Document

DEF 14A 1 tol2022def14a.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

Filed by the Registrant ý

Filed by a Party other than the Registrant ¨

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¨						Preliminary Proxy Statement
¨						Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý						Definitive Proxy Statement
¨						Definitive Additional Materials
¨						Soliciting Material under §240.14a-12

TOLL BROTHERS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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TOLL BROTHERS, INC.

1140 Virginia Drive

Fort Washington, Pennsylvania 19034

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

to be held on Tuesday, March 7, 2023

The 2023 Annual Meeting of Stockholders (the “Meeting”) of Toll Brothers, Inc., a Delaware corporation (the “Company,” "we," "us" or "our") will be held on Tuesday, March 7, 2023 at 9:00 am Eastern standard time, at the offices of the Company, 1140 Virginia Drive, Fort Washington, Pennsylvania 19034, for the following purposes:

1.To elect the 10 directors nominated by the Board of Directors of the Company (the “Board” or the "Board of Directors") and named in the proxy statement to hold office until the 2024 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified.

2.To ratify, in a non-binding vote, the re-appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2023 fiscal year.

3.To approve, in an advisory and non-binding vote, the compensation of the Company’s named executive officers as disclosed in the proxy statement.

4.Consideration of an advisory and non-binding vote on the frequency of votes on executive compensation.

5.To transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.

The Board has fixed the close of business on January 12, 2023 as the record date for the Meeting (the "Record Date"). Only stockholders of record at that time are entitled to notice of and to vote at the Meeting and any adjournment or postponement thereof.

The enclosed proxy card is solicited by the Board. Reference is made to the attached proxy statement for further information with respect to the business to be transacted at the Meeting. This proxy statement, our annual report, and the enclosed proxy card are first being sent to stockholders on or about January 25, 2023. The Board requests that you sign, date, and return the enclosed proxy card promptly, although you are cordially invited to attend the Meeting in person. The return of the enclosed proxy card will not affect your right to vote in person if you do attend the Meeting.

Please note the admission policy and procedures regarding attendance at the Meeting, which are set forth below.

By Order of the Board of Directors,

KEVIN J. COEN

Secretary

January 25, 2023

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MARCH 7, 2023

The proxy statement and 2022 Annual Report of Toll Brothers, Inc. are available at:

http://astproxyportal.com/ast/12483

ANNUAL MEETING INFORMATION

The Meeting will be held at the Company’s offices at 1140 Virginia Drive, Fort Washington, Pennsylvania 19034 and will begin promptly at 9:00 am Eastern standard time. Directions to the Company's offices are available by calling us at (215) 938-8000. You must present a valid photo identification to be admitted to the Meeting. Cameras, recording devices and other electronic devices, and the use of cellular phones, will not be permitted during the Meeting. Representatives will be at the entrance to the Meeting, and these representatives will have the authority, on the Company’s behalf, to determine whether the admission policy and procedures have been followed and whether you will be granted admission to the Meeting.

ATTENDANCE AT THE MEETING

Attendance at the Meeting is limited to stockholders, who may be "record holders" who own shares directly in their names, or who may hold shares in “street name” through banks, brokerages, or other intermediaries. In addition to photo identification, you must present evidence of ownership as of the Record Date, such as a letter from the bank, broker, or other intermediary confirming ownership, or the relevant portion of a bank or brokerage firm account statement. If you are the authorized representative of an entity that is a beneficial holder, you must present a letter from the entity certifying the beneficial ownership of the entity and your status as an authorized representative.

Your vote is important. You are invited to attend the meeting in person, although anyone who does not feel well should not attend. In addition, you are required to notify the Company's Secretary in the manner set forth below if you plan to attend the meeting. Attendees will be required to comply with any health and safety protocols recommended or required by the Centers for Disease Control and Prevention or state or local governments. If it is determined that a change in the date, time or location of the Meeting or a change to a virtual meeting format is advisable or required, an announcement of such changes will be made through a press release, additional proxy materials filed with the Securities and Exchange Commission ("SEC"), and on the Investor Relations section of our website. Please check our website in advance of the meeting date if you are planning to attend in person.

If you plan to vote by proxy but attend the Meeting in person:

•Indicate your votes on your proxy card or voting instruction card;

•Mark the box on your proxy card or voting instruction card indicating your intention to attend the Meeting;

•Return the proxy card or voting instruction card to the address indicated; and

•Follow the admission policies set forth above.

If you plan to attend and vote at the Meeting:

•If you are a "record holder," bring your proxy card with you to the Meeting;

•If you hold your shares in "street name," contact your bank or broker to obtain a written legal proxy form in order to vote your shares at the Meeting;

•Send written notice* of your intention to attend the Meeting to the Company's headquarters by February 22, 2023 to the attention of Kevin J. Coen, Secretary; and

•Follow the admissions policies set forth above.

* Written notice should include: (1) your name, complete mailing address and phone number; (2) if you are a beneficial holder, evidence of your ownership; and (3) if you are a beneficial holder who is not a natural person and will be naming a representative to attend on your behalf, the name, complete mailing address and phone number of that individual. If you do not provide the requested information by February 22, 2023, you may not gain admission to the Meeting.

TABLE OF CONTENTS


			Page
Proxy Summary			1
General Information			4
Voting Securities and Beneficial Ownership			4
Security Ownership of Certain Beneficial Owners and Management			6
Proposal One—Election of Directors			8
Board Membership Criteria			8
Our Director Nominees			9
Proposal Two—Ratification of the Re-Appointment of Independent Registered Public Accounting Firm			14
Audit and Non-Audit Fees			14
Proposal Three—Advisory and Non-Binding Vote on Executive Compensation (Say on Pay)			15
Proposal Four—Advisory Vote on the Frequency of the Say on Pay Vote			16
Equity Compensation Plan Information			17
Corporate Governance			18
Corporate Governance Guidelines and Practices			20
Committees of the Board and Meetings			22
Director Attendance			25
Risk Oversight			25
ESG Risk Oversight			26
Director Compensation			27
Director Compensation Program			27
Director Compensation Table			28
Executive Compensation			29
Compensation Discussion and Analysis			29
Executive Summary			29
Description of Our Executive Compensation Program			33
Fiscal 202 2 Compensation Decisions			36
Compensation Framework			41
Benefits and Perquisites			43
Other Compensation Practices and Policies			45
Compensation Committee Report			47
Executive Compensation Tables			48
CEO Pay Ratio Disclosure			60
Audit and Risk Committee Report			61

Certain Relationships and Transactions			62
Stockholder Proposals for the 202 4 Annual Meeting of Stockholders			64
Procedures for Recommending Candidates for Nomination to the Board of Directors			64
Consideration and Selection of Nominees for the Board			64
Householding Information			65
Solicitation of Proxies			65
Annual Report on Form 10-K			65
Other Business			65

TOLL BROTHERS, INC.

PROXY STATEMENT

Annual Meeting of Stockholders

Tuesday, March 7, 2023

PROXY SUMMARY

A summary of certain information in this proxy statement is provided below. Please review the complete proxy statement and our Annual Report on Form 10-K for the fiscal year ended October 31, 2022 before you vote.

Toll Brothers Strategy and Fiscal 2022 Highlights

Despite the many challenges facing the home building industry in fiscal 2022, we produced record results. We delivered 10,515 new homes, generated $9.7 billion in home sales revenues and increased earnings to $10.90 per share diluted, a 64% increase over the $6.63 earnings per share we delivered in fiscal 2021. We achieved a full year home sales gross margin of 25.5%, a 300 basis point increase compared to fiscal year 2021. Excluding interest in cost of home sales of approximately 1.7% and inventory write downs of approximately 0.3%, our adjusted home sales gross margin was 27.5%. Before taxes, we earned $1.7 billion in fiscal 2022 and net income was $1.3 billion, resulting in a return on beginning equity of 24.3% — a 720 basis point increase over fiscal 2021. At fiscal year end, our book value per share was $54.79 and our debt-to-capital ratio was 35.7%, or 23.4% on a net basis after adjusting for $1.3 billion of cash and cash equivalents and $148 million of loans made by our mortgage subsidiary. While these results were driven by strong housing demand that characterized fiscal 2021 and the first half of fiscal 2022, they were also the result of our multi-year strategy of expanding our product lines, price points and the geographic markets in which we operate, as well as our focus on increasing profitability and improving our capital efficiency. Because we are primarily a build-to-order home builder, our backlog stood at $8.9 billion and 8,098 homes at fiscal year end. Our year-end backlog provides us confidence that we will be able to deliver another year of strong financial results in fiscal 2023.

While we achieved record results in fiscal 2022, the year was also notable for the contrast between the strong demand we saw in the first half of the year and the swift cooling of the housing market in the second half. This shift was due primarily to the dramatic increase in mortgage rates over the course of 2022.

We are navigating this market by strategically balancing the delivery of our large backlog in fiscal 2023 with the generation of new sales for future deliveries. In each of our communities, we are thoughtfully assessing, and adjusting where necessary, product offerings, prices and incentive levels, taking into account local market dynamics, including elasticity of demand, the size of each community's backlog, and the depth and quality of our land holdings in the market.

Our strategy also includes growing community count in fiscal 2023, and we are strategically timing community openings to take advantage of the spring selling season, when there is typically a higher level of demand for homes. In addition, due to supply chain disruptions, labor shortages and municipality-related delays, delivery times for to-be-built homes became extended in fiscal 2022, resulting in a stronger than normal market for quick delivery, or "spec," homes, and depleting our inventory of those homes. We are replenishing our supply of these homes in select markets where conditions are favorable. These and other actions are being taken to both preserve the favorable margin embedded in our backlog and position us for success in fiscal 2023 and beyond.

takedown under an existing option, we are applying rigorous underwriting standards focused on both margins and returns, and which take into account current market conditions. Our land strategy also involves a consistent focus on the capital efficiency of our land portfolio as we aim to control a greater percentage of our land through option arrangements. Of the approximate 76,000 lots we held at fiscal year end, slightly more than half were controlled through options, as compared to approximately 39% five years ago. We continue to target an overall mix of 60% optioned lots and 40% owned over the long term.

We also continue to focus on our cost structure. Our SG&A expense, as a percentage of home sales revenues, declined to 10.1% in fiscal 2022 from 10.9% in fiscal 2021. While we expect our SG&A expense as a percentage of revenue to increase in fiscal 2023 due to volume deleveraging, we continue to focus on driving productivity and efficiency gains.

We ended fiscal 2022 with over $3.0 billion of liquidity, including $1.3 billion of cash and cash equivalents and approximately $1.8 billion available under our $1.9 billion revolving bank credit facility, nearly all of which matures in November 2026. In fiscal 2022, we generated close to $1.0 billion in cash flow from operations, paid down approximately $410 million of senior notes, repurchased approximately $543 million of stock, and paid total dividends of approximately $89 million, or roughly $0.77 per share. Our strong balance sheet and ample liquidity give us the flexibility to continue investing in our business while returning capital to our shareholders and reducing debt.

Meeting Agenda Items

Proposal One—Election of Directors. We are asking stockholders to elect 10 director nominees to hold office until the 2024 Annual Meeting of Stockholders and until his or her respective successor has been duly elected and qualified. The Board has nominated all 10 of our current directors for re-election at the Meeting.

Set forth below is summary information concerning our director nominees. For more information regarding the experience and qualifications of our director nominees, see “Proposal One—Election of Directors” on page 8.

Name

Age

Director
Since

Principal Occupation

Independent

Douglas C. Yearley, Jr.

2010

Chairman and Chief Executive Officer, Toll Brothers, Inc.

Stephen F. East

2020

Retired Managing Director, Senior Consumer Analyst and Head of Homebuilding and Building Products Research, Wells Fargo & Company

Christine N. Garvey

2009

Retired Global Head of Corporate Real Estate Services, Deutsche Bank AG

Karen H. Grimes

2019

Retired Partner, Senior Managing Director, and Equity Portfolio
Manager, Wellington Management Company

Derek T. Kan

2021

Chief Business Officer at Deliverr, Inc.

Carl B. Marbach

1991

Founder and Chief Executive Officer, Shared Charter, Inc.

John A. McLean

2016

Senior Managing Director, New York Life Investment
Management

Wendell E. Pritchett

2018

Riepe Presidential Professor of Law and Education, University of Pennsylvania Carey Law School

Paul E. Shapiro

1993

Chairman, Q Capital Holdings LLC

Scott D. Stowell

2021

Former Executive Chairman, CalAtlantic Group, Inc. and President and CEO, Capital Thirteen LLC.

The Board of Directors recommends that you vote “FOR” all Nominees

Proposal Two—Ratification of the Re-Appointment of Independent Registered Public Accounting Firm. We are asking stockholders to ratify, in a non-binding vote, the re-appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2023. For more information regarding our engagement of Ernst & Young LLP, including the fees billed for services rendered by Ernst & Young LLP in fiscal 2022 and fiscal 2021, see “Proposal Two—Ratification of the Re-Appointment of Independent Registered Public Accounting Firm” on page 14.

The Board of Directors recommends that you vote “FOR” Proposal Two

Proposal Three—Advisory and Non-Binding Vote on Executive Compensation (Say on Pay). As described on page 15 under “Proposal Three—Advisory and Non-Binding Vote on Executive Compensation (Say on Pay)," we are asking stockholders to approve, on an advisory basis, the compensation of our named executive officers ("NEOs"). We hold this advisory vote on an annual basis.

The Board of Directors recommends that you vote “FOR” Proposal Three

Proposal Four—Advisory and Non-Binding Vote on Frequency of Vote Regarding Executive Compensation (Say on Pay Frequency). As described on page 16 under “Proposal Four—Advisory and Non-Binding Vote on Frequency of Vote Regarding Executive Compensation," we are asking stockholders to cast an advisory vote on how often we should include a Say on Pay proposal in our proxy materials for future stockholder meetings. Stockholders may vote to recommend having the Say on Pay vote every year, every two years, or every three years.

The Board of Directors recommends that you vote to hold Say on Pay votes every ONE YEAR

GENERAL INFORMATION

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors for use at the Meeting, which will be held on the date, at the time and place, and for the purposes set forth in the foregoing notice, and any adjournment or postponement thereof. The Board does not intend to bring any matter before the Meeting except as specifically indicated in the notice and does not know of anyone else who intends to do so; however, if any other matters properly come before the Meeting, Mr. Douglas C. Yearley, Jr. and Mr. Martin P. Connor, or either of them, will vote or otherwise act thereon in accordance with his or their judgment on such matters, acting as proxies for stockholders who have returned an executed proxy to us.

If the enclosed proxy card is properly executed and returned to and received by us prior to voting at the Meeting, the shares represented thereby will be voted in accordance with the instructions marked thereon. If the enclosed proxy card is properly executed, returned, and received by us prior to voting at the Meeting without specific instructions, Mr. Douglas C. Yearley, Jr. and Mr. Martin P. Connor, or either of them, acting as your proxies, will vote your shares “FOR” all nominees under Proposal One, “FOR” Proposals Two and Three, and for "1 YEAR" with respect to the Say on Pay Frequency proposal. Any proxy card may be revoked at any time before its exercise by notifying the Secretary of the Company in writing, by delivering a duly executed proxy card bearing a later date, or by attending the Meeting and voting in person.

VOTING SECURITIES AND BENEFICIAL OWNERSHIP

The Record Date fixed by our Board for the determination of stockholders entitled to notice of and to vote at the Meeting is January 12, 2023. At the close of business on the Record Date, there were 110,570,747 shares of the Company's common stock outstanding and eligible to vote at the Meeting. We have no other class of voting securities outstanding. At the Meeting, stockholders will be entitled to one vote for each share of common stock owned at the close of business on the Record Date. Dissenters' rights are not applicable to any of the matters being voted upon at the Meeting.

The presence at the Meeting, in person or by proxy, of persons entitled to cast the votes of a majority of such outstanding shares of common stock will constitute a quorum for the proposals expected to be voted on at the Meeting. Abstentions and broker non-votes represented by submitted proxies will be included in the calculation of the number of shares present at the Meeting for the purposes of determining a quorum. “Broker non-votes” are shares held of record by a broker that are not voted on a matter because the broker has not received voting instructions from the beneficial owner of the shares and lacks the authority to vote the shares in its discretion.

Under the New York Stock Exchange (NYSE) rules, your brokerage firm or other nominee may not vote your shares with respect to Proposals One, Three and Four without specific instructions from you as to how to vote, because none of these proposals is considered a “routine” matter under the NYSE rules. Proposal Two is considered a “routine” matter, and brokerage firms and nominees that are members of the NYSE are permitted to vote their customers’ shares if the customers have not furnished voting instructions prior to the Meeting. In determining whether each Proposal receives the requisite number of affirmative votes, abstentions and broker non-votes are not considered "votes cast" and therefore will have no effect on the outcome of such proposals.

To elect directors and adopt the other proposals, the following votes are required:

Effect of Broker Non-Votes and Abstentions

Proposal

Vote Required

Broker
Discretionary
Voting Allowed

Broker Non-
Votes

Abstentions

Election of each director

Majority of votes cast

No effect

Ratification of independent auditors

Majority of votes cast

Yes

Not applicable

No effect

Advisory say on
pay vote

Majority of votes cast

No effect

Advisory say on pay frequency vote

Plurality of votes cast

No effect

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth beneficial ownership, as of the Record Date, of the Company's common stock by: (1) each person known to us to be the beneficial owner of more than 5% of the Company's common stock; (2) each of our directors (which includes all nominees for director) and named executive officers; and (3) all of our directors and executive officers as a group. To the best of our knowledge, each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated. Except as otherwise noted, the address of each beneficial owner is c/o Toll Brothers, Inc., 1140 Virginia Drive, Fort Washington, Pennsylvania 19034.

Name and Address of Beneficial Owner

Amount and Nature of
Beneficial Ownership (1)

Percent of
Common Stock

BlackRock, Inc. (2)

11,087,009

10.03%

55 East 52nd Street
New York, New York 10055

The Vanguard Group (3)

11,761,516

10.64%

100 Vanguard Blvd.
Malvern, Pennsylvania 19355

Stephen F. East

9,530

Christine N. Garvey

14,632

Karen H. Grimes

7,846

Derek T. Kan

—

Carl B. Marbach (4)

101,855

John A. McLean

17,693

Wendell E. Pritchett

11,829

Paul E. Shapiro

153,681

Scott D. Stowell

—

Douglas C. Yearley, Jr.

1,366,087

1.22%

Martin P. Connor

262,350

Robert Parahus

61,207

Directors, nominees and executive officers as a group (12 persons) (1)

2,006,710

1.79%

* Less than 1%

(1)Shares issuable pursuant to restricted stock units (“RSUs”) vesting and stock options exercisable within 60 days after the Record Date are deemed to be beneficially owned. Accordingly, the information presented above includes the following number of shares of common stock underlying RSUs and stock options held by the following individuals, and all directors and executive officers as a group: Mr. East, 3,530 shares; Ms. Garvey, 5,082 shares; Ms. Grimes, 5,032 shares; Mr. Marbach, 21,300 shares; Mr. McLean, 7,576 shares; Dr. Pritchett, 4,933 shares; Mr. Shapiro, 20,494 shares; Mr. Yearley, 1,102,830 shares; Mr. Connor, 231,130 shares; Mr. Parahus, 31,219 shares; and all directors and executive officers as a group, 1,433,126 shares.

(2)BlackRock, Inc. (“BlackRock”) filed a Schedule 13G/A dated February 1, 2022, which states that BlackRock had sole voting power with respect to 10,656,462 shares and sole dispositive power with respect to 11,087,009 shares. According to the Schedule 13G/A filed by BlackRock, various persons had the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares, and no one person’s interest in the Company's common stock was more than 5% of the total outstanding common stock, as of the date the Schedule 13G/A was filed.

(3)The Vanguard Group ("Vanguard") filed a Schedule 13G/A dated July 11, 2022, which states that Vanguard had sole dispositive power with respect to 11,573,421 shares, shared dispositive power with respect to 188,095 shares, and shared voting power with respect to 77,687 shares. According to the Schedule 13G/A filed by Vanguard, one or more other persons were known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Company's common stock. No other person's interest in the

Company's common stock was more than 5% of the total outstanding common stock, as of the date the Schedule 13G/A was filed.

(4)Amount includes an aggregate of 9,400 shares beneficially owned by individual retirement accounts (“IRAs”) for the benefit of Mr. Marbach and his wife. Mr. Marbach disclaims beneficial ownership of the 4,700 shares held by his wife’s IRA.

PROPOSAL ONE—ELECTION OF DIRECTORS

Board Membership Criteria

Our Board believes that it is necessary for our directors to possess many diverse qualities and skills. The Nominating and Corporate Governance Committee of the Board of Directors (the "Governance Committee") is charged with identifying individuals qualified to become members of the Board of Directors consistent with criteria approved by the Board. In selecting, or in recommending the selection of, nominees for directors, the Governance Committee considers the evolving needs of our Board, as well as applicable legal and NYSE requirements, including, when appropriate, those applicable to membership on the Audit and Risk Committee and the Executive Compensation Committee (the "Compensation Committee"), as well as other criteria it deems appropriate.

The Governance Committee will consider candidates nominated by stockholders, directors, officers and other sources. Stockholders wishing to recommend a prospective candidate for membership on the Board should follow the procedures described under "Procedures for Recommending Candidates for Nomination to the Board of Directors" on page 64. At a minimum, candidates must possess a background that includes a strong education, extensive business experience, and the requisite judgment, background, reputation, character, integrity, skills and temperament, which, in the view of the Governance Committee, have prepared them for dealing with the multi-faceted financial, business, governance, and other issues that confront a board of directors of a corporation with the size, complexity, reputation, and success of the Company. When evaluating director candidates, the Governance Committee first considers a candidate’s business experience and then considers other factors, including that candidate’s background, reputation, character, integrity, skills, temperament and other personal characteristics, including whether the candidate would add to the Board's diversity.

Board Composition, Evaluation and Refreshment

The Governance Committee continually assesses the composition of the Board, including through a review of Board size, the skills and qualifications represented on the Board, and director tenure. In its review of the skills and qualifications of each director, the Governance Committee considers the characteristics that it believes should be represented on the Board as well as on each Committee of the Board.

The findings of the Governance Committee's annual review of Board composition are reported to and discussed with the full Board. Based on its evaluation, the Governance Committee may recommend an increase or decrease in the size of the Board or changes in the composition of the Board to best reflect the objectives and needs of the Company and the desired skill sets of the directors. Similarly, the Governance Committee establishes processes for developing and recruiting candidates for Board membership and conducting searches for Board candidates.

As part of its annual review of Board composition, the Governance Committee considers director age and tenure, as well as the diversity of the Board. The Governance Committee seeks to ensure an appropriate mix of age and tenure of the directors, taking into account the benefits of directors with longer tenures, including greater board stability, continuity of organizational knowledge and experience gained through prior real estate cycles, and the benefits of directors with shorter tenures, including fresh perspectives and viewpoints. Our Board views diversity in a broad sense, taking into consideration not only racial, ethnic and gender diversity, but also the mix of qualifications and personal characteristics of our existing directors including age, tenure, experience levels and types of experience, including both industry and subject matter expertise. Although we do not have a separate policy specifically governing diversity, when considering board candidates, the Governance Committee considers whether an individual would bring a diverse viewpoint to the Board, which includes a candidate’s gender, race and ethnicity. To assist in its review, the Chair of the Governance Committee periodically conducts individual meetings with the independent directors to discuss Board composition and determine whether each such director's future plans may assist the Governance Committee in its consideration of the issue of director tenure.

Our Lead Independent Director (who also is the Chair of the Governance Committee) leads the annual Board self-evaluation process to review the effectiveness of the Board and each of its committees and to identify any opportunities for improvement. As part of this process, the Lead Independent Director receives feedback from each director regarding Board and committee composition, Board practices, Board accountability, and director standards of conduct. The Lead Independent Director presides over the discussion with the Board to review this information and to identify any areas for improvement. The Board believes that, through its annual review of Board composition and the nomination process, coupled with its annual self-evaluation procedure and refreshment process, the Board will continue to evolve and meet the current and future needs of the Company. As illustrated below, in recent years, the Governance Committee and the Board have focused a great deal of attention on renewing and refreshing the perspectives, skills and backgrounds that are represented on the Board.


Select Board Statistics

AGE						TENURE

		March 2015		March 2023			March 2015		March 2023
	45-55	10	%	20	%	0-5 years	10	%	50	%
	56-65	—	%	40	%	6-15 years	30	%	30	%
	66+	90	%	40	%	16+ years	60	%	20	%

RACIAL / ETHNIC DIVERSITY						GENDER DIVERSITY

		March 2015		March 2023			March 2015		March 2023
	Diverse	10	%	30	%	Female	10	%	20	%
	Non-Diverse	90	%	70	%	Male	90	%	80	%

	During this time period, six directors have retired and six new members have joined the Board

Our Director Nominees

Upon the recommendation of the Governance Committee, the Board has nominated 10 directors for re-election. Each director nominee is standing for election to hold office until the 2024 Annual Meeting of Stockholders and until his or her respective successor has been duly elected and qualified. Each nominee has indicated a willingness to serve as a director.

Under our Bylaws, Board nominees are elected using a majority voting standard for uncontested elections. Under a majority voting standard, in uncontested elections, a nominee for director shall be elected to the Board if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Directors are elected by plurality vote in the event of a contested election.

In connection with our stockholder engagement efforts in recent years, we have had discussions with stockholders regarding the composition of our Board and the criteria the Governance Committee considers when nominating candidates for Board positions. The Governance Committee continues to review the composition of the Board in an effort to provide a balance of skills, tenure and experience that best serves the Company and its stockholders. Since March 2015, six directors have retired and we have added six new directors to the Board, deepening the Board's diversity of composition, thought and experience, adding fresh perspectives, and preparing the Board for the retirement of long-serving members. Following a thorough recruitment and vetting process, Messrs. Stowell and Kan were appointed to the Board in October and December of 2021, respectively. Mr. Stowell brings to the Board significant leadership abilities and a wealth of experience in the home building industry, while Mr. Kan brings extensive experience in the area of innovation and technology implementation, logistics, experience with branches of the U.S. federal government, and financial and accounting acumen. The Board believes that, with the addition of Messrs. Kan and Stowell and combined with our existing

directors’ deep experience and knowledge of the Company and home building industry, the Board is well positioned to continue leading Toll Brothers as it executes on its strategic priorities.

As part of its annual review process, the Governance Committee has reviewed the experience, qualifications and contributions of each of our director nominees and believes that each director brings significant value to the Board and to the Company. Our directors' business experiences, their knowledge and understanding of the Company's operations, governance, personnel, and business ethics gained by them over time, and each of their unique perspectives, insights, and skill sets have led the Governance Committee and the Board of Directors to recommend that each director be re-elected to the Board for an additional term of office.

2023 Director Nominees

Set forth below is biographical information about our director nominees.

Douglas C. Yearley, Jr. has been a member of our Board since June 2010. He joined us in 1990, specializing in land acquisitions from financial institutions. He has been an officer since 1994, holding the position of Senior Vice President from January 2002 until November 2005, and the position of Regional President from November 2005 until November 2009, when he was promoted to Executive Vice President. Since June 2010, he has been our Chief Executive Officer and, in October 2018, he was elected Chairman of the Board. Prior to joining us, Mr. Yearley practiced law in New Jersey as a commercial litigator. He brings to the Board a deep understanding of our industry and our business as a result of his significant operational and executive roles with the Company, his managerial and leadership experience, and his legal background.

Stephen F. East has been a member of our Board since March 2020. He is a member of the Audit and Risk Committee and the Compensation Committee and the Chair of the Public Debt and Equity Securities Committee. Prior to his retirement in July 2019, Mr. East served as a Managing Director and Senior Consumer Analyst at Wells Fargo & Company, heading the equity research team that covered the home building and building products sectors. Prior to joining Wells Fargo, he spent four years with Evercore ISI, an independent research firm, as a Partner and Senior Managing Director heading the firm's housing research efforts, and, prior to that, spent nearly two decades in equity research and investment management at various firms. Mr. East holds the Chartered Financial Analyst designation. Mr. East brings valuable experience to the Board in the form of his extensive knowledge of the home building industry, analytical abilities, financial acumen and strategic insights.

Christine N. Garvey has been a member of our Board since September 2009. She is the Chair of the Audit and Risk Committee and a member of the Compensation Committee and Public Debt and Equity Securities Committee. Ms. Garvey was the Global Head of Corporate Real Estate Services at Deutsche Bank AG from 2001 to 2004. Prior to that, she served as Vice President of Worldwide Real Estate and Workplace Resources at Cisco Systems, Inc. and as Group Executive Vice President at Bank of America Corporation. Ms. Garvey has been a member of the board of directors of Healthpeak Properties, Inc., a publicly traded real estate investment trust, since 2007. She previously served on the boards of directors of Prologis, Inc. through May 2017 and Hilton Hotels Corporation through October 2007. Ms. Garvey brings to the Board her extensive knowledge of and background in real estate and banking and her experience in executive leadership positions and board memberships with various public entities in the national real estate market.

Karen H. Grimes has been a member of our Board since March 2019. She is a member of the Audit and Risk Committee and the Governance Committee. She held the position of Senior Managing Director, Partner, and Equity Portfolio Manager at Wellington Management Company LLP, an investment management firm, from January 2008 through December 2018. Prior to joining Wellington Management Company in 1995, she held the position of Director of Research and Equity Analyst at Wilmington Trust Company, a financial investment and banking services firm, from 1988 to 1995. Before that, Ms. Grimes was a Portfolio Manager and Equity Analyst at First Atlanta Corporation from 1983 to 1986 and at Butcher and Singer from 1986 to 1988. She is a member of the Board of Directors of Tegna Inc., a publicly traded

broadcast, digital media and marketing services company, as well as its audit committee. She is also a member of the Board of Directors of Corteva, Inc., a publicly traded global agriculture company, where she serves on its audit committee and people and compensation committee. She is a member of the Financial Analysts Society of Philadelphia and holds the Chartered Financial Analyst designation. Ms. Grimes' extensive executive-level experience, leadership abilities, financial acumen, investment expertise, and risk management experience reinforce the Board's abilities in these areas and bring a valuable investor-oriented perspective to the Board.

Derek T. Kan has been a member of our Board since December 2021. He is Chief Business Officer at Deliverr, Inc., an e-commerce fulfillment technology company that was acquired by Shopify in 2022, a position he has held since December 2020. Previously, he held a number of senior positions in the U.S. federal government, including Deputy Director of the White House Office of Management and Budget from June 2019 through December 2020 and Under Secretary at the U.S. Department of Transportation from June 2017 through July 2019, where he served as a principal advisor to the Secretary and spearheaded initiatives involving technology and innovation in the transportation sector. He was also a founding member of the White House COVID Task Force and Operation Warp Speed. Nominated by President Biden and confirmed by the United States Senate, Mr. Kan currently serves on the United States Postal Service Board of Governors. Prior to his recent public service, Mr. Kan held various positions focused on emerging technologies, including as the General Manager for Lyft. Earlier in his career, Mr. Kan was a policy advisor to the former Senate Majority Leader and was a Presidential Management Fellow at the White House Office of Management and Budget. Mr. Kan brings to the Board his familiarity and experience with the U.S. federal government, his financial and accounting acumen, and his extensive experience in the area of innovation and the implementation of new technologies.

Carl B. Marbach has been a member of our Board since December 1991. He is a member of the Compensation Committee, the Audit and Risk Committee and the Public Debt and Equity Securities Committee. Mr. Marbach is the President and Chief Executive Officer of Shared Charter, Inc., a company providing peer to peer web-based private airplane charter sharing services. From January 2004 through January 2020, Mr. Marbach was President of Greater Marbach Airlines, Inc., a company providing aviation and consulting services. From January 1995 to January 2004, Mr. Marbach was President of Internetwork Publishing Corp., an electronic publisher, which he founded. He brings to the Board his expertise in the field of information technology, as well as his entrepreneurial experiences in building businesses in that and other industries.

John A. McLean has been a member of our Board since March 2016. He is Chair of the Compensation Committee and a member of the Governance Committee. Mr. McLean is a Senior Managing Director of New York Life Investment Management LLC, where he oversees U.S. distribution. Prior to joining New York Life in June 2018, Mr. McLean was the Chief Executive Officer and Distribution Principal for Hartford Funds Distributors, a subsidiary of investment firm Hartford Funds, from January 2013 to April 2018. From April 2009 to May 2012, he was the Head of U.S. Retail and Offshore Sales at Eaton Vance Investment Managers, a financial services firm. Prior to that time, Mr. McLean held positions of increasing responsibility at brokerage firm MFS Fund Distributors. He serves on the Board of Trustees of The Gateway to Leadership Foundation. Mr. McLean brings to the Board his expertise in building and leading high performance sales and marketing organizations and his strategic and tactical leadership skills.

Wendell E. Pritchett has been a member of our Board since March 2018. He is a member of the Governance Committee and the Compensation Committee. He is the Riepe Presidential Professor of Law and Education at the University of Pennsylvania. Dr. Pritchett previously served as the Interim President of the University of Pennsylvania from February 2022 to June 2022 and as the University Provost from 2017 to 2021. In 2018, he was appointed Chairman of the Nominating Panel of the Philadelphia School Board by Philadelphia Mayor James Kenney. Dr. Pritchett first joined the University of Pennsylvania Law faculty in 2002 and served as Interim Dean and Presidential Professor from 2014 to 2015 and as Associate Dean for Academic Affairs from 2006 to 2007. A Professor at the University of Pennsylvania Carey School of Law from 2001 to 2009, Dr. Pritchett also served as Chancellor of Rutgers-Camden from

2009 to 2014, and in 2008 served as Deputy Chief of Staff and Director of Policy for Philadelphia Mayor Michael Nutter, who also appointed him to the School Reform Commission, where he served from 2011 to 2014. Dr. Pritchett served as Chair of the Redevelopment Authority of Philadelphia and as President of the Philadelphia Housing Development Corporation from 2008 to 2011. Dr. Pritchett serves on the board of directors of Clarivate plc, a publicly traded information services company. He brings to the Board his leadership and administrative skills, expertise in real estate and housing law, and experience as policymaker, political advisor, and leader in nonprofit organizations with a particular focus on urban development.

Paul E. Shapiro has been a member of our Board since December 1993. He is the Lead Independent Director and Chair of the Governance Committee. He is also a member of the Audit and Risk Committee. Since June 2004, Mr. Shapiro has been Chairman of the board of directors of Q Capital Holdings LLC, an investment management firm. From January 2004 to June 2004, Mr. Shapiro was Senior Vice President of MacAndrews & Forbes Holdings, Inc., a private holding company of operating businesses. Beginning in 1994, Mr. Shapiro held positions as Chief Administrative Officer of each of Revlon, Inc. and Sunbeam Corporation, and general counsel of each of Coleman Company, Inc. and Marvel Entertainment, Inc. Prior thereto, he practiced corporate and securities law as a managing shareholder of the Palm Beach County office of Greenberg Traurig LLP and was a partner in Wolf, Block, Schorr and Solis-Cohen LLP. He brings to the Board his extensive business experience in executive positions with various nationally known companies, which he has served in a wide variety of capacities that have drawn upon his legal and entrepreneurial skills, including those in the areas of corporate governance and the corporate regulatory environment.

Scott D. Stowell has been a member of our Board since November 2021. He is the President and Chief Executive Officer of Capital Thirteen LLC, a company he founded that specializes in advisory, real estate investment, and angel investing. From 2015 to 2018, he served as executive chairman of CalAtlantic Group, Inc., the 5th largest U.S. home builder in 2017, and oversaw the merger of CalAtlantic with Lennar Corporation. Mr. Stowell served on the board of directors of Lennar from 2018 until April 2021. From 2012 to 2015, he served as Chief Executive Officer of Standard Pacific Homes, which he joined in 1986, and oversaw its merger in 2015 with the Ryland Group, resulting in the creation of CalAtlantic. Mr. Stowell serves on the Board of Pacific Mutual Holding Company, where he currently serves on the compensation and personnel committee (as Chair) and the governance and nominating committee. He also serves on the executive committees of HomeAid America and the First Point Volleyball Foundation. He is a member of the Dean’s Advisory Board at University of California, Irvine’s Merage Business School. Mr. Stowell brings to the Board a wealth of experience in the home building industry, as well as significant leadership abilities and managerial experience gained from his years as a Chief Executive Officer and Chairman of publicly traded home builders.

The table below summarizes certain key qualifications, characteristics and skills of each director nominee that were relevant to the decision to nominate him or her to serve on the Board. The lack of a mark does not mean the director does not possess that qualification or skill; rather, a mark indicates a specific area of focus or expertise on which the Board relies most heavily.

Key Qualifications, Characteristics and Skills of Our Director Nominees

Name

Leadership

Industry

Operating and Investment

Accounting
and
Financial

Business Development and Marketing

Corporate Governance and Law

Other Boards

Douglas C. Yearley, Jr.

●

Stephen F. East

●

Christine N. Garvey

●

Karen H. Grimes

●

Derek T. Kan

●

Carl B. Marbach

●

John A. McLean

●

Wendell E. Pritchett

●

Paul E. Shapiro

●

Scott D. Stowell

●

Gender diversity:

20% women

Racial / ethnic diversity:

30% diverse

Required Vote

Each director nominee is elected by a majority of the votes cast at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALL NOMINEES.

PROPOSAL TWO—RATIFICATION OF THE RE-APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

As part of its oversight of the Company’s relationship with our independent auditors, the Audit and Risk Committee (the "Audit Committee") reviews annually our independent auditors’ qualifications, performance, and independence. Based on the results of this review, the Audit Committee re-appointed Ernst & Young LLP to serve as the Company’s independent auditors for the fiscal year ending October 31, 2023. Ratification is being sought at the Meeting in a non-binding vote of stockholders. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of Ernst & Young LLP to our stockholders for ratification because we value our stockholders' views on the Company’s independent auditors. Ernst & Young LLP has served as our independent auditor since 1983, and we believe that the continued retention of Ernst & Young LLP is in the best interests of the Company. If our stockholders fail to ratify the selection, it will be considered notice to the Board and Audit Committee to consider the selection of a different firm.

A representative of Ernst & Young LLP is expected to be present at the Meeting, will be afforded the opportunity to make a statement, and is expected to be available to respond to appropriate questions. We have been advised by Ernst & Young LLP that neither the firm, nor any member of the firm, has any financial interest, direct or indirect, in any capacity in us or our subsidiaries.

Audit and Non-Audit Fees

The following table sets forth the fees earned for services rendered by Ernst & Young LLP for professional services for the fiscal years ended October 31, 2022 and 2021:


	2022		2021

Audit Fees (1)	$	2,080,000	$	2,248,049
Audit-Related Fees	—		—
Tax Fees	—		—
All Other Fees	—		—
	$	2,080,000	$	2,248,049

(1)“Audit Fees” include fees billed for (a) the audit of the Company and its consolidated subsidiaries, (b) the audit of the Company’s internal control over financial reporting, (c) the review of quarterly financial information, and (d) the issuance of consents in filings with the SEC.

The Audit Committee meets and agrees upon the annual audit fee directly with our independent auditors. The Audit Committee also establishes pre-approved limits for which our management may engage our independent auditors for specified services. Any work that exceeds these pre-approved limits for the specified services in a quarter requires the advance approval of the Audit Committee. Each quarter the Audit Committee reviews the matters worked on by the independent auditors during the previous quarter and establishes any pre-approved limits for the current quarter. The Audit Committee also reviews and approves the compatibility of any proposed non-audit services, including tax services, with Ernst & Young LLP’s independence. The Audit Committee reviewed and pre-approved the services provided by Ernst & Young LLP and approved the fees paid to Ernst & Young LLP for all services for fiscal 2022.

Required Vote

To be approved, this proposal must receive an affirmative majority of the votes cast on the proposal at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL TWO.

PROPOSAL THREE—ADVISORY AND NON-BINDING VOTE

ON EXECUTIVE COMPENSATION (SAY ON PAY)

In the most recent advisory vote, our stockholders voted in favor of the annual submission of the Company’s compensation of its NEOs to our stockholders for approval on a non-binding basis, and our Board has adopted this approach. In accordance with the outcome of those stockholder votes and regulations under Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are including in this proxy statement a separate resolution, subject to a non-binding stockholder vote, to approve the compensation of our NEOs as disclosed in this proxy statement.

Our executive compensation program has consistently received strong support from our stockholders. The results of our Say on Pay votes held over the past five years are as follows:


Annual Meeting Year						Stockholder Support on Say on Pay Vote

2022						96%
2021						98%
2020						97%
2019						96%
2018						97%

We conduct an annual outreach to our largest stockholders and proxy advisory firms to receive feedback regarding, among other matters, our executive compensation program. During fiscal 2022 and 2023, we solicited feedback from investors representing well over half of our outstanding shares. We value our stockholders' perspective on our business and are committed to continuing the constructive dialogue that we have established with our stockholders in recent years.

Our Compensation Committee has developed and maintained a compensation program that is intended to reward performance and to encourage actions that drive success in our short- and long-term business strategy, which is described in the “Compensation Discussion and Analysis” and the compensation tables (and accompanying narrative) on pages 29 to 59. In determining fiscal 2022 compensation for our NEOs, the Compensation Committee considered Company performance in fiscal 2022 and our management’s achievements in fiscal 2022 set forth in the “Compensation Discussion and Analysis.”

We are asking our stockholders to approve, in a non-binding vote, the following resolution in respect of this Proposal Three:

“RESOLVED, that the stockholders approve, in a non-binding vote, the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the 'Compensation Discussion and Analysis' included in this proxy statement and the related compensation tables and narrative discussion."

Required Vote

To be approved, this proposal must receive an affirmative majority of the votes cast on the proposal at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL THREE.

PROPOSAL FOUR—ADVISORY AND NON-BINDING VOTE

ON THE FREQUENCY OF THE EXECUTIVE COMPENSATION VOTE

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders have the opportunity to cast an advisory vote on how often we should include a Say on Pay proposal in our proxy materials for future annual stockholder meetings (the “Say on Pay Frequency" proposal). Stockholders may vote to recommend having the Say on Pay vote every year, every two years, or every three years.

Our stockholders voted in 2011 and again in 2017 in favor of the annual submission of the Company’s executive compensation to our stockholders for approval on a non-binding basis, and our Board has adopted this approach. The Board continues to believe that Say on Pay votes should be conducted every year. The annual vote has worked well, giving shareholders the opportunity to react promptly to emerging trends in compensation and to annually express their views on executive compensation decisions made in the prior year.

As an advisory vote, this proposal is not binding on the Company, the Board, or the Compensation Committee; however, the Compensation Committee and the Board value the opinions expressed by our stockholders in their votes on this proposal and will consider the outcome of the vote when making future decisions regarding the frequency of conducting a Say on Pay vote. It is expected that the next vote on a Say on Pay Frequency proposal will occur at the 2029 Annual Meeting of Stockholders.

Stockholders may cast their advisory vote to recommend holding future advisory votes on executive compensation every “1 Year,” “2 Years,” or “3 Years,” or to “Abstain.”

Required Vote

A plurality of the votes cast on this proposal will determine the stockholders’ preferred frequency for holding future advisory votes on executive compensation, which means that the option for holding an advisory vote every 1 year, 2 years, or 3 years receiving the greatest number of votes will be considered the preferred frequency of the stockholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO
HOLD THE SAY ON PAY VOTE EVERY 1 YEAR.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of October 31, 2022, our fiscal year end, with respect to compensation plans (including individual compensation arrangements) under which the Company’s equity securities are authorized for issuance. There are no plans that have not been approved by stockholders.


Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)	Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights(2)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

	(a)	(b)		(c)
	(In thousands)			(In thousands)
Equity compensation plans approved by security holders	4,685	$	34.37	5,049
Equity compensation plans not approved by security holders	—	—		—
Total	4,685	$	34.37	5,049

(1)Amount includes 2,823,000 shares and 1,862,000 shares underlying stock options and RSUs, respectively, outstanding as of October 31, 2022. The amount of performance-based RSUs ("PRSUs"), which is included in the RSU amount, reflects the maximum number of shares that could be issued under awards granted in fiscal 2022 and 2021 as to which performance had not been determined as of October 31, 2022, as further described under "Fiscal 2022 Long-Term Incentive Compensation - Fiscal 2022 Performance-Based RSUs" on page 38.

(2)The weighted-average exercise price does not take into account 1,862,000 shares underlying RSUs outstanding as of October 31, 2022.

CORPORATE GOVERNANCE

Our Board is committed to sound corporate governance policies that enable our Company to operate ethically and with integrity, and which promote long-term value creation for our stockholders and other stakeholders. Our approach to corporate governance has been to implement policies that enable the success of our strategy and business objectives, are rooted in a robust ongoing dialogue with our stockholders, and are inspired by best practices. Consistent with this approach, we continue to build upon a strong framework of corporate governance policies and practices, including the items summarized below:


Strong Independent Leadership
Independence						A majority of our directors must be independent. All of our director nominees other than Mr. Yearley, our Chairman and Chief Executive Officer ("CEO"), are independent, and all of our Committees consist exclusively of independent directors.
Lead Independent Director						Whenever our CEO is also the Chair of the Board, we require a Lead Independent Director position with specific responsibilities to provide independent oversight of management. Both the Lead Independent Director and the Chair of the Board are elected annually by our Board. Mr. Shapiro was first appointed to serve as our Lead Independent Director in March 2021 and currently serves in this role.
Commitment to Board Refreshment						The Governance Committee continually assesses the composition of the Board, including a review of Board size, diversity and the skills and qualifications represented on the Board, as well as director tenure. Recognizing the importance of continued Board refreshment, since March 2015, six new directors have joined our Board and six have retired. This turnover has deepened the diversity of the Board's composition, thought and experience, and brought fresh perspectives to its already strong membership.
Stockholder Engagement
Proactive engagement						We aim to maintain an active dialogue with our stockholders to ensure a diversity of perspectives is thoughtfully considered on a broad range of issues including strategy, business performance, corporate governance, risk and compensation practices, and other environmental, social, and governance concerns. We conduct an annual outreach to our largest stockholders and proxy advisory firms to receive feedback regarding these matters.
Availability of independent directors						We make our lead independent director and other independent directors available, as appropriate, for engagements with our top stockholders.
Accountability to Stockholders
Board evaluations and refreshment						The Board and its committees regularly evaluate their performance and composition. These evaluations, including assessments of the skills, qualifications and diversity of Board members, are considered in light of the Company’s business strategy and operations and the anticipated makeup of the Board following potential director retirements to identify the desired characteristics of future Board members.
Annual elections						All directors are elected annually.
Majority voting standard						Our bylaws require that any director be elected by a “majority of votes cast” in uncontested director elections. In other words, each director must receive more votes “For” his or her election than votes “Against” in order to be elected.


Director resignation policy						An incumbent director that does not meet the majority voting standard must promptly offer to resign. The Governance Committee will consider the resignation offer and make a recommendation as to whether the Board should accept the resignation.
Voting Rights that are Proportionate to Economic Interests
Single voting class						Toll Brothers has a single class of voting stock outstanding.
One share, one vote						Each share of common stock is entitled to one vote.
Management, Human Capital and Risk Oversight
Management development and succession planning						Our Board regularly reviews management development and succession planning, in particular with respect to the CEO role.
Human capital management						We believe our employees are among our most important resources and are critical to our continued success. We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations, and our management team routinely reviews employee turnover rates and employee engagement and satisfaction surveys at various levels of the organization.
Risk oversight						Our Board and its committees devote significant time and effort to understanding and reviewing enterprise risks. This includes oversight of our Company’s strategy and reputation as well as a review of risks related to financial reporting, compensation practices, succession matters and cybersecurity, among other risks.
Compensation Governance
Pay program tied to performance						A majority of our CEO's pay is long-term and at-risk with no guaranteed bonuses or salary increases. The Compensation Committee has identified performance goals that underpin our strategy and has incorporated those goals into executive compensation plans to serve as drivers of incentive awards.
Stock ownership guidelines						Stock ownership guidelines align executive and director interests with those of stockholders. These guidelines require our CEO to retain qualifying equity equal to six times his annual base salary (three times for other executive officers), and for our Board members to retain qualifying equity equal to five times their annual base cash retainer.
Hedging and pledging prohibition						We prohibit all hedging, pledging and transactions in derivatives related to Toll Brothers securities for all directors and executives.
Clawbacks						We have a policy that requires reimbursement and/or cancellation of awards if, in the Board’s discretion, it is determined that a payment was made based upon the achievement of specified financial results that was subsequently restated; in the Board’s view, the executive engaged in fraud or intentional misconduct that was a substantial contributing cause to the need for the restatement; and a lower award would have been made to the executive based upon the restated financial results. Our policy will be updated in accordance with listing standards expected to be adopted in the near future by the NYSE.
No tax gross-ups						We do not pay tax gross-ups on payments to executives.

Corporate Governance Guidelines and Practices

The Board has adopted Corporate Governance Guidelines, which describe the Board’s views on a number of governance topics. The guidelines are posted on our website at www.tollbrothers.com under “Investor Relations: Corporate Governance.”

Leadership Structure

Under the Company's bylaws, the Board selects its Chair in the manner it determines to be in the best interest of the Company. Mr. Douglas C. Yearley, Jr., a Board member and our CEO since June 2010, is Chairman of the Board. In choosing to combine the Chairman and CEO role under Mr. Yearley, the Board considered Mr. Yearley's in-depth knowledge of the home building industry generally and his thorough understanding of the Company's operations and the risks it faces; his long tenure with the Company and on the Board; the composition of the Board and the tenure of its members; and the Company's strong governance structure, including a strong Lead Independent Director and well-functioning Board committees composed entirely of independent directors. The Board also considered that combining the roles of Chairman and CEO would provide a clear leadership structure for our management team while allowing Mr. Yearley to continue serving as a vital link between management and the Board. This structure allows the Board to perform its oversight role with the benefit of management's perspective on our business strategy and all other aspects of the business.

As Chairman and CEO, Mr. Yearley is responsible for our day-to-day operations and for formulating and executing our long-term strategies in collaboration with the Board. Mr. Yearley collaborates with Mr. Paul Shapiro, who has served as our Lead Independent Director since March 2021, in developing Board schedules and agendas. The Lead Independent Director helps ensure that there is an appropriate balance between management and the non-executive directors and that the non-executive directors are fully informed and able to discuss and contribute to the issues that they deem important. The role of the Lead Independent Director includes:

•presiding over all executive sessions and other meetings of the independent directors;

•acting as principal liaison between the Chairman and CEO and the non-executive directors;

•leading the process for evaluating the Board of Directors and the committees of the Board of Directors;

•participating in the communication of sensitive issues to the other directors;

•performing such other duties as the Board of Directors may deem necessary and appropriate from time to time; and

•serving as the director whom stockholders may contact.

Codes of Business Conduct and Ethics

The Company has adopted a Code of Ethics and Business Conduct which applies to all employees and vendors, as well as a Code of Ethics for Members of the Board of Directors. These codes of ethics are available on our website at www.tollbrothers.com under “Investor Relations: Corporate Governance.” The Governance Committee is responsible for reviewing any proposed changes to these documents.

Director Independence

Under the NYSE rules and the standards adopted by the Board, a director is not “independent” unless the Board affirmatively determines that the director has no direct or indirect material relationship with the Company. In addition, the director must meet the requirements for independence set forth by the NYSE rules.

The Board has established categorical standards of director independence to assist it in making independence determinations. These standards, which are described below, set forth certain relationships between us and the directors, and their immediate family members or entities with which they are affiliated, that the Board, in its judgment, has determined to be material in assessing a director’s independence. The standards applied by the Board in affirmatively determining whether a director is “independent” provide that a director is not independent if:

(1) the director is, or has been within the last three years, our employee; or an immediate family member (defined as including a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone, other than domestic employees, who shares such person’s home) of such director is, or has been within the last three years, one of our executive officers;

(2) the director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 per year in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

(3) (a) the director is a current partner or employee of our external auditor; (b) the director has an immediate family member who is a current partner of such firm; (c) the director has an immediate family member who is a current employee of such firm and personally works on our audit; or (d) the director or an immediate family member was, within the last three years, a partner or employee of such firm and personally worked on our audit within that time;

(4) the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee;

(5) the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to or received payments from us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1.0 million or two percent of such other company’s consolidated gross revenues; or

(6) the director or an immediate family member is, or within the past three years has been, an affiliate of another company in which, in any of the last three years, any of our present executive officers directly or indirectly either: (a) owned more than five percent of the total equity interests of such other company, or (b) invested or committed to invest more than $900,000 in such other company.

The Board annually reviews the independence of all directors. The Board, in applying the above-referenced standards, has affirmatively determined that all of our director nominees, other than Mr. Yearley, are independent. As part of the Board’s process in making such determination, the Board determined that all of the above-cited objective criteria for independence are satisfied, and that no independent director has any material relationship with us that could interfere with his or her ability to exercise independent judgment.

Compensation Committee Interlocks and Insider Participation

None of the members who served on the Compensation Committee during the fiscal year ended October 31, 2022 has ever been an officer or employee of the Company or its subsidiaries. None of the members has any relationship required to be disclosed under this caption under the rules of the SEC.

Stockholder Engagement

We believe that effective corporate governance should include regular constructive conversations with our stockholders to proactively seek stockholder insights and to answer stockholder inquiries. We

aim to maintain an active dialogue with our stockholders to ensure a diversity of perspectives is thoughtfully considered on a broad range of issues including strategy, business performance, corporate governance, risk and compensation practices, and other environmental, social, and governance concerns. During fiscal 2022 and 2023, we solicited feedback from investors representing well over half of our outstanding shares. We value our stockholders' perspective on our business and are committed to continuing the constructive dialogue that we have established in recent years. In addition, throughout the year our Investor Relations group and other members of senior management engage with our stockholders to ensure that an ongoing and open avenue of communication is maintained.

Communication with the Board

Any person who wishes to communicate with the Board or specific individual directors, including the Lead Independent Director or the independent directors as a group, may do so by directing a written request addressed to such directors or director in care of the Corporate Secretary, Toll Brothers, Inc., at 1140 Virginia Drive, Fort Washington, Pennsylvania 19034. In accordance with instructions from the Board, the Corporate Secretary reviews all correspondence, organizes the communications for review by the Board and forwards communications to the full Board or individual directors, as appropriate. The Company's independent directors have requested that certain items that are unrelated to the Board's duties, such as spam, junk mail, mass mailings, and solicitation and job inquiries, not be forwarded. Communications that are intended specifically for the Lead Independent Director, or any other independent director, should be sent to the street address noted above to the attention of the Corporate Secretary.

Committees of the Board and Meetings

The Board currently has the following standing committees: Audit and Risk Committee; Executive Compensation Committee; Nominating and Corporate Governance Committee; and Public Debt and Equity Securities Committee. The following table lists our four Board committees, as well as the current chairs and membership of each committee.

Name

Independent

Audit and Risk Committee

Executive Compensation
Committee

Nominating
& Corporate
Governance
Committee

Public Debt & Equity
Securities
Committee

Douglas C. Yearley, Jr.

Stephen F. East

●

Christine N. Garvey

●

Karen H. Grimes

●

John A. McLean

●

Derek T. Kan

●

Carl B. Marbach

●

Wendell E. Pritchett

●

Paul E. Shapiro

●

Scott D. Stowell

●

C-Chair M-Member

Audit and Risk Committee

The Audit Committee is, and since March 2022 has been, composed of Christine N. Garvey (Chair), Stephen F. East, Karen H. Grimes, Carl B. Marbach and Paul E. Shapiro, each of whom has been determined by the Board to meet the standards of independence required of audit committee members by the NYSE and applicable SEC rules. The Board has also determined that all members of the Audit Committee are financially literate, and that Stephen F. East, Christine N. Garvey and Karen H. Grimes

possess accounting and related financial management expertise within the meaning of the listing standards of the NYSE and are “audit committee financial experts” within the meaning of the applicable SEC rules. For a description of each of their relevant experiences, see “Proposal One—Election of Directors” on page 8.

The duties and responsibilities of the Audit Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:

•discharging the Board’s responsibilities relating to the quality and integrity of our financial statements;

•overseeing our compliance with legal and regulatory requirements;

•overseeing risk oversight and assessment;

•the appointment, qualifications, performance and independence of the independent registered public accounting firm;

•pre-approval of all audit engagement fees and terms, all internal-control related services, and all permitted non-audit engagements (including the terms thereof) with the independent auditor;

•review of the performance of our internal audit function; and

•management of the Company’s significant risks and exposures, including strategic, operational, compliance, and reporting risks.

The duties of the Audit Committee with respect to oversight of the Company’s financial reporting process are described more fully on page 61 under “Audit and Risk Committee Report.” During fiscal 2022, the Audit Committee held 12 meetings. All but one of its meetings were attended by representatives from Ernst & Young LLP, our independent registered public accounting firm. The Audit Committee meets regularly in executive session with the company’s Chief Audit Officer (who oversees our internal audit function) and our independent registered public accounting firm.

Executive Compensation Committee

The Compensation Committee is, and since March 2022 has been, composed of John A. McLean (Chair), Stephen F. East, Christine N. Garvey, Carl B. Marbach and Wendell E. Pritchett, each of whom has been determined by the Board to meet the NYSE’s standards for independence required of compensation committee members. In addition, each committee member qualifies as a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act.

The duties and responsibilities of the Compensation Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:

•establishing our compensation philosophy and objectives;

•overseeing the implementation and development of our compensation programs;

•annually reviewing and approving corporate goals and objectives relevant to the compensation of the CEO;

•evaluating the performance of the CEO in light of those goals and objectives and determining the CEO’s compensation level based on these evaluations;

•reviewing and approving all elements and levels of compensation for our executive officers and any other officers recommended by the Board;

•discussing the results of the stockholder advisory vote on Say on Pay;

•making recommendations to the Board with respect to incentive compensation plans and equity-based plans;

•administering (in some cases, along with the Board) all of our stock-based compensation plans, as well as the Company's other incentive compensation plans for executive officers and its Supplemental Executive Retirement Plan ("SERP");

•reviewing and approving, or making recommendations to the full Board regarding, equity-based awards; and

•reviewing our regulatory compliance with respect to compensation matters.

In fulfilling its responsibilities, the Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the committee. For a discussion concerning the process and procedures for determining executive compensation and the role of executive officers and compensation consultants in determining or recommending the amount or form of compensation, see the “Compensation Discussion and Analysis” beginning on page 29. The Compensation Committee held five meetings during fiscal 2022. During fiscal 2022, the Compensation Committee's independent compensation consultant and its affiliates did not provide any services to the Company or its affiliates other than advising the Compensation Committee on executive officer compensation.

Nominating and Corporate Governance Committee

The Governance Committee is, and since March 2022 has been, composed of Paul E. Shapiro (Chair), Karen H. Grimes, John A. McLean and Wendell E. Pritchett, each of whom has been determined by the Board to meet the NYSE’s standards for independence.

The duties and responsibilities of the Governance Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include, among other things:

•identifying individuals qualified to become members of the Board and recommending to the Board the nominees for election to the Board;

•establishing procedures for submission of recommendations or nominations of candidates to the Board by stockholders;

•evaluating from time to time the appropriate size of the Board and recommending any changes in the composition of the Board;

•evaluating and making recommendations to the Board with respect to the compensation of the non-executive management directors;

•adopting and reviewing, at least annually, corporate governance guidelines consistent with the requirements of the NYSE;

•reviewing the Board’s committee structure;

•reviewing proposed changes to our governance instruments;

•reviewing and recommending director orientation and continuing orientation programs; and

•considering potential conflicts of interest of directors and NEOs and reviewing and approving related person transactions.

The Governance Committee is responsible for evaluating and making recommendations to the Board with respect to compensation of our directors. The Governance Committee also reviews corporate

political contributions and our corporate compliance program, including compliance with the Company's Pledging Policy and Stock Ownership Guidelines. The Governance Committee held three meetings during fiscal 2022.

Public Debt and Equity Securities Committee

The Public Debt and Equity Securities Committee is, and since March 2022 has been, composed of Stephen F. East (Chair), Christine N. Garvey, and Carl B. Marbach, each of whom has been determined by the Board to meet the NYSE’s standards for independence.

The duties and responsibilities of the Public Debt and Equity Securities Committee are set forth in its charter, which may be found at www.tollbrothers.com under “Investor Relations: Corporate Governance,” and include reviewing and approving, pursuant to authority granted by the Board, certain transactions relating to our public debt and equity securities and those of our affiliates. The Public Debt and Equity Securities Committee did not meet or otherwise take action during fiscal 2022.

Director Attendance

Attendance at Board Meetings

•The Board of Directors held five meetings during fiscal 2022.

•All of our incumbent directors attended each regularly scheduled Board meeting and at least 90% of all meetings of the Board and Board Committees on which they served.

•Our independent directors hold separate meetings without the presence of management. Our Lead Independent Director acts as chair at meetings of the independent directors. During fiscal 2022, the independent directors met four times.

Attendance at Annual Meetings of Stockholders

It is the policy of our Board that all directors attend annual meetings of stockholders except where the failure to attend is due to unavoidable circumstances or conflicts discussed in advance by the director with the Chairman of the Board. All of our incumbent directors attended our 2022 Annual Meeting of Stockholders.

Risk Oversight

Our Audit Committee regularly receives reports from our enterprise risk management and business continuity committees, which are composed of representatives from various business functions within the Company that are charged with risk assessment and business continuity planning. The enterprise risk management committee meets regularly and performs an enterprise risk assessment to identify and assess risks to the Company based on the probability of occurrence and the potential financial or reputational impact to the Company, the results of which are presented to the Audit Committee. Each of our Audit Committee members has a standing invite to, and members regularly participate in, meetings of the enterprise risk committee.

The enterprise risk committee also selects topics related to specific risks and potential vulnerabilities related to particular business functions of the Company, for example information technology related cyber-risks, which topics are then presented to the Audit Committee along with a summary of the measures we have taken or plan to take in order to define and mitigate such risks and prepare for and address such vulnerabilities. Due to the importance of managing cyber risks, the Company's Chief Information Officer provides regular updates to the Audit Committee on the Company's efforts to identify and mitigate such risks.

In addition, our Compensation Committee oversees risks arising from our compensation practices, and our Governance Committee oversees succession risks. Each of these committees regularly reports to the full Board, which is ultimately responsible for overseeing risks at the enterprise level. The

Compensation Committee has reviewed the design and operation of our compensation structures and policies as they pertain to risk and has determined that our compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on us. In addition, our full Board oversees strategic risks through its focus on overall corporate strategy and execution.

ESG Oversight

Our full Board generally oversees the Company's environmental, social and governance (ESG) goals and objectives, and supports the implementation of the Company’s ESG priorities. Specific ESG topics are overseen by the Board committee generally responsible for the subject matter. For example, the Board's Governance Committee has oversight responsibility for the corporate governance aspects of ESG, and the Audit and Risk Committee generally oversees regulatory compliance matters, including with respect to environmental issues. Following a review of potential oversight alternatives by the Governance Committee, the Board determined that it is the appropriate body to oversee the development and implementation of the Company's ESG and sustainability efforts, which focus on the Company’s efforts to positively impact both people and planet. ESG-related matters are regularly part of the Board's agenda.

Execution of the Company's ESG strategy is overseen by the Company's senior management team. The Company has formed an ESG Committee, which includes members of senior management who report directly to the CEO. The ESG Committee is responsible for setting direction and driving accountability as we address material issues, work with key stakeholders, and measure and report our progress.

DIRECTOR COMPENSATION

Director Compensation Program

The Governance Committee is responsible for evaluating and recommending compensation for non-executive members of the Board. Our non-executive directors are compensated in cash and equity for their service as directors. Equity awards granted in fiscal 2022 were issued under the Toll Brothers, Inc. 2019 Omnibus Incentive Plan (the "Omnibus Incentive Plan").

The compensation program in effect for fiscal 2022 for non-executive directors consisted of the following components:

•Board Retainer. The principal form of compensation for non-executive directors for their service as directors is an annual retainer (the "Board Retainer"), consisting of a combination of cash and RSUs ("Director RSUs"). For fiscal 2022, the aggregate value of the Board Retainer was $250,000 and was comprised of:

•Cash. Each non-executive director receives one-third of the Board Retainer in cash.

•Equity. Each non-executive director receives Director RSUs with a grant date fair value equal to two-thirds of the Board Retainer, vesting in equal annual installments over a period of two years. Director RSUs are typically granted on a date within the last 15 days of December that is determined in advance by the Board. New non-executive directors are first granted Director RSUs in the December following the fiscal year of their appointment to the Board and receive a pro-rated grant reflecting their service during the prior fiscal year.

•Committee Retainer. Each member of the Audit Committee receives annually a combination of cash and equity with a grant date fair value of $25,000, and each member of the Compensation Committee and Governance Committees receives annually a combination of cash and equity with a grant date fair value of $20,000. In each case, one-third of these amounts are delivered in cash and two-thirds of these amounts are delivered in Director RSUs. The Chair of each of these committees receives an additional annual cash retainer of $10,000.

Each member of the Public Debt and Equity Securities Committee receives annually for any fiscal year in which the Public Debt and Equity Securities Committee meets or takes official action, for service on such Committee, a combination of cash and equity with a grant date fair value of $10,000. One-third of this amount is delivered in cash and two-thirds of this amount is delivered in Director RSUs. The Chair of the Public Debt and Equity Securities Committee receives an additional cash retainer of $5,000 for any fiscal year in which the Committee meets or takes official action.

•Attendance at Board and Committee Meetings. Directors, Committee Chairs and Committee members do not receive any additional compensation for attendance at Board or Committee meetings.

•Lead Independent Director. The Lead Independent Director receives annually $35,000 in cash for his services in that capacity.

Director Compensation Table

The following table sets forth information concerning the fiscal 2022 compensation awarded to or earned by our non-executive directors. Mr. Yearley is not compensated for his service as an executive director, and the compensation received by him for his services as an employee of the Company is reported in the Summary Compensation Table on page 48.

Director Compensation during Fiscal 2022


Name	Fees Earned or Paid in Cash ($)(1)	Stock Awards ($)(2)(3)	Option Awards ($)(4)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(7)	All Other Compensation ($)	Total ($)

Richard J. Braemer	91,667	181,442	—	—	—	273,109
Stephen F. East	100,000	182,500	—	—		282,500
Christine N. Garvey	110,000	196,158	—	—	—	306,158
Karen H. Grimes	100,000	189,458	—	—	—	289,458
Derek T. Kan	77,917	—	—	—	—	77,917
Carl B. Marbach	103,333	201,700	—	—	—	305,033
John A. McLean	105,067	191,600	—	—	—	296,667
Wendell E. Pritchett	98,400	186,058	—	—	—	284,458
Paul E. Shapiro	145,000	195,000	—	—	—	340,000
Scott S. Stowell	85,000	—	—	—	—	85,000
Robert I. Toll (5)	83,333	165,000	—	(2,569,354)	—	(2,321,021)

(1)Amounts shown include the cash portion of each non-executive director's Board Retainer and applicable committee, chair and lead director retainers. Amounts are pro-rated to reflect applicable service periods and, for retiring directors, include cash in lieu of equity for the portion served of the year in which they retired.

(2)Director RSUs are typically granted on a date within the last 15 days of December that is determined in advance by the Board. Director RSUs vest in equal annual installments over two years, and shares underlying Director RSUs are generally deliverable 30 days after the vesting of the second installment. Director RSUs earn dividend equivalents at the same time and in the same amount as dividends paid on the Company’s common stock; dividend equivalents are subject to the same vesting, settlement, and other terms and conditions as the Director RSUs to which the dividend equivalents relate. Upon the death, disability, or retirement (after reaching age 62) of a director, Director RSUs will vest immediately, and shares underlying Director RSUs will be deliverable 30 days after vesting (subject to a six-month delay in delivery if required to comply with Section 409A of the tax code). Upon a change of control of the Company, accelerated vesting of Director RSUs occurs only upon the Director ceasing to be a director of the Company.

For purposes of determining the number of Director RSUs that were awarded in fiscal 2022, the grant date fair value per share was the closing price of the Company's common stock on December 20, 2021, the grant date of the Director RSUs in fiscal 2022. Fractional Director RSUs are not granted.

(3)The non-executive directors held the following amounts of outstanding unvested RSUs at October 31, 2022: Mr. Braemer, 0 units; Mr. East, 3,803 units; Ms. Garvey, 4,732 units; Ms. Grimes, 4,632 units; Mr. Kan, 0 units; Mr. Marbach, 4,959 units; Mr. McLean, 4,772 units; Dr. Pritchett, 4,544 units; Mr. Shapiro, 4,859 units; Mr. Stowell, 0 units; and the estate of Mr. Toll, 0 units. The non-executive directors held the following amounts of outstanding vested RSUs at October 31, 2022: Mr. Braemer, 0 units; Mr. East, 1,086 units; Ms. Garvey, 1,811 units; Ms. Grimes, 1,811 units; Mr. Kan, 0 units; Mr. Marbach, 1,955 units; Mr. McLean, 1,918 units; Dr. Pritchett, 1,774 units; Mr. Shapiro, 1,955 units; Mr. Stowell, 0 units and the estate of Mr. Toll, 0 units.

(4)The following non-executive directors held unexercised stock options to acquire the following amounts of the Company's common stock at October 31, 2022: Mr. Braemer, 16,012 shares; Mr. Marbach, 19,779 shares; Mr. McLean, 2,313 shares; Mr. Shapiro, 18,838 shares; and the estate of Mr. Toll, 655,098 shares.

(5)Mr. Toll ceased service as a director in March 2022 and passed away on October 7, 2022. The decrease reported in the actuarial value of Mr. Toll's SERP benefits is due primarily to a change in the discount rate used in such valuation, as well as distributions from the SERP to Mr. Toll totaling $600,000 during fiscal 2022.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Our executive compensation program is designed to motivate and retain highly qualified and experienced executives, provide performance-based incentives and align our compensation with long-term creation of stockholder value. The Compensation Discussion and Analysis that follows describes how this compensation philosophy applied to the compensation paid in fiscal 2022 to our NEOs. Our NEOs for fiscal 2022 were:


Name			Role in Fiscal 2022
Douglas C. Yearley			Chairman and Chief Executive Officer
Martin P. Connor			Senior Vice President and Chief Financial Officer
Robert Parahus			President and Chief Operating Officer

Executive Summary

The majority of our NEOs' compensation continues to be delivered in the form of incentive based awards. During fiscal 2022, approximately ninety percent of our CEO's compensation and an average of approximately seventy-five percent of our other NEOs' compensation was at risk and linked to our operational and stock price performance and the execution of our strategic priorities throughout the fiscal year. The charts below show the mix of fiscal 2022 targeted total direct compensation for Mr. Yearley and for our other NEOs as a group.

Toll Brothers Strategy and Fiscal 2022 Performance

In the more challenging environment that characterizes the current market, and with approximately 76,000 lots owned or controlled at fiscal year end, we are being highly selective with respect to land acquisition and development. Whether we are evaluating a new land opportunity or a lot takedown under an existing option, we are applying rigorous underwriting standards focused on both margins and returns, and which take into account current market conditions. Our land strategy also involves a consistent focus on the capital efficiency of our land portfolio as we aim to control a greater percentage of our land through option arrangements. Of the approximate 76,000 lots we held at fiscal year end, slightly more than half were controlled through options, as compared to approximately 39% five years ago. We continue to target an overall mix of 60% optioned lots and 40% owned over the long term.

nearly all of which matures in November 2026. In fiscal 2022, we generated close to $1.0 billion in cash flow from operations, paid down approximately $410 million of senior notes, repurchased approximately $543 million of stock, and paid total dividends of approximately $89 million, or roughly $0.77 per share. Our strong balance sheet and ample liquidity give us the flexibility to continue investing in our business while returning capital to our shareholders and reducing debt.

Fiscal 2022 Performance Relative to Fiscal 2022 CEO Compensation

At the outset of each fiscal year, the Compensation Committee assesses the incentive structure of the Company's executive compensation program to confirm that the program continues to be aligned with the Company's operational goals and overall strategy, and that it is reasonably designed to pay our executive officers for Company and individual performance consistent with the creation of long-term shareholder value. As part of this review, the Compensation Committee determined that the metrics used in the program in recent years — pre-tax income, units delivered, adjusted gross margin and return on equity — continued to be the most appropriate metrics to drive desired outcomes.

The Compensation Committee set targets for each of these metrics that it considered challenging yet achievable in light of the robust housing market conditions that existed at the outset of fiscal 2022. Despite achieving record unit deliveries and pre-tax income, and the Company's highest adjusted gross margin in several years, actual results for these operational metrics fell short of the challenging targets set by the Compensation Committee. This was due in no small part to the rapid change in housing market conditions brought about by the sharp increase in mortgage rates over the course of the fiscal year. As a result, the payouts with respect to the annual cash incentive award and operational PRSUs based on units delivered and adjusted gross margin were below target for each NEO in fiscal 2022.

As previously disclosed, the Compensation Committee introduced a three-year return on equity metric as a replacement for the relative total shareholder return ("TSR") metric beginning with awards granted in December 2019. As a result, fiscal 2022 is the last year in which previously granted TSR-based awards vested. When making this adjustment, the Compensation Committee determined that management is better positioned to influence the Company's return on equity and that this metric better aligns management and stockholder interests in generating strong returns and increasing capital efficiency. Based on the results described above and the Company's three-year total shareholder return ("TSR") through October 31, 2022:

•Annual Incentive Bonus: Performance with respect to the formulaic portion of the annual incentive bonus (70% of the award) was achieved at 92.8% of the performance target, resulting in a payout of 91.0% of the targeted formulaic portion of the bonus. Based on an assessment of CEO and Company performance over the course of the year, as well as the results achieved under the formulaic portion, the Compensation Committee used its judgment to pay out the qualitative portion of the annual incentive bonus (30% of the award) at 100%, resulting in a full bonus payout of approximately 94% of target - a result the Compensation Committee deemed appropriate in light of all circumstances (see page 36 for more details);

•Operational PRSUs: The number of shares earned in respect of PRSUs based on the operational goals of unit deliveries and adjusted gross margin ("Ops PRSUs") was 91.0% of the target number of shares awarded. These earned shares vest pro-rata over a four-year period with delivery of 100% of such shares on the four-year anniversary of the grant date (see page 38 for more details).

•Total Shareholder Return PRSUs: PRSUs granted in December 2019 that were based on the Company's TSR relative to a group of peer companies ("TSR PRSUs") over the three-year period ended on October 31, 2022 paid out at 133.3% of target as the Company's relative TSR ranked at the 67th percentile of the peer group at the conclusion of the measurement period.

We believe these outcomes demonstrate a strong link between Company performance, the compensation earned by our CEO in fiscal 2022 and returns experienced by our stockholders over time.

CEO Realizable Compensation

Over time, both the Company's performance relative to the operational metrics included in the annual and long-term incentive programs, as well as the Company's stock price performance, have a direct and material impact on executive compensation. For this reason, realizable pay, which captures compensation earned, as well as the impact of the Company’s share price performance on previously granted long-term incentive awards by valuing those equity awards based on the fiscal year-end stock price, is an important tool in assessing the effectiveness of the Company’s executive compensation programs and whether it aligns the interests of executives with those of stockholders.

As shown below, operational results have generally been achieved at or slightly below targeted performance goals in recent years. Due to the heavy weighting of at-risk equity awards and incentive-based compensation in our CEO's targeted total direct compensation, the realizable compensation for our CEO generally follows performance outcomes, and is heavily influenced by our stock price performance.

How Target and Realizable Total Direct Compensation are Calculated

Target Total Direct Compensation ("TDC") is the sum of (i) the annual base salary for the corresponding calendar year, (ii) target bonus for the applicable fiscal year and (iii) the target dollar value of all equity awards granted in the applicable fiscal year, in each case as approved by the Compensation Committee at the outset of the fiscal year. The values of equity award grants included in the charts is greater than the accounting values reported in the Grants of Plan Based Awards Table due primarily to the application of an illiquidity discount related to post-vesting transfer restrictions on awards granted to retirement eligible employees.

Realizable TDC ("Realizable TDC") for each year is the sum of (i) base salary earned during the fiscal year, (ii) actual cash bonus earned for the fiscal year, and (iii) the value of equity awards granted at the beginning of the applicable fiscal year as of October 31, 2022. RSUs and PRSUs are valued by multiplying the October 31, 2022 closing share price of $43.08 by (a) in the case of RSUs, the number of shares granted, (b) in the case of Ops PRSUs, the number of shares earned based on actual performance through the end of the applicable fiscal year, (c) in the case of return on equity based

PRSUs ("ROE PRSUs"), the target number of shares granted (these awards were granted in fiscal 2022 and 2021) and (d) in the case of TSR PRSUs, the actual number of shares earned for completed performance periods (these awards were granted in fiscal 2020).

Description of Our Executive Compensation Program

Our executive compensation program is designed to incentivize our NEOs to improve performance and manage risk over the short- and long-term and align the interests of our NEOs with our stockholders.

Key Compensation Elements for Fiscal 2022:

Element

Time Horizon

FY2022 Performance Measure

Fixed

Base Salary

Short

(1 year)

Individual Performance

At Risk

Annual Incentive Bonus

Short

(1 year)

70% Quantitative Component:

Pre-tax Income (PTI Metric)

30% Qualitative Component: Individual/Company Performance

PRSUs

Medium

(3-4 years)

Units Delivered (Units Metric) (1/3)

Gross Margin (Margin Metric) (1/3)

Return on Average Equity (1/3)

RSUs

Medium

(4 years)

Stock Price Performance

Fixed

Retirement Benefits (SERP)

Long

(payable following retirement)

Individual Performance

Fiscal 2022 Performance Metrics

As described above, approximately 62% of our CEO's annual targeted TDC in fiscal 2022 was in the form of performance-based awards. Performance was measured under these awards based on the metrics described in the table below.

Metric

Weight

Performance Period

Vesting Period

Annual Incentive Bonus

PTI Metric

The PTI metric is used because it captures the overall profitability of the enterprise before taxes and includes the results of our joint ventures and non-home building activities, as well as SG&A expense. Certain adjustments are made to GAAP pre-tax income for compensation purposes (see page 37).

100%

1 Year

Long Term Incentive Award

Units Metric

Units delivered measures the number of homes that are delivered to home buyers during the fiscal year. It is a measure of our ability to efficiently convert our backlog and generate revenue in our core business.

1/3

1 Year

4 Years

Margin Metric

The home building margin metric measures the gross margin of our home building operations and reflects our ability to profitably and efficiently execute on this core business. Certain adjustments are made to GAAP gross margin for compensation purposes (see page 39).

1/3

1 Year

4 Years

ROE Metric

The ROE metric measures our return on average equity over three consecutive fiscal years. It is a measure of the return that our shareholders receive on investment. Certain adjustments are made to ROE for compensation purposes (see page 40).

1/3

3 Years

Compensation Philosophy and Objectives

We face competition for talent from many other home builders in the markets in which we operate. It is vital to our success and long-term viability that our business continues to be managed by highly experienced, focused, and capable executives who possess the experience and vision to anticipate and respond to market developments. The Compensation Committee’s primary objectives in setting compensation for our NEOs are:

•Incentivize executives to manage risks appropriately while improving our financial results, performance, and condition over both the short-term and the long-term. The Compensation Committee, by seeking a balance of short-term and long-term compensation, seeks to motivate and reward our NEOs for decisions made today that may not produce immediate or short-term results, but are intended to have a positive long-term effect.

•Align executive and stockholder interests. The Compensation Committee believes that the use of equity compensation, including the use of PRSUs as a key component of executive compensation, is a valuable tool for aligning the interests of our NEOs with those of our stockholders and to reward actions that demonstrate long-term vision.

•Set compensation levels that are competitive to attract, motivate, and reward the highest quality individuals to contribute to our goals and overall financial success. By keeping compensation competitive during times of growth as well as contraction, the Compensation Committee attempts to retain executives through all phases of the home building market cycle.

•Retain executives and encourage continued service. It is important that we concentrate on retaining and developing the capabilities of our current leaders and emerging leaders to ensure that we continue to have an appropriate depth of executive talent.

•Use pay practices that support good governance.

◦We employ our NEOs at will and do not enter into individualized employment agreements.

◦We regularly engage with stockholders to receive input on executive compensation matters.

◦We do not provide excise tax gross-ups.

◦We do not provide guaranteed incentive payments.

◦Perquisites are limited, and we do not provide tax gross ups on perquisites.

◦Incentive compensation, including stock-based compensation, is subject to a clawback policy.

◦Incentive awards are subject to individual caps.

◦Equity awards granted since December 2019 include double-trigger vesting protections.

◦Our Omnibus Incentive Plan prohibits option repricing without stockholder approval.

◦We have policies that prohibit NEOs from hedging and pledging Company shares.

◦We have stock ownership guidelines under which our NEOs are expected to acquire and hold a meaningful level of stock ownership in the Company.

◦We have an independent Compensation Committee consultant.

Consideration of Say on Pay Results

Our executive compensation program has consistently received strong support from our stockholders. See "Proposal Three—Advisory and Non-Binding Vote on Executive Compensation (Say on Pay)" on page 15 for the results of our annual Say on Pay votes held in the past five years. We conduct an annual outreach to our largest stockholders and proxy advisory firms to receive feedback regarding our executive compensation program.

At our 2022 Annual Meeting of Stockholders, 96% of stockholders voting on our Say on Pay proposal voted in support of the compensation of our NEOs. The Compensation Committee viewed the results of our 2022 Say on Pay vote as an affirmation by our stockholders of the Company's executive compensation program.

The Compensation Committee continually assesses the effectiveness of our executive compensation program and from time to time makes changes - taking into account the business environment in which the Company operates and market factors impacting the Company, developments in pay practices, discussions with stockholders and other factors it deems appropriate.

Fiscal 2022 and 2023 Design Changes

The Compensation Committee last made significant design changes to the Company's executive compensation program effective for incentive awards granted in fiscal 2021. It did not make any significant changes to the design of the executive compensation program for fiscal 2022. Beginning with ROE-based long-term incentive awards granted in fiscal 2023, inventory impairments and write-downs will be added back to both GAAP net income and stockholders' equity in determining ROE over the applicable performance period.

FISCAL 2022 COMPENSATION DECISIONS

Cash Compensation Decisions

Base Salary

When establishing annual base salaries, the Compensation Committee takes into account each NEO’s performance, considering their role and responsibilities and the range of compensation of comparable executives within our peer group. The Compensation Committee believes that its compensation objectives are more effectively met when most of an executive’s compensation package is composed of at-risk performance-based annual incentive bonuses and long-term incentive compensation, rather than fixed compensation such as base salaries.

In early fiscal 2022, the Compensation Committee determined that, for calendar year 2022, the base salary for Mr. Yearley would be increased from $1,150,000 to $1,200,000, the base salary for Mr. Connor would be increased from $1,000,000 to $1,025,000 and the base salary for Mr. Parahus would be increased from $875,000 to $1,000,000. In approving each increase, the Compensation Committee considered peer salaries, pay increases to other employees and the fiscal 2021 performance of each executive. In addition, in the case of Mr. Parahus, the Compensation Committee considered his promotion to the role of President and Chief Operating Officer at the beginning of fiscal 2022.

Incentive Awards

Fiscal 2022 Performance Targets

In setting performance metric target levels for both the annual incentive bonus and for long-term incentive compensation awards, at the beginning of each fiscal year, the Compensation Committee considers the Company's forecasted results and historical performance, economic and industry conditions, and the level of performance required by our NEOs to deliver against target levels, with the goal of appropriately aligning payout opportunities with performance expectations.

At the outset of fiscal 2022 when the Compensation Committee approved the performance metrics applicable to short-term and long-term incentive awards for the fiscal year, housing market conditions remained robust, with low mortgage rates, favorable demographics, pent up demand and a tight resale market all supporting demand for housing. In addition, there continued to be significant pressure on production, as supply chain disruptions, labor constraints and municipality-related delays extended delivery times for homes across the industry. Within this context, the Compensation Committee approved target performance metrics for pre-tax income, unit deliveries, adjusted gross margin and return on equity that it considered challenging yet achievable.

Fiscal 2022 Annual Incentive Bonus

Based on the Compensation Committee's review of the fiscal year 2021 performance of each executive and a review of each executive's annual incentive bonus opportunity relative to peers, for fiscal 2022, the Compensation Committee approved increases in the total target bonus opportunities for each NEO. The total target bonus opportunity for fiscal 2022 was $4,300,000 for Mr. Yearley, $1,450,000 for Mr. Connor, and $2,000,000 for Mr. Parahus. Payout of 70% of the bonus was targeted to achievement of the formulaic PTI Metric target described below. The remaining 30% of the bonus was to be determined based on the Compensation Committee's qualitative assessment of individual and Company performance for fiscal 2022.

As detailed below, based on the formulaic results and qualitative assessment, the total annual bonuses paid to Messrs. Yearley, Connor and Parahus for fiscal 2022 were 94% of their respective targets.

Formulaic Bonus Component. The Compensation Committee met in early fiscal 2023 and certified that the PTI Metric was achieved at 92.8% of target for fiscal 2022 performance, as set forth in

the table below.


	2022 Annual Incentive Bonus Formulaic Bonus Component (in '000s)
	Minimum (80%)		Target (100%)		Maximum (120%)		Actual

PTI Metric(1):	$	1,395,268	$	1,744,085	$	2,092,902	$	1,618,048

(1) The PTI Metric is calculated in accordance with U.S. generally accepted accounting principles, subject to the exclusions listed below to the extent not budgeted, and disclosed in a press release or conference call. These exclusion categories were approved by the Compensation Committee on the date the annual incentive bonus award was approved by the Compensation Committee:

•Restructuring and severance costs pursuant to a plan approved by the Board, CEO and/or President and Chief Operating Officer;

•Gains or losses from litigation or claims, natural disasters, or terrorism;

•Effect of changes in laws, regulations, or accounting principles;

•The gain or loss from the sale or discontinuance of a business segment, division, or unit and the corresponding budgeted, unrecognized pre-tax income and margin for this business segment, division, or unit.

The following exclusion categories, to the extent not budgeted, were also approved by the Compensation Committee on the approval date:

•Write-down or impairment of assets or joint venture investments;

•Stock-based compensation overages or underages;

•Expense of an acquisition; and

•Gains or losses from derivative transactions or the early retirement of debt.

Based on the performance level achieved at 92.8% of the PTI Metric target, the formulaic component of the annual incentive bonus for fiscal 2022 for each NEO was earned at 91.0% of targeted award amounts, as follows:


	Target Formulaic Bonus Component Amount		Actual Formulaic Bonus Component Award

Douglas C. Yearley, Jr.	$	3,010,000	$	2,739,100
Martin P. Connor	$	1,015,000	$	923,650
Robert Parahus	$	1,400,000	$	1,274,000

Qualitative Assessment Bonus Component. In its qualitative evaluation of performance for fiscal 2022, the Compensation Committee considered the performance of each NEO during a year in which we continued to experience significant supply chain disruptions, labor shortages and municipality related delays to production, yet delivered the most homes and highest revenue and net income in the Company's history. In assessing performance, the Compensation Committee considered the significant financial accomplishments of the Company during the year. It also considered that the Company made substantial progress executing on its operational and strategic goals by, among other things, continuing to improve margins through building plan and design studio optimization programs and continued focus on the capital efficiency of the land acquisition process. The Compensation Committee also considered management's focus on customer satisfaction and the employee experience, including with respect to diversity and inclusion initiatives. Additional factors included internal pay equity considerations and the fact that the Company's record financial performance in fiscal 2022 resulted in payouts below target under the formulaic portion of the annual incentive award for each NEO due in part to swiftly changing market conditions that were outside of management's control. Accordingly, the Compensation Committee used its judgment to approve the payout of the qualitative portion of the annual incentive award at 100% of target

for each NEO.


	Target Qualitative Assessment Bonus Component Amount		Actual Qualitative Assessment Bonus Component Award

Douglas C. Yearley, Jr.	$	1,290,000	$	1,290,000
Martin P. Connor	$	435,000	$	435,000
Robert Parahus	$	600,000	$	600,000

Total Fiscal 2022 Cash Compensation

Total cash compensation (base salary and annual incentive bonus) paid to or earned by our NEOs for fiscal 2022 is set forth below.


	Base Salary		Annual Incentive Bonus		Total Cash Compensation

Douglas C. Yearley, Jr. (1)	$	1,190,384	$	4,029,100	$	5,219,484
Martin P. Connor	$	1,020,192	$	1,358,650	$	2,378,842
Robert Parahus	$	987,019	$	1,874,000	$	2,861,019

(1) Reflects base salary earned during fiscal 2022. Base salary is paid on a calendar year basis. Each NEO's base salary was increased as described above effective January 1, 2022.

Fiscal 2022 Long-Term Incentive Compensation

The design and structure of our long-term incentive compensation program is reviewed annually to ensure that it remains appropriate to drive the operational and strategic actions deemed by the Compensation Committee to be key to the long-term success of the Company. In fiscal 2022, the Compensation Committee awarded equity compensation to the NEOs in the form of RSUs and PRSUs based on a fixed-dollar approach. For awards granted in fiscal 2022 to each NEO, the mix of equity awards was fixed at 50% RSUs and 50% PRSUs. Based on the Compensation Committee's review of the fiscal year 2021 performance of each executive and a review of each executive's equity grants relative to peers, for fiscal 2022, the Compensation Committee approved increases in the targeted grant date value of equity awards (disregarding the impact of an illiquidity discount for post-vesting transfer restrictions applicable to retirement eligible employees) for each NEO.

As it has done in the past, for fiscal 2022, the Compensation Committee continued to include a one-year performance period for awards of Ops PRSUs, although the awards generally vest on a pro-rata basis over four years and shares underlying the award are delivered at the end of such period, subject to continued service. The Compensation Committee believes that a one-year performance period is appropriate for these awards due to the highly cyclical nature of the residential home building industry and the challenges inherent in making long-term forecasts. A one-year performance period also provides executives a clear line of sight linking pay and performance. ROE PRSUs vest and shares underlying such awards are delivered at the end of the three-year performance period.

In fiscal 2022, all equity awards for our NEOs, and substantially all those for other employees and our non-executive directors, were granted on December 20, 2021. By practice, the grant date selected for our annual equity award is in the last 15 days of December, which follows our release of fourth quarter and full year earnings (generally in the first week of December). The specific date that is chosen is a date on which we believe it is unlikely that data will be released that will significantly impact the home building industry.

Fiscal 2022 Performance Based RSUs

In fiscal 2022, the Compensation Committee approved the grant of PRSUs to each NEO consisting of Ops PRSUs (2/3 of the award) and ROE PRSUs (1/3 of the award).

Fiscal 2022 Ops PRSU Performance Metrics

Ops PRSUs are designed to align NEO compensation with the achievement of pre-established growth and profitability goals and accomplish this through the following operational performance metrics.

•Units Metric, which measures the number of homes that are delivered to home buyers during the fiscal year and is a measure of our ability to efficiently convert our backlog and generate revenue in our core business; and

•Margin Metric, which measures the adjusted gross margin of our home building operations and reflects our ability to profitably and efficiently execute on this core business.

When considering appropriate performance metric targets at the beginning of fiscal 2022, the Compensation Committee considered a variety of factors, including forecasted results and historical performance, economic and industry conditions, and the level of performance required by our NEOs to deliver against target levels, with the goal of appropriately aligning payout opportunities with performance expectations. The targets were intended to incentivize management to profitably generate revenue while taking into account the challenges inherent in efficiently converting the Company's large 2021 fiscal year-end backlog in an environment characterized by industry-wide supply chain constraints, labor disruptions and municipality-related delays.


	Ops PRSU Metric(1) Performance Compared to Target
	Target	Actual	% of Target

Units Metric	11,800	10,515	89.11%
Margin Metric (2)	28.50%	27.51%	96.53%

(1) Each performance metric had a threshold level that, if achieved, would earn 75% of the Ops PRSUs allocated to that metric; a target level that, if achieved, would earn 100% of the Ops PRSUs allocated to that metric; and a maximum level that, if achieved, would earn 150% of the Ops PRSUs allocated to that metric. To the extent that actual performance results fell between these levels, the Ops PRSUs earned would be determined by linear interpolation between those levels. If the minimum threshold performance level of 80% of target performance was not achieved for any individual metric, none of the Ops PRSUs would have been earned for that metric.

(2) The Margin Metric is calculated in accordance with U.S. generally accepted accounting principles (revenue and cost of home sales revenues), subject to certain exclusions. The exclusions consist of the items listed below to the extent not budgeted, disclosed in a press release or conference call and to the extent included in cost of home sales revenues. These exclusion categories were approved by the Compensation Committee on the grant date of the award:

•Restructuring and severance costs pursuant to a plan approved by the Board, CEO and/or President and Chief Operating Officer;

•Gains or losses from litigation or claims, natural disasters, or terrorism;

•Effect of changes in laws, regulations, or accounting principles; and

The following exclusion categories, to the extent not budgeted, were also approved by the Compensation Committee on the grant date:

•Write-down or impairment of assets or joint venture investments;

•Stock-based compensation overages or underages;

•Expense of an acquisition;

•Gains or losses from derivative transactions or the early retirement of debt; and

•Interest expense in home sales cost of revenues.

Based on fiscal 2022 performance, the Compensation Committee certified that the blended average percentage of target shares earned for these metrics was 91.0% of target. One-fourth of the earned 2022 Ops PRSUs vested on December 20, 2022, the first anniversary of the grant date, and the remaining three-fourths are subject to service-based vesting over the next three anniversaries of the grant date. In general, no shares will be delivered until the fourth anniversary of the grant date.

ROE PRSUs

Beginning in December 2020, the Compensation Committee approved the grant of ROE PRSUs and discontinued the use of TSR PRSUs as part of the long-term incentive compensation awards of our NEOs. For awards granted in December 2020 and 2021, ROE PRSUs are calculated by dividing the Company's average GAAP net income over a three-year period by the Company's average GAAP stockholder's equity over the same timeframe, with vesting and settlement of the awards occurring upon the conclusion of the three-year performance period. Beginning in December 2022, GAAP net income and stockholder's equity will be adjusted to add back inventory impairments and write-downs. In all cases, following the conclusion of the performance period, the number of ROE PRSUs earned is determined by comparing actual results to targeted performance. If target performance is achieved, 100% of shares granted are earned. If the minimum threshold performance level of 80% of target performance is achieved, 75% of the shares granted would be earned (and no ROE PRSUs are earned below the 80% threshold level). If 120% or more of targeted performance is achieved, a maximum of 150% of shares granted may be earned. To the extent that actual performance results fall between these levels, ROE PRSUs are earned based on a linear interpolation between those levels.

Terms Applicable to All PRSUs

All PRSUs earn dividend equivalents at the same time and in the same amount as dividends paid on the Company’s common stock; dividend equivalents are subject to the same vesting, settlement, and other terms and conditions as the PRSUs to which the dividend equivalents relate. Shares subject to PRSUs held by an NEO fully vest and all restrictions immediately lapse upon an NEO’s termination of employment due to death or disability. In addition, all shares subject to PRSUs granted prior to December 2019 fully vest and all restrictions lapse upon a change of control of the Company. Starting with grants in December 2019, PRSUs will vest in connection with a change of control of the Company only if there is an actual or constructive termination of the executive (i.e., a "double trigger") within the time periods set forth in the applicable award agreement. Awards granted prior to December 2019 will continue to vest upon qualified retirement at age 62 following ten years of service. Starting in December 2019, retirement is defined as a voluntary resignation after achieving either (i) age 58 and ten years of service or (ii) age 62 and five years of service, and an award will continue to vest upon such a qualifying retirement. All vested and unvested PRSUs are subject to forfeiture in the event that, after the NEO retires or otherwise leaves the Company, the NEO breaches certain post-termination covenants.

Terms Applicable to Service-Based RSUs

All RSUs earn dividend equivalents at the same time and in the same amount as dividends paid on the Company’s common stock; dividend equivalents are subject to the same vesting, settlement, and other terms and conditions as the RSUs to which the dividend equivalents relate. RSUs granted to our NEOs generally vest in equal annual installments over a four-year period beginning on or about the first anniversary of the grant date. Although the awards vest over a four-year period, shares underlying vested RSUs generally are not delivered until the fourth anniversary of the grant date. In the event of an executive's qualifying retirement, which is defined as a voluntary resignation after achieving either (i) age 58 and ten years of service or (ii) age 62 and five years of service, RSUs continue to vest and are delivered in accordance with the normal schedule. Upon the death or disability of an executive, all RSUs are immediately vested and delivered. RSUs will vest in connection with a change of control of the Company only if there is an actual or constructive termination of the executive (i.e., a "double trigger") within the time periods set forth in the applicable award agreement. All vested and unvested RSUs granted to NEOs are subject to forfeiture in the event that, after the NEO retires or otherwise leaves the Company, the NEO breaches certain post-termination covenants.

COMPENSATION FRAMEWORK

Compensation Decision-Making Process

Compensation Decision-Making Timeline

The Compensation Committee reviews and determines base salary, annual incentive bonuses, and long-term incentive compensation, as well as benefits and perquisites, on an annual basis. For compensation relating to fiscal 2022, the primary steps taken by the Compensation Committee to establish and award compensation to our NEOs were as follows:


						Compensation Committee Action Taken

Fiscal 2022

December 2021						Reviewed compensation levels for each executive officer. Set base salaries and incentive compensation opportunity levels for the NEOs. Set performance goals for fiscal 2022 annual incentive bonus and PRSU awards and fixed target value and number of fiscal 2022 PRSU awards for NEOs

June 2022						Reviewed fiscal 2021 NEO compensation compared to our peers
						Reviewed 2021 Say on Pay voting results for the Company as well as peers
						Reviewed the year-to-date performance of the Company compared to peers and relative to fiscal 2022 incentive compensation performance metrics
						Reviewed a market assessment of peer company pay practices and performance metrics utilized by peers in their incentive compensation programs
						Preliminary consideration of whether any significant design changes to the executive compensation program were advisable for fiscal 2023
						Consulted with the independent compensation consultant regarding home building and broader industry trends in executive compensation


Fiscal 2023

November 2022						Reviewed market assessment prepared by the independent compensation consultant of Company fiscal 2022 NEO projected pay versus projected Company fiscal 2022 performance compared to our peer group
						Began engagement of our largest stockholders and proxy advisory firms to gain their input on, among other things, our executive compensation program
						Determined no significant changes to the design of the executive compensation program were warranted
						Preliminary review of individual NEO and Company performance during fiscal 2022

December 2022						Reviewed fiscal 2022 performance goals and certified the level of performance attained for the annual incentive bonus and PRSU payouts
						Final assessment of individual NEO and Company performance for fiscal 2022
						Reviewed tally sheets and approved fiscal 2022 annual incentive bonuses for the NEOs

Performance Assessment Process

Throughout the fiscal year, the full Board monitored our financial performance in relation to our recent historical performance, our forecasted results and in relation to our peers. The Compensation Committee also reviewed and considered our financial performance during the fiscal year, and individual performance when making final fiscal 2022 compensation decisions at the beginning of fiscal 2023. As part of its evaluation of individual performance, the Compensation Committee considered the contributions of each NEO to the Company's achievements during fiscal 2022 as described above on page 37.

Participation by Management

The Compensation Committee worked with management to establish its meeting agendas and determine meeting participants. Throughout the year, the Compensation Committee requested information from management and the Compensation Committee’s independent compensation consultant, including information about projected results for fiscal 2022 and the compensation practices and financial performance of other companies in the home building and other industries. Our CEO and Chief Financial Officer attended certain meetings of the Compensation Committee in order to provide information and answer questions regarding the Company’s strategic objectives, financial performance and, in the case of the CEO, to provide input on the performance of the other NEOs during the year. Our other NEOs were also available to Compensation Committee members and to attend Compensation Committee meetings upon request. Our CEO submitted recommendations to the Compensation Committee regarding salary, bonus, equity compensation, and overall compensation levels for the other NEOs for both fiscal 2022 and fiscal 2023. The Compensation Committee, after consideration of all of these inputs, determined actual compensation levels for each NEO.

Use of Independent Compensation Consultant

The Compensation Committee engaged Compensation Advisory Partners LLC (“CAP”) to serve as its independent compensation consultant for fiscal 2022. CAP received instructions from, and reported to, the Compensation Committee on an independent basis.

The Compensation Committee requested CAP’s advice on a variety of matters, such as the amount and form of executive compensation, compensation strategy, market comparisons, pay and performance alignment versus industry peers, compensation levels for peers, executive pay trends, compensation best practices, compensation-related regulatory developments, and potential compensation plan designs and modifications. The Compensation Committee consulted with CAP, both with and without management, on several occasions during fiscal 2022, and also in early fiscal 2023 with respect to compensation decisions for fiscal 2022 performance. During fiscal 2022, CAP did not provide any services to the Company or its affiliates other than advising on executive compensation, as approved by the Compensation Committee.

The Compensation Committee conducts a formal evaluation of the independence of CAP annually in the first quarter of the fiscal year. Based on this review, the Compensation Committee did not identify any conflict of interest raised by the work CAP performed in fiscal 2022. When conducting this evaluation, the Compensation Committee took into consideration the factors set forth in Rule 10C-1 under the Exchange Act and the NYSE’s listing standards.

Market Comparisons

Although the Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on market comparisons or industry practices, it believes that information regarding pay practices at other companies is useful in three respects. First, marketplace information is one of many factors considered in assessing the reasonableness of compensation. Second, our compensation practices must be generally competitive for executive talent in the home building industry and in the overall market. Third, marketplace information reflects emerging and changing components and forms of compensation. While the Compensation Committee considers peer compensation levels and practices when making its compensation decisions, it does not target

compensation at any particular point within a range established by a comparison of the compensation levels of our peer companies.

For fiscal 2022, the Compensation Committee did not make any changes to the peer group, which was previously determined by identifying publicly-traded home builders with revenues above $3.0 billion. For fiscal 2022 the peer group consisted of the following companies:


Peer Group

D. R. Horton, Inc.						NVR, Inc.
KB Home						PulteGroup, Inc.
Lennar Corporation						Taylor Morrison Home Corporation
M. D. C. Holdings, Inc.						Tri Pointe Group, Inc.
Meritage Homes Corporation

Benefits and Perquisites

We provide all of our employees, including our NEOs, with specified employee benefits programs. These include the opportunity to save for retirement through the Toll Brothers 401(k) Savings Plan (the “401(k) Plan”) and various health and welfare benefit programs, including medical, dental, life insurance, and long-term disability insurance. These programs are intended to promote the health and financial security of our employees and are provided at competitive market levels to attract, retain, and reward employees. We share the cost of these programs with our employees and our NEOs participate in these programs on the same terms as our other employees.

The 401(k) Plan is a qualified retirement savings plan under the tax code. Participants in the 401(k) Plan may contribute a portion of their compensation, subject to IRS regulations and specified limitations applicable to “highly compensated employees,” as such term is defined in the tax code. We match a portion of each participant’s contribution and, in certain years, also made discretionary contributions to each active participant’s account. All of the NEOs were participants in the 401(k) Plan during fiscal 2022.

Supplemental Executive Retirement Plan

We also maintain a SERP, which provides retirement benefits to our NEOs. The SERP is intended to provide competitive retirement benefits, to protect against reductions in retirement benefits due to tax law limitations on qualified plans, and to encourage continued employment or service with the Company. For a discussion of the material terms of the SERP, see “Pension Benefits During Fiscal 2022—Supplemental Executive Retirement Plan” on page 53.

In connection with Mr. Parahus' promotion to the role of sole President and Chief Operating Officer, his annual benefit under the SERP was increased to $145,000 in November 2021. No changes were made to the annual benefit for Messrs. Connor or Yearley. The annual benefit amounts for our NEOs under the SERP as of the end of fiscal 2022 are set forth in the table under “Pension Benefits During Fiscal 2022—Supplemental Executive Retirement Plan” on page 53.

Executive Severance Plan

The Company maintains the Toll Brothers, Inc. Executive Severance Plan (the "Severance Plan"), which provides certain cash severance benefits to eligible employees of the Company who experience a “covered termination” of employment, both in the context of a “change of control” transaction and otherwise. A “covered termination” under the Severance Plan means a participant’s employment is terminated by the Company without “cause” or the participant resigns with “good reason,” in each case as described below, and subject to the limitations described therein.

Under the terms of the Severance Plan, “Cause” includes a participant’s (i) substantial failure or refusal to perform the duties or responsibilities of his job, (ii) material violation of any fiduciary duty, (iii) conviction of (including a plea of nolo contendere) a felony, (iv) conviction of (including a plea of nolo contendere) a misdemeanor which involves dishonesty, fraud or morally repugnant behavior, (v) dishonesty, (vi) theft, (vii) material violation of Company rules or policy, or (viii) other egregious or morally repugnant conduct that has, or could have, a serious and detrimental impact on the Company. “Good Reason” includes (i) a material diminution in the participant’s authorities, duties, job responsibilities, status or reporting relationships, (ii) (A) a reduction in base salary or target bonus opportunity, (B) failure to pay base salary or the applicable bonus when due, or (C) for the two-year period following a change of control, a reduction in equity compensation opportunity, (iii) the relocation of the principal place of employment by more than fifty miles, (iv) the material breach of an existing agreement between the participant and the Company, or (v) the failure of any purchaser to assume any agreement between the participant and the Company.

If a participant, including each of our NEOs, experiences a “covered termination” not in connection with a change of control of the Company (as defined in the Severance Plan), the Company will provide certain severance payments and benefits, subject to the participant’s continued compliance with the Non-Interference Agreement, as described below, and the execution and non-revocation of a release of claims. For our NEOs, these payments and benefits are as follows: (i) an amount equal to 1.5 times (2.0 times for the CEO) the sum of the participant’s annual base salary and target annual incentive bonus, (ii) a prorated annual incentive bonus for the year of termination of employment based on actual performance, (iii) an amount equal to 18 months (24 months for the CEO) of the participant’s monthly COBRA premium for continued health insurance coverage, and (iv) reasonable outplacement services for a period corresponding to the time period that is the lesser of (x) 18 months (24 months for the CEO) and (y) the period beginning on the date of the covered termination and ending on the two-year anniversary of the covered termination.

If a participant experiences a “covered termination” within two years after the occurrence of a change of control of the Company or within six months prior to a change of control of the Company, and such termination is reasonably demonstrated to be in connection with or in anticipation of a change of control or is at the request of a third party who has reasonably calculated or intended to effect a change of control of the Company, the Company will provide the participant with certain severance payments and benefits, subject to his or her continued compliance with the Non-Interference Agreement and the execution and non-revocation of a release of claims. For our continuing NEOs, these payments and benefits are as follows: (i) an amount equal to 2.0 times (2.5 times for the CEO) the sum of the participant’s annual base salary and target annual incentive bonus, (ii) a prorated target annual incentive bonus for the year of termination of employment, (iii) an amount equal to 24 months (30 months for the CEO) of the participant’s monthly COBRA premium for continued health insurance coverage, and (iv) reasonable outplacement services for a period equal to the lesser of (x) 24 months (30 months for the CEO) or (y) the period beginning on the date of the covered termination and ending on the two-year anniversary of the covered termination.

Participants who receive severance benefits under the Severance Plan will be bound by certain restrictive covenants in favor of the Company, including the confidentiality, non-disparagement, non-competition and non-solicitation covenants included in the Non-Interference Agreement attached to the Severance Plan. Pursuant to the Non-Interference Agreement (which each NEO has executed), each executive officer of the Company is subject to non-compete and non-solicitation periods of one year following the executive officer's termination of employment for any reason. The Severance Plan also provides that if payments and benefits provided to the participant would constitute an “excess parachute payment” for purposes of Section 280G of the tax code, the participant will either have his or her payments and benefits reduced to the highest amount that could be paid without triggering Section 280G or receive the after-tax amount of his or her payment and benefits, whichever results in the greater after-tax benefit, taking into account the excise tax imposed under Section 4999 of the tax code and any applicable federal, state and local taxes.

The severance benefits available to our NEOs under the Severance Plan as of the end of fiscal 2022 are set forth in the tables under “Potential Payments upon Termination or Change of Control” beginning on page 57.

Deferred Compensation Plan

The Company maintains the Toll Bros., Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan” or "DCP"), which was designed to enable certain management and highly compensated employees, including our NEOs, to defer a portion of their annual cash compensation. The Deferred Compensation Plan was frozen with respect to compensation earned after December 31, 2011. However, in December 2014, the Company amended and restated the Deferred Compensation Plan (as amended, the "2015 Plan") to enable employees to defer a portion of their annual cash compensation starting on January 1, 2015. Messrs. Yearley, Connor and Parahus were participants in the 2015 Plan during fiscal 2022.

Amounts deferred prior to January 1, 2015, which are not re-deferred under the 2015 Plan, continue to be governed by the terms of the Deferred Compensation Plan in effect prior to January 1, 2015. Mr. Parahus is the only NEO who participated in the Deferred Compensation Plan prior to January 1, 2015. We have the right under the 2015 Plan to make discretionary contributions for the benefit of any participant in the 2015 Plan. We did not make discretionary contributions to any NEO under the 2015 Plan in fiscal 2022.

Interest earned during fiscal 2022 on NEO deferred compensation that is considered above-market interest under SEC rules is included in the amount reported under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the Summary Compensation Table on page 48, and further information about NEO deferred compensation is contained in the Nonqualified Deferred Compensation During Fiscal 2022 table on page 54.

Perquisites

Perquisites, which included auto and gas allowances, insurance, and tax and financial statement preparation assistance, as more fully described in the footnotes to the Summary Compensation Table on page 48, did not constitute a material portion of our NEOs compensation for fiscal 2022. We provide our NEOs with limited perquisites and personal benefits that the Compensation Committee believes are reasonable and consistent with our executive compensation philosophy and objectives, and we do not provide tax gross ups on perquisites. Each fiscal year, the Compensation Committee reviews and approves those perquisites that are provided to our NEOs.

Other Compensation Practices and Policies

Employment Agreements, Severance Payments and Change of Control Provisions

We employ our NEOs at will and do not have individualized employment agreements. As described above, we maintain a Severance Plan that provides for cash severance payments and other benefits to certain eligible employees of the Company, including our NEOs, who experience a termination of employment under certain conditions. For a description of the severance benefits available under the Severance Plan to our NEOs, see "Benefits and Perquisites - Executive Severance Plan" on page 43 and "Potential Payments upon Termination or Change of Control" beginning on page 55.

In addition, our equity award agreements and the SERP include provisions relating to the occurrence of a change of control of the Company. Under our Omnibus Incentive Plan, if there is a change of control of the Company (as defined in the Omnibus Incentive Plan), outstanding stock options and RSUs (in each case awarded prior to December 2019), or other plan awards will generally immediately vest, and any applicable restrictions will immediately lapse. Equity awards granted in December 2019 and thereafter are subject to "double trigger" accelerated vesting as described above. Under the SERP, if there is a change of control of the Company (as defined under the SERP), all participants become fully vested in their

SERP benefits and become eligible for a lump sum payout. See “Potential Payments upon Termination or Change of Control” beginning on page 55.

Stock Ownership Guidelines

We maintain Stock Ownership Guidelines ("Guidelines") pursuant to which our executive officers and non-employee directors are expected to acquire a meaningful level of stock ownership in the Company to further align their interests with those of our stockholders. Under the Guidelines, the executive officers and non-employee directors are expected to own shares equivalent in value to a multiple of his or her base salary or annual base cash retainer, as set forth below:


Position						Multiple

Chairman and CEO						6.0 x base salary
Other Executive Officers						3.0 x base salary
Directors						5.0 x annual base cash retainer

Executive officers and directors are expected to achieve compliance with these levels of ownership within five years from the date he or she assumes the position of executive officer or director, and may not sell net shares of stock received upon the exercise of stock options (that is, shares other than those sold to pay withholding taxes, brokerage fees, and the exercise price) or shares of stock received upon vesting of other equity awards, unless and until he or she has met these required levels of ownership. In connection with any increase to the Guidelines, executive officers and directors are given additional time commensurate with the increase in the multiple applicable to him or her to achieve compliance with the increased Guidelines.

On an annual basis, the Governance Committee reviews adherence to the Guidelines. For purposes of the Guidelines, the following are included as “owned”:

•shares of stock owned by the executive officer or director, including shares held in a trust controlled by the executive officer or director, by a spouse or by minor children that are deemed beneficially owned by the executive officer or director under Rule 13d-3 under the Exchange Act;

•one-third of the shares underlying vested stock options that were “in the money” at the beginning of the fiscal year of review; and

•shares of stock underlying vested PRSUs, RSUs, and restricted stock awards, regardless of provisions relating to delivery.

If an executive officer or director satisfies these Guidelines, they are generally deemed satisfied for subsequent annual review periods, regardless of decreases in the Company’s stock price as long as the executive officer or director continues to hold the shares originally included in determining compliance. At the time of the Governance Committee's annual review of adherence to the Guidelines in December 2022, the Governance Committee determined that each NEO and director had either met the minimum Guidelines, or were otherwise within the timeframe permitted to meet such levels, and were therefore in compliance with the Guidelines.

Hedging Policy

We have an insider trading policy that sets forth guidelines and restrictions applicable to employees’ transactions involving our stock. Among other things, this policy prohibits our employees from engaging in puts, calls, or similar options on our stock or in any derivative equity securities of the Company, or selling our stock short. In addition, this policy prohibits executive officers and directors from entering into hedging arrangements with respect to our equity securities that are designed to offset or reduce the risk of price fluctuations in the underlying security (such as covered calls, collars, or other transactions that sever the ultimate alignment with our stockholders’ interests).

Pledging Policy

We have a pledging policy that prohibits any pledging of the Company’s equity securities by executive officers and directors. As a result of this policy, no executive officer or director has Company shares that are pledged as of the date of this proxy statement.

Clawback Policy

In January 2017, the Board adopted a policy regarding the recoupment of incentive compensation from executives in specified situations involving fraud or intentional misconduct. The policy provides that, subject to the discretion and approval of the Board, the Company will, to the extent permitted by governing law, in all appropriate cases as determined by the Board, require reimbursement and/or cancellation of any cash bonus or other incentive compensation subject to the policy, including vested and unvested stock-based compensation, awarded to an executive officer where all of the following factors are present: (a) the award was predicated upon the achievement of specified financial results that were subsequently the subject of a restatement, (b) in the Board’s view, the executive engaged in fraud or intentional misconduct that was a substantial contributing cause to the need for the restatement, and (c) a lower award would have been made to the executive based upon the restated financial results. Under this policy, the Board may seek to recover payments of incentive compensation if the financial results leading to the award of incentive compensation are subsequently the subject of a restatement. The Board may use its judgment in determining the amount to be recovered where the incentive compensation was awarded on a discretionary basis.

The Board intends to review and update the Company's clawback policy upon the finalization of applicable SEC and NYSE rules regarding recoupment of incentive compensation.

Tax and Accounting Implications

When making decisions about executive compensation, the Compensation Committee considers both tax and accounting implications of the various elements of our compensation program, including the impact on our financial results and the dilutive impact to stockholders of various forms of compensation.

For equity compensation grants, ASC 718 requires us to recognize compensation expense for all share-based payment arrangements based upon the grant date fair value of those awards and period of vesting. The aggregate expense estimated to be recognized over the period of vesting is included in the Summary Compensation Table contained in this proxy statement as part of the NEOs’ total compensation in the fiscal year of the grant. This number, while required by the SEC rules and important for understanding the impact of granting equity on our financial statements, does not represent the value ultimately realized by the NEO.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with our management the Compensation Discussion and Analysis section of this proxy statement. Based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Annual Report on Form 10-K .

Respectfully submitted by the members of the Compensation Committee of the Board of Directors.

John A. McLean (Chair)

Stephen F. East

Christine N. Garvey

Carl B. Marbach

Wendell E. Pritchett

EXECUTIVE COMPENSATION TABLES
Summary Compensation Table

SEC Form DEF 14A filed by Toll Brothers Inc.