic initiatives in 2022, including key aspects of the long-term Strategic Shift laid out at Anywhere's 2022 Investor Day, such as:
▪ Relentlessly focus on cost
▪ Leverage our competitive advantages, including franchise power, luxury leadership, a network of trusted independent sales agents, and owned brokerage and title synergies
▪ Create an easier and integrated experience for all parts of a consumer's next move, meeting the consumer anywhere they are
Additionally, the Board oversaw moves designed to continue to improve the Company's debt profile in 2022, including:
▪ raising $1.0 billion in capital through the offering of 5.25% senior notes due 2030, using net proceeds (and cash on hand) to redeem higher interest senior notes with nearer term maturities
▪ refinancing our revolving credit facility to provide for a $1.1 billion facility due July 2027 (subject to earlier springing maturity in certain circumstances)
▪ redeeming our 4.875% senior notes due 2023
To empower Anywhere to achieve results, the Board worked with management to reimagine its senior leadership team, including the recruitment of key technology talent and the re-positioning of two of our most experienced executives to lead core aspects of our business.
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| KEY LEADERSHIP CHANGES | |
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| Elevated Susan Yannaccone to assume a broader role and take responsibility for both Anywhere Advisors and Anywhere Brands | |
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| Empowered Donald Casey with oversight of certain operational, agent service delivery and consumer experience aspects of our owned brokerage and title operations | |
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| Recruited Melissa McSherry to drive product, technology, enterprise marketing and customer experience in the newly created role of Chief Operating Officer | |
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| Recruited Tony Kueh as our first Chief Product Officer, leading our product strategy, innovation roadmap and technology investments | |
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As conditions in the residential real estate market worsened during the second half of 2022, the Board oversaw management's efforts to identify cost saving opportunities while continuing to invest in strategic objectives and achieve against key goals, including:
▪ achieving record franchise sales growth in 2022 (inclusive of conversions, M&A and agent recruitment);
▪ growing our Company-owned independent sales agent base by 4% on a like-for-like basis in 2022 and achieved record retention levels;
▪ expanding the Company's initial target of $70 million in realized cost savings in 2022 to $150 million in realized cost savings in 2022; and
▪ selling our title insurance underwriter in exchange for cash and a minority stake in a title insurance underwriter joint venture.
Oversight of Risk Management
The Board has an active role, as a whole and also at the committee level, in overseeing management of our risks. The Board focuses on the key risks facing us and our risk management strategy and seeks to ensure that risks—inherent and undertaken by us—are consistent with a level of risk that is appropriate for our Company and the achievement of our business objectives and strategies.
Anywhere's enterprise risk management (“ERM”) program recognizes the framework issued in 2004 by the Committee of Sponsoring Organizations of the Treadway Commission, as well as the 2017 update issued by the same, but our Company has fashioned a process that integrates our specific goals and objectives.
A Risk Management Committee, chaired by our General Counsel and comprised of key members of management, meets regularly and plays a core role in the identification, monitoring, mitigation and management of the risks the Company faces.
Our Head of Internal Audit reports directly to the Audit Committee and our Chief Ethics & Compliance Officer has a dotted-line reporting relationship to the Audit Committee. Each of these officers regularly participates in executive sessions with the Audit Committee. Our ERM program is facilitated by our Vice President, ERM.
Through our dynamic risk assessment process, the Risk Management Committee and our Board consistently evaluate the risk environment and adjust the Company's risk profile and focus as needed to respond to industry and macroeconomic changes.
In 2022, an integrated risk assessment was performed by Internal Audit in collaboration with ERM and Ethics & Compliance, with the results driving our 2023 Internal Audit Plan and 2023 Ethics & Compliance Plan.
On a regular basis, management presents to the Board, or the applicable Board committees, a comprehensive review of the Company’s ERM processes, including risk assessment and risk management as well as updates on key risks that have been identified and assessed during the year and the strategies management has developed for managing them.
During 2022, these topics included the Company's potential exposure to risks related to:
▪ macroeconomic factors,
▪ continued shifts of commission income to affiliated independent sales agents and the impact on traditional brokerage earnings,
▪ changes to the traditional consumer experience of buying and selling a home, including due to competitive factors and industry disruption,
▪ capital structure,
▪ simplification, modernization and cost reduction,
▪ cybersecurity and data privacy,
▪ product strategy and delivery,
▪ talent and succession,
▪ earnings concentration, key ventures and strategic third-party relationships,
▪ litigation and other legal and regulatory matters, including with respect to the antitrust, Telephone Consumer Protection Act and worker classification matters described in Note 15, "Commitments and Contingencies—Litigation", to the Condensed Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, and
▪ other operational matters.
Throughout the year, at meetings of the Board and, as applicable, Board committees, senior management presents updates on specific Company risks and trends, including emerging and existing competitive trends.
The Board and the applicable Board committees regularly review information regarding, and risks associated with, our finances, credit, liquidity, operations, litigation and legal and regulatory obligations, talent development, executive compensation, information technology (including cybersecurity and data privacy risks) and business strategy, including measures management has taken and will take to mitigate risks.
While each committee is responsible for evaluating certain risks and overseeing the management of risks, the entire Board is regularly informed about our risks through committee reports and management presentations.
The Audit Committee is charged with reviewing our processes with respect to risk assessment and risk management, including overseeing management of financial accounting and reporting and compliance risks, and steps undertaken by management to mitigate these risks to an acceptable level.
The Audit Committee shares oversight responsibility with the full Board for our information security and technology risks, including cybersecurity. In 2022, the Audit Committee and/or Board were briefed by the Chief Information Security Officer and Chief Operating Officer on these matters on a quarterly basis, with the Product & Technology Committee joining the Audit Committee at several meetings.
The Nominating and Corporate Governance Committee oversees the management of risks associated with the independence and composition of the Board, including that the Board has the appropriate skills and competencies necessary for effective oversight, as well as risks related to the reputation of the Company and potential conflicts of interest. In addition, the Nominating and Corporate Governance Committee is responsible for monitoring the Company's ESG initiatives and programs.
The Compensation Committee is responsible for overseeing the management of risks relating to talent, succession and executive compensation.
As part of its oversight of the Company's executive compensation program, the Compensation Committee annually considers the impact of the Company's executive compensation program, and the incentives created by the compensation awards that it administers, on the Company's risk profile as well as risks related to succession planning and talent management.
In addition, the Company reviews all of its compensation policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking, to determine whether they present a material risk to the Company.
To assist the Compensation Committee in its assessments of the Company's compensation risk profile, Internal Audit assessed the reasonableness of the criteria and assumptions that are used by the Company to identify the risks associated with the Company's material incentive-based compensation programs. Multiple factors were considered as part of Internal Audit's assessment, including incentive compensation criteria and payment limits, compensation mix, number of participants and risk mitigation factors.
The results of the validation procedures were presented by Internal Audit to both management and the Compensation Committee. The Company's Chief People Officer and the Compensation Committee's independent compensation consultant also reviewed the results. The Compensation Committee considered the results in making its determinations regarding the Company's executive compensation program and its compensation policies and procedures.
Based on these reviews and procedures, the Company has concluded that its compensation policies and procedures are not reasonably likely to have a material adverse effect on the Company.
While the Board and the committees oversee our risk management, our CEO and other members of senior management (including the Risk Management Committee) are primarily responsible for day-to-day risk management analysis and mitigation and report to the full Board or the relevant committee regarding risk management. We believe this division of responsibility is the most effective approach for addressing our risk management.
Environmental, Social & Governance Program
Board Oversight. Since 2020, the Nominating and Corporate Governance Committee has had oversight responsibility for the Company’s Environmental, Social and Governance, or ESG, initiatives, with the full Board receiving an annual report on the Company’s progress on ESG matters. In 2022, the Nominating and Corporate Governance Committee and/or Board met to discuss ESG matters on a quarterly basis.
Since assuming its ESG oversight role, the Nominating and Corporate Governance Committee has focused on several important ESG-related topics such as employee, affiliated agent and brokerage diversity, equity and inclusion initiatives and ESG trends, including with respect to reporting requirements.
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| The Nominating and Corporate Governance Committee also reviews Anywhere's corporate responsibility report, which is released on an annual basis and can be accessed on our website at www.anywhere.re under the ESG page. |
Members of management with responsibilities and expertise in ESG-related topics, including human resources, diversity, equity and inclusion, corporate governance, and compliance, work with our Executive Committee and Board to report on our key ESG-related initiatives and metrics.
Governance. The Company and Board have historically focused on governance topics, including Board and management structure, best corporate governance practices, risk management, transparent and accurate information disclosure and strong auditing and compliance. Based on investor feedback during the Board-led Investor Outreach Programs, the Board believes that our stockholders view strong governance practices as the linchpin to an effective ESG program. Our key governance practices are outlined throughout this Governance of the Company section of the proxy statement.
Social. Social issues, including diversity, equity and inclusion—both at Anywhere and in the real estate community—are a priority for the Company. Internally, we have eight long-standing Employee Resource Groups, or ERGs, each with its own executive sponsor, that support and promote an inclusive culture at Anywhere.
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| | Over half of our Executive Committee identifies as female and/or a person of color |
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Talent-centric Board sessions have focused on diversity, equity and inclusion topics. Our Executive Committee members have had diversity, equity and inclusion performance goals included as part of their annual performance reviews since 2018. Standardized diversity, equity and inclusion performance goals were expanded to our broader senior leadership team (nearly 200 employees) in 2021 as part of their annual review process.
Anywhere is also a proud sponsor and partner of several national real estate associations that promote the advancement of diverse homeownership through empowering diverse real estate professionals.
Health and Safety. The protection of the health and safety of our employees is a Company priority.
In 2022, we completed the transformation of our corporate headquarters—streamlining its footprint to one floor that is designed to welcome approximately 200 transitional employees during the week, instead of the approximately 750 employees who would frequent the building as part of a traditional office.
As of December 31, 2022, approximately half of our employees worked remotely on a full-time basis, other employees, in particular consumer-facing employees at our Company-owned brokerages, were operating in an office-based environment, while other employees remained on a hybrid model.
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| | In 2022, we achieved an 88% employee engagement score and an 86% response rate |
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Environment. We do not manufacture products and we own de minimis real property. From 2017 to 2022, we decreased our leased-office footprint by approximately 23%.
Despite our limited environmental footprint, we seek to mitigate our environmental impact. For example, our headquarters building interior is LEED Gold certified and the building’s exterior is LEED Silver certified, in each case by the Green Building Certification Institute. As part of the redesign of our corporate headquarters, we made strategic decisions to conserve energy and recycle materials through our building plans and during construction.
Succession Planning
The Board is responsible for the development, implementation and periodic review of a succession plan for our Chief Executive Officer and the other executive officer members of our Executive Committee.
The November 2022 meeting of the Board focused on talent and succession for the executive team. The meeting also included a review of broader business and corporate talent.
The Board has an emergency succession plan in the event of an unexpected disability or inability of our Chief Executive Officer to perform his duties.
The Board works, as appropriate, with the Compensation Committee and Nominating and Corporate Governance Committee with respect to the Company's programs and plans in the areas of talent development, succession planning, and diversity, equity and inclusion initiatives.
Corporate Governance Guidelines
Our Board has adopted Corporate Governance Guidelines that, along with the charters of the Board Committees, Director Independence Criteria, Code of Ethics for Employees and Code of Business Conduct and Ethics for Directors, provide the framework for our governance. The governance rules for companies listed on the NYSE and those contained in SEC rules and regulations are reflected in the guidelines. The Board reviews these principles and other aspects of governance periodically. The Corporate Governance Guidelines are available on the Governance page of our website at www.anywhere.re.
Director Service on Other Public Company Boards
Our Board believes that service on other public company boards provides Directors with valuable governance and leadership experience that benefits the Company.
At the same time, our Board recognizes that it is critical that directors dedicate sufficient time and attention to their service on Anywhere's Board.
Accordingly, under the Corporate Governance Guidelines, Directors must have the time and ability to make a constructive contribution to the Board as well as a clear commitment to fulfilling the fiduciary duties required of Directors and serving the interests of the Company’s stockholders.
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| | Our Board believes that each of our Directors has demonstrated the ability to devote sufficient time and attention to fulfill the responsibilities required of a Director of Anywhere |
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Unless explicitly approved by the Board:
▪ Directors who also serve as CEO (or an equivalent position) may not serve on more than two other boards of public companies.
▪ Other Directors may not serve on more than four other boards of public companies.
▪ Directors on the Audit Committee may not serve on the audit committees of more than three public companies, including the Company.
All Directors are in compliance with this policy.
Prior to recommending a candidate as a nominee for director, the Nominating and Corporate Governance Committee reviews the other commitments of such candidate (including service and leadership positions on public boards) and considers whether such obligations may interfere with the candidate's Board duties.
Director Independence Criteria
NYSE listing standards and our Corporate Governance Guidelines require the Board to affirmatively determine annually whether each Director satisfies the criteria for independence and has no material relationship with Anywhere Real Estate other than as a Director. The Board adopted the Director Independence Criteria set out below for its evaluation of the materiality of Director relationships with us. The Director Independence Criteria are available on the Governance page of our website at www.anywhere.re.
A Director who satisfies all of the following criteria shall be presumed to be independent under our Director Independence Criteria:
▪ No relationships that would disqualify independence under NYSE listing standards;
▪ No personal services contract in the last three years with Anywhere Real Estate or any of its executive officers; and
▪ No control position with a non-profit organization that has received more than the greater of (i) 2% of the consolidated gross revenues of such organization during any single fiscal year or (ii) $1,000,000, either directly or indirectly from Anywhere Real Estate within the last three years.
Determination of Director Independence
During the Board's annual review of the independence of the Directors, the Board considered whether there are any relationships between each Director (or any member of his or her immediate family) and us and our subsidiaries and affiliates. The Board also considered whether there were any transactions or relationships between Directors (or any member of their immediate family or any entity of which a Director or an immediate family member is an executive officer, general partner or significant equity holder) and us. The purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the Director is independent.
As a result of this review, the Board affirmatively determined that, under NYSE listing standards and our Director Independence Criteria:
▪ All of the members of our Board are Independent Directors, other than our CEO; and
▪ All members of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Product and Technology Committee are Independent Directors.
The Board also determined that none of the Independent Directors had or has any material relationship with us other than as a Director.
In making these determinations, the Board took into consideration the following transactions:
▪ several of our Independent Directors and/or their immediate family members, either before they joined the Board or during their tenure as Directors, utilized the brokerage services of our company owned brokerages and/or our franchisees in the purchase or sale of residential real estate and/or the Company's title and settlement services in the ordinary course and on similar terms to those offered to unrelated third parties in similar transactions;
▪ the Company entered into an agreement in the fourth quarter of 2022 to sublease approximately 13,000 square feet of office space to Transcend Capital Advisors, an entity affiliated with Mr. Niederauer, at an annualized cost of approximately $322,000, with a term of seven years. Until full occupancy commences (expected in the second half of 2023), the entity has occupied approximately 1,500 square feet of temporary space since May 2022 at an annualized cost of $24,000; and
▪ prior to Mr. Koehler joining our Board, the Company and Equifax Inc., Mr. Koehler’s employer, were party to agreements (which have been renewed over time) for certain tools, credit reports and information with respect to unemployment claims pursuant to which the Company made payments of approximately $100,000 in 2022.
Board and Committee Leadership Structure
Michael J. Williams became our Independent Chairman on December 31, 2017. Mr. Williams previously served as the Board's Lead Independent Director (from late 2013) and has been a Director since 2012.
The Board has no fixed policy on the separation of the CEO and Chairman roles and our Bylaws allow for these roles to be either combined or separated. This flexibility allows our Board to choose a different Board leadership structure if and when it believes it is in the best interests of the Company based on current circumstances. In making this determination, the Board considers a number of factors, including the position and direction of the Company, the specific needs of our business, and the constitution of the Board and management team.
The Board currently believes that the separation of the CEO and Chairman roles is the most effective leadership structure for the Company at this time, as it allows Mr. Schneider to focus on the day-to-day management of the business and on executing our strategic priorities, while allowing Mr. Williams to focus on leading the Board, providing its advice and counsel to Mr. Schneider, and facilitating the Board’s independent oversight of management.
The Board will continue to regularly review its leadership structure and exercise its discretion in recommending an appropriate and effective framework on a case-by-case basis, taking into consideration the needs of the Board and the Company at such time.
In his capacity as Independent Chairman of the Board, Mr. Williams:
▪ presides at all meetings of the Board and stockholders;
▪ acts as an adviser to Mr. Schneider on strategic aspects of the CEO role with frequent and regular consultations on major developments and decisions germane to the Board's oversight responsibilities;
▪ serves as a liaison between the CEO and the other members of the Board, including eliciting feedback from the Committee Chairs and Directors throughout the year and providing feedback to the CEO;
▪ coordinates with Directors between meetings and encourages and facilitates active participation of all Directors;
▪ sets Board meeting schedules and agendas in consultation with the CEO and corporate secretary;
▪ reviews Board materials, including drafts of key presentations and consultations with members of senior management;
▪ has the authority to call meetings of the Independent Directors or of the entire Board; and
▪ monitors and coordinates with management on corporate governance issues and developments.
While the Corporate Governance Guidelines do not mandate rotation of committee assignments or chairs, the Board may take such action from time to time if it believes that rotation is likely to increase committee performance.
When assigning committee memberships as well as designating committee chairs, the Board takes into account the recommendation of the Nominating and Corporate Governance Committee and each director’s knowledge, interests and areas of expertise.
Upon the recommendation of the Nominating and Corporate Governance Committee, in May 2022, the Board determined to:
▪ designate Ms. Williams as Chair of the Audit Committee, with Ms. Hailey, the former Chair of the Audit Committee continuing service on the Audit Committee;
▪ designate Mr. Silva as Chair of the Compensation Committee, with Mr. Niederauer, the former Chair of the Compensation Committee, rotating to the Nominating and Corporate Governance Committee;
▪ rotate Mr. Silva off of the Audit Committee and to appoint Mr. Koehler to the Audit Committee in his place;
▪ rotate Ms. Smith off of the Nominating and Corporate Governance Committee and onto the Compensation Committee;
▪ rotate Mr. Williams off of the Compensation Committee; and
▪ rotate Mr. Terrill onto the Nominating and Corporate Governance Committee.
Annual Board and Committee Evaluations
The Board recognizes that a robust and constructive performance evaluation process is an essential component of Board effectiveness.
Confidential annual Board evaluations are overseen by our Chairman of the Board, while the Chairs of our standing committees oversee the evaluation of their respective committees.
Tailored questions are designed to solicit Board and committee feedback on critical Board topics, including composition, culture, focus, strategy, risk, talent, process, and access.
Results of the evaluations are discussed by the Board and each committee in executive session and have led to substantive changes in practice.
Recent examples include
▪ evolving the composition of the Board and its committees, including rotations of the Chairs of the Audit Committee and Compensation Committee;
▪ reconfirming the focus the Product and Technology Committee on product and technology strategy and implementation; and
▪ enhancing Board focus on talent management, including as related to diversity, equity and inclusion topics.
The Nominating and Corporate Governance Committee periodically reviews the form and process for Board and committee self-evaluations.
The Chairman of the Board also consults with each Director on a quarterly basis during one-on-one telephonic meetings at which Directors are able to further share their views on matters related to the Board and the Company. Key themes raised at these meetings or during Board and Committee sessions are also summarized by the Chairman of the Board and conveyed on a regular basis to the other Directors and management. When appropriate, the Chairman of the Board incorporates real-time evaluation topics and feedback into regular sessions of the Board.
Executive Sessions of Independent Directors
The Independent Directors met without any members of management present in executive session at more than half of the Board meetings held in 2022. During 2022, Michael Williams, the Independent Chairman of the Board, chaired these sessions. Committees of the Board also regularly hold executive sessions without management present. These sessions are led by the Committee Chairs.
Communications with the Board and Directors
Stockholders and other parties interested in communicating directly with the Board, an individual Independent Director or the Independent Directors as a group may do so by writing our Corporate Secretary at anywhereboard@anywhere.re or Anywhere Real Estate Inc., 175 Park Avenue, Madison, New Jersey 07940. The Corporate Secretary will forward the correspondence only to the intended recipients. However, prior to forwarding any correspondence, the Corporate Secretary will review it and, in her discretion, not forward correspondence deemed to be of a commercial nature or otherwise not appropriate for review by the Directors.
Committee Membership
The following chart provides the membership of our standing committees as of December 31, 2022:
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Director (1) | | Audit
Committee | | Compensation
Committee | | Nominating & Corporate Governance Committee | | Product &
Technology Committee |
| Fiona P. Dias | | — | | M | | — | | M |
| Matthew J. Espe | | — | | M | | M | | — |
| V. Ann Hailey | | M | | — | | M | | — |
| Bryson R. Koehler | | M | | — | | — | | M |
| Duncan L. Niederauer | | — | | — | | M | | M |
Egbert L.J. Perry(2) | | — | | — | | — | | — |
| Ryan Schneider | | — | | — | | — | | — |
| Enrique Silva | | — | | C | | — | | — |
| Sherry M. Smith | | M | | M | | — | | — |
| Christopher S. Terrill | | — | | — | | M | | C |
| Felicia Williams | | C | | — | | — | | — |
| Michael J. Williams | | M | | — | | C | | — |
| Meetings held in 2022 | | 11 | | 6 | | 7 | | 4 |
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M = Member C = Chair
(1) Each member of each Committee is an Independent Director; see "Board and Committee Leadership Structure" above for additional information.
(2) Mr. Perry joined the Board in January 2023 and does not currently serve on any committee of the Board.
During 2022, the full Board held 12 meetings, five of which were full meetings that included regular committee sessions, one of which was a two-day strategy session and the balance of which were update meetings to review Company performance and recent developments.
Each Director nominated for election attended at least 75% of the aggregate total number of meetings of the Board and the committees of the Board on which the Director served in 2022.
From time to time the Company utilizes ad hoc committees. For example, from 2020 to 2022, the Board had an Ad Hoc Transactions Committee that was focused on capital structure and capital allocation considerations and other finance matters, including our debt profile, as well as corporate transactions.
Directors fulfill their responsibilities not only by attending Board and committee meetings and reviewing meeting materials, but also through communication with the Independent Chairman and the CEO and other members of management relative to matters of mutual interest and concern to Anywhere Real Estate.
Directors have also attended employee meetings, Company conferences and other strategic events, both in-person and virtually, which allows them to meet with an extended variety of members of management and to gain a deeper understanding of Company operations.
Director Attendance at Annual Meeting of Stockholders
As provided in the Board's Corporate Governance Guidelines, Directors are expected to attend our annual meeting of stockholders absent exceptional cause. All of our Directors were in attendance at the 2022 Annual Meeting of Stockholders, which was held in a virtual-only format.
Committees of the Board
The following describes our standing Board Committees and related matters. The Charter for each committee is available on the Governance page on our website at www.anywhere.re.
Audit Committee
The purpose of the Audit Committee is to assist the Board in fulfilling its responsibility to oversee management regarding:
▪ systems of internal control over financial reporting and disclosure controls and procedures;
▪ the integrity of the financial statements;
▪ the qualifications, engagement, compensation, independence and performance of the independent auditors and the internal audit function;
▪ compliance with legal and regulatory requirements and the Company's ethics program;
▪ review of material related party transactions; and
▪ compliance with, adequacy of, and any requests for written waivers sought with respect to any executive officer or Director under, the code of ethics.
The Audit Committee is charged with reviewing our policies with respect to risk assessment and risk management, including overseeing management of financial accounting and reporting and compliance risks, and steps undertaken by management to control these risks. The Audit Committee shares oversight responsibility with the full Board for our information security and technology risks, including cybersecurity and data privacy, as well as legal risks.
The Board has direct oversight of operational and strategic risks while the Compensation Committee addresses compensation, talent management and succession planning related risks. For a more detailed discussion of the oversight of risk management, see "—Oversight of Risk Management." All members of the Audit Committee are Independent Directors under the Board's Director Independence Criteria and applicable SEC and NYSE listing standards. The Board in its business judgment has determined that all members of the Audit Committee are financially literate, knowledgeable and qualified to review financial statements in accordance with applicable listing standards. The Board has also determined that each member of the Audit Committee (Felicia Williams, V. Ann Hailey, Bryson R. Koehler, Sherry M. Smith and Michael J. Williams) is an audit committee financial experts within the meaning of applicable SEC rules.
Compensation Committee
The purpose of the Compensation Committee is to:
▪ oversee management compensation policies and practices, including, without limitation, reviewing and approving, or recommending to the Board:
◦ the compensation of our CEO and other executive officers;
◦ management incentive policies and programs;
◦ equity compensation programs; and
◦ stock ownership and clawback policies;
▪ review and make recommendations to the Nominating and Corporate Governance Committee with respect to the compensation and stock ownership policies for Directors;
▪ provide oversight concerning selection of officers and severance plans and policies;
▪ review and discuss with management the Company's compensation discussion and analysis that is included in this proxy statement; and
▪ no less frequently than annually review the talent development and succession plans for the Company's executive officers (other than the CEO) and key individuals within the Company's senior leadership group (officers who report to the CEO's direct reports) and make recommendations to the Board as appropriate regarding possible successors for these positions.
For additional information regarding the Compensation Committee's processes and procedures, see below under "Executive Compensation—Compensation Discussion and Analysis—Role of Committee, Advisors and Executives in Setting Executive Compensation."
All of the members of the Compensation Committee are Independent Directors under the Board's Director Independence Criteria and applicable NYSE listing standards. Each member of the Compensation Committee is a “non-employee” Director as defined in the Securities Exchange Act of 1934, as amended.
Nominating and Corporate Governance Committee
The principal duties and responsibilities of our Nominating and Corporate Governance Committee include the following:
▪ implementation and review of criteria for membership on our Board and its committees;
▪ identification and recommendation of proposed nominees for election to our Board and membership on its committees;
▪ monitoring the Company's ESG initiatives and programs;
▪ overseeing governance matters, including the development and recommendation to the Board of a set of corporate governance principles applicable to the Company;
▪ reviewing, and recommending to our Board, of compensation, reimbursement and stock ownership policies for Directors; and
▪ oversee the evaluation of the Board.
All of the members of the Nominating and Corporate Governance Committee are Independent Directors under the Board's Director Independence Criteria and applicable NYSE listing standards.
Product and Technology Committee
The principal duties and responsibilities of our Product and Technology Committee are to assist the Board in fulfilling its oversight responsibilities with respect to the role of products and technology in executing the business strategy of the Company including, but not limited to:
▪ product and technology strategy and performance;
▪ major investments in product and technology projects (including, technology infrastructure and the development of products and services); and
▪ product and technology trends.
All of the members of the Product and Technology Committee are Independent Directors under the Board's Director Independence Criteria and applicable NYSE listing standards.
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| | Ethisphere® Institute, a leading international business ethics think-tank, has recognized us as one of the World's Most Ethical Companies |
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Code of Business Conduct and Ethics
Our Board has adopted a code of ethics (the "Code of Ethics"), which applies to all officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics is available on the Investors link, Governance page of Anywhere's website at www.anywhere.re. The purpose of the Code of Ethics is to:
▪ promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
▪ promote full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed by the Company;
▪ protect Company information and assets; and
▪ promote compliance with all applicable laws, rules and regulations that apply to the Company and its officers.
The Code of Ethics also focuses on our responsibilities to each other to maintain a respectful, fair and productive work environment.
The Board has adopted a Code of Business Conduct and Ethics for Directors, which sets forth ethics guidelines specifically applicable to Directors. The Code of Business Conduct and Ethics for Directors is available on the Investors link, Governance page of Anywhere's website at www.anywhere.re.
Copies of the Code of Ethics and the Code of Business Conduct and Ethics for Directors may also be obtained free of charge by writing to our Corporate Secretary. We will disclose on our website any amendment to or waiver from a provision of our Codes of Conduct that applies to any Director or executive officer, including our CEO, CFO or Chief Accounting Officer.
Availability of Corporate Governance Documents
Please visit our website at www.anywhere.re under the Investors link, Governance page for the Board's Corporate Governance Guidelines, Director Independence Criteria, the Code of Ethics for Employees, the Code of Business Conduct and Ethics for Directors, the Board-approved charters for the Audit, Compensation, Nominating and Corporate Governance and Product and Technology Committees and related information. These guidelines and charters may be obtained by writing to our Corporate Secretary at Anywhere Real Estate Inc., 175 Park Avenue, Madison, New Jersey 07940.
Compensation of Independent Directors
Independent Directors receive compensation for Board service designed to compensate them for their Board responsibilities and align their interests with the long-term interests of stockholders.
The Board has established guidelines with respect to the compensation of our Directors. These guidelines designate a portion of the compensation of our Directors to be paid in restricted stock unit awards.
The Board is subject to stock ownership guidelines for Directors as discussed under "Governance of the Company—Independent Director Stock Ownership Guidelines" on page 19 pursuant to which the Independent Directors must retain a meaningful portion of their equity compensation. The Compensation Committee undertakes an annual review of the competitiveness of the compensation paid to the Company's Directors and receives advice from its independent compensation consultant on market comparables. The Compensation Committee recommends changes, if any, to the Nominating and
Corporate Governance Committee, which in turn makes recommendations to the Board.
In May 2022, based upon an analysis performed by its compensation consultant, the Compensation Committee determined to recommend that no changes be made to Director compensation in 2022.
Cash fees are paid in advance on a quarterly basis, though Directors may elect to receive fully vested shares of common stock in lieu of cash fees. The equity portion of each of the Annual Retainer and the Annual Independent Chairman Retainer is granted immediately following the annual meeting of stockholders. The restricted stock unit awards vest one year following the date of grant, subject to the Director's continued service on our Board.
In the case of a new Director appointed in between annual meetings of stockholders, the RSU award is pro-rated for the period between the date of grant (on or about the date they are appointed to the Board) and the first anniversary of the immediately preceding annual meeting of stockholders.
A Director may defer cash fees and eligible equity awards, including restricted stock units, under the Anywhere Director Deferred Compensation Plan. Cash fees are deferred in the form of deferred stock units settled in shares of our common stock. The number of deferred stock units issuable in connection with a deferral of cash fees is calculated by dividing the amount of the deferred cash fees by the fair market of our common stock on the date of grant.
Deferred stock units are eligible to accrue dividend equivalent units, the value of which are factored into the grant date fair value. Generally, a Director's deferral will be paid as elected by the Director, or, if earlier, on the first anniversary following a Director's separation from service for elections made prior to December 11, 2014 or on the last business day of the quarter following a Director's separation of service for elections made on or after December 11, 2014. A Director may elect to receive deferred payments in a single lump-sum payment or installment payments over time.
A Director who serves on our Board does not receive any additional compensation for service on the Board of Directors of our subsidiaries.
We reimburse Independent Directors for all travel and other expenses incurred in connection with attending Board and Committee meetings and for continuing director education programs they attend.
The following table sets forth the compensation for services payable to our Directors as of December 31, 2022:
| | | | | |
| | Compensation(1) |
| Annual Director Retainer Paid in Cash | $ | 90,000 | |
Value of Annual Director Retainer Paid in Restricted Stock Units (2) | $ | 160,000 | |
Annual Independent Chairman of the Board Retainer Paid in Cash (3) | $ | 200,000 | |
Annual Independent Chairman of the Board Retainer Paid in Restricted Stock Units (2)(3) | $ | 250,000 | |
| Audit Committee Chair Retainer | $ | 20,000 | |
Audit Committee Member Retainer | $ | 15,000 | |
| Compensation Committee Chair Retainer | $ | 20,000 | |
Compensation Committee Member Retainer | $ | 15,000 | |
| Nominating and Corporate Governance Committee Chair Retainer | $ | 10,000 | |
Nominating and Corporate Governance Committee Member Retainer | $ | 10,000 | |
| Product and Technology Committee Chair Retainer | $ | 10,000 | |
Product and Technology Committee Member Retainer | $ | 10,000 | |
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(1) Members of the Board who are also officers or employees of Anywhere Real Estate or its subsidiaries (i.e., our CEO) do not receive compensation for serving as Directors. A Chair of a committee receives a Chair fee as well as a fee as a member of that committee.
(2) Amounts shown reflect grant date fair value.
(3) The Independent Chairman of the Board is not entitled to receive the Annual Director Retainer or Committee Chair or Member Retainers.
The following sets forth information concerning the compensation of our Independent Directors in 2022:
| | | | | | | | | | | |
| Name | Fees Earned or Paid in Cash
($) | Stock Awards ($)(1) | Total
($) |
| Fiona P. Dias | 115,000 | | 160,009 | | 275,009 | |
Matthew J. Espe | 115,000 | | 160,009 | | 275,009 | |
| V. Ann Hailey | 121,667 | | 160,009 | | 281,676 | |
Bryson Koehler | 110,000 | | 160,009 | | 270,009 | |
Duncan L. Niederauer | 118,333 | | 160,009 | | 278,342 | |
Enrique Silva | 118,333 | | 160,009 | | 278,342 | |
Sherry M. Smith | 118,333 | | 160,009 | | 278,342 | |
Christopher S. Terrill | 116,667 | | 160,009 | | 276,676 | |
| Felicia Williams | 118,333 | | 160,009 | | 278,342 | |
Michael J. Williams | 200,000 | | 250,010 | | 450,010 | |
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* Egbert Perry did not join our Board until January 2023 and is not included in the table above.
(1) The amounts reported in the "Stock Awards" column include: for each director, the grant date fair value of the RSU award granted in May 2022, representing the equity portion of the Director's retainer ($160,009 for each Director, other than Mr. Williams, and $250,010 for Mr. Williams).
The grant date fair value of equity awards granted in 2022 are computed in accordance with FASB ASC Topic 718. The assumptions we used in determining the grant date fair value are described in Note 13, "Stock-Based Compensation" to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.
As of December 31, 2022, each Independent Director held 13,782 unvested RSUs with the exception of Mr. Williams, who held 21,534 unvested RSUs.
Independent Director Stock Ownership Guidelines
In order to further strengthen alignment with stockholders, each Independent Director is required to beneficially own an amount of our stock with a value equal to the greater of:
▪ $500,000; and
▪ at least five times the cash portion of the annual Director retainer (i.e., $1,000,000 for our Independent Chairman of the Board or $450,000 for our other Independent Directors).
Stock options are not counted toward the stock ownership requirement. Shares of Anywhere common stock, deferred stock units, and unvested restricted stock units count as stock ownership. Directors have five years after joining the Board to achieve compliance with the guideline levels. If the guideline levels are not achieved by this compliance deadline, 100% of the net shares received from the exercise of
stock options or the vesting of any full value award must be retained until compliance is achieved.
Ms. Dias, Ms. Hailey, and Mr. Niederauer met the ownership guidelines based on the trailing 20-day trading average stock price as of December 31, 2022. While all of our Directors met the ownership guidelines based on the trailing 20-day trading average stock price at the end of 2021 (or were within the five-year compliance period), declines in our stock price during 2022 resulted in certain Directors falling below the ownership guidelines. Directors who have served on our Board for at least five years must retain 100% of net shares until compliance is re-achieved.
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| | None of our current Directors has ever sold a share of Anywhere stock |
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The following table shows each Independent Director's progress toward achievement of the stock ownership guidelines at the end of 2022:
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| Name* | Shares of
Common
Stock (#) | RSU
Awards
(#) | Deferred Stock Units (#)(1) | Total Ownership Value ($)(2) |
| Fiona P. Dias | 12,505 | | 13,782 | | 47,185 | | $ | 510,630 | |
Matthew J. Espe | 48,373 | | 13,782 | | 9,175 | | 495,744 | |
| V. Ann Hailey | 45,780 | | 13,782 | | 39,649 | | 689,516 | |
| Bryson Koehler | 37,470 | | 13,782 | | — | | 356,201 | |
| Duncan L. Niederauer | 77,015 | | 13,782 | | — | | 631,039 | |
| Sherry M. Smith | 19,448 | | 13,782 | | 36,421 | | 484,074 | |
| Enrique Silva | 56,223 | | 13,782 | | — | | 486,535 | |
| Christopher S. Terrill | 53,464 | | 13,782 | | — | | 467,360 | |
| Felicia Williams | 10,638 | | 13,782 | | — | | 169,719 | |
| Michael J. Williams | 120,234 | | 21,534 | | — | | 985,288 | |
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(1) Includes accrued dividend equivalent units. If a Director elected to defer his or her 2022 RSU award upon vesting in May 2023, such award is reported as deferred in the footnotes to the "Ownership of our Common Stock" table on the next page.
(2) Calculated based on average closing sale price for the 20 trading days immediately prior to the December 31, 2022 measurement date, in accordance with the stock ownership guidelines.
Ownership of Our Common Stock
The following table sets forth information regarding the beneficial ownership of our common stock as of March 8, 2023 by (i) each person known to beneficially own more than 5% of our common stock, (ii) each of our named executive officers, (iii) each member of the Board and (iv) all of our executive officers and members of the Board as a group. As of March 8, 2023, there were 110,346,549 shares of common stock outstanding.
The amounts and percentages of common stock beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. A person is also deemed
to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which he or she has no economic interest.
Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
See above for a description of the Stock Ownership Guidelines applicable to our independent Directors, which shows achievement against guideline levels and includes deferred stock units held by our Directors (which are not reflected in the table below).
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| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock | Percentage of Common Stock |
BlackRock, Inc. (1) | 20,232,506 | | 18.3% |
The Vanguard Group (2) | 18,418,210 | | 16.7% |
Angelo, Gordon & Co., L.P. (3) | 9,476,405 | | 8.6% |
FMR LLC (4) | 8,428,160 | | 7.6% |
Southeastern Asset Management, Inc. (5) | 6,543,957 | | 5.9% |
Dimensional Fund Advisors LP (6) | 5,534,250 | | 5.0% |
Ryan M. Schneider (7) | 1,892,055 | | 1.7% |
Charlotte C. Simonelli (8) | 304,868 | | * |
Melissa K. McSherry (9) | 33,286 | | * |
Marilyn J. Wasser (10) | 418,656 | | * |
Susan Yannaccone (11) | 50,128 | | * |
Fiona P. Dias (12) | 12,505 | | * |
Matthew J. Espe (13) | 48,373 | | * |
V. Ann Hailey (14) | 48,749 | | * |
Bryson R. Koehler (15) | 51,252 | | * |
Duncan L. Niederauer (16) | 90,797 | | * |
Egbert L.J. Perry (17) | 5,765 | | * |
Enrique Silva (18) | 70,005 | | * |
Sherry M. Smith (19) | 19,967 | | * |
Christopher S. Terrill (20) | 67,246 | | * |
Felicia Williams (21) | 24,420 | | * |
Michael J. Williams (22) | 120,234 | | * |
Directors and executive officers as a group (19 persons) (23) | 3,674,132 | | 3.3% |
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* Less than one percent.
(1) The information in the table is based solely upon Amendment No. 3 to Schedule 13G filed by such person with the SEC on January 30, 2023. The principal address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. BlackRock, Inc. reported sole voting power over 19,814,322 shares of common stock and sole dispositive power over all 20,232,506 shares of common stock.
(2) The information in the table is based solely upon Amendment No. 10 to Schedule 13G filed by such person with the SEC on February 9, 2023. The principal address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. Vanguard reported sole dispositive power over 18,098,194 shares of common stock, shared voting power over 210,373 shares of common stock and shared dispositive power over 320,016 shares of common stock.
(3) The information in this table is based solely upon the Schedule 13D jointly filed on November 25, 2022 by such person, AG GP LLC, Josh Baumgarten, and Adam Schwartz. The principal address for Angelo, Gordon is 245 Park Avenue, 26th Floor, New York, NY 10167. Angelo, Gordon and AG GP LLC reported sole dispositive and voting power over 9,476,405 shares of common stock and noted that Messrs. Baumgarten and Schwartz may be deemed to have shared dispositive and voting power over 9,476,405 shares of common stock.
(4) The information in the table is based solely upon Amendment No. 2 to Schedule 13G filed by such person with the SEC on February 9, 2023. The principal address for FMR LLC is 245 Summer Street, Boston, MA 02210. FMR reported sole voting power over 8,421,875 shares of common stock and sole dispositive power over all 8,428,160 shares of common stock.
(5) The information in the table is based solely upon Amendment No. 7 to Schedule 13G jointly filed by such person, Longleaf Partners Small-Cap Fund and O. Mason Hawkins, individually with the SEC on February 14, 2023. The principal address for all such filers is 6410 Poplar Ave., Suite 900, Memphis, TN 38119. Southeastern Asset Management, Inc. reported sole voting power over 3,671 shares of common stock, shared voting power over 6,540,286 shares of common stock, sole dispositive power over 3,671 shares of common stock and shared dispositive power over 6,540,286 shares of common stock and Longleaf Partners Small-Cap Fund reported shared voting and dispositive power over 6,507,042 shares of common stock. Mr. Hawkins disclaims direct or indirect control over the shares.
(6) The information in the table is based solely upon the Schedule 13G filed by such person with the SEC on February 10, 2023. The principal address for Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX 78746. Dimensional Fund Advisors LP reported sole voting power over 5,405,779 shares of common stock and sole dispositive power over all 5,534,250 shares of common stock.
(7) Includes 905,434 shares of common stock underlying options. Does not include (i) 734,710 shares of common stock subject to restricted stock unit awards or (ii) shares issuable under performance share unit awards that do not become issuable within 60 days of March 8, 2023.
(8) Includes 78,571 shares of common stock underlying options. Does not include (i) 212,129 shares of common stock subject to restricted stock unit awards or (ii) shares issuable under performance share unit awards that do not become issuable within 60 days of March 8, 2023.
(9) Does not include (i) 269,006 shares of common stock subject to restricted stock unit awards or (ii) shares issuable under performance share unit awards that do not become issuable within 60 days of March 8, 2023.
(10) Includes 187,693 shares of common stock underlying options. Does not include (i) 156,861 shares of common stock subject to restricted stock unit awards or (ii) 11,743 shares issuable under deferred stock units or shares issuable under performance share unit awards that do not become issuable or settleable within 60 days of March 8, 2023.
(11) Does not include (i) 326,003 shares of common stock subject to restricted stock unit awards or (ii) 2,654 shares issuable under deferred stock units or shares issuable under performance share unit awards that do not become issuable or settleable within 60 days of March 8, 2023.
(12) Does not include 60,967 shares issuable under deferred stock units that will not become settleable within 60 days of March 8, 2023.
(13) Does not include 22,957 shares issuable under deferred stock units that will not become settleable within 60 days of March 8, 2023.
(14) Includes 2,969 shares issuable under deferred stock units that will become settleable within 60 days of March 8, 2023. Does not include 50,462 shares issuable under deferred stock units that will not become settleable within 60 days of March 8, 2023.
(15) Includes 13,782 shares subject to vesting under a restricted stock unit award.
(16) Includes 13,782 shares subject to vesting under a restricted stock unit award and 51,967 shares held by a family limited partnership of which the reporting person and his spouse are the general partners.
(17) Includes 5,765 shares subject to vesting under a restricted stock unit award.
(18) Includes 13,782 shares subject to vesting under a restricted stock unit award.
(19) Includes 519 shares issuable under deferred stock units that will become settleable within 60 days of March 8, 2023. Does not include 49,684 shares issuable under deferred stock units that will not become settleable within 60 days of March 8, 2023.
(20) Includes 13,782 shares subject to vesting under a restricted stock unit award.
(21) Includes 13,782 shares subject to vesting under a restricted stock unit award.
(22) Does not include 21,534 shares issuable under deferred stock units that will not become settleable within 60 days of March 8, 2023.
(23) Includes or excludes, as the case may be, shares of common stock as indicated in the preceding footnotes. In addition, with respect to our other executive officers who are not named executive officers, this amount includes 180,023 shares of common stock underlying options. Does not include, with respect to such other executive officers, 183,931 shares subject to restricted stock unit awards or shares issuable under performance share unit awards that do not become issuable within 60 days of March 8, 2023.
Related Person Transactions
The Audit Committee has adopted a written policy on the review, approval, or ratification of transactions that could potentially be required to be reported under the SEC rules for disclosure of transactions in which related persons have a direct or indirect material interest. In general, related persons are directors, executive officers, stockholders beneficially owning 5% or more of our outstanding common stock, and immediate family members of any of the foregoing.
Under the policy, transactions with related persons are reviewed in advance by the Chief Compliance Officer, General Counsel and Chief Financial Officer of the Company, or in certain circumstances, as soon as possible thereafter. If it is determined by such officers that the transaction is a related person transaction and the amount involved exceeds $120,000, the transaction will be submitted for review to the Audit Committee or, under certain circumstances, to the Audit Committee Chair. The Audit Committee (or the Chair thereof) may approve or ratify only those transactions that are in, or not inconsistent with, the best interest of the Company and its stockholders. The Chair will update the full Audit Committee at the next regularly scheduled meeting for any interim approvals or ratifications granted. No Director may participate in any discussion or approval of a transaction for which he or she or a member of his or her immediate family is a related person.
Under the policy, certain related person transactions are pre-approved, including:
▪ the ordinary course utilization of Company services by a related person;
▪ transactions subject to a competitive bidding process and other transactions of a nature that would not require disclosure under SEC rules; and
▪ transactions involving an entity in which any related person is employed, provided that such related person is not employed as an executive officer (or its equivalent) of the entity and the transaction does not involve payments to or from such entity that exceed the greater of (i) $750,000 and (ii) 1% of the entity's annual gross revenues.
Without any requirement to do so, our Directors and executive officers and their immediate family members from time to time have utilized, and in the future may utilize, the services offered by the Company in the ordinary course and on similar terms to those offered to unrelated third parties in similar transactions, including but not limited to engaging our Company-owned brokerages (or those of our franchisees) and/or the Company's title and settlement services in the purchase or sale of real estate. These types of transactions have been pre-approved by the Audit Committee. While we do not generally consider ordinary course transactions between related persons and our franchisees to require approval under our policy, we request that our Directors and executive officers inform us whenever they engage in a transaction with any entity connected with the Company as part of our corporate governance controls.
Approved Related Person Transactions. During 2022, the Audit Committee reviewed and approved the transactions described under the heading Determination of Director Independence, although no Director was determined to have a direct or indirect material interest in any such transaction.
PROPOSAL 1: ELECTION OF DIRECTORS
Board of Directors
As of the date of this proxy statement, the Board consists of twelve members, eleven of whom are Independent Directors under NYSE listing standards and our corporate governance documents.
In February 2022, the Nominating and Corporate Governance Committee of our Board, which we refer to in this "Election of Directors" section as the "Governance Committee," recommended, and the Board nominated, Fiona P. Dias, Matthew J. Espe, Bryson R. Koehler, V. Ann Hailey, Duncan L. Niederauer, Egbert L.J. Perry, Ryan M. Schneider, Enrique Silva, Sherry M. Smith, Christopher S. Terrill, Felicia Williams and Michael J. Williams for election at the Annual Meeting. The nominees, all of whom are current Directors, are standing for election as Directors to hold office for a one-year term expiring in 2024 or until his or her successor has been duly elected and qualified. Each nominee has consented to his or her nomination for election to the Board.
The information under "Nominees for Election to the Board" includes each Director's professional experience, educational background and qualifications. The information also sets forth the public company directorships each Director currently holds or has held during the past five years. The age of each Director nominee is as of March 8, 2023.
If a Director nominee should become unavailable to serve as a Director, an event that we do not anticipate occurring, the persons named as proxies intend to vote the shares for the person whom the Board may designate to replace that nominee. In lieu of naming a substitute, the Board may reduce the number of Directors on our Board.
Process for Nominating Directors
The Governance Committee is responsible for identifying, recruiting, evaluating and recommending to the Board nominees for election at the Annual Meeting.
Identification and Evaluation Process. The process for identifying and evaluating nominees to the Board is initiated by Governance Committee and Board discussions concerning the skills and competencies of the current membership of the Board. While the Board does not have any mandatory policies with respect to rotation of committee assignments or chairs, its process for identifying and evaluating
nominees does take into account the periodic rotations of committee chairs and committee members. Its process also seeks to address both short-term and longer-term needs of the Board.
Once the need for a new Director has been determined, the Board begins a process to identify a candidate who meets the criteria for selection as a nominee and has the specific qualities or skills being sought based on input from members of the Board, management, stockholders or others and, if the Governance Committee deems appropriate, a third-party search or board advisory firm. Mr. Perry is being nominated for election as director for the first time and was originally proposed to us as a Director nominee by a non-management Director.
To help the Governance Committee determine whether Director nominees qualify to serve on our Board and would contribute to the Board's current and future needs, candidates undergo a series of interviews with, and evaluations by, the CEO, the Chair of the Governance Committee and generally one or more other members of the Governance Committee. In addition, candidates complete questionnaires regarding their backgrounds, qualifications, skills and potential conflicts of interest. Candidates are evaluated by the Governance Committee reviewing the candidates' biographical information and qualifications and checking the candidates' references.
Using the input from the interviews and other information it has obtained, the Governance Committee evaluates whether the prospective candidate is qualified to serve as a Director and whether the Governance Committee should recommend to the Board that the Board nominate the prospective candidate for election by the stockholders or to fill a vacancy on the Board.
Stockholder Nominations and Bylaw Procedures. The Governance Committee will consider written recommendations from stockholders for nominees for Director. Recommendations for Director candidates should be submitted to the Governance Committee, c/o the Corporate Secretary, and include at least the following: name of the stockholder and evidence of such person's ownership of our common stock, number of shares owned and the length of time of ownership, name of the candidate, the candidate's resume or a listing of his or her qualifications to be a
Director and the candidate's consent to be named as a Director if selected by the Governance Committee and nominated by the Board.
Assuming that appropriate biographical and background material has been provided on a timely basis, the Governance Committee will use a substantially similar evaluation process as described herein for candidates recommended by stockholders as it follows for candidates identified by Directors or management to evaluate nominees for Director recommended by stockholders.
Stockholders also have the right under our Bylaws to directly nominate Director candidates. Qualifying stockholders may also use the proxy access provisions of our Bylaws to nominate director candidates. See "Stockholder Proposals and Nomination of Directors" for additional information.
General Qualifications. The Board believes all Directors should possess certain personal characteristics, including personal and professional integrity, substantial professional achievement, sound business judgment and vision, to serve on our Board. We believe these characteristics are necessary to establish a competent, ethical and well-functioning Board that best represents the interests of our business, stockholders, employees, business partners and consumers.
Under our Corporate Governance Guidelines (the "Guidelines"), when evaluating the suitability of individuals for nomination, the Governance Committee seeks individuals from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise relevant to Anywhere. The Governance Committee takes into account many factors, including but not limited to: the individual's general understanding of the varied disciplines relevant to the success of a mid-cap publicly traded company in today's business environment; understanding of the real estate market and/or other relevant business models (e.g., franchising and businesses that have a focus on branding); professional expertise and educational background; experience as a director of a publicly-traded company; and other factors described below.
The Governance Committee also considers an individual's ability to devote sufficient time and effort to fulfill his or her Anywhere responsibilities, taking into account the individual's other commitments. In addition, the Governance Committee considers whether an individual meets various independence requirements, including whether his or her service on boards and committees of other organizations is consistent with our conflicts of interest policy, and
when searching for a candidate to serve on the Audit Committee, financial expertise.
When determining whether to recommend a Director for re-election, the Governance Committee also considers the Director's attendance at Board and committee meetings and participation in, and contributions to, Board and committee activities. In addition, under the Guidelines, the Governance Committee generally will not recommend, and the Board will not approve, the nomination for re-election of an Independent Director who has reached the age of 75, unless the Governance Committee, on an annual basis, waives or continues to waive, the mandatory age limitation. An employee Director must offer his or her resignation from the Board upon ceasing to be a Anywhere officer though the Governance Committee has the discretion as to whether or not it should accept such resignation.
Diversity. The Guidelines provide that the Governance Committee will consider factors that promote diversity of views and experience when evaluating the suitability of individuals for nomination. The Guidelines also provide that the Governance Committee will include, and have any search firm that it engages include, women and minority candidates in the initial pool from which the Governance Committee selects director candidates. The Governance Committee recognizes diversity's benefit to the Board and Anywhere, as varying viewpoints contribute to a more informed and effective decision-making process.
As shown in the tables below, our current Directors have varied experiences, backgrounds and personal characteristics, which ensure that the Board will have diverse viewpoints, enabling it to effectively represent our business, stockholders, employees, business partners and consumers:
▪ all of our Directors possess deep senior leadership experience as well as the skills needed to develop and execute an operating plan and business strategy;
▪ five Directors (including our CEO) are current or former chief executive officers or presidents of mid- or large-cap publicly traded companies, with nine Directors possessing accounting, financial or capital markets knowledge;
▪ three Directors are former chief financial or chief accounting officers of publicly traded companies;
▪ six Directors have significant industry, housing or franchise knowledge;
▪ three Directors have experience developing or overseeing an organization’s cybersecurity and/or data privacy program;
▪ four Directors have experience with the development, procurement and/or marketing of technologies and products targeting consumers;
▪ all of our Directors have experience serving on other public company boards and/or providing oversight of matters such as risk management and strategic planning as well as corporate governance and corporate social responsibility;
▪ four Directors are women;
▪ one Director is Hispanic;
▪ one Director is Asian;
▪ two Directors are African American; and
▪ the age range for the Directors is 47 to 72.
Individual Skills and Experience. When evaluating potential Director nominees, the Governance Committee considers each individual's professional expertise and educational background in addition to the general qualifications. The Governance Committee evaluates each individual in the context of the Board as a whole. The Governance Committee works with the Board to determine the appropriate mix of backgrounds and experiences that would establish and maintain a Board that is strong in its collective knowledge, allowing the Board to fulfill its responsibilities, represent our stockholders' interests and best perpetuate our long-term success.
The Governance Committee regularly communicates with the Board to identify characteristics, professional experience and areas of expertise that will help meet specific Board needs, including:
▪ operating experience as current or former executives, which gives Directors specific insight into, and expertise that fosters active participation in, the development and implementation of our operating plan and business strategy;
▪ leadership experience, as Directors who have served in important leadership positions possess strong abilities to motivate and manage others and to identify and develop leadership qualities in others;
▪ industry/housing or franchising knowledge, which assists in understanding and reviewing our business strategy;
▪ accounting, financial and/or capital markets expertise, which enables Directors to analyze our financial statements, capital structure and
complex financial transactions and oversee our accounting and financial reporting processes;
▪ cybersecurity and data privacy experience, given the heightened risk to the Company in light of the increasing level and sophistication of cyber attacks as well as the breadth of compliance requirements;
▪ consumer technology and product experience, which assists our Board in advising us on strategic initiatives and innovation opportunities related to product development and procurement; and
▪ public company board and ESG experience at mid-cap or large publicly traded companies, which provides Directors with a solid understanding of their extensive and complex oversight responsibilities—including risk management and strategic planning—as well as corporate social responsibility matters and furthers our goals of greater transparency, accountability for management and the Board and protection of stockholders' interests.
The Board believes that, as a whole, the Board represents diverse views, experience and background, and that each of the Directors is highly qualified and possesses leadership and professional experience, knowledge and skills that qualify them for service on our Board.
The following table highlights each current Director's specific skills, knowledge and experiences. A particular Director may possess other skills, knowledge or experience even though they are not indicated below.
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| Director Nominees | | Industry/ Housing | Franchise | Operating/ Leadership | Acct./Financial | Capital Markets | Cyber-security/Data Privacy | Consumer Tech./ Product | Public
Company
Board/ESG |
Fiona P. Dias | | | x | x | | | | x | x |
Matthew J. Espe | | | | x | x | | | | x |
| V. Ann Hailey | | | | x | x | x | | | x |
Bryson R. Koehler | | | | x | x | | x | x | x |
| Duncan L. Niederauer | | | | x | | x | | | x |
| Egbert L.J. Perry | | x | | x | x | | | | x |
Ryan M. Schneider | | x | x | x | x | x | | x | x |
| Enrique Silva | | | x | x | x | | | | x |
Sherry M. Smith | | | | x | x | x | x | | x |
| Christopher S. Terrill | | x | | x | | | | x | x |
| Felicia Williams | | | | x | x | x | x | | x |
Michael J. Williams | | x | | x | x | x | | | x |
The following table reports each Director's self-identified race/ethnicity and gender.
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| Director Nominees | Race/Ethnicity1 | Gender2 |
| African-American | Asian (excluding Indian/South Asian) | Caucasian/White | Hispanic/Latino | Female | Male |
Fiona P. Dias | | x | | | x | |
Matthew J. Espe | | | x | | | x |
| V. Ann Hailey | | | x | | x | |
Bryson R. Koehler | | | x | | | x |
| Duncan L. Niederauer | | | x | | | x |
| Egbert L.J. Perry | x | | | | | x |
Ryan M. Schneider | | | x | | | x |
| Enrique Silva | | | | x | | x |
Sherry M. Smith | | | x | | x | |
| Christopher S. Terrill | | | x | | | x |
| Felicia Williams | x | | | | x | |
Michael J. Williams | | | x | | | x |
________________________________(1) None of our Directors self-identified as Indian/South Asian, Middle Eastern/North American, Native American/Alaskan Native, Native Hawaiian/Other Pacific Islander or any other racial/ethnicity category.
(2) We have not surveyed our Directors on whether they identify as non-binary.
Stockholder Voting for Election of Directors
Pursuant to the Bylaws, Directors are each elected by a majority of the votes cast with respect to that nominee in uncontested elections. This means that the number of votes cast "for" each Director nominee must exceed the number of votes cast "against" that nominee. Any abstentions or broker non-votes are not counted as votes cast "for" or "against" that nominee's election and will have no effect on the election of Directors.
Under the Board's Director Resignation Policy, each incumbent Director who fails to receive the required vote for election or re-election in an uncontested election is required to submit a contingent, irrevocable resignation that the Board may accept. The Governance Committee is required to make a recommendation to the Board as to the action to be taken with respect to the tendered resignation. In making this recommendation, the Governance Committee will consider all factors deemed relevant by its members.
The Board is required to act on the resignation within 90 days following the date of the stockholders' meeting at which the election of the Directors occurred. In considering the Governance Committee's recommendation, the Board will consider the information, factors and alternatives considered by the Governance Committee and such additional information, factors and alternatives the Board believes to be relevant. We will promptly publicly disclose the Board's decision and process in a report filed with the SEC. Any Director who tenders his or her resignation under this process will not participate in the Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation. However, such Director shall remain active and engaged in all other committee and Board activities, deliberations and decisions during this committee and Board process.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE FOLLOWING NOMINEES:
Nominees for Election to the Board
Fiona P. Dias Director since June 2013
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| | Standing Committees: ▪ Compensation (since Aug. 2013) ▪ Product & Technology (since Aug. 2018) Additional Public Directorships (current): ▪ Qurate Retail, Inc. ▪ Berkshire Grey, Inc. |
Business Experience and Biographical Information: Ms. Dias, age 57, is currently Principal Digital Partner at Ryan Retail Consulting, a global consulting firm, and has held that position since January 2015. Previously, she was Chief Strategy Officer of ShopRunner, an online shopping service, from August 2011 to October 2014. Before that, she was Executive Vice President, Strategy & Marketing, of GSI Commerce, Inc., a provider of digital commerce solutions, from February 2007 to June 2011. Prior to 2007, Ms. Dias was Executive Vice President and Chief Marketing Officer of Circuit City Stores, Inc., a specialty retailer of consumer electronics, and also held senior marketing positions with PepsiCo, Inc., Pennzoil-Quaker State Company and The Procter & Gamble Company. Ms. Dias was a member of the Board of Directors of Advance Auto Parts, Inc. from September 2009 to May 2019.
Skills and Qualifications: Ms. Dias possesses extensive experience in marketing and managing consumer and retail brands. Her experience with developing, implementing and assessing marketing plans and initiatives allows the Board to benefit from her marketing expertise. In addition, Ms. Dias' e-commerce and digital marketing experience with a broad spectrum of brands aligns well with the Board's review and assessment of the Company's multi-brand strategies. Her position as a director of other public companies also enables her to share with the Board her experience with governance and compensation issues facing public companies.
Matthew J. Espe Director since August 2016
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| | Standing Committees: ▪ Compensation (since Dec. 2017) ▪ Nominating & Corporate Governance (since Aug. 2018) Additional Public Directorships (current): ▪ WESCO International, Inc. ▪ Periphas Capital Partnering Corporation |
Business Experience and Biographical Information: Mr. Espe, age 64, serves as an operating partner at Periphas Capital, a private investment firm (since 2018), Strategic Value Partners Global, a global investment firm (since 2018), and Advent International, a global private equity firm (since 2017). He served as the Chief Executive Officer of Radial Inc., an omnichannel commerce technology and operations provider, from February 2017 until its acquisition by bpost in November 2017. Prior thereto, he served as the President and Chief Executive Officer of Armstrong World Industries, Inc., a publicly traded global producer of flooring products and ceiling systems, from 2010 until 2015. Before joining Armstrong, he was Chairman and Chief Executive Officer of Ricoh Americas Inc. Prior to that role, Mr. Espe was Chairman of the board of directors and Chief Executive Officer of IKON Office Solutions, Inc. from 2002 to 2008. Mr. Espe began his career at General Electric Company, where he was employed for more than 20 years, serving in various leadership roles in Europe, Asia and the United States, last as President and Chief Executive Officer of GE Lighting. Mr. Espe was a member of the Boards of Directors of Foundation Building Materials, Inc. from 2018 until its acquisition in 2021.
Skills and Qualifications: Mr. Espe brings to the Board significant leadership experience, including serving as a CEO of two publicly traded companies. His skills include strategic vision, operational efficiency and driving change throughout an organization. His homebuilding experience also provides the Board with another perspective on the residential real estate industry. Mr. Espe also has extensive corporate governance experience including his service on boards of publicly traded companies.
V. Ann Hailey Director since February 2008
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| | Standing Committees: ▪ Audit (Chair of our Audit Committee from Feb. 2008 to May 2022) ▪ Nominating & Corporate Governance (since Oct. 2012) Additional Public Directorships (current): ▪ W.W. Grainger, Inc. |
Business Experience and Biographical Information: Ms. Hailey, age 72, spent ten years with L Brands, Inc. (formerly Limited Brands, Inc.), where she served as Executive Vice President and Chief Financial Officer from 1997 to 2006, as Executive Vice President of Corporate Development from 2006 to 2007 and as a board member from 2001 to 2006. Previously, Ms. Hailey spent 13 years at PepsiCo, Inc. in various leadership positions, including Vice President, Headquarters Finance, Pepsi-Cola Company and Vice President, Finance and Chief Financial Officer of the Pepsi-Cola Fountain Beverage and USA Divisions, as well as holding positions in the marketing and human resources functions. In addition, Ms. Hailey held leadership roles at Pillsbury Company and RJR Nabisco Foods, Inc. as well as gaining experience in on-line businesses as the President, Chief Executive Officer and Chief Financial Officer of Famous Yard Sale, Inc., an online marketplace, from July 2012 to March 2014 and as Chief Financial Officer of Gilt Groupe, Inc. from 2009 to 2010. She served as a member of the Board of Directors of TD Ameritrade Holding Corporation from 2016 until its acquisition by The Charles Schwab Corporation in October 2020 and the Federal Reserve Bank of Cleveland from 2004 to 2009, where she served as Audit Committee Chair from 2006 through 2009.
Skills and Qualifications: Ms. Hailey has spent her career in consumer businesses and brings key financial and operations experience to the Company. In particular, Ms. Hailey possesses broad expertise in finance, strategic planning, branding and marketing, retailing, and sales and distribution on a global scale. Ms. Hailey's positions as chief financial officer, her current and prior service as Audit Chair of other public companies and the Cleveland
Federal Reserve and her accounting and financial knowledge provide significant expertise to the Board, including an understanding of financial statements, accounting and internal controls, corporate finance and capital markets. Through her experiences at Gilt Groupe Inc. and Famous Yard Sale, Ms. Hailey has experience in internet site development and selling as well as new venture management and funding.
Bryson R. Koehler Director since January 2019
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| | Standing Committees: ▪ Audit (since May 2022) ▪ Product & Technology (since Jan. 2019) Additional Public Directorships (current): ▪ None |
Business Experience and Biographical Information: Mr. Koehler, age 47, has served as Chief Product, Data, Analytics and Technology Officer at Equifax Inc. since June 2018, where he is responsible for leading Equifax’s global product, data, analytics and information technology strategy, development and operations. From November 2016 to June 2018, Mr. Koehler was Chief Technology Officer for the IBM Watson and Cloud Platform, the division that encompasses the cognitive and AI computing capabilities of Watson machine learning. From July 2012 to November 2016, he served as Chief Technology and Information Officer at The Weather Channel Companies (TWCC), which was acquired in 2016 by IBM. Before joining TWCC, Mr. Koehler served as Senior Vice President of Global Revenue and Guest Technology at the Intercontinental Hotels Group from January 2002 to December 2011.
Skills and Qualifications: Mr. Koehler brings to the Board his exceptional experience in cloud computing, data analytics, cyber security, product management and Artificial Intelligence (AI), technology architecture development and specialized applications. Mr. Koehler’s proficiency in driving technology and data change at large publicly traded companies and his expertise in overseeing the strategic vision, development, technical operations, financial planning, and execution of technology initiatives, paired with his experience leading global product development and technology teams, led the Board to consider him well-qualified to serve as a Director of the Company.
Duncan L. Niederauer Director since January 2016
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| | Standing Committees: ▪ Nominating & Corporate Governance (since May 2022) ▪ Product & Technology (since Aug. 2018) Additional Public Directorships (current): ▪ None |
Business Experience and Biographical Information: Mr. Niederauer, age 63, is a founder and managing member of Transcend Capital Advisors, a financial advisory firm, and a co-founder of Communitas Capital Partners, a venture capital firm. He previously served as chief executive officer of NYSE Euronext (the “NYSE”) from December 2007 until the NYSE’s merger with Intercontinental Exchange in November 2013, and thereafter continued to serve as chief executive officer of the NYSE until his retirement in August 2014. Prior to joining the NYSE, Mr. Niederauer worked at Goldman Sachs for 22 years, where he was a partner and co-Head of the Equities Division Execution Services and Head of Electronic Trading and e-Commerce Strategy. Mr. Niederauer was a member of the Board of Directors of GEOX S.p.A. (Milan Stock Exchange) from 2014 to 2019 and First Republic Bank from 2014 to 2022.
Skills and Qualifications: Mr. Niederauer is well qualified to serve as a member of the Board based on his experience at Goldman Sachs as well as his role as CEO of the NYSE. In addition to his leadership skills, Mr. Niederauer has a keen understanding of the capital markets and the impact that technology may have on a business, both as an enabler and a disrupter.
Egbert L. J. Perry Director since January 2023
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| | Standing Committees: ▪ None Additional Public Directorships (current): ▪ None |
Business Experience and Biographical Information: Mr. Perry, age 67, is the Chairman and Chief Executive Officer of The Integral Group LLC. Founded in 1993 by Mr. Perry, Integral is a real estate development, advisory and investment management company based in Atlanta, Georgia. Mr. Perry served on the Board of Directors of Fannie Mae from December 2008 until December 2018, including as Chairman of the Board from 2014 through the end of his tenure. He has over 35 years of experience as a real estate professional, including work in urban development, developing and investing in mixed-income, mixed-use communities, affordable/work force housing and commercial real estate projects in markets across the United States.
Skills and Qualifications: Mr. Perry is well qualified to serve as a member of the Board based on his extensive business leadership experience as well as his deep knowledge of mortgage lending and the real estate market and his corporate governance experience.
Ryan M. Schneider Director since October 2017
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| | Standing Committees: ▪ None Additional Public Directorships (current): ▪ Elevance Health, Inc. |
Business Experience and Biographical Information: Mr. Schneider, age 53, has served as our Chief Executive Officer and President since December 31, 2017 and as a director since October 20, 2017. From October 23, 2017 until his appointment as our CEO and President, Mr. Schneider served as the Company’s President and Chief Operating Officer. Prior to joining the Company, Mr. Schneider served as President, Card of Capital One Financial Corporation (“Capital One”), a financial holding company, from December 2007 to November 2016 where he was responsible for all of Capital One’s consumer and small business credit card lines of business in the United States, the United Kingdom and Canada. Mr. Schneider held a variety of other positions within Capital One from December 2001 to December 2007, including Executive Vice President and President, Auto Finance and Executive Vice President, U.S. Card. From November 2016 until April 2017, he served as Senior Advisor to Capital One. Under the terms of his employment agreement, Mr. Schneider serves as a member of the Board of Anywhere.
Skills and Qualifications: Mr. Schneider’s current responsibilities and leadership as Chief Executive Officer of the Company, coupled with his executive management and leadership expertise, his depth of experience leveraging technology, data and analytics as well as his extensive knowledge of the complex strategic, operational, talent and regulatory issues faced by global public companies make him well qualified to serve on the Board. In addition, Mr. Schneider's service on the board of another public company allows him to offer broader perspectives on corporate governance topics to the Board.
Enrique Silva Director since August 2018
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| | Standing Committees: ▪ Compensation Chair (since May 2022) Additional Public Directorships (current): ▪ None |
Business Experience and Biographical Information: Mr. Silva, age 57, has served as Chief Executive Officer of Culver Franchising System, LLC (Culver's) since March 2021. He served as the Chief Executive Officer and President of Checkers Drive-In Restaurants, Inc. from February 2007 to February 2020. For 13 years prior thereto, Mr. Silva served in various leadership positions at Burger King Corporation, including Senior Vice President, Franchise Operations East Zone and Canada, Senior Vice President, U.S. Company Operations, President, Latin America Region, and Vice President and General Counsel, Latin America.
Skills and Qualifications: Mr. Silva brings to the Board extensive executive leadership experience in franchise operations and business strategy. His deep knowledge of operational, financial and legal matters, including with respect to risk management, also led the Board to consider him well-qualified to serve as a Director of the Company.
Sherry M. Smith Director since December 2014
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| | Standing Committees: ▪ Audit (since Dec. 2014) ▪ Compensation (since May 2022) Additional Public Directorships (current): ▪ Deere & Company ▪ Piper Sandler Companies
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Business Experience and Biographical Information: Ms. Smith, age 61, served as Chief Financial Officer and Executive Vice President of SuperValu Inc., a grocery retailer and food distributor, from December 2010 until August 2013. She previously served as Senior Vice President of Finance from 2006 until 2010, and before that as Senior Vice President of Finance and Treasurer from 2002 until 2005, and in various other capacities with SuperValu from 1987 to 2001, including accounting, audit, controller, compensation, mergers and acquisitions, strategic planning and treasury. Ms. Smith was a member of the Board of Directors of Tuesday Morning Corporation from 2014 to 2022.
Skills and Qualifications: Ms. Smith is well qualified to serve as a member of the Board based on her leadership qualities developed from her experience while serving as a senior executive and as Chief Financial Officer of Supervalu Inc., the breadth of her experiences in auditing, finance, accounting, compensation and strategic planning, and her subject matter knowledge in the areas of finance and accounting.
Christopher S. Terrill Director since July 2016
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| | Standing Committees: ▪ Product & Technology Chair (since Aug. 2018) ▪ Nominating and Corporate Governance (since May 2022) Additional Public Directorships (current): ▪ Vacasa, Inc. ▪ Yelp, Inc. |
Business Experience and Biographical Information: Mr. Terrill, age 55, served as the Chief Executive Officer and a director of ANGI Homeservices, an international digital marketplace for home services that helps connect consumers with home professionals in the United States and other countries under various brands, including HomeAdvisor® and Angie's List, among others, from September 2017 to November 8, 2018. Prior to assuming that role in September 2017, Mr. Terrill served as Chief Executive Officer of HomeAdvisor.com, a wholly owned subsidiary of IAC, from May 2011. Prior thereto, he held senior marketing positions at Nutrisystem.com, a leader in the direct-to-consumer diet space, serving as its Chief Marketing Officer and Executive Vice President of eCommerce from June 2009 to May 2011 and Senior Vice President of e-commerce from January 2007 to June 2009. For one year prior to joining Nutrisystem.com, he served as Vice President of Product and Marketing for Blockbuster.com, the online division of Blockbuster Inc. Additionally, he spent six years with Match.com where he held several senior marketing roles, his last being Vice President of New Brands & Verticals, where he developed and launched new online brands, including Chemistry.com. From September 2020 until December 2022, he served as Executive Co-Chairman of Z-Work Acquisition Corp., a special purpose acquisition company (or SPAC) that ceased operations in December 2022. Mr. Terrill also was a member of the Board of Directors of Terminix Global Holdings Inc. (from 2021 to 2022) and Porch Group, Inc. (from 2020 to 2022).
Skills and Qualifications: Mr. Terrill brings to the Board relevant experience in the areas of executive leadership, strategic planning and marketing and managing consumer behavior, including direct to consumer brands in the real estate services industry. Mr. Terrill is a seasoned Internet veteran who has specialized in consumer online subscription and marketplace business models.
Felicia Williams Director since March 2021
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| | Standing Committees: ▪ Audit Chair (since May 2022, member since March 2021) Additional Public Directorships (current): ▪ Paycom Software, Inc. |
Business Experience and Biographical Information: Ms. Williams, age 57, has served in senior finance leadership roles at Macy’s, Inc., a premier omni-channel fashion retailer, for the past 17 years, including as an executive officer of Macy’s from 2016 to 2020 in the roles of Interim Chief Financial Officer from June 2020 to November 2020 and Senior Vice President, Controller and Enterprise Risk Officer, including oversight of the company's information security and data privacy functions, from June 2016 to June 2020. She served as Senior Vice President, Finance and Risk Management from February 2011 to June 2016 and prior thereto across key corporate finance functions at Macy’s, including treasury, investor relations, risk management, financial services, financial planning and analysis, and internal audit. Ms. Williams is currently serving as Macy’s Fellow for CEO Action for Racial Equity, the first business-led coalition of its kind with a mission to advance racial equity through public policy. Prior to her time at Macy’s, Ms. Williams served in various financial positions at the Coca-Cola Hellenic Bottling Company, The Coca-Cola Company, Bristol-Myers Squibb, and Arthur Andersen & Company. Ms. Williams was a member of the Board of Directors of Meridian Bioscience, Inc. from 2018 to January 2023.
Skills and Qualifications: Ms. Williams is well-qualified to serve as a member of the Board based on the breadth of her experience in finance, accounting, auditing and enterprise risk management. She brings to the Board extensive leadership experience and broad-based knowledge of the financial and operational issues affecting complex organizations.
Michael J. Williams Director since November 2012
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| | Standing Committees: ▪ Audit (since Nov. 2012) ▪ Nominating & Corporate Governance Chair (since Aug. 2013; member since Nov. 2012) Additional Public Directorships (current): ▪ None |
Business Experience and Biographical Information: Mr. Williams, age 65, has served as our Independent Chairman of the Board since December 31, 2017 having previously served as our Lead Independent Director (or Presiding Director) since November 2013.
Mr. Williams served as a senior advisor to Sterling Partners, a private equity firm, and as non-executive chairman of Prospect Mortgage, one of its portfolio companies, from November 2012 to June 2014. He acted as the Chairman and Chief Executive Officer of Prospect Mortgage, from June 2014 until the sale of that company in February 2017. He was President and Chief Executive Officer of Fannie Mae, and a member of its Board of Directors and executive committee, from April 2009 to June 2012. He previously served as Fannie Mae's Executive Vice President and Chief Operating Officer from November 2005 to April 2009. Mr. Williams also served as Fannie Mae's Executive Vice President for Regulatory Agreements and Restatement from February 2005 to November 2005, as President, Fannie Mae eBusiness from July 2000 to February 2005 and as Senior Vice President, e-commerce from July 1999 to July 2000. Prior to this, Mr. Williams served in various roles in the Single-Family and Corporate Information Systems divisions of Fannie Mae. Mr. Williams joined Fannie Mae in 1991.
Skills and Qualifications: Mr. Williams' extensive experience in business, finance, accounting, mortgage lending, real estate and the regulation of financial institutions, which he gained during his tenure at Fannie Mae, make him well qualified to serve on the Board.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Discussion and Analysis, or the CD&A, focuses on the compensation of our named executive officers for 2022 as set forth below. We refer to this group as our "named executive officers" or "NEOs."
Our Named Executive Officers
Executive Summary
2022 Strategic Execution
Despite a challenging 2022, Anywhere Real Estate generated Operating EBITDA throughout the year.
At the Company's Investor Day in May 2022, we announced our rebranding and articulated a five-year strategic plan designed to deliver an improved homesale transaction experience to customers and capitalize on our existing strengths, including:
▪ Best-in-class franchisor
▪ Luxury leadership
▪ National scale, fully integrated owned brokerage, title and mortgage
▪ Best network of trusted independent sales agents
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| | |
| | Independent sales agents affiliated with our company owned brokerages grew ~4% on a like-for-like basis in 2022 over 2021 |
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Management continued its work to improve the Company's debt profile throughout 2022 as well, including extending its revolving credit facility to July 2027 (subject to certain earlier springing maturity dates) in the third quarter, strategically repurchasing senior notes at a discount in the second and third quarters, and redeeming the balance of our 4.875% senior notes due 2023 during the fourth quarter of 2022.
As the residential real estate market worsened during the year, we boosted our commitment to execute against cost savings initiatives, increasing our initial target of $70 million to $150 million of realizable cost savings in 2022.
2022 Financial Results
Weakening market conditions in the residential real estate industry accelerated during the second half of
2022, with rapidly rising mortgage rates, high inflation, reduced affordability and broader macroeconomic concerns driving significant declines in homesale transaction volume, as well as purchase and refinancing unit and mortgage origination volume. While the low inventory environment further contributed to declines in closed homesale sides, insufficient inventory levels also strongly contributed to a higher average homesale price in the first three quarters of 2022.
From March to December 2022, the Federal Reserve Board increased interest rates by over 400 basis points. On December 31, 2022, mortgage rates on a 30-year fixed-rate mortgage were 6.36% - more than double the rate of 3.10% on December 31, 2021, according to Freddie Mac.
Combined homesale transaction volume (transaction sides multiplied by average sale price) for our Company-owned and franchised brokerages declined 14% compared with 2021. Likewise, at our title operations, refinancing title and closing units declined 67%, purchase title and closing units declined 18%, and equity in earnings from our mortgage origination joint venture declined $71 million in 2022, in each case as compared to the prior year.
▪ Revenue of $6.9 billion declined 13% year-over year, with a net loss of $287 million (which included $470 million in non-cash goodwill and intangible asset impairments)
▪ Operating EBITDA* of $449 million decreased 50% over 2021
▪ Free Cash Flow* of $(159) million vs. $553 million in 2021
* See Annex A for definition & reconciliation of the non-GAAP measures referenced in this section.
| | |
2022 Key Leadership Changes |
We recruited new talent and restructured core roles to leverage strengths and accelerate our long-term strategy:
▪ Susan Yannaccone as our CEO & President of both Anywhere Advisors and Anywhere Brands, leading both our company owned brokerage and franchise operations
▪ Donald Casey in an expanded operational role for our Company-owned brokerage and title businesses and in assuming leadership of Cartus relocation
▪ Melissa McSherry as our Chief Operating Officer, leading our strategic initiatives to modernize the manner in which we deliver our products and services and create an easier and integrated experience for a consumer’s next move
▪ Tony Kueh as our Chief Product Officer
2022 Investor Outreach Program
At our 2022 Annual Meeting of Stockholders, our say-on-pay proposal received support from 71.8% of the votes cast—a lower level of support than we received at our last several meetings where support ranged from 88.6% to 96%.
In the spring of 2022, in advance of our 2022 Annual Meeting of Stockholders, and in the fall of 2022, we reached out to stockholders representing over 80% in the aggregate of our outstanding shares and met with holders of approximately 75% of our outstanding shares.
Michael Williams, Chairman of the Board, met with substantially all of our stockholders who accepted our invitation. Mr. Williams was joined by either Enrique Silva (who serves as our Compensation Committee Chair since May 2022) or Duncan Niederauer (who served as our Compensation Committee Chair until May 2022) at substantially all of such meetings.
The feedback from these important sessions with our investors was reviewed and discussed with the full Board as well as with the Compensation Committee.
A key objective of our 2022 Investor Outreach was to listen to our stockholders and better understand their perspectives on our executive compensation program and, with respect to the fall investor outreach, any concerns that motivated the lower level of support for our 2022 “say-on-pay” vote.
Many of our stockholders noted their support for our executive compensation program, including the high levels of "at-risk" and performance-based compensation granted, in particular to the CEO—as well as our use of three-year performance share units for at least a majority of long-term incentive awards.
Responsive action to specific investor feedback relating to our executive compensation program is noted below.
| | | | | | | | | |
| Topic | Stockholder Feedback | Board Action |
| | | |
| Overall Executive Compensation Philosophy | A significant number our investors noted their support for our executive compensation program design as articulated in the 2022 proxy statement | The Compensation Committee reaffirmed its commitment to a pay-for-performance compensation program that aligns the interests of our executive officers with our stockholders through an emphasis on the use of rigorous pre-established goals and long-term equity awards See Compensation Philosophy—page 39 |
| | | |
| Annual Cash Incentive Payout Volatility / Award Metrics | Certain investors noted the volatility in award payouts under the annual cash incentive plan and suggested design and/or metric considerations, including those that might moderate extreme variations such as metrics that take into account key Company objectives, including cost reductions | The 2023 annual cash incentive plan has been designed to reduce payout volatility by: ▪ funding 30% of the plan based on the achievement of strategic and business objectives related to operational excellence (including cost savings), consumer experience and talent ▪ funding the remaining 70% of the plan based on achievement of a budget-aligned Plan Operating EBITDA target ▪ requiring a higher multiple of Plan Operating EBITDA to achieve maximum funding and a lower multiple to obtain threshold funding, while remaining in line with the Company's peers ▪ reducing Compensation Committee discretion with respect to individual payouts to +/-25% of the amount funded under the plan ▪ retaining the requirement that total payouts under the plan may not exceed aggregate plan funding See 2023 Annual Incentive Plan—page 49 |
Strategic Alignment with Compensation
Our Compensation Committee, which we refer to in this CD&A as the "Committee," ties a significant portion of target direct compensation to performance against the annual and long-term metrics that the Committee believes are most directly linked to the successful execution of our strategy and shareholder value, including Operating EBITDA, Free Cash Flow and the generation of stockholder returns relative to a general market index. The remaining portion of target direct compensation is paid in fixed base salary.
In 2022, CEO target direct compensation was:
▪ 90% at-risk, including short- and long-term incentives
▪ 71% in equity-based compensation, of which 60% was granted in the form of performance share units tied to either Cumulative Free Cash Flow (the "CFCF PSUs") or Relative Total Stockholder Return (the "RTSR PSUs")
▪ 61% tied to performance-based metrics, including the CFCF and RTSR PSUs, as well as an annual cash incentive opportunity under the Executive Incentive Plan (the "EIP")
The Compensation Committee believes that the outcomes for awards with performance periods ended in 2022 demonstrate that our pay-for-performance executive compensation program worked as designed:
▪ No payout was made under the 2022 annual cash-based incentive plan tied to Plan Operating EBITDA
▪ No payout was made in respect of the three-year performance share units tied to Relative Total Stockholder Return
▪ Consistent with our significant generation of Free Cash Flow in 2020 and 2021, the performance share units tied to Cumulative Free Cash Flow paid out at 200%
The aggregate realized value for our NEOs was 71% of target for the 2020-2022 performance share unit cycle (based on our stock price on December 30, 2022).
Additionally, no payout was made under the one-time Market Share Award for the two-year performance period ending September 30, 2022.
| | |
| CEO Target Direct Compensation (2022) |
|
The graphic above is based on value assigned by the Committee to 2022 long-term incentive (equity) awards, rather than the grant date fair value of such awards.
In 2022, target direct compensation for our NEOs (other than our CEO) was on average approximately 70% at-risk and 50% tied to performance metrics. Overall NEO compensation was comprised, on average, of approximately 30% base salary, 30% annual incentive (cash), and 40% long-term incentive (equity)—with half of the equity granted in the form of performance share units and half granted in the form of time-vested restricted stock units.
Target direct compensation does not include the value of the one-time Market Share Performance Award granted in 2020 (see page 49) - which was not earned for the initial performance period; Ms. McSherry's make-whole inducement RSU award granted in connection with her hiring (see page 48); or the amounts vested in 2022 pursuant to a time-vested cash award granted to Ms. Yannaccone in 2019, prior to her being promoted to her current executive position (see page 48), none of which are part of the regular target direct compensation program for executive officers.
Elements of 2022 Target Direct Compensation
The following table describes each element of 2022 target direct compensation and describes why the Committee has incorporated that element into Anywhere’s executive compensation program.
| | | | | | | | | | | |
| | What Is It? | Why Do We Pay It? |
|
Base Salary
| | Annual cash salary | To attract and retain top-tier talent by providing market-competitive fixed pay reflective of the executive’s position, experience, scope of responsibility and contribution to our performance |
Annual Incentive (Cash)
| | Annual performance-based incentive plan, called the Executive Incentive Plan, or EIP, that was funded by results under a Plan Operating EBITDA metric, with payouts determined by each executive's "Relative Individual Performance" | To drive short-term financial performance, specifically by measuring results under our primary operating metric and the strength of each executive's individual performance (taking into consideration achievement of key strategic and operational objectives, execution of key initiatives and other factors) |
Long-Term Incentive (Equity)
| | Performance share units, or PSUs, are earned based on the achievement of the following pre-established metrics over rolling 3-year cycles: ▪ Cumulative Free Cash Flow ▪ Relative Total Stockholder Return | To align compensation with stockholders, PSUs constitute at least half of the long-term incentive award in 2022 and are designed to incentivize long-term value creation through stock and critical operating performance objectives over rolling 3-year periods Time-based RSUs serve a retention objective and further align executive interests with those of our stockholders, as the value of the grants increase or decrease with our stock price |
| Restricted Stock Units, or RSUs, vesting over a 3-year period |
Strong Commitment to Compensation Best Practices:
| | | | | | | | | | | | | | |
| 61% of CEO target direct compensation opportunity is performance-based | | | Multiple performance metrics (relative & absolute and annual & long-term) |
| At least 50% of regular long-term incentive program tied to performance goals over a three-year performance period | | | RTSR PSUs capped at target when the absolute total stockholder returns are negative |
| Clawback Policy provides for the recoupment
of both cash and equity compensation | | | Annual cash incentive program funded substantially on achievement of a financial objective |
| No option repricing without stockholder approval | | | No "golden parachute" excise tax gross-up arrangements |
| Responsive to investor feedback | | | Prohibition against hedging & pledging |
| Strong stock ownership requirements | | | Annual risk assessment of compensation programs |
| Double trigger change in control provisions | | | Independent compensation consultant |
| Strict restrictive covenant agreements | | | No significant executive-only perquisites |
Compensation Philosophy & Commitment to Pay-for-Performance
As part of our 2022 Investor Outreach, many investors noted their support for our executive compensation program as articulated in the 2022 proxy statement - with substantially all investors supporting a pay program that includes rigorous performance metrics.
Following its review of investor feedback (and incorporating investor feedback as discussed above under "2022 Investor Outreach Program"), the Committee reaffirmed its commitment to a pay-for-performance compensation program that aligns the interests of our executive officers with our stockholders through an emphasis on the use of rigorous pre-established goals and long-term equity awards.
Our compensation philosophy has the following key objectives:
▪ The attraction, motivation and retention of high-performing executives;
▪ A pay-for-performance focus that ties a significant portion of pay to business performance, both short- and long-term;
▪ Alignment of compensation with stockholder interests in both short-term performance and long-term value creation;
▪ Reinforcement of ethical behavior and practices;
▪ Discouragement of excessive risk; and
▪ Flexibility to respond to the necessities of a cyclical industry.
With regard to pay levels, our philosophy is that:
▪ Target direct compensation should be set at the outset of the compensation period by taking into account compensation paid to similarly-situated executives of comparable proficiency, with flexibility to vary individual executive compensation to specific factors such as tenure, experience, proficiency in role, criticality to the organization and other business needs; and
▪ All actual payments on incentive components should be linked to Company operating, financial, and stock performance during the performance period.
In setting target compensation, the Committee annually reviews a detailed and comprehensive analysis of peer group information and general industry survey data designed to educate the Committee on current compensation ranges by
executive position together with plan design and component weighting information.
Peer group and survey data are used as a reference point in making compensation decisions, but the Committee does not target a particular competitive level or utilize peer data in a formulaic manner. For additional information on our peer group, see "Our Peer Group" below in this CD&A.
As discussed in more detail below, individual pay levels vary based on individual experience, scope of responsibilities, past performance and expectations with respect to future performance and future leadership potential.
Components of Executive Compensation
Each named executive officer has a “target direct compensation” opportunity comprised in 2022 of both fixed (base salary) and “at-risk” (short- and long- term incentives) compensation.
The Committee considers a wide variety of factors when reviewing each element of executive compensation, including those set forth below.
| | | | | | | | | | | | | | |
How the Committee sets elements of
Total Direct Compensation |
Review Process | • Annual (but changes may be less frequent and are not guaranteed); or • Upon a promotion or material change in responsibilities |
| Factors |
• Individual performance assessment, including input from our CEO* • Extent of role’s impact on financial and strategic goals • Internal pay equity • Relative positioning to the peer group and other market comparables • Period since last increase • Retention concerns • Expected future contributions |
* CEO does not participate in discussions or decisions regarding his own compensation
A significant portion of “at-risk” compensation is tied to pre-established objective performance metrics, including an annual cash incentive opportunity and performance share units granted as part of each NEO’s long-term incentive opportunity.
When designing executive compensation, the Committee also takes into account that significant decreases in realizable value for our NEOs could damage Company performance if our pay program does not offer sufficient incentive and retention value to our key executive talent.
In exceptional circumstances, the Committee may offer special incentive, retention or other bonus awards if such action is determined by the Committee to be necessary to achieve its incentive and retention goals. For additional information on the one-time Market Share Performance Awards granted by the Committee in the second half of 2020, see page 49. In addition, the Company offers its NEOs severance protection and limited perquisites.
2022 Base Salary
In February 2022, the Committee approved base salaries for 2022 as set forth in the following table. The Committee determined not to increase the base salary for either our CEO or Ms. Wasser.
In approving an increase to base salary for Ms. Simonelli, the Committee considered her outstanding performance in strengthening Anywhere’s financial profile, including improvements to the Company's capital structure, the Company's expectations with respect to her contributions in 2022 and her positioning relative to the peer group.
The Committee approved an 8.3% increase in base salary for Ms. Yannaccone in February 2022 based on her contributions to the success of the Company's franchise operations in 2021, the Company's expectations with respect to her contributions to that business in 2022, internal pay equity considerations and her positioning relative to the peer group.
During the fourth quarter of 2022, the Committee approved an additional 15.4% increase in base salary for Ms. Yannaccone in connection with the significant increase of her responsibilities as she assumed leadership of our owned brokerage business in addition to leadership of our franchise business.
The base salary of each NEO as of December 31, 2022 is reflected in the table below.
| | | | | | | | | | | | | | |
| Name | Previous Year of
Last Increase | 2021 Annual
Base Salary ($) | 2022 Annual
Base Salary ($) | Base Salary 2022 v. Base Salary 2021
(% Increase) |
| Ryan Schneider | n/a | 1,000,000 | 1,000,000 | 0% |
| Charlotte Simonelli | 2021 | 900,000 | 950,000 | 6% |
| Melissa McSherry | n/a | n/a | 750,000 | n/a |
| Susan Yannaccone | 2020 | 600,000 | 750,000 | 25% |
| Marilyn Wasser | 2020 | 600,000 | 600,000 | 0% |
2022 Annual Incentive (Cash)
Summary. All of our NEOs participate in an annual cash incentive program called the Executive Incentive Plan, or EIP. The 2022 EIP was entirely funded based on achievement against a Plan Operating EBITDA target.
The Committee selected Plan Operating EBITDA as the financial performance metric under the EIP due to its direct link to the success of Anywhere’s business strategy—as this metric is materially aligned and consistent with Operating EBITDA, our key metric for evaluating overall performance of our operating business.
Certain adjustments to Operating EBITDA were permitted under the EIP, including adjustments for items that differed from the 2022 Budget such as pension expense, certain litigation costs, and
earnings/losses from RealSure as well as adjustments to account for the impact of changes in the expected timing of the close of our title insurance underwriter, foreign exchange movements and/or natural disasters (net of insurance reimbursements). The Committee also had discretion to adjust for other items, such as extraordinary corporate transactions.
In February 2023, the Committee determined that no funding had been achieved under the 2022 EIP based upon the Company's 2022 Operating EBITDA and determined not to make any adjustments permitted under the EIP.
2022 Target Annual Incentive. The Committee approved the following target opportunities (expressed as a percentage of earned base salary) for the NEOs: (i) for the CEO, a 200% target award
opportunity (given his overall greater accountability for the performance of the Company), and (ii) for the other NEOs, a 100% target award opportunity.
2022 Target Funding Pool. The potential funding pool for the EIP was determined by aggregating the target opportunity of each of the CEO and the other executive officer members of the Executive Committee.
The 2022 EIP would be funded by multiplying this aggregate target opportunity by the actual level of performance achieved against the Plan Operating EBITDA target - which could range from threshold funding at 25% (for performance achievement at the threshold performance level equal to 85% of the target goal) to maximum funding at 200% (for achievement at the maximum performance level equal to 120% of the target goal).
The aggregate value of awards earned under the EIP could not exceed this funding pool. Accordingly, any adjustments to an award based on consideration of Relative Individual Performance would have been restricted by this overall funding pool limit.
As the Committee determined that the Company had not achieved threshold funding level, no amounts were available for distribution under the 2022 EIP.
| | | | | | | | | | | | | | |
| 2022 EIP Funding Calculation |
Aggregate Participant Target Award Amount
($) | x | Plan Operating EBITDA Results (%) | = | Funded EIP Award Pool ($) |
| | | | |
| Individual 2022 EIP Awards Calculation |
Funded EIP Award ($) | x | Relative Individual Performance (%) | = | Individual EIP Award ($) |
Rigor in Setting the Plan Operating EBITDA Target. The target Plan Operating EBITDA goal was set by the Committee at a level equal to the budget approved by the Board for 2022, or the 2022 Budget.
The budgeting process undertaken by management and overseen by the Board is rigorous and set at a level that requires a reasonable degree of stretch performance and operational excellence to achieve. Funding of the 2022 EIP was based solely on Plan Operating EBITDA for the consolidated Company.
While the 2022 Plan Operating EBITDA target was lower than actual Operating EBITDA reported by us for 2021, the Committee believed the 2022 EIP target was rigorous in large part due to the factors listed below.
When setting the 2022 EIP target, the Committee also considered that the 2022 Budget forecasted:
▪ mid-single digit homesale transaction volume growth;
▪ benefits from new cost saving initiatives; and
▪ anticipated moderate increased earnings from our mortgage origination joint venture over 2021.
However, the foregoing benefits were expected to be more than offset and be negatively impacted by:
▪ continued pressure on the share of gross commission income paid by our Company-owned brokerages to independent sales agents;
▪ forecasted expenses for growth investments in the business, including strategic initiatives; and
▪ decreased earnings related to the then pending sale of the Company's title insurance underwriter.
Balancing these factors, the Committee believed that the target set for the EIP was in fact rigorous, notwithstanding it being lower than the actual 2021 EIP achievement.
Historical EIP payouts based on performance against the Plan Operating EBITDA target set by the Committee, as shown in the table below, further demonstrate the level of rigor required to achieve payout under the EIP.
| | | | | |
| Historical payouts under the EIP |
| 2022 | 0% |
| 2021 | 200%* |
| 2020 | 200%* |
| 2019 | 70%* |
| 2018 | 44%* |
| 2017 | 82% |
| 2016 | 70% |
| 2015 | 100% |
| 2014 | 63% |
| Average of above | 92% |
* Before application of Relative Individual Performance
Target and Actual 2022 Plan Operating EBITDA Funding under the EIP
The table below sets forth the:
▪ Pre-established Plan Operating EBITDA performance levels at threshold, target and maximum payout; and
▪ Actual Plan Operating EBITDA performance achieved in fiscal 2022.
| | | | | | | | |
2022 Plan Operating EBITDA* Funding under the EIP |
| Performance Level | Payout as % of Target | Plan Operating EBITDA
(in millions) |
| Threshold | 25% | $689 |
| Target | 100% | $810 |
| Maximum | 200% | $972 |
| Actual | 0% | $449 |
* See Annex A for a definition and a reconciliation of Operating EBITDA to the most directly comparable GAAP measure.
Relative Individual Performance Calculation.
The Committee, in collaboration with the full Board, establishes individual performance goals for our CEO at the beginning of the fiscal year based on our annual financial and strategic plan.
Likewise, each executive officer member of the Executive Committee works with our CEO at the outset of the year to establish quantitative and qualitative goals designed to drive our corporate strategy and results.
As the Plan Operating EBITDA threshold was not achieved under the 2022 EIP, the plan was not funded, and no amounts were payable under the 2022 EIP.
Nevertheless, following the conclusion of the year, our CEO provided an in-depth review of his performance to the Board. After consultation with the Board, the Committee assessed the CEO's performance, taking into account the following factors:
▪ Achievement of key strategic and operational objectives;
▪ Execution of key initiatives;
▪ Execution of key talent management initiatives, including those related to diversity, equity and inclusion; and
▪ Other factors identified as appropriate.
The CEO also presented the Committee with his assessment of the performance of each executive officer member of the Executive Committee taking into consideration each executive's pre-established goals and the factors listed above.
In years where the EIP is funded, these presentations and assessments form the basis for the Committee's determinations of the Relative Individual Performance of each NEO, although when determining each NEO's Relative Individual Performance, the Committee does not assign a specific weighting to any of the individual goals or factors, but rather considers progress and results against the objectives in the aggregate.
2022 Payouts Earned under the EIP
The following table sets forth each NEO's target award and payout achieved:
| | | | | | | | | | | |
| Name | Target Award ($) | Combined 2022 Financial and Individual
Performance (%) | 2022 Payout ($) |
Ryan Schneider | 2,000,000 | | 0 | — |
Charlotte Simonelli | 940,385 | | 0 | — |
| Melissa McSherry | 631,731 | | 0 | — |
| Susan Yannaccone | 646,154 | | 0 | — |
Marilyn Wasser | 600,000 | | 0 | — |
Long-Term Incentive (Equity)
Long-term incentives, or LTI, in 2022 consisted of the following types of equity awards:
| | | | | | | | | | | |
| 2022 Long-Term Incentive Awards by Grant Type and Weighting |
| Performance-Based Awards (Performance Share Units) | Time-Based Awards |
| RTSR† | CFCF | RSUs |
| CEO | 30% | 30% | 40% |
| Other NEOs | 20% | 30% | 50% |
† The weighting above is based on the valuation approach used by the Committee to determine the appropriate allocation among the components of target direct compensation, rather than the grant date fair value of the awards.
Summary
In 2022, the Committee again allocated 60% of our CEO's long-term incentive compensation value to performance share units, or PSUs. The PSUs are tied to Company achievement against pre-established metrics over the three-year period ending December 31, 2024. Half of each other NEO's 2022 long-term incentive award was awarded in the form of PSUs.
The performance metrics used in the PSU program are Relative Total Stockholder Return, or RTSR, and Cumulative Free Cash Flow, or CFCF, each of which is explained under the heading "Performance Share Units" in this CD&A.
The remaining 2022 LTI award was comprised of time-based awards granted in the form of restricted stock units, or RSUs.
In setting the mix of equity, the Committee weighed its preference for performance-based awards against the retention benefits provided by time-based equity awards. The Committee noted the meaningful three-year ratable vesting period for RSU awards.
The Committee considered the following factors when determining each NEO’s 2022 LTI grant:
▪ the need to provide sufficient long-term incentives;
▪ the need to satisfy retention objectives;
▪ a competitive pay analysis prepared by the Committee’s independent compensation consultant;
▪ the executive’s expertise, experience and criticality to Anywhere; and
▪ individual performance reviews conducted by the Committee with input from our CEO in the case of his direct reports and, in the case of our CEO, with input from the Board.
The Committee kept the 2022 LTI awards flat, year-over-year, for Mr. Schneider, determining that the LTI opportunities appropriately recognized his role in the oversight of our entire operations. The Committee believes that Mr. Schneider’s 2022 LTI award is appropriate given that:
▪ the majority of his LTI award is tied to the achievement of objective performance goals over a three-year performance cycle;
▪ his broad scope of responsibilities and the critical role he plays in setting and executing the Company’s business strategy;
▪ his equity awards are subject to both the Company's Clawback Policy as well as his continued compliance with the restrictive covenants in his employment agreement; and
▪ his awards vest over a period of three years and will be forfeited if he is terminated for cause or voluntarily leaves his position.
The Committee weighed PSU awards more heavily for Mr. Schneider than other NEOs, with 60% of his 2022 LTI target value tied to the RTSR or CFCF metric (as opposed to 50% weight for our other NEOs). Equal target compensation value was assigned to each of these PSU metrics for the 2022-2024 performance period for our CEO in order to provide further incentive to him to drive the creation of stockholder value through both stock performance and the Company’s generation of Free Cash Flow.
The Committee increased the target value of the LTI awards granted to Ms. Simonelli by approximately 11% to reflect her outstanding performance in strengthening Anywhere’s financial profile, including improvements to the Company's capital structure, the Company's expectations with respect to her contributions in 2022 and her positioning relative to the peer group.
The following table shows the 2022 LTI awards granted to our NEOs as well as the aggregate LTI target direct compensation value assigned by the Committee and aggregate grant date fair value of those awards.
| | | | | | | | | | | | | | | | | |
| 2022 Long-Term Incentive Grants |
| Shares Underlying Performance-Based PSU Awards (#)(1) | Shares Underlying Time-Based Awards (#) | LTI Target Direct Compensation Value ($)(2)
| Grant Date Fair Market Value ($)(2)
|
| Name | RTSR(2) | CFCF | RSUs |
| Ryan Schneider | 125,000 | | 125,000 | | 166,666 | | $ | 7,500,000 | | $ | 6,796,238 | |
Charlotte Simonelli | 16,666 | | 25,000 | | 41,666 | | 1,500,000 | | 1,406,146 | |
Melissa McSherry (3) | 11,111 | | 16,666 | | 27,777 | | 1,000,000 | | 937,417 | |
| Susan Yannaccone | 10,000 | | 15,000 | | 25,000 | | 900,000 | | 843,700 | |
| Marilyn Wasser | 12,222 | | 18,333 | | 30,555 | | 1,100,000 | | 1,031,170 | |
_______________
(1) Shares underlying performance-based PSU awards and grant date fair value are presented at target.
(2) The number of PSUs granted under the RTSR metric was determined by dividing the value of the award approved by the Committee by our closing stock price on the date of grant ($18.00), while the grant date fair value of $12.37 per RTSR PSU was determined, in accordance with FASB ASC Topic 718, by a Monte Carlo simulation performed by an independent third-party.
(3) Ms. McSherry also received a "make-whole" inducement award on March 1, 2022 in connection with her commencement of employment with us, which had a grant date fair value of $2,099,988 and was granted in the form of restricted stock units that vest in equal tranches over three years on each anniversary of the grant date. As noted under the heading Make Whole Award to Ms. McSherry on page 48, the award is subject to our Clawback Policy. Performance Share Units
Since 2014, Performance Share Unit, or PSU, awards have comprised at least half of the regular LTI award.
In 2022, the Committee allocated the following amounts of LTI target value to PSU awards:
▪ 60% of the CEO's LTI award; and
▪ 50% of each other NEO's LTI award.
The number of units that may be earned under each PSU award is a multiple of the target award, with such multiple based upon the achievement of the applicable performance metric over the three-year performance period.
The PSU awards granted in 2022 measure performance from January 1, 2022 to December 31, 2024. Likewise, the PSU awards that were earned for the three-year period ending December 31, 2022 were granted in 2020. Payouts are determined by linear interpolation when achievement falls between performance levels.
All of our currently outstanding PSU awards are based on two metrics—relative total stockholder return, or RTSR, and Cumulative Free Cash Flow, or CFCF.
PSUs are denominated in stock units, so the award value tracks Anywhere stock price over the three-year performance period.
Earned PSUs are distributed in actual shares of our common stock during the first quarter of the year after the end of the three-year cycle. Amounts earned are based upon the Committee's determination of results and are forfeitable if the Company does not meet pre-established threshold targets for CFCF and RTSR.
| | | | | | | | |
| | |
| | PSU award design incorporates feedback received during the Board's Investor Outreach Programs |
| | |
Relative Total Stockholder Return
Summary. The Relative Total Stockholder Return metric was initially adopted by the Committee as a PSU metric in 2015 at the recommendation of investors. Certain investors have continued to express support for this metric during the Board's Investor Outreach Program.
The RTSR metric focuses on Anywhere stockholder returns relative to an index selected by the Committee—with outperformance against the index
resulting in payouts above target and underperformance resulting in no payout, or payouts below target.
| | | | | |
| RTSR PSU—Design Features |
Metric Description | Total stockholder return relative to a hypothetical investment in the S&P MidCap 400 index |
Target Direct Compensation Weighting | In 2022, PSU awards tied to RTSR were: - 50% of the CEO's PSU award - 40% of each other NEO's PSU awards |
Opportunity (% of Target Shares Vested) | Threshold = 40% Target = 100% Maximum = 175% |
The Committee believes the RTSR metric aligns long-term executive compensation with the interests of our stockholders and is working as designed with:
▪ NO payouts earned under any cycle completed to date, including the cycle ended December 31, 2022
| | | | | | | | |
Historical achievement RTSR PSU Cycles |
| Cycle | Shares Earned | Realized Value |
| 2020 to 2022 | 0% | 0% |
| 2019 to 2021 | 0% | 0% |
| 2018 to 2020 | 0% | 0% |
| 2017 to 2019 | 0% | 0% |
| 2016 to 2018 | 0% | 0% |
| 2015 to 2017 | 0% | 0% |
▪ NO payouts forecasted under outstanding cycles
| | | | | |
Forecasted achievement*
RTSR PSU Cycles Outstanding at 12.31.22 |
| 2021 to 2023 | No payout |
| 2022 to 2024 | No payout |
* As of 12.31.22; actual results will be determined at the conclusion of the applicable three-year cycle.
Mechanics of RTSR PSU Awards Granted in 2022. Consistent with prior RTSR PSU awards, payouts under the RTSR PSU award granted for the three-year performance period of January 1, 2022 to December 31, 2024 will be determined by measuring the difference at the end of the performance period between the:
▪ total stockholder return realized through an investment in Anywhere stock, and
▪ total stockholder return realized through an investment in the applicable index.
Both calculations include dividends paid during the performance period, if any.
| | | | | | | | | | | | | | |
| 2022-2024 RTSR PSU Payout Formula |
Anywhere TSR
(%) | minus | S&P
MidCap 400 Index TSR
(%) | = | RTSR (%) |
The Committee protects against excessive awards by limiting payouts as follows:
▪ if Anywhere total stockholder returns are negative, the payout may not exceed 100%, regardless of our relative performance against the comparator index, and
▪ the value of the shares of Anywhere common stock to be issued in payment of the RTSR PSU award may not exceed 300% of the award's grant date fair value.
The Committee may exercise negative, but not positive, discretion in determining the performance level achieved under this metric.
Benchmark Index. Target payouts for the 2021 RTSR PSUs will be earned for performance equal to the S&P MidCap 400 index. For every +/- 1% change in RTSR, the payout as a percentage of the target award will increase/decrease by 2%. Maximum payouts will be made at 175% of target if Anywhere's TSR exceeds the S&P MidCap 400 index TSR by 37.5 percentage points, assuming Anywhere's TSR is positive. Payouts will be made at threshold (40% of target) if Anywhere's TSR trails the S&P MidCap 400 index by 30 percentage points.
In deciding to utilize an RTSR metric, the Committee recognized that many of our competitors are privately-held. In the absence of an index of publicly-traded companies engaged in a similar business to Anywhere, the Committee will regularly evaluate the
trading correlation between the S&P MidCap 400 index and our common stock and may determine to use another index or a custom peer group with respect to future grants, if any, tied to RTSR.
Cumulative Free Cash Flow
Summary. The Committee first used CFCF as a PSU metric in 2015. Target performance is set in-line with the Company’s strategic plan for the corresponding three-year period covering the award.
We do not disclose actual CFCF targets prior to the close of the related financial period for competitive reasons, but the 2022-2024 target exceeds the target for the 2021-2023 period and was aligned with the Company's 2021-2023 strategic plan when adopted. A threshold payout of 50% of the target award will be earned if 70% of target CFCF for the 2022-2024 period is achieved and a maximum payout of 200% of the target award will be earned if 130% of target CFCF is achieved.
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| CFCF PSU—Design Features |
| Metric Description | Cumulative Free Cash Flow generated by Anywhere over a three-year period, as adjusted for items pre-established by the Committee |
| Target Direct Compensation Weighting | In 2022, PSU awards tied to CFCF were: - 50% of the CEO's PSU award - 60% of each other NEO's PSU awards |
Opportunity
(% of Target Shares Vested) | Target = 100% Threshold = 50% Maximum = 200% |
The Committee has the authority to exercise negative or positive discretion to adjust the payout earned under this metric, including to take into account extraordinary corporate transactions or developments per the metric definition (see more detail below).
The Committee has continued its use of the CFCF metric in the LTI because it believes the metric:
▪ reflects the manner in which our stockholders measure Anywhere’s operating performance;
▪ aligns with our capital allocation priorities; and
▪ is working as designed, with:
◦ payouts earned correlating to actual achievement of CFCF during the applicable three-year periods in relation to our budget and forecasts at the time of grant - with no payout earned in one cycle, below target payouts earned in four cycles and above target payouts earned in two cycles
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Historical achievement
CFCF PSU Cycles |
| Cycle | Shares Earned | Realized Value* |
| 2020 to 2022 | 200% | 132% |
| 2019 to 2021 | 200% | 261% |
| 2018 to 2020 | 72% | 39% |
| 2017 to 2019 | 0% | 0% |
| 2016 to 2018 | 55% | 26% |
| 2015 to 2017 | 97% | 56% |
* Realized value is based on aggregate shares or units earned by NEOs times our stock price or unit price on the last day of the performance cycle vs. the Committee-approved target value of the awards.
◦ Forecasted payouts under outstanding cycles correlate to our current achievement trajectory of CFCF during the applicable three-year periods in relation to our budget and forecasts at the time of grant
| | | | | |
Forecasted achievement* CFCF PSU Cycles Outstanding at 12.31.22 |
| 2021 to 2023 | Above target |
| 2022 to 2024 | Below target |
* As of 12.31.22; actual results will be determined at the conclusion of the applicable three-year cycle.
Mechanics of CFCF PSU Awards Granted in 2020. At the time of grant, the Committee pre-established the CFCF target and permitted enumerated adjustments for determining CFCF results for the three-year period that include increases or decreases that differ from the cash amounts assumed in the forecast underlying the target. Neither the CFCF target goal or actual achievement against the target goal take into account capital expenditures during the performance period.
The Committee incorporated investor feedback from the 2018 Investor Outreach Program in the PSU awards granted since 2019, such that the calculation of CFCF excludes any earnings generated from acquisitions occurring during the three-year performance period with a purchase price in excess of $25 million, including contingent earnouts, if such acquisition was not incorporated into the CFCF target goal.
Other specific adjustments for the 2022 CFCF metric relate to the use of cash that differs from management’s forecast underlying the target such as:
▪ former parent legacy payments;
▪ taxes;
▪ pension payments;
▪ business optimization & restructuring expenses;
▪ earnings, losses or investments in RealSure;
▪ the impact of a change in the timing of the close of our sale of our title insurance underwriter (which occurred on scheduled in the first quarter of 2022);
▪ extinguishment of debt;
▪ obligations under the relocation securitization programs; and
▪ litigation and regulatory compliance, net of insurance reimbursement.
Achievement Against Performance Metrics and Payouts under the 2020-2022 PSU Award Cycle
On February 23, 2023, the Committee made the determinations described below with respect to the PSU awards granted in 2020 that measured performance over a three-year performance period ended December 31, 2022.
No payout was earned under the RTSR metric.
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Relative Total Stockholder Return Results 0% Payout Earned (2020-2022 Cycle) |
| Anywhere TSR | S&P MidCap 400 | Actual Relative TSR | Payout |
| -32% | 21% | -52% | 0% |
RTSR Performance Range (2020-2022 Cycle)
▪ Target if RTSR is equal to the
S&P MidCap 400 Index
▪ Maximum if RTSR better than +37.5%
▪ Threshold if RTSR is better than -30%
Maximum payout was earned under the CFCF metric.
The following table sets forth the:
▪ Pre-established CFCF performance levels over the three-year period of January 1, 2020 to December 31, 2022 at threshold, target and maximum payout; and
▪ Actual CFCF performance achieved during the 2020 to 2022 period.
The Committee determined in February 2022 not to make any specific adjustments permitted under the 2020-2022 CFCF PSU awards as such adjustments would have had the net impact of positively increasing the level of Cumulative Free Cash Flow achieved.
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Cumulative Free Cash Flow† Results 200% Payout Earned (2020-2022 Cycle) |
Performance Level | Payout as %
of Target | CFCF (in millions) |
| Threshold | 50% | 517 |
| Target | 100% | 738 |
| Maximum | 200% | 960 |
| Actual | 200% | 1,254 |
† Neither the CFCF target goal or actual achievement against the target goal take into account capital expenditures during the performance period. See Annex A for a definition and a reconciliation of Free Cash Flow to the most directly comparable GAAP measures.
The table below shows the aggregate shares earned by NEOs under the 2020-2022 PSU cycle, along with the payout value of those shares or units, as applicable, based on the results discussed above.
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| Aggregate Payouts Earned under the 2020-2022 PSU Award Cycle |
Name(1) | Target Award ($) | Aggregate Shares Earned (#)(2) | 2022 Payout Value ($)(2)(3) | Target Value Realized (%)(4) |
| Ryan Schneider | 4,500,000 | | 463,916 | | 2,964,423 | | 66 |
| Charlotte Simonelli | 600,000 | | 74,226 | | 474,304 | | 79 |
Susan Yannaccone(2) | 100,000 | | n/a | 200,000 | | 200 |
| Marilyn Wasser | 550,000 | | 68,040 | | 434,776 | | 79 |
_______________
(1) Ms. McSherry joined the Company in February 2022 and did not participate in the 2020-2022 PSU award cycle.
(2) Ms. Yannaccone was not an executive officer of the Company in February 2020 when the PSU awards were granted, but she received a cash-based award (with a target value of $100,000) that was tied to achievement of the same CFCF target for the 2020-2022 performance period described in this CD&A. In accordance with SEC rules, the cash award earned by Ms. Yannaccone for the 2020-2022 CFCF award is reported in the "Non-Equity Incentive Compensation" column of the Summary Compensation Table for 2022. She did not receive an award tied to RTSR for the 2020 to 2022 cycle.
(3) The 2022 payout value is based on $6.39 per share, the closing market price of Anywhere common stock on the NYSE on December 30, 2022 (the last trading day of the performance cycle), other than with respect to Ms. Yannaccone (see footnote 2).
(4) Target value realized represents the 2022 payout value divided by the target award.
See page 5 of this proxy statement for the status of outstanding PSU cycles as of December 31, 2022. Actual results will be determined based upon results under the applicable metric at the conclusion of the applicable three-year cycle.
2022 Time-Based Awards
Restricted Stock Units. Vesting restrictions on restricted stock units, or RSUs, lapse over three years, with 33.33% lapsing on each anniversary of the grant date.
When setting LTI awards, our Committee considers the important role of RSUs in:
▪ encouraging executive retention; and
▪ aligning the interests of our NEOs with the interests of our stockholders, as the value of these time-based awards will increase or decrease with the value of our stock.
Dividend Equivalent Units. PSUs and RSUs are entitled to be credited with dividend equivalent rights related to any cash dividend paid by Anywhere. Options do not carry dividend equivalent rights. Anywhere has not declared a dividend since the fourth quarter of 2019. Any additional units that that may credited as dividend equivalents are subject to the same vesting requirements, settlement provisions, and other terms and conditions as the original award to which they relate. No dividend equivalents will be paid unless and until the underlying award is vested or settled.
2020 Pre-Existing Restricted Cash Award to Ms. Yannaccone. Prior to her promotion to an executive officer role in November 2020, Ms. Yannaccone received a restricted cash award in February 2020 (in lieu of a RSU award) that vests in three equal tranches on each of the first three anniversaries of the grant date, subject to her continued employment and compliance with her restrictive covenants agreement with the Company including those related to non-competition and non-solicitation.
Cash amounts received in 2022 under this prior award ($66,667) are reported in the Summary Compensation Table in the "Bonus" column.
"Make-Whole" Inducement Award to Ms. McSherry. As an inducement to her hiring in the first quarter of 2022, the Committee granted Ms. McSherry an RSU award with a grant date fair value in the amount of $2,099,988, which was approximately equal to the value of cash and equity awards forfeited by Ms. McSherry in connection with her change in employer. The RSUs vest in equal installments over three years on each of the first three anniversaries of the grant date, subject to continued employment and compliance with her restrictive covenants agreement with the Company including those related to non-competition and non-solicitation.
The RSU award, including any proceeds, gains or other economic benefit in respect of the award, are subject to the terms and conditions of the Company’s Clawback Policy, which allows the Board to recoup incentive compensation in the event of a material restatement or adjustment of our financial statements, misconduct, or breach of Ms. McSherry's restrictive covenants with us, including those related to non-competition and non-solicitation.
2020 One-Time Market Share Performance Awards
In the second half of 2020, the Committee granted each NEO a cash-based performance incentive award tied to a market share metric (each, a "Market Share Performance Award").
Each Market Share Performance Award required achievement of growth in Anywhere's share of existing homesale transaction volume over a two-year period ended September 30, 2022, with an additional performance period applicable to the CEO based upon market share growth for the one-year period ending September 30, 2023.
In the fourth quarter of 2022, the Committee determined that the Market Share Performance Awards for the two-year period ended September 30, 2022, were not earned.
The Market Share Performance Awards also included a retention component, which vested in 2021 and is reported in the Bonus column of the Summary Compensation Table for 2021.
Our Clawback Policy applies to the CEO's outstanding Market Share Performance Award, which Clawback Policy will allow our Board to recoup incentive compensation in the event of a material restatement or adjustment of our financial statements, the CEO's misconduct, or the CEO's breach of his restrictive covenants with the Company, including those related to non-competition and non-solicitation.
2023 Annual and Long-Term Incentive Programs
2023 Executive Incentive Plan. During the 2022 Investor Outreach program, certain investors noted the volatility in award payouts under the EIP and suggested design and/or metric considerations, including those that might moderate extreme variations.
In February 2023, the Committee determined to make changes to the design of the 2023 EIP, which are intended to reduce the volatility in EIP payouts by implementing the following changes:
First, the Committee determined to tie a portion of the EIP award to the achievement of strategic goals during the year so that funding was not tied to a single financial metric. Specifically, 70% of the 2023 EIP will be funded based upon the achievement of Plan Operating EBITDA. The remaining 30% of the 2023 EIP will be funded based upon the achievement of qualitative pre-established strategic and business objectives. The objectives include those focused on the following strategic priorities for 2023: operational excellence (including cost savings), consumer experience, and a relentless focus on talent.
Second, to further manage volatility, the Committee determined to require a higher performance multiple to achieve maximum funding under the Operating EBITDA component of the 2023 EIP and a lower multiple to obtain threshold funding. Specifically, the Operating EBITDA component of the 2023 EIP will be funded at the maximum level of 200% upon achievement of 125% of the target goal (compared to 120% of the target goal under the 2022 EIP) and at the threshold level of 25% upon achievement of 75% of the target goal (compared to 85% of the target goal under the 2022 EIP).
The Committee also modified the design of the 2023 EIP to reduce Committee discretion with respect to individual payouts. Individual payouts must be within +/-25% of the aggregate funding percentage reached under the 2023 EIP, and consistent with the 2022 EIP, total payouts under the 2023 EIP may not exceed the aggregate funded amount under the plan. NEO EIP targets as a percentage of earned base salary under the 2023 EIP remain unchanged.
2023 Long-Term Incentive Awards.
The Committee determined to increase Mr. Schneider's aggregate LTI award from $7.5 million to $8.0 million. Mr. Schneider's 2023 LTI award is 60% in the form of PSUs (60% of which is aligned with CFCF goals and 40% of which aligned with RTSR goals, both over a three-year period), and 40% in the form of RSUs. The Committee determined to increase the value of Mr. Schneider's LTI award by $500,000 based upon his leadership during the housing downturn that commenced in 2022, including the Company taking actions that resulted in realized cost savings of $150 million during the year, and his leadership in developing and implementing the Company's long-term strategy announced at its Investor Day in May 2022. The Committee also modified the weighting of the metrics under Mr. Schneider's PSU awards to align with the relative weighting of the metrics for our other NEOs.
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