Meritage operates within a comprehensive plan of corporate governance for the purpose of defining responsibilities and setting high standards for ethical conduct. We regularly monitor developments in the area of corporate governance. In July 2002, Congress passed the Sarbanes-Oxley Act of 2002, which establishes or provides the basis for a number of new corporate governance standards and disclosure requirements. In addition, the New York Stock Exchange ("NYSE") recently changed its corporate governance and listing standards. We periodically review our corporate governance policies and practices and have initiated actions consistent with certain of the proposed rules. We will adopt changes, as appropriate, to comply with the Sarbanes-Oxley Act of 2002 and rule changes by the SEC and the NYSE.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Executive Compensation Committee reviews executive compensation arrangements. In addition, the Committee reviews corporate goals and objectives relevant to the CEO's compensation and approves compensation levels based on this evaluation. The Committee also administers Meritage's Executive Management Incentive Plan.
The Audit Committee recommends appointment of our independent auditors, reviews our financial statements and considers other matters in relation to the external and internal audit of financial affairs to promote accurate and timely reporting. The Audit Committee members are independent as described by Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange listing standards.
The Nominating/Governance Committee recommends nominees for election as directors and recommends matters of corporate governance to the Board of Directors, including plans relating to management succession.
The Board of Directors has determined that a majority of Meritage's Board members are independent, based on both the NYSE's current and proposed standards for independence. Our independent directors are Raymond Oppel, Peter L. Ax, Richard T. Burke and Gerald Haddock.
All members of the Audit Committee meet the NYSE's current and proposed standard for independence. All members possess the required level of financial literacy and at least one member of the Committee meets the current standard of requisite financial management expertise required by the NYSE. The SEC recently adopted a rule requiring disclosure concerning the presence of at least one "audit committee financial expert" on audit committees. The Board of Directors has determined that at least one of the audit committee members qualifies as an "audit committee financial expert." The Audit Committee operates pursuant to a charter, a copy of which is available on this website.
Executive Compensation Committee
All Executive Compensation Committee members meet both the NYSE's current and proposed standards for independence. The functions of this Committee include administrating executive compensation for the Company's CEO and other executive officers, and administrating management incentive compensation plans. The Executive Compensation Committee operates under a formal charter that governs its duties and standards of performance. A copy of the charter for the Executive Compensation Committee is available on this website.
The Company has established a Nominating/Governance Committee. All members of this committee meet the NYSE's current and proposed standards for independence. The functions of the Nominating/Governance Committee include recommending to the Board of Directors nominees for election as directors of the Company and making recommendations to the Board of Directors as to matters of corporate governance. The Nominating/Governance Committee operates under a formal charter that governs its duties and standards of performance. A copy of the charter for the Nominating/Governance Committee is available on this website.
Corporate Governance Principles and Practices
The Company has developed a set of Corporate Governance guidelines, including specifications for director qualifications and responsibility. These guidelines dictate that non-management directors will meet in executive session at least quarterly outside the presence of directors that are employees or officers of Meritage. Peter L. Ax has been appointed the "lead independent director" and presides over meetings of the non-management directors. A copy of our Corporate Governance Principles and Practices is part of this proxy of the 2002 Meritage 10-K.
Code of Ethics
Meritage Homes Corporation is committed to conducting business consistent with the highest ethical and legal standards. The Board of Directors has adopted a Code of Ethics, which is applicable to all employees, including our CEO and our Chief Financial Officer. The code is provided as Exhibit 14 to our Annual Report on Form 10-K.